HomeMy WebLinkAboutMonterey One Water - Public Financial ReportFor the Fiscal Year Ended June 30, 2021
Monterey County, California
POPULAR ANNUAL FINANCIAL REPORTPOPULAR ANNUAL FINANCIAL REPORT
Table of Contents
Board / What We Do ......................................... 3
Demographics .................................................... 4
History / Entity Description ................................ 5
Economic Profile ................................................ 7
Achievements ..................................................... 8
Financial Summary ............................................. 9
Ten Year Forecast ............................................. 17
Glossary ............................................................ 18
Mission and Vision
Mission: To provide safe, resilient solutions for
our community and environment
Vision: To be an agile and innovative industry
leader of water solutions
Strategic Goals
Service: To focus on customers / outreach
Stability: To develop good financial plans
Compliance: To meet all regulatory compliance
Skilled Staff: To attract, develop & retain staff
Optimize: To optimize use of resources
Core Values
Collaboration: To value and seek diverse input
Integrity: To be guided by strong ethics
Respect: To care about M1W and others
Transparency: To be honest, complete & timely
Executive Team
General Manager: Paul A. Sciuto
Assistant General Manager: Tamsen McNarie
Chief Financial Officer: Fred Marsh
Director Employee Services: Leara Sampson
Director External Affairs: Mike McCullough
Executive Assistant: Chayito Ibarra
Overview Welcome Message
Monterey One Water
(M1W) presents its Popular
Annual Financial Report
(PAFR) for the Fiscal Year
ended June 30th.
The PAFR is designed to
present M1W’s financial
condition in a concise, easy
to read format for all users.
Summary of Annual Report
This report summarizes the
Annual Comprehensive Financial
Report (ACFR), containing more
detailed financial information.
Certain disclosures required by
generally accepted accounting
principles (GAAP) are omitted.
Basis of Reporting / Audit Opinion
M1W reports its activities as an
enterprise fund using the
accrual method of accounting
similar to a private business.
Revenues and expenses are
realized as earned and incurred.
M1W has received a “clean”
unmodified audit opinion for its
Annual Report (ACFR), reflecting
its good accounting practices.
Social Media
For M1W’s PAFR or Annual Report (ACFR), go to:
Website: montereyonewater.org
Twitter: @monterey1water
Facebook: montereyonewater
M1W 20-21 PAFR - Page 2
Mary Ann Carbone, Chair
Sand City
Mayor
Thomas Moore, Vice Chair
Marina Coast Water District
President
Ron Stefani
Castroville CSD
Committee Member
Christie Cromeenes
City of Salinas
Councilmember
Scott Donaldson
City of Del Rey Oaks
Councilmember
Linda Grier
Boronda Sanitation District
Committee Member
Jason Campbell
City of Seaside
Councilmember
John M. Phillips
County of Monterey
Supervisor
Nick Smith
City of Pacific Grove
Councilmember
Tyller Williamson
City of Monterey
Council Member
Board of Directors What We Do
Wastewater Treatment
We collect used water that
is flushed down toilets or
runs down sinks, shower
drains, and clothes
washers, then treat it to
high standards before
either discharging it to the
ocean or reusing it as
recycled water.
Energy from Biosolids
We collect biosolids from
wastewater, digest the
solids and generate
biogas used to make
electricity for the plant.
Wastewater Reuse
We treat and disinfect
wastewater to very high
quality levels, then
distribute that water for
irrigation use in
agriculture and as an
additional source of
water for the area.
Program Outreach
We conduct outreach
programs on pollution
prevention, maintaining
a healthy sewer system,
and treatment processes
for wastewater and
recycled water, which
includes plant tours.
M1W 20-21 PAFR - Page 3
Transit / Water Sources
Monterey County was established in 1850 and
connects to the State by Highways 101 and 1
and to the Central Valley via Highways 156 and
198. Locally, Highway 68 connects Salinas to
the Monterey Peninsula. Amtrak, Monterey
Salinas Transit (MST) and Monterey Regional
Airport (MRY) serve the area.
The area relies solely upon its local water
supplies and lacks state or federal water
resources.
