2017 SDWD Annual Financial ReportSan Dieguito Water District
Annual Financial Report
For the Year Ended June 30, 2017
San Dieguito Water District
A Component Unit of the City of Encinitas
San Dieguito Water District
Table of Contents
FINANCIAL SECTION
Pape
Independent Auditors' Report on Financial Statements ........................................... ..............................1
Independent Auditors' 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
Management's Discussion and Analysis (Required Supplementary Information — Unaudited) .......... 7
Basic Financial Statements:
Statementsof Net Position ........................................................................................ ............................... 15
Statements of Revenues, Expenses, and Changes in Net Position .......................... ............................... 16
Statementsof Cash Flows .......................................................................................... ............................... 17
Notes to the Financial Statements ............................................................................. ............................... 19
Required Supplementary Information (Unaudited):
Schedule of Funding Progress ............................................................................... .............................49
Schedule of Proportionate Share of the Net Pension Liability and Related Ratios . .............................50
Scheduleof Contributions ....................................................................................... .............................51
SELECTED STATISTICAL INFORMATION SECTION (UNAUDITED)
Scheduleof Water Rates ........................................................................................
.............................56
Bi- Monthly Meter Service Availability Charges .....................................................
............................... 56
Historic Potable Water System Revenues ..............................................................
.............................57
Historic Recycled Water System Revenues ...........................................................
.............................57
Summary of Water Production by Source ...............................................................
.............................58
Summary of Water Deliveries by Source ................................................................
.............................58
Salesby Customer Class ........................................................................................
.............................59
Total Service Connections by Category ..................................................................
.............................59
Historical Debt Service Coverage ...........................................................................
.............................60
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FINANCIAL
SECTION
San Dieguito Water District, 505 S Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
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THE
PUN GROUP
ACCOUNTANTS & ADVISORS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of the 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, 2017 and June 30, 2016 and the related statements of revenues, expenses, and
changes in net position, and cash flows for the years 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 audits.
Investment in R.E. Badger Filtration Plant
We did not audit the financial statements of the R.E. Badger Filtration Plant which represents the following
percentages of the assets, net position, and expenses of the District as of June 30, 2017 and
June 30, 2016:
% of Total June 30, 2017 June 30, 2016
Assets 35% 31%
Net Position 48% 44%
Expenses 10% 11%
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.
4365 Executive Drive, Suite 710, San Diego, California 92121
Tel: 858 - 242 -5100 • Fax: 858 - 242 -5150
www.pungroup.com
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 2
Investment 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 the following percentages of the assets, net position, and expenses of the District as of June
30, 2017 and June 30, 2016:
% of Total June 30, 2017 June 30, 2016
Assets 1 % 1 %
Net Position 2% 2%
Expenses 5% 5%
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.
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, 2017 and
June 30, 2016, and the changes in financial position and cash flows for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 3
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 schedule of changes in net pension liability and related ratios, schedule of
contributions, and schedule of funding progress on pages 7 -11 and 49 -51, respectively, 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December
13, 2017, 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.
L�
San Diego, California
December 13, 2017
3
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THE
PUN GROUP
ACCOUNTANTS & ADVISORS
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, 2017, 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 13, 2017.
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.
4365 Executive Drive, Suite 710, San Diego, California 92121
Tel: 858 - 242 -5100 • Fax: 858 - 242 -5150
www.pungroup.com
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.
San Diego, California
December 13, 2017
N
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 2016 -17. 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
(Millions of Dollars)
Current liabilities
Fiscal
Fiscal
Dollar
Percent
Fiscal
Dollar
Percent
(In Millions)
Year 2017
Year 2016
Change
Change
Year 2015
Change
Change
Current assets
$ 16.1
$ 18.1
$ (2.0)
- 11.0%
$ 18.6
$ (0.5)
-2.7%
Other noncurrent assets
0.0
0.1
(0.1)
- 100.0%
0.2
(0.1)
- 50.0%
Investments in joint ventures
22.6
19.8
2.8
14.1%
17.7
2.1
11.9%
Capital assets (net)
23.2
22.5
0.7
3.1%
22.5
0.0
0.0%
Total assets
61.9
60.5
1.4
2.3%
59.0
1.5
2.5%
Deferred outflows
1.5
0.8
0.7
87.5%
0.6
0.2
33.3%
Current liabilities
1.6
1.8
(0.2)
- 11.1%
1.7
0.1
5.9%
Current portion of long -term debt
1.2
1.2
0.0
0.0%
1.1
0.1
9.1%
Net pension liability
6.3
5.0
1.3
26.0%
3.8
1.2
31.6%
Long -term debt
8.4
9.5
(1.1)
- 11.6%
10.7
(1.2)
- 11.2%
Total liabilities
17.5
17.5
0.0
0.0%
17.3
0.2
1.2%
Deferred inflows
0.2
0.3
(0.1)
-33.3%
1.3
(1.0)
- 76.9%
Net Position:
Net investment in capital assets
13.6
13.1
0.5
3.8%
10.8
2.3
21.3%
Restricted
0.0
0.0
0.0
0.0%
0.0
0.0
0.0%
Unrestricted
32.1
30.4
1.7
5.6%
30.2
0.2
0.7%
Total Net Position $
45.7
$ 43.5
$ 2.2
5.1%
$ 41.0
$ 2.5
6.1%
The District's net position increased by $2.2 million, or 5.1 %, from 2016 to 2017 and increased $2.5 million
from 2015 to 2016. The majority of the 2017 increase from 2016 is the result of an increase in SDWD's
joint venture investment with R.E. Badger Filtration Plant. The District had positive cash flows from
operations in 2017, after factoring in debt service payments of $1.4 million. On January 20, 2016, the
Board approved an updated two -year water rate study, modifying the District's water rates and service
charges. This action approved an overall revenue increase from rates and charges of 6.5% on February 1,
2016 and another 6.5% on January 1, 2017.
7
San Dieguito Water District
Management Discussion & Analysis (Continued)
(Unaudited)
Changes in Net Position are affected by revenues and operating expenses as summarized in Table 2.
111171 -01W
Summarized Statement of Revenues, Expenses and Changes in Net Position
(Millions of Dollars)
Nonoperating revenues
Fiscal
Fiscal
Dollar
Percent
Fiscal
$
Dollar
Percent
Nonoperating (expenses)
Year 2017
Year2016
Change
Change
Year 2015
Change
Change
Operating revenues
$ 15.0
$ 14.8
$ 0.2
1.4%
$ 14.9
$
(0.1)
-0.7%
Operating expenses:
capital contributions
1.7
2.0
(0.3)
-15.0%
0.3
1.7
Source of supply
5.9
5.4
0.5
9.3%
6.8
$
(1.4)
- 20.6%
General operations & maintenance
5.0
4.7
0.3
6.4%
4.3
$
0.4
9.3%
Facility operations & maintenance
1.6
1.8
(0.2)
- 11.1%
1.7
$
0.1
5.9%
General and administrative
0.5
0.1
0.4
400.0%
(0.1)
$
0.2
200.0%
Depreciation and amortization
1.0
1.5
(0.5)
- 33.3%
2.3
$
(0.8)
- 34.8%
Total operating expenses
14.0
13.5
0.5
3.7%
15.0
(1.5)
- 10.0%
Operating income
1.0
1.3
(0.3)
-23.1%
(0.1)
1.4
- 1400.0%
Nonoperating revenues
1.1
1.0
0.1
10.0%
0.9
$
0.1
11.1%
Nonoperating (expenses)
(0.4)
(0.3)
(0.1)
- 33.3%
(0.5)
$
0.2
- 40.0%
Income before transfers and
capital contributions
1.7
2.0
(0.3)
-15.0%
0.3
1.7
566.7%
Transfers in from City of Encinitas
0.0
0.0
0.0
0.0%
0.0
$
-
0.0%
Capital contributions
0.5
0.5
-
0.0%
0.3
$
0.2
66.7%
Change in net position
2.2
2.5
(0.3)
- 12.0%
0.6
0.1
16.7%
Net position, beginning
43.5
41.0
2.5
6.1%
40.4
$
0.6
1.5%
Net position, ending
$ 45.7
$ 43.5
$ 2.2
5.1%
$ 41.0
$
2.5
6.1%
Revenues - Operating revenues increased $0.2 million from 2016 to 2017 and decreased $0.1 million
from 2015 to 2016. In 2017, water sales were up 5.0% compared to 2016. A 6.5% water rate increase
was enacted on January 1, 2017. The decrease from 2015 to 2016 was mainly due to water sales
decreases but offset by a water rate increase. Non - operating revenues were essentially flat from both
2016 to 2017 and 2015 to 2016.
