HomeMy WebLinkAboutOperating and Capital Budget FY 2023-2024Otay Water District
Adopted Operating and Capital Budget
Fiscal Year 2023-2024
BOARD OF DIRECTORS
Mark Robak, Division 5 President
Jose Lopez, Division 4 Vice President
Ryan Keyes, Division 2 Treasurer
Tim Smith, Division 1
Gary Croucher, Division 3
MANAGEMENT TEAM
Jose Martinez General Manager
Joseph Beachem Chief Financial Officer
Kevin Koeppen Assistant Chief, Finance
Adolfo Segura Chief, Administrative Services
Michael Long Chief, Engineering
Andrew Jackson Chief, Water Operations
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Table of Contents Page
Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Awards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
Resolution No. 4433. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
OVERVIEW
Budget Guide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mission Statement, Vision, Statement of Values. . . . . . . . . . . . . . . . . . . . . . . 3
District Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Service Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Budget Control and Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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7
Budget Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fund Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Public Input. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Budget Calendar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
COMMUNITY PROFILE
Demographics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Service Area Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Ten Principal Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Ten Largest Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Water Rate Comparison – Member Agency Water Rates. . . . . . . . . . . . . . . . . 15
Sewer Rate Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
San Diego Rainfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Current Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
STRATEGIC PLAN
Strategic Plan Narrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
General Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Administrative Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FINANCIAL SUMMARIES
Financial Summaries Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Operating Budget Summary – General Fund . . . . . . . . . . . . . . . . . . . . . . . . 42
Operating Budget Summary by System . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
General Fund Revenues, Expenditures and Transfers . . . . . . . . . . . . . . . . . . . 45
Fund Balance Summary by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Revenues and Expenditures by Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Revenues and Expenditures by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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FIVE-YEAR FORECAST
Five-Year Forecast Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
General Fund Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Fund Balances Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Debt Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Impact of Current Debt Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Schedule of Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Projected Principal Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . 59
Projected Interest Payments by Debt Issuance . . . . . . . . . . . . . . . . . . . . . . . 60
REVENUES AND EXPENDITURES
Potable Revenues and Expenditures
Potable Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Water Sales Summary by Customer Class . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Unit Sales and Meter Count History by Customer Class . . . . . . . . . . . . . . . . . . 66
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
MWD and CWA Fixed Fees (pass-through) . . . . . . . . . . . . . . . . . . . . . . . . . 69
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Water Purchases and Related Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Potable Water Service Area Map. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Recycled Revenues and Expenditures
Recycled Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Classification of Water Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Water Sales Summary by Customer Class . . . . . . . . . . . . . . . . . . . . . . . . . 81
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Unit Sales and Meter Count History by Customer Class . . . . . . . . . . . . . . . . . . 83
Meter Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Water Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Materials and Maintenance Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . 89
Recycled Water Service Area Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Sewer Revenues and Expenditures
Sewer Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Operating Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Charges Summary by Customer Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
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Table of Contents Page
Sewer Revenues and Expenditures (continued)
System Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Revenue History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Power Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 98
Formula for Sewer Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Sewer Service Area Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
General Revenues and Expenditures
General Revenues and Expenditures Narrative . . . . . . . . . . . . . . . . . . . . . . . 103
General Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
General Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
DEPARTMENTAL OPERATING BUDGET
Departmental Operating Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . 107
Labor and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Labor and Benefits by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Position Count by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Administrative Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Materials and Maintenance Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Operating Expenditures by Department . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Operating Expenditures by Object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Departmental Budgets:
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
General Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Water Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
CAPITAL BUDGET
Capital Budget Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
CIP Reserve Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Six-Year CIP Projects Summary by Source ($1,000s). . . . . . . . . . . . . . . . . . . . 157
Six-Year CIP Projects Summary by Fund ($1,000s). . . . . . . . . . . . . . . . . . . . . 157
Six-Year CIP Projects by Source and Fund ($1,000s). . . . . . . . . . . . . . . . . . . . 158
CIP Justification and Impact on Operating Budget . . . . . . . . . . . . . . . . . . . . 161
Capital Purchases FY 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
POLICIES
Summary of Financial Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Reserve Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Debt Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
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APPENDIX
Glossary of General Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Glossary of Policy Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
List of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
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June 7, 2023
Honorable Board of Directors
Otay Water District
I am pleased to present the Otay Water District’s Adopted Operating and Capital Budget for
Fiscal Year 2024. The budget supports the District’s Fiscal Year 2023-2026 Strategic Plan as
well as the financing of all District services, programs, and capital needs during Fiscal Year
2024. The success as an agency is significantly enhanced by the policies and practices
implemented by its Board and management to ensure stability, reliability, strength, and
sustainability. The management team is fully confident that through sound financial
management and streamlining of operations and services, supported by the Strategic Plan
and a dedicated and talented staff, the District will continue to achieve success and thus,
ensure the well-being and quality of life of its over 240,000 customers. Our goal is to sustain
the services we provide while minimizing rate impacts to our ratepayers.
Legislative and Regulatory Issues
The District continues to monitor legislative and regulatory activity and how it could impact
the District and its customers. September 14 is the final day of the legislative session and
the Governor has until October 14, 2023 to sign or veto legislation.
The District submitted a letter in support of Senate Bill 366 (Caballero), which revises and
recasts the California Water Plan and requires the Water Plan, commencing with the 2028
update, to be a comprehensive plan for addressing the state’s water needs and meeting
water specified long-term supply targets.
Other bills that the District is watching include:
AB 1594 (Garcia), would require any state regulation that seeks to require, or
otherwise compel, the procurement of medium- and heavy-duty zero-emission
vehicles (ZEV) to ensure that those vehicles can support a public agency utility's
ability to maintain reliable water and electric service, respond to disasters in an
emergency capacity, and provide mutual aid assistance statewide and nationwide.
This bill, also supported by the California Municipal Utilities Association (CMUA), will
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assist in meeting California’s 100% ZEV goals in a manner tailored to each publicly
owned utility and the essential services they provide their communities.
AB 249 (Holden), would require, on or before January 1, 2027, a community water
system that serves a school site receiving federal Title I funds to test for lead in each
of the school site’s potable water system outlets and to report the results to the State
Water Resources Control Board (SWRCB) and applicable school or Local
Educational Agency (LEA); would require LEAs or schools, if lead levels exceed five
parts per billion (ppb), to perform specified actions. This bill is opposed by the
Association of California Water Agencies (ACWA), CMUA, and the California Special
Districts Association (CSDA) because the current version of the federal rule includes
different requirements than the proposed provisions of AB 249, and they expect that
those differences could be further exacerbated in the federal Lead and Copper Rule
Revisions and Improvements (LCRR/LCRI). The operative date of AB 249 would be
January 1, 2024 and the completion date is proposed to be 2027. This would directly
overlap with the LCRR/LCRI schedule and water systems likely would have to
comply with two comprehensive testing regimes without any additional public
health benefit.
AB 399 (Boerner), would require, as an additional condition to the Local Agency
Formation Commission (LAFCO) process for allowing the detachment of a public
agency from their relevant county water authority, that the majority of the voters
within the jurisdiction of the county water authority vote to approve the detachment
at a scheduled election. This bill is sponsored by the City of San Diego and supported
by the San Diego County Water Authority (CWA), and it is opposed by San Diego
LAFCO.
AB 1572 (Friedman), would prohibit the use of potable water to irrigate nonfunctional
turf on commercial, municipal, institutional, and multifamily residential properties
with a phase-in ban for specified property types beginning January 1, 2027.
There is also a package of highly controversial bills that the District is monitoring to
“modernize” California water rights system that ACWA is engaging including AB 1337
(Wicks), AB 460 (Baur Kahan), AB 676 (Bennett), and AB 560 (Bennett),
Other legislation that the District is tracking includes proposed water, parks, and climate
bonds still being negotiated by legislators. The District is also monitoring this year’s state
budget as the main budget bill and trailer bills are passed before the end of July and the
end of session.
The District also has been actively engaged in the California Air Resources Board’s (CARB)
release of its updated draft regulatory language for the Advanced Clean Fleets Regulation
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for State and Local Government Fleets. The District has followed this regulatory process
closely to make certain that the District’s first responders in the field who respond to water
and wastewater utility emergencies in specialized vehicles have the resources available to
them to ensure that response is not delayed. The District submitted comments regarding
its concerns regarding the draft and final regulatory language that was adopted on April 27,
and is continuing to monitor CARB’s activity on this matter. The District is also part of a
coalition through ACWA on the issue.
The District is also monitoring water quality regulatory developments at the SWRCB. In
March of this year, the board adopted a resolution for drinking water regulations
development for the remainder of this calendar year. The Board’s Division of Drinking Water
has established a proposed prioritized list for regulatory development projects for 2023. This
includes minimum contaminant levels (MCLs) for Chromium (hexavalent), Arsenic,
Perfluoro-octanoic acid (PFOA), perfluoro-octane sulfonic acid (PFOS), N-nitroso
dimethylamine (NDMA), Disinfection Byproducts, Styrene, Cadmium, and Mercury.
The SWRCB and many water agencies, including the District, continue to focus on
conservation-related laws such as SB 1157 (Hertzberg, 2022), which lowered the indoor
residential water-use standard and superseded SB 606 and AB 1668, which passed in 2018.
The bill passed and was signed by the Governor last fall. It established the indoor residential
water-use standards to be as follows: 55 GPCD until January 1, 2025; 47 GPCD until January
1, 2030; and 42 GPCD as of January 1, 2030. The District is currently projected to meet the
GPCD requirements. SB 1157 supersedes SB 606 and AB 1668 which passed in 2018 to
build on efforts to make water conservation a way of life and to better prepare the state for
droughts and climate change, the District and other water agencies throughout the state
have worked with CWA and state officials to define how the conservation laws will be
implemented. These laws outline an overall framework to guide the District and other urban
water suppliers in setting water-use targets. The laws also required the SWRCB to adopt an
outdoor water-use standard by June 2022. The District has worked collectively with other
water agencies and water industry associations to discuss and provide comments to the
SWRCB to ensure the regulations are both equitable and reflect local conditions. The
District will continue to work on these efforts as the SWRCB releases more
recommendations and reports.
Due to the drought, in May 2022, the SWRCB adopted an emergency drought regulation
and by June 10 2022, the regulation went into effect for all water suppliers. The regulation
requires that water suppliers implement demand reduction actions identified in their Water
Shortage Contingency Plan (WSCP) for a shortage level of 10-20% (Level 2). On March 24,
2023 the Governor issued an executive order amending the Emergency Drought
Proclamation and previous executive orders on conservation. This order included the
following: ended the voluntary 15% water conservation target, while continuing to
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encourage that Californians make conservation a way of life; ended the requirement that
local water agencies implement level 2 of their drought contingency plans; and retained a
state of emergency for all 58 counties to allow for drought response and recovery efforts to
continue.
In August of last year, the Governor released a new California’s Water Supply Strategy,
Adapting to a Hotter, Drier Future, listing actions needed to address 10% loss of water
supplies by 2040. This includes seeking or expanding new sources of supplies like
desalination, recycled water and potable reuse, increased storage, reducing urban and
agricultural water use, and improved forecasting, data collection, and management of
water. These are all related to actions included in the 2020 Water Resilience Portfolio.
As directed by the Governor and building on work already conducted, on July 27, 2022, the
Department of Water Resources (DWR) released its Draft Environmental Impact Report for
the Delta Conveyance Project (DCP), marking an important step in evaluating a key strategy
to adapt to a changing climate and provide clean, reliable water for future generations. This
environmental review process is also consistent with the Governor’s executive order
directing state agencies to develop the aforementioned portfolio of statewide water actions
and investments that improve water recycling, recharge depleted groundwater reserves,
strengthen existing levee protections, and improve Delta water quality. Building on that
progress, DWR is continuing to advance environmental planning and permitting activities,
as well as public outreach and engagement, including but not limited to California
Environmental Quality Act, National Environmental Policy Act, California Endangered
Species Act Incidental Take Permits, and Endangered Species Act Biological Opinions.
DWR released an “Adapting to Climate Change” fact sheet after the January winter storms,
detailing that if the DCP had been operational, it would have moved 202,000-acre feet of
water into the San Luis Reservoir, enough supply for 2.1 million people for one year or
710,000 households. This is about 35% of the total volume exported by the State Water
Project (SWP) in water year 2022.
Fiscal Year 2023 - 2026 Strategic Plan
Since 1956 the District's theme has been and continues to be "Dedicated to Community
Service." This motto serves as a great reminder for our staff of the responsibility and
significance of delivering exceptional service to the residents and businesses in our
community.
Over the years the District’s strategic plan has evolved from one focused on growth to one
focusing on consistent, albeit lower, growth levels, long-term operations, and capital
maintenance needs of the District. The District recently adopted a new strategic plan (FY
2023-2026), highlighting areas of focus, including a stronger emphasis on financial and
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long-term demands, legislative matters, aging workforce and knowledge transfer,
organizational culture, customer service, cybersecurity, and asset management. Quarterly
and annual performance metrics support short-term and long-term objectives linked to
these strategies to promote and track continuous improvement.
The new strategic plan, adopted by the Board in January 2022, is a four-year plan. The plan
reinforces the Board’s vision, mission, and value statements and the business perspectives
that serve as the foundation for the new strategies, goals, and objectives. The new strategic
plan addresses several challenges facing the District today. They include fulfilling more
stringent water quality requirements, meeting the water demands of a developing
community, discovering methods to better use our current water resources through storage
and water conservation, retention and recruitment of a skilled workforce, and maintaining
an adaptable organization to meet future challenges. The strategic plan allows us to also
convey our plans to our customers, other agencies, and water regulators. As with past
plans, we are confident that this plan will help us to successfully implement the Board’s
direction.
As the agency matures and its service area expands, fewer development resources and
fees will be available, but operating assets, infrastructure maintenance, rehabilitation, and
replacement expenses will continue to increase. Many of our infrastructure assets are
entering a pivotal age point in their operational lifecycle, and as a result, there will be
pressure to increase customer rates to offset these rising expenses. To balance the
customer's interest in reducing rate increases while preserving service reliability, well
maintained infrastructure, and a financially sound position, the management team
continues to prioritize efficiency inside the agency via investments in operational and
business technology to achieve continued efficiencies and maintaining an optimal head
count.
The strategic plan details our commitment to remain a model public agency that maintains
stakeholder trust through fiscal responsibility, environmental stewardship, and effective
leadership. These high-level goals and strategic objectives are further articulated with
aligned implementation plans, District-wide accountability, and performance metrics to
measure and improve outcomes. Through community focus, sound planning, preparation,
and fiscal management, and a prepared and adaptable work culture, the District is well
positioned to support its growing customer base while sustaining the quality water service
that our community and our ratepayers expect.
The success of this approach is proven by the District’s gains in productivity and reduction
in staffing while service growth continues. The District has reduced staffing by 30.75 full-
time equivalent positions, or 18%, while the number of customer accounts increased by
ix
4,675, or 9% from 2007 through 2024. The following chart shows that the District’s ratio of
customer accounts per full time employee has increased by 97 or 32% since 2007.
Customer Accounts per Full Time Employee
Because of increased efficiency and higher employee productivity, the District continues to
absorb some of the pass-through costs from its water suppliers, including the City of San
Diego, CWA, and Metropolitan Water District (MWD). This helps to address customer
concerns about rising water rates.
The District’s Other Post-Employment Benefit (OPEB) plan is 85% funded as of June 30,
2022, which is a 19% decline from the previous 104% funding status as of June 30, 2020,
due to lower investment returns from California Employers’ Benefit Trust (CERBT). The
District will continue its strategy of advance funding its unfunded pension and OPEB
obligations. The FY 2024 budget includes a $1.3 million advance contribution to the retiree
healthcare plan, which is consistent with the prior budget recommendations when OPEB
has fallen below a 100% funding level. The strategy of advance funding the District’s
unfunded obligations aims to reduce the District’s highest cost debt. This strategy is aimed
to save the ratepayers money and will save the District approximately $6.0 million over the
12-year advance funding period, which began in 2021.
Other cost savings include the reduction in number of vehicles and equipment, fuel
consumption, pavement costs, and decreasing water loss through the successful leak
detection and repair program. Staff continues to seek out other operational efficiencies, thus
decreasing costs and minimizing rate impacts on District customers.
Based on an annual survey of water and sewer rates conducted by staff, the District
continues to be one of the lower cost providers in San Diego County. The District has the
ninth lowest water rate out of the 24 member agencies in San Diego County (based on the
30
1
30
6
31
4
32
1
33
6
34
4
36
6
38
0
38
9
39
6
40
6
41
2
40
9
40
9
40
7
40
6
39
9
39
8
-
50
100
150
200
250
300
350
400
450
Ac
c
o
u
n
t
s
p
e
r
F
u
l
l
T
i
m
e
E
m
p
l
o
y
e
e
Fiscal Year
x
District’s average water user who uses 10 units of water and has a ¾” residential meter size),
and the fourth lowest sewer rate out of the 28 sewer service providers in the County (based
on 10.5 units of water and a ¾” residential meter size). The results of the water and sewer
surveys are shown on pages 15 and 16, respectively.
The following chart shows that since 2007, the wholesale water supply costs have
increased 129.9% and the District’s retail water rates have increased 122.1%.
Wholesale Water Supply Costs vs. District Retail Rate Increases
The District currently delivers water service to 51,758 potable and 793 recycled water
customer accounts. The District purchases all the potable water sold to customers from the
CWA. Seventy-six percent of this water, in turn, is purchased from the region’s primary water
importer, MWD, which derives its supply from the Colorado River and the California State
Water Project. The percentage of water purchased from MWD has decreased significantly
over the last several years due to conservation efforts, the water transfer agreement with
Imperial Irrigation District (IID), the All-American and Coachella lining project agreements,
and the water purchase agreement for water produced at the Carlsbad Desalination Plant.
The District continues its efforts to diversify water resources, reducing dependence on
traditional water supplies from the Colorado River and the Sacramento-San Joaquin Delta.
The District also has been proactive in reducing its dependence on MWD water treatment
facilities. For example, in 2009 the District entered into an agreement with the CWA that
allowed the neighboring Helix Water District to treat imported water on behalf of the District
at Helix’s Levy Water Treatment Plant. This has brought regional water treatment closer to
0%
20%
40%
60%
80%
100%
120%
140%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
129.9%
122.1%
CWA Water Cost Increase
Otay Water Rate Increase
xi
District customers, which lessens dependence on water treatment facilities located outside
of the County.
The District also collects and recycles wastewater from approximately 4,739 homes and
businesses. The District collects wastewater and delivers it to its Ralph W. Chapman Water
Recycling Facility (Chapman), which is capable of recycling wastewater at a rate of 1.3
million gallons per day. In addition to the Chapman facility, the District continues to
purchase up to 5.6 million gallons per day of recycled water from the City of San Diego’s
South Bay Water Reclamation Plant. The use of recycled water for landscape irrigation and
industrial processes reduces dependence on imported potable supplies, provides a local
supply that is drought proof, and diversifies District sources.
Fiscal Year 2024 Operating Budget Summary
The Fiscal Year 2024 budget was prepared with the continuing challenges of inflation,
supply-chain issues, water supply rate increases, added CIP projects, increasing power
costs, and current and pending legislative initiatives. Additional challenges are the City of
San Diego’s Pure Water program costs, the County of San Diego’s rehabilitation of shared
facilities, and the projected future debt issuances.
The District’s operating expenditures consist of three major sectors: potable water, recycled
water, and sewer, totaling $127.9 million of budget expenditures for Fiscal Year 2024.
Revenues from potable and recycled water sales are projected to be $111.9 million,
approximately $7.3 million more than the Fiscal Year 2023 budget. The District projects
sewer revenues to be $3.5 million, approximately $184 thousand more than Fiscal Year
2023. The remaining budgeted revenues of $12.6 million, approximately $1.8 million more
than Fiscal Year 2023, come from various special fees, assessments, and miscellaneous
income.
Other significant aspects of the Operating Budget are:
A balanced budget supporting the goals of the Strategic Plan.
The use of an economist to project growth for the region.
An updated six-year Rate Model to ensure sound financial planning and reserve
levels.
Ongoing 8.1% melded increases from MWD and CWA are due to the high cost of
supply programs, higher energy costs, and increasing operating costs.
6.6% water rate increase to District customers budgeted for January 1, 2024, and a
4.8% rate increase for sewer, effective January 1, 2024.
xii
Metro sewer costs include the anticipated impact of the City of San Diego’s Pure
Water Program costs.
The District maintains low water rates, below the countywide average of the County’s
24 water agencies.
Fiscal Year 2024-2029 Capital Improvement Program (CIP)
The CIP budget emphasizes long-term planning for ongoing programs to meet population
growth, facilities replacement, and betterment of infrastructure while functioning within
fiscal constraints. The Fiscal Year 2024 CIP budget contains 127 projects and totals $15.3
million. The District categorizes projects into three business segments: potable water,
recycled water, and sewer. Funding for the Fiscal Year 2024 potable, recycled, and sewer
projects are $10.2 million, $ 4.1 million, and $1.0 million, respectively. CIP projects are also
categorized into three categories: expansion, betterment, or replacement.
The following is a breakdown of the CIP projects into the three categories:
Replacement projects $ 14,012,000
Betterment projects 1,014,000
Expansion projects 315,000
Total $ 15,341,000
The Fiscal Year 2024-2029 CIP budget contains 139 projects and totals $148.0
million, increasing by $39.6 million versus last year. The total water CIP budget for the
six-year period is $136.6 million, which is a $38.1 million increase compared to Fiscal
Year 2023, while the sewer CIP of $11.4 million is increasing $1.6 million compared to
Fiscal Year 2023.
The District projects water debt issuances of $25.0 million and $30.5 million in Fiscal Year
2025 and Fiscal Year 2027, respectively. A debt issuance for sewer of $3.7 million
is projected for FY 2027.
Awards and Acknowledgments
The Government Finance Officers Association of the United States and Canada
presented Otay Water District the Distinguished Budget Presentation Award for its
annual budget for the fiscal year beginning July 1, 2022. 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.
xiii
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Operating Budgeting for Fiscal Year 2022-
2023.
The California Society of Municipal Finance Officers presented Otay Water District
the Certificate of Award for Excellence in Capital Budgeting for Fiscal Year 2022-2023.
The Government Finance Officers Association Officers presented Otay Water District
the Certificate of Excellence in Financial Reporting for its Annual Comprehensive
Financial Report for the Fiscal Year ended June 30, 2022.
Conclusion
The District’s Board of Directors met the challenges presented this year with responsibility,
commitment, and persistence to keep the stability and financial strength of the District as
one of its highest priorities. Reserves will be maintained above target levels as will the
District’s debt coverage level. The Board of Directors, management team, and staff are all
committed to efficiency in both District operations as well as in its capital development. With
these efficiencies and the ongoing investment in new technologies, the District has a
competitive edge in providing quality service.
This budget reflects the vision of the District’s Board, management, and staff. The District
will continue to strive to make improvements in budget processes, including an extensive
review and analysis of projections for revenues, expenditures, capital projects, and reserves.
I would like to thank the staff involved in this process for the efforts put forth in the
preparation of this budget to ensure a successful outcome.
To the Board, we acknowledge and appreciate their continued support and direction in
achieving excellence in the financial management and operations of the District.
Jose Martinez, General Manager
xiv
Distinguished Budget Presentation Award
The Government Finance Officers Association presented a Distinguished Budget
Presentation Award to the District for its annual budget for the fiscal year 2022-2023. In
order to receive this award, a governmental unit must publish a budget document that
meets program criteria as a policy document, as an operations guide, as a financial
plan, and as a communications device.
This award is valid for a period of one year only. We believe our current budget
continues to conform to program requirements, and we are submitting it to GFOA to
determine its eligibility for another award.
xv
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Operating
Budget Excellence Award for Fiscal Year 2022-2023.
xvi
Financial Awards
The California Society of Municipal Finance Officers presented Otay Water District the Capital
Budgeting Excellence Award for Fiscal Year 2022-2023.
xvii
Financial Awards
The Government Finance Officers Association Officers presented Otay Water District
the Certificate of Achievement for Excellence in Financial Reporting for its Annual
Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022.
xviii
RESOLUTION NO. 4433
A RESOLUTION OF THE BOARD OF DIRECTORS OF
OTAY WATER DISTRICT ADOPTING THE
FISCAL YEAR 2023-2024
OPERATING AND CAPITAL BUDGET;
AND SALARY SCHEDULE
WHEREAS, the Otay Water District Board of Directors have
been presented with a budget (Exhibit A) for the operation of
the Otay Water District for Fiscal Year 2023-2024; and
WHEREAS, the Fiscal Year 2023-2024 Operating and Capital
Budget, has been reviewed and considered by the Board;
WHEREAS, it is in the interest of the District to adopt a
budget for said year;
WHEREAS, in connection with the adoption of the budget, the
Board is also being presented with the Job Classification and
Salary Schedule (Exhibit B) for its consideration, in order to
comply with California Code of Regulations Section 570.5,
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by
the Board of Directors of the Otay Water District that the
Operating and Capital Budget for the operation of the District,
incorporated herein by reference, is hereby adopted as the
District’s budget for Fiscal Year 2023-2024.
BE IT FURTHER RESOLVED that the Board hereby approves and
adopts the Salary Schedule included with the budget and,
consistent with his authority over employee compensation under
both State law and the District’s Code of Ordinances, authorizes
xix
the General Manager to update the Salary Schedule, whenever
necessary, to reflect changes made within his authority.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
Otay Water District at a board meeting held this 7th day of June
2023, by the following vote:
Ayes: Directors Keyes, Lopez, Robak and Smith
Noes: None
Abstain: None
Absent: Director Croucher
President
ATTEST:
____________________________
District Secretary
xx
Overview
Budget Guide
The District views the budget as an essential tool for proper financial management. This budget is
developed with input from each department of the organization and is set prior to the start of each
fiscal year. It is designed and presented for the general needs of the District, its staff, and citizens.
The budget is a comprehensive and balanced financial plan that features District services, resources
and their allocation, financial policies, and other useful information to allow the users to gain a
general understanding of the District’s financial status and future plans. To help readers navigate this
document, the following is a general description of each of the tabulated sections of the budget.
Overview
This introductory section contains general information about the District such as: mission statement,
vision, statement of values, District formation, organizational chart, and the budget process and
calendar.
Community Profile
This section contains the demographics of the District along with the current and projected
economic conditions and water and sewer rate comparison. It also includes statistics on the District’s
customers, the region’s tax base, rainfall, future development, and projects that will have an impact
on the District in the coming years.
Strategic Plan
The Strategic Plan is the core document which guides the District’s efforts to meet and positively
adapt to change. The overall plan is extensively reviewed and revised every three-to-four years. This
current edition (covering fiscal years 2023-2026) is a continuation of the 2019-2022 plan and is the
seventh multi-year plan dating back to 2002. Included in this section are the District’s perspectives,
goals, key performance indicators, measurement methods, targets for each department, and the
historical results of each key performance indicator.
Financial Summaries
This section contains an overview of the District’s revenues and expenditures by fund for the current
budgeted fiscal year, the prior year’s actual amounts, and the future estimated amounts. It includes
a description of each of the revenue and expense categories as well as charts depicting their
relationships.
Five-Year Forecast
The District prepares a comprehensive Rate Model each year based on budget input, trends, new
programs, and requirements. Estimates are made for cost increases, rate increases, targeted fund
balances, capital needs, and debt requirements. Analysis for the current budget year plus five
subsequent years is conducted and a six-year forecast is prepared based on the Rate Model results.
This process helps the District make informed decisions and ensure long-term financial stability.
1
Overview
Revenues and Expenditures
The District budgets revenues and expenditures by Potable, Recycled, and Sewer systems. General
revenues and expenditures that are not specific to one system or department are budgeted in the
General Revenues and Expenses section. An allocation of overhead costs is made to equitably
distribute the cost of running the District among the various business segments enabling the District
to effectively manage its financial resources and allocate expenses in a balanced manner across
different operational areas.
Departmental Operating Budget
This section provides a summary of each department’s operating expenditures and detailed budgets
including its mission, responsibilities, three-year staffing schedules, and accomplishments. Also
provided are graphical presentations of departmental budget percentages to District totals, as well
as summary expenditure information by division for three fiscal years.
Capital Budget
An overview of the District’s Capital Improvement Program (CIP), the Water Resources Master Plan,
the Sewer Master Plan, major assumptions and criteria, a six-year listing of CIP project expenditures
justifications, and the impact on the Operating Budget and capital purchases budget for the fiscal
year are located in this section. The District also publishes a separate six-year Capital Budget that
provides more detail of each project (budget amount, description, justification, comments, fund
details, expenditure schedule and a map of the project location). The FY 2024-2029 Six-Year Capital
Budget is available on our website at otaywater.gov/cip.
Policies
This section includes a summary of the District’s financial policies and practices, including the
Reserve Policy, Investment Policy, and Debt Policy.
Appendix
The last section consists of a Glossary, List of Acronyms, and an Index.
2
Overview
Mission Statement
To provide exceptional water and wastewater service to its customers, and to manage District
resources in a transparent and fiscally responsible manner.
Vision
To be a model water agency by providing stellar service, achieving measurable results, and
continually improving operational practices.
Statement of Values
As Otay Water District employees we dedicate ourselves to:
Customers:
We take pride that our commitment to customer-centered service is our highest priority.
Excellence:
We strive to provide the highest quality and value in all that we do.
Integrity:
We commit ourselves to doing the right thing. Ethical behavior, trustworthiness, and accountability
are the District’s foundation.
Employees:
We see each individual as unique and important. We value diversity and open communication to
promote fairness, dignity, and respect.
Teamwork:
We promote mutual trust by sharing information, knowledge, and ideas to reach our common goals.
Innovation:
We constantly seek better, more efficient, and cost-effective ways to deliver our services.
3
Overview
District Formation
The Otay Water District was formed in 1956 by a small group of ranchers, farmers, and other property
owners concerned about the declining quality and quantity of well water. The District was
established to serve as a public water and sewer agency, authorized as a California special district
under the provisions of the Municipal Water District Act of 1911. In 1957, developers in south Spring
Valley created the La Presa County Water District to obtain water from the San Diego County Water
Authority (CWA). The CWA is the wholesale water supplier of the member agencies in San Diego
County. In the fall of 1969, Otay Water District and La Presa County Water District merged into the
Otay Water District. Since then, the District has provided high quality water to a semi-arid region of
southeastern San Diego County. In 1971, the District constructed a small collection and treatment
plant for sewer in the northern section of the District, and in 1980 the District opened the Ralph W.
Chapman Water Recycling Facility (RWCWRF). Recycled water from the RWCWRF is used to irrigate
a golf course, schools, public parks, roadway landscapes, and various other approved uses in
eastern Chula Vista. The RWCWRF is capable of recycling wastewater at a rate of 1.3 million gallons
per day (1,200 acre-feet per year). The District is also in partnership with the City of San Diego to
beneficially reuse an additional 2,697 acre-feet per year of recycled water for fiscal year 2024, and
ultimately up to 5,900 acre-feet per year. The District continues to be the largest retail provider of
recycled water in the County of San Diego.
The District also owns and operates a wastewater collection system providing public sewer service
to approximately 4,750 customer accounts within the Jamacha drainage basin. The sewer service
area covers approximately 8,800 acres, which is about 11% of the District’s total service area.
Residential customers comprise 97% of the sewer customer base.
Service Area
The District's boundaries encompass an area of approximately
125.3 square miles or 80,208 acres in San Diego County, lying
immediately east of the City of San Diego metropolitan area and
running from the City of El Cajon south to the international border,
abutting the cities of El Cajon and La Mesa and encompassing most
of the City of Chula Vista and a small portion of the City of San Diego.
The District purchases 100% of its treated water. Regionally, about
72% is imported, which is a blend from the Colorado River and the
California State Water Project. Twenty-eight percent of the District’s
treated water comes from local supplies, including groundwater,
local water storage within the county and from the Pacific Ocean via
seawater desalination. The District purchases its treated water from
the San Diego County Water Authority and receives a blend of
treated water from the Metropolitan Water District of Southern
California’s R.A. Skinner Treatment Plant, the San Diego County
Water Authority’s Twin Oaks Valley Water Treatment Plant, the
Carlsbad Desalination Plant, and the Helix Water District’s R.M. Levy
Water Treatment Plant.
4
Overview
Organizational Structure
The District has a five-member Board of Directors that serve four-year, alternating terms on the
Board. Each Director is elected by voters within their respective division boundaries to represent the
public’s interest with regard to rates for service, taxes, policies, ordinances, and other matters related
to the management and operation of the District. The Board generally meets in open public session
on the first Wednesday of each month at 3:30 p.m. at the District headquarters located at 2554
Sweetwater Springs Boulevard, Spring Valley, California. Board meetings are live streamed online.
Collection,
Treatment, and
Reclamation
Operations
District Secretary
General Counsel
Public Information
Conservation
Citizens and
Customers Board of Directors
General Manager (4)
Safety and
Security
Administration
Purchasing
and Facilities
Controller and
Budgetary
Services
Treasury and
Accounting
Services
Customer
Service
Meter
Services
Water System
Operations
Utility
Maintenance/
Construction
Water Resources,
Planning, Design
and
Environmental
Administrative
Services
(23)
Human
Resources
Information
Technology
and
Geographic
Information
System
Finance
(31)
Strategic
Planning
Public Services
and
Field Services
Engineering
(29)
Water
Operations
(57)
5
Overview
Budget Process
The District has integrated the Capital Improvement Program (CIP) Budget and the Operating
Budget. These budgets are developed based on the District’s Water Facilities Master Plan, the Sewer
System Management Plan, and Strategic Business Plan. New initiatives and programs are
categorized into the Balanced Scorecard perspectives. Appropriate budget amounts are determined
by using the historical data of operations and new growth, developers’ input, SANDAG projections,
and economic outlook.
To assure reliable and high-quality service to the growing customer base, the District has committed
to a number of long-range strategies that drive the budgeting process. The strategies and
assumptions used to develop the District’s six-year integrated budget are:
An average projected long-term growth rate of 0.25%.
Pass-through rate increases for costs imposed on the District by the wholesale water
providers.
Accurate projections of capital budget needs (including replacement needs).
Reserve funding in accordance with the Reserve Policy to meet future growth demands and
maintain financial stability.
Funding of the Strategic Plan initiatives as categorized into the Balanced Scorecard
perspectives.
Avoid rate spikes by leveling rate increases over a six-year period.
The Finance Department prepares the budget for the potable, recycled, and sewer systems. This is
done using estimated changes in costs from the District’s wholesale water providers as well as
estimated changes in sewer charges provided by the County and City of San Diego. Other significant
factors in the budget development include estimated water volumes, water cost projections, debt
6
Overview
coverage for current and future debt issuances, reserve levels, projected growth in customer
accounts, and weather. Additionally, all general revenue and expense budgets are calculated using
trend analysis and any external factors that may affect these items.
Personnel Budget
The budgeting of salaries and benefits is performed in the position budgeting module of the
Enterprise Resource Planning (ERP) system. This tool allows the District to budget for each
authorized position and the associated benefits in an automated fashion. Departments submit
requests for new positions, reclassifications, or advancements to the General Manager. Upon their
approval, the Finance Department enters these changes, as well as negotiated pay increases and
benefit rate changes, into the position budget system. Position budgeting calculates the salaries and
benefits to be included in the District’s budget.
Administrative and Materials and Maintenance Budget
Administrative and Materials and Maintenance expenses are entered into the budget model of the
ERP system by individual department requests. These requests are compared to last year’s budgeted
and actual expenses to determine reasonableness by the Finance Department. All costs are justified
and supported by explanations. Finance compiles the operating budget and submits it to the General
Manager for review prior to presentation to the Board of Directors.
Capital Improvement Plan (CIP) Budget
The Engineering Department issues budget instructions for the CIP budget process. Each year, all
existing CIP projects are reviewed and capital project costs are adjusted and/or closed as
appropriate. This requires each project manager to review the year-to-date project expenses and
then estimate costs to the end of the fiscal year. They also project future costs to complete the project.
Adjustments to capital project expenses include scope changes and/or construction cost increases.
District Chiefs discuss the cost-benefit of projects, evaluate the reasonableness of the project budget,
current and alternate funding source(s) as well as the timing and/or priority of the project. All new
CIP project requests and significant changes to existing projects are reviewed and approved by all
District’s Chiefs and the General Manager. All CIP projects are entered into the CIP Budget
application. The Engineering Department works closely with the Finance Department to finalize the
six-year CIP Program Budget. Finance ensures that the District funding and reserve levels are
maintained in accordance with the District’s policy. Engineering then compiles the six-year CIP
Program Budget and submits it to the General Manager for review prior to presentation to the Board
of Directors.
Budget Control and Jurisdiction
The District has a four-year Strategic Plan, and each year in the spring, the portion of the plan that
pertains to the upcoming fiscal year is presented to the Board of Directors for review and direction.
This is followed by a coordinated presentation of the budget by all departments, to the Board of
Directors for their approval at the Board meeting in June. The review of the Strategic Plan and the
adoption of the budget on an annual basis give the District its direction for the following fiscal year.
During the year, each department receives monthly budget and actual cost reports that are essential
7
Overview
to monitor and control costs. As events occur or conditions change, modifications to or deviations
from the original budget may be necessary. The General Manager has the authority to transfer
appropriations within the budget allocations or request that the Board of Directors increase the
current budget.
Once adopted, District staff allocate the annual budget amounts to months based on historical
trends, the timing of anticipated activities, or a straight-lined approach. On a monthly basis, staff
prepares an operating financial statement comparing year to date results to budget, which is
included in the District’s monthly Board package. On a quarterly basis, staff prepares a comparison
of actual to budgeted CIP expenditures, which is also reported to the District’s Board of Directors.
The budget report is intended as a financial guide and may be modified by the Board of Directors
during the fiscal year. All approved modifications to the budget are documented in the form of a staff
report and noted in the Board meeting minutes.
Due to the size of the District’s CIP, a separate budget book has been prepared outlining in detail the
projects and expenditures required to ultimate build-out. A synopsis of the CIP may be found under
the Capital Budget section of this report. As part of the integrated budget, capital purchases have
been included within the CIP Budget.
Budget Basis
The District utilizes the accrual basis for budgeting which is the same as the basis of accounting
used in the audited financial statements, recognizing revenues and expenses in the period in which
they are earned and incurred, regardless of the timing of cash receipts and disbursements. The
District reports its activities in enterprise funds, which is used to account for operations that are
financed and operated in a manner similar to a private business enterprise and conforms to the
guidelines of Generally Accepted Accounting Principles (GAAP). It is the intent of the District to
recover the costs (including replacement cost of existing assets) of providing goods or services to
the general public on a continuing basis, through financing or primarily through user charges.
Fund Structure
The District operates three major distinct business segments: Potable water, Recycled water, and
Sewer. Each business segment categorizes revenue and expenditure as a function of the Operating
Budget, Capital Improvement Plan Budget, or Developer Deposits. Please refer to the District’s
Reserve Policy, beginning on page 165, which provides the detailed flow of funds.
Recycled Sewer
Sewer
Operating
Budget
Sewer
CIP Budget
Sewer
Developer
Deposits
Recycled
Operating
Budget
Recycled
Developer
Deposits
Recycled
CIP Budget
Potable
Potable
Operating
Budget
Potable
CIP Budget
Potable
Developer
Deposits
8
Overview
Public Input
The District’s budget process begins in January and ends with the adoption of the next fiscal year
budget at the June Board meeting, and implementation of rates the following January. The budget
is typically presented to the Board in three stages in which the public has the opportunity to provide
input and comment at each stage. The stages consist of: 1) Economic study and growth projections
at the April regular Board meeting, 2) Major budget assumptions at a workshop held in late April, and
3) Final budget adoption at the June regular Board meeting. Agendas and Board packets are posted
on the District’s website in advance of the meetings.
Budget Calendar
December/January
The Finance Department posts a budget workbook on the District’s intranet which provides
instructions on the upcoming operating budget deadlines, budget procedures for personnel,
administrative expenses, and materials and maintenance expenses. Included in this workbook are
historical trends, assumptions, and instructions on how to enter the expense data into the District’s
budget module. For the six-year Capital Budget process, the Engineering Department provides
Chiefs with the upcoming CIP deadlines and procedures.
February
Chiefs submit requests to Human Resources for personnel reclassifications, advancements, long
term staffing and new personnel. Human Resources evaluates the requests and provides
recommendations to the General Manager. Human Resources notifies the Chiefs of the status of the
requests and Finance is provided with preliminary personnel changes.
Departments enter their administrative and materials and maintenance budget requests in the
budget module and provide their current year-end projections to Finance. Variance explanations are
provided comparing the current year’s budget versus the current year projected expenditures and
the current year’s projected expenditures versus the next fiscal year’s budget requests. Finance
reviews the year-end projections for reasonableness and documents the explanations of the
variances for review by the Management and Executive Team. CIP project managers review and
update their existing CIP projects, identify completed projects and submit new CIP projects to
Engineering for consideration. The CIP budget requests are reviewed with the General Manager.
March
The Finance Department meets with Chiefs and Section Managers of all departments to review their
current year administrative, materials and maintenance expenditures, year-end projections, and the
preliminary budget requests. Finance finalizes the explanations of the variances and consolidates
the year-end projections and the new fiscal year’s budget requests for the Management Team’s
review and discussion.
Human Resources finalizes new personnel requests, reclassifications, and change requests with the
General Manager and provides it to Finance for budgeting. The Engineering Department reviews the
CIP budget with the Finance Department and provides year-over-year explanations of the changes.
Once the General Manager has reviewed the preliminary CIP, Finance staff enters the proposed CIP,
administrative, material, labor, energy, water purchase, and treatment costs into the Rate Model to
9
Overview
develop a finance strategy for funding the projected operating and CIP needs of the District via a
combination of water rates, sewer rates, and debt issuances that meet the District's financial
objectives. Other data incorporated into the Rate Model includes the six-year operating revenues
and expenses, multi-year CIP expenses, reserve funding, reserve levels, and debt issuances. Inflators
for cost and volume are applied to project the next six years of revenue and expenses. The debt
coverage ratio is also evaluated to ensure adequate levels. Projected rates are then set for the current
fiscal year, plus five subsequent years, such that all financial targets are met. Using this
comprehensive modeling tool, the District is able to smooth future rate increases, determine when
debt should be issued, and maintain all the reserve levels in accordance with the Reserve Policy.
April
Finance provides the Management Team preliminary budget schedules containing key budget
assumptions for their review and incorporates recommended changes.
During the regular Board meeting, the independent consultant presents the District’s economic
outlook report. This report is used by the Engineering Department to validate growth projections,
meter sales and construction climate.
In late April, staff conducts a budget workshop during a Special Board meeting to review Strategic
Plan initiatives, discuss the key budget assumptions, and provide preliminary information on the
Capital Improvement Program Budget.
May
Based on the Board and public’s input from the April Special Board meeting, staff may modify the
budget for final presentation and approval in June.
June
At the regularly scheduled public June Board meeting, staff presents the consolidated operating and
CIP budgets, along with the recommended changes to water and sewer rates and charges, to the
Board for approval. Generally, no modifications are made to the proposed budget once adopted.
However, as events occur and/or conditions change, a modification to a specific budget item may
be necessary. In such an event, a modification is documented in the form of a staff report and
presented to the Board for approval. The modification may occur any time of the year.
July
Water and sewer rate increase notices containing changes in rates, fees, and charges, effective
January 1, 2024, are included as inserts with regular monthly bills for all customer classes.
January 2024
Water and sewer rates, fees, and charges become effective January 1, 2024.
10
Overview
Budget Calendar
December/January February March-April May-June July-January 2024
12/2/22
Budget instructions
and workbooks for
the Operating and
Capital Budget are
distributed to
departments
1/3/23
Labor Budget
Worksheets are
distributed to
departments
1/11/23
Project managers
submit CIP Budgets
for New Projects and
changes to existing
Projects in CIP
Budget Application
1/31/23
Finance initial review
of CIP Budget with
Chief of Engineering
including year over
year explanations
2/2/23
Chiefs to submit Capital
Purchases and
justifications
2/7/23
Chiefs to submit Operating
and Admin Budget
requests
2/9/23
Chiefs to submit request
for new personnel,
personnel reclassification
changes, Position Analysis
Questionnaire,
advancements, and long-
term staffing to HR
2/10/23
Chiefs to submit Labor
Budget Worksheets
2/15/23
Finance second review of
CIP Budget with Chief of
Engineering including year
over year explanations
2/23/23
HR to complete preliminary
review of new personnel,
personnel reclassification
changes, requests, and
advancements
3/1/23
Chiefs to finalize CIP
projects and sign-off on
new projects
3/2/23
HR to review new
personnel,
reclassifications and
change requests with
General Manager
3/7/23
CIP Budget finalized with
Management Team
4/5/23
Economic Outlook
presented to Board by
external Economist
4/10/23
Finance to review
Department Operating
Budgets and personnel
cost with Management
Team
4/17/23
FY 2024 Key Budget
Assumption practice run-
through
4/26/23
Key Budget Assumption
Workshop to discuss
budget key figures and
assumptions
5/4/23
Review assumptions
and rates with
Management Team
5/15/23
FY 2024 Budget
Practice Run-through
5/16/23
Preliminary Budget
provided to
Management Team
for review
6/7/23
Budget Presentation
at the regular Board
Meeting – approval
of the FY 2023-2024
Operating and
Capital Budget and
FY 2024-2029 Capital
Improvement
Program Budget
7/19/23-8/18/23
Rate increase notices
inserted with water
and sewer billing
1/1/24
The 2024 water and
sewer rates, fees,
and charges are
applied to customer’s
monthly billing
11
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12
Community Profile
Demographics
The City of Chula Vista is the second largest city in the San Diego metropolitan area and most of the
City east of the I-805 freeway is within the District’s service area. The following reflects the
demographics of the City of Chula Vista:
Demographics
Population – City of Chula Vista 279,170
Otay Water District population served (estimated) 240,290
Persons/Household 3.39
Ethnic/Racial makeup (City of Chula Vista)
Hispanic 60.2%
Non-Hispanic White 16.3%
Asian 15.4%
Black 5.3%
Other 2.8%
Median Age 36
Median Household Income $92,913
Percentage with 4-year degree or higher 30.3%
Source: San Diego Association of Governments, Current Estimates and
United States Census Bureau
Service Area Assessed Valuation
The District’s service area encompasses property with approximately $40.1 billion of assessed
valuation. Properties are assessed at 100% of their full value less exemption from taxation under the
law and homeowner’s exemptions. The District receives its portion of the 1% property tax according
to Proposition 13 and AB8. With the very recent increases in the assessed valuation, the District will
benefit by receiving its proportionate share of this increase.
Six-Year Service Area Assessed Valuation
$29.4 $30.8 $32.6 $34.6 $36.2 $40.1
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Bi
l
l
i
o
n
s
13
Community Profile
Ten Principal Taxpayers – Fiscal Year 2024
Organization Assessed Percent
Value to Total
1. Amazon.com Services, LLC $ 340,304,461 0.82%
2. Rancho Investors, LP 178,866,782 0.43%
3. Eastgroup Properties, LP 177,444,195 0.43%
4. John Hancock Life Insurance Co USA 163,830,523 0.39%
5. Lipt Sanyo Avenue, LLC 159,732,000 0.38%
6. Corrections Corporation of America 158,518,511 0.38%
7. CH Realty - Otay Mesa Business Park, LP 143,952,600 0.34%
8. Chula Vista Apartments, LLC 136,883,735 0.33%
9. Otay Enrico Industrial, LLC 130,764,883 0.31%
10. Regulo Place Apartments Investors, LLC 127,738,226 0.31%
Total Top Ten Principal Taxpayers $ 1,718,035,916 4.12%
Total Service Area Assessed Valuation $ 41,742,379,981
Source: County of San Diego Auditor and Controller
Ten Largest Customers – Fiscal Year 2023
Customer Name Customer Type Annual Revenues
% of
Water
Sales
1. City of Chula Vista Publicly Owned $ 4,215,277 4.2%
2. State of California Publicly Owned 1,728,000 1.7%
3. County of San Diego Publicly Owned 1,596,017 1.6%
4. Sweetwater School District Publicly Owned 1,475,805 1.5%
5. Chula Vista School District Publicly Owned 1,092,970 1.1%
6.Eastlake III Community Association Commercial 976,591 1.0%
7. Sycuan Commercial 708,419 0.7%
8. Eastlake Country Club Commercial 679,922 0.7%
9. Elite Athlete Services, LLC Commercial 615,574 0.6%
10. Southwestern College Publicly Owned 563,077 0.6%
Total Top Ten Customers $ 13,651,652 13.7%
Total Water Sales $ 99,901,174 100.0%
14
Community Profile
Water Rate Comparison, Member Agency Water Rates (1)
The District strives to remain cost effective in its rate setting by controlling operating costs, yet
passing through the full cost of supply. In August 2023, the District conducted a survey of the water
rates of the water providers within San Diego County. The following chart shows that the District has
the ninth lowest water rate in the region.
Projected Water Bill for FY 2024
Based on 10 Units of water used and ¾” residential meter size
144.89
140.12
127.25
125.94
124.11
121.25
112.09
105.78
103.45
99.90
99.44
99.17
96.50
95.64
93.35
91.21
88.94
82.62
79.15
78.84
76.25
67.47
$0 $20 $40 $60 $80 $100 $120 $140 $160
22
21
20
19
18*
17*
16*
15*
14
13
12
11
10
9
8
7*
6*
5*
4
3
2*
1*
*At the time of the survey in August 2023, the member agency's FY 2024 rate was unavailable. An estimated
increase was applied equal to the other districts’ average FY 2024 known rate increases.
(1)Only 22 of the 24 member agencies are surveyed. Camp Pendleton is not included in this survey due to being a
Marine Corps Base. The City of National City is not included because their water is supplied by Sweetwater.
15
Community Profile
Sewer Rate Comparison
The District conducted a survey of the rates of the sewer providers within San Diego County. Sewer
rates are billed at either a fixed or variable rate. The following chart shows the various sewer
providers and the rate that is charged to the consumers. The District has the fourth lowest sewer rate
in the County of San Diego.
145.94
104.86
91.84
88.86
85.11
84.80
82.60
81.08
75.32
69.65
66.57
65.36
64.23
62.78
61.72
60.95
59.55
59.00
55.25
54.60
53.61
51.74
51.06
49.35
49.23
45.56
40.84
38.12
$- $20 $40 $60 $80 $100 $120 $140 $160
28
27
26
25
24*
23
22*
21
20*
19
18
17
16
15
14*
13*
12*
11
10
9
8*
7
6*
5
4
3
2*
1
Projected Sewer Bill for FY 2024
Based on 10.5 Units of water used and ¾” residential meter size
*At the time of the survey in August 2023, the member agency's FY 2024 rate was unavailable. An estimated
increase was applied equal to the other districts’ average FY 2024 known rate increases.
16
Community Profile
San Diego Rainfall
San Diego received above average rainfall of 17.12 inches in Fiscal Year 2023. San Diego's average
rainfall over 10 years is 9.94 inches; the 20-year average is 9.52 inches; the 30-year average is 9.40
inches; and the 40-year average is 9.77 inches.
San Diego rainfall, while a contributing factor, is not the only controlling factor for our potable water
supply shortage. The San Diego region imports 72% of its potable supply, so conditions elsewhere
significantly affect the actual amount of water available to the District. In the event the amount of
water supplied to the District is reduced, water sales revenues would decrease. Related water
purchase expenses would also be reduced, mitigating the impact of the decrease in revenues. The
amount of any supply reduction would dictate the magnitude of the District's response and type of
reaction.
Current Economic Conditions
San Diego County Water Supply
A safe, reliable water supply is crucial for the vitality of the San Diego region’s economy and quality
of life of its residents. San Diego County imports approximately 72% of its water from the Colorado
River and Northern California. Since these sources face legal and environmental constraints, the
region has been making investments in the region’s water delivery and storage system and exploring
other avenues to ensure an adequate water supply. This includes water recycling, water-use
efficiency programs, water storage, groundwater desalination, and seawater desalination.
Desalinated Water Supply
In December 2015, the Claude “Bud” Lewis Carlsbad Desalination Plant began producing
approximately 50 million gallons of water per day to the CWA, enough to serve approximately 400,000
5.06
9.03
10.82
12.97
3.40
12.62
16.65
4.93
6.83
17.12
0
2
4
6
8
10
12
14
16
18
20
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
In
c
h
e
s
San Diego Rainfall
Fiscal Years 2014 - 2023
Annual Rainfall 10 year average
Source: Weather Underground
17
Community Profile
people, meeting more than 10% of the region’s demand. Since the production of desalinated water
from the Carlsbad plant, the District’s customers have received a portion of this highly reliable,
drought-proof water supply. The amount of desalinated water that the District’s customers receive
fluctuates daily based on a variety of factors including the CWA’s potable water demands.
Challenges
The District’s operating and CIP budgets are affected by rising inflation, regulatory compliance
requirements, and endeavors related to the District’s strategic plan. The FY 2024 impact of inflation
on material and administrative expenses is approximately $1.2 million, while the inflationary impact
to the CIP is estimated to be $18.4 million for the six-year projection. In addition, SDG&E rate
increases are anticipated to raise the District’s FY 2024 energy costs by 10.1%, or approximately $392
thousand. This energy cost increase is primarily due to an estimated overall 10% SDG&E rate
increase in FY 2023 and a 14% projected increase in FY 2024. Furthermore, regulatory mandates are
similarly adding pressure to both the operating and CIP budgets. Regulatory costs increased the FY
2024 material and administrative expense budgets by $848 thousand.