Key Geographic Statistics
99 miles of coastline
120 miles (2 hrs) south of San Francisco
345 miles (5 hrs) north of Los Angeles
3,381 square miles (16th largest in State)
Key Population Statistics
Median Age of County / State: 34 / 36
Population of Service Area: 262,000
Population of County / Ranking in State: 437,000 / 21st
Change County / State Population Last 10 years: 0.5% on Average Annually
Largest Segments of County / State Population: Whites and Hispanics / Ages 0-39 (over 50%)
29%
29%
24%
18%
Age Groups
0-19 20-39 40-59 60+
59%30%
8%3%
Ethnicity
Hispanic White
Asian Other
31.0%19.5%26.2%14.7%8.6%
No Degree High School Some College Bachelor's Degree Post Graduate Degree
Level of Education
Monterey One
Water
Service Area
M1W 20-21 PAFR - Page 4
History
Before the establishment of M1W, every
community in the Monterey Bay area had its own
wastewater treatment plant and most discharged
treated wastewater into the Monterey Bay, in some
cases as little as 300 feet offshore from the bay.
The Federal Clean Water Act of 1972 effectively
stopped that practice and increased treatment
standards. In November of 1972, M1W was formed
by Monterey, Pacific Grove and Seaside Sanitation Districts. Over the years, other northern
Monterey County entities eventually became participants in the regional system. During the
early 1970s, the County's groundwater supply began to deteriorate because of extensive
withdrawal of groundwater for agriculture. This overdraft led to increasing seawater intrusion,
which threatens the agricultural industry and the drinking water supply for Salinas.
Mid-1970s – Mid 1980s
A group of community leaders began discussing the
idea of recycling wastewater. The objective was to
retard the advancement of seawater intrusion by
supplying irrigation water to farmland in the
northern Salinas Valley. This would greatly reduce
the draw of water from the underground aquifers.
In 1983, several construction projects were
completed utilizing the former coastal treatment
plants as pumping stations, connected to one of three
interceptor pipelines, and a 60-inch outfall pipeline extending two miles into the Monterey Bay.
Offering economies of scale and expertise, M1W proposed to operate one regional plant by
replacing eight in Northern Monterey County.
Late 1980s - Present
The RTP was constructed two miles north of the City
of Marina, near the farmland experiencing the
worst seawater intrusion. In February 1990, the RTP
began operation with a design capacity to treat up
to 29.6 Million Gallons per Day (MGD). The former
wastewater treatment plants were subsequently
decommissioned. The pumping stations remained
to pump wastewater to the new treatment plant.
In 2017, the Agency changed its name to Monterey One Water to reflect the diversity of the
services that it provides, including wastewater treatment, reclamation of water for agriculture
and the beginning of operations of Pure Water Monterey, which provides an additional water
resource for the Monterey area and reduces its reliance on the pumping of ground water.
Construction on an expansion of the Pure Water Monterey project is scheduled to begin in 2022.
1972
Formed Agency
1980
Began
Wastewater
Reclamation
Study
1989
Most Coastal
Communities
Become
Members
1990
Plant Begins
Operations
1998
Produced
recycled water
for area (CSIP)
growers
2017
Changed Name
to Monterey
One Water
2020
Pure Water
Monterey
Began
Operations
TIMELINE
Colton Hall Monterey
M1W 20-21 PAFR - Page 5
Entity Description
Monterey One Water (M1W) is a Joint Powers
Authority (JPA) governed by a ten-member
Board of Directors. Each participating entity
appoints a member to the Board, usually an
elected official of the entity. M1W has no
separate component units.
Each January, a three-member committee is
formed to nominate a new Chair and Vice Chair, with selections made at the February Board
meeting. Board members may serve as a Chair or Vice-Chair for no more than two
consecutive and complete one-year terms. The M1W Board meets monthly most of the year,
with members serving on the Budget and Personnel Committee as well as the Recycled Water
Committee, which often meet monthly as well.
Services Provided
M1W provides wastewater treatment services
to approximately 262,000 people, with over 16
million gallons of water (MGD) treated daily.
M1W serves the Salinas Valley, one of the most
productive agricultural regions in California;
and the Monterey Peninsula, which has a
significant hospitality and service industry.
M1W is a leader in water recycling efforts.
Working with the Monterey County Water
Resources Agency (MCWRA), M1W oversees the Salinas Valley Reclamation Project (SVRP),
the Castroville Seawater Intrusion Project (CSIP), and the Salinas River Diversion Facility
(SRDF) to provide recycled water for agriculture for Monterey County.
