HomeMy WebLinkAbout2007-11-28 ORANGE COUNTY SANITATION DISTRICT
November 20, 2007
phone:
(714)952-2411 NOTICE OF MEETING
fox:
[714)BB2d2b6
vrww.oced...
realladdress: BOARD OF DIRECTORS
Fountain Valley'CA ORANGE COUNTY SANITATION DISTRICT
52726-B127
seven.eddran:
10844 Ellis Avenue
Fountain Valley.GA WEDNESDAY, November 28, 2007 — 6:30 P.M.
B2708-701B
Member
Agenda DISTRICT'S ADMINISTRATIVE OFFICES
0 10844 Ellis Avenue
cities Fountain Valley, California 92708
Anaheim
Brae
Buena Perk
Cypress
Faunrain Valley
Fullarten The Regular Meeting of the Board of Directors of the Orange County Sanitation
Garden craw District will be held at the above location, time and date.
Hundngtnn Beech
IMna
Le Habra
Le Palma
Los Alamitos
Newport Beach
Orange
Rotorua CIO of the Board
Santa Ana /
Seal Beach
Scanlan
Tustin
Ville Perk
Varies Linde Operations Committee -Wednesday, December 5,2007 at 5:00 p.m.
County of orange
GWRS Steering Committee -Monday, December 10,2007 at 5:30 p.m. @ OCWD
Sanitary Districts Administration Committee -Wednesday, December 12,2007 at 5:00 p.m.
casts Me.
nmdmey city Steering Committee -Wednesday, December 19,2007 at 5:30 p.m.
Water Districts
Irvine Pareh
To maintain world class leadership in wastewater and water resource management.
ST
BOARD MEETING DATES
December 19, 2007•
January 23, 2008
February 27, 2008
March 26, 2008
April 23, 2008
May 28, 2008
June 25, 2008
July 23, 2008
August 27, 2008
September 17, 2008a
October 22, 2008
November 19, 2008
December 17, 2008•
*Meetings are being held on the third Wednesday of the month
H:\depDgmo\15D\1511BS1Agenda12007 Mee0ng NDImeMN11.2.doc
ROLL CALL
BOARD OF DIRECTORS
ORANGE COUNTY SANITATION DISTRICT
MEETING DATE & TIME: 11/28/07 / 34 (%
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SIGN-IN SHEET
ORANGE COUNTY SANITATION DISTRICT
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Distributed at
it 09 Board Meeting
MINUTES OF STEERING COMMITTEE MEETING
Orange County Sanitation District
Wednesday, October 24, 2007, at 5:00 p.m.
A meeting of the Steering Committee of the Orange County Sanitation District was
held on Wednesday, October 24, 2007 at 5:00 p.m., in the District's Administrative
Office.
(1) A quorum was declared present, as follows:
STEERING COMMITTEE MEMBERS: STAFF PRESENT:
Directors Present: Jim Ruth, General Manager
Jim Ferryman, Chair Bob Ghirelli, Assistant General Manager
Doug Davert, Vice Chair Nick Arhontes, Director of Operations and
Mark Waldman, Administration Committee Maintenance
Chair Jim Herberg, Director of Engineering
Larry Crandall, Operations Committee Chair Ed Torres, Director of Technical Services
Cathy Green Lorenzo Tyner, Director of Finance and
Phil Luebben Administrative Services
Michael Gold, Legislative Affairs Liaison
OTHERS PRESENT: Penny Kyle, Clerk of the Board
Bradley R. Hogin, General Counsel John Linder
Gino Rapagna Jim Burror
Juanita Skillman
DIRECTORS ABSENT Layne Baroldi
Steve Anderson
(2) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(3) PUBLIC COMMENTS
There were no public comments.
(4) REPORT OF THE COMMITTEE CHAIR
Chair Jim Ferryman reported the workshop held on October 11 was successful in providing
direction to staff to finalize the strategic plan. He noted that additional financing alternatives
would be discussed under Item 8(B).
Minutes of the Steering Committee '.
October24,2007
Page 2
(5) REPORT OF GENERAL MANAGER
Jim Ruth, General Manager, provided an update on the IT Strategic Plan; selection of a
design/build project; SARI Line; legislative advocacy contracts; SAWPA capacity agreement;
and the Purchasing and Sale of Capacity Rights agreement with IRWD.
(6) REPORT OF GENERAL COUNSEL
General Counsel, Brad Hogin, reported on the hearing in Kem County matter. The judge took the
matter under submission, and a ruling is expected soon.
(7) ACTION ITEMS
A. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the
September 26, 2007 Steering Committee meeting.
B. MOVED, SECONDED AND DULY CARRIED: Recommend to the Board of
Directors to: (1)Approve an agreement with Townsend Public Affairs for State
Lobbying Services, Specification No. CS-2007-351 BD, in an amount not to
exceed $7,500 per month, from January 1, 2008 through June 30, 2009,and four
one-year optional renewals; and,
(2)Approve an agreement with ENS Resources,for Federal Lobbying Services,
Specification No CS-2007-352BD, in an amount not to exceed $10,000 per month
and $6,000 per year in reimbursable travel expenses, from January 1, 2008
through June 30, 2009, and four one-year optional renewals.
Director Luebben commended Michael Gold for his efforts and success on his
legislative results.
(8) INFORMATIONAL ITEMS
A. Legislative Affairs Report
A verbal report was not given.
B. Review of Strategic Plan Workshops
An overview of the draft strategic plan and the CIP budget was provided to the
Committee. Staff responded to Directors' questions regarding various projects
and the impacts to a five-year sewer rate program. Staff recommended the
Committee consider a five-year rate increase program of 12%the first year and
10% per year for the remaining four years in order to implement the levels of
service approved at the October 11'^workshop. The Steering Committee
directed staff to proceed with the Strategic Plan and proposed financing plan.
They also requested staff review the numbers again and see if there was a way to
reduce the first year costs to 10%or less.
Minutes of the Steering Committee
October 24,2007
Page 3
C. The agenda items scheduled to be presented to the Board of Directors at the
October 24, 2007 meeting were reviewed.
D. The agenda items scheduled to be reviewed by the Board's working committees
in November were reviewed.
(9) CLOSED SESSION
The Steering Committee convened at 5:58 p.m. in Closed Session, pursuant to Government
Code Section 54956.9(a)to discuss one matter. Confidential Minutes of the Closed Session
held by the Steering Committee have been prepared in accordance with Government Code
Section 54957.2, and are maintained by the Clerk of the Board in the Official Book of
Confidential Minutes of Board and Committee Closed Meetings.
At 6:02 p.m.,the Steering Committee reconvened in regular session.
(10) OTHER BUSINESS. COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
There were none.
(11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND/OR STAFF REPORT
There were none.
(12) CONSIDERATION OF UPCOMING MEETING
The next Steering Committee meeting is scheduled for Wednesday, December 19, 2007 at 5:30 p.m.
(13) ADJOURNMENT
The Chair declared the meeting adjourned at 6:05 p.m.
Submitted by:
Penny M. I e
Clerk of the Board
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MINUTES OF THE REGULAR MEETING OF
THE ADMINISTRATION COMMITTEE
Orange County Sanitation District
Wednesday, November 14, 2007, at 5:00 P.M.
A meeting of the Administration Committee of the Orange County Sanitation District was held on
November 14, 2007, at 5:00 p.m., in the Sanitation District's Administrative Office.
(2) Following the Pledge of Allegiance, a quorum was declared present, as follows:
ADMINISTRATION COMMITTEE STAFF PRESENT:
MEMBERS: Jim Ruth, General Manager
DIRECTORS PRESENT: Bob Ghirelli, Assistant General Manager
Mark Waldman, Chair Lorenzo Tyner, Director of Finance and
Phil Luebben, Vice Chair Administrative Services
Steven Choi Mike White, Controller
Catherine Driscoll (Alt) Jeff Reed, Human Resources& Employee Relations
Jon Dumitru Manager
Rich Freschi Lilia Kovac, Committee Secretary
Darryl Miller Bob Bell
Joy Neugebauer Rich Castillon
Chris Norby Norbert Gaia
Sal Tinajero Bob Gaggle
Jim Winder Paul Loehr
Jim Ferryman, Board Chair Juanita Skillman
Doug Davert, Board Vice Chair Simon Watson
DIRECTORS ABSENT: OTHERS PRESENT:
Bill Dalton Brad Hogin, General Counsel
Ed Soong Public Resources Advisory Group
Jennifer Christian Mayer Hoffman McCann
and Stephen Parker, Mayer Hoffman McCann
Toby Weissert, Carollo Engineers
(3) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(4) PUBLIC COMMENTS Distributed at
i �Board Meeting
There were no public comments.
(5) REPORT OF THE COMMITTEE CHAIR
Chair Waldman did not give a report.
(6) REPORT OF THE GENERAL MANAGER
General Manager, Jim Ruth, did not give a report.
Minutes of the Administration Committee
November 14, 2007
Page 2
(7) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance and Administrative Services, did not give a report.
(8) REPORT OF GENERAL COUNSEL
Brad Hogin, General Counsel, briefly reported the agreement with the Orange County Water
District regarding the GWRS will be reviewed in detail and revised, if necessary, prior to
operating at full capacity. Mr. Hogin also informed the Committee members that agreements
with SAWPA re SARI Line will also be reviewed and updated, if necessary.
(9) CONSENT CALENDAR ITEMS
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same, as follows:
a. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the October 10,2007
meeting of the Administration Committee.
Director Driscoll abstained.
b. ADM07-52 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to 1)Approve Change Order No. 2 to Purchase Order
No. 55952-05,a sole-source agreement, issued to Louis Allen Worldwide
for management and leadership training services,adding four one-year
renewal periods effective January 1, 2008 through December 31,2008,
authorizing $28,800 for this period, and $24,000 for all subsequent
renewal pedods, for a total amount not to exceed $253,815; and,
2)Approve a 5% per year cost escalation.
END OF CONSENT CALENDAR
(10) ACTION ITEMS
a. ADM07-53 MOVED,SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to receive and file: 1)Comprehensive Annual Financial
Report for the year ended June 30,2007, prepared by staff and audited by
Mayer Hoffman McCann, Certified Public Accountants;
2)Report on Compliance and Internal Control for the year ended June 30,
2007;and
3) Independent Accountants' Report on Agreed-Upon Procedures Applied
to Appropriations Limit Worksheets.
Minutes of the Administration Committee
November 14, 2007
Page 3
b. ADM07-54 Director Miller Indicated his concern of seeing only one option to issue the
certificates of participation proposed with a fixed rate, but no information
for issuance with a variable rate and its applicable inferences. A
workshop was proposed to be held to review debt policies.
A substitute motion was made to bring this item back to the Administration
Committee with further information; however,due to critical timing of the
budgeting process,this would cause a delay of three months for COP
issuance. It was then proposed that the following item be sent to the
Board of Directors for consideration along with the requested additional
Information, with no recommendation from the committee:
1)Adopt Resolution No. OCSD- , a Resolution of the Board of Directors
of the Orange County Sanitation District Authorizing the Execution and
Delivery by the District of an Installment Purchase Agreement,a Trust
Agreement, and a Continuing Disclosure Agreement in connection with
the execution and delivery of Orange County Sanitation District
Certificates of Participation, Series 2007B,Authorizing the Execution and
Delivery of such Certificates Evidencing Principal in an Aggregate Amount
of Not to Exceed $300,000,000,Authorizing the Distribution of an Official
Notice Inviting Bids and an Official Statement in Connection with the
Offering and Sale of such Certificates and Authorizing the Execution of
Necessary Documents and Related Actions; and,
2)The Orange County Sanitation District Financing Corporation approves
the documents supporting and authorizing the Certificates of Participation,
Series 2007B in an amount not to exceed $300 million.
C. ADM07-55 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to: 1)Approve a sole source purchase order to IBM
Corporation for the purchase of IBM Maximo Enterprise Asset
Management software for replacement of the Computerized Maintenance
Management System, for a total amount of$592,932; and,
2)Approve a 5% contingency($29,647).
d. AOM07-56 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to: 1)Authorize a renewal to the Master Contract with Xerox,
Inc., for an additional five-year period, December 1, 2007 through
November 30,2012,for a total amount not to exceed $233,000 per year,
and color copies at$.09 per impression;and,
2)Authorize a maximum 10% contingency($23,300)per year.
e. ADM07-57 MOVED, SECONDED AND DULY CARRIED: Approve a sole source
Consultant Services Agreement with Carollo Engineers to complete a
sewer rate study in an amount not to exceed $156,508.
Minutes of the Administration Committee
November 14, 2007
Page 4
f. ADM07-58 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to approve an extension of the Additional Retiree Benefit
Account agreement with Orange County Employees Retirement System,
extending the contract for a period of up to 90 days.
(11) INFORMATIONAL ITEMS
a. ADM07-59 Labor Relations Program Update
Jeff Reed, Manager of Human Resources and Employee Relations, and
Paul Loehr, Employee Relations Supervisor, briefly updated the
committee members on the progress in implementing the Memorandum of
Understanding provisions as ratified by the Board of Directors.
(12) CONVENE INCLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION
54957(b)(1).
There was no closed session.
(13) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
There were none.
(14) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
There were none.
(15) FUTURE MEETING DATES
The next regular Administration Committee meeting is scheduled for December 12, 2007, at
5 p.m.
(16) ADJOURNMENT
The Chair declared the meeting adjourned at 6:30 p.m.
Submitted by:
A—
Lillis Kovac
Committee Secretary
t Distributed at
/Board Meeting
November 26, 2007
MEMORANDUM
TO: Board of Directors
James D. Ruth, General Manager
FROM: Lorenzo Tyner-i;7-.
Director of Finance and Administrative Services
SUBJECT: Certificates of Participation
At the November Administration Committee, staff presented an item requesting
approval to issue $300 million in Certificates of Participation (COPS) as called for in the
District's current cash flow projection. This item Is listed as Board Agenda Item Number
15— Certificates of Participation (COPS), Series 2007E —and is contained in your Board
Agenda materials.
This debt issuance was included in the 2006-07 budget approved in June 2006 and the
2007-08 Budget Update approved in June 2007. Staff first obtained approval to issue
$300 million of fixed rate debt at the September Administration Committee. At that time,
Staff recommended that this $300 million COP debt be Issued as traditional fixed rate
debt in keeping with components of the District's Debt Policy regarding variable debt:
• The maximum level of variable rate obligations incurred shall not exceed the level
of available invested reserves; and
• The District will maintain an overall fixed versus variable rate debt mix allowed for
the District by the Rating Agencies.
Additionally, as the District is projected to issue over$1 billion more in debt in support of
the Capital Improvement Program (CIP), there would be amply opportunity to adjust the
future mix fixed and variable debt.
P
After some discussion, the Administration Committee referred this item to the full Board
without a recommendation.
During the staff presentation to the Administration Committee, some Committee
members had questions regarding this debt issuance, including the appropriate mix of
fixed rate and variable debt and overall debt capacity. The direction from the
Committee was to send the item forward to the full Board without recommendation and
for staff to provide additional information at the Board meeting.
This correspondence includes additional information regarding the District's debt
financing program and the rationale for issuing debt at this time and the selection of
fixed rate debt, and includes an update of the District's Capital Improvement Program
Financing Plan prepared by the District's financial advisor, Public Resources Advisory
Group(PRAG).
If you have any questions or concerns, please feel free to contact me.
a"
Debt Financing Program
Certificates of Participation (COPS)are the District's primary mechanism for financing
capital projects. COPS are repayment obligations based on a lease or installment sale
agreement.
The 2006-07 Budget adopted in June 2006 included the proposed $300 million debt
issuance. The 2007-08 Budget Update adopted in June 2007 also included this debt
issuance to assist with financing of the $334 million in capital outlays scheduled for this
fiscal year.
Due to the magnitude of identified future annual capital and operations and
maintenance expenditures, and the discontinuation of federal and state grant programs,
the Master Plan concluded that it was necessary to utilize debt financing to meet our
obligations.
Debt financing, recommended by the Master Plan, would enable the District to meet
projected construction schedules while achieving the lowest possible user fees, as well
as long-term stability for the user fees.
A Ten-Year Financial Plan is maintained to establish financing parameters regarding the
issuance of debt, the levying of user charges and the funding level for the four-part
reserve structure. The Financial Plan is revised annually to reflect the most current cost
and revenue figures resulting from capital program revisions and operating changes.
The District embarked upon its Debt Financing and Management Program, and
specifically its Variable and Fixed Rate Debt Program (the"Program"), in 1990 with the
issuance of$100 million in Certificates of Participation ("COP"), Capital Improvement
Program, 1990 Series"A." The Program was established to accomplish the following:
• To finance assets with long useful lives with long-term debt;
• To achieve the lowest possible interest costs and highest investment returns,
commensurate with the appropriate risk;
• To recoup reserve moneys that had previously been spent.
COPS are repayment obligations based on a lease or installment sale agreement. The
COP structure was selected over other structures because COPs are not viewed as
debt by the State of California, as the purchaser does not actually receive a "bond," but
rather a share in an installment sale arrangement where the District serves as the
purchaser. Accordingly, the District is not subject to the usual State restrictions
surrounding the issuance of debt. COPS can be Issued with fixed or variable interest
rates.
Fixed-rate debt can be either traditional or synthetic in form:
Fixed-Rate Debt traditionally has a final maturity between 20 and 30 years from the
date of issuance. Generally, pdncipal is amortized annually. Principal maturing in early
years typically has a lower interest rate("coupon")than later maturities. This structure
typically produces a level debt service. The District's 2003 series is a traditional fixed-
rate debt issuance.
" Synthetic Fixed-Rate Debt: Long-term, variable-rate debt can be issued and then the
interest component can be swapped to a fixed rate. This form of fixed-rate debt
achieves a balance between short and long-term interest costs and is frequently a less
expensive forth of debt. In some markets, this form of fixed-rate debt is less expensive
to issue than the more traditional forth of fixed-rate debt described above. The District's
1992 and 1993 Refunding Series are both synthetic fixed rate COPS.
Variable-rate debt can also be traditional or synthetic:
Variable-Rate Debt: traditionally has either along or short nominal maturity, but the
interest rate resets periodically. Typically, the intervals for interest rate resets are daily,
weekly or monthly, but any period is possible. Both the District's Series 2000 COPs and
Series 2006 are variable-rate debt maturing in 30 years, but with sinking funds to retire
a portion of the principal annually, and a dairy interest rate reset.
" Synthetic Variable-Rate Debt As described above for fixed-rate debt, variable-rate
debt can be created from a fixed-rate issue by means of a floating-rate swap.
An important factor to keep in mind, however,when reviewing the historical difference
between variable rate and fixed rate debt is that there are two fees that occur with
variable rate debt that are in addition to the interest rate. These fees are liquidity fees
and remarketing fees. Even when these extra fees are included, variable rates have
been lower than fixed rates over the past several years.
The maximum level of variable rate obligations incurred by the District should not
exceed the level of invested reserves available. This policy hedge is to be maintained
between variable rate obligations and short-term investments. The periodic change in
interest earnings on the District's unrestricted reserve funds (invested in short-term
securities like Treasury Bills)will move in a fashion similar to the movement of the yield
on the District's variable rate obligations.
This"Floating hedge"will result in a generally consistent and predictable spread
between the District's financing cost and the yield on the invested funds. Moreover,
since the District's obligations are tax-exempt, while its reserves earn taxable yields,
there is a potential legal arbitrage benefit which may actually lower the District's cost of
funds. There are complex federal regulations that limit the interest(arbitrage) earnings
on tax exempt financings and the District complies with them.
a
The District has entered into two types of swaps since 1990: fixed-to-floating and
floating-to-fixed. Fixed-to-floating interest rate swaps allow an issuer to convert all or a
portion of Its fixed rate debt to a floating rate. The way this is accomplished is the issuer
receives a fixed payment from a counterparty and makes floating rate based payments
to that counterparty.
A floating-to-fixed interest rate swap allows the issuer to convert floating rate debt to
fixed rate. The counterparty makes floating rate based payments to the issuer and, in
return, the issuer makes fixed payments to the counterparty. The certificate holder, in
both cases, receives the payment that the counterparty pays to the issuer. The
certificate holder, or investor, always receives the original stream of payments.
Through discussions with the Rating Agencies, the District has been permitted to
maintain an overall fixed versus variable rate debt mix of approximately 50:50.
"Synthetic"fixed transactions are considered as fixed rate transaction by the Rating
Agencies since the swap duration matches the maturity of the COP. These ratios are
higher than those traditionally allowed for most issuers, in part because of the District's
reserve policy.
The District currently has outstanding synthetic fixed-rate and fixed-rate COPs of$410.4
million and variable-rate COPs of$398.2 million, for a ratio of 51:49.
The Series 2000 Refunding reduced the three tiers of outstanding debt, Closed Senior
Obligations, Senior Subordinate Obligations, and Junior Obligations, to only two tiers,
Open Senior and Subordinate. Series 2003 and Series 2006 were issued to fund
current and future capital improvement expenditures. Figure 1 shows the status of all
outstanding COPS at June 30, 2006.
Figure I
Snm9urr of Cerun.t.of Tnielnadan
Senn 1992 Seri. 1993 N. 20WSer1n 2003Sn 2W .SArs
huie Name Refunding CON Refunding COPS Refandlog CON COT CON
Inue Mn 12-0}t992 0&21-1993 W-31-2W0 0&2&2W3 03 14W
Original Per 3160,60ROW U6,MOW S219ANIOM SMWO,OW 32W,000.OW
Ouuuoding Tr S93,I211,W0 Z7J%.OW S190121M,OW SSSO,000p00 3204Ddd,OW
Pavmenr Dale Augur 1 Auguu 1 A.,.I Pebrnaret Fel,n.,I
Cuof Ptonadr U,..Refunding Advnnm RNundimg Refun"d.b. ReimblFumre CIP CurreotlFmre CIF
I3®or M, Opee Senior Opea Senior Open Senior Open Senior OPen Senior
Inumt Rate Node Symhaic Mad S,.betl9 need V.mhk Mul Vedubie
Final Naurity Dan &I-W13 &1-2016 8-1-2030 2.1-MU L1-20M
Due to the current low interest rate environment, the District refunded $88.5 million of
the COP Series$280 million debt with the issuance of the $95 million Refunding COP
Series 2007A in May 2007. The net present value savings generated from this
refunding totaled $4.4 million.
t
Dedicated Funding Source
In 1992 and 2004 the Board of Directors formalized the dedication of certain funding
sources. To assure the continuation of favorable credit ratings, revenues were
dedicated to debt service in the following order:
1. Ad valorem property taxes
2. Sanitary sewer service charges
3. Other revenues
This apportionment of the ad valorem tax was consistent with and pursuant to the
Revenue Program adopted in April 1979 to comply with regulations of the
Environmental Protection Agency and the State Water Resources Control Board and in
accordance with COP documents and Board policy.
Up until FY 2003-04, property tax revenues alone had been sufficient to meet current
debt service payments. However, since the$280 million COP Series 2003 debt
issuance, this revenue source now has to be augmented by sewer service charges or
user fees. Annual increases in these user fees to offset property tax revenue shortfalls,
as well as to assist in the funding of the CIP expansion, are projected for the next
several years.
Establishment of Debt Policy
In 2001, the District developed a written debt policy for the following underlying reasons:
• promoting consistency and continuity;
• rationalizing the decision making process;
• committing to long-term financial planning;
• enhancing the quality of decisions; and
• promoting credit quality to rating agencies.
This Board adopted policy serves as the agency's guide in the management of existing
debt and in the issuance of future debt. Included within this debt policy are the following
restrictions on the issuance of variable rate debt:
• The maximum level of variable rate obligations incurred shall not exceed the level
of available invested reserves; and
• The District will maintain an overall fixed versus variable rate debt mix allowed for
the District by the Rating Agencies.
Coverage Ratios
OCSD has no legal debt limits as imposed by state legislation. The District does have
contractual covenants within the existing COP indenture agreements which require
minimum coverage ratios(the ratio of net annual revenues available for debt service
requirements to total annual debt service requirements for all senior lien COP debt) of
1.25. However, traditionally rating agencies have looked favorably at ratios in excess of
this amount.
c
Future Debt Financings
In March 2006, the District issued $200 million of COP fixed rate debt for current and
future capital improvements to be constructed over FY 2005-06 and FY 2006-07. As
the result of having a well-funded reserve policy, experienced management, and
prudent planning, the District was able to secure "Aa" category ratings from all three
rating agencies.
The District's long-range financing plan is designed to maintain these high ratings. Over
the next 15 years, the District is projecting an additional $2.5 billion in future treatment
plant and collection system capital improvements. In accordance with the District's
long-term debt fiscal policy, the District will confine long-tens borrowing to capital
improvements that cannot be financed from current revenue. Before any new debt is
issued, the impact of debt service payments on total annual fixed costs will be analyzed.
Although no new debt issuance is being proposed for FY 2006-07, the District's cash
flow forecast calls for the issuance of$300 million of COP in FY 2007-08 to help offset
the CIP cash outlays scheduled to occur the same year. A total of$1.2 billion in COP
debt issuance is being proposed over the next seven years. These financings are
needed early in the 15-year capital program because the bulk of the construction is
scheduled during the next six years.
Included on page 12 of the CIP Program Financing Plan Update prepared by PRAG is
an updated forecast on the financing plan out to 2019-20 by COP debt structure
including traditional fixed, synthetic fixed, traditional variable (hedged), and traditional
variable (unhedged).
Capital Improvement Program Financing Plan Update
`oJNZ( SANIlAT/0/Y
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Certificates of Participation, Series 2007E
PRAG
Public Resources Advisory Group
November 26, 2007
Orange County Sanitation District Page 1
CIP Financing Plan Update—COPS, Series 2007E November 26, 2007
Background
The Orange County Sanitation District (the "District") adopted a long-term capital improvement
program ("CIP") as part of its strategic planning initiatives. The CIP includes a number of different
projects which will provide new treatment and disposal capacity and expand the collection system
for the District. In addition, the District expects to fund other replacement, rehabilitation, and
refurbishment projects to properly maintain the operation of existing facilities. It is anticipated the
District will use a combination of ongoing revenues and new debt issuances to finance the CIP
through fiscal year 2019-20. The following chart shows the projected funding of capital costs
between revenues and debt proceeds.
($mm) Estimated Sources of CIP Funding
400
350 - - ------ -- - -. -- ■Ongoing Revenues
300 - ---- - to Debt Financed
250 . . ... _ __... _
200
150 ,. ... ... .. .. .. __..__...
150 i.
0
O O O N Ml V N W h O M N
O O O O O O O O O O O O O
N N N N N N N N N N N N N
The long period over which expenditures are expected to be made, the magnitude of those
expenditures, the long useful life of the assets funded, and the goal of minimizing the already
substantial (on a percentage basis) rate increases, all support the decision to finance a substantial
portion of the CIP through a series of bond financings through fiscal year 2013-14. Assuming a
series of debt issuances requires that long-term strategic considerations must be examined on an
aggregate basis with each future issuance providing the District with the opportunity to be flexible
and make adjustments. In addition, a series of debt issuances should reduce the risk associated
with timing the market for the lowest interest cost. The timing and sizes of subsequent issuances
is estimated in the following table.
Fiscal Year Approximate Size
2007-08 $300.000,000
2008-09 236,000,000
2009-10 177,000,000
2010-11 131,000.000
2011-12 100,000,000
2012-13 130,000,000
2013-14 60,000.000
Total $1,134,000,000
The District has requested that Public Resources Advisory Group ("PRAG") provide
recommendations pertaining to the management of existing debt and the issuance of additional
debt in connection with the CIP. In 2005. PRAG provided a report (the "2005 Report")
PRAG
Orange County Sanitation District Page 2 a
CIP Financing Plan Update—COPs, Series 2007E November 26, 2007
summarizing our debt management recommendations based on information which was available at
the time, including the District's financial projections, data on market conditions, historical interest
rates, best practices among municipal issuers, credit issues, and the District's outstanding debt.
The recommendations were formulated as guidelines for a long-term financing plan that balances
lowering interest cost and interest rate risk. This report applies the principles outlined in the 2005
Report to the upcoming issuance of the District's certificates of participation ('COPs') and updates
certain recommendations based on the District's current financial position (and projections) and
changes in market conditions.
The Distriefs Current Outstanding Debt
Currently, the District has approximately $784 million of outstanding long-tern debt, comprised of
six different series of COPS. The six series of COPS include traditional fixed rate COPS, synthetic
fixed rate COPS (i.e., variable rate COPS linked to a floating-to-fixed interest rate swap, which
together create an expected net fixed rate obligation) and variable rate COPS, which were issued
to fund new capital improvements and to refund then outstanding debt. Additional detailed
information pertaining to the COPs is shown in the following table.
Original Par Outstanding Final Maturity Interest
Series Issued Par (Fiscal Year) Rate Mode Purpose of Issuance
1992 $160,600,000 $77,340,000 2014 Synthetic Refunded 1986 COPS($107Fixed million)and Series B COPs
($38.4 million)
1993 46,000,000 26,900,000 2017 Synthetic Refunded Series B COPs
Fixed ($39.7 million)
Variable Refunded Series A. B and C
2000 218,800,000 196.800,000 2031 (Daily reset) funded$179.capital improvements
and
2003 280,000,000 191,500,000 2033 1 Fixed Funded capital improvements
2006 200,000,000 196.600,000 2036 Variable Funded capital improvements
(Daily reset)
Refunded a portion of Series
2007A 95,180,000 95,180,000 2030 Fixed 2003 COPS($88.5 million)
Total $1,300,380,000 $784,120,000
On an aggregate basis, as shown in the graphic on the following page, over 50% of the District's
outstanding debt portfolio (i.e., $393.2 million) is net variable rate (not fixed rate or synthetic fixed
rate). This exposure to fluctuations in short-term interest rates is offset to some degree by the
District's short-term investment assets. According to the District's most recent Quarterly
Treasurers Report for the Three Months Ended September 30, 2007 (the "Treasurer's Report°),
the District's investment account balances totaled $336.4 million, including debt service reserve
deposits with the trustee. Of this amount, approximately $65.7 million must be deposited in debt
service reserve funds, the earnings on which are subject to yield restriction in accordance with
arbitrage regulations and, as a result, do not serve as effective hedges against changes in short-
term interest rates. Therefore, a balance of $270.7 million in investment assets is available to
hedge against short-term interest rate movements. PRAG estimates that this balance of short-term
taxable investments effectively hedges an equal amount of, or in other words on a one-to-one
(1-to-1 Basis") with, tax-exempt variable rate COPs. (Note that this differs from the implied three-
to-two basis originating from the top-bracket marginal federal income tax rate of 35%.) The 1-to-1
Basis reflects that the traditional composition of the District's investment portfolio, the vast majority
of which is held in long-term bond funds and that investment earnings from long-term bond funds
PRAG
Orange County Sanitation District Page 3
1 ClP Financing Plan Update—COPS, Series 2007E November 26, 2007
are less responsive (than their short-term bond fund counterparts) to short-term interest rate
movements. All in all, the District's current unhedged, net variable rate exposure which is hedged
by neither interest rate swaps nor investment assets is approximately 15.6%.
Breakdown of
Outstanding COPs
Fixed,
$286.7mm,
36.6%
Variable,
6393.2mm,
50.1% P_�,
Synthetic
Fixed,
$104.2mm,
13.3%
The aggregate debt service profile of the COPS is nearly level, after taking into account the
releases of debt service reserves to pay debt service for each given series. From fiscal year
2007-08 through fiscal year 2031-32, net annual debt service associated with the outstanding
COPS is approximately $48 million; there is an increase for fiscal year 2032-33 to approximately
$57 million. Thereafter, net annual debt service declines to approximately $18 million through
fiscal year 2034-35. The following chart illustrates the aggregate debt service profile of the
District's outstanding COPS.
yo f$mm1 Aggregate Debt Service
--
5 v 1993 SadW 1993 .,.,
so
2006 reede112003
Wre So �5erlu 20WA
Het D r;
70 - — t Debtt Svc.
60 ■. .. .. ....._. I
60 .. ............
40
30
20
10
m o N O m m m N a m m O N a
O O O O O O O O O O O O O O O
N N N N N N N N N N N N N N N
Variable to Fixed Ratio
A fundamental strategic consideration of a long-term financing plan for a multi-year capital
improvement program is the ratio that represents the variable versus fixed rate debt relationship of
an outstanding debt portfolio (the -Variable/Fixed Ratio"). The Variable/Fixed Ratio is calculated
as the ratio of variable rate debt divided by total debt. The overall target Variable/Fixed Ratio
set by the District should be based on (1)the amount of and the type of interest rate risk the
PRAG
Orange County Sanitation District Page 4 r
CIP Financing Plan Update—COPs, Series 2007E November 26, 2007 r
District is willing to accept and (2)the expected cost benefit of variable rate debt over fixed
rate debt Prior to each future debt issuance, the District has a choice of issuing fixed rate,
variable rate, or a combination of fixed and variable to reach the overall target Variable/Fixed
Ratio. The District should evaluate each component (fixed or variable) on a net hedged basis by
considering the amount of outstanding hedges that mitigate or offset variable rate risk.
Interest Cost Savings
Historically, short-term variable rates have been lower than long-term fixed rates. The following
chart compares long-tens BondBuyer 20 General Obligation index (BBG020) to the Securities
Industry and Financial Market Association (SIFMA), formerly known as Bond Market Association
(BMA), swap index (a composite index for over 150 highly-rated, tax-exempt variable rate demand
obligations). The BMAISIFMA swap index has been an accurate indicator for the variable interest
cost of the District's debt.
BBG020(long-term tax-exempt)versus
BMAISIFMA(short-term tax-exempt)
a% ----
B82aG0 Rate
n BYAISIFMA Rate ..1
-- BUSIFMA Ave Mg.W
6% Rt_—r•n 4`��es.,..r_ yxl,.aylyGl rt.648% ...�
w.. ri445%(cuffenq
2% 'i . .310%..44----------13.41%(current)
0%
rV A Y b N W W N O N N A 0
W W W W W W W W N O O O O O O O O O
W W W W W W W O O O O O O O
If short-term tax-exempt variable rates continue to be low, there is an expected cost benefit which
is one of the primary reasons to issue variable rate rather than fixed rate debt. However, in the
comets market, the difference between short- and long-term interest rates as shown above is less
than the historic averages.
The risk of variable rate debt is that periodic short-term interest rate spikes, which exceed long-
term fixed rates, can and have occurred in the past. Also, variable rate debt requires additional
costs for credit enhancement and remarketing which effectively increase the cost of borrowing.
Short-term interest rate changes by the Federal Reserve since 2005 have directly impacted short-
term tax-exempt interest rates. Any additional Federal Reserve rate changes are likely to
correspondingly affect municipal variable rates. Since 1990, the historical correlation between the
BMAISIFMA swap index and Federal Funds Rate is strong at 92.7% as shown in the following
chart.
PRAG
Orange County Sanitation District Page 5
CIP Financing Plan Update—COPs, Series 2007B November 26, 2007
IBMAISIFMA versus Fed Funds Rate
BMAMFMA Rab,r
8% 4_.A........ ..........1 j
Fed Funds Rate
7% -i �................. .............. ...........
...............................
5% ..................
4% -
14 ............. ....................
it
...........................
............... ............................................................................ ..................
2%
0%
Hedges
The Variable/Fixed Ratio of the District is limited by (1)the amount of outstanding hedges (i.e.,
interest rate swaps and investments), (2)the expected ability to withstand interest rate spikes and
(3) rating agency guidelines. To calculate the unhedged (or net) Variable/Fixed Ratio, the amount
of variable rate assets (and fixed payer swaps) is subtracted from the outstanding variable rate
debt and the result is divided by total outstanding debt ("Net Variable/Fixed Ratio')
The following table provide simplified examples on how asset-to-liability hedging works by
assuming a 1-to-1 Basis for the relationship of taxable interest earnings to tax-exempt interest
earnings.
An Taxable Annual
Tax-Exempt Incremental Investment Incremental
Interest Earnings Variable Rate Earnings Rate Investment Net Annual
Rate Change Debt Cost Change Income Income I(Cost)
Example One-$100 million Variable Rate Debt and$200 million Assets
-100 bps ($1,000.000) +100 bps $2,000,000 $1,000,000
-100 bps $1,000,000 -100 bps ($2.000,000) ($1,000,000)
Example Two-$200 million Variable Rate Debt and$200 million Assets
+100 bps ($2,000,000) +100 bps $2,000,000 1 $0
100 bps $2,000,000 1 100 bps 1 ($2,000,000) 1 $0
Example Three-$300 million Venable Rate Debt and E200 million Assets
+100 bps ($3,000,000) +100 bps $2,000,000 1 ($1._000.000)
-100 bps $3,000,000 -100 bps ($2,000,000) 1 $1,000,000
As shown by Example Two in the table above, which assumes a 1-to-1 Basis, perfect hedging
occurs when variable rate debt is equal to the amount of assets which neutralizes the impact of
any interest earnings rate movements on net income/cost. If the amount of debt is less than the
amount of assets ('overhedged", as in Example One), net income would change in the same
direction as interest earnings rates (as interest earnings rates increase, net income increases and
vice versa). If the amount of debt is more than the amount of assets (Example Three), net income
would change in inverse proportion to the direction of interest earnings rates. In other words, not
I PRAG
c
Orange County Sanitation District Page 6
CIP Financing Plan Update— COPs, Series 2007B November 26, 2007
only can the issuance of a large amount of variable rate debt introduce interest rate risk, but also
the seemingly conservative choice of targeting a low VariablelFixed Ratio (i.e., having mostly or all
fixed rate debt) can introduce interest earnings rate risk. In addition, for the District's multi-year
CIP, the future fixed rate borrowing cost of the District will vary, creating long-term interest rate risk
to the District.
As described above, the District currently has $270.7 million of investment assets which could
effectively hedge an equal amount of variable rate debt, assuming a 1-to-1 Basis between changes
in investment earnings and short-term variable rate bond interest payments. The 1-to-1 Basis is
consistent with the District's policy to limit the aggregate amount of variable rate debt to no more
than its reserves, including any debt service reserves. This policy, recognized by rating agencies
(see Credit Rating Impact discussion below), is an effective management tool to mi igate variable
rate risk to the District. In comparison, the District has $393.2 million of variable rate COPS
outstanding, a situation which could be considered underhedged; for example, if interest rates
were to increase, interest costs could increase greater than investment income. This is somewhat
offset by the fact that the amount of reserves is forecasted to grow by $106.9 million to $377.6
million (net of$169.4 million debt service reserves) over the next five years.
Credit Rating Impact
Credit ratings from rating agencies can impact the borrowing costs for fixed rate debt and also
credit enhancement costs for variable rate debt. Among many factors, financial and non-financial,
the Variable/Fixed Ratio is one of the factors that credit rating analysts review when assigning
credit ratings. For a given rating, the Variable/Fixed Ratio acceptable to rating agencies varies
depending on the available liquidity to the issuer, volatility of revenues, flexibility of an issuer to
adjust revenues, variability of other (i.e., not interest—related) expenses, and an issuer's ability to
understand and manage interest rate risk. Moody's Investors Service ("Moody's") has "assign[ed]
high-grade long- and short-term ratings to some issuers, typically well endowed colleges or cash
flush states, public authorities and hospitals, with as much as 30% to 50% of their debt in variable
rate mode." Standard & Poor's ("S&P") states that "[i]ssuers with competitive rates, tax
advantages, or significant short-term assets can handle variable and short-term debt well in excess
of 60% of total debt, some even with 100%, when backed by accompanying risk management
programs."
More specifically, the District's Variable/Fixed Ratio is an important element in the assessment by
the rating agencies of its financial strength. In their published reports, the rating agencies discuss
the District's Variable/Fixed Ratio as one factor in assessing the credit profile of the District.
Excerpts from rating reports pertaining to the District's fixed versus variable rate capital structure
and how the District manages this risk are below:
Moody's: "The District has issued a significant amount of variable rate debt. The
District's ample reserves provide a natural hedge against the risk posed by the
District's variable rate debt, and the District routinely monitors the relationship
between its invested assets and its variable rate debt exposure. Variable rate debt
is limited by policy to not more than I District reserves."
Fitch Ratings ("Fitch"): "Unhedged variable-rate exposure is above average,
constituting approximately 50% of outstanding debt..."
S&P: "The 2000 and 2006 COPS are variable rate, totaling $396 million, and are
hedged through the district's cash position, which is by board policy maintained at a
PRAG
Orange County Sanitation District Page 7
1 CIP Financing Plan Update-COPa, Series 2007E November 26, 2007
high level, with cash reserves targeted at least equal to variable rate debt
outstanding...The district's policy is never to have more variable-rate debt than
reserves, so that interest earnings may offset variable interest costs."
Based on the current financial condition of the District, PRAG believes that the District's future
Variable/Fixed Ratio could be gradually increased with minimal, if any, negative credit rating
consequences. The actual level will depend on the District's debt management policies (primarily
relating to Section 4.3.4.1 of the District's Debt Policy requiring"The maximum level of variable rate
obligations incurred shall not exceed the level of available invested reserves."), evolving financial
profile of the District (including the amount of its cash reserves), the funding progress of the CIP,
and the ability to secure timely rate increases.
Structure of Debt Issuance
For each pending debt issuance, the decision on whether to issue fixed or variable rate debt,
provided there is sufficient flexibility to achieve the target Variable/Fixed Ratio, should be based on
two factors-ill)the level of fixed rate interest rates and (2)the perceived interest cost savings of
variable rate debt overfixed rate debt. If long-term interest rates are perceived to be low relative to
(1) expected future long-term interest rates and/or (2)historical long-term fixed rates, then fixed
rate debt would be the attractive choice.
The former method of comparison is dependent on interest rate outlooks by an issuer, which span
the range from lower to higher interest rates. Some economists have predicted that interest rates
will rise, while others have forecasted continuing low interest rates. In general, it seems very
difficult to accurately predict the direction of long-term interest rates, if not impossible.
The historical data necessary for the latter method of comparison is readily available. As shown in
the following chart, current long-term tax-exempt interest rates (represented by the BB20GO Index)
are lower than both the 15-year and the 50-year historic averages. However, some economists in
recent years have proposed that current interest rates reflect a return to "normal" interest rate
levels and that the high interest rates of the late 1970's and early 1980's were aberrations which
have artificially distorted historic averages. In addition, as with investing, past history is not, and
should not be, a predictor of future events. Nevertheless, based on near-term historic data, current
long-term interest rates, although somewhat higher than recent lows in March of this year, remain -
relatively low.
Bond Buyer General Obligation (G.O.)201ndex
ta% :---
12% - - BBG020 Rate
t&Year Average r
t0% 50-Year Avenge
6% -. ._ 5 70%.. . rr,y P.
2% Recent low(3/W07)=4,08%
Current=4,45%
0% -__—_— __. . - -_-
N O N O ,n O VI O Yl O N
b 0 b r m OI OI 0 O O
W OI CI P O 01 01 OI Of O O
PRAG
0
Orange County Sanitation District Page 8
CIP Financing Plan Update—COPs, Series 2007B November 26, 2007
Alternatively, if long-term interest rates are perceived as high and the immediate benefit for the
issuance of variable rate debt is high (i.e., the difference between short- and long-term interest
rates is large), then variable rate debt would be an attractive choice. Again, the prediction of future
interest rates is a very difficult, it not impossible, task and therefore, the analysis as to whether or
not the two aforementioned conditions exist is generally based on current market conditions in
relation to historic averages.
One approach for this type of analysis is to compare current market conditions to a two-
dimensional matrix which plots the historic instances of these two parameters: (1) long-term
interest rates and (2)the difference between short- and long-term interest rates), as shown below.
As shown in the following chart, when current market conditions fall within in the upper right
quadrant of the matrix (highlighted in yellow), the issuance of variable rate debt is deemed
favorable. In other quadrants, the issuance of fixed rate debt may be beneficial. For example, in
the upper left quadrant, when long-term interest rates are high but the benefit of variable rate debt
is low (small difference between short- and long-term interest rates), the use of fixed rate debt
avoids interest rate risk, at a relatively low cost, since it is possible to refund the debt it interest
rates were to decline in the future. Meanwhile, in the bottom half of the matrix, when long-term
interest rates are low, the use of fixed rate debt may be attractive to lock in low rates. The use of
fixed rate debt is especially appropriate in the lower left quadrant (highlighted in green) in which the
benefit of variable rate debt over fixed rate debt is relatively low.
BB20GO versus BB20GO less SIFMA(since 1990)
8.0% —
2.70%
7 5% FWar•va(Ial le
....y.._., .: . ..... ...geroLNt_....
7.e% �......... . .. - ..... - . .. ... . .aw .i.......•.-1.......... ..............a ......
31
7
• �.
•
a
rv. l 0.24%
Favorshnd •` •• . .'. .
Rate DOW • • Y • ^Y
4.5% .... fit, tr1 • . 1 r
V y
G ," CUItBlltl
4.0% J- J J �J
O b O N O YI O b O b
OO O .- '• N N wl Yi V V
Fixed Rate versus Synthetic Debt Structure
One implementation strategy to consider depending on market conditions is the use of synthetic
rather than traditional debt structures. For instance, if the District chooses to issue additional fixed'
rate exposure, it could do so by either(1) issuing fixed rate COPs or(2)issuing variable rate COPS
PRAG
Orange County Sanitation District Page 9
t CIP Financing Plan Update— COPs, Series 2007E November 26, 2007
plus entering into a floating-to-fixed interest rate swap. In the latter case, the floating rate receipt is
expected to offset the variable rate debt service of the COPS, creating a net fixed rate obligation
approximating the fixed swap rate.
Under certain market conditions, synthetic fixed rate debt structures may generate a lower
expected borrowing cost. The spread between traditional and synthetic fixed rate debt structures
have fluctuated in the past. The following table illustrates this historic fluctuation by comparing
20-year 65% of 1-month LIBOR (or London Interbank Offering Rate, which is a taxable short-term
interest rate) swap rates to the 20-year AAA GO MMD (which is the market benchmark for 20-year
tax-exempt interest rates). As shown in the graph below, the spread has fluctuated between
0.46% and 1.44%, as market conditions and the relationships between taxable and tax-exempt
interest rates have shifted. Current market relationships between traditional fixed rate bonds and
synthetic debt structures are not particularly compelling, especially given the recent concerns
about the financial strength of certain traditional providers of interest rate swaps.
Spread: 20-year Cal Insured MMD Less
20-year 65% of LIBOR Swap Rate
1.4% _. .........
Spread
p Swaps SI"r) Average
Outperform I.
1.2% t ri Average=0.96%
y .- Current= a96%
1.0%
0.8%
londs
B
0.6% � O utpeutpertorm
0.4%
A M O O O O O O O O O
O O O O O O
N N N N N N N N N
In addition, fluctuations between short-term taxable and tax-exempt interest rates can also impact
the borrowing cost of synthetic fixed rate debt structures by changing not only the fixed swap rates
paid on floating-to-fixed rate swaps but also the hedging efficiency of interest rate swaps. In other
words, while there is an expectation that floating rate receipt from the swap would match the
variable rate debt service of the debt, actual results may differ significantly from this expectation
which is referred to as "Basis Risk'. As the result of Basis Risk, a synthetic fixed rate structure
unlike a traditional fixed rate structure carries risk related to non-correlated interest rate
movements. In addition, synthetic fixed rate structures entail other risks to an issuer, such as tax
risk, credit enhancement risk, counterparty risk, and termination risk.
The cost of fixed rate municipal debt call option is low which means the mathematically calculated
value of the call option exceeds the actual cost of the call option. The fixed rate debt call option
allows an issuer to take advantage of future lower interest rates. With synthetic fixed rate
structures the cost of a call option typically equals the calculated value of the call option.
Therefore, issuers of synthetic fixed rate structures should be confident that the fixed rate spread is
sufficiently high because, unlike fixed rate municipal debt, there are limited opportunities to further
lower interest costs.
= PRAG
r
Orange County Sanitation District Page 10
CIP Financing Plan Update—COPs, Series 2007E November 26, 2007
Based on all of the above factors (especially, the less than optimal market relationships between
traditional fixed rate bonds and synthetic rate debt), PRAG believes that the District should issue
traditional fixed rate bonds for the upcoming sale, but should consider market conditions to re-
evaluate this decision at the time of each future sale.
Capital Improvement Prooram Financing Strategy.
The CIP of the District is expected to be funded by a series of bond issuances through fiscal year
2013-14. As noted in the 2005 Report, a step-by-step financing implementation plan would be
ideal; however, it would inevitably be inaccurate without the specific knowledge of future market
trends and conditions. Therefore, PRAG continues to believe the District should focus its long-
term planning on global strategic considerations, such as the timing of the financings and the target
Variable/Fixed Ratios. Implementation strategies should be analyzed on an issue-by-issue basis
subject to market conditions at the time of each sale. Consistent with this approach, we have
amended the specific steps outlining a potential financing strategy to take into account changes in
the District's financial condition, projections for future performance and general interest rate
conditions. As in the 2005 Report, the preliminary financing strategy assumes the District believes
that (1)future fixed interest rates are difficult to predict, (2)variable rates will ultimately be less than
current fixed rates, and (3)the District will have sufficient liquidity to absorb any additional interest
costs associated with potential variable rate interest spikes. The following considerations and
steps outline our updated potential financing strategy for the District:
1) Determine target Net Variable/Fixed Ratio based on (a)the District's current Debt
Policy, including recent written statements by the rating agencies, (b)outstanding
hedges, (c) expected reserve amounts, (d) 1-to-1 Basis or another estimate based
on the allocation of investments, and (a) expected cost effectiveness of variable
rate.
2) PRAG assumes the issuance of next $300 million of COPS will be fixed rate
obligations. A fixed rate issuance seems to be appropriate when analyzing
historical short- and long-term interest rates. The District's reserve balance as
shown in the most recent Treasurer's Report is$336.4 million, which is less than the
outstanding amount of variable rate COPs of$393.2 million, although reserves are
forecasted to grow to over$450 million by the end of the fiscal year.
3) With subsequent issuances, re-evaluate the District's Debt Policy and the target
unhedged Variable/Fixed Ratio based on market conditions at the time. Or course,
the target unhedged Variable/Fixed Ratio will likely change as the CIP unfolds and
matures, and as new financing products become available to municipal issuers.
The current amount of District reserves and the Debt Policy indicate the next sale of$300 million of
COPS should be fixed rate obligations. After the issuance of these fixed rate COPS, there remains
flexibility for the District to continue to adjust its target Variable/Fixed Ratio. The following graph
illustrates the extent to which the District may affect its aggregate(or gross) and Net Variable/Fixed
Ratios through the issuance of either fixed or variable rate COPS in future years.
= PRAG
Orange County Sanitation District Page 11
CIP Financing Plan Update- COPs, Series 2007E November 26, 2007
Potential Gross Variable/Fixed Ratios
70%
60% .:....._..............._....................................... ..........................................
60% ...... ............................. ..........................................................................
40% ................ ..... ...........................................................- ....-..................
30% .................................. .........................................................................
20% .......i _Eatlmatad ....................................................................... ......
10% L,... —minimum
�Mazimum
0%
current 2009 2009 2010 2011 2012 2013 2014
Over time, PRAG believes that the District can prudently increase its Net Variable/Fixed Ratio to
approximately 25% without jeopardizing its current credit ratings. To do so, it would be necessary
to update the District's Debt Policy to allow for the amount of outstanding variable rate debt to
exceed the level of the District's reserves. On the following page, PRAG has updated the
preliminary financing plan of the CIP a version of which was originally provided in the 2005 Report.
This updated plan assumes a revision to the District's Debt Policy and the use of variable rate debt
to increase the District's Net Variable/Fixed Ratio to a maximum of 25% in future years. In
particular, the plan assumes the issuance of 100% variable rate COPs to fund the debt-financed
portion of the CIP requirements in fiscal year 2008-09 (totaling $236 million). In addition, the plan
assumes the issuance of hybrid structures with traditional fixed, synthetic fixed, and variable rate
COPS structured to achieve 30-year level debt service. This assumption is intended to account for
constant changes in market conditions over time and the preservation of the ability to evaluate
these market conditions at the time of each sale to determine the most appropriate financing
structure.
PRAG
Orange County Sanitation District Page 12
C1P Financing Plan Update-COPs, Series 2007B November 26, 2007
One County Sanitation District
Preliminary Financing Plan -Estimated Debt Outstanding,Issued and Repaid
(Amounts In$millions)
Fend Year 200748 24048 20M-10 11 12e1-12 202..13201. 14 714-15 M1i 16 2-�6-17 301E 2018jp ZQ1q-2Q
Beginning 0mitandin9 Ba ow2
Traditional Feed 286.7 585.2 580.4 849.0 697.2 731.3 776.9 790.6 780.1 7691 757.5 745.3 732.6
Synthetic Feed 1"1 104.2 90.0 111.0 121.1 135.3 153.4 142.8 132.5 121.0 110.4 108.0 105.5
Traditional Venable(Hedgad)' 2580 357.5 315.2 332.6 347.4 361.8 375.2 402.7 4110 411.0 410.5 429.7 "111
Traditional Variable(Videdged)' 135.2 35.7 313.2 350.6 388.0 30.5 411.6 384.6 355.7 334.5 308.2 251 203.0
scheduled Principal Repayment2
Traditional Fixed (1.5) (4.7) (4.9) (6.3) (7.4) (8.4) (11.2) (10.5) (11.0) (11.6) (12.2) (12.8) (13.4)
synthetic Fixed 00 (14.3) (15.2) (16.7) (6.3) (8.5) (226) (10.3) (10.8) 111.4) (2.4) (2.5) (2.6)
Todhional Variable 00 (0.8) (4.5) (5.6) (18.0) (17.9) (22.4) (2c5) (21.3) (26.7) (32.8) (34.2) (35.7)
Hew Band lnuanw2
Traditional Fixed 3D0.0 0.0 73.5 544 415 54.0 24.9 0.0 0.0 0.0 0.0 00 0.0
Synthetic Fixed! 0.0 0.0 36.2 268 20.5 26E 123 0.0 0.0 00 0.0 o.D 0.0
Traditional Variable 0.0 236.0 67.3 49.8 38.0 49A 22A 0.0 0.0 0.0 0.0 0.0 0.0
Ending Oo startling Balance2
Traditional Fixed 5862 580.4 649.0 697.2 7313 776.9 7906 780.1 769.1 757.5 745.3 7326 719.2
Synthetic Fixed 1042 90.0 111.0 121.1 13E3 1534 142.8 1326 121.8 110.4 two 105.5 102.8
Traditional Variable(Hedged)' 357.5 315.2 332.6 347.4 wis 3752 402.7 411.0 411.0 410.5 4n.7 448.7 1a0A
Traditional Variable(Unhedged)' 35.7 313.2 358.6 388.0 393.5 411 6 384.6 355.7 334.5 308.2 256.3 203.0 i m s
Percentage of Overall Oebt
Traditional Fixed 54.1% 40.7% 44.7% 44.9% 45.1% 45.2% 45.9% 46.4% 470% 473% 464% 49.2% 50.0%
Synthetic Feed 9.6% 6.9% 7.6% 7.8% 8.3% 8.9% 8.3% Z9% 7.4% 7.0% 7.0% 7.1% 72%
Traditional Variable(Hedged)3 33.0% 24.3% 22.9% 22.4% 22.3% 21.9% 23.4% 24.5% 26.1% 25.9% 27.9% 3o1% 32.0%
Traditional Variable(Unhedgod)3 3.3% 241% 247% 25.0% 24.3% 24VA 22.4% 21.2°b 20.4% 19.4% 16.6% 13.6% 10.8%
1 For projection purposes only. Future balances and percentages will vary depam8rg on the target Var ableTwed Ratio and market conditions at ale time of each time.
2 Aasumas issuance of 6300 million of Vadhional find rate COPs in fiscal year 2007-08 and$238 mnion of variable hits COPS In fiscal year 2009-09. All subsequent neem s
are assumed to war hybrid traditional and synthetic fxedinriable rate debt shudures amortized to achieve level debt service oust 30 years based on a 5%interest rate. The
rare of(bred-to-vadable rate debt of the hybrid rowdies used 6 asaumea to be cemfad and Imgete total pretax rate principal equal to the amwd of Ole D1wicB projected
reserves.while the rare of BadiWxwWoo-nrdmrc fixed rate debt of the hybrid is ecwmed to be 2-t I. Actual rams of fued4 vadebhe rate debt will vary depending on market
cend8iors at the lime of sale.
3 Calculated hand on a 1-to-t Basis and the Disdd's projected foul reserves less debt service reserves.
PRAG
Orange County Sanitation District Page 13
CIP Financing Plan Update—COPs, Series 2007E November 26, 2007
As the District moves forward with its CIP, its debt service obligations are expected to increase
significantly. At this time, by issuing fixed rate COPS when long-term interest rates are relatively
low from a historic perspective, PRAG believes the District can mitigate the debt service costs of
additional capital needs. The following table illustrates the rapid rise of aggregate net debt service
due to these future issuances.
($MM) Aggregate Net Debt Service
150
■current a Series 2007B ■Additional Future Financings
125 _......._... . ._.._. ...__... . _...:
100
75 . _.__....
so f' .
25
e
12
0 0 0 0 0 0 0
PRAG
STATE OF CALIFORNIA)
) SS.
COUNTY OF ORANGE )
Pursuant to California Government Code Section 54954.2, 1 hereby certify that
the Notice and Agenda for the Regular Board Meeting of Orange County Sanitation
District to be held on -�C— , 2007, was duly posted for public
inspection in the main lobby of the Districts' offices on )Zfw H eC1, 2q 2007.
IN WITNESS WHEREOF, I have hereunto set my hand this a4 day of
G � 2007.
Penny M. Kyle, Verk of th oard
Board of Directors
Orange County Sanitation District
H1DEPTGMM150\1511BSIF0RMS%GENDA CERTIFICATION.DOC
Penny o the Board co"Ies
n°\abe11
C\etk
November 21, 2007
MEMORANDUM
TO: Chair and Members of the Board of Directors
Orange County Sanitation District
FROM: James D. Ruth
General Manager, Orange County Sanitation District
SUBJECT: November Status Report
The following status report for the month of November is submitted for your review and
consideration.
1. Design Build
The Operations Committee approved staffs recommendation to enter into negotiations
with Earth Tech Inc. to provide additional engineering services for the preparation of
Design Build documentation for the rehabilitation of the Magnolia Trunk Sewer Project.
This will be our first design-build project.
2. SARI Line Status
Progress of the selection of the design consultant is on track with the interviews to be
conducted on December 20. It is anticipated that the Board of Supervisors will approve
a design contract on March 11, 2008. Project start date is March 18, 2008. Funding for
SARI is authorized in H.R. 1495. Although the President vetoed this bill on November 6,
the House overrode the veto and it was subsequently approved by the Senate. The
actual appropriation is in the Energy and Water Bill which will be considered later this
year.
3. SAWPA Capacity Agreement
Staff of our respective agencies have scheduled the first meeting for November 26 to
review the existing capacity agreements and discuss the need to update those
agreements which date back to 1972.
4. GWRS Operating Agreement Review
An audit of the operating agreement between OCSD and OCWD was conducted by
KEMA, an outside consulting firm, to determine our operational readiness to meet the
terms and conditions of the agreement. Staff is currently reviewing the report and will be
implementing recommendations to assure a smooth startup of operations.
Board of Directors
Page 2
November 21, 2007
5. North County Maintenance Yard
Staff is in substantial agreement of a proposed floor plan and staffing accommodation for
the North County Maintenance Facility. We have received notification from the railroad
on our request to have the railroad spur removed and should receive their response
soon.
Staff will prepare a full report to the Operations Committee for their December meeting.
6. Leadership Training
Staff has received two proposals to conduct our Leadership Training Program for our
supervisory and management staff. Additional proposals are still being sought with a
final selection to be determined by January 1, 2008.
7. Safety&Security
There are currently three CIP projects for upgrading facility security. The projects for the
security barrier fencing and the integrated access control system are both active and
awaiting assignment of a Project Manger. The third CIP project is a feasibility study for a
dedicated Emergency Operation Center at Plant 1.
Another project for updating the Public Address System to reach all in-plant personnel is
at the point where the Scope of Work is being finalized.
A final security activity is related to the Main Street Pump Station. At this location, 8 has
been decided that the Hydrogen Peroxide Tank will no longer be utilized.
B. Succession Management
In February 2006, the commitment was made for OCSD to implement a Succession
Management Program (SMP). There have been updates to the Board regarding
program goals, structure, and tools along the way. The organization progressed from an
original concept manual in July 2006 to the current pilot phase of OCSD's customized
program,which began in August 2007.
OCSD now has a solid program structure and related components that were tailored to
the organization, with milestones set to continue moving the program forward. The
program includes workforce planning tools and reports, leadership competencies and
proficiency levels, a talent assessment process, coaching and mentoring relationships,
and individual development plans. EMT members were prepared for their roles as
coaches and mentors for SMP participants in a workshop held September 5.
Next steps include ongoing analysis and revision to the program in preparation for the
implementation at the Supervisor level in July 2008. An adapted version of the program
will be available for other levels of the organization starting in July 2009. Other
initiatives, such as knowledge management and apprenticeships, are being pursued for
future consideration to support OCSD's succession management efforts.
JDR:gg
MNepl'gmd11%110 AQ MHN EWI Ra{a1e b 9w,Q3.'I7 GM S us, %1121N MoME SOM RegM1
AGENDA
BOARD OF DIRECTORS
ORANGE COUNTY SANITATION DISTRICT
DISTRICT'S ADMINISTRATIVE OFFICES
10844 ELLIS AVENUE
FOUNTAIN VALLEY, CA 92708
REGULAR MEETING
November 28, 2007—6:30 P.M.
1. Invocation and Pledge of Allegiance (Midway City S.D. -Joy L. Neugebauer)
2. Roll Call
3. Consideration of motion to receive and file minute excerpts of member agencies relating
to appointment of Directors, if any.
4. Appointment of Chair pro tem, if necessary
5. Public Comments
6. The Chair, General Manager and General Counsel present verbal reports on
miscellaneous matters of general interest to the Directors. These reports are for
information only and require no action by the Directors.
a. Report of Chair; consideration of Resolutions or recommendations, presentations
and awards
It. Report of General Manager
c. Report of General Counsel
7. Ratifying payment of claims of the District, by roll call vote, as follows:
ALL DISTRICTS 10/15/07 10/31/07
Totals $18,222,169.15 $25,197,741.63
DIRECTORS: Pursuant to Government Code Section 84308, you are required to disclose
any campaign contribution greater than $250 received in the past twelve months from any
party to a contract involving OCSD. This requires that you identify the contributor by name.
Further, you may not participate in the decision making process to award a contract to such
party. For reference, you are directed to the Register of Warrants as to all current
contractors/vendors with OCSD. For the specks of Government Code Section 84308,
please see your Director's Handbook or call the office of General Counsel.
