ADMINISTRATIVE AND FINANCE COMMITTEE AGENDA FOR APRIL 27, :00 a.m. 9:35 a.m. 2. Additions to Agenda (Government Code Section (b)).

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1 ADMINISTRATIVE AND FINANCE COMMITTEE AGENDA FOR APRIL 27, :00 a.m. 9:35 a.m. Jesse Dixon, Chair Marilyn Dailey, Vice Chair Yen Tu, Vice Chair Jim Bowersox Tom Brammell John Johnson Bill Knutson Mark Muir Joseph Parker Hershell Price Pam Slater-Price Fern Steiner Mark Watton Howard Williams 1. Roll Call Determination of Quorum. 2. Additions to Agenda (Government Code Section (b)). 3. Public Comment Opportunities for members of the public to address the Committee on matters within the Committee s jurisdiction. 4. Chair s Report. 4-A Directors comments. I. CONSENT CALENDAR 1. Professional Services Contract with Sol Pacific, LLC for janitorial services for the Kearny Mesa and Escondido Offices. Staff recommendation: Award Professional Services Contract to Sol Pacific, LLC for janitorial services through June 30, 2007, with an option to extend the contract annually for two years, for a total notto-exceed amount of $195,586. (Action) 2. Treasurer s report. Staff recommendation: Note and file monthly Treasurer s report. (Action) Ellison Brust Page 6 / 280

2 II. ACTION/DISCUSSION 1. Resolution establishing the amount due from the City of San Diego for the In-Lieu Charge as a condition of providing water service for Fiscal Year Staff recommendation: Adopt Resolution establishing the amount due from the City of San Diego for the In-Lieu Charge for Fiscal Year of $408,475. This amount reflects an In- Lieu Charge calculation based on property taxes less the monies shifted to the Educational Revenue Augmentation Fund ( ERAF ). (Action) Brust III. INFORMATION 1. Report on Calendar Year 2007 Melded Untreated Municipal and Industrial Supply rate and Melded Municipal and Industrial Treatment rate. Delin 2. Board of Director s First Quarter 2006 payments and attendance. Wade 3. Controller s report on monthly financial statements. Wade 4. Board calendar. IV. NOTE: ADJOURNMENT Doria F. Lore Clerk of the Board This meeting is called as an Administrative and Finance Committee meeting. Because a quorum of the Board may be present, the meeting is also noticed as a Board meeting. Members of the Board who are not members of the Committee may participate in the meeting pursuant to Section (i) of the Authority Administrative Code (Recodified). All items on the agenda, including information items, may be deliberated and become subject to action. Page 7 / 280

3 April 19, 2006 Attention: Administrative and Finance Committee Professional Services Contract with Sol Pacific, LLC for janitorial services for the Kearny Mesa and Escondido offices. (Action) Purpose This report seeks Board approval to award a professional services contract for janitorial services for the Kearny Mesa and Escondido offices. Staff recommendation Award a professional services contract to Sol Pacific, LLC for janitorial services through June 30, 2007, with an option to extend the contract annually for two years, for a total not to exceed amount of $195,586. Alternatives 1. Do not award the contract and direct staff to negotiate with other companies or solicit new bids. Fiscal impact Funds in the amount of $72,058 for janitorial services are available within the existing Administrative Services department budget for fiscal years 2006 and Funds for the remaining two fiscal years ($123,528) will be requested during the next bi-annual budget process. Background The current janitorial services contract with Sol Pacific, LLC was awarded in April, 2003 and has expired. Discussion The bid solicitation was advertised in the San Diego Daily Transcript on March 22, 2006, and sent to 178 vendors including 68 small firms. Bidders were given the option to submit bids for janitorial services or supplies. Fourteen bids were received. A determination of the competence of each firm included review of past performance, cost, and responsiveness. Based on this review, Sol Pacific, LLC, a small, local firm was selected. Supplies will be purchased separately through Diversified Management Corporation, a small, local firm who was the lowest responsible bidder for supplies. Due to the special circumstances for this type of service, SCOOP outreach requirements were not applicable. Prepared by: Shelli Budai Ellison, Supervising Management Analyst Reviewed by: Marilyn L. Young, Director of Administrative Services Approved by: Paul A. Lanspery, Deputy General Manager PAL/MLY/SE:cao I:\Board Memos & Presentations\CY2006\04-06\janitorial contract.doc Page 8 / 280

4 April 19, 2006 Attention: Administrative and Finance Committee Treasurer s Report Attached for review by the Administrative and Finance Committee and the Board of Directors is the Treasurer s Report as of March 31, 2006, which includes: Portfolio Master Summary Investment Activity, Agency Securities, and Portfolio Yield Graphs Investment Portfolio Details Investment Activity Summary Cash Flow Summary Glossary of Terms The reports are formatted to provide information, as required by the California Government Code, and the San Diego County Water Authority s Statement of Investment Policy. A brief description of each report follows: Portfolio Master Summary: This one page report summarizes all cash and investments held by the Water Authority. Investment Activity, Agency Securities and Portfolio Yield Graphs: The Investment Activity Graph shows the Water Authority s portfolio holdings by type, percentage and amount. The Agency Securities Graph shows the Water Authority s total portfolio holdings of agencies by issuer. The Portfolio Yield Graph shows the Water Authority s portfolio yield, with and without bond funds, for the past twelve months, compared to a rolling average yield of the Merrill Lynch 1-3 Year Treasury Index and the rolling average yield of the Board adopted 1-Year U.S. Treasury Constant Maturity benchmark that became effective December Investment Portfolio Details: This report takes the summary information listed in the Portfolio Master Summary and provides details of active investments. Investment Activity Summary: This report produces a thirteen-month rolling summary of portfolio investment activity. Cash Flow Summary: This report shows Operating, Rate Stabilization Fund and Capital Improvement Program cash flows for the next 12 months. Glossary of Terms: This report defines investment and cash flow terms. The Federal Open Market Committee (FOMC) met on March 28, 2006 and raised its target for the federal funds rate from 4.50 percent to 4.75 percent, the 15 th consecutive rate increase. The FOMC stated, Economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace. It further stated the run-up in the prices of Page 9 / 280

