General Manager s Adopted Multi-Year Budget. Fiscal Years 2012 & Officers. Secretary of Board of Directors. Management. For copies contact:

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1 General Manager s Adopted Multi-Year Budget Fiscal Years 12 & 13 Officers Michael T. Hogan Thomas V. Wornham Richard Smith Chair of Board of Directors Vice Chair of Board of Directors Secretary of Board of Directors Management Maureen A. Stapleton Daniel S. Hentschke Sandra L. Kerl Frank Belock Jr. Dennis A. Cushman Eric L. Sandler General Manager General Counsel Deputy General Manager Deputy General Manager Assistant General Manager Director of Finance/Treasurer For copies contact: San Diego County Water Authority Finance Department 4677 Overland Avenue San Diego, CA i

2 Budget Awards GFOA Award CSMFO Award ii

3 Adopted Budget for Fiscal Years 12 & 13 Table of Contents General Manager s Budget Message...1 Fiscal Years 10 and Adopted Budget for Fiscal Years 12 and Looking Ahead Tables and Figures.. Figure 1:Fiscal Years 12 & 2103 Adopted Budget Figure 2: Water Supply Diversification: The Water Authority s Commitment to Water Reliability... 5 Background and Community Profile...7 Tables and Figures.. Table 1: Water Source and Use for Fiscal Years 09 and Figure 1: Lindbergh: Actual vs. Normal Rainfall Policies...13 Financial Summaries...17 Overview...17 Water Authority Labor and Benefits...28 Operating Departments Budget Tables and Figures.. Table 1: Adopted Fiscal Years 12 and 13 Budgeted Sources and Uses of Funds Table 2: Water Authority Adopted Rates & Charges Table 3: Total Treated Water Rate on a Per Acre-Foot Basis Table 4: Water Sales and Purchases..., 21.. Table 5: Adopted CIP Budget by Project Type Table 6: CIP Project Summary Table... 24, 25.. Table 7: Water Authority Debt Service Table 8: Budgeted Full-Time Equivalents Table 9: Distribution of Labor and Benefits by Fund Table 10: Operating Departments Budget by Expenditure Type Table 11: Operating Departments Budget by Department Figure 1: Sources of Funds Figure 2: Uses of Funds Figure 3: CIP Budget by Fiscal Year Figure 4: CIP Budget by Project Phase Figure 5: Debt Service Payment Schedule Figure 6a, b: Debt Service Coverage Ratios Figure 7: Operating Departments Budget by Expenditure Type Figure 8: Operating Budget by Department a

4 Adopted Budget for Fiscal Years 12 & 13 Table of Contents Sources and Uses of Funds...33 Overview...33 Water Authority Sources of Funds...33 Water Authority Uses of Funds...38 Historical and Projected Operating Results...42 Five-Year Financial Forecast Tables and Figures.. Table 1: Sources of Funds Fiscal Years Table 2a,b: Water Authority Rates and Charges on a Per Acre-Foot Basis Table 3: Uses of Funds Fiscal Years Table 4: Debt Service on Existing Long-Term Debt Table 5: Historical and Projected Operating Results Fiscal Years Table 6a, b: Fiscal Year 12 and 13 Budgeted Sources and Uses by Fund... 44, 45.. Table 7: Five-Year Forecast Fiscal Years Figure 1: Water Sales Volumes Fiscal Years Figure 2: Debt Service Payment Schedule Fiscal Years Figure 3: Budgeted Cash Balances by Fund Operating Departments...49 Introduction...49 Water Supplies Portfolio Colorado River Program MWD Program Water Resources Water Facilities Engineering Operations and Maintenance Core Business Administrative Services Finance General Counsel General Manager and Board of Directors Human Resources Public Outreach and Conservation b

5 Adopted Budget for Fiscal Years 12 & 13 Table of Contents Capital Improvement Program Overview Adopted Changes Project Summary Tables Tables and Figures.. Table 1: Deferred CIP Projects Table 2: Completed CIP Projects Table 3: Funding Source for Inter-Project Transfers Table 4: Adopted Budget Changes by Project Figure 1: Fiscal Years 12 & 13 Adopted Appropriation Figure 2: CIP Expenditures and Forecast Figure 3: CIP Expenditure Profile Figure 4: CIP Adopted Budget Changes by Type Figure 5: Capital Improvement Program Location Map Appendices Appendix A - Water Authority Workforce Appendix B - Capitalized Overhead Appendix C - Sources and Uses Definitions Appendix D - Glossary Appendix E - Classification and Salary Schedule Appendix F - Memorandums, Resolutions, and Ordinances...1 Appendix G - Performance Information c

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7 Adopted Budget for Fiscal Years 12 & 13 General Manager s Budget Message Board of Directors: I am pleased to present to you the General Manager s Adopted Multi-Year Budget for Fiscal Years 12 and 13. Fiscal Years 10 and 11 Two years ago, several key external and internal factors were noted that influenced the development of the previous multi-year budget. The Water Authority faced the most uncertain water supply conditions of the past years, the most difficult economic conditions of the past 70 years, and the transition of the Water Authority from a building to an operating organization. The adopted budget was responsive to these conditions it was based on reduced water sales resulting from mandatory use restrictions, provided funding for conservation messaging and spot water purchases, and implemented a series of staffing reductions and organizational changes to deliver efficiencies. The past two fiscal years have been characterized by steadily decreasing water sales volumes and a series of timely and prudent management interventions to mitigate the fiscal impact. Early in Fiscal Year 10, it became apparent that water sales volumes were below the levels on which the budget was based. Adaptive management actions included the deferral of call options on spot transfer water and $2.4 million in operating budget reductions $1.4 million in programmatic reductions in conservation, drought communication and local supply development, and $1.0 million in short-term operational reductions. Ultimately, Fiscal Year 10 water sales volumes were approximately 492,000 acre-feet, 18% below the original budgeted volumes. Various factors contributed to the demand reductions including increased price, conservation messaging, cooler weather, and reduced economic activity. Fiscal Year 11 continued this negative trend, exacerbated by an extremely cool summer (5th coolest July ever) and an extremely wet winter (9th wettest December since 1850). Accordingly, staff implemented an additional $3.6 million in operating budget reductions $2.4 million in programmatic reductions similar to Fiscal Year 10 and $1.2 million in operational reductions. Moreover, the Board approved the deferral of 14 capital projects to mitigate future rate increases. Current estimates are that Fiscal Year 11 water sales will be approximately 410,000 acre-feet, an additional 17% below Fiscal Year 10. The New Normal The environment in which we developed the Adopted Budget for Fiscal Years 12 and 13 is markedly different from just two years ago. Record precipitation throughout the State and in the Colorado River basin has yielded a dramatic increase in water supplies and resulted in an end to mandatory use restrictions. Despite these supplies, we face a near-term future of reduced water sales volumes and water supply uncertainty. A recent poll of the service area found that 83% of all respondents said they would continue to comply with water use restrictions even if they were not permanent; and of those respondents who said that their household water use had decreased over the past year, 87% believed their reductions in water use were permanent. This and other factors are reducing our long-term sales forecast; a phenomenon which is clearly illustrated by the ten-year demand lag between the Water Authority s 10 and 05 Urban Water Management Plans (UWMP). 1

8 Adopted Budget for Fiscal Years 12 & 13 General Manager s Budget Message Though the regional economy has improved, as I noted in my prior budget message, the economic impact of the recession will have a deep and enduring effect on our region and its people. This impact is clearly manifest in the form of ratepayer fatigue. According to the poll mentioned above, 61% of respondents said that they were either concerned or very concerned about the prospect of rising water rates. Moreover, the egregious transgression of the public trust uncovered at the City of Bell has only increased the level of anger over public employee compensation and benefits. The parallel themes of fiscal responsibility and sustainability figure largely in the development of this recommended budget. Despite these challenges, we remain focused on our core mission of long-term water reliability for the San Diego Region; a mission which is supported by 80% of our service area residents. Progress in this mission takes place on various fronts. Quantification Settlement Agreement (QSA) water supplies are the cornerstone of our diversification strategy. Securing the QSA s long-term viability requires extensive and complex engagement in judicial, regulatory, and legislative affairs at both the state and federal levels. Our efforts at Metropolitan Water District of Southern California (MWD) to fight discriminatory rate setting are of similar importance and complexity. In completing the final stages of the Emergency Storage Project (ESP), we must meet the demands of operating an increasingly diverse and complex water system. And as we look ahead a major update of the Water Facilities Master Plan will yield a Capital Improvement Program (CIP) of appropriate scope, schedule and cost to meet the future needs of the region. Coachella Canal Adopted Budget for Fiscal Years 12 and 13 The Adopted Budget for Fiscal Years 12 and 13 addresses all aspects of The New Normal reduced water sales volumes, defense of QSA supplies and the cost of their conveyance, changing nature of the organization to focus on operations versus construction, and fiscal responsibility and sustainability. Figure 1: Fiscal Years 12 & 13 Adopted Budget ($1.4 Billion) Debt Service % Operating Departments 6% CIP 23% All Others 2% Water Purchases & Treatment 49% In total, the recommended budget for Fiscal Years 12 and 13 is $1.4 billion, a 16% reduction versus the previous two-year budget. As depicted in Figure 1, over 90% of the recommended budget is for expenditures associated with either the purchase and treatment of water or the building and financing of infrastructure. The Water Purchases and Treatment budget is based on significantly reduced sales volumes versus the prior period. On average, the recommended budget is based on annual sales volume of 450,000 acre-feet versus just over 2

9 Adopted Budget for Fiscal Years 12 & 13 General Manager s Budget Message 600,000 acre-feet for the prior two-year period. In addition, when compared with the prior budget period, the mix of infrastructure-related expenditures has shifted from actual building and construction costs to debt service payments associated with bonded public debt. CIP expenditures have dropped 42%, whereas debt service has increased 17%. This recommended budget is the result of a comprehensive effort to reduce expenses and to pass those savings onto ratepayers. This budget is fundamentally different from the previous two-year budget in its breadth and depth of changes to staffing and spending which reflect significant reductions in services. This includes a significant reduction in CIP spending which is the result of both the planned completion of the final projects in the Emergency Storage Project (ESP) as well as the Board s decision to defer $150 million in spending on 14 CIP projects. In addition, this was accomplished through a combination of reductions in staffing, an increase in employee benefit cost sharing, and reductions in program expenditures authority-wide. The recommended budget contains dramatic staffing reductions. By the end of this two-year budget period, a total of full-time equivalents (FTEs) will be eliminated and an additional 4.42 FTEs will be reduced in Fiscal Year 14. This represents a 16% reduction in staffing since our peak levels in Fiscal Year 08. While approximately two-thirds of the staffing reductions discussed above are driven by decreased CIP activity, almost one-third is related to decreased program delivery and internal support. The proposed staffing reductions affect all departments and levels of the organization, including executive management. The reductions are painful, and involve the termination of actual employees, not simply a reduction in vacant positions. As such, the long term savings are offset by the short-term cost of unemployment claims for which we have budgeted an additional $0.7 million. The Water Authority is also managing labor and benefits costs by a negotiated increase in the employee costshare for the defined benefit pension. By the beginning of Fiscal Year 12 all employees will be contributing up to an additional 3.5% towards their pension benefit bringing the total employee contribution to 4.5%. With MOU extensions expiring during the upcoming budget period, negotiations will provide an opportunity to further evaluate labor and benefit costs. Beyond the purchase of water and investment in capital assets, the Operating Departments budget approximately 6% of the total Water Authority budget represents the remainder of program spending. The recommended budget for Operating Departments is approximately $6.7 million or 7% less than the prior two-year budget. The most significant programmatic reduction is in water conservation and outreach funding, reflecting a conservation strategy more focused on long-term reduction in water use than short-term crisis management. In addition, cuts throughout the organization will result in no new local supply development funding, reduced school education programming, less small contractor outreach, and reductions in internal support services related to finance, human resources, and information technology. In association with these reductions, the Water Authority is implementing the following restructuring to achieve greater efficiencies: Consolidating the Water Conservation Program into the Public Affairs Department; Consolidating the Right of Way Department into the Engineering Department; Consolidating short-term and long-term facilities planning into the Water Resources Department; and Restructuring the School Education Program to focus on teacher training and service provider programs. 3

10 Adopted Budget for Fiscal Years 12 & 13 General Manager s Budget Message Moreover, departments performed a thorough review of supplies, travel, training, memberships, non-capital equipment purchases, and other miscellaneous accounts as part of the budget development process. These cost containment efforts resulted in the elimination of $0.9 million or 15% of these expenditure categories. One of the advantages of a multi-year budget is the opportunity to focus energy on process improvements and program refinements during the off-budget year. The Water Authority leadership team has identified several projects aimed at increasing efficiencies, lowering costs, or increasing revenues. During the period a crossfunctional team will assess purchasing and contracting activities at an organization-wide level to identify areas for centralizing processes and achieving savings. The Engineering Department will be seeking additional efficiencies from the combination with the Right of Way Department and the consolidation of the CIP budget function within the Finance Department. Moreover other teams will be addressing the potential for outsourcing (i.e. IT services, mowing and grading, and fleet services) and insourcing (i.e. employee development and risk management). The Water Authority is currently working with member agencies to evaluate these options. In service of our long-term mission to provide safe and reliable water for our region we have identified program areas which require additional focus and dedicated resources. As noted earlier, the recommended budget provides sufficient funding for defending the QSA and prosecuting the MWD rate lawsuit. During this budget period the Water Authority will be managing the operating impacts of major new facilities. We will be concluding our analysis of contracting out operations for the new Lake Hodges Pumped Storage Facility. Funds for operating this new facility ($6.1 million) have been separately identified in the recommended budget pending final determination of the operating approach. After completing construction of the San Vicente Dam Raise we will begin filling the reservoir to provide emergency storage to the region. Prudently, funds for the fill have and will be set aside in the stored water fund expressly for this purpose. Importantly, we are not deferring repairs on critical facilities. San Vicente Dam Raise Looking Ahead There is broad awareness among our service area population of the importance of a reliable water supply and strong agreement regarding the role of supply diversification. In the public opinion poll mentioned earlier over 80% of those polled agreed with our diversification strategy. We are just now achieving the goals that we set out for ourselves nearly years ago. As the pie charts on the next page indicate, we have delivered a high level of supply diversification at a pace that is unheard of in the ordinarily slow-moving water industry. 4

11 Adopted Budget for Fiscal Years 12 & 13 General Manager s Budget Message We are entering a time of refinement to our strategy. The forecasts of our recently updated UWMP indicate a lower level of demand growth. The outcome of key QSA and MWD litigation will yield essential information for our strategy going forward. We are re-thinking the Water Authority s role in regional conservation, local supply development, and seawater desalination. Over the next two years we will be undertaking a complete overhaul of the Water Facilities Master Plan which will optimize existing facilities, identify asset management priorities, and determine what new facilities, if any, are needed to provide a reliable water supply. Of equal importance to supply reliability is the issue of fiscal sustainability. As part of our diversification effort we have made long-term financial commitments both to purchase water and to pay for facilities. We must make sure that those commitments are fairly born by everyone who made them, and that the Water Authority is well-positioned financially to accomplish its future goals. Figure 2: Water Supply Diversification: The Water Authority s Commitment to Water Reliability MWD=95% MWD=47% MWD=30% I want to thank the Board of Directors for providing both the vision and the resources necessary to respond to the water supply challenges our region faces. Though many of you have only recently joined the Board of Directors during the past two years, I am appreciative of your ready commitment to the Water Authority s long-term mission and vision. For those of you with long tenure on the Board of Directors, I thank you for your steadfast support. And finally, I want to recognize the excellent work of the Finance Department s Budget team of Eric Sandler, Director of Finance, Lisa Celaya, Budget & Analysis Manager, Tandy Ramsey, Budget Officer, Ann Yasukochi, Management Analyst, Liana Whyte, Grant Analyst, Melody Parker, Financial Analyst, and Angela Tomayko, Administrative Assistant; as well as Sandy Lash, Senior Management Analyst from the Engineering Department, and Mark Stadler, Principal Water Resources Specialist from the Water Resources Department. Respectfully submitted, Maureen A. Stapleton 5

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13 Adopted Budget for Fiscal Years 12 & 13 Background and Community Profile Background This section provides an overview of the Water Authority, including its organizational structure, the budget process and a community profile for the region. Key Water Authority Facts 66 Mission: To provide a safe and reliable supply of water to its member agencies serving the San Diego region s $186 billion economy and its 3.1 million residents. 66 Who We Are: Independent public agency that serves as San Diego County s regional water wholesaler. 66 Formed: June 9, First delivery to the region: Nov. 24, Imported water: Up to 80 percent of the region s water is imported from the Colorado River and Northern California. 66 Service area: of 951,000 acres 66 Serves: 95 percent of the county s population. 66 Pipelines: Five major pipelines totaling approximately 300 miles. 66 Board of Directors: 36 members representing 24 member agencies. 66 Member agencies: 24 retail member agencies including: 66 6 cities 66 5 water districts 66 3 irrigation districts 66 8 municipal water districts 66 1 public utility district 66 1 federal agency (military base) 6 6 One acre-foot = 326,000 gallons, or enough water to cover one acre to a depth of one foot. An acre-foot can supply the average household needs of two four-person families for one year. Overview of the Water Authority History. The San Diego County Water Authority ( Water Authority ) was organized on June 9, 1944, under the State County Water Authority Act ( The Act ) for the primary purpose of importing Colorado River water to augment local water supplies of the Water Authority s member agencies. Responsibility. The Act authorizes the Water Authority to acquire water and water rights; deliver water for beneficial uses and purposes; and provide, sell, and deliver water not needed or required for member agencies beneficial purposes to areas outside its boundaries. The Water Authority is also authorized to acquire, distribute, sell, store, treat, reclaim, and reuse wastewater for beneficial purposes. In 00, the State Legislature authorized the Water Authority to purchase federal power; construct, own, and operate electric power generation facilities to meet its needs or those of its member agencies; and purchase and transport natural gas. Mission Statement. The Water Authority s mission is to provide a safe and reliable supply of water to its member agencies serving the San Diego region. Service Area. The Water Authority s boundaries extend from the border with Mexico in the south, to Orange and Riverside counties in the north, and from the Pacific Ocean to the foothills that terminate the coastal plain in the east. With a total of 951,000 acres (1,486 square miles), the Water Authority s service area encompasses the western third of San Diego County. Member Agencies. The Water Authority s 24 member agencies purchase water from the Water Authority for retail distribution within their service territories. The member agencies are comprised of six cities, five water districts, eight municipal water districts, three irrigation districts, a public utility district, and a federal military reservation that have diverse and varying water needs. 7

14 Adopted Budget for Fiscal Years 12 & 13 Background and Community Profile In terms of land area, the city of San Diego is the largest member agency with 210,726 acres. The smallest is the city of Del Mar, with 1,159 acres. Some member agencies, such as the cities of National City and Del Mar, use water almost entirely for municipal and industrial purposes. Others, including Valley Center, Rainbow, and Yuima Municipal Water Districts, deliver water that is used mostly for agricultural production. Board of Directors. The member agencies are represented through a 36-member Board of Directors. All 24 member agencies have at least one representative on the Board. Member agencies may also designate and appoint one additional representative for each full five percent of Water Authority assessed value within the member agency service area. Directors are appointed to six-year terms by the chief executive officers of the respective member agencies, subject to approval by the agencies governing bodies. In addition, a member of the San Diego County Board of Supervisors serves as a non-voting representative to the Water Authority Board. Organizational Structure Deputy General Manager Frank Belock, Jr Engineering Department Bill Rose Opera ons & Maintenance Department Gary Eaton The Board determines the policies for the Water Authority; these policies are carried out by the Water Authority staff. The General Manager and General Counsel report directly to the Board. The General Manager is responsible for the Water Authority s regular operations. The Water Authority has eleven separate departments and programs as depicted in the following organizational chart. The Government Relations program is a part of the General Manager s Office. BOARD of DIRECTORS General Counsel Daniel S. Hentschke General Manager Maureen A. Stapleton Colorado River Program Halla Razak Deputy General Manager Sandra Kerl Assistant General Manager Dennis A. Cushman Administra ve Services Department Marilyn Young Finance Department Eric Sandler Human Resources Department Susan Leone Water Resources Department Ken Weinberg Public Outreach & Conserva on Department Jason Foster Government Rela ons Program Jeff Volberg MWD Program Amy Chen 8

15 Adopted Budget for Fiscal Years 12 & 13 Background and Community Profile Budget Process The Water Authority utilizes a two-year budget with a 24-month appropriation. The budget process usually spans several months, every other calendar year. Fiscal Years 12 & 13 Budget Calendar Fall 10. Planning for upcoming budget development process was initiated. January 11. Board of Directors considered and discussed the anticipated drivers and policy priorities of the upcoming multi-year budget. Board approved the deferral of 14 CIP projects based upon staff re-prioritization of the capital program in consideration of changes in near-term regional water demands. January February 11. Leadership team reviewed and evaluated existing services to identify the core services and the cost to provide them. Departments developed and submitted budget proposals. March April 11. The Executive Peer Review Team finalized their work and gave recommendations to the General Manager s Office. The General Manager reviewed the budget and final decisions were made. May 26, 11. The General Manager s Recommended Budget Document was presented to the Board. June 7 and 9, 11. The Administrative and Finance Committee reviewed the Recommended Budget including Water Rates and Charges, Water Purchases, Debt Service, Capital, and Operating Budgets. The Administrative and Finance Committee made a recommendation to the full Board to adopt the recommended budget. June 23, 11. The Board formally adopted the Fiscal Years 12 & 13 Multi-Year Budget. Budget Document The Adopted Multi-Year Budget for Fiscal Years 12 and 13 is organized and presented to satisfy the needs of Water Authority stakeholders, which include member agencies, creditors and investors, citizens, board directors, staff and public officials. The budget is organized in compliance with the California State Statutes and structured to meet external and internal managerial needs. The document serves as a comprehensive financial plan and communication tool for describing the Water Authority s programs, services, and resource requirements. Budget Adjustments The Water Authority Board of Directors adopted a two-year budget which is to be appropriated and expended as identified in Board Resolution No , which can be found in Appendix F of this document. By this resolution, the total appropriations adopted by the Board of Directors established the legal expenditure limit for the Water Authority as well as established budgetary controls. Overall, the adopted budget shall neither be increased nor decreased without prior Board authorization. In summary, the General Manager of the Water Authority may exercise discretion to modify the budget for changed circumstances provided that the modifications are under $150,000. Section 4 of the resolution details the budgetary controls authorized by the Board. 9

16 Adopted Budget for Fiscal Years 12 & 13 Background and Community Profile Budget versus Accounting Basis The Water Authority Multi-Year budget is developed on a cash basis. This means that revenues and expenditures are recognized when cash is received and cash is disbursed. Conversely, the Water Authority uses the accrual basis of accounting. This means that revenues are recognized when earned and expenditures are recognized as they are incurred. Community Profile The area the Water Authority services has undergone significant changes over the last several decades. Driven by an average annual population increase of 50,000 people per year, large swaths of rural land were shifted to urban uses to accommodate the growth in population. This shift in land use has resulted in the region s prominent urban and suburban character. San Diego County also has a rich history of agriculture, beginning with the large cattle ranches established in the 18th century and continuing through the diverse range of crops and products grown today. Although the total number of agricultural acres under production has declined, the region maintains a significant number of high value crops, such as cut-flowers, ornamental trees and shrubs, nursery plants, avocados, and citrus. Based on the 09 Crop Statistics and Annual Report by the San Diego County Department of Agricultural Weights and Measures, the region has 6,687 farms more than any other county in the nation. San Diego County agriculture is a $1.5 billion dollar per year industry, and ranks first in the state in gross value of agricultural production for flowers, foliage, and nursery products. Climate Climatic conditions within the county area are characteristically Mediterranean along the coast, with mild temperatures year-round. Inland area weather patterns are more extreme, with summer temperatures often exceeding 90 degrees Fahrenheit ( F) and winter temperatures occasionally dipping below freezing. Average annual rainfall is approximately 10 inches per year on the coast and in excess of 33 inches per year in the inland mountains. More than 80 percent of the region s rainfall occurs between December and March. Figure 1: Actual vs. Normal Rainfall 25 Lindbergh: Actual vs. Normal Rainfall 15 Normal Rainfall Actual Rainfall

17 Adopted Budget for Fiscal Years 12 & 13 Background and Community Profile Regional Economy and Demographics San Diego s economy was subject to two nationwide recessions in the past ten years. First, by a mild recession in 01 the aftermath of the dotcom bubble in which many traditional business models were abandoned in favor of business expansion before profitability. This unsustainable business approach resulted in the failure of numerous internet companies and ultimately caused the NASDAQ Composite Index to lose 78 percent of its value. In late-07, the national economy plunged into another recession driven by the collapse of large financial institutions, the bailout of banks by the federal government, and a downturn in the housing market. This second recession had more severe and sustained impacts on the local economy, which included reduced home prices, elevated foreclosure rates, and higher job losses. Although June 09 marked the official end of the recession, its lingering effects are still evident in the diminished number of new housing permits issued in 10 and double-digit unemployment rate. However, the San Diego region has shown some resilience in part due to defense-related spending. As the home of the largest concentration of U.S. military forces in the world, San Diego has reaped the leveling effect that Defense Department spending has on undulating economic cycles. Pentagon spending is estimated to pump over $17 billion into the local San Diego economy. In the private sector, San Diego also saw the largest employment growth of the state s main biomedical clusters. Despite the economic recession, San Diego s biomedical sector experienced a 2.5 percent increase in jobs expanding faster than the San Francisco Bay Area or Los Angeles County. Population When the Water Authority was formed in 1944, the population within its service area was estimated at roughly 260,000 people. By 10, Water Authority service area population reached 3.1 million, or an approximate 12- fold increase. The city of San Diego represents the largest population of any member agency, with just under 1.4 million people. The Yuima Municipal Water District has the smallest population, at approximately 1,500 people. The average population density in 10 was 3.0 per acre, with National City having the highest density (12.0 per acre) and Yuima Municipal Water District the lowest (0.1 per acre). The following table depicts the population served the Water Authority s member agencies, including the source of the water and type of water use. 11

18 Adopted Budget for Fiscal Years 12 & 13 Background and Community Profile Table 1: Water Source and Use Fiscal Years 09 and 10 Local Supply (1) Acre-feet Source of Water Water Authority Supply (Imported Use) (2) Acre-feet Total Acre-feet Type of Water Authority Supply Water Use Agricultural Use (3) Acre-feet M & I Use Acre-feet Gross Area (Acres) Estimated Populations Carlsbad M.W.D. 3,935 17,234 21, ,6,640 80,800 City of Del Mar 73 1,129 1,2 0 1,129 1,443 4,580 City of Escondido 4,080,768 24,848 3,281 17,488 21, ,788 Fallbrook P.U.D ,322 13,866 4,434 8,888 27,988 32,000 Helix W.D. 2,866 30,345 33, ,345 31, ,642 Lakeside W.D ,375 4, ,375 11,488 35,500 City of National City 3,305 3,023 6, ,023 4,812 59,341 City of Oceanside 3,833 24,897 28, ,213 26, ,095 Olivenhain M.W.D. 2,672 19,992 22, ,706 30,942 59,500 Otay W.D. 4,070 31,175 35, ,158 80,3 191,500 Padre Dam M.W.D ,485 13, ,709 54,402 99,100 Camp Pendleton Marine Corps Base (4) 8, , ,625 50,000 City of Poway ,111 11, ,085 25,047 52,056 Rainbow M.W.D. 0 22,357 22,357 8,309 14,049 47,260 18,000 Ramona M.W.D ,124 6,853 1,726 4,399 46,524 40,000 Rincon Del Diablo M.W.D. 3,279 6,280 9, ,014 10,596 29,546 City of San Diego (5) 12, , , , ,121 1,376,173 San Dieguito W.D. 4,989 2,156 7, ,156 5,653 38,750 Santa Fe I.D. 6,9 5,680 11, ,637 10,359 21,682 South Bay I.D. 2,943 11,523 14, ,523 13, ,756 Vallecitos W.D. 0 16,468 16,468 1,076 15,392 29,450 94,000 Valley Center M.W.D ,522 29,922 19,918 9,605 64,253 25,707 Vista I.D. (6) 3,899 15,336 19, ,269 21, ,632 Yuima M.W.D. (7) 779 2,519 3,298 2, ,460 1,870 TOTALS (8) 71, , ,443 43, , ,289 3,149,018 Notes: (1) Includes surface, recycled, and groundwater supplies; does not reflect conserved water. (2) Water use in a given year may differ from Water Authority sales due to storage. (3) Includes only amounts certified through the IAWP and SAWR agricultural water use programs. (4) Includes Water Authority deliveries via South Coast Water District system. (5) Excludes city of San Diego local surface water use outside of Water Authority service area. (6) Excludes land outside of the Water Authority s service area. (7) Excludes local supplies developed beyond Yuima s master meters. (8) Numbers may not total due to rounding. 12

19 Adopted Budget for Fiscal Years 12 & 13 Policies Water Authority Policies Under the Water Authority s Administrative Code Section the General Manager shall bi-annually prepare and submit to the Board a two-year budget. The Water Authority considers the budget to be balanced when the sources of funds equals the uses of funds. In addition to the bi-annual budget, the Water Authority prepares a Long-Range Financing Plan. As a financial planning document, the Long-Range Financing Plan (LRFP) serves as the financial foundation supporting the long-term strategic objectives of the Water Authority. It provides long-term forecasts of revenues and expenditures for both operating and capital investment activities. The plan ensures: Adherence to Board policies on fund balances Operating Fund maximum balance RSF target and maximum balances PAYGO Funds restricted for capital improvements Regular, predictable rate increases Adherence to debt service coverage policies Maintenance of credit ratings Optimal use of variable rate debt Prudent capital financing plan mix Strong overall fixed-revenue percentage The LRFP and the financial policies it is supported by provides a conservative, flexible financial structure that permits effective management of various risks, including weather variability, economic uncertainty, capital market volatility, and demand uncertainty. 13

20 Adopted Budget for Fiscal Years 12 & 13 Policies While the Long Range Financing Plan serves as a planning document, the Debt Management Policy (DMP) sets forth comprehensive guidelines for the issuance and management of Water Authority debt. The policy ensures soundness of debt structure and credit quality. The DMP contains detailed guidelines relating to the following topics: Governing legal documents Integration of capital planning and debt issuance Procurement of debt-related professional services Transaction-specific policies Communication and disclosure Refunding policies Reinvestment of bond proceeds Creation and maintenance of funds Compliance Debt service coverage Significant Financial Policies Within the LRFP and DMP, there are significant policies that play a role in managing the Water Authority s financial risks. These are highlighted below. Reserves With adequate reserves, the impact of volatility in net revenues to the Water Authority need not result in rate shock to member agencies. Given the nature and degree of the financial risk facing the Water Authority, adequate financial reserves are essential to prudent financial management. Operating Fund The most readily available Water Authority reserves are held in the Operating Fund. The Operating Fund is intended to manage working capital requirements of the Water Authority. The Board adopted the current operating fund reserve policy in April 03. The maximum cash and securities to be held in the Operating Fund on June 30 of each year to be used for working capital purposes is 45 days of average annual operating expenditures provided that $5 million of such calculated amount be designated and held available for emergency repairs to the Water Authority system. In the event that in any year the Operating Fund contains funds in excess of the maximum balance (less any funds required to bring the Rate Stabilization Fund (RSF) to its maximum balance, and less any funds appropriated for draws from the Operating Budget), the Board shall be presented with options to determine uses for the amounts over the guideline. 14

21 Adopted Budget for Fiscal Years 12 & 13 Policies Rate Stabilization Fund The Board adopted funding policies for the RSF based on hydrology risk. Hydrology risk refers to the decrease in sales volumes and net financial margin caused by wet weather. The enhanced funding policies establish target and maximum funding levels for the RSF equal to 2.5 and 3.5 years, respectively, of the net financial loss resulting from extreme wet weather. The targets were set based upon the analysis of historical rainfall. The policy also identifies appropriate uses for RSF monies. Transfers from the RSF to the Operating Fund may be made to meet annual operations and maintenance expenses, debt service expenses, stabilize water rates or to comply with debt service coverage and operating fund policies. Transfers from the Operating Fund to the RSF will be made as a closing audit adjustment if the Operating Fund maximum balance has been met. Balances below the RSF target level are to be replenished within three years. The Board may also choose to budget for RSF deposits resulting in balances in excess of the target level but below the maximum level to provide for rate smoothing. The RSF is managed so that any funds above the maximum balance will be transferred to the Operating Fund. Operating Fund balances above the existing 45-day policy are subject to discretionary use by the Board. Debt Service Coverage The Debt Service Coverage Ratio (DSCR) measures the availability of current financial resources to pay for debt service. It is the ratio of annual revenues - net of operating expenses - to total annual debt service. For example, a DSCR of 1.00 means that after paying all operating expenses, an issuer only has exactly enough funds to pay its debt service obligations. The DSCR is one of the primary metrics used by credit rating agencies and investors to assess the credit worthiness of an issuer. In this way it is similar to the income to loan ratio used in qualifying for a home mortgage. All other things being equal, a higher DSCR means less borrowing, better credit ratings, and a lower cost of debt. Conversely, a lower DSCR means more borrowing, lower credit ratings, and more expensive debt. The Water Authority s General Resolution is the document governing outstanding debt issues. In this document, the Water Authority contractually commits to set rates so as to maintain a minimum DSCR of 1. times on senior lien debt. The Water Authority also covenants to maintain net revenues of at least 1.00 times on all outstanding obligations. Enhanced Debt Service Coverage Ratio Target Highly-rated issuers generally have DSCRs that exceed the covenanted levels. The Board adopted a DSCR policy target of 1.50 times in August 06. This DSCR target provided levels more appropriate to preserve the longterm financial integrity of AA rated agency in the midst of a large capital program. In addition to this 1.50 times policy target, the Board also adopted another policy target of 1.00 times on senior lien debt net of capacity charge revenues. Revenue Collection Policy The Water Authority s revenues consist largely of (a) rates and charges imposed on member agencies for delivery of water, provision of services, and use of facilities; (b) capacity charges levied on new users and collected for the Water Authority by member agencies; and (c) taxes and standby charges imposed on property and collected on the tax rolls. 15

22 Adopted Budget for Fiscal Years 12 & 13 Policies The revenue collection policy clearly defines the revenue billing and collection cycle, thus ensuring the integrity of the revenue streams, which form the basis of the Water Authority s strong credit. Except for capacity charges and where otherwise provided by contract, invoices for rates and charges are mailed within ten business days after calendar month. Each invoice indicates the date of invoice, amount and basis for billing, total amount due and payable, and the payment date. Delinquency charges being to accrue starting after 2:00 pm on the date stated in the invoice. If the delinquency is less than five days, the delinquency charge is one percent of the delinquent amount. If the delinquency charge is greater than five days, the delinquency charge is two percent of the delinquent payment for each month or portion thereof that the payment remains delinquent. The Board adopted policy does not allow for waivers of delinquency charges. This policy has resulted in the Water Authority s very low delinquency rates. Investment Policy The investment policy organizes and formalizes Water Authority investment-related activities to ensure the systematic and prudent administration of funds. The Board of Directors and, upon formal delegation, the Treasurer for the San Diego County Water Authority, duly authorized to invest Water Authority monies by California Government Code, are trustees of Water Authority funds and therefore fiduciaries subject to the prudent investor standard. The investment policy applies to all Water Authority funds and investment activities except for the employee s retirement and deferred compensation funds. Based on the priorities of safety, liquidity, yield and public trust, the policy addresses issues such as delegation of authority, permitted investments, diversification, portfolio limitations, internal controls, safekeeping and custody, reporting, and ethics and conflicts of interest. 16

23 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Overview The Water Authority s Fiscal Years 12 and 13 adopted budget is $1.4 billion. This Financial Summaries Section contains charts and tables that explain the major components of this budget. The subsequent Sources and Uses Section provides additional detail regarding budgeted revenues and expenditures. The sources of funds (revenues) for Fiscal Years 12 and 13 are shown in Figure 1. Water Sales is the largest source of revenue at $943.8 million followed by Net Fund Withdraws. Net Fund Withdraws includes draws from existing fund balances totaling $285.3 million primarily from the Construction Fund, which holds short-term and long-term debt proceeds specifically for capital improvement projects. Figure 1: Sources of Funds ($ Thousands) Water Sales $ 943,802 67% Infrastructure Access Charges 56,978 4% Property Taxes & In-Lieu Charges 21,078 1% Investment Income 13,002 1% Hydroelectric Revenue 1,800 <1% Other Income 43,609 3% Capacity Charges 21,365 1% Water Standby Availability Charges 22,233 2% Contributions in Aid of CIP 8,2 <1% Net Fund Withdraws 285,347 % $ 1,417, % The uses of funds (expenditures) for Fiscal Years 12 and 13 are shown in Figure 2. The largest expenditure is Water Purchases and Treatment at $700.5 million followed by the Capital Improvement Program (CIP) at $321.1 million, Debt Service at $280.4 million, and the Operating Departments at $87.7 million. Figure 2: Uses of Funds ($ Thousands) Water Purchases & Treatment* $ 700,474 49% CIP Expenditures 321,129 23% Debt Service 280,394 % Operating Departments 87,715 6% Hodges Pumped Storage 6,052 <1% Equipment Replacement 1,2 <1% Other Expenditures,449 1% $ 1,417, % Note: * In this figure only, Water Purchases and Treatment includes QSA mitigation. These categories are shown separately in tables throughout the rest of the document. 17

24 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Purpose: Table 1 shows the breakdown of revenues and expenditures for the adopted budget and compares them to the previous budget periods. Table 1: Adopted Fiscal Years 12 and 13 Budgeted Sources and Uses of Funds ($ thousands) FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Variance Budget to Budget Actual Budget Estimated Adopted $ % Revenues & Other Income Water Sales $703,407 $964,292 $753,996 $943,802 $(,490) -2% Infrastructure Access Charges 36,848 45,551 45,749 56,978 11,427 25% Property Taxes & In-Lieu Charges,771,846 19,706 21, % Investment Income 39,217 26,876 17,580 13,002 (13,874) -52% Hydroelectric Revenue 2,009 2,613 2,8 1,800 (813) -31% Other Income 16,838 30,867 25,542 43,609 12,742 41% Capital Contributions: Capacity Charges 37,149 12,400 18,299 21,365 8,965 72% Water Standby Availability Charges 22,568 22,245 22,410 22,233 (12) -0% Contributions in Aid of CIP 29,014 22,143 24,002 8,2 (13,923) -63% Total Revenues & Other Income $907,8 $1,147,833 $929,492 $1,132,087 $(15,746) -1% Net Fund Withdraws 498, , , ,347 (261,304) -48% TOTAL SOURCES OF FUNDS $1,406,504 $1,694,484 $1,278,704 $1,417,434 $(277,050) -16% Expenditures Water Purchases & Treatment $532,769 $736,432 $552,186 $666,868 $(69,564) -9% Stored Water Purchases - 10,650-21,145 10,495 99% CIP Expenditures 556, , , ,129 (234,571) -42% Debt Service 197, , , ,394 40,386 17% QSA Mitigation* 24,336 22,792 22,792 12,461 (10,331) -45% Operating Departments 79,602 94,451 82,995 87,715 (6,735) -7% Hodges Pumped Storage ,052 6, % Equipment Replacement 3,282 3,805 3,105 1,2 (2,585) -68% Other Expenditures 12,0 30,646 9,859,449 (10,197) -33% TOTAL USES OF FUNDS $1,406,504 $1,694,484 $1,278,704 $1,417,434 $(277,050) -16% Note: *QSA Mitigation includes QSA JPA Contributions, environmental mitigation, and payments for Socioeconomic Mitigation Settlement. Totals may not foot due to rounding. The overall Water Authority budget of $1.4 billion has decreased by $277.1 million or 16% over the prior two-year budget. The biggest impact on the overall budget is a decrease to the Capital Improvement Program (CIP) of $234.6 million or 42%. Additional details on the individual revenue and expenditure line items are provided in the Sources and Uses Section of this document. 18

25 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Purpose: Table 2 depicts the rates and charges for Calendar Year 12 by category, and compares these to the current and previous years rates. Similarly, Table 3 displays this information on a per acre-foot basis. Table 2: Water Authority Adopted Rates and Charges CY 08 Rates CY 09 Rates CY 10 Rates CY 11 Projected Rates CY 11 Estimated Rates CY 12 Adopted Rates Variable Rates Melded M&I Supply Rate ($/AF) $390 $463 $532 $597 $597 $638 Melded M&I Treatment Rate ($/AF) $164 $168 $215 $215 $215 $234 Transportation Rate ($/AF) $60 $64 $67 $75 $75 $85 Fixed Charges Storage Charge ($ millions) $22.2 $23.0 $34.0 $44.3 $44.3 $54.2 Customer Service Charge ($ millions) $15.2 $16.0 $18.0 $23.2 $23.2 $26.4 Other Rates & Charges Untreated Special Agricultural Water Rate ($/AF) n/a $412 $484 $527 $527 $560 Treated Special Agricultural Water Rate ($/AF) n/a $580 $699 $742 $742 $794 Infrastructure Access Charge (IAC) $1.70/ME (1) $1.90/ME $2.02/ME $2.49/ME $2.49/ME $2.60/ME Water Standby Availability Charge (2) $10 $10 $10 $10 $10 $10 Notes: (1) ME means meter equivalent as defined in the resolution establishing the IAC. (2) Fiscal Year charge. Table 3: Total Treated Water Rate on a Per Acre-Foot Basis CY 08 Rates CY 09 Rates CY 10 Rates CY 11 Projected Rates CY 11 Estimated Rates CY 12 Adopted Rates Variance $ % Melded Supply Rate $390 $463 $532 $597 $597 $638 $41 6.9% Melded Treatment Rate $19 8.8% Transportation $ % Storage * $10 8.1% Customer Service * $2 3.6% TOTAL COST OF TREATED WATER $684 $766 $922 $1,026 $1,066 $1,148 $82 7.7% TOTAL COST OF UNTREATED WATER $5 $598 $707 $811 $851 $915 $64 7.4% Note: * Fixed charges converted to per acre-foot basis. Budgeted water sales revenues are estimated based on adopted rates and charges for Calendar Year 12 and an estimate of Calendar Year 13 rates and charges. Overall, rates and charges are increasing by 7.7% on Municipal and Industrial (M&I) treated water effective January 1, 12 and an estimated increase for Calendar Year 13 that is consistent with the high/low forecast provided to the Board in February. Calendar Year 11 Projected Rates are based on water sales volumes at the time rates were set. Calendar Year 11 Estimated Rates are based on current projected water sales volumes. 19

26 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Purpose: Table 4 shows the sources that generate the Water Sales revenue and the Water Purchases and Treatment expense (purchases or cost of sales). Table 4: Water Sales and Purchases Volume (AF) Dollars FY 12 FY 13 Total FY 12 FY 13 Total WATER SALES Water Authority Commodity Melded Supply 393, , ,303 $ 241,951,742 $ 295,092,565 $ 537,044,307 Melded Treatment 149, , ,255 33,496,657 42,102,451 75,599,108 Transportation 409, , ,424 32,483,975 39,536,333 72,0,308 Interim Agricultural Water Program (IAWP) 21,010 11,555 32,565 14,636,312 8,558,265 23,194,577 Special Agricultural Water Rate (SAWR),024 16,848 36,872 14,802,889 12,956,353 27,759,242 Subtotal Commodity $ 337,371,575 $ 398,245,967 $ 735,617,542 Fixed Customer Service Charge 434, , ,741 24,800,000 28,350,000 53,150,000 Storage Charge 393, , ,153 49,250,000 59,650, ,900,000 Subtotal Fixed $ 74,050,000 $ 88,000,000 $ 162,050,000 Subtotal Water Authority $ 411,421,575 $ 486,245,967 $ 897,667,542 MWD Pass-Throughs Readiness-to-Serve (RTS) Charge ,930,085 22,368,687 44,298,772 Capacity Charge ,506,850 7,926,358 16,433,8 Subtotal MWD $ 30,436,935 $ 30,295,045 $ 60,731,980 Adjustments Reclamation Credits SDCWA 19,080,056 39,136 (3,080,590) (3,237,522) (6,318,112) Reclamation Credits MWD 26,455 25,990 52,445 (4,319,327) (4,410,094) (8,729,421) SDG&E Pumping Cost , , ,000 Subtotal Adjustments $ (7,174,917) $ (7,422,616) $ (14,597,533) TOTAL WATER SALES $ 434,683,593 $ 509,118,396 $ 943,801,989 Note: Totals may not foot due to rounding. Water Sales revenues are generated through rates and charges from the Water Authority, pass-through of MWD s rates and charges, and other adjustments. The Water Authority s rate periods differ from the budget. Rates are set on a calendar year basis; whereas the budget is set on a fiscal year basis, commencing July 1. Additional detail on prior year Water Sales and Purchases can be found in the Sources and Uses of Funds Section of this document, on pages 33, 34, and 38.

