AGENDA BOARD OF DIRECTORS REGULAR MEETING …

AGENDA BOARD OF DIRECTORS REGULAR MEETING

WEDNESDAY, FEBRUARY 6, 2013 – 3:30 P.M. Board Room, 9300 Fanita Parkway, Santee, CA

• CALL TO ORDER

• PLEDGE OF ALLEGIANCE

• OPPORTUNITY FOR PUBLIC COMMENT Opportunity for members of the public to address the Board (Gov. Code 54954.3)

• APPROVAL OF MINUTES Recommendation: Approve the minutes of the Regular Board meeting of January 16, 2013.

• ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED ON THE AGENDA

• CONSENT AGENDA Items are considered to be routine and will be acted upon by a single motion without discussion, unless a Board Member, staff, or the public request a specific item be removed from the consent agenda for discussion.

CONSENT ITEMS 1. RESOLUTION RECOGNIZING 10-YEAR EMPLOYEE

Recommendation: Adopt Resolution recognizing Phillip Stevens, upon completion of 10 years of service with the District.

2. NEW VACTOR 2110 PLUS JET RODDER PURCHASE

Recommendation: Authorize purchase of a new Vactor 2110 Plus Jet Rodder on a Mack Chassis model number MP8-425M supplied by Haaker Equipment Company for a total of $430,509.60.

• ACTION AGENDA Items on the Action Agenda call for discussion and action by the Board. All items are placed on the Agenda so that the Board may discuss and take action on the item if the Board is so inclined.

[February 6, 2013] Page 2 of 4 [Agenda]

ACTION ITEMS 3. PUBLIC FINANCIAL MANAGEMENT (PFM) DISCUSSION ON LOCAL AGENCY INVESTMENT FUND (LAIF)

Recommendation: 1. Hear report by Richard Babbe from PFM. 2. Direct staff to make changes to the Investment Policy if desired.

4. TERMINATE THE JOINT WATER AGENCIES (JWA) NATURAL COMMUNITY

CONSERVATION PLAN (NCCP) – JN 98046 Recommendation:

1. Authorize staff to move forward with the process to terminate the NCCP. 2. Authorize General Manager to sign joint letter from the four JWA Partners

notifying the United States Fish and Wildlife Services (USFWS) and California Department of Fish and Game (CDFG) of the termination.

5. RULES AND REGULATIONS – SECTION 8 UPDATES AND REVISIONS

Recommendation: 1. Hear presentation summarizing proposed revision to the District’s Rules and

Regulations. 2. Adopt ordinance amending Rules and Regulations, Section 8, as set forth in

Exhibit A. 6. SEMI-ANNUAL REPORT ON FIVE YEAR PLAN, FOR THE 6 MONTHS ENDING

DECEMBER 31, 2012 Recommendation: 1. Hear Staff Report; no action required.

7. AUDITED FINANCIAL STATEMENTS FOR FYE JUNE 30, 2012 Recommendation: 1. Hear White Nelson Diehl Evans LLP’s presentation of Audited Financial

Statements for FYE June 30, 2012; and 2. Accept Audited Financial Statements for FYE June 30, 2012.

• REPORTS The following items are reports and are placed on the Agenda to provide information to the Board and the public. There is no action called for on these items. The Board may engage in discussion upon which a specific subject matter is identified but may not take any action other than to place the matter on a future agenda.

8. BOARD REPORTS Recommendation: Hear report from Directors for the following meetings:

A. President’s Report B. County Water Authority (CWA) Board of Directors Meeting C. Metro Commission/Metro Wastewater JPA/Metro TAC Meeting D. Other meetings/conferences/events attended by Directors per AB1234

(Council of Water Utilities, CSDA San Diego Chapter, etc.)


• DIRECTORS’ COMMENTS Directors’ comments are to be related to District business which may be of interest to the Board. They are placed on the agenda to enable individual Board Members to convey information to the Board and the Public. There is to be no discussion or action taken on comments made by Board Members.

• DISTRICT COUNSEL’S REPORT 9. GENERAL MANAGER’S REPORT

Recommendation: Receive General Manager’s report covering the following: operations, finances, projects, legislation, and other information.

10. INFORMATIONAL REPORTS Recommendation: Review, note, and file the following reports:

A. Monthly Finance & Treasurer’s Report for December 31, 2012 B. Notice of Completion – Sky Ranch Reservoir and Pump Station

• CLOSED SESSION At any time during the regular session, the Board may adjourn to closed session to consider litigation, or discuss with Legal Counsel matters within the attorney-client privilege, subject to the appropriate disclosures.

11. CLOSED SESSION

A. Conference with Legal Counsel – Existing Litigation (Gov. Code 54956.9 (a)) 1) Viejas Band of Kumeyaay Indians v. Padre Dam Municipal Water District

San Diego Superior Court Case Number 37-2011-00093203 2) Native American Heritage Commission v. Padre Dam Municipal Water District San Diego Superior Court Case Number 37-2011-00094878

B. Conference with Real Property Negotiator (Gov. Code Section 54956.8)

Property: 8954 El Dorado Parkway, El Cajon, CA 92021-1901 Agency Negotiators: Allen Carlisle, Al Lau and Paula de Sousa (BBK)

Negotiating Parties: Pamela Griggs Under Negotiation: Price and Terms 12. ADJOURNMENT This agenda was posted at least 72 hours before the meeting in a location freely accessible to the public. No action may be taken on any item not appearing on the posted agenda, except as provided by Gov. Code Section 54954.2. The complete agenda package is available for public review on the District’s website, www.PadreDam.org. Any written materials provided to a majority of the Board of Directors within 72 hours prior to the meeting regarding any item on this agenda will be made available for public inspection at the District’s office located at 9300 Fanita Parkway. For questions or request for information related to this agenda contact Amy Pederson, Board Secretary, at 619.258.4614 or [email protected].


PUBLIC COMMENT PROCEDURES

Members of the public may address the Board regarding items not appearing on the posted agenda, which are within the subject matter jurisdiction of the Board. Speakers are requested to state name, address and topic, and observe a time limit of 3 minutes each. Public comment on a single topic is limited to a total of 15 minutes. Anyone desiring to address the Board regarding an item listed on the agenda should fill out a “request to speak” form and present it to the Board Secretary. These forms are available in the Board Room on the counter near the entrance doors.

NEXT RESOLUTION NO. 2013-09 NEXT ORDINANCE NO. 2013-01

CERTIFICATION OF POSTING

I certify that on January 31, 2013, I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Padre Dam Municipal Water District, said time being at least 72 hours prior to the meeting, in accordance with Gov. Code Section 54954.2(a). ______________________________ Amy Pederson, Board Secretary

Padre Dam Municipal Water District does not discriminate on the basis of disability in admission to, access to, or operations of its programs, services or activities. This notice is available in alternate formats. Questions or requests for additional information or accommodations under the Americans with Disabilities Act (ADA) may be forwarded to our ADA Coordinator: Mike Byrd at 619.258.4678 or [email protected]

1 1/30/2013 10:07 AMAgenda Calendar

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February 2013S M T W T F S

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March 2013February 2013

Monday Tuesday Wednesday Thursday Friday Sat/SunFebruary 1 2

3

4 5 63:30pm Board Mtg

(Boardroom)

77:30am Santee

Chamber Board Mtg

12:00pm Metro Commission/J- Cancelled

8 9

10

11 12 137:30am EIT Meeting

(Boardroom)

14 159:30am LAFCO

Special Districts Advisory Cmte -Cancelled

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18Office Closed (Presidents'

8:30am Santee Governance Cmte

197:30am COWU

203:30pm Board Mtg

(Boardroom)

216:00pm CSDA

Quarterly Mtg

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24

251:30pm Facilities

Dev. & Ops Cmte (Boardroom)

26 273:30pm Park

Committee (Park Club House)

289:00am CWA Board

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April 2013March 2013

Monday Tuesday Wednesday Thursday Friday Sat/SunMarch 1 2

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(Boardroom)

77:30am Santee

Chamber Board Mtg

12:00pm Metro Commission/J

8 9

10


(Boardroom)

14 159:30am LAFCO

Special Districts Advisory Cmte

16

17

188:30am Santee

Governance Cmte

197:30am COWU

203:30pm Board Mtg

(Boardroom)

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251:30pm Finance &

Admin Svcs Cmte (Boardroom)

26 273:30pm Park


289:00am CWA Board

Mtg

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May 2013April 2013

Monday Tuesday Wednesday Thursday Friday Sat/SunApril 1 2 3

3:30pm Board Mtg (Boardroom)

47:30am Santee

Chamber Board Mtg


5 6

7


(Boardroom)

11 12 13

14

158:30am Santee

Governance Cmte

167:30am COWU

173:30pm Board Mtg

(Boardroom)

18 199:30am LAFCO


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21

221:30pm Security

Committee (Boardroom)

23 243:30pm Park


259:00am CWA Board

Mtg

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June 2013May 2013

Monday Tuesday Wednesday Thursday Friday Sat/SunMay 1

3:30pm Board Mtg (Boardroom)

27:30am Santee

Chamber Board Mtg


3 4

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(Boardroom)

9 10 11

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166:00pm CSDA

Quarterly Mtg

179:30am LAFCO


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208:30am Santee

Governance Cmte

217:30am COWU

223:30pm Park


239:00am CWA Board

Mtg

24 25

26

27Memorial DayOffice Closed

1:30pm Facilities Dev. & Ops Cmte (Boardroom)

28 29 30 31

MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF PADRE DAM

MUNICIPAL WATER DISTRICT HELD ON WEDNESDAY, JANUARY 16, 2013

The regular meeting of the Board of Directors of Padre Dam Municipal Water District was held on Wednesday, January 16, 2013, at the appointed meeting place, the Board Room at the District Administration Building, located at 9300 Fanita Parkway, Santee, California. President Pommering called the meeting to order at 3:30 p.m. A quorum was declared, and the following Directors were present: Caires, Peasley, Pommering, Scalzitti and Wilson. Staff members present: Allen Carlisle, CEO/General Manager; Al Lau, Director of Engineering & Planning; Frank Kowalski, Director of Operations & Water Quality; Karen Jassoy, CFO/Director of Finance; Lisa Sorce, Director of Human Resources; Johnathan Skinner, Director of Park & Recreation; Amy Pederson, Board Secretary; Paula de Sousa, District Counsel; Melissa McChesney, Communications Officer; Paul Clarke, Operations Manager; Brian Thornburgh, Assistant Operations Manager; Kevin Woo, Accounting Manager; Mark Niemiec, Engineering Manager; Mike Anderson, PDEA President Visitors present: None OPPORTUNITY FOR PUBLIC COMMENT There were no public comments. APPROVAL OF MINUTES On motion of Director Caires, seconded by Director Peasley, and unanimously carried, the minutes of the Regular Board Meeting of January 2, 2013, were approved as submitted. SEATING OF REELECTED DIRECTORS

Legal counsel stated for the record that Directors Augie Caires and Augie Scalzitti have executed their oaths of office in front of a Notary Public and have successfully been elected to this Board. The General Manager presented each with their Certificate of Election. PRESENTATION

Al Lau, Director of Engineering, recognized Mark Niemiec, Engineering Manager,

for 10 years of District service. ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED ON THE AGENDA

The Board pulled Item 3 from the consent agenda for discussion.

[January 16, 2013] Page 2 of 6 [Minutes]

• CONSENT AGENDA

Items are considered to be routine and will be acted upon by a single motion without discussion, unless a Board Member, staff, or the public request a specific item be removed from the consent agenda for discussion.

CONSENT ITEMS

President Pommering noted the handout received by the Board revising his per diem.

On motion of Director Caires, seconded by Director Peasley, and unanimously

carried, the Board approved item 1 as submitted and item 2 as amended. Item 3 was pulled for discussion. 1. DEMAND PAYMENTS The Board approved the Register of Audited Demands, and payment of warrants from December 7, 2012 - January 3, 2013. 2. DIRECTORS COMPENSATION AND EXPENSE CLAIMS The Board approved claims with the requested amendment and authorized payments. 3. AMENDMENTS TO JOB CLASSIFICATIONS AND STANDARD RATES OF PAY

Director Scalzitti requested the proposed amendments identified in the resolution as Items A (change the title of Field Engineering Supervisor to Engineering Supervisor), B (reduce the salary grade for the position of Information Systems Manager to Grade 44) and C (increasing the hourly rate of pay for the Director of Operations & Water Quality position to align with the Director of Engineering and the Director of Finance) be considered by the Board separately.

On motion by Director Scalzitti, seconded by Director Caires, and unanimously

carried, the Board adopted Resolution 2013-07 amending the Job Classifications and Standard Rates of Pay for FY 2012/13 to include items A and B.

Director Scalzitti expressed his opposition to item C stating that he can’t support

an increase to the Director of Operations position under current economic conditions. Discussion ensued regarding salary comparisons, the number of employees

reporting to the Director of Operations and the level of responsibility the position holds. Director Wilson pointed out that historically the Director of Operations position

has been aligned with the Director of Engineering and Director of Finance positions and taking into consideration the importance of the position and the qualifications required, he supports the increase.

On motion by Director Wilson, seconded by Director Peasley, with Director

Scalzitti voting no, the Board adopted Resolution 2013-08 amending the Job Classifications and Standard Rates of Pay for FY 2012/13 to include Item C.


• ACTION AGENDA Items on the Action Agenda call for discussion and action by the Board. All items are placed on the Agenda so that the Board may discuss and take action on the item if the Board is so inclined.

ACTION ITEMS 4. IMPLEMENTATION OF GASB 51

Karen Jassoy provided the Board with a presentation and review of GASB 51 noting that it establishes accounting and financial reporting requirements for intangible assets and explaining how it relates to District operating expenses. Director Wilson suggested that staff reconcile year one of the budget but before getting into next years budget, recast all five years, including year one, under GASB 51 requirements. Informational report only, no action was taken. 5. REBALANCING CAPITAL REPLACEMENT FUNDS (CRF) AND RATE STABILIZATION FUNDS (RSF) Ms. Jassoy provided an overview of District Reserve Funds explaining the purpose of RSF and CRF; how funds are allocated between the two; and staff’s recommendation to transfer funds in an effort to rebalance. Discussion ensued regarding future transfers between the two funds and whether there should be another minimum target amount lower than the existing, and other than zero, for the Rate Stabilization Fund. NOTE: At this time, Director Caires left the room briefly and returned after the vote had been taken.

On motion by Director Wilson, seconded by Director Pommering, and unanimously carried with Director Caires absent, the Board approved staff’s recommended transfers between Capital Replacement and Rate Stabilization Funds.

The Board requested that staff come back with a different recommendation other

than limiting future transfers between RSF and CRF to an amount that does not overdraw the RSF Fund and does not unreasonably build up one fund to the detriment of the other. 6. APPOINTMENT OF BOARD COMMITTEES AND REPRESENTATIVES FOR OUTSIDE ORGANIZATIONS President Pommering referred the Board to his handout with recommendations for Board appointed committees stating that he was not recommending any changes for Metro Commission/Metro Wastewater Joint Powers Authority (Metro JPA), San Diego Area Wastewater Management District (SANDISTRICT), and ACWA Joint Powers Insurance Agency. The Santee Chamber appointments must be considered separately due to Fair Political Practices Commission (FPPC) regulations.


On motion of Director Caires, seconded by Director Scalzitti, and unanimously carried, the Board approved the following appointments recommended by President Pommering: Standing Committees Members

Customer Appeals Scalzitti, Wilson Park Scalzitti, Pommering Finance & Administrative Services Caires, Wilson Facilities Development & Operations Caires, Peasley Security Peasley, Wilson Ex Officio Appointment Members Employee Involvement Team Caires; Scalzitti, alternate

At this time, President Pommering opened the floor for nominations for the Santee Chamber Board representative, and a representative and alternate for the Santee Chamber Governmental Affairs Committee Director Wilson nominated Director Pommering to continue to serve as the District’s representative on the Santee Chamber Board of Directors and the Santee Chamber Governmental Affairs Committee, and Director Scalzitti to continue as the alternate on the Santee Chamber Governmental Affairs Committee.

Director Pommering and Scalzitti recused themselves to comply with FPPC

regulations stating that a member of the Board being nominated to outside bodies where they would receive compensation different than other members of the Board would need to recuse themselves from participating in the vote, and then they left the room.

On motion of Director Wilson, seconded by Director Peasley, and unanimously

carried, with Director Pommering and Scalzitti absent, the Board appointed Director Pommering to serve as the representative on the Santee Chamber of Commerce Board of Directors and to represent the District on the Santee Chamber Governmental Affairs Committee; and Director Scalzitti to serve as alternate for the Santee Chamber Governmental Affairs Committee.

REPORTS The following items are reports and are placed on the Agenda to provide information to the Board and the public. There is no action called for on these items. The Board may engage in discussion upon which a specific subject matter is identified but may not take any action other than to place the matter on a future agenda.

7. BOARD REPORTS

A. President’s Report No report.

B. County Water Authority (CWA) Board of Directors Meeting Director Wilson reported on a recent CWA meeting in which members heard a presentation by Dan Cayan from Scripps Institute on Climate Change.


C. Metro Commission/Metro Wastewater JPA/Metro TAC Meeting

Director Peasley reported on new committee assignments and appointments along with the 2010 audit, which has been postponed due to corrections.

D. Employee Involvement Team Meeting Director Scalzitti reported on the recent EIT Advance meeting in which members reviewed last year’s accomplishments and survey results; brainstormed sessions for the future of EIT; and set goals for the upcoming year.

E. Santee Chamber of Commerce Board/Governance Committee Meeting

Director Pommering said there was no Governance Committee meeting. He summarized changes to the bylaws, new board appointments and adoption of the budget, which took place at the annual Santee Chamber Board Retreat.

F. Other meetings/conferences/events attended by Directors per AB1234

(Council of Water Utilities, CSDA San Diego Chapter, etc.) Director Wilson summarized the Council of Water Utilities presentation given by Joel Kuperberg, OCWD General Counsel, and Jeremy N. Jungreis, Special Counsel for Water Quality and Water Supply Matters, focusing on overcoming the legal and institutional obstacles to indirect potable recharge projects. He also reported new officers were elected who will take over in March. Director Caires reported on the California Water Plan Update 2013 and Strategic Plan for Integrated Regional Water Management, which were discussed during the ACWA Water Management Committee meeting; the Affordable Healthcare Act, which was discussed at ACWA JPIA; and sessions at the ACWA Conference. He also gave the Board Secretary handouts from the ACWA Conference to provide copies to the Board. Director Wilson also reported on sessions he attended at the ACWA conference regarding the Bay Delta and generational differences in the workplace.

• DIRECTORS’ COMMENTS Directors’ comments are to be related to District business which may be of interest to the Board. They are placed on the agenda to enable individual Board Members to convey information to the Board and the Public. There is to be no discussion or action taken on comments made by Board Members.

There were no comments.

• DISTRICT COUNSEL’S REPORT Paula de Sousa, District Counsel, reported the National Resources Defense Council (NRDC) staff announced today the release of their portfolio base conceptual alternative to the Bay Delta Conservation Plan created by a coalition of businesses, water agencies and environmental groups. Among the water agencies supporting this alternative plan are Otay Water District, City of San Diego and the San Diego County Water Authority.


8. GENERAL MANAGER’S REPORT Note and file; informational report only

• CLOSED SESSION At any time during the regular session, the Board may adjourn to closed session to consider litigation, or discuss with Legal Counsel matters within the attorney-client privilege, subject to the appropriate disclosures.

9. CLOSED SESSION At 5:15 p.m., the Board recessed to convene in Closed Session to discuss the following:

A. Conference with Legal Counsel – Existing Litigation (Gov. Code 54956.9 (a))

1) Viejas Band of Kumeyaay Indians v. Padre Dam Municipal Water District San Diego Superior Court Case Number 37-2011-00093203 2) Native American Heritage Commission v. Padre Dam Municipal Water District San Diego Superior Court Case Number 37-2011-00094878

B. Conference with Legal Counsel – Anticipated Litigation (Gov. Code 54956.9) Significant exposure to litigation pursuant to subdivision (b) of Government Code Section 54956.9: 1 case

The Board reconvened in open session at 5:31 p.m. No action was taken in closed session. 10. ADJOURNMENT President Pommering declared the meeting adjourned at 5:31 p.m.

______________________________ Board President

ATTEST: ______________________________ Board Secretary

BOARD AGENDA REPORT

Meeting Date: February 6, 2013

Dept. Head: Lisa Sorce Submitted by: Kathi Monteith Department: Human Resources Approved by: Allen Carlisle, CEO/GM

SUBJECT: RESOLUTION RECOGNIZING PHILLIP STEVENS

RECOMMENDATION(S): 1. Adopt Resolution recognizing Phillip Stevens upon completion of 10 years of service with Padre Dam.

ALTERNATIVE(S): 1.

ATTACHMENT(S): 1. Draft Resolution

FUNDING: Requested amount: -0- Budgeted amount: -0- Are funds available? Yes No Project cost to date:

PRIOR BOARD/COMMITTEE CONSIDERATION:

STRATEGIC PLAN IMPLEMENTATION: This agenda item is consistent with the District’s Strategic Plan & meets one or more of the following Strategic Goals: Provide safe, reliable water, recycled water and sewer services; Ensure fiscal health and competitively sustainable rates; Enhance customer communications and education; Increase water, wastewater and energy independence; Maintain workforce excellence; Expand park and recreation opportunities.

Reviewed by: Dept Head Finance Legal Counsel Standard Form

Action Required: Motion Resolution Ordinance None

Policy Updates:

Rules & Regulations

Standard Practices & Policies

Action Taken: As Recommended ___________________ Reso/Ord. No. ______________________ Other _____________________________

34317.1 Page 2 of 4

EXECUTIVE SUMMARY: Phil Stevens celebrates his tenth year with Padre Dam Municipal Water District on February 3, 2013. Phil began his career when he was hired as a Laboratory Analyst at Padre Dam’s Water Recycling Facility on February 3, 2003. Phil continues to serve the District in this capacity. RECOMMENDATION: Adopt a resolution recognizing Phil Stevens upon completion of ten years of service with Padre Dam.

34317.1 Page 3 of 4

RESOLUTION 2013-___

RESOLUTION OF THE BOARD OF DIRECTORS OF PADRE DAM MUNICIPAL WATER DISTRICT

RECOGNIZING PHILLIP STEVENS UPON COMPLETION OF TEN YEARS OF DISTRICT SERVICE

WHEREAS, Phillip Stevens began his career with Padre Dam Municipal Water District on February 3, 2003 as a Laboratory Analyst at the Water Recycling Facility and continues to serve the District in this capacity; and WHEREAS, Phillip has contributed to the success of Padre Dam by exhibiting the Core Values of the District - Trust, Integrity, Competence, Accountability, and Service - in performing his daily job responsibilities and by serving both internal and external customers with exceptional customer service in laboratory operations and excellence in regulatory compliance.

WHEREAS, Phillip came to the District with 4 years of Military service, serving in the 1STBN 11th MAR 1st Marine Division. He attended the University of Illinois receiving a Bachelor of Science Degree in Biology. During his service as Laboratory Analyst he has completed the following educational goals and certifications:

• Laboratory Analyst, Grade II (June 2004) CWEA • Water Treatment Operator, Grade I (November 2006) California Health Services • Water Distribution Operator, Grade II (October 2007) California Health Services • Wastewater Treatment Plant Operator, Grade I (October 2007) SWRCB • Associate Degree in Water Technology (May 2007) Mt. San Jacinto College WHEREAS, Phillip has contributed to the success of laboratory operations in the

following ways:

• Successfully completed the annual Water Studies for State certification with acceptable results

• Operated the Auto Analyzer, Block Digester and Ammonia Distillation Unit on a monthly basis with a high level of proficiency

• Increased the lab’s testing capabilities by implementing new instrumentation and methods

• Trained and mentored lab interns and staff on lab procedures • Project managed special sewer studies when lab involvement was requested • Assisted in the monthly data gathering and reporting for NPDES Permit • Serves on the District Emergency Response Team • Manages lake monitoring, testing and reporting • Assisted Plant Operators with repairs during Plant shut-downs • Is known as our in-house math tutor and is often sought out by co-workers for

tutoring

NOW, THEREFORE, BE IT HEREBY RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the Padre Dam Municipal Water District as follows:

1. That the Board does hereby recognize Phillip Stevens upon completion of ten years of dedicated and competent service to the District and its customers.

34317.1 Page 4 of 4

2. That the Board does further declare and extend the sincere appreciation and

gratitude of each of its Directors for a job well done. PASSED AND ADOPTED at the Regular Board Meeting of the Board of Directors of Padre Dam Municipal Water District held on February 6, 2013, by the following vote, to wit:

AYES: NOES: ABSENT:

ABSTAIN: ATTEST:

Board Secretary Board President

BOARD AGENDA REPORT


Dept. Head: Frank Kowalski Submitted by: Brian Thornburgh Department: Wastewater Collections Approved by: Allen Carlisle, CEO/GM

SUBJECT: NEW VACTOR 2110 PLUS JET RODDER PURCHASE

RECOMMENDATION(S): 1. Authorize purchase of a new Vactor 2110 Plus Jet Rodder on a Mack Chassis model number MP8-425M

supplied by Haaker Equipment Company for a total of $430,509.60.

ALTERNATIVE(S): 1. No viable alternative. This is a replacement vehicle for a 2000 7510 Vactor Truck, identified as B-6.

Haaker Equipment Company is the sole source western distributor and finishing fabricator for Vactor Manufacturing.

ATTACHMENT(S): 1. Haaker Equipment Company Proposal dated January 22, 2013.

FUNDING: Requested amount: $ 430,509.60 Budgeted amount: $ 400,000.00; Funds are available in the capital equipment budget to offset the additional $30,000 through savings achieved in the recent purchase of four replacement vehicles. Are funds available? Yes No Project cost to date: 0

PRIOR BOARD/COMMITTEE CONSIDERATION: 6/6/12 – Approved in the 5-Year Business Plan


Reviewed by: Dept Head Finance Legal Standard Form


Policy Updates:

Rules & Regulations



EXECUTIVE SUMMARY: An important part of the District’s Sewer System Management Plan (SSMP) is the requirement for maintenance on the sewer system. With the Vactor running on a daily basis, the goal is to clean the entire system every two years. This cleaning schedule has resulted in a reduced amount of Sanitary Sewer Overflows (SSOs). The SSMP is a requirement of the Regional Water Quality Control Board (RWQCB) Order No. 2006-0003, which is the regulatory requirement for public agencies with sewer systems. This is the first of two Vactors budgeted and approved in the 5-Year Business Plan: $400,000 in Year 1 and $420,000 in Year 4. Staff held off purchasing this vehicle in the first year of the 5-year budget cycle due to fiscal uncertainty and cautionary restraint. However, a replacement for the B-6 Vactor is absolutely necessary due to its age (12 years old), total hours of usage. The lead time required from contract approval to fabrication completion is about 9 months. Haaker Equipment, the sole source equipment supplier, has provided a proposal for one new Vactor, with the option of a Kenworth Chassis for a total cost of $412,767 or a Mack Chassis for a total cost of $430,509. Staff has selected the Mack Chassis option due to the additional safety margin provided by higher horsepower and torque ratings matched with a larger Allison 4500 transmission. The expansion of our wastewater service area to include Sky Ranch presents a difficult challenge for our existing vehicles due to the steep terrain, with Alpine and Crest part of the concern. This selection is a classic argument for bigger, better, stronger, and most importantly, safer. DESCRIPTION: Vactor trucks are the most cost-effective, essential, and obviously expensive tools in the Construction and Maintenance Division. They provide excellent cleaning capabilities for wastewater collection system performance and more importantly, spill prevention. Additionally, we utilize the vacuum aspect during emergency response calls for system overflows, main line breaks and heavy duty excavation operations. Haaker’s proposal for the Mack Chassis includes: Vactor 2110 Plus Jet Rodder Mack Truck MMP8-425M HP engine with Allison Auto Transmission 10-Cubic Yard capacity with Roots 16” Positive Displacement Blower 1,500 gallon water tank Equipped with all standard and optional equipment as described in proposal. RECOMMENDATION(S): Authorize purchase of a new Vactor 2110 Plus Jet Rodder on a Mack Chassis model number MP8-425M supplied by Haaker Equipment Company for a total of $430,509.60

2070 North White Avenue, La Verne, California 91750 (909) 598-2706 ~ FAX (909) 598-1427 ~ haaker.com

PROPOSAL January 22, 2013

TO: PADRE DAM WATER DISTRICT ATTN: Mr. John Dedonato 91201 Carlton Oaks Email: [email protected] Santee, CA 92072 In accordance with your request, we are pleased to submit the following proposal for your consideration and approval:

One (1) NEW VACTOR 2110 PLUS JET RODDER

10-Cubic Yard Capacity with Roots 16” Positive Displacement Blower, 1000 Gallons of Water, Mounted on a Kenworth T440 with Extended Day Cab 6x4 Chassis with 370 HP, Allison Automatic Transmission with 2010 Emissions Package. Equipped with all Standard and Optional

Equipment listed:

STANDARD FEATURES · 48" x 22" x 24" Curb Side Aluminum Toolbox · Aluminum Fenders · Mud Flaps · Electric/Hydraulic Four Way Boom · Color Coded Sealed Electrical System · Remote Pendant Control w/35' Cord · Vansco-Electronic Package · Double Acting Dump Hoist Cylinder · Handgun Assy. w/1/2" x 35' Hose w/Quick Disconnects · 3" Y-Strainer at Water Pump Inlet · Ex-Ten Steel Cylindrical Debris Tank · Flexible Hose Guide · 30 Deg. Sand Nozzle w/Carbide Inserts · 30 Deg. Sanitary Nozzle w/Carbide Inserts · 15 Deg. Penetrator Nozzle w/Carbide Inserts · Nozzle Storage Rack · Vacuum Tube Storage: Curbside (2) Pipe, Rear Door (2)

Pipe · 1" Nozzle · Flat Rear Door w/Hydraulic Locks and Door Power-

up/Down, Open/Close Feature · Dual 10" Stainless Steel Float Shut Off System/Rear Mounted · Debris Body Vacuum Relief System · Debris Deflector Plate · 48" Dump Height

· Water Sight Gauge PS · Liquid Float Level Indicator · 3" Y-Strainer @ Water Pump w/3" Drain Valve · Performance Package: (Hyd Variable Flow, Dual PTO's.