5 Administrative and Finance Committee April 19, 2006 Page 2 of 2 energy and other commodities appears to have had only a modest effect on core inflation but possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures. The statement also said some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. According to Bloomberg News, Fed chairman Ben Bernanke and Fed policy makers are trying to balance two risks: Stop raising rates too soon and inflation may accelerate; go too far and economic growth may be stunted. The next FOMC meeting is scheduled for May 10. Bloomberg News reported that crude oil rose to a two-month high and gasoline prices jumped on concern that U.S. refiners will fail to produce enough to keep up with peak demand this summer. Crude oil closed at nearly $68 a barrel, the highest closing price since January 30. The nation s gasoline inventories fell during the last week of March, and are down 6.2 percent over five weeks, according to the U.S. Energy Department. Many of the refiners are performing maintenance work that was delayed by the hurricanes that struck the Gulf Coast last year, causing concern about whether they can get up and running in time to produce enough fuel for the summer. The U.S. average gasoline pump price has climbed 16 percent in the past six weeks to $2.59 a gallon amid concern that the lingering effects of last year s hurricanes and changes this year in fuel specifications might crimp supplies. Reuters News also reported that the new environmental regulations facing the U.S. oil firms have the potential to trigger supply problems in the United States, consumer of 40 percent of the world s gasoline. U.S. employers added a strong 211,000 jobs in March, and the unemployment rate slipped to 4.7 percent from 4.8 percent in February, according to Reuters News. The unemployment rate is currently at a 4-½ year low. Economists say that the gain in jobs so far this year suggest the unemployment rate will keep falling. A declining jobless rate makes it more likely wages will accelerate and spark inflation. The housing market, however, which is a key driver of growth and a source of cash for consumers, is starting to slow down. Home sales in February fell 10.5 percent, the biggest drop in nine years. Hiring is needed to boost incomes that will keep people spending and the expansion rolling as housing falters, analysts said. As we noted last month, the Water Authority s aggregate portfolio yield has been lagging below our performance benchmark for several reasons. As interest rates rise and maturing investments are replaced with higher yielding securities, we expect our portfolio yield will begin to more closely match the benchmark. In fact, in March 2006 our portfolio yield increased more than our benchmark did, narrowing the gap between them by 6 basis points. All investments have been made in accordance with the San Diego County Water Authority Statement of Investment Policy. This report provides documentation that the Water Authority has sufficient funds to meet the financial obligations for the next six months. The market value information is provided by Bloomberg L.P. and is as of the report date. Karen P. Brust, Treasurer Page 10 / 280

6 Page 11 / 280 PORTFOLIO MASTER SUMMARY as of March 31, 2006 PORTFOLIO PERCENTAGES Investment Type Permitted By Board Policy Actual Percentage Actual Amount Local Agency Investment Fund (LAIF) $40 Million 2.19% $ 5,168,861 Banker's Acceptances 20% 0.00% - Treasury Securities 15% - Minimum 39.86% 94,183,981 Agency Securities 70% 39.26% 92,759,342 Reverse Repurchase Agreements 20% 0.00% - Certificates of Deposit (CD's) 15% 0.00% - Negotiable CD's 15% 0.00% - Commercial Paper 25% 17.83% 42,139,378 Medium Term Notes/Corporates 30% 0.00% - Money Market Funds 15% 0.86% 2,026, % $ 236,278,363 Accrued Interest (unavailable for investing) - Checking/Petty Cash/Available Funds (unavailable for investing) 32,492 Subtotal: $ 236,310,855 Bond Proceeds Excluded from Portfolio Percentages: Money Market Funds and Cash 21,404 Treasury Securities - Commercial Paper - AIG - Acquisition Fund (GIC) 222,605,649 Subtotal for Bond Proceeds (available for CIP expenditures): $ 222,627,053 Debt Service Reserve (DSR) Funds Excluded from Portfolio Percentages: Trinity Plus - Reserve (GIC) 12,240,775 FSA - Reserve (GIC) 18,385,750 MBIA - Reserve (GIC) 38,568,617 Subtotal for Debt Service Reserve Funds (unavailable for CIP expenditures): $ 69,195,142 Total Cash and Investments $ 528,133,050 PORTFOLIO INFORMATION Equipment Bond Debt Service Operating RSF Pay Go Replacement CIAC * Proceeds * Reserve Total ** Portfolio Yield to Maturity Days 4.54% 3.53% 3.46% 3.58% 0.00% 2.38% 5.31% 3.35% Average Term 54 1, Average Days to Maturity (730 Days Maximum) Avg. Term, excluding Bond Proceeds & DSR 771 Avg. Days to Maturity, excluding Bond Proceeds & DSR (730 Days Max.) 291 Accrued Interest Earnings (Cash and Investments): Month Ended March 2006 *** $ 236,805 $ 96,364 $ (336,337) $ 19,146 $ 4,701 $ 457,632 $ 315,578 $ 793,889 Fiscal Year to Date $ 1,694,604 $ 1,284,003 $ 2,818,897 $ 178,167 $ 113,809 $ 4,741,862 $ 2,789,298 $ 13,620,640 Fund Balance $ 44,491,641 $ 45,313,936 $ 138,659,557 $ 7,845,721 $ - $ 222,627,053 $ 69,195,142 $ 528,133,050 * Bond Proceeds and CIAC are available for CIP expenditures (Total of $222,627,053 at 3/31/2006). ** "The weighted average days to maturity of the total portfolio shall not exceed 730 days (two years) to maturity" per SDCWA Investment Policy. *** Pay Go interest earnings for the Month Ended March 2006 have been reduced by the premium that was paid at the time of purchase for investments that matured in March 2006.