27 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Table 4: Water Sales and Purchases, Continued Volume (AF) Dollars FY 12 FY 13 Total FY 12 FY 13 Total WATER PURCHASES & TREATMENT Water Purchases Metropolitan Water District (MWD) Supplies Full Service Water 228, , ,903 $ 123,177,558 $ 153,025,649 $ 276,3,7 Interim Agricultural Water Program (IAWP) 21,010 11,555 32,565 14,636,312 8,558,265 23,194,577 Special Agricultural Water Rate (SAWR),024 16,848 36,872 14,822,982 12,956,353 27,779,335 Readiness-to-Serve (RTS) ,930,085 22,368,687 44,298,772 Capacity Charge ,506,850 7,926,358 16,433,8 Subtotal MWD Supplies $ 183,073,787 $ 4,835,311 $ 387,909,098 Quantification Settlement Agreement (QSA) Imperial Irrigation District (IID) 85,000 95, ,000 72,635,000 88,715, ,350,000 All-American Canal 56,500 56, ,000 22,289,228 24,125,477 46,414,705 Coachella Canal 23,700 23,700 47,400 9,349,672 10,119,923 19,469,595 Subtotal QSA $ 104,273,900 $ 122,960,400 $ 227,234,300 Dry Year Transfers (net of losses) Groundwater Storage Subtotal Treatment Metropolitan Water District (MWD) 41,2 75, ,257 9,229,385 18,429,558 27,658,943 San Diego County Water Authority (SDCWA) 77,860 68, ,597 8,615,232 8,558,417 17,173,649 Helix 25,376 25,525 50,901 3,553,216 3,880,055 7,433,270 Olivenhain 5,500 5,000 10,500 1,284,000 1,215,000 2,499,000 Subtotal Treatment $ 22,681,833 $ 32,083,030 $ 54,764,862 Adjustments Storage Facility Related Supply Costs , , ,372 Reclamation Credits MWD 26,455 25,990 52,445 (4,319,327) (4,410,094) (8,729,421) Evaporation & Seepage at MWD Untreated Tier 1 Rate 3,400 4,150 7,550 1,839,650 2,475,0 4,314,850 SDG&E Pumping Cost , , ,000 Subtotal Adjustments $ (1,792,491) $ (1,247,708) $ (3,040,199) TOTAL PURCHASES AND TREATMENT $ 308,237,029 $ 358,631,033 $ 666,868,062 Net Water Sales $ 126,446,564 $ 150,487,363 $ 276,933,927 Note: Totals may not foot due to rounding. Water Purchases and Treatment (cost of sales) includes water purchases from MWD and IID; the cost to treat water, whether through the Water Authority s treatment facilities or one of our member agency s facilities; and other adjustments. In addition, Water Purchases includes 5,000 acre-feet of stored water purchases for Lake Hodges annually and,000 acre-feet for San Vicente in Fiscal Year 13. There are no planned purchases for dry year transfers or groundwater storage. The cost of purchasing and the treatment of water from MWD comprises approximately 62% of the Water Purchases and Treatment budget. 21

28 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Purpose: Table 5 summarizes the CIP Lifetime Budget and the adopted two-year budget by project type. In addition, the table compares the adopted two-year budget with the prior budget period. Table 5: Adopted CIP Budget by Project Type ($ Thousands) Projected Lifetime Two-Year Appropriation FYs 10 & 11 FYs 12 & 13 Budget Adopted Adopted Asset Management $ 869,144 $ 24,659 $ 79,973 New Facilities 641, ,448 44,660 Emergency Storage Program 1,004, , ,509 Master Planning 905,351-3,748 Other 102,369 23,726 11,239 CIP BUDGET TOTAL $ 3,523,319 $ 555,685 $ 321,129 Completed Projects 241, Note: Totals may not foot due to rounding. The CIP budget is viewed both in terms of a lifetime budget and in terms of a two-year appropriation. When a new project is approved by the Board of Directors, it is assigned a lifetime budget. A project s lifetime budget is the estimated cost of the project from design to construction, including post construction. Due to the length of time a project may be active, the entire lifetime budget is not immediately appropriated to manage cash flow. Funds for CIP expenditures are appropriated for the two-year period through the budget process. The lifetime budget of $3.5 billion has remained unchanged and the two-year appropriation of $321.1 million is 42% less than the prior two-year budget. In the adopted budget, significant funding is expected to be spent on Asset Management projects compared to the prior two-year budget period. In contrast, a major reduction in expenses is anticipated for projects in the Emergency Storage Program and New Facilities. The Master Planning category has been added to reflect the cost to update the Water Facilities Master Plan which is needed to produce a CIP of appropriate scope, schedule, and cost to meet the future needs of the region. 22

29 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Figure 3 depicts the reduction in budgeted CIP expenditures since Fiscal Year 08. Figure 3: CIP Budget by Fiscal Year in Millions ($) $350.0 $300.0 $250.0 $0.0 $150.0 $100.0 $278 $313 $259 $297 $211 $110 $50.0 $- FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Figure 4 illustrates that 83% of the adopted two-year budgeted expenditures will be spent on construction. Figure 4: CIP Budget by Project Phase $321.1M 17% Planning, Design, or Post-Construction Phases Construction Phase 83% Both the lifetime budget and two-year appropriation are summarized by project in Table 6. The Capital Improvement Program Section of the budget document provides details on individual CIP projects. 23

30 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Rate Adopted Mid-term Adopted Reimbursable Category FYs 10 & 11 FYs 12 & 13 Budget Lifetime Code Project Name Budget Budget Variance Cost Asset Management CS Additional Aqueduct Right of Way Width 5,787,000 5,787, CS Aqueduct Alignment Corrections 878, , T Aqueduct Protection Program 24,560,000 25,775,000 1,215,000 1,215,000 CS Building Additions and Improvements 635, , CS Emergency Ops Center/Alt Control Room 4,881,000 4,881, S ESP - Operations Center Upgrade 2,176,000 2,176, CS Fallbrook 7/Rainbow 14 FCFs 4,188,000 4,188, CS Fallbrook 8 FCF & DeLuz 1 SCADA 4,272,000 4,272, ,000 S Lake Hodges Quagga Mussel & Water Quality Mitigation - 1,110,000 1,110, ,000 CS Line Structure and Access Improvements 2,070,000 2,070, CS Miramar Pump Station Rehabilitation 3,900,000 4,000, ,000 - CS Miramar Pump Station Valve and Meter Vaults 1,908,000 2,008, ,000 - T Relining and Pipe Replacement Program 786,823, ,323,000 (500,000) - CS San Diego 12 FCF Expansion 9,4,000 9,4,000-3,391,0 CS San Diego 24 FCF 7,517,000 7,517,000-7,517,000 CS Valve and Venturi Meter Replacement Program 3,009,000 3,509, ,000 - CS Water System Security 4,595,000 4,595, Subtotal - Asset Management 866,619, ,144,000 2,525,000 13,273,0 New Facilities CS Camp Pendleton Desalination Project 5,7,000 5,7, CS Carlsbad Desalination Aqueduct Improvements 2,080,000 2,080,000-2,080,000 Sup Colorado River Canal Linings 271,230, ,230,000-83,360,000 Sup Colorado River Canal Linings - Post Construction Mitigation Monitoring,2,000,2, CS Communications System Facilities 1,750,000 1,750, T Lake Murray Control Valve 9,600,000 10,600,000 1,000,000 - T Mission Trails Flow Regulatory Structure (FRS) II 44,702,000 53,317,000 8,615,000 - T Nob Hill Improvements 16,000,000 16,000, T Olivenhain 9 Flow Control Facility 687, , CS Olivenhain-Hodges Pumped Storage 66,083,000 70,535,000 4,452,000 - WTP/T Twin Oaks Regulatory Storage - 4,943,000 4,943, ,000 T Twin Oaks Valley WTP Expanded Service Area - 5,600,000 5,600,000 - WTP/T Twin Oaks Valley Water Treatment Plant 179,000, ,000, ,000 Subtotal - New Facilities 617,072, ,682,000 24,610,000 86,500,000 Emergency Storage Program S ESP - Lake Hodges Pump Station and Inlet/Outlet 102,768, ,316,000 7,548,000 3,800,000 S ESP - Planning & Support Services 101,346, ,346, S ESP - Post Construction Mitigation 2,105,000 2,105, S ESP - San Vicente Dam Raise and Carryover Storage 482,173, ,448,000 (32,725,000) - S ESP - San Vicente Pipeline & Aqueduct Interconnect 341,558, ,558, Subtotal - Emergency Storage Program 1,029,950,000 1,004,773,000 (25,177,000) 3,800,000 Master Planning S ESP - Pump Station at Pipeline 3 & Interconnect 15,765,000 15,765, S ESP - Pump Station at Pipeline 4 5,798,000 5,798, S ESP - San Vicente 3rd Pump Drive & Power - 8,044,000 8,044,000 - CS Facilities Master Plan Update 2,825,000 4,425,000 1,600,000 - T Pipeline 6 443,211, ,211, T Restore Untreated Water in LMSE to Sweetwater 1,417,000 1,417, T Second Crossover Pipeline 371,041, ,041, T System Regulatory Storage 60,593,000 55,650,000 (4,943,000) - Subtotal - Master Planning 900,650, ,351,000 4,701,000 - Other CS Capitalized Warranty 750, , ,000 CS/T/WTP East County Regional Treated Water Improvements 28,906,000 28,906,000 4,653,000 Sup Groundwater Conjunctive Use Program 31,000,000 31,000,000-25,816,300 CS Hydraulic Transient Model 3,100,000 3,100, T Mitigation Program 23,806,000 33,806,000 10,000,000 T Post-Construction Mitigation Monitoring Program 4,807,000 4,807, Subtotal - Other 92,369, ,369,000 10,000,000 30,769,300 ACTIVE PROJECTS SUBTOTAL 3,506,660,000 3,523,319,000 16,659, ,342,500 Completed Projects S ESP - Lake Hodges to Olivenhain Pipeline 27,590,000 27,357,000 (233,000) - S ESP - San Vicente Pumping Facilities 117,745, ,701,000 (8,044,000) - Sup IID Water Conservation Improvements 50,000,000 50,000, T Mission Trails Pipeline Tunnel 49,463,000 40,848,000 (8,615,000) - S OMWD Settlement Agreement Project 13,500,000 13,500, Subtotal - Completed Projects 258,298, ,406,000 (16,892,000) - 24 Table 6: CIP Project Summary Table Note: Rate Category Codes are as follows: (1) CS: Customer Service (2) S: Storage (3) SUP: Supply (4) T: Transportation (5) WTP: Treatment. Totals may not foot due to rounding.

31 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Projected Water Life-To-Date Projected Projected Projected Projected Projected Projected Expenditures Projected Authority Expenditures FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Beyond Total Cost 6/30/10 Expenditures Expenditures Expenditures Expenditures Expenditures Expenditures FY 16 Expenditures 5,787,000 3,839, ,000 0, ,000 5,787, , ,437 70,000 50,000 47, ,000 24,560,000 23,5, ,000 1,215, ,000 1, ,775, , , , ,000 4,881,000 1,040, , ,240,000 4,881,000 2,176, , ,483,000 2,176,000 4,188,000 1,243, ,944,000 4,188,000 4,022,000 1,513, ,758,000 4,272, , ,000 6,000 2, ,110,000 2,070,000 1,305, , , , ,000 2,070,000 4,000, , , ,000 2,526, , ,000,000 2,008, ,455 13,000 4, , , ,008, ,323, ,158,080 1,588,000 29,027,000 41,432,000 5,216,000 58,042,000 54,722, ,126, ,323,000 6,028, , , ,000 17,000-5,023,000 2,694,000-9,4, ,407 15, ,078,000 7,517,000 3,509,000 2,406, , , ,000 51, ,509,000 4,595,000 4,006,734 3, , , ,595, ,870, ,572,043 4,734,000 33,385,000 46,588,000 6,509,000 63,185,000 57,416, ,727, ,144,000 5,7, ,897 3,000 1,600,000 1,500,000 1,221, , ,7, , ,000 1,314,000 53, ,080, ,870, ,727,012 5,240,000 5,176,000 5,249,000 3,337,000 2,500, ,230,000,2,000 3,306, ,000 9,639,000 2,614, ,000 1,690,000 1,680, ,000,2,000 1,750,000-25, , , ,750,000 10,600, ,231 70, , ,000-5,110,000 3,496,000-10,600,000 53,317,000 5,294,960 40, ,000 18,481,000 27,924,000 1,077,000 53,317,000 16,000, , , , ,000 11,500,000 2,449, ,000, ,000-12, , , ,000 70,535,000 60,265,335 4,944,000 2,914,000 2,171, , ,535,000 4,193,000 4,192, , , ,943,000 5,600, ,0,000 4,400, ,600, ,690, ,319,812 1,391, , , ,288, ,000, ,182, ,980,031 14,113,000 25,597,000 19,063,000 17,060,000 31,130,000 33,100,000 4,631, ,682, ,516,000 92,390,696 8,556,000 6,140,000 2,479, , ,316, ,346,000 89,030,443 5,884,000 1,510,000 1,580,000 1,389,000 1,639, , ,346,000 2,105, ,438 89, , , , , , ,000 2,105, ,448, ,101,869 41,428, ,800,000 31,600,000 30,089,000 40,725,000 7,866,000 58,836, ,448, ,558, ,035,387 15,721,000 2,383,000 1,700,000 38,717, ,558,000 1,000,973, ,071,832 71,678, ,989,000 37,5,000 71,129,000 42,609,000 8,108,000 59,655,000 1,004,773,000 15,765,000 1,117,604, ,000 1,250,000 1,250,000 11,786,000 15,765,000 5,798, ,439 5, , , ,000 4,218,000 5,798,000 8,044, , ,000 1,986,000 4,928,000 8,044,000 4,425, , ,000 1,757,000 1,991, ,425, ,211,000 5,802, , ,217, ,036, ,211,000 1,417, ,000 1,192,000 1,417, ,041,000 1,176 6, ,033, ,041,000 55,650, , ,350,000 1,746,000 51,398,000 55,650, ,351,000 7,846, ,000 1,757,000 1,991, ,000 4,932,000 6,884, ,591, ,351, , ,643 80, , , , ,000 24,253,000 22,375,282 6,375, , ,906,000 5,183,700 28,836, , , , ,000,000 3,100,000 2,043,029 2, , , , , , ,000 3,100,000 33,806,000 15,379,675 1,046,000 5,256,000 3,503, ,000 2,0,000 1,850,000 3,700,000 33,806,000 4,807, ,192 1,058, , , , , ,000 1,058,000 4,807,000 71,599,700 69,735,861 9,529,000 6,747,000 4,492,000 1,691,000 2,701,000 2,361,000 5,094, ,369,000 3,388,976,500 1,359,6, ,933, ,475, ,654,000 96,854, ,557, ,869,000 1,392,698,000 3,523,319,000 27,357,000 27,157, , ,357, ,701, ,006,710 4,693, ,701,000 50,000,000-50,000, ,000,000 40,848,000 38,577,946 2,270, ,848,000 13,500,000 13,500, ,500, ,406, ,242,584 57,161, ,406,000 25

32 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Purpose: Table 7 identifies the adopted Fiscal Years 12 and 13 Debt Service expense. The table includes the principal and interest payments for short-term and long-term debt. Also included are the fees associated with debt service. Table 7: Water Authority Debt Service ($ Thousands) FYs 12 & 13 Principal & Interest Long-Term Debt Service Water Revenue Certificates of Participation Series 1997A $ 6,403 Series 1998A 1,110 Series 02A 36,675 Series 04A 41,859 Series 05A 34,335 Series 08A 66,419 Water Revenue Bonds Series 10A&B 74,033 Subtotal $ 260,834 Short-term Debt Service Commercial Paper (Series 1, 2, & 3) $ 12,075 Fees on Debt 7,485 Subtotal $ 19,560 TOTAL DEBT SERVICE $ 280,394 The Water Authority s adopted budget for Fiscal Years 12 and 13 is $280.4 million, a 17% increase from the prior two-year budget. The Water Authority can utilize bond proceeds to pay debt service as a method to mitigate the impact from CIP projects during construction. The Water Authority is projecting to capitalize $.8 million in interest, resulting in a net debt service payment of $268.1 million. Current Debt Service expenditures for short-term and long-term debt include six outstanding Certificates of Participation (COPs) issues, one Build America Bond issue, one non-amt(alternative Minimum Tax) Tax- Exempt issue, and three outstanding commercial paper series as summarized in the above table. No new debt issuances are scheduled for the upcoming two-year budget period; however, the Water Authority does expect to refund existing debt. Figure 5, shown below, depicts all existing short-term and long-term debt payments for the Water Authority. Figure 5: Debt Service Payment Schedule in Millions ($) Principal Interest - FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY

33 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries An important financial performance metric is the debt service coverage ratio (DSCR). Exclusive of the tax revenue and debt service costs associated with voter-approved debt, net water revenues, as defined by the bond covenants, must equal or exceed 1. times (x) the annual senior lien debt service payments. The Board target for senior lien debt service coverage is 1.50x. As shown in Figure 6a, the Water Authority projects a coverage ratio of 1.43x which is slightly below the Board target, but higher than the bond covenant requirements. In addition, this DSCR is higher than Fiscal Year 11 due to mitigating actions taken. This short-term deviation from the Board target is fiscally prudent given current rate pressures and the long-term impact from significant reductions in water sales volumes. Figure 6: Debt Service Coverage Ratios (a) Senior Debt Service Coverage FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Required Bond Covenant Ratio Board Policy Target Sr. Lien Debt Service Coverage Ratio In addition, as illustrated in Figure 6b, the Water Authority will meet an overall debt service coverage ratio of 1.00x as required per bond covenants. b) Overall Debt Service Coverage FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Required Bond Covenant Ratio Overall Debt Service Ratio (Senior Lien plus CP) 27

34 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Water Authority Labor and Benefits The adopted two-year budget includes significant cost savings from the elimination of full-time equivalents, or approximately 11% of the Water Authority s work force, as depicted in Table 8. Full-time equivalents are based on the percentage of a fiscal year (represented by 2,080 working hours) the position will be funded. Table 8: Budgeted Full-Time Equivalents (FTEs) FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Regular Employees Limited Duration Employees TOTAL Difference from prior FY (4.00) (4.45) (4.30) (25.92) (5.41) (4.42) 0.00 Cumulative change from FY 08 (4.00) (8.45) (12.75) (38.67) (44.08) (48.50) (48.50) The position eliminations include both regular and limited duration employees (LDEs). As planned, the number of Limited Duration Employees (LDE) is decreasing in conjunction with the reduced spending on CIP. LDEs are budgeted, fixed-term employees who are primarily utilized to support the CIP. In Fiscal Year 11, one LDE was created and an existing LDE s term was extended for the purpose of securing and managing grant funding. In total, Labor and Benefits are projected to be $80.8 million or 5% less than the prior two-year budget period due to position reductions, as summarized in Table 9. Labor and Benefits are calculated for the entire Water Authority and then allocated between the Operating Departments and other reimbursable funds, like CIP or grants. Of the total adopted budget for labor and benefits, $63.3 million represents the Operating Department s expense and $17.5 million will be directly charged to CIP or grants. Table 9: Distribution of Labor and Benefits by Fund FYs 10 & 11 FYs 12 & 13 Variance Budget Adopted $ % Operating $ 64,418,458 $ 63,289,389 $ (1,129,070) -2% CIP & Grants,900,674 17,536,163 (3,364,511) -16% TOTAL $ 85,319,132 $ 80,825,552 $ (4,493,581) -5% Labor and Benefits includes negotiated cost of living and health care adjustments. The Memorandum of Understanding scheduled to expire June 30, 10 was extended with amendments for two years beginning on July 1, 10 and expiring on June 30, 12. In addition, unrepresented employees agreed to adjustments to their compensation plans over the same time period. Per the direction of the Board of Directors, the amendments implemented to labor and benefits resulted in a net zero cost to the Water Authority. A negotiated 2% salary increase was offset by increased employee contributions to PERS, a moratorium on special merit increases, and the suspension of the employer match for contributions to represented employees deferred compensation plans. 28

35 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Operating Departments Budget Purpose: Table 10 identifies the adopted budget by expenditure category and compares it to the previous multi-year budgets. Table 10: Operating Departments Budget by Expenditure Type FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $ 80,105,338 $ 85,319,132 $ 82,073,696 $ 80,825,552 $ (4,493,581) -5% Direct Charges to CIP/Grants (22,391,474) (,900,674) (21,269,341) (17,536,163) 3,364,511-16% Operating Labor & Benefits $ 57,713,864 $ 64,418,458 $ 60,804,355 $ 63,289,389 $ (1,129,070) -2% Services 21,467,882 28,085,108 21,219,055 22,103,428 (5,981,679) -21% Supplies 2,797,653 2,473,308 2,151,940 2,418,484 (54,824) -2% Utilities 1,690,731 2,609,589 1,876,338 2,195,168 (414,421) -16% Insurance 1,735,810 1,827,900 1,827,900 2,664, ,716 46% Leases & Rent 693, , , , % Other 4,149,960 3,462,543 3,088,566 2,769,316 (693,227) -% Fixed Assets 707, ,0 118,479 81,000 (188,0) -70% Subtotal $ 90,956,570 $103,988,796 $ 91,797,036 $ 96,364,892 $ (7,623,904) -7% Capitalized Overhead Allocation (11,354,724) (9,537,982) (8,802,478) (8,649,434) 888,548-9% TOTAL OPERATING $ 79,601,846 $ 94,450,814 $ 82,994,558 $ 87,715,458 $ (6,735,356) -7% Note: Totals may not foot due to rounding. The Operating Departments Budget makes up $87.7 million or 6% of the entire Water Authority expenditures budget. Table 10 shows the breakdown of the budget by expenditure type. Through a series of facilitated executive staff budget development meetings, the Water Authority achieved a budget that addresses the organization s new reality reduced water sales and revenue; transition to an operations-based organization; ratepayer fatigue; increased scrutiny and demand for increased transparency; member agency challenges; and the overall economic condition of the region. Figure 7: Operating Departments Budget by Expenditure Type (excluding capitalized overhead) ($ Thousands) Operating Labor & Benefits $ 63,289 66% Services 22,103 23% Supplies 2,418 2% Utilities 2,195 2% Insurance 2,665 3% Leases & Rent 843 1% Other 2,769 3% Fixed Assets 81 <1% $ 96, % 29

36 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries Services The Services line item budget is $22.1 million or 23% of the Operating Departments budget excluding capitalized overhead. In total, Services were reduced $6.0 million from the prior two-year budget period. Over $5 million in Services related to conservation programs has been reduced as well as a $1.3 million reduction related to the Local Investigations and Study Assistance Program, approximately $0.6 million in funds have been budgeted to honor existing commitments. Other Other expenditures include costs for travel, training, memberships and sponsorships. This expenditure category is $2.8 million or 3% of the Operating Departments budget excluding capitalized overhead. Overall, there is a $693,000 or % reduction from the prior two-year budget which is primarily due to an Authority-wide cost containment effort to reduce expenses for travel, training, and memberships. Utilities Utilities expenditures include costs for gas and electricity, water and sewer and telephone charges. Over $1.4 million or 66% of the Utilities budgeted is for the Operations and Maintenance Department of which over $1.1 million or 80% of its utilities budget is for gas and electricity. Insurance Insurance is $2.7 million or 3% of the Operating Departments budget excluding capitalized overhead. This expenditure category has increased by $837,000 or 46%. A majority of this increase is due to the anticipation of unemployment claims which has been budgeted at $700,000 in the Human Resources Department. Table 11: Operating Departments Budget by Department Budget to Budget FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Variance Actual Budget Estimated Adopted $ % Administrative Services $ 8,897,757 $11,019,018 $10,558,660 $11,311,834 $ 292,816 3% Colorado River Program 2,545,836 2,880,763 2,325,885 2,605,091 (275,673) -10% Engineering 6,149,129 7,490,693 6,462,306 6,742,582 (748,111) -10% Finance 3,959,947 4,731,650 4,253,405 4,442,763 (288,887) -6% General Counsel 3,158,537 5,491,425 5,400,863 6,132, ,608 12% General Manager & Board of Directors 5,055,026 5,183,339 4,881,675 5,057,977 (125,362) -2% Human Resources 1,692,808 2,305,462 2,122,180 2,708,7 403,258 17% MWD Program 2,311,617 2,859,859 2,837,7 3,424, ,804 % Operations & Maintenance 25,879,855 28,654,062 24,904,985 30,128,118 1,474,056 5% Public Outreach & Conservation 12,696,580 14,490,444 10,075,034 7,817,929 (6,672,514) -46% Water Resources 7,254,754 9,344,098 9,171,847 7,343,747 (2,000,351) -21% TOTAL $79,601,846 $94,450,814 $82,994,558 $87,715,458 $(6,735,356) -7% Note: Totals may not foot due to rounding. 30

37 Adopted Budget for Fiscal Years 12 & 13 Financial Summaries The Water Authority restructured its operating departments from thirteen departments and programs to eleven. The restructuring was implemented to realign the operating departments to address the impact to the organization due to the current and anticipated economic and water supply conditions, and the planned reduction in the CIP. These changes include incorporating the Right of Way Department into the Engineering Department, and incorporating the Water Conservation Program into the Public Affairs Department which is now the Public Outreach and Conservation Department. Table 11 lists, by department, the Fiscal Years 08 & 09 Actual, Fiscal Years 10 & 11 amended Budget, Fiscal Years 10 & 11 Estimated expenses, and Fiscal Years 12 & 13 Adopted Budget. The details of each department, including a discussion of significant budget changes, are provided in the Operating Departments Section. Figure 8: Operating Budget by Department ($ Thousands) Operations & Maintenance $ 30,128 34% Administrative Services 11,312 13% Public Outreach & Conservation 7,818 9% Water Resources 7,344 8% Engineering 6,742 8% General Counsel 6,132 7% General Manager & Board of Directors 5,058 6% Finance 4,443 5% MWD Program 3,424 4% Human Resources 2,709 3% Colorado River Program 2,605 3% $ 87, % 31

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39 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Overview This section provides a detailed description of the Water Authority Sources of Funds, Uses of Funds, Historical and Projected Operating Results, Sources and Uses by Fund Type All Funds, and Five-Year Financial Forecast. Additional background and descriptions of sources and uses is provided in Appendix C. Water Authority Sources of Funds The Water Authority s primary sources of funds or revenue include Water Sales and Capital Contributions. In addition, withdraws from fund balance or proceeds from the issuance of short-term and long-term debt may be used. Purpose: Table 1 provides a comparison of the adopted multi-year budgeted revenue sources to previous multi-year budget periods. Table 1: Sources of Funds Fiscal Years ($ Thousands) FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Variance Budget Actual Budget Estimated Adopted to Budget Revenues and Other Income Water Sales $ 703,407 $ 964,292 $ 753,996 $ 943,802 $ (,490) -2% Infrastructure Access Charges 36,848 45,551 45,749 56,978 11,427 25% Property Taxes & In-Lieu Charges,771,846 19,706 21, % Investment Income 39,217 26,876 17,580 13,002 (13,874) -52% Hydroelectric Revenue 2,009 2,613 2,8 1,800 (813) -31% Other Income * 16,838 30,867 25,542 43,609 12,742 41% Capital Contributions: Capacity Charges 37,149 12,400 18,299 21,365 8,965 72% Water Standby Availability Charges 22,568 22,245 22,410 22,233 (12) -0% Contributions in Aid of CIP 29,014 22,143 24,002 8,2 (13,923) -63% Total Revenues & Other Income $ 907,8 $ 1,147,833 $ 929,492 $ 1,132,087 $ (15,746) -1% Net Fund Withdraws 498, , , ,347 (261,304) -48% TOTAL SOURCES OF FUNDS $ 1,406,504 $ 1,694,484 $ 1,278,704 $ 1,417,434 $ (277,050) -16% Note: *Other Income includes the BABs subsidy, grant revenues and other miscellaneous revenues. Totals may not foot due to rounding. Total Revenues and Other Income are $1.1 billion, or 1% lower than the previous budget period. This slight change in revenue, combined with a decrease in expenditures, will reduce Net Fund Withdraws by 48%. This results in an overall decrease of $277.1 million or 16% in total sources of funding for the Water Authority. The following pages provide more detail on each of the revenue categories. 33

40 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Water Sales Revenue Water Sales revenue is the largest source of revenue for the Water Authority, typically accounting for over 67% of total revenues. Water Sales include: the Customer Service Charge, Storage Charge, Metropolitan Water District (MWD) Readiness-To-Serve Charge, MWD Capacity Charge, and revenues generated by Melded Municipal and Industrial (M&I) Supply, Melded M&I Treatment, Transportation, Interim Agricultural Water Program (IAWP), Special Agricultural Water Rate (SAWR), and water delivery rates. IAWP is scheduled to end in January 13. Water Sales revenue, as shown, is net of evaporation and seepage water losses, the Water Authority s Local Water Supply Development (LWSD) credits and MWD s Local Resource Program (LRP), Surface Storage Operating Agreement (SSOA), and Groundwater Resources Program (GRP) credits. A description of these charges is located in the appendix. The adopted budget for Water Sales is $943.8 million, reflecting a $.5 million or 2% reduction from the prior two-year budget period. However, in comparison to estimated revenues for Fiscal Years 10 and 11, the adopted budget is significantly higher. Water Sales revenue is directly correlated to the costs to purchase and treat water, which is explained in more detail in the Uses of Funds section of this document. The primary drivers of Water Sales are the volumes of water the Water Authority expects to sell and the pass through of MWD s rates and charges. The following table depicts the significant change in volumes the Water Authority has experienced and symbolizes the new reality facing the organization. Purpose: Figure 1 depicts Water Sales projections that include Municipal and Industrial (M&I) and Agricultural sales. Figure 1: Water Sales Volumes Fiscal Years Acre-feet 700, , , , ,000 0, , , , , , , ,3 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Municipal & Industrial Agricultural In Fiscal Year 11, Water Sales are currently projected to be 30% less than Fiscal Year 08 as a result of a myriad of factors, including above average rainfall, cooler weather, and reduced demand due to mandatory restrictions and the overall economy. For the upcoming budget period, the Water Authority is assuming a slight increase in estimated water sales volumes due to an expectation of more normal weather conditions and the lack of supply restrictions imposed on the Water Authority and subsequently its member agencies. 34

41 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Overall, the Water Authority has adopted an increase in rates and charges of 7.7% (treated) for Calendar Year 12 and an estimated increase for Calendar Year 13 which is consistent with the high/low forecast provided to the Board in February. The Calendar Year 13 is just an estimate based on current projected revenue requirements and will need to be approved by the Board before adoption. The following table provides a historical perspective of the Water Authority s rates and charges. In addition, Water Sales revenue includes MWD s rate and charge increase of 7.5%, effective January 1, 12 and an estimated increase of 10.0% for Calendar Year 13. Purpose: Table 2 depicts the Water Authority s rates and charges for Calendar Years 08 through 12. Table 2a,b: Water Authority Rates and Charges on a Per Acre-Foot Basis Calendar Years (a) Municipal and Industrial (M&I) Rates CY 11 Projected Rates CY 11 Estimated Rates CY 12 Adopted Rates CY 08 Rates CY 09 Rates CY 10 Rates Untreated Melded M&I Supply Rate $390 $463 $532 $597 $597 $638 Melded Treatment Rate Transportation Rate Storage Charge * Customer Service Charge * TOTAL $684 $766 $922 $1,026 $1,066 $1,148 (b) Special Agricultural Water Rate (SAWR) * Fixed charges converted to acre-foot basis Calendar Year 11 Projected Rates are based on water sales volumes at the time rates were set. Calendar Year 11 Estimated Rates are based on current projected water sales volumes. Infrastructure Access Charges (IAC) CY 11 Projected Rates CY 11 Estimated Rates CY 12 Adopted Rates CY 09 Rates CY 10 Rates MWD Supply Rate $412 $484 $527 $527 $560 Melded Treatment Rate Transportation Rate Customer Service Charge * TOTAL $671 $801 $861 $873 $937 The IAC is a fixed charge to help stabilize the Water Authority s fixed revenues by mitigating water sales revenue volatility from sudden changes in water demand/availability and/or economic cycles. The IAC is levied on all retail water meters within the Water Authority s service area. The calculation for IAC equals 25% of net fixed expenses (debt service and 80% of operations and maintenance) against revenues received via Water Standby Availability Charges and Property Tax and In-Lieu Charges. 35

42 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds The adopted IAC revenue budget is $57.0 million, an increase of $11.4 million or 25%. This change in revenue reflects an increase in the per meter charge from $2.49 to $2.60 per meter equivalent (ME) for Calendar Year 12 and an estimated increase for Calendar Year 13, consistent with the high/low forecast provided to the Board in February 11. Property Taxes and In-Lieu Charges The Water Authority is authorized under the County Water Authority Act (Act) to levy taxes on all taxable property within its boundaries for the purpose of carrying on its operations and paying its obligations, subject to certain limitations in the Act, the Revenue and Taxation Code, and the California Constitution. Property Taxes are levied annually by the Water Authority s Board of Directors (Board) on July 1 and are billed and collected by the County of San Diego and then remitted to the Water Authority throughout the year. The tax rate is based upon the San Diego County s Assessor s valuation of taxable property within the Water Authority s service area and debt service payments for interest and principal. In addition, the Water Authority collects an In- Lieu Charge from the City of San Diego. Revenue from Property Tax and In-Lieu Charges is estimated to be $21.1 million reflecting a minimal growth over estimated receipts in Fiscal Years 10 and 11. In addition, during Fiscal Year 10, the state re-purposed 8% of the Water Authority s Fiscal Year 09 property tax receipts (approximately $688,000) to mitigate their budget deficits. Per Proposition 1A, the State is required to repay this amount within three years. This one-time repayment is included in the adopted budget. Investment Income The Water Authority receives revenue from investing its cash balances. Investment Income received on the cash balances in the Operating Fund, Rate Stabilization Fund, and Debt Service Reserve Fund is available for general Water Authority operating expenditures. Investment Income received in the Pay-As-You-Go (PAYGO) Fund is restricted to pay for capital expenditures or debt service. Similarly, investment income received for the Construction Fund is used for construction expenditures. The investment environment has been challenging due to very low investment earnings rates. Revenue from Investment Income is estimated to be $13.0 million, a reduction of $13.9 million or 52% from the previous twoyear budget. Primarily, the reduction reflects low investment returns and less invested cash. During the previous two-year budget period, the Water Authority issued $625 million in long-term debt. No new debt issuances are planned during this budget period; however, the Water Authority is planning to refund existing debt. In addition, as significant payments are made on current CIP projects, less cash will be available to invest. Hydroelectric Revenue The Water Authority owns and operates the 4.6 megawatt (MW) Rancho Peñasquitos Pressure Control and Hydroelectric Facility (Rancho Hydro). A second generation facility, the 40 MW Lake Hodges Pumped Storage Facility (Hodges Hydro), is anticipated to begin regular operation following successful completion of construction and commissioning. The Water Authority has long-term agreements to sell the power generating from both locations to San Diego Gas and Electric (SDG&E). 36

43 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds The anticipated revenue from power generation is budgeted at $1.8 million which is $0.8 million or 31% less than the previous two-year budget forecast. The drop in anticipated revenue is due to power production decreases at Rancho Hydro as a result of continuing low regional water demands as well as SDG&E penalties assessed from operational delays at Hodges Hydro. Other Income The Fiscal Years 12 and 13 budget is $43.6 million, an increase of $12.7 million. Other Income primarily represents the subsidy from the U.S. Treasury for the Build America Bonds, which is projected to be $22.6 million for the upcoming two-year budget. In addition, reimbursements for operating grants and a nominal amount for revenue received from annexations, easements, gains/losses on the sale of assets, delinquency fees, and plan-check reimbursements is included in this revenue category. Capital Contributions Capital Contributions are independent of water use and intended to fund costs associated with new system capacity/reliability or maintain existing system capacity/reliability. The use of Capital Contributions revenue is restricted to paying for CIP projects and is deposited in the PAYGO Fund. Capital Contributions are made up of Capacity Charges (System and Treatment), Water Standby Availability Charges, and Contributions in Aid of CIP (CIAC). Capacity Charges. Capacity Charges include System Capacity Charges and Treatment Capacity Charges. System Capacity Charges recover a proportionate share of the capital costs associated with providing services to new connections in the Water Authority s service area and is applied to all new or larger retail water meters installed, if certain criteria are met. Treatment Capacity Charges recover a portion of the capital costs from future users of the Water Authority s regional water treatment facility. Because meter size dictates the maximum water demand of a new customer, the Capacity Charges are based upon meter size. In Fiscal Years 12 and 13, the System Capacity Charges revenues budget is $21.4 million, which reflects a significant increase over the previous two-year budget. The budget for Fiscal Years 10 and 11 was reduced significantly from the previous two-year budget due to the economic downturn; however, receipts are projected to be approximately $6 million higher. The Water Authority is forecasting an increase in development activity resulting in a adopted budget that is $3.1 million or 17% higher than estimated receipts. Water Standby Availability Charges. This charge is limited by statute and funds some of the capital costs associated with maintaining the system and is $10 per acre per year, or $10 for a parcel less than one acre per year. The Water Standby Availability Charges revenue budget for Fiscal Years 12 and 13 is $22.2 million. This revenue source remains steady due to the nature of the charge. Contributions in Aid of CIP (CIAC). This revenue source consists of grants or contributions from member agencies for capital projects. In some instances, a member agency may reimburse the Water Authority for improvements to their system as part of a Water Authority project. Typically these revenues are restricted to specific projects/uses and because they are tied to capital projects, will fluctuate each year. In Fiscal Years 12 and 13, the CIAC revenues budget is $8.2 million reflecting planned reimbursements for the Lake Hodges Pump Station, Twin Oaks Regulatory Storage, Carlsbad Desalination Aqueduct Improvements, and other miscellaneous projects. 37

44 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds 38 Net Fund Withdraws Net Fund Withdraws provides another source of funds for the Water Authority. The primary source of fund withdraws is bond proceeds, and other capital-restricted monies from the PAYGO Fund, to provide funding for CIP projects. For Fiscal Years 12 and 13, fund withdraws are projected to be $285.3 million, a reduction of 48% primarily due to the significant decrease in CIP expenditures. There are no anticipated withdraws from the Rate Stabilization Fund during this two-year period. Water Authority Uses of Funds The Water Authority s primary uses of funds include Water Purchases and Treatment, the Operating Departments Budget, CIP, and Debt Service. The Water Authority s historical and budgeted uses of funds are shown below. Purpose: Table 3 compares the uses of funds in this adopted budget with the previous two-year budget. The most significant expense or use of funds category is Water Purchases and Treatment. The following pages describe these categories and their significant changes. Table 3: Uses of Funds Fiscal Years ($ Thousands) Note: * QSA Mitigation includes QSA JPA Contributions, environmental mitigation, and payments for Socioeconomic Mitigation Settlement. Totals may not foot due to rounding. Water Purchases and Treatment FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Variance Budget Actual Budget Estimated Adopted to Budget Expenditures Water Purchases & Treatment $532,769 $736,432 $552,186 $666,868 $(69,564) -9% Stored Water Purchases - 10,650-21,145 10,495 99% CIP Expenditures 556, , , ,129 (234,571) -42% Debt Service 197, , , ,394 40,386 17% QSA Mitigation* 24,336 22,792 22,792 12,461 (10,331) -45% Operating Departments 79,602 94,451 82,995 87,715 (6,735) -7% Hodges Pumped Storage ,052 6, % Equipment Replacement 3,282 3,805 3,105 1,2 (2,585) -68% Other Expenditures 12,0 30,646 9,859,449 (10,197) -33% TOTAL USES OF FUNDS $1,406,504 $1,694,484 $1,278,704 $1,417,434 $(277,050) -16% Water Purchases and Treatment include all expenditures made by the Water Authority for supply and treatment. The Water Authority purchases water from MWD, the Imperial Irrigation District (IID), and through the canal lining program. Other expenditures include MWD s wheeling charges for transporting the IID and canal lining water to the Water Authority s system, MWD s Readiness-to-Serve Charges, MWD s Capacity Charges, and the Water Authority s credit programs. MWD s Local Water Supply Development (LWSD), Local Resources Program (LRP), and Groundwater Resources Program (GRP) credits are applied against the cost of water purchased. In addition, certain water treatment costs are also included in the cost of water purchased. Water Treatment costs are those associated with either MWD or water treatment contracts that the Water Authority has with other entities. The Water Purchases and Treatment Budget is $666.9 million. The decrease of $69.6 million or 9% primarily reflects the decrease in forecasted water sales and the increased cost to buy water primarily due to rate and charges increases imposed by MWD. No new funds are provided for local water supply development in the adopted budget.

45 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Stored Water Purchases The Water Authority budgets for the purchase of water for storage in inventory. In Fiscal Years 12 and 13, $21.1 million is budgeted to purchase 5,000 acre-feet annually for Lake Hodges and,000 acre-feet to begin the filling of San Vicente Dam upon completion of the Dam Raise project, currently anticipated to occur in Fiscal Year 13. The Water Authority has prudently provided for these planned purchases through regular deposits to the Stored Water Fund. Planned purchases in the prior period were budgeted to test operations at the Lake Hodges Hydroelectric Facility; however, due to water levels, the testing process was restructured and no water purchases were needed. Capital Improvement Program (CIP) The Water Authority initiated its CIP in 1989 as a long-range plan to ensure that the region s water supply would be reliable. In 04, after careful consideration of water rate impacts, the Board approved the Regional Water Facilities Master Plan to implement water supply, transportation, and storage projects over the 30-year forecast horizon to ensure the Water Authority meets the projected needs of the region. CIP projects are designed to enhance, expand, and repair the regional pipeline system, which typically supplies 90% of the region s water. The CIP is funded from short-term and long-term debt proceeds and cash. The total adopted CIP lifetime budget for active projects is $3.5 billion. The adopted budget for Fiscal Years 12 and 13 is $321.1 million, a reduction of 42% from the prior two-year budget period. The decrease in the adopted budget is due to the deferral of 14 major projects to future years. The CIP is presented in more detail in the Capital Improvement Program Section of this document. Debt Service The Water Authority uses debt to fund improvements to existing facilities and new CIP projects, or to refund previous debt (long-term debt only). The budget for debt service is $280.4 million, an increase of 17%. Figure 2: Debt Service Payment Schedule Fiscal Years in Millions ($) Future Debt. The Water Authority regularly reviews refunding opportunities that can reduce the cost of debt service. Figure 2 shows the projected debt service associated with all outstanding and projected future debt to be issued to fund the Water Authority s CIP in the next ten years. - FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY FY 21 FY 22 FY 23 FY 24 Existing Debt Service Series 17A Water Revenue Bonds Series 23A Water Revenue Bonds Series 14A Water Revenue Bonds Series A Water Revenue Bonds New CP Payments 39

46 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Outstanding Debt. As of June 30, 10, the Water Authority has $2.5 billion in outstanding debt. Current debt service expenditures include payments on six outstanding Certificates of Participation (COPs), one Build America Bond (BABs) issue and one non-amt Tax Exempt issue, and three outstanding commercial paper series. Table 4: Debt Service on Existing Long-Term Debt Fiscal Year Principal Interest Total FY 12 $ 26,585,000 $ 103,723,919 $ 130,308,919 FY 13 28,5, ,436, ,956,344 FY 14 32,550, ,133, ,683,594 FY 15 35,0, ,753, ,953,956 FY 16 39,2,000 99,133, ,353,426 FY 17 42,125,000 95,932, ,057,661 FY 18 45,190,000 93,855, ,045,654 FY 19 47,915,000 91,624, ,539,591 FY 50,600,000 89,434, ,034,654 FY 21 52,890,000 87,141, ,031,454 FY 22 55,550,000 84,480, ,030,141 FY 23 57,680,000 81,633, ,313,129 FY 24 60,600,000 78,714,4 139,314,4 FY 25 63,625,000 75,684,4 139,309,4 FY 26 66,785,000 72,483, ,268,210 FY 27 70,065,000 69,073, ,138,119 FY 28 82,500,000 65,521, ,021,184 FY 29 74,285,000 61,348, ,633,752 FY 30 77,930,000 57,554, ,484,842 FY 31 81,750,000 53,575, ,325,495 FY 32 94,600,000 49,401, ,001,849 FY 33 80,835,000 44,545, ,380,019 FY 34 95,515,000 40,371, ,886,318 FY 35 60,900,000 35,355,336 96,255,336 FY 36 63,725,000 32,060,488 95,785,488 FY 37 66,685,000 28,614,432 95,299,432 FY 38 69,770,000 25,009,964 94,779,964 FY 39 25,670,000 21,240,549 46,910,549 FY 40 26,695,000 19,664,924 46,359,924 FY 41 27,765,000 18,026,385 45,791,385 FY 42 28,870,000 16,322,170 45,192,170 FY 43 30,0,000 14,550,129 44,570,129 FY 44 31,2,000 12,707,501 43,927,501 FY 45 32,465,000 10,791,218 43,256,218 FY 46 33,760,000 8,798,516 42,558,516 FY 47 35,110,000 6,726,327 41,836,327 FY 48 36,510,000 4,571,276 41,081,276 FY 49 37,965,000 2,330,292 40,295,292 TOTAL $ 1,969,645,000 $ 2,056,326,224 $ 4,025,971,224 40

47 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Quantification Settlement Agreement (QSA) Mitigation This category reflects scheduled payments for environmental and socioeconomic impacts related to the Quantification Settlement and Related Agreements, including contributions to the QSA Joint Powers Agreement (JPA) for environmental mitigation pursuant to the QSA JPA Creation and Funding Agreement and payments to IID on behalf of the Imperial Valley Socioeconomic Improvement committee, Local Entity, to mitigate thirdparty socioeconomic impacts of the Conserved Water Transfer Agreement. The adopted budget for Fiscal Years 12 and 13 is $12.5 million, a decrease of 45% as scheduled. Operating Departments Budget The Operating Departments Budget funds the day to day operations of the Water Authority and makes up 6% of the Water Authority s total expenditures. The Fiscal Years 12 and 13 operating budget of $87.7 million reflects a decrease of $6.7 million or 7%. This decrease reflects significant reductions in programs and staffing as detailed in the Operating Departments Section of this document. Lake Hodges Pumped Storage The Lake Hodges Pumped Storage budget is intended to facilitate the operations and maintenance of the Lake Hodges Pumped Storage facility. It supports 24 hour operations of the hydroelectric facility to fulfill the requirements of the Water Authority s power purchase agreement with SDG&E for regional power production as well as ESP agreement obligations associated with Lake Hodges. This is a significant new expense for the Water Authority. Full operations of this facility are not expected to occur until Fiscal Year 13. Equipment Replacement On an annual basis, the Operating Fund makes a transfer to the Equipment Replacement Fund to provide for the replacement of capital assets. The amount of the transfer is based upon the depreciation schedule of the assets to be replaced. The adopted budget of $1.2 million is a 68% reduction reflecting the deferral of equipment replacement and the extension of our computer replacement schedule. In addition, the Water Authority has reduced its overall fleet from 111 vehicles in Fiscal Year 05 to 89 in Fiscal Year 12. Other Expenditures Other Expenditures include expenditures associated with grants and plan-check reviews. These expenditures are fully reimbursable. Grants may not occur at the same level routinely. The previous two-year budget included significant expenses associated with a grant for the Integrated Regional Water Management Program (IRWMP). The adopted budget for Other Expenditures is $.4 million. 41

48 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Historical and Projected Operating Results Purpose: Table 5 presents revenues and expenditures pursuant to the Water Authority s Board Resolution The table calculates the Water Authority s debt service coverage ratios according to the resolution. Table 5: Historical and Projected Operating Results Fiscal Years ($ Thousands) FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Operating Revenue Gross Water Sales $343,456 $359,952 $387,871 $366,677 $434,684 $509,118 Capital Contributions Water Standby Availability Charges 11,256 11,311 11,240 11,170 11,105 11,128 System Capacity Charges 22,977 12,805 9,909 10,100 10,300 10,500 Treatment Capacity Charges Infrastructure Access Charges 17,458 19,390 21,241 24,508 27,700 29,278 Subtotal Operating Revenue $396,054 $403,918 $430,650 $412,718 $484,065 $560,313 Less Deposits to/plus Withdraws from the Rate Stabilization Fund 3, , Non-Operating Revenue Investment Income * 12,137 6,532 3,421 4,176 3,8 5,241 Property Taxes & In-Lieu Charges 10,303 10,467 9,972 10,423 10,374 10,582 Hydroelectric Revenue 996 1,012 1,8 1, BABs Interest Rate Subsidy - - 4,615 11,303 11,303 11,303 Other Income (257) Subtotal Non-Operating Revenue $ 24,387 $ 18,735 $ 18,959 $ 27,167 $ 26,670 $ 28,307 TOTAL REVENUE $424,307 $422,653 $449,609 $445,235 $510,735 $588,6 Operating Expenses Cost of Water Purchased 262, , , , , ,631 Operating Expenses 37,196 48,446 39,742 43,574 46,277 47,491 Capital Equipment Purchases (277) (431) (347) (357) (368) (379) Member Agency Refund TOTAL OPERATING EXPENSE $299,457 $313,296 $330,780 $304,428 $354,146 $405,743 Net Water Revenue Available for Debt Service 124, , , , , ,877 Long-Term Debt Service Total Interest on Long-Term Debt (a) $ 48,360 $ 53,243 $ 73,068 $80,073 $ 82,719 $102,219 Total Principal on Long-Term Debt (b) $ 34,685 $ 19,8 $ 6,365 $24,1 $ 26,585 $ 28,5 Total Long-Term Debt Service $ 83,045 $ 73,063 $ 79,433 $104,193 $109,304 $130,739 Short-Term Debt Service Interest on Short-Term Debt Commercial Paper, All Series 12,633 6,298 1,696 3,680 4,600 7,475 Capitalized Interest Commercial Paper, Series 2 & 3 (9,784) Total Net Interest on Short-Term Debt $ 2,849 $ 6,298 $ 1,696 $ 3,680 $ 4,600 $ 7,475 Principal on Short-Term Debt Commercial Paper, All Series Total Principal on Short-Term Debt $ - $ - $ - $ - $ - $ - Total Short-Term Debt Service $ 2,849 $ 6,298 $ 1,696 $ 3,680 $ 4,600 $ 7,475 Fees on Debt Long-Term Debt Commercial Paper Management Fees ,501 4,682 3,725 3,725 Total Fees $ 716 $ 796 $ 1,519 $ 4,700 $ 3,743 $ 3,743 TOTAL DEBT SERVICE $ 86,610 $ 80,157 $ 82,648 $112,573 $117,647 $141,957 Senior Lien Debt Service Coverage Ratio 1.50x 1.50x 1.50x 1.35x 1.43x 1.40x Overall Debt Service Coverage Ratio 1.45x 1.38x 1.46x 1.31x 1.37x 1.32x 42