Dual Hyd. Pumps) · 1" Water Relief Valve for Vactor Water Pump · Stainless Steel Microstrainer · Blower Air Shift Controls · Hydraulic Cooling Package · Midship Handgun Coupling · Side Mounted Water Pump · Hose Wind Guide (Dual Roller) · Hose Footage Counter - Mechanical · Hose Reel Manual Hyd. Extend/Retract · Hose Reel Chain Cover (Full) · Tachometer/Chassis Engine W/Hourmeter · Circuit Breakers · LED Lights. Clearance, Back-Up, Stop, Tail & Turn · Vactor Spanish Manual & CD Version · Tow Hooks, Front and Rear · Electronic Back-Up Alarm · Module Paint, Dupont Imron Elite - Wet on Wet · 8" Vacuum Pipe Package · Emergency Flare Kit · Fire Extinguisher 5 Lbs. · Vactor 2100 Plus Body Decal - Multi-Colored

ADDITIONAL FEATURES INCLUDED ·1500 Gallons of Water · 3" Y-Strainer w/25' Fill Hose · Stainless Steel Cage for Float Shut Off System · Roots 824-16" Hg. Blower · 180 Degree Rotation, 8 Ft. Hydraulic Telescoping Boom,

Front Loading 8" Suction Hose · 80 GPM Variable Flow Water System · 2500 PSI Water Pressure · Blue Piranha 3000 PSI Rodder Hose · Hydraulic Extending/Rotating 15" Hose Reel (1" x 800')

Capacity · Debris Body Flush Out System · 6" Butterfly Valve, Rear Door, 3:00 Position · 6" Knife Valve w/Cam-Loc, Rear Door, 6:00 Position · Centrifugal Separators · Folding Pipe Rack, Curbside · Folding Pipe Rack, Streetside · Rear Door Splash Shield · Lube Manifold · Laminated Lube Chart · Low Water Light w/Alarm and Water Pump Flow

Indicator · Hot Shift Blower Drive

· Front Joystick Boom Control · Wireless Controls, including hose reel controls · Jet Rodder Water System Accumulator · Rodder Hose Pinch Roller · Digital Hose Footage Counter · Handgun Hose Reel w/Spring Retract · Hydraulic Tank Shutoff Valves · Hand Light w/Bumper Plug · LED Mid-Ship Turn Signals · Worklights (2), LED, Telescoping Boom · Worklight, LED, Operators Station · Toolbox, Front Bumper Mounted, 16 x 12 x 18 w/(2)

LED Side Markers · Toolbox, Driver Side Subframe, 18w x 24h x 24d · (4) Long Handle Tool Storage Locations Behind Cab · Camera System, Front, Rear and Both Sides · Safety Cone Storage Rack - Post Style · Door Stripe Material, Reflective Tape · (1) 8" x 5' Aluminum Vacuum Tube · (1) 8" x 7'-6" Aluminum Vacuum Tube · (2) 8" Quick Clamp Assembly · 1 Printed Full Vactor Manual · Reclaimed Water Fill

· Super Whelen LED Light Package

Unit Price on Kenworth Chassis ............................................................ $ 382,192.00 Sales Tax (8.0 %) ................................................................................... $ 30,575.36 TOTAL PRICE F.O.B. SANTEE, CA..: ........................................... $ 412,767.26 Mack chassis may be selected. Model is Mack MP8-425M 425 HP Engine with Allison Auto Transmission. If Mack chassis is desired, pricing is as follows: Unit Price on Mack Chassis ................................................................... $ 398,620.00 Sales Tax (8.0%) ...................................................................................... $ 31,889.60 TOTAL PRICE: FOB: SANTEE, CA: .............................................. $ 430,509.60

THE PROPERTY HEREIN IS GUARANTEED BY MANUFACTURER'S WARRANTY ONLY AND SELLER MAKES NO WARRANTY EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR OTHERWISE, OR OF FITNESS FOR ANY PARTICULAR PURPOSE, THAT EXTENDS BEYOND THE ABOVE DESCRIPTION OF THE EQUIPMENT. NOTE: Price is good until 60 Days. Cost increases due to the addition of Government mandated safety or environmental devices incurred after the date of this proposal, will be charged to you at our cost. Proof of such costs, if any, will be documented. TAXES: SALES TAX applicable at time of delivery will be shown on our invoice. FEDERAL EXCISE TAXES, if applicable, will require payment unless a properly executed Exemption Certificate is submitted. DELIVERY: Approx 280-340 Days TERMS: Net 30

We appreciate the opportunity to present this proposal and look forward to being of further and continued service. HAAKER EQUIPMENT COMPANY ACCEPTED BY:

BY: Dave ThomasDave ThomasDave ThomasDave Thomas DATE:

Dave Thomas Sales Representative

BOARD AGENDA REPORT


Dept. Head: Karen Jassoy, CFO Submitted by: Karen Jassoy, CFO Department: Finance Approved by: Allen Carlisle, CEO/GM

SUBJECT: PFM DISCUSSION ON LAIF

RECOMMENDATION(S): 1. Hear report by Richard Babbe from PFM 2. Direct staff to make changes to the Investment Policy if desired. ALTERNATIVE(S): 1. Do not hear report

ATTACHMENT(S): 1. District Investment Policy showing proposed changes recently presented to the Finance & Admin Services Committee as part of the annual review, but tabled pending this report.

FUNDING: Requested amount: None Budgeted amount: Are funds available? Yes No Project cost to date:

PRIOR BOARD/COMMITTEE CONSIDERATION: Finance and Administrative Committee Meeting 12/14/12




Policy Updates:

Rules & Regulations



EXECUTIVE SUMMARY: Richard Babbe from PFM will discuss the risk of investing in LAIF. He will also discuss investment alternatives and present ideas for rebalancing the District’s portfolio. DESCRIPTION: During the ACWA conference, members of the Board attended a session that focused on the potential threat by the State to take/borrow special district reserves invested in LAIF. Staff was asked to research the issue and present their findings to the Finance and Administrative Committee. Staff researched the issue and spoke to the District’s legal counsel, investment advisor (PFM), and other agencies. All sources referred to existing state law that protects a District’s investment in LAIF; however, there is always the risk that the State could change the law at any time. As such, the Committee asked Staff to look into rebalancing the District’s portfolio and possibly divesting some funds from LAIF. Staff had a discussion with Richard Babbe from PFM and felt it would be informative to have Mr. Babbe present directly to the Board and answer any questions they might have. Based on the discussion, there may be recommendations to update the investment policy. RECOMMENDATION(S): 1. Hear presentation by Richard Babbe from PFM. 2. Direct staff to make changes to the Investment Policy if desired.

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19.4 INVESTMENT POLICY 19.4.1 Introduction The purpose of this document is to identify policies and procedures that provide for prudent and systematic investment of District funds and to organize and formalize investment related activities. The ultimate goal is to enhance the economic status of the District while protecting its funds. The investment policies and practices of the Treasurer and Director of Finance for the District are based upon limitations placed on it by the District's Board of Directors. These policies have five primary goals:

1. To protect principal. 2. To insure that funds are available to pay obligations of the District without having

to liquidate investments at an inopportune time and the risk loss of principal or accrued interest.

3. To maximize the interest yield earned from on deposits. 4. To insure that all investment transactions are properly authorized and that all

transactions are properly carried out in a procedure designed to minimize risk, and prevent unauthorized transactions.

5. To assure compliance with all Federal, State and Local laws governing the

investment of monies under the control of the Director of Finance. 19.4.2 Scope It is intended that this policy cover all funds and investment activities under the direct authority of the Director of Finance, except for the employee's deferred compensation funds and funds invested by PERS. Bond proceeds will be invested according the applicable bond documents. If the bond documents are silent as to the investment of the proceeds, the proceeds will be invested according to this Policy. 19.4.3 Objectives: A. Safety: It is the primary duty and responsibility of the Director of Finance to protect, preserve and maintain District cash and investments placed in the treasury. Each investment transaction shall seek to ensure that capital losses are avoided, whether from institution default, broker-dealer default, or erosion of market value of securities. The Finance CommitteeFinance and Administration Committee shall evaluate or cause to have evaluated potential investments, seeking both quality in issuer and in underlying security or collateral. Diversification of the portfolio will be used in order to reduce exposure to principal loss.

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B. Liquidity: An adequate percentage of the portfolio will be maintained in liquid short-term securities which can be converted to cash if necessary to meet the operational needs of the Districtdisbursement requirements. Since all cash requirements cannot be anticipated, investment in securities with active secondary markets will be utilized. These securities will have a low sensitivity to market risk. C. Yield: Yield should become a consideration only after the basic requirements of safety and liquidity have been met. D. Market-Average Rate of Return: The investment portfolio shall be designed to attain a market-average rate of return throughout economic cycles, taking into account the District's risk constraints, the cash flow characteristics of the portfolio, State and Local laws, and ordinances or resolutions that restrict investments. The portfolio will be compared, on a quarterly basis, to a performance benchmark with portfolio characteristics similar to the District’s portfolio. E. Diversification: The investment portfolio will be diversified to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions. F. Prudence: The District adheres to the guidance provided by the "prudent investor standard,.” a legal doctrine that requires fiduciaries to make investments using the prudence, diligence, and intelligence that would be used by a prudent person in making similar investments. “When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.” G. Public Trust: All participants in the investment process shall act as custodians of the public trust. Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. The overall program shall be designed and managed with a degree of professionalism that is worthy of the public trust. In a diversified portfolio it must be recognized that occasional measured losses are inevitable, and must be considered within the context of the overall portfolio's investment return, provided that adequate diversification has been implemented.

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19.4.4 Delegation of Authority The investment of District idle fundsmonies is hereby delegated to the Finance CommitteeFinance and Administration Committee by the Board of Directors. The Finance CommitteeFinance and Administration Committee delegates the day to day investment operations to the Director of Finance for a period of one year; this delegation is contingent upon disclosure of investment results through the monthly report to the Board of Directors as described in Section 19.4.6. Subject to review, the Finance CommitteeFinance and Administration Committee may renew the delegation of authority pursuant to this section each year. As authorized by the Finance CommitteeFinance and Administration Committee, the Director of Finance may use a professional investment advisor to assist with the District’s investment program. Under the direction of the Director of Finance, the investment advisor will have responsibility for managing designated funds and executing day-to-day investment transactions. The investment advisor shall follow this investment policy and such other written instructions as are provided. 19.4.5 Finance CommitteeFinance and Administration Committee The Finance CommitteeFinance and Administration Committee shall consist of four members. All actions of the Finance CommitteeFinance and Administration Committee shall be with the approval of at least two members of the Finance CommitteeFinance and Administration Committee. Primary Alternate Board Member Board Member Treasurer Board Member General Manager Accounting Manager Director of Finance Accounting Manager 19.4.6 Reporting The Director of Finance will submit a monthly investment report to the Board of Directors. This report will include: Type of investment instrument (i.e. Treasury Bill, medium-term note) Issuer name (i.e., General Electric Credit Corp.) Purchase date (trade and settlement date) Maturity date Par value Purchase price Coupon Yield on cost Current market value and the source of valuation Accrued interest to date Overall portfolio yield based cost Average duration Percentage distribution by type of investment Transactions during the month

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The monthly report shall (i) state compliance of the portfolio with applicable California Government Codes and the District’s statement of Investment Policy, or manner in which the portfolio is not in compliance, (ii) include a description of any of the District’s funds, investments or programs that are under the management of contracted parties, and (iii) include a statement denoting the ability of the District to meet its expenditure requirements for the next six months, or provide an explanation as to why sufficient money shall, or may not, be available. 19.4.7 Authorized Investment Instruments The District is governed by the California Government Code, § 53600 et seq. All percentages described below refer to the percentage at the time of the purchase. Within the context of these limitations, the following investments are authorized: Local Agency Investment Fund (LAIF): LAIF is a State of California Pooled Investment Fund that invests hundreds of millions of dollars using the investment expertise of the State Treasurer’s Office investment staff at no additional cost to the taxpayer. All securities are purchased under the authority of Government Code Section 16430 and 16480.4. The Mmaximum permitted investment in the State’s pooled investment fund is the maximum allowed by the State Treasurer, currently $50 million. However, the district will maintain its current maximum amount of $30 million. Note: Effective October 2009, the State of California raised the limit on the maximum amount of money a public entity may invest in LAIF to $50 million. San Diego County Pool: The San Diego County Investment Pool is a local government money fund which invests monies in accordance with standards set for by the California Government Code and the County of San Diego Investment Policy. At a minimum, the pool is invested in 67% AAA-rated paper, with no investment lower than an A rating. The Mmaximum permitted investment in the County’s pooled investment fund is $1.0 million. No additional investments shall be made in the San Diego County Pool without the prior approval of the Finance CommitteeFinance and Administration Committee. Bankers Acceptances: The District may only purchase bankers’ acceptances issued by domestic or foreign banks, which are eligible for purchase by the Federal Reserve System, the short-term paper of which is rated in the highest category by a Nationally Recognized Statistical Rating Organization (“NRSRO”). Purchases of Bankers Acceptances may not exceed 180 days maturity or 40 percent of the District’s surplus money. However, no more than 30% of the District’s surplus funds may be invested in the bankers’ acceptances of any one commercial bank.

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U.S. Treasury Securities: United States Treasury notes, bonds, bills or certificates of indebtedness, or those for which the full faith and credit of the United States are pledged for payment of principal and interest. Repurchase Agreements: Repurchase Agreements shall be used solely as short-term investments not to exceed 90 days. Collateral for repurchase agreements shall be limited to obligations of the United States government and its agencies. The market value of securities that underlie a Repurchase Agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be reviewed on a regular basis and adjusted no less than monthly. Market value must be calculated each time there is a substitution of collateral. The District will only enter into Repurchase Agreements with primary dealers of the Federal Reserve Bank of New York. Collateral used for the Repurchase Agreement will be delivered on a delivery vs. payment system to the District’s custodian on the date of settlement. Reverse Repurchase Agreements: The District will not enter into Reverse Repurchase Agreements, nor any other securities lending arrangement, without the prior consent of the Board of Directors. If a Reverse Repurchase Agreement is authorized, it may be utilized only if the security to be sold on Reverse Repurchase Agreement has been owned and fully paid for by the District for a minimum of 30 days prior to the sale; the total of all Reverse Repurchase Agreements on investments owned by the District does not exceed 20 percent of the base value of the portfolio; and the agreement does not exceed a term of 90 days, unless the agreement includes a written codicil amendment guaranteeing a minimum earning or spread for the entire period between the settlement date and the maturity date. Reverse Repurchase Agreements can only be entered into with primary dealers of the Federal Reserve Bank of New York. Bank Deposits: The District may invest in FDIC- insured or fully collateralized bank deposits including, but limited to, demand deposit accounts, savings accounts, market rate accounts, and time certificates of deposit in financial institutions issued by a nationally or state-chartered bank, or a state or federal savings and loan association or by a state-licensed branch of a foreign bank. All deposits must be collateralized in accordance with California Government Code § 53651, with the exception that real estate mortgages are not acceptable collateral; or at 110% by eligible marketable securities listed in subsections (a) through (l) and (n) and (o). A written depository contract is required with all institutions that hold Water District deposits. All banks are required to provide the District with a regular statement of pooled collateral which shall include the following statements: (i) the 110% collateral rule is being met; (ii) a market value and location listing of all collateral; (iii) accountability of the total amount of deposits secured by the pool.

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There is no limitation as to the percentage of the portfolio that may be invested in liquid bank deposits;, however, collateralized time certificates shall not exceed 15 percent of total portfolio exposure. Maximum investment maturity will be restricted to two years. Per §53637 of the California Government Code, the Board of Directors of Padre Dam Municipal Water District is prohibited from depositing or investing local funds in certificates of deposit issued by a state or federal credit union if any member of a local agency’s legislative body or any person with investment decision making authority for the local agency also serves on the board of directors or any committee appointed by the board of directors, or the credit committee, or supervisory committee, of the state or federal credit union issuing the negotiable certificates of deposit. Per § 53638 of the California Government Code, any deposit shall not exceed the total paid-up capital and surplus of any depository bank, nor shall the deposit exceed the total net worth of any institution. Placement Service Certificates of Deposit: Certificates of deposit placed with a private sector entity that assists in the placement of certificates of deposit with eligible financial institutions located in the United States. The full amount of the principal and the interest that may be accrued during the maximum term of each certificate of deposit shall at all times be insured by federal deposit insurance. Placement Service CDs shall meet all of the requirements of California Government Code §53601.8. In combination with nNegotiable CDs, purchases of placement service CDs may not exceed 30% of the market value of the portfolio. Negotiable Certificates of Deposit: Negotiable certificates of deposits issued by a nationally or state-chartered bank or a state or federal association or by a federally licensed or state-licensed branch of a foreign bank provided that the senior debt obligations of the issuing institution are rated “A” or better by a NRSRO. Per §53637 of the California Govt. Code, the Board of Directors of Padre Dam Municipal Water District is prohibited from depositing or investing local funds in negotiable certificates of deposit issued by a state or federal credit union if any member of a local agency’s legislative body or any person with investment decision making authority for the local agency also serves on the board of directors or any committee appointed by the board of directors, or the credit committee, or supervisory committee, of the state or federal credit union issuing the negotiable certificates of deposit. Per §53638 of the California Govt. Code, any deposit shall not exceed the total paid-up capital and surplus of any depository bank, nor shall the deposit exceed the total net worth of any institution. In combination with Placement Service CDs, the maximum portfolio exposure is limited to 30 percent. Maximum investment maturity is restricted to two years.

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Commercial Paper: Commercial paper of "prime" quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical-rating organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1) or paragraph (2): (1) The entity meets the following criteria: (a) Iis organized and operating within the United States as a general corporation; . (b) Hhas total assets in excess of $500 million;. (c) Hhas debt other than commercial paper, if any, that is rated "A" or higher by a nationally recognized statistical-rating organization (NRSRO). (2) The entity meets the following criteria: (a) Iis organized within the United States as a special purpose corporation, trust, or limited liability company;. (b) Hhas program -wide credit enhancements including, but not limited to, over collateralization, letters of credit, or surety bond.; (c) Hhas commercial paper that is rated “A-1” or higher, or the equivalent, by a nationally recognized statistical-rating organization (NRSRO). Purchases shall not exceed 10 percent of the outstanding paper of the issuing corporation. Maximum investment maturity is restricted to 270 days. Maximum portfolio exposure is limited to 25% percent. Medium Term Notes: Medium-term corporate notes, defined as all corporate and depository institution securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or depository institutions licensed by the United States or any state and operating within the United States. Medium term notes shall be rated “A” or higher by a NRSRO. Maximum investment maturity is restricted to two years for “A” rated notes. Maximum portfolio exposure is limited to 30 percent. U.S. Federal Agencies: Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. Municipal Obligations: Obligations of the State of California or any local agency within the state, including bonds payable solely out of revenues from a revenue producing property owned, controlled or operated by the state or any local agency or by a department, board, agency or authority of the state or any local agency. In addition to California municipal obligations, the District may invest in registered treasury notes or bonds of any of the other 49 United States, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 United States. To be eligible for purchase, the obligation must be rated A or better by a NRSRO. The maximum portfolio allocation to municipal obligations is 15 percent.

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Money Market Funds: Shares of beneficial interest issued by diversified management companies, that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.). To be eligible for investment pursuant to this subdivision these companies shall either: (1) have attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations or (2) have retained an investment advisor registered or exempt from registration with the Securities and Exchange Commission, with not less than five years’ experience managing money market mutual funds, and with assets under management in excess of $500,000,000. The maximum portfolio exposure is limited to 20 percent. Local Government Investment Pools: Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivision (a) to (n), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria:

1. The adviser is registered or exempt from registration with the Securities and Exchange Commission.

2. The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (n), inclusive.

3. The adviser has assets under management in excess of five hundred million dollars ($500,000,000).

19.4.8 Ineligible Investments The District shall not invest in mortgage-backed securities, inverse floaters, range notes, interest-only strips that are derived from a pool of mortgages or any security that could result in zero interest accrual if held to maturity. Any security or security type not specifically allowed by the District’s Policy is expressly prohibited. 19.4.9 Swaps A swap transaction will only be executed if (i) economic gain over the life or the investment can be realized, or (ii) it enhances the portfolio’s overall credit quality or liquidity. In no instance shall a swap be used for speculative purposes. Swaps may be executed following the presentation to and approval of, the Finance CommitteeFinance and Administration Committee, of potential swap opportunities, as part of the quarterly review and approval of the overall investment strategy.

ATTACHMENT 1

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19.4.10 Loss of Value or Credit Quality When investments lose value either because of market conditions, credit quality, maturity or other conditions, the Finance CommitteeFinance and Administration Committee will evaluate the relative risk of holding versus liquidating the investment keeping in mind the five primary goals hereto fore presentedlisted in Section 19.4.1 of this policy. If a fund or investment incursexperiences a 3 percent market loss, regardless of actual dollar losses, the Committee will notify the Board of Directors of the reduced value and provide a recommended course of action. 19.4.11 Approved Broker/Dealer List The District shall execute purchases and sales of securities only with primary dealers or other approved institutional broker/dealers. The District’s finance staff will maintain a list of financial institutions approved for securities’ transactions and will review the list annually. All approved institutions must sign the Information Request Form and agree to abide by the conditions set forth in the District’s Investment Policy. For transactions executed by the investment management firm engaged by the District, the firm’s approved list may be used. 19.4.12 Risk Tolerance The District recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control non-systematic risk. The Finance CommitteeFinance and Administration Committee is expected to display prudence in the selection of securities, as a way to minimize default risk. No individual investment transaction shall be undertaken which jeopardizes the capital position of the overall portfolio. Risk will also be managed by subscribing to a portfolio management philosophy that helps to control market and interest rate risk by purchasing investing to ain shorter term investments. This philosophy also prohibits trading losses (for speculative purposes) unless there is a sudden need for liquidity and the need cannot be satisfied on a more cost effective basis. Loss of principal will only be acceptable if economic gain can be conclusively demonstrated. Controlling and managing risk is the foremost portfolio management objective. The District strives to maintain an efficient portfolio by providing for the lowest level of risk for a given level of return. This acceptable level of return is based on the performance of a benchmark with similar portfolio characteristics as the District’s portfolio. Any level of return above this measure should be reviewed in order to ensure that such investments meet the criteria previously specified. 19.4.13 Safekeeping and Custody All securities transactions entered into by the District or by the District’s financial advisors, consultants or managers, shall be conducted on a delivery versus payment basis. All cash and securities in the District’s portfolio shall be held in safekeeping the District’s name by a third party bank trust department, acting as agent for the District under the terms of a custody agreement executed by the bank and the District. The only exception to the foregoing shall be depository accounts and securities purchases made with: (I) LAIF, (ii) local government

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investment pools, and (iii) money market mutual funds, since these securities are not deliverable. Evidence of each of these investments will be held by the District Director of Finance. 19.4.14 Statement of Investment Policy The Director of Finance shall submit the Investment Policy for review by the Finance CommitteeFinance and Administration Committee annually. Any recommended changes to the policy shall also be considered by the Board of Directors at a public meeting. 19.4.15 Maximum Maturity Investment maturities shall be based on review of cash flow forecasts. Maturities will be scheduled so as to permit the District to meet all projected obligations. No investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement, that at the time of the investment has a term remaining to maturity in excess of five years, unless the Board has granted express authority to make that investment no less than three months prior to the investment. 19.4.16 Competitive Bidding Procedures A competitive process shall be used to conduct investment transactions whenever possible. When purchasing a security, the District, or its advisor, will select the security which provides (a) the highest rate of return among the comparable securities, and (b) optimizes the investment objectives of the overall portfolio. When selling a security, the District, or its advisor, will select the bid which generates the highest price. It will be the responsibility of the personnel involved with each purchase/sale to document and retain written records of each transaction.

ATTACHMENT 1

BOARD AGENDA REPORT


Dept. Head: Al Lau Submitted by: Gerry Canfield Department: Engineering Approved by: Allen Carlisle, CEO/GM

SUBJECT: TERMINATE THE JOINT WATER AGENCIES (JWA) NATURAL COMMUNITY CONSERVATION

PLAN (NCCP) – JN 98046 RECOMMENDATION(S): 1. Authorize staff to move forward with the process to terminate the NCCP 2. Authorize General Manager to sign joint letter from the four JWA Partners notifying the United States

Fish and Wildlife Services (USFWS) and California Department of Fish and Game (CDFG) of the termination.

ALTERNATIVE(S): 1. Continue the JWA NCCP Subregional and Subarea Plan in the future if circumstances change 2. Continue independently of JWA Partners with a similar conservation plan which would require securing

mitigation land. This could be achieved by purchasing desirable land, donating it to a conservation bank, reserving a portion of the land for future District projects and providing an endowment for the management of the mitigation land.

ATTACHMENT(S): 1.

FUNDING: Requested amount: 0 Budgeted amount: 0 Are funds available? N/A Project cost to date: $820,750; due to GASB 51 requirement, past expense associated with NCCP will need to be expensed.

PRIOR BOARD/COMMITTEE CONSIDERATION: July 1993, January 1996, March 1997, May 1997, August 1997, November 1997, March 1998, September 1999, July 2001, May 2002, June 2002, November 2002, July 2003, March 2004, April 2005, October 2006, January 2008, May 2008, January 2009, February 2010, March 2010




Policy Updates:

Rules & Regulations



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EXECUTIVE SUMMARY: After seventeen years of unsuccessful negotiations between USFWS, CDFG and Padre Dam, Sweetwater Authority, Helix Water District and Otay Water District (JWA Partners collectively), staff and fellow JWA Partners have agreed not to continue pursuing approval of the NCCP. The long term monitoring and maintenance costs that will be imposed on the NCCP and the lack of resources available by the USFWS and CDFG to complete the review of the NCCP make the plan infeasible. Additionally, each JWA Partner is facing reductions in water demands and developments within their jurisdictional area. Consequently, each JWA Partner is re-evaluating the needs of their capital improvement projects and their need for mitigation lands and credits. Although the JWA Partners have invested considerable time and resources as a group, each partner will walk away with a Subarea plan. The Subarea plan is specific to the District and has identified species and habitats for projects in the master plan. Padre Dam’s lands alone are not sufficient to provide required conservation and mitigation for Capital Improvement Projects, if the remaining three JWA Partner’s Boards agree to terminate the NCCP; Padre Dam will have no alternative but to terminate the JWA NCCP. DESCRIPTION OF JWA NCCP: California Legislature enacted the Natural Community Conservation Planning Act (NCCPA) in 1991. The NCCP allows for the preparation of multi species habitat conservation plans by certain jurisdictions to provide long-term protection of vegetation and wildlife while allowing compatible land uses and appropriate development and growth. The JWA NCCP is designed to coordinate management of sensitive habitats and their associated species with the public need for water supplies. The premise of developing the JWA NCCP is that in exchange for certain guarantees by the water agencies, the Wildlife Agencies will allow each water agency to “self-permit” for projects within their boundaries for a 75-year period so long as they comply with the plan guidelines. The water agencies’ assurances involve environmental and conservation responsibilities, providing conservation easements over designated portions of property, and monitoring and enhancement of habitat areas. Each agency will provide implementing guidelines for the preserve areas related to site selection, development, construction, operations and maintenance of facilities owned and managed by the agencies. The major advantage of the NCCP for Padre Dam is the negotiation of guidelines that are tailored to the needs of water districts. If Padre Dam did not participate in its own habitat management plan and implementing agreement with the Wildlife Agencies, it would be forced to follow those of the governing city or county where its projects are located. City and County plans are developed with the intent of issuing authority to third party developers, whereas the Plan is specific to the member water agencies. The NCCP still requires compliance with CEQA/NEPA and the preparation of any required support studies and documentation for each project. However, if a covered project requires mitigation, the Plan includes the mitigation ratios necessary to allow the project to proceed under the take authorization. Mitigation land must still be purchased for each applicable project. But the NCCP allows Padre Dam to purchase mitigation land directly from the other JWA Partners, which provides more security that the land will be managed and protected for conservation at current market prices. The NCCP does not relieve the requirements for wetlands areas under the “no net loss” policy. Consultation with the US Army Corps of Engineers and other appropriate documentation (CEQA/NEPA) must be processed when projects affect wetlands areas – such as crossing streams with pipelines.

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HISTORY OF JWA NCCP: November 1995, a meeting was conducted by BB&K, with Sante Fe Irrigation District, Helix Water District, Otay Water District, San Diego County Water Authority, Sweetwater Authority, and Padre Municipal Water District to discuss the need to prepare a document separate from the City of San Diego’s Multiple Species Conservation Plan (MSCP) scheduled to be reviewed by the United States Fish and Wildlife Service (USFWS) and California Department of Fish and Game (CDFG) in January 1996. The initial meeting discussed the benefits of a Joint Water Agency (JWA) NCCP such as autonomy from local land use jurisdictions under the City’s MSCP and the streamlined approval process for projects by federal and state agencies. It was decided that the JWA NCCP needed to be fast tracked and submitted to the USFWS and CDFG to coincide with the City of San Diego’s MSCP so the JWA PARTNERS drafted a Request for Proposal (RFP) for the preparation of the JWA NCCP.

• July 1997 – First draft of JWA Subregional plan submitted to CDFG and USFWS

• November 1997 – First draft of Padre Dam’s Subarea plan submitted to CDFG and USFWS for review.

• October 1998 - During negotiations with USFWS and CDFG, the USFWS and CDFG agencies

requested additional and expanded work tasks, requiring a third draft of the plan, due to challenges to the City of San Diego’s MSCP by certain environmental groups claiming that their MSCP is not supported by sound science, additionally the environmental groups filed a lawsuit.

• May 2000, USFWS and CDFG provided comments and recommendations to Padre Dam MWD’s

Subarea Plan to aid in preparation of the final draft.

• April 2001- Padre Dam MWD revises District’s Subarea Plan in response to the updated Padre Dam MWD Master Plan to reflect new projects.

• December 2001 - Draft Subregional Plan was submitted to the USFWS AND CDFG.

• March 4, 2011 – Final Subregional and all four Subarea Plans to USFWS AND CDFG for review.

Delays in submitting the final Plan were due to myriad of circumstances such as requested additional and expanded work tasks by the USFWS and CDFG, frequent turnover of staff at the USFWS and CDFG, Padre Dam staff turnover and updates to the District’s Master Plan.

• December 2011 - The JWA PARTNERS received a letter from USFWS acknowledging receipt of

the JWA NCCP but state they do not have the staff or resources to review the plan but commit to review the plan, allowing one staff person eight hours per week in April 2012 and that the review should take about 3 months.

• July 9, 2012 - GM’s from Helix, Padre and Sweetwater, staff and BB&K met to discuss cost and

options to continue with the NCCP. BB&K was directed to meet with USFWS and CDFG to discuss ways to reduce the monitoring and maintenance costs of the NCCP.

• August thru December 2012 - With lack of responsiveness from USFWS and CDFG, the JWA

Partners are directed to begin process of terminating the NCCP COSTS TO CONTINUE WITH NCCP: If the JWA partners choose to continue with the completion of the NCCP, there will be additional consultant fees to respond to the USFWS and CDFG reviews & comments, EIR/EIS preparation and review, public review and permit issuance. Staff anticipates it will take another 30 to 36 months to complete the NCCP at the current turnaround time from the wildlife agencies. The District’s share of the cost to complete the NCCP based on above assumptions would be approximately $103,000.

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Once the permit is issued, each Partner will have to establish Conservation Area Management Plans (CAMPs - a separate document providing more detail for management and monitoring of all conserved habitat in the subarea). The Partners will be required to complete biological studies in years one and two and submit a management plan for each subarea conservation area to the WA in year three for approval. Cost to establish CAMPs for three years will be approximately $108,738, which includes annual inflationary adjustment. The Partners will continue to evaluate their conservation areas for four more years to determine if the NCCP requires additional adjustments. During this period the Partners can decide if they would like to continue with the NCCP or abandon the Plan. The cost for the evaluation period would be approximately $237,307, which also includes the annual inflationary adjustment.

Activity Cost Cost with 3% CIP Start-up to establish CAMPs (years 1-3) $105,540 $108,738 Evaluation adjustment period (years 4-7) $219,472 $237,307 Monitoring and Maintenance (years 8-75) $2,371,024 $8,096,103 TOTAL $2,696,036 $8,442,148*

*Costs used were identified in Padre Dam’s Subarea Plan plus Staff time and then a 3% inflationary escalation rate was applied. PROJECTS IDENTIFIED IN THE NCCP THAT REQUIRE MITIGATION Within Padre Dam’s Master Plan, staff indentified 30 projects to be included in the NCCP. Of those projects twelve will be built or rehabbed in the next five years, eight within the next ten years, two are currently in progress, two will not be built and the remaining six are developer driven in which case the developer would be responsible for the mitigation. There is no cost savings when purchasing mitigation land from a JWA Partner, you must pay market rate at time of purchase. Cost to buy Mitigation Land on a project by project basis for the 22 reevaluated projects

22 Projects Habitat Disturbed

Projected Mitigation Required

Cost at $35,300/acre

TOTALS 18.2 27.9 $984,870 Factor of safety 1.5 times total acreage

41.9 $1,477,305

BENEFITS TO CONTINUE WITH THE NCCP:

• Purchase mitigation credits from other JWA Partners, guaranteeing required habitat will be available for projected projects. • Uniform mitigation ratios are established in the plan; members will not be required to use ratios that were established for other City/County conservation plans. • The EIR/EIS information can also be used for support documentation for CEQA/NEPA review for certain projects. • Subarea Plan has provisions to negotiate and process amendments, if needed, in order to include projects not currently included in the plan.

