OPERATING & NON-OPERATING BUDGETS Rancho California Water District



2011–2012 July 1, 2011 – June 30, 2012 UDGET B

42135 Winchester Rd./Box 9017 Temecula, CA 92590

OPERATING & NON-OPERATING BUDGETS FISCAL YEAR 2011 ~ 2012 ADOPTED JUNE 9, 2011

Board of Directors Lawrence M. Libeu, President John E. Hoagland, Sr. Vice President Stephen J. Corona Bennett R. Drake Lisa D. Herman William E. Plummer Roland C. Skumawitz

Executive Management Matthew G. Stone, General Manager Richard S. Williamson, Assistant General Manager Jeffrey D. Armstrong, Chief Financial Officer/Treasurer Andrew L. Webster, Chief Engineer

RANCHO CALIFORNIA WATER DISTRICT FISCAL YEAR 2011-2012 ADOPTED BUDGET TABLE OF CONTENTS Page

Distinguished Budget Presentation Award ...... 1 General Manager’s Budget Message ...... 2

INTRODUCTION

About the District ...... 6 Government ...... 7 Vicinity Map ...... 8 Organizational Structure ...... 9

BUDGET PROCESS ...... 11 Budget Calendar ...... 14 Budget Organization ...... 16

FINANCIAL POLICIES ...... 17-21

DEMOGRAPHIC SUMMARY ...... 22 Community Profile ...... 23-27

STRATEGIC PLANNING ...... 28 District Goals and Objectives ...... 29 District Mission and Values ...... 31

OPERATING BUDGET

Rate Design Structure Rate Setting Philosophy ...... 32 Cost and Revenue Categories ...... 33

Operational Factors Operating Revenues ...... 34 Water Rates and Sales ...... 34 Monthly Service Charges ...... 35 Sources of Water ...... 36 Existing Water Utility Facilities ...... 41 Wastewater Utility Operations ...... 42 Insurance ...... 42

Statements Consolidated Operating Budget ...... 43 Major Operating Revenue ...... 45-48 Major Operating Expenditures ...... 49-53 Rancho Division Operating Budget ...... 54 Santa Rosa Division Operating Budget ...... 56 Resource Division Operating Budget ...... 58 Wastewater Division Operating Budget ...... 60

Footnotes Footnote #1-Summary of Significant Budgeting Policies ...... 61 Footnote #2-User Rates ...... 61 Footnote #3-New Service Connections ...... 64 Footnote #4-Water Cost ...... 64 Footnote #5-Overhead Allocations ...... 65 Footnote #6-Wastewater Operations ...... 66 RANCHO CALIFORNIA WATER DISTRICT FISCAL YEAR 2011-2012 ADOPTED BUDGET TABLE OF CONTENTS

Rates and Fees Rancho Division Water & Energy Rates ...... 67 Santa Rosa Division Water & Energy Rates ...... 68 Monthly Service Charges ...... 69 Construction & Non-Potable Water Rates ...... 69 Fee for Service Schedule ...... 70-72

Five Year Operating Forecast Operating Reserve Fund ...... 73-78

Fund Structure ...... 79

Divisional Plans District Organizational Chart ...... 81-82 Personnel Staffing Levels ...... 84 Administration Division ...... 86-94 Finance Division ...... 95-108 Planning Division ...... 109-115 Engineering Division ...... 116-129 Operations Division ...... 130-140 Field Services Division ...... 141-148

NON-OPERATING BUDGET

Long-Range Capital Financing Plan Objectives ...... 149 Water Facilities ...... 149 Restructuring of District Debt ...... 155 Debt Policies and Administration ...... 156 Water Facilities – Rate Recommendations ...... 158 Wastewater Facilities – Rate Recommendations ...... 159 Water Reclamation, Treatment and Distribution Facilities ...... 160

Capital Projects ...... 161 10 Largest Capital Project Expenditures ...... 162 Summary of Capital Improvement Projects ...... 163-164 Capital Expenditures Summary ...... 165 Capital Expenditures Funding ...... 165 Capital Projects ...... 166-171

Capital Acquisitions ...... 172 Capital Acquisition Budget ...... 173-174

Rates and Fees Non-Operating Water & Wastewater Rates Summary ...... 175 Schedule of Ad Valorem Assessments & Standby Charges ...... 176 Schedule of Water & Wastewater Capacity Fees ...... 177 Statements Consolidated Non-Operating Budget ...... 178 Major Non-Operating Revenue...... 179-182 Major Non-Operating Expenditures ...... 183-185 Rancho Division Long-Range Capital Financing Plan ...... 187-193 Santa Rosa Division Long-Range Capital Financing Plan ...... 194-200 SRWRF Division Long-Range Capital Financing Plan ...... 207-207

Appendix A - Capital Improvement Projects Location Map/Descriptions ...... 209-220 Glossary...... 222 RANCHO CALIFORNIA WATER DISTRICT FISCAL YEAR 2011-2012

The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to RANCHO CALIFORNIA WATER DISTRICT for its Annual Budget beginning July 1, 2010. In order to receive this award, a government unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communication device. The award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. This is the 3rd consecutive year that the District has achieved this prestigious award.

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June 9, 2011

Rancho Board of Directors Rancho California Water District Water lease accept my transmittal to you of the Rancho California Water District’s Fiscal Year 2011-2012 Operating and Non-Operating Budgets in Board of Directors the amount of $118,949,034. This budget document provides detailed P Lawrence M. Libeu information about the District’s revenue and expenditure forecast in the coming President year and addresses the main points and major decisions made in compiling the

John E. Hoagland budget. Sr. Vice President The District with the participation of the Board of Directors annually reviews its Stephen J. Corona strategic goals and objectives. The results of the strategic planning process guide Ben R. Drake staff in its efforts to accomplish the mission of the District. Strategic goals and Lisa D. Herman objectives were considered during the budget development process this year to William E. Plummer provide the basis for prioritizing efforts, activities, needs, human resources and

Roland C. Skumawitz financial resources.

Officers Certain challenges from the previous year will carry over to this fiscal year. Some

Matthew G. Stone of these challenges include the continued downturn in the housing market from General Manager the hyper-growth levels during the last decade, continued increasing cost of Richard S. Williamson, P.E. goods and supplies, most significant of which is the increasing cost of import Assistant General Manager water, and finally the local economic climate for commerce and agriculture. Jeffrey D. Armstrong Chief Financial Officer/Treasurer While all of these challenges continue it does appear that most of these have

N. Craig Elitharp, P.E. leveled off. The District has reflected in its fiscal year 2011-2012 budget these Director of Operations & economic conditions. Maintenance

Perry R. Louck On June 4, 2008, Governor Schwarzenegger declared a drought in California. This Director of Planning came following two years of below average rainfall, very low snowmelt runoff,

Andrew L. Webster, P.E. and court ordered water pumping restrictions imposed to protect endangered Chief Engineer fish in the Sacramento/San Joaquin Delta. On March 30, 2011, Governor Jerry Kelli E. Garcia Brown declared the end of the California drought due to the state’s improved District Secretary hydrologic condition—the Sierra Nevada snow pack levels and rainfall amounts James B. Gilpin Best Best & Krieger LLP are above normal, and storage in the state’s reservoirs has increased. General Counsel While the removal of the state drought is good news for California there are still ongoing water supply issues. The regulatory restrictions to protect endangered species in the Delta still remain. Additionally, the Colorado River has experienced 10 years of sustained drought, and although this last winter was significantly wetter it has not fully restored the depleted reservoir storage in this important water resource for Southern California and the entire Southwest. RCWD customers will need to continue to be water efficient regardless of weather conditions. Given our semi-arid climate and our reliance on imported water for a significant portion of our water supply, it is the prudent course to take. Further, in November 2009, the State of California enacted legislation requiring all water suppliers to increase water-use efficiency. The legislation sets an overall goal of reducing per capita urban water use by 20% by the year 2020.

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Rancho California Water District 42135 Winchester Road • Post Office Box 9017 •Temecula, California 92589-9017 • (951) 296-6900 •FAX (951) 296-6860 It is important for all water users in Southern California to continue to use water wisely, and to implement additional efficiencies in order to minimize the effects of future droughts. As a result of the above, a trend of lower water demand has developed over the last few years. The fiscal year 2011-2012 forecast reflects this trend with a budgeted decrease in demand by 9,403 acre feet or 13.3% from the previous year. The decrease is across all customer categories. Because the cost of producing water is the single greatest expense the District incurs, 57.4% of the operating budget, a decrease in demand of this amount will result in a lower overall operating budget then the previous year. Therefore, the proposed total operating budget for the 2011-2012 fiscal year decreased by $5,354,055 or 7.9% over the 2010-2011 budget. While lower demand will result in a lower total operating budget, increased costs are still being incurred. The cost of imported water will be 7.5% over the prior year, increased energy costs of 3% are also occurring, increased system maintenance costs, and increased employee benefit costs together total a $2,554,365 increase over the prior year. The table below is presented to help illustrate the operating budget change for fiscal year 2011-2012. Prior year 2010-2011 Budget $67,865,136 Savings from reduced Import Quantity Req. ($7,908,420) 2010-2011 Budget For Reduced Demand $59,956,716 Additional Cost from Increased Import Water Rates $1,806,137 Additional Cost from All Other Categories $748,228 Proposed 2011-2012 Budget $62,511,081 The District anticipates achieving an increase in the amount of local water production over the prior year of 1,976 acre-feet. This will help partially mitigate the impact of the imported water costs increases as local water is the lowest cost water supply. The net decrease in source of supply expense is $5,889,326 or 14.1% over the prior year, and is a result of overall demands, greater local water supply, but import water purchase at a higher per unit rate. Looking forward a few years, additional cost pressures will continue to occur in the source of supply category as it is anticipated that MWD rates will increase 7.5% in September 2011 and then averaging 5% annually over the following three years. Energy expense represents another significant component of the total operating budget amounting to approximately 10.8%. Over the last year and a half the District’s operating staff has been modifying its pumping strategies. This effort resulted in shifting from on-peak energy rate run times to off-peak periods, thereby reducing the total energy expense. The District also constructed a 1 megawatt solar project to provide power to the Wastewater Treatment Plant. While it is anticipated that energy rates will increase 3.0%, these efforts coupled with lower demand projections resulted in the reduced energy expense budget by $333,563 or 4.7% for fiscal year 2011-2012.

The District operates with a staff of 149 employees which is a reduction of one from 2010-2011 and a labor budget that accounts for 18.6% of the total operating budget. Due to the water industry facing greater challenges associated with supply availability, rising costs, and the current condition of the local economy the District proposes to restructure staff rather than increasing its workforce in an effort to better meet these changed conditions and continue its commitment to providing quality services to the customers of RCWD. As previously mentioned, the State’s current water supply conditions have adversely affected the District’s service area. An important way the District and its customers can help reduce costs and preserve our water supply is through conservation and water use efficiency. Every drop of water

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Rancho California Water District 42135 Winchester Road • Post Office Box 9017 •Temecula, California 92589-9017 • (951) 296-6900 •FAX (951) 296-6860 saved directly reduces the amount of water produced from the most expensive supply source. Import water costs 500% more than the local water supply to produce. So by using water wisely every customer can help reduce costs and keep water rates lower. With this in mind, the District has embarked on several efforts to help create incentives for customers to conserve and become more efficient. Since September 2004, the District has conducted Targeted Water Conservation evaluations for 2,490 water customers with consumption greater than 200% of their customer class average. The program has served as the foundation for other grant funded water- use efficiency programs. The District offers rebates or assistance related to water efficient washing machines, high-efficiency toilets, and “smart” irrigation landscape timers. The largest of these programs is the “smart” irrigation controller program which has resulted in the installation of controllers responsible for the irrigation of more than 3,503 acres of landscape. The District has received $2.87 million in grants and conservation incentives directly related to the Targeted Water Conservation Program and will continue to pursue various incentives to save water. In addition, the District implemented a budget-based tiered water rate structure designed to promote efficient water use and currently only applies to domestic and landscape customer classes. Each customer was given a budget that represents an appropriate amount of water to meet their needs. If a customer exceeds the budget amount, they are considered to be using water inefficiently or wastefully and will correspondingly pay a higher rate. In this dynamic economic environment, monitoring the budget and responding to changes or unanticipated events is a continuing process. The Finance Division provides the Board of Directors with monthly reports and quarterly analysis of both the operating and non-operating budgets. If adjustments to the budget are required, the District will respond accordingly.

FY 2011-2012 BUDGET HIGHLIGHTS

The District’s 2011-2012 total budget is $118,949,034 and is comprised of the following: Category FY 2010-2011 FY 2011-2012 Operating $67,865,136 $62,511,080 Non-Operating $46,781,670 $47,045,454 CIP $18,255,000 $8,979,000 Capital Outlay $864,288 $413,500 Total $133,766,094 $118,949,034

Monthly Bill Impact- Rancho Division M&I New Current Change % Change Variable 27.94 27.47 0.47 1.7% Fixed 16.63 15.84 0.79 5.0% Total 44.57 43.31 1.26 2.9% ¾” Meter, 25 HCF per Month

Ag New Current Change % Change Variable 1,023.74 994.62 29.12 2.9% Fixed 64.83 61.75 3.08 5.0% Total 1,088.57 1,056.37 32.20 3.0% 2” Meter, 2 A/F per Month

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Rancho California Water District 42135 Winchester Road • Post Office Box 9017 •Temecula, California 92589-9017 • (951) 296-6900 •FAX (951) 296-6860

Monthly Bill Impact- Santa Rosa Division M&I New Current Change % Change Variable 37.37 36.79 0.57 1.6% Fixed 29.49 27.56 1.93 7.0% Total 66.86 64.35 2.50 3.9% ¾” Meter, 25 HCF per Month

Ag New Current Change % Change Variable 1,278.32 1,203.46 74.86 6.2% Fixed 135.76 126.87 8.89 7.0% Total 1,414.08 1,266.67 83.75 6.3% 2” Meter, 2 A/F per Month

CONCLUSION his budget reflects the Board of Directors’ priorities and strategic plans which are communicated to the District’s staff through various meetings and workshops. The goal of T this budget document is to provide staff with a road map for prioritizing major capital improvement programs and ultimately fulfilling the District’s mission statement. The overall objective is to produce guidelines to address the District’s short-term and long-term goals and objectives. This document also demonstrates the District’s ability to use capital resources for completing critical capital projects for current and future customers as well as the District’s commitment to meet its financial obligations. Staff is confident that the financial framework outlined in the Fiscal Year 2011-2012 Budget will allow the District to deliver reliable, high-quality water, wastewater and reclamation services to its customers and communities in a prudent and sustainable manner.

ACKNOWLEDGEMENTS would like to thank the Board of Directors’ for their leadership and continued interest in and support of the highest level for prudent fiscal management. I would also like to extend my Iappreciation to all of the District’s employees and to the Department Managers for presenting goals and objectives for this year’s budget that will support the District’s mission statement. Our goals and objectives could not have been met without all your work. Most importantly on behalf of our Board of Directors and all of the District’s employees, thank you to our valued customers, for whom it is an honor to serve.

Respectfully submitted, RANCHO CALIFORNIA WATER DISTRICT

Matthew G. Stone General Manager

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Rancho California Water District 42135 Winchester Road • Post Office Box 9017 •Temecula, California 92589-9017 • (951) 296-6900 •FAX (951) 296-6860 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Introduction Description of the District Development of the Temecula/Rancho California community began in 1965 when the Vail Ranch was acquired by the partnership of Kaiser Corporations (Kaiser Aluminum & Chemical Corporation and Kaiser Industries Corporation) and Macco Realty Company. On August 16, 1965, to provide for a continuing and reliable water supply, the developers of Temecula/Rancho California formed the original Rancho California Water District (the “Rancho District”) over the easterly area of the Temecula/Rancho California development. The Santa Rosa Ranches Water District (the “Santa Rosa District”) was organized on January 24, 1968 to serve the westerly 44,800 acres of land in the community of Temecula/Rancho California. To provide supplemental water, the Rancho District was annexed in 1966 to the Eastern Municipal Water District (“EMWD”) and The Metropolitan Water District of Southern California (“MWD”). EMWD was also granted powers to collect, treat, and dispose of wastewaters within the Rancho District. In 1968, the Santa Rosa District was annexed to the Western Municipal Water District (“WMWD”) of Riverside County and MWD. Both EMWD and WMWD are member agencies of MWD, which provides supplemental imported Colorado River and State Project water to the District. Prior to 1976, EMWD assisted in the operation and maintenance of the Rancho District’s water system. By mutual agreement in 1976, this arrangement was terminated and the Rancho District assumed responsibility for maintenance and operation of the water system. The Santa Rosa District operated and maintained its water system prior to consolidation with Rancho California Water District. On January 1, 1977, the Rancho District and the Santa Rosa District were consolidated in accordance with Riverside County Reorganization Nos. 76-34-4 and 76-34-5 under the name Rancho California Water District. Land areas within the District were designated as the “Rancho Division” for the original Rancho District and the “Santa Rosa Division” for the original Santa Rosa District. As a result of the consolidation, the District acquired power to operate, maintain and furnish facilities for all water systems within the District and for the collection and treatment of wastewaters over the Santa Rosa Division. EMWD remains responsible for wastewater treatment in the Rancho Division. With subsequent annexations, land area of the Santa Rosa Division and the Rancho Division of the District is currently approximately 50,878 and 48,864 acres, respectively.

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Government The District is governed by a seven-member Board. The Directors, who are elected by the registered voters of the service area and serve alternate four-year terms, are identified in the following table:

TERM DIRECTORS YEARS OF SERVICE EXPIRATION DECEMBER

Lawrence M. Libeu, President 4 years 2011

John E. Hoagland, Sr. Vice President 10 years 2013

Stephen J. Corona. Vice President 10 years 2013

Ben R. Drake, Vice President 10 years 2013

Lisa D. Herman, Vice President 20 years 2011

William E. Plummer, Vice President 6 years 2013

Roland C. Skumawitz , Vice President 1 year 2011

Service Area Rancho California Water District’s (“RCWD”/“District”) service area includes the City of Temecula and portions of the City of Murrieta and the unincorporated territory of the County of Riverside adjacent to such cities. The current population of the District’s service area is estimated to be approximately 140,000. The District is comprised of two divisions; the Rancho Division, consisting of approximately 48,864 acres, provides water service to customers in the area; the Santa Rosa Division, consisting of approximately 50,878 acres, provides water and wastewater services to customers in the area. The map on the following page illustrates the District’s service area.

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Service Area

The District is Headquartered in Western Riverside County, Temecula California

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Organizational Structure The District’s organizational structure is as follows:

Customers of the District

Board of Directors

Legal Counsel

General Manager

Admin. Engineering

Water Finance Operations

WW Planning Operations

District Officers The District currently employs an administrative and operating staff of 148.5 under the direction of a Board appointed General Manager. The current corporate officers of the District are shown below: Matthew G. Stone, General Manager Richard S. Williamson, Assistant General Manager Jeffrey D. Armstrong, Chief Financial Officer/Treasurer Kelli E. Garcia, District Secretary

The following are biographies of the officers of the District: Mr. Matthew G. Stone was appointed the District’s General Manager in October 2008. Prior to joining the District, Mr. Stone held the position of Associate General Manager with the Municipal Water District of Orange County for 11 years. Mr. Stone holds a Master of Public Administration from the University of LaVerne; a Master of Science in Environmental Engineering from Loyola Marymount University; and a Bachelor of Science in Civil Engineering from Santa Clara University. He is also a Registered Civil Engineer in the state of California. Mr. Richard S. Williamson initiated his service with the District as Assistant General Manager in December 2010. Mr. Williamson brings over 36 years of water, wastewater and recycled water management experience to the District. His most recent positions

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prior to joining the District included serving as General Manager for the Borrego Water District and Engineering Manager for the City of Tucson Water Department. Mr. Williamson’s resume also includes professional positions with the U.S. Environmental Protection Agency, State of Arizona Department of Health Services, and owner of a multi-disciplinary firm providing planning, design and construction services to water and wastewater systems in Arizona. Mr. Williamson is a registered Civil Engineer and Professional Surveyor in the State of California, having earned a Bachelor of Science degree in Water Resources Engineering from the University of California, Los Angeles. Mr. Jeffrey D. Armstrong has been with the District since 1988 and currently serves as the District’s Chief Financial Officer and was recently appointed the District Treasurer in April 2010. He has served as the District’s Controller for four years and was the Accounting Manager for 10 years. Prior to joining the District, Mr. Armstrong held various accounting positions in private industry including a Fortune 100 company. Mr. Armstrong earned his undergraduate degree in accounting from California State University, Long Beach and his MBA from the University of Redlands. Ms. Garcia was appointed the District Secretary in July 2005. She has more than 8 years of administrative experience in the public sector. Ms. Garcia has been with the District since 1992, and has served in the capacity of Administrative Assistant in the Board Administration Department since 1999 and as Deputy District Secretary since 2002. * * * * * * There are two recognized employee bargaining groups, the Rancho California Water District Employees’ Association (RCWDEA) and the Rancho California Water District Managers, Professional, and Confidential Employees’ Association (MPCEA). Under state law, the District is required to meet and confer each year with the bargaining units. There are no contracts with the two bargaining units. The District meets and typically reaches agreement for a one-year period, following which negotiations begin for the next year. All full-time employees are covered by the State of California Public Employees Retirement System (“PERS”). During the fiscal year ended June 30, 2010, the District’s contribution to PERS for full-time employees was approximately $1,784,032.

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Understanding the Budget Document On an annual basis, the Rancho California Water District Board of Directors adopts a budget for the subsequent fiscal year’s operations. Since water demand cannot be exactly forecast due to uncontrollable variables such as growth rates and weather conditions, actual revenues and expenditures may vary significantly from the approved budget. Consequently, the budget is viewed as a tool for estimating and planning District revenues and expenditures and is used for comparative purpose to identify unusual or unexpected trends. As a comprehensive management and financial plan, this document is structured to meet internal managerial needs and also describes the services and resources provided by the District to its customers, as well as District policies and Board guidelines for achieving immediate and long-term objectives. The Board of Directors approved this budget at its June 9, 2011 meeting.

The organization and presentation of this budget are designed to satisfy the needs of the Rancho California Water District, its customers, Board of Directors, staff and the public. It is divided into several sections as follows: Introduction – This section contains a description of the District and its organizational structure, budget process, and an explanation of the District’s financial policies. Strategic Plan – This section describes how the District utilizes strategic planning in defining the long-term goals and objectives of the District. Operating Budget – This section describes the philosophy and process used to develop the operating budget. The section discusses important operational factors and operating rate changes. Additionally, a budget summary, detailed budget, and a five-year forecast are presented. Finally, department objectives and accomplishments are detailed including specific performance indicators. Non-Operating Budget – This section defines the objectives, presents a summary of the non-operating budget and details the non-operating rates, fees and assessments for the fiscal year. The section also contains the District’s forty-five year Long Range Capital Financing Plan, detailing funding sources and projected cash reserve levels required to meet the long-term capital needs of the District. Glossary – This section contains a list of definitions of terms used in this document.

Budget Process The budget process began as a team effort in December 2010, starting with a planning meeting where management discussed the proposed budget schedule and major budget assumptions. Thereafter, the General Manager and staff conducted workshops to define the 2011 Strategic Objectives and target activities. These objectives are supported by District Personnel through the implementation of plans that are created to address key issues and completion of the District’s target activities. Finally, staff develops the budget requirements, reviews and consolidates requests, and compiles the approved budget.

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During this process, meetings were held with directors, division managers and supervisors to discuss budget assumptions, procedures, requirements and changes from the prior year’s budget. All requests for new capital improvement expenditures were reviewed in detail by the Engineering Division in accordance with the District’s water and wastewater master plans prior to being submitted for Board review. All requests for new vehicles and equipment and computer outlays were reviewed by the applicable manager for consistency with District procedures. With the District goals of budgeting effectiveness and accountability as well as minimizing water and sewer rate impacts, Divisions are required to provide detailed support by activity for each budgeted amount. This support was prepared as a guideline for expenditures throughout the entire budget period and to provide accountability for any subsequent activities and related expenditures not included in budgeted amounts. Additionally, Divisions were required to review and update goals, objectives, and performance measures and also provide a list of accomplishments for the last year. In a series of budget review meetings, the Board reviewed the capital improvement and capital outlay requests, planned corrective maintenance requests, staffing requirements and operating statements. Input from these meetings was included in the final budget draft. It was determined that the draft budget was balanced–estimated expenditures were equal to estimated revenues for the fiscal year. After Board review and discussion of the draft budget, the General Manager’s recommended budget was presented to the Board of Directors for approval at the first board meeting in June. The annual budget for fiscal year 2011-2012 reflects management’s commitment to incorporate the District’s short and long-term goals and objectives into our daily activities by integrating the results of our strategic planning efforts into the budget process. Consistent with the concepts of budgeting by objectives, these goals and objectives have been utilized to develop detailed departmental action plans which in turn are translated into dollars via the budget process. To accomplish a meaningful connection between strategy and resource allocation, each division of the District has created a divisional mission statement defining its role in supporting the District’s overall mission, goals and objectives. Furthermore, each department has created a narrative statement which defines its role in supporting its divisional mission. This process has established the meaningful connection between the functional levels of the District where action is taking place and the mission of the District. Departmental budgets are then created allocating resources necessary to support specific plans developed to meet the District’s mission. This process ensures that goals, objectives, and plans are transmitted to the level of the organization where action can

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take place and that limited resources are allocated to prioritized items. Therefore, dollar figures in the budget document represent estimates of the cost to carry out the District’s intended strategic operating plans, as opposed to an extrapolation of historical numbers. The budgets derived through the above process represent a summary of each department’s operating plan and can be used by management to measure the accomplishment of their goals. Additionally, the District uses performance measurements to make judgments about the effectiveness and efficiency of our operations as well as to drive improvements which successfully translate our strategies into action. Each department has identified performance indicators to help monitor its progress toward meeting its objectives. These performance indicators are being reviewed and analyzed on an annual basis to ensure that the framework is both well understood and supports the District’s objectives. Specific performance measurement indicators are detailed in the departmental budget section of this document. All District employees have received formal training in the “Quality Improvement Process” (QIP). The District utilizes the QIP process to close the loop on performance by generating and implementing solutions that keep performance aligned with the District’s strategic plan. The QIP process is done at a departmental level, a comprehensive asset management team level, and at an ad hoc cross-functional team level to ensure that all relevant parties at all levels in the organization are involved.

Mission Objective

Performance Establish Link Measurement Quality Improvement Process

Resource Department Plan Allocation

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Budget Calendar As part of the initial annual budget process, budgetary staff prepares a schedule for the development of the budget for that year. The schedule is then distributed to all Division Directors and management staff for their reference in submitting their data for review, approval and incorporation into the final budget. The budget schedule for this fiscal year follows: FISCAL 2011-2012 BUDGET SCHEDULE DATE DESCRIPTION RESPONSIBILITY CFO, Budget/Debt December 14, 2010 District Staff Meeting - Budget Process, Calendar and Budget Workshop Admin. December 31, 2010 Fee for Services Complete Budget/Debt Admin.

January 4, 2011 Finance Committee Budget Goal Setting GM, CFO, and BOD

January 5, 2011 C.I.P Corrective Maintenance Budget Mtg. Chief Engineer

Jan. – April Meet With Employee Association GM, AGM, & HR Mgr.

Review Performance Measurement Indicators January 8, 2011 Directors & Managers Measurement Criteria and Targets

January 18, 2011 Sales Projections Budget/Debt Admin.

Division/Department January 18 - 19 Present Initial Budget Reductions Staff

Week of Distribution of Work Papers for FY 2011-2012 Division Directors and January 10 – 22, 2011 6-Month operating Budget Review/Analysis Managers

GM, AGM, CFO, & HR January 26, 2011 Regular Admin. Committee Mtg. Labor Fringe Benefits, New Employee Requests Mgr. Engineering & Operations Committee Mtg. Water January 27, 2011 Production Audit Director of Operations

February1 1, 2011 Water Production Director of Operations

Engineering, Finance, February 15, 2011 Budget Packages Due Planning, Administration & Operations

February 16 – March 3, CFO/Div. Departmental Budget Review and Negotiation 2011 Directors/Managers

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FISCAL 2011-2012 BUDGET SCHEDULE DATE DESCRIPTION RESPONSIBILITY Regular E&O Committee Mtg. February 24, 2011 Chief Engineer 2011 – 2012 Capital & Corrective Maint. Projects Adjourned Regular Finance & Audit Comm. Mtg. March 1, 2011 2011 – 2011 Non-Op Budget CFO

March 4, 2011 Special Budget Workshop CFO

Adjourned Regular Finance & Audit Comm. Mtg. March 15, 2011 Operating Budget & Rate Recommendations CFO

April 5, 2011 Operating Budget and Rate Recommendations CFO. Board of Directors Meeting April 14, 2011 Review Final Op and Non-Op Rate Projections & Board of Directors Set Public Hearing (Prop 218 Compliance) Beginning *Mailed Notice of Rate Increases CFO, IT/CS Mgr., Public April 20, 2011 Water Quality Rpt. Information Specialist Special Mailing – April 22, 2011 General Manager, CFO, April 20, 2011 Agricultural Customer/Farm Manager’s Mtg. and Director of Planning

Board of Directors Meeting/ Public Hearing/Adopt Board of Directors June 9, 2011 Budget

Proposition 218 Compliance The District complies with the noticing requirements of Proposition 218 by mailing a newsletter informing customers of the proposed rate increases and the date of the public hearing where these rate changes will be considered. The mailed newsletter was accomplished with a special mailing on April 22, 2011. Additionally, any property owner not yet connected to the system receives a separate mailing. All noticing is accomplished at least 45 days prior to the public hearing.

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Budget Organization RCWD is organized into four divisions based on various types of services and legal requirements. These divisions consist of the Rancho and Santa Rosa Water Divisions, the Santa Rosa Water Reclamation Facility (SRWRF) known as the Wastewater Division and finally, the Resource Division, which is used to accumulate and allocate shared costs such as source of supply and indirect expenditures. The divisions and their respective order are identified as follows: Division I – Rancho Water Division Division II – Santa Rosa Water Division Division III – Resource Accumulation and Allocation Division Division IV – Santa Rosa Water Reclamation Facility Wastewater Division Balanced Budget According to Rancho California Water District, a budget should be balanced with current revenues equal to or greater than current expenditures/expenses. The District may elect to utilize rate stabilization or drought reserves to help implement more manageable rate increases. The District includes in its definition of a balanced budget the use of these reserves for this purpose. Budget Amendments The Board does not formally amend the budget after approval. Subject to the approval of the Board of Directors, the General Manager has full charge and control of the District’s expenditures to ensure that operating and capital expenditures in each fiscal year are within the budgetary guidelines and to ensure that the District’s goals and objectives are met. No expenditure of funds shall be authorized unless sufficient funds have been appropriated by the Board of Directors or General Manager as described in this budget. The General Manager has authority to enter into contracts and agreements and expend funds up to $50,000. Purchases in excess of $50,000 not approved in the budget require approval of the Board of Directors. Budget Basis The District accounts for its water and wastewater operations activities as enterprise funds. An enterprise fund is a proprietary type fund used to account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including deprecation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes.

16 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Financial Policies The Rancho California Water District financial policy document incorporates many of the District’s financial management practices that are used by District Staff as guidelines for operational and strategic decision making related to current and future financial matters. The purpose of establishing these policies is to identify acceptable and unacceptable courses of action, thus establishing parameters in which the District can operate as well as to provide a standard against which the District’s fiscal performance can be reviewed. Some policies are flexible when they are utilized by District staff as performance measurement tools to monitor the District’s finances, while others are restrictive to emphasize accountability. Due to the above reasons, these policies are drafted as a living document to maintain their effectiveness in order to accommodate changes. District Staff and board members will review these policies on an annual basis to accommodate minor changes to the existing policy or major shifts in financial priorities as approved by the District’s Board of Directors at its sole discretion. The District’s financial policies encompass the following functional areas: Investment Policy Cash Reserve Policy Land Secured Financing Policy Debt and Financial Management Policy Interest Rate Swap Policy Investment Policy-Revised February 2011 The Investment Policy set forth by Rancho California Water District for the following purposes: . To establish a clear understanding for the governing Board, management, responsible employees, citizens and third parties of the objectives, policies and guidelines for the investment of the District’s idle surplus funds; . To offer guidance to investment staff and any external investment advisers on the investment of District funds; and . To establish a basis for evaluating investment results. The District establishes investment policies that meet its current investment goals. The District shall review this policy annually and may change its policies as its investment objectives change. The primary objectives, in priority order, of investment activities shall be safety, liquidity and return. In order to achieve these objectives, the District has segregated its funds into three portfolios. The Construction fund is structured to meet a schedule of payouts for capital expenditures. The Cash Management Account is invested in short-term securities to meet operating needs. The operating Reserve is invested in somewhat longer –term securities in order to provide for future needs.

17 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

As in the District’s general investment policy, the primary objectives for investment of the Rancho California Water District’s Retirement Medical Benefits Plan monies shall be safety, liquidity, and return. Cash Reserve Policy In order to protect Rancho California Water District’s investments in various assets and to satisfy its commitments under its numerous financial, regulatory, and contractual obligations; the District has developed and segregated a number of funds and reserves. The efficient and discrete management of these reserves, when combined with their appropriate fortification add additional assurance that the current levels of service reliability and quality will continue into the future. These reserves can be broken out into four types that include operating reserves, debt reserves, capital facility reserves and replacement reserves. Operating reserves would predominately be funded from water and wastewater user rates and be accumulated in the District’s General Fund. Debt reserves are those funds that relate to the management of the District’s $364,615,000 in outstanding bonded indebtedness. The proceeds from these bonds have been used to fund the construction cost of the District’s backbone utility plant. These funds are accumulated in a debt service related fund from which annual principal and interest costs are paid and contractually required reserve trust funds held for the benefit of bond insurers and bondholders. Capital facility reserves are funded from developer impact fees and proceeds from bonds. Their collection and use are restricted under state law. These funds are used to finance the construction of required water-and wastewater-related facilities. Replacement funds are funded from charges reflected on wastewater bills and are restricted for the replacement of aging utility plant. Current estimates demonstrate that future facility replacements will need to be funded with a combination of replacement funds generated from user fees and future bond proceeds. Land Secured Financing Policy The Rancho California Water District has created these policies on debt financing as guidelines to assist all concerned parties in determining the District’s approach to land-secured financing. It is the District’s intent to support projects which address a public need and provide a public benefit. These policies are designed to comply with Section 53312.7(a) of the Government Code. The District and the Board of Directors will consider the use of community facilities districts, or fixed lien special assessment districts as well as other methods of public financing to assist the development of commercial, industrial and/or residential property. The minimum principal amount of any land secured financing shall be $150,000. While specific criteria are established in these Policies, for land secured financing between $150,000 and $1,000,000, the structure and processing procedures will be determined on a case by case basis. The District also reserves the right to amend or modify these Policies at any time as well as make exceptions or changes for specific financing projects, as facts and circumstances so warrant.

18 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Debt and Financial Management Policy General Management Policy The District will provide for a periodic review of its financial performance, and review its performance relative to the financial policies outlined herein. These policies will be taken into account during the capital planning, budgeting, and rate setting process. . In recognition of periodic changes in the cost of providing service to system users, service costs and fees will be reviewed annually and adjusted commensurately. . The District will present any proposed adjustments to existing rates, fees and charges at public meetings, and will consider recommendations and input from the public as it relates to such proposed changes. . All District funds will be invested according to the Investment Policies of the District. . Necessary appropriations for annual debt service requirements will be routinely included in the District’s annual budget. . The District will maintain proactive communication with the investment community, including rating agencies, credit enhancers and investors, to ensure future capital market access at the lowest possible rates. Financial Management Policy The District utilized a comprehensive planning process to determine its long-term capital needs. The District evaluates each capital project in relation to established levels of reserves, current rate structure, expected asset life/replacement timeline, and available revenue sources to ensure that adequate financial resources are available to support the District’s financial obligations. The District’s Debt and Financial Management, Land-Secured Financing, Reserve, Investment, and Swap Policies are integrated into the decision-making framework utilized in the budgeting and capital improvement planning process. As such the following policies outline the District’s approach to debt management.  The District will evaluate financing for each capital project on a case-by-case basis. The District will seek to pay for all capital projects from current revenues and available reserves prior to or in combination with the use of debt.  The District will seek to issue debt only in the case where there is an indentified source of repayment. Bonds will be issued to the extent that (i) projected fixed revenues are sufficient to pay for the proposed debt service together with all existing debt service covered by such fixed revenues, or (ii) additional projected revenues have been identified as a source of repayment in an amount sufficient to pay for the proposed debt.  Debt issuance for capital project will not be considered unless such issuance has been incorporated into the capital improvement plan (Long Range Financial Plan).

19 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

 User Fees and Water Rates will be set at adequate levels, which are fair and nondiscriminatory, to generate sufficient revenues to pay all Operating and Maintenance costs, to maintain sufficient operating reserves, and to pay debt service costs, if necessary.  Property Assessment and Connection fees will be maintained at a level sufficient to finance a portion of growth-related capital costs and cover related annual debt service requirements.  Property Assessments also will be utilized to finance a portion of replacement costs and related annual debt service payments. Debt and Capital Management Policy The following policies formally establish parameters for evaluating, issuing, and managing the District’s debt. The policies outlined below are not intended to serve as a list of rules to be applied to the District’s debt issuance process, but rather to serve as a set of guidelines to promote sound financial management. In issuing Debt, the District objective will be to:  Achieve the lowest cost of capital  Ensure ratepayer equity  Maintain high credit ratings and access to credit enhancement  Preserve financial flexibility Interest Rate Swap Policy The purpose of the Interest Rate Swap Policy of Rancho California Water District is to establish guidelines for the use and management of all interest rate management agreements, including, but not limited to, interest rate swaps, swaptions, caps, collars and floors incurred in connection with the issuance of bonds, notes and other obligations. This Policy sets forth the manners of execution of swaps, provides for security and payment provisions, risk considerations and certain other relevant provisions in the context of being responsive to the 2003 Recommended Practices of the Government Finance Officers Association (GFOA) regarding the contents of an interest rate swap policy. The failure by the District to comply with any provision of this Policy shall not invalidate or impair any Agreement, The issuance of Bonds involves a variety of interest payment obligations and risks that a variety of financial instruments are available to reduce, offset, or hedge. The structure of the District’s debt is often designed to manage the assets and liabilities in its balance sheet. It is the policy of the District to also consider the use of Swaps and other financial instruments to better manage its assets and liabilities. The District may execute a Swap if the transactions can be expected to result in one or more of the following or any similar type of benefit.  Reduce exposure to changes in interest rates on a particular financial transaction or in the context of the management of interest rate risk derived from the District’s overall asset/liability balance.

20 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

 Result in a lower net expected cost of borrowing with respect to Bonds.  Manage variable interest rate exposure consistent with prudent debt practices.  Manage exposure to changing market conditions in advance of anticipated issuance of Bonds (through the use of anticipatory hedging instruments).  Achieve more flexibility in meeting overall financial objectives that cannot be achieved in conventional markets. For example, entering into a swaption with an upfront payment.  Provide customized cash flows to match required payment obligations or revenue projections. The District will not use Agreements that:  Are speculative or create extraordinary leverage;  Lack adequate liquidity to terminate without incurring a significant bid/ask spread;  Provide insufficient price transparency to allow reasonable valuation;  Provide exposure to currency risk, sovereignty risk, commodity risk or the use of credit derivatives – unless directly linked to the District’s of the Counterparty’s credit.

21 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Demographic Summary Water System: Service Area 99,163 acres Miles of Water Main 888 No. of Reservoirs 37 No. of Wells 44 No. of Service Connections 42,958 connections Recycled Water System: Miles of Water Main 66 miles No. of Reservoirs 4 No. of Service Connections 208 connections Wastewater System: Miles of Sewer Line 72 miles 1 ~ Santa Rosa Water Reclamation Treatment Plant Facility No. of Sewer Connections 17,672 connections sold Misc. Statistical Information Population Served: Approximately 141,000 No. of Employees 149 Operating Budget: $62.5 Million Non-Operating Budget $46.1 Million Capital Improvement Program: $9.0 Million

Source: Rancho California Water District

22 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Community Profile The cities of Temecula and Murrieta are centrally located along the I-15/I-215 freeway corridor in Southwest California, just north of the San Diego County line. Temecula is well known for its championship golf courses, a climate perfect for serene and beautiful hot-air ballooning adventures, and Temecula Valley Wine Country, the heart of California's South Coast wine region. It is a place where natural beauty, historic traditions, and modern conveniences combine to attract visitors year round as well as offer entertainment for people of all ages. Murrieta is a young, on-the-go affluent community. Those living in the community find distinguished schools, abundant recreation, excellent medical facilities expanding employment opportunities and one of the lowest crime rates in Southern California. It is a city with a past and a vision for its future.

Old Town Temecula Santa Rosa Plateau, Murrieta

Hot Air Balloon Adventure in Wine Country

Throughout the year Rancho California Water District participates in several community events such as, the Susan G. Komen Race for the Cure, Solar Cup, The Annual Community Water Festival, and sponsors the “Water is Life” poster contest.

23 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Education The District serves portions of two school districts. The Temecula Valley Unified School District is comprised of approximately 30,183 students and the Murrieta Valley Unified School District is comprised of approximately 22,273 students. The University of California, Riverside has an extension center in Temecula and Mt. San Jacinto Community College is located ten miles from Temecula. There are seven two-year community college campuses located in the communities of Riverside, Moreno Valley, Norco, San Jacinto, Menifee, Coachella Valley and Palo Verde Valley. There are also two universities and a four-year college located in the City of Riverside: the University of California, Riverside, La Sierra University, and California Baptist College. Temecula and Murrieta have a history of academic excellence with its public schools ranking among the highest in state-administered achievement tests. There are also more than 40 private primary and secondary schools and charter schools available throughout the Temecula and Murrieta Valley.

Principal Employers

EMPLOYER NAME LOCATION NO. OF EMPLOYEES

Pechanga Resort & Casino Temecula 4,100

Abbott Laboratories Temecula 4,000 Temecula Valley Unified School Temecula 2,834 District Professional Hospital Supply Temecula 1,725 Murrieta Valley Unified School Murrieta 1,500 District Southwest Health Care System Murrieta 1,200

Exceed Temecula 635

International Rectifier Temecula 570

DCH Auto Group Temecula 365

City of Murrieta Murrieta 355

Channell Corp. Temecula 344

Costco Wholesale Corp. Temecula 325 South Coast Winery Resort & Temecula 320 Spa

Source: California Employment Development Dept.

24 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Population Historically, the District’s customer base was comprised of a mix of agricultural, domestic, landscape, commercial and miscellaneous water accounts. Considerable growth in the last decade has increased the customer base from 30,510 to 42,958 customer accounts. Growth continues to occur primarily in the domestic category, now 85.9% of total accounts, resulting in 40.3% of total consumption. The agricultural customers have the highest average consumption, creating almost the same production demands on the system. Although comprising only 4.0% of the accounts, 38.4% of the total water demands are for agricultural purposes.

Customer Mix - No. of Accounts 45,000

40,000 Agriculture 35,000 30,000 25,000 Domestic 20,000

15,000 10,000 5,000

0 Other

Population Estimate Murrieta Temecula

101,487 2010 105,029

100,714 2009 102,604

100,173 Fiscal Fiscal Year 2008 101,057

97,257 2007 97,935

92,000 94,000 96,000 98,000 100,000 102,000 104,000 106,000

Source: January Revised Estimates: State Dept. of Finance

25 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Weather Local weather experiences warm, dry days and cool evenings. Although separated from the Pacific by the Santa Rosa mountain range, the Rainbow Gap funnels the mild beach climate into the valley.

Average Daily Temperature: mid 70’s

Summer: mid 80’s to mid 90’s

Winter: mid 60’s to mid 70’s

Avg. Rainfall: 19 inches annually

Households Riverside County has been the fastest growing major county in California. The Temecula/Murrieta area enjoys a level of affluence, which places it in the upper ranks among communities in the Inland Empire. As well, the regions high discretionary income makes the area an attractive location for retailers. The cities retail sector consistently outperformed statewide growth trends.

Estimated median household income in 2009: $76,221 (it was $76,555 in 2008)

Temecula: $76,221 California: $58,931

Estimated median household income in 2009: $78,588 (it was $75,412 in 2008)

Murrieta: $78,588 California: $58,931 Source: City-Data.com

Median Household Income

$80,000 $60,000 CA $40,000 Murrieta $20,000 Temecula $0 $76,221 $78,588 $58,931

Source: City-Data.com

26 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Residential Growth in the communities served by the District has slowed as a result of the downturn in the housing market. The cities of Temecula and Murrieta experienced slowed growth rates of 2.3% and 0.6% respectively, which were near the County average of 1.4%. Estimated median house or condo value in 2009: $304,700 (it was $381,200 in 2008)

Temecula: $304,700 California: $384,200

Estimated median house or condo value in 2009: $290,200 (it was $349,800 in 2008)

Murrieta: $290,200 California: $384,200

Population & Accounts Served

160,000 140,000

120,000

100,000

80,000 60,000

40,000

20,000

0

Accounts Population

Agriculture Agriculture remains a leading source of income in Riverside County. Principal agricultural products are milk, eggs, table grapes, grapefruit, nursery, alfalfa, dates, lemons and avocados. The climate and soil in Temecula/Rancho California are particularly favorable for growing avocado, grape, and citrus crops. Avocados are produced on the majority of the agricultural land in the Santa Rosa Division. Grapes occupy approximately one-half of the agricultural land in the Rancho Division and citrus occupies approximately one-third of agricultural land in the Rancho Division.

27 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Strategic Planning While a strategic planning process has been in place for a number of years, the range and significance of water resource, financial and other challenges called for a fresh look at RCWD’s mission, guiding principles and key objectives.

Five guiding principles focus and drive the District’s efforts to achieve its Mission and Values. These principles set the overall direction for the District both for the short-term and long term.