49 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Notes: * Investment Income earned on short-term and long-term debt proceeds is excluded. (a) Note a is the breakdown of Interest; (b) Note b is the breakdown of Principal. Note a: FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Interest on Long-Term Debt 1991B COPs A COPs 1, A COPs 5,064 1,358 1,358 1, A COPs 2,930 2,732 1, A COPs 12,461 12,223 11,977 11,721 11,454 11,175 04A COPs,929,929,929,929,929,929 05A COPs 5,581 5,581 5,581 5,580 5,483 4,887 08A COPs - 9,767 26,291 26,291 27,778 27,656 10A&B Revenue Bonds - - 5,585 13,807 16,227 37,017 Additional Parity Obligations N/A TOTAL INTEREST ON LONG-TERM DEBT $48,360 $53,243 $73,068 $80,073 $82,719 $102,219 Note b: Principal on Long-Term Debt 1991B COPs A COPs 13,000 13, A COPs 15, ,500 6, A COPs A COPs 5,885 6,1 6,365 6,6 6,885 7,160 04A COPs A COPs ,725 12,240 08A COPs ,865 9,1 10A&B Revenue Bonds Additional Parity Obligations N/A TOTAL PRINCIPAL ON LONG-TERM DEBT $34,685 $19,8 $6,365 $24,1 $26,585 $28,5 43

50 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Purpose: Tables 6a and 6b show by each adopted fiscal year the Water Authority s sources and uses by fund, the net fund withdraws, net inter-fund transfers, proceeds from debt issues, and projected year-end fund balances. Table 6a: Fiscal Year 12 Budgeted Sources and Uses by Fund Type ($ thousands) RESERVE FUNDS CAPITAL FUNDS ALL OPERATING Debt Equipment Rate Stored SPECIAL FUNDS FUND Service Replacement Stabilization Water Construction PAYGO USE FUNDS Beginning Cash Balance (estimated) $708,405 $ 89,401 $ 69,196 $ 8,980 $ 38,141 $ 49,247 $ 378,917 $ 74,523 $ - Net Water Sales Revenue Water Sales $434,684 $ 434,684 $ - $ - $ - $ - $ - $ - $ - Water Purchases & Treatment 308, , TOTAL NET WATER SALES REVENUE $ 126,447 $ 126,447 $ - $ - $ - $ - $ - $ - $ - Revenues & Other Income Infrastructure Access Charges $ 27,700 $ 27,700 $ - $ - $ - $ - $ - $ - $ - Property Taxes & In-Lieu Charges 10,195 10, Investment Income 6, , , Hydroelectric Revenue Other Income 24,971 11, ,395 Capital Contributions: Capacity Charges 10, ,576 - Water Standby Availability Charges 11, ,105 - Contributions in Aid of CIP 6, ,360 1,400 - TOTAL REVENUES & OTHER INCOME $ 98,437 $ 50,885 $ 2,626 $ 43 $ 191 $ 255 $ 7,577 $ 23,465 $ 13,395 Expenditures Stored Water Purchases $3,190 $ - $ - $ - $ - $ 3,190 $ - $- $ - Debt Service 138,437 99, ,790 17,891 - QSA Mitigation* 6,025 2, ,085 - Operating Departments 43,490 43, Hodges Pumped Storage 2,787 2, Equipment Replacement Other Expenditures 13,395 13,395 TOTAL EXPENDITURES $ 8,0 $ 148,973 $ - $ 696 $ - $3,190 $,790 $,976 $ 13,395 Net Revenues before Capital Improvement Program (CIP) $ 16,864 $ 28,359 $ 2,626 $ (653) $ 191 $ (2,935) $ (13,213) $ 2,489 $ - CIP Expenditures $ (211,475) $ - $ - $ - $ - $ - $ (189,550) $ (21,925) $ - Net Fund (Withdraws)/Deposits $ (194,611) $ 28,359 $ 2,626 $ (653) $ 191 $ (2,935) $ (2,763) $ (19,436) $ - Net Interfund Transfers - (15,002) (2,626) ,000-2,628 - Projected Year-End Balances $ 513,794 $ 102,758 $ 69,196 $ 8,327 $ 38,332 $ 61,312 $ 176,154 $ 57,715 $ - Note: * QSA Mitigation includes QSA JPA Contributions, environmental mitigation, and payments for Socioeconomic Mitigation Settlement. Totals may not foot due to rounding. 44

51 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds The management of the Water Authority s funds is an important component of the overall health of the Water Authority s finances. Each of the funds within the Water Authority is designed to serve a specific purpose/function as described in the upcoming pages. Table 6b: Fiscal Year 13 Budgeted Sources and Uses by Fund Type ($ thousands) RESERVE FUNDS CAPITAL FUNDS ALL OPERATING Debt Equipment Rate Stored SPECIAL FUNDS FUND Service Replacement Stabilization Water Construction PAYGO USE FUNDS Beginning Cash Balance (estimated) $ 513,794 $ 102,758 $ 69,196 $ 8,327 $ 38,332 $ 61,312 $ 176,154 $ 57,715 $ - Net Water Sales Revenue Water Sales $ 509,118 $ 509,118 $ - $ - $ - $ - $ - $ - $ - Water Purchases & Treatment 358, , TOTAL NET WATER SALES REVENUE $ 150,487 $ 150,487 $ - $ - $ - $ - $ - $ - $ - Revenues & Other Income Infrastructure Access Charges $ 29,278 $ 29,278 $ - $ - $ - $ - $ - $ - $ - Property Taxes & In-Lieu Charges 10,883 10, Investment Income 6,772 1,140 2, , Hydroelectric Revenue Other Income 18,638 11, ,054 Capital Contributions: Capacity Charges 10, ,789 - Water Standby Availability Charges 11, ,128 - Contributions in Aid of CIP 1, , TOTAL REVENUES & OTHER INCOME $ 89,848 $ 53,785 $ 2,626 $ 81 $ 385 $ 565 $ 2,602 $ 22,750 $ 7,054 Expenditures Stored Water Purchases $17,955 $ - $ - $ - $ - $ 17,955 $ - $ - $ - Debt Service 141, , ,357 - QSA Mitigation* 6,436 2, ,496 - Operating Departments 44,226 44, Hodges Pumped Storage 3,265 3, Equipment Replacement Other Expenditures 7, ,054 TOTAL EXPENDITURES $ 221,417 $ 181,031 $ - $ 524 $ - $ 17,955 $ - $ 14,853 $ 7,054 Net Revenues before Capital Improvement Program (CIP) $ 18,918 $ 23,241 $ 2,626 $ (443) $ 385 $ (17,390) $ 2,602 $ 7,897 $ - CIP Expenditures $ (109,654) $ - $ - $ - $ - $ - $ (100,034) $ (9,6) $ - Net Fund (Withdraws)/Deposits $ (90,736) $ 23,241 $ 2,626 $ (443) $ 385 $ (17,390) $ (97,432) $ (1,723) $ - Net Interfund Transfers - (15,002) (2,626) ,000-2,628 - Projected Year-End Balances $ 423,058 $ 110,997 $ 69,196 $ 7,884 $ 38,717 $ 58,922 $ 78,722 $ 58,6 $ - Note: *QSA Mitigation includes QSA JPA Contributions, environmental mitigation, and payments for Socioeconomic Mitigation Settlement. Totals may not foot due to rounding. 45

52 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Purpose: Figure 3 depicts the historical and budgeted cash and cash equivalents held at fiscal year end for each fund. The Water Authority averages a minimum cash balance of $250 million for non-bond funds only, a key performance metric for rating agencies. Figure 3: Budgeted Cash Balances by Fund in Millions ($) $350 $300 $250 $0 $150 $100 $50 $ Fiscal Year Ending Fund Balance Operating Fund RSF Stored Water Fund PAYGO Fund Equipment Replacement Fund Note: Amounts are cash balances decreased for liabilities, increased for receivables and adjusted for interfund transfers pending on June 30th of each fiscal year. Operating Fund The Operating Fund contains the Water Authority s working capital and emergency operating reserve. Given the short-term nature of this fund, liquidity of investments is critical and is ensured by investing the Operating Fund on a monthly basis to cover water purchases and ongoing cash disbursements. The Operating Fund, together with Water Sales Revenue and Other Revenue Sources, provide ample liquidity for working capital. The Operating Fund s policy requires a maximum of 45 days of average annual operating expenditure be kept in reserves. In addition, $5 million of this amount is designated and held available for emergency repairs to the Water Authority s system due to unforeseen events. The Operating Fund is projected to meet its 45-day reserve goals. Reserve Funds The Water Authority has four reserve funds, including Debt Service, Equipment Replacement, Rate Stabilization, and Stored Water. Debt Service Reserve Fund. The Debt Service Reserve Fund contains the required legal reserve for Water Authority debt issues. Such reserves are held for the purpose of making an issue s annual debt service payments in the event that the Water Authority should be unable to make such payments. The reserve requirement is held in this fund until it is expended, generally to fund the last payment of the issue. Interest earned on the Debt Service Reserve Fund is transferred into the Operating Fund and is not restricted. 46

53 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Equipment Replacement Fund. The Equipment Replacement Fund is funded by an annual transfer from the Operating Fund, per depreciation schedules, for capital equipment purchase such as computers, vehicles, and the Supervisory Control and Data Acquisition (SCADA) system, etc., and is used to replace equipment that has reached the end of its effective useful life. The Equipment Replacement Fund balance will decrease by $1.1 million. This is a planned utilization of fund balance. Rate Stabilization Fund. The Rate Stabilization Fund (RSF) holds the water revenues greater than expenditures in years of strong water sales. Funds can then be used to mitigate rate shock in years of weak water sales and/ or to manage debt service coverage. The RSF target balance is equal to the financial impact of 2.5 years of wet weather and the maximum fund balance is equal to the financial impact of 3.5 years of wet weather. As a general rule, the Water Authority will transfer portions of its net water revenues exceeding the Board s 1.50x debt service coverage policy into the RSF. From time to time, as needed, the Water Authority will transfer amounts from its RSF into water revenues to meet its debt service ratio requirements, or to help provide adequate working capital to the Operating Fund. The RSF is projected to be 70% and 58% of the target for Fiscal Years 12 and 13, respectively. The Water Authority expects to add money to the RSF when water sales exceeds budgeted levels. Stored Water Fund. The Stored Water Fund, previously the Dam-Fill Fund, supports the purchase of water to fill the various Water Authority reservoirs and fund the IID water prepayment. Planning for these purchases requires a significant accumulation of funds, which if included in the RSF or Operating Fund would violate fund balance goals and objectives. The Stored Water Fund is structured as a sinking fund with the sole purpose of providing funds for inventory purchases. Capital Funds The Water Authority has two types of Capital Funds, including the Construction and PAYGO Funds. Construction Fund. The Construction Fund contains the proceeds from short-term and long-term debt. The fund also holds the CIAC from the Water Authority s member agencies in cases where the Water Authority constructs a project on the behalf of the member agency. Investment earnings from the fund remain in the fund and may only be used for construction expenditures. The Construction Fund balance fluctuates with CIP spending and debt issuances. The year-end Construction Fund balance is expected to be $176.2 million in Fiscal Year 12 and $78.7 million in Fiscal Year 13. The decrease is due to utilization of these proceeds for significant upcoming CIP payments. Pay-As-You-Go-Fund. The PAYGO Fund collects Capacity Charges and Water Standby Availability Charges to be used to pay for the cash portion of the CIP. The funds are dedicated for construction outlays, as well as debt service. The PAYGO Fund s average maturity is correlated to the CIP cash requirements that are not funded through other sources. The funds are generally invested for a longer term than the operating fund. 47

54 Adopted Budget for Fiscal Years 12 & 13 Sources and Uses of Funds Five-Year Financial Forecast The five-year financial forecast provides the projected sources and uses for Fiscal Year 14 through Fiscal Year 18. These projections reflect the expected trends while incorporating the current policies, goals and objectives of the Water Authority. The forecast presented contains the most recent financial rate modeling data on rates, revenue sources, future capital improvement projects, and debt management. Table 7: Five-Year Forecast Fiscal Years ($ Thousands) Note: *QSA Mitigation includes QSA JPA Contributions, environmental mitigation, and payments for Socioeconomic Mitigation Settlement. Totals may not foot due to rounding. FY 14 FY 15 FY 16 FY 17 FY 18 Net Water Sales Revenue Water Sales $ 607,676 $ 663,807 $ 690,886 $ 718,603 $ 784,817 Water Purchases & Treatment 436, ,5 506, , ,2 TOTAL NET WATER SALES REVENUE $ 171,596 $ 183,287 $ 184,626 $ 185,753 $ 197,597 Revenues & Other Income Infrastructure Access Charges $ 31,526 $ 34,017 $ 36,357 $ 39,033 $ 42,024 Property Taxes & In-Lieu Charges 10,794 11,009 11,230 11,454 11,683 Investment Income 11,768 15,660 16,797 17,771 19,089 Hydroelectric Revenue 1,660 3,719 3,719 3,719 3,719 Other Income 13,574 13,601 13,610 13,6 13,629 Capital Contributions: Capacity Charges 11,005 11,225 11,450 12,053 12,300 Water Standby Availability Charges 11,162 11,196 11,230 11,263 11,297 Contributions in Aid of CIP TOTAL REVENUES & OTHER INCOME $ 91,489 $ 100,427 $ 104,393 $ 108,913 $ 113,741 Expenditures Stored Water Purchases $ 15,400 $ 16,380 $ 35,470 $ 37,830 $ 16,8 Debt Service 147,5 152, , , ,210 QSA Mitigation* 5,250 5,290 6,080 8,250 8,310 Operating Departments 45,312 47,035 48,446 49,893 51,396 Hodges Pumped Storage 3,548 3,655 3,764 3,877 3,994 Equipment Replacement 1,400 1,400 1,400 1,400 1,400 Other Expenditures 2,000 2,000 2,000 2,000 2,000 TOTAL EXPENDITURES $ 2,430 $ 228,370 $ 256,100 $ 273,210 $ 256,130 Net Revenues before $ 42,655 $ 55,344 $ 32,919 $ 21,456 $ 55,8 Capital Improvement Program (CIP) CIP Expenditures $ (96,860) $ (144,550) $ (107,870) $ (166,800) $ (105,080) Net Fund Withdraws $ (54,5) $ (89,6) $ (74,951) $ (145,344) $ (49,872) 48

55 Adopted Budget for Fiscal Years 12 & 13 Operating Overview Introduction The Water Authority s Business Plan (Plan) was originally developed in 05 to manage priorities, implement Board policies, and fulfill the organization s mission. The Plan is organized into three focus areas: Water Supply Portfolio Water Facilities Core Business Similarly, the Operating Departments Section of this budget document is organized, alphabetically, under each focus area The primary goal of the Water Supply Portfolio Focus Area is to successfully diversify the Water Authority s water supplies. Programs and departments that support this focus area: Colorado River Program MWD Program Water Resources Department The primary goal of the Water Facilities Focus Area is to build, operate, and maintain the Water Authority s capital facilities in a cost-effective manner to meet water demand in the San Diego county region. Departments that support this focus area: Engineering Operations and Maintenance The primary purpose of the Core Business Focus Area is to provide effective operational support to the other focus areas in order to accomplish their principal strategic goals. Departments that support this focus area: Administrative Services Finance General Counsel General Manager and Board of Directors Human Resources Public Outreach and Conservation 49

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57 Water Supplies Portfolio

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59 Adopted Budget for Fiscal Years 12 & 13 Colorado River Program Overview. The Colorado River Program is responsible for the oversight of the water transfer with the Imperial Irrigation District (IID); construction of the All-American and Coachella Canal lining projects; and cooperative projects with the Colorado River Basin States and Mexico. Additionally, the program seeks to build community and regional support in the Imperial Valley for the Water Authority; particularly as it relates to the Quantification Settlement Agreement (QSA) and other water transfers. Strategic/Business Plans. The Colorado River Program is part of the Water Supplies Portfolio focus area of the Business Plan. The program s focus this multi-year budget will be on providing support for QSA Litigation defense and post-construction issues related to the Coachella and All-American Canal Lining projects, including environmental mitigation and operations and maintenance costs. Additionally, the program will support Colorado River water supply augmentation, participate in binational water supply and management efforts, and continue administration of the IID water transfer. Colorado River Program Director Administrative Assistant Sr. Civil Engineer Principal Water Resource Specialist Engineer P.E. (LDE) Sr. Public Affairs Representative 53

60 Adopted Budget for Fiscal Years 12 & 13 Colorado River Program Colorado River Program by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $ 2,752,150 $ 2,566,096 $ 2,366,125 $ 1,917,282 $(648,815) -25% Direct Charges to CIP/Grants (894,865) (796,940) (746,667) (548,610) 248,330-31% Operating Labor & Benefits $ 1,857,285 $ 1,769,156 $ 1,619,458 $ 1,368,672 $(400,485) -23% Services 182, , , ,0 171,100 32% Supplies 12,664 21,518 14,692 12,500 (9,018) -42% Utilities 2,540 3,000 2,500 2,000 (1,000) -33% Insurance % Leases & Rent 41,598 51,000 51,000 36,000 (15,000) -29% Other 433, , , ,719 (21,270) -4% Fixed Assets 15, % Subtotal $ 2,545,836 $ 2,880,763 $ 2,325,885 $ 2,605,091 $(275,673) -10% Capitalized Overhead Allocation % TOTAL OPERATING $ 2,545,836 $ 2,880,763 $ 2,325,885 $ 2,605,091 $(275,673) -10% by Category by Division Imperial Valley Outreach Program 15% Other 18% Operating Labor & Benefits 53% Leases & Rent 1% Utilities <1% Supplies 1% Colorado River Program 85% Services 27% Colorado River Program by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Colorado River Program $ 2,199,085 $ 2,466,492 $ 1,962,919 $ 2,226,186 $(240,307) -10% Imperial Valley Outreach Program 346, , , ,905 (35,366) -9% TOTAL $ 2,545,836 $ 2,880,763 $ 2,325,885 $ 2,605,091 $(275,673) -10% 54

61 Adopted Budget for Fiscal Years 12 & 13 Colorado River Program Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Colorado River Program Director Principal Water Resources Specialist Senior Engineer Senior Water Resources Specialist Senior Public Affairs Representative TOTAL Limited Duration Employees Engineer (P.E.) * Management Analyst Senior Program Advisor/Agency Representative TOTAL Note: *One Engineer (P.E.) was transferred from Engineering to Colorado River Program. Fiscal Years 12 and 13 Position Reductions Engineer (P.E.) Senior Engineer Senior Water Resources Specialist Significant Budget Changes The Colorado River Program s Operating Budget for Fiscal Years 12 and 13 is $2.6 million; a $276,000 or 10% reduction from the prior two-year budget period. Significant budget changes are outlined below: Increases Services increased by $171,000 or 32%. While several projects were eliminated, future projections require funding for QSA environmental and Salton Sea analysis, in addition to continued funding of Colorado River augmentation projects. 55

62 Adopted Budget for Fiscal Years 12 & 13 Colorado River Program Significant Budget Changes, Continued Reductions Operating Labor and Benefits decreased by $400,000 or 23% due to the elimination of a Senior Water Resources Specialist position, Senior Engineer position, and planned elimination of an Engineer (P.E.) position. In addition, 25% of the Administrative Assistant position has been transferred to the MWD Program to provide additional support. Significant reduction to the Imperial Valley Outreach Program Services budget with allocations for advertising and promotional materials budgeted at minimum levels. The remaining expenditure categories have been reduced by $46,300 or 8% as a result of the department s cost containment efforts. This has resulted in reductions to the supply, travel, training, and leases and rent categories. 56

63 Adopted Budget for Fiscal Years 12 & 13 MWD Program Overview. The Metropolitan Water District (MWD) Water Supplies program is responsible for monitoring, evaluating, and managing the Water Authority s relationship with MWD, consistent with the Board of Directors strategic objectives. The program serves as a liaison with water agencies throughout the MWD service area, and state and federal officials to promote and explain the Water Authority s positions on issues affecting MWD supply reliability, quality, and cost. It also supports the Water Authority s delegates to MWD and coordinates the efforts of the delegates, management, and the MWD staff. Strategic/Business Plans. The Metropolitan Water District Water Supplies program is part of the Water Supplies Portfolio focus area of the Business Plan. MWD Program Administrative Assistant Assistant Water Resources Specialist Sr. Water Resources Specialist Principal Water Resources Specialist Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Assistant General Manager MWD Program Chief Principal Water Resources Specialist Assistant Water Resources Specialist Senior Office Assistant Senior Water Resources Specialist TOTAL Fiscal Years 12 and 13 Position Reductions Senior Office Assistant 57

64 Adopted Budget for Fiscal Years 12 & 13 MWD Program MWD Program by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $1,513,0 $1,629,409 $1,654,184 $1,740,602 $111,193 7% Direct Charges to CIP/Grants (63,231) % Operating Labor & Benefits $1,449,789 $1,629,409 $1,654,184 $1,740,602 $111,193 7% Services 546, , ,000 1,380, ,554 52% Supplies 6,634 5,800 3,156 6,900 1,100 19% Utilities 3,101 3,000 2,034 2,500 (500) -17% Insurance % Leases & Rent 39,900 49,0 46,000 55,247 6,047 12% Other 254, , , ,860 (22,590) -9% Fixed Assets 11, % Subtotal $2,311,617 $2,859,859 $2,837,7 $3,424,663 $564,804 % Capitalized Overhead Allocation % TOTAL OPERATING $2,311,617 $2,859,859 $2,837,7 $3,424,663 $564,804 % by Category Leases & Rent 2% Utilities <1% Supplies <1% Other 7% Operating Labor & Benefits 51% Services 40% 58

65 Adopted Budget for Fiscal Years 12 & 13 MWD Program Significant Budget Changes The MWD Program s operating budget for Fiscal Years 12 and 13 is $3.4 million, a $565,000 or % increase from the prior two-year budget period. Significant budget changes are outlined below: Increases Operating Labor and Benefits increased by $111,000, including the transfer of 0.25 of an Administrative Assistant position from the Colorado River Program. Services increased by $470,000 largely due to implementation of a comprehensive outreach program associated with the MWD rate structure lawsuit. In addition, the Services budget in the MWD Program was modified to provide additional funding to support MWD team and board priorities. Reductions Elimination of a 0.5 Senior Office Assistant position. 59

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67 Adopted Budget for Fiscal Years 12 & 13 Water Resources Overview. The Water Resources Department is responsible for water supply planning and long-term facilities planning. The department also administers the Water Shortage and Drought Response Program; provides member agency assistance in local supply development; manages Water Authority involvement in Integrated Regional Water Management Plan and grants administration and ensures environmental regulatory compliance of Water Authority programs and projects. As part of the Water Authority s restructuring, all phases of facilities planning has been consolidated into the Water Resources Department. Strategic/Business Plans. The Water Resources Department supports the Water Supplies Portfolio and the Core Business focus areas of the Business Plan. Specific Business Plan programs include Brackish and Seawater Desalination, Drought Management, Environmental Management, Infrastructure Planning, Recycled Water, and Water Resources Planning. The primary focus of the Water Resources Department during the upcoming multi-year budget will be to update the Water Facilities Master Plan; work with member agencies on local supply implementation including recycled water market expansion and regulatory relief; consideration of water purchase agreements to purchase water from the Carlsbad Desalination Project; further planning and technical study related to the Camp Pendleton Desalination Project; implement the Natural Communities Conservation Plan/Habitat Conservation Plan (NCCP/HCP); and development of an update of the San Diego Integrated Regional Water Management Plan. Director of Water Resources Management Analyst Administrative Assistant Sr. Office Assistant Water Resources Planning Manager Environmental Planning Manager Manager of Grants Administration & Local Supply Assistance Principal Water Resources Specialist Principal Water Resources Specialist Principal Engineer Principal Water Resources Specialist Sr. Water Resources Specialist (3) Sr. Water Resources Specialist Grants Administrator Sr. Water Resources Specialist (3) Sr. Water Resources Specialist Engineer (P.E.) Water Resources Specialist (2) 61

68 Adopted Budget for Fiscal Years 12 & 13 Water Resources Water Resources by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $6,923,769 $7,854,187 $7,739,523 $7,880,985 $26,798 0% Direct Charges to CIP/Grants (1,648,898) (2,491,817) (2,384,2) (2,501,690) (9,873) 0% Operating Labor & Benefits $5,274,871 $5,362,370 $5,355,303 $5,379,295 $16,925 0% Services 1,830,760 3,803,388 3,651,282 1,807,0 (1,996,188) -52% Supplies 30,612 10,250 10,398 9,400 (850) -8% Utilities 2,500 2,536 2,380 2,0 (336) -13% Insurance % Leases & Rent % Other 97, , , ,652 (19,902) -12% Fixed Assets 18, % Subtotal $7,254,754 $9,344,098 $9,171,847 $7,343,747 $(2,000,351) -21% Capitalized Overhead Allocation % TOTAL OPERATING $7,254,754 $9,344,098 $9,171,847 $7,343,747 $(2,000,351) -21% by Category Utilities <1% Supplies <1% Other 2% by Division Environmental Planning 12% Services 25% Operating Labor & Benefits 73% Grant Adm & Local Supply Assistance 33% Water Supply & Fac Planning 55% Water Resources by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Grant Administration & Local Supply Assistance $1,213,145 $1,778,428 $1,737,969 $2,430,350 $651,817 37% Environmental Planning 1,012, , , , ,446 42% Water Supply & Facility Planning 5,029,167 6,943,782 6,747,153 4,028,064 (2,915,718) -42% TOTAL $7,254,754 $9,344,098 $9,171,847 $7,343,747 $(2,000,351) -21% 62

69 Adopted Budget for Fiscal Years 12 & 13 Water Resources Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Director of Water Resources Engineer (P.E.) Engineer II Management Analyst Office Assistant I Principal Engineer Principal Water Resources Specialist Senior Office Assistant Senior Water Resources Specialist Water Resources Manager Water Resources Specialist TOTAL Limited Duration Employees Grant Administrator * TOTAL Note: *Reflects prior year s budget information; position added during Fiscal Year 11. Fiscal Years 12 and 13 Position Reductions Principal Water Resources Specialist Grant Administrator Significant Budget Changes The Water Resources Department s Operating Budget for Fiscal Years 12 and 13 is $7.3 million, a $2.0 million or 21% reduction from the prior two-year budget. Significant budget changes are outlined below: Increases To support the Water Authority s efforts to ensure the effective management of external grants, one limitedduration position was added to the Grant Administration and Local Supply Assistance Division in Fiscal Year 11. This position is supported by grant funding and is scheduled to end in February 13. An increase of $40,000 to the Environmental Planning Division Services budget to fund specialized technical expertise to support implementation of the Board approved Natural Community Conservation Plan\Habitat Conservation Plan (NCCP\HCP). 63

70 Adopted Budget for Fiscal Years 12 & 13 Water Resources Significant Budget Changes, Continued Reductions ӹ ӹ As a result of reductions in significant CIP projects, one Principal Water Resources Specialist in the Environmental Planning Division was eliminated. ӹ ӹ In total, services decreased by $2.0 million or 52%. A significant portion of the Services decrease was the reduction of $1.3 million in funding for the Local Investigations and Study Assistance (LISA) program. The budget provides $0.6 million for existing commitments but does not provide any additional new funding. In addition, this expense has been transferred from the Water Supply and Facilities Planning Division to the Grant Administration and Local Supply Assistance Division. ӹ ӹ The Services budget for the Water Supply and Facilities Planning division was decreased due to the reduction in the consultant services for the Carlsbad Seawater Desalination Project which was added during the Fiscal Years 10 and 11 budget. ӹ ӹ The remaining expenditure categories have been reduced by $21,000 as a result of the department s cost containment efforts. This reduction is in supplies, travel, training, and memberships. 64

71 Water Facilities

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73 Adopted Budget for Fiscal Years 12 & 13 Engineering Overview. Starting with the Fiscal Years 12 and 13 budget cycle, the former Right of Way Department has been consolidated with the Engineering Department. The new department has a number of primary functions. It is responsible for the design and construction of new regional water facilities in the Capital Improvement Program (CIP); rehabilitates or replaces facilities identified as part of the Asset Management Program; identifies and employs value engineering of design concepts to optimize facility and aqueduct system performance; manages major emergency facility repairs; provides overall CIP programmatic monitoring and controls; manages the acquisition, disposal, and lease of real property; patrols and manages 168 miles of right of way; administers the deferral of standby water availability charges; provides survey services; and provides technical support to other agencies, departments and member agencies. Approximately two-thirds of the department s costs are funded by the CIP and one-third supports operating functions. Strategic/Business Plans. The Department supports the Water Facilities focus area of the Business Plan. Primary emphasis will be on the construction of the San Vicente Dam Raise and Carryover Storage and Relining and Pipe Replacement projects, as well as the resolution of right of way enforcement cases throughout each year. Director of Engineering Administrative & Records Group Supervisor Engineering Group 1 Engineering Manager Engineering Group 2 (San Vicente Dam) Engineering Manager Construction Group Engineering Manager Right of Way Management Manager Sr. ROW Agent (2) Principal Engineer Principal Engineer Principal Construction Manager Right of Way Services Supervisor Survey Supervising Land Surveyor Sr.Office Assistant (3) Sr. Engineer (2) Sr. Construction Manager Sr. Engineer ROW Tech III (4) Survey Tech Administrative Assistant (2) Engineer (2) Construction Manager Engineer (3) ROW Tech II Sr. Survey Tech Cost Estimator Sr. Engineer Project Scheduler ROW Tech I Project Scheduler Engineer (4) Engineering Tech Supervising Engineer Tech Sr. Engineering Tech (2) Engineering Tech Sr. Project Scheduler Sr. Engineering Tech Sr. Managment Analyst Management Analyst Supervising Management Analyst Management Analyst (2) 67

74 Adopted Budget for Fiscal Years 12 & 13 Engineering Engineering by Expense Category - Fiscal Years 12 and 13 Budget to Budget FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $ 21,752,352 $ 21,232,548 $,261,910 $ 17,325,592 $ (3,906,956) -18% Direct Charges to CIP/Grants (16,687,840) (16,026,702) (15,374,865) (12,3,883) 3,705,819-23% Operating Labor & Benefits $ 5,064,512 $ 5,5,846 $ 4,887,045 $ 5,004,709 $ (1,137) -4% Services 659,993 1,874,424 1,284,233 1,401,850 (472,574) -25% Supplies 76,810 55,150 36,962 41,700 (13,450) -24% Utilities 15,846 11,212 9,281 9,712 (1,500) -13% Insurance % Leases & Rent 28, , , ,0 (13,571) -9% Other 190, , , ,411 (37,879) -21% Fixed Assets 113,565 8,000 8,000 - (8,000) -100% Subtotal $ 6,149,129 $ 7,490,693 $ 6,462,306 $ 6,742,582 $ (748,111) -10% Capitalized Overhead Allocation % TOTAL OPERATING $ 6,149,129 $ 7,490,693 $ 6,462,306 $ 6,742,582 $ (748,111) -10% by Category Leases & Rent 2% Utilities <1% Supplies 1% Other 2% Engineering Group 2 (San Vicente Dam) 7% by Division Engineering Group 1 7% Construction Group 3% Right of Way Management 44% Services 21% Operating Labor & Benefits 74% Survey 11% Right of Way Services 13% Engineering by Division - Fiscal Years 12 and 13 Administrative & Records Group 15% FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Administrative Support Group $290,992 $ 5,134 $ 4,814 $ - $ (5,134) -100% CIP Administrative & Controls Group 726, , ,737 - (653,509) -100% Construction Administrative Group 138, ,759 92,356 - (347,759) -100% Design Group 324, , ,164 - (375,633) -100% Program Management Group 185,933 4, ,266 - (4,425) -100% Administrative & Records Group , ,747 0% Engineering Group , ,768 0% Engineering Group 2 (San Vicente Dam) , ,804 0% Construction Group , ,671 0% Right of Way Management 2,539,058 3,661,556 3,100,560 2,959,311 (702,245) -19% Right of Way Services 1,094,295 1,171,475 1,022, ,431 (290,044) -25% Survey 849, ,3 795, ,850 (106,353) -12% TOTAL $6,149,129 $ 7,490,693 $ 6,462,306 $ 6,742,582 $ (748,111) -10% 68

75 Adopted Budget for Fiscal Years 12 & 13 Engineering Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Assistant Director of Engineering Assistant Management Analyst Construction Manager Cost Estimator Director of Engineering Director of Right of Way Engineer II Engineering Manager Engineer (P.E.) Engineering Technician II Management Analyst Manager of Administration and Controls Office Assistant I Office Assistant II Principal Construction Manager Principal Engineer Program Control Manager Project Scheduler I Project Scheduler II Right of Way Agent Right of Way Inspector Right of Way Supervisor Right of Way Survey & Records Supervisor Right of Way Manager Right of Way Technician I, II, III Senior Construction Manager Senior Engineer Senior Engineering Technician Senior Management Analyst Senior Office Assistant Senior Project Scheduler Senior Right of Way Agent Senior Survey Technician Supervising Administrative Assistant Supervising Engineering Technician

76 Adopted Budget for Fiscal Years 12 & 13 Engineering Personnel Requirements, Continued Regular Status Employees, continued Supervising Land Surveyor Supervising Management Analyst Survey Technician TOTAL Limited Duration Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Assistant Cost Estimator Assistant Management Analyst Capital Projects Technician Construction Administrator Construction Manager Contract Technician Engineer (P.E.) * Engineer II Engineer Technician I Office Assistant II Project Scheduler I Senior Engineer Senior Information Systems Analyst Senior Office Assistant * TOTAL Note: * Two LDE positions were transferred in Fiscal Year 11; Engineer (P.E.) to Colorado River Program and a Senior Office Assistant to Finance. Fiscal Years 12 and 13 Position Reductions Assistant Cost Estimator Management Analyst Assistant Management Analyst (2) Office Assistant II Construction Administrator Program Control Manager Engineer II Project Schedule II Engineer P.E. (2) Right of Way Technician Engineering Manager Engineering Technician Senior Office Assistant (2) Supervising Management Analyst 70

77 Adopted Budget for Fiscal Years 12 & 13 Engineering Significant Budget Changes From the initial growth of staff to support a rapidly expanding capital improvement program in 04, a decision was made to use outside consultants and limited duration staff to build the nearly $4 billion CIP. This would allow the Water Authority to resize the staff as the CIP changed in size and scope. This change has occurred during the past four years and it is appropriate to continue to resize the organization to accomplish the new mission tasks. As a result, a number of significant changes have occurred to both the former Engineering and Right of Way departments that merged into one department in this budget cycle. The former Engineering and Right of Way departments were consolidated for a number of reasons: There are economies of scale resulting from the consolidation. The re-sizing of staff in the Engineering Department eliminates two of the three management analyst positions involved in budget development and administration as well as three administrative positions. The consolidation allows us to combine staffing that manages records for Right of Way needs with staff that provided document management control services for the CIP and operating functions of Engineering. The merger also allows us to consolidate management analyst budget administration duties for needed CIP and Operating functions utilizing positions in former Right of Way Department to serve the consolidated department. The elimination of some outside services expenditures by using consolidated staff to perform encroachment plan checks and provide inspection services. There will be greater integration of effort resulting from common planning and reporting relationships. It is anticipated that other opportunities for efficiencies will arise over time from the consolidation. The consolidated Engineering Department s operating budget, for Fiscal Years 12 and 13, is $6.7 million reflecting a decrease of $748,000 or 10% from the prior two-year budget period. Significant budget changes are outlined below: Increases Engineering divisions Services include $30,000 to potentially fund the use of speciality consultants to assist with solving warranty issues associated with several large, complicated projects (San Vicente Pumping Facilities and Pipeline) recently placed into service. Right of Way divisions Transfer of 0.5 Administrative Assistant from the Public Outreach and Conservation Department that was previously split with the former Water Conservation Program. 71

78 Adopted Budget for Fiscal Years 12 & 13 Engineering Significant Budget Changes, Continued Reductions Engineering divisions Labor and Benefits are projected to decrease by $3.3 million as the result of organizational structure changes associated with the transition from designing and building a large CIP to supporting asset management and system optimization on a smaller scale. Thirteen limited duration positions hired to support the expanding CIP in the time frame, along with five regular positions with responsibilities for engineering design and construction as well as programmatic functions of a large CIP have been reduced from the department. Most of the financial impact is on the CIP. Right of Way divisions Labor and Benefits were reduced by the elimination of a Right of Way technician position. Services are projected to decrease by approximately $500,000. These changes are associated with substantial reductions in use of outside services within the Right of Way Management and Services divisions. These changes reflect the reduction in the cost sharing associated with the Olivenhain-Elfin Forest Recreational Area budget and forecast savings on encroachment plan review and construction inspection services that will be performed by staff. Other expenses (training, travel, conferences etc.) have decreased by nearly $27,000. The majority of the decrease is in the Right of Way Management Division. This division sponsored a Board approved pilot program to broaden the range of skills of Right of Way technicians to be able to perform a wider range of responsibilities. Most of this training occurred during Fiscal Years 10 and

79 Adopted Budget for Fiscal Years 12 & 13 Operations and Maintenance Overview. The Operations and Maintenance (O&M) Department is responsible for the operation and maintenance of the Water Authority s aqueduct system; facilities security and emergency preparedness; fleet management and maintenance; and asset management. Specifically, the department controls water deliveries to meet member agency demands; manages dam and reservoir operations; performs preventative and corrective maintenance; ensures water quality; oversees water treatment plant and power generation operations; maintains all vehicles and heavy equipment; provides electro-mechanical support; implements the Aqueduct Protection Program (APP); complies with all applicable environmental regulations; and develops and manages computerized Supervisory Control and Data Acquisition (SCADA) and system maintenance programs. Strategic/Business Plans. The O&M Department supports the Water Facilities focus area of the Business Plan through the Asset Management, Facilities Security and Emergency Preparedness, and O&M programs. The focus of this department over the next two years will be on the integration of the Lake Hodges and San Vicente projects to our normal aqueduct operations, the cost effective management and replacement of Water Authority assets, and the continued implementation of the APP. Director of Operations and Maintenance System Operations O &M Manager Water Quality O&M Manager System Maintenance O&M Manager System Operations Supervisor Technical Services Supervisor Energy Water Resources Specialist Mechanical Maintenance Supervisor Facilities Maintenance Supervisor Fleet/Rotating Equipment Services Supervisor Sr. System Operator (8) Sr. E/E Technician (8) Sr. Maintenance Technician (6) Sr. Maintenance Technician (4) Sr. Maintenance Technician System Operator II (4) E/E Technician II (3) System Operator I E/E Technician I Maintenance Technician (4) Maintenance Worker II (4) Maintenance Technician (2) Maintenance Worker II (3) Maintenance Worker I Fleet Mechanic II (2) Maintenance Technician (2) Administration Supervising Management Analyst Asset Management O&M Manager Management Analyst Assistant Management Analyst Administrative Assistant Sr. Office Assistant (2) ESP/CIP Coordination & Operational Data Management Principal Water Resources Specialist Water Resources Specialist Sr. Water Resources Specialist Management Analyst Sr. Engineering Technician (2) Lake Hodges Contract Manager 73

80 Adopted Budget for Fiscal Years 12 & 13 Operations and Maintenance Operations and Maintenance by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $19,301,256 $21,123,708 $,100,056 $22,441,251 $1,317,543 6% Direct Charges to CIP/Grants (2,333,381) (987,795) (2,114,458) (1,758,044) 770,249 78% Operating Labor & Benefits $16,967,875 $,135,913 $17,985,598 $,683,7 $547,294 3% Services 4,457,022 4,258,894 3,603,682 5,492,733 1,233,839 29% Supplies 1,802,655 1,801,164 1,6,212 1,919,0 117,856 7% Utilities 855,277 1,777,552 1,193,009 1,454,708 (322,844) -18% Insurance % Leases & Rent 282, , , ,159 24,683 22% Other 1,090, , , ,291 10,728 3% Fixed Assets 424, , ,229 81,000 (137,500) -63% Subtotal $25,879,855 $28,654,062 $24,904,985 $30,128,118 $1,474,056 5% Capitalized Overhead Allocation % TOTAL OPERATING $25,879,855 $28,654,062 $24,904,985 $30,128,118 $1,474,056 5% by Category by Division Fixed Assets Other <1% 1% Leases & Rent <1% Utilities 5% Fleet Services 8% O&M Administration 8% Rotating Equipment Maintenance 2% Water Quality 1% System Operations 21% Supplies 6% Services 18% Operating Labor & Benefits 69% Facilities Maintenance 10% Asset Management 18% Mechanical Maintenance 15% Technical Services 17% Operations and Maintenance by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % O&M Administration $2,186,387 $1,969,914 $1,840,802 $2,395,453 $425,539 22% System Operations 5,195,993 6,149,707 5,232,034 6,226,137 76,430 1% Technical Services 4,181,270 5,241,838 4,162,271 5,032,638 (9,0) -4% Mechanical Maintenance 7,088,370 8,018,536 7,158,234 4,579,966 (3,438,570) -43% Facilities Maintenance ,991,386 2,991,386 0% Rotating Equipment Maintenance , ,808 0% Fleet Services 2,067,168 2,292,717 2,015,884 2,346,409 53,692 2% Member Agency Reimbursables 1,2, , ,595 - (245,860) -100% Asset Management 3,793,798 4,330,866 4,067,737 5,604,927 1,274,062 29% Water Quality 164, , , ,394 (110,230) -27% TOTAL $25,879,855 $28,654,062 $24,904,985 $30,128,118 $1,474,056 5% 74

81 Adopted Budget for Fiscal Years 12 & 13 Operations and Maintenance Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Assistant Management Analyst Contract Manager Director of Operations & Maintenance Electrical/Electronics Supervisor Electrical/Electronics Tech I, II, Senior Engineering Technician Fleet Maintenance Supervisor Fleet Mechanic II Maintenance Tech/Worker I, II Management Analyst Office Assistant II Operations & Maintenance Manager Principal Water Resources Specialist Project Control Technician Senior Engineering Technician Senior Maintenance Technician Senior Office Assistant Senior Water Resources Specialist Supervising Management Analyst System Maintenance Supervisor System Operator I, II, Senior Systems Operations Supervisor Water Resources Specialist TOTAL Fiscal Years 12 and 13 Position Additions: Contract Manager 75

82 Adopted Budget for Fiscal Years 12 & 13 Operations and Maintenance Significant Budget Changes The Operations and Maintenance Department s Operating Budget for Fiscal Years 12 and 13 is $30.1 million a $1.5 million or 5% increase from the prior two-year budget period. Significant budget changes are outlined below: Increases Operating Labor and Benefits increased by $547,000, including the addition of one Contract Manager position to provide contract management and administrative oversight for large scale outsourced contracts (i.e. Twin Oaks Valley Water Treatment Plant and Hodges pumped storage) and member agency agreements. Direct labor charges to CIP are primarily planned for continuing Hodges Pumped Storage project work and shutdowns associated with Pipe Relining projects. Services have increased by $1.2 million from the prior two-year budget. The most significant reason for this increase is monitoring and maintenance associated with Acoustic Fiber Optic (AFO) and Cathodic Protection systems installed under the CIP in Fiscal Years 10 and 11. Supplies increased by $118,000. While there are many small increases and decreases in supplies, increases for gas and diesel costs are most notable and market forecasts indicate that this trend will continue in the coming years. Increases in Leases and Rents are $25,000 and represent equipment rental costs associated with planned maintenance shutdowns. Other Expenses have increased by $11,000 chiefly associated with increased permit costs. Reductions Utilities budget is showing a $323,000 decrease as the budget for Hodges Pumped Storage utilities has been moved to a separate cost center to fully communicate the significant costs associated with that operation. Fixed assets have decreased by $138,000 from the prior year budget. Fixed asset purchases are one-time in nature and reflects procurement of equipment that aids in maintaining reliability and efficiency. 76

83 Core Business

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85 Adopted Budget for Fiscal Years 12 & 13 Administrative Services Overview. The Administrative Services Department provides a variety of services that support the efficient operation of the Water Authority. Responsibilities include administrative support to the Board of Directors; procurement support for solicitations and contracts; administration of the safety and risk management program; maintenance of computer Enterprise Resource Planning (ERP) systems and other software; acquisition and maintenance of computer hardware; maintenance and development of Geographic Information Systems (GIS) data sets; administration of the records management program; and management of all facilities related maintenance and building systems for the Kearny Mesa office and surrounding landscape. Strategic/Business Plans. The Administrative Services Department supports all three focus areas of the Business Plan but is directly responsible for the Information Technology (IT) program of the Core Business focus area. The focus of this program over the next two years will be on an analysis of our IT functions and how to meet the needs of the Water Authority as it transitions to an operations-based agency. This includes assessing the efficiency of our Maximo computerized maintenance management system used for our inventory and work order tracking functions. We will also build upon the disaster recovery and document management initiatives accomplished during the last two year budget. Specifically, we will optimize Water Authority business processes through the integration of the PeopleSoft enterprise resource planning and document management systems. Director of Administrative Services Administrative Assistant Sr. Office Assistant (0.5) Risk & Safety Manager Information Systems Manager Administrative Services Manager Sr. Office Assistant (0.5) Safety Officer I.S. Supervisor Business Applications Database Administrator Sr. I.S. Analyst Geographical Information Systems I.S. Supervisor Systems Support Management Analyst Purchasing Manager Sr. I.S. Analyst (3) Sr. I.S. Analyst (2) I.S. Analyst (2) Sr. Systems Administration & Support Specialist Systems Administration & Support Specialist (2) Network Administrator HelpDesk Support Specialist Receptionist Clerk of the Board Deputy Clerk of the Board Facilities Service Technician Sr. Management Analyst Management Analyst Purchasing Technician II Purchasing Technician I Warehouse Supervisor 79

86 Adopted Budget for Fiscal Years 12 & 13 Administrative Services Administrative Services by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $ 8,951,647 $ 9,745,993 $ 9,736,980 $ 10,231,241 $ 485,247 5% Direct Charges to CIP/Grants (41,532) - (29,097) - - 0% Operating Labor & Benefits $ 8,910,115 $ 9,745,993 $ 9,707,883 $ 10,231,241 $ 485,247 5% Services 2,212,292 2,074,923 1,791,093 1,699,706 (375,217) -18% Supplies 531, , , ,631 (79,485) -23% Utilities 792, , , ,963 (90,351) -11% Insurance 1,735,810 1,827,900 1,827,900 1,964, ,716 7% Leases & Rent 123, , , ,236 55,667 % Other 314, ,569 63,814 70,607 (79,962) -53% Fixed Assets 102,369 27,0 - - (27,0) -100% Subtotal $14,722,481 $15,241,585 $ 14,561,085 $ 15,266,999 $25,414 0% Capitalized Overhead Allocation (5,824,724) (4,222,566) (4,002,426) (3,955,165) 267,401-6% TOTAL OPERATING $ 8,897,757 $11,019,018 $ 10,558,660 $ 11,311,834 $ 292,816 3% by Category Leases & Rent 2% Insurance 13% Other <1% by Division Purchasing 12% Geographic Information Systems 5% Facilities Services 5% Information Systems 35% Utilities 5% Operating Labor & Benefits 67% Supplies 2% Services 11% Risk Management 21% Admin Services & Board Support 22% Administrative Services by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Administrative Services & Board Support $1,479,837 $ 2,378,799 $ 2,348,805 $ 2,478,773 $ 99,974 4% Purchasing 935,150 1,252,138 1,252,994 1,327,4 75,282 6% Information Systems 3,393,769 4,112,829 3,846,025 3,960,186 (152,643) -4% Geographic Information Systems 527, , , ,695 43,985 8% Risk Management 1,852,491 2,087,511 2,079,373 2,365,4 277,692 13% Facilities Services 709, , , ,555 (51,475) -8% TOTAL $8,897,757 $ 11,019,018 $ 10,558,660 $ 11,311,834 $ 292,816 3% 80

