HomeMy WebLinkAboutOperating and Capital Budget FY 2021-2022Otay Water District Spring Valley, California
Otay Water District
Adopted Operating and Capital Budget
Fiscal Year 2021-2022
BOARD OF DIRECTORS
Tim Smith, Division 1 President
Mark Robak, Division 5 Vice President
Jose Lopez, Division 4 Treasurer
Ryan Keyes, Division 2
Gary Croucher, Division 3
MANAGEMENT TEAM
Jose Martinez General Manager
Joseph R. Beachem Chief Financial Officer
Kevin Koeppen Assistant Chief, Finance
Adolfo Segura Chief, Administrative Services
Andrew Jackson Chief, Water Operations
Rod Posada Chief, Engineering
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Table of Contents
Page
Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Awards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvi
Resolution No. 4400. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx
OVERVIEW
Budget Guide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mission Statement, Vision, Statement of Values. . . . . . . . . . . . . . . . . . . . . . . 3
District Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Service Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Budget Control and Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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7
Budget Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fund Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Budget Calendar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
COMMUNITY PROFILE
Demographics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Service Area Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Ten Principal Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Ten Largest Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Water Rate Comparison – Member Agency Water Rates. . . . . . . . . . . . . . . . . 15
Sewer Rate Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
San Diego Rainfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Current Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
STRATEGIC PLAN
Strategic Plan Narrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Administrative Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FINANCIAL SUMMARIES
Financial Summaries Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Operating Budget Summary – General Fund . . . . . . . . . . . . . . . . . . . . . . . . 42
Operating Budget Summary by System . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
General Fund Revenues, Expenditures and Transfers . . . . . . . . . . . . . . . . . . . 45
Fund Balance Summary by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Revenues and Expenditures by Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Revenues and Expenditures by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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Table of Contents
FIVE-YEAR FORECAST
Five-Year Forecast Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
General Fund Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Fund Balances Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Debt Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Schedule of Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Projected Principal Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . 57
Projected Interest Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . . 58
REVENUES AND EXPENDITURES
Potable Revenues and Expenditures
Potable Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Water Sales Summary by Customer Class . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Unit Sales History and Meter Count by Customer Class . . . . . . . . . . . . . . . . . . 64
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
MWD and CWA Fixed Fees (pass-through) . . . . . . . . . . . . . . . . . . . . . . . . . 66
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Water Purchases and Related Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Potable Water Service Area Maps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Recycled Revenues and Expenditures
Recycled Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Water Sales Summary by Meter Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Unit Sales History and Meter Count by Customer Class . . . . . . . . . . . . . . . . . . 81
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Water Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Materials and Maintenance Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . 87
Recycled Water Service Area Maps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Sewer Revenues and Expenditures
Sewer Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Charges Summary by Customer Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
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Table of Contents
Sewer Revenues and Expenditures (continued)
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 96
Formula for Sewer Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Sewer Service Area Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
General Revenues and Expenditures
General Revenues and Expenditures Narrative . . . . . . . . . . . . . . . . . . . . . . . 101
General Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
General Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
DEPARTMENTAL OPERATING BUDGET
Departmental Operating Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . 105
Labor and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Labor and Benefits by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Position Count by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Contract/Temporary Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Operating Expenditures by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Operating Expenditures by Object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Departmental Budgets:
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
General Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
General Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
CAPITAL BUDGET
Capital Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
CIP Reserve Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Six-Year CIP Projects Summary by Source ($1,000s). . . . . . . . . . . . . . . . . . . . 161
Six-Year CIP Projects Summary by Fund ($1,000s). . . . . . . . . . . . . . . . . . . . . 161
Six-Year CIP Projects by Source and Fund ($1,000s). . . . . . . . . . . . . . . . . . . . 162
CIP Justification and Impact on Operating Budget . . . . . . . . . . . . . . . . . . . . 166
Capital Purchases FY 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
POLICIES
Summary of Financial Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Reserve Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Reserve Policy Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
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Table of Contents
POLICIES (continued)
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Investment Policy Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Debt Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Debt Policy Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
APPENDIX
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
List of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
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September 7, 2021
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 2022. The budget supports the District’s Fiscal Year 2019-2022 Strategic
Plan titled, “Growth and Sustainability,” as well as the financing of all District services,
programs, and capital needs during Fiscal Year 2022. The success as an agency is
significantly enhanced by the policies and practices implemented by its Board and
management to ensure stability, reliability, strength, and sustainability. The management
team is fully confident that through sound financial management and streamlining of
operations and services, supported by the Strategic Plan and a dedicated and talented
staff, the District will continue to achieve success and thus, ensure the well-being and
quality of life of its 226,000 customers. Our goal is to sustain the services we provide while
minimizing rate impacts to our ratepayers.
As you are aware, in early 2020, the unprecedented COVID-19 pandemic initiated
unexpected outcomes throughout the world, the nation, the state, and locally to the
District. The pandemic continues to impact state water agencies, including the District.
While not significant to the District’s overall financial results, collections and the initial
costs of establishing a safe working environment have had the most significant financial
impacts. As a result of the dynamic COVID-19 crisis environment, staff continues to assess
impacts to the District and its budget. The duration of the pandemic remains
unpredictable, especially with the Delta variant cases increasing. The District has
incorporated anticipated effects of the pandemic in its Fiscal Year 2022 budget and has
taken measures to ensure the continued safe working environment established in Fiscal
Year 2021. The costs of these measures are considered relatively minor to the District’s
budget.
Legislative issues
As a result of the COVID-19 pandemic, there are still many unknowns regarding the state
budget, funding sources, and the duration of executive orders, including Governor Gavin
Newsom’s water shutoff restriction order. It could expire on September 30, 2021, but that
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could be extended depending on the state of COVID-19 Delta variant cases and financial
issues affecting customers’ water and wastewater arrearages. COVID-19 financial relief for
the District and its customers has carried prominence throughout the year. The state
budget includes $1 billion for water and wastewater bill debt relief. There may be
additional funding sources from federal entities, which the District continues to research
and assess. District staff resumes its efforts to work with the San Diego County Water
Authority and other water-industry coalitions and associations to shape proposed
mechanisms for allocation of financial relief to local water suppliers.
The legislature has until September 10, 2021 to pass any bills for the 2021 legislative
session, and the Governor has until October 10, 2021 to sign or veto legislation sent to him
during the final weeks of the session.
Senate Bill 222 (Dodd), known as the Water Rate Assistance Program, would establish the
Water Rate Assistance Fund in the State Treasury to help provide water affordability
assistance, for both drinking water and wastewater services, to low-income ratepayers
and ratepayers experiencing economic hardship in California. The bill would require the
Department of Community Services and Development to develop and administer the
Water Rate Assistance Program. Staff continues to monitor this bill.
The public resources trailer bill, Senate Bill 155, is now in print. This trailer bill would
expand the prohibition of discontinuing water service due to nonpayment to all
community water systems regardless of the funding source a community water system
receives, for example funding through the California Water and Wastewater Arrearage
Program or other sources, and would also extend the prohibition of discontinuing water
service due to nonpayment to December 31, 2021. As mentioned previously, the
prohibition on the discontinuation of water service is currently set to expire September 30,
2021. Assembly Bill 155 is the companion budget trailer bill that includes identical
language from SB 155. The only difference between the two is one is a vehicle in the
Senate, and one is a vehicle in the Assembly. Both bills are currently active, however only
one of the two bills will move forward depending on how the legislature votes on the
measures in their respective houses. If passed by the legislature and signed by the
Governor, the bill would take effect immediately as part of the 2021-22 Budget Act.
The State Water Resources Control Board (SWRCB) and many water agencies, including
the District, continue to focus on conservation laws including Senate Bill 606 and
Assembly Bill 1668, which passed in 2018. Building on efforts to make water conservation
a way of life and to better prepare the state for droughts and climate change, the District
and other water agencies throughout the state have worked with San Diego County Water
Authority (CWA) and state officials to define how the conservation laws – SB 606 and AB
1668 – will be implemented. These laws outline an overall framework to guide the District
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and other urban water suppliers in setting water-use targets. The laws require water
agencies to establish a residential indoor gallon per capita per day (GPCD) goal of 55,
effective in 2023, decreasing to 52.5 in 2025, followed by a final decrease to 50 GPCD in
2030. The laws also require the SWRCB to adopt an outdoor water-use standard by June
2022. The District has worked collectively with other water agencies and water industry
associations to discuss and provide comments to the SWRCB to ensure the regulations
are both equitable and reflect local conditions. The District will continue to work on these
efforts as the SWRCB releases more recommendations and reports.
A related legislative issue that caused concern for water agencies this year was Assembly
Bill 1434 (Freidman), which would have established, beginning January 1, 2023 until
January 1, 2025, a standard for indoor residential water use GPCD goal of 48; beginning
January 1, 2025, a standard of 44 GPCD; and, beginning January 1, 2030, a GPCD of 40.
The bill failed to meet its deadline, so it may be acted upon in January 2022. Because the
current laws (SB 606 and AB 1668) already establish a residential indoor GPCD goal of 55,
effective in 2023, and the standards under the current laws were heavily negotiated with
the final agreement reflecting a compromise made between all engaged stakeholders,
the District and other water agencies believed that AB 1434 was too premature to
determine new regulations without understanding the full implementation and outcome of
the previously approved laws, SB 606 and AB 1668. Further, the District remains
concerned that a reduced indoor standard as proposed will have significant impacts on
potable water usage, wastewater, recycled and reuse systems, infrastructure, operations,
supplies, and affordability.
The District and other water agencies throughout California are actively looking to the
SWRCB and its 2020 Final Water Resilience Portfolio to assist in empowering local and
regional entities to meet their unique challenges, while delivering on the state’s
responsibility to provide tools and leadership, advance projects of statewide scale and
importance, and help address challenges that are beyond the scope of any region. District
staff, working with CWA and other local agencies, will continue to evaluate the actions in
the portfolio and resolve the most strategic methods to implement them.
As directed by the Governor and building on work already conducted, the Department of
Water Resources is in the process of preparing a Draft Environmental Impact Report for a
single tunnel solution to modernize Delta conveyance. The Draft EIR is expected to be
released for public review and comment in mid-2022. This environmental review process
is also consistent with the Governor’s executive order directing state agencies to develop
the aforementioned portfolio of statewide water actions and investments that improve
water recycling, recharge depleted groundwater reserves, strengthen existing levee
protections, and improve Delta water quality.
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The District continues to support and monitor Senate Bill 323 (Caballero), which would
provide public agency water and sewer rates the same protections already afforded to
fees and charges that fund other essential government services. This bill would authorize
a local agency or interested person to bring a validation action in a superior court to
determine the validity of a fee or charge for water and sewer service. It would also require
an interested party bring a validation action within 120 days after the fee or charge
becomes effective. It also would provide that this bill shall only apply to a fee or charge for
water or sewer service that has been adopted, modified, or amended after January 1,
2022.
To address the “Silver Tsunami” – an aging and retiring workforce in the water and
wastewater operator fields – and to increase the pool of qualified individuals for these
positions, the District continues to focus on the recent law (Assembly Bill 1588) that
passed in October 2019. The law ensures military veterans transitioning into civilian water
and wastewater operator occupations receive appropriate credit for experience and
education gained during military service. The District, other water agencies, and
stakeholders continue to work on defining the process with the SWRCB and educating
veterans and other stakeholders about how veterans can obtain sufficient credit for their
experience and education. The District has also secured a position on the State Water
Resource Control Board’s Drinking Water Division’s Advisory Committee to assist it in
carrying out its responsibility pursuant to the law.
Fiscal Year 2019 - 2022 Strategic Plan
Since its establishment, the District’s motto has been “Dedicated to Community Service.”
From modest beginnings in 1956 through today, the District stands committed to
providing outstanding service to the residents and businesses it has the honor to serve.
This serves as a great reminder to our staff and customers as to why the District exists.
During the District’s early years, a key focus of its preceding strategic plans was to meet
the demands of growth. Today, the District’s four-year Strategic Plan (Fiscal Years 2019-
2022) still has the word “growth” in its theme of “Growth and Sustainability,” but
“sustainability” is a critical element in managing long-term maintenance and replacement
of infrastructure. Staff works diligently to ensure its planning documents and programs
support the District’s water supply and sewer facilities that serve its customers now and in
the future. The four-year Strategic Plan aims to support the goals in our planning
documents, which include the Water Facilities Master Plan Update, Wastewater
Management Plan, Urban Water Management Plan, and other critical plans.
The District’s Strategic Plan also serves as a roadmap to execute its organizational
objectives and track day-to-day performance metrics, which ensure deliverables are
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being met and essential work processes are being continuously fine-tuned. The District’s
Strategic Plan was developed using the Balanced Scorecard performance management
framework. Via this framework, management and staff share a focused business and
operational strategy to ensure the District is moving along the right path and maximizing
its limited resources.
The District’s strategic philosophy recognizes that as the agency evolves and service
footprint matures, fewer development resources and fees will be available, while
operational assets and infrastructure maintenance, rehabilitation, and replacement costs
will increase. This is an important phase of the operational lifecycle and will therefore
place pressure to increase customer rates to counter more costly service expenses. To
balance the customer’s interest in minimizing rate increases, while also maintaining the
agency’s infrastructure, investments, and financial position, the management team
continues to place emphasis on efficiencies within the agency, including innovation and
continued use of technology throughout its operations.
In effect, the District leverages its investments in technology to manage operational cost
and do more with the same or fewer resources. With sound planning, prudent fiscal
management, community focus, and a work culture prepared to adapt to new challenges,
the District is well positioned to support its growing customer base, while sustaining the
quality of water service our customers expect. From a water supply perspective, this
means determining the optimal water supply, treatment, and delivery solutions for
customers. From a daily operating perspective, efficiency enhancements have become
the principal source of competitive advantage and cost optimization.
Finding ways to utilize technology, streamline operations, and reduce external costs are
critical elements of the District’s ongoing commitment and dedication to its customers.
Savings generated through streamlining and reducing costs are passed to our ratepayers.
As a key example, from 2017 to 2021, the District began to upgrade or replace more than
49,600 automated meter reading (AMR) meters, originally installed between 2004 and
2012. To be as cost efficient as possible, the District is replacing meter registers instead of
the entire meter and, when applicable, taking advantage of existing warranties. This saves
the District and its ratepayers approximately $3.3 million in meter replacement costs.
Because of the meter’s life expectancy and warranty, the District can delay the
replacement of its meters by approximately 10 years. There are many benefits to utilizing
AMR meter technology, including the reduction of meter reading staff, increased safety of
staff, and allowing staff to store historical water use data. These advanced meters can
assist customers and the District to identify unexplained usage by providing leak, tamper,
and backflow detection notifications. The efforts related to AMR meters are an example of
the District’s ongoing commitment to pursue efficient and cost saving technologies.
ix
The success of this approach is proven by the District’s gains in productivity, reduction in
staffing, and associated costs. The District has reduced staffing by 34.75 full-time
equivalent positions, or 20%, while the number of customer accounts increased by 4,177
from 2007 through 2022. The following chart shows that the District’s ratio of customer
accounts per full time employee has increased by 105 or 35% since 2007.
Customer Accounts per Full Time Employee
Because of increased efficiency and higher employee productivity, the District continues
to absorb some of the pass-through costs from its water suppliers, including the City of
San Diego, CWA, and Metropolitan Water District (MWD). This helps to address customer
concerns about rising water rates.
To reduce the District’s costs of retirement obligations, the District made an advanced
payment of $31.8 million to its CalPERS pension plan on August 15, 2018. This strategic
action significantly reduced the high financing cost of the unfunded liability at CalPERS
and brought the funding level up to 87%, which will save the District approximately $16
million. In Fiscal Year 2020, the District’s Other Post Employee Benefits (OPEB) plan
became fully funded. In Fiscal Year 2021, with the OPEB plan being fully funded, the
District began redirecting $1.1 million of additional contributions to PERS. The District has
budgeted to continue the additional $1.1 million contribution in Fiscal Year 2022. When
combined with the $31.8 million 2018 advance funding, the District’s PERS funding
strategy is projected to save the District in excess of $20 million over the next 12 years.
Other cost savings include the reduction in number of vehicles and equipment, fuel
consumption, pavement costs, and decreasing water loss through the successful leak
30
1
30
6
31
4
32
1
33
6
34
4
36
6
38
0
38
9
39
6
40
6
41
2
40
9
40
9
40
7
40
6
-
50
100
150
200
250
300
350
400
450
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Ac
c
o
u
n
t
s
p
e
r
F
u
l
l
T
i
m
e
E
m
p
l
o
y
e
e
Fiscal Year
x
detection and repair program. Staff continues to seek out other operational efficiencies,
thus decreasing costs and minimizing rate impacts on District customers.
Based on an annual survey of water and sewer rates conducted by staff, the District
continues to be one of the lower cost providers in San Diego County. The District has the
fifth lowest water rate out of the 24 member agencies in San Diego County (based on the
District’s average water user who uses 11 units of water and has a ¾” residential meter
size), and the fifth lowest sewer rate out of the 28 sewer service providers in the County
(based on 10.4 units of water and a ¾” residential meter size). The results of the water and
sewer surveys are shown on pages 15 and 16, respectively.
The following chart shows that since 2007, the wholesale water supply costs have
increased 116.6% and the District’s retail water rates have increased 111.4%.
Wholesale Water Supply Costs vs. District Retail Rate Increases
The District currently delivers water service to 51,316 potable and 754 recycled water
customer accounts. The District purchases all the potable water sold to customers from
the CWA. Eighteen percent of this water, in turn, is purchased from the region’s primary
water importer, MWD, which derives its supply from the Colorado River and the California
0%
20%
40%
60%
80%
100%
120%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
116.6%
111.4%CWA Water Cost Increase
Otay Water Rate Increase
xi
State Water Project. The percentage of water purchased from MWD has decreased
significantly over the last several years due to conservation efforts, the water transfer
agreement with Imperial Irrigation District (IID), the All-American and Coachella lining
project agreements, and the water purchase agreement for water produced at the
Carlsbad Desalination Plant.
The District continues its efforts to diversify water resources, reducing dependence on
traditional water supplies from the Colorado River and the Sacramento-San Joaquin
Delta. The District also has been proactive in reducing its dependence on MWD water
treatment facilities. For example, in 2009 the District entered into an agreement with the
CWA that allowed the neighboring Helix Water District to treat imported water on behalf of
the District at Helix’s Levy Water Treatment Plant. This has brought regional water
treatment closer to District customers, which lessens dependence on water treatment
facilities located outside of the County.
The District also collects and recycles wastewater from approximately 4,722 homes and
businesses. The District collects wastewater and delivers it to its Ralph W. Chapman
Water Recycling Facility (Chapman), which is capable of recycling wastewater at a rate of
1.3 million gallons per day. In addition to the Chapman facility, the District continues to
purchase up to 6 million gallons per day of recycled water from the City of San Diego’s
South Bay Water Reclamation Plant. The use of recycled water for landscape irrigation
and industrial processes reduces dependence on imported potable supplies, provides a
local supply that is drought proof, and diversifies District sources.
Fiscal Year 2022 Operating Budget Summary
The Fiscal Year 2022 budget was prepared with the continuing challenges of water supply
rate increases, added CIP projects, increasing power costs, and current and pending
legislative initiatives. Additional challenges are the City of San Diego’s Pure Water
program costs, the County of San Diego’s rehabilitation of shared facilities, and the
upcoming debt issuances. These challenges have been largely offset by the operational
surplus of over $15 million in Fiscal Year 2021 which includes a $3.1 million refund from
CWA.
The District’s operating expenditures consist of three major sectors: potable water,
recycled water, and sewer, totaling $112.2 million of budget expenditures for Fiscal Year
2022. Revenues from potable and recycled water sales are projected to be $99.6 million,
approximately $12.4 million more than the Fiscal Year 2021 budget. The Fiscal Year 2021
budget was prepared assuming that the pandemic would adversely impact potable and
recycled water sales volumes by 12% and 15%, respectively. In Fiscal Year 2021, the
actual water volumes did not experience the pandemic-driven declines anticipated in the
xii
budget. Therefore, the Fiscal Year 2022 budget was prepared assuming the water
volumes would be consistent with historic actual volumes and excluded the adverse
impacts included in the Fiscal Year 2021 budget. The District projects sewer revenues to
be $3.1 million, approximately $198 thousand more than Fiscal Year 2021. The remaining
budgeted revenues of $9.5 million, approximately $972 thousand more than Fiscal Year
2021, come from various special fees, assessments, and miscellaneous income.
Other significant aspects of the Operating Budget are:
A balanced budget supporting the goals of the Strategic Plan.
The use of an economist to project growth for the region.
An updated six-year Rate Model to ensure sound financial planning and reserve
levels.
Ongoing 5.5% melded increases from MWD and CWA are due to the high cost of
supply programs, higher energy costs, and increasing operating costs.
4.2% water rate increase to District customers budgeted for January 1, 2022, and a
4.9% rate increase for sewer, effective January 1, 2022.
Metro sewer costs include the anticipated impact of the City of San Diego’s Pure
Water Program costs.
The District maintains low water rates, below the countywide average of the
County’s 24 water agencies.
Fiscal Year 2022-2027 Capital Improvement Program (CIP)
The CIP budget emphasizes long-term planning for ongoing programs to meet population
growth, facilities replacement, and betterment of infrastructure while functioning within
fiscal constraints. The Fiscal Year 2022 CIP budget contains 123 projects and totals $8.7
million. The District categorizes projects into three business segments: potable water,
recycled water, and sewer. Funding for the Fiscal Year 2022 potable, recycled, and sewer
projects are $7.7 million, $732 thousand, and $324 thousand, respectively. CIP projects are
also categorized into four categories: expansion, betterment, replacement, or new water
supply.
The following is a breakdown of the CIP projects into the four categories:
Expansion projects $ 169,000
Betterment projects 1,377,000
Replacement projects 7,188,000
New Supply projects 8,000
Total $ 8,742,000
xiii
The Fiscal Year 2022-2027 CIP budget of $101.4 million has increased by $9.1
million versus last year. The total water CIP budget for the six-year period is $92.7 million,
which is a $7.3 million increase compared to Fiscal Year 2021, while the sewer CIP of $8.7
million is increasing $1.8 million compared to Fiscal Year 2021.
The District projects water debt issuances of $15.8 million and $5.0 million in Fiscal Year
2024 and Fiscal Year 2026, respectively, as well as sewer debt issuances of $2.0 million
and $1.5 million in Fiscal Year 2024 and Fiscal Year 2026, respectively.
COVID-19 Impacts
The District has not experienced the adverse financial impacts anticipated in the Fiscal
Year 2021 budget. The District’s Fiscal Year 2022 budget includes minor costs associated
with maintaining the COVID-19 operational safety measures instituted in FY 2021, as well
as minor ongoing impact to collections associated with the Governor’s ban on
disconnections that is scheduled to expire on September 30, 2021.
Awards and Acknowledgments
The Government Finance Officers Association of the United States and Canada
presented Otay Water District the Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2020. 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.
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Operating Budgeting for Fiscal Year 2020-
2021.
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Capital Budgeting for Fiscal Year 2020-
2021.
The Government Finance Officers Association Officers presented Otay Water
District the Certificate of Excellence in Financial Reporting for its Comprehensive
Annual Financial Report for the Fiscal Year ended June 30, 2020.
Conclusion
The District’s Board of Directors’ met the challenges presented this year with
responsibility, commitment, and persistence to keep the stability and financial strength of
the District as one of its highest priorities. Reserves will be maintained above target levels
as will the District’s debt coverage level. The Board of Directors, management team, and
xiv
staff are all committed to efficiency in both District operations as well as in its capital
development. With these efficiencies and the ongoing investment in new technologies,
the District has a competitive edge in providing quality service.
This budget reflects the vision of the District’s Board, management, and staff. The District
will continue to strive to make improvements in budget processes, including an extensive
review and analysis of projections for revenues, expenditures, capital projects, and
reserves.
I would like to thank 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, we acknowledge and appreciate their continued support and direction in
achieving excellence in the financial management and operations of the District.
Jose Martinez, General Manager
xv
Distinguished Budget Presentation Award
The Government Finance Officers Association presented a Distinguished Budget
Presentation Award to the District for its annual budget for the fiscal year 2020-2021. 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.
xvi
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Operating
Budget Excellence Award for Fiscal Year 2020-2021.
xvii
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Capital
Budgeting Excellence Award for Fiscal Year 2020-2021.
xviii
Financial Awards
The Government Finance Officers Association Officers presented Otay Water District
the Certificate of Achievement for Excellence in Financial Reporting for its
Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2020.
xix
RESOLUTION NO. 4400
A RESOLUTION OF THE BOARD OF DIRECTORS OF OTAY WATER DISTRICT ADOPTING THE FISCAL YEAR 2021-2022 OPERATING AND CAPITAL BUDGET; AND SALARY SCHEDULE
WHEREAS, the Otay Water District Board of Directors have
been presented with a budget (Exhibit A) for the operation of
the Otay Water District for Fiscal Year 2021-2022; and
WHEREAS, the Fiscal Year 2021-2022 Operating and Capital
Budget, have been reviewed and considered by the Board;
WHEREAS, it is in the interest of the District to adopt a
budget for said year;
WHEREAS, in connection with the adoption of the budget, the
Board is also being presented with the Salary Schedule
(Exhibit B) for its consideration, in order to comply with
California Code of Regulations Section 570.5,
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by
the Board of Directors of the Otay Water District that the
Operating and Capital Budget for the operation of the District,
incorporated herein by reference, is hereby adopted as the
District's budget for Fiscal Year 2021-2022.
BE IT FURTHER RESOLVED that the Board hereby approves and
adopts the Salary Schedule included with the budget and,
consistent with his authority over employee compensation under
both State law and the District's Code of Ordinances, authorizes
xx
the General Manager to update the Salary Schedule, whenever
necessary, to reflect changes made within his authority.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
Otay Water District at a board meeting held this 2nd day of June
2021, by the following vote:
Ayes: Noes: Abstain: Absent:
ATTEST:
Directors Croucher, Lopez, Robak and Smith Director Keyes None None
President
xxi
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xxii
Overview
Budget Guide
The District views the budget as an essential tool for proper financial management. This budget is
developed with input from each department of the organization and is set prior to the start of each
fiscal year. It is designed and presented for the general needs of the District, its staff, and citizens.
The budget 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.
Overview
This introductory section contains general information about the District such as: mission statement,
vision, statement of values, District formation, organizational chart, and the budget process and
calendar.
Community Profile
This section contains the demographics of the District along with the current and projected
economic conditions and water and sewer rate comparison. It also includes statistics on the District’s
customers, the region’s tax base, rainfall, future development, and projects that will have an impact
on the District in the coming years.
Strategic Plan
The Strategic Plan is the core document which guides the District’s efforts to meet and positively
adapt to change. The overall plan is extensively reviewed and revised every three-to-four years. This
current edition (covering fiscal years 2019-2022) is a continuation of the 2015-2018 plan and is the
sixth multi-year plan dating back to 2002. Included in this section are the District’s perspectives, goals,
key performance indicators, measurement methods, targets for each department, and the historical
results of each key performance indicator.
Financial Summaries
This section contains an overview of the District’s revenues and expenditures by fund for the current
budgeted fiscal year, the prior year’s actual amounts, and the future 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 for 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 six-year forecast is prepared based on the Rate Model results.
1
Overview
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 the
General Revenues and Expenses section. An allocation of overhead costs is made to equitably
distribute the cost of running the District among the various business segments.
Departmental Operating Budget
This section provides a summary of each department’s operating expenditures and detailed budget
information including its mission, responsibilities, three-year staffing schedules, performance
indicators, accomplishments, and goals. Also provided are graphical presentations of departmental
budget percentages to District totals, 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,
the Sewer Master Plan, major assumptions and criteria, a six-year listing of CIP project expenditures
justifications, and the impact on the Operating Budget and capital purchases budget for the fiscal
year are located in this section. The District also publishes a separate six-year Capital Budget that
provides more detail of each project (budget amount, description, justification, comments, fund
details, expenditure schedule and a map of the project location). The FY 2022-2027 Six-Year
Capital Budget is available on our website at otaywater.gov/cip.
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, List of Acronyms, and an Index.
2
Overview
Mission Statement
To provide exceptional water and wastewater service to its customers, and to manage District
resources in a transparent and fiscally responsible manner.
Vision
To be a model water agency by providing stellar service, achieving measurable results, and
continually improving operational practices.
Statement of Values
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.
Employees:
We see each individual as unique and important. We value diversity and open communication to
promote fairness, dignity, and respect.
Teamwork:
We promote mutual trust by sharing information, knowledge, and ideas to reach our common goals.
Innovation:
We constantly seek better, more efficient, and cost-effective ways to deliver our services.
3
Overview
District Formation
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. The District was
established 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. In 1957, developers in south Spring
Valley created the La Presa County Water District to obtain water from the San Diego County Water
Authority (CWA). The CWA is the water wholesale supplier of the member agencies in San Diego
County. In the fall of 1969, Otay Water District and La Presa County Water District merged into the
Otay Water District. Since then, the District has provided high quality water to a semi-arid region of
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). 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 partnership with the City of San Diego to beneficially
reuse an additional 2,654 acre-feet per year of recycled water for fiscal year 2022, and ultimately up
to 5,900 acre-feet per year. The District continues to be the largest retail provider of recycled water in
the County of San Diego.
The District also owns and operates a wastewater collection system providing public sewer service
to approximately 4,700 customer accounts within the Jamacha drainage basin. The sewer service
area covers approximately 8,800 acres, which is about 11% of the District’s total service area.
Residential customers comprise 97% of the sewer customer base.
Service Area
The District's boundaries encompass an area of
approximately 125.3 square miles or 80,208 acres 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, abutting the cities of
El Cajon and La Mesa and encompassing most of the City of
Chula Vista and a small portion of the City of San Diego. The
District purchases 100% of its treated water. Regionally,
about 80% is imported, which is a blend from the Colorado
River and the California State Water Project. Twenty percent
of the District’s treated water comes from local supplies,
including groundwater, local water storage within the county
and from the Pacific Ocean via seawater desalination. The
District purchases its treated water from the San Diego
County Water Authority and receives a blend of treated water
from the Metropolitan Water District of Southern California’s
R.A. Skinner Treatment Plant, the San Diego County
4
Overview
Water Authority’s Twin Oaks Valley Water Treatment Plant, the Carlsbad Desalination Plant, and the
Helix Water District’s R.M. Levy Water Treatment Plant.
Organizational Structure
The District has a five-member Board of Directors that serve four-year, alternating terms on the
Board. Each Director is elected by voters within their respective division boundaries to represent the
public’s interest with regard to rates for service, taxes, policies, ordinances, and other matters related
to the management and operation of the District. The Board generally meets in open public session
on the first Wednesday of each month at 3:30 p.m. at the District headquarters located at 2554
Sweetwater Springs Boulevard, Spring Valley, California. Due to COVID-19, as of March 16, 2020,
Board Meetings have been streamed online.
Citizens and
Customers Board of Directors
General Manager (4)
Safety and
Security
Administration
Purchasing
and Facilities
Controller and
Budgetary
Services
Treasury and
Accounting
Services
Customer
Service
Meter
Services
Water System
Operations
Utility
Maintenance/
Construction
Water Resources,
Planning, Design
and
Environmental
Administrative
Services
(23)
Human
Resources
Information
Technology
and
Geographic
Information
System
Finance
(31)
Strategic
Planning
Public Services
and
Field Services
Engineering
(28)
Water
Operations
(54)
Collection,
Treatment, and
Reclamation
Operations
District Secretary
General Counsel
Public Information
Conservation
5
Overview
Budget Process
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, the
Sewer 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 and new growth, developers’ input, SANDAG projections, and economic
outlook.
To assure reliable and 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 0.30%.
•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.
The Finance Department prepares the budget for the potable, recycled, and sewer systems. This is
done using estimated changes in costs from the District’s wholesale water providers as well as
estimated changes in sewer charges provided by the County and City of San Diego. Other significant
factors in the budget development include estimated water volumes, water cost projections, debt
Year-end
Balances
Operating
Budget Input 6-Year
Rate Model
Strategic Plan
Operating
Budget Water
&
Sewer
Rates CIP
Budget 6-Year CIP
Budget Input
MWD/CWA & City Sewer Rates
Assumptions
Interest Rates
Inflation
Growth
Sales
Targets
Debt Coverage Reserve Levels
6
Overview
coverage for current and future debt issuances, reserve levels, 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.
Personnel Budget
The budgeting of salaries and benefits is performed in the position budgeting module of the
Enterprise Resource Planning (ERP) 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 General Manager. 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.
Administrative and Materials and Maintenance Budget
Administrative and Materials and Maintenance expenses are entered into the budget model of the
ERP system by individual department requests. These requests are compared to last year’s budgeted
and actual expenses to determine reasonableness by the Finance Department. All costs are justified
and supported by explanations. Finance compiles the operating budget and submits it to the General
Manager for review prior to presentation to the Board of Directors.
Capital Improvement Plan (CIP) Budget
The Engineering Department issues budget instructions for the CIP budget process. Each year, all
existing CIP projects are reviewed and capital project costs are adjusted and/or closed as
appropriate. This requires each project manager to review the year-to-date project expenses and
then estimate costs to the end of the fiscal year. They also project future costs to complete the project.
Adjustments to capital project expenses include scope changes and/or construction cost increases.
District Chiefs discuss the cost-benefit of projects, evaluate the reasonableness of the project budget,
current and alternate funding source(s) as well as the timing and/or priority of the project. All new
CIP project requests and significant changes to existing projects are reviewed and approved by all
District’s Chiefs and the General Manager. All CIP projects are entered into the CIP Budget
application. The Engineering Department works closely with the Finance Department to finalize the
six-year CIP Program Budget. Finance ensures that the District funding and reserve levels are
maintained in accordance with the District’s policy. Engineering then compiles the six-year CIP
Program Budget and submits it to the General Manager for review prior to presentation to the Board
of Directors.
Budget Control and Jurisdiction
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 the Board meeting in June. The review of the Strategic Plan and the
adoption of the budget on an annual basis give the District its direction for the following fiscal year.
7
Overview
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 appropriations 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 the fiscal year. All approved modifications to the budget will be documented in the form of a
staff report and noted in the Board meeting minutes.
Budget Basis
The District utilizes the accrual basis for budgeting which is the same as the basis of accounting
used in the audited financial statements, recognizing revenues and expenses in the period in which
they are earned and incurred, regardless of the timing of cash receipts and disbursements. The
District reports its activities on an enterprise fund basis, which is used to account for operations that
are financed and operated in a manner similar to a private business enterprise and conforms to the
guidelines of Generally Accepted Accounting Principles (GAAP). It is the intent of the District to
recover the costs (including replacement cost of existing assets) of providing goods or services to
the general public on a continuing basis, through financing or primarily through user charges.
Fund Structure
The District budgets services in one of the three business segments: Potable, Sewer, or Recycled.
Each business segment categorizes revenue and expenditure as a function of the Operating Budget,
Capital Improvement Plan Budget, or Developer Deposits. Please refer to the District’s Reserve
Policy, beginning on page 171, which provides the detailed flow of funds.
Recycled Sewer
Sewer
Operating
Budget
Sewer
CIP Budget
Sewer
Developer
Deposits
Recycled
Operating
Budget
Recycled
Developer
Deposits
Recycled
CIP Budget
Potable
Potable
Operating
Budget
Potable
CIP Budget
Potable
Developer
Deposits
8
Overview
Budget Calendar
December/January
The Finance Department posts a budget workbook on the District’s intranet which provides
instructions on the upcoming operating budget deadlines, budget procedures for personnel,
administrative expenses, and materials and maintenance expenses. Included in this workbook are
historical trends, assumptions, and instructions on how to enter the expense data into the District’s
budget module. For the six-year Capital Budget process, the Engineering Department provides
Chiefs with the upcoming CIP deadlines and procedures.
February
Chiefs submit requests to Human Resources for personnel reclassifications changes,
advancements, long term staffing and new personnel. Human Resources evaluates the requests
and provides recommendations to the General Manager. Human Resources notifies the Chiefs of
the status of the requests and Finance is provided with preliminary personnel changes. Departments
enter their budget requests in the budget module and provide their year-end projections to the
Senior Accountant. Explanations of variances from the current year’s budget versus the current year
projected expenditures and explanations of the projected expenditures versus the next fiscal year’s
budget request are provided to the Senior Accountant. The Senior Accountant reviews the year end
projections for reasonableness and documents the explanations of the variances for the Assistant
Chief of Finance to review. CIP project managers review and update their existing CIP projects,
identify projects to be deleted and submit new CIP projects to Engineering for consideration. The CIP
budget requests are reviewed with the General Manager.
March
The Finance Department meets with other departments to review their current year administrative,
materials and maintenance expenditures, year-end projections, and the preliminary budget requests
with Chiefs and Section Managers. Finance finalizes the explanations of the variances and
consolidates the year-end projections and the new fiscal year’s budget requests for Chiefs and the
General Manager’s review and discussion.
Human Resources finalizes new personnel requests, reclassifications, and change requests with the
General Manager and provides it to Finance for budgeting. The Engineering Department reviews the
CIP budget with the Finance Department and provides year over year explanations of the changes.
The preliminary six-year CIP Budget is incorporated into the Rate Model to determine proposed water
and sewer rates.
Once budgets have been calculated, the Finance Department inputs all 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 six years of revenue and
expenses. The debt coverage ratio is also evaluated to ensure adequate levels. Projected 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 the reserve levels in accordance with the
Reserve Policy.
9
Overview
Budget Calendar (continued)
April
Finance provides the Chiefs and General Manager preliminary budget schedules containing key
budget assumptions for their review and incorporates recommended changes.
During the regular Board meeting, the independent consultant presents the District’s
economic outlook report. This report is used by the engineering department to validate growth
projections, meter sales and construction climate. In late April, staff schedules a budget workshop
to review the Strategic Plan Initiatives, to discuss the key budget assumptions and to
provide preliminary information on the Capital Improvement Program Budget.
May
Based on the Board’s input from the budget workshop, staff will modify the budget for final
presentation and approval in June.
June
At the regularly scheduled June Board meeting, staff presents the consolidated operating and
CIP budgets, along with recommended rate changes, to the Board for approval. No
modifications are made to the proposed budget once adopted.
July
Changes in water rates, fees, and charges, effective January 1, 2022, are included as inserts for the
following customers classes: residential, multi-residential, recycled, irrigation and commercial
agricultural water, and business and publicly-owned.
Changes in sewer rates, fees, and charges, effective January 1, 2022, are included as inserts for the
following customer classes: residential, multi-residential, and commercial and industrial.
January 2022
Water and sewer rates, fees, and charges become effective January 1, 2022.
10
Overview
Budget Calendar
December/January February March-April May-June July-January 2022
12/9/20
Budget instructions
and workbooks for
the Operating and
Capital Budget are
distributed to
departments
1/5/21
Labor Budget
Worksheets are
distributed to
departments
1/13/21
Project managers
submit CIP Budgets
for New Projects and
changes to existing
Projects in CIP
Budget Application
2/2/21
Finance initial review of
CIP Budget with Chief of
Engineering including year
over year explanations
2/5/21
Chiefs to submit request
for new personnel,
personnel reclassification
changes, Position Analysis
Questionnaire,
advancements, and long-
term staffing to HR
2/9/21
Chiefs to submit Operating
and Admin Budget
requests
2/12/21
Chiefs to submit Labor
Budget Worksheets
2/17/21
Final review of CIP Budget
with Chiefs and General
Manager
2/18/21
Chiefs to submit Capital
Purchases and
justifications
2/19/21
HR to complete
preliminary review of new
personnel, personnel
reclassification changes,
requests, and
advancements
3/3/21
HR to review new
personnel,
reclassifications, and
change requests with
General Manager
4/7/21
Economic Outlook
presented to Board by
external Economist
4/8/21
Finance to review
Department Operating
Budgets and personnel
cost with Chiefs and
General Manager
4/19/21
FY 2022 Key Assumption
Practice Run-through
4/28/21
Key Budget Workshop to
discuss budget key
figures and assumptions
5/10/21
Review assumptions
and rates with Chiefs
and General
Manager
5/13/21
Preliminary Budget
provided to Assistant
Chiefs, Chiefs, and
General Manager for
review
5/17/21
FY 2022 Budget
Practice Run-through
6/2/21
Budget Presentation
at the regular Board
Meeting – approval of
the FY 2021-2022
Operating and
Capital Budget and
FY 2022-2027 Capital
Improvement
Program Budget
07/17/21-08/16/21
Rate increase
message inserted
with water and
sewer billing
1/1/22
The 2022 water and
sewer rates, fees,
and charges are
applied to customer’s
monthly billing
11
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12
Community Profile
Demographics
The City of Chula Vista is the second largest city in the San Diego metropolitan area and most of the
City east of the I-805 freeway is within the District’s service area. The following reflects the
demographics of the City of Chula Vista:
Demographics
Population – City of Chula Vista 274,492
Otay Water District population served (estimated) 226,413
Persons/Household 3.45
Ethnic/Racial makeup (City of Chula Vista)
Hispanic 60%
Non-Hispanic White 17%
Asian 16%
Black 5%
Other 2%
Median Age 33.8
Median Household Income $81,272
Percentage with 4-year degree or higher 29.4%
Source: San Diego Association of Governments, Current Estimates and
United States Census Bureau
Service Area Assessed Valuation
The District’s service area encompasses property with over $34.4 billion of assessed valuation.
Properties are assessed at 100% of their full value less exemption from taxation under the law and
homeowner’s exemptions. The District receives its portion of the 1% property tax, according to
Proposition 13 and AB8. With the very recent increases in the assessed valuation, the District will
benefit by receiving its proportionate share of this increase.
Six-Year Service Area Assessed Valuation
$ 26
$ 28
$ 29
$ 31
$ 33
$ 34
$0
$5
$10
$15
$20
$25
$30
$35
$40
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Bi
l
l
i
o
n
s
13
Community Profile
Ten Principal Taxpayers – Fiscal Year 2021
Organization Assessed Percent
Value to Total
1.Rancho Investors LP $ 171,921,172 0.49%
2.John Hancock Life Insurance Co USA 157,468,792 0.45%
3.Corrections Corporation of America 152,363,045 0.43%
4.GGP-Otay Ranch LP 140,428,548 0.40%
5.Chula Vista Apartments LLC 131,464,456 0.37%
6.Amazon.com Services LLC 125,531,874 0.36%
7.Regulo Place Apartments Investors LLC 122,850,382 0.35%
8.Homefed Otay Land II LLC 112,815,211 0.32%
9.Village of Escaya Apartments 111,611,390 0.32%
10.BCIF Piper Ranch LC LP 109,000,000 0.31%
Total Top 10 Principal Taxpayers $1,335,454,870 3.80%
Total Service Area Assessed Valuation $35,298,196,908
Ten Largest Customers – Fiscal Year 2021
Customer Customer Annual % of Water
Name Type Revenues Sales
1.City of Chula Vista Publicly Owned $ 4,333,495 4.3%
2.Eastlake III Community Association Commercial 1,195,042 1.2%
3.County of San Diego Publicly Owned 1,037,209 1.0%
4.Richard J Donovan Correctional Facility Publicly Owned 991,496 1.0%
5.Homefed Village III Temporary 911,451 0.9%
6.Chula Vista Elementary School District Publicly Owned 724,173 0.7%
7.Eastlake Country Club Commercial Recycled 675,846 0.7%
8.Baldwin & Sons, LLC Temporary 583,305 0.6%
9.Rolling Hills Community Association Commercial 476,973 0.5%
10.Elite Athlete Services, LLC Commercial 468,319 0.5%
Total 10 Largest Customers $ 11,397,308 11.4%
Total District Customers $ 101,742,970
Source: County of San Diego Auditor and Controller
14
Community Profile
Water Rate Comparison, Member Agency Water Rates (1)
The District strives to remain cost effective in its rate setting by controlling operating costs, yet
passing through the full cost of supply. In September 2021, the District conducted a survey of the
water rates of the water providers within San Diego County. The following chart shows that the
District has the fifth lowest water rate in the region.
Projected Water Bill for FY 2022
Based on 11 Units of water used and ¾” residential meter size
129.91
128.18
121.41
120.76
114.67
111.42
109.20
107.31
105.33
97.60
96.82
91.87
91.21
86.54
83.39
83.38
82.93
80.99
77.38
76.83
73.68
66.93
$0 $20 $40 $60 $80 $100 $120 $140
*Fallbrook
Padre Dam
Ramona
Rainbow
Valley Center
*Escondido
Del Mar
Rincon
Yuima
*Vista
Olivenhain
Poway
San Diego
Helix
Vallecitos
*Carlsbad
Oceanside
Otay Water District
San Dieguito
*Santa Fe
Sweetwater
Lakeside
*At the time of the survey in September 2021, the member agency's FY 2022 rate was unavailable. An estimated
increase was applied equal to the other districts’ average FY 2022 known rate increases.