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REASONS NOT TO CONTINUE WITH THE NCCP

• Cost to maintain and monitor: $8,442,148 compared to purchasing mitigation land on a project by project basis $984,870. • Avoid granting conservation easements in perpetuity of District property. • Limitations as to what types of activities or projects would be allowed near and within the the conservation areas. • Avoid additional scrutiny and monitoring requirements by regulatory agencies on conservation property. • Avoid limits on types of activities or projects near and within the conservation areas. • Less of need for new facilities with the decrease in development. Most projects are maintenance projects which require little if any mitigation. Future development and the need for new facilities would require developer mitigation. • Not part of Padre Dam’s mission and vision to provide habitat and wildlife conservation, responsible to mitigate only for areas disturbed for district projects. This is the district’s fiduciary responsibility to rate payers.

RECOMMENDATION(S): Staff recommends that the Board of Directors authorize staff to move forward with the process to terminate the NCCP and authorize the General Manager to sign joint letter from the four JWA Partners notifying the USFWS and CDFG of the termination. Cost associated with the termination will be minimal to close out the project.

BOARD AGENDA REPORT


Dept. Head: Allen Carlisle, CEO/GM Submitted by: Melissa McChesney, Communications Officer Department: Administration Approved by: Allen Carlisle, CEO/GM

SUBJECT: RULES AND REGULATIONS – SECTION 8 UPDATES AND REVISIONS

RECOMMENDATION(S):

1. Hear presentation summarizing proposed revision to the District’s Rules and Regulations. 2. Adopt ordinance amending Rules and Regulations, Section 8, as set forth in Exhibit A. ALTERNATIVE(S): 1. Adopt ordinance amending the Rules and Regulations, section 8, with proposed amendments.

ATTACHMENT(S): 1. Ordinance and Exhibit A showing redlined version of proposed amendments to the Rules and

Regulations Section 8.






Policy Updates:

Rules & Regulations



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EXECUTIVE SUMMARY: Padre Dam’s Rules and Regulations, Section 8, cover customer accounts. The new Continuous Flow Program which customers can opt-in for required an update to ensure customer understanding of the program and clarify customer responsibility for water use. The IAWP Agricultural program was terminated on December 31, 2012 by Metropolitan Water District requiring an update to this section of the Rules and Regulations. Additional minor revisions were completed with these program changes. DESCRIPTION: The following table shows the areas that were revised for content and the purpose of the revision. Additional minor wording changes that do not change the content of the document but were revised for clarity are included in Exhibit A, but not in the chart below. Section Description of Change 8.1.4 – Continuous Flow Notification Program

Added this section to include information on the District’s new Continuous Flow Notification Program. Language clarifies the customer’s responsibility for all water use.

8.2.8 – Agricultural Water

Removed all language throughout this section that included reference to the IAWP Program. This program was terminated as of December 31, 2012.

8.3.8 – Establishment and Discontinuance of Accounts

Language added to allow removal of unused water meters after one year.

8.7.1 – Water Leak Adjustment Policy

Language added about customer’s responsibility for all water use. District is not responsible for notification of leaks or water use.

RECOMMENDATION(S):

1. Hear presentation summarizing proposed revision to the District’s Rules and Regulations. 2. Adopt ordinance amending Rules and Regulations, Section 8, as set forth in Exhibit A.

ORDINANCE 2013-___

ORDINANCE OF THE BOARD OF DIRECTORS OF PADRE DAM MUNICIPAL WATER DISTRICT

AMENDING RULES AND REGULATIONS SECTION 8, CUSTOMER ACCOUNTS

NOW THEREFORE BE IT ORDAINED by the Board of Directors of Padre Dam Municipal Water District as follows:

Section 1. The District’s Rules and Regulations Section 8, Customer Account, is hereby amended as set forth in Exhibit A attached hereto.

Section 2. All prior policies that are inconsistent with this Ordinance and

previous versions of the Rules and Regulations Section 8 are hereby repealed.

Section 3. This Ordinance shall take effect upon its adoption.

PASSES AND ADOPTED, at a Regular Meeting of the Board of Directors of Padre Dam Municipal Water District held on February 6, 2013 by the following vote, to wit:

AYES: NOES: ABSENT: ABSTAIN:

ATTEST: Board President

Board Secretary

Rules and Regulations SECTION 8 Padre Dam Municipal Water District Page 1

EXHIBIT A

SECTION 8 CUSTOMER ACCOUNTS Billing and Payment for Water and Sewer Services INDEX Page 8.1 METER READING ....................................................................................... 3

8.1.1 Estimated Readings......................................................................... 3 8.1.2 Meter Testing for Accuracy................................................................ 3 8.1.3 Meter Reading to Start or Discontinue Service......................................... 3

8.1.4 Continuous Flow Notification Program……………………………………………..4 8.2 STANDARD BILLINGS ............................................................................... 6

8.2.1 Water Charges ............................................................................... 6 8.2.2 Irrigation Adjustment to Daily Water Allocations...................................... 7 8.2.3 Recycled Water Charges ................................................................... 7 8.2.4 System Charges.............................................................................. 8 8.2.5 Sewer Service Charges ..................................................................... 8

8.2.5.1 Single Family Residential....................................................... 8 8.2.5.2 Multiple Family Residential .................................................... 8 8.2.5.3 Commercial....................................................................... 9 8.2.5.4 Sewer Charges During Mandatory Water Use Reductions ................. 9

8.2.6 Pumping Energy Charges................................................................... 9 8.2.7 Crest Service Area Charges (Improvement District D) ................................ 9 8.2.8 Agricultural Water .......................................................................... 9

8.2.8.1 IAWP .............................................................................. 10 8.2.8.12 SAWR Program .................................................................12 8.2.8.23 Program Exit and Ag Appeals................................................14

8.2.9 Temporary Meter Water Rates...........................................................14 8.2.10 Construction Meter Charges ............................................................14 8.2.11 Out-of-District Water Rates.............................................................15 8.2.12 Out-of-District Sewer Rates.............................................................15 8.2.13 Fire Service Charges .....................................................................15

8.3 SERVICES AND MISCELLANEOUS SERVICE CHARGES.........................................15

8.3.1 Billing Adjustments ........................................................................15 8.3.2 New Account Service Charge.............................................................15 8.3.3 Late Payment Fee..........................................................................15 8.3.4 Notification Fee ............................................................................16 8.3.5 Discontinuance Fee ........................................................................16 8.3.6 Overtime Fee ...............................................................................16 8.3.7 Returned Payment Fee ...................................................................16 8.3.8 Establishment and Discontinuance of Accounts.......................................16 8.3.9 Security Deposits...........................................................................17 8.3.10 Refund of Security Deposits ............................................................18 8.3.11 Other Services ............................................................................18

8.4 BILLINGS AND PAST DUE PROCEDURES........................................................18

8.4.1 Original Billings.............................................................................18 8.4.2 Past-Due Notices ...........................................................................18


8.4.3 48 Hour Notification .......................................................................19 8.4.4 Discontinuance of Service Due to Nonpayment .......................................19 8.4.5 Reinstatement of Discontinued Service ................................................20 8.4.6 Owner Only Policy ........................................................................20 8.4.7 Establishment of Lien to Secure Payment .............................................20 8.4.8 Collection Agency Procedures ...........................................................21 8.4.9 Customers in Bankruptcy .................................................................21

8.5 PAYMENTS ..........................................................................................22

8.5.1 Acceptance of Coins in Payment of Customer Bills...................................22 8.5.2 Returned Payments ........................................................................23 8.5.3 Advance Payment ..........................................................................23 8.5.4 Post Dated Checks - Two Party Checks .................................................23

8.6 SEWER SERVICE DISCONTINUANCE AND REINSTATEMENT .................................23

8.6.1 Discontinuance of Sewer Service ........................................................23 8.6.2 Reinstatement of Sewer Service.........................................................24

8.7 CUSTOMER'S RIGHT TO REVIEW AND APPEAL................................................25

8.7.1 Water Leak Adjustment Policy...........................................................26


SECTION 8 CUSTOMER ACCOUNTS Billing and Payment for Water and Sewer Services

8.1 METER READING The District will attempt to collect a read every billing period.

8.1.1 Estimated Readings Should any water meter in service fail to register or if a reading cannot be obtained during a billing period, the customer will be billed for an estimated amount of water use, as determined by the District. The bill will be marked "ESTIMATED."

8.1.2 Meter Testing for Accuracy All customers have a right to request that their water meters be tested by the District for accuracy. The District requires a deposit for such testing. Refer to the section regarding fees and charges for the meter test deposit amount. If such testing indicates a deviation of more than 1.5 % over the true registration, the District will replace the meter, adjust the customer's account accordingly, and refund the meter test deposit. The District will not adjust a customer's account for more than two billing periods preceding the customer's meter test request. If such testing indicates a deviation of less than 1.5 % of the true registration, the District will consider the meter to be registering within the limits of true accuracy and the District will not adjust the customer's account, nor refund the meter test deposit. The District may, at their discretion, replace the meter. American Water Works Association (AWWA) Standards for new meters are used to determine acceptable deviation from true registration. Those deviations may vary per meter size and type.

8.1.3 Meter Reading to Start or Discontinue Service The District will collect a read to start service during regular business hours. Upon request of the customer, the District may start water service after hours or during a weekend for an additional after-hours charge. The District will discontinue service only during normal business hours.


8.1.4 Continuous Flow Notification Program Padre Dam Municipal Water District (“Padre Dam”) has developed a voluntary continuous flow notification service (“Service”) for water customers. This service may be used as a tool to help customers manage water flows through their meter. This Service will allow customers to receive a phone, text, or email message when Padre Dam’s automated meter reading (“AMR”) system records a minimum of 48-hours of continuous water use. Padre Dam offers this optional Service as a helpful tool to notify customers of a potential leak. Participation in the Program is voluntary. In order to participate in the Service Aas a voluntary participant, customers must execute Padre Dam’s Participation Agreement and Waiver for the Service, requiring the customer to understand and agree to all of the following:

• The customer is the registered owner, or has the legal authority to act on behalf of the registered owner, of the property within the Padre Dam service area.

• The customer freely volunteered to participate in the Service.

• While Padre Dam will make reasonable efforts to notify customers of continuous flow occurring at their property, technical issues including, without limitation, email/phone/text delivery issues, AMR system reporting errors and AMR system signal interruptions, may prevent the customer you from receipt of notification.

• The customer will remain responsible for the maintenance of the water pipes at their property and for the detection and repair of any leak.

• Subject to any technical issues that may occur, customers participating in the Service will receive a notice from Padre Dam when the AMR system has recorded a minimum of 48-hours of continuous flow on their meter up to a maximum of three notices per incident.

• Continuous flow does not guarantee that a customer participating in the Service has a leak. Customers should check their property to ensure that no faucet or other water source has been left on.

• The Service does not guarantee notification of all undesirable water flows. The Service will not notify customers for:� (1) higher than normal use that is not continuous; (2) �problems or possible leaks within irrigation systems� (3) leaks that start and stop (i.e. toilet leaks or irrigation leaks)�; (4) sudden line breaks that have been flowing less than 3 days; and (5) sudden increases in water usage.

• Theis Service is intended to provide a helpful tool but does not replace the customer’s responsibility to monitor water use regularly. Once notification is sent,


the customer is solely responsible for determining the cause of the continuous flow of water through their water meter.

• Customers partcipating in the Service is still responsible for all water use at their property and will be charged and be responsible for the payment of fees for all water used including water used before and after receiving notification from Padre Dam of continuous flow.

• The connection between the water main and meter box, including the water meter, are owned and maintained by Padre Dam. The customer is responsible for the maintenance and repair of all water pipelines and facilities connecting their property to the District’s water meter (“private water facilities”).

• Padre Dam neither undertakes nor assumes any responsibility for or duty to the customer or any third party for the operation, maintenance, review, or inspection of private water facilities, or to inform the customer or any third party of any leaks or damage resulting from the operation and maintenance of private water facilities, or for any service, equipment or material furnished for private water facilities.

• The customer waives any claims, known or unknown, and shall hold harmless Padre Dam from any damage or liability that may arise or is in any way a result of Padre Dam’s operation of the Service.

• Customers opting for this program must read and fully understand the statutory language of Civil Code Section 1542, which reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Customers opting in expressly and specifically waive and relinquish any and all protections, privileges, rights and benefits under Civil Code Section 1542 as to the matters included in Padre Dam’s Participation Agreement and Waiver for the Service.

• Padre Dam does not make any representations or warranties, expressed or implied, concerning its operation of the Service or your participation therein.

• The customer shall rely solely upon their own judgment with regards to reliance on any information supplied by Padre Dam in connection with the Service.

• Any data collected from the District’s AMR system shall be for the benefit of Padre Dam.


• Padre Dam does not provide staff to find leaks or other water use on the customer’s property. For assistance locating leaks visit www.padredam.org. Customers may ultimately need to contact a plumber to help locate and repair leaks at your property. All leaks must be replaced in the time specified in Section 5 of Rules and Regulations.

8.2 STANDARD BILLINGS Billings consist of water charges, system charges, any applicable pumping energy charges, applicable sewer service charges, and applicable past due fees or other service charges. Customers in the Crest water service area are charged an additional fee for repayment of a Prior Debt Service as described under "Crest Service Area Charges" in this section.

8.2.1 Water Charges The District determines the water consumption for each customer based on a read from the customer’s water meter. The recorded consumption is used to calculate water charges as described in this section. Refer to the fees and charges section of these Rules and Regulations. Single family and multifamily residential tiered allocations are based on lot size and/or purchased capacity. Commercial, government, multifamily residential and potable water irrigation allocations are based on purchased capacity only. Customers are encouraged to conserve through an inclining block rate structure. A customer’s allocation is placed in tiers one and two of four rate tiers. Additional water is available for customer use at higher rates in tiers three and four. Refer to the fees and charges section of these Rules and Regulations for current rates. The District may adjust customer allocations due to changes in billing methodology, when the District is in a drought level or when the District, San Diego County Water Authority or Metropolitan Water District of Southern California order water use reductions. The following tables show the daily water allocation for each customer type in each tier. See Irrigation Adjustment to Daily Water Allocation table in this section for seasonal adjustments to these allocations.


Effective for bills mailed on or after January 1, 2013

There are three water customer classes – single family, multiple family and non-residential. The multi-family (MF) class covers multi-family dwellings (apartments), mobile home parks, and condominiums/townhouses. Non-residential customer class includes commercial/government (hotels and rest homes included), potable irrigation, recycled irrigation, agriculture, construction, flushing and fire service. The rates for non-residential customers are uniform rates for each category and do not have tiers.

All numbers are in Hundred Cubic Feet

Single Family Residential and Multi-Family Allocations

Effective for bills mailed on or after 1/1/13

Tier RS1

.01 - .50 acres

RS2

.51 – 2.00 acres

RS3

2.01 + acres

RS4

1.5 EDUs

RS5

2.0 EDUs

MF

Per EDU

1 0-9 0-9 0-9 0-13 0-18 0-7

2 10-27 10-33 10-38 14-41 19-55 8-22

3 28-36 34-43 39-49 42-55 56-73 23-30

4 37+ 44+ 50+ 56+ 74+ 31+

8.2.2 Residential Irrigation Adjustment to Daily Water Allocations The following table shows how daily water allocations in tiers two and above for residential and potable water irrigation customers change in accordance with landscape irrigation needs.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

71% 59% 70% 85% 112% 1276% 140% 141% 124% 110% 86% 75%

Warmer Months

(Percentages rounded to whole numbers. Annual amounts equal 100% of allocation.)

8.2.3 Recycled Water Charges The water charges for recycled irrigation water are currently set at a discounted rate (90%) of the potable irrigation rate. Recycled water has no water use allowance restrictions and is not subject to Conservation Water Commodity Rates. Refer to the fees and charges section of these Rules and Regulations.


8.2.4 System Charges A System Charge will be assessed for each active water account, whether or not water is actually used. This charge recovers certain fixed operative costs that do not vary with consumption. These costs include, but are not limited to, the costs of operating and maintaining the water system, the collection of meter reads, preparing and posting bills, and other related services. The System Charge will be prorated when service is provided for less than a full billing period. The System Charge is determined by the size of water meter used. Refer to the section regarding fees and charges for current System Charges.

8.2.5 Sewer Service Charges Sewer service charges will be assessed each billing period. The amount will be determined by the customer's type of service, the service classification, the estimated Return to Sewer (RTS) percentage, and water use. Refer to the section regarding fees and charges for current sewer service charges. At no time, will the sewer charges be less than or more than the minimum or maximum per EDU, as reflected in the section regarding fees and charges.

8.2.5.1 Single Family Residential The sewer rate is based upon 60 days of the lowest daily water consumption documented during a full two month billing period in the previous calendar year or if that period is unavailable the nearest available twelve month period. For new customers or those customers accounts with less than a full 12 month history, District-wide average shall apply, unless a full two month billing consumption from the previous calendar year is less than the District-wide average. Accounts with no water consumption history available shall be charged at the District-wide average for residential homes. Refer to the section regarding fees and charges for current sewer service charges.

8.2.5.2 Multiple Family Residential (Townhomes, Condominiums, Apartments, Mobile Homes, RV Parks)

Multiple Family equivalents are based upon a percentage of a Single Family Dwelling (EDU) as reflected in Section 4. To calculate the sewer charge for multiple dwellings, multiply the number of EDUs by the appropriate base rate, then add the amount of water returned to the sewer multiplied by the appropriate strength rate. The amount of water returned to the sewer system is determined by multiplying the water usage by the RTS percentage (refer to section 4) as determined by the District. At no time will the sewer charges be less than or more than the minimum or


maximum per EDU. Refer to the section regarding fees and charges for current sewer service charges.

8.2.5.3 Commercial To calculate the sewer charge for commercial accounts, multiply the number of EDU’s by the appropriate base rate, then add the amount of water returned to the sewer multiplied by the appropriate strength rate. The strength rate is determined by the sewer strength level of Suspended Solids and BOD as defined by the District. The amount of water returned to the sewer is determined by multiplying the water consumed by the RTS % (refer to section 4) as determined by the District. Refer to the section regarding fees and charges for current sewer service charges.

8.2.5.4 Sewer Charges During Mandatory Water Use Reductions The District may freeze each Single Family Residential (SFR) customer’s basis for sewer charges during mandatory water use reductions to maintain adequate revenues for sewer operations and capital costs.

8.2.6 Pumping Energy Charges Each pumping station used to pump water to elevations above the gravity flow service area operates on electrical energy. The District's energy costs for pumping water are charged to those customers who benefit from such pumping stations. Refer to the section regarding fees and charges for current pumping rates.

8.2.7 Crest Service Area Charges (Improvement District D) Customers in the Crest water service area pay additional charges. The Prior Debt Service, approved by Crest voters as a condition of the merger, covers the Crest customers' share of the eastern service area water distribution system which services the Crest area. This charge shall terminate no later than June 2015. When the outstanding obligations are paid in full, these charges will be removed from the water billing. Refer to the section regarding fees and charges for the Crest Area Charges.

8.2.8 Agricultural Water Metropolitan Water District of Southern California’s Interim Agricultural Water Program (IAWP), adopted in 1994, provides a discount on surplus water purchased for agricultural purposes. In exchange for this discount, Metropolitan may reduce IAWP deliveries prior to imposing any mandatory allocation under the Water Surplus and Drought Management Plan, when Metropolitan calls for IAWP reductions. Further reductions may be required once M & I reductions are put in place. The IAWP program will end on December 31, 2012.


SAWR is the San Diego County Water Authority’s Special Agricultural Water Rate Program. When Metropolitan calls for M&I reduction all SAWR customers will be subject to reductions. The District will assess a special service charge per billing for each account participating in the IAWP or SAWR. Refer to the Fees and Charges section for these billing amounts.

8.2.8.1 IAWP The Metropolitan Water District of Southern California (MWD) Board voted to terminate the Interim Agricultural Water Program (IAWP) on December 31, 2012. Customers enrolled in the IAWP program are automatically enrolled in the SAWR program. Customers Subject to IAWP Reduction: Customers electing to remain in the Interim Agricultural Water Program after December 31, 2011 are subject to the reduction.. Customers who exited the program prior to December 31, 2011 are not subject to the IAWP supply reductions. Entering the IAWP Program Today: MWD will no longer accept new IAWP applications. Customers exiting the program will not be able to re-enter in the future. Methodologies for Administering, Monitoring and Verifying Reduction – As per the regional implementation guidelines adopted by the San Diego County Water Authority, the District will utilize month to month water allocations provided in advance on a per customer basis, with allocations determined by the percentage reduction compared to the months of Fiscal Year 2006-2007 (July 1, 2006 through June 30, 2007) as follows:

a) Each IAWP customer will be provided a print-out of their respective monthly water usage allocations of each year.

b) Monthly invoicing will reflect the allocation for the specific month and the amount of

usage over and under the monthly allocation.

c) Water usage under the monthly allocation will result in a “usage credit” which can be rolled forward to offset over-usage in successive months of the 12-month program. However, credits remaining at the end of the initial 12-month program cannot be rolled forward into a subsequent year or program, if one is implemented.

d) Water usage over the monthly allocation will result in a “monetary penalty”. The

penalty will be charged for all water in excess of the allocation for the billing period. Penalties will be equal to what Metropolitan and the Water Authority assess the District in addition to the customer’s regular ag water rate. Refer to Section 10, Fees and Charges, for penalty fees and agricultural rates.


e) Penalties paid to the District can be earned back with subsequent usage credits.

However, penalties paid but not earned back at the end of the 12-month calendar year cannot be earned back with under usage in a subsequent year or program, if one is implemented.

In cases of customers repeatedly or flagrantly exceeding monthly allocations, the District has the authority to impose additional fines, penalties, or flow-restrict the customer’s meter as follows: First Violation - If at the end of any two consecutive billing cycles, the IAWP participant usage is 5% or more above the cumulative allocation and for that two month period, the IAWP participant or participant group will pay the applicable penalty rate for the over usage and receive a Notice and warning by phone call and certified letter stating that if the participant is still above the cumulative allocation at the end of the third month, or Warning Month, then effective with the start of the fourth month, the individual participant meter or meters for the participant group will be flow restricted to 50% of the meter design flow for the next 30 calendar days. If at the end of the fourth month, the IAWP participant usage is at or under the cumulative allocation for the preceding four months, the flow restrictor will be removed at the beginning of the fifth month. If at the end of the fourth month, the IAWP participant or participant group usage remains over the cumulative allocation for the preceding four months, the flow restrictor will remain in place until a subsequent account billing demonstrates that the cumulative usage of the IAWP participant or participant group for all preceding months is at or under the cumulative allocation. If necessary, greater flow restriction may be placed upon the meter if subsequent months continue to exceed allocations. Second Violation - If in any subsequent month after the 1st violation, an IAWP participant previously flow restricted under the provisions of the IAWP Reduction Implementation Plan again exceeds the usage allocation and accumulated usage credits by 5% or more during any one-month period, the participant or participant group will pay the penalty rate for over usage and receive Notice and warning by phone and certified letter. If at the end of the Warning Month, the cumulative consumption for the month in which the allocation was exceeded and allocation for the warning month is still above the cumulative allocation for the two month period, then the individual participant meter or meters for the participant group will be flow restricted to 50% of the meter design flow until a subsequent account billing demonstrates that the cumulative usage of the IAWP participant or participant group for all preceding months is at or under the cumulative allocation. If necessary, greater flow restriction may be placed upon the meter if subsequent months continue to exceed allocations.


Third Violation - If, in a subsequent month after the second violation, an IAWP participant or participant group usage exceeds the allocation and accumulated usage credits by 5% or more for that period, then the 50% design flow restriction will be implemented, without warning, for the duration of the 2008 IAWP reduction program. If necessary, greater flow restriction may be placed upon the meter if subsequent months continue to exceed allocations. Reduction in Future IAWP Allocation - If at the end of the initial 12-month IAWP Supply Reduction Program, the District has exceeded its allocation of IAWP water from MWD and the SDCWA, then its future allocation, under normal and reduced supply conditions, shall be reduced by that amount of over usage. Likewise, each of Padre Dam’s IAWP accounts exceeding their individual allocation will have their future allocations to IAWP water reduced by an equivalent amount.

8.2.8.12 SAWR Program On October 23, 2008, the Water Authority Board approved a two-year transitional SAWR for growers opting out of the IAWP. In 2013, the Water Authority will continue a SAWR program, however, the program will only contain the storage charge exemption. Customers exiting thePrevious IAWP program customers are the only customers eligible for entering the SAWR program. Customers exiting the SAWR program will not be able to re-enter in the future. SAWR customers will face greater water reductions than M&I customers during emergency situations, where the Water Authority’s Emergency Storage supplies are being used, and will not have access to the Water Authority’s carryover storage program supplies in a shortage. Methodologies for Administering, Monitoring and Verifying Reduction – If MWD reduces M&I supply, SAWR customers will receive allocations determined by the percentage reduction compared to the months of Fiscal Year 2006-2007 (July 1, 2006 through June 30, 2007) as follows:

a) Monthly invoicing will reflect the allocation for the specific month and the amount of usage over and under the monthly allocation.

b) Water usage under the monthly allocation will result in a “usage credit” which can be

rolled forward to offset over-usage in successive months of the 12-month program. However, credits remaining at the end of the initial 12-month program cannot be rolled forward into a subsequent year or program, if one is implemented.

c) Water usage over the monthly allocation will result in a “monetary penalty”. The

penalty will be charged for all water in excess of the allocation for the billing period. Penalties will be equal to what the Water Authority assess the District in addition to


the customer’s regular ag water rate. Refer to the fees and charges section for penalty fees and agricultural rates.

d) Penalties paid to the District can be earned back with subsequent usage credits.

However, penalties paid but not earned back at the end of the 12-month calendar year cannot be earned back with under usage in a subsequent year or program, if one is implemented.

e) In cases of customers repeatedly or flagrantly exceeding monthly allocations, the

District has the authority to impose additional fines, penalties, or flow-restrict the customer’s meter as follows:

First Violation - If at the end of any two consecutive billing cycles, the SAWR participant usage is 5% or more above the cumulative allocation for that two month period, the SAWR participant or participant group will pay the applicable penalty rate for the over usage and receive a Notice and warning by phone call and certified letter stating that if the participant is still above the cumulative allocation at the end of the third month, or Warning Month, then effective with the start of the fourth month, the individual participant meter or meters for the participant group will be flow restricted to 50% of the meter design flow for the next 30 calendar days. If at the end of the fourth month, the SAWR participant usage is at or under the cumulative allocation for the preceding four months, the flow restrictor will be removed at the beginning of the fifth month. If at the end of the fourth month, the SAWR participant or participant group usage remains over the cumulative allocation for the preceding four months, the flow restrictor will remain in place until a subsequent account billing demonstrates that the cumulative usage of the SAWR participant or participant group for all preceding months is at or under the cumulative allocation. If necessary, greater flow restriction may be placed upon the meter if subsequent months continue to exceed allocations. Second Violation - If in any subsequent month after the 1st violation, an IAWP participant previously flow restricted under the provisions of the SAWR Reduction Implementation Plan again exceeds the usage allocation and accumulated usage credits by 5% or more, the participant or participant group will pay the penalty rate for over usage and receive Notice and warning by phone and certified letter. If at the end of the Warning Month, the cumulative consumption for the month in which the allocation was exceeded and allocation for the warning month is still above the cumulative allocation for the two month period, then the individual participant meter or meters for the participant group will be flow restricted to 50% of the meter design flow until a subsequent account billing demonstrates that the cumulative usage of the SAWR participant or participant group for all preceding months is at or under the cumulative allocation. If necessary, greater flow restriction may be placed upon the meter if subsequent months continue to exceed allocations.


Third Violation - If, in a subsequent month after the second violation, an SAWR participant or participant group usage exceeds the allocation and accumulated usage credits by 5% or more for that period, then the 50% design flow restriction will be implemented, without warning, for the duration of the 2008 IAWP reduction program. If necessary, greater flow restriction may be placed upon the meter if subsequent months continue to exceed allocations.

8.2.8.23 Program Exit and Ag Appeals Program Exit –Customers cannot re-enter either programSAWR after exiting and will become a full-price customer. Upon becoming a full price customer, service category is based on original service type purchased from Padre Dam. Appeals – IAWP SAWR participants may appeal program implementation provisions and decisions made by Padre Dam staff, such as penalty imposition and flow reduction, as follows:

a) Decisions made by the Padre Dam staff can be appealed in writing to the District’s Customer Accounts Officer. All appeals shall be filed within 15 calendar days of the date of the provision or decision being appealed. The Customer Accounts Officer shall then have 30 calendar days to render a written decision on the appeal.

b) All decisions may be appealed to the General Manager. Requests for appeals to the

General Manager shall be made in writing. During the appeal process, all provisions and decisions under appeal shall remain in full effect until the conclusion of the appeal process. Changes - This plan is based upon information available at the time of adoption. District staff is aware that there are possible future implementation policy decisions at the MWD and SDCWA level which could impact the content of the District’s implementation plan.

8.2.9 Temporary Meter Water Rates Water consumption shall be charged at twice the Tier 3 water rate for potable water and twice the recycled water rate for recycled water. Owner may request the option of payment of all fees associated with a permanent water service application. Permanent meter designation allows for payment of commodity rates associated with such designation.

8.2.10 Construction Meter Charges Each applicant for a construction meter shall pay a deposit determined on the basis of the meter size requested. There will also be a new account charge and a meter installation and removal charge. Applicable water and pumping/energy charges will also apply. Refer to the section regarding


fees and charges for current water rates and deposit amounts.

8.2.11 Out-of-District Water Rates Upon payment of all connection and capacity fees assessed to the property, water service for property located outside District boundaries shall be charged at the current water rates. If capacity fees have not been paid water service shall be charged at twice the current water rate. System charges and applicable pumping energy charges will be assessed at the normal rate.

8.2.12 Out-of-District Sewer Rates Upon payment of all connection and capacity fees assessed to the property, water service for property located outside District boundaries shall be charged at the standard sewer rate. If capacity fees have not been paid sewer service shall be charged at twice the sewer rate.

8.2.13 Fire Service Charges Customers are charged a flat fee for unmetered fire service. Refer to the section regarding fees and charges for current rates. 8.3 SERVICES AND MISCELLANEOUS SERVICE CHARGES Refer to section regarding fees & charges for current amounts of the following misc. charges:

8.3.1 Billing Adjustments Any adjustments in charges, shall be handled in a fair and equitable manner, on a case by case basis, following investigation. Adjustments are limited to no more than two billing periods.

8.3.2 New Account Service Charge A service charge will be assessed on all new or transferred customer accounts. The purpose of this charge is to recover field and administrative costs related to establishing new accounts.

8.3.3 Late Payment Fee A late payment fee is charged on each account that is not paid within five working days after the past due date. The late fee is calculated on the total outstanding balance for the


account. This fee recovers the costs of preparing and mailing late notices and responding to questions regarding unpaid bills and subsequent necessary actions.

8.3.4 Notification Fee A notification fee is charged to an account which becomes subject to discontinuance and is given a 48 hour notification. The purpose of this fee is to recover the cost of notifying the customer.

8.3.5 Discontinuance Fee A fee is charged to recover the costs associated with disconnecting water service due to nonpayment.

8.3.6 Overtime Fee An overtime fee is charged for turning on a water service outside of normal business hours to recover overtime labor costs.

8.3.7 Returned Payment Fee A processing fee is charged to each customer whose payment issued to the District is returned by the bankany financial institution. Such service charge may be adjusted by the District upon proof that the customer was not responsible for the payment being dishonored. If warranted and at the discretion of the District, further charges may be assessed.

8.3.8 Establishment and Discontinuance of Accounts At the time of application for water and/or sewer service the applicant shall be required to provide identification, billing information, and evidence of creditworthiness. Photo identification may be required. Creditworthiness shall be established by providing evidence of a previous District water and/or sewer account with a minimum one year prompt payment record; evidence of verifiable employment or other income; evidence of residence and prompt payment of rent for that period of time; or any other verifiable evidence approved by one of the Customer Accounts Officers. Any applicant unable to establish creditworthiness and/or provide adequate identification shall be required to provide a security deposit. Refer to the section regarding security deposits.