Expenses - Operating expenses increased $0.5 million from 2016 to 2017 and decreased $1.5 million
from 2015 to 2016. Operating expenses increased in 2017 due to increases in the cost of wholesale
potable water purchases. The 2016 decrease in operating expenses was due to a $1.4 million decrease
in source of supply (water purchases) as a result of overall lower water purchases from less customer
demand as well as a higher amount of local water utilization compared to imported water.
Capital contributions stayed the same from 2016 to 2017, due to similar levels of development activity, and
donated infrastructure.
Net Position, Beginning - The beginning net position was restated in 2017 in order to remove restricted
cash and investment with fiscal agents and the Due to R.E. Badger liability in the same amount. Cash in
the amount of $1,377,006 was originally thought to be held by the City, but in actually was held by R.E.
Badger Financing Authority. This amount previously reported is a reserve account for Santa Fe Irrigation
District and is not associated with SDWD's portion of the reserve. SDWD's portion of the reserve is
included and reported in Investment in Joint Ventures.
W
San Dieguito Water District
Management Discussion & Analysis (Continued)
(Unaudited)
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 for 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 $0.6 million, which is primarily replacement or
improvements to the water distribution system and purchases of vehicles and equipment. The District also
capitalized approximately $155,000 of capital improvement costs paid for the R.E. Badger Joint Facilities.
The overall budget of the District for capital improvements averages about $3.2 million per year over the
next seven years.
Table 3
Capital Assets, Net of Accumulated Depreciation
(Millions of Dollars)
2017
2016
2015
Land easements
$ 3.3
$ 3.2
$ 3.0
Public works facility right -of -use
3.4
3.4
3.4
Construction in progress
1.8
0.9
1.3
Capacity rights
0.2
0.2
0.2
Utility, plant and equipment
14.5
14.8
14.6
Total
$ 23.2
$ 22.5
$ 22.5
San Dieguito Water District
Management Discussion & Analysis (Continued)
(Unaudited)
DEBT ADMINISTRATION
Table 4
Long -Term Debt
The District's total long -term debt outstanding at June 30 consisted of:
On September 18, 2014, the District issued $5,870,000 of Water Revenue Refunding Bonds, Series 2014.
The Series 2014 bonds redeemed all of the District's outstanding 2004 Water Revenue Refunding Bonds
remaining of $8,110,000, which were themselves a refunding of the District's original 1993 Water Revenue
Bonds. The 2014 refunding resulted in saving the District approximately $250,000 annually in debt service
costs, due to lower market interest rates and the elimination of a reserve previously required on the 2004
bonds. Interest is due and payable semi - annually at rates ranging from 3.0% to 4.0 %.
On November 20, 2007, the Authority issued $20,685,000 of 2007 Water 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. No new funds were raised by either agency. New Installation Purchase Agreements were
executed, which save the District approximately $60,000 per year on debt service.
The debt service payments on these two obligations will total approximately $1.4 million annually, going
forward. The District has covenanted to maintain debt service coverage of at least 115% of net revenues
available for debt service each fiscal year. The District was in compliance with its debt service coverage
requirement for the fiscal year 2016 -17, and is projected to be in compliance in fiscal year 2017 -18.
The District does not currently have plans to issue additional debt.
10
2017
2016
2015
2007 Note Payable to R.E. Badger Water
Facilities Financing Authority
$ 4,275,000
$ 4,715,000
$ 5,130,000
2014 Water Revenue Refunding Bonds
4,715,000
5,300,000
5,870,000
add: original issue premium
520,602
594,973
669,345
Total
$ 9,510,602
$ 10,609,973
$ 11,669,345
On September 18, 2014, the District issued $5,870,000 of Water Revenue Refunding Bonds, Series 2014.
The Series 2014 bonds redeemed all of the District's outstanding 2004 Water Revenue Refunding Bonds
remaining of $8,110,000, which were themselves a refunding of the District's original 1993 Water Revenue
Bonds. The 2014 refunding resulted in saving the District approximately $250,000 annually in debt service
costs, due to lower market interest rates and the elimination of a reserve previously required on the 2004
bonds. Interest is due and payable semi - annually at rates ranging from 3.0% to 4.0 %.
On November 20, 2007, the Authority issued $20,685,000 of 2007 Water 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. No new funds were raised by either agency. New Installation Purchase Agreements were
executed, which save the District approximately $60,000 per year on debt service.
The debt service payments on these two obligations will total approximately $1.4 million annually, going
forward. The District has covenanted to maintain debt service coverage of at least 115% of net revenues
available for debt service each fiscal year. The District was in compliance with its debt service coverage
requirement for the fiscal year 2016 -17, and is projected to be in compliance in fiscal year 2017 -18.
The District does not currently have plans to issue additional debt.
10
San Dieguito Water District
Management Discussion & Analysis (Continued)
(Unaudited)
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
On June 28, 2017, the District Board of Directors (Board) approved the two -year operating and capital
budget for FY 2017 -18 and FY 2018 -19. During the two -year budget cycle, funds are appropriated in the
first fiscal year only and then the District returns to the Board one year later to present its "second -year
revise" budget, which is revised based on changed assumptions to the originally published figures for the
second year.
On June 28, 2017, the Board approved the FY 2017 -18 operating and capital budgets. The operating
budget anticipates total revenues of $17.4 million, which is an overall increase of $0.4 million over the prior
year. On January 20, 2016, the Board approved an updated two -year water rate study, modifying the
District's water rates and meter service charges. This action approved an overall revenue increase from
rates and charges of 6.5% on February 1, 2016 and another 6.5% overall rate and charge increase on
January 1, 2017. A further update to the District's water rate schedule is scheduled to occur in Spring
2018, which may result in new water rate and charge increases. Operating expenses for FY 2017 -18 are
budgeted at $12.5 Million or approximately $0.6 Million less than prior year. The decrease is largely due
to increased availability of local water, which is less expensive to utilize than imported water. The Board
also approved a modest 2.0% increase in salaries and benefits in FY 2017 -18.
The capital budget anticipates capital costs at $2.9 million, which is on par with the average for the next
seven years. This includes $1.0 million for District capital improvements and $1.9 million for capital
contributions to the R.E. Badger Joint Facilities.
Overall, the District expects to end Fiscal Year 2016 -17 with an available fund balance of $10.2 million,
based on its internal projections
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.