Customer & Community Sustainability GUIDING PRINCIPLES Stewardship Quality Reliability Inform and engage our Address, adopt customers and and implement community leaders as we Exercise good policies that pursue reliable, stewardship of protect the long- quality, and Provide high financial and term quality of sustainable quality water operating assets life and water supply and services to through sound environment within our our customers business Provide a level of judgment service area water reliability that ensures customer’s water needs are met PROCESS

Evaluate Strengths, Weaknessess, Opportunities & Challenges

Review Mission, Values, establish Guiding Principles

Develop Strategic Objectives & Targeted Activities

Scorecard - Key Performance Indicators to measure progress

Develop Staffing & Resource needs w/Annual Budget Process

Regularly Update the Plan

28 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Goals and Objectives Annually, each business unit (department or division) establishes objectives that support the District’s guiding principles and overall mission statement. These objectives are reviewed to ensure that business units are focused on progressing toward District-wide priorities. After the objectives are finalized, each business unit (department or division) identifies accompanying measures and targets to track progress toward achieving and communicating the intent of the objective (Divisional Plans Section Pg. 83) against expected performance levels. Progress is measured throughout the fiscal year and reported to the Board of Directors on a semi-annual basis. FY 2011-2012 STRATEGIC OBJECTIVES Initiative Objective Lead Dept. Target

Reduce impact of regional water shortages; protect/  Prepare Groundwater Conjunctive Engineering 3/10/11 increase sustainability of Use Feasibility Report ground water resources

 Design and construct Recycled Water Design Implement Long-term plan Storage pond No. 5 4/15/11 Engineering for wastewater treatment and  Secure recycled water purchase Ongoing water recycling that agreement with EMWD Planning maximized recycled water use  Initiate and complete construction of December SRWRF Expansion 2013 Implement aggressive water 6/30/11 use efficiency plan that meets  2010 Urban/AG Water Mgmt. Plan Planning or exceeds voluntary BMP’s  Recycled Water Efficiency and/or legislative Requirements Planning 3/31/11 requirements

Pursue Emergency/Disaster  Conduct ICS 400 Training 6/11 preparedness, planning , and  Conduct RCWD Emergency Ops. Safety training Plan Training 4/11

Respond to anticipated near  Implement and monitor import water Ongoing term water shortages through supply allocation plan rate structure modification, Planning As  Determine Nexus fee and offsetting conservation assistance, determined projects customer service and outreach by BOD Vail Lake Resource Mgmt.  Development of a lake and watershed Not yet

Plan Management Plan Assigned Address planning for long-  Complete a Salt/Nutrient Mgmt. Plan Planning 5/14 term salinity mgmt. Anticipate and comply with  Continue to meet regulatory regulatory and environmental Operations Ongoing requirements changes  Ensure Drinking Water Regulatory Provide safe drinking water Operations Ongoing Compliance

29 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

FY 2011-2012 STRATEGIC OBJECTIVES CONTINUED Initiative Objective Lead Dept. Target  Acquire suitable properties for future 6/30/11 reservoir sites Optimize Real Estate Mgmt.  Investigate and acquire potential well Finance 6/30/11 sites  Develop income producing property 6/30/11  Explore grant funds Maximize outside funding  Develop tracking/reporting tool Planning Ongoing opportunities  Explore stimulus funds  Establish grant mgmt. program  Achieve cash reserve levels 6/30/11 Ensure development and  Execute new contract ww agreement protection of adequate 3/31/11  Hold 2011-2012 rate increase to Finance revenue sources/prudent 7/1/11 reserves minimal levels  Review BBTR Policy and Tiers 7/1/11 Optimize external shared  Bulk purchase of chemicals Finance 6/30/11 service opportunities  Bio solid disposal partnership Ops Ongoing Attract, retain & develop  Promote positive change mgmt. HR Ongoing quality staff  Evaluate future spacing needs By Dept.

 Develop/implement comprehensive Promote open and HR 3/11 training & development program professional work  environment throughout the Evaluate future spacing needs By Dept. Ongoing organization  Evaluate future staffing 3-5 yr. projections. HR Maximize energy efficiencies  Implement fuel cell design 1/12 including the economically  Implementation of solar power Engineering appropriate use of renewable 1/12 power projects- District HDQ & SRWRF Develop and maintain asset management program to  Initiate an asset management plan Engineering Ongoing support sustainable utility service  Review , evaluate and implement Improve outreach to conservation programs community, stakeholders, and Planning Ongoing local governments  Reach out to local municipalities to further their sustainability programs Inform RCWD’s customers  Review and assess methods to about water issues, water increase customer awareness of the Planning Ongoing rates, policies, and water current water shortage efficiency assistance programs

30 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

RCWD Mission Statement

“The mission of the Rancho California Water District is to deliver reliable, high-quality water, wastewater and reclamation services to its customers and communities in a prudent and sustainable manner.”

The District accomplishes its mission by setting strategic goals and objectives annually. This planning process allows the District to revisit goals and objectives on an annual basis, measures effectiveness and determines priorities based on current economic conditions, resources, environmental concerns, and regulatory demands. RCWD Values Statement In pursuit of the District’s Strategic Plan Objective to “Promote an Open and Professional Work Environment throughout the Organization,” staff launched an effort to develop shared organizational values with participation throughout the organization that will guide RCWD’s actions towards one another, our customers, and our community. As part of the roll out of the Strategic Plan, the General Manager held a series of small-group workshops with District staff. All staff members were invited to participate in the RCWD Values Discovery Exercise. A cross-departmental “Values Team” was formed and with the General Manager’s support held a contest open to all employees to create a phrase or statement that best describes the District’s values. The Values Team selected the top three entries and presented them to the employees for their final vote. The values statement selected and supported by District employees is: Serving Our Customers with Vision, Confidence, and PRIDE! P-Professionalism R-Responsibility I-Integrity & Ethics D-Dedication E-Equality  Professionalism  Dedication Reflected in the attitude and abilities In providing professional, quality services displayed in dealing with our employees, to our partners, customers, and customers, vendors, and community. community.  Responsibility  Equality Over financial and operating assets Commit to maintaining a balanced though sound business judgment. workplace, by utilizing open  Integrity & Ethics communication and diverse backgrounds, skills, and aspirations of all District Uphold an adherence to moral and ethical employees. principles and to remain accountable for our actions.

31 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Rate Design Structure Rate Setting Philosophy Accounting for water and wastewater operations is performed on an enterprise fund basis. An enterprise fund is defined as, “a fund established to account for operations that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges.” As an enterprise fund, water and wastewater operations are viewed as a business. Likewise, appropriate business principles related to cost identification, cost- effectiveness, and financial reporting are addressed accordingly. As indicated by the definition of an enterprise fund, appropriate fees and charges are established to ensure the District can operate on a self-sustaining basis. In a water and wastewater utility such as the Rancho California Water District, the majority of revenue is derived from user charges. User charges are defined as “fees, rates, assessments, and billings that are charged to the beneficiaries of services.” User charges are a way of recovering costs for providing a service from those that benefit directly from that service. The total process of (1) identifying water and wastewater costs; (2) allocating costs to utility or service beneficiaries; and (3) designing rate structures to recover allocated costs is defined as the user-charge system. Some of the factors that are considered in designing appropriate rate structures include: Equity or fairness: Costs should be recovered from customers or customer classes in proportion to the costs of providing service to these beneficiaries. Legality: A user charge structure should comply with appropriate local, state and federal legal requirements. Impact on customers: The economic impact that a proposed user charge structure will have on customers should be considered. When a utility modifies its rates, costs are typically redistributed among customer classes and significant impacts can affect certain customers. Avoidance of discriminatory relationships: The user charge system should avoid placing unfair cost recovery burdens on any particular class of customers. This is accomplished by using a cost-of-service rate structure.

Establishing a cost-of-service user charge system with numerous user classes will achieve greater equity, but is complex and more difficult to implement. These trades-offs show that ratemaking is an art that carefully considers alternative rate-setting techniques to optimize the District’s cost-recovery objectives and to achieve equity among customers.

32 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Cost and Revenue Categories The District’s current rate structure is established and maintained on the cost-of-service basis as described in the preceding section. Under this system, the costs of operations and the funding of capital facilities are identified and apportioned so that the customers receiving benefits from these services are appropriately charged. When the various costs of operating the District are analyzed, the first consideration is the separation of operating costs related to the production and delivery of water from costs related to the construction and expansion of the production and delivery systems. These two categories are referred to as “operating” and “non-operating” costs. Operating Costs The operating costs are broken down into three categories, as follows: Variable Costs - These costs are created during the actual production, distribution and delivery of water services and represent the costs per unit of water measured in hundred cubic feet or “hcf.” Fixed Costs - These costs are created by the need to maintain a utility systems capacity to deliver water to all customers and represent the cost of service availability which must be maintained for each customer in order to preserve their share of reserved system volume. Fee for Service Costs - These costs are created by specific service needs of specific customers and do not provide a direct benefit to other utility customers. In general terms, the tenor of the law in the State of California requires that the user or requestor pay for services in direct proportion to the benefit received. Therefore, the Board of Directors has established a policy of setting the amount of the fees (or rate) to recover direct and indirect expenses related to providing the requested services as opposed to supplementing these services in the water rates. Periodically, an evaluation of all services is conducted wherein the amount of actual expense for the service is reviewed and the fee (or rate) is set or adjusted accordingly. Examples of these fees or charges would be customer turn-on and turn-off fees, meter installation fees, and other various inspection and engineering-related services. Non-Operating Costs Non-operating costs are defined and discussed in the Long-Range Capital Financing Plan section of the budget beginning on page 148.

33 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Operational Factors The following is a summary of the District’s operating environment and philosophies, which affected the preparation of the District’s annual strategic operating plan and operating budget for the Water and Wastewater Divisions. Operating Revenues It has been, and continues to be the District’s policy to fix water and wastewater rates (consisting of base water rates, energy charges, monthly capacity fees, and wastewater monthly charges) so as to cover all costs of water and wastewater operations. Water Rates and Sales Four potable water rate classifications exist in the District. Farmers, growers and ranchers pay an agricultural rate, homeowners a domestic rate, businesses a commercial or an industrial rate, and developers/contractors a construction rate. All rates include payment for the amount of water used as well as an energy charge for the cost incurred in pumping water to higher elevation properties. Recycled water customers pay either an M&I rate or an agricultural rate. While growth continues to occur in the domestic category, now 85.8% of the accounts; the agricultural customers continue to create the greatest production demands on the system. Although comprising only 4.0% of the accounts, 38.4% of the total water demands are for agricultural purposes. The agricultural customers have benefited from lower rates due to credits received on imported water from the Metropolitan Water District of Southern California. As a result of this credit, $57 per-acre foot, the agricultural customers of the District saved approximately $663,000 in the 2010-2011 fiscal year. Beginning with the 2009-2010 budget the IAWP credit is being phased out through year 2013. The IAWP credit is $57 per-acre foot in the 2011-2012 budget as reflected in Footnote No. 2, User rates on Page 77. Therefore, the agricultural rate will increase to the same level of the M&I rate by FY 2013. One of the greatest challenges facing the District centers on finding new ways to meet these increasing demands while minimizing the financial impact to its customers. Based on current general plans for the Cities of Temecula and Murrieta and the County of Riverside, the ultimate build out of the District is expected to include 58,587 dwelling units, 4,732 acres of Business Park and commercial areas and approximately 11,345 acres of agricultural use. According to the District’s Master Plan, the projected ultimate water demand is estimated at 100,284 acre-feet, 33% more than the rate of current usage in the District. The chart below details the projected water sales for each of the next five years. While moderate growth is occurring each year, total sales are still projected to be 4% less than the 2010-2011 budgeted amounts.

34 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISSCAL YEAR 2011-2012

5 Year Water Sales Forecast

70,000

60,000

50,000 t

ee 40,000 F Ft ‐

cre 30,000 A A

20,000

10,000

0 11‐12 12‐13 13‐14 14‐15 15‐16

Ag M&I Recycled

Chart 5.1 Monthly Service Charges The District levies a fixed monthly fee on each water meter according to the rate of flow that the meter is capable of delivering. The philosophy behind this charge is that the fixed costs to the District will remain, irrespective of water demands and represent the cost to keep the system ready to meet demands. These fixed charges account for 23.5% of the District’s operating revenues. A more detailed description can be found in the Footnotes section, Page 61, and the Schedule of Monthly Service Charges can be found on Page 69. Sources of Water Water Utility Supply and Operations The District adopted a Water Resources Master Plan in 1990 and updated it during 2005 (the “Master Plan”). Under the Master Plan, the water resources available to the District include imported water and recharged water from MWD purchased through EMWD and WMWD, natural local sources and secondary sources, such as locally available recycled water and water conservation. Local sources include the District’s right to capture native waters at Vail Lake (up to 40,000 acre-feet annually) and to appropriate local groundwater, which it does on a perennial safe yield basis. Over the last seven fiscal years, the District has lost approximately 3.8% to 7.5% of its water sources between the source and the ultimate use by the consumer as a result of pipeline breaks, evaporation frfrom operating reservoirs and metering discrepancies. A summary of the District’s annual water production by source for the five fiscal years 2005- 2006 through 2009-2010 is set forth in the table below:

35 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

RANCHO CALIFORNIA WATER DISTRICT ANNUAL WATER PRODUCTION SOURCE(1)(2) Fiscal Years 2005-06 through 2009-10

Purchased Treated % of Recharged % of Local % of Recycled % of Total Water Fiscal Year Water Total Water Total Sources Total Water Total Production 2005-06 35,969 44.8% 17,259 21.5% 23,441 29.2% 3,685 4.6% 80,354 2006-07(3) 47,479 51.5 16,398 17.8 23,644 25.7 4,608 5.0 92,129 2007-08 38,858 48.0 12,003 14.8 26,495 32.7 3,642 4.5 80,998 2008-09 34,289 43.8 16,223 20.7 24,037 30.7 3,666 4.7 78,215 2009-10(4) 26,993 40.0 12,187 18.0 24,556 36.3 3,829 5.7 67,565

(1) All sources in acre-feet of water. (2) Amounts may not total due to independent rounding. (3) For fiscal year 2006-07, total water production increased by 16.0% due to the decrease in average annual precipitation. Total rainfall levels decreased substantially, at approximately 3.8 inches for fiscal year 2006-07, compared to 10.3 inches of rainfall during fiscal year 2005-06. (4) Reductions in purchased treated water and total water production during fiscal year 2009-10 were attributable to cooler temperatures and conservation efforts. Source: Rancho California Water District Local Sources of Water The District’s policy is to manage and protect its local groundwater resources as a top priority. Local sources of water include groundwater from regional aquifers, precipitation and surface stream flows. Natural local sources supplied approximately 36.3% of the District’s fiscal year 2009-2010 water demand and 30.7% of its fiscal year 2008-2009 water demand. Starting in fiscal year 1997-1998, the District began to use recharge and recovery programs utilizing imported water. Recharged water provided approximately 20.7% and 18.0% of the District’s water demand in fiscal years 2008-2009 and 2009-2010, respectively. For management purposes, the District has subdivided the Murrieta-Temecula Groundwater Basin into 14 hydrologic sub-units, the substantial portion of which is located in the Rancho Division. The perennial safe yield of local groundwater within the District is estimated to be between 25,000 and 30,000 acre-feet per year. The District’s knowledge of the groundwater basin has grown substantially over the past 30 years through extensive monitoring programs, a well-documented annual groundwater audit process to establish safe production targets, and the development and integration of a combined surface water/groundwater hydrogeologic computer model. All aquifers managed by the District are located in the Santa Margarita Watershed. Oversight of all groundwater production within the Santa Margarita Watershed falls under the continuing jurisdiction of the United States District Court, in the case of the United States v. Fallbrook Public Utility District, et al. and is administered by a court-appointed Watermaster (the "Santa Margarita Watermaster"). The court appointed a Steering Committee, which is comprised of representatives of the United States, Eastern Municipal Water District, Fallbrook Public Utility District, MWD, Pechanga Tribe and the District. The purpose of the Steering Committee is to assist the court, to facilitate litigation and to assist the Santa Margarita Watermaster. The need for the Watermaster and the Steering Committee stems from litigation that began in the early years of the twentieth century over

36 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

various water rights between the Vail Ranch and the Santa Margarita Ranch, two cattle ranches. Today, the District, through the Vail Lake Agreement, has assumed the rights and responsibilities of Vail Ranch, and the United States Marine Corps Base, Camp Pendleton ("MCBCP") is the successor in interest to the Santa Margarita Ranch. In 2002 the District and MCBCP entered into a Cooperative Water Resources Management Agreement (the “CWRMA”) which supplements the Fallbrook decree and has been approved by the Court in the Fallbrook Public Utility District Case. In general terms, the CWRMA divides the natural supply of Santa Margarita River supply one-third to the District and two-thirds to Camp Pendleton and requires the District to provide make-up water if there is a shortage in Camp Pendleton’s share of the river flows. As long as the parties comply with the provisions of the CWRMA, the long-standing water rights dispute between the District and MCBCP over the Santa Margarita River is considered to be ended. Settling the water rights disputes in the watershed is a result of the District’s long-term management policies. In 1966 the District instituted an Agency Agreement program, which required property owners to assign management of their water rights to the District in return for acquiring service from the District. This program has now allowed the District to cover 95% of the properties within the District’s boundaries with a restriction on drilling wells and producing groundwater. Consequently, the District controls the majority of the groundwater production in the upper basin. As such, the District is able to manage the basin on a long-term sustained yield basis, which targets an annual production of approximately 25,000 to 30,000 acre-feet. Vail Lake is an important component of the District’s local water sources. It is the only surface water capture-release facility in the hydro-geologic area of the District. Vail Dam was completed in November, 1948 to impound the winter flows derived from the Wilson, Kolb, and Temecula Creeks, an upstream area of approximately 319 square miles. Through the Vail Lake Agreement between Kaiser Development Co. and the District, executed in 1978, the District acquired Vail Lake and Vail Dam, as well as the right to operate the facilities for the benefit of the District’s water users. Water contained within Vail Lake is released at the base of Vail Dam into Butterfield Canyon, through which Temecula Creek flowed uncontrolled prior to the construction of the dam. The full reservoir area of Vail Dam is 1,070 surface acres. Total reservoir capacity of Vail Dam is 49,370 acre-feet. Average annual surface flows into the reservoir are approximately 12,500 acre-feet. Under an Appropriations Permit obtained from the State of California in 1948, the District may store up to 40,000 acre feet in Vail Lake each year between November 1 and April 30 and may use the stored water for irrigation and domestic uses incidental to farming operations on 3,797 acres of land between May 1 and October 31. The State Water Resources Control Board issued an amended Appropriations Permit 7032 in 2009 that entitles the

37 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

District to use the diverted and stored water for groundwater recharge and ultimate use for all purposes throughout the District’s service area. The State Water Resources Control Board’s issuance of the amended Appropriations Permit 7032 was conditioned upon the existence of a valid Cooperative Water Resource Management Agreement by and between the District and United States Marine Corps at Camp Pendleton. Since 1975, a total of 164,500 acre-feet of captured surface water run-off has been periodically released from Vail Lake to artificially recharge the groundwater aquifers serving the District. In 1993, the District constructed 175 acres of improvements in its recharge facility. The installation of these facilities enables the District to recharge up to 29,000 acre-feet of imported water purchased from MWD. The District also has the capability of recharging natural flows when seasonally available and purchasing year around imported untreated water, which is discounted in price by MWD. Imported Water Approximately 64.6% of the District’s fiscal year 2008-2009 and 58.0% of the District’s fiscal year 2009-2010 water supply was imported. Based on the District’s Master Plan, the projected future water demand is estimated at 100,284 acre-feet. The District expects that additional future water needs will be provided from increased amounts of imported water as seen in the chart below.

5 Year Production Forecast

80,000 70,000 60,000

50,000 Feet - 40,000

Acre 30,000 20,000 10,000 0 11-12 12-13 13-14 14-15 15-16

Native Recharge Treated Import Recycled

Chart 5.2 Imported water purchased from EMWD and WMWD is delivered to the District from the MWD aqueducts passing through the District. EMWD generally serves the Rancho Division and the WMWD generally serves the Santa Rosa Division. The District’s ability to purchase imported water from EMWD and WMWD is based on availability and demand within the region and no assurances can be made as to the ability of MWD to satisfy the water demands of its member agencies, including the EMWD and WMWD, and, in turn, the

38 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

demands of the District to the EMWD and WMWD. The cost of treated water from imported sources currently is approximately $704 per acre-foot, which is substantially more expensive than the average cost of water from local sources. The District currently pays approximately $618 per acre-foot for interim agricultural treated water, $484 per acre-foot for untreated water and $416 for ag-untreated water. Marginal Cost Impacts Import water costs and changes in import water requirements have a significant impact on the cost of water utility operations due to the marginal per unit cost difference between import water and local water. The cost per acre foot of import water exceeds that of local water by 500%; therefore, any changes in the quantity of import water requirements has a material impact on total water operations and corresponding water rates. Additionally, projected import water rate increases by MWD will further add to the impact on total operating costs and corresponding water rates. The following chart details the projected MWD treated water rates for the next five years, showing an anticipated increase of 20.2% over the 2010-2011 actual rate.

Projected Average Treated Import Water Rate

$1,200

$1,000

$800 Foot - $600

Per Acre $400

$200

$0 11-12 12-13 13-14 14-15 15-16

Chart 5.3 Skinner Reservoir, a MWD facility located five miles from the District, provides additional stored surface water within Southern California. Skinner Reservoir was completed in April 1973 with a full reservoir area of 1,140 acres. Total reservoir capacity is 44,264 acre-feet. This MWD facility is a storage and regulating reservoir for the California Water Project and for Colorado River water imported to Southern California for use in southern Riverside and San Diego Counties. All deliveries of imported water to the District emanate from Skinner Reservoir. In 2002, the District constructed a new connection to the Skinner Reservoir, which increased the District’s connected capacity by 100 cubic-feet per second.

39 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

The drainage area upstream of the dam that forms Skinner Reservoir includes approximately 44 square miles. Natural surface runoff from that area is measured as it enters the reservoir and, by legal agreement, upstream surface flows are passed through the reservoir and discharged into Tucalota Creek. Flows in Tucalota Creek enter Santa Gertrudis Creek, which, in turn, is a tributary of Murrieta Creek. Flows into Tucalota Creek and Santa Gertrudis Creek help to recharge the underground aquifers, the source of groundwater for the District. Once the releases from Skinner Reservoir reach Murrieta Creek, the water is effectively lost from the area by evaporation and/or surface flows out through the Temecula Gorge. Secondary Sources of Water Secondary sources of water for the District include recycled water and conserved water. According to the District’s Master Plan, these secondary resources will contribute to the District’s supplies for the foreseeable future by reducing overall costs to the District’s water users, as well as ensuring an adequate long-term supply through build-out of the District. Recycled water produced at the Santa Rosa Water Reclamation Facility is used to irrigate large turf areas in the District such as golf courses, parks and schools. The District completed its conversion of landscape irrigation to recycled water at the community’s three high schools and for a portion of the City of Temecula’s 140-acre Sports Park. In fiscal years 2008-2009 and 2009-2010, the District sold 4,104 acre-feet and 4,367 acre-feet of recycled water, respectively. As municipal and industrial water uses increase in the future, additional recycled water is expected to become available for specialized purposes. The District is working on increasing its use of recycled water with an end goal in excess of 9,000 acre-feet. Conservation, although not a true water source but a reduction in use through scientific and more careful application, will be largely reflected in the agricultural use sector. The District has also purchased imported water to percolate and recharge its basins and use stored water during its high-demand periods. In fiscal year 2008-2009, such recharged water supply provided more than 16,223 acre-feet, representing 20.7% of the District’s water supply. In fiscal year 2009-2010, such recharged water supply provided more than 12,187 acre-feet, representing 18.0% of the District’s water supply. Energy Costs It is estimated that the District’s fiscal year 2010-2011 energy budget, related to water operations of $5,752,419 will decrease to $5,512,868 for fiscal year 2011-2012. This equates to a decrease of $239,551 or a 4.16% decrease over prior years’ estimates. The decrease in energy costs is due to operational efficiencies related to reduced pumping during on-peak rate periods coupled with less demand. Quality of District’s Water The quality of water delivered by the District meets all current requirements of the federal Safe Drinking Water Act and regulations of the California Department of Health Services. The District purchases raw and treated MWD water stored at Skinner Reservoir through EMWD and WMWD. The District’s MWD water is delivered from the first delivery station of Skinner Reservoir. As a result, the District receives treated water with the highest strength of residual disinfectant level as compared to other delivery stations in the system downstream.

40 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

The District manages the production of local groundwater for both long-term sustained yield and protection of water quality. Currently, three of the District’s 44 active production wells exceed allowable maximum contaminant levels for arsenic and/or fluoride. Both constituents commonly occur naturally in the region’s geologic formations. All three wells are operating under California Department of Public Health Services approved blending plans so that the water delivered to customers meets all current standards. Existing Water Utility Facilities The District presently uses a combination of existing groundwater wells, four imported treated turnouts from MWD, and two imported untreated turnouts from MWD, recycled water, and groundwater recharge to meet its water supply needs. Future water supply needs are expected to be provided through increased water recycling projects and groundwater recharge. Wastewater Utility Operations The District is responsible for providing collection, treatment, and disposal of wastewater in the Santa Rosa Division of the District. Such service originally was provided by the District’s Joaquin Ranch Treatment Plant built in 1984. In recent years, the rapid development along the corridor created by Interstate 15, which approximately bisects the District, created the need for the District to expand its provision of wastewater treatment facilities beyond the 600,000-gallon per day capacity at Joaquin Ranch. This facility, however, was taken out of service during fiscal year 1995-96 and wastewater flows from the service area of Improvement District No. 3 have been and continue to be diverted to the SRWRF for treatment. In 1989 the District placed in service its Santa Rosa Water Reclamation Facility ("SRWRF"). The SRWRF is a 5.0 million gallons per day (mgd) sequencing batch reactor wastewater treatment facility. The average annual capacity of the SRWRF is expected to be sufficient until at least 2020 given the current pace of development in the District’s service area. The head works of the plant have been built to accommodate average daily flows of up to 12.0 mgd, and the structural capacity is designed to be expandable to 25.0 mgd. The SRWRF is currently processing flows of 2.8 mgd, which is approximately 70% of its current capacity. The District anticipates connections of approximately 350 equivalent dwelling units per year, which should produce an additional 87,500 gallons per day of influent per year. Currently in the design phase is a project to expand the capacity of the plant to 5.5 mgd and update certain of the technology employed at the SRWRF. The District has established a plan of finance for such project and its design and construction is expected to be completed by 2015. As set forth in the District’s Capital Facilities Plan, the estimated cost of the expansion and updating project is projected to be between $16 million and $50 million depending upon the treatment process selected by the District, a portion of which may be funded from long-term agreements with EVMWD and WMWD. In 1993 the District completed construction of tertiary level treatment facilities at the SRWRF. The recycled water from the tertiary facilities is used to irrigate golf courses, green belts, parks, as well as other large landscaped areas and potentially for agricultural uses.

41 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

The District has a capacity fee program for the wastewater system. Upon making application to the District for wastewater service, the District requires payment of a capacity fee per equivalent dwelling unit. The District has entered into long-term agreements with the Elsinore Valley Municipal Water District (“EVMWD”) and the Murrieta County Water District (“MCWD”) for receiving, treating and disposing of wastewater. The MCWD has subsequently merged its operations into the Western Municipal Water District (WMWD). Current flows of wastewater under these agreements total approximately 1.5 mgd. Revenues for wastewater service and wastewater service availability within a geographic area of EVMWD known as California Oaks, or within MCWD will accrue to the District as long as the respective long- term agreements remain in force. The respective agreements require that rates and charges for wastewater service and service availability be consistent with rates and charges in the District. The District is in the process of negotiating with each of EVMWD and WMWD in connection with the expansion and updating of the SRWRF described above. Insurance The District is a member of the Association of California Water Agencies Joint Powers Insurance Authority ("ACWA/JPIA"). Through the ACWA/JPIA, the District carries property, liability, and workers compensation insurance. The ACWA/JPIA currently services approximately 300 member agencies. The ACWA/JPIA provides pooled insurance coverage for losses in excess of the member districts’ specified self-insured retention level. Individual claims (and aggregate public liability and property claims) in excess of specified levels are covered by excess insurance policies purchased from commercial carriers. The District continues its proactive risk management role through careful monitoring of losses, working closely with ACWA/JPIA’s claims adjuster, and designing and implementing programs to minimize risks and losses. In addition, the District analyzes worker’s compensation issues by monitoring work conditions, and organizing and implementing safety-training programs to reduce employee exposure to hazards. Permits and Licenses The District operates its water system pursuant to a Water Supply Permit issued by the State of California, Department of Health Services to supply water to its service area under Water Permit No. 04-14-96P-016. Additionally, the District owns Permit 7032 for Vail Lake, which allows the District to impound up to 40,000 acre-feet of water per year at Vail Dam and release the same to recharge Pauba Valley for recovery and use for irrigation. That permit is currently under application to the State Water Resources Control Board to allow its use anywhere in the District boundaries. The District operates its Santa Rosa Water Reclamation Facility pursuant to a discharge permit issued by the San Diego Regional Water Quality Control Board ("RWQCB"). RWQCB Order No. 94-92 allows RCWD to reclaim up to 5.0 mgd and redistribute that water over a portion of its service area for irrigation purposes.

42 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

CONSOLIDATED OPERATING BUDGET COMPARISON Fiscal Year 2011-2012

% CHANGE BUDGET ACTUAL BUDGET BUDGET FY 2010-2011 2009-2010 2009-2010 2010-2011 2011-2012 BUDGET OPERATING REVENUE Water Revenue 34,835,603 29,441,887 38,537,579 34,245,842 -11.14% Recycled Water Revenue 907,818 965,354 1,077,194 1,038,819 -3.56% Monthly Service Charges 12,989,230 12,341,670 13,588,806 14,265,345 4.98% Unmetered Construction Water 128,107 25,656 73,374 47,929 -34.68% Energy Charges 6,110,657 4,787,420 3,362,217 2,969,039 -11.69% Wastewater Service Charges 4,280,667 4,202,709 4,616,282 4,712,674 2.09% Other-Recycled Local Project Credits 609,096 612,889 630,890 586,191 -7.09% New Service Connections 321,366 612,889 312,981 231,325 -26.09% Rental/Lease Income 527,307 246,083 454,549 629,470 38.48% Other Op Rev-Billing 1,365,413 671,196 2,247,974 1,780,099 -20.81% Other Op Rev-Engineering 372,077 1,586,970 297,254 258,793 -12.94% Western Ids/Rock Mountain 50,855 111,341 96,899 58,346 -39.79% TOTAL OPERATING REVENUE 62,498,196 55,084,649 65,295,999 60,823,872 -6.85%

OPERATING EXPENSES Source of Supply 39,411,604 32,414,792 41,793,551 35,904,225 -14.09% Booster Pumping 4,519,633 3,720,516 4,626,177 3,950,863 -14.60% T&D 7,006,924 6,921,505 7,064,065 7,763,501 9.90% Customer Service 4,638,014 4,584,657 4,597,708 4,958,417 7.85% Recycled Water 2,560,278 2,584,363 2,914,257 2,948,891 1.19% Wastewater Expense 3,531,470 3,428,667 3,895,690 4,034,860 3.57% Engineering 1,356,100 1,303,606 1,186,440 1,326,276 11.79% Support 1,677,601 2,436,571 1,787,248 1,624,048 -9.13% TOTAL OPERATING EXPENSES 64,701,623 57,394,677 67,865,136 62,511,081 -7.89%

GAIN OR (LOSS) FROM OPERATIONS (2,203,427) (2,310,028) (2,569,137) (1,687,209) RESERVES – USE OF (ADDITIONS TO) 598,427 1,192,920 1,331,637 333,209 INTEREST EARNINGS GENERAL FUND 1,180,000 692,108 962,500 1,104,000 PERS CONTRIBUTION AMORTIZATION 500,000 500,000 500,000 500,000 CAPITAL EXPENDITURES GENERAL FUND (75,000) (75,000) (225,000) (250,000) SOURCES OF (USES) FROM OP ACTIVITIES 0000 * Labor dollars are subject to the outcome of final labor negotiations.

43 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

Consolidated Operating Budget Fiscal Year 2011-2012

Support $1.624

Engineering $1.326

Wastewater $4.035 Expense

Recycled Water $2.949

Customer Service $4.958

T & D $7.764

Booster Pumping $3.951

Source of Supply $35.904

0 10 20 30 40 Millions

Consolidated Operating Budget Fiscal Year 2010-2011

Support $1.787

Engineering $1.186

Wastewater $3.896 Expense

Recycled Water $2.914

Customer Service $4.598

T & D $7.064

Booster Pumping $4.626

Source of Supply $41.794

0 10 20 30 40 50 Millions

44 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

The following graph and schedules identify the major sources of revenue of the 2011-2012 operating budget.

MAJOR OPERATING REVENUE

Actual Budget Budget Percent FY 2009-10 FY 2010-11 FY 2011-12 Change Water Revenue 29,441,887 38,537,579 34,245,842 -11.1% Recycled Water Revenue 965,354 1,077,194 1,038,819 -3.6% Monthly Service Charges 12,341,670 13,588,806 14,265,345 5.0% Unmetered Construction Water 25,656 73,374 47,929 -34.7% Energy Charges 4,787,420 3,362,217 2,969,039 -11.7% Wastewater Service Charges 4,202,709 4,616,282 4,712,674 2.1% Other-Recycled Project CRDS 612,889 630,890 586,191 -7.1% New Service Connections 246,083 312,981 231,325 -26.1% Rental/Lease Income 671,196 454,549 629,470 38.5% Other OP Revenue - Billing 1,586,970 2,247,974 1,780,099 -20.8% Other OP Revenue - Engineering 111,341 297,254 258,793 -12.9% Western IDA/Rock Mountain 91,473 96,899 58,346 -39.8% Totals $55,084,649 $65,295,999 $60,823,872 -6.8%

FY 2011-2012 Major Operating Revenues 0% 1% 0% 0% 1% 3% 8%

0% 5%

24% 56%

2% Water Revenue Recycled Water Rev. Monthly Service Charges Unmetered Construction Water Energy Charges WW Service Charges Other-Recycled Project CRDS New Service Conn. Rental/Lease Income Other Op Rev.-Billing Other Op Revenue-Eng. Western IDS/Rock Mountain

45 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Explanation of Major Revenue Sources WATER REVENUE: Commodity water sales are the largest source of District revenues. Water Revenue The District sets rates at a level to recover the cost of delivery. There are four major types of 11-12 $34.25 water revenue: Agricultural, Ag-Domestic, 10-11 $38.54 Domestic and Other. 09-10 $29.44 For fiscal year 2011-2012 sales quantities are projected to be 61,578 acre feet. Water sales 0 20 40 revenue is projected to be $34,245,842. Millions Revenue is projected to decrease by 11.1% compared to fiscal year 2010-2011 due to a Actual 09-10 Budget 10-11 Budget 11-12 decrease in budgeted demand. RECYCLED WATER REVENUE: Water sales earned from water supplied for approved reclaimed water use such as golf courses, landscapes, parks, etc. For fiscal year 2011-2012 sales quantities are projected to be 4,300 acre feet. Recycled water sales revenue is projected to be $1,038,819. Revenue is projected to decrease by 3.6% compared to the fiscal year 2010-2011 due to a small decrease of budgeted demand. MONTHLY SERVICE CHARGES: Revenues Monthly Service Charges earned from a monthly charge (pro-rated daily) for customer services such as maintaining meters, processing bills, posting 11-12 $14.27 payments and repairing water mains. Daily 10-11 $13.59 capacity charges are based on the size of a customer’s water meter. Charges are applied 09-10 $12.34 to open accounts whether water is used or not. 0 10 For fiscal year 2011-2012 revenue is projected Millions to be $14,265,345. Monthly service charge revenue is projected to increase by 5.0% Actual 09-10 Budget 10-11 Budget 11-12 compared to the fiscal year 2010-2011 due to increase in rates and charges. UN-METERED CONSTRUCTION WATER: Revenues earned from a monthly charge for temporary connection to water system in lieu of the meter during construction of residence. For fiscal year 2011-2012 revenue is projected to be $47,929. Un-metered construction water revenue is projected to decrease by 34.7% compared to the fiscal year 2010-2011 due to a reduction in developer activity.

46 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 ENERGY CHARGES: Revenues earned from a commodity energy charge per HCF for the cost of energy related to pumping of water to various elevation pressure zones. Energy Charges For fiscal year 2011-2012 revenue is projected 11-12 $2.97 to be $2,969,039. Energy revenue is projected to decrease by 11.7% compared to the fiscal 10-11 $3.36 year 2010-2011 due to less demand. WASTEWATER SERVICE CHARGES: Revenues 09-10 $4.79 earned from a monthly charge, prorated daily, on a customer’s account to recover the costs of 0 2 4 6 collection, transporting, treating and Millions disposing of sewage. Rates are based on equivalent dwelling units (EDU’s). Actual 09-10 Budget 10-11 Budget 11-12 For fiscal year 2011-2012 revenue is projected to be $4,712,674. Wastewater service charges are projected to increase by 2.1% compared to the fiscal year 2010-2011 due to increased flows and increase in rate. OTHER- RECYCLED PROJECT CREDITS: Revenues earned from recycled water credits related to recycled water sold in the District. In April 1993 the District entered into a Joint Agreement with Metropolitan Water and Eastern Municipal for an expansion project to distribute up to an additional 5,550 acre feet of recycled water per year and receive a credit of $154 per acre foot (AF) for each AF sold. For fiscal year 2011-2012 revenue is projected to be $586,191. Recycled Water Credits revenue is projected to decrease by 7.1% compared to the fiscal year 2010-2011 due to decreased recycled water sales. NEW SERVICE CONNECTIONS: The District charges customers for the installation of new water meters. For fiscal year 2011-2012 revenues are New Service Connections projected to be $231,325. New service connections revenue is projected to decrease 11-12 $231.33 by 26.1% compared to the fiscal year 2010- 2011 due to a reduction in developer activity. 10-11 $312.98 RENTAL LEASE INCOME: The District collects rent received from the lease of the old District 09-10 $612.89 Headquarters property. For fiscal year 2011- 2012 revenues are projected to be $629,470. 0 200 400 600 800 Rental/Lease income is projected to increase Thousands by 38.5% compared to fiscal year 2010-2011 due to a new lease on the old District Actual 09-10 Budget 10-11 Budget 11-12 Headquarters.

47 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

OTHER OPERATING REVENUE-BILLING: The District collects fees for various services related to the customer water account such as: returned check charges, reduced pressure backflow prevention device (R.P). Inspection fees, delinquent charges, meter tests, R.P Certification, meter relocations, billing service charges and miscellaneous operation revenue. For fiscal year 2011-2012 revenues are projected to be $1,780,099. Other Op Rev - Billing is projected to decrease by 20.8% compared to the fiscal year 2010-2011 due to decreased delinquent activity. OTHER OPERATING REVENUE-ENGINEERING: The District collects engineering fees for various services performed such as: will serve letters, blueprint sales, sewer inspections, water inspections and plan checking. For fiscal year 2011-2012 revenues are projected to be $258,793. Other Op Rev - Engineering is projected to decrease by 12.9% compared to the fiscal year 2010-2011 due to decreased developer activity.

48 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

The following graph and schedules identify the major operating expenses of the 2011-2012 operating budget.

MAJOR OPERATING EXPENSES

Actual Budget Budget Percent FY 2009-10 FY 2010-11 FY 2011-12 Change Source of Supply 32,414,792 41,793,551 35,904,225 -14.1% Booster Pumping 3,720,516 4,626,177 3,950,863 -14.6% Transmission and Distribution 6,921,505 7,064,065 7,763,501 9.9% Customer Service 4,556,510 4,597,708 4,958,417 7.8% Recycled Water 2,584,364 2,914,257 2,948,891 1.2% Wastewater Expense 3,456,813 3,895,690 4,034,860 3.6% Engineering 1,303,606 1,186,440 1,326,276 11.8% Support 2,436,571 1,787,248 1,624,048 -9.1% Totals $ 57,394,677 $ 67,865,136 $ 62,511,081 -7.9%

FY 2011-2012 Major Operating Expense

2% 3% 7% 5%

8%

12% 57%

6%

Source of Supply Booster Pumping T&D Customer Service Recycled Water WW Expense Engineering Support

49 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

Explanation of Major Operating Expenses SOURCE OF SUPPLY: Source of Supply expense is the acquisition cost of water for resale to customers. Source of Supply The District has several water resources available, including treated and untreated import water, re- cycled water and natural local sources. Import 11-12 $35.90 water is purchased from Metropolitan Water District (MWD) through two of its member 10-11 $41.79 agencies, Eastern Municipal Water District (EMWD) and Western Municipal Water District 09-10 $31.00 (WMWD) and distributed through connections at 0 20 40 60 EM13, EM 20, WR26 and WR28. The natural local Millions groundwater is produced through the District’s potable water wells. The District purchases Actual 09-10 Budget 10-11 Budget 11-12 untreated water from EMWD through the EM 19 connection to recharge the groundwater basin. This operating function includes the cost of labor, overheads, materials, outside services, permits, water quality regulations, and utilities used and incurred in the general supervision and operation of water source of supply activities. The District’s water source comes from the groundwater basin and through imported water from MWD. The District has a system of wells and pump stations to extract the water from the ground. Source of supply activities include preventive and corrective maintenance on all well facilities, recharge ponds, and water connections. For fiscal year 2011-2012 expenses are projected to be $35,904,225. Cost of import water is projected to increase by 7.1% compared to fiscal year 2010-2011. The 14.1% decrease in total source of supply is directly related to the reduction in demand. BOOSTER PUMPING: Booster pumping is the activity that transfers water from lower to higher elevation pressure zones through pump stations that lift the water for customer usage. This operating function includes the cost of labor, overheads, materials, outside services, and utilities used and incurred in the general supervision and operation of pumping activities. The cost of energy is 73.5% or $2,904,868 of the total cost of this activity. Booster pumping activities include preventive and corrective maintenance on all pump stations, generators, and other equipment used in the pumping of water. For fiscal year 2011-2012 expenses are projected to be $3,950,863. Booster expense is projected to decrease by 14.6% compared to fiscal year 2010-2011 due to a decrease in energy expense from less demand and corrective maintenance activities. TRANSMISSION AND DISTRIBUTION: Transmission and distribution is the water system conveyance facilities that transport water from source of supply facilities to water users. These facilities consist of fire hydrants, air-vacs, reservoirs, and large diameter pipelines that transport water into and out of reservoirs. Reservoirs are designed to meet water requirements at peak demand and equalize the system.

This operating function includes of the cost of labor, overheads, materials, and outside services used and incurred in the general supervision and operation of transmission and

50 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 distribution facilities. Transmission and distribution activities include preventive and corrective maintenance on all reservoirs, mainlines, air vacs, fire hydrants and meter installations. For fiscal year 2011-2012 expense is projected to be $7,763,501. Transmission and distribution expense is projected to increase by 9.9% compared to fiscal year 2010-2011 due to an increase in preventive maintenance of air vacs, fire hydrants and control valves. Customer Service CUSTOMER SERVICE: Customer service is the activity involved in reading and maintaining 11-12 $4.96 water meters. It is important that meters be properly installed, maintained, and read to 10-11 $4.60 obtain necessary revenue for the water system. 09-10 $4.58 This operating function includes the cost of 0 2 4 6 labor, overheads, materials and outside Millions services used and incurred in the general supervision and operation of customer meters Actual 09-10 Budget 10-11 Budget 11-12 and associated equipment. Activities include preventive maintenance of customer meters and meter reading. For fiscal year 2011-2012 expense is projected to be $4,958,417. Customer service expense is projected to increase by 7.8% compared to the fiscal year 2010-2011 due to the increased preventive maintenance activities on meters and associated equipment. RECYCLED WATER: Recycled water is wastewater treated beyond the secondary to tertiary treatment (Title 22) level. This process consists of a chemically assisted filtration system that de-chlorinates the water to be used for landscape irrigation, golf courses, and some agriculture use. The recycled water system includes reservoirs, pipelines, pump stations and holding ponds. Recycled Water This operating function includes of the cost of labor, overheads, materials and outside services 11-12 $2.95 used and incurred in the general supervision and operation of recycled water facilities and 10-11 $2.91 associated equipment. Activities include 09-10 $2.58 preventive and corrective maintenance of all recycled waterlines, reservoirs, pump stations 0 2 4 and holding ponds. Millions For fiscal year 2011-2012 expense is projected Actual 09-10 Budget 10-11 Budget 11-12 to be $2,948,891. Recycled Water expense is projected to increase by 1.2% compared to fiscal year 2010-2011 due to increased cost of recycled water purchases. WASTEWATER EXPENSE: Wastewater treatment is the process whereby raw sewage is collected and lifted to the treatment plant for processing. There are two processes the sewage goes through, the primary and the secondary. The primary process is the physical settling of waste. The secondary process is transferred to the biological treatment whereby particles are consumed by biological activity. After secondary

51 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 treatment the wastewater is transferred to the recycled water function for further processing. This operating function includes of the cost of labor, overheads, materials, outside services, bio-solid removal and utilities used and incurred in the general supervision and operation of wastewater treatment activities. Wastewater activities include preventive and corrective maintenance on all treatment plant structures and improvements. For fiscal year 2011-2012 expense is projected to be $4,034,860. Wastewater expense is projected to increase by 3.6% compared to fiscal year 2010-2011 due to increased chemical costs, increased corrective maintenance activity, and additional labor expense. ENGINEERING: The primary function of Engineering is the planning, design, and construction management of District capital facilities both new and replacement. Engineering also includes overseeing developer activities to ensure that capital facilities meet District standards. This operating function includes of the cost of labor, overheads, materials and outside services used and incurred in connection with the engineering functions that are not chargeable directly to capital activity. Activities include cost estimates, general customer inquiries, mapping updates and general project planning. Engineering For fiscal year 2011-2012 expense is projected to be $1,326,276. Engineering expense is 11-12 $1.33 projected to increase by 11.8% compared to fiscal year 2010-2011 due to increased labor 10-11 $1.19 expense and a shift of engineering services 09-10 from other functions. $1.30 SUPPORT: Support consists of the functions that 0 1 2 support the District activities. These functions Millions include planning, accounting, board Actual 09-10 Budget 10-11 Budget 11-12 administration, public relations, human resources, records-management, warehouse operations, purchasing, office building maintenance, legal expenses, and utilities. The costs become overhead that is allocated to operating and capital functions. The overhead rate is determined during the annual budget process. This operating function includes the cost of labor, overheads, materials, and utilities, outside services used and incurred in connection with the general administration of the District’s operations that are not chargeable directly to a particular operating function. Activities include preventive and corrective maintenance of all District office buildings, office equipment, and furnishings. For fiscal year 2011-2012 expense is projected to be $1,624,048. Support expense is projected to decrease by 9.1% compared to fiscal year 2010-2011 due to decreased labor expense upon the completion of the Computerized Maintenance Management System conversion.

