SDWD - 2014 San Dieguito Water District
Encinitas, California
Annual Financial Report
and Independent Auditors' Reports
For the Years Ended June 30, 2014 and 2013
F?M
PUN & McGEADY
San Dieguito Water District
TABLE OF CONTENTS
Pape
FINANCIAL SECTION
Independent Auditors' Report................................................................................................................... 1-3
Report on Internal Control over Financial Reporting
And on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards.................................................. 5-6
Management's Discussion and Analysis (Required Supplementary Information - Unaudited)........ 7-10
Basic Financial Statements:
Statementsof Net Position .......................................................................................................................... 12
Statements of Revenues, Expenses and Changes in Net Position............................................................. 13
Statementsof Cash Flows............................................................................................................................ 14
Notes to Financial Statements.................................................................................................................17-34
Required Supplementary Information:
Other Postemployment Employee Benefits Schedule of Funding Progress...........................................37
SELECTED STATISTICAL INFORMATION SECTION
Historical Debt Service Coverage...........................................................................................................42
Scheduleof Water Rates........................................................................................................................44
Bi-Monthly Meter Service Availability Charges .......................................................................................44
Historic Potable Water System Revenues..............................................................................................45
Historic Recycled Water System Revenues............................................................................................45
Summary of Water Production by Source...............................................................................................46
Summary of Water Deliveries by Source ................................................................................................46
TenLargest Customers ..........................................................................................................................47
Total Service Connections by Category..................................................................................................47
FINANCIAL
SECTION
San Dieguito Water District, 505 S Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
6265 Greenwich Drive
Suite 220
San Diego, California 92122
PUN & McGEAI3Y Phone: (858) 242-5100
Fax: (858) 242-5150
www.pm-llp.com
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
San Dieguito Water District
Encinitas, California
Report on Financial Statements
We have audited the accompanying financial statements of the San Dieguito Water District (the "District") a
component unit of the City of Encinitas, California (the "City"), which comprise the statement of net position
as of June 30, 2014 and the related statements of revenues, expenses, and changes in net position, and
cash flows for the year then ended, and the related notes to financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit.
Investments in R.E. Badger Filtration Plant
We did not audit the financial statements of the R.E. Badger Filtration Plant which represents 28 percent, 39
percent and 11 percent of the assets, net position, and expenses, respectively, of the District. Those
statements were audited by other auditors whose report has been furnished to us, and our opinion, in so far
as it relates to the amounts included for the Investments in R.E. Filtration Plant, is based solely on the
report of the other auditors.
Investments in R.E. Badger Water Facilities Financing Authority
We did not audit the financial statements of the R.E. Badger Water Facilities Financing Authority which
represents 1 percent, 2 percent and 5 percent of the assets, net position, and expenses, respectively, of the
District. Those statements were audited by other auditors whose report has been furnished to us, and our
opinion, in so far as it relates to the amounts included for the Investments in R.E. Filtration Plant, is based
solely on the report of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 2
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, based on our audit and the report of others auditors, the financial statements referred to
above present fairly, in all material respects, the financial position of the District as of June 30, 2014, and
the changes in financial position and cash flows for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and the schedules of funding progress on pages 7-10 and 37 be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America,
which consisted of inquiries of management about the methods of preparing the information and comparing
the information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements. The statistical
section is presented for purposes of additional analysis and is not a required part of the basic financial
statements. The statistical section has not been subjected to the auditing procedures applied in the audit of
the financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
2
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 3
Report on 2013 Financial Statements
The District's financial statements for the year ended June 30, 2013 were audited by other auditors whose
report thereon dated December 5, 2013, expressed an unmodified opinion on the respective financial
position of the District as of June 30, 2013, and changes in its financial positions and cash flows for the year
ended in accordance with accounting principles generally accepted in the United States of America.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 5, 2014, on our consideration of the District's internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering District's internal control over financial
reporting and compliance.
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San Diego, California
December 5, 2014
3
6265 Greenwich Drive
Suite 220
San Diego, California 92122
PUN & McGEADY Phone: (858) 242-5100
Fax: (858) 242-5150
www.pm-llp.com
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors'Report
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the San Dieguito
Water District (the "District"), a component unit of the City of Encinitas, California (the "City"), as of and
for the year ended June 30, 2014, and the related notes to the financial statements, which collectively
comprise the District's basic financial statements, and have issued our report thereon dated
December 5, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District's internal
control over financial reporting ("internal control") to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the District's
internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal
control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
misstatement of the District's financial statements will not be prevented, or detected and corrected on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 2
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the District's internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
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San Diego, California
December 5, 2014
6
SAN DIEGUITO WATER DISTRICT
Management Discussion & Analysis
(Unaudited)
This section of the San Dieguito Water District (the "District") Annual Financial Report presents
Management's Discussion and Analysis of the District's financial position and performance for fiscal year
2013-14. Please read it in conjunction with the District's Basic Financial Statements, which include
explanatory footnotes and required supplementary information.
FINANCIAL HIGHLIGHTS
Table 1
Summarized Statement of Net Position
(amounts expressed in millions of dollars)
Fiscal Fiscal Dollar Percent Fiscal Dollar Percent
Year 2014 Year2013 Change Change Year2012 Change Change
Current assets $ 20.1 $ 17.4 $ 2.7 15.5% $ 15.6 $ 1.8 11.5%
Restricted assets 1.0 1.0 0.0 0.0% 1.0 0.0 0.0%
Other noncurrent assets 0.3 0.4 (0.1) -25.0% 0.1 0.3 300.0%
Investments in joint ventures 18.3 18.6 (0.3) -1.6% 19.7 (1.1) -5.6%
Capital assets(net) 22.0 21.6 0.4 1.9% 20.2 1.4 6.9%
Total Assets 61.7 59.0 2.7 4.6% 56.6 2.4 4.2%
Current liabilities 2.9 1.8 1.1 61.1% 1.6 0.2 12.5%
Current portion of long-term debt 1.1 1.0 0.1 10.0% 1.0 0.0 0.0%
Long-term debt 12.6 13.6 (1.0) -7.4% 14.7 (1.1) -7.5%
Total Liabilities 16.6 16.4 0.2 1.2% 17.3 (0.9) -5.2%
Net Position:
Net investment in capital assets 26.6 25.5 1.1 4.3% 5.6 19.9 355.4%
Restricted 1.0 1.0 0.0 0.0% 0.0 1.0 100.0%
Unrestricted 17.5 16.1 1.4 8.7% 33.7 (17.6) -52.2%
Total Net Position $ 45.1 $ 42.6 $ 2.5 5.9% $ 39.3 $ 3.3 8.4%
NOTE:Certain accounts have been reclassified in the fiscal year 2013 and 2012 presentation above.
The District's net position improved by $2.5 million, or 6%, from 2013 to 2014 and $3.3 million from 2012 to
2013. The majority of the 2014 improvement over 2013 was in current assets; specifically, cash and
investments. The District had positive cash flows from operations in 2014, after factoring in debt service
payments of $1.6 million. Average water rates were increased by 8.5%, effective September 1, 2013.. That
increase, combined with slightly higher sales volume, translated into an increase of 12% in operating
revenues. The excess cash generated by operations is transferred to the capital project fund, which has the
effect of increasing the District's capital reserve balance. Average water rates did not increase from 2012 to
2013.
Changes in Net Position are affected by revenues and operating expenses, which are summarized below in
Table 2.
7
SAN DIEGUITO WATER DISTRICT
Management Discussion & Analysis (Continued)
(Unaudited)
Table 2
Summarized Statement of Revenues, Expenses and Changes in Net Position
(amounts expressed in millions of dollars)
Fiscal Fiscal Dollar Percent Fiscal Dollar Percent
Year2014 Year2013 Change Change Year 2012 Change Change
Operating revenues $ 15.4 $ 13.7 $ 1.7 12.3% $ 12.9 $ 0.8 6.2%
Operating expenses:
Source of supply 6.4 3.8 2.6 68.4% 3.8 - 0.0%
General operations&maintenance 2.3 2.4 (0.1) -2.4% 2.5 (0.1) -4.0%
Facility operations&maintenance 1.5 2.1 (0.6) -29.1% 2.3 (0.2) -8.7%
General and administrative 1.8 1.7 0.1 5.9% 1.8 (0.1) -5.6%
Depreciation and amortization 1.5 1.5 - 0.0% 1.3 0.2 15.4%
Total operating expenses 13.5 11.5 2.0 17.7% 11.7 (0.2) -1.7%
Operating income 1.8 2.2 (0.4) -16.0% 1.2 1.0 83.3%
Nonoperating revenues 0.8 0.9 (0.1) -11.1% 0.8 0.1 12.5%
Nonoperating(expenses) (0.6) (0.7) 0.1 -14.3% (0.7) - 0.0%
Income before transfers and
capital contributions 2.0 2.4 (0.4) -14.6% 1.3 1.1 84.6%
Transfers in from City of Encinitas 0.0 0.0 0.0 0.0% 0.5 (0.5) -100.0%
Capital contributions 0.5 0.9 (0.4) -44.4% 0.4 0.5 125.0%
Change in net position 2.5 3.3 (0.8) -22.8% 2.2 0.1 4.5%
Net position,beginning 42.6 39.3 3.3 8.4% 37.1 2.2 5.9%
Net position,ending $ 45.1 $ 42.6 $ 2.5 6.0% $ 39.3 $ 3.3 8.4%
Revenues - Operating revenues increased $1.7 million from 2013 to 2014 and $800,000 from 2012 to
2013. The 2014 increase was mainly due to the September rate increase and slightly higher sales volume
for the year, while the 2013 increase was due mainly to increase in customer demand for potable water.
