HomeMy WebLinkAboutFY 2016 Comprehensive Annual Financial Report
Otay Water District
Comprehensive Annual Financial Report
for the Years Ended June 30, 2016 and 2015
BOARD OF DIRECTORS
Mitch Thompson, Division 2 President
Jose Lopez, Division 4 Vice President
Tim Smith, Division 1 Treasurer
Gary Croucher, Division 3
Mark Robak, Division 5
DISTRICT FINANCIAL MANAGEMENT
Mark Watton General Manager
German Alvarez Assistant General Manager
Joseph R. Beachem Chief Financial Officer
PREPARED BY Finance Department
Otay Water District, Spring Valley, California
Table of Contents
Introductory Section
Letter of Transmittal…………………………………………………………………………………………………………………… 1
Organization Chart…………………………………………………………………………………………...……………………….. 10
List of Principal Officials……………………………………………………………………………………………………………… 11
GFOA Certificate of Achievement………………………………………………………………………………………………. 12
Financial Section
Independent Auditors’ Report………………………………………………………………………………………………..…. 13
Management’s Discussion & Analysis…………………………………………………...……………………………… 16
Basic Financial Statements:
Statements of Net Position..……………………………………………………………………………………………….…. 27
Statements of Revenues, Expenses, and Changes in Net Position…………..………………. 29
Statements of Cash Flows……………………………………………………………….……………………………………… 30
Notes to Financial Statements……………………………………………………………………………………………... 32
Required Supplementary Information:
Schedule of Funding Progress for DPHP……………………………………………...…………………………… 75
Schedule of Changes in the Net Pension Liability and Related Ratios……………………… 76
Schedule of Contributions……………………………………………………………………………………………………… 77
Statistical Section
Net Position by Component………………………………………………………………………………………………….. 80
Changes in Net Position………………………………………………………………..…………………………………………. 81
Operating Revenues by Source…………………………………………………………………………………………….. 82
Operating Expenses by Function………………………………………………………..………………………………… 83
Non-Operating Revenues by Source…………………………………………………………………………………… 84
Non-Operating Expenses by Function……………………………………………………………………………… 85
Assessed Valuation of Taxable Property within the District………………………………………… 86
Water Purchases, Production, and Sales……………………………………………...………………………….… 87
Meter Sales by Type…………………………………………………………………….……………………………………………. 88
Number of Customers by Service Type……………………………………………………………………………….. 89
Property Tax Levies and Collections…………………………………………………………………………………….. 90
Water Fixed Rates ……….………………………………………………………………………………………………………….…. 91
Water Variable Rates…….…………………………………………………………………………………………………………... 92
Sewer Variable and Fixed Rates…….………………………………………………………………………..…………….. 93
Ten Largest Customers…………………………………………………………………………………………………………….. 94
Ratios of Outstanding Debt by Type…………………………………………………….……………………………….. 95
Pledged Revenue Coverage………………………………………………………………………………………………….... 96
Ratios of General Bonded Debt Outstanding…………………………………………………………………...… 97
Computation of Direct and Overlapping Bonded Debt………………………………………………… 98
Principal Employers…………………………..………………………………………......................................................... 100
Demographic and Economic Statistics……………………………………………………………………………….. 101
Number of Employees by Function………………………………………………………………………………………. 102
Active Meters by Size………………………………………………………………..………………………………………………. 103
Operating and Capital Indicators…………………………………………………………………………………………... 104
October 19, 2016
Honorable Board of Directors
Otay Water District
I am pleased to present the Otay Water District’s (the “District”) Comprehensive Annual Financial
Report (CAFR) for the fiscal year ended June 30, 2016.
This report was prepared by the District’s Finance Department following guidelines set forth by the
Government Accounting Standards Board (GASB) and generally accepted accounting principles
(GAAP). Responsibility for the accuracy of the data presented and the completeness and fairness
of the presentation, including all disclosures, rests with the District’s management. We believe the
data, as presented, is accurate in all material respects and that it is presented in a manner that
provides a fair representation of the financial position and results of the District’s operations.
Included are all disclosures we believe necessary to enhance your understanding of the financial
condition of the District. GAAP requires that management provide a narrative introduction,
overview, and analysis, to accompany the basic financial statements in the form of Management’s
Discussion and Analysis (MD&A), which should be read in conjunction with this report. The
District’s MD&A can be found immediately following the Independent Auditors’ Report.
The District’s financial statements have been audited by Teaman, Ramirez & Smith, Inc. a firm of
licensed certified public accountants. The goal of the independent audit was to provide
reasonable assurance that the financial statements of the District for the fiscal year ended June 30,
2016 are free of material misstatement. The independent audit involved examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating the
overall financial statement presentation. In the independent auditors’ opinion, the following
financial statements present fairly, in all material respects, the respective financial position of the
Otay Water District as of June 30, 2016 and are presented in conformity with GAAP. The
Independent Auditors’ Report is presented as the first component of the financial section of this
report.
1
REPORTING ENTITY
The District is a publicly-owned water and sewer agency, authorized on January 27, 1956 as a
California special district by the State Legislature, with an entitlement to import water under the
provisions of the Municipal Water District Act of 1911. Its ordinances, policies, taxes, and rates for
service are set by five Directors, elected by voters in their respective divisions, to serve staggered
four-year terms on its Governing Board. The District is a “revenue neutral” public agency, meaning
that each end-user pays only their fair share of the District’s costs of water acquisitions,
construction, operation, maintenance, betterment, renewal, and replacement of the public water
and sewer facilities.
The General Manager reports directly to the Board of Directors and, through the Assistant General
Manager and the District management, oversees day-to-day operations. The Assistant General
Manager oversees the four departments of Administrative Services, Finance, Water Operations,
and Engineering. These and other lines of reporting are shown on the organization chart on page
10.
Over the last 60 years, the District has grown from a handful of customers and two employees to
become an organization operating a network of more than 919 miles of pipelines, 44 operational
reservoirs, a recycled water facility, and one of the largest recycled water distribution networks in
the State of California. The character of the service area has also changed from predominantly
dry-land farming and cattle ranching, to businesses, high-tech industries, and large master-
planned communities.
Today the District provides
water service to
approximately 49,425
potable and 708 recycled
customers within 125
square miles of the
southeastern San Diego
metropolitan area. All of
the potable water sold to
customers is purchased
through the San Diego
County Water Authority
(CWA) whose focus has
been on diversifying its
water portfolio. Much of this water is purchased from the region’s water importer; the Metropolitan
Water District of Southern California (MWD), and a growing percentage is from the Imperial
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Irrigation District as well as from ocean desalination. Beginning in November 2015, a new
desalination plant in Carlsbad, California began delivering water to the region. The District also has
entered into an agreement to purchase treated water from CWA directly and from Helix Water
District via a contract with CWA. These actions have brought regional water treatment closer to
our customers and helped reduce dependence on water treatment facilities located outside of San
Diego County.
To deliver this locally treated water to customers the District constructed a 5.1 mile, 36-inch
diameter pipeline in 2010. Drinking water delivered by this new pipeline is stored in two 10 million
gallon reservoirs. In addition to bringing water treatment closer to customers, this new source of
water diversifies the District’s supply and improves reliability.
The District also owns and operates a
wastewater collection and recycling
system providing public sewer service to
approximately 4,677 customer accounts
within portions of the communities of La
Mesa, Rancho San Diego, El Cajon, Jamul,
and Spring Valley. Wastewater collected is
conveyed to the District’s Ralph W.
Chapman Water Recycling Facility
(RWCWRF), which is capable of recycling
wastewater at a rate of 1.3 million gallons
per day. The District also has the capability to purchase up to 6 million gallons per day of recycled
water from the City of San Diego’s South Bay Reclamation Plant. Recycled water from these two
sources is used to irrigate golf courses, schools, public parks, roadway landscapes, and various
other approved uses in eastern Chula Vista. The use of recycled water reduces dependency on
imported supplies and provides a local supply, thereby diversifying District resources.
MISSION, CURRENT ECONOMIC CONDITIONS, AND OUTLOOK
The mission of the District is to provide high value water and wastewater services to the customers
of the Otay Water District, in a professional, effective, and efficient manner.
While California experienced severe drought, water supply in San Diego County was at 98% of
supply needs. Due to the Governor’s regulatory drought mandate, customers stepped up and
conserved 20.6%. In addition, the District has faced large regional water supply cost increases
totaling more than 106.7% since 2007 and a 116% increase in the recycled water supply cost which
Ralph W. Chapman Water Recycling Facility
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cost which was effective January 1, 2016. Fortunately the District, as a member of CWA, is well-
positioned for the future with a diversified supply.
With the slow steady economic recovery, the District’s Public Services Division has seen
improvement in recent years. During fiscal year 2015-16 they approved an average of 10 permits
per month and sold 120 water meters. However, the District’s service area is one of the largest
growth areas in the County therefore, future growth projections continue to increase over the next
several years. The population within the District’s service area continues to grow and as of July
2016, it is estimated that the District served 220,000 residents. The San Diego Association of
Governments (SANDAG), the regional planning agency, has estimated the District’s approximate
growth will be 1% per year for the next decade. Using historical data and considering current
economic conditions, staff has moderated this projection to a growth rate of 0.3% for FY 2017. The
District projects an ultimate customer population of 285,000 residents.
STRATEGIC PLAN
The Strategic Plan is the core document which guides the District’s efforts to meet and positively
adapt to change. Every three years the District engages in a major revision of its Strategic Plan.
The current plan (covering fiscal years 2016 – 2018) consists of a two-phased approach. Phase
one and phase two have been completed with the primary focus on developing key enterprise-
wide projects – SCADA, Work Order/Asset Management, and Emergency Preparedness/NIMS.
Phase two focused on building upon the system foundation, business process improvements, and
facilities. As part of phase three in FY 2017, we will continue to collect and populate these and other
systems with new data so we can analyze and optimize these systems for efficiencies. Based on
results from FY 2017, in phase four we will enhance key existing programs such as asset
management, the internal auditing process, facilities maintenance and security, and work-resource
planning. Where rapid growth had been a significant focus in the early years of the District and in
its earlier strategic plans, today we are primarily focused on operational efficiencies to cost-
effectively manage long-term maintenance and replacement of infrastructure.
The change is based on the recognition that as an organization matures, fewer resources are
needed to support growth; but greater effort is required to maintain and upgrade infrastructure and
assets. This is important because in this phase of its lifecycle an organization derives income more
from customer rates and less from developer fees. Therefore, the increased maintenance and
replacement costs place increased pressure on customer rates. To balance the customer’s interest
in minimizing rate increases while also maintaining an organization’s infrastructure, investments,
and a strong financial position; the management team must place greater emphasis on internal
efficiency and the development of technology assisted best practices. In effect, the organization
must use investments in technology to do more with the same or fewer resources.
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From a water supply perspective, this means determining the optimum mix of water supply,
treatment, and delivery solutions for customers. From a daily operating perspective, efficiency
improvements have become the primary source of competitive advantage and cost optimization
for utilities.
BUDGETING CONTROLS
The District views the budget as an essential tool for proper financial management and is adopted
prior to the start of each fiscal year. The budget is developed by combining the District’s strategic
measures and objectives with input from the various departments of the organization. By
incorporating these strategic measures and objectives the budget becomes a direct reflection of
the District’s strategic plan. The budget is designed and presented for the general needs of the
District, its staff, and customers. It is a comprehensive and balanced financial plan that features
District services, resources and their allocation, financial policies, strategic objectives, and other
useful information that allows the users to gain a general understanding of the District’s financial
status and future. To monitor the District’s performance monthly, comparison reports of budget to
actual are prepared and distributed to all department heads, with top level information provided to
the Board at the monthly board meetings.
BUDGET SUMMARY
The Otay Water District’s operating expenditures consist of three major sectors: potable water,
recycled water, and sewer. The total budget is $91,741,500 for Fiscal Year 2017. Revenues from
potable and recycled water are projected to be $81,138,900, about $2,239,200 (2.8%) higher than
the Fiscal Year 2016 budget. Water sales volumes are expected to decrease by 8.0% versus
FY 2016. This decrease in volume is primarily due to drought mandates. The MWD and CWA
water supply rate increased by 4.0% and 5.9%, respectively. CWA’s increase is due to the reduced
volumes as a result of the Governor’s conservation mandate, high cost of supply programs, higher
energy costs, and increasing operating costs. Sewer revenues are projected to be $2,918,900,
approximately $287,400 less than the fiscal year 2016. This decrease in sewer revenue is primarily
due to the discontinuance of the system fee recapture, which was part of a 2013 Cost of Service
study. The remaining budgeted revenues of $7.7 million come from various special fees,
assessments, and miscellaneous income.
5
711-2 Reservoir (2.3 MG) – Exterior Scaffold Installation
The FY 2016-17 Capital Improvement
Program (CIP) budget consists of 89
projects and a budget of $10.7 million.
The budget emphasizes maintenance
of existing infrastructure and long-term
planning for ongoing programs to meet
population growth while functioning
within fiscal constraints. This year’s CIP
budget decreased by $1.0 million
compared to last year’s projection,
primarily due to a $340,000 decrease in
capital purchases for vehicles and field equipment and a $600,000 reduction in reservoir recoating
and relining of smaller reservoirs. The budget emphasizes long-term planning for on-going
programs while functioning within fiscal constraints and population growth.
THE FUTURE
The coming years will continue to pose considerable challenges for those in California’s water
community. The state is just beginning to recover from its fifth straight year of a record drought and
despite extensive efforts to develop more reliable water, Governor Jerry Brown and the State Water
Resources Control Board (SWCRB) ordered mandatory cuts in potable water use across California.
The District’s mandatory cut of 20% in FY 2016 has been reduced to 12% for FY 2017. Southern
California is looking forward to a sustainable and cost effective solution to the Bay Delta problem,
an important component of the Southern California water supply.
The District’s customers have done an excellent job in conserving water usage which has resulted
in the District meeting the mandatory reductions. San Diego County, including Otay Water District
customers by virtue of being a member of CWA, have expended more than $3.1 billion over the last
decade to create a more reliable water supply network that has shielded customers from the most
severe of the drought’s impacts. Water supplies in the San Diego region have improved with the
development of the western hemisphere’s largest desalination plant in Carlsbad, California.
6
Rosarito Desalination Project rendering
SAN DIEGO COUNTY WATER SUPPLY
San Diego County imports about 84 percent of its
water from the Colorado River and Northern
California. Since these sources face legal and
environmental constraints, the region has been
exploring other ways to ensure an adequate
water supply, including increased water recycling,
more aggressive conservation programs,
increased water storage, groundwater
desalination, and seawater desalination.
CARLSBAD DESALINATION PROJECT
The District’s water wholesaler, the San Diego
County Water Authority, entered into a formal
Water Purchase Agreement (WPA) in November
2012. The WPA outlines the commercial and
financial terms for the purchase and delivery of
desalinated ocean water produced at the
Carlsbad Desalination Plant. Under the WPA, the
County Water Authority will purchase 48,000 to
56,000 acre-feet of water annually from the
desalination plant. The plant will produce up to 50 million gallons of water a day and will generate
enough water to serve about 112,000 families and meet 7 to 10 percent of the region’s demand.
Commercial production began on December 23, 2015. The total price for the desalinated water for
2016 is estimated to be between $2,131 and $2,267 per acre-foot depending on how much is
purchased annually. An acre-foot is approximately 325,900 gallons or enough to supply two typical
single-family households of four for a year.
ROSARITO DESALINATION AND THE OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM
PROJECTS
The Rosarito Desalination Project is comprised of a 100 million gallons per day seawater reverse
osmosis desalination plant, and together with a pump station and a pipeline would convey water
to Tijuana and to the District. This would be the first cross border water supply project of its kind
and requires public messaging to inform key stakeholders and the public of the significance of the
Project. If successful, this Project may start delivering water to District customers by early 2024. The
7
Project includes the construction of facilities on the U.S. side to include a large diameter pipeline
3.5 miles long, a pump station, a disinfection facility and the use of the Roll Reservoir in Otay Mesa.
ACCOUNTING SYSTEM
The Finance Department is responsible for providing financial services to the District including
financial accounting; reporting; payroll; accounts payable; investment of funds; billing and
collection of water and wastewater charges; taxes; and other revenues. The District’s books and
records are maintained on an enterprise basis, matching revenues against the costs of providing
services. Revenues and expenses are recorded on the accrual basis in the period in which
revenues are earned and expenses are incurred.
INTERNAL CONTROLS
Otay Water District operates within a system of internal controls established and periodically
reviewed by management. This provides reasonable assurance that assets are adequately
safeguarded and transactions are recorded correctly according to District policies and procedures.
When establishing or reviewing controls, management must also consider the cost of the control
and the value of the benefit derived from its utilization. Management maintains and implements all
sensitive controls and those controls whose value adequately exceeds their cost.
Management believes the District’s internal controls, procedures, and policies adequately
safeguard assets and provide reasonable assurance of proper recording of financial transactions.
In addition, the District maintains controls to provide for compliance with all finance related legal
and contractual provisions. Management believes the activities reported within the presented
Comprehensive Annual Financial Report comply with these finance related legal and contractual
provisions including bond covenants and fiduciary responsibilities.
AWARDS AND ACKNOWLEDGMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to Otay Water District for its
Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015. In order to be
awarded a Certificate of Achievement, a government agency must publish an easily readable and
efficiently organized Comprehensive Annual Financial Report. This report must satisfy both
generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
Comprehensive Annual Financial Report continues to meet the Certificate of Achievement
8
Program's requirements and we are submitting it to the GFOA to determine its eligibility for another
certificate.
ln addition to the Certificate of Achtevement for Excellence in Financial Reporting, Otay Water
District has received the following awards:
The Government Finance Officers Association of the United States and Canada (GFOA)
presented a Distinguished Budget Presentatton Award To Otay Water District, for its annual
budget for the fiscal year 2015-201.6. ln 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.
The California Society of Municipal Finance Officers (CSMFO) presented Otay Water District
the Certificate of Award tor Excellence in Operating Budgeting for Fiscal Year 20L5-20L6.
The California Society of Municipal Finance Officers (CSMFO) presented Otay Water District
the Certificate of Award for Excellence in Capital Budgeting for Fiscal Year 201.5-20L6.
Otay Water District has received the Distinguished Owner Honoree Award from the
Construction Management Association of America (CMAA).
I would like to thank all of the staff involved for their efforts in preparing this Comprehensive Annual
Financial Report and for their hard work to ensure a successful outcome. I would also like to thank
the firm of Teaman, Ramirez & Smith, lnc., for their professional work and opinion.
To the Board of Directors, staff and I acknowledge and appreciate their continued support and
direction in achieving excellence in financial management.
Joseph R. Beachem
Chief Financial Officer
KW
General Manager
9
Organization Chart
District Position Count— (138 Positions)
Citizens and Customers Board of Directors
Safety and
Security
Administration
Assistant General Manager
General Manager (5)
Purchasing
and Facilities
Controller and
Budgetary
Services
Treasury and
Accounting
Services
Customer
Service
Meter
Maintenance
Water System
Operations
Utility
Maintenance/
Construction
Water Resources,
Planning, Design and
Environmental
Services
Administrative
Services
(26)
Human
Resources
Information
Technology
and Strategic
Planning
Finance
(32)
Geographic
Information
System
Public Services
and
Field Services
Engineering
(24)
Water
Operations
(51)
10
List of Principal Officials
Mission Statement
To provide high quality and reliable water
and wastewater services to the
customers of the Otay Water District, in a
professional, effective and efficient
manner.
Mark Robak
Division 5
Tim Smith
Treasurer
Division 1
Mitch Thompson
President
Division 2
Jose Lopez
Vice President
Division 4
Gary Croucher
Division 3
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.