7 INVESTMENT ACTIVITY $236,278,363 March 31, 2006 Commercial Paper 18% $42.1M Money Market Funds 1% $2.0M $5.2M Local Agency Investment Fund (LAIF) 2% $94.2M Treasury Securities 40% $92.8M Agency Securities 39% Page 12 / 280

8 AGENCY SECURITIES $92,759,342 March 31, 2006 Federal Home Loan Mortgage Corporation 5% Federal National Mortgage Association 3% $4.1M $3.0M $52.3M $33.3M Federal Farm Credit Bank 36% Federal Home Loan Bank 56% Page 13 / 280

9 AGGREGATE CWA PORTFOLIO YIELD April 2005 through March % 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% April May June July August September October November December January February March CWA Yield CWA Yield (excluding Bond Proceeds & DSR Funds) Merrill Lynch 1-3 Year Treasury Index (Rolling 12-month Average) 1 Year U.S. Treasury Constant Maturity (Rolling 12-month Average) (adopted Dec. 2005) Page 14 / 280

10 CUSIP Investment # Managed Pool Accounts Issuer Average Balance SDCWA - Fiscal Year 2006 Portfolio Management Portfolio Details - Investments March 31, 2006 Purchase Date Par Value Market Value Book Value Stated Rate S&P YTM Days to 365 Maturity CASH AIG MATCHED FUNDING CORP. 222,605, ,605, ,605, AA CASH FSA CAPITAL MGMT. SVC A 18,385, ,385, ,385, AAA CASH GOLDMAN - RATE STABILIZATION 07/01/ , , , AAA CASH GOLDMAN A COPS 07/01/ , , , AAA CASH GOLDMAN - EQUIPMENT 07/01/ , , , AAA CASH GOLDMAN - OPERATING 07/01/2005 1,591, ,591, ,591, AAA CASH GOLDMAN - PAY AS YOU GO 07/01/ , , , AAA CASH13 72 LAIF - OPERATING 5,168, ,168, ,168, CASH MBIA INC A 38,568, ,568, ,568, AAA CASH TRINITY PLUS A 12,240, ,240, ,240, AAA CASH US BANK MONEY MARKET FUND /01/ , , , Page 2 Maturity Date Subtotal and Average 302,455, ,017, ,017, ,017, Commercial Paper - Discount 36959JD GENERAL ELECTRIC CAPITAL CORP. 02/01/2006 4,030, ,998, ,998, AAA /05/ JDU GENERAL ELECTRIC CAPITAL CORP. 02/08/2006 6,565, ,533, ,499, AAA /28/ JDU GENERAL ELECTRIC CAPITAL CORP. 02/13/2006 1,514, ,506, ,499, AAA /28/ JDU GENERAL ELECTRIC CAPITAL CORP. 02/23/2006 4,100, ,080, ,066, AAA /28/ JDQ GENERAL ELECTRIC CAPITAL CORP. 03/01/2006 1,712, ,701, ,700, AAA /24/ JDQ GENERAL ELECTRIC CAPITAL CORP. 03/06/2006 1,560, ,550, ,550, AAA /24/ JD GENERAL ELECTRIC CAPITAL CORP. 01/05/2006 4,550, ,514, ,499, AAA /05/ JDU GENERAL ELECTRIC CAPITAL CORP. 03/06/2006 3,010, ,995, ,989, AAA /28/ JDU GENERAL ELECTRIC CAPITAL CORP. 03/07/2006 2,420, ,408, ,403, AAA /28/ JDU GENERAL ELECTRIC CAPITAL CORP. 03/15/ ,000, ,941, ,931, AAA /28/ JDU GENERAL ELECTRIC CAPITAL CORP. 03/22/2006 1,005, ,000, ,000, AAA /28/2006 Subtotal and Average 50,425, ,466, ,229, ,139, Federal Agency - Coupon 31331TDE FEDERAL FARM CREDIT BANK 09/05/2003 4,000, ,963, ,998, AAA /05/ Q3M FEDERAL FARM CREDIT BANK 09/30/2003 2,315, ,255, ,274, AAA /16/ Q3M FEDERAL FARM CREDIT BANK 11/18/ , , , AAA /16/ Q3M FEDERAL FARM CREDIT BANK 11/19/2003 1,650, ,607, ,611, AAA /16/ TLQ FEDERAL FARM CREDIT BANK 12/03/2003 1,000, , , AAA /01/ TDE FEDERAL FARM CREDIT BANK 01/03/2006 1,000, , , AAA /05/ T6W FEDERAL FARM CREDIT BANK 01/03/2006 1,200, ,187, ,183, AAA /07/ LWJ FEDERAL FARM CREDIT BANK 11/12/2003 1,000, , ,057, AAA /19/ TGN FEDERAL FARM CREDIT BANK 11/12/2003 2,000, ,972, ,976, AAA /02/ Q3M FEDERAL FARM CREDIT BANK 11/18/2003 2,205, ,148, ,153, AAA /16/2007 Run Date: 04/06/ :17 Page 15 / 280 Portfolio CWA2 CC PM (PRF_PM2) SymRept a Report Ver. 5.00