Non-operating revenues were essentially flat from both 2013 to 2014 and 2012 to 2013. In 2014, an
increase in connection fees was offset to some degree by lower investment earnings.
Expenses -Operating expenses increased by $2.0 million from 2013 to 2014 and decreased $200,000 from
2012 to 2013. The 2014 increase in source of supply (water purchases) of$2.6 million was primarily driven
by the ratio of water purchased from the San Diego County Water Authority (imported water) compared to
the amount of local water utilized. The District purchased a higher percentage of imported water this fiscal
year, which is significantly more expensive than local water. However, since less local water was utilized,
the costs for treatment ("facility operations & maintenance") were lower in 2014. Other operating expenses
were comparable to prior year amounts in both 2013 and 2014.
8
SAN DIEGUITO WATER DISTRICT
Management Discussion & Analysis (Continued)
(Unaudited)
Capital contributions were lower in 2014, mainly due to the level of development activity and the timing of
donated infrastructure. Other donated assets (easements) exhibited lower levels of activity this year, as
well. Connection fees paid by applicants were higher due to an increase in the number of hookups, year-
over-year.
CAPITAL ASSETS AND CAPITAL IMPROVEMENT PROGRAMS
The District has an ongoing capital improvement program and publishes a capital budget every year. The
District's capital budget includes funding for both infrastructure and various large consulting projects, such
as capital master plans and water rate studies. The District generally capitalizes infrastructure and
expenses consulting studies in the accompanying Basic Financial Statements.
Capital expenditures for infrastructure are accounted in the accompanying financial statements either as: (1)
additions to Capital Assets, or (2) additions to Investments in Joint Ventures.
Additions to Capital Assets totaled approximately $975,000, which is principally replacement or
improvements to the water distribution system and purchases of vehicles and equipment. The District also
capitalized approximately $500,000 of capital improvement costs paid for the R.E. Badger Joint Facilities.
The overall budget of the District for capital improvements averages about $2.5 million per year over the
next six years.
Table 3
Capital Assets, Net of Accumulated Depreciation
(amounts expressed in millions of dollars)
2014 2013 2012
Land easements $ 3.0 $ 2.9 $ 2.7
Public works facility right-of-use 3.4 3.4 3.4
Construction in progress 0.8 0.9 0.7
Capacity rights 0.2 0.2 0.2
Utility, plant and equipment 14.6 14.2 13.2
Total $ 22.0 $ 21.6 $ 20.2
DEBT ADMINISTRATION
Table 4
Long-Term Debt
The District's total long-term debt outstanding at June 30 consisted of:
2014 2013 2012
2004 Water Revenue Refunding Bonds $ 8,110,000 $ 8,750,000 $ 9,365,000
2007 Note Payable to R.E. Badger Water
Facilities Financing Authority 5,535,000 5,920,000 6,295,000
Total $ 13,645,000 $ 14,670,000 $ 15,660,000
9
SAN DIEGUITO WATER DISTRICT
Management Discussion & Analysis (Continued)
(Unaudited)
The 2004 Water Revenue Refunding Bonds were issued to refinance a previous 1993 bond issue. The
outstanding amount of $8,110,000 was refinanced on September 30, 2014 in a current refunding
transaction. The District will save approximately $250,000 per year over the life of the 2014 bonds, which
have a final maturity in 2024.
The Note Payable represents the District's obligation to pay principal and interest on the Financing
Authority's 2007 Water Revenue Refunding Bonds.
The debt service payments on these two obligations will total approximately $1.40 million annually, going
forward. The District has covenanted to maintain debt service coverage of at least 115% of annual debt
service each fiscal year. The District was in compliance with its debt service coverage requirement for the
fiscal year 2013-14, and is projected to be in compliance in fiscal year 2014-15.
There are no current plans to issue additional debt.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The District adopted its two-year operating budget and capital budget in May of 2013. Under this system,
funds are only appropriated for the first fiscal year. The District returns to the Board one year later to
present its "second-year revise" budget, which may or may not be consistent with the originally published
figures for the second year.
The second year revise operating budget anticipates total revenues of $16.0 million, an increase of about
$600,000 over the prior year. Water rates and meter service charges were increased an average of 4.5%
on July 1, 2014, following an increase of 8.5% on September 1, 2013. The July 2014 increase was lower
than the previously approved (maximum allowable) increase of 8.5%. Staff determined that the maximum
increase would not be necessary due to healthy reserve balances and the District's continuing commitment
to cost containment. Operating expenses for FY 2014-15 are budgeted at or near FY 2013-14 levels, with
some variations by category. The cost of water is expected to decrease and the costs of treatment are
expected to increase, as a result of the projection of more local water usage.
The second-year revise capital budget anticipates capital costs at $2.0 million, which is slightly below the
average for the next six years. This includes $500,000 for District capital improvements and $1.5 million for
capital contributions to the R.E. Badger Joint Facilities.
Overall, the District expects to end the next fiscal year with an available fund balance of $10.8 million,
based on its internal projections. This balance is slightly higher than the original estimate of $10.6 million,
and reflects the successful implementation of the water rate increases and efficiencies in the District's
operations. This projected fund balance is expected to increase in the next cycle, due to pending updates
to the audited ending fund balances for FY 2013-14.
CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT
If you have questions about this report or need additional information, please contact the City of Encinitas
Finance Department or the San Dieguito Water District General Manager's office.