11/28i07 ^
Page 2
CONSENT CALENDAR
8. Consideration of motion to approve all agenda items appearing on the Consent Calendar
not specifically removed from same, as follows:
a. Order the minutes for the regular meeting held on October 24, 2007, to be filed
and deemed approved, as mailed.
b. Adopt Resolution No. OCSD 07-23, Appointing a Clerk of the Board Pro Tern to
the Board of Directors; and Repealing Resolution No. OCSD 06-01.
C. (1)Adopt Resolution No. OCSD 07-24, Considering An Addendum to the 1999
Strategic Plan Program Environmental Impact Report and the 2007 Program
Environmental Impact Report for the Collection System Improvement Plan; and,
Authorize Initiation of Proceedings and Requesting the Orange County Local
Agency Formation Commission to Take Proceedings for Annexation to the
District of Territory Known as Annexation No. OCSD-62—Orange Park Acres
Annexation to annex 377.1 acres along Orange Park Boulevard from Chapman
Avenue to Santiago Canyon Road in an unincorporated area of Orange County;
and,
(2) Defer collection of associated fees for said proposed Annexation
No. OCSD-62 —Orange Park Acres, until a sewer connection is permitted.
d. Approve a Transfer Agreement with the Newport Mesa Unified School District
transferring ownership of sewers at no cost and quitclaiming easement rights in
connection with Abandonment of Airbase Trunk Sewer, Contract No. 6-13-3, in a
form approved by General Counsel.
END OF CONSENT CALENDAR
e. Consideration of items deleted from Consent Calendar, if any.
COMMITTEE REPORTS AND RECOMMENDED ACTIONS
9. STEERING COMMITTEE
Consent Calendar
a. Order Steering Committee Minutes for the meeting held on October 24, 2007, to
be filed. (Minutes to be distributed at the 11/28(07 Board meeting.)
Non-Consent Calendar
b. (1)Approve the Five-Year Strategic Plan dated November 2007; and,
(2)Authorize staff to implement the goals and strategies contained in the plan.
C. Consideration of items deleted from Consent Calendar, if any.
11/28/07
Page 3
10. OPERATIONS COMMITTEE
Consent Calendar
a. Order Operations Committee Minutes for the meeting held on November 7, 2007,
to be filed.
b. Approve Amendment No. 1 to Cooperative Projects Grant Program Contract
No. 0601 with the City of Cypress, providing for an eight-month time extension.
C. Approve Amendment No. 1 to Permit Agreement for Discharge from
Groundwater with Irvine Ranch Water District(IRWD), providing for a time
extension through December 31, 2012, to allow time for sewer facilities to be
constructed to redirect Cattrans'flow to sewer facilities that are not tributary to
the IRWD Michelson Water Reclamation Plant, at no additional cost to the
Sanitation District, in a form approved by General Counsel.
d. Approve an increase in contingency for the Professional Services Agreement
with Earth Tech, Inc. for construction support services for Bushard Trunk Sewer
Rehabilitation, Job No. 1-24, for an additional 9% ($238,663) contingency,
increasing the total contingency to 21% ($560,808).
e. Authorize staff to negotiate Amendment No. 2 to the Professional Services
Agreement with Carollo Engineers for construction support services for the
Headworks Rehabilitation/Refurbishment, Job No. P1-71.
f. 1) Establish a budget for access improvements to OCSD sewers in the Big
Canyon Nature Park Area, Project No. 5-64, in the amount of$765,000; and,
2)Authorize the General Manager to execute a reimbursement agreement with
the City of Newport Beach to design and construct Big Canyon Nature Park Area,
Project No. 5-64, sewer access improvements, for an amount not to exceed
$533,300, in a form approved by General Counsel.
g. 1)Approve Amendment No. 1 to the Professional Design Services Agreement
with RBF Consulting providing for construction support services for Rehabilitation
of College Avenue Pump Station, Contract No. 747, for an additional amount of
$911,380, increasing the total contract amount not to exceed $1,852,956; and,
2)Approve a 5% contingency ($92,648).
It. 1)Approve Amendment No. 2 to the Professional Design Services Agreement
with Malcolm Pirnie, Inc. for support services during the construction,
commissioning, and closeout phases of Coast Trunk Sewer Rehabilitation, Job
No. 11-26, for an additional amount of$180,582, increasing the total contract
amount not to exceed $1,761,407; and,
2)Approve a 6% contingency($105,684).
11/28107
Page 4
i. 1)Approve a budget increase for Fire Suppression for Servers& Related
Equipment at Plant 1 & 2, Specification No. FR-2007-348BD, in the amount of
$43,685 for a total project budget of$964,718;
2)Award a purchase order agreement to K2 General Contractors, Inc. for Fire
Suppression for Servers & Related Equipment at Plant 1 & 2, Specification
No. FR-2007-348BD, in an amount not to exceed $583,697; and,
3)Approve a 10% contingency ($58,369).
j. Receive and file Energy Master Plan for the Treatment Plant Strategic Plan
Update, Job No. J-102, dated October 16, 2007, prepared by Black&Veatch
Corporation.
k. Authorize staff to enter into negotiations with Earth Tech, Inc. to provide
additional engineering services for the preparation of Design Build
Documentation for the Rehabilitation of the Magnolia Trunk Sewer, Contract
No. 3-58.
Non-Consent Calendar
I. Consideration of items deleted from Consent Calendar, if any.
11. ADMINISTRATION COMMITTEE
Consent Calendar
a. Order Administration Committee Minutes for the meeting held on November 14,
2007, to be filed. (Minutes to be distributed at the 11/28/07 Board meeting.)
b. 1)Approve Change Order No. 2 to Purchase Order No. 55952-OS, a sole-source
agreement, issued to Louis Allen Worldwide for management and leadership
training services, adding four one-year renewal periods effective January 1, 2008
through December 31, 2008, authorizing $28,800 for this period, and $24,000 for
all subsequent renewal periods, for a total amount not to exceed $253,815; and,
2)Approve a 5% per year cost escalation.
C. Receive and file: 1) Comprehensive Annual Financial Report for the year ended
June 30, 2007, prepared by staff and audited by Mayer Hoffman McCann,
Certified Public Accountants;
2) Report on Compliance and Internal Control for the year ended June 30, 2007;
and,
3) Independent Accountants' Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets.
11/28/07
Page 5
d. 1)Approve a sole source purchase order to IBM Corporation for the purchase of
IBM Maximo Enterprise Asset Management software for replacement of the
Computerized Maintenance Management System, for a total amount of
$592,932; and,
2)Approve a 5% contingency ($29,647).
e. 1)Authorize a renewal to the Master Contract with Xerox, Inc., for an additional
five-year period, December 1, 2007 through November 30, 2012, for a total
amount not to exceed $233,000 per year, and color copies at $.09 per
impression; and,
2)Approve a 10%contingency ($23,300) per year.
f. Approve an extension of the Additional Retiree Benefit Account agreement with
Orange County Employees Retirement System, extending the contract for a
period of up to 90 days.
Non-Consent Calendar
g. Consideration of items deleted from Consent Calendar, if any.
12. GWR SYSTEM STEERING COMMITTEE (GWRSSC)
GWRSSC Consent Calendar
a. Verbal update re Joint Groundwater Replenishment System Steering Committee
meeting held on November 19, 2007.
GWRSSC Non-Consent Calendar
b. Consideration of items deleted from GWRSSC Consent Calendar, if any.
NON-CONSENT CALENDAR
13. (a)Approve Plans and Specifications for the Rehabilitation of College Avenue Pump
Station, Contract No. 747, on file at the office of the Clerk of the Board;
(b)Approve Addenda Nos. 1, 2, 3, 4, and 5 to the plans and specifications;
(c) Receive and file bid tabulation and recommendation;
(d) Reject low bid from Griffith Company as "Non Responsive" due to its failure to
provide the information required under Public Contract Code§4100 et seq. in its Bid;
(e) Receive and file letter from Griffith Company dated November 19, 2007, protesting
award of Contract No. 747 to the apparent second low bidder alleging that Grath
Company's bid is responsive and responsible;
11/28/07
Page 6
(f) Receive and file letter from Stanek Constructors, Inc., dated November 19, 2007,
protesting award of Contract No. 7-47, alleging that the bid submitted by Norman A.
Olsson Construction, Inc. neglected to identify the material type on Bid Item#13 and is
therefore incomplete;
(g) Oral public comments, If any
(h) Staff and Counsel response to comments
(i) Board consideration of said protests
Q) Consideration of motion rejecting the bid protest filed by Griffith Company; or other
action deemed appropriate by the Board;
(k) Consideration of motion rejecting the bid protest filed by Stanek Constructors, Inc.; or
other action deemed appropriate by the Board;
(1)Award a construction contract to Norman A. Olsson Construction, Inc. for construction
of Rehabilitation of College Avenue Pump Station, Contract No. 7-47,for a total amount
not to exceed $5,792,000; and,
(m)Approve a 5% contingency ($289,600); or,
(n) Consideration of other action deemed appropriate by the Board.
14. Ordinance No. OCSD-34,An Ordinance of the Board of Directors of Orange County
Sanitation District, Establishing Board of Directors' Compensation, and Repealing
Ordinance No. OCSD-14 and Ordinance No. OCSD-23:
a. Open hearing
1. Receive and file written comments, if any
2. Verbal reports of staff
3. Directors'questions
4. Public comments
b. Close hearing
C. Discussion by Board of Directors
d. Recommended actions:
1. Motion to read Ordinance No. OCSD-34 by title only and waive reading of
said entire ordinance.
2. Motion to adopt Ordinance No. OCSD-34, An Ordinance of the Board of
Directors of Orange County Sanitation District, Establishing Board of
Directors' Compensation.
11/28/07
Page 7
15. The Administration Committee referred the following item to the Board of Directors
without recommendation:
Adopt Resolution No. OCSD 07-25,Authorizing the Execution and Delivery by the
District of an Installment Purchase Agreement, a Trust Agreement, and a Continuing
Disclosure Agreement in connection with the execution and delivery of Orange County
Sanitation District Certificates of Participation, Series 20078, Authorizing the Execution
and Delivery of such Certificates Evidencing Principal in an Aggregate Amount of Not to
Exceed $300,000,000, Authorizing the Distribution of an Official Notice Inviting Bids and
an Official Statement in Connection with the Offering and Sale of such Certificates and
Authorizing the Execution of Necessary Documents and Related Actions.
16. Recess by Board of Directors, Orange County Sanitation District
17. Call to Order, Board of Directors, Orange County Sanitation District Financing
Corporation:
a. Roll Call
b. If no corrections or amendments are made, the Minutes for the meeting held on
March 28, 2007, will be deemed approved and be so ordered by the Chair.
C. Report of the Director of Finance
d. Adopt Resolution No. FC-04,Authorizing the Execution and Delivery by the
Corporation of an Installment Purchase Agreement and a Trust Agreement in
connection with the execution and delivery of Orange County Sanitation District
Certificates of Participation, Series 2007B, Authorizing the Execution and
Delivery of such Certificates Evidencing Principal in an Aggregate Amount of Not
to Exceed $300,000,000, and Authorizing the Execution of Necessary
Documents and Related Actions. (See Agenda Item No. 15 for report.)
18. Adjourn, Board of Directors, Orange County Sanitation District Financing Corporation.
19. Reconvene, Board of Directors, Orange County Sanitation District
l
11/28/07
Page 8
20. Closed Session
CLOSED SESSION: During the course of conducting the business set forth on this
agenda as a regular meeting of the Board, the Chair may convene the Board in
closed session to consider matters of pending real estate negotiations, pending or
potential litigation, or personnel matters, pursuant to Government Code Sections
54956.8, 54956.9, 54957 or 54957.6, as noted.
Reports relating to(a) purchase and sale of real property; (b) matters of pending or
potential litigation; (c) employment actions or negotiations with employee
representatives; or which are exempt from public disclosure under the California
Public Records Act, may be reviewed by the Board during a permitted closed
session and are not available for public inspection. At such time as the Board takes
final action on any of these subjects,the minutes will reflect all required disclosures
of information.
a. Convene in closed session, if necessary
b. Reconvene in regular session
C. Consideration of action, if any, on matters considered in closed session
21. Other business and communications or supplemental agenda items, if any.
22. Matters which a Director may wish to place on a future agenda for action and staff
report.
23. Future Meeting Date: The next Board of Directors regular meeting is scheduled for
December 19, 2007, at 6:30 p.m.
24. Adjournment
11/28/07
Page 9
r
Agenda Posting: In accordance with the requirements of California Govemment Code Section 54954.2,this agenda
has been posted in the main lobby of the District's Administrative offices not less than 72 hours prior to the meeting
sate and time above. All written materials relating to each agenda item are available for public inspection in the
office of the Clerk of the Board.
Items Not Posted: In the event any matter not listed on this agenda is proposed to be submitted to the Board for
discussion and/or action,it will be done in compliance With Section 54954.2(b)as an emergency item or because
there is a need to take immediate action,which need came to the attention of the Board subsequent to the posting of
agenda,or as set forth on a supplemental agenda posted in the manner as above, not less than 72 hours prior to the
meetng sate.
Public Comments: Any member of the public may address the Board of Directors on specific agenda hems or
matters of general interest. As determined by the Chair,speakers may be deferred until the specific item is taken for
discussion and remarks may be limited to three minutes.
Matters of interest addressed by a member of the public and not listed on this agenda cannot have action taken by
the Board of Directors except as authorized by Section 54954.2(b). If you wish to speak,please complete a
Speaker's Form(located at the table outside of the Board Room)and give it to the Clerk of the Board.
Consent Calendar:All matters placed on the Consent Calendar are considered as not requiring discussion or further
explanation and unless any particular item is requested to be removed from the Consent Calendar by a Director,staff
member or member of the public in attendance,there will be no separate discussion of these items. All items on the
Consent Calendar will be enacted by one action approving all motions,and casting a unanimous ballot for resolutions
included on the consent calendar. All items removed from the Consent Calendar shall be considered in the regular
order of business.
Members of the public who wish to remove an item from the Consent Calendar shall,upon recognition by the Chair,
state their name,address and designate by number the item to be removed from the Consent Calendar.
The Chair will determine if any items are to be deleted from the Consent Calendar.
Items Continued: Items may be continued from this meeting without further notice to a Committee or Board meeting
held within five(5)days of this meeting per Government Code Section 54954.2(b)(3).
Meeting Adioumment: This meeting may be adjourned to a later time and items of business from this agenda may
be considered at the later meeting by Order of Adjoummem and Notice in accordance with Government Code
Section 54955(posted within 24 hours).
Accommodations for the Disabled The Board of Directors Meeting Room is wheelchair accessible. If you require
any special disability related accommodations, please contact the Orange County Sanitation Disb ict Clerk of the
Board's office at(714)593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature
of the disability and the type of accommodation requested.
l NOTICE TO DIRECTORS:To place items on the agenda for the Regular Meeting of the Board of
j Directors, items shall be submitted to the Clerk of the Board no later than the close of business 14 days
.preceding the Board meeting. The Clerk of the Board shall include on the agenda all items submitted by
;Directors, the General Manager and General Counsel and all formal communications.
'General Manager James D. Ruth (714)593-7110 iruth0ocsd.com
'Assistant General Manager Bob Ghirelli (714)593-7400 rahirelliacesd.com
!Clerk of the Board Penny Kyle (714)593-7130 okvlel@ocsd.com
'Director of Engineering Jim Herberg (714)593-7020 iherbero@ocsd.com
Director of Fin. 8 Admin Services Lorenzo Tyner (714)593-7550 Itvnerifitiocsd.com
.Director of Operations 8 Nick Amontes (714)593-7210 namontesfglocsd.com
Maintenance
:Director of Technical Services Ed Tones (714)593-7080 etorresaacsd.com
_General,Counsel..._...._..__-........_..__.._.....-Brad Hggin.....................................(714).415-1005 bho in wss-law:com.........................--....
H:\dept\agenda\Bwrd Agendas12007 Board Agendas\l 12807 agenda.doc
BOARD OF DIRECTORS rneeuoyoate TOBtl.ofDNr.
ll/28/07
AGENDA REPORT Hein Number Iert Numbe
7
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: PAYMENT OF CLAIMS OF THE ORANGE COUNTY SANITATION
DISTRICT
GENERAL MANAGER'S RECOMMENDATION
Ratify Payment of Claims of the District by Roll Call Vote.
CONFLICT OF INTEREST NOTIFICATION
Pursuant to Government Code Section 84308, you are required to disclose any
campaign contribution greater than $250 received in the past twelve months from any
party to a contract involving the Orange County Sanitation District. Further, you may
not participate in the decision making process to award a contract to such party.
For reference, you are directed to the Register of Warrants as to all current
contractors/vendors with the District.
In general, you must disclose the basis of the conflict by identifying the name of the firm
or individual who was the contributor.
For the specifics of Government Code Section 84308, please see your Director's
Handbook or call the office of General Counsel.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
See attached listing.
ATTACHMENTS
1. Copies of Claims Paid reports from 10/01/07 tot O/15/07 and 10/16/07 to 10/31/07
FO1,11 NO 1024 gpe,p�ggpl_Fg
dV1 ]N HwxO. 11/lY1W]
Page 1
ES �/
Claims Paid From 111101/W 10 IGMSKD
Warrant No. Vendor Amount Descdptlon
Acc meta Parable-Warrants
N304 Basic Chemical Solutions,L.L.C. 32,430.59 Sodium Sisulfite&Sadion Hydroxide
W305 Black&VeatrA Corporation 82,248.33 Professiol191 SeMceB J-]],5.58,&P1-78
94305 Blue Cross of California 4A,374.76 Medical Insurance Premium
N307 Camp Oracular&McKee.Inc. 84,268.49 Prolessional SeMces J47
M308 Consuale Image Maintenance,Ins. M.520.00 Cusladlal Services Spec Na.989949
N309 De1M Detroit 64,541.41 Dental Insurence Plen
94310 Demik WMm Convela 37,223.32 24'Full Port Plug Valve&Mechanical Pads
9011 EBdh Tech,Inc. 49,051.57 Professional Services 348
94312 General Polydeum 38,36SAI Engine Oil
N313 MDR Engbteering,lne. W&442.90 Professioal Services P142
M314 Hill BMhers 29,839.23 Chemicals-Odor&Command Control-Newport Trunklins
94315 Jamison Engin rerrg Contractors.Ix 48.353.00 Repair&Main.Servo.-Pit,1 generators;Gfsting&Supports III Mass St.Metering Slo:fM MSP ai Pit.2
N316 JCI Jones Chemicals,Inc. 234.349.07 Sodium Hypochbrite
N317 Kaiser Foundation Motor Plan 82,94918 Medical In...Premium
94IMS Kemire Water Solutions 101.]]976 Fame Chloride
N319 W J.Borth ant Associates.Inc 33,068.31 Temporary Empbymerr Services
N320 Malcolm%mis,In, 302,027.09 Processional Services I-10,5.50.1.24.11-W&P240
N321 MetLife Life Insurance Company 39,695.82 Group Lee,Manager Ada Life,Short&Lorg-Term Disability Optional Term Life Ins.
N322 National Assx of Clean Water Agencies W,742.00 M08 NACWA Membership
N323 Oocitlemal Energy Marketing,Inc. 103,871.68 Natural Gas far CenGereCOGen
94324 PoNdIrne,Inc. 58,052.13 Cationic Polymer NO 31142
M25 Smahern Calibmle Edison 102.451.0 Power
BOX TekSy9leme 25,016.00 Temporary Employment Services
94327 Tule RancisMagan Farms M3,154.89 Residual.Removal NO 3-29-95
94325 UN Financial Servces.Inc. 37.265.76 Remarketing Fee-2000A&B Series Advanced Rebnding COPS
M29 US Peroxide,L.L.C. 130,034.91 Odor&Corrosfon Comm)Twerdahl or Col.Sys.:Hydrogen Peroxide&Ferrous Chloride
M30 Woodrum Spadlm&Smart 52,541.85 Legal Services MO 7-2B-95
M31 Bemam Saktanda Jaint Venture 2,789,908.92 Construction 1.10A
9032 J F Stara Conebudiern,Ix. 1,042,352.58 Construction 1.106
84333 Kiewit Pacific Co. 3051115J0 Conetruclion 5.51&S42
94334 US Bank National Asa.Escrow 300,989.88 Constructed 1-10-A,Retention
94335 J.F.Shea Construction,Inc. 4.44 .383.21 Constmdion P240
9433e American Teleptana&Telegraph Cone. 197.94 Long Distance Telephone Service
94337 Absolute Sandards,Inc. 179.00 Lab Pads&Supplies
94338 Accounting Options,In, 4.24&W Temporery Employment Saddest
94332 AEE-SCC 40.00 Heeling Registration-Division 860
94340 Aelmek 3,795.84 Tempered,Employment Services
94341 Agilent Techdologles,Inc. 802.W Lab Pads&Supplies
94342 Amass Be",Ins. 7,341.21 Safety Supplies
94343 Alliance Resource Cones".L.L.C. 35&41 Precessional Services-Executive Search for I.T.Management Posome
94344 Agree,Performance Systems 2.295.50 Training FuNfe don
94345 American Society of CNII Eglneen 250.00 Membership
943Q Amtmm Elevebr S.Mces 1,400.00 Monthly Elevator Maintenance at Pits.1&2
94347 Applied Industrial Teciaalagy 157.56 Mechanical Paris&Supplies
94348 AWked!Marne Schaces.Inc. 900.00 OULSide lab Services
94349 ARK Technologies 9,223.24 Programming Senuces
943M ASM Press 149.75 Books&Publications
94351 AT&T CeMorria)MCI 69.10 Telephone Service
94352 AT&T Long Distance, 1,175.51 Telephone SeMce
H VbpNeaiF%CELAne1t3PAP$X4flE1CYune pas Pewdown LMx paid Report-Alb Qm A_10.154]WS EKHISITA
Palau: Page 1 of 9 11e5pea1
Claims Pala From 10401I1 to 10I15101
Woland No. VeMor Amount Description
9,1353 American TeleptroM&Telegraph Corp. 13.19 Telephone Servile
94354 AT&T VArelass Services 6,930,07 Ce0uar Airtime
M55 Atlas UndergrouM,Inc. 4.1gel Repair&Maim Sam.-Install 35 LF of 10-C-900 Pipe.Grade Access Road to Manhole-Santa Ana
943% AUNin Bldg.&Design DM The Austin Commiry V,451.61 Professional Services J4?7
94352 Autodesk UnannsilylEnterprae Event 3,290.00 Meeting Registration-Division 740
94358 Bar Tech Telecom,irk, U&M Telephone Equipment
94359 Banes Specralties 179.99 Bermes
94350 BC Wine Rope&Rigging 37.n Mechanical Parts&Supplies
Start BHI Management Consulting 2.400.O0 Professional Sam.-Strategic Planning&Facilitating Services for EMT Retreat&Board Workshops
94352 BioMerleux Vick,Inc 598.B7 lab Parts&Supplies
94383 Blue Diamond Car Wash,Inc. 1.630,53 OCSO oldies NJaMI^9Nsratl^9 Sarvirea
941)64 California Bamcede Rentable 2.225.W Bamrade Renla6
94385 Califoma Recreation Company 1,3W.97 Boat Slip Rental Fees fro Ocean Monitoring Vessel Normal
94.166 Caginess Retention Services,Im. 405.O1) Offim Fills Moving/Relocebon Services
94367 Csmerpn Compression Systems W.74 Fees
94360 Circle,Ire. 3.553.73 Office Supplies-Toner Cartridges
9438E CMAA Sil Training Registration(Copalmpfich Management Assoc.of Amenw)
U370 Consumers Pipe&Suppty Co. 512.83 Plumbing Parr&Suppose
M71 Controlled!Motfort Soluliona 1,042BD Mechanics Parts&Supplies
94272 Corporate Eamoss 242.44 Office Supplies
91373 Counterpart Enterprises,Inc. 2,SW038 Mechanical Paris&Supplies
B4374 County Wholeaale Eteclfc Co. 6,80.68 Etenicel Parts&Subsidies
B4375 CR&R,Inc. 1,020.00 Crommr Ramos&Mass Disposal Service
M76 CRC Press,Inc 798.04 Books&Medications
Mn CSUF Foundation 14,299.50 Project Development of Demographic Data&Support-Center for Demographic Redhead,
94378 Climate Tree Servin 8.500.00 Tree Main Same
94319 Desert Pumps&Pecis,Inc 1.117.50 Pump Parts&Supplies
94380 OLT SOMions.Inc 10,465.94 SaBware License RBnawals-Map 3D 2008&Raster Design 2000
94381 Dunn EdwaM,Corioallon 203.65 Paint Suppllar
94382 Dirtier Services.Inc. 12,632.W Tempoary Employment Services
M383 Eagle Proldhat of California 275.00 Bldg.Security Alarm Services-No.County Yam
943M Empoyment Deveopmenl Dept 3,099.00 Sate UnMrploymenl Tax
N385 Enamnter.In . 2.1 WAD Oman Monitoring&Ou ll Inspection&Malrom me
94388 Environmental Water Solutions,Inc 309.25 Fillers
94387 Eckel doctor Consulting.Inc. 4.537,50 Professional Servides-Implementation of Microsoft Customer Relationship Management Application
94388 Ewing IPlgari Industrial 106.78 landscape Imgation Paris&Suppose
U389 FEDEX Corporation W.W Freight Services
94388 Firlet American Real Estate Soutions 2.084.50 On-dm Orange County Property Information
W91 Father Scientific 12,T29.89 lab Pads&Supplies
W92 Fa Systems,Im. 7,1 W.W Pump Parts&Supplies
94393 Fountain Valley Palls,Inc. 138.35 Paint Supplies
94394 Franklin Covey 60.33 Office Suppose
94395 Fryle Elecironin 140.34 Computer Supplies
94388 CM of Fullerton West Vetter Use
U397 Defend Manufacturing Co. 581.32 Mechanical Parts&Supplies
94388 George T Hall Co. 723.93 Mechanical Paris&Supplies
94399 Gbbal Awads.Inc 175.89 Asset Tags
944W Golden Beg Products 5,973.09 Contractual Services,-InseWpde CoafiW Of Manholes
Will Gadenwest Corp. 5,155.00 Repair&Installation of Fendi
94402 Grantor.Inc. 6,21155 Earhral parts&supplies
N NinessaEXCELdibroMNPSHARElCY'ma Pad RppolgWTCWmf Pad Radar-AtWardna tOIWAS EXHIBITA
.1. Page 2 af9 It/.Soot a
Claims Paid From I010110T u 1011&/OT
Wamenl No. Vendor Amount Description
04403 Great Weslem Sarntery Supplies 202.55 .finhorad Suppies
91404 Hampton Tedder Technical Services 11.237.90 Professional Services-Electrical Acceptance Testing-Various Capital Protects
94405 He*Obignosiica 129.41 Lab Pam&Supplies
W08 Harold Friends ice 160.00 has For Samples
U407 Had ngten IMuathil PlaYles,Inc. 3.699.30 Mechencal Paris&Supplies
WOO Had,&Kid,Inc. 11,287.38 Spark Plugs for Cooper LSVB Engines
WOO Health Dimensions 1O0bOO On-She Health Expos for 2008-2010
9M10 Heallhlax.Inc. 5,280.00 Flu lmmunlration Program
W11 HewleK Packard Company 12,381.55 (1)Server&SOBwareJNsrdwse
W12 Hills Boat SeMce.Inc. 7"17 Oil&prior Change-Ocean Monitoring Vessel Nedssa
W13 Hall,In 2,812.02 Tool.&Mtthankal Supplies
04414 Home Depot 269.90 Misc.Rapelr&Maintenance Matenal
WIS Hope HeMlhlll4AC 512.74 Publication-Wellness Newslerers
W16 Hub Ado Supply 7n.42 Vehicle Pads&Supplies
94417 City of Huntington Beech 16890.34 Water Use
94418 IHS-'Information Handling Services 3,9B000 So9v2re Maintenance&Support-NFPA Dae Pages
W19 Industrial Distnbulion Gmzry 4.220.08 Mechanical Supplies,Cleaners,Sealants.Oil Is Small Table
WW IMusMal Threaded Products,Inc. 4,397.89 Imenrory Fasteners
94421 Interstate Ballence;of Cal Coast 939.33 Safteres for Vehicles&Cans
WM JO Tucker And Son,Inc. 1,26818 Calibration Gases
WM Jack-%Charge 190.28 Equipment Replace-Pneumatic lmpad Gun
94424 Jars;Catering 2,512.00 Meeting Expenses
Stan Johnstone Supply 110.72 Eleclrcal Pens&Supplies
W28 Kabob Expres. 146.07 Meting Expenses
W27 Kforce,Inc. 2,240.00 Temporary Employment Services
W420 Lab Safety Supply,Ins 301.52 Lab Pant&Supplies
W29 Lab Support 1,800.00 Temporary Employment Services
W/30 Lee&RP,Inc. 12.321.11 Profedslonel Sandie!3-54,FEO504,Is FE0T411
W31 Lomran Education Somme 33SOO Training Registration
9<432 Lu a relica Pizza 79.09 Meeting Expenses
W33 Mau ElecBk Contraction Co. 4.995.00 Engineering Services Pl-71
W34 McMaster Can Supply Co. 8.805.88 Mechanical Party It Supplies
W35 Meawremenl Control Systems,Inc. 2.827,18 Repair&Calibration Ranked Rotary Gas Meter
94038 Midway Mg.&Machinum,Co. 2.629,10 Mechanical Paris,Supplies&Repairs
94437 Miele,I= 1.130.81) Lab Paris&Suppfres
94438 Mission Uniform Service 257.81 Uniform Rental.
94439 MM Americas,Inc. 7,703.54 Professional Services P2-74
Wild National Resurch Council Cantle 483.2T Lab Plate&Supplies
Spilt Neal Supply Co. 551.14 Plumbing Supplies
Wu12 Neutron Products,Inc. 8.878.52 Anlonlc Polymer
OM43 Newel Electrontcs 2,008.20 Elechical Parts&Supplies
94M4 Nhryo&Moore Corporate Accounting 761.25 Professional Services-Salts.Comas"Other Materiels Testing for Various Capital ProRds
9045 NRG Thmmal Ssrvlcee.L.L.C. 5,225.86 Mechanical Pam&Supplies
94446 OCR Reprographics 18,510.44 Printing Service-MO 11281UO
W47 Office Oepol Business Services Division 2,67119 Office Supplies
W48 Omega Industrial Supply,Inc 1.318.43 Jani0ml Supplies
9W19 Onesource Distributed,Inc. 7,680.26 Elecrical Paris&Supplies
W50 Oracle Conporaion 10.231L22 Seflxare License and Maintenance Agreement Renewal
W61 Orange County Chapter-ISCEBS 90.00 Meeting Regl9halion-Ethernet 240
94452 Orange Count,Vector Control Otshigt 70.74 Put Co hol
HWepNMEXCELEInduckp3NARMIMMr ped Re0epltGOTCMme PW fission. xfinenr_4na'r5-0LN EXHIBITA
anod. Page 3 of 9 ".roam
Claims Pam From 1W01107 to ton6101
Wemerlt No. Vander Amount Description
94453 Orange Fluid System Terlmologlea,Ire 1,230.14 Plumbing Paris&Supplied
W54 ORCO Construction Supply 740J8 Small Tads&Ladder
94455 Oxygen Service Company 1.7VLW Retand Shop Gases&Lab Parts&Supplies
9H56 Paalfic Mectunicel Supply 501.82 Plumbing Supplies
09451 PCG Mountain, 850.00 Repair&Maintenance Services-Shaft
WOO Peerless Veping Materials Co. 4M.0 Janhwial Supplies
W59 Performance Pipeline TechndWes 1,100.00 Sewerline Video Inspection-Various
94460 PerkinElmer Las 1.18248 Lab Instrument Maintenance-Mee Spectrometer and HardsarelSe0sare
94451 PFTIAIexander Semce,lac. 21,10T.40 Mechanical Parts&Supplies
94462 PL Hawn Company,Inc. 1,424.64 Electrical Parts&Sup",
W63 Ponton Industries Inc. 12113 Instrument Pans&Supplies
W64 Poser Eleclro Supply CO.Inc. 202.11 Elecbiical Paris&Supples
94465 Paxal,Inc. 282.50 lab Pau&Supplies
9M66 printed, 2.671.85 Printer Maintenance
04451 Padental Overall Sup* 3AVAH Unit...&Related Anficas
94488 Pubmeister America.Inc. 1,26&22 Fillers
W69 Guinn Group,Inc. 482.72 Air Filler
91410 Rennin Instrument Co..Inc. MM tab Pads&Supplies and Repeire
BW71 RBFConstmhg 1.70.52 Surveying Services-Various Locations
W422 Restek Cory. 855.P lab Pans&Supplies
84473 Retrofit Paris&Compensate.Inc. 336.94 MaChednl Parts&Supplies
B W74 Rolls Royce Energy Systems.Inc M.71 Electrical Paris&Supplies
W 75 Ran Writer Consulting.L L.C. 3.GW,W SplNna-Somdule Analyzer
W 76 Rom Rooter N00811 70SA0 Plumbing Services-Video Inspection and Sewer Lire Cleaning at Plant 2
BW11 Royale Cleaners 22.00 Dry Cleaning Semces
W78 Ryan Hence Produce Cog, 2,023.89 Meal
BW79 Sancon Engiraenry&Ina 22,295.00 Repair&luentewnce Semces-Maniple Rehab.Program
WOO SC F.Is 3,292.14 Dr.[Fuel
94401 Scientific ReMgeation 219.00 ReItlBOator Repair
94402 Sceh Specialty Gases,Inc, 4,139.18 Lab Pans&Supplies
WI83 Smllel Voice&Wed,Ina 2.2154.19 Telephone System Maintenance
944W Sen..Ebcbodn 81.19 Redangell Batlene
94485 Slammck Supply Co..Inc 2.030.39 Merlanical&Electrical Pads&Supplies
9W W Shureluck Salaa&ErgiraeMg 1.601.70 Medamcal Parts&Supplies
W87 Sigma AmM,Ina 1.BW.15 lob Pads&Supplies
W88 SKC used.Inc, 1.874.32 Lab Pads&Supplies
W89 South.Cooperate Tend Service 3 ".25 Maintenance Agreement-Plant l Absorption Chillers
BW80 SeulhMn Courroes Lubricants 8.521.00 at
W91 Spaddetls 2,088.14 Drinking walerttader R®Nels
94482 Spec Semces.Inc. 17,131.99 Engalerring Semces FEO6-01
Sal Spencer Fluid Poser.Ina 19&28 Oil Fiber
BMW Steven Enterynsers,Inc. 3B5.74 OR Supplies
WINS Summit Steel 6.053.97 Meal
W96 Sunset Irrdusaal Pale 329,45 MCCina l Para&Supplies
M97 TeMrnscal Serape Group.Inc 1398.08 SCAM System VAX Service Agreemenl
BUBO TDC Gmw.Inc, 2.000.00 Soavere.Maimereva&Strudel-Faeence
9H99 Tenmidx Inlemetanel 135.00 Pest Cannot
94500 Tesaman.Ontario 2.092.00 Analysis of Biosplids
945111 11amg EleClmn Noah Amerse,L.L.C. 0.665.08 Lab Equipment Maintenance Services
W502 Tbompspn Industrial Sup*,Inc. 11,439.94 Mecanical Paris&Supplies
H anauddeXCELdreV2TV5HMEM24mr Paid Pxporp3p0i'qumr Pod Repon-TWhnmL/LI0.150iffi EXHIBRA
.1. Page 4 of 9 nnMedme
Claims Paid From 101111107 W 1WIMT
Wmant No. Vendor Amount Description
94503 The Clod Saks and Service Co.,Inc. 160.43 Repair&Maintenance S.M..-Acrolmind Time Clock
94504 Tany's Lock&Sale Service&Seles 305.82 Locks&Keys
94505 Tn ou ty Fire 424.04 Fire Extinguishers
94506 Tmdl&Auto Supply,Inc 800.29 Automotive Parts&Supplies
94507 Union Bark M California 2.203.00 Annual Aominlstratim Fee for Sense 2W3 Candidates at Parllclpallon
94506 The Unlsoune Corporation 1,161.68 Office Supplies
Wa99 UMted Prof.S.M.,Inc. 17,057.61 Landscape Maintenance at Plants 1&2 and Pump SWiom
94510 United Parcel SeMce 48.57 Parcel SeMcas
94511 US Equipment Co.,Inc. "2.60 Repair&Maintenance Services-Air Compressor
94512 Valley Delmil Conrad Allison 447.40 Mechanical Pads is Supplies
94513 Varian.Inc. 1,155.80 Lab Paris&SupP'ies
M514 Verizon Wireless 537.06 N&Rless Telephone Services
W15 Vernes Plumbbly 14n0.00 Repair&Mara.Slue.-RemoveJReplace Shower FtooNPars;Hot Water Hester,is Reroute a 314'WaW Lim
94516 union Senace Plan CA 9.349.20 Vision Service Premium
M17 Vortex Co, 319.30 Door Rep rlrs-Rall-Up Door at Warehouse Loading Dock
M18 VWR Sdentifrc Producls 1,234.94 Lab Pans&Supplies
94510 Waters Corporation 1,187.96 Lab Pens&Supplies
94520 Waxie Sanitary Supply Still Janilorkl Supplies
94521 West Coast Us 2,BB3,00 Employee Life Insurance
94522 West LXe Supply Company,Inc. 1.167.85 Ele rml Paris&Supplies
94523 Westport Apparatus DBA Breaker Supp. W.24 Electrical Paris&Supplies
M24 Xerox Corporation 19.745.27 MutBunmional Copier Leases
U525 YmdC hose Materials Han:01%Inc. 497.W Ekcvic Cad Pans
94526 Zbnmerman Yerle Maintenance 212.00 Repair&Maintenance Service-Ocean Moniloncg Vessel Nerbse
94527 Green Giant Landscape,Inc 5.652.00 Convention-FE05-1 TR
94528 Wells Fagp Bank Mac CM00412 16,090,30 ConMpmlon 551&552,Retention
9452o Laym T.Sachs 286.80 MeetingTreinirg Ivioad a ReimWnemenl
94530 Ratkumar Settled 18.00 Meeting/Th nVg Expense Reombursemenl
94531 Brian Birgman 560.00 MeetingTraming Expense Relmbursement
M32 Pinky E.Ruder 64.04 M9eling/Tralnirg Expanse Reimbursement
W33 Pmrysakdi Cady 69.24 Meetingandring Expense Relmbursement
945M James E.Colston 180.80 MeelingTraining Expense Reimbursement
94535 Dairy G.CovamlNas 33,06 Meetng/M1ainirg Expense Reimbursement
945M Ingrid G,HellebaM 50.62 Meeting/There,Expanse Reimbursement
94537 Eck S.HNeh 73.96 MeetingTaining Expense Reimbursement
94538 Laura A.Lucena 1,435.60 MeeMglTralnhq Expense Reimbursamant
U539 Lourdes Lure 35.03 Maning/Train o,Expense Reimbursement
M640 Denise M.Martinez 20.66 Meefing/Tralning Expeme Reimbursement
W541 John Mikovich 61.00 Mcetingriminirg Expense Reimbursement
94542 Samuel L.Mm6my 1,148.55 McetngTrainhg Expense RNmbmssment
91543 Subash Mysore 0.18 Meeting/Tlelnirg Expense Reimbursement
94544 Samlr Patel 3640 Meatng"Tralntrg Expemo ReimWmmeM
94545 Odem Phuong 430.18 Mee9ng/Tralning Expense Relmbursement
94545 Sent Redm,r WAS Maeling/Training Expanse Reimbursement
94547 Often K Reed 110.00 MeelirWTheining Expense Reimbursement
94548 Hem,R.Selgato 56.91 MeelinglTraintng Expense Reimbursement
94649 Guam T.Smith 273.40 MeelingTralning Expense Relmbursement
945M John W.Sobaffer 54.00 McMirg/Trairvng Expense Reimbursement
94551 Peale A.Zeller 566.66 Mandg7raintng Expense Relmbursement
94552 County of Orange Audtor Controller 615.00 Adminlstrallon Fee-Adjustment to Property Tax gill
Hw%o aMEKmLEW]NOPuHARMhm4 Pea ReµvN00i1CIMme PW Ram-MletivnenL 1pleaT Ne EXHIBITA
andthm Pape 5 of 9 1910.7
Claims Pala From IMIM7 to 101I5ro7
Vyaoam No. Vendor Amount Denalplbn
94553 County of Orange Audibr Cpnbolbr 615.00 ACministsition Fee-AENstment to Property Tax Eli
94550 Deercreek Capital Group 1,267.89 Recomfolion User Fee ReNW Pngrsm
MSSS Germain Family Trost 213.59 Reconciliation User Fee Refund Program
94N6 HYR Enteryriees OM.40 Reconciliation User Fee Refund PRgrsm
W657 David Johnson T91.91 Re ondhation User Fee Belfast Program
W558 Mohemad Web 259.63 Recondliabon User Fee Refund Program
M559 Pon 1989 United PaMerame 1 756.83 Reconcoation User Fee Rai Program
MSW Deny&Cbirs Robins 282.98 Reexamination ation User Fee Refund Program
W561 Lira VaCher 2T1.32 Reconciliation User Fee Refunid Program
M62 Govemmenl Finance Officer Assocation 425.W MeeNg Regisca0ol-Division Z20
M63 Black&VealenC Wnfiflun 113.917.n Pmfcstional Semen Pt-102
94564 B.&Caldweu 1 W,6M.29 Professional Services 1`2-90
M58.5 Ca oto Eng. 202.212.00 Piremanoml Services P26
M598 EaM Teen,Inc. MA58.34 Pmleadonal Services P1-100
M567 IPMC do Parsons 1.086,231A0 Engineering Semces-Integrated ProgranrPmleN Management.Temporary Staffing,Will.&Supplies
94568 Jamison Engineering DMrsntors,Inc. 2 ,6 W Repair&Menterome Semmes,-W InW.Ied Cdd Water Urea at Plant
94559 JCI Jenne Chemicls.Inc 36,522.48 Sodium Hypoenlonb
BWTO Kemirs lklaler Sohniom,Inc. W.075.22 Fentc Chloride
M571 WA AmJmBecis W,050.00 Profe eloml Semces 15-04
94572 NRG Themmal Services,L.L.D. 249,638.00 Repair&MainMmnce Services-40,000 Hour Ce M,/CoGen Engim OvemapN
MSM RMS EMineemg&Design,Inc. 58,220.W En0ineenng Services FEW-12
94524 Symgm Walt.Inc 891.408.36 ResiivaLL Removal MO 3.29-85
MST5 Caidmnia Business Bank M.222.00 Donsbuction 7-3b1,Relention
gain Ken Thompson,Inc. 59,3W.W Construction 7412-1
945A Smcon Engineering.Inc 132.570.00 Comtruction FEO&15
W578 American Telephone&TeIMMph Corp. 230.40 Log Distance Telephone Semen
M579 AKM Consu0ing En0ineers 12.000.00 Proessional Services-Pad-Time Dig Alpd Technician
94500 Amencan Aidbres 3.986.M Travel Services
M01 Amentan Fidelity A.M.Company M.M Employee VONnrany Cancer lmmance
M82 Amerrn Payroll Assocafion 414.00 Training Registration
94583 American Seals West 712.75 Mechanicel Parts&Supplies
W584 Applied Industrial TerArology 25.30 Mednanlcel Pads&Supplies
M585 Baker Tanks 479.M Tank Re ils
WON Bar Tech Tel.,lncprporated 3A3&62 Telephone EOvipmenl
W597 Basic Chemical Solutions,L.L.O. 16,M n Sodium BiwRle&Sodium Hydroxide
94588 BicMeriemm Vick,Inc. 2.374.0 tab Equipment Maintenance Agreement-Vile K2
M509 BMC Busircss Maenbes Consu0anls 17.074.07 Mullihmai0nal Copier-HP9059 into&SmpkNStarker
94590 Urforrea Department m Punic Health 175.00 Cadietatnm Reeeval
94591 California Dept.of Chid Support 1.M.12 Wage Garnishment
94592 CMTA -Cellfoma Municipal Treasurers Association 6W.W Training Registration
94593 Compressor Components of Oallfemia 13.233.W Merdaical Plans&Supplies
MS" Consumer,Pipe&Suppty Co. 1,338.25 Plumbing Parts&Supplies
W595 C Forsb Expreas 343.12 Office Supplies
94596 C.S.M.F.O =LW Membership
94597 CWEA SpecialtyC rence fill Meeting Registra0on-Dynamo 240
U598 Dennis Tone Service T.STS.W Tone W.M.Sam.
94596 Dbgx Coparation 1,1100.00 Training Registration
woo E1Mnome Belamdrg Co. 145.00 Reparr&Maintenance Services-Balance Impeller&Shaft Assembly
9W91 Employee Benefits S,kcalisN.Inc. 9.1T5.T5 Reimbursed Prepaid Employes Modest&Dependent Cars
8W02 EnnWrOnvnmMral Compliance Inspection Svce. 1,200.0 Professional Servers-pass Oil Grease(FOG Program)Impecti0ns
m1:idepOeeeFxe[s S.Ecrams aae fan.00KI®mm Pus Report-npamnne l.'W E%HIBITA
s„Oraz Page 6 of 9 1111.7,
Claims Paid From 10/01107 to 1WIS107
Warrant No. Vendor Amount Description
94803 Eskel Porter Containing,Inc 2.475.00 Professional Services-Implementation of Mmmwft Customer Relatlonshlp Management Applimimn
94804 Expen Lem lab 3,739.0 Safety Glasses
94605 FEDEX CWporation 16.87 Freight Service,
040136 Fisher Sensors.Company.LLC. 172.02 tab Paris&Supplies
94607 Fleming Eromnmental,Inc 928.88 Repair&Whemn.Senate.-Atmuls,
94606 Franrldso Tex Bosh 50.00 Wage GamisNrenl
94609 Goldensesl Cory. 1.210.00 Window Wald ng Services
M10 Gommment Fin..OMcere Aucalallon 50.00 Faviaw Fee-GAAFR ReNew Subscription 12/0IW-11I3010!l
04811 Grainger,Inc. 222.72 Essential Pads&Supplies
94612 Guarantee Records Management 799.60 O"Ile Records Storage
94613 HIM Bmthem 22,632.29 Chemicals-Odor&Corrosion Cmlral-Newport TmnMina
W14 Home Depot 855.57 Mi. Repair&Maintenance MateMI
0015 Indiana Child Sepporl Bureau 290.00 Wage Garnishment
W616 Internet Revenue SBrvlce 320.00 Wage Gamishment
stet] International Inafdule of Mumumal Clerks 190.00 MembeMip
94818 International Risk Management trial. 8.00 Annual Subscription Removal
9019 Iml.Union of Open,Eng,AFL CIO Local 501 4720.21 Dues DedYpiom
94WO IPI GremmeNr,Inc. 18.050.00 NT Server Maintenance-Sllonr
94621 Imn Moeelan 106.00 Storage Fee-Bid Documents P1-37
24622 Inane Rents Water DNMct a." Wamc Use
94523 Jaya Cetadeg 781.07 Meeting Expenses
W24 Jumbo Doper EMeMd .Ice, 2,310.00 Repe0&Maintenance Semces-Irma littion of Rod Iron Fence&Gate at Traverse$1.Easement
W25 Larne Son and Lungterd 1,s92.75 Pnerectemall Services-assumed Auditors
946M Lee&Ro,Inc. 17,211.08 Professional Services FE06-04
94527 Court Order 150.00 Wage Garnishment
W28 Luparelos Pb2a 5&Bg Meeting Expense 7-02
94629 Midway Mfg.&Machnnllg Co. 510.00 Repair&Maintenance Services-Air Compressor;Cut 8 Sandblast Pipe Sectiom
W30 COW Order 225.00 Wege Garnishment
OM31 li Ina. 140.00 Meesmann,
94e32 National Bond&Trost 2,217.34 U.S.Savings Bonds Payroll Deductions
94833 Netlotal Plant Service&Ina. 2.850.00 Pumping Senses
94634 Nautllua Environmental.L.L.C. 225.00 Lob Paris&Supplies
94035 Newark Electronics 422.86 Computer Supplies
W38 The Norco Compent9. 388.80 Mail Delmry SeMce
W37 NPELRA Annual Tralydng Commune 279.00 Training Registration
W30 OCS Reprographiq 2,000.58 Finding Service-MO 1/2Woo
M39 OCEA 536.50 Dues Deduction
94640 Orange County Shares 342.33 Wage Garnishment
94041 Orange County Unissd Way 5D.00 Employee Contributions
94042 Orange Courier 52.01 Cooper BeMces
91643 Oxygen Service Company 07.85 Lab Paris&Supplies
all PCB Express,hrc. 11D.39 Counter Session
94645 Peace OBirxrs Council ofCA 2.056.00 Dun D.dudbn,SupeMsore&Professionals
94846 PerklnElmar Les 1.439.38 Lob Instrument Menfenamce-Was Spectrometer 80 HBrdweral5oftware
94847 Platinum Adhesion 10.000.00 Legislation AOwcec+/EBOM
94848 Potydym,Inc 19,890.05 Celicnic Polymer MO 3.11.02
M49 Pm-Pend Legal SaVoi s,Inc 1.M9.10 Employee Voluntary Legal Service Insurance Premium
W650 Pmpme 12.91 Seserine Cleaning ter City of Tualm&Unincorporated County Property
94651 FEW Resources,Inc 2.190.00 Tramp RWi.traf
N852 Public Reeeuroes Advisory Group 10.029.0 Financial Advisory SeMces
Xbapfnr XCELdert]PMPSI REWIaIme PNd RepMQOMW,mr Pwd RNor, AnRbm.'kii SaLds EXHIBITA
nMrNC Page T of 9 lower.,
Claims Pad Film 1 W01107 to 10115107
Warrant No. Venda, Amount Oeccrip8an
9a653 Pyramid Ferree Cemarry,me 5.278.00 Fenung
94654 Quion Power System Assoc. 161.73 Maintenance AgreemMt-Crean Monitoring Vessel Nerisa
9a655 R L Abbott&Associates 2.000.00 Kent County Slosotids Consullirg Services
94556 Safely-Kleen 521 A4 Pads,YVasher Lease.&Service
W57 Sorrtn Coast Environmental Co. 12.258.63 Air Quality Manner,
94658 Scott Specialty Gases,Inc. 128.P Lahomtory Supplies
W59 Shumsuck Sales&Engineering 591 MxJvnical Supplies,Paint If Lubricant
04660 Smith Point and Supply MM Point Supplies
W61 Solhae House International 18.822UU Schaefer Maintenance&Support-Gatexy
94662 Swmesest Pipelira and TrenMless Co. 3,570.00 Repair&Maintenance Services-Video Inspection&Repair r Sener Main
M63 Steven Morse 2,600.0c, IrervlewVtledEtlNr,&Media DiffiNUBon Senmeas Re Succession Management Pmgmm
9054 Sbalus EmkonmMW.Ix 1700.00 Professional Sandals-Gmundeater Monitoring
tM65 Terminix lntemalimal 1.1145.00 Past Condell
94665 Tesions. 4W.W Analysis of BiosoAds
e4567 The Public Retirement Journal 1911 Books&Publications
W68 Times Community Ness 87.50 Notices&Ads
Miss UldmgrourM Service AIM of So.Call 3.3".60 Undergmuid Utility Idembficatiorol ig AIM Iseifcatgn Service
94670 UniX.d Palmer!Service 38.89 Parcel Services
W71 US Equipment Co..Inc. 2,WA2 Mechanical Parts&Supplies and OR
W72 US Pemtde.LLC. 14,555.35 Color&Corrosion Control Treatment for Col.Sys',Hydrogen Peroxide&Ferma Chloride
INI Vane Audmeti0n&Connote 1,BB6.89 Repair B Mabdeance Shininess-Actuator
M74 Variant,Inc 231.02 tab Pads&Supplies
M75 Vannes Plumbing 70.110 Service Contract-Teem,.Repair If Ced.Saalk a Devices at Pin,h&2&Pump Ste.
M75 Vorlml Corp. 1,2Ba.87 Door Repairs-Plant 2 Warehouse
94877 Ini SUMMrc PrMucds 400.22 Lab Parts&Supplies
W78 Westport Apparatus DBA Breaker Sups. 246.68 ElecMcel Pads&Supplies
W79 Court Oder 597.50 Wage Garnishment
Wild Peter Claims 117.00 MeetinglTrsimng Expense Reimbursement
94581 Y.Choi 137.W Wasing'Traming Expense Rembusement
U682 Douglas Kanle 250A0 Mr!eling?mining Expense RaimWrsement
M83 Jamison M.Waste 349.00 MeetingfTmining External ReimWrsoment
94684 Chris A.Sterklln 125.00 MeetingfTminin,Pxperne Reimbursement
94685 Edead M.Toms 125.a Meeting mining ExpMee ReimWreameM
94686 Simon L.WMbon 137.30 MestingrTiarke,FxpMse Reimbursement
satisfy Charles F.W it., 125.00 Meet rigrTmlMng Expense Rembursement
94688 City M Fountain VeRey 2.336.94 Plan Check Fee-P1A7
94688 Kaiser Foundation Heaton Plan.Inc. 3,11M.17 ReanulbGon User Fee Refund Program
W90 Cmnge County SaniaBon Diselct 7.616.79 Mikefs Cane.Reports.
94591 O.,County Fire Authority 145.a Pem1A Fee-Ferrous Chloride Storage Tank-Seal Bach Pump Station
W92 Vended Check -
M93 Wild Rivers Montauk 1.829.00 Reimbursed Employee Agivitle6 Program
Total Accounts Payable-Wamanls S t
Payroll Olabursements
37WI - 37M Employee PayUscks $ 125.8,17.69 Bieaekty Payroll(101=7)
37W - 37549 Employee Paychecks 11,121.50 Interim PaymR-Void.Reissue.Reims&Retirement(1WW07-1Wh hm7)
146330 - 148330 Direct Deasil Statement 10.648AS 415 Payment(1W01107)
146331 - 146895 Direct Deasll Statements 1,251,521.12 Bieeedy Peyroll(1W1W07)
Total Payroll Disbursement 1. 96,1 .45
..P. .cf,usunhu,..k s:.: No Iu'u,r,kMwro Pytl Pryon PcrurnnsP10-15-0,1n E)(HIBRA
m Irkk Page8ol9 1111asnnQ
Chime Pala From ION1m7 to 10116107
Warrant No. Vendor Amount Description
Wire Transfer Paements
OCSO Payroll Taxes 8 Conlrbutions S 099,528M Biweekly Payroll(10110107)
Deutsche Bank 4sa,94O.60 Series 200E CeNOoates of PerOdp lion Seplem0er 2007Interest Payment
BdrIX of Newyork 102220.00 Series 1990 Relunnum Certificaets of Padldp ton September 2007Interest Payment
Tehl YAM Transfer Payments 1.0 ,691.B8
Total Claims Paid 1m011O7-1011 W07 S 1B.222.189.1s
H WepN IPF10EL MaQ2MPSMRE0wme PaiO Fe} OOn Wlma Pad ReWr.MlnWnenLA l0.lS 7,Aa ERHIBITA
nMm. Pace 9 0l9 1111sRm2
Clalme Paid From 10116107 to 10/31107
Warrant No. Vendor Am0ad Description
Accounts Payable-Warrants,
91894 Air Products&Chemicals & 26,13SN 0&M Agreement OXy.Gen.Sys.MO 8.949
WIN going-Anaheim 26.001 Recomiludion User Fee Refund Program
Si J R F9anc ConeVucllon 95.40D.UD Repair&MaiM.Services-Replacement of Di0user Membranes at Pit.1 Aeration Basins 1 to 10
W97 Jamison Engineering Cmdactoa,Inc. 34,035.41 Repair&Main.Barriers-Pit.2 Bersomens:Is Leak at Pit.1 lab 8"Hot Water Loop
Skl5M JCI Jones Chemleals,Inc 58,411.13 Sodium HypoC lMM
9099 Xemlra Water Soldiers,Inc. 82,551.04 FBMC Chloride
WIND Mayer Ho&man McCann,PC 25,538.00 Financial Auditing Services
94701 Orange County Business Council 25A00.00 OCSD Memberahip-200]GrpMh Strategies Initiatives
"702 large County Water Mass 75,205.T2 Green Acres Water Preject(GAP)
94703 Polydyne,Inc. 28,176.W Cationic Polymer M03-11-92
9704 pastures 25,628.74 Employee VNuntsry Ule.Cancer&Supplemental Shod-Term Disability Insurance
94705 SL Jude Medial Center 27,530.81 Reconciliation User Fee Refund Program
W705 SO Car Gas Company 46.651.83 Ni Gas
N707 Southern California Edison 107,765.64 Power
9700 Synagro Was,Ins. 35.27,11 Residuals Removal MO 129.95
BOOB Thompson Industrial Supply.Inc. 25.688.16 Mechanist Perk&Supplies
971D TMV Syslems Engineering.Inc. 72.620.42 Sofiss re-SCAM HIslwian SpMware
94711 Turks RancMMagan Forme 198.493.2D Residuals Removal M03-29-95
9712 Adamrulkir ory Construction Co..Inc. 238.945.50 Construction P1-106
W713 J F Shea Construction.Inc 3,877,759.88 Construction P246
9714 J R Filent ConebUCtiam 3%.W7.66 Construction P142
8715 Kcew9 Pacific Go. 4,854.M.40 Construction Pt-tco
8015 Pacific Mercantile Bank 93.652.10 Construction P1d06,Retention
N717 SNmmlok Constmtllon Co.,Inc. 255,384.2T Construct.P240
94718 Union Bank of America Escow 201 COnstruWon P248.Pearson
94719 J F Shea Construction,Inc. 530,282A0 Construction P2-TO
94720 J F Shea Colnhuc9on,Inc. 593,916.25 Conkmacron J-TT
94721 A W Chesterton 4,60&98 Whadhadal Paris&Suppose
W7V Ac obun,Inc.92 177.14 ReanciliaOon User Fee Refund Program
M723 Air Industries Company,A KC 12,691.W Reconciliation User Fee Refund Program
94T24 Air Industries Corporation 2,661.26 Reconciliation User Fes Refund Program
04725 Allied Pacific Metal Stamping 2,899.54 RemncilktM User Fee Refund Program
94726 Alloy Ok Casmg 3,303.91 Reconciliation User Fee Refund Program
94727 A.Sumhpke,Inc. 8,408.87 Remrgiktion User Fee Refund Program
9028 Amadmax Building Products,trio. 2,09T.10 Recom illation User Fee Refund Program
972e Ameisk Aerospace M3.41 Reconciliation User Fee Refund Pmgmm
9730 Anaheim Extmslon Go.,Inc. 300.51 Reconciliation User Fee Refund Program
M731 Anolwhead Products 4,344.18 Reconrtkbon User Fee Refund Program
9032 Aviation Equipment.Inc 4,359.28 Recom lktion User Fee Refund Program
NM Abmekve Engineering Tool&Equip. 101.70 6esqui Supplies
9734 Absolute Skrdai IM 55.00 Lab Pads&Supplies
9035 Accounting Options,Inc 4,513.W Temporary Employment Schema
94736 ACE EMorwmkx 1,2T6.42 Proems od Services-Wetional Evaluations
94737 Amway 4,217.80 Temporary Employmenl Services
94738 AICHE 174.DD Membeahip
94739 Aimee Sa eft Inc 14,487.64 Safety Supplies
8740 Ark-Robbin,Inc 1,370.45 Imlmmenl Supplies
94741 American Express 15,282.W Purchasing Card"rem,More.Supplies&Services
94742 American Society For Microbiology 329.00 Memberstdp
94743 Apple0n0 Employment Service 1.O75.01 Temporary Employmenl Services
HW pmNMXCELd=MAPSHAREu3ims Ped RygnMpTfblmr Paid Rapan-NlMmmr B 103" .xis EXHIBITS
enlac -- Page 10 15 Iulsrzoor
Claims Paid From 1UI161UT m 10O1107
Merely I&A Vendor A,abcol Deserlplho,
91714 Applied Industrial TeWmbgy, 519.w Metllaniml Parts&Supplies
9170.5 Atonal Ivy.Inc. 4.4n.00 Slurry Seal&ReSbrm Front Parsrg Lot Area of Maintenance Building
91715 Ary Services 453.89 Reconciliation User Fee Refund Program
91747 American Society M Chid Engineers 250.00 Membership
B1748 Aelldook Corporation, 1.99721 Medraniral Parts&Supplies
M749 AT&T Univmsal Biller 2.600.33 Telephone Service
01T50 A adn&Trophies Company 285.50 Awards&Plaques
U751 AVM 133.00 Department of TransporWian Program Management&Testing
94752 Bare Houston Co. 2.121.97 Reconciliation User Fee Refund Program
U70 Beo-Mag Electronics 91.35 Reconciliation User Fee Refund Program
01751 Bodywte Lindberg Corp. 755.93 Reconciliation User Fee Refund Program
91T55 Brassleen 02.Inc. 38311 Reconciliation User Fee Refund Program
94756 Brasstech.Inc. 5.992.79 Reconciliation User Fee Refund Program
91757 Bnsld Industries 2,568M Reconciliation User Fee Refund Program
8050 Burlington Enginpenrg.Inc. Bn.90 Recondluibim User Fee Refund Program
W759 Basic Chemical Solutions,LL.C. 3,405.59 Sodium enugh.