The District partially mitigates inflationary impacts through increasing returns on investments and
long-term contracts with pricing structures that are fixed for the duration of the contract or include
pricing structures whereby annual price increases are for fixed dollar amounts that are less than CPI
levels.
Although federal interest rates are rising to combat inflation, the London Moeder Advisors’ economic
report indicates inflation will likely continue well into 2024, albeit, at a more moderately tempered
pace than what the nation has experienced over the last two years. The tempered pace is supported
by the March 2023 CPI data which was at 5.3% inflation rate. For the FY 2024 six-year rate model,
staff is assuming administrative and material inflation to decrease gradually from 5.5% in FY 2025 to
4.0% by 2028.
Economic Outlook
At the start of each budget cycle, the District enters into a contract with an economist to complete
an economic and demographic analysis of the national and local economy. The study also provides
information on the changes in population, residential and commercial development within the
District service area. The following highlights the report:
San Diego County’s economy has mostly recovered from the pandemic downturn of early
2020 despite civilian employment still missing more than 6,000 jobs since just prior to the
pandemic. The unemployment rate dropped to 2.9% in December and is lower than the
National and State rates of 3.5% and 4.1%, respectively. San Diego’s economy is expected to
continue to outpace the State and National economies.
San Diego County added 37,500 jobs in 2022 – a 2.5% increase. 2023 is expected to soften
somewhat with a dip in job additions and a likely increase in the unemployment rate in the
County.
With the exception of Manufacturing and Financial Activities, all of the region’s sectors
18
Community Profile
Cottonwood Sewer Pump Station
experienced year-over-year growth. Leading the way was the Leisure & Hospitality sector
which increased by 9.9% or 18,100 jobs.
San Diego County’s population has declined in each of the last two years. The cause is two-
fold. The population’s natural increase (births over deaths) is declining while at the same
time, more people are leaving the County (and State) than are entering. This has resulted in
population declines in each of the last two years. We expect this trend to continue.
Housing construction is forecasted to average 8,000 to 10,000 units annually during each of
the next six years, with as much as 20% of that growth in the District’s service area.
Affordability will be a concern countywide as upward pressure on mortgage rates (which
decreases the maximum amount that a buyer can borrow) coupled with a supply
constrained market will ultimately drive prices up, but at slower rates than in recent years.
As much as 70% of the new housing in the District’s service area will be attached, both for-
sale and rental. The preponderance of attached housing (combined with mandated
conservation efforts) will inevitably result in substantially less water usage per household.
Commercial development in the District’s service area is expected to increase as office and
retail space ramps up in the Millenia masterplan along with industrial development in Otay
Mesa.
The Future
Capital Improvement Program
The District provides water and sewer service to a population of over 240,000 customers, including
residential, business, government, industrial, and agricultural water users across urban, suburban,
and rural areas. The District’s service area population is projected to grow by 13% to 271,531
residents by 2055. To ensure a reliable water supply and sewer system for the future including
sustaining the current infrastructure, the District has developed several future planning documents,
which provide a guide to defining the District’s proposed projects. These planning documents
include: the District’s 2015 Water Facilities Master Plan Update, Wastewater Management Plan, 2020
Urban Water Management Plan, 2015 Integrated Water Resources Plan, and 2023-2026 Strategic
Plan.
The major projects planned for delivery over the next six fiscal years include:
Pipeline Replacement Projects (39 Total)
Reservoir Construction or Rehabilitation Projects (16 Total)
Meter Replacement
Pump Station Replacement and Rehabilitation
Pipeline Misc. Appurtenances
Sewer Basin Improvements
Equipment & Vehicles
RWCWRF Projects (10 Total)
19
Residential Construction
The following table summarizes the projected new units for sale and new units for rent from Fiscal
Year 2023 through Fiscal Year 2029. The average annual total residential units are projected to be
1,479. The consensus among developers is that future attached projects, including multifamily
rentals, will choose to outfit projects with master water meters and submeters for each unit.
Source: London Moeder Advisors Economic Report, March 2023
Commercial Construction
Commercial construction in the District area will be largely industrial with over 2 million square feet
under construction and expected to deliver in the first half of 2023. Office development is expected
to be significant with the Think.Discover.Invent. office complex in Millenia underway in 2023. Two
hotel projects are in the pipeline, one under construction that is expected to deliver at the beginning
of 2024, and one expected to start construction at the end of 2023.
Projected New Residential Construction (Otay Water District Service Area)
FY 2023 through FY 2029
2023 2024 2025 2026 2027 2028 2029 Total Avg.
Annual
Attached (For Sale) 131 554 392 585 320 495 460 2,937 420
Attached (Unknown) 0 0 0 29 591 697 647 1,964 281
Detached 91 152 84 154 200 261 200 1,142 163
Multifamily
(incl. Affordable)
809 785 1,136 382 421 440 340 4,313 616
Total 1,031 1,491 1,612 1,150 1,532 1,893 1,647 10,356 1,479
% Multifamily
(incl. Unkn Att)
78.5% 52.6% 70.5% 35.7% 66.1% 60.1% 59.9% 60.6%
Community Profile
Future Development
Using the economist’s report, the District’s engineering staff projects that over the next six years, the
District will sell another 1,123 meters which translates to 3,964.5 equivalent dwelling units (EDUs).
These projections have been incorporated in the Five-Year Forecast on page 51.
Projected Meter Sales in Equivalent Dwelling Unit (EDUs)
87
7
81
1
61
1
50
0
62
3
54
4
0
200
400
600
800
1,000
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
20
Community Profile
Commercial Pipeline Anticipated Delivery
Year Industrial Office Retail
(Storefront)
Retail (Strip
Center)
Total Hotel
2023 2,184,809 SF 2,184,809 SF
2024 0 SF 179 Rooms
2025 0 SF 130 Rooms
2026 55,000 SF 55,000 SF
2028 3.52 Acres
Unknown 937,247 SF 1,450,550 SF 59,973 SF 2,447,770 SF
Total 3,122,056 SF 1,450,550 SF 55,000 SF 59,973 SF 4,687,579 SF 309 Rooms
Source: London Moeder Advisors Economic Report, March 2023
Of the 2,447,770 square feet of development with unknown delivery dates, half is expected to start
construction in the first half of 2023. This includes 168,000 square feet in the above mentioned
Millenia office complex and 59,973 square feet of retail strip center in three different projects.
Commercial Pipeline Anticipated Construction Start (Unknown Delivery)
Year Industrial Office Retail
(Storefront)
Retail (Strip
Center)
Total
2023 913,126 SF 168,000 SF 59,973 SF 1,141,099 SF
2024 24,121 SF 24,121 SF
2025 0 SF
2026 0 SF
2028 0 SF
Unknown 1,282,550 SF 1,282,550 SF
Total 937,247 SF 1,450,550 SF 0 SF 59,973 SF 2,447,770 SF
Source: London Moeder Advisors Economic Report, March 2023
21
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22
Strategic Plan
Strategic Planning Process
The Otay Water District’s Strategic Plan (Plan) serves as the blueprint for defining operational
objectives and guiding the tasks undertaken by District staff. The current Plan was formed as a result
of a number of planning sessions(1) which identified risks and opportunities in order to develop short
and long-term goals. The Plan is a compass for implementing initiatives, allocating resources, and
fostering partnerships with stakeholders. Leveraging the Balanced Scorecard Performance
Management System, the Board of Directors, Senior Management, and staff operate under a
targeted strategy to further shared objectives that optimize its finite resources. Moreover, the Plan
underscores our dedication to upholding our reputation as a model public agency, solidifying
stakeholder trust through prudent financial management, responsible operational best practices,
and impactful leadership.
This balanced approach translates the District's strategic objectives into performance indicators
distributed among four essential perspectives: Financial, Customer, Internal Business Processes,
and Learning and Growth. Each of the four business perspectives forms the fundamental
cornerstone of the District’s strategic planning efforts, encompassing:
Customer: Elevate customer satisfaction and instill greater confidence
Financial: Demonstrate excellence in stewardship and financial accountability
Internal Business Process: Efficiently manage and elevate internal process excellence and
organizational performance
Learning and Growth: Foster a foundation based on people, safety, and environmental
consciousness within our organization
The District also participated in the annual American Water Works Association's (AWWA) Utility
Benchmarking Program for the second consecutive year, focusing on utility performance indicators.
This program tracks utility performance metrics established and utilized by water industry experts
across the United States. The progress of strategic objectives and corresponding performance
indicators is presented biannually to both the public and Board of Directors.
As we embark on the second year of our present Plan, we focus on areas including financial analysis
for long-term benefits, succession planning, transferring knowledge, promoting positive work culture,
enhancing customer service, fortifying cybersecurity measures, and optimizing asset management.
These strategic goals are further elaborated within project charters, outlining performance metrics
aligned with each objective.
The following pages contain details of the District’s perspectives, goals, key performance indicators,
measurement methods, and targets for each department.
(1) A detailed discussion of the Strategic Plan process is found on page 15 of the District's Strategic Plan.
23
Key Performance Indicators: General Manager
Performance Indicator Definition Measurement
Method Target
Customer Opinion
Survey
To provide information
to the District about
customers’
perceptions, opinions,
and satisfaction as they
relate to the District
and its services.
Multiple recruiting
methods (email and
telephone) and multiple
data collection
methods (telephone
and online)
85% or greater
satisfaction
FY 2022 FY 2023 (1)FY 2024 (2)
Target N/A 85%N/A
Actual N/A 85% N/A
(1) FY 2023 is the first year for this key performance indicator
(2) Key performance indicator is measured biennially to triennially
Strategic Plan
Cu
s
t
o
m
e
r
Goal
Enhance customer and community engagement to increase
public awareness of the water industry and the District, while
continuing to provide superior customer service.
24
Key Performance Indicators: Administrative Services
Performance Indicator Definition Measurement
Method Target
Business Recovery
Exercises
Exercises focused on
recovering data,
restoring essential
business applications,
and continuing
operations following an
unplanned network
outage.
Number of business
recovery exercises
completed annually
2 exercises completed
annually
FY 2022 FY 2023 (1)FY 2024
Target N/A 2 2
Actual N/A 2 2 (2)
Performance Indicator Definition Measurement
Method Target
Vulnerability
Assessment
Assessments designed
to identify and classify
security vulnerabilities.
Its purpose is to reduce
the possibility of
unauthorized access to
sensitive systems and
data.
Number of vulnerability
assessments
completed annually
2 assessments
completed annually
FY 2022 FY 2023 (1)FY 2024
Target N/A 2 2
Actual N/A 2 2 (2)
Performance Indicator Definition Measurement
Method Target
Injury Incident Rate(3)(4)
Measures the rate of
work-related injuries
and illnesses.
(Number of recordable
injuries/illnesses x
200,000 average hours
worked)/total hours
employees worked
No more than 4.1
incidents per 200,000
hours worked annually
FY 2022 FY 2023 FY 2024
Target 4.1 4.1 4.1
Actual 5.1 4.1 3.7 (2)
(1) FY 2023 is the first year for this key performance indicator
(2) FY 2024 projected performance indicator
(3) Key performance indicator is based on calendar year and results are available in the 4th quarter of the following fiscal year
(4) Key performance indicator utilizes AWWA Benchmark
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
Goal
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
25
Key Performance Indicators: Administrative Services (continued)
Performance Indicator Definition Measurement
Method Target
Employee Turnover
Rate
Measures the number
of voluntary
departures, excluding
retirements.
Number of voluntary
resignations (not
including retirements)
/Average number of
employees
Less than 5% turnover
annually
FY 2022 FY 2023 FY 2024
Target 5%5%5%
Actual 8%6% 4.5% (1)
Performance Indicator Definition Measurement
Method Target
Training Hours per
Employee (2)
Measures the quantity
of general and
management formal
training employees are
completing (excludes
safety training).
Total qualified training
hours for all
employees/ Average
number of full time
employees (FTE)
15.6 hours or more
per employee annually
FY 2022 FY 2023 FY 2024
Target 12.0 15.6 15.6
Actual 24.5 24.9 30.5 (1)
Performance Indicator Definition Measurement
Method Target
Safety Training
Program
Measures the quantity
of safety training for
field operational
employees.
Number of safety
training hours/
Number of field
employees (includes
mandated training)
24 hours or more per
field employee annually
FY 2022 FY 2023 FY 2024
Target 24.0 24.0 24.0
Actual 55.8 42.3 47.9 (1)
(1) FY 2024 projected performance indicator
(2) Key performance indicator utilizes AWWA Benchmark
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
Pr
o
c
e
s
s
Goal
Foster a workforce culture of employee development and
innovation.
Le
a
r
n
i
n
g
a
n
d
G
r
o
w
t
h
Goal
Foster a workforce culture of employee development and
innovation.
Strategic Plan
Le
a
r
n
i
n
g
a
n
d
Gr
o
w
t
h
Goal
Foster a workforce culture of employee development and
innovation.
26
Key Performance Indicators: Finance
Performance Indicator Definition Measurement
Method Target
Answer Rate
Measures the
percentage of calls
answered out of total
calls received.
Number of all calls
answered/Number of
all calls received
No less than 97%
answer rate annually
FY 2022 FY 2023 FY 2024
Target 97.0%97.0%97.0%
Actual 98.6%98.7% 98.5% (1)
Performance Indicator Definition Measurement
Method Target
Billing Accuracy
Percentage of bills
issued without error as
a percentage of total
statements issued.
Number of correct
bills/Number of total
bills
No less than 99.8%
accuracy rate annually
FY 2022 FY 2023 FY 2024
Target 99.8%99.8%99.8%
Actual 99.99%99.99% 99.98% (1)
Performance Indicator Definition Measurement
Method Target
Sewer Rate Ranking
District's average
customer sewer bill
compared to other San
Diego County
agencies.
Otay percentage
ranking or the average
bill for sewer among
regional agencies
Bottom 50th percentile
for the 28 sewer
service providers
in San Diego annually
FY 2022 FY 2023 FY 2024
Target 14 14 14
Actual 5 5 5 (1)
(1) FY 2024 projected performance indicator
Strategic Plan
Goal
Cu
s
t
o
m
e
r
Fi
n
a
n
c
i
a
l
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Fi
n
a
n
c
i
a
l
Goal
Goal
Enhance customer and community engagement to increase
public awareness of the water industry and the District, while
continuing to provide superior customer service.
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
27
Key Performance Indicators: Finance (continued)
Performance Indicator Definition Measurement
Method Target
Water Rate Ranking
District's average
customer water bill
compared to other San
Diego County
agencies.
Otay percentage
ranking among regional
agencies
Bottom 50th percentile
for the 22 member
agencies in
San Diego annually
FY 2022 FY 2023 FY 2024
Target 11 11 11
Actual 5 5 11 (1)
Performance Indicator Definition Measurement
Method Target
Water Debt Coverage
Ratio
Measures the level of
debt service to the net
revenues available to
pay debt service,
excluding growth
revenues and non-
cash transactions
(GASB 68 adjustment).
Qualified net operating
revenues/Debt service
requirements
150% excluding growth
revenue annually
FY 2022 FY 2023 FY 2024
Target 150%150%150%
Actual 262%219% 221% (1)
Performance Indicator Definition Measurement
Method Target
Sewer Debt Coverage
Ratio
Measures level of
sewer debt service to
the net revenues
available to pay debt
service.
Qualified net operating
revenue/Debt Service
requirements
150% excluding growth
revenue annually
FY 2022 FY 2023 FY 2024
Target 150%150%150%
Actual 838%603% 604% (1)
(1) FY 2024 projected performance indicator
Fin
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Strategic Plan
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
28
Key Performance Indicators: Finance (continued)
Performance Indicator Definition Measurement
Method Target
Reserve Level
All reserve levels in the
District measured to a
predetermined plan
developed during the
initial budget process
Number of reserve
funds that meet or
exceed fund target
levels/Total number of
reserve funds
No less than 85%
annually
FY 2022 FY 2023 FY 2024
Target 83%85%85%
Actual 83%85% 85% (1)
Performance Indicator Definition Measurement
Method Target
Accounts per Full-Time
Employee (FTE)
Measures the number
of active accounts per
full-time employee.
The greater the
number of accounts
per employee, the
more efficient
technology and staff
are utilized.
Potable + Recycled +
Sewer Accounts/
Number of full-time
employees
398 accounts per FTE
annually
FY 2022 FY 2023 FY 2024
Target 406 399 398
Actual 406 423 398 (1)
Performance Indicator Definition Measurement
Method Target
Distribution System
Loss
Percentage of
unaccounted potable
and recycled water
100 [Volume
purchased–(volume
sold + volume
used)/Volume
purchased]
Less than 5% annually
FY 2022 FY 2023 FY 2024
Target 5.0%5.0%5.0%
Actual 4.0%3.5% 3.75% (1)
(1) FY 2024 projected performance indicator
Fin
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.Fi
n
a
n
c
i
a
l
Goal
Strategic Plan
Fin
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
29
Key Performance Indicators: Water Operations
Performance Indicator Definition Measurement
Method Target
Technical Quality
Complaint (1)
Measures the
complaint rate related
to core utility services.
It is expressed as
complaints per 1,000
customer accounts.
1,000 (Number of
technical quality
complaints)]/
Number of active
customer accounts per
reporting period
No more than 4.6
complaints per 1,000
customer accounts
annually
FY 2022 FY 2023 FY 2024
Target 7.1 4.6 4.6
Actual 3.9 1.0 2.8 (2)
Performance Indicator Definition Measurement
Method Target
Potable Water
Compliance Rate (1)
Quantifies the
percentage of time
each year that the
District meets all health
related drinking water
standards in U.S.
National Primary
Drinking Water
Regulations.
All primary health
regulations are met
100% of all health
regulations met
annually
FY 2022 FY 2023 FY 2024
Target 100%100%100%
Actual 100%100% 100% (2)
Performance Indicator Definition Measurement
Method Target
Planned Potable Water
Maintenance Ratio in $
Compares how
effectively the District is
investing in planned
maintenance for
Potable Water.
Total planned
maintenance cost/Total
maintenance cost
70% of labor dollars
spent on preventative
maintenance annually
FY 2022 FY 2023 FY 2024
Target 66%70%70%
Actual 73%76% 75% (2)
(1) Key performance indicator utilizes AWWA benchmark
(2) FY 2024 projected performance indicator
Cu
s
t
o
m
e
r
Goal
Enhance customer and community engagement to increase
public awareness of the water industry and the District, while
continuing to provide superior customer service.
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Strategic Plan
Cu
s
t
o
m
e
r
Goal
Enhance customer and community engagement to increase
public awareness of the water industry and the District, while
continuing to provide superior customer service.
30
Key Performance Indicators: Water Operations (continued)
Performance Indicator Definition Measurement
Method Target
Planned Recycled
Maintenance Ratio
in $
Compares how
effectively the District is
investing in planned
maintenance for
Recycled Water.
Total planned
maintenance cost/Total
maintenance cost
70% of labor dollars
spent on preventative
maintenance annually
FY 2022 FY 2023 FY 2024
Target 70%70%70%
Actual 74%90% 73% (1)
Performance Indicator Definition Measurement
Method Target
Planned Wastewater
Maintenance Ratio
in $
Compares how
effectively the District is
investing in planned
maintenance for
Wastewater.
Total planned
maintenance cost/Total
maintenance cost
80% of labor dollars
spent on preventative
maintenance annually
FY 2022 FY 2023 FY 2024
Target 77%80%80%
Actual 90%92% 91% (1)
Performance Indicator Definition Measurement
Method Target
Direct Cost of
Treatment per MGD
Measures the direct
cost of wastewater
treatment and excludes
staff overhead and
fringe benefits but
includes salaries. The
costs of solid waste
disposal are not
included.
Total O&M costs
directly attributable to
sewer treatment/
Total volume
(in MGD)
No more than $1,464
per MG spent on
wastewater treatment
annually
FY 2022 FY 2023 FY 2024
Target $1,050 $1,315 $1,464
Actual $869.97 $1,049.68 $1,072 (1)
(1) FY 2024 projected performance indicator
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Strategic Plan
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Goal
Fin
a
n
c
i
a
l
Fi
n
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
31
Key Performance Indicators: Water Operations (continued)
Performance Indicator Definition Measurement
Method Target
System Valve
Exercising Program
Quantifies the number
of system valves
exercised in the
distribution system.
Number of valves
exercised/ Total
number of District
valves
20% of District valves
exercised annually
(4092 valves) to
accomplish 100%
every 5 years
FY 2022(4)FY 2023 FY 2024
Target 3080 20%20%
Actual 3132 21% 20% (2)
Performance Indicator Definition Measurement
Method Target
Potable Water
Distribution System
Integrity (Leaks) (3)
Measures the condition
of the potable water
distribution system
expressed as the total
annual number of leaks
per 100 miles of
distribution piping.
(Total number of leaks
x 100)/ Total miles of
distribution system
piping
No more than 2.5 leaks
per 100 miles of
distribution piping
annually
FY 2022 FY 2023 (1)FY 2024
Target N/A 2.5 2.5
Actual N/A 0.3 2.5 (2)
Performance Indicator Definition Measurement
Method Target
Potable Water
Distribution System
Integrity (Breaks) (3)
Measures the condition
of the potable water
distribution system
expressed as the total
annual number of
breaks per 100 miles of
distribution piping.
(Total number of
breaks x 100)/ Total
miles of distribution
system piping
No more than 3 breaks
per 100 miles of
distribution piping
annually
FY 2022 FY 2023 (1)FY 2024
Target N/A 3 3
Actual N/A 0 3 (2)
(1) FY 2023 is the first year for this key performance indicator
(2) FY 2024 projected performance indicator
(3) Key performance indicator utilizes AWWA Benchmark
(4) Key performance indicator measured as actual number of valves in FY 2022
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
32
Key Performance Indicators: Water Operations (continued)
Performance Indicator Definition Measurement
Method Target
Recycled Water
System Integrity
(Leaks)
Measures the condition
of the recycled water
distribution system
expressed as the total
annual number of leaks
per 100 miles of
distribution piping.
(Total number of leaks
x 100)/ Total miles of
recycled distribution
system piping
No more than 2.5
leaks per 100 miles of
recycled distribution
system
annually
FY 2022 FY 2023 (1)FY 2024
Target N/A 2.5 2.5
Actual N/A 0 2.5 (2)
Performance Indicator Definition Measurement
Method Target
Recycled Water
System Integrity
(Breaks)
Measures the condition
of the recycled water
distribution system
expressed as the total
annual number of
breaks per 100 miles of
distribution piping.
(Total number of
breaks x 100)/ Total
miles of recycled
distribution system
piping
No more than 3
breaks per 100 miles of
recycled distribution
system
annually
FY 2022 FY 2023 (1)FY 2024
Target N/A 3 3
Actual N/A 0 3 (2)
Performance Indicator Definition Measurement
Method Target
Sewer Overflow
Rate (2)
Measures the
wastewater collection
system pipeline
condition and the
effectiveness of
planned maintenance.
[100 (Collection
system failure)]/
Total miles of collection
system piping
0 overflow rate
annually
FY 2022 FY 2023 FY 2024
Target 0 0 0
Actual 2.27 1.14 1.14 (1)
(1) FY 2024 projected performance indicator
(2) Key performance indicator utilizes AWWA benchmark
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
33
Key Performance Indicators: Water Operations (continued)
Performance Indicator Definition Measurement
Method Target
Potable Tank
Inspection and
Cleaning
This provision ensures
that the District
adheres to the
American Water Works
Association (AWWA)
recommendation and
guidelines of a tank
cleaning program that
cleans all tanks and
reservoirs every five
years.
Number of tanks
cleaned and inspected
annually
8 potable water storage
tanks and/or reservoirs
cleaned annually
FY 2022 FY 2023 FY 2024
Target 8 8 8
Actual 8 7 8 (1)
Performance Indicator Definition Measurement
Method Target
Hydrant Maintenance
Program
Evaluates the condition
and maintenance of
hydrants to ensure that
they are readily
accessible, completely
functional, and leak-
free.
Number of hydrants
maintained/ Total
number of hydrants
20% of District
hydrants maintained
annually (1220
hydrants) to
accomplish 100%
every 5 years
FY 2022 FY 2023 (2)FY 2024
Target N/A 20%20%
Actual N/A 22% 20% (1)
(1) FY 2024 projected performance indicator
(2) FY 2023 is the first year for this key performance indicator
Strategic Plan
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
34
Key Performance Indicators: Engineering
Performance Indicator Definition Measurement
Method Target
CIP Project
Expenditures vs.
Budget
Compares CIP
expenditures vs.
Budget
Actual quarterly
expenditures/
Annual budget
Greater than or equal
to 95% of budget
annually
FY 2022 FY 2023 FY 2024
Target 95%95%95%
Actual 103%94% 100% (1)
Performance Indicator Definition Measurement
Method Target
Construction Change
Order Incidence
Measures rate of
Change Orders for CIP
projects under
Construction.
Total cost of change
orders (not including
allowances)/Total
original construction
contract amount (not
including allowances)
No more than
5% change order rate
annually
FY 2022 FY 2023 FY 2024
Target 5.0%5.0%5.0%
Actual 2.0%0.50% 3.1% (1)
Performance Indicator Definition Measurement
Method Target
Mark-out Accuracy
The percentage of
mark-outs performed
without an at-fault hit;
defined as damage to
a District facility that
results from a missing
or erroneous mark-out.
Number of mark-outs
performed without an
at-fault hit/Total
number of mark-outs
performed
100% of mark-outs
performed without an
at fault hit annually
FY 2022 FY 2023 FY 2024
Target 100%100%100%
Actual 100%99% 100% (1)
(1) FY 2024 projected performance indicator
Strategic Plan
Fin
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
Fin
a
n
c
i
a
l
Goal
Operate the District in a financially sustainable and transparent
manner while maintaining a fair rate structure.
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
35
Key Performance Indicators: Engineering (continued)
Performance Indicator Definition Measurement
Method Target
Easement Desktop
Evaluation and Field
Inspection
Inspection of District
easements to ensure
that no unauthorized
encroachments exist.
Number of Actual
Easements Evaluated
and Inspected/Total
Number of Easements
100% of easements
evaluated and
inspected annually
FY 2022 FY 2023 FY 2024
Target 100%100%100%
Actual 100%106% 101% (1)
(1) FY 2024 projected performance indicator
In
t
e
r
n
a
l
B
u
s
i
n
e
s
s
P
r
o
c
e
s
s
Goal
Strategic Plan
Practice ongoing infrastructure renewal and organizational
improvement through planning and increased operational
efficiency.
36
Financial Summaries
Budget Summary
The FY 2024 Operating Budget is summarized and presented in the Operating Budget Summary- General
Fund on pages 42-43. This schedule presents the District’s overall revenues and expenditures by type.
Also included in this section is the Operating Budget Summary by System on page 44 which presents the
General Fund budget in the business segments of Potable, Recycled, and Sewer. Additional schedules
provided in this section are the General Fund Revenues, Expenditures and Transfers; Fund Balance
Summary by Fund; Revenues and Expenditures by Type - All Funds; and Revenues and Expenditures by
Fund; and are presented on pages 45-49.
General Fund Revenues
Potable Water Sales
Potable water sales revenue collected from the sale of water including system charges, energy charges,
and penalties account for 78.9% of the District’s operating revenues. It is estimated that 27,566.5 acre-feet
of potable water will be sold during FY 2024, which is an increase of 230 acre-feet from FY 2023. Budgeted
revenues from water sales are projected to be $101.0 million, an increase of 7.0% compared to FY 2023.
Schedules relating to potable water sales are included in the Potable Revenues and Expenditures section
of this budget.
Recycled Water Sales
The District’s recycled water sales continue to be adversely impacted by measures implemented as a
result of the permanent conservation efforts. Recycled water sales revenue is generated from the sale of
3,645.5 acre-feet of recycled water, which is below historic volumes which were as high as 4,748 acre-
feet sold in 2014. The FY 2024 sales revenue budget is $10.9 million which is an increase of $0.7 million
from FY 2023 and includes the incentive credit provided by MWD.
Sewer Revenues
Sewer charges, which represent 99% of sewer revenue, are the monthly fees collected from residential,
multi-residential, and commercial customers. The remaining 1% of revenue is derived from penalties. The
monthly fees are determined by volume of flow and the strength of solids discharged into the sewer
system. The FY 2024 sewer revenues are projected to be $3.5 million, an increase of $184,000 from FY
2023.
Meter Fees
Meter fees are charges collected for new water service connections. Fees vary depending upon meter
size and the type of service. The FY 2024 revenue from meter fees is projected to be $168,000 which is
relatively flat when compared to FY 2023. The costs associated with meter installations are included in
the Operating Expenses section.
Capacity Fee Revenues
These fees are earned by the General Fund for the Engineering Department’s support for expansion
functions. The FY 2024 capacity fee revenue is projected to be $2.4 million, an increase of $41,000 from
FY 2023.
37
Financial Summaries
Tax Revenues
The District receives a portion of the 1% property tax revenues and availability fees on properties within
the District’s boundaries. These revenues are collected by the County of San Diego via the Property Tax
Roll and are remitted to the District annually. The District budgeted tax revenues of $6.2 million which is
an increase of $933,000 compared to FY 2023.
Spending limits for government entities are governed by the 1979 passage of California Proposition 4,
Limitations of Government Appropriations (Article XIII B of the California Constitution, commonly known
as the Gann Limit). Proposition 4 places an appropriations limit on most spending from tax proceeds. It
plays a crucial role in maintaining fiscal discipline and accountability in government appropriations and
establishes a framework for managing public finances ensuring that taxpayer funds are used responsibly
and in accordance with the limitations set forth by the California Constitution.
Non-Operating Revenues
Non-operating revenues are revenues that are not directly related to the operation of a water or sewer
utility and include such items as District property rentals and leases, and billing services for the City of
Chula Vista. The District projected $2.8 million in revenues for FY 2024, which is an increase of $248,000
compared to FY 2023.
Interest
Interest is earned by each fund that has a positive balance and is paid by each fund with a negative
balance. Interest income on General Fund balances is considered general use revenue. Interest revenue
is projected to be $1.1 million in FY 2024, which is an increase of $596,000 from FY 2023.
General Fund Expenditures
Potable Water Purchases
Water purchases are the expenses of purchasing 28,684.42 acre-feet for the District's potable water
supply. A provision has been made to allow 1,117.9 acre-feet of water for District usage, leakage, and
evaporation. Total Potable Water Purchases are projected to be $48.1 million in FY 2024, which is an
increase of $3.9 million compared to FY 2023.
Recycled Water Purchases
Recycled water purchases are the expenses of purchasing 2,697.2 acre-feet for the District's recycled
water supply which is an increase of 11.5 acre-feet compared to FY 2023. In addition to the purchases,
there is a contractual Take-or-Pay payment budgeted for 2,916.8 acre-feet which is 78.5 acre-feet more
than FY 2023. Total Recycled Purchases are projected to be $5.8 million in FY 2024, which is an increase
of $311,000 compared to FY 2023.
Infrastructure Access Charge
This charge was established in FY 1999 by CWA and is imposed on member agencies as a condition of
maintaining connections to the CWA facilities. It is apportioned based on water meters within each
member agency. Infrastructure access charges are projected at $3.1 million in FY 2024, which is an
increase of $148,000 compared to FY 2023.
38
Financial Summaries
Customer Service Charge
This charge was established in FY 2004 by CWA as a fixed charge. The customer service charge is set to
recover costs that are necessary to support the functioning of the CWA. The customer service charge is
allocated among the member agencies based on each agency’s three-year rolling average of member
agency supply purchases from the CWA. Budgeted customer service charges are projected to be $2.0
million in FY 2024, an increase of $90,000 compared to FY 2023.
Supply Reliability Charge
This charge was established in FY 2016 by CWA as a fixed charge and became effective in January 2016.
The supply reliability charge is set to recover a portion of the fixed costs associated with the CWA’s highly
reliable water supplies, such as desalinated water (Carlsbad Desalination Plant) and Imperial Irrigation
District (IID) water transfer costs. Allocation of this charge is based upon member agencies’ share of the
rolling five-year average Municipal and Industrial (M&I) deliveries (agricultural deliveries are not
included). The reliability charge is projected at $3.2 million in FY 2024, which is an increase of $232,000
compared to FY 2023.
Emergency Storage Charge
The Emergency Storage Charge was established by CWA in calendar year 2003 to recover costs
associated with non-agricultural water deliveries and is allocated based on each member agency’s share
of deliveries. The emergency storage charge is projected to be $4.9 million in FY 2024, which is an
increase of $154,000 compared to FY 2023.
Capacity Reservation Charge
This charge was established in FY 2002 by MWD as a fixed charge on a member agency's requested
maximum daily capacity. The capacity reservation charge is a charge per cubic-foot-second and is
applied to the amount of capacity (daily flow) a member agency expects to use during the peak period
from May through September. Capacity reservation charges are projected to be $562,000 in FY 2024,
which is a decrease of $200,000 compared to FY 2023.
Readiness-to-Serve Charge
This charge was established in FY 1996 by MWD to recover the principal and interest payments on non-
tax supported debt service used to fund the capital improvements necessary to meet the continuing
reliability and quality needs associated with current demands. These costs are offset by standby charges
collected by MWD on the tax bills of District customers. These charges are projected to be $654,000 in FY
2024, a decrease of $31,000 compared to FY 2023.
Labor and Benefits
Labor and benefits are the wages and fringe benefits for FY 2024 Full-time Equivalent (FTE) employees.
Labor costs are reduced by the number of hours that are charged to non-operating Capital Improvement
Program (CIP) and developer deposit projects. The detail of actual personnel and payroll related
expenses is included in the Departmental Operating Budget section. Labor and benefits are projected to
be $25.9 million, which is an increase of $1.1 million compared to FY 2023.
Administrative Expenses
Administrative expenses are costs incurred by various departments that are directly related to District
operations. Administrative expenses are projected to be $8.9 million in FY 2024, which is an increase of
39
Financial Summaries
$885,000 compared to FY 2023. Additional details are supplied in the Departmental Operating Budget
section.
Materials and Maintenance Expenses
Materials and maintenance expenses are costs associated with the operation and maintenance of
District facilities. Materials and maintenance expenses are projected to be $4.8 million in FY 2024, which
is an increase of $692,000 compared to FY 2023. Additional details are supplied in the Departmental
Operating Budget section.
Power Costs
Power costs are expenses associated with the transmission and distribution of water to customers. The
pumping costs to distribute water vary with elevation and will increase as water sales increase. The
District’s power costs are projected to be $4.3 million in FY 2024, which is an increase of $408,000
compared to FY 2023.
General Fund Reserves(1)
Expansion Reserves
These reserves are established to fund expansion needs including project costs, existing debt payments,
and new debt that will be issued in the future to fund expansion. For FY 2024, these reserves will be funded
with $4.3 million from the Potable Water Fund and $70,000 from the Sewer Fund.
Betterment Reserves
These reserves are established to fund the betterment needs of facilities including project costs, existing
debt payments, and new debt that will be issued in the future to fund betterment. For FY 2024, these
reserves will be funded with $1.8 million from the Potable Water Fund, $613,000 from the Recycled Water
Fund, and $146,000 from the Sewer Fund.
Replacement Reserves
These reserves are established to fund the replacement needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund replacement. For FY 2024, these reserves
will be funded with $6.7 million from the Potable Water Fund, $1.4 million from the Recycled Water Fund,
and $698,000 from the Sewer Fund.
Rate Stabilization Reserves
This sewer reserve is established for the purpose of minimizing rate increases in response to one-time
events and therefore stabilizing the rates and charges imposed by the District to meet covenanted debt
service coverage levels. This fund is anticipated to be completely funded in FY 2024.
New Water Supply Reserves
These reserves are established to fund new water supply needs including project costs, existing debt
payments, and new debt that will be issued in the future to fund expansion. There is no allocated budget
for reserve funding in FY 2024.
(1) See the Policies section for the District’s complete Reserve Policy.
40
Financial Summaries
Fund Transfers
Fund transfers are necessary to ensure that each fund pays its fair share of costs, or to achieve required
fund balances per the District’s policy.
Other Financial Schedules/Presentations
Operating Budget Summary by System
The Budget Summary by System schedule reflects the breakdown of operating revenues and expenses
per fund. The schedule presents a balanced budget for each fund and shows that anticipated resources
are sufficient to cover current expenditures. This is provided as information but is necessary to ensure
sufficient revenue is collected from sewer customers versus water customers.
General Fund – Revenues, Expenditures, and Transfers
This schedule shows the General Fund’s total revenues, expenditures, and transfers showing the prior
year’s actuals, the prior year’s budget and audited actuals, the current year’s budget, along with the
variance from the prior year’s budget.
Fund Balance Summary by Fund
This schedule shows each fund’s balance at June 30, 2023, and the projected balance for June 30, 2024.
These balances are based on the results of the budget and rate model. This includes transfers between
funds made to meet target levels as outlined in the Reserve Policy.
Revenues and Expenditures by Fund
The Revenues and Expenditures by Fund schedule reflects each fund’s revenues and expenditures by
business line, where appropriate. This schedule is reconciled to the Fund Balance Summary and
excludes transfers between funds.
Revenues and Expenditures by Type – All Funds
This is a consolidated schedule of revenues and expenditures, including sources and uses of funds but
excluding fund transfers.
41
FY 2022 FY 2023 FY 2023 FY 2024
11-Actual Budget Actual Budget $%
Revenues
Potable Water Sales 92,452,011$ 94,308,000$ 90,549,740$ 100,949,000$ 6,641,000$ 7.0%
Recycled Water Sales 10,042,348 10,217,000 9,351,434 10,906,000 689,000 6.7%
Sewer Revenues 3,085,044 3,284,000 3,297,522 3,468,000 184,000 5.6%
Meter Fees 163,782 170,000 135,079 168,000 (2,000) (1.2%)
Capacity Fee Revenues 2,551,404 2,311,000 2,734,072 2,352,000 41,000 1.8%
Tax Revenues 5,502,252 5,310,000 6,084,144 6,243,000 933,000 17.6%
Non-operating Revenues 6,469,704 2,523,100 3,131,555 2,770,600 247,500 9.8%
Interest 187,354 495,000 772,219 1,091,000 596,000 120.4%
Total Revenues 120,453,899 118,618,100 116,055,765 127,947,600 9,329,500 7.9%
Expenditures
Potable Water Purchases 42,572,534 44,250,000 41,263,647 48,147,000 3,897,000 8.8%
Recycled Water Purchases 4,585,689 5,487,000 5,432,169 5,798,000 311,000 5.7%
CWA - Infrastructure Access Charge 3,080,352 2,998,000 3,097,476 3,146,000 148,000 4.9%
CWA - Customer Service Charge 1,816,764 1,881,000 1,900,266 1,971,000 90,000 4.8%
CWA - Reliability Charge 2,866,626 3,003,000 3,042,420 3,235,000 232,000 7.7%
CWA - Emergency Storage Charge 4,595,462 4,711,000 4,748,834 4,865,000 154,000 3.3%
MWD - Capacity Reservation Charge 764,843 762,000 740,531 562,000 (200,000) (26.2%)
MWD - Readiness-To-Serve Charge 653,367 685,000 613,556 654,000 (31,000) (4.5%)
Subtotal - Water Costs 60,935,637 63,777,000 60,838,899 68,378,000 4,601,000 7.2%
Labor and Benefits 21,384,698 24,730,000 23,700,531 25,860,600 1,130,600 4.6%
Administrative Expenses 6,919,294 8,057,700 7,610,526 8,942,300 884,600 11.0%
Materials and Maintenance 3,884,421 4,132,600 4,424,819 4,824,900 692,300 16.8%
Power 3,679,023 3,893,000 4,400,025 4,285,000 392,000 10.1%
Subtotal - Operations Costs 35,867,436 40,813,300 40,135,901 43,912,800 3,099,500 7.6%
DSGeneral Fund Reserve 90,500 40,400 40,400 - (40,400) (100.0%)
Expansion Reserve 2,066,900 684,800 684,800 4,320,000 3,635,200 530.8%
Bett ResBetterment Reserve 735,000 4,890,000 4,890,000 2,562,000 (2,328,000) (47.6%)
Repl ResReplacement Reserve 11,986,900 8,393,600 8,393,600 8,774,800 381,200 4.5%
Transfer to Rate Stabilization Fund 21,000 19,000 19,000 - (19,000) (100.0%)
Subtotal - Reserve Funding 14,900,300 14,027,800 14,027,800 15,656,800 1,629,000 11.6%
Total Expenditures 111,703,373 118,618,100 115,002,600 127,947,600 9,329,500 7.9%
Excess Revenues (Expenditures)8,750,526$ -$ 1,053,164$ -$ -$ -
Operating Budget Summary - General Fund
Budget to Budget
Variance
42
Potable Water Sales 100,949,000$ 78.9%
Recycled Water Sales 10,906,000 8.5%
Sewer Revenues 3,468,000 2.7%
Meter Fees 168,000 0.1%
Capacity Fee Revenues 2,352,000 1.8%
Tax Revenues 6,243,000 4.9%
Non-operating Revenues 2,770,600 2.2%
Interest 1,091,000 0.9%
127,947,600 100.0%
Potable Water Purchases 62,580,000 48.9%
Recycled Water Purchases 5,798,000 4.5%
Power 4,285,000 3.4%
Labor and Benefits 25,860,600 20.2%
Administrative Expenses 8,942,300 7.0%
Materials and Maintenance 4,824,900 3.8%
Reserve Funding 15,656,800 12.2%
127,947,600$ 100.0%
Operating Budget Summary - General Fund
FY 2024 OPERATING REVENUES
FY 2024 OPERATING EXPENDITURES
49%
5%
3%20%
7%
4%
12%
79%9%
3%
2%
5%
2%
1%
43
Potable Recycled Sewer Total
Revenues
Water Sales 100,949,000$ -$ -$ 100,949,000$
Recycled Water Sales - 10,906,000 - 10,906,000
Sewer Revenues - - 3,468,000 3,468,000
Meter Fees 154,000 14,000 - 168,000
Capacity Fee Revenues 2,352,000 - - 2,352,000
Tax Revenues 6,190,000 - 53,000 6,243,000
Non-operating Revenues 2,712,600 40,000 18,000 2,770,600
Interest 935,000 115,000 41,000 1,091,000
Total Revenues 113,292,600 11,075,000 3,580,000 127,947,600
Expenditures
Water Purchases 48,147,000 5,798,000 - 53,945,000
CWA - Infrastructure Access Charge 3,146,000 - - 3,146,000
CWA - Customer Service Charge 1,971,000 - - 1,971,000
CWA - Reliability Charge 3,235,000 - - 3,235,000
CWA - Emergency Storage Charge 4,865,000 - - 4,865,000
MWD - Capacity Reservation Charge 562,000 - - 562,000
MWD - Readiness-To-Serve Charge 654,000 - - 654,000
Subtotal - Water Costs 62,580,000 5,798,000 - 68,378,000
Labor and Benefits 23,228,500 1,547,200 1,084,900 25,860,600
Administrative Expenses 8,151,900 547,000 243,400 8,942,300
Materials and Maintenance 3,117,500 551,500 1,155,900 4,824,900
Power 3,487,000 616,000 182,000 4,285,000
Subtotal - Operations Costs 37,984,900 3,261,700 2,666,200 43,912,800
#Expansion Reserve 4,250,000 - 70,000 4,320,000
Bett ResBetterment Reserve 1,803,000 613,000 146,000 2,562,000
Repl ResReplacement Reserve 6,674,700 1,402,300 697,800 8,774,800
Subtotal - Reserve Funding 12,727,700 2,015,300 913,800 15,656,800
Total Expenditures 113,292,600 11,075,000 3,580,000 127,947,600
Excess Revenue (Expenditures)-$ -$ -$ -$
FY 2024 Operating Budget Summary by System
44
FY 2022 FY 2024
Actual Budget Actual Budget $%
Revenues
Water Sales 102,494,359$ 104,525,000$ 99,901,174$ 111,855,000$ 7,330,000$ 7.0%
Sewer Revenues 3,085,044 3,284,000 3,297,522 3,468,000 184,000 5.6%
Meter Fees 163,782 170,000 135,079 168,000 (2,000) (1.2%)
Capacity Fee Revenues 2,551,404 2,311,000 2,734,072 2,352,000 41,000 1.8%
Tax Revenues 5,502,252 5,310,000 6,084,144 6,243,000 933,000 17.6%
Non-Operating Revenues 6,469,704 2,523,100 3,131,555 2,770,600 247,500 9.8%
Interest 187,354 495,000 772,219 1,091,000 596,000 120.4%
Total Revenues 120,453,899 118,618,100 116,055,765 127,947,600 9,329,500 7.9%
Expenditures and Transfers
Water Purchases 60,935,637 63,777,000 60,838,899 68,378,000 4,601,000 7.2%
Power 3,679,023 3,893,000 4,400,025 4,285,000 392,000 10.1%
Labor and Benefits 21,384,698 24,730,000 23,700,531 25,860,600 1,130,600 4.6%
Administrative Expenses 6,919,294 8,057,700 7,610,526 8,942,300 884,600 11.0%
Materials and Maintenance 3,884,421 4,132,600 4,424,819 4,824,900 692,300 16.8%
Transfers 14,900,300 14,027,800 14,027,800 15,656,800 1,629,000 11.6%
- Total Expenditures and Transfers 111,703,373 118,618,100 115,002,601 127,947,600 9,329,500 7.9%
Excess Revenues (Expenditures)8,750,526$ -$ 1,053,164$ -$ -$ 0%
General Fund Revenues, Expenditures and Transfers, in millions ($)
FY 2023
Budget to Budget
Variance
General Fund - Revenues, Expenditures and Transfers
$80
$90
$100
$110
$120
$130
FY 2022
Actual
FY 2023
Budget
FY 2023
Actual
FY 2024
Budget
$1
2
0
$1
1
9
$1
1
6
$1
2
8
$1
1
2
$1
1
9
$1
1
5
$1
2
8
Revenue Expenditures
45
Actual Projected
Balance Interfund Balance
June 30, 2023 Revenues Expenditures Transfers (1)June 30, 2024
General Fund
Potable 31,708,622$ 113,292,600$ 113,292,600$ -$ 31,708,622$
Recycled 4,595,700 11,075,000 11,075,000 - 4,595,700
Sewer 1,267,600 3,580,000 3,580,000 - 1,267,600
Total General Fund 37,571,922 127,947,600 127,947,600 - 37,571,922 (1)
Expansion Fund
Water (2)(1,845,700) 3,907,900 6,193,900 4,382,000 250,300
Sewer 114,100 3,000 102,200 70,000 84,900
Total Expansion Fund (1,731,600) 3,910,900 6,296,100 4,452,000 335,200 (3)
Betterment Fund
Potable 2,110,900 1,105,400 2,601,100 1,803,000 2,418,200
Recycled 864,900 37,000 336,100 635,000 1,200,800
Sewer 100,000 56,800 229,500 146,000 73,300
Total Betterment Fund 3,075,800 1,199,200 3,166,700 2,584,000 3,692,300 (3)
Replacement Fund
Potable 54,246,300 9,039,600 13,084,300 9,598,000 59,799,600
Recycled 4,434,600 964,000 3,897,300 3,420,000 4,921,300
Sewer 4,119,700 289,700 835,700 1,692,000 5,265,700
Total Replacement Fund 62,800,600 10,293,300 17,817,300 14,710,000 69,986,600
New Supply Fund
Water (2)3,052,400 118,200 89,800 - 3,080,800
Total New Supply Fund 3,052,400 118,200 89,800 - 3,080,800
Rate Stabilization Fund 215,000 - - - 215,000
OPEB Fund (123,800) 30,100 1,270,000 1,209,000 (154,700)
Debt Service Fund 3,991,978 150,000 - 90,000 4,231,978
Total (3)108,852,300$ 143,649,300$ 156,587,500$ 23,045,000$ 118,959,100$
(1)The total for interfund transfers does not net to $0 because some transfers are already reflected in the Operating Revenues and Expenditures for General Fund as follows:
Expansion Reserve (4,320,000)
Betterment Reserve (2,562,000)
Replacement Reserve (8,774,800)
OPEB Reserve (1,270,000)
Total (16,926,800)$ #
(2)Potable and Recycled funds are combined.
transfers made in accordance with the Reserve Policy found on pages 165-200.
Fund Balance Summary by Fund
Fiscal Year 2024 Budget
(3) The fund balance is anticipated to change more than 10% due to the District's ongoing current year CIP expenditures funded by current years revenues and
46
FY 2022 FY 2024
Actual Budget Actual Budget
Revenues and Fund Sources
Water Sales 102,494,359$ 104,525,000$ 99,901,174$ 111,855,000$
Sewer Revenues 3,085,044 3,284,000 3,297,522 3,468,000
Meter Fees 163,782 170,000 135,079 168,000
Capacity Fee Revenues 2,551,404 2,311,000 2,734,072 2,352,000
Capacity Fees for Maintenance 11,195,389 11,191,300 7,899,071 11,456,300
Tax Revenues 5,502,252 5,310,000 6,084,144 6,243,000
Availability Fees 507,988 711,000 489,357 743,000
Non-Operating Revenues 6,469,704 2,523,100 3,131,555 2,770,600
GO Bond Debt Tax Revenues (1)483,260 362,800 245,063 -
Bond Proceeds and BABs Subsidy 782,835 783,000 782,835 783,000
Interest 634,221 1,693,000 2,968,065 3,810,400
Annexation Fees 48,686 -82,682 -
Total Revenue and Fund Sources 133,918,924 132,864,200 127,750,619 143,649,300
-$ (0.03)$
Expenditures and Fund Uses
Water Purchases 60,935,637 63,777,000 60,838,899 68,378,000
Power 3,679,023 3,893,000 4,400,025 4,285,000
Labor Expenses 21,384,698 22,649,100 21,386,531 24,590,600
Administrative Expenses 6,919,294 8,057,700 7,610,526 8,942,300
Materials and Maintenance 3,884,421 4,132,600 4,424,819 4,824,900
CIP Expenses 8,996,429 14,890,100 11,689,248 17,693,100
Debt Service 9,501,873 10,290,700 9,506,229 9,676,800
Operating Projects 2,541,598 -2,730,760 -
OPEB Retiree Expenditures & PERS/OPEB Funding 1,167,260 2,080,900 2,314,000 1,270,000
Total Expenditures and Fund Uses 119,010,233 129,771,100 124,901,038 139,660,700
Surplus/(Deficit)14,908,691$ 3,093,100$ 2,849,581$ 3,988,600$
0$ -$ -$
(1)The District's General Obligation (GO) bonds fully matured in FY 2023.
Revenues and Expenditures by Type - All Funds
FY 2023
47
FY 2022 FY 2024
Actual Budget Actual Budget
Revenues
General Fund
Potable 107,991,040$ 104,968,100$ 103,933,980$ 113,292,600$
Recycled 10,079,969 10,282,000 9,478,154 11,075,000
Sewer 3,165,726 3,368,000 3,426,465 3,580,000
Total General Fund (1)121,236,735 118,618,100 116,838,600 127,947,600
Expansion Fund
Potable 3,914,799 3,904,700 2,099,251 3,103,900
Recycled 264,842 599,000 694,856 804,000
Sewer 188 800 3,091 3,000
Total Expansion Fund 4,179,828 4,504,500 2,797,197 3,910,900
Betterment Fund
Potable 479,840 1,020,900 534,684 1,105,400
Recycled 24,174 12,000 47,317 37,000
Sewer 32,636 57,800 35,348 56,800
Total Betterment Fund 536,649 1,090,700 617,349 1,199,200
Replacement Fund
Potable 6,963,734 7,116,500 6,149,848 9,039,600
Recycled 370,550 858,000 628,873 964,000
Sewer 76,439 177,500 202,792 289,700
Total Replacement Fund 7,410,723 8,152,000 6,981,513 10,293,300
New Supply Fund
Potable 34,771 56,100 93,710 106,200
Recycled 1,886 7,000 8,061 12,000
Total New Supply Fund 36,658 63,100 101,771 118,200
OPEB and PERS Fund 7,282 - 58,739 30,100
Debt Service Fund 511,049 435,800 355,451 150,000
Total Revenues 133,918,924$ 132,864,200$ 127,750,619$ 143,649,300$
Revenues and Expenditures by Fund
FY 2023
Note: This schedule excludes interfund transfers.
48
FY 2022 FY 2024
Actual Budget Actual Budget
Revenues and Expenditures by Fund
FY 2023
Expenditures
General Fund
Potable 87,484,562$ 91,438,500$ 88,365,116$ 99,387,900$
Recycled 7,268,930 8,464,700 7,925,584 9,002,700
Sewer 2,049,581 2,606,200 2,370,101 2,630,200
Total General Fund 96,803,073 102,509,400 98,660,801 111,020,800
Expansion Fund
Potable 4,990,604 5,017,600 5,060,187 5,043,600
Recycled 1,264,034 1,144,600 995,525 1,150,300
Sewer 46,662 74,700 38,478 102,200
Total Expansion Fund 6,301,300 6,236,900 6,094,190 6,296,100
Betterment Fund
Potable 2,664,243 3,372,300 2,524,295 2,601,100
Recycled 246,635 886,200 324,292 336,100
Sewer 149,091 171,300 131,293 229,500
Total Betterment Fund 3,059,970 4,429,800 2,979,880 3,166,700
Replacement Fund
Potable 10,022,085 11,747,800 12,550,592 13,084,300
Recycled 494,660 1,197,700 1,099,313 3,897,300
Sewer 276,970 756,000 399,527 835,700
Total Replacement Fund 10,793,714 13,701,500 14,049,433 17,817,300
New Supply Fund
Potable 103,934 83,000 73,822 85,000
Recycled 3,431 4,800 3,313 4,800
Total New Supply Fund 107,365 87,800 77,135 89,800
OPEB and PERS Fund 1,167,260 2,007,900 2,314,000 1,270,000
Debt Reserve Fund (1)777,551 797,800 725,600 -
Total Expenditures 119,010,233 129,771,100 124,901,038 139,660,700
Surplus/(Deficit)14,908,691$ 3,093,100$ 2,849,581$ 3,988,600$
Note: This schedule excludes interfund transfers.