10
BASIC FINANCIAL
STATEMENTS
San Dieguito Water District, 505 S Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
11
San Dieguito Water District
Statements of Net Position
June 30, 2014 and 2013
2014 2013
ASSETS
Current assets:
Cash and investments $ 17,152,589 $ 14,793,223
Accounts receivables, net 2,790,244 2,492,708
Inventories 143,164 142,577
Total current assets 20,085,997 17,428,508
Noncurrent assets:
Cash and investments with fiscal agents 1,039,739 1,040,197
Prepaid pension assets, net 294,459 392,611
Investments in joint ventures 18,321,553 18,594,413
Capital assets, net 21,946,660 21,590,466
Total noncurrent assets 41,602,411 41,617,687
Total assets 61,688,408 59,046,195
LIABILITIES
Current liabilities:
Acounts payable and accrued liabiliites 2,309,554 1,063,336
Accrued interest payable 150,371 160,669
Deposits 352,400 430,609
Compensated absences -due within one year 140,665 154,219
Long-term debt-due within one year 1,070,000 1,025,000
Total current liabilities 4,022,990 2,833,833
Noncurrent liabilities:
Long-term debt-due in more than one year 12,575,000 13,645,000
Total noncurrent liabilities 12,575,000 13,645,000
Total liabilities 16,597,990 16,478,833
NET POSITION
Net investment in capital assets 26,623,213 25,514,879
Restricted 1,039,739 1,040,197
Unrestricted 17,427,466 16,012,286
Total net position $ 45,090,418 $ 42,567,362
See accompanying Notes to Financial Statements 12
San Dieguito Water District
Statements of Revenues, Expenses, and Changes in Net Position
For the Years Ended June 30, 2014 and 2013
2014 2013
OPERATING REVENUES
Charges for services $ 15,166,038 $ 13,509,376
Interfund revenues 41,444 27,099
Other revenue 180,733 150,681
Total operating revenues 15,388,215 13,687,156
OPERATING EXPENSES
Source of supply 6,403,037 3,815,390
General operations and maintenance 2,342,857 2,348,194
Facility operations and maintenance 1,489,420 2,121,251
General and administrative 1,820,835 1,713,045
Depreciation of capital assets 622,435 604,382
Amortization of prepaid pension asset 98,152 98,152
Amortization of investment in joint ventures 770,219 773,510
Other 5,907 68,544
Total operating expenses 13,552,862 11,542,468
NET OPERATING INCOME (LOSS) 1,835,353 2,144,688
NONOPERATING REVENUES (EXPENSES)
Property taxes 787,242 749,378
Investment earnings 32,789 117,072
Gain on sale of capital assets 7,645 3,118
Interest expense (611,775) (657,963)
Total nonoperating revenues (expenses) 215,901 211,605
INCOME BEFORE CAPITAL CONTRIBUTIONS 2,051,254 2,356,293
CAPITAL CONTRIBUTIONS
Contribution of capital assets:
Donation 22,971 553,960
Easements 121,471 211,583
Connection fees 327,360 102,480
Total capital contributions 471,802 868,023
CHANGES IN NET POSITION 2,523,056 3,224,316
NET POSITION:
Beginning of year 42,567,362 39,343,046
End of year $ 45,090,418 $ 42,567,362
See accompanying notes to financial statements 13
San Dieguito Water District
Statements of Cash Flows
For the Years Ended June 30, 2014 and 2013
2014 2013
Cash flows from operating activities:
Receipts from users $ 15,032,766 $ 12,951,303
Receipts from interfund charges 41,444 27,099
Payments to employees and suppliers for goods and services (10,894,634) (9,922,880)
Other operating revenues 16,469 150,681
Net cash provided by operating activities 4,196,045 3,206,203
Cash flows from noncapital financing activities:
Transfers in - -
Receipts from property taxes 787,242 749,378
Net cash provided by noncapital and related financing activities 787,242 749,378
Cash flows from capital and related financing activities:
Acquisition of capital assets (834,187) (1,007,509)
Capital contributions - connection fees 327,360 102,480
Payments on advance from City of Encinitas - (95,000)
Interest payments on advance from City of Encinitas - (3,800)
Principal payments on bonds and note payable (1,038,554) (990,000)
Interest payments on bonds and note payable (622,073) (665,650)
Capital related payments to R.E. Badger Filtration Plant (497,359) (59,561)
Proceeds from sale of capital assets 7,645 3,118
Net cash used by capital and related financing activities (2,657,168) (2,715,922)
Cash flows from investing activities:
Investment income received 32,789 94,128
Net cash provided by investing activities 32,789 94,128
Net increase in cash and cash equivalents 2,358,908 1,333,787
Cash and cash equivalents, beginning 15,833,420 14,499,633
Cash and cash equivalents, ending $ 18,192,328 $ 15,833,420
Reconciliation of cash and cash equivalents to the
Statement of Net Position:
Current assets:
Cash and investments 17,152,589 14,793,223
Noncurrent restricted assets:
Cash and investments with fiscal agents 1,039,739 1,040,197
Total cash and cash equivalents $ 18,192,328 $ 15,833,420
See accompanying notes to financial statements 14
San Dieguito Water District
Statements of Cash Flows (Continued)
For the Years Ended June 30, 2014 and 2013
2014 2013
Reconciliation of operating income to net cash provided
by operating activities:
Operating income $ 1,835,353 $ 2,144,688
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation and amortization 1,490,806 1,476,044
Change in net assets and liabilities:
Accounts receivable (297,536) (558,073)
Inventory and prepaid items (587) 22,612
Accounts payable and accrued liabilities 1,246,218 204,362
Deposits (78,209) (90,791)
Compensated absences - 7,361
Net cash provided by operating activities $ 4,196,045 $ 3,206,203
Noncash capital and related financing activities:
Contribution of capital assets $ 144,442 $ 765,543
Acquisition of capital assets included in accounts payable - 187,885
Capital related payment to R.E. Badger Filtration Plant
included in accounts payable - 60,408
See accompanying notes to financial statements 15
San Dieguito Water District
Notes to Financial Statements
For the Years Ended June 30, 2014 and 2013
Note 1 — Reporting Entity
San Dieguito Water District (the "District") was formed in 1922 under the laws of the State of California to
supply irrigation and potable water services to the central western portion of San Diego County. The District
became a subsidiary district of the City of Encinitas, California (the "City") on October 1, 1986, pursuant to
an election approving the San Dieguito Reorganization and the incorporation of the City. The District is
considered a component unit on the City, based on the provisions of Governmental Accounting Standards
Board ("GASB") Statement No. 61, The Financial Reporting Entity: Omnibus - An Amendment of GASB
Statement No. 14 and No. 34.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
Financial statement presentation follows the recommendations promulgated by the Governmental
Accounting Standards Board ("GASB") commonly referred to as accounting principles generally accepted in
the United States of America ("U.S. GAAP"). GASB is the accepted standard-setting body for establishing
governmental accounting and financial reporting standards.
Measurement Focus, Basis of Accounting and Financial Statements Presentation
The Financial Statements (i.e., the statement of net position, the statement of revenues, expenses and
changes in net position, and statement of cash flows) report information on all of the activities of the District.
The Financial Statements are reported using the "economic resources"measurement focus and the accrual
basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Interest associated with the current fiscal period is
considered to be susceptible to accrual and so has been recognized as revenue of the current fiscal period.
In accordance with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position, the Statement of Net Position reports separate sections
for Deferred Outflows of Resources, and Deferred Inflows of Resources, when applicable.
Deferred Outflows of Resources represent outflows of resources (consumption of net position) that
apply to future periods and that, therefore, will not be recognized as an expense until that time.
Deferred Inflows of Resources represent inflows of resources (acquisition of net position) that apply to
future periods and that, therefore, are not recognized as revenue until that time.
Operating revenues are those revenues that are generated from the primary operations of the District. The
District reports a measure of operations by presenting the change in net position from operations as
"operating income" in the statement of revenues, expenses, and changes in net position. Operating
activities are defined by the District as all activities other than financing and investing activities (interest
expense and investment income), and other infrequently occurring transaction of a non-operating nature.
Operating expenses are those expenses that are essential to the primary operations of the District. All other
expenses are reported as non-operating expenses.
17
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 2—Summary of Significant Accounting Policies (Continued)
Cash and Investments
Cash and cash equivalents include all highly liquid investments with original maturities of 90 days or less
and are carried at cost, which approximates fair value. The majority of the District's cash and investments is
invested in the City's pooled investment fund (the "City Pool"). The District does not own any specifically
identifiable securities or investments in the City Pool. As a participant in the City Pool, the District has rights
to its ratable share of the pooled cash and investments in the City Pool, on a dollar-for-dollar basis. The
District's ratable share of investment income from the City Pool is calculated and distributed on a monthly
basis. Investment income is reported as nonoperating revenue in the Statement of Revenues, Expenses
and Changes in Net Position. Since all amounts invested in the City Pool are available upon demand, the
District considers all amounts invested in the City Pool to be cash equivalents.
Certain disclosure requirements, if applicable for deposit and investment risk, are specified for the following
areas:
• Interest Rate Risk
• Credit Risk
— Overall
— Custodial Credit Risk
— Concentration of Credit Risk
• Foreign Currency Risk
Restricted Cash and Investments
Cash and investments with fiscal agents are restricted due to limitations on their use by bond covenants or
donor limitations. Fiscal agents acting on behalf of the District hold investment funds arising from the
proceeds of long-term debt issuances. The funds may be used for specific capital outlays or for the payment
of certain bonds, and have been invested only as permitted by specific State statutes or applicable District
ordinance, resolution or bond indenture.
Receivables and Unbilled Revenues
Customer accounts receivable consist of amounts owed by private individuals and organizations for
services rendered in the regular course of business operations. Receivables are shown net of allowances
for doubtful accounts, if any. The District also accrues an estimated amount for services that have been
provided, but not yet billed. Federal and State grants accrued as revenue when all eligibility requirements
have been met. Amount earned but outstanding at year end are reported as accounts receivable.
Inventory of Materials
Inventories consist primarily of materials used in the construction and repair of the District's plant and
equipment and on-site supplies such as water meters. Inventory is stated at cost using average-cost basis.
Prepaid Pension Assets
The District's defined-benefit pension plan, which has less than 100 active members, was required to enroll
in a CalPERS risk-sharing pool in 2003. As part of that enrollment process, CalPERS calculated the funded
status of the Plan and compared that amount to the funded status of the risk pool at inception, and a "side
fund liability" was created. The difference was being financed by CalPERS over a 17 year period at the
assumed rate of return of the CalPERS pooled investment fund (7.75%). The District elected to prepay the
full amount of$981,523 in fiscal year 2007 and has capitalized this amount in the Statement of Net Position.
This amount is being amortized over ten (10) years on a straight-line basis.