Staffing and Infrastructure
M1W employees are located at the Regional
Treatment Plant (RTP) in Marina and the
Administrative Offices in Monterey. M1W staff
assists members with city pump station
maintenance, meeting regulatory requirements
(including for stormwater) and sewer spill
prevention. M1W also provides sewer billing and
customer service for its members and other
entities in Monterey County.
The RTP represents an investment of approximately $150 million for the pump stations,
pipelines, and 60-inch diameter outfall line and over $100 million for the RTP. RTP operation
and maintenance costs are funded by property owners through bi-monthly billings. Today,
M1W operates the RTP and maintains 42 pump stations, 35 pressure-vacuum stations and 35
miles of pipeline from each pump station to the RTP, and a 60-inch outfall pipeline.
KEY ITEMS
42 Pump
Stations
Maintained
35 Miles of
Pipeline
Maintained
16 Million
Gallons
per day of
water
treated
M1W 20-21 PAFR - Page 6
Economic Profile 201
The majority of all revenues are provided from wastewater
user fees (excluding reimbursement and one-time grant
revenues). The top ten users were less than 10% of all user
fees. This small proportion makes M1W’s fiscal condition less
dependent on the operations of a single user.
Due to the fiscal impacts resulting from the COVID-19 virus,
Monterey County saw in 2020 a dramatic increase in its
unemployment rate, which is improving as the hotels and
restaurants are reopening with the lifting of the shelter in
place orders from the County and State.
Cultural Attractions and Events
The economy has benefited from many special events, such as
the Beach Concours D’Elegance, Monterey Classic Car Week
and Jazz Festival, as well as the area’s many golf courses,
wineries, restaurants and social activities, including:
Fisherman’s Wharf Cannery Row
Laguna Seca Raceway Pebble Beach Golf Links
Monterey Bay Aquarium National Steinbeck Center
Major employers Include Salinas Valley Memorial Healthcare,
US Defense Department, Valley Harvesting, Pebble Beach
Company, Middlebury Institute and County of Monterey.
Employment
Monterey County (Salinas MSA) employs over 200,000
employees in multiple industries. Agriculture employs over a
significant portion, with Monterey County producing roughly
half of all lettuce grown in the United States. Additional key
crops include strawberries and artichokes. Other key
industries in the County include:
Government Leisure and Hospitality
Transportation Professional Services
Manufacturing Educational/Health Services
Key Housing and Economic Statistics
Millions of people visit and contribute to the local economy.
Key factors for Monterey County are shown below:
Median Income: $60K Median Value: $429K
Median Price: $517K Median Rent: $1.4K
Average Wage: $55K Housing Units: 140K
% Owner Occupied: 51% Persons Per House: 3.3
Growth Rate: 0.5% Average Age: 35
U.S. Economic
Statistics
(thru 6/21)
M1W 20-21 PAFR - Page 7
Anticipated Departmental Achievements
M1W strived to make progress on a number of significant goals established in this year’s budget, including the following
which address all of M1W’s strategic goals listed below. The CSIP, SRDF and SVRP activities are funded from
reimbursements from MCWRA, Pure Water Monterey from sales of potable water and others by Wastewater revenues:
M1W Strategic Goals
Category Anticipated Accomplishment A B C D E
Annual Report / Budget Issue meeting award standards of GFOA
Capital Plan (CIP) Made substantial progress on prior year CIP program