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GFOA CERTIFICATE OF ACHIEVEMENT
FOR EXCELLENCE IN FINANCIAL REPORTING
The Government Finance Officers Association (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Otay Water District for its
CAFR for the fiscal year ended June 30, 2015. This is the twelfth year that the District
has achieved this prestigious award. In order to be awarded a Certificate of
Achievement, the District had to publish an easily readable and comprehensive
report. This report must satisfy both Generally Accepted Accounting Principles
(GAAP) and applicable legal requirements.
This award is valid for a period of one year only. We believe our current CAFR
continues to meet the Certificate of Achievement Program’s requirements, and will
be submitting it to GFOA to determine its eligibility for another certificate.
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iF TEAMAN, RAM IREZ & SMITH, INC.
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
Board of Directors
Otay Water District
Spring Valley, California
Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activities of the Otay Water
District (the "District"), as of and for the years ended June 30, 2016 and 2015, and the related notes to the
financial statements, which collectively comprise the District's basic financial statements as listed in the
table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States and the State Controller's Minimum Audit Requirements for
California Special Districts. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the District's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Richard A. Teaman, CPA . David M. Ramirez, CPA • Javier H. Carrillo, CPA
4201 Brocklon Ave. Suite 100, Riverside CA 92501 .951.274.9500 • 951.274.7828 FAX• www.trscpas.com 13
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the business-type activities of the Otay Water District as of June 30, 2016
and 2015, and the respective changes in financial position and cash flows thereof for the years then ended in
accordance with accounting principles generally accepted in the United States of America, as well as the
accounting systems prescribed by the California State Controller’s Office and California regulations
governing Special Districts.
Emphasis of Matter
As described in Note 1 to the basic financial statements, the District adopted the provisions of Governmental
Accounting Standards Board Statement No. 72, Fair Value Measurement and Application. Our opinion is
not modified with respect to these matters.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and required supplementary information on pages 16-23 and 75-77 be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America,
which consisted of inquiries of management about the methods of preparing the information and comparing
the information for consistency with management's responses to our inquiries, the basic financial statements,
and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the District’s basic financial statements. The introductory section and statistical section are
presented for purposes of additional analysis and are not required part of the basic financial statements.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
14
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 19, 2016,
on our consideration of the District’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards in considering the District’s internal control over financial reporting
and compliance.
Riverside, California
October 19, 2016
15
Management’s Discussion and Analysis
As management of the Otay Water District (the “District”), we offer readers of the District’s financial
statements, this narrative overview, and analysis of the District’s financial performance during the fiscal
year ending June 30, 2016. Please read it in conjunction with the District’s financial statements that follow
Management’s Discussion and Analysis. All amounts, unless otherwise indicated, are expressed in
millions of dollars.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the District’s basic financial
statements, which are comprised of the following: 1) Statements of Net Position, 2) Statements of
Revenues, Expenses, and Changes in Net Position, 3) Statements of Cash Flows, and 4) Notes to the
Financial Statements. This report also contains other supplementary information in addition to the basic
financial statements.
The Statements of Net Position present information on all of the District’s assets, deferred outflows of
resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over
time, increases or decreases in net positions may serve as a useful indicator of whether the financial
position of the District is improving or weakening.
The Statements of Revenues, Expenses and Changes in Net Position present information showing how the
District’s net position changed during the most recent fiscal year. All changes in net positions are reported
as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash
flows. Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
The Statements of Cash Flows present information on cash receipts and payments for the fiscal year.
The Notes to the Financial Statements provide additional information that is essential to a full
understanding of the data supplied in each of the specific financial statements listed above.
Financial Highlights
The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at
the close of the most recent fiscal year by $401.3 million (net position). Of this amount, $45.3 million (unrestricted net
position) may be used to meet the District’s ongoing obligations to citizens and creditors.
Total assets decreased by $2.5 million or .44% during Fiscal Year 2016, to $566.4 million, due primarily to depreciation
offset by investments in capital infrastructure, contributions, and improved operating results.
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Management’s Discussion and Analysis
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information concerning the District’s progress in funding its obligation to provide
pension benefits to its employees.
Financial Analysis:
As noted, net position may serve, over time, as a useful indicator of an entity’s financial position. In the
case of the District, assets and deferred outflows of resources exceeded liabilities and deferred inflows of
resources by $401.3 million at the close of the most recent fiscal year.
By far, the largest portion of the District’s net position, $351.6 million (88%), reflects its investment in capital
assets, less any remaining outstanding debt used to acquire those assets. The District uses these capital
assets to provide services to citizens; consequently, these assets are not available for future spending.
Although the District’s investment in its capital assets is reported effectively as a resource, it should be
noted that the resources needed to repay the debt must be provided from other sources, since the capital
assets themselves cannot be used to liquidate these liabilities.
17
Management’s Discussion and Analysis
Statements of Net Position
(In Millions of Dollars)
2016 2015 2014
Assets
Current and Other Assets $ 112.4 $ 109.7 $ 109.9
Capital Assets 454.0 459.2 466.7
Total Assets 566.4 568.9 576.6
Deferred Outflows of Resources
Deferred Amount on Refunding 1.3 0.0 0.1
Deferred Contributions to Pension Plan 7.0 3.6 0.0
Total Deferred Outflows of Resources 8.3 3.6 0.1
Liabilities
Long-Term Debt Outstanding 99.8 101.5 105.3
Net Pension Liability 40.1 38.7 0.0
Other Liabilities 27.8 24.9 26.6
Total Liabilities 167.7 165.1 131.9
Deferred Inflows of Resources
Deferred Actuarial Pension Costs 5.7 5.0 0.0
Total Deferred Inflows of Resources 5.7 5.0 0.0
Net Position(1)
Net Investment in Capital Assets 351.6 354.0 357.9
Restricted for Debt Service 4.4 4.6 3.9
Unrestricted 45.3 43.8 83.0
Total Net Position $ 401.3 $ 402.4 $ 444.8
While the District’s operations and population continue to grow, albeit at slower rates than the housing
boom years, the pattern of reduced growth of the District’s Net Position is indicative of the reduction and
slow recovery of new development projects within the District. This reduction is a result of the slow
recovery from the national housing slump.
In FY 2016, the District’s Capital Assets increased by $11.2 million before accumulated depreciation. (See
Note 4 in the Notes to Financial Statements). The District also saw a decrease in Long-Term Debt of $1.7
million due to the annual payments of long-term debt and the advance refunding of 2007 Certificates of
Participation (See Note 5 in the Notes to Financial Statements).
(1)GASB No. 68 & 71 implemented in FY 2015. Prior years were not restated as the information was not
readily available.
18
Management’s Discussion and Analysis
Certain planning and environmental study costs associated with capital projects such as the Otay Mesa
Desalination and Disinfection System or San Miguel Habitat Management/Mitigation Area do not qualify
as capital costs under Generally Accepted Accounting Principles and are included in the miscellaneous
(non-operating) expenses of the District. For FY 2016 and FY 2015 those expenses were $1.4 million and
$1.2 million, respectively.
At the end of FY 2016 the District is able to report positive balances in all categories of net position. This
situation also held true for the prior two fiscal years.
Statements of Revenues, Expenses, and Changes in Net Position
(In Millions of Dollars)
2016 2015 2014
Water Sales $ 73.9 $ 79.1 $ 81.3
Wastewater Revenue 3.2 3.1 2.8
Connection and Other Fees 1.8 1.7 1.9
Non-operating Revenues 8.9 8.9 7.8
Total Revenues 87.8 92.8 93.8
Depreciation Expense 16.5 16.2 16.1
Other Operating Expenses 73.2 75.7 76.5
Non-operating Expenses 6.2 6.0 8.0
Total Expenses 95.9 97.9 100.6
Loss Before Capital
Contributions (8.1) (5.1) (6.8)
Capital Contributions 7.0 3.1 3.4
Change in Net Position (1.1) (2.0) (3.4)
Beginning Net Position, As Previously Stated 402.4 444.8 448.2
Prior Period Adjustment 0.0 (40.4) 0.0
Beginning Net Position, As Restated 402.4 404.4 448.2
Ending Net Position $ 401.3 $ 402.4 $ 444.8
Water Sales decreased by $5.2 million and $2.2 million in FY 2016 and FY 2015 respectively. The year over
year reduction was mainly due to decreases in units sold as a result of the ongoing drought conditions.
This reduction as a result of the drought was partially offset by increases in rates.
Other Operating Expenses decreased predominantly due to the decrease in Cost of Water Sales brought
about by the decrease in units purchased in FY 2016 and FY 2015.
19
Management’s Discussion and Analysis
The District growth, has slowly started to pick up as Connection and Other Fees revenues increased by
$.01 million in FY 2016 as compared to a decreased by $0.2 million in FY 2015. The nationwide housing
has improved due to lower interest rates and developers had started to work on new and existing projects
that were previously put on hold. The improvement in economy has resulted in an increase of $3.9 million
in Capital Contributions in FY 2016 compared to a decrease of $0.3 million in FY 2015.
Non-operating Revenues
Non-operating Revenues by Major Source
(In Millions of Dollars)
2016 2015 2014
Taxes and Assessments $ 4.0 $ 3.8 $ 3.5
Rents and Leases 1.3 1.2 1.3
Other Non-operating Revenue 3.6 3.9 3.0
Total Non-operating Revenues $ 8.9 $ 8.9 $ 7.8
The District’s total non-operating revenues remains the same in FY 2016 compared to an increase of $1.1
million in FY 2015. The increase in FY 2015 was primarily a result of increased revenues from property
taxes, availability fees, and investment earnings.
Capital Assets and Debt Administration
The District’s capital assets (net of accumulated depreciation) as of June 30, 2016, totaled $454.0 million.
Included in this amount is land. The District’s net capital assets decreased by 1.1% for FY 2016 and 1.6% for
FY 2015.
20
Management’s Discussion and Analysis
Capital Assets
(In Millions of Dollars)
2016 2015 2014
Land $ 14.1 $ 13.7 $ 13.7
Construction in Progress 12.5 15.1 11.7
Water System 476.6 468.7 465.9
Recycled Water System 111.8 110.5 110.3
Sewer System 42.8 42.0 41.2
Field Equipment 9.1 8.7 8.8
Buildings 20.6 19.0 18.9
Transportation Equipment 3.4 3.4 3.3
Communication Equipment 3.3 3.1 2.9
Office Equipment 19.4 18.2 17.5
713.6 702.4 694.2
Less Accumulated
Depreciation (259.6) (243.2) (227.5)
Net Capital Assets $ 454.0 $ 459.2 $ 466.7
As indicated by figures in the table above, the majority of capital assets added during both fiscal years
were related to the potable and recycled water systems. In addition, the majority of the cost of
construction-in-progress is also related to these water systems. Additional information on the District’s
capital assets can be found in Note 4 of the Notes to Financial Statements.
At June 30, 2016, the District had $99.8 million in outstanding debt (net of $3.9 million of maturities
occurring in FY 2017), which consisted of the following:
General Obligation Bonds $ 4.1
Certificates of Participation 8.2
Revenue Bonds 87.5
Total Long-Term Debt $ 99.8
In June 2013, the District issued $7.7 million of 2013 Water Revenue Refunding Bonds for an advance
refunding of its 2004 Certificates of Participation, which was called on September 1, 2014. Excluding costs
of issuance the District received $8.5 million in proceeds, including a $1.0 million premium, to fund the $8.1
million of outstanding principal and $0.4 million of remaining interest payments. In accordance with GASB
Nos. 23 and 65, the remaining interest payments of $0.1 million in FY 2014 is reflected as a deferred outflow
of resources on the Statements of Net Position.
In May 2016, the District issued $33.4 million of 2016 Water Revenue Refunding Bonds for an advance
refunding of its 2007 Certificates of Participation, which will be called on September 1, 2017. Excluding
costs of issuance the District received $36.6 million in proceeds, including a $3.6 million premium, to fund
the $34.8 million of outstanding principal and $1.8 million of remaining interest payments. In accordance
21
Management’s Discussion and Analysis
with GASB Nos. 23 and 65, the remaining interest payments of $1.3 million in FY 2016 is reflected as a
deferred outflow of resources on the Statements of Net Position.
Additional information on the District’s long-term debt can be found in Note 5 of the Notes to Financial
Statements
Prior Period Adjustment
The Governmental Accounting Standards Board (GASB) issued Statement No. 68, “Accounting and
Financial Reporting for Pensions-an amendment of GASB Statement No. 27”, and No. 71 “Pension
Transitions for Contributions Made Subsequent to the Measurement Date-an amendment of GASB No. 68”
for periods beginning after June 15, 2014. The District implemented these standards in fiscal year 2015.
The result of the implementation of these standards was to decrease the net position at July 1, 2014 by
$40.4 million which consists of net pension liability, deferred outflows of resources, deferred inflows of
resources, and pension expense.
Fiscal Year 2016-2017 Budget
Economic Factors
The San Diego region imports 84% of its potable supply so factors such as local rainfall as well as weather
conditions elsewhere in the western portion of the nation can affect the region. San Diego received more
than normal rainfall in Fiscal Year 2016, and the District anticipates an average rainfall pattern in the
coming years.
Water sales have declined for the District by nearly 35% in the last ten years. This was driven by many
factors including the economic downturn caused by the great recession, increases in the price of imported
water, and most recently the State mandated cuts in potable water use due to the prolonged statewide
drought. In Fiscal Year 2016 the District was assigned a reduction target of 20% compared to the 2013
levels. In March of 2016, with the certification of the Claude “Bud” Lewis Carlsbad Desalination Plant as a
drought- resilient supply, CWA agencies were allowed to reduce the target from 20% to 12%. Decreases in
water sales revenue have been offset by the corresponding decreases in water purchase expense, as well
as reductions in District managed cost such as reduced employee count and internal cost cuts, achieved
through automation and streamlining of processes. Should further loss in water sales continue due to
limited supplies or mandated cuts, the District’s response will be modified based on the magnitude of the
reduction.
The District continues to use the challenges presented by growth and the ongoing drought to create new
opportunities and new organizational efficiencies. By utilizing and continuing to refine its Strategic
Business Plan, it has captured the Board of Director’s vision and united its staff in a common mission. The
District has achieved a number of significant accomplishments based on its successful adherence to its
Strategic Business Plan. The District is not only poised to continue successfully providing an affordable,
22
Management’s Discussion and Analysis
safe, and reliable water supply for the people of its service area, but is set to reap the rewards of greater
efficiencies and economies of scale.
The District is currently at about 52% of its projected ultimate population, serving approximately 220,000
people. Long-term, this percentage should continue to increase as the District's service area continues to
develop and grow. By 2035, the District is projected to serve approximately 285,000 people, with an
average daily demand of 46 million gallons per day (MGD). Currently, the District services the needs of this
growing population by purchasing water from the San Diego County Water Authority (CWA), who in turn
purchases its water from the Metropolitan Water District (MWD) and the Imperial Irrigation District (IID).
Otay takes delivery of the water through several connections of large diameter pipelines owned and
operated by CWA. The District currently receives treated water from CWA directly and from the Helix Water
District via a contract with CWA. In addition, the District has an emergency agreement with the City of San
Diego to purchase water in the case of a shutdown of the main treated water source. The City of San
Diego also has a long-term contract with the District to provide recycled water for landscape and irrigation
usage. Through innovative agreements like these, benefits can be achieved by both parties by using
excess capacity of another agency, and diversifying local supply, thereby increasing reliability.
Financial
The District is budgeted to deliver approximately 24,800 acre-feet of potable water to 49,500 potable
customer accounts during Fiscal Year 2016-2017. Management feels that these projections are realistic
after accounting for low growth, supply changes, and a focus on conservation. A combination of factors,
including the ongoing drought and economic uncertainty, have created challenges in developing
projections for the current fiscal year. Both unemployment and levels of distressed activity in the
commercial and residential resale market have improved from their economic crisis peaks. However,
while unemployment has recovered, housing starts remain significantly below the levels of the boom years
from 2001 to 2005. The negative impacts to the District of the economic indicators and conservation are
partially offset by growth as the District’s commercial and residential permits have shown slow and steady
improvement from previous lows. While all of these factors impact the region’s water usage, people’s
need for water remains an underlying constant. Staff continues working diligently on developing new
water supplies as they work through the financial impacts of conservation and the modest economic
turnaround.
Management is unaware of any other conditions that could have a significant impact on the District’s
current financial position, net position, or operating results.
Contacting the District’s Financial Management
This financial report is designed to provide a general overview of the Otay Water District’s finances for the
Board of Directors, citizens, creditors, and other interested parties. Questions concerning any of the
information provided in the report or requests for additional information should be addressed to the
District’s Finance Department, 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978-2004.
23
24
25
26
2016 2015
ASSETS
Current Assets:
Cash and Cash Equivalents (Notes 1 and 2)21,122,543$ 23,168,511$
Restricted Cash and Cash Equivalents (Notes 1 and 2)8,208 47,083
Investments (Note 2)36,806,704 35,888,511
Board Designated Investments (Note 2)23,876,678 22,395,347
Restricted Investments (Notes 1 and 2)4,394,093 4,532,725
Accounts Receivable, Net 11,116,393 9,987,050
Accrued Interest Receivable 157,620 97,291
Taxes and Availability Charges Receivable, Net 341,651 321,178
Restricted Taxes and Availability Charges Receivable, Net 32,173 31,848
Inventories 722,225 807,008
Prepaid Items and Other Receivables 1,309,335 988,882
Total Current Assets 99,887,623 98,265,434
Non-current Assets:
Net OPEB Asset (Note 8)12,519,549 11,472,386
Capital Assets (Note 4):
Land 14,085,251 13,714,963
Construction in Progress 12,541,701 15,106,336
Capital Assets, Net of Depreciation 427,341,594 430,370,095
Total Capital Assets, Net of Depreciation 453,968,546 459,191,394
Total Non-current Assets 466,488,095 470,663,780
Total Assets 566,375,718 568,929,214
DEFERRED OUTFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 7)7,001,426 3,575,595
Deferred Amount on Refunding 1,339,997 -
Total Deferred Outflows of Resources 8,341,423$ 3,575,595$
Continued
STATEMENTS OF NET POSITION
June 30, 2016 and 2015
The accompanying notes are an integral part of these statements.
27
2016 2015
LIABILITIES
Current Liabilities:
Current Maturities of Long-term Debt (Note 5)3,920,000$ 3,690,000$
Accounts Payable 11,497,728 9,779,477
Accrued Payroll Liabilities 574,037 1,057,976
Other Accrued Liabilities 3,813,262 3,642,511
Customer and Developer Deposits 3,313,631 2,227,173
Accrued Interest 1,197,113 1,540,122
Unearned Revenues 421,800 -
Liabilities Payable from Restricted Assets:
Restricted Accrued Interest 59,604 65,304
Total Current Liabilities 24,797,175 22,002,563
Non-current Liabilities:
Long-term Debt (Note 5):
General Obligation Bonds 4,095,853 4,697,208
Certificates of Participation 8,191,803 43,355,103
Revenue Bonds 87,483,686 53,402,993
Net Pension Liability 40,143,128 38,723,345
Other Non-current Liabilities 3,040,648 2,933,331
Total Non-current Liabilities 142,955,118 143,111,980
Total Liabilities 167,752,293 165,114,543
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs (Note 7)5,677,071 4,967,940
Total Deferred Inflows of Resources 5,677,071 4,967,940
NET POSITION
Net Investment in Capital Assets 351,617,201 354,046,090
Restricted for Debt Service 4,402,301 4,579,808
Unrestricted 45,268,275 43,796,428
Total Net Position 401,287,777$ 402,422,326$
Statements of Net Position - continued
June 30, 2016 and 2015
The accompanying notes are an integral part of these statements.