91780 Ba9ery Specialties 259.55 Batteries
90751 ace Man Peal COmr01,11 155.00 Past Control
91762 Bendy Nevada Corporation OVAL Vibration Sensor ENert ion Cables
9083 Blue Martin Group 133.10 Lab Parts&Supplies
8061 BMC Business Machines Consultants 18.962.08 Multifunctional Copier-HP9050 trip&StsplerlSlachm&Maintenance Agreement
W705 Snociogialix LLC. 6.000.00 Prot Serv.-Preparation of Interim Amituage,Rebam Reps Re 20M Series COPS
91T66 Bopwond 5.382.93 Motile Safety Side Service
91767 Cambm Manufacturing 2,080.00 Reconciliation User Fee Refund Program
91766 Cannon Equipment VJnst I.M.0 Rewnalanion User Fee Refund Program
9Q5g Ceram Precision Engreerng 2.371]5 Reconciliation User Fee Refund Program
9070 Cargill,Inc. 2,513." Reconciliation User Fee Refund Program
91771 Catania Cylinders 3,09 1 Reamulia9on User Fee Refund Program
91n2 Central Popper Coating 1,551.29 Reovmilialion User Fee Refund Program
MM C5y of Fountain Valley 515.00 Fire Permit Fees
eena County of Orange M62 Maim Agreement-Repainllrztallation of Base.Handheld&Vemde Radios
91n5 Creal Coatings e2 2.580.05 Remndfialion User Fee Refund Program
NM Cher w Machine Works 1,180.53 ReconcMation User Fee Refund Program
0 M Crooked Container Corp. 8.915.25 Reconalialion User Fee Refund program
Una Cal Gave.Inc. 372.05 tab Paris&Supplies
91n9 Cameron Compression Systems 3,Bo1.11 MaJlarncal Pans&Supplies For LSVB Cooper Engym
90780 Candela Corporation 9.n Electrical Supplies
91781 Cm Fired Systems,Inc 17,5117.89 Fuel Card Program-District Vehlcies&Monitoring Vessel
91782 Career Management Strategies 3.InW Succession Mgml.-Coaching&stanching
91783 CEPACmopeny 1.810.00 Lad Equipment Maint Bernice
91281 Cai In . 181.43 Office Supplies-Toner Canndges
91785 Claw Plating,Inc, 812.38 Reconciliation User Fee Refund Program
91755 Clean Harbors EnNromnenlel Servgxs 15.214.07 Halardous Waste Management Services
W87 CRolon Industries.I. 1,637.38 Mechanical Paris&Supplies
91788 Cole Farmer mentioned Co. 351.38 Lab Pans&Supplies
8&789 Computer Pmlegion Tlchriology,Inc. 559.09 Computer Batienes Maintenance Agreement
91790 Consumes Pipe&Supply Co. 222.18 Plumbbg Pars&Supplies
01291 ConlMled Motion Solutions n&93 Mechanical Pant&Supplies
W792 Corporal¢Express 9,361.81 OMca Supplies
91T93 County of Orange SA MS!) Carbon Canyon Dam&Pump Station Abandonment
BOTBO CR&R,Inc. 1,575.00 Container Rentals&Wass Disposal Service
HNeoUa XCEL�m41RMl sPMRepaN00TL'lame Pm Rewn-F1bCmem 010.11a✓,m Ei(HIBITB
wLb% Page 2 at 15 111152001
Claims Paid From 1011 GMT to 1W3107
Vll.M No. Vander Addend Dexrlptbn
9p95 Crena Veyor Corp. 4,624.91 Repair&Maintenance Services-Owmead Crane
94188 CSAMSCO 1,429.53 Mlcmncel Pads&Supplies
94297 California Special DistrkAAssodalion 315.00 Books&Publications
94790 CWEA-Mr Shop 150.00 TMlmn Repteratlon-Calf Wafer Environment A6ax.
94799 Data Aire.lyd . 1.119.40 RBconoliation User Fee Refund Program
940W Data Seem.Inc 181.47 Reconciliation User Fee Refund Program
94801 Dr.Smo0lhie Enterprises 687.S2 Recencl ladiol User Fee Refund program
94802 Dummmun Aemslruclum,Inc 2,360.48 Recondaion User Fee Refund Program
94803 Dapper Tire Co. 558.28 Truck Tires
84804 Davids Tree Service 3,675.00 Tree Maim Served,
94805 Dell Computer 1,874.0l Laser Toner Cakidges
94WB Desert Pumps&Pads,Inc. 727.42 Pump Pads&Supplies
U807 Dish.Evma&Co..L.L.P. 1,100.00 Melling R"iebegon-Division 220
94008 ORS Sensors&Targalkg Systems,Inc, 7.253.22 Reconciliation User Fee Refund Program
94809 Dynlek Siumnes,Inc. 10,200XV Temporary Employment Services
94810 E.Sam Jones Dislubusrs,Inc 20.26 Electrical Pads&Supplies
"Bit Embed.Inc.83 161124 Recenatialion User Fee Refund Program
94812 Expects Media.L.L.C. 3.639.90 Reconciliation User Fee Retumd Program
94813 Eagle Protection of Calismia 275.00 Bldg.Seci Aland Services-No.County Yard
94814 Electronic Balancing Co. 535.00 Repair&Maintenance Services-Balance ID'Pump
94815 EMEDCO 480.13 Safety Supplies
U816 Employee Benefits Specialevs.Inc. 1.375.00 Reimbursed Prepaid Employee Mefical&Dependent Care
94812 Enchanter,Inc. 3,400.00 Ocean Monilorig&OutFall Iropectom&Maintenance
W10 Emlmnmenlal Resource Assedates 1,788.56 tab Pads&Supplies
94819 Ewing Implied Industrial 30D05 Landedepe Irrigation Pars&SUPPlies
94820 pulled.Plain, 2,061 Ja0 Reconciliation User Fee Refund Program
"021 FEDEX Cortical 41.95 Freight Services
94822 Ferguson Enedpries,Inc. 2.064.99 Metlanbl Pads&Supplies
M23 Filter Bdis.Inc. 8,704.82 Filter Press Begs
94824 Fine Scance TPola,Ix 111.32 Lab Pads&Supplies
94825 FisMr Sdim ifc 2,756.32 Lab Paris&Supplies
94825 Five Star Metals,fix. 0".00 Menchanid pads&Supplies
94827 Fee&Vedical.Inc. 305.50 Repair&Maintenance Services-Concrete Cutting for Conduit at Poser Bldg.BVFDCabinct
W28 Flow Sciences,ant 29.30 Sales Tat
W29 Fria Electronics 193.89 Computer Supplies
B"30 Gellade Chemical.Inc 1,233.01D Reconciliation User Fee Refund Program
B"31 General Container Corp. 279]0 Reconciliation User Fee Refund Program
94832 Geogia-Pacific Conugeted,L.L.C. 4,135.80 Reconciliation User Fee Refund Program
94033 Ganatt CaRthan Company 5,018.40 Chemicals
94834 Gary D.Gorden Services 2,000.00 Or Slte Training-Warehouse Spig Response
94833 George T.Hell 1.214.44 Electrical Pads Is Supplies
94836 GT Hall Compam Co. 285.99 Electrical Pads&Supplies
94837 Ginulc Well Inc 012.27 Pumps&Pump Pads
94038 Global Awards,fix. 32BA2 Asset Tags
94839 GOWenwest Corp. 1.500.00 Gmundskeeping
94840 Drennan,ant 2,243.16 MeduMcal Paris 8 Supplies
94841 Grayber Electric Canpnry 1.399.40 Electrical Parts&Suppies
94842 Guarantee Records Management 374.64 OfSXe Records Storage
"843 Hasler Eeuipmanl Company 1.8T2.65 Wid.Vehicle,Pads,Raiders&Service
Bale" Hach do Proton Indeed. 12,218.67 Lab Paris&Supplies
94e45 Hama PMnrose ice 80.00 Ice For Samples
NNPNMERCELOreg3MP511RXP4bYne Peq RpoRd]aTGenm PnYPepgn-FIYSmenr B I0.]n-0)ee EXHIBIT
nM1oc Page 3 of 15 nnsrzom
Claims Pam From 1011010T to ta31MT
Wmlam No. Vander Amount Description
M846 HanirlgWn bmushial Plastics,Inc. 808 M Mechanical Pads&Supplies
94847 HD Supply 208.01 Medladcal Paris&Supoes
94848 Hills BmOes Lack&Safe 432.41 Troubleahect&Repair Ellie Asenue Gab
94849 Home Defect S0.47 Mlec.Repair&Maintenance Malenal
94850 Hub Aulo Suppy 127.74 Vehicle Parts IS SupP'hs
94051 Independent Forge Co. 411.39 Raemachation User Fee Refund Program
94852 Irvine Sensors Cap. 12.044.74 ReconUllatam User Fee Refund Program
U853 IECOC 60AD Membership
94854 Indutial Disbibution Group 1,884.32 Tools.Claimers.Streams&Mechanical Supplies
U855 Industrial Threaded Products.Im 2.959.81 Imentory Falseness
M856 Inorganic Ventures.Inc. 163.60 Lab Parts&Supplies
94857 Imide EPA 700.00 Subscription
94050 freight Public Sector 2.620.95 Soiled.-Cisco
94B59 Ineensys Systems,Inc. 1.022.35 msaumert Pads&Supplies
94850 Jai.Conlainer Inc. 850.14 Recon lemon User Fee Refund Program
94%, Jays Cdenna SW59 Meelina Espenses
94862 JnMter.Inc. 395.00 Nntcas&Aft
94853 .mhesmne Supply 1,053." Electrical&Mecomical Parts&Supplies
M664 JPR Systems,Inc. 20.76 Modedicsf Paris&Supplies
94865 Keeled Spedalties.In. 448.00 Reconciliation User Fee Refund Program
948N Krone,In, 1.120.00 Temporary Employment Services
94567 Kind Enerumenewl Lab 240.00 Outside Iationabry,Services
94868 Ia Palma Insewmmunisy Hospital 23,905.43 Od4ile Safety Shoe Service
94869 Lab Barely Suppy,Inc 152.00 tab Parts&Supplies
94970 Lab Support 4,147.50 Temporary Employmenl Services
UB71 Lehigh Safety Shoe Company 976.79 Reconliallon User Fee Refund Program
M872 Ipmhn Education Servces SBB.00 Training ReBktratipn
B1873 M.S.Betloa9 500.51 Racer at ation User Fee Robust PRgram
94874 MT,Motor Rafter 1,074.75 Repairdtebdld Motor
94875 Magnetic Metals Corporation 2,141.03 Remndfimpan User Fee Refusal Program
UB76 Metal Powder Pro0uats 3,508.23 RMourobabon User Fee Refund Program
BIBTT Manternex,TerJlnology Corp. 933.25 Mechanical Parts&Supplies
N878 Manlek 9N.57 Past Control Supplies
94979 Mannus Sdent'Ific T9.30 Lab Pads&Supplies
94880 MassMulual Muchel Financial Group 79.04 ExecOlhe Disability Plan Premium
94881 McMin lnabers" 735.00 Repair&Maintenance Services-Microscope
94882 McMaster Can Supply Co. 2,322.51 Mechanical IS tab Parts&Supplies
94883 Medlin Controls Co. 1,247.95 Instrument Paris&Supplies
948" Mewl,Coryoretfn 1,001.97 Instrument Supplies
94885 Mlne Safety Appliances Company 105525 Electrical Parts&Supplies
948W Mobile Hose If Hydraulic Supply 2.267,OB Hoses
M887 MRC TeMn0logles.Inc. 1,939,50 LBb In6lromant.Portable Sampler
W688 WA RrohBeds 2,00000 Professional Services-Penchant,Bldg.Annex Constructed
94889 Nebel Biocare 51,83 Reconciliation War Fee Reund Program
94890 Nu-Tac Powder Coaling 8U3O0 Reconciliation User Fee RebM Program
94891 National Assoc.of Clean Water Agendas ;590.00 Training Registration
94892 National Mad Sources.Inc. 9,910.O0 Drain Clereing-B-Line at D Badn and 17'Line at Primary Clarifies
N893 Neal Supply Co. 3.N7.04 Plumbing Supplies
94594 Neutron Products,Inc. 2,961.55 Anionic Polymer
M895 Nee Horizon.C.L.C.of Santa Ana WDAD Training ReBetslion
94896 The Neroo Companies M.60 Mail Delivery Sesica
N WpNWEXCEIdneV2PAP$IWREIeHrrn Pan RegrN00TGa ns Paid men-Muntenia B ILL]ILi x. EXHIBIT S
.1. Page 4 of 15 I negam
Mime Paid Fmm 10118N7 to 10131107
Warren W. Vendor Amount Deecdp0an
W97 NRG Thermal 5ervicea L.L.C. 4,024.13 Spark Plugs for LSVB Engines
MOO O C Tanner Reccgnrion Company 1,002.63 Employee Service Awasts Program
NOW Fred J.O'Brien 493.67 MaeNglfrelning Ediense Reimbursement
NOW OCB Reprographics 2.MS.35 Printing Servlce-KID 1126MO
94901 Office Depot Businece SeMces Division 1.510.67 Office Supplies
B4902 GI AnabdiM 1.683.97 Lab Raft&Supplied
W903 Omega hauNrial Supply.Inc. 1,450.51 JanlaMI Supplies
94904 Onesouma Dlstrovars,Inc. 7,T38.M Ekdriwl Pads&Supplies
94905 Orange County Chapter-ISCEBS 180.00 Meelirg Registration Division 240
B4806 Onede County Industrial Plastics 4,525.50 Polyester Street,
W907 Oredge County Vecar Control District 142.53 Pest Coniml
84906 Orange Fluid Syslem Tetlmologles.Inc. 1,005.10 Plpmbise Pads&Septum
M809 ORCO Construction Supply MASS Tools
84810 Osygen Service Cooper, 1,042.72 Lab Pads&SupplhM
94911 Paramount Dac Manufacturing.Inc. 504.42 Retsun llalmn User Fee Refund Program
U912 Pice Farad.Inc. 1,677.60 Reconciliation User Fee Refund Program
94913 Powdercoel Services stl 407.27 Re purdhalion User Fee ReNM Program
94914 Poallensest Services a3 3,331.67 Recenshmon User Fee ReNM Program
Nets Precede Metals Plating Co. St Re ondlialbn User Fee Refund Program
9481E Private Labal Laboratories 8,847.34 Reo ndlialmn User Fee Refund!Progmm
P917 Prtgess Marketing 3,033.49 Remntl11eton User Fee Refund Program
M918 Pure Chem Products Co. 58.47 Reconciliation User Fee ReluM Pro mm
94919 Pace.Mectruniral Supply 2.09.92 PlumNrg Supplies
94920 PAPA 40.00 Membership
94921 Paden Systems,Inc. 3.104.05 Electrical Pan&Supplies
94922 Pedomence Pipeline Tetlmologies 4,230.00 Repair&Maintenance Servicse-Grout Removal lmm 2T'Sewerine In Tustin
94923 PL Hawn Company,Inc. 838.84 ElMrical Pan&Supplies
M924 Ponlon Industries.Inc. 403.99 Ineb0m6nt Pan&Supplies
U925 Pon Supply 0.69 Repair&Maintenance Maari9la-Ocean Mandating Vessel Nersse
94926 PowMrain lndustns 130.77 Repair&Maintenance Services-Drive Shaft
94927 primary Source DR.Furnishings,Inc 8,517.84 O&K<FumiW.a Misc.Equipment
U928 Prnterguy 393.76 Pnnterhlumenance
Been Printing SdMigns.Inc. 855.51 Pdnling Services-Bill lnsen
94030 Proplpe 15,392.49 Seeedine Video Inspections& Sevverthe Cleaning for City of Tustin&UnlnompoAAOd CO.Im,"
94931 Prudential Oversll Supply 3,10L02 Unfomis&Related ARldes
W932 PuWeisar Amerce,Inc. 640.S8 Pump Supplies
U933 Pyramid!Fence Compvry.Irlc 1,859.00 Fencing Repair-VaMus
94934 Quinn Group,Inc. 532.20 Filler Elements
N935 Rellmakers.In . 143.81 Recendliaden User Fee Refund Program
U936 Ricsh Electronics eft 8,2B4.19 Rewndliellon User Fee Refund PRgem
94937 Raven Biological I.Sbon lolles 106.97 Lab Pars&Supplies
W930 Reslek Coryorellon 1.511.90 Lab Paris&Supplies
94939 Realech Industrial Services 918.75 Ashamed Step Covert
U940 RF MacDonald Co. 512.81 Boller Paris&Supplies-Cleaver Brooks
W941 Riverside Can flology Assoc a es T20.00 Medical Sc servings
84942 ROdtwell Engineering&Equipment Co. 910.11 Medenicel Pan&Supplies
94943 ROmec Supply Co. BB9.88 Elecdcal Pan&Supplies
Us" Ron,Radar HOCH1 3e5.n Plumbing Services-Reheb Yoder Closet
U945 Royale Clearere 6.00 Dry Manang SeMces
M946 Samaria Services 645.88 Reconci ation Used Fee Refund!".in
U947 Sakiwi TO Industrial,Inc. 16.216.30 Rec noXellon U.Fee Refund Progrem
HY Av&OAEXCELNe11AV1+5R4RflCalma PeiO Re{ORUCARCYlme Peg ROMA-AIMAmenl B WIA7.N EXHIBIT B
Ana'. Pee 5 Of 15 nnsnmr
Claims Paid From 1011607a 10131107
WammND. Vendor Amount Deacmdron
SAM Shepal B.,Inc 2.037.40 Remncl6ason User Fee Refund Pnogrem
94949 Statek Corp even 2,822.78 Recam fohon Use Fee Refund Pmgrem
94950 Sdm9g Sudan e,724.59 Pump Parts&Supplies
94951 Science Applicabons alemadonal 10.210.0 Oman Moniromg MO".94
N952 SCP Science 3.072.17 Lab Pars&Supplies
N953 Sea Gear Coryaasen 659.00 Lab Fare&Supplies
949M Shzmmtlt Supply Cc.,Inc. 3,086.20 MecM1anbl&Eletlneal Parts,Penn&Tools
949M Sldimuck Sales&Engineering 1.363.83 Mechanical Parts&Supplies
NOW Siemens Water TeUmlogies Corp. 60.00 Sells,Agreement-DI Water Systems at Plants 1&2
94957 Sigma AidmrA,Inc 32202 Lab Pars&Supplies
W958 SKC West,Inc. 231.46 Lab Parts&Supplies
NOS Small Paid and Supply 190.19 Paint Supplies
M960 Smith Rpe&Supply,Ix 158P0 Plumbing Supplies
%4951 Snap On Toolsrlesse Genet 1,04221 Small Tool Expense;
94962 Souaem Counties Lubricants 10,e114.15 Oil
94963 Sparring lnSWmens,Inc 3,3n.81 Instrument Pals&Supplies
N%,1 Spectrum Labomary Pmdlels,Inc. 03.46 Lab Pads&Supplies
NOS SPEX Colleen.Inc 295.97 Lab Parts&Supplies
NOS SPS Technologies 1209.62 Remnuliason Uaar Fee Refund Pm,mnn
94967 Simple DComeam 9.571.19 Ektldral Pals&Supplies
94880 Sumel Fad 1n.33 VMicte Pi ms&Servese
N969 Sumer hJuseral Pam 760.10 MttAenkal Pars&Supplm
94970 Taomina Industries,Inc WAS Reconciliation User Fee Refund Pmgmm
94971 Cherry Aemapace,L.L.C. 3.364.83 Remedlaton User Fee Refund Pmgrem
94072 Tremble Technology,In. 389.41 Remnutlaeon User Fee Refund Program
94973 Taylor Dunn 9,786.43 ReeaimBasea User Fee Refund Pmgmm
W974 TekSystems 13,768.00 Temporary Employment Sews
N975 Tessmbira Ontario 53.00 Analysis 0l Biosolids
N978 The SSMard lmaarrce Company 2,569.W Exosidee Dsabgty essence
Man me Clock Sales and Service Co..Inc. 65.00 Repair&Malmad.Services-Acmpint Time Crock
94978 Time Mpliea Teas 227.16 Todd
84979 TO's Services 200.00 Window Cleaniig Services
94900 T-Mobile 107.68 Wuetese Air Time
94981 Townsend Public ARdrs 6.O0O00 Legisative IS Execulive Adwcete roc Grad Funding
94902 Trinity C.Iters,he 725.00 SaOeere Malnlenence-Bads"annoelSC 015
94983 Tmcic&Aulo Supply,Imo 1.215.42 Aukenode Pals&Supplies
94W ULlne 233.24 Office Supplies
NOS U S Bank 4.102.00 Annual Adminlsiletive Fee Re Sales 2000 COPS
94M United Circus Te ndrogy 2,409.09 Remndsatien User Fee Refund Pmgmm
94987 United Patel Service 145AD F¢rtxl Services
NOS United Sates Plastic Cap. 24.80 Lab Pals&Supplies
N989 US Pedal Servii AMS TMS 5000.00 Postage
N990 Vanmr,Inc. 19.9U7.16 Remnellbon User Fee Refund Pmgnam
94991 Vernon CaMonam 737.54 Telephone Seodes
U992 Vemes Plumbing 4,515.00 SePMe Conflict-TOWN.Repair&Col.Beckllow W cim at Pals.1&28 Pump Sm.
94993 Village Nurseries 74.34 Landscaping Supplies
949M Vona.USA,LLC. 445.51 Safety Videds
NOS VWR Scientific Pmducts 10,735.55 Lab Pals&Supplies
949% Weyerhceuser Co.n 2,5n.08 Reomdliatan User Fee Refund Pm min
N997 The Wakenhul Comoresm 14,828.55 Sealdy Services
949M Waters Coipaason 300.00 Telling Reimposed
X deP11eMEXCELdaeU 4PSXRRECIeuns Pad RepvN[OTCUd-Paid Report-MbTmenl a 1041A]Yr F HIBRB
nMtmc Page 9 d 15 tlnsrzWl
Lelms Paid From 10116m1 to I013IM7
Warrant No. Vendor Amount Description
94999 Main Sanitary Supply 1,956.58 Janlonal Supplies
95000 Weather and Wind!Instrument Co. 806.94 NAM Sock
95001 WEF 381.00 Mambenhlp-Wage Emdmmnenl Federation
95002 West LXc Supply Company,Inc. 10.22 Electrical Pads&Supplies
95003 Weatem Stales Controls 30.09 Electrical Pads&Supplies
95004 Weston Solutions,11 6.210.00 Outside LeMrabry Services-Core Ocean MWbteri g Program
95005 Westpod Apparatus DBA Breaker Sup. 2p47.25 Electrical Pads&Supplies
95006 W2 Technologies,Inc 176.05 Repair&Malntelunce Materials
95007 YeWChe9e Materials damping,Inc 2.106.72 Electric Can Pads
95008 Zip Scientl0c 2,925.55 lab Pasta&Supplies
95009 20 Ten Sohlmns,Inc. 69.34 Video Sedice6-Tape Ouplica0on for FOG Program
95010 Teatime C.Alas 441.79 Meeting?rafning Expense Reimbursement
95011 Layne T.Bauchi 214.19 Meetle,d reeing Expense Reimbursement
95012 Ralku nd r BBllan 18.00 Meelleg?mining Expense Relmbureemand
95013 Jennifer M.Cabral 7.00 Meeting?mining Expense Reimbursement
95014 George R.Created 440.43 Meelirg?minirlp Expense Reimbursement
95015 Enka Gaz 58.23 Meelirg?ninlrg Expense Reimbursement
95016 Daniel C.Fonlels 437.66 Meeft,Mraining Expense Relmbureement
95017 tarry Gibson 932.70 MeefigRrelning Expense Reimbursement
95018 David P.Halverson 791.30 MeelingTTMning Expense Reimbursement
95019 Mkhael H.Haelg 798.52 MeelllgRMning Expense Reimbursement
950M lel G.Helebrand 788.48 MBegrg?ralnirg Expense Relmbursamenl
95021 Vladimir A.Kagan M." MeelinglTrainlrlp Expense Relmdueemenl
95022 Lacy E.Lateral, 439.79 Weeng/Tralning Expense Reeneursemenl
950M Wedea Luna 70.05 Meellogri'mining Expense Reimbursement
95024 Phi W.McNally, 316.01 MeellrglTnlning Expecaa Reimbursement
95025 sacred D.Moure 116.00 MeeUrglTrainirg Expense Reimbursement
950M Subesh Mysore 2770 Meellrglfmining Expecae Reimburzemenl
95027 Chung M.Nguyen 1.Oi MeelingRrainirlg Expense Reimbursement
95028 Seem Peel 18.00 MeellnlYTrainirg Exparue Reimbursement
95029 Devid Rodriguez MM Meelingri"ralning Expense Relmburaemenl
95OW Ken A.SBkampl0 258.49 Me floWTh inirrg Expense Reimbursement
95031 Monica A.Sanchez 194.M Massumg?rainirg Expends,RNmbumemenl
95032 Gary J.Tuleao d;c KMmper 417.90 Meelllg?mining Expense Reimbumemenl
95033 Charles F.W cal 123.70 Meelle fTminirg Expense Reimburxme el
95034 Paull A.War 284.14 Meelllgaralning Expense Reins ureemenl
950M South Coati Air Dually Management Did. 923.92 Perms Fee
950M South Coast Air Quality Management Dist. 923.92 Fears Fee
95037 South Coast Air Quality Management Dist. 923.92 PermO Fee
95038 South Coast Air Quality Management Olin. 923.92 ParmN Fee
95039 South Coast Air Quality Management 0lst. 923.92 Perrot Fee
95040 County of Orange Audor Controller T20.00 Administration Fee-AEjusbrmnt W Property Tax Bill
95041 Alen Falnbag 1.098.BT Reconcillallon User Fee Rai Program
95042 Fleets Merkelplace Panders 2,019.50 Reconciliation User Fee RefuM Program
95043 Saint End Leasing 1,174.m1 Reconciliation User Fee Refund Program
95044 ROOad R.Smith 684.88 User Fee Refund Regarding Septic Tenths
91 WM Weal VJeslmlraler 3,659.22 Reconclllelion User Fee Relurd Program
95046 A 1Serves.,Inc 291,116.70 Professional Sandi-Ph.2 Digested,F&G Linn Replacemenla
95047 Area=International Ml,TBT.TS Release of Construction Relenikm 1-24P
95048 Gummed Compression Systems 41,939.81 McWnical Pads&Supplies-Piston&Rod Assembly M LSVB Cooper Engines
95049 Dudek&Associates,Inc. 85,359.01 Professional Servloas 248
MWore,oxiii surer MPSIURE1 .,P®4 ReancrXiMlems Pain Repml-ixavAnnM-B_I.I.?xb EXHIBITR
flag. Page 70115 I11,WWI
Claims Pab From f 0il MIT to 10131MT
Warrant No. Vendor Amount Description
85050 Malcolm Nine,Inc. 72,25220 Professional Services 11-28&P240
PW51 Orange County Water District 2,U73,028.95 Joint GWRS Prgect J-36
950.52 Soulhem CaNpmia Edison 255.70&12 Poser
95053 J R Fdanc Construction 32,745.60 Corshuctlorn FE06-14
95054 ACE Egarcan. 375.00 Professional Semces-Workstation Evaluatans
95055 All Elandomar.Inc Bill Ehxdrical Pau,&Supples
eW58 AppleOme Empoyment Semce 18.463.11 Temporary Employment Senecas
95057 Ants Wine.OpemGng Company.Ion. 705.57 Wheless Ser,ices&Equipment
95058 ASTD American Sotiely M Training&Dev. 600.00 Training Registmtlon
95059 AT&T Unhersel Biller 1,837.63 Telephone S.
95050 AT&TCalilomiaAlCl 895.75 Telephone Service
95061 BHI Management Consulting 3,850.00 Professional Servs.-Slralegic Planning&Fathating Services for EMT Reheat&Board Workshops
95062 BbMenem Ylek,Inc. 599.21 Lab Pans&Sum0es
95083 Bureau Vannes North America,Inc 2.07.0 Industrial Hygiene Seems
95064 Bush&Assocales.Im 1,310.00 Simenng Sauces-Various Loaticre
95065 California Dept of Child Support 1,240.12 Wage Gamishment
95066 Cavanaugh Martine Works 5W.W Repair&Maintenance Services-gearing Harein0
95067 Clean Harbors EWro,rnenlal&ennoes 1,449.it 1lazzmom Waste Management Services
95068 Columbia Analytical Sennces.lne. 600.00 Analysis of Wasleraler,Indusral Wasomealer&Biosabda
95069 Con-Way Wastem Express 304.82 Freight Services
95070 CR&R,Inc. 00.00 Container Rentals&Waste Disposal Service
95071 CWlganafOran,Cwnty 56.60 Maim.Agreement-Can Gen Water Scanner System
950I2 CWEA Membership 330.00 Membership(Ca18 Water Environment Assoc)
95073 Dr.llarvry GOldsune 9W.00 Salety Glasses
95074 Earth Tooth,Inc 4,SWA1 Professional Services Pl-106
e5075 Employee Benefits Specallsls.Inc. 9.175.75 Reimbursed Prepaid Employee Medical&Dependent Care
9W78 ENS R9aWrces.Im 10,000.00 Pmfessioal Senecas-legislative Achmcale
Stain Eqv hler 347.28 Hydrochkmc Add
950M FEDEX Corporation 138.31 Freight Services
QW79 Ford American Real Estate Solutions 450.00 On-Line Orange County Property Information
95080 Fisher Sdenlific Comanry,L LC. 1,018.06 Lab Paris&Supplies
95081 Flats T2namnalion Services 16,635.00 Gail&Screenings Removal
95082 Fonts Ehyreenng&Surveying,Inc. 11,758.75 Surveying Services-Venous Capital Projects
95083 Fr and de Tax Boats W.W Wage Gamrshmenl
95084 Frye,Electronics; 107.74 Computer Supplies
95085 GbbalAmrds.Inc. 61.95 Asset Tags
9500fi GOTM Enterprises DRA Property Care Smvices 1.050.00 Svreeyirg Senecas
M07 Granger.Inc, 285.69 Mechanical Pans,Supplies&Tools
95000 HIM Sm" 2,765.51 Chemicals-Odor&Corrosion Control-NeMon Trunkine
95(un Indiana Child Suppol Bureau 280.00 Wage Garftdmenl
95090 Internal Revenue Service 1.W7.33 Wage Gamahment
95091 Intl.Union of Oper.Eg.AFL CIO Local W1 4,M0.21 Dues Deduction
95092 Irvine Ranch Water District a1.2J Water Use
95093 Court Omer 150.00 Wage Gamnhment
95094 Luals Gourme Foods,Inc. 662.50 Meeting Expeaae
95096 Mayer Hoffman McCann,PC 1.085.00 Finandal AWiting Services
950N M mmeler.I.. 755.33 Meduni al Paris&Supphes
95097 MCWerimn 7,339.29 Wireless Telephone Services
95098 Court Order 22500 Wage Garnishment
95099 Nabomal Asset of Clean Water Agendas 545.00 Training Reputation
95100 National Bub&Trust 2,217.34 U.S.Savings Bolls Payro:l Deductons
N'4mN+TE%eEL4aV1gAP$NARe.Chens vela Reym]W]1D01ma vas aepon-nlummem a lwlalm EXHIBITS
rorzlos Page a any unfigem
Claims Paul From 10WTW IM1107
Warmrt No. Vendor Amount Description
95101 National Barriers Group 299.W Meeting RegMmtion-Divblon 750
95102 Nedim,&Meote Ceryoms Accounting 14.222.25 Proksaknel Services-Soils,Concrete&Other Maands Testing for Various Capital Projects
96103 OCFA 536.50 Dues Deduction
95IN Omnge County SheM' 414.78 We,Gemlehment
95105 Orange County Unllel Way 50.00 Employee Contributions
9510E Pan potl HeMm 11,250.00 Employee transmutation Program-Hepatitis A Vaccine
95107 PCG IINuattles 1,550.00 Repair&Maintenance Services-Shaft
95108 Peeve Officers Coundl of CA 2,007.50 Dues Oeductlan,Supary need,&Professionals
95109 PL Hewn Company,Inc. 2,004.15 Repair&Maintereroe SeMces-Cation Filter Panels at Pit.1 Oe,vatering
95110 Prison".Inc. 81.55 Lab Paris&Supplies
96111 Rainbow Dinned Co. 3.195.99 Them Removal
95112 RBF Consulting 2.131.52 Surveying Services-Various Lou ions
95113 RBF Consulting 3,303.73 Engineedtg SeMces 2-24-1
95114 Shcmrk Trebel 2,110.30 Reor&Mainlerence Services-Balancing Machine
0115 Sm11 Spedally Ganes.Inc. 122.05 Demurrage
W115 SEundudt Saks&Etgineemg 2.003.78 &ledmnical Pacts&Supplies
95117 Sieme0s Myer Technologies Cord. 8.912.35 BaMm Agmamenl-DI Water Systems at Plems 1&2
W118 SmiMEmery Company 988.50 Soh.,Concrete&Other Materials Testing
95119 Scudded Califomla Edison 41.33 Power
0120 Sunni Ford 174.23 VeNcle Pats&SeMce
M121 TDC EnWonmentel,L.L.C. 1,726.ee Prof.San.-Joint OCSD.TRI TAC&L kCSD Final Dun Cortmpontlence to U S.EPA Re Melam Sodium
M122 Termimx lmeme5onal 1,109.00 Pest Central
95123 Terminated. 845.00 Analysts a Shumbe
95124 The AutomoN.e Training Getup,Inc 1.393.00 Training ReDibri tlon
95125 Thompson lMua l Supply,Ix 3,303.39 Mechanical Park&Supplies
95126 Time Werner Communication 51.07 Cable Services
95127 TJ's BeMces 978.01) Prolessknal Serces 1-24
95120 Turn'.Leck&Sale Service&Sales 4,000,W Lode&Keys
95129 Tula flenciuMagan Farm. 20,255.77 Residual.Removal MO 3.29.95
951M Merlon Brink of California 747.44 Banking Services
95131 United Pacific Services,Ire 2,821.52 LeMecape Maintenance at Plants 1&2 and Pump Stations
95132 Lintel Paroel SeMce 1,95254 Parcel SeMces
951" Univerdy of Califcmk,Devi; 42.00 Training Registration
95134 US Equipmatl Co..Inc. 2,259.41 Repair&Maintenance SeMces-Comprmaor
95135 Wpm.the 8.802.50 onshumem Pads Is Supplier-H2d Bernier
951M VeriWn Calibmk VISO Melma Services
95137 Venison California 6,541.11 Wirclaes Services
95138 VWR Scientific Products 2T.54 lab Paris Is Supposes
95139 Mda Summary Supply 12.67 JenlfohM Supplies
95140 VJaMNWork 2,130.00 Tmbting Reglatmllon
96141 Count Order $97.50 Wage Gemkitment
95142 Layne T.Seroldi 117.30 MeaingyTminbg Expanse Reimbursement
95143 Ppngsekdi Cady W.00 MeelingRmining Expense Reimbursement
951" Cash M.Camce 329.19 Maelim✓Tminbg Expend!Reim demand rt
96145 Richard A.Cas811on 552.22 Meeling]]relning Espanee Reimbursement
95145 Arm Crofton 461.14 Meeling/Tmking Expenee Reimbumement
95147 Melwe A.FomMn-Woodbddga 421.49 Nteeling/Tmining Expense Reimbursement
9510 Eric A.Dined 180.51 MeminglTedning Expense Reimbursement
95149 Thomas S.Homy 310.04 MeellrglTmning Expanse Reimbursement
951W Merlin A.Hag 312.99 Meelitg/Tmining Expense Reimbursement
95151 Eric S.HSkh e73.42 Meetingamining Expense Reimbursement
XWpauSP%CFL.NV3W.PBMAREICIeua Rad RepOmAO iCken Pxb Rapid-Assessment B 10.11d].M EXHIBIT
m/11atc POW 9 of 15 t MOKIr
Claims Paid From IW181W W 1W31MT
Warrant W. Vanden Amount Oeacil
0152 Vfedimtr A.Xcr nn 147,53 Meetirgnreid,Expeme Relmbuxmem
95153 Lourdes Lure 35.03 Meelirlgrfralning Expanse Reimbursement
Meat Robed M.Mods 395.11 Meslingyfnining Expense Reimbursement
95155 Jagadsh C.Od i 54.00 MeellrgTrainbg Expense Reimbursement
95156 Balacilandm P.Rao 58,37 MeelirgTminin9 Expense Reimbursement
0157 Lucinda Ellen Ray 679,13 Meelingntrainirg Expense RelmEasemem
01N MiWel Reideler 289D1 Meeting/Training Expense Reimbursement
95159 George L.Rebenwn 336.87 MmtingrTmining Expeme Reimbursement
95150 Mon.A.Sanchez 37 94 MmtWralNrg Expeme Reimbursement
95161 Cnstim J.Slanted 28.62 Meeting/Training Expema Reimbursement
95162 Palms A.SUIWan 33761 Meeting?minirg Expense Rdmbunement
95M Mary S.Tlpmpsed 295.53 MeetingTmrning Expense Raimbmeemem
951" Jam H.Tdin 31299 Meellrlg/Tmimg Expense Reimbursement
951M Jenne Wad 519.61 Meeiingp7coning Expense Reimbursement
951" Marla C.Yirg $47.19 ME9tirgrTraintng Expense Rembursesewl
96157 South Coast Air Quality Manapinued Dist. 286.55 Permit F.-E-923 Cummins at Crystal Cove Pump SW.
951N South Coast Ale Quality Management Dist Ill Permit Fes-E-923 Cummins at Crystal Cora Pump SW.
95189 Cry,of Westminster 1,164.00 Penn Check Fee 2458
05170 Alta Laval.Inc. 52,O3,1.80 Spurred Heat Exemoder
95171 Basic Chemical Solutions.L L.C. 48,863.0 Sodium BI.IRW 6 Sodium Hydroxide
95172 Broym 6 Caldvrell 0.384.81 Professional Services P1.3T
95173 Dudek B Assoaalet.Inc. 118,042.75 Professionel Services FE0594
96174 IPMC do Parsons 1526D45.00 Engeneedng Sempea-interpreted PnogcamlProject Maregement Temporary Staining,Marl.6 Supplles
0175 J R FIWm Constructed 95,400.00 Repau S Maim Semces-Clean Addition Basins,Replace Guesser Membranes 6 Reverse Rings at Pit,1
95176 XI Jones Chemicals.Inc 248.515.11 Sodium Hypoctllodle
all Xemim Water Solutions 139,653.44 Fedc Chloride
05176 lAedstar M.H.E. 80,437.53 (2)Step Tow Tractors
95179 MetUle Life Insurance Company 30,876.94 Group Life.Mem er Addi.LBe.Brien 6 LWg-Teem Deal S Optional Term life Ina.
96180 NRG 11lemal Serowe,L.L.C. 51,253.95 Mechanical Pads B Supplies&40,DDD Hour Can GeNCOGen Engine CyedauW at Plants r52
M191 Omdental Enegy Marketirg,Ina 103,805.31 Naluml Gas for CeoGdyCOGen
0182 Pelyell Inc. 59.n2.45 Calisnk Polymer MO 3.1192
05183 Sculhem CatifomW Edison 99,176.99 P.
95184 Synagm West.Inc. 267,311.50 Reseluals Removal MO 3-29-95
95185 US Peroxide,L.L.L. 448,538.88 Cdcr 6 Corrosion Centel Treatment for Coll.Sys.;Hydrogen Peroxide 8 Ferrous Chloride
95186 View Enmmrment Research Foundation 85,fal Annual Ressal Commitment
95187 WooddiB Spradlin 6 Sneed 1M.M.10 Legal Services MO 7-28.95
95188 Bernardi Sole encim Mind Venture 2.049,9T8.00 Construction I-10A
95159 AWChast2non 3,497.86 MCWnical Pens B Supplies
95190 AccuSMdad 64.00 Lab Pads 6 Supplies
95191 Advance Business Graphics 1,513.16 PnMbg SeMces-Waslehauler Manifesl For
95192 AWIem TeehngogRa,lea 1,310.82 Lab Pads 6 Supplies
95193 Aigas Safety,Inc 2.109.12 Safety Supplies
95194 Aigas-Vital 9.50 DemurdiBHCylinder RenleW
95195 Amencen Aidines 5,021.10 Travel Services
951M Amended Chemical Society 135.00 Membership
0197 American Society For Meobbbgy ZMAID Membership
95199 Amended Society of Ciyll Engineers 1,020D0 Membership
95199 Analyse,Inc 1,541.45 Transfmmer Oil Toting XB
95200 Analytical Products Group.Inc BMW Lab Pena 8 Supplies
95201 Applied Industrial TeMnolM 211.88 Mocha isil Pans S Supplies
95202 AMA Southern CalilomW Clapter 200.00 Trading Repispetion
H NrpNME%LELdtaQ2@AP3IURVCWn5 Pad Re9w%%dmW uV4d Repwl-AdVhmrnl B I04W,Oi EXHIBITS
.1. Page 10 of 15 unsxm
Claims Pam From 10116107 to 1013IMT
Woman No. Vendor Amount Oescriptlon
95203 ANye Pry,Inc. 3.615.00 Repair&Matrlarmece Berman;-Asphalt Street Paving
95204 AT&T CsbrmkIMCI 2,118.42 Tolson.Service
952a5 AT&T Lang Distance. 1.239.08 Telephone Service
95206 AT&T Mobility 11,L.L.C. 7,620.28 Wireless TelepMne Sernce6
95207 Augusta Engineer, 7,592.87 Treeing Registration
95208 AWSI 33.00 Department al Transportation Program Manegemsnt&Tealbg
95209 Bull Speciallles 199.34 Serum.
95210 Benz Compressed Air System,lilt. 1.843.09 Compresses Supplies
95211 Birmingham Controis,Inc. 1,082.W Instrument Parts&Supplies
95212 Blosphorlcal In.tiumenla,Inc. 263.18 Instrument Repairs&Maintenanrc
95213 Blue Diamond Car Wash,Inc. 1,027.W OCSD Varide WasMngMbxing Services
95214 California Auto Cathode 1,511 Truck Body Repair
95215 Califarnie Recreation Company 2,052.00 Boat Slip Rental Fees for Ocean Monionng Vessel Honest
95216 California Refixed.Sevice&Inc. 427.50 Office Filsa Mpvi,fibilaGibn S.Mce6
95217 Mahn Boyer Ca.,In.do Cambridge Integrated 2.&76A0 Professional Services-V emkee Compensation Claim
95218 Cameron Welding Supply 551W VJeming Paris Supplies
95219 Cad Warren&Co. 300.00 Insurance Claim Administrant
95220 CEMCcrpm bon 198.90 Lab Pads&Suffuses
9=1 Chen Homers Envlmnmer al Service. 3,940.61 Hsecad a Wash Management Services
95M Cole Pamir Instrument Co. 258.66 lab Pare&Supplies
95223 Columbia Antlyloal Services.Ino 4,650.00 Analysis Of Wastewater,Indented Wastewater B Biosolids
95224 CompuCom Systems.Inc. 6,988.94 Sallwere Uamses&Maintenance-Orion Nemork Performance Monitors&LAN Surveyor
95225 Consumers Pipe&Sepdy Co. 851.14 PhmMryl Pad.&Supplies
95226 Corporate Express 1.312.14 Orrice Supplies
95227 Certain Ergirsenng 106.78 Pump Supplies
95228 CounlyalOrerge Audlor Cm9raller 35.00 Encroachment Permit 2400
95229 County Of Orange Audlor Controller 140.00 Encroerhmerl Permtl 2-68
95230 County Wmpbxh Electric Co. 1,040.61 Ehtlricel Pads B Supplies
95231 Crane Veyor Corp. 474.19 Maintenance Agreement-Old,&Annual Inspections.Certification OuadrennlN Tell
OS232 CS4IMSC0 17,421.2& Mechanical Pads&Supplies
95233 VOIded Check -
95234 CWEA Specialty Conference 4W.00 Training Registration
95235 Grade Tres Service 2,40.W Tree Meint.Service
952M Disarmed ed of Molar Vehidea 20.00 Bost License element-Ocean Mamionng Program
95237 Dunn Enti Corporation 132.07 Paint Supplies
952M E.Sam Jooss Dtatrbutos,Inc. 981.30 Electrical Paris&Supplies
95239 Employers Group 4,0619.08 Training Registration
95240 Enchanter.Inc. 4,2110.00 Ocean Mimonng&Gaining Inspection&Maintenance
95241 ENS Resources,1 . 10,000.00 Professional Services-Leglsltdive Adwcela
95242 Ervin mental Compliance Inspection Sam. 1,080.00 Professional Services-Fats,Oil Grease(FOG Pmgmm)Inspectors
96243 Enamnmental Resource A3sotlehs 1,224.26 Lab Paris&Supplies
952" Enulro mental Sampling Supply,Inc. 324.36 lab Paris&Supplies
95245 Eakel Porter Oendulerg,Inc. 742.50 Professorial Services-Implementation Of Micreach Customer Relationship entertainment Application
95246 Ewing Irrigation Industrial 545.04 Landscape Irrigation Pads&Supplies
95247 FEDEX Corporation 33.89 Freight Serirea
95248 Ferguson Emotionally,Inc 3.50.81 Mechanical Parts&Supplies
95249 Ftiat American Real Estate Solulions 923.50 On my Orange County Property Inlormefion
95250 Fisher Sderofic Company,LLC. 2,486.29 Lab Party B Supplies
95251 Franklin Covey 19.98 OMce Supplies
95252 Frya Electronics W1.31 Computer Supplies
95253 Gexammental Accounting Standards Sued 217.33 Publlceeon
NbpNMFXLFLC1aU2PAP$NLRFCIMTe Pan RpwemanOmm Pad anon.Anarmam B 10-3"Ar EXHIBIT
oul Page 11 a15 "name
Claims Paid From IBM GMT to IMIMT
Warrant No. Vendor Amount personation
85254 Getinge Castle 1,778.00 tab Instrument Maintenance Agreemenl-AulOWves
05255 G.F.OA. 51.00 Meeting Registration-Division 220
952% GGTch Mitchell,Inc. 357.39 Hardware
95257 GlobalAwarvis Inc. 1m.09 Asset Tags
95258 Gorden Stale Water Company 201.52 Weler Use
95259 Goidemiest Corp. 3,425.00 N/irdow Washing Semces&Gmundsi eagrg
952N Grainger,Inc. 3.985.07 Electrical Pans&Supplies
95281 Graybar Electric Company 468.73 Electnwl Pads&Supplies
95262 Grmtlend Coryprelion 384.00 W2 Fonda&Envelopes
95263 Hach cio Ponlon InduaWes 2.39206 Electrical Pads&Supplies
952W Traced Primrose Ice 150.00 Ice For Samples
95265 Widnglon Industrial PWnlia,Inc ],25]19 MCGlanoal Paris&Supplies
95266 Heat Technology Products 375.00 Repair&Mainfenarce Seraces-Heal Exchanger
95267 Hills,Inc. 508.04 Mechanical Part,&Supplies
95MB Home Depol 1.60807 Mlac Repul Maintenance Material
9526E Hopkins Technical Products 3,326.52 Medmmical Pads&Supplies
95270 City of Huntington Beads 13.437.89 Water Use
95271 Industrial Distribution Group 111.30 Meclenral Paris&Supplies
95272 Inmdde Engineering 887.09 Seivenine Video Inspections
GUTS Irorganic Ventures.Inc. 720.34 Lab Parts&Supplies
95274 IBM 5.ND41 Maintenance Agreement AS400
95275 Imensys System,Inc. 2,699.85 Instrument Paris&Supplies
952M [SEC.Inc. 038.00 Lab Pads&Supplies
95277 JG Tucker And Son,Ins, 1.112.25 Repair&Maintenance Services-AtO ReMexid Whon
95278 Jamison Engineering Contractors,In, 14,250.00 OWide Cameo Relocations-W St&15%St.Pump Sw:B Install Camera CoMuils at Main St.Pump Sta.
95279 Jays Calming 1,575.27 Heeling Expenses
95280 Johnstone Supply 2.105.49 Electrical Pens&Supplies
95281 Keith Boger 2.25000 Training Regisicetion
95282 Kenl Fluld Poser Div or AIT 125.46 Mechanical Pads 8 Supplies
95283 Kim&EmAcnmenal Lab 120.00 Dual Laboratory Samples
052W Kcmne.Ira. 242.48 Meehancal Paris&Supplies
95285 Kno,L.L.C. 46.79 Lab Pads&Supplies
95288 Lab S6lety Supply,Inc. 310.00 Lab Paris&Supplies
95287 labserve-Tent 830.00 Late,Instruments Calibration Semrea
95288 Lame Sol and LMghail 2,340.71 Professional Somme-Informal Audi
95289 Li man Education Services 319.00 Training Registration
95290 Los Angeles County 1,042.50 Seser Service Conn.Agreement MO W23MB
95291 Wassail.Pico, 33.09 Heeling Expenses
95292 M.J.Soma and A.M.,Inc 1,168.00 Professional Service9-Chloride Testing or Concrete Modals at Digester
95293 Mayer Hoffman McCann.PC 7,609.00 Financial Auditing Services
952" McLean Thermal 120.02 Electrical Pam&Suppies
95295 McMmter Carr Supply Co. 3.701.33 Mechanical Pan.&Supplies
952M Midway Mfg.&Monitoing Co. 9.603.55 Mechanical Pads&Supgies
95297 Mine So"Appllences Company 3,924.80 Electrical Parts B Supplies
95298 Motion lld68tre9.Inc 223.30 Inslmmded Pens&Supplies
95299 MRC Technologies.Inc 52.00 Freight Chagm
95300 Heal Supply Co. 3.725.15 Plumbing Supplies
95301 Neutron Produce.Inc 14,751.25 Antonic Polymer
95302 Nesxrk Electronics WT.W Instrument Suppose
95303 City of Newport Burch 102.55 Weler Use
95304 shaBre Plumbing 176.17 Plumbing Pans Is Supplies
HNpNM1EMCELEYI PSNRMWmx PW AidommdiQlarx PVdRWon-PN ens alpi1'VW EXHIBITS
&vttas: -� Page 12 or 15 tln15rzce1
Clam.Paw From 1011firoy to 10131MI
Warrant No. Verwor Amount Description
95305 Nirryo&Moore Contents Accounting 23,107.72 Professional SeMces-Bads,Concrete&Other Mamas Testing tar Various Capital Prejecls
95306 Office Depot Business Services Division 3.152.70 Omce Supplies
95307 Oimsmme Distributers.Inc. 1,173.03 Electrical Pans&Supdi m
95308 Orane Cortoratim 10,525.22 Saftware License and Maintenance Agreement Nearest
25309 Orange FIYid System Technologies.Inc. 1,698.10 Plumbing Paris&Supplies
95310 Oxygen Service Camparry 1,975.55 Lab Parts&Supplies
95311 PCD Industries 150.00 Repair&Malnlenenm Services-Shaft
95312 PCS Express.Inc, 110.30 Courier Service
95313 Perimmance Pipeline Technologies 927.40 Sesedine Vwen Inspections-Various
95314 PFT/Alexander Service,Inc. 1.547.15 Irxstmmenl Parts&Supplies
95315 Poser Design,Inc. 127.15 Repair&Maintenance Materials-UPS Interface Card
95316 PdM.,W 1.374]] Printer Maintenance
OW17 Progressive Business Publications 2d0.00 Subscription
9018 Prudential Oven!Su0sly 3,206.74 Unlwmre&Rebted Articles
95319 0Air Calif..-Oiv,of Pump Engmeenng 1,649.25 Air Compressor Pans
963M RSF Consulting 630.00 Surveying Services-Various Locations
95321 Red Wing Shags 13.017.21 Satsly SMee
953M R98mk Cap. 1.957.33 Lab Parts&Supplies
95323 RMB Engineering&Design,Inc. 3,130.00 Structural Engineering Services-Steel Framing,Mm"Crack&Turbine VenNalar at Air Compressor Bldg.
95324 Ras9moont.Inc 489.50 Insinuator Pena&Supplies
95325 Row Rooter NOC911 761.75 Plumbing Samacea-Clean 0.1 East Shover Drain In Menlo Room of Building"A"
MM Royale Caused, 7.50 Dry Cleaning Services
95327 RS Hughes Co.,Inc. 194.15 Pains Supplies
9029 Rutland Tod&Supply n1.06 Small Tad Expenses
95329 S&J Supply Co Inc 1,051.54 Mechanical Pens&Supply.
95330 Southern Candles Lubricants 2,BSBA3 Oiesd Fuel
95331 Smftel Voice&Date.Inc 2,715.79 Telephone System Maintenance
0032 Sea Bind Electronics,Inc. 921.00 Lab Instrenn9nt MCInkmance&Cadbratlon Services
95333 Won Name Plate ]BT.S] Speed Limit Sign
95334 Shammok Supply Co.,Inc 2,767.90 Mechanical.Elecancal,l.otln&Pains Pans&Supplies
95335 Sbureluek Bays&Engineering 1,219.55 MrrJlanmal&Paid Supplies
95336 Siemens Me,Technologies Corp. 2,835.55 Service Agreement-DI Venter Systems at Pynts 1&2
95337 Sigma Aldrich,Inc 458.50 Lab pang&Supplies
95336 Sees.Inc. 8,835.50 Lab Pans&Suppllea
95339 Smith-Emery Compary 6,158.50 Sails,Concrete&Other Maedals Testing
95340 South Coca Air Ou"Management Dist. 2n.00 Annual Permit Fees-Activated Caton Absorber Drum Verb
95341 Sougiem Cali arms Trene Service 063.08 Mxhenical Pans&Supplies
95342 Southern Counlles LUbricam 2,052.14 at
95343 SpstMstts 1.M.44 Ddnkhg MeaXoder Rentals
95344 SPEX Cm6P.P,Ina 128.89 Lab Pads&Supplies
95345 Steven EMeryrom,Inc. 21.21 Office Suppllae
95346 Summit SIeN 6,351.50 Mewl
95347 SWRCB Acommling Omme 474.00 Anmel So.Water Permlt pass-651&5.52
95345 Technical Samoa Group,Inc. 1,590.08 SCADA Sysym VAX Service Agreement
95349 Systems Solution Caiparry 3,310.00 Repulse&Maintenance BorvMe.-Access CWOUCCTV Security System
95350 Tedamerice Onym 946.00 Anelyets of Bbeditls
OM61 The Waking Man,Inc. 500.00 Printing and Dlsldbudan d NotlAcalons for Various Construction Projects
9M52 Thompson Installed Supply,Inc. 11,928.88 Machanlcel Pads&Supplies
95353 TJ'a Servicaa 325.00 Proleselonel Services 1-24
95354 Tony'.Lock&Set Sarvlee&Sales 9d2.99 Locks&Keys
95355 Tortuga Pod SeMme Mop Maintenance Agreement-Weekly Cleaning of AVium Pond
H WeI>h.rNEXCELduo2MP9HpMWims Paul ae{m UlsMelms Pel4 RepM-rssW GM-a-10.11ei.W EXHIBITS
M.I. Page 13 015 Ilnsmo2
Claims Paid From 1 W/SIW to/0/31M7
Warrant No. Vendor Assumed Description
953SB Truck&Auto Supply,Inc. 1.283.51 Addemhm Pads&Supplies
95357 UC Regents CPER 65.95 Books&Publications
95350 UmtM PaCKc Servicas,Ina. 20,353.01 Tree Maintenance Sallies&Landscape Membranes at Plants 1&2 and Pump Stations
95359 United Parcel SeMce 39.49 Passel SeMtse
95380 Vahe Automation&Controls 403.85 Electrical Pads&Supplies
95361 Vapex,line. 9.172.00 Sample Pump
9536F Varian,Ise 503.73 Lab Pads&Supplies
95363 Vernon California 46.66 Telephone Services
953M Version Variables 523.So 4MroWs Telephone SeMtes
95365 Vedas Plumbing 4n.50 Sella Contract-Testing,Repair&Car.Becli D cos w PM.1&2&Pump She
9068 VIILMe Nurseries 452.95 Landscaping Supplies
95387 Vortex Corp. 890.25 Gale Repairs
9536E VWR Scientific Products 5.803.71 Lab Pads&Supplies
95369 The Wake ilm!Corporation 20.200.03 Security Senecas
05370 early Machinery And Tod Supply,Inc, 10.73 Mechdeled Pans,Suppliea&Table
95371 Vhxle Sanitary Supply 62.71 Janiodal Supplies
95373 WEF 346.00 Memberalep-Weber Environment Federated
B5373 Well Us Supply Company,Inc. 89.21 Electrical Pads&Supplies
95374 Weabem Series Console 4,222.81 Inssument Parts&Supplies
85375 We&pen Approve DBA Breaker Sum. 3.145.90 Electrical Pam&Supplies
95376 Xerox Corporation 20,608.69 Coder Services-saddled Copy Usage&Chagas
95377 YaWChase Materials Handling.Inc 77.77 Electric Cad Parts
95378 Jude Brooks 117.00 MeelingRrolurig Expense Reimbursement
95379 Pinky E.Burke 7.95 MeeMgRrslnbng Expends,Reimbursement
95380 Damn L.Caren 282.01 Mealson ralMng Expense Reimbursement
9S361 Rlchem A.Casbilon 1,016.49 MeeNgrfruni g Expense Reimbursement
95382 Ann Grafton 1,M9.63 MeelWminhg Expanse Reimbursement
95383 Andy DaSINa 165.47 MeefirglTra nkilg Expense Reimbursement
95384 Ronald L.De Mit.Jr 216.15 Maeling?Mning Expeue Reardursement
95385 Trades D.Depositor 4all Meefiilgfranning Expense Reimbursement
05386 Darrell S.Ennis 195.00 Meeting/Traning Expense Reimbursement
SM87 Mercury A.Erickson 73.62 Mastrg/Tralrbng Expense Reimbursement
95388 Mark A.Sabi MOD MeetinglTrwning Expense Reimbursement
95389 Joind B.Falkenstein 143,00 Meetlig?reeing Expense Reimbursement
95390 Chuck,M.Forman 691,40 Meedngyframlig Expense Reimbursement
95391 Lester Kexin Harden 644.84 MedingRrwnlrg Expense Reimbursement
95392 FenaiMo Herrera 17.85 Mesgng?ralning Expense Reimbursement
95393 TM H.Hopkins 16800 MeesngrTrwwng Expense Reimbursement
95394 Luis M.Kewte 458.32 MeetlrgRbalning Expires Reimbursement
95395 Randall pwnmad 11SA6 MeetingyTneing Expense Reimbursement
95390 Lauer J.Klinger 14.17 Mee irgRrwnitg Expands Reimbursement
95397 Vladimir A.Kogan 254.83 MeetingRmining Expense Reimbursement
95398 Mlduel D.Larkin 26.00 Meetingrtrainirg Expense Reimbursement
95399 L9unded Lull 70.00 Merme,11minlrg Expense Reimbursement
95400 ChM Maher 31.58 Meedilg/Tnsling Expanse Reimbursement
95401 Michael D.Moon 161.00 MedingRiainlrg Expense Reimbursement
95402 Raymond Neadro 61.00 Medingamming Expense Reimbursement
95403 Waae Phuong 555.25 Mee ing/Tnuming Expense Reimbursement
95404 Wiliam F.Pierce 437.90 Meetingrtrunlig Expanse Reimbursement
95405 Victoria Mike 04.BB Meabing?ralning Expense Reimbursement
95406 Gary V.Prater 24.79 MeetinglTMning Expanse Reimbursement
H WoplNeeE%GEL OIB1nn0NP$HAREICIeImf Ped Re{am]OOTCItlme PelO Rama�Allemm0nl B IOdILINa EXHIBIT
er✓elorm Page 14 o115 111,52e1T
Claims Paid From 1 W16W1 to 10I3 AIT
Warrant No. Vendor Amount Description
95407 MWhew 0.Rebal 3]0.]2 MmoinglTnining Expense Relmbunemenl
BUDD Georye Riven 1,369.24 Misad"nmining Expeme Reimbursement
BUDD JaM K.Roberts 1&00 Mcet"ffivinblp Expense Reimbursement
85410 Carolyn L.Thompson 204.73 Mee inglTrabsM Expense Reimbursement
85411 Edward M.Tones 189.00 MeetinganalmV Expeesa Reimbursement
95a12 Joseph F.Vallolxf 90.00 Meat"anaining Exppsa Relmbumemenl
93413 Simon L.Meson Ta.00 MeelhgRraining Expense Reimbursement
95414 Chelsea F.Wlnsor 1,147.00 Meelingaminblp Expeme Reimbursement
85415 MOMa C.Ying 41.39 MeeWgrtrainhg Expense Reimbursement
95410 Dwayne Berg 2.089.17 User Fee Refund Regarding Septic Tama
95417 RomM CCMs 2,700.00 Employee Computer Loan Program
95418 Co1mN Of Orange Auditor COmrdler =.00 Administration Fee-Adjustmenl M PmDady Tax BBs
95419 Paul G.Nielson 2,089.17 User Fee Rebmtl RegaNing Septic Tanks
BUM RSG Uarolmenls 943.14 Reconciliation User Fee Refund Program
95121 BARBS 640.00 Tninillp Registration
Total Accounts Payable-Warranb 3 2202&]95.BB
Pavmll Otebursements
37650 - 37651 Employee Paychecks $ 2.213.01 Inlemn Payroll-TerminHbn(1W1]/0])
37652 - 377M Employee Paychecks 113,316Aa BiyRekly Pryrall(1 W24107)
140NS .147450 Direst Cropped Statements 1.246.525.74 BMeekly Payroll(1 W24I0])
Total Parnell DtebursemerXs 3 t 39205&23
Win Transfer Peymema
OCSD Payroll Taxes&CorAnbu0ons 3 495,101.32 Bkaeskq Payroll-(10R4O])
US Bonk 515,789.09 Sends 20D0 A&B Refaffirlp Cenilkales of Padiupations October lnteresVPnnclpi Payment
Total W.Transfer Payments & 1.011.aB0.41
Tolud Claims Paid t OMWO7-1W31MT
HWepMMECEL4LV PSI REWIo,mf Pe,d Repompm I&Ime PA,d Rfi m -AIYCmenl_a_10.31-07.tla EXHIBIT
tn61 We Page 15 of 15 HIIWM7
lI
Orange County Sanitation District
MINUTES
BOARD MEETING
October 24, 2007
OJN� S ANI Tgr�oy
9
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O -1
�cr�N HE ENV�QO
ADMINISTRATIVE OFFICES
10844 ELLIS AVENUE
FOUNTAIN VALLEY, CALIFORNIA 92708-7018
Minutes of Board Meeting s
10/24/07
Page 2 Y
ROLL CALL
A regular meeting of file Board of Directors of the Orange County Sanitation District was
held on October 24, 2007 at 6:30 p.m., in the District's Administrative Offices. Following
the Pledge of Allegiance and invocation, the roll was called and the Clerk of the Board
reported a quorum present as follows:
ACTIVE DIRECTORS ALTERNATE
DIRECTORS
X James M. Ferryman, Chair Bob Ooten
-3F Doug DaverL Vice Chair Jim Palmer
X Steve Anderson Tom Beamish
A Charles Antos Gordon Shanks
A Don Bankhead Sharon Quirk
X Steven Choi Sukhee Kang
X Larry Crandall Gus Ayer
A Bill Dalton Mark Rosen
A Jon Dumitru Carolyn Cavecche
X Richard Freschi Brad Reese
X Cathy Green Don Hansen
X Phil Luebben Prakash Narain
X Patsy Marshall Jim Dow
X Darryl Miller Douglas Reinhart
Roy Moore X Ron Garcia
X Joy Neugebauer AI Krippner
X Chris Norby Janet Nguyen
X Ken Parker Catherine Driscoll
X David Shawver David Cadena
X Harry Sidhu Lucille Kring
A Sal Tinajero David Benavides
X Constance Underhill Joseph Aguirre
X Mark Waldman Ralph Rodriguez
X Don Webb Leslie Daigle
A Jim Winder John Anderson
STAFF MEMBERS PRESENT: Jim Ruth, General Manager, Bob Ghirelli,Assistant
General Manager; Penny Kyle, Clerk of the Board; Nick Arhontes; Jim Herberg; Ed
Torres; Lorenzo Tyner, Bret Colson; Norbert Gaia; Lilia Kovac; Juanita Skillman; Michael
Gold; Michael Von Winckelmann; Laurie Von Winckelmann;
OTHERS PRESENT: Brad Hogin, General Counsel; Trevor Von Winckelmann
Minutes of Board Meeting
° 10/24/07
v Page 3
PUBLIC COMMENTS
There were no public comments.