87 Adopted Budget for Fiscal Years 12 & 13 Administrative Services Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Administrative Services Manager Assistant and Management Analyst Clerk of the Board Database Administrator Deputy Clerk of the Board Director of Administrative Services Facilities Services Technician HelpDesk Support Specialist Information Systems Analyst Information Systems Manager Information Systems Supervisor Network Administrator Purchasing Manager Purchasing Technician I Purchasing Technician II Receptionist Risk Manager Safety Officer Senior Information Systems Analyst Senior Management Analyst Senior Office Assistant Senior Systems Administrative & Support Specialist Supervising Management Analyst Systems Administration & Support Specialist Warehouse Supervisor TOTAL Limited Duration Employees Custodian TOTAL Fiscal Years 12 and 13 Position Reductions Systems Administration and Support Specialist 81

88 Adopted Budget for Fiscal Years 12 & 13 Administrative Services Significant Budget Changes The Administrative Services Department operating budget for Fiscal Years 12 and 13 is $11.3 million which represents a 3% increase over the previous two-year budget. When considering all other expense categories except labor and benefits, the overall department budget is down $460,000 or 8%. Significant changes are outlined below: Increases Operating Labor and Benefits increased by $485,000, representing the cumulative impact of labor agreements over the two-year period. Leases and Rents increased by $56,000 as a result of moving to all-inclusive leases for multi-function print devices. Reductions The Insurance expense category increased by $137,000 due to the addition of the Lake Hodges facility and three solar installations (Escondido Operations Center, Twin Oaks Treatment Plant, and Kearny Mesa Headquarters) to our property and liability coverage. The department reduced one Systems Administrator and Support Specialist in the Information Systems division. Services decreased by $375,000 or 18%, primarily in the Information Systems division. This decrease reflects the elimination of $290,000 in services for Maximo and disaster recovery based on the decision to accomplish this work by redeploying in-house staff. An additional one-time expense of $80,000 in the previous two-year budget for the upgrade and migration of the document management system was eliminated. Supplies decreased by $79,000 as a result of moving to all-inclusive leases for multi-function printing devices versus budgeting for toner, parts and repair for purchased printers. The Utilities budget decreased by $90,000 or 11% due to increased building management efficiencies and conservation, as well as full implementation of the new contract pricing for the Water Authority s telecommunications systems. The other expense category, primarily travel and training has been reduced by $80,000 or 53% across all divisions through the elimination of all but critical or legally required training. 82

89 Adopted Budget for Fiscal Years 12 & 13 Finance Overview. The Finance Department is responsible for providing innovative, proactive and strategic financial direction in support of the mission of the Water Authority, the Board of Directors, management, employees and other stakeholders. These responsibilities include, ensuring adequate internal financial controls and accurate financial reporting, efficiently managing the budget, rates and charges, and invested funds, maintaining the Water Authority s high credit ratings, and actively engaging with a range of external stakeholders to promote fiscal transparency and accountability. The General Accounting division is responsible for functional management of the Peoplesoft financial system, payroll, accounts payable/receivable, capital project accounting, internal controls, monthly financials, the Board of Directors Audit Committee, and the Comprehensive Annual Financial Report (CAFR). The Financial Management division is responsible for the Water Authority s multi-year budget, grant administration, long-range financial planning, debt management, credit rating and investor relations, rates and charges, and the investment of funds. The department also provides support for specific programs (Seawater Desalination, MWD, Colorado River Program) as well as Water Authority executive management. Strategic/Business Plans. The Finance Department supports all three focus areas of the Business Plan and is directly responsible for the Financial Planning program within the Core Business focus area. The primary business plan focus for the prior multi-year budget period was the issuance of debt to fund the CIP, continued improvement of the investor relations marketing plan, and the renewal of expiring liquidity facilities on the Water Authority s Commercial Paper program. Going forward the most significant initiative for the coming budget period will be to address the issue of fiscal sustainability and a comprehensive, strategic review of the Water Authority s rates and charges. Director of Finance Administrative Assistant Controller Financial Planning Manager Budget & Analysis Manager Office Assistant I Investment Analyst Budget Officer Accounting Supervisor Accounting Supervisor Financial Analyst Management Analyst Grants Analyst Sr. Accountant (2) Accounting Technician Accountant Accounting Technician Accounting Assistant II (2) 83

90 Adopted Budget for Fiscal Years 12 & 13 Finance Finance by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $ 4,927,265 $ 5,604,659 $ 5,462,082 $5,762,841 $158,181 3% Direct Charges to CIP/Grants - - (96,071) (132,261) (132,261) 0% Operating Labor & Benefits $ 4,927,265 $ 5,604,659 $ 5,366,011 $5,630,580 $25,9 0% Services 1,104,571 1,192, , ,750 (270,650) -23% Supplies 58,519 33,450 24,990 21,500 (11,950) -36% Utilities 1, % Insurance % Leases & Rent 58,162 66,000 60,540 62,800 (3,0) -5% Other 82, ,538 60,422 54,870 (88,668) -62% Fixed Assets 4,065 15, (15,000) -100% Subtotal $ 6,235,947 $ 7,055,047 $ 6,474,472 $6,691,500 $(363,548) -5% Capitalized Overhead Allocation (2,276,000) (2,323,398) (2,221,066) (2,248,737) 74,661-3% TOTAL OPERATING $ 3,959,947 $ 4,731,650 $ 4,253,405 $4,442,763 $(288,887) -6% by Category Supplies <1% Leases & Rent 1% Other 1% by Division Financial Management 50% Services 14% Operating Labor & Benefits 84% General Accounting 50% Finance by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % General Accounting $ 2,246,698 $ 2,423,947 $ 2,281,763 $2,2,180 $(221,767) -9% Financial Management 1,713,249 2,307,703 1,971,642 2,240,583 (67,1) -3% TOTAL $ 3,959,947 $ 4,731,650 $ 4,253,405 $4,442,763 $(288,887) -6% 84

91 Adopted Budget for Fiscal Years 12 & 13 Finance Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Accountant Accounting Assistant II Accounting Supervisor Accounting Technician Administrative Assistant Assistant Management Analyst Budget & Analysis Manager Budget Officer Controller Deputy Director of Finance Director of Finance/Treasurer Financial Analyst Financial Planning Manager Financial Services Manager/Assistant Treasurer Investment Analyst Management Analyst Office Assistant I Rate and Debt Administrator Senior Accountant Specific classification will be determined in Fiscal Year <0.42> TOTAL Limited Duration Employees Financial Analyst Grant Analyst * TOTAL Note: *One Senior Office Assistant (LDE) was transferred from Engineering and reclassified to a Grant Analyst in Fiscal Year 11. Fiscal Years 12 and 13 Position Reductions Senior Accountant Grant Analyst Additional position to be determined in Fiscal Year 12 85

92 Adopted Budget for Fiscal Years 12 & 13 Finance Significant Budget Changes The Finance Department s Operating Budget for Fiscal Years 12 and 13 is $4.4 million; a $0.3 million or 6% reduction from the prior two-year budget period. Significant budget changes are outlined below: Increases No significant increases due to reductions in staffing as described below. Reductions As part of the Water Authority s restructuring and reorganization, this two-year budget reflects a reduction of three positions (1.75 FTEs) in the Finance Department. This represents a 15% reduction in the number of positions and 9% reduction in budgeted FTEs. The proposed reductions include the elimination of a Senior Accountant in the General Accounting section, an additional position (to be identified) starting in January 13, and a limited-duration Grant Analyst starting in February 13. Services decreased by $271,000 or 23%, primarily in the Financial Management Division. This decrease is the net result of several changes including: Approximately $100,000 in savings associated with the renegotiation/reduction in financial and investment advisory services and the elimination of certain one-time contracts including $250,000 that was added to the department s budget in Fiscal Year 11 for a cost of service study in association with the MWD rate structure lawsuit. The remaining expenditure categories have been reduced by $119,000 or 54% as a result of the department s cost containment efforts. This has resulted in a reduction in supplies, travel, training, and memberships. Funding is still budgeted for travel in support of the Water Authority s Investor Relations Marketing Plan. 86

93 Adopted Budget for Fiscal Years 12 & 13 General Counsel Overview. The General Counsel, as Chief Legal Officer of the Water Authority, manages all legal affairs of the Water Authority, supervises special counsel, and provides a full range of legal services to the Board and Water Authority staff in the performance of their official duties. Specifically, the General Counsel s office ensures that Water Authority business is conducted according to all applicable state, federal, and local laws and regulations; provides legal support to assist the accomplishment of the Water Authority s policy goals and objectives; and represents the Water Authority, its officers and employees in litigation matters and administrative proceedings. General Counsel Assistant General Counsel Deputy General Counsel Legal Administrative Assistant Office Assistant II Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Assistant/Deputy General Counsel General Counsel Legal Administrative Assistant Office Assistant II TOTAL Fiscal Years 12 and 13 Position Reductions Assistant/Deputy General Counsel 87

94 Adopted Budget for Fiscal Years 12 & 13 General Counsel General Counsel by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $2,017,762 $1,969,833 $1,834,355 $1,962,627 $(7,6) 0% Direct Charges to CIP/Grants % Operating Labor & Benefits $2,017,762 $1,969,833 $1,834,355 $1,962,627 $(7,6) 0% Services 2,085,282 4,3,000 4,312,500 4,753, ,075 10% Supplies 37,938 37,050 34,050 37, % Utilities 2,215 4,000 2,500 7,000 3,000 75% Insurance % Leases & Rent % Other 37,626 55,930 47,326 48,400 (7,530) -14% Fixed Assets 2, % Subtotal $4,183,537 $6,386,813 $6,230,731 $6,808,652 $421,839 7% Capitalized Overhead Allocation (1,025,000) (895,388) (829,869) (676,619) 218,769-24% TOTAL OPERATING $3,158,537 $5,491,425 $5,400,863 $6,132,033 $640,608 12% by Category Supplies <1% Utilities <1% Other 1% Operating Labor & Benefits 29% Services 70% 88

95 Adopted Budget for Fiscal Years 12 & 13 General Counsel Significant Budget Changes Overall, the General Counsel s Operating Budget for Fiscal Years 12 and 13 increased by $641,000 or 12% from the prior two-year budget period. Litigation services increased by $440,000 or 10%. Without the increase in litigation costs, the overall budget decreased by $18,000 or 3%. The 12% increase shown in the operating budget relates to a 24% decrease in overhead expenses being charged to the Capital Improvement Program (CIP). Significant budget changes are outlined below: Increases Litigation Services increased by $440,000 or 10%, with the remaining services accounts decreasing by $7,000 or 12% resulting in a net increase of $433,000. The MWD litigation and QSA litigation make up the majority of the legal services budget. Reductions Operating Labor and Benefits decreased by $7,000 reflecting negotiated changes to the employees compensation plan as ratified by the Board in July 10 and one attorney position in the General Counsel s Office will be eliminated in the last quarter of Fiscal Year 13. The remaining non-personnel expenditure categories have been reduced by $4,000 or 4% as a result of the department s cost containment efforts. This has resulted in a reduction in supplies, travel and training. 89

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97 Adopted Budget for Fiscal Years 12 & 13 General Manager and Board of Directors Overview. The General Manager s Office manages and directs the activities of the Water Authority. Specifically, the General Manager s Office implements the Board s Strategic Plan and policies through the programs of the Business Plan; provides oversight of the Water Authority s extensive infrastructure system; communicates and advocates adopted policy positions and programs of the Water Authority to local, state, and federal officials and agencies; oversees the Water Authority s infrastructure system; and provides staff assistance to the Board of Directors. This department also contains the direct expenses of the Board of Directors. Strategic/Business Plans. The General Manager s Office provides oversight of the Business Plan and ensures alignment with the objectives of the Board s Strategic Plan. One Business Plan program, Government Relations, is managed by and budgeted in the General Manager s Office. The Government Relations program will continue to provide legislative advocacy in obtaining the Water Authority s fair share of statewide bond funding, pursuing and securing federal funding, finding solutions to the problems of the Bay-Delta, and promoting water supply reliability legislation. General Manager Deputy General Manager Deputy General Manager Assistant General Manager Executive Adminstrative Assistant Administrative Assistant Government Relations Manager Management Analyst 91

98 Adopted Budget for Fiscal Years 12 & 13 General Manager and Board of Directors General Manager and Board of Directors by Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $3,474,764 $4,140,895 $3,874,757 $3,971,404 $(169,492) -4% Direct Charges to CIP/Grants % Operating Labor & Benefits $3,474,764 $4,140,895 $3,874,757 $3,971,404 $(169,492) -4% Services 1,271,998 1,144, ,261 1,522, ,137 33% Supplies 17,402 14,960 10,323 15, % Utilities 4,521 8,675 8,704 8,285 (390) -5% Insurance % Leases & Rent 65,642 65,624 33,947 44,600 (21,024) -32% Other 896, , , ,380 (389,030) -50% Fixed Assets 8, (500) -100% Subtotal $5,739,026 $6,154,023 $5,581,610 $5,951,614 $(2,409) -3% Capitalized Overhead Allocation (684,000) (970,683) (699,935) (893,636) 77,047-8% TOTAL OPERATING $5,055,026 $5,183,339 $4,881,675 $5,057,977 $(125,362) -2% by Category Leases & Rent 1% Utilities <1% Supplies <1% Other 7% Operating Labor & Benefits 66% GM Administration 47% by Division Directors' Expense 15% Services 26% Government Relations 38% General Manager and Board of Directors by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % GM Administration $2,375,137 $2,474,595 $2,460,104 $2,315,176 $(159,419) -6% Directors Expense 773, , , ,190 14,190 2% Government Relations 1,906,210 1,858,744 1,719,099 1,878,611 19,867 1% TOTAL $5,055,026 $5,183,339 $4,881,675 $5,057,977 $(125,362) -2% 92

99 Adopted Budget for Fiscal Years 12 & 13 General Manager and Board of Directors Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Assistant/Deputy General Manager Executive Administrative Assistant General Manager Government Relations Manager Management Analyst Public Affairs Representative Senior Office Assistant TOTAL Limited Duration Employees Special Projects Manager TOTAL Fiscal Years 12 and 13 Position Reductions Assistant/Deputy General Manager Senior Office Assistant Special Projects Manager Significant Budget Changes The General Manager s Operating Budget for Fiscal Years 12 and 13 is $5.1 million; a $125,000 or 2% reduction from the previous two-year budget period. The Water Authority will continue to face significant challenges as it shifts from a building to an operating organization, and as it responds to critical needs and increased costs associated with vital legal efforts. While costs for services essential to high priority efforts are expected to increase, changes made to the General Manager s budget result in an overall 2% reduction in budget for the department. This reduction is accomplished with staff reductions and the elimination of non-essential services and other costs. Increases GM Administration With the significant reductions in various departmental services budget, the proposed budget includes $250,000 per year in contingency funds to address as-needed studies, analyses and consulting services for unanticipated work. 93

100 Adopted Budget for Fiscal Years 12 & 13 General Manager and Board of Directors Significant Budget Changes, Continued Director s Expense Due to recent IRS determinations, the Board of Directors are now employees of the Water Authority for IRS purposes. Additional funding has been added for mandated FICA and Medicare expenses. Government Relations Reductions The critical work efforts associated with the MWD and QSA litigation make it necessary to maintain existing staffing and contracts with legislative advocates. Expenses within the Government Relations division will remain consistent with the Fiscal Years 10 and 11 budget. While there will be increases in expenses associated with maintaining the existing legislative advocacy contracts, the overall budget will increase by only 1% due to cost containment and reductions in other areas. GM Administration Two positions were eliminated from the Administration division effective July 1, 11, and an Assistant/ Deputy General Manager position will be eliminated in the last quarter of Fiscal Year 13. Government Relations The relocation of the Sacramento office provided an estimated savings of approximately $40,000 in this budget period. 94

101 Adopted Budget for Fiscal Years 12 & 13 Human Resources Overview. The Human Resources Department provides strategic, operational, and administrative human resources support to its customers by facilitating change processes and providing services in organizational development; employee and labor relations; employee training and development; benefits design and administration; ensuring compliance with applicable employment laws; selection and retention; position classification and compensation; and wage and salary administration. Strategic/Business Plans. The Human Resources Department oversees the Workforce Planning program within the Core Business focus area of the Business Plan. The emphasis of this program is to ensure that the Water Authority has the right people, with the right competencies, in the right place, at the right time to accomplish the Water Authority s business initiatives. Director of Human Resources Human Resources Assistant Sr. Human Resources Analyst (2) Human Resources Analyst 95

102 Adopted Budget for Fiscal Years 12 & 13 Human Resources Human Resources by Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $1,738,624 $2,092,130 $1,861,813 $1,593,109 $(499,021) -24% Direct Charges to CIP/Grants % Operating Labor & Benefits $1,738,624 $2,092,130 $1,861,813 $1,593,109 $(499,021) -24% Services 490, , , , ,645 36% Supplies 25,073 18,100 15,313 15,758 (2,342) -13% Utilities % Insurance , ,000 0% Leases & Rent 4,493 7,000 6,525 1,250 (5,750) -82% Other 118, , , ,174 (10,516) -8% Fixed Assets 4, % Subtotal $2,381,808 $2,670,470 $2,403,363 $3,004,486 $334,016 13% Capitalized Overhead Allocation (689,000) (365,008) (281,183) (295,766) 69,242-19% TOTAL OPERATING $1,692,808 $2,305,462 $2,122,180 $2,708,7 $403,258 18% by Category by Division Other 4% Leases & Rent <1% Insurance 23% Operating Labor & Benefits 53% Benefits 38% Supplies 1% Services 19% HR Administration 62% Human Resources by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % HR Administration $1,413,946 $1,986,246 $1,808,675 $1,666,7 $(3,039) -16% Benefits 278, , ,505 1,042, , % TOTAL $1,692,808 $2,305,462 $2,122,180 $2,708,7 $403,258 18% 96

103 Adopted Budget for Fiscal Years 12 & 13 Human Resources Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Director of Human Resources Senior and Human Resources Analyst Human Resources Assistant Office Assistant II TOTAL Limited Duration Employees Senior Human Resources Analyst TOTAL Fiscal Years 12 and 13 Position Reductions Senior and Human Resources Analyst (2) 97

104 Adopted Budget for Fiscal Years 12 & 13 Human Resources Significant Budget Changes The Human Resources Department s Operating Budget for Fiscal Years 12 and 13 is $2.7 million; a $0.4 million or 18% increase from the prior two-year budget period. The addition of $0.7 million for anticipated unemployment insurance claims due to staff lay-offs is the major contributor to this increase. Without the $0.7 million budgeted for unemployment insurance claims the Human Resources Department s Operating Budget would actually be reduced by $0.3 million, or 13%, from the previous two-year amended budget. Significant budget changes are outlined below: Increases The $152,000 increase in services is primarily associated with employment-related legal services. Reductions The Benefits Division budget has increased by $0.7 million reflecting potential unemployment insurance claims payments that may be incurred subsequent to the reduction of staff. The Administration Division budget decreased by $0.3 million, or 16%, primarily in labor and benefits. This decrease primarily reflects position eliminations as described below. One Senior Human Resources Analyst position was eliminated in December 10 and an additional analyst position has been identified for reduction in June 12. Reduction of $14,000 for supplies, travel, training, memberships and leases and rent. Funding is still budgeted for specific training related to technical and public-sector employment law. 98

105 Adopted Budget for Fiscal Years 12 & 13 Public Outreach and Conservation Overview: Starting with the Fiscal Years 12 and 13 budget cycle, the former Public Affairs Department and Water Conservation Program have been consolidated to more cost-effectively manage and deliver an array of programs related to public outreach and strategies for motivating water users to improve or maintain their longterm efficiency. The department engages key audiences including news media, business organizations, civic leaders, schoolage children and members of the general public to build awareness and appreciation for the Water Authority s strategies, projects and programs. The department also supports member agency efforts to maintain or reduce per-capita water use through managing, coordinating and implementing a core set of programs and initiatives focused on facilitating long-term behavioral change and market transformation. Strategic/Business Plans: The department s outreach components support both the Core Business focus area of the Business Plan and the leadership key result area of the Strategic Plan, while the conservation components support the Strategic Plan s Water Supplies Portfolio key result area. In total, these programs will support overall efforts to achieve the Strategic Plan and Business Plan goals related to reduced per-capita water use, public support for the Water Authority s diversification plan, public support for conservation, public understanding and acceptance of advanced treated recycled water, small-business participation in contracts and procurements, and other Water Authority strategies. Director of Public Outreach and Conservation Administrative Assistant Sr. Office Assistant (0.25) Office Assistant I Regional Communications Manager SCOOP Manager Community Relations Supervisor Water Conservation Principal Water Resources Specialist Sr. Water Resources Specialist (2) Water Resources Specialist (3) PA Representative II (4) Representative Sr. PA Representative PA Representative II Education Program Specialist (1.75) 99

106 Adopted Budget for Fiscal Years 12 & 13 Public Outreach and Conservation Public Outreach and Conservation by Expense Category - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Total Labor & Benefits $6,752,729 $7,359,673 $7,181,910 $5,998,619 $(1,361,054) -18% Direct Charges to CIP/Grants (721,727) (597,4) (523,963) (274,675) 322,745-54% Operating Labor & Benefits $6,031,002 $6,762,253 $6,657,947 $5,723,944 $(1,038,309) -15% Services 6,626,057 7,552,470 3,184,021 1,849,070 (5,703,400) -76% Supplies 198, ,750 80,673 73,675 (58,075) -44% Utilities 10,921 7,300 6,275 6,800 (500) -7% Insurance % Leases & Rent 49,230 54,050 45,074 27,000 (27,050) -50% Other 635, , , ,952 (26,608) -4% Fixed Assets 1, % Subtotal $13,552,580 $15,251,383 $10,843,034 $8,397,441 $(6,853,942) -45% Capitalized Overhead Allocation (856,000) (760,939) (768,000) (579,511) 181,428-24% TOTAL OPERATING $12,696,580 $14,490,444 $10,075,034 $7,817,929 $(6,672,514) -46% Leases & Rent <1% Utilities <1% Supplies 1% by Category Other 9% Operating Labor & Benefits 68% by Division School Education 8% Community Relations 5% SCOOP 2% Water Conservation Program 52% Services 22% Regional Communtications 33% Public Outreach and Conservation by Division - Fiscal Years 12 and 13 FYs 08 & 09 FYs 10 & 11 FYs 10 & 11 FYs 12 & 13 Budget to Budget Variance Actual Budget Estimated Adopted $ % Community Relations $708,190 $541,391 $597,482 $359,2 $(182,190) -34% Regional Communications 4,130,747 2,585,089 2,479,008 2,615,370 30,281 1% School Education 900,6 906, , ,705 (301,481) -33% SCOOP 137, , , ,046 (52,679) -22% Water Conservation Program 6,819,960 10,216,052 5,914,098 4,049,607 (6,166,445) -60% TOTAL $12,696,580 $14,490,444 $10,075,034 $7,817,929 $(6,672,514) -46% 100

107 Adopted Budget for Fiscal Years 12 & 13 Public Outreach and Conservation Personnel Requirements Regular Status Employees FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 Administrative Assistant Director of Public Affairs Education Programs Specialist Education Programs Supervisor Management Analyst Office Assistant I, II Principal Water Resources Specialist Public Affairs Manager Public Affairs Representative II Public Affairs Supervisor Senior Office Assistant Senior Public Affairs Representative Senior Water Resources Specialist Small Contractor Program Manager Small Contractor Program Representative Water Conservation Program Executive Director Water Resources Manager Water Resources Specialist Specific classification will be determined in Fiscal Year <1.00> TOTAL Limited Duration Employees Assistant Water Resources Specialist Education Program Specialist Project Scheduler Public Affairs Representative I TOTAL Fiscal Years 12 and 13 Position Reductions Education Programs Specialist Project Scheduler I Education Programs Supervisor Small Contractor Program Representative Public Affairs Representative I Water Conservation Program Executive Director Fiscal Years 12 and 13 Position Additions Additional postition to be determined in Fiscal Year 12 Management Analyst 101

108 Adopted Budget for Fiscal Years 12 & 13 Public Outreach and Conservation Significant Budget Changes Starting with the Fiscal Years 12 and 13 budget cycle, the former Public Affairs Department and Water Conservation Program have been consolidated to cost-effectively manage and deliver a more focused array of programs designed to build awareness and support for key Water Authority strategies and programs, and streamlined set of programs and strategies for motivating water users to improve or maintain their long-term efficiency. The combined Public Outreach and Conservation Department results in a more cost-effective operation with reduced managerial and administrative overhead, and greater synergy in outreach efforts by placing conservationrelated and communications-related functions in one department. The combined Public Outreach and Conservation department s Operating Budget for Fiscal Years 12 and 13 is $7.8 million. That represents a nearly $6.7 million, or 46%, reduction from the prior two-year budget period for the Public Affairs Department and Water Conservation Program combined. Note: The adopted budget does not consider any mitigation measures related to MWD invoking their Rate Structure Integrity clause. Significant budget changes are outlined below: Increases Reductions To reflect programmatic changes and more effectively meet ongoing analytical needs in the department, one analyst position will be added July 1, 12. Water Conservation program There are two significant budget adjustments from the previous two-year budget. Both are related to reducing the conservation program s scope to focus on core services member agencies identified they needed to help meet their long-term water use efficiency goals, including: audits, surveys, education programs, MWD incentive programs, and tools that help water users understand how to identify and implement improvements that create sustainable improvements in water efficiency. Operating Labor and Benefits decreased by approximately $675,000. Department management has been consolidated under the Director of Public Affairs, resulting in the elimination of the Water Conservation Program Executive effective June 30, 11. Elimination of the Project Scheduler I position (limited duration employment). An additional conservation position, to be identified, will be eliminated effective June 30, 12. Transfer of the 0.5 Administrative Assistant position to the Engineering Department that was previously split with the former Right of Way Department. 102

109 Adopted Budget for Fiscal Years 12 & 13 Public Outreach and Conservation Significant Budget Changes, Continued Non-personnel-related costs decreased by approximately $5.5 million, or about 75%. Nearly all of this savings stems from reducing the budget for conservation program services to focus only on services needed to support core conservation programs mentioned above. There will also be an increased emphasis on leveraging Water Authority resources with external grant funding. This level of reduction also reflects that the Water Authority originally planned to execute a very aggressive array of conservation programs in the previous two-year budget period. Not all of these programs were implemented as originally forecast because regional water use significantly declined during the two-year period. Funds for programs that were not implemented were part of the mid-year budget reductions in the Fiscal Years 10 and 11 operating budget. Public Affairs divisions There are several significant budget adjustments from the previous two-year budget. They are related to the Water Authority s overall restructuring to focus on programs essential for its core mission and more cost-effectively operate programs on a sustainable basis. As part of this restructuring: The School Education program will transition from direct provision of program content to training teachers to deliver program curriculum. The Small Contractor Outreach and Opportunities Program, to reflect the planned downsizing of capital improvement projects and related contracting activities, is being restructured to focus on programs that meet the Water Authority s core procurement needs and small-business participation goals. Community outreach activities to help support Water Authority capital improvement or maintenance projects around the region are being reduced to reflect planned reductions in the Water Authority s Capital Improvement Program. Reductions by budget category to reflect these changes include the following: Operating Labor and Benefits decreased by approximately $364,000. The Education Programs Supervisor position will be eliminated June 30, 11. In addition, a limited duration Education Programs Specialist (0.75 FTE) will be eliminated effective June 30, 12. The Small Contractor Program Representative position will be eliminated effective June 30, 12. A Public Affairs Representative I position (limited duration employment) will be eliminated effective June 30, 11. Non-Personnel-related costs are reduced by about $324,000, or about 30%. These savings principally reflect: reduced outreach-related printing and professional services that reflect using more electronic-based communications and reduced small-business training needs; ordering fewer supplies to support classroom presentations and general department supply purchases; and overall department cost containment efforts, including reductions in travel, training, and memberships. 103

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111 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Overview This overview: Establishes the adopted appropriation for Fiscal Years 12 and 13. Describes the significant issues that shaped the present capital improvement program and helped to determine the adopted appropriation. Frames the dominant program themes for the next two fiscal years. Details adopted changes, including new projects. Adopted Appropriation The adopted appropriation for Fiscal Years 12 and 13 is $321.1 million. Staff s adopted appropriation reflects the Board s approval of deferring $150 million in spending on 14 CIP projects as well as a move toward enhancing existing infrastructure through system optimization and the asset management program. Twenty-two percent of all expenditures during this period will be on asset management projects, primarily the Relining and Pipe Replacement Program. More than half of all anticipated expenditures in this two-year period will be on the San Vicente Dam Raise and Carryover project ($165 million). Five of the CIP projects, including the Dam Raise, will account for 87% of all forecast expenditures. Figure 1 profiles the anticipated expenditures during the appropriation period. Figure 1: Fiscal Years 12 & 13 Adopted Appropriation San Vicente Dam Raise ($165 M) 51% Relining & Pipe Replacement ($70 M) 22% Colorado Canal Linings/Mitigation ($23 M) 7% Lake Hodges Projects ($12 M) 4% Mitigation Program ($9 M) 3% Other ($42 M) 13% Lake Hodges Projects ($12 M) 4% Colorado Canal Linings/ Mitigation ($23 M) 7% Mitigation Program ($9 M) 3% Other ($42 M) 13% San Vicente Dam Raise ($165 M) 51% Significant Issues The Fiscal Years 12 and 13 CIP budget is built around a shift in emphasis from building new infrastructure to managing existing assets and supporting operational functions and the project deferral decisions made by the Board in January and March 11. Relining & Pipe Replacement ($70 M) 22% The CIP began in Fiscal Year 1989 as a pipeline design and construction program. It grew in diversity and size over the last two decades to $3.8 billion as the Water Authority moved to ensure reliability through expansion of its water resources portfolio. Facilities in the CIP now consist of pipelines, flow control facilities, pumping stations, hydro-electric facilities, a water treatment plant, and several dams. 105

112 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program The build-out of these programs reached a high point in Fiscal Year 07 and began to diminish as projects were completed. Figure 2 shows the growth of the CIP and planned expenditures over the next five years. Figure 2: CIP Expenditures and Forecast CIP Expenditures (in millions) During Fiscal Years 10 and 11, the emphasis was on completing a majority of the remaining Emergency Storage Projects (ESP). Staff also began to shift its emphasis from construction of new infrastructure to asset management and system optimization of existing facilities. During this same period, the Water Authority began experiencing shortages in imported water supplies and a severe economic downturn occurred. In addition, the member agencies implemented mandatory water use restrictions in response to the supply shortages. These factors resulted in significantly lower demands for water over the last budget cycle. This reduction in water use and the adoption of state legislation mandating long-term conservation has led to a reassessment of the timing of CIP projects and the need for certain near-term infrastructure projects. In early 10, staff began a study to update forecasted regional water demands and analyze the need for future facilities and their timing. Projections of current demands resulted in lower water demand forecasts in the near term. Given that forecast, staff suggested that it might be beneficial to reprioritize 14 CIP projects and determine whether they should be cancelled, re-scoped or deferred. In late 10, staff presented the results of these early investigations with the Board s Comprehensive Reliability and Cost Assessment (CRACA) Committee. Following its review, the CRACA committee presented its recommendations to the full Board in January and March of 11. The Board subsequently voted to defer the 14 CIP projects to better align their completion dates with revised water demand forecasts. Half of the deferred projects are under further review while those originally scheduled for construction in the next two years have been deferred to dates beyond the Fiscal Years 12 and 13 budget cycle. Planning and design efforts for deferred projects will continue over the next two years. These Board actions resulted in shifting approximately $150 million in planned expenditures beyond the current two-year budget cycle, which will defer additional bond debt and potential rate impacts. Table 1 shows the deferred projects. 106

113 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program The deferral of these projects, the already lower expenditure forecasts associated with finishing many of the substantial CIP projects and the start of a shift in the CIP mission towards asset management and system optimization drove a decision to re-evaluate the size and composition of the organization. During Fiscal Year 08, the peak services contract, which provided extensions of staff, was reduced to a handful of specialized skills. During the Fiscal Years 10 and 11 budget cycle, 18 positions that performed functions largely associated with program management of a large CIP were eliminated. Of these, 13 were of limited duration and five were regular staff positions. The limited duration positions included administrative support, engineers, technicians and contracting staff. The regular positions included senior management, scheduling and controls staff, and management analysts. Table 1: Deferred CIP Projects Asset Management Referrals ESP Operations Center Upgrades Fallbrook 7/Rainbow 14 Flow Control Facilities Fallbrook 8 Flow Control Facility & Deluz 1 SCADA Master Plan Evaluation ESP Pump Station Projects (pump stations at Pipelines 3 and 4) ESP San Vicente 3 rd Pump Drive and Power Pipeline 6 Design Phase-ROW Acquisition Restore Untreated Water in La Mesa Sweetwater Extension (LMSE) to Sweetwater Construction Phase Deferrals ESP San Vicente Bypass Pipeline ESP San Vicente Post Construction Re-vegetation Lake Murray Control Valve Mission Trails Flow Regulatory Structure (FRS) II Relining and Pipe Replacement Program (Scripps Ranch to SR 52) San Diego 12 Flow Control Facilities Expansion San Luis Rey River Mitigation Site Dominant Program Themes The majority of expenditures in the next two years will be associated with finishing the San Vicente Dam Raise and Carryover Storage project and resuming the Pipe Relining and Replacement Program. In Fiscal Year 15, construction of the seven deferred construction projects will slightly increase CIP expenditures. Beyond that point, ongoing asset management activities, most notably pipe replacement and relining, will account for the majority of future expenditures. The update to the Regional Water Facilities Master Plan will be completed in late Calendar Year 12. This updated plan will provide a revised roadmap to the construction and timing of future projects. The largest remaining future project expenditures are associated with Pipeline 6 and the Second Crossover Pipeline, both of which will be subject to further analysis in the Regional Water Facilities Master Plan update. 107

114 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program The concentration of expenditures on a few key projects, particularly the Dam Raise and Pipe Relining projects, brings both advantages and risk. On the positive side, staff will be able to focus on a few key projects. On the other hand, if there are problems with either of these large projects, there may be a significant impact on spending and timely completion of work. To optimize capital project management, staff has developed and broadly employed CIP best management practices for more than a decade. Some examples of best management practices include use of: Project scheduling and controls tools Management reports and reviews that integrate management actions across the stakeholder base, as well as the management hierarchy Decision gates at critical transitions in the life of projects Sophisticated cash forecasting and reporting tools Value engineering Dedicated designer of record accountability throughout project life Highly developed CIP policy and process documents Water Authority best management practices documentation A unique construction bidding outreach program Details of Adopted Appropriation The CIP budget will be presented in two parts: the capital improvement program level and the individual project level. The first part is a discussion of the CIP program and project budgets that span a decade or more into the future. They represent the inclusive, lifetime budget for the projects and the CIP program. This discussion updates and details the adopted project changes, rationale for these changes, and their funding sources. The second part of the discussion focuses on the adopted appropriation for individual CIP projects in Fiscal Years 12 and 13. Key aspects of this discussion deal with profiling the two-year expenditures and understanding potential risks and management strategies over this period. CIP Program Budget. The CIP program budget is the sum of all the Board-adopted project budgets. There are 52 adopted projects with a value of $3.8 billion. During the last two fiscal years, five projects totaling $258.3 million were completed, leaving a remaining adopted budget of $3.5 billion. Table 2: Completed CIP Projects ($ Millions) ESP San Vicente Pumping Facilities $117.7 IID Conservation Improvements 50.0 Mission Trails Tunnel 49.5 ESP Lake Hodges to Olivenhain Pipeline 27.6 OMWD Settlement Agreement Project 13.5 TOTAL COMPLETED PROJECTS $258.3 The adopted budget for active projects going forward is $3.5 billion; however, this does not tell the whole story. Through the end of June 11, staff is forecasting that $1.5 billion in work will already have been spent on active projects, leaving a balance of about $2.1 billion. Staff does not recommend any increase in the CIP Program budget. 108

115 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Pending the outcome of the Facilities Master Plan Update in 12, the majority of future expenditures against this remaining budget balance likely will be spent on four projects. In the near term, slightly more than $300 million will remain to be spent on the San Vicente Dam Raise. Over the next ten years, staff forecasts the expenditure of about $50 million annually on the Relining and Pipe Replacement Program. Beyond, staff forecasts the expenditure of $810 million on Pipeline 6 and the 2nd Crossover Pipeline. Figure 2 profiles the remaining adopted CIP budget of $3.5 billion. Figure 3: CIP Expenditure Profile Spent thru June 11 ($1.5 B) 41% Relining and Pipe Replacement ($0.6 B) 17% Pipeline 6 ($0.4 B) 12% 2nd Crossover Pipeline ($0.4 B) 11% Other ($0.3 B) 10% San Vicente Dam Raise ($0.3 B) 9% Other ($0.3 B) 10% 2nd Crossover Pipeline ($0.4 B) 11% Pipeline 6 ($0.4 B) 12% San Vicente Dam Raise ($0.3 B) 9% 3.5B Relining and Pipe Replacement ($0.6 B) 17% Spent thru June 11 ($1.5 B) 41% CIP Project Budget Changes. Staff recommends the creation of three new projects and changes to 16 CIP project budgets totaling $54.8 million. All project budget changes are to be met by transfers from five existing project budgets (see Table 3), leaving the CIP program adopted budget at $3.5 billion. Table 3: Funding Source for Inter-Project Transfers ($ Millions) ESP San Vicente Dam Raise and Carryover Storage $32.7 Thirty percent ($16.6 million) of the $54.8 Mission Trails Tunnel 8.6 million in budget changes represents ESP San Vicente Pumping Facilities 8.0 administrative actions to facilitate System Regulatory Structure 4.9 future management of the CIP budget. Relining and Pipe Replacement 0.5 Approximately $8.0 million will be TOTAL INTER-PROJECT TRANSFERS $54.8 transferred to the Facilities Master Plan Update for further study of the scope and timing of construction of the Emergency Storage Project San Vicente 3rd Variable Pump Drive. An additional $8.6 million will be transferred from the Mission Trails Tunnel Project to enable completion of the Mission Trails Flow Regulatory Structure II Project. The remaining 70% ($38.2 million) represents new work in support of asset management, increased scope of work, new projects, and Facilities Master Plan Update activities. 109

116 Adopted Budget for Fiscal Years 12 & 13 This profile of project budget changes is depicted in figure 4. Figure 4: CIP Adopted Budget Changes by Type Scope of Work ($32.9 M) 60% New Projects ($10.5 M) 19% Master Planning ($9.6 M) 18% Asset Management ($1.8 M) 3% Adopted Changes The adopted changes to the CIP budget will be presented as four groups of budget changes: asset management, new projects, scope, and master planning. Asset Management Program Budget Changes Asset Management projects either replace or upgrade existing facilities. Staff recommends four budget changes for asset management projects totaling $1.8 million. Master Planning ($9.6 M) 18% New Projects ($10.5 M) 19% Capital Improvement Program Asset Management ($1.8 M) 3% Scope of Work ($32.9 M) 60% Lake Hodges Quagga Mussel and Water Quality Mitigation. This new project consists of two parts and represents the first phase of an effort to mitigate the effects of Quagga mussels on Lake Hodges and improve long-term water quality in the reservoir. Quagga mussel mitigation tasks include evaluation, design, and construction of control measures, including Hodges Pumped Storage Facility retrofits, recommended as part of the Winter/Spring 11 vulnerability assessment. If available, grant funds will be requested at a later date to support implementation of additional Quagga mussel mitigation measures at Lake Hodges and other Water Authority facilities. The other part of this project analyzes long-term water quality issues associated with Lake Hodges pumped storage and reservoir operations. Tasks include preparing a feasibility study and performing an environmental review and pilot-testing of the most promising in-lake treatments and technologies. The adopted project budget is $1.1 million. Of this amount, $900,000 is anticipated funding through the State s Proposition 84 Integrated Regional Water Management Implementation Grant Program. The remaining $210,000 represents the Water Authority s contribution towards the $300,000 funding match required by the grant. This match is focused on quagga mussel mitigation tasks. Project partners (Santa Fe Irrigation District, City of San Diego, and San Dieguito Watershed Council/River Valley Conservancy) will contribute the remaining $90,000 of the $300,000 funding match in the form of in-kind services in support of water quality mitigation tasks. Should budget decisions at the State level eliminate or delay the anticipated grant funding, this project s scope and schedule will be reevaluated. This project will be funded by a transfer of $1.1 million from the San Vicente Dam Raise and Carryover project. 110

117 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Miramar Pump Station Rehabilitation. During the planning phase of this project, staff determined that cathodic protection work was necessary and it is now being adopted for inclusion in the budget. The cost of this work will increase the project budget by $100,000. This budget increase will be funded by a $100,000 budget transfer from the San Vicente Dam Raise and Carryover Storage project. Miramar Pump Station Valve and Meter Vaults. This project was initially established in 1996 and has been deferred over the ensuing years to allow funding of higher priority work. Revising plans and specifications to comply with current codes and standards will cost $100,000. This budget increase will be funded by a $100,000 budget transfer from the San Vicente Dam Raise and Carryover Storage project. Valve and Venturi Meter Replacement. Staff has identified 44 locations within the region where valves and venturi meters need to be replaced because they have exceeded their expected service life. They will be replaced during the Fiscal Years 12 and 13 budget cycle to maintain the functionality of the water delivery system. The adopted increase in budget is $500,000 and will be funded by a transfer from the Relining and Pipe Replacement Program. New Projects In addition to the new Lake Hodges Quagga Mussel and Water Quality Mitigation asset management project, staff recommends creation of two other new projects valued at a total of $10.5 million. Twin Oaks Regulatory Storage. Work was completed in 07 on clear wells to manage the treated water component of the Twin Oaks Valley Water Treatment Plant. Subsequently, there is a need to resolve issues associated with untreated water at Twin Oaks. This project would: Capitalize the $4.1 million in work previously done on the treated water clear wells at the Treatment Plant. Fund the balance of planning work and the Environmental Impact Report (EIR) needed to remedy untreated water pressure surges and aqueduct flow variations at the Treatment Plant. The pressure surges and flow variations on the untreated water side of the Twin Oaks Valley Water Treatment Plant cause excessive wear and reduce the service life of the valves. These conditions require operations staff to continuously monitor and manually adjust the flow control facility. These issues were identified during testing by the design-build contractor who provided funds as settlement of all issues. As a result, this project includes preparation of a planning study that will evaluate alternative control strategies to alleviate the pressure surges and flow variations and allow fully remote operation using the Water Authority s Supervisory Control and Data Acquisition (SCADA) system. The adopted budget for this project is $4.9 million which will be transferred from the System Regulatory Storage project, which was created in 05 to improve treated and untreated aqueduct operations by adding regulatory storage at various sites along the Water Authority conveyance system. Of this amount, approximately $4.1 million has been expended on the clear wells and will be capitalized. The remaining funding will be used for a planning study and environmental document. Upon completion of the study, staff will return to the Board with a recommendation for the design and construction phases of the project. 111

118 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Twin Oaks Valley Water Treatment Plant Expanded Service Area. This new project will expand the area that can receive treated water produced at the Twin Oaks Valley Water Treatment Plant. The project also will address an expected reduction in demand for treated water from the Twin Oaks Valley Water Treatment Plant resulting from increased water conservation measures and potential new treated water supplies from the Carlsbad Desalination project. The project includes two components: installation of a smaller replacement meter on Pipeline 4 at the Metropolitan Water District (MWD) Delivery Point and an increase in the capacity of the Valley Center Pipeline 2A Pump Station from cubic feet per second (cfs) to 60 cfs. The replacement meter is intended to reduce the minimum treated water take from MWD from 50 cfs to approximately 10 cfs. Along with the increased pumping capacity, this change will expand the Treatment Plant s treated water service area to the First and Second Aqueducts north of Twin Oaks. The adopted budget for this project is $5.6 million. This project is funded by a transfer of $5.6 million from the San Vicente Dam Raise and Carryover Storage project. Project Scope Budget Changes Five existing projects have experienced a change in scope of work requiring a total budget increase of $32.9 million. A majority of the funds for these budget increases come from the San Vicente Dam Raise and Carryover Storage project. Aqueduct Protection Program. Water from the proposed Carlsbad Desalination Project is proposed to be conveyed using a segment of Pipeline 3, which requires reoperating the pipeline at a hydraulic regime that differs from the pipeline s original design. This segment of Pipeline 3 is constructed with welded steel pipe and is considered safe and reliable. However, the end of useful service for this segment is estimated to occur in less than 15 years. The adopted budget includes an increase of $1.2 million to conduct internal and external investigations on Pipeline 3, develop a rehabilitation strategy that will enable safe, reliable conveyance of desalted water under the new hydraulic regime and extend the useful service life of Pipeline 3 beyond the 30- year operating agreement term for the Carlsbad Desalination project. The welded steel pipe condition assessment information and the rehabilitation strategies also will support the Water Authority s Asset Management Program and the prioritization of repair needs for other welded steel pipe segments. The Water Authority expects to be reimbursed for those costs directly attributable to the Carlsbad Desalination project. Lake Murray Control Valve. The Lake Murray Control Valve project was established in the last budget cycle. Based on operating and hydraulic constraints identified during planning and environmental work, the facility is to be located in the vicinity of Lake Murray where Pipeline 3 lies in the center median of Baltimore Drive. Safe access for maintaining valves within this facility requires the structure to be sited adjacent to and outside of the public roadway. The adopted budget includes an increase of $1.0 million to construct the facility at this location, including new connections to Pipeline 3 that will cross under the Baltimore Drive travel lanes. Mission Trails Flow Regulatory Structure II. The construction phase of the Mission Trails FRS II project was deferred in the last budget cycle. As a result, several work items from the Mission Trails Tunnel construction contract were deleted, by change order, because they will only be required when the FRS is constructed. 112