(1)Only 22 of the 24 member agencies are surveyed. Camp Pendleton is not included in this survey due to being a
Marine Corps Base. The City of National City is not included because their water is supplied by Sweetwater.
15
Community Profile
Sewer Rate Comparison
The District conducted a survey of the rates of the sewer providers within San Diego County. Sewer
rates are billed at either a fixed or variable rate. The following chart shows the various sewer
providers and the type of rate that is charged to the consumers. The District has the fifth lowest sewer
rates in the County of San Diego.
142.30
89.02
83.61
83.02
81.26
80.85
79.91
75.83
74.66
68.46
66.08
65.17
64.20
60.94
60.70
58.67
57.83
56.86
55.25
55.10
54.60
48.75
46.61
44.86
43.08
38.99
31.50
30.96
$- $20 $40 $60 $80 $100 $120 $140 $160
Del Mar
Fallbrook
Olivenhain
*Rancho Santa Fe
Oceanside
Encinitas
Padre Dam
Imperial Beach
El Cajon
Ramona
Rainbow
Poway
San Diego, City
La Mesa
*Escondido
Valley Center - MG
Vista
Solana Beach
Buena
Chula Vista
Lemon Grove
Coronado, City
National City
Otay Water District
San Diego, County
Vallecitos
Leucadia
*Carlsbad
Projected Sewer Bill for FY 2022
Based on 10.4 Units of water used and ¾” residential meter size
*At the time of the survey in September 2021, the member agency's FY 2022 rate was unavailable. An estimated
increase was applied equal to the other districts’ average FY 2022 known rate increases.
16
Community Profile
San Diego Rainfall
San Diego received below average rainfall of 4.93 inches in Fiscal Year 2021. The 10-year average of
9.0 inches for San Diego rainfall reflects the long-term drought conditions for our area. San Diego's
rainfall average over 20 years is 9.01 inches; the 30-year average is 9.65 inches; and the 40-year
average is 9.92 inches.
San Diego rainfall, while a contributing factor, is not the controlling factor for our potable water supply
shortage. The San Diego region imports 80.0% of its potable supply, so conditions elsewhere
significantly affect the actual amount of water available to the District. In the event the amount of
water supplied to the District is reduced, water sales revenues would decrease. Related water
purchase expenses would also be reduced, mitigating 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.
Current Economic Conditions
San Diego County Water Supply
A safe, reliable water supply is crucial for the vitality of the San Diego region’s economy and quality
of life of its residents. San Diego County imports approximately 80% of its water from the Colorado
River and Northern California. Since these sources face legal and environmental constraints, the
region has been making investments in the region’s water delivery and storage system and exploring
other avenues to ensure an adequate water supply. This includes water recycling, water-use
efficiency programs, water storage, groundwater desalination, and seawater desalination.
Desalinated Water Supply
In December 2015, the Claude “Bud” Lewis Carlsbad Desalination Plant began producing
approximately 50 million gallons of water per day to the CWA, enough to serve approximately 400,000
8.03 6.51
5.06
9.03 10.82 12.97
3.40
12.62
16.65
4.93
0
5
10
15
20
25
30
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
In
c
h
e
s
San Diego Rainfall
Fiscal Years 2012 - 2021
Annual Rainfall
10 year average
Source: Weather Underground
17
Community Profile
people, meeting 7% – 10% of the region’s demand. Since the production of desalinated water from
the Carlsbad plant, the District’s customers have received a portion of this highly reliable, drought-
proof water supply. The amount of desalinated water that the District’s customers receive fluctuates
daily based on a variety of factors including the CWA’s potable water demands.
Economic Outlook
At the start of each budget cycle, the District enters into a contract with an economist to complete
an economic and demographic analysis of the national and local economy. The study also provides
information on the changes in population, residential and commercial development within the
District service area. The following highlights the report:
Employment will gradually recover, matching the pre-COVID total job level by year end.
The unemployment rate will fall to 4-5% by year end.
30-year mortgage rates will remain in the 2.5-3.0% range.
Oil prices per barrel will remain in the $50-60 range.
The nationwide demand for new homes and condominiums will continued unabated.
The resale home market will continue its strong demand throughout 2021 with the inventory
of housing for sale gradually expanding in the second half of the year.
The non-residential construction market will continue to expand thanks to major increases
in infrastructure and military spending.
The Federal government will open its purse strings even further than it did in 2020 and that
will increase consumer goods demand.
The Future
Capital Improvement Program
The District provides water and sewer service to a population of over 226,000 customers, including
residential, business, government, industrial, and agricultural water users across urban, suburban,
and rural areas. The District’s service area population is projected to grow by 21% to 272,350
residents by 2045. To ensure a reliable water supply and sewer system for the future including
sustaining the current infrastructure, the District has developed several future planning documents,
which provide a guide to defining the District’s proposed projects. These planning documents
include: The District’s 2015 Water Facilities Master Plan Update, Wastewater Management Plan, 2020
Urban Water Management Plan, 2015 Integrated Water Resources Plan, and 2019-2022 Strategic
Plan.
The major projects planned for delivery over the next six fiscal years include:
Various Waterline Replacements (24 Total)
Reservoir Improvements (15 Total)
18
Community Profile
Cottonwood Sewer Pump Station
Pump Station Upgrades & Modifications (P2083,
P2174, P2196, P2619, P2639, P2666, S2060, and S2069)
Automated Meter Reading (P2604 and R2143) and
Advanced Metering Infrastructure (P2682) Meter and
Vault Replacements
Sewer Basin Improvements (S2049, S2050, S2054 and
S2066)
Residential Construction
The following table summarizes the projected new units for sale and new units for rent from Fiscal
Year 2022 through Fiscal Year 2027. It is anticipated that most of the development in the District will
be in East Chula Vista (Otay Ranch). There is a large development in apartments and townhomes to
appeal to the young families.
Projected Units for Sale and Rental
Otay Water District Service Area FY 2022 through FY 2027
Project 2022 2023 2024 2025 2026 2027 Total
Total Single-Family Detached 160 260 360 290 250 250 1,570
Total Single-Family Attached 200 400 450 450 450 450 2,400
Total For Sale 360 660 810 740 700 700 3,970
Apartments 250 800 800 700 700 700 3,950
Total 610 1,460 1,610 1,440 1,400 1,400 7,920
% Sale 59% 45% 50% 51% 50% 50% 50%
% Rental 41% 55% 50% 49% 50% 50% 50%
Source: The Xpera Group, April 2021
Future Development
Using the economist’s report, the District’s engineering staff projects that over the next six years the
District will sell another 1,694 meters which translates to 2,905 equivalent dwelling units (EDUs).
These projections have been incorporated in the Five-Year Forecast on page 51.
Projected Meter Sales in Equivalent Dwelling Unit (EDUs)
30
3
51
8
61
8
51
6
47
6
47
6
0
200
400
600
800
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
19
Community Profile
Eastlake Lake in Chula Vista, CA
Commercial Construction
Commercial construction in the District is projected to be significant during the next six years with
6,405,000 square feet of commercial development in the planning stages and under construction,
including a 3.2 million square foot Amazon facility. There are also approximately 550 total hotel rooms
in two planned hotel projects.
Under Construction and Planned Commercial Development
Expected Delivery FY 2022 through FY 2027
Expected Delivery
Year 2022 2023 2024 2025 2026 2027 TOTAL
Industrial (Sq. Ft.) 500,000 400,000 400,000 400,000 400,000 400,000 2,500,000
Amazon (Sq. Ft.) 3,200,000 - - - - - 3,200,000
Office (Sq. Ft.) - 150,000 150,000 15,000 15,000 15,000 345,000
Retail (Sq. Ft.) - - 20,000 90,000 15,000 15,000 140,000
Total (Sq. Ft.) 3,700,000 550,000 620,000 555,000 490,000 490,000 6,405,000
Hotels (Rooms) - - 125 125 150 150 550
Source: The Xpera Group, April 2021
Miscellaneous Development
The City of Chula Vista has two major upcoming projects that are
located in the District’s service area: University Village and Sunroad
East Otay Mesa Business Park (Sunroad Project). The Sunroad
Project is currently planned for a combination of 3,100 multi-family
units and 843,000 square feet of commercial space. University
Village is a proposed campus of St. Katherine University which is
currently based in San Marcos. The land is also planned for a total
of 1,597 residential units and 29.3 acres of industrial space.
Proposed Miscellaneous Development Activity
Chula Vista/Otay Mesa
Property Location Type Acres Est Date of
Completion
Sunroad East
Otay Mesa
Business Park
SR125 & Otay
Mesa Road
Mixed use, including 3,100 housing
units, 78,000 square feet of retail
space and 765,000 square feet of
industrial/high tech space.
253 2025
Salt Creek
Golf Course
Hunte Parkway,
east of SR125
164 acres to be sold, 80 acres to
remain undeveloped
245 2025
University
Village
Innovation
Center
First project: St. Katherine’s University
in planning with 1,000 students
1,281 2023
Brown Field Otay Mesa
Road
Airport with commercial development 880 2038
Source: The Xpera Group March 2020
20
Strategic Plan
Strategic Planning Process
The District’s strategic planning process is designed to provide clarity, direction, and focus for its water service
and to ensure the agency is working toward a common goal. The primary purpose of the Strategic Plan is to
ensure alignment of the District’s mission, vision, values, and plan execution. Lastly, the Strategic Plan helps
the District manage its day-to-day operations and services, and reduce business risk.
The District’s Strategic Plan is developed using the Balanced Scorecard framework. Using this framework, the
District’s Strategic Plan is centered on four perspectives: customer, financial, internal business process, and
learning and growth. The key to this planning framework is that these perspectives are not developed in
isolation of each other, but as a unified set of strategies and objectives. This unified approach is clearly
understood throughout the District and by its governing Board.
Each of the four perspectives is explained below:
Customer: Focuses on performance related to customer service levels, satisfaction, brand, and confidence.
Financial: Focuses on the financial performance of the agency.
Internal Business Process: Focuses on business processes designed to deliver and improve customer
objectives and services.
Learning and Growth: Focuses on the agency’s culture and development of staff to ensure there
is a productive and skilled workforce in place.
In addition, the District uses the American Water Works Association’s (AWWA) utility benchmarking
performance indicators to monitor, track, and improve day-to-day essential tasks and services, which are
collected on a quarterly schedule. Execution of strategic objectives and industry-based performance
indicators are presented bi-annually to the public and Board.
The District’s current strategic plan is a continuation of the 2015-2018 plan, and it is the 6th multi-year plan
dating back to 2002. Led by the General Manager and management team, strategic sessions were held to
review risks, opportunities, and develop short and long-term goals. The team carefully examined and
prioritized operational and service goals ranging from enhancing customer engagement to pension liability.
In a special workshop held in December 2017, the District’s Board, along with an outside consultant,
reviewed and provided feedback on the 2019-2022 Strategic Plan and set in motion via the General
Manager, the direction to prepare, finalize, and complete the District’s new four-year plan. The complete
2019-2022 Strategic Plan is located on our website. The following pages reflect the District’s perspectives,
goals, key performance indicators, measurement methods, and targets for each department:
21
Key Performance Indicators: Administrative Services
Performance
Indicator Target
Enterprise
System
Availability
No less than 99.5%
availability per quarter
annually
FY 2020 FY 2021 FY 2022
Target 99.5% 99.5% 99.5%
Actual 99.5% 99.5% 99.5% (1)
Performance
Indicator Target
Employee
Voluntary
Turnover Rate
Less than 5%
turnover annually
FY 2020 FY 2021 FY 2022
Target 5.0% 5.0% 5.0%
Actual 2.2% 2.2% 0.0% (1)
Performance
Indicator Target
Training Hours
per Employee
12 hours or more per
employee annually
FY 2020 FY 2021 FY 2022
Target 12.0 12.0 12.0
Actual 59.9 16.5 12.0 (1)
(1)FY 2022 projected performance indicator
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal Measurement
Method
Provide hands-on leadership, support,
and empowerment of staff, in order to
maintain an accountable high-
performing workforce.
Number of voluntary
resignations (not
including retirements)
/Average number of
employees
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal Measurement
Method
Provide hands-on leadership, support,
and empowerment of staff, in order to
maintain an accountable high-
performing workforce.
Total qualified training
hours for all
employees/ Average
number of full time
employees (FTE)
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
99.5% = 3.60 hours of
downtime per
month/1.83 days of
downtime in a year
22
Key Performance Indicators: Administrative Services (continued)
Performance
Indicator Target
Safety
Training
Program
24 hours or more per
field employee
annually
FY 2020 FY 2021 FY 2022
Target 24.0 24.0 24.0
Actual 79.0 28.4 24.0 (1)
Performance
Indicator Target
Injury Incident
Rate(2)
No more than 6.8
incidents per 200,000
hours worked
annually
FY 2020 FY 2021 FY 2022
Target 6.8 4.1 4.1
Actual 2.9 2.1 4.1 (1)
(1) FY 2022 projected performance indicator
(2) KPI based on calendar year and results would be available at 4th quarter of the following fiscal year
Strategic Plan
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal Measurement
Method
Provide hands-on leadership, support,
and empowerment of staff, in order to
maintain an accountable high-
performing workforce.
Number of safety
training hours/
Number of field
employees (includes
mandated training)
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
(Number of
recordable
injuries/illnesses x
200,000 average hours
worked)/total hours
employees worked
23
Key Performance Indicators: Finance
Performance
Indicator Target
Answer Rate No less than 97% per
quarter annually
FY 2020 FY 2021 FY 2022
Target 97.0% 97.0% 97.0%
Actual 98.4% 98.6% 97.0% (1)
Performance
Indicator Target
Billing
Accuracy
No less than 99.8%
per quarter annually
FY 2020 FY 2021 FY 2022
Target 99.8% 99.8% 99.8%
Actual 99.99% 99.99% 99.8% (1)
Performance
Indicator Target
Percentage of
Customers
Paying Bills
Electronically
No less than 75% per
quarter annually
FY 2020 FY 2021 FY 2022
Target 75.0% 75.0% 75.0%
Actual 80.5% 82.7% 75.0% (1)
(1) FY 2022 projected performance indicator
Strategic Plan
Measurement
Method
Number of all calls
answered/Number
of all calls received
Goal Measurement
Method
Cu
s
t
o
m
e
r
Fi
n
a
n
c
i
a
l
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Number of correct
bills/Number of total
bills
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Number of
customers paying
bills electronically/
Total number of
customers
Goal
Execute and deliver services that meet or
exceed customer expectations, and
increase customer engagement in order
to improve District services.
24
Key Performance Indicators: Finance (continued)
Performance
Indicator Target
Overtime
Percentage
Less than 100% of
the budgeted
overtime per quarter
annually
FY 2020 FY 2021 FY 2022
Target 100.0% 100.0% 100.0%
Actual 72.0% 106.0% 100.0% (1)
Performance
Indicator Target
Sewer Rate
Ranking
Bottom 50th
percentile for the 28
sewer service
providers
in San Diego annually
FY 2020 FY 2021 FY 2022
Target 14 14 14
Actual 5 5 5 (1)
Performance
Indicator Target
Water Rate
Ranking
Bottom 50th
percentile for the 22
member agencies in
San Diego annually
FY 2020 FY 2021 FY 2022
Target 11 11 11
Actual 5 5 5 (1)
(1) FY 2022 projected performance indicator
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Actual overtime
costs (including
comp time)
Strategic Plan
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Otay percentage
ranking among
regional agencies
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Otay percentage
ranking or the
average bill for
sewer among
regional agencies
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
25
Key Performance Indicators: Finance (continued)
Performance
Indicator Target
Reserve Level No less than 85%
annually
FY 2020 FY 2021 FY 2022
Target 85.0% 85.0% 85.0%
Actual 100.0% 85.0% 85.0% (1)
Performance
Indicator Target
Distribution
System Loss
Less than 5% per
quarter annually
FY 2020 FY 2021 FY 2022
Target 5.0% 5.0% 5.0%
Actual 3.8% 3.9% 5.0% (1)
Performance
Indicator Target
Accounts per
Full-Time
Employee
(FTE)
406 accounts per
FTE annually
FY 2020 FY 2021 FY 2022
Target 409.0 407.0 406.0
Actual 410.0 408.0 406.0 (1)
(1) FY 2022 projected performance indicator
Fi
n
a
n
c
i
a
l
Goal
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
100 [Volume
purchased–(volume
sold + volume
used)/Volume
purchased]
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Potable + Recycled +
Sewer Accounts/
Number of full-time
employees
Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Number of reserve
funds that meet or
exceed fund target
levels/Total number
of reserve funds
26
Key Performance Indicators: Finance (continued)
Performance
Indicator Target
O&M Cost per
Account
No more than $575
per account annually
FY 2020 FY 2021 FY 2022
Target $552 $575 $575
Actual $545 $545 $545 (2)
Performance
Indicator Target
Water Debt
Coverage
Ratio
150% excluding
growth revenue
annually
FY 2020 FY 2021 FY 2022
Target 150% 150% 150%
Actual 188% 272% 150% (2)
Performance
Indicator Target
Sewer Debt
Coverage
Ratio
150% excluding
growth revenue
annually
FY 2020 FY 2021(1)FY 2022
Target 150% 150% 150%
Actual 1241% (3) 371% (3) 391% (2)
(1) FY 2021 is the first year for this key performance indicator
(2) FY 2022 projected performance indicator
(3) The actual in excess of the target is due to sewer having one debt issuance, which was issued in FY 2020.
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Total O&M costs/
Number of Accounts
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Qualified net
operating
revenues/Debt
service requirements
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Qualified net
operating
revenue/Debt
Service
requirements
27
Key Performance Indicators: Water Operations
Performance
Indicator Target (1)
Technical
Quality
Complaint
No more than 7.1
complaints per 1,000
customer accounts
annually/7.1
FY 2020 FY 2021 FY 2022
Target 7.10 7.10 7.10
Actual 3.51 4.50 4.00 (2)
Performance
Indicator Target
Planned
Potable Water
Maintenance
Ratio in $
66% of labor dollars
spent on preventative
maintenance per
quarter annually
FY 2020 FY 2021 FY 2022
Target 66.0% 66.0% 66.0%
Actual 76.9% 66.0% 66.0% (2)
Performance
Indicator Target
Planned
Recycled
Maintenance
Ration in $
70% of labor dollars
spent on preventative
maintenance per
quarter annually
FY 2020 FY 2021 FY 2022
Target 70.0% 70.0% 70.0%
Actual 70.0% 55.0% (3) 70.0% (2)
(1) Target utilizes AWWA benchmark
(2) FY 2022 projected performance indicator
Strategic Plan
Cu
s
t
o
m
e
r
Goal Measurement
Method
Execute and deliver services that meet or
exceed customer expectations, and
increase customer engagement in order
to improve District services.
1,000 (Number of
technical quality
complaints)]/
Number of active
customer accounts
per reporting period
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total planned
maintenance
cost/Total
maintenance cost
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total planned
maintenance
cost/Total
maintenance cost
28
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
Planned
Wastewater
Maintenance
Ratio in $
77% of labor dollars
spent on preventative
maintenance per
quarter annually
FY 2020 FY 2021 FY 2022
Target 77.0% 77.0% 77.0%
Actual 91.6% 93.3% 77.0% (1)
Performance
Indicator Target
Leak Detection
Program
At least 20% of
system surveyed for
leaks annually
FY 2020 FY 2021 FY 2022
Target 20.0% 20.0% 20.0%
Actual 20.0% 20.0% 20.0% (1)
Performance
Indicator Target
Direct Cost of
Treatment per
MGD
No more than $1,050
per MG spent on
wastewater treatment
annually
FY 2020 FY 2021 FY 2022
Target $1,050 $1,050 $1,050
Actual $996.29 $1,374.69 $1,050 (1)
(1) FY 2022 projected performance indicator
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total planned
maintenance
cost/Total
maintenance cost
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Percentage
distribution system
surveyed for leaks
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running and
sustaining District operations, with the
lowest possible impact to customers.
Total O&M costs
directly attributable to
sewer treatment/
Total volume
(in MGD)
29
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
Percent of
Preventative
Maintenance
Completed -
Reclamation
Plant
No less than 90% per
quarter annually
FY 2020 FY 2021 FY 2022
Target 90.0% 90.0% 90.0%
Actual 100.0% 100.0% 90.0% (1)
Performance
Indicator Target
Percent of
Preventative
Maintenance
Completed -
Fleet
Maintenance
No less than 90% per
quarter annually
FY 2020 FY 2021 FY 2022
Target 90.0% 90.0% 90.0%
Actual 95.9% 98.6% 90.0% (1)
Performance
Indicator Target
Percent of
Preventative
Maintenance
Completed -
Pump/Electric
No less than 90% per
quarter annually
FY 2020 FY 2021 FY 2022
Target 90.0% 90.0% 90.0%
Actual 100.0% 100.0% 90.0% (1)
(1) FY 2022 projected performance indicator
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of PM's
completed/Number
of PM's scheduled to
be completed
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of PM's
completed/Number
of PM's scheduled to
be completed
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of PM's
completed/Number
of PM's scheduled to
be completed
30
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
System Valve
Exercising
Program
3,080 valves exercised
annually
FY 2020 FY 2021 FY 2022
Target 3,080 3,080 3,080
Actual 2,969 4,723 3,080 (1)
Performance
Indicator Target (2)
Potable Water
Distribution
System Integrity
No more than 16
leaks or breaks per
100 miles of
distribution piping
annually/16.1
FY 2020 FY 2021 FY 2022
Target 16.0 16.0 16.0
Actual 7.6 15.2 16.0 (1)
Performance
Indicator Target
Recycled Water
System Integrity
No more than 6.6
leaks or breaks per
100 miles of recycled
distribution system
annually
FY 2020 FY 2021 FY 2022
Target 6.6 6.6 6.6
Actual 0.96 4.8 6.6 (1)
(1) FY 2022 projected performance indicator
(2) Target utilizes AWWA benchmark
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
[100 (Annual total
number of leaks &
breaks)]/
Total miles of
distribution pipes
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Actual number of
valves exercised
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
[100 (Collection
system failure)]/
Total miles of
collection system
piping
31
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target (1)
Potable Water
Compliance
Rate
No less than 100%
per quarter
annually/100%
FY 2020 FY 2021 FY 2022
Target 100.0% 100.0% 100.0%
Actual 100.0% 100.0% 100.0% (2)
Performance
Indicator Target (1)
Sewer Overflow
Rate
0 Overflows per
quarter annually/0
FY 2020 FY 2021 FY 2022
Target 0 0 0
Actual 1.14 1.14 0 (2)
Performance
Indicator Target
Emergency
Facility Power
Testing
Test 100% of all
facilities scheduled
per quarter to have all
emergency facilities
tested annually
FY 2020 FY 2021 FY 2022
Target 100% 100% 100%
Actual 72%100% 100% (2)
(1) Target utilizes AWWA benchmark
(2) FY 2022 projected performance indicator
Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
[100 (Total number of
sewer
overflows)]/Total
miles of pipe in the
sewage collection
system
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of facilities
and generators
tested/Total facilities
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
All primary health
regulations are met
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal
32
Key Performance Indicators: Water Operations (continued)
Performance
Indicator Target
Main Flushing
and Hydrant
Maintenance
215 or more mains
flushed and fire
hydrants maintained
annually
FY 2020 FY 2021 FY 2022
Target 215 215 215
Actual 413 580 215 (1)
Performance
Indicator Target
Critical Valve
Exercising
631 critical valves
exercised annually
FY 2020 FY 2021 FY 2022
Target 631 631 631
Actual 631 631 631 (1)
Performance
Indicator Target
Tank Inspection
and Cleaning
No less than 8
potable water storage
tanks and/or
reservoirs cleaned
annually
FY 2020 FY 2021 FY 2022
Target 8 8 8
Actual 11 8 8 (1)
(1) FY 2022 projected performance indicator
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of tanks
cleaned and
inspected annually
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of mains
flushed and fire
hydrants maintained
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Cumulative number
of mains flushed plus
hydrants maintained
33
Key Performance Indicators: Engineering
Performance
Indicator Target
CIP Project
Expenditures
vs. Budget
95%-100% of
budget, but not to
exceed 100%
annually
FY 2020 FY 2021 FY 2022
Target 95.0% 95.0% 95.0%
Actual 87.3% 111.0%
95.0% (1)
Performance
Indicator Target
Construction
Change Order
Incidence
No more than
5% annually
FY 2020 FY 2021 FY 2022
Target 5.0% 5.0% 5.0%
Actual 5.6% 4.4%
5.0% (1)
Performance
Indicator Target
Mark-out
Accuracy
No less than 100%
per quarter annually
FY 2020 FY 2021 FY 2022
Target 100.0% 100.0% 100.0%
Actual 100.0% 100.0%
100.0% (1)
(1) FY 2022 projected performance indicator
Strategic Plan
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Actual quarterly
expenditures/
Annual budget
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of mark-outs
performed without an at-
fault hit/Total number of
mark-outs performed
Fi
n
a
n
c
i
a
l
Goal Measurement
Method
Plan and execute sound financial
activities that are essential to running
and sustaining District operations, with
the lowest possible impact to customers.
Total cost of change
orders (not including
allowances)/Total original
construction contract
amount (not including
allowances)'
34
Key Performance Indicators: Engineering (continued)
Performance
Indicator Target
Project
Closeout Time
No more than a
45 day average per
quarter annually
FY 2020 FY 2021 FY 2022
Target 45.0 45.0 45.0
Actual 37.3 32.0 45.0 (1)
Performance
Indicator Target
Annual
Recycled
Water Site
Inspections
100% of recycled
water sites
inspected annually
FY 2020 FY 2021 FY 2022
Target 100.0% 100.0% 100.0%
Actual 100.0% 100.0% 100.0% (1)
Performance
Indicator Target
Recycled
Water
Shutdown
Testing
90% of recycled site
shutdown tests
performed annually
FY 2020 FY 2021 FY 2022
Target 90.0% 90.0% 90.0%
Actual 96.4% 100.0% 90.0% (1)
(1)FY 2022 projected performance indicator
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Number of days between
Notice of Substantial
Completion and Notice of
Completion for all
construction projects
within the quarter/Number
of construction projects
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by continually
improving essential processes, invest in
strategic technology, and achieve new
efficiencies.
Percentage of recycled
sites inspected per year of
those required by the
Department of
Environmental Health
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Improve business services by
continually improving essential
processes, invest in strategic technology,
and achieve new efficiencies.
Percentage of recycled
water use sites per year
compared to those
scheduled
35
Key Performance Indicators: Engineering (continued)
Performance
Indicator Target
Easement
Desktop
Evaluation and
Field
Inspection
100% of easements
evaluated and
inspected annually
FY 2020 FY 2021 FY 2022
Target 100.0% 100.0% 100.0%
Actual 188.0% 111.0% 100.0% (1)
(1)FY 2022 projected performance indicator
Improve business services by
continually improving essential
processes, invest in strategic technology,
and achieve new efficiencies.
Number of Actual
Easements Evaluated and
Inspected/Total Number
of EasementsIn
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
e
s
Goal Measurement
Method
Strategic Plan
36
Financial Summaries
Budget Summary
The FY 2022 Operating Budget is summarized and presented in the Operating Budget Summary- General
Fund on pages 42-43. This schedule presents the District’s overall revenues and expenditures by type.
Also included in this section is the Operating Budget Summary by System on page 44 which presents the
General Fund budget in the business segments of Potable, Recycled, and Sewer. Additional schedules
provided in this section are the General Fund Revenues, Expenditures and Transfers; Fund Balance
Summary by Fund; Revenues and Expenditures by Type - All Funds; and Revenues and Expenditures by
Fund ; and are presented on pages 45-49.
General Fund Revenues
Potable Water Sales
Potable water sales revenue collected from the sale of water including system charges, energy charges,
and penalties account for 80.2% of the District’s operating revenues. It is estimated that 27,001.8 acre-feet
of potable water will be sold during FY 2022, which is an increase of 3,524 acre-feet from FY 2021.
Budgeted revenues from water sales are projected to be $89.9 million, an increase of 14.2% compared
to FY 2021. Schedules relating to potable water sales are included in the Potable Revenues and
Expenditures section of this budget.
Recycled Water Sales
The District’s recycled water sales continue to be adversely impacted by measures implemented as a
result of the permanent conservation efforts. Recycled water sales revenue is generated from the sale of
3,601.9 acre-feet of recycled water, which is below historic volumes which were as high as 4,748 acre-
feet sold in 2014. The FY 2022 sales revenue budget is $9.7 million which is an increase of $1.3 million
from FY 2021 and includes the incentive credit provided by MWD. As of FY 2021, the District was no longer
eligible for the rebate from CWA.
Sewer Revenues
Sewer charges, which represents 99% of sewer revenue, are the monthly fees collected from residential,
multi-residential, and commercial customers. The remaining 1% of revenue is derived from penalties. The
monthly fees are determined by volume of flow and the strength of solids discharged into the sewer
system. The FY 2022 sewer revenues are projected to be $3.1 million, an increase of $198,000 from FY
2021.
Meter Fees
Meter fees are charges collected for new water service connections. Fees vary depending upon meter
size and the type of service. The FY 2022 revenue from meter fees is projected to be $74,000 which is a
decrease of $49,000 from FY 2021. 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 the Engineering Department’s support for expansion
functions. The FY 2022 capacity fee revenue is projected to be $1.98 million, an increase of $107,000 from
FY 2021.
37
Financial Summaries
Tax Revenues
The District receives 1% property tax revenues 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 are
remitted to the District annually. The District budgeted tax revenues of $4.97 million which is an increase
of $814,000 compared to FY 2021.
Spending limits for the District are governed by the 1979 passage of California Proposition 4, Limitations
of Government Appropriations (Article XIII B of the California Constitution, commonly known as the Gann
Limit). Proposition 4 places an appropriations limit on most spending from tax proceeds. The following
table shows that the District is below the Gann Limit.
Otay Water District Appropriations Limit (in thousands)
Fiscal Year 2016 2017 2018 2019 2020 2021
Gann Limit $ 4,673 $ 4,969 $ 5,196 $ 5,430 $ 5,710 $ 5,948
Appropriations subject to the limit $ 3,323 $ 3,551 $ 3,795 $ 3,942 $ 4,161 $ 4,439
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. The District projected $2.2 million in revenues for FY 2022 which is relatively flat compared to
FY 2021.
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. Interest revenue
is projected to be $236,000 in FY 2022 which is an increase of $57,000 from FY 2021.
General Fund Expenditures
Potable Water Purchases
Water purchases are the expenses of purchasing 28,274.2 acre-feet for the District's potable water supply.
A provision has been made to allow 1,272.4 acre-feet of water for District usage, leakage, and evaporation.
Total Potable Water Purchases are projected to be $40.4 million in FY 2022 which is an increase of $6.8
million compared to FY 2021.
Recycled Water Purchases
Recycled water purchases are the expenses of purchasing 2,653.6 acre-feet for the District's recycled
water supply which is an increase of 726 acre-feet compared to FY 2021. In addition to the purchases
there is a contractual Take-or-Pay payment budgeted for 2,781.0 acre-feet which is 638.4 acre-feet less
than FY 2021. Total Recycled Purchases are projected to be $4.9 million in FY 2022 which is an increase
of $807,000 compared to FY 2021.
Infrastructure Access Charge
This charge was established in FY 1999 by CWA and is imposed on member agencies as a condition of
38
Financial Summaries
maintaining connections to the CWA facilities. It is apportioned based on water meters within each
member agency. Infrastructure access charges are projected at $3.1 million in FY 2022 which is an
increase of $241,000 compared to FY 2021.
Customer Service Charge
This charge was established in FY 2004 by CWA as a fixed charge. The customer service charge is set to
recover costs that are necessary to support the functioning of the CWA. The customer service charge is
allocated among the member agencies based on each agency’s three-year rolling average of member
agency supply purchases from the CWA. Budgeted customer service charges are projected to be $1.8
million, an increase of $114,000 compared to FY 2021.
Supply Reliability Charge
This charge was established in FY 2016 by CWA as a fixed charge and became effective January 2016.
The supply reliability charge is set to recover a portion of the fixed costs associated with the CWA’s highly
reliable water supplies, such as desalinated water (Carlsbad Desalination Plant) and Imperial Irrigation
District (IID) water transfer costs. Allocation of this charge is based upon member agencies share of the
rolling five-year average M&I deliveries (agricultural deliveries are not included). The reliability charge is
projected at $2.9 million in FY 2022 which is an increase of $156,000 compared to FY 2021.
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. The emergency storage charge is projected to be $4.6 million in FY 2022 which is flat
compared to FY 2021.
Capacity Reservation Charge
This charge was established in FY 2002 by MWD, as a fixed charge on a member agency's requested
maximum daily capacity. The capacity reservation charge is a charge per cubic-foot-second and is
applied to the amount of capacity (daily flow) a member agency expects to use during the peak period
from May through September. Capacity reservation charges are projected to be $765,000 in FY 2022
which is an increase of $137,000 compared to FY 2021.
Readiness-to-Serve Charge
This charge was established in FY 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 MWD on the tax bills of District customers. These charges are projected to be $653,000 in FY
2022, which is a decrease of $67,000 compared to FY 2021.
Labor and Benefits
Labor and benefits are the wages and fringe benefits for FY 2022 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. Labor and benefits are projected to
be $22.0 million, which is an increase of $188,500 compared to FY 2021.
39
Financial Summaries
Administrative Expenses
Administrative expenses are costs incurred by various departments that are directly related to District
operations. Administrative expenses are projected to be $7.5 million in FY 2022, which is an increase of
$560,800 compared to FY 2021. Additional details are supplied in the Departmental Operating Budget
section.
Materials and Maintenance Expenses
Materials and maintenance expenses are costs associated with the operation and maintenance of
District facilities. Materials and maintenance expenses are projected to be $4.0 million in FY 2022, which
is an increase of $267,900 compared to FY 2021. Additional details are supplied in the Departmental
Operating Budget section.
Power Costs
Power costs are expenses 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. The
District’s power costs are projected to be $3.5 million in FY 2022, which is an increase of $587,000
compared to FY 2021.
General Fund Reserves
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. For FY 2022, these reserves will be funded
with $2.0 million from the Recycled Water Fund and $25,000 from the Sewer Fund.
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. For FY 2022, these
reserves will be funded with $445,000 from the Potable Water Fund and $290,000 from the Sewer Fund.
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. For FY 2022, these reserves
will be funded with $11.9 million from the Potable Water Fund and $68,000 from the Sewer Fund.
Rate Stabilization Reserves
This sewer reserve is established for the purpose of minimizing rate increases in response to one-time
events and therefore stabilizing the rates and charges imposed by the District to meet covenanted debt
service coverage levels. For FY 2022, this reserve will be funded with $21,000 from the Sewer Fund.
New Water Supply Reserves
These reserves are established to fund new water supply needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund expansion. For FY 2022, there is no
reserve funding budgeted.
40
Financial Summaries
Transfer to California Public Employees’ Retirement System (CalPERS)
For FY 2022, the General Fund is budgeted to make an additional annual contribution of $1.1 million to
CalPERS for pension liabilities.
Fund Transfers
Fund 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.
Other Financial Schedules/Presentations
Operating Budget Summary by System
The Budget Summary by System schedule reflects the separation of operating revenues and expenses
among potable water, recycled water, and sewer. This is provided as information but is necessary to
ensure sufficient revenue is collected from sewer customers versus water customers.
General Fund – Revenues, Expenditures, and Transfers
This schedule shows the General Fund’s total revenues, expenditures, and transfers showing the prior
year’s actuals, the prior year’s budget and audited actuals, the current year’s budget, along with the
variance from the prior year’s budget.
Fund Balance Summary by Fund
This schedule shows each fund’s balance at June 30, 2021, and the projected balance for June 30, 2022.
These balances are 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 reflects 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.
41
FY 2020 FY 2021 FY 2021 FY 2022
11-Actual Budget Actual Budget $%
Revenues
#Potable Water Sales 81,481,668$ 78,749,000$ 91,054,950$ 89,934,000$ 11,185,000$ 14.2%
Recycled Water Sales 8,953,481 8,411,000 10,688,020 9,681,000 1,270,000 15.1%
#Sewer Revenues 2,892,883 2,870,000 2,865,634 3,068,000 198,000 6.9%
#Meter Fees 166,249 123,000 151,346 74,000 (49,000) (39.8%)
#Capacity Fee Revenues 2,273,778 1,869,000 2,287,553 1,976,000 107,000 5.7%
Tax Revenues 4,919,583 4,155,000 5,191,022 4,969,000 814,000 19.6%
#Non-operating Revenues 2,827,481 2,177,000 5,960,015 2,219,500 42,500 2.0%
#Interest 428,868 179,000 231,823 236,000 57,000 31.8%
Total Revenues 103,943,991 98,533,000 118,430,362 112,157,500 13,624,500 13.8%
Expenditures
#Potable Water Purchases 36,333,195 33,631,000 40,797,557 40,446,000 6,815,000 20.3%
Recycled Water Purchases 3,919,507 4,058,000 2,902,170 4,865,000 807,000 19.9%
#CWA - Infrastructure Access Charge 2,380,782 2,839,000 2,851,758 3,080,000 241,000 8.5%
#CWA - Customer Service Charge 1,659,013 1,703,000 1,734,673 1,817,000 114,000 6.7%
CWA - Reliability Charge 2,377,331 2,711,000 2,714,150 2,867,000 156,000 5.8%
#CWA - Emergency Storage Charge 4,580,016 4,608,000 4,588,473 4,595,000 (13,000) (0.3%)
#MWD - Capacity Reservation Charge 606,271 628,000 636,498 765,000 137,000 21.8%
#MWD - Net RTS and Standby Charge 791,452 720,000 716,037 653,000 (67,000) (9.3%)
Subtotal - Water Costs 52,647,567 50,898,000 56,941,316 59,088,000 8,190,000 16.1%
#Labor and Benefits 20,966,791 21,860,000 20,884,945 22,048,500 188,500 0.9%
#Administrative Expenses 6,465,335 6,987,000 6,265,249 7,547,800 560,800 8.0%
#Materials and Maintenance 3,398,293 3,720,000 3,802,207 3,987,900 267,900 7.2%
#Power 3,102,364 2,898,000 3,310,860 3,485,000 587,000 20.3%
Subtotal - Operations Costs 33,932,783 35,465,000 34,263,261 37,069,200 1,604,200 4.5%
DSGeneral Fund Reserve 954,400 259,000 259,000 90,500 (168,500) (65.1%)
#Expansion Reserve 4,927,300 150,000 150,000 2,066,900 1,916,900 1277.9%
Bett ResBetterment Reserve 3,048,000 985,000 985,000 735,000 (250,000) (25.4%)
Repl ResReplacement Reserve 7,513,000 9,676,000 9,676,000 11,986,900 2,310,900 23.9%
TOPEBTransfer to OPEB/PERS 1,038,100 1,100,000 1,100,000 1,100,000 - -
Transfer to Rate Stabilization Fund - - - 21,000 21,000 100.0%
Subtotal - Reserve Funding 17,480,800 12,170,000 12,170,000 16,000,300 3,830,300 31.5%
Total Expenditures 104,061,150 98,533,000 103,374,577 112,157,500 13,624,500 13.8%
Excess Revenues (Expenditures)(117,159)$ -$ 15,055,785$ -$ -$ -
Operating Budget Summary - General Fund
Budget to Budget
Variance
42
Potable Water Sales 89,934,000$ 80.2%
Recycled Water Sales 9,681,000 8.6%
Sewer Revenues 3,068,000 2.7%
Meter Fees 74,000 0.1%
Capacity Fee Revenues 1,976,000 1.8%
Tax Revenues 4,969,000 4.4%
Non-operating Revenues 2,219,500 2.0%
Interest 236,000 0.2%
112,157,500 100.0%
Potable Water Purchases 54,223,000 48.3%
Recycled Water Purchases 4,865,000 4.3%
Power 3,485,000 3.1%
Labor and Benefits 22,048,500 19.7%
Administrative Expenses 7,547,800 6.7%
Materials & Maintenance 3,987,900 3.6%
Reserve Funding 16,000,300 14.3%
112,157,500$ 100.0%
Operating Budget Summary - General Fund
FY 2022 Operating Revenues
FY 2022 Operating Expenditures
43
Potable Recycled Sewer Total
Revenues
Water Sales 89,934,000$ -$ -$ 89,934,000$
Recycled Water Sales - 9,681,000 - 9,681,000
Sewer Revenues - - 3,068,000 3,068,000
Meter Fees 68,000 6,000 - 74,000
Capacity Fee Revenues 1,976,000 - - 1,976,000
Tax Revenues 4,912,000 - 57,000 4,969,000
Non-operating Revenues 2,186,500 - 33,000 2,219,500
Interest 212,000 19,000 5,000 236,000
Total Revenues 99,288,500 9,706,000 3,163,000 112,157,500
Expenditures
Water Purchases 40,446,000 4,865,000 - 45,311,000
CWA - Infrastructure Access Charge 3,080,000 - - 3,080,000
CWA - Customer Service Charge 1,817,000 - - 1,817,000
CWA - Reliability Charge 2,867,000 - - 2,867,000
CWA - Emergency Storage Charge 4,595,000 - - 4,595,000
MWD - Capacity Reservation Charge 765,000 - - 765,000
MWD - Net RTS and Standby Charge 653,000 - - 653,000
Subtotal - Water Costs 54,223,000 4,865,000 - 59,088,000
Labor and Benefits 19,714,100 1,306,700 1,027,700 22,048,500
Administrative Expenses 6,760,000 538,600 249,200 7,547,800
Materials and Maintenance 2,442,500 349,800 1,195,600 3,987,900
Power 2,764,000 561,000 160,000 3,485,000
Subtotal - Operations Costs 31,680,600 2,756,100 2,632,500 37,069,200
DSGeneral Fund Reserve - - 90,500 90,500
#Expansion Reserve - 2,041,900 25,000 2,066,900
Bett ResBetterment Reserve 445,000 - 290,000 735,000
Repl ResReplacement Reserve 11,918,900 - 68,000 11,986,900
TOPEBTransfer to OPEB/PERS 1,021,000 43,000 36,000 1,100,000
Transfer to Rate Stabilization Fund - - 21,000 21,000
Subtotal - Reserve Funding 13,384,900 2,084,900 530,500 16,000,300
Total Expenditures 99,288,500 9,706,000 3,163,000 112,157,500
Excess Revenue (Expenditures)-$ -$ -$ -$
FY 2022 Operating Budget Summary by System
44
FY 2020 FY 2022
Actual Budget Actual Budget $%
Revenues
Water Sales 90,435,149$ 87,160,000$ 101,742,970$ 99,615,000$ 12,455,000$ 14.3%
Sewer Revenues 2,892,883 2,870,000 2,865,634 3,068,000 198,000 6.9%
Meter Fees 166,249 123,000 151,346 74,000 (49,000) (39.8%)
Capacity Fee Revenues 2,273,778 1,869,000 2,287,553 1,976,000 107,000 5.7%
Tax Revenues 4,919,583 4,155,000 5,191,021 4,969,000 814,000 19.6%
Non-Operating Revenues 2,827,481 2,177,000 5,960,015 2,219,500 42,500 2.0%
Interest 428,868 179,000 231,823 236,000 57,000 31.8%
Total Revenues and Sources 103,943,991 98,533,000 118,430,362 112,157,500 13,624,500 13.8%
Expenditures and Transfers
Water Purchases 52,647,567 50,898,000 56,941,316 59,088,000 8,190,000 16.1%
Power 3,102,364 2,898,000 3,310,860 3,485,000 587,000 20.3%
Labor and Benefits 20,966,791 21,860,000 20,884,945 22,048,500 188,500 0.9%
Administrative Expenses 6,465,335 6,987,000 6,265,249 7,547,800 560,800 8.0%
Materials and Maintenance 3,398,293 3,720,000 3,802,207 3,987,900 267,900 7.2%
Transfers 17,480,800 12,170,000 12,170,000 16,000,300 3,830,300 31.5%
- - Total Expenditures and Transfers 104,061,150 98,533,000 103,374,577 112,157,500 13,624,500 13.8%
Excess Revenues (Expenditures)(117,159)$ -$ 15,055,785$ -$ -$ -
General Fund Revenues, Expenditures and Transfers, in millions ($)
FY 2021
Budget to Budget
Variance
General Fund - Revenues, Expenditures and Transfers
$80
$85
$90
$95
$100
$105
$110
FY 2020-Actual FY 2021-Budget FY 2021-Actual FY 2022-Budget
$1
0
4
$9
9
$1
1
8
$1
1
2
$1
0
4
$9
9
$1
0
3
$1
1
2
Revenue Expenditures
45
Actual Projected
Balance Interfund Balance
June 30, 2021 Revenues Expenditures Transfers (1)June 30, 2022
General Fund
Potable 39,790,429$ 99,288,500$ 99,288,500$ -$ 39,790,429$
Recycled 5,909,233 9,706,000 9,706,000 - 5,909,233
Sewer 328,428 3,163,000 3,163,000 - 328,428
Total General Fund 46,028,090 112,157,500 112,157,500 - 46,028,090 (1)
Expansion Fund
Water (2)1,264,885 3,093,700 5,747,500 1,274,000 (114,915)
Sewer 28,958 300 23,300 25,000 30,958
Total Expansion Fund 1,293,843 3,094,000 5,770,800 1,299,000 (83,957) (3)
Betterment Fund
Potable 1,774,909 1,013,200 3,129,800 445,000 103,309
Recycled 919,287 10,000 314,500 (170,000) 444,787
Sewer (187,136) 56,600 121,800 290,000 37,664
Total Betterment Fund 2,507,060 1,079,800 3,566,100 565,000 585,760 (3)
Replacement Fund
Potable 24,705,372 2,179,800 10,040,900 25,972,000 42,816,272
Recycled 5,259,190 472,000 501,500 (775,000) 4,454,690
Sewer 4,180,985 31,300 337,000 68,000 3,943,285
Total Replacement Fund 34,145,547 2,683,100 10,879,400 25,265,000 51,214,247 (3)
New Supply Fund
Water (2)3,098,435 30,600 50,200 - 3,078,835
Total New Supply Fund 3,098,435 30,600 50,200 - 3,078,835
Rate Stabilization Fund 175,000 - - - 175,000
OPEB Fund 463,890 3,600 1,100,000 1,140,000 503,490
Debt Service Fund 4,677,341 565,000 770,000 - 4,472,341
Total (3)92,389,206$ 119,613,600$ 134,294,000$ 28,269,000$ 105,973,806$
(1) The total for interfund transfers does not net to $0 because some transfers are already reflected in the Operating
Revenues and Expenditures for General Fund as follows:
General Fund Reserve (90,500)$
Expansion Reserve (2,066,900)
Betterment Reserve (735,000)
Replacement Reserve (11,986,900)
OPEB Reserve (1,100,000)
Rate Stabilization Reserve (21,000)
Total (16,000,300)$ #
Fund Balance Summary by Fund
Fiscal Year 2022 Budget
(2)Potable and Recycled funds are combined.