The owner of property receiving service is ultimately responsible for all charges including but not limited to all unpaid service charges and any late fees or other fees; however, any person (s) listed on a rental agreement may be listed in an application for service as responsible for water and/or sewer charges and fees. Each actual user agrees to the terms and conditions of service, and shall meet the requirements of the District's rules. At any time the District may require copies of a verifiable rental agreement and/or paperwork showing proof of ownership. The District may require that an account in which a single meter serves multiple tenants be held in the property owner’s name. It is the responsibility of the account holder to notify the District of a request to discontinue service prior to the closing date. If no discontinuance request is received, the account holder remains responsible for any water use. Any unauthorized water use between account holders is the ultimate responsibility of the property owner. Unpaid charges and fees may be transferred to or consolidated with another existing account held in the name of the person(s) responsible for such unpaid charges and fees, including the property owner where charges remain unpaid by the tenant(s). The District may remove meters where service has been discontinued for one year. A meter restoration fee will be required to reinstate the meter, in addition to any account start-up fee.

8.3.9 Security Deposits Each applicant who applies to the District for water and/or sewer service shall establish creditworthiness or pay a deposit. The normal deposit shall be calculated at current rates based on the highest consumption bill cycle for the subject property during the preceding 12 months, rounded to the next $5.00 increment with a minimum deposit of $50.00. Based on a customer’s account history, the District has the option to increase a deposit to a maximum of one and a half times the normal deposit. In the case of new service, the amount shall be fixed by the District on the basis of similar service types. A deposit or revision of an existing deposit may also be required for any service that has been subject to returned payments, prior unpaid debt(s) or had an account terminated for failure to pay. The District may allow the customer up to three months for payment, upon determination that such payments will not seriously jeopardize the ultimate collection of future payments due on the subject account, as decided by any one of the District Customer Accounts Officers indicated below:


a) Customer Service Manager b) Director of Finance c) General Manager

8.3.10 Refund of Security Deposits Customers who have paid security deposits shall be entitled to refunds upon the closing of their accounts, or upon completion of 12 consecutive billing periods during which no more than two payments were past due. Such deposits shall be credited against any amounts due the District. In the case of a closed account, the District may issue a check for any amount exceeding the outstanding balance, with the option to refund in cash any amounts less than $15.00. No interest shall be paid on the amount of any deposit or refund.

8.3.11 Other Services For services not specifically listed in these rules and regulations, refer to the section regarding fees and charges for miscellaneous fee amounts. Whenever the District performs a service, which is not covered by a charge or fee described in these Rules and Regulations, the person for which the service is being performed shall pay a reasonable fee. Special information requests that require research of District records, as permitted by law, will require payment of actual cost based on the District’s billing rates.

8.4 BILLINGS AND PAST DUE PROCEDURES

8.4.1 Original Billings Bills will be prepared and sentmailed to customers every billing period. The bill will state the procedures for filing a complaint or requesting an investigation concerning services or charges. Bills are due 15 days after the date sentmailed. When District offices are closed on the 15th day, bills are due on the following business day. All customer bills will indicate a "due" date.

8.4.2 Past-Due Notices The District will mail past-due notices to accounts that are not paid within 19 days after the bill was mailed. The past-due notice will include the following:


a) Name and address of the customer whose account is delinquent. b) Amount of original bill. c) Pending past due charges. d) Total amount due if not paid within five working days. e) The dates by which payments are required to avoid a 48-hour notification and

termination of service. f) The fee for the 48-hour notification. g) The procedure to request amortization. h) The procedure to initiate a complaint or request an investigation concerning service

or charges, unless the original bill for service contains a description of that procedure.

i) The procedure to obtain information regarding financial assistance. j) The telephone number of District representatives who can provide additional

information. No less than 10 days’ notice that service may be terminated on account of nonpayment shall be provided, effective not less than 5 days after the mailing of such notice.

8.4.3 48 Hour Notification District staff shall make a reasonable, good faith effort to contact an adult person residing at the customer premises either by telephone or in person, at least 48 hours prior to actual termination of service. Whenever telephone or personal contact cannot be accomplished, the District shall give, by mail or by posting in a conspicuous location at the premise, a notice of termination for service, at least 48 hours prior to termination. However, failure of the customer to receive such notification shall not affect the right of the District to discontinue service for nonpayment of outstanding charges. If it is necessary for the District to notify by a door hanger or telephone of pending termination, an additional notification fee shall be assessed. Refer to the section regarding fees and charges for the notification fee amount.

8.4.4 Discontinuance of Service Due to Nonpayment If payment is not received on a past-due account by the discontinuance date indicated on the 48 hour notification, water service shall be discontinued. The discontinuance date shall be not less than 35 days after the date the original bill was mailed sent by the District. Service shall not be discontinued on a Friday, Saturday, Sunday, District holiday or day prior to a District holiday.


At the District's option, sewer service may be physically disconnected due to nonpayment of outstanding charges. The account holder will be charged for the actual cost of service disconnection, including overhead expenses. The District shall not terminate residential service for nonpayment in any of the following situations:

a) During a pending investigation by the District of a customer dispute or complaint.

b) When a customer has been granted an extension of the period for payment of a bill.

c) On the certification of a licensed physician and surgeon that to do so will be life threatening to the customer and the customer is financially unable to pay for service within the normal payment period and is willing to enter into an amortization agreement with the District, over a period not to exceed 12 months, to amortize the unpaid balance of any bill asserted to be beyond the means of the customer within the normal period for payment.

8.4.5 Reinstatement of Discontinued Service Prior to the reinstatement of any service discontinued for non-payment, the customer must pay all outstanding charges. A security deposit may also be required. Refer to the section regarding fees and charges for the reinstatement fee amount. In the event that an account is closed due to non-payment, the account becomes subject to the District’s Owner Only Policy. If sewer service has been physically disconnected the account holder will also be charged for the actual cost of reconnecting the service, including overhead expenses.

8.4.6 Owner Only Policy In the event that normal collection procedures fail to secure payment of fees and charges resulting in an unpaid debt, the District may require that water and/or sewer service to subsequent tenants at the property be furnished under the name of the property owner and/or the District may establish a lien(s) against the property served, pursuant to provisions of the California Water Code. Refer to section regarding establishment of lien to secure payment. In all cases the actual user shall be entitled to pay amounts due on the account in order to avoid discontinuance.

8.4.7 Establishment of Lien to Secure Payment


In the event that normal collection procedures fail to secure payment of fees and charges outstanding on a customer account, the District may establish a lien(s) against the property served, pursuant to provisions of the California Water Code. An unpaid or delinquent water and/or sewer bill is the responsibility of the person in whose name the services are held. If the services are in the name of a tenant or lessee, the ultimate responsibility for the bill is with the legal owner of the property as shown on the San Diego Assessor and Controller’s tax rolls. After 60 days, if normal collection procedures fail to secure payment of fees and charges outstanding on a customer account, the District may establish a lien(s) against the property served according to the California Water Code. Ultimate responsibility for these unpaid bills (water, sewer, and/or other service charges) is with the property owner. The District will make every reasonable attempt to collect from the person in whose name the account is in. Upon written notice to the property owner, a lien against the property may be established regarding unpaid bills. One or both of the following lien procedures may apply:

a) Judgment Type Lien - The District may secure payment of unpaid charges by filing a

certificate specifying the amount of charges and the name and address of the person liable to the office of the San Diego County Recorder. The lien effected thereby shall attach to all property owned or thereafter acquired by that person within the County. Such lien shall have the force, priority and effect of a judgment lien and shall continue for 10 years from filing date, unless released or discharged sooner. Lien may be extended by filing a new certificate in the office of the San Diego County Recorder.

b) Tax Type Lien - Any unpaid bills that are at least 60 days overdue on July 1, may be

subject to a tax lien. The District may file a lien against a property on or before August 10 of each year, certifying to the Board of Supervisors and San Diego Auditor and Controller that the property owner has been notified of unpaid charges and the District is requesting a tax lien be levied upon the property.

Interest and penalty charges may be added to any of the above lien amounts. These lien procedures shall be in addition to any discontinuance of service procedures.

8.4.8 Collection Agency Procedures In the event that normal collection procedures do not receive payment, the District may choose to turn over uncollected amounts to a private collection agency.

8.4.9 Customers in Bankruptcy


In accordance with Title 11 U.S.C.§366 of the Bankruptcy Code (“Bankruptcy Code”), the District will not alter, refuse, or discontinue service to a customer or trustee in bankruptcy as long as the appropriate security deposit is paid. The District will not discriminate against such customer or the trustee in bankruptcy of said customer, based on the filing of a petition under Title 11 U.S.C. (“Petition Date”) or on the basis of a debt owed for service rendered prior to the Petition Date which was not paid when due. Within 20 days of the Petition Date, the customer or the trustee in bankruptcy of the customer shall furnish the District with a cash deposit to assure payment of future billings for services provided by the District after the Petition Date. The cash deposit shall be equal to two times the normal security deposit (Refer to Security Deposits described in this section). The deposit shall be refunded seven years after completion of all bankruptcy proceedings or termination of the service, provided that all amounts owed the District for service provided after the Petition Date have been paid. The deposit shall also be refunded if the customer voluntarily pays the District the debt originally discharged in bankruptcy. The District will discontinue service, unless such security deposit is received within 20 days of the Petition Date. Service may be discontinued for nonpayment for services rendered after the Petition Date. As used herein, Petition Date has the same meaning as given in the Bankruptcy Code. The Petition Date shall, in a voluntary case, constitute the commencement of the case and/or an Order for Relief.

8.5 PAYMENTS Bills are not considered paid until payment is received by the District. Customers may pay bills using cash, check, money order, bank check, or approved transactions through the District’s online payment service.

8.5.1 Acceptance of Coins in Payment of Customer Bills The District will not accept coins for payment of customer accounts over $1.00 unless they are properly wrapped (in bank approved rolls) by the customer in the appropriate denominations, with each roll bearing the customer's name, address, telephone number, and District account number. Rolled coins shall be delivered to the District's bank as presented by the customer, without recounting by District personnel, and the customer shall be required to make up any deficiency determined by the bank immediately upon notification.


8.5.2 Returned Payments If the District accepts a payment which is returned by the bank, additional charges will be assessed. Refer to the section regarding fees and charges for returned payment fees. Payment on returned items and related fees must be paid by cash, money order, bank check or by credit card through the District’s online payment service. The District will attempt to notify the customer of a returned payment within 48-hours. The notification will include information regarding the returned payment, additional charges, the total due, and the scheduled discontinuance date if total due is not paid. An account is not considered paid until the amount of the returned payment and all related fees have been paid in full. A payment that is not honored and returned after the past due date will be considered to be past due and late payment fees shall be applied to the account. Customers who have had returned payments by the bank, may be required to pay future bills by cash, money order, or bank check.

8.5.3 Advance Payment Upon request, the District may accept an advance payment as a credit against actual charges pending on a customer's account. The amount of the advanced payment shall be computed by the District on the basis of estimated charges for a specific time period.

8.5.4 Post Dated Checks - Two Party Checks The District will not accept post dated or two party checks. The account is considered unpaid and any applicable past due charges will apply until a properly dated check is received.

8.6 SEWER SERVICE DISCONTINUANCE AND REINSTATEMENT

8.6.1 Discontinuance of Sewer Service Sewer service for customers receiving water service from the District shall be deemed discontinued during any period in which the water service is discontinued. Sewer service for customers who do not receive water service from the District may be terminated upon the physical disconnection of the customer's lateral from the District's lateral. If service disconnection is requested by the customer, a deposit must be paid on the basis of the District's estimate before work will commence. Upon completion of the disconnection,


the District will bill the customer for any actual costs over the amount estimated, and will refund any amount exceeding the estimated cost of disconnecting the service. Service may also be discontinued by the District for failure of the customer to pay any outstanding sums of money for sewer service charges or sewer installation fees. If service disconnection is due to non-payment of sewer service charges, the customer will be charged for the actual cost of disconnecting the service. Refer to the section regarding fees and charges for current sewer disconnection charges.

8.6.2 Reinstatement of Sewer Service Sewer service discontinued by means of disconnection from the District's sewer facilities may be reinstated upon payment of all outstanding fees and charges, as well as a re-connection charge. When service re-connection is requested by the customer, a deposit must be paid on the basis of the District's estimate before work will commence. If service was disconnected due to non-payment of sewer service charges billed, all outstanding charges owed to the District must be paid. The customer shall also pay a security deposit to guarantee payment of future bills in accordance with procedures established for water customers. After the re-connection is completed, the customer will be billed for any actual costs over the amount estimated. A refund will be paid for an amount deposited that exceeds the actual re-connection cost. Refer to the section regarding fees and charges for current re-connection charges and deposit amounts.


8.7 CUSTOMER'S RIGHT TO REVIEW AND APPEAL Any customer desiring to initiate a complaint or contest the validity or accuracy of any charges shall submit a properly executed appeal form to the District’s Customer Accounts Officer within 30 days of the mailing date of the bill in question. The written request shall state the reasons for the complaint and/or the basis for contesting the validity of the charges in question. For purposes of this policy, the acting Customer Accounts Officer is the Director of Finance or his or her authorized designee. The customer may appeal the decision of the Customer Accounts Officer to the CEO/General Manager of the District by submitting a written request to the Board Secretary within 7 14 days of the decision by the Customer Accounts Officer. The customer may appeal the decision of the CEO/General Manager to the Board's Customer Appeals Committee (“Appeals Committee”) by submitting a written request to the Board Secretary within fourteen days of the CEO/General Manager’s decision. The written request shall state the grounds for the appeal and shall include any documents or other evidence that the customer wishes the Appeals Committee to consider. Upon receiving a timely appeal, a hearing date for the Appeals Committee will be established by the Board Secretary. A notice of the hearing date shall be mailed to the customer at least ten calendar days before the date established for the hearing. If the customer is not able to appear at the appointed day and time of the Appeals Committee Meeting, the Appeals Committee will make a decision based on all available information, and no other customer hearing will be scheduled. The decision of the Appeals Committee shall be final and no further appeals on the disputed charges may be made by the Customer to the District. Notice of the determination by the Appeals Committee shall be mailed to the customer within ten calendar days of such determination and shall indicate whether the appeal has been denied or granted in whole or in part and set forth the terms and conditions for the decision, if any. If the CEO/General Manager determines an adjustment to the customer’s account is appropriate in light of the facts and evidence presented by the customer and any information provided by the Customer Accounts Officer, the CEO/General Manager may adjust the disputed charges by an amount not to exceed $1,000 of the original billing amount less any adjustment previously given for the same billing under this policy. The Appeals Committee may adjust the disputed charges by an amount not to exceed $2,000 of the original billing amount less any adjustment previously given for the same billing under this policy. Adjustments which total more than $500 cannot reduce water charges due to the District to an amount that is lower than if the bill were calculated using the budgeted average rate. The budgeted average rate shall be determined annually by the Finance Department in accordance with the District’s existing rates for water service charges and its annual budget. Such limitations are applied for fairness and protection to both the District and customers.


Service to the customer’s property shall not be discontinued pending the outcome of such review by the Customer Accounts Officer, CEO/General Manager or the appeal to the Appeals Committee. If the appeal is denied or granted in part, any amounts due and owing shall be paid in full within ten days after the notice of determination has been mailed to the customer, including any applicable penalties as provided herein. At least annually, the Customer Accounts Officer shall provide a written report summarizing the results of appeals processed to the Appeals Committee to monitor the effectiveness and appropriateness of this policy.

8.7.1 Water Leak Adjustment Policy The Customer Accounts Officer is authorized to make adjustments to water flow charges for the billing period in which an apparent water loss occurred due to a broken pipe and/or plumbing fixture that caused exceptionally high water consumption compared to consumption history for the property during the same billing period. Adjustments will be determined using the following criteria:

a) The customer must not have received an adjustment at the same property under this

policy in the past 60 months. b) The District leak appeal form must be properly completed by the customer and

submitted to the District, with required documentation and verifications mentioned thereon, within 30 days of the mailing date of the bill in question. A minimum payment equal to that of the previous billing period must accompany the appeal.

c) Only one billing period will be considered for an adjustment. d) To qualify as exceptional high water consumption, the minimum adjustment amount,

based on the following criteria, must exceed $50. e) A consumption base will be determined using the previous 3year average from the

same billing period unless the District determines other measurable factors are shown to have greater relevance for a consumption base. The base will be calculated at normal rates and added to any excess consumption calculated at wholesale water costs. The adjustment amount becomes that sum less the charges originally billed for water flow, or the maximum adjustment amount, whichever is less.

f) The adjustment shall not exceed $750 or 25% of original water flow charges, whichever is less.

g) No adjustments will be given if the District determines excessive water flow was caused by the customer’s negligence or non-responsiveness to warning signals such as higher water and/or sewer bills, leak notifications, visible water, or other factors which should have made the customer reasonably aware of the existence of a broken pipe and/or plumbing fixture.

h) No adjustments will be given if a third party is responsible for water loss at the customer’s property and can be pursued for reimbursement by the customer.

i) No adjustments will be given due to the resetting of irrigation timers at the customer’s property, whether intentional or not.


j) Padre Dam is not responsible for any leak due to lack of notification and no adjustment will be given for this reason. It is the customer’s responsibility to determine leaks and/or excessive water use. Padre Dam provides an optional (opt-in) continuous flow notification program (Section 8.1.4) to customers; however, this program does NOT replace the customer’s responsibility for all water use.

List of Ordinances amending Section 8: Ord. 2001-15, adopted 10/9/01, effective 11/9/01, Sections 8.2.1., 8.2.8, 8.2.8.1, 8.2.11, 8.2.12 Ord. 2007-12, adopted 11/13/07, effective 1/1/08, Section 8.2.8, IAWP Ord. 2008-01, adopted 2/12/08, effective 3/1/08, Sections 8.3 and 8.4, prompted by Cycle Leveling Ord. 2009-01, adopted 1/13/09, effective 2/1/09, Section 8.2.8. IAWP / SAWR Ord. 2009-04, adopted 4/14/09, effective 7/1/09, Section 8.2, adoption of Drought Rates, amending Water Conservation, and authorizing Pass-Through Rates Ord. 2010-02, adopted 07/13/10, effective 07/14/10, Section 8.7 and 8.7.1, amending District’s leak adjustment policy. Ord. 2011-05 adopted 6/17/11, effective for all services provided on or after 7/1/11, Section 8.2.1, amending District’s daily water allocations. Ord. 2012-04 adopted 7/18/12, effective 7/19/12, rewrite of Rules & Regs Sections 1, 2, and 4-9. Ord. 2012-05 adopted 8/15/12, effective for fiscal yrs 2012/2013 - 2016/2017, adopting new water allocations. 29718.15

BOARD AGENDA REPORT


Dept. Head: Karen Jassoy, CFO Submitted by: Karen Jassoy, CFO Department: Finance Approved by: Allen Carlisle, CEO/GM

SUBJECT: SEMI-ANNUAL REPORT ON FIVE YEAR PLAN, FOR THE 6 MONTHS ENDING DECEMBER 31, 2012

RECOMMENDATION(S): 1. Hear Staff Report ALTERNATIVE(S): 1. Do not hear Staff Report

ATTACHMENT(S): 1. Performance Indicators 2. Statements of Operations 3. FY ’13 CIP Budget and Project Status 4. CIP Financials through December 31, 2012






Policy Updates:

Rules & Regulations



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EXECUTIVE SUMMARY:

The Board approved Padre Dam’s second Five Year Business Plan and Budget (Plan) on June 6, 2012. At that meeting, Staff told the Board that they would provide periodic reporting to show progress towards the Plan’s goals. This is the first of those semi-annual updates. DESCRIPTION: The Plan covers fiscal years 2013–2017 and is a comprehensive roadmap to achieve operational performance, capital replacements and preventive maintenance for the benefit of District customers over that period. The Plan identifies the work to be performed and the related rates to produce necessary revenues to achieve the Plan’s goals. The Plan includes the following objectives:

• Avoid spills, breaks and surprises • Avoid interruption of water and sewer services • Achieve water quality and system reliability • Water reliability during droughts • Provide reliable sewer service • Promote use of recycled water • Achieve efficient & effective business operations • Promote transparency and openness with customer • Adopt reasonable rate increases and avoid rate spikes • Continuous cost management • Match spending to revenues • Reduce staffing by an additional 5 FTEs through attrition • Increase CIP funding • Maintain District reserves and increase to recommended levels if possible • Increase park and recreation opportunities at Santee Lakes

Attachment 1 shows a number of performance indicators relating to the Plan and the status of each (Goal / Actual or On-task / Off-task). Specific staff members are responsible for each indicator and must update the status quarterly. The indicators were set at the beginning of the Plan and represent Staff’s best estimate at the time. Any off-task items are monitored and an explanation is provided. Financial Update The accounting department is responsible for setting and monitoring the budget. Each month, Staff prepares a report for department that shows actual expenditures compared to budget. Directors are responsible for ensuring that their departments stay within budget. There is flexibility within the budget to address unanticipated items as long as over the five years of the Plan, total budgeted expenses are not exceeded. Likewise, planned expenditures can be delayed to future periods depending on need without the risk of losing funding. For the first six months of FY ’13, all operations are favorable to budget. Retail water sales, recycled water sales and sewer revenue are all favorable to budget. Operating expenses for all three operations are also favorable to budget. In addition, the fund balances for each of these operations has increased. Although the Park operation is slightly under budget on revenues, that is more than compensated by lower operating expenses. The following summaries show the combined District’s and individual operation’s revenues and expenses verses budget as well as fund balances. Attachment 2 shows this information in more detail.

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Actual Budget Varience

Total Operating Revenues 32,902,078$ 31,662,565$ 1,239,513$

Total Direct Costs (11,975,630) (12,069,602) 93,972

Revenue Available for Operations 20,926,448 19,592,963 1,333,485

Operating Expenses (10,849,879) (11,963,766) 1,113,887

Depreciation (3,521,282) (3,714,983) 193,701

Non-Operating Rev/(Exp) (1,396,297) (1,403,970) 7,673

Change in Net Assets 5,158,990$ 2,510,244$ 2,648,746$

Beginning Fund Balance 24,716,682$

Change in Net Assets 5,142,964

Other Sources/Uses of Cash (536,118)

Ending Fund Balance 29,323,528$

Rate Stabilization Fund 12,845,400$

Capital Replacement Fund 16,478,127

Total Undesignated Fund 29,323,528$

COMBINED OPERATIONS


Total Operating Revenues 20,606,839$ 19,899,386$ 707,453$

Total Direct Costs (8,818,508) (9,014,930) 196,422

Revenue Available for Operations 11,788,331 10,884,456 903,875

Operating Expenses (5,606,904) (6,149,143) 542,239

Depreciation (2,300,975) (2,388,848) 87,873

Non-Operating Rev/(Exp) (1,218,553) (1,244,107) 25,555

Change in Net Assets 2,661,899$ 1,102,358$ 1,559,541$



Other Sources/Uses of Cash 186,703





RETAIL WATER OPERATION

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Total Direct Costs - - -


Operating Expenses (806,410) (880,943) 74,533

Depreciation (365,365) (399,613) 34,247

Non-Operating Rev/(Exp) (79,642) (83,155) 3,513

Change in Net Assets 1,174,585$ 641,335$ 533,250$








RECYCLED WATER OPERATION



Total Direct Costs (3,010,729) (2,929,519) (81,210)



Depreciation (473,661) (495,044) 21,383

Non-Operating Rev/(Exp) 122 (4,054) 4,176

Change in Net Assets 1,256,387$ 768,259$ 488,128$








SEWER OPERATION

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Total Operating Revenues 2,118,599$ 2,176,132$ (57,533)$

Total Direct Costs (146,393) (125,153) (21,240)

Revenue Available for Operations 1,972,206 2,050,979 (78,773)


Depreciation (381,280) (431,478) 50,198

Non-Operating Rev/(Exp) (114,250) (122,653) 8,403

Change in Net Assets 50,093$ (51,707)$ 101,800$


Change in Net Assets 50,093


Ending Fund Balance 888,390$

Rate Stabilization Fund 371,176$

Capital Replacement Fund 517,214

Total Undesignated Fund 888,390$

PARK OPERATION

Preventive and Predictive Maintenance The goal of the operations department is to provide sufficient maintenance of existing infrastructure systems to promote efficient operations and minimal customer service outages while avoiding emergency repairs and ensuring that the water and sewer systems are maintained for future customers/ratepayers. The last six months have been a challenge for the department because of a reduction in staffing levels and summer/winter operations. A few goals like Valve Replacement, Valve Exercising and Fire Hydrant Maintenance are off target. Some of this is part of a normal, yearly pattern in shifting system demands with issues like nitrification in reservoirs during warm months, system water flushing and high summer stress on system components which fail creating emergency response situations that pull staff off task. The other factors are lower staffing levels due to the Deficit Elimination Plan in 2011 and three unplanned resignations in Operations in the last year resulting in less staff than budgeted. The Construction and Maintenance Department has dropped from 43 to 31 employees in the last five years. Most of this was succession planning and lateral position moves in support of reducing staffing levels to meet the new budget and revenue stream from the drought cutbacks and recession. For the three unplanned resignations, it was decided to hold off replacing those vacancies until it was determined what impacts reduced staff would have on achieving goals and to monitor the trend in water sale revenues with the current economy. Now that we have seen the impacts, the strategies and goals going forward will need to be adjusted. Staff is working on those scenarios currently, including looking at some potential outsourcing opportunities to achieve goal numbers as current funding allows. Out of the 24 plus Performance Indicators that Operations tracks, the majority are on target and favorable at this time. Staff is still making favorable progress with the CIP and maintenance funding currently available in the 5-Year Business Plan.

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Capital Improvement Program A major component of the Plan is the five year Capital Improvement Program (CIP). The CIP is the foundation of the District’s long-range capital investment and financial planning. The CIP establishes a specific list of projects to be completed for capital replacements and improvements, and preventive maintenance. The proposed CIP budget is structured to bridge the short term funding gap without undue burden on ratepayers while positioning the District to have a long term and sustainable replacement plan. Overall objectives of the CIP include:

• Appropriate replacement of aging and at-capacity sewer and water facilities including condition assessment;

• Ensuring safe and reliable water and sewer facilities; • Compliance with regulatory mandates; • Ongoing capitalized operations projects; • Replacement of outdated hardware and software systems.

Attachment 3 provides the budget, the actual amount spent, and a status update of the major projects budgeted for FY ’13. Attachment 4 summarizes the CIP financials through the first six months of the fiscal year. As is illustrated in Attachment 4, Staff does not anticipate that the full budget for FY ’13 will be utilized in each of the financial categories listed. This is primarily due to the following:

• CIP General: Timing of the Customer Service Center Phase 2 and Financial Computer System Upgrade projects. Expenditures reflect delays in project execution due to environmental or other impacts; additionally, there are possible cost savings that are not reflected in the budget.

• External Agency Mandates: Many of the City of Santee’s major planned projects have been delayed. The project that will impact Padre Dam the most is the Prospect Avenue East Widening Project because it will require the District to relocate facilities at its own cost. Currently the City is in the land acquisition phase and the project is about 9 to 12 months behind the original schedule projection.

• COP Financed: The Rios Canyon Pump Station Generator project is being delayed until FY ’14 due to environmental constraints. The ESA Secondary Connection project is currently in the request for proposal (RFP) phase with design anticipated to begin in April or May of this year.

• Grant Funded: The District just recently received the $3,000,000 Prop. 50 grant for the WRF Demonstration project. The Department of Water Resources delayed the timing of the grant approval by about 4 months. Therefore, the planned expenditures for this project are also delayed. Staff is currently preparing the RFP for project management services.

Additionally, as seen in Attachment 4, through the first six months of the current fiscal year Staff has identified some activities or projects that were not included in the original budget but will have an impact the budget. These budget deviations have either been approved by the Board or brought to the Board’s attention and include the following:

• Construction Costs: If the construction contingencies approved by the Board for the Sunrise Reservoir Improvements and Flinn Springs Generator projects are fully realized, each of these projects will be slightly over budget. Staff does not anticipate the full utilization of the approved contingencies unless unforeseen conditions are encountered in the field. The Board approved the additional contingencies to be absorbed within the CIP budget, to remain fiscally responsible. Total costs above budget if contingencies are fully realized are approximately $120,000.

• Salinity/Nutrient Management Plan: The San Diego Regional Water Quality Control Board (RWQCB) has required the District to prepare a Salinity/Nutrient Management Plan for the Santee Basin by amendment to the District’s Waste Discharge Requirements Permit which

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regulates District’s distribution of recycled water for irrigation. This project is partially funded by a Prop. 84 grant and was recommended by the Facilities Development and Operations Committee if the total project cost does not exceed $120,000. Proposals for this project have been received and will be brought to the Board for final approval.

• Energy Recovery Project: The Board approved Staff’s request to complete and submit a WaterSmart Grant Application to determine the feasibility of co-digesting municipal biosolids and organic landfill wastes for a total application cost of $15,000.

• ESA Secondary Connection Land Acquisition: Following purchase of the new site for the Secondary Connection project Staff received quotes and issued a contract to demolish three existing single family residences on site to prevent unwanted occupancy during the design period. Total additional costs are anticipated to be approximately $60,000.

• GASB 51: Recent changes in accounting guidelines will require the expense of planning activities associated with project executions.

The flexibility built into the Five Year Business Plan will allow Staff to keep projects moving towards completion. Any remaining budget not utilized this fiscal year will be rolled over into next fiscal year. The intent remains to stay within the overall approved CIP budget. However, the need to reprioritize capital projects and preventive maintenance projects from changing conditions is also probable. Human Resources The Human Resources Department’s mission is to recruit, hire and retain a competent workforce to ensure Padre Dam fulfills its mission of service to its customers. The mission of our Risk Management Department is to provide loss control, wellness and other risk management programs to reduce and prevent losses to Padre Dam. In addition to the two recruitments completed in the 2nd quarter, the Human Resources Department is currently working on two major projects that will support the Plan’s goals and initiatives. One is a Talent Management Plan that starts with re-defining all of the positions here at Padre Dam, outlining the necessary competencies that exist within each job and aligning those with expected retirements to identify and leverage our current talent. The Talent Management Plan will take us through 2014 with 360 degree feedback, individual staff development plans and the introduction of Padre Dam University. The second major project is to complete a gap analysis on our current benefit plans with relation to health care reform and start building strategies to leverage costs and prepare ourselves for future legislative guidance under the Patient Protection and Affordable Care Act (PPACA). Additionally, in an effort to continue to make Padre Dam a safe work environment, Risk Management is proud to announce that we now have 12 Padre Dam employees certified in Confined Space Rescue and our Risk Manager is diligently working to ensure Padre Dam facilities are safe and secure. Communications The Communications department works to communicate and educate our customers on the District’s services, rates, customer programs and projects. This is accomplished through many mediums including customer bill messages, bill inserts, website updates, social media, self-mailers, community meetings, emails, automated phone calls and media stories. Key accomplishments during the first six-months of FY’13 include:

• The Value of Water Campaign to educate customers. Campaign included community presentations, briefing book, bill messages, bill inserts and lobby messaging to customers.

• A five-minute video on an overall of the services the District provides. The video is meant to help educate customers on everything that it takes to provide water, wastewater and recycled water services to customers.

• Developed the Prop 218 mailer to educate and inform customers of the District’s plan for rates and fees over the next 5 years.

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• Customer newsletters educating customers on monthly billing status, cycle leveling, recent and upcoming District projects, San Diego County desalination project and e-billing options.