REPORT OF THE CHAIR
Chair Ferryman thanked everyone who attended the Strategic Plan Workshops and
provided guidance to Staff for preparing the Strategic Plan for the Board's consideration
in November. Director of Technical Services, Ed Torres, presented a 20-year service
award to Michael Von Winckelmann. Mr. Ferryman then reviewed the November
meeting schedule.
REPORT OF THE GENERAL MANAGER
General Manager,Jim Ruth, provided a brief overview on the progress and cost savings
of the IT Strategic Plan; a design-build project scheduled for November; SARI Line
project status and its proposed timeline; the SAWPA capacity agreements review
process; and existing IRWD capacity right agreements review and updates.
REPORT OF THE GENERAL COUNSEL
General Counsel, Brad Hogin, briefly reported that the Kern County ruling has been
challenged and may result in the Sanitation District being required to perform additional
analysis to strengthen the addendum, or the possibility of a supplemental environmental
report.
RATIFICATION OF PAYMENT OF CLAIMS
MOVED, SECONDED AND DULY CARRIED: Ratify payment of claims set forth on
exhibits"A'and'B',attached hereto and made a part of these minutes.
ALL DISTRICTS 09/15/07 09/30/07
Totals $14,791,158.87 $14,798,783.83
Director Green abstained from discussion and voting on Warrant Nos. 93614, 93710,
93999, 94004, and 94104. Director Norby abstained from discussion and voting on
Warrant Nos. 94104, 94259, 92854, and 93864. Director Shawver abstained from
discussion and voting on Warrant Nos. 93661 and 93880. Director Sidhu abstained from
discussion and voting on all warrants. Abstentions were pursuant to California
Government Code Section 84308.
Minutes of Board Meeting
10/24/07
Page 4
CONSENT CALENDAR
8. Consideration of motion to approve all agenda items appearing on the Consent
Calendar not specifically removed from same, as follows:
a. MOVED, SECONDED AND DULY CARRIED: Order the minutes for the
special meetings held on September 19, 2007, October 11, 2007, and the
regular meeting held on September 26, 2007,to be filed and deemed
approved, as mailed.
b. MOVED, SECONDED AND DULY CARRIED:Adopt Resolution
No. OCSD 07-22, approving the Orange County Sanitation District levying
assessment installments in lieu of the payment of sewer system capital
facilities capacity charges(CFCC) incidental to the connection of
assessor's parcel No. 383-082-21 to the sewer system.
END OF CONSENT CALENDAR
COMMITTEE REPORTS AND RECOMMENDED ACTIONS
9. STEERING COMMITTEE
Chair Ferryman reported that minutes of the September 26, 2007 Steering
Committee meeting had been approved; the General Manager provided his
monthly status report; and Michael Gold gave an update on legislative activities.
Consent Calendar
a. MOVED, SECONDED AND DULY CARRIED: Order Steering Committee
Minutes for the meeting held on September 26, 2007, to be filed.
b. MOVED, SECONDED AND DULY CARRIED: (1)Approve an agreement
with Townsend Public Affairs for State Lobbying Services, Specification
No. CS-2007-351 BD, in an amount not to exceed $7,500 per month, from
January 1, 2008 through June 30, 2009, and four one-year optional
renewals; and,
(2)Approve an agreement with ENS Resources,for Federal Lobbying
Services, Specification No CS-2007-352BD, in an amount not to exceed
$10,000 per month and $6,000 per year in reimbursable travel expenses,
from January 1, 2008 through June 30, 2009, and four one-year optional
renewals.
Directors Green, Marshall, Norby and Sidhu abstained.
Minutes of Board Meeting
_ 10/24/07
V Page 5
10. OPERATIONS COMMITTEE
Consent Calendar
a. MOVED, SECONDED AND DULY CARRIED: Order Operations
Committee Minutes for the meeting held on October 3, 2007, to be filed.
b. MOVED, SECONDED AND DULY CARRIED:Approve Amendment No. 2
to the Agreement for Management of Biosolids with Tule Ranch/Magan
Farms, extending the contract term for one year,January 1, 2008 through
December 31, 2008, with four additional one-year options, for an annual
amount not to exceed $6,600,000, in a form approved by General
Counsel.
c. MOVED, SECONDED AND DULY CARRIED: 1)Approve Change Order
No. 3 to Purchase Order No. 102354-OB for Purchase of Ferric Chloride,
Specification No. C-2005-247, issued to Kemira Water(previously known
as Kemiron Pacific)for a unit price increase of$28.25 per dry ton for
ferric chloride, increasing the total price to $46225 per dry ton plus tax for
an estimated amount of$4,029,562 for the period December 1, 2007
through November 30, 2008;
2)Approve procurement of an economical grade of Ferric Chloride SG
from Kemira Water, at a unit price $410.00 per dry ton plus tax, for testing
during the contract period beginning December 1, 2007 through
November 30,2008, and continued usage in lieu of ferric chloride if the
Ferric Chloride SG is deemed to be equivalent in performance, at the
aforementioned price,for the remainder of the contract period; and,
3)Approve a 10%contingency for ferric chloride and Ferric Chloride SG,
for the remaining two one-year renewal options.
d. MOVED, SECONDED AND DULY CARRIED:Approve an increase in
contingency to the Professional Services Agreement with RBF
Consulting, Inc. for Carbon Canyon Sewer and Pump Station
Abandonment, Contract No. 2-24-1,for an additional 6% ($37,354),
increasing the total contingency to 10% ($62,256).
e. MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to: 1)Approve a Professional Services Agreement with
Dudek, Inc. providing engineering services for the Bayside Drive
Improvement, Contract No. 5-61, for an amount not to exceed $349,561;
and,
2)Approve a 10% contingency ($34,956).
Minutes of Board Meeting
10/24/07
Page 6 V
f. MOVED, SECONDED AND DULY CARRIED: Approve a Grant of
Easement to Southern California Edison in connection with the 66kV
Substation at Plant No. 1, Job No. P1-97, in a form approved by General
Counsel.
g. MOVED, SECONDED AND DULY CARRIED: Approve a Utility
Relocation Agreement with Southern California Edison in connection with
the 66kV Substation at Plant No. 1, Job No. P1-97, in a form approved by
General Counsel.
h. MOVED, SECONDED AND DULY CARRIED: 1)Approve a Professional
Services Consultant Agreement with Alan Plummer Associates, Inc. for
the Superoxygenation Process Feasibility Study Utilizing ECO2
Technology, Specification No. CS-2007-34013D, for a total amount not to
exceed $286.850; and,
2)Approve a 15% contingency($43,028).
Non-Consent Calendar
i. No items were considered.
11. ADMINISTRATION COMMITTEE
Consent Calendar
a. MOVED, SECONDED AND DULY CARRIED: Order Administration
Committee Minutes for the meeting held on October 10, 2007, to be filed.
b. MOVED, SECONDED AND DULY CARRIED: Approve a Professional
Services Agreement with Aon Risk Services Inc., for an Owner Controlled
Insurance Program Broker/Administrator(OCIP), Specification
No. CS-2007-347BD, in an amount not to exceed 0.39550%of total
construction value(minimum of$150,000/yr.),for a one-year period, with
four additional one-year renewal options.
Non-Consent Calendar
C. No items were considered.
12. GWR SYSTEM STEERING COMMITTEE (GWRSSC)
GWRSSC Consent Calendar
a. MOVED, SECONDED AND DULY CARRIED: Order Joint
Groundwater Replenishment System Steering Committee Minutes for the
meeting held on September 10, 2007, to be filed.
Minutes of Board Meeting
10/24/07
v Page 7
GWRSSC Non-Consent Calendar
b. No items were considered.
13. Ordinance No. OCSD-34, An Ordinance of the Board of Directors of Orange
County Sanitation District, Establishing Board of Directors' Compensation, and
Repealing Ordinance No. OCSD-14 and Ordinance No. OCSD-23:
a. MOVED, SECONDED AND UNANIMOUSLY CARRIED: Read Ordinance
No. OCSD-34 by title only and waive reading of said entire ordinance.
b. MOVED, SECONDED AND UNANIMOUSLY CARRIED: Introduce
Ordinance No. OCSD-34,and pass to second reading and public hearing on
November 28, 2007.
NON-CONSENT CALENDAR
14. CONVENE IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE
SECTION 54956.9(c): The Board convened in closed session at 6:51 p.m.
pursuant to Government Code Section 54956.9(c).
RECONVENE IN REGULAR SESSION: The Board reconvened in regular
session at 6:59 p.m.
Brad Hogin, General Counsel, reported that the Board of Directors authorized General
Counsel to continue to defend the interests of the Sanitation District re existing litigation
re City of Los Angeles v. Kem County.
ADJOURNMENT: The Chair declared the meeting adjourned at 7:00 p.m.
Penny M. I e
Clerk of the Board
Orange County Sanitation District
Claims Paid From W01107 to 09/15/07
Warrant No. Vander Amount Description
Account,Payable-Warrants
93602 Basic Chemical Solutions.L.L.C. & 44,135.31 Sodium Bisul6te&Sodium Hydroxide
93603 B.&Caldvrell 47.601.43 Professional Services PW7
93604 Carollo Engineers 185,963.69 Professional Services P2d6
93605 Corporate Image Maintenance,Inc. 34,455.0D Cuslot ial Services Spec.No.98994y9
936W County of Orange Auditor Controller 47.583.80 Properly AtInbute Processing Charges
93607 Harriett Packard Company 142,804.73 (100)HP Compaq dc7700 Computers&(50)Monitors
93608 JCI Jones Chemicals,Inc. 53.369.06 Sodium Hypochlodle
93M Southern California Edison 06.059.05 P.
93610 Synagro West,Inc. 300.974.20 Residuals Removal NO 3.29-95
93611 Tule Ranch/Magan Farms 217,188.32 Residuals Removal MO 3-29-95
93612 Ameron International 38,856.38 Construction 1-24
93513 Barnard Soletanche Joint Venture 1,928,359.84 Construction 00A
93614 J F Shea Construction,Inc. 4,541,604.96 Construction 1-108
93615 J R Filanc Construction 241,032.60 Construction FE06-14
93616 Margate Construction,Inc. 211.523.56 Construction PI-37
93617 US Bank National Ass.Escrow 214.262.21 Construction 1-10-A.Retention
93618 Orange County Sanitation District 43.675.57 Workers Camp.Rem b.
93619 Able Scale Repair 870.00 Loading Scabs Quarterly Inspection&Certification for Pits.1 &2
93620 Accounting Options,Inc. 3,410.00 Temporary Employment Services
93621 ACCU Sludge 372.62 Lab Parts&Supplies
93622 Accurate Measurement Systems 1,103.76 Electrical Pads&Supplies
93623 AccuSlandard $7.02 Lab Parts B Supplies
93624 Advanced Infrastructure Technologies 8011.13 Camera Parts&Repair Service-OV System 38"Armored Cable
93625 Aemsk 8,013.44 Temporary Employment Services
93626 Airgas Safety,Inc. 5.583.63 Safety Supplies
93627 ALFA-LAVAL INC. 116.08 Electrical&Mechanical Parts&Supplies
93628 Allrex Pad0nn .Syslems 650.00 Training Registration
93529 Applied Industrial Technology 26.79 Mechanical Paris&Supplies
93630 AT&T Califomla/MCI 38.14 Telephone Service
93631 AT&T Long Distance 1,326.66 Telephone Service
93632 AT B T Mobility 11,L.L.C. 9,775.45 Wireless Telephone Services
93633 Atlas Underground,Inc. 21,600.00 Repair B Maintenance Services-Manhole Cone
93634 AW51 303.OD Department of Transportation Program Management B Tesling
93635 Battery Specialties 382.93 Batteries
93636 SC Wine Rope&Rigging 1,851.39 Mechanical Pads&Supplies and Safety Tools
93637 Bee Man Pest Contml,Inc. 370,00 Pest Control
93638 BioMeneux Vilek,Inc. 145.65 Lab Pads&Supplies
93639 Brimmes Electric 1,907.32 Electrical Pads&Supplies
93640 Cal Glass,Inc. 570.61 Lab Pads&Supplies
93641 California Barricade Rentals 3,600.00 Barricade Rentals&Worksite Protection
93642 California Municipal Statistics,Inc. 500.00 Debt Statement-Comprehensive Annual Finanall Report 06130/07
93643 California Relocation Services,Inc. 427.50 Office Files Moving/Relocation Services
93644 Callen Associates,Inc. 3.872.50 Investment Advisor
93645 Marlin Boyer Co.,Inc.do Cambridge Integrated 2.875.00 Professional Services-Workers'Compensalion Claims
93646 Cameron Compression Systems 5.958.34 Mechanical Parts B Supplies for LSVB Cooper Engines
93647 Cameron Welding Supply 57.40 Welding Parts B Supplies
93648 Cad Warren&Co. 144A2 Insurance Claims Administrator
93649 Cavanaugh Machine Works 779AO Repair&Maintenance Services-Pump
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Claims Paid From 09101/07 to 09115107
Warrant No. Vendor Amount Description
93650 Clean Harbors Environmental Services 15.928.64 Hazardous Waste Management Services
93651 Columbia Anslyticel Services,Inc. 1.188.00 Ansysis of Wastewater,Industrial Wastewater&Biosolids
93652 Compressor Components of California 21.156.72 Mechanical Parts&Supplies
93653 Computer Protection Technology,Inc. 6,476.70 Computer Batteries Maintenance Agreement
93654 Consiliant Technologies 8.178.63 Software/Hardware-Gvedand Storage Add-On Drive Kit for Newer Series LTO-3
93655 Consumers Pipe&Supply Co. 11.77 Freight Charges
93656 Controlled Motion Solutions 60.08 Mechanical Paris&Supplies
93557 Corporate Express 1,646.52 Off=Supplies
93658 Cortech Engineering 4,187.60 Pump Supplies
93659 County of Orange Auditor Controller 3.140.00 2007-08 Preliminary Tax Roll&Cross-Reference
93660 County of Orange 1,150.00 Appkcetion Fee-Carbon Canyon Dam&Pump Station Abandonment
93661 CR&R,Inc 315.00 Container Rentals&Waste Disposal Service
93662 CSI Services,Inc. 2.459.84 Professional Services-Corrosion Inspection
93663 Culligan of Orange County 52.85 Maint.Agreement-Can Gen Water Softener System
93664 Cudey Wholesale Electric,Inc. 726.75 Electrical Pads&Supplies
93665 Dapper Tire Co. 2A76.69 Truck Time
93666 DeWd's Tree Service 1.800.00 Tree Maml.Service
93667 Desert Pumps&Parts,Inc. 14.870.47 Pump&Parts
93668 Dexon Computers,Inc. 9.215.00 Computer Suilware/Hardware-Cisco 46-Port Switch
93669 DigSmad,L.L.C. 1,D00.00 Software Maintenance Agreement-DlgSmad V2.2&Support
93670 Kimberly A.Erickson 22.63 Meeting/Training Expense Reimbursement
93671 Eagle Protection of California 690.00 Bldg.Security Alarm Services-No.County Yard
93672 Earth Tech,Inc. 4,679.80 Professional Services P1-106
93673 Enrhanler,Ina 4.500.00 Ocean Monitoring&Outlall Inspection&Maintenance
93674 Environmental Resource Associates 212.50 Lab Parts&Supplies
93675 Ewing Initiation Industrial 1.057.98 Landscape Irrigation Parts&Supplies
93676 Ferguson Enterprises,Ina 1,480.18 Mechanical Parts&Supplies
93677 Fisher Sdentlfic Company,L.L.C. 2.212.26 Lab Paris&Supplies
93673 Flat&Vertical,Inc. 286.00 Concrete Cutting&Removal
93679 Fleet Transportation Services 14.715.96 Grit&Screenings Removal
93680 FLW,Inc 48.82 Mechanical Pads&Supplies
93681 Franklin Covey 73.97 Office Supplies
93682 Frys ENdronlce 131.93 Computer Supplies
93683 GE Mul0lin,I..(Repairs) 620.00 Electnul Equipment Repair
93684 George T.Ha0 909.10 Electoral Paris&Supplies
93685 Golden State Water Company 514.68 Water Use
93886 Goldemsest Corp. 4.330.00 Repair&Maintenance Services-Various
93687 GOTM Enterprises DBA Property Care Services 1,400.00 Sweeping Services
93668 Grainger,Inc. 8,011.46 Electrical Pads,Supplies&Tools
93689 Greet Western Sanitary Supplies 285.11 Janitorial Supplies
93690 Guy L.Warden&Sons 642.19 Instrument&Mechanical Pads&Supplies
93691 Hach cto Penton Industries 791.53 Lab Parts&Supplies
93692 Harold Primrose Ice 270.00 Ice For Samples
93693 Harrington Industrial Plastics,Inc. 1,396.21 Mechanical Pads&Supplies
93694 Home Depot 748.20 Mist Repair&Maintenance Material
93685 City of Huntington Beach 34.99 Water Use
93696 Hydmtex 2.933.71 Lube 00
93697 Influddal Distribution Group 180.50 Toole&Mechanical Supplies
93693 Inland Litho 6,872.87 Postage for Community Newsletter Mailing-Summer 2007
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Claims Paid From 09101107 to 00115107
Warrant No. Vendor Amount Description
93699 Innedine Engineering 4.960.00 Severna Cleaning-Newpgd Beach
93700 International Association of Admin.Prof. 73.00 Membership
93701 Ironman Pads&Services 506.14 Filter
93702 Irvine Ranch Water District 7.50 Water Use
93703 ITT FLYGT Corporation 767A3 Electrical Pans&Supplies
937N Jamison Engineering Contractors,Inc. 15,326.97 Repair&Maintenance Services-66'Velves of Pit,1
93705 Jays Catering 919.09 Meeting Expenses
93706 Johnson&Associates,L.L.C. 5.725.00 Professional Services-2005 Slwcluml Adjustment-Execulive Management Study
93707 Johnstone Supply 26827 Electrical Pads&Supplies
93708 Kforce,Inc. 1.092.00 Temporary Employment Services
93709 Lab Support 1,876.88 Temporary Employment Services
93710 Mandic Motors 300.00 Towing Services
93711 Marking Services,Inc. 16.56 Asset Tags
93712 McMaster Can Supply Co. 3,292.82 Mechanical Pads&Supplies
93713 MCR Technologies,Inc. 1.817.48 Instrument Supplies-Flow Meter
93714 MDS Consulting 389.37 Professional Surveying Services
93715 Medlin Controls Co. 31SAl Instrument Pads&Supplies
93716 Midway Mfg.&Machining Co. 8,081.25 Mechanical Pads,Supplies&Rapids
93717 Milken Valve Company 7.343.17 Mechanical Pans&Supplies
93718 Mission Abrasive&Janitorial Supplies 125.05 Janitorial Supplies
93719 Mission Uniform Service 58.17 Uniform Rentals
93720 Mitchell Instrument Co. 168.00 Instrument Pads&Supplies
93721 MWH Amences,Inc. 5,852.69 Professional Services P2-74
93722 National Plant Services,Inc. 4,750.00 Jetting&Vacuum Services-"C"Headvai
93723 Neal Supply Co. 382.11 Plumbing Supplies
93724 Neutron Products,Inc. 8,905.54 Anionic Polymer
93725 New Pig 183.15 Spill Absorbent Materials
93728 Newark Etemronira 245.91 Eleclncel Pans&Supplies
93727 Ninyo&Moore Corporate Accounting 24,282.25 Professional Services-Soils,Concrete&Other Materials Tealing for Various Capital Projects
93728 Office Depot Business Services Division 2,422.58 Office Supplies
93729 Onesource Distributors,Inc. 3,388.35 Electrical Pads&Supplies
93730 Orange County Plating Co.,Inc. 356.0D Mechanical Pans&Supplies
93731 Orange,County Vector Control District 219.27 Pest Control
93732 Orange Fluid System Technologies,Inc. 41.99 Lab Pens&Supplies
93733 Oxygen Service Company 1.839.58 Rebuild Shop Gases&Lab Pads&Supplies
93734 Pacific Mechanical Supply 264.95 Mechanical Pans&Supplies
93735 Parkhouce Tire,Inc. 2,243.33 Tires
93736 Parsons Water&Infrastructure,Inc. 9,375.09 Professional Services J-35-1
93nir Palrmt Video Productions 705.00 Video&Editing Services
93738 Peak Technologies 1,416.64 Lab Pads&Supplies
93732 Performance Pipeline Technologies 1,6B0.35 Sewedine Video Inspection-Variow
93740 Phenomenex 545.30 Lab Pan&Supplies
93741 PL Hawn Company,Inc. 1,671.16 Electrical Pads&Supplies
03742 Polydyne.Inc. 11.099.19 Cationic Polymer MO 3.11-92
93743 Port Supply 33.76 lab Pads&Supplies
93744 Primary Source Office Furnishings,Inc. 1,211.11 Office Furniture&Misc.Equipment
93745 Process Work Injury Center 445.00 Medical Screenings
93746 Prudential Overall Supply 3,094.56 Uniforms&Related Adidas
93747 Pump Action 1,226.80 Oil Filters
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Claims Paid From 09/01/07 to 0911SR17
Warrant No. Vendor Amount Description
93748 RBF Consulting 15,302.75 Repair&Maintenance Services 241 &Surveying Services 1.10,7.32&2-24-1
93740 Red Wing Shoes 856.14 Safety Shoes
93750 Res"Corp. 872.49 Lab Paris&Supplies
93751 RM Aulomation do RM Controls 56.87 Instrument Supplies
93752 Ran Rakish and Associates,Inc. 487.50 Professional Services-OCIP(Ower Controlled Insurance Program)Feasibility Study
93753 Rutland Tool&Supply 889SB Mechanical Parts&Tools
93754 SETAC 655.00 Membership
93755 Sevier Equipment Company of America 188.57 Hose Guides
93756 Shamrock Supply Co.,Im 868.12 CleanedDegresser
93757 Shureiuck Saks&Engineering 2.450.78 Mechanical Pans&Supplies
93755 Siemens Water Technologies Corp. 60.00 Service Agreement-DI Water Systems at Plants 1 &2
93759 Sigma Aldrich,Inc. 1.814.90 Lab Pans&Supplies
93760 Skalar,Inc. 283.88 Lab Paris&Supplies
93761 SKC West,Inc. 1.892.56 Lab Pads&Supplies
93762 Shan Electric Company 8.693.06 Motor-75hp
93763 SPEX Cedipre s.In. 59.96 Lab Paris&Supplies
93764 St.Croix Sensory,Inc. 1.940.00 Ogaclometry Testing Services
93755 Stanley Steamer International.Inc. 1,809.00 Carpet Cleaning Services
93766 Summit Sleet 2,567.34 Metal
93767 Sunny Express 205.50 Freight Charges
93768 Sunset Ford 135.62 Vehicle Pads&Service
93769 Sunset Industrial Parts 81.11 Mechanical Pads&Supplies
93770 Troy Systems, Inc. 876.29 Toner Cartridges
937nl Teslemenca Ontario 5.045.00 Analysis of Biosolids
93772 Teslo,Inc. 161.00 Instrument Repairs&Calibration Services-Emission Analyzer
93773 The Orange County Register 5.200.08 Notices&Ads
93774 Thompson Industrial Supply,Inc. 10.556.67 Mechanical Pads&Supplies,and Explosion Proof Pump
93775 Time Motion Tools 128.09 Tools&Mechanical Supplies
93776 Time Warner Communicefion 51.08 Cable Services
93777 Times Community News 81.25 Notices&Ads
93778 Tanya Lock&Safe Service&Saks 1.617.16 Locks&Keys
93779 Tortuga Pool Services 310.00 Maintenance Agreement-Weekly Cleaning of Atrium Pond
93780 Tranecal 556.75 Instrument Pads&Supplies
93781 Tremor Incorporeled 2.890.00 Repairs&Maintenance Services-Control Candler Roof
93752 Truck&Auto Supply,Inc. 1.537.63 AuiomolNe Pads&Supplies
93783 UOra Scienlific 459.32 Lab Pads&Supplies
93784 US Equipment Co..Inc. 1,255.80 Hose Supplies
93785 Valid Corporation 2.403.44 Mechanical Paris&Supplies
93786 VePex,Inc. 5,991.50 Insi ument Pam&Supplies-H2S Vapor Sensor
93787 Varian,Inc. 1,850.61 Lab Parts&Supplies
93788 Vernon California 825.76 Telephone Services
93789 Vernon Wireless 455.71 Wireless Telephone Services
93790 Village Nurseries 74.32 Landscaping Supplies
93791 Vortex Corp. 2.065.49 Various Door and Gate Repairs
93792 VWR Scientific Prelude 6.312.26 Lab Pam B Supplies
93793 The Wakenhut Corporation 9,946.41 Security Services
93794 Waler Environ.Research Foundation 20.000.00 Collaborative Biosol as Research Freed-Third Year of Five-Year Pledge
93795 Waters Corporation 2,070.14 Lab Pads&Supplies
93796 Waxie Sanitary Supply 291.09 Janitorial Supplies
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surtax -- Page 4 of uinscon
Claims Paid From 09/01/07 to 09115107
Warrant No, Vendor Amount Descripticn
93797 West Lite Supply Company,Inc. 224.71 Electrical Paris 8 Supplies
93798 Western Switches 8 Controls.Inc. 9,223.00 Maintenance B Technical Support-(100)ION Meter Devices
93799 Westport Apparatus DBA Breaker Supp. 378.20 Electrical Parts 8 Supplies
93800 Wilmington Instrument Co.,Inc. 120.68 Electrical Parts 8 Supplies
93801 Xerox Corporation 19,099.69 Copier Services-Metered Copy Usage B Charges
93802 Yela/Chase Materials Handling,Inc. 1,827.70 Electric Cart Parts
93803 David Andrade 31.00 MeetingRralning Expense Reimbursement
93804 Shabbir S.Sesml 1,296.29 MeelingRmining Expense Reimbursement
93805 Ann H.Brandvoid 14.10 MeelinglTraining Expense Reimbursement
93806 Ann CraBon 324.38 Meelingffmining Expense Reimbursement
93807 Larry R.Crandall 872.23 MeelingRralning Expense Reimbursement
93808 Jerry F.Evangelista 1.316.60 Meelingffmining Expense Reimbursement
93809 Luis Gasca 867.57 Meeling?raining Expense Reimbursemenl
93810 Cathy Green 630.51 MeelinglTraining Expense Reimbursement
93811 Vladimir A.Kogan 940.23 MeelingRralning Expense Reimbursement
93812 Linda Loaurdo 30.08 MeelingRraining Expense Reimbursement
93813 James F.Moyneur 915.10 MeelinglTraining Expense Reimbursement
93814 Dan P.Nicolas 875.24 Meeling?raining Expanse Reimbursement
93815 Padilla,Gilbert 135.00 MeelingRraining Expense Reimbursement
93816 Ddaze Phuang 607.68 MeelinglTraining Expense Reimbursement
93817 Gary V.Prater 52.79 MeelingRraining Expense Reimbursement
93818 Balachandra P.Rao 58.37 MeelinglTraining Expense Reimbursement
93819 Ernest R.Savedra 49.00 MeetingrTmming Expense Reimbursement
93820 Aaron M.Suarez 930.42 MeelingRraining Expense Reimbursement
93821 John W.Swindler 161.59 Meeting/rmining Expense Reimbursement
93822 BARBS 80.00 Training Registration
93823 SETAC 425.00 Training Registration
93624 Jonathan K.Thumslc 1,818.65 Meeting/Training Expense Reimbursement
93825 Simon L.Watson 527.02 MeeliNfTmining Expense Reimbursement
93826 Chapman Restaurants 2,137.97 Reconciliation User Fee Refund Program
93827 County of Orange Auditor Controller 330.00 Administration Fee-Adjustments to Properly Tax Bills
93828 Employee Activity Committee 10,0D0.00 EAC Fund FY 07/08
93629 Harbor Landing 635.49 Reconciliation User Fee Refund Program
93630 Bland Huffman,Jr. 729.00 Rewnclllalion User Fee Refund Program
93831 Comello JalmeslClaudis Rodriguez 1,373.08 User Fee Refund Regarding Septic Tanks
93832 Mega Industries Cory. 2.543.92 Rewnctilalion User Fee Refund Program
93333 Tony Lee Spriggs 2,623.11 Reconcitialion User Fee Refund Program
93834 Sunjee,Inc. 367.52 Reconciliation User Fee Refund Program
93835 W.G.Walls 2,386.32 Reconciliation User Fee Refund Program
93836 American Express 32,724.70 Purchasing Card Program,Misc.Supplies 8 Services
93837 Black 8 Veatch Corporation 114,863.51 Prof.Sent.J.33-3 B lnspecYRapairlReplace Corrosion of Outfall Pipe A Appurtenances
03638 Blue Croea of Calilomia 474,70114 Medical Insurance Premium
93839 Brown B Celdwrell 117,777.26 Professional Services P2-90
93840 Delhi Dental 64,619.78 Dental Insurance Plan
93541 Fleet Transportation Services 96.266.06 Grit 8 Screenings Removal
93942 HDR Engineering,brc. 26,248.00 Professional Services FE06-05
93843 Hill Brothers 26,444.65 Chemicals-Odor B Corrosion Control-Newport Tmnkline
938" JCI Jones Chemicals,Inc. 75.170.67 Sodium Hypochlonte
93845 Kaiser Foundation Health Plan 81,634.D4 Medical Insurance Premium
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Claims Paid From 09101/07 to 09116107
Warrant No. Vendor Amount Description
93846 Kemim Water Solutions,Inc. 1T7,476.87 Ferric Chloride
93847 Malcolm Firms,Inc. 102,414.65 Professional Services 1-2< &J-79
93848 OCB Reprographics 46,896.06 Printing Service-MO 128100
93849 Polydyno,Inc. 42.498.44 Callonic Polymer MO 3-11.92
93550 Propipe 97,371.69 Sevedore Cleaning for City of Tustin B Unlncorporaled County Property
93851 So Cal Gas Company 55,289.69 Natural Gas
93852 US Peroxide,L.L.C. 188,222.21 Odor&Corrosion Control Treatment for Con.Sys.;Hydrogen Peroxide&Famous Chloride
93863 Kan Thompson,Inc. 183,652.20 Construction 7-32-1
938N Steve P.Rados,Inc. 660.772.86 Construction 1-24
93855 Union Bank of California 73,419.21 Construction 144.Retention
93856 Accounting Options,Inc. 3,200.00 Temporary Employment Services
93857 Aerotek 6,326.40 Temporary Employment Services
93858 Accounting Options,Inc. 210.00 Meeting Registration-Division 610
93859 American Fidelity Assurance Company 529.04 Employee Voluntary Cancer Insurance
93860 American Red Cross 760.00 CPR Training&Miscellaneous Supplies
93861 Amtech Elevator Services 1,800.00 Monthly Elevator Maintenance at Pits.1 &2
93862 ASIS 870.00 Training Registration
93863 AT&T Universal Biller 477.91 Telephone Service
93864 AT&T Califamia/MCI 723.11 Telephone Service
93865 Basic Chemical Solutions,L.L.C. 21,792.20 Sodium Bisulfile&Sodium Hydroxide
93866 Ben11y Nevada Corporation 2,491.72 Evaluate&Calibrate Vibration Sensors on Pit.1 Gas Compressors
93867 Bush B Associates,Inc. 1.330.00 Surveying Services-Various Locations
93868 California Dept.of Child Support 1.240.12 Wage Garnishment
93859 CASOA-California Stommvaler Quality 50.00 Meeting Registration-Divislon 620
93870 Casual Gourmet 582.39 Meeting Expenses
93871 Cavanaugh Machine Works 784.95 Repair B Maintenance,Services-Bearing Carrier
93872 Circle,Inc 1,838.37 Office Supplies-Toner Cartridges
93873 Clean Harbor Environmental Services 4,004.82 Hazardous Waste Management Services
93874 Coast Plumbing 777.68 Plumbing Services-Purchasing Bldg.
93875 Columbia Analytical Services,Inc. 540.00 Analysis of Wastewaler,Industrial Wastewater&Biosolids
93876 Compressor Components of California 4.498.56 Repair B Maintenance Services-Gas Compressor
93877 Corporate Express 19.194.42 Once Supplies
93678 County of Orange-Health Care Agency 4,950.00 Underground Storage Tank,Haz.meus Material,&Slate Fees
931179 County'of Orange-Health Care Agency 4.997.00 Underground Storage Tank,Hazardous Material,&State Fees
93880 CR&R,Inc. 315.00 Container Rentals&Waste Disposal Service
93881 Disneyland Resourt-Croup Tickets 2,900.00 Reimbursed Employee Activities
93882 Dynlek Services,Inc. 11.052.50 Temporary Employment Services
93863 Eagle Protection of California 120.00 Bldg.Security Alarm Services-No.County Yard
93884 Edward S.Babcock&Sans,Inc. 400.00 Outside Lab Services-TOO Testing of Ocean Sediment
93885 Electronic Balancing Co. 335.00 Repair&Maintenance Services-Rotating Fan Assembly
93886 Employee Benefits Specialists,Inc. 9,370.75 Reimbursed Prepaid Employee Medical&Dependent Cara
93887 Energetics Incorporated 346.00 Meeting Registration-Division 620
93888 Environmental Resource Center 789.00 Training Registration
93889 Michele Farmer 270.00 Mes tingffralning Expense Reimbursement
93890 Federal Technology Solutions,Inc. 1,025.00 Repair&Maintenance Services-Mlcmmw Antennae at Pit.2
93891 FEDEX Corporation 90.05 Freight Services
93892 Forked Engineering&Surveying,Inc. 8,114.26 Surveying Services-Various Capital Projects
93893 Franchise Tax Board 50.00 Wage Garnishment
93894 Franklin Covey 53.17 Office Supplies
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1M1.d Page 6.19 narsnam
Claim Paid From 09101/07 to 09115/07
Warrant No. Vendor Amount Description
93896 Gas Control Technologies 4,470.00 Repair&Maintenance Services-Gas Leak Defection
93896 Global Awards,Inc. 108.84 Asset Tags
93897 Gold Coast Awards,Inc. 24.47 Name Badges
93898 Goldenwesl Corp. 863.00 Power Washing Services-Electric Cads,Groundskeeping&Roll-Up Deer at Pas. I &2
93899 Hooker Equipment Company 2a2.79 Misc.Vehicle,Parts,Repolm&Service
939DO Hach do Penton Industries 814.60 Lab Parts&Supplies
93901 Hewlett Packard Company 11,423.50 (1)HP OKcejel Printer&(1)HP Chassis Server
93902 Hills Brothers Lock&Sate 194.30 Troubleshoot&Repair Gate 6
93903 Hub Auto Supply 1,094.55 Vehicle Pads&Supplies
93904 Indiana Child Support Bureau 580.00 Wage Garnishment
93905 Internal Revenue Service 320.00 Wage Garnishment
93906 Intl.Union of Otter.Eng.AFL CIO Local 501 4.699.64 Dues Deduction
93907 Iron Mountain 211.31 Storage Fee-BM Documents PI-37
93908 ISA 632.00 Membership
93909 Jobsfer.Inc. 395.00 Noliom&Ads
93910 Kimce,Inc, 2,240.00 Temporary Employment Services
93911 Lab Support 1,837.50 Temporary Employment Services
93912 Lee&Ro,Ix. 13,184.97 Professional Services P2.47,5.51&M2
93913 Court Order 150.00 Wage Garnishment
93914 Lorman Education Services 330.00 Training Registration
93915 Marines Scientific 79.3D Lab Parts&Supplies
93916 Court Order 225.00 Wage Garnishment
93917 National Bond&Trust 2,217.34 U.S.Savings Bonds Payroll Deductions
93918 National Seminars Group 299.00 Training Registration
93919 Neutron Products,Inc. 2,979.98 Anionic Polymer
93920 New Horizons,C.L.C.of Santa Ana 160.00 Trailing Registration
93921 Nextel Communications 3,027.54 Air Time
93922 Maya&Moore Corporate Accounting 782.00 Professional Services-Sofia,Controls&Other Materials Testing for Various Capital Projects
93923 OCEA 636.60 Dues Deduction
93924 Office Depot Business Services Division 894.52 Office Supplies
93925 Orange County Sheriff 264.31 Wage Garnishment
93926 Oxygen Service Company 174.77 Rebuild Shop Gases&Lab Paris&Supplies
93927 Flood Video Productions 395.60 Video&Editing Services-Training
93928 PCS Express,Inc. 99.05 Courier Service
93929 Poem Officers,Council of CA 2,102.00 Dues Deduction,Supervisor&Professionals
93930 Pre-Paid Legal Services,Inc. 1,295.00 Employee Voluntary Legal Service Insurance Premium
93931 Red tarp Shoes 412.90 Safety Shoes
93932 Royale Cleaner 20.60 Dry Cleaning Services
93933 Safetycere,Inc. 269.37 Safety Training DVDs
93934 SETAC 425.00 Trelning Registration
93935 Shamrock Supply Co.,Inc. 42.93 Tools
93936 SkillPath Seminars 348.00 Training Registration
93937 Smllh-Emery Company 4.803.26 Sails,Concrete&Other Materials Testing
93938 South Coast Air Quality Management Dist. 99.09 Permit Fees-Annual Emission,Operation&Misc.Fees
93939 South Coast Air Quality Management Dist. 99.09 Permit Fees-Annual Emission,Operation&Misc.Fees
93940 South Coast Air Quality Management Dist. 99.09 Permit Fees-Annual Emission,Operation&Misc.Fees
93941 South Coast Air Quality Management Dist. 99.09 Permit Fees-Annual Emission,Operation&Misc.Fees
93942 South Coast Air Quality Management Dist. 99.09 Permit Fees-Annual Emission,Operation&Misc.Fees
93943 South Coast Air Quality Management Dist. 256.55 Permit Fees-Annual Emission,Operation&Mac.Fees
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Claims Paid From 09/01107 to 09/15/07
Warrant No. Vander Amount Description
939" South Coast Air Quality Management Dist. 266.55 Permit Fees-Annual Emission,Operation S Misc.Fees
93945 South Coast Air Quality Management Dist. 3,353.66 Permit Fees-Annual Emission,Operation&Misc.Fees
93946 South Coast Air Quality Management DIN. 17.907.15 Pemat Fees-Annual Emission,Operation 8 Misc.Fees
93947 South Coast Air Quality Management Dist. Z0,727.71 Permit Fees-Annual Emission,Operation 8 Misc.Fees
93948 Southern Califoria Selac 30.00 Meeting Registration-Division 620
93949 Synagm West,Inc. 4.404.12 Residuals Removal MO 3-29-95
93950 Systems Solution Company 680.00 Repairs 8 Maintenance Services-Gale 5 Access Control
93951 TekSyslems 4.660.00 Temporary Employment Services
93952 Telminix International 1.009.00 Pest Control
93953 Testamerica Ontario 706.00 Analysis of Biosolids
93954 The Walking Man,Inc. 925.00 Printing and Distribution for Various Construction Projects
93955 Theme Forma,Inc. 3,494.40 Maintenance Services- (3)Laboratory Incubators
93956 Thompson Industrial Supply,Inc. 266.04 Mechanical Paris 8 Supplies
93957 Times Community News 100.00 Notices 8 Ads
93958 T-Mobile 107.68 Wireless Air Time
93958 Truck 8 Auto Suppy.Inc. 371.68 Automotive Pads 8 Supplies
93960 United Parcel Service 189.00 Parcel Services
93961 United Way 50.00 Employee Contributions
93962 Venzon California 34.89 Telephone Services
93963 Verdes Plumbing 2,765.00 Service Contract-Testing,Repair BCad.Backiloar Devices at Pits.1828 Pump Sit.
93964 Vision Service Plan CA 9Al2.80 Vision Service Premium
93955 Vortex Corp. 1.076.76 Door Repairs-Various Locallons
93966 Yale/Chase Materiels Handling.Inc. 547.74 Electec Cart Paris
93967 Court Order 597.50 Wage Garnishment
93968 1-B00-Conference(R) 29.02 Telephone Conference Calls
93969 C.Eddie Baker 170.00 Meeting/7ralneng Expenx Reimbursement
93970 Rejkumar Behan 54.00 Meeting/Training Expense Reimbursement
93971 Delay G.Covanubias 48.00 Meettrgf fading Expense Reimbursement
93972 Larry R.Crandall 226.63 Meetingfimining Expense Reimbursement
93973 Gall Gantt 55.68 MeetingRralning Expense Reimbursement
93974 Ruben Gomez 740.22 Meetingrrralning Expense Reimbursement
93975 Tad E.Haynes 550.00 MeetillgfTralning Expense Reimbursement
93976 Marie Jimenez 12.80 MeetingfTraining Expense Reimbursement
93977 Laurie J.Kanner 20.66 MeettngfTraining Expense Reimbursement
93978 Adam A.Nazaro6 465.75 MeelingRraining Expense Reimbursement
93979 Edmund L.Pendleton 112.00 Meeling/rralning Expanse Reimbursement
93980 Brian K.Reed 178.00 Meeting?raining Expense Reimbursement
93981 Henry R.Salgado 38.91 MeetinglTraining Expense Reimbursement
93982 Duane T.Smith 786.77 MeelingfTraining Expense Reimbursement
93983 Jonathan K.Thomslc 94.00 Meetingfrreining Expense Reimbursement
93984 Chades F.N/lnsor 140.00 Meelsigf raining Expense Reimbursement
93985 Robed M.Ben 2.452.41 Employee Computer Loan Program
93986 Todd A.May 782.57 Employee Computer Loan Program
93987 Vanh Phoned 882.43 Employee Computer Loan Program
Total Accounts Payable-Warrants 5 11.9]3.994.41
a wmn.w4xca�auvzawnsame¢mma a.a 9eponowxwme Peu aezon-♦n.rAmvnLP a9nsal tla EXHIBIT A
aM= Pane 8 of 9 ieivmm
Claims Paid From 09101107 to 09115107
Warrant No. Vendor Amount Description
Payroll Diabunsementa
37397 - 37399 Employee Paychecks 3 3,823.59 Interim Payroll-Terminations(09/05/07-09106/07)
37400 - 37483 Employee Paychecks 122,446.42 Biweekly Payroll(09/12/07)
37484 - 37491 Employee Paychecks 6.165.94 Interim Payroll-Retro-EMT,Void&Reissue Retm
145208 -145T71 Direct Deposh Statements 1,257,525.40 Biweekly Payroll(09/12/07)
Total Payroll Disbursement S 1.389.%1.35
Wire Transfer Payments
OCSD Payroll Taxes B Contributions $ 715.543.37 Biweekly Payroll(09112107)
Deutsche Bank 610.507.62 Series 2006 Certificales of Participation August Interest Payment
Bank of New York 101,152.12 Series 1993 Refunding Certificates of Pa0icpation September Interest Payment
Total Wire Transfer Payment 9 1.42].203.11
Total Claims Paid 09101107.09/15107 6 I4.]91.156.67
e WepMa XCELdWu PSnAReemms Pay Repo� laima Pmd Report-Anaoneni A-oxrsor.xis EXHIBIT
"loM Page 9 or 9 IMWWl
CWhu Paid From 09/16/07 to 09I30107
Warrant No. Vendor Amount Description
Accounts Payable-Warrente
93988 Brovm&Caldwell g 26,957.75 Professional SeMces P2-91
93989 Carollo Engineers 144,906.79 Professional SeMces P1-71
93990 Jamison Engineering Contractors,Inc. 132.057.84 Repair&Maintenance Services-Feed Lines at Headymds"C"&Natural Gas Pipelines at Pit.1
93991 JCI Jones Chemicals,Inc. 69.922.37 Sodium HypocModte
939V Kendra Water Solutions,Inc. 73.ni.45 Ferric Chloride
93993 Orange County Water District 922,070.16 Joint GWRS Project&Green Acres Water Pm)ect(GAP)
93994 Polydyne,Inc. 40.125.33 Cathmlc Polymer MO 3.11-92
93995 Tule Ranch/Magan Fames 24019526 Residuals Removal MO 3.2945
93096 Victor Buick GMC Truck 37,460.01 (1)MOB GMCIChevrolel P/U Truk-Regular Cab TC6500
93997 Adams/Mallory Conduction Co.,Inc. 203,337.OD Construction PI-106
93998 Ammon Inlemabon it 108.872.49 Construction 1-24P
93999 J F Shea Construction,Ix. 349.855.55 Construction J47
94000 KieyAl Pacific Co. 2,682,9g0.90 Construction Pl-102
94001 Shimndck Constructed Co.,Inc. 297.000.00 Construction P2-80&P2-91
94002 Southern Conhacling Company 115,892.00 Construction J-33-IA
94M UnIon Bank of America Escrow 210.128.18 Construction P2d8,Retention
940N J F Shea Construction.Inc. 3,992,435.34 Construction P2-66
94005 Absolute Standards.Inc. 65.00 Lab Pads&Supplies
94006 Accounting Options,Inc. 6,834.00 Temporary Employment Services
9WD7 ACCU Sludge 72074 Lab Pads&Supplies
940M AecuStandard 371.25 Lab Pads&Supplies
94DD9 Adamson Industries 735.07 Lab Pads&Supplies
94010 Aerotek 2,108.80 Temporary Employment Services
94011 Augurs Safety,Inc. 5.426.56 Safety Supplies
94012 All Seals,Inc. 1,401.51 Mechanical Pads&Supplies
94013 AmericanAidines 3.002.80 Travel Services
94014 American Machinery&Blade,Inc. 86.95 Mechanical Pads&Supplies
94015 API Bad. 189.78 Freight Charges
94016 Applied Industrial Technology 152.10 Mechanical Pads&Supplies
94017 ARBIPERP-Air Resources Board 1.150.00 Permit Fees-Portable Diesel Engines
94018 Arch Wheless Opersdi g Company,Inc. 933.20 Wireless Services&Equipment
SAMS Associaann of Compost Producers 10,000.00 Annual Assoc.Dues-Compost&Market Research
94020 AT&T Untweral Biller 1,950.66 Telephone Service
94021 AT&T Cafifmnia/MCI 193.21 Telephone Service
94022 Atlas Underground,Inc. 2.700.00 Manhole Repairs-Buena Park
94023 AUL Pipe and Tubing.Inc. 476.84 Metal
94024 Battery Specialties 1,047.44 Batteries
94025 Bennett Sowen Ughthouse 1,006.05 Calibration Gases
94026 BIM B Gone 668.33 Anti-Roosting Bid Spikes
MD27 Blue Moon Catering 445.22 Meeting Supplies
94028 California Department of Fish and Game MOJOID 2008 Permit Extension-Santo Ana Rher Interceptor Maintenance Plan-241
94029 CWEA Membership 110.00 Membership
94030 Camemn Compression Systems 4.963.57 Mechanical Parts&Supplies For LSVB Cooper Engines
W031 CMAA 160.00 Training&Meefirg ReglsOalion-Div.760(Construction Mgmt.Assoc.of America)
94032 CMAA 300.00 Membership
MOM Cole Partner Instrument Co. 162.45 Lab Parts&Supplies
D40M Consumers Pipe&Supply Co. 479.70 Plumbing Pads&Supplies
94035 Corporate Espress 414.89 Office Supplies
rw.gwrosxwt.amasAPsw.akvorm.Pad xepartlmNiuns PiddRepee-Amrnann_eosaw7es EXHIBIT
Page"Ift 9 udidem
Claims Paid From 09116/07 to 09130101
Warrant No. Vendor Amount Description
94036 County Wholesale Electric Co. 1,266.78 Electrical Pads&Supplies
94037 Cronelron Welding Systems,Inc. 127.86 Welding Supplies
94038 CS-AMSCO 8.938.94 Mechanical Parts&Supplies
94039 Curley Wholesale Electric,Inc. 175.12 Electrical Parts&Supplies
94040 Dapper Tire Co. 213.41 Truck Time
M041 DeviCs Tree Service 4,900.00 Tree Mass.Service
94042 Desert Pumps&Pads.Inc. 5,399.8E Pump Pads&Supplies
94043 Deaunk Wale,Controls 1,590.40 Mechanical Pads&Supplies
94044 Dunn Edwards Corppre8on 704.22 Paint Supplies
N045 Eberhard Equipment 269.61 Mechanical Pads&Supplies
94046 Electra Bond.Inc. 5,333.92 Repair&Maintenance Services-Ponder Coating Pump Pads at McArthur Pump Sla.
94047 Enchanter,Inc. 3.650.00 Ocean Monitoring&Oulall Inspection&Maintenance
94046 Enecon Corporation 1.260.00 Repair&Maintenance Materials
ND49 Environmental Compliance Inspection Svice. 1.M.N Professional Services-Fats,Oil Grease(FOG Program)Inspections
94050 EqueChlor 5,958.46 Hydrochloric Acid
94051 FEDEX Corporation 67.74 Freight Services
N052 Fisher Scientific Company.L.L.C. 6.673.87 Lab Pads&Supplies
N063 Facti.Inc. 3.000.00 Annual Surveillance Fee for Series 2000 A&B Certificates of Participation
94054 Fleet Pride 16.96 Oil Filler
94055 Fluid Handling Systems 3.073.41 Pump
94056 Frost Engineering Service Co. 527.57 Pressure Swatch
94057 Gardner Denver 1.334.66 Plumbing Pads&Supplies
94058 Gained Callahan Company 217.23 Chemicals
94059 Gales Fiberglass Installers 2.162.00 Repair&Maintenance Services- H Scrubber Complex
94060 Gelinge Castle 105.64 Lab Paris&Supplies
N061 Global Industrial Equipment 150.23 Steel Dolly
94062 Grainger,Inc. 3.976.63 Fan Guards
94083 Great Western Saddlery Supplies 21.12 Janitorial Supplies
94054 Hach do Penton Industries 211.50 Lab Para&Supplies
94065 Harrington Industrial Plastics,Inc. 6,904.24 Plumbing Pads&Supplies
94065 HaSCD Oil Co.,Inc. 330.60 Grease
94067 Henry Prat do Southwest Valve&Equip. 4.544.80 Valves
94068 Hub Auto Supply BAD Vehicle Pads&Suppties
94069 Industrial Distribution Group 1."5.86 Tools&Mechanical Supplies
94070 Inorganic Ventures,Inc. 62.96 Lab Paris&Supplies
W71 Invensya Systems.Inc. 380.83 Plumbing Paris&Supplies
940M ISA Expo,98 2.093.00 Membership&Meeting Registration-Division 860
94073 Jays Calming 668.64 Meeting Expenses
94074 Johnstone Supply 1.114.21 Electrical Paris&Supplies
94075 Lance Soil and Lunghard 5,786.25 Professional Services-Internal Auditors
94076 Lincoln Financial Group 201.00 Deferred Compensation Plan Contributions
940" Lormen Education Services 339.00 Meeting Registration-Division 760
N078 Maintenance Superintendents Assoc. 35.00 Membership
M79 Maintenance Technology Corp. 965.99 Welding Supplies
94080 MC Junkin Corp 129.40 Plumbing Supplies
94081 McMaster Can Supply Co. 1.955.94 Mechanical Paris&Supplies
94082 McNichols Company 3,095.46 Repair&Maintenance Materials-vinyl Mesh
94083 Metal Ad of CA DBA Sign Mad 501.04 Reflective Vinyl Sheeting
94084 Micro Molion.Inc. 3,586.43 Electrical Pads&Supplies
H WCpNfGE'{CEL 0A}]PAPSX/.RE1 mf Pad RaxorsM0TL4hni PYE RWn.Ary Manl R 0a 74f EXHIBIT
sMHt Pape 2 of 7 10,1140m
Claims Paid From 09116107 to 09/30107
Warrant No. Vendor Amount Description
94085 Midway Mfg.It Machining Co. 2,909.25 Mechanical Parts,Supplies It Repairs
94086 Minark Corporation 756.96 Instrument Supplies
94087 Mission Uniform Service 146.53 Uniform Rentals
94088 MSDS Online.hlc. 3.249.00 SoMrare Maintenance-MSDS Online Web Server
94089 Municipal lnt0rmation Systems 475.00 Meeting Registration-DWlsion4930&940
94090 National Institute of Business MgmL 73.00 Subscripbon
94091 Neal Supply Co. 2,041.32 Plumbing Supplies
MD92 Nickey Petroleum Go.,Inc. 2,612.96 Grease&Oil
N093 NRG Thermal Services.L.L.C. 244.45 Mechanical Paris&Supplies
M094 OCB Reprographics 84.71 Printing Service-M01/28/00
94095 Onesource Distributors.Inc. 5.325.64 Electrical Paris&Supplies
M096 Orange Fluid System Technologies.Inc. 252.13 Plumbing Parts&Supplies
M097 Pacific Mechanical Supply 2,768.90 Plumbing Pads&Supplies
M098 Poser Design 844.76 Electrical Parts It Supplies
94099 Propipe 21.M.61 Sewerline Cleaning for City of Tustin It Unincorporated Co.Property
94100 Prudential Overall Supply 3,120.12 Uniform;&Related Amides
94101 Pump Action 2.597.98 Mechanical Pans&SUpplle3
941M PuUrnalster America.Inc. 11,054.43 Pump Pals&Supplies
94103 R L Abbott&Associates 2,000.00 Kern County Sandals Consulting Services
N104 Reintiow Disposal Co. 3.196.99 Trash Removal
94105 Retrofit Paris&Components,Inc. 2,513.32 Mechanical Parts It Supplies
MIN Retrach Industrial Services 612.35 Industrial Step Covers
94107 RS Hughes Co..Inc. 265.94 Paint Supplies
94108 Safe T Rack Systems,Inc. 81a.H Lab Parts&Supplies
94109 SARBS 180.00 Training Registration
94110 South Coast Emironmentel Co. 8,557.31 Air Quality Monitoring
94111 Schneider Automation.Inc. 398.68 Repair&Maintenance Samicas-3710 ACM Meter
W112 Schvang Bloset 13,798.21 Pump Paris&Supplies
94113 Sensldyne.Inc. WAS Instrument Pelts&Supplies
94114 Shamrock Supply Co.,Inc. 8.654.12 Mechanical Pads,Supplies,Tools,Paint&Cleaners
04115 Shureluck Sales&Engineering 588.53 Mechanical Pads It Supplies
Will Smith Paint and Supply 328.54 Paint Supplies
94117 SMRP 500.00 Membership(Society for Maintenance&Reliability Prolessionals)
94118 SOem Coast Air Quality Management Dist. 99.09 Permit Fees-Annual Emission,Operation It Misc.Fees
94119 South Coast Air Quality Management Dist. 266.55 Permit Fees-Annual Emission.Operation&Misc.Fees
94120 Southern California Tram Service 164AB Electrical Pads&Supplies
M121 Southern Counties Lubricants 2,815.62 Oil
94122 SPED!Cediprep,Inc. 405.14 Lab Pads&Supplies
M123 Square D Company 4,456.39 Electrical Paris&Supplies
M124 Stanley Steamer International,Inc. 2,149.20 Carpel Cleaning Sennces
94125 Steven Enterprises,Inc. 94.71 Office Supplies
N126 Stratus Environmental,Inc. 5,650.00 Professional Services-Groundwater Monitoring It Removal
94127 Summit Steel 3.194.08 Metal
94128 Sunset Ford 179.49 Vehicle Pads&Service
94129 Sunset Industrial Pads 52.81 Mechanical Pads It Supplies
WIM Super Chem Corporation 549.53 Cleaner
94131 Target Specialty Products 133.69 Insecticide
94132 TekSystems 8.720.00 Temporary Employment Services
94133 Teledyne RD Instruments,Inc. 814.71 Lab Pans&Supplies
naswrds:sce�maausyslvaeciam.PafaefvrarolKlwns PaJaapm-nocmem a_asa0o7er 3of] FJIHIBITB
RMlak Pop IN11=7
Claims Paid From OW18107 to 09130/07
WamerH No. Vendor Amount Description
94134 Teledyne Electronic Tech. 202.86 Instrument Paris
94135 Thermo EleNon Corp. 764.25 Lab Paris&Supplies
941M Thermo Electron North Americe,L.L.C. 052.04 Lab Pads 8 Supplies
94137 Thompson Industrial Supply,Inc. 13.738.20 Mechanical Pads&Supplies
94138 Tri-State Seminar On*e-River 80.00 Training Regisba6on
94139 Truck&Auto Supply,Inc. 391.16 Automotive Parts&Supplies
94140 UBra Scientific 360.58 Lab Parts&Supplies
94141 United Parcel Service 1.138.65 Parcel Services
94142 United Slam Water 7,414.85 Repair&Maintenance Services-Spill Containment
94143 US Cost.Inc. 5,992.50 SoBvware License&Murnmente-Success Estimator
941" US Equipment Co.,Inc. 2,037.30 Electrical Pads&Supplies
94145 Valley Detroit Diesel Allison 392.21 Mechanical Paris&Supplies
M146 Varian.Inc. 460.20 Lab Paris&Supplies
N147 Verizon California 129.80 Telephone Services
94148 VWIR Scientific Products 2.826.59 Lab Parts&Supplies
94149 The Wakenhul Corporation 5.018.04 Security Services
N150 Waxie Samlary Supply 445.80 Jandmial Supplies
94151 WEF 962.00 Membership-Water Environment Federation
M152 West Coast Sv4lchgear.Inc. 1,777.88 Electrical Pads&Supplies
941M West Ute Supply Company.Inc. 337.69 Electrical Pads&Supplies
94154 Western City 63.00 Subscription
94155 Westport Apparatus DBA Weaker Supp. 427.77 Electrical Pads&Supplies
94155 Mite Cap Construction Supply 534.91 Sealant
94157 3Wre Pacific Coast 83.86 Lab Pads&Supplies
941H California Bank&Trust 6.100.00 Construction J-33`!A.Retention
M159 Shabbir S.Basrai 1,134.99 MeetingrTraming Expense Reimbursement
94160 James E.Colston 319.85 Meeting/Training Expense Reimbursement
94161 Dean M.Fisher 550.00 MeelingrTralrug Expense Reimbursement
94162 Michael 1.Gold 646.93 Meeling/Trainhig Expense Reimbursement
N163 Aurelio Jaime 110.00 Meelir arainbg Expense Reimbursement
94164 Larry J.Jones 125.00 MeefingfTraini g Expense Reimbursement
94165 Paul Krsysik 1.077.01 Meeling/Training Expense Reimbursement
94166 Michael N.Morey 170.00 MeeBngf raining Expense Reimbursement
N167 Jamiann M.Ouesta 231.00 MeetingTTraming Expe.Reimbursement
94168 Brian K Reed 218.00 MeelingRreining Expense Reimbursement
N169 Davitl Rodriguez 550.0D MeeliigfTraining Expense Reimbursement
M170 Robert J.Thletle 34.00 Meetirg/Tralnhg Expense Reimbursement
D4171 WEF 164.00 Membership-Water Emlronment Federation
94172 Brokers West 636.19 Reconciliation User Fee Refund Program
94173 County Of Orange Audilar Controls, 132.00 Encroachment Permit 7-32-1
94174 County Of Orange Auditor Controller 735.00 Administration Fee-Adjustment to Property Tax Bill
94175 County Of Orange Auditor Controller 480.01) Administration Fee-Adjustment to Properly Tax Bill
94176 County Of Orange Author Controller 765.00 Administration Fee-Adjustment to Properly Tax Bill
94177 Glabman Furniture 692.44 Reconciliation User Fee Refund Program
N178 Jedco Ventures 569.36 Reconciliation User Fee Refund Program
94179 Kodama,lkuo 2,008.0 User Fee Refund Regarding Septic TaMrs
94180 Louis Imestmenl Company 1,610.96 Rewncifiation User Fee Refund Program
94181 Orange County Sanitation District 1,853.14 Petty Cash Retmb.
94182 Parosim,Harry G. 198.29 Reconciliation User Fee Refund Program
X Pad RppwMpJ�P84 Refan hmnl BOB.bdl rtt EXHIBIT
r,4!1lc - Page4o17 lchu=01
Claims Paid From(191161117 to p913WO7
Warrant No. Vendor Amount Description
94183 Ponderosa Property Management 359.60 Reconciliation User Fee Refund Program
94IN Sloss.,Michael John 307.63 Reconciliation User Fee Refund Program
94185 Slate Water Resources Control Board 474.00 Annual Fee for Stain Water Permit
94186 Wal-Mart Real Estate Business 1,030.28 Reconciliation User Fee Refund Program
94187 Wallington Investment Properties 891.78 Reconciliation User Fee Refund Program
94188 Air Products&Chemicals 26,136.65 O&M Agreement Oxy.Gen.Sys.MO 8-9-89
94189 Black&Veatch Corporation 401,052.45 Professional Services 54i8&Develop&Implement Electronic Operations&Mand Manual Project
94190 City of Fountain Valley 47,682AS Water Use
94191 Fleet Transportation Services 33,843.80 Gr8&Screenings Removal
94192 Lee&Ro,Inc 80,91)128 Professional Services 5.49,5.51&5-52
94193 Malcolm Fhnte,Inc. 83.369.26 Professional Services 5.50
94194 Propipe 42.685.68 Sewedine Cleaning for City of Tustin&Unincorporated Co.Property
94195 Southern California Edison 382,242.T Power
94196 J R Filanc Construction 671,089.46 Construction P1412
M197 Aftrex Performance System 2.000.00 Training Registration
M198 Amtech Elevator Services 1,400.00 Monthly Elevator Maintenance at PIN.i&2
94199 AppleOne Employment Service 9.223.93 Temporary Employment Services
N200 AT&T Universal Bitter 1,837.05 Telephone Service
94201 AT&T Calgomia/MCI 2,081.23 Telephone Service
94202 Buckman&Associates.Inc. 894.00 Professional Services-Pavement Management
94203 California Dept,of Child Support 1,240.12 Wage Garnishment
94204 Cardlock Fuel Systems.Inc. 20,438.39 Fuel Card Program-Dismal Vehicles&Monitoring Vessel
iW205 City of Westminster 206.90 Water Use
N206 Coast Rubber Stamp,Mfg, 8620 Office Supplies
94207 Compressor Components of California 3,706.60 Mechanical Pads&Supplies
94208 Can-Way Western Express l.176.18 FreigMCharges
94209 Consumers Pipe&Supply Co. 2,311.60 Plumbing Pads&Supplies
94210 CWEA Annual Conference 110.00 Membership(California Water Environment Association)
94211 David's Tree Service 1,350.00 Tree Maint.Service
94212 Employee Benefits Specialists,Inc. 9270.75 Reimbursed Prepaid Employee Medical&Dependent Care
94213 Ewing Irrigation Industrial 14&13 Landscape Irrigator,Pads&Supplies
94214 FED"Corporation 16.87 Freight Services
94215 Forked Ergbteedrg&Surveying,Inc. 6,137.60 Surveying Services-Various Capital Projects
94216 Franchise Tax Board 50.00 Wage Garnishment
94217 Franchise Tax Board 112.00 Wage Garnishment
94218 Frys Electronics 422M Computer Supplies
94219 Ganahl Lumber Company 731.92 Asphalt
942M Garden Grove Sanitary District 200.14 Water Use
94221 Garrall Callahan Company 3,136.38 Chemicals
942U Geomalrix Consultants,Inc. 7,618.46 Professional Services P2-66
94223 Globalslar clo Custom Cellular 969.52 Wireless Services
94224 Great Western Samilary Supplies 162.01 Janitorial Supplies
94225 Harker Equipment Company 13.003.29 Misc.VeMde.Pads.Repairs&Service
94M Harold Primrose Ice 80.00 Its For Samples
94227 Hevred Packard Company 18,053.57 (1)Server
94228 HIII Brothers 11,484.39 Chemicals-Odor&Corrosion Control-Newport Trunkline
94229 Home Depot 932.18 Misc.Repair&Maintenance Material
94230 Hub Auto Supply 4.35 Vehicle Paris&Supplies
94231 Indiana Child Support Bureau 290.00 Wage Garnishment
X`b wkEXCEL.EINIPAP Ra1CIWM Pal Rgrods7Clx—PW RryM-PnacM1mrit_a_OB.1Witls EXHIBITB
fincrim Pate 5 of 7 W11=7
Claims Paid From HI'l li 07 to 011113011117
Warrant No. Vendor Amount Description
94232 Industrial Distribution Group 318.12 Tools&Mechanical Supplies
94233 Internal Revenue Service 320.00 Wage Garnishment
94234 Interstate Batteries of Cal Coast 2.726.24 Batteries for Vehides&Carts
94236 Intl.Union of Oper.Eng.AFL CIO Local 501 4.897.80 Dues Deduction
942M Irvine Ranch Water District 42.03 Water Use
94237 ISEC,Inc. 771.00 Lab Pans&Supplies
94238 Kabob Express 156.57 Meeting Expenses
94239 Court Order 160.00 Wage Garnishment
94240 Marinus Scientific 79.30 Lab Paris&Supplies
94241 MassMuluel Michel Financial Group 79.04 Executive Disability Plan Premium
94242 Mesa Consolidated Water District 36.70 Water Use
94243 Court Order 225.00 Wage Garnishment
84244 MVA Artlntxv 780.87 Professional Services-1504
94245 National Bond&Trust 2,217.34 U.S.Savings Bonds Payroll Deductions
94246 New Horizons,C.L.C.o1 Santa Ana 11,950.00 Training Registration-SOL Server Training for(15)Employees Off-Site
M247 O C Tanner Recognition Company 1,215.83 Employee Service Awards Program
9,1248 OCB Reprographics 7.094.78 Printing Service-NO V28100
94249 OCEA S38.50 Dues Deduction
94250 Office Depot Business Services DNision 1,344.67 Office Supplies
94251 Orange County Sheriff 433.80 Wage Garnishment
M262 Orange Comfier 15.47 Courier Services
N263 Oxygen Service Company 112.81 Rebuild Shop Gases
94254 PBS&J 3,093.77 Professional Services 3.52
94255 PCG Industries 850.00 Repair&Maintenance Services-Shaft
94256 Peace Officers Council of CA 2.090.50 Dues Detluclion,Supervisors&Professionals
B4257 Process Work Injury Center 350.00 Medical Screenings
94258 Prudential Overall Supply 1,478.00 Uniforms&Related Asides
N259 RBF Consuiting 20,392.44 Engineering Services 2-24-1
94260 RMS Engineering&Design,Inc. 3,857.50 Engrg.Svm.-Slruclural Inspection of Concrete Surfacesllnspection of Internal Metal Surfaces
94261 Ron Rakish and Associates,Inc. 202.50 Professional Services-OCIP(Owner Controlled Insurance Program)Feasibility Study
94262 RPM Electric Motors 3.667.13 Motor Repairs
94263 Safety-Kleen 804.78 Pads,Washer Lease,&Service
94264 Sea Bird Electronics.Inc. 1,526.00 Lab natrument Maintenance&Callbrallon Services
94285 City of Seal Beach Finance Dept. 260.64 Water Use
94266 Siemens Building Technologies 1,495.00 Training Registration
94267 Siemens Water Technologies Corp. 2,404.37 Service Agreement-Of Water Systems at Plarda 1&2
94268 Smith-Emery Company 236.00 Sails,Concrete&Other Materials Testing
94269 Southern California Edison 46.83 Power
94270 Sou9rem Counties Lubricants 3,312.72 Oil
94271 Spec Services,Inc. 3.203.94 Engineering Services 7.32-1
9427E Square D Company 4,45639 Meter
94273 The Orange County Register 3.673.92 Notices&Ads
94274 The Standard Insurance Company 2,569.36 Executive Disability Insurance
SU75 Thompson Publishing Group 428.60 Publication
94276 Time Warner Communication 51.08 Cable Services
M277 Tri-State Seminar On4he-River 80.00 Training Registration
94278 United Parcel Service 84.57 Parcel Services
94279 United Way 50.00 Employee Contributions
94280 Verzon California 89.83 Telephone Services
H'.W;6nd£xCELNtlSaMPSMREY me PaW tg WODTCIHns PW RePo -wn W BM&or s EJ(HISITB
sN21mc Page 6 of 7 rwttaOD7
Claims PSIS From 09/16107 to 09130/07
Warrant No. Vendor Amount Description
94281 WEF 192.00 Membership-Water Environment Federation
94282 Westport Apparatus DOA Breaker Supp. 14,994,49 Electrical Pars 8 Supplies
U283 Vale/Chase Materials Handling,Inc. $90.10 Electric Car Pars
94284 Court Order 597.50 Wage Garnishment
94285 Jan O.Bradley,Jr. 289.29 MeetingfTraining Expanse Reimbursement
94286 Ann H.Brandvold 73.60 Meeting/Training Expense Reimbursement
94287 Damn L.Canen 161.00 Meeting/Tralning Expense Reimbursement
94285 Bruce A.Chapman 110.00 Meeting7Train-mg Expense Reimbursement
94289 Bret Colson 97.00 Meeting7Training Expense Reimbursement
94290 Daisy G.Covanublas 20.60 MeetingRraining Expense Reimbursement
94281 Sieve GrelMe 205.00 Meetiig/Tralnirg Expense Reimbursement
94292 Vladimir A.Kogan 270.78 Meelingrlraining Expense Reimbursement
94293 Lille Kovac 57.89 MeetinglTradng Expense Reimbursement
94294 Madankumar B.Patel 125.00 Meeling/Trebdng Expense Reimbursement
94295 Steven D.Pelletier 61.00 Mee9nglTraining Expense Relmbursemenl
94295 Mathew D.Rebai 193.33 Meeting/Training Expense Reimbursement
94297 Doug Rullson 81 Meeling7Traming Expense Reimbursement
94285 Henry R.Salgado 43.00 MeelinglTraining Expense Relmbusemenl
94299 Monica A.Sanchez 189.24 MeeBng?raining Expense Reimbursement
943M Patrick A.Sullivan 210.90 Meeting(Traming Expense Reimbursement
94301 John W.SwlrMler 43.00 MeelingfTrelning Expense Reimbursement
94302 Fry's Electronics 8 Tim Colamonlco 1.173.36 Employee Computer Loan Program
94W3 Julian F.Sabn 2.11M.21 Employee Computer Loan Program
Total Accounts Payable-Warrants S 12.003.431.01
Payroll 0labumementa
37492- 37549 Employee Paychecks S 111.756.12 Biweekly Payroll(090281UG
37550- 37NO Employee Paychecks 5.639.70 Interim Payroll-Ramos,Temdnallon,8 Payroll Correction(0 9/18 7)7-OB27m7)
145772-146329 Direct Deposit Statements 1,254,624.36 Slweekly,Payroll(09Q8707)
Total Payroll Dlebursomente S 1.3]2.020.18
Wire Transfer Payments
OCSD Payroll Taxes B Contributions S 636,367.09 Biweekly Payroll.(Og12812007)
US Bank 486.985.55 Series 2000 A 8 B Refunding Certificates of Partidpatlens September Interest Payment
Total Wire Transfer Payments S 1.123.332.84
Total Claims Paid 09118107.09130107 S 14A9878U
H weH'+smexcEcfl..PSNAae. .—ems neoortuw>,ciamn Pura Repan-nnammem e0eioa7ae EXHIBIT
1�101c Page 7 of 7 mn4007
BOARD OF DIRECTORS neearwDate TOB° aFDr
tu28iui
AGENDA REPORT Iem Number ire b)
8(u
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Penny Kyle, Clerk of the Board
SUBJECT: APPOINTING A CLERK OF THE BOARD PRO TEM TO THE BOARD OF
DIRECTORS IN THE CLERK OF THE BOARD'S ABSENCE
GENERAL MANAGER'S RECOMMENDATION
Adopt Resolution No. OCSD 07-23, Appointing a Clerk of the Board Pro Tem to the
Board of Directors; and Repealing Resolution No. OCSD 06-01.