18
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 2—Summary of Significant Accounting Policies (Continued)
Investment in R.E. Badger Filtration Plant (the "Joint Facilities")
The District's investment in the Joint Facilities is accounted for using the equity method of accounting. The
District makes periodic contributions to cover its share of capital and operating costs. Contributions for
capital are accounted for as an increase in the District's investment account. Contributions for operations
are accounted for as operating expenses under the classification: facility operations and maintenance.
Depreciation expense on plant operations that is charged to the District is accounted for as an operating
expense.
Investment in R.E. Badger Water Facilities Financing Authority (the "Financing Authority")
The District's investment in the Financing Authority is accounted for using the equity method of accounting.
The equity interest is comprised primarily of bond reserve funds held by a fiscal agent and unamortized
bond discounts and issuance costs. Changes in the investment account result primarily from interest
revenues on reserve funds and amortization expense on the bond discounts and issuance costs. These
items are classified as nonoperating revenues and expenses in the accompanying Statement of Revenues,
Expenses and Changes in Net Position.
Capital Assets
Capital assets consist of land easements, the perpetual right-of-use of the City's Public Works facility,
structure and improvements, machinery and equipment, distribution system, and capacity rights. Capital
assets are valued at historical cost, or estimated historical cost, if actual historical cost was not available.
Donated capital assets are valued at their estimated fair market value on the date donated. The District
policy has set the capitalization threshold for reporting capital assets at $5,000 for non-infrastructure assets
and $100,000 for infrastructure assets, all of which must have an estimated useful life in excess of one year.
Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows:
Structures and improvements 20-45 years
Equipment, machinery and vehicles 5-20 years
Collection and distribution system 50 years
Capacity rights 50 years
Major outlays for capital assets are capitalized as projects, once constructed, and repairs and maintenance
costs are expensed. Interest accrued during capital assets construction, if any, is capitalized as part of the
asset cost, net of interest income on construction bond proceeds.
Deposits
Deposits consist of cash amounts that the District has collected from customers related to on-going
construction work being performed by the applicant. It can either be a "job deposit," which is an amount
collected to cover the expected costs to the District related to the project, or a "security deposit" which is
meant to help guarantee that the work required of the applicant will be completed to the satisfaction of the
District.
19
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 2—Summary of Significant Accounting Policies (Continued)
Compensated Absences
The District's policy permits its employees to accumulate not more than one and one half of their current
annual vacation. The District participates in the City's IPP Program which provides employees with
protection against loss of income due to illness or disability. Employees do not earn any number of hours of
sick leave and thus, no provision has been made for sick leave liability under the account for compensated
absences. The unused vacation pay will be paid to employee or his/her beneficiary upon leaving the
District's employment. The amount due will be determined using salary/wage rate in effect at the time of
separation.
Long-Term Debt
Debt premiums and discounts are deferred and amortized over the life of the debt using the straight-line
method. Long-term debt is reported net of the applicable bond premium or discount. Debt issuance costs
are expensed when incurred.
Arbitrage Rebate Requirement
The District is subject to the Internal Revenue Code ("IRC") Section 148(f), related to its tax exempt revenue
bonds. The IRC requires that investment earnings on gross proceeds of any revenue bonds that are in
excess of the amount prescribed will be surrendered to the Internal Revenue Service. The District had no
rebate liability for arbitrage as of June 30, 2014 and 2013.
Net Position
Net position represents the difference between all other elements in the statement of net position and
should be displayed in the following three components:
Net Investment in Capital Assets — This component of net position consists of capital assets, net of
accumulated depreciation, reduced by the outstanding balances of debt that are attributable to the
acquisition, construction, or improvement of those assets.
Restricted — This component of net position consists of restricted assets reduced by liabilities and
deferred inflows of resources related to those assets.
Unrestricted — This component of net position is the amount of the assets, deferred outflows of
resources, liabilities, and deferred inflows of resources that are not included in the determination of
net investment in capital assets or the restricted component of net position.
Property Taxes
Property taxes are levied on March 1 and are payable in two installments: November 1 and February 1 of
each year. Property taxes become delinquent on December 10 and April 10, for the first and second
installments, respectively. The lien date is March 1. The County of San Diego, California ("County") bills
and collects property taxes and remits them to the District according to a payment schedule established by
the County.
The County is permitted by State law to levy on properties at 1% of full market value (at time of purchase)
and can increase the property tax rate at no more than 2% per year. The District receives a share of this
basic tax levy proportionate to what it received during the years 1976-1978.
Property taxes are recognized in the fiscal year for which the taxes have been levied.
No allowance for doubtful accounts was considered necessary.
20
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 2—Summary of Significant Accounting Policies (Continued)
Use of Restricted/Unrestricted Assets
When both restricted and unrestricted resources are available for use, it is the District's policy to use
restricted resources first, then unrestricted resources as they are needed.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Note 3—Cash and Investments
At June 30, cash and investments are reported in the accompanying statement of net position as follows:
2014 2013
Cash and investments $ 17,152,589 $ 14,793,223
Cash and investments with fiscal agent 1,039,739 1,040,197
Total cash and investements $ 18,192,328 $ 15,833,420
At June 30, cash and investments consisted of the following:
2014 2013
Cash on hand $ 300 $ 300
City of Encinitas pooled investments fund 17,152,289 14,792,923
Money market mutual funds 1,039,739 1,040,197
Total cash and investements $ 18,192,328 $ 15,833,420
Authorized Investment
The District's investments are managed by the City. All of the District's cash, except investments held by
fiscal agents, are invested in the City Pool. The District has an equity interest in the City Pool equal to its
proportionate share of invested cash. The District does not have a separate investment policy; its cash are
invested according to the City of Encinitas' adopted investment policy.
The table below identifies the allowable investment types authorized by the California Government Code
(the "Gov't Code") and the City's adopted Investment Policy (the "Investment Policy"). The table also
identifies certain restrictions related to interest rate risk and concentration of credit risk. The Investment
Policy restricts the City Treasurer to investing in only the types of investments listed herein, which is more
restrictive than the Gov't Code, as the City's policy does not allow certain investments to be purchased
which are permitted under the Gov't Code.
21
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 3—Cash and Investments (Continued)
Authorized Investments (Continued)
Authorized Maximum Maximum
by Investment Maximum Percentage of Investment in
Authorized Investment Type Policy Maturity Portfolio One Issuer
Repurchased Agreements-Overnight "Sweep" Yes 1 Year No Limit No Limit
Local Agency Investment Fund (LAIF) Yes N/A No Limit No Limit
Local Agency Bonds No 5 Years None None
Other Governmental Managed Investment Pools Yes N/A No Limit No Limit
Money Market Mutual Funds Yes N/A 20% 10%
Certificates of Deposit Yes 5 Years No Limit No Limit
Negotiable Certificates of Deposit Yes 5 Years 30% No Limit
Bankers'Acceptances Yes 180 Days 40% 30%
U.S. Treasury Bills, Notes and Bonds Yes 5 Years No Limit No Limit
U.S. Government Sponsored Enterprises Yes 5 Years No Limit No Limit
Commercial Paper Yes 270 Days 25% 10%
Commercial Medium-Term Notes Yes 5 Years 30% No Limit
Investments Authorized and Utilized under Debt Agreements
The investment of the proceeds of debt issues (the 2004 Revenue Bond debt reserve fund) is governed by
the provisions of the 2004 Bond Indenture. Although there are several authorized investment instruments,
the District's reserve fund is currently invested 100% in a Money Market Mutual Fund.
Disclosures Related to Interest Rate Risk
The District invests all of its excess cash in the City Pool. As a participant, the District has immediate
access to its funds on a dollar-for-dollar basis. The allocation of investment income is made to the District
based on the book value of its investment (which approximates fair market value). As a result, the District is
not exposed to interest rate risk, as it would be if it owned direct securities for its own account.
The District's investment with fiscal agents consists of an institutional money market mutual fund. This
Fund has a stable net asset value of$1.00 and the funds can be withdrawn at any time without prior notice.
Any changes to the fair value of this money market mutual fund are allocated on a monthly basis to each
participant, as a part of their monthly distribution.
Disclosures Relating to Credit Risk
Credit risk is defined as the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized statistical
organization. Presented below is the minimum rating required by (where applicable) the Gov't Code, the
Investment Policy, or the debt agreements, and the actual rating as of year-end for each investment type.