(3) The fund balance is anticipated to change more than 10% due to the District's ongoing current year CIP expenditures funded by current years
revenues and transfers made in accordance with the Reserve Policy found on pages 171-210.
46
FY 2020 FY 2022
Actual Budget Actual Budget
Revenues and Fund Sources
Water Sales 90,435,149$ 87,160,000$ 101,742,970$ 99,615,000$
Sewer Revenues 2,892,883 2,870,000 2,865,634 3,068,000
Meter Fees 166,249 123,000 151,346 74,000
Capacity Fee Revenues 2,273,778 1,869,000 2,287,553 1,976,000
Capacity Fees for Maintenance 6,671,658 4,083,291 10,245,373 5,041,000
Tax Revenues 4,919,583 4,155,000 5,191,021 4,969,000
Availability Fees 518,602 715,600 492,275 711,000
Non-Operating Revenues 2,827,481 2,177,000 5,960,015 2,219,500
GO Bond Debt Tax Revenues 715,136 611,000 747,215 532,000
Bond Proceeds and BABs Subsidy 3,780,760 782,000 783,415 783,300
Interest 1,352,106 522,400 611,408 624,800
Annexation Fees 97,665 - 84,810 -
Total Revenue and Fund Sources 116,651,050 105,068,291 131,163,035 119,613,600
-$ -$ -$ -$
Expenditures and Fund Uses
Water Purchases 52,647,567 50,898,000 56,941,316 59,088,000
Power 3,102,364 2,898,000 3,310,860 3,485,000
Labor Expenses 20,966,791 21,861,000 20,884,945 22,048,500
Administrative Expenses 6,465,335 6,986,000 6,265,249 7,547,800
Materials and Maintenance 3,398,293 3,720,000 3,802,207 3,987,900
CIP Expenses 14,890,313 10,334,200 9,484,860 10,718,400
Debt Service 9,387,823 10,300,900 9,447,321 10,318,100
Operating Projects 2,250,845 - 2,274,905 -
OPEB Retiree Expenses & PERS Funding 949,330 1,100,000 1,034,085 1,100,000
Total Expenditures and Fund Uses 114,058,661 108,098,100 113,445,748 118,293,700
Surplus/(Deficit)2,592,389$ (3,029,809)$ 17,717,287$ 1,319,900$
-$ -$ -$ -$
Revenues and Expenditures by Type - All Funds
FY 2021
47
FY 2020 FY 2022
Actual Budget Actual Budget
Revenues
General Fund
Potable 92,564,071$ 87,113,000$ 105,521,579$ 99,288,500$
Recycled 8,998,159 8,429,000 10,728,713 9,706,000
Sewer 3,162,521 2,991,000 2,963,487 3,163,000
Total General Fund (1)104,724,751 98,533,000 119,213,779 112,157,500
Expansion Fund
Potable 2,385,564 2,149,300 3,740,240 2,713,700
Recycled 104,112 279,000 406,355 380,000
Sewer 223 100 358 300
Total Expansion Fund 2,489,899 2,428,400 4,146,953 3,094,000
Betterment Fund
Potable 559,748 1,022,600 477,720 1,013,200
Recycled 20,835 7,000 28,186 10,000
Sewer 1,552,636 59,200 31,383 56,600
Total Betterment Fund 2,133,218 1,088,800 537,289 1,079,800
Replacement Fund
Potable 4,110,138 1,731,654 5,344,631 2,179,800
Recycled (1,090) 267,000 734,928 472,000
Sewer 1,630,057 23,800 117,392 31,300
Total Replacement Fund 5,739,105 2,022,454 6,196,951 2,683,100
New Supply Fund
Potable 536,865 265,637 228,981 26,600
Recycled 17,709 42,000 31,773 4,000
Total New Supply Fund 554,574 307,637 260,754 30,600
OPEB and PERS Fund 21,970 2,600 11,068 3,600
Debt Service Fund 987,532 685,400 796,241 565,000
Total Revenues 116,651,050$ 105,068,291$ 131,163,035 119,613,600$
Revenues and Expenditures by Fund
FY 2021
Note: This schedule excludes interfund transfers.
48
FY 2020 FY 2022
Actual Budget Actual Budget
Revenues and Expenditures by Fund
FY 2021
Expenditures
General Fund
Potable 77,843,892$ 77,053,000$ 83,147,654$ 85,903,600$
Recycled 6,336,546 6,784,000 5,434,309 7,621,100
Sewer 2,399,912 2,526,000 2,622,614 2,632,500
Total General Fund 86,580,350 86,363,000 91,204,577 96,157,200
Expansion Fund
Potable 5,506,617 4,389,500 4,062,061 4,604,500
Recycled 809,070 1,143,000 994,110 1,143,000
Sewer 16,447 32,400 34,158 23,300
Total Expansion Fund 6,332,134 5,564,900 5,090,329 5,770,800
Betterment Fund
Potable 2,163,030 2,994,500 1,316,912 3,129,800
Recycled 104,067 742,000 251,625 314,500
Sewer 1,120,364 106,300 104,964 121,800
Total Betterment Fund 3,387,461 3,842,800 1,673,501 3,566,100
Replacement Fund
Potable 8,694,095 9,028,000 8,399,411 10,040,900
Recycled 170,384 761,000 577,656 501,500
Sewer 740,545 429,000 256,267 337,000
Total Replacement Fund 9,605,024 10,218,000 9,233,334 10,879,400
New Supply Fund
Potable 485,924 194,000 (236,792) 45,200
Recycled 3,450 5,000 3,444 5,000
Total New Supply Fund 489,374 199,000 (233,348) 50,200
OPEB and PERS Fund 949,330 1,100,000 1,034,085 1,100,000
Debt Reserve Fund 6,714,988 810,400 5,443,270 770,000
Total Expenditures 114,058,661 108,098,100 113,445,748 118,293,700
Surplus/(Deficit)2,592,389$ (3,029,809)$ 17,717,287 1,319,900$
Note: This schedule excludes interfund transfers.
49
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50
Five-Year Forecast
The District updates its Rate Model to build the budget for the upcoming fiscal year and to forecast
the five subsequent years, FY 2023 through FY 2027. This financial forecast is designed to provide a
general understanding of how revenues and expenditures are expected to influence the District.
This forecast also highlights the funding of capital projects and reserve levels. Estimates for
growth, water costs, and others such as rainfall, and average water consumption per customer, are
used throughout the Rate 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 page 6. Water cost estimates are obtained from District’s water suppliers, CWA
and MWD. Power cost inflators are obtained from San Diego Gas and Electric, the District’s 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 the District’s health providers, and the actuarial
reports related to the District’s pension and OPEB plans. Other general inflators are derived from
consumer price index statistical data for the region.
The District must look at replacing existing aging and future 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, replacement, and expansion needs from now until ultimate build-out.
Capital projects and their funding are reviewed annually by the Engineering Department. As new
capital assets are brought into service, they are managed by a GIS-centric Asset Management
System, CityWorks, which is crucial to tracking and maintaining the history of 726 miles of potable
pipelines, 101 miles of recycled pipelines, 88 miles of sewer mains, 40 potable and 4 recycled
reservoirs, 21 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 the systems are further developed, the District will be able to better anticipate
operating costs associated with the capital projects. The impact of the CIP on the Operating
Budget is addressed in the CIP section of this budget.
Projected Cost of Water
The projected cost of water is based
on CWA’s Rate Modeling Program.
This CWA program 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).
51
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Revenues
Water/Sewer Rates 106,284,800$ 111,047,500$ 115,348,600$ 120,537,900$ 125,957,800$
Meter Fees 71,500 74,300 75,700 78,000 80,700
Capacity Fee Revenues 1,985,900 2,005,800 2,025,900 2,046,200 2,066,700
Non-operating Revenues 2,246,700 2,286,800 2,424,400 2,677,900 2,807,000
Tax Revenues 5,178,900 5,404,400 5,407,400 5,410,400 5,412,400
Interest Income 322,600 255,100 265,900 278,900 289,200
Total Revenues 116,090,400 121,073,900 125,547,900 131,029,300 136,613,800
52,040,600$ 52,059,100$ 51,651,400$ 52,423,000$
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Expenditures
Water Cost 62,862,100 66,512,000 70,372,000 74,454,100 75,986,300
Power 3,668,500 3,861,700 4,064,900 4,278,900 4,504,200
Labor and Benefits 22,558,400 21,836,600 22,365,900 22,887,400 23,420,400
Administrative Expenses 7,489,900 7,697,000 8,009,500 8,334,600 8,673,100
Materials & Maintenance 4,179,600 4,381,300 4,593,700 4,817,300 5,053,100
Net Reserve Funding 15,310,900 16,764,300 16,120,900 16,236,000 18,955,700
Transfer to Rate Stabilization Fund 21,000 21,000 21,000 21,000 21,000
Total Expenditures and Transfers 116,090,400 121,073,900 125,547,900 131,029,300 136,613,800
Excess Revenues (Expenditures)-$ -$ -$ -$ -$
-$ -$ -$-$-$
General Fund Forecast
This forecast incorporates both cost increases for expenditures and rate increases for revenues, as well as growth
projections.
Expenditures and Transfers
Revenues
$100
$120
$140
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
$1
1
6
$1
2
1
$1
2
6
$1
3
1
$1
3
7
$1
1
6
$1
2
1
$1
2
6
$1
3
1
$1
3
7
Revenues and Expenditures Forecast, in millions ($)
Revenues Expenditures
52
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Fund Balance
General Fund 25,176,300$ 26,046,200$ 27,316,300$ 28,647,100$ 29,345,100$
Betterment Fund 1,179,800 1,953,500 1,588,000 739,200 743,900
Replacement Fund 31,900,200 44,597,100 33,859,500 34,357,500 38,026,600
Expansion Fund 387,200 791,900 798,600 301,900 122,900
New Supply Fund 2,599,400 2,594,100 2,588,700 2,574,600 2,560,000
Debt Reserve 4,171,300 21,921,600 4,171,800 10,722,000 4,172,200
Total Fund Balance 65,414,200$ 97,904,400$ 70,322,900$ 77,342,300$ 74,970,700$
(510,246) (515,246) (520,359) (525,523) (530,736)
Fund Balances Forecast
Fund Balances by Fund
$0
$20
$40
$60
$80
$100
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Fund Balances Forecast, in millions ($)
General Fund Betterment Fund Replacement Fund Expansion Fund Debt Reserve New Supply Fund
53
Debt Management
The District has been successful in financing capital improvements through a combination of long-
term and short-term financing plans. Financial tools used include General Obligation Bonds,
Certificates of Participation (COPs), Build America Bonds (BABs), Water Revenue Bonds (WRBs),
Wastewater Revenue Bonds, developer fees, and pay-as-you-go funding.
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. 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 effect that reduces water rates.
In September 2018, Standard & Poor’s (S&P) affirmed the District’s water operation’s AA rating and
stable outlook. The rating was based on good historical coverage metrics, strong liquidity position,
moderate leverage, and strong financial management policies and practices. The District’s sewer
debt is not rated.
The District’s water side achieved a 353% actual debt coverage ratio, with growth revenues, for fiscal
year 2021, which exceeded the debt covenant minimum ratio of 125%. To meet the bond
indebtedness obligation and maintain stable rates, the rate model is used to forecast revenues and
operating requirements. On the water side, the District anticipates issuing new debt in FY 2024 and
FY 2026 for approximately $15.8 million and $5.0 million, respectively. The chart below shows the
District’s projected debt coverage ratio, for the water side of the District, from FY 2022 through FY
2027. The debt coverage ratios are growing as rates are set to ensure adequate funding of the
reserves.
The District’s Board of Directors believes that a strong debt coverage ratio will benefit the ratepayers
as it reduces the cost of water infrastructure; and therefore have been willing to support this with
necessary rate increases. 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.
Projected Water Debt Coverage Ratio
2.01 2.29 2.53
2.18 2.12 2.35
-
0.50
1.00
1.50
2.00
2.50
3.00
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Co
v
e
r
a
g
e
R
a
t
i
o
Projected Ratio Minimum Covenant = 1.25
54
Debt Management
For sewer, the District originally issued $3.1 million of debt for sewer capital projects in 2019. This is
sewer’s only current outstanding debt obligation. The District is forecasting additional debt issuances
totaling $3.4 million between 2024 and 2026 will be needed to meet the projected capital project
expenditures.
The financial needs of sewer for the FY 2022 six-year projection include funding anticipated Metro
JPA increases, increases in County shared facility costs for County rehabilitation projects, and
meeting the debt coverage requirements of future debt issuances. Sewer’s debt service coverage,
with growth revenues, for FY 2021 was 457%. The chart below shows the District’s projected debt
coverage ratio, for the sewer side of the District, from FY 2022 through FY 2027. The debt coverage
ratios are growing as rates are set to ensure adequate funding of the reserves.
Sewer Debt Coverage Ratio
3.91 4.19 4.53
3.14 2.85
2.44
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Co
v
e
r
a
g
e
R
a
t
i
o
Projected Ratio Minimum Covenant = 1.25
55
Outstanding
Year Maturity Original Balance
#Incurred Description Date Amount 6/30/2022
1 2009 General Obligation (GO) Bonds August 31, 2022 7,780,000$ 720,000$
2 2010 Water Revenue Bonds Series A September 1, 2024 13,840,000 3,705,000
3 2010 Water Revenue Bonds Series B (1)September 1, 2040 36,355,000 36,355,000
4 2013 Water Revenue Refunding Bonds (2)September 1, 2023 7,735,000 1,640,000
5 2016 Water Revenue Refunding Bonds (3)September 1, 2036 33,385,000 26,655,000
6 2018 Water Revenue Refunding Bonds (4)September 1, 2043 32,435,000 28,510,000
Subtotal Water Bonds 131,530,000 97,585,000
7 2019 Wastewater Revenue Bonds September 1, 2049 3,120,000 3,055,000
Subtotal Wastewater Bonds 3,120,000 3,055,000
Total Outstanding Debt 134,650,000$ 100,640,000$
Total Assessed Valuation - FY 2021
Percentage of Original Debt to Assessed Valuation 0.39%0.08%
Debt Limit per District Debt Policy (% of Assessed Valuation)15.00%15.00%
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a
refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable
Rate COPs.
Schedule of Outstanding Debt
All Debts GO Bonds
Total Outstanding Debt, in millions ($)
Note: The accounting for debt proceeds and payments is described in the District's Reserve Policy found
on pages 171-210.
34,449,256,039$ 16,359,621,544$
$0
$10
$20
$30
$40
$50
$60
$70
2009 GOBs 2010A WRBs 2010B
WRBs(1)
2013
WRRBs(2)
2016
WRRBs(3)
2018
WRRBs(4)
2019
WWRBs
Principal Interest
56
2009 GOBs 2010A WRBs 2010B WRBs(1)2013 WRRBs(2)2016 WRRBs(3)2018 WRRBs(4)2019 WWRBs Total
705,000 1,120,000 - 775,000 1,215,000 1,370,000 65,000 5,250,000
720,000 1,175,000 - 805,000 1,285,000 1,455,000 70,000 5,510,000
- 1,235,000 - 835,000 1,350,000 1,650,000 75,000 5,145,000
- 1,295,000 - -1,420,000 1,730,000 75,000 4,520,000
- -1,365,000 - 1,495,000 1,820,000 80,000 4,760,000
- -1,450,000 - 1,570,000 1,915,000 80,000 5,015,000
- -1,545,000 - 1,645,000 1,030,000 85,000 4,305,000
- -1,640,000 - 1,715,000 1,080,000 85,000 4,520,000
- -1,745,000 - 1,785,000 1,135,000 90,000 4,755,000
- -1,855,000 - 1,855,000 1,195,000 90,000 4,995,000
- -1,975,000 - 1,955,000 1,245,000 95,000 5,270,000
- -2,105,000 - 2,005,000 1,295,000 95,000 5,500,000
- -2,245,000 - 2,055,000 1,350,000 100,000 5,750,000
- -2,390,000 - 2,115,000 1,400,000 100,000 6,005,000
- -2,550,000 - 2,170,000 1,460,000 105,000 6,285,000
- -2,715,000 - 2,235,000 1,270,000 105,000 6,325,000
- -2,895,000 - -1,235,000 110,000 4,240,000
- -3,085,000 - -1,185,000 115,000 4,385,000
- -3,290,000 - -1,210,000 115,000 4,615,000
- -3,505,000 - -1,290,000 120,000 4,915,000
- -- - - 985,000 125,000 1,110,000
- -- - - 775,000 125,000 900,000
- -- - - 800,000 130,000 930,000
- -- - - -135,000 135,000
- -- - - -140,000 140,000
- -- - - -145,000 145,000
- -- - - -150,000 150,000
- -- - - -155,000 155,000
- -- - - -160,000 160,000
1,425,000$ 4,825,000$ 36,355,000$ 2,415,000$ 27,870,000$ 29,880,000$ 3,120,000$ 105,890,000$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2049
2050
Total
Combined Debt Service through Maturity, in millions ($)
2044
2040
2041
2042
2043
2045
2046
2047
2048
2034
2035
2036
2037
2038
2039
2028
2029
2030
2031
2032
2033
2022
2023
2024
2025
2026
2027
Projected Principal Payments by Debt Issuance
FY
$0
$2
$4
$6
$8
$10
$12
20
2
2
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
20
3
3
20
3
4
20
3
5
20
3
6
20
3
7
20
3
8
20
3
9
20
4
0
20
4
1
20
4
2
20
4
3
20
4
4
20
4
5
20
4
6
20
4
7
20
4
8
20
4
9
20
5
0
Interest Principal
57
2009 GOBs 2010A WRBs 2010B WRBs(1)2013 WRRBs(2)2016 WRRBs(3)2018 WRRBs (4)2019 WWRBs Total
28,500 216,488 2,371,868 65,600 973,831 1,259,788 89,441 5,005,516
14,400 159,113 2,371,868 33,400 909,581 1,187,038 88,041 4,763,441
- 98,863 2,371,868 - 842,081 1,104,538 86,541 4,503,891
- 33,994 2,371,868 - 771,081 1,018,038 84,291 4,279,272
- -2,328,345 - 696,331 927,038 81,891 4,033,605
- -2,238,589 - 617,831 831,288 79,491 3,767,199
- -2,143,093 - 552,031 779,788 76,941 3,551,854
- -2,041,540 - 483,431 725,788 74,391 3,325,150
- -1,933,609 - 412,031 669,038 71,691 3,086,369
- -1,818,823 - 337,831 609,288 68,991 2,834,933
- -1,694,728 - 288,956 559,488 66,616 2,609,789
- -1,560,558 - 238,831 507,688 64,146 2,371,223
- -1,417,508 - 184,888 453,688 61,446 2,117,529
- -1,265,086 - 126,725 397,688 58,696 1,848,195
- -1,102,634 - 67,050 339,288 55,756 1,564,728
- -929,495 - -288,488 52,738 1,270,720
- -745,010 - -245,263 49,575 1,039,847
- -548,357 - -197,863 46,269 792,489
- -338,716 - -154,000 42,819 535,534
- -115,262 - -102,400 39,219 256,881
- -- - - 63,000 35,469 98,469
- -- - - 32,000 31,719 63,719
- -- - - -27,656 27,656
- -- - - -23,438 23,438
- -- - - -19,063 19,063
- -- - - -14,531 14,531
- -- - - -9,844 9,844
- -- - - -5,000 5,000
42,900$ 508,456$ 31,708,826$ 99,000$ 7,502,513$ 12,452,475$ 1,505,711$ 53,819,882$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2045
2046
2047
2048
2030
2031
2032
Total
2035
2036
2037
2038
2042
2043
2039
2049
2033
2034
2044
2040
2041
2024
2025
2026
2027
2028
2029
2022
2023
Projected Interest Payments by Debt Issuance
FY
58
Potable Revenues and Expenditures
Potable Revenues
The District will provide water service to approximately 51,316 potable customers by the end of FY
2022. Ninety-one percent of the potable customers are residential and the remaining 9.0% are
comprised of multi-residential, business and publicly-owned, and irrigation and commercial
agricultural. The District expects nominal growth in the customer base of 1.0% for FY 2022. Unit
sales are anticipated to increase 15.0% compared to the previous year's budget, and decrease by
6.7% versus the previous year’s actual unit sales.
Other revenue sources include: system charges, energy charges, penalties, and other pass-through
charges from the San Diego County Water Authority (CWA) and the Metropolitan Water District
(MWD).
All customers are required to pay fixed monthly fees, the MWD/CWA fixed charge, and the District
system charge. The MWD/CWA fixed charges are based on meter size. The District system fee is
based on meter size and customer type. These fees generate 34.4% of the potable water sales
revenue. Water rates, energy charges, and penalties generate the remaining 65.6% of revenues
necessary to fund operations.
Energy charges are based on the quantity of water used and the elevation to which the water has
been lifted to provide service. Energy charges are set so as to recover the power costs associated
with pumping. This charge is adjusted based on an annual review of these costs to ensure that
sufficient revenue is collected to offset pumping costs.
Penalties are charged to the District customer accounts when payments are delinquent. These
penalty revenues are budgeted based on historical trends.
Potable Expenditures
In FY 2022, the District estimates to purchase 28,274.2 acre-feet of potable water, sufficient to meet
the demands of its customers. Provisions have been made for District usage and loss in the amount
of 1,272.4 acre-feet.
Today, the District purchases 100% of its potable water from CWA. In the past the District purchased
only treated water through the CWA’s treated water Pipeline No. 4. In 2010, to diversify the water
supply and to become less reliant on CWA’s Pipeline No. 4, the District entered an agreement with
CWA to purchase water treated by neighboring Helix Water District at their Levy Water Treatment
Plant. This treated water from Flow Control Facility No. 14 gives the District redundancy in water
supply. This is beneficial as it enhances reliability of water deliveries in an emergency situation such
as earthquakes or other natural disasters. The District’s agreement also brings regional water
treatment closer to our customers, which reduces dependence on water treatment facilities located
outside of San Diego County. Flow Control Facility No. 14 connects the Helix Water District to Otay
Water District through approximately 5 miles of 36-inch pipeline.
59
Potable Revenues and Expenditures
Although the District does not own a direct water supply reservoir to capture surface water, there are
cooperative agreements between CWA and the other member agencies to manage water demands
and supply the region in times of need.
The reservoirs of member agencies and CWA serve multiple functions including: surface water
capture, seasonal water storage and carryover storage to provide a reliable water source in dry years.
The CWA’s emergency and carryover storage project interconnected reservoirs, pipelines and pump
stations make water available to the San Diego region if imported water deliveries are interrupted.
The CWA purchases water for the 24 member agencies from MWD and the Imperial Irrigation
District. Any cost increases by CWA, MWD, or IID impacts the District's water purchases and directly
affects the District's fees, rates, and service charges. The Carlsbad Desalination Plant began
commercial operations in December 2015 and is the largest seawater desalination plant in the
nation. It produces approximately 56,000 acre-feet per year of drinking water for the San Diego
region. It currently meets about 10% of the county’s water demand.
60
FY 2020 FY 2021 FY 2021 FY 2022
11-Actual Budget Actual Budget $%
Revenues
4100 Water Sales 81,481,668$ 78,749,000$ 91,054,950$ 89,934,000$ 11,185,000$ 14.2%
4131 Meter Fees 159,372 118,000 134,973 68,000 (50,000) (42.4%)
4136 Capacity Fee Revenues 2,262,318 1,869,000 2,279,774 1,976,000 107,000 5.7%
Tax Revenues 4,870,811 4,106,000 5,137,569 4,912,000 806,000 19.6%
4400 Non-operating Revenues 2,617,334 2,109,000 5,921,102 2,186,500 77,500 3.7%
4510 Interest 391,808 162,000 209,794 212,000 50,000 30.9%
Total Revenues 91,783,311 87,113,000 104,738,162 99,288,500 12,175,500 14.0%
Expenditures
Potable Water Purchases 36,333,195 33,631,000 40,797,557 40,446,000 6,815,000 20.3%
5523 CWA - Infrastructure Access Charge 2,380,782 2,839,000 2,851,758 3,080,000 241,000 8.5%
5521 CWA - Customer Service Charge 1,659,013 1,703,000 1,734,673 1,817,000 114,000 6.7%
5524 CWA - Reliability Charge 2,377,331 2,711,000 2,714,150 2,867,000 156,000 5.8%
5522 CWA - Emergency Storage Charge 4,580,016 4,608,000 4,588,473 4,595,000 (13,000) (0.3%)
5531 MWD - Capacity Reservation Charge 606,271 628,000 636,498 765,000 137,000 21.8%
5532 MWD-Net RTS and Standby Charge 791,452 720,000 716,037 653,000 (67,000) (9.3%)
Subtotal - Water Costs 48,728,060 46,840,000 54,039,146 54,223,000 7,383,000 15.8%
5110 Labor and Benefits 18,852,943 19,459,000 18,693,313 19,714,100 255,100 1.3%
5200 Administrative Expenses 5,761,204 6,203,000 5,627,518 6,760,000 557,000 9.0%
5300 Materials and Maintenance 2,074,644 2,307,000 2,152,609 2,442,500 135,500 5.9%
5411 Power 2,427,041 2,244,000 2,635,068 2,764,000 520,000 23.2%
11-1311-5133Subtotal - Operations Costs 29,115,832 30,213,000 29,108,508 31,680,600 1,467,600 4.9%
DS Transfer to General Fund Reserve 556,100 - - - - -
5716 Expansion Reserve 2,599,900 150,000 150,000 - (150,000) (100.0%)
Bett ResBetterment Reserve 3,048,000 - - 445,000 445,000 100.0%
Repl ResReplacement Reserve 7,321,600 8,892,000 8,892,000 11,918,900 3,026,900 34.0%
TOPEBTransfer to OPEB/PERS 932,900 1,018,000 1,018,000 1,021,000 3,000 0.3%
Subtotal - Reserve Funding 14,458,500 10,060,000 10,060,000 13,384,900 3,324,900 33.1%
Total Expenditures 92,302,392 87,113,000 93,207,654 99,288,500 12,175,500 14.0%-
Excess Revenues (Expenditures)(519,081)$ -$ 11,530,508$ -$ -$ -
Operating Budget Summary - Potable
Budget to Budget
Variance
61
FY 2020 FY 2022
Actual Budget Actual Budget $ %
Water Sales 50,081,789$ 46,419,000$ 58,610,501$ 55,549,000$ 9,130,000$ 19.7%
System Charges 16,205,007 16,805,000 16,828,509 17,393,000 588,000 3.5%
Energy Charges 2,276,779 2,034,000 2,695,390 2,575,000 541,000 26.6%
MWD and CWA Fixed Charges 12,305,712 12,869,000 12,889,974 13,505,000 636,000 4.9%
Penalties 612,381 622,000 30,576 912,000 290,000 46.6%
Total Water Sales 81,481,668$ 78,749,000$ 91,054,950$ 89,934,000$ 11,185,000$ 14.2%
Water Sales 55,549,000$ 61.8%
System Charges 17,393,000 19.3%
Energy Charges 2,575,000 2.9%
MWD and CWA Fixed Charges 13,505,000 15.0%
Penalties 912,000 1.0%
Total Water Sales 89,934,000$ 100.0%
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is
equal to 100 cubic feet of water.
System Charges: 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.
Energy Charges: The energy pumping charge is $ .063 per 100 cubic feet of water for each 100 feet of lift above
the elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD and CWA Fixed Charges: These pass-through charges are calculated to recover the MWD's and CWA's fixed
annual costs including the construction, operation and maintenance of aqueducts, and emergency storage projects.
These fixed charges are based on the size of the meter.
Penalties: Charges and penalties are imposed on customer accounts for late payments and returned checks.
FY 2022 Classification of Water Sales
FY 2021
Classification of Water Sales - Potable
Budget to Budget
Variance
62
Consumption Blocks (1)Current Proposed (2)Accounts (3)Unit Sales Budget
Residential 46,607 6,521,600 29,972,000$
1 - 10 3.38$ 3.52$
11 - 22 6.04 6.30
23 or more 7.79 8.12
Multi-Residential 887 1,623,700 7,331,000
0 - 4 3.16 3.29
5 - 9 5.73 5.97
10 or more 7.05 7.35
Business and Publicly-Owned
All units 4.00 4.17 1,483 1,874,300 7,639,000
Irrigation and Commercial Agricultural
All units 5.84 6.09 1,477 1,742,400 10,318,000
Total 50,454 11,762,000 55,260,000$
Government Fee 0.42 0.43 - - 289,000
Total Water Sales 50,454 11,762,000 55,549,000$
Units %
Residential 6,521,600 55.4%
Multi-Residential 1,623,700 13.8%
Business and Publicly-Owned 1,874,300 15.9%
Irrigation and Commercial 1,742,400 14.9%
Agricultural
Total Water Sales 11,762,000 100.0%
(3)Does not include fire service.
Water Sales Summary by Customer Class - Potable
FY 2022
FY 2022 Unit Sales by Customer Class
(2)Proposed rates for water billed beginning in January 2022.
Water Rates
(1)This cost varies based on water usage and can be calculated using the consumption block tables. One
Multi-Residential is the water usage divided by the number of dwellings served.
unit of consumption equals 748 gallons of water or one HCF (hundred cubic feet). Consumption for
63
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget
Residential 6,266,299 6,761,701 6,187,132 6,311,655 5,670,000 6,926,913 6,521,600
Multi-Residential 1,516,436 1,602,807 1,598,041 1,658,205 1,379,500 1,798,024 1,623,700
Business and Publicly-Owned 1,815,635 1,924,280 1,874,312 1,810,410 1,625,800 1,822,088 1,874,300
Irrigation and Commercial Agricultural 1,651,961 1,938,595 1,667,267 1,610,213 1,551,800 2,057,075 1,742,400
Total Unit Sales 11,250,331 12,227,383 11,326,752 11,390,483 10,227,100 12,604,100 11,762,000
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget
Residential 45,086 45,518 45,972 46,298 46,459 46,482 46,607
Multi-Residential 802 820 821 874 884 884 887
Business and Publicly-Owned 2,227 2,271 2,302 2,349 2,342 2,365 2,345
Irrigation and Commercial Agricultural 1,387 1,436 1,460 1,473 1,471 1,473 1,477
Total Meter Count 49,502 50,045 50,555 50,994 51,156 51,204 51,316
Unit Sales History and Meter Count by Customer Class - Potable
Unit Sales in thousands and Meter Count Trends
Actual
Actual
FY 2021
FY 2021
5,000
15,000
25,000
35,000
45,000
55,000
-
5,000
10,000
15,000
20,000
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Budget
FY 2022
Budget
Unit Sales in thousands and Meter Count Trends
Potable Meters Potable Unit Sales
Units Meters
64
FY 2021 FY 2022 FY 2021 FY 2022
Meter Size Count Count Current Approved Budget Budget $%
Residential
0.75 45,301 45,384 19.27$ 20.08$ 10,336,000$ 10,696,000$ 360,000$ 3.5%
1.00 1,135 1,200 27.24 28.39 367,000 401,000 34,000 9.3%
1.50 19 19 47.12 49.11 11,000 11,000 - -
2.00 4 4 70.98 73.98 3,000 3,000 - -
Sub-total 46,459 46,607 10,717,000 11,111,000 394,000 3.7%
Multi-Residential
0.75 37 37 42.38 44.17 19,000 19,000 - -
1.00 190 190 59.84 62.37 135,000 139,000 4,000 3.0%
1.50 249 249 103.55 107.92 305,000 314,000 9,000 3.0%
2.00 263 265 155.94 162.53 487,000 506,000 19,000 3.9%
3.00 66 67 295.73 308.22 218,000 235,000 17,000 7.8%
4.00 69 69 453.03 472.17 371,000 383,000 12,000 3.2%
6.00 7 7 890.03 927.63 74,000 76,000 2,000 2.7%
8.00 3 3 1,414.36 1,474.12 50,000 52,000 2,000 4.0%
10.00 - - 2,026.07 2,111.67 - - - -
Sub-total 884 887 1,659,000 1,724,000 65,000 3.9%-
Business and Publicly-Owned
0.75 344 335 39.92 41.61 163,000 164,000 1,000 0.6%
1.00 371 371 56.37 58.75 248,000 256,000 8,000 3.2%
1.50 305 308 97.54 101.66 353,000 368,000 15,000 4.2%
2.00 394 388 146.90 153.11 687,000 698,000 11,000 1.6%
3.00 39 40 278.57 290.34 129,000 137,000 8,000 6.2%
4.00 27 27 426.73 444.76 137,000 141,000 4,000 2.9%
6.00 9 9 838.39 873.81 90,000 92,000 2,000 2.2%
8.00 - - 1,332.27 1,388.56 - - - -
10.00 5 5 1,908.45 1,989.08 113,000 117,000 4,000 3.5%
Sub-total 1,494 1,483 1,920,000 1,973,000 53,000 2.8%-
Irrigation and Commercial Agricultural
0.75 124 129 33.71 35.13 50,000 53,000 3,000 6.0%
1.00 300 302 47.61 49.62 169,000 176,000 7,000 4.1%
1.50 393 395 82.38 85.86 383,000 399,000 16,000 4.2%
2.00 463 460 124.04 129.28 682,000 698,000 16,000 2.3%
3.00 3 3 235.25 245.19 8,000 9,000 1,000 12.5%
4.00 181 183 360.40 375.63 775,000 808,000 33,000 4.3%
6.00 7 5 708.03 737.94 59,000 43,000 (16,000) -27.1%
8.00 - - 1,125.15 1,172.69 - - - -
10.00 - - 1,611.76 1,679.86 - - - -
Sub-total 1,471 1,477 2,126,000 2,186,000 60,000 2.8%
Fire Services
≤ 3"49 48 23.03 24.00 13,000 14,000 1,000 7.7%
≥ 4"799 814 31.03 32.34 294,000 309,000 15,000 5.1%
Sub-total 848 862 307,000 323,000 16,000 5.2%
Set-up Fees 15.00 15.00 76,000 76,000 - -
Total 51,156 51,316 16,805,000$ 17,393,000$ 588,000$ 3.5%
(1) Approved rates for water billed beginning in January 2022.
System Charges Budget to Budget Variance
System Charges - Potable
(1)
65
FY 2022 FY 2021 FY 2022
Meter Size Count(1)Current Approved(2)Budget Budget $%
0.75 45,879 16.36$ 17.00$ 8,747,000$ 9,167,000$ 420,000$ 4.8%
1.00 2,059 30.38 31.57 707,000 765,000 58,000 8.2%
1.50 968 68.67 71.36 772,000 812,000 40,000 5.2%
2.00 1,116 116.81 121.39 1,536,000 1,594,000 58,000 3.8%
3.00 110 248.44 258.17 303,000 328,000 25,000 8.3%
4.00 102 397.83 413.41 475,000 496,000 21,000 4.4%
6.00 18 814.38 846.28 172,000 179,000 7,000 4.1%
8.00 3 1,315.14 1,366.65 46,000 48,000 2,000 4.3%
10.00 5 1,892.97 1,967.12 111,000 116,000 5,000 4.5%
Total 50,260 12,869,000$ 13,505,000$ 636,000$ 4.9%
(1)Construction Meters, Fire Services, and Recycled Meters are exempt from MWD and CWA Fixed Charges.
(2)Approved rates for water billed beginning in January 2022.
Historical MWD and CWA Fixed Charges, in millions ($)
Budget to Budget VarianceMWD and CWA Fixed Charges
MWD and CWA Fixed Charges (Pass-Through) - Potable
$0
$2
$4
$6
$8
$10
$12
$14
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
66
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 161 112.70$ 237.49$ 350.19$ 56,000$
1.00 - 112.70 306.46 419.16 -
1.50 2 112.70 498.12 610.82 1,000
2.00 2 112.70 713.75 826.45 2,000
3.00 4 678.55 1,539.47 2,218.02 9,000
4.00 - 678.55 2,997.11 3,675.66 -
6.00 - 1,071.82 5,395.77 6,467.59 -
8.00 - 1,643.54 7,188.13 8,831.67 -
10.00 - 1,643.54 10,200.50 11,844.04 -
Total 169 68,000$
Meter Fees: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.
Historical Meter Count
FY 2022
Meter Fees - Potable
-
15,000
30,000
45,000
60,000
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
67
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget
Water Sales 46,265,872$ 54,262,051$ 47,517,849$ 50,081,789$ 58,610,501$ 55,549,000$
System Charges 12,243,766 13,078,386 15,383,214 16,205,007 16,828,509 17,393,000
Energy Charges 2,334,565 2,040,410 2,123,039 2,276,779 2,695,390 2,575,000
MWD and CWA Fixed Charges 12,398,886 11,920,268 12,149,114 12,305,712 12,889,974 13,505,000
Penalties 734,261 830,217 801,527 612,381 30,576 912,000
Total Potable Revenues 73,977,350$ 82,131,332$ 77,974,743$ 81,481,668$ 91,054,950$ 89,934,000$
Revenue History - Potable, in millions ($)
Revenue History - Potable
FY 2021
Actual
$-
$20
$40
$60
$80
$100
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
Water Sales System Charges Energy Charges MWD & CWA Fixed Charges Penalties
68
FY 2022 FY 2022
Budget Actual Budget Budget Actual Budget $ %
Potable Water Purchases (CWA):
Rate Effective January 1,399.00$ 1,361.41$ 1,492.00$ 93.00$ 6.6%
Budgeted Sales 23,478.2 28,935.0 27,001.8 32,043,000$ 39,407,100$ 38,635,000$ 6,592,000$ 20.6%
District, Unbilled Usage (1)178.7 161.7 141.8 243,000 207,400 193,000 (50,000) -20.6%
Water Loss 985.7 928.7 1,130.6 1,345,000 1,262,300 1,618,000 273,000 20.3%
- Total Variable Charges 24,642.6 30,025.4 28,274.2 33,631,000$ 40,876,800$ 40,446,000$ 6,815,000$ 20.3%
CWA and MWD Fixed Charges:
CWA - Infrastructure Access Charge 2,839,000$ 2,851,758$ 3,080,000$ 241,000$ 8.5%
CWA - Customer Service Charge 1,703,000 1,734,673 1,817,000 114,000 6.7%
CWA - Emergency Storage Charge 4,608,000 4,588,473 4,595,000 (13,000) -0.3%
CWA - Reliability Fixed Charge 2,711,000 2,714,150 2,867,000 156,000 5.8%
MWD - Capacity Reservation Charge 628,000 636,498 765,000 137,000 21.8%
MWD - Readiness-to-Serve Charge 720,000 716,037 653,000 (67,000) -9.3%
Total Fixed Charges 13,209,000$ 13,241,589$ 13,777,000$ 568,000$ 4.3%
Total Variable and Fixed Charges 46,840,000$ 54,118,389$ 54,223,000$ 7,383,000$ 15.8%
Average Cost Per Acre-Foot 1,901$ 1,802 1,918$
#DIV/0!
(1)Excludes potable supplement to recycled system.
Water Purchases and Related Costs - Potable
Budget to Budget
VariancePurchase Costs
FY 2021FY 2021
Acre-Feet
-
8,000
16,000
24,000
32,000
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
Historical Potable Water Purchases, in acre-feet
69
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget $ %
Administrative Buildings 196,288$ 188,067$ 168,286$ 166,175$ 154,000$ 170,863$ 187,000$ 33,000$ 21.4%
Potable Transmission 1,981,178 2,111,203 2,028,976 2,260,865 2,090,000 2,464,206 2,577,000 487,000 23.3%
Total Power Costs 2,177,466$ 2,299,270$ 2,197,262$ 2,427,040$ 2,244,000$ 2,635,068$ 2,764,000$ 520,000$ 23.2%
Power Costs - Potable
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
FY 2021
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
Administrative Buildings Potable Transmission
70
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $%
Administrative Expenditures
Directors' Fees 61,553$ 80,000$ 55,335$ 80,000$ -$ 0.0%
Travel and Memberships 200,335 198,000 122,117 256,100 58,100 29.3%
Conservation and Outreach 161,793 164,000 116,200 151,600 (12,400) (7.6%)
General Office Expense 268,353 250,000 232,639 259,900 9,900 4.0%
Equipment 1,371,401 1,427,000 1,428,634 1,418,100 (8,900) (0.6%)
Fees 731,474 776,000 900,186 845,200 69,200 8.9%
Services 1,721,886 1,746,000 1,592,968 2,221,800 475,800 27.3%
Training 127,312 143,000 63,342 214,700 71,700 50.1%
Utilities 14,692 16,000 15,999 17,600 1,600 10.0%
Insurance and Legal 1,707,851 1,782,000 1,770,620 2,021,900 239,900 13.5%
Miscellaneous Expense 262 - - - - 0.0%
Bad Debt Expense 169,659 485,000 242,500 240,000 (245,000) (50.5%)
Subtotal before Overhead 6,536,571 7,067,000 6,540,540 7,726,900 659,900 9.3%
Less: Overhead Allocation (775,367) (864,000) (913,022) (966,900) (102,900) 11.9%
Total Expenditures 5,761,204$ 6,203,000$ 5,627,518$ 6,760,000$ 557,000$ 9.0%
4,403,925$ 5,400,900$ 8,311,160$ 9,748,800$
Directors' Fees 80,000$ 1.0%
Travel and Memberships 256,100 3.3%
Conservation and Outreach 151,600 2.0%
General Office Expense 259,900 3.4%
Equipment 1,418,100 18.4%
Fees 845,200 10.9%
Services 2,221,800 28.8%
Training 214,700 2.8%
Utilities 17,600 0.2%
Insurance and Legal 2,021,900 26.1%
Bad Debt Expense 240,000 3.1%
Subtotal before Overhead 7,726,900 100.0%
Less: Overhead Allocation (966,900)
Total Administrative Expenses 6,760,000$
Administrative Expenditures - Potable
Budget to Budget
Variance
FY 2022 Administrative Expenditures - Potable
71
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $ %
Materials and Maintenance
Fuel and Oil 179,265$ 189,000$ 174,769$ 205,700$ 16,700$ 8.8%
Meters and Materials 209,352 136,000 138,155 123,900 (12,100) (8.9%)
Fleet Parts and Equipment 130,452 130,000 106,188 130,300 300 0.2%
Infrastructure Equipment & Supplies 326,670 371,000 437,564 382,400 11,400 3.1%
Chemicals 216,914 207,000 178,353 219,600 12,600 6.1%
Safety Equipment 43,509 69,000 65,107 80,900 11,900 17.2%
Laboratory Equipment and Supplies 47,102 43,000 43,614 59,000 16,000 37.2%
Other Materials and Supplies 238,907 282,000 207,594 281,100 (900) (0.3%)
Building and Grounds Materials 68,505 61,000 62,597 87,600 26,600 43.6%
Contracted Services 613,968 819,000 738,668 872,000 53,000 6.5%
Total Expenditures 2,074,644$ 2,307,000$ 2,152,609$ 2,442,500$ 135,500$ 5.9%
Fuel and Oil 205,700$ 8.4%
Meters and Materials 123,900 5.1%
Fleet Parts and Equipment 130,300 5.3%
Infrastructure Equipment and Supplies 382,400 15.7%
Chemicals 219,600 9.0%
Safety Equipment 80,900 3.3%
Laboratory Equipment and Supplies 59,000 2.4%
Other Materials and Supplies 281,100 11.5%
Building and Grounds Materials 87,600 3.6%
Contracted Services 872,000 35.7%
Total Expenditures 2,442,500$ 100.0%
Materials and Maintenance Expenditures - Potable
Budget to Budget
Variance
FY 2022 Materials and Maintenance Expenditures - Potable
72
Potable Water Service Area
73
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74
Recycled Revenues and Expenditures
In 1980, the District began operation of the Ralph W. Chapman Water Recycling Facility. The
RWCWRF plant is capable of recycling wastewater at the rate of 1.3 million gallons per day (MGD)
to augment water supplies for irrigation purposes only. The treatment process consists of primary,
secondary, and tertiary treatment. The facility’s conversion time to treat 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 rotary 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 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 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. Sludge is discharged to the City of San Diego Metropolitan Wastewater (Metro)
system.