49
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50
Five-Year Forecast
The District updates its Rate Model to build the budget for the upcoming fiscal year and to forecast
the five subsequent years, FY 2025 through FY 2029. This financial forecast is designed to provide a
general understanding of how revenues and expenditures are expected to influence the District.
This forecast also highlights the funding of capital projects and reserve levels.
Revenue forecasting is crucial in assessing the available resources to sustain District operations
and fulfill commitments. It involves a complex process that requires analysis of historical trends
and various external factors. Primary factors include historical consumption(1) and rainfall(2) data
which provide insight into and can influence water consumption levels and wastewater generation.
Growth estimates are derived from an economic study performed by an external consultant at the
start of the budget cycle. The study involves a comprehensive analysis of the economy’s historical,
current, and future states spanning from the District’s service area to a global perspective. The
District also receives property tax revenues(3) that are forecasted based on historical trends.
The District utilizes an in-depth approach in developing the expenditure budget. Water cost
estimates are obtained from District’s water suppliers, CWA and MWD. Power cost inflators are
obtained from San Diego Gas and Electric, the District’s power supplier. Labor and benefit cost
inflators are based on the Memorandum of Understanding with the District’s labor union, estimates
from the District’s health providers, and actuarial reports related to the District’s pension and OPEB
plans. Other general inflators are derived from consumer price index statistical data for the region.
The District must look at replacing existing aging and future infrastructure to service the needs of
its customers. The CIP Master Plan looks at the service needs of all customers over the next six
years and at the betterment, replacement, and expansion needs from now until ultimate build-out.
Capital projects and their funding are reviewed annually by the Engineering Department. As new
capital assets are brought into service, they are managed by a GIS-centric Asset Management
System, CityWorks, which is critical in tracking and maintaining the history of 731 miles of potable
pipelines, 102 miles of recycled pipelines, 88 miles of sewer mains, 40 potable and 4 recycled
reservoirs, 21 potable and 3 recycled pump stations, and a 1.3 million gallons per day reclamation
plant. Utilizing an integrated database from the Geographic Information System (GIS) provides real-
time work order planning, execution, and consolidation of all maintenance history. These systems
are also integrated with financial software to allow asset tracking and management information.
The impact of the CIP on the Operating Budget is addressed in the CIP section of this budget.
(1)Historical unit sales can be found on pages 66 and 83.
(2)Rainfall history can be found on page 17.
(3)Service area assessed property valuation is found on page 13.
51
Five-Year Forecast
Projected Cost of Water
The projected cost of water is based on CWA’s Rate Modeling Program. This CWA program
evaluates many options of the Regional Water Facilities Master Plan, which determines the most
feasible projects for water resources and incorporates these decisions into CWA’s Capital
Improvement Program. This cost is also based on CWA’s estimated water cost for purchases from
MWD and the Imperial Irrigation District (IID).
52
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Revenues
Water/Sewer Revenues 121,346,200$ 129,585,900$ 137,582,600$ 145,029,700$ 152,874,600$
Meter Fees 163,600 159,500 159,900 160,300 161,100
Capacity Fee Revenues 2,363,800 2,387,400 2,411,300 2,435,400 2,459,800
Non-operating Revenues 2,646,600 2,765,700 3,025,400 3,226,100 2,880,800
Tax Revenues 6,381,000 6,552,000 6,729,100 6,912,400 7,099,100
Interest Income 1,014,600 1,080,400 1,130,000 1,169,100 1,219,300
Total Revenues 133,915,800 142,530,900 151,038,300 158,933,000 166,694,700
69,866,000$ 73,516,100$ 77,141,800$ 80,326,700$
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Expenditures
Water Cost 74,556,800 80,304,700 82,032,000 85,665,310 90,501,500
Power 4,723,600 5,017,800 5,330,300 5,662,200 6,014,800
Labor and Benefits 26,368,400 27,082,300 28,078,200 28,746,400 29,229,600
Administrative Expenses 9,059,300 9,588,300 10,100,900 10,523,700 10,961,700
Materials & Maintenance 5,075,100 5,358,200 5,669,900 5,920,300 6,182,000
Net Reserve Funding 14,132,600 15,179,600 19,827,000 22,381,090 23,775,100
Transfer to Rate Stabilization Fund - - -34,000 30,000
Total Expenditures and Transfers 133,915,800 142,530,900 151,038,300 158,933,000 166,694,700
Excess Revenues (Expenditures)-$ -$ -$-$-$
-$ -$ -$ -$ -$
General Fund Forecast
This forecast incorporates both cost increases for expenditures and rate increases for revenues, as well as growth
projections.
Expenditures and Transfers
Revenues
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
$1
3
4
$1
4
3
$1
5
1
$1
5
9
$1
6
7
$1
3
4
$1
4
3
$1
5
1
$1
5
9
$1
6
7
Revenues and Expenditures Forecast, in millions ($)
Revenues Expenditures
53
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Fund Balance
General Fund 29,609,700$ 31,476,600$ 32,407,400$ 33,683,600$ 35,235,500$
Betterment Fund 2,570,700 2,115,100 2,008,700 1,599,800 1,602,200
Replacement Fund 49,686,600 41,317,100 60,842,900 59,534,800 60,556,000
Expansion Fund 1,382,500 1,411,500 2,217,300 1,760,000 1,763,000
New Supply Fund 3,083,200 3,105,500 3,128,700 3,167,200 3,207,200
Debt Reserve 7,869,100 4,290,300 22,528,400 12,053,500 4,290,600
Rate Stabilization Fund 230,700 239,000 247,600 291,100 332,100
Total Fund Balance 94,432,500$ 83,955,100$ 123,381,000$ 112,090,000$ 106,986,600$
(641,700) (664,800) (688,700) (678,921) (672,796)
Fund Balances Forecast
Fund Balances by Fund
$0
$20
$40
$60
$80
$100
$120
$140
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Fund Balances Forecast, in millions ($)
General Fund Betterment Fund Replacement Fund Expansion Fund
Debt Reserve New Supply Fund Rate Stabilization Fund
54
Debt Management
Water Debt Coverage
The District has achieved success in financing capital improvements through a combination of long-
term and short-term financing plans. Financial tools used include Certificates of Participation (COPs),
Build America Bonds (BABs), Water Revenue Bonds (WRBs), Wastewater Revenue Bonds, developer
fees, and pay-as-you-go funding.
The District’s primary debt management objective is to keep the level of indebtedness within
available resources and within limits that will allow the District to meet the debt service coverage
ratios required by the bond covenants. Bonds have been and will be used for the purpose of
improving the District’s existing facilities and to build the projects outlined in the Capital Improvement
Program (CIP). The District’s debt service obligations have a significant impact on the District’s
current and future water rates. All efforts that minimize the cost of debt have a corresponding effect
that reduce water rates.
In September 2018, Standard & Poor’s (S&P) affirmed the District’s water operation’s AA rating and
stable outlook. The rating was based on good historical coverage metrics, strong liquidity position,
moderate leverage, and strong financial management policies and practices. The District’s sewer
debt is not rated.
The District’s water operations achieved a 219% actual debt coverage ratio, with growth revenues,
for fiscal year 2023, which exceeded the debt covenant minimum ratio of 125%. To meet the bond
indebtedness obligation and maintain stable rates, the rate model is used to forecast revenues and
operating requirements. On the water side, the District anticipates debt issuances of $25.0 million
and $30.5 million for budget years FY 2025 and FY 2027, respectively. The charts below show the
District’s projected debt coverage calculations and ratios, for the water side of the District, from FY
2024 through FY 2029.
2.86 3.10
2.42 2.66 2.97 2.92
-
1
2
3
4
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Co
v
e
r
a
g
e
R
a
t
i
o
Projected Water Debt Coverage Calculations and Ratios
Projected Ratio Minimum Covenant = 1.25
55
7.11 7.38 7.60 8.06
3.93 3.59
-
1
2
3
4
5
6
7
8
9
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Co
v
e
r
a
g
e
R
a
t
i
o
Debt Management
The District’s Board of Directors believes that a strong debt coverage ratio will benefit the ratepayers
as it reduces the cost of water infrastructure; and therefore have been willing to support this with
necessary rate increases. The District has projected a schedule of rate increases designed to
generate sufficient revenue to pay off existing and planned future debt issues. See the Policies
section of the budget for the District’s complete Debt Policy.
Sewer Debt Coverage
For sewer, the District originally issued $3.1 million of debt for sewer capital projects in 2019. This is
sewer’s only current outstanding debt obligation. The District is forecasting an additional debt
issuance of $3.7 million in FY 2027. This funding is necessary to meet the projected capital project
expenditures and maintain reserves above target levels in all six years.
The financial needs of sewer for the FY 2024 six-year projection include funding anticipated Metro
JPA increases, increases in County of San Diego shared facility costs for county rehabilitation
projects, and meeting the debt coverage requirements of future debt issuances. Sewer’s debt service
coverage, with growth revenues, for FY 2023 was 603%. The charts below show the District’s
projected debt coverage calculations and ratios for the sewer operations from FY 2024 through FY
2029. The projected debt coverage ratios from FY 2024 to FY 2027 will steadily increase due to stable
rate increases. However, the debt coverage ratios are expected to decrease when the repayment of
the debt issued in FY 2027 starts in FY 2028.
Projected Sewer Debt Coverage Calculations and Ratios
Projected Ratio Minimum Covenant = 1.25
56
The District's debt service payments for FY 2024 is $9.6 million on total outstanding debt of $139 million as of
June 30, 2024. The FY 2024 debt service payments represent 7.5% of the District's total budget. The District
considers this debt level low and does not impact the level of utility service provided to customers.
The following schedule shows the District's debt service payments for FY 2024:
Year Incurred Debt Description Principal Interest Principal Interest Total
2010 Water Revenue Bonds Series A 1,235,000$ 98,863$ -$ -$ 1,333,863$
2010 Water Revenue Bonds Series B - 2,371,868 - - 2,371,868
2013 Water Revenue Refunding Bonds 835,000 - - - 835,000
2016 Water Revenue Refunding Bonds 1,350,000 842,081 - - 2,192,081
2018 Water Revenue Refunding Bonds 1,650,000 1,104,538 - - 2,754,538
2019 Wastewater Revenue Bonds - - 75,000 86,541 161,541
Total 5,070,000$ 4,417,350$ 75,000$ 86,541$ 9,648,891$
Water Sewer
Impact of Current Debt Levels
57
Outstanding
Year Maturity Original Principal Balance
#Incurred Description Date Amount 6/30/2024
1 2010 Water Revenue Bonds Series A September 1, 2024 13,840,000$ 2,530,000$
2 2010 Water Revenue Bonds Series B (1)September 1, 2040 36,355,000 36,355,000
3 2013 Water Revenue Refunding Bonds (2)September 1, 2023 7,735,000 835,000
4 2016 Water Revenue Refunding Bonds (3)September 1, 2036 33,385,000 25,370,000
5 2018
Water Revenue Refunding Bonds (4)September 1, 2043 32,435,000 27,055,000
Subtotal Water Bonds 123,750,000 92,145,000
6 2019 Wastewater Revenue Bonds September 1, 2049 3,120,000 2,985,000
Subtotal Wastewater Bonds 3,120,000 2,985,000
Total Outstanding Debt 126,870,000$ 95,130,000$
Total Assessed Valuation - FY 2023
Percentage of Original Debt to Assessed Valuation 0.32%
General Obligation Bonds Debt Limit per District Debt Policy (% of Assessed Valuation)0.00%
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a
refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable
Rate COPs.
Schedule of Outstanding Debt
All Debt
Total Outstanding Debt, in millions ($)
Note: The accounting for debt proceeds and payments is described in the District's Reserve Policy found on pages
165-200.
40,067,736,869$
$0
$10
$20
$30
$40
$50
$60
$70
2010A WRBs 2010B WRBs(1) 2013 WRRBs(2) 2016 WRRBs(3) 2018 WRRBs(4) 2019 WWRBs
Principal Interest
2010B
WRBs(1)
2013
WRRBs(2)
2016
WRRBs(3)
2018
WRRBs(4)
58
2010A WRBs 2010B WRBs(1)2013 WRRBs(2)2016 WRRBs(3)2018 WRRBs(4)2019 WWRBs Total
1,235,000$ -$ 835,000$ 1,350,000$ 1,650,000$ 75,000$ 5,145,000$
1,295,000 - - 1,420,000 1,730,000 75,000 4,520,000
- 1,365,000 - 1,495,000 1,820,000 80,000 4,760,000
- 1,450,000 - 1,570,000 1,915,000 80,000 5,015,000
- 1,545,000 - 1,645,000 1,030,000 85,000 4,305,000
- 1,640,000 - 1,715,000 1,080,000 85,000 4,520,000
- 1,745,000 - 1,785,000 1,135,000 90,000 4,755,000
- 1,855,000 - 1,855,000 1,195,000 90,000 4,995,000
- 1,975,000 - 1,955,000 1,245,000 95,000 5,270,000
- 2,105,000 - 2,005,000 1,295,000 95,000 5,500,000
- 2,245,000 - 2,055,000 1,350,000 100,000 5,750,000
- 2,390,000 - 2,115,000 1,400,000 100,000 6,005,000
- 2,550,000 - 2,170,000 1,460,000 105,000 6,285,000
- 2,715,000 - 2,235,000 1,270,000 105,000 6,325,000
- 2,895,000 - -1,235,000 110,000 4,240,000
- 3,085,000 - -1,185,000 115,000 4,385,000
- 3,290,000 - -1,210,000 115,000 4,615,000
- 3,505,000 - -1,290,000 120,000 4,915,000
- -- -985,000 125,000 1,110,000
- -- -775,000 125,000 900,000
- -- -800,000 130,000 930,000
- -- -- 135,000 135,000
- -- -- 140,000 140,000
- -- -- 145,000 145,000
- -- -- 150,000 150,000
- -- -- 155,000 155,000
- -- -- 160,000 160,000
2,530,000$ 36,355,000$ 835,000$ 25,370,000$ 27,055,000$ 2,985,000$ 95,130,000$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2049
2050
Total
Combined Debt Service through Maturity, in millions ($)
2044
2040
2041
2042
2043
2045
2046
2047
2048
2034
2035
2036
2037
2038
2039
2028
2029
2030
2031
2032
2033
2024
2025
2026
2027
Projected Principal Payments by Debt Issuance
FY
$0
$2
$4
$6
$8
$10
$12
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
20
3
3
20
3
4
20
3
5
20
3
6
20
3
7
20
3
8
20
3
9
20
4
0
20
4
1
20
4
2
20
4
3
20
4
4
20
4
5
20
4
6
20
4
7
20
4
8
20
4
9
20
5
0
Principal Interest
59
2010A WRBs 2010B WRBs(1)2013 WRRBs(2)2016 WRRBs(3)2018 WRRBs (4)2019 WWRBs Total
98,863$ 2,371,868$ -$ 842,081$ 1,104,538$ 86,541$ 4,503,891$
33,994 2,371,868 - 771,081 1,018,038 84,291 4,279,272
- 2,328,345 - 696,331 927,038 81,891 4,033,605
- 2,238,589 - 617,831 831,288 79,491 3,767,199
- 2,143,093 - 552,031 779,788 76,941 3,551,854
- 2,041,540 - 483,431 725,788 74,391 3,325,150
- 1,933,609 - 412,031 669,038 71,691 3,086,369
- 1,818,823 - 337,831 609,288 68,991 2,834,933
- 1,694,728 - 288,956 559,488 66,616 2,609,789
- 1,560,558 - 238,831 507,688 64,146 2,371,223
- 1,417,508 - 184,888 453,688 61,446 2,117,529
- 1,265,086 - 126,725 397,688 58,696 1,848,195
- 1,102,634 - 67,050 339,288 55,756 1,564,728
- 929,495 - - 288,488 52,738 1,270,720
- 745,010 - - 245,263 49,575 1,039,847
- 548,357 - - 197,863 46,269 792,489
- 338,716 - - 154,000 42,819 535,534
- 115,262 - - 102,400 39,219 256,881
- - - - 63,000 35,469 98,469
- - - - 32,000 31,719 63,719
- - - - - 27,656 27,656
- - - - - 23,438 23,438
- - - - - 19,063 19,063
- - - - - 14,531 14,531
- - - - - 9,844 9,844
- - - - - 5,000 5,000
132,856$ 26,965,089$ -$ 5,619,100$ 10,005,650$ 1,328,229$ 44,050,925$
(1)The 2010B Water Revenue Bonds are Taxable Build America Bonds.
(2)The 2013 Water Revenue Refunding Bonds were an advanced refunding of the 2004 COPs, which was a refunding of the 1993 COPs.
(3)The 2016 Water Revenue Refunding Bonds were an advanced refunding of the 2007 COPs.
(4)The 2018 Water Revenue Refunding Bonds include a $6.9 million current refunding of the 1996 Variable Rate COPs.
2045
2046
2047
2048
2030
2031
2032
Total
2035
2036
2037
2038
2042
2043
2039
2049
2033
2034
2044
2040
2041
2024
2025
2026
2027
2028
2029
Projected Interest Payments by Debt Issuance
FY
60
Potable Revenues and Expenditures
Potable Revenues
The District will provide water service to approximately 51,758 potable customers by the end of FY
2024. Ninety-one percent of the potable customers are residential and the remaining 9.0% are
comprised of multi-residential, business and commercial, publicly-owned, non-public irrigation and
commercial agriculture, public irrigation, and construction. The District expects nominal growth in
the customer base of 1.0% for FY 2024. Unit sales are anticipated to increase by 0.8% compared to
the previous year's budget and 6.4% versus the previous year’s actual unit sales. Other revenue
sources include system charges, energy charges, penalties, and other pass-through charges from
the San Diego County Water Authority (CWA) and the Metropolitan Water District (MWD).
All customers are required to pay fixed monthly fees: the MWD/CWA fixed charge, and the District
system charge. The MWD/CWA fixed charges are based on meter size. The District system fee is
based on meter size and customer type. These fees generate 26.5% of the potable water sales
revenue. Water rates, energy charges, and penalties generate the remaining 73.5% of revenues
necessary to fund operations.
Energy charges are based on the quantity of water used and the elevation to which the water is lifted
to provide service. Energy charges are set to annually recover the power costs associated with
pumping water to higher elevation.
Penalties are charged to the District customer accounts when payments are delinquent. These
penalty revenues are budgeted based on historical trends.
Potable Expenditures
In FY 2024, the District estimates to purchase 28,684.4 acre-feet of potable water, sufficient to meet
the demands of its customers. Provisions have been made for District usage and loss in the amount
of 1,117.9 acre-feet.
Today, the District purchases 100% of its potable water from CWA. In the past the District purchased
only treated water through the CWA’s treated water Pipeline No. 4. In 2010, to diversify the water
supply and to become less reliant on CWA’s Pipeline No. 4, the District entered an agreement with
CWA to purchase water treated by neighboring Helix Water District at their Levy Water Treatment
Plant. This treated water from Flow Control Facility No. 14 gives the District redundancy in water
supply. This is beneficial as it enhances reliability of water deliveries in an emergency situation such
as earthquakes or other natural disasters. The District’s agreement also brings regional water
treatment closer to our customers, which reduces dependence on water treatment facilities located
outside of San Diego County. Flow Control Facility No. 14 connects the Helix Water District to the
Otay Water District through approximately five miles of 36-inch pipeline.
Although the District does not own a direct water supply reservoir to capture surface water, there are
cooperative agreements between CWA and the other member agencies to manage water demands
and supply the region in times of need.
61
Potable Revenues and Expenditures
The reservoirs of member agencies and CWA serve multiple functions including: surface water
capture, seasonal water storage and carryover storage to provide a reliable water source in dry years.
The CWA’s emergency and carryover storage project interconnected reservoirs, pipelines and pump
stations make water available to the San Diego region if imported water deliveries are interrupted.
Historically, CWA purchases water for the 24 member agencies from MWD and the Imperial Irrigation
District. In December 2015, the Claude “Bud” Lewis Carlsbad Desalination Plant began its
commercial operations and has entered into an agreement with CWA as its sole water purchaser.
Any cost increases by CWA, MWD, IID, or Carlsbad Desalination Plant impacts the District's water
purchases and directly affects the District's fees, rates, and service charges. The Carlsbad
Desalination Plant began commercial operations in December 2015 and is the largest seawater
desalination plant in the nation. It produces approximately 56,000 acre-feet per year of drinking water
for the San Diego region. It currently meets about 10% of the county’s water demand.
62
FY 2022 FY 2023 FY 2023 FY 2024
11-Actual Budget Actual Budget $%
Revenues
##Water Sales 92,452,011$ 94,308,000$ 90,549,740$ 100,949,000$ 6,641,000$ 7.0%
##Meter Fees 154,443 157,000 122,639 154,000 (3,000) (1.9%)
##Capacity Fee Revenues 2,536,629 2,311,000 2,718,270 2,352,000 41,000 1.8%
Tax Revenues 5,449,332 5,253,000 6,032,251 6,190,000 937,000 17.8%
##Non-operating Revenues 6,459,721 2,507,100 3,104,697 2,712,600 205,500 8.2%
##Interest 156,069 432,000 623,548 935,000 503,000 116.4%
Total Revenues 107,208,205 104,968,100 103,151,145 113,292,600 8,324,500 7.9%
Potable Water Purchases 42,572,534 44,250,000 41,263,647 48,147,000 3,897,000 8.8%
##CWA - Infrastructure Access Charge 3,080,352 2,998,000 3,097,476 3,146,000 148,000 4.9%
##CWA - Customer Service Charge 1,816,764 1,881,000 1,900,266 1,971,000 90,000 4.8%
##CWA - Reliability Charge 2,866,626 3,003,000 3,042,420 3,235,000 232,000 7.7%
##CWA - Emergency Storage Charge 4,595,462 4,711,000 4,748,834 4,865,000 154,000 3.3%
##MWD - Capacity Reservation Charge 764,843 762,000 740,531 562,000 (200,000) (26.2%)
##MWD - Readiness-To-Serve Charge 653,367 685,000 613,556 654,000 (31,000) (4.5%)
Subtotal - Water Costs 56,349,948 58,290,000 55,406,730 62,580,000 4,290,000 7.4%
##Labor and Benefits 19,328,712 21,976,200 21,696,252 23,228,500 1,252,300 5.7%
##Administrative Expenses 6,227,770 7,243,900 6,971,244 8,151,900 908,000 12.5%
##Materials and Maintenance 2,587,437 2,676,400 2,706,830 3,117,500 441,100 16.5%
##Power 2,990,695 3,136,000 3,679,103 3,487,000 351,000 11.2%
11-1311-5133Subtotal - Operations Costs 31,134,614 35,032,500 35,053,429 37,984,900 2,952,400 8.4%
##Expansion Reserve - - - 4,250,000 4,250,000 100.0%
Bett ResBetterment Reserve 445,000 4,065,000 4,065,000 1,803,000 (2,262,000) (55.6%)
Repl ResReplacement Reserve 11,918,900 7,580,600 7,580,600 6,674,700 (905,900) (12.0%)
Subtotal - Reserve Funding 12,363,900 11,645,600 11,645,600 12,727,700 1,082,100 9.3%
Total Expenditures 99,848,462 104,968,100 102,105,759 113,292,600 8,324,500 7.9%
Excess Revenues (Expenditures)7,359,743$ -$ 1,045,387$ -$ -$ -
Operating Budget Summary - Potable
Budget to Budget
Variance
63
FY 2022 FY 2024
Actual Budget Actual Budget $ %
Water Sales 57,900,777$ 61,958,000$ 58,208,380$ 70,298,000$ 8,340,000$ 13.5%
System Charges 17,439,502 15,168,000 15,248,032 13,011,000 (2,157,000) (14.2%)
Energy Charges 2,692,451 2,721,000 2,538,846 2,916,000 195,000 7.2%
MWD and CWA Fixed Charges 13,548,475 13,547,000 13,595,126 13,746,000 199,000 1.5%
Penalties 870,806 914,000 959,356 978,000 64,000 7.0%-$
Total Water Sales 92,452,011$ 94,308,000$ 90,549,740$ 100,949,000$ 6,641,000$ 7.0%
Water Sales 70,298,000$
System Charges 13,011,000
Energy Charges 2,916,000
MWD and CWA Fixed Charges 13,746,000
Penalties 978,000
Total Water Sales 100,949,000$
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is
equal to 100 cubic feet of water.
System Charges: Each water service customer pays a monthly system charge for water system replacement,
maintenance, and operation expenses. The charge is based on the meter size.
Energy Charges: The energy pumping charge is $0.075 per 100 cubic feet of water for each 100 feet of lift above
the elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD and CWA Fixed Charges: These pass-through charges are calculated to recover MWD's and CWA's fixed annual
costs, excluding MWD's Capacity Reservation charge. These fixed charges are based on meter size.
Penalties: Penalties are imposed on customer accounts for late payments and returned checks.
FY 2024 Classification of Water Sales
FY 2023
Classification of Water Sales - Potable
Budget to Budget
Variance
64
Customer Class and
Unit Structure(1)
Current
Rate
Approved
Rate (2)Accounts Unit Sales Budget Budget - (Validation)
Residential 46,878 6,133,000 35,149,000$
0 - 9 5.26$ 5.60$
10 - 12 5.71 6.08
13 or more 6.35 6.76
Multi-Residential 1,003 1,925,000 10,514,000
0 - 9 5.22 5.56
10 - 12 5.65 6.01
13 or more 5.85 6.23
Business and Commerical(3)
All units 5.52 5.88 2,188 1,259,000 7,156,000
Publicly Owned
All units 6.08 6.47 200 682,000 4,267,000
Non-Public Irrigation and Commercial Agriculture
All units 6.36 6.77 1,070 1,385,000 8,989,000
Public Irrigation
All units 6.94 7.39 233 312,000 2,213,000
Construction
All units 6.32 6.73 186 312,000 2,010,000
Total Water Sales 51,758 12,008,000 70,298,000$
Unit Sales %
Residential 6,133,000 51.1%
Multi-Residential 1,925,000 16.0%
Business and Commercial 1,259,000 10.5%
Publicly Owned 682,000 5.7%
Non-Public Irrigation and Commercial Agriculture 1,385,000 11.5%
Public Irrigation 312,000 2.6%
Construction 312,000 2.6%
Total Water Sales 12,008,000 100.0%
Water Sales Summary by Customer Class - Potable
(3)Fire Services Meters are charged the Business and Commercial water rate.
FY 2024 Unit Sales by Customer Class
(2)Approved rates apply to water billed beginning January 1, 2024.
(1)This cost varies based on water usage and can be calculated using the consumption block tables. One unit of consumption
divided by the number of dwellings served.
equals 748 gallons of water or one HCF (hundred cubic feet). Consumption for Multi-Residential is the water usage
Water Rates FY 2024
65
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget Actual Budget
Residential 6,187,132 6,311,655 6,926,913 6,499,686 6,491,400 5,814,587 6,133,000
Multi-Residential 1,598,041 1,658,205 1,798,024 1,806,626 1,857,800 1,831,262 1,925,000
Business and Commercial 1,147,997 1,100,358 1,132,851 1,326,708 1,132,700 1,287,432 1,259,000
Publicly Owned 726,315 710,052 689,237 743,983 744,900 677,092 682,000
Non-Public Irrigation and Commercial Agriculture 1,142,073 1,072,854 1,331,773 1,284,096 1,131,900 1,063,704 1,385,000
Public Irrigation 250,694 252,466 307,244 338,309 262,700 278,000 312,000
Construction 274,500 284,893 418,058 310,809 286,500 283,827 312,000
Total Unit Sales 11,326,752 11,390,483 12,604,100 12,310,217 11,907,900 11,235,904 12,008,000
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget Actual Budget
Residential 45,972 46,298 46,482 46,574 46,722 46,742 46,878
Multi-Residential 821 874 884 896 919 965 1,003
Business and Commercial(1)2,056 2,099 2,113 2,180 2,113 2,222 2,188
Publicly Owned 246 250 252 253 252 202 200
Non-Public Irrigation and Commercial Agriculture 1,005 1,016 1,022 1,040 1,035 1,059 1,070
Public Irrigation 258 261 262 260 264 233 233
Construction 197 196 189 186 189 181 186
Total Meter Count 50,555 50,994 51,204 51,389 51,494 51,604 51,758
(1) Business and Commercial Customer Class includes Fire Services Meters.
Unit Sales and Meter Count History by Customer Class - Potable
Unit Sales in thousands and Meter Count Trends
FY 2023
Unit Sales by Customer Class
Meter Count by Customer Class
Actual
Actual
FY 2023
5,000
15,000
25,000
35,000
45,000
55,000
-
5,000
10,000
15,000
20,000
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
Unit Sales in thousands and Meter Count Trends
Potable Meters Potable Unit Sales
Units Meters
66
FY 2023 FY 2024 FY 2023 FY 2024
Meter Size Count Count Current Approved Budget Budget $%
Residential
0.75 45,386 45,390 18.07$ 19.24$ 10,373,000$ 10,156,000$ (217,000)$ (2.1%)
1.00 1,313 1,465 22.47 23.92 383,000 384,000 1,000 0.3%
1.50 19 19 33.73 35.91 9,000 8,000 (1,000) (11.1%)
2.00 4 4 47.04 50.07 3,000 2,000 (1,000) (33.3%)
Sub-total 46,722 46,878 10,768,000 10,550,000 (218,000) (2.0%)
Multi-Residential
0.75 44 52 16.67 17.75 15,000 10,000 (5,000) (33.3%)
1.00 195 234 20.14 21.44 95,000 58,000 (37,000) (38.9%)
1.50 256 266 29.06 30.93 206,000 93,000 (113,000) (54.9%)
2.00 270 292 39.58 42.13 325,000 140,000 (185,000) (56.9%)
3.00 75 75 83.59 88.98 159,000 77,000 (82,000) (51.6%)
4.00 69 74 140.85 149.93 254,000 128,000 (126,000) (49.6%)
6.00 7 7 276.38 294.21 51,000 24,000 (27,000) (52.9%)
8.00 3 3 426.72 454.24 34,000 16,000 (18,000) (52.9%)
Sub-total 919 1,003 1,139,000 546,000 (593,000) (52.1%)-
Business and Commercial
0.75 311 315 18.22 19.40 112,000 71,000 (41,000) (36.6%)
1.00 308 317 22.72 24.19 151,000 89,000 (62,000) (41.1%)
1.50 277 285 34.22 36.43 226,000 121,000 (105,000) (46.5%)
2.00 304 308 47.82 50.90 367,000 182,000 (185,000) (50.4%)
3.00 30 31 101.62 108.17 71,000 39,000 (32,000) (45.1%)
4.00 13 13 173.30 184.48 48,000 28,000 (20,000) (41.7%)
6.00 3 3 348.50 370.98 22,000 13,000 (9,000) (40.9%)
Sub-total 1,246 1,272 997,000 543,000 (454,000) (45.5%)-
Publicly Owned
0.75 34 15 16.97 18.06 12,000 3,000 (9,000) (75.0%)
1.00 64 26 20.64 21.97 30,000 7,000 (23,000) (76.7%)
1.50 32 35 30.06 32.00 25,000 13,000 (12,000) (48.0%)
2.00 84 86 41.18 43.84 98,000 44,000 (54,000) (55.1%)
3.00 11 12 87.08 92.70 25,000 13,000 (12,000) (48.0%)
4.00 16 15 147.14 156.63 57,000 27,000 (30,000) (52.6%)
6.00 6 6 290.36 309.09 42,000 22,000 (20,000) (47.6%)
10.00 5 5 692.32 736.97 80,000 43,000 (37,000) (46.3%)
Sub-total 252 200 369,000 172,000 (197,000) (53.4%)
Non-Public Irrigation and Commercial Agriculture
0.75 115 128 16.13 17.17 35,000 25,000 (10,000) (28.6%)
1.00 273 284 19.24 20.48 112,000 67,000 (45,000) (40.2%)
1.50 330 339 27.26 29.02 222,000 114,000 (108,000) (48.6%)
2.00 313 315 36.69 39.06 311,000 143,000 (168,000) (54.0%)
4.00 2 2 129.48 137.83 6,000 3,000 (3,000) (50.0%)
6.00 2 2 251.10 267.29 12,000 6,000 (6,000) (50.0%)
Sub-total 1,035 1,070 698,000$ 358,000$ (340,000)$ (48.7%)
System Charges - Potable
(1)Rates apply to water billed beginning January 1, 2024.
System Charges Budget to Budget Variance
(1)
67
FY 2023 FY 2024 FY 2023 FY 2024
Meter Size Count Count Current Approved Budget Budget $%
System Charges - Potable
System Charges Budget to Budget Variance
(1)
Public Irrigation
0.75 12 11 16.13$ 17.17$ 4,000$ 2,000$ (2,000)$ (50.0%)
1.00 32 23 19.24 20.48 13,000 5,000 (8,000) (61.5%)
1.50 68 65 27.26 29.02 45,000 22,000 (23,000) (51.1%)
2.00 145 130 36.69 39.06 144,000 59,000 (85,000) (59.0%)
3.00 3 - 77.26 82.25 6,000 - (6,000) (100.0%)
4.00 4 4 129.48 137.83 12,000 6,000 (6,000) (50.0%)
Sub-total 264 233 224,000 94,000 (130,000) (58.0%)
Construction
0.75 6 3 16.58 17.65 2,000 1,000 (1,000) (50.0%)
1.00 4 - 19.98 21.27 1,800 - (1,800) (100.0%)
1.50 3 - 28.75 30.60 2,200 - (2,200) (100.0%)
2.00 1 - 39.09 41.61 1,100 - (1,100) (100.0%)
4.00 172 176 138.91 147.87 531,000 300,000 (231,000) (43.5%)
8.00 3 7 419.37 446.42 29,000 26,000 (3,000) (10.3%)
Sub-total 189 186 567,100 327,000 (240,100) (42.3%)
Fire Services
All Meters 867 916 329,900 345,000 15,100 4.6%
Set-up Fees 15.00 15.00 76,000 76,000 - -
Total 51,494 51,758 15,168,000$ 13,011,000$ (2,157,000)$ (14.2%)
(1)Rates apply to water billed beginning January 1, 2024.
68
FY 2024 FY 2023 FY 2024
Meter Size Count(1)Current Approved(2)Budget Budget $%
0.75 45,914 16.33$ 17.19$ 9,165,000$ 9,230,000$ 65,000$ 0.6%
1.00 2,349 27.22 28.65 750,000 758,000 8,000 1.1%
1.50 1,009 54.42 57.27 736,000 669,000 (67,000) (9.1%)
2.00 1,135 87.06 91.62 1,399,000 1,210,000 (189,000) (13.5%)
3.00 118 190.45 200.43 304,000 274,000 (30,000) (9.9%)
4.00 284 342.81 360.77 826,000 1,195,000 369,000 44.7%
6.00 25 761.79 801.71 174,000 235,000 61,000 35.1%
8.00 3 1,305.91 1,374.34 72,000 48,000 (24,000) (33.3%)
10.00 5 2,067.69 2,176.04 121,000 127,000 6,000 5.0%
Total 50,842 13,547,000$ 13,746,000$ 199,000$ 1.5%
(1) Excludes fire service meters.
(2) Approved rates apply to water billed beginning January 1, 2024.
Historical MWD and CWA Fixed Charges, in millions ($)
Budget to Budget VarianceMWD and CWA Fixed Charges
MWD and CWA Fixed Charges (Pass-Through) - Potable
$0
$2
$4
$6
$8
$10
$12
$14
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
69
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 10 130.80$ 275.63$ 406.43$ 4,000$
1.00 214 130.80 355.69 486.49 104,000
1.50 22 130.80 578.13 708.93 16,000
2.00 13 130.80 828.40 959.20 12,000
3.00 2 787.54 2,581.62 3,369.16 7,000
4.00 2 787.54 4,483.85 5,271.39 11,000
6.00 - 1,243.98 7,744.83 8,988.81 -
8.00 - 1,907.52 9,676.59 11,584.11 -
10.00 - 1,907.52 13,916.75 15,824.27 -
Total 263 154,000$
Meter Fees:Charges collected for new water service connections. Fees vary depending upon meter
size and type of service. The costs associated with meter installations are included in the Operating
Expenses section of the budget. These charges are funded by developers.
Historical Meter Count
FY 2024
Meter Fees - Potable
-
15,000
30,000
45,000
60,000
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
70
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget
Water Sales 47,517,849$ 50,081,789$ 58,610,501$ 57,900,777$ 58,208,380$ 70,298,000$
System Charges 15,383,214 16,205,007 16,828,509 17,439,502 15,248,032 13,011,000
Energy Charges 2,123,039 2,276,779 2,695,390 2,692,451 2,538,846 2,916,000
MWD and CWA Fixed Charges 12,149,114 12,305,712 12,889,974 13,548,475 13,595,126 13,746,000
Penalties 801,527 612,381 30,576 870,806 959,356 978,000
Total Potable Revenues 77,974,743$ 81,481,668$ 91,054,950$ 92,452,011$ 90,549,740$ 100,949,000$
Revenue History - Potable, in millions ($)
Revenue History - Potable
FY 2023
Actual
$-
$20
$40
$60
$80
$100
$120
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
Water Sales System Charges Energy Charges MWD & CWA Fixed Charges Penalties
71
FY 2024 FY 2024
Budget Actual Budget Budget Actual Budget $ %
Average Variable Rate Per Acre-Foot:(1)1,545.00$ 1,540.56$ 1,679.00$ 134.00$ 8.7%
Budgeted Sales 27,336.8 25,794.1 27,566.5 42,245,000 39,737,477 46,272,000 4,027,000 9.5%
District, Unbilled Usage(2)151.5 25.5 57.0 235,000 39,284 93,000 (142,000) (60.4%)
Water Loss 1,144.9 997.1 1,060.9 1,770,000 1,536,097 1,782,000 12,000 0.7% Budgeted Sales Treatment (CSD)- - - -
-
- - 0.0%
Total Variable Charges 28,633.2 26,765.7 28,684.4 44,250,000$ 41,234,288$ 48,147,000$ 3,897,000$ 8.8%
CWA and MWD Fixed Charges:
CWA - Infrastructure Access Charge 2,998,000$ 3,097,476$ 3,146,000$ 148,000$ 4.9%
CWA - Customer Service Charge 1,881,000 1,900,266 1,971,000 90,000 4.8%
CWA - Emergency Storage Charge 4,711,000 4,748,834 4,865,000 154,000 3.3%
CWA - Reliability Fixed Charge 3,003,000 3,042,420 3,235,000 232,000 7.7%
MWD - Capacity Reservation Charge 762,000 740,531 562,000 (200,000) (26.2%)
MWD - Readiness-to-Serve Charge 685,000 613,556 654,000 (31,000) (4.5%)
Total Fixed Charges 14,040,000$ 14,143,083$ 14,433,000$ 393,000$ 2.8%
Total Variable and Fixed Charges 58,290,000$ 55,377,371$ 62,580,000$ 4,290,000$ 7.4%
Average Cost Per Acre-Foot 2,036$ 2,069$ 2,182$
(1)The average variable rate per acre-foot is a weighted average rate based on CWA’s actual calendar year variable rate of $1,608.00 per
acre-foot in 2023, and a projected 2024 calendar year variable rate of $1,772.00 per acre-foot.
(2)Excludes potable supplement to recycled system.
Water Purchases and Related Costs - Potable
Budget to Budget
VariancePurchase Costs
FY 2023FY 2023
Acre-Feet
-
8,000
16,000
24,000
32,000
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
Historical Potable Water Purchases, in acre-feet
72
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024
Budget Actual Budget $ %
Administrative Buildings 168,286$ 166,175$ 170,863$ 217,303$ 228,000$ 254,500$ 267,000$ 39,000$ 17.1%
Potable Transmission 2,028,976 2,260,865 2,464,206 2,773,392 2,908,000 3,227,000 3,220,000 312,000 10.7%
Total Power Costs 2,197,262$ 2,427,040$ 2,635,069$ 2,990,695$ 3,136,000$ 3,481,500$ 3,487,000$ 351,000$ 11.7%
Power Costs - Potable
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
FY 2023
Actual
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
Administrative Buildings Potable Transmission
73
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Administrative Expenditures
Directors' Fees 55,632$ 84,000$ 59,130$ 75,000$ (9,000)$ (10.7%)
Travel and Conferences 96,910 181,600 214,998 254,700 73,100 40.3%
Memberships and Dues 79,843 92,000 83,420 94,800 2,800 3.0%
Conservation and Outreach 125,816 138,200 134,956 145,500 7,300 5.3%
General Office Expense 250,436 268,000 296,036 304,800 36,800 13.7%
IT Hardware, Software & Communication 1,318,028 1,439,600 1,423,467 1,690,000 250,400 17.4%
Miscellaneous Office & Field Equipment 101,304 112,600 95,598 149,900 37,300 33.1%
Fees 956,331 1,121,700 984,171 1,076,000 (45,700) (4.1%)
Services 1,961,809 2,484,200 1,906,478 2,764,100 279,900 11.3%
Training 153,465 208,800 209,114 290,700 81,900 39.2%
Utilities 17,747 18,100 25,712 23,800 5,700 31.5%
Insurance and Legal 1,703,411 1,959,500 2,281,368 2,165,000 205,500 10.5%
Bad Debt Expense 247,276 120,000 21,028 70,000 (50,000) (41.7%)
Subtotal before Overhead 7,068,008 8,228,300 7,735,476 9,104,300 876,000 10.6%
Less: Overhead Allocation (840,238) (984,400) (764,232) (952,400) 32,000 (3.3%)
Total Expenditures 6,227,770$ 7,243,900$ 6,971,244$ 8,151,900$ 908,000$ 12.5%
5,400,900$ 10,016,844$ 11,269,300$
Directors' Fees 75,000$ 0.8%
Travel and Conferences 254,700 2.8%
Memberships and Dues 94,800 1.0%
Conservation and Outreach 145,500 1.6%
General Office Expense 304,800 3.3%
IT Hard/Software & Comm 1,690,000 18.6%
Misc Office/Field Equipment 149,900 1.6%
Fees 1,076,000 11.8%
Services 2,764,100 30.4%
Training 290,700 3.2%
Utilities 23,800 0.3%
Insurance and Legal 2,165,000 23.8%
Bad Debt Expense 70,000 0.8%
Subtotal before Overhead 9,104,300 100.0%
Less: Overhead Allocation (952,400)
Total Expenditures 8,151,900$
Administrative Expenditures - Potable
Budget to Budget
Variance
FY 2024 Administrative Expenditures - Potable
74
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $ %
Materials and Maintenance
Fuel and Oil 311,212$ 306,200$ 293,552$ 296,500$ (9,700)$ (3.2%)
Meters and Materials 160,326 147,600 218,266 187,100 39,500 26.8%
Fleet Parts and Equipment 123,316 161,600 157,508 165,600 4,000 2.5%
Infrastructure Equipment and Supplies 399,772 428,900 498,077 589,200 160,300 37.4%
Chemicals 175,872 247,200 251,043 424,600 177,400 71.8%
Safety Equipment 100,249 63,000 79,536 100,700 37,700 59.8%
Laboratory Equipment and Supplies 57,967 55,500 55,575 50,500 (5,000) (9.0%)
Other Materials and Supplies 281,841 296,100 322,434 350,000 53,900 18.2%
Building and Grounds Materials 87,879 82,500 86,454 92,500 10,000 12.1%
Contracted Services 889,003 887,800 744,385 860,800 (27,000) (3.0%)
Total Expenditures 2,587,437$ 2,676,400$ 2,706,830$ 3,117,500$ 441,100$ 16.5%
FY 2024 Materials and Maintenance Expenditures - Potable
Fuel and Oil 296,500$ 9.6%
Meters and Materials 187,100 6.0%
Fleet Parts and Equipment 165,600 5.3%
Infrastructure Equipment and Supplies 589,200 18.9%
Chemicals 424,600 13.6%
Safety Equipment 100,700 3.2%
Laboratory Equipment and Supplies 50,500 1.6%
Other Materials and Supplies 350,000 11.2%
Building and Grounds Materials 92,500 3.0%
Contracted Services 860,800 27.6%
Total Expenditures 3,117,500$ 100.0%
Materials and Maintenance Expenditures - Potable
Budget to Budget
Variance
75
Potable Water Service Area
76
Recycled Revenues and Expenditures
In 1980, the District began operation of the Ralph W. Chapman Water Recycling Facility. The
RWCWRF plant is capable of recycling wastewater at the rate of 1.3 million gallons per day (MGD)
to augment water supplies for irrigation purposes only. The treatment process consists of primary,
secondary, and tertiary treatment. The facility’s conversion time to treat raw sewage to full Title 22
recycled water is approximately 20 hours.
The steps of the water recycling process are as follows:
Primary Treatment
The raw sewage flows in at the rotary screen, also known as the “headworks” which removes a large
amount of coarse organic and inorganic material that is either floating or in suspension. This is
followed by a grit chamber, which removes the heavy settled material.
Secondary Treatment
This is where the biological treatment begins. The first step takes place in the aeration tanks, also
known as reactors or sedimentation basins, which contain bacteria that feed on the organic material
in sewage. These bacteria are aerobic, and therefore require a great quantity of pumped-in air to
help them thrive. The second step in the process is clarification where the sludge from the aeration
tanks is allowed to settle to the bottom and the clear liquid, or secondary effluent, flows out over
weirs at the surface. Some of the settled sludge is disposed of and some is returned to the aeration
tanks to keep the process in balance. The secondary effluent flowing over the weirs is now ready for
the next step. Sludge is discharged to the City of San Diego Metropolitan Wastewater (Metro) system.
77
Recycled Revenues and Expenditures
Tertiary Treatment
Just before filtration, a small amount of coagulant is added as a filter aid which helps suspended
material in the secondary effluent “clump” on the surface of the filters. The filters consist of a layer of
sand with a layer of anthracite coal on top. As the fluid moves through the filters, the flow goes
through a chlorine contact chamber where disinfection takes place, completing the process of
recycling wastewater into recycled water.
The District entered an agreement with the City of San Diego in October 2003, to purchase up to six
million gallons a day of recycled water from their South Bay Water Reclamation Plant (SBWRP). The
District constructed a 30-inch six-mile pipeline, a 12-million-gallon reservoir, and a pump station to
bring this new source of recycled water into the District’s system. These projects were completed in
spring 2007 which eliminated the need for a potable supplement into the recycled system. The
benefits of this to the region are great, as less demand on the potable system will be made, reducing
future capacity and storage requirements. The $42 million investment in capital outlay results in a
significant reduction of water purchase costs and an increase in system reliability. The District
expects that 12% of its total water demand will be met using recycled water.
Both the RWCWRF plant, owned and operated by the District, and the SBWRP plant, owned and
operated by the City of San Diego, supply the District’s recycled distribution system. The District
operates the largest recycled water distribution system in San Diego County and will supply
approximately 3,645.5 acre-feet of recycled water to 793 landscaping and construction customers by
the end of Fiscal Year 2024. The recycled water customer base consists primarily of irrigation at a
golf course, schools, parks, and open space. The geographic area of this water use includes
Eastlake, Otay Ranch, Rancho Del Rey, and other areas of eastern Chula Vista.
Producing and distributing recycled water is costly. To help offset the costs of supplying alternative
water sources, both CWA and MWD offer incentive programs. In Fiscal Year 1991, the District signed
agreements with CWA and MWD to take advantage of the programs they offered. A second
agreement was signed in 2000. In 2005, the District agreed to terminate both agreements and
entered into a new agreement, which expires June 30, 2024, allowing the District to maximize its
ability to earn incentives and to simplify the grant requirements. Currently, the District receives $185
from MWD for every acre-foot (AF) of recycled water sold. As of FY 2021, the District was no longer
eligible for the rebate from CWA.
78
FY 2022 FY 2023 FY 2023 FY 2024
31-Actual Budget Actual Budget $%
Revenues
Recycled Water Sales 10,042,348$ 10,217,000$ 9,351,434$ 10,906,000$ 689,000$ 6.7%
Meter Fees 9,339 13,000 12,440 14,000 1,000 7.7%
Non-operating Revenues - - - 40,000 40,000 100.0%
Interest 28,282 52,000 114,280 115,000 63,000 121.2%
Total Revenues 10,079,969 10,282,000 9,478,154 11,075,000 793,000 7.7%
Expenditures
Recycled Water Purchases 4,585,689 5,487,000 5,432,169 5,798,000 311,000 5.7%
Labor and Benefits 1,298,378 1,574,400 1,218,467 1,547,200 (27,200) (1.7%)
Administrative Expenses 459,270 572,900 468,153 547,000 (25,900) (4.5%)
Materials and Maintenance 396,833 354,900 386,663 551,500 196,600 55.4%
Power 528,760 590,000 547,458 616,000 26,000 4.4%
11-1311-5133Subtotal - Operations Costs 7,268,930 8,579,200 8,052,910 9,059,700 480,500 5.6%
Expansion Reserve 2,041,900 542,800 542,800 - (542,800) (100.0%)
Bett ResBetterment Reserve - 615,000 615,000 613,000 (2,000) (0.3%)
Repl ResReplacement Reserve - 545,000 545,000 1,402,300 857,300 157.3%
Subtotal - Reserve Funding 2,041,900 1,702,800 1,702,800 2,015,300 312,500 18.4%
Total Expenditures 9,310,830 10,282,000 9,755,710 11,075,000 793,000 7.7%
769,139$ -$ (277,556)$ -$ -$ - Excess Revenues/Expenditures
Operating Budget Summary - Recycled
Budget to Budget
Variance
79
FY 2022 FY 2024
Actual Budget Actual Budget $%
Water Sales 8,247,269$ 8,113,000$ 7,387,138$ 8,700,000$ 587,000$ 7.2%
System Charges 929,628 911,000 935,212 936,000 25,000 2.7%
Energy Charges 425,488 490,000 377,146 556,000 66,000 13.5%
MWD Rebate 408,030 668,000 606,634 674,000 6,000 0.9%
Penalties 31,933 35,000 45,304 40,000 5,000 14.3%
Total Recycled Water Sales 10,042,348$ 10,217,000$ 9,351,434$ 10,906,000$ 689,000$ 6.7%
Water Sales 8,700,000$ 79.7%
System Charges 936,000 8.6%
Energy Charges 556,000 5.1%
MWD Rebate 674,000 6.2%
Penalties 40,000 0.4%
Total Recycled Water Sales 10,906,000$ 100.0%
Water Sales: Water rates vary among classes of service and are charged per unit of water. A unit of water is equal
to 100 cubic feet of water.
System Charges: Each water service customer pays a monthly system charge for water system replacement,
maintenance, and operation expenses. The charge is based on customer class and meter size.
Energy Charges: The energy pumping charge is $ 0.089 per 100 cubic feet of water for each 100 feet of lift above
the elevation of 450 feet. All water customers are in one of 29 zones based on elevation.
MWD Rebate: The District receives a $185 incentive from MWD for every acre-foot (AF) of recycled water sold.
Penalties: Penalties are imposed on customer accounts for late payments and returned checks.
Budget to Budget
Variance
FY 2024 Classification of Water Sales
Classification of Water Sales - Recycled
FY 2023
80
Current Approved(1)Accounts Unit Sales Budget
Recycled Non-Public Irrigation 5.36$ 5.71$ 430 803,000 4,400,000$
Recycled Commercial 4.92 5.24 1 156,000 786,000
Recycled Public Irrigation 5.47 5.82 362 629,000 3,514,000
Total 793 1,588,000 8,700,000$
Units %
Recycled Non-Public Irrigation 803,000 50.6%
Recycled Commercial 156,000 9.8%
Recycled Public Irrigation 629,000 39.6%
1,588,000 100.0%
(1)Approved rates apply to water billed beginning January 1, 2024.
FY 2024
Water Sales Summary by Customer Class - Recycled
Water Rates
FY 2024 Unit Sales by Customer Class
(1)
81
FY 2024 FY 2023 FY 2024
Meter Size Meter Count Current Approved(1)Budget Budget $%
0.75 11 36.06$ 38.39$ 4,000$ 4,000$ -$ -
1.00 128 48.83 51.98 75,000 76,000 1,000 1.3%
1.50 433 81.22 86.46 423,000 432,000 9,000 2.1%
2.00 204 119.74 127.46 313,000 301,000 (12,000) (3.8%)
3.00 6 262.42 279.35 14,000 18,000 4,000 28.6%
4.00 7 458.00 487.54 36,000 40,000 4,000 11.1%
6.00 3 953.41 1,014.90 21,000 35,000 14,000 66.7%
10.00 1 2,411.52 2,567.06 25,000 30,000 5,000 20.0%
Total 793 911,000$ 936,000$ 25,000$ 2.7%
(1)Approved rates apply to water billed beginning January 1, 2024.