SUMMARY
In order to fulfill the complex administrative, technical and programmatic duties related
to the Clerk of the Board's Office in her absence, it is necessary to appoint a Clerk of
the Board Pro Tem to exercise such responsibilities during these periods of time. It is
recommended that the Associate Clerk of the Board be empowered with said Pro Tem
duties and responsibilities.
PRIOR COMMITTEE/BOARD ACTIONS
Resolution No. OCSD 06-01, approved at the January 25, 2006 Board meeting.
ADDITIONAL INFORMATION
A restructure of the Clerk of the Board's office in December 2006 made the titles
obsolete as adopted in Resolution No. OCSD 06-01. The recommended action updates
the titles to reflect current titles.
ATTACHMENTS
Resolution No. OCSD 07-23
HeegWs,e.`ae`enw��s+•am�auanpvw n.w+ �1e1 c4rkaerawewoum.eec
�, viom Page 1
RESOLUTION NO. OCSD 07-23
APPOINTING A CLERK OF THE BOARD PRO TEM TO THE BOARD OF
DIRECTORS
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT APPOINTING A CLERK OF THE BOARD
PRO TEM TO THE BOARD OF DIRECTORS; AND REPEALING RESOLUTION
NO. OCSD 06-01
WHEREAS, the Office of the Clerk to the Board of Directors performs a wide variety of
responsible, confidential, and complex administrative, technical, and programmatic duties for
and on behalf of the District's Board of Directors and Management Staff, in accordance with
established Sanitation District policies and procedures, and applicable State laws; and,
WHEREAS, it is necessary that in order to fulfill the duties of the Office in the absence of
the Clerk of the Board, a Clerk of the Board Pro Tern be appointed to exercise the duties of the
Clerk of the Board.
NOW, THEREFORE, the Board of Directors of Orange County Sanitation District,
DOES HEREBY RESOLVE, DETERMINE AND ORDER:
Section 1: That the individual holding the position of Associate Clerk of the Board is
hereby appointed as Clerk of the Board Pro Tem of the Board of Directors.
Section 2: That in the absence of the Clerk of the Board, the Clerk of the Board Pro
Tern to the Board of Directors shall have the powers and authority to exercise the duties of the
Clerk of the Board.
Section 3: That Resolution No. OCSD 06-01 is hereby repealed.
PASSED AND ADOPTED at a regular meeting of the Board of Directors held
November 28, 2007.
Chair
ATTEST:
Clerk of the Board
H.Wao11-d.l ,d aaonde a Ida --r+e WIOr b),pan,a.a dd,oian,.a:
R—. &1098 Page 2
BOARD OF DIRECTORS Meeting Dete TorBd,,of/DDr.
AGENDA REPORT Item Numbe Itun Numbe
gut
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
SUBJECT: PROPOSED ANNEXATION NO. OCSD -62 — ORANGE PARK ACRES
ANNEXATION
GENERAL MANAGER'S RECOMMENDATION
(1) Adopt Resolution No. OCSD 07-24, Considering An Addendum to the 1999 Strategic
Plan Program Environmental Impact Report and the 2007 Program Environmental
Impact Report for the Collection System Improvement Plan; and, Authorize Initiation of
Proceedings and Requesting the Orange County Local Agency Formation Commission
to Take Proceedings for Annexation to the District of Territory Known as Annexation No.
OCSD-62 — Orange Park Acres Annexation to annex 377.1 acres along Orange Park
Boulevard from Chapman Avenue to Santiago Canyon Road in an unincorporated area
of Orange County; and,
(2) Defer collection of associated fees for said proposed Annexation No. OCSD-62 —
Orange Park Acres, until a sewer connection is permitted.
SUMMARY
• Orange County Sanitation District (OCSD) received a request from Irvine Ranch
Water District (IRWD) to annex 377.1 acres to the Sanitation District's Revenue Area
14. IRWD is the local sewer provider for Revenue Area 14.
• The territory is currently served by the Orange Park Acres Mutual Water Company
(OPAMWC) for water service only. A planned merger is underway of OPAMWC into
IRWD's limited liability company for water services. There is no local sewer service
to the area at the present time.
• The Local Agency Formation Commission (LAFCO) has received an application
from IRWD to add the OPAMWC territory into the IRWD service area boundary.
• Annexation fees for Revenue Area 14 are not applicable under Ordinance
No. OCSD-33. Collection of Sanitation fees associated with IRWD services are
governed by separate agreement and are based on actual IRWD flows treated by
the Sanitation District. The request to defer the collection of OCSD fees until the
time a sewer connection is made will cover any time gaps associated with
processing these complex annexations.
PRIOR COMMITTEEIBOARD ACTIONS •r
September 2006—The Steering Committee directed staff to proceed with preparing
California Environmental Quality Act documentation and conducting necessary public
meetings for the annexation of nine remaining islands within OCSD.
ADDITIONAL INFORMATION
IRWD has submitted an application to LAFCO for annexation to provide both water and
wastewater services to the area. This application for annexation is contingent on a
successful completion of the merger of OPAMWC into IRWD's limited liability company.
This merger is anticipated in early 2008.
The more than 550 homes in the Orange Park Acres area are on septic tanks and a
number of septic tanks have failed in the area. IRWD is proposing to construct sewers
to allow residents to abandon these failing septic tanks. Thus, the successful
completion of this annexation to Revenue Area 14 will also require IRWD to restructure
their current agreement with OCSD to add this new area to IRWD. This restructured
agreement will need to be in place prior to IRWD constructing sewer facilities to service
the area.
Califomia Environmental Quality Act(CEQA) Findings
IRWD has assumed the role of lead agency for this annexation and is
responsible for overall compliance with CEQA. On September 24, 2007, the
IRWD Board adopted a resolution authorizing an application for annexation the
OPAMWC territory and approving an Addendum to OCSD's past EIRs to
facilitate the Annexation.
OCSD is a "responsible agency"for this project, complies with CEQA by considering the
environmental document prepared by the lead agency, and reaching its own
conclusions on whether and how to approve Annexation No. OCSD-62 (14 Cal. Code
Regs § 15096(a)). Therefore, prior to authorizing initiation of the annexation
proceedings, OCSD must consider the attached Addendum to the 1999 Strategic Plan
Program Environmental Impact Report and to the 2007 Program Environmental Impact
Report for the Collection System Improvement Plan (14 Cal. Code Regs §§ 15096 (f),
15164 (d)).
ATTACHMENTS
1. Location Map
2. Resolution No. OCSD 07-24
3. Addendum to the 1999 Strategic Plan Program Environmental Impact Report and to
the 2007 Program Environmental Impact Report for the Collection System
Improvement Plan
JB:gc:sa
H:Wep0agendatBoard Agenda ReponSU007 Board Agenda RepodsMOM(c).Annexation No.UAoc
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RESOLUTION NO. OCSD 07-24
CONSIDERING AN ADDENDUM TO THE 1999
STRATEGIC PLAN ENVIRONMENTAL IMPACT REPORT
AND TO THE PROGRAM ENVIRONMENTAL IMPACT
REPORT FOR THE ORANGE COUNTY SANITATION
DISTRICT COLLECTION SYSTEM IMPROVEMENT PLAN;
AND, AUTHORIZING INITIATION OF PROCEEDINGS AND
REQUESTING THE ORANGE COUNTY LOCAL AGENCY
FORMATION COMMISSION TO TAKE PROCEEDINGS
FOR ANNEXATION TO THE DISTRICT OF TERRITORY
KNOWN AS ANNEXATION NO. OCSD-62 — ORANGE
PARK ACRES ANNEXATION
A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE
COUNTY SANITATION DISTRICT CONSIDERING AN ADDENDUM TO
THE 1999 STRATEGIC PLAN PROGRAM ENVIRONMENTAL IMPACT
REPORT AND THE PROGRAM ENVIRONMENTAL IMPACT REPORT
FOR THE ORANGE COUNTY SANITATION DISTRICT COLLECTION
SYSTEM IMPROVEMENT PLAN AND AUTHORIZING INITIATION OF
PROCEEDINGS AND REQUESTING THE ORANGE COUNTY LOCAL
AGENCY FORMATION COMMISSION TO TAKE PROCEEDINGS FOR
ANNEXATION TO THE DISTRICT OF TERRITORY KNOWN AS
ANNEXATION NO. OCSD-62 — ORANGE PARK ACRES ANNEXATION
The Board of Directors of the Orange County Sanitation District,
DOES HEREBY RESOLVE, DETERMINE, and ORDER:
Section 1 . That this proposal is made pursuant to the Cortese-Knox Local
Government Reorganization Act of 1985, Division 3, commencing with Section 56000 of
the California Government Code; and
Section 2. That this proposal is for the purpose of annexing approximately
377.1 acres of territory to Revenue Area 14 of the District in the vicinity of Orange Park
Boulevard from Chapman Avenue to Santiago Canyon Road in an unincorporated area
of Orange County, the boundaries of which are more particularly described and
delineated on Exhibit "A", attached hereto and by reference made a part of this
resolution ("Annexation Area") to provide sanitary sewer service to said territory as
requested by Engineering staff of the Orange County Sanitation District, which said
service is not now provided by any public agency; and
5<5W 1
Section 3. That the territory to be annexed is inhabited; and
Section 4. That this proposal is consistent with the adopted sphere of
influence of the District; and
Section 5. That as lead agency for Annexation No. OCSD-62, the Irvine
Ranch Water District ("IRWD") prepared and approved an Addendum to the Orange
County Sanitation District 1999 Strategic Plan Program Environmental Impact Report
("PEIR") and to the Program Environmental Impact Report for the Orange County
Sanitation District Collection System Improvement Plan ("Improvement Plan PEIR") in
connection with IRWD's related proposal to annex the Annexation Area to IRWD for the
provision of water and sewer services; and
Section 6. The District is a "responsible agency" for the Annexation No. OCSD-62
and complies with CEOA by considering the environmental document prepared by IRWD and
reaching its own conclusions regarding whether and how to approve Annexation No.
OCSD-62; and
Section 7. The District has determined that:
(a) The PEIR evaluated all aspects of the District's operations and assessed its
regional wastewater system capacity needs and options to the year 2020 for its service area
which included the projected flow from the herein-proposed subject Annexation Area; and
(b) An Addendum to the PEIR and Improvement Plan PEIR has been prepared to
address the District's annexation of the Annexation Area, and the resultant use of IRWD's
capacity in the District's regional treatment facilities; and
(c) Based on the Addendum, regional capacity in the District's facilities sufficient to
serve the Annexation Area is contemplated in the District's strategic planning, and moreover,
IRWD's use of its Revenue Area 14 capacity in the District's regional treatment facilities for
flows from the Annexation Area can be more than offset by equivalent flows that IRWD can
divert from areas outside Revenue Area 14 and treat at IRWD's Michelson Water Reclamation
Plan ("MWRP") as a result of the expansion of MWRP presently underway; and
(d) Further based on the Addendum, there are no new significant environmental
effects or substantial increases in the severity of previously identified significant effects,
measures previously incorporated into the PEIR and Improvement Plan PEIR will mitigate all
impacts of the proposed annexation, there are no mitigation measures or alternatives that were
555459,,
0
previously found infeasible or that are considerably different from those analyzed in the PEIR
or Improvement Plan PEIR and that would substantially reduce one or more significant effects,
and no additional mitigation measures or alternatives are required; and
Section 8.
The Board has considered the Addendum with the PEIR and Improvement Plan
PEIR prior to making a decision to initiate the proposed Annexation No. OCSD-62
proceedings; and
Section 9.
That proceedings are hereby authorized to be initiated by the Orange County
Sanitation District, and the Orange County Local Agency Formation Commission is
hereby requested to take proceedings for the annexation of territory designated as
Annexation No. OCSD-62 according to the terms and conditions hereinafter set forth in
this Resolution in the manner provided by the Cortese-Knox Local Government
Reorganization Act of 1985; and
Section 10. That proposed Annexation No. OCSD-62 shall not be subject to
annexation fees. Annexation fees are not applicable to Revenue Area 14 in accordance
with Ordinance No. OCSD-32; and
Section 11. That the District will defer collection of sanitation fees associated in
the Annexation Area until such time that a sewer connection to the Annexation Area is
established; and
Section 12. That the District hereby agrees to waive, pursuant to Section 99.1
of the Revenue and Taxation Code, its ad valorem property tax allocation exchange
with other affected taxing agencies.
PASSED AND ADOPTED at a regular meeting held November 28, 2007.
Chair
ATTEST:
555959.1
Clerk of the Board
555959.1
6
ADDENDUM TO THE
ORANGE COUNTY SANITATION DISTRICT
1999 STRATEGIC PLAN PROGRAM ENVIRONMENTAL IMPACT REPORT
AND TO THE PROGRAM ENVIRONMENTAL IMPACT REPORT FOR THE
ORANGE COUNTY SANITATION DISTRICT COLLECTION SYSTEM
IMPROVEMENTPLAN
Submitted to:
Orange County Sanitation District
10844 Ellis Avenue
P.O. BOX 8127
Fountain Valley, California 92728
Contact: Jim Burror
(714) 962-2411
Prepared by:
Irvine Ranch Water District
15600 Sand Canyon Avenue
Irvine, CA 92618
Contact: Natalie Likens
(949) 453-5633
l
BACKGROUND:
In 1999 the Orange County Sanitation District(OCSD) certified a Program
Environmental Impact Report(PEIR)on its 20-year Strategic Plan to ensure wastewater
collection and treatment capacity for northern and central Orange County. In 2007
OCSD certified a separate PEIR on its Collection System Improvement Plan. The
Collection System Improvement Plan replaces the collection system element of the 1999
Strategic Plan. This addendum, prepared in accordance with the California
Environmental Quality Act (CEQA) (Public Resources Code Section 21000 at seq.) and
its implementing Guidelines(California Code of Regulations Tille 14, Chapter 3, Section
15000 at seq.), addresses annexation of a portion of Orange Park Acres into the OCSO
service area.
DESCRIPTION OF ANNEXATION:
The area to be annexed, shown in Exhibit'A", is located in unincorporated Orange
County adjacent to the City of Orange. Under separate proceedings, Irvine Ranch
Water District (IRWD)is annexing the water service area of the Orange Park Acres
Mutual Water Company as part of a coordinated set of actions to implement water
service by IRWD. Such actions also include the formation of Improvement District No.
256 of IRWD as a preliminary step that could facilitate the provision of sewer service. If
and to the extent sewer service is provided by IRWD within the Orange Park Acres area
following the annexation of such area to IRWD, such action will trigger the need for an
associated action,the annexation to OCSD of the portions of the subject sewer service
area not currently within OCSD, to allow for wastewater to be treated using IRWD's
capacity in OCSD's regional treatment facilities. Annexation to the Sanitation District
service area is coordinated with the Orange County Local Agency Formation
Commission(LAFCO) and local cities and local sewerage agencies, in this case, Irvine
Ranch Water District. Property is annexed by OCSD in accordance with Ordinance No.
OCSD-33. Annexation to OCSD provides access to regional sewerage and wastewater
treatment services. Annexation does not entitle property owners to further development
on their properties, but does provide property owners the option to abandon septic tanks.
ENVIRONMENTAL IMPACT ANALYSIS:
Annexation of the portion of Orange Park Acres described herein will have no
environmental impact. This annexation is an administrative action and does not include
any proposed facilities. Nevertheless, OCSD has considered projected flow from this
area in planning its regional wastewater collection and treatement facilities. Flows from
Orange Park acres were projected as part of Job No. J-101, Collection System Model
and Strategic Plan Update, which replaced the collection system element of the 1999
Strategic Plan, and serves as the technical basis for the OCSO Collection System
Improvement Plan. Volume 2, Section 3.1.3.1 of the Study entitled Computer Model
Documentation and Procedures Manual stipulates that septic tanks are assumed to be
abandoned upon failure and that projected flows are assumed to be conveyed through
the OCSD collection system after 2010. Additionally the regional treatment facili ies
a
identified in the 1999 Strategic Plan described sufficient capacity to treat the ultimate
wastewater flows from the annexed properties. Thus the current and future flows from
Orange Park Acres can be accommodated by OCSD regional facilities. OCSD has no
plan to build additional infrastructure to accommodate this spec annexation.
This annexation does not affect the scope of OCSD's Strategic Plan nor modify the
impact analysis of the two referenced Program Environmental Impact Reports. New
sewer facilities are not proposed at this time, since many of the properties will continue
to have onsite septic tanks for some time. Environmental impact analysis of any future
local sewer facilities for the annexed properties will occur at the appropriate time.
FINDINGS OF APPROVAL FOR ADDENDUM TO THE 1999 STRATEGIC PLAN
PROGRAM ENVIRONMENTAL IMPACT REPORT AND TO THE PROGRAM
ENVIRONMENTAL IMPACT REPORT FOR THE COLLECTION SYSTEM
IMPROVEMENT PLAN.
1. If and to the extent sewer service is provided by IRWD within the Orange Park Acres
area following the annexation of such area to IRWD, such action will trigger an
associated action, the annexation to OCSD of the portions of the subject sewer
service area not currently within OCSD, to allow for wastewater to be treated using
IRWD's capacity in OCSD's regional treatment facilities.
2. OCSD'S 1999 Strategic Plan and Collection System Improvement Plan describe
improvements to the regional wastewater collection and treatment facilities to ensure
capacity for wastewater flows in Northern and Central Orange County.
3. The 1999 Strategic Plan PEIR and the PEIR for the Collection System Improvement
Plan analyze environmental impacts associated with construction and operation of
the OCSD wastewater collection and treatment facilities.
4. Regional capacity in OCSD's facilities sufficient to serve the subject area is
contemplated in OCSD's strategic planning. IRWD's use of its Revenue Area 14
capacity in OCSD's regional treatment facilities for flows from the subject annexation
area can be more than offset by equivalent flows that IRWD can divert from area
outside Revenue Area 14 and treat at IRWO's Michelson Water Reclamation Plant
(MWRP) as a result of the expansion of MWRP presently underway.
5. Annexation of a portion of Orange Park Acres as described herein would not result in
new significant environmental effects or a substantial increase in the severity of
significant effects from those determined by the 1999 Strategic Plan PEIR certified
by the OCSD Board of Directors on October 27, 1999 and by the PEIR for the
Collection System Improvement Plan certified by the OCSD Board of Directors on
August 22, 2007, there are no mitigation measures or alternatives that were
previously found infeasible or that are considerably different from those analyzed in
the EIR and that would substantially reduce one or more significant effects, and no
additional mitigation measures or alternatives are required.
BOARD OF DIRECTORS Meeting Date To Bd.of Dir.
lt/7B/o7
AGENDA REPORT item Number Item Number
firdl
Orange County Sanitation District
Colle do
Facilies
FROM: James D. Ruth, General Manager
Originator: James Herberg, Director of Engineering
SUBJECT: AGREEMENT WITH THE NEWPORT MESA UNIFIED SCHOOL DISTRICT
TO TRANSFER SEWER PIPELINES AND ASSOCIATED EASEMENT
RIGHTS ASSOCIATED WITH CONTRACT NO. 6-13-3
GENERAL MANAGER'S RECOMMENDATION
Approve a Transfer Agreement with the Newport Mesa Unified School District transferring
ownership of sewers at no cost and quitclaiming easement rights in connection with
Abandonment of Airbase Trunk Sewer, Contract No. 6-13-3, in a form approved by General
Counsel.
SUMMARY
• In the late 1990s, the Orange County Sanitation District (OSCD) constructed new
regional sewers that eliminated the need for the Airbase Trunk Sewer System to convey
larger volumes of Flow. This presented the opportunity to turn this system into a local
sewer, thus eliminating the need for additional maintenance activities, rehabilitation
projects, and potential capacity upgrades.
• Under Contract No. 6-13-3, OCSD has abandoned certain unnecessary portions of the
Airbase Trunk Sewer in the northwestern part of the City of Costa Mesa near Harbor
and Gisler Avenues.
• As part of the project, OCSD modified the sewer and sewer connection for Newport
Mesa Unified School District's (NMUSD) TeWinkle Middle School. This Agreement will
transfer ownership of the modified sewer serving the school grounds to NMUSD.
• The Agreement will also quitclaim easement rights to NMUSD where OCSD has
abandoned unnecessary portions of the Airbase Trunk Sewer crossing the TeWinkle
Middle School.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
None
AN:sa
HmepbagendMftard Agenda ReporiM2007 Board Agenda RepodsM0718(d).6-13.doo
The Steering Committee minutes for the
meeting held October 24, 2007 will be
distributed at the November 28, 2007
meeting.
Once the minutes are finalized , they will
also be available on the Sanitation
District's website (www.ocsd .com).
STEERING COMMITTEE r;, ng odC TO BA.a/0ir.
rr/zs/or a/as/a7
AGENDA REPORT rNlR NYRber Item N�mbu
7b 9b
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator. Bob Ghirelli, Assistant General Manager
SUBJECT: STRATEGIC PLAN
GENERAL MANAGER'S RECOMMENDATION
(1)Approve the Five-Year Strategic Plan dated November 2007; and,
(2)Authorize staff to implement the goals and strategies contained in the plan.
SUMMARY
The Plan contains revised Mission and Vision Statements, articulates the values of the
organization through a set of core values, outlines the risks facing the District, lays out a series
of targets that define our levels of service (LOS), and a number of strategic goals designed to
support the service levels and to mitigate the risks. A financing strategy is contained in the plan
to support implementation of the LOS and strategic goals.
PRIOR COMMITTEE/BOARD ACTIONS
The Board of Directors met over the summer 2007 in a series of four strategic planning
workshops to consider elements of the plan and provide policy direction to staff for preparing the
plan. Workshops were held on August 1 and 8, September 19 and October 11.
ADDITIONAL INFORMATION
• The strategic plan is a planning tool that brings the Board of Directors to agreement
around a level of service for the District's ratepayers. The plan is the result of a series of
workshops during which the Board articulated a clear direction and vision for the
agency.
• The Strategic Plan provides clear direction to staff for development of the Proposition
218 rate notice, a five year sewer user fee schedule, the FY2D08-09 CIP and budget.
• The plan provides a five year roadmap with strategic goals and actions and a financial
strategy to support implementation. The financing strategy proposes annual rate
increases over each of the next five years of 10.5%, 10%, 10%, 9.8%, and 9.8%for
fiscal years 2008-09 through 2012-13.
CEQA
The strategic plan is a feasibility and planning document that describes, among other things,
possible future actions which the Board of Directors has not approved, adopted, or funded. The
Fp NO.V IW1 M .ary -SC
R—m 01N 7
Page 1
adoption of the strategic plan does not amount to the approval of any individual project. The
Board will consider individual projects at a later date, based on project-specific environmental
review. The strategic plan has no binding legal effect on later activities.
With respect to the Proposition 218 Notice, no additional CEQA review is required for new
sewer user rates and connection fees that are intended to fund projects that have been
analyzed in a previously certified or approved CEQA document(e.g EIR, Negative Declaration,
Notice of Exemption). This would include projects that were addressed in the 1999 Strategic
Plan EIR, the 2002 Secondary Treatment SEIR, and the 2007 Collection System Improvement
Plan PEIR. Projects that have not been analyzed in a previously certified or approved CEQA
document and are designed to maintain existing service and capacity are exempt from CEQA
pursuant to Pub. Resources Code §21080(b)(8); 14 Cal. Code Regs 15273(a). These projects
include (1) projects to divert wastewater to Treatment Plant No. 1 for the GWRS; (2) projects to
improve odor control (e.g. additional scrubbers); and (3) projects that are needed to comply with
existing air quality regulations relating to air toxics and NOx. The District is not proposing to
fund any new projects (other than those that have already been approved)that increase sewer
services or expand the capacity of the treatment plants or the collection system.
ATTACHMENTS
Strategic Plan
Form No
flen,ep 01N1V7
Page 2
w MINUTES OF THE
OPERATIONS COMMITTEE
Engineering, Operations &Maintenance, and Technical Services
Orange County Sanitation District
November 7, 2007—5:00 p.m.
A meeting of the Operations Committee of the Orange County Sanitation District was held on
November 7,2007, at 5:00 p.m. in the Sanitation District's Administrative Office.
(2) ROLL CALL
Following the Pledge of Allegiance, a quorum was declared present, as follows:
Operations Directors Present: Staff Present:
Larry Crandall, Chair Jim Ruth, General Manager
Cathy Green, Vice Chair Bob Ghirelli, Assistant General Manager
Charles Antos Nick Arhontes, Dir. of Operations& Maintenance
Patsy Marshall Jim Herberg, Director of Engineering
Roy Moore Ed Torres, Director of Technical Services
David Shawver Life Kovac, Committee Secretary
Harry Sidhu Tod Haynes, Engineering Manager
Constance Underhill John Linder, Engineering Manager
Don Webb Matt Smith, Engineering Manager
Doug Davert, Board Vice Chair Jim Bunor
Mark Esquer
Gary Conklin
Operations Directors Absent: Juanita Skillman
Rob Thompson
Steve Anderson Simon Watson
Don Bankhead
James M. Ferryman, Board Chair Others:
Rich ten Bosch, Black&Veatch
(3) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(4) PUBLIC COMMENTS
There were no public comments.
(5) REPORT OF THE COMMITTEE CHAIR
Chair Crandall announced he and a few committee members had attended a plant tour prior to
the meeting and encouraged other Directors to consider attending one in the future.
Minutes of the Operations Committee ;
November 7, 2007
Page 2
(6) REPORT OF THE GENERAL MANAGER
General Manager Jim Ruth briefly reported that legislation, which includes a $100 million SARI
Line earmark, is expected to be vetoed by the President, but is also expected that the Senate
includes enough votes to override the President's veto.
(7) CONSENT CALENDAR ITEMS
a. The minutes of the October 3, 2007 Operations Committee meeting were distributed; it
was then,
MOVED, SECONDED,AND DULY CARRIED: Approve minutes of the October 3, 2007
Operations Committee meeting.
b. OP07-87 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board
of Directors to approve Amendment No. 1 to Cooperative Projects Grant
Program Contract No. 0601 with the City of Cypress, providing for an
eight-month time extension.
C. OP07-88 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board
of Directors to approve Amendment No. 1 to Permit Agreement for
Discharge from Groundwater with Irvine Ranch Water District(IRWD),
providing for a time extension through December 31, 2012, to allow time
for sewer facilities to be constructed to redirect Caltrans'flow to sewer
facilities that are not tributary to the IRWD Michelson Water Reclamation
Plant, at no additional cost to the Sanitation District, in a form approved
by General Counsel.
d. Item pulled for discussion.
e. OP07-90 MOVED, SECONDED,AND DULY CARRIED: Recommend to the Board
of Directors to authorize staff to negotiate Amendment No. 2 to the
Professional Services Agreement with Carollo Engineers for construction
support services for the Headworks Rehabilitation/Refurbishment, Job
No. P1-71.
f. OP07-91 MOVED, SECONDED,AND DULY CARRIED: Recommend to the Board
of Directors to:1) Establish a budget for access improvements to OCSD
sewers in the Big Canyon Nature Park Area, Project No. 5-64, in the
amount of$765,000; and,
2)Authorize the General Manager to execute a reimbursement
agreement with the City of Newport Beach to design and construct Big
Canyon Nature Park Area, Project No. 5-64, sewer access improvements,
for an amount not to exceed $533,300, in a form approved by General
Counsel.
g. Item pulled for discussion.
y Minutes of the Operations Committee
November 7, 2007
Page 3
h. OP07-93 MOVED, SECONDED,AND DULY CARRIED: Recommend to the Board
of Directors to: 1)Approve Amendment No. 2 to the Professional Design
Services Agreement with Malcolm Pimie, Inc. for support services during
the construction, commissioning, and closeout phases of Coast Trunk
Sewer Rehabilitation, Job No. 11-26, for an additional amount of
$180,582, increasing the total contract amount not to exceed $1,761,407;
and,
2)Approve a 6%contingency ($105,684).
I. OP07-94 MOVED, SECONDED,AND DULY CARRIED: Approve a Services
Contract Agreement with Mettler-Toledo, Inc. for Truck Loading Scale
Replacement, Specification No. R-2007-342, for an amount not to exceed
$132,727.
j. OP07-95 MOVED, SECONDED,AND DULY CARRIED: Recommend to the Board
of Directors to: 1)Approve a budget increase for Fire Suppression for
Servers& Related Equipment at Plant 1 &2, Specification No. FR-2007-
348BD, in the amount of$43,685 for a total project budget of$964,718;
2)Award a purchase order agreement to K2 General Contractors, Inc.for
Fire Suppression for Servers& Related Equipment at Plant 1 &2,
Specification No. FR-2007-348BD, in an not to exceed $583,697; and,
3)Approve a 10%contingency($58,369).
Non-Consent Items
k OP07-89 Jim Herberg, Director of Engineering, indicated that an outdated version
of the agenda report had been submitted for approval, and a revised
version was distributed for consideration. It was then,
MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board
of Directors to approve an increase in contingency for the Professional
Services Agreement with Earth Tech, Inc. for construction support
services for Bushard Trunk Sewer Rehabilitation, Job No. 1-2-4, for an
additional 9% ($238,663)contingency, increasing the total contingency to
21%($560,808).
I. OP07-92 Director of Engineering, Jim Herberg, indicated that the recommended
action excluded the dollar amount of recommended action, and the
revised wording submitted for consideration was distributed. It was then,
Minutes of the Operations Committee
November 7, 2007
Page 4
MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board
of Directors to: 1)Approve Amendment No. 1 to the Professional Design
Services Agreement with RBF Consulting providing for construction
support services for Rehabilitation of College Avenue Pump Station,
Contract No. 7-47, for an additional amount of$911,380, increasing the
total contract amount not to exceed $1,852,956; and,
2)Approve a 5% contingency ($92,648).
(8) ACTION ITEMS
a. OP07-96 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board
of Directors to receive and file Energy Master Plan for the Treatment
Plant Strategic Plan Update, Job No. J-102, dated October 16, 2007,
prepared by Black&Veatch Corporation.
b. OP07-97 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board
of Directors to authorize staff to enter into negotiations with Earth Tech,
Inc. to provide additional engineering services for the preparation of
Design Build Documentation for the Rehabilitation of the Magnolia
Trunk Sewer, Contract No. 3-58.
(9) INFORMATIONAL ITEMS
There were none.
(10) REPORT OF DIRECTOR OF ENGINEERING
Jim Herberg, Director of Engineering, advised that staff would be presenting the annexation of
Orange Park Acres for approval in December.
(11) REPORT OF DIRECTOR OF OPERATIONS AND MAINTENANCE
Director of Operations and Maintenance, Nick Arhontes, briefly reported on an upcoming
software upgrade request; Plant 2 old headworks failure and risks; CenGen printed circuit board
card failure; and an upcoming meeting with Corps of Engineers on Emergency Response
Planning.
(12) REPORT OF DIRECTOR OF TECHNICAL SERVICES
Director of Technical Services, Ed Tortes, briefly reported on an upcoming public outreach
program through member cities to minimize sewer pollutants; update on air quality regulations;
and AQMD definition of digester gas.
Minutes of the Operations Committee
November 7, 2007
Page 5
(13) OTHER BUSINESS. COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
There were none.
(14) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA
FOR ACTION AND STAFF REPORT
It was recommended that a plant tour would be made available to the Board of Directors at the
next Board meeting, November 28, 2007.
(15) CONVENE INCLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION
54956.9 a
There was no closed session.
(16) FUTURE MEETING DATES
The next Operations Committee meeting is scheduled for Wednesday, December 5, 2007, at
5:00 p.m.
(17) ADJOURNMENT
The Chair declared the meeting adjourned at 5:57 p.m.
Submitted by:
Line I ovac
Committee Secretary
H:WepNmo\15M151\BSkM!nutes\110707 OpemUons Core Minutw.doc
OPERATIONS COMMITTEE Meebng Date TOBd.ofDb.
11/07/07 11/28/07
AGENDA REPORT Item Number Item Number
OP07-87 10(b)
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Jim Herberg, Director of Engineering
SUBJECT: COOPERATIVE PROJECTS GRANT PROGRAM
GENERAL MANAGER'S RECOMMENDATION
Approve Amendment No. 1 to Cooperative Projects Grant Program Contract No. 0601
with City of Cypress, providing for an eight-month time extension.
SUMMARY
• The Cooperative Projects Grants Program (Program) provides funds to local
agencies for projects that reduce or eliminate inflow and infiltration (1/1) to the sewer
collection system.
• The City of Cypress (City) requests Amendment No. 1 to Cooperative Projects
Program Contract No. 0601 (Contract No. 0601) to provide an eight-month time
extension. This project will visually inspect the City's sewer to identify and prioritize
corrective actions. The delay is due to the lack of availability of vendors providing
these services in Southern California.
PRIOR COMMITTEE/BOARD ACTIONS
In July 2006, the Board of Directors approved $325,000 in grant funds to the City of
Cypress.
ADDITIONAL INFORMATION
Cooperative Projects Grants are paid to local agencies on a reimbursement basis after
project completion. The total amount of grant reimbursements provided to member
agencies since 1999 through the program is approximately $23.1 million. New awards
are anticipated to be paid in FY 08-09 or FY 09-10, depending on the time received and
the overall budget status; one application has been received to date by the City of Seal
Beach for approximately $1,500,000, however, the application is incomplete and at the
moment does not meet program requirements.
The City has been identified as having an 1/1 problem by the Orange County Sanitation
District's long-term flow monitoring efforts.
Form No.o ioax Rer,xEow1m�
R�PpmEe Itg S ?BmN Ng Reo•1110]\tIXb)Coob.doe
Page 1
The project involves closed circuit television (CCTV) inspection and condition
assessment of approximately 450,000 feet of sewer mains to identify and prioritize
corrective projects and update the City's Master Plan and Capital Improvement
Program.
The work, however, has not been completed as quickly as originally anticipated due to a
delay in project award, resulting from a shortage and high demand of CCTV contractors
to perform the inspections. Amendment No. 1 to the Contract will provide for the
additional time to complete this project and serve to reduce 1/1 at both the regional and
local levels of the sewer system.
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Page 2
OPERATIONS COMMITTEE Meeting Date To Bd.of Dir.
11/07/07 11/28/07
Item AGENDA REPORT m Number Item Number
oP07-88 10lct
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Ed Torres, Director of Technical Services
SUBJECT: PERMIT AGREEMENT EXTENSION
GENERAL MANAGER'S RECOMMENDATION
Approve Amendment No. 1 to Permit Agreement for Discharge from Groundwater with
Irvine Ranch Water District (IRWD), providing for a time extension through December
31, 2012, to allow time for sewer facilities to be constructed to redirect Caltrans'flow to
sewer facilities that are not tributary to the IRWD Michelson Water Reclamation Plant, at
no additional cost to the Sanitation District, in a form approved by General Counsel.
SUMMARY
• The Orange County Sanitation District (OCSD) and the Irvine Ranch Water District
(IRWD) entered into an agreement dated March 22, 2004, to measure the flow for
assessing charges, such as charges for use and Supplemental Capital Facility
Capacity Charges (SCFCC), for the California Department of Transportation's
(Caftrans) groundwater dewatering of the Eastern Transportation Corridor, near the
intersection of Interstate 5 Freeway and Jamboree Road in the City of Irvine. Due to
the shallow groundwater table in that area, Caltrans dewaters to prevent flooding of
the corridor. The groundwater currently is discharged to IRWD's Harvard Avenue
Trunk Sewer (HATS) line, which flows into OCSD's Reclamation Plant No. 1.
• The HATS line is being re-routed to the IRWD Michelson Water Reclamation Plant
(MWRP). Because of water quality issues, IRWD requested that Caftrans cease
discharge to the HATS line.
• In August 2007, Caftrans requested an extension of the March 22, 2004 agreement,
until sewer facilities are constructed to divert the flow from the HATS line to facilities
that are not tributary to the MWRP.
• Staff recommends that OCSD approve Amendment No. 1 to Permit Agreement for
Discharge from Groundwater with IRWD providing for a time extension until
December 31, 2012 or until such time that sewer facilities have been constructed to
redirect Caltrans' flow at no additional cost, in a form approved by General Counsel.
Form No.g IM-2 Pwivaemmtu)
Page 1
PRIOR COMMITTEE/BOARD ACTIONS
In May 2004, the Board of Directors approved Special Purpose Discharge Permit
(SPDP) No. 54-202 issued to Transportation Corridor Authority and Caltrans for
extracted groundwater from a maintenance project of the Eastern Transportation
Corridor. Furthermore, the Board of Directors also approved a Permit Agreement for
Discharge from Groundwater with IRWD in connection with said project.
In 1996, the Board of Directors entered into an agreement with Silverado Constructors
for the discharge of groundwater to the sewer for the Eastern Transportation Corridor.
ADDITIONAL INFORMATION
• Dewatering has been performed in the subject area since 1996. Since October
1996, the dewatering was overseen by Silverado Constructors until responsibility for
the project was transferred to Caltrans in August 2001.
• In February 2003, Caltrans requested a permit from OCSD to sewer 864,000 gallons
per day of groundwater from the project.
• The original permit agreement to discharge to the sewer was entered into in October
1996 to enable OCSD to collect user fees and charges. Because the current
Memorandum of Understanding (MOU) between OCSD and IRWD does not make
provisions for the collection of SCFCC for facilities under IRWD's jurisdiction, a
permit agreement is required to enable OCSD to collect the SCFCC.
• The IRWD Board of Directors approved the current agreement in March 2004, and
the OCSD Board of Directors approved the agreement in May 2004.
ET:MHK:on
KWepMgenda\Operations CommittmlOpemtions 200m110T MA sion Agml.doc
Form No.D W-2 pwi 0&01 a)
Page 2
OPERATIONS COMMITTEE Meetl�9 Date Tu9d.of Dir.
11/07/07 11/28/07
Item Number Item Number
AGENDA REPORT
_ OP07-89 mcm
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: David May
SUBJECT: BUSHARD TRUNK SEWER REHABILITATION, JOB NO, 1-24
GENERAL MANAGER'S RECOMMENDATION
Approve an increase in contingency for the Professional Services Agreement with Earth
Tech, Inc. for construction support services for Bushard Trunk Sewer Rehabilitation, Job
No. 1-24, for an additional 9% ($238,663) contingency, increasing the total contingency
to 21% ($560,808).
SUMMARY
• This contract is for construction services rendered during construction of the new
Bushard Trunk Sewer from 2006 to the present. In 2005, construction stopped due
to pipe problems. The Orange County Sanitation District (Sanitation District), the
contractor Steve P. Rados, and the pipe supplier Rinker Hydro Conduit, went to
mediation resulting in a Settlement Agreement.
• Earth Tech, Inc. was contracted after the Settlement Agreement to provide the
construction management services for the subject project. These services are
expected to complete in October, 2007.
• Per the Settlement Agreement, the parties will resume discussions regarding cost
escalations and other costs related to the pipe problems. The Sanitation District will
develop arguments related to work performed since 2006 and will need the
assistance of Earth Tech, Inc.
PRIOR COMMITTEEIBOARDIGENERAL MANAGER ACTIONS
• November 2005 —Approval of the original Professional Services Agreement with
Earth Tech, Inc. for construction support services.
• July 2006 —Approval of Amendment No. 1 to the Professional Services Agreement
with Earth Tech, Inc. for $478,693, increasing the total amount not to exceed
$2,531,286.
Form No,mumzx awn.e ovo,ror
Page 1
• April 2007—Approval of Amendment No. 2 to the Professional Services Agreement
with Earth Tech, Inc. for$120,525, increasing the total amount not to exceed
$2,651,811. Approval of 12% ($318,217) contingency.
• October 2007—Approval of Amendment No. 3 to the Professional Services
Agreement with Earth Tech, Inc. for$308,559, increasing the total amount not to
exceed $2,960,370. The General Manager approved this amendment using
contingency funds.
ADDITIONAL INFORMATION
This Amendment No. 4 complies with authority levels of the Sanitation District's
Delegation of Authority. This item has been budgeted. (Line item: Section 8, Page 48).
Award Date: Contract Amount: Contingency:
11/1612006 $2,651,811 12% $318,217
11128/2007 $2,651,811 9% $238,663
Total 21% $560,808
DM:tic:gc
H9deptlagendalOperatlons Committee\Operatlom 200A110707-89.1-2A.Rwlsed.doc
F..No..1.2 2 R..GWOM
Page 2
OPERATIONS COMMITTEE Meetingo7/o7 Dale TO Bd.of Dir.
u/ a/ze/o7
AGENDA REPORT Item Number item Number
OP07-90 10 e
uOra n a County Sanitation District
ty xeaaworks
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Wendy T. Sevenandt
SUBJECT: HEADWORKS REHABILITATION/REFURBISHMENT, JOB NO. P1-71
GENERAL MANAGER'S RECOMMENDATION
Authorize staff to negotiate Amendment No. 2 to the Professional Services Agreement with
Carollo Engineers for construction support services for the Headworks Rehabilitation/
Refurbishment, Job No. P1-71.
SUMMARY
• This project is for the replacement of the pump motor electrical drives for the five Main
Sewage Pumps and installation of new cables and conduit to meet current Orange
County Sanitation District (Sanitation District) and industry standards.
• Carollo Engineers (Carollo) has provided Preliminary Design and Final Design services
for this project for a total amount not to exceed $880,096.
• The construction contract is scheduled to be awarded in April 2008.
• Staff is requesting authorization to negotiate construction support services with Carollo
so that the amendment will be approved in conjunction with award of the construction
contract.
• Following scope and fee negotiations, an amendment to the Professional Design
Service Agreement (PDSA) for construction support services will be brought before the
Operations Committee and the Board for approval in April 2008.
PRIOR COMMITTEE/BOARD ACTIONS
The Board of Directors authorized Amendment No. 1 for the Final Design Phase Services
on December 20, 2006.
Form No.ow-=, Rft'W 03NIN7
Page 1
The Board of Directors authorized negotiation of Amendment No. 1 for the Final Design
Phase Services on November 15, 2006. The original PSA was awarded to Carollo on March
22, 2006.
ADDITIONAL INFORMATION
All flow entering Plant No. 1 passes through the Headworks No. 2 Facility. Construction of
Headworks No. 2 at Plant No. 1 was completed in 1990 and was designed by Carollo. Four
Variable Frequency Drive (VFD) pumps were installed to pump all sewage that enters the
Plant for further treatment. Under a subsequent project designed by Carollo, a fifth constant
speed pump was added. Each pump has the capacity of 70 million gallons per day. These
pumps are critical as they are the first line of pumps in the process and keep sewage from
backing up in the sewers which could cause sewage spills and flooding.
The VFDs that regulate the Headworks pumps have reached the end of their useful life and
replacement parts can no longer be obtained. The existing single speed drive will also be
replaced with a VFD for consistency in equipment, flexibility in operations, and better
performance from a control standpoint. The ability to vary the speed of all pumps will also
be necessary when the new Ellis Pump Station pumps sewage to Plant No.1.
In March 2006, Carollo was awarded a Professional Services Agreement (PSA) for the
Preliminary Design Phase under a competitive proposal process. Carollo performed the
final design under Amendment No. 1 that was approved in December 2006. Preliminary
Design and Final Design Services were approved in the total amount not to exceed
$880,096.
The construction contract will be awarded in April 2008. Staff is requesting approval to
negotiate Amendment No. 2 with Carollo to provide construction support services during
construction.
The approved budget for consultant services during construction is $300,000. These funds
are in addition to the 3% ($26,403) contingency allocated for the Design Phase Services.
This request to negotiate an amendment complies with authority levels of the Sanitation
District's Delegation of Authority. This item has been budgeted. (Line item: Section 8,
Page 49).
Award Date: December 2006 Contract Amount: $880,096 Contingency: 9%
WS:tc:
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Form N..OVN0-2 R—.eo o1o,m7
Page 2
OPERATIONS COMMITTEE Meeting Dare To ad.of Dir.
11/07/07 11/28/07
AGENDA REPORT Item Number Item Number
_ OP07-91 loin
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: James D. Herberg, Director of Engineering
SUBJECT: ACCESS IMPROVEMENTS TO SEWERS IN THE BIG CANYON
NATURE PARK AREA, PROJECT NO. 5-64
GENERAL MANAGER'S RECOMMENDATION
1) Establish a budget for access improvements to OCSD sewers in the Big Canyon Nature
Park Area, Project No. 5-64, in the amount of$765,000; and,
2)Authorize the General Manager to execute a reimbursement agreement with the City of
Newport Beach to design and construct Big Canyon Nature Park Area, Project No. 5-64, sewer
access improvements, for an amount not to exceed $533,300, in a form approved by General
Counsel.
SUMMARY
• The Orange County Sanitation District (OCSD) owns a sewer near the intersection
of Backbay Drive and Jamboree Road in Newport Beach. Due to the location of this
sewer, there are several sewer manholes that are not accessible for OCSD
maintenance vehicles and are susceptible to a future sewage spill.
• This project will improve an existing access road and extend an access retaining
wall near the Big Canyon Creek.
• The City of Newport Beach (City) is currently implementing The Big Canyon Creek
Restoration Project in the area as well. The City staff supports incorporating
OCSD's needed access improvements into to their project, via a reimbursement
agreement, to ensure that OCSD improvements complement their proposed
restoration efforts.
• The City has already completed a Mitigated Negative Declaration for this project and
has included OCSD's needed access improvements.
• After this area has been restored with Native Habitat, it will be very difficult for OCSD
to be able to obtain manhole access without significant environmental impacts and
additional permitting obligations.
• The funds being requested are not budgeted and must come from reserves.
Fom No.W 1022 Rw,w 0"M7
Page 1
PRIOR COMMITTEE/BOARD ACTIONS
None
ADDITIONAL INFORMATION
The request of$765,000 includes funds for the anticipated contract with the City of
Newport Beach for design and construction services and funding for OCSD staff to
review and inspect the anticipated improvements.
The City's Big Canyon Creek Restoration Project is an estimated $5.0 million restoration
of the 55-acre Big Canyon Nature Park between Jamboree Road and Upper Newport
Bay. The project goals are to: (1) Increase valuable habitat by increasing the area
subject to Bay tidal flows; (2) Improve water quality in Big Canyon Creek; (3) Allow for
better public access into the Nature Park; (4) Remove non-native vegetation and
replace it with native plantings; and (5) Provide for interpretive signage which assists
the public in understanding the habitat.
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H:WepM9enda%0p mlions CommitteetOperalions 200711107107-91.5-64 Reimb Agml w PB.dm
Form No.O IW-2 n MIVT
Page 2
OPERATIONS COMMITTEE Meeb•9oanz Tofid.ofCir.
11/07/07 11/26/07
AGENDA REPORT 'te1"Number "e10Nn'"bef
OPo7-92 10fa7
Orange County Sanitation District
E`�1 Collections
1 Facilities
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Alberto Acevedo
SUBJECT: REHABILITATION OF COLLEGE AVENUE PUMP STATION,
CONTRACT NO. 747
GENERAL MANAGER'S RECOMMENDATION
1. Approve Amendment No. 1 to the Professional Design Services Agreement with
RBF Consulting providing for construction support services for Rehabilitation of
College Avenue Pump Station, Contract No. 747, for an additional amount of
$911,380, increasing the total contract amount not to exceed $1,852,956; and,
2. Approve a 5% contingency ($92,648).
SUMMARY
• This project will rehabilitate College Avenue Pump Station. The rehabilitation
includes mechanical, electrical, instrumentation and controls, structural, landscape,
and architectural improvements to bring the facility into compliance with Orange
County Sanitation District (Sanitation District) Standards.
• RBF Consulting completed the design of the Rehabilitation of College Avenue Pump
Station. Construction support services are required which will include reviewing
submittals, attending construction and coordination meetings, responding to request
for information, preparing design modifications, performing special testing,
participating in commissioning activities, and preparing record drawings.
• These construction support services shall be authorized only as requested and
managed by the Sanitation District's Project Manager. The proposed fee is
reasonable for a project of this magnitude and is consistent with fees for similar
services on past Sanitation District projects.
• A 5% contingency for potential consultant amendments is being requested per the
Sanitation District's Delegation of Authority.
Page 1
PRIOR COMMITTEE/BOARD ACTIONS
• PDSA with RBF Consulting for an amount not to exceed $941,576 (Board —August
2004).
• Approval of a Construction Contract Budget increase of$2,450,000 for
Rehabilitation of College Avenue Pump Station, Contract No. 7-47, for a total budget
amount of$10,426,000 Board — February 2007).
• Approved staff to negotiate for additional engineering services (Board — March
2007).
ADDITIONAL INFORMATION
This Amendment No. 1 complies with authority levels of the Sanitation District's
Delegation of Authority. This item has been budgeted. (Page A-6, Item No. 28).
Award Date: 10/03/07 Contract Amount: $1,852,956 Contingency: 5%
JH:AA:tic:
M:WepMgenda%0perations CommitlaetOperations 200711107107-92.747.dm
Page 2
OPERATIONS COMMITTEE Mee11/07(07 1tlg Date TOaJ.cf 112fi/07ar.
AGENDA REPORT Item Numbs Item Number
_ OP07-93 10(h)
Orange County Sanitation District
Collectiom
Facilities
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Alberto Acevedo
SUBJECT: COAST TRUNK SEWER REHABILITATION, CONTRACT NO. 11-26
GENERAL MANAGER'S RECOMMENDATION
1. Approve Amendment No. 2 to the Professional Design Services Agreement with
Malcolm Pirnie, Inc. for support services during the construction, commissioning, and
closeout phases of Coast Trunk Sewer Rehabilitation, Contract No. 11-26, for an
additional amount of$180,582, increasing the total contract amount not to exceed
$1,761,407; and
2. Approve a 6% contingency ($105,684).
SUMMARY
• This project will rehabilitate the Coast Trunk Sewer including approximately 300 feet
of 72-inch pipeline located at the intersection of Pacific Coast Highway and First
Street; 6,800 feet of 54-inch pipeline located along the City's Beach and State Park
parking areas, between First Street and Newland Street; and 900 feet of 84-inch
pipeline located between Newland Street and Magnolia Street.
• Malcolm Pirnie, Inc. satisfactorily executed the design and possesses an in-depth
and unique knowledge of all the details of the design and restrictions during
construction. This history makes Malcolm Pirnie, Inc. the best firm to provide support
services during the construction, commissioning, and closeout phases of this project.
• These construction support services shall be authorized only as requested and
managed by the Orange County Sanitation District's (Sanitation District) Project
Manager. The proposed fee is reasonable for a project of this magnitude and is
consistent with fees for similar services on past Sanitation District's projects.
• A 6% contingency for potential consultant amendments is being requested per the
Sanitation District's Delegation of Authority.
Page 1
PRIOR COMMITTEEIBOARD ACTIONS
• November 2004 —Approval of Professional Design Services Agreement with Malcolm
Pirnie, Inc. to prepare a Preliminary Design Report for an amount not to exceed
$2,219,330.
• May 2006 —Approval of Amendment No. 1 to the Professional Design Services
Agreement with Malcolm Pirnie, Inc. for the preparation of construction documents
and the reduction of $638,505 to the original amount of the PDSA for an amount not
to exceed $1,580,825.
• September 2007 —Authorize staff to enter into negotiations with Malcolm Pirnie, Inc.
for support services during the construction, commissioning, and closeout of the
Coast Trunk Sewer Rehabilitation, Contract No. 11-26.
ADDITIONAL INFORMATION
This authorization complies with authority levels of the Sanitation District's Delegation of
Authority. This item has been budgeted. (Page A-7, Item No. 33).
Award Date: 11104 Contract Amount: $1,761,407 'Contingency: 6%
AAA C:
H1depttagenda\Operations Committee\Operations 200T1107111-26-Amendment No.2-110707.docx
Page 2
OPERATIONS COMMITTEE Meeting late To Bd.of Dlr.
11/07/07 11/28/07
AGENDA REPORT Item Number Item Number
OP07-95 10fn
Orange County Sanitation District
Facilities•el
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Christopher MacLeod
SUBJECT: Fire Suppression for Servers & Related Equipment at Plant 1 &2,
Specification No. FR-2007-348BD
GENERAL MANAGER'S RECOMMENDATION
1)Approve a budget increase for Fire Suppression for Servers & Related Equipment at
Plant 1 & 2, Specification No. FR-2007-348BD, in the amount of$43,685 for a total
project budget of$964,718;
2)Award a purchase order agreement to K2 General Contractors, Inc. for Fire
Suppression for Servers & Related Equipment at Plant 1 &2, Specification
No. FR-2007-3481313, in an amount not to exceed $583,697; and,
3) Approve a 10% contingency ($58,369).
SUMMARY
• The District has several computer-server rooms. This project adds an inert-gas fire
suppression system to the existing wet pipe fire suppression systems in the
computer-server rooms. The inert-gas fire suppression system will be used to protect
the computer equipment. The existing wet pipe system, if activated, would damage
the computer equipment making it difficult to recover operational data and operate
the treatment plant.
• This project secures the services of a specialty fire suppression firm to conduct the
work. The firm will work with Fountain Valley and Huntington Beach Building
Departments, obtain permits, and coordinate the necessary fire protection work
activities.
• The project was developed in-house. The contract specifications were completed on
July 31, 2007. Two sealed bids were received on September 6, 2007. Summary
information of the bids received is tabulated below.
Page 1
I
Project Budget: $ 964,718
Construction Contract Budget: $ 583,697
Engineer's Estimate: $ 330,000
Lowest Responsive, Responsible Bid: $ 583,697
High Bid: $ 583,697
• A budget increase of$43,685 is for a change in design services and to increase the
contingency.