52 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012

EMPLOYEE BENEFITS: This operating function includes of the cost of employees’ sick- vacation-holiday benefit, medical-dental-vision insurance, group term life insurance, FICA, long term disability insurance, and PERS retirement benefits. These costs become overhead that is allocated to operating and capital functions. The overhead rate is determined with the annual budget process. For fiscal year 2011-2012 expense is projected to be $8,063,548. Employee benefit expense is projected to increase by 7.5% compared to fiscal year 2010-2011 due to increased medical costs and pension retirement benefits. At this time employee benefits and labor dollars are subject to the outcome of final labor negotiations. VEHICLE & EQUIPMENT: This operating function includes the cost of labor, overheads, materials and outside services used and incurred in connection with the preventive and corrective maintenance of all District vehicles and equipment. These costs become overhead that is allocated to operating and capital functions. The overhead rate is determined during the annual budget process. For fiscal year 2011-2012 expense is projected to be $662,076. Vehicle & equipment is projected to increase by 11.4% compared to fiscal year 2010-2011 due to increased corrective maintenance costs.

53 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 RANCHO DIVISION OPERATING BUDGET

2009-2010 2010-2011 2010-2011 2011-2012 ACTUAL PROJECTED BUDGET BUDGET OPERATING REVENUES Water Revenue 15,142,891 15,877,735 20,040,955 17,872,947 SEE NOTE - 2 Recycled Water Revenue 557,868 760,632 677,296 693,620 Monthly Service Charge 7,953,021 8,442,181 8,682,607 9,083,263 SEE NOTE - 2 Unmetered Construction Water 25,656 29,006 72,727 47,929 Energy Charges 2,469,072 1,083,590 1,338,276 1,216,551 SEE NOTE - 2 Other-Recycled Project Crds 420,543 422,388 417,151 414,572 New Service Connections 186,110 354,308 209,847 170,667 SEE NOTE - 3 Rental/Lease Income 322,151 395,524 311,499 459,189 Other Op Rev-Billing 1,093,936 1,206,023 1,369,217 1,135,906 Other Op Rev-Eng. 83,345 92,300 187,460 164,664 TOTAL OPERATING REVENUES 28,254,591 28,663,687 33,307,035 31,259,308 OPERATING EXPENSES SOURCE OF SUPPLY Operating Purchased Water Resource 16,159,655 16,848,331 21,362,129 18,000,075 Purchased Water Santa Marg 1953,562 892,998 1,054,057 1,105,236 TOTAL SOURCE OF SUPPLY 17,113,217 17,741,329 22,416,186 19,105,311

BOOSTER PUMPING OPERATING Labor 72,875 73,302 79,761 74,963 G&A/Fringe Benefit 158,205 173,214 188,474 166,042 Materials & Supplies 15,844 29,214 16,750 11,900 Utilities 1,051,773 1,110,108 1,289,380 1,162,398 Outside Services 47,969 43,160 59,100 54,500 Vehicle & Equipment 8,324 7,330 7,976 7,571 Total Operating 1,354,990 1,436,328 1,641,441 1,477,374 CORRECTIVE MAINTENANCE Corrective Maintenance-Labor 7,278 11,762 16,610 8,507 Corrective Maintenance-G&A/FB 15,799 27,792 40,911 19,703 Corrective Maintenance 62,802 76,292 88,700 95,000 Total Corrective 85,879 115,846 146,221 123,211 TOTAL BOOSTER PUMPING 1,440,869 1,552,174 1,787,662 1,600,585 TRANSMISSION & DISTRIBUTION OPERATING Labor 896,623 887,132 861,909 1,105,840 G&A/Fringe Benefit 1,750,719 1,855,970 1,823,895 2,258,816 Materials & Supplies 174,761 203,760 138,178 219,148 Outside Services 188,806 272,296 242,837 182,712 Vehicle & Equipment 92,124 78,544 77,185 102,998 Service Connections-Labor 17,094 25,500 22,404 21,537 Service Connections-G&A/FB 36,743 56,732 55,181 49,880 Service Connection Expense 127,823 272,076 131,500 100,400 Total Operating T&D 3,284,693 3,652,010 3,353,090 4,041,331

CORRECTIVE MAINTENANCE Corrective Maintenance-Labor 131,784 125,060 119,677 121,047 Corrective Maintenance-G&A/FB 286,093 295,518 294,764 280,346 Corrective Maintenance 484,908 256,824 381,200 274,500 Total Corrective 902,785 677,402 795,640 675,893 TOTAL TRANSMISSION & DISTRIBUTION 4,187,478 4,329,412 4,148,730 4,717,223

54 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 RANCHO DIVISION OPERATING BUDGET

2009-2010 2010-2011 2010-2011 2011-2012 ACTUAL PROJECTED BUDGET BUDGET CUSTOMER SERVICE OPERATING Labor 480,635 482,734 406,818 556,793 G&A/Fringe Benefit 1,014,899 1,114,054 939,268 1,212,276 Materials & Supplies 188,180 146,214 189,800 175,700 Outside Services 148,763 112,232 51,500 15,000 Vehicle & Equipment 54,878 48,276 40,682 56,236 Resource Customer Support 1,362,601 1,605,848 1,369,158 1,347,260 Uncollectible Accounts 90,804 190,562 103,000 153,000 Total Operating 3,340,760 3,699,920 3,100,226 3,516,265 TOTAL CUSTOMER SERVICE 3,340,760 3,699,920 3,100,226 3,516,265

RECYCLED WATER OPERATING Joint Facility Recycled Water 1,325,850 1,335,090 1,398,290 1,403,147 Labor 42,905 50,132 43,422 59,134 G&A/Fringe Benefit 93,144 118,460 102,605 130,983 Materials & Supplies 5,057 38,976 21,055 21,139 Utilities 158,485 179,156 174,442 166,790 Outside Services 6,220 18,582 23,997 24,236 Vehicle & Equipment 4,899 5,014 4,342 5,973 Total Operating 1,636,560 1,745,410 1,768,153 1,811,401

CORRECTIVE MAINTENANCE Corrective Maintenance-Labor 3,687 4,550 4,729 4,922 Corrective Maintenance-G&A/FB 8,005 10,752 11,648 11,400 Corrective Maintenance 45,227 68,982 79,000 70,000 Total Corrective 56,919 84,284 95,378 86,323 TOTAL RECYCLED WATER 1,693,479 1,829,694 1,863,531 1,897,724

ENGINEERING OPERATING Labor 25,854 19,762 43,382 43,936 G&A/Fringe Benefit 51,708 41,524 94,182 90,464 Outside Services 16,219 39,390 5,000 5,000 Vehicle & Equipment 2,806 2,552 4,338 4,438 Engineering OH-Cap Fee for Service 11,113 12,411 27,244 27,504 SEE NOTE - 5 Resource Engineering 567,269 695,217 504,824 578,439 SEE NOTE - 5 Total Operating 674,969 810,856 678,970 749,780 TOTAL ENGINEERING 674,969 810,856 679,970 749,780

SUPPORT OPERATING Direct Support Allocation 741,111 599,786 930,429 856,124 Resource Support 534,349 0 0 0 Total Operating 1,275,460 599,786 930,429 856,124 TOTAL SUPPORT 1,275,460 599,786 930,429 856,124

TOTAL OPERATING EXPENSES 29,726,227 30,563,171 34,925,734 32,443,013 GAIN OR (LOSS) FROM OPERATIONS (1,471,636)(1,899,483)(1,618,699) (1,183,705) RESERVES 575,707 927,617 620,199 120,205 INTEREST EARNINGS GENERAL FUND 612,429 688,366 715,000 780,000 PERS CONTRIBUTION AMORTIZATION 283,500 283,500 283,500 283,500 NET SOURCES OR (USES) FROM OP ACTIVITIES 0 (0) 0 0

55 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 SANTA ROSA DIVISION OPERATING BUDGET

2009-2010 2010-2011 2010-2011 2011-2012 ACTUAL PROJECTED BUDGET BUDGET OPERATING REVENUES Water Revenue 14,298,997 14,574,471 18,496,624 16,372,895 SEE NOTE - 2 Recycled Water Revenue 407,486 347,800 399,898 345,199 Monthly Service Charges 4,388,649 4,725,559 4,906,199 5,182,082 SEE NOTE - 2 Unmetered Construction Water 0 0 647 0 Energy Charges 2,318,348 1,364,535 2,023,941 1,752,488 SEE NOTE - 2 Other- Recycled Project Crds 192,346 199,770 213,739 171,619 New Service Connections 59,973 106,616 103,134 60,658 SEE NOTE - 3 Rental/Lease Income 349,046 144,750 143,050 170,281 Other Op Rev-Billing 493,034 439,803 878,757 644,193 Other Op Rev-Eng. 24,255 20,598 101,794 90,129 Western IDA-Rock Mtn 91,473 42,338 96,899 58,346 TOTAL OPERATING REVENUES 22,623,606 21,966,240 27,364,682 24,847,890 OPERATING EXPENSES SOURCE OF SUPPLY Operating Purchased Water Resource 14,348,013 15,575,258 18,323,308 15,693,678 SEE NOTE - 4 Purchased Water Santa Marg 953,562 892,998 1,054,057 1,105,236 Total Operating 15,301,575 16,468,256 19,377,365 16,798,914 TOTAL SOURCE OF SUPPLY 15,301,575 16,468,256 19,377,365 16,798,914 BOOSTER PUMPING OPERATING Labor 118,665 100,648 122,550 80,217 G&A/Fringe Benefit 257,609 237,830 289,586 177,681 Materials & Supplies 65,297 76,324 54,000 41,150 Utilities 1,574,568 1,685,106 1,991,037 1,742,470 Outside Services 103,189 161,162 166,400 142,950 Vehicle & Equipment 13,566 10,066 12,255 8,102 Total Operating 2,132,894 2,271,136 2,635,829 2,192,569 CORRECTIVE MAINTENANCE Corrective Maintenance-Labor 11,935 11,292 17,322 9,442 Corrective Maintenance-G&A/FB 25,911 26,682 42,664 21,867 Corrective Maintenance 108,907 133,268 142,700 126,400 Total Corrective 146,753 171,242 202,686 157,708 TOTAL BOOSTER PUMPING 2,279,647 2,442,378 2,838,515 2,350,278 TRANSMISSION & DISTRIBUTION OPERATING Labor 595,680 565,114 619,208 636,996 G&A/Fringe Benefit 1,158,623 1,188,812 1,326,093 1,285,078 Materials & Supplies 102,698 97,616 104,714 159,535 Outside Services 146,694 161,704 147,865 137,337 Vehicle & Equipment 61,039 50,310 56,119 58,597 Service Connections-Labor 6,326 14,068 12,764 9,985 Service Connections-G&A/FB 13,067 30,406 31,437 23,125 Service Connection Expense 25,629 62,142 58,500 28,000 Total Operating T&D 2,109,756 2,170,172 2,356,699 2,338,653 CORRECTIVE MAINTENANCE Corrective Maintenance-Labor 113,854 95,680 85,803 116,443 Corrective Maintenance-G&A/FB 247,167 226,092 211,333 269,682 Corrective Maintenance 263,250 306,492 261,500 321,500 Total Corrective 624,271 628,264 558,636 707,624 TOTAL TRANSMISSION & DISTRIBUTION 2,734,027 2,798,436 2,915,335 3,046,277

56 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 SANTA ROSA DIVISION OPERATING BUDGET

2009-2010 2010-2011 2010-2011 2011-2012 ACTUAL PROJECTED BUDGET BUDGET CUSTOMER SERVICE OPERATING Labor 180,209 227,316 236,941 237,854 G&A/Fringe Benefit 380,572 522,694 539,282 517,181 Materials & Supplies 34,675 52,314 52,500 52,450 Outside Services 19,743 15,434 19,300 7,100 Vehicle & Equipment 20,587 22,734 23,694 24,023 Resource Customer Support 319,959 376,752 322,498 315,189 Uncollectible Accounts 60,395 91,958 102,000 92,000 Total Operating 1,016,140 1,309,202 1,296,214 1,245,798 TOTAL CUSTOMER SERVICE 1,016,140 1,309,202 1,296,214 1,245,798 RECYCLED WATER OPERATING Joint Facility Recycled Water 557,727 572,181 599,267 601,349 Labor 51,290 29,120 49,622 57,429 G&A/Fringe Benefit 111,348 68,808 117,257 127,205 Materials & Supplies 5,369 10,004 25,321 16,575 Utilities 111,155 155,314 138,641 137,473 Outside Services 14,194 9,136 21,638 25,317 Vehicle & Equipment 5,860 2,912 4,962 5,800 Total Operating Rec 856,943 847,475 956,708 971,148 CORRECTIVE MAINTENANCE Corrective Maintenance-Labor 6,189 436 3,730 3,715 Corrective Maintenance-G&A/FB 13,433 1,032 9,187 8,604 Corrective Maintenance 14,320 74,842 81,100 67,700 Total Corrective 33,942 76,310 94,017 80,019 TOTAL RECYCLED WATER 890,885 923,785 1,050,726 1,051,167 ENGINEERING OPERATING Labor 10,900 16,510 30,397 34,748 G&A/Fringe Benefit 21,785 35,730 65,992 71,547 Outside Services 5,810 1,840 5,000 5,000 Vehicle & Equipment 1,237 1,658 3,040 3,510 Engineering OH-Cap Fee for Service 1,572 10,368 19,090 21,752 SEE NOTE - 5 Resource Engineering 388,723 246,631 179,088 205,203 SEE NOTE - 5 Total Operating 430,027 312,737 302,607 341,760 TOTAL ENGINEERING 430,027 312,737 302,607 341,760 SUPPORT OPERATING Direct Support Allocation 431,378 474,626 588,491 520,692 Resource Support 334,914 0 0 0 Total Operating 766,292 474,626 588,491 520,692 TOTAL SUPPORT 766,292 474,626 588,491 520,692 TOTAL OPERATING EXPENSES 23,418,593 24,729,420 28,369,253 25,354,887 GAIN OR (LOSS) FROM OPERATIONS (794,987) (2,763,180) (1,004,571) (506,997) RESERVES 533,035 2,284,154 610,571 70,497 INTEREST EARNINGS GENERAL FUND 75,452 312,526 227,500 270,000 PERS CONTRIBUTION AMORTIZATION 166,500 166,500 166,500 166,500 NET SOURCES OR (USES) FROM OP ACTIVITIES 0 0 0 0

57 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 RESOURCE DIVISION OPERATING BUDGET

2009-2010 2010-2011 2010-2011 2011-2012

ACTUAL PROJECTED BUDGET BUDGET OPERATING REVENUES TOTAL OPERATING REVENUES 0 0 0 0 OPERATING EXPENSES SOURCE OF SUPPLY Operating Purchased Water MWD 17,210,894 21,233,477 25,636,621 20,099,565 Import Water Fixed Charge 1,037,924 1,029,032 1,231,932 1,241,736 Purchased Water Premium 482,011 27,817 500,000 250,000 Purchased Recharge Water 8,490,974 6,463,353 8,639,295 8,340,528 Purchased Water Resource (30,507,66 9) (32,423,589) (39,685,437) (33,693,753) SEE NOTE - 4 Purchased Water Santa Marg (1,907,125) (1,785,997) (2,108,114) (2,210,472) Labor 442,552 443,390 420,076 430,593 G&A/Fringe Benefit 960,742 1,047,728 992,639 953,763 Materials & Supplies 218,363 175,996 270,695 224,415 Utilities 2,277,775 2,482,537 2,472,002 2,608,000 Outside Services 1,000,189 696,287 1,001,924 1,182,212 Vehicle & Equipment 50,563 44,342 42,007 43,490 Total Operating (242,806) (565,627) (586,360) (529,924) Corrective Maintenance Corrective Maintenance-Labor 28,976 72,052 27,826 28,928 Corrective Maintenance-G&A/FB 62,903 170,258 68,534 66,996 Corrective Maintenance 150,927 323,317 490,000 434,000 Total Corrective 242,806 565,627 586,360 529,924 TOTAL SOURCE OF SUPPLY 0 0 0 0 CUSTOMER SERVICE OPERATING Labor 413,827 475,658 411,777 425,887 G&A/Fringe Benefit 826,413 1,032,652 893,969 876,902 Materials & Supplies 28,348 24,482 27,000 24,000 Outside Services 566,406 637,054 519,000 489,000 Vehicle & Equipment 47,176 47,566 41,178 43,015 Resource Customer Support (1,882,170) (2,217,412) (1,892,924) (1,858,803) TOTAL CUSTOMER SERVICE 0 0 (0) 0 RECYCLED WATER OPERATING Joint Facility Recycled Water (1,883,577) (1,907,271) (1,997,557) (2,004,496) Purchased Recycled Water 366,312 381,597 372,919 391,570 Labor 313,344 299,236 288,070 300,033 G&A/Fringe Benefit 680,249 707,096 680,710 664,574 Materials & Supplies 113,172 134,196 202,600 197,800 Utilities 141,791 136,148 175,000 145,000 Outside Services 178,284 122,664 124,750 187,209 Vehicle & Equipment 35,780 29,924 28,807 30,303 Total Operating (54,645) (96,410) (124,701) (88,006) Corrective Maintenance Corrective Maintenance-Labor 3,115 16,670 20,127 9,954 Corrective Maintenance-G&A/FB 6,764 40,948 49,574 23,053 Corrective Maintenance 44,766 38,792 55,000 55,000 Total Corrective 54,645 96,410 124,701 88,006 TOTAL RECYCLED WATER 0 (0) 0 0

58 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 RESOURCE DIVISION OPERATING BUDGET

2009-2010 2010-2011 2010-2011 2011-2012

ACTUAL PROJECTED BUDGET BUDGET ENGINEERING OPERATING Labor 555,244 572,346 444,189 514,132 G&A/Fringe Benefit 1,108,945 1,242,562 964,335 1,058,598 Materials & Supplies 55,474 47,674 57,100 47,600 Outside Services 163,535 61,818 129,000 94,000 Vehicle & Equipment 63,474 57,236 44,419 51,927 Engineering OH-Cap Fee for Service (792,070) (757,662) (750,269) (747,879) SEE NOTE - 5 Resource Engineering (1,154,602) (1,223,974) (888,775) (1,018,378) SEE NOTE - 5 Total Operating 0 (0) 0 0 TOTAL ENGINEERING 0 (0) 0 0 SUPPORT OPERATING Labor 3,750,877 3,953,716 4,128,430 3,989,362 G&A/Fringe Benefit 2,610,017 2,857,782 2,988,474 3,019,947 Materials & Supplies 490,534 341,166 508,137 417,350 Utilities 159,459 185,636 170,897 170,705 Outside Services 3,436,061 3,305,450 3,094,325 3,197,848 Corrective Maintenance 32,538 156,410 51,575 39,728 Direct Support Allocation (1,366,431) (1,228,042) (1,787,248) (1,624,047) Resource Support (9,113,055) (9,572,118) (9,154,590) (9,210,894) SEE NOTE - 5 Total Operating 0 0 0 (0) TOTAL SUPPORT 0 0 0 (0) EMPLOYEE BENEFIT Employee Benefits 5,586,809 5,525,293 5,664,282 6,126,036 E/B Vacation/Sick/Holiday 1,781,392 1,811,778 1,838,377 1,937,512.15 Reimbursement Employee Benefit (7,368,201) (7,337,071) (7,502,659) (8,063,548) TOTAL EMPLOYEE BENEFIT 0 0 0 0 VEHICLE & EQUIPMENT OPERATING Vehicle & Equipment PM-Labor 35,205 28,780 37,556 35,645 Vehicle & Equipment PM-G&A/FB 25,264 21,297 27,792 26,983 Vehicle & Equipment Exp. PM 266,219 329,124 343,450 374,279 Total Operating 326,688 379,201 408,798 436,907 CORRECTIVE MAINTENANCE Vehicle & Equipment CM-Labor 48,732 59,574 40,476 58,719 Vehicle & Equipment CM-G&A/FB 34,976 44,085 29,952 44,450 Vehicle & Equipment Exp. CM 172,429 185,861 115,000 122,000 Total Corrective 256,137 289,520 185,429 225,169 Reimb Vehicle Expense (582,825) (668,721) (594,226) (662,076) SEE NOTE - 5 TOTAL VEHICLE & EQUIP EXP 0 (0) 0 0 TOTAL OPERATING EXPENSES 0 (0) 1 0 GAIN OR (LOSS) FROM OPERATIONS 0 0 (0) 1 RESERVES 0 0 0 0 INTEREST EARNINGS GENERAL FUND 0 0 0 0 PERS CONTRIBUTION AMORTIZATION 0 0 0 0 CAPITAL EXPENDITURES GENERAL FUND 0 0 0 0 NET SOURCES OR (USES) FROM OP

ACTIVITIES 0 0 (0) 1

59 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 WASTEWATER DIVISION OPERATING BUDGET

2009-2010 2010-2011 2010-2011 2011-2012

ACTUAL PROJECTED BUDGET BUDGET OPERATING REVENUES Watewater Service Charges 4,202,709 4,672,340 4,616,282 4,712,674 Other Op Rev-Eng. 3,741 3,986 8,000 4,000 TOTAL OPERATING REVENUES 4,206,450 4,676,326 4,624,282 4,716,674

CUSTOMER SERVICE OPERATING Resource Customer Support 199,610 234,810 201,269 196,354 Total Operating 199,610 234,810 201,269 196,354 TOTAL CUSTOMER SERVICE 199,610 234,810 201,269 196,354 WASTEWATER EXPENSE Operating Labor 568,141 553,422 618,262 687,210 G&A/Fringe Benefit 1,164,747 1,225,614 1,386,015 1,454,477 Materials & Supplies 275,221 263,682 345,800 323,600 Utilities 681,931 725,762 685,000 630,000 Outside Services 462,358 562,530 448,070 463,389 Vehicle & Equipment 61,287 51,890 58,655 66,367 Uncollectible Accounts 28,147 11,856 34,000 12,000 Total Operating 3,241,832 3,394,756 3,575,801 3,637,043

Corrective Maintenance Corrective Maintenance-Labor 16,635 12,466 30,000 30,524 Corrective Maintenance-G&A/FB 36,111 29,456 73,889 70,693 Corrective Maintenance 162,235 312,468 216,000 296,600 Total Corrective 214,981 354,390 319,889 397,817 TOTAL WASTEWATER EXPENSE 3,456,813 3,749,146 3,895,690 4,034,860 ENGINEERING OPERATING Resource Engineering 198,610 282,126 204,863 234,736 Total Operating 198,610 282,126 204,863 234,736 TOTAL ENGINEERING 198,610 282,126 204,863 234,736

SUPPORT OPERATING Direct Support Allocation 193,942 153,630 268,328 247,231 Resource Support 200,877 0 0 0 Total Operating 394,819 153,630 268,328 247,231 TOTAL SUPPORT 394,819 153,630 268,328 247,231 TOTAL OPERATING EXPENSES 4,249,852 4,419,712 4,570,150 4,713,181

GAIN OR (LOSS) FROM OPERATIONS (42,402) 256,614 54,132 3,493 RESERVES 64,175 (84,531) 100,868 142,507 INTEREST EARNINGS GENERAL FUND 4,227 2,915 20,000 54,000 PERS CONTRIBUTION AMORTIZATION 50,000 50,000 50,000 50,000 CAPITAL EXPENDITURES GENERAL FUND (75,000) (225,000) (225,000) (250,000)

NET SOURCES OR (USES) FROM OP

ACTIVITIES 0 (2) 0 0

60 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FOOTNOTES

FOOTNOTES

FOOTNOTE #1 – SUMMARY OF SIGNIFICANT BUDGETING POLICIES Enterprise Fund - The District utilizes accounting principles appropriate for an enterprise fund; accordingly, the revenues and expenses are budgeted on an accrual basis.

FOOTNOTE #2 – USER RATES Total water demand for the 2011-2012 fiscal budget is projected to decrease by 9,403 acre feet or 13.3%. The decrease in demand is primarily a result of less average demand per account. Factors that contribute to this include the continued effects of the local economic climate. There are still residual vacant homes due to the housing downtrend as well as vacant commercial accounts. An additional factor is the continued awareness of the current drought conditions and proactive conservation coupled with the implementation of the Budget-Based Tiered Water Rate structure. Finally, Agricultural customers continue to face rising water rates and calls for reduced demands which have resulted in lower sales projected for this specific customer class. Consistent with the projected decrease in demand, the District’s 2011- 2012 operating budget decreased by $5,354.055 or 7.9% over the 2010-2011 budget. The single greatest operating expense of RCWD is the source of supply cost of water. Consequently, the mix of water production sources can have a significant impact on costs and water rates from year to year. In the 2011-2012 fiscal budget, treated and untreated import water requirements are estimated to decrease by 11,327 acre-feet or 22.8%. This will result in a $7.9 million savings related to reduction in water supply costs. The 2010-2011 operating budget of $67.9 million reduced by a $7.9 million savings results in an adjusted budget of $60 million. The adjusted budget of $60 million increased by $1.8 million directly related to an increase in MWD’s import water rate and an increase of .74 for all other costs results in the 2011-2012 operating budget of $62.5 million.

Prior year 2010-2011 Budget $67,865,136 Savings From Reduced Import Quantity Req. ($7,908,420) 2010-2011 Budget Adjusted for Reduced Demand $59,956,716 Addt’l Cost From Increased Import Water Rates $1,806,137 Addt’l Cost From All Other Categories $748,228 Proposed 2011-2012 Budget $62,511,081

Additionally, the District anticipates an increase of 975 AF or 2.6% in the amount of production over the prior year from its lowest cost supply, local water supplies. This will help mitigate the impact of the imported water costs. The net decrease in source of supply expense is $5,889,326 or 14.1% over the prior year. The total source of supply water expense, accounts for 52.0% of the total operating budget.

61 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FOOTNOTES

Rancho Division - The current year’s 2011-2012 total budgeted operating costs are projected to decrease in the Rancho Division by $2,482,721, or 7.1%. This decrease in total costs is primarily being driven by less demand of water as discussed above. This Division did experience other cost increases related to increased fire hydrant, airvac, and valve maintenance, increased customer service associated with meter maintenance, and increased engineering all of which amounted to approximately $1,089,535. As a result, the Rancho Division’s combined M&I commodity rate will increase on a weighted average basis by 1.8% and combined Ag commodity rates will increase on a weighted average basis by 3.0%. The monthly impact to the average domestic bill in the Rancho Division is $1.24 which also reflects the impact of the fixed meter charges including the 5.0% rate increase for all meter sizes. Therefore, the total monthly bill will increase 2.9%. Likewise, the impact to the average agricultural rate in the Rancho Division will increase by $32.21 per acre-foot. Santa Rosa Division - The total operating costs for the Santa Rosa Division decreased by $3,014,366 or 10.6%. This decrease in total costs is primarily being driven by less demand of water as discussed above. This Division did experience other cost increases related to air- vac, fire hydrant, valve maintenance, and increased engineering, all of which amounted to approximately $170,537. As a result, the Santa Rosa Division’s combined M&I commodity rate will increase on a weighted average basis by 1.6%, and combined Ag commodity rates will increase on a weighted average basis by 6.2%. The monthly impact to the average domestic bill in the Santa Rosa Division is $2.52, which includes the 7.0% rate increase on the fixed meter charges. Therefore, the total monthly bill will increase 3.9%. Likewise, the impact to the average agricultural rate in the Santa Rosa Division will increase by $83.90 per acre-foot. Budget-Based Tiered Water Rate Structure – RCWD’s Budget-Based Tiered Water Rate Structure was implemented in July 2010. This structure applies to domestic, multi-family, and dedicated landscape accounts. The key principle underlying budget based water rates is that each customer gets a water use budget that is appropriate to their property and circumstances if water is used efficiently. The rate structure acknowledges that water is a finite resource and needs to be used efficiently in order to ensure a continued reliable supply today and in the future. The water rates recover the actual cost of water operations and do so in a manner that rewards efficient use of water. The use of tiered price levels allows the District to recover the higher costs of additional water supplies from customers that are using water in excess of efficient levels. Absent this structure, all customers would be underwriting inefficient water use and those customers who are less efficient would not have a strong incentive to become more efficient in their water use. The District does not expect a change in rate structure for domestic, multi-family and dedicated landscape accounts to materially affect revenues. BUDGET-BASED TIERED WATER RATES (PER A/F) Division Tier 1 Tier II Tier III Tier IV Rancho $0.54 $1.33 $2.32 $5.35 Santa Rosa $1.15 $1.72 $2.32 $5.35

62 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FOOTNOTES

Recycled Water Rates - The District has two sources of recycled water that is available for resale to approved users. The first source is recycled water that is generated as a bi-product of wastewater treatment at the District’s Santa Rosa Treatment Plant. The second source of recycled water is purchased under a contract with EMWD. The District is adjusting its current rate from $259.47 to $269.85 per acre-foot for M&I and Ag users; and RCWD’s construction rates will increase from $601.38 to $636.86 per acre-foot. Interim Agricultural Water Program - On May 10, 1994, MWD adopted the Interim Agricultural Water Program (IAWP) which provided for a discount to agricultural water users retroactive to May 1, 1994 and which replaced the interruptible water discount, which was eliminated on April 1, 1991. The program set forth several requirements; the most critical were the requirements to pass through discounts directly to agricultural users and the application of a more stringent interruption schedule of 30% in Phase I of MWD’s IAWP. In June 2008 The MWD Board elected to phase out the IAWP over the next 5 years. This phase out will reduce agricultural credits by 25% each year and eventually end the program on January 1, 2013. AG CREDIT PHASE OUT DATE TREATED UNTREATED January 2009 $114 $90 January 2010 $86 $68 January 2011 $57 $45 January 2012 $29 $23 January 2013 $0 $0 For Fiscal Year 2011-2012 the District expects to receive $662,805 in credits through the Interim Agricultural Water Program (IAWP). Santa Rosa Water Reclamation Facility (SRWRF) - The total budgeted operating costs for the SRWRF increased slightly by $143,031 or 3.1%. This increase is a result of increased costs related to labor, chemical outlay, and corrective maintenance activities. Therefore, the proposed monthly rate per equivalent dwelling unit (EDU) is being increased from $36.50 per EDU to $37.00 per EDU or 1.4%. The table below details the rate impacts: RATE COMPONENT CURRENT PROPOSED CHANGE O&M $22.50 $23.00 $0.50 Collections 3.00 3.00 0.00 Adv. Treatment 2.00 2.00 0.00 Replacement 4.00 4.00 0.00 Capital/Debt Service 5.00 5.00 0.00 Total $36.50 $37.00 $.50 Monthly Service Charge - A large percentage of the District’s operating costs are of a fixed nature, and do not vary with increased water deliveries. A monthly fee is levied on each water meter according to the rate of flow that the meter is capable of delivering. The philosophy behind this fee is that the fixed costs to the District will remain irrespective of water demands and represent the cost to keep the system ready to meet demands. Therefore, these fixed costs are allocated on a meter capacity basis. The fixed monthly capacity fee for all meter sizes in the Rancho and Santa Rosa Divisions will be increased for the fiscal year 2011-2012 as recommended by the Board of Directors. The District had been

63 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FOOTNOTES adjusting these rates in the Rancho and Santa Rosa Divisions by 5% to 7% a year, based upon a rate study performed in 1990, and updated in 1997 and annually thereafter, which has covered the costs of inflation, but has not corrected the fixed-cost shortfall. For the 2011- 2012 budget year, approximately 78% of the Rancho Division fixed costs, and 64% of Santa Rosa Division’s fixed cost, will be recovered by the monthly service charge. Energy Charges - It is estimated that the District’s fiscal year 2010-2011 energy budget, of $7,096.399 will decrease to $6,762,836 for the fiscal year 2011-2012. This equates to a decrease of $333,563 or a 4.7% decrease over the prior year. Over the last year and a half the District’s operating staff has been modifying its pumping strategies. This effort resulted in shifting from on-peak energy rate run times to off-peak periods thereby reducing total energy expense. The District also constructed a 1 megawatt solar project to provide power to the Wastewater Treatment Plant. While it is anticipated that energy rates will increase 3% these efforts coupled with lower demand projections have resulted in the reduced expense. Rancho Division customers will see the energy component of their water rate increase on average by 2.4%. Santa Rosa Division customers’ zones will see the energy component of their rate increase on average by 2.7%. SALES QUANTITIES BUDGETED SALES PROJECTED IN ACRE FEET

2009-2010 2010-2011 2011-2012 DIVISION ACTUAL BUDGETED BUDGETED Rancho Division 35,934 43,151 38,470 Santa Rosa Division 26,544 32,376 27,363 Totals 62,478 75,527 65,833 Production 67,505 79,263 69,664 Percentage of Average Production Loss 8% 5% 6% Table 7.1 FOOTNOTE #3 – NEW SERVICE CONNECTIONS The budget line item titled “New Service Connections” in the operating revenue and transmission and distribution sections of the Operating Budget represents the estimated revenue and costs associated with the installation of new water meter services.

FOOTNOTE #4 – WATER COST The source of supply costs associated with the Rancho and Santa Rosa Water Divisions are accumulated in the Resource Division. The underlying accounting records track the specific costs of water production and supply for the Rancho, Santa Rosa, Resource wells and import water. These costs are then allocated back to the respective water division after consideration of the 12,000 acre-foot benefit to the Rancho Division, and 2,000 acre-foot benefit to the Santa Rosa Division, in accordance with legal requirements. The budget line item titled “Purchased Water Resource” represents the allocation of these costs.

64 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FOOTNOTES

PROJECTED PRODUCTION REQUIREMENTS IN ACRE FEET

2009-2010 2010-2011 2011-2012 ACTUAL BUDGETED BUDGETED RANCHO SANTA RANCHO SANTA RANCHO SANTA PRODUCTION TYPE ROSA ROSA ROSA Well 17,278 7,278 17,460 7,540 18,488 8,488 Import 13,130 13,803 18,703 18,513 13,581 13,308 Import Recharge 6,094 6,094 6,250 6,250 5,750 5,750 Recycled 3,056 773 2,859 1,688 2,871 1,429 Total AF Req. 39,558 27,947 45,272 33,991 40,690 28,974 Avg. Cost Per AF $560 $579 $536 $602 $516 $616 Avg. Production Loss 7.5% 7.5% 5% 5% 5% 5% Table 7.2 FOOTNOTE #5 – OVERHEAD ALLOCATIONS General, Administrative and Fringe Benefits - Indirect general, administrative and fringe benefit overhead costs are allocated to operating, fee-for-service and capital activities based upon direct labor hours. General Engineering Support - Prior to 1991-92, 100% of the District’s general engineering support costs was charged to Operations. After studying the components of the general engineering support costs, it was determined that capital and fee-for-service customers obtained substantial benefit from the expenditures relating to non-directly allocable engineering costs. Therefore, a general engineering overhead rate was established based upon an estimate of the fee-for-service and capital portion of general engineering costs. The remaining general engineering costs, which were not allocable to fee-for-service or capital jobs, were charged to each of the water and sewer divisions based upon an estimate of their relative benefit as determined by new construction activity. Presented below is a comparison of overhead rates: 2010-2011 2011-2012 CATEGORY BUDGETED BUDGETED General & Administration 143.1% 130.2% Fringe Benefits1 66.9% 68.9% Vehicle & Equipment 10.0% 10.1% Operations 19.2% 15.6% Operating Overhead Rates 239.2% 224.80 Engineering Direct Rate 62.8% 62.6 Less Operations Rate <19.2%> <15.6%> Total Fee for Service & Capital Allocation Rate 282.8% 271.80% Table 7.3 1Fringe benefit overhead rate including non-cash amortized expense is 75.7% for fiscal year 2011-2012.

65 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FOOTNOTES

FOOTNOTE #6 – WASTEWATER OPERATIONS Santa Rosa Water Reclamation Facility (SRWRF) - The monthly treatment rate for the Santa Rosa Division’s wastewater customers will increase from $36.50 per month to $37.00 per connected EDU, and $25 per month per unconnected EDU, for which capacity fees have been received and fall under the special classifications of existing ordinances for wastewater capacity. Twenty-eight dollars ($28.00) of this thirty-seven dollars ($37.00) monthly fee will cover the cost of operations, four dollars ($4) will be set aside to fund future replacement costs, and five dollars ($5) will be used for debt service. The SRWRF will be reimbursed for costs associated with the treatment of flows on behalf of other agencies, based upon the terms of existing wastwater treatment contracts.

66 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 RATES & FEE SCHEDULES

RANCHO DIVISION

POTABLE WATER RATES

2010-2011 RATES 2011-2012 RATES % OF CHANGE Domestic, (1)Pre 03 (2)Post 03 Pre 03 Post 03 Pre 03 Post 03 Standard Standard Standard Multifamily, Annex Annex Annex Annex Annex Annex Landscape Tier I 0.370 1.710 2.000 0.540 1.820 2.110 45.9% 6.4% 5.5% Tier II 1.380 1.710 2.000 1.330 1.820 2.110 -3.6% 6.4% 5.5% Tier III 2.280 2.280 2.280 2.320 2.320 2.320 1.8% 1.8% 1.8% Tier IV 5.200 5.200 5.200 5.350 5.350 5.350 2.9% 2.9% 2.9% Commercial, 2010-2011 RATES 2011-2012 RATES % OF CHANG Industrial, Agricultural Opt- (1)Pre 03 (2)Post 03 Pre 03 Post 03 Pre 03 Post 03 Standard Standard Standard Out, Non IAWP & Annex Annex Annex Annex Annex Annex Other Tier I 1.0679 1.7100 2.0000 1.086 1.820 2.110 1.7% 6.6% 5.6% Tier II 1.6738 2.3159 2.6059 1.692 2.426 2.716 1.1% 4.9% 4.3% Penalty 2.8216 3.4637 3.7537 2.840 3.574 3.864 0.6% 3.3% 3.0% Agricultural Agricultural- 2010-2011 RATES 2011-2012 RATES % OF CHANGE Domestic (IAWP) Tier I 1.0166 1.0470 3.0% Penalty 2.8233 2.8858 2.2% (1) Rate for certain properties annexed into the District before 2003 (2) Rate for certain properties annexed into the District after 2003

ENERGY RATES

2010-2011 RATES 2011-2012 RATES % OF CHANGE Projected Rate by Pump Zone in HCF (Addition to Water M&I AG M&I AG M&I AG Commodity) 1305 ------1380 0.03075 0.03075 0.03150 0.03150 2.4% 2.4% 1485 0.07380 0.07380 0.07560 0.07560 2.4% 2.4% 1550 0.10045 0.10045 0.10290 0.10290 2.4% 2.4% 1610 0.12505 0.12505 0.12810 0.12810 2.4% 2.4% 1790 0.19885 0.19885 0.20370 0.20370 2.4% 2.4% 1880 0.31365 0.31365 0.32130 0.32130 2.4% 2.4% 2070 0.31365 0.31365 0.32130 0.32130 2.4% 2.4% 2350 0.42845 0.42845 0.43890 0.43890 2.4% 2.4%

TOTAL WEIGHTED AVERAGE RATE IMPACT: 2.4% 2.4%

67

RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 RATES & FEE SCHEDULES

SANTA ROSA DIVISION

POTABLE WATER RATES

2010-2011 RATES 2011-2012 RATES % OF CHANGE Domestic, (1)Pre 03 (2)Post 03 Pre 03 Post 03 Pre 03 Post 03 Standard Standard Standard Multifamily, Annex Annex Annex Annex Annex Annex Landscape Tier I 0.850 1.710 2.000 1.150 1.820 2.110 35.3% 6.4% 5.5% Tier II 1.820 1.820 2.000 1.720 1.820 2.110 -5.5% 0.0% 5.5% Tier III 2.280 2.280 2.280 2.320 2.320 2.320 1.8% 1.8% 1.8% Tier IV 5.200 5.200 5.200 5.350 5.350 5.350 2.9% 2.9% 2.9% Commercial, 2010-2011 RATES 2011-2012 RATES % OF CHANGE Industrial, Agricultural Opt- (1)Pre 03 (2)Post 03 Pre 03 Post 03 Pre 03 Post 03 Standard Standard Standard Out, Non IAWP & Annex Annex Annex Annex Annex Annex Other Tier I 1.4240 1.7100 2.0000 1.446 1.820 2.110 1.5% 6.6% 5.6% Tier II 2.0299 2.3159 2.6059 2.052 2.426 2.716 1.1% 4.9% 4.3% Penalty 3.1777 3.4637 3.7537 3.200 3.574 3.864 0.7% 3.3% 3.0% Agricultural Agricultural- 2010-2011 RATES 2011-2012 RATES % OF CHANGE Domestic (IAWP) Tier I 1.2463 1.3288 6.6% Penalty 3.0530 3.1676 3.8% (1) Rate for certain properties annexed into the District before 2003 (2) Rate for certain properties annexed into the District after 2003

ENERGY RATES

2010-2011 RATES 2011-2012 RATES % OF CHANGE Projected Rate by Pump Zone in HCF (Addition to Water M&I AG M&I AG M&I AG Commodity) 1305 ------1434 0.04773 0.04773 0.04902 0.04902 2.7% 2.7% 1440 0.04995 0.04995 0.05130 0.05130 2.7% 2.7% 1500 0.07215 0.07215 0.07410 0.07410 2.7% 2.7% 1670 0.13505 0.13505 0.13870 0.13870 2.7% 2.7% 1990 0.25345 0.25345 0.26030 0.26030 2.7% 2.7% 2160 0.31635 0.31635 0.32490 0.32490 2.7% 2.7% 2260 0.35335 0.35335 0.36290 0.36290 2.7% 2.7% 2550 0.46065 0.46065 0.47310 0.47310 2.7% 2.7% 2850 0.57165 0.57165 0.58710 0.58710 2.7% 2.7%

TOTAL WEIGHTED AVERAGE RATE IMPACT: 2.7% 2.7%

68

RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 RATES & FEE SCHEDULES

MONTHLY SERVICE CHARGES 2010-2011 Rate 2011-2012 Rate % of Increase Meter Rancho Santa Rancho Santa Rancho Santa Size Rosa Rosa Rosa 3/4" $ 15.84 $ 27.56 $ 16.63 $ 29.49 5% 7% 1" $ 24.02 $ 49.47 $ 25.22 $ 52.93 5% 7% 1-1/2" $ 40.96 $ 80.51 $ 43.00 $ 86.14 5% 7% 2" $ 61.75 $ 126.87 $ 64.83 $ 135.76 5% 7% 2-1/2" $ 92.42 $ 178.26 $ 97.04 $ 190.74 5% 7% 3" $ 162.32 $ 279.70 $ 170.43 $ 299.28 5% 7% 4" $ 365.88 $ 699.19 $ 384.18 $ 748.13 5% 7% 6" $ 625.01 $ 1,148.94 $ 656.26 $ 1,229.37 5% 7% 8" $ 959.15 $ 1,588.40 $ 1,007.11 $ 1,699.59 5% 7%

CONSTRUCTION & NON-POTABLE WATER RATES *(Base Water Rates Per HCF) RANCHO DIVISION SANTA ROSA DIVISION Description FY 2010-2011 FY 2011-2012 FY 2010-2011 FY 2011-2012 Construction Water $2.708/HCF $2.925/HCF $2.708/HCF $2.925/HCF $601.38/AF + $636.86/AF + $601.38/AF + $636.86/AF + Recycled $20 Monthly $20 Monthly $20 Monthly $20 Monthly Construction Water Service Charge Service Charge Service Charge Service Charge $259.47/AF + $269.85/AF + $259.47/AF + $269.85/AF + Tertiary Treated $20 Monthly $20 Monthly $20 Monthly $20 Monthly Service Charge Service Charge Service Charge Service Charge $259.47/AF + $269.85/AF + $259.47/AF + $269.85/AF + Agricultural $20 Monthly $20 Monthly $20 Monthly $20 Monthly Service Charge Service Charge Service Charge Service Charge *Customers will be charged the appropriate pump zones’ energy rates in addition to the base rate.