11 SDCWA - Fiscal Year 2006 Portfolio Management Portfolio Details - Investments March 31, 2006 Page 3 CUSIP Investment # Federal Agency - Coupon Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate S&P YTM Days to 365 Maturity 31331STU FEDERAL FARM CREDIT BANK 04/11/2005 2,858, ,827, ,864, AAA /11/ MYRT FEDERAL HOME LOAN BANK 08/28/2003 2,000, ,993, ,968, AAA /15/ MQSS FEDERAL HOME LOAN BANK 08/28/2003 1,500, ,491, ,523, AAA /15/ MJUR FEDERAL HOME LOAN BANK 09/03/2003 2,505, ,488, ,586, AAA /15/ X2W FEDERAL HOME LOAN BANK 09/22/2003 2,000, ,989, ,995, AAA /09/ MU4F FEDERAL HOME LOAN BANK 09/30/2003 1,000, , ,021, AAA /04/ MYRR FEDERAL HOME LOAN BANK 09/30/2003 1,000, , ,001, AAA /15/ MW2K FEDERAL HOME LOAN BANK 10/03/2003 1,790, ,754, ,809, AAA /15/ X2FQ FEDERAL HOME LOAN BANK 06/17/2005 1,500, ,480, ,485, AAA /08/ MJUR FEDERAL HOME LOAN BANK 11/15/2001 4,000, ,973, ,995, AAA /15/ X2B FEDERAL HOME LOAN BANK 11/12/2003 2,255, ,221, ,241, AAA /15/ XBTT FEDERAL HOME LOAN BANK 06/20/ , , , AAA ,168 06/12/ X4C FEDERAL HOME LOAN BANK 08/15/2005 1,000, , , AAA /16/ A4SX FEDERAL HOME LOAN MORTGAGE COR 02/12/2003 1,000, , , AAA /15/ A4SX FEDERAL HOME LOAN MORTGAGE COR 02/21/2003 3,100, ,097, ,109, AAA /15/ MLH FEDERAL NATION MORTAGE ASSOC. 11/14/2001 2,985, ,973, ,025, AAA /15/2006 Federal Agency - Coupon - Callable Subtotal and Average 57,791, ,808, ,251, ,779, TMB FEDERAL FARM CREDIT BANK 11/28/2003 3,150, ,100, ,144, AAA /24/ TQP FEDERAL FARM CREDIT BANK 02/09/2004 4,500, ,354, ,500, AAA /09/ YYZ FEDERAL HOME LOAN BANK 07/31/2003 1,940, ,923, ,929, AAA /28/2006 Federal Agency - Discount Subtotal and Average 9,573, ,590, ,378, ,573, VK FEDERAL FARM CREDIT BANK 03/15/2006 3,300, ,294, ,288, AAA /11/ WA FEDERAL FARM CREDIT BANK 03/29/2006 3,000, ,989, ,989, AAA /26/ WC FEDERAL HOME LOAN BANK 02/24/2006 4,000, ,985, ,968, AAA /28/ VY FEDERAL HOME LOAN BANK 03/13/2006 5,500, ,482, ,471, AAA /24/ VY FEDERAL HOME LOAN BANK 03/14/2006 1,000, , , AAA /24/ VV FEDERAL HOME LOAN BANK 01/20/2006 5,250, ,235, ,191, AAA /21/ XE FEDERAL HOME LOAN BANK 01/25/2006 2,200, ,184, ,167, AAA /24/ WC FEDERAL HOME LOAN BANK 03/15/2006 7,100, ,073, ,061, AAA /28/ WC FEDERAL HOME LOAN BANK 03/22/2006 1,500, ,494, ,492, AAA /28/ XC FEDERAL HOME LOAN BANK 03/29/2006 2,800, ,780, ,780, AAA /22/2006 Subtotal and Average 30,205, ,650, ,516, ,407, Maturity Date Run Date: 04/06/ :17 Page 16 / 280 Portfolio CWA2 CC PM (PRF_PM2) SymRept a

12 SDCWA - Fiscal Year 2006 Portfolio Management Portfolio Details - Investments March 31, 2006 Page 4 CUSIP Investment # Treasury Securities - Discount Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate S&P YTM Days to 365 Maturity WZ UNITED STATES TREASURY 02/13/2006 8,000, ,972, ,929, AAA /27/ WZ UNITED STATES TREASURY 01/25/2006 1,000, , , AAA /27/2006 Treasury Securities - Coupon Subtotal and Average 11,147, ,000, ,969, ,918, AY UNITED STATES TREASURY 07/31/2003 2,900, ,890, ,895, AAA /15/ BF UNITED STATES TREASURY 08/15/2003 3,100, ,071, ,097, AAA /15/ F UNITED STATES TREASURY 08/28/2003 4,284, ,247, ,387, AAA /15/ BP UNITED STATES TREASURY 11/28/2003 3,000, ,957, ,019, AAA /15/ AN UNITED STATES TREASURY 12/03/2003 5,800, ,630, ,793, AAA /15/ AT UNITED STATES TREASURY 01/29/2004 2,195, ,121, ,225, AAA /15/ AZ UNITED STATES TREASURY 05/28/2004 3,100, ,961, ,012, AAA /15/ AH UNITED STATES TREASURY 06/02/2004 3,100, ,032, ,104, AAA /15/ BK UNITED STATES TREASURY 08/18/2004 2,000, ,920, ,998, AAA /15/ BK UNITED STATES TREASURY 08/20/2004 1,575, ,512, ,574, AAA /15/ BG UNITED STATES TREASURY 08/20/2004 3,575, ,447, ,593, AAA /15/ BM UNITED STATES TREASURY 08/27/2004 3,500, ,356, ,493, AAA /15/ BQ UNITED STATES TREASURY 08/27/2004 3,500, ,373, ,525, AAA /15/ AT UNITED STATES TREASURY 08/31/2004 5,000, ,833, ,024, AAA /15/ BT UNITED STATES TREASURY 08/31/2004 2,300, ,214, ,324, AAA /15/ AT UNITED STATES TREASURY 10/01/2004 3,100, ,996, ,099, AAA /15/ BY UNITED STATES TREASURY 10/21/2004 2,825, ,761, ,802, AAA /15/ CM UNITED STATES TREASURY 12/15/2004 3,955, ,935, ,949, AAA /30/ F UNITED STATES TREASURY 11/20/2001 3,900, ,866, ,795, AAA /15/ AY UNITED STATES TREASURY 08/01/2003 1,095, ,091, ,089, AAA /15/ AH UNITED STATES TREASURY 07/01/2004 2,000, ,956, ,003, AAA /15/ BT UNITED STATES TREASURY 08/31/2004 4,000, ,851, ,042, AAA /15/ BQ UNITED STATES TREASURY 10/28/2004 3,675, ,541, ,709, AAA /15/ CE UNITED STATES TREASURY 11/01/2004 1,775, ,689, ,767, AAA ,110 04/15/ AZ UNITED STATES TREASURY 02/15/2005 3,595, ,434, ,499, AAA /15/ BK UNITED STATES TREASURY 03/15/2005 1,865, ,790, ,810, AAA /15/ AN UNITED STATES TREASURY 03/21/2005 2,020, ,960, ,977, AAA /15/ BM UNITED STATES TREASURY 03/21/2005 2,730, ,617, ,650, AAA /15/2008 Subtotal and Average 85,265, ,464, ,065, ,265, Maturity Date Run Date: 04/06/ :17 Page 17 / 280 Portfolio CWA2 CC PM (PRF_PM2) SymRept a