22
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 3—Cash and Investments (Continued)
Disclosures Relating to Credit Risk (Continued)
Credit ratings as of June, 30, 2014 were as follows:
Minimum Rating as of Year End
Legal AAA/
Investment Type Totals Rating Aaa Not Rated
Investment in City Pool $ 17,152,289 N/A $ - $ 17,152,289
Held by Fiscal Agent:
Money Market Mutual Funds 1,039,739 AAA 1,039,739 -
Total investments $ 18,192,028 $ 1,039,739 $ 17,152,289
Credit ratings as of June, 30, 2013 were as follows:
Minimum Rating as of Year End
Legal AAA/
Investment Type Totals Rating Aaa Not Rated
Investment in City Pool $ 14,792,923 N/A $ - $ 14,792,923
Held by Fiscal Agent:
Money Market Mutual Funds 1,040,197 AAA 1,040,197 -
Total investments $ 15,833,120 $ 1,040,197 $ 14,792,923
The investment policy contains no limitations on the amount that can be invested in any one issuer beyond
that stipulated in the Gov't Code. GASB Statement No. 40 requires disclosure by amount and issuer, of
investments in any one issuer that represent 5% or more of total investments.
As of June 30, 2014 and 2013, both the investment in the City Pool and the Money Market Fund exceeded
5% of the District's total cash and investments.
Disclosures Relating to Custodial Credit Risk
The District is exposed to custodial credit risk indirectly via its investment in the City Pool. Custodial credit
risk is the risk that, in the event of the failure of a depository financial institution, an entity may not be able to
recover its deposits or will not be able to recover collateral securities that are in the possession of an
outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty (e.g. broker-dealer) to a transaction, an entity may not be able to recover the value of its
investment or collateral securities that are in the possession of another party. The Government Code and
the Investment Policy do not contain legal or policy requirements that would limit the exposure to custodial
credit risk for deposits or investments, other than the following provisions for deposits: The Government
Code requires that a financial institution secure deposits made by state or local governmental units by
pledging qualifying securities in an undivided collateral pool held by a depository regulated under State
Law. The market value of the qualifying pledged securities must equal at least 110% of the total amount
deposited by the public agencies. California law also allows financial institutions to secure deposits by
pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
At June 30, 2014 and 2013 the District had no deposits with financial institutions or any other parties that
would subject the District to custodial credit risk.
23
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 4— Investment Other Agencies
At June 30, investment in other agencies consisted of the following:
2014 2013
R.E. Badger Filtration Plant $ 17,557,363 $ 17,777,594
R.E. Badger Water Facilities Financing Authority 764,190 816,819
Total investment in other agencies $ 18,321,553 $ 18,594,413
R.E. Badger Filtration Plant
In 1967, the District entered into an agreement with the Santa Fe Irrigation District (Santa Fe) for the joint
ownership, maintenance, operation, and use of a water treatment plant and various facilities for the storage
and delivery of potable water. During the ensuing years, the parties have added various facilities and
improvements, which are owned in different percentages depending on the type of facility and the
agreements in place. The ownership percentages of the Joint Facilities are described below:
San Dieguito Santa Fe
Facilities Water District Irrigation District
Filtration Plant 45% 55%
Filtered Water Reservior (13 million gallons) 31% 69%
Joint Pipeline 39% 61%
San Dieguito Reservoir 42% 68%
Santa Fe is responsible for the operations, maintenance, and construction of capital improvements of the
Joint Facilities, as well as the related administration. For the years ended June 30, 2014 and 2013, the
District made capital contributions of $497,359 and $264,009, respectively and recorded its share of
depreciation and other allocated charges, as well as a true-up charge affecting the prior fiscal year. The
investment balance at June 30, 2014 and 2013 was $17,557,363 and $17,777,594, respectively.
Operations and maintenance costs are allocated monthly on the basis of the water used by each district,
and administrative costs are allocated based on an agreed-upon cost allocation plan. For the years ended
June 30, 2014 and 2013, the District's share of operations and maintenance costs for the Joint Facilities
was $1,489,420 and $2,121,250, respectively.
R.E Badger Water Facilities Financing Authority
In 1999, the District and Santa Fe entered into a joint exercise of powers agreement and formed the
Financing Authority, to provide financing for the acquisition and construction of capital improvements related
to the Joint Facilities. The Financing Authority subsequently issued revenue bonds for the purpose of
funding those capital improvements. Each district is obligated under an Installment Purchase Agreement to
repay their proportionate share of the costs of the long-term financing. The investment in the Financing
Authority consists primarily of a share of the debt reserve funds held by a fiscal agent and unamortized
bond discounts and issuance costs. The investment balance at June 30, 2014 and 2013 was $764,190 and
$816,819, respectively.
24
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 5—Capital Assets
Summary of changes in capital assets for the year ended June 30, 2014 is as follows:
Balance Balance
July 1, 2013 Additions Deletions Transfers June 30, 2014
Capital assets, not depreciated
Land easements $ 2,925,679 $ 121,472 $ - $ - $ 3,047,151
Public works facilities right of use 3,378,700 - - - 3,378,700
Construction in progress 898,920 530,982 - (653,405) 776,497
Total capital assets, not depreciated 7,203,299 652,454 - (653,405) 7,202,348
Capital assets, being depreciated
Structures and improvements 11,007 - - - 11,007
Machinery and equipment 2,260,917 303,204 (120,071) - 2,444,050
Distribution system 37,176,582 22,971 - 653,405 37,852,958
Capacity rights 323,190 - - - 323,190
Total capital assets, being depreciated 39,771,696 326,175 (120,071) 653,405 40,631,205
Less accumulated depreciation
Structures and improvements (1,193) (1,101) - - (2,294)
Machinery and equipment (1,902,114) (220,655) 120,071 - (2,002,698)
Distribution system (23,368,644) (394,215) - - (23,762,859)
Capacity rights (112,578) (6,464) - - (119,042)
Total accumulated depreciation (25,384,529) (622,435) 120,071 - (25,886,893)
Total capital assets, being depreciated, net 14,387,167 (296,260) - 653,405 14,744,312
Total capital assets, net $ 21,590,466 $ 356,194 $ - $ - $ 21,946,660
25
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 5—Capital Assets (Continued)
Summary of changes in capital assets for the year ended June 30, 2013 is as follows:
July 1, 2012 Additions Deletions Transfers June 30, 2013
Capital assets, not depreciated
Land easements $ 2,714,096 $ 211,583 $ - $ - $ 2,925,679
Public works facilities right of use 3,378,700 - - - 3,378,700
Construction in progress 700,299 1,141,635 (943,014) - 898,920
Total capital assets, not depreciated 6,793,095 1,353,218 (943,014) - 7,203,299
Capital assets, being depreciated
Structures and improvements 107,414 - (5) (96,402) 11,007
Machinery and equipment 2,226,797 53,759 (19,639) - 2,260,917
Distribution system 35,583,206 1,496,974 - 96,402 37,176,582
Capacity rights 323,190 - - - 323,190
Total capital assets, being depreciated 38,240,607 1,550,733 (19,644) - 39,771,696
Less accumulated depreciation
Structures and improvements (97) (1,101) 5 - (1,193)
Machinery and equipment (1,700,773) (220,980) 19,639 - (1,902,114)
Distribution system (22,992,807) (375,837) - - (23,368,644)
Capacity rights (106,114) (6,464) - - (112,578)
Total accumulated depreciation (24,799,791) (604,382) 19,644 - (25,384,529)
Total capital assets, being depreciated, net 13,440,816 946,351 - - 14,387,167
Total capital assets, net $ 20,233,911 $ 2,299,569 $ (943,014) $ - $ 21,590,466
Note 6—Compensated Absences
Summary of changes in compensated absences for the years ended June 30, 2014 and 2013 is as follows:
Beginning Ending Due within Due in More
Fiscal Year Balance Additions Deletions Balance One Year Than One Year
2013-2014 $ 154,219 $ 127,923 $ (141,477) $ 140,665 $ 140,665 $ -
2012-2013 146,858 154,219 (146,858) 154,219 154,219 -
Compensated absences represent the dollar value of employee vacation leave earned (up to the specified
maximum amount of hours) but unused as of June 30, 2014 and 2013. The balance outstanding of
$140,665 and $154,219 at June 30, 2014 and 2013, respectively, are classified as a current liability
because there are no restrictions on when employees may make use of their accrued vacation.