69 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FEE FOR SERVICE SCHEDULE

FEE FOR SERVICE SCHEDULE

DESCRIPTION OF SERVICE FEE/ DEPOSIT 1 Water Availability Letters Single lot $180 Tract/Parcel map $300 2 Fire Hydrant Location Letter $300 3 Topographic Map $25 4 Topographic Map w/Aerial $35 5 Black Line Copies (24’ x 36’) – Each $12 6 CFD/Assessment District (Processing Fee) [Deposit] $10,000 Assessment District Pay-Off Administrative Fee $25 Request for RCWD Participation in Joint Community Facilities Financing 7 $5,000 Agreement (JCFA) (Processing Fee) [Deposit] 8 Annexation Processing Fee $3,995 9 Annexation Acreage Fee Rancho Division $1,731 Santa Rosa Division $1,674 10 Fire Hydrant Meter Deposit (4-inch) $750 11 Construction Meter Deposit (4-inch) $1,500 12 Construction Meter Deposit (6-inch) $3,000 13 Construction Meter Relocation $75 14 Meter Test Requests (3/4-inch to 2-inch) $50 15 Meter Test Requests (3-inch and larger) $100 16 Floating Meter “No Read” Penalty $200 17 Construction Meter Location Penalty $200 18 Unmetered Water Accounts $52 19 Meter Obstruction Charge $77 20 Meter Relocation Deposit (3/4-inch to 2-inch) $2,000 21 Meter Downsize Deposit (3/4-inch to 2-inch MJ and Turbo) $1,300 22 Drop-In Meter Installations Meter w/Double Checks ¾-inch MJ-Single $488 ¾-inch MJ-Multiple $484 1-inch MJ $646 1-1/2-inch MJ $1,022 2-inch MJ $1,257 2-inch Turbo $1,350 Meter w/Pressure Regulator and Double Checks ¾-inch MJ-Single $611 ¾-inch MJ-Multiple $608 1-inch MJ $792

70 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FEE FOR SERVICE SCHEDULE

1-1/2-inch MJ $1,585 2-inch MJ $1,861 2-inch Turbo $1,932 23 Full Meter Installations Meter w/Double Checks ¾-inch MJ-Single $3,890 1-inch MJ $3,963 1-1/2-inch MJ $4,378 2-inch MJ $4,727 2-inch Turbo $4,804 Meter w/Pressure Regulator and Double Checks ¾-inch MJ-Single $3,969 1-inch MJ $4,101 1-1/2-inch MJ $4,934 2-inch MJ $5,381 2-inch Turbo $5,404 24 Plan Checks ( Pipelines – Up to 1,000 Linear Feet $2,000 Pipelines – Each 100 Linear Feet Thereafter $50 Misc. Appurtenances (DCDA’s, FH’s, Meters, etc.) – Up to 4 App. $2,000 Groupings Misc. Appurtenances (DCDA’s, FH’s, Meters, etc.) – Add’l 4 App. $500 Groupings On-Site Recycled Water System $1,500 25 Inspection Pipelines- Up to 1,000 Linear Feet $4,000 Pipelines – Each 100 Linear Feet Thereafter $40 Misc. Appurtenances (DCDA’s, FH’s, Meters, etc.) – Up to 4 App. $2,000 Groupings Misc. Appurtenances (DCDA’s, FH’s, Meters, etc.) – Add’l 4 Ap. $500 Groupings On-Site Recycled Water System $1,500 Post Construction Record Drawing Preparation & Processing (per usage of 26 $125 plan) Per 1 foot thereafter $3.63 27 RP Device Initial Certification Fee $180 Recertification Fee $150 28 Potable Construction Water $2.761/HCF 29 Application Processing Fee (non-refundable) $50 30 Service Connection Fee Estimate $167 31 Bond Split Deposit $1,500 Per Parcel $35

71 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FEE FOR SERVICE SCHEDULE

32 Sewer Lateral Sampling Wyes/Inspection, etc. $155 33 Non-Compliance Sampling and Unauthorized Use Charges $105 34 Non-Compliance Inspection $130 35 Non-Compliance Inspection/Meeting $210 36 Transfer Set-Up Charge $23 Delinquent Accounts (% x Balance) 1st 30 days Greater of 37 $5 or 10% Each 30 Days Thereafter $0.02 DTO’s (Turn service back on after shut-off for non-payment; or non- 38 compliance to recycle water agreement) M-F 8 a.m. to 5 p.m. $46 M-F after 5 p.m.; Weekends and Holidays $109 39 Non-Sufficient Funds/NSF Returned Check Fee $25 Cutting District lock or straight-lining across meter (previously referred to as 40 $125 Lock Off Vandalism Penalty) 41 For a second cut District lock $250 42 Cutting Angle Meter (AM) Stop from Meter $125 Replacement of pulled meter resulting from customer cutting lock a second 43 $100 time 44 Illegal Hydrant Use $600 45 Witness Fire Flow Test $300 46 Fire Service Charge for Industrial/Commercial w/Water Meter 0-30,000 sq. ft. (charged on water bill) $0.002/sq. ft. Over 30,000 sq. ft. (charged on water bill) $0.001/sq. ft. Annual Fee Per Acre or Per Parcel if Less than 1 Acre $40 47 Site Lease and Land Lease Application Processing Fee $5,000 48 Door Hanger Fee $20

ZONES OF BENEFIT

ZONE FEE/ACRE 1 $390/AC 2 $4,138/AC 3 $3,611/AC 5 $3,192/AC 7 $3,606/AC 8 $5,598/AC

72 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

Five Year Operating Forecast A five year operating forecast has been developed that projects the impacts of growth and increased demand along with the increased import water requirements. This is accomplished using regression analysis to project water demand, which then drives projected production requirements. The District uses the projected import water rates from the Metropolitan Water District of Southern California to determine projected water cost. In order to forecast projected energy expenses, the District utilizes rate projections from Southern California Edison and the Gas Company. With regard to wage increases, the District utilizes the historical average wage increase to project wages and utilizes the consumer price index to estimate increases in material and outside service expenses. All of these estimated inputs drive the projected 5-year budget information. The District is projected to continue growing from the current customer base of approximately 42,900 water service connections to over 62,000 water service connections at build out (2050). This growth will drive the need for more import water supplies which will in turn increase the cost of providing water to our customers. Over the next five years it is projected that water demand will increase 4.5% and treated import water cost will increase 20.2%. The greater percentage increase in import water cost is a combination of increased quantities and increased rates by MWD. Based on the forecasted operating costs a five year projection of water commodity and monthly wastewater rates was calculated and is presented on the following pages.

 Demand Forecast  Operating Forecast  Rate Forecast

73 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

POTABLE WATER FORECAST

SUMMARY BUDGET & FORECAST – BY TYPE TOTAL - BUDGET Ag Ag/Dom Ag Ag/Dom Dom. Other Total Opt Out Opt out Prior Yr. Budget 10-11 13,785 4,986 7,143 1,502 39,130 13,081 70,982

11-12 10,873 4,271 7,143 1,502 34,909 11,525 61,578

12-13 10,873 4,271 7,143 1,502 35,400 11,675 62,219 Five

Year 13-14 10,873 4,271 7,143 1,502 35,927 11,825 62,896 Forecast

14-15 10,873 4,271 7,143 1,502 36,480 11,975 63,599

15-16 10,873 4,271 7,143 1,502 37,070 12,125 64,339

SUMMARY OF BUDGET & FORECAST – BY PUMP ZONE PER FISCAL YEAR Rancho Zones 11-12 12-13 13-14 14-15 15-16 1305 7,954 8,065 8,182 8,303 8,431 1380 8,616 8,737 8,864 8,995 9,133 1485 10,647 10,796 10,953 11,115 11,286 1550 819 831 843 855 868 1610 3,229 3,274 3,322 3,371 3,423 1790 2,146 2,176 2,207 2,240 2,275 1880 (2070) 180 183 186 188 191 2070 1,867 1,893 1,920 1,949 1,979 2350 171 173 176 178 181 Total 35,628 36,128 36,653 37,195 37,766

Santa Rosa Zones 11-12 12-13 13-14 14-15 15-16 1305 542 545 548 552 555 1434 - - - - - 1440 4,898 4,925 4,953 4,984 5,016 1500 3,692 3,712 3,734 3,757 3,781 1670 10,330 10,386 10,446 10,510 10,578 1990 3,769 3,790 3,812 3,835 3,860 2160 213 214 216 217 218 2260 499 502 504 508 511 2550 1,987 1,997 2,009 2,021 2,034 2850 20 20 21 21 21 Total 25,950 26,091 26,243 26,404 26,573 District Total 61,578 62,219 62,896 63,599 64,339 Excludes recycled water

74 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

PROJECTED RESULTS OF OPERATIONS (In 1,000’s) 11-12 12-13 13-14 14-15 15-16 OPERATING REVENUES Water Revenue $35,333 $38,624 $42,130 $45,593 $49,320 Monthly Service Charges(1) 14,265 15,082 16,311 17,641 19,079 Energy Charges 2,969 3,142 3,363 3,599 3,853 Wastewater Service(2) 4,713 4,830 4,951 5,075 5,202 Other Revenue 3,544 3,692 3,847 4,010 4,182 Total Operating Revenue $60,824 $65,371 $70,602 $75,919 $81,635

OPERATING EXPENSES Source of Supply(3) $35,904 $39,309 $43,267 $47,178 $51,415 Booster Pumping(4) 3,951 4,155 4,430 4,724 5,038 Transmission & Distribution 7,764 8,242 8,654 9,087 9,541 Customer Service 4,958 5,157 5,415 5,685 5,970 Reclaimed Water 2,949 3,067 3,220 3,381 3,550 Wastewater Expense 4,035 4,196 4,301 4,409 4,519 Engineering 1,326 1,379 1,448 1,514 1,590 Support 1,624 1,689 1,773 1,855 1,948 Total Operating Expenses $65,511 $67,194 $72,509 $77,833 $83,571

Net Operating Revenue ($1,687) ($1,823) ($1,907) ($1,914) ($1,936)

Interest Earnings $1,104 $1,104 $1,104 $1,104 $1,104 Non-Cash Item $500 $500 $500 $500 $500

Net Source/(Uses) of Cash ($83) ($219) ($303) ($310) ($332) Table 8.1 (1)Monthly Service Charges assume 0% growth in accounts through 2012-2013. The 3% growth thereafter. Also includes an annual increase in the monthly service charges of 5% in Rancho Division and 7% in the Santa Rosa Division (2)Wastewater service charge assumes 2.5% growth rate. (3)Includes projected import water rates per MWD LRFP. (4)Includes estimated average energy rate increase of 3%. (5)Other expenses are indexed at 5%. Source: Rancho California Water District

75 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

PROJECTED RATE REQUIREMENTS – COMBINED WATER & ENERGY

11-12 12-13 13-14 14-15 15-16 RANCHO DIVISION WATER RATES M&I Water Commodity $1.086 $1.160 $1.221 $1.293 $1.369 Average Energy Rate $0.076 $0.079 $0.083 $0.086 $0.090 Total M&I per HCF $1.162 $1.239 $1.304 $1.379 $1.459 Total M & I Rate per A/F $506 $540 $568 $601 $635 AGRICULTURAL Water Commodity $1.047 $1.127 $1.208 $1.279 $1.356 Average Energy Rate $0.076 $0.079 $0.083 $0.086 $0.090 Total Agricultural Rate per HCF $1.123 $1.206 $1.290 $1.366 $1.446 Total Agricultural Rate per A/F $489 $525 $562 $595 $630 SANTA ROSA DIVISION WATER RATES M&I Water Commodity $1.446 $1.548 $1.616 $1.696 $1.779 Average Energy Rate $0.139 $0.145 $0.151 $0.158 $0.165 Total M&I Rate per HCF $1.584 $1.693 $1.768 $1.854 $1.944 Total M&I Rate per A/F $690 $737 $770 $808 $847 AGRICULTURAL Water Commodity $1.329 $1.479 $1.608 $1.688 $1.771 Average Energy Rate $0.139 $0.145 $0.151 $0.158 $0.165 Total Agricultural Rate per HCF $1.467 $1.624 $1.760 $1.846 $1.937 Total Agricultural Rate per A/F $639 $707 $767 $804 $844

PROJECTED WASTEWATER CHARGE WASTEWATER MONTHLY CHARGE $37.00 $37.50 $38.00 $38.50 $39.00 Table 8.2

76 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

Projected M&I Combined Water & Energy Rate Increases Rancho Division

10.0%

8.0%

6.0%

4.0%

2.0%

0.0% 11-12 12-13 13-14 14-15 15-16 % Increase 1.8% 6.7% 5.2% 5.7% 5.8%

Chart 8.1

Projected Ag Combined Water & Energy Rate Increases Rancho Division

10.0%

8.0%

6.0%

4.0%

2.0%

0.0% 11-12 12-13 13-14 14-15 15-16 % Increase 3.0% 7.4% 7.0% 5.8% 5.9%

Chart 8.2

77 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

Projected M&I Combined Water & Energy Rate Increases Santa Rosa Division

10.00%

8.00%

6.00%

4.00%

2.00%

0.00% 11-12 12-13 13-14 14-15 15-16 % Increase 1.6% 6.8% 4.4% 4.9% 4.9%

Projected Ag Combined Water & Energy Rate Increases Santa Rosa Division

10.00%

8.00%

6.00%

4.00%

2.00%

0.00% 11-12 12-13 13-14 14-15 15-16 % Increase 6.3% 10.7% 8.4% 4.9% 4.9%

Charts 8.3 and 8.4

78 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

Fund Structure Operating Budget Enterprise Fund The District accounts for its water and wastewater operations activities as enterprise funds. These activities closely resemble those of private business enterprises where services are provided on a continuous basis and are substantially financed by revenues derived from user charges.

A number of District divisions perform functions supporting both water enterprise funds and wastewater enterprise funds. The following chart shows the relationship between the District’s divisions and the enterprise funds that are charged for their activities.

Relationship Between Divisions, Departments and Funds

Rancho Santa Rosa Wastewater Division Department Enterprise Fund Enterprise Fund Enterprise Fund

Administration Board Administration X X X Administrative Services X X X Human Resources X X X Risk Transfer, Liability and Property Insurance X X X Finance Finance Administration X X X Accounting X X X Budgetary X X X Treasury X X X Real Estate Management X X X Billing X X X Meter Reading X X Purchasing X X X Warehouse X X X Information Systems X X X Geographical Information Systems X X X Planning Planning and Conservation Activities X X Public and Legislative Relations/Outreach Activities X X X Engineering Engineering Administration X X X Planning & Capital Projects Design X X X Development Engineering X X X Engineering Services X X X Construction Contracts X X X Operations Water Operations X X Electrical Services X X X Water Quality X X Wastewater Treatment X Operations Project Department X X X Field Services Field Services X X X Building and Grounds Maintenance X X Meter Maintenance X X Mechanic Maintenance X X Pumps and Wells Maintenance X X X

79 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 FORECAST

Fund Structure Non-Operating Budget Debt Service Capital Improvement Fund The Debt Service Capital Improvement (DSCI) Fund is used to account for money received by the District from the collection of property assessments, standby charges, and monthly wastewater surcharges. Money placed in the DSCI fund is used for the payment of principal and interest on bonds and to cash fund capital improvement projects. Capital projects can include new facilities as well as replacement water facilities. Wastewater Replacement Fund The Wastewater Replacement Fund is used to account for money received by the District from the payment of the monthly depreciation surcharge attached to the monthly wastewater service charge. Money placed in the wastewater replacement fund is used for the replacement of capital facilities. Capacity Fee Fund Water Capacity Fee: charges paid by new customers prior to connecting to the District’s system. The District has taken significant steps to create a capacity fee program that equitably allocates capital between existing and future users and complies with the requirements of AB1600. Money placed in the water capacity fee fund is used for the construction of capital facilities. Wastewater Capacity Fee: charges paid by new customers prior to connecting to the District’s wastewater system. Money placed in the wastewater capacity fund is used for the funding of wastewater facilities and for the payment of principal and interest on construction bonds issued to construct wastewater facilities.

80 Rancho California Water District 2011-2012

General Manager

Human Resources Manager Director of Planning Assistant General Manager CFO/Treasurer

Sr. Water Resources HR Analyst Admin. Services Planner Admin. Assistant II District Secretary Supervisor

Water Resource Safety Officer Budget/Debt Planner Administrator

Accounting

81 Admin. Assistant II Office Assistant (4) Admin. Asst. II Conservation Water Supervisor

Use Efficiency

Analyst IT/Customer Public Information Accountant Service Manager Officer II

Acctg. Analysts Admin. Assistant II (2) Customer Service Data Center Ops.

Acctg. Clerk Supervisor Supervisor Interns (2) (2)

CS Office

Representatives(6) Systems Admin. Finance

Administrator ERP Business GIS Coordinator Analyst

Purchasing/ Warehouse Meter Reader Customer Service Supervisor Foreman Analyst

CS Field Warehouse Worker Representatives(4) (2)

Finance/Administration/Planning/HR Rancho California Water District 2011-2012

General Manager

Eng. Planning Manager

Chief Engineer Director of System

Operations GIS Analyst II Civil Engineer

Ops. & Maint. Technician

Engineering Eng. Services Field Service Manager Manager Worker II-Ops. Operations. Project Op. & Maintenance Manager Assistant I Sr. Admin. Assistant

Eng. Services Rep. Civil Eng. (2) Water Operations (4) Corrosion Control Manager

Office Assistant II Tech. II 82 Eng. Proj. Coord. Engineering Aide

Water System Elec. Services Associate Engineer Supervisor Supervisor

Field Services

Construction Manager Water Reclamation Sr. Water System Contracts Manager (2) Manager Op. (4) Instrumentation

Control Techs. (5) Field Services Field Service

Foreman (7) Worker II-Ops (3) Contracts Admin. II WW System Construction Supervisor Inspector Field Services Lead Water Quality Supervisor (4) WW Maintenance Supervisor (2) Supervisor

Field Services Sr. WW Plant Op. (5) Construction Worker (18) Inspector (3) Sr. WW Treatment Sr. WW Collection Well & Pump Tech. Op. (2) Mechanic II Sys. Op. (2) II (2) Cross Connection Sr. Plant Maint. Bldg. Grounds Controls Specialist Tech. (2) Worker II (4)

Engineering/Operations RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Divisional Plans A key element of the District’s operating budget is developing departmental programs that are in support of the District’s mission and strategic plan. The Divisional Plans represent the link that transmits the strategic planning into tactical action. This section presents these departmental programs using the following format: . Division Mission Statement . Divisional Organizational Chart . Divisional Personnel Requirements . Critical Success Factors for each Division . Narrative statement of the function of each Department . Three year comparison of accomplishments for each Department . Key objectives of the Department . Performance Measurement Indicators of each Department’s objectives

District Organizational Chart

Rancho California Water District Customers

Board of Directors

General Legal General Manager Counsel

AGM/Admin Finance Engineering Planning Operations Division Division Divison Division Division

83 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Personnel Staffing Levels

FULL-TIME POSITIONS BY DIVISION:

Actual Budget Budget Percent FY 2009-10 FY 2010-11 FY 2011-12 Change Administration Division 14.0 14.00 13.00 -7.14% Finance Division 30.00 29.00 31.00 6.90% Planning Division 7.00 8.00 8.00 0% Engineering Division 21.50 21.50 22.50 4.65% Operations Division 35.00 37.00 39.00 5.41% Field Services Division 41.00 40.00 36.00 -12.50% Total 148.50 149.50 148.50 -0.67%

TOTAL PERSONNEL BY CLASSIFICATION:

Actual Actual Budget Projected FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 General Manager 1 1 1 1 Assistant General Manager 1 1 1 1 Directors 5 4 4 4 Management 8 10 10 10 Supervisory 19 18 19 19 Professional 14 15 18 18 Administrative 31.5 30.5 32.5 32.5 Technical 37 38 34 34 General Labor 32 32 29 29 Total 148.5 149.5 148.5 148.5

For 2011-2012, the budget proposes to fund 148.5 positions, down one from 149.5 positions in the current year. Since 1992-92, installed water meters have grown by 172.1 percent to over 42,958 installed meters, while employee positions have increased by 17.5 percent.

Ratio of Employees to Accounts Last 10 Fiscal Years

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 No. of Employees 122 118 121 129 131 141 144.5 148.5 149.5 148.5 No. of Accounts 24,418 36,759 38,654 40,197 41,304 41,986 42,260 42,630 42,753 42,958 Ratio 0.50% 0.32% 0.31% 0.32% 0.32% 0.34% 0.34% 0.35% 0.35% 0.35%

84 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

In order to operate and maintain the water and sewer systems with the best service to our customers, a restructuring of the organization is proposed for this budget year.

New Positions: (5)

1 FTE- Customer Service Representative, Finance Division 1 FTE- Accountant, Finance Division 1 FTE- Civil Engineer, Engineering Division 2 FTE- Valve operators, Operations Division

Positions Eliminated: (6)

1 FTE- Mechanic II, Field Service Division 4 FTE- Field Service Worker – AMR, Field Services Division 1 FTE- Wastewater Plant Operator, Operations Division

Re-Organization of Positions: (5)

1 FTE- Accounting Manager changed to Finance Administrator, Finance Division 2 FTE- Field Services Superintendent changed to Field Services Manager, Field Services Division 1 FTE- Wastewater Plant operator changed to Wastewater Maint. Supervisor, Operations Division 1 FTE- Director of Field Services changed to Water Operations Manager, Operations Division

85 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Administration Division MISSION STATEMENT To provide exceptional, timely and professional administrative support toward the Rancho California Water District’s mission, vision and values, including specific administration of human resources, safety and risk management, board administration, administrative services, employee recognition, and district memberships.

PERSONNEL REQUIREMENTS

Actual Actual Budget Projected FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 General Manager 1 1 1 1 Asst. General Manager 1 1 1 1 District Secretary 1 1 1 1 Administrative Assistant 2 2 1 1 Administrative Services Supervisor 1 1 1 1 Office Assistant 4 4 4 4 Human Resources Manager 1 1 1 1 Human Resource Analyst 1 1 1 1 Administrative Assistant H/R 1 1 1 1 Safety/Risk Officer 1 1 1 1 Total 14 14 13 13

DIVISION SUMMARY Actual Budget Budget Category FY 2009-10 FY 2010-11 FY 2011-12 Labor $1,255,517 $1,236,217 $1,203,534 Materials 53,190 74,940 36,950 Outside Services* 6,831,365 7,018,593 7,474,889 Funded Staffing Level 14 14 13 * Outside Services includes fringe benefits expense. * Labor dollars are subject to the outcome of final labor negotiations.

CRITICAL SUCCESS FACTORS The Administration Division has identified the following objectives it considers critical to the overall success of the Division and the District for fiscal year 2010-2011: . Provide administrative support to the General Manager, Assistant General Managers and the Board of Directors. . Provide technical support and compliance solutions that protect the District from legal, financial and safety exposures. . Provide Human Resources, safety and risk management and support to employees of the District. . Provide administrative support to the District’s internal and external customers.

86 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Board Administration MISSION STATEMENT To provide specific administration of the Board of Directors business, legal services, and election processes. This includes the preparation and timely distribution of Board and Committee meeting packages, coordination of industry travel and event arrangements, maintenance of all official documents, and timely development and filing of all noticing requirements in accordance with the Ralph M. Brown Act.

ACCOMPLISHMENTS FOR FISCAL YEAR 2010-11 . Prepared and/or assisted with the completion of approximately 57 Board and Committee meeting minutes and 37 Board, Administration, Finance and Audit and Governmental Affairs Committee meeting packages; . Ensured all meeting agendas, notices and related material were in compliance with the Ralph M. Brown Act; . Arranged and scheduled numerous meetings for the General Manager, Assistant General Manager, Chief Financial Officer/Treasurer, and Board of Directors; . Provided updates to Parts I (Administration of the District) and II (Fiscal Policies of the District) of the adopted Administrative Code.

OBJECTIVES FOR FISCAL YEAR 2011-12 . Provide support and assistance to the County of Riverside for the completion of the 2011 Board of Directors General Election; . Timely prepare and complete all Board, Finance and Audit, Administration, and Governmental Affairs Committee meeting packages for distribution; . Assure timely preparation and dispersion of the Finance and Audit Committee and Engineering and Operations Committee meeting packages; . Administer agendas and notices for said meetings to comply with the Ralph M. Brown Act; . Transcribe and generate for approval all Board, Finance and Audit, Administration, and Governmental Affairs Committee meeting minutes and secure completion of the minutes of the Finance and Audit and Engineering and Operations Committee meetings; . Provide administrative support to the General Manager, Assistant General Manager/Treasurer, Chief Financial Officer, and Board of Directors; . Continue to update Parts I (Administration of the District) of the adopted Administrative Code; . Render completion of Part III (Engineering, Operations and Maintenance of the District) of the Administrative Code for adoption by the Board of Directors; and . Provide a timely response to public requests.

87 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Provide assistance to the 2011 Board of Directors General County of Riverside for the August N/A NA Election completion of the 2011 Board 2011 of Directors Election

Post agendas and notices in Prepare and post meeting accordance with the Ralph M. 100% 100% 100% agendas and notices Brown Act

Timely prepare and complete all Provide completed meeting Board of Directors, packages to the Board of Administration, and Directors and staff a minimum 100% 100% 100% Governmental Affairs Committee of four days before the subject meeting agendas and packages meeting

Complete minutes for review Generate Board, Administration, and approval by the Board and Governmental Affairs 100% 99% 100% within 30 days of the subject Committee meeting minutes meeting

Update the Administrative Maintain updates for Parts I and Code as changes become 100% 100% 100% II of the Administrative Code effective

Render completion of Part III of Adoption by the Board of January Ongoing Ongoing the Administrative Code Directors 2012

88 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Administrative Services MISSION STATEMENT To provide a full array of quality administrative support for all departments of the District, including but not limited to mail services, event arrangements, setting up for District-related meetings, reception, and oversight of the centralized paper and electronic recordkeeping system, as well as to provide quality customer service to all internal and external customers.

ACCOMPLISHMENTS FOR FISCAL YEAR 2010-11 . Provided administrative support to all divisions within the District, including copying and delivering all Board and Committee packages, and general copying, typing and clerical requests, special projects, and stuffing envelopes for New Customer Letters, Annual Backflow Test Forms, and New Employee Recruitments; . Completed conversion of archived documents to electronic storage including 1995- 2003 News Articles; approximately 1,300 batches of Variance information, 1995 work papers, and 2008-2009 (20 categories) Job Cost data; . Provided set-up for approximately 420 meetings; . Successfully planned and organized the District’s Annual Employee Recognition Banquet; and . Successfully implemented a document management shredding and recycling program, recycling 61,036.8 pounds of paper.

OBJECTIVES FISCAL YEAR 2011-12 . Ensure that regular work duties are completed in a timely manner with very few errors; . Provide administrative support to all divisions within the District, including general copying, typing and clerical requests, meeting set-ups, fulfill requests for breakfasts and luncheons, and stuffing envelopes for New Customer Letters and Annual Backflow Test Forms, and New Employee Recruitments; and . Continue with each office assistant prepping, scanning and indexing of new documents, and/or converting archived documents to electronic storage on a daily basis.

PERFORMANCE MEASUREMENT INDICATORS

89 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Timely answering of all Answer incoming calls 96% 95% 100% incoming calls within six rings

Acknowledge and greet all customers in a professional Timely with no complaints Met Met 100% manner

Accurately open and deliver Open, sort, and distribute the daily incoming mail 90% 90% 95% incoming mail before 11:30 a.m.

Copy and prepare documents for outgoing mail, ensuring the correct Timely process outgoing mail 89% 95% 95% address and postage is affixed and ready for postal pick-up by 4:00 p.m.

Provide timely administrative Complete all support 95% 96% 95% and clerical support requests prior to deadline

Each office assistant prep, scan, and index new Electronic storage of archived documents, and/or convert 95% 95% 90% documents archived documents to electronic storage on a daily basis

Scan, index and e-mail Complete by 3:30 p.m. each incoming correspondence to N/A N/A 92% day staff

Scan, index, and e-mail Complete by end of each outgoing correspondence to - - 95% business day staff

90 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Human Resources MISSION STATEMENT Our mission is to maximize the potential of RCWD’s greatest assets – its employees. We are committed to recruit, develop, reward, retain and protect the physical and human assets of RCWD. Our vision as human resource and safety/risk management professionals is to embrace a change and the opportunity it brings. We will accomplish this by providing services, which promote a work environment that is characterized by fair treatment of staff, open communication, personal accountability, trust, and mutual respect.

CRITICAL SUCCESS FACTORS Human Resources has identified the following objectives it considers critical to the overall success of the Division and the District for fiscal year 2011-2012: . Develop a program to transfer knowledge of employees in critical positions as the workforce ages and readies for retirement. . Update Districts Certification Chart & Job Descriptions in collaborative effort with RCWD Employee Association, Human Resources, supervisors, and department managers. . Develop strategies to attract and retain employees through challenging budget years. . Successfully negotiate Memorandum of Understanding with Rancho California Water District Employee Association. . Collaborate with the Teamsters Local 911, the RCWD Employee Association, and the RCWD Management Association to provide effective labor relations. . Update all insurance schedules annually. . Update Material Safety Data Sheets on a regular basis at HQ and SRWRF. . Coordinate site visits from JPIA and implement any recommendation within a 45 day turnaround period. . Maintain safe working environment by achieving a TRR of 5.8 for calendar year 2011.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Reduced dental insurance costs by chancing carriers July 1, 2010 affecting an 8.4% savings for the 1st half of the FY, and 2.6% savings to the estimated budget for this employee benefit for the second half of the fiscal year; . Reduced life and accidental death & dismemberment insurance cost by changing carriers and combining with our long term disability coverage, affecting a 5% savings for this employee benefit; . Established effective working relationship with Teamsters Local 911 in conjunction with RCWD employee association labor relations; . Successfully recruited and conducted twenty recruitments since 7/1/10, including new employees, internal recruitments/promotions, and temporary hires;

91 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Conducted bi-annual compensation survey to ensure District salaries follow philosophy guidelines to pay a the median of survey agency group; . Conducted a successful on-line open enrollment for employee benefits utilizing the new ESS module of the Lawson system; . Conducted a successful United Way charitable campaign; . Provided annual employee benefit statements; . Established active Committee participation on Water Utilities Human Resources Committee; . Active Committee participation on ACWA Health Benefits Authority Health Benefits Program Committee to establish rates for 2012 calendar year; and . Continue team-building efforts within work groups.

OBJECTIVES FISCAL YEAR 2011-12 . Participate in interface team with Lawson and Hanson’s Computerized Maintenance Management system (CMMS).

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Work with District Tie objective to annual management team to identify strategic planning/budgeting N/A N/A Jan. 2012 future staffing needs process projecting out 3-5 years

Collaborative effort with Continue update certification RCWD Met Ongoing Ongoing Chart/Job descriptions EA/HR/supervisors/managers

ESS Lawson/Hanson Go-live with remaining ESS Met N/A Nov 2012 Interface functions on Lawson system

Collaborative effort with Successfully negotiate MOU RCWD Management N/A Jun 2012 for FY 12/13 Team/RCWD EA

Identify critical positions to Succession Planning capture knowledge prior to N/A N/A Dec 2011 retirements

92 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Safety Risk Transfer, Liability and Property Insurance Risk Transfer, Liability, and Property Insurance is responsible for overseeing and administrating the District’s key business and asset safeguards. Jointly, these functions provide compliance measures that protect the District from legal, financial, and safety exposures.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Continued active committee participation on Riverside County Emergency Response Committee; . Conducted CPR, AED and First Aid training for 35 employees; . Coordinated JPIA liaison; . Maintained vendor certificates of insurance coverage and risk transfer; . Successfully updated all insurance schedules; . Maintained a safe working environment – 4.2 TRR goal – actual was 6.4; . Continue to maintain the Districts FEMA – NIMSCAST rating at 96% or better- actual was 100%; . Conducted training for Field Service and Operations on New Safety Manual; . Developed a more focused District confined space rescue training program; . Organized 2011 RCWD Joint Agency Emergency Response Drill required for compliance with CCR Title 19 Public Safety; . Updated pas, batteries and maintained all District AED units; . Reviewed and updated all MSDS’s for head quarters and the treatment plant; . Developed electronic MSDS files – now available on the Pipeline; . Updated 2011 Target Safety Training Schedules; . Completed the review and update of the Districts Emergency Operations Plan (EOP); . Conducted asbestos safety refresher training as required by state regulations; . Developed the Districts new Heat Illness Prevention policy and procedures; . Conducted Front Office Security Training at the District; . Conducted a compliance review for new California law AB 2774; and . Assisted the CMMS implementation team in the development of process safety functions.

93 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

OBJECTIVES FISCAL YEAR 2011-12 . Continue to review and update of the MSDS books for the Winchester Road facility; and . Continue 45 day turn around on JPIA liaison visit recommendations.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Evaluate whether noise reduction program is Conduct a noise survey Met N/A Aug 2011 required

Update all insurance Maintain vendor risk 100% Ongoing Ongoing schedules transfer

HQ and Plant Bldg. Update MSDS Ongoing Ongoing Ongoing Complete

Coordinate site visits and implement JPIA Liaison 100% 100% 100% recommendation’s - 45 Day Turnaround

Maintain a Safe Working Supervisor/manager round 6.78 4.2 5.8 Environment table –TRR Goal (4.2)

Coordinate NIMS-FEMA Conduct NIMS training utilizing DHS Compliance Training for N/A N/A Feb. 2012 grant funding at no cost to management staff RCWD

94 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Finance Division MISSION STATEMENT To provide innovative, proactive and strategic financial direction and support to Rancho California Water District’s Board of Directors, management and employees in an effort to achieve low, stable water and wastewater rates and charges. We are committed to maintaining the District’s strong financial position, efficiently managing the District’s financial resources, and ensuring that adequate financial controls are in place and monitored to communicate and report accurate financial results and to protect the District’s assets. The Finance Division will accomplish this mission while maintaining a commitment to providing quality customer service. The Finance Division provides the accounting, auditing, investing and debt management functions required, showing clearly and accurately at all times, the financial status of the District. The Division also manages information systems and administrative facilities.

PERSONNEL REQUIREMENTS ACTUAL ACTUAL BUDGET PROJECTED FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 CFO/Treasurer 1 1 1 1 Administrative Assistant II 0 0 1 1 Accounting Manager 1 0 0 0 Finance Administrator 0 1 1 1 Budget/Debt Administrator 0 0 1 1 Accounting Supervisor 0 0 1 1 Accountant 0 0 1 1 Sr. Accountant 2 2 0 0 Sr. Accounting Analyst 2 2 2 2 Accounting Clerk 2 2 2 2 Purchasing Supervisor 1 1 1 1 Warehouse Worker 2 2 2 2 IT /Customer Service Manager 1 1 1 1 Customer Service Supervisor 1 1 1 1 Meter Reader Foreman 1 1 1 1 Customer Service Analyst 1 1 1 1 Customer Service Rep 11 10 10 10 Data Center Operations Supv. 1 1 1 1 Systems Administrator 1 1 1 1 ERP Administrator 1 1 1 1 GIS Coordinator 1 1 1 1 Total 30 29 31 31

DIVISION SUMMARY Actual Budget Budget Category FY 2009-10 FY 2010-11 FY 2011-12 Labor $2,199,728 $2,268,366 $2,481,468 Materials 73,131 158,100 144,550 Outside Services 2,450,705 2,237,733 2,626,019 Funded Staffing Level 30 29 31 * Labor dollars are subject to the outcome of final labor negotiations.

95 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

CRITICAL SUCCESS FACTORS The Finance Division has identified the following objectives it considers critical to the overall success of the Division and the District for fiscal year 2010-2011: . Maintain or improve the District’s bond rating to ensure lowest overall borrowing cost for the Fiscal Year 2010-2011 bond issuance. . Complete the Operating and Non-Operating Budgets for the 2010-2011 fiscal year with complete committee review and recommendation at the April 12, 2010 Board of Directors workshop and adoption at the June 14, 2010 public hearing with all rates, fees and charges taking effect July 1, 2010. . Complete all internal financial records for the year ended June 30, 2010 by July 31, 2010 to allow the District’s Certified Public Accountants to perform and complete the independent audit of the District and its taxing entities for presentation to the Board of Directors no later than its October 2010 Board Meeting. The results of the audit must contain an unqualified opinion, have no reportable conditions, and limit management letter comments to immaterial items. . Complete the Comprehensive Annual Financial Report for the 2009-10 fiscal year with committee review in November 2010. The quality of the report should be of a standard that it receives the Certificate of Achievement awarded by the Government Finance Officers Association. . Continue to achieve significant progress in implementation of the District wide Enterprise Resource Planning (ERP) System (multi-year project); . Implement new water budget rate structure by April 1, 2010.

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Accounting Accounting is responsible for creating and maintaining a reporting structure to accurately and expeditiously communicate pertinent financial data to its customers. Accounting is also responsible for ensuring efficient use and protection of District assets. This area also maintains, monitors and enforces a system of internal controls.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Completed Comprehensive Annual Financial Report and received Government Finance Officers Association (GFOA) award for excellence in financial reporting; . Completed Audit of 09-10 financial records with an unqualified opinion; and . Implement Enterprise Resource Planning (ERP) project, which included conversion of all financial accounting modules from the current Gough system to the Lawson system.

OBJECTIVES FISCAL YEAR 2011-12 . Provide timely and accurate financial reports, including the CAFR; . Obtain an unqualified audit opinion; . Reevaluate the internal controls of the department given all the changes from the ERP project; and . Provide timely and accurate check runs for accounts payable and processing of payroll.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 October Timely closing of fiscal Approval of annual audit Met Met 2011 BOD year accounting records report Mtg

Maintain accurate accounting records in Number of Significant accordance with Met None None external audit findings Governmental Accounting Standards

Timely payment of vendor Unpaid invoices over 30 Less than Less than 2% invoices days – Less than 5% 5% 5%

Implement new GASB A new GASB included in None None August 2011 Pronouncement CAFR for FYE 2011

97 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Budgetary Budgetary is responsible for overseeing and facilitating the District-wide planning, development, and compliance to an approved operating and non-operating budget plan. Additionally, this area is responsible for the rate-setting process and for monitoring departmental performances throughout the year.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Received the Government Finance Officers Association Distinguished Budget Award for 2010-2011; . Completed operating and non-operating budgets with rates effective for July 1; . Reviewed Capital Improvements, Capital Replacements, Planned Correctives, and Acquisition Outlays for funding availability; and . Reviewed and updated current Fee for Service schedule.

OBJECTIVES FISCAL YEAR 2011-12 . Continue to utilize the five year financial plan to determine the future impact of proposed programs and capital improvement projects to ensure long-term fiscal stability; . Complete operating and non-operating budgets with rates effective for July 1; . Update Long Range Financial Plan; . Conduct Budget Workshop; and . Update and revise Fee-for-Service study.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Timely completion and Actual effective date of Met Met July 1 approval of annual budget new rates

Review and monitor Management budget operating results vs. review meetings held Completed Completed 100% budgets quarterly

Successfully conduct Conduct workshop on Met Met 100% Budget Workshop time

Update Fee for Service Completion and approval Completed Completed March 2011 study of results

98 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Treasury The treasury function is responsible for assuring that all investments of the District funds are made within the Board of Directors’ adopted investment policy, while at all times adhering to the Prudent Investor Standard. The primary objective, in priority order, of investment activities shall be safety, liquidity and return. Treasury is also responsible for managing the District’s debt. The primary debt objectives are to minimize long term, debt borrowing cost and risk, and to manage and utilize the bonding capacity of the District so that future capital facility requirements can be funded as needed.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Re-balanced investment allocations to maximize return.

OBJECTIVES FISCAL YEAR 2011-12 . Execute new wastewater contract agency agreements incorporating fixed annual capital payments; . Review District’s financial position and demographics with rating agencies to maintain or increase the credit ratings of the District to ensure the lowest possible borrowing costs; . Update District’s debt and investment policies; and . Ensure compliance with investment and debt policy requirements.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Bond ratings received by rating agencies Met Met Dec. Complete continuing Maintain credit worthiness of disclosure reporting AA or the District Met Met requirements Better Number of non-compliance 0 0 0 reportable events

Review and maintain adequate Updated long range financial Met Met Annual bonding capacity plan

Compliance with District approved investment policy Investment portfolio 100% 100% 100% Investment return compared to performance 108% 100% 95% established benchmarks for each investment pool. * Bond insurance downgrade

99 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Real Estate Management Consistent with the District’s strategic objective to maximize the benefits of its real estate holdings, Real Estate Management is responsible for overseeing, managing, and administrating the District’s real estate holdings. These business and asset management functions provide full levels of services to acquire, utilize, maintain, dispose, and manage District properties.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Processed Riverside County’s PSEC communication site project at two District locations; . Successfully acquired 60 acres next to the District’s treatment plant; . Successfully negotiated co-location cell site least agreement for the General Kearny site; . Processed plans to upgrade two cell sites under two cellular companies; and . Commenced negotiations with two carriers for two new cell site lease locations.

OBJECTIVES FISCAL YEAR 2011-12 . Secure new tenant for Diaz Road property; and . Negotiate dirt-hauling agreement for stockpile on 60-acre acquisition.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Develop Desk Maintain Property Manual and Completed N/A N/A Management Services Contacts List

Property Negotiate purchase of acquired June 2009 One Two Started reservoir sites # of Sites 1-2010 Completed acquired

New Tenant Add Diaz Road Tenant Met February 2010 N/A Lease

100 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Customer Service Customer Service is responsible for the maintenance and use of an efficient and accurate utility billing system, which provides for the timely collection of the District’s water and sewer service revenues. Equally important is providing first class service to customers over the phone and in person at our District office. Customer Service is also responsible for the collection of meter read data to help ensure that all customers are billed timely and accurately. This function is also responsible for daily meter services such as turning on and off meters, placing door hangers, and responding to customer requests. All activities within the Customer Service department are performed emphasizing a “customer comes first” philosophy.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Implemented new Budget-Based Tiered Water Rate billing system changes; . Answered over 6,800 customer calls per month; . Assisted over 1,300 walk-in customer per month; . Successfully promoted online payment system with more than 70 percent of all credit card payments made online or via the IVR system; . Successfully promoted electronic payments with more than 50 percent of customers utilizing some form of electronic payment; . Commenced fixed real collections for Phase 6 & 7 AMR accounts; and . Completed over 14,400 service orders.

OBJECTIVES FISCAL YEAR 2011-12 . Begin the implementation of the Cayenta Customer Information System; . Explore additional electronic bill payment options; . Begin fixed read collections for Phase 8 AMR accounts; . Continue to provide job specific training for customer service staff; and . Support and contribute to the ERP project.

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PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Timely billing of customer Bills sent on Wednesday 52% 95% 75% accounts Less than Less than Timely response to customer Average time to answer 30.45 60 60 calls incoming phone calls Seconds Seconds Seconds Timely response to customer Less than Less than Number of abandoned calls 2 % phone calls 4% 5%

Collection of accounts Outstanding receivables over 11% 2% 4% receivable 60 days

Efficient and alternative Customers utilizing some 42% 30% 48% payment options form of electric payment

Responding to customer Complete request in one day 100% 98.5% 98.5% service request

Timely completion of door hanger and delinquent shut- Complete same day 100% 98% 98% offs

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Purchasing Purchasing is responsible for creating and maintaining a procurement system that provides professional, responsive, efficient and effective material and procurement support services to its internal and external customers.

ACCOMPLISHMENTS FISCAL YEAR 2009-10 . Met the challenge of procuring inventory requirements in addition to maintaining enough inventory that was unplanned to meet the needs of the AMR project; . Successfully removed brass from inventory and replaced it with the new “Lead Free” brass; . Successfully coordinated and ran the quarterly Materials Committee meetings; . Participated as team member for the Lawson Software implementation; and . Coordinated and supervised the first complete physical inventory since 1994.

OBJECTIVES FISCAL YEAR 2010-11 . Continue to maintain appropriate levels of inventory and non-inventory support to meet planned and emergency situations; . Sustain and purchase and receive inventory items for scheduled projects/jobs; . Coordinate month end closing and various reporting of Lawson transactions; . Coordinate quarterly materials committee meetings; . Train Supervisors and Management staff in Process Flow Approval System; and . Support and contribute to the ERP/CMMS Project.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Maintain appropriate levels Less than of inventory and non- Number of stock outs per 2% inventory support to meet 2% 2% month shortages planned and emergency monthly situations Purchase and Receive inventory items for Items in warehouse and 100% scheduled projects/job staffed for job within 24 99% 100% Compliant materials that exceed normal hours of due date carrying levels Order non-inventory Write and process RFPO’s “Request for Purchase 100% within 48 hours of RFPO 96% 100% Order” materials and Compliant receipt in Purchasing Dept. services

103 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Warehouse The Warehouse is responsible for maintaining a safe and responsive warehouse and inventory control system that ensures supplies are available and ready when needed by District personnel.

ACCOMPLISHMENTS FISCAL YEAR 2009-10 . Pulled, issued or staged orders in a timely manner; . Received, distributed or stocked all incoming purchases in a timely manner; . Successfully oversaw and trained temporary employees as required; . Participated in Lawson Software implementation; and . Completed training program for District staff in Lawson Requisitioning.

OBJECTIVES FISCAL YEAR 2010-2011 . Ensure timely and continuous availability of inventoried materials; . Receive and receipt inventory deliverables in a timely manner; . Maintain and ensure timely and continuous availability of direct charged materials not on inventory; . Conduct weekly scheduled cycle counting; and . Conduct purchase order follow-up on late deliveries.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 95% Receive and receipt Receipt inventory items for compliant inventory deliverables in a accounting processing 99% 95% to timely manner within 24 hours receiving date Conclude weekly cycle Conduct weekly scheduled 100% counting by Tuesday each 80% 100% cycle counting compliant week

Receive all materials that are Ensure timely and direct charges, process 95% continuous availability of paperwork and deliver or 91% 95% compliant inventoried materials stage within 24 hours after delivered to dock

104 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Information Technology Information Systems is responsible for maintaining a reliable and capable District-wide Local Area Network (LAN) that allows for effective and efficient integration of computer technologies into the daily business practices of the District. This IT function is also responsible for managing, maintaining, and administering the District’s key servers, including: . Financial Information System (FIS) . Geographic Information System (GIS) . MS Mail/Exchange . Imaging System . SAN Storage System . Disaster Recovery/Backup/Business Continuity System . Network Firewall/Security/Content Filter System . Web/E-commerce/FTP Servers . Telecommunications Servers . VoIP Phone System . HQ Main Datacenter Facility . DR Backup Datacenter Facility . Nine Intermediate Distribution Frames (IDF) . Two Main distribution Frames (MDF) . Two Extension Networks

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Provided support and resources for the ongoing implementation of the Information Technology Master Plan (ITMP); . Successfully upgraded all hardware and software for the Lawson FHRIS system; . Completed a new Information Technology Master Plan for 2011; . Replaced all firewall and edge security components with a new advanced ‘Next Generation’ Palo Alto redundant firewall system; . Completed Disaster Recovery site upgrades; . Achieved MISAC Achievement in Information Technology award for 2010; . Replaced Document management system with a new EMC product; . Implemented Phase II of the ERP project by going live on December 20, 2010; . Implemented Extension network for the SRWRF, mechanics/shop bldg.. for IP/wireless/phones for staff;

105 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Created new VPN access network for Employees and consultants; . Consolidated server farm down to 14 physical servers at HQ by increasing utilization of VMWare to now run 30 virtual servers; and . Successfully blocked over 1.1 million spam emails, over 3 billion viruses, 21 billion intrusion attempts, over 260 million spyware’s , and over 980 billion attempts by peer-to-peer software to infiltrate RCWD’s network.