• Staff recommends awarding a Purchase Order contract to K2 General Contractors,
Inc. for Fire Suppression for Servers & Related Equipment at Plant Nos. 1 &2,
Specification No. FR-2007-348BD, the lowest responsive and responsible bidder.
Prava Construction Services, Inc. submitted the lowest, and only other, bid but was
deemed nonresponsive by the Bid Evaluation Team.
PRIOR COMMITTEE ACTION
None
ADDITIONAL INFORMATION
This authorization complies with authority levels of the Sanitation District's Delegation of
Authority. This item has been budgeted. (Line item: Section 8, Page 74).
Award Date: 11128/07 Contract Amount: $583,697 Contingency: 10%
JDH:CM:ct
EDMS:003845264
KWepNgendMOperations Committee0peratlons 2007\1107107-95.FR-2007-348.doc
Page 2
OPERATIONS COMMITTEE Mretin9 Dale To, orDr-
11/07/07 A8/07
AGENDA REPORT """Nu'nbef Item NuntW
aP07-96 10n1
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Gary Conklin
SUBJECT: RECEIVE AND FILE ENERGY MASTER PLAN FOR THE TREATMENT
PLANT STRATEGIC PLAN UPDATE, JOB NO. J-102
GENERAL MANAGER'S RECOMMENDATION
Receive and file Energy Master Plan for the Treatment Plant Strategic Plan Update, Job
No. J-102, dated October 16, 2007, prepared by Black & Veatch Corporation.
SUMMARY
The Energy Master Plan is part of the Orange County Sanitation District's (Sanitation
District) effort to update its Capital Facilities Strategic Plan. The Energy Master Plan
specifically plans for increased energy demands associated with the decision to
upgrade the treatment plants to secondary treatment to ensure power is provided
reliably for treatment plant operations.
PRIOR COMMITTEE/BOARD ACTIONS
November 2004 -Approval of Professional Services Agreement (PSA) with Black &
Veatch Corporation to provide an Energy Master Plan for the Treatment Plant Strategic
Plan Update, Job No. J-102, for an amount not to exceed $1,894,660.
July 2007 -Approval of a 3% contingency ($56,838) for the Amendment to the
Professional Design Services Agreement with Black & Veatch Corporation to prepare
an Energy Master Plan for the Treatment Plant Strategic Plan Update, Job No. J-102.
ADDITIONAL INFORMATION
Proiect Background
In July 2002, the Sanitation District committed to planning, designing, and constructing
upgrades to meet the Clean Water Act Secondary Treatment Standards. In order to
support secondary treatment, the power and electrical system needed to be assessed
to ensure reliable operations. Also, several existing and proposed regulations are
restricting the Sanitation District's energy generation facilities, including air quality
regulations, power utility regulations, and health and safety regulations.
Form No.OW 1020 nwuea ovowl
Page 1
This plan ties these complex issues together and lays out a plan that will be both
economical and comply with anticipated requirements facing the Sanitation District.
The Sanitation District's power demand is expected to increase as much as 100% when
secondary treatment expansion is complete in 2012. The Sanitation District's power
demand will be roughly equal to the entire City of Huntington Beach. The Executive
Summary from the Energy Master Plan is attached for additional information. The
Executive Summary contains recommendations to ensure reliable operations in the
future operations under Secondary Treatment Standards.
This item has been budgeted. (Line item: Section 8, Page 108).
Award Date: 07118/07 Contract Amount: $1,894,660 Contingency: 8%
ATTACHMENTS
Executive Summary
JB:GC:sa
H:WeptWgendalOpemlions Comminme Op mlions20pT110TW-96J-102.dm
F..No.e 1.-2 ge„iapo}p,q)
Page 2
• Executive Summary Project J•102, Energy Master Plan, Sept. 2007
OCSD Energy Master Plan - Executive Summary
Introduction
This Energy Master Plan(Plan) is a part a comprehensive OCSD Master Plan
Update. It identifies the improvements needed to continue the economical and
reliable operation of the treatment plant power systems,based on requirements for
secondary standards, new air quality regulations, operational requirements,and
existing design limitations.
Concerns
The following concerns were specifically addressed by this project:
• Power Supply and Demand Concerns
o Power use increases for secondary treatment and projected flow increases.
o OCSD demands may exceed the capacity of the Southern California Edison
(SCE) feeders to the treatment works.
♦ Potential Central Generation Replacement or Expansion Options
• Potential Impacts from SCE Outages
♦ Operation Requirements and Design Limitations
o Updated Information for Recent Projects
o Limited UPS System Reliability
o Electrical Grounding and Cathodic Protection Needs
Findings
Power Supply and Demands
The power demand at both plants will increase significantly from 2007 through
2012. The daily peak demand for power will increase from 8 Megawatts(MM to 16
MW at Reclamation Plant No. 1 (Plant No.l),and from 14 MW to 16 MW at
Treatment Plant No.2(Plant No.2).
The estimated 2012 peak power demand at Plant No. 1 will exceed the capacity of
the existing SCE power supplies. This Plan confirms that service upgrades need to
be completed as planned by OCSD. The planned service upgrades include replacing
the existing dual 12kV feed with a dual 66 kV feed. Also, Plant No. 2 service should
be upgraded to a dual 66 kV feed system in the future to increase reliability.
M01ENE W EXFWTI A;MWNv .W-41r]CG6t3]940C1 1
OCSa ERERG"TER PU -EXECUTIVE EUN
Potential Cengen Replacement or Expansion Options
New and modified Southern California Air Quality Management District
(SCAQMD) Rules are placing tighter restrictions on air emissions on all the OCSD
combustion sources.
An economic model was created to evaluate potential options for OCSD. The model
was used to analyze various future options over a 20-year period. These options
ranged from implementing new technologies to upgrading existing facilities to
comply with the new SCAQMD rules. This Plan recommends OCSD continue to
pursue emissions controls upgrades instead of implementing new technologies.
In the future,as gas production increases at Plant No.1,OCSD should invest in new
boilers. Boilers have low emission levels, but can provide the treatment plant with
needed heat and energy. Also, both treatment plants will need additional capacity
to flare digester gas during Central Generation System outages.
Potential Impacts from SCE Outages
To analyze onsite power needs during SCE outages,treatment plant equipment
criticality tables were developed. These tables included each major piece of
equipment,or equipment groups,and the potential consequences from power
outages ranging from 15 minutes to over 12 hours. From these tables,timelines
were developed showing power demands and potential outage consequences.
For SCE outages occurring during normal daily peaks, it appears feasible for both
Treatment Plants to meet all process requirements with the existing onsite power
supplies. However, this should be confirmed as ongoing capital projects are
completed and OCSD starts to operate under secondary treatment standards.
For SCE outages occurring during peak storm events,Plant No.1 cannot meet all
normal process requirements with the existing onsite power supplies. However, the
plant could maintain operation of the most critical plant processes. The only area
that requires additional standby generating capacity is the Headworks at Plant
No. 1. Additional standby power is needed to ensure that wastewater is pumped up
into the Plant No.1 instead of spilling from the collection system.
Plant No. 2 has enough onsite power for peak storm events. However, the reliability
of the Primary Effluent Pump Station (PEPS) needs to be increased to avoid
discharging disinfected primary effluent to the ocean. Possible solutions could
include connecting PEPS to a diesel generator, or routing flows to existing
emergency storage basins.
Operation Limitation and Design Needs
Updated Information for Recent Projects
This project updated electrical system documentation to reflect recently completed
CIP projects. This information was critical to analyzing power generation and
distribution issues in the future.
2 A107 EWR WEXEWNEE "R,X07-1417.00L W3YAW2
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Limited UPS System Reliability
The plant Uninterruptible Power Supply (UPS)system provides continuous power
for electronic devices critical to monitoring and operating the treatment plant. UPS
systems of all sizes have been added to each plant over several years. Many of the
smaller units are difficult to maintain and fail without warring. This Plan
recommends replacement of these systems with fewer larger units which allow for
condition monitoring and maintenance to increase process reliaiblity.
Electrical Grounding and Cathodic Protection Needs
Recommendations were made to update existing design standards and
specifications for Electrical Grounding and Cathodic Protection. When these standards
were applied to the review of existing facilities,no urgent issues were noted. For
some facilities it was recommended that the actual ground resistance be measured to
confirm they have adequate grounding,as insufficient information is available. For
all existing facilities, remedial measures should be coordinated with future projects.
Recommended Improvements
The improvements recommended by this project me listed in the following table.
ENERGY MASTER PLAN RECOMMENDED IMPROVEMENTS
Item Description Cost($M) Budgeted Project
1 New Plant 1 Dual 66kv SCE Feed 11.2 Yes P1-97
2 New Plant 2 66kv SCE Feed 5.6 No Future
3 Load Management/Shedding' 8.0 Yes J-33-3
4 Cengen Underrrequency Relays 0.1 Yes J-33-3
5 Replace Plant No. 1 Boilers 1.3 Yes P1-101
6 Add Flare at Plant No. 1 1.1 No Future
7 Add Flare at Plant No. 2 1.1 No Future
6 PB-3A Standby Power Capacity 3.0 No Future
9 Replace Plants 1&2 UPS Systems 6.0 No Future
10 Cengen Emissions Controls 31.0 No Future
11 Interplant Gas Pipeline 3.8 Yes J-106
12 PEPS Power Study 0.1 No Future
TOTAL 72.3
It u eeNnated tiwt the cop of PrOIW J-33-3=W be as nigh M$1510,out intludee omw upgraEn in addition w IM item.
.'02Er&aGY)P ExECUYfsJM4PY W01 ;'I=OnMt)p2 3
i
OPERATIONS COMMITTEE Fleeting Date To ad.of Mr.
11/07/07 11/28/07
AGENDA REPORT Item Numlee Rem Number
OP07-97 10(k)
Orange County Sanitation District
Collection
Facilities
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Alberto Acevedo
SUBJECT: REHABILITATION OF MAGNOLIA TRUNK SEWER,
CONTRACT NO. 3-58
GENERAL MANAGER'S RECOMMENDATION
Authorize staff to enter into negotiations with Earth Tech, Inc. to provide additional
engineering services for the preparation of Design Build Documentation for the
Rehabilitation of the Magnolia Trunk Sewer, Contract No. 3-58.
SUMMARY
• In March 22, 2006, the Orange County Sanitation District(Sanitation District) issued a
Professional Services Agreement(PSA)to Earth Tech, Inc. to provide engineering
services for the preparation of a Pipeline Condition Assessment Report for the
Rehabilitation of the Magnolia Trunk Sewer, Contract No. 3-58.
• Earth Tech completed the report to the highest standards and possesses an in-depth
and unique knowledge of all the sections of the pipeline that need rehabilitation, and
the in-depth expertise in preparing documents for a Design Build Procurement
Process. This history makes Earth Tech, Inc. the best firm to provide additional
engineering services during the Design Build Procurement Process to rehabilitate the
Magnolia Trunk Sewer.
• This will be the Sanitation District's first design build project under the new legislation
allowing the Sanitation District to use best value procurement. As such, Earth Tech,
Inc. will also help the Sanitation District establish policies and procedures necessary
for all design build projects the Sanitation District pursues.
PRIOR COMMITTEEIBOARD ACTIONS
• March 2006 —Approval of Professional Services Agreement with Earth Tech, Inc. to
prepare a Pipeline Condition Assessment Report for an amount not to exceed
$699,096.
Page 1
ADDITIONAL INFORMATION
This authorization complies with authority levels of the Sanitation District's Delegation of
Authority. This item has been budgeted. (Page A-6, Item No. 13). An amendment to the
original PSA with Earth Tech will be presented at the December Board Meeting for approval.
At that time, a contingency amount will be assigned to PSA amendment following the
guidelines in the Sanitation District's Delegation of Authority.
Award Date: 11I04 Contract Amount: $699,096 'Contingency%:
*No contingency has been established.
AA:tic:
H:WeppagendaV0pemflwa CcmmfltW0pemt1one 20OA11 Wt07-97.3-59.d=
Page 2
The Administration Committee minutes
for the meeting held November 14 , 2007
will be distributed at the November 28 ,
2007 meeting .
Once the minutes are finalized , they will
also be available on the Sanitation
District's website (www.ocsd .com).
ADMINISTRATION COMMITTEE NteenOywte To8°'0far'
11/14/2007 11/28/07
AGENDA REPORT It Nu szr Item11 Numb"b_ un Nu
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance &Administrative Services
SUBJECT: PROFESSION OF MANAGEMENT TRAINING -AGREEMENT CHANGE
ORDER NO. 2
GENERAL MANAGER'S RECOMMENDATION
1. Approve Change Order No. 2 to Purchase Order No. 55952-OS, a sole-source
agreement, issued to Louis Allen Worldwide for management and leadership training
services, adding four one-year renewal periods effective January 1, 2008 through
December 31, 2008, authorizing $28,800 for this period, and $24,000 for all
subsequent renewal periods, for a total amount not to exceed $253,815; and,
2. Approve a 5% per year cost escalation.
SUMMARY
The General Manager requests an increase in the contract with Louis Allen Worldwide
for OCSD's Profession of Management(POM) training program. The continuation of
the Profession of Management training program will ensure sustainment of OCSD's
management principles and competencies that the initial training sessions have instilled
in the agency. Additionally, it ensures consistency and continuity at all levels of
management. The additional funding provides continued POM training for the next four
years. The contract is renewable annually.
PRIOR COMMITTEE/BOARD ACTIONS
February 14, 2007— Management and Leadership Training Change Order No. 1
requesting an additional program funding of$106,765 to amend the contract to
$153,015 total.
ADDITIONAL INFORMATION
Louis Allen Worldwide is an industry leader in customized management development
programs. Since 1964, Louis Allen has served over 5000 organizations in a variety of
industries, including government agencies.
Form No.owtma n«i..e.nw,m7
Page 1
When the General Manager originally sought to model OCSD's program after the City of
Anaheim's successful management training, OCSD selected Louis Allen based on the
outstanding program the vendor had developed and implemented for Anaheim.
During 2006, OCSD's EMT and Managers participated in Louis Allen's Profession of
Management program, and OCSD's Supervisors participated in the program during
2007. This completed the initial training for all of management. The additional program
funding provides the requisite skills to ensure a common knowledge base across OCSD
management, providing initial information for the organization's future leaders and
refresher training for current management.
The estimated minimum annual cost is $9,600 for two (2) classes and the maximum
annual cost is $24,000 for five (5) classes. Training will be allocated based on
participant need. The order of participation priority is: 1) new management;
2) development of future leaders. The proposed sustainment and refresher training will
provide a minimum of 32 training seats annually.
The anticipated minimum and maximum four-year costs for the program is as follows:
An 1pated Program Costs
Minimum Maximum Item
$4,800 $ 4,800 Course Development one-time cost, year one on
$9,600 $24,000 Recurring Annual Costs Mro classes vs. five classes
$14,400 $28,800 First-Year Program Costs
$10,800 $25,200 Average Annual Program Costs
$43,200 $100,800 Total Four-Year Program Costs
Procuring Louis Allen Worldwide's services will ensure that OCSD continues to
implement a high-quality customized management training program that meets the
needs of the organization.
This request complies with authority levels of the Sanitation District's Delegation of
Authority. This item has not been budgeted.
JDR:LT:JR:RS
Form No.owm 3 Nm,M.0.W1N)
Page 2
y
ADMINISTRATION COMMITTEE Meeting Dam To ad.of Dir.
11/194/07 11/28/07
AGENDA REPORT Item Number Item Number
ADM07-53 11(d
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE
ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR ENDED
JUNE 30, 2007
GENERAL MANAGER'S RECOMMENDATION
Receive and file the:
(1) Sanitation District's Comprehensive Annual Financial Report for the year ended
June 30, 2007, prepared by staff and audited by Mayer Hoffman McCann,
Certified Public Accountants;
(2) Report on Compliance and Internal Control for the year ended June 30, 2007;
and
(3) Independent Accountants' Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets
SUMMARY
The Sanitation District's independent auditors, Mayer Hoffman McCann P.C. (MHM),
have completed their examination of the Sanitation District's financial statements for the
year ended June 30, 2007, and have issued an unqualified opinion. Each year, the
Administration Committee reviews the results of the audit and the corresponding
Auditor's report to the Committee. During the audit performed by MHM, no matters
involving the internal control over financial reporting and its operations that the auditors
consider to be material weakness were noted. Jennifer Christian, Partner, will attend
the meeting to respond to any questions of Directors.
This year, staff has again prepared the Comprehensive Annual Financial Report that
includes the audited financial statements. For the last thirteen years, the Sanitation
District has earned the Certificate of Achievement for Excellence in Financial Reporting
from the Government Finance Officers Association (GFOA). This year's report will
again be submitted to GFOA for their review in anticipation of another award.
Fnen No.rnw=3 Rrv.M,mr
Page 1
The Comprehensive Annual Financial Report, including the Auditor's opinion letter, the
Auditor's Report to the Committee, the Auditor's Report on Compliance and Internal
Control Over Financial Reporting, the Auditor's Appropriations Limit Report, and the
Auditor's Single Audit Report are attached.
ATTACHMENTS
1. Comprehensive Annual Financial Report for the year ended June 30, 2007.
(Separately bound document.)
2. Report on Compliance and Internal Control Over Financial Reporting.
3. Independent Accountants' Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets.
Form No.DW103.3 R....M107
Page 2
Ce..^.:a3 G..,errr::e�± Ssrvicts ty..aen
2301 Lu, b:,, So fP ]_.
Irvine.'A!t0:` 3!W
949474 202:-
949-263252.i ..
, W.mnrt.pc rem
Board of Directors
Orange County Sanitation District
Fountain Valley,CA
In planning and performing our audit of the financial statements of the Orange County Sanitation
District ("District") as of and for the year ended June 30. 2007. in accordance with auditing
standards generally accepted in the United States of America, we considered Orange County
Sanitation District's internal control over financial reporting (internal control) as a basis for
designing our auditing procedures for the purpose of expressing our opinion on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the District's
internal control. Accordingly, we do not express an opinion on the effectiveness of the District's
internal control.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and would not necessarily identify all deficiencies in internal control that might be
significant deficiencies or material weaknesses. Although no significant deficiencies or material
weaknesses were identified, we observed other deficiencies in internal controls that were not
deemed to be significant deficiencies as discussed below.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination
of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record,
process, or report financial data reliably in accordance with generally accepted accounting
principles such that then is more than a remote likelihood that a misstatement of the District's
Financial statements that is more than inconsequential will not be prevented or detected by the
District's internal control. We observed the following matters, which were not deemed to be
significant deficiencies in internal control,and offer these comments and suggestions.
(I) Purchase Orders and Invoice Approvals
During our test of cash disbursements transactions, we noted that for those employees
that were granted purchase requisition approvals up to 52,000 could request and approve
a purchase requisition and also approve the invoice without a second authorization.
While the Purchasing Department does review and approve every purchase order, the
Purchasing Department would not always have enough knowledge of departmental
activities to detect Fraudulent overcharges or unnecessary purchases. Strong internal
controls require two knowledgeable individuals to be involved in every transaction.
Recommendation
We recommend that the District evaluate the possibility of modifying the purchasing and
approval system to not allow the same individual who initiates a purchase request to also
approve the vendor invoice without a second departmental approval.
Orange County Sanitation District
Page 2
(2) Petty Cash
The District's petty cash policy allows for reimbursements up to $100. During our audit,
we noted that periodically petty cash is used to reimburse transactions over$100 with the
approval of the Controller.
Recommendation
We recommend that the petty cash policy be modified to reflect the actual practice of the
District. The policy should address the Controller's authority to approve reimbursements
over$100 and specify a maximum amount that the Controller can approve.
(3) System User Access
During our review of computer system access controls, we investigated user access for
terminated employees. The District's policy is to change a terminated employee's
password and disable the account immediately upon termination. After the employees'
department is sure there is no pertinent data remaining in the account, the District
personnel delete the account. Our review of terminated employees detected that the
passwords had been changed; however,user accounts had not been deleted for six former
employees who had been terminated for over three months. We were informed that the
policy had not been adhered to in a timely manner due to employee turnover in the
responsible department.
Recommendation
To prevent unauthorized access, we recommend that terminated employees' accounts be
disabled immediately upon termination.
This communication is intended solely for the information and use of management, Board of
Directors and others within the organization, and is not intended to be and should not be used by
anyone other than these specified parties.
//Zu
Irvine,California
October 25,2007
i
i
l
Mayer Hoffman McCann P.C.
1,IpQQCpptlpn;CPA Fnn:
Conrad Government Services C.Msion
A01 o.wra D,e. s,:to r,n
1z1ne.Caafnrma 92612
i49474 2020 or
,49-263-5520 a
:..:w.mnm-cacon•.
Board of Directors
Orange County Sanitation District
Fountain Valley.California
Independent Accountants' Repon on Aweed-Upon Procedures
.Splied to Apnronriations Limit Worksheets
We have applied the procedures enumerated below to the appropriations limit worksheets
prepared by the Orange County Sanitation District for the ,year ended June 30, 2007. These
procedures, which were agreed to by the Orange County Sanitation District and the League of
California Cities (as presented in the League publication entitled Article AMB Appropriations
Limitation Uniform Guidelines) were performed solely to assist the Orange County Sanitation
District in meeting the requirements of Section 1.5 of Article XIIIB of the California
Constitution.
This engagement to apply agreed-upon procedures was performed in accordance with standards
established by the American Institute of Certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of the specified users of the report. Consequently, we
make no representation regarding the sufficiency of the procedures described below either for the
purpose for which this report has been requested or for any other purpose.
The procedures performed and the results of those procedures were as follows:
I. We obtained the worksheets referred to above and compared the limit and annual
adjustment factors included in those worksheets to the limit and annual adjustment
factors that were adopted by resolution of the Board of Directors. We also compared
the population and inflation options included in the aforementioned worksheets to
those that were selected by a recorded vote.
Results: No exceptions were noted as a result of our procedures.
_. We recalculated the mathematical computations reflected in the District worksheets.
Results: No exceptions were noted as a result of our procedures.
IR,
rd of Directors
Urange County Sanitation District
Page Two
3. We compared the current year information used to determine the current year limit
and found that it agreed to worksheets prepared by the District and to information
provided by the State Department of Finance.
Results: No exceptions were noted as a result of our procedures.
4. We compared the amount of the prior year appropriations limit presented in the
worksheets to the amount adopted by the Board of Directors for the prior year.
Results: No exceptions were noted as a result of our procedures.
We were not engaged to, and did not, perform an audit, the objective of which would be the
expression of an opinion on the worksheets referred to above. Accordingly, we do not express
such an opinion. Had we performed additional procedures,other matters might have come to our
attention that would have been reported to you. No procedures have been performed with respect
to the determination of the appropriation limit for the base year, as defined by the League
publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines.
This report is intended solely for the information and use of the specified users listed above and
is not intended to be and should not be used by anyone other than these specified parties.
Irvine, California
October 25, 2007
ADMINISTRATION COMMITTEE Mleing Date TOBd.ur Dir.
11/19/8] I1/28/07
AGENDA REPORT IDun Number Iem Numbe
ADM07-55 11(dt
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Nick Arhontes, Director of Operations and Maintenance
Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: SOFTWARE PROCUREMENT, REPLACEMENT OF COMPUTERIZED
MAINTENANCE MANAGEMENT SYSTEM (CMMS)
GENERAL MANAGER'S RECOMMENDATION
1. Approve a sole source purchase order to IBM Corporation for purchase of IBM
Maximo Enterprise Asset Management software for replacement of the
Computerized Maintenance Management System (CMMS), for a total amount of
$592,932; and,
2. Approve a 5% contingency ($29,647).
SUMMARY
The O&M department is tasked with providing infrastructure management services to
allow OCSD's collection, treatment and reuse facilities to meet our various permit and
statute requirements. Tens of thousands of assets are managed and continued use of
an effective CMMS is required.
• The current CMMS (RJN Group's CASSWORKS) installed in 1992 has reached
the end of its useful life at OCSD. Furthermore, the software provides minimal
support related to hazardous energy and other safety issues. The software tool
does not support OCSD's reliability initiatives and provides no support or
integration with WonderWare Process Data Historian (SCADA) or the geo-spatial
information system (GIS), and minimal integration with the Financial Information
System (FIS).
• Staff recommends the replacement of the existing CMMS application with Maximo.
The selection of Maximo is based on two years of research into CMMS
applications by staff.
• The Maximo product has been in production since 1968 and was integrated into
IBM Corporation's product line in 2006. The useful lifetime of the Maximo product
is expected to be at least 20 years as yearly software licensing/maintenance
covers future upgrades.
• Maximo provides seamless integration of information from our financial system,
process data historian (SCADA), and GIS systems.
FOI.NO.nW 10]2 Rmiae0010f A]
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Page 1
• In collaboration with OCSD staff on system needs, the Orange County Water
District (OCWD) independently selected Maximo for supporting the GWRS
project's CMMS needs.
• Staff recommends a sole source purchase agreement because Maximo is the only
CMMS tool supported by the Electronic Operations & Maintenance Manual
software application. This recommendation is for software procurement only as
the implementation services for this product will be competitively bid.
• IBM has offered to discount the GSA pricing by 25% if procurement is made prior
to December 31, 2007.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
CMMS use by other agencies:
AGENCY CMMS SOFTWARE TOOL COMMENTS
Inland Empire (IEUA) MP2 Possibly moving to
SAP installation
City of LA Bureau of Sanitation EMPAC
King County Department of Mainsaver
Natural Resources
Sacramento Regional County IBM/Maximo
Sanitation District SRCSD
Sanitation Districts of Los Synergen/SPL
Angeles Count LACSD
East Bay MUD IBM/Maximo
City of San Diego EMPAC Product de-supported,
considering move to
IBM/Maximo
City of Portland Bureau of Synergen/SPL in Treatment
Environmental Services Plant
Hansen in Collections System
Orange County Water District IBM/Maximo New installation,
(OCWD-GWRS) installed JDEdwards
financials stem
DC Water& Sewer IBM/Maximo
San Onofre Nuclear IBM/Maximo Asset hierarchy and
Generating Station (SONGS) maintenance strategy
similar to OCSD
San Diego County Water IBM/Maximo
Authorit
JDR:LT:RC
Fom No.DM1033 Rsaaee0 101.1
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Page 2
ADMINISTRATION COMMITTEE Meeting Date To M.orar.
10/14/07 11/28/07
AGENDA REPORT item Number Ism Number
RDM07-56 11(e)
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: RENEWAL OF THE EXISTING XEROX MANAGED SERVICES
CONTRACT
GENERAL MANAGER'S RECOMMENDATION
1. Authorize a renewal to the Master Contract with Xerox, Inc., for an additional five-
year period, December 1, 2007 through November 30, 2012, for a total amount not
to exceed $233,000 per year, and color copies at $.09 per impression.
2. Authorize a maximum 10% contingency ($23,300) per year.
SUMMARY
OCSD entered into a five year managed services agreement with Xerox in July of 2004.
The current agreement includes the lease of seven workgroup printer/copier units, the
equipment lease and personnel to operate the copy center, and the personnel to
operate the mail room. Two Xerox personnel are assigned to OCSD's account for 80
hours per week. Xerox has offered the opportunity to renew the Xerox Managed
Services contract with no additional cost if implemented prior to January 2008.
PRIOR COMMITTEEIBOARD ACTIONS
N/A
ADDITIONAL INFORMATION
• The existing workgroup printer/copier units will be replaced with upgraded machines
that include color scanning/printing and optical character recognition (OCR)
software.
• Price per color impression will be reduced from $0.135 to $0.09 per copy. Color is
used predominantly for larger projects such as annual reports, newsletters and
budget material or for special projects such as Fats/Oils/Grease or the Sewer Atlas.
• Provide one-time scanning service to electronically store documents
• Renewing this contract at this time will lock in labor and equipment cost and utilizes
the latest technology in printing.
JDR:LT:RC
Form N. MN 102-2 R.W owlml
Page 1
ADMINISTRATION COMMITTEE M71 NDae TO Btl.d Dir.
tUt4/o7 ulzs/o7
AGENDA REPORT Rem Number Item Number
ADM07-58 urn
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance &Administrative Services
SUBJECT: CHANGES TO ADMINISTRATION OF OCSD SUPPLEMENTAL
RETIREMENT BENEFITS CALLED ADDITIONAL RETIREE BENEFIT
ACCOUNT (ARBA) THROUGH THE ORANGE COUNTY EMPLOYEES
RETIREMENT SYSTEM (OCERS)
GENERAL MANAGER'S RECOMMENDATION
Approve an extension of the Additional Retiree Benefit Account (ARBA) agreement with
Orange County Employees Retirement System (OCERS), extending the contract for a
period of up to 90 days.
SUMMARY
On October 8, 2007, Governor Schwarzenegger, approved AB1124, which allows for
the contribution of funds through Post-Employment Benefits Trust Accounts. OCERS
has established trust accounts through Barclays Global Investors, N.A. (BGI) for various
Plan Sponsors, including the Orange County Fire Authority and the County of Orange,
to fund retiree medical benefits. These agencies are participating at a cost of
approximately $1,000 to $2,000 per month, and it is likely that the Orange County
Transportation Authority will implement a similar trust in the near future.
Plan Sponsors can now use trusts like the RMPT to fund post employment benefits,
such as OCSD's ARBA benefit. Pre-existing law limited the types of benefits that could
be held in a trust to only medical premiums. In an effort to maintain competitive medical
premiums, OCSD has not required retirees to remain on District group insurance
policies. Therefore, it is not currently mandatory that the ARBA benefit be used for the
intended purpose of offsetting the cost of medical premiums.
Prior to the approval of AB1124, OCSD would have had to direct approximately 75
retirees to adopt an OCSD group medical plan in order to continue the administration of
the ARBA benefit with OCERS. This was not considered a viable alternative because of
the impact it would have on overall plan premium costs. As such, OCSD planned to
self-administer the ARBA benefit, which was reported to the Administration Committee
in October 2007. However, AB1124 broadened the use of funds to include other
supplemental benefits, which allows OCSD to establish an RMPT account to hold the
ARBA funds and continue administration through OCERS.
Form No.MNtM.] ReAwO:oW'W
Page 1
f
The type of trust the Plan Sponsor may use depends on the method by which the post-
employment benefit is administered. If the benefit is used strictly for medical premiums,
a 401(h) trust may be used, and the funds may be co-mingled with the retirement plan
funds and receive returns on the entire portfolio. However, since OCSD's ARBA benefit
is not restricted to medical premiums, an Internal Revenue Code (IRC) Section 115 trust
must be established.
The ARBA agreement currently ends December 31, 2007. The purpose of the
extension is to allow staff an opportunity to review and analyze options for establishing
a Retiree Medical Plan Trust (RMPT); whereby ARBA benefits would continue to be
administered by OCERS. OCERS has agreed to extend the existing ARBA agreement
for a period of up to 90 days to allow OCSD time to establish the proposed trust
agreement.
Based on the analyses, staff will submit a report and proposed trust agreement to the
OCSD Board of Directors in January 2008 for review and approval. If the agreement is
approved, it would be submitted to the OCERS Retirement Board for final approval in
February 2008.
Subject to Board approval, OCSD would draft a trust agreement to establish the RMPT
account through BGI for OCERS to hold and administer the RMPT benefits. The benefit
would continue to be administered by OCERS so the transition would be seamless to
retirees. OCSD would be required to pay an administrative fee estimated to be $1,000
to $2,000 per month. The in-house reporting requirements and monthly tasks
associated with the administration of ARBA are estimated to cost $920 per month.
Currently, the ARBA benefit is added to the retirees' pension checks and taxed
accordingly. However, if administration were moved in-house, retirees would receive
two separate checks and would be required to account separately for the taxes
associated with the ARBA benefit. To ensure a seamless transition, staff recommends
administration of the benefit to continue with OCERS.
PRIOR COMMITTEE/BOARD ACTIONS
October 10, 2007: An update on the status of the ARBA agreement and administration
was provided to the OCSD Board of Directors. The Board was notified of the signing of
AB1124 on Monday, October 8, 2007, which would likely change the direction OCSD
would choose to administer the benefit in the near future.
May 24, 2006: The second amended ARBA agreement was approved by OCSD's
Board of Directors.
May 10, 2006: An amended agreement for the ARBA benefit was presented to the
FAHR Committee to address depleting ARBA benefit funds. In addition, a timeline for
addressing intermediate and long term issues with retiree plan benefits was discussed.
Farm N. ow,un pwnea owfm7
Page 2
9
ADDITIONAL INFORMATION
9
ARBA was established in 1996 with the Orange County Employees Retirement System
(OCERS) to provide retirees with a medical premium offset of$10 per month for every
year of service with the Orange County Sanitation District (OCSD), up to a maximum of
$250 per month. ARBA was funded through OCERS' Unallocated Fund Balance (UFB)
which contained excess earnings of the system. Due to the diminishing returns in
recent years, there are no longer excess earnings available for use by the Plan
Sponsors.
In December 2002, the ARBA agreement was amended and a reserve account, the
Retiree Medical Benefit Reserve (RMBR), was established. RMBR contained three
years of projected ARBA payments as a safeguard for agencies to evaluate funding of
future payments. OCSD began using RMBR to fund ARBA payments in July 2003. The
ARBA agreement was amended on May 24, 2006 to extend the termination date to
December 31, 2007.
Since the ARBA benefit is a vested right, OCSD has a legal obligation to continue
funding retiree medical benefits to retirees. Currently, ARBA benefits are added to
retiree pension checks for the purpose of medical premiums; however, they can be
used at the discretion of the retirees and are considered taxable income.
OCSD currently has a total of 187 retirees and 32 survivors on the OCERS pension
payroll. Of the 219 individuals, 113 are receiving ARBA benefits, of which 38 are
enrolled in OCSD group medical plans. Moreover, 45 individuals are receiving
OCSD-paid medical insurance and will become eligible for ARBA upon the expiration of
their OCSD-paid medical insurance. OCSD-paid medical insurance provides for 2.5
months of paid medical insurance premium for every year of service with OCSD. The
2.5 month benefit is more costly to OCSD and was frozen to include only employees
hired prior to July 1, 1988, of which only 116 of the 584 active employees remain on
OCSD payroll. Once the 2.5 month benefit expires, the retirees are moved to ARBA,
which lowers the overall cost of retiree medical insurance.
JDR:LT:JR:PL
Fwm No,CW103.9 R Woo..1.1
Page 3
BOARD OF DIRECTORS ruing tale To lid.ofnir.
} 11/28/m
AGENDA REPORT 10"a"°� 1O�a"°"�
13
Orange County Sanitation District
I collections
Facilities
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Alberto Acevedo
SUBJECT: REHABILITATION OF COLLEGE AVENUE PUMP STATION,
CONTRACT NO. 7-47
GENERAL MANAGER'S RECOMMENDATION
(a)Approve Plans and Specifications for the Rehabilitation of College Avenue Pump Station,
Contract No. 747, on file at the office of the Clerk of the Board;
(b)Approve Addenda Nos. 1, 2, 3, 4, and 5 to the plans and specifications;
(c) Receive and file bid tabulation and recommendation;
(d) Reject low bid from Grath Company as'Non Responsive" due to its failure to provide the
information required under Public Contract Code §4100 et seq. in Its Bid;
(e) Receive and file letter from Griffith Company dated November 19, 2007, protesting award of
Contract No. 747 to the apparent second low bidder alleging that Griffith Company's bid is
responsive and responsible;
(f) Receive and file letter from Stanek Constructors, Inc., dated November 19, 2007, protesting
award of Contract No. 747, alleging that the bid submitted by Norman A. Olsson Construction,
Inc. neglected to identify the material type on Bid Item#13 and is therefore incomplete;
(g) Orel public comments, if any
(h) Staff and Counsel response to comments
(i) Board consideration of said protests
0) Consideration of motion rejecting the bid protest filed by Griffith Company; or other action
deemed appropriate by the Board;
(k) Consideration of motion rejecting the bid protest filed by Stanek Constructors, Inc.; or other
action deemed appropriate by the Board;
(1)Award a construction contract to Norman A. Olsson Construction, Inc. for construction of
Rehabilitation of College Avenue Pump Station, Contract No. 747,for a total amount not to
exceed $5,792,000; and,
(m)Approve a 5%contingency ($289,600); or,
(n) Consideration of other action deemed appropriate by the Board.
Pagel
SUMMARY
• This project will rehabilitate College Avenue Pump Station. The rehabilitation includes the r
design and construction of mechanical, electrical, instrumentation and controls, structural,
landscape, and architectural improvements to bring the facility into compliance with Orange
County Sanitation District(District) Standards.
• RBF Consulting completed the plans and specifications for Contract No. 7-47 in
July 2007. Ten sealed bids were received on October 25, 2007. The low bid from Griffith
Company was deemed "Non Responsive" due to failure to comply with the Public Contract
Code on their List of Subcontractors. Summary information on the bid opening for Contract
No. 7-47 is as follows:
Project Budget $11,404,000
Construction Contract Budget $ 7,800,000
Engineer's Estimate $ 6,940,819
Lowest Responsive, Responsible Bid: $ 5,792,000
High Bid: $ 8,115,400
PRIOR COMMITTEEIBOARD ACTIONS
• November 2007-Approval of Amendment No. 1 to the PSA with RBF Consulting for
support services during the construction, commission, and closeout phases of Contract No.
7-47 for an amount not to exceed $911,380.
• March 2007-Authorize Staff to commence Negotiations with RBF Consulting for support
services during the construction, commissioning, and closeout phases of Contract No. 7-47.
• February 2007-Approval of a Construction Contract Budget increase of$2,844,000 for
Rehabilitation of College Avenue Pump Station, Contract No. 7-47, for a total budget
amount of$10,820,000.
• August 2004-Approval of PSA with RBF Consulting for an amount not to exceed $941,576.
ADDITIONAL INFORMATION
The contractor selection was conducted in accordance with the Sanitation District's adopted
policies and procedures. This item has been budgeted (Page A-6,
Item No. 28).
Award Date: 11128/07 Contract Amount: $5,792,000 Contingency %: 5%
ATTACHMENTS
1. Letter of protest from Griffith Company
2. Letter of protest from Stanek Constructors, Inc.
JH:AA:tic:
KM pteWdaToe.d Agenda Rep0,t.=07 Buerd A,.de R,WW t07110.7i7.d
Page 2
November 19.2007
amems6
GRIFFITH
COMPANY
Ms.Olga Cervantes.Contracts Manager
u2maoomsenA„. Orange County Sanitation Districts
Po s-2150 P.O.Box 8127
s..,.r.s„ms..C. Fountain Valley.CA 92728-8127
sosnorsn
Isbn -Iin
t..lwls`s.rne Subject:Bid Protest(Specification Section IFB 28)
Orange County Sanitary District
evesWe �An Rehabilitation or College Ave.Pump Station (contract #747)
Po sue. m•s+
eA—f.e.CA Deaf Ms.Cervantes:
v3MI Ot9
1.118311331 This letter is sent as a formal notification of Bid Protest for the subject P rc ect.This letter
i�•kAnena+± is also an acknowledgement of receipt of Orange County Sanitary District (OCSD)
.. .. notification by fax November 14,2007 at 4:05P.M.,to Griffith Company,recommending
i2moaw.«,r.wA.. award to the second lowest bidder. Norman A. Olsson Construction. Inc. (NAO). Said
Po eo•2150 letter also states that O.C.S.D. considers Griffith Company to be non-responsive, non-
responsible.
W1 "as
u.lsan ee..sovo The bid from Griffith Company is $5.316,014.00, which is about S475,000 lower than
t, NAO's bid of S5,792.000.00.Our bid represents a substantial cost savings of about half a
aua sm„�vas•s��.M million dollars to the local cities&taxpayers that rely upon OCSD to treat their sewage.
C.
A meeting was held with Mr. Gary Prater at OCSD on November 15, 2007, to request a
v""'r 2A1 coy of our bid in order to properly identify the issues involved since Mr. Prater did not
t••Ir+Al s+9+oss P. P Y Y
identify the non-responsive.non-responsible issue(s)-
The facts as we cumemly undersland them:
co�eao. � 1. Griffith Company failed to list the contractor license numbers and scope of work for
s.Mn.o sm.�s+.0 two of the subcontractors named in our bid. The name, address and phone number
voemai,n with the dollar amount of each subcontract bid was included. There is no question
owl n2"17" which subcontractor is named in our bid. and under State of California Contract
In 5E3 vlJdlW
Code. it an error or omission is made in the naming of subcontractors, Griffith
.. Company is entitled to"self-perform"the work in question should that be mandated
122ao abomA.w A.. by O.C.S.D.
Po eo.2uo
s-.r.sm.s+.cn
wuro o+so The above being true.Griffith Company cannot determine how Griffith Company has
i5so s2o.un or can take advantage of an apparent unfair advantage in reference to this.
In•Isen rrvaue
•s,nsx..a.w.r.., 2. Griffith Company named two masonry subcontractors for the same work with IMI
Masonry listed for$78300 and Grans[rom Masonry for S58,750.This was a clerical
� + error in not crossing out IMI Masonry. In reference to such. per Mr. Prater. Griffith
us.....es `•-^' Company must self-perfomt said scope of work-
Enclosed are copies of subcontractor's proposals. which include: Fontana Steel.Rain for
Rent. Slater Waterproofing and Granstrom Masonry. We sent a Letter of Intent to each
subcontractor named with a description of scope of work and contract price. (Please see
enclosed copy of the Letter of Intent that was mailed to each company).
It is normal and customary for public works agencies to contact the apparent low bidder
and clarity said issues in question. This is typically done before the agency considers a
bid non-responsive. O.C.S.D. did not do this. Also, normally the missing information is
requested from the contractor. Missing information from a contractor's proposal is often
waived thereby allowing the listed subcontractor to do the work. If the contractor is
informed that they may not utilize the subcontractor in question, the general contractor
must self-perform said scope of work
Griffith Company did not receive written quotations from the contractors in question until
the day AFTER the bid (see attached quotes).This occurrence is not an unusual
circumstance,but rather the norm.
Finally,Griffith Company wishes to inform O.C.S.D. that Griffith Company has been in
business since 1902 (Contractor's License t188). Griffith Company will construct
approximately $200,000,000.00 worth of work this year. This information was also
Included in our proposal.
We request a meeting today to discuss the issues presented in this letter and to review our
bid submittal with you.
Respectfully submitted,
Griffith Company
Andrew A.Bruner
Estimator/Preject Manager
(562)207.1777,em.303
AB/ar
cc: O.C.S.D.Board of Directors
O.C.S.D.Clerk of the Board Office
Mr.lames Ruth,O.C.S.D.General Manager
Mr.Bob Ghue[14 O.C.S.D.Assistant General Manager
Mr.Gary Prater,O.C.S.D Principal Contracts Administrator
Mr.Donald Bradley,Anomey at Law,Musick,Peeler.Garret, L.L.P.
Mr.Jim Waltze,Griffith Company,Chairman
• GRANGE COUNTY SANITATION DISTRICT
r
November 14. 2007
Via Fax (562) 207-1799&
U.S. Mail
:-1419SR2411 Daniel L. Muns
.a 9szmse Griffith Company
12631 Imperial Hwy., F-230
Santa Fe Springs, CA 90670
�o so<e1z7
SUBJECT. AWARD RECOMMENDATION NOTICE
--2729-e127 Re: CONTRACT NO. 7-47. REHABILITATION OF COLLEGE
AVENUE PUMP STATION
iUsx=nsAr<a�
92]0B]OIB
The Orange County Sanitation District (OCSD) completed its evaluation of the bids
M®E.e submitted in response to Invitation for Bids for the above referenced project. The
AN r lowest responsive, responsible bidder is Norman A. Olsson Construction. Inc.
emu.. The award recommendation will be forwarded to the Board of Directors for approval.
Anehvnn
sre� The Board Meeting is scheduled for:
ere pe-k
pass
Date: November 28, 2007
Wennn
Time: 6:30 p.m.
Location. Orange County Sanitation District
Board Room, Administration Building
La Heb-a
a pmm. 10844 Ellis Avenue
-v'°m11111 Fountain Valley, CA 92708
- Orange
s=^b� The final Agenda Report will not be posted until three days prior to the Board
Meeting. Should you wish to determine if the item has been lace on the agenda,
s.a seam 9 Y P 9
sa^re, please contact the Clerk of the Board Office at (714) 593-7130.
:
V P
lm rk
Gary V. Prater
Principal Contracts Administrator
r.uarur ah GVP:II
w.s.v Oiu•iu. EDMS 0009/9615
cc: J. Herberg
A. Acevedo
A loan
Clerk of the Board Office
Contract File 7.4.4d
Revision 012907
•"smv� w.•no-rmas man^rs. •"waserw:nr-a"n narc-resnu-c�man.prme"o
October 26,2007
CMC Fontana Steel
12451 Arrow Rte.
Edwanda,CA91739
Attn:Mr.Gregg D.Hughett
Fax:909-254-0290
RE: Rehabilitation of College Avenue Pump Station,Contract No.4-47,Orange
County Sanitation District;Bid:October 25,2007 @ 11:00 AM
Subject: Letter oflntent
Dear Mr.Hughett;
We have been informed that Orange County Sanitation District will tentatively recommend an
award to Griffith Companytor the referenced project on November 16,2007.We intend to start
work immediately upon award,at which time a second letter regarding submittals will be sent to
YOU.
Subject to a contract award and receiving a signed contact with Orange County Sanitation
District,please be advised that we intend to enter into an agreement with your company for
material or subcontractor services meeting contact plans ands specifications,per your proposal
to Griffith Company.
This Letter ofIntent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or SubcontractorAgreement signed byyourwmpanyfor the services to be
provided.
Please acknowledge receipt and acceptance of this Letter oflntent by signing and dating this
letter and returning it to the undersigned within five-calendar days to fax number(562)207-
1799.Ifa written replyoran acknowledgement isnotmoeived within five-calendar days,wewM
assume thatyou are in accord and will comply with the conditions contained within thisLetterof
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFFUH COMPANY
.................................................................................
Acknowledgement Print Name&Title Date
October 26,2007
Darco Demolition,Inc.
go16 Norwalk Blvd.
Santa Fe Springs,CA 90670
Attn: Mr.Brant Davis
Fax:9o9-839-8186
RE: Rehabilitation of College Avenue Pump Station,Contract No.4-47,Orange
County Sanitation District; Bid:October 25,2007 @ 11:00 AM
Subject: Letter oflntent
Dear Mr.Davis:
We have been informed that Orange County Sanitation District will tentatively recommend an
award to Griffith Company for the referenced project on November 16,2007.We intend to start
work immediately upon award,at which time a second letter regarding submittals will be sent to
you.
Subject to a contract award and receiving a signed contract with Orange County Sanitation
District,please be advised that we intend to enter into an agreement with your company for
material or subcontractor services meeting contract plans ands specifications,per your proposal
to Griffith Company.
This Letter oflntent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or SubcontractorAgmement signed by your company for the services to be
provided.
Please acknowledge receipt and acceptance of this Letter of Intent by signing and dating this
letter and returning it to the undersigned within five-calendar days to fax number(562)207-
1799.Ifa written reply or an acknowledgement is not received within five-calendar days,we will
assume that you are in accord and will comply with the conditions contained within this Letter of
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFFI17i COMPANY
.................................................................................
Acknowledgement Print Name&Title Date
October z6,zoo7
Hardy Landscape
21520 Ambushers Street
Diamond Bar,CA g1765
Attn:Mr.Sam Romer
Fax:9o9-396-5584
RE: Rehabilitation of College Avenue Pump Station,Contract No.4-47,Orange
County Sanitation District;Bid:October 25,zoo7 @ 11:00 AM
Subject: letter of Intent
Dear Mr.Kamer:
We have been informed that Orange County Sanitation District will tentatively recommend an
award to Griffith Company for the referenced project on November 16,zoo7.We intend to start
work immediately upon award,at which time a second letter regarding submittals will be sent to
you.
Subject to a contract award and receiving a signed contract with Orange County Sanitation
District, please be advised that we intend to enter into an agreement with your company for
material or subcontractor services meeting contract plans ands specifications,peryourproposal
to Griffith Company.
This Letter of Intent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or Subcontractor Agreement signed by your company for the services to be
provided.
Please acknowledge receipt and acceptance of this Letter of Intent by signing and dating this
letter and returning it to the undersigned within five-calendar days to fax number(562)207-
1799.If a written reply or an acknowledgement is not received within five-calendar days,we will
assume that you are in accord and will comply with the conditions contained within this Letter of
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFFrM COMPANY
.................................................................................
Acknowledgement Print Name&15tle Date
October 26,2007
IMI Industrial Masonry,Inc.
1600 E.Steel Rd.
Colton,CA 92324
Attn:Mr.Dan Ricketts
Fax:909-254-0290
RE: Rehabilitation of College Avenue Pump Station,Contract No.4-47,Orange
County Sanitation District;Bid:October 25,2007 @ rt:oo AM
Subject: Letteroflntent
Dear Mr.Ricketts:
We have been informed that Orange County Sanitation District will tentatively recommend an
awardto Griffith Companyfor the referenced project on November 16,2007.We intend to start
work immediately upon award,at which time a secondletterregardingsubmittalswill besentto
you.
Subject to a contract award and receiving a signed contract with Orange County Sanitation
District, please be advised that we intend to enter into an agreement with your company for
material or subcontractor services meeting contract plans antis specifications,per your proposal
to Griffith Company.
This Letter oflntent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or Subcontractor Agreement signed byyourcompany for the services to be
provided.
Please acknowledge receipt and acceptance of this Letter of Intent by signing and dating this
letter and returning it to the undersigned within five-calendar days to fax number(562)207-
1799.if written reply or an acknowledgement is not received within five-calendar days,we will
assume that you are in accord and will comply with the conditions contained within this Letter of
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFFrM COMPANY
.................................................................................
Acknowledgement Print Name&Title Date
October 26,2007
Morrow-Meadows Corporation
231 Benton Court
Industry,CA 91789
Attn:Mr.Nick Oliver
Fax:9o9-839-8186
RE: Rehabilitation of College Avenue Pump Station,Contract No.4-47,Orange
County Sanitation District;Bid:October 25,2007 @ 11:00 AM
Subject: Letter oflntent
Dear Mr.Oliver:
We have been informed that Orange County Sanitation District will tentatively recommend an
award to Griffith Company for the referenced project on November 16,2007.We intend to start
work immediately upon award,at which time a second letter regarding submittals will be sent to
you.
Subject to a contract award and receiving a signed contract with Orange County Sanitation
District, please be advised that we intend to enter into an agreement with your company for
material or subcontractor services meeting contract plans ands specifications,peryour proposal
to Griffith Company.
This Letter oflntent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or Subcontractor Agreement signed byyour company for the services to be
provided.
Please acknowledge receipt and acceptance of this Letter oflntent by signing and dating this
letter and returning it to the undersigned within five-calendar days to fax number(562)207-
1799.If a written replyor an acknowledgement is not received within five-calendardays,we will
assume thatyou are in accord and will complywith the conditions contained within thisLetterof
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFITM COMPANY
.................................................................................
Acknowledgement Print Name&Title Date
October26,2007
Murphy Industrial Coatings,Inc.
2704 Gundry Avenue
Signal Hill,CA 90755-1611
Attn:Mr.Rick Suttles
Fax:562-426-6751
RE: Rehabilitation of College Alrenue Pump Station,Contract No.4-47,Orange
County Sanitation District;Bid:October 25,2007�1a Il:oo AM
Subject: Letter oflntent
Dear Mr.Settles:
We have been informed that Orange County Sanitation District will tentatively recommend an
award to Griffith Company for the referenced project on November 16,2007.We intend to start
work immediately upon award,at which time second letter regarding submittals Will be sent to
YOU.
Subject to a contract award and receiving a signed contract with Orange County Sanitation
District,please be advised that we intend to enter into as agreement with your company for
material orsubcontractorserviccs mcetingcommct plans andsspecifications,peryourproposal
to Griffith Company.
This Letter oflntent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or SubcontractorAgreementsgnedbyyourcompanyfor the services to be
provided.
Please acknowledge receipt and acceptance of this Letter oflntent by signing and dating this
letter and returning it to the undersigned within fiv calendar days to fax number(562)207-
1799.Ifa written reply or an acknowledgement is not received within five-calendar days,we will
assume that you are in accord and will comply with the conditions contained within this Letter of
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFFiTII COMPANY
.................................................................................
Acknowledgement Print Name&Title Date
October 26,2007
Slater Waterproofing,Inc.
5577 Arrow Hwy.
Montclair,CA 9r763
Attu:Mr.Larry McCauley
Fax:909-949-2431
RE: Rehabilitation of College Avenue Pump Station,Contract No.4-47,Orange
County Sanitation District;Bid:October 25,2007 @ 11:00 AM
Subject: Letter oflntent
Dear Mr.McCauley:
We have been informed that Orange County Sanitation District will tentatively recommend an
award to Griffith Company for the referenced project on November 16,2007.We intend to start
work immediately upon award,at which time a second letter regarding submittals will be sent to
you.
Subject to a contract award and receiving a signed contract with Orange County Sanitation
District,please be advised that we intend to enter into an agreement with your company for
material or subcontractor services meeting contract plans ands specifications,per your proposal
to Griffith Company.
This Letter oflntent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or Subcontractor Agreement signed byyour company for the services to be
provided.
Please acknowledge receipt and acceptance of this Latter oflntent by signing and dating this
letter and returning it to the undersigned within five-calendar days to fax number(562)207-
1799.1f a written reply or an acknowledgement is not received within five-calendar days,we will
assume that you are in accord and will comply with the conditions contained within this Letter of
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFFrM COMPANY
.................................................................................
Acknowledgement Print Name&l4tle Date
J
November6,2007
Zefiro Corporation
3868 Carson St.,Suite 315
Torrance,CA 90503
Attn:Mr.Takayuki Sakai
Fax:310-316-5969
RE: Rehabilitation of College Avenue Pump Station,Contract No.4-47,Orange
County Sanitation District;Bid:October 25,2007 @=00 AM
Subject: Letteroflntent
Dear Mr.Sakai,
We have been informed that Orange County Sanitation District will tentatively recommend an
award to Griffith Company for the referenced project on November 16,2007.We intend to start
work immediately upon award,at which time a second letter regarding submittals win be sent to
you.
Subject to a contract award and receiving a signed contract with Orange County Sanitation
District, please be advised that we intend to enter into an agreement with your company for
material or subcontractor services meeting contract plans ands specifications,peryour proposal
to Griffith Company,
This Letter of Intent is predicated upon receipt of a properly endorsed Griffith Company Long
Form Purchase Order or Subcontractor Agreement signed byyour company for the services to be
provided.
Please acknowledge receipt and acceptance of this Letter of Intent by signing and dating this
letter and returning it to the undersigned within five-calendar days to fax number(562)207-
1799.If a written reply or an acknowledgement is not received within fivrcahmdar days,we will
assume that you are in accord and will comply with the conditions contained within this Letter of
Intent.
Sincerely,
Andrew Bruner,
Estimator
GRIFFITH COMPANY
.................................................................................
Acknowledgement Print Name&Title Date
Stanek Constructors,Inc.
E434 o Park0Y,Sulta,62 sTANEK
Escondido,
92
do,CA 82026
Phone:(760)871-0102
Fac(760)$714100
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Contreetors Lrconse 0 869424
Fax
7b: OCSO Pages: 2 including fhK per)
Attn: Gary V.Prater From George Foote
FAX: 714-962-9746 Yale: 11/19r07
Plwati 714-982-2411 CC:
Ra Contact 7-47
Urgent ❑For Review OPteese Continent OPtease Reply❑For Your Use
Comments:
Gary,
Please see the attached letter to OCSD for Stanek Constructors Inc dated 11/19/07 mgarding the
Award Recommendation of Contract No. 7-47.
George Foote
Vice President/Division Manager
This message contains confidential information and Is intended only for the individual named. If you are not the
named addressee you should not disseminate,distribute or copy this fax. Please notify the sender immediately by
phone or fax. If you have received this fax by mistake, please delete or destroy this fax
Ze/IB 39yd SN=nel1SN00 H3NV.LS 00I01LB09L eb:Ei L00Z/6I1II
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Stanek Constrnctam lot
24a4 Auto Perk Way ♦ Suite 102 ♦ Escondido,GA,92029
(P)760$/1.0192 Ca License 6869424 (F)76"714100
November 19,2007 Via Fax 714-962-9746
Gary V. Prater
Orange County Sanitation District
10944 Ellis Ave.
Fountain Valley,CA 92728-9127
RE: OCSD Contract No.7-47 Rehabilitation of College Ave.Ptmmp Station,
Award Recommendation Notice
Dear Mr.Prater:
Stanek Constructors Inc(SCI)has received OCSD letter,dated November 14,2007
regarding Recommendation of Award of Contract No. 7-47,Rehabilitation of College
Ave.Pump Station to Norman A. Olsson Construction,lee(Olsson). SCI took the
opportunity to review Olsson's bid documents at the OCSD's purchasing department on
November 16,2007 and we have identified an item on their bid form that is incomplete.
Please review their bid page 27,Bid Item#13 requires the contractor to designate either
Ductile Iron Pipe or Fusion Bonded Epoxy Lined Steel Pipe.In our opinion, Olsson
neglected to identify either material type and therefore OCSD is essentially awarding a
contract with an undefined scope of wort•
SCI believes that we are the lowest responsive,responsible bidder as we did define the
pipe materials on Bid Item 913,as well as comply with all of the other requirements of
the bid documents.As such,we request that OCSD award the project to SCI
We sincerely await your response.
Thank You
Stanek C structoo ine.
�71--,
George E. Foote
Division Manages,Vice President
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Fax Call Report 1
Orange County Sanitation
714-962-9746
Nov-19-2007 01:49 PM
Job Date/Time Type Identification Duration Pages Result
2147 Nov-19-2007 O1A8 PM Receive 7608710100 029 2 Success
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4 BOARD OF DIRECTORS Meetlnq Date T 9d.of Dir.
u/xe1 7
AGENDA REPORT [enNumbe Item14
4
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Penny Kyle, Clerk of the Board
SUBJECT: DIRECTORS' COMPENSATION
GENERAL MANAGER'S RECOMMENDATION
Adopt Ordinance No. OCSD-34, An Ordinance of the Board of Directors of Orange
County Sanitation District, Establishing Board of Directors' Compensation, and
Repealing Ordinance No. OCSD-14 and Ordinance No. OCSD-23:
1. Motion to read Ordinance No. OCSD-34 by title only and waive reading of said
entire ordinance.
2. Motion to adopt Ordinance No. OCSD-34, An Ordinance of the Board of Directors
of Orange County Sanitation District, Establishing Board of Directors'
Compensation, and Repealing Ordinance No. OCSD-14 and Ordinance
No. OCSD-23
SUMMARY
A survey was completed at the direction of Chair Ferryman for Directors' compensation
of local special districts similar to Orange County Sanitation District. The last survey
completed was in 2004, and the last increase in Directors' compensation took place in
March 2001, increasing the stipend per meeting from $100 to $170, and increased the
maximum number of meetings compensated per month from three to six (Board Chair's
increased from six to ten meetings per month).
The results of the survey indicate a wide spread of stipends, and staff noted that several
of the districts were also undertaking a similar survey for comparison purposes. The
compensation amounts for meetings range from a high of$221 per meeting to a low of
$100 per meeting.
If the Board desires to increase the compensation, it must be accomplished through two
readings for adoption of an ordinance. Current legislation allows the stipend to be
increased by an amount not to exceed 5% of the present compensation for each
calendar year following the operative date of the last increase. The current rate of$170
per meeting or day of service became operative in April of 2001. Thus, any increase
adopted before the end of the year cannot exceed 5% x 5 years, or$212.50 per meeting
or day of service. If the second reading and adoption of the ordinance takes place in
January 2008 or thereafter, then the Board could increase the rate by an additional 5%,
with a maximum of$221.
PRIOR COMMITTEE ACTION
The Board of Directors adopted Resolution No. OCSD 04-16 on May 26, 2004, and
Ordinance No. OCSD-23 on June 23, 2004, which established a policy for Directors'
compensation related to meeting attendance, and the reimbursement of business and
travel expenses incurred by Board Members.
ADDITIONAL INFORMATION
Compensation Amount&
Organization Maximum Number of Meetings Milea e
$221/meeting, maximum 2 per month
Central Contra Costa Chair maximum 6 per month No
Costa Mesa Sanitary District $221/meetin , m mum6permonth No
East Bay Municipal Water
District $1,025/month, no maximum Yes
El Toro Water District $189/meetin , maximum 10 per month No
Irvine Ranch Water District $215/meetin , maximum 10 per month Yes
Los Angeles County San Dist $125/meetin , no maximum Yes
Mesa Consolidated Water
District $189/meetin , maximum 10 per month No
Midway City Sanitary District $198/meetin , maximum 6 per month No
Municipal Water District of
Orange County $201.02/meetin , maximum 10 per month Yes
Orange County Fire Authority $100/meetin , maximum 3 per month No
Orange County Transportation
Authority $100/meetin , maximum 5 per month Yes
Orange County Vector Control $100/meetin , no maximum No
Orange County Water District $200.57/meetin , maximum 10 per month Yes
$55/meeting, maximum 5 per month
Chair= $110/meeting, maximum 10 per
Sunset Beach Sanitary District month Yes
Yorba Linda Water District $150/meetin , maximum 10 per month No
For comparison purposes, in 2006 there were 865 meetings of which Directors were paid
a total compensation of$147,050 at $170 per meeting. If this was paid at $212.50 per
meeting, the total would be $183,813, a difference of$36,763 for the year.
ATTACHMENTS
Proposed Ordinance No. OCSD-34
yl.
i
ORDINANCE NO.00SD-XX
AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE
COUNTY SANITATION DISTRICT, REPEALING ORDINANCE NO,
OCSD-14 ESTABLISHING BOARD OF DIRECTORS COMPENSATION
AND ORDINANCE NO. OCSD-23, AMENDING OCSD-14
ESTABLISHING BOARD OF DIRECTORS COMPENSATION
WHEREAS, Members of the Board of Directors are entitled, by the
provisions of State law, to receive compensation for attendance at meetings, or
for each day's service rendered as a member of the Board; and,
WHEREAS, the State Legislature, during the regular Session of Year
2000, adopted legislation (Senate Bill 1559), Chaptered'in"law(Ch. 86, Stats.
2000), effective January 1, 2001, authorizing the adoption of an Ordinance
pursuant to California Water Code Sections 2000 through 2007, including an
increase of the per diem compensation in an amount not to exceed five (5%)
percent for each calendar yearifollowing the operative date of the''last
adjustment; and
WHEREAS, the Board of Directors determines that the proposed increase
is reflective of increases in the cost of living related to the performance of
service.
NOW, THEREFORE, the Board of Directors of the Orange County Sanitation
District does hereby ORDAIN:
Section.1: That each Director shall receive the sum of Two Hundred Twelve
Dollars and Fifty-Cents,($212.50) for attendance at each meeting of the Board of
Directors;:or for each day's service rendered as a Member of the Board, by
request of the'Board; provided that each Director, other than the Chair of the
Board, shall receive compensation for not more than a total of six (6) meetings or
six (6) days' service per month.