System Charges - Recycled
System Charges Budget to Budget
Variance
82
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget Actual Budget
Recycled Non-Public Irrigation 738,029 796,764 965,690 872,845 834,700 733,343 803,000
Recycled Commercial 148,980 149,820 172,240 171,876 155,900 145,280 156,000
Recycled Public Irrigation 575,623 505,373 661,506 640,538 581,700 549,762 629,000
Total Unit Sales 1,462,632 1,451,957 1,799,436 1,685,259 1,572,300 1,428,385 1,588,000
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget Actual Budget
Recycled Non-Public Irrigation 373 379 394 409 411 420 430
Recycled Commercial 1 1 1 1 1 1 1
Recycled Public Irrigation 352 355 358 358 359 361 362
Total Meter Count 726 735 753 768 771 782 793
Unit Sales and Meter Count History by Customer Class - Recycled
Unit Sales History in thousands and Meter Count Trends
FY 2023
FY 2023
Actual
Actual
Unit Sales by Customer Class
Meter Count by Customer Class
-
200
400
600
800
100
500
900
1,300
1,700
2,100
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
MetersUnits
Meter Count Unit Sales
83
Meter Size Meter Sales Installation Fee Meter Fee Total Fees Budget
0.75 2 130.80$ 275.63$ 406.43$ 1,000$
1.00 5 130.80 355.69 486.49 2,000
1.50 8 130.80 578.13 708.93 6,000
2.00 2 130.80 828.40 959.20 2,000
3.00 1 787.54 2,581.62 3,369.16 3,000
4.00 - 787.54 4,483.85 5,271.39 -
6.00 - 1,243.98 7,744.83 8,988.81 -
8.00 - 1,907.52 9,676.59 11,584.11 -
10.00 - 1,907.52 13,916.75 15,824.27 -
Total 18 14,000$
Meter Fees: Charges collected for new water service connections. Fees vary depending upon
meter size and type of service. The costs associated with meter installations are included in the
Operating Expenses section of the budget. These charges are funded by developers.
Historical Meter Count
Meter Fees - Recycled
FY 2024
550
575
600
625
650
675
700
725
750
775
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
84
FY 2019 FY2020 FY 2021 FY 2022 FY 2024
Budget
Water Sales 6,347,342$ 6,481,692$ 8,604,255$ 8,247,269$ 7,387,138$ 8,700,000$
System Charges 798,349 833,113 876,898 929,628 935,212 936,000
Energy Charges 315,385 331,188 442,669 425,488 377,146 556,000
MWD and CWA Rebates(1)1,292,330 1,283,359 764,198 408,030 606,634 674,000
Penalties 28,073 24,129 - 31,933 45,304 40,000
Total Recycled Revenues 8,781,479$ 8,953,481$ 10,688,020$ 10,042,348$ 9,351,434$ 10,906,000$
(1) Incentive from MWD and CWA for providing recycled water. The District receives $200 from CWA and $185 from MWD for
every acre-foot (AF) of recycled water sold. As of FY 2021, the District was no longer eligible for the rebate from CWA.
Revenue History - Recycled
Revenue History - Recycled, in millions ($)
FY 2023
Actual
$-
$2
$4
$6
$8
$10
$12
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
Water Sales System Charges Energy Charges MWD and CWA Rebates Penalties
85
FY 2024 FY 2024
Budget Actual Budget Budget Actual Budget $ %
Rate Per Acre-Foot 974.00$ 983.92$ 1,016.00$ 42.00$ 4.3%
Recycled Water Purchases 2,685.7 2,460.1 2,697.2 2,616,000$ 2,399,525$ 2,733,000$ 117,000$ 4.5%
Meter Fee 27,000 26,600 28,000 1,000 3.7%
Take-or-pay contract (1)2,838.3 3,061.9 2,916.8 2,844,000 3,006,044 3,037,000 193,000 6.8%
Total 5,524.0 5,524.0 5,614.0 5,487,000$ 5,435,153$ 5,798,000$ 311,000$ 5.7%
Average Cost Per Acre-Foot (Effective Rate)2,043$ 2,209$ 2,150$
(1) This is the anticipated take-or-pay amount to be paid to the City of San Diego. The contract requires the purchase of a minimum volume of water.
The District does not anticipate meeting the minimum, therefore a payment would be due to the City of San Diego.
HISTORICAL RECYCLED WATER PURCHASES, IN ACRE-FEET
Water Purchases - Recycled
FY 2023
Purchase Costs
Budget to Budget
Variance
FY 2023
Acre-Feet
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
86
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget Actual Budget $ %
Total Power Costs 536,179$ 522,863$ 551,075$ 528,760$ 590,000$ 547,458$ 616,000$ 26,000$ 4.4%
Power Costs - Recycled
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
FY 2023
Actual
$0
$100
$200
$300
$400
$500
$600
$700
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
87
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Administrative Expenditures
Miscellaneous Office & Field Equipment 15,531$ 12,400$ 15,991$ 21,900$ 9,500$ 76.6%
Fees 34,580 39,000 47,496 54,700 15,700 40.3%
Services 163,188 207,700 198,370 205,100 (2,600) (1.3%)
Insurance and Legal 14,847 50,000 7,630 5,000 (45,000) (90.0%)
Subtotal before Overhead 228,146 309,100 269,487 286,700 (22,400) (7.2%)
Add: Overhead Allocation 231,124 263,800 198,666 260,300 (3,500) (1.3%)
Total Expenditures 459,270$ 572,900$ 468,153$ 547,000$ (25,900)$ (4.5%)
Misc. Office/Field Equip.21,900$ 4.0%
Fees 54,700 10.0%
Services 205,100 37.5%
Insurance and Legal 5,000 0.9%
Overhead Allocation 260,300 47.6%
Total Expenditures 547,000$ 100.0%
FY 2024 Administrative Expenditures - Recycled
Budget to Budget
Variance
Administrative Expenditures - Recycled
88
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Materials and Maintenance
Fuel and Oil 19,900$ 20,000$ 19,795$ 20,000$ -$ -
Meters and Materials 8,827 8,600 5,603 13,800 5,200 60.5%
Infrastructure Equipment and Supplies 142,685 95,700 86,225 116,100 20,400 21.3%
Chemicals 190,441 196,000 226,413 353,500 157,500 80.4%
Safety Equipment 280 4,100 910 8,200 4,100 100.0%
Laboratory Equipment and Supplies 2,665 5,100 5,743 5,400 300 5.9%
Other Materials and Supplies 15,254 9,500 19,833 18,500 9,000 94.7%
Contracted Services 16,781 15,900 22,141 16,000 100 0.6%
Total Expenditures 396,833$ 354,900$ 386,663$ 551,500$ 196,600$ 55.4%
FY 2024 Materials and Maintenance Expenditures - Recycled
Fuel and Oil 20,000$ 3.6%
Meters and Materials 13,800 2.5%
Infrastructure Equipment and Supplies 116,100 21.0%
Chemicals 353,500 64.1%
Safety Equipment 8,200 1.5%
Laboratory Equipment & Supplies 5,400 1.0%
Other Materials and Supplies 18,500 3.4%
Contracted Services 16,000 2.9%
Total Expenditures 551,500$ 100.0%
Materials and Maintenance Expenditures - Recycled
Budget to Budget
Variance
89
Recycled Water Service Area
90
Sewer Revenues and Expenditures
The District provides sewer service to approximately 15,300 customers through 4,739 accounts
located in the northern section of the District. The District operates and maintains the sewage
collection system serving Rancho San Diego, Singing Hills, and portions of Mount Helix, all within
the Upper Sweetwater River Basin. This basin is also known as the Jamacha Basin. Residential
customers comprise 98.4% of the customer base.
Wastewater collection within the Jamacha Basin is provided by two agencies: the Otay Water District
and the County of San Diego (formerly the Spring Valley Sanitation District). Customers in the basin
not served by either agency dispose of their sewage through septic tanks. After the sewage has been
collected, it is sent to the District’s Ralph W. Chapman Water Recycling Facility treatment plant
where the District produces recycled water, see page 77 outlining the sewer process. The by-
product of the treatment process is called sludge and it is discharged through the County’s
transmission system into the City of San Diego Metropolitan Wastewater (Metro) systems.
The District is a member of Metro Wastewater Joint Powers Authority (JPA) and shares in the use of
the City of San Diego's regional wastewater facilities. A significant amount of the sewer operation
costs is for sewer service charges from the Metro Wastewater JPA which is budgeted at $735,000 for
FY 2024. Additionally, the District is budgeted to pay $229,000 for its share of the operation and
maintenance cost of the Rancho San Diego Outfall and the Spring Valley Outfall to transport sewage
to Metro for FY 2024.
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines. In
January 2020, the District performed a Cost of Service Study and Rate Study (i.e. reviewed rates, fees,
charges, costs, and the usage structure) and determined that changes in rates, fees, and charges
were necessary in order to recover sufficient revenues to operate and maintain the public sewer
system.
Sewer bills are based on the rate of discharge and the strength. Due to their higher discharge and
strength, non-residential customers (comprising 1.6% of the customer base) comprise 13.9% of the
total sewer charges. The formula for sewer rates is shown on pages 99-100.
91
FY 2022 FY 2023 FY 2023 FY 2024
21-Actual Budget Actual Budget $%
Revenues
Sewer Revenues 3,085,044$ 3,284,000$ 3,297,522$ 3,468,000$ 184,000$ 5.6%
Capacity Fee Revenues 14,775 -15,802 - - -
Availability Fees 52,920 57,000 51,893 53,000 (4,000) (7.0%)
Non-operating Revenues 9,983 16,000 26,858 18,000 2,000 12.5%
Interest 3,004 11,000 34,390 41,000 30,000 272.7%
Total Revenue 3,165,726 3,368,000 3,426,465 3,580,000 212,000 6.3%
Expenditures
Labor and Benefits 757,608 1,179,400 785,812 1,084,900 (94,500) (8.0%)
Administrative Expenses 232,254 240,900 171,129 243,400 2,500 1.0%
Materials and Maintenance 900,151 1,101,300 1,331,326 1,155,900 54,600 5.0%
Power 159,568 167,000 173,464 182,000 15,000 9.0%
11-1311-5133Subtotal - Operations Costs 2,049,581 2,688,600 2,461,731 2,666,200 (22,400) (0.8%)
DSGeneral Fund Reserve 90,500 40,400 40,400 - (40,400) (100.0%)
Expansion Reserve 25,000 142,000 142,000 70,000 (72,000) (50.7%)
Bett ResBetterment Reserve 290,000 210,000 210,000 146,000 (64,000) (30.5%)
Repl ResReplacement Reserve 68,000 268,000 268,000 697,800 429,800 160.4%
Transfer to Rate Stabilization Fund 21,000 19,000 19,000 - (19,000) (100.0%)
Subtotal - Reserve Funding 494,500 679,400 679,400 913,800 234,400 34.5%
Total Expenditures 2,544,081 3,368,000 3,141,131 3,580,000 212,000 6.3%
621,645$ -$ 285,334$ -$ -$ - Excess Revenue/(Expenditures)
Operating Budget Summary - Sewer
Budget to Budget
Variance
92
FY 2024 FY 2024
Accounts Current Approved(1)Budget Actual Budget $%
Residential 4,613 3.25$ 3.40$ 1,604,000$ 1,609,400$ 1,689,000$ 85,000$ 5.3%
Multi-Residential 50 3.25 3.40 229,000 229,800 248,000 19,000 8.3%
Commercial
Low Strength 46 3.25 3.40 63,000 63,200 67,000 4,000 6.3%
Medium Strength 13 3.69 3.87 41,000 41,100 46,000 5,000 12.2%
High Strength 7 5.20 5.45 26,000 26,100 25,000 (1,000) (3.8%)
Schools 6 3.25 3.40 87,000 87,300 100,000 13,000 14.9%
Churches 4 3.25 3.40 9,000 9,000 10,000 1,000 11.1%
Subtotal Commercial 76 226,000 226,700 248,000 22,000 9.7%
Total Sewer Charges 4,739 2,059,000$ 2,065,900$ 2,185,000$ 126,000$ 6.1%
Residential 1,689,000$ 77.2%
Multi-Residential 248,000 11.4%
Commercial 248,000 11.4%
2,185,000$ 100.0%
(1)Approved rates for sewer billed beginning in January 2024.
FY 2024 Charges Summary by Customer Class
Charges Summary by Customer Class - Sewer
Usage Rate Budget to Budget
VarianceFY 2023
93
FY 2024 Current Approved(1)FY 2023 FY 2024
Meter Size Accounts Charge Charge Budget Budget $ %
Residential 4,613 18.13$ 18.99$ 982,000$ 1,027,000$ 45,000$ 4.6%
Multi-Residential/Commercial
0.75 24 18.13 18.99 5,000 5,000 - -
1.00 5 45.30 47.45 3,000 3,000 - -
1.50 21 90.58 94.88 22,000 23,000 1,000 4.5%
2.00 62 144.92 151.80 105,000 111,000 6,000 5.7%
3.00 6 271.74 284.65 19,000 20,000 1,000 5.3%
4.00 6 452.90 474.41 32,000 33,000 1,000 3.1%
6.00 1 905.79 948.82 11,000 11,000 - -
10.00 1 2,083.35 2,182.31 24,000 26,000 2,000 8.3%
Total System Charges 4,739 1,203,000$ 1,259,000$ 56,000$ 4.7%
(1)Approved rates for sewer billed beginning in January 2024.
System Charges - Sewer
Budget to Budget
Variance
94
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget Actual Budget
Sewer Charges 2,913,787$ 2,876,592$ 2,863,846$ 3,057,053$ 3,262,000$ 3,272,858$ 3,444,000$
Penalties 19,870 16,291 1,788 27,991 22,000 24,664 24,000
Total 2,933,657$ 2,892,883$ 2,865,634$ 3,085,044$ 3,284,000$ 3,297,522$ 3,468,000$
Revenue History - Sewer, in thousands ($)
Revenue History - Sewer
Actual
FY 2023
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
Sewer Charges Series2Penalties
95
FY 2019 FY 2020 FY 2021 FY 2022 FY 2024
Budget Actual Budget $ %
Total Power Cost 143,575$ 152,461$ 124,717$ 159,568$ 167,000$ 173,464$ 182,000$ 15,000$ 8.2%
Power Costs - Sewer
Budget to Budget
Variance
Historical Power Costs, in thousands ($)
FY 2023
Actual
$20
$60
$100
$140
$180
$220
FY 2019
Actual
FY 2020
Actual
FY 2021
Actual
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
96
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Administrative Expenditures
Memberships and Dues 2,886$ 3,500$ 3,505$ 4,000$ 500$ 14.3%
Miscellaneous Office & Field Equipment 2,046 2,400 960 2,400 - -
Fees 5,064 5,300 5,191 5,500 200 3.8%
Services 72,992 31,200 32,883 50,600 19,400 62.2%
Bad Debt Expense 16,117 2,000 132 2,000 - -
Total 99,105 44,400 42,671 64,500 20,100 45.3%
Add: Overhead Allocation 133,149 196,500 128,458 178,900 (17,600) (9.0%)
Total Expenditures 232,254$ 240,900$ 171,129$ 243,400$ 2,500$ 1.0%
FY 2024 Administrative Expenditures - Sewer
Memberships and Dues 4,000$ 1.5%
Misc. Office & Field Equipment 2,400 1.0%
Fees 5,500 2.3%
Services 50,600 20.9%
Bad Debt Expense 2,000 0.8%
Overhead Allocation 178,900 73.5%
Total Expenditures 243,400$ 100.0%
Administrative Expenditures - Sewer
Budget to Budget
Variance
97
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Materials and Maintenance
Fleet Parts and Equipment 3,054$ 8,000$ 8,208$ 8,000$ $ - -
Infrastructure Equipment and Supplies 112,327 103,000 107,826 102,400 (600) (0.6%)
Chemicals 13,525 24,000 21,559 29,700 5,700 23.8%
Laboratory Equipment and Supplies 4,595 6,600 6,425 7,000 400 6.1%
Other Materials and Supplies 33 600 - 600 - -
Contracted Services 63,648 45,100 42,440 44,200 (900) (2.0%)
Subtotal Materials and Maintenance 197,182 187,300 186,458 191,900 4,600 2.5%
Metro O&M Costs 531,868 704,000 850,000 735,000 31,000 4.4%
Spring Valley Sewer Charge 171,101 210,000 294,868 229,000 19,000 9.0%
Subtotal Sewer Charges 702,969 914,000 1,144,868 964,000 50,000 5.5%
Total Expenditures 900,151$ 1,101,300$ 1,331,326$ 1,155,900$ 54,600$ 5.0%
FY 2024 Materials and Maintenance Expenditures - Sewer
Fleet Parts and Equipment 8,000$ 0.7%
Infrastructure Equipment and Supplies 102,400 8.9%
Chemicals 29,700 2.6%
Laboratory Equipment and Supplies (1)7,600 0.7%
Contracted Services 44,200 3.8%
Metro O&M Costs 735,000 63.5%
Spring Valley Sewer Charge 229,000 19.8%
Total Expenditures 1,155,900$ 100.0%
Includes Other Materials & Supplies.
Materials and Maintenance Expenditures - Sewer
Budget to Budget
Variance
(1)
98
Formula for Sewer Rates
To meet State of California requirements, customers must pay their fair share of sewer costs. The
District is required to set sewer rates in accordance with the State’s Revenue Program Guidelines.
Residential and Multi-Residential Sewer Service
To estimate sewer use, the District averages metered water use for the winter months of January
through April of the previous three years. The “three-year winter average” is the basis of the sewer
charges for the entire year. The winter months are used to measure average water use because less
water is typically used outdoors during this time and therefore this average water use will more
accurately measure the typical water that flows into the sewer system. The District gives customers a
15.0 percent usage discount to acknowledge that not all water purchased goes to the sewer system.
The maximum consumption charge is based on 35.29 units.
The following is the sewer bill formula for residential and multi-residential customers:
(Sewer Rate x 3-Year Winter Average x 85%) + System Charges = Total Monthly Bill
The current sewer rates and system charges for single-family residential customers are $3.25 and
$18.13, respectively. Effective January 1, 2024, the sewer rate and system charges will be $3.40 and
$18.99, respectively.
The current sewer rates for multi-residential customers is $3.25 and will increase to $3.40 for the
calendar year 2024. The sewer rates and system charges for residential and multi-residential
customers is shown on pages 93 and 94.
Commercial and Industrial Sewer Service
To estimate sewer use, the District averages metered water use. An “average annual consumption” is
the basis of the sewer charges for the entire year. The average annual consumption is defined as the
units of water billed from January through December of the previous year. The District gives
customers a 15.0 percent usage discount to acknowledge that not all water purchased goes to the
sewer system.
The following is the sewer bill formula for commercial and industrial customers:
(Average Annual Consumption x 85% x Sewer Rate(1)) + System Charges = Total Monthly Bill
The District calculates the monthly bill based on the customer’s water use, sewer strength, and the
size of the customer’s water meter, which is more equitable among customer classes. The rates and
charges by meter size are shown on page 94.
(1) Sewer rates are based on the customer’s assigned strength factor
99
Formula for Sewer Rates
The District is required to determine sewer rates in accordance with the State’s Revenue Program
Guidelines. The SWRCB has grouped commercial and industrial customers into various categories
and has identified Strength Factors for each of these business categories. The standard of measure
for Strength Factors is the typical sewer strength of a single-family residence (SFR). The Strength
Factors established by the SWRCB are listed below and are used by the District in the calculation of
commercial sewer rates. These factors are in terms of the strength relative to an SFR, with an SFR
having a strength factor of 1.
The following are the Strength Factors:
Description
Fee, Effective
1/1/2024
Low-Strength Commercial(1) $ 3.40
Medium-Strength Commercial $ 3.87
High-Strength Commercial $ 5.45
(1) Schools and churches are categorized as Low-Strength Commercial customers
100
Sewer Service Area
101
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102
General Revenues and Expenditures
The District’s revenues and expenditures in this section are not directly related to the services
delivered to potable, recycled, or sewer customers, yet they are operating expenses or revenues.
General Revenues
Capacity fees are restricted for the purpose of funding the District facilities. When collected, these
fees may cover costs including but not limited to planning, design, construction, and financing
associated with facilities. The District uses a portion of capacity fee revenues to provide general
expansion planning and developer support. These fees reimburse the General Fund for the cost of
providing these services. For FY 2024, capacity fees are projected to be $2.4 million which is an
increase of $41,000 compared to FY 2023.
Annexation fees are collected when developers buy into the District’s potable or recycled water
facilities. The fee ensures that future users fund the portion of the facilities that were sized and built
for their future use by prior customers. Prior to FY 2010, annexation fees were unrestricted and
therefore included in the General Fund revenues. With the revised methodology, these fees are now
restricted for the purpose of capital improvements.
The 1% property tax is a result of Proposition 13 that was approved in 1978, which limited the general
levy property tax rate for all taxing authorities to a total rate of 1% of the assessed value. Subsequent
legislation, AB8, established that the receipts from the 1% levy were to be distributed to taxing
agencies according to approximately the same proportions received prior to Proposition 13. These
general use funds are currently being used as a source of operating revenue. Property Tax Revenues
are projected to be $5.5 million which is $901,000 more than the FY 2023 budget.
The District levies availability charges each year in developed areas to be used for upgrades and
betterment and in undeveloped areas to provide funding for planning, mapping, and preliminary
design of facilities to meet future development. Current legislation provides that any availability
charge up to $10.00 per parcel is general use and any amount over $10.00 per parcel or acre shall
be used only for the benefit of the improvement district in which it is assessed. Budgeted availability
fees are projected at $743,000, an increase of $32,000 when compared to the prior year’s budget.
Included in the General Revenues are a variety of Non-Operating Revenues. These revenues include
lease revenue, set-up fees, sewer billing fees, grants, and miscellaneous revenues. Lease revenues
make up a large portion of general revenues and are mainly from cell-site leases on District property.
When the District enters a new lease, there is a one-time fee charged with the set-up of each cell-
site. The District incurs expenses related to these leases and the purpose of the fee is to recover the
lease set up costs.
The City of Chula Vista provides the sewer services for most of the District’s water customers located
in the City of Chula Vista (CCV). The CCV sewer fees are based on water consumption. Because of
the shared customer base, the CCV contracts with the District for the billing of their sewer customers
who live within the District.
103
General Revenues and Expenditures
General Expenditures
The general expenditures in this section are general operating costs not associated with an
individual department. These include legal costs, insurance premiums and changes in accrued
employee leave balances. These expenditures represent 11.0% of the total Departmental Budget.
Legal expenditures are viewed as a District-wide general cost because they benefit all departments
and usually are not attributed to any one department. The District retains outside legal services
instead of in-house counsel.
Insurance premiums are also viewed as District-wide general cost because it benefits all
departments and cannot be attributed to any one department. The District participates in a program
where it can reduce its premium by implementing training sessions to reduce on-the-job accidents
and injuries.
Some employee benefits are charged to general expenditures because they are not entirely
attributable to a specific department or fiscal year in which they are incurred. For example, when a
pay rate increase occurs for an employee, his/her leave balances increase in value. In this case, the
cost is charged to the General Expenditures category.
104
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Fee Revenues
Capacity Fee Revenues 2,551,404$ 2,311,000$ 2,734,072$ 2,352,000$ 41,000$ 1.8%
Subtotal Fee Revenues 2,551,404 2,311,000 2,734,072 2,352,000 41,000 1.8%
Tax Revenues
1% General Tax 4,761,324 4,599,000 5,373,190 5,500,000 901,000 19.6%
Availability Fees 740,928 711,000 710,954 743,000 32,000 4.5%
Subtotal Tax Revenues 5,502,252 5,310,000 6,084,144 6,243,000 933,000 17.6%
General Revenue 8,053,656$ 7,621,000$ 8,818,216$ 8,595,000$ 974,000$ 12.8%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Property Rental 1,682,270$ 1,666,000$ 1,828,645$ 1,700,000$ 34,000$ 2.0%
Sewer Billing Fees 458,205 477,000 477,383 516,000 39,000 8.2%
Set-up Fee for Lease Site 9,000 - 22,500 - - -
Grants 580,035 203,000 2,919 374,600 171,600 84.5%
Revenue from Shared Facility (11,718) 16,000 18,232 18,000 2,000 12.5%
Miscellaneous (2)3,751,912 161,100 428,579 162,000 900 0.6%
Non-Operating Revenue 6,469,704$ 2,523,100$ 2,778,258$ 2,770,600$ 247,500$ 9.8%
Potable Recycled Sewer Total
Capacity Fee Revenues 2,352,000$ -$ -$ 2,352,000$
1% General Tax 5,500,000 - - 5,500,000
Availability Fees 690,000 - 53,000 743,000
Property Rental 1,700,000 - - 1,700,000
Sewer Billing Fees 516,000 - - 516,000
Grants 334,600 40,000 - 374,600
Revenue from Shared Facility - - 18,000 18,000
Miscellaneous 162,000 - - 162,000
Total General and Non-Operating Revenue 11,254,600$ 40,000$ 71,000$ 11,365,600$
(1)For General and Non-Operating Revenues, the Potable Fund serves as the District's General Fund for accounting purposes.
(2)In FY 2022, the District received a settlement refund of $3,270,450 from CWA after a favorable judgement was awarded to CWA against
MWD for overcharging prior years' water rates.
FY 2024
Non-Operating Revenues(1)
Budget to Budget
Variance
General and Non-Operating Revenues by Fund(1)
General Revenues
General Revenues(1)
Budget to Budget
Variance
105
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
General Expense 2,158,499$ 3,584,200$ 4,036,091$ 4,164,600$ 580,400$ 16.2%
Legal 603,241 455,000 760,951 357,000 (98,000) (21.5%)
Total Expenses 2,761,740 4,039,200 4,797,042 4,521,600 482,400 11.9%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Labor and Benefits (1), (2)1,043,482 2,029,700 2,508,044 2,351,600 321,900 (15.9%)
Insurance expenses 1,115,017 1,554,500 1,528,047 1,813,000 258,500 16.6%
Legal expenses 603,241 455,000 760,951 357,000 (98,000) (21.5%)
Total Expenses 2,761,740$ 4,039,200$ 4,797,042$ 4,521,600$ 482,400$ 11.9%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget
OPEB ADC(2) $ - $- $- $ 1,182,000
OPEB/PERS advance funding 989,000 2,080,900 2,314,000 1,270,000
Cost of Living Adjustment & Benefits 269,082 177,600 422,844 195,500
Vacancy Adjustment (214,600)(228,800)(228,800)(295,900)
Total $ 1,043,482 $ 2,029,700 $ 2,508,044 $ 2,351,600
(1)Benefits include District-wide labor and benefit costs not attributable to any one department, such as the effect of cost of living raises on
accrued leave liabilities or the Other Post Employment Benefit (OPEB) costs. These costs are netted against the District's anticipated Vacancy
Factor. The Vacancy Factors for FY 2023 and FY 2024 are $228,800 and $295,900, respectively. Additionally, the labor and benefits shown on
this schedule are related to operating costs and does not include CIP labor and benefit costs.
(2)In FY 2022 and FY 2023, the District's OPEB plan was fully funded; therefore, no contribution was necessary. As of July 1, 2023 the OPEB plan
is no longer fully funded; therefore, the District’s FY 2024 budget includes reinstating the funding of the OPEB plan’s Actuarially Determined
Contributions (ADC).
General Expense
Department
Object
Budget to Budget
Variance
Budget to Budget
Variance
The expenses in this section are general operating costs not associated with an individual department. The expenditures include:
legal costs, insurance premiums and changes in accrued employee leave balances. These expenditures represent 11.0% of the
total Department Budget.
106
Departmental Operating Budget
Labor and Benefits
The District reviews and studies organizational/personnel changes and performs a five-year staffing
review on an annual basis as part of the budgeting process. Labor and Employee Benefits expenditures
for FY 2023 were estimated based on proposed staffing level needs. The objective of the annual review
is to examine the implementation of department efficiencies and evolving business practices, impacts on
staffing levels, as well as prepare future leaders of the organization. The annual review is also used as a
reference tool for District succession planning purposes.
The District provides employees and Board members with a choice of four health providers (Blue Shield
HMO, EPO and PPO, and Kaiser HMO) plus a vision and dental PPO plan. The District pays 100% of
employee coverage and 88% of spouse and dependent coverage. Other ancillary benefits include basic
life and accidental death and dismemberment insurance, short- and long-term disability benefits, flexible
spending accounts for health and dependent care, and an Employee Assistance Program. In addition,
the District offers the CalPERS Pension plan 2.7% @ 55 for classic members and 2.0% @ 62 for PEPRA
employees and Other Post-Employment Benefits after the employees reach certain age and tenure
requirements. Employees participate in the contribution for both plans. Increases in employee labor and
benefits costs are mainly due to continued increases in group health insurance premiums and an
increase in compensation due to a 3.0% increase in salary and wages, based on the Memorandum of
Understanding (MOU) between the District and its employee association.
Labor and Benefits represent 20.2% of the total Operating Budget. District personnel are assigned to work
in five departments: General Manager, Administrative Services, Finance, Water Operations, and
Engineering. The departments are further categorized by functions into divisions. The FY 2024 Budget
includes funding for labor and benefits for 144 full-time equivalent (FTE) employees.
The staffing level for FY 2024 has increased by one (1) FTE employee from FY 2023. The District
continuously analyzes workload requirements, opportunities for automation and areas where resources
can be effectively shared or relocated. For FY 2024, the staffing changes include an addition of one asset
management specialist to manage fixed assets information and provide support on fixed assets
maintenance.
A projected 6.9% of the labor and benefits costs will be charged to projects included in the Capital
Improvement Program (CIP) and Developer Deposits. These labor and benefit costs totaling $1,983,000
are not considered operating costs and therefore are not included in the Operating Budget.
Administrative Expenses
Administrative expenses are funds allocated to cover the costs associated with the day-to-day
administrative and support functions of the District. These expenses include memberships, office supplies
and equipment, staff training, Directors' fees, water conservation programs, safety expenses, and
regulatory agencies' fees. Some of the administrative expenses are less discretionary than others. The
safety needs of the District's customers and employees, and compliance with regulatory agencies are of
utmost importance and are considered necessary.
Overall administrative expenses are increasing by $884,600 or 11.0% compared to FY 2023 and are shown
on page 116. The District’s outside services budget is increasing $296,700 or 10.9% primarily attributable
to the District’s compliance with the lead and copper regulatory mandate. IT hardware, software and
107
Departmental Operating Budget
communication is going up by $250,400 or 17.4% predominantly due to the District’s transition to a new
Enterprise Resource Planning (ERP) system. Insurance and Legal is projected to increase $160,500 or
8.0% mainly driven by the rise in insurance premiums ($258,500) offset by legal services decreasing by
$98,000. Training is increasing $81,900 or 39.2% primarily driven by a rise in position-based training (i.e.,
SCADA), District-wide ERP training, and an increase in staff development training aligned with the
District’s strategic plan. Travel and conferences are increasing $73,100 or 40.3% due to factors such as
inflation, the return to in-person attendance at conferences and seminars, and strategic initiatives
associated with the District’s transition to the new ERP system and the District’s progression through the
“silver tsunami” phase with new management and younger workforce. Miscellaneous field equipment is
increasing $46,800 or 36.7% due to various one-time purchases of small tools and equipment (i.e., thermal
camera, pressure test equipment, heavy-duty roller cards, etc.), and cost increases in tools and
equipment used for inspection and survey. General office expenses are going up $36,800 or 13.7%
primarily attributable to an increase in postage for mailing customers’ monthly water bills.
The increases were partially offset by a $50,000 or 41.0% decline in bad debt expense due to the District’s
strengthened payment collection practices such as the reinstatement of locking and imposing liens on
property owners for tenant non-payment. Additionally, fees are decreasing $29,800 or 2.6% primarily due
to a reduction in bank fees to align the budget to current credit card activities and trends.
Materials and Maintenance
The materials and maintenance expenses allow the District to provide reliable, high-quality products,
services, and support to its customers. As the District continues to grow and technology and regulations
change, maintenance and services will be adjusted as needed.
For FY 2024, overall materials and maintenance expenses are increasing $692,300 or 16.8% compared to
FY 2023, as shown on page 117. The District’s budget for chemicals is experiencing a significant surge of
$340,600 or 72.9% due to vendor price increases. Infrastructure equipment and supplies are rising
$180,100 or 28.7% due to: price increases in materials and equipment for poly service replacements, non-
major main breaks and service leaks, and repairs and maintenance of the District’s fire hydrants; various
one-time purchases of equipment and materials (i.e., catalytic converter and exhaust system, spare
pumps, ProMinent analyzer, etc.); and purchase of cla-valve parts for preventive maintenance. Other
materials and supplies are increasing $62,900 or 20.5% driven by inflation in the cost of various materials
and supplies used for water system maintenance and repairs such as air release valves, anodes, brass
fittings, repair couplings, flanges, and tees. Metro and County sewer charges are on an upward trend due
to a projected increase in wastewater flow to the sewer system resulting in a higher share of the operating
and maintenance costs. The prices of meters and materials are projected to rise resulting in a budget
increase of $44,700 or 28.6%. Safety equipment is increasing $41,800 or 62.3% primarily attributable to
the implementation of two safety and equipment vending machines, and identification of additional
necessary safety-related items for the Utility Services staff.
These increases were offset by a $27,800 or 2.9% decrease in contracted services primarily due to the
completion of the erosion remediation project at the 450-1 reservoir/680-1 pump station in FY 2023, and
a reduction in budgeted funds for site maintenance and vegetation control at the Salt Creek property due
to the removal of a one-time additional mowing schedule that took place in FY 2023.
108
Board of Directors 249,000$ 0.6%
General Manager 1,633,000 4.0%
General Expense 4,521,600 11.0%
Administrative Services 8,243,900 20.0%
Finance 6,666,800 16.3%
Water Operations 14,501,300 35.4%
Engineering 5,205,000 12.7%
41,020,600$ 100.0%
Departmental Operating Budgets
Total FY 2024 Departmental Operating Budgets
$41,020,600
109
FY 2022 FY 2023 FY 2024
Actual Budget Actual Budget $%
Labor Costs 12,914,585$ 14,345,300$ 13,271,775$ 14,659,800$ 314,500$ 2.2%
Benefits
Pension 2,971,789 3,383,300 3,163,702 3,458,600 75,300 2.2%
Employee Assistance Program 3,192 4,000 3,208 3,400 (600) (15.0%)
Workers' Compensation 319,929 311,100 218,979 239,900 (71,200) (22.9%)
Health/Dental/Life Insurance/Advance Funding to PERS/OPEB(1)5,286,121 5,482,300 5,553,500 6,159,400 677,100 12.4%
Social Security/Medicare 1,046,877 1,203,700 1,131,882 1,240,700 37,000 3.1%
Salary Continuation Insurance 62,297 62,300 64,347 64,700 2,400 3.9%
State Unemployment Insurance 12,041 20,000 3,743 20,000 - -
Vacation/Sick/Holiday/Other Leave 2,639,015 2,830,300 2,723,745 2,876,700 46,400 1.6%
Total Benefits 12,341,261 13,297,000 12,863,106 14,063,400 766,400 5.8%
Total Labor and Benefits 25,255,846 27,642,300 26,134,881 28,723,200 1,080,900 3.9%
Less: Non-Operating Labor and Benefits
Labor Costs 1,123,156 1,236,300 1,031,462 1,211,000 (25,300) (2.0%)
Benefits Allocation 694,169 777,700 653,815 772,000 (5,700) (0.7%)
Total Non-Operating Labor and Benefits 1,817,325 2,014,000 1,685,277 1,983,000 (31,000) (1.5%)
Operating Labor & Benefits 23,438,521 25,628,300 24,449,604 26,740,200 1,111,900 4.3%
Overhead Allocation (115% of labor costs)1,291,629 1,422,100 1,186,181 1,392,800 (29,300) (2.1%)
Admin Overhead (36.85%)475,965 523,800 437,108 513,200 (10,600) (2.0%)
Less: Non-operating labor overhead (815,664) (898,300) (749,073) (879,600) 18,700 (2.1%)
Net Operating Labor and Benefits $ 22,622,857 $ 24,730,000 $ 23,700,531 $ 25,860,600 $ 1,130,600 4.6%
(1)Includes the following advance fundings to the District's pension and retiree healthcare plans:
FY 2022
Actual
FY 2023
Budget
FY 2023
Actual
FY 2024
Budget
Advance Funding to OPEB/PERS 989,000$ 2,080,900$ 2,314,000$ 1,270,000$
Labor and Benefits
Budget to Budget
VarianceFY 2023
Budget vs. Actual, in thousands ($)
$21,000
$21,500
$22,000
$22,500
$23,000
$23,500
$24,000
$24,500
$25,000
$25,500
$26,000
2022 2023 2024
$23,038
$24,730
$25,861
$22,623
$23,701
Budget Actual
110
Potable Recycled Sewer
Developer
Reimbursed
CIP Total
Operating Labor Costs 12,412,400$ 614,300$ 422,100$ -$ 13,448,800$
Benefits 12,448,300 486,800 356,300 - 13,291,400
Overhead Allocation-Personnel (1,632,200) 446,100 306,500 - (879,600)
Total Operating Labor and Benefits 23,228,500 1,547,200 1,084,900 - 25,860,600
CIP Labor Costs 696,400 115,200 35,900 363,500 1,211,000
Benefits 438,100 72,200 22,600 239,100 772,000
Overhead Allocation-Personnel 505,800 83,700 26,100 264,000 879,600
Total CIP Labor and Benefits 1,640,300 271,100 84,600 866,600 2,862,600
Total Labor and Benefits 24,868,800$ 1,818,300$ 1,169,500$ 866,600$ 28,723,200$
Potable-Operating 23,228,500$ 80.9%
Potable-CIP 1,640,300 5.7%
Sewer-Operating 1,084,900 3.8%
Sewer-CIP 84,600 0.3%
Recycled-Operating 1,547,200 5.4%
Recycled-CIP 271,100 0.9%
Developer Reimbursed-CIP 866,600 3.0%
Total Labor and Benefits 28,723,200$ 100.0%
Labor and Benefits by Fund - Fiscal Year 2024
111
General Manager
General Manager 1 1 1
District Secretary 1 1 1
Communications Officer 1 1 1
Communications Assistant 1 1 1
Total FTE - General Manager Department 4 4 4
Administrative Services
Chief, Administrative Services 1 1 1
Confidential Executive Assistant 1 1 1
Administrative Services 2 2 2
Human Resources
Human Resources Manager 1 1 1
Senior Human Resources Analyst 2 2 2
HR Assistant I and II 1 1 1
Human Resources 4 4 4
Purchasing
Purchasing and Facilities Manager 1 1 1
Senior Procurement & Contracting Analyst 1 1 1
Warehouse Technician 1 1 1
Facilities Maintenance Technician 2 2 2
Purchasing 5 5 5
Safety
Safety & Security Specialist 1 1 1
Safety 1 1 1
Information Technology/GIS
IT Manager 1 1 1
GIS Manager 1 1 1
GIS Programmer Analyst 1 1 1
GIS Analyst 1 1 1
GIS Technician 1 1 1
Network Engineer 1 1 1
Database Administrator 1 1 1
Business Systems Technician 1 1 1
System Support Analyst 1 1 1
Business Systems Analyst I and II 2 2 2
Information Technology/GIS 11 11 11
Total FTE - Administrative Services Department 23 23 23
Position Count by Department
FY 2024
Budget
FY 2022
Actual
FY 2023
Actual
112
Position Count by Department
FY 2024
Budget
FY 2022
Actual
FY 2023
Actual
Finance
Chief Financial Officer 1 1 1
Assistant Chief, Finance 1 1 1
Executive Assistant 1 1 1
Department Assistant 1 1 1
Finance 4 4 4
Controller and Budgetary Services
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Controller and Budgetary Services 4 4 4
Treasury and Accounting Services
Finance Manager, Treasury and Accounting 1 1 1
Senior Accountant 2 2 2
Accountant 1 1 1
Accounting Technician 1 1 1
Treasury and Accounting Services 5 5 5
Customer Service
Customer Service Manager 1 1 1
Customer Service Supervisor 1 1 1
Lead Customer Service Representative 1 1 1
Customer Service Representative I and II 6 6 6
Customer Service 9 9 9
Meter Services
Meter Services Supervisor 1 1 1
Lead Meter Maintenance/Cross Connection Worker 1 1 1
Meter Maintenance Worker I and II 3 3 3
Lead Customer Service Field Representative 1 1 1
Customer Service Field Representative I and II 3 3 3
Meter Services 9 9 9
Total FTE - Finance Department 31 31 31
Operations
Chief, Water Operations 1 1 1
Executive Assistant 1 1 1
Asset Management Specialist 0 0 1
Operations 2 2 3
113
Position Count by Department
FY 2024
Budget
FY 2022
Actual
FY 2023
Actual
Operations (continued)
Water System Operations
System Operations Manager 1 1 1
Water Systems Supervisor 1 1 1
Lead Water Systems Operator 2 2 2
Water Systems Operator I, II, and III 8 8 8
Senior Disinfection Technician 1 1 1
Disinfection Technician 1 1 1
Water System Operations 14 14 14
Reclamation Operations
Reclamation Plant Supervisor 1 1 1
Lead Reclamation Plant Operator 1 1 1
Reclamation Plant Operator I, II, and III 2 2 2
Laboratory Analyst 2 2 2
Reclamation Operations 6 6 6
Utility Maintenance/Construction
Utility Services Manager 1 1 1
Utility Maintenance Supervisor 1 1 1
Utility Maintenance Assistant Supervisor 1 1 1
Utility Crew Leader 3 3 3
Utility Workers I and II 9 12 12
Senior Utility/Equipment Operator 4 4 4
Valve Maintenance Worker 1 0 0
SCADA/Pump/Electrical Supervisor 1 1 1
Senior SCADA Instrumentation Technician 2 2 2
SCADA Instrumentation Technician 1 1 1
Electrician I and II 2 2 2
Pump Mechanic I and II 2 2 2
Fleet Maintenance Supervisor 1 1 1
Equipment Mechanic I and II 3 3 3
Utility Maintenance/Construction 32 34 34
Total FTE - Operations Department 54 56 57
Engineering
Chief, Engineering 1 1 1
Executive Assistant 1 1 1
Department Assistant 1 1 1
Engineering 3 3 3
Water Resources, Planning, Design & Environmental
Engineering Manager 1 1 1
Senior Civil Engineer 3 3 3
Environmental Compliance Specialist 1 1 1
Senior Engineering Technician 1 1 1
Engineering Design Technician 1 1 1
Water Resources, Planning, Design & Environmental 7 7 7
114
Position Count by Department
FY 2024
Budget
FY 2022
Actual
FY 2023
Actual
Engineering (continued)
Public Services, Survey, Inspection, & Recycled Water Program
Engineering Manager 1 1 1
Field Services Manager 1 1 1
Permit Technician 2 2 2
Recycled Water Program Supervisor 1 1 1
Lead Recycled Water Specialist 1 0 0
Recycled Water Specialist 3 4 4
Inspection Supervisor 1 0 0
Lead Construction Inspector 1 1 1
Construction Inspector I and II 3 4 4
Construction Technician 0 1 1
Supervising Land Surveyor 1 1 1
Senior Utility Locator 1 0 2
Utility Locator 2 3 1
Public Services, Survey, Inspection, & Recycled Water Program 18 19 19
Total FTE - Engineering Department 28 29 29
District Total FTE Position Count 140 143 144
Contract / Temporary Employees
GIS Intern 0.50 0 0
Human Resources Analyst 0.50 0 0.05
Senior SCADA Instrumentation Technician 0 0.50 0
Water Conservation Intern 0 0.50 0.50
Total Contract/Temporary Employees 1.00 1.00 0.55
General Manager 4 2.8%
Administrative Services 23 16.0%
Finance 31 21.5%
Operations 57 39.6%
Engineering 29 20.1%
Total 144 100.0%
140
143 144
125
130
135
140
145
150
FY 2022
Actual
FY 2023
Actual
FY 2024
Budget
Full-Time Equivalent (FTE)Position Count by Department
115
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Administrative Expenditures
Directors' Fees 55,632$ 84,000$ 59,130$ 75,000$ (9,000)$ (10.7%)
Travel and Conferences 96,910 181,600 214,998 254,700 73,100 40.3%
Memberships and Dues 82,729 95,500 86,925 98,800 3,300 3.5%
Conservation and Outreach 125,816 138,200 134,956 145,500 7,300 5.3%
General Office Expenses 250,436 268,000 296,036 304,800 36,800 13.7%
IT Hardware, Software & Communication 1,318,028 1,439,600 1,423,467 1,690,000 250,400 17.4%
Miscellaneous Office & Field Equipment 118,881 127,400 112,549 174,200 46,800 36.7%
Fees 995,975 1,166,000 1,036,858 1,136,200 (29,800) (2.6%)
Services 2,197,989 2,723,100 2,137,731 3,019,800 296,700 10.9%
Training 153,465 208,800 209,114 290,700 81,900 39.2%
Utilities 17,747 18,100 25,712 23,800 5,700 31.5%
Insurance and Legal 1,718,258 2,009,500 2,288,998 2,170,000 160,500 8.0%
Bad Debt Expense 263,393 122,000 21,160 72,000 (50,000) (41.0%)
Subtotal before Overhead 7,395,259 8,581,800 8,047,634 9,455,500 873,700 10.2%
Less: Overhead Allocation (475,965) (524,100) (437,108) (513,200) 10,900 2.1%
Total Expenditures 6,919,294$ 8,057,700$ 7,610,526$ 8,942,300$ 884,600$ 11.0%
4,702,612$ 5,605,400$ 10,336,632$ 11,625,500$
Directors' Fees 75,000$ 0.9%
Travel and Conferences 254,700 2.7%
Memberships and Dues 98,800 1.0%
Conservation and Outreach 145,500 1.5%
General Office Expense 304,800 3.2%
IT Hardware, Software & Comm 1,690,000 17.9%
Misc Office & Field Equipment 174,200 1.8%
Fees 1,136,200 12.0%
Services 3,019,800 31.9%
Training 290,700 3.1%
Utilities 23,800 0.3%
Insurance and Legal 2,170,000 22.9%
Bad Debt Expense 72,000 0.8%
9,455,500 100.0%
Less: Overhead Allocation (513,200)
Total Administrative Expenditures 8,942,300$
Administrative Expenditures - Total
Budget to Budget
Variance
FY 2024 Total Administrative Expenditures
18%
2%
12%
32%
3%
23%
10%
IT Hardware,
Software & Comm
Services
Fees
Insurance and
legal
116
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $ %
Materials and Maintenance
Fuel and Oil 331,112$ 326,200$ 313,347$ 316,500$ (9,700)$ (3.0%)
Meters and Materials 169,153 156,200 223,869 200,900 44,700 28.6%
Fleet Parts and Equipment 126,370 169,600 165,716 173,600 4,000 2.4%
Infrastructure Equipment and Supplies 654,784 627,600 692,128 807,700 180,100 28.7%
Chemicals 379,838 467,200 499,015 807,800 340,600 72.9%
Safety Equipment 100,529 67,100 80,446 108,900 41,800 62.3%
Laboratory Equipment and Supplies 65,227 67,200 67,743 62,900 (4,300) (6.4%)
Other Materials and Supplies 297,128 306,200 342,267 369,100 62,900 20.5%
Building and Grounds Materials 87,879 82,500 86,454 92,500 10,000 12.1%
Contracted Services 969,432 948,800 808,966 921,000 (27,800) (2.9%)
Subtotal Materials and Maintenance 3,181,452 3,218,600 3,279,951 3,860,900 642,300 20.0%
Sewer Charges
Metro O&M Costs 531,868 704,000 850,000 735,000 31,000 4.4%
Spring Valley Sewer Charge 171,101 210,000 294,868 229,000 19,000 9.0%
Subtotal Sewer Charges 702,969 914,000 1,144,868 964,000 50,000 5.5%
Total Expenditures 3,884,421$ 4,132,600$ 4,424,819$ 4,824,900$ 692,300$ 16.8%
FY 2024 Materials and Maintenance Expenditures
Fuel and Oil 316,500$ 6.6%
Meters and Materials 200,900 4.2%
Fleet Parts and Equipment 173,600 3.6%
Infrastructure Equipment & Supplies 807,700 16.7%
Chemicals 807,800 16.7%
Safety Equipment 108,900 2.3%
Laboratory Equipment & Supplies 62,900 1.3%
Other Materials & Supplies 369,100 7.6%
Building and Grounds Materials 92,500 1.9%
Contracted Services 921,000 19.1%
Metro and County Sewer Charges 964,000 20.0%
Total Expenditures Total Materials and Maintenance Expenditures 4,824,900$ 100.0%
Materials and Maintenance Expenditures - Total
Budget to Budget
Variance
6%4%
4%
17%
17%
2%1%8%
2%
19%
20%
Sewer
Charges
Chemicals
Contracted
Services
Infrastructure,
Equipment &
Supplies
117
FY 2022 FY 2023 FY 2023 FY 2024
Budget to
Budget
Actual Budget Actual Budget Variance
Departmental Expenditures
Board of DirectorsBoard of Directors 182,093$ 239,000$ 216,549$ 249,000$ 10,000$
General ManagerGeneral Manager 1,405,895 1,638,600 1,347,202 1,633,000 (5,600)
General ExpenseGeneral Expense 2,761,740 4,039,200 4,797,042 4,521,600 482,400
Administrative ServicesAdministrative Services 7,132,130 7,849,000 7,626,825 8,243,900 394,900
FinanceFinance 6,239,544 6,561,500 6,223,236 6,666,800 105,300
Water OperationsWater Operations 11,466,899 12,973,100 12,515,637 14,501,300 1,528,200
EngineeringEngineering 4,291,742 5,042,300 4,195,566 5,205,000 162,700
Total Departmental ExpendituresTotal Departmental Expenditures 33,480,043 38,342,700 36,922,057 41,020,600 2,677,900
Less: Overhead Allocation (1,291,629) (1,422,100) (1,186,181) (1,392,800) 29,300
Net Departmental Expenditures 32,188,413 36,920,600 35,735,876 39,627,800 2,707,200
Non-Departmental Expenditures & Reserve Funding
Water Purchases 60,935,637 63,777,000 60,838,899 68,378,000 4,601,000
Power 3,679,023 3,893,000 4,400,025 4,285,000 392,000
Subtotal Non-Departmental Expenditures 64,614,660 67,670,000 65,238,924 72,663,000 4,993,000
General Fund Reserve 90,500 40,400 40,400 - (40,400)
Expansion Reserve 2,066,900 684,800 684,800 4,320,000 3,635,200
Betterment Reserve 735,000 4,890,000 4,890,000 2,562,000 (2,328,000)
Replacement Reserve 11,986,900 8,393,600 8,393,600 8,774,800 381,200
Transfer to Rate Stabilization Fund 21,000 19,000 19,000 - (19,000)
Subtotal Reserve Funding 14,900,300 14,027,800 14,027,800 15,656,800 1,629,000
Total Operating Expenditures 111,703,373$ 118,618,400$ 115,002,600$ 127,947,600$ 9,329,200$
Operating Expenditures by Department
FY 2024 Funding Source by Department, in Thousands ($)
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000
Board of Directors
General Manager
Administrative Services
Finance
Water Operations
Engineering
General Expense
Potable
Sewer
Recycled
118
FY 2022 FY 2023 FY 2023 FY 2024
Budget to
Budget
Actual Budget Actual Budget Variance
Departmental Expenditures
Labor and Benefits 22,200,363$ 25,628,300$ 24,449,604$ 26,740,200$ 1,111,900$
Director's Fees 55,632 84,000 59,130 75,000 (9,000)
Travel and Conferences 96,910 181,600 214,998 254,700 73,100
Memberships and Dues 82,729 95,500 86,925 98,800 3,300
Conservation and Outreach 125,816 138,200 134,956 145,500 7,300
General Office Expense 250,436 268,000 296,036 304,800 36,800
IT Hardware, Software & Communication 1,318,028 1,439,600 1,423,467 1,690,000 250,400
Misc Office & Field Equipment 118,881 127,400 112,549 174,200 46,800
Fees 2,714,233 3,175,500 3,325,856 3,306,200 130,700
Services 2,197,989 2,723,100 2,137,731 3,019,800 296,700
Training 153,465 208,800 209,114 290,700 81,900
Materials & Maintenance 3,181,452 3,218,600 3,279,951 3,860,900 642,300
Utilities 17,747 18,100 25,712 23,800 5,700
Sewer Charges 702,969 914,000 1,144,868 964,000 50,000
Bad Debt Expense 263,393 122,000 21,160 72,000 (50,000)
Total Departmental Expenditures 33,480,043 38,342,700 36,922,057 41,020,600 2,677,900
Less: Overhead Allocation (1,291,629) (1,422,100) (1,186,181) (1,392,800) 29,300
Net Departmental Expenditures 32,188,413 36,920,600 35,735,876 39,627,800 2,707,200
Non-Departmental Expenditures & Reserve Funding
Water Purchases 60,935,637 63,777,000 60,838,899 68,378,000 4,601,000
Power 3,679,023 3,893,000 4,400,025 4,285,000 392,000
Subtotal Non-Departmental Expenditures 64,614,660 67,670,000 65,238,924 72,663,000 4,993,000
General Fund Reserve 90,500 40,400 40,400 - (40,400)
Expansion Reserve 2,066,900 684,800 684,800 4,320,000 3,635,200
Betterment Reserve 735,000 4,890,000 4,890,000 2,562,000 (2,328,000)
Replacement Reserve 11,986,900 8,393,600 8,393,600 8,774,800 381,200
Transfer to Rate Stabilization Fund 21,000 19,000 19,000 - (19,000)
Subtotal Reserve Funding 14,900,300 14,027,800 14,027,800 15,656,800 1,629,000
Total Operating Expenditures 111,703,373$ 118,618,400$ 115,002,600$ 127,947,600$ 9,329,200$
Operating Expenditures by Object
119
Departmental Operating Budget
Tim Smith
Division 1
Mark Robak
President
Division 5
Jose Lopez
Vice President
Division 4
Ryan Keyes
Treasurer
Division 2
Board of Directors
The Otay Water District is a revenue-neutral
public agency established in accordance with
the California Water Code. This not-for-profit
status means Otay has no private shareholders,
pays no dividends and therefore does not report
to, nor answer to the California Public Utilities
Commission. The District does, however, answer
to the public through a five-member Board of
Directors. Each Director is elected by voters
within their respective division boundaries to
represent the public's interest with regard to
rates for service, taxes, policies, ordinances, and
other matters related to the management and
operation of the Otay Water District. Directors
serve four-year alternating terms on the Board.