11
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12
BASIC FINANCIAL
STATEMENTS
San Dieguito Water District, 505 S Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
13
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14
San Dieguito Water District
Statements of Net Position
June 30, 2017 and 2016
ASSETS
Current assets:
Cash and investments
Restricted cash and investments with fiscal agent
Accounts receivables, net
Inventories
Total current assets
Noncurrent assets:
Other assets
Investments in joint ventures
Capital assets, net
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Pension related items (Note 9)
Total deferred outflows of resources
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities
Accrued interest payable
Deposits
Compensated absences - due within one year
Long -term debt - due within one year
Total current liabilities
Noncurrent liabilities:
Long -term debt - due in more than one year
Aggregate net pension liability
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Pension related items (Note 9)
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Restricted
Unrestricted
Total net position
See accompanying Notes to the Financial Statements
15
2017 2016
$ 13,671,646
65
2,243,159
221,388
16,136,258
22,547,246
23,222,557
45,769,803
61,906,061
1,540,047
1,540,047
1,189,620
97,259
298,195
162,845
1,060,000
2,807,919
8,450,602
6,288,631
14,739,233
17,547,152
168,372
168,372
13,711,955
65
32,018,564
$ 45,730,584
$ 15,490,693
2,481,987
181,393
18,154,073
98,155
19,780,139
22,483,641
42,361,935
60,516,008
840,631
840,631
1,316,714
106,838
354,628
161,310
1,025,000
2,964,490
9,584,973
5,019,493
14,604,466
17,568,956
287,437
287,437
11,873,668
31,626,578
$ 43,500,246
San Dieguito Water District
Statements of Revenues, Expenses, and Changes in Net Position
For the Years Ended June 30, 2017 and 2016
OPERATING REVENUES
Charges for services
Rental income
Interfund revenues
Other revenue
Total operating revenues
OPERATING EXPENSES
Source of supply
General operations and maintenance
Facility operations and maintenance
General and administrative
Depreciation of capital assets
Amortization of other assets
Amortization of investment in joint ventures
Total operating expenses
NET OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Property taxes
Investment earnings
Gain on sale of capital assets
Accretion of bond premium
Interest expense
Total nonoperating revenues (expenses)
INCOME BEFORE CAPITAL CONTRIBUTIONS
CAPITAL CONTRIBUTIONS
Contribution of capital assets:
Donation
Easements
Connection fees
Total capital contributions
CHANGES IN NET POSITION
NET POSITION:
Beginning of year
End of year
See accompanying Notes to the Financial Statements
16
2017 2016
$ 14,788,114
91,247
63,863
37,620
14,980,844
5,888,028
4,982,370
1,570,463
453,276
694,595
98,155
284,032
13,970,919
1,009,925
959,873
81,966
6,925
74,372
(366,740)
756,396
1,766,321
258,940
43,477
161,600
464,017
2,230,338
43,500,246
$ 45,730,584
$ 14,628,656
103,181
55,681
4,733
14,792,251
5,352,508
4,729,923
1,788,841
76,947
675,548
98,152
741,015
13,462,934
1,329,317
906,106
103,590
4,010
74,372
(412,108)
675,970
2,005,287
238,453
172,150
59,400
470,003
2,475,290
41,024,956
$ 43,500,246
San Dieguito Water District
Statements of Cash Flows
For the Years Ended June 30, 2017 and 2016
Cash flows from operating activities:
Receipts from users
Receipts from interfund charges
Payments to employees and suppliers for goods and services
Other operating revenues
Net cash provided by operating activities
Cash flows from noncapital financing activities:
Receipts from property taxes
Net cash provided by noncapital and related financing activities
Cash flows from capital and related financing activities:
Acquisition of capital assets
Capital contributions - connection fees
Principal payments on bonds and note payable
Interest payments on bonds and note payable
Capital related payments to R.E. Badger Filtration Plant
Proceeds from sale of capital assets
Net cash (used in) capital and related financing activities
Cash flows from investing activities:
Investment income received
Net cash provided by investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year, as restated (Note 12)
Cash and cash equivalents, end of year
Reconciliation of cash and cash equivalents to the
Statements of Net Position:
Current assets:
Cash and investments
Restricted cash and investments with fiscal agent
Total cash and cash equivalents
See accompanying Notes to the Financial Statements
17
2017
$ 15,118,189
63,863
(12,667,002)
37,620
2,552,670
2016
$ 14,291,536
55,681
(11,892,150)
4,734
2,459,801
959,873 906,106
959,873 906,106
(1,433,511)
464,017
(1,025,000)
(374,783)
(3,051,139)
6,925
(5,413,491)
(650,556)
470,003
(985,000)
(400,210)
(1,491,918)
4,010
(3,053,671)
81,966 103,590
81,966 103,590
(1,818,982) 415,826
15,490,693 15,074,867
$ 13,671,711 $ 15,490,693
$ 13,671,646
65
$ 15,490,693
$ 13,671,711 $ 15,490,693
San Dieguito Water District
Statements of Cash Flows (Continued)
For the Years Ended June 30, 2017 and 2016
Reconciliation of operating income to net cash provided
by operating activities:
Operating income
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation and amortization
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts receivable
Inventory and prepaid items
Pension related deferred outflows of resources
Accounts payable and accrued liabilities
Deposits
Compensated absences
Net pension liability
Deferred pension investment earnings
Deferred change in pension plan assumptions
Pension related deferred inflows of resources
Net cash provided by operating activities
Noncash capital and related financing activities:
Amortization of original issue premium
Contribution of capital assets
See accompanying Notes to the Financial Statements
18
2017
$ 1,009,925
1,076,782
238,828
(39,995)
(699,416)
(127,094)
(56,433)
1,269,138
2016
$ 1,329,317
1,514,715
(440,301)
(33,750)
(203,086)
(1,647)
42,474
1,240,208
(119,065) (988,129)
$ 2,552,670 $ 2,459,801
$ 74,371 $ 74,372
302,417 410,603
$ 376,788 $ 484,975
San Dieguito Water District
Notes to the Financial Statements
For the Years Ended June 30, 2017 and 2016
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 of 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.
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.
19
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
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 non - operating 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
following areas:
• Interest Rate Risk
• Credit Risk
— Overall
— Custodial Credit Risk
— Concentration of Credit Risk
• Foreign Currency Risk
Restricted Cash and Investments
for deposit and investment risk, are specified for the
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.
Fair Value Measurement
U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes
disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair
value in the Statements of Net Position, are categorized based upon the level of judgment associated
with the inputs used to measure their fair value. Levels of inputs are as follows:
Level 1 — Inputs are unadjusted, quoted prices for identical assets and liabilities in active markets at the
measurement date.
Level 2 — Inputs, other than quoted prices included in Level 1, which are observable for the asset or
liability through corroboration with market data at the measurement date.
Level 3 — Unobservable inputs that reflect management's best estimate of what market participants would
use in pricing the asset or liability at the measurement date.
20
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 2 — Summary of Significant Accounting Policies (Continued)
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.
Other 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 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.
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 non - operating revenues and expenses in the accompanying Statement of
Revenues, Expenses and Changes in Net Position.
21
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 2 — Summary of Significant Accounting Policies (Continued)
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.
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.
22
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 2 — Summary of Significant Accounting Policies (Continued)
Pensions
For purposes of measuring the net pension liability at June 30, 2017, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information about the fiduciary
net position of the plans and additions to /deductions from the plans' fiduciary net position have been
determined on the same basis as they are reported by the plans (Note 9). For this purpose, benefit
payments (including refunds of employee contributions) are recognized when due and payable in
accordance with benefit terms. Investments are reported at fair value.
The following timeframes are used for pension reporting:
CalPERS
Valuation date June 30, 2015
Measurement date June 30, 2016
Measurement period July 1, 2015 to June 30, 2016
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, 2017 and 2016.
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.
23
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 2 — Summary of Significant Accounting Policies (Continued)
Property Taxes (Continued)
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.
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:
2017 2016
Cash and investments $ 13,671,646 $ 15,490,693
Cash and investments with fiscal agent 65 -
Total cash and investments $ 13,671,711 $ 15,490,693
At June 30, cash and investments are reported at fair value based on quoted market prices. The following
table presents the fair value measurements of investments recognized in the accompanying statement of
net position measured at fair value on a recurring basis and the level within the fair value hierarchy in
which the fair value measurements fall at June 30:
Cash on hand
City of Encinitas pooled investments fund
Money market mutual funds
Total cash and investments
2017 2016
Fair Measurement
Value Input
$ 300 Uncategorized
13,671,346 Uncategorized
65 Uncategorized
$ 13,671,711
24
Fair Measurement
Value Input
$ 300 Uncategorized
15,490,393 Uncategorized
- Uncategorized
$ 15,490,693
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 3 — Cash and Investments (Continued)
Authorized Investments
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.
Investments Authorized and Utilized under Debt Agreements
Maximum
Authorized
Percentage of
Investment in
by Investment
Maximum
Authorized Investment Type
Policy
Maturity
Repurchased Agreements - Overnight "Sweep"
Yes
1 year
Local Agency Investment Fund (LAIF)
Yes
N/A
Local Agency Bonds
No
5 years
Other Governmental Managed Investment Pools
Yes
N/A
Money Market Mutual Funds
Yes
N/A
Certificates of Deposit
Yes
5 years
Negotiable Certificates of Deposit
Yes
5 years
Bankers' Acceptances
Yes
180 days
U.S. Treasury Bills, Notes and Bonds
Yes
5 years
U.S. Government Sponsored Enterprises
Yes
5 years
Commercial Paper
Yes
270 days
Commercial Medium -Term Notes
Yes
5 years
Investments Authorized and Utilized under Debt Agreements
Maximum
Maximum
Percentage of
Investment in
Portfolio
One Issuer
20%
No Limit
30%
No Limit
N/A
N/A
30%
No Limit
20%
10%
10%
$1 M
10%
$1 M
10%
$1 M
50%
15%
60%
15%
25%
$5M
15%
$1 M
The investment of the proceeds of debt issues 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.
