Capital Improvement Program

reservoir

The Otay Water District provides water and sewer services to a population of more than 225,000, which is expected to ultimately increase to 308,000 by the year 2050. This growth, as well as the maintenance of existing assets, requires long-term capital planning. Due to the evolving needs of the community, water supply issues, and changing regulations, capital planning is a critical part of the District’s overall strategic planning. The capital planning process involves identifying current needs, future needs, and prioritizing them based on certain operating assumptions. The primary objective of this planning effort is to support an orderly and efficient program of expansion, new water supply, replacement, and betterment, while maintaining a stable long-range financial plan.

Capital Improvement Projects

To accommodate growth requires that the District invest over $280 million in capital assets through ultimate build-out. The District’s Fiscal Year 2020 Capital Improvement Program (CIP) Budget consists of 113 projects. The cost for the work planned in Fiscal Year 2020 is $17.2 million and the opens in a new windowsix-year CIP totals approximately $88.3 million. The FY 2020 CIP Budget and the six-year CIP are consistent with the District’s Water Facilities Master Plan, current capacity fees, and strategic financial objectives.

The following shows how the $17.2 million of projects are broken down into four categories:

Expansion Projects: $69 thousand
Betterment Projects: $3.581 million
Replacement or Renewal Projects: $12.949 million
New Supply Projects: $623 thousand

Assumptions and Criteria

The CIP is developed based on the District’s Water Facilities Master Plan incorporating historical data, growth, developers’ input, SANDAG projections, and long-term economic outlook.

District staff developed the Master Plan using several major assumptions and design criteria including:

  1. Utilizing historical water demands for each land use type in the District to calculate future demands.
  2. Using maximum day peaking factors that vary with demand level.
  3. Utilizing land use as planned by the City of Chula Vista.
  4. Providing 10 days of emergency water supply through a maximum of five days in covered reservoirs and a minimum of five days from interconnections with adjacent agencies.
  5. Inclusion of emergency operational storage to meet the five-day covered storage requirement into the 10-day outage supply requirement.

CIP Justification

The justification for each project is determined by whether it is required due to growth (Expansion), new water sources (New Supply), improvements or upgrades (Betterment), or to replace an existing asset (Replacement). As these projects are completed and placed into service, there may be an impact on the Operating Budget by increasing costs in the areas of maintenance, energy, or chemicals.

The CIP projects are identified and are prioritized based on the following criteria:

  1. Safety, restoration of service, immediate obligation, Board directed, or critical system need.
  2. System upgrades or requirements to maintain system reliability in the next few fiscal years.
  3. Need to meet the future growth of the system.
  4. Project requirement may be reduced in capacity or may have low probability of need in the future.

The following are the four categories of CIP projects:

Expansion: Facilities required to support new or future users are funded from capacity fees or user rates.
Betterment: Facilities required because of inadequate capacity or new requirements that benefit existing users are funded from availability, betterment fees, or rates.
Replacement: Facilities required to renew or replace existing facilities that have deteriorated or have exceeded their useful life are funded from user rates.
New Water Supply: Facilities required to support new sources of water are funded from new supply fees or user rates.

 

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