13 SDCWA - Fiscal Year 2006 Portfolio Management Portfolio Details - Investments March 31, 2006 Page 5 CUSIP Investment # Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate S&P YTM Days to 365 Maturity Total and Average 547,184, ,995, ,427, ,100, Run Date: 04/06/ :17 Page 18 / 280 Portfolio CWA2 CC PM (PRF_PM2) SymRept a

14 SDCWA - Fiscal Year 2006 Portfolio Management Portfolio Details - Cash March 31, 2006 Page 6 CUSIP Investment # Passbook/Checking Accounts Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate S&P YTM Days to 365 Maturity CASH01 48 PETTY CASH 07/01/2005 2, , , CASH WELLS FARGO - OPERATING 07/01/ , , , CASH WELLS FARGO - PAYROLL ZBA 07/01/ , , , CASH WELLS FARGO - PAY AS YOU GO 07/01/ CASH WELLS FARGO - RSF 07/01/ CASH WELLS FARGO A COPS 07/01/ CASH WELLS FARGO - EQUIPMENT 07/01/ Average Balance Total Cash and Investmentss ,184, ,028, ,460, ,133, Run Date: 04/06/ :17 Page 19 / 280 Portfolio CWA2 CC PM (PRF_PM2) SymRept a

15 SDCWA - Fiscal Year 2006 Portfolio Management Activity Summary March 2005 through March 2006 Page 7 Month End Year Number of Securities Total Invested 360 Equivalent Yield to Maturity 365 Equivalent Managed Pool Rate Number of Investments Purchased Number of Investments Redeemed Average Term Average Days to Maturity March ,267, April ,436, May ,812, June ,196, July ,534, August ,922, September ,974, October ,481, November ,336, December ,783, January ,043, February ,810, March ,100, Average ,592, % 3.083% Run Date: 04/06/ :17 Page 20 / 280 Portfolio CWA2 CC PM (PRF_PM4) SymRept a Report Ver. 5.00