25
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 3 — Cash and Investments (Continued)
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.
Credit ratings as of June, 30, 2017 were as follows:
Investment Type
Investment in City Pool
Held by Fiscal Agent:
Money Market Mutual Funds
Total investments
Totals
$ 13,671,346
65
$ 13,671,411
Credit ratings as of June, 30, 2016 were as follows:
Investment Type
Investment in City Pool
Total investments
Totals
$ 15,490,393
$ 15,490,393
Minimum
Rating
as of Year End
Legal
AAA/
Rating
Aaa
Not Rated
N/A
$
- $
13,671,346
AAA
65
-
$
65 $
13,671,346
Minimum
Rating as of Year End
Legal
AAA/
Rating
Aaa
Not Rated
N/A
$
- $
15,490,393
$
- $
15,490,393
The investment policy contains limitations on the amount that can be invested in any one issuer beyond
those 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, 2017, both the Investment in City Pool and the money market mutual funds held by fiscal
agent exceeded 5% of the District's total cash and investments. As of June 30, 2016 the Investment in
City Pool exceeded 5% of the District's total cash and investments.
26
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 3 — Cash and Investments (Continued)
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, 2017 and 2016 the District had no deposits with financial institutions or any other parties that
would subject the District to custodial credit risk.
Note 4 — Investment Other Agencies
At June 30, investment in other agencies consisted of the following:
2017 2016
R.E. Badger Filtration Plant $ 21,786,604 $ 19,015,947
R.E. Badger Water Facilities Financing Authority 760,642 764,192
Total investment in other agencies $ 22,547,246 $ 19,780,139
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:
Facilities
Filtration Plant
Filtered Water Reservior (13 million gallons)
Joint Pipeline
San Dieguito Reservoir
27
San Dieguito
Water District
45%
31%
39%
42%
Santa Fe
Irrigation District
55%
69%
61%
58%
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 4 — Investment Other Agencies (Continued)
R.E. Badger Filtration Plant (Continued)
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, 2017 and 2016, the
District made capital contributions of $3,051,139 and $2,868,924, 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, 2017 and 2016 was $21,786,604 and $19,015,947, 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, 2017 and 2016, the District's share of operations and maintenance costs for the Joint Facilities
was $1,570,463 and $1,788,841, respectively.
RE 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, 2017 and 2016 was
$760,642 and $764,192, respectively.
28
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 5 — Capital Assets
Summary of changes in capital assets for the year ended June 30, 2017 is as follows:
Capital assets, not depreciated
Land easements
Public works facilities right of use
Construction in progress
Total capital assets, not depreciated
Capital assets, being depreciated
Structures and improvements
Machinery, equipment, and vehicles
Distribution system
Capacity rights
Total capital assets, being depreciated
Less accumulated depreciation
Structures and improvements
Machinery and equipment
Distribution system
Capacity rights
Total accumulated depreciation
Total capital assets, being depreciated, net
Total capital assets, net
Balance
July 1, 2016 Additions
$ 3,219,301 $ 43,377 $
3,378,700 -
937,748 1,056,849
7,535, 749 1,100,226
Balance
Deletions Transfers June 30, 2017
$ $ 3,262,678
3,378,700
(80,189) 1,914,408
(80,189) 8,555,786
11,007
-
11,007
2,355,844
74,345
(98,737)
(19,299)
2,312,153
39,228,318
258,940
80,189
39,567,447
323,190
-
-
323,190
41,918,359
333,285
(98,737)
60,890
42,213,797
(4,495)
(1,100)
-
-
(5,595)
(1,624,431)
(172,765)
98,737
19,299
(1,679,160)
(25,209,571)
(514,266)
-
-
(25,723,837)
(131,970)
(6,464)
-
-
(138,434)
(26,970,467)
(694,595)
98,737
19,299
(27,547,026)
14,947,892
(361,310)
-
80,189
14,666,771
$ 22,483,641
$ 738,916 $
- $
-
$ 23,222,557
29
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 5 — Capital Assets (Continued)
Summary of changes in capital assets for the year ended June 30, 2016 is as follows:
Capital assets, not depreciated
Land easements
Public works facilities right of use
Construction in progress
Total capital assets, not depreciated
Capital assets, being depreciated
Structures and improvements
Machinery and equipment
Distribution system
Capacity rights
Total capital assets, being depreciated
Less accumulated depreciation
Structures and improvements
Machinery and equipment
Distribution system
Capacity rights
Total accumulated depreciation
Total capital assets, being depreciated, net
Total capital assets, net
Note 6 — Compensated Absences
Balance
July 1, 2015 Additions
$ 3,047,151 $ 172,150 $
3,378,700 -
1,341,337 154,945 _
7,767,188 327,095
Balance
Deletions Transfers June 30, 2016
$ $ 3,219,301
3,378,700
_ (558,534) 937,748
(558,534) 7,535,749
11,007
-
Due within Due in More
Fiscal Year Balance
11,007
2,308,613
53,831
(6,600)
-
2,355,844
38,400,154
269,630
558,534
39,228,318
323,190
-
-
323,190
41,042,964
323,461
(6,600)
558,534
41,918,359
(3,395)
(1,100)
-
-
(4,495)
(2,001,691)
(238,635)
6,600
609,295
(1,624,431)
(24,170,927)
(429,349)
-
(609,295)
(25,209,571)
(125,506)
(6,464)
(131,970)
(26,301,519)
(675,548)
6,600
-
(26,970,467)
14,741,445
(352,087)
-
558,534
14,947,892
$ 22,508,633
$ (24,992) $
-
$ -
$ 22,483,641
Summary of changes in compensated absences for the years ended June 30, 2017 and 2016 is as
follows:
Beginning
Ending
Due within Due in More
Fiscal Year Balance
Additions Deletions Balance
One Year Than One Year
2016 -2017 $ 161,310
$ 131,111 $ (129,576) $ 162,845
$ 162,845 $
2015 -2016 148,064
293,833 (280,587) 161,310
161,310
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, 2017 and 2016. The balance outstanding of
$162,845 and $161,310 at June 30, 2017 and 2016, respectively, are classified as a current liability
because there are no restrictions on when employees may make use of their accrued vacation.
c
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 7 — Long -Term Debt
A summary of changes in long -term debt for the year ended June 30, 2017, is as follows:
A summary of changes in long -term debt for the year ended June 30, 2016, is as follows:
Balance
Balance
Due within
Due In More
July 1, 2016 Additions
Deletion
June 30, 2017
One Year
Than One Year
2007 Note Payable to R.E. Badger
Water Facilities Financing Authority
$ 4,715,000 $
$ (440,000)
$ 4,275,000
$ 455,000
$ 3,820,000
2014 Water Revenue Bonds
5,300,000
(585,000)
4,715,000
605,000
4,110,000
add: original issue premium
594,973
(74,371)
520,602
-
520,602
Total long -term obligation
$ 10,609,973 $
$ (1,099,371)
$ 9,510,602
$ 1,060,000
$ 8,450,602
A summary of changes in long -term debt for the year ended June 30, 2016, is as follows:
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.
The 2004 Bonds were fully refunded during fiscal year 2015 via issuance of the Water Revenue Refunding
Bonds, Series 2014.
31
Balance
Balance
Due within
Due In More
July 1, 2015 Additions
Deletion
June 30, 2016
One Year
Than One Year
2007 Note Payable to R.E. Badger
Water Facilities Financing Authority
$ 5,130,000 $
$ (415,000)
$ 4,715,000
$ 440,000
$ 4,275,000
2014 Water Revenue Bonds
5,870,000
(570,000)
5,300,000
585,000
4,715,000
add: original issue premium
669,345
(74,372)
594,973
-
594,973
Total long -term obligation
$ 11,669,345 $
$ (1,059,372)
$ 10,609,973
$ 1,025,000
$ 9,584,973
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.
The 2004 Bonds were fully refunded during fiscal year 2015 via issuance of the Water Revenue Refunding
Bonds, Series 2014.