119 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Work items deleted from the tunnel construction project in the amount of $8.6 million will be added to the Mission Trails FRS II project, which was deferred and is now scheduled to begin construction in Fiscal Year 15. Mitigation Program. This program provides comprehensive mitigation for Water Authority programs, projects, and actions. These mitigation actions enable the Water Authority to comply with state and federal regulations and, to, prevent both short-term and long-term construction and operational delays. Three issues are driving a $10 million increase in the Mitigation Program budget: An increase of $3.5 million is necessary to cover increased costs due to resource and regulatory agency requirements, as well as final design adjustments to the Tijuana River Valley Wetlands Mitigation Project. These include inlet redesign and site expansion, irrigation system and water supply improvements, post construction site management, and a one-time endowment payment for perpetual maintenance at Tijuana River wetlands and Manchester wetlands. There is a need for $1.5 million to permit implementation of the approved 55-year Natural Community Conservation Plan/Habitat Conservation Plan (NCCP/HCP), including one-time individual endowment payments for endangered species and habitat management at three upland mitigation banks and labor and consultant costs to administer the program. Five million dollars is needed to plan, design, construct, manage, and provide for a one-time perpetual maintenance endowment payment to the approved North County endangered species/ wetland mitigation bank along the San Luis Rey River. Olivenhain-Hodges Pumped Storage/ESP Lake Hodges Pump Station. The adopted budget includes a $12 million budget increase for legal support and installation of safety and efficiency enhancements to aid in future operations and maintenance of the pump station. The increase also is necessary to pay for staff labor and professional services assistance for the repair and reassembly of equipment components damaged in recent facilities startup testing. The Water Authority is seeking reimbursement for a portion of these costs. Master Planning Changes The adopted budget includes two changes for Master Planning projects totaling $9.6 million. Facilities Master Plan Update. This $1.6 million budget increase is for preparation of a Program EIR that will assess regional impacts and provide corresponding mitigation measures resulting from development of new infrastructure projects and supply programs approved for implementation in the 12 Regional Water Facilities Master Plan Update. The project also includes preparation of a Climate Action Plan that will assess greenhouse gas emissions and related mitigation strategies pursuant to the California Global Warming Solutions Act (AB 32). This increase is funded by a $1.6 million budget transfer from the San Vicente Dam Raise and Carryover Storage project. ESP San Vicente 3rd Pump Drive and Power. The San Vicente Pump Station was designed with three highcapacity pumps sized to meet the region s emergency supply needs through 30. Due to power availability limitations, only two of the three planned pump drive systems, known as variable frequency drive systems (VFDs), were installed. The two VFDs are capable of meeting the region s near-term emergency supply requirements. By transferring the remaining project budget to the ESP s San Vicente 3rd Pump Drive and Power, the completed portion of the pumping facilities project will be capitalized. 113

120 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program This new project will be evaluated as part of the Facilities Master Plan Update, which will analyze the costs and reliability of grid-supplied power versus on-site generation for the third pump, as well as project timing to meet the region s emergency supply needs for 30. The adopted budget for this project is $8.0 million and represents the remaining funds available in the San Vicente Pump Station project. Table 4: Adopted Budget Changes by Project Adopted Budget Adopted Budget Change Asset Management Program Changes Lake Hodges Quagga Mussel and Water Quality Mitigation $ - $ 1,110,000 $ 1,110,000 Miramar Pump Station Rehabilitation 3,900,000 4,000, ,000 Miramar Pump Station Valve & Meter 1,908,000 2,008, ,000 Valve & Venturi Meter Replacement 3,009,000 3,509, ,000 Subtotal $ 8,817,000 $ 10,627,000 $ 1,810,000 New Projects Twin Oaks Regulatory Storage - 4,943,000 4,943,000 Twin Oaks Valley WTP Expanded Service Area - 5,600,000 5,600,000 Subtotal $ - $ 10,543,000 $ 10,543,000 Project Scope Changes Aqueduct Protection Program 24,560,000 25,775,000 1,215,000 ESP Lake Hodges Pump Station 102,768, ,316,000 7,548,000 Lake Murray Control Valve 9,600,000 10,600,000 1,000,000 Mission Trails FRS II 44,702,000 53,317,000 8,615,000 Mitigation Program 23,806,000 33,806,000 10,000,000 Olivenhain-Hodges Pumped Storage 66,083,000 70,535,000 4,452,000 Subtotal $ 271,519,000 $ 304,349,000 $ 32,830,000 Master Planning Changes ESP San Vicente 3rd Pump Drive and Power - 8,044,000 8,044,000 Facilities Master Plan Update 2,825,000 4,425,000 1,600,000 Subtotal $ 2,825,000 $ 12,469,000 $ 9,644,000 Project Savings ESP San Vicente Dam Raise 482,173, ,448,000 (32,725,000) ESP San Vicente Pumping Facilities 117,745, ,701,000 (8,044,000) Mission Trails Tunnel 49,463,000 40,848,000 (8,615,000) Relining & Pipe Replacement 786,823, ,323,000 (500,000) System Regulatory Structure 60,593,000 55,650,000 (4,943,000) Subtotal $ 1,496,797,000 $ 1,441,970,000 $ (54,827,000) TOTAL $ 1,779,958,000 $ 1,779,958,000 $ - 114

121 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Figure 5: Capital Improvement Program Location Map 115

122 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program The project summary table on pages 24 and 25 in the Financial Summaries section of the budget provides a programmatic and project level summary of the CIP. Individual Project Sheets follow in alphabetical order by project name within the project categories of Asset Management, New Facilities, Emergency Storage Program, Master Planning, and Other. They summarize the project scope, status, and planned work for Fiscal Years 12 and 13. Active Projects Asset Management Page No. Additional Aqueduct Right of Way Width (N0340)...1 Aqueduct Alignment Corrections (N0280) Aqueduct Protection Program (R0100) Building Additions & Improvements (P05) Emergency Ops Center/Alt Control Room (P0600) ESP Operations Center Upgrade (G1900) Fallbrook 7/Rainbow 14 FCF s (M00) Fallbrook 8 FCF & DeLuz 1 SCADA (M02) Lake Hodges Quagga Mussel & Water Quality Mitigation (P0610) Line Structure & Access Improvements (P00) Miramar Pump Station Rehabilitation (N0330) Miramar Pump Station Valve & Meter Vaults (M0190) Relining & Pipeline Replacement Program (R00) San Diego 12 FCF Expansion (M0290) San Diego 24 FCF (M0280) Valve & Venturi Meter Replacement Program (P0550) Water System Security (P0800)

123 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Page No. New Facilities Camp Pendleton Desalination Project (K0400) Carlsbad Desalination Aqueduct Improvements (K0300) Colorado River Canal Linings (I0300) Colorado River Canal Linings Post Construction Mitigation Monitoring (I0400) Communications System Facilities (P07) Lake Murray Control Valve (C0710) Mission Trails Flow Regulatory Structure (FRS) II (C0600) Nob Hill Improvements (C07) Olivenhain 9 Flow Control Facility (M3550) Olivenhain-Hodges Pumped Storage (J0100) Twin Oaks Regulatory Storage (S01) Twin Oaks Valley WTP Expanded Service Area (N05) Twin Oaks Valley Water Treatment Plant (S0100) Emergency Storage Program ESP Lake Hodges Pump Station & Inlet/Outlet (G1300) ESP Planning & Support Services (G00) ESP Post Construction Mitigation (G00) ESP San Vicente Dam Raise & Carryover Storage (G1400) ESP San Vicente Pipeline & Aqueduct Interconnect (G0700)

124 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Page No. Master Planning ESP Pump Station at Pipeline 3 & Interconnect (G1700) ESP Pump Station at Pipeline 4 (G1800) ESP San Vicente 3rd Pump Drive & Power (G0610) Pipeline 6 (F0100) Restore Untreated Water in LMSE to Sweetwater (B0400) Second Crossover Pipeline (N0360) System Regulatory Storage (N0500) Water Facilities Master Plan Update (H0110) Other Capitalized Warranty (N0600) East County Regional Treated Water Improvements (S0300) Groundwater Conjunctive Use Program (aka Vidler/Semitropic) (I0500) Hydraulic Transient Model (P0710) Mitigation Program (H00) Post-Construction Mitigation Monitoring Program (H0500)

125 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Asset Management 119

126 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program N0340 Additional Aqueduct Right of Way Width Project No: N0340 Project Name: Additional Aqueduct Right of Way Width Board Approval: June 1998 Project Description: Along extended reaches of the Second Aqueduct, the centerline of Pipeline 3 is only 15 feet from the Water Authority's right-of-way line. The purpose of this project is to acquire additional property rights to widen the right-of-way to provide adequate width to maintain Pipeline 3. Staff has focused on areas of active development where owners have placed their properties up for sale. This project is related to the Relining and Pipeline Replacement Program. Project Status: In the later part of FY 06, staff learned that Metropolitan Water District (MWD) was re-evaluating the delivery point of Pipeline 6. A different delivery point may change the alignment of Pipeline 6 and could also affect which side of the Second Aqueduct Pipeline 6 would be located. Therefore, the acquisition of 15 parcels along the Aqueduct in the vicinity of Aqueduct Road previously planned for FY 06 and FY 07 was put on hold and we re-directed our efforts to southerly reaches that were unaffected by the Pipeline 6 alignment. Since 07, surveys, plats and appraisals were developed for the Otay and San Marcos segments. Negotiations to acquire these parcels will continue into FY 12. Planned Work for FY 12 and FY 13: Additional right-of-way width work for the Otay segment will be completed. Negotiations on the San Marcos segment will continue. #N/A #N/A #N/A NCDP WOHLFORD FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE R AMON A P IPEL IN E ONDAQUEDUCT SEC PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 4, ,000 4,000 Design 3,785, ,000 0, ,000 5,728,000 Construction 1, ,000 2,000 Post-Construction 50, ,000 53,000 Totals 3,840, ,000 0, ,000 5,787,000 Planning May-05 Design Jun- Construction Aug-04 May-05 Post-Construction Aug-04 May FY 12 Key Milestones Date Acquire 10 parcels for San Marcos segment Jul-11 Complete acquisition of all Otay parcels Jul-11 Complete outstanding San Marcos acquisitions/lawsuits Jun-12 FY 13 Key Milestones Date Expenditures (Millions) 21 Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 1

127 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program N0280 Aqueduct Alignment Corrections Project No: N0280 Project Name: Aqueduct Alignment Corrections Board Approval: June 1996 Project Description: There are locations in the Water Authority system where the legal descriptions for the right-of-way are not compatible with the physical location of the pipeline or facility. This project will provide the necessary budget to correct known inaccuracies and identify other locations where the right-of-way and Water Authority facilities do not coincide. Funds for this project will also be made available to provide and record surveys of previously acquired, but not monumented, Water Authority property. Project Status: In FY 10 and FY 11, contracts to resolve survey issues were ongoing. Surveys to resolve issues in the Elfin Forest and Del Dios areas and a corrective Record-of-Survey has been completed as well as the completion of the Record-of-Survey depicting the disposition of San Diego County Water Authority vs. Atlantica. A survey has also completed, monumentation set and filed Record-of- Surveys for other Water Authority property on San Marcos Blvd. in San Marcos as well as for a for portion of 4E1 near Sweetwater Reservoir. A Record of Surveys is in process for portions of Pipelines 4 and 4E1 in La Mesa. Planned Work for FY 12 and FY 13: Evaluate existing right-of-ways for areas that have inaccuracies or other deficiencies, study right-ofway deeds and alignments for portions of right of ways and Authority Fee Parcels which have not been surveyed or mapped, and complete documentation and file records-of-surveys for un-mapped Water Authority property. #N/A #N/A #N/A NCDP WOHLFORD FIRSTAQUEDUCT C ROSSOVER TRI-AGENCY PIPELINE RAMON A PIPELINE ECONDAQUEDUCT S PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 2, ,000 Design 531,000 49,000 50,000 47, ,000 Construction 21,000 21, ,000 Post-Construction 157, ,000 Totals 711,000 70,000 50,000 47, ,000 Planning Design Jun-13 Construction Post-Construction Apr FY 12 Key Milestones Date Complete Records of Survey for P4 & P4E1 in La Mesa Aug-11 FY 13 Key Milestones Date Complete "as needed" surveying Jun-13 Fiscal Year (Ending June 30th) Actual Projected Cumulative Expenditures (Millions) Fiscal Year 121

128 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program R0100 Aqueduct Protection Program Comalli,Mike Project No: R0100 Stine,Gary Project Name: Aqueduct Protection Program Galleher,John Board Approval: January 1992 Project Description: In the early 1980 s, the Water Authority began experiencing failures of its Prestressed Concrete Cylinder Pipelines. In response to these failures, the Board approved the Aqueduct Protection Program (APP) in January 1992 to determine the nature and extent of the corrosion problems along the aqueducts, perform condition assessments, calculate the remaining service life of the pipelines, and develop a pipeline corrosion monitoring and protection program. This project monitors the condition of the Water Authority's pipelines and develops the rehabilitation and replacement schedule based on the remaining service lives. This project supports the Relining and Pipe Replacement Program. This project is partially reimbursable. NCDP WOHLFORD FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE R AMONA PIPELINE ECONDAQUEDUCT S NOT T O S CALE PACIFIC OCEAN Project Status: Since inception, an internal inspection program and pipeline decay index has been developed to assess the pipelines' condition and estimate the remaining service life. A corrosion monitoring program was implemented to monitor the decay of both the new and existing pipelines and a system specific Corrosion Control Manual has been developed. A pipeline condition assessment report was completed and a preventive maintenance program has been developed for pipelines constructed prior to In addition, an acoustic fiber optic (AFO) monitoring system has been installed within 49 miles of the 82.5 miles of pre-stressed concrete cylinder pipe to mitigate failures and to decrease the frequency of pipeline shutdowns. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Planning 40, ,000 53,000 Design 19,288, ,000 1,215, ,000 21,511,000 Construction 4,070, ,000 4,071,000 Post-Construction 126, , ,000 Totals 23,524, ,000 1,215, ,000 25,775,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $1,215,000 Total Budget Planning Jun-09 Design Jun-12 Planned Work for FY 12 and FY 13: During FY 12, perform a condition assessment of Pipeline 3 between Lake San Marcos and the Twin Oaks Valley Water Treatment Plant (if necessary to accommodate and be reimbursed by the Carlsbad Desalination project) and remove the Acoustic Fiber Optic Monitoring system from Pipelines 3 and 4 in the Miramar area after they are relined. During FY 13, work with Finance on the development of a facility replacement/rehabilitation fund that will be used to support Asset Management into the next budget cycle. Construction Post-Construction Jun Fiscal Year (Ending June 30th) FY 12 Key Milestones Date Remove acoustic fiber optic system from Pipeline 3 & 4 Jun-12 Assess condition of Pipeline 3 between San Marcos and the Twin Oaks Valley Water Treatment Plant Jun-12 FY 13 Key Milestones Date Develop recommendations for facility replacement/rehabilitation fund Jun Actual Projected Cumulative Expenditures (Millions) Fiscal Year 122

129 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Project No: P05 Project Name: Building Additions and Improvements Board Approval: June 02 Project Description: This project was established to construct improvements to the existing Escondido Operations Center. Improvements will include replacement/upgrade of the existing Heating Ventilation Air and Conditioning system; installation of insulated security windows replacing existing single-pane windows along the perimeter of the building; modifications to the entry and replacement of the reception desk area; replacement of the office phone system; replacement of the fleet services roof; and an Americans With Disabilities Act compliant women's restroom and locker area. This project is related to the Emergency Operations Center/Alt Control Room project, as well as the Emergency Storage Program Operations Center Upgrade project, as they pertain to building modifications at the Escondido Operations Center. Project Status: Three improvement projects at the Escondido Operations Center were completed in FY 04. These include the security window replacement, phone system replacement, and modifications to the front reception desk area. In FY 05, the design element for the Heating Ventilation and Air Conditioning upgrade project was included in the Escondido Operations Center Upgrade Project. In FY 09, a facility needs assessment was completed. As a result of this assessment, all unfinished components except the heating and air conditioning upgrade and the fleet services roof replacement were put on hold. In FY 11, completed upgrade of the Escondido Operations Center heating and air conditioning System and installation of a new roof on the Fleet Services facility. Any further work on this project is under review and will be addressed in FY 14. Planned Work for FY 12 and FY 13: No work is contemplated for FY 12 and FY 13. #N/A #N/A #N/A Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning Design, ,000 Construction 332, , ,000 Post-Construction Totals 352, , ,000 Jun-06 Jun NCDP WOHLFORD Planning Planning Design Design Construction Construction Post-Construction Post-Construction Jun-10 Jun-11. P05 Building Additions & Improvements FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E ONDAQUEDUCT SEC FY 12 Key Milestones Date FY 13 Key Milestones Date PACIFIC OCEAN NOT T O SCALE Expenditures (Millions) 21 Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 123

130 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program P0600 Emergency Ops Center/Alt Control Room Project No: P0600 Project Name: Emergency Ops Center/Alt Control Room Board Approval: June 03 Project Description: This project funds the Emergency Operations Center/Alternate Control Room. In the event that the Escondido Control Room is damaged in an emergency, an alternate control system will be necessary at the Twin Oaks Treatment Plant. This facility will allow the control of the aqueduct system, including all ESP components, to be seamlessly transferred with minimal effect to the member agencies. Project Status: A vulnerability analysis was conducted on the Escondido Operations Center control system in 10. If the control system is damaged during an emergency event, control of the aqueduct system would be severely hampered and cause major impacts to the member agencies. As a result, a plan was put together to locate an alternate control room at the Twin Oaks Valley Treatment Plant. This project is related to the ESP Operations Center Upgrade and will be evaluated as part of Asset Management for future needs. Planned Work for FY 12 and FY 13: In FY 12, a redundant SCADA system will be purchased and installed in the operations room of the treatment plant. Modifications to the existing control and communication system will also be made to ensure synchronization of data between the two systems and allow an easy transfer of control between the two locations. All SCADA equipment purchases and system modifications are expected to be completed in FY12. #N/A #N/A #N/A Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 14, ,000 36,000 Design 1,026, ,000 1,195,000 Construction 1, ,000-3,050,000 3,651,000 Post-Construction Totals 1,041, ,000-3,240,000 4,881,000 Jul-03 Mar-04 Sep-03 Apr-14 Jul-11 Sep NCDP WOHLFORD FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E ONDAQUEDUCT SEC FY 12 Key Milestones Date Complete installation of alternate SCADA system Jun-12 FY 13 Key Milestones Date PACIFIC OCEAN NOT T O SCALE Planning Design Construction Post-Construction Expenditures (Millions) 21 Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 124

131 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G1900 ESP Operations Center Upgrade Root,Chris Project No: G1900 Steele,Ken Project Name: ESP - Operations Center Upgrade Zecha,Hubert Board Approval: June 1998 Project Description: Implementation of the Emergency Storage Program (ESP) requires that the Water Authority's Escondido Operations Center monitor several new facilities, including three reservoirs, several large pump stations, and approximately 18 miles of new pipeline. Telemetry is included in the ESP for relay of operational instructions and data at the Operations Center. This project funds the design and construction of structural upgrades needed to designate the Operations Center as an "essential services" building, which by definition, will remain operational following a major seismic event. It also shares street and landscaping improvement work, American With Disabilities Act upgrades within the existing Escondido office building, and other miscellaneous items, as required by the City of Escondido, with the Alternate Control Room/Emergency Operations Center project. NCDP WOHLFORD FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE ONDAQUEDUCT SEC NOT T O S CALE PACIFIC OCEAN This project is related to the Emergency Operation Center/Alternate Control Room and Building Additions and Improvements projects. Actual thru 6/30/10 BUDGET SUMMARY BY PROGRAM Planning Project Status: Design 691, , ,000 Design of the Supervisory Control and Data Acquisition (SCADA) integration portion of this project Construction 2, ,461,000 1,463,000 was completed in August 03. Structural analysis of the Escondido Operations Center was Post-Construction completed in September 03. In March 05, the architect submitted the 60 percent design along Totals 693, ,483,000 2,176,000 with notification that their firm would be dissolving. A replacement architect was selected and approved in April 05. The design was completed in FY 06. During the Comprehensive Reliability and Cost Assessment (CRACA) process, a decision was made to defer further work on this project until FY 14. The project was referred to Asset Management for evaluation. Planning Design Construction Aug Projected Basis of 12 Basis of 13 Remaining Balance Dec-14 Jun-17 Total Budget Planned Work for FY 12 and FY 13: This project is deferred until FY 14. Post-Construction FY 12 Key Milestones Date FY 13 Key Milestones Date Expenditures (Millions) 21 Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 125

132 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program M00 Fallbrook 7/Rainbow 14 FCF s Project No: M00 Project Name: Fallbrook 7/Rainbow 14 FCF's Board Approval: June 1996 Project Description: The existing Fallbrook 3/Rainbow 1 Flow Control Facility was constructed in 1955 and will be replaced by new Fallbrook 7/Rainbow 14 Flow Control Facilities. Based on the increased frequency of maintenance since 1968 and to ensure a reliable supply of treated water to both Fallbrook Public Utility District and Rainbow Municipal Water District, replacement of the existing flow control facilities may be required. These two upgraded Fallbrook 7/Rainbow 14 flow control facilities would provide 30 and 22 cubic feet per second of water, respectively. Project Status: In FY 11, the Comprehensive Reliability and Cost Assessment (CRACA) committee of the Board recommended the referral of the Fallbrook project to the Asset Management program for evaluation. An assessment will be made over the next two years about the future need and scope of the project. Planned Work for FY 12 and FY 13: No work is planned since this project has been referred to Asset Management for further evaluation. #N/A #N/A #N/A NCDP WOHLFORD FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E ONDAQUEDUCT SEC PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 14, ,000 95,000 Design 1,173, ,173,000 Construction 57, ,863,000 2,9,000 Post-Construction Totals 1,244, ,944,000 4,188,000 Planning Design Jun-17 Construction Jun-17 Jun-18 Post-Construction FY 12 Key Milestones Date FY 13 Key Milestones Date Expenditures (Millions) 21 Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 126

133 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program M02 Fallbrook 8 FCF & DeLuz 1 SCADA Project No: M02 Project Name: Fallbrook 8 FCF & DeLuz 1 SCADA Board Approval: June 1996 Project Description: Project Status: Planned Work for FY 12 and FY 13: NCDP W O HL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Planning 15, ,000 99,000 Design 1,481, ,481,000 Construction 18, ,674,000 2,692,000 Post-Construction Totals 1,514, ,758,000 4,272,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $250,000 Total Budget Planning Planning Design Design Construction Construction Post-Construction Jun-17 Jun-17 Dec-09 Dec-09 Sep-18 Mar The existing Fallbrook 6 Flow Control Facility (FCF) and DeLuz 1 FCF have turnouts located along Metropolitan Water District's portion of the aqueduct and do not have throttling valves to control flow. As a result, the facilities operate on demand, which causes fluctuations in the flow in the aqueduct. These facilities could benefit from upgrading to regulate flow and bring them up to date with current Water Authority design standards for flow control facilities. The upgraded facilities will be renamed, Fallbrook 8 FCF and DeLuz 1 Supervisory Control and Data Acquisition (SCADA) and will consist of installing a valve at the Fallbrook 8 FCF and installing telemetry software, SCADA, at the DeLuz 1 FCF. This project is partially reimbursable. In FY 11, the Comprehensive Reliability and Cost Assessment (CRACA) committee of the Board recommended the referral of the Fallbrook project to the Asset Management program for evaluation. An assessment will be made over the next two years about the future need and scope of this project. No work is planned since this project has been referred to Asset Management for further evaluation. FY 12 Key Milestones Date FY 13 Key Milestones Date Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 127

134 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program P0610 Lake Hodges Quagga Mussel & Water Quality Mitigation Project No: P0610 Project Name: Lake Hodges Quagga Mussel & Water Quality Mitigation Board Approval: June 11 Project Description: This new project represents the first phase of an effort to mitigate the effects of the Quagga mussel on reservoir and facility operations, as well as improve long-term water quality issues associated with Lake Hodges pumped storage and reservoir operation. Quagga mussel mitigation tasks include evaluation, design, and construction of control measures, including Hodges Pumped Storage Facility retrofits, recommended as part of a Winter/Spring 11 vulnerability assessment. Water quality tasks include a feasibility study, environmental review, and pilot testing of the most promising in-lake treatments and technologies. This project is partially reimbursable. Project Status: This project is new in FY 12. Planned Work for FY 12 and FY 13: Planned work includes completing the design of quagga mitigation measures for Hodges Pumped Storage facility and starting construction/installing equipment. The Water Authority also plans to complete a feasibility study for potential water quality improvements, determine pilot tests and equipment evaluations to be done, and begin the environmental review and documentation process. #N/A #N/A #N/A NCDP WOHLFORD FIRSTAQUEDUCT C ROSSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE ECONDAQUEDUCT S PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Planning ,000 72, ,000 Design , , ,000 Construction ,000 2, ,000 Post-Construction Totals ,000 6,000 2,000 1,110,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $900,000 Total Budget Planning Design Construction Post-Construction Jul-11 Nov-11 Jan-13 Dec-12 Jul-13 May FY 12 Key Milestones Date Complete Water Quality Feasibility Study Feb-12 Determine Environmental Document requirement Mar-12 FY 13 Key Milestones Date Complete Design - Quagga Mitigation Jul-12 Issue Construction Notice to Proceed - Quagga Mitigation Jan-13 Fiscal Year (Ending June 30th) Actual Projected Cumulative Expenditures (Millions) Fiscal Year 128

135 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program P00 Line Structure & Access Improvements Walech,Terry Project No: P00 Rose,Bill Project Name: Line Structure and Access Improvements Busch,Bill Board Approval: June 1997 Project Description: This project will identify and acquire access rights to areas of the aqueduct system that are currently inaccessible for maintenance or patrol, or where existing access rights are inadequate. Not all the aqueduct right-of-way is accessible for patrol activities. Better access will provide for improved patrol activities resulting in fewer encroachments and improved right-of-way condition. Other tasks that are part of this project include; a two-year program of facility fencing, line road gates, line road paving, and facility signage. NCDP W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Project Status: Work to establish access to Second Aqueduct at Gopher Canyon through Wild Acres or other route has commenced. During FY 10 and FY 11, four paving projects, three fencing and four culvert projects were completed. The Water Authority also purchased and installed two type II gates on our right-of-way. Projects for signage, facility fencing, line road gates and paving will continue in FY 12 and FY 13. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 9, ,000 10,000 Design 250, , ,000 Construction 1,006, , , ,000 80,000 1,743,000 Post-Construction 45, ,000 Totals 1,310, , , , ,000 2,070,000 Planning Jun-09 Planned Work for FY 12 and FY 13: Staff will pursue access rights to Second Aqueduct at Gopher Canyon over Wild Acres Road or comparable route. New opportunities will be placed in queue as needs are identified. Projects for signage, facility fencing, line road gates and paving will continue. Design Construction Post-Construction Aug-03 Jun-04 Jun-11 Jun FY 12 Key Milestones Date Complete acquisition of access to Second Aqueduct at Gopher Canyon Jun FY 13 Key Milestones Date Complete Facility Fencing Installations Jun Complete Additional Line Road Paving Jun-13 Complete Gate Installations Jun Expenditures (Millions) 21 Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 129

136 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program N0330 Miramar Pump Station Rehabilitation Project No: N0330 Project Name: Miramar Pump Station Rehabilitation Board Approval: June 1997 Project Description: The Miramar Pump Station was constructed in 1978 and is connected to the treated water pipeline of the Second Aqueduct, pumping water from the City of San Diego s Miramar Water Treatment Plant. The project includes rehabilitating pumps and motors, replacing electrical switchgear, upgrading instrumentation and control equipment to allow remote operation, and installing isolation flanges for corrosion protection. Planned Work for FY 12 and FY 13: Perform condition assessment of the facility. Complete detailed design work and advertise the project for construction bids. #N/A #N/A #N/A NCDP WOHLFORD FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E ONDAQUEDUCT SEC PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 155, , ,000 Design 234, , , ,000 Construction 56, ,269, ,000 2,818,000 Post-Construction Totals 445, , ,000 2,526, ,000 4,000,000 Planning Jul-06 Dec-10 Design Jul-11 Sep-12 Construction Dec-12 Dec-13 Post-Construction Project Status: A Phase I-Project Development Report evaluating rehabilitation alternatives was completed in 10. A Phase II-Project Design Phase has started. FY 12 Key Milestones Date Hire Design Consultant to complete condition assessment Sep-11 Hire Design Consultant to complete detailed design Jun-12 FY 13 Key Milestones Date Complete detailed design Jun-13 Fiscal Year (Ending June 30th) Actual Projected Cumulative Expenditures (Millions) Fiscal Year 130

137 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program M0190 Miramar Pump Station Valve & Meter Vaults Project No: M0190 Project Name: Miramar Pump Station Valve & Meter Vaults Board Approval: June 1996 Project Description: Project Status: The original valve vault and valve was installed in 02. Design of the meter vault was started but then put on hold until the completion of the Phase I-Project Development Report for the Miramar Pump Station Rehabilitation project to ensure the projects did not adversely impact each other. Planned Work for FY 12 and FY 13: Complete design and begin construction of the meter vault. NCDP W OHL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 17, ,000 Design 377,000 13,000 4, ,000 Construction 411, , ,000 1,597,000 Post-Construction Totals 805,000 13,000 4, , ,000 2,008,000 Planning Design Jul-11 Construction Sep-13 Post-Construction The Miramar Pump Station is connected to the treated water pipeline of the Second Aqueduct and pumps water from the Miramar Water Treatment Plant to the aqueduct to supplement flows. The pump station is currently connected to the Scripps Ranch Pipeline via a 48-inch pipeline. This phased project will add one valve vault in the first phase and one meter vault in the second phase to the 48-inch pipeline. The Project Development Report was completed in 10 and determined that the existing pump station would be rehabilitated instead of a new pump station being built and the rehabilitated pump station would not interfere with the proposed meter vault project. The meter vault project is now moving forward with the design and construction of the meter vault. FY 12 Key Milestones Date Complete design Jul-11 Start construction Mar-12 FY 13 Key Milestones Date Complete construction May Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 131

138 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program R00 Relining & Pipeline Replacement Program Walech,Terry Project No: R00 Stine,Gary Project Name: Galleher,John NCDP Board Approval: Project Description: Relining and Pipeline Replacement Program June 1993 W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT There are 82 miles of pre-stressed concrete cylinder pipe (PCCP) within the Water Authority s Second Aqueduct. This pipe was constructed between 1958 and In the early 1980 s, the Water Authority began experiencing PCCP failures in the Sweetwater area and relined five miles of Pipeline 3. Between 1990 and 1993 there were four further PCCP repairs conducted. In 1993, the Board approved the Replacement/Relining of Existing PCCP to facilitate the rehabilitation of Water Authority pipelines. In 07, the project was amended to include relining of PCCP, as well as all emergency pipe replacement work. PACIFIC OCEAN NOT T O S CALE Project Status: The length of existing PCCP pipelines rehabilitated to date totals approximately 27 miles. Through FY 10 and FY 11, project construction phases were delayed as a result of the Board's decision in January 09 to defer construction to the beginning of FY 12. During this time, priority projects were designed to be ready for construction in FY 12 and FY 13. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 1,412, , , , ,000 3,052,000 Design 6,281,000 1,212,000 1,750,000 1,015,000 12,065,000 22,323,000 Construction 164,457,000 17,000 26,860,000 39,947, ,312, ,593,000 Post-Construction 8, , , ,000 Totals 172,158,000 1,588,000 29,027,000 41,432, ,118, ,323,000 Planning Planned Work for FY 12 and FY 13: Complete construction of Relining Pipelines 3 & 4 Miramar Hill to Scripps Ranch Complete design of Relining Pipeline 3 Otay Vent 1 to Lower Otay Complete construction of Relining Pipeline 4 SR-52 to Lake Murray Complete design of Relining Pipeline 3 Sweetwater to Otay Vent 1 Design Construction Post-Construction FY 12 Key Milestones Date Notice to Proceed for construction - P3 & 4 Miramar Hill to Scripps Ranch Jul-11 Advertise for Bids for construction - P4 SR-52 to Lake Murray Feb-12 Complete 90% Design - P3 Otay Vent 1 to Lower Otay Mar-12 FY 13 Key Milestones Date Notice to Proceed for construction - P4 SR-52 to Lake Murray Jul-12 File Notice of Completion - P3&4 Miramar Hill to Scripps Ranch Jan-13 Complete 90% Design - P3 Sweetwater to Otay Vent 1 Mar Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 132

139 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program M0290 San Diego 12 FCF Expansion Project No: M0290 Project Name: San Diego 12 Expansion Board Approval: June 03 Project Description: This project will increase the capacity of the San Diego 12 Flow Control Facility from 96 mgd to 150 mgd to meet a request from the City of San Diego for expanded untreated water service at the Alvarado Water Treatment Plant. The portion of the project that increases flow control facility capacity is reimbursable by the City of San Diego. This project is partially reimbursable. Project Status: A revised facility planning study was completed in FY 11 and identified new alternatives that would allow the existing flow control facility to remain in service and construct a separate structure that would accommodate the City's requested increase in untreated water delivery capacity. This project is one of the seven projects approved for construction phase deferral via the CRACA process. The FYs 12 and 13 budget assumes a continuation of environmental planning and design work over then next two years with the start of construction deferred to FY 15. Coordination will continue with the City of San Diego to assure project implementation meets the City's requirements for operation of the Alvarado Water Treatment Plant. Planned Work for FY 12 and FY 13: Execute an agreement with City of San Diego and complete California Environmental Quality Act requirements and design work for the new flow control facility. #N/A #N/A #N/A NCDP W O HL F OR D FIRSTAQUEDUC T CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E S ECONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Planning 44,000 49, , ,000 Design 69, , ,000 17,000-1,610,000 Construction ,622,000 7,622,000 Post-Construction Totals 113, , ,000 17,000 7,717,000 9,4,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $3,391,0 Total Budget Planning Jul-04 Jun-11 Design Jun-11 May-13 Construction Jul-14 May-16 Post-Construction FY 12 Key Milestones Date Board approval of flow control facility agreement Apr-12 Board award design contract Apr-12 FY 13 Key Milestones Date Board certify Environmental Impact Report Jun Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 133

140 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program M0280 San Diego 24 FCF Project No: M0280 Project Name: San Diego 24 FCF Board Approval: June 03 Planned Work for FY 12 and FY 13: #N/A #N/A #N/A Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Planning 417,000 15, , ,000 Design 7, , ,000 Construction ,112,000 6,112,000 Post-Construction Totals 424,000 15, ,078,000 7,517,000 PROJECT REIMBURSABLE IN THE SUM OF $7,517,000 Total Budget Planning Design Construction Construction Post-Construction Post-Construction Sep-01 Jun-12 Jun-09 Jun Project Description: The San Diego 24 Flow Control Facility (FCF) will increase untreated water delivery capacity to match the capacity of the City of San Diego's expanded Miramar Water Treatment Plant. The new flow control facility is also intended to replace an existing temporary flow control facility, known as the San Diego Temporary 5C FCF, with a new, permanent structure. The portion of the project that increases flow control facility capacity above the current permanent service is reimbursable by the City of San Diego. This project is reimbursable. Project Status: A revised preliminary design report was finalized in early 10 leading to the selection of a preferred project that would allow the existing permanent flow control facility, known as the San Diego 5A and 5B FCF, to remain in service and a new separate structure would be constructed to provide the expanded service capacity. As a result of reduced water demands experienced throughout the region, in late 10 the City requested a delay to San Diego 24 FCF, pending approval of an agreement with the City to convert San Diego Temporary 5C FCF to a permanent structure. Agreement discussions on conversion requirements are ongoing at this time. The need for expanded delivery capacity for the Miramar Water Treatment Plant will be further evaluated in the 12 Regional Water Facilities Optimization and Master Plan. No work is contemplated for the San Diego 24 FCF project. A revised project schedule will be developed under the 12 Regional Water Facilities Optimization and Master Plan, which will fund that analysis. NCDP WOHLFORD FIRSTAQUEDUC T CR OSSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E ONDAQUEDUCT SEC FY 12 Key Milestones Date Finalize agreement with City of San Diego to convert SD 5C FCF Jun-12 from a temporary to a permanent facility FY 13 Key Milestones Date PACIFIC OCEAN NOT T O SCALE Jan-19 Fiscal Year (Ending June 30th) Fiscal Year (Ending June 30th) Actual Projected Cumulative Expenditures (Millions) Fiscal Year 134

141 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program P0550 Valve & Venturi Meter Replacement Program Project No: P0550 Project Name: Valve and Venturi Meter Replacement Program Board Approval: June 02 Project Description: Project Status: During FY10 & 11, maintenance crews replaced six venturi meters at NCSB 1, Rainbow 3 & 6, Valley Center 1B, 3 & 7. Replaced the take off valves at Otay 13, VID 1 and Vallicetos 2. Installed new electric actuators at San Diego 1, 5 A&B, 11, VID 1, and Vallicetos 2. Replaced the control valves at Valley Center 1B, San Diego 12 and NCSB 1 also installed two isolation valves at the Twin Oaks FRS drain vault. Planned Work for FY 12 and FY 13: Purchase 6 take off valves for San Diego 5A,B&C. New pressure relief valves for Otay 13. New control valve for San Diego 12. Purchase new control valves and venturi meters for Fallbrook 4 and Olivenhain 1. Rehabilitate line structures during winter aqueduct shutdowns at various locations. #N/A #N/A #N/A Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning Design 62, , ,000 Construction 2,345, , , ,000 51,000 3,310,000 Post-Construction Totals 2,407, , , ,000 51,000 3,509,000 Planning Design Sep-03 Construction May-03 Jun-13 Post-Construction Staff has evaluated valves and venturi meters that have reached the end of their useful service lives in many of the Water Authority's flow control facilities. This program will provide for the replacement/upgrade of those items on a priority basis. Valves covered under this program will be procured in advance to reduce lead-time, should emergency replacement be necessary. NCDP W O HL F OR D FIRSTAQUEDUCT CR OSSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT FY 12 Key Milestones Date Complete the installation of take off valves San Diego 5A,B&C. Mar-12 Complete the installation of pressure relief valves Otay 13. Mar-12 Complete the installation of control valve San Diego 12. Mar-12 Rehabilitate line structures during winter aqueduct shutdowns Mar-12 FY 13 Key Milestones Date Complete installation of venturi meter and control valve at Fallbrook 4 Mar-13 Complete the installation of venturi meter & control valve at Olivenhain 1 Mar-13 Rehabilitate line structures during winter aqueduct shutdowns Mar-13 PACIFIC OCEAN NOT T O SCALE Fiscal Year (Ending June 30th) Actual Projected Cumulative Expenditures (Millions) Fiscal Year 135

142 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program P0800 Water System Security Project No: P0800 Project Name: Water System Security Board Approval: June 03 Project Description: This project is intended to increase the Water Authority s ability to monitor and protect the aqueduct system from terrorist acts or deliberate acts of destruction or degradation. The project includes security improvements to key water conveyance facilities, including pipelines, regulatory structures, hydroelectric facilities, pump stations, and reservoirs. The six segments include the design and construction of dual mode security camera systems, security lighting, fencing, alarm systems, realtime water quality monitoring equipment, and other physical security improvements suggested in the hazards assessment/vulnerability analysis performed as required by the Public Health Security and Bio-terrorism Preparedness and Response Act of 02. NCDP W O HL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE R AMON A PIP EL IN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 BUDGET SUMMARY BY PROGRAM Project Status: Planning 15, ,000 Completed initial installation and began planning and design for additional security camera systems at key locations. Installed security fencing at key locations and began facility, structure, and gate lock replacements. Completed real-time water quality monitoring equipment installations at five sites. Completed Second Aqueduct primary communication system upgrade. Began video security system upgrade and new installations at key sites. 11 Projected Basis of 12 Basis of 13 Remaining Balance Total Budget Design 255, ,000 Construction 3,738,000 3, , ,000-4,325,000 Post-Construction Totals 4,008,000 3, , ,000-4,595,000 Planning Planned Work for FY 12 and FY 13: Complete video security system upgrade and new installations at key facilities. Design Construction Post-Construction Jul-02 Jun-04 Jul-03 Jul-03 Jun-04 Jun-13 Mar FY 12 Key Milestones Date Complete video security system upgrade and new Jun-12 installations at key facilities. FY 13 Key Milestones Date Complete Water System Security Improvements Jun Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 136

143 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program New Facilities 137

144 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program K0400 Camp Pendleton Desalination Project Project No: K0400 Project Name: Camp Pendleton Desalination Project Board Approval: June 09 Project Description: This project will support continued planning activities for a new seawater desalination project sized between 50 and 150 million gallons per day located at the southerly end of Marine Corps Base Camp Pendleton. Activities include negotiating an agreement with Camp Pendleton to cover planning activities; conducting geological, hydrogeologic and marine life studies in support of preliminary design and environmental review of the desalination facility intake and discharge facilities; preparing preliminary site development plans for the treatment plant and conveyance facilities; and incorporation of these planning activities into the 12 Regional Water Facilities Optimization and Master Plan. Project Status: Based on the results of an initial feasibility assessment completed in 09, two potential seawater desalination sites located in the southwest corner of the Base near the mouth of the Santa Margarita River were identified and authorized by Camp Pendleton for further consideration. An agreement was awarded by the Board in March 11 to begin technical studies and investigations related to the seawater intake and brine disposal systems. Planned Work for FY 12 and FY 13: Complete the technical studies and geological, hydrogeologic, and marine life investigations that will support a review of the seawater desalination plant intake and discharge facilities. Complete preliminary site development plans for the treatment plant site, including development of site access and power supply. Consideration of further work, including environmental reviews, will be made following an assessment of new facility requirements and supply development options evaluated under the 12 Regional Water Facilities Optimization and Master Plan. #N/A #N/A #N/A Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 179,000 3,000 1,600,000 1,500,000 2,121,000 5,7,000 Design Construction Post-Construction Totals 179,000 3,000 1,600,000 1,500,000 2,121,000 5,7,000 Jul-09 Dec NCDP W OHL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT FY 12 Key Milestones Date Award Contract for Site Development Evaluations Jul-11 FY 13 Key Milestones Date Complete technical studies for intake and discharge systems Mar-13 Complete site development evaluations Mar-13 PACIFIC OCEAN NOT T O S CALE Planning Design Construction Post-Construction Expenditures (Millions) Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 138

145 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program K0300 Carlsbad Desalination Aqueduct Improvements Project No: K0300 Project Name: Carlsbad Desalination Aqueduct Improvements Board Approval: June 09 Project Description: The Carlsbad Desalination Aqueduct Improvements includes a new flow control facility, connections to the Second Aqueduct pipelines in San Marcos and at the Twin Oaks Water Treatment Plant, and rehabilitation of a five-mile portion of Pipeline 3 between San Marcos and Twin Oaks Valley. These aqueduct improvements, which are required to deliver water from the Carlsbad desalination facility to the Water Authority's Second Aqueduct, are planned to be owned and operated by the Water Authority. A budget and schedule adjustment will be made following the negotiation and acceptance of a Water Purchase Agreement defining facility requirements and implementation responsibilities. This project is reimbursable. NCDP WOHLFORD #N/A #N/A #N/A FIRSTAQUEDUCT C ROSSOVER TRI-AGENCY PIPELINE R A MO N A P IP ELIN E ONDAQUEDUCT SEC NOT T O S CALE PACIFIC OCEAN Project Status: Poseidon has prepared preliminary design drawings for the desalination plant and conveyance system, allowing Poseidon to select an Engineering, Procurement and Construction (EPC) contractor team. The Water Authority has initiated due diligence reviews of the project. Actual thru 6/30/10 BUDGET SUMMARY BY PROGRAM Planning Design 158, ,000 1,314,000 53,000-2,080,000 Construction Post-Construction Planned Work for FY 12 and FY 13: Totals 158, ,000 1,314,000 53,000-2,080,000 PROJECT REIMBURSABLE BY THE SUM OF $2,080,000 A Water Purchase Agreement with Poseidon will be considered that would define the terms and conditions for design, construction, financing and scheduling of the aqueduct improvements. Cost reimbursement is currently being provided through the Water Authority encroachment permit process. Milestones will commence upon Board approval of the Water Purchase Agreement. Planning Design 11 Projected Jul-09 Basis of 12 Basis of 13 Dec-12 Remaining Balance Total Budget Construction Post-Construction Fiscal Year (Ending June 30th) FY 12 Key Milestones Date FY 13 Key Milestones Date Actual Projected Cumulative Expenditures (Millions) Fiscal Year 139

146 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program I0300 Colorado River Canal Linings Project No: I0300 Project Name: Colorado River Canal Linings Board Approval: June 05 #N/A #N/A #N/A Project Description: This project involves the lining of two canals in southeastern California branching from the Colorado River and owned by the U.S. Bureau of Reclamation; the All-American Canal and Coachella Canal. Lining the canals will control seepage from the previously unlined canals. The Water Authority benefits from the lining of these two canals as a result of the 03 Quantification Settlement Agreement. The lining of the Coachella Canal was completed in Spring of 07. It provides a firm supply of 21,500 acre-feet of water per year and an additional variable supply of about 2,500 acre-feet of water, as a result of the settlement agreement with Coachella Valley Water District, for a total water supply of 24,000 acre-feet per year to the Water Authority. The lining of the All-American Canal was completed in Spring of 10. It provides 56,0 acre-feet of water per year to the Water Authority. Construction for the Coachella Canal Lining was administered by the Coachella Valley Water District, while construction for the All-American Canal Lining was administered by the Imperial Irrigation District. A portion of this project is subsidized by the State of California Department of Water Resources. All costs BUDGET SUMMARY BY PROGRAM above the state subsidy are funded by the Water Authority. This project is partially reimbursable. Actual thru 11 Basis of 12 Basis of 13 Remaining Total Budget Project Status: Actual thru 6/30/01 Basis of 03 Basis of 03 Basis of 03 Basis of 03 As required by the environmental document for the construction of the Coachella Canal Lining, environmental mitigation work continues. Construction of the Water Supply System was completed in 11. Planning Design Construction 249,728,000 5,240,000 5,176,000 5,249,000 5,837, ,230,000 Post-Construction Planned Work for FY 12 and FY 13: Totals 249,728,000 5,240,000 5,176,000 5,249,000 5,837, ,230,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $83,360,000 Water Authority staff will continue to coordinate with Imperial Irrigation District and Operation, Maintenance and Repair (OM&R) Coordinating Committees for each project to establish baselines of the operating expenses; review budgets produced by Coachella Valley Water District and Imperial Irrigation District; and monitor spending of budgets. Planning Design Construction Jun-11 Post-Construction Jul-08 Jun FY 12 Key Milestones Date Complete Water Supply system monitoring Dec-11 Complete access road Jan FY 13 Key Milestones Date 100. Initiate Solar System Reliability Study Jul Repair Cracked Panels Jan Actual Projected Cumulative Fiscal Year (Ending June 30th) Expenditures (Millions) Fiscal Year 140

147 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program I0400 Colorado River Canal Linings Post Construction Mitigation Monitoring Project No: I0400 Project Name: Colorado River Canal Linings - Post Construction Mitigation Monitoring Board Approval: June 07 #N/A #N/A #N/A Project Description: The Coachella Canal Lining Project and All American Canal Lining Project agreements require that post construction mitigation and monitoring is further defined and implemented after canal lining construction is complete. Although the construction of both lining projects are complete, environmental mitigation activities continue. These remaining activities include the construction of a 50-acre sports fishery pond, construction and long-term performance measurement of a 17-acre created marsh, and maintenance of various other environmental features. The All American Canal Lining project has many other remaining post-construction activities which include the installation of environmental mitigation features such as dune restoration, large mammal water catchment devices, and wetland restoration. In most cases, mitigation measures are implemented by either Imperial Irrigation District or Coachella Valley Water District staff. BUDGET SUMMARY BY PROGRAM Actual thru 6/30/10 11 Projected Remaining Basis of 12 Basis of 13 Total Budget Balance Planning Project Status: Design Construction This project is for post-construction monitoring of the Colorado River Canal Linings project. Construction of the 17-acre marsh was completed in FY 10 followed by the start of a 5-year management and monitoring program. Design of the 50-acre sport fishery mitigation pond began in FY 11 and is planned for start construction in FY12. Ongoing environmental mitigation activities for All American Canal, which include dune and wetland restorations, will continue. The installation of large mammal water catchment devices was completed in FY 11. Post-Construction 3,308, ,000 9,639,000 2,614,000 3,898,000,2,000 Totals 3,308, ,000 9,639,000 2,614,000 3,898,000,2,000 Planning Design Planned Work for FY 12 and FY 13: Continue post-construction of onsite and off-site mitigation and monitoring for the canal linings. Construction Complete design and construction ti of 50-acre Fish Pond. Negotiate t a Memorandum of Understanding with Department of Fish & Game and Imperial Irrigation District to fund one-time Post-Construction Jul-07 Dec-17 endowment for fish pond long-term maintenance and water supply, respectively. Negotiate transfer of Aqua Farms land to a third party for long-term management. FY 12 Key Milestones Date Complete long-term maintenance MOU with Department of Fish & Game Mar-12 Complete water supply MOU with Imperial Irrigation District Mar FY 13 Key Milestones Date 5. Complete Construction of 50-acre Fish Pond Jul-12 Negotiate third party agreement for Aqua Farms Jul Expenditures (Millions) Fiscal Year (Ending June 30th) Actual Projected Cumulative 141