28
2016 2015
OPERATING REVENUES
Water Sales 73,940,200$ 79,135,000$
Wastewater Revenue 3,175,300 3,044,158
Connection and Other Fees 1,760,807 1,686,249
Total Operating Revenues 78,876,307 83,865,407
OPERATING EXPENSES
Cost of Water Sales 51,826,046 54,364,884
Wastewater 2,051,913 1,866,711
Administrative and General 19,318,247 19,437,141
Depreciation 16,473,337 16,194,992
Total Operating Expenses 89,669,543 91,863,728
Operating Income (Loss)(10,793,236) (7,998,321)
NON-OPERATING REVENUES (EXPENSES)
Investment Earnings 758,004 656,925
Taxes and Assessments 3,966,593 3,856,276
Availability Charges 616,591 685,555
Gain (Loss) on Sale of Capital Assets 46,423 30,282
Rents and Leases 1,281,150 1,232,920
Miscellaneous Revenues 2,228,200 2,490,796
Donations (120,722) (117,462)
Interest Expense (4,603,093) (4,545,530)
Miscellaneous Expenses (1,485,778) (1,324,155)
Total Non-operating Revenues (Expenses)2,687,368 2,965,607
Income (Loss) Before Capital Contributions (8,105,868) (5,032,714)
Capital Contributions 6,971,319 3,081,894
Change in Net Position (1,134,549) (1,950,820)
Total Net Position, Beginning, As Previously Reported 402,422,326 444,807,820
Prior Period Adjustment - (40,434,674)
Total Net Position, Beginning, As Restated 402,422,326 404,373,146
Total Net Position, Ending 401,287,777$ 402,422,326$
For the Years Ended June 30, 2016 and 2015
Statements of Revenues, Expenses and Changes in Net Position
The accompanying notes are an integral part of these statements.
29
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers 77,072,615$ 84,879,648$
Receipts from Connections and Other Fees 1,760,807 1,686,249
Other Receipts 2,650,000 2,490,796
Payments to Suppliers (52,065,783)(57,803,850)
Payments to Employees (22,197,793)(20,838,190)
Other Payments (1,505,690)(1,501,218)
Net Cash Provided By (Used For) Operating Activities 5,714,156 8,913,435
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Receipts from Taxes and Assessments 3,945,795 3,877,931
Receipts from Property Rents and Leases 1,160,428 1,115,458
Net Cash Provided By (Used For) Noncapital and Related
Financing Activities 5,106,223 4,993,389
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from Capital Contributions 5,122,137 2,979,305
Proceeds from Sale of Capital Assets 60,925 30,735
Proceeds from Debt Related Taxes and Assessments 616,591 685,555
Deposit to Escrow Account for Advance Refunding (36,099,997)-
Proceeds from Long-Term Debt 37,015,950 -
Principal Payments on Long-Term Debt (3,690,000)(3,495,000)
Interest Payments and Fees (4,951,802)(4,497,782)
Acquisition and Construction of Capital Assets (9,415,809)(8,632,578)
Net Cash Provided By (Used For) Capital and Related
Financing Activities (11,342,005)(12,929,765)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received on Investments 697,675 643,313
Proceeds from Sale and Maturities of Investments 65,385,175 44,917,589
Purchase of Investments (67,646,067)(53,932,480)
Net Cash Provided By (Used For) Investing Activities (1,563,217)(8,371,578)
Net Increase (Decrease) in Cash and Cash Equivalents (2,084,843)(7,394,519)
Cash and Cash Equivalents - Beginning 23,215,594 30,610,113
Cash and Cash Equivalents - Ending 21,130,751$ 23,215,594$
Continued
Statements of Cash Flows
For the Years Ended June 30, 2016 and 2015
The accompanying notes are an integral part of these statements.
30
2016 2015
Reconciliation of Operating Income (Loss) to Net Cash Flows
Provided By (Used For) Operating Activities:
Operating Income (Loss)(10,793,236)$ (7,998,321)$
Adjustments to Reconcile Operating Income to
Net Cash Provided By (Used For) Operating Activities:
Depreciation 16,473,337 16,194,992
Miscellaneous Revenues 2,650,000 2,490,796
Miscellaneous Expenses (1,505,690) (1,501,218)
(Increase) Decrease in Accounts Receivable (1,129,343) 2,892,071
(Increase) Decrease in Inventory 84,783 (32,001)
(Increase) Decrease in Net OPEB Asset (1,047,163) (1,087,050)
(Increase) Decrease in Prepaid Items and Other Receivables (320,453) 58,826
(Increase) Decrease in Deferred Actuarial Pension Costs (2,716,700) 4,529,519
Increase (Decrease) in Accounts Payable 1,718,251 (2,126,549)
Increase (Decrease) in Accrued Payroll and Related Expenses (483,939) 280,629
Increase (Decrease) in Other Accrued Liabilities 170,751 245,011
Increase (Decrease) in Customer and Developer Deposits 1,086,458 (191,581)
Increase (Decrease) in Prepaid Capacity Fees 107,317 6,814
Increase (Decrease) in Net Pension Liability 1,419,783 (4,848,503)
Net Cash Provided By (Used For) Operating Activities 5,714,156$ 8,913,435$
Schedule of Cash and Cash Equivalents:
Current Assets:
Cash and Cash Equivalents 21,122,543$ 23,168,511$
Restricted Cash and Cash Equivalents 8,208 47,083
Total Cash and Cash Equivalents 21,130,751$ 23,215,594$
Supplemental Disclosures
Non-Cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 1,849,182$ 102,590$
Change in Fair Value of Investments and Recognized Gains/Losses 60,177 23,827
Amortization Related to Long-term Debt 191,428 78,118
Statements of Cash Flows - continued
For the Years ended June 30, 2016 and 2015
The accompanying notes are an integral part of these statements.
31
Notes to Financial Statements
NOTE DESCRIPTION PAGE
1 Reporting Entity and Summary of Significant Accounting Policies..……….. 33
2 Cash and Investments………………………………………………………………………………………….. 41
3 Fair Value Measurements…………………………………………..………………………………………. 45
4 Capital Assets…………………………………………………..………………………………………………………. 47
5 Long-Term Debt………………………………………………….…………………………………………………... 49
6 Net Position………………………………………………………………………………………………………………. 55
7 Defined Benefit Pension Plan………………………………………………………………………….….. 55
8 Other Post Employment Benefits………………………..………….......................................... 63
9 Water Conservation Authority………………………………………............................................. 65
10 Commitments and Contingencies…………………………………………………………….………. 66
11 Risk Management……………………………………………………………………………………………….…. 67
12 Interest Expense……………………………………………………......................................................... 68
13 Segment Information…………………………………………………………………………………..……….. 68
14 Prior Period Adjustment……………………………………………………………………………...……….. 71
32
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Reporting Entity
The reporting entity Otay Water District (the “District”) includes the accounts of the District, Otay
Service Corporation (the “Corporation”) and the Otay Water District Financing Authority (the
“Financing Authority”).
The Otay Water District (the “District”) is a public entity established in 1956 pursuant to the
Municipal Water District Law of 1911 (Section 711 et. Seq. of the California Water Code) for the
purpose of providing water and sewer services to the properties in the District. The District is
governed by a Board of Directors consisting of five directors elected by geographical divisions
based on District population for a four-year alternating term.
The District formed the Otay Service Corporation on June 21, 1993, a nonprofit public benefit
corporation duly organized and existing under the laws of the State of California. The Service
Corporation was formed to assist the District in the financing of public capital improvements.
The District formed the Financing Authority on March 3, 2010 under the Joint Exercise of Powers
Act, constituting Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title
1 of the California Government Code. The Financing Authority was formed to assist the District in
the financing of public capital improvements.
The financial statements present the District and its component units. The District is the primary
government unit. Component units are those entities which are financially accountable to the
primary government, either because the District appoints a voting majority of the component unit’s
board, or because the component units will provide a financial benefit or impose a financial
burden on the District. The District has accounted for the Service Corporation and Financing
Authority as “blended” component units. Despite being legally separate, the Service Corporation
and Financing Authority are so intertwined with the District that they are in substance, part of the
District’s operations. Accordingly, the balances and transactions of these component units are
reported within the funds of the District. Separate financial statements are not issued for the
Service Corporation and the Financing Authority.
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation
Measurement focus is a term used to describe “which” transactions are recorded within the
various financial statements. Basis of accounting refers to “when” transactions are recorded
regardless of the measurement focus applied. The accompanying financial statements are
reported using the economic resources measurement focus, and the accrual basis of accounting.
Under the economic measurement focus all assets and liabilities (whether current or noncurrent)
associated with these activities are included on the Statements of Net Position. The Statements of
Revenues, Expenses and Changes in Net Position present increases (revenues) and decreases
(expenses) in total net position. Under the accrual basis of accounting, revenues are recorded
when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows.
33
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
The District reports its activities as an enterprise fund, which is used to account for operations that are
financed and operated in a manner similar to a private business enterprise, where the intent of the
District is that the costs (including depreciation) of providing goods or services to the general public
on a continuing basis be financed or recovered primarily through user charges.
The basic financial statements of the Otay Water District have been prepared in conformity with
accounting principles generally accepted in the United States of America. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for governmental
accounting financial reporting purposes.
Net position of the District is classified into three components: (1) net investment in capital assets,
(2) restricted net position, and (3) unrestricted net position. These classifications are defined as
follows:
Net Investment in Capital Assets
This component of net position consists of capital assets, net of accumulated depreciation and
reduced by the outstanding balances of notes or borrowing that are attributable to the acquisition of
the assets, construction, or improvement of those assets. If there are significant unspent related debt
proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in
the calculation of the net investment in capital assets.
Restricted Net Position
This component of net position consists of net position with constrained use through external
constraints imposed by creditors (such as through debt covenants), grantors, contributions, or laws
or regulations of other governments or constraints imposed by law through constitutional provisions
or enabling legislation.
Unrestricted Net Position
This component of net position consists of net position that do not meet the definition of “net
investment in capital assets” or “restricted net position”.
The District distinguishes operating revenues and expenses from those revenues and expenses that
are non-operating. Operating revenues are those revenues that are generated by water sales and
wastewater services while operating expenses pertain directly to the furnishing of those services.
Non-operating revenues and expenses are those revenues and expenses generated that are not
associated with the normal business of supplying water and wastewater treatment services.
The District recognizes revenues from water sales, wastewater revenues, and meter fees as they are
earned. Taxes and assessments are recognized as revenues based upon amounts reported to the
District by the County of San Diego, net of allowance for delinquencies of $41,536 at June 30, 2016
and $39,225 at June 30, 2015.
Additionally, capacity fee contributions received which are related to specific operating expenses are
offset against those expenses and included in Cost of Water Sales in the Statements of Revenues
and Expenses and Changes in Net Position.
34
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted
bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as
restricted - net position and unrestricted - net position, a flow assumption must be made about the
order in which the resources are considered to be applied.
It is the District’s practice to consider restricted - net position to have been depleted before
unrestricted - net position is applied, however it is at the Board’s discretion.
C) New Accounting Pronouncements
Implemented
Governmental Accounting Standards Board Statement No. 72
The GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement
addresses accounting and financial reporting issues related to fair value measurements. The
definition of fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. This
Statement provides guidance for determining a fair value measurement for financial reporting
purposes. This Statement also provides guidance for applying fair value to certain investments and
disclosures related to all fair value measurements. Statement No. 72 is effective for periods
beginning after June 15, 2015. The District has implemented GASB No. 72 which is reflected on the
District’s financial statements.
Governmental Accounting Standard Board Statement No. 73
In June of 2015, GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions.
This Statement was issued to improve the usefulness of information about pensions for making
decisions and assessing accountability. This Statement establishes requirements for defined
benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial
Reporting for Pensions, as well as for the assets accumulated for purposes of providing those
pensions. In addition, it establishes requirements for defined contribution pensions that are not
within the scope of Statement No. 68 and also amends certain provisions of Statement No. 67,
Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that
are within their respective scopes.
Statement No. 73 requirements that addresses accounting and financial reporting by employers
and governmental non-employer contributing entities for pensions that are not within the scope of
Statement No. 68 are effective for fiscal years beginning after June 15, 2016, and the requirements
of this statement that address financial reporting for assets accumulated for purposes of providing
those pensions are affective for fiscal years beginning after December 15, 2015. The requirements
of this Statement for pension plans that are within the scope of Statement No. 67 or for pensions
35
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
C) New Accounting Pronouncements - Continued
Implemented - Continued
Governmental Accounting Standard Board Statement No. 73 - Continued
that are within the scope of Statement No. 68 are effective for fiscal years beginning after June 15,
2015. Currently, this statement has no effect on the District’s financial statements.
Governmental Accounting Standard Board Statement No. 76
In June of 2015, GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting
Principles for State and Local Governments. This Statement was issued to identify, in the context of
the current governmental financial reporting environment, the hierarchy of generally accepted
accounting principles (GAAP). The “GAAP hierarchy” consists of the sources of accounting principles
used to prepare financial statements for state and local governmental entities in conformity with
GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy
to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative
literature in the event that the accounting treatment for a transaction or other event is not specified
within a source of authoritative GAAP. This Statement supersedes Statement No. 55, The Hierarchy of
Generally Accepted Accounting Principles for State and Local Governments. Statement No. 76 is
effective for periods beginning after June 15, 2015 and should be applied retroactively. The District
has adopted GASB No. 76 in the 2016 fiscal period.
Governmental Accounting Standard Board Statement No. 79
In December of 2015, GASB issued Statement No. 79, Certain External Investment Pools and Pool
Participants. This statement addresses accounting and financial reporting for certain external
investment pools and pool participants. Specifically, it establishes criteria for an external
investment pool to qualify for making the election to measure all of its investments at amortized
cost for financial reporting purposes. An external investment pool qualifies for that reporting if it
meets all of the applicable criteria established in this Statement. The specific criteria address (1)
how the external investment pool transacts with participants; (2) requirements for portfolio
maturity, quality, diversification, and liquidity; and (3) calculation and requirements of a shadow
price. Significant noncompliance prevents the external investment pool from measuring all of its
investments at amortized cost for financial reporting purposes. Professional judgment is required
to determine if instances of noncompliance with the criteria established by this Statement during
the reporting period, individually or in the aggregate, were significant. The requirements of this
Statement are effective for reporting periods beginning after June 15, 2015. Currently, this
statement has no effect on the District’s financial statements.
36
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
C) New Accounting Pronouncements - Continued
Pending Accounting Standards
GASB has issued the following statements which impact the District’s financial reporting
requirements in the future:
i. GASB 74 – “Financial Reporting for Postemployment Benefits Plans Other Than Pensions”,
effective for fiscal years beginning after June 15, 2016.
ii. GASB 75 – “Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions”, effective for fiscal years beginning after June 15, 2017.
iii. GASB 77 – “Tax Abatement Disclosures”, effective for fiscal years beginning after December 15,
2015.
iv. GASB 78 – “Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension
Plans”, effective for fiscal years beginning after December 15, 2015.
v. GASB 80 – “Blending Requirements for Certain Component Units – An Amendment of GASB
Statement No. 14”, effective for fiscal years beginning after June 15. 2016.
vi. GASB 81 – “Irrevocable Split Interest Agreements”, effective for fiscal years beginning after
December 15, 2016.
vii. GASB 82 – “Pension Issues – An Amendment of GASB Statements No. 67, No. 68, and No. 73”,
effective for fiscal years beginning after June 15. 2016.
D) Deferred Outflows / Inflows of Resources
In addition to assets, the statements of net position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows of
resources, represents a consumption of net position that applies to a future period(s) and so will not
be recognized as an outflow of resources (expense/expenditure) until then. The District has two
items that qualifies for reporting in this category, deferred accrued pension costs are items that are
deferred and recognized as an outflow of resources in the period the amounts become available.
Additionally, the category, deferred amount on refunding, which resulted from the difference in the
carrying value of refunded debt and its reacquisition price. This amount is shown as deferred and
amortized over the shorter of the life of the refunded or refunding debt.
In addition to liabilities, the statements of net position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period(s) and will not be
recognized as an inflow of resources (revenue) until that time. The District has only one item that
37
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
D) Deferred Outflows / Inflows of Resources - Continued
qualifies for reporting in this category. Accordingly, the item, deferred actuarial pension costs, are
deferred and recognized as an inflow of resources in the period that the amounts become available.
E) Statements of Cash Flows
For purposes of the Statements of Cash Flows, the District considers all highly liquid investments
(including restricted assets) with a maturity period, at purchase, of three months or less to be cash
equivalents.
F) Investments
Investments are stated at their fair value, which represents the quoted or stated market value.
Investments that are not traded on a market, such as investments in external pools, are valued
based on the stated fair value as represented by the external pool. All investments are stated at
their fair value, the District has not elected to report certain investments at amortized costs.
G) Inventory and Prepaids
Inventory consists primarily of materials used in the construction and maintenance of the water and
sewer system and is valued at weighted average cost. Both inventory and prepaids use the
consumption method whereby they are reported as an asset and expensed as they are consumed.
H) Capital Assets
Capital assets are recorded at cost, where historical records are available, and at an estimated
historical cost where no historical records exist. Infrastructure assets in excess of $20,000 and other
capital assets in excess of $10,000 are capitalized if they have an expected useful life of two years or
more. The District will also capitalize individual purchases under the capitalization threshold if they
are part of a new capital program. The cost of purchased and self-constructed additions to utility
plant and major replacements of property are capitalized. Costs include materials, direct labor,
transportation, and such indirect items as engineering, supervision, employee fringe benefits,
overhead, and interest incurred during the construction period. Repairs, maintenance, and minor
replacements of property are charged to expense. Donated assets are capitalized at their
approximate fair market value on the date contributed.
The District capitalizes interest on construction projects up to the point in time that the project is
substantially completed. Capitalized interest for fiscal years ending June 30, 2016 of $274,429 and
2015 of $179,476 is included in the cost of water system assets and is depreciated on the straight-line
basis over the estimated useful lives of such assets.
38
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
H) Capital Assets - Continued
Depreciation is calculated using the straight-line method over the following estimated useful lives:
Water System 15-70 Years
Field Equipment 2-50 Years
Buildings 30-50 Years
Communication Equipment 2-10 Years
Transportation Equipment 2-4 Years
Office Equipment 2-10 Years
Recycled Water System 50-75 Years
Sewer System 25-50 Years
I) Compensated Absences
It is the District’s policy to record vested or accumulated vacation and sick leave as an expense and
liability as benefits accrue to employees.
June 30, 2016
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Compensated
Absences $ 2,530,192 $ 6,226,374 $ 6,121,716 $ 2,634,850 $ 263,485
Current portion is reflected in Accrued Payroll Liabilities and remainder in other non-current liabilities on the Statements of Net Position.
June 30, 2015
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Compensated
Absences $ 2,352,861 $ 2,700,572 $ 2,523,241 $ 2,530,192 $ 253,019
Current portion is reflected in Accrued Payroll Liabilities and remainder in other non-current
liabilities on the Statements of Net Position.
J) Classification of Liabilities
Certain current liabilities have been classified as current liabilities payable from restricted assets as
they will be funded from restricted assets.
K) Allowance for Doubtful Accounts
The District charges doubtful accounts arising from water sales receivable to bad debt expense when
it is probable that the accounts will be uncollectible. Uncollectible accounts are determined by the
allowance method based upon prior experience and management’s assessment of the
39
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
K) Allowance for Doubtful Accounts - Continued
collectibility of existing specific accounts. The allowance for doubtful accounts was $170,887 for 2016
and $158,716 for 2015, respectively.