75
Recycled Revenues and Expenditures
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, completing the process of
recycling wastewater into recycled water.
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 (SBWRP). The
District constructed a 30-inch six-mile pipeline, a 12-million-gallon reservoir, and a pump station to
bring this new source of recycled water into the District’s system. These projects were completed in
spring 2007 which eliminated the need for a potable supplement into the recycled system. The
benefits of this to the region are great, as less demand on the potable system will be made, reducing
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 12% of its total water demand will be met using recycled water.
Both the RWCWRF plant, owned and operated by the District, and the SBWRP plant, owned and
operated by the City of San Diego, supply the District’s recycled distribution system. The District
operates the largest recycled water distribution system in San Diego County and will supply
approximately 3,601.9 acre-feet of recycled water to 754 landscaping and construction customers by
the end of Fiscal Year 2022. The recycled water customer base consists primarily of irrigation at golf
courses, schools, parks, and open space. The geographic area of this water use includes Eastlake,
Otay Ranch, Rancho Del Rey, and other areas of eastern Chula Vista.
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
entered into a new agreement, which expires June 30, 2024, allowing the District to maximize its
ability to earn incentives and to simplify the grant requirements. Currently, the District receives $185
from MWD for every acre-foot (AF) of recycled water sold. As of FY 2021, the District was no longer
eligible for the rebate from CWA.
76
FY 2020 FY 2021 FY 2021 FY 2022
31-Actual Budget Actual Budget $%
Revenues
Recycled Water Sales 8,953,481$ 8,411,000$ 10,688,020$ 9,681,000$ 1,270,000$ 15.1%
Meter Fees 6,877 5,000 16,373 6,000 1,000 20.0%
Non-operating Revenues 6,484 - 5,367 - - -
Interest 31,317 13,000 18,953 19,000 6,000 46.2%
Total Revenues 8,998,159 8,429,000 10,728,713 9,706,000 1,277,000 15.2%
Expenditures
Recycled Water Purchases 3,919,507 4,058,000 2,902,170 4,865,000 807,000 19.9%
Labor and Benefits 1,195,201 1,367,000 1,248,432 1,306,700 (60,300) (4.4%)
Administrative Expenses 476,367 559,000 411,219 538,600 (20,400) (3.6%)
Materials and Maintenance 222,608 298,000 321,413 349,800 51,800 17.4%
Power 522,863 502,000 551,075 561,000 59,000 11.8%
11-1311-5133Subtotal - Operations Costs 6,336,546 6,784,000 2,532,139 7,621,100 837,100 12.3%
DSTransfer to General Fund Reserve 398,300 - - - - -
Expansion Reserve 2,281,400 - - 2,041,900 2,041,900 100.0%
Bett ResBetterment Reserve - 985,000 985,000 - (985,000) (100.0%)
Repl ResReplacement Reserve 81,100 615,000 615,000 - (615,000) (100.0%)
TOPEBTransfer to OPEB/PERS 65,800 45,000 45,000 43,000 (2,000) (4.4%)
Subtotal - Reserve Funding 2,826,600 1,645,000 1,645,000 2,084,900 439,900 26.7%
Total Expenditures 9,163,146 8,429,000 7,079,309 9,706,000 1,277,000 15.2%
(164,987)$ -$ 3,649,404$ -$ -$ - Excess Revenues/Expenditures
Operating Budget Summary - Recycled
Budget to Budget
Variance
77
FY 2020 FY 2022
Actual Budget Actual Budget $%
Water Sales 6,481,692$ 6,094,000$ 8,604,255$ 7,667,000$ 1,573,000$ 25.8%
System Charges 833,133 869,000 876,898 914,000 45,000 5.2%
Energy Charges 331,188 289,000 442,669 400,000 111,000 38.4%
MWD and CWA Rebates 1,283,359 1,137,000 764,198 666,000 (471,000) -41.4%
Penalties 24,129 22,000 - 34,000 12,000 54.5%
Total Recycled Water Sales 8,953,501$ 8,411,000$ 10,688,020$ 9,681,000$ 1,270,000$ 15.1%
Water Charges 7,667,000$ 79.2%
System Charges 914,000 9.4%
Energy Charges 400,000 4.1%
MWD and CWA Rebates 666,000 6.9%
Penalties 34,000 0.4%
9,681,000$ 100%
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is equal to
100 cubic feet of water.
System Charges: 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.
Energy Charges: The energy pumping charge is $ .063 per 100 cubic feet of water for each 100 feet of lift above the
elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD and CWA Rebates: The District receives a $185 incentive from MWD for every acre-foot (AF) of recycled water
sold. As of FY 2021, the District was no longer eligible for the rebate from CWA.
Penalties: Charges and penalties are imposed on customer accounts for late payments and returned checks.
Budget to Budget
Variance
FY 2022 Classification of Water Sales
Classification of Water Sales - Recycled
FY 2021
78
Current Approved(1)Accounts Unit Sales Budget
Recycled Irrigation
All units $4.80 $5.05 753 1,418,900 6,934,000$
Recycled Commercial
All units 3.40 $3.58 1 150,100 519,000
Total 754 1,569,000 7,453,000$
Government Fee 0.42 0.43 - - 214,000
Total Water Sales 754 1,569,000 7,667,000$
Units %
Recycled Irrigation 1,418,900 90%
Recycled Commercial 150,100 10%
1,569,000 100%
(1)Approved rates for water billed beginning in January 2022.
FY 2022
Water Sales Summary by Meter Size - Recycled
Water Rates
FY 2022 Unit Sales by Meter Size
(1)
79
FY 2022 FY 2021 FY 2022
Meter Size Meter Count Current Approved(1)Budget Budget $%
Irrigation
0.75 5 35.07$ 36.93$ 1,000$ 2,000$ 1,000$ 100.0%
1.00 122 49.53 52.16 65,000 74,000 9,000 13.8%
1.50 409 85.71 90.25 408,000 429,000 21,000 5.1%
2.00 204 129.06 135.90 310,000 322,000 12,000 3.9%
3.00 4 244.76 257.73 12,000 12,000 - -
4.00 7 374.97 394.84 31,000 32,000 1,000 3.2%
6.00 2 747.91 787.55 18,000 18,000 - -
8.00 - 1,170.62 1,232.66 - - - -
10.00 - 1,676.89 1,765.77 - - - -
Sub-total 753 845,000$ 889,000$ 44,000$ 5.2%
Commercial
0.75 - 41.54$ 43.74$ - - - -
1.00 - 58.65 61.76 - - - -
1.50 - 101.51 106.89 - - - -
2.00 - 152.88 160.98 - - - -
3.00 - 289.91 305.28 - - - -
4.00 - 444.11 467.65 - - - -
6.00 - 872.49 918.73 - - - -
8.00 - 1,386.49 1,459.97 - - - -
10.00 1 1,986.14 2,091.41 24,000 25,000 1,000 4.2%
Sub-total 1 24,000 25,000 1,000 4.2%
Total 754 869,000$ 914,000$ 45,000$ 5.2%
(1) Approved rates for water billed beginning in January 2022.
System Charges - Recycled
System Charges Budget to Budget Variance
80
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget
Recycled Irrigation 1,393,468 1,588,141 1,313,652 1,302,137 1,165,400 1,627,196 1,418,900
Recycled Commercial 232,300 222,361 148,980 149,820 120,800 172,240 150,100
Total Unit Sales 1,625,768 1,810,502 1,462,632 1,451,957 1,286,200 1,799,436 1,569,000
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget
Recycled Irrigation 719 723 725 734 738 752 753
Recycled Commercial 2 1 1 1 1 1 1
Total Meter Count 721 724 726 735 739 753 754
Unit Sales History and Meter Count by Customer Class - Recycled
Unit Sales in thousands and Meter Count Trends
FY 2021
Actual
Actual
FY 2021
-
100
200
300
400
500
600
700
800
100
500
900
1,300
1,700
2,100
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
MetersUnits
81
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 - 112.70$ 237.49$ 350.19$ -$
1.00 3 112.70 306.46 419.16 1,000
1.50 5 112.70 498.12 610.82 3,000
2.00 3 112.70 713.75 826.45 2,000
3.00 - 678.55 1,539.47 2,218.02 -
4.00 - 678.55 2,997.11 3,675.66 -
6.00 - 1,071.82 5,395.77 6,467.59 -
8.00 - 1,643.54 7,188.13 8,831.67 -
10.00 - 1,643.54 10,200.50 11,844.04 -
Total 11 6,000$
FY 2022
Meter Fees: 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.
Meter Fees - Recycled
82
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
Budget
Water Sales 7,431,235$ 7,883,748$ 6,347,342$ 6,481,692$ 8,604,255$ 7,667,000$
System Charges 434,775 594,049 798,349 833,113 876,898 914,000
Energy Charges 417,595 347,841 315,385 331,188 442,669 400,000
MWD and CWA Rebates (1)1,436,936 1,600,214 1,292,330 1,283,359 764,198 666,000
Penalties 22,259 38,012 28,073 24,129 - 34,000
Total Recycled Revenues 9,742,800$ 10,463,864$ 8,781,479$ 8,953,481$ 10,688,020$ 9,681,000$
(1) As of FY 2021, the District was no longer eligible for the rebate from CWA.
Revenue History - Recycled
Revenue History - Recycled, in millions ($)
Actual
$3
$5
$7
$9
$11
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
Water Sales System Charges Energy Charges MWD and CWA Rebates Penalties
83
FY 2022 FY 2022
Budget Actual Budget Budget Actual Budget $ %
Rate Per Acre Feet(1)756.00$ 755.33$ 962.00$ 206.00$ 27.2%
Recycled Water Purchases 1,927.6 3,625.3 2,653.6 1,457,000$ 2,738,315$ 2,163,000$ 706,000$ 48.5%
Potable Supplement - 58.8 - - 78,577 - - 0.0%
Meter Fee(1)16,000 21,340 21,000 5,000 31.3%
Take-or-pay contract(2)3,419.4 188.7 2,781.0 2,585,000 142,515 2,681,000 96,000 3.7%
Total 5,347.0 3,872.8 5,434.6 4,058,000$ 2,980,747$ 4,865,000$ 807,000$ 19.9%
Average Cost Per Acre-Foot (Effective Rate) (3)2,105$ 822$ 1,833$
(1) Based on the City of San Diego's Cost of Service Study proposing a 27.5% increase in recycled water rate and
62.9% increase in monthly fixed fee effective January 1, 2022.
(2) This is the anticipated take-or-pay amount to be paid to the City of San Diego. The contract requires the purchase of a
minimum volume of water. The District does not anticipate meeting the minimum therefore, a payment would be due
to the City of San Diego.
(3) The $822 actual price per AF differs from budget due to a one-time $1.2 million credit in contractual purchases
from the City of San Diego for their inability to deliver recycled water. Excluding the credit, the price per AF would
have been $1,142.
HISTORICAL RECYCLED WATER PURCHASES, IN ACRE-FEET
Water Purchases - Recycled
FY 2021
Purchase Costs
Budget to Budget
Variance
FY 2021
Acre Feet
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
84
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget $ %
Total Power Cost 590,035$ 665,509$ 536,179$ 522,863$ 502,000$ 551,075$ 561,000$ 59,000$ 11.8%
Power Costs - Recycled
FY 2021 Budget to Budget
Variance
Historical Power Costs, in thousands ($)
Actual
$0
$100
$200
$300
$400
$500
$600
$700
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
85
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $ %
Administrative Expenditures
Equipment 5,795$ 6,000$ 5,415$ 10,000$ 4,000$ 66.7%
Fees 25,044 29,000 34,038 30,600 1,600 5.5%
Services 116,915 111,000 100,217 218,900 107,900 97.2%
Insurance and Legal (1)122,336 175,000 50,062 50,000 (125,000) (71.4%)
Subtotal before Overhead 270,090 321,000 189,732 309,500 (11,500) (3.6%)
Add: Overhead Allocation 206,277 238,000 221,487 229,100 (8,900) (3.7%)
Total Expenditures 476,367$ 559,000$ 411,219$ 538,600$ (20,400)$ (3.6%)
Equipment 10,000$ 1.9%
Fees 30,600 5.7%
Services 218,900 40.6%
Insurance and Legal 50,000 9.3%
Overhead Allocation 229,100 42.5%
Total Expenditures 538,600$ 100.0%
(1) Legal expenses pertaining to the City of San Diego Recycled Water Rate Lawsuit.
FY 2022 Administrative Expenditures - Recycled
Budget to Budget
Variance
Administrative Expenditures - Recycled
86
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $%
Materials and Maintenance
Fuel and Oil 16,411$ 24,000$ 11,292$ 20,000$ (4,000)$ (16.7%)
Meters and Materials 1,820 8,000 6,295 8,600 600 7.5%
Infrastructure Equipment & Supplies 68,484 82,000 94,610 132,100 50,100 61.1%
Chemicals 112,577 149,000 177,038 154,300 5,300 3.6%
Safety Equipment 6,998 - 359 3,800 3,800 100.0%
Laboratory Equipment and Supplies 4,233 5,000 4,318 4,900 (100) (2.0%)
Other Materials and Supplies 3,307 4,000 5,458 4,500 500 12.5%
Contracted Services 8,778 26,000 22,043 21,600 (4,400) (16.9%)
Total Expenditures 222,608$ 298,000$ 321,413$ 349,800$ 51,800$ 17.4%
Fuel and Oil 20,000$ 5.6%
Meters and Materials 8,600 2.5%
Infrastructure Equipment & Supplies 132,100 37.8%
Chemicals 154,300 44.1%
Safety Equipment 3,800 1.1%
Laboratory Equipment & Supplies 4,900 1.4%
Other Materials and Supplies 4,500 1.3%
Contracted Services 21,600 6.2%
Total Expenditures 349,800$ 100.0%
Materials and Maintenance Expenditures - Recycled
Budget to Budget
Variance
FY 2022 Materials and Maintenance Expenditures - Recycled
87
Recycled Water Service Area
88
Sewer Revenues and Expenditures
The District provides sewer service to approximately 15,300 customers through 4,722 accounts
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, all within
the Upper Sweetwater River Basin. This basin is also known as the Jamacha Basin. Residential
customers comprise 98.4% of the customer base.
Wastewater collection within the Jamacha Basin is provided by two agencies: the Otay Water District
and the County of San Diego (formerly the Spring Valley Sanitation District). Customers in the basin
not served by either agency, dispose of their sewage through septic tanks. After the sewage has
been collected, it is sent to the District’s Ralph W. Chapman Water Recycling Facility treatment plant
where the District produces recycled water, see page 75 outlining the sewer process. The by-
product of the treatment process is called sludge and it is discharged through County’s
transmission system into the City of San Diego Metropolitan Wastewater (Metro) systems.
The District is a member of Metro Wastewater Joint Powers Authority and shares in the use of the
City of San Diego's regional wastewater facilities. A significant amount of the sewer operation costs
is for sewer service charges from the Metro Wastewater JPA which is budgeted at $651,900 for FY
2022. Additionally, the District is budgeted to pay $297,700 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 FY 2022.
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines. In
January 2020, the District performed a Cost of Service Study and Rate Study (i.e. reviewed rates, fees,
charges, costs, and the usage structure) and determined that changes in rates, fees, and charges
were necessary in order to recover sufficient revenues to operate and maintain the public sewer
system.
Sewer bills are based on the rate of discharge and the strength. Due to their higher discharge and
strength, non-residential customers (comprising 1.6% of the customer base) comprise 11.7% of the
total sewer charges. The formula for sewer rates is shown on pages 97-98.
89
FY 2020 FY 2021 FY 2021 FY 2022
21-Actual Budget Actual Budget $%
Revenues
4200 Sewer Revenues 2,892,883$ 2,870,000$ 2,865,634$ 3,068,000$ 198,000$ 6.9%
4136 Capacity Fee Revenues 11,460 - 7,779 - - -
Tax Revenues 48,772 49,000 53,452 57,000 8,000 16.3%
4400 Non-operating Revenues 203,663 68,000 33,546 33,000 (35,000) (51.5%)
4510 Interest 5,743 4,000 3,076 5,000 1,000 25.0%
Total Revenue 3,162,521 2,991,000 2,963,487 3,163,000 172,000 5.8%
Expenditures
5110 Labor and Benefits 918,647 1,034,000 943,200 1,027,700 (6,300) (0.6%)
5200 Administrative Expenses 227,764 225,000 226,512 249,200 24,200 10.8%
5300 Materials and Maintenance 1,101,041 1,115,000 1,328,185 1,195,600 80,600 7.2%
5411 Power 152,460 152,000 124,717 160,000 8,000 5.3%
11-1311-5133Subtotal - Operations Costs 2,399,912 2,526,000 2,622,614 2,632,500 106,500 4.2%
DS Transfer to General Fund Reserve - 259,000 259,000 90,500 (168,500) (65.1%)
5716 Expansion Reserve 46,000 - - 25,000 25,000 100.0%
Bett ResBetterment Reserve - - - 290,000 290,000 100.0%
Repl ResReplacement Reserve 110,300 169,000 169,000 68,000 (101,000) (59.8%)
TOPEBTransfer to OPEB/PERS 39,400 37,000 37,000 36,000 (1,000) (2.7%)
Subtotal - Reserve Funding 195,700 465,000 465,000 530,500 65,500 14.1%
Total Expenditures 2,595,612 2,991,000 3,087,614 3,163,000 172,000 5.8%
566,909$ -$ (124,127)$ -$ -$ - Excess Revenue/(Expenditures)
Operating Budget Summary - Sewer
Budget to Budget
Variance
90
FY 2022 FY 2022
Accounts Current Approved(1)Budget Actual Budget $%
Residential 4,596 2.96$ 3.11$ 1,300,000$ 1,305,400$ 1,469,000$ 169,000$ 13.0%
Multi-Residential 50 2.96 3.11 197,000 197,800 212,000 15,000 7.6%
Commercial
Low Strength 46 2.96 3.11 73,000 73,300 64,000 (9,000) -12.3%
Medium Strength 13 3.37 3.54 36,000 36,100 37,000 1,000 2.8%
High Strength 7 4.75 4.98 25,000 25,100 25,000 - 0.0%
Schools 6 2.96 3.11 100,000 100,400 88,000 (12,000) -12.0%
Churches 4 2.96 3.11 10,000 10,000 9,000 (1,000) -10.0%
Subtotal Commercial 76 244,000 244,900 223,000 (21,000) -8.6%
Total Sewer Charges 4,722 1,741,000$ 1,748,100$ 1,904,000$ 163,000$ 9.4%
Single-Family 1,469,000$ 77.2%
Multi-Family 212,000 11.1%
Commercial 223,000 11.7%
1,904,000$ 100.0%
(1)Approved rates for sewer billed beginning in January 2022.
FY 2022 Charges Summary by Customer Class
Charges Summary by Customer Class - Sewer
Usage Rate Budget to Budget
VarianceFY 2021
91
FY 2022 Current Approved (1)FY 2021 FY 2022
Meter Size Accounts Charges Charges Budget Budget $ %
Residential 4,596 16.55$ 17.37$ 907,000$ 932,000$ 25,000$ 2.8%
Multi-Residential/Commercial
0.75 24 16.55 17.37 5,000 5,000 - -
1.00 5 41.36 43.41 2,000 3,000 1,000 50.0%
1.50 21 82.71 86.80 20,000 20,000 - -
2.00 62 132.33 138.88 98,000 101,000 3,000 3.1%
3.00 6 248.13 260.41 18,000 18,000 - -
4.00 6 413.55 434.02 30,000 31,000 1,000 3.3%
6.00 1 827.09 868.03 10,000 10,000 - -
8.00 - 1,323.36 1,388.87 - - - -
10.00 1 1,902.34 1,996.50 23,000 23,000 - -
Total System Charges 4,722 1,113,000$ 1,143,000$ 30,000$ 2.7%
(1)Approved rates for sewer billed beginning in January 2022.
System Charges - Sewer
Budget to Budget
Variance
92
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget
Sewer Charges 2,929,899$ 2,809,415$ 2,913,787$ 2,876,592$ 2,854,000$ 2,863,846$ 3,047,000$
Penalties 25,531 28,797 19,870 16,291 16,000 1,788 21,000
Total 2,955,430$ 2,838,212$ 2,933,657$ 2,892,883$ 2,870,000$ 2,865,634$ 3,068,000$
Revenue History - Sewer, in thousands ($)
Revenue History - Sewer
FY 2021
Actual
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
Sewer Charges Series2Penalties
93
FY 2017 FY 2018 FY 2019 FY 2020 FY 2022
Budget Actual Budget $ %
Total Power Cost 122,622$ 173,997$ 143,575$ 152,461$ 152,000$ 124,717$ 160,000$ 8,000$ 5.3%
Power Costs - Sewer
FY 2021 Budget to Budget
Variance
Actual
Historical Power Costs, in thousands ($)
$20
$60
$100
$140
$180
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
94
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $ %
Administrative Expenditures
Travel and Memberships 5,098$ 7,000$ 2,415$ 7,000$ -$ -
Equipment 15,805 8,000 16,170 2,700 (5,300) (66.3%)
Fees 4,025 4,000 4,322 4,500 500 12.5%
Services 40,781 26,000 27,349 57,200 31,200 120.0%
Bad Debt Expense 3,673 3,000 7,494 3,200 200 6.7%
Total 69,382 48,000 57,750 74,600 26,600 55.4%
Add: Overhead Allocation 158,382 177,000 168,762 174,600 (2,400) (1.4%)
Total Expenditures 227,764$ 225,000$ 226,512$ 249,200$ 24,200$ 10.8%
Travel & Memberships 7,000$ 2.7%
Equipment 2,700 1.1%
Fees 4,500 1.8%
Services 57,200 23.0%
Bad Debt Expense 3,200 1.3%
Overhead Allocation 174,600 70.1%
Total Expenditures 249,200$ 100.0%
Administrative Expenditures - Sewer
Budget to Budget
Variance
FY 2022 Administrative Expenditures - Sewer
95
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $ %
Materials and Maintenance
Fleet Parts and Equipment 10,200$ 8,000$ 7,535$ 8,000$ -$ -
Infrastructure Equipment & Supplies 90,531 122,000 110,369 124,300 2,300 1.9%
Chemicals 10,007 24,000 21,005 16,200 (7,800) (32.5%)
Safety Equipment 5,511 - - 500 500 100.0%
Laboratory Equipment and Supplies 3,578 8,000 5,945 6,800 (1,200) (15.0%)
Other Materials and Supplies - 1,000 - 600 (400) (40.0%)
Contracted Services 133,948 84,000 86,788 89,600 5,600 6.7%
Subtotal Materials and Maintenance 253,775 247,000 231,642 246,000 (1,000) (0.4%)
Sewer Charges
Metro O&M Costs 618,116 663,000 849,962 651,900 (11,100) (1.7%)
Spring Valley Sewer Charge 229,150 205,000 246,581 297,700 92,700 45.2%
Subtotal Sewer Charges 847,266 868,000 1,096,543 949,600 81,600 9.4%
Total Expenditures 1,101,041$ 1,115,000$ 1,328,185$ 1,195,600$ 80,600$ 7.2%
Fleet Parts & Equipment 8,000$ 0.7%
Infrastructure Equipment & Supplies 124,300 10.4%
Chemicals 16,200 1.4%
Safety Equipment 500 0.0%
Laboratory Equipment & Supplies (1)7,400 0.6%
Contracted Services 89,600 7.5%
Metro O&M Costs 651,900 54.5%
Spring Valley Sewer Charge 297,700 24.9%
Total Expenditures 1,195,600$ 100.0%
Includes Other Materials & Supplies.
Materials and Maintenance Expenditures - Sewer
Budget to Budget
Variance
FY 2022 Materials and Maintenance Expenditures - Sewer
(1)
96
Formula for Sewer Rates
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines.
Residential and Multi-Residential Sewer Service
To estimate sewer use, the District averages metered water use for the winter months of January
through April of the previous three years. The “three-year winter average” is the basis of the sewer
charges for the entire year. The winter months are used to measure average water use because less
water is typically used outdoors during this time and therefore this average water use will more
accurately measure the typical water that flows into the sewer system. The District gives customers
a 15.0 percent usage discount to acknowledge that not all water purchased goes to the sewer
system. The maximum consumption charge is based on 35.29 units.
The following is the sewer bill formula for residential and multi-residential customers:
(Sewer Rate x 3-Year Winter Average x 85%) + System Charges = Total Monthly Bill
The current sewer rates and system charges for single-family residential customers are $2.96 and
$16.55, respectively. Effective January 1, 2022, the sewer rate and system charges will be $3.11 and
$17.37, respectively.
The current sewer rates for multi-residential customers is $2.96 and will increase to $3.11 for the
calendar year 2022. The sewer rates and system charges for residential and multi-residential
customers is shown on pages 91 and 92.
Commercial and Industrial Sewer Service
To estimate sewer use, the District averages metered water use. An “average annual consumption”
is the basis of the sewer charges for the entire year. The average annual consumption is defined as
the units of water billed from January through December of the previous year. The District gives
customers a 15.0 percent usage discount to acknowledge that not all water purchased goes to the
sewer system.
The following is the sewer bill formula for commercial and industrial customers:
(Average Annual Consumption x 85% x Sewer Rate(1)) + System Charges = Total Monthly Bill
The District calculates the monthly bill based on the customer’s water use, sewer strength, and the
size of the customer’s water meter, which is more equitable among customer classes. The rates
and charges by meter size are shown on page 92.
(1) Sewer rates are based on the customer’s assigned strength factor
97
Formula for Sewer Rates
The District is required to determine sewer rates in accordance with the State’s Revenue Program
Guidelines. The SWRCB has grouped commercial and industrial customers into various categories
and has identified Strength Factors for each of these business categories. The standard of measure
for Strength Factors is the typical sewer strength of a single-family residence (SFR). The Strength
Factors established by the SWRCB are listed below and are used by the District in the calculation of
commercial sewer rates. These factors are in terms of the strength relative to an SFR, with an SFR
having a strength factor of 1.
The following are the Strength Factors:
Description
Fee, Effective
1/1/2022
Low-Strength Commercial * $ 3.11
Medium-Strength Commercial $ 3.54
High-Strength Commercial $ 4.98
*Schools and churches are categorized as Low-Strength Commercial customers
98
Sewer Service Area
99
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100
General Revenues and Expenditures
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 are restricted for the purpose of funding the District facilities. When collected these
fees may cover costs including but not limited to planning, design, construction, and financing
associated with facilities. The District uses a portion of capacity fee revenues to provide general
expansion planning and developer support. These fees reimburse the General Fund for the cost of
providing these services. For FY 2022, capacity fees are projected to be $2.0 million which is an
increase of $107,000 compared to FY 2021.
Annexation fees are collected when developers buy into the District’s potable or 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 2010, annexation fees were unrestricted and
therefore included in the General Fund revenues. With the revised 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. Property Tax Revenues
are projected to be $4.3 million which is $768,000 more than the FY 2021 budget.
The District levies availability charges each year in developed areas to be used for upgrades and
betterment and in undeveloped areas to provide funding for planning, mapping, and preliminary
design of facilities to meet future development. Current legislation provides that any availability
charge up to $10.00 per parcel is general use and any amount over $10.00 per parcel or acre shall
be used only for the benefit of the improvement district in which it is assessed. Budgeted availability
fees are projected to increase to $711,000 from $665,000.
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 miscellaneous revenues. Lease revenues
make up a large portion of general revenues and are mainly from the lease of cell-sites on District
property. 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.
101
General Revenues and Expenditures
For most of the District’s water customers in the City of Chula Vista (CCV), the City of Chula Vista
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 Expenditures
The expenses in this section are general operating costs not associated with an individual
department. These include legal costs, insurance premiums, changes in accrued employee leave
balances, and miscellaneous interest. These expenditures represent 8.4% of the total Departmental
Budget.
Legal expenditures are viewed as a District-wide general cost 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 premiums are also viewed as District-wide general cost 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 cost is charged to the General Expense Department.
102
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $%
Fee Revenues
Capacity Fee Revenues 2,273,778$ 1,869,000$ 2,287,553$ 1,976,000$ 107,000$ 5.7%
Subtotal Fee Revenues 2,273,778 1,869,000 2,287,553 1,976,000 107,000 5.7%
Tax Revenues
1% General Tax 4,224,814 3,490,000 4,504,324 4,258,000 768,000 22.0%
Availability Fees 694,769 665,000 686,697 711,000 46,000 6.9%
Subtotal Tax Revenues 4,919,583 4,155,000 5,191,021 4,969,000 814,000 19.6%
General Revenue 7,193,361$ 6,024,000$ 7,478,574$ 6,945,000$ 921,000$ 15.3%
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $%
Property Rental 1,501,328$ 1,554,000$ 1,587,687$ 1,616,000$ 62,000$ 4.0%
Sewer Billing Fees 429,683 438,000 447,247 445,000 7,000 1.6%
Set-up Fee for Lease Site 9,000 - 9,000 - - 0.0%
Revenue from Shared Facility 28,426 30,000 33,546 33,000 3,000 10.0%
Miscellaneous (2)805,827 155,000 3,882,535 125,500 (29,500) -19.0%
Non-Operating Revenue 2,774,264$ 2,177,000$ 5,960,016$ 2,219,500$ 42,500$ 2.0%
Potable Recycled Sewer Total
Capacity Fee Revenues 1,976,000$ -$ -$ 1,976,000$
1% General Tax 4,258,000 - - 4,258,000
Availability Fees 654,000 - 57,000 711,000
Property Rental 1,616,000 - - 1,616,000
Sewer Billing Fees 445,000 - - 445,000
Grants 3,000 - - 3,000
Revenue from Shared Facility - - 33,000 33,000
Miscellaneous 122,500 - - 122,500
Total General and Non-Operating Revenue 9,074,500$ -$ 90,000$ 9,164,500$
(1)For General and Non-Operating Revenues, the Potable Fund serves as the District's General Fund
for accounting purposes.
(2)In FY 2021, the District received a settlement refund of $3,162,940 from CWA after a favorable judgement was awarded
to CWA against MWD for overcharging prior years' water rates.
Non-Operating Revenues(1)
Budget to Budget
Variance
General and Non-Operating Revenues by Business(1)
FY 2022
General Revenues
General Revenues(1)
Budget to Budget
Variance
103
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
General Expense
Labor and Benefits (1)1,275,173$ 1,042,000$ 880,729$ 874,800$
Total labor and benefits (1)1,275,173 1,042,000 880,729 874,800
Administrative Expenditures
Insurance expenses 1,090,388 1,250,000 1,168,883 1,414,900
Legal expenses (2)740,769 707,000 638,607 657,000
Total General Expense 3,106,330$ 2,999,000$ 2,688,219$ 2,946,700$
-$ -$-$-$
General Expense
(1)Benefits include District-wide labor and benefit costs not attributable to any one department,
such as the effect of cost of living raises on accrued leave liabilities or the Other Post
Employment Benefit (OPEB) costs. These costs are netted against the District's anticipated
Vacancy Factor. The Vacancy Factors for FY 2021 and FY 2022 are $209,700 and $214,700,
respectively. Additionally, the labor and benefits shown on this schedule are those related to
operating costs and does not include CIP labor and benefit costs.
(2)Included in the Legal Expenses budget for FY 2021 and FY 2022 are $175,000 and $50,000,
respectively, for the City of San Diego Recycled Water Rate Lawsuit.
104
Departmental Operating Budget
Labor and Benefits
The District reviews and studies organizational/personnel changes and performs a five-year long-term
staffing review on an annual basis as part of the budgeting process. Labor and Employee Benefits
expenditures for FY 2022 were estimated based on proposed staffing level needs. The objective of the
annual review is to examine the implementation of department efficiencies and evolving business
practices, impacts on staffing levels, as well as prepare future leaders of the organization. The annual
review is also used as a reference tool for District succession planning purposes.
The District provides employees and Board members with a choice of four health providers (Blue Shield
HMO, EPO and PPO, and Kaiser HMO) plus a vision and dental PPO plan. The District pays 100% of
employee coverage and 88% of spouse and dependent coverage. Other ancillary benefits include basic
life and accidental death and dismemberment insurance, short- and long-term disability benefits, flexible
spending accounts for health and dependent care, and an Employee Assistance Program. In addition,
the District offers the CalPERS Pension plan 2.7% @ 55 for classic members and 2.0% @ 62 for PEPRA
employees and Other Post-Employment Benefits after the employees reach certain age and tenure
requirements. Employees participate in the contribution for both plans. Increases in employee benefits
costs are mainly due to continued increases in group health insurance premiums, additional payments
to OPEB to reduce long-term retiree health liability, and an increase in compensation due to a 2.0%
increase in salary and wages, based on the Memorandum of Understanding (MOU) between the District
and its employee association.
Labor and Benefits represent 19.7% of the total Operating Budget. District personnel are assigned to work
in five departments: General Manager, Administrative Services, Finance, Water Operations, and
Engineering. The departments are further categorized by functions into divisions. The FY 2022 Budget
includes funding for labor and benefits for 140 full-time equivalent (FTE) employees.
The staffing level for FY 2022 has increased by one (1) FTE employee from FY 2021. The District
continuously analyzes workload requirements, opportunities for automation and areas where resources
can be effectively shared or relocated. For FY 2022, the staffing changes include the removal of a Senior
Confidential Executive Assistant position due to consolidation of tasks, and the addition of one Recycled
Water Specialist and one Senior Utility Locator due to increased workloads driven by the increases in the
number of water connections.
A projected 8.6% of the labor and benefits costs will be charged to projects included in the Capital
Improvement Program (CIP) and Developer Deposits. These labor and benefit costs totaling $2,154,400
are not considered operating costs and therefore are not included in the Operating Budget.
Administrative Expenses
Administrative Expenses include such items as memberships, office supplies, staff training, Directors'
fees, water conservation programs, safety expenses, and regulatory agencies' fees. Some of the
administrative expenses are less discretionary than others. The safety needs of the District's customers
and employees, and compliance with regulatory agencies are of utmost importance and are considered
necessary.
105
Departmental Operating Budget
Administrative Expenses (Continued)
Overall administrative expenses increased by $560,800 or 8.0% compared to FY 2021 and are shown on
page 115. The services budget increased by $614,900 or 32.7% due to a required facilities master plan
update and other various studies, including of a water cost of service study, and temporary employees.
The insurance and legal expenses budget increased by $114,900 or 5.9% due to increased insurance
premiums. In response to the COVID-19 pandemic, the District’s FY 2021 budget included an extensive
savings initiative plan, which included deferring maintenance or required training. For FY 2022, the District
has reinstated necessary training, increasing the budget by $71,700 or 50.1%, as well as travel and
memberships, increasing the budget by $58,100 or 28.3%. Fees increased by $71,300 or 8.8% due to an
uptick in credit card activity.
These increases were partially offset by decreases in bad debt expense by $244,800 or 50.2% due to
anticipated improvement in the collection process. A decrease of $114,200 or 25.4% is due to an increase
in the allocation of administrative costs to CIP projects. The conservation and outreach budget decreased
by $12,400 or 7.6% due to a reduction in the Garden’s operating and maintenance expenses and school
tours. Equipment decreased $10,200 or 0.7% due to one-time purchases budgeted in the previous fiscal
year. Lastly, election costs declined $45,000 due to FY 2022 not being an election year for the District.
Materials and Maintenance
Like all costs included by the District, 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 technology and regulations change, maintenance and services will be adjusted, as needed.
For FY 2022, overall materials and maintenance expenses increased by 7.2%, or $267,900 compared to
FY 2021. Spring Valley sewer charge increased $92,700 or 45.2% due to increases in shared facility
rehabilitation costs for County-operated facilities. Infrastructure equipment and supplies increased by
$63,800 or 11.1% due to one-time purchases of equipment. The contracted services budget increased by
$54,200 or 5.8% due to various Utility Maintenance projects, landscaping, and AC/heating services. As a
result of the necessary additions of COVID-19 related cleaning supplies, building and grounds materials
increased $26,600 or 43.6% and safety equipment increased $16,200 or 23.5%. The budget for laboratory
equipment has increased $14,700 or 26.3% due to the purchase of new equipment. Due to the rise of gas
and diesel prices, fuel and oil has increased $12,700 or 6.0%. The budget for chemicals increased $10,100
or 2.7% due to the increasing chemical prices, and the purchase of new analyzers.
These increases were partially offset by decreases in meters and materials and Metro operating and
maintenance costs. Meters and materials decreased by $11,500 or 8.0% due to a reduction in meter sales
based on growth projections and historical needs. Metro O&M costs decreased $11,100 or 1.7% due to
changes related to the City of San Diego’s Pure Water program.