Compliance Conduct testing to ensure employee safety
CSIP – Source Waters Optimize use ensuring success of program
Digester Gas Increase use to decrease natural gas consumption
Document Retention Continue with document imaging
Employee Culture Implement results from organizational survey
Grants Lead research and applications for grant funding
Infrastructure Design upgrade of the gravity thickener
Leadership Increase skill set of RTP Management
Plant Maintenance Do a valve exercise program increasing reliability
Pollution Prevention Provide services for members
Pure Water Monterey Become experts in all operations
SRDF Update Supervisory Control and Data Acquisition (SCADA)
SVRP - Infrastructure Upgrade chlorine system infrastructure to increase safety
Training Cross train all maintenance mechanics
Utilities Services Document controllers (PLCs) to increase asset reliability
Virtual Meetings Establish best practices
Water Production Produce over 2,800 acre feet of potable water
Workers Compensation Continued to keep the cost below the industry average
Planning
Ensure Financial
Stability & Effective
Long-Term Planning
Staffing
Attract, Develop
and Retain Skilled
& Motivated Staff
Resources
Optimize the
Effective Use
of All Resources
A
Compliance
Meet All
Regulatory
Compliance
Service
Be Exemplary
with Customers
& in Outreach
B C D E
M1W 20-21 PAFR - Page 8
Government-Wide Financial Statements
18-19 19-20 20-21 Change % Change
Cash and Cash Equivalents 23.3$ 12.3$ 24.9$ 12.6$
Restricted - Cash and Investments 2.8 7.4 7.8 0.4
Accounts Receivable, Net 3.6 3.4 3.3 (0.1)
Accounts Receivable, Restricted 11.2 10.5 3.8 (6.7)
Inventory and Prepaid Items 0.5 0.5 0.6 0.1
Total Current Assets 41.4 34.1 40.4 6.3 18%
Salinas Reclamation Project Receivable 10.3 10.8 10.2 (0.6)
Capital Assets, Net 193.0 213.1 222.2 9.1
Total Non-Current Assets 203.3 223.9 232.4 8.5 4%
Total Assets 244.7 258.0 272.8 14.8
Deferred Outflows of Resources 6.4 6.5 6.1 (0.4)
Total Assets and Deferred Outflows 251.1$ 264.5$ 278.9$ 14.4$
Total Current Liabilities 28.8$ 23.7$ 19.2$ (4.5) -19%
Net Pension Liability 21.5 23.8 25.9 2.1
Bonds Payable 11.4 9.6 8.0 (1.6)
Loans Payable 95.6 104.9 105.7 0.8
Other Long Term Liabilities 0.7 0.6 0.7 0.1
Total Non-Current Liabilities 129.2 138.9 140.3 1.4 1%
Total Liabilities 158.0 162.6 159.5 (3.1)
Deferred Inflows of Resources 1.2 2.3 1.6 (0.7)
Net Investment in Capital Assets 90.1 109.1 118.2 9.1
Restricted for Water Reclamation 3.7 3.8 3.8 -
Restricted for Debt Covenants 0.9 0.9 5.2 4.3
Unrestricted (2.8) (14.2) (9.4) 4.8
Total Net Position 91.9 99.6 117.8 18.2
Grand Totals 251.1$ 264.5$ 278.9$ 14.4$
Condensed Statement of Net Position (In Millions)
The increase in assets, liabilities and net position in the Statement of Net Position is due to construction of
Pure Water Monterey as well as revenue and expense variances noted elsewhere in this document. The
unrestricted portion of Net Position consists of $16.9 million of operating and non-spendable reserves, offset
by pension related liabilities, inflows and outflows totaling $26.3 million.
M1W 20-21 PAFR - Page 9
Government-Wide Financial Statements (Continued)
The Statement of Changes in Net Position illustrates how M1W’s net position has changed during the fiscal year and
serves as an indicator of whether the Agency’s financial position is improving over time or deteriorating.
See other pages of this document for an analysis of revenues, expenses, reserves, capital assets, long term debt
and cash and investments, as well as definitions of key terms used.