Gary Croucher
Division 3
120
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Board of Directors 182,093$ 239,000$ 216,549$ 249,000$ 10,000$ 4.2%
Total Expenses 182,093 239,000 216,549 249,000 10,000 4.2%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Benefits 103,255 121,000 108,710 121,000 - -
Director's Fees 55,632 84,000 59,130 75,000 (9,000) (10.7%)
Travel and Conferences 23,206 34,000 48,709 53,000 19,000 55.9%
Total Expenses 182,093$ 239,000$ 216,549$ 249,000$ 10,000$ 4.2%
-$
Department
Object
Budget vs. Actual, in thousands ($)
Board of Directors
Budget to Budget
Variance
Budget to Budget
Variance
$0
$50
$100
$150
$200
$250
2022 2023 2024
$224 $239 $249
$182
$217
Budget Actual
121
Director’s Division Boundaries
122
Departmental Operating Budget
(1) See Position count by Department on page 112-115 for the list of positions per department. District Chiefs
report directly to the General Manager; however, they are budgeted within their respective department.
General Manager
Mission
To provide exceptional water and wastewater service to its customers, and to manage the Otay
Water District’s resources in a transparent and fiscally responsible manner.
General Manager’s Vision
“To be a model water agency by providing stellar community service, achieving measurable results,
and continuously improving our operational practices.”
C
Statement of values
As Otay Water District employees we dedicate ourselves to:
Customers: We take pride that our commitment to customer-centered service is our highest
priority.
Excellence: We strive to provide the highest quality and value in all that we do.
Integrity: We commit ourselves to doing the right thing. Ethical behavior, trustworthiness, and
accountability are the District’s foundation.
Employees: We see each individual as unique and important. We value diversity and open
communication to promote fairness, dignity, and respect.
Teamwork: We promote mutual trust by sharing information, knowledge, and ideas to reach our
common goals.
Innovation: We constantly seek better, more efficient, and cost-effective ways to deliver our
services.
General Manager – 4 Positions (1)
District Secretary
1211
Communications Officer
1211
General Manager
1211
Chief Financial Officer
2311
Board of Directors
1111
Communications Assistant
1211
Chief, Administrative
Services 2211
Chief, Water
Operations 3211
Chief, Engineering
3311
123
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
General Manager 1,262,004$ 1,495,600$ 1,232,976$ 1,482,200$ (13,400)$ (0.9%)
Conservation 143,891 143,000 114,226 150,800 7,800 5.5%
Total Expenses 1,405,895 1,638,600 1,347,202 1,633,000 (5,600) (0.3%)
-$
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Labor and Benefits 858,969 939,000 917,669 985,500 46,500 5.0%
Travel and Conferences 17,098 35,200 27,643 41,200 6,000 17.0%
Memberships and Dues 69,522 77,700 74,977 83,800 6,100 7.9%
Conservation and Outreach 125,816 138,200 134,956 145,500 7,300 5.3%
General Office Expense 1,600 5,700 6,335 6,700 1,000 17.5%
Fees 58,340 116,000 76,216 66,000 (50,000) (43.1%)
Services 123,083 222,300 106,403 199,800 (22,500) (10.1%)
Training 1,710 4,500 3,003 4,500 - -
Materials & Maintenance 149,757 100,000 - 100,000 - -
Total Expenses 1,405,895$ 1,638,600$ 1,347,202$ 1,633,000$ (5,600)$ (0.3%)
-$ -$ -$ -$
Budget vs. Actual, in thousands ($)
General Manager
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
2022 2023 2024
$1,514
$1,639 $1,633
$1,406 $1,347
Budget Actual
124
Departmental Operating Budget
General Manager
Services We Provide
The General Manager’s office provides leadership and direction for all District operations and
services including potable, recycled, and wastewater. As leader of the agency, the General Manager
interacts with the Board of Directors to set policies and strategic direction and ensures that
applicable laws and regulations are met. The General Manager oversees, coordinates, and directs
the development and execution of planning and strategic documents and the operating and capital
improvement projects. The General Manager represents the District in establishing and maintaining
relationships with member agencies and external organizations. The General Manager is also
focused on executing the District’s mission, Strategic Plan, and Board priorities. The General
Manager’s office collaborates with all District departments to provide and support communications,
including but not limited to the website, social media, the newsletter, the mobile application, and
other materials and technologies. In addition, the office coordinates media relations, outreach,
education, water conservation, and legislation. The office supports and participates in outreach and
business events throughout the community and helps fund and promote a variety of conservation
rebates and other programs available to its customers. Staff promotes water-use efficiency through
educating the District’s customers about available rebates, water conservation programs, and the
Water Conservation Garden. The office also works with other departments to coordinate the District’s
Water Shortage Contingency Plan as well as its water waste reporting program.
Accomplishments – Fiscal Year 2022-2023
The District’s rates were ranked the ninth lowest among San Diego County’s 22 public water
agencies and the fourth lowest among the County’s 28 sewer service providers.
Saved more than $66 million due to staffing efficiencies and the reduction of full-time
equivalent positions from 2007 to fiscal year 2023.
This District marketed the State’s Low Income Household Water Assistance Program
(LIHWAP) to its customers. As of June 30, 2023, the District processed more than $150,000 in
payments to assist customers. The District continues to advocate for financial assistance for
its customers.
The District maintained continuity of operations and services post-COVID-19. Staff continued
to monitor and provide updates relating to responding to the pandemic, including but not
limited to water and wastewater services, supplies, operations, finances, and communication.
Staff continued to monitor and comply with all Federal, State, and Local orders and guidelines.
Continued to lead executive management and staff in legislative and health order efforts to
address the COVID-19 pandemic and post-pandemic, which included managing
communications with employees and customers and implementing policies and procedures
related to telecommuting, safe work practices, employee absences, staffing plans, testing, and
more.
125
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Continued to implement the Pilot Telecommuting Policy/Program, which allows administrative
employees to work from home for up to two days per week to ensure the District remains
competitive in the industry, and support work/life balance initiatives.
Finalized and approved the District’s first Hazard Mitigation Plan, which allows the District to
apply for hazard mitigation assistance funding.
Presented the 2023 Otay Water District Legislative Program Policy Guidelines and 2023 Top 10
Legislative Priorities to the Board and remained engaged in legislative issues that could
impact the District.
Remained engaged with Association of California Water Agencies (ACWA) and other public
agencies in response to California Air Resources Board’s (CARB) approved regulation of the
transition to Zero Emissions Vehicles (ZEV) and Near Zero Emissions Vehicles (NZEV) for
public fleets per the Governor’s Executive Order of Advance Clean Fleet Regulation. Staff, in
collaboration with operations, submitted comment letters. Staff also remained engaged in
monitoring and supporting AB 1594 (Garcia), which would require that any state regulation on
medium- and heavy-duty vehicles support an agency’s ability to maintain reliable water and
electric service, respond to emergencies and provide mutual aid assistance.
Remained at Level 1 of the District’s Water Shortage Contingency Plan but encouraged Level 2
actions based on the emergency water conservation regulation adopted by the State Water
Resources Control Board.
Published the annual consumer confidence report, indicating to customers that the District
met or surpassed all public health drinking water requirements and standards.
General Manager continued serving as a board member representing Association of California
Water Agencies (ACWA) Region 10.
Completed the Customer Opinion Survey with 85% of respondents indicating they were
satisfied with the job the District is doing to provide water services to their household.
Created and distributed four Pipeline newsletters to customers.
Collaborated with information technology staff to complete the most recent iteration of the
District's mobile app, "Make Every Drop Count." The latest version includes a range of
enhancements, including strengthened security measures, improved performance, and
enriched content.
Continued to develop, leverage, and enhance District technologies, including smartphone
apps, drone technology, geographic information systems technology, GPS fleet-tracking
management systems, SCADA upgrades, the boardroom’s audio-visual equipment, work order
management, asset management software, cloud-based ticket management systems, and
more.
126
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Coordinated public outreach for various Capital Improvement Program projects, including but
not limited to the Vista Sierra water line replacement, Vista Diego Hydropneumatic Pump
Station and Water Main Replacement, and the 485-1 Reservoir Recoating.
Secured $10,000 in funding for the District’s Leak Detection and Repair Program, which
surveyed approximately 175 miles of potable and recycled pipelines, pinpointing 21 water-
system leaks and 63 consumer-side leaks.
To continue promoting water-use efficiency to customers, the District recognized the
WaterSmart Landscape Contest “Best in District” winner, an El Cajon resident. Her water-wise
landscape uses approximately 41% less water than before she installed the new landscape.
The District hosted an educational booth at several events including Cuyamaca College’s
Military Career Day, Chula Vista Elementary School District’s 130 Year Anniversary Celebration,
the City of Chula Vista’s South Bay Earth Day, Spring Valley Day, the Water Conservation
Garden’s Spring Garden and Butterfly Festival, the Sixth Annual Women in Water Symposium,
the Construction Management Association of America Owner’s Night, and the Safety Officers
Appreciation event The District also supported and attended the Chula Vista Chamber of
Commerce 96th Installation Dinner and South County Economic Development Corporation’s
Economic Summit.
Presented to organizations and groups, including but not limited to: the attendees of
Cuyamaca College Center for Water Studies Military Career Day, Chula Vista Chamber of
Commerce, South County Economic Development Council, American Water Works
Association and Association of California Water Agencies conference attendees, and others.
Continued the educational partnership with Chula Vista Elementary School District and the
Sweetwater Authority for the Hydro Station, an interactive educational space that houses
learning exhibits, hands-on activities, and virtual opportunities, and teaches more than 4,000
fifth graders about the ecological cycle of water, water conservation, water quality, and
careers in the water industry.
Partnered with Cuyamaca College’s Center for Water Studies program to serve on committees
to enhance outreach to veterans and women in the water industry.
District staff participated on the committee for the Cuyamaca College Center for Water
Studies’ sixth annual Women in Water Symposium. The symposium, held on March 29, was
held for the first time in person since the start of COVID-19. The District sponsored the event.
The symposium hosted more than 10 speakers and 160 attendees from 39 agencies,
companies, and institutions. Several District staff also attended the symposium. Engaging
topics included interviewing tips, advocating for needs in the workplace, women in the
different fields of the water industry, leadership, and empowering a team of diverse
personalities while emphasizing the importance of educational and professional development
opportunities. District staff moderated one of the panels.
127
Departmental Operating Budget
General Manager (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
The District continued to support the “Mark Watton” scholarship fund through the Foundation
for Grossmont and Cuyamaca Colleges to increase the talent pool in the water industry by
supporting students attending the Center for Water Studies at Cuyamaca. Through the
scholarship, the Foundation for Grossmont & Cuyamaca College awarded scholarships to
seven recipients for $500 each.
The District continued to enhance its website and social media sites by increasing its use of
short social media videos, graphics, and photos related to the District-related services,
projects, conservation and rebate programs, and news. As a result, the number of followers on
all District social media pages increased from July 1, 2022, to June 30, 2023. The District’s
Facebook gained a 5% increase in followers from 694 to 727. Its Twitter followers increased
from 2,236 to 2,245 by .4%. Instagram followers increased by 7%, from 1,045 to 1,113. Nextdoor
members in the District’s service area increased by 17%, from 56,295 to 65,839. LinkedIn
followers increased by 20%, from 833 to 1,003. YouTube subscribers increased by 3%, from
225 to 231. Also, its cumulative YouTube video views increased by 5%, from 180,615 to 190,324.
Produced videos and reels for social media about topics including tips to conserve during the
holiday season, celebrating national Public Works Week, the board tour of the 870-2 Pump
Station and 571-1 Reservoir in Otay Mesa, the WaterSmart Checkup program, turning off
irrigation during the rain, and a New Year’s related message.
The District launched its annual poster contest for grades kindergarten through twelfth. To
reflect the Metropolitan Water District of Southern California’s new theme for their annual art
calendar contest, the District changed its theme from “Water is Life” to “Being water wise is…”
and awarded six students of 53 entries from elementary and middle schools in the District’s
service area. No high school students submitted. There is potential for District winners to be
selected by MWD for the 2024 calendar. Staff will be notified of the winners later in 2023.
128
Departmental Operating Budget
Administrative Services
Mission Statement
To provide support to the Board of Directors, General Manager, and District staff by executing
objectives that meet and serve the needs of our customers by providing, through best practices, the
full range of employer and employee services, administrative services, risk management, safety and
security, emergency preparedness and response, enterprise technology, and strategic planning.
Department Responsibilities
The Administrative Services Department, under the general direction of the Chief of Administrative
Services, provides the following support services: Human Resources, Purchasing, Facilities
Maintenance, Safety and Security, Geographic Information Systems and Information Technology,
and Strategic Planning. The department also coordinates assigned activities with other departments
and outside agencies and provides highly responsible and complex administrative support to the
District, Board of Directors, and General Manager.
Administrative Services Department – 23 Positions (1)
(1) See Position Count by Department on page 112 for the list of positions per department.
Chief,
Administrative Services
2211
Purchasing
and Facilities
2231
Human
Resources
2221
Information
Technology
2421
Geographic
Information Systems
2431
Safety and
Security
2241
129
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Administrative Chief 486,399$ 500,000$ 497,218$ 507,300$ 7,300$ 1.5%
Human Resources 851,337 1,125,000 993,147 1,107,800 (17,200) (1.5%)
Purchasing and Facilities 1,728,728 1,853,400 1,830,941 1,895,600 42,200 2.3%
Safety and Security 433,509 422,400 450,902 506,200 83,800 19.8%
IT Operations 2,543,658 2,775,700 2,758,576 3,053,100 277,400 10.0%
Geographic Information System (GIS)1,088,499 1,172,500 1,096,041 1,173,900 1,400 0.1%
Total Expenses 7,132,130 7,849,000 7,626,825 8,243,900 394,900 5.0%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Labor and Benefits 4,400,913 4,738,000 4,626,599 4,799,200 61,200 1.3%
Travel and Conferences 11,466 39,100 55,184 48,000 8,900 22.8%
Memberships and Dues 4,470 5,100 5,173 5,200 100 2.0%
General Office Expense 96,253 105,200 124,063 119,200 14,000 13.3%
IT Hardware, Software & Communication 1,311,212 1,429,600 1,416,784 1,672,300 242,700 17.0%
Misc Office & Field Equipment 37,928 37,000 35,003 44,000 7,000 18.9%
Services 405,876 630,100 455,332 599,500 (30,600) (4.9%)
Training 133,705 161,700 178,891 221,300 59,600 36.9%
Materials & Maintenance 712,560 685,100 704,084 711,400 26,300 3.8%
Power and Utilities 17,747 18,100 25,712 23,800 5,700 31.5%
Total Expenses 7,132,130$ 7,849,000$ 7,626,825$ 8,243,900$ 394,900$ 5.0%
Administrative Services
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
Budget vs. Actual, in thousands ($)
$6,500
$7,000
$7,500
$8,000
$8,500
2022 2023 2024
$7,412
$7,849
$8,244
$7,132
$7,627
Budget Actual
130
Departmental Operating Budget
Human Resources
Services We Provide
Human Resources, under the direction of the Chief of Administrative Services, provides the following:
recruits, selects, and ensures the retention of qualified employees; develops, implements, and
administers policies, procedures, collective bargaining contracts, and employee programs; ensures
up-to-date classification plans and a competitive compensation program; manages benefits program
for employees and retirees; manages the workers’ compensation program; oversees employee
performance through staff management to include employee training and development;
development of recognition and incentive programs; manages performance evaluation process and
employee discipline; ensures legal compliance; and implements work/life balance initiatives.
Accomplishments – Fiscal Year 2022-2023
Conducted 20 recruitments to fill 21 positions, which constitutes 14.7% of the District’s
workforce.
Conducted a Request-for-Proposals and selected a new benefits broker for the District.
Updated the District’s Staff Travel Policy and Board Ethics Policy.
Consistent with the current Strategic Plan, initiated the development of an Innovation
Committee to promote innovation to advance the District’s culture of collaboration, proactively
improve processes, and identify departmental efficiencies.
Consistent with the advancement of the District’s development and training program,
coordinated a FranklinCovey training program for District management, supervision, and lead
staff regarding the advancement of trust and building a winning culture in government.
Developed and implemented a Return-to-Work Program in coordination with the Safety &
Security Specialist.
Continued to manage legislation and health orders related to COVID-19, which included
updating District policies and procedures and managing employee communication and
related absences.
Continued to manage the District’s Pilot Telecommuting Program.
Purchasing and Facilities
Services We Provide
Purchasing and Facilities, under the direction of the Chief of Administrative Services, provides the
following: oversees the general purchasing and contracting standards used within the District;
oversees the procurement of supplies, equipment, and services; controls and administers the District’s
standard materials inventory; disposes of surplus materials, equipment, and supplies; assists in the
131
Departmental Operating Budget
Purchasing and Facilities (continued)
Services We Provide (continued)
acquisition and disposal of non-infrastructure-related real estate; performs facility maintenance work;
and administers and manages outsourced facility maintenance service contracts.
Accomplishments – Fiscal Year 2022-2023
Updated the Administration building’s 25-year-old landscape, initially designed as a
demonstration garden that outlined water conservation measures promoted at that time. The
new design incorporates new materials, irrigation systems, and plant species that promote
the latest in water conservation.
Adopted DroneDeploy mapping and analytics software in support of the District’s drone
program to regularly survey and document District facilities in high-resolution maps and 3D
models. Various analytical tools and drone sensors combined to deliver survey quality
renderings, water system leak detection, vegetation wildfire risk assessments, supplemental
regulatory visual inspections, and storm damage surveys among many other capabilities.
Purchasing received its first-ever Excellence in Procurement® Award from the National
Procurement Institute (NPI). The District is one of 171 organizations in the United States and
Canada and one of 15 special districts to be recognized for its excellence in procurement.
Through its annual award, NPI recognizes organizations that demonstrate commitment to
innovation, professionalism, productivity, e-procurement, and leadership. NPI established its
award program in 1995 having been founded in 1968 with a focus on leading excellence in
public procurement and serving professionals internationally.
Safety and Security
Services We Provide
Safety and Security, under the direction of the Chief of Administrative Services, provides the following:
interprets and enforces safety regulations and standards, participates in the development and
management of new or revised safety standards, policies, and plans; organizes, coordinates,
implements the occupational safety and health and security management programs; ensures the
workplace adheres to Cal/OSHA regulations; coordinates programs that support a safe workplace,
including assessment and mitigation of hazards, and safety orientations, the Injury and Illness
Prevention Program (IIPP), emergency preparedness, directs and coordinates accident
investigations related to occupational injuries, fleet incidents and/or damage to, or theft of District
property; determines training needs to address issues; coordinates the District’s Department of
Transportation (DOT), Drug-Free Workplace, and DMV Pull-Notice programs.
132
Departmental Operating Budget
Safety and Security (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Implemented the Bionomics (Body Mechanics) safety training for District staff. As a result,
reduced the number of OSHA Recordable sprains and strains by 50%.
Developed the District’s first Return-to-Work Program to accommodate injured employees
with modified/transitional duties in coordination with human resources. This will significantly
reduce the number of lost workdays reported to the California Department of Industrial
Relations and decrease worker’s compensation temporary total disability benefits.
Continued FBI/InfraGard membership with the San Diego Chapter and staff appointment as
the Water and Wastewater Section Chief for the County. Completed the Sector Chief
Leadership Program.
Appointed California Water/Wastewater Agency Response Network (Cal WARN) Region 6 Co-
Chair. Cal WARN supports and promotes statewide emergency preparedness, disaster
response, and mutual assistance processes for public and private water and wastewater
utilities.
Annexation of the District’s first Hazard Mitigation (HazMit) Plan. The plan was approved and
signed by the District’s Board and was sent to the County of San Diego Office of Emergency
Services. The District is now eligible to apply for hazard mitigation assistance funding.
Completed County Office of Emergency Services WebEOC monthly exercises to maintain the
District’s emergency readiness.
Information Technology Operations
Services We Provide
IT Operations, under the direction of the Chief of Administrative Services, provides the following:
comprehensive support for the District's enterprise business computing environment. The team
manages essential services to ensure smooth and efficient operations, including day-to-day
maintenance and troubleshooting of the District’s enterprise network, data center, and desktop and
mobile hardware/software; management and support of critical systems including the Enterprise
Resource Planning (ERP), Work Order Management, Document Management, Office Productivity,
and Security Systems; implementation and management of disaster recovery measures to safeguard
essential data and systems.
Accomplishments – Fiscal Year 2022-2023
Received the Best of California Award for the “Best Application Serving an Agency's Business
Needs.” This recognition highlights the District's commitment to the advancement of
innovative practices in workflow automation technology. Among the notable
accomplishments is redesigning the District's employee performance evaluation system and
implementing several interdepartmental automated processes, improving operational
performance efficiencies.
133
Departmental Operating Budget
Information Technology Operations (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Completed the District's SCADA system upgrade project. The comprehensive upgrade
encompassed all system functionalities, requirements, and components, ensuring a seamless
and integrated system. Key elements of the upgrade involved the replacement and
enhancement of the SCADA operations software, computer hardware, improved notification
system, and the integration of sensory automation. The project incorporated reprogramming
and configuration of remote monitoring operations, emphasizing cybersecurity measures and
heightened safeguards.
Completed a threat and vulnerability assessment to evaluate the District’s cybersecurity
framework. The evaluation analyzed the organization's preventive measures, secured
network infrastructure, and configuration practices. Collaborative discussions with the
assessment team addressed emerging threat categories, including fraudulent activities,
endpoint exploits, and the increasing prevalence of brute-force password attempts in
cybersecurity.
Collaborating with the communications section, completed the latest version of the District’s
mobile app, "Make Every Drop Count." The new version includes a range of enhancements,
including strengthened security measures, improved performance, and enriched customer
content.
Updated the District's Work Order Management System, Cityworks. The updates included
improved support for ArcGIS components, and integration of Barcoding and Equipment
Management features, which streamline scan/inventory and equipment checkout processes
for increased efficiency. Additional features include enhanced analytic tools, offering better
asset and maintenance strategies visualization.
Geographic Information Systems (GIS)
Services We Provide
GIS, under the direction of the Chief of Administrative Services, provides the following: technical and
administrative support of the District’s enterprise GIS and computer-aided design systems; data
collection and data Quality Assurance/Quality Control (QA/QC) of the District’s facility data and land-
based data; technical support in designing, developing, documenting, and maintaining the District’s
GIS database systems.
Accomplishments – Fiscal Year 2022-2023
Developed a GIS portal that provides easy access to GIS applications developed over the
years. The GIS portal contains 12 GIS applications ranging from customer service to
engineering service support. The portal was developed in-house saving the District thousands
of dollars. The portal will help staff make real-time informed decisions and improve the overall
efficiency and effectiveness of the District's operations.
134
Departmental Operating Budget
Geographic Information Systems (GIS) (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Completed the migration of the on-premises to cloud-based InfraMAP service solution. The
new cloud-based maintenance management system allows for seamless field data collection
and digital record keeping for historical purposes. It also supports the District’s asset
management program. The cloud migration will save the District money and provide greater
flexibility, mobile device interoperability, and enhanced integration with the Esri geographic
information system.
To ensure compliance with the recently released EPA's Guidance for Developing and
Maintaining a Service Line Inventory, staff created a GIS-based lead-service line collection
system. The solution allows staff to use mobile devices to efficiently collect and manage data
pertaining to service lines, significantly reducing the time and effort required to complete
inventory tasks. Additionally, the solution offers an application that allows residents to directly
report and communicate any lead-related issues to District staff.
Staff completed the collection and verification of service laterals project. The project included
work order and as-drawing analysis of different sized service laterals, validating and
populating diameter information in the GIS system, and generating reports for department
stakeholders.
As part of the valve replacement program, staff completed the valve ranking and criticality
factor project. Staff produced a new report that ranks valves based on their level of
importance. This report was created using the Valve Segmentation tool, which was jointly
developed with Esri. The tool utilizes a calculation methodology to determine the number of
meters that will be impacted by each valve once it becomes faulty or requires replacement.
The new report assigns a ranking to each valve based on the number of customer
connections within the District. This ranking system allows for a better understanding of the
impact that each valve has on the overall system. By identifying the most critical valves, the
District can prioritize their replacement, ensuring that resources are allocated for valves
requiring attention based on their condition.
135
Departmental Operating Budget
Finance
Mission Statement
To provide timely, accurate, and clear information that optimizes service to the District’s staff and
ratepayers. Through continuous improvement, professional service, and effective fiscal policies the
Finance Department will ensure that financial resources are collected, recorded, protected, and
expended in a fiscally responsible manner.
Department Responsibilities
The Finance Department, under the general direction of the Chief Financial Officer, provides the
following support services: Controller and Budgetary Services, Treasury and Accounting Services,
Meter Services, and Customer Service. The department ensures the District’s conformance with
modern finance, accounting theory and practices, and compliance with applicable state and federal
laws. In addition, it provides customer support, meter reading and maintenance, and water
conservation support to the Communications Division. Finance staff is also responsible for providing
complex administrative and technical support to the District, General Manager, and Board of
Directors.
Finance Department – 31 positions (1)
(1) See Position Count by Department on page 113 for the list of positions per department.
Treasury and Accounting Services 2331
Customer Service 2341
Controller and Budgetary Services 2321
Assistant Chief of Finance - 2321231
Chief Finance Officer - 2311
Meter Services 2342
136
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $ %
Finance Chief 596,475$ 621,400$ 652,347$ 659,700$ 38,300$ 6.2%
Controller and Budgetary Svs 980,694 975,100 991,555 1,053,400 78,300 8.0%
Treasury and Accounting Svs 1,622,021 1,769,900 1,618,117 1,762,800 (7,100) (0.4%)
Customer Service 2,196,098 2,228,700 2,040,325 2,228,100 (600) (0.0%)
Meter Shop 844,256 966,400 920,892 962,800 (3,600) (0.4%)
Total Expenses 6,239,544 6,561,500 6,223,236 6,666,800 105,300 1.6%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $ %
Labor and Benefits 4,689,660 5,062,600 4,872,252 5,154,300 91,700 1.8%
Travel and Conferences 2,245 13,100 23,095 29,900 16,800 128.2%
Memberships and Dues 3,247 6,200 3,534 4,300 (1,900) (30.6%)
General Office Expense 152,272 156,400 164,515 177,900 21,500 13.7%
Misc Office & Field Equipment 815 1,500 3,395 3,000 1,500 100.0%
Fees 701,896 808,900 680,848 770,400 (38,500) (4.8%)
Services 219,629 173,200 166,442 199,800 26,600 15.4%
Training 435 1,200 516 900 (300) (25.0%)
Materials & Maintenance 205,952 216,400 287,479 254,300 37,900 17.5%
Bad Debt Expense 263,393 122,000 21,160 72,000 (50,000) (41.0%)
Total Expenses 6,239,544 6,561,500 6,223,236 6,666,800 105,300 1.6%
Less: Bad Debt Expense (263,393) (122,000) (21,160) (72,000) 50,000 (41.0%)
Expenses, Net of Bad Debt $ 5,976,151 $ 6,439,500 $ 6,202,076 $ 6,594,800 $ 155,300 2.4%
Finance
Department
Object
Budget to Budget
Variance
Budget to Budget
Variance
Budget vs. Actual, in thousands ($)
$6,000
$6,100
$6,200
$6,300
$6,400
$6,500
$6,600
$6,700
2022 2023 2024
$6,358
$6,562
$6,667
$6,240 $6,223
Budget Actual
137
Departmental Operating Budget
Controller and Budgetary Services
Services We Provide
The Controller and Budgetary Services Division is responsible for developing and publishing the
annual operating and capital budget and preparing the six-year financial plan. The division is also
responsible for the development of water and sewer rates and charges as well as capacity fees. Staff
prepares monthly and annual reports, monitors budget variances, and coordinates interactions with
outside agencies. This division is responsible for performing cost of service and capacity fee studies
and preparing rate notices. This division is also responsible for the biweekly payroll of 144 full-time
and temporary employees using the District’s Eden System. Division staff collects and distributes
timesheets and paystubs electronically. Staff also processes benefits and deductions biweekly and
files federal and state tax returns on a quarterly basis, and W2s annually. This division also assists in
the general ledger accounting, audit, cost accounting, and contract review.
Accomplishments – Fiscal Year 2022-2023
For the nineteenth consecutive year, the Government Finance Officers Association (GFOA)
awarded the District with the Distinguished Budget Presentation Award for the Fiscal Year
2022-2023 Budget.
The California Society of Municipal Finance Officers (CSMFO) awarded the District for the
seventeenth consecutive year, the Operating Budget Excellence Award for the Fiscal Year
2022-2023 Budget.
The CSMFO awarded the District for the eighteenth consecutive year with the Capital
Budgeting Excellence Award for the Fiscal Year 2022-2023 Capital Improvement Program
Budget.
Treasury and Accounting Services
Services We Provide
The Treasury and Accounting Services Division coordinates and directs the activities of the general
ledger accounting and audit, banking and cash management, investments and treasury functions,
debt financing, job costing, cost accounting, fixed assets, property and liability insurance, and
contract review. The division is also responsible for the accounts payable process, which pays
approximately 700 invoices monthly. Additionally, the division is responsible for completing the
District’s annual financial audit and publishing the Annual Comprehensive Financial Report. The
division also conducts an annual review of the District’s Investment Policy, as required by law, with
approval of the Board of Directors. Moreover, it provides financial analysis and review of staff projects
and operational business proposals, assists in the preparation of the District’s annual operating and
capital budgets, and updates the rate model and the six-year financial plan.
138
Departmental Operating Budget
Treasury and Accounting Services (continued)
Accomplishments – Fiscal Year 2022-2023
For the nineteenth consecutive year, the GFOA awarded a Certification of Achievement for
Excellence in Financial Reporting to the District for its Annual Comprehensive Financial
Report for the fiscal year ended June 30, 2022.
Continued implementing various automations to reduce manual handling of invoices,
requisitions, and other financial documents, streamlining the invoice approval process while
strengthening internal controls over financial operations.
Transitioned daily banking operations to US Bank including utility payment processing,
check payments, and payroll.
Completed the implementation of Governmental Accounting Standards Board Statement
No. 96 Subscription-Based Information Technology Arrangements, which included system
and process changes to support the recording and amortization of certain information
technology agreements.
Completed the 2022 State Water Resources Control Board’s water loss audit certification
program and submitted a certified water loss audit to the Department of Water Resources.
Customer Service
Services We Provide
The Customer Service Division is responsible for providing billing, receipting, collections, and
customer care for water and sewer services in addition to assisting the Communications Division
with water conservation. The billing and customer care teams handle the coordination of billing and
receipting of approximately 49,000 accounts per month. Customers have the choice of receiving
either a paper or an electronic bill, and various payment options including check, ACH, web,
interactive voice response (telephone), and the convenience of multiple locations for walk-in
payments. The District has an automated phone system and web portal, which give customers
access to their account information 24/7. If customers desire more personal service, the customer-
care team, which handles an average of 4,000 calls per month, will assist them.
The Meter Services Division is responsible for the installation and maintenance of all meters. Division
staff manages the District’s backflow/cross-connection prevention, which includes annual testing of
devices and water meters to ensure the continued safety of the potable water system. Staff also
responds to customer issues regarding meter accuracy, conducts site audits, and maintains records
as required by various regulatory agencies. Meter reading staff reads approximately 50,000 potable
and recycled meters a month using Automatic Meter Reading (AMR) technology.
139
Departmental Operating Budget
Customer Service (continued)
Accomplishments – Fiscal Year 2022-2023
Completed 259 meter installations and 89 construction meter installations.
In preparation for migrating approximately 22,000 meters from drive-by meter reading to
transmitting reads electronically directly to the office, staff upgraded nine district facilities
and installed hardware.
Completed the application process to accept payments from the State from the Low
Income Household Water Assistance Program (LIHWAP). The District marketed this
program to its customers and worked closely with the local community provider, MAAC, to
receive email notifications when a customer was approved for funding. As of the end of
June 2023, the District has processed over $150,000 in payments to customer accounts.
Staff installed a new small meter test bench for meters 2-inch or smaller. The previous test
bench was more than 40 years-old and no longer functioned. The new bench will allow
the District to create a meter testing program for small meters to determine the timeline for
meter changeouts and ensure residential water loss remains low.
Staff participated in various workshops related to the State’s second draft of the Cross
Connection Control Policy handbook. The District submitted comments to address many
items within the draft. A final copy of the handbook is expected in late 2023.
140
Departmental Operating Budget
Water Operations Department
Mission Statement
To provide operations and maintenance service in the most efficient, safe, and cost-effective manner
to internal and external customers, and to strive to continually improve the level of service.
Department Responsibilities
The Water Operations Department, under the general direction of the Chief of Water Operations,
provides the following support services: potable and recycled water system operations, construction
maintenance, sewer collection, and wastewater treatment. The department provides highly
responsible and complex technical and administrative support to the District, General Manager, and
Board of Directors.
Water Operations Department – 57 Positions (1)
(1) See Position Count by Department on pages 113-114 for the list of positions per department.
Chief, Water Operations
3211
Utility Services
Utility Maintenance 3232
Fleet Maintenance 3233
Pump & Electrical 3236
SCADA 3227
Water Operations
Water System Operations 3221
Water System 3225
Laboratory 3243
Reclamation Plant 3244
141
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Water Operations Chief(1)535,325$ 495,000$ 493,720$ 701,400$ 206,400$ 41.7%
Water Systems(1)5,870,358 6,600,600 6,610,554 7,534,600 934,000 14.2%
Utility Maintenance(1)5,061,216 5,877,500 5,411,363 6,265,300 387,800 6.6%
Total Expenses 11,466,899 12,973,100 12,515,637 14,501,300 1,528,200 11.8%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Labor and Benefits(1)7,793,820 8,818,100 8,120,372 9,286,300 468,200 5.3%
Travel and Conferences 30,611 40,700 48,842 63,100 22,400 55.0%
Memberships and Dues 2,540 3,500 1,682 2,500 (1,000) (28.6%)
General Office Expense - 200 448 500 300 150.0%
IT Hardware, Software & Communication 6,816 10,000 6,683 17,700 7,700 77.0%
Misc Office & Field Equipment 40,642 58,300 52,003 82,100 23,800 40.8%
Fees 162,597 168,100 184,005 202,100 34,000 20.2%
Services 603,600 724,300 652,712 1,045,500 321,200 44.3%
Training 10,121 18,800 15,634 42,300 23,500 125.0%
Materials & Maintenance 2,113,183 2,217,100 2,288,388 2,795,200 578,100 26.1%
Sewer Charges 702,969 914,000 1,144,868 964,000 50,000 5.5%
Total Expenses 11,466,899$ 12,973,100$ 12,515,637$ 14,501,300$ 1,528,200$ 11.8%
(1)Excludes CIP labor & benefits.
Budget vs. Actual, in thousands ($)
Water Operations
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
$-
$5,000
$10,000
$15,000
2022 2023 2024
$12,371 $12,973 $14,501
$11,467
$12,516
Budget Actual
142
Departmental Operating Budget
Water System Operations
Services We Provide
The Water Systems Operations Division encompasses four sections, which are responsible for
operations and monitoring of the potable and recycled water distribution systems as well as the
Ralph W. Chapman Water Recycling Facility. The four sections include: 1) Water System Operations
which oversees the Water Operations section; 2) Water Systems – Water system operators monitor
and operate the water distribution system to ensure it provides safe, reliable drinking water to the
District’s customers; 3) Treatment Plant – Maintains and operates the District’s sewer treatment plant
to produce high-quality recycled water to the District’s recycled water customers. Water system
operators monitor and operate the recycled water distribution system ensuring it provides an
adequate recycled water supply; and 4) Laboratory – Ensures regulatory-required sampling,
analyses, and reporting complies with the State Water Resources Control Board (SWRCB)
requirements for potable water, and the Regional Water Quality Control Board requirements for
recycled water and the reclamation plant treatment process. Laboratory staff works closely with
water system operators and disinfection staff to monitor and optimize the water quality in the
distribution system. They also perform bacteriological sampling and analyses for utility maintenance
and engineering staff to ensure proper disinfection was performed after maintenance or new
construction.
Accomplishments – Fiscal Year 2022-2023
Coordinated and executed shutdowns to support the valve replacement Capital
Improvement Program (CIP) project.
Assisted with the emergency portable pump testing at interagency interconnection sites.
Coordinated the biannual cleaning and dive inspections for the District’s floating cover
reservoirs.
Coordinated the cleaning and inspection of seven potable reservoirs to keep pace with
American Water Works Association recommendations.
Finalized the framework for the District’s Lead and Copper Rule private water service line
inventory plan and received State approval.
Coordinated the fiscal year 2023 leak detection campaign.
Assisted with the 1004-1 Reservoir rehabilitation CIP project, including setting up and daily
operation of the temporary variable frequency drive pumping trailer.
Assisted with the 485-1 Reservoir recoating CIP project.
Assisted with the Vista Sierra main replacement CIP project.
Assisted with the Pazo de Luz main replacement CIP project.
Assisted with Developer Project Support, including planned shutdowns for various developer
project needs.
Coordinated Mexico emergency water deliveries.
143
Departmental Operating Budget
Water System Operations (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Participated in the CalARP Compliance Audit and Hazard Review for aqua ammonia sites
that are in the program.
Participated in the San Diego County Water Authority’s Internship Program.
Continued support for the Treatment Plant’s UV System Study project.
Continued to transition to the State’s Environmental Laboratory Accreditation Program
(ELAP) The NELAC Institute (TNI) laboratory requirements. Completed an onsite assessment
report (OSAR), submitted a Corrective Action Plan (CAP) on the Quality Assurance Manual,
as required, and submitted required Proficiency Testing samples (PT’s) for State certification.
Assisted with the testing and conversion of the new SCADA upgrade project.
Assisted with the Cottonwood Sewer Lift Station Rehabilitation CIP project.
Prepared and provided assistance with the County of San Diego’s Certified Uniform Program
Agency (CUPA) Hazardous Material Division (HMD) inspection, reviewing the Hazardous
Materials Business Plan (HMBP) at the Russell Square Sewer Lift Station, with no violations
reported.
Prepared and provided assistance with the State of California Regional Water Quality Control
Boards (RWQCB) inspection as part of the District’s compliance order # R9-2007-0038, with
no violations reported.
Prepared and provided assistance with the County of San Diego’s Stormwater site
inspection, with no violations reported.
Assisted with the new requirements of the Sewer System Management Plan (SSMP) to
develop and submit a Sewer Emergency response Plan (SERP).
The Richard W. Chapman Water Recycling Facility (treatment plant) fulfilled the regulatory
requirement of a five-year update to the Process Hazard Assessment (PHA) as part of the
California Accidental Release Prevention/Process Safety Management/Risk Management
Program (CalARP/PSM/RMP). The CalARP program is required for the use of chlorine at the
treatment plant.
Assisted with the completion of the required five-year maintenance cycle for the chlorine
scrubber maintenance at the treatment plant.
Conducted a tour of the treatment plant for students enrolled in the Center for Water Studies
Program at Cuyamaca College.
Participated in SDG&E’s Emergency Load Reduction Program events during the electric grid
stress event in September 2022.
Assisted with the progression of the District’s Asset Management Plan.
Completed the annual Consumer Confidence Report.
144
Departmental Operating Budget
Utility Services Maintenance
Services We Provide
The Utility Maintenance and Construction Division has four sections, which provide vital
maintenance functions to ensure continuity of the potable, recycled, and wastewater services to
District customers while adhering to all applicable regulatory compliance requirements. The three
sections include: 1) Utility Maintenance – Maintains all collection and potable distribution and
recycled distribution systems, including regular inspection and cleaning of the wastewater collection
system. In addition, exercises valves and installs and repairs main pipelines and service lines
expediently while following all established safety rules and regulations; 2) Fleet Maintenance –
Implements active preventative maintenance practices and repairs on District vehicles and
equipment to ensure optimum performance while establishing fuel-efficient operational practices
and emissions compliance; and 3) Pump and Electrical – Performs preventative, predictive, and
corrective maintenance on pumps, motors, switchgear, and control valves, and assists with electrical
maintenance and installation throughout the District; and 4) SCADA – Performs installations,
maintenance, updates, and modifications to the SCADA control system and related communications
equipment, for existing facilities and the Capital Improvement Project.
Accomplishments – Fiscal Year 2022-2023
Initiated and finalized repairs on large potable water main breaks on Woods Drive and Hunte
Parkway in Chula Vista, Cactus Road in Otay Mesa, Lyons Valley in Jamul, and Vista Sierra
Drive in El Cajon. This included coordinating paving work with contractors.
Supported several CIP projects including:
o Retrofitting the 1004-1 Pump Station for the variable frequency drive (VFD) trailer,
including core drilling, piping, and welding to assist engineering staff with the
implementation of the rehabilitation of the 1004-1 Reservoir
o Recoating and setting up temporary connections for the 458-1 Reservoir, including a
spool on the outlet of the reservoir to put it back in service
o Changing out four large meters on Calle Verde
o recycled water main interconnections on Alta Road in Otay Mesa to set up
redundancy in the distribution system
o Replacing two 42-inch insulating gaskets, replumbing pumps 2, 3, and 4, and
dismantling joints at the 980-2 Pump Station
o Installing a highline for a water main replacement on Vista Sierra Drive in El Cajon.
Coordinated with engineering staff to plan the Central Area cathodic protection
improvements on Hunte Parkway in Chula Vista and 870-2 Pump Station potable mains.
Supported 20 potable wet taps and two sewer taps for new developments throughout the
District.
145
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Set up emergency potable bypass pumps for testing on East Oxford and Cherry Hills Drive
in Chula Vista.
Completed 51 valve replacements and replaced nearly 121 valves since the start of the
ongoing pilot valve replacement program in fiscal year 2021.
Exercised 782 critical valves and 3,514 valves and 18 recycled isolation valves, maintained
1,338 hydrants, and flushed 1,093 segments of mains.
Completed more than 320,081 feet of routine sewer flushing and 72,179 feet of Closed-Circuit
Television sewer inspections.
Replaced/repaired 212 service laterals, 47 pro-active polyethylene lines, and seven water
mains.
Continued to work with the County of San Diego and City of Chula Vista’s paving contractors
to complete improvements throughout the District, such as adjusting to grade manholes and
valve caps.
Continued to update Standard Operating Procedures (SOP) as they relate to preventative
and corrective maintenance for each of the staffing sections.
In response to California Air Resources Board’s (CARB) proposed regulation of the transition
to Zero Emissions Vehicles (ZEV) and Near Zero Emissions Vehicles (NZEV) for public fleets
per the Governor’s Executive Order of Advance Clean Fleet Regulation, operations staff
worked with communications staff to draft a letter in collaboration with Association of
California Water Agencies (ACWA) and other public agencies
Completed 26 emergency facility power testing and multiple Air Pollution Control District
(APCD), Hazardous Materials Business Plan (HMBP), and Spill Prevention Control and
Countermeasure (SPCC) inspections, with no violations noted.
Completed pump vibration, pump efficiency, and thermo testing on District pump stations to
ensure system reliability.
Completed replacement of all existing 90/30 Programable Logic Controllers (PLC) with RX3i
PLCs except for the Tijuana interconnection due to challenges of the communication
protocol with the totalizer.
Completed and provided support for the testing, programming, and conversion of the VFD
pump station at the 1004-2 Pump Station.
Completed the change of the dedicated telephone lines from the Otay Rio and Otay 13
connection to Cradlepoint communications.
Completed the testing of 10 automatic transfer switches (ATS).
Completed preventive maintenance at 980-1 and 980-2 Pump Station switchgears.
146
Departmental Operating Budget
Utility Services Maintenance (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
Completed the development of 10 SOPs.
Competed the calibration on 193 SCADA sensor transmitters.
Completed the setup of one new motor at the 980-2 Pump Station.
Completed the upgrade of iFix version 5.8 to version 2022 and Win 911 from version 4.20.5 to
version 21 R6 to ensure compatibility with iFix 2022. These SCADA programs check the water
distribution system remotely.
Completed repair of equipment #2 and #3 control centers at the 980-2 Pump Station.
147
Departmental Operating Budget
Engineering
Mission Statement
To provide Engineering, Construction, and Environmental services for the District and for the
development community, quality control of future District assets, and expediting of the permitting
process, through the use of our dedicated employees and innovative technology with the goal of
attaining excellent customer satisfaction.
Departmental Responsibilities
The Engineering Department, under the general direction of the Chief of Engineering, provides the
following support services: planning, design, construction management, inspection project
management, surveying, and public services of all District facilities. The department is responsible for
strategic planning, the capital budget, water resources planning, support facilities planning,
environmental services, quality control, construction, and developer designed and constructed
facilities. The department also coordinates assigned activities with other District departments and
outside agencies and provides highly responsible and complex administrative and technical support
to the District, General Manager, and the Board of Directors.
Engineering Department – 29 Positions (1)
(1) See Position Count by Department on pages 114-115 for the list of positions per department.
Chief, Engineering
3311
Water Resources, Planning,
and Design 3321
Environmental Services 3451
Public Services 3421
Field Services 3431
148
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Engineering Chief (1)647,415$ 750,200$ 597,277$ 653,600$ (96,600)$ (12.9%)
Engineering Services (1), (2)1,088,656 1,309,100 1,182,930 1,443,600 134,500 10.3%
Public Services (1), (3)2,145,448 2,430,900 2,012,448 2,603,200 172,300 7.1%
Environmental Services (1)410,223 552,100 402,911 504,600 (47,500) (8.6%)
Total Expenses 4,291,742 5,042,300 4,195,566 5,205,000 162,700 3.2%
FY 2022 FY 2023 FY 2023 FY 2024
Actual Budget Actual Budget $%
Labor and Benefits (1)3,310,264 3,919,900 3,295,958 4,042,300 122,400 3.1%
Travel and Conferences 12,284 19,500 11,525 19,500 - -
Memberships and Dues 2,950 3,000 1,559 3,000 - -
General Office Expense 311 500 675 500 - -
Misc Office & Field Equipment 39,496 30,600 22,148 45,100 14,500 47.4%
Fees 73,142 73,000 95,789 97,700 24,700 33.8%
Services 845,801 973,200 756,842 975,200 2,000 0.2%
Training 7,494 22,600 11,070 21,700 (900) (4.0%)
Total Expenses 4,291,742$ 5,042,300$ 4,195,566$ 5,205,000$ 162,700$ 3.2%
(1) Excludes CIP labor and benefits.
(2) Engineering Services includes Planning, Design, and Water Resources.
(3)Public Services includes Public, Construction and Survey Services.
Engineering
Budget to Budget
Variance
Budget to Budget
Variance
Department
Object
Budget vs. Actual, in thousands ($)
$-
$2,000
$4,000
$6,000
2022 2023 2024
$4,288
$5,042 $5,205$4,292 $4,196
Budget Actual
149
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services
Services We Provide
The Water Resources, Planning, Design, and Environmental Sections provide a variety of services
directly related to potable water, recycled water, and sewer services. The Water Resources Section
identifies, negotiates, and develops additional potable and recycled water supplies. The Planning
Section develops the preliminary design of a project to facilitate final design and ultimately
construction of the facility. The Planning Section also coordinates the review of planning documents
related to potential new development. The Design Section prepares the design of facilities and
advertises projects for bid. The Environmental Section coordinates and tracks projects through the
construction stage and for a period after construction if long-term mitigation is required. In addition,
staff assists the Operations Department on special design projects related to the maintenance of
existing facilities including the Ralph W. Chapman Water Reclamation Facility. Additionally, the Water
Resources Section coordinates with other agencies on regional issues and is responsible for
obtaining grants, loans, and cost-sharing opportunities.
Accomplishments – Fiscal Year 2022-2023
The Engineering Department presented the Recycled Water Intertie study to the Otay Water
District and Sweetwater Authority Task Force to develop recycled water opportunities. Staff
also submitted an application for $300,000 of grant funding for a joint-agency study.
As a result of several pipeline breaks during the previous fiscal year, staff developed the
Olympic Parkway Recycled Water Rehabilitation/Replacement project. Management and
the board approved a new Capital Improvement Project (CIP). Staff initiated the design
within four months and awarded construction.
Achieved spending approximately 95% of the fiscal year 2023 budget with a seven-year
average of spending over 100% of the fiscal year budget from fiscal year 2015 through fiscal
year 2023.
Approved Water Supply Assessment and Verification Report for the City of Chula Vista Otay
Ranch Town Center Redevelopment project.
Completed the design of the Ralph W Chapman Water Reclamation Facility Disinfection
(RWCWRF) system improvements.
Completed the designs and awarded construction contracts for the following projects:
- 1004-2 Reservoir interior/exterior coating and upgrades
- 485-1 Reservoir interior/exterior coating and upgrades
- Olympic Parkway Recycled Water Pipeline Replacement
- Advanced Metering Infrastructure (AMI)
Prepared a Request for Proposals and awarded consultant service contracts for the
following:
- As-Needed Electrical Engineering Services
- As-Needed Coating Inspection Services
- As-Needed Geotechnical Engineering
150
Departmental Operating Budget
Water Resources, Planning, Design, and Environmental Services (continued)
Accomplishments – Fiscal Year 2022-2023 (continued)
- As-Needed Corrosion Engineering Services
- As-Needed Environmental Services
- Engineering Design Services for the Rancho San Diego and Jamul Pipeline Replacement
- Engineering Design Services for the Cottonwood Sewer Pump Station Replacement
Prepared and administered reimbursement agreements with other agencies, which
included:
- Submitting the final invoice to Caltrans for the SR-11 projects. Total received: $690,000.
- Board approval of reimbursement to the City of Chula Vista for the City to construct the
pipelines and pressure reducing station for the Heritage Road Bridge project.
- The City of San Diego invoiced the District $2,200,000 for the City to relocate District
pipelines for the La Media and Airway Road storage drain improvement project.
Approved Sub Area Master Plans and Amendments for the following:
- Otay Ranch Village 8 West – Amendment No. 2.
- Otay Crossings Port of Entry – Amendment No. 3.
- Rancho Jamul and Granite Lion Cellars – Amendment No. 1.
- International Industrial Park
- Otay Ranch Village 3 North – Amendment No. 1.
Prepared reports and studies, which included:
- The Water Facilities Master Plan and Programmatic Environmental Impact Report.
- RWCWRF pre-procurement of ultraviolet equipment.
- Asset Management Pipeline Prioritized Rehabilitation and Replacement Methodology
Assessment for District-wide potable water pipelines.
- Asset Management Pump Station Rehabilitation and Replacement Pilot project.
Managed District surplus properties, which included:
- Meeting with the board and preparing exhibits for a marketing brochure.
- Negotiating a purchase agreement for the sale of Salt Creek property.
Public Services and Field Services
Services We Provide
The Public Services, Survey, Inspection, and Construction Sections assist the public by responding to
customer visits, phone calls, and inquiries regarding permits, plan-checking fees, filing procedures,
checking permit status, tracking meter sales, meter costs, and lateral costs. Staff administers all plan-
checking submittals for potable and recycled water, and sewer applications for approval, cellular
lease agreements, fire service, backflow inspections, project deposits, and invoicing. Staff provides
inspections to private developer-funded projects and the District’s capital improvement projects,
easement and encroachment enforcements, and survey and utility Mark-Outs of District facilities and
global positioning system plots. Once bid, construction staff provides construction management for
the projects.
151
Departmental Operating Budget
Public Services and Field Services (continued)
Accomplishments – Fiscal Year 2022-2023
Sold 222 meters, which totaled $6.82 million, and equated to 522.5 equivalent dwelling units.
Completed 6,563 USA Mark-Out tickets with an accuracy rate of 99.9%.
Supported $41.5 million of incoming assets to the District from developer projects.
Amended leases to generate fiscal year 2023 revenue in excess of $1.59 million from the
District’s 31 cell-site leases.
Completed and closed out 22 developer recycled water projects.
Worked with operations staff to implement the Lead Service Line Inventory Plan, which was
approved by the State Water Resources Control Board Drinking Water Program.
Completed the construction of the following projects:
- 1200 Pressure Zone Improvements Phase II (P2653) - Replaced existing pump station
discharge header and conducted pressure relief, suction manifold, and yard piping
improvements.
- 458-1 Reservoirs Interior and Exterior Coatings and Upgrades - Removed and replaced the
interior and exterior coatings on the 458-1 potable water welded steel tank. Also, structural
modifications, including, but not limited to, liquid level indicator replacement, cathodic
anode replacement, new tank penetrations, new fall protection devices, and roof vent
replacement.