Customer Service The Customer Service department is committed to increase services to customers while improving efficiencies during the five years of the Plan. The four areas of focus include: CIS Software Implementation; Monthly Billing; Hosted IVR Implementation; and Proactive Customer Communications. The CIS software project was approved in August 2012 and kickoff began in September 2012. This project, scheduled to be completed in January 2014, will address the following objectives:

• Connect cash register to system data bases • Automate bad debt, credit risk & collection processes • Mobile functionality for service orders • Reduce staff training time & eliminate workforce fragment

The first phase of the transition to monthly billing was completed in January 2013 and the final transition will occur in January 2014 with the inauguration of the new CIS software. Incorporating the changes approved from Prop 218, billing routes and cycles have been streamlined in anticipation of the final phase. Over the next 12 months, the monthly billing transition team will address:

• Customer Education • Billing • Rates • Meter Reading/AMI • Staffing • Payment Processing • Past Due Processing • Collections • Reporting • Bill Design • Rules and Regulations Changes • Standard Practices & Policies (Red Flag Alerts)

Although a hosted IVR solution was targeted to launch in 2014, in an effort to save money on the overall cost of the CIS software project, products were researched and a contract was signed with Paymentus before the CIS software contract was signed. Paymentus provides District customers 24/7 access to pay their utility bill, either by credit card or by eCheck, by phone (1-877-MY PADRE). Paymentus will also play a large role in the High Usage Notification process, delinquency processes and boil order notifications, aiding the proactive customer communication goal. Other goals achieved not originally in the Plan include:

• Cash Payments Off-Site o 7-Eleven/PayNearMe partnership

• Variance Policy Modification o Reduced amount of accounts eligible based on actual need

• Streamline Appeals Process o Reduced turnaround time in process from as much as 2 years to an average of 3 days

Note: No new Appeals have been escalated to Board in 2012 since implementation of this process.

• Corrected Shared Capacity Billing Accounts o 73 accounts enjoyed an unfair water cost reduction for no discernible reason except

improper set up in the billing system o 55 Condo/Multiple Dwelling and Mobile Home Park shared capacity billing loops remain

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• Rewrite Staff Job Classifications o CSR Job Classifications had not been updated since the 1990’s o This is also a goal for the new Human Resources Department

• Continuous Flow Notification Program o A pilot program/test environment was launched in 2012 o Customers can receive either a phone call, text message or email with continuous

water flow after 48 hours o Due to limitations in the current CIS software, the real Continuous Flow Notification

Program will launch in 2014 Santee Lakes Under the Plan, Santee Lakes will continue to be operated as an independent Enterprise Fund, receiving no ratepayer fees or subsidized tax revenue. Santee Lakes has its own expansion and improvement goals detailed in the Plan; these projects are financed either by grants or user fees. Since the implementation of the Plan, Santee Lakes has completed the replacement of the Playground and Shelter at Lake One as well as the replacement of Shelters on the northern and southern areas of Lake 5. These projects were completed on-time and were under the approved budget. Another important project that is on “On Task” is the Park and Recreation Master Plan for Santee Lakes. A steering committee representing areas of Padre Dam began meeting in December to develop the Master Plan that will be the roadmap for the future of Santee Lakes. Other items that are “On Task” include Trends and Projection, Grants and Fundraising, Recreation Programs and Events, Advertising and Marketing, Preventive and Predictive Maintenance, ADA Compliance, Paving, Fencing and Capital Equipment Purchases. Items that are “Off Task” include several projects tied directly to the Park and Recreation Master Plan including the Park Administration Office Expansion, Park Clubhouse Expansion, Park CUP Amendment 3, Day Use Landscape Improvement and Day Use Restroom Remodel. These projects may be adjusted based on final information from the Master Plan, expected to be finalized in June 2013. Cabin and camping stays at Santee Lakes are lower than budget for the first two quarters of FY ’13. As participation in recreational activity is primarily based on disposable income, this could be a contributing factor to lower occupancy. Staff has adjusted expenditures to coincide with reduced revenue. Staff will continue to monitor and adjust the indicators to reflect the results of the Park and Recreation Master Plan. Staff will also continue to identify opportunities to increase occupancy at the campground and cabins and will maintain the goal of being a viable and recognizable asset in the City of Santee. RECOMMENDATION(S): Here the first semi-annual report for the Five Year Plan covering July 1, 2012 – December 31, 2012.

5‐Year Business Plan

Performance IndicatorsYear 1: FY2012/13

56%

43%

38%

96%

81%

82% 10

9%

55% 69%

113%

92% 100%

100%

300%

100% 110%

71%

148%

90%

92%

88%

86% 100%

100%

0%

50%

100%

150%

200%

250%

300%

350%

Preventive & Predictive MaintenanceYear 1: Quarters 1 & 2 (Jul.‐ Dec.)

106%

103%

103%

102%

226%

0% 50% 100% 150% 200% 250%

Water Deliveries (A/F)

Water Sales (A/F)

Recycled Water Production

Gross Revenue (District‐wide)

Combined EDU's sold

Miscellaneous IndicatorsYear 1: Quarters 1 & 2 (Jul.‐ Dec.)

S:\Performance Indicators\Performance Indicators MASTER.xlsx1/28/2013 1 of 6



Preventive & Predictive Maintenance CommentsGOAL ACTUAL % TO GOAL GOAL ACTUAL % TO GOAL GOAL ACTUAL % TO GOAL

Valve Replacement 33 22 67% 33 15 45% Off schedule with staffing issues and seasonal conflicts. 66 37 56%Valve Exercising 675 238 35% 675 346 51% Off task with seasonal demands like nitrification and staffing issues. 1,350 584 43%CCTV Footage 36,000 15,566 43% 36,000 11,751 33% Off task with staffing issues and attrition. 72,000 27,317 38%

Sewer Camera Hours 225 170 76% 225 261 116% On Task. 450 431 96%Sewer Mains Repaired 24 17 71% 8 9 113% On Task. 32 26 81%

Sewer Lines Cleaning Footage 182,250 153,102 84% 182,250 146,262 80% Slightly off task due to Vactor being down for many days in a row. 364,500 299,364 82%Sewer Hot Spots Cleaned 123 70 57% 123 198 161% Over task numbers. 246 268 109%Fire Hydrants Maintained 180 74 41% 180 125 69% Off task with seasonal demands like nitrification and staffing issues. 360 199 55%

Water Mains Flushed 120 81 68% 120 85 71% Off task with seasonal demands like nitrification and staffing issues. 240 166 69%Pressure Reducing Stations Maintenance 6 5 83% 2 4 200% On Task. 8 9 113%

Infrared Camera MCC's 38 34 89% 36 34 94% On Task. 74 68 92%CP Test Station Reads WSA 174 174 100% 174 174 100% On Task. 348 348 100%

Reservoir CP Reads/Visual Assess./Insp. 29 29 100% 29 29 100% On Task. 58 58 100%Reservoir Inspection (Dive Insp.) 1 4 400% 1 2 200% Over Task. 2 6 300%

FOG Inspections 33 33 100% 25 25 100% On Task. 58 58 100%FOG Spot Checks 30 35 117% 30 31 103% On Task. 60 66 110%

Industrial Waste Inspections 3 3 100% 4 2 50% In Range for catch up before next quarter report out. 7 5 71%Fleet Maintenance (Service Tickets/Repairs) 23 43 187% 23 25 109% On Task. 46 68 148%

Cross Connection Control Inspections 60 56 93% 60 52 87% On Task. 120 108 90%AMI Percentage Reporting Efficiency 99% 95% 96% 99% 88% 89% In range. 2 2 92%Water Quality Monitoring Samples 390 338 87% 390 350 90% On Task; this number is set by regulators and is subject to change throughout the year. 780 688 88%

Water Systems Site Inspections (45 sites) 135 103 76% 135 129 96% On Task 270 232 86%Sewer Lift Station Inspections (4) 26 24 92% 26 28 108% On Task 52 52 100%

SCADA Status Report 1 1 100% ‐ Complete. 1 1 100%

Miscellaneous Indicators CommentsBUDGET ACTUAL % TO GOAL GOAL ACTUAL % TO GOAL GOAL ACTUAL VARIANCE

Water Deliveries (A/F) 3,719 3,943 106% 2,593 2,657 102% Water deliveries have exceeded budget due to higher than anticipated water sales. 6,312 6,600 288 Water Sales (A/F) 3,810 3,924 103% 2,898 3,034 105% Budgeted flat water sale compared to prior year. Through Dec 31, water sales exceeded budget. 6,708 6,958 250

Sewer Discharged to Metro (Units) 322,000,000 133,200,000 41% 284,000,000 154,000,000 54% 606,000,000 287,200,000 (318,800,000) Recycled Water Production 164,000,000 169,087,000 103% 164,000,000 176,980,000 108% 328,000,000 346,067,000 18,067,000

Gross Revenue (District‐wide) 16,717,314$ 17,098,465$ 102% 14,945,261$ 15,803,610$ 106% Positive to budget due to higher than budgeted water and sewer sales and lower than budgeted expenses, 31,662,575 32,902,075 1,239,500 Combined EDU's sold 33 74.5 226% 33 77 232% Increased development in the first half of the fiscal year has resulted in higher than budgeted EDUs. 66 151 85

1st Qrt (Jul‐Sep)

1st Qrt (Jul‐Sep) 2nd Qrt (Oct‐Dec) Fiscal Year Cumulative

2nd Qrt (Oct‐Dec) Fiscal Year Cumulative




Water Resource Development CommentsComplete On Task Off Task Complete On Task Off Task

Santee Basin Testing/Analysis On Task On Task BOR is reviewing its budget for the upcoming FY.

Demonstration Project at WRF On Task On Task Received Prop. 50 grant.

Grant Funding On Task On Task Ongoing evaulation of grant opportunties

Combined Solids Handling Off Task On Task Baord approved submission of the grant application.

Nitrification Reliability On Task On Task Study completed; awaiting final report

Capital Improvement / Engineering CommentsComplete On Task Off Task Complete On Task Off Task

ESA Secondary Connection On Task On Task RFP for design services issued.

West Victoria Reservoir & Pump Station On Task On Task Construction to be completed this FY.

CSC Phase 2 On Task On Task Detail design to begin February 2013.

Flinn Springs Standby Generator On Task On Task Construction to start in February 2013.

Rios Canyon Generator On Task Off Task Design completed; delayed construction due to environmental restrictions

Rios Canyon Pipeline Rehab./Replacement On Task On Task Currently conducting condition assessment of the steel pipe.

Braverman Sewer Rehabilitation Phase 2 On Task On Task To be completed this FY.

Sewer Diversion Structure Upgrades On Task On Task Sewer study draft report due by March 2013.

Asset Management System / CMMS On Task On Task Budgeted for year 4 of 5 year B‐plan; needs new FIS system in place before implementing

Encroachment enforcement On Task On Task

Implementation of District‐wide access to GIS Off Task Off Task Waiting to complete EDMS before implementing this project.

Information Technology CommentsComplete On Task Off Task Complete On Task Off Task

Develop Information technology strategic plan On Task On Task Begin 1st QTR 2013

District‐Wide Systems\Infratructure Upgrades On Task On Task Section 2.5.3 complete other systems upgrades will occur through out 5 year cycle

Improve Cyber Security On Task On Task Intrusion detection installed 1st QTR, Digital Control system enhancment installed 2nd QTR, currently analyzing secuity proposals from different vendors.

Sharepoint development On Task On Task Begin 2nd QTR 2013

Expand and Improve mobility On Task On Task Currently in R&D, testing remote access with IOS and Android platforms

Virtual desktop technology On Task On Task Begin 1st QTR 2014

Phone System Replacement On Task On Task Begin 1st QTR 2014

Data backup and recovery improvements On Task On Task Implemented disk to disk backup locally and from remote sites.

Disaster recovery & bus. continuity improv. On Task On Task Begin 2nd QTR 2013

Wireless Local Area Network On Task On Task Begin 2nd QTR 2013

Maintenance Activities On Task On Task Ongoing

Support Activities On Task On Task currently supporting new EDMS, CIS and FHRIS software development and roll out,. ongoing.

Research & Development On Task On Task ongoing; currently researching mobility security, related to "Expand and Improve mobility" goal

Employee Reten., Recruit. & Succession CommentsComplete On Task Off Task Complete On Task Off Task

Employee RetentionReview compensation package for competitiveness Complete Ongoing S.P., Dec. 2012 target; reviewed annually thereafter

Review benefits package for sustainability Complete Ongoing S.P., Dec. 2012 target; reviewed annually thereafter

RecruitmentMarket the Workforce Partnership On Task On Task S.P., Dec. 2012 target; reviewed annually thereafter

Attend Career Fairs On Task On Task S.P., Dec. 2013 target; reviewed annually thereafter

Community involvement On Task On Task S.P., Dec. 2015 target

Succession PlanningPublish potential retirements Complete Ongoing S.P., Dec. 2012 target, review as needed

Identify potential replacements for succession planning On Task On Task S.P., Dec. 2013 target

Develop competencies for promotional opportunities On Task On Task S.P., Dec. 2014 target

Offer training for employee leadership/development On Task On Task S.P., Dec. 2013 target

Create Padre Dam University On Task On Task S.P., Dec. 2014 target

Cross‐Training On Task On Task S.P., Dec. 2013 target

Encourage Informational interviewing On Task On Task S.P., Dec. 2013 target

Promote job shadowing On Task On Task S.P., Dec. 2013 target

2nd Qrt (Oct‐Dec)

1st Qrt (Jul‐Sep)

1st Qrt (Jul‐Sep)

1st Qrt (Jul‐Sep)

1st Qrt (Jul‐Sep)

2nd Qrt (Oct‐Dec)

2nd Qrt (Oct‐Dec)

2nd Qrt (Oct‐Dec)




Increased Customer Service & Focus CommentsComplete On Task Off Task Complete On Task Off Task

Automation of bill cycles process On Task On Task S.P., Phase 1 Jan. 2013 target

Connect register to system data bases On Task On Task S.P., Jan. 2014 target

Simplify rate and billing methodology Complete Complete Rates complete. Billing in process

Automate bad debt, credit risk & collect. process On Task On Task S.P., Jan. 2014 target

Mobile functionality for service orders On Task On Task S.P., May. 2014 target

Reduce staff training time & elim. workforce fragment. On Task On Task S.P., Jan. 2014 target

CIS Software Implementation On Task On Task S.P., Jan. 2014 target

Cash Payments Off Site On Task On Task S.P., Jan., 2013 target

Variance Policy Modification Complete Complete Completed 9/1/12

Streamline Appeals Process Complete Complete Completed 7/1/12

Correct Shared Capacity Billing Accounts Off Task Complete Completed 12/2012

AS400 Data Hygiene for New Software Implementation Complete Complete Completed 6/30/12

TSWAR Program On Task On Task Completed 1/7/13

Rewrite Staff Job Classifications Complete Complete Completed 8/23/12

Staff Service Skills Enhancement and Training On Task On Task Ongoing

Monthly Billing On Task On Task S.P., Jan. 2014 target

Smart Phone Payment Implementation On Task Complete S.P., 10/15 /12 target

Real‐Time Credit Card Billing On Task Complete S.P., 10/15 /12 target

IVR Payment Implementation On Task Complete S.P., 10/15 /12 target‐ originally 2014 project

High Water Use Alert System On Task On Task S.P., May. 2014 target

Department Support CommentsComplete On Task Off Task Complete On Task Off Task

AdministrationProgress reports on the 5‐Year Plan to the Board On Task On Task 1st Brd mtg in Feb; Special mtg in June for results YTD & reaffirm 5YBP for remaining years

Progress reports on the Strategic Plan to the Board On Task On Task 2nd Board mtg in February; Special mtg in June

Implementation of EDMS On Task On Task SIRE completed 1st file conversion in Oct ‐ not all docs came thru. 2nd file converson was completed mid December ‐ staff to validate by mid January. Weekly status meetings to resume Jan 9.

Implementation of AgendaPlus Software On Task On TaskAgenda item workflow developed and Amy to test by mid January. Will start workflow for committees once agenda workflow is confirmed. We've completed serveral parallel agendas using software and working out minor glitches; I/S working with Sire to get the "publishing" feature installed before we are able to set date to "go live" with agenda software. Once determined, training will be arranged for All Managers to use agenda workflow.

4 FDOC Meetings Annually On Task On Task 8/27, 9/20, 11/26/12, 2/25/13, 5/27/13 (will reschedule due to holiday)

4 F&A Meetings Annually On Task On Task 9/24, 12/3/12, 3/25/13, 6/24/13

3 Security Committee Meetings Annually On Task On Task 7/23, 10/22/12, 1/28/13, 4/22/13

12 Park Committee Meetings Annually On Task On Task 4th Wed monthly

CommunicationsValue of Water Campaign Complete Complete Successful campaign

Bill design to include internal vs. external costs On Task S.P. July 2013 Target

Prop 218 Messaging Complete Complete Rates approved in August 2012

Santee Basin: IPR and FAT messaging On Task On Task New messaging to be developed with the approval of $3M grant for demo project

Annual Water Quality Report On Task On Task Distributed in June of each year.

District Annual Report On Task On Task Reviewing ideas, release date TBD in FY 2013

CIP Notifications On Task On Task working w/engineering on 2011/2012 orojects as of 10/2012

2015 Urban Water Management Plan On Task On Task not due until 2015

Customer Newsletters On Task On Task Jan./Feb. 2013 printed and currently going out in bills

Website updates Off Task On Task Web updates occuring with new District news. Also, working with Operations and Engineering on adding additional informaiton and pages to the website.

Web Videos On Task On Task District video post on website home page. Working with departments to determine next video option.

Social Media Updates Off Task Off Task Staffing constraints, limited available time. Third quarter will be on‐task with staffing levels returning to normal.

E‐billing promotional campaign On Task On Task Jan/Feb 2013 newsletter has ad for e‐billing, working on an ad to place on the District website

Bill Inserts On Task On Task Bill inserts on cycle leveling and billing changes with current bills.

1st Qrt (Jul‐Sep) 2nd Qrt (Oct‐Dec)





Dept. Support Cont. CommentsComplete On Task Off Task Complete On Task Off Task

Finance

Montly Financial Reporting On TaskOn Task 2nd Board mtg after month end, exception for end of fiscal year/beginning of fiscal year reports. Caught up by September's report.

Annual Audits On Task Off Task Fieldwork mid‐Sept; goal to issue final report last meeting Oct/1st meeting Nov. FY '12 audit to go to board 12/5/12. Delay in FY '12 report due to GASB 51.

State Controllers Reports On Task On Task Due 110 days after end of fiscal year (October 18, 2012) if filed electronically.

Investment Reports On Task On Task Reported monthyl in Financial Package

CAFR On Task On Task Target the year after software implementation (FY '15)

FIS Training On Task On Task Implementation Jan '13; estimated go live Jan '14

OPEB Actuarials On Task On Task Bi‐Annually ‐ next report due after FY '13 year end for FY '14 audit.

Annual COP Disclosures On Task On Task Due annually in March for preceeding fiscal year; next due March '13

941 and DE‐9/9C Complete On Task Filed quarterly, 30 days after end of quarter(Due 7/31, 10/31, 1/31, 3/31)

Human ResourcesEncourage participation in EIT On Task On Task S.P., Dec. 2012 target with goals, Renew Goals for 2013 and annually as needed

Identify and support collaboration On Task On Task S.P., Dec. 2012 target, Ongoing

Cultivate and maintain positive culture On Task On Task S.P., Dec. 2012, 2013, 2014 targets

Encourage teamwork On Task On Task S.P., Dec. 2012, 2013, 2014 targets

Regularly communicate w/ employees ‐ District bus. On Task On Task S.P., Goal 5.5, Dec. 2012, 2013, 2014 targets with goals

Risk & SafetyComplete Security Plans for all remote sites On Task On Task

Install security systems at remote sites On Task On Task

Maximize Credit Incentive Points On Task On Task S.P., Ongoing 2.2.1

Maintain 100% non‐litigation on Work Comp claims On Task On Task S.P., Ongoing 2.2.5

State and County Tabletop Emergency Exercises On Task S.P., Dec. 2015 target 1.4.3

Monthly Web EOC Exercises On Task S.P., Ongoing 1.4.4

SEMS/NIMS Training for Emergency Response team On Task S.P., Dec. 2015 target 1.4.4

Safety Training/Online Training/Outside Training On Task On Task S.P., 2012 Target and Ongoing 5.7.2

Safety Meetings On Task On Task S.P., 2012 Target and Ongoing 5.7.1

Perform Job Safety/Hazard Analyses On Task On Task S.P., Dec. 2014, 2015 target 5.7.2

Safety Reporting On Task On Task S.P., Dec. 2012, 2014 target and Ongoing 5.7.3, 5.7.4

Reduce absenteeism Off Task Off Task S.P., 2012 Target ‐ Re‐assess for valid starting point

Reduce Employee Smoking by 25% Off Task Off Task S.P., 2013 Target 5.8.2

Smoke Free Campus On Task On Task S.P., 2014 Target 5.8.3

Healthy lifestyle messaging On Task On Task S.P., 2012 Target and Ongoing 5.8.1

Management Support of Wellness Initiatives On Task On Task S.P., Dec. 2012, 2013 Target 5.8.4

Monitor Transition Plan for Santee lakes On Task On Task S.P., 2015 Target 5.9.1

ADA Training On Task On Task S.P., 2013 Target 5.9.1

Disabled Access On Task On Task S.P., 2013 Target 5.9.2

Reporting and Collaboration on ADA Issues On Task On Task S.P., 2013 Target 5.9.3





Park & Recreation CommentsComplete On Task Off Task Complete On Task Off Task

Shelter Replacement Project On Task Complete Construction completed 08/12 ‐ Punch list process

Lake One Playground Project On Task Complete Construction completed 08/12 ‐ Punch list process

Park Admin Office Expansion Off Task Off Task Re‐evaluation as part of the Park Master Plan

One Campground Restroom Remodel Off Task On Task Sycamore Loop replacement (due to fire), other replacements pending outcome of Master Plan Process

Park Clubhouse Expansion Off Task Off Task Pending outcome of Master Plan Process

Park CUP Amendment 3 Off Task Off Task Pending outcome of Master Plan Process

Day Use Landscape Improvement Off Task Off Task Pending outcome of Master Plan Process

Day Use Restroom Remodel (3) Off Task Off Task Pending outcome of Master Plan Process

ADA Compliance On Task On Task As renovations and upgrades are performed

Paving On Task On Task Ongoing

Fencing On Task On Task Ongoing

New Master Plan Development On Task On Task Process has begun

Capital Equipment Purchase On Task On Task On track

Advertising & Marketing On Task On Task Ongoing

Community Outreach Complete On Task Holding Community Workshops in February/March for Master Plan

Budget Projections On Task Off Task Off Task Revenue fluctuation in fishing, camping and cabin stays

Recreation Programs and Events On Task On Task Working with internal staff and external organizations

Preventive & Predictive Maintenance On Task On Task Ongoing

Trends & Projections On Task On Task Ongoing ‐ monthly reporting to Park Committee

Grants & Fundraising On Task On Task Ongoing ‐ reviewing opportunities; Received $59,819 for campground playground expansion (June/July)



Income provided from Operations: A C T U A L B U D G E T $ % A C T U A L B U D G E T $ % A C T U A L B U D G E T $ % A C T U A L B U D G E T $ % A C T U A L B U D G E T $ %

Revenues:Water Sales 14,415,809$ 13,713,354$ 702,455$ 5.1 1,134,874$ 785,964$ 348,910$ 44.4 -$ -$ -$ -$ -$ -$ 15,550,680$ 14,499,318$ 1,051,362$ 7.3 Infrastructure Access Charge 407,667 406,706 961 0.2 - - - - - - - - - 407,667 406,706 961 0.2 Standby Credit - - - - - - - - - - - - - - - Energy Billings 917,208 958,098 (40,890) (4.3) - - - - - - - - - 917,208 958,098 (40,890) (4.3) CWA/ Metro Credits - - - 245,783 192,307 53,476 27.8 - - - - - - 245,783 192,307 53,476 27.8 Padre Dam Sewer Processing Fee - - - 979,519 979,519 - - - - - - - - 979,519 979,519 - - Sewer Revenues - - - - - - 7,743,400 7,582,001 161,399 2.1 - - - 7,743,400 7,582,001 161,399 2.1 System Charges 3,441,394 3,428,368 13,026 0.4 65,826 47,256 18,570 39.3 - - - - - - 3,507,220 3,475,624 31,596 0.9 Park Fees - - - - - - - - - 2,118,286 2,176,132 (57,846) (2.7) 2,118,286 2,176,132 (57,846) (2.7) Property taxes subvention 1,003,989 1,033,695 (29,706) (2.9) - - - - - - - - - 1,003,989 1,033,695 (29,706) (2.9) Other Revenues 420,772 359,165 61,607 17.2 - - - 7,238 - 7,238 313 - 313 428,323 359,165 69,158 19.3

Total Operating Revenues 20,606,839 19,899,386 707,453 3.6 2,426,002 2,005,046 420,956 21.0 7,750,638 7,582,001 168,637 2.2 2,118,599 2,176,132 (57,533) (2.6) 32,902,075 31,662,565 1,239,510 3.9

Direct Costs:Water Purchases 7,729,997 7,650,126 (79,871) (1.0) - - - - - - - - - 7,729,994 7,650,126 (79,868) (1.0) Infrastructure Access Charge 406,086 406,706 620 0.2 - - - - - - - - - 406,086 406,706 620 0.2 Readiness to Serve - - - - - - - - - - - - - - - Energy Purchases 682,425 958,098 275,673 28.8 - - - - - - - - - 682,425 958,098 275,673 28.8 Sewer METRO Costs - - - - - - 2,031,210 1,950,000 (81,210) (4.2) - - - 2,031,210 1,950,000 (81,210) (4.2) Padre Sewer Treatment - - - - - - 979,519 979,519 - - - - - 979,519 979,519 - - Fish Stock/Propane - - - - - - - - - 146,393 125,153 (21,240) (17.0) 146,393 125,153 (21,240) (17.0)

Total Direct Costs 8,818,508 9,014,930 196,422 2.2 - - - 3,010,729 2,929,519 (81,210) (2.8) 146,393 125,153 (21,240) (17.0) 11,975,627 12,069,602 93,975 0.8

Revenues Available for Operating Expenses 11,788,331 10,884,456 903,875 8.3 2,426,002 2,005,046 420,956 21.0 4,739,909 4,652,482 87,427 1.9 1,972,206 2,050,979 (78,773) (3.8) 20,926,448 19,592,963 1,333,485 6.8

Operating Expenses:Salary & Wages 3,210,231 3,382,192 171,961 5.1 412,059 434,132 22,073 5.1 1,421,277 1,497,410 76,133 5.1 474,349 492,154 17,805 3.6 5,517,916 5,805,888 287,972 5.0 Employee Benefits 1,927,491 1,997,984 70,493 3.5 258,711 268,173 9,462 3.5 945,893 980,486 34,594 3.5 281,816 296,041 14,225 4.8 3,413,911 3,542,684 128,773 3.6 Professional Services 236,361 280,788 44,426 15.8 15,762 18,725 2,963 15.8 94,295 112,019 17,724 15.8 69,939 162,548 92,608 57.0 416,358 574,079 157,721 27.5 Materials, Supplies, Vehicle & Bldg. Rent 643,661 1,006,851 363,190 36.1 99,965 156,371 56,406 36.1 516,971 808,675 291,705 36.1 272,999 281,923 8,925 3.2 1,533,595 2,253,821 720,226 32.0 Administrative Expenses 242,353 295,538 53,185 18.0 35,879 43,753 7,874 18.0 197,622 240,991 43,369 18.0 81,486 116,043 34,556 29.8 557,341 696,325 138,984 20.0 Utilities 49,587 48,649 (939) (1.9) 83,525 81,943 (1,581) (1.9) 204,908 201,028 (3,879) (1.9) 258,599 214,847 (43,753) (20.4) 596,619 546,467 (50,152) (9.2) Billing Credits (702,780) (862,858) (160,079) (18.6) (99,492) (122,154) (22,662) (18.6) (370,983) (455,485) (84,502) (18.6) (12,606) (15,000) (2,394) (16.0) (1,185,861) (1,455,498) (269,637) (18.5)

Subtotal 5,606,904 6,149,143 542,239 8.8 806,410 880,943 74,533 8.5 3,009,982 3,385,125 375,142 11.1 1,426,582 1,548,555 121,973 7.9 10,849,879 11,963,766 1,113,887 9.3

Depreciation/Amort 2,300,975 2,388,848 87,873 3.7 365,365 399,613 34,247 8.6 473,661 495,044 21,383 4.3 381,280 431,478 50,198 11.6 3,521,282 3,714,983 193,701 5.2

Total Operating Expenses 7,907,879 8,537,991 630,112 7.4 1,171,775 1,280,556 108,781 8.5 3,483,644 3,880,169 396,525 10.2 1,807,863 1,980,033 172,171 8.7 14,371,161 15,678,749 1,307,588 8.3

Income (Loss) Provided from Operations 3,880,452 2,346,465 1,533,987 65.4 1,254,227 724,490 529,737 73.1 1,256,265 772,313 483,952 62.7 164,343 70,946 93,398 131.6 6,555,287 3,914,214 2,641,073 67.5

Non Operating ActivityInterest Expense (1,237,744) (1,256,160) 18,416 1.5 (93,783) (95,178) 1,395 1.5 (28,211) (28,631) 420 1.5 (117,652) (125,022) 7,370 5.9 (1,477,390) (1,504,991) 27,601 1.8 Interest Assessment from Park - - - - - - - - - - - - - - - Interest Income (Non CEF) 19,191 12,053 7,139 59.2 14,141 12,023 2,118 17.6 28,333 24,577 3,756 15.3 3,402 2,369 1,033 43.6 65,066 51,021 14,045 27.5 Interest Income (CEF) - - - - - 51,689 50,000 1,689 3.4 Property taxes debt - - - - - - - - - - - - - - - Gain/Loss on Sale of Fixed Assets - - - - - - - - - - - - 9,555 - 9,555 Gain/Loss on Investments - - - - (45,217) - (45,217) Other Income/(Expense) - - - - - - - - - - - - - - - Total Non Operating Income (Expenses) (1,218,553) (1,244,107) 25,555 2.1 (79,642) (83,155) 3,513 4.2 122 (4,054) 4,176 103.0 (114,250) (122,653) 8,403 6.9 (1,396,297) (1,403,970) 7,673 0.5

Change in Net Assets 2,661,899$ 1,102,358$ 1,559,541$ 141.5 1,174,585$ 641,335$ 533,250$ 83.1 1,256,387$ 768,259$ 488,128$ 63.5 50,093$ (51,707)$ 101,800$ 196.9 5,158,990$ 2,510,244$ 2,648,746$ 105.5

Other Expense - - - - - - - - - - - - - - - Change in Net Assets after Other Expense 2,661,899$ 1,102,358$ 1,559,541$ 141.5 1,174,585$ 641,335$ 533,250$ 83.1 1,256,387$ 768,259$ 488,128$ 63.5 50,093$ (51,707)$ 101,800$ 196.9 5,158,990$ 2,510,244$ 2,648,746$ 105.5

DESIGNATED FUND BALANCES Total Rate

Stabilization Capital

Replacement Total Rate








Replacement

Balance 07/01 7,359,067 1,416,382 5,942,685 5,753,979 1,125,628 4,628,351 10,553,006 5,685,800 4,867,205 1,050,630 371,176 679,454 24,716,682 8,598,987 16,117,695

Change in Net Assets 2,661,899 1,174,585 1,256,387 50,093 5,142,964 Add Back Depreciation/Amort 2,300,975 365,365 473,661 381,280 3,521,282 Changes in Payables/Receivables, Other (273,386) (40,078) (108,305) - (421,768) Cash Generated from Operations 4,689,488 4,689,488 - 1,499,873 1,499,873 - 1,621,743 1,621,743 - 431,373 431,373 - 8,242,477 8,242,477 -

CIP/Capital Equip (5,846,258) (5,846,258) (111,347) (111,347) (1,642,438) (1,642,438) (394,859) (394,859) (7,994,902) (7,994,902) Debt Principal (883,247) (883,247) (522,664) (522,664) (214,929) (214,929) (333,190) (333,190) (1,954,030) (1,954,030) Transfers to CRF fm Rate Stab - (4,954,974) 4,954,974 - (1,529,910) 1,529,910 - (1,722,682) 1,722,682 - (429,196) 429,196 - (8,636,762) 8,636,762 Interest Income Transfer - (7,900) 7,900 - (10,040) 10,040 - (7,367) 7,367 - (2,177) 2,177 - (27,483) 27,483 Cash Used for Property Acquisition & Debt (6,729,506) (4,962,874) (1,766,632) (634,011) (1,539,950) 905,939 (1,857,367) (1,730,048) (127,319) (728,049) (431,373) (296,675) (9,948,932) (8,664,246) (1,284,687)

Financing/Contrib Capital/Other Transfers 4,888,619 3,913,847 974,772 5,164 1,000,000 (994,836) 1,285,081 (245,665) 1,530,746 134,436 - 134,436 6,313,301 4,668,182 1,645,119

Net Change in Cash 2,848,602 3,640,461 (791,859) 871,026 959,922 (88,896) 1,049,458 (353,970) 1,403,427 (162,240) - (162,240) 4,606,846 4,246,414 360,432

Balance 12/31 10,207,669 5,056,843 5,150,826 6,625,005 2,085,551 4,539,454 11,602,463 5,331,831 6,270,633 888,390 371,176 517,214 29,323,528 12,845,400 16,478,127

FAVORABLE / (UNFAVORABLE) FAVORABLE / (UNFAVORABLE)

STATEMENT OF OPERATIONS FOR SIX MONTHS ENDING DECEMBER 31, 2012

RETAIL WATER OPERATION RECYCLED WATER OPERATION SEWER OPERATION PARK OPERATIONFAVORABLE / (UNFAVORABLE) FAVORABLE / (UNFAVORABLE)

COMBINEDFAVORABLE / (UNFAVORABLE)

Attachment 3: Fiscal Year 2012/2013 CIP Projects

Project Name FY 12/13 Budget

FY 12/13 Actual (thru Dec 2012)

Status

West Victoria Res. & PS

$1,100,00 $1,550,438 Construction anticipated to be complete in next 3-4 months. This project will be completed within the total project budget.