106
Board of Directors 224,000$ 0.7%
General Manager 1,514,300 4.3%
General Expense 2,946,700 8.4%
Administrative Services 7,411,800 21.1%
Finance 6,357,500 18.1%
Water Operations 12,370,600 35.2%
Engineering 4,287,800 12.2%
35,112,700$ 100.0%
Departmental Operating Budget
Total FY 2022 Departmental Operating Budget
$35,112,700
107
FY 2020 FY 2021 FY 2022
Actual Budget Actual Budget $%
Labor Costs 12,672,160$ 13,160,000$ 13,074,212$ 13,508,200$ 348,200$ 2.6%
Benefits
Pension 2,465,750 2,855,000 2,764,318 3,127,900 272,900 9.6%
Employee Assistance Program 3,807 4,000 4,772 4,000 - -
Workers' Compensation 595,677 428,000 380,296 427,600 (400) -0.1%
Health/Dental/Life Insurance/OPEB 3,762,633 4,069,000 3,739,156 4,239,000 170,000 4.2%
Social Security/Medicare 1,049,345 1,119,000 1,090,151 1,139,000 20,000 1.8%
Salary Continuation Insurance 63,594 58,000 61,440 60,500 2,500 4.3%
State Unemployment Insurance - 20,000 19,167 20,000 - -
Vacation/Sick/Holiday/Other Leave 2,580,429 2,606,000 2,625,107 2,642,000 36,000 1.4%
Total Benefits 10,521,235 11,159,000 10,684,407 11,660,000 501,000 4.5%
Total Labor and Benefits 23,193,395 24,319,000 23,758,619 25,168,200 849,200 3.5%
Less: Non-Operating Labor and Benefits
Labor Costs 969,166 1,061,000 1,233,609 1,329,200 268,200 25.3%
Benefits Allocation 553,605 628,000 744,187 825,200 197,200 31.4%
Total Non-Operating Labor and Benefits 1,522,771 1,689,000 1,977,796 2,154,400 465,400 27.6%
Operating Labor & Benefits 21,670,624 22,630,000 21,780,823 23,013,800 383,800 1.7%
Overhead Allocation (115% of labor costs) 1,114,541 1,220,000 1,418,650 1,528,600 308,600 25.3%
Admin Overhead (36.85%)410,708 450,000 522,772 563,300 113,300 25.2%
Less: Non-operating labor overhead (703,833) (770,000) (895,878) (965,300) (195,300) 25.4%
Net Operating Labor and Benefits 20,966,791$ 21,860,000$ 20,884,945$ 22,048,500$ 188,500$ 0.9%
Labor and Benefits
Budget to Budget
VarianceFY 2021
Budget vs. Actual, in thousands ($)
$15,000
$17,000
$19,000
$21,000
$23,000
2020 2021 2022
$2
1
,
1
5
8
$2
1
,
8
6
0
$2
2
,
0
4
9
$2
0
,
9
6
7
$2
0
,
8
8
5
Budget Actual
108
Potable Recycled Sewer
Developer
Reimbursed
CIP Total
Operating Labor Costs 11,226,500$ 540,500$ 412,000$ -$ 12,179,000$
Benefits 10,144,600 373,700 316,500 - 10,834,800
Overhead Allocation-Personnel (1,657,000) 392,500 299,200 - (965,300)
Total Operating Labor and Benefits 19,714,100 1,306,700 1,027,700 - 22,048,500
CIP Labor Costs 840,600 44,900 73,600 370,100 1,329,200
Benefits 522,700 27,700 42,500 232,300 825,200
Overhead Allocation-Personnel 610,500 32,600 53,400 268,800 965,300
Total CIP Labor and Benefits 1,973,800 105,200 169,500 871,200 3,119,700
Total Labor and Benefits 21,687,900$ 1,411,900$ 1,197,200$ 871,200$ 25,168,200$
Potable-Operating 19,714,100$ 78.3%
Potable-CIP 1,973,800 7.8%
Sewer-Operating 1,027,700 4.1%
Sewer-CIP 169,500 0.7%
Recycle-Operating 1,306,700 5.2%
Recycle-CIP 105,200 0.4%
Developer Reimbursed-CIP 871,200 3.5%
25,168,200$ 100.0%
Labor and Benefits by Fund - Fiscal Year 2022
109
FY 2021
General Manager
General Manager 1 1 1
District Secretary 1 1 1
Sr. Confidential Executive Assistant 1 1 0
Communications Officer 1 1 1
Communications Assistant 1 1 1
Total FTE - General Manager Department 5 5 4
Administrative Services
Chief, Administrative Services 1 1 1
Confidential Executive Assistant 1 1 1
Confidential Department Assistant 1 1 0
Administrative Services 3 3 2
Human Resources
Human Resources Manager 1 1 1
Senior Human Resources Analyst 1 1 2
Human Resources Analyst 1 1 0
HR Assistant I 0 0 1
Human Resources 3 3 4
Purchasing
Purchasing and Facilities Manager 1 1 1
Senior Procurement & Contracting Analyst 1 1 1
Senior Warehouse Worker 1 1 0
Warehouse Technician 0 0 1
Facilities Maintenance Technician 2 2 2
Purchasing 5 5 5
Safety
Safety & Security Specialist 1 1 1
Safety 1 1 1
Information Technology Operations/Applications
IT Manager 1 1 1
GIS Manager 1 1 1
GIS Programmer Analyst 1 1 1
GIS Analyst 1 1 1
GIS Technician 1 1 1
Network Engineer 1 1 1
Database Administrator 1 1 1
Business Systems Technician 1 1 1
System Support Analyst 1 1 1
Business Systems Analyst I and II 2 2 2
Information Technology 11 11 11
Total FTE - Administrative Services Department 23 23 23
Position Count by Department
FY 2020 FY 2022
110
FY 2021
Finance
Chief Financial Officer 1 1 1
Assistant Chief, Finance 1 1 1
Executive Assistant 1 1 1
Department Assistant 1 1 1
Finance 4 4 4
Controller and Budgetary Services
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Controller and Budgetary Services 4 4 4
Treasury and Accounting Services
Finance Manager, Treasury and Accounting 1 1 1
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Treasury and Accounting Services 5 5 5
Customer Service
Customer Service Manager 1 1 1
Customer Service Supervisor 1 1 1
Lead Customer Service Representative 1 1 1
Customer Service Representative I, II, III 6 6 6
Customer Service 9 9 9
Meter Services
Meter Services Supervisor 1 1 1
Lead Meter Maintenance/Cross Connection Worker 1 1 1
Meter Maintenance Worker I & II 3 3 3
Lead Customer Service Field Representative 1 1 1
Customer Service Field Representative I and II 3 3 3
Meter Services 9 9 9
Total FTE - Finance Department 31 31 31
Operations
Chief, Water Operations 1 1 1
Assistant Chief, Water Operations 1 0 0
Executive Assistant 1 1 1
Operations 3 2 2
Water System Operations
System Operations Manager 1 1 1
Water Systems Supervisor 1 1 1
Lead Water Systems Operator 2 2 2
Position Count by Department
FY 2020 FY 2022
111
FY 2021
Operations (continued)
Water System Operations (continued)
Water Systems Operator I, II, and III 8 8 8
Senior SCADA Instrumentation Technician 2 2 2
SCADA Instrumentation Technician 1 1 1
Senior Disinfection Technician 1 1 1
Disinfection Technician 1 1 1
Water System Operations 17 17 17
Utility Maintenance/Construction
Utility Services Manager 0 1 1
Utility Maintenance Supervisor 1 1 1
Utility Maintenance Assistant Supervisor 1 1 1
Utility Crew Leader 3 3 3
Utility Workers I and II 9 9 9
Senior Utility/Equipment Operator 3 4 4
Valve Maintenance Worker 1 1 1
Pump Electrical Supervisor 1 1 1
Electrician I and II 2 2 2
Pump Mechanic I and II 2 2 2
Fleet Maintenance Supervisor 1 1 1
Equipment Mechanic I and II 3 3 3
Utility Maintenance/Construction 27 29 29
Collection/Treatment/Reclamation Operations
Reclamation Plant Supervisor 1 1 1
Lead Reclamation Plant Operator 1 1 1
Reclamation Plant Operator I, II, III 2 2 2
Laboratory Analyst 2 2 2
Collection/Treatment/Reclamation Operations 6 6 6
Total FTE - Operations Department 53 54 54
Engineering
Chief, Engineering 1 1 1
Assistant Chief of Engineering 1 0 0
Executive Assistant 1 1 1
Department Assistant 1 1 1
Engineering 4 3 3
Water Resources, Planning, Design & Environmental
Engineering Manager 1 1 1
Senior Civil Engineer 3 3 3
Environmental Compliance Specialist 1 1 1
Senior Engineering Technician 2 1 1
Engineering Design Technician 0 1 1
Water Resources, Planning, Design & Environmental 7 7 7
Position Count by Department
FY 2020 FY 2022
112
FY 2021
Engineering (continued)
Public Services, Survey, Inspection, & Recycled Water Program
Engineering Manager 0 1 1
Field Services Manager 1 1 1
Permit Technician 2 2 2
Recycled Water Program Supervisor 1 1 1
Lead Recycled Water Specialist 0 0 1
Recycled Water Specialist 3 3 3
Inspection Supervisor 1 1 1
Lead Construction Inspector 0 0 1
Construction Inspectors I and II 4 4 3
Supervising Land Surveyor 1 1 1
Senior Utility Locator 1 1 1
Utility Locator 1 1 2
Public Services, Survey, Inspection, & Recycled Water
Program 15 16 18
Total FTE - Engineering Department 26 26 28
District Total FTE Position Count 138 139 140
Position Count by Department
FY 2020 FY 2022
138
139
140
137
138
139
140
141
FY 2020
Actual
FY 2021
Actual
FY 2022
Budget
Full-Time Equivalent (FTE)
113
FY 2021
Lab Analyst 0.5 0 0
Reclamation Plant Supervisor 0 0.5 0
GIS Intern 0 0 0.5
Human Resources Analyst 0 0.5 0.5
Total Contract/Temporary Employees 0.5 1.0 1.0
General Manager 4 3%
Administrative Services 23 16%
Finance 31 22%
Operations 54 39%
Engineering 28 20%
Total 140 100%
Contract / Temporary Employees
FY 2020 FY 2022
FY 2022 Position Count by Department
114
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $%
Administrative Expenditures
Directors' Fees 61,553$ 80,000$ 55,335$ 80,000$ -$ -
Travel and Memberships 205,433 205,000 124,532 263,100 58,100 28.3%
Conservation and Outreach 161,793 164,000 116,200 151,600 (12,400) (7.6%)
General Office Expense 268,353 250,000 232,639 259,900 9,900 4.0%
Equipment 1,393,001 1,441,000 1,450,219 1,430,800 (10,200) (0.7%)
Fees 760,543 809,000 938,546 880,300 71,300 8.8%
Services 1,879,582 1,883,000 1,720,534 2,497,900 614,900 32.7%
Training 127,312 143,000 63,342 214,700 71,700 50.1%
Utilities 14,692 16,000 15,999 17,600 1,600 10.0%
Insurance and Legal 1,830,187 1,957,000 1,820,682 2,071,900 114,900 5.9%
Miscellaneous Expense 262 - - - - -
Bad Debt Expense 173,332 488,000 249,994 243,200 (244,800) (50.2%)
Subtotal before Overhead 6,876,043 7,436,000 6,788,022 8,111,000 675,000 9.1%
Less: Overhead Allocation (410,708) (449,000) (522,773) (563,200) (114,200) 25.4%
Total Expenditures 6,465,335$ 6,987,000$ 6,265,249$ 7,547,800$ 560,800$ 8.0%
4,702,612$ 5,605,400$ 8,608,704$
Directors' Fees 80,000$ 1.0%
Travel and Memberships 263,100 3.3%
Conservation & Outreach 151,600 1.9%
General Office Expense 259,900 3.2%
Equipment 1,430,800 17.6%
Fees 880,300 10.9%
Services 2,497,900 30.8%
Training 214,700 2.6%
Utilities 17,600 0.2%
General Expense 2,071,900 25.5%
Bad Debt Expense 243,200 3.0%
8,111,000 100.0%
Less: Overhead Allocation (563,200)
Total Administrative Expenses 7,547,800$
Administrative Expenditures - Total
Budget to Budget
Variance
FY 2022 Total Administrative Expenditures
115
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget $%
Materials and Maintenance
Fuel and Oil 195,676$ 213,000$ 186,061$ 225,700$ 12,700$ 6.0%
Meters and Materials 211,172 144,000 144,450 132,500 (11,500) (8.0%)
Fleet Parts and Equipment 140,652 138,000 113,723 138,300 300 0.2%
Infrastructure Equipment & Supplies 485,685 575,000 642,543 638,800 63,800 11.1%
Chemicals 339,498 380,000 376,396 390,100 10,100 2.7%
Safety Equipment 56,018 69,000 65,466 85,200 16,200 23.5%
Laboratory Equipment and Supplies 54,913 56,000 53,877 70,700 14,700 26.3%
Other Materials and Supplies 242,214 287,000 213,052 286,200 (800) (0.3%)
Building and Grounds Materials 68,505 61,000 62,597 87,600 26,600 43.6%
Contracted Services 756,694 929,000 847,499 983,200 54,200 5.8%
Subtotal Materials and Maintenance 2,551,027 2,852,000 2,705,664 3,038,300 186,300 6.5%
Sewer Charges
Metro O&M Costs 618,116 663,000 849,962 651,900 (11,100) (1.7%)
Spring Valley Sewer Charge 229,150 205,000 246,581 297,700 92,700 45.2%
Subtotal Sewer Charges 847,266 868,000 1,096,543 949,600 81,600 9.4%
Total Expenditures 3,398,293$ 3,720,000$ 3,802,207$ 3,987,900$ 267,900$ 7.2%
Fuel and Oil 225,700$ 5.6%
Meters and Materials 132,500 3.3%
Fleet Parts and Equipment 138,300 3.5%
Infrastructure Equipment & Supplies 638,800 16.0%
Chemicals 390,100 9.8%
Safety Equipment 85,200 2.1%
Laboratory Equipment & Supplies 70,700 1.8%
Other Materials & Supplies 286,200 7.2%
Building and Grounds Materials 87,600 2.2%
Contracted Services 983,200 24.7%
Sewer Charges 949,600 23.8%
Total Expenditures 3,987,900$ 100.0%
Materials and Maintenance Expenditures - Total
Budget to Budget
Variance
FY 2022 Materials and Maintenance Expenditures
116
FY 2020 FY 2021 FY 2021 FY 2022
Budget to
Budget
Actual Budget Actual Budget Variance
Departmental Expenditures
Board of DirectorsBoard of Directors 157,123$ 186,000$ 157,997$ 224,000$ 38,000$
General ManagerGeneral Manager 1,490,089 1,657,000 1,418,456 1,514,300 (142,700)
General ExpenseGeneral Expense 3,106,330 2,999,000 2,688,219 2,946,700 (52,300)
Administrative ServicesAdministrative Services 6,679,983 6,927,000 6,793,865 7,411,800 484,800
FinanceFinance 5,702,071 6,256,000 6,111,503 6,357,500 101,500
Water OperationsWater Operations 11,148,922 11,935,000 11,413,254 12,370,600 435,600
EngineeringEngineering 3,661,109 3,827,000 3,787,758 4,287,800 460,800
Total Departmental ExpendituresTotal Departmental Expenditures 31,945,627 33,787,000 32,371,052 35,112,700 1,325,700
Less: Overhead Allocation (1,115,208) (1,220,000) (1,418,650) (1,528,600) (308,600)
Net Departmental Expenditures 30,830,420 32,567,000 30,952,402 33,584,100 1,017,100
Non-Departmental Expenditures & Reserve Funding
Water Purchases 52,647,567 50,898,000 56,941,316 59,088,000 8,190,000
Power 3,102,364 2,898,000 3,310,860 3,485,000 587,000
Subtotal Non-Departmental Expenditures 55,749,931 53,796,000 60,252,176 62,573,000 8,777,000
General Fund Reserve 954,400 259,000 259,000 90,500 (168,500)
Expansion Reserve 4,927,300 150,000 150,000 2,066,900 1,916,900
Betterment Reserve 3,048,000 985,000 985,000 735,000 (250,000)
Replacement Reserve 7,513,000 9,676,000 9,676,000 11,986,900 2,310,900
Transfer to OPEB/PERS 1,038,100 1,100,000 1,100,000 1,100,000 -
Transfer to Rate Stabilization Fund - - - 21,000 21,000
Subtotal Reserve Funding 17,480,800 12,170,000 12,170,000 16,000,300 3,830,300
Total Operating Expenditures 104,061,151$ 98,533,000$ 103,374,578$ 112,157,400$ 13,624,400$
Operating Expenditures by Department
FY 2022 Funding Source by Department, in thousands ($)
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000
Board of Directors
General Manager
Administrative Services
Finance
Water Operations
Engineering
General Expense
Potable
Sewer
Recycled
117
FY 2020 FY 2021 FY 2021 FY 2022
Budget to
Budget
Actual Budget Actual Budget Variance
Departmental Expenditures
Labor and Benefits 21,671,291$ 22,631,000$ 21,780,823$ 23,013,800$ 382,800$
Director's Fees 61,553 80,000 55,335 80,000 -
Travel and Memberships 205,433 205,000 124,532 263,100 58,100
Conservation and Outreach 161,793 164,000 116,200 151,600 (12,400)
General Office Expense 268,353 250,000 232,639 259,900 9,900
Equipment 1,393,001 1,441,000 1,450,219 1,430,800 (10,200)
Fees 2,590,730 2,766,000 2,759,228 2,952,200 186,200
Services 1,879,582 1,883,000 1,720,534 2,497,900 614,900
Training 127,312 143,000 63,342 214,700 71,700
Materials & Maintenance 2,551,027 2,852,000 2,705,664 3,038,300 186,300
Utilities 14,692 16,000 15,999 17,600 1,600
Sewer Charges 847,266 868,000 1,096,543 949,600 81,600
Miscellaneous Expense 262 - - - -
Bad Debt Expense 173,332 488,000 249,994 243,200 (244,800)
Total Departmental Expenditures 31,945,627 33,787,000 32,371,052 35,112,700 1,325,700
Less: Overhead Allocation (1,115,208) (1,220,000) (1,418,650) (1,528,600) (308,600)
Net Departmental Expenditures 30,830,419 32,567,000 30,952,402 33,584,100 1,017,100
Non-Departmental Expenditures & Reserve Funding
Water Purchases 52,647,567 50,898,000 56,941,316 59,088,000 8,190,000
Power 3,102,364 2,898,000 3,310,860 3,485,000 587,000
Subtotal Non-Departmental Expenditures 55,749,931 53,796,000 60,252,176 62,573,000 8,777,000
General Fund Reserve 954,400 259,000 259,000 90,500 (168,500)
Expansion Reserve 4,927,300 150,000 150,000 2,066,900 1,916,900
Betterment Reserve 3,048,000 985,000 985,000 735,000 (250,000)
Replacement Reserve 7,513,000 9,676,000 9,676,000 11,986,900 2,310,900
Transfer to OPEB/PERS 1,038,100 1,100,000 1,100,000 1,100,000 -
Transfer to Rate Stabilization Fund - - - 21,000 21,000
Subtotal Reserve Funding 17,480,800 12,170,000 12,170,000 16,000,300 3,830,300
Total Operating Expenditures 104,061,151$ 98,533,000$ 103,374,578$ 112,157,400$ 13,624,400$
Operating Expenditures by Object
118
Departmental Operating Budget
Tim Smith
President
Division 1
Mark Robak
Vice President
Division 5
Jose Lopez
Treasurer
Division 4
Ryan Keyes
Division 2
Board of Directors
The Otay Water District is a revenue-
neutral public agency established in
accordance with the California Water
Code. This not-for-profit status means
Otay has no private shareholders, pays no
dividends and therefore does not report
to, nor answer to the California Public
Utilities Commission. The District does,
however, answer to the public through a
five-member Board of Directors. Each
Director is elected by voters within their
respective division boundaries to
represent the public's interest with regard
to rates for service, taxes, policies,
ordinances, and other matters related to
the management and operation of the
Otay Water District. Directors serve four-
year alternating terms on the Board.
Gary Croucher
Division 3
119
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Board of Directors 157,123$ 186,000$ 157,997$ 224,000$
Total Expenses 157,123 186,000 157,997 224,000
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Benefits 74,053 81,000 99,528 110,000
Director's Fees 61,553 80,000 55,335 80,000
Travel and Memberships 21,502 25,000 3,134 34,000
General Office Expense 15 - - -
Total Expenses 157,123$ 186,000$ 157,997$ 224,000$
-$
Department
Object
Budget vs. Actual, in thousands ($)
Board of Directors
$0
$30
$60
$90
$120
$150
$180
$210
$240
2020 2021 2022
$1
9
0
$1
8
6
$2
2
4
$1
5
7
$1
5
8
Budget Actual
120
Director’s Division Boundaries
121
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122
Departmental Operating Budget
(1) See Position count by Department on page 110-114 for the list of positions per department. District Chiefs
report directly to the General Manager; however, they are budgeted within their respective department.
General Manager
Mission
To provide exceptional water and wastewater service to its customers, and to manage the Otay
Water District’s resources in a transparent and fiscally responsible manner.
General Manager’s Vision
“To be a model water agency by providing stellar community service, achieving measurable results,
and continuously improving our operational practices.”
C
Statement of values
As Otay Water District employees we dedicate ourselves to:
Customers: We take pride that our commitment to customer-centered service is our highest
priority.
Excellence: We strive to provide the highest quality and value in all that we do.
Integrity: We commit ourselves to doing the right thing. Ethical behavior, trustworthiness, and
accountability are the District’s foundation.
Employees: We see each individual as unique and important. We value diversity and open
communication to promote fairness, dignity, and respect.
Teamwork: We promote mutual trust by sharing information, knowledge, and ideas to reach our
common goals.
Innovation: We constantly seek better, more efficient, and cost-effective ways to deliver our
services.
General Manager – 4 Positions (1)
District Secretary
1211
Communications Officer
1211
General Manager
1211
Chief Financial Officer
2311
Board of Directors
1111
Communications Assistant
1211
Chief, Administrative
Services 2211
Chief, Water
Operations 3211
Chief, Engineering
3311
123
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
General Manager 1,345,062$ 1,495,000$ 1,315,033$ 1,363,800$
Conservation 145,027 162,000 103,423 150,500
Total Expenses 1,490,089 1,657,000 1,418,456 1,514,300
-$
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Labor and Benefits 1,000,883 998,000 961,656 880,500
Travel and Memberships 81,887 97,000 71,255 113,700
Conservation and Outreach 161,793 164,000 116,200 151,600
General Office Expense 10,751 5,000 2,525 5,700
Fees 61,095 109,000 90,974 64,000
Services 169,087 181,000 74,577 194,800
Training 2,589 3,000 1,269 4,000
Materials & Maintenance 1,742 100,000 100,000 100,000
Miscellaneous 262 - - -
Total Expenses 1,490,089$ 1,657,000$ 1,418,456$ 1,514,300$
General Manager
Department
Object
Budget vs. Actual, in thousands ($)
$1,000
$1,300
$1,600
$1,900
2020 2021 2022
1,
6
7
5
1,
6
5
7
1,
5
1
4
1,
4
9
0
1,
4
1
8
Budget Actual
124
Departmental Operating Budget
General Manager
Services We Provide
The General Manager’s office provides leadership and direction for all District operations and
services including potable recycled, and wastewater. As leader of the agency, the General Manager
interacts with the Board of Directors to set policies and strategic direction and ensures that
applicable laws and regulations are met. The General Manager oversees, coordinates, and directs
the development and execution of planning and strategic documents and the operating and capital
improvement projects. The General Manager represents the District in establishing and maintaining
relationships with member agencies and external organizations. The General Manager is also
focused on executing the District’s mission, Strategic Plan, and Board priorities. The General
Manager’s office also collaborates with all District departments to provide and support
communications, including but not limited to the website, social media, the newsletter, the mobile
application, and other materials and technologies. In addition, the office coordinates media relations,
outreach, education, water conservation, and legislation. The office also supports and participates in
outreach and business events throughout the community and helps fund and promote a variety of
conservation rebates and other programs available to its customers. Staff also promotes water-use
efficiency through educating the District’s customers about available rebates, water conservation
programs, and the Water Conservation Garden. The office also works with other departments to
coordinate the District’s Water Shortage Response Plan as well as its water waste reporting program.
Accomplishments – Fiscal Year 2020-2021
The District’s rates were ranked the fifth lowest among San Diego County’s 22 public water
agencies and the fifth lowest among the County’s 28 sewer service providers in the County.
Saved approximately $60.8 million due to staffing efficiencies and the reduction of Full Time
Equivalent positions from 2007 to fiscal year 2021.
As of June 30, 2020, the District funded 84% of its Defined Benefit Pension Plan, with a plan to
have it fully funded by 2034.
Maintained full funding of the District’s Other Post Employment Benefit Plan.
Researched and monitored COVID-19 emergency rental and utility funding assistance
programs through the County of San Diego and City of Chula Vista and provided necessary
feedback to both agencies to assist District customers in understanding the programs
available.
During the COVID-19 pandemic, GM’s office Communications staff worked with Customer
Service staff to revamp its communications outreach to customers, including delinquent
customers, by replacing pre-COVID-19 delinquent communications with post cards, emails,
phone calls, online announcements, and other materials to encourage customers to contact
the District to establish payment arrangements and/or take advantage of existing emergency
rental and utility programs.
125
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
Led executive management and staff in legislative and health order efforts to address the
COVID-19 pandemic, which included managing communications with employees and
customers and implementing policies and procedures related to telecommuting, safe work
practices, employee absences, staffing plans, testing, and more.
Due to revenue loss because of unpaid water bills during COVID-19, staff monitored and
tracked federal, state, and local funding programs available to water agencies and customers.
Published the annual consumer confidence report, indicating to customers that the District
met or surpassed all public health drinking water requirements and standards.
In compliance with the America’s Water Infrastructure Act of 2018 findings, updated the
District’s Emergency Response Plan. The District produced documents in-house, saving the
District over $200,000 in projected consultant fees.
Developed and implemented the District’s COVID-19 Prevention Program required under the
Cal/OSHA Emergency Temporary Standard, which became effective in November 2020.
Coordinated a team to validate, correct, and submit District service area data requested by the
California Department of Water Resources (DWR). To comply with state mandates per
Assembly Bill 1668 and Senate Bill 606, DWR requested per-parcel landscape area estimates
from urban retail water suppliers. The accuracy of the estimates will directly impact District
future water budgets. Leveraging the District’s GIS system and data, the project team was able
to quickly conduct a general assessment, including spatial analysis to verify DWR’s initial
estimates for the District’s service area and identify discrepancies in DWR’s initial report.
Developed the 2020 Urban Water Management Plan and obtained Board approval.
Continued to develop, leverage, and enhance District technologies, including smartphone
apps, drone technology, geographic information systems technology, GPS fleet-tracking
management systems, the Boardroom’s audio-visual equipment, asset management software,
cloud-based ticket management systems, and more.
Coordinated public outreach for various Capital Improvement Projects, including the
Dictionary Hill Water Line Replacement Project, Vista Grande/Vista Sierra/Pence Drive Water
Line Replacement Project, 1200-1 site, 850-1 Reservoir Recoating and Lining Project, 1090-1
Pump Station Renovation Project, the Melrose Avenue and Oleander Avenue Pressure
Reducing Station Replacement Project, and others.
Supported the San Diego Food Bank through a virtual food drive during the COVID-19 crisis.
Raised more than $6,200 through employee, Board member, and customer contributions.
Reduced the number of vehicles and other equipment the District maintained by 16% since
2006, saving the District approximately $106,000 in fiscal year 2021.
126
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
Reduced overall fuel consumption for gas and diesel vehicles by 23%, saving the District
approximately $47,000 in fiscal year 2021.
As part of the District’s Leak Detection and Repair Program, the District surveyed
approximately 170 miles of potable and recycled pipelines, finding, and repairing seven
District-side leaks, saving approximately 140,160 gallons of water per month.
Reduced water loss by 40% since 2011, saving the District approximately $1.2 million.
To continue promoting water-use efficiency to customers, it recognized the WaterSmart
Landscape Contest “Best in District” winner, an El Cajon resident.
Recognized by the California Association of Public Information Officials (CAPIO) for its
innovative communication for the Hydro Station Education Experience. Received an Award of
Distinction for excellence in public information and communications. Continued the
educational partnership with Chula Vista Elementary School District and the Sweetwater
Authority to establish the first Hydro Station, an interactive educational space that houses
learning exhibits and hands-on activities and teaches more than 4,000 fifth graders about the
ecological cycle of water, water conservation, water quality, and careers in the water industry.
Partnered with Cuyamaca College’s Center for Water Studies program to serve on committees
to enhance outreach to veterans and women in the water industry.
The District continues to enhance its website and social media sites by increasing the
frequency of posts and use of increased Spanish-language content. As a result, from July 1,
2020 to June 30, 2021, the District’s Facebook gained an 8% increase in followers from 445 to
480 followers and a 5% increase in Twitter followers from 2,070 to 2,166. Cumulative YouTube
video views since launched increased by 15% from 101,516 as of June 30, 2020 to 117,075 as
of June 30, 2021. Nextdoor members in the District’s service area have increased by 4% from
48,463 to 50,172. LinkedIn followers have increased by 19% from 586 to 696. Also, since staff
launched the District’s Instagram page account in November 2018, it has attracted 927
followers as of June 30, 2021, a 34% increase over fiscal year 2020.
The District continued to support the “Mark Watton” scholarship fund through the Foundation
for Grossmont and Cuyamaca Colleges to increase the talent pool in the water industry by
supporting students attending the Center for Water Studies at Cuyamaca. Through the
scholarship, the Foundation for Grossmont & Cuyamaca College awarded scholarships to four
recipients.
Participated in the “Water is Life” Poster contest for grades kindergarten through twelfth and
awarded six students from three of 59 schools in the District’s service area. As part of
Metropolitan Water District of Southern California calendar contest, two District winners from
last year’s contest were published in MWD’s 2021 calendar.
127
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128
Departmental Operating Budget
Administrative Services
Mission Statement
To provide support to the Board of Directors, the General Manager, and District staff by executing
objectives that meet and serve the needs of our customers by providing, through best administrative
practices, the full range of employer and employee services, administrative services, risk
management, safety and security, emergency preparedness and response, enterprise computing,
and strategic planning.
Department Responsibilities
The Administrative Services Department, under the general direction of the Chief of Administrative
Services, provides the following support services: Human Resources, Purchasing, Facilities
Maintenance, Safety and Security, Information Technology, Strategic Planning, and Geographic
Information Systems. The department also coordinates assigned activities with other departments
and outside agencies and provides highly responsible and complex administrative support to the
District, Board of Directors, and General Manager.
Administrative Services Department – 23 Positions (1)
(1) See Position Count by Department on page 110 for the list of positions per department.
Purchasing
and Facilities
2231
Human
Resources
2221
Chief,
Administrative Services
2211
Information
Technology
2421
Geographic
Information
Systems
2431
Safety and Security
2241
129
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Administrative Chief 535,622$ 446,000$ 499,071$ 478,800$
Human Resources 778,337 889,000 795,346 1,018,300
Purchasing and Facilities 1,578,539 1,635,000 1,646,385 1,851,200
Safety and Security 341,069 436,000 272,279 390,300
IT Operations 2,483,486 2,469,000 2,531,377 2,534,200
Geographic Information System (GIS)962,930 1,052,000 1,049,407 1,139,000
Total Expenses 6,679,983 6,927,000 6,793,865 7,411,800
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Labor and Benefits 4,110,774 4,288,000 4,272,797 4,547,300
Travel and Memberships 28,515 22,000 5,006 26,400
General Office Expense 112,623 91,000 82,690 104,400
Equipment 1,315,536 1,339,000 1,339,687 1,355,200
Services 458,973 431,000 394,998 469,200
Training 105,569 118,000 54,008 173,700
Power and Utilities 14,692 16,000 15,999 17,600
Total Expenses 6,679,983$ 6,927,000$ 6,793,865$ 7,411,800$
Administrative Services
Budget vs. Actual, in thousands ($)
Department
Object
$6,200
$6,400
$6,600
$6,800
$7,000
$7,200
$7,400
$7,600
2020 2021 2022
$6
,
7
3
7
$6
,
9
2
7
$7
,
4
1
2
$6
,
6
8
0
$6
,
7
9
4
Budget Actual
130
Departmental Operating Budget
Human Resources
Services We Provide
Human Resources, under the direction of the Chief of Administrative Services, provides the following:
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 program
for employees and retirees; manages the Workers’ Compensation program; oversees employee
performance through staff management to include employee training and development;
development of recognition and incentive programs; manages performance evaluation process and
employee discipline; ensures legal compliance; and implements work/life balance initiatives.
Accomplishments – Fiscal Year 2020-2021
Implemented an online performance evaluation portal in coordination with the Information
Technology Division to automate the District’s annual employee performance evaluation
process. This increased efficiencies including a paperless format and electronic workflow
approval process.
Enhanced the District’s benefits program by adding vision coverage and changing flexible-
spending account administrators in response to service issues and to increase employee
satisfaction.
Consistent with the advancement of the District’s development and training program, HR
staff contracted with Franklin Covey to provide online leadership and business execution
training to District management staff and senior level employees.
Continued to manage significant legislation and health orders related to Coronavirus
Disease 2019 (COVID-19), which included implementing several District policies and
procedures, and managing employee communication and related leaves of absence.
Coordinated District-wide COVID-19 vaccination offering, which resulted in a 78% employee
vaccination rate.
Purchasing and Facilities
Services We Provide
Purchasing and Facilities, under the direction of the Chief of Administrative Services, provides the
following: oversees the general purchasing and contracting 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.
131
Departmental Operating Budget
Purchasing and Facilities (continued)
Accomplishments – Fiscal Year 2020-2021
Completed the Ralph W. Chapman Water Reclamation Facility roof and skylight replacement
and repair project on time and within budget, including minor repairs due to water damaged
elements that were revealed during demolition. Per the specifications, a single-ply reinforced
Thermoplastic Polyolefin (TPO) membrane was installed over a layer of UL Class A fire rated
roof board. TPO is one of the fastest growing commercial roofing systems with its UV reflective
surface and reinforcing scrim. The project carries a 5-year contractor labor warranty and 20-
year manufacturer’s guarantee.
Staff replaced five entrance gate motors at the Administration Building and Operations Yard.
With over 20 years of service and increasing service calls, gate motors had reached the end
of useful life. To reduce vehicle wait times on busy Sweetwater Springs Blvd, staff researched
“high-speed” gate openers and selected HySecurity SlideSmart HD15F with open speeds of
2.25 feet per second versus the previous 1 foot per second. Staff also installed upgraded
wheels and guides for each gate and new Opticom Strobe Detectors for emergency vehicle
access.
Due to remote work during the COVID-19 pandemic, the need for an e-signature solution to
process the District’s documents came to the forefront. Staff researched and selected
DocuSign Inc’s eSignature solution, a leader in the industry utilized by many public agencies,
and accepted by the California Secretary of State as legally binding for all contractual
relationships. It is estimated that DocuSign eSignature saves an “average of $36 per
agreement by reducing hard costs and improving employee productivity” with up to “80% of
agreements completed in less than a day and 44% in less than 15 minutes.” By adopting
DocuSign eSignature, the District can expect to save nearly $100,000 in administrative and
other costs over the next 10 years.
Safety and Security
Services We Provide
Safety and Security, under the direction of the Chief of Administrative Services, provides the following:
interprets safety regulations and standards, participates in the development and management of new
or revised safety standards, policies, and plans; organizes, coordinates, implements the occupational
safety and health and security management programs; ensures the workplace follows Cal/OSHA
regulations; coordinates programs that support a safe workplace, including safety orientations, the
Injury and Illness Prevention Program, emergency preparedness, HAZWOPER Team, and confined
space entry and rescue; takes or recommends action to ensure compliance with security and
occupational safety and health regulations and requirements; advises staff on safe work methods
and practices and the elimination of hazards; assesses the occupational exposure to risk by
evaluating hazards and mitigation of safety hazards and risk to injury; directs and supervises accident
132
Departmental Operating Budget
Safety and Security (continued)
investigations related to occupational injuries, fleet incidents and/or damage to, or theft of District
property; develops 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; coordinates the Department of
Transportation (DOT), the District’s Drug-Free Workplace, and DMV Pull-Notice programs; and plans
and coordinates the District’s emergency preparedness program.
Accomplishments – Fiscal Year 2020-2021
Maintained the District’s 2020 OSHA Recordable Incident Rate below the Annual Target Rate
of 4.1, at 2.1.
Through proactive and preventive measures, the District did not have any work related COVID-
19 cases during the pandemic and was able to maintain essential community water services,
while adhering to state health orders.
Completed designated County Office of Emergency Services WebEOC monthly exercises to
maintain the District’s emergency readiness, which included the completion of a cybersecurity
tabletop exercise.
Updated the District’s Emergency Response Plan with America’s Water Infrastructure Act of
2018 (AWIA 2018) Risk and Resiliency Assessment findings. The plan was certified through the
Environmental Protection Agency in September 2020. Staff produced the two documents in-
house, saving the District over $200,000 in projected consultant fees.
Developed and implemented the District’s COVID-19 Prevention Program required under the
Cal OSHA Emergency Temporary Standard, which became effective in November 2020.
Information Technology Operations/Applications
Services We Provide
IT Operations, under the direction of the Chief of Administrative Services, provides the following: day-
to-day support of the District’s enterprise business computing environment to include network and
desktop hardware/software; disaster recovery; telecommunications; cybersecurity; physical access
controls; mobile, physical, and wireless networks; internal/external website support; and end-user
helpdesk services.
Accomplishments – Fiscal Year 2020-2021
Completed the deployment of new Board room technology enhancements including audio-
visual updates, a sophisticated sound processing and reinforcement system, new video walls,
a cutting-edge voting system, and user-controlled wireless operated touch smart-tablets. The
new system also complies with Title II of the Americans with Disabilities Act and other federal
and state laws, standards, and regulations to assist with public participation.
133
Departmental Operating Budget
Information Technology Operations/Applications (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
Completed the implementation of a new cloud-based DigAlert-Damage Prevention ticket
management system, KorTerra. Through this system, staff will be alerted to new requests via
email and will be queued based on a predefined priority schedule. In addition, the new
ticketing management system integrates with the District's geographic information system for
facility map information, which in turn provides critical coordinates for each ticket. Ticket
tracking, asset damage detection, and regulatory compliance are a few of the other essential
features the system provides. By combining real-time visibility and technology, the KorTerra
solution improves productivity while reducing cost and time, eliminating manual processes,
and reducing ticket closing time by 20% annually, or approximately 1,000 hours saved.
Completed the implementation of the District's new strategic planning and reporting
application, which incorporates performance management tracking, strategic decision-
making, and reporting of quarterly operational metrics.
Updated the District's financial and budgeting system, Tyler Eden. The update provides
enhancements and necessary patches associated with various Eden financial modules,
including updates pertaining to tax code changes, Accounts Payable module, and Utility
Billing service.
Geographic Information Systems (GIS)
Services We Provide
GIS, under the direction of the Chief of Administrative Services, provides the following: technical and
administrative support of the District’s enterprise GIS and computer aided design systems; data
collection and data Quality Assurance/Quality Control of the District’s facility data and land-based
data; 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.
Accomplishments – Fiscal Year 2020-2021
Updated and deployed the new enterprise GIS Operational and Service Dashboard. The
Dashboard provides a host of essential services ranging from customer account and meter
information to historical as-build drawing and plans of District vertical and horizontal assets.
The new Dashboard incorporates the latest Esri GIS technologies, including improved
performance and security features. Per Assembly Bill (AB) 1668 and Senate Bill (SB) 606, the
California Department of Water Resources (DWR) requested per-parcel landscape area
estimates for all urban retail water suppliers in California. Staff worked with Engineering,
Communications, and Customer Service staff to comply with the associated mandates. The
accuracy of the estimates will directly impact District future water budgets. Leveraging the
134
Departmental Operating Budget
Geographic Information Systems (GIS) (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
District’s GIS system and data, the project team was able to quickly conduct a general
assessment, including spatial analysis to verify DWR’s initial estimates for the District’s service
area. The team located discrepancies in the initial report, validated and corrected using
District parcel and billing data. Staff submitted deliverables to DWR for verification.
Completed the design and mapping of the new facility book, which is a paper-based copy of
District assets and associated attribute information, including 200,000 cartographic
representations. The facility book is an essential resource of the District’s emergency response
plan.
Migrated the District’s enterprise GIS system to the Dell Hyperconverged Infrastructure (HCI),
which provides an all-in-one server, storage, and networking platform for greater efficiency
and ease of administration via a centralized console, as well as a projected lower cost of
ownership.
Continued to advance the use of drones across the District. In addition to the video collection
of vertical assets and environmental conditions, staff is now capturing pipeline break and
repair activities. Along with the digital as-builts, the drone-captured videos and photos will
serve as reference for future pipe replacement, rehabilitation, and asset management.
Created 50 new relationship classes to link historical vertical data to new and updated GIS
data. The update and consolidation of data has led to greater detail in the work order creation
process and improved data management.
135
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136
Departmental Operating Budget
Finance
Mission Statement
To provide timely, accurate, and clear information that optimizes service to the District’s staff and
ratepayers. Through continuous improvement, professional service, and effective fiscal policies the
Finance Department will ensure that financial resources are collected, recorded, protected, and
expended in a fiscally responsible manner.
Department Responsibilities
The Finance Department, under the general direction of the Chief Financial Officer, provides the
following support services: Controller and Budgetary Services, Treasury and Accounting Services,
Meter Services, and Customer Service. The department ensures the District’s conformance with
modern finance, accounting theory and practices, and compliance with applicable state and federal
laws. In addition, it provides customer support, meter reading and maintenance, and water
conservation support to the Communications Division. Finance staff also provides highly responsible
and complex administrative and technical support to the District, General Manager, and Board of
Directors.
Finance Department – 31 positions (1)
(1) See Position Count by Department on page 111 for the list of positions per department.
Treasury and
Accounting
Services
2331
Customer
Service
2341
Controller and
Budgetary
Services
2321
Assistant Chief of Finance - 2321231
Chief Finance Officer - 2311
Meter
Services
2342
137
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Finance Chief 550,378$ 567,000$ 583,852$ 598,400$
Controller and Budgetary Svs 853,253 899,000 872,180 979,600
Treasury and Accounting Svs 1,389,915 1,385,000 1,618,184 1,571,900
Customer Service 2,019,612 2,496,000 2,216,860 2,313,000
Meter Shop 888,913 909,000 820,427 894,600
Total Expenses 5,702,071 6,256,000 6,111,503 6,357,500
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Labor and Benefits 4,432,827 4,757,000 4,731,526 4,911,100
Travel and Memberships 7,431 8,000 5,726 19,100
General Office Expense 144,561 153,000 146,972 149,100
Equipment 1,095 3,000 2,825 1,500
Fees 507,205 492,000 647,467 605,200
Services 173,936 147,000 137,982 230,900
Training 758 1,000 400 1,400
Materials & Maintenance 260,926 207,000 188,611 196,000
Bad Debt Expense 173,332 488,000 249,994 243,200
Total Expenses 5,702,071$ 6,256,000$ 6,111,503$ 6,357,500$
Budget vs. Actual, in thousands ($)
Finance
Department
Object
$2,500
$4,000
$5,500
$7,000
2020 2021 2022
$5
,
7
5
4
$6
,
2
5
6
$6
,
3
5
8
$5
,
7
0
2
$6
,
1
1
2
Budget Actual
138
Departmental Operating Budget
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 proposing
rate changes. Staff prepares monthly and annual reports, monitors budget variances, and
coordinates interactions with outside agencies. This division is responsible for performing cost of
service and capacity fee studies and preparing rate notices and property tax assessments. This
division is also responsible for the biweekly payroll of 140 full-time and temporary employees using
the District’s Eden System. Division staff collects and distributes timesheets and paystubs
electronically. Staff also processes benefits and deductions biweekly and files federal and state tax
returns on a quarterly basis, and W2s annually. This division also assists in the general ledger
accounting, audit, cost accounting, and contract review.
Accomplishments – Fiscal Year 2020-2021
For the seventeenth consecutive year, the Government Finance Officers Association
(GFOA) awarded the District with the Distinguished Budget Presentation Award for the
Fiscal Year 2020-2021 Budget. This is a significant achievement and is the highest form of
recognition in governmental budgeting.
The California Society of Municipal Finance Officers (CSMFO) awarded the District for the
fifteenth consecutive year, the Operating Budget Excellence Award for the Fiscal Year 2020-
2021 Budget.
The CSMFO awarded the District for the sixteenth consecutive year with the Capital
Budgeting Excellence Award for the Fiscal Year 2020-2021 CIP Budget.
Treasury and Accounting Services
Services We Provide
The Treasury and Accounting Services Division coordinates and directs the activities of the general
ledger accounting and audit, banking and cash management, investments and treasury functions,
debt financing, job costing, cost accounting, fixed assets, property and liability insurance, and
contract review. The division is also responsible for the accounts payable process, which pays
approximately 700 invoices monthly. Additionally, the division is responsible for completing the
District’s annual financial audit and publishing the Comprehensive Annual Financial Report. The
division also conducts an annual review of the District’s Investment Policy, as required by law, with
approval of the Board of Directors. Moreover, it 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, and updates the rate model and the six-year financial plan.
139
Departmental Operating Budget
Treasury and Accounting Services (continued)
Accomplishments – Fiscal Year 2020-2021
For the seventeenth consecutive year, the GFOA awarded a Certification of Achievement for
Excellence in Financial Reporting to the District for its Comprehensive Annual Financial
Report for the fiscal year ended June 30, 2020.
Implemented changes to the District’s Debt Policy regulating the use of internal borrowing
between funds and to reflect the most recent updates made by the Securities Exchange
Committee.
Maintained full funding of the District’s Other Post Employment Benefit plan unfunded
liability.
Completed the 2020 State Water Resources Control Board’s water loss audit certification
program and submitted a certified water loss audit to the Department of Water Resources.
Customer Service
Services We Provide
The Customer Service Division is responsible for providing billing, receipting, collections, and
customer care for water and sewer services in addition to assisting the Communications Division
with water conservation. The billing and customer care teams handle the coordination of billing and
receipting of approximately 49,000 accounts per month. Customers have the choice of receiving
either a paper or an electronic bill, and various payment options including check, ACH, web,
interactive voice response (telephone), and the convenience of multiple locations for walk-in
payments. The District has an automated phone system and web portal, which give customers
access to their account information 24/7. If customers desire more personal service, the customer-
care team, which handles an average of 4,000 calls per month, will assist them.
The Meter Services Division is responsible for the installation and maintenance of all meters. Division
staff manages the District’s backflow/cross-connection prevention, which includes annual testing of
devices and water meters to ensure the continued safety of the potable water system. Staff also
responds to customer issues regarding meter accuracy, conducts site audits, and maintains records
as required by various regulatory agencies. Meter reading staff reads approximately 50,000 potable
and recycled meters a month using Automatic Meter Reading (AMR) technology.
Accomplishments – Fiscal Year 2020-2021
Completed more than 250 new meter installations.
140
Departmental Operating Budget
Customer Service (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
In response to the COVID-19 pandemic, staff worked with communications staff to revamp
its communications outreach to delinquent customers. Existing delinquent communication
was replaced with post cards, emails, and phone calls encouraging customers to contact
the District to establish payment arrangements. Staff worked with I.T. to develop an online-
payment arrangement form and a payment support email address to assist staff with
managing these requests.
As part of the District’s AMR change-out program, staff changed out more than 450 meters,
belonging to high water-use customers.
Staff participated in various backflow prevention workgroups to provide comments on the
first draft of the State Water Resources Control Board’s new Cross Connection Control
Policy.
Staff created an owner-acknowledgement online and hard copy form required to be filled
out by property owners who want to authorize service to a tenant. This form ensures
property owners are aware they are responsible for their tenant’s past due balances.
Staff participated in the State Water Resources Control Board’s COVID-19 Financial Impacts
Survey.
141
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142
Departmental Operating Budget
Water Operations Department
Mission Statement
To provide operations and maintenance service in the most efficient, safe, and cost-effective manner
to internal and external customers, and to strive to continually improve the level of service.
Department Responsibilities
The Water Operations Department, under the general direction of the Chief of Water Operations,
provides the following support services: potable and recycled water system operations, construction
maintenance, sewer collection, and wastewater treatment. The department provides highly
responsible and complex technical and administrative support to the District, General Manager, and
Board of Directors.
Water Operations Department – 54 Positions (1)
(1) See Position Count by Department on pages 111-112 for the list of positions per department.
Chief, Water Operations
3211
Utility Services
Utility Maintenance 3232
Fleet Maintenance 3233
Pump & Electrical 3236
Water Operations
Water System Operations 3221
Water System 3225
SCADA System 3227
Laboratory 3243
Reclamation Plant 3244
143
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Water Operations Chief (1)471,950$ 511,000$ 476,977$ 522,500$
Water Systems (1)5,672,256 6,018,000 6,091,711 6,463,200
Construction Maintenance (1)5,004,716 5,406,000 4,844,566 5,384,900
Total Expenses 11,148,922 11,935,000 11,413,254 12,370,600
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Labor and Benefits (1)7,816,129 8,399,000 7,845,851 8,433,400
Travel and Memberships 49,885 49,000 36,025 46,800
General Office Expense 118 - - 200
Equipment 61,592 76,000 79,966 58,000
Fees 142,236 141,000 131,876 142,500
Services 469,883 467,000 432,798 696,800
Training 6,964 12,000 1,883 19,000
Materials & Maintenance 1,754,849 1,923,000 1,788,312 2,024,300
Sewer Charges 847,266 868,000 1,096,543 949,600
Total Expenses 11,148,922$ 11,935,000$ 11,413,254$ 12,370,600$
(1)Excludes CIP labor & benefits.-$ -$ -$ -$
Water Operations
Budget vs. Actual, in thousands ($)
Department
Object
$-
$4,000
$8,000
$12,000
$16,000
2020 2021 2022
$1
1
,
8
5
8
$1
1
,
9
3
5
$1
2
,
3
7
1
$1
1
,
1
4
9
$1
1
,
4
1
3
Budget Actual
144
Departmental Operating Budget
Water System Operations
Services We Provide
The Water Systems Operations Division encompasses five sections, which are responsible for
operations and monitoring of the potable and recycled water distribution systems as well as the
Ralph W. Chapman Water Recycling Facility. The five sections include: 1) Water System Operations
which oversees the Water Operations section; 2) Water Systems – Water system operators monitor
and operate the water distribution system to ensure it provides safe, reliable drinking water to the
District’s customers; 3) SCADA – Performs installations, maintenance, updates, and modifications to
the SCADA control system and related communications equipment, for existing facilities and the
Capital Improvement Project; 4) Treatment Plant – Maintains and operates the District’s sewer
treatment plant to produce high-quality recycled water to the District’s recycled water customers.