26
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 7— Long-Term Debt
Summary of changes in long-term debt for the year ended June 30, 2014, is as follows:
Balance Balance Due within Due In More
July 1, 2013 Additions Deletion June 30, 2014 One Year Than One Year
2004 Water Revenue Refunding Bond, $ 8,750,000 $ - $ (640,000) $ 8,110,000 $ 665,000 $ 7,445,000
2007 Note Payable to R.E. Badger
Water Facilities Financing Authority 5,920,000 - (385,000) 5,535,000 405,000 5,130,000
Total long-term obligation $14,670,000 $ - $(1,025,000) $13,645,000 $ 1,070,000 $ 12,575,000
Summary of changes in long-term debt for the year ended June 30, 2013, is as follows:
Balance Balance Due within Due In More
July 1, 2012 Additions Deletion June 30, 2013 One Year Than One Year
2004 Water Revenue Refunding Bond, $ 9,365,000 $ - $ (615,000) $ 8,750,000 $ 640,000 $ 8,110,000
2007 Note Payable to R.E. Badger
Water Facilities Financing Authority 6,295,000 - (375,000) 5,920,000 385,000 5,535,000
Total long-term debt 15,660,000 - (990,000) 14,670,000 1,025,000 13,645,000
Advance payavble to City of Encinitas 95,000 - (95,000) - - -
Total long-term obligation $15,755,000 $ - $(1,085,000) $14,670,000 $ 1,025,000 $ 13,645,000
2004 Water Revenue Refunding Bonds
On January 22, 2004, the District issued $13,845,000 of Water Revenue Refunding Bonds, Series 2004, to
redeem all of the outstanding 1993 Water Revenue Refunding Bonds. The bonds consist of$10,170,000 of
serial bonds maturing from 2004 through 2019 in annual installments of$505,000 to $820,000 and one term
bond of $3,675,000 maturing on October 1, 2023. The term bond is subject to sinking fund requirements.
Interest is payable semi-annually at rates ranging from 2.5% to 5.0%. The bonds maturing on or after
October 1, 2015 are subject to optional redemption at a redemption price equal to the principal amount of
the bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without
premium.
Annual debt service requirement for the 2004 Water Revenue Refunding Bonds outstanding at June 30,
2014 are as follows:
Year Ending
June 30 Principal Interest Total
2015 $ 665,000 $ 354,631 $ 1,019,631
2016 695,000 327,461 1,022,461
2017 720,000 299,131 1,019,131
2018 750,000 267,856 1,017,856
2019 785,000 234,791 1,019,791
2020-2024 4,495,000 580,300 5,075,300
Total $ 8,110,000 $ 2,064,170 $10,174,170
27
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 7— Long-Term Debt (Continued)
2007 Note Payable to the R.E. Badger Water Facilities Financing Authority
On November 20, 2007, the R.E. Badger Water Facilities Financing Authority issued $20,685,000 of 2007
Water Revenue Refunding Bonds while concurrently redeeming all of its outstanding 1999 Water Revenue
Bonds, on behalf of its member agencies, the Santa Fe Irrigation District and the San Dieguito Water
District. The transaction was a current refunding intended to save the member agencies future interest
costs due to lower market interest rates. New Installment Purchase Agreements were executed. The
overall bond issue consists of$20,685,000 of serial bonds maturing from 2008 through 2024. The District's
portion of the refinancing totaled $7,705,000. Principal is due and payable annually in amounts ranging
from $335,000 to $620,000. Interest is due and payable semi-annually at rates ranging from 3.5% to 4.5%.
The District accounts for its share of the bonds as a Note payable to the Financing Authority.
Annual debt service requirement for the 2007 Note Payable to the R.E. Badger Water Facilities Financing
Authority outstanding at June 30, 2014 are as follows:
Year Ending
June 30 Principal Interest Total
2015 $ 405,000 $ 227,844 $ 632,844
2016 415,000 211,144 626,144
2017 440,000 191,244 631,244
2018 455,000 171,619 626,619
2019 475,000 152,919 627,919
2020-2024 2,725,000 441,438 3,166,438
2025 620,000 13,950 633,950
Total $ 5,535,000 $ 1,410,158 $ 6,945,158
Pledged Revenues
The District has pledged its net revenues (as defined) to pay the annual debt service on the Bonds and
Note described above. The District has covenanted to set rates and charges in order to produce net
revenues of at least 115% of annual debt service. During the year, principal and interest paid was
$1,647,075 and net revenues available for debt service were $4,625,639, resulting in a debt service
coverage ratio of 279%.
Note 8— Risk Management
Risk management programs and support for the District are provided by the City risk management
department. The District is a member of the Association of California Water Agencies - Joint Powers
Insurance Authority (JPIA), which provides coverage for general liability, property and casualty, and
workers' compensation. Self-insured retention levels ranges from $10,000 to $25,000. As of June 30, 2014
and 2013, in the opinion of the District's management and general counsel, there were no material claims
which would require accrual in the accompanying financial statements. Management has determined, based
on modest self-insurance retention levels and favorable claims experience, that no self-insurance reserve is
required.
28
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 9— Public Employees Retirement System —CaIPERS
Plan Description
The San Dieguito Water District has entered into a contract for a defined benefit pension plan for
miscellaneous employees with CalPERS (the "Plan"). The Plan provides retirement and disability benefits,
annual cost-of-living adjustments, and death benefits to members and beneficiaries and is administered by
CalPERS, which acts as a common investment and administrative agent for participating public employers
within the State of California. A menu of benefit provisions as well as other requirements is established by
State statutes within the Public Employees' Retirement Law. The District selects optional benefit provisions
from the benefit menu by contract and adopts those benefits through local ordinances. CalPERS issues a
separate comprehensive annual financial report, which can be obtained from the CalPERS Executive
Office, Lincoln Plaza North —400 Q Street— Sacramento, CA 95811.
The Plan is a cost-sharing multiple employer defined benefit plan, in which the District participates with
other public agencies that share the same benefit formula and have less than 100 active members.
The Plan provides employees hired before October 13, 2012 with a Tier 1 benefit equal to 2.7% at 55 years
of age, calculated based on the single highest year of qualifying compensation. As of October 13, 2012, the
Board of Directors imposed new terms and conditions which created a new benefit formula for employees
hired after the effective date of the change (the "Tier 2 Plan.") Employees hired under the Tier 2 Plan
receive a lower benefit formula, referred to as the 2% at 60 year of age formula. In addition, legislation
enacted by the State of California applying to all local units of government, which became effective on
January 1, 2013, created yet another benefit formula for new hires with no experience or prior service credit
with CalPERS. In the case of SDWD, this will constitute a "Tier 3 Plan" which provides a retirement benefit,
referred to as the 2% at 62 years of age formula. The actual retirement benefit for Tier 2 and Tier 3
employees will be calculated using the average of the highest 36 consecutive months of qualifying
compensation.
Funding Policy
Employee contributions:
Active members in the Tier 1 Plan are required to contribute 8% of their annual covered salary (the
"employee contribution"). Effective October 13, 2012, all Tier 1 members contribute the full 8%, which is
credited to their individual accounts. Members receiving the Tier 2 or Tier 3 benefits are required to
contribute 7% of their annual covered salary. The employee contribution requirements are established by
State statute.
Employer contributions:
The District is required to contribute the actuarially determined remaining amounts necessary to fund the
benefits for its members (the "employer contributions"). The employer contribution rate for fiscal year 2013-
2014 was approximately 15.69%. The employer contribution rates are calculated and established annually
by CalPERS, based on the actuarial methods and assumptions as adopted by the CalPERS Board of
Administration.
29
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 9— Public Employees Retirement System —CalPERS (Continued)
Annual Pension Costs
For the year ended June 30, 2014 and 2013, the District's Miscellaneous Plan annual pension costs were
$252,831 and $252,408, respectively, which is equivalent to the actual employer contributions made to
CalPERS, based on the actuarially determined rates in effect for that fiscal year. These amounts do not
include any payments by the employer of behalf of the employees for employee contributions. The required
contribution rate for the fiscal year ended June 30, 2014 and 2013 was determined as part of June 30, 2011
and 2010, respectively, actuarial valuation using entry age normal actuarial cost method with the
contributions determined as a percentage of pay. The actuarial assumptions included (a) 7.50% investment
rate of return (net of administrative expenses); (b) projected salary increases that vary depending on age,
service, and type of employment from 3.00% to 14.20%; (c) inflation of 2.75%; and (d) payroll growth of
3.00%. The actuarial value of the Plan's assets was determined using techniques that smooth the effects of
short-term volatility in the market value of investments over a fifteen-year period (smoothed market value).
CalPERS' unfunded actuarial accrued liabilities (or excess assets) are being amortized as a level
percentage of projected payroll on a closed basis, depending on the size of investment gains and/or losses.
Based on the actuarial valuation dated June 30, 2012, the remaining average amortization period was 30
years for the Miscellaneous Plan.