ESA 2nd

Connection $3,000,000 $274,736 Evaluating proposals for design on new site.

CSC Phase 2 $1,883,000 $87,976 Schematic design complete. Moving into detail design.

District Computer System Upgrades

$1,500,000 $457,624 The Document Management and Customer Information System projects are underway. The Financial Information System project implementation is scheduled for the second half of FY ‘13

Flinn Springs PS Gen $800,000 $185,219 Starting construction. Rios Canyon PS Gen $500,000 $30,713 Construction delayed until FY 13/14 due

to bird nesting season. Sunrise Res. Site Improvements

$450,000 $38,369 Starting construction.

Braverman Sewer Rehab. Phase 2

$550,000 $0 Anticipated bid date of March 2013.

Walmart/Carlton Hills Div. Structure

$250,000 $41,925 Sewer study complete. Finalizing report.

WRF Chlorine Trolley

$350,000 $51,013 Construction delayed until FY 13/14 to minimized WRF shutdown impacts.

Rios Canyon PS Suction Line

$650,000 $65,382 Evaluating condition assessment technology.

Steel Pipe Condition Assessment

$150,000 $0 Awaiting results from Rios Canyon Suction Line condition assessment.

Santee Basin Aquifer $200,000 $22,203 Moving into Phase 3 of work – Well drilling & hydraulic analysis.

WRF Demonstration Project (RFP)

$45,000 $5,961 $3M Grant received. Preparing RFP for advertisement in Feb.

Sewer Siphon Assessment

$30,000 $0 Assess double barrel sewer siphon under river.

Facilities Master Plan

$100,000 $1,238 Preparing RFP for advertisement in Feb./Mar.

Capitalized Ops $1,313,000 $517,352 Valve repl., air-vacs, blowoffs, security. External Agency Mandates

$910,000 $0 City of Santee beginning land acquisitions for Prospect Ave. East.

Attachment 4: CIP Financials (through December 2012)

$0.00

$1,000,000.00

$2,000,000.00

$3,000,000.00

$4,000,000.00

$5,000,000.00

$6,000,000.00

$7,000,000.00

FY 12/13 Total Budget

FY 12/13 Actual

Projected Spent (thru July 2013)

BOARD AGENDA REPORT


Dept. Head: Karen Jassoy Submitted by: Kevin Woo

Department: Finance Approved by: Allen Carlisle, CEO/GM

SUBJECT: AUDITED FINANCIAL STATEMENTS FOR FYE JUNE 30, 2012

RECOMMENDATION(S): 1. Hear White Nelson Diehl Evans LLP’s presentation of Audited Financial Statements for FYE June 30,

2012 and 2. Accept Audited Financial Statements for FYE June 30, 2012.

ALTERNATIVE(S): 1. Defer report to future meeting.

ATTACHMENT(S): 1. Audited Financial Statements. 2. Management Letter.

FUNDING: Requested amount: Budgeted amount: Are funds available? Yes No Project cost to date:


STRATEGIC PLAN IMPLEMENTATION: This agenda item is consistent with the Strategic Plan and meets one or more of the following Strategic Goals: Customer Service & Education; Employee Relations; Facilities Issues, Financial Health; Premier Park; Preventative & Predictive Maintenance; Water Resource Development.

Reviewed by: Dept Head X Finance Legal Standard Form

Action Required: Motion Resolution X Ordinance None

Policy Updates:

Rules & Regulations



Audit_Agenda_Item_2012.doc Page 2 of 2

EXECUTIVE SUMMARY: Pursuant to California Government Code Section 53646 and the District Standard Practices and Policies Manual, Section 19.2, Investment Policy, the Board is to receive monthly reports of the summary of financial operations, cash balances and investments. RECOMMENDATION(S): Accept Audited Financial Statements for FYE June 30, 2012.

PADRE DAM MUNICIPAL WATER DISTRICT

FINANCIAL STATEMENTS

WITH REPORT ON AUDIT BY INDEPENDENT

CERTIFIED PUBLIC ACCOUNTANTS

JUNE 30, 2012 AND 2011

PADRE DAM MUNICIPAL WATER DISTRICT TABLE OF CONTENTS

JUNE 30, 2012 and 2011

Page Independent Auditors’ Report 1 - 2 Management’s Discussion and Analysis (Required Supplementary Information) 3 - 7 Basic Financial Statements: Statements of Net Assets 8 - 9 Statements of Revenues, Expenses and Changes in Net Assets 10 Statements of Cash Flows 11 - 12 Notes to Basic Financial Statements 13 - 34 Required Supplementary Information: Schedule of Funding Progress for PERS 35 Schedule of Funding Progress for OPEB 35 Supplementary Information:

Schedule of Income (Loss) Before Contributions by Fund Services For the Year Ended June 30, 2012 36

Schedule of Income (Loss) Before Contributions by Fund Services

For the Year Ended June 30, 2011 37 Schedule of Income (Loss) Before Contributions (Budget to Actual)

For the Year Ended June 30, 2012 38 Schedule of Income (Loss) Before Contributions (Budget to Actual)

For the Year Ended June 30, 2011 39 Schedule of Change in Cash, Cash Equivalents and Investments

For the Year Ended June 30, 2012 40 Schedule of Change in Cash, Cash Equivalents and Investments

For the Year Ended June 30, 2011 41

PADRE DAM MUNICIPAL WATER DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS

2965 Roosevelt Street, Carlsbad, CA 92008-2389 • Tel: 760.729.2343 • Fax: 760.729.2234

Offices located in Orange and San Diego Counties

INDEPENDENT AUDITORS’ REPORT

Board of Directors Padre Dam Municipal Water District Santee, California We have audited the accompanying basic financial statements of Padre Dam Municipal Water District as of and for the years ended June 30, 2012 and 2011, as listed in the table of contents. These basic financial statements are the responsibility of the Padre Dam Municipal Water District’s management. Our responsibility is to express opinions on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the State Controller’s Minimum Audit Requirements for California Special Districts. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinions.

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the Padre Dam Municipal Water District as of June 30, 2012 and 2011, and the changes in financial position and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 14 to the financial statements, the District adopted the provisions of GASB Statement No. 51 Accounting and Financial Reporting for Intangible Assets, in 2012.

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, PERS Defined Benefit Pension Plan – schedule of funding progress, and Other Post-Employment Benefit Plan – schedule of funding progress, on page 35 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

1

Our audits were conducted for the purpose of forming opinions on the basic financial statements as a whole. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements of Padre Dam Municipal Water District. The supplementary information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

January 29, 2013 Carlsbad, California

2

PADRE DAM MUNICIPAL WATER DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS

3

MANAGEMENT’S DISCUSSION AND ANALYSIS Our discussion and analysis of Padre Dam Municipal Water District’s (District) financial performance provides an overview of the District’s financial activities for the years ended June 30, 2012 and 2011. Please read it in conjunction with the District’s financial statements, which follow this section. Financial Statements This discussion and analysis provides an introduction and a brief description of the District’s financial statements, including the relationship of the statements to each other and the significant differences in the information they provide. The District’s financial statements include four components:

Statements of Net Assets Statements of Revenues, Expenses and Changes in Net Assets Statements of Cash Flows Notes to Basic Financial Statements

The statement of net assets includes all the District’s assets and liabilities, with the difference between the two reported as net assets. Net assets may be displayed in the categories:

Invested in Capital Assets, Net of Related Debt Restricted Net Assets Unrestricted Net Assets

The statement of net assets provides the basis for computing rate of return, evaluating the capital structure of the District and assessing the liquidity and financial flexibility of the District. The statement of revenues, expenses and changes in net assets presents information which shows how the District’s net assets changed during the year. All of the current year’s revenues and expenses are recorded when the underlying transaction occurs, regardless of the timing of the related cash flows. The statement of revenues, expenses and changes in net assets measures the success of the District’s operations over the past year and determines whether the District has recovered its costs through current services and other revenues. The statement of cash flows provides information regarding the District’s cash receipts and cash disbursements during the year. This statement may report cash activity in four categories:

Operating Noncapital and related financing Capital and related financing Investing

This statement differs from the statement of revenues, expenses and changes in net assets because it accounts only for transactions that result in cash receipts or cash disbursements. The notes to the financial statements provide a description of the accounting policies used to prepare the financial statements and present material disclosures required by generally accepted accounting principles that are not otherwise present in the financial statements.


4

Financial Highlights For the year ended June 30, 2012, the District’s total net assets increased by $9,788,605. The District’s operating revenues of $53,832,988 increased by $4,892,496 while operating expenses increased by $3,770,878. Nonoperating expenses increased in the current year by $6,114,899 due primarily to a one-time adjustment to property previously purchased by the District. During this year, the District also implemented GASB 51, which requires an intangible asset be recognized in the statement of net assets only if it is considered identifiable. Financial Analysis of the Financial Statements

Net Assets

The District’s net assets at June 30, 2012 totaled $215,924,741 compared with $206,136,136 at June 30, 2011. The increase in net assets is primarily attributed to operating income of $2,591,248, nonoperating revenues of $2,721,632, capital contributions of $13,540,379, and offset by interest expense of $3,038,014 and loss on abandonment of assets of $6,026,640. The following is a summary of the District’s statement of net assets:

June 30, 2012 June 30, 2011 June 30, 2010

AssetsCurrent Assets $ 36,674,176 $ 31,454,119 $ 30,637,227

Noncurrent Assets: Restricted Assets 31,798,207 34,950,163 42,125,298 Other Noncurrent Assets 599,922 629,670 642,112 Capital Assets, net of depreciation 235,009,735 227,168,200 218,951,879 Total Assets 304,082,040 294,202,152 292,356,516

LiabilitiesCurrent Liabilities 10,771,191 11,605,206 9,892,204 Due to Other Agencies 3,118,760 3,118,760 3,118,760 Long-Term Debt 71,459,837 70,649,957 75,605,509 Other Noncurrent Liabilities 2,807,511 2,692,093 2,961,720 Total Liabilities 88,157,299 88,066,016 91,578,193

Net AssetsInvested in capital assets, net of related debt 182,613,016 173,806,644 171,261,983 Restricted for future capital projects 2,986,011 4,658,774 4,925,624 Restricted for debt service 4,467,292 4,476,963 4,475,420 Unrestricted 25,858,422 23,193,755 20,115,296 Total Net Assets $ 215,924,741 $ 206,136,136 $ 200,778,323


5

Financial Analysis of the Financial Statements (Continued)

Revenues, Expenses and Changes in Net Assets

The District reported a change in net assets of $9,788,605 for the year ended June 30, 2012, an increase of $4,430,792 when compared to the year ended June 30, 2011. Operating revenues were higher than the prior year by $4,892,496 mostly due to rate increases for water and wastewater operations as well as an increase in campground revenues. There has been a decrease in the amount of water sold over the last few years due to conservation. However, water sales have leveled off; current year water sales were lower than the prior year by less than 1%. Operating expenses were $3,770,878 higher primarily as a result of the increases in water and sewer services direct costs as well as the reduction of capitalized labor. Depreciation expense increased $396,765 as a result of capital asset additions. Nonoperating expenses increased in the current year by $6,114,899 due primarily to a one-time adjustment to property previously purchased by the District. The following is a summary of the District’s statement of revenues, expenses and changes in net assets:

June 30, 2012 June 30, 2011 June 30, 2010

Operating Revenues $ 53,832,988 $ 48,940,492 $ 46,621,262 Nonoperating Revenues 2,721,632 2,896,133 3,044,351

Total Revenues 56,554,620 51,836,625 49,665,613

Operating Expenses 51,241,740 47,470,862 44,657,222 Nonoperating Expenses 9,064,654 2,949,755 2,301,972

Total Expenses 60,306,394 50,420,617 46,959,194

Income Before Capital Contributions (3,751,774) 1,416,008 2,706,419

Capital Contributions 13,540,379 3,941,805 4,690,492

Changes in Net Assets 9,788,605 5,357,813 7,396,911 Net Assets at Beginning of Year 206,136,136 200,778,323 193,381,412 Net Assets at End of Year 215,924,741$ 206,136,136$ 200,778,323$

Capital Assets At June 30, 2012, the District had invested $235,009,735 in capital assets, net of accumulated depreciation of $86,731,749 including land, franchises and water rights, a water system, sewer system, water recycling system, buildings, equipment, park and campgrounds and construction in progress. This amount represents an increase of $7,841,535, over the prior year. The District implemented GASB 51, which requires an intangible asset be recognized in the statement of net assets only if it is considered identifiable. In order to comply, staff had to identify all District intangible assets that did not meet the requirement under GASB 51 for capitalization, including all studies, plans, and preliminary project work. Some items had been capitalized in the past and some items were in construction in progress. The following is a summary of the capital assets at June 30, 2012 and 2011, respectively. These numbers have been restated to reflect the effect of GASB 51:


6

Capital Assets (Continued)

June 30, 2012 June 30, 2011Land, franchises and water rights $ 898,511 $ 1,207,162 Water system 183,551,092 166,525,077 Sewer system 44,726,771 39,393,690 Water recycling system 26,059,048 26,008,126 Park and campgrounds 19,046,288 18,891,155 Buildings 14,921,429 14,530,669 Equipment 7,810,807 7,521,550 Construction in progress 24,727,538 33,454,264 Total 321,741,484 307,531,693 Less: Accumulated depreciation (86,731,749) (80,363,493)Net Capital Assets $ 235,009,735 $ 227,168,200

Significant additions to construction in progress for the year ended June 30, 2012 include:

5 Reservoir Retrofit Phase 3 - W. Victoria $ 3,166,240 Santee Lakes Park Shelters Replacment 681,187 WSA Valve Replacement Program 538,404 Alpine Pump Station Emergency Generator Set 498,709 SCADA Software Upgrades - Operations 423,164 ESA Secondary Supply Connection 310,032 5 Reservoir Retrofit Phase 3 - Mt. Top & E. Victoria 248,416 WSA Polyservice Replacment 202,188 IPS Flood Wall 196,020 Braverman Sewer Cured In-Place Repairs 166,347 CSC Phase II Operations 147,426 Blowoff Installations 126,885 WRF Roofing 121,869 Flinn Springs Pump Station Emergency Generator 119,436 Rios Canyon Suction Line Rehab/Replacement 110,130

Additional information on the District’s capital assets can be found in note 4 of the notes to the financial statements.


7

Long-Term Debt At June 30, 2012, the District had $74,090,264 in long-term debt, including certificates of participation, a note payable, State of California loans payable, a capital lease, and other long-term debt. This amount represents a decrease of $2,584,290 primarily due to principal payments made on debt. During the year the California Bank and Trust note was refinanced from short term to long term. The following is a summary of the long-term debt at June 30, 2012 and 2011, respectively:

June 30, 2012 June 30, 2011Certificates of participation $ 57,110,000 $ 57,875,000 Notes payable 3,564,833 3,790,537 Capital leases 4,429,906 4,915,498 State of California loans payable 4,550,902 5,435,013 Other long-term debt 1,506,307 1,605,665 Total long-term debt 71,161,948 73,621,713 Less: unamortized deferred charges (112,015) (124,126)Less: unamoritzed premiums/discounts 3,040,331 3,176,967

$ 74,090,264 $ 76,674,554

Additional information on the District’s long-term debt can be found in note 6 of the notes to the financial statements. Conditions Affecting Current Financial Position Water sales for the year ended June 30, 2012 were down slightly (less than 1%) compared to the previous year due to the inverse relationship between rain and water sales and lower consumption due to conservation. However, rates were increased so revenues increased compared to the prior year. Management cannot accurately predict rainfall into the future and what its effects might be on water sales and costs of operations. In April 2009, Padre Dam’s wholesale supplier declared a Level 2 Drought Alert and ordered a mandatory, eight percent reduction in water use effective July 1, 2009. In response, Padre Dam adopted additional water use restrictions and a new rate structure that provides customers with a daily allocation of water based on their property size and purchased capacity. The tiered rate structure rewards customers who are already using water efficiently and motivates high water users to conserve. Padre Dam can adjust the new rates as needed in response to decreased water sales in order to maintain adequate revenues for preventive maintenance and capital improvement projects. District-wide water use is approximately 28% less than it was during the same time in 2008 and the new rate structure has been lauded by the San Diego County Taxpayers Association and other government watchdog groups as a fair and effective approach to conservation. Contacting the District’s Financial Manager This financial report is designed to provide Padre Dam Municipal Water District’s customers, investors, and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Padre Dam Municipal Water District.

(As Restated)2012 2011

ASSETSCurrent Assets:

Cash and cash equivalents (Notes 1 and 2) 16,180,416$ 12,448,680$ Restricted cash and cash equivalents (Notes 1 and 2) 311,443 301,539 Investments (Notes 1 and 2) 10,927,004 10,081,354 Accounts receivable, net (Note 1) 7,607,891 6,415,476Property taxes receivable, net (Note 1) 135,195 148,536Accounts receivable - other 187,279 855,562Accrued interest receivable 43,292 48,506Inventory 1,137,873 1,007,917Prepaid expenses 143,783 146,549

Total Current Assets 36,674,176 31,454,119

Noncurrent Assets:Restricted Assets (Notes 1, 2 and 3):

Cash and cash equivalents 3,324,116 3,915,864 Investments 28,459,660 31,014,487Accrued interest receivable 14,431 19,812

Total Restricted Assets 31,798,207 34,950,163


STATEMENTS OF NET ASSETSJune 30, 2012 and 2011

Other Noncurrent Assets:Deferred Charges (Note 5) 599,922 629,670

Total Other Noncurrent Assets 599,922 629,670

Capital Assets (Note 4):Land, franchise and water rights 898,511 1,207,162Construction in progress 24,727,538 33,454,264Capital assets, net of depreciation 209,383,686 192,506,774

Total Capital Assets, Net of Depreciation 235,009,735 227,168,200

Total Noncurrent Assets 267,407,864 262,748,033

Total Assets 304,082,040 294,202,152

(Continued)See accompanying independent auditors' report and notes to basic financial statements. 8


LIABILITIESCurrent Liabilities:

Accounts payable 5,056,491$ 1,825,727$ Accrued expenses and other liabilities 1,943,743 2,601,167Accrued interest payable 829,087 852,176Current portion of long-term debt 2,630,427 6,024,597Liabilities payable from restricted assets:

Deposits and advances on construction 311,443 301,539

Total Current Liabilities 10,771,191 11,605,206

Noncurrent Liabilities:

Due to Other Agencies 3,118,760 3,118,760

Long-Term Debt (Note 6):Capital lease obligations 3,921,969 4,429,907Certificates of participation 59,218,316 60,162,841Note payable 3,277,387 - State of California loans payable 3,640,279 4,550,902Other long-term debt 1,401,886 1,506,307


STATEMENTS OF NET ASSETS (Continued)June 30, 2012 and 2011

Other long term debt 1,401,886 1,506,307

Total Long-Term Debt 71,459,837 70,649,957

Other Noncurrent Restricted Liabilities:Prepaid capacity fees (Note 7) 2,793,357 2,677,852Accrued pension benefits and other 14,154 14,241Total Other Noncurrent Restricted Liabilities 2,807,511 2,692,093

Total Noncurrent Liabilities 77,386,108 76,460,810

Total Liabilities 88,157,299 88,066,016

NET ASSETSInvested in capital assets, net of related debt 182,613,016 173,806,644 Restricted for future capital projects 2,986,011 4,658,774 Restricted for debt service 4,467,292 4,476,963 Unrestricted 25,858,422 23,193,755

Total Net Assets 215,924,741$ 206,136,136$

See accompanying independent auditors' report and notes to basic financial statements. 9

(As Restated) 2012 2011OPERATING REVENUES

Water operations 34,628,310$ 30,863,147$ Wastewater operations 14,651,455 13,789,398 Park operations 4,553,223 4,287,947

Total Operating Revenues 53,832,988 48,940,492

OPERATING EXPENSESWater operations 34,051,003 31,766,325 Wastewater operations 13,095,015 12,140,832 Park operations 4,095,722 3,563,705

Total Operating Expenses 51,241,740 47,470,862

Operating Income 2,591,248 1,469,630

NONOPERATING REVENUES (EXPENSES)Investment income 102,372 161,427Restricted investment income 216,698 341,232Taxes and assessments 2,397,733 2,384,681Gain on sale of assets 4,829 8,793Loss on abandonment of assets (6 026 640)


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETSFor the years ended June 30, 2012 and 2011

Loss on abandonment of assets (6,026,640) - Interest expense (3,038,014) (2,949,755)

Total Nonoperating Revenues (Expenses) (6,343,022) (53,622)

Income Before Capital Contributions (3,751,774) 1,416,008

Capital Contributions 13,540,379 3,941,805

Changes in Net Assets 9,788,605 5,357,813

Total Net Assets, Beginning of Year, as Originally Stated 206,136,136 206,278,942

Prior period adjustment - (5,500,619)

Total Net Assets, Beginning of Year, as Restated 206,136,136 200,778,323

Total Net Assets, End of Year 215,924,741$ 206,136,136$



CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers 53,423,037$ 48,261,535$ Payments for operating goods and services (24,970,041) (29,121,534) Payments to employees (17,372,040) (14,651,018)

Net Cash Provided (Used) by Operating Activities 11,080,956 4,488,983

CASH FLOWS FROM NONCAPITAL AND RELATED FINANCING ACTIVITIESReceipts from taxes and assessments 2,411,074 2,420,822

Net Cash Provided (Used) by Noncapitaland Related Financing Activities 2,411,074 2,420,822

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESAcquisition and construction of capital assets (8,394,471) (12,635,966) Net proceeds from issuance of long-term debt - 1,395,692 Principal payments on long-term debt (2,459,765) (2,291,877) Proceeds from capital contributions 1,654,054 2,505,677 Interest paid, net of amounts capitalized (3,185,627) (3,042,463) Proceeds from sale of assets 4,829 11,333


STATEMENTS OF CASH FLOWSFor the years ended June 30, 2012 and 2011

Net Cash Provided (Used) by Capitaland Related Financing Activities (12,380,980) (14,057,604)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of investments (4,562,026) (8,350,608) Proceeds from sale and maturities of investments 6,271,203 18,372,689 Interest received on investments 329,665 550,132

Net Cash Provided (Used) by Investing Activities 2,038,842 10,572,213

Net Increase (Decrease) inCash and Cash Equivalents 3,149,892 3,424,414

Cash and Cash Equivalents, Beginning of Year 16,666,083 13,241,669

Cash and Cash Equivalents, End of Year 19,815,975$ 16,666,083$

(Continued)See accompanying independent auditors' report and notes to basic financial statements. 11


Reconciliation of operating income to net cash flows provided by operating activities:

Operating income 2,591,248$ 1,469,630$ Adjustments to reconcile operating income

to net cash provided by operating activities:Depreciation 6,411,632 6,014,867 Amortization 32,060 31,750 (Increase) decrease in accounts receivable (1,192,415) 311,371 (Increase) decrease in accounts receivable - other 666,959 (720,841) (Increase) decrease in inventories (129,956) (88,341) (Increase) decrease in prepaid expenses 2,766 13,139 Increase (decrease) in accounts payable 3,230,764 (2,221,432) Increase (decrease) in accrued expenses and other liabilities (657,424) (42,957) Increase (decrease) in deposits and advances on construction 9,904 (8,576) Increase (decrease) in accrued pension benefits and other 115,418 (269,627)

Net Cash Provided By Operating Activities 11,080,956$ 4,488,983$

Financial Statement ClassificationCash and cash equivalentsCurrent assets:


STATEMENTS OF CASH FLOWS (Continued)For the years ended June 30, 2012 and 2011

Current assets:Cash and cash equivalents 16,180,416$ 12,448,680$ Restricted cash and cash equivalents 311,443 301,539

Noncurrent assets:Restricted cash and cash equivalents 3,324,116 3,915,864

Total Cash and Cash Equivalents 19,815,975 16,666,083

InvestmentsCurrent assets:

Investments 10,927,004 10,081,354 Noncurrent assets:

Restricted investments 28,459,660 31,014,487

Total Investments 39,386,664 41,095,841

Total Cash, Cash Equivalents and Investments 59,202,639$ 57,761,924$

Supplemental Disclosures:Noncash Investing and Financing Activities

Contributed Capital for Capital Assets 11,885,340$ 1,606,555$ Amortization Related to Long-Term Debt (124,524)$ (124,524)$ Unrealized (Loss) on Investments (114,877)$ (30,989)$



See accompanying independent auditors’ report. 13

June 30, 2012 and 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

a. Reporting Entity:

The Padre Dam Municipal Water District (the “District”) was organized November 23, 1955, (as Rio San Diego Municipal Water District) pursuant to the Municipal Water District Law of 1911, Division 20 of the Water Code, as the result of an election held December 2, 1952. The name changed to Padre Dam Municipal Water District effective January 1, 1977.

Santee County Water District (formed in 1956 pursuant to the County Water District Law, Division 12 of the Water Code) operated within the territory of the District. As the result of an election held on November 2, 1976, Santee County Water District dissolved and its functions and operations were assumed by the District on December 31, 1976.

The communities of Alpine, Crest, and Harbison Canyon (Eastern Service Area) were annexed to the District in 1961. The area within Crest Public Utility District was annexed in 1985 when that agency dissolved.

The District purchases its water supply from the San Diego County Water Authority.

The District sends its wastewater to City of San Diego METRO for treatment.

The District is comprised of two geographically distinct Service Areas:

Western Service Area

Western Service Area provides retail potable water, recycled water and sewer services to the community of Santee. The Santee Lakes Recreation Preserve and the Santee Water Reclamation Facility are located within this District.

Eastern Service Area

Eastern Service Area provides retail potable water service to the communities of Alpine, Crest and Harbison Canyon.

b. Basis of Presentation:

The basic financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental accounting financial reporting purposes. The District is accounted for as an enterprise fund. An enterprise fund is a proprietary type fund used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes.



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

c. Measurement Focus and Basis of Accounting:

“Measurement Focus” is a term used to describe which transactions are recorded within the various financial statements. “Basis of Accounting” refers to when transactions are recorded regardless of the measurement focus applied. The accompanying financial statements are reported using the “economic resources measurement focus,” and the “accrual basis of accounting.” Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statements of Net Assets. The Statements of Revenues, Expenses, and Changes in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The District distinguishes operating revenues and expenses from nonoperating revenues and expenses. Operating revenues are generated by water sales, wastewater services and park services while operating expenses are directly related to furnishing those services. Nonoperating revenues and expenses are not directly associated with the normal business of supplying water, wastewater treatment services and park services.

When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, and then unrestricted resources as necessary.

d. Net Assets:

Net assets of the District are classified into three components: (1) invested in capital assets, net of related debt, (2) restricted net assets, and (3) unrestricted net assets. These classifications are defined as follows:

Invested in Capital Assets, Net of Related Debt

This component of net assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of notes or borrowing that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt.

Restricted Net Assets

This component of net assets consists of net assets whose use is constrained by external sources such as creditors (i.e. debt covenants), grantors, contributors, laws or regulations of other governments, or constraints imposed by law through constitutional provisions or enabling legislation.

Unrestricted Net Assets

This component of net asset consists of net assets that do not meet the definition of “invested in capital assets, net of related debt” or “restricted net assets”.




e. Statements of Cash Flows:

For purposes of the statements of cash flows the District considers all financial instruments purchased with a maturity of three months or less to be cash and cash equivalents.

f. Investments:

Investments are stated at their fair value, which represents the quoted or stated market value. Investments that are not traded on a market, such as investments in external pools, are valued based on the stated fair value as represented by the external pool.

g. Accounts Receivable and Allowance for Doubtful Accounts:

Accounts receivable are from billed and unbilled customer accounts and total $7,607,891 and $6,415,476 at June 30, 2012 and 2011, respectively. Management believes that all uncollectible accounts have been identified and written-off. Due to historically low write-offs of water and sewer revenue billed, no allowance has been established as of June 30, 2012 and 2011.

h. Inventory:

Inventory consists primarily of materials and supplies used in the construction and maintenance of capital assets, and are valued at average cost. Inventory is used on the consumption method whereby inventory is expended as it is consumed.

i. Capital Assets:

The District records the acquisition of capital assets and additions, improvements and other capital outlays that significantly extend the life of an asset at historical cost. Contributed assets are recorded at their fair market value at the date of donation. Self-constructed assets are recorded in the amount of direct labor, material, and allocated overhead. District policy has set the capitalization threshold for reporting capital assets at $5,000 and an estimated useful life of greater than three years.

The District capitalizes interest on construction projects up to the point in time that the project is substantially completed. Capitalized interest is included in the cost of the assets and is depreciated on the straight-line basis over the estimated useful life of such assets.