L) Property Taxes
Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of
$1.00 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-
approved indebtedness are excluded from this limitation.
The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The
County’s tax calendar year is July 1 to June 30. Property taxes attach as a lien on property on January
1. Taxes are levied on July 1 and are payable in two equal installments on November 1 and February
1, and become delinquent after December 10 and April 10, respectively.
M) Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources
related to pensions, and pension expense, information about the fiduciary net position of the
District’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions
to/deductions from the Plans’ fiduciary net position have been determined on the same basis as
they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
N) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets, deferred outflows of resources, liabilities, deferred inflows of
resources, and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
O) Reclassifications
Certain reclassifications have been made to prior year amounts to conform to the current year
presentation.
40
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
2) CASH AND INVESTMENTS
The primary goals of the District’s Investment Policy are to assure compliance with all Federal, State, and
Local laws governing the investment of funds under the control of the organization, protect the principal
of investments entrusted, and generate income under the parameters of such policies.
Cash and Investments are classified in the accompanying financial statements as follows:
Statements of Net Position:
2016 2015
Cash and Cash Equivalents $ 21,122,543 $ 23,168,511
Restricted Cash and Cash Equivalents 8,208 47,083
Investments 36,806,704 35,888,511
Board Designated Investments 23,876,678 22,395,347
Restricted Investments 4,394,093 4,532,725
Total Cash and Investments $ 86,208,226 $ 86,032,177
Cash and Investments consist of the following:
2016 2015
Cash on Hand $ 2,950 $ 2,950
Deposits with Financial Institutions 1,485,808 2,074,424
Investments 84,719,468 83,954,803
Total Cash and Investments $ 86,208,226 $ 86,032,177
Investments Authorized by the California Government Code and the District’s Investment Policy
The table below identifies the investment types that are authorized for the District by the California
Government Code (or the District’s Investment Policy, where more restrictive). The table also identifies
certain provisions of the California Government Code (or the District’s Investment Policy, where more
restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does
not address investments of debt proceeds held by bond trustee that are governed by the provisions of
debt agreements of the District, rather than the general provisions of the California Government Code
or the District’s Investment Policy.
Maximum Maximum
Authorized Maximum Percentage Investment
Investment Type Maturity Of Portfolio(1) In One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Government Sponsored Entities 5 years None None
Certificates of Deposit 5 years 15% None
Corporate Medium-Term Notes 5 years 15% None
Commercial Paper 270 days 15% 10%
Money Market Mutual Funds N/A 15% None
County Pooled Investment Funds N/A None None
Local Agency Investment Fund (LAIF) N/A None None
(1) Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
41
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
2) CASH AND INVESTMENTS - Continued
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the District’s
Investment Policy.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value
to changes in market interest rates. One of the ways that the District manages its exposure to interest
rates risk is by purchasing investments with shorter durations than the maximum allowable under the
District Investment Policy and by timing cash flows from maturities, so that a portion of the portfolio is
maturing or coming close to maturity evenly over time, as necessary, to provide the cash flow and
liquidity needed for operations.
Information about the sensitivity of the fair values of the District’s investments to market interest rate
fluctuations are provided by the following tables that show the distribution of the District’s investments by
maturity as of June 30, 2016 and 2015.
June 30, 2016
Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 64,993,625 $ 10,005,920 $17,207,568 $37,780,137 $ -
Local Agency Investment Fund (LAIF) 6,331,635 6,331,635 - - -
San Diego County Pool 13,386,000 13,386,000 - - -
Money Market Funds 8,208 8,208 - - -
Total $ 84,719,468 $ 29,731,763 $17,207,568 $37,780,137 $ -
June 30, 2015
Remaining Maturity (in Months)
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 62,730,204 $ 3,000,390 $28,006,120 $31,723,694 $ -
Local Agency Investment Fund (LAIF) 7,593,516 7,593,516 - - -
San Diego County Pool 13,584,000 13,584,000 - - -
Money Market Funds 47,083 47,083 - - -
Total $ 83,954,803 $ 24,224,989 $28,006,120 $31,723,694 $ -
42
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized statistical
rating organization. Presented below is the minimum rating required by (where applicable) the California
Government Code or the District’s Investment Policy, or debt agreements, and the Moody’s ratings as of
June 30, 2016 and 2015.
June 30, 2016
Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
U.S. Government Sponsored Entities $ 64,993,625 N/A $64,993,625 $ - $ - $ -
Local Agency Investment Fund (LAIF) 6,331,635 N/A - - - 6,331,635
San Diego County Pool 13,386,000 N/A - - - 13,386,000
Money Market Funds 8,208 N/A - - 8,208 -
Total $ 84,719,468 $ 64,993,625 $ - $ 8,208 $19,717,635
June 30, 2015
Minimum Rating as of Year End
Legal Not
Investment Type Rating AAA AA A-1 Rated
U.S. Government Sponsored Entities $ 62,730,204 N/A $62,730,204 $ - $ - $ -
Local Agency Investment Fund (LAIF) 7,593,516 N/A - - - 7,593,516
San Diego County Pool 13,584,000 N/A - - - 13,584,000
Money Market Funds 47,083 N/A - - 47,083 -
Total $ 83,954,803 $ 62,730,204 $ - $ 47,083 $21,177,516
Concentration of Credit Risk
The investment policy of the District contains various limitations on the amounts that can be invested in
any one type or group of investments and in any issuer, beyond that stipulated by the California
Government Code, Sections 53600 through 53692. Investments in any one issuer (other than U.S.
Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total
District investments as of June 30, 2016 and 2015 are as follows:
June 30, 2016
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 13,221,648
Federal Home Loan Mortgage Corp U.S. Government Sponsored Entities $ 26,023,080
Federal National Mortgage Association U.S. Government Sponsored Entities $ 11,740,057
Federal Farm Credit Banks U.S. Government Sponsored Entities $ 14,008,840
43
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
2) CASH AND INVESTMENTS - Continued
Concentration of Credit Risk - Continued
June 30, 2015
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 13,989,160
Federal Home Loan Mortgage Corp U.S. Government Sponsored Entities $ 22,006,280
Federal National Mortgage Association U.S. Government Sponsored Entities $ 8,003,200
Federal Farm Credit Banks U.S. Government Sponsored Entities $ 18,731,564
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover collateral
securities that are in the possession of an outside party. The custodial credit risk for investments is the
risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government
will not be able to recover the value of its investment or collateral securities that are in the possession of
another party. The California Government Code and the District’s investment policy do not contain legal
or policy requirements that would limit the exposure to custodial credit risk for deposits or investments,
other than the following provision for deposits: The California Government Code requires that a financial
institution secure deposits made by state or local government units by pledging securities in an
undivided collateral pool held by a depository regulated under state law (unless so waived by the
governmental unit). The market value of the pledged securities in the collateral pool must equal at least
110% of the total amount deposited by the public agencies. California law also allows financial
institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of the
secured public deposits.
As of June 30, 2016, $1,403,394 and June 30, 2015, $1,570,403 of the District’s deposits with financial
institutions in excess of federal depository insurance limits were held in collateralized accounts.
Local Agency Investment Fund (LAIF)
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the Treasurer of the State of California.
The fair value of the District’s investment in this pool is reported in the accompanying financial
statements at amounts based upon District’s pro-rata share of the fair value provided by LAIF for the
entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for
withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized
cost-basis.
San Diego County Pooled Fund
The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program governed
by the County of San Diego Board of Supervisors, and administered by the County of San Diego
Treasurers and Tax Collector. Investments in SDCPIF are highly liquid as deposits and withdrawals can
be made at anytime without penalty.
44
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
2) CASH AND INVESTMENTS - Continued
San Diego County Pooled Fund - Continued
The County of San Diego’s bank deposits are either federally insured or collateralized in accordance with
the California Government Code. Pool detail is included in the County of San Diego Comprehensive
Annual Financial Report (CAFR). Copies of the CAFR may be obtained from the County of San Diego
Auditor-Controller’s Office - 1600 Pacific Coast Highway, San Diego California 92101.
Restricted Cash and Cash Equivalents
2016 2015
Debt Service:
Water Revenue Bond Series 2010A $ 2,264 $ 12,816
Water Revenue Bond Series 2010B 5,944 34,267
Total $ 8,208 $ 47,083
Board Designated Investments
Investments are Board restricted for the cost of the following District projects:
2016 2015
New Water Supply $ 487,059 $ 287,697
Replacement 23,389,619 22,107,650
Total $ 23,876,678 $ 22,395,347
Restricted Investments
2016 2015
Debt Service:
General Obligation Bond ID No. 27-2009 $ 657,076 $ 793,131
Water Revenue Bond Series 2010A 1,030,556 1,031,267
Water Revenue Bond Series 2010B 2,706,461 2,708,327
Total $ 4,394,093 $ 4,532,725
3) FAIR VALUE MEASUREMENTS
Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurements and
Application, provides the framework for measuring fair value. The framework provides a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value with Level 1
given the highest priority and Level 3 the lowest priority. The three levels of the fair value hierarchy are
as follows:
45
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
3) FAIR VALUE MEASUREMENTS - Continued
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
organization has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 2 inputs include the following:
a. Quoted prices for similar assets or liabilities in active markets.
b. Quoted prices for identical or similar assets or liabilities in markets that are not active.
c. Inputs other than quoted prices that are observable for the asset or liability (for example,
interest rates and yield curves observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default rates).
d. Inputs that are derived principally from or corroborated by observable market data by
correlation or other means (market-corroborated inputs).
Level 3 inputs are unobservable inputs for the asset or liability.
Fair value of assets measured on a recurring basis at June 30, 2016, are as follows:
Significant Other
Observable
Inputs
June 30, 2016 Fair Value (Level 2) Uncategorized
U.S. Government Sponsored Entities
$ 64,993,625
$ 64,993,625
$ -
Local Agency Investment Fund (LAIF) 6,331,635 - 6,331,635
San Diego County Pool 13,386,000 - 13,386,000
Money Market Funds 8,208 8,208 -
Total $ 84,719,468 $ 65,001,833 $ 19,717,635
Fair value of assets measured on a recurring basis at June 30, 2015, are as follows:
Significant Other
Observable
Inputs
June 30, 2015 Fair Value (Level 2) Uncategorized
U.S. Government Sponsored Entities
$ 62,730,204
$ 62,730,204
$ -
Local Agency Investment Fund (LAIF) 7,593,516 - 7,593,516
San Diego County Pool 13,584,000 - 13,584,000
Money Market Funds 47,083 47,083 -
Total $ 83,954,803 $ 62,777,287 $ 21,177,516
46
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
3) FAIR VALUE MEASUREMENTS - Continued
Investments classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique.
Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted
prices. Uncategorized investments do not fall under the fair value hierarchy as there is no active
market for the investments.
4) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2016:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated
Land $ 13,714,963 $ 370,418 $ (130) $ 14,085,251
Construction in Progress 15,106,336 9,127,008 (11,691,643) 12,541,701
Total Capital Assets Not Depreciated 28,821,299 9,497,426 (11,691,773) 26,626,952
Capital Assets, Being Depreciated
Infrastructure 621,338,227 9,880,756 (17,745) 631,201,238
Field Equipment 8,720,188 500,562 (97,572) 9,123,178
Buildings 18,992,652 1,592,991 (11,293) 20,574,350
Transportation Equipment 3,398,370 127,517 (88,093) 3,437,794
Communication Equipment 3,097,068 221,871 (35,688) 3,283,251
Office Equipment 18,223,444 1,135,511 (3,417) 19,355,538
Total Capital Assets Being Depreciated 673,769,949 13,459,208 (253,808) 686,975,349
Less Accumulated Depreciation:
Infrastructure 206,825,493 13,972,386 (3,373) 220,794,506
Field Equipment 7,569,568 195,663 (97,572) 7,667,659
Buildings 8,841,448 473,567 (11,293) 9,303,722
Transportation Equipment 2,443,598 233,759 (88,093) 2,589,264
Communication Equipment 2,219,957 393,637 (35,688) 2,577,906
Office Equipment 15,499,790 1,204,325 (3,417) 16,700,698
Total Accumulated Depreciation 243,399,854 16,473,337 (239,436) 259,633,755
Total Capital Assets Being Depreciated,
Net
430,370,095
(3,014,129)
(14,372)
427,341,594
Total Capital Assets, Net $ 459,191,394 $ 6,483,297 $ (11,706,145) $ 453,968,546
Depreciation expense for the year ended June 30, 2016 was $16,473,337.
47
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
4) CAPITAL ASSETS - Continued
The following is a summary of changes in Capital Assets for the year ended June 30, 2015:
Beginning Ending
Balance Additions Deletions Balance
Capital Assets, Not Depreciated
Land $ 13,714,963 $ - $ - $ 13,714,963
Construction in Progress 11,642,506 8,453,369 (4,989,539) 15,106,336
Total Capital Assets Not Depreciated 25,357,469 8,453,369 (4,989,539) 28,821,299
Capital Assets, Being Depreciated
Infrastructure 617,602,562 4,032,123 (296,458) 621,338,227
Field Equipment 8,812,693 16,188 (108,693) 8,720,188
Buildings 18,928,879 63,773 - 18,992,652
Transportation Equipment 3,308,602 205,180 (115,412) 3,398,370
Communication Equipment 2,880,141 216,927 - 3,097,068
Office Equipment 17,513,193 755,189 (44,938) 18,223,444
Total Capital Assets Being Depreciated 669,046,070 5,289,380 (565,501) 673,769,949
Less Accumulated Depreciation:
Infrastructure 193,479,391 13,624,785 (278,683) 206,825,493
Field Equipment 7,495,508 182,754 (108,694) 7,569,568
Buildings 8,336,568 504,880 - 8,841,448
Transportation Equipment 2,299,848 259,162 (115,412) 2,443,598
Communication Equipment 1,746,613 473,344 - 2,219,957
Office Equipment 14,394,208 1,150,067 (44,485) 15,499,790
Total Accumulated Depreciation 227,752,136 16,194,992 (547,274) 243,399,854
Total Capital Assets Being Depreciated,
Net
441,293,934
(10,905,612)
(18,227)
430,370,095
Total Capital Assets, Net $ 466,651,403 $ (2,452,243) $ (5,007,766) $ 459,191,394
Depreciation expense for the year ended June 30, 2015 was $16,194,992.
48
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
5) LONG-TERM DEBT
Long-term liabilities for the year ended June 30, 2016 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 - 2009 $ 5,150,000 $ - $ 570,000 $ 4,580,000 $ 585,000
Unamortized Bond Premium 117,208 - 16,355 100,853 -
Net General Obligation Bonds 5,267,208 - 586,355 4,680,853 585,000
Certificates of Participation:
1996 Certificates of Participation 9,400,000 - 600,000 8,800,000 600,000
2007 Certificates of Participation 35,795,000 - 35,795,000 - -
1996 COPS Unamortized Discount (8,942) - (745) (8,197) -
2007 COPS Unamortized Discount (195,955) - (195,955) - -
Net Certificates of Participation 44,990,103 - 36,198,300 8,791,803 600,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 10,590,000 - 870,000 9,720,000 900,000
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 -
2013 Water Revenue Refunding Bonds 6,470,000 - 615,000 5,855,000 635,000
2016 Water Revenue Refunding Bonds - 33,385,000 - 33,385,000 1,200,000
2010 Series A Unamortized Premium 688,215 - 74,402 613,813 -
2013 Bonds Unamortized Premium 784,778 - 96,095 688,683 -
2016 Bonds Unamortized Premium - 3,630,950 29,760 3,601,190 -
Net Revenue Bonds 54,887,993 37,015,950 1,685,257 90,218,686 2,735,000
Total Long-Term Liabilities $105,145,304 $ 37,015,950 $ 38,469,912 $103,691,342 $ 3,920,000
49
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
5) LONG-TERM DEBT - Continued
Long-term liabilities for the year ended June 30, 2015 are as follows:
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
General Obligation Bonds:
Improvement District No. 27 - 2009 $ 5,700,000 $ - $ 550,000 $ 5,150,000 $ 570,000
Unamortized Bond Premium 133,563 - 16,355 117,208 -
Net General Obligation Bonds 5,833,563 - 566,355 5,267,208 570,000
Certificates of Participation:
1996 Certificates of Participation 9,900,000 - 500,000 9,400,000 600,000
2007 Certificates of Participation 36,790,000 - 995,000 35,795,000 1,035,000
1996 COPS Unamortized Discount (9,687) - (745) (8,942) -
2007 COPS Unamortized Discount (204,999) - (9,044) (195,955) -
Net Certificates of Participation 46,475,314 - 1,485,211 44,990,103 1,635,000
Revenue Bonds:
2010 Water Revenue Bonds Series A 11,435,000 - 845,000 10,590,000 870,000
2010 Water Revenue Bonds Series B 36,355,000 - - 36,355,000 -
2013 Water Revenue Refunding Bonds 7,075,000 - 605,000 6,470,000 615,000
2010 Series A Unamortized Premium 762,617 - 74,402 688,215 -
2013 Bonds Unamortized Premium 880,873 - 96,095 784,778 -
Net Revenue Bonds 56,508,490 - 1,620,497 54,887,993 1,485,000
Total Long-Term Liabilities $ 108,817,367 $ - $ 3,672,063 $105,145,304 $ 3,690,000
General Obligation Bonds
In June 1998, the District issued $11,835,000 of General Obligation Refunding Bonds. The proceeds of this
issue, together with other lawfully available monies, were to be used to establish an irrevocable escrow to
advance refund and defease in their entirety the District’s previous outstanding General Obligation Bond
issue. In November 2009, the District issued $7,780,000 of General Obligation Refunding Bonds
Improvement District No. 27-2009 to refund the 1998 issue. The proceeds from the bond issue were
$7,989,884, which included an original issue premium of $209,884. An amount of $7,824,647, which
consisted of unpaid principal and accrued interest, was deposited into an escrow fund. Pursuant to an
optional redemption clause in the 1998 bonds, the District was able to redeem the 1998 bonds, without
premium at any time after September 1, 2009. On December 15, 2009 the 1998 bonds were refunded.
These bonds are general obligations of Improvement District No. 27 (ID 27) of the District. The Board of
Directors has the power and is obligated to levy annual ad valorem taxes without limitation, as to rate or
amount for payment of the bonds and the interest upon all property which is within ID 27 and subject to
taxation. The General Obligation Bonds are payable from District-wide tax revenues. The Board may
utilize other sources for servicing the bond debt and interest.
The Improvement District No. 27-2009 General Obligation Refunding Bonds have interest rates from
3.00% to 4.00% with maturities through Fiscal Year 2023.
50
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
5) LONG-TERM DEBT - Continued
General Obligation Bonds - Continued
Future debt service requirements for the bonds are as follows:
For the Year Ended
June 30, Principal Interest
2017 $ 585,000 $ 169,306
2018 605,000 147,700
2019 635,000 122,900
2020 650,000 97,200
2021 680,000 70,600
2022-2025 1,425,000 57,300
$ 4,580,000 $ 665,006
Certificates of Participation (COPS)
In June 1996, COPS with face value of $15,400,000 were sold by the Otay Service Corporation to finance
the cost of design, acquisition, and construction of certain capital improvements. An installment
purchase agreement between the District, as Buyer, and the Corporation, as Seller, was executed for the
scheduled payment of principal and interest associated with the COPS. The installment payments are to
be paid from taxes and net revenues, as described in the installment agreement. The certificates bear
interest at a variable weekly rate not to exceed 12%. The variable interest rate is tied to the 30-day LIBOR
index and the Securities Industry and Financial Markets Association (SIFMA) index. An irrevocable letter
of credit facility is necessary to market the District’s variable rate debt. This facility is with Union Bank and
covers the outstanding principal and interest. The facility expires on June 29, 2017. The interest rate at
June 30, 2016 was 0.42%. The installment payments are to be paid annually at $350,000 to $900,000 from
September 1, 1996 through September 1, 2026.