OBJECTIVES FISCAL YEAR 2011-12 . Roll out ITMP projects as required and under direction of District management; . Lead and support Phase II and III of ERP implementation; . Find additional opportunities and areas to leverage existing technology to save money while increasing performance and stability of the network; . Upgrade all desktop and laptop operating systems to Windows 7; . Upgrade memory capacity in VMWare servers to allow for additional use of virtualization; . Replace all managers and some supervisors desktop PC’s with Laptops; . Maintain reliable and dependable LAN and ERP performance, minimizing down time; . Respond and resolve network user issues timely and completely; . Conduct as internal customer satisfaction survey; . Provide individual Help Desk user system assessments and proactive customer service; . Have all IT staff attend an enhancing IT Customer Service related course; and . Complete and achieve MISAC Achievement in Information Technology award for 2011.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Number of hours down time 9 hours 9 hours Reliable and dependable 0.08 network performance during business hours annually annually Resolve problems within 24 Timely resolution to user 85% 80% 80% problems hours Percentage of favorable Maintain internal customer responses to internal customer 80% 90% 90% service satisfaction survey

106 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Geographical Information Systems Geographical Information Systems (GIS) is responsible for providing enhanced access to high quality geographic information that increases the effectiveness of business operations through information and process integration crossing organization units in pursuit of better public service.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Continued to assist Finance Department with the implementation of new tiered water rate structure by providing area calculations; . Assisted the Planning Department with mapping and analysis requests for various projects; . Implemented water use footprint calculator web application to be used in the Tiered Rate Water Budget (automated process); . Developed and deployed GIS workflow for viewing/updating meter service areas; . Continued to assist the Operations and Maintenance with the Automated Meter Reading project by providing maps to track progress; . Continued to produce maps and provide technical support for District’s personnel; . Continued working on improving GIS data collection by reviewing current workflows and identifying facilities not captured through the as-built process; . Provided GeoViewer support/training throughout the District; . Continued monitoring the GPS-based Corrosion Control Program – undergoing in M&O department; . Implemented custom Pressure Zone Filter tool for main ArcGIS Server web application (RCWD GIS Viewer Online) as requested by M&O personnel; . Converted GIS water and sewer features to CMMS; . Updated GIS features to match CMMS; . Developed new GIS service for SMMS and configured Map Drawer; . Re-designed GIS database to facilitate data editing/maintenance without impacting District’s GIS users; and . Implemented new GIS-based dig-alert system.

OBJECTIVES FISCAL YEAR 2011-12 . Continue to operate, develop, and maintain the District’s Geographic Information System including updating and adding new data sources; . Continue to assist in the integration of District data sources through participation in the Information Technology Steering Committee, Web development Sub-Team, IT Training Sub-Team, ERP Sub-Team, and Needs Assessment Implementation Team; . Improve GIS information dissemination throughout the District;

107 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Promote integration of GIS with other business systems (ERP/CMMs/CIS),; . Conduct a needs assessment with all departments and develop strategy for integrating GIS with current workflows, as applicable; . Provide District-wide training for using ArcGIS Server technology; . Reconcile meter database using CIS data and GPS information; . Complete Phase II of Enterprise GIS implementation (GeoViewer phased out/standard GIS architecture; begin integration with core business systems); . Implement GIS-based mobile CMMS solution and training program; . Maintain GIS and CMMS systems and keep them in sync; and . Assist with implementing a new CIS system.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Respond to customer service Maps produced within 48 hours 100% 90% 90% requests for maps of request

Reliable GIS system software Resolve problems within 24 100% 90% 90% performance hours of notification

108 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Planning Division MISSION STATEMENT To conduct and implement strategic water, wastewater and recycled water resource projects and planning studies that lead to the implementation of projects that maintain or increase the water quality and reliability of the District’s resources in support of the District’s strategic plans and objectives. These activities include planning and feasibility studies, water conservation programs, grant and outside funding partnerships, public and legislative outreach, public relations and water education.

PERSONNEL REQUIREMENTS

ACTUAL ACTUAL BUDGET PROJECTED FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Director of Planning 1 1 1 1 Public Information Officer 1 1 1 1 Resource Planner 2 2 2 2 Con. Water Use Efficiency Analyst 0 1 1 1 Administrative Assistant 1 1 1 1 Planning Intern 2 2 2 2 Total 7 8 8 8

DIVISION SUMMARY Actual Budget Budget Category FY 2009-10 FY 2010-11 FY 2011-12 Labor $407,331 $454,794 $478,417 Materials 44,391 110,200 110,301 Outside Services 794,913 502,278 615,563 Funded Staffing Level 7 8 8 * Labor dollars are subject to the outcome of final labor negotiations.

CRITICAL SUCCESS FACTORS The Planning Division has identified the following objectives it considers critical to the overall success of the Division and the District for fiscal year 2010-2011: . Secure MWD Small Project Contract and define participation of partner agencies for the IRP projects. . Update the Integrated Regional Water Management Plan to incorporate the Proposition 84 (State of California) Guidelines and apply for funding. . Seek additional federal funding for the IRP. . Target landscape customers for potential conversion to recycled water under the mandatory water re-use policy. . Assure compliance with the California “Urban Water Conservation Council’s Best Management Practices. . Apply for six grants, receive $500,000 in outside funding, and implement the programs.

109 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Conservation Activities

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Implemented 2010 IAWP Opt-Out program; . Developed tracking system through billing system for conservation rebates; . Pursued grants and other avenues of funding opportunities; . Explored CFL retrofit programs for HOA’s, residential and repo-homes by sponsoring stake holders meetings; . Completed the development and implementation of the water use efficiency across the District groups; . Worked with Hunter Irrigation Industries in providing irrigation auditing certification for irrigation professionals; . Pursued funding/rebate opportunities with WMWD; . Procured rebated money from MWD for ROSIP; . Reviewed, survey and site visit weather based controller customers, implemented monthly WBIC Tune Up class to help educate customers; . Procured five RCWD facilities for installation of WBIC products; . Retained instructor, and increased residential CFL weekend class for residential customers; . Increased CFL professional classes by extending to city licensed contractors; . Documented process flow charts within the Department; and . Assisted in development of Ag input screens with the GIS and CS Department. OBJECTIVES FISCAL YEAR 2011-12 . Develop Leak Alert Program via the web for all customers on Fixe networks; . Pursue MWD funding through WMWD and EMWD for fair share allocation of $65,000 conservation funds; . Administer Opt-Out Process for Ag customers; . Capture as much funding through MWD Ag Pay for Performance Program as possible; . Develop and implement RCWD Ag Efficiency Program; . Streamline data collection/management activities for BMP reporting purposes; . Seek financial assistance for capital projects in the form of grants and/or loans from State and Federal entities; . Collaborate with Finance Department for developing specific procedures for tracking grant/loan funding and streamlining report activities;

110 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Develop Residential Water Use Efficiency Evaluation Program; . Work with Public Information Officer to develop more conservation programs; . Attend other staff meetings to educate on conservation programs, rebates, and support; . Review goals with staff monthly, provide support and opportunities to expand experience; . Work with GIS and CIS reps to develop Ag Input screens; and . Develop strong team work by conducting monthly team building activities.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Develop ET water budgets ET Water Budgets Met Met N/A for all M&I customers

Develop and begin Salinity Management implementation of a salinity N/A Met N/A management plan

Begin a feasibility study for a Conjunctive Use N/A Met N/A conjunctive use program

111 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Water Planning Activities

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Prepared and submitted a Proposition 84 Integrated Regional Water Management (IRWM) Planning Grant application for implementation and update of the Upper Santa Margarita Watershed IRWM Plan; . Prepared and submitted a Proposition 84 IRWM Implementation Grant, Round 1 Application for projects included in the Upper Santa Margarita Watershed IRWM Plan; . Prepared the District’s 2010 Urban Water Management Plan in accordance with the requirements of the Urban Water Management Planning Act; and . Received award and administration of a $6.2 million American Recovery and Reinvestment Act of 2009 Grant.

OBJECTIVES FISCAL YEAR 2011-12 . Adopt the District’s 2010 Urban Water Management Plan by July 1, 2011; . Submit the District’s 2010 Urban Water Management Plan to the Department of Water Resources by August 1, 2011; . Develop a District=wide Grants Management Program to include grant tracking and acquisition grant management, and grant close-out; . Coordinate with the Upper Santa Margarita Watershed (USMW) Integrated Regional Water Management (IRWM) Plan Regional Water Management Group for implementation of the USMW IRWM Plan; . Collaborate with the Tri-County Funding Area Coordinating Committee (FACC) for use or IRWM funding in the San Diego Funding Area and coordination of overlay projects; . Update the USMW IRWM Plan, as required, when funding is available; . Prepare a salinity-nutrient management plan when funding is available; . Participate in regional water management groups and forums, including the Riverside County Water Task Force, to ensure District representation in regional issues; . Consider development of a groundwater management plan (GWMP) for the Temecula-Murrieta Basin in compliance with CWC §10753.7; . Provide input where appropriate on development of the California Water Plan, Update 2013; . Participate in examining opportunities water markets and transfers; . Work collaboratively with all District departments in water planning and development issues for coordination and consistency of dta and project information; and

112 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Build relationships with Western Municipal Water District and Eastern Municipal Water District staff for collaborative efforts on water planning and development issues.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Submit 2010 UWMP to Coordinate IRWM Plan Board for adoption by June Ongoing Ongoing Ongoing implementation 2011

Attend and participate in Participate in regional water regional water meetings, Met Ongoing Ongoing issues groups, committees and forums

Research opportunities and Examine water Ongoing Ongoing Ongoing economic viability of water markets/transfers Effort Effort Effort market/transfers

Track development of the Follow development of CWP, Update 2013 and Ongoing Ongoing Ongoing California Water Plan, provide input where Effort Effort Effort update 2013 appropriate

Build collaboration with Participate in meetings with Ongoing Ongoing Ongoing WMWD and EMWD

113 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Public and Legislative Relations/Outreach Activities

ACCOMPLISHMENTS FISCAL YEAR 2009-10 . Developed Outreach Plan to coincide with the stages in the Water Shortage Contingency Plan; . Developed targeted water use efficiency outreach to different customer types, i.e. AG, domestic and commercial; . Fostered and maintained Federal and State Legislative partnerships; . Fostered on-going communication with cities and school districts in our service area; . Developed and implemented a teacher workshop prior to the school year; . Partnered and implemented a region wide water use efficiency on-going campaign, “Water Use it Wisely”; . Sponsored education programs: MWD Solar Cup, poster contest, and technology contest; . Implemented additional education programs for junior high and high school students; . Fostered public outreach program announcing Stage 2 Water Alert; . Created strategic and seasonal media pitches; and . Participated in California Water Awareness Campaign, Community Water Festival, WRCOG Environmental Youth Conference, and MWD’s legislative committee and ACWA outreach program.

OBJECTIVES FISCAL YEAR 2010-11 . Improve intra-departmental communication by attending department staff meetings and maintaining on-going communication; . Develop and implement an emergency communication plan and policy; . Develop and distribute fact sheets on legislation that will affect the District; . Prepare and create materials and outreach strategies to deal with possible MWD cuts; . Develop partnerships for seasonal targeted outreach campaigns; . Maintain education programs including the additional education program for junior high and high school students through partnerships with wholesale agencies to reduce costs; . Foster relationships with key legislative staff and communicate on their introduced bill language affecting the District; . Maintain Federal and State legislative partnerships; and

114 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Maintain participation in community outreach programs, as well as maintain communication efforts through the local media.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Develop and implement an Emergency Communication emergency communication Met N/A N/A Plan plan and policy

Create materials and Water cut outreach strategies for outreach with Met N/A Ongoing MWD water cuts

Work with legislative staff to communicate language State Legislation Ongoing Ongoing Ongoing changes to legislation affecting the District

Improve intra-departmental Communication communication through Met 90% 90% meetings and email updates

115 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Engineering Division MISSION STATEMENT To develop, implement and manage various programs to ensure the delivery of reliable, high- quality water, wastewater, and reclamation services to its customers and communities in a prudent and sustainable manner. The Engineering Division’s mission is accomplished by providing quality customer service- oriented project management, facilities planning, facilities design, and inspection of District facilities utilizing an innovative, responsive and highly skilled professional staff. Services include facility planning, design, project management, inspection, and coordination of District-led and developer-led facility work. The Engineering Division also satisfies the District’s mission by providing engineering leadership and support for all District functions.

PERSONNEL REQUIREMENTS

ACTUAL ACTUAL BUDGET PROJECTED FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Chief Engineer 1 1 1 1 Engineering Planning Mgr. 1 1 1 1 Sr. Administrative Assistant 1 1 1 1 Office Assistant 1 1 1 1 Construction Contracts Manager 1 1 1 1 Contracts Administrator 1 1 1 1 Construction Inspector Supervisor 1 1 1 1 Sr. Constr. Inspector/Constr. Insp. 3 3 3 3 Civil Engineer 2 2 3 3 Associate Engineer 1 1 1 1 GIS Analyst 1 1 1 1 Engineering Manager 1 1 1 1 Engineering Services Manager 0 1 1 1 Engineering Services Supervisor 1 0 0 0 Engineering Services Representative 3.5 3.5 3.5 3.5 Engineering Project Coordinator 1 1 1 1 Engineering Aide 1 1 1 1 Engineering Intern 0 0 0 0 Totals: 21.5 21.5 22.5 22.5

DIVISION SUMMARY Actual Budget Budget Category FY 2009-10 FY 2010-11 FY 2011-12 Labor $1,212,953 $1,280,980 $1,356,751 Materials 57,179 66,887 62,600 Outside Services 353,655 425,740 264,000 Funded Staffing Level 21.5 21.5 22.5 * Labor dollars are subject to the outcome of final labor negotiations.

116 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

CRITICAL SUCCESS FACTORS The Engineering Division has identified the following objectives it considers critical to the overall success of the Division and the District for fiscal year 2010-2011: . The timely completion of the report packages for the Engineering and Operations Committee meeting and Board of Directors meetings. . The timely review of developer plan check submittals, and professional and courteous customer and developer engineering support. . Preparation, approval, and implementation of the fiscal year 2011-2012 Corrective Capital Replacement, and Capital Improvement Programs. . Implementation and completion of the various proposed Long-Term Financing Program projects. Included in this item is the significant completion of the 2010 Bond Financing projects. . Implementation and completion of assigned Strategic Plan activities. . Develop and implementation of the Customer Information System. Included in this item is further refinement and analysis of workflow processes within the Engineering Division and implementation of knowledge management practices. . Providing engineering leadership and support for all District functions and legal activities.

117 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Engineering Administration Engineering Administration is responsible for providing the required management, support, and leadership to ensure the Engineering Division’s objectives are accomplished. General administration is accomplished through records management, correspondence processing, legal activity support, supplementary administrative support and coordination with other District Divisions, and providing support to the Board of Director’s Engineering and Operations Committee.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Completed 100 percent on-time all monthly Engineering & Operations Committee meeting package preparation and corresponding minutes; . Completed 100 percent on-time over 600 individual pieces of correspondence and 65 contract specifications and consulting agreements; . Updated the latest version of the Water System Facility Requirements and Design Guidelines Manual for Board of Director review as required to be included within the District’s Administrative Code; . Updated the latest version of the Sewer System Facility Requirements and Design Guidelines Manual for Board of Director review as required to be included within the District’s Administrative Code; . Updated the latest version of the Standard Specification and Drawings Manual for Board of Director review as required to be included within the District’s Administrative Code; . Facilitated the posting of the updated Facility Requirements and Design Guidelines, and Standard Specifications and Drawings Manual to the District’s website; . Maintained update log documents to track changes to the Standard Specifications and Drawings Manual front-end document, General Provisions, Special Provisions, and Technical Provisions. Update logs are incorporated into appropriate sections for the Standard Specifications and Drawings Manual and posted to the District’s website for clarification of all revisions; . Participated in the Pechanga Water Rights Negotiating Team; . Participated in various Board of Directors Ad-Hoc Committee meetings; . Recruited, hired, and trained Office Assistant Position; . Converted the master project list for the Engineering Division from Word format to Excel format; and . Updated master document list for the Engineering Division library and verified list for accuracy.

118 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

OBJECTIVES FISCAL YEAR 2011-12 . Timely completion of all Engineering & Operations Committee meeting packages and corresponding minutes; . Timely completion of all correspondence, agreements and specifications; . Administrative assistance to the Engineering Division to provide quality external and internal customer service in the most efficient manner; . Participate in ACWA/JPIA’s Professional Development Program, Supervisor Basics (program to be completed within 4 years); . Continue support for various legal activities; and . Continue documentation support of the Engineering Division workflow process activities (knowledge management plan).

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Complete Engineering & Operations Committee Meeting Completed within monthly 100% 100% 100% packages and Board Meeting scheduled deadlines write-ups

Prepare and complete transcription of Engineering and Within 30 days of subject 100% 100% 100% Operations Committee Mtg. meeting minutes

Provide timely response to all requests for finalization of correspondence, agreements, Within 1 day of receipt 100% 100% 95% specifications, and miscellaneous tasks assigned on a daily basis

Particpation in ACWA/JPIA’s Program to be completed within Professional Development N/A N/A 100% 4 years (2011-2014) Program, Supervisor Basics

119 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Engineering Planning Engineering Planning’s primary responsibility is for the immediate and long-range facility planning for water, water reclamation, and wastewater facilities ensuring needed facilities are available to provide reliable and sustainable services for District customers. This is accomplished by updating the facility master plans, developing fiscal year capital improvements/replacement programs, implementing an asset management program, furthering regional and local agency coordination, assisting with regulatory compliance activities, and assisting with CEQA documentation and design of major capital improvement projects.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Developed the fiscal year 2011-2012 Facility Capital Replacement and Capital Improvement Program Projects; . Developed the fiscal year 2011-2012 Facility Corrective Program projects; . Formulated the draft Capital Improvement Program for the proposed 2010 Bond Financing Program; . Continued implementation of GIS for the Sewer System Management Plan; . Pursued principals of advanced assessment management with sewer video and sewer condition assessment pursuant to the Sewer System Management Plan; . Advanced sewer model development pursuant to the Sewer System Management Plan and subsequent efforts to update the Wastewater Facilities Master Plan; . Updated the Wastewater Facilities Master Plan sewer flow projections and GIS database framework; . Updated the Water Facilities Mast Plan water demand projection and GIS structure; . Advanced integrated resource plan initiatives including the Lower and upper VDC studies for optimized conjunctive use, brine disposal alternatives analysis, indirect potable reuse conceptual design, and construction of Pauba Valley Monitoring Well(s); . Coordinated with EMWD on regional integrated planning, such as water supply initiatives involving water wheeling, sewer system analysis of the Temecula Valley Wine County and the EM-20 turnout capacity re-rating; . Pursued initiatives with IT Department to further the District’s enterprise GIS; and . Participated in CMMS development and determination of possible Engineering business process impacts and opportunities for improvement.

OBJECTIVES FISCAL YEAR 2011-12 . Develop the proposed fiscal year 2012-2013 Facility Corrective Program; . Develop the proposed fiscal year 2012-2013 Facility Capital Replacement and Capital improvement Program;

120 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Advancement of the District’s Asset Management Program; . Participate in the improvement of the District’s data sources and development of the necessary solutions to improve the data access and integration of data involving the GIS, SCADA, CIS, CMMS, and FIS databases; . Update the Sewer System Management Plan; . Completion of the domestic water and non-domestic water distribution system model updates and GIS coordination; . Participate in the development of the enterprise GIS, including the GIS Master Plan; . Complete the brine disposal alternatives analysis and indirect potable reuse conceptual design; . Continue to monitor potential renewable energy opportunities; and . Assist the Planning Division with updating the IRP feasibility studies, Salt & Nutrient Management Plan and Urban Water Management Plan.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Complete within Complete Engineering & Operations monthly scheduled 100% 100% 100% Committee and Board Meeting write-ups deadlines

Develop proposed FY Facility Corrective FY 2012-2013 Budget Nov June Projects, Capital Replacement and capital Met approval 2011 2012 Improvement projects

Percentage of assigned Complete assigned projects. projects completed 51% 80% 80% Timing of completion

Percentage of actual Less Completion of all assigned projects in a cost compared to 85% 95% than cost effective manner budgeted cost 110%

121 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Engineering Design Engineering staff generates a variety of engineering deliverables and performs related services for its internal and external customers in support of capital improvement and land development projects within the District’s service area. Engineering staff ensures that new water, sewer, and recycled water facilities, and the provisions of water and/or sewer service, are in compliance with applicable laws, ordinances, and District standards and/or policies. Activities include: . Project management of District-led capital improvement and corrective maintenance projects, to include design, preparation of contract documents (plans and specifications) and related coordination and administrative tasks. . Plan checking and as-built documentation of developer-led water, sewer, and recycled water facility improvement projects. . Responding to inquiries for engineering and related technical information, including water pressure, water availability, fire flow, hydrant location, and facility conflict evaluation and processing. . Interdepartmental coordination of District-led and developer-led facility improvement projects. . Maintaining the District’s Facility Design Requirements, as well as the Standard Specification and Standard Drawings documentation. . Providing oversight and support to the Engineering Services work group.

ACCOMPLISHMENTS FISCAL YEAR 2010-2011 . Managed various capital improvement projects (CIP) through design and/or construction phases—project activity included: o Vail Lake Transmission Main and Pump Station; o WR34 turnout Hydroelectric Power Generation Facility; o Ace Bowen Pump Station Improvements – Fuel Cell Power Generation, Pump Driver Replacement, and Miscellaneous Facility Improvements; o SR Water Reclamation Facility Expansion; o SR Water Reclamation Facility Sludge Drying Bed Access Improvements; o Reservoir Seismic Isolation and Safety Upgrades (various sites); o Disinfection System Upgrades (various well and pump station sites), including a Salt Hopper and Conveyor system; o Recycled Storage Pond No. 5; o Recycled Water Storage Pond Improvements; o Water Pipeline Interties; o 1610 PZ (Warren Rd) Reservoir and Supply Pipeline; o Redonda Mesa Hydropneumatic Water System; o Wellhead Treatment Systems (various well sites); o Leeways Freeway Sewer and Manhole Modification/Repair; o Tenaja Pump Station; o Anza Reservoir No. 2;

122 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

o Miscellaneous pipeline and appurtenance (facility) relocation/retrofits; o Miscellaneous sewer collection system repairs; o Miscellaneous sewer lift station and force main repairs; . Managed various corrective/maintenance projects through design and/or construction phases—project activity includes: o Reservoir recoating, mixing systems, cathodic protection, and safety improvements; o Mainline valve replacements; o Meter vault lid replacements; o Cathodic protection test station repair/replacements; o Service lateral replacement; . Performed plan check and coordination of developer projects to include a running average of 13 (concurrent) active projects; . Coordinated as-built documentation of 24 completed developer projects; . Performed a multitude of technical inquiries and evaluation for both internal and external customers—activity includes: o 44 fire hydrant location evaluations; o 36 fire flow evaluations; o 10 facility conflict evaluations and/or coordination; o 18 water availability evaluations; . Performed and published updates to Engineering department reference documentation (Water and Sewer Facility Design Requirements, Standard Specifications, Standard Drawings, and On-site Recycled Water Irrigation Guidelines and Requirements) – Ongoing; . Recruited and hired new Civil Engineer; and . Retained Engineering consultant to update the District’s Technical Provision sections of the Standard Specifications.

OBJECTIVES FISCAL YEAR 2011-12 . Proficient management of capital and/or corrective maintenance engineering projects through design and construction phases; . Develop Recycled Water Retrofit Program and secure funding for near-term and/or long-range targeted site retrofits; . Timely and accurate response to technical information requests/evaluations; . Timely and accurate plan checking, as-built documentation, and coordination of developer-led facility improvement projects; . Assess/improve the accuracy and timeliness, and efficiency of select Engineering department processes;

123 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Assess/Improve the accuracy and value of Engineering department reference documentation (Water and Sewer Facility Design Requirements, Standard Specifications, Standard Drawings, and On-Site Recycled Water Irrigation Guidelines and Requirements); and . Continued documentation support for the Engineering Division workflow process activities (knowledge management plan).

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Complete FY 2011-2012 facility Percentage of assigned projects 75% 100% 100% corrective maintenance projects completed by June 30th

Complete FY 2011-2012 facility Percentage of assigned projects cap. improvement/replacement 45% 80% 80% completed by June 30th projects

Complete Series 2010 Bond Percentage of assigned projects Financing facility capital 85% 80% 60% completed by June 30, 2012 improvement projects

Completion of all facility Less corrective and capital projects in Percentage of actual cost 90% 90% than a prudent and cost effective compared to budgeted cots 110% manner

Proficient and timely completion Published turn-around time; of developer-led facility plan positive (project account) N/A N/A 90% checks without exceeding balance throughout plan check deposit phase

At July Assess/improve the accuracy and and Ongoing (frequent) review and function of Engineering reference 90% 90% January updates to documents documentation E&O Mtg.

124 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Engineering Services The Engineering Services Section’s primary responsibility is to provide engineering-related customer service to both internal and external customers of the District. Much of the customer service activity is provided to the development community through the processing and coordination of new water and sewer facilities and service installations. In support of this effort, Engineering Services staff participates in the review of rates and charges and fees for service, research for annual property assessments, and annexation processes. Specific activities include: . Process and coordinate applications for new service connections. . Process and coordinate applications for Developer Plan Check projects. . Process requests for engineering evaluation and correspondence (Will Serve, Fire Flow, Hydrant Location, etc.); . Process and track easements and Maintenance Agreement Recordings. . Support the Planning Department with the Agricultural Requests for Variance and Consolidation. . Administer the Recycled Water Service Program in conjunction with Water Quality staff. . Respond to customer inquiries for engineering and other technical information. . Support Engineering Department for facility data QA/QC; . Assist in processing the variance requests for the new tiered water budgets; and . Assist in processing the survey results for the dedicated landscape meters and multi- family dwellings.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Assisted with customer notification of the AMR meter-exchange program; . Assisted with customer notification for all scheduled water shutdowns; . Processed 412 single and multiple drop-in meter requests (206); . Processed 34 full-meter requests (17); . Processed 94 fire hydrant construction meter request (47); . Processed 8 new fire hydrant installations and 4 fire hydrant upsizing requests (4); . Processed 14 plan check requests (7); . Processed 18 inspection job requests (9); . Maintained tracking of 25 floating fire hydrant construction meters; . Continue coordination with EMWD and WMWD to verify and improve the sewer connection hookup procedures; . Identification and cleanup of incorrect APN numbers within the billing system;

125 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Agency Agreement verification for various properties; . Maintained all vacant billing accounts to transfer to either seasonal shut-off or vacant long-term; . Processed 40 requests for fire hydrant location letters (20); . Processed 10 requests for water availability letters (3); . Maintain all vacant billing accounts to transfer to with seasonal shut-off or vacant long-term; . Assist Customer Service staff with the collection process; . Assist Customer Service Staff with violation notification and collection of penalties; . Verified that the previously completed manual audit of the properties receiving special assessments with the Rancho and Santa Rosa Division had been corrected by the State of California and the County of Riverside; (these assessments include Standby Water Assessments, Ad Valorem Assessments, Fire Service Charges, Unconnected Sewer, etc.); . Monitor the commercial billing accounts for missing square footage information for the monthly fire service charge; and . Provided frontline administration of the variance request program. This includes the following. o Data entry of all information from the variance request forms directly into the billing system for all customer classes and calculated landscape measurements; o Indexing all paperwork to be scanned into the customer billing records for future reference; o Issuing the approval correspondence to the customer’s variance request; o After July 1, 2010, the District received and processed 900+ landscape specific variance requests and 2,700+ non-landscape variance requests; and o After July 1, 2010, coordinated with the Construction Contracts Inspectors for the field verification of 327 accounts;

OBJECTIVES FISCAL YEAR 2011-12 . Process all engineering service requests in a timely and accurate manner; . Continue to expand documentation of engineering service procedures and processes, and work with ERP consultant to assess/improve the efficiencies of such processes; . Begin the implementation of the Cayenta Customer Information System . Develop a tracking system for easements and Maintenance Agreement Recordings; . Send out notification letters to commercial accounts to determine the correct square footage and begin assessing the appropriate monthly fire service charges; . Incorporate water conservation guidance/information into the new customer application process;

126 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Continue to promote inter-departmental team building and communication; and . Continue to support the Planning and Finance Departments with updating variance requests and irrigated landscape are calculations, including the mapping of new customer landscape areas.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Timely process of single service Turnaround time: 1 week 100% 95% 100% requests

Timely process of tract service Turnaround time: 1 month 100% 100% 100% requests

Timely process of incoming and Turnaround time: 2-days 100% 100% 100% outgoing Plan Checks

Timely response to phone call Turnaround time: 2-days 100% 95% 95% requests for information

Timely process incoming Turnaround time: 2-days 100% 100% 100% inspection packages

Timely process of requests for Turnaround time: 1-day 100% 100% 100% topo maps

Timely process of requests for fire hydrant verification and Turnaround time: 1-day 100% 100% 100% location letters

127 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Construction Contracts Construction Contracts is responsible for administering the contracts for construction of District capital facility projects, District corrective projects, developer-provided facility projects, and community facilities district (CFD) and assessment district (AD) project programs. Construction Contracts also provides technical support for the District’s Field Services construction teams. The primary focus of this area is to ensure all facilities are constructed in accordance with District standards, thereby enhancing the ability of the facilities to provide reliable and sustainable services. To accomplish this goal, the Construction Contracts department manages the entire bid process, construction activities, safety measures, and final inspection of completed facilities.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Assisted in the management of the ARRA grant funding projects; . Completed construction of the following projects: o Vail Lake Transmission Pipeline and Pump Station; o East Benton 8-inch Inter Tie Pipeline; o Wolf Store Road 12-inch Inter Tie; o Winchester Road Recycled Pipeline; o Washington Ave. Inter Tie Pipeline; o Meter Vault Improvements; o Exterior Recoating of Bear Creek Reservoir No. 2; o Exterior Recoating of El Chimisal Reservoir No. 1; o Exterior Recoating of Antelope Reservoir; o Exterior Recoating of De Portola and Prado No. 1 Reservoir; o Interior Recoating of De Portoloa and Prado No. 1 Reservoirs; o Reservoir inlet/outlet piping modifications at 15 Reservoir Sites; o Valve replacement and new installation projects; o Various city and county relocation projects; o Fiscal Year 2010-2011 Corrective Maintenance Projects (Painting/Slurry Seal); . Administration and inspections of developer-constructed facilities: o Installed 19,433 lineal feet (LF) of potable waterline; o Installed 2 double detector checks; and . Assisted in the filed verification of water-budget variances.

OBJECTIVES FISCAL YEAR 2011-12 . Provide construction contracts administration of the fiscal year 2011-2012 Facility Corrective Program; . Provide construction contracts administration of the fiscal year 2011-2012 Facility Capital Replacement and Capital Improvement Program; . Provide construction contracts administration of the 2010 Bond Financing Program Projects; . Obtain Board approval of the revised RCWD Contracting Policy;

128 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Provide construction contracts administration of the developer-funded projects; . Provide continued support for various legal activities; and . Provide continued documentation support for the Engineering Division workflow process activities (knowledge plan).

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Complete Engineering & Completed within monthly Operations Committee status 100% 100% 100% scheduled deadlines reports.

Finalize monthly progress Within monthly scheduled 100% 100% 100% reports deadlines

Timely completion of Percentage of projects 76% 75% 95% construction projects completed by scheduled date

Prepare daily reports for each Submit daily reports 100% 100% 100% project.

Timely submit final as-built Submit within 2 weeks of Notice drawings to Engineering 95% 90% 100% of Completion Department.

129 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Operations Division MISSION STATEMENT To operate and maintain the facilities and systems required to reliably deliver water, wastewater and water reclamation services to RCWD’s customers in a prudent and sustainable manner while producing high quality products and services that protect the public health.

PERSONNEL REQUIREMENTS

ACTUAL ACTUAL BUDGET PROJECTED FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Dir. of Systems Operations 1 1 1 1 Ops & Main. Technician 1 1 1 1 Ops/Maint. Assistant 0 0 1 1 CMMS Technician 0 1 0 0 Water Ops. Manager 0 0 1 1 Water System Supervisor 1 1 1 1 Water Systems Operator 5 5 7 7 Water Quality Supervisor 1 1 1 1 Water Quality Technician 6 6 6 6 Corrosion Control Tech. 1 1 1 1 Electrical Services Supervisor 1 1 1 1 Instrument & Controls Tech. 5 5 5 5 Water Reclamation Manager 1 1 1 1 Wastewater System Supervisor 1 1 1 1 Wastewater Plant Operator 6 7 5 5 Wastewater Maint. Supervisor 0 0 1 1 WW Collections Systems Op. 2 2 2 2 Plant Maintenance Technician 2 2 2 2 Operations Project Manager 1 1 1 1 Total 35 37 39 39

DIVISION SUMMARY

WATER: Actual Budget Budget Category FY 2009-10 FY 2010-11 FY 2011-12 Labor $2,059,380 $2,099,687 $2,332,018 Materials 388,948 427,973 592,361 Outside Services* 33,673,562 43,644,053 37,801,356 Funded Staffing Level 22 24 27 * Outside Service includes import water and energy expense * Labor dollars are subject to the outcome of final labor negotiations.

WASTEWATER: Actual Budget Budget Category FY 2009-10 FY 2010-11 FY 2011-12 Labor $996,035 $1,197,488 $1,066,729 Materials 379,177 580,800 323,600 Outside Services 1,325,444 1,481,552 1,105,389 Funded Staffing Level 13 13 12 * Labor dollars are subject to the outcome of final labor negotiations.

130 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

CRITICAL SUCCESS FACTORS The Operations Division has identified the following objectives it considers critical to the overall success of the Division and the District for fiscal year 2010-2011: . Economically provide potable, sewer and reclaimed water by meeting budgeted well production and optimizing material, outside services and operator and electrical services labor costs. . Reliably provide same services by minimizing the effects of purchased treated water and energy shortages. . Protect the public health and environment by meeting all Department of Health Services, EPA and Regional Water Quality Control Board requirements.

131 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Water Operations Water Operations is responsible for operating the potable, recycled and raw water systems in a manner that ensures reliable and sustainable deliveries to District customers. To accomplish this, Water Operations utilizes a Supervisor Control and Data Acquisition (SCADA) system that controls water production and flow through the District’s transmission and distribution system. Additionally, this area performs various maintenance, monitoring and evaluations of the source of supply and transmission and distribution systems to maintain operational readiness.

ACCOMPLISHMENTS FISCAL YEAR 2009-10 . Purchased and equipped a new valve exercising truck with all the necessary tools to expedite the valve exercising program ; . Successfully hired a full-time service worker (instead of an operator) to spearhead the valve exercising program; . Maximized production of the well field, consistently exceeding budgeted productions; . Installed the Geoviewer program on all of the operator’s laptops to assist with shutdowns after hours; . Coordinated with the aquatic inspections team to inspect and clean several reservoirs without putting any customer out of water; . Added production wells to the TOU program from SCE, saving on the “on-Peak” demand charges; and . Conducted several large-scale shutdowns for tie-ins to the 48”, with zero “no water."

OBJECTIVES FISCAL YEAR 2010-11 . Maximize production of the well field with weekly inspections in order to meet budgeted well production; . Map and exercise an average of 150 valves per month; . Institute a routine District wide flushing program; . Equip a present service truck into a control valve maintenance rig, removing the crane and compressor from unit 300; . Equip unit 300 with a laptop computer to assist in pipeline and valve locating; and . Clean debris from the recycled wet weather ponds.

132 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET; ACTIVITY CRITERIA 09/10 10/11 11/12 Support Water Quality during Check system with 5 minutes of hazmat situations and respond alarm and respond to hazmat 100% 95% 100% to system alarms in a timely situation within the 30-minute manner requirement

Actual well production equals Meet budgeted well production 94% 95% 95% budgeted amount

Stay consistent with valve Exercise and map average of 150 114% 90% 100% exercising/mapping valves per month

Complete all preventative Plan and execute monthly maintenance including monthly preventative maintenance and 88% 90% 100% flushing activities throughout flushing activities with customer the District notification

133 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Electrical Services Electrical Services’ primary responsibility is to maintain all electrical, electronic, instrumentation, associated control data networks, and SCADA systems and their networks that are used to supply water to District customers as well as systems that treat and reclaim water. This is accomplished through: . The immediate repairs to failed equipment . Routine maintenance of equipment to prevent failures, provide reliability and extend equipment life . Upgrade aging and obsolete equipment before it becomes an expensive re-occurring problem or unsupported A secondary function of the electrical services group is to provide support to other departments as needed. This is accomplished through: . Providing information as needed, such as NEC NFPA 70E code requirements, electrical imitations and control strategy options . Plan check electrical drawings for accuracy and proper function . Inspection assistance of new electrical/instrumentation construction . Give instruction in the operation of new or upgraded devices and systems used by operators Additionally, the electrical services group continues to revise operating systems for efficiency and ease of operation. Monitor District facilities for electrical violations and safety hazards to maintain an electrically safe environment. Continue to be aware of new and proven devices that increase reliability and cost savings.

ACCOMPLISHMENTS FISCAL YEAR 2009-2010 . Completed objectives to replace level probe with standard transducer at three reservoirs; . Completed objective to program data radio reset function at all reservoirs; . Completed objective to use new IEC standard for PLC programming; . Completed objective to install and test UPS unit in RTU at four reservoir; . Upgrade Wells 118, 211 and 120 to new PLC and soft-start motor control; . Introduced new model PLC to replace old obsolete type throughout the District; . Installed two AMR Collector Units for AMR pilot program; . Completed installation of the majority of AMR Collectors for Meter Fixed Network Project; . Installed new video intercom system in the warehouse; . Completed installation of KWh meters at lift station for Collections Department; . Modified Washington MMH RTU with new operator interface terminal;

134 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Upgraded motor starters at Winchester Pump Station to new soft-start standard; . Installed wireless security video camera at Well 211; . Installed power to temporary training trailer at District main facilities; . Modified controls at Cal Oaks 1 Lift Station to allow lead/lag function; . Replaced MCC at Cal Oaks 1 Lift Station; . Repaired collapsed conduit bank at SRWRF; . Documented and stenciled electrical underground vaults at SRWRF; . Replaced Collections Department SCADA computer; . Set up FTP site to provide SRWRF personnel daily reports; . Set up FTP capability for EVMWD to read all related MMH flows; . Provided 480vac power for new CL2 generation units at various field sites; . Provide power and SCADA interface to Air Removal System test site; . Provide power and SCADA interface to reservoir tank mixing test; . Upgrade PLC and motor starter at Well 125 and 139; . Replaced damaged underground cable at reclaim storage pond with wireless I/O system; . Had flow calibration verified at all MMH sites; . Modified VDC wells PTW for high turbidity per Water Quality Department request; . Upgrade Elm St Pump Station 1 & 2 PLC; . Replaced VFD’s at Well 153 (1), SRWRF headworks (2) and AWT pumps (3); . Added motor operator controls for discharge line at WR34; . Provided Adams Diversion flow signal to EMWD; . Upgrade Ace Bowen PLC and added controls to monitor engine emissions for AQMD compliance; . Upgrade Well 101 PLC and added controls to monitor engine emissions for AQMD compliance; . Established a functional Ethernet data radio link in the field; . Added a master PLC to the distribution SCADA system; . Reprogrammed PLC logic for Chloramination Station; . Developed a PLC model and SCADA software standard to be used throughout the District;

135 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

. Extensive work with engineering on electrical, I/C and SCADA architecture for SRWRF upgrade; . Assisted with data gathering for new CMMS system; and . Recalibrated new District two-way radio and repeaters to comply with FCC required narrow banding.

OBJECTIVES FISCAL YEAR 2010-11 . Replace SRWRF alarm call-out copper phone lines with a more reliable mode of communication; . Upgrade nine Rancho Division reservoir PLC’s to Modicon M340 series; . Upgrade 10 Santa Rosa Division reservoir PLC’s to Modicon M340 series; and . Install and test the effective use of fiber-optic float switch for level control in sewage lift station applications.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Start July Replace SRWRF alarm call- Compare availability and 1, 2010 out copper phone lines with a compatibility of coaxial, cell Met N/A more reliable mode of and fiber communications for Complete communication the plant SCADA alarms by Nov 1, 2010

Start July Upgrade nine Rancho 1, 2010 Complete Remove old PLC and replace Division reservoir PLC’s to Started by June with M30 and program Complete Modicon M340 series by June 2011 2011

Start July Upgrade 10 Santa Rosa 1, 2010 Complete Remove old PLC and replace Division reservoir PLC’s to Started by June with M30 and program Complete Modicon M340 series by June 2011 2011

Start July Install and test the effective Replace a standard float 1, 2010 use of fiber-optic float switch switch with a fiber optic float Met N/A for level control in sewage lift Complete switch at a lift station station application by June 2011

136 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Water Quality Water Quality is responsible for protecting the public health while ensuring the District delivers high quality water to its customers. To accomplish this, Water Quality investigates and resolves water quality issues, customer inquiries and complaints; maintains a system of sampling; completes analysis and regulatory reporting; operates and maintains systems for disinfection; and implements and supports District projects.

ACCOMPLISHMENTS FISCAL YEAR 2009-10 . Completed conversion of well field chlorine facilities from Gas Chlorine to on-site generation; . Completed installation of on-site chlorine generation systems at Deportola, Carancho, and De Luz pump stations; . Completed installation of on-site chlorine generator with reservoir mixing system at Avocado Mesa reservoir and pump station; . Completed installation of reservoir mixing system at Redondo Mesa reservoir; . Implemented Vail Lake water quality monitoring program; . Added additional recheck distribution system sampling stations; . Completed retrofit of well field sampling points; . Completed and submitted to Department of Public Health, 2008 Consumer Confidence Report; . Initiated operation of VDC chloramination treatment facility; . Department of Public Health, 2010 Annual Report; and . Developed recycled water program inspection procedures.

OBJECTIVES FISCAL YEAR 2010-11 . Complete installation of on-site chlorine generation and ammonia facilities at various pump stations; . Implement bulk salt storage for on-site generation systems; . Add additional recheck distribution system sampling stations; . Complete and submit to Department of Public Health, 2009 Consumer Confidence Report; . Complete retrofit of well field sampling points; . Complete and submit to Department of Public Health, Public Health Report; . Complete and submit to Department of Public Health, 2009 Annual Report; and . Complete and submit to Department of Public Health lead and copper monitoring.

137 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Prompt reporting to the By deadline required under state 100% Met 100% Department of Health Services regulations

Prompt collection of water By deadline required under state 99% 100% 100% quality samples regulations

Timely response to customer Return phone call within 24 hrs. 94% 90% 100% calls or next working day

Timely response to cross Inspection within 10 working 98% 90% 90% connection inspection requests days

Complete all preventative By time period prescribed under 81% 90% 90% maintenance maintenance schedule

138 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Wastewater Treatment Wastewater Treatment is responsible for providing reliable and sustainable wastewater collection and treatment services for the District’s customers. Additionally, this area is responsible for accomplishing its duties in a prudent manner by completing its task using effective management practices and ensuring an environmentally responsible operation.

ACCOMPLISHMENTS FISCAL YEAR 2009-10 . Completed 95 percent of maintenance routines; . Compliant with 99 percent of SDRWQCB discharge orders; . Maintained operating costs in-line with budget; . Successfully cleaned four miles of gravity sewer line per month; and . Completed all SDRWQCB reports on time.

OBJECTIVES FISCAL YEAR 2010-11 . Continue to ensure compliance with SDRWQCB discharge orders; . Reduce Sewer overflows, clean four miles of gravity sewer line per month; . Complete 95 percent of preventative maintenance tasks on schedule; and . Complete SDRWQCB reports and monthly scheduled maintenance on time.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Timely completion of SDRWQCB Reports and Reports submitted by 30th day 100% 100% 100% monthly scheduled of the following month maintenance

Compliance with SDRWQCB Prevent discharge order 80% 100% 100% discharge orders violations

103% Clean four miles of gravity Reduce Sewer overflows 95% 100% sewer line per month 49.08 Miles

Complete 95 percent of Effectively maintain existing preventative maintenance 100% 95% 95% equipment tasks on schedule

139 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Operations Project Department The Operations Project Department is responsible for providing corrosion control services for the District’s distribution system in addition to a wide range of project-oriented research and analysis of operations and maintenance projects.

ACCOMPLISHMENTS FISCAL YEAR 2009-10 . Successfully established and implemented new position.

OBJECTIVES FISCAL YEAR 2010-11 . Evaluate existing reservoir Cathodic protection stations/system; and . Implement a maintenance strategy.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Identify condition of all Evaluate existing reservoir Santa Rosa and Rancho 100% 90% 100% Cathodic Protection systems reservoir cathodic protection systems

Complete Work with a selected by June Complete Implement a reservoir consultant to develop a Project 2009 by June maintenance strategy corrosion control panel Deferred 2011 within 10/11 budget year Project Deferred

140 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Field Services Division MISSION STATEMENT To ensure that District’s customers receive reliable and sustainable services. Field Services is dedicated to accomplishing its mission in a cooperative team-oriented environment that emphasizes quality, safety, and customer service. The most critical function of the Field Services Division is to maintain and repair the infrastructure of the District. Repair and maintenance of the collections and distribution systems along with responding to emergency calls 24 hours a day is critical to providing uninterrupted service to our customers. Additionally, maintaining the operational ability of the District’s production wells is a critical task as it helps maintain supply and reduce the need for purchasing more costly import water.