18-19 19-20 20-21 Change % Change
Operating Revenue 34.2$ 39.3$ 49.8$ 10.5$
Non-Operating Revenue 0.9 0.9 2.1 1.2
Total Revenues 35.1 40.2 51.9 11.7 29%
Operating Expenses 33.0 39.4 41.9 2.5
Non-Operating Expenses 1.9 3.0 2.3 (0.7)
Total Expenses 34.9 42.4 44.2 1.8 4%
Operating Income Adjustments 2.3 3.0 2.3 (0.7)
Net Gain/(Loss) Before Contributions 2.5 0.8 10.0 9.2
Capital Contributions 14.5 6.9 6.4 (0.5)
Change in Net Position 17.0 7.7 16.4 8.7
Net Position, Beginning (restated)74.9 91.9 101.4 9.5
Net Position, End of Year 91.9$ 99.6$ 117.8$ 18.2$
Statement of Revenues, Expenses, Changes in Net Position (Millions)
18-19 19-20 20-21 Change % Change
Cash Flows From:
Operating Activities 5.0$ 8.9$ 14.4$ 5.5$
Non-Capital Financing Activities (1.3) (0.6) 9.7 10.3
Capital/Related Financing Activities 7.1 (14.9) (11.3) 3.6
Investing Activities 0.2 0.3 0.1 (0.2)
Net Change Cash and Equivalents 11.0 (6.3) 12.9 19.2
Cash and Equivalents, Beginning 15.1 26.1 19.8 (6.3)
Cash and Equivalents, End of Year 26.1$ 19.8$ 32.7$ 12.9 65%
Allocation of Cash and Investments
Investments LAIF / County Pool 24.6$ 14.2$ 29.1$ 14.9$
Bank Deposits with Union Bank 1.5 5.6 3.6 (2.0)
Total Cash and Equivalents 26.1$ 19.8$ 32.7$ 12.9
Statement of Cash Flows (Millions)
M1W 20-21 PAFR - Page 10
Revenues and Capital Contributions
Wastewater User Fees:
Represent charges to residential and non-residential customers for treatment and operations
Reclamation / Pure Water Monterey (PWM):
Revenues from recycled water sales for CSIP, SVRP, SRDF and PWM, including sales to Monterey Peninsula
Water Management District (MPWMD) and Monterey County Water Resources Agency (MCWRA)
Contributions:
Represent grants and development fees used to pay for capital items and projects, including PWM
Operating Revenues
Residential User Fees: ↑ Due to significant rate increases implemented during the fiscal year
Other User Fees: ↑ Due to rate increases for commercial and industrial charges for service
Reclamation Fees / Other: ↑ Due to a full year of PWM operations and MCWRA reimbursements
Non-Operating Revenues
Capital Contributions: ↓ Due to additional grants received for PWM in the prior fiscal year
Non-Operating Revenues: Represent interest earnings and other one-time revenues
Residential Fees $25.5 million –
52% of Operating Revenues (OR)
Other Wastewater Fees
$9.8 million – 20% of OR
Reclamation / PWM / Other
$14.5 million – 29% of OR
18-19 19-20 20-21 Change % Change
Wastewater User Fees - Residential Customers 20.2$ 22.1$ 25.5$ 3.4$
Wastewater User Fees - Others 8.1 8.9 9.8 0.9
Reclamation Operations Reimbursements 5.2 5.7 6.8 1.1
Pure Water Monterey Fees 1.6 6.8 5.2
Other Charges for Services 0.7 0.9 0.9 -
Total Operating Revenues 34.2$ 39.2$ 49.8$ 10.6$ 27%
Non-Operating Revenues 0.9$ 0.9$ 2.1$ 1.2$
Capital Contributions 14.5$ 6.9$ 6.4$ (0.5)$ -7%
Total Revenues (In Millions)
M1W 20-21 PAFR - Page 11
Expenses
Variances in expenses by activity are discussed below:
Administration / Non Departmental – The decrease was due to a one-time charge for an expected claim
payout in the prior year, which was substantially reduced in the subsequent year.
Plant Operations – The decrease was due to several unexpected vacancies and retirements that occurred
during the year, partially offset by higher costs for chemicals, maintenance and professional services.
Reclamation – The increase was due primarily to higher costs for chemicals, utilities, maintenance and other
professional and contract services.
Pure Water Monterey – The increase was related due to the increase of production of portable water, higher
costs for chemicals, utilities and contract services and the running of operations for a full year.
Depreciation – The increase was due to the conversion of a substantial portion of infrastructure for Pure
Water Monterey from Construction in Progress to depreciable capital assets.