31
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
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 requirements for the 2007 Note Payable to the R.E. Badger Water Facilities Financing
Authority outstanding at June 30, 2017 are as follows:
Year Ending
June 30
Principal
2018
$ 455,000
2019
475,000
2020
490,000
2021
525,000
2022
545,000
2023 -2025
1,785,000
Total
$ 4,275,000
2014 Water Revenue Refunding Bonds
Interest Total
$ 171,619
152,919
133,619
111,465
89,396
120,908
$ 779,926
$ 626,619
627,919
623,619
636,465
634,396
1,905,908
$ 5,054,926
On September 18, 2014, the District issued $5,870,000 of Water Revenue Refunding Bonds, Series 2014,
to defease and refund on a current basis, all of the outstanding 2004 Water Revenue Refunding Bonds.
The Bonds consist of serial bonds maturing from 2016 through 2024 in annual installments of $570,000 to
$755,000. Interest is due and payable semi - annually at rates ranging from 3.0% to 4.0 %. Annual debt
service is approximately $780,000 through 2024. The bonds are subject to federal arbitrage requirements.
The aggregate debt service payments of the new debt are $2,012,280 less than the old debt. The
issuance of the new debt and refunding of the old debt resulted in an economic gain (the difference
between the net present value of the old debt and new debt service payments) of approximately $780,873.
32
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 7 — Long -Term Debt (Continued)
2014 Water Revenue Refunding Bonds (Continued)
The annual debt service requirements for the 2014 Water Revenue Refunding Bonds outstanding at
June 30, 2016 are as follows:
Year Ending
June 30
Principal
Interest
Total
2018
$ 605,000
$ 167,225
$ 772,225
2019
625,000
148,775
773,775
2020
645,000
126,500
771,500
2021
665,000
100,300
765,300
2022
695,000
73,100
768,100
2023 -2025
1,480,000
59,800
1,539,800
Total
$ 4,715,000
$ 675,700
$ 5,390,700
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 years ended June 30, 2017 and June, 30,
2016, principal and interest paid were $1,401,319 and $1,398,544, respectively, net revenues available for
debt service were $3,273,387 and $3,991,511, respectively, resulting in debt service coverage ratios of
235% and 285 %, respectively.
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,
2017 and 2016, 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.
33
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS
Summary
Net Pension Liability
Net pension liability is reported in the Statement of Net Position as follows at June 30:
2017 2016
Net pension liability $ 6,288,631 $ 5,019,493
Total $ 6,288,631 $ 5,019,493
Deferred Outflows of Resources
Deferred outflows of resources are reported in the accompanying Statement of Net Position as follows at
June 30:
Pension contributions after the measurement date
Difference between expected and actual experience
Difference between projected and actual
earnings on pension plan investments
Employer contributions in excess of proportionate
share of contributions
Change in plan proportion
Total
2017 2016
$ 472,819 $ 598,690
11,600 17,389
740,965 $ -
13,320 -
301,343 224,552
$ 1,540,047 $ 840,631
Deferred Inflows of Resources
Deferred inflows of resources are reported in the accompanying Statement of Net Position as follows at
June 30:
Difference between projected and actual
earnings on pension plan investments
Employer contributions in excess of proportionate
share of contributions
Changes in assumptions
Change in plan proportion
Total
34
2017
26,007
142,365
2016
$ 82,471
40,455
164,511
$ 168,372 $ 287,437
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Summary (Continued)
Pension Expense
Pension expense is included in the accompanying Statement of Revenues, Expenses, and Changes in
Net Position as follows for the year ended June 30:
2017 2016
Pension Expense $ 923,486 $ 647,683
Total $ 923,486 $ 647,683
Plan Description
The SDWD Plan is a cost - sharing multiple employer defined benefit plan that provides retirement and
disability benefits, annual cost -of- living adjustments, and death benefits to members and beneficiaries, in
which the District participates with other public agencies that each have fewer than 100 active members
and share the same benefit formula. The Plan is administered by the California Public Employees'
Retirement System (CaIPERS), which acts as a common investment and administrative agent for its
participating member employers. Benefit provisions under the Plan are established by State statutes within
the Public Employee's Retirement Law. CalPERS issues publicly available reports that include a full
description of the pension plans regarding benefit provisions, assumptions and membership information
that can be found on the CalPERS website. Copies of the CalPERS annual financial report may be
obtained from the CalPERS Executive Office — 400 P Street, Sacramento, CA 95814.
Benefits Provided
The SDWD 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 years of age formula. In addition,
PEPRA created yet another benefit formula for new hires with no experience or prior service credit with
CalPERS. In the case of the District, 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.
35
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Employees Covered by Benefit Terms
At June 30, the following employees were covered by the benefit terms for the Plan:
Active employees
Inactive employees or beneficiaries currently
receiving benefits
Inactive employees entitled to, but not yet
receiving benefits
Total
Contributions
2017 2016
25 23
32 32
7 5
64 60
Section 20841(c) of the California Public Employees' Retirement Law (PERL) requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall be
effective on July 1 following notice of a change of the rate. The total plan contributions are determined
through CalPERS' annual actuarial valuation process. The Public agency cost - sharing plans covered by
the miscellaneous risk pools, the Plan's actuarially determined rate is based on the estimated amount
necessary to pay the Plan's allocated share of the risk pool's costs of benefits earned by employees
during the year, and any unfunded accrued liability. The employer is required to contribute the difference
between the actuarially determined rate and the contribution rate of employees.
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 %, and 6.25% of their annual covered salary, respectively. The employee contribution
requirements are established by State statute.
SDWD is required to contribute the actuarially determined remaining amounts necessary to fund the
benefits for its members (the "employer contributions "). The employer contribution rates for the year ended
June 30, 2016 for Tier 1, Tier 2, and PEPRA employees were 25.636 %, 6.682 %, and 6.223 %,
respectively. The employer contribution rates for the year ended June 30, 2015 for Tier 1, Tier 2, and
PEPRA employees were 16.691%, 0 %, and 0 %, respectively. 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.
0
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Contributions (Continued)
For the measurement period ended June 30, the Plan's proportionate share of aggregate employer
contributions made was as follows:
2017 2016
Contributions recognized as part of pension expense $ 356,509 $ 509,456
Pension Liabilities, Pension Expenses and Deferred Outflows /Inflows of Resources Related to
Pensions
As of June 30, the District reported net pension liabilities for its proportionate share of the net pension
liability of the SDWD Plan as follows:
Plan Total Plan Plan Net
Pension Fiduciary Pension
Liability Net Position Liability /(Asset)
Balance at: 6/30/15 (Valuation date) $ 21,378,148 $ 16,358,655 $ 5,019,493
Balance at: 6/30/16 (Measurement date) 21,875,339 15,586,708 6,288,631
Net changes during 2015 -2016 $ 497,191 $ (771,947) $ 1,269,138
Plan Total Plan Plan Net
Pension Fiduciary Pension
Liability Net Position Liability /(Asset)
Balance at: 6/30/14 (Valuation date) $ 22,268,743 $ 18,489,458 $ 3,779,285
Balance at: 6/30/15 (Measurement date) 21,378,148 16,358,655 5,019,493
Net changes during 2014 -2015 $ (890,595) $ (2,130,803) $ 1,240,208
The District's net pension liability for the SDWD Plan is measured as the proportionate share of the net
pension liability. The net pension liability of the Plan is measured as of June 30, 2016, and the total
pension liability for the Plan used to calculate the net pension liability was determined by an actuarial
valuation as of June 30, 2015 rolled forward to June 30, 2016 using standard update procedures. The
District's proportion of the net pension liability was based on a projection of the District's long -term share
of contributions to the pension plans relative to the projected contributions of all participating employers,
actuarially determined.
37
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows /Inflows of Resources Related to
Pensions (Continued)
The following is the approach established by the plan actuary to allocate the net pension liability and
pension expense to the individual employers within the risk pool.
(1) In determining a cost - sharing plan's proportionate share, total amounts of liabilities and assets are
first calculated for the risk pool as a whole on the valuation date (June 30, 2014). The risk pool's
fiduciary net position ( "FNP ") subtracted from its total pension liability ( "TPL ") determines the net
pension liability ( "NPL ") at the valuation date.
(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the
measurement date (June 30, 2016). Risk pool FNP at the measurement date is then subtracted
from this number to compute the NPL for the risk pool at the measurement date. For purposes of
FNP in this step and any later reference thereto, the risk pool's FNP at the measurement date
denotes the aggregate risk pool's FNP at June 30, 2016 less the sum of all additional side fund (or
unfunded liability) contributions made by all employers during the measurement period (2015 -16).