148 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program P07 Communications System Facilities Project No: P07 Project Name: Communications System Facilities Board Approval: June 09 Project Description: This project was established to construct improvements necessary to finish the radio-based data communication system to allow high-speed broadband communication for the first time along the First Aqueduct. The First Aqueduct currently utilizes a slow, hard-wired communication system that limits the amount of data that can be transmitted. The new radio-based system, coupled with the existing Second Aqueduct fiber optic system, will provide essential wireless and backup communication between the Escondido Control Room and facilities located throughout San Diego County. This link will allow full functionality of the aqueduct control system, the video surveillance system, the security access system, and the real-time water quality monitoring system over one communication path. NCDP W O HL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN This system includes the installation of radio towers and high performance antennas, microwave radios, and miscellaneous equipment for a complete wireless communications system. Main repeater sites will be located at the Escondido Operations Center, Kearny Mesa Office, Otay 10 FCF, at Mt. Woodson, Twin Oaks Flow Regulatory Structure, and the Mission Trails Flow Regulatory Structure. Actual thru 6/30/10 BUDGET SUMMARY BY PROGRAM Planning Design Construction - 25, , ,000-1,750,000 Post-Construction Project Status: Totals - 25, , ,000-1,750,000 Planned work for FY 10 and FY 11 was delayed by contract negotiations. Work resumed in FY 11 and the radio path study is forecast to be completed by the end of FY 11. Planning NOT T O SCALE 11 Projected Basis of 12 Basis of 13 Remaining Balance Total Budget Planned Work for FY 12 and FY 13: The preliminary design, provided by the geotechnical consultant, will be finalized. Radio towers, antennas, microwave radios, and other equipment necessary to provide a turn-key communication system at radio repeater sites and flow control facilities located throughout San Diego County will be installed. Design Construction Post-Construction Jul-09 Jun FY 12 Key Milestones Date Award design-build contract Oct-11 FY 13 Key Milestones Date Complete communications systems facilities improvements Jun Expenditures (Millions) Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 142

149 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program C0710 Lake Murray Control Valve Project No: C0710 Project Name: Lake Murray Control Valve Board Approval: June 09 Project Description: This project consists of a new untreated water control facility connected to Pipeline 3 in the vicinity of Lake Murray that will work in conjunction with the Mission Trails Flow Regulatory Structure (FRS) II to regulate flow and pressure in Pipeline 3. Project Status: A revised facility planning study was completed in April 11 that identified the preferred location and piping configuration. To provide safe access, the facility will be located adjacent to Baltimore Drive and east of Lake Murray. This project is one of the seven projects approved for construction phase deferral by CRACA. The FY 12 and FY 13 budget assumes a continuation of planning and design work over then next two years, with the start of construction deferred to FY 15. Planned Work for FY 12 and FY 13: Complete the preparation of an Environmental Impact Report (EIR) in accordance with California Environmental Quality Act (CEQA), obtain Board certification of EIR, and complete final design. #N/A #N/A #N/A W OHL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 260,000, ,000 Design 84,000 50, , ,000-1,714,000 Construction ,606,000 8,606,000 Post-Construction Totals 344,000 70, , ,000 8,606,000 10,600,000 Planning Jun-09 Jan-12 Design Dec-11 Jun-13 Construction Jul-14 Dec-15 Post-Construction FY 12 Key Milestones Date Award contract for design services Dec-11 FY 13 Key Milestones Date Complete Environmental studies/certify Final EIR Dec-12 Complete design Jun Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 143

150 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program C0600 Mission Trails Flow Regulatory Structure (FRS) II Project No: C0600 Project Name: Mission Trails Flow Regulatory Structure (FRS) II Board Approval: June 03 Project Description: Project Status: In FY 11, the Comprehensive Reliability and Cost Assessment (CRACA) committee of the Board recommended the deferment of the construction phase of seven CIP projects to more closely time completion dates to regional water needs. Planned Work for FY 12 and FY 13: No work is planned for this budget cycle. NCDP W OHL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 1,689, ,689,000 Design 3,592,000 40, ,632,000 Construction 14, ,215,000 39,229,000 Post-Construction , ,000 Totals 5,295,000 40, ,982,000 53,317,000 Planning Sep-04 Sep-04 Aug-06 Aug-06 Design Jul-06 Jul-06 Jun-14 Jun-11 Construction Jul-14 Jan-08 Feb-17 Dec-13 Post-Construction Feb-17 Feb-19 Apr The Mission Trails Flow Regulatory Structure II project is important to meet future untreated water demands in central and south county. The project consists of a 12-million gallon buried concrete tank and appurtenant facilities for the untreated water system. The Flow Regulatory Structure II, in combination with the Mission Trails Pipeline Tunnel and Lake Murray Control Valve, will relieve hydraulic constraints along the Second Aqueduct. FY 12 Key Milestones Date FY 13 Key Milestones Date Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 144

151 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program C07 Nob Hill Improvements Project No: C07 Project Name: Nob Hill Improvements Board Approval: June 09 Project Description: Previous hydraulic studies prepared for the Mission Trails Flow Regulatory Structure (FRS) II and Pipeline Tunnel projects have shown that excessive hydraulic transient pressures ( psi increase) will occur during high flow conditions on the untreated water pipeline system. These excessive pressures may result in a pipe failure. The segment of pipeline that is most vulnerable to these excessive pressures is located on an elevated ridge in the Scripps Ranch community where the Second San Diego Aqueduct traverses multi-family residential areas. The same hydraulic studies have shown that lowering an approximately 800-foot long segment of both pipelines at their high elevation point will eliminate the risk of pipeline failure. As a result, this project includes lowering two segments of the existing Pipelines 3 and 4 in the Scripps Ranch area to eliminate the potential for excessive hydraulic transient pressures during high flow conditions. Project Status: A draft facility planning study, issued in April 11, identified both tunneling and open trench construction alternatives for lowering Pipelines 3 and 4. The planning study is expected to be finalized in October 11. Planned Work for FY 12 and FY 13: Complete the preparation of an Environmental Impact Report (EIR) in accordance with California Environmental Quality Act (CEQA) and obtain Board certification of EIR. #N/A #N/A #N/A Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 195, ,000 78,000-50, ,000 Design , ,000-1,422,000 Construction ,900,000 13,900,000 Post-Construction Totals 195, , , ,000 13,950,000 16,000,000 Jul-09 Oct-11 Nov-11 Nov-13 Nov-13 May-15 May-15 Jun NCDP W OHL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT FY 12 Key Milestones Date Board selects preferred alternative Oct-11 Award contract for design services Nov-11 Award contract for environmental services Nov-11 FY 13 Key Milestones Date Certify Final EIR Nov-12 PACIFIC OCEAN NOT T O S CALE Planning Design Construction Post-Construction Expenditures (Millions) Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 145

152 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program M3550 Olivenhain 9 Flow Control Facility Project No: M3550 Project Name: Olivenhain 9 Flow Control Facility Board Approval: June 10 Project Description: This project provides a new untreated water flow control facility (FCF) and connection to the Second Aqueduct to serve Olivenhain's David C. McCollom Water Treatment Plant. The project is being implemented as part of a settlement agreement with Olivenhain regarding operation of Lake Hodges and Olivenhain Reservoir. Project Status: Olivenhain is responsible for all planning, design and construction of the new FCF and aqueduct connection. The Water Authority is responsible for review of design and construction work. Olivenhain completed a preliminary design report in April 11, which defined all facility requirements. Planned Work for FY 12 and FY 13: Complete final design, construction, start up and commissioning. #N/A #N/A #N/A W O HL F OR D FIRSTAQUEDUCT NCDP CROSSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SECON DAQUEDUCT PACIFIC OCEAN NOT T O S CALE BUDGET SUMMARY BY PROGRAM Actual thru 6/30/10 11 Projected Remaining Basis of 12 Basis of 13 Total Budget Budget Planning Design - 12, , ,000 Construction , , ,000 Post-Construction Totals - 12, , , ,000 Planning Design Jun-10 Aug-11 Construction Sep-11 Jun-13 Post-Construction FY 12 Key Milestones Date Board approval of FCF Agreement Jul-11 Submit final design submittals for Water Authority review/approval Sep-11 FY 13 Key Milestones Date Complete construction, facility start up and commissioning Jun Actual Projected Cumulative Expenditures (Millions) 2 Fiscal Year (Ending June 30th) Fiscal Year 146

153 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program J0100 Olivenhain-Hodges Pumped Storage Project No: J0100 Project Name: Olivenhain-Hodges Pumped Storage Board Approval: March 02 Project Description: Project Status: The ESP-Lakes Hodges Inlet/Outlet project was combined with the Lake Hodges Pump Station project in 03 because the design and construction of these components are highly interrelated. A pre-procurement contract, for the turbines, was awarded in September 04. This contract included technical assistance and commissioning efforts that are currently ongoing through commercial operation. The Lake Hodges to Olivenhain Pipeline was completed in May 07. The Lake Hodges Pump Station contract was awarded in February 06 and the majority of construction has been completed. The project has been delayed due to various issues, i.e. differing site condition, pump house modifications and an unsuccessful test during commissioning. Planned Work for FY 12 and FY 13: Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 1,579, ,579,000 Design 2,390, ,390,000 Construction 56,297,000 4,944,000 1,000, ,241,000 Post-Construction - - 1,914,000 2,171, ,000 4,325,000 Totals 60,266,000 4,944,000 2,914,000 2,171, ,000 70,535,000 Feb-04 May-03 Mar-06 Mar-06 Jun-11 Jul-11 Jun-13 #N/A ### ### W O HL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT This project will increase the size and vary the operation of ESP facilities planned to connect Lake Hodges with the Olivenhain Reservoir. The project will convert the Lake Hodges Pump Station to a hydroelectric/pumping facility using reverse-turbine generating units with a planned generating capacity of 40 megawatts. The project will also upsize the Lake Hodges to Olivenhain Pipeline to meet the increased pump station flows. It is related to the Lake Hodges to Olivenhain Pipeline and Lake Hodges Pump Station/Inlet-Outlet projects. Complete construction and close-out the project. Design and install/construct safety and maintenance enhancements. Place the facility into commercial operation. FY 12 Key Milestones Date Repair units, complete testing and commissioning Jun-12 FY 13 Key Milestones Date Complete majority of safety and maintenance enhancements. Jun-13 PACIFIC OCEAN NOT T O SCALE Planning Design Construction Post-Construction Expenditures (Millions) Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 147

154 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program S01 Twin Oaks Regulatory Storage Project No: S01 Project Name: Twin Oaks Regulatory Storage Board Approval: June 11 Project Description: This new project was developed to regulate treated and untreated aqueduct deliveries associated with the operation of the Twin Oaks Valley Water Treatment Plant. Work was completed in 08 on the treated water side with construction of new clearwell storage. On the untreated water side, a new regulatory facility is needed to modulate flow variations and pressure surges that occur during high flows into the treatment plant. This project is partially reimbursable. Project Status: A $4.2 million budget transfer was previously approved by the Board to fund additional treated water clearwell storage constructed with the Twin Oaks Water Treatment Plant. The clearwell storage was completed in 08. The balance of the project budget is to fund a facility planning study, preliminary design, and CEQA required environmental reviews for new infrastructure improvements needed to address untreated water flow regulation. The facility planning study was initiated in November 10 and is expected to be completed by mid-summer 11. Following completion of the facility planning study, funds will be required to support final design and construction of the new infrastructure improvements. Planned Work for FY 12 and FY 13: Finalize facility planning study and complete environmental reviews. #N/A #N/A #N/A Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Planning - 400, , ,000 Design Construction 4,193, ,193,000 Post-Construction Totals 4,193, , , ,943,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $750,000 Total Budget Nov-10 Jun-12 Jun-06 Jun NCDP W O HL F OR D FIRSTAQUEDUCT CROSSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SECONDAQUEDUCT FY 12 Key Milestones Date Finalize the facility planning study Jul-11 Certify CEQA documents Jun-12 FY 13 Key Milestones Date Budget transfer for final design and construction Jul-12 PACIFIC OCEAN NOT T O SCALE Planning Design Construction Post-Construction Expenditures (Millions) 21 Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 148

155 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program N05 Twin Oaks Valley WTP Expanded Service Area Project No: N05 Project Name: Twin Oaks Valley WTP Expanded Service Area Board Approval: June 11 Project Description: This new project will expand to the north and northeast the geographic area that can reasonably be served by the Twin Oaks Valley Water Treatment Plant. The project has two components: Installation of a replacement meter on Pipeline 4 at the Delivery Point (owned by the Metropolitan Water District of Southern California), and an expansion of the Pipeline 2A Pump Station. W O HL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN Project Status: This is a new project. Actual thru 6/30/10 NOT T O SCALE 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning , ,000 Design ,000 0,000-1,100,000 Construction ,0,000-3,0,000 Post-Construction Totals - 1,0,000 4,400,000-5,600,000 Planned Work for FY 12 and FY 13: Execute a meter agreement with MWD for a replacement meter. Complete design, procurement and construction of the project. Planning Design Construction Post-Construction Jul-11 Feb-12 Aug-12 Jan-12 Jul-12 Jan FY 12 Key Milestones Date Execute Meter Agreement with MWD Jan-12 Award agreement for pump station design services Feb FY 13 Key Milestones Date 1. Award contract for equipment procurement/construction Aug-12 Complete Procurement and Installation Work at Pump Station Jan Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 149

156 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program S0100 Twin Oaks Valley Water Treatment Plant Project No: S0100 Project Name: Twin Oaks Valley Water Treatment Plant Board Approval: June 03 Project Description: This project is a direct result of the key finding in the Regional Water Facilities Master Plan identifying the immediate requirement for additional treatment plant capacity for the San Diego region. This project included a 100-million gallons per day treatment plant implemented using the design-build-operate procurement contract. This project is partially reimbursable. Project Status: On September 8, 05, the Board approved the full project, certified the Environmental Impact Report, acquired all property required for the project and awarded a contract to CH2M Hill Constructors, Inc. Because the contract includes the Emergency Storage Project Pump Station, Desalinated Water Conveyance facilities for future desalinated water storage and blending purposes, and additional treated water storage, the Board approved funding the contract with $17,0,000 from these project budgets. Major construction, with the exception of disputed items, is complete. The plant went into operation in April 08. The Water Authority and the contractor resolved the disputed items and are implementing plant improvements. Planned Work for FY 12 and FY 13: Planned work is to implement the plant improvements and finalize construction. #N/A #N/A #N/A NCDP W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E S ECONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Planning 4,911, ,000 5,100,000 Design 508, ,000 Construction 167,902,000 1,391, , ,000 3,099, ,392,000 Post-Construction Totals 173,321,000 1,391, , ,000 3,288, ,000,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $310,000 Total Budget Planning Sep-05 Design Nov-05 Mar-11 Construction Oct-05 Aug-11 Post-Construction FY 12 Key Milestones Date Complete plant improvements associated with disputed issues Jul-11 FY 13 Key Milestones Date Resolution of all design-build claims Aug Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 150

157 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Emergency Storage Program 151

158 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G1300 ESP Lake Hodges Pump Station and Inlet/Outlet Root,Chris Project No: G1300 Stewart,Ed ESP - Lake Hodges Pump Station and Inlet/Outlet June 1998 Project Name: Smith,Tim NCDP Board Approval: Project Description: The Lake Hodges Pump Station will convey water from storage in Lake Hodges to the Olivenhain Reservoir. The pump station will be used for annual reservoir operations, to meet emergency demands, and convey local runoff into the Olivenhain Reservoir. As part of the Olivenhain-Hodges Pumped Storage project, the pump station has been modified to provide two reversible motor-generator/pumpturbine units with a combined 56,000 horsepower. The project includes a new 69 kilovolt transmission line to bring power to the site. This project is related to the Lake Hodges to Olivenhain Pipeline and Olivenhain-Hodges Pumped Storage projects. This project is partially reimbursable. WOHLFORD FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E ONDAQUEDUCT SEC PACIFIC OCEAN NOT T O S CALE Project Status: The ESP-Lakes Hodges Inlet/Outlet project was combined with the Lake Hodges Pump Station project in 03 because the design and construction of these components are highly interrelated. A preprocurement contract was awarded in September 04. This contract included technical assistance and commissioning efforts that are currently ongoing through commercial operation. The Lake Hodges Pump Station contract was awarded in February 06 and the majority of construction has been completed. The project has been delayed due to various issues, i.e. differing site condition, pump house modifications, and an unsuccessful test during commissioning. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 6, ,000 Design 6,005, ,005,000 Construction 86,380,000 8,556,000 1,790, ,726,000 Post-Construction - - 4,350,000 2,479, ,000 7,579,000 Totals 92,391,000 8,556,000 6,140,000 2,479, , ,316,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $3,800,000 Planning Planning Planned Work for FY 12 and FY 13: Place the facility into commercial operation, complete construction and close-out the project. Design and install/construct safety and maintenance enhancements. Provide litigation support. Design Design Construction Post-Construction Mar-02 Mar-06 Mar-06 Mar-06 Mar-06 Jun-11 Jul-11 Dec-10 Jun FY 12 Key Milestones Date Place facility into commercial operation Jun-12 FY 13 Key Milestones Date Complete majority of safety and maintenance enhancements. Jun Actual Projected Cumulative Expenditures (Millions) Fiscal Fiscal Year Year (Ending (Ending June June 30th) 30th) Fiscal Year 152

159 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G00 ESP Planning & Support Services Project No: NCDP G00 Walech,Terry Project Name: ESP - Planning and Support Service Steele,Ken Board Approval: April 1998 Zecha,Hubert Project Description: W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT Planning and Support Services for the Emergency Storage Project includes the preliminary environmental studies, biological and cultural resource mitigation; risk management and Owner Controlled Insurance Programs, onsite safety and Project Labor Agreement; preliminary public affairs support; and miscellaneous engineering studies and operation plans. This project provides overall support for the individual projects that are part of the Emergency Storage Project. PACIFIC OCEAN NOT T O SCALE Project Status: During the last several years, the preliminary environmental studies, miscellaneous engineering studies, and preliminary public affairs support activities were completed. The remaining on-going activities are environmental mitigation, Owner Controlled Insurance Program, Project Labor Agreement, and onsite safety for the Emergency Storage Projects in construction. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 27,738, ,000 28,150,000 Design 34,138,000 1,199, , ,000 1,410,000 38,092,000 Construction 26,627,000 4,391, , ,000 1,515,000 34,062,000 Post-Construction 532, ,000 99, ,000-1,042,000 Totals 89,035,000 5,884,000 1,510,000 1,580,000 3,337, ,346,000 Planned Work for FY 12 and FY 13: The total expenditures during the two-year period are forecast to be $3 million. These expenditures are primarily related to the Owner Controlled Insurance Program, Project Labor Agreement, and safety services for the San Vicente Dam Raise project. The remaining expenditures are for environmental mitigation for impacts resulting from the San Vicente Dam Raise project. Planning Design Construction May-05 Jun 13 Jun 14 FY 12 Key Milestones Date Complete post-construction maintenance/monitoring for Escondido Creek and complete all permit requirements for Manchester wetlands. June-12 FY 13 Key Milestones Date Closeout activities for the Owner Controlled Insurance Program, Project Labor Agreement, and safety services for the San Vicente Dam Raise Project. Feb-13 Complete all permit requirements for Escondido Creek. June Jun 15 Expenditures (Millions) Post-Construction Actual Projected 55,723,898 Fiscal Year (Ending June 30th) Fiscal Year 153

160 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G00 ESP Post Construction Mitigation Project No: G00 Balha,John Project Name: ESP - Post Construction Mitigation Balha,John Board Approval: June 03 Project Description: This mitigation monitoring program consolidates the post-construction phase of existing ESP Capital Improvement Program (CIP) projects. The formation of this program allows a project to transfer postconstruction funds to this program and be closed when construction is complete. NCDP W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN Project Status: This project has proceeded as planned. ESP projects currently being monitored for post-construction mitigation include the Olivenhain Dam, Lake Hodges/Olivenhain Pipeline and San Vicente Pump Station/Surge Control projects. Post-construction habitat restoration maintenance and monitoring commenced for the San Vicente Pump Station/Surge Control project in FY 11. Actual thru 6/30/10 NOT T O SCALE 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning Design Construction Post-Construction 514,000 89, , ,000 1,185,000 2,105,000 Totals 514,000 89, , ,000 1,185,000 2,105,000 Planned Work for FY 12 and FY 13: Complete post-construction mitigation and monitoring of the Olivenhain Dam (endangered Encinitas baccharis) and the north portal of Lake Hodges/Olivenhain Pipeline. Continue post construction mitigation and monitoring at San Vicente Pump Station/Surge Control projects. Initiate post construction mitigation and monitoring at the Lake Hodges Pump Station, San Vicente Pipeline, and San Vicente Dam Raise projects. Planning Design Construction Post-Construction Fiscal Year (Ending June 30th) FY 12 Key Milestones Date Start Lake Hodges Pump Station. post construction mitigation & monitoring Jul-11 Start San Vicente Pipeline post construction mitigation & monitoring Sep-11 Complete Lake Hodges/Olivenhain Pipeline mitigation & monitoring Apr-12 Complete Olivenhain Dam Encinitas baccharis permit requirements Jun-12 FY 13 Key Milestones Date Start San Vicente Dam Raise post construction habitat restoration Mar-13 monitoring Actual Projected Cumulative Expenditures (Millions) Fiscal Year 154

161 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G1400 ESP San Vicente Dam Raise & Carryover Storage Comalli,Mike Project No: G1400 Steele,Ken Project Name: NCDP ESP - San Vicente Dam Raise and Carryover Storage Reed,Jerry Board Approval: June 1998 Project Description: W OHL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT The San Vicente Dam Raise Project is a major component of the fourth and final phase of the Emergency Storage Project. The San Vicente Dam will be raised by 117 feet, using roller compacted concrete to accommodate an additional 152,000 acre-feet of combined emergency and carryover storage capacity for the region. The total capacity of the expanded San Vicente Reservoir would be approximately 242,000 acre-feet. The project currently consists of seven construction packages: Package 1(Test Quarry), Package 2 (Foundation Preparatory Work), Package 2B (Vegetation Cutting), Package 3 (Dam Raise), Package 4 (Bypass), Package 5 (Marina), and Package 6 (Post Construction Site Restoration). NOT T O S CALE PACIFIC OCEAN Project Status: In April 08, the Board certified the Carryover Storage Project Environmental Impact Report. Package 1 (Test Quarry) and Package 2 (Foundation Construction) are complete. Package 3 (Dam Raise) began construction in June 09 and is expected to be complete in early 13. Design of Package 4 (Bypass) began in November 10. In FY 11, the Comprehensive Reliability and Cost Assessment (CRACA) committee of the Board presented their committee recommendations which resulted in the deferment of 14 CIP projects to better align their completion dates with revised water demand forecasts. Package 4 (Bypass) and Package 6 (Post Construction Site Restoration) construction phases were deferred until FY 15, but will continue design efforts over the next two years. The lower than forecast bids on construction Packages 2 and 3 made possible the recommended transfers of $32.8 million from the Dam Raise to fund other project increases during this budget cycle. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 11,825, ,184,000 13,009,000 Design 35,584,000 3,855,000 3,949,000 1,758,000 5,868,000 51,014,000 Construction 57,695,000 37,573, ,851,000 29,842, ,464, ,425,000 Post-Construction Totals 105,104,000 41,428, ,800,000 31,600, ,516, ,448,000 Planning Design Construction Aug-05 Jul-06 Mar-15 Apr-16 Post-Construction Planned Work for FY 12 and FY 13: FY 12 Key Milestones Date Issue Notice to Proceed Package 5 (Marina) design consultant. Aug-11 Completion of roller compacted concrete placement Apr-12 FY 13 Key Milestones Date Complete draft Final Design Package 4 (Bypass Pipeline) Jul-12 Construction of Dam Raise Package 3 Complete Feb-13 Board Award Package 5 (Marina) Construction Contract Jun-13 Complete final operations plan for the dam Jun Actual Projected Cumulative Expenditures (Millions) 2 Planned work includes completion of the Package 3 (Dam Raise) construction, completion of Package 4 (Bypass) design, and completion of Package 5 (Marina) design. Fiscal Year (Ending June 30th) Fiscal Year 155

162 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G0700 ESP San Vicente Pipeline & Aqueduct Interconnect Comalli,Mike Project No: G0700 Stine,Gary Project Name: Ahinga,Zachary NCDP Board Approval: Project Description: ESP - San Vicente Pipeline and Aqueduct Interconnect June 1998 W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT The San Vicente Pipeline is an 11-mile, 102-inch diameter pipeline, which will connect the San Vicente Reservoir to the Second Aqueduct in the vicinity of Mercy Road and Interstate 15. The pipeline will transport water in either direction between the San Vicente Reservoir and the Second Aqueduct to meet member agency needs and to achieve storage requirements in the San Vicente Reservoir. This project is dependent upon the Rancho Penasquitos Pressure Control/Hydroelectric Facility and the San Vicente Pumping Facilities to operate. PACIFIC OCEAN NOT T O SCALE Project Status: The final Environmental Impact Report (EIR) was certified in August The tunnel alternative was approved in November 01. A Supplemental EIR was certified in January 04. The design of the pipeline was completed in February 05. The construction contract was awarded to Shea-Traylor Joint Venture in June 05. The contract Notice of Completion was filed in January 11. A separate landscaping contract was awarded in January 11 to landscape or revegetate areas impacted by the pipeline tunnel construction and to install park improvements that were required by Agreement with the City of San Diego. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning, ,000 21,000 Design 25,090,000 5, ,907,000 27,002,000 Construction 257,927,000 15,716,000 2,383,000 1,700,000 36,809, ,535,000 Post-Construction Totals 283,037,000 15,721,000 2,383,000 1,700,000 38,717, ,558,000 Planning Aug-04 Jan-05 Design Jul-05 Planned Work for FY 12 and FY 13: The plant establishment period in the landscaping contract will be completed. Alemania Road between the Rancho Penasquitos Pressure Control/Hydroelectric Facility and the West Shaft site will be paved. The majority of money being spent in the next two years is for legal fees for defense against contractor claims. FY 12 Key Milestones Date Complete plant establishment period Oct-11 File Notice of Completion for Alemania Road Improvements May-12 FY 13 Key Milestones Date Resolution of contractor claims Jun-13 Construction Post-Construction Jun-04 Actual Projected Cumulative Jun-13 Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 156

163 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Master Planning 157

164 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G1700 ESP - Pump Station at Pipeline 3 & INterconnect Walech,Terry Project No: G1700 Steele,Ken Project Name: ESP - Pump Station at Pipeline 3 and Interconnect Zecha,Hubert Board Approval: June 1998 Project Description: The Pump Station at Pipeline 3 and Interconnect project will be used to deliver water to portions of the North County service area during an emergency condition. The project as currently budgeted includes a 856-horsepower pump station and an interconnect between Pipeline 3 and the First Aqueduct pipelines. A flow control vault and two interconnection vaults will also be constructed as part of this project. W OHL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN Project Status: A new planning study that looks at facility requirements for both the ESP-Pump Station at Pipeline 3 and the ESP-Pump Station at Pipeline 4 projects was completed in 09. This planning study focused on a number of alternatives that met ESP delivery needs, ensured compatibility with daily aqueduct operations, and considered opportunities for multi-agency benefits. The planning study results indicated a single pump station and use of a Fallbrook Public Utilities District distribution line met all study objectives. The Comprehensive Reliability and Cost Assessment Committee of the Board determined that the project should be further evaluated as part of the Facilities Master Plan Update. The future of this project will be determined as part of the Facilities Master Plan Update. Actual thru 6/30/10 NOT T O S CALE 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 1,118,000, ,000 1,144,000 Design ,782,000 1,782,000 Construction ,839,000 12,839,000 Post-Construction Totals 1,118,000, ,627,000 15,765,000 Planning Jun-06 May-14 Planned Work for FY 12 and FY 13: Work on this project has been deferred pending the evaluation of the future need for this project and its scope. Design Construction Post-Construction Jul-13 Feb-16 Dec-16 Oct FY 12 Key Milestones Date FY 13 Key Milestones Date Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 158

165 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G1800 ESP - Pump Station at Pipeline 4 Walech,Terry Project No: G1800 Steele,Ken Project Name: ESP - Pump Station at Pipeline 4 Zecha,Hubert Board Approval: June 1998 Project Description: The Pump Station at Pipeline 4 will be used to deliver water to portions of the North County service area during an emergency condition. The project as currently budgeted includes a 32-horsepower pump station to provide emergency service to the northern reaches of Pipeline 4. W O HL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Project Status: A new planning study that looks at facility requirements for both the ESP-Pump Station at Pipeline 3 and the ESP-Pump Station at Pipeline 4 projects was completed in 09. This planning study focused on a number of alternatives that met ESP delivery needs, ensured compatibility with daily aqueduct operations, and considered opportunities for multi-agency benefits. The planning study results indicated a single pump station and use of a Fallbrook Public Utilities District distribution line met all study objectives. The Comprehensive Reliability and Cost Assessment Committee of the Board determined that the project should be further evaluated as part of the Facilities Master Plan Update. The future of this project will be determined as part of the Facilities Master Plan Update. Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 190,000 5, ,000 Design 339, , ,000 Construction ,847,000 4,847,000 Post-Construction Totals 529,000 5, ,264,000 5,798,000 Planning Nov-06 Dec-10 Planned Work for FY 12 and FY 13: Work on this project has been deferred pending the evaluation of the future need for this project and its scope. Design Construction Post-Construction Jun-14 Jan-17 Jan-17 Oct FY 12 Key Milestones Date FY 13 Key Milestones Date Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 159

166 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program G0610 ESP - San Vicente 3rd Pipeline Drive & Power Root,Chris Project No: G0610 Stine,Gary Project Name: ESP - San Vicente 3rd Pump Drive & Power Hartman,Randy Board Approval: June 11 Project Description: NCDP W OHL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 BUDGET SUMMARY BY PROGRAM Project Status: Planning Design 256, ,003,000 1,259,000 This project has been referred to the Facilities Master Plan Update for further evaluation. It has also been given it's own project so that the balance of the San Vicente Pumping Facilities projects can be closed. 11 Projected Basis of 12 Basis of 13 Remaining Balance Total Budget Construction 1, ,784,000 6,785,000 Post-Construction Totals 257, ,787,000 8,044,000 Planned Work for FY 12 and FY 13: The third variable frequency drive and power project will upgrade the pump station to operate three pumps simultaneously when the San Vicente Dam Raise and Carryover project is complete. Planning Evaluation of this project will be funded by the Facilities Master Plan Update project. No work on this project is planned pending final evaluation as part of the Facilities Master Plan Update. Design Construction Post-Construction FY 12 Key Milestones Date FY 13 Key Milestones Date Expenditures (Millions) Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 160

167 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program F0100 Pipeline 6 Project No: F0100 Project Name: Pipeline 6 Board Approval: August 1989 Project Description: Pipeline 6 was included in the 1987 Water Distribution Study and approved by the Board in August The Pipeline 6 project consists of approximately 12 miles of 108-inch diameter pipeline extending from the Metropolitan Water District of Southern California (MWD) Delivery Point to the Water Authority s Twin Oaks Valley Diversion Structure. MWD will construct the pipeline from De Portola Road in Riverside County to the Delivery Point. This project is designed to increase the Water Authority s capability to import up to 370 mgd of untreated water. Project Status: In conjunction with MWD, a revised feasibility and alignment study was completed in 09 that identified a preferred alignment for a -mile segment of Pipeline 6 extending from Riverside County to Twin Oaks. However, based on recent projections for new imported water supplies, the online date for the project has been reset to the 18 to 23 time frame. The timing for Pipeline 6 is dependent on many factors, primarily the need for additional untreated water supplies and the development of new local supplies. Further evaluation on the timing for Pipeline 6 will be considered in the 12 Regional Water Facilities Optimization and Master Plan. Planned Work for FY 12 and FY 13: Further evaluation of the Pipeline 6 project will be conducted under the 12 Regional Water Facilities Optimization and Master Plan. #N/A #N/A #N/A W OHL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 3,883, , ,962,000 7,000,000 Design 1,9, ,266,000 46,186,000 Construction ,000, ,000,000 Post-Construction ,000 25,000 Totals 5,803, , ,253, ,211,000 Planning Apr-07 Jun-17 Design Jul-17 Jun-19 Construction Jul-19 Post-Construction FY 12 Key Milestones Date FY 13 Key Milestones Date Actual Projected Cumulative Expenditures (Millions) 2 Fiscal Year (Ending June 30th) Fiscal Year 161

168 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program B0400 Restore Untreated Water to LMSE to Sweetwater Project No: B0400 Project Name: Restore Untreated Water in LMSE to Sweetwater Board Approval: June 03 Project Description: This project involves the conversion of the La Mesa Sweetwater Extension (LMSE) Pipeline from treated water service to untreated water service. This project can only be implemented after the pipeline from Otay 14 FCF to Otay Water District's Regulatory Reservoir is completed and replaces the LMSE as the treated water delivery system in this area. Project Status: This project was identified in the 02 Regional Water Facilities Master Plan. Further evaluations of the timing and need for this project will be conducted under the 12 Regional Water Facilities Optimization and Master Plan. Planned Work for FY 12 and FY 13: Further evaluation of this project will be conducted under the 12 Regional Water Facilities Optimization and Master Plan. #N/A #N/A #N/A NCDP W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning , ,000 Design , ,000 Construction ,091,000 1,091,000 Post-Construction Totals ,417,000 1,417,000 Planning Jul-15 Dec-15 Design Jan-16 Jun-16 Construction Jul-16 Jun-17 Post-Construction FY 12 Key Milestones Date FY 13 Key Milestones Date Fiscal Year (Ending June 30th) Actual Projected Cumulative Expenditures (Millions) Fiscal Year 162

169 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program N0360 Second Crossover Pipeline Project No: N0360 Project Name: Second Crossover Pipeline Board Approval: June 03 Project Description: The Second Crossover Pipeline project involves construction of a new 52,000-foot long, 96-inch diameter pipeline to replace and upgrade the capacity of the existing Crossover Pipeline. The Second Crossover Pipeline will be evaluated in combination with the Pipeline 6 project to optimize regional benefits of both projects. Project Status: This project was identified in the 02 Regional Water Facilities Master Plan. The timing for the Second Crossover Pipeline has been linked to the need for new imported untreated water supplies under the Pipeline 6 project. Recently completed planning work for Pipeline 6 confirms that the timing for Pipeline 6 will vary between 18 and 23, with the later date reflecting development of new local supplies. Further evaluation of the need and timing for the Second Crossover Pipeline will be addressed in the 12 Regional Water Facilities Optimization and Master Plan. Planned Work for FY 12 and FY 13: Further evaluation of the Second Crossover Pipeline will be conducted under the 12 Regional Water Facilities Optimization and Master Plan. #N/A #N/A #N/A NCDP W OHL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 2,000 6, ,412,000 7,4,000 Design ,104,000 35,104,000 Construction ,662, ,662,000 Post-Construction ,855,000 1,855,000 Totals 2,000 6, ,033, ,041,000 Planning Jul-10 Mar- Design Jan- Construction Jul-22 Post-Construction FY 12 Key Milestones Date FY 13 Key Milestones Date Fiscal Year (Ending June 30th) Actual Projected Cumulative Expenditures (Millions) Fiscal Year 163

170 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program N0500 System Regulatory Storage Project No: N0500 Project Name: System Regulatory Storage Board Approval: June 05 Project Description: This project adds regulatory storage to the Water Authority's conveyance system. Additional storage will increase the efficiency of system operations. This project may be integrated with the Pipeline 6 project to facilitate integration of the pipeline into the Water Authority's distribution system. A component of the System Regulatory Storage project is storage capacity in the Twin Oaks Valley Water Treatment Plant's clearwells for regulatory storage. Project Status: This project was identified in the 02 Regional Water Facilities Master Plan. In 05, the Board approved using $4,0,000 from the project budget to implement regulatory storage capacity in the clearwells at Twin Oaks Valley Water Treatment Plant. The clearwells were placed in service in 07. Planning studies conducted under the Pipeline 6 project identified a need for new regulatory storage facilities at the Twin Oaks Diversion Structure that would provide hydraulic control for new deliveries from Pipeline 6. However, with the timing for Pipeline 6 being moved out to the 18 to 23 time frame, further evaluation of the need, timing and location of new system regulatory storage facilities will be considered under the 12 Regional Water Facilities Optimization and Master Plan. Planned Work for FY 12 and FY 13: Further evaluation of system regulatory storage will be conducted under the 12 Regional Water Facilities Optimization and Master Plan. #N/A #N/A #N/A NCDP W OHL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE R AMON A PIP ELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 1, , , ,000 Design ,565,000 5,565,000 Construction ,529,000 49,529,000 Post-Construction Totals 1, , ,494,000 55,650,000 Planning Jul-09 Jun-11 Design Jun-11 Jun-16 Construction May-06 Jun-19 Post-Construction FY 12 Key Milestones Date FY 13 Key Milestones Date Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 164

171 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program H0110 Water Facilities Master Plan Update Project No: H0110 Project Name: Water Facilities Master Plan Update Board Approval: June 09 Project Description: The project will evaluate new infrastructure requirements and optimization of existing regional facilities that support the mix of local and imported water supplies projected for the region through the 35 planning horizon. Evaluation results will be presented in the 12 Regional Water Facilities Optimization and Master Plan Update document. The project also includes preparation of a Program Environmental Impact Report (EIR) and Climate Action Plan to assess regional impacts of proposed new infrastructure projects. Project Status: In December 10, a consultant contract was awarded to prepare the 12 Regional Water Facilities Optimization and Master Plan. Planned Work for FY 12 and FY 13: Complete the draft and final master plan documents. Complete and certify the associated Program EIR and Climate Action Plan. #N/A #N/A #N/A W O HL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 137, ,000 1,757,000 1,991,000 2,000 4,425,000 Design Construction Post-Construction Totals 137, ,000 1,757,000 1,991,000 2,000 4,425,000 Planning Jul-09 Jul-13 Design Construction Post-Construction FY 12 Key Milestones Date Issue Notice of Preparation for Program EIR Nov-11 Release draft version of the Master Plan Mar-12 FY 13 Key Milestones Date Release Draft Program EIR Jul-12 Release Final Master Plan Dec-12 Board to certify Final Program EIR Mar Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 165

172 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program Other 166

173 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program N0600 Capitalized Warranty Project No: N0600 Project Name: Capitalized Warranty Board Approval: June 09 Project Description: Project Status: Planned Work for FY 12 and FY 13: #N/A #N/A #N/A W O HL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E S ECONDAQUEDUCT PACIFIC OCEAN Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning Design Construction Post-Construction 183,000 80, , , , ,000 Totals 183,000 80, , , , ,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $300,000 Planning Design Construction Post-Construction Jul-09 Jun The project will provide an accounting mechanism to efficiently capture and update changes in the capitalized value of completed projects during warranty situations where capital components, such as a valve, require replacement by the contractor at a cost different than the original. For FY 12 and FY 13, the project includes funds for staff labor, benefits, and shutdowns to complete warranty work for the Rancho Penasquitos Hydroelectric Facility, San Vicente Pump Station and Lake Hodges Pump Station. This project is partially reimbursable. Warranty work resulting in a changed basis for the capitalized value for the Rancho Penasquitos Hydroelectric Facility began in FY 09. Additional repair of the electrical generation turbine will require a shutdown of Pipeline 5. The San Vicente Pump Station was completed in FY 11 and will be under warranty during this fiscal appropriation cycle. The exact scope of any warranty work is unknown at this time, however, any work resulting in a changed value of capitalized assets under warranty, will be paid for by this project. Complete all warranty work for the Rancho Penasquitos Hydroelectric Facility. Monitor and perform any warranty work required for the San Vicente Pump Station, Lake Hodges Pump Station, and Olivenhain-Hodges Pumped Storage. FY 12 Key Milestones Date Complete coating repairs at Rancho Penasquitos facility Jan-12 FY 13 Key Milestones Date Funding forecast for "as occurring" warranty work change values Jun-13 NOT T O SCALE Expenditures (Millions) Fiscal Year (Ending June 30th) Actual Projected Cumulative Fiscal Year 167

174 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program S0300 East County Regional Treated Water Improvements Project No: S0300 Project Name: East County Regional Treated Water Improvements Board Approval: June 05 Project Description: Project Status: Planned Work for FY 12 and FY 13: No work is planned for this budget cycle. NCDP W O HL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT The East County Regional Treated Water Improvements is a joint program of the Water Authority and several member agencies to improve the use of the Helix Water District's Levy Water Treatment Plant. This implements the concept developed in the 02 Regional Water Master Plan of meeting some treated water demand through improved use of member agency plants. The member agencies involved include Helix Water District, Padre Dam Municipal Water District, Otay Water District, and Lakeside Water District. The program involves the construction or funding of various improvements by each participating agency and a guarantee of certain minimum water purchases by each member agency. To date, the Water Authority purchased additional capacity, participated in the expansion of the Levy plant, acquired capacity rights in various transmission pipelines and pump stations, oversaw the design and construction for member agency led projects, and completed the design and construction for the Otay 14 Flow Control Facility capacity expansion. This project is partially reimbursable. A Principles of Understanding document was prepared and approved by the boards of directors of all involved agencies. Water Authority Board approval of the Principles occurred in February 05. Member agency agreements have been completed. Los Coches Pump Station and Helix Flume Improvements were completed in FY 09. Otay 14 Flow Control Facility Expansion Project was completed in FY 10. La Mesa Sweetwater Extension Pipeline Project and Lakeside 1 Flow Control Facility project were completed in FY 11. Padre Dam 7 Flow Control Facility has been delayed pending resolution of Indian burial site and is expected to resume in FY 14. FY 12 Key Milestones Date FY 13 Key Milestones Date PACIFIC OCEAN NOT T O SCALE BUDGET SUMMARY BY PROGRAM Actual thru 6/30/10 11 Projected Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 46, ,000 47,000 Design 1,667, ,000 1,683,000 Construction,663,000 6,375, ,000 27,176,000 Post-Construction Totals 22,376,000 6,375, ,000 28,906,000 PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $4,653,000 Planning Jul-05 Jun-08 Design Oct-05 Nov-09 Construction o Jun-06 Jan-15 Post-Construction Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 168

175 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program I0500 Groundwater Conjunctive Use Program (aka Vidler/Semitropic) Project No: I0500 Project Name: Groundwater Conjunctive Use Program (aka Vidler/Semitropic) Board Approval: June 07 Project Description: In 1998, the State Legislature appropriated $235 million to implement the California Colorado Water Use Plan; of which, $35 million was to fund groundwater conjunctive use programs. The Water Authority became the recipient of the funds, less about $4.5 million already spent on Metropolitan Water District s Hayfield project. In 07, a funding agreement with the Department of Water Resources for $30.48 million was established to obtain Department of Water Resources (DWR) funds in reimbursement for incurred groundwater expenses. Also in 07, the Water Authority entered into funding agreements with some of its member agencies to support Local Investigations and Studies Assistance (LISA) Program. This project is partially reimbursable. W O HL F OR D #N/A #N/A #N/A FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE R AMON A PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 BUDGET SUMMARY BY PROGRAM Planning Project Status: Design 28,837, , , ,000-31,000,000 In 08, the Water Authority acquired a total of 70,000 acre-feet of storage in two banking programs Construction (Semitropic-Rosamond and Semitropic (Vidler)). The Water Authority also purchased 23,007 acrefeet Post-Construction (before conveyance losses) of initial fill water from Northern California. Three LISA programs Totals 28,837, , , ,000-31,000,000 continue to progress: City of San Diego, Sweetwater Authority and Yuima Metropolitan Water PROJECT PARTIALLY REIMBURSABLE BY THE SUM OF $25,816,300 District. 11 Projected Basis of 12 Basis of 13 Remaining Balance Total Budget Planning Jun-11 Planned Work for FY 12 and FY 13: The balance of funding to be reimbursed to the City of San Diego and Sweetwater Authority is expected to be completed in 13. These reimbursements will complete the Groundwater Conjunctive Use Program. Design Construction Post-Construction FY 12 Key Milestones Date Support "as occurring" LISA activities. Jun-12 FY 13 Key Milestones Date Support "as occurring" LISA activities. Jun Expenditures (Millions) Actual Projected Cumulative Fiscal Year (Ending June 30th) Fiscal Year 169

176 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program P0710 Hydraulic Transient Model Project No: P0710 Project Name: Hydraulic Transient Model Board Approval: June 09 Project Description: Project Status: Planned Work for FY 12 and FY 13: #N/A #N/A #N/A NCDP W O HL F OR D FIRSTAQUEDUCT CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O SCALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Remaining Basis of 12 Basis of 13 Total Budget Balance Planning 2,044,000 2, , , ,000 3,100,000 Design Construction Post-Construction Totals 2,044,000 2, , , ,000 3,100,000 Planning Aug-08 Jun-17 Design Construction Post-Construction This project provides a computer hydraulic transient model that can be used to analyze transient concerns of new Water Authority facilities, proposed operational changes, and proposed member agency facilities that have a hydraulic influence on our system. The model results will allow staff to evaluate and mitigate potential concerns to the Water Authority's conveyance and distribution system prior to implementation. The modeling of the untreated water distribution system on the Second Aqueduct from the Water Authority's Twin Oaks Valley Water Treatment Plant to Otay Reservoir has been completed. Calibration tests have been performed to enhance the modeling of this portion of the system. Additional segments of our conveyance and distribution system will be incorporated into the model. Calibration tests will be performed to ensure accuracy of the model. Training will be conducted to enable additional Water Authority staff to utilize the hydraulic model. FY 12 Key Milestones Date Training of Water Authority staff completed Dec-11 Expand the hydraulic model to include the San Vicente Pipeline, Pump Jun-12 Station and Surge Control Facility FY 13 Key Milestones Date Expand the model to include treated water distribution system on the Jun-13 Second Aqueduct Beta testing of the entire pipe network completed Jun Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 170