Depreciation is calculated on the straight-line method over the estimated useful life of an asset, which ranges from three to one hundred years as follows:

Water system 10 - 75 years Wastewater system 10 - 100 years Water recycling system 5 - 50 years Park and campgrounds 5 - 30 years Buildings 20 - 25 years Equipment 3 - 10 years

Depreciation totaled $6,411,632 and $6,014,867 (as restated) for the years ended June 30, 2012 and 2011, respectively. Depreciation expense has been allocated to Water Operations, Wastewater Operations and Park Operations on the Statements of Revenues, Expenses and Changes in Net Assets. The allocation of depreciation expense for the years ended June 30, 2012 and 2011 are as follows:




i. Capital Assets (continued):

2012 2011 Water Operations $ 4,852,642 $ 4,611,193 Wastewater Operations 838,452 818,367 Park Operations 720,538 585,307 $ 6,411,632 $ 6,014,867

j. Compensated Absences:

Vested or accumulated vacation and sick leave are recorded as expenses and liabilities as benefits accrue to employees. At June 30, 2012 and 2011 accumulated vacation and sick leave totaled $1,565,435 and $1,733,448 respectively, and is included in accrued expenses and other liabilities on the statements of net assets.

k. Restricted Assets and Liabilities:

Certain current liabilities have been classified as current liabilities payable from restricted assets as they will be funded from restricted assets.

l. Use of Estimates:

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and, accordingly, include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates.

m. Property Taxes:

Property taxes are billed by the County of San Diego to property owners. The District takes into account differences in the property taxes assessed in the two service areas when establishing its water rates for each area. The District’s property tax calendar for the fiscal year ended June 30, 2012 was as follows:

Lien Date: January 1 Levy Date: July 1 Due Date: First Installment - November 1

Second Installment - February 1 Delinquent Date: First Installment - December 10

Second Installment - April 10

Property taxes receivable of $135,195 and $148,536 as of June 30, 2012 and 2011, respectively, have been reported net of an allowance for estimated uncollectible taxes in the amount of $7,549 and $8,197, respectively.

n. Amortization of Deferred Charges, Bond Discounts, Premiums and Issuance Costs:

Deferred charges, bond discounts, premiums and issuance costs are being amortized over the periods of debt maturities. Amortization of bond issuance costs totaled $32,060, and $31,750 for the years ended June 30, 2012 and 2011, respectively, and is included in operating expenses on the statements of revenues, expenses and changes in net assets. Amortization of bond discounts and premiums totaled $124,524 and $124,524 for the years ended June 30, 2012 and 2011, respectively, and is included in interest expense on the statements of revenues, expenses and changes in net assets.




o. Interest Expense:

The District incurs interest charges on long-term debt. Interest expense for the years ended June 30, 2012 and 2011, is as follows:

2012 2011 Amount Expensed $ 3,038,014 $ 2,949,755 Amount Capitalized as a Cost of Construction Projects 133,716 277,339 Total Interest $ 3,171,730 $ 3,227,094

2. CASH AND INVESTMENTS:

Cash and investments at June 30, 2012 and 2011 are classified in the accompanying financial statements as follows:

Statements of Net Assets: 2012 2011Current Assets: Cash and cash equivalents 16,180,416$ 12,448,680$

311,443 301,539 Investments 10,927,004 10,081,354 Noncurrent Assets: Restricted: Cash and cash equivalents 3,324,116 3,915,864 Investments 28,459,660 31,014,487

Total cash and investments 59,202,639$ 57,761,924$

Cash and investments consist of the following:

Cash on hand 2,600$ 2,400$ Deposits with financial institutions 23,425,902 20,230,518Investments 35,774,137 37,529,006

Total cash and investments 59,202,639$ 57,761,924$

Restricted cash and cash equivalents



2. CASH AND INVESTMENTS (CONTINUED):

Investments Authorized by the California Government Code and the District’s Investment policy:

The table below identifies the investment types that are authorized for the District by the California Government Code (or the District’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the District’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk.

Authorized Investment Type Maximum Maturity

Maximum Percentage of

Portfolio

Maximum Investment in One

IssuerU.S. Treasury Obligations 5 years None NoneU.S. Government Sponsored Entities 5 years None NoneBanker’s Acceptances 180 days 40% 30%Commercial Paper 270 days 25% 10%Certificates of Deposit 2 years 30% NoneRepurchase Agreements 90 days None NoneReverse Repurchase Agreements 90 days 20% of base value NoneMedium-Term Notes 5 years 30% NoneMoney Market Mutual Funds N/A 20% NoneLocal Agency Investment Fund (LAIF) N/A ** NoneSan Diego County Pooled Investment Fund N/A None NoneCalifornia Asset Management Program (CAMP) N/A None None

**Maximum investment in LAIF is $50 million per California Government Code.

Investments Authorized by Debt Agreements:

Investments of debt proceeds held by a bond trustee are governed by the general provisions of the California Government Code or the District’s investment policy (whichever is more restrictive).

Disclosures Relating to Interest Rate Risk:

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time to provide the cash flow and liquidity needed for operations.




Disclosures Relating to Interest Rate Risk (Continued):

Information about the sensitivity of the fair values of the District’s investments to market interest rate fluctuations is provided by the following tables that show the distribution of the District’s investments by maturity. As of June 30, 2012 the District had the following investments:

Investment Type Total12 Months or

Less13 to 24 Months

25 to 60 Months

More than 60 Months

CAMP 4,436,152$ 4,436,152$ -$ -$ -$ Local Agency Investment Fund (LAIF) 17,711,389 17,711,389 - - - Money Market Mutual Funds 244,511 244,511 - - - U.S. Government Sponsored Entities 9,608,686 6,347,853 3,260,833 - - U.S. Treasury Obligations 3,773,399 - 2,277,734 1,495,665 -

Total 35,774,137$ 28,739,905$ 5,538,567$ 1,495,665$ -$

Remaining Maturity (in Months)

As of June 30, 2011 the District had the following investments:

Investment Type Total12 Months or

Less13 to 24 Months

25 to 60 Months

More than 60 Months

CAMP 2,423,027$ 2,423,027$ -$ -$ -$ Local Agency Investment Fund (LAIF) 13,152,458 13,152,458 - - - Money Market Mutual Funds 6,436,399 6,436,399 - - - U.S. Government Sponsored Entities 11,733,107 2,020,492 8,456,865 1,255,750 - U.S. Treasury Obligations 3,784,015 2,512,100 - 1,271,915 -

Total 37,529,006$ 26,544,476$ 8,456,865$ 2,527,665$ -$

Remaining Maturity (in Months)

Disclosures Relating to Credit Risk:

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by the California Government Code, the District’s investment policy or debt agreements, and the Standard and Poor’s rating as of year ended June 30, 2012 and 2011 for each investment type.




Disclosures Relating to Credit Risk (Continued):

The District’s investment policy and the actual rating as of the year ended June 30, 2012 for each investment type

are as follows:

Investment Type TotalMinimum

Legal RatingExempt from

Disclosure AAA AA Not RatedCAMP 4,436,152$ N/A -$ 4,436,152$ -$ -$ Local Agency Investment Fund (LAIF) 17,711,389 N/A - - - 17,711,389 Money Market Mutual Funds 244,511 AAA - 244,511 - - U.S. Government Sponsored Entities 9,608,686 N/A - - 9,608,686 - U.S. Treasury Obligations 3,773,399 N/A 3,773,399 - - -

Total 35,774,137$ 3,773,399$ 4,680,663$ 9,608,686$ 17,711,389$

Rating as of Year End

The District’s investment policy and the actual rating as of the year ended June 30, 2011 for each investment type are as follows:

Investment Type TotalMinimum

Legal RatingExempt from

Disclosure AAA AA Not RatedCAMP 2,423,027$ N/A -$ 2,423,027$ -$ -$ Local Agency Investment Fund (LAIF) 13,152,458 N/A - - - 13,152,458 Money Market Mutual Funds 6,436,399 AAA - 6,112,372 - 324,027 U.S. Government Sponsored Entities 11,733,107 N/A - 11,733,107 - - U.S. Treasury Obligations 3,784,015 N/A 3,784,015 - - -

Total 37,529,006$ 3,784,015$ 20,268,506$ -$ 13,476,485$

Rating as of Year End

Concentration of Credit Risk:

The investment policy of the District limits the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer (other than U.S. Treasury securities, money market mutual funds, and external investment pools) that represent 5% or more of the District’s investments are as follows:

IssuerFederal Home Loan Bank Bonds U.S. Government Sponsored Entities 2,002,020$ Federal National Mortgage Association U.S. Government Sponsored Entities 6,347,353$

Reported AmountInvestment Type




Custodial Credit Risk:

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, an entity will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, an entity will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the District’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local government units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2012, $2,189,380 of the District’s deposits with financial institutions in excess of federal depository insurance limits was held in collateralized accounts.

Local Agency Investment Fund (LAIF):

The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the District’s investment in this pool is reported in the accompanying financial statements at amounts based upon the District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

California Asset Management Program (CAMP):

The District is a voluntary participant in the California Asset Management Program (CAMP). CAMP is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act for the purpose of exercising the common power of its Participants to invest funds. The investments are limited to investments permitted by California Government Code. The District reports its investment in CAMP at the fair value amounts provided by CAMP, which is the same value of the pool share. At June 30, 2012 and 2011 the fair value approximated is the District’s cost.



3. RESTRICTED ASSETS:

Restricted assets were provided by, and are to be used for, the following:

Funding Source Use 2012 2011

Customer and construction deposits Various $ 311,443 $ 301,539

Capacity expansion funds and accrued interest receivable Acquisiton and construction 5,779,375 7,336,626

Debt proceeds, capital contributions and interest earned

Debt service and acquisition andconstruction 26,004,678 27,599,296

Pensions and other Various 14,154 14,241

32,109,650$ 35,251,702$

4. CAPITAL ASSETS:

The following is a summary of changes in Capital Assets for the year ended June 30, 2012:

Beginning Balance

(As Restated) Additions Deletions Ending BalanceCapital Assets, Not Depreciated:Land, Franchise and Water Rights 1,207,162$ 124,223$ (432,874)$ 898,511$ Construction in Progress 33,454,264 8,349,663 (17,076,389) 24,727,538

Total Capital Assets Not Depreciated 34,661,426 8,473,886 (17,509,263) 25,626,049

Capital Assets, Being Depreciated:Water System 166,525,077 17,026,015 - 183,551,092 Sewer System 39,393,690 5,333,081 - 44,726,771 Water Recycling System 26,008,126 50,922 - 26,059,048 Park and Campgrounds 18,891,155 155,133 - 19,046,288 Buildings 14,530,669 390,760 - 14,921,429 Equipment 7,521,550 332,633 (43,376) 7,810,807

Total Capital Assets Being Depreciated 272,870,267 23,288,544 (43,376) 296,115,435

Less Accumulated Depreciation: (80,363,493) (6,411,632) 43,376 (86,731,749)

Total Capital Assets Being Depreciated, Net 192,506,774 16,876,912 - 209,383,686

Total Capital Assets, Net 227,168,200$ 25,350,798$ (17,509,263)$ 235,009,735$



4. CAPITAL ASSETS (CONTINUED):

The following is a summary of changes in Capital Assets for the year ended June 30, 2011:

Beginning Balance

(As Restated)Additions

(As Restated) DeletionsEnding Balance (As Restated)

Capital Assets, Not Depreciated:Land, Franchise and Water Rights 1,207,162$ -$ -$ 1,207,162$ Construction in Progress 40,210,305 12,213,843 (18,969,884) 33,454,264

Total Capital Assets Not Depreciated 41,417,467 12,213,843 (18,969,884) 34,661,426

Capital Assets, Being Depreciated:Water System 151,397,932 15,127,145 - 166,525,077 Sewer System 38,189,317 1,204,373 - 39,393,690 Water Recycling System 25,382,705 625,421 - 26,008,126 Park and Campgrounds 16,527,459 2,363,696 - 18,891,155 Buildings 14,191,999 338,670 - 14,530,669 Equipment 7,416,073 177,200 (71,723) 7,521,550

Total Capital Assets Being Depreciated 253,105,485 19,836,505 (71,723) 272,870,267

Less Accumulated Depreciation: (74,417,809) (6,014,867) 69,183 (80,363,493)

Total Capital Assets Being Depreciated, Net 178,687,676 13,821,638 (2,540) 192,506,774

Total Capital Assets, Net 220,105,143$ 26,035,481$ (18,972,424)$ 227,168,200$

5. DEFERRED CHARGES:

Bond issuance costs totaled $599,922 and $629,670, net of accumulated amortization of $117,795 and $85,735 as of June 30, 2012 and 2011, respectively. The costs are amortized using the straight-line method based on the estimated term of the related bond debt. Amortization expense of $32,060 and $31,750 for the years ended June 30, 2012 and 2011 is included in operating expenses on the statements of revenues, expenses and changes in net assets.



6. LONG-TERM DEBT:

Balance at June 30, 2011 Additions Deletions

Balance at June 30, 2012

Due within One Year

Certificates of Participation:2004 Certificates of Participation $ 4,645,000 -$ $ (255,000) $ 4,390,000 $ 265,000 2009 Certificates of Participation 53,230,000 - (510,000) 52,720,000 555,000 2004 COPS Unamortized Premium 12,205 - (872) 11,333 - 2009 COPS Unamortized Premium 3,164,762 - (135,764) 3,028,998 - 2009 COPS Unamortized Deferred Charges (124,126) - 12,111 (112,015) -

Net Certificiates of Participation 60,927,841 - (889,525) 60,038,316 820,000

Note Payable:California Bank and Trust 3,790,537 - (225,704) 3,564,833 287,446

Capital Leases:Bank of America 4,915,498 - (485,592) 4,429,906 507,937

State of California Loans Payable:1995 State Water Resources Control Board 3,798,950 - (585,938) 3,213,012 604,102 1996 State Water Resources Control Board 1,636,063 - (298,173) 1,337,890 306,521

Total State of California Loans Payable 5,435,013 - (884,111) 4,550,902 910,623

Other Long-Term Debt:Government Capital Park Cabins Loan 1,415,000 - (64,852) 1,350,148 68,190 Lakeside Detachment Liability 190,665 - (34,506) 156,159 36,231

Total Other Long-Term Debt 1,605,665 - (99,358) 1,506,307 104,421

76,674,554$ -$ (2,584,290)$ 74,090,264$ 2,630,427$

Certificates of Participation (COPS):

The 2004 Certificates of Participation are dated August 18, 2004, secured by net revenues of the District and reserve funds, with annual principal payments from $95,000 to $430,000 plus interest at 3.0% to 4.75%.

On September 1, 2009, the District issued $53,695,000 of 2009 Capital Improvement and Refunding Project, Series A Certificates of Participation which consisted of serial bonds and term bonds. $27,020,000 of serial bonds mature annually from October 1, 2010 to October 1, 2029 and bear varying interest rates between 2.00% and 5.25%. An $11,600,000 term bond matures on October 1, 2034 and bears an interest rate of 5.25%, and a $15,075,000 term bond matures on October 1, 2039 and bears an interest of 5.25%. The COPs were issued in part to refinance the Certificates of Participation issued in 1996 and in part to finance various improvements to the District’s Water System. The savings between the cash flow required to service the old debt and the cash flow required to service the new debt is $1,278,568 and represents an economic gain on refunding of $998,791.



6. LONG-TERM DEBT (CONTINUED):

Future debt service requirements for the certificates of participation are as follows:

For the YearEnded June 30, Principal Interest Principal Interest Principal Interest

2013 $ 265,000 $ 181,423 555,000$ 2,573,906$ $ 820,000 $ 2,755,329 2014 275,000 171,698 615,000 2,556,356 890,000 2,728,054 2015 285,000 161,195 635,000 2,536,019 920,000 2,697,214 2016 295,000 150,028 650,000 2,511,906 945,000 2,661,934 2017 305,000 138,175 675,000 2,485,406 980,000 2,623,581

2018-2022 1,730,000 484,981 9,630,000 11,505,905 11,360,000 11,990,886 2023-2027 1,235,000 89,052 7,655,000 9,480,840 8,890,000 9,569,892 2028-2032 - - 9,905,000 7,233,257 9,905,000 7,233,257 2033-2037 - - 12,885,000 4,259,456 12,885,000 4,259,456 2038-2040 - - 9,515,000 766,895 9,515,000 766,895

$ 4,390,000 $ 1,376,552 $ 52,720,000 $ 45,909,946 $ 57,110,000 $ 47,286,498

2004 COPS 2009 COPS Total COPS

Note Payable:

In April 1996, the District obtained an unsecured loan from California Bank and Trust, which was refinanced in 2002, 2007 and again in 2012, in the amount of $5,000,000. The note bears interest at 61% of the prime rate (1.98% at June 30, 2012). The note requires monthly interest and principal payments of $32,651 with the remaining unpaid principal balance due August, 2017. This note is payable from revenues levied by the District for purposes other than the payment of principal and interest of bonded debt. Future debt service requirements for the California Bank and Trust Note are as follows:

For the YearEnded June 30, Principal Interest Total

2013 $ 287,446 $ 68,898 356,344$ 2014 328,936 62,876 391,812 2015 335,611 56,201 391,812 2016 342,290 49,522 391,812 2017 349,369 42,443 391,812 2018 1,921,181 103,220 2,024,401

$ 3,564,833 $ 383,160 $ 3,947,993

California Bank and Trust




Capital Lease:

The District entered into a capital lease agreement on July 16, 2009 with Government Capital Corporation for $5,604,125 to finance a portion of the $8,706,363 cost of various new equipment. Accumulated depreciation on this equipment at June 30, 2012 and June 30, 2011 was $919,005 and $338,583, respectively. The capital lease is for a term of 10 years with semiannual lease payments of $351,892 which include interest at 6.75%. Upon the expiration of the lease term the equipment can be purchased for $1.00. Future minimum lease payments under the capital lease are as follows:


2013 507,937$ 195,848$ 703,785$ 2014 531,311 172,474 703,785 2015 555,761 148,024 703,785 2016 581,335 122,450 703,785 2017 608,087 95,698 703,785

2018-2020 1,645,475 113,987 1,759,462

$ 4,429,906 $ 848,481 $ 5,278,387

Government Capital Corp

Loans Payable:

In August 1995, the District obtained a loan of $10,173,515 from the State Water Resources Control Board for the construction of the Santee Water Reclamation Facility expansion. The loan bears interest at 3.1% with annual installments of $703,705, including interest. The District shall maintain a dedicated source of revenue sufficient to provide reasonable assurance of the repayment of the loan. In April 1996, the District obtained a loan of $5,000,000 from the State Water Resources Control Board for the construction of the Santee Water Reclamation Facility expansion. The loan bears interest at 2.8% with annual installments of $343,982, including interest. The District shall maintain a dedicated source of revenue sufficient to provide reasonable assurance of the repayment of the loan. Future debt service requirements for the State Water Resources Control Board loans are as follows:

For the YearEnded June 30, Principal Interest Principal Interest Principal Interest

2013 $ 604,102 $ 99,603 $ 306,521 $ 37,461 $ 910,623 $ 137,064 2014 622,829 80,876 315,104 28,878 937,933 109,754 2015 642,137 61,567 323,927 20,055 966,064 81,622 2016 662,043 41,662 392,338 11,259 1,054,381 52,921 2017 681,901 21,139 - - 681,901 21,139

$ 3,213,012 $ 304,847 $ 1,337,890 $ 97,653 $ 4,550,902 $ 402,500

1995 State Water Loan 1996 State Water Loan Total State Water Loans




Other Long-Term Debt:

The District had a wholesale agreement with Lakeside Water District. Effective November 16, 2006, Lakeside Water District (Lakeside) detached from the District. Per the detachment agreement, the District will make ten annual payments to Lakeside totaling $448,000. The District estimates that the net present value of the remaining principal payments is $156,159 assuming a 5% rate of return. The Lakeside detachment liability is reported on the statements of net assets as other long-term debt. Future debt service requirements for the Lakeside detachment liability are as follows:


2013 $ 36,231 $ 8,569 44,800$ 2014 38,043 6,757 44,800 2015 39,945 4,855 44,800 2016 41,940 2,860 44,800

$ 156,159 $ 23,041 $ 179,200

Lakeside Water District Payable

On October 1, 2010, the District entered into an installment sale agreement with Government Capital Corporation to finance the purchase and site work necessary to install 7 land based cabins and 3 floating cabins at Santee Lakes. The total amount financed, including legal and closing costs, is $1,415,000. The term of the agreement is 15 years with an effective interest rate of 5.147%. Annual payments of $137,682 are required. The agreement is subordinate to the existing COPs and State loans and is secured by a pledge of Park and District net revenues. Future debt service requirements for the Government Capital Corporation installment agreement is as follows:


2013 $ 68,190 $ 69,492 $ 137,682 2014 71,700 65,982 137,682 2015 75,390 62,292 137,682 2016 79,271 58,411 137,682 2017 83,351 54,331 137,682

2018-2022 485,696 202,718 688,414 2023-2026 486,550 64,177 550,727

$ 1,350,148 $ 577,403 $ 1,927,551

Park Cabins Loan



7. PREPAID CAPACITY FEES:

The District records capacity fees collected as a liability until its duty to perform has been completed and service has begun at which time these fees are recorded as capital contributions. Following is a summary of the prepaid capacity fee liability at June 30:

2012 2011

Balance, Beginning of Year $ 2,677,852 $ 2,947,339 Add: Construction and Capacity Fees Received 1,493,719 1,546,693 Less: Water and Sewer Connections (1,358,660) (1,816,180)

Refunds (19,554) -

Balance, End of Year $ 2,793,357 $ 2,677,852

8. DEFINED BENEFIT PENSION PLAN:

Plan Description

The District’s defined benefit pension plan (the “Plan”) provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to Plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions as well as other requirements are established by State statutes within the Public Employees’ Retirement Law. The Plan selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through District resolution. CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 Q Street, Sacramento, California 95814.

Funding Policy

Active members in the Plan are required to contribute 8% of their annual covered salary of which the District pays 4.5% on behalf of the employees. The District is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The required employer contribution rates were 18.605% and 15.827% for the years ended June 30, 2012 and 2011, respectively. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS.

Annual Pension Costs

For the fiscal year ended June 30, 2012 and June 30, 2011, the District’s annual pension cost and actual contribution was $2,049,349 and $1,735,019, respectively. The required contribution for the fiscal year ended June 30, 2012 was determined as part of the June 30, 2009 actuarial valuation.



8. DEFINED BENEFIT PENSION PLAN (CONTINUED):

Annual Pension Costs (Continued)

The following is a summary of the actuarial assumptions and methods:

Valuation Date June 30, 2009 Actuarial Cost Method Entry Age Normal Cost Method Amortization Method Level Percent of Payroll Average Remaining Period 27 Years as of the Valuation Date Asset Valuation Method 15 Year Smoothed Market Actuarial Assumptions:

Investment Rate of Return 7.75% (net of administrative expenses) Projected Salary Increases 3.55% to 14.45% depending on age, service, and type of employment Inflation 3.00% Payroll Growth 3.25% Individual Salary Growth A merit scale varying by duration of employment

coupled with an assumed annual inflation growth of 3.00% and an annual production growth of 0.25%.

Initial unfunded liabilities are amortized over a closed period that depends on the plan’s date of entry into CalPERS. Subsequent plan amendments are amortized as a level percent of pay over a closed 20 year period. Gains and losses that occur in the operation of the plan are amortized over a 30 year rolling period, which results in an amortization of 6% of unamortized gains and losses each year. If the plan’s accrued liability exceeds the actuarial value of plan assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30 year amortization period.

Three-Year Trend Information for PERS

Annual Pension Percentage of Net Pension Fiscal Year Cost (APC) APC Contributed Obligation

June 30, 2012 $2,049,349 100% $-0- June 30, 2011 $1,735,019 100% $-0- June 30, 2010 $1,725,304 100% $-0-

Funded Status and Funding Progress

As of June 30, 2011, the most recent actuarial valuation date, the plan was 74.1% funded. The actuarial accrued liability (AAL) for benefits was $78,446,285, and the actuarial value of assets was $58,106,355, resulting in an unfunded actuarial accrued liability (UAAL) of $20,339,930. The covered payroll (annual payroll of active employees covered by the plan) was $10,969,899, and the ratio of the UAAL to the covered payroll was 185.4%.

The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over the time relative to the actuarial accrued liability for benefits.



9. OTHER POST EMPLOYMENT BENEFITS:

Plan Description

The District contributes to a single-employer defined benefit plan to provide medical benefits to eligible retired District employees and beneficiaries. The Plan has three tiers of retiree health insurance benefits. Members who were hired on or before August 27, 2002 and who meet full eligibility requirements receive medical benefits paid for entirely by the employer; members must meet additional eligibility requirements after this date to receive the same benefit. Reduced benefits are available to members hired after August 27, 2002 and before August 6, 2006. For members hired after August 8, 2006, the District will contribute up to $600 per month towards health insurance at the time of retirement if the member meets certain requirements; this coverage ends when the member becomes eligible for Medicare. The plan does not provide a publicly available financial report.

Funding Policy

The contribution requirements of plan members and the District are established and may be amended by the Board of Directors. The District’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal annual cost plus the portion of the unfunded actuarial accrued liability (or funding excess). Any unfunded actuarial liability (or funding excess) is amortized over a period not to exceed thirty years. The current ARC rate is 13.9% of the annual covered payroll.

Annual OPEB Cost and Net OPEB Obligation

The following table shows the components of the District’s annual OPEB cost for the years ending June 30, 2012 and 2011, the amount actually contributed to the plan, and changes in the District’s net OPEB obligation:

2012 2011Annual Required Contribution (ARC) 1,457,946$ 1,604,761$ Interest on net OPEB obligation - - Adjustment to Annual Required Contribution (ARC) - - Annual OPEB cost (expense) 1,457,946 1,604,761 Contributions made 1,457,946 1,604,761 Increase in net OPEB obligation - - Net OPEB obligation - beginning of year - - Net OPEB obligation - end of year -$ -$



9. OTHER POST EMPLOYMENT BENEFITS (CONTINUED):

The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the fiscal years 2012, 2011 and 2010 were as follows:

THREE-YEAR TREND INFORMATION FOR CERBT Fiscal Annual OPEB Percentage of Annual Net OPEB Year Cost (AOC) OPEB Cost Contributed Obligation 6/30/12 $ 1,457,946 100% $ - 6/30/11 $ 1,604,761 100% $ - 6/30/10 $ 1,604,761 100% $ -

Funded Status and Funding Progress The funded status of the plan as of the June 30, 2011 actuarial valuation was as follows:

Actuarial Accrued Liability (AAL) $ 23,247,868 Actuarial Value of Plan Assets $ 5,568,515 Unfunded Actuarial Accrued Liability (UAAL) $ 17,679,353 Funded Ratio (Actuarial Value of Plan Assets/AAL)

23.95%

Covered Payroll (Active Plan Members) $ 10,477,513 UAAL as a Percentage of Covered Payroll 168.74%

Actuarial Methods and Assumptions

The required contribution was determined as part of the June 30, 2011 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included a 7.61% investment rate of return. The District’s projected healthcare cost trend rate is projected to be 8% per annum graded down approximately one-quarter percent increments to an ultimate rate of 4.5%. The District’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll over a fixed 30-year period. The District’s projected salary increase was 3.25%. Inflation was projected at 3.0%. The average remaining amortization period at June 30, 2011 was 26 years. The asset valuation method is based on the market value basis.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the benefits.

10. REIMBURSEMENT CONTRACTS:

The District has entered into a number of reimbursement contracts with developers who have made contributions to the District to aid in the construction of water and sewer facilities. These contracts are to be repaid as new connections are made to the related water and sewer facilities. The District’s liability is limited to collecting the applicable connection fees and payment of the fees to the developers. Usually, only connections made within ten years from the date of each contract qualify for repayment; the contracts are void after that date.



11. COMMITMENTS AND CONTINGENCIES:

Leases The District entered into a twenty-five year agreement in 1976 with the City of San Diego for the use of a portion of a major water transmission line. In December 2002, the lease was extended for an additional ten years. In November 2011, the lease was extended for an additional ten years. The minimum annual payments under the terms of the agreement are $33,339 through December 2021.

The District entered into a lease agreement in 1997 with the City of San Diego for the use of an antenna for the purpose of a mobile relay station and as a data relay station. The lease was amended in February 2008 to extend the lease to February 2018. Monthly payments are $1,360 with an annual cost of living increase of 3%. The District has entered into various lease agreements for vehicles, all of which are categorized as operating leases and expire during fiscal year ending June 30, 2012. Rent expense under these non-cancelable leases was $61,012 and $73,461 for the year ended June 30, 2012 and 2011.

Future minimum lease payments as of June 30, 2012 are as follows:

2013 $ 21,432 2014 19,487 2015 20,072 2016 20,674 2017 21,294 2018 21,933 $ 124,892

Litigation

There are pending lawsuits in which the District is involved. The District’s management and legal counsel estimate that the potential claims against the District, not covered by insurance, resulting from such litigation would not materially affect the operations or financial condition of the District.

Construction Contracts

The District has entered into various contracts for the purchase of material and construction of facilities. The amounts contracted for are based on the contractors’ estimated cost of construction. At June 30, 2012 and 2011 the total unpaid amount on these contracts was $18,312,430 and $15,995,113, respectively.



12. CERTIFICATION OF RATE COVENANT REQUIREMENTS:

In connection with the execution and delivery of the outstanding Certificates of Participation, the District agreed to meet certain covenants to maintain and collect gross revenues sufficient in each fiscal year to provide District net revenues which meet or exceed required ratios, as defined in the Rate Covenant section of the Official Statements. The District has complied with the Rate Covenants as outlined in the 2004 Certificates of Participation agreement and the 2009 Certificates of Participation agreement for the year ending June 30, 2012. In connection with the execution and delivery of the California Bank and Trust Note, the District agreed to meet certain covenants to meet or exceed required ratios, as defined in the Rate Covenant section of the Official Statements. The District has complied with the Rate Covenants as outlined in the Note agreement for the year ended June 30, 2012.

13. RISK MANAGEMENT:

The District is exposed to various risks of loss related to torts, theft, damage and destruction of assets, errors and omissions, and natural disasters. The District participates in an insurance pool through the Special District Risk Management Authority (SDRMA). SDRMA is a not-for-profit public agency formed under California Government Code Sections 6500 et. Seq. SDRMA is governed by a board composed of members from participating agencies. The mission of SDRMA is to provide renewable, efficiently priced risk financing and risk management services through a financially sound pool. The District pays an annual premium for commercial insurance covering general liability, excess liability, property, automobile, public employee dishonesty, and various other risks. Accordingly, the District retains no risk of loss. Separate financial statements of SDRMA may be obtained at Special District Risk Management Authority, 1112 “I” Street, Suite 300, Sacramento, CA 95814. During its membership, the following policies were in effect:

General and Auto Liability - Public Officials’ and Employees’ Errors and Omissions and Employment Practices Liability: Total risk financing limits of $10.0 million, combined single limit at $10.0 million per occurrence, subject to the following deductibles:

$10,000 per occurrence for third party general liability and auto liability property damage.

50% co-insurance of cost expended by SDRMA in excess of $10,000 up to $50,000 per

occurrence for employment related claims. However 100% of the obligation may be waived if certain criteria are met.

Employee Dishonesty Coverage - Total of $400,000 per loss includes Public Employee Dishonesty, Forgery or Alteration and Theft, and Disappearance and Destruction.

Property Loss - Replacement cost, for property on file, if replaced and if not replaced within two years after the loss, paid on an actual cash value basis, to a combined total of $1 billion per occurrence, subject to $2,000 deductible per occurrence.

Boiler and Machinery - Replacement cost up to $100 million per occurrence, subject to a $1,000 deductible.

Comprehensive and Collision - On selected vehicles, with deductibles of $250/$500 or $500/$1,000, as elected; ACV limits, fully self-funded by SDRMA.



13. RISK MANAGEMENT (CONTINUED): Public Officials’ Personal Liability - $500,000 each occurrence, with an annual aggregate of $500,000 per each elected/appointed official to which this coverage applies, subject to the terms, conditions and exclusions as provided in the Memorandum of Coverage’s, deductible of $500 per claim. Workers’ Compensation & Employer’s Liability – Statutory limits per occurrence for Workers’ Compensation and $5 million for Employer’s Liability Coverage.

Members are subject to dividends and/or assessments, in accordance with the Sixth Amended Joint Powers Agreement and amendments thereto. No such dividends have been declared, nor have any assessments been levied. Presently, there are no known refunds or credits due to the District. During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year.

14. PRIOR PERIOD ADJUSTMENT:

During the fiscal year ending June 30, 2012 District management changed its method of capitalizing feasibility and related studies. The new method of accounting for feasibility and related studies was adopted to conform with Statement 51 of the Governmental Accounting Standards Board Accounting and Financial Reporting for Intangible Assets which was effective for the year ended June 30, 2011. The effect of this change was to expense feasibility and related studies rather than capitalizing them to Construction in Progress.

The District determined that $5,500,619 of costs in Construction in Progress and Capital assets, net of depreciation at June 30, 2010 should have been expensed to conform with generally accepted accounting principles. As a result, on the Statements of Revenues, Expenses and Changes in Net Assets, beginning net assets in the 2011 column is being restated for this prior period adjustment.