44
44
A
Admin / Non Dept
$7.9 million - 19%
Reclamation/PWM
$9.9 million - 24%
Depreciation
$7.3 million - 17%
Plant Operations
$16.8 million - 40%
18-19 19-20 20-21
Actual Actual Actual Change Trend
Administration / Non Departmental 5.0$ 9.1$ 7.9$ (1.2)$
Plant Operations / Maintenance 17.2 19.1 16.8 (2.3)
Reclamation 5.5 4.8 5.5 0.7
Pure Water Monterey 0.9 4.4 3.5
Depreciation Expense 5.3 5.5 7.3 1.8
Total Operating Expenses 33.0$ 39.4$ 41.9$ 2.5$ 6%
Operating Expenses (In Millions)
M1W 20-21 PAFR - Page 12
Cash and Investments
Below are key statistics through the end of the fiscal year:
Item Amount
Unrestricted Cash and Investments $ 24.9 million
Restricted Cash and Investments 7.8 million
Total $ 32.7 million
Net Change for Fiscal Year $12.9 million
Rate of Return on LAIF / County Pool 0.33% / 0.69%
Average Days to Maturity 220 / 539
% of Investments in LAIF / County Pool 90% / 10%
The Agency has a $15 million line of credit, of which none has been drawn down through June and which
expires in April 2022. The change in cash and investments is due to the rate increases that were implemented
during the year and savings from staffing vacancies. M1W’s investments comply with its current investment
policy as adopted by its Board. The policy emphasizes safety and liquidity for its investments over yield.
Investment Policy Summary and Compliance
The following provides a summary of M1W’s investment policy, which
provides guidelines that Agency staff follows in placing investments and
was developed in accordance with standards of state and national
organizations. Debt covenants guide investment of bond proceeds.
Investment Type
Maximum % or $
Minimum
Required Rating
Maximum
Maturity
Agency in
Compliance?
Demand Deposits None None 5 years Yes
Federal Securities None N/A 5 years None Held
Money Market
Funds
CAMP/CalTrust - 20% AAA N/A Yes
Commercial Paper 20% (10% with one firm) A1/P1 270 days None Held
CDs 10% / 30% (10% with one bank) A 5 years None Held
LAIF $75 million per account N/A N/A Yes
State / Local
Agency Debt Issues
25% AA (except
Agency’s bonds)
5 years None Held
County Pool 100% None N/A Yes
M1W 20-21 PAFR - Page 13
Capital Assets
A summary for the fiscal year is below and in Note 4 of
the Annual Report. Assets over $5k with useful lives >
one year are capitalized at cost and depreciated over
their useful lives. The increase in depreciable assets is
mostly for addition of the completed PWM facilities
and reflect a full year of depreciation of the facilities.
Replacement and major maintenance will be required
in the next 10-20 years, as accounted for in the
Agency’s capital and asset management programs.
Major Capital Projects (Millions)Fiscal YTD Total
Pure Water Monterey 5.4$ 131.7$
Salinas Storm Water Diversion 1.8 8.2
Gravity Thickener Rehabilitation 1.6 1.6
Low Pressure Digester Gas System 0.7 1.9
Cogen Circuit Breakers 0.3 0.3
Plant SCADA Upgrades 0.2 0.4
Pump Station Upgrades 0.1 0.6
Headworks Bypass Valves 0.1 0.4
% Depreciated 18-19 19-20 20-21 Change % Change
Land and Easements N/A 3.7$ 3.7$ 3.7$ -$
Construction in Progress (CIP)N/A 114.6 134.0 15.8 (118.2) -88%
Total Non-Depreciable Assets N/A 118.3 137.7 19.5 (118.2)
Structures/Improvements 41%107.5 108.9 186.8 77.9 72%
Wastewater System 53%50.1 51.4 59.5 8.1 16%
Equipment 54%90.1 92.8 140.4 47.6 51%
Total Depreciable Assets 48%247.7 253.1 386.7 133.6
Accumulated depreciation (173.0) (177.7) (184.0) (6.3) 4%
Total Capital Assets, Net 193.0$ 213.1$ 222.2$ 9.1$ 4%
Capital Assets (In Millions)
Future
Depreciation 18-19 19-20 Additions
Transfers /
Deletions 20-21
Wastewater Infrastructure 0.3$ 7.2$ 4.2$ 2.3$ 6.5$
Pure Water Monterey (PWM)0.1 103.9 126.3 5.4 (126.0) 5.7
Brine Desalination 0.1 2.7 2.9 2.9
Other Capital Projects 0.04 0.8 0.6 0.1 0.7
Total Construction in Progress 0.5$ 114.6$ 134.0$ 7.8$ (126.0)$ 15.8$
Construction in Progress (In Millions)
M1W 20-21 PAFR - Page 14
Debt Obligations
A summary of long-term debt is provided below and in
Notes 6-10 of the Annual Report. Debt increased for
M1W due to State Revolving Fund loans received to
finance the construction of Pure Water Monterey and an
increase in its net pension liability (the latter discussed in
more detail on the following page), partially offset by
debt service paid in the fiscal year.