16 FPC I-1c - Rolling Cash Flows.xls San Diego County Water Authority Rolling Cash Flow Projections 4/17/ :28 AM April, FY06 May, FY06 June, FY06 July, FY07 August, FY07 September, FY07 October, FY07 November, FY07 December, FY07 January, FY07 February, FY07 March, FY07 Water Sales 14,333,961 18,434,785 19,274,686 23,374,202 26,545,065 28,449,615 27,310,070 25,269,357 25,523,648 21,525,115 18,824,964 17,140,019 RTS/CRC 848, ,911 4,089, , , , , ,873 4,104, , , ,954 Taxes 208,351 65,644 21, , , , ,509 3,186, , , ,365 Standby Charges 1,681,724 2,389, ,602 (61,502) 22,406 25, , ,230 2,068,471 3,280, , ,087 In-Lieu Taxes 0 373, Capacity Charges 3,820,597 2,123,122 1,224,651 5,136,731 1,866,472 2,315,462 6,478,981 2,463,730 2,346,385 5,431,670 1,822,001 1,886,401 Infrastructure Access Charges 1,161,050 1,161,050 1,161,050 1,341,910 1,341,910 1,341,910 1,341,910 1,341,910 1,341,910 1,355,256 1,355,256 1,355,256 Interest 517, , , , , , , , , , , ,170 Other Revenues 149, , , , , , , , , , , ,083 RSF Transfers Maturing Investments 23,000, ,000 4,500,000 7,600,000 11,100,000 15,900,000 19,700, ,000 4,800,000 12,400,000 16,200,000 20,200,000 Use of Liquid Funds TOTAL RECEIPTS 45,721,387 26,882,825 31,836,814 38,959,862 42,728,752 49,690,347 57,034,989 31,986,017 43,998,093 46,328,838 40,521,533 42,472,334 Water Purchases (10,387,565) (13,991,421) (14,681,744) (18,278,108) (21,021,899) (22,640,994) (21,643,481) (19,874,653) (19,956,568) (16,515,786) (14,238,460) (12,772,576) RTS/CRC (848,911) (848,911) (4,089,619) (848,911) (848,911) (848,873) (848,873) (848,873) (4,104,763) (848,873) (848,873) (833,954) Payroll (1,846,885) (1,846,885) (1,846,885) (2,041,445) (2,041,445) (3,062,167) (2,041,445) (2,041,445) (2,041,445) (3,062,167) (2,041,445) (2,041,445) Operating Expenditures (726,992) (559,588) (1,117,016) (974,538) (441,905) (470,109) (489,757) (911,216) (463,277) (412,467) (457,736) (448,507) G.O. Debt Service C.O.P. Debt Service (25,074,750) (169,501) (169,501) (169,501) (169,501) (169,501) (24,302,408) (169,501) (169,501) (169,501) (169,501) (339,001) S.T. Debt Service (549,643) (549,643) (549,643) (549,643) (549,643) (549,643) (549,643) (549,643) (549,643) (549,643) (549,643) (549,643) RSF Transfers Investment Purchases (900,000) (4,500,000) (7,600,000) (11,100,000) (15,900,000) (19,700,000) (700,000) (4,800,000) (12,400,000) (16,200,000) (20,200,000) (23,500,000) Transfers to PAYGO (5,502,321) (4,512,419) (1,828,253) (5,075,229) (1,888,878) (2,340,627) (6,587,678) (2,905,960) (4,414,856) (8,712,413) (2,103,122) (2,108,487) Replenish Liquid Funds (24,236) (44,373) (94,070) (66,570) (10,654) (52,516) (15,788) (28,810) (42,123) (2,072) (56,836) (22,804) TOTAL DISBURSEMENTS (45,861,304) (27,022,741) (31,976,730) (39,103,945) (42,872,836) (49,834,430) (57,179,072) (32,130,101) (44,142,177) (46,472,922) (40,665,616) (42,616,418) NET CHANGE IN INVESTMENTS (22,075,764) 3,644,373 3,194,070 3,566,570 4,810,654 3,852,516 (18,984,212) 4,128,810 7,642,123 3,802,072 4,056,836 3,322,804 PAYGO FUND Maturing Investments - PAYGO Fund 48,235,000 9,900,000 2,000,000 1,940,000 4,600,000 4,000, ,939,000 2,000,000 4,260,000 4,615,000 0 Interest Income - PAYGO 435, , , , , , , , , , , ,938 Canal Lining Reimbursements 2,895,122 3,555,463 3,831,324 3,647,445 4,399,604 3,295,165 2,413,165 2,409, , , , ,984 Transfers from Operating Fund 5,502,321 4,512,419 1,828,253 5,075,229 1,888,878 2,340,627 6,587,678 2,905,960 4,414,856 8,712,413 2,103,122 2,108,487 Use of Liquid Funds 0 0 1,790, ,735, ,427 TOTAL RECEIPTS 57,068,150 18,317,002 9,787,233 11,013,899 11,250,647 10,010,778 9,396,924 18,657,667 7,370,112 13,960,432 27,368,303 3,630,836 Cash Funded CIP Expenditures (7,706,874) (6,518,726) (9,787,233) (5,853,035) (2,141,977) (2,712,738) (3,035,903) (3,170,786) (3,489,280) (7,512,952) (27,368,303) (3,630,836) Debt Service (31,310,992) Investment Purchases (18,000,000) (11,700,000) 0 (5,100,000) (9,100,000) (7,200,000) (6,300,000) (15,400,000) (3,800,000) (6,400,000) 0 0 Replenish Liquid Funds (50,284) (98,276) 0 (60,864) (8,670) (98,040) (61,021) (86,881) (80,832) (47,480) 0 0 TOTAL DISBURSEMENTS (57,068,150) (18,317,002) (9,787,233) (11,013,899) (11,250,647) (10,010,778) (9,396,924) (18,657,667) (7,370,112) (13,960,432) (27,368,303) (3,630,836) NET CHANGE IN INVESTMENTS (30,184,716) 1,898,276 (3,790,242) 3,220,864 4,508,670 3,298,040 6,361,021 2,547,881 1,880,832 2,187,480 (24,350,727) (559,427) BOND FUND Maturing Investments - Bond Fund 10,300,000 12,800,000 11,900,000 11,000,000 9,500,000 11,600,000 15,300,000 20,900,000 15,800,000 15,000,000 15,100,000 16,100,000 Contributions in Aid of Construction 0 0 2,948, , Interest Income - CIP 317, , , , , , ,388 91,636 46, ,248 Use of Liquid Funds 1,078,132 1,397,322 3,603,521 2,271,957 3,534,240 7,073,488 8,072,727 2,292,914 8,395, ,142,862 TOTAL RECEIPTS 11,695,946 14,487,581 18,722,716 13,517,348 13,254,261 18,856,894 23,510,115 23,284,550 24,841,321 15,000,000 15,100,000 23,763,110 CIP Fund Draws (11,378,132) (14,197,322) (15,503,521) (13,271,957) (13,034,240) (18,673,488) (23,372,727) (23,192,914) (24,195,253) (19,993,431) 0 (23,242,862) Investment Purchases (15,100,000) 0 Replenish Liquid Funds (317,814) (290,259) (3,219,195) (245,391) (220,021) (183,406) (137,388) (91,636) (646,068) 0 0 (520,248) TOTAL DISBURSEMENTS (11,695,946) (14,487,581) (18,722,716) (13,517,348) (13,254,261) (18,856,894) (23,510,115) (23,284,550) (24,841,321) (19,993,431) (15,100,000) (23,763,110) NET CHANGE IN INVESTMENTS (11,060,318) (13,907,063) (12,284,326) (13,026,566) (12,814,219) (18,490,082) (23,235,339) (23,101,278) (23,549,185) (15,000,000) 0 (22,722,614) RATE STABILIZATION FUND Maturing Investments 0 1,095, ,985,000 10,155,000 1,000,000 2,205,000 1,000,000 0 Interest Earnings 202, , , , , , , , , , , ,609 Deposits TOTAL RECEIPTS 202,935 1,298, , , , ,941 5,191,548 10,362,157 1,207,767 2,413,379 1,208, ,609 Withdrawals Investment Purchases (202,935) (1,298,532) (204,132) (204,733) (205,337) (205,941) (5,191,548) (10,362,157) (1,207,767) (2,413,379) (1,208,993) (209,609) TOTAL DISBURSEMENTS (202,935) (1,298,532) (204,132) (204,733) (205,337) (205,941) (5,191,548) (10,362,157) (1,207,767) (2,413,379) (1,208,993) (209,609) NET CHANGE IN INVESTMENTS 202, , , , , , , , , , , ,609 Page 21 / 280 OVERALL CHANGE IN INVESTMENTS (63,117,863) (8,160,881) (12,676,367) (6,034,399) (3,289,558) (11,133,584) (35,651,982) (16,217,430) (13,818,464) (8,802,069) (20,084,899) (19,749,628)