In March 2007, Revenue Certificates of Participation (COPS) with face value of $42,000,000 were sold by
the Otay Service Corporation to improve the District’s water storage system and distribution facilities. An
installment purchase agreement between the District, as a Buyer, and the Corporation, as Seller, was
executed for the scheduled payment of principal and interest associated with the COPS. The installment
payments are to be paid from taxes and net revenues, as described in the installment agreement. The
certificates are due in annual installments of $785,000 to $2,445,000 from September 1, 2007 through
September 1, 2036; bearing interest at 3.7% to 4.47%. On May 1, 2016 the 2007 COPS was refunded.
51
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
5) LONG-TERM DEBT – Continued
Certificates of Participation (COPS) – Continued
There is no aggregate reserve requirement for the COPS. Future debt service requirements for the
certificates are as follows:
For the Year 1996 COPS
Ended June 30, Principal Interest(1)
2017 $ 600,000 $ 16,600
2018 600,000 15,400
2019 700,000 14,033
2020 700,000 12,633
2021 700,000 11,233
2022-2026 4,400,000 31,067
2027 1,100,000 367
$ 8,800,000 $ 101,333
(1)Variable Rate - Interest reflected at June 30, 2016 at a rate of 0.42%.
The COPS debt issue contains various covenants and restrictions, principally that the District fix,
prescribe, revise and collect rates, fees and charges for the Water System which will at lease sufficient to
yield, during each fiscal year, taxes and net revenues equal to one hundred twenty-five percent (125%) of
the debt service for such fiscal year. The District was in compliance with these rate covenants for the
fiscal year ended June 30, 2016.
Defeased Certificate of Participation (COPS)
In May 2016, the March 2007 COPS were refunded with the issuance of the 2016 Water Revenue
Refunding Bonds. Proceeds of $36,577,898, which consisted of unpaid principal and accrued interest,
were used to establish an irrevocable escrow to advance refund and defease in their entirety the District’s
2007 COPS. Pursuant to an optional redemption clause in the 2007 COPS, the District will be able to
redeem the 2007 bonds, without premium at any time after September 1, 2017. As a result, the 2007 COPS
are considered to be defeased and the liability of those bonds has been removed from long-term
liabilities. The outstanding balance at June 30, 2016 was $34,760,000.
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District
Financing Authority to provide funds for the construction of water storage and transmission facilities. The
bond issue consisted of two series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a
face value of $13,840,000 plus a $1,078,824 original issue premium, and Water Revenue Bonds Series
2010B (Taxable Build America Bonds) with a face value of $36,255,000. The Series 2010A bonds are due
in annual installments of $785,000 to $1,295,000 from September 1, 2012 through September 1, 2025;
bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of $1,365,000 to
$3,505,000 from September 1, 2026 through September 1, 2040; bearing interest at 6.377% to 6.577%.
52
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
5) LONG-TERM DEBT - Continued
Water Revenue Bonds - Continued
Interest on both Series is payable on September 1, 2010 and semiannually thereafter on March 1st and
September 1st of each year until maturity or earlier redemption. The installment payments are to be made
from Taxes and Net Revenues of the Water System as described in the installment purchase agreement,
on parity with the payments required to be made by the District for the 1996, and 2007 Certificates of
Participation described above and the 2013 Water Revenue Refunding Bonds described below.
The proceeds of the bonds will be used to fund the project described above as well as to fund reserve
funds of $1,030,688 (Series 2010A) and $2,707,418 (Series 2010B). $542,666 was used to fund various
costs of issuance.
The original issue premium is being amortized over the 14 year life of the Series 2010A bonds.
Amortization for the year ending June 30, 2016 was $74,402 and is included in interest expense. The
unamortized premium at June 30, 2016 is $613,813 and June 30, 2015 was $688,215.
The 2010 Water Revenue Bonds contains various covenants and restrictions, principally that the District
fix, prescribe, revise and collect rates, fees and charges for the Water System which will at lease sufficient
to yield, during each fiscal year, taxes and net revenues equal to one hundred twenty-five percent (125%)
of the debt service for such fiscal year. The District was in compliance with these rate covenants for the
fiscal year ended June 30, 2016.
In June 2013, the 2013 Water Revenue Refunding Bonds were issued to defease the 2004 Refunding
Certificates of Participation. The bonds were issued with a face value of $7,735,000 plus a $984,975
original issue premium. The bonds are due in annual installments of $660,000 to $835,000 from
September 1, 2013 through September 1, 2023; bearing interest at 1% to 4%. The installment payments
are to be made from Taxes and Net Revenues of the Water System, on parity with the payments required
to be made by the District for the 1996, and 2007 Certificates of Participation and the 2010A and 2010B
described above.
The original issue premium is being amortized over the 11 year life of the Series 2013 bonds.
Amortization for the year ending June 30, 2016 was $96,095 and is included in interest expense. The
unamortized premium at June 30, 2016 is $688,683 and June 30, 2015 was $784,778.
In May 2016, Water Revenue Refunding Bonds were issued to defease the 2007 Revenue Certificates of
Participation. The bonds are due in annual installments of $1,200,000 to $2,235,000 from September 1,
2016 through September 1, 2036; bearing interest of 2% to 5%. The bonds were issued with a face value
of $33,385,000 plus $3,630,950 original issue premium. The savings between the cash flow required to
service the old debt and the cash flow required to service the new debt is $5,664,140 and represent an
economic gain on refunding of $4,538,175.
53
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
5) LONG-TERM DEBT – Continued
Water Revenue Bonds – Continued
The original issue premium is being amortized over the 20 year life of the Series 2016 bonds.
Amortization for the year ending June 30, 2016 was $29,760 and is included in interest expense. The
unamortized premium at June 30, 2016 is $3,601,190.
The total amount outstanding at June 30, 2016 and aggregate maturities of the revenue bonds for the
fiscal years subsequent to June 30, 2016, are as follows:
For the Year
2010 Water Revenue Bond
Series A
2010 Water Revenue Bond
Series B
Ended June 30, Principal Interest Principal Interest
2017 $ 900,000 $ 443,088 $ - $ 2,371,868
2018 940,000 406,288 - 2,371,868
2019 975,000 367,988 - 2,371,868
2020 1,015,000 323,112 - 2,371,868
2021 1,065,000 271,112 - 2,371,868
2022-2026 4,825,000 508,456 1,365,000 11,815,819
2027-2031 - - 8,235,000 10,175,655
2032-2036 - - 11,265,000 7,040,514
2037-2041 - - 15,490,000 2,676,840
2042 - - - -
$ 9,720,000 $ 2,320,044 $ 36,355,000 $ 43,568,168
For the Year
2013 Water Revenue
Refunding Bonds
2016 Water Revenue
Refunding Bonds
Ended June 30, Principal Interest Principal Interest
2017 $ 635,000 $ 221,500 $ 1,200,000 $ 994,709
2018 660,000 195,600 1,015,000 1,214,806
2019 685,000 168,700 1,045,000 1,173,456
2020 715,000 140,700 1,100,000 1,119,831
2021 745,000 111,500 1,155,000 1,063,456
2022-2026 2,415,000 147,300 6,765,000 4,362,031
2027-2031 - - 8,570,000 2,582,407
2032-2036 - - 10,300,000 1,041,841
2037 - - 2,235,000 33,525
$ 5,855,000 $ 985,300 $ 33,385,000 $ 13,586,062
Revenues Pledged
The District has pledged a portion of future water sales revenues to repay its Water Revenue Bonds and
Certificates of Participation. Total principal and interest remaining on the Water Revenue Bonds and
Certificates of Participation is $154,675,907 payable through fiscal year 2042. For the current year,
principal and interest paid by the water sales revenues were $3,120,000 and $4,584,149, respectively.
54
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
6) NET POSITION
Designations of Net Position
In addition to the restricted net position, a portion of unrestricted net position, have been designated by
the Board of Directors for the following purposes as of June 30, 2016 and 2015:
2016 2015
Designated Betterment $ 2,081,586 $ 5,072,063
Expansion Reserve - 4,486,171
Replacement Reserve 32,508,472 23,822,678
Designated New Supply Fund 64,711 758,956
Employee Benefits Reserve 135,933 31,445
Total $ 34,790,702 $ 34,171,313
7) DEFINED BENEFIT PENSION PLAN
A) General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the District’s Plan,
agent multiple-employer defined benefit pension plans administered by the California Public
Employees’ Retirement System (CalPERS), which acts as a common investment and
administrative agent for its participating member employers. Benefit provisions under the Plans
are established by State statute and District resolution. CalPERS issues publicly available reports
that include a full description of the pension plans regarding provisions, assumptions and
membership information that can be found on the CalPERS website.
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and
death benefits to plan members, who must be public employees and beneficiaries. Benefits are
based on years of credited service, equal to one year of full time employment. Members with five
years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members
are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the
following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death
Benefit. The cost of living adjustments for the plan are applied as specified by the Public
Employees’ Retirement Law.
55
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
7) DEFINED BENEFIT PENSION PLAN - Continued
A) General Information about the Pension Plans - Continued
Benefits Provided - Continued
The Plans’ provisions and benefits in effect at June 30, 2016 and 2015, are summarized as follows:
Prior to On or After
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7% at 55 2% at 62
Benefit Vesting Schedule 5 years service 5 years service
Benefit Payments Monthly for life Monthly for life
Retirement Age 50 - 55 52 - 67
Monthly Benefits, as a % of Eligible Compensation 2.0% to 2.7% 1.0% to 2.5%
Required Employee Contribution Rates 8% 6.25%
Required Employer Contribution Rates 20.869% - 25.435% 25.435% - 30.812%
Employees Covered
The following employees were covered by the benefit terms for the Plan:
2016 2015
Inactive Employees or Beneficiaries Currently Receiving Benefits 169 161
Inactive Employees Entitled to But Not Yet Receiving Benefits 138 142
Active Employees 138 137
Total 445 440
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and
shall be effective on the July 1 following notice of a change in the rate. Funding contributions for
the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially
determined rate is the estimated amount necessary to finance the costs of benefits earned by
employees during the year, with an additional amount to finance any unfunded accrued liability.
The District is required to contribute the difference between the actuarially determined rate and the
contribution rate of employees.
B) Net Pension Liability
The District’s net pension liability for the Plan is measured as the total pension liability, less the
pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June
30, 2015, using the annual actuarial valuation as of June 30, 2014 rolled forward to June 30, 2015
using standard update procedures. A summary of principal assumptions and methods used to
determine the net pension liability is shown on the following page:
56
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
7) DEFINED BENEFIT PENSION PLAN - Continued
B) Net Pension Liability - Continued
Actuarial Assumptions
The total pension liabilities in the June 30, 2014 actuarial valuations were determined using the
following actuarial assumptions:
Valuation Date June 30, 2014
Measurement Date June 30, 2015
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.65%
Inflation 2.75%
Payroll Growth 3.0%
Projected Salary Increase 3.3% - 14.2%(1)
Investment Rate of Return 7.5%(2)
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation
The underlying mortality assumptions and all other actuarial assumptions used in the
June 30, 2014 valuation were based on the results of a January 2014 actuarial
experience study for the period 1997 to 2011. Further details of the Experience Study
can be found on the CalPERS website.
The total pension liabilities in the June 30, 2013 actuarial valuations were determined using the
following actuarial assumptions:
Valuation Date June 30, 2013
Measurement Date June 30, 2014
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.5%
Inflation 2.75%
Payroll Growth 3.0%
Projected Salary Increase 3.3% - 14.2%(1)
Investment Rate of Return 7.5%(2)
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation
The underlying mortality assumptions and all other actuarial assumptions used in the
June 30, 2013 valuation were based on the results of a January 2014 actuarial
experience study for the period 1997 to 2011. Further details of the Experience Study
can be found on the CalPERS website.
57
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
7) DEFINED BENEFIT PENSION PLAN - Continued
B) Net Pension Liability - Continued
Discount Rate
The discount rate used to measure the total pension liability was 7.65% for the Plan. To determine
whether the municipal bond rate should be used in the calculation of a discount rate for each plan,
CalPERS stress tested plans that would most likely result in a discount rate that would be different
from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out
of assets. Therefore, the current 7.65 percent discount rate is adequate and the use of the
municipal bond rate calculation is not necessary. The long term expected discount rate of 7.65
percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress
test results are presented in a detailed report that can be obtained from the CalPERS website.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined
without reduction for pension plan administrator expense. The 7.50 percent investment return
assumption used in this accounting valuation is net of administrative expenses. Administrative
expenses are assumed to be 15 basis points. An investment return excluding administrative
expenses would have been 7.65 percent. Using this lower discount rate has resulted in a slightly
higher Total Pension Liability and Net Pension Liability. CalPERS checked the materiality threshold
for the difference in calculation and did not find it to be a material difference.
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability
Management (ALM) review cycle that is scheduled to be completed in February 2018. Any
changes to the discount rate will require Board action and proper stakeholder outreach. For these
reasons, CalPERS expects to continue using a discount rate net of administrative expenses for
GASB 67 and 68 calculations through at least 2017-18 fiscal year. CalPERS will continue to check
the materiality of the difference in calculation until such time as we have changed our
methodology.
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best-estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense and inflation) are developed for each
major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term
and long-term market return expectations as well as the expected pension fund cash flows. Using
historical returns of all the funds’ asset classes, expected compound returns were calculated over
the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach.
Using the expected nominal returns for both short-term and long-term, the present value of
benefits was calculated for each fund. The expected rate of return was set by calculating the
single equivalent expected return that arrived at the same present value of benefits for cash flows
as the one calculated using both short-term and long-term returns. The expected rate of return
was then set equivalent to the single equivalent rate calculated above the rounded down to the
nearest one quarter of one percent.
58
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
7) DEFINED BENEFIT PENSION PLAN - Continued
B) Net Pension Liability - Continued
Discount Rate - Continued
The following table reflects the long-term expected real rate of return by asset class. The rate of
return was calculated using the capital market assumptions applied to determine the discount rate
and asset allocation. These rates of return are net of administrative expenses.
Asset Class
New
Strategic
Allocation
Real Return
Years 1 - 10(a)
Real Return
Years 11+(b)
Global Equity 47.0% 5.25% 5.71%
Global Fixed Income 19.0% 0.99% 2.43%
Inflation Sensitive 6.0% 0.45% 3.36%
Private Equity 12.0% 6.83% 6.95%
Real Estate 11.0% 4.50% 5.13%
Infrastructure and Forestland 3.0% 4.50% 5.09%
Liquidity 2.0% -0.55% -1.05%
Total 100%
(a) An expected inflation of 2.5% used for this period.
(b) An expected inflation of 3.0% used for this period.
C) Changes in the Net Position Liability
The changes in the Net Position Liability for the Plan for June 30, 2016:
Increase (Decrease)
Total
Pension
Liability
Plan
Fiduciary
Net Position
Net Pension
Liability/(Asset)
Beginning Balance $112,069,436 $ 73,346,091 $ 38,723,345
Changes in the Year:
Service Cost 2,250,860 - 2,250,860
Interest on the Total Pension Liability 8,229,312 - 8,229,312
Changes in Benefit Terms -
Differences Between Actual and Expected
Experience
(981,200)
-
(981,200)
Changes in Assumptions (1,996,819) - (1,996,819)
Contribution - Employer - 3,557,098 (3,557,098)
Contribution - Employee - 1,007,023 (1,007,023)
Net Investment Income - 1,601,760 (1,601,760)
Benefit Payments, Including Refunds of
Employee Contributions
(5,288,251)
(5,288,251)
-
Administrative Expense (83,511) 83,511
Net Changes 2,213,902 794,119 1,419,783
Ending Balance $114,283,338 $ 74,140,210 $ 40,143,128
59
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
7) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Position Liability
The changes in the Net Position Liability for the Plan for June 30, 2015:
Increase (Decrease)
Total
Pension
Liability
Plan
Fiduciary
Net Position
Net Pension
Liability/(Asset)
Beginning Balance $106,716,218 $ 63,144,370 $ 43,571,848
Changes in the Year:
Service Cost 2,330,709 - 2,330,709
Interest on the Total Pension Liability 7,907,915 - 7,907,915
Changes in Benefit Terms - - -
Differences Between Actual and
Expected Experience
-
-
-
Changes in Assumptions - - -
Contribution - Employer - 3,137,174 (3,137,174)
Contribution - Employee - 1,074,954 (1,074,954)
Net Investment Income - 10,874,999 (10,874,999)
Benefit Payments, Including Refunds of
Employee Contributions
(4,885,406)
(4,885,406)
-
Net Changes 5,353,218 10,201,721 (4,848,503)
Ending Balance $112,069,436 $ 73,346,091 $ 38,723,345
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the District for the Plan, calculated using the
discount rate for the Plan, as well as what the District’s net pension liability would be if it were
calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than
the current rate:
2016 2015
1% Decrease 6.65% 6.50%
Net Pension Liability $ 55,289,674 $ 53,440,281
Current Discount Rate 7.65% 7.50%
Net Pension Liability $ 40,143,128 $ 38,723,345
1% Increase 8.65% 8.50%
Net Pension Liability $ 27,584,842 $ 26,496,138
60
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
7) DEFINED BENEFIT PENSION PLAN - Continued
C) Changes in the Net Position Liability - Continued
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately
issued CalPERS financial reports.
D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2016, the District recognized pension expense of $2,557,616. At June
30, 2016, the District reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following services:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Pension contributions subsequent to measurement date $ 3,854,533 $ -
Differences between actual and expected experience - (642,855)
Changes in assumptions - (1,308,261)
Net differences between projected and actual earnings on
pension plan investments
3,146,893
(3,725,955)
Total $ 7,001,426 $ (5,677,071)
$3,854,533 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended
June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30
2017 $ (1,482,165)
2018 (1,379,475)
2019 (455,262)
2020 786,724
2021 -
Thereafter -
61
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
7) DEFINED BENEFIT PENSION PLAN - Continued
D) Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions -
Continued
For the year ended June 30, 2015, the District recognized pension expense of $3,256,611. At June
30, 2015, the District reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following services:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Pension contributions subsequent to measurement date $ 3,575,595 $ -
Differences between actual and expected experience - -
Changes in assumptions - -
Net differences between projected and actual earnings on
pension plan investments
-
(4,967,940)
Total $ 3,575,595 $ (4,967,940)
$3,575,595 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended
June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30
2016 $ (1,241,985)
2017 (1,241,985)
2018 (1,241,985)
2019 (1,241,985)
2020 -
Thereafter -
E) Payable to the Pension Plan
At June 30, 2016, the District reported a payable of $61,904 for the outstanding amount of
contributions to the pension plan required for the year ended June 30, 2016 and $167,970 for June
30, 2015 reflected in the accrued payroll liabilities on the Statements of Net Position.
62
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
8) OTHER POST EMPLOYMENT BENEFITS
Plan Description
The District’s defined benefit postemployment healthcare plan, (DPHP), provides medical benefits to
eligible retired District employees and beneficiaries. DPHP is part of the Public Agency portion of the
California Employers’ Retiree Benefit Trust Fund (CERBT), an agent multiple-employer plan administered
by California Public Employees’ Retirement System (CalPERS), which acts as a common investment and
administrative agent for participating public employers within the State of California. CalPERS issues a
separate Comprehensive Annual Financial Report. Copies of the CalPERS’ annual financial report may
be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814.