Section 2: The Chair of the Board shall receive compensation for not more
than a total of ten (10) meetings, or ten (10) days' service per month.
The Board of Directors of Orange County Sanitation District does hereby
FIND:
WHEREAS, the Board of Directors has previously, by duly adopted
Ordinance No. OCSD-14, established Board of Directors' compensation; and,
e
WHEREAS, the Board of Directors has, by adoption of Resolution No.
OCSD 04-16, established a policy regarding Board of Directors' business and
travel expense reimbursement, and meeting attendance and compensation; and,
WHEREAS, based upon the newly-adopted policy and procedures set
forth in Resolution No. OCSD 04-16, it is necessary to amend Ordinance No.
OCSD-23 as it relates to Board of Directors' meeting attendance and
compensation.
NOW, THEREFORE, the Board of Directors of Orange County Sanitation
District, does hereby ORDAIN as follows:
Section 1: Ordinance No. OCSD-14, is hereby repealed.
Section 2: Ordinance No. OCSD-23,is hereby repealed.
Section 3: This Ordinance shall take effect on November 28, 2007,
PASSED AND ADOPTED at a regular meeting of the Board of Directors of
the Orange County Sanitation District held November 28, 2007.
Chair of the Board of Directors
Orange County Sanitation District
ATTEST:
Clerk of the Board
Orange County Sanitation District
Bradley R. Hogin, General Counsel
Orange County Sanitation District
ADMINISTRATION COMMITTEE Meeting Date TOBd.a of
11/14/07 11/2e/07
AGENDA REPORT Item Number Item Number
ADM07.54 is
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: CERTIFICATES OF PARTICIPATION (COPS), SERIES 2007E
GENERAL MANAGER'S RECOMMENDATION
The Administration Committee referred this item to the Board of Directors without
recommendation:
(1) Adopt Resolution No. OCSD 07-25, a Resolution of the Board of Directors of the Orange
County Sanitation District Authorizing the Execution and Delivery by the District of an
Installment Purchase Agreement, a Trust Agreement, and a Continuing Disclosure
Agreement in connection with the execution and delivery of Orange County Sanitation
District Certificates of Participation, Series 2007B,Authorizing the Execution and
Delivery of such Certificates Evidencing Principal in an Aggregate Amount of Not to
Exceed $300,000,000, Authorizing the Distribution of an Official Notice Inviting Bids and
an Official Statement in Connection with the Offering and Sale of such Certificates and
Authorizing the Execution of Necessary Documents and Related Actions.
(2) The Administration Committee recommends that the Orange County Sanitation District
Financing Corporation approve the documents supporting and authorizing the
Certificates of Participation, Series 2007E in an amount not to exceed $300 million.
SUMMARY
At the November Administration Committee, staff presented an agenda report requesting
approval to issue $300 million in Certificates of Participation (COPS) as called for in the District's
current cash flow projection.
After the staff presentation and discussion, the Administration Committee referred this Rem to
the full Board without a recommendation.
During the staff presentation to the Administration Committee, some Committee members had
questions regarding this debt issuance, including the appropriate mix of fixed rate and variable
debt and overall debt capacity. Some of these questions were not resolved to the satisfaction of
all the Committee members. The direction from the Committee was to send the item forward to
the full Board without recommendation and for staff to provide additional information at the
Board meeting. Additional information will be provided to the full Board under a separate cover
prior to the November Board meeting.
The Administration Committee and the Board of Directors have previously authorized the
issuance of$300 million of new Certificates of Participation and approved the financing team
Folm No.UM023 R.I. OWIN7
Page 1
consisting of an independent financial advisor, Public Resources Advisory Group, and bond and
disclosure counsel, Fulbright&Jaworski. Woodruff, Spradlin & Smart, the District's General
Counsel, has also been assisting staff.
The purpose of the financing is to provide a portion of the funding required for the capital
improvement program of FY 2006-07 and FY 2007-08. None of the proceeds will be used for
operations and maintenance needs. This financing is included in the 2007-08 approved budget.
The financing is structured as new fixed rate Certificates of Participation that is to be sold in a
competitive sale. The draft documents will be presented to the Board and the OCSD Financing
Corporation on November 28, 2007, for final approval. Staff will make a brief presentation and
provide an overview of the draft documents and the financing schedule at the Administration
Committee meeting. A current Financing Schedule is attached.
PRIOR COMMITTEE/BOARD ACTIONS
June 27, 2007: Approved Resolution declaring District's intent to reimburse ourselves for
capital outlays from a future long-term financing.
September 12, 2007: Approved a Consulting Services Agreement with Fulbright& Jaworski,
L.L.P to provide bond counsel services.
September 26, 2007: Directed staff to initiate procedures to issue up to $300 million in new
fixed-rate Certificates of Participation (COP)debt.
ADDITIONAL INFORMATION
The Consultant Services Agreements with PRAG and Orrick total a not-to-exceed amount of
$185,000, excluding expenses. This is approximately 0.062%of the COP issue. These and
other costs, such as printing the Official Statement, underwriters'discount, rating agency fees
and trustee's fees will be paid from the proceeds of the borrowing.
The $300 million that is borrowed will be repaid with interest over the next 30 years. The total
interest cost is expected to be less than 5.00% (or less than approximately $286 million). Some
of the interest cost will be offset by interest earnings while the funds are waiting to be used.
The Board of Directors and the Financing Corporation will each be required to adopt separate
Resolutions to complete this borrowing. Drafts of these two Resolutions are attached for
review. A Financing Corporation is required by the structure of the COPS and was formed in
April 2000, solely to satisfy this need. The Board of Directors of the Corporation is the same as
the Board of Directors of the District and the Corporation meets after an adjournment of the
OCSD Board.
The OCSD Resolution authorizes the execution and delivery of certain legal documents and the
execution and delivery of Certificates of Participation evidencing principal in an aggregate
amount of not to exceed $300,000,000 all as spelled out in the title as follows:
"A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY
SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE
DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT,A TRUST AGREEMENT,AND
A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION
Form No.Ew=3 pvnye:p Iw
Page 2
AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT CERTIFICATES OF
PARTICIPATION, SERIES 2007B,AUTHORIZING THE EXECUTION AND DELIVERY OF
SUCH CERTIFICATES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO
EXCEED $300,000,000,APPROVING A NOTICE OF INTENTION TO SELL, AUTHORIZING
THE DISTRIBUTION OF AN OFFICIAL NOTICE INVITING BIDS AND AN OFFICIAL
STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH
CERTIFICATES,AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS
AND RELATED ACTIONS."
The Resolution of the Corporation is somewhat shorter and simpler. It authorizes three actions
that are similarly enumerated in the title as follows:
"A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY
SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND
DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND
A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF
ORANGE COUNTY SANITATION DISTRICT CERTIFICATES OF PARTICIPATION, SERIES
200713; AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH CERTIFICATES
EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT-TO-EXCEED
$300.000,000 AND; AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND
CERTIFICATES AND RELATED ACTIONS."
Following Is a chart listing the remaining steps to be completed for the issuance of the COP
Series 2007E debt issuance:
November n Finalize debt service and cash Bow modeling
D Board approval of legal and disclosure documents
D Marketing and Sale of the COPS through a Competitive Sale
Process
December > Execute$300 million Fixed-Rate COP Issue
D Investment of Bond Proceeds
D Debt Administration
ATTACHMENTS
1. Resolution No. OCSD 07-25
2. OCSC Finance Corporation Resolution No. FC-04
3. Draft Trust Agreement
4. Draft Installment Purchase Agreement
5. Draft Continuing Disclosure Agreement
6. Draft Preliminary Official Statement
7. Draft Official Notice Inviting Bids
8. Draft Notice of Intention to Sell
JDR:LT:MW
Fw No.1 W1= ae"WE'.OMW
Page 3
RESOLUTION NO. OCSD 07-25
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION
AND DELIVERY BY THE DISTRICT OF AN INSTALLMENT PURCHASE
AGREEMENT, A TRUST AGREEMENT, AND A CONTINUING
DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION
AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION, SERIES 2007B, AUTHORIZING
THE EXECUTION AND DELIVERY OF SUCH CERTIFICATES
EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO
EXCEED $300,000,000, APPROVING A NOTICE OF INTENTION TO
SELL, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL NOTICE
INVITING BIDS AND AN OFFICIAL STATEMENT IN CONNECTION
WITH THE OFFERING AND SALE OF SUCH CERTIFICATES AND
AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND
RELATED ACTIONS
WHEREAS, the Orange County Sanitation District (the 'District') desires to
finance the acquisition, construction and installation of certain improvements to its
wastewater system (the "Project");
WHEREAS, in order to finance the Project, the District desires to purchase the
Project from the Orange County Sanitation District Financing Corporation (the
"Corporation"), and the Corporation desires to sell the Project to the District, for the
installment payments (the `Installment Payments") to be made by the District pursuant
to the Installment Purchase Agreement, dated as of December 1, 2007 (the "Installment
Purchase Agreement"), by and between the District and the Corporation;
WHEREAS, the Corporation intends to assign without recourse certain of its
rights under and pursuant to the Installment Purchase Agreement to Union Bank of
California, N.A., as trustee (the 'Trustee"), pursuant to a Trust Agreement among the
Trustee, the Corporation and the District (such Trust Agreement, in the form presented
to this meeting, with such changes, insertions and omissions as are made pursuant to
this Resolution, being referred to herein as the "Trust Agreement");
WHEREAS, in consideration of such assignment and the execution and entering
into of the Trust Agreement, the Trustee intends to execute and deliver Orange County
Sanitation District Certificates of Participation, in one or more series (the "Certificates"),
evidencing direct, undivided fractional interests in the Installment Payments, and the
interest thereon;
WHEREAS, the District desires to provide for the public sale of the Certificates;
WHEREAS, a form of the Notice of Intention to Sell to be published in connection
with the public offering and sale of the Certificates has been prepared (such Notice of
Intention to Sell, in the form presented to this meeting, with such changes, insertions
and omissions as are made pursuant to this Resolution, being referred to herein as the
"Notice of Intention to Sell');
V
WHEREAS, a form of the Official Notice Inviting Bids to be distributed in
connection with the public offering and sale of the Certificates has been prepared (such
Official Notice Inviting Bids, in the form presented to this meeting, with such changes,
insertions and omissions as are made pursuant to this Resolution, being referred to
herein as the "Notice Inviting Bids");
WHEREAS, a form of the Preliminary Official Statement to be distributed in
connection with the public offering of the Certificates has been prepared (such
Preliminary Official Statement in the form presented to this meeting, with such changes,
insertions and omissions as are made pursuant to this Resolution, being referred to
herein as the "Preliminary Official Statement');
WHEREAS, Rule 15c2-12 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"),
requires that the underwriter thereof must have reasonably determined that the District
has undertaken in a written agreement or contract for the benefit of the holders of the
Certificates to provide disclosure of certain financial information and certain material
events on an ongoing basis;
WHEREAS, to cause such requirement to be satisfied, the District desires to
enter into a Continuing Disclosure Agreement with the Trustee (such Continuing
Disclosure Agreement in the form presented to this meeting, with such changes,
insertions and omissions as are made pursuant to this Resolution, being referred to
herein as the "Continuing Disclosure Agreement');
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Installment Purchase Agreement;
(b) the Trust Agreement;
(c) the Notice of Intention to Sell;
(d) the Notice Inviting Bids;
(e) the Preliminary Official Statement; and
(f) the Continuing Disclosure Agreement;
WHEREAS, all acts, conditions and things required by the Constitution and laws
of the State of California to exist, to have happened and to have been performed
precedent to and in connection with the consummation of the financing authorized
hereby do exist, have happened and have been performed in regular and due time,
form and manner as required by law, and the District is now duly authorized and
empowered, pursuant to each and every requirement of law, to consummate such
financing for the purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE, the Board of Directors of the District DOES HEREBY
RESOLVE, DETERMINE AND ORDER:
Section 1. All of the recitals herein contained are true and correct and the
Board of Directors of the District (the "Board") so finds.
Section 2. The Installment Purchase Agreement, in substantially the form
submitted to this meeting and made a part hereof as though set forth herein, be and the
same is hereby approved. The Chair of the Board, and such other member of the Board
as the Chair may designate, the General Manager of the District, the Director of Finance
and Administrative Services of the District, and such other officer of the District as the
Director of Finance and Administrative Services may designate (the "Authorized
Officers") are, and each of them is, hereby authorized and directed, for and in the name
of the District, to execute and deliver the Installment Purchase Agreement in the form
submitted to this meeting, with such changes, insertions and omissions as the
Authorized Officer executing the same may require or approve, such requirement or
approval to be conclusively evidenced by the execution of the Installment Purchase
Agreement by such Authorized Officer; provided, however, that such changes,
insertions and omissions shall not result in an aggregate principal amount of Installment
Payments in excess of $300,000,000, shall not result in a true interest cost for the
Installment Payments in excess of 6% and shall not result in a final Installment Payment
later than February 1, 2037.
Section 3. The Trust Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, be and the same is
hereby approved. The Authorized Officers are, and each of them is, hereby authorized
and directed, for and in the name of the District, to execute and deliver the Trust
Agreement in the form presented to this meeting, with such changes, insertions and
omissions as the Authorized Officer executing the same may require or approve, such
requirement or approval to be conclusively evidenced by the execution of the Trust
Agreement by such Authorized Officer.
Section 4. The execution and delivery of Certificates evidencing principal in an
aggregate amount of not to exceed $300,000,000, payable in the years and in the
amounts, and evidencing principal of and interest on the Installment Payments as
specified in the Trust Agreement as finally executed, are hereby authorized and
approved.
Section 6. The form of Notice of Intention to Sell, in substantially the form
submitted to this meeting and made a part hereof as though set forth in full herein, with
such changes, insertions and omissions therein as may be approved by an Authorized
Officer, is hereby approved, and the use of the Notice of Intention to Sell in connection
with the offering and sale of the Certificates is hereby approved. The Authorized
Officers are each hereby authorized and directed, for and in the name and on behalf of
the District, to cause the Notice of Intention to Sell to be published once in The Bond
Buyer(or in such other financial publication generally circulated throughout the State of
California or reasonably expected to be disseminated among prospective bidders for the
Certificates as an Authorized Officer shall approve as being in the best interests of the
3
District) at least five days prior to the date set for the opening of bids in the Notice
Inviting Bids, with such changes, insertions and omissions therein as an Authorized
Officer may require or approve, such requirement or approval to be conclusively
evidenced by such publishing of the Notice of Intention to Sell.
Section 6. The Notice Inviting Bids, in substantially the form submitted to this
meeting and made a part hereof as though set forth herein, with such changes,
insertions and omissions therein as may be approved by an Authorized Officer, be and
the same is hereby approved, and the use of the Notice Inviting Bids in connection with
the offering and sale of the Certificates is hereby authorized and approved. The terms
and conditions of the offering and sale of the Certificates shall be as specked in the
Notice Inviting Bids. Bids for the purchase of the Certificates shall be received at the
time and place set forth in the Notice Inviting Bids. The Authorized Officers are each
hereby authorized and directed, for and in the name and on behalf of the District, to
accept the bid for the Certificates with the lowest true interest cost, or to reject all bids
therefor, in accordance with the terms of the Notice Inviting Bids.
Section 7. The Preliminary Official Statement, in substantially the form
presented to this meeting and made a part hereof as though set forth in full herein, with
such changes, insertions and omissions therein as may be approved by an Authorized
Officer, is hereby approved, and the use of the Preliminary Official Statement in
connection with the offering and sale of the Certificates is hereby authorized and
approved. The Authorized Officers are each hereby authorized to certify on behalf of the
District that the Preliminary Official Statement is deemed final as of its date, within the
meaning of Rule 15c2-12 (except for the omission of certain information permitted by
Rule 15c2-12 to be omitted). The Authorized Officers are each hereby authorized and
directed to furnish, or cause to be furnished, to prospective bidders for the Certificates a
reasonable number of copies of the Preliminary Official Statement.
Section 8. The preparation and delivery of a final Official Statement (the
"Official Statement"), and its use in connection with the offering and sale of the
Certificates, be and the same is hereby authorized and approved. The Official
Statement shall be in substantially the form of the Preliminary Official Statement, with
such changes, insertions and omissions as may be approved by an Authorized Officer,
such approval to be conclusively evidenced by the execution and delivery thereof. The
Authorized Officers are, and each of them is, hereby authorized and directed to execute
the final Official Statement and any amendment or supplement thereto, for and in the
name of the District.
Section 9. The Continuing Disclosure Agreement, in substantially the form
submitted to this meeting and made a part hereof as though set forth herein, be and the
same is hereby approved. The Authorized Officers are, and each of them is, hereby
authorized and directed, for and in the name of the District, to execute and deliver the
Continuing Disclosure Agreement in the form submitted to this meeting, with such
changes, insertions and omissions as the Authorized Officer executing the same may
require or approve, such requirement or approval to be conclusively evidenced by the
execution of the Continuing Disclosure Agreement by such Authorized Officer.
4
Section 10. The Authorized Officers are, and each of them hereby is,
authorized and directed to execute and deliver any and all documents and instruments
and to do and cause to be done any and all acts and things necessary or proper for
carrying out the execution and delivery of the Certificates and the transactions
contemplated by the notices, agreements and documents referenced in this Resolution.
Section 11. All actions heretofore taken by the officers and employees of the
District with respect to the execution, delivery and sale of the Certificates, or in
connection with or related to any of the agreements or documents referenced in this
Resolution, are hereby approved, confirmed and ratified.
Section 12. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED at a regular meeting held on November 28, 2007.
Chair
ATTEST:
Clerk of the Board
APPROVED:
General Counsel, Orange County
Sanitation District
5
STATE OF CALIFORNIA )
as
COUNTY OF ORANGE )
I, Penny M. Kyle, Clerk of the Board of Directors of the Orange County Sanitation
District, do hereby certify that the foregoing Resolution No. OCSD 07-—
was passed
and adopted at a regular meeting of said Board on the 281h day of November 2007, by
the following vote, to wit:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of Orange County Sanitation District this 28" day of November 2007.
Clerk of the Board of Directors
Orange County Sanitation District
\ V
RESOLUTION NO. FC-04
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT FINANCING CORPORATION
AUTHORIZING THE EXECUTION AND DELIVERY BY THE
CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT
AND A TRUST AGREEMENT IN CONNECTION WITH THE
EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION
DISTRICT CERTIFICATES OF PARTICIPATION, SERIES 2007B,
AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH
CERTIFICATES EVIDENCING PRINCIPAL IN AN AGGREGATE
AMOUNT OF NOT TO EXCEED $300,000,000 AND AUTHORIZING
THE EXECUTION OF NECESSARY DOCUMENTS AND RELATED
ACTIONS.
WHEREAS, the Orange County Sanitation District (the 'District") desires to
finance the acquisition, construction and installation of certain improvements to its
wastewater system (the 'Project");
WHEREAS, in order to finance the Project, the District desires to purchase the
Project from the Orange County Sanitation District Financing Corporation (the
"Corporation"), and the Corporation desires to sell the Project to the District, for the
installment payments (the 'Installment Payments") to be made by the District pursuant
to the Installment Purchase Agreement, dated as of December 1, 2007 (the "Installment
Purchase Agreement'), by and between the District and the Corporation;
WHEREAS, the Corporation intends to assign without recourse certain of its
rights under and pursuant to the Installment Purchase Agreement to Union Bank of
California, N.A., as trustee (the 'Trustee"), pursuant to a Trust Agreement among the
Trustee, the Corporation and the District (such Trust Agreement, in the form presented
to this meeting, with such changes, insertions and omissions as are made pursuant to
this Resolution, being referred to herein as the "Trust Agreement');
WHEREAS, in consideration of such assignment and the execution and entering
into of the Trust Agreement, the Trustee intends to execute and deliver Orange County
Sanitation District Certificates of Participation, in one or more series (the "Certificates"),
evidencing direct, undivided fractional interests in the Installment Payments, and the
interest thereon;
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Installment Purchase Agreement; and
(b) the Trust Agreement;
WHEREAS, all ads, conditions and things required by the Constitution and laws
of the State of California to exist, to have happened and to have been performed
precedent to and in connection with the consummation of the actions authorized hereby
do exist, have happened and have been performed in regular and due time, form and
manner as required by law, and the Corporation is now duly authorized and
empowered, pursuant to each and every requirement of law, to consummate such
actions for the purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE, the Board of Directors of the Corporation DOES HEREBY
RESOLVE, DETERMINE AND ORDER:
Section 1. All of the recitals herein contained are true and correct and the
Board of Directors of the Corporation (the "Board") so finds.
Section 2. The Installment Purchase Agreement, in substantially the form
submitted to this meeting and made a part hereof as though set forth herein, be and the
same is hereby approved. The President of the Corporation, the Vice-President of the
Corporation, the Treasurer of the Corporation and the Secretary of the Corporation, and
such other officer of the Corporation as the President may designate (the "Authorized
Officers") are, and each of them is, hereby authorized and directed, for and in the name
of the Corporation, to execute and deliver the Installment Purchase Agreement in the
form submitted to this meeting, with such changes, insertions and omissions as the
Authorized Officer executing the same may require or approve, such requirement or
approval to be conclusively evidenced by the execution of the Installment Purchase
Agreement by such Authorized Officer; provided, however, that such changes,
insertions and omissions shall not result in an aggregate principal amount of Installment
Payments in excess of $300,000,000, shall not result in a true interest cost for the
Installment Payments in excess of 6% and shall not result in a final Installment Payment
later than February 1, 2037.
Section 3. The Trust Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, be and the same is
hereby approved. The Authorized Officers are, and each of them is, hereby authorized
and directed, for and in the name of the Corporation, to execute and deliver the Trust
Agreement in the form presented to this meeting, with such changes, insertions and
omissions as the Authorized Officer executing the same may require or approve, such
requirement or approval to be conclusively evidenced by the execution of the Trust
Agreement by such Authorized Officer.
Section 4. The execution and delivery of Certificates evidencing principal in an
aggregate amount of not to exceed $300,000,000, payable in the years and in the
amounts, and evidencing direct, undivided fractional interests in the Installment
Payments, and the interest thereon, as specified in the Trust Agreement as finally
executed, are hereby authorized and approved.
2
Section 5. The officers and agents of the Corporation are, and each of them
hereby is, authorized and directed to execute and deliver any and all documents and
instruments and to do and cause to be done any and all acts and things necessary or
proper for carrying out the execution and delivery of the Certificates and the
transactions contemplated by the agreements or documents referenced in this
Resolution.
Section 6. All actions heretofore taken by the officers and agents of the
Corporation with respect to the execution, delivery and sale of the Certificates, or in
connection with or related to any of the agreements or documents referenced in this
Resolution, are hereby approved, confirmed and ratified.
Section 7. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED at a meeting held on November 28, 2007.
President, Orange County Sanitation
District Financing Corporation
ATTEST:
Clerk of the Board
Orange County Sanitation
District Financing Corporation
APPROVED:
General Counsel, Orange County
Sanitation District Financing
Corporation
3
STATE OF CALIFORNIA )
ss
COUNTY OF ORANGE )
I, Penny M. Kyle, Clerk of the Board of Directors of the Orange County Sanitation
District Financing Corporation, do hereby certify that the foregoing Resolution No.
FC-04, was passed and adopted at a regular meeting of said Board on the 281" day of
November 2007, by the following vote, to wit:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of Orange County Sanitation District Financing Corporation this 281h day of
November 2007.
Clerk of the Board of Directors
Orange County Sanitation District
Fulbright&Jaworski L.L.P.—Draft 11/2/07
�v
TRUST AGREEMENT
by and among
UNION BANK OF CALIFORNIA,N.A.,
as Trustee,
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
and
ORANGE COUNTY SANITATION DISTRICT
Dated as of December I,2007
Relating to
$300,000,000
Orange County Sanitation District
Certificates of Participation
Series 2007B
11-2 Vast AV=mt. o
TABLE OF CONTENTS
s
Page
ARTICLE 1
DEFINITIONS;EQUAL SECURITY
Section1.01. Definitions........................................................................................................ I
Section 1.02. Definitions in Installment Purchase Agreement..............................................9
Section1.03. Equal Security..................................................................................................9
ARTICLE II
TERMS AND CONDITIONS OF CERTIFICATES
Section 2.01. Preparation and Delivery of Certificates........................................................ 10
Section 2.02. Denomination, Medium and Dating of Certificates....................................... 10
Section 2.03. Payment Dates of Certificates; Interest Computation.................................... 10
........................................................................................................................ I I
Section2.04. Form of Certificates....................................................................................... 12
Section 2.05. Execution of Certificates and Replacement Certificates............................... 12
Section 2.06. Transfer and Payment of Certificates;Exchange of Certificates................... 12
Section 2.07. Certificate Registration Books....................................................................... 13
Section2.08. Temporary Certificates.................................................................................. 13
Section 2.09. Certificates Mutilated,Lost, Destroyed or Stolen......................................... 13
Section2.10. Book-Entry System........................................................................................ 14
ARTICLE III
PROCEEDS OF CERTIFICATES
Section 3.01. Delivery of Certificates.................................................................................. 16
Section 3.02. Deposit of Proceeds of Certificates................................................................ 16
Section3.03. Costs of Issuance Fund.................................................................................. 16
Section 3.04. Use of Moneys in the Acquisition Fund........................................................ 16
ARTICLE IV
PREPAYMENT OF CERTIFICATES
Section4.01. Optional Prepayment..................................................................................... 17
Section 4.02. Mandatory Sinking Account Prepayment...................................................... Is
Section 4.03. Selection of Certificates for Optional Prepayment........................................ 19
Section4.04. Notice of Prepayment.................................................................................... 19
Section 4.05. Partial Prepayment of Certificates.................................................................20
Section4.06. Effect of Prepayment.....................................................................................20
ARTICLE V
ASSIGNMENT AND PLEDGE;FUNDS AND ACCOUNTS
Section 5.01. Assignment and Pledge..................................................................................20
Section 5.02. Installment Payment Fund.............................................................................21
Section5.03. Reserve Fund.................................................................................................22
Section5.04. Rebate Fund...................................................................................................23
Section5.05. Investment of Moneys....................................................................................24
TABLE OF CONTENTS
(continued)
Page
ARTICLE VI
COVENANTS
Section 6.01. Compliance with Trust Agreement................................................................25
Section 6.02. Compliance with Installment Purchase Agreement.......................................25
Section 6.03. Compliance with Master Agreement.............................................................25
Section 6.04. Observance of Laws and Regulations............................................................25
Section6.05. Other Liens.....................................................................................................25
Section 6.06. Prosecution and Defense of Suits..................................................................25
Section 6.07. Accounting Records and Statements.............................................................25
Section 6.08. Tax Covenants...............................................................................................26
Section6.09. Continuing Disclosure...................................................................................29
Section 6.10. Further Assurances.........................................................................................29
ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY
Section 7.01. Action upon Event of Defauh........................................................................30
Section 7.02. Other Remedies of the Trustee......................................................................30
Section7.03. Non-Waiver.........................................................................................._........30
Section7.04. Remedies Not Exclusive................................................................................31
Section 7.05. Application of Amounts After Default..........................................................31
Section 7.06. Trustee May Enforce Claims Without Possession of Certificates.................32
Section 7.07. Limitation on Suits.........................................................................................32
Section 7.09. No Liability by the Corporation to the Owner...............................................32
Section 7.09. No Liability by the District to the Owners.....................................................32
Section 7.10. No Liability of the Trustee to the Owners.....................................................32
ARTICLE VIII
THE TRUSTEE
Section 8.01. Employment of the Trustee;Duties...............................................................33
Section 8.02. Removal and Resignation of the Trustee.......................................................33
Section 8.03. Compensation and Indemnification of the Trustee........................................34
Section8.04. Protection of the Trustee................................................................................35
ARTICLE DC
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT
Section9.01. Amendment or Supplement............................................................................36
Section 9.02. Disqualified Certificates................................................................................37
Section 9.03. Endorsement or Replacement of Certificates After Amendment or
Supplement....................................................................................................37
Section9.04. Amendment by Mutual Consent....................................................................37
TABLE OF CONTENTS
(continued)
Page
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Certificates and Trust Agreement.............................................38
Section10.02. Unclaimed Moneys........................................................................................39
ARTICLE XI
MISCELLANEOUS
Section11.01. Benefits of Trust Agreement..........................................................................39
Section 11.02. Successor Deemed Included in all References to Predecessor......................40
Section 11.03. Execution of Documents by Owners.............................................................40
Section 11.04. Waiver of Personal Liability.......................................................................... 40
Section 11.05. Acquisition of Certificates by District...........................................................40
Section 11.06. Content of Certificates...................................................................................40
Section11.07. Funds and Accounts.......................................................................................41
Section 11.08. Article and Section Headings,Gender and References.................................41
Section11.09. Partial Invalidity.............................................................................................41
Section11.10. California Law...............................................................................................42
Section11.It. Notices...........................................................................................................42
Section11.12. Effective Date................................................................................................42
Section 11.13. Execution in Counterparts..............................................................................43
iii
TRUST AGREEMENT
THIS TRUST AGREEMENT(this "Tout Agreement"), dated as of December 1, 2007,
by and among UNION BANK OF CALIFORNIA, N.A., a national banking association
organized and existing under the laws of the United States of America, as Trustee (the
"Trustee"), the ORANGE COUNTY SANITATION DISTRICT FINANCING
CORPORATION, a nonprofit public benefit corporation organized and existing under the laws
of the State of California (the "Corporation"), and the ORANGE COUNTY SANITATION
DISTRICT, a county sanitation district organized and existing under the laws of the State of
California(the"District").
WITNESSETH :
WHEREAS, the District desires to finance the acquisition, construction and installation
of certain improvements to its wastewater system (the"Project');
WHEREAS, in order to finance the Project, the District desires to purchase the Project
from the Corporation, and the Corporation desires to sell the Project to the District, for the
installment payments (the "Installment Payments") to be made by the District pursuant to the
Installment Purchase Agreement, dated as of December 1, 2007 (the "Installment Purchase
Agreement"), by and between the District and the Corporation;
WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to the Trustee;
WHEREAS, in consideration of such assignment and the execution and delivery of this
Tmst Agreement, the Trustee has agreed to execute and deliver Orange County Sanitation
District Certificates of Participation, Series 2007B (the "Certificates"), evidencing direct,
undivided fractional interests in the Installment Payments,and the interest thereon;
WHEREAS, all acts, conditions and things required by law to exist, to have happened
and to have been performed precedent to and in connection with the execution and delivery of
this Trust Agreement do exist, have happened and have been performed in regular and due time,
form and manner as required by law, and the parties hereto are now duly authorized to execute
and deliver this Trust Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the
context otherwise requires, the tents defined in this Section shall for all purposes hereof and of
any amendment hereof or supplement hereto and of the Certificates and of any certificate,
11-3 Tt Agr a mt dm
opinion, request or other document mentioned herein or therein have the meanings defined
herein, the following definitions to be equally applicable to both the singular and plural forms of
any of the terms defined herein:
"Acquisition Costs" means all costs of acquiring, constructing and installing the Project,
including but not limited to:
(a) all costs which the Corporation or the District shall be required to pay to a
manufacturer,vendor or contractor or any other Person under the terms of any contract or
contracts for the construction,acquisition or installation of the Project;
(b) obligations of the Corporation or the District incurred for labor and
materials (including obligations payable to the Corporation or the District for actual
out-of-pocket expenses of the Corporation or the District) in connection with the
construction, acquisition or installation of the Project, including reimbursement to the
Corporation or the District for all advances and payments made in connection with the
Project prior to or after delivery of the Certificates;
(c) the costs of performance or other bonds and any and all types of insurance
that may be necessary or appropriate to have in effect during the course of construction,
acquisition and installation of the Project;
(d) all costs of engineering, architectural and other consulting services,
including the actual out-of-pocket costs of the Corporation or the District for test borings,
surveys, estimates, plans and specifications and preliminary investigations therefor, of
development fees and sales commissions, and for supervising the construction,
acquisition and installation of the Project, as well as for the performance of all other
duties required by or consequent to the proper construction,acquisition and installation of
the Project; and
(e) any sums required to reimburse the Corporation or the District for
advances made by the Corporation or the District for any of the above items or for any
other costs incurred and for work done by the Corporation or the District which the
Corporation or the District determine are properly chargeable to the construction,
acquisition or installation of the Project.
"Acquisition Fund" means the fund by that name established in accordance with
Section 3.04 hereof.
"Authorized Corporation Representative" means the President, the Vice President,the
Treasurer and the Secretary of the Corporation, and any other Person authorized by the President
of the Corporation to act on behalf of the Corporation under or with respect to this Trust
Agreement.
"Authorized Denominations" means$5,000 and integral multiples thereof.
"Authorized District Representative" means the General Manager of the District, the
Director of Finance and Administrative Services of the District, the Controller of the District and
11-2 T, A�.t.E 2
any other Person authorized by the Director of Finance and Administrative Services of the
District to act on behalf of the District under or with respect to this Trust Agreement.
"Beneficial Owners" means those individuals, partnerships, corporations or other
entities for which the Participants have caused the Depository to hold Book-Entry Certificates.
"Book-Entry Certificates"means the Certificates registered in the name of the nominee
of DTC, or any successor securities depository for the Certificates, as the Owner thereof pursuant
to the terms and provisions of Section 2.10 hereof.
"Business Day" means a day other than (a)Saturday or Sunday, (b)a day on which
banking institutions in the city in which the Principal Office is located are authorized or required
by law to be closed, and (c)a day on which the New York Stock Exchange is authorized or
obligated by law or executive order to be closed.
"Cede & Co." means Cede & Co., the nominee of DTC, and any successor nominee of
DTC with respect to the Certificates.
"Certificate Year" means each twelve-month period beginning on February 2 in each
year and extending to the next succeeding February 1, both dates inclusive, except that the first
Certificate Year shall begin on the Closing Date and end on February 1,2008.
"Certificates" means the Orange County Sanitation District Certificates of Participation,
Series 2007B,executed and delivered by the Trustee pursuant hereto.
"Closing Date" means December ,2007.
"Code" means the Internal Revenue Code of 1986.
"Continuing Disclosure Agreement" means the Continuing Disclosure Agreement,
dated as of the date hereof, by and between the District and the Trustee, as originally executed
and as it may from time to time be amended in accordance with the terms thereof.
"Corporation" means the Orange County Sanitation District Financing Corporation, a
nonprofit public benefit corporation organized and existing under the laws of the State.
"Costs of Issuance" means all the costs of executing and delivering the Certificates,
including, but not limited to, all printing and document preparation expenses in connection with
this Trust Agreement, the Installment Purchase Agreement, the Certificates and any preliminary
official statement and final official statement pertaining to the Certificates, rating agency fees,
market study fees, legal fees and expenses of counsel with respect to the execution and delivery
of the Certificates, the initial fees and expenses of the Trustee and its counsel and other fees and
expenses incurred in connection with the execution and delivery of the Certificates,to the extent
such fees and expenses are approved by the District.
"Costs of Issuance Fund" means the fund by that name established in accordance with
Section 3.03 hereof.
I I-2 Trust Agr wtdm 3
"Depository" means the securities depository acting as Depository pursuant to e
Section 2.10 hereof.
"District" means the Orange County Sanitation District, a county sanitation district
organized and existing under the laws of the State,and any successor thereto.
"DTC"means The Depository Trust Company,New York,New York and its successors.
"Event of Default" shall have the meaning set forth in Section 6.01 of the Installment
Purchase Agreement.
"Government Obligations" means any of the following which are noncallable by the
issuer thereof except to the extent not permitted by the laws of the State as an investment for the
moneys to be invested therein at the time of investment:
(i) (a)direct general obligations of the United States of America,
(b)obligations the payment of the principal of and interest on which are unconditionally
guaranteed as to the full and timely payment by the United States of America, or (c)any
fund or other pooling arrangement whose assets consist exclusively of the obligations
listed in clause(a) or(b) of this clause(i) and which is rated at least "PA" by Moody's;
provided that, such obligations shall not include unit investment trusts or mutual fund
obligations;
(ii) advance refunded tax-exempt obligations secured by the obligations
specified in clause(i) which tax-exempt obligations are rated "Aaa" by Moody's and
"AAA"by S&P as a result of such obligations being secured by said obligations;
(iii) bonds, debentures or notes issued by any of the following federal
agencies: Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation or
Federal National Mortgage Association; provided that such bonds, debentures or notes
shall be the senior obligations of such agencies (including participation certificates) and
rated"Aaa"by Moody's and"AAA"by S&P; and
(iv) bonds, debentures or notes issued by any Federal agency hereafter created
by an act of Congress, the payment of the principal of and interest on which are
unconditionally guaranteed by the United States of America as to the full and timely
payment; provided, that, such obligations shall not include unit investment trusts or
mutual fund obligations.
"Installment Payment Fund" means the fund by that name established in accordance
with Section 5.02 hereof.
"Installment Payments" means the Installment Payments required to be made by the
District pursuant to Section 3.02 of the Installment Purchase Agreement.
"Installment Purchase Agreement" means the Installment Purchase Agreement, dated
as of the date hereof,by and between the District and the Corporation,as originally executed and
as it may from time to time he amended in accordance with the provisions thereof
11-2 Tmt Agr c mt.dw 4
"Interest Account" means the account by that name within the Installment Payment
Fund established in accordance with Section 5.02 hereof.
"Interest Payment Date" means February 1 and August 1 of each year, commencing
February 1,2008.
"Letter of Representations"means the letter of the District delivered to and accepted by
the Depository on or prior to the delivery of the Certificates as Book-Entry Certificates setting
forth the basis on which the Depository serves as depository for such Book-Entry Certificates,as
originally executed or as it maybe supplemented or revised or replaced by a letter to a substitute
Depository.
"Mandatory Sinking Account Payment"means the amount required to be deposited by
the District in the Principal Account for the prepayment of Term Certificates pursuant to Section
4.02 hereof.
"Master Agreement" means the Master Agreement for District Obligations, dated as of
August 1,2000, by and between the District and the Corporation, as originally executed and as it
may from time to time be amended or supplemented in accordance with the terms thereof
"Moody's" means Moody's Investors Service, a corporation organized and existing
under the laws of the State of Delaware, its successors and assigns, except that if such
corporation shall no longer perform the function of a securities rating agency for any reason,the
term "Moody's" shall be deemed to refer to any other nationally recognized securities rating
agency selected by the District.
"Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.11 hereof.
"Opinion of Counsel" means a written opinion of Fulbright,& Jaworski L.L.P. or any
other counsel of recognized national standing in the field of law relating to municipal bonds,
appointed and paid by the District and reasonably satisfactory to and approved by the Trustee.
"Outstanding,"when used as of any particular time with reference to Certificates,means
(subject to the provisions of Section 9.02 hercol) all Certificates except (a)Certificates
previously canceled by the Trustee or delivered to the Trustee for cancellation, (b)Certificates
paid or deemed to have been paid within the meaning of Section 10.01 hereof, and
(c) Certificates in lieu of or in substitution for which other Certificates shall have been executed
and delivered by the Trustee pursuant to Section 2.09 hereof.
"Owner" means any Person who shall be the registered owner of any Outstanding
Certificate as indicated in the registration books of the Trustee required to be maintained
pursuant to Section 2.07 hereof
"Participants" means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Book-Entry Certificates as securities depository.
11-2 T=Agerni W. 5
"Participating Underwriter" has the meaning ascribed thereto in the Continuing
Disclosure Agreement.
"Permitted Investments" means any of the following, except to the extent not permitted
by the laws of the State as an investment for the moneys to be invested therein at the time of
investment:
(1) Government Obligations;
(2) Bonds, debentures, notes, participation certificates or other evidences of
indebtedness issued, or the principal of and interest on which are unconditionally
guaranteed, by the Federal Intermediate Credit Bank, the Federal Home Loan Bank
System, the Government National Mortgage Association or any other agency or
instrumentality of or corporation wholly owned by the United States of America when
such obligations are backed by the full faith and credit of the United States for the full
and timely payment of principal and interest;
(3) Obligations of any state of the United States or any political subdivision
thereof, which at the time of investment are rated "Aa3" or higher by Moody's and
"AA-"or higher by S&P; or which are rated by Moody's"V MIG I"or better and by S&P
"A-1+" or better with respect to commercial paper, or "VMIGI" and "SP-1",
respectively, with respect to municipal notes;
(4) Bank time deposits evidenced by certificates of deposit, deposit accounts,
and bankers' acceptances, issued by any bank, trust company or national banking
association insured by the Federal Deposit Insurance Corporation (including the Trustee);
provided that (a)such bank, trust company or national banking association be rated
"Aa3" or better by Moody's and "AA-" or better by S&P; and (b)the aggregate of such
bank time deposits and bankers' acceptances issued by any bank, trust company or
banking association does not exceed at any one time 10% of the aggregate of the capital
stock, surplus and undivided profits of such bank, trust company or banking association
and that such capital stock,surplus and undivided profits shall not be less$15,000,000;
(5) Repurchase agreements with any bank, trust company or national banking
association insured by the Federal Deposit Insurance Corporation(including the Trustee),
with subsidiaries (of a parent company), provided the obligations of the subsidiary under
the agreement are unconditionally guaranteed by the parent, or with any government
bond dealer recognized as a primary dealer by the Federal Reserve Bank of New York,
which agreements are fully and continuously secured by a valid and perfected first
priority security interest in obligations described in paragraph (1) or(2)of this definition,
provided that either such bank, trust company or national banking association which (or
senior debt or claims paying ability of the financial entity's guarantor) is rated,at the time
of investment,"Aa3" or better by Moody's and"AA='or better by S&P;
(6) Repurchase agreements with maturities of not more than one year entered
into with financial institutions such as banks or trust companies organized under state law
or national banks or banking associations (including the Trustee), insurance companies or
11-2 bust Ag{ mt.d« 6
government bond dealers reporting to, trading with, and recognized as a primary dealer
by, the Federal Reserve Bank of New York and a member of the Securities Investor
Protection Corporation or with a dealer or parent holding company that is rated, at the
time of investment, or whose long-term debt obligations (or senior debt or claims paying
ability of the financial entity's guarantor) are rated, at the time of investment, "Aa3" or
better by Moody's and"AA-"or better by S&P,provided such repurchase agreements are
in writing, secured by obligations described in paragraphs(1) and (2) of this definition
having a fair market value, exclusive of accrued interest, at least equal to the amount
invested in the repurchase agreements and in which the Trustee has a perfected first lien
in,and retains possession of, such obligations free from all third party claims;
(7) Investment agreements,forward purchase agreements and reserve fund put
agreements with any corporation, including banking or financial institutions, or
agreements entered into with subsidiaries(of a parent company), provided the obligations
of the subsidiary under the agreement are unconditionally guaranteed by the parent, the
corporate debt of which (or senior debt or claims paying ability of the financial entity's
guarantor) is rated, at the time of investment, "Aa3" or better by Moody's and "AA-" or
better by S&P;
(8) Guaranteed investment contracts or similar funding agreements issued by
insurance companies, provided that either the long term corporate debt of such insurance
company, at the time of investment, is rated,at the time of investment,"Aa3"or better by
Moody's and "AA-" or better by S&P or which agreements are fully and continuously
secured by a valid and perfected first priority security interest in obligations described in
paragraph (1) or (2) of this definition, or that the following conditions are met: (a)the
market value of the collateral is maintained at levels acceptable to Moody's and S&P,
(b)the Trustee or a third party acting solely as agent for the Trustee has possession of the
collateral, (c)the Trustee has a perfected first priority security interest in the collateral,
(d)the collateral is free and clear of third-party liens, and (e)failure to maintain the
requisite collateral level will require the Trustee to liquidate collateral;
(9) Corporate commercial paper rated "P-1"or better by Moody's and"A-I+"
or better by S&P at the time of investment;
(10) Taxable government money market portfolios restricted to obligations the
payment of principal and interest with respect to which is guaranteed by the United States
of America or repurchase agreements secured by such obligations, and which are rated
"AAAm" or"AAAm-G" by S&P and "P-l" by Moody's (including funds for which the
Trustee or an affiliate provides investment advice or similar services);
(11) Deposits with the Local Agency Investment Fund of the State, as may
otherwise be permitted by law; and
(12) Shares in the Franklin Adjustable U.S. Government Securities Fund or any
other similar fund having at least $1,000,000,000 in assets and invested solely in
securities directly guaranteed by the U.S. government or its agencies and rated "AAAf'
by S&P or a comparable rating by Moody's.
11-2 Tn AV.1.e 7
"Person" means an individual, corporation, limited liability company, firm, association,
partnership, trust, or other legal entity or group of entities, including a governmental entity or
any agency or political subdivision thereof.
"Prepayment Account"means the account by that name within the Installment Payment
Fund established in accordance with Section 5.02 hereof.
"Principal Account" means the account by that name within the Installment Payment
Fund established in accordance with Section 5.02 hereof.
"Principal Office" means the Trustee's principal corporate trust office in Los Angeles,
California.
"Principal Payment Date"means a date on which an Installment Payment evidenced by
the Certificates becomes due and payable.
"Project"has the meaning ascribed thereto in the recitals hereto.
"Rebate Fund" means the fund by that name established in accordance with
Section 5.04 hereof.
"Rebate Requirement"has the meaning ascribed thereto in the Tax Certificate.
"Record Date" means, with respect to the interest payable on any Interest Payment Date,
-- the 15th day of the calendar month immediately preceding such Interest Payment Date, whether
or not such day is a Business Day.
"Reserve Facility" means any line of credit, letter of credit, insurance policy, surety
bond or other funding instrument issued by an entity the long-term unsecured obligations of
which are rated "Aa3"or better by Moody's and "AA-' or better by S&P and deposited with the
Trustee pursuant to Section 5.03 hereof.
"Reserve Fund" means the fund by that name established in accordance with
Section 5.03 hereof.
"Reserve Requirement" means, as of any date of calculation, an amount equal to the
least of(a) 10% of the original aggregate amount of principal evidenced by the Certificates(or if
the amount of original issue discount or premium applicable to the Certificates exceeds 2%,then
l0% of the issue price of the Certificates), (b)the maximum amount of remaining Installment
Payments, and the interest thereon, coming due in any one Certificate Year,and (c) 125% of the
average amount of remaining Installment Payments,and the interest thereon, coming due in each
Certificate Year.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., a corporation organized and existing under the laws of the State of New York,
its successors and assigns, except that if such entity shall no longer perform the functions of a
securities rating agency for any reason, the term "S&P" shall be deemed to refer to any other
nationally recognized securities rating agency selected by the District.
11-1 TY Ageemrnt.d% 8
"State" means the State of California.
"Tax Certificate" means the Tax Certificate executed by the District at the time of
execution and delivery of the Certificates relating to the requirements of section 148 of the Code,
as originally executed and as it may from time to time be amended in accordance with the
provisions thereof.
"Term Certificates"means Certificates payable at or before their specified maturity date
or dates from Mandatory Sinking Account Payments established for that purpose and calculated
to retire such Certificates on or before their specified maturity date or dates.
"Trust Agreement" means this Trust Agreement, dated as of December 1, 2007, by and
among the Trustee, the Corporation and the District, as originally executed and delivered and as
it may from time to time be amended or supplemented in accordance with the provisions hereof.
"Trustee" means Union Bank of California, N.A., a national banking association duly
organized and existing under the laws of the United States of America,or any other bank or trust
company which may at any time be substituted in its place as provided in Section 10.02 hereof.
"Written Certificate" and "Written Request' mean (a) with respect to the Corporation,
a written certificate or written request, respectively, signed in the name of the Corporation by an
Authorized Corporation Representative, and (b)with respect to the District, a written certificate
or written request, respectively, signed in the name of the District by an Authorized District
Representative. Any such certificate or request may, but need not, be combined in a single
instrument with any other instrument, opinion or representation, and the two or more so -
combined shall be read and construed as a single instrument.
Section 1.02. Definitions in Installment Purchase Agreement. Except as otherwise
herein defined and unless the context otherwise requires, the terms defined in the Installment
Purchase Agreement shall for all purposes hereof and of any amendment hereof or supplement
hereto and of any report or other document mentioned herein have the meanings defined therein,
such definitions to be equally applicable to both the singular and plural forms of any of the terms
defined therein. With respect to any defined term which is given a different meaning under this
Trust Agreement than under the Installment Purchase Agreement, as used herein it shall have the
meaning given herein.
Section 1.03. Equal Security. In consideration of the acceptance of the Certificates by
the Owners, this Tryst Agreement shall be deemed to be and shall constitute a contract between
the Trustee and the Owners to secure the full and final payment of the interest and principal
evidenced by the Certificates which may be executed and delivered hereunder, subject to each of
the agreements, conditions, covenants and terms contained herein; and all agreements,
conditions, covenants and terms contained herein required to be observed or performed by or on
behalf of the Trustee shall be for the equal and proportionate benefit, protection and security of
all Owners without distinction, preference or priority as to security or otherwise of any
Certificates over any other Certificates by reason of the number or date thereof or the time of
execution or delivery thereof or for any cause whatsoever, except as expressly provided herein or
therein.
11-2 blot Aµra .tdm 9
ARTICLE II
TERMS AND CONDITIONS OF CERTIFICATES
Section 2.01. Preparation and Delivery of Certificates. The Trustee is hereby
authorized, upon the Written Request of the District, to execute and deliver the Certificates in the
aggregate principal amount of$300,000,000, evidencing the aggregate principal amount of the
Installment Payments and each evidencing a direct, fractional undivided interest in the
Installment Payments, and the interest thereon. The Installment Payments evidenced by each
Certificate shall constitute the principal evidenced thereby and the interest on such Installment
Payments shall constitute the interest evidenced thereby. The Certificates shall be numbered,
with or without prefixes,as directed by the Trustee.
Section 2.02. Denomination. Medium and Dating of Certificates. The Certificates
shall be designated "Orange County Sanitation District Certificates of Participation,
Series 2007B" shall be prepared in the form of fully registered Certificates, without coupons, in
Authorized Denominations and shall be payable in lawful money of the United States of
America.
The Certificates shall be dated as of the Closing Date. Each Certificate shall evidence
interest from the Interest Payment Date next preceding its date of execution to which interest has
been paid in full, unless such date of execution shall be after a Record Date and on or prior to the
following Interest Payment Date, in which case such Certificate shall evidence interest from such
Interest Payment Date, or unless such date of execution shall be on or prior to January 15, 2008,
in which case such Certificate shall represent interest from the Closing Date. Notwithstanding,
the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Certificates
shall be in default,each Certificate shall evidence interest from the last Interest Payment Date to
which such interest has been paid in full or duly provided for.
Section 2.03. Payment Dates of Certificates: Interest Computation. (a)Method and
Place of Payment. The principal evidenced by the Certificates shall become due and payable,
subject to prior prepayment, on February I of the years, in the amounts, and shall evidence
interest accruing at the rates per annum set forth below:
I I-2 T,uu Agmnml.doc 10
Principal Payment Date Principal Interest
(February 1) Component Rate
2009 $
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Except as otherwise provided in the Letter of Representations, payments of interest
evidenced by the Certificates shall be made to the Owners thereof(as determined at the close of
business on the Record Date next preceding the related Interest Payment Date) by check or draft
of the Trustee mailed to the address of each such Owner as it appears on the registration books
maintained by the Trustee pursuant to Section 2.07 hereof, or to such other address as may be
furnished in writing to the Trustee by each such Owner. Except as otherwise provided in the
Letter of Representations, payment of principal and prepayment premium, if any, evidenced by
the Certificates, on their stated Principal Payment Dates or on prepayment in whole or in part
prior thereto, shall be made only upon presentation and surrender of the Certificates at the
Principal Office.
(b) Computation of Interest. The interest evidenced by the Certificates shall be
payable on each Interest Payment Date to and including their respective Principal Payment Dates
11.2 hoot Ag..t.d. 11
or prepayment prior thereto, and shall represent the sum of the interest on the Installment
Payments coming due on the Interest Payment Dates in each year. The principal evidenced by
the Certificates shall be payable on their respective Principal Payment Dates in each year and
shall represent the Installment Payments coming due on the Principal Payment Dates in each
year. Interest evidenced by the Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Section 2.04. Form of Certificates. The Certificates shall be in substantially the form
of Exhibit A hereto, with necessary or appropriate insertions, omissions and variations as
permitted or required hereby.
Section 2.05. Execution of Certificates and Replacement Certificates. The
Certificates shall be executed by the Trustee by the manual signature of an authorized signatory
of the Trustee. The Trustee shall deliver replacement Certificates in the manner and as
contemplated by this Article. Such replacement Certificates shall be executed as herein provided
and shall be in Authorized Denominations.
Section 2.06. Transfer and Payment of Certificates: Exchange of Certificates. Each
Certificate is transferable by the Owner thereof, in person or by his attorney duly authorized in
writing, at the Principal Office, on the registration books maintained by the Trustee pursuant to
the provisions of Section 2.07 hereof, upon surrender of such Certificate for cancellation
accompanied by delivery of a duly executed written instrument of transfer in a form acceptable
to the Trustee. The Trustee may treat the Owner of any Certificate as the absolute owner of such
Certificate for all purposes, whether or not the principal or interest evidenced by such Certificate
shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the
contrary; and payment of the interest and principal evidenced by such Certificate shall be made
only to such Owner, which payments shall be valid and effectual to satisfy and discharge the
liability evidenced by such Certificate to the extent of the sum or sums so paid.
Whenever any Certificate shall be surrendered for transfer, the Trustee shall execute and
deliver a new Certificate or Certificates evidencing principal in the same aggregate amount and
having the same stated Principal Payment Date. The Trustee shall require the payment by any
Owner requesting such transfer of any tax or other governmental charge required to be paid with
respect to such transfer.
Each Certificate may be exchanged at the Principal Office for Certificates evidencing
principal in a like aggregate principal amount having the same stated Principal Payment Dale in
such Authorized Denominations as the Owner thereof may request. The Trustee shall require the
payment by the Owner requesting such exchange of any tax or other governmental charge
required to be paid with respect to such exchange.
The Trustee shall not be required to transfer or exchange any Certificate during the period
commencing on the date five days before the date of selection of Certificates for prepayment and
ending on the date of mailing notice of such prepayment, nor shall the Trustee be required to
transfer or exchange any Certificate or portion thereof selected for prepayment from and after the
date of mailing the notice of prepayment thereof.
11-2 Twl Aarxmml.d. 12
Section 2.07. Certificate Rel istration Books. The Trustee shall keep at its Principal
Office sufficient books for the registration and transfer of the Certificates, which books shall be
available for inspection and copying by the District at reasonable hours and under reasonable
conditions; and upon presentation for such purpose the Trustee shall, under such reasonable
regulations as it may prescribe, register or transfer the Certificates on such books as hereinabove
provided.
Section 2.08. Temporary Certificates. The Certificates may be initially delivered in
temporary form exchangeable for definitive Certificates when ready for delivery, which
temporary Certificates shall be printed, lithographed or typewritten, shall be of such
denominations as may be determined by the Trustee, shall be in fully registered form and shall
contain such reference to any of the provisions hereof as may be appropriate. Every temporary
Certificate shall be executed and delivered by the Trustee upon the same conditions and terms
and in substantially the same manner as definitive Certificates. If the Trustee executes and
delivers temporary Certificates, it shall prepare and execute definitive Certificates without delay,
and thereupon the temporary Certificates may be surrendered at the Principal Offire in exchange
for such definitive Certificates, and until so exchanged such temporary Certificates shall be
entitled to the same benefits hereunder as definitive Certificates executed and delivered
hereunder.
Section 2.09. Certificates Mutilated, Lost. Destroyed or Stolen. If any Certificate
shall become mutilated, the Trustee, at the expense of the Owner thereof, shall execute and
deliver a new Certificate evidencing a like principal amount and having the same stated Principal
Payment Date and number in exchange and substitution for the Certificate so mutilated, but only
upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so
surrendered to the Trustee shall be canceled by it. If any Certificate shall be lost, destroyed or
stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and if such
evidence is satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given,
the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Certificate
evidencing a like principal amount and having the same stated Principal Payment Date,
numbered as the Trustee shall determine, in lieu of and in substitution for the Certificate so lost,
destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of
preparing each new Certificate executed and delivered by it under this Section and of the
expenses which may be incurred by it under this Section. Any Certificate executed and delivered
under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or
stolen shall be equally and proportionately entitled to the benefits hereof with all other
Certificates executed and delivered hereunder, and the Trustee shall not be required to treat both
the original Certificate and any replacement Certificate as being Outstanding for the purpose of
determining the amount of Certificates which may be executed and delivered hereunder or for
the purpose of determining any percentage of Certificates Outstanding hereunder, but both the
original and replacement Certificate shall be treated as one and the same. Notwithstanding any
other provision of this Section, in lieu of executing and delivering a new Certificate for a
Certificate which has been lost, destroyed or stolen and which evidences principal that is then
payable, the Trustee may make payment of such Certificate to the Owner thereof if so instructed
by the District.
11.2 Turr Ag.Mi.doc 13
Section 2.10. Book-Entry System. (a)The Certificates shall be initially executed and
delivered as Book-Entry Certificates, and the Certificates for each stated Principal Payment Date
shall be in the form of a separate single fully registered Certificate (which may be typewritten).
Upon initial execution and delivery, the ownership of each Certificate shall be registered in the
registration books maintained by the Trustee in the name of the Nominee, as nominee of the
Depository.
Payment of principal or interest evidenced by any Book-Entry Certificate registered in
the name of the Nominee shall be made on the applicable Interest Payment Date by wire transfer
of New York clearing house or equivalent next day funds or by wire transfer of same day funds
to the account of the Nominee. Such payments shall be made to the Nominee at the address
which is, on the Record Date,shown for the Nominee in the registration books maintained by the
Trustee.
(b) With respect to Book-Entry Certificates, the District, the Corporation and the
Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of
which such a Participant holds an interest in such Book-Entry Certificates. Without limiting the
immediately preceding sentence, the District, the Corporation and the Trustee shall have no
responsibility or obligation with respect to (i)the accuracy of the records of the Depository, the
Nominee or any Participant with respect to any ownership interest in Book-Entry Certificates,
(ii)the delivery to any Participant or any other Person, other than an Owner as shown in the
registration books maintained by the Trustee, of any notice with respect to Book-Entry
Certificates, including any notice of prepayment, (iii)the selection by the Depository and its
Participants of the beneficial interests in Book-Entry Certificates to be prepaid in the event
Certificates are prepaid in part, (iv)the payment to any Participant or any other Person, other
than an Owner as shown in the registration books maintained by the Trustee,of any amount with
respect to principal, premium, if any, or interest evidenced by Book-Entry Certificates, or(v)any
consent given or other action taken by the Depository as Owner.
(c) The District, the Corporation and the Trustee may treat and consider the Person in
whose name each Book-Entry Certificate is registered in the registration books maintained by the
Trustee as the absolute Owner of such Book-Entry Certificate for the purpose of payment of
principal, prepayment premium, if any, and interest evidenced by such Certificate, for the
purpose of selecting any Certificates, or portions thereof,to be prepaid, for the purpose of giving
notices of prepayment and other matters with respect to such Certificate, for the purpose of
registering transfers with respect to such Certificate, for the purpose of obtaining any consent or
other action to be taken by Owners and for all other purposes whatsoever, and the District, the
Corporation and the Trustee shall not be affected by any notice to the contrary.
(d) In the event of a prepayment of all or a portion of a Certificate, the Depository, in
its discretion, (i) may request the Trustee to execute and deliver a new Certificate, or (ii)if DTC
is the sole Owner of such Certificate, shall make an appropriate notation on the Certificate
indicating the date and amounts of the reduction in principal evidenced thereby resulting from
such prepayment, except in the case of final payment, in which case such Certificate must be
presented to the Trustee prior to payment.
11-21hWAgreem ,,. IQ
(e) The Trustee shall pay all principal,premium, if any, and interest evidenced by the
Certificates to the respective Owner, as shown in the registration books maintained by the
Trustee, or his respective attorney duly authorized in writing, and all such payments shall be
valid and effective to fully satisfy and discharge the obligations with respect to payment of
principal, premium, if any, and interest evidenced by the Certificates to the extent of the sum or
sums so paid. No Person other than an Owner, as shown in the registration books maintained by
the Trustee, shall receive a Certificate evidencing principal, premium, if any, and interest
evidenced by the Certificates. Upon delivery by the Depository to the Owners, the Trustee and
the District of written notice to the effect that the Depository has determined to substitute a new
nominee in place of the Nominee, and subject to the provisions herein with respect to Record
Dates,the word Nominee in this Trust Agreement shall refer to such nominee of the Depository.
(f) In order to qualify the Book-Entry Certificates for the Depository's book-entry
system,the District shall execute and deliver to the Depository a Letter of Representations. The
execution and delivery of a Letter of Representations shall not in any way impose upon the
Corporation, the District or the Trustee any obligation whatsoever with respect to Persons
having, interests in such Book-Entry Certificates other than the Owners, as shown on the
registration books maintained by the Trustee. Such Letter of Representations may provide the
time, form, content and manner of transmission, of notices to the Depository. In addition to the
execution and delivery of a Letter of Representations by the District,the District,the Corporation
and the Trustee shall take such other actions, not inconsistent with this Trust Agreement, as are
reasonably necessary to qualify Book-Entry Certificates for the Depository's book-entry
program.
(g) In the event the District determines that it is in the best interests of the Beneficial
Owners that they be able to obtain certificated Certificates and that such Certificates should
therefore be made available and notifies the Depository and the Trustee of such determination,
the Depository will notify the Participants of the availability through the Depository of
certificated Certificates. In such event, the Trustee shall transfer and exchange certificated
Certificates as requested by the Depository and any other Owners in appropriate amounts. In the
event(i)the Depository determines not to continue to act as securities depository for Book-Entry
Certificates, or (ii)the Depository shall no longer so act and gives notice to the Trustee of such
determination,then the District shall discontinue the Book-Entry system with the Depository. If
the District determines to replace the Depository with another qualified securities depository,the
District shall prepare or direct the preparation of a new single, separate, fully registered
Certificate for each stated Principal Payment Date of such Book-Entry Certificates, registered in
the name of such successor or substitute qualified securities depository or its nominee. If the
District fails to identify another qualified securities depository to replace the Depository,then the
Certificates shall no longer be restricted to being registered in the registration books maintained
by the Trustee in the name of the Nominee, but shall be registered in whatever name or names
the Owners transferring or exchanging such Certificates shall designate, in accordance with the
provisions of Sections 2.06 and 2.09 hereof. Whenever the Depository requests the District to do
so, the District will cooperate with the Depository in taking appropriate action after reasonable
notice (i)to make available one or more separate certificates evidencing the Book-Entry
Certificates to any Participant having Book-Entry Certificates credited to its account with the
Depository, and (ii)to arrange for another securities depository to maintain custody of
certificates evidencing the Book-Entry Certificates.