- Melrose Avenue and Oleander Avenue 458/340 Pressure Reducing Stations - Replacement
and 980 Reservoir Altitude Valve Vaults Renovation – Replaced two existing potable water
pressure reducing stations, including construction of approximately 155 linear feet of 12-
inch water line, connections and abandonments of existing water lines, pavement, and
surface restoration. Renovated two potable water altitude valve vaults, including
replacement of precast concrete vault tops, altitude valves, butterfly valves, steel water lines
from 4-inch to 30-inch inside diameter, pavement and surface restoration, cathodic
protection, and other associated work and appurtenances.
- Recycled Water Pipeline Cathodic Protection - Implemented construction of cathodic
protection improvements on the recycled water system in various locations throughout the
City of Chula Vista, including cathodic test stations, galvanic anodes, bond wires, and
associated work.
- Advanced Metering Infrastructure (AMI) Project - Initiated the construction and installation
of Master Meter Allegro AMI equipment, including base stations, antennas, folding towers,
equipment cabinets, associated conduits, wiring, clamps, and associated work.
152
Capital Budget
The District provides water service to a population of over 240,000, which is expected to ultimately
increase to 271,531 by the year 2055. This growth, as well as the maintenance of existing assets,
requires a long-term capital planning process. The process is dynamic, due to evolving needs of the
community, water supply issues, and changing regulations. As such, capital planning is part of the
District’s overall strategic planning process. The capital planning process involves identifying current
and future needs and prioritizing them based on certain operating assumptions. The primary
objective of this planning effort is to support an orderly and efficient program of expansion, new water
supply, replacement, and betterment, while maintaining a stable long-range financial plan.
To accommodate growth requires that the District invest approximately $525 million in capital assets
through ultimate build-out. The Fiscal Year 2024 Capital Budget is $15.3 million and the six-year
Capital Improvement Program (CIP) totals $148.0 million. The CIP is consistent with the District's
Water Facilities Master Plan, Sewer System Master Plan, current capacity fees, and the District's
strategic financial objectives. This CIP Budget document contains the descriptions, justifications,
expenditures, and funding for all the identified projects to ultimate build-out.
The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital facilities within three business segments
(potable water, recycled water, and sewer) are allocated to four cost types and corresponding fund
categories: Expansion, Betterment, Replacement, and/or New Water Supply. The allocation to these
four cost types is defined in the District’s Capital Improvement Program (CIP) and is determined by
an engineering analysis that identifies which type of customer will benefit from each facility, planned
or existing. The costs of the capital improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable. Alternative funding sources are not
identified until they have been secured. Any secured alternative funding sources will be noted in the
project schedule. The following are general descriptions of the four fund categories:
Expansion
Facilities required to support new or future users are funded from capacity fees or user rates.
Betterment
Facilities required because of inadequate capacity or new requirements that benefit existing users
are funded from availability, betterment fees, or rates.
Replacement
Facilities required to renew or replace existing facilities that have deteriorated or have exceeded their
useful life are funded from user rates.
New Water Supply
Facilities required to support new sources of water are funded from new supply fees or user rates.
As of November 4, 2020, the collection of the new water supply fee was discontinued. The new
water supply fund will remain until the funds collected from the new water supply fees have been
fully depleted.
153
Capital Budget
Assumptions and Criteria
As a component of the annual budget development process, the Engineering staff update the CIP
budget using the following process:
CIP projects are selected based on the Water Facilities Master Plan (WFMP), the Urban
Water Management Plan (UWMP), Sub Area Master Plans (SAMP), Integrated Water
Resources Plan (IRP), Wastewater Management Plan (WWMP), the Cathodic Protection
Plan, the District’s Strategic Plan, and other focused or specific planning documents and
reports to manage growth, maintenance, and the life extension of assets.
The CIP goes through an iterative process to meet the criteria of growth, service levels,
supply targets, and system reliability.
CIP target expenditures for the next six (6) years are refined and used in the rate model.
The following general criteria are used to determine the reasonableness of a project before it is
considered for inclusion within the CIP budget:
Safety and existing facility conditions
Operating system conditions and energy improvements
Water and sewer system deficiencies
Regulatory and permitting requirements
Developer driven requirements
Economic outlook
Growth projections
Water supply diversification goals
Board and management directives
CIP Justification and Impact on Operating Budget
The justification for each project is determined by whether it is required due to growth (Expansion),
new water sources (New Supply), improvements or upgrades (Betterment), or to replace an existing
asset (Replacement). As these projects are completed and placed into service, there may be an
impact on the Operating Budget by increasing costs in the areas of maintenance, energy, or
chemicals as shown on the justification and impact pages in this section.
New CIP projects and projects with material changes are subject to a formal approval process,
whereby the projects are reviewed and approved by each department and a senior management
panel. At each level of review, projects may be dropped or returned for more information. Once a
project has been approved by the department and senior management panel, the project is
forwarded to the General Manager (GM) for approval. Once approved by the GM, projects are added
to the CIP budget.
The Engineering Department evaluates the District’s recent construction and bidding data and
adjusts costs for individual CIP projects as appropriate. Projects are reprioritized based on the
District’s planning documents and to control spending to stabilize water and sewer rates.
154
Capital Budget
Other factors that influence the construction climate are:
Shortage of skilled and unskilled labor
Regional competition for contracting resources
Materials cost escalation due to demand and material shortages
To mitigate the factors that influence the construction climate, Engineering staff utilize value
engineering, which involves reviewing new and existing projects during the design phase to reduce
costs and while maintaining the quality, value, and/or functionality of the capital project. Staff also
identifies projects that can be grouped together to attract bidders, utilizes pre-purchasing of
materials, and adds no-cost time extensions into specs as further mitigation strategies.
Capital Purchases and Facilities
All capital expenditures are in the CIP. This includes capital facilities and capital purchases. Capital
purchases are non-recurring expenditures for assets that cost more than $10,000 each and have an
estimated useful life of two years or more. The capital purchase projects include vehicles, office
equipment, furniture, and field equipment purchases. Capital facility projects are items that exceed
$10,000 or $20,000 for infrastructure related items (as defined under capital equipment on page 232
of the Glossary) and have a useful life of at least two years and the cost is based on current costs.
CIP Projects
155
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
Beginning Balance 66,884$ 76,781$ 60,300$ 47,947$ 86,433$ 73,823$ 66,884$
Sources
Capacity Fees 11,456 11,020 8,670 7,378 9,542 8,657 56,723
Debt financing - 25,000 - 34,200 - - 59,200
Interest 2,539 3,014 1,914 2,022 2,834 2,492 14,815
Availability (Betterment Portion)743 783 825 865 900 935 5,051
COPS 2010B Reimbursement 783 783 759 731 698 663 4,417
Transfer from (to) General Fund 21,592 (20,165) 14,326 39,912 22,123 23,244 101,032
Interfund Transfers 154 154 154 154 154 154 924
Total Sources 37,267 20,589 26,648 85,262 36,251 36,145 242,162
Uses
CIP Projects (1)15,341 25,887 26,425 33,808 34,960 28,457 164,878
Debt Service 9,677 8,819 10,189 10,557 11,466 11,925 62,633
Developer Services 2,352 2,364 2,387 2,411 2,435 2,460 14,409
Total Uses 27,370 37,070 39,001 46,776 48,861 42,842 241,920
Net Sources (Uses)9,897 (16,481) (12,353) 38,486 (12,610) (6,697) 242
Ending Balance 76,781$ 60,300$ 47,947$ 86,433$ 73,823$ 67,126$ 67,126$
(1)The CIP projects incorporate a 4% annual inflationary rate from FY 2025 to FY 2029.
CIP Reserve Funds ($1,000)
The CIP Reserve Funds presentation, shown on the following pages, is designed to provide an understanding of
how the funding of CIPs is expected to financially influence the District over the next six years. The financial
impacts are based on CIPs and their funding sources, including fund transfers in accordance with the District’s
Reserve Policy, and planned debt issuances. This data is captured in the District’s Rate Model on an annual basis
in order to make these projections.
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
CIP Reserve Fund Balances ($1,000)
Betterment Replacement Expansion New Supply
156
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
Source
Expansion 315$ 1,994$ 2,546$ 2,503$ 3,784$ 2,888$ 14,030$
Betterment 1,014 6,234 4,736 3,743 3,419 2,614 21,760
Replacement 14,012 16,663 17,149 23,809 22,681 17,888 112,202
Total 15,341$ 24,891$ 24,431$ 30,055$ 29,884$ 23,390$ 147,992$
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
Fund
Potable 10,189$ 19,899$ 20,994$ 24,817$ 22,085$ 18,597$ 116,581$
Recycled 4,152 3,746 1,437 1,937 5,903 2,878 20,053
Sewer 1,000 1,246 2,000 3,301 1,896 1,915 11,358
Total 15,341$ 24,891$ 24,431$ 30,055$ 29,884$ 23,390$ 147,992$
CIP Funding Source
CIP by Fund
Six-Year CIP Projects Summary by Source ($1,000s)
Six-Year CIP Projects Summary by Fund ($1,000s)
$-
$5
$10
$15
$20
$25
$30
$35
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Six-Year CIP Projects by Funding Source, in Thousands ($)
Expansion Betterment Replacement
$-
$10
$20
$30
$40
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Six-Year CIP Projects by Fund, in Thousands ($)
Potable Recycled Sewer
157
Expansion
CIP No.CIP Project Title FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
P2040 (1), (2)Res - 1655-1 Reservoir 0.5 MG 31$ 31$ 31$ 1$ 620$ 527$ 1,241$
P2058 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Melody Road to Highway 94 37 62 155 388 186 16 843
P2171 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Pioneer Way to Melody Road 50 93 310 639 12 - 1,104
P2195 (2)PL - 24 - Inch, 640 Zone, Campo Road - Regulatory Site/Millar Ranch 6 6 16 31 62 62 183
P2196 (2)PL - 24 - Inch, 640 Zone, Millar Ranch Road to 832-1 Pump Station 6 6 16 31 62 62 183
P2228 (1)Res - 870-2 Reservoir 3.4 MG 62 1,550 1,550 248 - - 3,410
P2451 (2)Otay Mesa Desalination Conveyance and Disinfection System 0 2 2 2 2 31 38
P2595 (1)PL - 16-inch, 624 Zone, Village 3N - Heritage Road, Main St/Energy Way 1 100 100 100 35 - 336
P2596 PL – 16-inch, 624 Zone, Village 3N – Main St, Heritage Rd/Wolf Canyon 1 1 1 2 395 500 900
P2598 PL-16-Inch, 624 Zone, Village 8W – Main St, La Media/Village 4 1 1 1 12 45 220 280
P2599 PL-16-Inch, 624 Zone, Village 8W- Otay Valley Rd, School/Village 8E 1 1 1 1 146 350 500
P2602 PL - 16-inch, 624 Zone, Otay Valley Road, SR 125 Bridge 1 1 1 1 126 150 280
P2603 PL - 16-inch, 711 Zone, Hunte Parkway, SR 125 Bridge 1 1 1 1 136 200 340
P2642 (1), (2)Rancho Jamul Pump Station Replacement 8 8 8 62 310 310 705
R2028 RecPL – 8-in, 680 Zone, Heritage Road to Main Street 1 5 44 300 500 50 900
R2037 RecPL – 8-in, 680 Zone, Main Street/Otay Valley Road – Village 8W 1 1 1 67 500 50 620
R2038 RecPL – 8-in, 680 Zone, Village 3N – Main St, Heritage Rd/Wolf Canyon 1 1 1 57 300 110 470
R2047 RecPL – 12-in, 680 Zone, La Media Road - Birch/Main St 1 1 48 300 150 50 550
R2136 RecPL – 8-in, 680 Zone, Otay Valley Rd, SR 125 Bridge 1 1 1 1 46 90 140
R2137 RecPL - 8-in, 815 Zone, Hunte Parkway, SR 125 Bridge 1 1 1 1 56 110 170
S2069 (1)Cottonwood Sewer Pump Station Renovation 75 88 225 225 63 - 675
S2071 (2)San Diego Metro Wastewater Capital Improvements 27 34 34 34 34 - 163
Total Expansion 315$ 1,994$ 2,546$ 2,502$ 3,786$ 2,888$ 14,031$
Note: Numbers may not total accurately due to rounding.
Potable 207$ 1,862$ 2,191$ 1,517$ 2,137$ 2,428$ 10,343$
Recycled 6 10 96 726 1,552 460 2,850
Sewer 102 122 259 259 97 - 838
Total Expansion 315$ 1,994$ 2,546$ 2,502$ 3,786$ 2,888$ 14,031$
Betterment
CIP No.CIP Project Title FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
P2040 (1), (2)Res - 1655-1 Reservoir 0.5 MG 69$ 69$ 69$ 1$ 1,380$ 1,173$ 2,761$
P2228 (1)Res - 870-2 Reservoir 3.4 MG 138 3,450 3,450 552 - - 7,590
P2451 (2)Otay Mesa Desalination Conveyance and Disinfection System 1 3 4 3 4 69 84
P2521 Large Meter Vault Upgrade Program 40 25 40 40 25 40 210
P2563 Res - 870-1 Reservoir Cover/Liner Replacement 35 21 14 1,750 140 - 1,960
P2578 (2)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 GPM 31 31 62 124 124 124 496
P2630 624-3 Reservoir Automation of Chemical Feed System 15 15 25 160 444 - 659
P2642 (1). (2)Rancho Jamul Pump Station Replacement 18 17 17 138 690 690 1,570
P2652 (2)520 to 640 Pressure Zone Conversion 5 5 5 5 5 25 50
P2654 Heritage Road Interconnection Improvements 10 30 30 30 30 29 159
P2656 Regulatory Site Desilting Basin Improvements 5 5 5 5 5 118 143
P2658 (2)832-2 Pump Station Modifications 5 5 5 5 5 25 50
P2664 Otay Mesa Dual Piping Modification Program 25 25 25 100 100 35 310
P2674 (2)System Pressure Reducing Program 10 10 10 10 10 10 60
P2682 AMI Project 70 30 - - - - 100
P2683 Pump Station Safety, Monitoring, and Automation Improvements 40 100 100 100 100 20 460
P2684 Zero Emission Vehicles and Charging Infrastructure 87 162 163 163 213 207 995
P2698 Improve Fire Sprinkler Protection System at RWCWRF (P)5 5 5 55 5 - 75
R2117 (1)RWCWRF Disinfection System Improvements 200 2,000 400 100 - - 2,700
R2157 RWCWRF Backwash Supply Pumps Upgrade 55 48 2 - - - 105
R2168 Improve Fire Sprinkler Protection System at RWCWRF (R)5 5 5 55 5 - 75
S2024 Campo Road Sewer Main Replacement 12 13 2 - - - 27
S2043 (2)RWCWRF Sludge Handling System 1 1 1 1 1 50 55
S2069 (1)Cottonwood Sewer Pump Station Renovation 75 88 225 225 62 - 675
S2071 (2)San Diego Metro Wastewater Capital Improvements 53 66 66 66 66 - 317
S2081 Improve Fire Sprinkler Protection System at RWCWRF (S)5 5 5 55 5 - 75
Total Betterment 1,015$ 6,234$ 4,735$ 3,743$ 3,419$ 2,615$ 21,761$
Note: Numbers may not total accurately due to rounding.
Potable 609$ 4,008$ 4,029$ 3,241$ 3,280$ 2,565$ 17,732$
Recycled 260 2,053 407 155 5 - 2,880
Sewer 146 173 299 347 134 50 1,149
Total Betterment 1,015$ 6,234$ 4,735$ 3,743$ 3,419$ 2,615$ 21,761$
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Project may be funded with the water and sewer debt proceeds.
(2) Project expenditures go beyond FY 2029. See project detail sheet for more information.
158
Replacement
CIP No.CIP Project Title FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
P2058 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Melody Road to Highway 94 83$ 138$ 345$ 862$ 414$ 35$ 1,877$
P2171 (1)PL - 20-Inch, 1296 Zone, Proctor Valley Road from Pioneer Way to Melody Road 110 207 690 1,421 28 - 2,456
P2195 (2)PL - 24 - Inch, 640 Zone, Campo Road - Regulatory Site/Millar Ranch 14 14 34 69 138 138 407
P2196 (2)PL - 24 - Inch, 640 Zone, Millar Ranch Road to 832-1 Pump Station 14 13 35 69 138 138 407
P2282 (2)Vehicle Capital Purchases 1,821 467 1,025 370 570 665 4,918
P2286 (2)Field Equipment Capital Purchases 219 123 125 130 400 140 1,137
P2405 PL - 624/340 PRS, Paseo Ranchero and Otay Valley Road 35 500 200 150 50 - 935
P2460 I.D. 7 Trestle and Pipeline Demolition 50 550 50 - - - 650
P2485 (2)SCADA - Infrastructure and Communications Replacement 35 55 - - - - 90
P2516 (2)PL - 12-Inch, 640 Zone, Jamacha Road - Darby/Osage 5 75 125 400 390 - 995
P2533 1200-1 Reservoir Interior & Exterior Coating 5 5 5 5 45 10 75
P2543 850-1 Reservoir Interior/Exterior Coating 5 5 5 5 40 45 105
P2553 (1)Heritage Road Bridge Replacement and Utility Relocation 200 2,000 1,000 1,000 500 50 4,750
P2563 Res - 870-1 Reservoir Cover/Liner Replacement 15 9 6 750 60 - 840
P2567 1004-2 Reservoir Interior/Exterior Coating & Upgrades 325 50 50 50 - - 475
P2571 Data Center Network Data Storage and Infrastructure Enhancements 15 15 - - - - 30
P2572 Enterprise Resource Planning (ERP) Replacement 280 130 215 170 - - 795
P2578 (2)PS - 711-2 (PS 711-1 Replacement and Expansion) - 14,000 GPM 69 69 138 276 276 276 1,104
P2584 (2)Res - 657-1 and 657-2 Reservoir Demolitions - - - - - 25 25
P2593 458-1 Reservoir Interior/Exterior Coating & Upgrades 10 45 20 20 5 - 100
P2594 Large Meter Replacement 25 40 50 50 50 50 265
P2605 458/340 PRS Replacement, 1571 Melrose Ave 5 5 5 5 20 - 40
P2608 (1)PL - 8-inch, 850 Zone, Coronado Avenue, Chestnut/Apple 30 40 40 800 500 10 1,420
P2609 (1)PL - 8-inch, 1004 Zone, Eucalyptus Street, Coronado/Date/La Mesa 20 25 100 500 300 20 965
P2610 Valve Replacement Program - Phase 1 325 150 50 - - - 525
P2611 (2)Quarry Road Bridge Replacement and Utility Relocation 1 1 1 1 1 25 30
P2612 PL - 12-inch, 711 Zone, Paso de Luz/Telegraph Canyon Road 500 250 50 - - - 800
P2614 485-1 Reservoir Interior/Exterior Coating 375 50 50 50 - - 525
P2615 (1)PL - 12-Inch Pipeline Replacement, 803 PZ, Vista Grande 250 300 500 1,000 400 100 2,550
P2616 (1), (2)PL - 12-Inch Pipeline Replacement, 978 Zone, Pence Drive/Vista Sierra Drive 600 200 150 150 400 500 2,000
P2617 Lobby Security Enhancements 1 3 20 20 - - 44
P2623 Central Area to Otay Mesa Interconnection Pipelines Combination Air/Vacuum Valve
Replacements
5 10 15 140 140 70 380
P2627 458/340 PRS Replacement, 1505 Oleander Avenue 5 5 - - - - 10
P2631 1485-2 Reservoir Interior/Exterior Coating & Upgrades 40 950 350 10 10 90 1,450
P2638 Buildings and Grounds Refurbishments 175 220 50 50 - - 495
P2639 (1)Vista Diego Hydropneumatic Pump Station Replacement 175 1,000 1,000 1,000 50 - 3,225
P2646 North District Area Cathodic Protection Improvements 15 400 400 350 30 - 1,195
P2647 Central Area Cathodic Protection Improvements 75 165 600 600 460 - 1,900
P2649 HVAC Equipment Purchase 43 39 46 22 - - 150
P2655 (2)La Presa Pipeline Improvements 25 25 25 200 500 500 1,275
P2657 1485-1 Reservoir Interior/Exterior Coating & Upgrades 5 25 800 300 5 15 1,150
P2659 (2)District Boardroom Improvements 50 35 - - - - 85
P2661 (2) Replacement of Backflow Prevention Devices on Pipeline Interconnections on Otay
Mesa
25 25 25 25 150 100 350
P2662 (1)Potable Water Meter Change Out 1,000 2,500 3,000 3,400 3,500 3,700 17,100
P2663 (2)Potable Water Pressure Vessel Program 100 400 400 400 400 400 2,100
P2665 (2)PL - 12-inch Pipeline Replacement, 870 Zone, Cactus Road 5 25 25 25 25 25 130
P2666 (2)Low Head and High Head Pump Stations Demolition 5 5 5 5 5 100 125
P2670 Administration and Operations Roof Repairs and Replacement 20 100 5 50 175 - 350
P2671 (2)980 Reservoirs Altitude Valve Vaults Renovation 25 25 - - - - 50
P2672 (2)District Roof Repairs and Replacement Program 35 100 100 100 - - 335
P2673 803-4 Reservoir Interior/Exterior Coating - 5 50 1,500 650 145 2,350
P2675 458-1 and 458-2 Reservoirs Site Pavement Refurbishment 150 200 70 10 - - 430
P2676 980-2 PS Motors and Motor Control Center Replacements 100 450 450 450 500 500 2,450
P2677 PL - 16-Inch, 870 Zone, La Media Road and Airway Road Utility Relocations 700 100 50 - - - 850
P2678 Jamacha Boulevard Utility Relocation 25 75 50 50 50 - 250
P2680 PL - 12-inch Pipeline Replacement, 1530 Zone, Vista Diego Road 40 150 150 25 - - 365
P2681 (1), (2) PL-12-Inch, 1655 Zone, Presilla Drive Pipeline Replacement 25 25 25 350 500 500 1,425
P2684 Zero Emission Vehicles and Charging Infrastructure 88 162 162 163 213 208 996
P2685 980/711 PRS Renovation - Proctor Valley Rd 5 50 70 100 400 225 850
P2686 870 PZ Seismic Vault Renovation 5 5 5 150 150 85 400
P2687 Steele Canyon Rd Bridge 803 PZ 20-inch WL Renovation 100 90 200 150 10 - 550
P2688 (2)Standby Power Renovations - Potable Water 150 78 165 200 400 100 1,093
P2689 944-1-9 Pump Station Meter Vault Renovation 20 50 60 60 10 - 200
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Project may be funded with the water and sewer debt proceeds.
(2) Project expenditures go beyond FY 2029. See project detail sheet for more information.
159
Replacement, Continued
CIP No.CIP Project Title FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
P2690 (2)850-4 Reservoir Interior/Exterior Coating -$ -$ -$ -$ 15$ 1,350$ 1,365$
P2691 City of San Diego - Otay 2nd Pipeline Phase 4 Interconnections Relocation 50 200 150 300 250 50 1,000
P2692 1485-2 PS Yard Piping Modifications 1 1 1 50 147 400 600
P2693 (2)PL – 12 & 16-inch, 1296 Zone, Jefferson Rd., Lyons Valley Rd to Jamul Dr. 20 150 230 600 2,000 900 3,900
P2694 Operations Replacement Communication Radios 75 75 5 - - - 155
P2695 Relocation of Data Center 25 25 100 50 50 - 250
P2696 (2)1296-1 Reservoir Interior/Exterior Coating - - - - - 15 15
P2697 (2)Valve Replacement Program - Phase 2 350 350 500 750 1,000 1,800 4,750
P2699 Miscellaneous Replacements and Improve Fire Sprinkler Protection System in the
Warehouse
25 100 200 - - - 325
P2700 (2)Pump Station Equipment Replacement Program 150 100 150 100 150 100 750
R2121 (2)Res - 944-1 Reservoir Cover/Liner Replacement 5 5 10 50 2,000 750 2,820
R2146 Recycled Pipeline Cathodic Protection Improvements 35 10 10 10 10 250 325
R2148 Large Meter Replacement - Recycled 10 15 15 15 15 15 85
R2152 (2)Recycled Water Meter Change-Out 10 70 90 130 85 75 460
R2153 (2)Recycled Water Pressure Vessel Program 5 1 1 1 1 350 359
R2156 (2)RecPL - 14-inch RWCWRF Effluent Force Main Improvements 10 80 150 150 150 - 540
R2157 RWCWRF Backwash Supply Pumps Upgrade 165 143 8 - - - 316
R2158 RWCWRF Stormwater Pond Improvements (R)10 10 50 90 15 - 175
R2159 (1)RecPL - 16-Inch, 680 Zone, Olympic Parkway Recycled Pipeline Replacement 3,500 1,000 300 150 50 - 5,000
R2160 (2)Recycled Water Field Equipment Capital Purchases - 40 - - - 25 65
R2161 (2)450-1R Reservoir Interior/Exterior Coating & Upgrades - -- 15 1,550 650 2,215
R2162 (2)Vehicle Capital Purchases - Recycled - 38 - - - - 38
R2163 450-1 RW Res Disinfection Injection Vault Renovation - 20 20 50 110 100 300
R2164 450-1 RW Res Stormwater Improvements - 50 50 300 300 100 800
R2165 Recycled HVAC Equipment Purchase 1 1 30 30 10 3 75
R2166 RWCWRF Effluent Pump Station Compressors 60 50 50 15 - - 175
R2167 RecPL - 14-Inch, 927 Zone, Force Main Road Improvements and Erosion Repairs 25 100 100 - - - 225
R2169 (2)Pump Station Equipment Replacement Program (R)50 50 50 50 50 100 350
S2012 (2)San Diego County Sanitation District Outfall and RSD Outfall Replacement 200 300 300 400 400 500 2,100
S2024 Campo Road Sewer Main Replacement 12 13 2 - - - 27
S2049 (1)Calavo Basin Sewer Rehabilitation - Phase 2 50 30 100 600 250 50 1,080
S2050 (1), (2) Rancho San Diego Basin Sewer Rehabilitation - Phase 2 20 40 80 100 300 500 1,040
S2054 (2)Calavo Basin Sewer Rehabilitation - Phase 3 - 10 10 10 50 50 130
S2060 (2)Steele Canyon Pump Station Replacement 10 40 50 100 300 500 1,000
S2061 RWCWRF Aeration Controls Consolidation & Optimization Upgrades (S)20 20 100 - - - 140
S2066 (2)Rancho San Diego Basin Sewer Rehabilitation - Phase 3 - 5 5 5 50 50 115
S2069 (1)Cottonwood Sewer Pump Station Renovation 150 175 450 450 125 - 1,350
S2072 RWCWRF Rotary Screen Replacement 100 10 100 200 100 85 595
S2074 RWCWRF Stormwater Pond Improvements (S)5 40 40 30 30 30 175
S2076 (2)RWCWRF Grit Chamber Improvements 5 20 25 30 40 50 170
S2077 (2)RWCWRF Blowers Renovation 120 120 120 10 - - 370
S2078 (2)Vehicle Capital Purchases - Sewer - - - 660 - - 660
S2079 (2)Steele Canyon Rd Bridge 6-inch Sewer FM Renovation 50 50 50 90 10 - 250
S2080 (2)Standby Power Renovations - Sewer 10 78 10 10 10 50 168
Total Replacement 14,012$ 16,663$ 17,149$ 23,809$ 22,681$ 17,888$ 112,202$
Note: Numbers may not total accurately due to rounding.
Potable 9,374$ 14,029$ 14,773$ 20,058$ 16,670$ 13,605$ 88,509$
Recycled 3,886 1,683 934 1,056 4,346 2,418 14,323
Sewer 752 951 1,442 2,695 1,665 1,865 9,370
Total Replacement 14,012$ 16,663$ 17,149$ 23,809$ 22,681$ 17,888$ 112,202$
Summary by Source
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
Expansion 315$ 1,994$ 2,546$ 2,503$ 3,784$ 2,888$ 14,030$
Betterment 1,014 6,234 4,736 3,743 3,419 2,614 21,760
Replacement 14,012 16,663 17,149 23,809 22,681 17,888 112,202
Total CIP by Funding Source 15,341$ 24,891$ 24,431$ 30,055$ 29,884$ 23,390$ 147,992$
Summary by Fund
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total
Potable 10,189$ 19,899$ 20,994$ 24,817$ 22,085$ 18,597$ 116,581$
Recycled 4,152 3,746 1,437 1,937 5,903 2,878 20,053$
Sewer 1,000 1,246 2,000 3,301 1,896 1,915 11,358$
Total CIP by Fund 15,341$ 24,891$ 24,431$ 30,055$ 29,884$ 23,390$ 147,992$
Funding Source
Fund
Six-Year CIP Projects by Source and Fund ($1,000s)
(1) Project may be funded with the water and sewer debt proceeds.
(2) Project expenditures go beyond FY 2029. See project detail sheet for more information.
160
CIP#Description Cost
Category (2)
Funding
Source (3)
FY
2024
FY
2025
FY
2026
FY
2027
FY
2028
FY
2029 Total
P2654 Heritage Road Interconnection Improvements M B $ 1,500 $ - $ - $ - $ - $ - $ 1,500
$ 1,500 $ - $ - $ - $ - $ - $ 1,500
Cost Category FY
2024
FY
2025
FY
2026
FY
2027
FY
2028
FY
2029 Total
$ 1,500 $ - $ - $ - $ - $ - $ 1,500
- - - - - - -
- - - - - - -
$ 1,500 $ - $ - $ - $ - $ - $ 1,500
(1)
(2)Cost Category - Indicates maintenance cost (M), energy cost (E), or chemical cost (C), based on the project type and Engineer's estimates.
(3)Funding Source - Some projects have multiple funding sources as indicated by a slash (/):
E - Expansion B - Betterment R - Replacement N - New Supply
(4)
Note: See pages 158-160 for complete description of CIP projects.
CIP Justification and Impact on Operating Budget
Negative cost reflect savings gained from operational efficiencies or the retirement of a facility.
Projected Incremental Operating Expenditures (1)
The following schedule shows anticipated operating costs associated with each project in the CIP. Below is a summary of each category of new costs
that will be impacted. No additional revenues are associated with the individual projects, as revenues are linked more directly to growth in water sales
and capacity fee revenues.
Maintenance (M)
Energy (E)
Chemical (C)
Total Operating Budget Cost Impact
Projected Incremental Operating Expenditures (operating cost) or O&M includes labor, benefits, materials, and overhead.
O&M cost for pipes: Total annual operating cost divided by the number of feet of pipe in the system = O&M cost to maintain a foot of pipe. This rate is then
multiplied by the number of feet in new pipeline, and is increased annually for inflation.
O&M cost for a pump station: Total annual operating cost divided by the number of million of gallons a day (MGD) capacity in the system = O&M cost per MGD.
This rate is then multiplied by the MGD capacity of the new pump station. Similarly, power cost per MGD for transmission is calculated and applied to the MGD
of the new pump station. Chemical expenses are incurred for pumping at the well sites. All estimated costs are increased annually for inflation.
O&M cost for a reservoir: Total annual operating cost divided by the number of million gallons (MG) of storage capacity in the system. This rate per MG is then
multiplied by the MG capacity of the new reservoir. Reservoirs require chemical treatment; therefore, the chemical cost per MG is estimated and applied to the
161
Quantity Potable Recycled Sewer Total
Vehicles
1 Class 7 hydro excavator 410,000$ -$ -$ 410,000$
1 Class 7 utility truck 330,000 - - 330,000
1 Class 7 commercial (utility) truck - FY22 carryforward 310,000 - - 310,000
1 Class 5 valve exercising truck - FY23 carryforward 248,000 - - 248,000
1 Class 8 10-12 yard dump truck - FY23 carryforward 208,000 - - 208,000
1 Class 7 5-7 yard dump truck - FY23 carryforward 152,000 - - 152,000
1 Class 5 dump truck 130,000 - - 130,000
1 Compact hybrid pickup 33,000 - - 33,000
1,821,000 - - 1,821,000
Field Equipment
1 Skid steer 115,000 - - 115,000
2 Water tank trailers 84,000 - - 84,000
1 Portaccount machine 20,000 - - 20,000
219,000 - - 219,000
2,040,000$ -$ -$ 2,040,000$
Summary by Project Total
P2282 Vehicle Capital Purchases (Potable)1,821,000$
P2286 Field Equipment Capital Purchases (Potable)219,000
Total 2,040,000$
FY 2024 Capital Purchases
Capital purchases are non-recurring expenditure items for District-wide use that cost more than $10,000 each and have an estimated
useful life of two years or more. The capital purchase projects include vehicles, office equipment and furniture, field equipment and air
pollution control district engine replacements, and retrofits.
Description
162
Summary of Financial Policies
Introduction
This section commences with a brief synopsis of the District’s Reserve Policy, Investment Policy,
and Debt Policy followed by the detailed policy documents.
The Reserve Policy is a comprehensive policy which explains how the District is operated,
including the distinction of business segments to ensure the various users pay their fair share of
costs. It explains how fees are collected and what they are used for. It also explains the difference
between funds, as well as how transfers shall be made, and defines each reserve target funding
level. This policy was adopted by the Board in February 1993. The District periodically reviews the
policy to ensure it reflects current policies and financial practices. The Reserve Policy was updated
and adopted by the Board in May 2023.
The following chart depicts the detailed flow of funds that may be useful in understanding the
Reserve Policy.
Unrestricted and
Undesignated
(General Use) Funds
Restricted Funds
FUND CHART
Designated Funds
Designated
Expansion
Designated
New Supply
Designated
Replacement
Designated
Betterment
Potable
General Fund
Recycled
General Fund
Sewer
General Fund
Restricted
Expansion
Restricted
Betterment
Debt
Reserve
Restricted
New Supply
OPEB
Reserve
163
Summary of Financial Policies
The Investment Policy is a guideline for the prudent investment of cash. It outlines government
code as well as authority granted by the Board of Directors. The primary objectives, in order of
significance, are to invest safely, with adequate liquidity, and to achieve a return on investments. In
August 2007, the District received a Certification of Excellence Award from the Association of Public
Treasurers of the United States and Canada (APT US&C) for this policy. The Investment Policy was
updated and adopted by the Board in May 2021.
The Debt Policy establishes that debt financing will only be used for Capital Improvement Projects
(CIP), which have an extended useful life for ten years or longer, and that exceed the District’s
ability to be funded with current resources such as annual cash flow, fund balances, or reserves.
Additionally, the life of a project is expected to exceed the term of the financing. The District strives
to maintain the highest possible credit ratings for all categories of long-term debt that can be
achieved without compromising delivery of basic services and the achievement of district policy
objectives. In August 2007, the District received a Certification of Excellence award from the
Association of Public Treasurers of the United States and Canada (APT US&C) for this policy. The
Debt Policy was updated and adopted by the Board in March 2021.
164
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
1.0 The District
The Otay Water District is a California municipal water district,
authorized in 1956 by the State Legislature under the provisions
of the Municipal Water District Act of 1911. The District is a
"revenue neutral" public agency; meaning each end user pays their
fair share of the District's costs of water acquisition,
construction of infrastructure, and the operation and maintenance
of the public water facilities.
The District provides water service within its boundaries, and
provides sewer and recycled water service within certain portions
of the District. As such, the District operates three distinct
business segments:
Potable water
Recycled water
Sewer
Each of these business segments has an identifiable customer base.
In addition, the developer community, large and small, makes up a
significant class of customers for each business segment. As a
result, the District has four distinct customer service types:
Developers
Potable water users
Recycled water users
Sewer users
The District has established practices and developed computer
systems that have enabled the District to maintain a clear
separation between the service costs relating to each of its four
customer service types. Regardless of customer class, financial
principles regarding cost allocation and fund accounting are
fundamental to the District’s Reserve Policy. These principles
are derived from the statements of the Governmental Accounting
Standards Board (GASB), and from oversight and advisory bodies
such as the California State Auditor, the Little Hoover
Commission, and the Government Finance Officers Association
(GFOA). These principles have significant impacts on how the
finances of the District are organized and how financial processes
work within the organization.
165
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RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
1.1 The District’s Use of Financial Resources
All the District’s expenditures fall into two broad categories:
operating costs and capital expenditures.The operating costs
include costs relating to the purchase and delivery of potable and
recycled water, and the transportation and treatment of sewage.
The capital expenditures support the construction of
infrastructure necessary to deliver services. The District uses
various funds to support the operating and capital efforts.
Operations and maintenance are financed only by rates and charges,
also called pay-as-you-go, while capital infrastructure is
financed using two financing methods: pay-as-you-go and debt
issuance (requiring annual debt service). The Capital Improvement
Program (CIP) and the two funding methods support the
construction, betterment, and replacement of infrastructure in all
three business areas: potable, recycled, and sewer.
The District establishes different funds to track revenues
allocated to different activities. Once established, each fund
receives financial resources up to the levels defined in this
policy. Every year, as a part of the annual budget process, the
District’s rate model is updated for each fund with the current
fund balances and the estimated revenues and expenditures for the
next six years. The expenditure requirements and financial
resources are then evaluated to ensure that the existing fund
balances and additional revenues are sufficient within the current
budget cycle and for the next five years to maintain target fund
levels. If a deficit is identified, then options for transfers,
shifting CIP projects, debt issuance(s), cost saving measures,
and/or rate increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital
facilities within the three business segments are allocated to
four cost types and corresponding fund categories: New Water
Supply, Expansion, Replacement, and/or Betterment. The allocation
to these four cost types is defined in the District’s Capital
Improvement Program (CIP) and is determined by an engineering
analysis that identifies which type of customer will benefit from
each facility, planned or existing. The costs of the capital
improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable.
166
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
This Reserve Policy protects both the existing users and the
developing areas from incurring unwarranted costs. Developing
areas are not required to finance facilities that are replacement
or betterment and established areas are not required to replace
facilities before they are worn out because of new development.
However, to ensure a fair allocation of costs, each facility has
the potential to be classified into any or all of the four cost
types. In addition to these cost types, there are occasional CIP
projects that may be billable to a third party, if for example a
third party requires a District facility be relocated.
Paragraphs a through d, which follow, describe how the costs of
capital facilities are financed through various fees.
a.New Water Supply
The portion of a new supply project that benefits new users
is financed from the reserves in the New Water Supply Fund
category. These reserves were primarily derived from
proceeds of the new water supply fee. The New Water Supply
Fund is restricted, meaning the amounts credited to this fund
are accounted for separately and are used solely for the
planning, design, and construction of new water supply
expansion facilities. Debt financing may also be a temporary
financial resource to finance new water supply projects. The
District has a Debt Policy (Policy No. 45) that guides the
debt issuance process. Any debt proceeds used for this
purpose would be restricted in nature and tracked separately.
General use reserves may also be placed in the designated New
Water Supply Fund and used for water supply projects.
Effective December 1, 2020, new water supply fee collection
was discontinued. The New Water Supply Fund will continue to
be used to fund qualified projects and to pay the
proportionate share of debt service for new water supply
projects until the monies in the fund are fully depleted.
b.Expansion
The portion of a CIP project that benefits new users is
financed from the reserves in the Expansion Fund category.
These reserves are primarily derived from proceeds of the
“incremental” portion of the capacity fees collected within
developing areas. Capacity fees are accounted for
separately and used for the planning, design, and
construction of expansion facilities. Additionally,
expansion may be financed by the “buy-in” portion of the
capacity fee, which is restricted for CIP purposes, but not
167
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
specifically for expansion. Debt financing can be a
temporary financial resource for expansion projects. General
use reserves may also be placed in the designated Expansion
Fund and used for expansion projects.
c.Replacement
The portion of a CIP project that benefits existing users by
replacing an existing facility is financed from the reserves
in the Replacement Fund category. Replacement of facilities
may be financed with proceeds from the “buy-in” portion of
the capacity fees, general use reserves held in the
designated Replacement Fund, and/or debt proceeds. The
various funding sources available for replacement projects
are anticipated to provide the necessary flexibility to begin
projects while any necessary debt financing is being
obtained.
d.Betterment
Facilities that improve reliability, meet new regulations, or
create increased levels of service are considered betterment
facilities that benefit existing users. The reserves in the
Betterment Fund category are used to finance these projects
or portions of projects. Proceeds of the “buy-in” portion of
the capacity fees may also be used to finance betterment
projects. General use reserves may be placed in the
designated Betterment Fund and used for betterment projects.
1.21 Relocations
Occasionally, a third party requires relocation of a District
facility. If the District has a superior easement the third
party will pay the relocation cost, but only to the extent that
the District does not benefit from the relocation. When
relocation is required, a CIP project may be created which is
wholly or partially financed by a third party. On occasion, the
District will require that its own facilities be relocated.
Depending on the nature of the facilities, the financial resources
for these projects could be from new water supply, expansion,
replacement, betterment, and/or third-party financing. Each
project is individually negotiated with the third party based on
the facts and circumstances of the relocation. Occasionally, the
District will improve the facilities that are being relocated.
When determining how to allocate costs to various funds the
following guideline is suggested: if a project has more than five
years of useful life remaining, an incremental cost view should
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
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Date
Revised
5/3/23
be considered; if the project has less than five years of useful
life remaining, a pro-rata cost approach should be considered.
Also, the likelihood that the District will benefit from an
asset’s life extension should be evaluated prior to allocating
costs.
1.22 Oversizing
If deemed reasonable by the District, in connection with the
construction of backbone facilities, a developer may be required
to oversize new facilities for future development. The developer
is reimbursed for incremental oversizing costs as per Policy
No. 26. These reimbursements are not available for the
distribution system within a development which is an obligation
of the developer.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are assumed to have sufficient supply and capacity
to meet their current requirements as provided by the developers.
In addition, they are considered to have borne capital financial
costs that are at least proportionate to the benefits they have
received from capital facilities. Accordingly, no regional
capital financing costs are allocated to these areas so that they
will not incur any costs for newly developing areas, except for
capital projects that produce district-wide benefit or cost
savings.
1.24 Improvement Districts (IDs)
Improvement Districts (IDs) are established to facilitate the
financing of particular improvements by the specific
beneficiaries. The District has a number of IDs that were
established for General Obligation (GO) debt repayment. All GO
debt has been paid off and it is unlikely that the District will
issue additional GO debt. IDs continue to be used for other
purposes: 1) to distinguish sewer customers from water customers
on the county tax roll; or 2) to place parcels on the county tax
roll for the collection of availability fees.
Over the years, the District moved to a district-wide perspective
of financing improvements. This philosophy is evident by the
district-wide capacity and annexation fees. The District also
uses district-wide water rates. As time goes on, it is expected
that IDs will continue to outgrow their purpose and their use will
diminish.
169
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and continuous availability of services.
Financial stability and the resulting improved credit quality
allow the public entity to weather times of uncertainty and the
impact of negative events, both major and minor. Reserves allow
for the ongoing maintenance of property and timely payment of
expenses, even when such expenses exceed money available from a
single fiscal period. Ultimately, the type and level of
reserves are driven by the type and magnitude of uncertainty
faced by the public entity.
A “reserve” has a number of functions, as follows:
Working capital is required to ensure timely payment of
obligations.
A buffer against volatility in revenues.
Liquidity is required to obtain other goods and services
(e.g., bank services).
Designated money to protect creditors.
Money set aside to replace assets at the end of their useful
lives.
Money set aside to repair or replace assets damaged or
destroyed at unanticipated times.
It is important to note that reserves, fund balance, and net
assets are not the same. Fund balance and net assets are
accounting terms and may not always be in the form of cash or
liquid investments. Fund balances and net assets may not always
be reserves unless a designation of all or a portion of fund
balance is made. In addition, the term fund balance was replaced
by net assets as codified by the Governmental Accounting Standards
Board (GASB).
In short, reserves are the liquid assets of the District,
accumulated and maintained for application to finance contingent
future activities, whether known or unanticipated, operating or
capital in nature. The District’s Reserve Policy governs the
management and use of these financial resources. Few policies
have a more significant impact on the financial health and
stability of the District. This policy explains several key
170
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
financial concepts used by the District and provides some
background information on the overall strategies and practices
utilized. The District has a fiduciary obligation to its
customers, to manage and direct the use of public funds for the
purpose of providing water and sewer services in an efficient and
financially sound manner.
1.4 Policy Guidelines
In 2000, the Little Hoover Commission reviewed the levels of
reserve funds for special districts in California and prepared a
report reflecting that special districts were accumulating
unreasonable levels of funds. As a proactive response, the
California Special Districts Association (CSDA) prepared Reserve
Guidelines for its members. The Reserve Guidelines were
significant in noting that reserve levels need to be in context of
the organization’s overall business model and capital improvement
plan.
There are a number of potential events which the District should
consider in the development of reserves:
Economic Uncertainty - performance of the regional economy
and the impact of that performance on demand for water.
Weather - the amount of rainfall and the impact of weather on
the availability and cost of water as well as the demand for
water.
Government Mandates - the impact of federal and state
regulations, particularly environmental regulations.
Tax Changes - limitations on the District’s taxing and
spending powers through the passage of a voter referendum,
the impound of District property taxes, the removal of the
District’s power to levy property taxes, further increases to
Educational Revenue Augmentation Fund (ERAF) contributions,
or changes in calculation methodology.
Operating Costs - increases in operating and maintenance
costs because of inflation, labor agreements, or other
modifications.
Force Majeure - unanticipated expenditures resulting from
natural disasters or intentional acts.
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RESERVE POLICY
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Number
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Date
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Date
Revised
5/3/23
Emergency Maintenance - unanticipated expenditures resulting
from unexpected failure of assets (e.g., rupture in the
primary transmission system).
Unexpected Variation in Cash Flow - the incidence of
additional costs or decreased revenues that require short-
term borrowing in the absence of sufficient financial
resources.
The California State Auditor has, in its oversight role, offered a
number of quality recommendations for the development of reserve
policies as outlined in its report entitled, “California’s
Independent Water Districts: Reserve Amounts Are Not Always
Sufficiently Justified, and Some Expenses and Contract Decisions
Are Questionable,” dated June 2004, Report No. 2003-137. All of
these recommendations have been incorporated into this policy in
an effort to address key issues surrounding the management and use
of District reserves. The detailed objectives as identified by
the State Auditor are as follows:
Distinguish between restricted and unrestricted reserves.
Establish distinct purposes for all reserves.
Set target levels, including minimums and maximums, for the
accumulation of reserves.
Identify the events or conditions that prompt the use of
reserves.
Conform to plans to acquire or build capital assets.
Receive Board approval and that it is in writing.
Require periodic review of reserve balances and rationale for
maintaining them.
Yet, the State Auditor’s report acknowledges that the California
Constitution (Article XIII B, Section 5) is vague in its
provisions governing the accumulation and use of reserves.1
1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are
Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004,
2003-137; p. 8.
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
Specifically, the Constitution states that “each entity of the
government can establish contingency, emergency, unemployment,
reserve, sinking fund…or similar funds as it shall deem reasonable
and proper.”2 Similarly, the State’s Water Code does not impose
any requirements as to specific or recommended reserve fund
levels. As a result, the public finance community has yet to
settle on any real objective standards for the level of reserve
funds appropriate for governmental enterprises. This lack of
consensus as to specific standards is indicative of the wide
variance of the financial and operations context for different
districts and different contingencies justifying reserves.
The Government Finance Officers Association (GFOA) in its
“Recommended Practice on Appropriate Level of Unreserved Fund
Balance in the General Fund” (2002) states that in
establishing a policy governing the level of unreserved fund
balance in the general fund, a government should consider a
variety of factors. These include:
The predictability of its revenues and the volatility of
its expenditures (i.e., higher levels of the unreserved
fund balances may be needed if significant revenue
sources are subject to unpredictable fluctuations or if
operating expenditures are highly volatile).
The availability of resources in other funds as well as
the potential drain upon general fund resources from
other funds (i.e., the availability of resources in
other funds may reduce the amount of the unreserved fund
balance needed in the general fund, just as deficits in
other funds may require that a higher level of
unreserved fund balance be maintained in the general
fund).
Liquidity (i.e., a disparity between when financial
resources actually become available to make payments and
the average maturity of related liabilities may require
that a higher level of resources be maintained).
Designations (i.e., governments may wish to maintain
higher levels of the unreserved fund balance to
compensate for any portion of unreserved fund balance
already designated for a specific purpose).
2 California Constitution, Article XIII B, Section 5.
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Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
In the preparation of this policy, each of the CSDA guidelines and
the GFOA recommendations have been considered. In addition, all
seven objectives provided by the State Auditor are specifically
addressed for each reserve. The District wholly supports the
State Auditor’s efforts to bring a high-level of quality to
reserve governance and establish a standard of performance.
The District recognizes that the customer pays for services
provided. Quality management requires that periodic valuations be
performed so that fees and charges can be set at appropriate
levels to recover the cost of service. The District’s Reserve
Policy has been drafted with consideration of the GFOA, CSDA, and
State Auditor’s general guidelines as provided above.
Additionally, the District has adopted the following principles in
the management of its financial resources:
Reserves are held and used only for the purpose for which
they are collected. This is done to maintain equity among
customers.
Each of the service types is tracked separately so that
expenditures and revenues can be monitored and evaluated for
each customer type. This provides the District with the
necessary information to appropriately charge for each of the
services.
Separation of operations and maintenance from capital
expenditures occurs within each of the service types. This
is done because the financing of these expenditures is often
on different timelines or use different reserves.
The District will hold its reserves at responsible and
prudent levels. This policy sets minimum, maximum, and
target levels for each of the various funds. This has been
done so that the District can maintain reserves to meet the
purpose for which the funds were established. The levels are
set by reference to line items in the District’s financial
statements and approved budgets. This allows reserve levels
to adjust to the District’s changing financial circumstances.
Debt financing of facilities provides intergenerational
equity and maintains rates at reasonable levels. This equity
is accomplished with long-term financing which spreads the
cost of facilities over the life of the facilities. The
burden to pay for facilities is then paid by those who use
174
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject
RESERVE POLICY
Policy
Number
25
Date
Adopted
2/10/93
Date
Revised
5/3/23
them. The District could amass significant reserves by pre-
collecting financial resources in a Replacement Reserve Fund
allowing the District to cash finance all replacements.
However, this would require significant rate increases
burdening the current customers and creating reserve levels
difficult to defend to the ratepayers or other oversight
entities.
These concepts are fundamental to the way the District manages its
funds and have a direct impact on the way rates and charges are
set. The District performs annual budget evaluations and updates
its rate model on an annual basis to monitor and adjust the
various funds, expenditures, and revenue sources. The separation,
tracking, and projecting of the various funds, expenditures, and
revenue sources create the essential information necessary for the
equitable rate structure maintained by the District. The annual
review preserves the balance between services provided and the
fees charged. This review also ensures that reserves will be
available to continue to serve the District’s customers.
Financial Sources
2.0 Developers
a.Meter Installation Charges (General Use)
Meter fees are charges collected for new water service
connections. Fees vary depending upon meter size and type of
service. The costs associated with meter installations are
included in the Operating Expenses section of the budget.
Developers finance these charges.
b.Developer Deposits (General Use)
These deposits are for the engineering and operations
services provided to developers. They are tracked separately
for each developer and any excess amount is returned to the
developer.
c.Water Annexation Fees (General Use)
Annexation fees3 are collected as a condition of annexing
into the District’s potable or recycled water facilities.
Since the existing facilities have been built and maintained
by developers or customers within the District, the
annexation fee is calculated based on the present value of
all property taxes (1% property tax and availability fees)
3 Otay Water District Code of Ordinances, Section 9.
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paid by existing and prior customers. The annexation fee
reimburses existing customers for past contributions so that
all customers have contributed more equally to water
facilities. Proceeds of annexation fees are unrestricted and
may be used for any general fund purpose.
d.Sewer Annexation Fees (General Use)
A sewer annexation fee is collected when property is annexed
into an improvement district (ID). Since the existing
facilities have been built and maintained by developers or
customers within a sewer ID, the annexation fee is calculated
based on the present value of all availability fees paid by
existing and prior customers. The annexation fee reimburses
existing customers for past contributions so that all
customers have contributed more equally to sewer facilities.
Proceeds of the annexation fees are unrestricted and may be
used for any general fund purpose.
e.Water Capacity Fees (Restricted)
Water capacity fees4 are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
planning, design, construction, and financing associated with
expansion, replacement, or betterment of facilities. The
“buy-in” portion may be shifted back and forth between
expansion, betterment, or replacement as the financing needs
change. The “incremental” portion of the capacity fee is
limited to planning, design, construction, and financing
exclusively for expansion facilities (excluding new water
supply expansion).
f.Sewer Capacity Fees (Restricted)
Sewer capacity fees are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
4 Otay Water District Code of Ordinances, Section 28
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existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
planning, design, construction, and financing associated
with expansion, replacement, or betterment of facilities.
The “buy-in” portion may be shifted back and forth between
expansion, betterment, or replacement as the financing needs
change. The “incremental” portion of the capacity fee is
limited to planning, design, construction, and financing
exclusively for expansion facilities. For parcels within a
sewer ID the calculation excludes the tax debt already paid
by these customers, therefore producing a lower fee than for
parcels outside of a sewer ID. The capacity fees are
restricted to pay for planning, design, construction, and
financing associated with the expansion, replacement, or
betterment of facilities.
Facility needs are based on projected land use planning.
Changes in anticipated future land use occur and can alter
projected facility requirements. Thus, both the anticipated
facilities’ needs and their projected costs change over time as
regulatory agencies make changes to land use. The District
periodically reviews the capacity fee calculation to
accommodate such variations. These fees are paid by developers.
The District’s construction of infrastructure occurs prior to the
addition of EDUs. This sequence serves two purposes: 1) it
ensures that the District can serve the pending construction as it
is completed; and 2) it is more efficient to oversize many
facilities at the outset rather than build for the current need
and then reconstruct when the future need is realized. As a
result of this strategy, the District has financed construction
with bond financing as the existing expansion reserves are
depleted.