Prior to the plan agreements signed in 2011, the eligibility in the plan was broken into 3 tiers,
employees hired before January 1, 1981, employees hired on or after January 1, 1981 but before July 1,
1993 and employees hired on or after July 1, 1993. Board members elected before January 1, 1995 are
also eligible for the plan. Eligibility also includes age and years of service requirements which vary by
tier. Benefits include up to 100% medical and/or dental premiums for life for the retiree for Tier I, II or III
employees, and up to 100% spouse premium until death of retiree or age 65 whichever is greater and
dependent premium up to age 19 depending on the tier.
Subsequent to the agreements in 2011 and 2012 all employees are eligible for the plan after 20 years
of consecutive service and unrepresented employees hired before January 1, 2013 are eligible after 15
years. Survivor benefits are covered beyond Medicare.
Funding Policy
The contribution requirements of plan members and the District are established and may be amended
by the Board of Directors. Effective January 1, 2013, represented employees hired prior to January 1,
2013 or hired on or after January 1, 2013 from another public agency that has reciprocity without
having a break in service of more than six months, contribute .75% of covered salaries. In addition,
unrepresented and represented employees hired on or after January 1, 2013, and do not have
reciprocity from another public agency, contribute 1.75% and 2.5% of covered salaries, respectively.
DPHP members receiving benefits contribute based on their selected plan options of EPO, HMO or
PPO and whether they are outside the State of California. Contributions by plan members range from
$0 to $181 per month for coverage to age 65, and from $0 to $186 per month, respectively, thereafter.
Annual OPEB Cost and Net OPEB Obligation/Asset
The District’s annual OPEB cost (expense) is calculated based on the annual required contribution
(ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB
Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover the normal annual cost. Any unfunded actuarial liability (or funding excess) is amortized over a
period not to exceed thirty years. The current ARC rate is 9.5% of the annual covered payroll.
63
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
8) OTHER POST EMPLOYMENT BENEFITS - Continued
Annual OPEB Cost and Net OPEB Obligation/Asset - Continued
The following table shows the components of the District’s annual OPEB cost for the year, the amount
actually contributed to the plan, and changes in the District’s net OPEB obligation/assets:
2016 2015
Annual Required Contribution (ARC) $ 1,239,000 $ 1,413,000
Interest on Net OPEB Asset (831,748) (752,937)
Adjustment to Annual Required Contribution (ARC) 810,000 713,000
Annual OPEB Cost (Expense) 1,217,252 1,373,063
Contributions Made 2,264,415 2,460,113
Increase in Net OPEB Asset (1,047,163) (1,087,050)
Net OPEB Asset - Beginning of Year (11,472,386) (10,385,336)
Net OPEB Asset - End of Year $ (12,519,549) $ (11,472,386)
For 2016, in addition to the ARC, the District contributed cash benefit payments outside the trust
(healthcare premium payments for retirees) to Special District Risk Management Authority (SDRMA) in
the amount of $909,415, which is included in the $2,264,415 of contributions shown above. For 2015,
this amount was $929,113, which was included in the $2,460,113 of contributions shown above.
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB obligation/asset for the fiscal years 2016, 2015 and 2014 were as follows:
THREE-YEAR TREND INFORMATION FOR CERBT
Fiscal Annual OPEB Percentage of Net OPEB
Year Cost (AOC) OPEB Cost Contributed Obligation
6/30/16 $ 1,217,252 186% $ (12,519,549)
6/30/15 $ 1,373,063 179% $ (11,472,386)
6/30/14 $ 1,386,456 175% $ (10,385,336)
Funded Status and Funding Progress
The funded status of the plan as of June 30, 2015, the most recent actuarial valuation date, was as
follows:
Actuarial Accrued Liability (AAL) $ 23,689,000
Actuarial Value of Plan Assets $ 16,920,000
Unfunded Actuarial Accrued Liability (UAAL) $ 6,769,000
Funded Ratio (Actuarial Value of Plan Assets/AAL) 71.42%
Covered Payroll (Active Plan Members) $ 13,080,000
UAAL as a Percentage of Covered Payroll 51.75%
64
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
8) OTHER POST EMPLOYMENT BENEFITS - Continued
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and new estimates
are made about the future. The schedule of funding progress, presented as required supplementary
information following the notes to the financial statements, presents multi-year trend information about
whether the actuarial value of the plan assets is increasing or decreasing over time relative to the
actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and plan members) and include the types of benefits provided at the time
of each valuation and the historical pattern of sharing of benefit costs between the employer and plan
members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets,
consistent with the long-term perspective of the calculations.
The following is a summary of the actuarial assumptions and methods:
Valuation Date June 30, 2015
Actuarial Cost Method Entry Age Normal Cost Method
Amortization Method Level Percent of Payroll
Remaining Amortization Period 23-Year Fixed (Closed) Period as of the Valuation Date
Asset Valuation Method 5-Year Smoothed Market
Actuarial Assumptions:
Investment Rate of Return 7.25% (Net of Administrative Expenses)
Projected Salary Increase 3.25%
Inflation 3.00%
Individual Salary Growth CalPERS 1997-2007 Experience Study
Healthcare Cost Trend Rate Medical: 10% per annum graded down in approximately
one-half percent increments to an ultimate rate of 5%.
Dental: 4% per annum.
9) WATER CONSERVATION AUTHORITY
In 1999 the District formed the Water Conservation Garden Authority (the “Authority”), a Joint Powers
Authority, with other local entities to construct, maintain and operate a xeriscape demonstration garden in
the furtherance of water conservation. The authority is a non-profit public charity organization and is
exempt from income taxes. During the years ended June 30, 2016 and 2015, the District contributed
$120,722 and $117,462, respectively, for the development, construction and operation costs of the
xeriscape demonstration garden.
65
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
9) WATER CONSERVATION AUTHORITY - Continued
A summary of the Authority’s June 30, 2015 audited financial statement is as follows (latest report
available):
Assets $ 1,386,314
Liabilities 0
Net Assets $ 1,386,314
Revenues, Gains and Other Support $ 500,000
Expenses 581,019
Changes in Net Assets $ (81,019)
10) COMMITMENTS AND CONTINGENCIES
Construction Commitments
The District had committed to capital projects under construction with an estimated cost to complete of
$9,616,369 at June 30, 2016.
Litigation
Certain claims, suits and complaints arising in the ordinary course of operation have been filed or are
pending against the District. In the opinion of the staff and counsel, all such matters are adequately
covered by insurance, or if not so covered, are without merit or are of such kind, or involved such
amounts, as would not have significant effect on the financial position or results of operations of the
District if disposed of unfavorably.
Refundable Terminal Storage Fees
The District has entered into an agreement with several developers whereby the developers prepaid the
terminal storage fee in order to provide the District with the funds necessary to build additional storage
capacity. The agreement further allows the developers to relinquish all or a portion of such water storage
capacity. If the District grants to another property owner the relinquished storage capacity, the District
shall refund to the applicable developer $746 per equivalent dwelling unit (EDU). There were 17,867
EDUs that were subject to this agreement. At June 30, 2016, 1,750 EDUs had been relinquished and
refunded, 15,083 EDUs had been connected, and 1,034 EDUs have neither been relinquished nor
connected. At June 30, 2015, 1,750 EDUs had been relinquished and refunded, 15,076 EDUs had been
connected, and 1,041 EDUs have neither been relinquished nor connected.
Developer Agreements
The District has entered into various Developer Agreements with developers towards the expansion of
District facilities. The developers agree to make certain improvements and after the completion of the
projects the District agrees to reimburse such improvements with a maximum reimbursement amount
for each developer. Contractually, the District does not incur a liability for the work until the work is
accepted by the District. As of June 30, 2016, none of the outstanding developer agreements had been
66
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
10) COMMITMENTS AND CONTINGENCIES - Continued
Developer Agreements - Continued
accepted, however it is anticipated that the District will be liable for an amount not to exceed $201,020 at
the point of acceptance. Accordingly, the District has accrued a liability as of year end.
11) RISK MANAGEMENT
General Liability
The District is exposed to various risks of loss related to torts, theft, damage and destruction of assets,
errors and omissions, and natural disasters. Beginning in July 2003, the District began participation in an
insurance pool through the Special District Risk Management Authority (SDRMA). SDRMA is a not-for-
profit public agency formed under California Government Code Sections 6500 et. Seq. SDRMA is
governed by a board composed of members from participating agencies. The mission of SDRMA is to
provide renewable, efficiently priced risk financing and risk management services through a financially
sound pool. The District pays an annual premium for commercial insurance covering general liability,
excess liability, property, automobile, public employee dishonesty, and various other claims. Accordingly,
the District retains no risk of loss. Separate financial statements of SDRMA may be obtained at Special
District Risk Management Authority, 1112 “I” Street, Suite 300, Sacramento, CA 95814.
General and Auto Liability, Public Officials’ Errors and Omissions and Employment Practices Liability:
Total risk financing limits of $10 million combined single limit at $10 million per occurrence, subject to the
following deductibles:
$500 per occurrence for third party general liability property damage;
$1,000 per occurrence for third party auto liability property damage;
50% co-insurance of cost expended by SDRMA, in excess of $10,000 up to $50,000, per
occurrence, as respects any employment practices claim or suit arising in whole or any part out
of any action involving discipline, demotion, reassignment or termination of any employee of the
member.
Employee Dishonesty Coverage: Total of $1,000,000 per loss includes Public Employee Dishonesty,
Forgery or Alteration and Theft, Disappearance and Destruction coverage’s effective July 1, 2015.
Property Loss: Replacement cost, for property on file, if replaced, and if not replaced within two years
after the loss, paid on an actual cash value basis, to a combined total of $1 billion per occurrence, subject
to a $1,000 deductible per occurrence, effective July 1, 2015.
Boiler and Machinery: Replacement cost up to $100 million per occurrence, subject to a $1,000
deductible, effective July 1, 2015.
67
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
11) RISK MANAGEMENT - Continued
General Liability - Continued
Public Officials Personal Liability: $500,000 each occurrence, with an annual aggregate of $500,000 per
each elected/appointed official to which this coverage applies, subject to the terms, conditions and
exclusions as provided in the Memorandum of Coverage’s, deductible of $500 per claim, effective July 1,
2015.
Comprehensive and Collision: On selected vehicles, with deductibles of $250/$500 or $500/$1,000, as
elected; ACV limits; fully self-funded by SDRMA; Policy No. LCA - SDRMA – 2014-15, effective July 1, 2015.
Workers’ Compensation Coverage and Employer’s Liability: Statutory limits per occurrence for Workers’
Compensation and $5.0 million for Employer’s Liability Coverage, subject to the terms, conditions and
exclusions as provided in the Memorandum of Coverage, effective July 1, 2015.
Health Insurance
Beginning in January 2008, the District began providing health insurance through SDRMA covering all of
its employees, retirees, and other dependents. SDRMA is a pooled medical program, administered in
conjunction with the California State Association of Counties (CSAC).
Adequacy of Protection
During the past three fiscal (claims) years none of the above programs of protection have had
settlements or judgments that exceeded pooled or insured coverage. There have been no significant
reductions in pooled or insured liability coverage from coverage in the prior year.
12) INTEREST EXPENSE
Interest expense for the years ended June 30, 2016 and 2015 is as follows:
2016 2015
Amount Expensed $ 4,603,093 $ 4,545,530
Amount Capitalized as a Cost of
Construction Projects 274,429 179,476
Total Interest $ 4,877,522 $ 4,725,006
13) SEGMENT INFORMATION
During the June 30, 2011 fiscal year, the District issued Revenue Bonds to finance certain capital
improvements. While water and wastewater services are accounted for jointly in these financial
statements, the investors in the Revenue Bonds rely solely on the revenues of the water services for
repayment.
68
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
13) SEGMENT INFORMATION - Continued
Summary financial information for the water services is presented for June 30, 2016:
Condensed Statement of Net Position
June 30, 2016
Water Services
ASSETS
Cash and Investments $ 75,203,843
Accounts Receivable 10,936,612
Other Current Asset 2,528,704
Capital Assets 436,033,611
Other Assets 12,101,043
Total Assets 536,803,813
DEFERRED OUTFLOWS OFRESOURCES
Deferred Amount of Refunding 1,339,997
Deferred Actuarial Pension Costs 6,723,896
Total Deferred Outflows of Resources 8,063,893
LIABILITIES
Accounts Payable 11,306,394
Other Miscellaneous Liabilities 4,176,741
Other Current Liabilities 8,912,148
General Obligation Bonds 4,095,853
Certificates of Participation 8,191,803
Revenue Bonds 87,483,686
Net Pension Liability 38,315,001
Other Non-current Liabilities 3,040,648
Total Liabilities 165,522,274
DEFERRED INFLOWS OF RESOURCES
Deferred Actuarial Pension Costs 5,425,144
Total Deferred Inflows of Resources 5,425,144
NET POSITION
Net Investment in Capital Assets 333,682,266
Restricted for Debt Service 4,402,301
Unrestricted 35,835,721
Total Net Position $ 373,920,288
69
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
13) SEGMENT INFORMATION - Continued
Condensed Statement of Revenues, Expenses and Changes in Net Position
For the Year Ended June 30, 2016
Water Services
Operating Revenues
Water Sales $ 73,940,200
Connection and Other Fees 1,757,043
Total Operating Revenues 75,697,243
Operating Expenses
Cost of Water Sales 51,826,046
Administrative and General 19,348,647
Depreciation 15,456,157
Total Operating Expenses 86,630,850
Operating Income (Loss) (10,933,607)
Non-operating Revenues (Expenses)
Investment Earnings 663,836
Taxes and Assessments 3,966,590
Availability Charges 544,122
Gain (Loss) on Sale of Capital Assets 46,423
Rents and Leases 1,281,150
Miscellaneous Revenues 1,371,892
Donations (120,722)
Interest Expense (4,603,093)
Miscellaneous Expenses (1,485,776)
Total Non-operating Revenues (Expenses) 1,664,422
Income (Loss) Before Capital Contributions (9,269,185)
Capital Contributions 6,873,482
Change in Net Position (2,395,703)
Total Net Position, Beginning 376,315,991
Total Net Position, Ending $ 373,920,288
70
Notes to Financial Statements
Years Ended June 30, 2016 and 2015
13) SEGMENT INFORMATION - Continued
Condensed Statement of Cash Flows
For the Year Ended June 30, 2016
Water Services
Net Cash Provided/(Used) by:
Operating Activities $ 4,791,143
Non-capital and Related Financing Activities 5,106,223
Capital and Related Financing Activities (10,324,822)
Investing Activities (1,657,387)
Net Increase (Decrease) in Cash and Cash Equivalents (2,084,843)
Cash and Cash Equivalents, Beginning 23,215,594
Cash and Cash Equivalents, Ending $ 21,130,751
14) PRIOR PERIOD ADJUSTMENT
In June 30, 2015, the prior period adjustment of $40,434,674 relates to the implementation of GASB
Statements 68 and 71 for defined benefit pension plans. According to GASB Statement 68, Accounting
and Financial Reporting for Pensions - an amendment of GASB 68 Statement No. 27, and GASB
Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date –
an amendment of GASB No. 68, which was implemented by the District in the 2015 fiscal year,
recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expenses
related to defined benefit pension plans.
71
72
73
74
Schedule of Funding Progress for DPHP
Years Ended June 30, 2016 and 2015
Actuarial
Accrued UAAL as a
Actuarial Actuarial Liability Unfunded Percentage of
Valuation Value of (AAL) Entry AAL Funded Covered Covered
Date Assets Age (UAAL) Ratio Payroll Payroll
(A) (B) (B - A) (A/B) (C) [(B-A)/C]
6/30/15
Miscellaneous $ 16,920,000 $ 23,689,000 $ 6,769,000 71.42% $ 13,080,000 51.75%
6/30/13
Miscellaneous $ 11,831,000 $ 22,891,000 $ 11,060,000 51.68% $ 11,969,000 92.41%
6/30/11
Miscellaneous $ 7,893,000 $ 18,289,000 $ 10,396,000 43.16% $ 12,429,000 83.64%
75
Schedule of Changes in the Net Pension
Liability and Related Ratios
Years Ended June 30, 2016 and 2015
Measurement Period(1) 2014-2015 2013-2014
TOTAL PENSION LIABILITY
Service Cost $ 2,250,860 $ 2,330,709
Interest 8,229,312 7,907,915
Changes of Benefit Terms - -
Changes of Assumptions (1,996,819) -
Difference Between Expected and Actual Experience (981,200) -
Benefit Payments, Including Refunds of Employee Contributions (5,288,251) (4,885,406)
Net Change in Total Pension Liability 2,213,902 5,353,218
Total Pension Liability - Beginning 112,069,436 106,716,218
Total Pension Liability - Ending (a) $ 114,283,338 $ 112,069,436
PLAN FIDUCIARY NET POSITION
Contributions - Employer $ 3,557,098 $ 3,137,174
Contributions - Employee 1,007,023 1,074,954
Net Investment Income 1,601,760 10,874,999
Benefit Payments, Including Refunds of Employee Contributions (5,288,251) (4,885,406)
Administrative Expense (83,511) -
Other Changes in Fiduciary Net Position - -
Net Change in Fiduciary Net Position 794,119 10,201,721
Plan Fiduciary Net Position - Beginning 73,346,091 63,144,370
Plan Fiduciary Net Position - Ending (b)$ 74,140,210 $ 73,346,091
Plan Net Pension Liability/(Asset) - Ending (a) - (b)$ 40,143,128 $ 38,723,345
Plan Fiduciary Net Position as a Percentage of the Total Pension
Liability 64.87%
65.45%
Covered-Employee Payroll $ 12,451,513 $ 12,276,578
Plan Net Pension Liability/(Asset) as a Percentage of Covered
Employee Payroll 322.40% 315.42%
(1) Historical information is required only for measurement periods for which GASB 68 is applicable.
Notes to Schedule:
Benefit Changes: The figures above do not include any liability impact that may have results from plan
changes which occurred after June 30, 2014. This applies for voluntary benefit changes as well as any
offers of Two Years Additional Service Credit (a.k.a. Golden Handshake).
Changes of Assumptions: For the 2016 fiscal year the discount rate was changed from 7.5 percent (net of
administrative expense) to 7.65 percent to correct for an adjustment to exclude administrative expense.
76
Schedule of Contributions
Years Ended June 30, 2016 and 2015
Schedule of Plan Contributions(1)
Fiscal Year
2014-15
Fiscal Year
2013-14
Actuarially Determined Contribution(2) $ 3,557,098 $ 3,137,174
Contributions in Relation to the Actuarially Determined Contribution(2) (3,557,098) (3,137,174)
Contribution Deficiency (Excess) $ - $ -
Covered-Employee Payroll(3) $ 12,451,513 $ 12,276,578
Contributions as a Percentage of Covered-Employee Payroll(3) 28.55% 25.55%
(1)Historical information is required only for measurement periods for which GASB 68 is applicable.
(2)Employers are assumed to make contributions equal to the actuarially determined contributions. However,
some employers may choose to make additional contributions toward their unfunded liability. Employer
contributions for such plans exceed the actuarially determined contributions.
(3)Payroll from prior year $12,088,848 was assumed to increase by the 3.00 percent payroll growth
assumption.
Notes to Schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year
2014-15 were from the June 30, 2012 public agency valuations.
Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details see June 30, 2012 Funding Valuation Report
Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2012 Funding
Valuation Report
Inflation 2.75%
Salary Increases Varies by Entry Age and Service
Payroll Growth 3.00%
Investment Rate of Return 7.50% Net of Pension Plan Investment and Administrative
Expenses; includes Inflation
Retirement Age
The probabilities of Retirement are based on the 2010 CalPERS
Experience Study for the period from 1997 to 2007
Mortality
The probabilities of mortality are based on the 2010 CalPERS
Experience Study for the period from 1997 to 2007. Pre-retirement
and Post-retirement mortality rates include 5 years of projected
mortality improvement using Scale AA published by the Society of
Actuaries.