17 GLOSSARY OF TERMS INVESTMENT PORTFOLIO DETAIL REPORT and CASH FLOW INVESTMENT PORTFOLIO DETAIL REPORT CUSIP: Committee of Uniform Securities Identification Procedures; unique number assigned to a security. Investment Number: The unique number assigned by the investment software in order to keep track of an investment. Issuer: The Bank, Federal Agency/Government, Corporation or Company that manages a fund or issues the security/securities. Average Balance: The average daily balance of the type of security or cash account during the month reported. Purchase Date: The day in which the security was delivered to the Authority s safekeeping account. Book Value: The amount paid for the security inclusive of any accrued interest or premium/discount. A security that has a book value in excess of face value was purchased with accrued interest or at a premium, thus the yield-to-maturity on the security will be the same as or less than the stated rate. A security that has a book value less than face value was purchased at a discount, thus the yield to maturity will always be in excess of the stated rate. The book value may differ significantly from the security s current value in the market. Face (Par) Value: The amount of cash to be received on the maturity date. Market Value: The current market value of the security. This is based on the price a security can be traded in the market at the close of the month. Stated Rate: The rate of interest paid on a security as dictated by the coupon, if applicable, and by discount rate (original purchase price) if it is a discount security (t-bill, banker s acceptance, commercial paper, etc.). Yield to Maturity: The yield of a security on a 365 day basis (converting 360 day interest payment investments to 365 day) with a theoretical assumption that securities with coupon payments are reinvested at the rate of the coupon. Quality Rating: The credit rating of the security. Maturity Date: The date in which the security matures. With managed pool accounts and passbook/checking accounts, there are no maturity dates because these accounts are ongoing. Days to Maturity: The number of days remaining from the reporting date until the maturity of the security. CASH FLOW TERMS Other Revenues: Revenues received from hydro-electric power sales and other sources. RSF Transfers: Transfers to or from the Rate Stabilization Fund. Use/Replenishment of Liquid Funds: Incoming or outgoing transfer of funds from either the State of California LAIF pooled investment account or the Goldman Sachs money market accounts. Investment Purchases: Investments with specific maturities to cover the cash flow needs of the fund (Operating, RSF, PAYGO, Bond/CIP). Net Change in Investments: The increase or decrease (dollars) held in investments for a fund. M:\Board\2006\04-April\FPC I-1d - Treasurer's Report-Terms.doc Page 22 / 280

18 GLOSSARY OF TERMS INVESTMENT TYPES Agencies: Debt instrument(s) that are issued by U.S. Government agencies, departments and governmentsponsored corporations. Some agencies have a direct government guarantee and others have an implied government guarantee. All agency securities are of the highest credit quality. Banker's Acceptances: An investment instrument issued by a bank, guaranteeing the payment of a customer s drafts for a stated amount for a specified period. It substitutes the bank s credit for the buyer and eliminates the seller s risk. This security is created out of a trade transaction. Callable: A security redeemable by the issuer before the scheduled maturity. The issuer usually pays the holder par or in some cases a premium price if such a security is retired early. Certificates of Deposit: A security instrument representing specific cash deposits in commercial banks, having varying maturities and yields based on size and maturity. This security has pooled collateral pledged against the deposit. Commercial Paper: Commercial paper is a short-term, unsecured promissory discount note that usually pays interest at maturity and is primarily used by large corporations to finance receivables. Managed Pool Accounts: Funds are managed by outside managers. Goldman Sachs is an AAA rated U.S. Treasury fund with a very short average life. The Local Agency Investment Fund (LAIF) is run by the State Treasurer s Office and is invested in most securities permitted under the California Government Code. LAIF has an average life that varies between 6 to 12 months. Both types of funds are used for liquidity purposes. Trinity Plus, FSA and MBIA are guaranteed investment contracts (GICs) that provide competitive rates of return while giving additional security to the holders of Authority 1998A, 2002A and 2004A debt. The final maturity of the Trinity Plus, FSA and MBIA reserve funds are 2028, 2032 and 2034, but due to the ability to access funds immediately, the investments are considered to have daily liquidity. Medium Term Notes: Corporate and agency, usually senior, unsecured debt instruments sold by an agent on a continuously offered basis. Negotiable Certificates of Deposit: Securities that are issued by major international and domestic banks and are similar to certificates of deposits purchased at a local bank; however, unlike collateralized certificates of deposit, they are liquid with an active secondary market for strong issuers. Passbook/Checking Account: These accounts are savings, checking and money market accounts at Wells Fargo Bank. Repurchase Agreements (RP, Repo): An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. Also called a repo, it represents a collateralized short-term loan for which, where the collateral may be a Treasury security, money market instrument, federal agency security, or a mortgage-backed security. From the purchaser s (customer s) perspective, the deal is reported as a reverse repurchase agreement. Treasury Bill: An obligation issued by the U.S. Treasury with a maturity of under one year and having virtually no risk. Treasury Note: An obligation issued by the U.S. Treasury with a maturity ranging from one to ten years, paying interest semiannually, and having virtually no risk. M:\Board\2006\04-April\FPC I-1d - Treasurer's Report-Terms.doc Page 23 / 280

19 April 19, 2006 Attention: Administrative and Finance Committee Adopt a resolution establishing the amount due from the City of San Diego for the In-Lieu Charge as a condition of providing water service for Fiscal Year (Action) Purpose This action establishes the amount due from the City of San Diego for the In-Lieu Charge for Fiscal Year according to Resolution Staff recommendation Adopt Resolution establishing the amount due from the City of San Diego for the In-Lieu Charge for Fiscal Year of $408,745. This amount reflects an In-Lieu Charge calculation based on property taxes less the monies shifted to the Educational Revenue Augmentation Fund ( ERAF ). Alternative Do not adopt Resolution as recommended and instead adopt a resolution setting the amount due from the City of San Diego for the In-Lieu Charge for Fiscal Year at $1,493,249. This amount reflects an In-Lieu Charge calculation without a deduction for the ERAF. Fiscal Impact Adoption of Resolution will mean that revenues for Fiscal Year will be $1,084,504 less than budgeted. Using the same calculation in preparing the In-Lieu Charge for Fiscal Year will result in a similar revenue impact in that year. The alternative would recover revenue as budgeted from the In-Lieu Charge, for both Fiscal Year or Fiscal Year Background Each year, the Water Authority receives an allocation of property taxes collected within the County. Proposition 13 limited the total property tax levy to 1% of net assessed valuation. In implementing Proposition 13, the State Legislature allocated this 1% levy among various taxing agencies according to the share each agency received during the three fiscal years prior to the passage of Proposition During that time period, pursuant to provisions of the County Water Authority Act, the City of San Diego was making payments In-Lieu of property taxes to the Water Authority from other available funds. As a result, the Legislature s formula for implementing Proposition 13 under-allocated property taxes from the City of San Diego to the Water Authority. Page 24 / 280