177 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program H00 Mitigation Program Project No: H00 Project Name: Mitigation Program Board Approval: September 1992 Project Description: The Mitigation Program provides comprehensive mitigation for Water Authority programs, projects, and actions by preventing both short and long-term construction and operational delays resulting from compliance with state and federal endangered species and wetland regulations. Short-term efforts focus on coordinated permitting and mitigation for immediate project needs, while long-term includes preparation of multi-species habitat conservation plans and development of agreements with regulatory agencies to allow issuance of 50-year permits for activities regulated under federal and state law. Project Status: The Natural Community Conservation Plan/Habitat Conservation Plan (NCCP/HCP) and Federal Environmental Impact Reports was approved by the Board in FY 11. The Plan includes 63 species of plants and animals that are currently listed as threatened, endangered or at risk of future listing by the state or federal government. The coverage area includes western San Diego County and a portion of Riverside County from Diamond Valley Lake to the San Diego County line. Design for the 40-acre Tijuana River Valley Wetlands Mitigation Project commenced in FY 11. A federal public notice was issued for the preparation of a multiple agency umbrella wetland banking agreement in FY 11. Planned Work for FY 12 and FY 13: Obtain state and federal wildlife agency NCCP/HCP Endangered Species Act permits. Negotiate and fund one-time endowments for Rancho Canada and Crestridge upland mitigation sites, and the Manchester wetland mitigation site. Submit applications for and obtain programmatic Clean Water Act permits from state and federal regulatory agencies. Execute multiple resource agency umbrella wetland banking enabling instrument for mitigation projects. Complete final design, obtain regulatory permits and construct the Tijuana River Valley Wetlands Mitigation Project. Commence design and complete environmental compliance documents for the San Luis Rey River Valley Wetland Mitigation Project. #N/A #N/A #N/A W OHL F OR D FIRSTAQUEDUCT NCDP C ROSSOVER TRI-AGENCY PIPELINE RAMONA PIPELINE SEC ONDAQUEDUCT PACIFIC OCEAN NOT T O S CALE Actual thru 6/30/10 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning 2,655, , ,000 76, ,000 4,077,000 Design 8,257, , ,000 40,000 62,000 9,530,000 Construction 4,369,000-4,285,000 3,387,000 6,895,000 18,936,000 Post-Construction 99, ,164,000 1,263,000 Totals 15,380,000 1,046,000 5,256,000 3,503,000 8,621,000 33,806,000 Planning Design Jul-06 Apr-15 Construction Aug-04 Aug-17 Post-Construction Jan-06 Jul FY 12 Key Milestones Date Board Award Tijuana River Valley Wetlands Construction Contract and Dec-11 issue Notice to Proceed for Tijuana River Valley Wetlands Construction Feb-12 FY 13 Key Milestones Date File Notice of Completion for Tijuana River Valley Wetland Mar-13 Construction Board Adopts San Luis Rey River Valley Wetland Mitigation Project Jun-13 Environmental Document Actual Projected Cumulative Expenditures (Millions) Fiscal Year (Ending June 30th) Fiscal Year 171

178 Adopted Budget for Fiscal Years 12 & 13 Capital Improvement Program H0500 Post-Construction Mitigation Monitoring Walech,Terry Project No: H0500 Purcell,Larry Project Name: Post-Construction Mitigation Monitoring Cass,Tim Board Approval: June 00 Project Description: W O HL F OR D FIRSTAQUEDUCT NCDP CRO SSOVER TRI-AGENCY PIPELINE RAMONA PIPELIN E SEC ONDAQUEDUCT This mitigation monitoring program consolidates the post-construction phase of existing non-esp Capital Improvement Program (CIP) projects. The formation of this program allows an individual CIP project to be closed and capitalized when its construction phase is complete, subject to the transfer of its post-construction mitigation funding to this program. PACIFIC OCEAN Project Status: The project is proceeding as anticipated. Of the original 23 projects, 18 were completed successfully, one (Moreno Lakeside Pipeline--Wetland Mitigation) is actively being monitored, and the remaining projects have not progressed to post-construction. The following projects successfully completed post-construction mitigation during FY 10 and FY 11: Pipeline 4 Relining Paint Mountain to Del Dios Highway. Actual thru 6/30/10 NOT T O SCALE 11 Projected BUDGET SUMMARY BY PROGRAM Basis of 12 Basis of 13 Remaining Balance Total Budget Planning Design Construction Post-Construction 9,000 1,058, , ,000 2,227,000 4,807,000 Totals 9,000 1,058, , ,000 2,227,000 4,807,000 Planned Work for FY 12 and FY 13: Continue to implement and monitor habitat remediation activities in Mission Trails Regional Park in support of Good Neighborhood Policy for: Mission Trails FRS I and II, Mission Trails Pipeline Tunnel, Pipeline 3 Reline-SR52 to Lake Murray, Pipeline 4 Reline-SR52 to 30" Interconnect, and Pipeline 4 Emergency Shutdown & Repair at Station Implement required permit monitoring and reporting on river-bed morphology for the San Diego River crossing. Complete wetland mitigation for the Moreno Lakeside Pipeline and Pipeline 3 Emergency Repair projects. Begin post-construction monitoring of Pipelines 3 & 4 Reline -Miramar Hill to Scripps Ranch. Planning Design Construction Post-Construction Fiscal Year (Ending June 30th) FY 12 Key Milestones Date Complete Pipeline 3 Emergency Repair project wetland mitigation Jun-12 Complete Moreno Lakeside Pipeline wetland mitigation Jun-12 FY 13 Key Milestones Date Commence post construction mitigation monitoring for Pipeline 3 and 4 Reline-Miramar Hill to Scripps Ranch Dec Actual Projected Cumulative Expenditures (Millions) Fiscal Year 172

179 Adopted Budget for Fiscal Years 12 & 13 Appendices For ease of use, not all of the information that went into developing the adopted budget has been included in the front section. The following appendices provide certain supplemental information on key components of the budget and summary data on an agency-wide basis. Appendix A Water Authority Workforce. Provides additional information on budgeted positions by department, including the distribution of positions between the Operating and Capital Improvement Program (CIP) funds. Appendix B Capitalized Overhead. Provides additional information on the Water Authority s Capitalized Overhead allocation and discusses any significant changes from the previous multi-year budget. Appendix C Sources and Uses Definitions. Provides additional definitions and historical information beyond that already discussed in the Sources and Uses section. Appendix D Glossary. Includes glossary of common terms and acronyms. Appendix E Classification and Salary Schedule. Provides the Water Authority s classification and salary schedule as required by Section (d) of the Administrative Code. Appendix F - Memorandums, Resolutions, and Ordinances. Provides the adopted budget and rates and charges memorandums, resolutions, and ordinances. Appendix G - Perfomance Information. Provides updated performance information on the 08 Strategic Plan and the 15 Business Plan. 173

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181 Adopted Budget for Fiscal Years 12 & 13 Appendix A Water Authority Workforce The Water Authority utilizes both regular and limited duration employees (LDEs) to meet the Water Authority s range of staffing needs. Regular Positions. The majority of the Water Authority workforce consists of regular, full-time positions. Historical and adopted full-time employees (FTEs) are set forth in the table below, by department. In response to the organization s changing environment, the Water Authority has and plans to reduce staffing levels. Limited Duration Employees. In addition to regular positions, the Water Authority utilizes LDEs. These positions are created for a fixed term, generally between two to five years; and are limited by the terms of an employment contract. Such positions are utilized to meet needs for specialized skills or peak workflow. The Water Authority has primarily utilized LDE positions to meet workforce demands of the CIP. As summarized in the table, LDE positions are decreasing as a result of a decline in CIP project spending. Table 1: Summary of Budgeted Positions Department FY 08 FTE FY 09 FTE FY 10 FTE FY 11 FTE FY 12 FTE FY 13 FTE Administrative Services Colorado River Program Engineering Finance General Counsel General Manager Human Resources MWD Program Operations & Maintenance Public Outreach and Conservation Water Resources TOTAL REGULAR FTEs Limited Duration Employee (LDE) TOTAL Labor Distribution. The cost for positions that work directly on reimbursable projects, such as CIP or grants, are allocated to these non-operating funds. It is projected that approximately -23% of the Water Authority s positions will be funded through the CIP or grants. This is less than the past budget cycle and reflects the Water Authority s transition from building to operating/maintaining facilities. 175

182 Adopted Budget for Fiscal Years 12 & 13 Appendix A Table 2 identifies by position, the number of FTEs that are allocated to the Operating or CIP/Grant Funds. Throughout the year, depending on workload, this number may fluctuate. Table 2: FTEs by Fund by Department Operating CIP Total Department Classification FY 12 FY 13 FY 12 FY 13 FY 12 FY 13 Administrative Services Administrative Assistant Administrative Services Manager Clerk of the Board Database Administrator Deputy Clerk of the Board Director of Administrative Services Facilities Services Technician HelpDesk Support Specialist Information Systems Analyst Information Systems Manager Information Systems Supervisor Management Analyst Network Administrator Purchasing Manager Purchasing Technician I Purchasing Technician II Receptionist Risk Manager Safety Officer Senior Information Systems Analyst Senior Management Analyst Senior Office Assistant Senior Systems Administrative & Support Specialist Systems Administration & Support Specialist Warehouse Supervisor TOTAL ADMINISTRATIVE SERVICES Colorado River Program Administrative Assistant Colorado River Program Director Engineer (P.E.) (LDE) Principal Water Resources Specialist Senior Engineer Senior Public Affairs Representative TOTAL COLORADO RIVER PROGRAM

183 Adopted Budget for Fiscal Years 12 & 13 Appendix A Table 2: FTEs by Fund by Department, Continued Operating CIP Total Department Classification FY 12 FY 13 FY 12 FY 13 FY 12 FY 13 Engineering Administrative Assistant Assistant Management Analyst Construction Manager Cost Estimator Director of Engineering Engineer II Engineering Manager Engineer (P.E.) Engineer (P.E.) (LDE) Engineering Technician II Management Analyst Principal Construction Manager Principal Engineer Project Scheduler I Project Scheduler II Right of Way Manager Right of Way Supervisor Right of Way Technician I Right of Way Technician II Right of Way Technician III Senior Construction Manager Senior Engineer Senior Engineering Technician Senior Management Analyst Senior Office Assistant Senior Project Scheduler Senior Right of Way Agent Senior Survey Technician Supervising Administrative Assistant Supervising Engineering Technician Supervising Land Surveyor Supervising Management Analyst Survey Technician TOTAL ENGINEERING

184 Adopted Budget for Fiscal Years 12 & 13 Appendix A Table 2: FTEs by Fund by Department, Continued Operating CIP Total Department Classification FY 12 FY 13 FY 12 FY 13 FY 12 FY 13 Finance Accountant Accounting Assistant II Accounting Supervisor Accounting Technician Administrative Assistant Budget & Analysis Manager Budget Officer Controller Director of Finance/Treasurer Financial Analyst Financial Planning Manager Grant Analyst (LDE) Investment Analyst Management Analyst Office Assistant I Senior Accountant Additional position to be determined in FY <0.42> <0.42> TOTAL FINANCE General Counsel Assistant/Deputy General Counsel General Counsel Legal Administrative Assistant Office Assistant II TOTAL GENERAL COUNSEL General Manager Administrative Assistant Assistant/Deputy General Manager Executive Administrative Assistant General Manager Government Relations Manager Management Analyst TOTAL GENERAL MANAGER

185 Adopted Budget for Fiscal Years 12 & 13 Appendix A Table 2: FTEs by Fund by Department, Continued Operating CIP Total Department Classification FY 12 FY 13 FY 12 FY 13 FY 12 FY 13 Human Resources Director of Human Resources Senior & Human Resources Analyst Human Resources Assistant TOTAL HUMAN RESOURCES MWD Program Administrative Assistant Assistant General Manager MWD Program Chief Principal Water Resources Specialist Assistant Water Resources Specialist Senior Water Resources Specialist TOTAL MWD PROGRAM Operations & Maintenance Administrative Assistant Assistant Management Analyst Contract Manager Director of Operations & Maintenance Electrical/Electronics Supervisor Electrical/Electronics Tech I Electrical/Electronics Tech II Fleet Mechanic II Maintenance Technician Maintenance Worker I Maintenance Worker II Management Analyst Operations & Maintenance Manager Principal Water Resources Specialist Senior Electrical/Electronics Technician Senior Engineering Technician Senior Maintenance Technician Senior Office Assistant Senior System Operator Senior Water Resources Specialist Supervising Management Analyst System Maintenance Supervisor System Operator I System Operator II Systems Operations Supervisor Water Resources Specialist TOTAL OPERATIONS & MAINTENANCE

186 Adopted Budget for Fiscal Years 12 & 13 Appendix A Table 2: FTEs by Fund by Department, Continued Operating CIP Total Department Classification FY 12 FY 13 FY 12 FY 13 FY 12 FY 13 Public Outreach & Conservation Administrative Assistant Director of Public Affairs Education Programs Specialist Education Programs Specialist (LDE) Management Analyst Office Assistant II Principal Water Resources Specialist Public Affairs Manager Public Affairs Representative II Public Affairs Supervisor Senior Office Assistant Senior Public Affairs Representative Senior Water Resources Specialist Small Contractor Program Manager Small Contractor Program Representative Water Resources Specialist Additional position to be determined on FY <1.00> <1.00> TOTAL PUBLIC OUTREACH & CONSERVATION Water Resources Administrative Assistant Director of Water Resources Engineer (P.E.) Grant Administrator (LDE) Management Analyst Principal Engineer Principal Water Resources Specialist Senior Office Assistant Senior Water Resources Specialist Water Resources Manager Water Resources Specialist TOTAL WATER RESOURCES GRAND TOTAL

187 Adopted Budget for Fiscal Years 12 & 13 Appendix B Capitalized Overhead Capitalized Overhead are those costs that are not directly attributable to specific CIP projects but rather are in the nature of generalized, indirect support of the CIP. For example, employees in support departments, such as Administrative Services, Finance, and Human Resources, spend time supporting activities that benefit both the operating budget programs as well as the CIP. By using a capitalized overhead allocation, some of these labor costs are appropriately charged to the CIP. Costs for other items such as insurance premiums, utilities, computer systems, services, and building maintenance are also expensed to the CIP via the Capitalized Overhead Allocation. Capitalized Overhead costs can be categorized as either fixed or variable. Certain labor costs tend to be variable in that they rise or fall somewhat proportionately with CIP activity. Costs for other items such as electricity, telephone, computer systems, and building maintenance are fixed in that there is little, if any, correlation between the amount of these costs and the size of the CIP. In budget periods where the CIP is large, it is appropriate that more of these fixed costs are allocated to it; conversely, a smaller CIP will carry less of these fixed costs, resulting in a greater allocation to the Operating Departments budget. As the Water Authority transitions from an agency with a large CIP that designs and constructs facilities to one that operates and maintains them the CIP appropriation will decrease. Fewer projects to manage and less money to spend will also mean a reduction in capitalized overhead as certain indirect costs associated with the CIP are reduced or eliminated, fixed costs are reapportioned to the operating budget, and some staff time is shifted to support new priorities associated with the operating budget. Figure 1 reflects the continual decrease in capitalized overhead since Fiscal Years 08 and 09. Figure 1: Capitalized Overhead FYs 08 & 09 Budget FYs 10 & 11 Budget FYs 12 & 13 Adopted Variance % Variance Administrative Services $5,947,594 $4,222,567 $3,955,165 $(267,402) -6% Finance 2,6,000 2,323,398 2,248,737 (74,661) -3% General Counsel 1,301, , ,619 (218,769) -24% General Manager & Board of Directors 946, , ,636 (77,046) -8% Human Resources 698, , ,766 (69,242) -19% Public Outreach and Conservation 1,088, , ,511 (181,428) -24% TOTAL CAPITALIZED OVERHEAD $12,186,677 $9,537,982 $8,649,434 $(888,548) -9% 181

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189 Adopted Budget for Fiscal Years 12 & 13 Appendix C Sources and Uses Definitions This section provides background on the Sources and Uses of Funds that are shown in the Financial Summaries section and the Sources and Uses section of this document. Funds are listed first followed by the sources and then uses of funds. Funds. Each of the funds within the Water Authority is designed to serve a specific purpose/function and are discussed below. Construction Fund The Construction Fund holds the proceeds from long-term and short-term debt. The fund also receives Contributions in Aid of CIP (CIAC) from the Water Authority s member agencies in cases where the Water Authority constructs a project on the behalf of the member agency. Investment earnings from the fund remain in the fund and may only be used for construction expenditures. Debt Service Reserve Fund The Debt Service Reserve Fund was created to hold the required legal reserve for Water Authority debt issues. Such reserves are held for the purpose of making an issue s annual debt service payments in the event that the Water Authority should be unable to make such payments. The reserve requirement is held in this fund until it is expended, generally to fund the last payment of the issue. Interest earned on the Debt Service Reserve Fund is transferred into the Operating Fund and is not restricted. Equipment Replacement Fund In 03, the Board separated the Equipment Replacement Fund from the Operating Fund. The Equipment Replacement Fund is funded by annual draws from the Operating Fund per depreciation schedules for small capital equipment, such as computers, vehicles, the Supervisory Control and Data Acquisition (SCADA) system, etc., to replace equipment that has reached the end of its useful life. Operating Fund The Operating Fund holds the Water Authority s working capital and emergency operating reserve. The Water Authority s water rate structure adopted in January 03 significantly increased the predictability of cash flows. In April 03, the Water Authority amended its Operating Fund policy from a 60-day minimum balance of average annual operating expenditures to a maximum balance of 45 days of average annual operating expenditures. Common to both policies is a requirement that $5 million of such calculated amount must be designated and held available for emergency repairs to the Water Authority s system due to unforeseen events. As a part of the new policy, the Equipment Replacement Fund was removed from the Operating Fund, and established as a separate fund. Working capital ensures that even with a mismatch of cash receipts and disbursements, the Water Authority will have at least 30 days of operating funds on hand at all times. Given the short-term nature of this fund, liquidity of investments is critical and is ensured by investing the Operating Fund on a monthly basis to cover water purchases and ongoing cash disbursements. 183

190 Adopted Budget for Fiscal Years 12 & 13 Appendix C Pay-As-You-Go (PAYGO) Fund In Fiscal Year 1990, the Water Authority established a Pay-As-You-Go (PAYGO) fund to serve as a mechanism to collect Capacity Charges and Water Standby Availability Charges to be used to pay for the cash portion of the Capital Improvement Program (CIP). The funds are dedicated for construction outlays, as well as debt service. The PAYGO Fund s average maturity is correlated to the CIP cash requirements that are not funded through other sources. The funds are generally invested for an average of one to three years. Rate Stabilization Fund (RSF) In Fiscal Year 1990, the Water Authority established the Rate Stabilization Fund (RSF) for the purpose of collecting amounts of water revenues greater than expenditures in years of strong water sales. These funds can then be used to mitigate rate shock in years of weak water sales and/or to manage debt service coverage. In August 06, the Board adopted new policies that govern the RSF balances. The new policy replaces the old policy of setting a minimum and maximum balance with a target and a maximum balance. The new RSF target balance is equal to the financial impact of 2.5 years of wet weather and the maximum fund balance is set equal to the financial impact of 3.5 years of wet weather. The effect of this policy is to create a target for fund balances that is tied to the real financial impacts that the fund is designed to protect against; and provides financial protection against drought-induced reductions in water sales. As a general rule, the Water Authority will transfer portions of its net water revenues exceeding its debt service ratio requirement into the RSF. From time to time, as needed, the Water Authority will transfer amounts from its RSF into water revenues to meet its debt service ratio requirements, or to help provide adequate working capital to the Operating Fund. The funds are invested with maturities of one to five years and include restricted cash and investments. Stored Water Fund In 06, the Board created the Dam-Fill Fund, currently called the Stored Water Fund, as a separate fund to support the purchase of water to fill the various Water Authority reservoirs and fund the Imperial Irrigation District (IID) water prepayment. Planning for this cost requires a significant accumulation of funds, which if included in the RSF or Operating Fund would violate fund balance goals and objectives. The Stored Water Fund is structured as a sinking fund with the sole purpose of providing funds for dam-fill water purchases and the IID water prepayment. 184

191 Adopted Budget for Fiscal Years 12 & 13 Appendix C Sources of Funds. Sources of funds includes Operating Revenues and Capital Contributions. In addition to Water Sales, Operating Revenues include Investment Income, Infrastructure Access Charges, Property Taxes and In- Lieu, and Hydroelectric Revenue. Operating Revenue Operating revenue is made up of Water Sales, Investment Income, Infrastructure Access Charges, Property Taxes and In-Lieu, Hydroelectric Revenue, and other income. Water Sales Water sales revenue, as shown, is net of evaporation and seepage water losses, the Water Authority s Local Water Supply Development (LWSD) credits and Metropolitan Water District s (MWD s) Local Resource Program (LRP), Surface Storage Operating Agreement (SSOA), and Groundwater Resources Program (GRP) credits. Water sales projections are derived from municipal and industrial demand forecasts prepared using the CWA- MAIN Water Demand Forecasting model, a forecast of agricultural demand, and projected development and use of local supplies. Water Authority long-term forecasts utilize San Diego Association of Governments (SANDAG) demographic projections and assume long-term average weather. Effective January 1, 03, the Water Authority s Board implemented a new rate structure designed to more effectively allocate the cost of service to its customers and to increase the proportion of revenues collected by fixed charges. The new rate categories include: Fixed Storage and Customer Service Charges - fixed charges that enable the Water Authority to increase its coverage of fixed expenditures by fixed revenues, which is desirable from a credit rating agency perspective. Variable Transportation, Melded Municipal and Industrial (M&I) Treatment and Melded M&I Supply Rates. Agricultural customers pay the Transportation Rate and the Customer Service Charge. Agricultural water users have elected to receive a reduced level of service during an emergency, in return for excluding the cost of the Emergency Storage Project (ESP) from their water rate, and pay MWD s Interim Agricultural Water Program (IAWP) rate instead of a melded supply rate. ӹ ӹ M&I customers pay the Transportation Rate, the Customer Service Charge, and the Storage Charge, which funds the ESP. Investment Income The Water Authority receives a significant amount of revenue from investing its fund balances. Investment income on the cash balances in the Operating Fund, Rate Stabilization Fund, and Debt Service Reserve Fund is available to fund general Water Authority operating expenditures. The PAYGO Fund investment income is restricted to pay for capital expenditures or debt service. The Construction Fund investment income is used to fund construction expenditures and is included as part of the available funds, thus reducing the issuance sizing accordingly. 185

192 Adopted Budget for Fiscal Years 12 & 13 Appendix C Infrastructure Access Charges (IAC) In June 1998, the Infrastructure Access Charges (IAC) was adopted by the Board to provide an additional source of fixed revenue to help stabilize the Water Authority s revenues. By increasing fixed revenues, the IAC helps to mitigate water sales revenue volatility that can result from sudden changes in water demand/availability and/or economic cycles. The IAC is a fixed charge that is levied on all retail water meters within the Water Authority s service area. The IAC maintains a minimum ratio of projected fixed revenues to projected fixed expenditures of 25% in any future fiscal year, excluding fixed water rate revenues. Fixed expenditures are defined as debt service (bond and commercial paper principal and interest payments), 80% of operations and maintenance expenditures, and a portion of the LWSD program costs. Property Taxes The Water Authority is authorized under its State County Water Authority Act (Act) to levy taxes on all taxable property within its boundaries for the purpose of carrying on its operations and paying its obligations, subject to certain limitations in the Act, the Revenue and Taxation Code, and the California Constitution. Property taxes are levied annually by the Water Authority s Board of Directors on July 1, using a lien date of March 1, and are payable by property owners in two equal installments, which are due by December 10 and April 10, respectively. The taxes levied are billed and collected by the County of San Diego and are remitted to the Water Authority throughout the year. The tax rate set by the Water Authority s Board of Directors is based upon the assessed valuation of taxable property within the Water Authority s service area and debt service payments for interest and principal. The San Diego County Assessor determines property valuation. In-Lieu Charges Annually, the Water Authority receives an allocation of taxes from the State of California collected within the County. This allocation (one percent State Allocation) was put into place to assist special districts, which were adversely impacted from the implementation of Proposition 13. The basis of the allocation was the amount of secured taxes the Water Authority was collecting in , at which time the City of San Diego was paying certain secured taxes in-lieu of them being on the tax roll. As a result, the initial base for the allocation of taxes to the Water Authority was understated. Each year, the Water Authority calculates the amount of the In-Lieu Charge due from the City of San Diego in accordance with Resolution 87-21, which established an annual charge for member agencies that made In-Lieu payments for taxes levied for General Purposes in fiscal years preceding Other Income Other income includes encroachment permits, easements, gain/loss on sale of assets, delinquency fees, plan-check reimbursements, and operating grants. 186

193 Adopted Budget for Fiscal Years 12 & 13 Appendix C Rate Categories. The water rate categories are discussed in detail below. Customer Service Charge The Customer Service Charge is set to recover costs that are necessary to support the functioning of the Water Authority, to develop policies and implement programs that benefit the region as a whole. The Customer Service Charge is a fixed charge, which is allocated among the member agencies on the basis of each agency s three-year rolling average of all deliveries (including all users, member agencies, and third-party wheeling throughput). Interim Agricultural Water Program (IAWP) Agricultural water users are able to purchase treated or untreated water from the Water Authority at MWD s IAWP rate. Melded M&I Supply The per-acre-foot Melded Untreated M&I Supply Rate recovers the cost of water to the Water Authority. The melded supply rate includes the costs of water purchased from MWD and IID, the costs of water supplies from the canal lining projects, the MWD wheeling costs for non-mwd supplies, and seepage and evaporation. In addition, the rate recovers certain fixed costs associated with the Quantification Settlement Agreement (QSA), and may recover costs of certain operating budget expenditures associated with the procurement of water and wheeling. The largest component of the Melded Untreated M&I Supply Rate is MWD s water supply rates. Recently, MWD created a new water rate structure designed to better allocate the cost of services to the fees and charges designed to recover these costs. The structure applies to full cost firm supplies provided by MWD and replaced the previous postage stamp rate for this class of service. The new structure unbundles or itemizes the cost elements of water supply into transportation, power, and treatment (included in the Melded M&I Treatment Rate), and establishes a two-tiered pricing (inclining block) structure for water supplies. MWD member agencies were asked to make ten-year financial commitments termed purchase orders to purchase at least 60% of each agency s maximum historic annual firm (base) demand for MWD water. In exchange, the agency may purchase up to 90% of its base demand at the preferable Tier 1 rate. The Water Authority s exposure to Tier 2 rates has decreased as annual deliveries from its water transfer with IID and the canal lining projects increase. The structure maintains a postage stamp approach for discount water supplies, such as agricultural, or groundwater replenishment deliveries. Melded Municipal and Industrial (M&I) Treatment Effective January 1, 06, the Water Authority implemented a melded treatment rate. This per-acre-foot rate is designed to recover the Water Authority s water treatment costs. The Melded M&I Treatment Rate includes the costs of purchasing treated water from MWD, the operating and capital costs associated with the Water Authority s agreement with Helix Water District s Levy Water Treatment Plant, operating costs associated with the Olivenhain Treatment Plant and the operating and capital costs associated with the construction of the Water Authority s new Twin Oaks Valley Water Treatment Plant. 187

194 Adopted Budget for Fiscal Years 12 & 13 Appendix C MWD Capacity Charge The Capacity Charge formerly known as the Capacity Reservation Charge is a fixed charge levied on an agency s maximum daily flows over the three previous fiscal years. It recovers the cost of providing peak capacity within the distribution system, and is designed to encourage member agencies to shift demands and avoid placing large daily peaks on the MWD system during the summer months. Daily flow measured between May 1 and September 30 for purposes of billing the Capacity Charge will include deliveries (except long-term seasonal storage deliveries) made by MWD to a member agency or member agency customer including water transfers, exchanges and agricultural deliveries. As part of a separate surface reservoir operating agreement to manage seasonal peaking, the Water Authority is expected to reserve its full available capacity. The Water Authority s Board has directed that the Capacity Charge be recovered proportionally based on a five-year rolling average of member agency flows during coincident peak weeks. MWD Readiness-To-Serve Charge (RTS) The Readiness-to-Serve (RTS) Charge recovers MWD s debt service for construction projects necessary to meet the reliability and water quality needs of current water users, as opposed to new customers. MWD passes these costs to its member agencies based upon the member agency s share of the ten-year rolling average firm water deliveries. This ensures that all member agencies pay a share of the fixed costs necessary to meet existing demand for MWD s water. The MWD Standby Charge revenues, which MWD collects from ratepayers in the San Diego County Water Authority service area, offset the RTS charge paid by the Water Authority. Storage Charge The Storage Charge is a fixed charge set to recover costs associated with the Emergency Storage Program. Allocation of the Storage Charge is based on all non-agricultural water deliveries and is allocated among the member agencies using a pro rata share of each agency s three-year rolling average of non-agricultural deliveries (including all users, member agencies, and third-party wheeling throughput). Transportation The Transportation Rate is a uniform rate set to recover capital, operating, and maintenance costs of the Water Authority s aqueduct system including all facilities used to physically transport the water to member agency meters. The Transportation Rate is charged to each acre-foot of water as delivered by the Water Authority through Water Authority facilities. All users, member agencies, and third-party wheelers will pay the Transportation Rate. 188

195 Adopted Budget for Fiscal Years 12 & 13 Appendix C Capital Contribution Capital contributions are independent of water use and are fixed to recover costs associated with new system capacity/reliability or maintaining existing system capacity/reliability. The use of capital contributions revenue is restricted to paying for the CIP projects and is deposited in the PAYGO Fund. Capital contributions are made up of Capacity Charges (System and Treatment Capacity Charges), CIAC, and Water Standby Availability Charges. These revenue sources are discussed next. Capacity Charges System Capacity Charge. In May 1990, the Water Authority s Board of Directors adopted a System Capacity Charge on all new or larger retail water meters installed. The charge is designed to recover a proportionate share of the capital costs associated with providing services to new connections in the Water Authority s service area. This follows existing Government Code (Section 54991), which states that System Capacity Charges shall not exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed... In May 05, the Board approved a change in the System Capacity Charge calculation methodology, which balances the extra capacity present in the system financed by existing customers with the benefits of use by future customers. Because meter size dictates the maximum water demand of a new customer, the System Capacity Charge is based upon meter size. Treatment Capacity Charge. In May 05, the Board also approved the creation of a Treatment Capacity Charge to help fund the Water Authority s regional water treatment facility. The charge recovers a portion of the capital costs from the future users of the facility. Like the System Capacity Charge, the fee is based upon the size of the meter installed. Contributions in Aid of CIP (CIAC) Grants or contributions from member agencies for capital projects make up CIAC. Typically these revenues are restricted to specific projects/uses. In some instances, a member agency may reimburse the Water Authority for improvements to their system as part of a Water Authority project. Water Standby Availability Charges On April 12, 1990, the Board of Directors adopted Resolution for Standby Charges, under Section of the County Water Authority Act and Article 23 of the Water Authority s Administrative Code. The charge is $10 per acre per year, or $10 for a parcel less than one acre per year. The charge for each parcel that includes more than one acre shall be determined by multiplying the total number of acres in said parcel by $10. The charge is added to the Secured Tax Roll collected via the San Diego County property tax collection process and remitted by the County to the Water Authority. The Water Standby Availability Charge is intended to recover some of the capital costs associated with maintaining the system. 189

196 Adopted Budget for Fiscal Years 12 & 13 Appendix C Uses of Funds Capital Budget The Water Authority initiated its CIP in 1989 as a long-range plan to ensure that the county s water supply would be reliable. CIP projects are designed to enhance, expand and repair the regional pipeline system, which typically supplies 90% of the county s water. Debt Service The Water Authority uses debt to fund improvements to existing facilities, to fund CIP projects or to refund a previous debt issue (long-term debt only). Quantification Settlement Agreement (QSA) Mitigation The QSA was executed on October 10, 03 and is related to water transfers and other agreements. As a part of the QSA, the Water Authority participates in a Joint Powers Authority (JPA) with IID and the Coachella Valley Water District to provide for the environmental mitigation of water transfer impacts. The Water Authority will fund the JPA annually through Fiscal Year 26 according to a set schedule of payments. Payments are from withdrawals from the QSA Commitment Fund, a fund established by the Board in Fiscal Year 04 to hold the IID socioeconomic payment. With the final payment completed in December 06, the fund will sunset and a minor amount of residual interest earnings will be transferred to the Operating Fund. JPA expenditures are funded through the PAYGO fund, and are repaid with interest through the Melded M&I Supply Rate. In May 07, the Water Authority entered into a settlement with IID regarding third-party socioeconomic impacts of the QSA water transfers. The settlement includes a series of annual payments to the IID. 190

197 Adopted Budget for Fiscal Years 12 & 13 Appendix D Glossary AB Assembly Bill Accrual Basis of Accounting - The basis of accounting under which transactions are recognized when they occur, regardless of the timing of cash receipts and disbursements. Acre-Foot - A unit of measure equivalent to 325,900 gallons of water, which meets the need of two average families in and around the home for one year. ADA - Americans with Disabilities Act AF - Acre-feet AFO Acoustic Fiber Optic APP - Aqueduct Protection Program Appropriation - An amount of money in the budget authorized by the Board of Directors for expenditure or obligation within organizational units for specific purposes. Assessed Valuation - an official government value placed upon real estate or other property as a basis for levying taxes. Assets - Resources owned or held which have monetary and economic value. BAB Build America Bond Bay/Delta - Refers to an environmentally sensitive area of Sacramento/San Joaquin Rivers Delta through which State Water Project water must flow to reach Southern California and other areas. Bond - A written promise to pay a specified sum of money (called the principal) at a specified date in the future, together with periodic interest at a specified rate. In the budget document, these payments are identified as debt service. Budget A balanced financial plan for a given period of time, which includes expenditures and revenues funded through various funds. The budget serves as a financial plan as well as a policy guide, an operations guide, and a communications medium. Bypass - San Vicente Reservoir Bypass Pipeline Capital Equipment - Fixed assets such as vehicles, computers, furniture and technical instruments which have a life expectancy of more than three years and a value over five thousand dollars. Capital Improvement Program - A long-range plan for the construction, rehabilitation and modernization of the Water Authority-owned and operated infrastructure. 191

198 Adopted Budget for Fiscal Years 12 & 13 Appendix D Capital Outlay Expenditures which result in the acquisition of, or addition to, fixed assets including land, buildings, improvements, machinery and equipment. Most equipment or machinery is included in the Annual Operating Budget. Capital improvements such as acquisition of land, construction and engineering expenses are included in the Capital Budget. Capitalized Overhead Indirect administrative costs in the Operating Budget that benefit the Capital Improvement Program (CIP) that are transferred as capitalized overhead from the Operating to CIP. Cash Management - A conscious effort to manage cash so that interest and penalties paid are minimized and interest earned is maximized. Funds received are deposited on the day of receipt and invested as soon as the funds are available. The Water Authority maximizes the return on all funds available for investment without sacrifice of safety. CEQA California Environmental Quality Act CFS - Cubic Feet per Second CIP - see Capital Improvement Program COPs - Certificates of Participation CRACA - Comprehensive Reliability and Cost Assessment CWA-MAIN - County Water Authority-Municipal and Industrial water demand forecasting model Debt Service - The current year portion of interest costs and current year principal payments incurred on longterm debt issued by the Water Authority. Disbursements - Payments made on obligations. DSCR - Debt Service Coverage Ratio DWR - California Department of Water Resources Each Parcel of Land - Shall mean each parcel of land assigned a parcel number by the San Diego County Assessor. EIR/EIS - Environmental Impact Report/Environmental Impact Statement EPC - Engineering, Procurement and Construction ESP - Emergency Storage Project Expenditure - An amount of money disbursed or obligated. Expenditures include current operating disbursements requiring the present or future use of net current assets, debt service and capital improvements. FCF - Flow Control Facility Fiscal Year (FY) - The time frame in which the budget applies. This is the period from July 1 through June

199 Adopted Budget for Fiscal Years 12 & 13 Appendix D Fixed Assets - Long-term tangible assets that have a normal use expectancy of more than three years and do not lose their individual identity through use. Fixed assets include buildings, equipment, and improvements other than buildings and land. FRS - Flow Regulatory Structure FTE - Full Time Equivalent Generally Accepted Accounting Principles (GAAP) - Uniform minimum standards of, and guidelines for, external financial accounting and reporting. They govern the form and content of the basic financial statements of an entity. GAAP encompasses the conventions, rules and procedures necessary to define accepted accounting practices at a particular time. They include not only broad guidelines of general application, but also detailed practices and procedures. The primary authoritative statement on the application of GAAP to state and local governments is Government Accounting Standards Board (GASB) pronouncements and Financial Accounting Standards Board (FASB) pronouncements. GAAP provides a standard by which to measure financial presentations. GIS - Geographic Information System. An organized collection of computer hardware, software, and geographic data designed to efficiently capture, store, update, manipulate, analyze, and display all forms of geographically referenced information. GRP Groundwater Resources Program HCP - Habitat Conservation Plan Hodges Hydro Lake Hodges Pumped Storage Facility IAC Infrastructure Access Charge IAWP Interim Agricultural Water rate IID - Imperial Irrigation District IRP - Integrated Resources Plan. An open and participatory planning process which takes a broad view of all water resource options available to the region and searches for the right combinations of investments to achieve water supply objectives in a cost conscious and environmentally responsible manner. IRWM Integrated Regional Water Management program JPA Joint Powers Authority LDE Limited Duration Employee Leases and Rentals This includes costs to rent equipment, copy machines, temporary easements and other items. LISA Local Investigations and Study Assistance program LMSE - La Mesa Sweetwater Extension LRP MWD s Local Resource Program 193

200 Adopted Budget for Fiscal Years 12 & 13 Appendix D LWSD Water Authority s Local Water Supply Development Master Plan - Regional Water Facilities Master Plan ME Meter Equivalent Metropolitan Water District of Southern California (MWD) MWD is one of the world s largest water agencies. It imports almost 60% of the water used by more than 15 million people in urban Southern California, including San Diego County. This water is wholesaled to Metropolitan s 27-member agencies, including the Water Authority. Metropolitan is governed by a 51-member Board of Director s representing its member agencies. With six Directors, the Water Authority has the second largest contingent on the Board. MG - Million Gallon MGD - Million Gallons per Day MOU - Memorandum of Understanding MW Megawatt NCCP Natural Communities Conservation Plan OMWD - Olivenhain Municipal Water District Operating Departments Budget The normal, ongoing operating costs incurred to operate the Water Authority. Other Expenses This includes employee mileage reimbursement, travel, training, tuition refunds, suggestion awards, professional association dues, memberships, and other miscellaneous items. PCCP - Pre-stressed Concrete Cylinder Pipeline QSA - Quantification Settlement Agreement Rancho Hydro Rancho Penasquitos Pressure Control and Hydroelectric facility RCC - Roller Compacted Concrete Reliability - Consistently providing a water supply that adequately supports the regional economy. Revenue - Income generated by taxes, notes, bonds, investment income, land rental, and user charges. Revenue Bonds - a bond issued by an agency commissioned to finance the building or improving of a public property, such as a bridge or toll road, the revenue from which will pay for the bond. ROW - Right of Way RSF Rate Stabilization Fund RTS Readiness to Service charge 194

201 Adopted Budget for Fiscal Years 12 & 13 Appendix D SANDAG - San Diego Association of Governments SAWR Special Agricultural Water Rate SCADA - Supervisory Control and Data Acquisition SCOOP - Small Contractor Outreach Opportunity Program SD - San Diego SDCWA San Diego County Water Authority Services - The normal, ongoing operating costs incurred to operate the Water Authority that are procured from companies outside of the Water Authority. Examples include repair, maintenance, auditing, appraisals, custodial, security, engineering, drafting and design. SR - State Route SSOA Surface Storage Operating Agreement Total Capital Budget - The total budget requests for construction projects and associated expenses. Total Water Authority Budget - The sum of the total Operating Budget, Debt Service, Water Purchases, Capital Budget and Equipment Replacement. Treated Water - Water delivered to member agencies which has been treated by coagulation, sedimentation, filtration and chlorination. UWMP Urban Water Management Plan Utilities - This includes gas, electricity, water, sewer, and telephone. VFD Variable Frequency Drive systems Water Authority - San Diego County Water Authority Water Purchases - The cost of purchasing water from other agencies. WD - Water District WTP - Water Treatment Plant 195

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203 Adopted Budget for Fiscal Years 12 & 13 Appendix E Classification and Salary Schedule Section (d) of the Administrative Code requires that The Personnel Officer may make additions or modifications to the classification and salary schedule, to add, delete or modify positions and establish corresponding salary bands or ranges, subject to ratification by the Board not later than the time of approval of the next bi-annual budget, provided that the addition or modification does not increase the bi-annual budget for the department or office affected by the addition or modification The Classification and Salary Schedule (the Schedule) which follows reflects the changes made during Fiscal Years Position titles that were eliminated from the Schedule are shown with a strike-through and position titles that were added or modified are shown in italics. The Schedule also lists the salary range for each position. Identified changes did not increase the bi-annual budget for the department or office in which the changes occurred. 197

204 Adopted Budget for Fiscal Years 12 & 13 Appendix E San Diego County Water Authority Classification and Salary Schedule CLASSIFICATIONS RANGE CLASSIFICATIONS RANGE EXECUTIVE ANALYST General Manager Set by Board of Directors Supervising Management Analyst 37 General Counsel Set by Board of Directors Senior Management Analyst 33 Deputy General Manager A Management Analyst 28 Assistant General Manager B Assistant Management Analyst 24 Assistant General Counsel C Director of Engineering C COUNSEL Director of Finance/Treasurer C Director of Water Resources C Deputy General Counsel 45 Director of Operations and Maintenance D Director of Administrative Services E EDUCATION Director of Human Resources E Director of Public Affairs E Education Programs Supervisor 35 Director of Right of Way E Education Programs Specialist 23 SENIOR MANAGEMENT ELECTRICAL/ELECTRONICS Controller F Electrical/Electronics Supervisor 36 Engineering Manager F Sr. Electrical/Electronics Technician 32 Government Relations Manager F Electrical/Electronics Technician II 28 Inter-Agency Program Manager F Electrical/Electronics Technician I Operations & Maintenance Manager Right of Way Manager F F ENGINEERING Water Resources Manager F Information Systems Manager G Principal Engineer 46 Administrative Services Manager H Senior Engineer 43 Public Affairs Manager H Engineer (P.E.) 39 Risk Manager H Supervising Engineering Technician 35 Contract Manager I Engineer II 31 Purchasing Manager I Senior Engineering Technician 29 ACCOUNTING Engineer I 25 Engineering Technician II 22 Accounting Supervisor 37 Engineering Technician I 18 Senior Accountant 33 Accountant 26 ENGINEERING CONSTRUCTION Accounting Technician 17 Accounting Assistant II 12 Principal Construction Manager 46 Accounting Assistant I 06 Senior Construction Manager 43 Construction Manager 35 ADMINISTRATIVE SUPPORT Cost Estimator 39 Clerk of the Board 27 FINANCE Executive Administrative Assistant 27 Legal Administrative Assistant 27 Financial Unit Manager 46 Supervising Administrative Assistant 26 Rate and Debt Administrator 43 Administrative Assistant Rate Analyst 41 Deputy Clerk of the Board Budget Officer 37 Senior Office Assistant 14 Investment Analyst 35 Receptionist 09 Financial Analyst 24 Office Assistant II 09 Office Assistant I

205 Adopted Budget for Fiscal Years 12 & 13 Appendix E San Diego County Water Authority Classification and Salary Schedule, Continued CLASSIFICATIONS RANGE CLASSIFICATIONS RANGE HUMAN RESOURCES RIGHT OF WAY Senior Human Resources Analyst 33 Right of Way Supervisor 37 Human Resources Analyst 25 Senior Right of Way Agent 35 Human Resources Assistant Right of Way Agent 31 Right of Way Inspector 21 INFORMATION TECHNOLOGY Right of Way Technician Series(Level I IV) 18-28* * Level I: Range 18 Steps 1-7 Data Base Administrator 41 Level II: Range 19 Steps 5-11 Information Systems Supervisor 39 Level III: Range 22 Steps 7-13 Network Administrator 35 Level IV: Range 28 Steps 6-13 Senior Information Systems Analyst 35 Information Systems Analyst 31 SAFETY AND RISK Sr. Systems Admin. & Support Specialist 30 Systems Admin. & Support Specialist 26 Safety Officer 33 Help Desk Support Specialist 24 Information Systems Assistant II STUDENT Information Systems Assistant I 14 Student Intern (Fixed at Range 1, Step 1) MAINTENANCE Student Worker (Fixed at Ca. Min. Wage) System Maintenance Supervisor (Utility) 33 SURVEYING Fleet Maintenance Supervisor (Equipment) 30 Senior Maintenance Technician (Utility) 27 Supervising Land Surveyor 37 Facilities Services Technician (Facilities) 25 Land Surveyor (P.L.S) 33 Maintenance Technician (Utility) 23 Senior Survey Technician 29 Fleet Mechanic II (Equipment) 22 Survey Technician 24 Fleet Mechanic I (Equipment) 18 Maintenance Worker II (Field) 17 WATER RESOURCES / CONSERVATION Maintenance Worker I (Field) 11 Principal Water Resources Specialist 42 PROJECT CONTROLS Principal Water Resources Spec. (Env) 42 Senior Water Resources Specialist 39 Program Control Manager 41 Senior Water Resources Spec. (Env) 39 Senior Project Scheduler 39 Water Resources Specialist 31 Project Scheduler II 37 Water Resources Specialist (Env) 31 Project Scheduler I 31 Asst. Water Resources Specialist 24 Asst. Water Resources Spec. (Env) 24 PUBLIC AFFAIRS Water Resources Aide Small Contractor Program Manager 39 WATER SYSTEMS Public Affairs Supervisor 35 Sr. Public Affairs Representative 31 System Operations Supervisor 37 Public Affairs Representative II 27 Senior System Operator 28 Small Contractor Program Representative 27 System Operator II 24 Public Affairs Representative I 23 System Operator I 18 PURCHASING Purchasing Technician II 24 Warehouse Supervisor 24 Purchasing Technician I Storekeeper II 14 Storekeeper I

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207 Adopted Budget for Fiscal Years 12 & 13 Appendix F June 15, 11 Attention: Administrative and Finance Committee Approval of the General Manager s Recommended Budget for Fiscal Years 12 and 13. (Action) Purpose For the Administrative and Finance Committee to recommend to the full Board the adoption of the General Manager s Recommended Budget for Fiscal Years 12 and 13. Staff recommendation Approve adoption of Resolution No. 11-, a Resolution of the Board of Directors of the San Diego County Water Authority approving the General Manager s Recommended Budget for Fiscal Years 12 and 13, for operations and capital improvements and appropriating $1.417 billion consistent with the approved budget. Alternative The Committee and the Board may modify the Recommended Budget prior to adoption of the Budget Resolution. Fiscal impact Distributed to the Board on May 26, 11, the General Manager s Recommended Budget for Fiscal Years 12 and 13 includes an appropriation of $1,417.4 million. This is allocated amongst the following categories: Water Purchases and Treatment, $666.9 million; Stored Water Purchases, $21.1 million; Capital Improvement Program (CIP), $321.1 million; Debt Service, $280.4 million; QSA Mitigation, $12.5 million; Operating Departments, $87.7 million; Hodges Pumped Storage, $6.1 million; Equipment Replacement, $1.2 million; and Other Expenditures, $.4 million. With the proposed increase in rates and charges being considered at the Public Hearing on June 23 rd, adequate revenues and funding sources are anticipated to be available to meet the budgetary needs for Fiscal Years 12 and 13. Background The General Manager delivered to the Board and introduced the Recommended Budget to the Administrative and Finance Committee on May 26, 11. The presentation provided the context in which the budget was developed, an overview of the budget, and the format for upcoming budget workshops. Key topics discussed included how the recommended budget will address the following aspects of the New Normal environment in which the Water Authority now operates reduced water sales volumes; increased water costs; continued transition from a building to an operating organization; impacts of the economic recession; ratepayer fatigue; and long-term Page 137 of 563 1