Water system operators monitor and operate the recycled water distribution system ensuring it
provides an adequate recycled water supply; and 5) Laboratory – Ensures regulatory-required
sampling, analyses, and reporting complies with the State Water Resources Control Board (SWRCB)
requirements for potable water, and the Regional Water Quality Control Board requirements for
recycled water and the reclamation plant treatment process. Laboratory staff works closely with
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 staff to ensure proper disinfection was performed after maintenance or new
construction.
Accomplishments – Fiscal Year 2020-2021
Throughout the COVID-19 pandemic, staff continued to provide uninterrupted service to
customers while following the Center for Disease Control and Prevention and Cal/OSHA’s
requirements.
Coordinated the Fiscal Year 2021 leak detection campaign by providing administrative and
operational support verifying leaks.
Coordinated planned water deliveries to Mexico as requested by the International Boundary
and Water Commission, Comision Internacional de Limites y Aguas, the Metropolitan Water
District of Southern California, and the San Diego County Water Authority.
Coordinated biannual cleaning and annual dive inspections for the floating cover reservoirs.
Coordinated the cleaning and inspection of six potable reservoirs per American Water Works
Association standards and as part of Key Performance Indicator I1.15 Potable Tank
Inspection and Cleaning.
Coordinated the large drum screen motor, gear drive, and bearing replacement.
Assisted with the Filter Storage Tank recoating project.
Assisted with the effluent force main air-vac and fittings replacement project.
Replaced two aeration basin slide gates at the Treatment Plant.
145
Departmental Operating Budget
Water System Operations (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
Replaced aeration basin spray heads at the Treatment Plant.
Drained, cleaned, and inspected the aeration basin panels at the Treatment Plant.
Installed new chlorine vacuum switches at the Treatment Plant.
Assisted with the UV system study project.
Installed new anionic polymer pumps at the Treatment Plant.
Assisted with the installation of a new skimmings pump at the Treatment Plant.
Completed the California Accidental Release Prevention program three-year audit of affected
chlorine and ammonia sites.
Assisted with the installation of new stormwater sump pumps at the Treatment Plant.
Installed upgraded programmable logic controllers at 17 District SCADA sites.
Assisted with the programming, start-up, and testing of the District’s variable frequency drive
trailer deployed at the 1200-1 Pump Station.
Assisted with the 850-1 Reservoir recoating project.
Assisted with the commissioning of Temporary Lower Otay Pump Station (TLOPS) #2 and
upgrades to TLOPS #1.
Coordinated pilot valve replacement program in the Otay Valley Road area in Chula Vista.
Utility Services Maintenance
Services We Provide
The Utility Maintenance and Construction Division has three sections, which provide vital
maintenance functions to ensure continuity of the potable, recycled, and wastewater services to
District customers while adhering to all applicable regulatory compliance requirements. The three
sections include: 1) Utility Maintenance – Maintains all collection and potable distribution and
recycled distribution systems, including regular inspection and cleaning of the wastewater collection
system. In addition, exercises valves and installs and repairs main pipelines and service lines
expediently while following all established safety rules and regulations; 2) Fleet Maintenance –
Implements active preventative maintenance practices and repairs on District vehicles and
equipment to ensure optimum performance while establishing fuel-efficient operational practices
and emissions compliance; and 3) Pump and Electrical – Performs preventative, predictive, and
corrective maintenance on pumps, motors, switchgear, and control valves, and assists with electrical
maintenance and installation throughout the District.
146
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2020-2021
Completed initial and final repairs on large recycled water main breaks on Olympic Parkway
in Chula Vista and one large potable main break on Orville Street in Spring Valley, including
coordinating paving work with contractors.
Coordinated with contractor to initiate and finalize repairs on large potable main break on
Paseo Ladera, including working with other District departments to ensure an efficient and
cost-effective approach was taken to complete repairs and submitted all related costs for
third-party damage reimbursement to the District.
Supported several CIP projects, including retrofitting the Rancho Jamul Pump Station with a
new hydro tank and piping and installing a large concrete pad, block wall, piping, and core
drilling; setting up VFD trailer at the 1200 Pump Station, including rewiring the electrical
system to allow Engineering to implement rehabilitation of the 1200-1 Reservoir; supported a
small cathodic protection at the recycled Maxwell Pump Station; and assisted with a repair
at the 624-3 Reservoir injection site in a vault.
Coordinated with Engineering to plan the replacement of a new sewer lift station located at
the Cottonwood golf course; the implementation of the new 870-2 Pump Station; upgrade
the 1090 Pump Station; design the 1530 Hydro Station; and replace the 1655-1 hydro tank.
Initiated inspections on five overhead bridge cranes located at the following sites: 1485-2 and
980-2 Pump Stations, 624-3 recirculation, 980 680/944-1, and 450/680-1 Recycled Pump
Stations. Staff tested, certified, and scheduled cranes for annual inspections to ensure
reliability and the safety of staff performing maintenance on pumps and motors.
Completed 41 valve replacements, of which 30 were in the Otay Valley area for an ongoing
pilot-valve replacement program.
Exercised 631 critical valves and 4,723 isolation valves. In addition, maintained 195 hydrants,
and flushed 374 segments of mains.
Completed over 327,000 feet of routine sewer flushing and over 323,000 feet of Closed Circuit
Television sewer inspections.
Replaced/repaired 147 service laterals and 13 water mains.
Continued to work with the County of San Diego and City of Chula Vista’s paving contractors
including Superior, Eagle, and ATP General Engineering to complete improvements
throughout the District, adjusting to grade manholes, and valve caps as needed.
Updated the District’s section of the Interagency Shared Resources Agreement with the
Padre Dam Municipal Water District, Lakeside Water District, Helix Water District, and
Sweetwater Authority.
147
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
Updated the Asbestos Cement Pipe (ACP) procedure. In addition, coordinated an industrial
hygienist to monitor and perform an analysis of the air while ACP pipe snapping/cutting was
being performed and to document that the exposure to asbestos is below the Permissive
Exposure level (PEL) per Cal/OSHA regulations.
Collected all fleet data and sent a one-time large entity fleet reporting to the California Air
Resources Board in preparation for the Governor's Executive Order of the Advanced Clean
Fleet Regulation for Public Fleet requirements.
Evaluated the District's emergency stand-by generators, above-ground diesel fuel storage
tanks and related diesel fuel-day tanks, spill prevention devices, and equipment retrofits.
Removed the Hazardous Materials (HAZMAT) endorsements from the fleet mechanic's job
description and work requirements since the purchase of the existing individualized fuel
tankers exempted the District from the endorsement.
Completed 36 emergency facility power testing and multiple Air Pollution Control District,
Hazardous Materials Business Plan, and HAZMAT inspections with no violations noted.
Completed pump vibration, pump efficiency, and thermo testing at District pump stations to
ensure system reliability.
148
Departmental Operating Budget
Engineering
Mission Statement
To provide Engineering, Construction, and Environmental services for the District and for the
development community, quality control of future District assets, and expediting of the permitting
process, through the use of our dedicated employees and innovative technology with the goal of
attaining excellent customer satisfaction.
Departmental Responsibilities
The Engineering Department, under the general direction of the Chief of Engineering, provides the
following support services: planning, design, construction management, inspection project
management, surveying, and public services of all District facilities. The department is responsible for
strategic planning, the capital budget, water resources planning, support facilities planning,
environmental services, quality control, construction, and developer designed and constructed
facilities. The department also coordinates assigned activities with other District departments and
outside agencies and provides highly responsible and complex administrative and technical support
to the District, General Manager, and the Board of Directors.
Engineering Department – 28 Positions (1)
(1) See Position Count by Department on pages 112-113 for the list of positions per department.
Chief, Engineering
3311
Water Resources, Planning,
and Design 3321
Environmental Services 3451
Public Services 3421
Field Services 3431
149
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Engineering Chief (1)559,304$ 589,000$ 599,748$ 635,900$
Planning (1)787,970 911,000 929,086 1,136,500
Engineering Services (1), (2)787,970 911,000 929,086 1,136,500
Public Services 408,840 465,000 362,144 405,900
Construction Services 1,529,813 1,505,000 1,516,967 1,701,000
Public Services (1), (3)1,938,653 1,970,000 1,879,111 2,106,900
Environmental Services (1)375,182 357,000 379,813 408,500
Total Expenses 3,661,109 3,827,000 3,787,758 4,287,800
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Labor and Benefits (1)2,960,785 3,066,000 2,988,736 3,256,700
Travel and Memberships 16,880 4,000 3,386 23,100
General Office Expense 285 1,000 452 500
Equipment 14,778 23,000 27,741 16,100
Fees 50,007 67,000 81,421 68,600
Services 606,733 657,000 680,179 906,200
Training 11,432 9,000 5,782 16,600
Materials & Maintenance 209 - 61 -
Total Expenses 3,661,109$ 3,827,000$ 3,787,758$ 4,287,800$
(1) Excludes CIP labor and benefits.
(2) Engineering Services includes Planning, Design, and Water Resources.
(3)Public Services includes Public, Construction and Survey Services.
Budget vs. Actual, in thousands ($)
Object
Engineering
Department
$3,200
$3,400
$3,600
$3,800
$4,000
$4,200
$4,400
2020 2021 2022
$3
,
7
0
1
$3
,
8
2
7
$4
,
2
8
8
$3
,
6
6
1
$3
,
7
8
8
Budget Actual
150
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services
Services We Provide
The Water Resources, Planning, Design, and Environmental divisions provide a variety of services
directly related to potable water, recycled water, and sewer services. The Water Resources Division
identifies, negotiates, and develops additional potable and recycled water supplies. The Planning
Division develops the preliminary design of a project to facilitate final design and ultimately
construction of the facility. The Planning Division also coordinates the review of planning documents
related to potential new development. The Design Division prepares the design of facilities and
advertises projects for bid. The Environmental Division coordinates and tracks projects through the
construction stage and for a period after construction if long-term mitigation is required. In addition,
staff assists the Operations Department on special design projects related to maintenance of existing
facilities, including the Ralph W. Chapman Water Reclamation Facility. Additionally, the Water
Resources Division coordinates with other agencies on regional issues and is responsible for
obtaining grants, loans, and cost-sharing opportunities.
Accomplishments – Fiscal Year 2020-2021
Achieved the objective by spending 100% of the Fiscal Year 2021 budget with a seven-year
average of spending more than 97% of the fiscal year budget from Fiscal Year 2015 through
Fiscal Year 2021.
Prepared the 2020 Urban Water Management Plan and obtained Board approval of the plan.
Prepared the Amendment of the 2015 Urban Water Management Plan and obtained Board
approval of the amendment.
Prepared the Water Shortage Contingency Plan and Revision of Section 39 of the Code of
Ordinance and obtained Board approval.
Reviewed and approved the Water Supply Assessment and Verification Report for the City of
Chula Vista Sunbow II Phase 3 project.
Reviewed and approved the Water Supply Assessment Report for the County of San Diego
Otay Hills project.
Completed designs for the following projects:
-Phase II of the 1200 Pressure Zone Improvements
-RWCWRF Entrance Storm Water Improvements
Completed the designs and awarded construction contracts for the following:
-Otay Mesa Pipeline Cathodic Protection Improvement Project
-14-Inch Force Main Air-Vac Replacement Project
-Melrose Avenue and Oleander Avenue PRS Replacement Projects
-1090- Pump Station Renovation Project
-850-1 Reservoir Recoating and Lining Project
-Recycled Water Filter Water Storage Tank Recoating and Lining Project
-980 Reservoirs Altitude Valve and Vault Replacement Project
151
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services (continued)
Accomplishments – Fiscal Year 2020-2021 (continued)
Approved Sub Area Master Plans and amendments for:
-Phase 1 and 2 - Lumina Development
-250 East Otay Mesa
-7144 Otay Mesa Road Project Hermanito
-Village 4 South
Prepared the following studies and assessments:
-Energy Intensity Study
-Study of the District’s Reduced Reliance on the Delta Watershed
-Ralph W. Chapman Water Recycling Facility (RWCWRF) Disinfection Alternatives
Study
-Asset Management Pipeline Prioritized Rehabilitation and Replacement
Methodology Assessment Pilot of La Presa Pipelines
-Asset Management Pipeline Prioritized Rehabilitation and Replacement
Methodology Assessment of all District Potable Water Pipelines
Completed surplusing of the following District properties:
-Negotiated a purchase agreement and closed escrow for the sale of the Buena
Vista Avenue property for $222,500.
-Completed a boundary adjustment with a certificate of compliance, negotiated the
purchase agreement, and closed escrow for the sale of the Jamacha Boulevard
property for $182,000.
Public Services and Field Services
Services We Provide
The Public Services, Survey, Inspection, and Construction Divisions assist the public by responding
to customer visits, phone calls, and inquiries regarding permits, plan-checking fees, filing procedures,
checking permit status, tracking meter sales meter costs, and lateral costs. Staff administers all plan-
checking submittals for potable and recycled water, and sewer applications for approval, cellular
lease agreements, fire service, backflow inspections, project deposits, and invoicing. Staff also
provides 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 global positioning system plots. Once bid, construction staff provides construction
management for the projects.
152
Departmental Operating Budget
Public Services and Field Services (continued)
Accomplishments – Fiscal Year 2020-2021
Sold 297 meters, which totaled $8.04 million and equated to 755 Equivalent Dwelling Units.
Completed 5,163 USA Mark-Out tickets with an accuracy rate of 100% and completed 36
surveys related to various projects included in the Fiscal Year 2021 Capital Improvement
Program.
Supported $40.5 million of incoming assets to the District from developer projects.
Amended leases to generate FY 2021 revenue in excess of $1.61 million from the District’s 31
cell-site leases.
Completed and closed out 36 developer recycled projects.
Completed the construction of:
-1200 Pressure Zone Improvements (P2653) - Construction of two 8-inch ductile iron
water main laterals, a driveway widening, and custom fabricated double leaf gate.
-Hidden Mountain Sewer Pump Station Wet Well Renovation (S2070) - Rehabilitation
of existing sewage wet wells, installation of sewer manhole and connections to
existing sewer main, pavement restoration, and associated work.
-Dictionary Hill Waterline Replacement – 2019 (P2608, P2609 & P2655) - Removal of
approximately 1,600 linear feet of 4-inch and 6-inch asbestos-cement waterline and
replacement with approximately 1,600 linear feet of 8-inch polyvinyl chloride
waterline, including reconnecting existing services, installation of approximately 300
linear feet of new 8-inch polyvinyl chloride waterline, and 60 linear feet of 12-inch
polyvinyl chloride waterline.
-Otay Mesa Area Cathodic Protection Improvements (P2648) - Construction of
cathodic protection improvements, including cathodic test stations, galvanic
anodes, and bond wires, and all other work and appurtenances in accordance with
the contract documents.
-14-Inch RWCWRF Effluent Force Main Improvements (R2156) - Replacement of air-
vac valve assemblies partially located in below grade vaults, and all other work and
appurtenances in accordance with the contract documents.
-RWCWRF Storage Tank Improvements (R2120) - Removal and replacement of the
interior and exterior coatings on the recycled water storage welded steel tank. The
work also includes structural modifications, including, but not limited to, a new
overflow pipe, drain-pipe, and safety climb equipment in accordance with the
contract documents.
-Temporary Lower Otay Pump Station Redundancy Project (P2619) - Grading, raised
concrete slab with cut off walls, masonry retaining wall, below and above grade
potable steel piping, meter vault, fuel oil piping, electrical improvements,
instrumentation and control equipment, fencing, and installation of an owner pre-
purchased trailer mounted portable pump and diesel engine and all other work and
appurtenances in accordance with the contract documents.
153
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154
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
General Expense (1)2,365,561$ 2,292,000$ 2,049,612$ 2,289,700$
Legal 740,769 707,000 638,607 657,000
Total Expenses 3,106,330 2,999,000 2,688,219 2,946,700
FY 2020 FY 2021 FY 2021 FY 2022
Actual Budget Actual Budget
Labor and Benefits (1)1,275,173 1,042,000 880,729 874,800
Insurance expenses 1,090,388 1,250,000 1,168,883 1,414,900
Legal expenses (2)740,769 707,000 638,607 657,000
Total Expenses 3,106,330$ 2,999,000$ 2,688,219$ 2,946,700$
General Expense
(2)Included in the Legal Expenses budget for FY 2021 and FY 2022 are $175,000 and $50,000 ,respectively, for the
City of San Diego Recycled Water Rate Lawsuit.
The expenditures in this section are general operating costs not associated with an individual
department. The expenditures include: legal costs, insurance premiums, changes in accrued
employee leave balances and miscellaneous interest. These expenditures represent 8.4% of the total
Department Budget.
Department
Object
(1)Benefits include District-wide labor and benefit costs not attributable to any one department, such as the effect of
cost of living raises on accrued leave liabilities or the Other Post Employment Benefit (OPEB) costs. These costs
are netted against the District's anticipated Vacancy Factor. The Vacancy Factors for FY 2021 and FY 2022 is
$209,700 and $214,700, respectively. Additionally, the labor and benefits shown on this schedule are those related
to operating costs and does not include CIP labor and benefit costs.
155
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156
Capital Budget
The District provides water service to a population of over 226,000, which is expected to ultimately
increase to 272,350 by the year 2045. This growth, as well as the maintenance of existing assets,
requires a long-term capital planning process. The process is dynamic, due to evolving needs of the
community, water supply issues, and changing regulations. As such, capital planning is part of the
District’s overall strategic planning process. 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, new water
supply, replacement, and betterment, while maintaining a stable long-range financial plan.
To accommodate growth requires that the District invest approximately $267 million in capital assets
through ultimate build-out. The Fiscal Year 2022 Capital Budget is $8.7 million and the six-year
Capital Improvement Program (CIP) totals $101.4 million. The CIP is consistent with the District's
Water Facilities Master Plan, Sewer System Master Plan, current capacity fees, and the District's
strategic financial objectives. This CIP Budget document contains the descriptions, justifications,
expenditures, and funding for all the identified projects to ultimate build-out.
The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital facilities within three business segments
(potable water, recycled water and sewer) are allocated to four cost types and corresponding fund
categories: Expansion, Betterment, Replacement, and/or New Water Supply. The allocation to these
four cost types is defined in the District’s Capital Improvement Program (CIP) and is determined by
an engineering analysis that identifies which type of customer will benefit from each facility, planned
or existing. The costs of the capital improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable. Alternative funding sources are not
identified until they have been secured. Any secured alternative funding sources will be noted in the
project schedule. The following are general descriptions of the four fund categories:
Expansion
Facilities required to support new or future users are funded from capacity fees or user rates.
Betterment
Facilities required because of inadequate capacity or new requirements that benefit existing users
are 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 are funded from user rates.
New Water Supply
Facilities required to support new sources of water are funded from new supply fees or user rates.
As of November 4, 2020, the collection of the new water supply fee was discontinued. The new water
supply fund will remain until the funds collected from the new water supply fees have been fully
depleted.
157
Capital Budget
Assumptions and Criteria
As a component of the annual budget development process, the Engineering staff update the CIP
budget using the following process:
CIP projects are selected based on the Water Facilities Master Plan (WFMP), the Urban
Water Management Plan (UWMP), Sub Area Master Plans (SAMP), Integrated Water
Resources Plan (IRP), Wastewater Management Plan (WWMP),the Cathodic Protection
Plan, the District’s Strategic Plan, and other focused or specific planning documents and
reports to manage growth, maintenance, and the life extension of assets.
The CIP goes through an iterative process to meet the criteria of growth, service levels,
supply targets, and system reliability.
CIP target expenditures for the next six (6) years are refined and used in the rate model.
The following general criteria are used to determine the reasonableness of a project before it is
considered for inclusion within the CIP budget:
Safety and existing facility conditions
Operating system conditions and energy improvements
Water and sewer system deficiencies
Regulatory and permitting requirements
Developer driven requirements
Economic outlook
Growth projections
Water supply diversification goals
Board and management directives
CIP Justification and Impact on Operating Budget
The justification for each project is determined by whether it is required due to growth (Expansion),
new water sources (New Supply), 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.
New CIP projects and projects with material changes are subject to a formal approval process,
whereby the projects are reviewed and approved by each department and a senior management
panel. At each level of review, projects may be dropped or returned for more information. Once a
project has been approved by the department and senior management panel, the project is
forwarded to the General Manager (GM) for approval. Once approved by the GM, projects are added
to the CIP budget.
The Engineering Department evaluates the District’s recent construction and bidding data and
adjusts costs for individual CIP projects as appropriate. Projects are reprioritized based on the
District’s planning documents and to control spending to stabilize water and sewer rates. The current
158
Capital Budget
economic climate is expected to increase the number of bids the District will receive on future
projects. Other factors that influence the construction climate are:
Shortage of skilled and unskilled labor
Regional competition for contracting resources
Materials cost escalation due to demand and material shortages
To mitigate the factors that influence the construction climate, Engineering staff utilize value
engineering, which involves reviewing new and existing projects during the design phase to reduce
costs and while maintaining the quality, value, and/or functionality of the capital project. In addition,
Engineering staff have identified projects that can be grouped together to attract bidders.
Capital Purchases and Facilities
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
vehicles, office equipment, furniture, and field equipment purchases. Capital facility projects are
items that exceed $10,000 or $20,000 for infrastructure related items (as defined under capital
equipment on page 254 of the Glossary) and have a useful life of at least two years and the cost is
based on current costs.
Major CIP Projects
159
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
Beginning Balance 40,289$ 54,039$ 36,067$ 49,937$ 38,836$ 37,976$ 40,289$
Sources
Capacity Fees 3,372 5,939 7,254 6,317 5,939 6,135 34,956
Debt financing - - 17,750 - 6,550 - 24,300
Interest 352 449 428 442 382 395 2,448
Temporary Meters 1,669 1,674 1,679 1,684 1,689 1,694 10,089
Availability (Betterment Portion)711 738 766 795 825 856 4,691
COPS 2010B Reimbursement 783 783 783 783 759 729 4,620
Transfer from (to) General Fund 27,098 (465) 16,848 15,807 15,864 19,219 94,371
Interfund Transfers 31 42 42 42 42 42 241
Total Sources 34,016 9,160 45,550 25,870 32,050 29,070 175,716
Uses
CIP Projects 8,742 15,581 19,978 24,340 20,135 12,592 101,368
Debt Service 9,548 9,565 9,696 10,605 10,729 10,928 61,071
Developer Services 1,976 1,986 2,006 2,026 2,046 2,067 12,107
Total Uses 20,266 27,132 31,680 36,971 32,910 25,587 174,546
Net Sources (Uses)13,750 (17,972) 13,870 (11,101) (860) 3,483 1,170
Ending Balance 54,039$ 36,067$ 49,937$ 38,836$ 37,976$ 41,459$ 41,459$
CIP Reserve Funds ($1,000)
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 CIPs and their 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.
$0
$10
$20
$30
$40
$50
$60
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
CIP Reserve Fund Balances ($1,000)
Betterment Replacement Expansion New Supply
160
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
Source
Expansion 169$ 413$ 949$ 1,887$ 2,123$ 1,397$ 6,938$
Betterment 1,377 2,586 2,318 3,871 3,146 1,455 14,753
Replacement 7,188 12,575 16,711 18,582 14,866 9,740 79,662
New Supply 8 7 - - - - 15
Total 8,742$ 15,581$ 19,978$ 24,340$ 20,135$ 12,592$ 101,368$
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
Fund
Potable 7,686$ 12,094$ 14,721$ 18,063$ 17,026$ 10,529$ 80,119$
Recycled 732 2,189 3,630 4,460 1,069 513 12,593
Sewer 324 1,298 1,627 1,817 2,040 1,550 8,656
Total 8,742$ 15,581$ 19,978$ 24,340$ 20,135$ 12,592$ 101,368$
CIP Funding Source
CIP by Fund
Six-Year CIP Projects Summary by Source ($1,000s)
Six-Year CIP Projects Summary by Fund ($1,000s)
$-
$5
$10
$15
$20
$25
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Six-Year CIP Projects by Funding Source, in Thousands ($)
Expansion Betterment Replacement New Supply
$-
$5
$10
$15
$20
$25
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Six-Year CIP Projects by Fund, in Thousands ($)
Potable Recycled Sewer
161
Expansion
CIP No CIP Project Title FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
P2040 (1), (3)Res - 1655-1 Reservoir 0.5 MG 85$ 163$ 372$ 481$ 302$ 140$ 1,542$
P2058 PL - 20-Inch, 1296 Zone, Proctor Valley Road from Melody Road to
Highway 94
13 33 59 330 330 59 825
P2171 PL - 20-Inch, 1296 Zone, Proctor Valley Road from Pioneer Way to Melody
Road
13 53 66 330 660 528 1,650
P2195 (3)PL - 24 - Inch, 640 Zone, Campo Road - Regulatory Site/Millar Ranch 15 15 15 15 75 375 510
P2196 (3)PL - 24 - Inch, 640 Zone, Millar Ranch Road to 832-1 Pump Station 15 15 15 15 75 188 323
P2451 (3)Otay Mesa Desalination Conveyance and Disinfection System 0 2 0 2 2 31 36
P2595 PL - 16-inch, 624 Zone, Village 3N - Heritage Road, Main St/Energy Way 1 1 1 145 1 1 150
P2642 Rancho Jamul Pump Station Replacement 2 51 217 310 155 31 766
R2084 (1)RecPL - 20-Inch, 680 Zone, Village 2 - Heritage/La Media 1 1 1 1 358 1 363
S2069 Cottonwood Sewer Pump Station Renovation 6 63 175 225 131 10 610
S2071 (3)San Diego Metro Wastewater Capital Improvements 17 17 27 34 34 34 163
Total Expansion 169$ 413$ 949$ 1,887$ 2,123$ 1,397$ 6,938$
Potable 145$ 332$ 746$ 1,627$ 1,600$ 1,352$ 5,802$
Recycled 1 1 1 1 358 1 363
Sewer 23 80 202 259 165 44 773
Total Expansion 169$ 413$ 949$ 1,887$ 2,123$ 1,397$ 6,938$
Betterment
CIP No CIP Project Title FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
P2040 (1), (3)Res - 1655-1 Reservoir 0.5 MG 190 362 828 1,070 673 310 3,433
P2058 PL - 20-Inch, 1296 Zone, Proctor Valley Road from Melody Road to
Highway 94
7 17 31 170 170 30 425
P2171 PL - 20-Inch, 1296 Zone, Proctor Valley Road from Pioneer Way to Melody
Road
7 27 34 170 340 272 850
P2521 Large Meter Vault Upgrade Program 50 50 50 15 - - 165
P2578 (1), (3)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 gpm 43 109 155 1,085 930 139 2,461
P2619 (1)PS - Temporary Lower Otay Pump Station Redundancy 17 18 - - - - 35
P2626 803-4 Reservoir Water Quality Improvements – PAX System Purchase 5 10 10 - - - 25
P2630 624-3 Reservoir Automation of Chemical Feed System 50 300 55 65 150 50 670
P2642 Rancho Jamul Pump Station Replacement 3 114 483 690 345 69 1,704
P2652 520 to 640 Pressure Zone Conversion 55 30 15 10 10 90 210
P2653 1200 Pressure Zone Improvements 350 160 60 - - - 570
P2654 Heritage Road Interconnection Improvements 25 125 10 - - - 160
P2656 Regulatory Site Desilting Basin Improvements 10 25 30 50 10 5 130
P2658 (3)832-1 Pump Station Modifications 5 5 5 25 50 100 190
P2664 Otay Mesa Dual Piping Modification Program 10 50 50 50 90 60 310
P2669 Fuel Tank Safety and Integrity 35 45 - - - - 80
P2674 (1), (3)System Pressure Reducing Program 10 10 10 10 10 10 60
P2682 AMI Pilot Project 200 100 - - - - 300
P2683 Pump Station Safety, Monitoring and Automation Improvements 25 50 50 100 150 125 500
R2117 RWCWRF Disinfection System Improvements 200 850 200 50 - - 1,300
R2157 RWCWRF Backwash Supply Pumps Upgrade 37 25 10 - - - 72
S2024 (2)Campo Road Sewer Main Replacement 3 3 2 15 17 -40
S2043 (3)RWCWRF Sludge Handling System 1 1 1 1 1 50 55
S2069 Cottonwood Sewer Pump Station Renovation 6 63 175 225 131 10 610
S2071 (3)San Diego Metro Wastewater Capital Improvements 33 33 53 66 66 66 317
Total Betterment 1,377$ 2,582$ 2,317$ 3,867$ 3,143$ 1,386$ 14,672$
Potable 1,097$ 1,611$ 1,877$ 3,514$ 2,931$ 1,329$ 12,359$
Recycled 237 875 210 50 - - 1,372
Sewer 43 100 231 307 215 126 1,022
Total Betterment 1,377$ 2,586$ 2,318$ 3,871$ 3,146$ 1,455$ 14,753$
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2027. See project detail sheet for more information.
162
Six-Year CIP Projects by Source and Fund ($1,000s)
Replacement
CIP No CIP Project Title FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
P2083 (1)PS - 870-2 Pump Station Replacement 25 25 25 25 25 25 150
P2174 (1)PS - 1090-1 Pump Station Upgrade 400 150 150 50 - - 750
P2195 (3)PL - 24 - Inch, 640 Zone, Campo Road - Regulatory Site/Millar Ranch 5 5 5 5 25 125 170
P2196 (3)PL - 24 - Inch, 640 Zone, Millar Ranch Road to 832-1 Pump Station 5 5 5 5 25 63 108
P2282 (3)Vehicle Capital Purchases 303 380 230 200 200 200 1,513
P2286 Field Equipment Capital Purchases 74 86 90 60 20 - 330
P2405 (1)PL - 624/340 PRS, Paseo Ranchero and Otay Valley Road 150 425 500 200 140 80 1,495
P2453 (1)SR-11 Utility Relocations 75 100 150 150 150 150 775
P2460 I.D. 7 Trestle and Pipeline Demolition 50 350 150 115 10 - 675
P2485 SCADA - Infrastructure and Communications Replacement 80 35 30 40 35 - 220
P2516 (1)PL - 12-Inch, 640 Zone, Jamacha Road - Darby/Osage 5 5 75 125 400 390 1,000
P2533 1200-1 Reservoir Interior & Exterior Coating 90 5 50 5 120 5 275
P2539 South Bay Bus Rapid Transit (BRT) Utility Relocations 10 15 40 - - - 65
P2543 850-1 Reservoir Interior/Exterior Coating 5 5 45 50 50 20 175
P2546 980-2 Reservoir Interior/Exterior Coating 5 5 5 - - - 15
P2553 (1), (3)Heritage Road Bridge Replacement and Utility Relocation 50 50 425 1,350 1,700 1,225 4,800
P2562 Res - 571-1 Reservoir Cover/Liner Replacement 1 1 1 82 - - 85
P2563 Res - 870-1 Reservoir Cover/Liner Replacement 100 1,500 1,000 450 400 - 3,450
P2565 803-2 Reservoir Interior/Exterior Coating & Upgrades 40 5 5 5 - - 55
P2567 1004-2 Reservoir Interior/Exterior Coating & Upgrades 20 685 395 5 45 - 1,150
P2571 Data Center Network Data Storage and Infrastructure Enhancements 100 30 10 - - - 140
P2572 (3)Enterprise Resource Planning (ERP) Replacement 80 50 - - - - 130
P2574 (1)PL - 12-Inch Pipeline Replacement, 978 Zone, Vista Vereda 5 - - - - - 5
P2578 (1), (3)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 gpm 97 242 345 2,415 2,070 311 5,479
P2593 458-1 Reservoir Interior/Exterior Coating & Upgrades 895 110 5 30 - - 1,040
P2594 Large Meter Replacement 10 10 60 25 40 50 195
P2604 AMR Change-Out 150 40 - - - - 190
P2605 (1)458/340 PRS Replacement, 1571 Melrose Ave 350 250 40 - - - 640
P2608 (1)PL - 8-inch, 850 Zone, Coronado Ave, Chestnut/Apple 50 100 300 400 575 10 1,435
P2609 (1)PL - 8-inch, 1004 Zone, Eucalyptus St, Coronado/Date/La Mesa 25 25 300 540 100 10 1,000
P2610 Valve Replacement Program - Phase 1 175 400 400 400 400 115 1,890
P2611 (1), (3)Quarry Road Bridge Replacement and Utility Relocation 10 10 10 10 10 200 250
P2612 (1)PL - 12-inch, 711 Zone, Paso de Luz/Telegraph Canyon Rd 500 400 100 70 10 - 1,080
P2615 (1)PL - 12-Inch Pipeline Replacement, 803 PZ, Vista Grande 260 600 1,500 100 100 - 2,560
P2616 (1), (3)PL - 12-Inch Pipeline Replacement, 978 Zone, Pence Dr/Vista Sierra Dr 500 400 100 300 300 500 2,100
P2617 Lobby Security Enhancements 20 10 10 5 - - 45
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2027. See project detail sheet for more information.163
Six-Year CIP Projects by Source and Fund ($1,000s)
Replacement, Continued
CIP No CIP Project Title FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
P2623 Central Area to Otay Mesa Interconnection Pipelines Combination
Air/Vacuum Valve Replacements
5 150 150 70 - - 375
P2627 (1)458/340 PRS Replacement, 1505 Oleander Avenue 350 250 15 - - - 615
P2638 Buildings and Grounds Refurbishments 50 50 41 - - - 141
P2639 Vista Diego Hydropneumatic Pump Station Replacement 150 700 1,500 150 150 75 2,725
P2640 Portable Trailer Mounted VFD Pumps 1 1 8 - - - 10
P2646 North District Area Cathodic Protection Improvements 25 325 450 400 - - 1,200
P2647 Central Area Cathodic Protection Improvements 5 25 40 275 600 350 1,295
P2648 Otay Mesa Area Cathodic Protection Improvements 5 15 15 5 - - 40
P2649 HVAC Equipment Purchase 25 35 33 - - - 93
P2655 La Presa Pipeline Improvements 75 575 500 200 100 25 1,475
P2659 District Boardroom Improvements 25 25 50 10 - - 110
P2661 Replacement of Backflow Prevention Devices on Pipeline
Interconnections on Otay Mesa
50 75 75 65 50 50 365
P2663 (3)Potable Water Pressure Vessel Program 70 70 400 400 400 400 1,740
P2666 (3)Low Head and High Head Pump Stations Demolition 5 25 25 50 50 50 205
P2667 Small Meter Testing Bench 100 - - - - - 100
P2670 Administration and Operations Roof Repairs and Replacement 5 5 5 25 280 5 325
P2671 980 Reservoirs Altitude Valve Vaults Renovation 450 90 10 - - - 550
P2672 District Roof Repairs and Replacement Program 25 125 25 75 100 25 375
P2675 458-1 and 458-2 Reservoirs Site Pavement Refurbishment 55 250 100 40 5 - 450
P2676 980-2 PS Miscellaneous Replacements 100 100 100 50 25 - 375
P2677 PL - 16-Inch, 870 Zone, La Media Rd and Airway Rd. Utility Relocations 50 500 500 250 200 - 1,500
P2678 Jamacha Boulevard Utility Relocation 25 25 100 100 - - 250
P2679 520-3 Reservoir Recirculation Static Mixer Replacement Project 25 75 50 50 - - 200
P2680 PL - 12-inch Pipeline Replacement, 1530 Zone, Vista Diego Road 30 50 250 45 - - 375
P2681 PL-12-Inch, 1655 Zone, Presilla Drive Pipeline Replacement 10 20 350 490 300 70 1,240
R2120 (1)RWCWRF Filtered Water Storage Tank Improvements 5 15 50 10 - - 80
R2121 Res - 944-1 Reservoir Cover/Liner Replacement 5 30 50 2,000 290 - 2,375
R2143 AMR Change-Out 35 25 - - - - 60
R2144 RWCWRF Roofing Replacement and Natural Light Enhancement (R)40 35 - - - - 75
R2146 Recycled Pipeline Cathodic Protection Improvements 25 150 250 200 - - 625
R2148 Large Meter Replacement - Recycled 9 8 8 8 - - 33
R2153 (3)Recycled Water Pressure Vessel Program 30 30 1 1 1 37 100
R2156 (3)RecPL - 14-inch RWCWRF Effluent Force Main Improvements 10 10 10 80 140 150 400
R2157 RWCWRF Backwash Supply Pumps Upgrade 113 75 30 - - - 218
R2158 RWCWRF Stormwater Pond Improvements (R)10 65 75 15 - - 165
R2159 RecPL - 20-Inch, 680 Zone, Olympic Parkway Recycled Pipeline
Rehabilitation
100 825 2,900 2,000 175 150 6,150
R2160 (3)Recycled Field Equipment Capital Purchases 50 25 25 25 25 50 200
R2162 (3)Vehicle Capital Purchases - Recycled 62 10 10 20 20 20 142
S2012 (3)San Diego County Sanitation District Outfall and RSD Outfall
Replacement
5 125 125 125 150 150 680
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2027. See project detail sheet for more information.
164
Six-Year CIP Projects by Source and Fund ($1,000s)
Replacement, Continued
CIP No CIP Project Title FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
S2024 (2)Campo Road Sewer Main Replacement 3 3 3 15 18 - 40
S2049 Calavo Basin Sewer Rehabilitation - Phase 2 25 550 300 100 5 - 980
S2050 (3)Rancho San Diego Basin Sewer Rehabilitation - Phase 2 5 10 20 180 600 250 1,065
S2061 RWCWRF Aeration Controls Consolidation & Optimization Upgrades (S) 25 70 75 20 - - 190
S2067 RWCWRF Roofing Replacement and Natural Light Enhancement (S)75 24 - - - - 99
S2069 Cottonwood Sewer Pump Station Renovation 13 125 350 450 263 20 1,220
S2072 (3)RWCWRF Rotary Screen Replacement 1 1 1 11 100 200 314
S2074 RWCWRF Stormwater Pond Improvements (S)10 65 75 25 - - 175
S2075 (3)Field Equipment Capital Purchases 67 25 25 100 100 100 417
S2076 RWCWRF Grit Chamber Improvements 20 80 100 50 - - 250
S2077 RWCWRF Blowers Renovation 10 30 100 100 100 10 350
Total Replacement 7,188$ 12,485$ 15,931$ 15,502$ 11,196$ 5,665$ 67,967$
Potable 6,436$ 10,144$ 12,098$ 12,922$ 12,495$ 7,848$ 61,943$
Recycled 494 1,313 3,419 4,409 711 512 10,858
Sewer 258 1,118 1,194 1,251 1,660 1,380 6,861
Total Replacement 7,188$ 12,575$ 16,711$ 18,582$ 14,866$ 9,740$ 79,662$
New Supply
CIP No CIP Project Title FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
P2619 (1)PS - Temporary Lower Otay Pump Station Redundancy 8 7 - - - - 15
Total New Supply 8$ 7$ -$ -$ -$ -$ 15$
Potable 8$ 7$ -$ -$ -$ -$ 15$
Total New Supply 8$ 7$ -$ -$ -$ -$ 15$
Summary by Source
Funding Source FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
Expansion 169 413 949 1,887 2,123 1,397 6,938$
Betterment 1,377 2,586 2,318 3,871 3,146 1,455 14,753
Replacement 7,188 12,575 16,711 18,582 14,866 9,740 79,662
New Supply 8 7 - - - - 15
Total CIP by Funding Source 8,742$ 15,581$ 19,978$ 24,340$ 20,135$ 12,592$ 101,368$
Summary by Fund
Fund FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
Potable 7,686 12,094 14,721 18,063 17,026 10,529 80,119$
Recycled 732 2,189 3,630 4,460 1,069 513 12,593$
Sewer 324 1,298 1,627 1,817 2,040 1,550 8,656$
Total CIP by Fund 8,742$ 15,581$ 19,978$ 24,340$ 20,135$ 12,592$ 101,368$
(1) Partially funded by 2018A Water Revenue Bonds.
(2) Project may by funded with Sewer Debt proceeds.
(3) Project expenditures go beyond FY 2027. See project detail sheet for more information.
165
CIP#Description Cost
Cat. (2)
Funding
Source (3)
FY
2022
FY
2023
FY
2024
FY
2025
FY
2026
FY
2027 Total
P2083 PS - 870-2 Pump Station Replacement M R
$ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 30,000
P2626 803-4 Reservoir Water Quality Improvements
– PAX System Purchase
M/E B
1,700 1,700 1,700 - - - 5,100
P2654 Heritage Road Interconnection
Improvements M B
1,500 1,500 1,500 - - - 4,500
R2084 RecPL - 20-Inch, 680 Zone, Village 2 -
Heritage/La Media
M E 1,900 1,900 1,900 - - - 5,700
$ 10,100 $ 10,100 $ 10,100 $ 5,000 $ 5,000 $ 5,000 $ 45,300
FY
2022
FY
2023
FY
2024
FY
2025
FY
2026
FY
2027 Total
$ 9,900 $ 9,900 $ 9,900 $ 5,000 $ 5,000 $ 5,000 $ 44,700
200 200 200 - - - 600
- - - - - - -
$ 10,100 $ 10,100 $ 10,100 $ 5,000 $ 5,000 $ 5,000 $ 45,300
(1)
(2)
(3)
Note: See pages 162-165 for complete description of CIP projects.
Each of the capital purchases and other types of assets has its own unique O&M cost.
Maintenance (M)
Energy (E)
Chemical (C)
Total Operating Budget Cost Impact
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.
Cost Category
CIP Justification and Impact on Operating Budget
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.
Projected Incremental Operating Expenditures (1)
E - Expansion B - Betterment R - Replacement N - New Supply
The following schedule shows anticipated operating costs associated with each project in the CIP. 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.
Funding Source - Some projects have multiple funding sources as indicated by a slash (/):
Cost Category - Indicates maintenance cost (M), energy cost (E), or chemical cost (C), based on the project type and Engineer's
estimates.
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.
Projected Incremental Operating Expenditures (operating cost) or O&M includes labor, benefits, materials, and overhead.
166
Quantity Amount
Vehicles
1 38,000$
1 Compact pickup truck 31,000
1 Class 7 commercial truck 175,000
2 Two (2) compact vehicles 52,000
1 Compact pickup truck 31,000
1 1/2 ton truck for the Water Systems Department 38,000
Total vehicles - P2282/R2162 365,000
Field Equipment
1 65,000
1 60,000
1 Trailer, Ramming Compactor, Chop Saw, and Rock Saw 15,600
1 Replacement pump and gear drive 50,000
Total field equipment - P2286/R2160/S2075 190,600
Total 555,600$
Summary by Project
P2282 Vehicles 303,000
P2286 Field Equipment 73,600
R2160 Field Equipment 50,000
R2162 Vehicles 62,000
S2075 Field Equipment 67,000
Grand Total:555,600$
Sewer easement machine
FY 2022 Capital Purchases
Capital purchases are non-recurring operating expense items for District-wide use that cost more than $10,000
each and have an estimated useful life of two years or more. The capital purchase projects include vehicles,
office equipment and furniture, field equipment and air pollution control district engine replacements, and
retrofits.
Description
1/2 ton truck for Survey/Location Services
Replacement portable pump
167
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168
Summary of Financial Policies
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 the various 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. This policy was adopted by the Board in February 1993. The District periodically reviews the
policy to ensure it reflects current policies and financial practices. The Reserve Policy was updated
and adopted by the Board in November 2020.
The following chart depicts the detailed flow of funds that may be useful in understanding the
Reserve Policy.
Unrestricted and
Undesignated
(General Use) Funds
Restricted Funds
FUND CHART
Designated Funds
Designated
Expansion
Designated
New Supply
Designated
Replacement
Designated
Betterment
Potable
General Fund
Recycled General
Fund
Sewer
General Fund
Restricted
Expansion
Restricted
Betterment
Debt
Reserve
Restricted
New Supply
OPEB
Reserve
169
Summary of Financial Policies
The Investment Policy is a guideline for the prudent investment of cash. It outlines 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 a return on investments. In
August 2007, the District received a Certification of Excellence Award from the Association of Public
Treasurers of the United States and Canada (APT US&C) for this policy. The Investment Policy was
updated and adopted by the Board in May 2021.
The Debt Policy establishes that debt financing will only be used for Capital Improvement Projects
(CIP), which have an extended useful life for 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. In August 2007, the District received a Certification of Excellence award from the
Association of Public Treasurers of the United States and Canada (APT US&C) for this policy. The
Debt Policy was updated and adopted by the Board in March 2021.
170
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
1.0 The District
The Otay Water District is a California municipal water 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 their
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 provides water service within its boundaries, and
provides sewer and recycled water service within certain portions
of the District. As such, the District operates three distinct
business segments:
•Potable water
•Recycled water
•Sewer
Each of these business segments has an identifiable 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 the service costs relating to each of its four
customer service types. 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.
171
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
1.1 The District’s Use of Financial Resources
All of the District’s expenditures fall into two broad categories:
operating costs and capital expenditures. The operating costs
include costs relating to 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 services. The District uses
various funds to support the operating and capital efforts.