PERSONNEL REQUIREMENTS

ACTUAL ACTUAL BUDGET PROJECTED FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Director of Field Services 1 1 0 0 Field Services Manager 0 0 2 2 Superintendent 2 2 0 0 Construction Foreman 3 3 3 3 Pump/Wells Foreman 1 1 1 1 Meter Repair Foreman 2 2 2 2 Field Services Construction Lead 2 2 2 2 Field Services Meter Repair Lead 1 1 1 1 Field Services AMR Lead 1 1 1 1 Field Services Construction I/II 11 11 11 11 Field Services Const. Locator 1 1 1 1 Field Services Meter Repair I/II 5 5 5 5 Field Services AMR I 5 4 1 1 Building & Grounds I/II 1 1 1 1 Auto Mechanic Foreman 1 1 1 1 Auto Mechanic I/II 2 2 1 1 Pumps & Wells I/II 2 2 2 2 Total 41 40 35 35

DIVISION SUMMARY Actual Budget Budget Category FY 2009-10 FY 2010-11 FY 2011-12 Labor $2,000,764 $2,172,792 $2,312,218 Materials 1,016,214 1,481,400 1,720,650 Outside Services 1,088,984 1,847,155 1,540,592 Funded Staffing Level 41 40 35 * Labor dollars are subject to the outcome of final labor negotiations.

141 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

CRITICAL SUCCESS FACTORS The Field Services Division has identified the following objectives it considers critical to the overall success of the Division and the District for fiscal year 2009-2010:

. Participation on ERP project to incorporate new maintenance management program to improve operational efficiency and reliability, provide better management reporting with accurate data for better decision making, and have the ability to integrate with software systems in the Finance and Engineering departments. . Continued extensive training of staff to ensure that employees are the best qualified and trained for their specific job responsibilities. Design an individual personal development plan to maximize each employee’s skills. . Completion of all scheduled maintenance routines on District assets including wells, pumps, and vehicles in accordance with specified requirements. . Continued implementation of the Automated Meter Reading Program-Phase IV utilizing the District’s comprehensive meter change out/service maintenance program.

142 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Field Services Field Services is responsible for maintaining the water and sewer systems infrastructure, ensuring the District provides reliable and sustainable services to its customers. Additionally, this function is responsible for full service meter installations establishing the water connection for new customers.

ACCOMPLISHMENTS FISCAL YEAR 2010-11 . Completed 64 corrective jobs to date; . Installed four meter services to date; . Installed four water sampling stations; . Replaced 15 AMR meters; . Installed 24 new water services; . Completed 360 corrective waterline repairs; . Completed 263 maintenance work orders; . Successfully performed 317 air valve maintenance orders; . Performed 675 fire hydrant maintenance orders; and . Completed five fire hydrant installations.

OBJECTIVES FISCAL YEAR 2011-2012 . Timely completion of assigned work orders; . Timely completion of assigned corrective jobs; . Install new meter services and fire hydrants as required; . Install new sample stations as required; . Perform maintenance on air valves (projected 900); . Perform fire hydrant maintenance (projected 1,500); and . Timely completion of capital improvement projects as required.

143 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Timely completion of assigned Close assigned work orders 55% 90% 90% work orders within 30 days

Complete maintenance on fire Complete maintenance on 300 91% 90% 90% hydrants and air-vac’s appurtenances per month

Timely completion of assigned Close assigned corrective jobs 31% 90% 90% corrective jobs within 30 days

Install 18 concrete foundations Install concrete foundations for for C12 onsite generation at 100% 100% N/A C12 onsite generation various wells and pump stations

Replace nine discharge Job was Replace discharge manifolds not 90% N/A manifolds at R.C. pump station budgeted

Relocate water sampling Relocate water sampling stations in the Santa Rosa and 90% 100% N/A stations Rancho Divisions – One each

144 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Building and Grounds Building and Grounds is responsible for providing custodial and landscape maintenance to all District facilities including buildings, pump stations, well sites, and reservoirs. This maintenance sustains and extends the useful life of the District’s assets and assures an aesthetic appeal that enhances customer service.

ACCOMPLISHMENTS FOR THE FISCAL YEAR 2010-11 . Successfully completed daily staff support and maintenance of all District facilities, 140 services requests completed; and . Completed scheduled preventative maintenance by the 10th of the following; and . Successfully scheduled and supervise work completed by outside vendors.

OBJECTIVES FOR THE FISCAL YEAR 2011-2012 . Complete all CMMS generated service requests within 24 hours and work orders within 5 business days; . Complete CMMS generated preventative maintenance by the 10th of the following month; and . Schedule, inspect, and review all facilities outside service work so that assignments are completed within 30 days.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Complete service CMMS service requests requests within 24 N/A N/A 90% and work orders hours and work orders within 5 business days

Schedule preventative Assign monthly 100% 100% N/A maintenance maintenance LCE

Complete preventative CMMS preventative maintenance by the 10th N/A N/A 90% maintenance of the following month

Outside service work to Schedule, inspect, and be completed within 30 N/A N/A 90% review outside services days

145 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Meter Maintenance Function Meter Maintenance helps to ensure reliable water deliveries and customer satisfaction by installing new meter services for developments, private residences and agricultural customers in a timely manner. This area is also responsible for various repairs and inspections of individual meter services, recycled water meter services, pressure regulators, and construction meters helping to sustain high quality water deliveries.

ACCOMPLISHMENTS FOR THE FISCAL YEAR 2010-11 . Successfully achieved 97.8% of Phase 6, 97.5% of Phase 7, and 14.4% of Phase 8 of the AMR project ; . Successfully completed 153 new meter installations and 2,349-meter service tickets within department time goals.

OBJECTIVES FOR THE FISCAL YEAR 2011-2012 . Install all fixed network endpoints in Phases 5-8 by December 31, 2011 ; . Respond and repair all meter leaks tickers, no water complaints, and AMR service tickets with 24 hours; and . Install new meters within five working days.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Percent of completion each Phase 6 and 7 of AMR Project 65% Ongoing N/A month

Installation of all fixed Completion of AMR Project network endpoints by N/A N/A 90% December 31, 2011

Installation of new services Excellence in customer service within 5 working days 98% 90% 90% through timely new service installations and meter repairs Meter service repairs within 95% 95% 90% 24hrs

146 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Mechanic Maintenance Function Mechanic Maintenance provides maintenance and recordkeeping of all District vehicles and heavy equipment, which keeps the fleet running and ready to respond. Additionally, this area also maintains stationary engines, which drive the District’s wells and pump stations. The timely completion of these functions enables responsive customer service and reliable water and sewer services.

ACCOMPLISHMENTS FOR THE FISCAL YEAR 2010-11 . Completed all DOT inspections for truck inspections; . Received a satisfactory inspection from the CHP BIT inspector; and . Completed LCE maintenance by the 10th of the following month; and . Successfully completed preventative maintenance on a total of 64 vehicles and 32 pieces of equipment, along with 71 corrective vehicle and 43 corrective equipment tickets.

OBJECTIVES FOR THE FISCAL YEAR 2011-2012 . Meet all DOT requirements for CHP BIT inspection program; . Complete CMMS generated preventative maintenance for vehicle and equipment by the 10th of the following month; and . Complete all CMMS generated corrective work within five business days.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Complete CMMS generated preventative Schedule preventative maintenance by the 98% 100% 100% maintenance 10th of the following month

Maintain heavy Receive a satisfactory equipment to DOT rating for the CHP BIT 100% 100% 100% standards program

Complete CMMS Corrective generated corrective N/A N/A 90% Maintenance maintenance within 5 business days

147 RANCHO CALIFORNIA WATER DISTRICT OPERATING BUDGET FISCAL YEAR 2011-2012 DIVISIONAL PLANS

Pumps and Wells Function Pumps and Wells provide routine and complex maintenance and repair to all District wells and pump stations. This area enhances customer satisfaction by enabling the District to provide reliable and sustainable services to its customers by maintaining the system that keeps the services flowing.

ACCOMPLISHMENTS FOR THE FISCAL YEAR 2010-11 . Minimized downtime on well repairs, utilize outside vendors to assist in the process of repair; . Successfully rehabilitated well nos. 120, 125, and 139; . Completed monthly preventative maintenance as scheduled.

OBJECTIVE FOR THE FISCAL YEAR 2011-2012 . Continue to schedule monthly preventative maintenance; and . Continue to work with outside vendors on well and booster repairs.

PERFORMANCE MEASUREMENT INDICATORS ACTUAL BUDGET TARGET ACTIVITY CRITERIA 09/10 10/11 11/12 Complete CMMS preventative Schedule preventative maintenance by the 100% 96% 100% maintenance 10th of the following month

90% of wells Schedule and complete and booster CMMS work orders to Work orders N/A N/A available for minimize downtime operation at for wells boosters all times

Complete all well rehabilitation and Capital Projects booster station N/A N/A 100% modifications by June 1, 2011

148 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Long-Range Capital Financing Plan

Objectives Based on current general plans for the Cities of Temecula, Murrieta and the County of Riverside, the ultimate build-out of the Rancho California Water District (RCWD/District) is expected to include 58,587 dwelling units, 4,732 acres of business park and commercial areas, and approximately 11,345 acres of agricultural use. According to the District’s Master Plan, the projected ultimate water demand is estimated at 100,284 acre feet-an increase of approximately 33% over the current usage. In light of the substantial financial commitment required to meet the current and future service demands of the District’s constituency, the District’s Board of Directors determined that a long-range capital financing plan would be a vital tool to utilize toward maximizing the District’s financial resources. This financial plan details future capital requirements as specified in RCWD’s completed facility master plans and identifies funding sources and the corresponding rate requirements to meet future debt obligations. The District funds capital improvement requirements through the issuance of long-term bonded indebtedness and, when available, cash reserves. The following plan determines a strategy for the repayment of existing and future debt obligations by projecting the many variables that affect the availability and growth of the District’s revenue sources. Development of the plan was influenced by the following goals: . Utilize the existing financial resources of property owners so that rates are minimized and benefits are maximized. . Ensure that sufficient funds are available to meet the financing needs as detailed in the facility master plans. . Allocate the costs of funding to the benefiting property owners or customers. . Maintain ad valorem assessments and standby charges within current parameters. . Structure rates in accordance with financial market and legal requirements. In response to the completion of Riverside County’s MASTER PLANS General Plan (Riverside County Integrated Plan) and revisions to the General Plans for the cities of Temecula  Water Facilities and Murrieta, the District revised its existing Water  Wastewater Facilities Facilities Master Plan, Wastewater Facilities Master Plan,  Water Reclamation and Water Reclamation Facilities Master Plan with the Facilities completion of the 2005 Water Facilities Master Plan and  Regional Integrated 2005 Wastewater Facilities Master Plan. These master Resource Plan plans were intended to identify and prioritize all required capital facility improvements through 2030, (projected build-out). Furthermore, the District completed the 2005 Integrated Resources Plan (“IRP”) to optimize the District’s use of its water resources. It is expected the Water Facilities Master Plans will be updated again in 2013.

149 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

The IRP was created to develop a long-term water supply plan that will help meet water demands from now until 2050 (ultimate build out of the service area). Through partnerships with Western Municipal Water District and Eastern Municipal Water District, the components of the IRP will utilize storage in Vail Lake to capture winter flows for summer use, deliver reliable high-quality water, and desalinate water for reuse in agriculture. The proposed project will free-up enough treated water supply to meet the needs of up to 70,000 households. The District’s project was selected as a Tier 1 project under MWD’s 2007 Official Integrated Area Study, was approved by California’s Proposition 50 Integrated Regional Water Management Plan, and expects to receive Proposition 84 funding. The project was selected to receive over $6.2 million in American Recovery and Reinvestment Act of 2009 funds, received $123,000 in the fiscal year 2008 Omnibus Appropriations bill, and $50,000 in the fiscal year 2009 Omnibus Appropriations bill. The Vail Lake Pipeline, which is phase one of the IRP, was completed in 2010. This Long Range Capital Financing Plan is broken down into three sections as follows: . Water Facilities . Wastewater Facilities; and . Water Reclamation, Treatment and Distribution Facilities The current capital facilities financing program calls for expenditures of $376 million by the end of 2030, with $323 million being spent on water facilities, $26 million for recycled water facilities, and $27 million on wastewater facilities.

Water Facilities Revenue Sources As a California Water District, RCWD has various sources from which to fund water related capital facilities and the corresponding annual debt service. These revenue sources are: . Ad valorem assessments based on $100 of assessed land value; . Standby charges based on acreage; . Capacity fees; . General purpose property taxes; and . Developer contributions The appropriate application of these revenue sources is critical to the success of the District’s financial plan. Classification of Water Facilities As the appropriate application of revenue sources is critical to the success of the overall financial plan of the District, so is the classification of water facilities critical to achieving equity for property owners within the District. The facilities of the District can be conceived as layers or categories. The first layer is the backbone system that provides for the production of water resources or the source of supply system. This layer consists of well production, groundwater recharge, import water and major water-wheeling facilities.

150 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

The second layer can be viewed as the delivery system and is broken down into numerous pumping and storage zones, each of which has a unique facility requirement, which varies based upon the character of the pumping zone’s water consumption and geographical requirements. This layer consists of booster pumping, distribution and storage facilities. The third layer can be viewed as the delivery system connected for each property in a pumping zone, which is supplied by the second layer facilities. As described above, these three layers build on one another. The source of supply facilities feed the pump zone facilities, and the pump zone facilities feed the property-specific facilities. Accordingly, the District’s facilities are broken down into three categories. These categories are defined based upon the relative level of benefit to property owners of the District. A brief summary of the three categories is as follows:

FACILITY LAYER FACILITY TYPE BENEFITING PROPERTY OWNERS

Benefits all properties within RCWD’s sphere of influence since source of supply facilities Category 1 Source of Supply enhance the value of property due to water availability

Benefits all properties within a specific Division Divisional Delivery Category 2 due to the fact that the facilities provide for the System delivery of water throughout the entire Division

Property Benefits only individual properties, tracts, or Category 3 Specific Delivery zones because they require delivery facilities in System addition to the Category 2 facilities Table 10.1

The key to a workable and equitable financial plan is to apply the appropriate revenue sources in such a way as to spread the financial burden of the facilities to the benefiting properties. This leads to a three-tiered funding approach for future facilities and a review of the allocation of existing debt service for existing facilities as outlined below. After definition and classification of facilities into the three categories described above, the funding of these facilities can be determined under the same theory. Since Category 1 facilities provide benefit to the entire District, they can be allocated and funded on a divisional basis; Category 2 facilities can be funded on a divisional basis; and Category 3 facilities on a property- by-property basis. This structure ensures that there is a matching of benefit to cost for the property owners within the District’s boundaries. In order to carry out this plan and apply it during the determination of assessments for each division and property therein, the debt service requirements are calculated and applied in the financial plan under the following formula: . The gross debt service requirement for existing and future debt is calculated for each division.

151 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

. Non ad-valorem assessment revenues such as capacity fees, standby charges, water debt service surcharges, and investment earnings on the debt service funds are then applied to determine the net ad valorem assessment requirement for each division. . Under this theory, the bonding capacity of each division is determined under existing ad valorem rates. . Bonding capacity is then used first for Category 1 facilities with the remaining capacity being applied to each division’s Category 2 facilities. . If a division does not possess the required bonding capacity for its entire share of Category 1 and 2 facilities, then the Category 1 and 2 shortfall will be made up via landowner contributions with corresponding reimbursement agreements. The reimbursement agreements will then be funded via capacity fees collected from benefiting property owners within the applicable division. Accordingly, revenue sources collected from the property owners are applied as follows:

REVENUE SOURCE APPLICATION

Ad Valorem Assessments

Standby Assessments Fund Capital Improvements or Debt Service Related to Category 1 and 2 Facilities Water Surcharge

Capacity Fees

Landowner Contribution or Special Construction of Category 3 Facilities Financing Instruments

Table 10.2 The financial plan calculates the bonding capacity for each division after the application of existing debt service costs and future debt service costs relating to Category 1 and 2 facilities. The remaining bonding capacity for each division then represents that division’s capital budget. Facilities must then be prioritized within each division to ensure that each division does not exceed its current bonding capacity. Any facility requirements exceeding the division’s current bonding capacity must be funded via landowner contribution in the form of cash or alternative financing vehicles. If any other sizing is required, reimbursement agreements can then be established and repaid via capacity fees charged to benefiting properties that connect in the future. The numerous advantages to this financing plan are as follows: . The District will not exceed its current bonding capacity; . The collection of assessments is directly related to the benefit that each property owner receives from corresponding facilities;

152 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

. Since the District will not issue debt in excess of its current bonding capacity, the risk relating to development timing is shifted to the developing property; and . Higher bond ratings; thus, lower financing costs. Allocation of Facility Costs Specific facility costs are also allocated to each of the District’s water divisions based upon estimated benefit. The adjacent table depicts the allocation formulas for specific facility types and the rationale for divisional allocation.

FACILITY ALLOCATION

67% Rancho Division; 33% Santa Rosa Division – Resource Distribution Facilities Based upon ultimate water demand

50% Rancho Division; 50% Santa Rosa Division – Resource Wells Based upon local water allocation

Recycled Water Advanced Treatment 70% Rancho Division; 30% Santa Rosa Division – and Storage Based upon ultimate demand

Rancho Wells 100% Rancho Division – Economic Benefit

Santa Rosa Wells 100% Santa Rosa Division – Economic Benefit

50% Rancho Division; 50% Santa Rosa Division – Recharge Water Facilities Based upon water allocation

Table 10.3

Replacement of Facilities Setting aside replacement reserves for aging facilities is of particular importance to water and wastewater utilities because of the relatively large investment in utility plants required to provide service. Depreciation of utility plant assets is an economic fact that must be given explicit and systematic recognition as a cost of rendering service. A failure to adequately fund the replacement of utility assets over their useful life creates a concealed form of deficit spending. The first step in creating a replacement funding strategy is to quantify future replacement costs. In January 2006, the District completed a comprehensive and detailed capital facility replacement study. This study identifies the replacement requirements through the year 2050. It is expected this study will be updated in 2013. Addressing the need for replacement cost funding, the District has taken a proactive two- pronged approach to meet this funding requirement. First, as the District currently funds the majority of its new facility requirements with the issuance of debt, the District’s long range financial plan anticipates extending this practice for the funding of future replacement facilities requirements as well. This will allow for the bonding capacity of the District to be utilized consistently with the transition from new to replacement facilities. Therefore, the

153 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 existing revenue streams to fund today’s debt service on new facilities will likewise shift and be utilized to fund future debt service related to replacement facilities in the future. Secondly, when needed, a charge within the existing water rates will be utilized to meet additional funding requirements. The following graph details projected future facility requirements in five-year increments. As is demonstrated by the graph, between now and the year 2050, the District’s planning focus will shift from new facilities to the management of replacing aging facilities.

Future Water Facilities

$500,000,000

$400,000,000

$300,000,000

$200,000,000

$100,000,000

$0 2015 2020 2025 2030 2035 2040 2045 2050

New Replacement

Chart 10.1

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Restructuring of District Debt Over the past few years, the District has accomplished several bond issue refinancings. As a result of these refinancings, the District lowered its average annual debt service payments by $2.5 million. Those issues and their respective savings to the District are detailed below:

PRESENT ANNUAL GROSS DATE BOND ISSUE ISSUE SIZE VALUE GROSS/CASH SAVINGS SAVINGS/% SAVINGS Refunding Revenue $2,294,000 01/92 $41,810,000 $5,466,000 $273,300 Bonds, Series 1992 5.96% Refunding Revenue $3,328,913 09/93 $48,710,000 $5,017,841 $228,000 Bonds, Series 1993 7.59% Refunding Revenue $4,082,811 12/93 $91,595,000 $8,800,000 $303,500 Bonds, Series 1994 5.28% Forward Interest Rate $2,806,856 5/94 $43,670,000 $4,699,512 $140,000 Agreement (FIRA) 6.43% Refunding Revenue $2,517,468 8/95 $46,585,000 $4,912,155 $233,912 Bonds, Series 1995 5.65% Adj. Rate Tender $2,128,835 1/96 Refunding Revenue $34,670,000 $7,681,820 $307,273 6.52% Bonds, Series 1996 Refunding Revenue $923,747 11/00 $19,170,000 $1,183,858 $98,655 Bonds, Series 2001A 5.19% Adj. Rate Refunding $2,714,420 7/02 Revenue Bonds, $77,095,000 $3,192,852 $122,802 7.00% Series of 2002A Synthetic Fixed Rate $2,546,042 6/04 Refunding Revenue $53,125,000 $3,199,371 $199,961 5.12% Bonds, Series 2004B Synthetic Fixed Rate $1,891,663 08/05 Refunding Revenue $30,250,000 $2,439,850 $221,805 6.02% Bonds, Series 2005A Conventional Fixed Rate Refunding $303,509 8/05 $18,185,000 $6,530,388 $466,456 Revenue Bonds, 1.29% Series 2005C Totals $504,865,000 $25,538,264 $53,123,647 $2,595,664 Table 10.4 (1) The 2008 A and B Refunding were executed for economic purposes, of which the gain could not be accurately calculated, in order to address the trading performance due to market issues surrounding the auction bonds as well as the related downgrades of the bond insurers. In addition to these bonds, the District also terminated the associated synthetic fixed payor swap in order to eliminate future interest rate swap risks. In April 2008, the District issued the 2008A and 2008B Series Fixed Rate Refunding Bonds totaling $204,205,000.

155 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Because of the savings associated with these refinancings, the District was able to lower the Rancho Division ad valorem assessment rate from $.36 to $.30 per $100 of assessed land value, and avoided increases to the Santa Rosa Division ad valorem assessment rate. The 1996 issue afforded the District the opportunity to restructure the outstanding debt related to the Santa Rosa Water Reclamation Facility (SRWRF), which created a more efficient matching of revenue streams to debt service cash flows.

Debt Policy and Administration There is no statutory regulation setting debt limitations on the District. The District has adopted its own debt management policies which determine the objectives and conditions for issuing debt. Through the District’s Long Range Financial planning process borrowing needs are anticipated and revenue streams to repay borrowings are identified. The ability of the revenue streams to meet current and projected borrowing needs determine the bonding capacity of the District. The Long Range Financial Plan ensures that the District will not exceed its current bonding capacity. Total District long term debt is as follows:

YEAR PRINCIPAL INTEREST TOTAL 2012-2016 58,475,000 87,066,778 145,541,778 2017-2021 38,825,000 76,266,746 115,091,746 2022-2026 56,795,000 64,171,296 120,966,296 2027-2031 70,105,000 49,197,985 119,302,985 2032-2036 65,410,000 32,781,054 98,191,057 2037-2041 75,005,000 12,274,611 87,279,612 Totals $364,615,000 $321,758,469 $686,373,473 Table 10.5

Table 10.6 identifies the total amount of revenue bonds outstanding as of December 31, 2010.

YEAR ISSUED AMOUNT USES(1) 2001A Series $4,040,000 Water Facilities 2002A Series $49,900,000 Water and Wastewater Facilities 2005C Series $18,185,000 Water Facilities 2008A Series $147,080,000 Water and Wastewater Facilities 2008B Series $44,625,000 Water and Wastewater Facilities 2010A Series $100,785,000 Water and Wastewater Facilities Total $364,615,000 Table 10.6 (1) Water facilities include: Wells, ponds, recycled facilities, reservoirs, pump stations, transmission mains, and valves. Wastewater facilities include: Plant, lift stations, collections, trunk sewer, and plant improvements.

156 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

The 2011-2012 fiscal year debt service requirements for the above mentioned obligations are as follows:

INTEREST DESCRIPTION RATES(1) PRINCIPAL INTEREST TOTAL 2001A Series 5.00% $1,965,000 $168,163 $2,133,163 2002A Series 4.84% $1,500,000 $2,438,000 $3,938,000 2005C Series 5.50% - $1,000,175 $1,000,175 2008A Series 4.60% $7,340,000 $6,648,463 $13,988,463 2008B Series 3.82% - $1,703,336 $1,703,336 2010A Series(2) 4.12% - $6,386,745 $6,386,745 Total $10,805,000 $18,344,882 $29,149,882 Table 10.7 (1) The interest rate represents the average rate per year for the remaining life of the bonds. (2) Rate reflects net of 6.34 taxable rate less 35% Federal Subsidy.

Likewise, Table 10.8 identifies the total revenue bonds outstanding per Division, together with their corresponding average interest rate at December 31, 2010.

WEIGHTED AVERAGE DIVISION AMOUNT ANNUAL INTEREST RATE Rancho $147,524,797 4.54% Santa Rosa $153,483,588 4.67% Wastewater $63,606,615 4.69% Total $364,615,000 4.62% Table 10.8

Bond Ratings Rancho California Water District’s historically sound financial and operational management has allowed it to achieve excellent credit scores from all three of the municipal rating agencies. The District’s credit ratings as of September 30, 2010 are as follows:

Moody’s Investor Service – Aa2 Standard and Poor’s – AA+ Fitch Ratings – AA+ Moody’s bond ratings range from Aaa (highest quality) to C (lowest quality) for long- term obligations. Moody’s applies numerical modifiers 1-high, 2-mid, and 3-low in each generic rating classification from Aa to Caa. Standard & Poor’s top four bond rating categories (AAA, AA, A, BBB) generally are regarded as eligible for bank investment (AAA is the highest rating). Fitch uses a rating system very similar to that of Standard & Poor’s. A “+” or “–” may be appended to ratings by Fitch to denote relative status within a major rating category. Fitch also considers the historical and prospective financial condition, quality of management, operating performance of the issuer and of any guarantor, any special

157 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 features of a specific issue or guarantee, the issue’s relationship to other obligations of the issuer, as well as developments in the economic and political environment that might affect the issuer’s financial strength and credit quality.

Water Facilities – Rate Recommendations Ad Valorem Rates As is demonstrated in the financial models of the plan, it is recommended that assessment rates be maintained at the current levels for the fiscal year 2011-2012 for both the Rancho and Santa Rosa Divisions, as follows: . Rancho Division - $0.30 per $100 of assessed land value only . Santa Rosa Division - $0.50 per $100 of assessed land value only Water Standby Charges For the 2011-2012 fiscal year, it is recommended that the standby charges remain at current levels as follows: Santa Rosa Water Area 1 - Parcels with a water meter shall be charged $69.92 per acre or per parcel if less than one acre. Area 1A- Parcels without water service shall be charged $69.92 per acre or per parcel if less than one acre for the first 40 acres, and $62.10 per acre for the remaining acres. Area 2- All Parcels shall be charged $48.00 per acre or per parcel if less than one acre. Area 3- All Parcels shall be charged $23.50 per acre or per parcel if less than one acre. Water Capacity Fee The District has taken significant steps to create a capacity fee program that equitably allocates capital between existing and future users and complies with the requirements of AB1600. Historically the method for determining capacity fees was based upon an incremental cost-pricing method. As the District matures the method used for determining the capacity fee must transition to a system buy-in method. Therefore, water capacity fees are currently supported by a combined method until build out is reached and a pure system buy-in method is utilized. It is recommended that the water capacity fees be held at the current levels.

Wastewater Facilities For purposes of this plan, the wastewater facilities are considered on a phase-by-phase approach. The first phase under consideration is the construction requirements for 5.0-mgd wastewater flow for which the District has issued Certificates of Participation and Revenue Bonds. This equates to a current investment of $50 million in wastewater treatment facilities at the Santa Rosa Water Reclamation Facility. The District is currently evaluating the treatment process and the near term capital replacement needs. Engineering analysis is being performed to determine if a process change to a more operationally efficient method would produce greater long-term asset returns compared to making major capital replacements that are now needed. The estimated capital expenditures

158 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 required to accomplish this range from $16 million to $50 million. This effort should be completed in 2012. Revenue Sources The District has four revenue sources from which to fund wastewater facilities. These revenue sources are as follows: . Capacity fees; . Standby assessments; . Monthly wastewater debt service charge; and . Developer contributions. Capacity fees are the primary revenue source for the funding of wastewater facilities. There are two secondary revenue sources, monthly debt service charges and standby charges, which fund any shortfalls in the primary revenue source. The operations and maintenance cost are paid by monthly service charges and are not part of the capital budget. Currently, the plant is processing 2.8-mgd of permanent flows, which is approximately 56% of its current capacity. The portion of the plant capacity that is in reserve for future benefiting users creates a financial burden that is directly tied to the availability of the service. In order to arrive at an equitable apportionment of cost and benefit, it is necessary that an annual standby charge be levied on those properties that have not paid their proportionate share of the capital costs of this facility. The District has currently received capacity fees for approximately 17,722 EDU’s, or 81% of the plant capacity, and is bearing the risk for the remaining 19% of uncovered capacity. As capacity fees are received in the future, the risk to the District caused by growth slow-downs and for debt service requirements, decreases correspondingly. Wastewater Facilities – Rate Recommendations Wastewater Capacity Fees During fiscal year 1995-1996, the District restructured the outstanding debt related to the SRWRF which created a more efficient matching of revenue streams to debt service cash flows. This allowed the District to lower and hold wastewater capacity fees at a constant amount for ten years until fiscal year 2005-2006 when they were raised 10% from $3,724 per EDU to $4,105 per EDU. As demonstrated by the financial models of the plan, estimated future annual wastewater capacity fee increases of 8% to 10%, are required. It is recommended that the wastewater capacity fee be increased by 8% to $6,511 for fiscal year 2011-2012. The District is currently reviewing and renegotiating the existing wastewater contracts in place with its wastewater contract agencies. The objective of this effort is to revise the existing contracts so that the contract agencies will guarantee a fixed periodic payment to RCWD for their pro-rata share of the existing and future capital cost and/or debt service of the wastewater plant. The agencies pro-rata share will be determined based on each agencies share of ultimate plant capacity. This approach will add more stability to the overall revenue stream and reduce the financial risk previously burdened upon the District. This amount is reflected on the non-operating statement as “contract debt service revenue.”

159 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Wastewater Standby Charges The current levy of a standby charge for properties that have not paid a capacity fee is $28.50 per acre or per parcel if less than one acre. It is recommended that the levy of a standby charge remain at $28.50 per acre or per parcel if less than one acre for fiscal year 2011-2012 on all land that has not paid a capacity fee as of March 1, 2011.

Wastewater Replacement Charge Wastewater Division customers pay $4.00 per EDU per month towards facility replacement. This revenue is the primary source for funding wastewater facility replacement. For fiscal year 2011-2012, it is recommended that the replacement charge remain at $4.00 per EDU per month.

Wastewater Debt Service Charge A wastewater debt service charge was implemented in fiscal year 2007-2008. This charge provides another revenue stream for debt service and adds more stability and reliability to the financial plan. The wastewater division customers currently pay $5.00 per EDU per month towards debt service. For fiscal year 2011-2012, it is recommended that the debt service charge remain at $5.00 per EDU per month. Table 10.9 identifies the total wastewater monthly rate per EDU.

ALLOCATION FISCAL YEAR 2010-11 FISCAL YEAR 2011-2012 Operations & Maintenance $27.50 $28.00 Replacement $4 $4 Debt Service $5 $5 Total $36.50 $37.00 Table 10.9

Water Reclamation, Treatment and Distribution Facilities Recycled water has been identified as a critical resource to RCWD as it relates to the District’s ability to meet future water demand requirements and for which the District has made a substantial investment of $52 million. The questions arising during discussion of the funding of water reclamation treatment facilities are “Who bears the burden for these facility costs?” and, “Are water reclamation facilities the responsibility of the wastewater generator or the end-user of recycled water resources?” The District’s Water Resources Master Plan identifies recycled water as one of the required resources to meet ultimate water demands. The use of recycled water offsets the need for import water or water production facilities in the future. Therefore, the financing of recycled water advance treatment, storage and distribution facilities has been included in the water divisions’ capital plans. The cost of advanced treatment facilities will be funded at 70% for the Rancho Division and 30% for the Santa Rosa Division. This allocation is based upon the projected ultimate use of recycled water. The costs of recycled water distribution facilities are funded based upon the direct benefit of these facilities to each division.

160 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Capital Projects Capital facilities are potable water, recycled, and wastewater infrastructure related projects that require a longer time to build and to complete, have a longer estimated life and have costs well exceeding $2,000. Capital facilities include reservoirs, pipelines, wells, transmission mains and pump stations. All capital facilities are funded by bond funds or cash reserves of the District. District cash reserves can be capacity fee funds, replacement funds or debt service funds. Capacity fee funds are used for those projects that support new or future users of the water and wastewater system. The District collects capacity fees from new development to help cover the cost of expanding water, wastewater, and recycled system capacity to serve new development within the District’s service area. Replacement funds are used for those projects that renew or replace existing facilities that have deteriorated or have exceeded their useful life and are funded from user rates. Debt Service Construction funds are used for those projects that are new or replacement facilities as approved by the Board of Directors. For fiscal year 2011-2012, a total of $8,979,000 has been budgeted for the Districts capital improvement program.

The following table identifies the Districts previous CIP Budgets for the last 10 years.

RANCHO SANTA ROSA WASTEWATER FISCAL YEAR DIVISION CIF DIVISION CIF DIVISION CIF TOTAL 2002-2003 $1,620,500 $1,139,500 $285,000 $3,045,000 2003-2004 $1,842,000 $1,473,000 $315,000 $3,630,000 2004-2005 $1,916,250 $1,473,750 $275,000 $3,665,000 2005-2006 $1,985,500 $2,209,500 $165,000 $4,360,000 2006-2007 $2,859,500 $1,977,500 $370,000 $5,207,000 2007-2008 $5,104,500 $3,585,500 $200,000 $8,890,000 2008-2009 $8,008,250 $4,566,750 $193,000 $12,768,000 2009-2010 $7,972,750 $3,497,250 $315,000 $11,785.000 2010-2011 $5,157,000 $11,998,000 $1,100,000 $18,255,000 2011-2012 $4,802,500 $3,760,500 $416,000 $8,979,000

161 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

TEN LARGEST CAPITAL PROJECT EXPENDITURES

1. Senga Doherty Pump Station Solar Power Project ...... $6,000,000

2. Ace Bowen Pump Station Fuel Cell Conversion Project ...... $5,000,000

3. Recycled Water Storage Pond No. 5 ...... $4,000,000

4. District Headquarters Solar Power Project...... $3,000,000

5. Tenaja Pump Station ...... $3,000,000

6. Single Detector Check Replacement Project ...... $1,780,000

7. WR-34 Flow Control Hydro-Electric Facility ...... $1,500,000

8. Rancho Division Reservoir Recoating & Modification Project...... $1,275,000

9. Santa Rosa Division Reservoir Recoating & Modification Project ...... $1,030,000

10. Various Valve Replacement/Installation Projects ...... $740,000

162 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Summary of Capital Improvement Program See Appendix A – Capital Improvement Projects Location Map/Descriptions

FINANCIAL PROJECT NAME/DESCRIPTION COMMITMENT Reservoir Recoating: Santa Rosa Division Due to deteriorating conditions of the exterior coating systems, as evidenced by chalking, this project consists of recoating the interior surface of De Luz $1,030,000 Reservoir No. 1 and the exterior surfaces of De Luz Reservoirs Nos. 1 & 2, as well as Avocado Mesa Reservoir.

Well Rehabilitation and PLC Replacement: Resource Division Due to normal mechanical pump wear, plugging of well screens, and necessary electrical repair and programmable logic controller (PLC) replacement, selected potable water supply wells will be rehabilitated. Well $880,000 rehabilitation typically includes the replacement of pump column piping, and motor upon inspection of the pumping equipment once removed from the well and cleaning of the well screen.

Interior and Exterior Reservoir Recoating: Rancho Division The normal interior and exterior coating life of the District’s steel reservoirs is 10 to 15 years. For FY 2011-2012, staff is proposing to recoat the exterior $785,000 and interior surfaces of various reservoirs.

Pipeline Replacement: Calle Medusa Road This project consists of replacing 3,400 feet of a 12-inch diameter steel water pipeline on Calle Medusa Road, which was installed in 1974. Replacement of the pipeline will result in reduced maintenance costs, reduced operational $750,000 down-time, reduced risk to property damage, and an improved level of service to District Customers.

Reservoir Mixing System and OSG Installation: Rancho Division The OSG combined with the mixing system, will mitigate water age issues created in the distribution system and the reservoir inlet/outlet piping $560,000 configuration.

Pressure Regulator Station Improvement: Bear Creek and Cameron: This improvement project is to eliminate confined space issues with the concrete vaults and to reduce maintenance costs associated with the $340,000 pressure regulator stations.

Reservoir Mixing System and OSG Installation: Santa Rosa Division Installation of a reservoir mixing system normally occurs as part of the $325,000 reservoir interior recoating program.

163 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

FINANCIAL PROJECT NAME/DESCRIPTION COMMITMENT Mainline Valve Installation and Replacement: Santa Rosa Division As part of a continuing mainline valve improvement program, this project will add new mainline valves, where needed, for system isolation or replace $300,000 mainline valves where these valves are not functioning. A total of 11 valves are proposed to be installed.

Non-Compliant Water Discharge System Improvement: Upper VDC Staff proposes to replace the existing well discharge control valves with motorized valves and electrical controls that will automatically shut-down the well and redirect the non-complaint well water from any of the four $280,000 potable water wells located at the upper VDC recharge basins when a well goes out of compliance, either due to high turbidity or low chlorine residual.

Reservoir Site Access Improvement: Calaveras Reservoir The dirt access road leading to Calaveras Reservoir has repeatedly washed- out during heavy rain events. As a result, access to the site has been impaired and the reservoir transmission pipeline has become exposed and vulnerable to damage. Staff proposes to improve the road drainage system $275,000 and make road improvements to provide a permanent solution with drainage facilities and a paved road surface for improved reservoir access and pipeline protection.

Disinfection System Upgrade: Ace Bowen Pump Station No. 1 & 2 This project consists of installing a disinfection system to boost chloramine levels at Ace Bowen Pump Stations Nos. 1 and 2. The site improvements will include installing the OSG equipment; ammonia feed system, enclosure, $265,000 shade-structure for tanks, concrete slab, electrical equipment, pumps, conduits, and appurtenant facilities.

Sewer Collection System Video Survey and Condition Assessment In conformance with the District’s Sewer System Management Plan, staff is continuing an annual program to conduct a sewer video survey and condition assessment of RCWD’s sewer collection system. RCWD has $250,000 approximately 70 total miles of gravity sewer main pipelines ranging from 6- inches to 42-inches in diameter.

164 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

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165 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

2011-2012 CAPITAL PROJECTS

ESTIMATED RANCHO DIV. RANCHO DIVISION PROJECTS COST CAP. IMPR. FUND

Reservoir Recoating: Interior: Calle Contento Reservoir No. 1 $560,000 $560,000 Exterior: Winchester Reservoir $145,000 $145,000 Calaveras Reservoir $80,000 $80,000

Reservoir Improvement: Mixing System and On-Site Generator Installation: Calle Contento Reservoir No. 1 and 2 $315,000 $315,000 Winchester Reservoir $245,000 $245,000 Sacrificial Anode System Installation: 166 Calle Contento Reservoir No. 1 $45,000 $45,000 Site Access Improvement: Calaveras Reservoir $275,000 $275,000 Inspection, Cleaning, & Interior Coating Repair: 5 Sites $90,000 $90,000

Pump Station Improvement: Pump Bowl Replacement: Buck Mesa PS and Calle Breve PS $75,000 $75,000 Pump Seal Replacement: Buck Mesa PS $40,000 $40,000 Pump Motor Starter Replacement: Los Caballos PS $75,000 $75,000 PLC Replacement: 4 Sites $60,000 $60,000 Pump Control Valve Replacement: Winchester PS and Calle Breve PS $80,000 $80,000 Well Improvement: Well No. 234 Rehabilitation and PLC Replacement $220,000 $220,000

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

ESTIMATED RANCHO DIV. RANCHO DIVISION PROJECTS COST CAP. IMPR. FUND

Distribution System Improvements: Calle Medusa Road Pipeline Replacement $750,000 $750,000 Mainline Valve Installation/Replacement Various Locations $300,000 $300,000

Appurtenance Improvements: Valve Replacements $110,000 $110,000 Cathodic Protection Test Station Replacements $200,000 $200,000 Meter Valve Lid Replacement $150,000 $150,000 Fire Hydrant Installation: Los Ranchitos Area $100,000 $100,000 Meter Service Relocation: Pujol Street $50,000 $50,000

Facility Relocations: Facility Relocations: Various Sites, Unknown $100,000 $100,000 167 RANCHO DIVISION TOTAL $4,065,000 $4,065,000

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

ESTIMATED SANTA ROSA DIV. SANTA ROSA DIV. SANTA ROSA DIVISION PROJECTS COST CAP. IMPR. FUND REPLACEMENT FUND

Reservoir Recoating: Interior Only: De Luz Reservoir No. 1 $605,000 $605,000 Exterior Only: De Luz Reservoir No. 1 $135,000 $135,000 De Luz Reservoir No. 2 $135,000 $135,000 Avocado Mesa Reservoir $155,000 $155,000

Reservoir Improvement: Mixing System and On-Site Generator Installation: De Luz reservoir No. 1 (mixing system only) $80,000 $80,000 Antelope Reservoir $245,000 $245,000 Inspection, Cleaning, & Interior: 5 Sites $90,000 $90,000

168 Pump Station Improvement: Pump Seal Replacement: Del Oro PS $30,000 $30,000 PLC Replacement: 4 Sites $60,000 $60,000 Disinfection System Upgrade: Ace Bowen PS No. 1 and No. 2 $265,000 $265,000

Distribution System Improvement: Mainline Valve Installation/Replacement: Various Locations $300,000 $300,000 Via Los Ventos Pipeline Relocation $150,000 $150,000

Appurtenance Improvement Cathodic Protection Test Station Replacement $200,000 $200,000 Fire Hydrant Installation: CA Oaks Area $120,000 $120,000 Install Air Release and Vacuum Valves: $30,000 $30,000 Upgrade Pressure Regulator Stations Bear Creek and Cameron at De Luz $340,000 $340,000

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

ESTIMATED SANTA ROSA DIV. SANTA ROSA DIV. SANTA ROSA DIVISION PROJECTS COST CAP. IMPR. FUND REPLACEMENT FUND

Facility Relocations: Misc. Unknown Relocations $100,000 $100,000

SANTA ROSA DIVISION TOTAL $3,040,000 $3,040,000 169

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

ESTIMATED RANCHO DIV. SANTA ROSA DIV. SANTA ROSA DIV. RESOURCE DIVISION PROJECTS COST CAP. IMPR. FUND CAP. IMPR. FUND REPLACEMENT FUND

Well Improvement: Well Rehabilitation and PLC Replacement 4 Total Sites $880,00 $440,000 $440,000

Misc. Project Improvements: VFD and PLC Replacement: Well 158 $50,000 $25,000 $25,000 Upper VDC Non-Compliant Water Discharge Sys $280,000 $140,000 $140,000 Old District HDQ Site Asphalt R&R $120,000 $60,000 $60,000 GIS Update of Facility As-Built and Prop. Doc. $50,000 $33,500 $16,500

RESOURCE DIVISION TOTAL $1,458,000 $737,500 $720,500

170

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

ESTIMATED WASTEWATER DIV. WASTEWATER DIV. WASTEWATER DIVISION PROJECTS COST GENERAL FUND REPLACEMENT FUND

Santa Rosa Water Reclamation Facility Improvements: Sludge Drying Beds Access Improvements $50,000 $50,000 Replace HVAC Control Replacement $16,000 $16,000

Sewer Collection System Improvements: Video survey & Condition Assessment $250,000 $250,000 Manhole and Pipeline Repair $100,000 $100,000

WASTEWATER DIVISION TOTAL $416,000 $250,000 $166,000

171 FISCAL YEAR 2011-2012 TOTALS

General Fund Capital Impr Fund Replacement Fund Total Rancho $4,802,500 $4,802,500 Santa Rosa $3,760,500 $3,760,500 Wastewater $250,000 $166,000 $416,000 Total $8,979,000

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Capital Acquisitions Capital purchases are non-recurring operating expense items for District-wide use that cost more than $2,000 each and have an estimated useful life of more than a year. The capital purchases include vehicles, shop and field equipment, wastewater/collection equipment, office equipment and furniture, and computer equipment. The justification for each purchase is determined by whether it is required due to growth, improvements or upgrades, or to replace an existing asset. As these purchases are completed and placed into service, there is a potential impact on the Operating Budget.

The total Capital Acquisition Budget for Fiscal Year 2011-2012 is $413,500.