(3) The individual plan's TPL, FNP and NPL are also calculated at the valuation date.
(4) Two ratios are created by dividing the plan's individual TPL and FNP as of the valuation date from
(3) by the amounts in step (1), the risk pool's total TPL and FNP, respectively.
(5) The plan's TPL as of the Measurement Date is equal to the risk pool TPL generated in (2)
multiplied by the TPL ratio generated in (4). The plan's FNP as of the Measurement Date is equal
to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side
fund (or unfunded liability) contributions made by the employer on behalf of the plan during the
measurement period.
(6) The plan's NPL at the Measurement Date is the difference between the TPL and FNP calculated in
(5).
The District's proportionate share of the net pension liability for each SDWD Plan as of the measurement
date June 30 was as follows:
Proportion June 30, 2015
Proportion June 30, 2016
Change - Increase (Decrease)
Proportion June 30, 2014
Proportion June 30, 2015
Change - Increase (Decrease)
0.0018296%
0.0018103%
0.0000193%
0.0607400%
0.0018296%
0.0589104%
For the years ended June 30, 2017 and 2016, the District recognized pension expense of $923,486 and
$647,683, respectively, for the SDWD Plan.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows /Inflows of Resources Related to
Pensions (Continued)
At June 30 the District reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Contribution made after the measurement date
Difference between expected and actual
experience
Changes of assumptions
Net difference between projected and actual
earnings on pension plan investments
Difference between employer's actual contributions
and proportionate share of contributions
Adjustments due to difference in proportions
Total
June 30, 2017 June 30, 2016
Deferred outflows Deferred inflows Deferred outflows Deferred inflows
of Resources of Resources of Resources of Resources
$ 472,819 $ $ 598,690 $
11,600 17,389
- (142,365) - (164,511)
740,965 (82,471)
13,320 (26,007) - (40,455)
301,343 224,552
$ 1,540,047 $ (168,372) $ 840,631 $ (287,437)
The $598,690 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended June 30,
2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related
to pensions will be recognized as pension expense as follows:
Measurement Period
Ended June 30
2018
$
176,947
2019
148,909
2020
381,091
2021
191,909
Thereafter
-
$
898,856
Measurement Period
Ended June 30
2016
$
564,703
2017
(42,631)
2018
(74,297)
2019
105,419
2020
-
Thereafter
-
$
553,194
c
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
For the measurement period ended June 30, 2016 and 2015 (the measurement dates), the total pension
liability was determined by rolling forward the June 30, 2015 and 2014 total pension liability determined in
the June 30, 2015 and June 30, 2014 actuarial accounting valuations, respectively. The June 30, 2016
and June 30, 2015 total pension liabilities were based on the following actuarial methods and
assumptions:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Entry Age Normal
7.65%
2.75%
Varies by Entry Age and Service
7.65% Net of Pension Plan Investment and Administrative
Expenses; includes inflation
Mortality Rate Table' Derived using CaIPERS' Membership Data for all Funds. The
mortality table used was developed based on CaIPERS' specific
data. The table includes 20 years of mortality improvements
using Society of Actuaries Scale BB.
Post Retirement Benefit Increase Contract COLA up to 2.75% until Purchasing Power Protection
Allowance Floor on Purchasing Power applies, 2.75%
thereafter.
The mortality table used was developed based on CaIPERS' specific data. The table includes 20 years of
mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to
CaIPERS' 2015 Experience Study report.
All other actuarial assumptions used in the June 30, 2015 and June 30, 2014 valuations were based on
the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary
increase, mortality and retirement rates. The Experience Study report can be obtained at CaIPERS'
website under "Forms and Publications."
Change of Assumption
In accordance with GASB 68, the long -term expected rate of return should be determined net of pension
plan investment expense but without reduction for pension plan administrative expense. The discount rate
was changed from 7.5% (net of administrative expense in 2014) to 7.65% as of the June 30, 2015
measurement date to correct the adjustment which previously reduced the discount rate for administrative
expenses.
40
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Discount Rate
The discount rate used to measure the total pension liability as of the June 30, 2016 and June 30, 2015
measurement dates was 7.65 and 7.65 (net of administrative expenses) percent, respectively. To
determine whether the municipal bond rate should be used in the calculation of a discount rate for each
plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different
from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of
assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the municipal bond
rate calculation is not necessary. The long term expected discount rate of 7.65 percent is applied to all
plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report
called "GASB Crossover Testing Report" that can be obtained at CaIPERS' website under the GASB 68
section.
According to Paragraph 30 of Statement 68, the long -term discount rate should be determined without
reduction for pension plan administrative expense. The 7.65 percent investment return assumption used in
this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15
basis points. An investment return excluding administrative expenses would have been 7.65 percent.
Using this lower discount rate has resulted in a slightly higher total pension liability and net pension
liability.
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability
Management review cycle that is scheduled to be completed in February 2018. Any changes to the
discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS
expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations
through at least the 2017 -18 fiscal year. CalPERS will continue to check the materiality of the difference in
calculation until such time as we have changed our methodology.
The long -term expected rate of return on pension plan investments was determined using a building -block
method in which best - estimate ranges of expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed for each major asset class.
In determining the long -term expected rate of return, staff took into account both short -term and long -term
market return expectations as well as the expected pension fund cash flows. Such cash flows were
developed assuming that both members and employers will make their required contributions on time and
as scheduled in all future years. Using historical returns of all the funds' asset classes, expected
compound (geometric) returns were calculated over the short -term (first 10 years) and the long -term (11-
60 years) using a building -block approach. Using the expected nominal returns for both short -term and
long -term, the present value of benefits was calculated for each fund. The expected rate of return was set
by calculating the single equivalent expected return that arrived at the same present value of benefits for
cash flows as the one calculated using both short -term and long -term returns. The expected rate of return
was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest
one quarter of one percent.
41
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 - Public Employees Retirement System - CalPERS (Continued)
Discount Rate (Continued)
The table below reflects long -term expected real rate of return by asset class. The rate of return was
calculated using the capital market assumptions applied to determine the discount rate and asset
allocation. These geometric rates of return are net of administrative expenses.
The long -term expected real rate of return by asset class for the measurement period ended June 30,
2016 was as follows:
Asset Class
Global equity
Global fixed income
Inflation sensitive
Private equity
Real estate
Infrastructure and forestland
Liquidity
An expected inflation of 2.5% was used for this period.
2 An expected inflation of 3.0% was used for this period.
New Strategic
Real Return
Real Return Years
Allocation
Years 1 - 10
11 + 2
47.00%
5.25%
5.71%
19.00%
0.99%
2.43%
6.00%
0.45%
3.36%
12.00%
6.83%
6.95%
11.00%
4.50%
5.13%
3.00%
4.50%
5.09%
2.00%
-0.55%
-1.05%
The long -term expected real rate of return by asset class for the measurement period ended June 30,
2015 was as follows:
Asset Class
Global equity
Global fixed income
Inflation sensitive
Private equity
Real estate
Infrastructure and forestland
Liquidity
An expected inflation of 2.5% was used for this period.
2 An expected inflation of 3.0% was used for this period.
New Strategic
Real Return
Real Return Years
Allocation
Years 1 - 10
11 + 2
50.00%
5.25%
5.71%
17.00%
0.99%
2.43%
4.00%
0.45%
3.36%
14.00%
6.83%
6.95%
11.00%
4.50%
5.13%
0.00%
4.50%
5.09%
4.00%
-0.55%
-1.05%
42
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 9 — Public Employees Retirement System — CalPERS (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the District's proportionate share of the net pension liability for each SDWD Plan,
calculated using the discount rate for each SDWD Plan, as well as what the District's proportionate share
of the net pension liability would be if it were calculated using a discount rate that is one percentage point
lower or one percentage point higher than the current rate:
Measurement
Date
June 30, 2016
Plan's Net Pension Liability /(Asset)
Discount Rate - 1% Current Discount Discount Rate + 11/
(6.65 %) Rate (7.65 %) (8.65 %)
$ 9,233,733 $ 6,288,631 $ 3,854,650
Plan's Net Pension Liability /(Asset)
Measurement Discount Rate - 1% Current Discount Discount Rate + 11y
Date (6.65 %) Rate (7.65 %) (8.65 %)
June 30, 2015 $ 8,418,040 $ 5,019,493 $ 2,213,598
Pension Plan Fiduciary Net Position
Detailed information about the plan's fiduciary net position is available in the separately issued CalPERS
financial report and can be obtained from CalPERS website under Forms and Publications.