A summary of the annual pension costs and the percentage of the required APC contributed for the last
three fiscal years are presented below:
Three-Year Trend Information
Annual Pension Percentage of Net Pension
Fiscal Year Cost (APC) APC Contributed Obligation
June 30, 2012 $ 202,637 100% $ -
June 30, 2013 252,408 100% -
June 30, 2014 252,831 100% -
30
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 10— Other Postemployment Benefits
The District maintains a separate plan to provide for post-retirement health care benefits. An actuarial
report is prepared every two years to update plan information and assumptions (when required). The latest
actuarial valuation was prepared as of June 30, 2013, and applies to fiscal years 2013-14 and 2014-15.
Plan Description
The District provides OPEB benefits (postretirement health care) through the CaIPERS healthcare program
(PEMHCA), to eligible employees who retire directly from the District. Retirees receive the PEMHCA
minimum benefit as determined by CaIPERS. The District does not provide any retiree benefits for dental,
vision, or life insurance. The District's OPEB plan does not issue a separate stand-alone report.
The District has elected to join the California Employers' Retiree Benefit Trust (the "Trust"), which provides
a means to fully fund the annual OPEB cost, referred to as the Annual Required Contribution (ARC). The
District makes its annual contribution to the Trust, pays benefits either directly to retirees or through
PEMHCA during the year, and then seeks reimbursement for these "pay-as-you-go expenses" from the
Trust.
Funding Policy and Actuarial Methods and Assumption
It is the District's Policy to fully fund the ARC each fiscal year.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of
the plan and the annual required contributions of the employer are subject to continual revision as actual
results are compared with past expectations and new estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood between the employer and the plan members) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing benefit costs between the employer and the plan
members at that point. The actuarial methods and assumptions used include techniques designed to
reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of plan
assets, consistent with the long—term perspective of the calculations.
31
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 10— Other Postemployment Benefits (Continued)
Funding Policy and Actuarial Methods and Assumption (Continued)
The following key assumptions were utilized in developing the June 30, 2013 actuarial valuation:
1) The actuarial cost method used to determine the benefit obligations is the Entry Age Normal cost
method.
2) The ARC is comprised of the present value of benefits in the current fiscal year (normal cost with
interest) plus a 26-year amortization (on a level-percentage of basis) of the unfunded actuarial
accrued liability.
3) The valuation reflects updated census and premium information, as well as changes to the
demographic tables, reflecting the recent experience study published by CalPERS.
4) The investment return assumption by the Trust is 7.61%.
5) The expected future medical price inflation trend ranges from 5.0 to 7.5%.
6) Core inflation rate of 3.0%.
7) Payroll increases of 3.0% per annum, in aggregate.
8) Projected salary increase is based on merit increase data from the most recent CalPERS Pension
Plan Study.
9) Levels of Participation — participation levels for safety personnel eligible of lifetime medical benefits
is assumed to be 100%, while participation levels for miscellaneous employees who receive the
CalPERS minimum required contribution is 50%, based on experience.
Annual Required Contribution (ARC) and OPEB Cost Summary
The ARC for fiscal years June 30, 2014 and 2013 of $31,000 and $31,000, respectively, represents a level
of funding that, if paid on an on-going basis, is projected to cover normal costs each year and to amortize
any unfunded actuarial liability over a maximum of 30 years.
The annual OPEB costs, the percentage of annual OPEB cost contributed, and the resulting net OPEB
obligation for the preceding four years were as follows:
Percentage of
Annual Annual OPEB Cost Net OPEB
Fiscal Year OPEB Cost APC Contributed Obligation
June 30, 2012 $ 25,000 100% $ -
June 30, 2013 31,000 100% -
June 30, 2014 31,000 100% -
32
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 10— Other Postemployment Benefits (Continued)
Annual Required Contribution (ARC) and OPEB Cost Summary (Continued)
Funding Status and Funding Progress
As of June 30, 2013, the most recent actuarial valuation date, the actuarial accrued liability for benefits was
$332,472, and the actuarial value of assets was $68,176, resulting in an unfunded actuarial liability
("UAAL") of $264,296 and a funded ratio (actuarial value of assets as a percentage of the actuarial liability)
of 20.51%.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about the
future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded
status of the plan and the annual required contributions of the employer are subject to continual revision as
actual results are compared with past expectations and new estimates are made about the future.
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Estimated Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2013 $ 68,176 $ 332,472 $ 264,296 20.51% $ 1,886,000 14.01%
The schedule of funding progress for the Plan is presented as Required Supplementary Information
following the Notes to the Financial Statements. These schedules show multiyear trend information about
whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial
accrued liability for benefits.
Note 11 — Commitments and Contingencies
Risk management programs and support for the District are provided by the City of Encinitas Risk
Management Department, for which the District pays the City an annual fee (charge for those services.)
The District is a member of the Association of California Water Agencies - Joint Powers Insurance Authority
(JPIA), which provides coverage for general liability, property and casualty, and workers' compensation.
Self-insured retention levels ranges from $10,000 to $25,000. As of June 30, 2014, in the opinion of the
District's management and general counsel, there were no material claims which would require accrual in
the accompanying financial statements. Management has determined, based on modest self-insurance
retention levels and favorable claims experience, that no self-insurance liabilities were necessary. The
District has no outstanding claims as of June 30, 2014, and did not pay any claims during the fiscal year.
33
San Dieguito Water District
Notes to Financial Statements (Continued)
For the Years Ended June 30, 2014 and 2013
Note 12— Subsequent Events
GASB Statement No. 68, Accounting and Financial Reporting for Pension Plans
In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pension Plans (an
amendment of GASB Statement No. 27). This Statement establishes standards for measuring and
recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and
expenses/expenditures of pension plans. This statement identifies the methods and assumptions that
should be used to project benefit payments, discount projected benefit payments to their actuarial present
value, and attribute that present value to periods of employee service. Management is evaluating the impact
of the adoption of this standard on the financial statements and believes that its impact, when adopted, may
be substantial to the District. GASB Statement No. 68 will be implemented effective with the fiscal year
2014-2015 financial statements.
Issuance of Debt
In September 2014, the District issued its Water Revenue Refunding Bonds, Series 2014 (the "2014
Bonds"). The 2014 Bonds were issued via a competitive process, and the proceeds were used to
accomplish a full refunding of the District's 2004 Water Revenue Refunding Bonds. The purpose of the
refunding was to obtain lower interest rates, and thus, save the District money on future interest costs.
None of the terms or conditions of the original 2004 Bonds changed; all previous covenants are still in
place, and the original final stated maturity of 2024 was not modified. The District retired $8,110,000
principal amount of bonds, and replaced them with $5,870,000 principal amount of the 2014 Bonds. The
reason(s) for the reduction in principal amount are: (1) elimination of the previous debt service reserve fund,
and (2) the opportunity to issue premium bonds. The District achieved net present value savings or 13.5%
on the refunded bonds, which translates to annual debt service savings of approximately $250,000, and a
new payment (principal and interest) of about $770,000 per year for the next ten years. The transaction was
a pure current refunding, which did not raise any additional funds for the District's capital program.
34
REQUIRED SUPPLEMENTARY
INFORMATION
San Dieguito Water District, 505 So. Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
35
San Dieguito Water District
Required Supplementary Information
For the Year Ended June 30, 2014
Note 1 —Other Postemployment Employee Benefits Schedule of Funding Progress
Schedule of Funding Progress
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Estimated Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2009 $ 13,000 $ 302,000 $ 289,000 4.30% $ 1,049,000 27.55%
June 30, 2011 65,000 343,000 278,000 18.95% 1,230,000 22.60%
June 30, 2013 68,176 332,472 264,296 20.51% 1,886,000 14.01%
37
STATISTICAL
SECTION
San Dieguito Water District, 505 So. Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
39
San Dieguito Water District
Summary of Operational Data
The following tables are being presented as supplementary information based on
requirements for bonds issued by SDWD for continuing bond disclosure certificate.