The Agency currently has an A+ rating with Moody’s and an Aa3 rating with Standard and Poors (S&P).
Maintenance of a good credit rating is essential for the Agency to continue to be able to issue debt for future
projects and to minimize its interest costs on existing and future debt issues.
Trends
10 Year Change in Debt Coverage: ↑40%
Debt per Ratepayer: $1,859
Debt as % of Per Capita Income 0.46%
10 Year Change Debt Service: ↑$5.6 million
10 Year Change Long Term Debt: ↑$76 million
Summary Descriptions of Non CalPERS Debt Obligations
Line of Credit: Issued in 2020 to provide bridge financing as needed for Pure Water Monterey.
Pension Bonds: Used to retire the Agency’s “Side-Fund” with CalPERS in 2012, resulting from the
implementation of risk pooling of groups of smaller agencies by CalPERS.
Revenue Bonds: Used in 2013 to refund the outstanding portion of M1W’s 2003 and 2006 Revenue Bonds
State SRF Loans: Low Interest Loans offered by the State through its State Revolving Fund with
corresponding grants to fund Pure Water Monterey capital projects
USBR Loan: A loan of the United States Bureau of Reclamation (USBR) to fund improvements in the
Agency’s reclamation programs in partnership with the Monterey County Water
Resources Agency
Obligation Interest Rate Matures
Principal
2021-22
Interest
2021-22
Future
Principal
Future
Interest
Line of Credit LIBOR+0.35%4/2022 TBD TBD None None
Pension Bonds 4.18%2026 0.7 0.2 3.8 0.5$
Revenue Bonds 2.14%2026 1.0 0.1 4.1 0.2
USBR Loan 0-7.625%2036 0.6 0.4 9.6 4.5
State SRF Loans 1.00%2050 3.0 1.0 96.2 14.1
Net Pension Liability 7.05%N/A N/A N/A 25.9 21.3
Totals 5.3$ 1.7$ 139.6$ 40.6
Non-Current Liabilities - Current and Long-Term Portions (In Millions)
M1W 20-21 PAFR - Page 15
Pension Liability
The net pension liability of $29 million, including $4 million
of M1W pension bonds, is based on CalPERS most recent
actuarial. The increase in the liability is due to the CalPERS
rate of return falling below the assumed rate of return of
6.8% in prior years. See Note 12 in the Annual Report, the
Required Supplementary Information schedule (RSI) in the
Basic Financial Statements and CalPERS for more actuarial
information on M1W’s pension liability and the glossary for
an explanation of key terms on this page.
Seven Year Trend Information
Payments as % of Covered Payroll: 28%
Change in Funded Status: ↓ 5%
Change in Net Pension Liability: ↑$14 million
Change in Actuarial Contribution: ↑$1.5 million
Actuarial Analysis of 3 at 60 Plan
Unfunded Termination Liability at 2.5%: $105 Million
Liability Volatility Ratio: 22.2 (high)
Savings prepayment UAL annual amount $55,308
The 3 @ 60 plan has high volatility due to its low ratio of
active to inactive employees in the plan. The termination
liabilities represent estimates by CalPERS should M1W
terminate its pension plans with CalPERS.
Contacting the Agency’s Financial Management
The Annual Report is designed to provide a general overview of M1W’s finances. For more information about
M1W or to see the report or budget online, visit http://montereyonewater.org/173/Financials. Requests for
additional financial information not otherwise included as part of M1W’s budget or Annual Report should be
addressed to: Monterey One Water, Chief Financial Officer, 5 Harris Court, Building D, Monterey, CA 93940.