20 Administrative and Finance Committee April 19, 2006 Page 2 of 4 Between , a dispute arose between the Water Authority and the City of San Diego regarding payments of property taxes and in-lieu payments. A negotiated settlement, dated April 6, 1987 resolved the dispute. Later that year, consistent with the settlement agreement, the Water Authority adopted Resolution No , which established an annual In-Lieu Charge as a condition of service for member agencies that made in-lieu payments in the fiscal years preceding Fiscal Year Resolution No also established the formula for calculating the In-Lieu Charge for future years. Since 1988, the Water Authority and the City of San Diego have complied with the terms of the Resolution. Previous Board action: Adopted a Resolution establishing the amount due from the City of San Diego for the In-Lieu Charge as a condition of providing water service for Fiscal Year on August 26 th, Discussion Each year, Water Authority staff calculates the amount of the In-Lieu Charge due from the City of San Diego. The calculation is shown in detail on Attachment A. The charge is based on the product of the net assessed valuation of property within the City for the fiscal year in question and an imputed rate based on information from the prior fiscal year. The imputed rate is a fraction. The numerator is the amount received by the Water Authority from the County Auditor during the prior fiscal year from all member agencies other than the City, and the denominator is the net assessed valuation during the prior fiscal year for all member agencies other than the City (less one half of the net assessed valuation of Camp Pendleton). Because the In-Lieu Charge is based on property tax receipts from the prior fiscal year, calculation of the charge for Fiscal Year has been complicated by the ERAF property tax shift for Fiscal Year The Water Authority s share of the original ERAF property tax shift was $5,787,380 for both fiscal years and for a total of approximately $11.6 million. In August 2005, Water Authority staff determined that the State had overestimated the amount of the ERAF property tax shift by $1,039,222. The actual amount of the ERAF property tax shift should have been $4,748,158. Staff petitioned the State for credit of this amount for both Fiscal Years 2005 and In February 2006, the Water Authority received both a wire and a credit from the State returning the funds totaling $2,078,444. The City of San Diego questioned whether the ERAF property tax shift for Fiscal Year should reduce the numerator of the imputed rate on the basis that the Water Authority could not keep ERAF funds. Since the City of San Diego raised this question, Water Authority staff have met with representatives of the City several times to evaluate the formula for the In-Lieu Charge and the impacts of the ERAF property tax shift on the calculation. The primary issue is that applying the formula in Resolution No without a reduction for ERAF results in placing a greater share of the property tax and In-Lieu Charge responsibility on the City. The Charts in Attachment B, illustrate this impact. Comparison of Tax/In-Lieu Revenue Share The charts in Attachment B show the estimated breakdown, for Fiscal Year , of property taxes and In-Lieu Charge under three different scenarios. Page 25 / 280

21 Administrative and Finance Committee April 19, 2006 Page 3 of 4 Scenario 1 is the Base Case. It represents the share of total member agency payments of property taxes and In-Lieu Charge assuming there had been no ERAF property tax shift. In this case, the In-Lieu Charge would be $1.49 million and the City accounts for 39.73% of the total tax/in-lieu payments. Scenario 2 is the No ERAF Deduction Case (Alternative). It represents the share of net receipts of the Water Authority of property taxes and In-Lieu Charge, assuming the ERAF property tax shift did not affect the In-Lieu Charge calculation. In this case, the In-Lieu Charge would be $1.49 million and the City accounts for 52.73% of the total tax/in-lieu payments. Scenario 3 is the ERAF Deduction Case (Recommendation). It represents the share of net receipts of the Water Authority of property taxes and In-Lieu Charge, assuming the ERAF property tax shift did affect the In-Lieu Charge calculation. In this case, the In- Lieu Charge would be $408,745 and the City accounts for 36.95% of the total tax/in-lieu payments. Calculating the In-Lieu Charge without consideration of ERAF, results in a significant increase in the City s share of Water Authority net receipts. The recommendation, however, more closely approximates the City s share under normal circumstances, i.e., no ERAF property tax shift. This application of the formula not only addresses the City s concerns regarding the distribution of revenue responsibility, but also preserves the validity of Resolution and the calculation of the In-Lieu Charge. Attachment A provides a detailed calculation of the recommended In-Lieu Charge for Fiscal Year The amount of the charge due from the City of San Diego is $408,745 and is due on May 30, Comparison of Tax/In-Lieu and Rate Revenue Share Another perspective on the recommended amount of the In-Lieu Charge is to look at a larger pie and examine the distribution of revenue responsibility if the Water Authority were to recover the budgeted revenue shortfall by increasing the customer service charge. The charts in Attachment C illustrate the estimated breakdown of not only property taxes and In-Lieu Charge, but also Other Charges (customer service, storage, transportation, and IAC). In addition these charts assume that any shortfall in budgeted revenue would be recovered through the customer service charge. Scenario 1 is the Base Case. It represents the share of total member agency payments of property taxes, In-Lieu Charge and Other Charges assuming there had been no ERAF property tax shift. In this case, the In-Lieu Charge would be $1.49 million and the City accounts for 38.14% of the payments. Scenario 2 is the No ERAF Deduction Case (Alternative). It represents the share of net receipts of the Water Authority of property taxes and In-Lieu Charge and Other Charges assuming the ERAF property tax shift did not affect the In-Lieu Charge calculation. In Page 26 / 280