The water capacity fee is calculated based on the combined
recycled and potable water systems’ needs. This methodology is
used because the two water systems work hand-in-hand. All
capacity fees can be used for either potable or recycled but must
be tracked to distinguish between the “buy-in” and “incremental”
portions as described above. So, while capacity fees are not
restricted separately by potable and recycled, they are tracked
separately.
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Meter
Installation
Charges
Developer
Deposits Annexation
Fees
Capacity
Fees
Unrestricted and
Undesignated
(General Use)
Funds
Restricted Funds
DEVELOPERS
Diagram 2.0: Flow of Funds - Developer Sources
2.1 Customers/Users
a.Uniform Rates and Charges (General Use)
Charges to users for water, sewer, and recycled water are
uniform throughout the District for similar customer types.
b.Monthly System Fees (General Use)
This is a fixed revenue source that is charged monthly.The
amount of the charge is based on the customer class and
meter size.
c.Energy Charges (General Use)
The energy pumping fee is a charge per unit of water for each
100 feet of lift, or fraction thereof, above the base
elevation of 450 feet. This charge is placed on the
monthly water bills of all water customers.
d.Penalties (General Use)
Penalties are added to the monthly water and sewer bills for
late charges, locks, etc.
e.Pass-through Fixed Charges (General Use)
A fixed monthly charge to the District’s customers intended
to collect sufficient funds to pass-through the increased
fixed costs from the County Water Authority (CWA) and the
Metropolitan Water District (MWD).
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Uniform Rates
and Charges
Monthly
System Fees
Energy
Charges
Special Rates
and Charges
Pass –Through
Fixed Charges Penalties Special Rates
and Charges
Restricted Funds
Unrestricted and
Undesignated
(General Use) Funds
CUSTOMERS / USERS
f.Special Rates and Charges (General Use)
In addition to the uniform water and sewer charges, the
District has a special sewer rate for the Russell Square lift
station. The Russell Square fee is for construction,
installation, maintenance, or repair of the Russell Square
lift station. This fee is collected in accordance with the
Russell Square sewer charge. (See Code of Ordinances
Section 53.03B.)
g.Special Rates and Charges (Restricted)
In addition to the uniform water charges, the District has a
special rate charged to outside and interim users. Outside
and interim users are charged an additional fee for
temporary capacity. The fee is collected in accordance with
outside and interim service agreements. (See Code of
Ordinances Section 25.)
Diagram 2.1: Flow of Funds - Customer Sources
2.2 County-Collected Taxes and Fees
a.General Levy Property Tax Receipts (1% Property
Tax) (General Use)
In 1978, Proposition 13 limited the levy of ad valorem
property taxes on real property to one percent of the
assessed value of such property. Subsequent legislation,
AB 8, established that the receipts from the one percent levy
were to be distributed to taxing agencies proportionate to
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each agency’s general levy receipts prior to Proposition 13.
Taxes received are for general use. Spending limits for the
District are governed by the 1979 passage of California
Proposition 4, Limitations of Government Appropriations (GANN
limit). Proposition 4 places an appropriation limit on most
spending from tax proceeds.
b.Availability Charges (General Use/Restricted)
The District levies availability charges each year in
developed and undeveloped areas. Current legislation
provides that any amount up to $10 per parcel is general use
and any amount over $10 per parcel is restricted to being
expended in and for the improvement district (ID) within
which it is collected. Accordingly, the District may use
availability charges in excess of $10 toward costs of water
and sewer facilities which are either, expansion,
betterment, or replacement of facilities consistent with the
purpose of the ID in which they are collected. This portion
of the proceeds of availability charges is geographically
restricted and restricted by purpose. As costs are incurred
on these projects the respective IDs are charged, reducing
the reserves. To the extent that availability charges are
not used for the purpose for which they are collected, they
must be returned to the property owners that paid them. The
District has historically used these reserves for the
betterment of capital facilities thus, the restricted
reserves are accounted for in “sub-funds” of the Betterment
Fund (See 2.1 f.).
c.Improvement District General Obligation (GO) Bond
Assessments (Restricted)
The District has historically issued general obligation
(GO) debt and established an ID for the repayment of that
debt. When this financing method is used, the county tax
roll can be used to collect special taxes or assessments
within the ID to pay the debt obligation. The proceeds of
the debt are restricted for the purpose as defined in the
bond documents.
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General Levy
Property Tax
Receipts
Availability
Charges General Obligation
Bond Assessments
Unrestricted and
Undesignated
(General Use)
Funds
Restricted Funds
COUNTY COLLECTED TAXES AND FEES
Diagram 2.2: Flow of Funds – County Collection Sources
2.3 Miscellaneous Income
a.Miscellaneous Rents and Leases (General Use)
Revenues received from the rental and lease of District
property are general use revenues. Not only are these
periodic revenues, but there is also a one-time fee charged
with the setup of each new lease. The District incurs
expenses related to these rents and leases. The one-time
fees are calculated to recover the costs of setting up the
leases.
b.Sewer Billing Fees (General Use)
Sewer billing fees are general use revenues. The District
provides processing and billing services to the City of Chula
Vista and bill and collect from their customers for sewer
service. These fees are to recover the cost the District
incurs to provide this service.
c.Interest Income or Expense Allocation (General Use,
Designated, and Restricted)
Interest income (expense) will be allocated every month based
upon each fund's month-ending balance. In this way, each
fund receives credit for interest earned by that fund and
each fund with a negative balance is charged for the use of
the other fund’s reserves.
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Miscellaneous
Rents and Leases
Sewer Billing
Fees
Interest Income or
Expense Allocation
Restricted FundsDesignated Funds
Unrestricted and
Undesignated
(General Use) Funds
MISCELLANEOUS INCOME
Diagram 2.3: Flow of Funds – Miscellaneous Income Sources
2.4 Debt Issuance
a.Loans (General/Restricted Use)
As the District determines that additional financing is
required for a particular purpose, the option of borrowing is
considered. The determination to borrow is made as a part of
the annual rate model update and is evaluated in accordance
with the Debt Policy before it is recommended to the Board
for action. As an option to bond indebtedness, loans are
available to satisfy short-term financing needs. These loans
may or may not be contractually restricted for a particular
purpose.
b.General Obligation (GO) Bonds (Restricted)
As the District becomes more developed it becomes less likely
that general obligation debt will be used as it requires a
vote of the public to be approved. Bond proceeds are
restricted for the construction of those facilities
identified in the GO bond issuance. Occasionally, specific
portions of bond proceeds may be allocated for the repayment
of the principal and interest, also called debt service, on
these bonds. As the District determines that additional
financing is required for a particular purpose, the option of
debt issuance is considered. The determination to issue
debt is made as a part of the annual rate model update and
is evaluated in accordance with the Debt Policy before it is
recommended to the Board for action.
c.Revenue Bonds (Restricted)
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General revenues of the District are pledged as security for
Revenue Bonds (previously Certificates of Participation)
indebtedness. If the District determines that additional
financing is required for a particular purpose, the option of
debt issuance is considered. The determination to issue
debt is made as a part of the annual rate model update and
is evaluated in accordance with the Debt Policy before it is
recommended to the Board for action. This form of financing
has become the industry’s preferred form of financing as it
does not require a vote of the general public.
Diagram 2.4: Flow of Funds – Debt Issuance Sources
2.5 Inter-fund Transfers
Each year in the budgeting process, future fund balance
levels are projected for the next six years. Based on these
projections, transfers are recommended. Reserves may be
transferred between Unrestricted or Designated Funds and the
General Fund (see 4.0 “Funding Levels” and 4.1 “Fund
Transfers”). Reserves may not be transferred to or from any
of the Restricted Funds unless it is between two restricted
funds with a shared purpose.
Fund Types and Categories
Loans General
Obligation Bonds Revenue
Bonds
Restricted Funds
Unrestricted and
Undesignated
(General Use) Funds
DEBT PROCEEDS
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3.0 General Funds
a.Purpose
The General Fund is neither restricted nor designated. The
District maintains one General Fund for each business
segment (water, sewer, and recycled). This fund holds the
working capital and emergency operating reserves. While
the General Fund has a short-term focus to finance the
District’s annual operations, it is supported by the six-
year rate model. This fund is primarily used to finance the
operations of the District; however, it can be used for any
District purpose.
This fund can be used to supplement the District’s rates and
charges and be a temporary source of revenue to balance the
Operating Budget. This fund can also be used to avoid
spikes in the rates or significant and abrupt increases. It
is an industry practice to have a fund that can be used to
stabilize rates. This would only occur if there was a
temporary need to use reserves to smooth out a rate spike or
to ramp up what would otherwise be a dramatic rate increase.
The General Fund also plays a role in the debt planning of
the District.This fund is viewed by the debt markets as a
commitment by the District to ensure financial stability of
the rates and charges of the District. The District is
anticipated to need a number of debt issuances over the years
and this fund will help the District not only to stabilize
rate fluctuations but also to access low cost financing for
future projects.
b.Sources
The potable and recycled general funds receive meter
installation charges, special rates and charges, uniform
rates and charges, monthly system fees, energy charges,
penalties, pass-through fixed charges, general levy property
tax receipts, water annexation fees, availability charges,
miscellaneous rents and leases, sewer billing fees, interest
income or expense allocation, and loans.
The sewer general fund receives sewer charges, penalties,
availability charges, sewer annexation fees, and interest
income or expense allocation.
c.Funding Levels
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I.Minimum Level – The minimum reserve level for
each business segment of the General Fund is
three months of operating budget expenses
(evaluated separately for each segment).
II.Maximum Level – The maximum reserve level for the
General Fund is nine months of operating budget
expenses. In the event that this fund exceeds the
seven-month level, the excess will be evaluated or
transferred to one or more of the designated funds.
III.Target Level – The target level of reserves is
three months of operating budget expenses. In the
event that the fund drops below the target level,
rate increases or fund transfers would be
considered.
3.1 New Water Supply Fund Category
a.Purpose
The New Water Supply Fund category is to finance the
expansion portion of new water supply projects and is
therefore to be paid by developers. When considering the
reserve level of the New Water Supply category; the New Water
Supply Fund, the New Water Supply Debt Fund, and the
Designated New Water Supply Fund all work in concert and must
be considered jointly.
b.Sources
The New Water Supply Fund received reserves only from the new
water supply fee. Other funds within the new water supply
category of funds received debt proceeds and general use
reserves through a designation to this category. Effective
December 1, 2020, the new water supply fee collection was
discontinued. The New Water Supply Fund will continue to be
used to fund qualified projects and to pay the proportionate
share of debt service of new water supply projects until the
monies in the fund are fully depleted.
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Date
Revised
5/3/23
Unrestricted and
Undesignated Funding
Designated
New Water
Supply Fund
Designated Funds
Expansion
New Water
Supply Fund
New
Water
Supply
Debt Fund
New Water
Supply Fund
General Fund – Rates and Charges
Debt Fund
Diagram 3.1: New Water Supply Fund
3.2 Expansion Fund Category
a.Purpose
The Expansion Fund category is to finance the expansion
portion of capital projects and therefore is to be paid for
by developers. When considering the reserve levels of the
expansion category, the following funds work in concert and
must be considered jointly: Expansion Fund, Expansion Debt
Fund, Capital Improvement Fund, and the Designated Expansion
Fund. Potable and recycled reserves are considered jointly
while sewer is evaluated separately.
b.Sources
The Expansion Fund is financed by the “incremental” portion
of the capacity fee and restricted special rates and
charges. The other funds in this category may also be
financed by debt proceeds, the “buy-in” portion of the
capacity fee, and the general fund through a designation of
reserves.
c.Funding Levels
Restricted Funds
Restricted Funds
Restricted Funds
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I.Minimum Level – As the District matures, the
CIP will move to purely replacement and
betterment projects. As the District moves
through this life cycle the need for expansion
reserves will decrease and may be reduced to
zero.
II.Maximum Level – The maximum reserve level for the
expansion category of funds is limited to five
years of unfinanced expansion facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing needs must be reduced by the projected
expansion revenues, bond financing, and any
restricted or general fund revenues allocated to
this fund category. If the combined expansion
reserves exceed target levels, the District should
consider reducing capacity fees, reallocating
restricted or designated funds to meet other
purposes, or shifting the timing of expansion
projects.
III.Target Level – The target level is six months of
expansion expenditures. It is important that the
expansion reserves remain at a minimum of six
months of expansion expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting expansion
reserves. If the combined expansion reserves
drop below six months of expenditures this would
trigger a transfer of general use reserves, a
bond sale, an adjustment to the timing of
expansion projects, or a reallocation of
restricted reserves. Bond proceeds would be
placed in the Restricted Bond Fund, transfers of
general use reserves would be placed in the
Designated Expansion Fund, and transfers of
restricted reserves would be placed in the
Expansion Capital Improvement Fund.
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Diagram 3.2: Expansion Fund Category
(1) For Water Capacity Fees 31.2% goes into the Expansion Fund and 68.8% goes into the
Capital Improvement Fund. For Sewer Capacity Fees 100% goes into the Capital
Improvement Fund.
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3.3 Replacement Fund Category
a.Purpose
The Replacement Fund category is to finance replacement
projects. When considering the reserve levels of the
replacement category of funds, the following funds work
in concert and must be considered jointly: Debt Fund,
Capital Improvement Fund, and the Designated
Replacement Fund. The purpose of these reserves is
to pay for the replacement of capital infrastructure
and capital purchases.These reserves are not to be used
for the replacement of non-capital items.
With the District’s development of its financial systems
and the greater need and ability to separate and track
reserves, the replacement reserves have been separated
into three funds: water, recycled, and sewer.
Projects undertaken solely for the purpose of replacing
major capital equipment or facilities, i.e., where the
cost exceeds $10,000 for capital purchases or $20,000
for infrastructure items, generally these are not
considered normal maintenance. When the cost is below
$10,000, the costs are financed annually as operational
maintenance. As charges are incurred on replacement
projects the reserves are deducted from the respective
Replacement Funds monthly.
b.Sources
The various funds in this category are financed by debt
proceeds, the “buy-in” portion of the capacity fee, and
general fund designations.
c.Funding Levels
I.Minimum Level – The minimum reserve level of this
category of funds is 3% of the historical value of
existing assets as identified in the District’s
current financial statements. Potable, recycled,
and sewer replacement are evaluated separately.
II.Maximum Level – The maximum reserve level of this
category of funds is 6% of existing assets. If the
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Revised
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combined replacement reserves exceed target levels,
the District should consider transferring the “buy-
in” portion of the capacity fee to meet other
purposes. Another consideration would be to shift
the timing of replacement projects.
III.Target Level – The target reserve level of this
category of funds is 4% of existing assets. In the
event that the reserves fall below the recommended
target level, the District should consider
transferring the “buy-in” portion of the capacity
fee. The District should also consider shifting
the timing of replacement projects or issuing debt
to support the planned level of facility
replacement. The District will act based on the
annual six-year rate model to ensure that at the
end of that planning horizon the reserves exceed
the minimum level and are approaching the target
level.
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Revised
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Diagram 3.3: Replacement Fund Category
(1)For Water Capacity Fees 68.8% goes into the Capital Improvement Fund.
For Sewer Capacity Fees 100% goes into the Capital Improvement Fund.
3.4 Betterment Fund Category
a.Purpose
The Betterment Fund category is to finance the
betterment portion of capital projects with a portion
going to maintenance of the potable, recycled, and sewer
systems. The District maintains separate Betterment
Fund categories, one for each improvement district. An
improvement district is a legally defined geographic
area usually established for the purpose of bond
financing of facilities. The betterment reserves within
Unrestricted and
Undesignated Funding
Sources
Designated
Replacement
Fund
Designated Funds
Replacement
Capital
Improvement
Fund
Restricted Funds
Replacement
Debt FundRestricted Funds
Restricted Funds
Replacement
Fund
Category
Debt
ProceedsCapacity
Fees (1)Funding Source
General Fund – Rates and Charges
Debt FundCapital
Improvement Fund
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these funds are restricted by law for use within the
improvement district in which the fees were collected
(Water Code 71631.6). However, the legal restriction of
this reserve depends upon the particular revenue source.
(See Section 2.2 b. for a review of the availability
fees).
When considering the reserve levels of the betterment
category of funds, the following funds work in concert
and must be considered jointly: Betterment Fund, Debt
Fund, Capital Improvement Fund, and Designated
Betterment Fund.
b.Sources
The Betterment Fund category receives restricted
revenues through improvement districts from the
availability fees (the first $10 is unrestricted,
while amounts over $10 are restricted) collected
through the county tax roll. Betterment may also be
financed by debt proceeds, the “buy-in” portion of the
capacity fee, as well as the general fund through a
designation of reserves.
c.Funding Levels
I.Minimum Level – As the District matures, the CIP
will move to purely replacement projects. As the
District moves through this lifecycle the need for
betterment reserves will decrease and may be
reduced to zero.
II.Maximum Level – The maximum reserve level for the
betterment category of funds is limited to five
years of unfinanced betterment facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing need must be reduced by the projected
betterment revenues, bond financing, and general
fund designations. If this maximum is exceeded,
then the District should evaluate reductions in the
special water rates and availability fees,
transferring designated reserves to meet other
purposes, or shifting the timing of betterment
projects.
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Date
Revised
5/3/23
III.Target Level – The target is six months of
betterment expenditures.It is important that the
betterment reserves remain at a minimum of six
months of betterment expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting betterment
reserves. If the combined betterment reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, or
an adjustment to the timing of betterment projects.
Bond proceeds would be placed in the Betterment
Bond Fund while transfers would be placed in the
Designated Betterment Fund.
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Date
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5/3/23
Betterment
Fund
Diagram 3.4: Betterment Fund Category
(1)The portion of charges over $10 per parcel is restricted.
(2)For Water Capacity Fees 68.8% goes into the Capital Improvement Fund. For Sewer
Capacity Fees 100% goes into the Capital Improvement Fund.
Betterment
Capital
Improvement
Fund
Availability
Charges(1)
Capacity
Fees(2)
Debt
Proceeds
Betterment
Fund
Category
Betterment
Debt Fund
Designated
Betterment
Fund
General Fund - Rates and Charges
Betterment
Fund
Capital
Improvement
Fund
Bond/Debt
Fund
Funding Source
Restricted Funds
Restricted Funds
Restricted Funds
Unrestricted and
Undesignated Funding
Sources
Restricted Funds
Designated Funds
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Diagram 3.5: Fund Targets
Fund or Fund
Category
Actions to Consider if
below Target Target Maximum
New Supply Fund
Category
Bond financing, or
transfer to designated
or CIF
Total of all funds in fund
category = six months
of new supply capital
expenditures
Nexus of cost to fee
Expansion Fund
Category
Capacity fee increase,
bond financing, or
transfer to designated
or CIFs
Total of all funds in fund
category = six months
of expansion capital
expenditures
Five years unfunded
needs
Replacement Fund
Category
Bond financing, or
transfer to designated
or CIFs
Total of all funds in fund
category = 4% of
infrastructure
6% of infrastructure
Betterment Fund
Category
Bond financing, or
transfer to designated
or CIFs
Total of all funds in fund
category = six months
of betterment capital
expenditures
Five years unfunded
needs
Rate Stabilization Fund Fund transfers from
legally available funds
The financial impact of
two consecutive years of
low winter water usage
The financial impact of
three consecutive years
of low winter water
usage
General Fund Rate increase or fund
transfers
Three months of
operating budget
expenses
Nine months of
operating budget
expenses
Additional Restricted Funds
4.0 Capital Improvement Fund
a.Purpose
The Capital Improvement Fund’s (CIF) sole purpose is to
track the “buy-in” portion of the capacity fee and to ensure
these fees are expended solely for the purpose for which they
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were collected. In this case it is to pay for facilities
that were in existence at the time this fee was established.
These fees may be used for expansion, replacement, or
betterment projects or any debt related to these categories.
The water capacity fees may also be used for either the
potable or the recycled systems. As capacity fees are
collected, the “buy-in” portion of the fee is allocated as
needed to one of three CIFs, one in each of the Expansion,
Replacement, and Betterment Fund categories. These reserves
are used to pay debt or offset any negative balance within
these three categories of funds. For sewer, these fees fund
the Expansion, Replacement, or Betterment Fund categories.
These fees may not be used to finance the New Water Supply
category, as there were no new water supply facilities in
existence at the time the new methodology for capacity fees
was established.
b.Sources
The “buy-in” portion of the capacity fee collected after
June 30, 2010 for water or after September 30, 2014 for
sewer.
c.Funding Levels
There are no minimums, maximums, or target levels for these
reserves on an individual basis. The allocation of this
fee to the various CIFs is dependent on the overall reserve
levels within each fund category.
4.1 Debt Reserve Fund
a.Purpose
The Debt Reserve Fund is established to hold the proceeds
from the various debt issuances. There are two types of
debt, General Obligation bonds and Revenue bonds. The
proceeds are transferred to the New Water Supply, Expansion,
Replacement, or Betterment Debt Funds as they are expended
for various facilities within those fund categories. As
repayment of the debt occurs, the balances within these
individual funds are reduced so that the financial impact of
issuing debt is tracked within the category for which the
debt was issued.
b.Sources
Debt proceeds.
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c.Uses
There are no minimums, maximums, or target levels for this
fund on an individual basis. This fund is available on an as
needed basis to fund CIP projects for new water supply,
expansion, replacement, betterment, or maintain levels
defined within the District’s debt agreements. From a
funding level perspective, these reserves are evaluated in
the context of all the various funds within each fund
category.
4.2 Rate Stabilization Fund
a. Purpose
The Rate Stabilization Fund is established for the purpose of
minimizing rate increases in response to one-time events and
therefore stabilizing the rates and charges imposed by the
District to meet covenanted debt service coverage levels.
The Rate Stabilization Fund is not intended to be used to
offset regular rate increases needed to meet inflationary
cost increases in operations.
b.Sources
The District may budget for Rate Stabilization Fund deposits
from the Sewer Fund, amounts in excess of the annual debt
service coming due and payable in the fiscal year, after
payment of operating expenses. The allowable amount that may
be deposited shall not be transferred prior to payment of the
annual debt service obligation.
c. Uses
There is no minimum level for this fund. The maximum level
shall be equal to the financial impact of three (3)
consecutive years of low winter water usage. The target
level for this fund shall be equal to two (2) consecutive
years of low winter water usage. For the purposes of
calculating debt service, amounts transferred from the Rate
Stabilization Fund to the Sewer Fund will constitute Gross
Revenue in the fiscal year the transfer occurs. All interest
Or other earnings on deposits in the Rate Stabilization Fund
will be withdrawn at least annually and will be accounted for
as operating revenue in the Sewer Fund.
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Fund Transfers
5.0 Funding Levels
As described in the preceding sections, the District maintains
reserves for its operating and capital activities. These reserves
can be of three types: 1) undesignated or general use reserves, 2)
designated, and 3) restricted for a specific purpose. The
restricted reserves can be restricted geographically and/or by
purpose. The District maintains various funds to track the
various designations and restrictions. The source of the money
for each fund was discussed along with the purpose, source of
funds, and levels. Key characteristics of these funds are the
target levels, minimums, and maximums. The funding levels must
be viewed in the context of the economic environment, political
environment, and in light of the District’s rate model. The
District’s six-year rate model not only shows the current balance
but also shows the trend of the fund balances. Often the trend
of the fund is a greater indicator of financial stability than is
the current balance.
The rate model is updated each year with the budget process and
evaluates each fund over the next six years. The rate model will
take into account the general economic environment, looking at
the development rate, supply rate increases, the possibility of
raising rates, capital infrastructure spending, and strategic
plan initiatives. The fund balances may at times be over or
under the target amount. This is not only acceptable but
expected. The rate model provides an empirical estimate of the
conformance between the projected District’s financial activities
and the guidelines of this policy.
5.1 Fund Transfers
Reserves within the District’s various designated funds come from
interfund transfers of unrestricted general use reserves. It is
important to note that the District has the ability to use
general use reserves for any business purpose. General use
reserves may be transferred to and from any unrestricted fund for
any business need. Designated reserves are general use reserves
which have been set aside for a specific purpose by Board action.
These reserves can only be used for the purpose they were
designated, or with Board action they may be used for any other
business purpose. While general use reserves may be used for any
restricted purpose, they may not be transferred to Restricted
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Funds due to the sensitivity of the tracking of restricted
reserves. If reserves are needed for a restricted purpose, they
are transferred to a Designated Fund within the fund category
with that particular purpose. Reserves restricted to a fund
category may only be used within that category and may not be
transferred to another category. For example, the “incremental”
portion of the capacity fee are restricted reserves for a
specific purpose and may not be transferred to another category
as no other category has the same purpose. However, the “buy-in”
portion of the capacity fees are restricted for purposes that are
shared by more than one category of funds and may therefore be
transferred to a restricted fund within another fund category as
long as it shares the same purpose.
In many situations reserve transfers are expected as some fund
categories will exceed their maximums or drop below their
minimums. Only fund categories that are below the stated target
are eligible to receive transferred reserves. Fund categories
that exceed their maximums are first to be considered for
transfers out, followed by funds that exceed their targets.Funds
that exceed their minimums are also available for reserve
transfers out, but only when other options are not available.
The rationale for prioritizing reserve transfers is based on the
immediacy of the need and the availability of reserves from other
funding sources. For example, the General Fund is first to
receive reserves when it drops below its target or minimum levels.
This is because of the immediate and ongoing nature of the
expenditures that are served by this fund. The operation of the
District is the first and foremost objective of the District. On
the other end of the spectrum, the Replacement Fund has a long-
term perspective and will be used to partially finance replacement
assets for many years to come. Debt financing is available to
respond to this long-term, foreseeable, and planned cash flow.
This fund is less likely to have immediate needs and has other
financing options.
When making the determination of when transfers are necessary, all
funds within a fund category work as a group. The combined
balance of the restricted and designated funds are looked at when
determining whether the fund category requires additional funding
from the Restricted Capital Improvement Fund, Restricted Debt
Fund, or the General Fund. Because the Capital Improvement Fund
may finance expansion, replacement, or betterment, reserves may
be transferred between these fund categories, but only back and
forth within its own type of restricted fund.
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As an example, if during the rate model update process it was
determined that the Expansion Funds (designated and restricted)
would drop and stay below the minimum during the six-year
planning horizon, this would trigger a bond issuance, a transfer
of general use reserves, and/or a transfer of restricted reserves.
If in the cash planning process, it was anticipated that the
General Fund would remain above target during the planning
horizon and that the trend did not present a problematic
underfunded status, then General Fund reserves would be
considered available for transfer prior to issuing debt. Also,
if during this period the Betterment Fund category was
anticipated to exceed its maximum, then reserves from either the
Designated Betterment Fund, or the Capital Improvement Fund would
be transferred to the corresponding Expansion Fund prior to a
bond issuance. All funds are evaluated to determine which has
the greatest need or availability of reserves before any reserve
transfer recommendation is presented to the Board.
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1.0: POLICY
It is the policy of the Otay Water District to invest public funds in
a manner which will provide maximum security with the best interest
return, while meeting the daily cash flow demands of the entity and
conforming to all state statues governing the investment of public
funds.
2.0: SCOPE
This investment policy applies to all financial assets of the Otay
Water District. The District pools all cash for investment purposes.
These funds are accounted for in the District’s audited Comprehensive
Annual Financial Report (CAFR) and include:
2.1) General Fund
2.2) Capital Project Funds
2.2.1) Designated Expansion Fund
2.2.2) Restricted Expansion Fund
2.2.3) Designated Betterment Fund
2.2.4) Restricted Betterment Fund
2.2.5) Designated Replacement Fund
2.2.6) Restricted New Water Supply Fund
2.3) Other Post Employment Fund (OPEB)
2.4) Debt Reserve Fund
Exceptions to the pooling of funds do exist for tax-exempt debt
proceeds, debt reserves and deferred compensation funds. Funds
received from the sale of general obligation bonds, certificates of
participation or other tax-exempt financing vehicles are segregated
from pooled investments and the investment of such funds are guided by
the legal documents that govern the terms of such debt issuances.
3.0: PRUDENCE
Investments should be made with judgment and care, under current
prevailing circumstances, which persons of prudence, discretion and
intelligence, exercise in the management of their own affairs, not for
speculation, but for investment, considering the probable safety of
their capital as well as the probable income to be derived.
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The standard of prudence to be used by investment officials shall be
the “Prudent Person” and/or "Prudent Investor" standard (California
Government Code 53600.3) and shall be applied in the context of
managing an overall portfolio. Investment officers acting in
accordance with written procedures and the investment policy and
exercising due diligence shall be relieved of personal responsibility
for an individual security's credit risk or market price changes,
provided deviations from expectations are reported in a timely fashion
and appropriate action is taken to control adverse developments.
4.0: OBJECTIVE
As specified in the California Government Code 53600.5, when
investing, reinvesting, purchasing, acquiring, exchanging, selling and
managing public funds, the primary objectives, in priority order, of
the investment activities shall be:
4.1) Safety: Safety of principal is the foremost objective of
the investment program. Investments of the Otay Water
District shall be undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio.
To attain this objective, the District will diversify its
investments by investing funds among a variety of securities
offering independent returns and financial institutions.
4.2) Liquidity: The Otay Water District’s investment portfolio
will remain sufficiently liquid to enable the District to
meet all operating requirements which might be reasonably
anticipated.
4.3) Return on Investment: The Otay Water District’s investment
portfolio shall be designed with the objective of attaining
a benchmark rate of return throughout budgetary and economic
cycles, commensurate with the District’s investment risk
constraints and the cash flow characteristics of the
portfolio.
5.0 DELEGATION OF AUTHORITY
Authority to manage the Otay Water District’s investment program is
derived from the California Government Code, Sections 53600 through
53692. Management responsibility for the investment program is hereby
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delegated to the Chief Financial Officer (CFO), who shall be
responsible for all transactions undertaken and shall establish a
system of controls to regulate the activities of subordinate officials
and their procedures in the absence of the CFO.
The CFO shall establish written investment policy procedures for the
operation of the investment program consistent with this policy. Such
procedures shall include explicit delegation of authority to persons
responsible for investment transactions. No person may engage in an
investment transaction except as provided under the terms of this
policy and the procedures established by the CFO.
6.0: ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process shall
refrain from personal business activity that could conflict with the
proper execution and management of the investment program, or that
could impair their ability to make impartial investment decisions.
Employees and investment officials shall disclose to the General
Manager any material financial interests in financial institutions
with which they conduct business. They shall further disclose any
personal financial/investment positions that could be related to the
performance of the investment portfolio. Employees and officers shall
refrain from undertaking personal investment transactions with the
same individual with whom business is conducted on behalf of the
District.
7.0: AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The Chief Financial Officer shall maintain a list of District selected
financial institutions and security broker/dealers authorized and
approved to provide investment services in the State of California.
Investment services include the buying or selling of permissible
investments such as treasuries, government agencies, etc. for delivery
to the custodian bank. These may include “primary” dealers or regional
dealers that qualify under Securities & Exchange Commission Rule 15C3-
1 (Uniform Net Capital Rule). No public deposit shall be made except
in a qualified public depository as established by state laws. All
financial institutions and broker/dealers who desire to become
qualified bidders for investment transactions must supply the District
with the following, as appropriate:
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•Audited Financial Statements.
•Proof of Financial Industry Regulatory Authority (FINRA)
certification.
•Proof of state registration.
•Completed broker/dealer questionnaire.
•Certification of having read the District’s Investment
Policy.
•Evidence of adequate insurance coverage.
An annual review of the financial condition and registrations of
qualified bidders will be conducted by the CFO. A current audited
financial statement is required to be on file for each financial
institution and broker/dealer through which the District invests.
8.0: AUTHORIZED AND SUITABLE INVESTMENTS
From the governing body perspective, special care must be taken to
ensure that the list of instruments includes only those allowed by law
and those that local investment managers are trained and competent to
handle. The District is governed by the California Government Code,
Sections 53600 through 53692, to invest in the following types of
securities, as further limited herein:
8.01) United States Treasury Bills, Bonds, Notes or those
instruments for which the full faith and credit of the United
States are pledged for payment of principal and interest. There
is no percentage limitation of the portfolio which can be
invested in this category, although a five-year maturity
limitation is applicable.
8.02) Local Agency Investment Fund (LAIF), which is a State
of California managed investment pool, may be used up to the
maximum permitted by State Law (currently $75 million). The
District may also invest bond proceeds in LAIF with the same but
independent maximum limitation.
8.03) Bonds, debentures, notes and other evidence of
indebtedness issued by any of the following government agency
issuers:
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•Federal Home Loan Bank (FHLB)
•Federal Home Loan Mortgage Corporation (FHLMC or "Freddie
Mac")
•Federal National Mortgage Association (FNMA or "Fannie Mae")
•Government National Mortgage Association (GNMA or “Ginnie
Mae”)
•Federal Farm Credit Bank (FFCB)
•Federal Agricultural Mortgage Corporation (FAMCA or “Farmer
Mac”)
There is no percentage limitation of the portfolio which can be
invested in this category, although a five-year maturity from the
settlement date limitation is applicable. Government agencies
whose implied guarantee has been reduced or eliminated shall
require an “A” rating or higher by a nationally recognized
statistical rating organization.
8.04) Interest-bearing demand deposit accounts must be made
only in Federal Deposit Insurance Corporation (FDIC) insured
accounts. For deposits in excess of the insured maximum of
$250,000, approved collateral shall be required in accordance
with California Government Code, Section 53652. Certificates of
Deposit (CD) will be made only to the FDIC-insured limit of
$250,000. Investments in CD’s are limited to 15 percent of the
District’s portfolio.
8.05) Commercial paper, which is short-term, unsecured
promissory notes of corporate and public entities. Purchases of
eligible commercial paper may not exceed 2 percent of the
outstanding paper of an issuing corporation, and maximum
investment maturity will be restricted to 270 days. Investment is
further limited as described in California Government Code,
Section 53601(h). Purchases of commercial paper may not exceed 10
percent of the District’s portfolio.
8.06) Medium-term notes defined as all corporate debt
securities with a maximum remaining maturity of five years from
the settlement date or less, and that meet the further
requirements of California Government Code, Section 53601(k).
Investments in medium-term notes are limited to 10 percent of the
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District’s portfolio and no more than 2 percent of the
outstanding medium-term notes of any single issuer.
8.07) Money market mutual funds that invest only in Treasury
securities and repurchase agreements collateralized with Treasury
securities, and that meet the further requirements of California
Government Code, Section 53601(l). Investments in money market
mutual funds are limited to 10 percent of the District's
portfolio.
8.08) The San Diego County Treasurer’s Pooled Money Fund,
which is a County managed investment pool, may be used by the
Otay Water District to invest excess funds. There is no
percentage limitation of the portfolio which can be invested in
this category.
8.09) Under the provisions of California Government Code
53601.6, the Otay Water District shall not invest any funds
covered by this Investment Policy in inverse floaters, range
notes, interest-only strips derived from mortgage pools, or any
investment that may result in a zero-interest accrual if held to
maturity. Also, the borrowing of funds for investment purposes,
known as leveraging, is prohibited.
9.0: INVESTMENT POOLS/MUTUAL FUNDS
A thorough investigation of the pool/fund is required prior to
investing, and on a continual basis. There shall be a questionnaire
developed which will answer the following general questions:
•A description of eligible investment securities, and a
written statement of investment policy and objectives.
•A description of interest calculations and how it is
distributed, and how gains and losses are treated.
•A description of how the securities are safeguarded
(including the settlement processes), and how often the
securities are priced and the program audited.
•A description of who may invest in the program, how often,
and what size deposits and withdrawals are allowed.
•A schedule for receiving statements and portfolio listings.
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•Are reserves, retained earnings, etc., utilized by the
pool/fund?
•A fee schedule, and when and how is it assessed.
•Is the pool/fund eligible for bond proceeds and/or will it
accept such proceeds?
10.0 COLLATERALIZATION
Collateralization will be required on certificates of deposit
exceeding the $250,000 FDIC insured maximum. In order to anticipate
market changes and provide a level of security for all funds, the
collateralization level will be 102% of market value of principal and
accrued interest. Collateral will always be held by an independent
third party with whom the entity has a current custodial agreement. A
clearly marked evidence of ownership (safekeeping receipt) must be
supplied to the entity and retained. The right of collateral
substitution is granted.
11.0: SAFEKEEPING AND CUSTODY
All security transactions entered into by the Otay Water District
shall be conducted on a delivery-versus-payment (DVP) basis.
Securities will be held by a third-party custodian designated by the
District and evidenced by safekeeping receipts.
12.0: DIVERSIFICATION
The Otay Water District will diversify its investments by security
type and institution, with limitations on the total amounts invested
in each security type as detailed in Paragraph 8.0, above, so as to
reduce overall portfolio risks while attaining benchmark average rate
of return. With the exception of U.S. Treasury securities, government
agencies, and authorized pools, no more than 50% of the District’s
total investment portfolio will be invested with a single financial
institution.
13.0: MAXIMUM MATURITIES
To the extent possible, the Otay Water District will attempt to match
its investments with anticipated cash flow requirements. Unless
matched to a specific cash flow, the District will not directly invest
in securities maturing more than five years from the settlement date
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of the purchase. However, for time deposits with banks or savings and
loan associations, investment maturities will not exceed two years.
Investments in commercial paper will be restricted to 270 days.
14.0: INTERNAL CONTROL
The Chief Financial Officer shall establish an annual process of
independent review by an external auditor. This review will provide
internal control by assuring compliance with policies and procedures.
15.0: PERFORMANCE STANDARDS
The investment portfolio shall be designed with the objective of
obtaining a rate of return throughout budgetary and economic cycles,
commensurate with the investment risk constraints and the cash flow
needs.
The Otay Water District’s investment strategy is passive. Given this
strategy, the basis used by the CFO to determine whether market yields
are being achieved shall be the State of California Local Agency
Investment Fund (LAIF) as a comparable benchmark.
16.0: REPORTING
The Chief Financial Officer shall provide the Board of Directors
monthly investment reports which provide a clear picture of the status
of the current investment portfolio. The management report should
include comments on the fixed income markets and economic conditions,
discussions regarding restrictions on percentage of investment by
categories, possible changes in the portfolio structure going forward
and thoughts on investment strategies. Schedules in the quarterly
report should include the following:
•A listing of individual securities held at the end of the
reporting period by authorized investment category.
•Average life and final maturity of all investments listed.
•Coupon, discount or earnings rate.
•Par value, amortized book value, and market value.
•Percentage of the portfolio represented by each investment
category.
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17.0: INVESTMENT POLICY ADOPTION
The Otay Water District’s investment policy shall be adopted by
resolution of the District’s Board of Directors. The policy shall be
reviewed annually by the Board and any modifications made thereto must
be approved by the Board.
18.0: GLOSSARY
See Appendix A.
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1.0: POLICY
It is the policy of the Otay Water District to finance the acquisition
of high value assets that have an extended useful life through a
combination of current revenues and debt financing. Regularly updated
debt policies and procedures are an important tool to ensure the use
of the District’s resources to meet its commitments, to provide the
highest quality of service to the District’s customers, and to
maintain sound financial management practices. These guidelines are
for general use and allow for exceptions as circumstances dictate.
2.0: SCOPE
This policy is enacted in an effort to standardize the issuance and
management of debt by the Otay Water District. It also establishes a
standard for internal lending/borrowing between water (potable and
recycled) and sewer funds, either direction. The primary objective is
to establish conditions for the use of debt, to minimize the
District’s debt service requirements and cost of issuance, to retain
the highest practical credit rating, maintain full and complete
financial disclosure and reporting, and to maintain financial
flexibility for the District. This policy applies to all debt issued
by the District including general obligation bonds, revenue bonds,
capital leases, and special assessment debt and loans between water
and sewer funds.
3.0: LEGAL & REGULATORY REQUIREMENTS
The Chief Financial Officer (CFO) and the District’s Legal Counsel
will coordinate their activities to ensure that all securities and
lending/borrowing agreements are issued in full compliance with
Federal and State law.
4.0: CAPITAL FACILITIES FUNDING
Financial Planning
The District maintains a six-year financial projection that identifies
operating requirements and public facility and equipment requirements,
and has developed a Rate Model for funding the District’s 6-Year
Capital Improvement Program (CIP). The District’s CIP Budget places
the capital requirements in order of priority and schedules them for
funding and implementation. It identifies a full range of capital
needs, provides for the ranking of the importance of such needs, and
identifies all the funding sources that are available to cover the
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costs of the projects. In cases where the program identifies project
funding through the use of debt financing, the budget should provide
information needed to determine debt capacity. The Rate Model and the
CIP Budget give the Board part of the data needed to make informed
judgments concerning the possibility of issuing debt.
Funding Criteria
The Chief Financial Officer (CFO) will evaluate all capital project
requests and develop a proposed funding plan. Priority may be given
to those projects that can be funded with current resources (annual
cash flow, fund balances or reserves). Those projects that cannot be
funded with current resources may be deferred or the CFO may recommend
that they be funded with debt financing. However, debt financing will
not be considered appropriate for any recurring purpose such as
current operating and maintenance expenditures. The issuance of
short-term cash-flow instruments is excluded from this limitation.
The General Manager will recommend the funding plan to the Board. The
General Manager may deem it necessary or desirable in certain
circumstances to convene a Finance Committee meeting to evaluate
funding options presented by the Chief Financial Officer.
Funding Sources
The District’s capital improvements can be classified in three
categories: those related to an expansion of the system
(“expansion”), those related to upgrading the existing system
(“betterment”) and those related to repairing or replacing existing
infrastructure (“replacement”). In general, capital improvements for
betterment or replacement are financed primarily through user charges,
availability charges, and betterment charges. Capital improvements
for expansion are financed through capacity fees. Accordingly, these
fees are reviewed at least annually or more frequently as required and
set at levels sufficient to ensure that new development pays its fair
share of the costs of constructing necessary infrastructure.
Additionally, the District will seek State and Federal grants and
other forms of intergovernmental aid wherever possible.
Pay-As-You-Go Projects
The District’s capacity fees are the major funding source in financing
additions to the water system and the recycled water system. Over
time, the fees collected and the cost to construct the capital
projects should balance. However, collection of these fees is subject
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to significant fluctuation based on the rate of new development.
Accordingly, the Chief Financial Officer, in developing the funding
plan for the CIP, will determine that current revenues and adequate
fund balances are available so project phasing can be accomplished.
If this is not the case, the Chief Financial Officer may recommend
that:
1.The project be deferred until funds are available, or
2.Based on the priority of the project, debt be issued to finance
the project.
Debt Financed Projects
If a project or projects are to be financed with long-term debt, the
District should use the following criteria to evaluate the suitability
of the financing for the particular project or projects:
1.The life of the project or asset to be financed is 10 years or
longer and its useful life is expected to exceed the term of the
financing.
2.Revenues available for debt service are deemed to be sufficient
and reliable so that long-term financing can be marketed without
jeopardizing the credit rating of the District.
3.Market conditions present favorable interest rates and demand for
District financing.
4.The project is mandated by State and/or Federal requirements and
current resources are insufficient or unavailable.
5.The project is immediately required to meet or relieve capacity
needs and current resources are insufficient or unavailable.
5.0: DEBT STRUCTURE
General
The District will normally issue debt with a maturity of not more than
30 years. The structure should approximate level debt service for the
term where it is practical or desirable. There will be no debt
structures that include increasing debt service levels in subsequent
years, with the first and second year of a debt payoff schedule the
exception and related to projected additional income to be generated
by the project to be funded. There will be no "balloon" debt
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repayment schedules that consist of low annual payments and one large
payment of the balance due at the end of the term. There will always
be at least interest paid in the first fiscal year after debt issuance
and principal starting no later than the first fiscal year after the
date the facility or equipment is expected to be placed in service.
Capitalized interest will not be for a period of more than necessary
to provide adequate security for the financing.
Limitations on the Issuance of Variable Rate Debt
The District will normally issue debt with a fixed rate of interest.
The District may issue variable rate for the purpose of managing its
interest costs. At the same time, the District should protect itself
from too much exposure to interest rate fluctuations. In determining
that it is in the District’s best interest to issue certain debt at
variable rates instead of fixed rates, at the time of issuing any
variable rate debt, there should be at least a 10% estimated reduction
in annual debt costs by issuing variable rate debt when compared to a
similar issuance of fixed rate debt. If the estimated overall cost
savings from issuing variable rate debt is not at least 10% at the
time of issuance, relatively small fluctuations in rates could
actually increase the District’s financing costs over the life of the
bonds compared to a similar fixed rate financing. By using this 10%
factor at the time of issuance, the District can be relatively assured
that its variable rate financing will be cost-effective over the term
of the bonds.
The comparison will be based on the following criteria:
1.The interest rate used to estimate variable interest costs will
be the higher of the 10-year average rate or the current weekly
variable rate.
2.The variable rate debt costs will include an estimate for annual
costs such as letter of credit fees, liquidity fees, remarketing
fees, monthly draw fees and annual rating fees applicable to the
letter of credit.
3.Any potential reserve fund earnings will reduce the fixed rate
debt service or variable rate debt service as applicable.
Periodically, using the criteria described above, the Chief Financial
Officer will compare the estimated annual debt service costs to
maturity of any variable rate debt with estimated debt service if the
debt was converted to fixed rates. If this analysis produces a break
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even in total payments over the life of the issue, the Chief Financial
Officer will recommend converting such variable rate debt to fixed
rate.
Variable rate debt should not represent more than 25% of the
District’s total debt portfolio. This level of exposure to interest
rate fluctuations is considered to be manageable in an environment of
increasing interest rates. At a higher ratio than this, the District
might be faced with an unplanned water rate increase to meet its Rate
Covenants. Rating agencies use this ratio in their analysis of the
District’s overall credit rating.
Further, Rate Covenants applicable to variable rate debt shall not
compromise the issuance of additional debt planned by the District and
variable rate debt should always contain a provision to allow
conversion to a fixed rate at the District’s option.
6.0: CREDIT OBJECTIVES
The Otay Water District seeks to maintain the highest possible credit
ratings for all categories of long-term debt that can be achieved
without compromising delivery of basic services and achievement of
District policy objectives.
Factors taken into account in determining the credit rating for a
financing include:
1.Diversity of the District’s customer base.
2.Proven track record of completing capital projects on time and
within budget.
3.Strong, professional management.
4.Adequate levels of staffing for services provided.
5.Reserves.
6.Ability to consistently meet or exceed Rate Covenants.
The District recognizes that external economic, natural, or other
events may from time to time affect the creditworthiness of its debt.
Nevertheless, the District is committed to ensuring that actions
within its control are prudent and well planned.
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7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA
Competitive Sale
The District will use a competitive bidding process in the sale of
debt unless the nature of the issue or specific circumstances warrants
a negotiated sale. The CFO will determine the best bid in a
competitive sale by calculating the true interest cost (TIC) of each
bid.
Negotiated Sale
Types of debt that would typically lend themselves to the negotiated
sale format are variable rate debt and unrated debt. Circumstances
that might warrant a negotiated sale may occur when the issue is of a
limited size that would not attract wide-spread investor interest,
during periods of high levels of issuance by other entities in the
State, or during periods of market volatility or with relatively new
financing techniques. In the event the District decides to use a
negotiated sale, it will pay management fees only to those firms that
place orders for bonds.
If the size of the District’s proposed issue is not cost effective,
the District may also consider issuing its debt by private placement
or through any qualified Joint Power Authority (JPA) in the State of
California whose principal business is issuing bonds.
8.0: REFUNDING DEBT
Purpose
Periodic reviews of all outstanding debt will be undertaken by the
Chief Financial Officer to determine refunding (refinancing)
opportunities. The purpose of the refinancing may be to:
1.Lower annual debt service by taking advantage of lower current
interest rates.
2.Update or revise covenants on outstanding debt issue if a Rate
Covenant appears to be too high, has precluded the District from
implementing its financing plan, or has caused the District to
increase rates to customers.
3.Restructure debt service associated with an issue to facilitate
the issuance of additional debt, usually in order to smooth out
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peaks in total debt service which can occur frequently as one
debt issue is layered on top of existing debt issues.
4.Alter bond characteristics such as call provisions or payment
dates.
5.Pay for conversion costs such as funding a reserve fund or paying
for credit enhancement when converting variable rate debt to
fixed rate debt.
Restrictions on Refunding
Tax-exempt bonds typically have provisions that preclude early
redemption of the bonds for a period of years after issuance. The
ability of issuers to refinance a tax-exempt bond prior to its
Optional Redemption date (known as Advance Refunding) is limited by
the Tax Code. There is no limit in the Tax Code on the ability of
issuers to redeem bonds prior to their maturity date once the Optional
Redemption date has been reached (known as Current Refunding).
Savings Criteria
In cases where an Advance Refunding or Current Refunding is intended
to provide debt service savings, the District may commence the
refinancing process if a minimum five percent (5%) present value
savings net of issuance costs and any cash contributions can be
demonstrated. Since interest rates may fluctuate between the time
when a refinancing is authorized and when the debt is issued,
beginning the process with at least a 5% savings should provide the
District with some level of protection that it can achieve a minimum
of three percent (3%) net present value savings of the refunding bonds
when and if the debt is issued. These minimum standards are intended
to protect the District staff from spending time on refinancings that
become marginally cost-effective after the entire issuance process is
complete.
The savings target may be waived, however, if sufficient justification
for lowering the savings target can be provided by meeting one or more
of the other refunding objectives described above.
9.0: SUBORDINATE LIEN DEBT
The District will issue subordinate lien debt only if it is
financially beneficial to the District or consistent with
creditworthiness objectives. Subordinate lien debt is structured to be
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payable second in priority to the District’s other outstanding debt.
Typically, subordinate lien debt might be issued if the District
desired a more flexible Rate Covenant with respect to its new
obligations and did not want to refinance all of its existing debt to
obtain that less restrictive Rate Covenant.
10.0: FINANCING PARTICIPANTS
The District’s purchasing guidelines provide the process for securing
professional services related to individual debt issues. The
solicitation and selection process include encouraging participation
from qualified service providers, both local and national, and
securing services at competitive prices.
Municipal Advisor: The use of a Municipal Advisor is necessary for
the sale of debt by a competitive bid process and is desirable when
issuing debt through a negotiated sale. The Municipal Advisor has a
fiduciary duty to the District and will seek to structure the
District’s debt in the manner that is saleable, yet meets the
District’s objectives for the financing. The Municipal Advisor will
advise the District on alternative structures for its debt, the cost
of different debt structures and potential pricing mechanisms that can
be expected from underwriters (such as call features, term bonds and
premium and discount bond pricing) and, at the District’s direction,
will write the offering document (preliminary official statement).
With respect to competitive sales, the Municipal Advisor will arrange
for distributing the preliminary official statement, accepting bids
via an internet bidding platform, verifying the lowest bid and provide
detailed instructions for the flow of funds at closing to the winning
Underwriter, the Trustee and the District. In a negotiated sale, the
Municipal Advisor will provide independent confirmation on the
Underwriter’s proposed pricing to ensure that interest rates and
Underwriter’s compensation are appropriate for the credit quality of
the issue and competitive in the overall public finance market in
California.
Underwriter: The Underwriter markets the bonds for sale to investors.
While the District’s preference is to select the Underwriter for the
debt via sale of the debt at competitive bid, there are circumstances
when a negotiated issue is in the best interests of the District.
Negotiated sales are preferable if the security features are
particularly complex or market conditions are volatile. The Chief
Financial Officer will recommend whether the method of sale is
competitive or negotiated based on the type of issue and other market
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conditions. In the case of negotiated sales, the Underwriter will be
required to demonstrate sufficient capitalization and sufficient
experience related to the specific type of debt issuance.
The Underwriter will work in connection with the District’s Municipal
Advisor on structuring the issue and offering different pricing ideas.
Bond Counsel: The District’s Bond Counsel provides the primary legal
documents that detail the security for the bonds and the authority
under which bonds are issued. The Bond Counsel also provides an
opinion to bond holders that the bonds are tax-exempt under both State
and Federal law. All closing documents in connection with an issue
are also prepared by Bond Counsel.
Disclosure Counsel: The District’s Disclosure Counsel provides legal
advice to the District regarding the adequacy of the District’s
disclosure of financial information or risks of investing in the
District’s debt issue to the investing public. The Disclosure Counsel
can prepare the official statement or review the official statement
and gives the District an opinion that there is no information missing
from the official statement of a material nature that would be
necessary for an investor to make an informed decision about investing
in the District’s bonds.
Trustee: The Trustee is a financial institution selected by the
District to administer the collection of revenues pledged to repay the
bonds and to distribute those funds to bondholders.
Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign
bank that has issued a letter of credit providing both credit
enhancement (the Letter of Credit Bank will pay the debt in the event
that the District defaults on the payment) and liquidity for a
variable rate bond issue. These banks have their own short-term
credit rating, which can be higher than the District’s short-term
credit rating. Liquidity is needed because variable rate bondholders
are allowed to “put” their bonds back to the District if they do not
like the interest rate currently being offered. The District’s
Remarketing Agent then finds a new buyer for those bonds, but in the
event that no buyer is found, a draw is made under the letter of
credit to purchase the bonds that have been “put.” As soon as the
bonds are remarketed to another buyer, the letter of credit is repaid.
The letter of credit fees are paid annually or quarterly. Letter of
credits are typically issued for not more than 3 years and must be
renewed during the life of the bonds. Credit enhancement is discussed
further under the heading “CREDIT ENHANCEMENT.”