41
SAN DIEGUITO WATER DISTRICT
Historical Debt Service Coverage
Last Five Fiscal Years
2010 2011 2012
Revenues:
Operating revenues-including connection fees $ 11,267,684 $ 12,574,450 $ 13,170,422
Non-operating revenues 879,477 817,872 813,610
Gross Revenues 12,147,161 13,392,322 13,984,032
Total Operating &Non-Operating Expenses 11,634,347 11,614,631 12,448,911
Net Income 512,814 1,777,691 1,535,121
Add back:
Interest expense and other 749,704 725,936 698,908
Depreciation and amortization expense 1,213,640 1,196,007 1,294,904
Net Revenues Available for Debt Service $ 2,476,158 $ 3,699,634 $ 3,528,933
Less: Debt Service
2004 Water Revenue Refunding Bonds- Interest Charges $ 469,269 $ 452,244 $ 433,950
2004 Water Revenue Refunding Bonds-Principal Payments 560,000 575,000 595,000
2007 Note Payble to Financing Authority- Interest Charges 265,157 281,494 270,352
2007 Note Payble to Financing Authority-Principal Payments 335,000 350,000 365,000
Total Debt Service $ 1,629,426 $ 1,658,738 $ 1,664,302
Coverage by Net Revenues Available for Debt Service 152% 223% 212%
42
SAN DIEGUITO WATER DISTRICT
Historical Debt Service Coverage
Last Five Fiscal Years (Continued)
2013 2014
Revenues:
Operating revenues-including connection fees $ 13,789,636 $ 15,715,575
Non-operating revenues 869,568 827,676
Gross Revenues 14,659,204 16,543,251
Total Operating &Non-Operating Expenses 12,198,228 14,066,485
Net Income 2,460,976 2,476,766
Add back:
Interest expense and other 657,963 622,075
Depreciation and amortization expense 1,476,044 1,490,806
Net Revenues Available for Debt Service $ 4,594,983 $ 4,589,647
Less: Debt Service
2004 Water Revenue Refunding Bonds- Interest Charges $ 408,906 $ 380,731
2004 Water Revenue Refunding Bonds-Principal Payments 615,000 640,000
2007 Note Payble to Financing Authority- Interest Charges 256,744 241,344
2007 Note Payble to Financing Authority-Principal Payments 375,000 385,000
Total Debt Service $ 1,655,650 $ 1,647,075
Coverage by Net Revenues Available for Debt Service 278% 279%
43
TABLE 1
SAN DIEGUITO WATER DISTRICT
Schedule of Water Rates
As of June 30, 2014
Rate (footnote 1)
Customer Class Residential Rate Tier Potable Recycled
Single-family residential 0-12 units $ 2.52
13-20 units 3.76
21-40 units 4.44
41+ units 5.62
Multi-family residential (per dwelling) 0-8 units 2.52
9-12 units 3.76
13-16 units 4.44
17+ units 5.62
Agriculture 3.13 $ 2.66
Commercial 3.53 3.00
Government / Public 3.53 3.00
Landscaping 4.44 3.77
Construction 4.44 3.77
Source: San Dieguito Water District
(1) Per Unit (one hundred cubic feet or 748 gallons)
TABLE 2
SAN DIEGUITO WATER DISTRICT
Bi-Monthly Meter Service Availability Charges
As of June 30, 2014
Water Meter Service Infrastructure Fire Meter Service
Availability Access Availability
Meter Size Charge Charge Charge
5/8" & 3/4" $ 33.54 $ 5.30 N/A
1" 53.33 8.48 $ 7.05
1-1/2" 102.82 15.90 13.15
2" 162.20 27.56 23.66
3" 300.77 50.08 61.41
4" 498.70 86.92 126.51
6" 993.56 159.00 360.16
8" 1,587.39 275.60 763.17
Source: San Dieguito Water District
(2) San Dieguito charges a bi-monthly service availability charge, which covers the
costs for the maintenance of meters, water lines, and storage facilities, to ensure that
water is available upon demand. This charge also covers customer service costs for
meter reading and billing. The infrastructure access charge is levied by the
San Diego County Water Authority, and is collected from the customer by the District.
44
TABLE 3
SAN DIEGUITO WATER DISTRICT
Historic Potable Water System Revenues
Last Ten Fiscal Years
Meter
Fiscal Potable Percent Availability Percent
Year Water Sales Change (2) Charges Change (2)
2005 $ 5,252,235 8.0% $ 1,877,863 10.5%
2006 6,465,975 23.1% 2,061,454 9.8%
2007 7,579,205 17.2% 2,251,011 9.2%
2008 7,717,818 1.8% 2,404,547 6.8%
2009 7,525,927 -2.5% 2,453,075 2.0%
2010 7,146,854 -5.0% 2,501,264 2.0%
2011 8,205,876 14.8% 3,007,127 20.2%
2012 8,528,418 3.9% 3,196,605 6.3%
2013 9,236,462 8.3% 3,087,794 -3.4%
2014 10,649,157 15.3% 3,227,823 4.5%
Source: San Dieguito Water District
(3) Due to the varying number of billing cycles in a fiscal year, changes year-over-year
may of be exactly comparable.
TABLE 4
SAN DIEGUITO WATER DISTRICT
Historic Recycled Water System Revenues
Last Ten Fiscal Years
Meter
Fiscal Recycled Percent Availability Percent
Year Water Sales Change Charges (4) Change
2005 $ 387,607 -8.0% $ - N/A
2006 454,145 17.2% - N/A
2007 596,299 31.3% - N/A
2008 600,401 0.7% - N/A
2009 663,036 10.4% - N/A
2010 537,654 -18.9% - N/A
2011 523,397 -2.7% - N/A
2012 422,925 -19.2% - N/A
2013 400,244 -5.4% - N/A
2014 460,383 15.0% 60,048 N/A
Source: San Dieguito Water District
(4) The District first implemented a meter availability charge for recycled customers
on September 1, 2013.
45
TABLE 5
SAN DIEGUITO WATER DISTRICT
Summary of Water Production by Source
Last Ten Fiscal Years
Potable Production (5)
Fiscal Local Imported Total Recycled Total
Year Water Water Potable Water Production
2005 1,705 5,602 7,307 595 7,902
2006 2,765 5,093 7,858 600 8,458
2007 2,706 5,692 8,398 708 9,106
2008 3,539 3,753 7,292 676 7,968
2009 3,869 3,369 7,237 694 7,931
2010 4,399 2,156 6,555 498 7,053
2011 4,434 1,901 6,335 511 6,846
2012 3,719 2,663 6,382 578 (6) 6,960
2013 4,200 2,395 6,595 678 (6) 7,273
2014 1,136 5,593 6,729 692 7,421
Source: San Dieguito Water District
(5) Water Production is defined as water either produced locally or purchased (expressed in acre-feet)
TABLE 6
SAN DIEGUITO WATER DISTRICT
Summary of Water Deliveries by Source
Last Ten Fiscal Years
Fiscal Percent Percent
Year Potable Change Recycled Change
2005 6,719 -6.8% 595 -16.3%
2006 7,281 8.4% 600 0.8%
2007 7,592 4.3% 708 18.0%
2008 6,753 -11.1% 676 -4.5%
2009 6,463 -4.3% 694 2.7%
2010 5,649 -12.6% 498 -28.2%
2011 5,425 -4.0% 511 2.6%
2012 5,957 9.8% 578 (6) 13.1%
2013 6,284 5.5% 678 (6) 17.3%
2014 6,449 2.6% 692 2.1%
Source: San Dieguito Water District
(6) 2012 and 2013 Recycled Water Production and Delivery figures revised to now include water provided
to the Encinitas Ranch Golf Course (ERGA). Beginning in 2012, the San Elijo Joint Powers Authority
(SEJPA) began directly providing recycled water to ERGA and the District ceased selling recycled water
to ERGA. The recycled water provided to ERGA credits towards the Districts production and delivery as
ERGA falls within the District's sphere of influence.
The differences between potable water production and deliveries represents water loss in the
distribution system and/or water pumped or used through the fire distribution system.
46
TABLE 7
SAN DIEGUITO WATER DISTRICT
Ten Largest Customers
As of June 30, 2014
Acre-Feet Percent of
Customer Description Sold Water Sold
City of Encinitas 124 1.9%
Park Place Bluffs 80 1.2%
Cardiff by the Sea Apartments 62 1.0%
Scripps Memorial Hospital 56 0.9%
Leucadia Seabluff Village 48 0.7%
Encinitas Ranch Community Association 47 0.7%
Skyloft Homeowners 45 0.7%
LF Encinitas Properties, LLC 44 0.7%
Seacrest Village 43 0.7%
Cal West Enterprises 38 0.6%
Subtotal - Top 10 Customers 587 9.1%
Total Sold 6,449
Source: San Dieguito Water District
TABLE 8
SAN DIEGUITO WATER DISTRICT
Total Service Connections by Category
Last Ten Fiscal Years
Fiscal Percent Percent
Year Potable Change Recycled Change
2005 11,268 0.9% 49 11.4%
2006 11,275 0.1% 55 12.2%
2007 11,338 0.6% 56 1.8%
2008 11,364 0.2% 59 5.4%
2009 11,370 0.1% 68 15.3%
2010 11,388 0.2% 73 7.4%
2011 11,397 0.1% 72 -1.4%
2012 11,476 0.7% 74 2.8%
2013 11,502 0.2% 77 4.1%
2014 11,610 0.9% 77 0.0%
Source: San Dieguito Water District
(8) The decline of one connection in 2011 reflects the change in the contract arrangement with the
Encinitas Ranch Golf Course.
47