During fiscal year 2011, there was $737,273 of costs capitalized to these projects that should have been expensed to conform with generally accepted accounting principles. During fiscal year 2011 there was $508,123 of depreciation expense that was taken on these projects. On the Statements of Revenues, Expenses and Changes in Net Assets, the operating expenses “Water operations”, “Wastewater operations” and “Park operations” have been restated to include this net $229,150. On the Statements of Net Assets, Construction in Progress and Capital assets, net of depreciation have been restated in the 2011 column to be $33,454,264 and $192,506,774 respectively.

Required Supplementary Information

PADRE DAM MUNICIPAL WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION


Schedule of Funding Progress for PERS

Actuarial Accrued

Actuarial Actuarial Liability Unfunded Annual UAAL as a Valuation Value of (AAL) AAL Funded Covered Percentage of Date Assets Entry Age (UAAL) Status Payroll Covered Payroll

(A) (B) (B-A) (A/B) (C) [(B-A)/C] June 30, 2009 $49,867,637 $66,011,363 $16,143,726 75.5% $10,254,601 157.4%

June 30, 2010 $53,747,986 $71,494,698 $17,746,712 75.2% $10,818,648 164.0%

June 30, 2011 $58,106,355 $78,446,285 $20,339,930 74.1% $10,969,899 185.4%

Schedule of Funding Progress for OPEB

Actuarial Accrued

Actuarial Actuarial Liability Unfunded Annual UAAL as a Valuation Value of (AAL) AAL Funded Covered Percentage of Date Assets Entry Age (UAAL) Status Payroll Covered Payroll

(A) (B) (B-A) (A/B) (C) [(B-A)/C] June 30, 2007 $2,030,869 $16,437,500 $14,406,631 12.4% $9,761,175 147.6%

June 30, 2009 $2,327,666 $16,919,634 $14,591,968 13.8% $9,761,175 149.5%

June 30, 2011 $5,568,515 $23,247,868 $17,679,353 23.9% $10,477,513 168.7%

The District is only required to perform annual actuarial valuations biennially.

Supplementary Information

Water Sewer Park Other Restricted TotalOperating Revenues: Water Sales 22,809,724$ -$ -$ -$ -$ 22,809,724$ Sewer Revenues - 14,637,544 - - - 14,637,544 System Charges 6,725,532 - - - - 6,725,532 Park Fees - - 4,544,868 - - 4,544,868 Other Operating Income 5,093,054 13,911 8,355 - - 5,115,320 Total Operating Revenues 34,628,310 14,651,455 4,553,223 - - 53,832,988

Operating Expenses:

Direct Expenses Water Purchases 13,170,583 - - - - 13,170,583 Sewer METRO Costs - 3,895,028 - - - 3,895,028 Other Operating Expenses 1,906,054 1,865,750 290,768 - - 4,062,572

Internal Expenses Salary and Wages 7,901,534 3,100,328 892,119 - - 11,893,981 Employee Benefits 4,685,919 2,027,432 529,130 - - 7,242,481 Professional Services 856,879 341,984 207,128 - 89,497 1,495,488 Materials, Supplies, Vehicle, & Bldg. Rent 1,494,051 1,105,177 751,437 - 13,086 3,363,751 Administrative Expenses 460,915 327,379 152,995 - - 941,289 Utilities 234,985 361,725 558,105 - - 1,154,815 Depreciation and Amortization 4,871,904 838,452 733,336 - - 6,443,692 Billing Credits (1,733,466) (769,610) (19,296) - 100,432 (2,421,940) Total Operating Expenses 33,849,358 13,093,645 4,095,722 - 203,015 51,241,740

Operating Income (Loss) 778,952 1,557,810 457,501 - (203,015) 2,591,248

Nonoperating Revenues and (Expenses): Investment Income 94,293 80,147 9,622 (81,690) - 102,372 Restricted Investment Income - - - - 216,698 216,698 Taxes and Assessments 2,397,733 - - - - 2,397,733 Gain on Sale of Assets - - - 4,829 - 4,829 Other Expense 100,000 - (100,000) (3,688,304) (2,338,336) (6,026,640) Interest Expense (2,772,149) (13,326) (252,539) - - (3,038,014) Total Nonoperating Revenues and (Expenses) (180,123) 66,821 (342,917) (3,765,165) (2,121,638) (6,343,022)

Income (Loss) Before Contributions 598,829$ 1,624,631$ 114,584$ (3,765,165)$ (2,324,653)$ (3,751,774)$

See accompanying independent auditors' report. 36


SCHEDULE OF INCOME (LOSS) BEFORE CONTRIBUTIONS BY FUND SERVICESFOR THE YEAR ENDED JUNE 30, 2012

Water Sewer Park Other Restricted TotalOperating Revenues: Water Sales 20,729,389$ -$ -$ -$ -$ 20,729,389$ Sewer Revenues - 13,775,487 - - - 13,775,487 System Charges 4,805,992 - - - - 4,805,992 Park Fees - - 4,275,645 - - 4,275,645 Other Operating Income 5,327,766 13,911 12,302 - - 5,353,979 Total Operating Revenues 30,863,147 13,789,398 4,287,947 - - 48,940,492

Operating Expenses:

Direct Expenses Water Purchases 11,881,549 - - - - 11,881,549 Sewer METRO Costs - 3,801,934 - - - 3,801,934 Other Operating Expenses 1,992,762 1,865,748 248,963 - - 4,107,473

Internal Expenses Salary and Wages 8,127,297 3,127,787 846,740 - - 12,101,824 Employee Benefits 4,678,082 1,840,076 481,996 - - 7,000,154 Professional Services 421,102 214,236 216,817 - - 852,155 Materials, Supplies, Vehicle, & Bldg. Rent 2,383,879 1,205,759 611,776 - - 4,201,414 Administrative Expenses 568,498 242,599 114,099 - - 925,196 Utilities 223,745 365,366 457,491 - - 1,046,602 Depreciation and Amortization 4,630,455 818,367 597,795 - - 6,046,617 Billing Credits (3,141,044) (1,341,040) (11,972) - - (4,494,056) Total Operating Expenses 31,766,325 12,140,832 3,563,705 - - 47,470,862

Operating Income (Loss) (903,178) 1,648,566 724,242 - - 1,469,630

Nonoperating Revenues and (Expenses): Investment Income 129,416 84,804 12,432 (65,225) - 161,427 Restricted Investment Income - - - - 341,232 341,232 Taxes and Assessments 2,384,681 - - - - 2,384,681 Gain on Sale of Assets - - - 8,793 - 8,793 Other Expense - - - - - - Interest Expense (2,689,034) (22,795) (237,926) - - (2,949,755) Total Nonoperating Revenues and (Expenses) (174,937) 62,009 (225,494) (56,432) 341,232 (53,622)

Income (Loss) Before Contributions (1,078,115)$ 1,710,575$ 498,748$ (56,432)$ 341,232$ 1,416,008$



SCHEDULE OF INCOME (LOSS) BEFORE CONTRIBUTIONS BY FUND SERVICESFOR THE YEAR ENDED JUNE 30, 2011

PRIOR YEARACTUAL A C T U A L B U D G E T

Operating Revenues: $ $ % $ % $ % $ %Revenues:

Water Sales 20,729,389$ 22,809,724$ 42.4 22,805,728$ 42.1 3,996$ 0.0 2,080,335$ 10.0 Infrastructure Access Charge 682,324 791,481 1.5 794,094 1.5 (2,613) (0.3) 109,157 16.0 Energy Billings 1,117,654 1,358,133 2.5 1,287,472 2.4 70,661 5.5 240,479 21.5 CWA/MWD Credits 290,525 277,591 0.5 270,381 0.5 7,210 2.7 (12,934) (4.5) Padre Dam Sewer Processing Fee 1,865,748 1,865,750 3.5 1,865,750 3.4 - - 2 0.0 Sewer Revenues 13,775,487 14,637,544 27.2 15,556,931 28.7 (919,387) (5.9) 862,057 6.3 System Charges 4,805,992 6,725,532 12.5 6,535,180 12.1 190,352 2.9 1,919,540 39.9 Park Fees 4,275,645 4,544,868 8.4 4,156,523 7.7 388,345 9.3 269,223 6.3 Other Revenues 1,397,728 822,365 1.5 899,195 1.7 (76,830) (8.5) (575,363) (41.2)

Total Operating Revenues 48,940,492 53,832,988 100.0 54,171,254 100.0 (338,266) (0.6) 4,892,496 10.0

Operating Expenses: Direct Expenses:

Water Purchases 11,881,549 13,170,583 24.5 13,210,948 24.4 40,365 0.3 (1,289,034) (10.8) Infrastructure Access Charge 702,222 794,094 1.5 794,094 1.5 - - (91,872) (13.1) Energy Purchases 1,290,540 1,111,960 2.1 1,375,937 2.5 263,977 19.2 178,580 13.8 Sewer METRO Costs 3,801,934 3,895,028 7.2 5,600,000 10.3 1,704,972 30.4 (93,094) (2.4) Padre Dam Sewer Treatment 1,865,748 1,865,750 3.5 1,865,750 3.4 - - (2) (0.0) Fish Stock, Propane, & Retail 248,963 290,768 0.5 210,430 0.4 (80,338) (38.2) (41,805) (16.8)

Total Direct Expenses 19,790,956 21,128,183 39.2 23,057,159 42.6 1,928,976 8.4 (1,337,227) (6.8)

Internal Expenses: Salary & Wages 12,101,824 11,893,981 22.1 12,315,526 22.7 421,545 3.4 207,843 1.7 Employee Benefits 7,000,154 7,242,481 13.5 7,739,173 14.3 496,692 6.4 (242,327) (3.5) Professional Services 852,155 1,405,991 2.6 810,105 1.5 (595,886) (73.6) (553,836) (65.0) Materials, Supplies, Vehicle, & Bldg. Rent 4,201,414 3,363,751 6.2 4,149,498 7.7 785,747 18.9 837,663 19.9 Administrative Expenses 925,196 1,030,786 1.9 1,118,855 2.1 88,069 7.9 (105,590) (11.4) Utilities 1,046,602 1,154,815 2.1 1,248,237 2.3 93,422 7.5 (108,213) (10.3) Billing Credits (4,494,056) (2,421,940) (4.5) (4,243,820) (7.8) (1,821,880) (42.9) (2,072,116) (46.1)

Subtotal 21,633,289 23,669,865 44.0 23,137,574 42.7 (532,291) (2.3) (2,036,576) (9.4)

Depreciation & Amortization 6,046,617 6,443,692 12.0 6,955,584 12.8 511,892 7.4 (397,075) (6.6)

Total Internal Expenses 27,679,906 30,113,557 55.9 30,093,158 55.6 (20,399) (0.1) (2,433,651) (8.8)

Total Operating Expenses 47,470,862 51,241,740 95.2 53,150,317 98.1 1,908,577 3.6 (3,770,878) (7.9)

Operating Income (Loss) 1,469,630 2,591,248 4.8 1,020,937 1.9 1,570,311 153.8 1,121,618 76.3

Nonoperating Revenues and (Expenses):Interest Income (Designated) 226,652 184,062 0.3 206,629 0.4 (22,567) (10.9) (42,590) (18.8) Interest Income (Restricted) 367,873 243,928 0.5 385,713 0.7 (141,785) (36.8) (123,945) (33.7) Gain (Loss) on Investments (91,866) (108,920) (0.2) - - (108,920) N/A (17,054) (18.6) Taxes and Assessments 2,384,681 2,397,733 4.4 2,217,941 4.1 179,792 8.1 13,052 0.5 Gain (Loss) on Sale of Other Capital Assets 8,793 4,829 - - - 4,829 N/A (3,964) (45.1) Other Expense - (6,026,640) (11.2) - - (6,026,640) N/A (6,026,640) (100.0) Interest Expense (2,949,755) (3,038,014) (5.6) (3,082,803) (5.6) 44,789 1.5 (88,259) (3.0)

Total Nonoperating Revenues and (Expenses) (53,622) (6,343,022) (11.8) (272,520) (0.4) (6,070,502) (2,227.5) (6,289,400) (11,729.1)

Income (Loss) Before Contributions 1,416,008$ (3,751,774)$ (7.0) 748,417$ 1.4 (4,500,191)$ (601.3) (5,167,782)$ (365.0)


BUDGET PRIOR YEARCURRENT YEAR ACTUAL TO - FAV/(UNFAV)


SCHEDULE OF INCOME (LOSS) BEFORE CONTRIBUTIONS (BUDGET TO ACTUAL)FOR THE YEAR ENDED JUNE 30, 2012

CURRENT YEAR

PRIOR YEARACTUAL A C T U A L B U D G E T

Operating Revenues: $ $ % $ % $ % $ %Revenues:

Water Sales 19,914,217$ 20,729,389$ 42.4 22,893,715$ 44.6 (2,164,326)$ (9.5) 815,172$ 4.1 Infrastructure Access Charge 611,001 682,324 1.4 702,222 1.4 (19,898) (2.8) 71,323 11.7 Energy Billings 1,117,457 1,117,654 2.3 1,206,021 2.3 (88,367) (7.3) 197 0.0 CWA/MWD Credits 263,173 290,525 0.6 255,987 0.5 34,538 13.5 27,352 10.4 Padre Dam Sewer Processing Fee 1,776,900 1,865,748 3.8 1,865,748 3.6 - - 88,848 5.0 Sewer Revenues 13,479,662 13,775,487 28.1 14,871,431 29.0 (1,095,944) (7.4) 295,825 2.2 System Charges 4,585,277 4,805,992 9.8 4,873,136 9.5 (67,144) (1.4) 220,715 4.8 Park Fees 3,817,943 4,275,645 8.7 3,707,542 7.2 568,103 15.3 457,702 12.0 Other Revenues 1,055,632 1,397,728 2.9 970,896 1.9 426,832 44.0 342,096 32.4

Total Operating Revenues 46,621,262 48,940,492 100.0 51,346,698 100.0 (2,406,206) (4.7) 2,319,230 5.0

Operating Expenses: Direct Expenses:

Water Purchases 11,428,849 11,881,549 24.3 13,030,840 25.4 1,149,291 8.8 (452,700) (4.0) Infrastructure Access Charge 607,824 702,222 1.4 702,222 1.4 - - (94,398) (15.5) Energy Purchases 1,330,012 1,290,540 2.6 1,478,121 2.9 187,581 12.7 39,472 3.0 Sewer METRO Costs 4,051,177 3,801,934 7.8 6,450,151 12.6 2,648,217 41.1 249,243 6.2 Padre Dam Sewer Treatment 1,776,900 1,865,748 3.8 1,865,748 3.6 - - (88,848) (5.0) Fish Stock, Propane, & Retail 231,124 248,963 0.5 209,397 0.4 (39,566) (18.9) (17,839) (7.7)

Total Direct Expenses 19,425,886 19,790,956 40.4 23,736,479 46.2 3,945,523 16.6 (365,070) (1.9)

Internal Expenses: Salary & Wages 11,877,870 12,101,824 24.7 12,962,039 25.2 860,215 6.6 (223,954) (1.9) Employee Benefits 6,906,116 7,000,154 14.3 7,446,862 14.5 446,708 6.0 (94,038) (1.4) Professional Services 567,230 852,155 1.7 787,135 1.5 (65,020) (8.3) (284,925) (50.2) Materials, Supplies, Vehicle, & Bldg. Rent 3,229,243 4,201,414 8.6 4,366,544 8.5 165,130 3.8 (972,171) (30.1) Administrative Expenses 902,882 925,196 1.9 1,086,983 2.1 161,787 14.9 (22,314) (2.5) Utilities 1,102,439 1,046,602 2.1 1,200,784 2.3 154,182 12.8 55,837 5.1 Billing Credits (4,828,012) (4,494,056) (9.2) (4,875,347) (9.5) (381,291) (7.8) (333,956) (6.9)

Subtotal 19,757,768 21,633,289 44.2 22,975,001 44.7 1,341,712 5.8 (1,875,521) (9.5)

Depreciation & Amortization 5,473,568 6,046,617 12.4 6,532,896 12.7 486,279 7.4 (573,049) (10.5)

Total Internal Expenses 25,231,336 27,679,906 56.6 29,507,897 57.5 1,827,991 6.2 (2,448,570) (9.7)

Total Operating Expenses 44,657,222 47,470,862 97.0 53,244,376 103.6 5,773,514 10.8 (2,813,640) (6.3)

Operating Income (Loss) 1,964,040 1,469,630 3.0 (1,897,678) (3.6) 3,367,308 177.4 (494,410) (25.2)

Nonoperating Revenues and (Expenses):Interest Income (Designated) 232,923 226,652 0.5 168,925 0.3 57,727 34.2 (6,271) (2.7) Interest Income (Restricted) 368,569 367,873 0.8 374,205 0.7 (6,332) (1.7) (696) (0.2) Gain (Loss) on Investments (39,512) (91,866) (0.2) - - (91,866) N/A (52,354) (132.5) Taxes and Assessments 2,450,109 2,384,681 4.8 2,653,085 5.2 (268,404) (10.1) (65,428) (2.7) Gain (Loss) on Sale of Other Capital Assets 32,262 8,793 - - - 8,793 N/A (23,469) (72.7) Other Expense - - - - - - N/A - - Interest Expense (2,301,972) (2,949,755) (6.0) (2,951,212) (5.7) 1,457 0.0 (647,783) (28.1)

Total Nonoperating Revenues and (Expenses) 742,379 (53,622) (0.1) 245,003 0.5 (298,625) (121.9) (796,001) (107.2)

Income (Loss) Before Contributions 2,706,419$ 1,416,008$ 2.9 (1,652,675)$ (3.2) 3,068,683$ 185.7 (1,290,411)$ (47.7)


CURRENT YEAR CURRENT YEAR ACTUAL TO - FAV/(UNFAV)BUDGET PRIOR YEAR


SCHEDULE OF INCOME (LOSS) BEFORE CONTRIBUTIONS (BUDGET TO ACTUAL)FOR THE YEAR ENDED JUNE 30, 2011

Restricted OtherWater Total CEF/AMR/ Restricted Non- Grand

Retail Recycling Sewer Park Designated Other '09 COP Operating TotalCash Flows From Operating Activities:Operating Income (Loss) (299,117)$ 1,078,069$ 1,557,810$ 457,501$ 2,794,263$ (203,015)$ -$ -$ 2,591,248$

Depreciation 4,216,699 635,943 838,452 720,538 6,411,632 - - - 6,411,632Amortization 19,075 187 - 12,798 32,060 - - - 32,060Accounts Receivable (772,912) * (113,306) * (306,197) * - * (1,192,415) - - - (1,192,415)Accounts Receivable - Other 432,316 * 63,376 * 171,267 * - * 666,959 - - - 666,959Inventory (84,236) * (12,349) * (33,371) * - * (129,956) - - - (129,956)Prepaid Expenses 1,793 * 263 * 710 * - * 2,766 - - - 2,766Accounts Payable 2,094,149 * 306,996 * 829,619 * - * 3,230,764 - - - 3,230,764Accrued Expense and Other Liabilities (426,136) * (62,470) * (168,818) * - * (657,424) - - - (657,424)Deposits & Advances on Construction 6,420 * 941 * 2,543 * - * 9,904 - - - 9,904Accrued Pension Benefits and Other 74,813 * 10,967 * 29,638 * - * 115,418 - - - 115,418

Net Cash Provided by Operating Activities 5,262,864 1,908,617 2,921,653 1,190,837 11,283,971 (203,015) - - 11,080,956

Cash & Cash Equivalents and Investments From Noncapital and Related Financing Activities:

Property Tax Receipts 2,411,074 - - - 2,411,074 - - - 2,411,074Net Cash Provided (Used) by Noncapital and Related Financing Activities 2,411,074 - - - 2,411,074 - - - 2,411,074

Cash Flows From Capital and Related Financing Activities:Acquisition and Construction of Capital Assets (7,822,887) (512,743) (2,084,967) (361,100) (10,781,697) 2,387,226 - - (8,394,471)Net Proceeds from Issuance of Long-Term Debt - - - - - - - - - Principal Payments on Long-Term Debt (1,349,602) (589,558) (200,753) (319,852) (2,459,765) - - - (2,459,765)Proceeds from Capital Contributions - - - - - 1,654,054 - - 1,654,054Interest Paid, Net of Amount Capitalized (2,688,161) (212,271) (32,656) (252,539) (3,185,627) - - - (3,185,627)Proceeds from Sale of Assets - - - - - - - 4,829 4,829

Net Cash Provided (Used) by Capital and Related Financing Activities (11,860,650) (1,314,572) (2,318,376) (933,491) (16,427,089) 4,041,280 - 4,829 (12,380,980)

Cash Flows From Investing Activities:Interest Received on Investments (3,562) 31,520 57,228 9,622 94,808 66,734 - 168,123 329,665

Net Cash Provided by Investing Activities (3,562) 31,520 57,228 9,622 94,808 66,734 - 168,123 329,665

Transfers:Transfers (2,440,540) (357,776) (966,846) - (3,765,162) - - 3,765,162 - Transfers Sales Proceeds Woodside Property 91,168 12,944 43,314 - 147,426 - - (147,426) - Transfers 2009 COP 1,484,753 - - - 1,484,753 275,678 (1,760,431) - - Transfers 2009 AMR - - - - - - - - - Transfers 2010 Park Loan - - - - - - - - - Transfers LWD Detachment 44,800 - - - 44,800 - - (44,800) - Transfers Debt Service (2009 COP) 911,317 - - - 911,317 (911,317) - - - Transfers Other 6,232,042 830,613 1,940,832 (474,068) 8,529,419 (4,811,411) 165,811 (3,883,819) -

Net Transfers 6,323,540 485,781 1,017,300 (474,068) 7,352,553 (5,447,050) (1,594,620) (310,883) -

Net Increase (Decrease) in Cash and Cash Equivalents and Investments 2,133,266 1,111,346 1,677,805 (207,100) 4,715,317 (1,542,051) (1,594,620) (137,931) 1,440,715

Cash and Cash Equivalents and Investments at Beginning of Year 5,225,772 4,642,647 8,875,192 1,257,743 20,001,354 7,632,594 27,599,296 2,528,680 57,761,924

Cash and Cash Equivalents and Investments at End of Year 7,359,038$ 5,753,993$ 10,552,997$ 1,050,643$ 24,716,671$ 6,090,543$ 26,004,676$ 2,390,749$ 59,202,639$

* Note: Allocation (of changes in receivables/payables/other assets) are based upon a constant percentage (overhead allocation percentage) applied throughout the fiscal year.



SCHEDULE OF CHANGE IN CASH, CASH EQUIVALENTS AND INVESTMENTSFOR THE YEAR ENDED JUNE 30, 2012

Restricted OtherWater Total CEF/AMR/ Restricted Non- Grand

Retail Recycling Sewer Park Designated Other '09 COP Operating TotalCash Flows From Operating Activities:Operating Income (Loss) (2,011,905)$ 1,108,727$ 1,648,566$ 724,242$ 1,469,630$ -$ -$ -$ 1,469,630$

Depreciation 3,977,988 633,205 818,367 585,307 6,014,867 - - - 6,014,867Amortization 19,075 187 - 12,488 31,750 - - - 31,750Accounts Receivable 201,828 * 29,587 * 79,956 * - * 311,371 - - - 311,371Accounts Receivable - Other (467,242) * (68,496) * (185,103) * - * (720,841) - - - (720,841)Inventory (57,262) * (8,394) * (22,685) * - * (88,341) - - - (88,341)Prepaid Expenses 8,516 * 1,249 * 3,374 * - * 13,139 - - - 13,139Accounts Payable (1,439,910) * (211,086) * (570,436) * - * (2,221,432) - - - (2,221,432)Accrued Expense and Other Liabilities (27,844) * (4,082) * (11,031) * - * (42,957) - - - (42,957)Deposits & Advances on Construction (5,559) * (815) * (2,202) * - * (8,576) - - - (8,576)Accrued Pension Benefits and Other (174,769) * (25,621) * (69,237) * - * (269,627) - - - (269,627)

Net Cash Provided by Operating Activities 22,916 1,454,461 1,689,569 1,322,037 4,488,983 - - - 4,488,983

Cash & Cash Equivalents and Investments From Noncapital and Related Financing Activities:

Property Tax Receipts 2,420,822 - - - 2,420,822 - - - 2,420,822Net Cash Provided (Used) by Noncapital and Related Financing Activities 2,420,822 - - - 2,420,822 - - - 2,420,822

Cash Flows From Capital and Related Financing Activities:Acquisition and Construction of Capital Assets (7,927,082) (542,812) (1,747,951) (1,802,031) (12,019,876) (616,090) - - (12,635,966)Net Proceeds from Issuance of Long-Term Debt - - - - - 1,395,692 - - 1,395,692Principal Payments on Long-Term Debt (1,289,300) (546,832) (205,745) (250,000) (2,291,877) - - - (2,291,877)Proceeds from Capital Contributions - - - - - 2,505,677 - - 2,505,677Interest Paid, Net of Amount Capitalized (2,590,323) (186,189) (28,025) (237,926) (3,042,463) - - - (3,042,463)Proceeds from Sale of Assets - - - - - - - 11,333 11,333

Net Cash Provided (Used) by Capital and Related Financing Activities (11,806,705) (1,275,833) (1,981,721) (2,289,957) (17,354,216) 3,285,279 - 11,333 (14,057,604)

Cash Flows From Investing Activities:Interest Received on Investments 45,406 32,925 67,153 12,432 157,916 105,936 286,280 - 550,132

Net Cash Provided by Investing Activities 45,406 32,925 67,153 12,432 157,916 105,936 286,280 - 550,132

Transfers:Transfers (36,578) (5,362) (14,491) - (56,431) - - 56,431 - Transfers Sales Proceeds Woodside Property 79,149 11,238 37,603 - 127,990 - - (127,990) - Transfers 2009 COP 5,226,056 - - - 5,226,056 1,438,731 (6,664,787) - - Transfers 2009 AMR 221,224 - - - 221,224 (221,224) - - - Transfers 2010 Park Loan - - - 1,400,000 1,400,000 (1,400,000) - - - Transfers LWD Detachment 44,800 - - - 44,800 - - (44,800) - Transfers Debt Service (2009 COP) 642,425 - - - 642,425 (642,425) - - - Transfers Other 2,013,284 536,101 857,898 18,626 3,425,909 (3,319,340) (38,804) (67,765) -

Net Transfers 8,190,360 541,977 881,010 1,418,626 11,031,973 (4,144,258) (6,703,591) (184,124) -

Net Increase (Decrease) in Cash and Cash Equivalents and Investments (1,127,201) 753,530 656,011 463,138 745,478 (753,043) (6,417,311) (172,791) (6,597,667)

Cash and Cash Equivalents and Investments at Beginning of Year 6,352,973 3,889,117 8,219,181 794,605 19,255,876 8,385,637 34,016,607 2,701,471 64,359,591

Cash and Cash Equivalents and Investments at End of Year 5,225,772$ 4,642,647$ 8,875,192$ 1,257,743$ 20,001,354$ 7,632,594$ 27,599,296$ 2,528,680$ 57,761,924$

* Note: Allocation (of changes in receivables/payables/other assets) are based upon a constant percentage (overhead allocation percentage) applied throughout the fiscal year.



SCHEDULE OF CHANGE IN CASH, CASH EQUIVALENTS AND INVESTMENTSFOR THE YEAR ENDED JUNE 30, 2011

2965 Roosevelt Street, Carlsbad, CA 92008-2389 • Tel: 760.729.2343 • Fax: 760.729.2234

Offices located in Orange and San Diego Counties

Board of Directors Padre Dam Municipal Water District Santee, California In planning and performing our audit of the financial statements of the Padre Dam Municipal Water District (the District) as of and for the year ended June 30, 2012, in accordance with auditing standards generally accepted in the United States of America, we considered the District’s internal control over financial reporting (internal control) as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control that we consider to be material weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the following deficiencies in the District’s internal control to be material weaknesses:

Timely Bank Reconciliations

During our audit, it was noted that bank reconciliations were not always prepared on a timely basis and reconciling items were not attached to the bank reconciliations. We recommend that all bank accounts be reconciled timely (monthly if possible), agreed to the general ledger, reviewed, and approved by appropriate personnel. We also recommend all differences on the bank reconciliations between book and bank balances be investigated on a timely basis by appropriate accounting personnel so that errors and adjustment can be quickly identified and corrected.

Managements’ Response: Customers can pay their water/sewer bills by cash, check, credit card, or online. When payment is made online by customers, their account is credited immediately by the District. However, there is a delay in processing by the bank’s third party processor. This delay creates a timing difference that makes reconciling the bank account difficult. We have worked with the bank’s third party processor to generate reports that will make reconciling the bank account simpler. As a result the District was able to set up a report that reconciled the timing difference in online payments received. The checking account is now being reconciled on a monthly basis.

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Journal Entry Authorization During our audit, it was noted that journal entries do not require authorization prior to posting to the general ledger. We recommend the District implement a policy to have all journal entries reviewed by appropriate personnel prior to posting to the general ledger.

Managements’ Response: There are several adjustments made throughout the year. Some of these adjustments are routine entries that are automatically generated by the accounting computer system. The less routine entries are made manually and posting of these entries is limited to either Director of Finance or Accounting Manager. There is a report that can be printed that shows adjustments for a specific period, including who originated/posted the entry. This report gives staff a way to review all transactions.

* * * *

This communication is intended solely for the information and use of management, the Board of Directors, and others within the District, and is not intended to be, and should not be, used by anyone other than these specified parties. Padre Dam Municipal Water District’s written responses to the material weaknesses identified in our audit has not been subjected to the audit procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

January 29, 2013 Carlsbad, California

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UU-T SAN DIEGO �

EARLY PROMISING SNOWPACK IS EVAPORATING By Michael Gardner9:46 a.m.Jan. 29, 2013 �

SACRAMENTO — Exuberance over early-season snow storms has dissipated in a mild January, and there is a threat of even drier weeks ahead.

“This has been the tale of two winters. It started out good and now we seem to have dried out … It’s another reminder of how fickle nature can be,” said Ken Weinberg, director of water resources for the San Diego County Water Authority.

The Sierra snowpack has plunged to 93 percent of normal, according to a state survey of conditions Tuesday.

While that amount may sound promising, it is far below the 137 percent measured Jan. 2.

Still, a key official with the Metropolitan Water District of Southern California notes there is plenty of time to catch up.

“We have a couple of months left, The peak snowpack really isn’t until April,” said Devan Upadhyay, manager of Metropolitan’s water resource management group.

The Sierra snowpack is a vital source of water for the San Diego region, and all of Southern California served by Metropolitan. About one in every three gallons delivered by the county water authority starts out as Sierra snow.

Despite the drop-off, water managers say rationing is unlikely thanks to a stormy winter that filled reservoirs two years ago. Nevertheless, they urge continued conservation.

“It’s still a reasonably good year. We’re not expecting any constraints,” Weinberg said.

Metropolitan’s confidence can be traced back to those 20110-11 storms, plus its long-term investment in more storage projects, Upadhyay said.

“We have started 2013 with the highest storage levels we have ever had,” he said. “That sets us up to deal with the current year, and the foreseeable future, if it stays dry.”

Metropolitan has 2.7 million ace-feet of water in reserve — enough to serve 5.4 million homes for a year. That’s nearly triple its 1 million acre-feet reserve in 2010. Metropolitan separately keeps another 600,000 acre-feet in storage in case of a catastrophic natural disaster.

The rest of the state also has access to healthy water banks.

Lake Oroville, the state’s major reservoir, is at 113 percent of normal for this date and 75 percent of capacity. Lake Shasta, the large federal reservoir, is at 111 percent of normal for this date and 76 percent of capacity.

Those reserves could come in handy.

The forecast for the rest of the year is gloomy. Both the 10-day and long-range outlooks predict drier than normal conditions for the Sierra.

“It looks like we may be in for a dry end to the winter and a dry start to the spring,” said Drew Peterson, a meteorologist with the National Weather Service. “We’re pretty lucky we started out with an atmospheric river.”

The Sierra went through a long stretch of not receiving much more than a dusting for most of January, although there was some measurable snow a few days ago.

“It got us some recovery,” Peterson said.

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AGENDA BOARD OF DIRECTORS REGULAR MEETING …