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, 2015, and applies to fiscal years 2015 -16 and 2016-
17.
Plan Description
The District provides OPEB benefits (postretirement health care) through the CalPERS healthcare
program ( PEMHCA), to eligible employees who retire directly from the District. Retirees receive the
PEMHCA minimum benefit as determined by CalPERS. 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.
43
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 10 — Other Postemployment Benefits (Continued)
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.
The following key assumptions were utilized in developing the June 30, 2015 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 7.28 %.
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, 2017 and 2016 of $52,780 and $28,794, 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.
44
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 10 — Other Postemployment Benefits (Continued)
Annual Required Contribution (ARC) and OPEB Cost Summary (Continued)
The annual OPEB costs, the percentage of annual OPEB cost contributed, and the resulting net OPEB
obligation for the preceding three years were as follows:
Fiscal Year
June 30, 2015
June 30, 2016
June 30, 2017
Annual
OPEB Cost
$ 29,000
28,794
52,780
Funding Status and Funding Progress
Percentage of
Annual OPEB Cost
APC Contributed
100%
100%
100%
Net OPEB
Obligation
As of June 30, 2015, the most recent actuarial valuation date, the actuarial accrued liability for benefits
was $484,247, and the actuarial value of assets was $111,363, resulting in an unfunded actuarial liability
( "UAAL ") of $372,884 and a funded ratio (actuarial value of assets as a percentage of the actuarial liability)
of 23 %.
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.
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.)
Management has determined, based on modest self- insurance retention levels and favorable claims
experience, that no liability accruals were necessary. The District has no outstanding claims as of June 30,
2017, and did not pay any claims during the fiscal year.
45
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, 2015
$ 111,363 $
484,247
$ 372,884
23.00% $ 1,767,898
21.09%
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.)
Management has determined, based on modest self- insurance retention levels and favorable claims
experience, that no liability accruals were necessary. The District has no outstanding claims as of June 30,
2017, and did not pay any claims during the fiscal year.
45
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2017 and 2016
Note 12 — Prior Period Adjustment
The City recorded the following prior period adjustment to the beginning net position of the Business- Type
Activities and the San Dieguito Water District ( "SDWD ") major enterprise fund in order to remove restricted
cash and investments with fiscal agents and the Due to R.E. Badger liability in the same amount. Cash in
the amount of $1,377,006 was originally thought to be held by the City, but in actuality was held by R.E.
Badger Financing Authority. The amount previously reported is a reserve account for Santa Fe Irrigation
District and is not associated with SDWD's portion of the reserve. SDWD's portion of the reserve is
included and reported in Investment in Joint Ventures.
Net position at July 1, 2016, as previously reported $ 43,500,246
To adjust restricted cash (1,377,006)
to adjust amount due to R.E. Badger 1,377,006
Net position at July 1, 2016, as restated
Net position at July 1, 2015, as previously reported
To adjust restricted cash
to adjust amount due to R.E. Badger
Net position at July 1, 2015, as restated
46
$ 43,500,246
$ 41,024,956
(1,377,006)
1,377,006
$ 41,024,956
REQUIRED
SUPPLEMENTARY
INFORMATION
(UNAUDITED)
San Dieguito Water District, 505 So. Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
47
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48
San Dieguito Water District
Required Supplementary Information (Unaudited)
For the Years Ended June 30, 2017 and 2016
Note 1 — Schedule of Funding Progress
A. Defined Benefits Pension Plans
As of the actuarial valuation date of June 30, 2015, the District's miscellaneous plans became part of a
CalPERS Risk Pool for employers with less than 100 active plan members. As part of a cost - sharing
multiple - employer defined benefit plan, disclosure of the schedule of funding progress is not required.
B. Other Postemployment Employee Benefits Schedule of Funding Progress
49
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, 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%
June 30, 2015
111,363
484,247
372,884
23.00%
1,767,898
21.09%
49
San Dieguito Water District
Required Supplementary Information (Unaudited) (Continued)
For the Years Ended June 30, 2017 and 2016
Note 2 — Schedule of Proportionate Share of the Net Pension Liability and Related Ratios
Plan's proportion of the net pension liabliity
Plan's proportionate share of the net pension liability
Plan's covered - employee payroll 2
Plan's proportionate share of the net pension liability as a
percentage of covered - employee payroll
Plan's fiduciary net position
Plan's fiduciary net position as a percentage of the total
pension liability
Plan's proportionate share of aggregate employer contributions 3,4
6/30/20161 6/30/20151 6/30/2014 1
0.0018103% 0.0018296% 0.0006074%
$ 6,288,631 $ 5,019,493 $ 3,779,285
$1,808,714 $ 1,756,033 $ 1,712,639
347.69% 285.84% 220.67%
$ 15,586,708 $ 16,358,655 $ 18,489,458
71.25% 76.52% 83.03%
$ 356,509 $ 565,860 $ 499,985
Notes to Schedule:
Benefit changes. In 2015, benefit terms were modified to base miscellaneous employee pensions on a final three -year average salary
instead of a final five -year average salary.
Changes in assumptions. In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement
ages of miscellaneous employees.
* - Fiscal year 2015 was the first year of implementation, therefore only three years are shown.
Historical information is presented only for measurement periods for which GASB 68 is applicable.
2 Covered- Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68 defines
covered - employee payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionable
earnings are different than total earnings for covered - employees, the employer should display in the disclosure footnotes the payroll based on
total earnings for the covered group and recalculate the required payroll - related ratios.
3 The plan's proportionate share of aggregate contributions may not match the actual contributions made by the employer during the
measurement period. The plan's proportionate share of aggregate contributions is based on the plan's proportion of fiduciary net position
shown on line 5 of the table above as well as any additional side fund (or unfunded liability) contributions made by the employer during the
measurement period.
4 This data is not required to be displayed by GASB 68 for employers participating in cost - sharing plans, but it is being shown here because it
is used in the calculation of the Plan's pension expense.
:11
San Dieguito Water District
Required Supplementary Information (Unaudited) (Continued)
For the Years Ended June 30, 2017 and 2016
Note 3 — Schedule of Contributions
Contractually determined contribution (actuarially determined)
Contributions in relation to the actuarially determined contributions z
Contribution deficiency (excess)
Covered - employee payroll 3, 4
Contributions as a percentage of covered -
employee payroll 3
2016-171 2015 -16
$ 472,819 $ 356,509 $
(472,819) (598,690)
2014-151 2013-141
271,845 $ 241,133
(271,845) (241,133)
$ - $ (242,181) $ - $ -
$ 1,862,975 $ 1,808,714 $ 1,756,033 $ 1,712,639
25.38% 33.10% 15.48% 14.08%
1 Historical information is presented only for measurement periods for which GASB 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make additional
contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions.
3 Covered - Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB 68 defines covered - employee
payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionable earnings are different than total earnings
for covered - employees, the employer should display in the disclosure footnotes the payroll based on total earnings for the covered group and recalculate the
required payroll - related ratios.
4 Payroll from prior year was assumed to increase by the 3.00% payroll growth assumption.
Notes to Schedule
Valuation date:
6/30/2015 6/30/2014 6/30/2013
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2013 -14 were from the June 30, 2011 public agency
valuations.
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method /period
Asset valuation method
Inflation
Salary increases
Payroll growth
Investment rate of return
Retirement age
Mortality
Entry Age Normal
For details, see June 30, 2011 Funding Valuation Report
Actuarial Value of Assets. For details, see June 30, 2011
Funding Valuation Report.
2.75%
Varies by entry age and service
3.00%
7.50 %, net of pension plan investment and administrative
expenses, including inflation
The probabilities of retirement are based on the 2010
CalPERS Experience study for the period from 1997 to
2007.
The probabilities of mortality are based on the 2010
CalPERS Experience Study for the period from 1997 to
2007. Pre - retirement and Post - retirement mortality rates
include 5 years of projected mortality improvement using
Scale AA published by the Society of Actuaries.
* - Fiscal year 2015 was the first year of implementation, therefore only two years are shown.
51
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52
STATISTICAL
SECTION
San Dieguito Water District, 505 So. Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
53
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54
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.