Capital Acquisition Budget Annual Comparison $1,206,898 $1,200,000

$1,000,000 $989,200 $979,425 $998,668 $861,127 $800,000 $674,677 $633,500 $600,000 $506,785 $496,775 $413,500 $400,000

$200,000

$0 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 Fiscal Year

172 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

2011-2012 CAPITAL ACQUISITION BUDGET

CATEGORY DEPT DESCRIPTION BUDGET $

NEW

VEHICLES / 559 Install active particulate filter on Unit 418 $ 16,000.00 EQUIPMENT 559 Install active particulate filter on Unit 419 $ 16,000.00 559 Install active particulate filter on Unit 420 $ 16,000.00 Total $ 48,000.00 REPLACEMENT

CONSTRUCTION / 719 Woodward Sync Controller $ 40,000.00 173 FIELD / SHOP / 719 SCADA HMI Computers $ 9,000.00 TESTING EQUIP 719 SCADA Historian Computer $ 11,000.00 Total $ 60,000.00

NEW CONSTRUCTION / FIELD / SHOP / 739 Fluoride Analyzers $ 13,500.00 TESTING EQUIP Total $ 13,500.00 NEW

WASTEWATER / 760 Moisture Balance $ 4,000.00 EQUIPMENT Total $ 4,000.00

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

CATEGORY DEPT DESCRIPTION BUDGET $

REPLACEMENT

OFFICE EQUIP / 210 Replacement Workstations $ 30,000.00 COMPUTERS 210 Anti-Spam Appliance $ 25,000.00 210 Router Clustering Hardware Replacement $ 18,000.00 559 Replace AC/Heat Unit #19 for GM & Executive Conf Room $ 10,000.00 559 Replace AC/Heat Unit #20 for HR and staff area $ 10,000.00 Total $ 93,000.00 NEW

OFFICE EQUIP / 200 Capacity Fee Study $ 50,000.00 COMPUTERS 200 Budget Based Tier Water Rate Model $ 50,000.00 174 210 IT Master Plan Refresh $ 30,000.00 210 Itron 200W Moblie Collector $ 20,000.00 210 VMWare Server Memory Upgrade $ 15,000.00 410 Capital Project Mgmt. Application – Engineering $ 30,000.00 Total $ 195,000.00 FISCAL YEAR 2011-2012 TOTALS

Replacement Total Rancho Division Debt Service/Capital Improvement $76,500.00 Santa Rosa Debt Service/Capital Improvement $76,500.00 Total $153,000.00 New Total Rancho Division Debt Service/Capital Improvement $128,250.00 Santa Rosa Debt Service/Capital Improvement $128,250.00 Wastewater Replacement $4,000.00 Total $260,500.00 TOTAL $413,500.00

RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

NON-OPERATING RATES SUMMARY Water Rates RANCHO DIVISION SANTA ROSA DIVISION Description FY 2010-2011 FY 2011-2012 FY 2010-2011 FY 2011-2012 Ad Valorem $0.30 per $100 $0.30 per $100 $0.50 per $100 of $0.50 per $100 of Assessment of Assessed of Assessed Assessed Land Assessed Land Land Value Land Value Value Value Area 1-$69.92 per Area 1-$69.92 per acre/parcel acre/parcel Area 1A-$69.92 Area 1A-$69.92 per acre/parcel, per acre/parcel, first 40 acres, first 40 acres, Standby N/A N/A $62.10 per acre $62.10 per acre Charge thereafter thereafter Area 2-$48 per Area 2-$48 per acre/parcel acre/parcel Area 3-$23.50 Area 3-$23.50 per acre/parcel per acre/parcel Water Capacity $1,397 $1,397 $2,220 $2,220 fee ¾” Meter

Wastewater RANCHO DIVISION SANTA ROSA DIVISION Rates Description FY 2010-2011 FY 2011-2012 FY 2010-2011 FY 2011-2012 Standby $28.50 per $28.50 per Charge N/A N/A unconnected unconnected ID’s 2 and 3 parcel parcel Wastewater N/A N/A $6,029 $6,511 Capacity fee Wastewater $4.00 per $4.00 per Replacement N/A N/A EDU/month EDU/month Surcharge Wastewater $5.00 per $5.00 per Debt Service N/A N/A EDU/month EDU/month Surcharge

175 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

AD VALOREM ASSESSMENTS

Rancho Division- Ad valorem assessment $0.30 per $100 of assessed land value

Santa Rosa Division- Ad valorem assessment $0.50 per $100 of assessed land value

SANTA ROSA WATER DIVISION STANDBY CHARGE CATEGORIES BY AREA

WATER STANDBY CHARGES

Area 1. Parcels with the water meter shall be charged $69.92 per acre or per parcel if less than one acre.

Area 1A. Parcels without water service shall be charged $69.92 per acre or per parcel if less than one acre for the first 40 acres, and $62.10 per acre for the remaining acres.

Area 2 All parcels shall be charged $48.00 per acre or per parcel if less than one acre.

Area 3. All parcels shall be charged $23.50 per acre or per parcel if less than one acre.

SANTA ROSA WATER RECLAMATION FACILITY- STANDBY CHARGE - $28.50 per acre or per parcel on all land that has not paid a capacity fee as of March 1, 2011.

176 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

WATER CAPACITY FEES

METER SIZE RANCHO DIVISION SANTA ROSA DIVISION

3/4" $1,397.00 $2,220.00

1" 2,328.00 3,700.00

1-1/2" 4,657.00 7,398.00

2" 5,820.00 9,249.00

2" Turbine 7,451.00 11,838.00

3" 13,970.00 22,197.00

4" 34,925.00 55,493.00

6" 72,178.00 114,685.00

8" 116,417.00 184,974.00

WASTEWATER CAPACITY FEES

CAPACITY FEES per EDU*

Santa Rosa Water Reclamation Facility (SRWRF) Improvement Districts Nos. 2 & 3 ...... $6,511

*EDU = Equivalent Dwelling Unit

177 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

CONSOLIDATED NON-OPERATING BUDGET

Combined Rancho Santa Rosa Revenue SRWRF Total Division Division AV Assessments 18,708,000 11,693,000 7,015,000 - 1% Assessments 11,501,284 9,220,007 2,281,277 - Standby Assessments 2,776,327 - 2,701,147 75,180 Interest Revenue 8,039,838 5,814,819 1,331,156 893,863 Re-class Operating Interest (1,104,000) (780,000) (270,000) (54,000) Federal Direct Pay Interest Subsidy 2,235,361 1,265,210 949,951 20,200 Capacity Fee 916,065 344,585 147,256 424,224 Capacity Fee Contra (916,065) (344,585) (147,256) (424,224) Fire Service Charge 240,361 170,185 70,176 - Other Debt Service 481,929 - - 481,929 Other Income Replacement 385,543 - - 385,543 Contract Debt Service Revenue 1,760,746 - - 1,760,746 Re-class to Operations (1,000,000) (1,000,000) - - Total Non-Operating Revenue 44,025,390 26,383,221 14,078,707 3,563,462 Expenditures

Depreciation & Amortization 18,749,212 9,893,990 6,629,310 2,225,912 Bond Discount Amortization 797,236 280,863 348,122 168,251 CFD Assessment 540,146 378,102 162,044 - Bond Interest 18,704,926 7,720,294 7,891,308 3,093,324 Investment Management Expense 113,402 74,247 20,329 18,826 Other 303,546 213,955 76,354 13,237 Total Non-Operating Expenditures 39,208,468 18,561,451 15,127,467 5,519,550 Net Non-Operating Revenue 4,816,922 7,821,770 (1,048,759) (1,956,088) Adjustments to Cash Basis

Add: Depreciation & Amortization 18,749,212 9,893,990 6,629,310 2,225,912 Bond Discount Amortization 797,236 280,863 348,122 168,251 Connection Fees 916,065 344,585 147,256 424,224 Less: Capital Improvement Projects (8,979,000) (4,802,500) (3,760,500) (416,000) Capital Acquisition Items (413,500) (204,750) (204,750) (4,000) Debt Principal (10,805,000) (5,747,905) (4,640,790) (416,305) Net Cash Adjustment 265,013 (235,717) (1,481,352) 1,982,082 Net Non-Operating Cash Sources/(Uses) 5,081,935 7,586,053 (2,530,111) 25,994

178 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

The following graph and schedules identify the major sources of revenue of the 2011-2012 non- operating budget.

MAJOR NON-OPERATING REVENUE

Actual Budget Budget Percent FY 2009-10 FY 2010-11 FY 2011-12 Change AV Assessments 21,317,111 19,636,000 18,708,000 -4.7% 1% Assessments 11,811,408 12,651,000 11,501,284 -9.1% Standby Assessments 2,841,762 2,751,826 2,776,327 0.9% Interest Revenue 12,500,476 8,383,836 8,039,838 -4.1% Reclass Operating Interest (1,180,000) (958,750) (1,104,000) -15.1% Federal Direct Pay Interest Subsidy - - 2,235,361 - Capacity fee 1,092,431 884,668 916,065 3.5% Capacity fee Contra (1,092,431) (884,668) (916,065) 3.5% Fire Service Charge 245,070 245,070 240,361 -1.9% Other Non-Operating Income 1,278,162 - - - Other Income Debt Service 956,136 519,883 481,929 -7.3% Other Income Replacement 528,070 365,794 385,543 5.4% Contract Debt Service Revenue - 1,343,593 1,760,746 31.0% Reclass to Operations (2,000,000) (2,000,000) (1,000,000) -50.0% Totals $48,298,195 $ 42,938,252 $ 44,025,390 2.5%

FY 2011-2012 Major Non-Operating Revenues

-2% 1% 0% 1% -2% 4% 2% 4% -2% 37%

16%

6%

23%

AV Assessments 1% Assessments Standby Assessments Interest Revenue Reclass to Op. Interest Federal Direct Pay Interest Subsidy Capacity Fee Capacity Fee Contra Fire Service Charge Other Non-Op. Income Other Income Debt Service Other Income Replacement Contract Debt Service Revenue Reclass to Op.

179 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Explanation of Major Non-Operating Revenue Sources AV ASSESSMENTS: Revenues received from the annual ad valorem assessments levied by the AV Assessments District to pay for annual debt service on water improvement bonds which funded 11-12 capital facilities. The rate in the Rancho $18.71 Division is .30 per $100 of assessed land value 10-11 $19.64 and is .50 per $100 of assessed land value for 09-10 $21.32 the Santa Rosa Division. For fiscal year 2011-2012 revenue is projected 0 20 to be $18,708,000. AV assessment revenue is Millions projected to decrease by 4.7% compared to fiscal year 2010-2011. This decrease is due to Actual 09-10 Budget 10-11 Budget 11-12 expected lower assessed property values. 1% ASSESSMENT: Revenues received from the District’s share of the 1% property tax that is levied by the County based on land value and distributed to agencies is used for debt service only. For fiscal year 2011-2012 revenue is projected to be $11,501,284. The 1.0% assessment revenue is projected to decrease by 9.1% compared to fiscal year 2010-2011. This decrease is due to expected lower assessed property values. STANDBY ASSESSMENTS: Revenues received from the annual standby charges levied to pay annual debt service on bonds. This Standby Assessments assessment is a fixed charge per acre/parcel based upon the estimated benefit from water 11-12 $2.78 facilities constructed to meet water supply demands. 10-11 $2.75 For fiscal year 2011-2012 revenue is projected to 09-10 $2.84 be $2,776,327. The standby assessment revenue 0 1 2 3 is projected to increase by 0.9% compared to Millions fiscal year 2010-2011. This increase is due changes in acreage. Actual 09-10 Budget 10-11 Budget 11-12 INTEREST REVENUE: Revenues received from the interest earned on general funds, assessment district funds, capital replacement funds, capacity fees funds, and various bond funds. District funds are pooled together for investing purposes. Interest earnings are allocated based on prior month cash balances for the various funds. For fiscal year 2011-2012 revenue is projected to be $8,039,838. The interest revenue is projected to decrease by 4.1% compared to fiscal year 2010-2011. This decrease is due to expected lower re-investment yields.

180 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

RE-CLASS OPERATING INTEREST: This activity represents the budgeted re-class of general fund interest earnings being used for operations. For fiscal year 2011-2012 the re-class to operations is projected to be $1,104,000. The re- class to operations is projected to increase by 15.1% compared to fiscal year 2010-2011. This increase is due to the use of greater operating reserves. FEDERAL DIRECT PAY SUBSIDY: In November 2010 the District issued $100,785,000 of Build America Bonds (BABs). Under the BABs Program the District will receive a 35% Interest Subsidy on the issue. For fiscal year 2011-2012 the District expects to receive $2,235,361. CAPACITY FEE: Revenues received from the Capacity Fee collection of water and sewer connection fees also referred to as capacity fees. The amount charged for the purchase of capacity in the 11-12 $916 District’s water or sewer system is based upon the rated maximum of the meter for water and 10-11 $885 the number of EDU’s for sewer. 09-10 $1,029 For fiscal year 2011-2012 revenue is projected to be $916,065. Capacity fee revenue is 0 500 1,000 1,500 projected to increase by 3.5% compared to Thousands fiscal year 2010-2011. This increase is due to more developer activity. Actual 09-10 Budget 10-11 Budgte 11-12 FIRE SERVICE CHARGE: Revenues received for fire service charges levied on the property tax bill of parcels requiring more than a residential (1,000 gpm) fire flow requirement. The charge is a per acreage assessment and is used to help offset the additional capital cost of up-sizing District facilities constructed to provide adequate fire flow. For fiscal year 2011-2012 revenue is projected to be $240,361. The fire service charge revenue is projected to remain in line with fiscal year 2010-2011. OTHER- NON-OP INCOME: For fiscal year 2009-2010 the District received a legal settlement for $1,278,162. This is a one-time event. The District does not budget for unplanned events and therefore the fiscal year 2011-2012 budget amount is $0.00. OTHER- INCOME DEBT SERVICE: Revenues received from a wastewater surcharge assessed as a monthly debt service charge on the wastewater billing. This surcharge will remain at $5.00 per EDU. For fiscal year 2011-2012 revenue is projected to be $481,929. The other non-operating income is projected to decrease by 7.3% compared to fiscal year 2010-2011. This decrease is due to a shift of some of this revenue to “contract debt service revenue.”

181 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

OTHER- INCOME REPLACEMENT: Revenues Other- Income Replacement received from a wastewater surcharge assessed for facility replacement on the 11-12 $386 monthly wastewater billing. The surcharge for wastewater will remain at $4.00 per EDU 10-11 $366 for fiscal year 2011-2012. For fiscal year 2011-2012 revenue is projected 09-10 $528 to be $385,542. The other income replacement revenue is projected to increase 0 200 400 600 by 5.4% compared to fiscal year 2010-2011. Thousands This increase is due to the number of active Actual 09-10 Budget 10-11 Budget 11-12 accounts. CONTRACT DEBT SERVICE REVENUE: Revenues received as fixed annual payments for capital facilities from wastewater contract agencies. The revenues are required annual payment for debt service or construction of the wastewater facility and are based on the ultimate plant capacity requirements of each agency. In addition to the District, there are two contract agencies. For fiscal year 2011-2012 revenue is projected to be $1,760,746. The contract debt service revenue is projected to increase by 31.0% compared to fiscal year 2010-2011. This increase is due to an increase in the rate for the two contract agencies. RE-CLASS TO OPERATIONS: Annually the District evaluates its net non-operating position and determines if any available amount can be reclassified to Operating Reserves for the bolstering Rate Stabilization, Working Capital, and Drought Reserves. For fiscal year 2011-2012 the District will re-class $1,000,000.

182 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

The following graph and schedules identify the major non-operating expenses of the 2011-2012 non-operating budget.

MAJOR NON-OPERATING EXPENSES

Actual Budget Budget Percent FY 2009-10 FY 2010-11 FY 2011-12 Change Depreciation & Amortization 17,675,451 17,641,149 18,749,212 6.3% Bond Discount Amortization 783,996 783,996 797,236 1.7% CFD Assessment 204,508 540,146 540,146 0.0% Bond Interest Expense 11,435,148 12,399,124 18,704,926 50.9% Investment Management Expense 101,500 99,100 113,402 14.4% Other 212,558 207,848 303,546 46.0% Totals $ 30,414,161 $ 31,671,363 $ 39,208,468 23.8%

FY 2011-2012 Major Non-Operating Expense 0% 1% 4% 3% 1%

91%

Depreciation & Amortization Bond Discount Amortization CFD Assessment Bond Interest Expense Investment Management Expense Other

183 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

Explanation of Major Non-Operating Expenses DEPRECIATION AND AMORTIZATION: This expenditure includes such amounts of depreciation and amortization chargeable to each month’s operations calculated on the straight line method over the useful lives of the assets. For fiscal year 2011-2012 expenses are projected to be $18,749,212. Depreciation and amortization expense is projected to increase by 6.3% compared to the fiscal year 2010-2011. This increase is due to an increase in District assets. BOND DISCOUNT AMORTIZATION: This Bond Discount Amortization expenditure includes amortization of bond discount chargeable to each month’s operations. 11-12 $797 The costs are amortized on the straight-line method based on the estimated term of the related 10-11 $784 bond debt. 09-10 $784 For fiscal year 2011-2012 expenses are projected to be $797,236. Bond discount amortization 0 500 1,000 expense is projected to increase by 1.7% Thousands compared to the fiscal year 2010-2011. Actual 09-10 Budget 10-11 Budget 11-12

CFD ASSESSMENT: This expenditure includes the amount of interest expense applicable to CFD Assessment outstanding long-term debt issued by the Community Facility District No. 89-5. The 11-12 $540 District owns all the property in Zone B. The actual special tax requirement will depend on 10-11 $540 the actual monthly interest payments due on 09-10 $205 the Refunding Bonds. The District will be responsible for the difference in the actual 0 200 400 600 special tax requirement and the amount levied Thousands on Zone A parcels. Actual 09-10 Budget 10-11 Budget 11-12 For fiscal year 2011-2012 expenses are projected to be $540,146, which is expected to be the same as the prior fiscal year 2010- 2011. BOND INTEREST: This expenditure includes the amount of interest expense applicable to outstanding long-term debt issued by the District. The expense is accrued monthly and there is a corresponding liability account for each bond interest account. For fiscal year 2011-2012 expense is projected to be $18,704,926. Interest expense is projected to increase by 50.9% compared to the fiscal year 2010-2011. This increase is due to the issuance of $100,785,000 of Build America Bonds in November 2010. The purpose of the Bonds was to finance Capital Facilities.

184 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012

INVESTMENT MANAGEMENT EXPENSE: The District utilizes an external professional management firm to execute its investment policy. For fiscal year 2011-2012 this expense is projected to be $113,402. A 14.4% increase is projected over fiscal year 2010-2011 and is due to increased portfolio balances. OTHER: This expenditure includes banking fees, county charges related to administrating the property tax rates, and other miscellaneous expense. For fiscal year 2011-2012 expense is projected to be $303,546. Other expense is projected to increase by 46.0% compared to the fiscal year 2010-2011. This increase was due to a correction of the previous budget estimate which omitted some bank fees.

185 RANCHO CALIFORNIA WATER DISTRICT NON-OPERATING BUDGET FISCAL YEAR 2011-2012 EXHIBITS

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186 RANCHO DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2012 2013 2014 2015 2016 2017 2018

Beginning Fund Balance $ 145,871,582 159,244,885 176,074,906 189,057,213 205,789,343 222,163,235 241,140,788

Funding Sources Taxes & Assessments 1% General Purpose (1) 9,220,007 9,588,807 9,972,360 10,371,254 10,786,104 11,217,548 11,666,250 Ad Valorem Assessments (2) 11,693,000 11,927,000 12,165,000 12,652,000 13,158,000 11,404,000 11,860,000 Capacity Fees 344,585 516,870 689,170 689,170 689,170 689,170 689,170 Federal Direct Pay Interest Subsidy 1,265,210 1,265,210 1,265,210 1,265,210 1,265,210 1,265,210 1,265,210 Fire Service Charges (3) 170,185 170,185 170,185 170,185 170,185 170,185 170,185 Total Taxes and Assessments 22,692,987 23,468,072 24,261,924 25,147,818 26,068,669 24,746,113 25,650,815 Other Revenues External Debt Reserve Funds (4) 344,635 1,531,066 297,177 297,177 297,177 297,177 297,177 Interest Internal Debt Reserve Funds (5) 5,470,184 5,971,683 6,602,809 7,562,289 8,231,574 8,886,529 9,645,632 Bond Construction Interest ------Total Other Revenues 5,814,819 7,502,749 6,899,986 7,859,466 8,528,751 9,183,707 9,942,809 Total Funding Sources 28,507,806 30,970,821 31,161,911 33,007,284 34,597,420 33,929,820 35,593,624

187 Funding Uses Debt Service (6) 13,689,231 13,695,528 17,734,332 15,829,882 17,778,256 14,506,995 14,500,048 Misc. Bond Fees/Other Expenses 445,272 445,272 445,272 445,272 445,272 445,272 445,272 Transfer to Operating Reserve Fund 1,000,000 ------Pay-Go-Capital ------

Total Funding Uses 15,134,503 14,140,800 18,179,604 16,275,154 18,223,528 14,952,267 14,945,320 Net Sources/(Uses) 13,373,303 16,830,021 12,982,307 16,732,131 16,373,892 18,977,553 20,648,304 Ending Fund Balance $ 159,244,885 176,074,906 189,057,213 205,789,343 222,163,235 241,140,788 261,789,092 Projected Debt Balance $ 141,776,893 135,780,719 179,171,836 171,751,914 164,029,236 159,272,356 154,250,986

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and at 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.30 per $100 of assessed land value indexed at 0% growth for FY 11/12 and 4% a year. FY 2013-2015 and 4% a year thereafter. Rate decrease by $0.05 every five years till the floor of $0.15 is reached. Note 3: Fire Service is property assessment applied to commercial properties related to upsizing capital facilities to meet fire flow requirements. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

RANCHO DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2019 2020 2021 2022 2023 2024 2025

Beginning Fund Balance $ 261,789,092 266,286,393 281,390,527 300,657,525 318,975,955 338,054,924 346,924,125

Funding Sources Taxes & Assessments 1% General Purpose (1) 12,132,900 12,618,216 13,122,945 13,647,863 14,193,777 14,761,528 15,351,989 Ad Valorem Assessments (2) 12,334,000 12,828,000 13,341,000 11,099,000 11,543,000 12,005,000 12,485,000 Capacity Fees 689,170 689,170 689,170 689,170 689,170 689,170 828,870 Federal Direct Pay Interest Subsidy Fire Service Charges (3) 170,185 170,185 170,185 170,185 170,185 170,185 170,185 Total Taxes and Assessments 26,591,465 27,570,781 28,588,509 26,871,427 27,861,342 28,891,093 30,101,254 Other Revenues External Debt Reserve Funds (4) 297,177 297,177 297,177 297,177 297,177 297,177 297,177 Interest Internal Debt Reserve Funds (5) 10,471,564 10,651,456 11,255,621 12,026,301 12,759,038 13,522,197 13,876,965 Bond Construction Interest ------Total Other Revenues 10,768,741 10,948,633 11,552,799 12,323,478 13,056,216 13,819,374 14,174,142 Total Funding Sources 37,360,206 38,519,414 40,141,308 39,194,906 40,917,557 42,710,467 44,275,396

188 Funding Uses Debt Service (6) 22,417,632 22,970,008 20,429,038 20,431,203 21,393,316 33,395,995 33,365,593 Misc. Bond Fees/Other Expenses 445,272 445,272 445,272 445,272 445,272 445,272 445,272 Transfer to Operating Reserve Fund ------Pay-Go-Capital 10,000,000 Total Funding Uses 32,862,904 23,415,280 20,874,310 20,876,475 21,838,588 33,841,267 33,810,865 Net Sources/(Uses) 4,497,301 15,104,134 19,266,997 18,318,430 19,078,969 8,869,200 10,464,531 Ending Fund Balance $ 266,286,393 281,390,527 300,657,525 318,975,955 338,054,924 346,924,125 357,388,656 Projected Debt Balance $ 237,154,176 228,370,249 221,715,386 214,677,387 206,245,228 330,683,030 317,325,188

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and at 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.30 per $100 of assessed land value indexed at 0% growth for FY 11/12 and 4% a year. FY 2013-2015 and 4% a year thereafter. Rate decrease by $0.05 every five years till the floor of $0.15 is reached. Note 3: Fire Service is property assessment applied to commercial properties related to upsizing capital facilities to meet fire flow requirements. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

RANCHO DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2026 2027 2028 2029 2030 2031 2032 Beginning Fund Balance $ 357,388,656 369,370,052 379,594,687 391,236,133 396,962,687 406,959,053 416,358,895 Funding Sources Taxes & Assessments 1% General Purpose (1) 15,966,069 16,604,712 17,268,900 17,959,656 18,678,042 19,425,164 20,202,171 Ad Valorem Assessments (2) 12,985,000 10,128,000 10,533,000 10,955,000 11,393,000 11,848,000 12,322,000 Capacity Fees 828,870 828,870 828,870 828,870 828,870 828,870 828,870 Federal Direct Pay Interest Subsidy 1,265,210 1,265,210 1,265,210 1,265,210 1,265,210 1,265,210 1,265,210 Fire Service Charges (3) 170,185 170,185 170,185 170,185 170,185 170,185 170,185 Total Taxes and Assessments 31,215,334 28,996,976 30,066,165 31,178,921 32,335,307 33,537,429 34,788,435 Other Revenues External Debt Reserve Funds (4) 297,177 297,177 297,177 297,177 3,149,479 183,085 4,760,220 Interest Internal Debt Reserve Funds (5) 14,295,546 14,774,802 15,183,787 15,649,445 15,878,507 16,278,362 16,654,356 Bond Construction Interest Total Other Revenues 14,592,724 15,071,980 15,480,965 15,946,623 19,027,986 16,461,448 21,414,576 Total Funding Sources 45,808,057 44,068,956 45,547,130 47,125,544 51,363,293 49,998,876 56,203,011 189 Funding Uses Debt Service (6) 33,381,389 33,399,049 33,460,412 40,953,718 40,921,655 40,153,762 40,121,265 Misc. Bond Fees/Other Expenses 445,272 445,272 445,272 445,272 445,272 445,272 445,272 Transfer to Operating Reserve Fund ------Pay-Go-Capital Total Funding Uses 33,826,661 33,844,321 33,905,684 41,398,990 41,366,927 40,599,034 40,566,537 Net Sources/(Uses) 11,981,396 10,224,635 11,641,446 5,726,554 9,996,366 9,399,843 15,636,475 Ending Fund Balance $ 369,370,052 379,594,687 391,236,133 396,962,687 406,959,053 416,358,895 431,995,370 Projected Debt Balance $ 303,196,401 288,251,042 272,397,821 343,769,474 323,738,787 303,550,169 282,269,851

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and at 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.30 per $100 of assessed land value indexed at 0% growth for FY 11/12 and 4% a year. FY 2013-2015 and 4% a year thereafter. Rate decrease by $0.05 every five years till the floor of $0.15 is reached. Note 3: Fire Service is property assessment applied to commercial properties related to upsizing capital facilities to meet fire flow requirements. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

RANCHO DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2033 2034 2035 2036 2037 2038 2039

Beginning Fund Balance $ 431,995,370 446,926,033 462,081,196 479,250,385 493,759,748 510,369,843 529,227,481

Funding Sources Taxes & Assessments 1% General Purpose (1) 21,010,258 21,850,668 22,724,695 23,633,682 24,579,030 25,562,191 26,584,678 Ad Valorem Assessments (2) 12,815,000 13,328,000 13,861,000 14,415,000 14,992,000 15,592,000 16,215,000 Capacity Fees 828,870 828,870 828,870 828,870 828,870 828,870 828,870 Federal Direct Pay Interest Subsidy 1,240,197 1,188,853 1,135,092 1,024,621 855,022 678,268 494,076 Fire Service Charges (3) 170,185 170,185 170,185 170,185 170,185 170,185 170,185 Total Taxes and Assessments 36,064,509 37,366,575 38,719,842 40,072,358 41,425,107 42,831,514 44,292,810 Other Revenues External Debt Reserve Funds (4) ------Interest Internal Debt Reserve Funds (5) 17,279,815 17,877,041 18,483,248 19,170,015 19,750,390 20,414,794 21,169,099 Bond Construction Interest ------Total Other Revenues 17,279,815 17,877,041 18,483,248 19,170,015 19,750,390 20,414,794 21,169,099 Total Funding Sources 53,344,324 55,243,617 57,203,089 59,242,373 61,175,497 63,246,308 65,461,909

190 Funding Uses Debt Service (6) 37,968,390 39,643,181 39,588,629 44,287,738 44,120,130 43,943,397 54,208,385 Misc. Bond Fees/Other Expenses 445,272 445,272 445,272 445,272 445,272 445,272 445,272 Transfer to Operating Reserve Fund ------Pay-Go-Capital Total Funding Uses 38,413,662 40,088,453 40,033,901 44,733,010 44,565,402 44,388,669 54,653,657 Net Sources/(Uses) 14,930,662 15,155,164 17,169,188 14,509,363 16,610,095 18,857,638 10,808,252 Ending Fund Balance $ 446,926,033 462,081,196 479,250,385 493,759,748 510,369,843 529,227,481 540,035,733 Projected Debt Balance $ 262,018,549 308,814,542 284,099,548 257,212,242 228,844,027 198,913,747 372,145,194

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and at 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.30 per $100 of assessed land value indexed at 0% growth for FY 11/12 and 4% a year. FY 2013-2015 and 4% a year thereafter. Rate decrease by $0.05 every five years till the floor of $0.15 is reached. Note 3: Fire Service is property assessment applied to commercial properties related to upsizing capital facilities to meet fire flow requirements. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

RANCHO DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2040 2041 2042 2043 2044 2045 2046

Beginning Fund Balance $ 540,035,733 552,988,591 568,238,431 594,516,110 623,771,061 638,773,011 656,457,812

Funding Sources Taxes & Assessments 1% General Purpose (1) 27,648,066 28,753,988 29,904,148 31,100,314 32,344,326 33,638,099 34,983,623 Ad Valorem Assessments (2) 16,864,000 17,539,000 18,240,000 18,970,000 19,729,000 20,518,000 21,338,000 Capacity Fees 828,870 828,870 - - - - - Federal Direct Pay Interest Subsidy 302,133 102,092 Fire Service Charges (3) 170,185 170,185 170,185 170,185 170,185 170,185 170,185 Total Taxes and Assessments 45,813,253 47,394,135 48,314,333 50,240,499 52,243,511 54,326,284 56,491,808 Other Revenues External Debt Reserve Funds (4) ------Interest Internal Debt Reserve Funds (5) 21,601,429 22,119,544 22,729,537 23,780,644 24,950,842 25,550,920 26,258,312 Bond Construction Interest ------Total Other Revenues 21,601,429 22,119,544 22,729,537 23,780,644 24,950,842 25,550,920 26,258,312 Total Funding Sources 67,414,682 69,513,679 71,043,870 74,021,143 77,194,354 79,877,205 82,750,121

191 Funding Uses Debt Service (6) 54,016,553 53,818,566 44,320,920 44,320,920 61,747,132 61,747,132 61,747,132 Misc. Bond Fees/Other Expenses 445,272 445,272 445,272 445,272 445,272 445,272 445,272 Transfer to Operating Reserve Fund ------Pay-Go-Capital Total Funding Uses 54,461,825 54,263,838 44,766,192 44,766,192 62,192,404 62,192,404 62,192,404 Net Sources/(Uses) 12,952,858 15,249,840 26,277,678 29,254,951 15,001,950 17,684,801 20,557,717 Ending Fund Balance $ 522,988,591 568,238,431 594,516,110 623,771,061 638,773,011 656,457,812 677,015,529 Projected Debt Balance $ 340,661,708 307,864,648 283,370,157 257,359,440 557,572,162 530,501,107 502,399,437

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and at 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.30 per $100 of assessed land value indexed at 0% growth for FY 11/12 and 4% a year. FY 2013-2015 and 4% a year thereafter. Rate decrease by $0.05 every five years till the floor of $0.15 is reached. Note 3: Fire Service is property assessment applied to commercial properties related to upsizing capital facilities to meet fire flow requirements. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

RANCHO DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2047 2048 2049 2050 2051 2052 2053

Beginning Fund Balance $ 677,015,529 700,648,900 727,570,924 739,716,906 754,882,800 773,290,365 795,175,750

Funding Sources Taxes & Assessments 1% General Purpose (1) 36,382,968 37,838,287 39,351,818 40,925,891 42,562,927 44,265,444 46,036,062 Ad Valorem Assessments (2) 22,192,000 23,080,000 24,003,000 24,963,000 25,961,000 27,000,000 28,080,000 Capacity Fees ------Federal Direct Pay Interest Subsidy Fire Service Charges (3) 170,185 170,185 170,185 170,185 170,185 170,185 170,185 Total Taxes and Assessments 58,745,153 61,088,472 63,525,003 66,059,076 68,694,112 71,435,629 74,286,247 Other Revenues External Debt Reserve Funds (4) ------Interest Internal Debt Reserve Funds (5) 27,080,621 28,025,956 29,102,837 29,588,676 30,195,312 30,931,615 31,807,030 Bond Construction Interest ------Total Other Revenues 27,080,621 28,025,956 29,102,837 29,588,676 30,195,312 30,931,615 31,807,030 Total Funding Sources 85,825,774 89,114,428 92,627,840 95,647,752 98,889,424 102,367,243 106,093,277 192 Funding Uses Debt Service (6) 61,747,132 61,747,132 80,036,586 80,036,586 80,036,586 80,036,586 80,036,586 Misc. Bond Fees/Other Expenses 445,272 445,272 445,272 445,272 445,272 445,272 445,272 Transfer to Operating Reserve Fund ------Pay-Go-Capital Total Funding Uses 62,192,404 62,192,404 80,481,858 80,481,858 80,481,858 80,481,858 80,481,858 Net Sources/(Uses) 23,633,371 26,922,024 12,145,982 15,165,894 18,407,565 21,885,385 25,611,418 Ending Fund Balance $ 700,648,900 727,570,924 739,716,906 754,882,800 773,290,365 795,175,750 820,787,168 Projected Debt Balance $ 472,580,082 440,941,940 699,549,122 655,290,728 615,824,311 573,967,226 529,577,566

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and at 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.30 per $100 of assessed land value indexed at 0% growth for FY 11/12 and 4% a year. FY 2013-2015 and 4% a year thereafter. Rate decrease by $0.05 every five years till the floor of $0.15 is reached. Note 3: Fire Service is property assessment applied to commercial properties related to upsizing capital facilities to meet fire flow requirements. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

RANCHO DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2054 2055 2056 Total

Beginning Fund Balance $ 820,787168 821,490,843 825,305,765 145,871,582

Funding Sources Taxes & Assessments 1% General Purpose (1) 47,877,504 49,792,604 51,784,308 1,115,891,842 Ad Valorem Assessments (2) 29,203,000 30,371,000 31,586,000 751,513,000 Capacity Fees - - - 22,533,115 Federal Direct Pay Interest Subsidy Fire Service Charges (3) 170,185 170,185 170,185 7,658,325 Total Taxes and Assessments 77,250,689 80,333,789 83,540,493 1,931,186,035 Other Revenues External Debt Reserve Funds (4) - - - 14,723,324 Interest Internal Debt Reserve Funds (5) 32,831,487 32,859,634 33,012,231 852,219,678 Bond Construction Interest - - - - Total Other Revenues 32,831,487 32,859,634 33,012,231 866,943,002 Total Funding Sources 110,082,176 113,193,423 116,552,724 2,798,129,038

193 Funding Uses Debt Service (6) 108,933,229 108,933,229 130,787,616 2,102,337,779 Misc. Bond Fees/Other Expenses 657,805 657,805 657,805 20,037,240 Transfer to Operating Reserve Fund - - - 1,000,000 Pay-Go-Capital 10,000,000 Total Funding Uses 109,378,501 109,378,501 131,232,888 2,133,375,019 Net Sources/(Uses) 703,675 3,814,922 (14,680,164) 664,754,019 Ending Fund Balance $ 821,490,843 825,305,765 810,625,601 810,625,601 Projected Debt Balance $ 879,299,102 824,294,727 765,906,685 765,906,685

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and at 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.30 per $100 of assessed land value indexed at 0% growth for FY 11/12 and 4% a year. FY 2013-2015 and 4% a year thereafter. Rate decrease by $0.05 every five years till the floor of $0.15 is reached. Note 3: Fire Service is property assessment applied to commercial properties related to upsizing capital facilities to meet fire flow requirements. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028. .

SANTA ROSA DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2012 2013 2014 2015 2016 2017 2018

Beginning Fund Balance $ 24,999,042 26,704,181 29,648,788 27,889,964 28,573,705 29,626,742 34,439,039

Funding Sources Taxes & Assessments 1% General Purpose (1) 2,281,277 2,372,528 2,467,429 2,566,126 2,668,771 2,775,522 2,886,543 Ad Valorem Assessments (2) 7,015,000 7,155,000 7,298,000 7,590,000 7,894,000 8,210,000 8,538,000 Standby Charges (3) 2,701,147 2,728,158 2,755,440 2,781,147 2,781,147 2,781,147 2,781,147 Capacity Fees 147,256 332,990 495,786 665,980 665,980 665,980 665,980 Federal Direct Pay Interest Subsidy 949,951 949,951 949,951 949,951 949,951 949,951 949,951 Fire Service Charges 70,176 70,176 70,176 70,176 70,176 70,176 70,176 Total Taxes and Assessments 13,164,807 13,608,804 14,036,782 14,623,380 15,030,025 15,452,776 15,891,797 Other Revenues External Debt Reserve Funds (4) 393,692 1,124,261 364,469 364,469 364,469 364,469 364,469 Interest Internal Debt Reserve Funds (5) 937,464 1,001,407 1,111,830 1,115,599 1,142,948 1,185,070 1,377,562 Bond Construction Int ------Total Other Revenues 1,331,156 2,125,668 1,476,299 1,480,068 1,507,418 1,549,539 1,742,031 Total Funding Sources 14,495,963 15,734,471 15,513,081 16,103,448 16,537,443 17,002,315 17,633,828 194 Funding Uses Debt Service (6) 12,600,150 12,599,188 17,081,231 15,229,032 15,293,731 11,999,343 11,993,177 Misc. Bond Fees/Other Expenses 190,675 190,675 190,675 190,675 190,675 190,675 190,675 Transfer to Operating Reserve Fund ------Pay-Go-Capital Total Funding Uses 12,790,825 12,789,863 17,271,906 15,419,707 15,484,406 12,190,018 12,183,852 Net Sources/(Uses) 1,705,139 2,944,608 (1,758,824) 683,741 1,053,037 4,812,297 5,449,976 Ending Fund Balance $ 26,704,181 29,648,788 27,889,964 28,573,705 29,626,742 34,439,039 39,889,015 Projected Debt Balance $ 148,842,797 144,012,921 186,948,952 180,125,918 172,912,581 168,713,549 164,279,748

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.50 per $100 of land value indexed at 0% growth for FY 11/12 , 2% FY’s 13/15 and 4% thereafter. Note 3: Standby Charges are indexed at 1% a year, until capped at maximum assessment of $2,781,147. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

SANTA ROSA DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2019 2020 2021 2022 2023 2024 2025

Beginning Fund Balance $ 39,889,015 33,650,697 36,471,876 40,603,952 45,525,402 51,475,074 54,559,488

Funding Sources Taxes & Assessments 1% General Purpose (1) 3,002,005 3,122,085 3,246,969 3,376,847 3,511,921 3,652,398 3,798,494 Ad Valorem Assessments (2) 8,880,000 9,235,000 9,604,000 9,988,000 10,388,000 10,803,000 11,235,000 Standby Charges (3) 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 Capacity Fees 665,980 665,980 665,980 665,980 665,980 665,980 665,980 Federal Direct Pay Interest Subsidy 949,951 949,951 949,951 949,951 949,951 949,951 949,951 Fire Service Charges 70,176 70,176 70,176 70,176 70,176 70,176 70,176 Total Taxes and Assessments 16,349,259 16,824,339 17,318,222 17,832,101 18,367,175 18,922,652 19,500,748 Other Revenues External Debt Reserve Funds (4) 364,469 364,469 364,469 364,469 364,469 364,469 364,469 Interest Internal Debt Reserve Funds (5) 1,595,561 1,346,028 1,458,875 1,624,158 1,821,016 2,059,003 2,182,380 Bond Construction Int ------Total Other Revenues 1,960,030 1,710,497 1,823,344 1,988,628 2,185,486 2,423,472 2,546,849

195 Total Funding Sources 18,309,289 18,534,836 19,141,567 19,820,729 20,552,661 21,346,124 22,047,597 Funding Uses Debt Service (6) 14,356,932 15,522,983 14,818,816 14,708,604 14,412,313 18,071,035 18,049,545 Misc. Bond Fees/Other Expenses 190,675 190,675 190,675 190,675 190,675 190,675 190,675 Transfer to Operating Reserve Fund ------Pay-Go-Capital 10,000,000 Total Funding Uses 24,547,607 15,713,658 15,009,491 14,899,279 14,602,988 18,261,710 18,240,220 Net Sources/(Uses) (6,238,318) 2,821,179 4,132,076 4,921,450 5,949,672 3,084,414 3,807,377 Ending Fund Balance $ 33,650,697 36,471,876 40,603,952 45,525,402 51,475,074 54,559,488 58,366,865 Projected Debt Balance $ 205,386,671 197,883,122 190,698,899 183,228,952 175,645,102 240,177,803 229,691,181

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.50 per $100 of land value indexed at 0% growth for FY 11/12 , 2% FY’s 13/15 and 4% thereafter. Note 3: Standby Charges are indexed at 1% a year, until capped at maximum assessment of $2,781,147. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

SANTA ROSA DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2026 2027 2028 2029 2030 2031 2032

Beginning Fund Balance $ 58,366,865 62,964,060 68,407,079 74,760,917 76,775,184 81,233,132 85,347,661

Funding Sources Taxes & Assessments 1% General Purpose (1) 3,950,434 4,108,451 4,272,789 4,443,701 4,621,449 4,806,307 4,998,559 Ad Valorem Assessments (2) 11,685,000 12,152,000 12,638,000 13,144,000 13,670,000 14,216,000 14,785,000 Standby Charges (3) 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 Capacity Fees 665,980 665,980 665,980 665,980 665,980 665,980 665,980 Federal Direct Pay Interest Subsidy 949,951 949,951 949,951 949,951 949,951 949,951 949,951 Fire Service Charges 70,176 70,176 70,176 70,176 70,176 70,176 70,176 Total Taxes and Assessments 20,102,688 20,727,705 21,378,043 22,054,955 22,758,703 23,489,561 24,250,813 Other Revenues External Debt Reserve Funds (4) 364,469 364,469 364,469 364,469 1,990,892 299,413 299,413 Interest Internal Debt Reserve Funds (5) 2,334,675 2,518,562 2,736,283 2,990,437 3,071,007 3,249,325 3,413,906 Bond Construction Int ------Total Other Revenues 2,699,144 2,883,032 3,100,753 3,354,906 5,061,899 3,548,738 3,713,319 22,801,832 23,610,737 24,478,796 25,409,861 27,820,602 27,038,298 27,964,132

196 Total Funding Sources Funding Uses Debt Service (6) 18,013,962 17,977,043 17,934,282 23,204,919 23,171,979 22,733,094 22,730,558 Misc. Bond Fees/Other Expenses 190,675 190,675 190,675 190,675 190,675 190,675 190,675 Transfer to Operating Reserve Fund ------Pay-Go-Capital 18,013,962 17,977,043 17,934,282 23,204,919 23,171,979 22,733,094 22,730,558 Total Funding Uses 18,204,637 18,167,718 18,124,957 23,395,594 23,362,654 22,923,769 22,921,233 Net Sources/(Uses) 4,597,194 5,443,019 6,353,838 2,014,267 4,457,948 4,114,529 5,042,899 Ending Fund Balance $ 62,964,060 68,407,079 74,760,917 76,775,184 81,233,132 85,347,661 90,390,560 Projected Debt Balance $ 218,654,771 207,038,840 194,816,486 288,259,880 271,549,675 254,332,869 236,154,839

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.50 per $100 of land value indexed at 0% growth for FY 11/12 , 2% FY’s 13/15 and 4% thereafter. Note 3: Standby Charges are indexed at 1% a year, until capped at maximum assessment of $2,781,147. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

SANTA ROSA DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2033 2034 2035 2036 2037 2038 2039

Beginning Fund Balance $ 90,390,560 93,006,925 93,215,617 101,773,252 107,892,072 114,514,075 122,364,203

Funding Sources Taxes & Assessments 1% General Purpose (1) 5,198,501 5,406,441 5,622,699 5,847,607 6,081,511 6,324,772 6,577,762 Ad Valorem Assessments (2) 15,377,000 15,992,000 16,631,000 17,296,000 17,988,000 18,708,000 19,456,000 Standby Charges (3) 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 Capacity Fees 665,980 665,980 665,980 665,980 - - - Federal Direct Pay Interest Subsidy 931,171 892,620 852,255 769,311 641,972 509,261 370,965 Fire Service Charges 70,176 70,176 70,176 70,176 70,176 70,176 70,176 Total Taxes and Assessments 25,023,975 25,808,364 26,623,257 27,430,221 27,562,806 28,393,355 29,256,050 Other Revenues External Debt Reserve Funds (4) 299,413 299,413 7,784,725 - - - - Interest Internal Debt Reserve Funds (5) 3,615,622 3,720,277 3,728,625 4,070,930 4,315,683 4,580,563 4,894,568 Bond Construction Int ------Total Other Revenues 3,915,035 4,019,690 11,513,350 4,070,930 4,315,683 4,580,563 4,894,568 Total Funding Sources 28,939,010 29,828,054 38,136,607 31,501,151 31,878,489 32,973,918 34,150,618 197 Funding Uses Debt Service (6) 26,131,969 29,428,688 29,388,297 25,191,656 25,065,811 24,933,116 31,024,789 Misc. Bond Fees/Other Expenses 190,675 190,675 190,675 190,675 190,675 190,675 190,675 Transfer to Operating Reserve Fund ------Pay-Go-Capital ------Total Funding Uses 26,322,644 29,619,363 29,578,972 25,382,331 25,256,486 25,123,791 31,215,464 Net Sources/(Uses) 2,616,366 208,691 8,557,635 6,118,820 6,622,003 7,850,127 2,935,154 Ending Fund Balance $ 93,006,925 93,215,617 101,773,252 107,892,072 114,514,075 122,364,203 125,299,356 Projected Debt Balance $ 213,471,808 307,247,846 283,185,596 262,014,392 239,672,273 216,094,764 362,329,256

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.50 per $100 of land value indexed at 0% growth for FY 11/12 , 2% FY’s 13/15 and 4% thereafter. Note 3: Standby Charges are indexed at 1% a year, until capped at maximum assessment of $2,781,147. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

SANTA ROSA DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2040 2041 2042 2043 2044 2045 2046

Beginning Fund Balance $ 125,299,356 129,392,943 134,732,366 148,466,363 163,920,684 176,893,181 191,651,693

Funding Sources Taxes & Assessments 1% General Purpose (1) 6,840,873 7,114,508 7,399,088 7,695,052 8,002,854 8,322,968 8,655,887 Ad Valorem Assessments (2) 20,234,000 21,044,000 21,886,000 22,761,000 23,671,000 24,618,000 25,603,000 Standby Charges (3) 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 Capacity Fees ------Federal Direct Pay Interest Subsidy 226,849 76,653 Fire Service Charges 70,176 70,176 70,176 70,176 70,176 70,176 70,176 Total Taxes and Assessments 30,153,045 31,086,484 32,136,411 33,307,375 34,525,177 35,792,291 37,110,210 Other Revenues External Debt Reserve Funds (4) ------Interest Internal Debt Reserve Funds (5) 5,011,974 5,175,718 5,389,295 5,938,655 6,556,827 7,075,727 7,666,068 Bond Construction Int ------Total Other Revenues 5,011,974 5,175,718 5,389,295 5,938,655 6,556,827 7,075,727 7,666,068 35,165,019 36,262,202 37,525,706 39,246,029 41,082,004 42,868,018 44,776,277

198 Total Funding Sources

Funding Uses Debt Service (6) 30,880,757 30,732,104 23,601,033 23,601,033 27,918,832 27,918,832 27,918,832 Misc. Bond Fees/Other Expenses 190,675 190,675 190,675 190,675 190,675 190,675 190,675 Transfer to Operating Reserve Fund ------Pay-Go-Capital ------Total Funding Uses 31,071,432 30,922,779 23,791,708 23,791,708 28,109,507 28,109,507 28,109,507 Net Sources/(Uses) 4,093,587 5,339,423 13,733,997 15,454,321 12,972,497 14,758,511 16,666,770 Ending Fund Balance $ 129,392,943 134,732,366 148,466,363 163,920,684 176,893,181 191,651,693 208,318,463 Projected Debt Balance $ 335,471,895 307,120,481 284,394,799 260,305,576 397,736,526 372,918,900 346,612,216

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.50 per $100 of land value indexed at 0% growth for FY 11/12 , 2% FY’s 13/15 and 4% thereafter. Note 3: Standby Charges are indexed at 1% a year, until capped at maximum assessment of $2,781,147. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

SANTA ROSA DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2047 2048 2049 2050 2051 2052 2053

Beginning Fund Balance $ 208,318,463 227,022,140 247,899,048 269,239,621 292,975,284 319,263,420 348,270,330

Funding Sources Taxes & Assessments 1% General Purpose (1) 9,002,122 9,362,207 9,736,695 10,126,163 10,531,210 10,952,458 11,390,556 Ad Valorem Assessments (2) 26,627,000 27,692,000 28,800,000 29,952,000 31,150,000 32,396,000 33,692,000 Standby Charges (3) 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 2,781,147 Capacity Fees ------Federal direct Pay Interest Subsidy Fire Service Charges 70,176 70,176 70,176 70,176 70,176 70,176 70,176 Total Taxes and Assessments 38,480,445 39,905,530 41,388,018 42,929,486 44,532,533 46,199,781 47,933,879 Other Revenues External Debt Reserve Funds (4) ------Interest Internal Debt Reserve Funds (5) 8,332,739 9,080,886 9,915,962 10,769,585 11,719,011 12,770,537 13,930,813 Bond Construction Int ------Total Other Revenues 8,332,739 9,080,886 9,915,962 10,769,585 11,719,011 12,770,537 13,930,813 46,813,184 48,986,416 51,303,980 53,699,071 56,251,544 58,970,318 61,864,692 199 Total Funding Sources

Funding Uses Debt Service (6) 27,918,832 27,918,832 29,772,733 29,772,733 29,772,733 29,772,733 29,772,733 Misc. Bond Fees/Other Expenses 190,675 190,675 190,675 190,675 190,675 190,675 190,675 Transfer to Operating Reserve Fund ------Pay-Go-Capital ------Total Funding Uses 28,109,507 28,109,507 29,963,408 29,963,408 29,963,408 29,963,408 29,963,408 Net Sources/(Uses) 18,703,677 20,876,909 21,340,572 23,735,663 26,288,136 29,006,910 31,901,285 Ending Fund Balance $ 227,022,140 247,899,048 269,239,621 292,975,284 319,263,420 348,270,330 380,171,615 Projected Debt Balance $ 318,727,131 289,168,941 409,752,755 382,423,472 353,454,432 322,747,250 290,197,637

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.50 per $100 of land value indexed at 0% growth for FY 11/12 , 2% FY’s 13/15 and 4% thereafter. Note 3: Standby Charges are indexed at 1% a year, until capped at maximum assessment of $2,781,147. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

SANTA ROSA DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2054 2055 2056 Total

Beginning Fund Balance $ 380,171,615 412,975,248 448,966,875 24,999,042

Funding Sources Taxes & Assessments 1% General Purpose (1) 11,846,179 12,320,026 12,812,827 276,101,568 Ad Valorem Assessments (2) 35,039,000 36,441,000 37,899,000 817,076,000 Standby Charges (3) 2,781,147 2,781,147 2,781,147 124,992,920 Capacity Fees - - - 15,627,592 Federal Direct Pay Interest Subsidy 25,220,027 Fire Service Charges 70,176 70,176 70,176 3,157,920 Total Taxes and Assessments 49,736,502 51,612,349 53,563,150 1,262,176,027 Other Revenues External Debt Reserve Funds (4) - - - 18,322,731 Interest Internal Debt Reserve Funds (5) 15,206,865 16,519,010 17,958,675 238,217,708 Bond Construction Int - - - - Total Other Revenues 15,206,865 16,519,010 17,958,675 256,540,439

200 Total Funding Sources 64,943,366 68,131,359 71,521,825 1,518,716,466

Funding Uses Debt Service (6) 31,949,057 31,949,057 31,949,057 1,036,786,166 Misc. Bond Fees/Other Expenses 190,675 190,675 190,675 8,580,375 Transfer to Operating Reserve Fund - - - - Pay-Go-Capital - - - 10,000,000 Total Funding Uses 32,139,732 32,139,732 32,139,732 1,055,366,541 Net Sources/(Uses) 32,803,634 35,991,626 39,382,092 883,755,375 Ending Fund Balance $ 412,975,248 448,966,875 488,348,967 488,348,967 Projected Debt Balance $ 421,597,681 391,184,215 358,945,982 358,945,982

Note 1: 1% Tax revenue is indexed at 0% growth for FY 2011-2012 and 4% a year thereafter. Note 2: Ad Valorem revenue is based upon a rate of $0.50 per $100 of land value indexed at 0% growth for FY 11/12 , 2% FY’s 13/15 and 4% thereafter. Note 3: Standby Charges are indexed at 1% a year, until capped at maximum assessment of $2,781,147. Note 4: Reserve funds consist of investment at 4.0% and principal maturities. Note 5: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 6: Debt service costs include taxes for CFD 89-5, ends in FY 2028.