CalPERS Actuarial Information
Pension Plan
Unfunded
Liability
with Bonds
Payoff
Period in
Years
Net
Employee
Normal
Cost Rate
Funded
Status
CalPERS
Net
Employer
Normal
Cost Rate
Payment on
Unfunded
Liability
Employees
Active /
Retirees
3% at 60 $29 million 24 9.093% 73% 14.352% $1.7 million 41 87
2% at 55 < $1 million 20 8.101% 92% 9.383% $6,977 8 0
2% at 62 (PEPRA) < $1 million 20 6.961% 91% 7.521% $10,364 40 0
M1W 20-21 PAFR - Page 16
Ten Year Forecast – Wastewater Fund
The chart below summarizes M1W’s projected wastewater fund expenses over the next ten years. The totals
on the top of each column of the graph below represent projected revenues each year, including projected
annual additions to reserves. The forecast includes the following assumptions:
Operating Expenses
Revenues
Incorporates the rate increases approved by the board through FY 25-26
and assumes rate increases of approximately 9% annually thru FY 30-31.
Wages
Assumes some additional staffing to accommodate growth and salary
adjustments based upon estimated increases in employees’ MOUs.
Health and Pensions
Health increases of 10% with a 50% cost share by employees
Pension includes estimated contribution rates from CalPERS actuarials.
Other Operating Expenses
Increases of 3-10% annually on non-personnel expenses representing
estimated increases, with some rising faster than the rate of inflation.
Other Expenses and Reserves
Debt Service
Incorporates debt service on existing debt through their maturities.
Assumes no further debt, using pay as you go for future capital programs.
Capital Program
The 10 Year program has been included as part of the long-term forecast,
assuming that projects will be funded out of future projected revenues.
Reserves / Pension Trust Fund
Reserves funds for its Operations and CIP (50% of Operating Expenses, 20%
of 10 year CIP per policy) within 10 years. Also, starting in FY 26-27, make
$2.4 million of annual payments towards its pension trust fund, i.e., the
debt service savings from the retirements of the 2012 and 2013 bonds.
M1W 20-21 PAFR - Page 17
Monterey One Water
Glossary (with blue weblinks and references to Notes in ACFR)
Statement of Net Position
Current Assets – Cash/Assets
expected to be converted into cash
in one year (Note 2)
Non-Current Assets – Includes land and capital assets.
These items provide services to others and are not
available for future spending (Notes 3-4)
Current Liabilities – Represents liabilities expected to be
paid with cash within one year (Notes 6-10)
Non-current Liabilities – Includes
pension, compensated absences and
bonded debt (Notes 6-10,12)
Deferred Outflows / Inflows of Resources –
Contributions after the pension measurement date
recognized as expenses in future periods (Note 5)
Net Investment Capital Assets -
Represents capital assets net of
accumulated depreciation and
debt (Note 11)
Restricted Net Position – Subject to externally imposed
restrictions, not otherwise available (Note 11)
Unrestricted Net Position – Operating Reserves less the
pension obligation (Note 11)
Statement of Cash Flows
Cash and Cash Equivalents – All liquid
investments with a maturity <= three months
Cash Flows from Operating Activities – All cash received
or spent related to normal operations
Cash Flows from Non-Capital Financing Activities –
Include non-operating revenues, insurance proceeds,
rebates received and assessments paid
Cash Flows from Capital and Related Financing –
Cash related to construction of infrastructure
Cash Flows from Investing Activities – Related to
investing cash reserves
Statement of Changes in Net Position
Operating Revenues – They include
fees charged for wastewater
treatment service. All user fee
revenue is recognized when the related services are
provided, and billings are peformed bi-monthly.
Other operating revenues include fees charged for
permits and site inspections, as well as administration of
programs for local agencies.
Operating Expenses – These represent expenses
incurred through normal business operations. They
include personnel, supplies, utilities and depreciation.
Depreciation – An expense based on
the expectation that an asset will
gradually decline in value or have to
be replaced. The initial cost is spread
over its useful life.
Non-Operating Revenues & Expenses – Derived from
activities not related to wastewater operations, e.g.,
interest earnings and costs of borrowing
Capital Contributions – Represent
fees paid by each new sewer user
or from expansion of existing
projects to fund capital projects
Pension Terms
Actuarial Assumptions – Demographic
and economic assumptions made
about certain events, such as mortality
and retirement age that affect costs.
Funded Status - A measure of how well funded a plan is
with respect to assets versus accrued liabilities.
PEPRA – Relates to new members that become a
member of CalPERS on or after January 1, 2013
Unfunded Accrued Liability (UAL) - When a
plan’s assets are less than its liabilities.
Amortization Period – The number of years required to
pay off the unfunded accrued pension liability.
M1W 20-21 PAFR - Page 18