55
Table 1
San Dieguito Water District
Schedule of Water Rates
As of June 30, 2017
Customer Class Residential Rate Tier
Single- family residential
0 -12 units
13 -20 units
San Dieguito Water District
21 -40 units
41+ units
Multi- family residential (per dwelling)
0 -8 units
9 -12 units
13 -16 units
17+ units
Agriculture
Uniform
Commercial
Uniform
Government
Uniform
Public
Uniform
Landscaping
Uniform
Construction
Uniform
(1) Per Unit (one hundred cubic feet or 748 gallons)
Source: San Dieguito Water District
Potable
2.81
4.46
5.51
6.28
2.81
4.46
5.51
6.28
4.78
4.78
5.23
5.23
5.51
5.61
Rate (1)
Recycled
4.06
4.06
4.44
4.44
4.68
4.76
(2) San Dieguito Water District 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 Intrastructure Access
Charge is levied by the San Diego County Water Authority and is collected from the customer by the District.
Source: San Dieguito Water District
6^'.
Table 2
San Dieguito Water District
Bi- Monthly
Meter Service Availability Charges (2)
As of June 30, 2017
Water Meter Service
Infrastructure
Fire Meter Service
Availability
Access
Availability
Meter Size
Charge
Charge
Charge
5/8" & 3/4"
$ 39.82
$ 5.74
$ 8.47
1"
58.63
9.18
8.47
1-1/2"
105.24
17.22
9.55
2"
161.40
29.84
16.65
3"
292.52
55.10
42.12
4"
479.81
94.13
86.04
6"
947.59
172.20
243.69
8"
1,509.16
298.48
515.61
(2) San Dieguito Water District 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 Intrastructure Access
Charge is levied by the San Diego County Water Authority and is collected from the customer by the District.
Source: San Dieguito Water District
6^'.
Table 3
San Dieguito Water District
Historic Potable Water System Revenues
Last Ten Fiscal Years
Meter
Fiscal Potable Percentage Availability Percent
Year Water Sales Change (3) Charge Change (3)
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%
2015
9,728,434
-8.6%
3,415,227
5.8%
2016
9,503,108
-2.3%
3,503,933
2.6%
2017
9,467,085
-0.4%
3,544,758
1.2%
(3) Due to the varying number of billing cycles in a fiscal year, changes year- over -year may not be exactly
comparable.
Source: San Dieguito Water District
-r-L.1- A
San Dieguito Water District
Historic Recycled Water System Revenues
Last Ten Fiscal Years
Meter
Fiscal Recycle Percent Availability Percent
Year Water Sales Change Charges (4) Change
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
2015
648,398
40.8%
80,585
34.2%
2016
702,301
8.3%
85,149
5.7%
2017
716,826
2.1%
78,732
-7.5%
(4) The District first implemented a meter availability charge for recycled customers on September 1, 2013.
Source: San Dieguito Water District
57
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
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
5,598
6,734
692
7,426
2015
603
5,726
6,329
736
7,065
2016
1,400
3,839
5,239
628
5,867
2017
1,446
3,984
5,430
654
6,084
(5) Potable water
production is defined as water either
produced locally
or purchsed from imported
sources (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
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%
2015
6,134
-4.9%
736
6.4%
2016
5,112
-16.7%
628
-14.7%
2017
5,287
3.4%
654
4.1%
(6) Since 2012 Recycled Water Production and Delivery figures are revised to include water provided to the
Encinitas Ranch Golf Authority (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 figures as ERGA
falls within the District's sphere of influence.
Note: 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.
Source: San Dieguito Water District
58
Table 7
San Dieguito Water District
Sales by Customer Class
As of June 30, 2017
Source: San Dieguito Water District
Table 8
San Dieguito Water District
Total Service Connections by Category
Last Ten Fiscal Years
Fiscal
Acre -Feet
Percent of
Customer Description
Sold
Water Sold
Agriculture
175
3.3%
Commercial
509
9.6%
Construction
15
0.3%
Government
22
0.4%
Landscaping
378
7.1%
Multi - Family Residential
1127
21.3%
Public
122
2.3%
Single - Family Residential
2939
55.6%
Total Sales
11,476
o
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
Increase
Recycled
Increase
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%
2015
11,644
0.3%
81
5.2%
2016
11,721
0.7%
82
1.2%
2017
11,740
0.2%
87
6.1%
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.
59
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
San Dieguito Water District
2008 2009 2010 2011 2012
Revenues:
Operating revenues - including connection fees
Non - operating revenues
Gross Revenues
Total Operating & Non - Operating Expenses
Net Income
Add back........
Interest expense
Depreciation and amortization expense
Net Revenues Available for Debt Service
Less: Debt Service Paid
1999 Badger Bonds - Interest Charges
1999 Badger Bonds - Principal Payments
280,000
2004 Water Revenue Refunding Bonds -
Interest Charges
2004 Water Revenue Refunding Bonds -
Principal Payments
2007 Note Payble to Financing Authority
- Interest Charges
2007 Note Payble to Financing Authority
- Principal Payments
2014 Water Revenue Refunding Bonds -
Interest Charges
2014 Water Revenue Refunding Bonds -
Principal Payments
Total Debt Service
595,000
Coverage by Net Revenues Available for Debt Service
$ 11,468,569 $ 11,521,897 $ 11,267,684 $ 12,574,450 $ 13,170,422
1,464,949 1,129,594 879,477 817,872 813,610
12,933,518 12,651,491 12,147,161 13, 392, 322 13,984, 032
12, 366,526 12,955, 085 11,634, 347 11,614,631 12,448,911
566,992 (303,594) 512,814 1,777,691 1,535,121
830,953 803,748 749,704 725,936 698,908
2,250,919 2,217,274 1,213,640 1,196,007 1,294,904
3,648,864 2,717,428 2,476,158 3,699,634 3,528,933
148,992
280,000
-
-
-
-
497,181
485,769
469,269
452,244
433,950
530,000
540,000
560,000
575,000
595,000
167,780
290,748
265,157
281,494
270,352
-
360,000
335,000
350,000
365,000
$ 1,623,953
$ 1,676,517
$ 1,629,426
$ 1,658,738
$ 1,664,302
225% 162% 152% 223% 212%
Debt service coverage requirement is minimum 115% including connection fees. The above schedules include connection fees in operating revenues.
Source: City of Encinitas Finance Department 60
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
(Continued)
San Dieguito Water District
Revenues:
Operating revenues - including connection fees
Non - operating revenues
Gross Revenues
Total Operating & Non - Operating Expenses
Net Income
Add back........
Interest expense
Depreciation and amortization expense
Net Revenues Available for Debt Service
Less: Debt Service Paid
380,731
1999 Badger Bonds - Interest Charges
1999 Badger Bonds - Principal Payments
615,000
2004 Water Revenue Refunding Bonds -
Interest Charges
2004 Water Revenue Refunding Bonds -
Principal Payments
2007 Note Payble to Financing Authority
- Interest Charges
2007 Note Payble to Financing Authority
- Principal Payments
2014 Water Revenue Refunding Bonds -
Interest Charges
2014 Water Revenue Refunding Bonds -
Principal Payments
Total Debt Service
440,000
Coverage by Net Revenues Available for Debt Service
2013 2014 2015 2016 2017
$ 13,789,636 $ 15,715,575 $ 15,152,433 $ 14,852,061 $ 15,142,544
869,568 827,676 927,526 1,013,297 1,048,764
14,659,204 16,543,251 16, 079,959 15, 865, 358 16,191, 308
12,198,228 14, 066,485 15,481,543 13, 800,671 14,263,288
2,460,976 2,476,766 598,416 2,064,687 1,928,020
657,963 622,075 475,775 412,108 366,740
1,476,044 1,490,806 2,271,907 1,514,716 978,627
4,594,983 4,589,647 3,346,098 3,991,511 3,273,387
408,906
380,731
144,720
615,000
640,000
665,000
-
-
256,744
241,344
224,994
211,144
191,244
375,000
385,000
405,000
415,000
440,000
-
-
106,061
202,400
185,075
-
-
-
570,000
585,000
$ 1,655,650
$ 1,647,075
$ 1,545,775
$ 1,398,544
$ 1,401,319
278%
279%
216%
285%
234%
Debt service coverage requirement is minimum 115% including connection fees. The above schedules include connection fees in operating revenues.
Source: City of Encinitas Finance Department 61
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RVA