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Municipal Bond Insurer: The Municipal Bond Insurer can be one of
several insurance companies that provide municipal bond insurance
policies securing payment of the District’s debt. These policies
provide that the Municipal Bond Insurer will pay the District’s debt
in the event that the District defaults on its payments. Debt which
is insured carries the Municipal Bond Insurer’s credit rating. The
insurance premium for the bond insurance policy is paid one time at
the issuance of the debt and is non-cancelable for the term of the
debt. Unlike a letter of credit, bond insurance policies do not
provide liquidity and are most typically purchased for fixed rate
debt.
Remarketing Agent: The Remarketing Agent is an investment bank that,
each week, determines the interest rate for the District’s variable
rate obligations. The rate is set at the rate at which the
obligations could be sold on the open market at 100% of their face
value. The Remarketing Agent also finds new buyers for any of the
obligations that are “put” back to the District.
Rating Agencies: Currently, there are three widely recognized rating
agencies that rate municipal debt in the United States: Standard &
Poor’s, Moody’s Investors Service, and Fitch Investors Service.
Rating agencies establish objective criteria under which each type of
financing undertaken by the District is to be analyzed. Upon request,
a rating agency will rate the underlying strength of the District’s
financings, without regard to the purchase of any credit enhancement.
The rating is released to the general public and thereafter, the
rating agency will periodically update its analysis of a particular
issue, and may raise or lower the rating if circumstances warrant.
Investment-grade ratings range from “AAA” to “BBB-.” A rating below
“BBB-” is not investment grade. Many mutual funds cannot buy bonds
that do not carry an investment grade.
Verification Agent: In a refunding, the District will deposit funds
with an escrow agent (usually the trustee) in an amount sufficient,
together with earnings thereon, to pay the debt service and redemption
price of the debt being refunded through and including the call date.
The Verification Agent verifies the mathematical accuracy of
calculation of the amount to be deposited in escrow and the bond
counsel relies on this verification in giving their opinion that the
debt is defeased within the meaning of the indenture and that the lien
of the debt on the revenues pledged to the debt being refunded is
released.
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11.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT
Members of the District, the Board of Directors and its consultants,
service providers and underwriters shall adhere to standards of
conduct and conflict of interest rules as stipulated by the California
Political Reform Act or the Municipal Securities Rulemaking Board
(MSRB), as applicable. All debt financing participants shall maintain
the highest standards of professional conduct at all times, in
accordance with MSRB Rules, including Rule G-37. Municipal Advisors
shall also adhere to applicable SEC rules and MSRB Rule G-42. There
shall be no conflict of interest with the District with any debt
financing participant.
12.0: CONTINUING DISCLOSURE
The District acknowledges the responsibilities of the underwriting
community and pledges to make all reasonable efforts to assist
underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB
Rule G-36. The District will file its official statements with the
MSRB and the nationally recognized municipal securities information
repositories. The District will also post copies of its comprehensive
financial reports on the MSRB’s Electronic Municipal Market Access
(EMMA) website, and will disseminate other information that it deems
pertinent to the market in a timely manner (For bonds issued after
2012, 10 days).
Reporting of Listed Events
While initial bond disclosure requirements pertain to underwriters,
the District will provide financial information and notices of listed
events on an ongoing basis throughout the life of the issue.
The list below (as of the most current SEC amendment effective
February 27, 2019) can change in the future, and any new requirements
added to SEC Rule 15(c)2-12 in the future are deemed to be added to
this section without the need to update the policy.
(a)The District shall give, or cause to be given, notice of the
occurrence of any of the following events with respect to any
bonds (in each case to the extent applicable) in a timely
manner not more than ten business days after the occurrence of
the event:
1.Principal or interest payment delinquencies;
2.Non-payment related defaults, if material;
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3.Modifications to the rights of the Holders, if material;
4.Optional, contingent or unscheduled calls, if material, and
tender offers;
5.Defeasances;
6.Rating changes;
7.Adverse tax opinions or the issuance by the Internal Revenue
Service of proposed or final determinations of taxability,
Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax
status of the Bonds or other material events affecting the
tax status of the Bonds;
8.Unscheduled draws on the debt service reserves reflecting
financial difficulties;
9.Unscheduled draws on the credit enhancements reflecting
financial difficulties;
10.Substitution of the credit or liquidity providers or their
failure to perform;
11.Release, substitution or sale of property securing repayment
of the Bonds, if material;
12.Bankruptcy, insolvency, receivership or similar proceedings
of the District, which shall occur as described below;
13.Appointment of a successor or additional trustee or the
change of name of a trustee, if material;
14.The consummation of a merger, consolidation, or acquisition
involving the District or the sale of all or substantially
all of the assets of the District other than in the ordinary
course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant
to its terms, if material;
15.Incurrence of a financial obligation of the District, if
material, or agreement to covenants, events of default,
remedies, priority rights, or other similar terms of a
financial obligation of the District, any of which affect
security holders, if material; or
16.Default, event of acceleration, termination event,
modification of terms, or other similar events under the
terms of a financial obligation of the District, any of
which reflect financial difficulties.
For these purposes, any event described in item 12 is considered to
occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the District in a proceeding
under the United States Bankruptcy Code or in any other proceeding
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under state or federal law in which a court or governmental authority
has assumed jurisdiction over substantially all of the assets or
business of the District, or if such jurisdiction has been assumed by
leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement, or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of
the assets or business of the District.
Whenever the District obtains knowledge of the occurrence of a Listed
Event under item 12 above, the District shall or shall cause the
Dissemination Agent (if not the District) as soon as possible
determine if such event would be material under applicable federal
securities laws and if applicable file a notice of such occurrence
with the MSRB, in an electronic format as prescribed by the MSRB, in a
timely manner not in excess of 10 business days after the occurrence
of the Significant Event.
Notwithstanding the foregoing, notice of Significant Events described
in subparagraph (a)(8) above need not be given any earlier than the
notice (if any) of the underlying event is given to holders of
affected bonds under the applicable indenture securing such bonds.
The events described in subparagraphs (a)(2), (a)(7),(a)(8) (if the
event is a bond call), (a)(10), (a)(11), (a)(13), (a)(14) and (a)(15)
contain the qualifier “if material.” The District shall cause a notice
to be filed with respect to any such event only to the extent that the
District determines the event’s occurrence is material for purposes of
U.S. federal securities law.
13:0 INVESTMENT & ARBITRAGE COMPLIANCE
Tax-exempt bonds are required to meet certain provisions of the
federal tax code in order to maintain their tax-exempt status. In
order to prevent municipal issuers from borrowing money at tax-exempt
rates solely for the purpose of investing the proceeds in higher
yielding investments and making a profit (“arbitrage”), the federal
tax code contains a provision that requires issuers to compare the
interest earned on any bond funds held (such as a reserve fund) with
interest that would theoretically be earned if the funds were invested
at the yield of the bonds, and to “rebate” to the federal government
any interest earned in excess of the theoretical earnings limit.
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The Chief Financial Officer shall invest the bond proceeds subject to
the District’s Investment Policy in a timely manner, to ensure the
availability of funds to meet operational requirements. In doing so,
the CFO will maintain a system of record keeping and reporting to meet
the arbitrage rebate compliance requirements of the federal tax code.
14.0: INTERNAL CONTROL
The District has implemented the following procedure to ensure that
the proceeds of the proposed debt issuance will be directed to the
intended use:
1.A separate Reserve Account shall be maintained for the
proceeds of each bond to ensure that there is no comingling
of funds.
2.All related expenditures charged against the bond proceeds
shall be properly approved by the authorized authority.
3.All related transactions shall be fully documented so that
an undisputable audit trail exists.
4.All related transactions shall be tracked in the District’s
Accounting System. A financial report reflecting all charges
related to the bond shall be prepared and maintained.
5.The District shall establish a retention policy which states
that all supporting documents related to bond proceeds
spending shall be kept indefinitely.
6.The Reserve Account shall be reconciled on a monthly basis.
15.0: TYPES OF DEBT FINANCING
General Obligation Bonds
General obligation bonds are secured by a pledge of the ad-valorem
taxing power of the issuer and are also known as a full faith and
credit obligations. Bonds of this nature must serve a public purpose
to be considered lawful taxation of the property owners within the
District and require a two third’s majority vote in a general
election. The benefit of the improvements or assets constructed and
acquired as a result of this type of bond must be generally available
to all property owners.
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The District can issue general obligation bonds up to but not in
excess of 15% of the assessed valuation under Article XVI, Section 18
of the State constitution. An annual amount of the levy necessary to
meet debt service requirements is calculated and placed on the tax
roll through the County of San Diego. The District also has a policy
that the ad-valorem tax to be used to pay debt service on general
obligation bonds will not exceed $.10 per $100 of assessed value.
Voters within Improvement District No. 27 of the District authorized
$100 million general obligation bonds in 1989. The District issued
$11,500,000 general obligation bonds in 1992 and refinanced the bonds
in 1998 and again in 2009. The District also has approximately $29
million in general obligation bonds authorized between 1960 and 1978
for various improvement districts throughout the District, but
unissued. General obligation bonds can only be issued under these
existing authorizations to the extent necessary to fund the
improvements specified by each ballot measure.
General obligation bonds generally are regarded as the broadest and
soundest security among tax-secured debt instruments. An unlimited-
tax pledge would enable a trustee to invoke mandamus to force the
District to raise the tax rate as much as necessary to pay off the
bonds. General obligation bonds have other credit strengths as well:
the property tax tends to be a steady and predictable revenue source,
and when a vote is required to issue them, bondholders have some
indication of taxpayers’ willingness to pay. General obligation bonds
carry the highest credit rating that a public agency can achieve and
therefore, the lowest interest cost. General obligation bonds
typically are issued to finance capital facilities and not for ongoing
operational or maintenance costs.
The District will use an objective analytical approach to determine
whether it can afford to assume new general obligation debt for the
improvement districts, or in the case of projects not approved by the
original ID 27 vote, prior to any submission of a general obligation
bond ballot measure to voters. This process will compare generally
accepted standards of affordability to the current values for the
District. These standards will include debt per capita, debt as a
percent of taxable value, debt service payments as a percent of
current revenues and current expenditures, and the level of
overlapping net debt of all local taxing jurisdictions. The process
will also examine the direct costs and benefits of the proposed
expenditures. The decision on whether or not to assume new debt will
be based on these costs and benefits, the current conditions of the
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municipal bond market, and the District’s ability to "afford" new debt
as determined by the aforementioned standards.
Revenue Bonds
Revenue bonds are limited-liability obligations that pledge net
revenues of the District to debt service. The net revenue pledge is
after payment of all operating costs. Since revenue bonds are not
generally secured by the full faith and credit of the District, the
financial markets require coverage ratios of the pledged revenue
stream and a covenant to levy rates and charges sufficient to produce
net income at some level in excess of debt service (a Rate Covenant).
Also there may be a test required to demonstrate that future revenues
will be sufficient to maintain debt service coverage levels after any
proposed additional bonds are issued. The District will strive to
meet industry and financial market standards with such ratios without
impacting the current rating. Annual adjustments to the District’s
rate structure may be necessary to maintain these coverage ratios.
The underlying credit of revenue bonds is judged on the ability of the
District’s existing rates to provide sufficient net income to pay debt
service and the perceived willingness of the District to raise rates
and charges in accordance with its Rate Covenant. Actual past
performance also plays a role in evaluating the credit quality of
revenue bonds, as well as the diversity of the customer base. Revenue
bonds generally carry a credit rating one or two investment grades
below a general obligation bond rating.
The District may use a debt structure called “Certificates of
Participation” to finance capital facilities. However, if the
certificates contain a pledge of net revenues and a Rate Covenant,
they are treated as essentially the same as a revenue bond.
Lease/Purchase Agreements
Over the lifetime of a lease, the total cost to the District will
generally be higher than purchasing the asset outright. As a result,
the use of lease/purchase agreements in the acquisition of vehicles,
equipment and other capital assets will generally be avoided,
particularly if smaller quantities of the capital asset(s) can be
purchased on a "pay-as-you-go" basis.
The District may utilize lease-purchase agreements to acquire needed
equipment and facilities. Criteria for such agreements should be that
the asset life is three years or more, the minimum value of the
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agreement is $50,000 and interest costs must not exceed the interest
rate earned by the District’s portfolio for the average of the past 6
months. Lease payments of this type are considered operating expenses
and would reduce net operating income available to pay any District
revenue bonds. There are no coverage requirements or rate covenants
associated with lease/purchase agreements.
State Water Loans
The State Water Resources Control Board makes certain funds available
to water districts throughout the State. These loans typically carry
a below-market rate of interest and are short term in nature. While
State loans should be incorporated into the District’s debt portfolio
for the financing of capital improvements, the payment of the loan
should not compromise the District’s ability to issue other planned
debt or cause the District to violate its rate covenants or make it
necessary for the District to increase rates to maintain existing rate
covenants.
Land Based Financing
The District may consider developer or property owner-initiated
applications requesting the formation of community facilities or
assessment districts and the issuance of bonds to finance eligible
District facilities necessary to serve newly developing commercial,
industrial and/or residential projects. Facilities will be financed
in accordance with the provisions of the Municipal Improvement Act of
1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community
Facilities Act of 1982.
Typically, the bonds issued would be used to prepay, in a lump-sum,
the District’s capacity fees with respect to a large tract of land
under development, or to finance in-tract infrastructure that will
eventually be dedicated to the District. The bonds are secured by a
special tax or assessment to be levied on property within the
boundaries established for the community facilities district
(sometimes known as a “Mello-Roos” district) or the assessment
district. If the District becomes the sponsoring public agency for
such financing district and the issuance of debt, the District will be
required to enter into a Funding, Construction and Acquisition
agreement for any of the facilities to be dedicated to the District
upon completion. This agreement governs the type of facilities to be
constructed with bond proceeds and how the facilities will be accepted
by the District.
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In some cases, the District may not be asked to be the sponsoring
agency for the formation of a financing district, rather, the
developer or property owner may approach a school district or a city
to be the sponsoring agency. Nonetheless, the property owner may want
to include lump-sum payment of District fees in the financing or
construction of certain facilities to be dedicated to the District
upon completion. In this case, if the District desired to
participate, the District would enter into a Joint Financing Agreement
with the sponsoring agency, again governing the type of facilities to
be constructed with bond proceeds and how the facilities will be
accepted by the District.
On a case-by-case basis, the Board shall make the determination as to
whether a proposed district will proceed under the provisions of the
Assessment Acts or the Mello-Roos Community Facilities Act. The Board
may confer with other consultants and the applicant to learn of any
unique district requirements, such as long-term development phasing,
prior to making any final determination.
All District and District consultant costs incurred in the evaluation
of new development, district applications and the establishment of
districts will be paid by the applicant(s) by advance deposits in
those instances where a party or parties other than the District have
initiated a proposed district. Expenses not legally reimbursable by
the financing district will be borne by the applicant. The District
may incur expenses for analyzing proposed assessment or community
facilities districts where the District is the principal proponent of
the formation or financing of the district.
Prior to the issuance of any land secured financing and in accordance
with State law, the Board will adopt policies and procedures with
criteria to be met before any special tax bonds or assessment district
bonds may be issued. These criteria include the qualifications of the
appraiser, the minimum value to lien ratio to be achieved prior to
issuing the land secured debt and the maximum tax to be levied on
different categories of property.
Internal Lending/Borrowing
Internal Lending/Borrowing allows the lending and/or borrowing of
funds between the Water (Potable and Recycled) and the Sewer Funds,
either direction to meet financial needs in lieu of the borrowing fund
obtaining outside debt.
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Upon recommendation by the Chief Financial Officer, the Board may
adopt a resolution allowing lending/borrowing arrangements between
Water and Sewer funds. To the extent any inter-fund lending/borrowing
is undertaken in anticipation of long-term financing, the District
shall adopt a Resolution of its intention to repay such funds out of
tax-exempt debt proceeds so as to meet the requirement of federal tax
law for such borrowing.
If the funds being loaned are restricted, prevailing law requires that
the Resolution that the Board adopts must include a finding by the
Board that the lending fund has sufficient money to lend and that the
borrowing fund can repay the loan without adversely affecting the
District’s credit ratings.
Internal Lending/Borrowing arrangements will be recorded in accordance
with GASB reporting requirements. The arrangement will include the
purpose, a debt repayment schedule and a periodic interest charge that
is equal to the District’s investment rate of return for that same
period. This ensures that the lending fund is recapturing earnings
that would have been otherwise realized had these funds been invested
in the District’s investment portfolio.
16.0: RATING AGENCY APPLICATIONS
The District may seek one or more ratings on all new issues that are
being sold in the public market. These rating agencies include, but
are not limited to, Fitch Investors Service, Moody’s Investors
Service, and Standard & Poor’s. When applying for a rating on an
issue over $1 million or more, the District shall make a formal
presentation of the finances and positive developments within the
District to the rating agencies. The District will report all
financial information to the rating agencies upon request. This
information shall include, but shall not be limited to, the District’s
Comprehensive Annual Financial Report (CAFR), and the Adopted
Operating and Capital Budget.
17.0: USE OF CREDIT ENHANCEMENT
Credit enhancement is a generic term that means any third-party
guarantee of debt service. Credit enhancement providers include
municipal bond insurance companies or financial institutions. The
purchase of credit enhancement allows the District’s bond issue to
carry the same credit rating as the credit provider. The District will
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seek to use credit enhancement when such credit enhancement proves
cost-effective. Selection of credit enhancement providers will be
subject to a competitive bid process using the District’s purchasing
guidelines, if applicable.
Fixed Rate Bonds
Credit enhancement for fixed rate bonds is obtained by the purchase of
bond insurance. If a commitment for bond insurance is obtained for a
particular issue, the District will estimate the annual debt service
for the issue based on current interest rates applicable to the credit
rating of the bond insurer. If the estimated debt service on this
basis is less than or equal to estimated debt service for the issue
based on interest rates for bonds with the District’s underlying or
stand-alone credit rating, the District will purchase the bond
insurance. Any intention of the District to prepay the debt ahead of
its scheduled maturity will be taken into account in the analysis.
Credit enhancement may be used to improve or establish a credit rating
on a District debt obligation even if such credit enhancement is not
cost effective if, in the opinion of the Chief Financial Officer, the
use of such credit enhancement meets the District’s debt financing
goals and objectives, such as, funding of a reserve fund for the
bonds.
Variable Rate Bonds
Credit enhancement for variable rate bonds is comprised of two
components: credit support and liquidity. The interest on variable
rate bonds is based on a short-term investment rate (usually 7 days).
Any investor can tender their bonds back to the District to be
repurchased on short notice (usually 7 days). Because of the short-
term nature of the investment, the securities that the District is
“competing” with for investors are AA-rated mutual funds. Therefore,
variable debt needs to have credit enhancement to achieve a comparable
AA rating, as well as liquidity support to provide the District with a
mechanism to purchase any bonds that are tendered before they can be
remarketed to new investors. A limited number of financial
institutions offer letters of credit that combine both credit support
and liquidity for one fee. An alternative is to purchase bond
insurance to provide credit support and enter into a separate purchase
agreement with a financial institution to provide liquidity. The
difference in cost between the two structures will be analyzed before
either alternative is selected for variable rate debt.
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Glossary: General Terms
The Fiscal Budget contains terminology that is unique to public finance and budgeting. The following
budget glossary provides assistance in understanding these terms.
ACRE-FOOT: The volume of water that will cover one acre to a depth of one foot. One acre-foot
equals 435.6 units or 325,850 gallons.
ACCRUAL: A charge for work that has been done but not yet invoiced, for which provision is made at
the end of a financial period.
ANNEXATION FEES: When water service is requested for land outside the boundaries of the District,
the land to be serviced must first be annexed. For sewer service the land must be annexed into an
improvement district within the District.
APPROPRIATIONS: The annual budget adopted by the District’s Board appropriates funds for
monitoring and control purposes, and serves as a financial plan.
ARBITRAGE: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate and
investing the proceeds at higher (often taxable) rates.
ASSETS: Resources owned or held by the District that have monetary value.
AVAILABILITY FEES: The District levies charges each year in developed areas to be used for general
purposes for construction of facilities. This fee is levied in undeveloped areas to provide a source of
funding for planning, mapping, and preliminary design of facilities to meet future development. Current
legislation provides that any availability charge in excess of $10.00 per acre shall be restricted only for
the purpose of constructing facilities in the improvement district in which it was assessed.
BALANCED BUDGET: A financial plan, for a specified period of time that matches all planned
revenues and expenditures with various services. This plan has sufficient sources of funds to support
the planned expenditures. The District uses a fiscal year beginning July 1 and ending June 30 for
budgetary and financial reporting purposes.
BOND: A written promise to pay a sum of money on a specific date at a specified interest rate. The
interest payments and the repayment of the principal are authorized in a District bond resolution. The
most common types of bonds are general obligation (GO) bonds and Certificates of Participation
(COPs). These are frequently used for construction of large capital projects such as buildings,
reservoirs, pipelines, and pump stations.
BUDGET BASIS: The budget and accounting basis for the District is recognized on an accrual basis.
Accrual basis means that revenues are recognized when earned and expenses are recognized when
incurred.
CAPACITY FEE: A connection fee is charged when a new meter is placed into service. This fee is a
contribution of capital to either reimburse existing customers for the available capacity in the existing
system, or to help finance planned future growth-related capacity improvements.
CAPACITY FEE REVENUES: These fees are earned by the Operating Budget as the Engineering
Department supports expansion functions.
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CAPACITY RESERVATION CHARGE: An MWD charge passed on by CWA to individual agencies. This
charge is based on the District’s peak water demand.
CAPITAL BUDGET: The portion of the annual budget that appropriates funds for the purchase of
capital equipment items and capital improvements. These expenditures are separated from regular
operating items, such as salaries, utilities, and office supplies. The Capital Budget includes funds for
capital equipment purchases over $10,000, such as vehicles, furniture, machinery, computer systems,
and special tools. The capital budget also includes funds for infrastructure related items over $20,000
(as explained below) which are distinguished from operating items according to their value and
projected useful life.
CAPITAL EQUIPMENT: Fixed assets such as vehicles, marine equipment, computers, furniture,
technical instruments, etc. which have a life expectancy of more than two years and a value over
$10,000.
CAPITAL EXPENDITURE: Capital expenditure or capital expense is an expense where the benefit
continues over a long period, rather than being exhausted in a short period. Such expenditure is of a
non-recurring nature and results in acquisition of permanent assets.
CAPITAL IMPROVEMENT PROGRAM: A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
CLASS OF SERVICE: All customers are classified based on the type of service used. For example, the
water rate per unit is determined by a classification such as residential versus business.
COVID-19: Illness caused by a novel coronavirus which was first identified amid an outbreak of
respiratory illness cases in Wuhan City, Hubei Province, China.
CWA: The County Water Authority was organized in 1944 under the State County Water Authority Act
for the primary purpose of importing Colorado River water to augment the local water supplies of the
Authority's member agencies. The Authority purchases water from MWD which imports water from the
Colorado River and the State Water Project.
DEBT COVERAGE RATIO: The ratio of net revenue to annual interest and principal payments on debt.
DEBT SERVICE: The District's obligation to pay the principal and interest of bonds and other debt
instruments according to a predetermined payment schedule.
DEPRECIATION: An expense recorded to allocate a tangible asset’s cost over its useful life.
DESALINATION: The removal of dissolved minerals (including salts) from seawater or brackish water.
Engineered water desalination processes, which produce potable water from seawater or brackish
water, have become important because many regions throughout the world suffer from water
shortages.
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ENERGY CHARGE: Water customers are charged an energy pumping charge based on the quantity of
water used and the elevation to which the water has been lifted to provide service. All water
customers are in one of 29 zones based on elevation.
ENTERPRISE FUND: Fund that provides goods or services to the public for a fee that makes the entity
self-supporting.
ENTERPRISE RESOURCE PLANNING: Systems with a shared database that supports multiple
functions used by different business units.
EXPENDITURES/EXPENSES: These terms refer to the outflow of funds paid or to be paid for an asset,
goods or services obtained regardless of when actually paid for. (Note: An encumbrance is not an
expenditure). An encumbrance reserves funds to be expended in a future period.
FINANCIAL AUDIT: Official financial examination of the District’s accounts.
FIRE SERVICE: Water service is provided by the District solely for use in fire hydrants or fire sprinkler
systems from lines or laterals connected to the District’s water mains.
FISCAL YEAR: Twelve-month term designating the beginning and ending period for recording
financial transactions. The District has specified July 1 to June 30 as its fiscal year.
FUND: An account used to track the collection and use of monies for a specifically defined purpose.
FUND BALANCE: The current funds on hand resulting from the net historical collection and use of
monies. The difference between assets and liabilities reported in the District’s Operating Fund plus
residual equities or balances and changes therein, from the result of operations.
GALLONS PER CAPITA PER DAY: The total number of gallons used by the city divided by the
population, divided by the number of days.
GENERAL FUND: The District’s general fund is an enterprise fund – one for each of the District’s three
business lines Potable, Recycled and Sewer services. Each is an accounting entity with a self-
balancing set of accounts established to record the financial position and results that pertain to a
specific activity. The activities of enterprise funds closely resemble those of ongoing businesses in
which the purpose is to conserve and add to basic resources while meeting operating expenses from
current revenues. Enterprise funds account for operations that provide services on a continuous basis
and are substantially financed by revenues derived from user charges.
GRANTS: Contributions or gifts of cash or other assets from another governmental agency to be used
or expended for a specified purpose, activity, or facility. Capital grants are restricted by the grantor for
the acquisition and/or construction of fixed assets. Operating grants are restricted by the grantor for
operating purposes or may be used for either capital or operating purposes at the discretion of the
grantee.
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INTEREST INCOME: Earnings from the investment portfolio. Per District Policy Number 25, interest
income will be allocated to improvement districts each month based upon each fund’s prior month-
ending balance.
LATE CHARGES/PENALTIES: Charges and penalties are imposed on customer accounts for late
payments, returned payments, and other infringement of the District’s Code of Ordinances.
METER AND LATERAL FEES: Charge includes the material costs for the meter, meter box, and the
labor cost for installation to connect a new service to the distribution system.
METROPOLITAN WATER DISTRICT (MWD) STANDBY CHARGES: Revenue generated from property
taxes by MWD to cover the Readiness-to-Serve Charge. This charge pays for the debt service for
construction projects necessary to meet reliability and quality needs. The RTS Charge was adopted in
1996.
MWD AND CWA FIXED SYSTEM CHARGES: These pass-through charges are calculated to recover
the MWD’s and CWA’s fixed annual costs including the construction, operation and maintenance of
aqueducts, and emergency storage projects. These fixed charges are based on the size of the meter.
NET ASSETS: The difference between total assets and total liabilities. Increases or decreases in net
assets may serve as a useful indicator of whether the financial position of the District is strengthening
or weakening.
1% PROPERTY TAX: In 1978, Proposition 13 limited general levy property tax rates for all taxing
authorities to a total rate of 1% of full cash value. Subsequent legislation, AB 8, established that the
receipts from the 1% levy were to be distributed to taxing agencies according to approximately the
same proportions received prior to Proposition 13. Funds received are to be used for facilities
construction or debt service on bonds sold to build facilities.
OPERATING BUDGET: The portion of the budget that pertains to daily operations that provide basic
governmental services. The operating budget contains appropriations for such expenditures as
personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major capital
plant or equipment which are budgeted for separately in the Capital Budget.
READINESS-TO-SERVE CHARGE: Adopted by MWD in Fiscal Year 1996. The charge serves as a
foundation of fixed revenue for MWD. It covers the new debt service for construction projects
necessary to meet reliability and quality needs of current water-users as opposed to new customers.
RECYCLED WATER RATES: Non-potable water service provided from water produced by the District’s
reclamation plant and other non-potable sources. Recycled water is not used for domestic purposes
and all uses must comply with federal, state and local laws and regulations regarding the use of
recycled water.
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RESERVE FUND: The District maintains Reserve Funds per the District’s policy for both designated
and restricted balances. Designated Reserve Funds are “general use” funds designated by the Board.
Restricted reserves are those that are legally set aside for a particular purpose and cannot be used for
any other purpose.
REVENUE: Monies that the District receives as income. It includes such items as water sales and
sewer fees. Estimated revenues are those expected to be collected during the fiscal year.
SYSTEM CHARGE: Each water service customer pays a monthly system charge for water system
replacement, maintenance and operation expenses. The charge is based on the size of the meter and
class of service.
TAXES: California Water Code Section 72091 authorizes the District, as a municipal water district, to
levy ad valorem property taxes which are equal to the amount required to make annual payments for
principal and interest on general obligation bonds approved by the voters prior to July 1, 1978.
UNIT: A unit of water is 100 cubic feet or 748 gallons of water.
WATER RATES: Rates vary among classes of service. The water rates for residential customers use
an accelerated block structure. As more units are consumed, a higher unit rate is charged. Effective in
2009, all non-residential customers are charged for water based on a tiered rate structure in which
water rates are based on meter size and amount of units consumed.
WATER YEAR: The 12-month period for which precipitation totals are measured spanning October 1
through September 30 of the following year.
WORKING CAPITAL: A financial measure which represents available operating liquidity. The
calculation is current assets minus current liabilities.
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ACTIVE INVESTING: Active investors will purchase investments and continuously monitor their activity,
often looking at the price movements of their stocks many times a day, in order to exploit profitable
conditions. Typically, active investors are seeking short term profits.
AD VALOREM TAX: A tax calculated “according to the value” of property. Such a tax is based on the
assessed valuation of tangible personal property. In most jurisdictions, the tax is a lien on the property
enforceable by seizure and sale of the property. General restrictions, such as overall restrictions on
rates, or the percent of charge allowed, sometimes apply. As a result, ad valorem taxes often function
as the balancing element in local budgets.
ADVANCE REFUNDING: A procedure whereby outstanding bonds are refinanced by the proceeds of
a new bond issue prior to the date on which outstanding bonds become due or are callable. Typically,
an advance refunding is performed to take advantage of interest rates that are significantly lower than
those associated with the original bond issue. At times, however, an advance refunding is performed
to remove restrictive language or debt service reserve requirements required by the original issue.
AGENCIES: Federal agency securities and/or Government-sponsored enterprises.
AMORTIZATION: The planned reduction of a debt obligation according to a stated maturity or
redemption schedule.
ANNEXATION FEES: When water service is requested for land outside the boundaries of the District,
the land to be serviced must first be annexed. For sewer service the land must be annexed into an
improvement district within the District.
ARBITRAGE: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate and
investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax-
exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended.
ASSESSED VALUATION: The appraised worth of property as set by a taxing authority through
assessments for purposes of ad valorem taxation.
ASSETS: Resources owned or held by Otay Water District that have monetary value.
AVAILABILITY FEES: The District levies charges each year in developed areas to be used for
upgrades, betterment, or replacement and in undeveloped areas to provide a source of funding for
planning, mapping, and preliminary design of facilities to meet future development. Current legislation
provides that any availability charge in excess of $10.00 per acre shall be used only for the purpose of
the improvement district for which it was assessed.
BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The
accepting institution guarantees payment of the bill, as well as the issuer.
BASIS POINT: One one-hundredth of one percent.
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BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment
portfolio. A benchmark should represent a close correlation to the level of risk and the average
duration of the portfolio’s investments.
BOND: A written promise to pay a sum of money on a specific date at a specified interest rate. The
interest payments and the repayment of the principal are authorized in a District bond resolution. The
most common types of bonds are General Obligation (GO) bonds and Certificates of Participation
(COPs). These are frequently used for construction of large capital projects such as buildings,
reservoirs, pipelines and pump stations.
BOND COUNSEL: An attorney (or firm of attorneys) retained by the issuer to give a legal opinion
concerning the validity of the securities. The bond counsel’s opinion usually addresses the subject of
tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing
resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation.
BOND INSURANCE: A type of credit enhancement whereby a monocline insurance company
indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to pay
principal and interest in-full and on-time, investors may call upon the insurance company to do so.
Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company
receives an up-front fee, or premium, when the policy is issued.
BROKER/DEALER: Any individual or firm in the business of buying and selling securities for itself and
others. Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer executes
orders on behalf of his/her client. When acting as a dealer, a broker/dealer executes trades for his/her
firm's own account. Securities bought for the firm's own account may be sold to clients or other firms,
or become a part of the firm's holdings.
CALL OPTION: A contract through which the owner is given the right but is not obligated to purchase
the underlying security or commodity at a fixed price within a limited time frame.
CAP: A ceiling on the interest rate that would be paid.
CAPITAL LEASE: The acquisition of a capital asset over time rather than merely paying rent for
temporary use. A lease-purchase agreement, in which provision is made for transfer of ownership of
the property for a nominal price at the scheduled termination of the lease, is referred to as a capital
lease.
CERTIFICATE OF DEPOSIT (CD): A short or medium term, interest bearing, FDIC insured debt
instrument offered by banks and savings and loans. Money removed before maturity is subject to a
penalty. CDs are a low risk, low return investment, and are also known as “time deposits”, because the
account holder has agreed to keep the money in the account for a specified amount of time,
anywhere from a few months to several years.
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CERTIFICATE OF PARTICIPATION: A financial instrument representing a proportionate interest in
payments such as lease payments by one party (such as the District acting as a lessee) to another
party (often a trustee).
CAPITAL EQUIPMENT: Fixed assets such as vehicles, marine equipment, computers, furniture,
technical instruments, etc. which have a life expectancy of more than two years and a value over
$10,000.
CAPITAL IMPROVEMENT PROGRAM (CIP): A long-range plan of the District for the construction,
rehabilitation and modernization of the District-owned and operated infrastructure.
COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure
repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.
COMMERCIAL PAPER: An unsecured short-term promissory note, issued by corporations, with
maturities ranging from 2 to 270 days.
COMPETITIVE SALE: The sale of securities in which the securities are awarded to the bidder who
offers to purchase the issue at the best price or lowest cost.
COMPREHENSIVE ANNUAL FINANCIAL REPORT: The official annual report for the Otay Water
District. It includes detailed financial information prepared in conformity with generally accepted
accounting principles (GAAP). It also includes supporting schedules necessary to demonstrate
compliance with finance-related legal and contractual provisions, extensive introductory material, and
a detailed statistical section.
CONTINUING DISCLOSURE: The requirement by the Securities and Exchange Commission for most
issuers of municipal debt to provide current financial information to the informational repositories for
access by the general marketplace.
COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the
bond’s face value. (b) A certificate attached to a bond evidencing interest due on a set date.
CWA: The County Water Authority was organized in 1944 under the State County Water Authority Act
for the primary purpose of importing Colorado River water to augment the local water supplies of the
Authority's member agencies. The Authority purchases water from the Metropolitan Water District of
Southern California (MWD) which imports water from the Colorado River and the State Water Project.
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for
his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DEBT SERVICE: The District's obligation to pay the principal and interest of bonds and other debt
instruments according to a predetermined payment schedule.
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DEFEASANCE: Providing for payment of principal of premium, if any, and interest on debt through the
first call date or scheduled principal maturity in accordance with the terms and requirements of the
instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing
an irrevocable escrow funded with only cash and U.S. Government obligations.
DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus
payment and delivery versus receipt. Delivery versus payment is delivery of securities with an
exchange of money for the securities. Delivery versus receipt is delivery of securities with an
exchange of a signed receipt for the securities.
DERIVATIVE: A financial product that is based upon another product. Generally, derivatives are risk
mitigation tools.
DISCOUNT: The difference between a bond’s par value and the price for which it is sold when the
latter is less than par.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at a
discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills.
DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent
returns.
EXPENDITURES/EXPENSES: These terms refer to the outflow of funds paid or to be paid for an asset,
goods, or services obtained regardless of when actually paid for. (Note: An encumbrance is not an
expenditure). An encumbrance reserves funds to be expended in a future period.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various
classes of institutions and individuals, e.g., S&L’s, small business firms, students, farmers, farm
cooperatives, and exporters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures deposits in
member banks and thrifts.
FEDERAL FARM CREDIT BANK (FFCB): The Federal Farm Credit Bank system supports agricultural
loans and issues securities and bonds in financial markets backed by these loans. It has consolidated
the financing programs of several related farm credit agencies and corporations.
FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open-market operations.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION (FAMC OR FARMER MAC): A stockholder
owned, publicly-traded corporation that was established under the Agricultural Credit Act of 1987,
which added a new Title VIII to the Farm Credit Act of 1971. Farmer Mac is a government sponsored
enterprise, whose mission is to provide a secondary market for agricultural real estate mortgage loans,
rural housing mortgage loans, and rural utility cooperative loans. The corporation is authorized to
purchase and guarantee securities. Farmer Mac guarantees that all security holders will receive timely
payments of principal and interest.
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Glossary: Policy Terms
FEDERAL HOME LOAN BANK (FHLB): Government sponsored wholesale banks (currently 12 regional
banks), which lend funds and provide correspondent banking services to member commercial banks,
thrift institutions, credit unions and insurance companies.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC OR FREDDIE MAC): A stockholder
owned, publicly traded company chartered by the United States federal government in 1970 to
purchase mortgages and related securities, and then issue securities and bonds in financial markets
backed by those mortgages in secondary markets. Freddie Mac, like its competitor Fannie Mae, is
regulated by the United States Department of Housing and Urban Development (HUD).
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA OR FANNIE MAE): FNMA, like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal
corporation working under the auspices of the Department of Housing and Urban Development
(HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae
is a private stockholder-owned corporation. The corporation’s purchases include a variety of
adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s securities are
also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders
will receive timely payment of principal and interest.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and
consisting of a seven-member Board of Governors in Washington, D.C., 12 regional banks and about
5,700 commercial banks that are members of the system.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA): An independent, not-for-profit
organization authorized by Congress to protect America’s investors by making sure the securities
industry operates fairly and honestly. It is dedicated to investor protection and market integrity through
effective and efficient regulation of the securities industry. FINRA is the successor to the National
Association of Securities Dealers, Inc. (NASD).
FINANCIAL OBLIGATION: A debt obligation, lease, guarantee, derivative instrument, or monetary
obligation resulting from a judicial, administrative, or arbitration proceeding, but not including
municipal securities as to which a final official statement has been provided to the MSRB.
FUND: An account used to track the collection and use of monies for a specifically defined purpose.
FUND BALANCE: The current funds on hand resulting from the historical collection and use of monies.
The difference between assets and liabilities reported in the District’s Operating Fund plus residual
equities or balances and changes therein, from the results of operations.
GENERAL OBLIGATION BONDS: Debt that is secured by a pledge of the ad valorem taxing power of
the issuer. Also known as a full faith and credit obligation.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA OR GINNIE MAE): A government
owned agency which buys mortgages from lending institutions, securitizes them, and then sells them
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Glossary: Policy Terms
to investors. Because the payments to investors are guaranteed by the full faith and credit of the U.S.
Government, they return slightly less interest than other mortgage-backed securities.
INTEREST INCOME: Earnings from the investment portfolio. Per District Policy Number 25, interest
income will be allocated to the various funds each month based upon each fund’s prior month-
ending balance.
INTEREST-ONLY STRIPS: A mortgage-backed instrument where the investor receives only the interest,
no principal, from a pool of mortgages. Issues are highly interest rate sensitive, and cash flows vary
between interest periods. Also, the maturity date may occur earlier than that stated if all loans within
the pool are pre-paid. High prepayments on underlying mortgages can return less to the holder than
the dollar amount invested.
INTERNAL LENDING/BORROWING: An Inter-fund lending arrangement between Water and Sewer
funds.
INVERSE FLOATER: A bond or note that does not earn a fixed rate of interest. Rather, the interest rate
is tied to a specific interest rate index identified in the bond/note structure. The interest rate earned by
the bond/note will move in the opposite direction of the index. An inverse floater increases the market
rate risk and modified duration of the investment.
LATE CHARGES/PENALTIES: Charges and penalties are imposed on customer accounts for late
payments, returned payments, and other infringements of the District’s Code of Ordinances.
LEVERAGE: Investing with borrowed money with the expectation that the interest earned on the
investment will exceed the interest paid on the borrowed money.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a
substantial loss of value. In the money market, a security is said to be liquid if the spread between bid
and asked prices is narrow and reasonable size can be done at those quotes.
LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions
that are placed in the custody of the State Treasurer for investment and reinvestment.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the
parties to repurchase/reverse repurchase agreements that establish each party’s rights in the
transactions. A master agreement will often specify, among other things, the right of the buyer-lender
to liquidate the underlying securities in the event of default by the seller borrower.
MATURITY: The date upon which the principal or stated value of an investment becomes due and
payable.
MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’
acceptances, etc.) are issued and traded.
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Glossary: Policy Terms
MONEY MARKET MUTUAL FUNDS: An open-end mutual fund which invests only in money markets.
These funds invest in short term (one day to one year) debt obligations such as Treasury bills,
certificates of deposit, and commercial paper.
MUNICIPAL ADVISOR: A person that provides advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products or the issuance of municipal securities, including
advice with respect to the structure, timing, terms, and other similar matters concerning such financial
products or issues.
MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB): The MSRB, comprised of representatives
from investment banking firms, dealer bank representatives, and public representatives, is entrusted
with the responsibility of writing rules of conduct for the municipal securities market.
MUTUAL FUNDS: An open-ended fund operated by an investment company which raises money from
shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual
funds raise money by selling shares of the fund to the public. Mutual funds then take the money they
receive from the sale of their shares (along with any money made from previous investments) and use
it to purchase various investment vehicles, such as stocks, bonds, and money market instruments.
NEGOTIATED SALE: A sale of securities in which the terms of sale are determined through negotiation
between the issuer and the purchaser, typically an underwriter, without competitive bidding.
OFFICIAL STATEMENT: A document published by the issuer that discloses material information on a
new issue of municipal securities including the purposes of the issue, how the securities will be repaid,
and the financial, economic and social characteristics of the issuing government. Investors may use
this information to evaluate the credit quality of the securities.
1% PROPERTY TAX: In 1978, Proposition 13 limited general levy property tax rates for all taxing
authorities to a total rate of 1% of full cash value. Subsequent legislation, AB 8, established that the
receipts from the 1% levy were to be distributed to taxing agencies according to approximately the
same proportions received prior to Proposition 13.
OPERATING BUDGET: The portion of the budget that pertains to daily operations that provide basic
governmental services. The operating budget contains appropriations for such expenditures as
personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major capital
plant or equipment which is budgeted for separately in the Capital Budget. The Operating Budget
also identifies planned non-operating revenues and expenses.
OPTION: A derivative contract. There are two primary types of options (see Put Option and Call
Option). An option is considered a wasting asset because it has a stipulated life to expiration and may
expire worthless. Hence, the premium could be wasted.
OPTIONAL REDEMPTION: The redemption of an obligation prior to its stated maturity, which can only
occur on dates specified in the bond indenture.
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Glossary: Policy Terms
OVERLAPPING DEBT: The legal boundaries of local governments often overlap. In some cases, one
unit of government is located entirely within the boundaries of another. Overlapping debt represents
the proportionate share of debt that must be borne by one unit of government because another
government with overlapping or underlying taxing authority issued its own bonds.
PAR VALUE: The face value or principal amount of a security.
PASSIVE INVESTING: An investment strategy involving limited ongoing buying and selling actions.
Passive investors will purchase investments with the intention of long-term appreciation and limited
maintenance, and typically don’t actively attempt to profit from short term price fluctuations. Also
known as a buy-and-hold strategy.
PAY-AS-YOU-GO: To pay for capital improvements from current resources and fund balances rather
than from debt proceeds.
PRIMARY DEALER: A designation given by the Federal Reserve System to commercial banks or
broker/dealers who meet specific criteria, including capital requirements and participation in Treasury
auctions. These dealers submit daily reports of market activity and positions and monthly financial
statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary
dealers include Securities and Exchange Commission registered securities broker/dealers, banks, and
a few unregulated firms.
PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary,
such as a trustee, may invest money only in a list of securities selected by the custody state—the so-
called legal list. In other states the trustee may invest in a security if it is one which would be bought
by a prudent person of discretion and intelligence who is seeking a reasonable income and
preservation of capital.
PUBLIC SECURITIES ASSOCIATION (PSA): A trade organization of dealers, brokers, and bankers who
underwrite and trade securities offerings.
PUT OPTION: A contract that grants to the purchaser the right but not the obligation to exercise.
QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the
payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has
segregated for the benefit of the commission eligible collateral having a value of not less than its
maximum liability and which has been approved by the Public Deposit Protection Commission to hold
public deposits.
RANGE NOTE: An investment whose coupon payment varies and is dependent on whether the
current benchmark falls within a pre-determined range.
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Glossary: Policy Terms
RATE COVENANT: A covenant between the District and bondholders, under which the District agrees
to maintain a certain level of net income compared to its debt payments, and covenants to increase
rates if net income is not sufficient to meet such level.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market
price. This may be the amortized yield to maturity on a bond the current income return.
REFUNDING: A procedure whereby an issuer refinances an outstanding bond issue by issuing new
bonds.
REGIONAL DEALER: A securities broker/dealer, registered with the Securities & Exchange
Commission (SEC), who meets all of the licensing requirements for buying and selling securities.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor
with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect
lends the “seller” money for the period of the agreement, and the terms of the agreement are
structured to compensate him for this. Dealers use RP extensively to finance their positions.
Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves.
REVENUE: Monies that the District receives as income. It includes such items as water sales and
sewer fees. Estimated revenues are those expected to be collected during the fiscal year.
REVENUE BONDS: A bond which is payable from a specific source of revenue and to which the full
faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from
identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt
service from any other source. Pledged revenues often are derived from the operation of an
enterprise. Generally, no voter approval is required prior to issuance.
RUSSELL SQUARE: A sewer lift station constructed in 1983 that serves four properties in the Russell
Square Development.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables
of all types and descriptions are held in the bank’s vaults for protection.
SECONDARY MARKET: A market made for the purchase and sale of outstanding securities issues
following their initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
SEC RULE 15C3-1: See Uniform Net Capital Rule.
SPECIAL ASSESSMENTS: A charge imposed against property or parcel of land that receives a special
benefit by virtue of some public improvement that is not, or cannot be enjoyed by the public at large.
Special assessment debt issues are those that finance such improvements and are repaid by the
assessments charged to the benefiting property owners.
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Glossary: Policy Terms
STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, FAMCA,
etc.), and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating
rate coupons, derivative-based returns) into their debt structure. Their market performance is
impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the
shape of the yield curve.
SWAP: A customized financial transaction between two or more counterparties who agree to make
periodic payments to one another. Swaps cover interest rate, equity, commodity and currency
products. They can be simple floating for fixed exchanges or complex hybrid products with multiple
option features.
SYSTEM FEES: Each water service customer pays a monthly system charge for water system
replacement, maintenance, and operation expenses. The charge is based on the size of the meter and
class of service.
TAX COLLECTION FOR BOND DEBT: California Water Code Section 72091 authorizes the District, as a
municipal water district, to levy ad valorem property taxes which are equal to the amount required to
make annual payments for principal and interest on General Obligation bonds approved by the voters
prior to July 1, 1978.
TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the
national debt. Most bills are issued to mature in three months, six months, or one year.
TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of
the U.S. Government and having initial maturities of more than 10 years.
TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities from two to 10 years.
TRUE INTEREST COST (TIC): A method of calculating the overall cost of a financing that takes into
account the time value of money. The TIC is the rate of interest that will discount all future payments
so that the sum of their present value equals the issue proceeds.
UNDERWRITER: The term used broadly in the municipal market, to refer to the firm that purchases a
securities offering from a governmental issuer.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms
as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to
liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money
owed to a firm, including margin loans and commitments to purchase securities, one reason new
public issues are spread among members of underwriting syndicates. Liquid capital includes cash
and assets easily converted into cash.
UNIT: A Unit of water is 100 cubic feet or 748 gallons of water.
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Glossary: Policy Terms
WATER RATES: Rates vary among classes of service and are measured in Units. The water rates for
residential customers are based on an accelerated block structure. As more Units are consumed, a
higher Unit rate is charged. Effective in 2009, all non- residential customers are charged for water
based on a tiered rate structure in which water rates are based on meter size and amount of Units
consumed.
YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME
YIELD is obtained by dividing the current dollar income by the current market price for the security. (b)
NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus
any discount from par in purchase price, with the adjustment spread over the period from the date of
purchase to the date of maturity of the bond.
YIELD CURVE: Refers to the graphical or tabular representation of interest rates across different
maturities. The presentation often starts with the shortest-term rates and extends towards longer
maturities. It reflects the market’s views about implied inflation/deflation, liquidity, economic and
financial activity, and other market forces.
246
AB Assembly Bill
AF Acre-Foot/Feet
AMR Automated Meter Reader/Reading
AWWA American Water Works Association
BABS Build America Bonds
CALPERS California Public Employees' Retirement System
CCV City of Chula Vista
CEQA California Environmental Quality Act
CIP Capital Improvement Program/Project
COPS Certificates of Participation
CSD City of San Diego
CSDA California Special Districts Association
CSMFO California Society of Municipal Finance Officers
CWA County Water Authority (San Diego)
EDU Equivalent Dwelling Unit
ERP Enterprise Resource Planning
FTE Full-time Equivalent
FY Fiscal Year
GAAP Generally Accepted Accounting Principles
GASB Government Acounting Standards Board
GF General Funds
GFOA Government Finance Officers Association
GIS Geographic Information System
GO General Obligation (bonds)
GPCD Gallons Per Capita Per Day
GPM Gallons Per Minute
HCF Hundred Cubic Foot
HR Human Resources
ID Improvement District
IID Imperial Irrigation District
IT Information Technology
LAIF Local Agency Investment Fund
MG Million Gallons
MGD Million Gallons per Day
MOU Memorandum of Understanding
MWD Metropolitan Water District
NIMS National Incident Management System
O&M or O/M Operations and Maintenance
OPEB Other Post Employee Benefits
OWD Otay Water District
PL Pipeline
PRS Pressure Reducing Station
List of Acronyms
247
List of Acronyms
PS Pump Station
RWCWRF Ralph W. Chapman Water Recycling Facility
SANDAG San Diego Association of Governments
SB Senate Bill
SBWRP South Bay Water Reclamation Plant
SCADA Supervisory Control and Data Acquisition
SWRCB State Water Resources Control Board
248
Index
Administrative Expenditures 74,88,97,116
Awards xv-xviii
Budget Basis 8
Budget Calendar 9-11
Budget Control and Jurisdiction 7
Budget Guide 1-2
Budget Process 6-7
Budget Summary 37
Capital Budget Narrative 153-155
Capital Purchases FY 2024 162
CIP Justification and Impact on Operating Budget 161
CIP Reserve Funds 156
Classification of Water Sales 64,80
Contract/Temporary Employees 115
Current Economic Conditions 17-18
Debt Management 55-56
Debt Policy 210-229
Demographics 13
Department Budgets:
Administrative Services 129-135
Board of Directors 120-122
Engineering 148-152
Finance 136-140
General Manager 123-128
Water Operations 141-147
Departmental Operating Budget Narrative 107-108
Director’s Division Boundaries 122
District Formation 4
Economic Outlook 18-19
Five-Year Forecast 51-52
Formula for Sewer Rates 99-100
Fund Balance Summary by Fund 46
Fund Balances Forecast 54
Fund Structure 8
Future, The 19-21
General Fund Forecast 53
General Fund Revenues, Expenditures and Transfers 37-43, 45
General Expense 106
General Revenues 105
General Revenues and Expenditures Narrative 103-104
249
Index
Glossary of General Terms 231-235
Glossary of Policy Terms 236-246
Impact of Current Debt Levels 57
Investment Policy 201-209
Labor and Benefits 110
Labor and Benefits by Fund 111
Letter of Transmittal v-xiv
List of Acronyms 247-248
Materials and Maintenance Expenditures 75,89,98,117
Meter Fees 70,84
Mission Statement, Statement of Values 3
MWD and CWA Fixed Fees (pass-through) 69
Operating Budget Summary 63,79,92
Operating Budget Summary by System 44
Operating Budget Summary – General Fund 42-44
Operating Expenditures by Department 118
Operating Expenditures by Object 119
Organizational Structure 5
Position Count by Department 112-115
Potable Narrative 61-63
Power Costs 73,87,96
Projected Interest Payments by Debt Issuance 60
Projected Principal Payments by Debt Issuance 59
Recycled Narrative 77-78
Reserve Policy 165-200
Resolution 4433 xix-xx
Revenue History 71,85,95
Revenues and Expenditures by Fund 48-49
Revenues and Expenditures by Type 47
San Diego Rainfall 17
Schedule of Outstanding Debt 58
Service Area 4
Service Area Assessed Valuation Fees 13
Service Area Maps 76,90,101
Sewer Charges Summary by Customer Class 93
Sewer Narrative 91
Sewer Rate Comparison 16
Six-Year CIP Projects Summary by Fund ($1,000s) 157
Six-Year CIP Projects Summary by Source ($1,000s) 157
Six-Year CIP Projects by Source and Fund ($1,000s) 158-160
250
Index
Statement of Values 3
Strategic Plan 23-36
Summary of Financial Policies 163-164
System Charges 67-68,82,94
Table of Contents i-iv
Ten Largest Customers 14
Ten Principal Taxpayers 14
Unit Sales History and Meter Count by Customer Class 66,83
Water Purchases - Recycled 86
Water Purchases and Related Costs - Potable 72
Water Rate Comparison- Member Agency Water Rates 15
Water Sales Summary by Meter Size 81
Water Sales Summary by Customer Class 65
251