Operations and maintenance is financed only by rates and charges,
also called pay-as-you-go, while capital infrastructure is
financed using two financing methods: pay-as-you-go and debt
issuance (requiring annual debt service). The Capital Improvement
Program (CIP) and the two funding methods support the
construction, betterment, and replacement of infrastructure in all
three business areas: potable, recycled, and sewer.
The District establishes different funds to track revenues
allocated to different activities. Once established, each fund
receives financial resources up to the levels defined in this
policy. Every 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 requirements and financial
resources are then evaluated to ensure that the existing fund
balances and additional revenues are sufficient within the current
budget cycle and for the next five years to maintain target fund
levels. If a deficit is identified, then options for transfers,
shifting CIP projects, debt, cost saving measures, and/or rate
increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital
facilities within the three business segments are allocated to
four cost types and corresponding fund categories: New Water
Supply, Expansion, Replacement, and/or Betterment. The allocation
to these four cost types is defined in the District’s Capital
Improvement Program (CIP) and is determined by an engineering
analysis that identifies which type of customer will benefit from
each facility, planned or existing. The costs of the capital
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improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable.
This Reserve Policy protects both the existing users and the
developing areas from incurring unwarranted costs. Developing
areas are not required to finance facilities that are replacement
or betterment and established areas are not required to replace
facilities before they are worn out because of new development.
However, to ensure a fair allocation of costs, each facility has
the potential to be classified into any or all of the four cost
types. In addition to these cost types there are occasional CIPs
that may be billable to a third party, if for example a third
party requires a District facility be relocated. Paragraphs a
through d below, describe how the costs of capital facilities are
financed through various fees.
a.New Water Supply
The portion of a new supply project that benefits new users
is financed from the reserves in the New Water Supply Fund
category. These reserves are primarily derived from proceeds
of the new water supply fee. The New Water Supply Fund is
restricted, meaning the amounts credited to this fund are
accounted for separately and are used solely for the
planning, design, and construction of the new water supply
expansion facilities. Debt financing may also be a temporary
financial resource to finance new water supply projects. The
District has a Debt Policy (Policy No. 45) that guides the
debt issuance process. Any debt proceeds used for this
purpose would be restricted in nature and tracked separately.
General use reserves may also be placed in the Designated New
Water Supply Fund and used for water supply projects.
Effective December 1, 2020, the new water supply fee
collection was discontinued. The New Water Supply Fund will
continue to be used to fund qualified projects and to pay the
proportionate share of debt service of new water supply
projects until the monies in the fund are fully depleted.
b.Expansion
The portion of a CIP project that benefits new users is
financed from the reserves in the Expansion Fund category.
These reserves are primarily derived from proceeds of the
“incremental” portion of the capacity fees collected within
developing areas. Capacity fees are accounted for separately
and used for the planning, design, and construction of
expansion facilities. Additionally, expansion may be
financed by the “buy-in” portion of the capacity fee which is
restricted for CIP purposes, but not specifically for
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expansion. Debt financing may also be a temporary financial
resource for expansion projects. General use reserves may
also be placed in the Designated Expansion Fund and used for
expansion projects.
c.Replacement
The portion of a CIP project that benefits existing users by
replacing an existing facility is financed from the reserves
in the Replacement Fund category. Replacement of facilities
may be financed with proceeds of the “buy-in” portion of the
capacity fees, general use reserves held in the Designated
Replacement Fund, and debt proceeds. The various funding
sources available for replacement projects is anticipated to
provide the necessary flexibility to begin projects while any
necessary debt financing is being obtained.
d.Betterment
Facilities that improve reliability, meet new regulations, or
create increased levels of service are considered betterment
facilities that benefit existing users. The reserves in the
Betterment Fund category are used to finance these projects
or portions of projects. Proceeds of the “buy-in” portion of
the capacity fees may also be used to finance betterment
projects. General use reserves may be placed in the
Designated Betterment Fund and used for betterment projects.
1.21 Relocations
Occasionally, relocation of a District facility is required by a
third party. If the District has a superior easement the
relocation cost will be paid by the third party, but only to the
extent that the District does not benefit from the relocation.
When relocation is required, a CIP project may be created which is
wholly or partially financed by a third party. On occasion, the
District will require that its own facilities be relocated.
Depending on the nature of the facilities, the financial resources
for these projects could be from new water supply, expansion,
replacement, betterment or third party financing. Each project is
individually negotiated with the third party based on the facts
and circumstances of the relocation. Occasionally, the District
will improve the facilities that are being relocated. When
determining how to allocate costs to various funds the following
guideline is suggested: if a project has more than five years of
useful life remaining, an incremental cost view should be
considered; if the project has less than five years of useful life
remaining, a pro-rata cost approach should be considered. Also,
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the likelihood the District will benefit from an asset’s life
extension should be evaluated prior to allocating costs.
1.22 Oversizing
If deemed reasonable by the District, in connection with the
construction of backbone facilities, a developer may be required
to oversize new facilities for future development. The developer
is reimbursed for incremental oversizing costs as per Policy
No. 26. These reimbursements are not available for the
distribution system within a development which is an obligation
of the developer.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are assumed 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 financing costs are allocated to these areas so that they
will not incur any costs for newly developing areas, except for
capital projects that produce district-wide benefit or cost
savings.
1.24 Improvement Districts (IDs)
Improvement Districts (IDs) are established to facilitate the
financing of particular improvements by the specific
beneficiaries. The District has a number of improvement districts
that were established for General Obligation (GO) debt repayment.
Most GO debt has been paid off and it is unlikely that the
District will issue additional GO debt. Improvement districts
continue to be used for other purposes: 1) to distinguish sewer
customers from water customers on the county tax roll; or 2) to
place parcels on the county tax roll for the collection of
availability fees.
Over the years, the District moved to a district-wide perspective
of financing improvements. This philosophy is evident by the
district-wide capacity and annexation fees. The District also
uses district-wide water rates. As time goes on, it is expected
that IDs will continue to outgrow their purpose and their use will
diminish.
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1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and continuous availability of services.
Financial stability and the resulting improved credit quality
allow the public entity to weather times of uncertainty and the
impact of negative events, both major and minor. Reserves allow
for the ongoing maintenance of property and timely payment of
expenses even when such expenses exceed money available from 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 public entity.
A “reserve” has a number of meanings, as follows:
•Working capital is required to insure timely payment of
obligations.
•A buffer against volatility in revenues.
•Liquidity is required to obtain other goods and services
(e.g., bank services).
•Designated money to protect creditors.
•Money set aside to replace assets at the end of their useful
lives.
•Money set aside to repair or replace assets damaged or
destroyed at unanticipated times.
It is important to note that reserves, 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. In addition, the term fund balance was replaced
by net assets as codified by the Governmental Accounting Standards
Board (GASB).
In short, reserves are the liquid assets of the District,
accumulated and maintained for application to finance contingent
future activities, whether known or unanticipated, operating or
capital in nature. The District’s Reserve Policy governs the
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management and use of these financial resources. 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 as well as the demand
for 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
Educational Revenue Augmentation Fund (ERAF) contributions or
changes in calculation methodology.
•Operating Costs - increases in operating and maintenance
costs because of inflation, labor agreement or other
modification.
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•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 require short-
term borrowing in the absence of sufficient financial
resources.
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, Report No. 2003-137. All of
these recommendations have 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:
•Distinguish between restricted and unrestricted reserves.
•Establish distinct purposes for all reserves.
•Set target levels, including minimums and maximums, for the
accumulation of reserves.
•Identify the events or conditions that prompt the use of
reserves.
•Conform to plans to acquire or build capital assets.
•Receive Board approval and that it is 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 reserves.1
1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are
Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137; p. 8.
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Specifically, the Constitution states that “each entity of the
government can establish contingency, emergency, unemployment,
reserve, sinking fund…or similar funds as it shall deem reasonable
and proper.”2 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 context for different
districts and different contingencies justifying reserves.
The Government Finance Officers Association (GFOA) in its
“Recommended Practice on Appropriate Level of Unreserved Fund
Balance in the General Fund” (2002) states that in
establishing a policy governing the level of unreserved fund
balance in the general fund, a government should consider a
variety of factors. These include:
•The predictability of its revenues and the volatility of
its expenditures (i.e., higher levels of the unreserved
fund balances 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 the 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 the unreserved fund balance to
compensate for any portion of unreserved fund balance
already designated for a specific purpose).
2 California Constitution, Article XIII B, Section 5.
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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.
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’s general guidelines as provided above. In
addition, the District has adopted the following principles in the
management of its financial resources:
•Reserves are held and used only for the purpose for which
they are collected. This is done to maintain equity among
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 operations and maintenance from capital
expenditures occurs within each of the service types. This
is done because the financing of these expenditures is often
on different timelines or use different reserves.
•The District will hold its reserves 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 reserves 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 long-term financing which spreads the
cost of facilities over the life of the facilities. The
burden to pay for facilities is then paid by those who use
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them. The District could amass significant reserves by pre-
collecting financial resources in a Replacement Reserve Fund
allowing the District to cash finance all replacements.
However, this would require significant rate increases
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 model on 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 fees charged. This
review also insures that reserves will be available to continue to
serve the District’s customers.
Financial Sources
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 financed by developers.
b.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.
c.Water Annexation Fees (General Use)
Annexation fees3 are collected as a condition of annexing
into the District’s potable or recycled water facilities.
Since the existing facilities have been built and maintained
3 Code of Ordinances, Section 9.
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by developers or customers within the District, the
annexation fee is calculated based on the present value of
all property taxes (1% property tax and availability fees)
paid by existing and prior customers. The annexation fee
reimburses existing customers for past contributions so that
all customers have contributed more equally to water
facilities. Proceeds of annexation fees are unrestricted and
may be used for any general fund purpose.
d.Sewer Annexation Fees (General Use)
A sewer annexation fee is collected when property is annexed
into an improvement district. Since the existing facilities
have been built and maintained by developers or customers
within a sewer IDs, the annexation fee is calculated based on
the present value of all availability fees paid by existing
and prior customers. The annexation fee reimburses existing
customers for past contributions so that all customers have
contributed more equally to sewer facilities. Proceeds of the
annexation fees are unrestricted and may be used for any
general fund purpose.
e.Water Capacity Fees (Restricted)
Water capacity fees4 are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
planning, design, construction, and financing associated with
expansion, replacement or betterment facilities. The “buy-
in” portion may be shifted back and forth between expansion,
betterment or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities (excluding new water supply expansion).
f.Sewer Capacity Fees (Restricted)
Sewer capacity fees are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
4 Code of Ordinances, Section 28
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in” portion of the capacity fee covers cost to repay existing
customers for the facilities that they have built, and where
the “incremental” portion of the capacity fee covers the cost
of future expansion facilities. The “buy-in” portion of
the capacity fee is restricted to pay for planning, design,
construction, and financing associated with expansion,
replacement or betterment facilities. The “buy-in” portion
may be shifted back and forth between expansion, betterment
or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities. For parcels within a sewer ID the
calculation excludes the tax debt already paid by these
customers therefore, producing a lower fee than for parcels
outside of a sewer ID. The capacity fees are restricted to
pay for planning, design, construction, and financing
associated with the expansion, replacement, or betterment of
facilities.
Facility needs are based on projected land use planning. Changes
in anticipated future land use occur and can alter projected
facility requirements. Thus, both the anticipated facilities
needs and their projected costs change over time as regulatory
agencies make changes to land use. The District periodically
reviews the capacity fee calculation to accommodate such
variations. These fees are paid by developers.
The District’s construction of infrastructure occurs prior to the
addition of EDUs. This sequence serves two purposes: one it
ensures that the District can serve the pending construction as it
is completed; and 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 reserves are
depleted.
The water capacity fee is calculated based on the combined
recycled and potable water systems’ needs. This methodology is
used because the two water systems work hand-in-hand. All
capacity fees can be used for either potable or recycled but must
be tracked to distinguish between the “buy-in” and “incremental”
portions as described above. So, while capacity fees are not
restricted separately by potable and recycled, they are tracked
separately.
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Meter
Installation
Charges
Developer
Deposits
Annexation
Fees
Capacity
Fees
Restricted Funds Unrestricted and
Undesignated
(General Use) Funds
DEVELOPERS
Diagram 2.0: Flow of Funds - Developer Sources
2.1 Customers/Users
a.Uniform Rates and Charges (General Use)
Charges to users for water, sewer, and recycled water are
uniform throughout the District for similar customer types.
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 a charge 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 costs from the County Water Authority (CWA) and the
Metropolitan Water District (MWD).
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Uniform Rates
and Charges
Monthly
System Fees
Energy
Charges
2x Water
Rate
Pass –Through
Fixed Charges Penalties
Special Rates
and Charges
Restricted Funds
Unrestricted and
Undesignated
(General Use) Funds
CUSTOMERS / USERS
f.Special Rates and Charges (General Use)
In addition to the uniform water and sewer charges, the
District has a special sewer rate for the Russell Square lift
station. The Russell Square fee is for construction,
installation, maintenance or repair of the Russell Square
lift station. This fee is collected in accordance with the
Russell Square sewer charge (see Code of Ordinances Section
53.03B).
g.Temporary Meter Fees (General Use/Restricted)
Water charges, in lieu of capacity fees, are charged on
temporary meters. This is done because temporary meters use
system capacity but 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.
Diagram 2.1: Flow of Funds - Customer Sources
2.2 County-Collected Taxes and Fees
a.General Levy Property Tax Receipts (1% Property Tax)
(General Use)
In 1978, Proposition 13 limited the levy of ad valorem
property taxes on real property to one percent of the
assessed value of such property. Subsequent legislation,
AB 8, established that the receipts from the one percent levy
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were to be distributed to taxing agencies proportionate to
each agency’s general levy receipts prior to Proposition 13.
Taxes received are for general use. Spending limits for the
District are governed by the 1979 passage of California
Proposition 4, Limitations of Government Appropriations (GANN
limit). Proposition 4 places an appropriation limit on most
spending from tax proceeds.
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 the improvement district (ID) within
which it is collected. Accordingly, the District may use
availability charges in excess of $10 toward costs of water
and sewer facilities which are either, expansion,
betterment, or replacement of facilities consistent with the
purpose of the ID in which they are collected. This portion
of the proceeds of availability charges is geographically
restricted and restricted by purpose. As costs are incurred
on these projects the respective IDs are charged, reducing
the reserves. To the extent that availability charges are
not used for the purpose for which they are collected, they
must be returned to the property owners that paid them. The
District has historically used these reserves for betterment
capital facilities thus, the restricted reserves are
accounted for in “sub-funds” of the Betterment Fund
(See 2.1 f.).
c.Improvement District General Obligation (GO) Bond
Assessments (Restricted)
The District has historically issued general obligation (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 special taxes or
assessments within the ID to pay the debt obligation. The
proceeds of the debt are restricted for the purpose as
defined in the bond documents.
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General Levy
Property Tax
Receipts
Availability
Charges
General Obligation
Bond Assessments
Unrestricted and
Undesignated
(General Use)
Funds
Restricted Funds
COUNTY COLLECTED TAXES AND FEES
Diagram 2.2: Flow of Funds – County Collection Sources
2.3 Miscellaneous Income
a.Miscellaneous Rents and Leases (General Use)
Revenues received from the rental and lease of District
property are general use revenues. Not only are they
periodic revenues, but there is also a one-time fee charged
with the setup of each new lease. The District incurs
expenses related to these rents and leases. The one-time
fees are calculated to recover the costs to setup the leases.
b.Sewer Billing Fees (General Use)
Sewer billing fees are general use revenues. The District
provides processing and billing services to the City of Chula
Vista to bill and collect from their customers for sewer
service. These fees are to recover the cost the District
incurs to provide this service.
c.Interest Income or Expense Allocation (General Use,
Designated, and Restricted)
Interest income (expense) will be allocated every month based
upon each fund's month-ending balance. In this way, each
fund receives credit for interest earned by that fund and
each fund with a negative balance is charged for the use of
the other fund’s reserves.
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Number
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Date
Revised
11/4/20
Miscellaneous
Rents and Leases
Sewer Billing
Fees
Interest Income or
Expense Allocation
Restricted Funds Designated Funds
Unrestricted and
Undesignated
(General Use) Funds
MISCELLANEOUS INCOME
Diagram 2.3: Flow of Funds – Miscellaneous Income Sources
2.4 Debt Issuance
a.Loans (General/Restricted Use)
As the District determines that additional financing 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 to satisfy short-term 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 general obligation 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
financing 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.
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RESERVE POLICY
Policy
Number
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Date
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Date
Revised
11/4/20
c.Certificates of Participation (COPs) (Restricted)
General revenues of the District are pledged as security for
Certificates of Participation (COPs) indebtedness. If the
District determines that additional financing 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. 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
2.5 Inter-fund Transfers
Each year in the budgeting process, future fund levels are
projected for the next six years. Based on these projections
transfers are recommended. Reserves may be transferred
between Unrestricted or Designated Funds and the General Fund
(see 4.0 “Funding Levels” and 4.1 “Fund Transfers”).
Reserves may not be transferred to or from any of the
restricted funds unless it is between two restricted funds
with a shared purpose.
Loans General
Obligation Bonds
Certificates of
Participation
Restricted Funds
Unrestricted and
Undesignated
(General Use) Funds
DEBT PROCEEDS
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BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
Fund Types and Categories
3.0 General Funds
a.Purpose
The General Fund is neither restricted nor designated. The
District maintains one General Fund for each business segment
(water, sewer, and recycled). This fund holds the working
capital and emergency operating reserves. While the General
Fund has a short-term focus to finance the District’s annual
operations, it is supported by the six-year rate model. This
fund is primarily used to finance the operations of the
District; however, it can be used for any District purpose.
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. This fund can also be used to avoid spikes
in the rates or significant and abrupt increases. It is an
industry practice to have a fund that can be used to
stabilize rates. This would only occur if there was a
temporary need for reserves that would smooth out a rate
spike or to ramp up what would otherwise be a dramatic rate
increase.
The General Fund also plays a role in the debt planning of
the District. 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 need a number of debt issuances over the years
and this fund will help the District not only to stabilize
rate fluctuations but also to access low cost financing for
future projects.
b.Sources
Meter installation charges, temporary meter fees, uniform
rates and charges, monthly system fees, energy charges,
penalties, pass-through fixed charges, general levy property
tax receipts, water annexation fees, availability charges,
miscellaneous rents and leases, sewer billing fees, interest
income or expense allocation, loans, and a portion of the
temporary water sales.
The sewer general fund receives sewer charges, penalties,
availability charges, sewer annexation fees, and interest
income or expense allocation.
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BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
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Date
Adopted
2/10/93
Date
Revised
11/4/20
c.Funding Levels
I.Minimum Level – The minimum reserve level for each
business segment of the General Fund is three
months of operating budget expenses (evaluated
separately for each segment).
II.Maximum Level – The maximum reserve 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 reserves 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.
3.1 Designated Other Post Employment Benefits (OPEB) Fund
a.Purpose
Designated Other Post Employment Benefits (OPEB) reserves are
“general use” reserves that have been set apart by Board
action to finance the medical benefits of qualified retirees
as outlined in the District’s benefits plan. This fund is
available to hold any Board designated OPEB funds. The
District also has a trust at CalPERS and is restricted for
the purpose of financing the OPEB liability. Money held in
the CalPERS trust restricts the funds from any use other than
OPEB. The two funds are considered jointly when looking at
target reserve levels. Every two years, actuarial study is
performed to update the annual financing requirements.
Changes in the actuarial valuation may result from changes in
benefit levels, employee population, health insurance costs,
or general market conditions.
b.Sources
The OPEB liability may be financed by general use reserves
coming from user rates and charges, either from an operating
budget expenditure or from interfund transfers. Transfers of
unrestricted reserves may come from the various designated
funds or from the General Fund. As a part of the normal
budget process, annual operating revenues have been
sufficient to finance the ongoing needs of this designated
fund. While debt financing is also an option, the District
has only used user rates and charges to finance this fund.
191
OTAY WATER DISTRICT
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
I.Minimum Level – The minimum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. When
considering the reserve level of this fund, both
the District held OPEB reserves and CalPERS held
OPEB reserves must be considered jointly.
II.Maximum Level – The maximum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, exceed the
OPEB liability, the District will reduce the annual
funding levels as defined by the actuarial study.
III.Target Level – The target reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, fall below
the OPEB liability, the District will increase the
annual funding levels as defined by the actuarial
study.
3.2 New Water Supply Fund Category
a.Purpose
The New Water Supply Fund category is to finance the
expansion portion of new water supply projects and is
therefore to be paid by developers. When considering the
reserve level of the New Water Supply category; the New Water
Supply Fund, the New Water Supply Debt Fund, and the
Designated New Water Supply Fund all work in concert and must
be considered jointly.
b.Sources
The New Water Supply Fund receives reserves only from the new
water supply fee. Other funds within the new water supply
category of funds receive debt proceeds and general use
reserves through a designation to this category. Effective
December 1, 2020, the new water supply fee collection was
discontinued. The New Water Supply Fund will continue to be
used to fund qualified projects and to pay the proportionate
share of debt service of new water supply projects until the
monies in the fund are fully depleted.
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OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
c.Funding Levels
Effective December 1, 2020, the new water supply fee
collection was discontinued. The New Water Supply Fund
will continue to be used to fund qualified projects and
to pay the proportionate share of debt service of new
water supply projects until the monies in the fund are
fully depleted.
Diagram 3.2: New Water Supply Fund Category
3.3 Expansion Fund Category
a.Purpose
The Expansion Fund category is to finance the expansion
portion of capital projects and therefore is to be paid for
by developers. When considering the reserve levels of the
expansion category, the following funds work in concert and
Funding Source Debt
Proceeds
Restricted Funds
Unrestricted and
Undesignated Funding
Sources
Designated
New Water
Supply Fund
Designated Funds
Expansion
New Water
Supply Fund
Restricted Funds
New Water
Supply
Debt Fund
Restricted Funds
New Water
Supply Fund
New Water
Supply Fund
Category
General Fund – Rates and Charges
Debt Fund
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BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
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Date
Adopted
2/10/93
Date
Revised
11/4/20
must be considered jointly: the Expansion Fund, Expansion
Debt Fund, Capital Improvement Fund, and the Designated
Expansion Fund. Potable and recycled reserves are considered
jointly while sewer is evaluated separately.
b.Sources
The Expansion Fund is financed by water charges in lieu of
capacity fees (for temporary meters) and the “incremental”
portion of the capacity fee. The other funds in this
category may also be financed by debt proceeds, the “buy-in”
portion of the capacity fee, and the general fund through a
designation of reserves.
c.Funding Levels
I.Minimum Level – As the District matures the CIP
will move to purely replacement and betterment
projects. As the District moves through this
lifecycle the need for expansion reserves will
decrease and may be reduced to zero.
II.Maximum Level – The maximum reserve level for the
expansion category of funds is limited to five
years of unfinanced expansion facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing needs must be reduced by the projected
expansion revenues, bond financing, and any
restricted or general fund revenues allocated to
this fund category. If the combined expansion
reserves exceed target levels, the District should
consider reducing capacity fees, reallocating
restricted or designated funds to meet other
purposes, or shifting the timing of expansion
projects.
III.Target Level – The target level is six months of
expansion expenditures. It is important that the
expansion reserves remain at a minimum of six
months of expansion expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting expansion
reserves. If the combined expansion reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, an
adjustment to the timing of expansion projects, or
a reallocation of restricted reserves. Bond
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Policy
Number
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Date
Adopted
2/10/93
Date
Revised
11/4/20
proceeds would be placed in the Restricted Bond
Fund, transfers of general use reserves would be placed
in the Designated Expansion Fund, and transfers of
restricted reserves would be placed in the Expansion
Capital Improvement Fund.
Diagram 3.3: Expansion Fund Category
(1)For Water Capacity Fees 32.4% goes into the Expansion fund and 67.6% goes into
the Capital Improvement Fund. For Sewer Capacity Fees 100% goes into the Capital
Improvement Fund.
Unrestricted and
Undesignated Funding
Sources
Designated
Expansion
Fund
Designated Funds
Expansion
Fund Restricted Funds
Expansion Capital
Improvement
Fund
Restricted Funds
Expansion
Debt Fund
Restricted Funds
Restricted Funds
Debt
Proceeds Capacity
Fees (1)
2x Water
Rates
Funding Source
General Fund – Rates and Charges
Expansion
Fund
Capital
Improvement
Fund
Bond
Debt
Expansion
Fund
Category
195
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BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
3.4 Replacement Fund Category
a.Purpose
The Replacement Fund category is to finance replacement
projects. When considering the reserve levels of the
replacement category of funds, the following funds work
in concert and must be considered jointly: the Debt
Fund, Capital Improvement Fund, and the Designated
Replacement Fund. The purpose of these reserves is to
pay for the replacement of capital infrastructure and
capital purchases. These reserves are not to be used
for the replacement of non-capital items.
With the District’s development of its financial systems
and the greater need and ability to separate and track
reserves, the replacement reserves have 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 these are not
considered normal maintenance. When the cost is below
$10,000, the costs are financed annually as operational
maintenance. As charges are incurred on replacement
projects the reserves are deducted from the respective
Replacement Funds on a monthly basis.
b.Sources
The various funds in this category are financed by debt
proceeds, the “buy-in” portion of the capacity fee, and
general fund designations.
c.Funding Levels
I.Minimum Level – The minimum reserve level of this
category of funds is 3% of the historical value of
existing assets as identified in the District’s
current financial statements. Potable, recycled,
and sewer replacement are evaluated separately.
II.Maximum Level – The maximum reserve level of this
category of funds is 6% of existing assets. If the
combined replacement reserves exceed target levels, the
District should consider transferring the “buy- in”
portion of the capacity fee to meet other purposes.
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OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
Another consideration would be to shift the timing of
replacement projects.
III.Target Level – The target reserve level of this
category of funds is 4% of existing assets. In the
event that the reserves fall below the recommended
target level, the District should consider
transferring the “buy-in” portion of the capacity
fee. The District should also consider shifting
the timing of replacement projects or issuing debt
to support the planned level of facility
replacement. The District will act based on the
annual six-year rate model, to insure that at the
end of that planning horizon the reserves exceed
the minimum level and is approaching the target
level.
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
Diagram 3.4: Replacement Fund Category
(1)For Water Capacity Fees 67.6% goes into the Capital Improvement Fund.
For Sewer Capacity Fees 100% goes into the Capital Improvement Fund.
3.5 Betterment Fund Category
a.Purpose
The Betterment Fund category is to finance the
betterment portion of capital projects with a portion
going to maintenance of the potable, recycled, and sewer
systems. The District maintains separate Betterment
Fund categories, one for each improvement district. An
improvement district is a legally defined geographic
area usually established for the purpose of bond
financing of facilities. The betterment reserves within
Unrestricted and
Undesignated Funding
Sources
Designated
Replacement
Fund
Designated Funds
Replacement
Capital
Improvement
Fund
Restricted Funds
Replacement
Debt Fund Restricted Funds
Restricted Funds
Replacement
Fund
Category
Debt
Proceeds
Capacity
Fees (1)
Funding Source
General Fund – Rates and Charges
Debt Fund Capital
Improvement Fund
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Subject
RESERVE POLICY
Policy
Number
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Date
Adopted
2/10/93
Date
Revised
11/4/20
these funds are restricted by law for use within the
improvement district in which the fees were collected
(Water Code 71631.6). However, the legal restriction of
this reserve depends upon the particular revenue source.
(See Section 2.2 b. for a review of the availability
fees).
When considering the reserve levels of the betterment
category of funds, the following funds work in concert
and must be considered jointly: the Betterment Fund,
Debt Fund, Capital Improvement Fund, and Designated
Betterment Fund.
b.Sources
The Betterment Fund category receives restricted
revenues by improvement district from availability fees
(the first $10 is unrestricted, while amounts over $10
are restricted) collected through the county tax roll.
Betterment may also be financed by debt proceeds, the
“buy-in” portion of the capacity fee, as well as the
general fund through a designation of reserves.
c.Funding Levels
I.Minimum Level – As the District matures the CIP
will move to purely replacement projects. As the
District moves through this lifecycle the need for
betterment reserves will decrease and may be
reduced to zero.
II.Maximum Level – The maximum reserve level for the
betterment category of funds is limited to five
years of unfinanced betterment facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing need must be reduced by the projected
betterment revenues, bond financing, and general
fund designations. If this maximum is exceeded,
then the District should evaluate reductions in the
special water rates and availability fees,
transferring designated reserves to meet other
purposes, or shifting the timing of betterment
projects.
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OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
III.Target Level – The target is six months of
betterment expenditures. It is important that the
betterment reserves remain at a minimum of six
months of betterment expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting betterment
reserves. If the combined betterment reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, or
an adjustment to the timing of betterment projects.
Bond proceeds would be placed in the Betterment
Bond Fund while transfers would be placed in the
Designated Betterment Fund.
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BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
11/4/20
Fund
Diagram 3.5: Betterment Fund Category
Funding Source Availability
Charges (1) Capacity
Fees (2)
Debt
Proceeds
Restricted Funds
Capital
Improvement
Fund
Restricted Funds Betterment
Debt Fund
Restricted Funds
Betterment
Capital
Improvement
Fund
Restricted Funds Betterment
Fund
Designated Funds Designated
Betterment
Fund
Unrestricted and
Undesignated Funding
Sources
(1)The portion of charges over $10 per parcel is restricted.
(2)For Water Capacity Fees 67.6% goes into the Capital Improvement Fund. For Sewer
Capacity Fees 100% goes into the Capital Improvement Fund.
General Fund – Rates and Charges
Bond
Debt
Betterment
Fund
Betterment
Fund
Category
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Subject
RESERVE POLICY
Policy
Number
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Date
Adopted
2/10/93
Date
Revised
11/4/20
Diagram 3.6: Fund Targets
Fund or Fund
Category
Actions to Consider if
below Target Target Maximum
New Supply Fund
Category
New supply fee
increase, bond
financing, or transfer to
designated or CIF Funds
Total of all funds in fund
category = six months
of capital expenditures
Nexus of cost to fee
Expansion Fund
Category
Capacity fee increase,
bond financing, or
transfer to designated
or CIF Funds
Total of all funds in fund
category = six months
of capital expenditures
Nexus of cost to fee
Replacement Fund
Category
Bond financing, or
transfer to designated
or CIF Funds
Total of all funds in fund
category = 4% of
infrastructure
Nexus of cost to fee
Betterment Fund
Category
Bond financing, or
transfer to designated
or CIF Funds
Total of all funds in fund
category = six months
of capital expenditures
5 years unfunded needs
Debt Reserve Fund Increase tax collection
or rates
One semi-annual
payment
Two semi-annual
payments
Rate Stabilization Fund Fund transfers from
legally available funds
The financial impact of
two consecutive years of
low winter water usage
The financial impact of
three consecutive years
of low winter water
usage
OPEB Fund Fund transfers Full funding Full funding
General Fund Rate increase or fund
transfers
Three months of
operating budget
expenses
Nine months of
operating budget
expenses
Additional Restricted Funds
4.0 Capital Improvement Fund
a.Purpose
The “Capital Improvement Fund’s sole purpose is to track the
“buy-in” portion of the capacity fee and to ensure these fees
are expended solely for the purpose for which they were
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Date
Revised
11/4/20
collected. In this case it is to pay for facilities that
were in existence at the time this fee was established.
These fees may be used for expansion, replacement, or
betterment projects or any debt related to these categories.
The water capacity fees may also be used for either the
potable or the recycled systems. As capacity fees are
collected, the “buy-in” portion of the fee is allocated as
needed to one of three capital improvement funds, one in each
of the Expansion, Replacement, and Betterment Fund
categories. These reserves are used to pay debt or offset any
negative balance within these three categories of funds. For
sewer, these fees fund the Expansion, Replacement, or
Betterment Fund categories. These fees may not be used to
finance the New Water Supply category, as there were no new
water supply facilities in existence at the time the new
methodology for capacity fees was established.
b.Sources
The “buy-in” portion of the capacity fee collected after
June 30, 2010 or after September 30, 2014 for sewer.
c.Funding Levels
There are no minimums, maximums, or target levels for these
reserves on an individual basis. The allocation of this fee
to the various capital improvement funds is dependent on the
overall reserve levels within each fund category.
4.1 Debt Reserve Fund
a.Purpose
The Debt Reserve Fund is established to hold the proceeds
from the various debt issuances. There are two types of
debt, General Obligation bonds and Certificates of
Participation bonds. The proceeds are transferred to the New
Water Supply, Expansion, Replacement, or Betterment Debt
Funds as they are expended for various facilities within
those fund categories. As repayment of the debt occurs, the
balances within these individual funds are reduced so that
the financial impact of issuing debt is tracked within the
category for which the debt was issued.
b.Sources
Debt proceeds.
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Number
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Date
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Date
Revised
11/4/20
c.Uses
There are no minimums, maximums, or target levels for this
fund on an individual basis. This fund is available on an as
needed basis to fund CIP projects for new water supply,
expansion, replacement, or betterment. From a funding level
perspective, these reserves are evaluated in the context of
all the various funds within each fund category.
4.2 Rate Stabilization Fund
a.Purpose
The Rate Stabilization Fund is established for the purpose of
minimizing rate increases in response to one-time events and therefore
stabilizing the rates and charges imposed by the District to meet
covenanted debt service coverage levels. The Rate Stabilization Fund
is not intended to be used to offset regular rate increases needed to
meet inflationary cost increases in operations.
b.Sources
The District may budget for Rate Stabilization Fund deposits from the
Sewer Fund, amounts in excess of the annual debt service coming due
and payable in the fiscal year, after payment of operating expenses.
The allowable amount that may be deposited shall not be transferred
prior to payment of the annual debt service obligation.
c.Uses
There is no minimum level for this fund. The maximum level shall be
equal to the financial impact of three (3) consecutive years of low
winter water usage. The target level for this fund shall be equal to
two (2) consecutive years of low winter water usage. For the purposes
of calculating debt service, amounts transferred from the Rate
Stabilization Fund to the Sewer Fund will constitute Gross Revenue in
the fiscal year the transfer occurs. All interest or other earnings
on deposits in the Rate Stabilization Fund will be withdrawn at least
annually and will be accounted for as operating revenue in the Sewer
Fund.
Fund Transfers
5.0 Funding Levels
As described in the preceding sections, the District maintains
reserves for its operating and capital activities. These reserves
can be of three types: 1) undesignated or general use reserves,
2) designated, and 3) restricted for a specific purpose. The
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Number
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Date
Revised
11/4/20
restricted reserves can be restricted geographically and/or by
purpose. The District maintains various funds to track the
various designations and restrictions. The source of the money
for each fund was discussed along with the purpose, source of
funds, and levels. Key characteristics 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 in light of the 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 or under the
target amount. This is not only acceptable but expected. The
rate model provides an empirical estimate of the conformance
between the projected District’s financial activities and the
guidelines of this policy.
5.1 Fund Transfers
Reserves within the District’s various designated funds come from
interfund transfers of unrestricted general use reserves. It is
important to note that the District has the ability to use general
use reserves for any business purpose. General use reserves may
be transferred to and from any unrestricted fund for any business
need. Designated reserves are general use reserves which have
been set aside for a specific purpose by Board action. These
reserves can only be used for the purpose they were designated, or
with Board action they may be used for any other business purpose.
While general use reserves may be used for any restricted purpose
they may not be transferred to Restricted Funds due to the
sensitivity of the tracking of restricted reserves. If reserves
are needed for a restricted purpose they are transferred to a
Designated Fund within the fund category with that particular
purpose. Reserves restricted to a fund category may only be used
within that category and may not be transferred to another
category. For example, the “incremental” portion of the capacity
fee are restricted reserves for a specific purpose, and may not be
transferred to another category as no other category has the same
purpose. However, the “buy-in” portion of the capacity fees are
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restricted for purposes that are shared by more than one category
of funds and may therefore be transferred to a restricted fund
within another fund category as long as it shares the same
purpose.
In many situations reserve transfers are expected as some fund
categories will exceed their maximums or drop below their
minimums. Only fund categories that are below the stated target
are eligible to receive transferred reserves. Fund categories
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 reserve
transfers out, but only when other options are not available.
The rationale for prioritizing reserve transfers is based on the
immediacy of the need and the availability of reserves from other
funding sources. For example, the General Fund is first to
receive reserves 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 finance replacement
assets for many years to come. Debt financing is
available to respond to this long term, foreseeable, and planned
cash flow. This fund is less likely to have immediate needs and
has other financing options.
When making the determination of when transfers are necessary, all
funds within a fund category work as a group. The combined
balance of the restricted and designated funds is looked at when
determining whether the fund category requires additional funding
from the Restricted Capital Improvement Fund, Restricted Debt
Fund, or the General Fund. Because the Capital Improvement Fund
may finance expansion, replacement or betterment reserves may be
transferred between these fund categories, but only back and forth
within its own type of restricted fund.
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 six-year planning
horizon, this would trigger a bond sale, a transfer of general use
reserves, and/or a transfer of restricted reserves. If in the
cash planning process, it was anticipated that the General Fund
would remain above target during the planning horizon and that the
trend did not present a problematic underfunded status, then
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General Fund reserves would be considered available for transfer
prior to making proceeds available from a bond sale. Also, if
during this period the Betterment Fund category was anticipated to
exceed its maximum, then reserves from either the Designated
Betterment Fund, or the Capital Improvement Fund would be
transferred to the corresponding Expansion Fund prior to a bond
sale. All funds are evaluated to determine which has the greatest
need or availability of reserves before any reserve transfer
recommendation is presented to the Board.
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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: When water service is requested for land outside
the boundaries of the District, the land to be serviced must first
be annexed. For sewer service the land must be annexed into an
improvement district within the District.
Assets: Resources owned or held by Otay Water District that has
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.
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.
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CWA: The County Water Authority was organized in 1944 under the
State County Water Authority Act for the primary purpose of
importing Colorado River water to augment the local water supplies
of the Authority's member agencies. The Authority purchases water
from the Metropolitan Water District of Southern California (MWD)
which imports water from the Colorado River and the State Water
Project.
Debt Service: The District's obligation to pay the principal and
interest of bonds and other debt instruments according to a
predetermined payment schedule.
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 payments, and other
infringements of the District’s Code of Ordinances.
1% Property 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, AB 8, 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.
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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.
Russell Square: A sewer lift station constructed in 1983 that
serves four properties in the Russell Square Development.
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.
Tax Collection for Bond Debt: 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.
Unit: A Unit of water is 100 cubic feet or 748 gallons of water.
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. Effective in 2009, all non-
residential customers are charged for water based on a tiered rate
structure in which water rates are based on meter size and amount
of Units consumed.
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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
2.2.1) 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
2.2.6) Restricted New Water Supply 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, debt reserves 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.
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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 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
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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 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 District selected
financial institutions and security broker/dealers authorized and
approved to provide investment services in the State of California.
Investment services include the buying or selling of permissible
investments such as treasuries, government agencies, etc. for delivery
to the custodian bank. 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:
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•Audited Financial Statements.
•Proof of Financial Industry Regulatory Authority (FINRA)
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 through 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 $75 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”)
•Federal Farm Credit Bank (FFCB)
•Federal Agricultural Mortgage Corporation (FAMCA or “Farmer
Mac”)
There is no percentage limitation of the portfolio which can be
invested in this category, although a five-year maturity from the
settlement date limitation is applicable. Government agencies
whose implied guarantee has been reduced or eliminated shall
require an “A” rating or higher by a nationally recognized
statistical rating organization.
8.04) Interest-bearing demand deposit accounts must be made
only in Federal Deposit Insurance Corporation (FDIC) insured
accounts. For deposits in excess of the insured maximum of
$250,000, approved collateral shall be required in accordance
with California Government Code, Section 53652. Certificates of
Deposit (CD) will be made only to the FDIC-insured limit of
$250,000. 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 2 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(h). Purchases of commercial paper may not exceed 10
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 from
the settlement date or less, and that meet the further
requirements of California Government Code, Section 53601(k).
Investments in medium-term notes are limited to 10 percent of the
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District’s portfolio and no more than 2 percent of the
outstanding medium-term notes of any single issuer.
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(l). Investments in money market
mutual funds are limited to 10 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 as leveraging, is prohibited.
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.
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•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
exceeding the $250,000 FDIC insured maximum. 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.
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 settlement date
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of the 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.
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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.
18.0: GLOSSARY
See Appendix A.
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APPENDIX A: 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.
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COMPREHENSIVE ANNUAL FINANCIAL 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.
DEALER: A dealer, as opposed to a broker, acts as a principal in all
transactions, buying and selling for his own account.
DEBENTURE: 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.
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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.
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 AGRICULTURAL MORTGAGE CORPORATION (FAMC or Farmer Mac): A
stockholder owned, publicly-traded corporation that was established
under the Agricultural Credit Act of 1987, which added a new Title
VIII to the Farm Credit Act of 1971. Farmer Mac is a government
sponsored enterprise, whose mission is to provide a secondary market
for agricultural real estate mortgage loans, rural housing mortgage
loans, and rural utility cooperative loans. The corporation is
authorized to purchase and guarantee securities. Farmer Mac
guarantees that all security holders will receive timely payments of
principal and interest.
FEDERAL HOME LOAN BANK (FHLB): 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 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).
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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.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA): An independent,
not-for-profit organization authorized by Congress to protect
America’s investors by making sure the securities industry operates
fairly and honestly. It is dedicated to investor protection and
market integrity through effective and efficient regulation of the
securities industry. FINRA is the successor to the National
Association of Securities Dealers, Inc. (NASD).
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
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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.
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
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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.
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.
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.
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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, FAMCA, 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.
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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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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 ensure the use
of the District’s resources to meet its commitments, to provide the
highest quality of service to the District’s customers, and to
maintain sound financial management practices. These guidelines are
for general use and allow for exceptions as circumstances dictate.
2.0: SCOPE
This policy is enacted in an effort to standardize the issuance and
management of debt by the Otay Water District. It also establishes a
standard for internal lending/borrowing between water (potable and
recycled) and sewer funds, either direction. The primary objective is
to establish conditions for the use of debt, to minimize the
District’s debt service requirements and cost of issuance, to retain
the highest practical credit rating, maintain full and complete
financial disclosure and reporting, and to maintain financial
flexibility for the District. This policy applies to all debt issued
by the District including general obligation bonds, revenue bonds,
capital leases, and special assessment debt and loans between water
and sewer funds.
3.0: LEGAL & REGULATORY REQUIREMENTS
The Chief Financial Officer (CFO) and the District’s Legal Counsel
will coordinate their activities to ensure that all securities and
lending/borrowing agreements are issued in full compliance with
Federal and State law.
4.0: CAPITAL FACILITIES FUNDING
Financial Planning
The District maintains a six-year financial projection that identifies
operating requirements and public facility and equipment requirements,
and has developed a Rate Model for funding the District’s 6-Year
Capital Improvement Program (CIP). The District’s CIP Budget places
the capital requirements in order of priority and schedules them for
funding and implementation. It identifies a full range of capital
needs, provides for the ranking of the importance of such needs, and
identifies all the funding sources that are available to cover the
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costs of the projects. In cases where the program identifies project
funding through the use of debt financing, the budget should provide
information needed to determine debt capacity. The Rate Model and the
CIP Budget give the Board part of the data needed to make informed
judgments concerning the possibility of issuing debt.
Funding Criteria
The Chief Financial Officer (CFO) will evaluate all capital project
requests and develop a proposed funding plan. Priority may be given
to those projects that can be funded with current resources (annual
cash flow, fund balances or reserves). Those projects that cannot be
funded with current resources may be deferred or the CFO may recommend
that they be funded with debt financing. However, debt financing will
not be considered appropriate for any recurring purpose such as
current operating and maintenance expenditures. The issuance of
short-term cash-flow instruments is excluded from this limitation.
The General Manager will recommend the funding plan to the Board. The
General Manager may deem it necessary or desirable in certain
circumstances to convene a Finance Committee meeting to evaluate
funding options presented by the Chief Financial Officer.
Funding Sources
The District’s capital improvements can be classified in three
categories: those related to an expansion of the system
(“expansion”), those related to upgrading the existing system
(“betterment”) and those related to repairing or replacing existing
infrastructure (“replacement”). In general, capital improvements for
betterment or replacement are financed primarily through user charges,
availability charges, and betterment charges. Capital improvements
for expansion are financed through capacity fees. Accordingly, these
fees are reviewed at least annually or more frequently as required and
set at levels sufficient to ensure that new development pays its fair
share of the costs of constructing necessary infrastructure.
Additionally, the District will seek State and Federal grants and
other forms of intergovernmental aid wherever possible.