208 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 2 of 3 water reliability. In addition, as required by Section (d) of the Administrative Code, the Water Authority s Classification and Salary Schedule is included in the budget document as Appendix E. The Schedule reflects modifications made during Fiscal Years to position titles and includes a listing of the salary range for each position. Discussion On June 7 and 9, 11, the Administrative and Finance Committee considered and discussed the Fiscal Years 12 and 13 Recommended Budget. On the first day of the budget hearings, a presentation was provided on the Water Authority s sources of funds (revenues) and uses of funds (expenditures), including key assumptions utilized to develop the budget and key rate information. In addition, presentations were provided on the operating departments that represent the Water Supplies Portfolio and Water Facilities Business Plan focus areas. Directors asked a variety of questions focused on the budgeting for investment income and debt service, including how the deferral of CIP projects impacted the schedule for utilizing funds from our last bond issuance; the schedule for depositing and withdrawing funds from the Stored Water Fund; variances between the projected expenses for the current budget period and the recommended budget, primarily as it relates to water sales and labor and benefits; key drivers of the proposed rate increase by category; programs and/or services that were eliminated, deferred, or added; and position reductions, including the identification of which positions were currently vacant. At the beginning of the second day, staff provided responses to these questions. In addition, presentations were provided on the remaining operating departments and a more in-depth discussion on CIP and Debt Service was provided. At the conclusion of the second day of budget meetings, the A&F Committee decided to consider key expenses on Hodges Pumped Storage and Grants at its regularly scheduled meeting on June 23 rd. Copies of the handouts of the presentations and follow up discussion were sent to the Board on June 13, 11. Upon approval of the budget at the June Board meeting, staff will distribute a final document to the Board by the end of September 11. Prepared by: Lisa Celaya, Budget & Analysis Manager Reviewed by: Eric Sandler, Director of Finance/Treasurer Approved by: Maureen A. Stapleton, General Manager 2 Page 138 of 563

209 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 3 of 3 Attachment: Resolution No. 11- Resolution of the Board of Directors of the San Diego County Water Authority Approving the General Manager s Recommended Budget for Fiscal Years 12 and 13 for Operations and Capital Improvements and Appropriating $1.417 billion consistent with the Approved Budget. Page 139 of 563 3

210 Adopted Budget for Fiscal Years 12 & 13 Appendix F RESOLUTION NO. 11- RESOLUTION OF THE BOARD OF DIRECTORS OF THE SAN DIEGO COUNTY WATER AUTHORITY APPROVING THE GENERAL MANAGER S RECOMMENDED BUDGET FOR FISCAL YEARS 12 AND 13 FOR OPERATIONS AND CAPITAL IMPROVEMENTS AND APPROPRIATING $1.417 BILLION CONSISTENT WITH THE APPROVED BUDGET WHEREAS, on May 26, June 7, 9, and 23, 11, at publicly noticed meetings, staff presented to the Administrative and Finance Committee the General Manager s Recommended Budget for Fiscal Years 12 and 13; and WHEREAS, based on its review of the recommended budget and the presentations and discussions at its meetings on May 26, June 7, 9 and 23, 11, the Administrative and Finance Committee has recommended approval of the General Manager s Recommended Budget for Fiscal Years 12 and 13, including operations, new and revised project budgets within the Capital Improvement Program, and ratification of changes made to the classification and salary schedule; and WHEREAS, the Administrative and Finance Committee also recommended appropriating $1.417 billion consistent with the approved budget; and WHEREAS, on June 23, 11 the Board of Directors considered the General Manager s Recommended Budget for Fiscal Years 12 and 13 and the report and recommendation of the Administrative and Finance Committee; NOW, THEREFORE, the Board of Directors of the San Diego County Water Authority resolves as follows: 1. Those certain documents now on file in the Office of the Clerk of the Board entitled, General Manager s Recommended Budget for Fiscal Years 12 and 13 are approved as the biannual budget for Fiscal Years 12 and The total amount of $1.417 billion is hereby appropriated for the purposes and in the amounts specified in Exhibit A. Expenditures of appropriated funds shall be consistent with the approved budget. Except as in this Resolution, no increases or decreases to the budget shall occur except upon prior approval by the Board of Directors. 3. The General Manager has the authority within the Operating Fund balance to accommodate any adjustments to Fiscal Years 12 and 13 employee salaries and benefits consistent with Resolutions No , 07-23, and 10-10, or future resolutions approving memoranda of understanding with recognized employee organizations, or salary and compensation plans for represented or unrepresented employees. 4 Page 140 of 563 1

211 Adopted Budget for Fiscal Years 12 & 13 Appendix F The Classification and Salary Schedule (contained in Appendix E of the General Manager s Recommended Budget for Fiscal Years 12 and 13) is approved. The General Manager is authorized to make amendments to the Classification and Salary Schedule consistent with Resolutions No , 07-23, and 10-10, and as authorized by the Administrative Code and other rules and regulations governing the personnel system, provided such adjustments are consistent with the budget controls contained in paragraph The following controls are hereby placed on the use and transfers of the appropriated and budgeted funds: a. The General Manager is responsible for keeping expenditures within the approved appropriations and budgeted allocations for positions, salaries and benefits, and operational expenditures and may adopt budget policies as necessary to carry out that responsibility. No expenditure of funds shall be authorized unless sufficient funds have been appropriated by the Board or General Manager as described herein. b. Subject to paragraph d, the General Manager may exercise discretion in administration of the Operating Budget to respond to changed circumstances, provided that any modification in excess of $150,000 requires approval by the Board. c. Subject to paragraph d, the General Manager may exercise discretion in administration of the Capital Budget to respond to changed circumstances, provided that total expenditures for all CIP projects, in the two fiscal years do not exceed the total appropriations for the Capital Improvement Program in the budget approved in paragraph 1. Addition or deletion of a project or increase in excess of $150,000 to a project budget within the Capital Improvement Program requires approval by the Board. Inclusion of a project in the Capital Improvement Program Budget for planning and environmental review purposes shall not be construed as an irrevocable commitment to the project or implementation. A project shall be subject to revision or deletion from the Capital Improvement Program as necessary to comply with the California Environmental Quality Act. No appropriation under this resolution for a capital project that provides new or expanded service shall be spent for activities other than exempt planning, feasibility, environmental review and other similar purposes until the Board certifies or approves the environmental review document for the project. d. Increases in the appropriation amount of $1.417 billion shall not be effective unless approved by the Board. Addition of personnel positions above the level identified in the budget as approved in paragraph 1 shall not be effective unless approved by the Board. The General Manager may authorize the hiring of temporary or part-time staff as necessary, within the limits imposed by the available expenditure amounts designated in the budget as approved in paragraph 1. This paragraph shall not be construed as a limitation on reclassification or reassignment of positions or other administration of the personnel system consistent with paragraph 3. e. The General Manager is authorized, subject only to the total appropriation, to exceed the expenditure amount designated for water purchases in the budget as approved in paragraph 1 in order to meet the water demands of the Water Authority. Page 141 of

212 Adopted Budget for Fiscal Years 12 & 13 Appendix F 6

213 Adopted Budget for Fiscal Years 12 & 13 Appendix F EXHIBIT A to RESOLUTION 11- Fiscal Years 12 & 13 Budget SOURCES AND USES OF FUNDS ($ Thousands) Recommended FY 12 &13 Revenues & Other Income Water Sales 943,802 Infrastructure Access Charges 56,978 Property Taxes and In-Lieu Charges 21,078 Investment Income 13,002 Hydroelectric Revenue 1,800 Other Income (1) 43,609 Capital Contributions: Capacity Charges 21,365 Water Standby Availability Charges 22,233 Contributions in Aid of CIP 8,2 Subtotal Revenue 1,132,087 Net Fund Withdraws 285,347 Total Revenues & Other Income 1,417,434 Expenditures Water Purchases & Treatment 666,868 Stored Water Purchases 21,145 Capital Improvement Program (CIP) 321,129 Debt Service 280,394 QSA Mitigation (2) 12,461 Operating Departments 87,715 Hodges Pumped Storage 6,052 Equipment Replacement 1,2 Other Expenditures (3),449 Total Uses of Funds 1,417,434 (1) (2) (3) Other Income includes the BABs subsidy, grants revenues and other miscellaneous revenues QSA Mitigation includes QSA JPA Contributions for environmental mitigation, and payments for Socioeconomic Mitigation Settlement Other Expenditures include grants and other expenses Totals may not foot due to rounding Page 143 of 563 7

214 Adopted Budget for Fiscal Years 12 & 13 Appendix F This page intentionally left blank 8

215 Adopted Budget for Fiscal Years 12 & 13 Appendix F June 15, 11 Attention: Administrative and Finance Committee Adopt the Water Authority s rates and charges for calendar year 12 and continue the annual Standby Availability Charge for fiscal year as currently imposed (Action). Purpose To increase water and service rates and charges and to continue the Standby Availability Charge at its current level. Staff recommendation a. Adopt Ordinance No. 11- an ordinance of the Board of Directors of the San Diego County Water Authority setting rates and charges for the delivery and supply of water, use of facilities and provision of services. b. Adopt Resolution 11- a resolution of the Board of Directors of the San Diego County Water Authority continuing the Standby Availability Charge. Alternative Modify the proposed rates and charges to obtain full cost recovery in the upcoming year. Fiscal impact The proposed water rates and charges, in combination with existing taxes, the System Capacity Charge, the Treatment Capacity Charge, the Infrastructure Access Charge (IAC), investment income and the Standby Availability Charge are expected to raise revenues sufficient to meet the Water Authority s revenue requirement and bond covenants. Background Under Government Code section , as amended effective January 1, 08, it is no longer necessary to have a public hearing to keep the Standby Availability Charge at the same level. However, as part of the Water Authority s rate setting process, the Water Authority holds public hearings before establishing or changing any of the rates or charges that it levies to solicit input from stakeholders. In November 10, the voters adopted Proposition 26, an initiative measure amending provisions of articles XIII A and XIII C of the California Constitution. The General Counsel has determined that the measure s amendment of article XIII C affects the Water Authority. Specifically, the measure adds a new definition of tax applicable to local government agencies. As newly defined, a tax is any levy, charge, or exaction of any kind imposed by a local government Page 144 of 563 9

216 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 2 of 9 except one that falls within one of seven specific categories. One of these categories includes charges for benefits or privileges paid by a recipient that do not exceed the reasonable costs of providing the benefit or privilege. Another category includes charges for services or products that do not exceed the cost of providing the service or product. The General Counsel has opined that the Water Authority s recommended rates and charges comply with the requirements of Proposition 26. On April 14, 09, the Metropolitan Water District (MWD) went to Level 2 water supply allocation effective July 1, 09. As a result, MWD s water supply allocation to the Water Authority was reduced by approximately 13%. On April 12, 11, the MWD Board of Directors determined that supply allocation was no longer warranted for 11/12 and elected to terminate, effective April 13, 11, implementation of the 10/11 Water Supply Allocation Plan (WASP) Level 2 and the Condition 3 Water Supply Allocation declaration. In addition, the 11 Interim Agricultural Water Program reductions were lifted. This action ended MWD s longest period of water allocations. On April 13, 10, MWD s Board of Directors adopted rate and charge increases for calendar years 11 and 12. The adopted rate and charge schedule results in a 7.5% annual increase in revenues in each year. Based upon MWD s adopted rate and charge schedule, the cost of treated and untreated water to the Water Authority will increase by 6.7% and 6.3%, respectively, in CY 12 (excluding the impact of MWD s fixed charges). Previous Board Action: On May 26, 11 the Board adopted Resolution setting the time and place for the public hearing on June 23, 11 to receive comments on the proposed rates and charges. Discussion In February, staff developed a high/low rate and charge forecast to support member agency financial planning efforts. The high/low rate and charge forecasts were based upon scenarios varying the level of water sales, MWD rate and charge increases, and CIP expenditures. The CY 12 recommended rates and charges are within that guidance. The Water Authority s All-in rate for treated and untreated water is increasing 7.7% and 7.5%, respectively (includes the Customer Service and Storage Charges converted to a $/AF basis). It should be noted that the actual cost of water will vary by member agency based upon their fixed charge allocations. In April 11, the Water Authority Board of Directors ended water shortage allocations and ended calls for mandatory water use restrictions, because of significant improvements in water supply and storage conditions. However, with water sales volumes down 38% from fiscal year to fiscal year due to the combination of wet/cool weather conditions, economic conditions, and mandatory use restrictions, water sales are not expected to fully rebound to previous levels in the near term. Due to decreased agricultural demand and because urban water users expect to continue efficient water use practices, water sales are expected to recover gradually over time. Current expectations are for water sales to stabilize and increase 210 Page 145 of 563

217 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 3 of 9 slightly over the next two years. Water sales projections are expected to remain below preallocation levels for some time the new normal. In response to the water supply and economic challenges facing the region, the Water Authority has taken the following actions to mitigate CY 12 rate and charge increases. Budget reductions fiscal years 12 & 13 $6.7 million in operating department budget reductions achieved through a downsizing of staff and programs enabling the Water Authority to more efficiently fulfill its core mission. CIP reprioritization Based upon reduced sales forecasts, 14 projects representing $150 million in CIP expenditures were deferred until after the next budget cycle. Debt service coverage levels The forecasted debt service coverage ratio for fiscal year is below the Water Authority Board s policy target to mitigate rate impacts. Given the dramatic decreases in sales volumes, a short-term deviation from this policy is not expected to have negative credit impacts. Setting Rates and Charges: On an annual basis, the Water Authority develops proposed rates and charges which it presents to the Board of Directors for adoption. Each year the Water Authority undertakes the following cost of service analysis to determine water rates and charges. Step 1. Establish the revenue requirement determine the total amount of revenue needed to recover the Water Authority s annual operating (operations and maintenance of facilities, cost of water, treatment costs, etc.) and capital expenditures (cash and short and long-term debt) Step 2. Allocate the revenue requirement and offsetting non-commodity revenues (i.e. investment income, property tax, IAC, etc) to rate categories (melded supply, melded treatment, transportation, storage and customer service) to determine the net revenue requirement for each rate category Step 3. Determine rates and charges based upon the net revenue requirements, water sales projections and other key financial management metrics (i.e. senior lien debt service coverage, fund deposits and withdrawals) Step 4. Allocate fixed charges (storage and customer service) to member agencies based on specified allocation methodologies Description of Rates and Charges: Table 1 summarizes the Water Authority s recommended CY 12 rates and charges. A description of the Water Authority s rates and charges is provided in subsequent sections. In addition to the Water Authority s rates and charges shown in Table 1 on the following page, certain MWD rates and charges are passed through to the member agencies. Table 2 on the following page, summarizes MWD s rates and charges that the Water Authority passes through to its member agencies. Page 146 of

218 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 4 of 9 Table 1 Summary of Water Authority Rates and Charges Water Authority Rates and Charges CY 10 Previous CY 11 Current CY 12 Recommended Melded M&I Supply Rate ($/AF) $532 $597 $638 Melded M&I Treatment Rate ($/AF) $215 $215 $234 Transportation Rate ($/AF) $67 $75 $85 Untreated Special Agricultural Water Rate ($/AF) $484 $527 $560 Treated Special Agricultural Water Rate ($/AF) $699 $742 $794 Infrastructure Access Charge $2.02/ME 2 $2.49/ME 2 $2.60/ME 2 Customer Service Charge $18,000,000 $23,0,000 $26,400,000 Storage Charge $34,000,000 $44,300,000 $54,0,000 Standby Availability Charge per parcel or acre, $10 $10 $10 whichever is greater 1 1 Fiscal Year Charge. 2 ME means meter equivalent as defined in the resolution establishing the Infrastructure Access Charge. Table 2 Summary of Water Authority Pass Through Rates and Charges MWD Rates and Charges CY 10 Previous CY 11 Current CY 12 Adopted Untreated Tier 2 Supply Rate $/AF 1 $594 $652 $686 Interim Agricultural Water Program Untreated ($/AF) $416 $482 $537 Interim Agricultural Water Program Treated ($/AF) $615 $687 $765 Replenishment Water Rate Untreated ($/AF) $366 $409 $442 Replenishment Water Rate Treated ($/AF) $558 $601 $651 MWD Capacity Charge $9,331,0 $9,4,480 $7,809,2 Readiness-to-Serve Charge 2 $17,481,664 $18,596,491 $21,930,087 1 Agencies exceeding their Tier 1 allocation pay the MWD bundled Tier 2 Supply Rate (System Access Rate, System Power Rate and Water Stewardship Rate) instead of the M&I Melded Supply Rate. 2 Fiscal Year Charge. The following proposed charge is effective July 1, 11: Standby Availability Charge. The County Water Authority Act limits the maximum annual Standby Availability Charge to $10 per acre or parcel, whichever is greater. Beginning before November 6, 1996, the Water Authority has determined that the maximum annual Standby Availability Charge should be levied on property within the Water Authority s service area. To provide necessary funding for the CIP, the General Manager recommends that the charge continue at the $10 maximum for fiscal year The Standby Availability Charge rate is effective July 1, 11. The amount of this charge has not changed since the adoption of Proposition 218 in The justification for imposition of this charge is the same as for when the charge was initially levied and as it was imposed before November 6, Page 147 of 563

219 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 5 of 9 The following rates and charges are being proposed effective on January 1, 12: Melded Untreated M&I Supply Rate. The Melded Untreated Municipal and Industrial Supply Rate will be set to recover the costs of purchasing Tier 1 water from MWD, water purchases from IID, payments in connection with the All American and Coachella Canal lining projects, payments to MWD under the 03 Exchange Agreement for conveyance of IID and Canal Lining water, and may include other costs specifically associated with the acquisition of the IID supply source, cost recovery for supply costs previously incurred but not charged, etc. For CY 12, the Melded M&I Supply Rate will increase from its current level of $597/AF to $638/AF. Table 3 shows the calculation of the Melded Untreated Supply Rate. Table 3 Melded Untreated M&I Supply Rate Calculation CY 12 Acre-Foot Sales (A/F) (000's) MWD Tier I IID 90.0 Canal Water Delivery Costs 80.2 TOTAL A/F SALES Water Purchase Cost (in Millions) MWD Tier 1 Water Purchases & Exchange Fees $1.6 IID Water Purchases 44.1 Canal Water Purchases 0.9 Subtotal Water Purchases $246.6 Additional Costs (in Millions) Canal Cost Differential and Operating Budget Costs $14.6 IID Socioeconomic 0.0 QSA Environmental 0.0 Groundwater Storage 0.4 Subtotal Other Costs $15.0 TOTAL SUPPLY COST $261.6 A/F RATE (Total Supply Cost /Total A/F Sales) $638 Melded M&I Treatment Rate. The Melded Municipal and Industrial Treatment Rate will be set to recover the costs of treating water for the Water Authority and may include costs of purchasing treated water from MWD, and the Levy and Olivenhain treatment plants and may recover certain other costs associated with the delivery of treated water. For CY 12, the Melded M&I Treatment Rate will increase from its current level of $215/AF to $234/AF. Table 4 shows the calculation of the Melded Treatment Rate. Page 148 of

220 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 6 of 9 Table 4 Melded M&I Treatment Rate Calculation CY 12 Acre-Foot Sales (A/F) (000's)* MWD 76.3 Water Authority 68.3 Helix 25.4 Olivenhain 5.0 TOTAL A/F SALES Cost (in Millions) MWD $17.9 Water Authority 18.0 Helix 3.8 Olivenhain 1.2 TOTAL TREATMENT COSTS $40.9 A/F RATE (Total Treatment Costs/Total A/F Sales) $234 * Includes SAWR treated water deliveries. Transportation Rate. The Transportation Rate is a uniform rate set to recover capital, operating and maintenance costs of the Water Authority s aqueduct system including all facilities used to physically transport the water to member agency meters. The Transportation Rate is charged to each acre-foot of water delivered by the Water Authority as it occurs. All users, member agencies and third-party wheelers will pay the Transportation Rate. A separate administration fee will also be imposed to recover the Water Authority s cost to administer the purchase and delivery of wheeled water to member agencies and third parties. For CY 12, the Transportation Rate will increase from its current level of $75/AF to $85/AF. Water Authority s Transitional Special Agricultural Water Program Rates. For CY 12, the untreated agricultural water rate will increase from its current level of $527/AF to $560/AF. The treated agricultural water rate will increase from $742/AF in CY 11 to $794/AF in CY 12. MWD s Interim Agricultural Water Program Rates. For CY 12, the untreated agricultural water rate will increase from its current level of $482/AF to $537/AF. The treated agricultural water rate will increase from $687/AF in CY 11 to $765/AF in CY 12. Replenishment Rate. For CY 12, the untreated replenishment water rate will increase from its current level of $409/AF to $442/AF. The treated replenishment water rate will increase from $601/AF in CY 11 to $651/AF in CY 12. Infrastructure Access Charge. The Infrastructure Access Charge is imposed on member agencies as a condition of maintaining connections to Water Authority facilities. It is apportioned based on retail water meters within each agency. For CY 12, the IAC will increase from its current level of $2.49/ME to $2.60/ME. 214 Page 149 of 563

221 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 7 of 9 Customer Service Charge. The Customer Service Charge is set to recover costs that are necessary to support the functioning of the Water Authority, to develop policies and implement programs that benefit the region as a whole. The Customer Service Charge will be allocated among the member agencies on the basis of each agency s three-year rolling average of member agency purchases from the Water Authority (excludes member agency wheeled water). For CY 12, the Customer Service Charge will increase from its current level of $23.2M to $26.4M. Storage Charge. The Storage Charge is set to recover costs associated with the Emergency Storage Program. Because agricultural users receive a low level of Emergency Storage Program water service, the Storage Charge is based on all non-agricultural water deliveries and will be allocated among the member agencies using a pro rata share of each agency s three-year rolling average deliveries (including all users, member agencies and third-party wheeling throughput). For CY 12, the Storage Charge will increase from its current level of $44.3M to $54.2M. The following MWD rates and charges are passed on directly or allocated to the member agencies as follows; MWD Capacity Charge. For CY 12, the Capacity Charge is $7,400 per cubic foot second (cfs) of maximum daily flow requested by a MWD member agency. The Capacity Charge is a fixed charge levied on an agency s maximum daily flows over the three previous fiscal years. It recovers the cost of providing peak capacity within the distribution system, and is designed to encourage member agencies to shift demands and avoid placing large daily peaks on the MWD system during the summer months. Daily flow measured between May 1 and September 30 for purposes of billing the Capacity Charge will include deliveries (except long-term seasonal storage deliveries) made by MWD to a member agency or member agency customer including water transfers, exchanges and agricultural deliveries. As part of a separate surface storage operating agreement to manage seasonal peaking, the Water Authority is expected to reserve its full available capacity. The Capacity Charge will be set at $7,809,2. The Water Authority s Board has directed that the Capacity Charge will be recovered proportionally based on a five-year rolling average of member agency flows during coincident peak weeks. Page 150 of

222 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 8 of 9 Table 5 - Calendar Year 12 MWD Capacity Charge Allocation Member Agency 7/18/06 8/14/07 7/15/08 8/25/09 8/24/10 Carlsbad M.W.D % $ 262,488 Del Mar, City of % 19,140 Escondido, City of % 327,186 Fallbrook P.U.D % 247,480 Helix W.D % 314,570 Lakeside W.D % 53,790 Oceanside, City of % 413,210 Olivenhain M.W.D % 338,246 Otay W.D. 1, , , % 543,095 Padre Dam M.W.D % 263,881 Pendleton M.R % 1,142 Poway, City of % 177,813 Rainbow M.W.D % 430,643 Ramona M.W.D % 122,500 Rincon Del Diablo M.W.D % 116,258 San Diego, City of 4, , , , , % 2,717,933 San Dieguito W.D % 62,7 Santa Fe I.D % 148,677 Sweetwater Authority % 48,210 Vallecitos W.D % 293,646 Valley Center M.W.D. 1, , , % 661,788 Vista I.D % 181,032 Yuima M.W.D % 64,285 Totals 1 14, , , , , % $ 7,809,2 may not foot due to rounding. 2 Percentages shown are rounded. Totals may not foot. (Capacity Charge) Coincident Peak Week Deliveries (AF) 1 5-year average share 2 1 Charge is allocated based on a five-year rolling average of member agency deliveries during regional peak weeks. Annual charges and totals CY12 Charge Readiness-to-Serve Charge. MWD s Readiness-to-Serve Charge differs from the other MWD charges in that it is set on a fiscal year basis. The total Readiness-to-Serve Charge will increase from its current level of $125 million to $146 million in fiscal year The Water Authority s share is set at $34,608,890. After credits from the MWD Standby Charge, and administrative costs, the net Water Authority share is $21,930,087. MWD s Readiness-to-Serve Charge will recover costs associated with standby and peak conveyance capacity and system emergency storage capacity. The Readiness-to-Serve Charge will be allocated among MWD member agencies on the basis of each agency s ten-year rolling average of firm demands (including water transfers and exchanges conveyed through system capacity). This allocation will be revised each year. Revenues equal to the amount of MWD Standby Charges will continue to be credited against the member agency s Readiness-to-Serve Charge obligation unless a change is requested by the member agency. The Board has directed that the Water Authority s Readiness-to-Serve Charge will be passed through proportionally to member agencies on the basis of each agency s ten-year rolling average of firm demands (including water transfers and exchanges conveyed through system capacity). 216 Page 151 of 563

223 Adopted Budget for Fiscal Years 12 & 13 Appendix F Administrative and Finance Committee June 15, 11 Page 9 of 9 Table 6 - Readiness-to-Serve Charge Allocation Member Agency 10-Year Average Deliveries (AF) 1 FY12 RTS Charge 2 Net Stand-By Charge Credits 3 FY12 RTS Net Charge Monthly Charge Carlsbad M.W.D. 19,499 $ 1,308,679 $ (392,629) $ 916,050 $ 76,338 Del Mar, City of 1,314 88,189 (24,762) 63,427 5,286 Escondido, City of 21,129 1,418,077 (224,141) 1,193,936 99,495 Fallbrook P.U.D. 9, ,057 (283,556) 343,501 28,625 Helix W.D. 36,051 2,419,570 (791,767) 1,627, ,650 Lakeside W.D. 4 4, ,106 (168,311) 126,795 10,566 Oceanside, City of 28,734 1,928,488 (660,274) 1,268, ,685 Olivenhain M.W.D. 21,295 1,429,218 (415,674) 1,013,544 84,462 Otay W.D. 36,559 2,453,664 (965,047) 1,488, ,051 Padre Dam M.W.D. 4 14, ,083 (536,590) 433,493 36,124 Pendleton Military Reservation 74 4, , Poway, City of 13, ,136 (284,397) 633,739 52,812 Rainbow M.W.D. 10, ,871 (536,791) 192,080 16,007 Ramona M.W.D. 7, ,874 (400,879) 88,995 7,416 Rincon Del Diablo M.W.D. 7, ,156 (307,035) 185,121 15,427 San Diego, City of 210,933 14,156,809 (4,349,149) 9,807, ,304 San Dieguito W.D. 4, ,777 (162,323) 163,454 13,621 Santa Fe I.D. 9, ,466 (150,682) 457,784 38,149 Sweetwater Authority 12, ,846 (423,234) 401,612 33,468 Vallecitos W.D. 16,372 1,098,810 (426,616) 672,194 56,016 Valley Center M.W.D. 11, ,133 (682,476) 65,657 5,471 Vista I.D. 18,221 1,222,906 (407,470) 815,436 67,953 Yuima M.W.D. (1) (67) (85,074) (85,141) (7,095) Contract Water , ,142 4,262 Totals 515,664 $ 34,608,890 $ (12,678,803) $ 21,930,087 $ 1,827, year rolling average of firm MWD deliveries based on FY01-FY10 period and rounded to nearest acre-foot. Annual and monthly charges are rounded to nearest dollar. 2 Effective date is July 1, Net of $12,724,104 in standby-charge credits and $45,301 in MWD administrative fees. 4 Lakeside W.D. is allocated 23.83% of Padre Dam M.W.D's deliveries prior to January 08. Lakeside W.D's deliveries after January 08 are being metered seperately from Padre Dam M.W.D's deliveries. After consideration of public comments at the Public Hearing on June 23, 11, the staff recommends that the Board adopt ordinances setting the water rates and charges for the next calendar year and continuing the existing Standby Availability Charge. Prepared by: Reviewed by: Approved by: David G. Shank, Financial Planning Manager Eric Sandler, Director of Finance/Treasurer Sandra L. Kerl, Deputy General Manager Attachments: A: Ordinance 11- (Rate Ordinance) B: Resolution 11- (Standby Availability Charge Resolution) Page 152 of

224 Adopted Budget for Fiscal Years 12 & 13 Appendix F Attachment A ORDINANCE NO. 11- AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE SAN DIEGO COUNTY WATER AUTHORITY SETTING RATES AND CHARGES FOR THE DELIVERY AND SUPPLY OF WATER, USE OF FACILITIES AND PROVISION OF SERVICES WHEREAS, Subdivision (11) of Section 5 of the County Water Authority Act provides, in part that, the Authority's Board of Directors, "as far as practicable, shall provide each of its member agencies with adequate supplies of water to meet their expanding and increasing needs;" and WHEREAS, Subdivision (13) of Section 5 of the County Water Authority Act provides that the Authority may: "Fix, revise, and collect rates or other charges for the delivery of water, use of any facilities or property, or provision of services. In fixing rates, the Board may establish reasonable classifications among different classes and conditions of service, but rates shall be the same for similar classes and conditions of service." and WHEREAS, Subdivision (j) of Section 7 of the County Water Authority Act provides in part, that the Authority s Board of Directors, as far as practicable, shall fix such rate or rates for water as will result in revenues which will pay the operating expenses of the Authority, provide for required maintenance, and provide for the payment of the interest and principal of the bonded debt; and WHEREAS, the Long-Range Financing Plan adopted by the Board of Directors contemplates the establishment of sufficient rates and charges, when considered along with taxes and other revenues of the Authority, to provide revenues for accomplishment of the Authority s purposes and programs as determined by the Board of Directors; and WHEREAS, pursuant to the County Water Authority Act, the Board of Directors has adopted ordinances and resolutions levying and fixing property taxes, water standby availability charges and other rates and charges for delivery and supply of water, use of facilities and provision of other services by the Authority, including, without limitation, a system capacity charge, water treatment capacity charge, an infrastructure access charge, a readiness-to-serve charge and water rates and charges; and WHEREAS, the Board of Directors, upon recommendation of the Rate Study Subcommittee and the Fiscal Policy Committee, enacted Ordinance 02-03, An Ordinance of the Board of Directors of the San Diego County Water Authority Setting Rates and Charges for the Delivery and Supply of Water, Use of Facilities and Provision of Services, which established a new structure for water rates and charges; and WHEREAS, on May 26, 05, the Board of Directors adopted Ordinance No increasing the System Capacity Charge and establishing the Water Treatment Capacity Charge; and WHEREAS, on May 21, 02, the Authority filed a Notice of Exemption pursuant to the California Environmental Quality Act (CEQA) for the project described as "Establishment of water supply and delivery rates and charges including: Customer Service Charge, Emergency Storage Program Charge, Transportation Rate, Supply Service Charge, Capacity Reservation 218 Page 153 of 563

225 Adopted Budget for Fiscal Years 12 & 13 Appendix F Charge and Readiness-to-Serve Charge, and maintaining the Infrastructure Access Charge and Standby Availability Charge" stating the project is exempt from the requirements of CEQA pursuant to the statutory exemption of Public Resources Code Section 21080(b)(8) and stating as the reason therefore: "Project involves establishment of water rates, tolls, fares, or other charges for the purpose of meeting operating expenses, including employee wages and benefits; purchasing and leasing supplies, equipment, or materials; meeting financial reserve needs and requirements; or obtaining funds for capital projects within existing service areas."; and and WHEREAS, the adoption of this ordinance is exempt from CEQA for the same reason; WHEREAS, the Authority has adopted a policy of diversifying its supplies and in furtherance of that policy is evaluating several potential Authority programs to augment and enhance supplies from the Metropolitan Water District, including: local ocean water desalination, regional water treatment, and water transfers in addition to the transfer from the Imperial Irrigation District; and WHEREAS, these potential new supply programs are incurring capital costs for research, development and planning, the costs of which are appropriately recovered through the Customer Service Charge subject to reimbursement from future revenues collected through the Supply Charge if and when a new supply is approved and implemented; and WHEREAS, the Director of Finance has presented a report dated May 26, 11 to the Administrative and Finance Committee describing the proposed rates and charges to be collected from the member agencies (the "Report"); and WHEREAS, the Administrative and Finance Committee recommended that the proposed rates and charges set forth in the Report be considered by the Board along with public input; and WHEREAS, the Clerk of the Board caused a notice to be published pursuant to Section 6066 of the Government Code in newspapers of general circulation printed and published within the Water Authority which fixed Thursday, June 23, 11 at 9:00 a.m. or as soon thereafter as may practicably be heard, during the Administrative and Finance Committee meeting, in the Board room of the Water Authority, 4677 Overland Avenue, San Diego, California as the time and place for a public hearing to consider objections and protests to the schedule of charges as proposed by Resolution 11-11; and WHEREAS, the Board of Directors has considered the information contained in the Report, the testimony and other evidence presented during the public hearing, the recommendations of the Administrative and Finance Committee; and WHEREAS, the Board of Directors hereby makes the following legislative findings and determinations: Page 154 of The foregoing recitals are true and correct; 2. The rates and charges as proposed and recommended in the Report are exempt from the requirements of the California Environmental Quality Act pursuant to Public Resources Code Section 21080(b)(8);

226 Adopted Budget for Fiscal Years 12 & 13 Appendix F 3. Any and all protests to the rates and charges as proposed and recommended in the Report are overruled; 4. The Report is approved; 5. The rates and charges as proposed and recommended in the Report are reasonable, fair, proper and necessary to meet the Authority's revenue requirements and fund its capital, operations, maintenance and other costs. NOW, THEREFORE, the Board of Directors of the San Diego County Water Authority does ordain as follows: 1. The Authority's revenues from taxes, water rates and charges consists of: ad valorem property taxes, including payments of member agencies in lieu of taxes; a standby availability charge levied pursuant to Section 5.2 of the County Water Authority Act, including payments of such charges pursuant to Section 5.3 of the County Water Authority Act; an infrastructure access charge levied pursuant to Section (c) of the Administrative Code; a capacity charge levied pursuant to Section 5.9 of the County Water Authority Act according to Ordinance No. 05-3; and water rates and charges having the following components as described in this ordinance: customer service, storage, transportation, treatment and supply. 2. Ad valorem taxes, the standby availability charge and the system and water treatment capacity charges are not affected by this ordinance. All other water rates and charges shall continue to be paid pursuant to existing authority until increased or adjusted as provided in this ordinance. 3. Commencing January 1, 12, the amount of the Infrastructure Access Charge to be paid monthly by each member agency of the Authority, shall be $2.60 per equivalent meter within the territory of the member agency and determined according to Table 1 attached hereto and made a part hereof. 4. Effective January 1, 12, the Customer Service Charge is fixed at $26,400,000. Commencing January 1, 12 the amount of the monthly Customer Service Charge to be paid by each member agency shall be determined according to Table 2 attached hereto and made a part hereof. 5. Effective January 1, 12, the Storage Charge is fixed at $54,0,000. Commencing January 1, 12 the amount of the monthly Storage Charge to be paid by each member agency to the Authority for Storage as set forth in Table 3 attached hereto and made a part hereof. 6. Effective January 1, 12, the Transportation Rate is fixed at $85 per acre-foot of water delivered by the Authority through Authority facilities by all users, member agencies and third-party wheeling customers. Member agencies shall pay the Transportation Rate in accordance with the procedures and processes of the Administrative Code relating to billing and payment of the Municipal and Industrial Water Rate. Third-party wheeling customers will also be subject to an administration fee Effective January 1, 12, the Melded Municipal and Industrial Treatment Rate is fixed at $234 per acre-foot. Page 155 of

227 Adopted Budget for Fiscal Years 12 & 13 Appendix F Table 1 - Infrastructure Access Charge Allocation Member Agency IAC Equivalent Monthly Rate CY12 Annual Meters (ME) as of 12/31/10 1 ($/ME) Charge Monthly Charge Carlsbad M.W.D. 35, $ 1,1,296 $ 93,358 Del Mar, City of 2, ,964 6,497 Escondido, City of 34, ,085,952 90,496 Fallbrook P.U.D. 11, ,484 30,7 Helix W.D. 64, ,015, ,942 Lakeside W.D. 8, ,280,940 Oceanside, City of 55, ,736, ,677 Olivenhain M.W.D. 27, ,612 72,301 Otay W.D. 57, ,796, ,713 Padre Dam M.W.D. 26, ,172 67,681 Pendleton Military Reservation Poway, City of 17, ,576 44,798 Rainbow M.W.D. 13, ,660 34,055 Ramona M.W.D. 10, ,440 27,370 Rincon Del Diablo M.W.D. 9, ,644 24,887 San Diego, City of 389, ,153,084 1,012,757 San Dieguito W.D. 14, ,724 38,727 Santa Fe I.D. 10, ,0 27,100 Sweetwater Authority 42, ,332, ,072 Vallecitos W.D. 25, ,480 66,290 Valley Center M.W.D. 14, ,292 38,691 Vista I.D. 34, ,090,500 90,875 Yuima M.W.D ,824 1,152 Totals 908,302 $ 28,339,032 $ 2,361,586 1 Equivalent meters rounded to nearest whole meter; annual and monthly charges rounded to nearest dollar. Page 156 of

228 Adopted Budget for Fiscal Years 12 & 13 Appendix F Member Agency Table 2 - Customer Service Charge Allocation 3-Year Average Deliveries (AF) 1 CY12 Annual Charge Monthly Charge Carlsbad M.W.D. 19,399 $ 922,434 $ 76,870 Del Mar, City of 1,180 56,110 4,676 Escondido, City of 22,682 1,078,543 89,879 Fallbrook P.U.D. 15, ,044 60,837 Helix W.D. 35,450 1,685, ,472 Lakeside W.D. 3, ,498 15,292 Oceanside, City of 29,289 1,392, ,059 Olivenhain M.W.D. 22,763 1,082,394 90,0 Otay W.D. 35,136 1,670, ,228 Padre Dam M.W.D. 14, ,727 57,144 Pendleton Military Reservation 75 3, Poway, City of 13, ,628 51,886 Rainbow M.W.D. 25,285 1,2, ,193 Ramona M.W.D. 9, ,706 36,309 Rincon Del Diablo M.W.D. 7, ,596 28,883 San Diego, City of 2,837 9,645, ,751 San Dieguito W.D. 3, ,531 13,378 Santa Fe I.D. 7, ,046 30,421 Sweetwater Authority 12, ,189 49,682 Vallecitos W.D. 18, ,389 73,949 Valley Center M.W.D. 34,601 1,645, ,108 Vista I.D. 17, ,712 69,059 Yuima M.W.D. 2, ,377 11,281 Contract Water ,755 3,146 Totals 555,198 $ 26,400,000 $ 2,0,000 1 Three-year rolling average of M&I, SAWR and agricultural MWD deliveries (excludes wheeled water) based on FY08-FY10 period. Rounded to nearest acre-foot. Annual and monthly charges are rounded to nearest dollar. 222 Page 157 of 563

229 Adopted Budget for Fiscal Years 12 & 13 Appendix F Member Agency Table 3 - Emergency Storage Charge Allocation 3-Year Average Deliveries (AF) 1 CY12 Annual Charge Monthly Charge Carlsbad M.W.D. 18,989 $ 2,091,890 $ 174,324 Del Mar, City of 1, ,993 10,833 Escondido, City of 18,905 2,082, ,553 Fallbrook P.U.D. 9,390 1,034,433 86,3 Helix W.D. 35,450 3,905, ,441 Lakeside W.D. 3, ,027 35,252 Oceanside, City of 27,583 3,038, ,2 Olivenhain M.W.D. 22,095 2,434,058 2,838 Otay W.D. 35,079 3,864, ,035 Padre Dam M.W.D. 13,524 1,489, ,154 Pendleton Military Reservation 75 8, Poway, City of 12,844 1,414, ,911 Rainbow M.W.D. 10,767 1,186,128 98,844 Ramona M.W.D. 6, ,288 62,857 Rincon Del Diablo M.W.D. 6, ,813 63,151 San Diego, City of 2,518 22,310,047 1,859,169 San Dieguito W.D. 3, ,911 30,993 Santa Fe I.D. 7, ,979 69,082 Sweetwater Authority 12,538 1,381, ,102 Vallecitos W.D. 17,005 1,873, ,111 Valley Center M.W.D. 8, ,649 79,804 Vista I.D. 17,011 1,873, ,166 Yuima M.W.D. (116) (12,779) (1,065) Totals 491,997 $ 54,0,000 $ 4,516,667 1Three-year rolling average of firm, non-agricultural MWD deliveries based on FY08-FY10 period. Rounded to the nearest acre-foot. Annual and monthly charges are rounded to nearest dollar. Page 158 of

230 Adopted Budget for Fiscal Years 12 & 13 Appendix F 8. (a) Each member agency shall reimburse the Authority on a per-acre foot of water delivered basis, except as otherwise provided in subdivisions (b) and (c), for rates, fees and charges of the Metropolitan Water District of Southern California, the Imperial Irrigation District, or other sources of supply that may become available to the Authority. It is the intent of the Authority to charge the melded rate for supply representing the cost of water to the Authority for the appropriate class of service. Effective January 1, 12, the Melded Untreated Municipal and Industrial Supply Rate is $638 per acre-foot to reflect the cost of the supply of untreated municipal and industrial water to the Water Authority. (b) Effective January 1, 12 as part of the Supply Charge, each member agency shall pay to the Authority a MWD Capacity Charge determined according to the method as set forth in the to Table 4 attached hereto and made a part hereof. (c) Effective July 1, 11 as part of the Supply Charge, each member agency shall pay a MWD Readiness-to-Serve Charge determined according to Table 5 attached hereto and made a part hereof. this ordinance. (d) This section shall be administered in accordance with the Report approved by 9. For the purposes of this ordinance, including the tables, the City of National City and the South Bay Irrigation District are collectively referred to as Sweetwater Authority. Any reference in this ordinance to Sweetwater Authority as a member agency shall be construed as a reference to the City of National City and the South Bay Irrigation District. 10. This ordinance shall be effective upon adoption. In lieu of publication of the text of this ordinance, the Clerk of the Board may publish a summary prepared by the General Counsel. 11. The provisions of this ordinance shall prevail over any provisions of the Administrative Code relating to rates and charges to the extent of any conflict. All existing rates and charges shall continue in effect until adjusted as provided in this ordinance. 12. To the greatest extent possible the provisions of this ordinance shall be construed to be compatible with the provisions of Section 8.2 (e) of the Agreement Between the San Diego County Water Authority and the City of San Diego for the Emergency Storage Project (Joint Use of Lake Hodges Dam and Reservoir and of Section 8.2 (e) of the Agreement Between the San Diego County Water Authority and the City of San Diego for the Emergency Storage Project (Expansion of San Vicente Reservoir; however, the contract provisions shall control in the event of a conflict). 13. For the purposes of Section 6 of this ordinance, water delivered by the Authority through the following turnouts is deemed not to be water delivered by the Authority through Authority facilities DeLuz 1, Fallbrook 3, Fallbrook 6, Rainbow 1, Rainbow 8, Rainbow 9 and Rainbow Page 159 of

231 Adopted Budget for Fiscal Years 12 & 13 Appendix F Table 4 - Calendar Year 12 MWD Capacity Charge Allocation Member Agency 7/18/06 8/14/07 7/15/08 8/25/09 8/24/10 Carlsbad M.W.D % $ 262,488 Del Mar, City of % 19,140 Escondido, City of % 327,186 Fallbrook P.U.D % 247,480 Helix W.D % 314,570 Lakeside W.D % 53,790 Oceanside, City of % 413,210 Olivenhain M.W.D % 338,246 Otay W.D. 1, , , % 543,095 Padre Dam M.W.D % 263,881 Pendleton M.R % 1,142 Poway, City of % 177,813 Rainbow M.W.D % 430,643 Ramona M.W.D % 122,500 Rincon Del Diablo M.W.D % 116,258 San Diego, City of 4, , , , , % 2,717,933 San Dieguito W.D % 62,7 Santa Fe I.D % 148,677 Sweetwater Authority % 48,210 Vallecitos W.D % 293,646 Valley Center M.W.D. 1, , , % 661,788 Vista I.D % 181,032 Yuima M.W.D % 64,285 Totals 1 14, , , , , % $ 7,809,2 may not foot due to rounding. 2 Percentages shown are rounded. Totals may not foot. (Capacity Charge) Coincident Peak Week Deliveries (AF) 1 5-year average share 2 1 Charge is allocated based on a five-year rolling average of member agency deliveries during regional peak weeks. Annual charges and totals CY12 Charge Page 160 of

232 Adopted Budget for Fiscal Years 12 & 13 Appendix F Table 5 - Readiness-to-Serve Charge Allocation Member Agency 10-Year Average Deliveries (AF) 1 FY12 RTS Charge 2 Net Stand-By Charge Credits 3 FY12 RTS Net Charge Monthly Charge Carlsbad M.W.D. 19,499 $ 1,308,679 $ (392,629) $ 916,050 $ 76,338 Del Mar, City of 1,314 88,189 (24,762) 63,427 5,286 Escondido, City of 21,129 1,418,077 (224,141) 1,193,936 99,495 Fallbrook P.U.D. 9, ,057 (283,556) 343,501 28,625 Helix W.D. 36,051 2,419,570 (791,767) 1,627, ,650 Lakeside W.D. 4 4, ,106 (168,311) 126,795 10,566 Oceanside, City of 28,734 1,928,488 (660,274) 1,268, ,685 Olivenhain M.W.D. 21,295 1,429,218 (415,674) 1,013,544 84,462 Otay W.D. 36,559 2,453,664 (965,047) 1,488, ,051 Padre Dam M.W.D. 4 14, ,083 (536,590) 433,493 36,124 Pendleton Military Reservation 74 4, , Poway, City of 13, ,136 (284,397) 633,739 52,812 Rainbow M.W.D. 10, ,871 (536,791) 192,080 16,007 Ramona M.W.D. 7, ,874 (400,879) 88,995 7,416 Rincon Del Diablo M.W.D. 7, ,156 (307,035) 185,121 15,427 San Diego, City of 210,933 14,156,809 (4,349,149) 9,807, ,304 San Dieguito W.D. 4, ,777 (162,323) 163,454 13,621 Santa Fe I.D. 9, ,466 (150,682) 457,784 38,149 Sweetwater Authority 12, ,846 (423,234) 401,612 33,468 Vallecitos W.D. 16,372 1,098,810 (426,616) 672,194 56,016 Valley Center M.W.D. 11, ,133 (682,476) 65,657 5,471 Vista I.D. 18,221 1,222,906 (407,470) 815,436 67,953 Yuima M.W.D. (1) (67) (85,074) (85,141) (7,095) Contract Water , ,142 4,262 Totals 515,664 $ 34,608,890 $ (12,678,803) $ 21,930,087 $ 1,827, year rolling average of firm MWD deliveries based on FY01-FY10 period and rounded to nearest acre-foot. Annual and monthly charges are rounded to nearest dollar. 2 Effective date is July 1, Net of $12,724,104 in standby-charge credits and $45,301 in MWD administrative fees 4 Lakeside W.D. is allocated 23.83% of Padre Dam M.W.D's deliveries prior to January 08. Lakeside W.D's deliveries after January 08 are being metered seperately from Padre Dam M.W.D's deliveries. 226 Page 161 of 563

233 Adopted Budget for Fiscal Years 12 & 13 Appendix F 227

234 Adopted Budget for Fiscal Years 12 & 13 Appendix F 228