77
78
Statistical Schedules
The Statistical Schedule is part of understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the District’s overall financial health.
Contents Page
Financial Trends 8800
These schedules contain trend information to help the reader understand how the
District’s financial performance and well-being have changed over time.
Revenue Capacity 8866
These schedules contain information to help the reader assess the factors affecting the
District’s ability to generate its potable and recycled water, and sewer sales as well as
property and sales taxes.
Debt 9955
These schedules present information to help the reader assess the affordability of the
District’s current levels of outstanding debt and the District’s ability to issue additional
debt.
Demographic and Economic Information 110000
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the District’s financial activities take place
and to help make comparisons over time and with other governments.
Operating Information 110022
These schedules contain information about the District’s operation and resources to
help the reader understand how the District’s financial information relates to the
services the District provides and the activities it performs.
Sources
Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports of the relevant year. The District implemented GASB Statement 34
in 2001; schedules presenting government-wide information include information beginning in
that year.
79
Fiscal Net Investment Total
Year in Capital Assets Restricted Unrestricted Net Position
2016 351,617,201$ 4,402,301$ 45,268,275$ 401,287,777$
2015 354,046,090 4,658,306 43,717,930 402,422,326 (1)
2014 357,912,154 3,855,673 83,039,993 444,807,820
2013 376,549,168 4,612,890 67,071,849 448,233,907
2012 381,725,015 4,715,904 67,701,068 454,141,987
2011 377,656,762 4,915,555 74,627,563 457,199,880
2010 375,953,042 5,192,111 80,204,428 461,349,581
2009 382,410,491 1,797,512 76,136,868 460,344,871
2008 372,696,591 9,411,114 74,719,712 456,827,417
2007 374,667,591 2,071,307 70,282,627 447,021,525
(1) For Fiscal Year ending June 30, 2015, the $42.4 million decrease of Total Net Position is primarily due
to the implementation of Governmental Accounting Standards Board (GASB) Statements No. 68 "Accounting
and Financial Reporting for Pensions-an amendment of GASB Statement No. 27" and No. 71 "Pension
Transitions for Contributions Made Subsequent to the Measurement Date-an amendment of GASB No. 68".
Implementation of these standards resulted in a decrease of Net Position at July 1, 2014 by $40.4 million.
Source: Otay Water District
Net Position by Component - Last Ten Fiscal Years
$360,000
$380,000
$400,000
$420,000
$440,000
$460,000
$480,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total Net Positon, in Thousands ($)
80
Total
Operating Non-Operating Income (Loss)Changes
Fiscal Operating Operating Income/Revenues/Before Capital Capital in Net
Year Revenues Expenses (Loss)(Expenses)Contributions Contributions Position
2016 78,876,307$ 89,669,543$ (10,793,236)$ 2,687,368$ (8,105,868)$ 6,971,319$ (1,134,549)$
2015 83,865,407 91,863,728 (7,998,321)2,965,607 (5,032,714)3,081,894 (1,950,820)
2014 86,025,573 92,567,023 (6,541,450)(277,057)(6,818,507)3,392,420 (3,426,087)
2013 76,881,388 87,335,338 (10,453,950)1,770,738 (8,683,212)2,775,132 (5,908,080)
2012 68,400,349 81,795,466 (13,395,117)3,511,327 (9,883,790)6,825,897 (3,057,893)
2011 63,204,216 77,266,228 (14,062,012)4,452,825 (9,609,187)7,866,190 (1,742,997)
2010 60,686,681 73,126,342 (12,439,661)5,937,575 (6,502,086)8,839,892 2,337,806
2009 57,103,311 71,507,161 (14,403,850)10,932,096 (3,471,754)6,989,208 3,517,454
2008 55,714,845 71,474,372 (15,759,527)10,623,457 (5,136,070)14,941,962 9,805,892
2007 53,250,481 64,651,050 (11,400,569)9,793,692 (1,606,877)26,563,075 24,956,198
Source: Otay Water District
Changes in Net Position - Last Ten Fiscal Years
-$6,000
-$2,000
$2,000
$6,000
$10,000
$14,000
$18,000
$22,000
$26,000
$30,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Changes in Net Position, in Thousands ($)
81
Fiscal Connection and Percent
Year Water Sales Wastewater Other Fees Total Change
2016 73,940,200$ 3,175,300$ 1,760,807$ 78,876,307$ -5.9%
2015 79,135,000 3,044,158 1,686,249 83,865,407 -2.5%
2014 81,287,164 2,791,523 1,946,886 86,025,573 11.9%
2013 72,187,081 2,625,087 2,069,220 76,881,388 12.4%
2012 63,830,272 2,400,313 2,169,764 68,400,349 8.2%
2011 58,293,184 2,396,385 2,514,647 63,204,216 4.1%
2010 56,249,816 2,299,585 2,137,280 60,686,681 6.3%
2009 52,428,648 2,182,429 2,492,234 57,103,311 2.5%
2008 50,808,825 2,386,285 2,519,735 55,714,845 4.6%
2007 48,605,606 2,604,431 2,040,444 53,250,481 11.3%
Source: Otay Water District
Operating Revenues by Source - Last Ten Fiscal Years
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Operating Revenues, in Thousands ($)
82
Fiscal Cost of Administrative Percent
Year Water Sales Wastewater and General Depreciation Total Change
2016 51,826,046$ 2,051,913$ 19,318,247$ 16,473,337$ 89,669,543$ -2.4%
2015 54,364,884 1,866,711 19,437,141 16,194,992 91,863,728 -0.8%
2014 56,068,147 1,834,465 18,608,603 16,055,808 92,567,023 6.0%
2013 50,600,551 1,638,354 18,550,811 16,545,622 87,335,338 6.8%
2012 46,106,403 2,547,929 17,926,430 15,214,704 81,795,466 5.9%
2011 42,029,819 2,592,823 18,763,380 13,880,206 77,266,228 5.7%
2010 39,338,495 2,169,988 18,320,362 13,297,497 73,126,342 2.3%
2009 37,252,482 1,890,804 19,888,161 12,475,714 71,507,161 0.05%
2008 35,296,002 2,009,876 21,127,922 13,040,572 71,474,372 10.6%
2007 33,994,841 1,508,672 18,418,441 10,729,096 64,651,050 8.6%
Source: Otay Water District
Operating Expenses by Function - Last Ten Fiscal Years
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Operating Expenses, in Thousands ($)
Cost of Water Sales Wastewater Administrative and General Depreciation
83
Fiscal Investment Taxes and Availability Rents and Percent
Year Earnings Assessments Charges Leases Miscellaneous Total Change
2016 758,004$ 3,966,593$ 616,591$ 1,281,150$ 2,274,623$ 8,896,961$ -0.6%
2015 656,925 3,856,276 685,555 1,232,920 2,521,078 8,952,754 15.2%
2014 522,286 3,537,162 729,961 1,317,736 1,661,992 7,769,137 -0.2%
2013 22,155 3,545,595 707,881 1,276,914 2,233,804 7,786,349 -14.9%
2012 436,596 3,502,155 696,863 1,222,060 3,288,111 9,145,785 4.4%
2011 854,440 3,895,938 653,012 1,185,573 2,174,690 8,763,653 0.2%
2010 1,323,844 3,973,328 670,784 1,083,988 1,693,942 8,745,886 -37.7%
2009 2,252,335 4,586,823 625,065 1,029,506 5,545,344 (1)14,039,073 3.5%
2008 4,538,791 4,591,023 744,722 962,929 2,729,277 13,566,742 22.3%
2007 4,416,342 4,151,956 715,664 914,403 897,216 11,095,581 29.7%
(1) The District received a large, one-time legal settlement as a member of a class action lawsuit
in Fiscal Year 2009.
Source: Otay Water District
Non-Operating Revenues by Source - Last Ten Fiscal Years
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Non-Operating Revenues, in Thousands ($)
84
Fiscal Interest Percent
Year Donations (1)Expense Miscellaneous Total Change
2016 120,722$ 4,603,093$ 1,485,778$ 6,209,593$ 3.7%
2015 117,462 4,545,530 1,324,155 5,987,147 -25.6%
2014 119,687 4,872,060 3,054,447 (3)8,046,194 33.8%
2013 120,684 3,977,538 1,917,389 6,015,611 6.8%
2012 121,617 3,899,927 1,612,914 (2)5,634,458 35.6%
2011 120,648 3,877,531 158,337 4,156,516 48.0%
2010 100,240 2,404,530 303,541 2,808,311 -9.6%
2009 95,270 1,340,110 1,671,597 3,106,977 5.6%
2008 80,541 2,601,252 261,492 2,943,285 126.1%
2007 80,000 950,479 271,410 1,301,889 -0.9%
(1) Donations are contributions to the Water Conservation Authority formed in 1999. See Note 9 in the Notes
to Financial Statements for more information.
(2) Miscellaneous expense includes $1.4 million of non-capitalizable expenses with corresponding
miscellaneous revenues. In prior years these expenses and revenues were presented, net of revenue,
in miscellaneous revenues.
(3) Miscellaneous expense includes $2 million of non-capitalizable expenses which were funded by the
2010 Water Revenue Bonds.
Source: Otay Water District
Non-Operating Expenses by Function - Last Ten Fiscal Years
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Non-Operating Expenses, in Thousands ($)
Miscellaneous Interest Expense Donations
85
Fiscal Total Direct
Year Real Personal Total Tax Rate
2016 25,506,243,489$ 551,455,064$ 26,057,698,553$ 1.00%
2015 24,109,906,912 572,400,598 24,682,307,510 1.00%
2014 22,739,584,104 564,518,965 23,304,103,069 1.00%
2013 22,253,255,369 583,080,854 22,836,336,223 1.00%
2012 22,556,489,450 588,978,085 23,145,467,535 1.00%
2011 22,997,752,952 521,424,896 23,519,177,848 1.00%
2010 23,671,616,006 527,200,694 24,198,816,700 1.00%
2009 26,269,630,081 482,465,611 26,752,095,692 1.00%
2008 25,333,821,005 568,975,196 25,902,796,201 1.00%
2007 22,166,251,649 518,441,943 22,684,693,592 1.00%
Source: County of San Diego Auditor and Controller
Last Ten Fiscal Years
Assessed Valuation of Taxable Property within the District -
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Assessed Valuation of Property, In Thousands ($)
86
Fiscal
Year Purchases Sales Production Purchases Sales
2016 11,108,105 10,475,379 439,650 1,163,117 1,591,677
2015 13,198,201 12,744,425 443,090 1,447,737 1,841,956
2014 14,554,049 13,720,119 503,120 1,664,630 2,068,330
2013 13,888,496 13,189,042 486,610 1,415,610 1,878,950
2012 13,304,444 12,510,894 285,190 1,381,300 1,652,833
2011 13,007,365 12,363,608 461,060 1,293,310 1,676,775
2010 13,580,004 12,749,799 449,771 1,250,873 1,774,563
2009 15,233,498 14,923,843 367,461 1,593,621 1,991,737
2008 16,572,271 15,575,662 538,227 1,566,148 2,001,137
2007 18,255,735 16,059,464 550,206 284,499 (2)1,920,287
(1) Rates are not presented on this schedule because the District has multiple water rates for various meter sizes
and customer classes and cannot represent rates in a meaningful manner with a weighted average rate. See
Water and Sewer rates on pages 91-93 for meter sizes and their corresponding water rates.
(2) The District entered into an agreement with the City of San Diego and began purchasing recycled water from
their South Bay Water Reclamation Plant in 2007.
Source: Otay Water District
Per 100 Cubic Feet
Water Purchases, Production, and Sales - Last Ten Fiscal Years
Recycled Water (1)
Per 100 Cubic Feet
Potable Water (1)
0
50,000
100,000
150,000
200,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Recycled Purchases Recycled Production Potable Purchases
Water Purchases, Productions, and Sales, in Hundred Cubic Feet (HCF)
87
Fiscal
Year Total (1)
2016 116 4 120
2015 138 8 146
2014 195 3 198 2014
2013 305 5 310
2012 457 24 481
2011 283 9 292
2010 288 17 305
2009 113 44 157
2008 224 22 246
2007 563 85 648
(1) Meters may not be activated in the year sold.
Source: Otay Water District
Meter Sales by Type - Last Ten Fiscal Years
Potable Recycled
0
200
400
600
800
1,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Meter Sales by Type
Recycled Potable
88
Fiscal
Year Potable Recycled Sewer Total
2016 49,425 708 4,677 54,810
2015 49,308 705 4,679 54,692
2014 49,148 702 4,657 54,507
2013 48,962 704 4,655 54,321
2012 48,665 696 4,655 54,016
2011 48,154 685 4,655 53,494
2010 47,845 683 4,646 53,174
2009 47,689 671 4,638 52,998
2008 47,593 626 4,627 52,846
2007 47,460 588 4,567 52,615
Source: Otay Water District
Number of Customers by Service Type - Last Ten Fiscal Years
5,000
15,000
25,000
35,000
45,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number of Customers by Service Type
Sewer Recycled Potable
89
Fiscal
Year 1% Property Tax
Special
Assessments
Total
Levies
Total
Collections (1)
End of the Year
Percent
Collected
2016 3,367,615 1,998,874 5,366,489 5,127,563 96%
2015 3,276,296 2,012,420 5,288,716 5,071,336 96%
2014 3,032,618 2,096,409 5,129,027 4,885,718 95%
2013 3,014,180 2,139,415 5,153,595 4,790,286 93%
2012 3,115,841 2,108,269 5,224,110 4,809,293 92%
2011 3,156,446 2,497,117 5,653,563 5,199,833 92%
2010 3,622,861 2,179,270 5,802,131 5,272,728 91%
2009 3,661,961 2,455,211 6,117,172 5,591,554 91%
2008 3,437,810 2,561,574 5,999,384 5,612,821 94%
2007 2,689,068 2,403,275 5,092,343 4,735,879 93%
(1) Levies and collections include Current Secured, Current Unsecured, and Supplemental Homeowners
Exemptions.
Source: Otay Water District
Property Tax Levies and Collections - Last Ten Fiscal Years
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Levies and Collections, in Thousands ($)
Levy Collections
90
Fixed Rates 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
System Fee by Meter Size
Residential
3/4"18.91$ 19.39$ 16.19$ 16.74$ 14.58$ 14.58$ 14.58$ 13.83$ 12.30$ 11.30$
1"26.71 27.39 22.87 21.26 18.52 18.52 18.52 17.56 19.80 18.15
1.5"46.22 47.40 39.58 32.57 28.37 28.37 28.37 26.90 51.95 35.75
Non-Residential & Others
3/4"18.91 19.39 16.19 16.74 14.58 14.58 14.58 13.83 24.00 22.00
1"26.71 27.39 22.87 21.26 18.52 18.52 18.52 17.56 36.95 33.90
1.5"46.22 47.40 39.58 32.57 28.37 28.37 28.37 26.90 51.95 47.50
2"69.61 71.39 59.62 46.13 40.18 40.18 40.18 38.10 64.95 59.60
3"132.02 135.41 113.08 82.29 71.68 71.68 71.68 67.98 104.55 95.90
4"202.24 207.43 173.22 122.99 107.13 107.13 107.13 101.59 119.70 109.80
6"397.31 407.50 340.29 236.02 205.59 205.59 205.59 194.96 239.20 219.45
8"631.37 647.56 540.76 371.64 323.73 323.73 323.73 307.00 - -
10"904.44 927.63 774.64 529.88 461.57 461.57 461.57 437.71 456.60 418.90
CWA and MWD Pass-through charges by Meter Size
Residential
3/4"16.84 13.67 14.45 13.28 14.01 11.82 9.77 4.33 3.85 3.55
1"31.24 25.35 26.79 22.12 23.33 19.69 16.28 6.91 6.15 5.65
1.5"70.66 57.35 60.61 44.31 46.74 39.44 32.61 13.04 11.60 10.65
Non-Residential & Others
3/4"16.84 13.67 14.45 13.28 14.01 11.82 9.77 4.33 3.85 3.55
1"31.24 25.35 26.79 22.12 23.33 19.69 16.28 6.91 6.15 5.65
1.5"70.66 57.35 60.61 44.31 46.74 39.44 32.61 13.04 11.60 10.65
2"120.17 97.53 103.08 70.85 74.74 63.07 52.15 22.54 20.05 18.45
3"255.60 207.44 219.23 141.71 149.48 126.14 104.30 41.53 36.95 34.05
4"409.32 332.20 351.09 221.43 233.58 197.17 162.98 70.98 63.15 58.20
6"837.89 680.02 718.69 442.80 467.09 394.17 325.92 129.82 115.50 106.45
8"1,353.09 1,098.15 1,160.59 708.53 747.39 630.71 521.51 374.62 - -
10"1,947.62 1,580.67 1,670.55 1,015.06 1,070.74 903.58 749.61 538.52 300.30 276.75
Fire Services
All Types 30.11 30.11 30.11 28.55 25.40 23.30
Less than 3 inch 24.69 25.32 21.14 34.57
4 inch and higher 33.27 34.12 28.49 34.57
Source: Otay Water District
Water Fixed Rates - Last Ten Fiscal Years
91
Usage Rate (1)2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Tier 1 2.13$ 1.95$ 1.86$ 1.73$ 1.58$ 1.49$ 1.35$ 1.12$ 1.12$ 1.08$
Tier 2 3.32 3.04 2.90 2.69 2.45 2.31 2.10 1.74 1.85 1.78
Tier 3 4.32 3.95 3.77 3.50 3.19 3.00 2.73 2.26 2.01 1.94
Tier 4 6.65 6.08 5.80 5.39 4.92 4.63 4.21 3.48 2.94 2.83
Tier 1 3.28 3.00 2.86 2.66 2.43 2.29 2.08 1.72 1.85 1.78
Tier 2 4.25 3.89 3.71 3.45 3.15 2.97 2.70 2.23 2.01 1.94
Tier 3 6.56 6.00 5.73 5.32 4.85 4.57 4.15 3.43 2.94 2.83
Publicly-Owned (2)2.06 1.99
Commercial & Others (3)1.98 1.91
Government Fee (2)0.37 0.32 0.31 0.29 0.29 0.29 0.29 0.29 0.28 -
Tier 1 3.51 3.21 3.06 2.84 2.59 2.44 2.22 1.84
Tier 2 3.56 3.26 3.14 2.92 2.66 2.50 2.27 1.88
Tier 3 3.62 3.31 3.19 2.96 2.70 2.54 2.31 1.91
Tier 1 4.78 4.37 4.17 3.87 3.53 3.32 3.02 2.50
Tier 2 4.83 4.42 4.25 3.95 3.60 3.39 3.08 2.55
Tier 3 4.89 4.47 4.32 4.01 3.66 3.45 3.14 2.60
Recycled (Commercial)1.67 1.65
Recycled (Publicly-Owned) (2)1.75 1.73
Tier 1 4.08 3.73 3.56 3.31 3.02 2.84 2.58 2.13
Tier 2 4.14 3.79 3.61 3.35 3.06 2.88 2.62 2.17
Tier 3 4.20 3.84 3.68 3.42 3.12 2.94 2.67 2.21
Energy Pumping Fee
Per 100 cubic feet (4)0.072 0.050 0.048 0.042 0.045 0.044 0.038 0.034 0.034 0.032
(1) Effective 2009, all non-residential customers are charged based on a tiered rate system in which the water rates
are based on meter size and amount of water units consumed each month.