SANTA ROSA WATER RECLAMATION FACILITY DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2012 2013 2014 2015 2016 2017 2018

Beginning Fund Balance $ 18,326,294 18,826,288 19,749,934 20,547,009 21,975,236 23,620,164 25,657,508

Funding Sources Capacity Fees (1) 424,224 824,691 1,286,518 1,816,959 1,962,316 1,962,316 1,962,316 Federal Direct Pay Interest Subsidy 20,200 20,200 20,200 20,200 20,200 20,200 20,200 Standby Charges 75,180 67,662 60,896 54,806 49,326 44,393 39,954 External Debt Reserve Funds (2) 206,627 206,627 206,627 206,627 206,627 206,627 206,627 Interest Internal Debt Reserve Funds (3) 687,236 705,986 740,623 821,880 879,009 944,807 1,026,300 Contract Debt Service Revenue 1,760,746 1,761,458 2,396,023 2,394,405 2,398,633 2,091,008 2,090,534 Replacement Surcharge(4) 385,543 391,173 399,304 409,937 420,571 431,204 441,837 Debt Service Surcharge (5) 481,929 488,966 499,130 512,422 525,713 539,005 552,297 Total Funding Sources 4,041,686 4,466,763 5,609,320 6,237,237 6,462,395 6,239,559 6,340,065 Funding Uses Debt Service

201 Primary Debt Service 3,400,695 3,402,120 3,508,866 3,505,631 3,514,087 2,898,836 2,897,888 Debt Service – New Projects (6) - - 1,162,383 1,162,383 1,162,383 1,162,383 1,162,383 Misc. Bond Fees/Other Expenses 140,997 140,997 140,997 140,997 140,997 140,997 140,997 Total Debt Service 3,541,692 3,543,117 4,812,246 4,809,010 4,817,466 4,202,215 4,201,268 Total Funding Uses 3,541,692 3,543,117 4,812,246 4,809,010 4,817,466 4,202,215 4,201,268 Net Sources/(Uses) 499,994 923,646 797,075 1,428,227 1,644,929 2,037,344 2,138,797 Ending Fund Balance $ 18,826,288 19,749,934 20,547,009 21,975,236 23,620,164 25,657,508 27,796,305 Projected Debt Balance $ 63,190,309 62,756,359 77,994,041 77,198,057 76,353,116 76,095,615 75,823,969

Note 1: From EDU absorption calculations, capacity fee indexed at 8% through 2016. Note 2: Reserve funds consist of investment earnings at 4.0% and principal maturities. Note 3: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 4: Monthly surcharge for Replacement $4 per EDU per month. Note 5: Monthly surcharge for Debt Service $5 per EDU per month. Note 6: Per Master Plan as provided by Engineering Planning Manager. Borrowing rate @ 6%, Term 30 years.

SANTA ROSA WATER RECLAMATION FACILITY DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2019 2020 2021 2022 2023 2024 2025

Beginning Fund Balance $ 27,796,305 29,673,455 29,542,200 27,865,003 26,203,779 24,790,274 23,356,894 Funding Sources Capacity Fees (1) 1,633,885 ------Federal Direct Pay Interest Subsidy 20,200 20,200 20,200 20,200 20,200 20,200 20,200 Standby Charges 35,958 32,363 29,126 26,214 23,592 21,233 19,110 External Debt Reserve Funds (2) 206,627 206,627 206,627 206,627 206,627 206,627 206,627 Interest Internal Debt Reserve Funds (3) 1,111,852 1,186,938 1,181,688 1,114,600 1,048,151 991,611 934,276 Contract Debt Service Revenue 2,129,282 2,599,269 4,160,700 4,088,767 3,771,977 3,732,953 4,083,783 Replacement Surcharge (4) 452,493 463,149 473,805 480,045 480,045 480,045 480,045 Debt Service Surcharge (5) 565,617 578,937 592,257 600,057 600,057 600,057 600,057 Total Funding Sources 6,155,914 5,087,483 6,664,404 6,536,510 6,150,650 6,052,726 6,344,098 Funding Uses Debt Service Primary Debt Service 2,899,103 3,839,078 6,961,940 6,818,073 6,184,493 6,106,445 6,081,617 202 Debt Service – New Projects (6) 1,238,664 1,238,664 1,238,664 1,238,664 1,238,664 1,238,664 1,965,153 Misc. Bond Fees/Other Expenses 140,997 140,997 140,997 140,997 140,997 140,997 140,997 Total Debt Service 4,278,764 5,218,739 8,341,601 8,197,734 7,564,154 7,486,106 8,187,767 Total Funding Uses 4,278,764 5,218,739 8,341,601 8,197,734 7,564,154 7,486,106 8,187,767 Net Sources/(Uses) 1,877,150 (131,256) (1,677,197) (1,661,224) (1,413,505) (1,433,380) (1,843,669) Ending Fund Balance $ 29,673,455 29,542,200 27,865,003 26,203,779 24,790,274 23,356,894 21,513,225 Projected Debt Balance $ 76,556,549 75,259,606 70,693,908 66,038,481 61,787,616 57,407,551 52,838,723

Note 1: From EDU absorption calculations, capacity fee indexed at 8% through 2016. Note 2: Reserve funds consist of investment earnings at 4.0% and principal maturities. Note 3: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 4: Monthly surcharge for Replacement $4 per EDU per month. Note 5: Monthly surcharge for Debt Service $5 per EDU per month. Note 6: Per Master Plan as provided by Engineering Planning Manager. Borrowing rate @ 6%, Term 30 years.

SANTA ROSA WATER RECLAMATION FACILITY DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2026 2027 2028 2029 2030 2031 2032

Beginning Fund Balance $ 21,513,225 19,619,784 17,674,377 15,681,929 13,622,962 11,130,320 8,390,251 Funding Sources Capacity Fees (1) ------Federal Direct Pay Interest Subsidy 20,200 20,200 20,200 20,200 20,200 20,200 20,200 Standby Charges 17,199 15,479 13,931 12,538 11,284 10,156 9,140 External Debt Reserve Funds (2) 206,627 206,627 206,627 206,627 206,627 654,965 188,693 Interest Internal Debt Reserve Funds (3) 860,529 784,791 706,975 627,277 544,918 445,213 335,610 Contract Debt Service Revenue 4,057,898 4,032,406 4,000,083 3,985,512 4,335,573 4,930,504 4,931,420 Replacement Surcharge (4) 480,045 480,045 480,045 480,045 480,045 480,045 480,045 Debt Service Surcharge (5) 600,057 600,057 600,057 600,057 600,057 600,057 600,057 Total Funding Sources 6,242,555 6,139,605 6,027,918 5,932,256 6,198,705 7,141,140 6,565,166 Funding Uses Debt Service Primary Debt Service 6,029,847 5,978,862 5,914,216 5,885,074 5,858,708 7,048,569 7,050,402 203 Debt Service - New Projects (6) 1,965,153 1,965,153 1,965,153 1,965,153 2,691,642 2,691,642 2,691,642 Misc. Bond Fees/Other Expenses 140,997 140,997 140,997 140,997 140,997 140,997 140,997 Total Debt Service 8,135,997 8,085,012 8,020,366 7,991,224 8,691,347 9,881,208 9,883,041 Total Funding Uses 8,135,997 8,085,012 8,020,366 7,991,224 8,691,347 9,881,208 9,883,041 Net Sources/(Uses) (1,893,442) (1,945,407) (1,992,448) (2,058,968) (2,492,642) (2,740,069) (3,317,875) Ending Fund Balance $ 19,619,784 17,674,377 15,681,929 13,622,962 11,130,320 8,390,251 5,072,376 Projected Debt Balance $ 48,095,330 43,168,015 38,061,668 32,731,978 27,164,950 20,091,671 12,684,393

Note 1: From EDU absorption calculations, capacity fee indexed at 8% through 2016. Note 2: Reserve funds consist of investment earnings at 4.0% and principal maturities. Note 3: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 4: Monthly surcharge for Replacement $4 per EDU per month. Note 5: Monthly surcharge for Debt Service $5 per EDU per month. Note 6: Per Master Plan as provided by Engineering Planning Manager. Borrowing rate @ 6%, Term 30 years.

SANTA ROSA WATER RECLAMATION FACILITY DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2033 2034 2035 2036 2037 2038 2039

Beginning Fund Balance $ 5,072,376 4,711,563 4,918,344 5,132,635 10,419,971 11,012,156 11,627,489 Funding Sources Capacity Fees (1) ------Federal Direct Pay Interest Subsidy 19,801 18,981 18,123 16,359 13,651 10,829 7,888 Standby Charges 8,226 7,404 6,663 5,997 5,397 4,857 4,372 External Debt Reserve Funds (2) 188,693 188,693 188,693 4,906,029 (0) (0) (0) Interest Internal Debt Reserve Funds (3) 202,895 188,463 196,734 205,305 416,799 440,486 465,100 Contact Debt Service Revenue 1,840,730 1,257,880 1,257,902 910,097 910,113 910,113 1,089,289 Replacement Surcharge (4) 480,045 480,045 480,045 480,045 480,045 480,045 480,045 Debt Service Surcharge (5) 600,057 600,057 600,057 600,057 600,057 600,057 600,057 Total Funding Sources 3,340,448 2,741,523 2,748,217 7,123,890 2,426,062 2,446,388 2,646,751 Funding Uses Debt Service Primary Debt Service 868,622 864,485 863,670 166,296 163,620 160,799 157,864 204 Debt Service - New Projects (6) 2,691,642 1,529,260 1,529,260 1,529,260 1,529,260 1,529,260 1,887,607 Misc. Bond Fees/Other Expenses 140,997 140,997 140,997 140,997 140,997 140,997 140,997 Total Debt Service 3,701,261 2,534,741 2,533,927 1,836,553 1,833,877 1,831,055 2,186,467 Total Funding Uses 3,701,261 2,534,741 2,533,927 1,836,553 1,833,877 1,831,055 2,186,467 Net Sources/(Uses) (360,813) 206,781 214,290 5,287,337 592,185 615,333 460,284 Ending Fund Balance $ 4,711,563 4,918,344 5,132,635 10,419,971 11,012,156 11,627,489 12,087,773 Projected Debt Balance $ 35,020,581 9,813,862 8,260,211 7,334,500 6,355,358 5,319,704 10,298,366

Note 1: From EDU absorption calculations, capacity fee indexed at 8% through 2016. Note 2: Reserve funds consist of investment earnings at 4.0% and principal maturities. Note 3: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 4: Monthly surcharge for Replacement $4 per EDU per month. Note 5: Monthly surcharge for Debt Service $5 per EDU per month. Note 6: Per Master Plan as provided by Engineering Planning Manager. Borrowing rate @ 6%, Term 30 years.

SANTA ROSA WATER RECLAMATION FACILITY DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2040 2041 2042 2043 2044 2045 2046

Beginning Fund Balance $ 12,087,773 12,566,030 13,063,007 13,654,515 14,339,862 14,056,132 14,124,038 Funding Sources Capacity Fees (1) ------Federal Direct Pay Interest Subsidy 4,824 1,630 Standby Charges 3,935 3,541 3,187 2,868 2,581 2,323 2,091 External Debt Reserve Funds (2) (0) (0) (0) (0) (0) (0) (0) Interest Internal Debt Reserve Funds (3) 483,511 502,641 522,520 546,181 573,594 562,245 564,962 Contract Debt Service Revenue 1,089,290 1,089,307 1,014,302 943,803 1,940,008 1,576,764 1,576,764 Replacement Surcharge (4) 480,045 480,045 480,045 480,045 480,045 480,045 480,045 Debt Service Surcharge (5) 600,057 600,057 600,057 600,057 600,057 600,057 600,057 Total Funding Sources 2,661,661 2,677,221 2,620,111 2,572,954 3,596,286 3,221,434 3,223,918 Funding Uses Debt Service Primary Debt Service 154,801 151,640 - - - - - 205 Debt Service - New Projects (6) 1,887,607 1,887,607 1,887,607 1,887,607 3,880,017 3,153,527 3,153,527 Misc. Bond Fees/Other Expenses 140,997 140,997 140,997 Total Debt Service 2,183,404 2,180,243 2,028,604 1,887,607 3,880,017 3,153,527 3,153,527 Total Funding Uses 2,183,404 2,180,243 2,028,604 1,887,607 3,880,017 3,153,527 3,153,527 Net Sources/(Uses) 478,257 496,977 591,507 685,347 (283,730) 67,907 70,391 Ending Fund Balance $ 12,566,030 13,063,007 13,654,515 14,339,862 14,056,132 14,124,038 14,194,429 Projected Debt Balance $ 9,236,632 8,113,690 7,079,174 5,982,587 33,407,773 33,407,773 33,407,773

Note 1: From EDU absorption calculations, capacity fee indexed at 8% through 2016. Note 2: Reserve funds consist of investment earnings at 4.0% and principal maturities. Note 3: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 4: Monthly surcharge for Replacement $4 per EDU per month. Note 5: Monthly surcharge for Debt Service $5 per EDU per month. Note 6: Per Master Plan as provided by Engineering Planning Manager. Borrowing rate @ 6%, Term 30 years.

SANTA ROSA WATER RECLAMATION FACILITY DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2047 2048 2049 2050 2051 2052 2053

Beginning Fund Balance $ 14,194,429 14,267,426 14,343,155 13,277,238 12,531,776 11,756,359 10,949,801 Funding Sources Capacity Fees (1) ------Federal Direct Pay Interest Subsidy Standby Charges 1,882 1,694 1,524 1,372 1,235 1,111 1,000 External Debt Reserve Funds (2) (0) (0) (0) (0) (0) (0) (0) Interest Internal Debt Reserve Funds (3) 567,777 570,697 573,726 531,090 501,271 470,254 437,992 Contract Debt Service Revenue 1,576,764 1,576,764 2,721,270 2,358,025 2,358,025 2,358,025 2,358,025 Replacement Surcharge (4) 480,045 480,045 480,045 480,045 480,045 480,045 480,045 Debt Service Surcharge (5) 600,057 600,057 600,057 600,057 600,057 600,057 600,057 Total Funding Sources 3,226,525 3,229,256 4,376,622 3,970,588 3,940,633 3,909,493 3,877,119 Funding Uses Debt Service Primary Debt Service ------206 Debt Service - New Projects (6) 3,153,527 3,153,527 5,442,539 4,716,050 4,716,050 4,716,050 4,716,050 Misc. Bond Fees/Other Expenses ------Total Debt Service 3,153,527 3,153,527 5,442,539 4,716,050 4,716,050 4,716,050 4,716,050 Total Funding Uses 3,153,527 3,153,527 5,442,539 4,716,050 4,716,050 4,716,050 4,716,050 Net Sources/(Uses) 72,997 75,729 (1,065,917) (745,462) (775,417) (806,558) (838,931) Ending Fund Balance $ 14,267,426 14,343,155 13,277,238 12,531,776 11,756,359 10,949,801 10,110,870 Projected Debt Balance $ 33,407,773 33,407,773 64,915,633 64,915,633 64,915,633 64,915,633 64,915,633

Note 1: From EDU absorption calculations, capacity fee indexed at 8% through 2016. Note 2: Reserve funds consist of investment earnings at 4.0% and principal maturities. Note 3: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 4: Monthly surcharge for Replacement $4 per EDU per month. Note 5: Monthly surcharge for Debt Service $5 per EDU per month. Note 6: Per Master Plan as provided by Engineering Planning Manager. Borrowing rate @ 6%, Term 30 years.

SANTA ROSA WATER RECLAMATION FACILITY DIVISION LONG-RANGE CAPITAL FINANCING PLAN

Fiscal Year Ending June 30, 2054 2055 2056 Total

Beginning Fund Balance $ 10,110,870 6,693,980 3,140,323 18,326,294 Funding Sources Capacity Fees (1) - - - 11,873,223 Federal Direct Pay Interest Subsidy 536,295 Standby Charges 900 810 729 745,238 External Debt Reserve Funds (2) (0) (0) (0) 10,241,680 Interest Internal Debt Reserve Funds (3) 404,435 267,759 125,613 28,002,321 Contract Debt Service Revenue 4,902,328 4,902,328 4,902,328 117,153,175 Replacement Surcharge (4) 480,045 480,045 480,045 21,070,603 Debt Service Surcharge (5) 600,057 600,057 600,057 26,338,254 Total Funding Sources 6,387,764 6,250,999 6,108,772 215,960,790 Funding Uses Debt Service Primary Debt Service - - - 109,336,344 207 Debt Service - New Projects (6) 9,804,655 9,804,655 9,804,655 121,135,393 Misc. Bond Fees/Other Expenses - - - 4,370,907 Total Debt Service 9,804,655 9,804,655 9,804,655 234,842,645 Total Funding Uses 9,804,655 9,804,655 9,804,655 234,842,645 Net Sources/(Uses) (3,416,891) (3,553,656) (3,695,884) (18,881,855) Ending Fund Balance $ 6,693,980 3,140,323 (555,561) (555,561) Projected Debt Balance $ 134,959,424 134,959,424 134,959,424

Note 1: From EDU absorption calculations, capacity fee indexed at 8% through 2016. Note 2: Reserve funds consist of investment earnings at 4.0% and principal maturities. Note 3: Projected investment earnings are calculated on the opening balance at 3.75% through 2015 and 4% thereafter. Note 4: Monthly surcharge for Replacement $4 per EDU per month. Note 5: Monthly surcharge for Debt Service $5 per EDU per month. Note 6: Per Master Plan as provided by Engineering Planning Manager. Borrowing rate @ 6%, Term 30 years. .

208 FISCAL YEAR 2011-2012 ADOPTED BUDGET

APPENDIX A CAPITAL IMPROVEMENT PROJECT LOCATION MAP/DESCRIPTIONS

209 FISCAL YEAR 2011-2012 ADOPTED BUDGET

APPENDIX A Reservoir Recoating

Santa Rosa Division:

De Luz Reservoir No. 1 (3.0 MG) is located along De Luz Road, just north of Rancho California Road. This reservoir’s interior and exterior surfaces were last recoated in 2000. Due to deterioration of the interior roof and floor areas and chalking of the exterior coating, staff proposes to recoat the interior with a combination of polyurethane and epoxy coating and the exterior with polyurethane or enamel coating in compliance with AWWA Specifications. The estimated project cost for the interior recoating is $605,000 and the exterior recoating is $135,000.

De Luz Reservoir No. 2 (3.0 MG) is located along De Luz Road, just north of Rancho California Road, next to De Luz Reservoir No. 1. This reservoir’s exterior was last recoated in 2000 along with De Luz Reservoir No. 1. Due to the deteriorating condition of the exterior coating system, as evidenced by chalking, staff proposes to recoat the exterior with polyurethane or enamel coating in compliance with AWWA Specifications. The estimated project cost for the exterior recoating is $135,000.

210 FISCAL YEAR 2011-2012 ADOPTED BUDGET

Avocado Mesa Reservoir (3.0 MG) is located at 19265 Avocado Mesa Road, west of Corona Cala Camino. This reservoir was originally constructed in 1986 and the exterior surface was last recoated in 2002. Due to the deteriorating condition of the exterior coating system, as evidenced by chalking, staff proposes to recoat the exterior with polyurethane or enamel coating in compliance with AWWA Specifications. The estimated cost for the exterior recoating of Avocado Mesa Reservoir is $155,000.

The total proposed budget for reservoir recoating in the Santa Rosa Division is $1,030,000

211 FISCAL YEAR 2011-2012 ADOPTED BUDGET

Rancho Division:

Calle Contento Reservoir No. 1 (2.2 MG) is located along Calle Contento, south of Pauba Road. This reservoir was originally constructed in 1981; the interior was last recoated in 2000 and the exterior was last recoated in 2001. Due to the deteriorating condition of the interior coating system, staff proposes to recoat the interior reservoir surface. The estimated cost for the interior recoating of Calle Contento Reservoir No. 1 is $560,000.

Winchester Reservoir (4.6 MG) is located southwest of the intersection of Leon Road and Borel Road. This reservoir was originally constructed in 1996 and the exterior surface has never been recoated. Due to the deteriorating condition of the exterior coating system, as evidenced by chalking, staff proposes to recoat the exterior with a polyurethane or enamel coating in compliance with AWWA Specifications. The estimated cost for the exterior recoating of Winchester Reservoir is $145,000.

212 FISCAL YEAR 2011-2012 ADOPTED BUDGET

Calaveras Reservoir (0.5 MG) is located at 38795 Esplendida Way in the Glen Oaks area. This reservoir’s exterior surface was last recoated in 2000. Due to the deteriorating condition of the exterior coating, as evidenced by chalking, staff proposes to recoat the exterior with polyurethane or enamel coating in compliance with AWWA Specifications. The estimated cost for the exterior recoating of Calaveras Reservoir is $80,000.

The total proposed budget for reservoir recoating in the Rancho Division is $785,000.

213 FISCAL YEAR 2011-2012 ADOPTED BUDGET APPENDIX A Well Modifications

Due to normal mechanical pump wear, plugging of well screens, and necessary electrical repair and programmable logic controller (PLC) replacement, staff proposes to rehabilitate selected potable water supply wells. Well rehabilitation typically includes the replacement of pump column piping, pump, and motor upon inspection of the pumping equipment once removed from the well and cleaning of the well screen. As previously noted, replacement of the PLCs is part of a comprehensive program to upgrade the PLCs for various facilities over the next several years. Those wells proposed to be rehabilitated are as follows:  Well No. 109, constructed in 1975 and located at 31955 Temecula Parkway at the southwest intersection of Temecula Parkway and Redhawk Parkway, is equipped with a 75 HP motor to produce a 650 gallon-per-minute supply to the 1305 Pressure Zone;  Well No. 123, constructed in 1987 and located at 37677 Pauba Road approximately 300 feet north from street centerline of Winners Circle, is equipped with a 300 HP motor to produce a 1,900 gallon-per-minute supply to the 1305 Pressure Zone;  Well No. 124, constructed in 1986 and located at 43880 Anza Road approximately 450 feet north from street centerline of SH-79S, is equipped with a 200 HP motor to produce a 1,000 gallon-per-minute supply to the 1305 Pressure Zone; and  Well No. 133, constructed in 1987 and located at 27987 Pauba Road approximately 900 feet to the north from street centerline of Pauba Road, is equipped with a 200 HP motor to produce 1,400 gallon-per-minute supply to the 1305 Pressure Zone. The total estimated cost to rehabilitate the four wells and to replace the PLCs is $880,000 ($220,000 each), and this work is proposed to be funded 50 percent Rancho Division DS/CI Fund and 50 percent Santa Rosa Division DS/CI Fund.

214 FISCAL YEAR 2011-2012 ADOPTED BUDGET

APPENDIX A Pipeline Replacement

This project consists of replacing 3,400 feet of a 12-inch diameter steel water pipeline in Calle Medusa Road, generally between Nicolas Road and Riverton Lane, which was installed in 1974. The pipeline has had multiple leaks since 1995, primarily caused by pipeline joint and service saddle corrosion failures. Eight of those reported leaks are documented emergency repair work with labor and outside services totaling $283,000. Replacement of the pipeline will result in reduced maintenance cost, reduced operational down time, reduced risk to property damage, and an improved level of service to District customers. The estimated cost of pipeline replacement is $750,000, and this work is proposed to be funded by the Rancho Division DS/CI Fund.

215 FISCAL YEAR 2011-2012 ADOPTED BUDGET APPENDIX A Mainline Valve Replacement

The proposed mainline valve improvements are as follows:  Install three 8” butterfly valves at the intersection of Corte Benavente and Corte Algete (1485 Pressure Zone pipeline constructed in 1990);  Replace one 4” valve on Calle Fiesta located 150 feet south from street centerline of Calle Fuente (1485 Pressure Zone pipeline constructed in 1969);  Replace one 6” valve on Calle Torcida at Via Norte (1485 Pressure Zone pipeline constructed in 1970);  Replace one 24” valve on Rancho California Road at La Serena Way (1610 Pressure Zone pipeline constructed in 1974);  Install two 20” butterfly valves on the 20” pipeline in Rancho California Road each side of a 12” pipeline connection located 250 feet west from street centerline of Margarita Road (1380 Pressure Zone pipeline constructed in 1970);  Replace two 8” valves at the intersection of Rue Jadot and Cour Magdelaine (1485 Pressure Zone pipeline constructed in 1990); and  Replace one 6” valve at the intersection of Esmerado Court and Loma Linda Road (1305 Pressure Zone pipeline constructed in 1986).

216

FISCAL YEAR 2011-2012 ADOPTED BUDGET

The proposed mainline valve improvements are as follows:

 Install two 24” butterfly valves and replace one 12” valve at the intersection of Calle De Companero and Vista De Montanas (2550 Pressure Zone 24” pipeline constructed in 1975 and 12” pipeline constructed in 1986);  Install two 24” butterfly valves and replace one 12” valve at the intersection of Vista De Montanas and Vista Del Bosque (2550 Pressure Zone 24” pipeline constructed in 1975 and 12” pipeline constructed in 1986);  Replace one 8” valve at the intersection of Muirfield Drive and Glen Abbey (1500 Pressure Zone pipeline constructed in 1984);  Install one 20” butterfly valve at the intersection of Avenida La Cresta and Calle Centro (2550 Pressure Zone pipeline constructed in 1975); and  Install two 20” butterfly valves and replace one 12” valve at the intersection of Avenida La Cresta and Avenida Bonita (2550 Pressure Zone 20” pipeline constructed in 1975 and 12” pipeline constructed in 1986).

217

FISCAL YEAR 2011-2012 ADOPTED BUDGET APPENDIX A Upper VDC Recharge Basins Non-Compliant Water Discharge

Staff is proposing to replace the existing well discharge control valves with motorized valves and electrical controls that will automatically shut-down the well and would redirect the non-compliant well water from any of the four potable water wells (i.e., Wells 152, 153, 157, 158) located at the Upper VDC recharge basins when a well goes out of compliance, either due to high turbidity or low chlorine residual. Electrical controls would initiate valve closure to redirect the non-compliant water away from the potable water supply system header pipe back to the recharge basins for disposal. Currently, staff is required to manually flush a considerable amount of water from the pipeline header at the Upper VDC when any one of the four wells goes out of compliance, which may require several hours to a few days to perform. During this period, the District experiences considerable loss of valuable man-hours to flush and test the system until compliance for the entire pipeline header is reestablished. The estimated cost for the non-compliant water discharge system improvement is $280,000, and this work is proposed to be funded 50 percent Rancho Division DS/CI Fund and 50 percent Santa Rosa Division DS/CI Fund.

218

FISCAL YEAR 2011-2012 ADOPTED BUDGET APPENDIX A Calaveras Reservoir Access Site Improvement

The dirt access road leading to Calaveras Reservoir has repeatedly washed-out during heavy rain events and has again washed-out during recent rain storms at locations where the natural drainage course crosses over the access road. As a result, access to the site has been impaired and the reservoir transmission pipeline has become exposed and vulnerable to damage. Staff has temporarily filled the damaged areas to protect the pipeline. Staff proposes to improve the road drainage system and make road improvements to provide a permanent solution with drainage facilities and a paved road surface for improved reservoir access and pipeline protection. The estimated cost for this work is $275,000, and this amount is proposed to be funded by the Rancho Division DS/CI Fund

219

FISCAL YEAR 2011-2012 ADOPTED BUDGET APPENDIX A Pump Station Modifications

This project consists of installing a disinfection system to boost chloramine levels at Ace Bowen Pump Stations No. 1 and No. 2. The disinfection system consists of an On-Site Generation (OSG) system of 0.8 percent solution of sodium hypochlorite and an ammonia feed system to control the chlorine-ammonia ratio. The site improvements will include installing the OSG equipment, ammonia feed system, enclosure, shade structure for tank, concrete slab, electrical equipment, pumps, conduits, and appurtenant facilities. The estimated project cost for OSG and ammonia feed system at Ace Bowen Pump Stations No. 1 and No. 2 is $265,000, and the proposed source of funds is the Santa Rosa Division DS/CI Fund.

220

221 FISCAL YEAR 2011-2012 ADOPTED BUDGET GLOSSARY

AB 1881 – Assembly Bill that provides for a a result of past transactions or events (i.e., new updated model water efficient landscape cash, receivables, equipment, and the like). ordinance to reflect the improvements in irrigation technology and to continue to AWWA – American Water Works Assoc. promote water efficiencies in landscaping. Beginning Balance – The beginning balance ACWA – Association of California Water is comprised of residual funds brought Agencies forward from the previous fiscal year (ending balance). Accrual Basis – The method of accounting whereby income and expense items are Bonded Indebtedness – The District’s recognized as they are earned or incurred, general name for bond debt evidencing even though they may not have been received amounts owed and payable on specific dates or actually paid in cash. or on demand.

ACD – Automatic Call Distribution Budget – A financial plan showing authorized planned expenditures and their Acre-Foot (AF) – 325,829 gallons or 435.6 funding sources. hundred cubic feet of water. Budget-Based Tiered Water Rate Ad Valorem Tax – A tax based on the value (BBTWR) – Increasing rate block structure of the item rather than on its weight or in which the block definition is different for quantity (e.g., an ad valorem property tax is each customer and is based on an efficient based on the assessed land value of property level of water use by that customer. rather than its size). Budget Process – The schedule of key dates Ag – Agriculture/agricultural or milestones which the District follows in the development, preparation, adoption and AMR – Automatic Meter Reading administration of the budget.

Annexation – Properties that are outside the Budgetary – Management of a government (current District) boundaries that desire or enterprise in accordance with an approved service from RCWD must apply for budget to keep expenditures within the annexation. limitations of available appropriations and available revenues.

APN – Assessor’s Parcel Number Capital Projects – Projects budgeted within the Capital Budget fall within the definition of Aquifer - A layer of permeable rock, sand, or Capital Expenditures which mean (1) they gravel through which ground water flows, create or extend the lives of assets, (2) their containing enough water to supply wells and work products have a useful life of greater springs. than two years, and (3) they involve an expenditure of District resources in excess of Asset – A probable future economic benefit $2,000. obtained or controlled by a particular entity as

222 FISCAL YEAR 2011-2012 ADOPTED BUDGET GLOSSARY Capital Improvement Plan (CIP) – Debt Service – The current year portion of Authorized expenditures for tangible and interest costs and current year principal long-term physical improvements or additions payments incurred on long-term debt. of a fixed or permanent nature. Division Mission Statement – The Capital Outlay– Individual item purchases of Division’s core purpose; how the Division furniture, fixtures, machinery, vehicles, and supports the District’s mission. equipment with an individual cost of at least $1,000 and having a useful life of two years or DTO –Delinquent Turn Off more EDU – Equivalent dwelling unit. Certificates of Participation (COPs) – A security in the form of a bond, which EMWD – Eastern Municipal Water District evidences a proportionate participation in a flow of lease or other payments between two Energy Rate – The cost of energy generated parties. by the pumping of water to various pump zones is recovered via an energy surcharge per CFD – Community Facility District hcf.

CIP – Capital Improvement Projects Enterprise Fund – A fund established to account for operations that are financed and CIS – Customer Information System operated in a manner similar to private business enterprises where the intent of the CMMS – Computerized Maintenance governing body is that the costs of providing Management System goods or services to the general public on a

Comprehensive Annual Financial Report continuing basis be financed or recovered (CAFR) – A widely-recognized comprehensive primarily through “user charges.” annual financial reporting medium summarizing financial and statistical data in a standardized ERP – Enterprise Resource Planning format, used by municipal issuers. Expense – Decreases in net financial resources resulting from payment for Critical Success Factors – Key objectives operating costs, labor and overhead, services which must be obtained for overall success to and supplies, land and structures, equipment, be achieved. debt service, etc.

CUWCC BMP – California Urban Water Fee for Service Costs – Cost of providing Conservation Best Management Practice. special services to customers and the related fee to cover those costs. Depreciation – A portion of the cost of a fixed asset which is charged as an expense Fire Service Charge – A monthly charge during a year, representing an estimate of the assessed commercial and/or industrial value of the asset used up during that year. properties to cover the cost of the District providing additional fire flow capacity.

223 FISCAL YEAR 2011-2012 ADOPTED BUDGET GLOSSARY Fiscal Year (FY) – A 12-month period to Groundwater – Water produced by pumping which the annual operating budget applies and from an underground aquifer. at the end of which a government determines its financial position and the results of its HCF – Hundred cubic feet. operations (for RCWD the fiscal year is July 1 through June 30). H.R. 1725 –Amend the Reclamation Wastewater and Groundwater Study and Fixed Costs – Costs created by the need to Facilities Act to authorize the Secretary of the maintain a utility systems capacity to deliver Interior to participate in the Rancho water to all customers and represent the cost California Water District Southern Riverside of service availability which must be County Recycled/Non-Potable Distribution maintained for each customer in order to Facilities and Demineralization/Desalination preserve their share of reserved system Recycled Water Treatment and Reclamation volume. Facility Project.

Fund- A self-balancing set of accounts in IAWP – Interim Agricultural Water Program which cash and other financial resources, all provides discounted wholesale supply and related liabilities and residual equities, or treatment pricing for qualified agricultural balances and changes therein, are recorded users within its service area on the basis that and segregated to carry on specific activities participants receive non-firm, interruptible or attain certain objectives in accordance with supply up to the maximum allowed under special regulations, restrictions or limitations. Section 4901 of the MWD Administrative Code. Fund Balance – The difference between total fund assets and liabilities. Import Water – Purchased water.

GASB – Governmental Accounting Standards ITMP – Information Technology Master Board. Plan

General Fund – A fund used to account for IRWMP – Integrated Resource Water major operating revenues and expenditures, Management Plan except for those financial transactions that are required to be accounted for in another fund. IRP – Integrated Resource Plan, a study General Fund revenues are derived primarily developed as a long-term supply plan that will from property and other taxes. help meet water demands for the District from now until 2050 (ultimate build out) Geographical Information Systems (GIS) – An information system integrating maps IVR – Interactive Voice Response with electronic data. JPIA – Joint Powers Insurance Authority. GFOA – Government Finance Officers Association. LAFCO – Riverside Local Agency Formation Commission GIC – Guaranteed Investment Contract.

GPS – Global Positioning System

224 FISCAL YEAR 2011-2012 ADOPTED BUDGET GLOSSARY Lock Off – A final notice to a customer if District, including wages, materials, utilities, their billing account remains unpaid for 45 professional and outside services, and other days. Must be paid within 48 hours to avoid such operating expenses. having water service terminated. Operating Costs – All costs necessary to operate and maintain the water and Long-Range Capital Financing Plan – A wastewater operations. plan which details future capital requirements for the District’s service area and identifies Operating Reserve Fund – A fund category funding sources to meet future debt designated for specific operating purposes. obligations. OSG – On-Site Generation

M&I – Municipal and Industrial Performance Measurement – A method of

MCBP – Marine Corps Base, Camp determining the success rate of a specific task Pendleton or job requirement within identified guidelines of the District’s goals and objectives.

MISAC – Municipal Information Systems Performance Measurement Indicators – A Association of California measurable achievement or accomplishment used to determine specific tasks or goals. Monthly Capacity Rate – The charge to offset the “ready to serve” cost incurred by PERS – Public Employees Retirement the District regardless of the volume of water System sold. Plan Check – Process District reviews and Mission Statement – The District’s core approved drawings for improvements to the purpose. water/sewer system to ensure conformation of design materials with the standard MPCEA – Managers, Profession, and drawings.

Confidential Employee’s Association PLC – Programmable Logic Controller

MWD – The Metropolitan Water District of Public Employees Retirement System – Southern California. An agent, multiple employer, public retirement system to which the District Non-Operating Budget – Budgeted income contributes that acts as a common investment and expenses derived from non-operating and administrative agent for participating type categories, such as interest income and public entities within the State of California. expenses, assessments, connection fees and depreciation. Potable Water – Water that is suitable for drinking. Non-Operating Costs – Costs incurred through activities other than regular business Proposition 50 – Prop 50 allows for 3.4 operating activities, such as source of supply, billion dollars in general obligation bonds to transmission and distribution, customer fund a variety of water projects. service, etc... Proposition 84 – On November 7, 2006, Operating Budget – The normal ongoing voters passed Proposition 84 by 53.9 percent. operating costs incurred to operate the The 5.4 billion dollar “Safe Drinking Water,

225 FISCAL YEAR 2011-2012 ADOPTED BUDGET GLOSSARY Water Quality and Supply, Flood Control, SRWRF – Santa Rosa Water Reclamation River and Coastal Protection Bond Act of Facility. The District’s 5.0 million gallons per 2006” (Safe Drinking Water Bond) is detailed day sequencing batch reactor treatment in Sections 75001 through 75090 of the Public facility. Resources Code. Standard Specifications – Written Proposition 218 – Prop 218 amended the description of design and material standard California Constitution (Articles XIIIC and drawings for water/sewer pipeline, XIIID) which, as it relates to assessments, appurtenances, and installation. requires the local government to have a vote of the affected property owners for any Standby Charge – A “ready-to-serve” charge proposed new or increased assessment before levied annually in two equal installments it could be levied. The Proposition was passed against property within District boundaries by California voters on November 5, 1996, based on the proximity of existing water and the assessments portion placed in effect facilities, with decreases in the charges as the on July 1, 1997. distance from existing water service increases. Standby charges collected by the District are PS – Pump Station used exclusively for the purpose of paying bonded indebtedness. QIP – Quality Improvement Process Strategic Plan – Defines the long-term goals

and objectives and performance measurement RCWDEA – Rancho California Water standards for the District. District Employees’ Association T & D – Transmission & Distribution. RP – Abbreviation for reduced pressure backflow prevention device Targeted Operating Reserve – A desired level of operating reserves for various Recycled Water – Water that has been purposes such as rate stabilization, drought, treated to remove harmful contaminants that risk management and working capital. can be used for non-potable purposes, such as landscape and golf-course irrigation. Tertiary – The purification of wastewater by removal of fine particles, nitrates and RWQCB – Regional Water Quality Control phosphates. Board Tier 2 Conservation Rate - Designed to Reserve – A portion of fund balance that is charge customers using substantially more held for a specific future use. water than other customers in their customer class, an add-on rate to recover Tier 2 charges SCADA – Supervisory Control and Data from MWD and to fund targeted water Acquisition uses computer technology to conservation programs. monitor and control remote facilities such as pumps and reservoirs. Topographical Map - A large-scale map showing relief and man-made features of a SCE – Southern California Edison portion of a land surface distinguished by SLA – Service Level Agreements portrayal of position, relation, size, shape, and elevation of the features.

226 FISCAL YEAR 2011-2012 ADOPTED BUDGET GLOSSARY

Unlock – The process of restoring service (removing the lock from the meter) once delinquent charges have been settled.

User Charge System – The total process of (1) identifying water and wastewater costs; (2) allocating costs to utility or service beneficiaries; and (3) designing rate structures to recover allocated costs.

VDC – Valle Los Caballos

Variable Costs – Costs created during the actual production, distribution and delivery of water services and represent the costs per unit of water measured in hundred cubic feet or “hcf.”

WMWD – Western Municipal Water District

Water Capacity Fee – The amount charged for the purchase of capacity in the RCWD sewage treatment and collection system. The fee is based on the total EDUs.

Will Serve Letter – A conditional commitment by the District to provide water, sewer service, or fire flow. Subject to the completion of all financial arrangements and conditions of service.

Zone of Benefit – An acreage charge in the Santa Rosa Division for installation by RCWD of the secondary water system to all 20-acre parcels.

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