Pay-As-You-Go Projects
The District’s capacity fees are the major funding source in financing
additions to the water system and the recycled water system. Over
time, the fees collected and the cost to construct the capital
projects should balance. However, collection of these fees is subject
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to significant fluctuation based on the rate of new development.
Accordingly, the Chief Financial Officer, in developing the funding
plan for the CIP, will determine that current revenues and adequate
fund balances are available so project phasing can be accomplished.
If this is not the case, the Chief Financial Officer may recommend
that:
1.The project be deferred until funds are available, or
2.Based on the priority of the project, debt be issued to finance
the project.
Debt Financed Projects
If a project or projects are to be financed with long-term debt, the
District should use the following criteria to evaluate the suitability
of the financing for the particular project or projects:
1.The life of the project or asset to be financed is 10 years or
longer and its useful life is expected to exceed the term of the
financing.
2.Revenues available for debt service are deemed to be sufficient
and reliable so that long-term financing can be marketed without
jeopardizing the credit rating of the District.
3.Market conditions present favorable interest rates and demand for
District financing.
4.The project is mandated by State and/or Federal requirements and
current resources are insufficient or unavailable.
5.The project is immediately required to meet or relieve capacity
needs and current resources are insufficient or unavailable.
5.0: DEBT STRUCTURE
General
The District will normally issue debt with a maturity of not more than
30 years. The structure should approximate level debt service for the
term where it is practical or desirable. There will be no debt
structures that include increasing debt service levels in subsequent
years, with the first and second year of a debt payoff schedule the
exception and related to projected additional income to be generated
by the project to be funded. There will be no "balloon" debt
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repayment schedules that consist of low annual payments and one large
payment of the balance due at the end of the term. There will always
be at least interest paid in the first fiscal year after debt issuance
and principal starting no later than the first fiscal year after the
date the facility or equipment is expected to be placed in service.
Capitalized interest will not be for a period of more than necessary
to provide adequate security for the financing.
Limitations on the Issuance of Variable Rate Debt
The District will normally issue debt with a fixed rate of interest.
The District may issue variable rate for the purpose of managing its
interest costs. At the same time, the District should protect itself
from too much exposure to interest rate fluctuations. In determining
that it is in the District’s best interest to issue certain debt at
variable rates instead of fixed rates, at the time of issuing any
variable rate debt, there should be at least a 10% estimated reduction
in annual debt costs by issuing variable rate debt when compared to a
similar issuance of fixed rate debt. If the estimated overall cost
savings from issuing variable rate debt is not at least 10% at the
time of issuance, relatively small fluctuations in rates could
actually increase the District’s financing costs over the life of the
bonds compared to a similar fixed rate financing. By using this 10%
factor at the time of issuance, the District can be relatively assured
that its variable rate financing will be cost-effective over the term
of the bonds.
The comparison will be based on the following criteria:
1.The interest rate used to estimate variable interest costs will
be the higher of the 10-year average rate or the current weekly
variable rate.
2.The variable rate debt costs will include an estimate for annual
costs such as letter of credit fees, liquidity fees, remarketing
fees, monthly draw fees and annual rating fees applicable to the
letter of credit.
3.Any potential reserve fund earnings will reduce the fixed rate
debt service or variable rate debt service as applicable.
Periodically, using the criteria described above, the Chief Financial
Officer will compare the estimated annual debt service costs to
maturity of any variable rate debt with estimated debt service if the
debt was converted to fixed rates. If this analysis produces a break
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even in total payments over the life of the issue, the Chief Financial
Officer will recommend converting such variable rate debt to fixed
rate.
Variable rate debt should not represent more than 25% of the
District’s total debt portfolio. This level of exposure to interest
rate fluctuations is considered to be manageable in an environment of
increasing interest rates. At a higher ratio than this, the District
might be faced with an unplanned water rate increase to meet its Rate
Covenants. Rating agencies use this ratio in their analysis of the
District’s overall credit rating.
Further, Rate Covenants applicable to variable rate debt shall not
compromise the issuance of additional debt planned by the District and
variable rate debt should always contain a provision to allow
conversion to a fixed rate at the District’s option.
6.0: CREDIT OBJECTIVES
The Otay Water District seeks to maintain the highest possible credit
ratings for all categories of long-term debt that can be achieved
without compromising delivery of basic services and achievement of
District policy objectives.
Factors taken into account in determining the credit rating for a
financing include:
1.Diversity of the District’s customer base.
2.Proven track record of completing capital projects on time and
within budget.
3.Strong, professional management.
4.Adequate levels of staffing for services provided.
5.Reserves.
6.Ability to consistently meet or exceed Rate Covenants.
The District recognizes that external economic, natural, or other
events may from time to time affect the creditworthiness of its debt.
Nevertheless, the District is committed to ensuring that actions
within its control are prudent and well planned.
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7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA
Competitive Sale
The District will use a competitive bidding process in the sale of
debt unless the nature of the issue or specific circumstances warrants
a negotiated sale. The CFO will determine the best bid in a
competitive sale by calculating the true interest cost (TIC) of each
bid.
Negotiated Sale
Types of debt that would typically lend themselves to the negotiated
sale format are variable rate debt and unrated debt. Circumstances
that might warrant a negotiated sale may occur when the issue is of a
limited size that would not attract wide-spread investor interest,
during periods of high levels of issuance by other entities in the
State, or during periods of market volatility or with relatively new
financing techniques. In the event the District decides to use a
negotiated sale, it will pay management fees only to those firms that
place orders for bonds.
If the size of the District’s proposed issue is not cost effective,
the District may also consider issuing its debt by private placement
or through any qualified Joint Power Authority (JPA) in the State of
California whose principal business is issuing bonds.
8.0: REFUNDING DEBT
Purpose
Periodic reviews of all outstanding debt will be undertaken by the
Chief Financial Officer to determine refunding (refinancing)
opportunities. The purpose of the refinancing may be to:
1.Lower annual debt service by taking advantage of lower current
interest rates.
2.Update or revise covenants on outstanding debt issue if a Rate
Covenant appears to be too high, has precluded the District from
implementing its financing plan, or has caused the District to
increase rates to customers.
3.Restructure debt service associated with an issue to facilitate
the issuance of additional debt, usually in order to smooth out
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peaks in total debt service which can occur frequently as one
debt issue is layered on top of existing debt issues.
4.Alter bond characteristics such as call provisions or payment
dates.
5.Pay for conversion costs such as funding a reserve fund or paying
for credit enhancement when converting variable rate debt to
fixed rate debt.
Restrictions on Refunding
Tax-exempt bonds typically have provisions that preclude early
redemption of the bonds for a period of years after issuance. The
ability of issuers to refinance a tax-exempt bond prior to its
Optional Redemption date (known as Advance Refunding) is limited by
the Tax Code. There is no limit in the Tax Code on the ability of
issuers to redeem bonds prior to their maturity date once the Optional
Redemption date has been reached (known as Current Refunding).
Savings Criteria
In cases where an Advance Refunding or Current Refunding is intended
to provide debt service savings, the District may commence the
refinancing process if a minimum five percent (5%) present value
savings net of issuance costs and any cash contributions can be
demonstrated. Since interest rates may fluctuate between the time
when a refinancing is authorized and when the debt is issued,
beginning the process with at least a 5% savings should provide the
District with some level of protection that it can achieve a minimum
of three percent (3%) net present value savings of the refunding bonds
when and if the debt is issued. These minimum standards are intended
to protect the District staff from spending time on refinancings that
become marginally cost-effective after the entire issuance process is
complete.
The savings target may be waived, however, if sufficient justification
for lowering the savings target can be provided by meeting one or more
of the other refunding objectives described above.
9.0: SUBORDINATE LIEN DEBT
The District will issue subordinate lien debt only if it is
financially beneficial to the District or consistent with
creditworthiness objectives. Subordinate lien debt is structured to be
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payable second in priority to the District’s other outstanding debt.
Typically, subordinate lien debt might be issued if the District
desired a more flexible Rate Covenant with respect to its new
obligations and did not want to refinance all of its existing debt to
obtain that less restrictive Rate Covenant.
10.0: FINANCING PARTICIPANTS
The District’s purchasing guidelines provide the process for securing
professional services related to individual debt issues. The
solicitation and selection process include encouraging participation
from qualified service providers, both local and national, and
securing services at competitive prices.
Municipal Advisor: The use of a Municipal Advisor is necessary for
the sale of debt by a competitive bid process and is desirable when
issuing debt through a negotiated sale. The Municipal Advisor has a
fiduciary duty to the District and will seek to structure the
District’s debt in the manner that is saleable, yet meets the
District’s objectives for the financing. The Municipal Advisor will
advise the District on alternative structures for its debt, the cost
of different debt structures and potential pricing mechanisms that can
be expected from underwriters (such as call features, term bonds and
premium and discount bond pricing) and, at the District’s direction,
will write the offering document (preliminary official statement).
With respect to competitive sales, the Municipal Advisor will arrange
for distributing the preliminary official statement, accepting bids
via an internet bidding platform, verifying the lowest bid and provide
detailed instructions for the flow of funds at closing to the winning
Underwriter, the Trustee and the District. In a negotiated sale, the
Municipal Advisor will provide independent confirmation on the
Underwriter’s proposed pricing to ensure that interest rates and
Underwriter’s compensation are appropriate for the credit quality of
the issue and competitive in the overall public finance market in
California.
Underwriter: The Underwriter markets the bonds for sale to investors.
While the District’s preference is to select the Underwriter for the
debt via sale of the debt at competitive bid, there are circumstances
when a negotiated issue is in the best interests of the District.
Negotiated sales are preferable if the security features are
particularly complex or market conditions are volatile. The Chief
Financial Officer will recommend whether the method of sale is
competitive or negotiated based on the type of issue and other market
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conditions. In the case of negotiated sales, the Underwriter will be
required to demonstrate sufficient capitalization and sufficient
experience related to the specific type of debt issuance.
The Underwriter will work in connection with the District’s Municipal
Advisor on structuring the issue and offering different pricing ideas.
Bond Counsel: The District’s Bond Counsel provides the primary legal
documents that detail the security for the bonds and the authority
under which bonds are issued. The Bond Counsel also provides an
opinion to bond holders that the bonds are tax-exempt under both State
and Federal law. All closing documents in connection with an issue
are also prepared by Bond Counsel.
Disclosure Counsel: The District’s Disclosure Counsel provides legal
advice to the District regarding the adequacy of the District’s
disclosure of financial information or risks of investing in the
District’s debt issue to the investing public. The Disclosure Counsel
can prepare the official statement or review the official statement
and gives the District an opinion that there is no information missing
from the official statement of a material nature that would be
necessary for an investor to make an informed decision about investing
in the District’s bonds.
Trustee: The Trustee is a financial institution selected by the
District to administer the collection of revenues pledged to repay the
bonds and to distribute those funds to bondholders.
Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign
bank that has issued a letter of credit providing both credit
enhancement (the Letter of Credit Bank will pay the debt in the event
that the District defaults on the payment) and liquidity for a
variable rate bond issue. These banks have their own short-term
credit rating, which can be higher than the District’s short-term
credit rating. Liquidity is needed because variable rate bondholders
are allowed to “put” their bonds back to the District if they do not
like the interest rate currently being offered. The District’s
Remarketing Agent then finds a new buyer for those bonds, but in the
event that no buyer is found, a draw is made under the letter of
credit to purchase the bonds that have been “put.” As soon as the
bonds are remarketed to another buyer, the letter of credit is repaid.
The letter of credit fees are paid annually or quarterly. Letter of
credits are typically issued for not more than 3 years and must be
renewed during the life of the bonds. Credit enhancement is discussed
further under the heading “CREDIT ENHANCEMENT.”
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Municipal Bond Insurer: The Municipal Bond Insurer can be one of
several insurance companies that provide municipal bond insurance
policies securing payment of the District’s debt. These policies
provide that the Municipal Bond Insurer will pay the District’s debt
in the event that the District defaults on its payments. Debt which
is insured carries the Municipal Bond Insurer’s credit rating. The
insurance premium for the bond insurance policy is paid one time at
the issuance of the debt and is non-cancelable for the term of the
debt. Unlike a letter of credit, bond insurance policies do not
provide liquidity and are most typically purchased for fixed rate
debt.
Remarketing Agent: The Remarketing Agent is an investment bank that,
each week, determines the interest rate for the District’s variable
rate obligations. The rate is set at the rate at which the
obligations could be sold on the open market at 100% of their face
value. The Remarketing Agent also finds new buyers for any of the
obligations that are “put” back to the District.
Rating Agencies: Currently, there are three widely recognized rating
agencies that rate municipal debt in the United States: Standard &
Poor’s, Moody’s Investors Service, and Fitch Investors Service.
Rating agencies establish objective criteria under which each type of
financing undertaken by the District is to be analyzed. Upon request,
a rating agency will rate the underlying strength of the District’s
financings, without regard to the purchase of any credit enhancement.
The rating is released to the general public and thereafter, the
rating agency will periodically update its analysis of a particular
issue, and may raise or lower the rating if circumstances warrant.
Investment-grade ratings range from “AAA” to “BBB-.” A rating below
“BBB-” is not investment grade. Many mutual funds cannot buy bonds
that do not carry an investment grade.
Verification Agent: In a refunding, the District will deposit funds
with an escrow agent (usually the trustee) in an amount sufficient,
together with earnings thereon, to pay the debt service and redemption
price of the debt being refunded through and including the call date.
The Verification Agent verifies the mathematical accuracy of
calculation of the amount to be deposited in escrow and the bond
counsel relies on this verification in giving their opinion that the
debt is defeased within the meaning of the indenture and that the lien
of the debt on the revenues pledged to the debt being refunded is
released.
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11.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT
Members of the District, the Board of Directors and its consultants,
service providers and underwriters shall adhere to standards of
conduct and conflict of interest rules as stipulated by the California
Political Reform Act or the Municipal Securities Rulemaking Board
(MSRB), as applicable. All debt financing participants shall maintain
the highest standards of professional conduct at all times, in
accordance with MSRB Rules, including Rule G-37. Municipal Advisors
shall also adhere to applicable SEC rules and MSRB Rule G-42. There
shall be no conflict of interest with the District with any debt
financing participant.
12.0: CONTINUING DISCLOSURE
The District acknowledges the responsibilities of the underwriting
community and pledges to make all reasonable efforts to assist
underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB
Rule G-36. The District will file its official statements with the
MSRB and the nationally recognized municipal securities information
repositories. The District will also post copies of its comprehensive
financial reports on the MSRB’s Electronic Municipal Market Access
(EMMA) website, and will disseminate other information that it deems
pertinent to the market in a timely manner (For bonds issued after
2012, 10 days).
Reporting of Listed Events
While initial bond disclosure requirements pertain to underwriters,
the District will provide financial information and notices of listed
events on an ongoing basis throughout the life of the issue.
The list below (as of the most current SEC amendment effective
February 27, 2019) can change in the future, and any new requirements
added to SEC Rule 15(c)2-12 in the future are deemed to be added to
this section without the need to update the policy.
(a)The District shall give, or cause to be given, notice of the
occurrence of any of the following events with respect to any
bonds (in each case to the extent applicable) in a timely
manner not more than ten business days after the occurrence of
the event:
1.Principal or interest payment delinquencies;
2.Non-payment related defaults, if material;
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3.Modifications to the rights of the Holders, if material;
4.Optional, contingent or unscheduled calls, if material, and
tender offers;
5.Defeasances;
6.Rating changes;
7.Adverse tax opinions or the issuance by the Internal Revenue
Service of proposed or final determinations of taxability,
Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax
status of the Bonds or other material events affecting the
tax status of the Bonds;
8.Unscheduled draws on the debt service reserves reflecting
financial difficulties;
9.Unscheduled draws on the credit enhancements reflecting
financial difficulties;
10.Substitution of the credit or liquidity providers or their
failure to perform;
11.Release, substitution or sale of property securing repayment
of the Bonds, if material;
12.Bankruptcy, insolvency, receivership or similar proceedings
of the District, which shall occur as described below;
13.Appointment of a successor or additional trustee or the
change of name of a trustee, if material;
14.The consummation of a merger, consolidation, or acquisition
involving the District or the sale of all or substantially
all of the assets of the District other than in the ordinary
course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant
to its terms, if material;
15.Incurrence of a financial obligation of the District, if
material, or agreement to covenants, events of default,
remedies, priority rights, or other similar terms of a
financial obligation of the District, any of which affect
security holders, if material; or
16.Default, event of acceleration, termination event,
modification of terms, or other similar events under the
terms of a financial obligation of the District, any of
which reflect financial difficulties.
For these purposes, any event described in item 12 is considered to
occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the District in a proceeding
under the United States Bankruptcy Code or in any other proceeding
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under state or federal law in which a court or governmental authority
has assumed jurisdiction over substantially all of the assets or
business of the District, or if such jurisdiction has been assumed by
leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement, or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of
the assets or business of the District.
Whenever the District obtains knowledge of the occurrence of a Listed
Event under item 12 above, the District shall or shall cause the
Dissemination Agent (if not the District) as soon as possible
determine if such event would be material under applicable federal
securities laws and if applicable file a notice of such occurrence
with the MSRB, in an electronic format as prescribed by the MSRB, in a
timely manner not in excess of 10 business days after the occurrence
of the Significant Event.
Notwithstanding the foregoing, notice of Significant Events described
in subparagraph (a)(8) above need not be given any earlier than the
notice (if any) of the underlying event is given to holders of
affected bonds under the applicable indenture securing such bonds.
The events described in subparagraphs (a)(2), (a)(7),(a)(8) (if the
event is a bond call), (a)(10), (a)(11), (a)(13), (a)(14) and (a)(15)
contain the qualifier “if material.” The District shall cause a notice
to be filed with respect to any such event only to the extent that the
District determines the event’s occurrence is material for purposes of
U.S. federal securities law.
13:0 INVESTMENT & ARBITRAGE COMPLIANCE
Tax-exempt bonds are required to meet certain provisions of the
federal tax code in order to maintain their tax-exempt status. In
order to prevent municipal issuers from borrowing money at tax-exempt
rates solely for the purpose of investing the proceeds in higher
yielding investments and making a profit (“arbitrage”), the federal
tax code contains a provision that requires issuers to compare the
interest earned on any bond funds held (such as a reserve fund) with
interest that would theoretically be earned if the funds were invested
at the yield of the bonds, and to “rebate” to the federal government
any interest earned in excess of the theoretical earnings limit.
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The Chief Financial Officer shall invest the bond proceeds subject to
the District’s Investment Policy in a timely manner, to ensure the
availability of funds to meet operational requirements. In doing so,
the CFO will maintain a system of record keeping and reporting to meet
the arbitrage rebate compliance requirements of the federal tax code.
14.0: INTERNAL CONTROL
The District has implemented the following procedure to ensure that
the proceeds of the proposed debt issuance will be directed to the
intended use:
1.A separate Reserve Account shall be maintained for the
proceeds of each bond to ensure that there is no comingling
of funds.
2.All related expenditures charged against the bond proceeds
shall be properly approved by the authorized authority.
3.All related transactions shall be fully documented so that
an undisputable audit trail exists.
4.All related transactions shall be tracked in the District’s
Accounting System. A financial report reflecting all charges
related to the bond shall be prepared and maintained.
5.The District shall establish a retention policy which states
that all supporting documents related to bond proceeds
spending shall be kept indefinitely.
6.The Reserve Account shall be reconciled on a monthly basis.
15.0: TYPES OF DEBT FINANCING
General Obligation Bonds
General obligation bonds are secured by a pledge of the ad-valorem
taxing power of the issuer and are also known as a full faith and
credit obligations. Bonds of this nature must serve a public purpose
to be considered lawful taxation of the property owners within the
District and require a two third’s majority vote in a general
election. The benefit of the improvements or assets constructed and
acquired as a result of this type of bond must be generally available
to all property owners.
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The District can issue general obligation bonds up to but not in
excess of 15% of the assessed valuation under Article XVI, Section 18
of the State constitution. An annual amount of the levy necessary to
meet debt service requirements is calculated and placed on the tax
roll through the County of San Diego. The District also has a policy
that the ad-valorem tax to be used to pay debt service on general
obligation bonds will not exceed $.10 per $100 of assessed value.
Voters within Improvement District No. 27 of the District authorized
$100 million general obligation bonds in 1989. The District issued
$11,500,000 general obligation bonds in 1992 and refinanced the bonds
in 1998 and again in 2009. The District also has approximately $29
million in general obligation bonds authorized between 1960 and 1978
for various improvement districts throughout the District, but
unissued. General obligation bonds can only be issued under these
existing authorizations to the extent necessary to fund the
improvements specified by each ballot measure.
General obligation bonds generally are regarded as the broadest and
soundest security among tax-secured debt instruments. An unlimited-
tax pledge would enable a trustee to invoke mandamus to force the
District to raise the tax rate as much as necessary to pay off the
bonds. General obligation bonds have other credit strengths as well:
the property tax tends to be a steady and predictable revenue source,
and when a vote is required to issue them, bondholders have some
indication of taxpayers’ willingness to pay. General obligation bonds
carry the highest credit rating that a public agency can achieve and
therefore, the lowest interest cost. General obligation bonds
typically are issued to finance capital facilities and not for ongoing
operational or maintenance costs.
The District will use an objective analytical approach to determine
whether it can afford to assume new general obligation debt for the
improvement districts, or in the case of projects not approved by the
original ID 27 vote, prior to any submission of a general obligation
bond ballot measure to voters. This process will compare generally
accepted standards of affordability to the current values for the
District. These standards will include debt per capita, debt as a
percent of taxable value, debt service payments as a percent of
current revenues and current expenditures, and the level of
overlapping net debt of all local taxing jurisdictions. The process
will also examine the direct costs and benefits of the proposed
expenditures. The decision on whether or not to assume new debt will
be based on these costs and benefits, the current conditions of the
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municipal bond market, and the District’s ability to "afford" new debt
as determined by the aforementioned standards.
Revenue Bonds
Revenue bonds are limited-liability obligations that pledge net
revenues of the District to debt service. The net revenue pledge is
after payment of all operating costs. Since revenue bonds are not
generally secured by the full faith and credit of the District, the
financial markets require coverage ratios of the pledged revenue
stream and a covenant to levy rates and charges sufficient to produce
net income at some level in excess of debt service (a Rate Covenant).
Also there may be a test required to demonstrate that future revenues
will be sufficient to maintain debt service coverage levels after any
proposed additional bonds are issued. The District will strive to
meet industry and financial market standards with such ratios without
impacting the current rating. Annual adjustments to the District’s
rate structure may be necessary to maintain these coverage ratios.
The underlying credit of revenue bonds is judged on the ability of the
District’s existing rates to provide sufficient net income to pay debt
service and the perceived willingness of the District to raise rates
and charges in accordance with its Rate Covenant. Actual past
performance also plays a role in evaluating the credit quality of
revenue bonds, as well as the diversity of the customer base. Revenue
bonds generally carry a credit rating one or two investment grades
below a general obligation bond rating.
The District may use a debt structure called “Certificates of
Participation” to finance capital facilities. However, if the
certificates contain a pledge of net revenues and a Rate Covenant,
they are treated as essentially the same as a revenue bond.
Lease/Purchase Agreements
Over the lifetime of a lease, the total cost to the District will
generally be higher than purchasing the asset outright. As a result,
the use of lease/purchase agreements in the acquisition of vehicles,
equipment and other capital assets will generally be avoided,
particularly if smaller quantities of the capital asset(s) can be
purchased on a "pay-as-you-go" basis.
The District may utilize lease-purchase agreements to acquire needed
equipment and facilities. Criteria for such agreements should be that
the asset life is three years or more, the minimum value of the
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agreement is $50,000 and interest costs must not exceed the interest
rate earned by the District’s portfolio for the average of the past 6
months. Lease payments of this type are considered operating expenses
and would reduce net operating income available to pay any District
revenue bonds. There are no coverage requirements or rate covenants
associated with lease/purchase agreements.
State Water Loans
The State Water Resources Control Board makes certain funds available
to water districts throughout the State. These loans typically carry
a below-market rate of interest and are short term in nature. While
State loans should be incorporated into the District’s debt portfolio
for the financing of capital improvements, the payment of the loan
should not compromise the District’s ability to issue other planned
debt or cause the District to violate its rate covenants or make it
necessary for the District to increase rates to maintain existing rate
covenants.
Land Based Financing
The District may consider developer or property owner-initiated
applications requesting the formation of community facilities or
assessment districts and the issuance of bonds to finance eligible
District facilities necessary to serve newly developing commercial,
industrial and/or residential projects. Facilities will be financed
in accordance with the provisions of the Municipal Improvement Act of
1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community
Facilities Act of 1982.
Typically, the bonds issued would be used to prepay, in a lump-sum,
the District’s capacity fees with respect to a large tract of land
under development, or to finance in-tract infrastructure that will
eventually be dedicated to the District. The bonds are secured by a
special tax or assessment to be levied on property within the
boundaries established for the community facilities district
(sometimes known as a “Mello-Roos” district) or the assessment
district. If the District becomes the sponsoring public agency for
such financing district and the issuance of debt, the District will be
required to enter into a Funding, Construction and Acquisition
agreement for any of the facilities to be dedicated to the District
upon completion. This agreement governs the type of facilities to be
constructed with bond proceeds and how the facilities will be accepted
by the District.
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In some cases, the District may not be asked to be the sponsoring
agency for the formation of a financing district, rather, the
developer or property owner may approach a school district or a city
to be the sponsoring agency. Nonetheless, the property owner may want
to include lump-sum payment of District fees in the financing or
construction of certain facilities to be dedicated to the District
upon completion. In this case, if the District desired to
participate, the District would enter into a Joint Financing Agreement
with the sponsoring agency, again governing the type of facilities to
be constructed with bond proceeds and how the facilities will be
accepted by the District.
On a case-by-case basis, the Board shall make the determination as to
whether a proposed district will proceed under the provisions of the
Assessment Acts or the Mello-Roos Community Facilities Act. The Board
may confer with other consultants and the applicant to learn of any
unique district requirements, such as long-term development phasing,
prior to making any final determination.
All District and District consultant costs incurred in the evaluation
of new development, district applications and the establishment of
districts will be paid by the applicant(s) by advance deposits in
those instances where a party or parties other than the District have
initiated a proposed district. Expenses not legally reimbursable by
the financing district will be borne by the applicant. The District
may incur expenses for analyzing proposed assessment or community
facilities districts where the District is the principal proponent of
the formation or financing of the district.
Prior to the issuance of any land secured financing and in accordance
with State law, the Board will adopt policies and procedures with
criteria to be met before any special tax bonds or assessment district
bonds may be issued. These criteria include the qualifications of the
appraiser, the minimum value to lien ratio to be achieved prior to
issuing the land secured debt and the maximum tax to be levied on
different categories of property.
Internal Lending/Borrowing
Internal Lending/Borrowing allows the lending and/or borrowing of
funds between the Water (Potable and Recycled) and the Sewer Funds,
either direction to meet financial needs in lieu of the borrowing fund
obtaining outside debt.
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Upon recommendation by the Chief Financial Officer, the Board may
adopt a resolution allowing lending/borrowing arrangements between
Water and Sewer funds. To the extent any inter-fund lending/borrowing
is undertaken in anticipation of long-term financing, the District
shall adopt a Resolution of its intention to repay such funds out of
tax-exempt debt proceeds so as to meet the requirement of federal tax
law for such borrowing.
If the funds being loaned are restricted, prevailing law requires that
the Resolution that the Board adopts must include a finding by the
Board that the lending fund has sufficient money to lend and that the
borrowing fund can repay the loan without adversely affecting the
District’s credit ratings.
Internal Lending/Borrowing arrangements will be recorded in accordance
with GASB reporting requirements. The arrangement will include the
purpose, a debt repayment schedule and a periodic interest charge that
is equal to the District’s investment rate of return for that same
period. This ensures that the lending fund is recapturing earnings
that would have been otherwise realized had these funds been invested
in the District’s investment portfolio.
16.0: RATING AGENCY APPLICATIONS
The District may seek one or more ratings on all new issues that are
being sold in the public market. These rating agencies include, but
are not limited to, Fitch Investors Service, Moody’s Investors
Service, and Standard & Poor’s. When applying for a rating on an
issue over $1 million or more, the District shall make a formal
presentation of the finances and positive developments within the
District to the rating agencies. The District will report all
financial information to the rating agencies upon request. This
information shall include, but shall not be limited to, the District’s
Comprehensive Annual Financial Report (CAFR), and the Adopted
Operating and Capital Budget.
17.0: USE OF CREDIT ENHANCEMENT
Credit enhancement is a generic term that means any third-party
guarantee of debt service. Credit enhancement providers include
municipal bond insurance companies or financial institutions. The
purchase of credit enhancement allows the District’s bond issue to
carry the same credit rating as the credit provider. The District will
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seek to use credit enhancement when such credit enhancement proves
cost-effective. Selection of credit enhancement providers will be
subject to a competitive bid process using the District’s purchasing
guidelines, if applicable.
Fixed Rate Bonds
Credit enhancement for fixed rate bonds is obtained by the purchase of
bond insurance. If a commitment for bond insurance is obtained for a
particular issue, the District will estimate the annual debt service
for the issue based on current interest rates applicable to the credit
rating of the bond insurer. If the estimated debt service on this
basis is less than or equal to estimated debt service for the issue
based on interest rates for bonds with the District’s underlying or
stand-alone credit rating, the District will purchase the bond
insurance. Any intention of the District to prepay the debt ahead of
its scheduled maturity will be taken into account in the analysis.
Credit enhancement may be used to improve or establish a credit rating
on a District debt obligation even if such credit enhancement is not
cost effective if, in the opinion of the Chief Financial Officer, the
use of such credit enhancement meets the District’s debt financing
goals and objectives, such as, funding of a reserve fund for the
bonds.
Variable Rate Bonds
Credit enhancement for variable rate bonds is comprised of two
components: credit support and liquidity. The interest on variable
rate bonds is based on a short-term investment rate (usually 7 days).
Any investor can tender their bonds back to the District to be
repurchased on short notice (usually 7 days). Because of the short-
term nature of the investment, the securities that the District is
“competing” with for investors are AA-rated mutual funds. Therefore,
variable debt needs to have credit enhancement to achieve a comparable
AA rating, as well as liquidity support to provide the District with a
mechanism to purchase any bonds that are tendered before they can be
remarketed to new investors. A limited number of financial
institutions offer letters of credit that combine both credit support
and liquidity for one fee. An alternative is to purchase bond
insurance to provide credit support and enter into a separate purchase
agreement with a financial institution to provide liquidity. The
difference in cost between the two structures will be analyzed before
either alternative is selected for variable rate debt.
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18.0: GLOSSARY
Ad Valorem Tax: A tax calculated “according to the value” of
property. Such a tax is based on the assessed valuation of tangible
personal property. In most jurisdictions, the tax is a lien on the
property enforceable by seizure and sale of the property. General
restrictions, such as overall restrictions on rates, or the percent of
charge allowed, sometimes apply. As a result, ad valorem taxes often
function as the balancing element in local budgets.
Advance Refunding: A procedure whereby outstanding bonds are
refinanced by the proceeds of a new bond issue prior to the date on
which outstanding bonds become due or are callable. Typically, an
advance refunding is performed to take advantage of interest rates
that are significantly lower than those associated with the original
bond issue. At times, however, an advance refunding is performed to
remove restrictive language or debt service reserve requirements
required by the original issue.
Amortization: The planned reduction of a debt obligation according to
a stated maturity or redemption schedule.
Arbitrage: The gain that may be obtained by borrowing funds at a
lower (often tax-exempt) rate and investing the proceeds at higher
(often taxable) rates. The ability to earn arbitrage by issuing tax-
exempt securities has been severely curtailed by the Tax Reform Act of
1986, as amended.
Assessed Valuation: The appraised worth of property as set by a
taxing authority through assessments for purposes of ad valorem
taxation.
Basis Point: One one-hundredth of one percent.
Bond: A security that represents an obligation to pay a specified
amount of money on a specific date in the future, typically with
periodic interest payments.
Bond Counsel: An attorney (or firm of attorneys) retained by the
issuer to give a legal opinion concerning the validity of the
securities. The bond counsel’s opinion usually addresses the subject
of tax exemption. Bond counsel may prepare, or review and advise the
issuer regarding authorizing resolutions or ordinances, trust
indentures, official statements, validation proceedings and
litigation.
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Bond Insurance: A type of credit enhancement whereby a monocline
insurance company indemnifies an investor against a default by the
issuer. In the event of a failure by the issuer to pay principal and
interest in-full and on-time, investors may call upon the insurance
company to do so. Once assigned, the municipal bond insurance policy
generally is irrevocable. The insurance company receives an up-front
fee, or premium, when the policy is issued.
Call Option: A contract through which the owner is given the right
but is not obligated to purchase the underlying security or commodity
at a fixed price within a limited time frame.
Cap: A ceiling on the interest rate that would be paid.
Capital Lease: The acquisition of a capital asset over time rather
than merely paying rent for temporary use. A lease-purchase
agreement, in which provision is made for transfer of ownership of the
property for a nominal price at the scheduled termination of the
lease, is referred to as a capital lease.
Certificate of Participation: A financial instrument representing a
proportionate interest in payments such as lease payments by one party
(such as the District acting as a lessee) to another party (often a
trustee).
CIP: Capital Improvement Program.
Competitive Sale: The sale of securities in which the securities are
awarded to the bidder who offers to purchase the issue at the best
price or lowest cost.
Continuing Disclosure: The requirement by the Securities and Exchange
Commission for most issuers of municipal debt to provide current
financial information to the informational repositories for access by
the general marketplace.
Debt Service: The amount necessary to pay principal and interest
requirements on outstanding bonds for a given year or series of years.
Defeasance: Providing for payment of principal of premium, if any,
and interest on debt through the first call date or scheduled
principal maturity in accordance with the terms and requirements of
the instrument pursuant to which the debt was issued. A legal
defeasance usually involves establishing an irrevocable escrow funded
with only cash and U.S. Government obligations.
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Derivative: A financial product that is based upon another product.
Generally, derivatives are risk mitigation tools.
Discount: The difference between a bond’s par value and the price for
which it is sold when the latter is less than par.
Municipal Advisor: A person that provides advice to or on behalf of a
municipal entity or obligated person with respect to municipal
financial products or the issuance of municipal securities, including
advice with respect to the structure, timing, terms, and other similar
matters concerning such financial products or issues.
Financial Obligation: A debt obligation, lease, guarantee, derivative
instrument, or monetary obligation resulting from a judicial,
administrative, or arbitration proceeding, but not including municipal
securities as to which a final official statement has been provided to
the MSRB.
General Obligation Bonds: Debt that is secured by a pledge of the ad
valorem taxing power of the issuer. Also known as a full faith and
credit obligation.
Internal Lending/Borrowing: An Inter-fund lending arrangement between
Water and Sewer funds.
Municipal Securities Rulemaking Board (MSRB): The MSRB, comprised of
representatives from investment banking firms, dealer bank
representatives, and public representatives, is entrusted with the
responsibility of writing rules of conduct for the municipal
securities market.
Negotiated Sale: A sale of securities in which the terms of sale are
determined through negotiation between the issuer and the purchaser,
typically an underwriter, without competitive bidding.
Official Statement: A document published by the issuer that discloses
material information on a new issue of municipal securities including
the purposes of the issue, how the securities will be repaid, and the
financial, economic and social characteristics of the issuing
government. Investors may use this information to evaluate the credit
quality of the securities.
Option: A derivative contract. There are two primary types of
options (see Put Option and Call Option). An option is considered a
wasting asset because it has a stipulated life to expiration and may
expire worthless. Hence, the premium could be wasted.
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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.
251
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
DEBT POLICY
Policy
Number
Date
Adopted
Date
Revised
45 4/13/04 03/03/2021
They can be simple floating for fixed exchanges or complex hybrid
products with multiple option features.
True Interest Cost (TIC): A method of calculating the overall cost of
a financing that takes into account the time value of money. The TIC
is the rate of interest that will discount all future payments so that
the sum of their present value equals the issue proceeds.
Underwriter: The term used broadly in the municipal market, to refer
to the firm that purchases a securities offering from a governmental
issuer.
Yield Curve: Refers to the graphical or tabular representation of
interest rates across different maturities. The presentation often
starts with the shortest-term rates and extends towards longer
maturities. It reflects the market’s views about implied
inflation/deflation, liquidity, economic and financial activity, and
other market forces.
252
Glossary
The Fiscal Budget contains terminology that is unique to public finance and budgeting. The following
budget glossary provides assistance in understanding these terms.
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.
ACCRUAL: A charge for work that has been done but not yet invoiced, for which provision is made at
the end of a financial period.
ANNEXATION FEES: When water service is requested for land outside the boundaries of the District,
the land to be serviced must first be annexed. For sewer service the land must be annexed into an
improvement district within the District.
APPROPRIATIONS: The annual budget adopted by the District’s Board appropriates funds for
monitoring and control purposes, and serves as a financial plan.
ASSETS: Resources owned or held by the District that have monetary value.
AUDIT: Official financial examination of the District’s accounts.
AVAILABILITY FEES: The District levies charges each year in developed areas to be used for general
purposes for construction of facilities. This fee is levied 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 in which it was assessed.
BALANCED BUDGET: A financial plan, for a specified period of time that matches all planned
revenues and expenditures with various services. This plan has sufficient sources of funds to support
the planned expenditures. The District uses a fiscal year beginning July 1 and ending June 30 for
budgetary and financial reporting purposes.
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 meter is placed into service. This fee is a
contribution of capital to either reimburse existing customers for the available capacity in the existing
system, or to help finance planned future growth-related capacity improvements.
CAPACITY FEE REVENUES: These fees are earned by the Operating Budget as the Engineering
Department supports expansion functions.
253
Glossary
CAPACITY RESERVATION CHARGE: An MWD charge passed on by CWA to individual agencies. This
charge is 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, computer systems,
and special tools. The capital budget also includes funds for infrastructure related items over $20,000
(as explained below) 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.
CAPITAL EXPENDITURE: Capital expenditure or capital expense is an expense where the benefit
continues over a long period, rather than being exhausted in a short period. Such expenditure is of a
non-recurring nature and results in acquisition of permanent assets.
CAPITAL IMPROVEMENT PROGRAM: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
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.
DEBT COVERAGE RATIO: The ratio of net revenue to annual interest and principal payments on debt.
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.
254
Glossary
ENERGY CHARGE: 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. 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.
ENTERPRISE RESOURCE PLANNING: Systems with a shared database that supports multiple
functions used by different business units.
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.
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.
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 net 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.
GALLONS PER CAPITA PER DAY: The total number of gallons used by the city divided by the
population.
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.
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.
255
Glossary
LATE CHARGES/PENALTIES: Charges and penalties are imposed on customer accounts for late
payments, returned payments, and other infringement of 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 Charge. This charge pays for the debt service for
construction projects necessary to meet reliability and quality needs. The RTS Charge was adopted in
1996.
MWD AND CWA FIXED SYSTEM CHARGES: These pass-through charges are calculated to recover
the MWD’s and CWA’s fixed annual costs including the construction, operation and maintenance of
aqueducts, and emergency storage projects. These fixed charges are based on the size of the meter.
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% PROPERTY 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, AB 8, 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 are budgeted for separately in the Capital Budget.
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 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.
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.
256
Glossary
READINESS-TO-SERVE CHARGE: 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.
SYSTEM CHARGE: 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.
UNIT: A unit of water is 100 cubic feet or 748 gallons of water.
WATER RATES: Rates vary among classes of service. The water rates for residential customers use
an accelerated block structure. As more units are consumed, a higher unit rate is charged. Effective in
2009, all non-residential customers are charged for water based on a tiered rate structure in which
water rates are based on meter size and amount of units consumed.
WORKING CAPITAL: A financial measure which represents available operating liquidity. The
calculation is current assets minus current liabilities.
257
AB Assembly Bill
AF Acre-Foot/Feet
AMR Automated Meter Reader/Reading
AWWA American Water Works Association
BABS Build America Bonds
CALPERS California Public Employees' Retirement System
CCV City of Chula Vista
CEQA California Environmental Quality Act
CIP Capital Improvement Program
COPS Certificates of Participation
CSD City of San Diego
CSDA California Special Districts Association
CSMFO California Society of Municipal Finance Officers
CWA County Water Authority (San Diego)
EDU Equivalent Dwelling Unit
ERP Enterprise Resource Planning
FTE Full-time Equivalent
FY Fiscal Year
GAAP Generally Accepted Accounting Principles
GASB Government Acounting Standards Board
GF General Funds
GFOA Government Finance Officers Association
GIS Geographic Information System
GO General Obligation (bonds)
GPCD Gallons Per Capita Per Day
GPM Gallons Per Minute
HCF Hundred Cubic Foot
HR Human Resources
ID Improvement District
IID Imperial Irrigation District
IT Information Technology
LAIF Local Agency Investment Fund
MG Million Gallons
MGD Million Gallons per Day
MOU Memorandum of Understanding
MWD Metropolitan Water District
NIMS National Incident Management System
O&M or O/M Operations and Maintenance
OPEB Other Post Employee Benefits
OWD Otay Water District
PL Pipeline
PRS Pressure Reducing Station
List of Acronyms
258
List of Acronyms
PS Pump Station
RWCWRF Ralph W. Chapman Water Recycling Facility
SANDAG San Diego Association of Governments
SB Senate Bill
SBWRP South Bay Water Reclamation Plant
SCADA Supervisory Control and Data Acquisition
SWRCB State Water Resources Control Board
259
Index
Administrative Expenditures 71,86,95,115
Awards xvi-xix
Budget Basis 8
Budget Calendar 9-11
Budget Control and Jurisdiction 7
Budget Guide 1-2
Budget Process 6-8
Budget Summary 37
Capital Budget Narrative 157-159
Capital Purchases FY 2022 167
CIP Justification and Impact on Operating Budget 166
CIP Reserve Funds 160
Classification of Water Sales 62,78
Contract/Temporary Employees 114
Current Economic Conditions 17-18
Debt Management 54-55
Debt Policy 228-252
Debt Policy Glossary 248-252
Demographics 13
Department Budgets:
Administrative Services 129-135
Board of Directors 119-121
Engineering 149-153
Finance 137-141
General Expense 155
General Manager 123-127
Water Operations 143-148
Departmental Operating Budget Narrative 105-106
Director’s Division Boundaries 121
District Formation 4
Economic Outlook 18
Five-Year Forecast 51
Formula for Sewer Rates 97-98
Fund Balance Summary by Fund 46
Fund Balances Forecast 53
Fund Structure 8
Future, The 18-20
General Fund Forecast 52
General Fund Revenues, Expenditures and Transfers 37-43, 45
General Expense 104,155
260
Index
General Revenues 103
General Revenues and Expenditures Narrative 101-102
Glossary 253-257
Investment Policy 211-227
Investment Policy Glossary 220-235
Labor and Benefits 108
Labor and Benefits by Fund 109
Letter of Transmittal v-xv
List of Acronyms 258-258
Materials and Maintenance Expenditures 72,87,96,116
Meter Fees 67,82
Mission Statement, Statement of Values 3
MWD and CWA Fixed Fees (pass-through) 66
Operating Budget Summary 61,77,90
Operating Budget Summary by System 44
Operating Budget Summary – General Fund 42-44
Operating Expenditures by Department 117
Operating Expenditures by Object 118
Organizational Structure 5
Position Count by Department 110-114
Potable Narrative 59-60
Power Costs 70,85,94
Projected Interest Payments by Debt Issuance 58
Projected Principal Payments by Debt Issuance 57
Recycled Narrative 75-76
Reserve Policy 171-210
Reserve Policy Glossary 208-210
Resolution 4400 xx-xxi
Revenue History 68,83,93
Revenues and Expenditures by Fund 48-49
Revenues and Expenditures by Type 47
San Diego Rainfall 17
Schedule of Outstanding Debt 56
Service Area 4
Service Area Assessed Valuation Fees 13
Service Area Maps 73,88,99
Sewer Charges Summary by Customer Class 91
Sewer Narrative 89
Sewer Rate Comparison 16
Six-Year CIP Projects Summary by Fund ($1,000s) 161
261
Index
Six-Year CIP Projects Summary by Source ($1,000s) 161
Six-Year CIP Projects by Source and Fund ($1,000s) 162-165
Statement of Values 3
Strategic Plan 21-36
Summary of Financial Policies 169-170
System Charges 65,80,92
Table of Contents i-iv
Ten Largest Customers 14
Ten Principal Taxpayers 14
Unit Sales History and Meter Count by Customer Class 64,81
Water Purchases - Recycled 84
Water Purchases and Related Costs - Potable 69
Water Rate Comparison- Member Agency Water Rates 15
Water Sales Summary by Meter Size 79
Water Sales Summary by Customer Class 63
262