(2) An additional $.37 per unit was charged to governmental customers in lieu of tax revenues. In the past, an
additional $.08 is added to the publicly-owned companies water rate.
(3) Others include agricultural and temporary meters.
(4) Water customers are charged an energy pumping charge based on the quantity of water used and the elevation to
which the water has been lifted to provide service. The energy pumping charge is the rate of $.072 per 100 cubic
feet of water for each 100 feet of lift above the base elevation of 450 feet. All water customers are in one of
twenty-nine zones based on elevation.
Source: Otay Water District
Water Variable Rates - Last Ten Fiscal Years
Recycled
Public Agency & Commercial
Landscape, Agricultural & Construction
Master Meter
Residential
92
Description 2016 2015 2014 2013**2012 2011 2010 2009 2008*2007
1 Unit 2.46$ 2.46$ 2.46$ 2.35$ 1.77$ 1.67$ 1.56$ 1.47$ 1.41$ -
Low Strength 2.46 2.46 2.46 2.35
Medium Strength 3.53 3.53 3.53 3.37
High Strength 5.63 5.63 5.63 5.37
Sewer Rate Per ASU 41.75 39.39 36.88 34.79 33.26 32.70
3/4"27.07 15.89 15.89 14.38 12.26 11.57 10.80 10.20 9.75
1"27.07 15.89 15.89 14.38 17.88 16.87 15.75 14.90 14.25
3/4"27.07 27.07 27.07 25.83
1"39.86 39.86 39.86 38.03
1.5"71.82 71.82 71.82 68.53
2"110.17 110.17 110.17 105.12
3"199.66 199.66 199.66 190.52
4"327.51 327.51 327.51 312.51
6"647.12 647.12 647.12 617.48
8"1,030.67 1,030.67 1,030.67 983.46
10"1,478.12 1,478.12 1,478.12 1,410.42
Calculation of Monthly Residential Sewer Billing:
*Bill calculation prior to calendar year 2008: Sewer Rate per ASU (9)
Bill calculation beginning calendar year 2008: (Winter Average (8) x .85 (2) x Usage Fee) + Fixed Fee (7)
Calculation of Monthly Non-Residential Sewer Billing:
Footnotes:
(1) Flow in gallons per day (Flow) is calculated using monthly readings from account's water meter.
(2) Flow is reduced by 15 percent to reflect that not all water purchased is disposed of into the public sewer system.
(3) Flow is divided by 250 gallons per day to convert it into terms of residential equivalence.
(4) Strength factors for business customers are categorized as low, medium or high strength.
(5) The average annual usage is defined as the units of water billed from January-December of previous year.
(6) The usage fee is based on the commercial account's strength factor as shown on the usage fee table as being either
Low, Medium, or High.
(7) The fixed rate is based on the size of the water meter.
(8) The winter average for a residential customer is defined as the units of water billed from January-April of the previous
calendar year divided by the number of months of service.
(9) The ASU (assigned service unit) is then multiplied by the district-wide sewer rate.
Source: Otay Water District
Sewer Variable and Fixed Rates - Last Ten Fiscal Years
Non-Residential
Fixed Rates
Usage Fee
**Bill calculation prior to calendar year 2012: ((Flow in gallons per day (1) x .85 (2)/250 (3))) x Strength Factor (4)
Bill calculation beginning calendar year 2013: ((Average Annual Usage (5) x .85 (2)/250 (3) x Usage Fee (6))) + Fixed Fee (7)
Residential
Non-Residential
Residential
93
Customer Customer Annual % of Water
Name Type Revenues Sales
1. City of Chula Vista Publicly Owned 3,247,032$ 4.4%
2. State of California Publicly Owned 1,017,064 1.4%
3. County of San Diego Publicly Owned 750,769 1.0%
4. Eastlake III Community Commercial 637,974 0.9%
5. Steele Canyon Golf Club LLC Commercial 598,046 0.8%
6. Chula Vista School District Publicly Owned 524,968 0.7%
7. EastLake Country Club Commercial 442,514 0.6%
8. Sweetwater School District Publicly Owned 353,981 0.5%
9. Highlands Golf Company LLC Commercial 335,488 0.5%
10. Eastlake 1 HOA Commercial 306,520 0.4%
Total Top Ten Customers 8,214,356$ 11.2%
Other Customers 65,725,844 88.8%
Total Water Sales 73,940,200$ 100.0%
Customer Customer Annual % of Water
Name Type Revenues Sales
1. City of Chula Vista Publicly Owned 2,555,440$ 5.3%
2. State of California Publicly Owned 993,602 2.0%
3. County of San Diego Publicly Owned 801,420 1.6%
4. Eastlake III Community Commercial 576,165 1.2%
5. McMillin Commercial 571,469 1.2%
6. Eastlake Country Club Commercial 547,092 1.1%
7. Country Hills Apartments Residential 491,231 1.0%
8. Otay River Construction Commercial 386,212 0.8%
9. Salt Creek Partners LLC Commercial 383,076 0.8%
10. Otay Project LP Commercial 365,690 0.8%
Total Top Ten Customers 7,671,397$ 15.8%
Other Customers 40,934,208 84.2%
Total Water Sales 48,605,605$ 100.0%
Source: Otay Water District
Ten Largest Customers - Current Year and Nine Years Ago
Fiscal Year 2016
Fiscal Year 2007
94
As a Share
Fiscal Population GO Revenue Capital Per of Personal
Year Estimate Bond COPS Bonds Notes Leases Total Capita Income (1)
2016 220,000 4,680,853$ 8,791,803$ (3)90,218,686$ -$ -$ 103,691,342$ 471.32$ 0.84%
2015 217,000 5,267,208 44,990,103 54,887,993 - - 105,145,304 484.54 0.90%
2014 213,000 5,833,563 46,475,314 56,508,490 - - 108,817,367 510.88 0.99%
2013 211,000 6,384,918 47,920,525 (2)58,158,987 - - 112,464,430 533.01 1.06%
2012 208,500 6,921,271 58,023,740 50,321,421 - - 115,266,432 552.84 1.14%
2011 206,500 6,803,577 59,715,531 51,180,822 6,010 - 117,705,940 570.00 1.19%
2010 206,000 7,283,127 61,489,612 51,255,224 359,744 - 120,387,707 584.41 1.28%
2009 195,000 7,726,575 63,213,693 - 701,516 - 71,641,784 367.39 0.83%
2008 191,500 8,093,302 64,892,774 - 1,031,730 - 74,017,806 386.52 0.85%
2007 190,000 8,445,029 65,851,790 - 1,350,778 - 75,647,597 398.15 0.89%
(1) See the Demographics and Economic Statistics schedule on page 101 for personal income data.
(2) 2004 COPS were refunded with the issuance of 2013 Water Revenue Refunding Bonds in June 2013.
(3) 2007 COPS were refunded with the issuance of 2016 Water Revenue Refunding Bonds in May 2016.
Source: Otay Water District
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years
$0
$100
$200
$300
$400
$500
$600
$700
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Outstanding Debt, Per Capita
95
Adjusted Net Revenues
Fiscal Adjusted Operating Available for Debt Service Requirements (4)Coverage
Year Revenues (1)Expenses (2)Debt Service Principal Interest Total Factor (3)
2016 85,417,850$ 72,117,631$ $13,300,219 $3,120,000 4,640,947$ $7,760,947 171%
2015 89,646,845 74,320,591 15,326,254 2,945,000 4,767,618 7,712,618 199%
2014 90,948,021 75,575,679 15,372,342 2,935,000 4,895,622 7,830,622 196%
2013 81,778,447 70,228,987 11,549,460 2,800,000 4,988,640 7,788,640 148%
2012 74,484,691 64,028,686 10,456,005 1,850,000 6,050,746 7,900,746 132%
2011 69,653,627 60,117,245 9,536,382 1,795,000 5,084,450 6,879,450 139%
2010 65,573,058 57,084,904 8,488,154 1,745,000 2,720,258 4,465,258 190%
2009 63,739,773 57,076,567 6,663,207 1,700,000 2,342,048 4,042,048 165%
2008 63,732,275 56,420,286 7,311,989 800,000 2,567,884 3,367,884 217%
2007 69,442,301 52,413,282 17,029,019 790,000 1,513,834 2,303,834 739%
(1) Adjusted revenues exclude sewer revenues and taxes collected for Improvement District 27 and are
inclusive of capacity fees.
(2) Adjusted operating expenses exclude sewer expenses and depreciation expense.
(3) The District's bond covenants require a minimum coverage factor of 125%.
(4) Pledge debts are Certificates of Participation (COPS) and Revenue Bonds.
Source : Otay Water District
Pledged Revenue Coverage - Last Ten Fiscal Years
00%
200%
400%
600%
800%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Coverage Factor, in Percentage (%)
Actual Ratio Minimum ratio
96
Net Bonded
Net Debt to Net Bonded
Fiscal Population Assessed Bonded Assessed Debt Per
Year Estimate Valuation Debt Valuation Capita
2016 220,000 26,057,698,553$ 4,680,853$ 0.02%21.28
2015 217,000 24,682,307,510 5,267,208 0.02%24.27
2014 213,000 23,304,103,069 5,833,563 0.03%27.39
2013 211,000 22,836,336,223 6,384,918 0.03%30.26
2012 208,500 23,145,467,535 6,921,271 0.03%33.20
2011 206,500 23,519,177,848 6,803,577 0.03%32.95
2010 206,000 24,198,816,700 7,283,127 0.03%35.35
2009 195,000 26,752,095,692 7,726,575 0.03%39.62
2008 191,500 25,902,796,201 8,093,302 0.03%42.26
2007 190,000 22,684,693,592 8,449,025 0.04%44.47
Source: Otay Water District
Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years
0.00%
0.01%
0.02%
0.03%
0.04%
0.05%
0.06%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Bonded Debt Ratios, in Percentage (%)
97
Computation of Direct and Overlapping Bonded Debt
June 30, 2016
2015-16 Assessed Valuation: $26,057,698,553
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District
Otay Water District Improvement District No. 27
Grossmont-Cuyamaca Community College District
Southwestern Community College District
Grossmont Union High School District
Sweetwater Union High School District
Chula Vista City School District and School Facilities Improvement
District
San Ysidro School District
Other School Districts
Grossmont Healthcare District
City of Chula Vista Community Facilities District
Sweetwater Union High School District Community Facilities Districts
City 1915 Act Bonds
California Statewide Communities Development Authority
San Diego County / Venture Community Center Assessment District
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Diego County General Fund Obligations
San Diego County Pension Obligation Bonds
San Diego Superintendent of Schools Certificates of Participation
Otay Water District Certificates of Participation & Revenue Bonds
Grossmont and Southwestern Community College District General
Fund Obligations
Grossmont Union High School District Certificates of Participation
Sweetwater Union High School District Certificates of Participation
Chula Vista City School District Certificates of Participation
San Ysidro School District Certificates of Participation
Other School District Certificates of Participation
City of Chula Vista Certificates of Participation
City of San Diego General Fund Obligations
San Miguel Consolidated Fire Protection District Certificates of
Participation
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT
Less: Otay Water District Revenue Certificates of Participation &
Revenue Bonds (100% self-supporting)
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT
(1) The percentage of overlapping debt applicable to the District is estimated using taxable assessed property value. Applicable
percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of
the District divided by the overlapping district's total taxable assessed value.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Qualified Zone Academy Bonds are included based on principal due at maturity.
Total Debt District’s Share of
6/30/16 % Applicable (1) Debt 6/30/16
$ 92,865,000 1.061% $ 985,298
4,580,000 100. 4,580,000
238,589,230 15.364 36,656,849
336,243,676 40.777 137,110,084
496,551,773 15.761 78.261.525
398,811,637 48.731 194,344,899
93,505,000 61.165 & 23.637 41,937,202
131,872,132 48.384 63,805,012
4,473,555,491 Various 57,897,100
266,188,330 13.974 37,197,157
137,605,000 100. 137,605,000
124,594,206 10.894-100. 116,555,409
11,490,000 100. 11,490,000
1,013,067 100. 1,013,067
$ 919,438,602
$ 307,830,000 5.888% $ 18,125,030
649,860,000 5.888 38,263,757
13,295,000 5.888 782,810
94,115,000 100. 94,115,000
1,940,000 15.364 & 40.777 547,109
500,000 15.761 78,805
41,850,000 48.731 20,393,924
165,785,000 61.165 101,402,395
42,434,715 48.384 20,531,613
4,865,000 Various 1,177,281
102,440,000 69.238 70,927,407
594,045,000 0.811 4,817,705
3,180,000 52.153 1,658,465
$ 372,821,301
94,115,000
$ 278,706,301
Continued
98
Computation of Direct and Overlapping Bonded Debt - continued
OVERLAPPING TAX INCREMENT DEBT (Successor Agency):
TOTAL GROSS DIRECT DEBT
TOTAL NET DIRECT DEBT
TOTAL OVERLAPPING DEBT
COMBINED TOTAL DEBT
Ratios to 2015-16 Assessed Valuation:
Direct Debt ($4,580,000) ............................................................................ 0.02%
Total Overlapping Tax and Assessment Debt .......................................... 3.53%
Total Direct Debt ($4,580,000) ................................................................ 0.02%
Combined Total Debt ............................................................................................. 4.61%
Ratios to Redevelopment Successor Agency Incremental Valuation ($278,922,034):
Total Overlapping Tax Increment Debt ........................................................ 1.21%
Source: California Municipal Statistics, Inc. and Otay Water District
$20,450,000 16.568% $3,388,156
$98,695,000
$4,580,000
$ 1,196,953,059
$ 1,201,533,059 (2)
99
2007
% of Total % of Total
County County
Employer Employees Rank Employment Employees Rank Employment
UC San Diego 29,287 1 1.96% 24,790 4 1.69%
Sharp HealthCare 16,896 2 1.13% 13,872 8 0.95%
Scripps Health 14,644 3 0.98% 10,313 10 0.70%
Qualcomm Inc 13,500 4 0.91%- - -
Kaiser Permanente 7,535 5 0.51%- - -
UC San Diego Health System 7,229 6 0.48%- - -
San Diego Community College District 5,902 7 0.40%- - -
Rady Children's Hospital-San Diego 5,122 8 0.34%- - -
YMCA of San Diego County 5,487 7 0.37%- - -
General Atomics Aeronautical Systems Inc 5,088 9 0.34%
San Diego State University 5,064 10 0.34%
United States Navy(1)- --42,000 1 2.88%
Federal Government(1)- --39,100 2 2.67%
State of California(1)- --37,100 3 2.54%
San Diego Unified School District(1)- --21,073 5 1.44%
City of San Diego(1)- --20,700 6 1.41%
County of San Diego(1)- --18,900 7 1.29%
US Postal Service, San Diego District - --11,611 9 0.79%
Total 115,754 7.76% 239,459 16.36%
Diego Unified School District, City of San Diego, and County of San Diego declined to participate in the
survey organized by the San Diego Business Journal.
Source: Book of Lists, San Diego Business Journal.
Principal Employers - Current Year and Nine Years Ago
2016
(1) For Fiscal Year ending June 30, 2016, the United States Navy, Federal Government, State of California, San
100
Personal Per Capita
Fiscal Income Personal Unemployment
Year Population (in 000'S)Income Rate
2016 (1) 3,314,800 186,900,000$ 56,400$ 4.86%
2015 3,275,500 177,300,000 54,100 5.75%
2014 3,212,300 172,900,000 54,000 7.11%
2013 3,182,100 161,100,000 50,288 7.40%
2012 3,143,429 154,200,000 48,674 9.30%
2011 3,140,069 149,600,000 47,776 10.40%
2010 3,095,313 137,525,000 45,627 10.50%
2009 3,173,407 134,696,000 44,412 10.20%
2008 3,001,072 143,783,000 45,728 6.00%
2007 2,959,734 131,499,657 44,830 4.60%
(1) Forecast
Source: SANDAG; Census 2010, California Department of Finance; LAEDC-Los Angeles Economic Development
Corp., The Kyser Center for Economic Research Employment Development Department; Labor Market Info.
Demographic and Economic Statistics - Last Ten Fiscal Years
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Unemployment Rate, in Percentage (%)
101
Department 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
General Manager 5 5 5 5 5 6 6 6 6 6
Finance 32 34 34 36 39 42 45 44 43 42
Operations/Maintenance 51 51 51 54 54 54 56 58 60 61
Engineering 24 24 25 24 26 26 26 28 31 34
Administrative Services 26 26 28 29 31 31 33 33 33 32
Total 138 140 143 148 155 159 166 169 173 175
Source : Otay Water District
Number of Employees by Function - Last Ten Fiscal Years
125
130
135
140
145
150
155
160
165
170
175
180
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total Employees
102
Meter Size 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
3/4" & 5/8" 44,413 44,395 44,375 44,354 44,376 44,065 43,815 43,641 43,551 43,544
1" 2,756 2,674 2,557 2,412 2,099 1,881 1,815 1,804 1,747 1,618
1-1/2" 1,342 1,335 1,332 1,333 1,326 1,317 1,317 1,309 1,275 1,242
2" 1,299 1,294 1,293 1,295 1,277 1,278 1,292 1,299 1,283 1,262
3"82 81 77 76 75 75 75 75 76 76
4"210 207 189 169 180 193 184 202 258 275
6"22 18 18 18 19 21 22 21 19 24
Others 9 9 9 9 9 9 8 9 10 7
Total 50,133 50,013 49,850 49,666 49,361 48,839 48,528 48,360 48,219 48,048
% Change 0.2% 0.3% 0.4% 0.6% 1.1% 0.6% 0.3% 0.3% 0.4% 1.3%
Increase 120 163 184 305 522 311 168 141 171 639
Source : Otay Water District
Active Meters by Size - Last Ten Fiscal Years
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Active Meters by Size
103
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Water System
Service Area (Square Miles) 125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5
Miles of Potable Water Main 727.0 727.0 726.0 725.0 724.0 723.0 723.0 722.0 722.0 680.0
40 40 40 40 40 40 40 38 36 37
Water Storage Capacity
(in Acre-Feet) 672.0 668.0 668.0 667.8 670.8 673.8 663.8 655.5 605.5 601.7
Total Potable Water Connections
(No. of Meters in Service)49,534 49,308 49,148 48,962 48,665 48,154 47,845 47,689 47,593 47,460
Number of Pump Stations 22 21 21 21 21 21 21 21 21 21
Number of Potable Water
Valves 20,746 20,676 20,460 20,317 20,317 19,522 19,522 19,192 19,131 18,721
Sewer System
Miles of Sewer Lines 88.0 88.0 88.0 88.0 88.0 88.0 88.0 88.0 88.0 86.2
Number of Treatment Plants 1 1 1 1 1 1 1 1 1 1
Treatment Plant Capacity
(Million Gallons per Day)1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Total Flows for Fiscal
Year (in Million Gallons)336 388 405 422 423 481 474 483 503 514
Recycled System
Miles of Recycled Water Mains 104.0 104.0 102.0 99.0 99.0 98.0 98.0 97.0 93.0 83.0
Number of Pumping Facilities 3 3 3 3 3 3 3 3 3 3
Number of Operational
Storage Reservoirs in Service 4 4 4 4 4 4 4 4 4 4
Number of Acre-Feet Storage 134.2 134.2 134.2 134.1 134.1 134.1 134.1 133.2 135.0 134.1
Total Recycled Water
Connections 710 705 702 704 696 685 683 671 626 588
Number of Recycled
Water Valves 1,497 1,492 1,473 1,430 1,430 1,380 1,380 1,338 1,314 1,245
Source: Otay Water District
Operating and Capital Indicators - Last Ten Fiscal Years
Number of Operational
Storage Reservoirs in Service
550
600
650
700
750
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Potable Water Mains, in Miles
104