11-2TaarAV�Lduo 15
(h) Notwithstanding any other provision of this Trust Agreement to the contrary, if
DTC is the sole Owner of the Certificates, so long as any Book-Entry Certificate is registered in
the name of the Nominee, all payments of principal, premium, if any, and interest evidenced by
such Certificate and all notices with respect to such Certificate shall be made and given,
respectively, as provided in the Letter of Representations or as otherwise instructed by the
Depository.
(i) In connection with any notice or other communication to be provided to Owners
pursuant to the Trust Agreement by the District, the Corporation or the Trustee, with respect to
any consent or other action to be taken by Owners, the Trustee shall establish a record date for
such consent or other action and give the Depository notice of such record date not less than 15
calendar days in advance of such record date to the extent possible. Notice to the Depository
shall be given only when DTC is the sole Owner of the Certificates.
ARTICLE III
PROCEEDS OF CERTIFICATES
Section 3.01. Delivery of Certificates. The Trustee is hereby authorized to execute the
Certificates and deliver the Certificates to the original purchaser thereof upon receipt of a
Written Request of the District and upon receipt of the proceeds of sale thereof.
Section 3.02. Deposit of Proceeds of Certificates. The net proceeds received by the
Trustee from the sale of the Certificates in the amount of$ shall be deposited by the
Trustee as follows:
(a) the Trustee shall deposit in the Costs of Issuance Fund the amount of S-
(b) the Trustee shall deposit in the Reserve Fund the amount of$ , which is
equal to the initial Reserve Requirement; and
(c) the Trustee shall deposit in the Acquisition Fund the amount of$
Section 3.03. Costs of Issuance Fund. The Trustee shall establish and maintain a
separate special fund to be held by the Trustee known as the Costs of Issuance Fund. There shall
be deposited in the Costs of Issuance Fund on the Closing Date the amount required to be
deposited therein pursuant to Section 3.02 hereof. The Trustee shall disburse moneys from the
Costs of Issuance Fund on such dates and in such amounts as are necessary to pay Costs of
Issuance, in each case upon the Written Request of the District stating the Person to wham
payment is to be made,the amount to be paid,the purpose for which the obligation was incurred
and that such payment is a proper charge against the Costs of Issuance Fund. On the date that is
six months after the Closing Date, the Trustee shall transfer any amounts then remaining in the
Costs of Issuance Fund to the Installment Payment Fund. Upon such transfer, the Costs of
Issuance Fund shall be closed.
Section 3.04. Use of Moneys in the Acquisition Fund. The Trustee shall establish and
maintain a separate special fund to be known as the Acquisition Fund. All moneys in the
11.2 Ttust Agrtt .,.doc 16
Acquisition Fund shall be held by the Trustee in trust and applied by the Trustee, as provided in
this Section,to the payment of Acquisition Costs.
Before any payment is made from the Acquisition Fund by the Trustee, the District shall
cause to be filed with the Trustee a Written Request of the District showing with respect to each
payment to be made:
(a) the item number of the payment;
(b) the name of the Person to whom payment is due;
(c) the amount to be paid;and
(d) the purpose for which the obligation to be paid was incurred.
Each such Written Request shall also state, and shall be sufficient evidence to the
Trustee, (a) that obligations in the stated amounts have been incurred by the District or the
Corporation,and(b)that each item thereof is a proper charge against the Acquisition Fond and is
an Acquisition Cost properly allocable to the Project. Each such Written Request shall further
specify in reasonable detail the nature of the obligation to be paid.
Upon receipt of each such Written Request, the Trustee shall pay the amount set forth in
such Written Request as directed by the terms thereof. The Trustee need not make any such
payment if it has received written notice of any lien, right to lien or attachment upon, or claim
affecting the right to receive payment of, any of the moneys to be so paid, which has not been
released or will not be released simultaneously with such payment, unless a payment bond has
been posted with the Trustee in the full amount of such lien or claim.
Upon the filing with the Trustee of a Written Certificate of the District(i) stating that the
Project has been completed and that all costs of the Project have been paid or are not required to
be paid from the Acquisition Fund, or (ii) stating that the Project has been substantially
completed and that all remaining costs of the Project have been determined and specifying the
amount to be retained therefor,the Trustee shall transfer and apply the amount, if any,remaining
in the Acquisition Fund (less any such retention) to the Installment Payment Fund. Upon such
transfer and the release of any retained funds,the Acquisition Fund shall be closed.
ARTICLE IV
PREPAYMENT OF CERTIFICATES
Section 4.01. Optional Prepayment. The Certificates are subject to optional
prepayment prior to their stated Principal Payment Dates, on any date on or after February 1,
20_, in whole or in part, in Authorized Denominations, from and to the extent of prepaid
Installment Payments paid pursuant to Section 4.01 of the Installment Purchase Agreement or
from any other source of available funds, any such prepayment to be at a price equal to the
principal evidenced by the Certificates to be prepaid, plus accrued interest evidenced thereby to
the date fixed for prepayment,without premium.
11-2 T n A®ea =t 17
Section 4.02. Mandatory Sinkina Account Prepayment. The Term Certificates
maturing on February 1, 20_are subject to prepayment prior to their stated maturity,in part,by
lot, on any February 1 on and after February 1, 20, at the principal amount thereof, plus
accrued interest to the date fixed for prepayment, without premium, from Mandatory Sinking
Account Payments deposited in the Principal Account. The Term Certificates maturing on
February 1, 20_ shall be prepaid (or paid at maturity, as the case may be) by application of
Mandatory Sinking Account Payments in the amounts and upon the dates set forth below:
I1-2 TN9t Agrxmmtft 18
Term Certificates Maturing February 1,
Mandatory
Sinking Account Mandatory
Payment Dates Sinking Account
(February 1) Payments
S
Section 4.03. Selection of Certificates for Optional Prepayment. Whenever less than
all the Outstanding Certificates are to be prepaid on any one date pursuant to Section 4.01 hereof,
the Trustee shall select the Certificates to be prepaid among Certificates with different Principal
Payment Dates as directed in a Written Request of the District. Whenever less than all the
Outstanding Certificates with the same stated Principal Payment Date are to be prepaid on any
one date pursuant hereto, the Trustee shall select the Certificates with such Principal Payment
Date to be prepaid by lot in any manner that the Trustee deems fair and appropriate, which
decision shall be final and binding upon the District and the Owners. The Trustee shall promptly
notify the District in writing of the numbers of the Certificates so selected for prepayment on
such date. For purposes of such selection, any Certificate may be prepaid in part in Authorized
Denominations.
Section 4.04. Notice of Prepayment. When prepayment of Certificates is authorized
pursuant to Section 4.01 or 4.02 hereof, the Trustee shall give notice, at the expense of the
District, of the prepayment of the Certificates. The notice of prepayment shall specify (a)the
Certificates or designated portions thereof(in the case of prepayment of the Certificates in part
but not in whole) which are to be prepaid, (b)the date of prepayment, (c)the place or places
where the prepayment will be made, including the name and address of any paying agent, (d)the
prepayment price, (a)the CUSIP numbers assigned to the Certificates to be prepaid, (f)the
numbers of the Certificates to be prepaid in whole or in part and,in the case of any Certificate to
be prepaid in part only, the principal evidenced by such Certificate to be prepaid, and (g)the
interest rate and stated Principal Payment Date of each Certificate to be prepaid in whole or in
part. Such notice of prepayment shall further state that on the specified date there shall become
due and payable upon each Certificate or portion thereof being prepaid the prepayment price and
that from and after such date interest evidenced thereby shall cease to accrue and be payable.
With respect to any notice of prepayment of Certificates pursuant to Section 4.01 hereof, unless
at the time such notice is given the Certificates to be prepaid shall be deemed to have been paid
within the meaning of Section 10.01 hereof, such notice shall state that such prepayment is
conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of
moneys sufficient to pay for the prepayment price of the Certificates to be prepaid, and that if
such moneys shall not have been so received said notice shall be of no force and effect and the
District shall not be required to prepay such Certificates. If a notice of prepayment of
Certificates contains such a condition and such moneys are not so received, the prepayment of
Certificates as described in the conditional notice of prepayment shall not be made and the
Trustee shall, within a reasonable time after the date on which such prepayment was to occur,
give notice to the persons and in the manner in which the notice of prepayment was given, that
such moneys were not so received and that there shall be no prepayment of Certificates pursuant
to such notice of prepayment.
11-2Ta Apraaaa.aw 19
The Trustee shall, at least 30 but not more than 60 days prior to any prepayment date,
give notice of prepayment to the respective Owners of Certificates designated for prepayment by
first-class mail, postage prepaid, at their addresses appearing on the registration books
maintained by the Trustee as of the close of business on the day before such notice of
prepayment is given.
The actual receipt by the Owner of any notice of such prepayment shall not be a
condition precedent to prepayment, and neither failure to receive such notice nor any defect
therein shall affect the validity of the proceedings for the prepayment of such Certificates or the
cessation of interest evidenced thereby on the date fixed for prepayment.
A certificate by the Trustee that notice of prepayment has been given to Owners as herein
provided shall be conclusive as against all parties, and no Owner whose Certificate is called for
prepayment may object thereto or object to the cessation of interest evidenced thereby on the
fixed prepayment date by any claim or showing that said Owner failed to actually receive such
notice of prepayment.
Section 4.05. Partial Prepayment of Certificates. Upon surrender of any Certificate
prepaid in part only, the Trustee shall execute and deliver to the Owner thereof a new Certificate
or Certificates evidencing the=prepaid principal with respect to the Certificate surrendered.
Section 4.06. Effect of Prepayment. If notice of prepayment has been duly given as
aforesaid and moneys for the payment of the prepayment price of the Certificates to be prepaid
are held by the Trustee, then on the prepayment date designated in such notice, the Certificates
so called for prepayment shall become payable at the prepayment price specified in such notice;
and from and after the date so designated, interest evidenced by the Certificates so called for
prepayment shall cease to accrue, such Certificates shall cease to be entitled to any benefit or
security hereunder and the Owners of such Certificates shall have no rights in respect thereof
except to receive payment of the prepayment price thereof. The Trustee shall, upon surrender for
payment of any of the Certificates to be prepaid, pay such Certificates at the prepayment price
thereof, and such moneys shall be pledged to such payment. All Certificates prepaid pursuant to
the provisions of this Article shall be canceled by the Trustee and shall not be redelivered.
ARTICLE V
ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS
Section 5.01. Assignment and Pledge. The Corporation hereby transfers, conveys and
assigns to the Trustee, for the benefit of the Owners, all of the Corporation's rights, title and
interest in and to the Installment Purchase Agreement (excepting its rights to indemnification
thereunder), including the right to receive Installment Payments, and the interest thereon, from
the District and the right to exercise any remedies provided therein in the event of a default by
the District thereunder. The Trustee hereby accepts said transfer, conveyance and assignment,
solely in its capacity as Trustee, for the benefit of the Owners, subject to the provisions of this
Trust Agreement. All Installment Payments, and the interest thereon, shall be paid directly by
the District to the Trustee, and if received by the Corporation at any time shall be deposited by
the Corporation with the Trustee immediately upon the receipt thereof.
11-I Tw,Asl..Ld 20
In order to secure the respective rights of the Owners to the payments required to be
made thereto as provided herein, the Corporation and the District hereby irrevocably pledge to
the Trustee, for the benefit of the Owners, all of their right, title and interest, if any, in and to all
amounts on deposit from time to time in the funds and accounts established hereunder (other
than the Rebate Fund). This pledge shall constitute a first lien on the amounts on deposit in such
funds and accounts.
Section 5.02. Installment Payment Fund. (a)The Trustee shall establish and maintain
the Installment Payment Fund until all required Installment Payments, and the interest thereon,
are paid in full pursuant to the Installment Purchase Agreement and until the first date upon
which the Certificates are no longer Outstanding. The Trustee shall deposit in the Installment
Payment Fund all Installment Payments, and the interest thereon, paid by the District and
received by the Trustee. The moneys in the Installment Payment Fund shall be held in trust by
the Trustee for the benefit of the Owners and shall be used and disbursed only for the purposes
and uses herein authorized.
(b) The Trustee shall transfer the amounts on deposit in the Installment Payment
Fund, at the times and in the manner hereinafter provided, to the following respective accounts
within the Installment Payment Fund, each of which the Trustee hereby agrees to establish and
maintain until all required Installment Payments, and the interest thereon, are paid in full
pursuant to the Installment Purchase Agreement and until the first date upon which the
Certificates are no longer Outstanding. The moneys in each of such accounts shall be held in
trust by the Trustee for the benefit of the Owners and shall be used and disbursed only for the
purposes and uses herein authorized.
(i) Interest Account. The Trustee, on each Interest Payment Date, shall
deposit in the Interest Account that amount of moneys representing the interest on the
Installment Payments coming due on such Interest Payment Date. Moneys in the Interest
Account shall be used by the Trustee for the purpose of paying the interest evidenced by
the Certificates when due and payable.
(ii) Principal Account. The Trustee, on each Principal Payment Date, shall
deposit in the Principal Account that amount of moneys representing the Installment
Payments coming due on such Principal Payment Date. Moneys in the Principal Account
shall be used by the Trustee for the purpose of paying the principal or Mandatory Sinking
Account Payments evidenced by the Certificates when due and payable.
(iii) Prepayment Account. The Trustee, on the prepayment date specified in
the Written Request of the District filed with the Trustee at the time that any prepaid
Installment Payment is paid to the Trustee pursuant to the Installment Purchase
Agreement, shall deposit in the Prepayment Account that amount of moneys representing
such prepaid Installment Payment, the accrued interest thereon to the prepayment date
and any premium payable with respect thereto. The Trustee shall deposit in the
Prepayment Account any other amounts made available by the District that the District,
pursuant to a Written Request of the District, instructs the Trustee to apply to the
prepayment of Certificates pursuant to Section 4.01 hereof. Moneys in the Prepayment
Account shall be used by the Trustee for the purpose of paying the interest, premium, if
na raat Ap�mtd. 21
any, and principal evidenced by the Certificates to be prepaid pursuant to Section 4.01
hereof
Section 5.03. Reserve Fund. (a)The Trustee shall establish and maintain the Reserve
Fund until all required Installment Payments, and the interest thereon, are paid in full pursuant to
the Installment Purchase Agreement and until the first date upon which no Certificates are
Outstanding. The moneys in the Reserve Fund, and any Reserve Facility, shall be held in trust
by the Trustee for the benefit of the Owners and shall be used and disbursed only for the
purposes and uses herein authorized. There shall be deposited in the Reserve Fund on the
Closing Date the amount required to be deposited therein pursuant to Section 3.02 hereof
(b) The District may substitute a Reserve Facility for all or a part of the moneys on
deposit in the Reserve Fund by depositing such Reserve Facility with the Trustee so long as, at
the time of such substitution, the amount on deposit in the Reserve Fund, together with the
amount available under such Reserve Facility and any previously substituted Reserve Facilities,
shall be at least equal to the Reserve Requirement. Moneys for which a Reserve Facility has
been substituted as provided herein shall be transferred, at the election of the District, to the
Installment Payment Fund, or upon receipt of an Opinion of Counsel to the effect that such
transfer, in and of itself, will not adversely affect the exclusion of interest evidenced by the
Certificates from gross income for federal income tax purposes, to a special account to be held
by the Trustee and applied to the payment of capital costs of the District,as directed in a Written
Request of the District. Any amounts paid pursuant to any Reserve Facility shall be deposited in
the Reserve Fund.
(c) If, on any Interest Payment Date, the amount on deposit in the Interest Account is
insufficient to pay the interest evidenced by the Certificates on such Interest Payment Date, the
Trustee shall transfer from the Reserve Fund and deposit in the Interest Account an amount
sufficient to make up such deficiency. If a Reserve Facility is credited to the Reserve Fund to
satisfy a portion of the Reserve Requirement,the Trustee shall make a claim for payment under
such Reserve Facility, in accordance with the provisions thereof, in an amount which, together
with other available moneys in the Reserve Fund, will be sufficient to make said deposit in the
Interest Account.
If, on any Principal Payment Date, the amount on deposit in the Principal Account is
insufficient to pay the principal evidenced by the Certificates on such Principal Payment Date,
the Trustee shall transfer from the Reserve Fund and deposit in the Principal Account an amount
sufficient to make up such deficiency. If a Reserve Facility is credited to the Reserve Fund to
satisfy a portion of the Reserve Requirement, the Trustee shall make a claim for payment under
such Reserve Facility, in accordance with the provisions thereof, in an amount which, together
with other available moneys in the Reserve Fund, will be sufficient to make said deposit in the
Principal Account.
Moneys, if any, on deposit in the Reserve Fund shall be withdrawn and applied by the
Trustee for the final payment of principal and interest evidenced by the Certificates.
(d) Amounts on deposit in the Reserve Fund which were not derived from payments
under any Reserve Facility credited to the Reserve Fund to satisfy a portion of the Reserve
11.2T=ng .t.d. 22
Requirement shall he used and withdrawn by the Trustee prior to using and withdrawing any
amounts derived from payments under any such Reserve Facility. In order to accomplish such
use and withdrawal of such amounts not derived from payments under any such Reserve Facility,
the Trustee shall, as and to the extent necessary, liquidate any investments purchased with such
amounts. If and to the extent that more than one Reserve Facility is credited to the Reserve Fund
to satisfy a portion of the Reserve Requirement,drawings thereunder,and repayment of expenses
with respect thereto, shall be made on a pro rasa basis (calculated by reference to the policy
limits available thereunder).
(e) In the event of any transfer from the Reserve Fund or the making of any claim
under any Reserve Facility, the Trustee shall, within five days thereafter, provide written notice
to the District of the amount and the date of such transfer or claim.
(f) The Trustee shall, from amounts received from the District pursuant to
Section 3.03 of the Installment Purchase Agreement, deposit in the Reserve Fund an amount of
money which, together with the amount already on deposit therein and the amounts available
under all Reserve Facilities, will be equal to the Reserve Requirement. No deposit need be made
in the Reserve Fond so long as there shall be on deposit therein a sum equal to the amount which,
together with the amounts available under all Reserve Facilities, is at least the Reserve
Requirement. The Trustee shall promptly notify the District in writing if the amount on deposit
is less than the Reserve Requirement.
(g) If, as a result of the scheduled payment of principal or interest evidenced by the
Certificates, the Reserve Requirement is reduced, the Trustee shall transfer an amount equal to
the amount of such reduction to the Installment Payment Fund.
(h) On any date on which Certificates are defeased in accordance with Article X
hereof, the Trustee shall, if so directed in a Written Request of the District,transfer any moneys
in the Reserve Fund in excess of the Reserve Requirement resulting from such defeasance to the
entity or fund so specified in such Written Request of the District, to be applied to such
defeasance.
Section 5.04. Rebate Fund. (a)In addition to the other funds and accounts created
pursuant hereto, the Trustee shall establish and maintain the Rebate Fund. The District shall
deliver to the Trustee for deposit in the Rebate Fund such amounts as are required to be
deposited therein pursuant to the Tax Certificate. All money at any time deposited in the Rebate
Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate
Requirement, for payment to the United States of America upon the Written Request of the
District. Notwithstanding defeasance of the Certificates pursuant to Article X hereof or anything
to the contrary contained herein, all amounts required to be deposited into or on deposit in the
Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate (which is
incorporated herein by reference). The Trustee shall be deemed conclusively to have complied
with such provisions if it follows the written directions of the District, and shall have no liability
or responsibility to enforce compliance by the District with the terms of the Tax Certificate. The
Trustee may conclusively rely upon the District's determinations, calculations and certifications
required by the Tax Certificate. The Trustee shall have no responsibility to independently make
any calculation or determination or to review the District's calculations.
11-2 Tina AVe t.dm 23
(b) Any funds remaining in the Rebate Fund after payment in full of all of the
principal and interest evidenced by the Certificates and after payment of any amounts described
in this Section,shall be withdrawn by the Trustee and remitted to the District.
Section 5.05. Investment of Moneys. Except as otherwise provided herein, all moneys
in any of the funds or accounts established pursuant to this Trust Agreement shall be invested by
the Trustee solely in Permitted Investments, as directed by the District pursuant to a Written
Request of the District at least two Business Days prior to the making of such investment.
Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments
maturing not later than the date on which it is estimated that such moneys will be required for the
purposes specified in this Trust Agreement; provided, however, that Permitted Investments in
which moneys in the Reserve Fund are so invested shall mature no later than the final Principal
Payment Date of the Certificates. Absent timely written direction from the District, the Trustee
shall invest any funds held by it in Permitted Investments described in clause(10) of the
definition thereof. Permitted Investments that are registerable securities shall be registered in the
name of the Trustee.
All interest, profits and other income received from the investment of moneys in any fund
or account established pursuant to this Trust Agreement (other than the Reserve Fund) shall be
retained therein. All interest, profits and other income received from the investment of moneys
in the Reserve Fund shall be deposited in the Installment Payment Fund; provided, however,
that,notwithstanding the foregoing,any such transfer shall be made only if and to the extent that,
after such transfer, the amount on deposit in the Reserve Fund is at least equal to the Reserve
Requirement.
Permitted Investments acquired as an investment of moneys in any fund or account
established under this Trust Agreement shall be credited to such fund or account. For the
purpose of determining the amount in any fund, all Permitted Investments credited to such fund
shall be valued by the Trustee at the market value thereof, such valuation to be performed not
less frequently than semiannually on or before each January 15 and July 15.
The Trustee may act as principal or agent in the making or disposing of any investment.
The Trustee shall sell or present for redemption any Permitted Investment whenever it shall be
necessary to provide moneys to meet any required payment,transfer,withdrawal or disbursement
from the fund or account to which such Permitted Investment is credited, and the Trustee shall
not be liable or responsible for any loss resulting from any investment made or sold pursuant to
this Section. For purposes of investment, the Trustee may commingle moneys in any of the
funds and accounts established hereunder.
The Trustee is hereby authorized, in making or disposing of any investment permitted by
this Section, to deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether or not such affiliate is acting as an agent of the Trustee or for any third Person
or dealing as principal for its own account.
11-2T=A® .Ldm 24
ARTICLE VI
COVENANTS
Section 6.01. Compliance with Trust Agreement. The Trustee will not execute or
deliver any Certificates in any manner other than in accordance with the provisions hereof, and
the Corporation and the District will not suffer or permit any default by them to occur hereunder,
but will faithfully comply with, keep, observe and perform all the agreements, conditions,
covenants and terms hereof required to be complied with, kept,observed and performed by them.
Section 6.02. Compliance with Installment Purchase Agreement. The Corporation
and the District will faithfully comply with, keep, observe and perform all the agreements,
conditions, covenants and terns contained in the Installment Purchase Agreement required to be
complied with, kept, observed and performed by them and, together with the Trustee, will
enforce the Installment Purchase Agreement against the other party thereto in accordance with its
terns.
Section 6.03. Compliance with Master Agreement. The Corporation and the District
will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants
and terms contained in the Master Agreement required to be complied with, kept, observed and
performed by them and, together with the Trustee, will enforce the Master Agreement against the
other party thereto in accordance with its terms.
Section 6.04. Observance of Laws and Regulations. The Corporation and the District
will faithfully comply with, keep, observe and perform all valid and lawful obligations or
regulations now or hereafter imposed on them by contract, or prescribed by any law of the
United States of America or of the State, or by any officer, board or commission having
jurisdiction or control, as a condition of the continued enjoyment of each and every franchise,
right or privilege now owned or hereafter acquired by them, including their right to exist and
carry on their respective businesses,to the end that such franchises,rights and privileges shall be
maintained and preserved and shall not become abandoned,forfeited or in any manner impaired.
Section 6.05. Other Liens. None of the Trustee, the Corporation or the District shall
create or suffer to be created any pledge of or lien on the amounts on deposit in any of the funds
or accounts created hereunder,other than the pledge and lien hereof.
Section 6.06. Prosecution and Defense of Suits. The District will defend against every
action, suit or other proceeding at any time brought against the Trustee or any Owner upon any
claim arising out of the receipt, deposit or disbursement of any of the Installment Payments, or
the interest thereon, or involving the rights of the Trustee or any Owner hereunder; provided,
however, that the Trustee or any Owner at its or his election may appear in and defend any such
action, suit or other proceeding.
Section 6.07. Accounting Records and Statements. The Trustee will keep proper
accounting records in which complete and correct entries shall be made of all transactions
relating to the receipt, deposit and disbursement of the Installment Payments, and the interest
thereon, and such accounting records shall be available for inspection by the Corporation and the
11-2T"Agr mt. a 25
District at reasonable hours and under reasonable conditions. The Trustee shall not be obligated
to provide an accounting for any fund or account that (a)has a balance of$0.00 and (b)has not
had any activity since the last reporting date. The Trustee will, upon written request, make
copies of the foregoing available to any Owner(at the expense of such Owner).
Section 6.08. Tax Covenants.
(a) Special Definitions. When used in this Section,the following terms shall have the
following meanings:
"Code"means the Internal Revenue Code of 1986.
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Gross Proceeds" means any Proceeds and any replacement proceeds as defined in
section 1.148-1(c)of the Tax Regulations, of the Certificates.
"Investment"has the meaning set forth in section 1.148-1(b)of the Tax Regulations.
"Nonpurpose Investment" means any investment property,as defined in section 148(b)of
the Code, in which Gross Proceeds of the Certificates are invested and that is not acquired to
carry out the governmental purposes of that series of Certificates.
"Proceeds," with respect to an issue of governmental obligations, has the meaning set
forth in has the meaning set forth in section 1.148-1(b) of the Tax Regulations (referring to sales,
investment and transferred proceeds).
"Rebate Amount"has the meaning set forth in section 1.148-1(b)of the Tax Regulations.
"Special Counsel" means Fulbright & Jaworski L.L.P. or any other firm of nationally
recognized standing in the field of municipal finance selected by the District.
"Tax Regulations" means the United States Treasury Regulations promulgated pursuant
to sections 103 and 141 through 150 of the Code.
"Yield" of any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and of any issue of governmental obligations has the meaning set forth in section
1.148-4 of the Tax Regulations.
(b) Not to Cause Interest to Become Taxable. The District covenants that it shall not
use, and shall not permit the use of, and shall not omit to use Gross Proceeds or any other
amounts(or any property the acquisition,construction or improvement of which is to be financed
directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively,
could cause the interest with respect to any Certificate to fail to be excluded pursuant to section
103(a) of the Code from the gross income of the owner thereof for federal income tax purposes.
Without limiting the generality of the foregoing, unless and until the Trustee receives a written
opinion of Special Counsel to the effect that failure to comply with such covenant will not
11.2 Tmt Agmmmtdm 26
adversely affect such exclusion of the interest with respect to any Certificate from the gross
income of the owner thereof for federal income tax purposes,the District shall comply with each
of the specific covenants in this Section.
(c) Private Use and Private Payments. Except as would not cause any Certificate to
become a "private activity bond" within the meaning of section 141 of the Code and the Tax
Regulations, the District shall take all actions necessary to assure that the District at all times
prior to the final cancellation of the last of the Certificates to be retired:
(i) exclusively owns, operates, possesses and provides any services necessary
to allow and maintain each function of every property the acquisition, construction or
improvement of which is to be financed or refinanced directly or indirectly with Gross
Proceeds of the Certificates and not use or permit the use of such Gross Proceeds
(including through any contractual arrangement with terms different than those applicable
to the general public)or any property acquired,constructed or improved with such Gross
Proceeds in any activity carried on by any person or entity(including the United States or
any agency, department and instrumentality thereof) other than a state or local
government,unless such use is solely as a member of the general public;and
(ii) does not directly or indirectly impose or accept any charge or other
payment by or for the benefit of any person or entity (other than a state or local
government) who is treated as using any Gross Proceeds of the Certificates or any
property the acquisition, construction or improvement of which is to be financed or
refinanced directly or indirectly with such Gross Proceeds.
(d) No Private Loan. Except as would not cause any Certificate to become a"private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the District shall not use or permit the use of Gross Proceeds of the
Certificates to make or finance loans to any person or entity other than a state or local
government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be
"loaned"to a person or entity if: (i) property acquired,constructed or improved with such Gross
Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal
income tax purposes; (ii) capacity in or service from such property is committed to such person
or entity under a take-or-pay, output or similar contract or arrangement; or(iii) indirect benefits
of such Gross Proceeds, or burdens and benefits of ownership of any property acquired,
constructed or improved with such Gross Proceeds,are otherwise transferred in a transaction that
is the economic equivalent of a loan.
(e) Not to Invest at Higher Yield. Except as would not cause the Certificates to
become "arbitrage bonds" within the meaning of section 148 of the Code and the Tax
Regulations and rulings thereunder,the District shall not(and shall not permit any person to),at
any time prior to the final cancellation of the last Certificate to be retired, directly or indirectly
invest Gross Proceeds in any Investment, if as a result of such investment the Yield of any
Investment acquired with Gross Proceeds, whether then held or previously disposed of, would
materially exceed the Yield of the Certificates within the meaning of said section 148.
11-2`r wAgrm doe 27
(f) Not Federally Guaranteed. Except to the extent permitted by section 149(b)of the
Code and the Tax Regulations and rulings thereunder,the District shall not take or omit to take
(and shall not permit any person to take or omit to take) any action that would cause any
Certificate to be"federally guaranteed"within the meaning of section 149(b)of the Code and the
Tax Regulations and rulings thereunder.
(g) Information Report. The District shall timely file any information required by
section 149(e) of the Code with respect to Certificates with the Secretary of the Treasury on
Form 8038-G or such other form and in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section
148(f)of the Code and the Tax Regulations:
(i) The District shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from
all other funds (and receipts, expenditures and investments thereof) and shall retain all
records of accounting for at least six years after the day on which the last Certificate is
discharged. However, to the extent permitted by law,the District may commingle Gross
Proceeds of Certificates with its other monies, provided that it separately accounts for
each receipt and expenditure of Gross Proceeds and the obligations acquired therewith.
(ii) Not less frequently than each Computation Date (and so long as amounts
remain on deposit in the Acquisition Fund,not less frequently than annually),the District
shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of
the Code and the Tax Regulations and rulings thereunder. The District shall maintain a
copy of the calculation with its official transcript of proceedings relating to the execution
and delivery of the Certificates until six years after the final Computation Date.
(iii) In order to assure the excludability pursuant to section 103(a)of the Code
of the interest with respect to the Certificates from the gross income of the owners thereof
for federal income tax purposes, within 60 days of each Computation Date the District
shall pay to the United States the amount that when added to the future value of previous
rebate payments made for the Certificates equals (i) in the case of the Final Computation
Date as defined in section 1.148-3(ex2) of the Tax Regulations, one hundred percent
(100%)of the Rebate Amount on such date;and(ii) in the case of any other Computation
Date, ninety percent(9M)of the Rebate Amount on such date. In all cases, such rebate
payments shall be made by the District at the times and in the amounts as are or may be
required by section 148(f) of the Code and the Tax Regulations and rulings thereunder,
and shall be accompanied by Form 8038-T or such other forms and information as is or
may be required by section 148(f) of the Code and the Tax Regulations and rulings
thereunder for execution and filing by the District.
0) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Tax Regulations and rulings thereunder, the District shall not and shall not
permit any person to,at any time prior to the final cancellation of the last of the Certificates to be
retired,enter into any transaction that reduces the amount required to be paid to the United States
pursuant to paragraph(H) of this Section because such transaction results in a smaller profit or a
11-2`r mAV�doo 28
larger loss than would have resulted if the transaction had been at arm's length and had the Yield
on the Certificates not been relevant to either party.
0) Certificates Not Hedge Bonds.
(i) The District represents that none of the Certificates is or will become a
"hedge bond"within the meaning of section 149(g)of the Code.
(ii) Without limitation of paragraph (i)above: (A)the District will not execute
and deliver the Certificates unless as of the date of execution and delivery of the
Certificates the District reasonably expects that at least 85%of the spendable proceeds of
the Certificates will be expended within the three-year period commencing on such date
of execution and delivery, and (B) no more than 50% of the proceeds of the Certificates
will be invested in Nonpurpose Investments having a substantially guaranteed yield for a
period of four years or more.
(k) Elections. The District hereby directs and authorizes any Authorized
Representative to make elections permitted or required pursuant to the provisions of the Code or
the Tax Regulations, as such Authorized Representative (after consultation with Special
Counsel) deems necessary or appropriate in connection with the Certificates, in the Tax
Certificate or similar or other appropriate certificate,form or document.
(1) Tax Certificate. The District agrees to execute and deliver in connection with the
execution and delivery of the Certificates a Tax Certificate as to Arbitrage and the Provisions of
Sections 141-150 of the Internal Revenue Code of 1986, or similar document containing
additional representations and covenants pertaining to the exclusion of interest with respect to
the Certificates from the gross income of the owners thereof for federal income tax purposes(the
"Tax Certificate'), which representations and covenants are incorporated as though expressly set
forth herein.
Section 6.09. Continuing Disclosure. Each of the District and the Trustee will comply
with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it.
Notwithstanding any other provision of this Trust Agreement, failure of the District or the
Trustee to comply with the Continuing Disclosure Agreement shall not be considered an Event
of Default; provided, however, the Trustee may (and, at the request of any Participating
Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding
Certificates and upon being indemnified to its reasonable satisfaction, shall) or any Owner or
Beneficial Owner of Certificates may take such actions as may be necessary and appropriate to
compel performance,including seeking mandate or specific performance by court order.
Section 6.10. Further Assurances. The District will promptly execute and deliver or
cause to be executed and delivered all such other and further assurances, documents or
instruments and promptly do or cause to be done all such other and further things as may be
necessary or reasonably required in order to carry out the purposes and intentions of this Trust
Agreement and for preserving and protecting the rights and interests of the Owners.
11.2 Tmt Aga [.e 29
ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY
Section 7.01. Action upon Event of Default. An Event of Default under the Installment
Purchase Agreement shall constitute an Event of Default hereunder and an Event of Default
under the Master Agreement shall constitute an Event of Default hereunder. The Trustee may
give notice, as assignee of the Corporation, of an Event of Default under the Installment
Purchase Agreement to the District, and shall do so if directed to do so by the Owners of not less
than 5% of the aggregate principal evidenced by Certificates then Outstanding. In each and
every case during the continuance of an Event of Default, the Trustee may and, at the direction
of the Owners of not less than a majority of the aggregate principal evidenced by Certificates
then Outstanding, shall, upon notice in writing to the District and the Corporation (a)exercise
any of the remedies granted to the Corporation under the Installment Purchase Agreement,
(b)exercise any of the remedies granted to the Trustee under the Master Agreement,and (c)take
whatever action at law or in equity may appear necessary or desirable to enforce its rights
pursuant to this Trust Agreement, the Installment Purchase Agreement or the Master Agreement
or to protect and enforce any of the rights vested in the Trustee or the Owners by this Trust
Agreement, the Certificates, the Installment Purchase Agreement or the Master Agreement,
either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement or for the enforcement of any other legal or equitable right, including
any one or more of the remedies set forth in Section 9.02 hereof.
Section 7.02. Other Remedies of the Trustee. Subject to the provisions of Section 7.01
hereof,the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce
its rights against the Corporation or the District or any member, director, officer or employee
thereof, and to compel the Corporation or the District or any such member, director, officer or
employee to perform or carry out its or his or her duties under law and the agreements and
covenants required to be performed by it or him or her contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee;or
(c) by suit in equity upon the happening of any Event of Default hereunder to require
the Corporation and the District to account as the trustee of an express trust
Section 7.03. Non-Waiver. A waiver of any default or breach of duty or contract by the
Trustee or the Owners shall not affect any subsequent default or breach of duty or contract or
impair any rights or remedies on any such subsequent default or breach of duty or contract. No
delay or omission by the Trustee or the Owners to exercise any right or remedy accruing upon
any default or breach of duty or contract shall impair any such right or remedy or shall be
construed to be a waiver of any such default or breach of duty or contract or an acquiescence
therein, and every right or remedy conferred upon the Trustee or the Owners by law or by this
Article may be enforced and exercised from time to time and as often the Trustee shall deem
expedient.
I1-2 Tmt Acl..Ld 30
If any action, proceeding or suit to enforce any right or to exercise any remedy is
abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse
determination,the Trustee,such Owner,the Corporation and the District shall be restored to their
former positions, rights and remedies as if such action, proceeding or suit had not been brought
ortaken.
Section 7.04. Remedies Not Exclusive. Subject to the provisions of Section 7.01
hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of
any other remedy, and each such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing in law or in equity or by statute or
otherwise and may be exercised without exhausting and without regard to any other remedy
conferred by any law. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other
appropriate right or remedy.
Section 7.05. Application of Amounts After Default. All damages or other payments
received by the Trustee for the enforcement of any rights and powers of the Trustee under this
Article shall be deposited into the Installment Payment Fund and as soon as practicable thereafter
applied:
(a) to the payment of all amounts due the Trustee under Section 8.03 hereof;
(b) unless the unpaid Installment Payments, and the interest thereon, shall have
become,and shall remain, immediately due and payable pursuant to the Master Agreement:
(i) to the payment of all amounts then due for interest evidenced by the
Certificates, in respect of which, or for the benefit of which, money has been collected
(other than Certificates which have become payable prior to such Event of Default and
money for the payment of which is held by the Trustee), ratably without preference or
priority of any kind, according to the amounts of interest evidenced by such Certificates
due and payable; and
(ii) to the payment of all amounts then due for principal evidenced by the
Certificates, in respect of which, or for the benefit of which, money has been collected
(other than Certificates which have become payable prior to such Event of Default and
money for the payment of which is held by the Trustee), ratably without preference or
priority of any kind, according to the amounts of principal evidenced by such Certificates
due and payable.
(c) if the unpaid Installment Payments, and the interest thereon, shall have become,
and shall remain, immediately due and payable pursuant to the Master Agreement, to the
payment of all amounts then due for principal and interest evidenced by the Certificates and, if
the amount available therefor shall not be sufficient to pay in full the whole amount so due and
unpaid, then to the payment thereof ratably, without preference or priority of principal over
interest, or of interest over principal, or of any installment of interest over any other installment
of interest, or of any Certificate over any other Certificate, to the persons entitled thereto without
any discrimination or preference.
I IQ Trust Agr mmtA 31
Section 7.06. Trustee May Enforce Claims Without Possession of Certificates. All
rights of action and claims under this Trust Agreement or the Certificates may be prosecuted and
enforced by the Trustee without the possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Owners of
the Certificates in respect of which such judgment has been recovered.
Section 7.07. Limitation on Suits. No Owner shall have any right to institute any
proceeding,judicial or otherwise,with respect to this Trust Agreement, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless (a) such Owner shall have
previously given written notice to the Trustee of a continuing Event of Default hereunder, (b) the
Owners of not less than a majority of the aggregate principal evidenced by Certificates then
Outstanding shall have made written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder, (c)such Owner or Owners shall
have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request, (d)the Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall have failed to institute
any such proceedings, and(e)no direction inconsistent with such written request shall have been
given to the Trustee during such 60-day period by the Owners of a majority of the aggregate
principal evidenced by Certificates then Outstanding; it being understood and intended that no
one or more Owners of Certificates shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of
any other Owner of Certificates, or to obtain or seek to obtain priority or preference over any
other Owner or to enforce any right under this Trust Agreement, except in the manner herein
provided and for the equal and ratable benefit of all the Owners of Certificates.
Section 7.08. No Liability by the Corporation to the Owner. Except as expressly
provided herein, the Corporation shall not have any obligation or liability to the Owners with
respect to the payment when due of the Installment Payments, and the interest thereon, by the
District, or with respect to the performance by the District of the other agreements and covenants
required to be performed by it contained in the Installment Purchase Agreement, the Master
Agreement or herein,or with respect to the performance by the Trustee of any right or obligation
required to be performed by it contained herein.
Section 7.09. No Liability by the District to the Owners. Except for the payment
when due of the Installment Payments, and the interest thereon, and the performance of the other
agreements and covenants required to be performed by it contained in the Installment Purchase
Agreement, the Master Agreement or herein,the District shall not have any obligation or liability
to the Owners with respect to this Trust Agreement of the preparation, execution, delivery or
transfer of the Certificates or the disbursement of the Installment Payments, and the interest
thereon, by the Trustee to the Owners, or with respect to the performance by the Trustee of any
right or obligation required to be performed by it contained herein.
Section 7.10. No Liability of the Trustee to the Owners. Except as expressly provided
herein, the Trustee shall not have any obligation or liability to the Owners with respect to the
11-2rrust A6ree WUM 32
payment when due of the Installment Payments, and the interest thereon, by the District, or with
respect to the performance by the Corporation or the District of the other agreements and
covenants required to be performed by them, respectively contained in the Installment Purchase
Agreement or herein.
ARTICLE Vlll
THE TRUSTEE
Section 8.01. Employment of the Trustee: Duties. The Corporation and the District
hereby appoint and employ the Trustee to receive, deposit and disburse the Installment
Payments, and the interest thereon, to prepare, execute, deliver and transfer the Certificates and
to perform the other functions contained herein, all in the manner provided herein and subject to
the conditions and terms hereof. By executing and delivering this Trust Agreement, the Trustee
accepts the appointment and employment hereinabove referred to and accepts the rights and
obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other
than when an Event of Default hereunder has occurred and is continuing, the Trustee undertakes
to perform such duties and only such duties as are specifically set forth in this Trust Agreement,
and no implied covenants or obligations shall be read into this Trust Agreement against the
Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Trust Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
Section 8.02. Removal and Resignation of the Trustee. The Corporation and the
District may, by an instrument in writing, remove the Trustee initially a party hereto and any
successor thereto unless an Event of Default shall have occurred and then be continuing, and
shall remove the Trustee initially a party hereto and any successor thereto if at any time
(a)requested to do so by an instrument or concurrent instruments in writing signed by the
Owners of a majority of the aggregate principal evidenced by the Certificates at the time
Outstanding (or their attorneys duly authorized in writing), or (b)the Trustee shall cease to be
eligible in accordance with the following sentence, and shall appoint a successor Trustee. The
Trustee shall be a bank having trust powers or a trust company in good standing in or
incorporated under the laws of the United States or any state thereof, having (or if such bank or
trust company is a member of a bank holding company system, its parent bank holding company
shall have) a combined capital and surplus of at least$75,000,000, and be subject to supervision
or examination by federal or state banking authorities. If such bank or trust company publishes a
report of condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to,then for the purposes of this Section the combined capital
and surplus of such bank or trust company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The Trustee may at any time resign by giving written notice of such resignation to the
Corporation and the District and by giving notice, by first class mail, postage prepaid, of such
resignation to the Owners at their addresses appearing on the registration books maintained by
the Trustee. Upon receiving such notice of resignation, the Corporation and the District shall
promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the
11-2 Tun Agrmn®rA 33
event the District and the Corporation do not appoint a successor Trustee within 30 days
following receipt of such notice of resignation, the resigning Trustee may, at the expense of the
District, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any
resignation or removal of a Trustee and appointment of a successor Trustee shall become
effective only upon acceptance of appointment by the successor Trustee. Any successor Trustee
appointed under this Trust Agreement shall signify its acceptance of such appointment by
executing and delivering to the District and the Corporation and to its predecessor Trustee a
written acceptance thereof, and thereupon such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the moneys, estates, properties, rights, powers,
trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named
Trustee herein;but,nevertheless,at the written request of the District or of the successor Trustee,
such predecessor Trustee shall execute and deliver any and all instruments of conveyance or
further assurance and do such other things as may reasonably be required for more fully and
certainly vesting in and confirming to such successor Trustee all the right, title and interest of
such predecessor Trustee in and to any property held by it under this Trust Agreement and shall
pay over, transfer, assign and deliver to the successor Trustee any money or other property
subject to the trusts and conditions herein set forth.
Any corporation, association or agency into which the Trustee may be converted or
merged, or with which it may be consolidated, or to which it may sell or transfer its corporate
trust business and assets as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party,
provided that such entity meets the combined capital and surplus requirements of this Section,
ipso facto, shall be and become successor trustee under this Trust Agreement and vested with all
the trusts, powers, discretion, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 8.03. Compensation and Indemnification of the Trustee. The District shall
from time to time, subject to any written agreement then in effect with the Trustee, pay the
Trustee reasonable compensation for all its services rendered hereunder and reimburse the
Trustee for all its reasonable advances and expenditures (which shall not include `overhead
expenses" except as such expenses are included as a component of the Trustee's stated annual
fees or disclosed transaction fees) hereunder, including but not limited to advances to and
reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other
experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys
retained by the Trustee, employed by it in the exercise and performance of its rights and
obligations hereunder; provided, however, that the Trustee shall not have any lien for such
compensation or reimbursement against any moneys held by it in any of the funds or accounts
established hereunder. The Trustee may take whatever legal actions are lawfully available to it
directly against the Corporation or the District.
Except as otherwise expressly provided herein, no provision of this Trust Agreement
shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of any of its rights or powers
hereunder.
11-2 TM Agtt1 .[A 34
The District,to the extent permitted by law, agrees to indemnify and save the Trustee, its
directors, officers, employees and agents harmless against any liabilities which it may incur in
the exercise and performance of its powers and duties hereunder, including but not limited to
costs and expenses incurred in defending against any claim or liability, which are not due to its
negligence or willful misconduct.
Section 8.04. Protection of the Trustee. The Trustee shall be protected and shall incur
no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent,
notice, request, requisition, resolution, statement, waiver or other paper or document which it
shall in good faith believe to be genuine and to have been adopted, executed or delivered by the
proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty
to make any investigation or inquiry as to any statements contained or matters referred to in any
such instrument, but may accept and rely upon the same as conclusive evidence of the truth and
accuracy of such statements. The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Trust Agreement at the request or direction of any of the
Owners of the Certificates pursuant to this Trust Agreement, unless such Owners shall have
offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the
reasonable costs,expenses and liabilities which might be incurred by it in compliance with such
request or direction. The Trustee may consult with counsel, who may be counsel to the
Corporation or the District, with regard to legal questions, and the opinion of such counsel shall
be full and complete authorization and protection in respect to any action taken or suffered by it
hereunder in good faith in accordance therewith.
The Trustee shall not be responsible for the sufficiency of the Certificates or the
Installment Purchase Agreement, or of the assignment made to it hereunder, or for statements
made in the preliminary or final official statement relating to the Certificates.
The Trustee shall not be required to take notice or be deemed to have notice of any
default or Event of Default hereunder, except failure of any of the payments to be made to the
Trustee required to be made hereunder or under the Installment Purchase Agreement, unless the
Trustee shall be specifically notified in writing of such default or Event of Default by the
District,the Corporation or the Owners of not less than 5% of the aggregate principal evidenced
by the Certificates then Outstanding.
Whenever in the administration of its rights and obligations hereunder the Trustee shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a Written Certificate of
the District or a Written Certificate of the Corporation, and such certificate shall be full warrant
to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof,
but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence as it deems reasonable.
The Trustee may buy, sell, own, hold and deal in any of the Certificates and may join in
any action which any Owner may be entitled to take with like effect as if the Trustee were not a
party hereto. The Trustee,either as principal or agent,may also engage in or be interested in any
financial or other transaction with the Corporation or the District, and may act as agent,
11-2 must Ag,e .t.d. 35
depository or trustee for any committee or body of Owners or of owners of obligations of the
Corporation or the District as freely as if it were not the Trustee hereunder.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers
hereof and perform any rights and obligations required of it hereunder by or through agents,
attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust
and its rights and obligations hereunder, and the Trustee shall not be answerable for the
negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable
care;provided,however, that in the event of any negligence or misconduct of any such attorney,
agent or receiver, the Trustee shall diligently pursue all remedies of the Trustee against such
agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it
in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent
facts.
The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or
for anything whatsoever in connection with the funds established hereunder, except only for its
own willful misconduct,negligence or breach of an obligation hereunder.
The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which
the Corporation or the District is a party and which, in the opinion of the Trustee and its counsel,
affects the Certificates or the security therefor, and shall do so if requested in writing by the
Owners of at least 5% of the aggregate principal evidenced by Certificates then Outstanding,
provided the Trustee shall have no duty to take such action unless it has been indemnified to its
reasonable satisfaction against all risk or liability arising from such action.
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT
Section 9.01. Amendment or Supplement. (a)This Trust Agreement and the rights
and obligations of the Corporation, the District, the Owners and the Trustee hereunder may be
amended or supplemented at any time by an amendment hereof or supplement hereto which shall
become binding when the prior written consents of the Owners of a majority of the aggregate
principal evidenced by the Certificates then Outstanding, exclusive of Certificates disqualified as
provided in Section 9.02 hereof, are filed with the Trustee. No such amendment or supplement
shall (i)extend the stated Principal Payment Date of any Certificate or reduce the rate of interest
evidenced thereby or extend the time of payment of such interest or reduce the amount of
principal evidenced thereby or change the prepayment terms and provisions or the provisions
regarding delivery of notice of prepayment without the prior written consent of the Owner of
each Certificate so affected, (ii)reduce the percentage of Owners whose consent is required for
the execution of any amendment hereof or supplement hereto without the prior written consent of
the Owners of all Certificates then Outstanding, (iii)modify any of the rights or obligations of
the Trustee without the prior written consent of the Trustee, or (iv)amend this Section without
the prior written consent of the Owners of all Certificates then Outstanding.
(b) This Trust Agreement and the rights and obligations of the Corporation, the
District, the Owners and the Trustee hereunder may also be amended or supplemented at any
11.2 Thin Aga wt. oc 36
time by an amendment hereof or supplement hereto which shall become binding upon execution,
without the written consents of any Owners, but only to the extent permitted by law and only for
any one or more of the following purposes:
(i) to add to the agreements, conditions, covenants and terms required by the
Corporation or the District to be observed or performed herein other agreements,
conditions, covenants and terms thereafter to be observed or performed by the
Corporation or the District, or to surrender any right or power reserved herein to or
conferred herein on the Corporation or the District;
(ii) to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein or in regard
to questions arising hereunder which the Corporation or the District may deem desirable
or necessary and not inconsistent herewith;
(iii) to make such additions, deletions or modifications as may be necessary or
appropriate to assure the exclusion from gross income for federal income tax purposes of
interest evidenced by the Certificates;or
(iv) for any other reason, provided such amendment or supplement does not
adversely affect the rights or interests of the Owners.
Section 9.02. Disqualified Certificates. Certificates owned or held by or for the
account of the District (but excluding Certificates held in any pension or retirement fund of the
District) shall not be deemed Outstanding for the purpose of any consent or other action or any
calculation of Outstanding Certificates provided in this Article, and shall not be entitled to
consent to or take any other action provided in this Article, and the Trustee may adopt
appropriate regulations to require each Owner, before his consent provided for herein shall be
deemed effective, to reveal if the Certificates as to which such consent is given are disqualified
as provided in this Section.
Section 9.03. Endorsement or Replacement of Certificates After Amendment or
Supplement. After the effective date of any action taken as hereinabove provided in this
Article, the Trustee may determine that the Certificates may bear a notation by endorsement in
faun approved by the Trustee as to such action, and in that case upon demand of the Owner of
any Outstanding Certificate and presentation of such Certificate for such purpose at the Principal
Office a suitable notation as to such action shall be made on such Certificate. If the Trustee shall
receive an Opinion of Counsel advising that new Certificates modified to conform to such action
are necessary, modified Certificates shall be prepared, and in that case upon demand of the
Owner of any Outstanding Certificates such new Certificates shall be exchanged at the Principal
Office without cost to each Owner for Certificates then Outstanding upon surrender of such
Outstanding Certificates.
Section 9.04. Amendment by Mutual Consent. The provisions of this Article shall not
prevent any Owner from accepting any amendment as to the particular Certificates owned by
such Owner,provided that due notation thereof is made on such Certificates.
11.2Tu Aff m '.d 37
ARTICLE X
DEFEASANCE
Section 10.01. Discharee of Certificates and Trust Agreement. (a) If the Trustee
shall pay or cause to be paid or there shall otherwise be paid(i)to the Owners of all Outstanding
Certificates the interest and principal evidenced thereby at the times and in the manner stipulated
herein and therein, and (ii)all other amounts due hereunder and under the Installment Purchase
Agreement,then such Owners shall cease to be entitled to the pledge of and lien on the amounts
on deposit in the funds and accounts established hereunder, as provided herein, and all
agreements and covenants of the Corporation, the District, and the Trustee to such Owners
hereunder shall thereupon cease, terminate and become void and shall be discharged and
satisfied.
(b) Any Outstanding Certificate shall be deemed to have been paid within the
meaning and with the effect expressed in this Section when the whole amount of the principal,
premium, if any, and interest evidenced by such Certificate shall have been paid or when (i)in
case said Certificate or portion thereof has been selected for prepayment in accordance with
Section 4.02 hereof prior to its stated Principal Payment Date,the District shall have given to the
Trustee irrevocable instructions to give, in accordance with the provisions of Section 4.03 hereof,
notice of prepayment of such Certificate, or portion thereof,(ii)there shall be on deposit with the
Trustee, moneys, or Government Obligations, or any combination thereof, the principal of and
the interest on which when due, and without any reinvestment thereof, will provide moneys
which shall be sufficient to pay when due the principal, premium, if any, and interest evidenced
by such Certificate and due and to become due on or prior to the prepayment date or its stated
Principal Payment Date, as the case may be, and (iii)in the event the stated Principal Payment
Date of such Certificate will not occur, and said Certificate is not to be prepaid, within the next
succeeding 60 days, the District shall have given the Trustee irrevocable instructions to give
notice, as soon as practicable in the same manner as a notice of prepayment given pursuant to
Section 4.03 hereof,to the Owner of such Certificate, or portion thereof, stating that the deposit
of moneys or Government Obligations required by clause(ii) of this subsection has been made
with the Trustee and that said Certificate, or portion thereof, is deemed to have been paid in
accordance with this Section and stating such Principal Payment Date or prepayment date upon
which moneys are to be available for the payment of the principal, premium, if any, and interest
evidenced by said Certificate,or portion thereof.
Neither the moneys nor the Government Obligations deposited with the Trustee pursuant
to this Section nor principal or interest payments on any such Government Obligations shall be
withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the
payment of the principal,premium, if any,and interest evidenced by said Certificate,or portions
thereof. If payment of less than all of the Certificates is to be provided for in the manner and
with the effect expressed in this Section, the Trustee or the District, as applicable, shall select
such Certificates, or portions thereof, in the manner specified in Section 4.02 hereof for selection
for prepayment of less than all of the Certificates, in the principal amounts designated to the
Trustee by the District
11.2 Tug Ageenml.doc 38
(c) After the payment of all the interest, prepayment premium, if any, and principal
evidenced by all Outstanding Certificates and all other amounts due hereunder and under the
Installment Purchase Agreement as provided in this Section, the Trustee shall execute and
deliver to the Corporation and the District all such instruments as may be necessary or desirable
to evidence the discharge and satisfaction of this Trust Agreement, the Trustee shall pay over or
deliver to the District all moneys or securities held by it pursuant hereto which are not required
for the payment of the interest, prepayment premium, if any, and principal evidenced by such
Certificates and all other amounts due hereunder and under the Installment Purchase Agreement.
(d) Prior to any defeasance becoming effective under this Article, the District shall
cause to be delivered (i)an executed copy of a report, addressed to the Trustee and the District,
in form and in substance acceptable to the Trustee and the District, of a nationally recognized
certified public accountant, or firm of such accountants, verifying that the Government
Obligations and cash, if any, satisfy the requirements of clause(ii) of subsection(b) of this
Section (a "Verification"), (ii)a copy of the escrow deposit agreement entered into in connection
with such defeasance, which escrow deposit agreement shall provide that no substitution of
Government Obligations shall be permitted except with other Government Obligations and upon
delivery of a new Verification and no reinvestment of Government Obligations shall be
permitted except as contemplated by the original Verification or upon delivery of a new
Verification, and (iii)a copy of an Opinion of Counsel, dated the date of such defeasance and
addressed to the Trustee and the District, in form and in substance acceptable to the Trustee and
the District, to the effect that such Certificates have been paid within the meaning and with the
effect expressed in this Trust Agreement, all agreements and covenants of the Corporation, the
District and the Trustee to the Owners of such Certificates under this Trust Agreement have
ceased,terminated and become void and have been discharged and satisfied.
Section 10.02. Unclaimed Moneys. Any moneys held by the Trustee in trust for the
payment and discharge of the interest or principal evidenced by any of the Certificates which
remain unclaimed for two years after the date when such interest or principal evidenced by such
Certificates have become payable, if such moneys were held by the Trustee at such date, or for
two years after the date of deposit of such moneys if deposited with the Trustee after the date
when the interest and principal evidenced by such Certificates have become payable, shall be
repaid by the Trustee to the District as its absolute property free from trust, and the Trustee shall
thereupon be released and discharged with respect thereto and the Owners shall look only to the
District for the payment of the interest and principal evidenced by such Certificates.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Benefits of Trust Agreement. Nothing contained herein, expressed or
implied, is intended to give to any Person other than the Corporation, the District, the Trustee
and the Owners any claim, remedy or right under or pursuant hereto, and any agreement,
condition, covenant or term required herein to be observed or performed by or on behalf of the
Corporation or the District shall be for the sole and exclusive benefit of the Trustee and the
Owners.
I I-2 Trod Agr a mt, o 39
Section 11.02. Successor Deemed Included in all References to Predecessor.
Whenever the Corporation, the District or the Trustee, or any officer thereof, is named or
referred to herein, such reference shall be deemed to include the successor to the powers, duties
and functions that are presently vested in the Corporation, the District or the Trustee, or such
officer, and all agreements, conditions, covenants and terms required hereby to be observed or
performed by or on behalf of the Corporation, the District or the Trustee, or any officer thereof,
shall bind and inure to the benefit of the respective successors thereof whether so expressed or
not.
Section 11.03. Execution of Documents by Owners. Any declaration, request or other
instrument which is permitted or required herein to be executed by Owners may be in one or
more instruments of similar tenor and may be executed by Owners in person or by their attorneys
appointed in writing. The fact and date of the execution by any Owner or his attorney of any
declaration, request or other instrument or of any writing appointing such attorney may be
proved by the certificate of any notary public or other officer authorized to take
acknowledgments of deeds to be recorded in the state or territory in which he purports to act that
the Person signing such declaration, request or other instrument or writing acknowledged to him
the execution thereof,or by an affidavit of a witness of such execution duly swom to before such
notary public or other officer, or by such other proof as the Trustee may accept which it may
deem sufficient.
The ownership of any Certificates and the amount, payment date, number and date of
owning the same may be proved by the registration books maintained by the Trustee pursuant to
the provisions of Section 2.07 hereof.
Any declaration, request or other instrument in writing of the Owner of any Certificate
shall bind all future Owners of such Certificate with respect to anything done or suffered to be
done by the Corporation,the District or the Trustee in good faith and in accordance therewith.
Section 11.04. Waiver of Personal Liability. Notwithstanding anything contained
herein to the contrary, no member, officer or employee of the District or the Corporation shall be
individually or personally liable for the payment of any moneys, including without limitation,the
interest or principal evidenced by the Certificates, but nothing contained herein shall relieve any
member, officer or employee of the District or the Corporation from the performance of any
official duty provided by any applicable provisions of law, by the Installment Purchase
Agreement or hereby.
Section 11.05. Acquisition of Certificates by District. All Certificates acquired by the
District, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for
cancellation.
Section 11.06. Content of Certificates. Every Written Certificate of the District and
every Written Certificate of the Corporation with respect to compliance with any agreement,
condition,covenant or term contained herein shall include (a)a statement that the Person making
or giving such certificate has read such agreement, condition, covenant or term and the
definitions herein relating thereto, (b)a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in such certificate are based,
11-2 Tma Ag..Ldoc 40
(c)a statement that, in the opinion of the signer, the signer has made or caused to be made such
examination or investigation as is necessary to enable the signer to express an informed opinion
as to whether or not such agreement, condition, covenant or term has been complied with, and
(d)a statement as to whether, in the opinion of the signer, such agreement, condition, covenant
or teem has been complied with.
Any Written Certificate of the District and any Written Certificate of the Corporation
may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless the
Person making or giving such certificate knows that the Opinion of Counsel with respect to the
matters upon which each Person's certificate may be based, as aforesaid, is erroneous, or in the
exercise of reasonable care should have known that the same was erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters, upon information which is in the
possession of the District or the Corporation upon a representation by an officer or officers of the
District or the Corporation, as the case may be, unless the counsel executing such Opinion of
Counsel knows that the representation with respect to the matters upon which such counsel's
opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should
have known that the same was erroneous.
Section 11.07. Funds and Accounts. Any fund or account required to be established
and maintained herein by the Trustee may be established and maintained in the accounting
records of the Trustee either as an account or a fund, and may, for the purposes of such
accounting records, any audits thereof and any reports or statements with respect thereto, be
treated either as an account or a fund, but all such records with respect to all such funds and
accounts shall at all times be maintained in accordance with sound accounting practice and with
due regard for the protection of the security of the Certificates and the rights of the Owners. The
Trustee may establish such funds and accounts as it deems necessary to perform its obligations
hereunder.
Trustee may commingle any of the moneys held by it hereunder for investment purposes
only; provided,however,that the Trustee shall account separately for the moneys in each fund or
account established pursuant to this Trust Agreement.
Section 11.08. Article and Section Headings, Gender and References. The singular
form of any word used herein, including the terms defined in Section 1.01 hereof, shall include
the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of
any gender shall include correlative words of the other genders. The headings or titles of the
several Articles and Sections hereof and the table of contents appended hereto shall be solely for
convenience of reference and shall not affect the meaning, construction or effect hereof. All
references herein to "Articles," "Sections," subsections or clauses are to the corresponding
Articles, Sections, subsections or clauses hereof, and the words "hereby," "herein," "hereof,"
"hereto;' "herewith," "hereunder" and other words of similar import refer to this Trust
Agreement as a whole and not to any particular Article, Section, subsection or clause thereof.
Section 11.09. Partial Invalidity. If any one or more of the agreements, conditions,
covenants or terms required herein to be observed or performed by or on the part of the
Corporation, the District or the Trustee shall be contrary to law, then such agreement or
agreements, such condition or conditions, such covenant or covenants or such term or terms shall
11-2 Trust AgrmmrnLdM 41
be null and void to the extent contrary to law and shall be deemed separable from the remaining
agreements, conditions,covenants and terns hereof and shall in no way affect the validity hereof
or of the Certificates, and the Owners shall retain all the benefit,protection and security afforded
to them under any applicable provisions of law. The Corporation, the District and the Trustee
hereby declare that they would have executed this Trust Agreement, and each and every Article,
Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized
the execution and delivery of the Certificates pursuant hereto irrespective of the fact that any one
or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the
application thereof to any Person or circumstance may be held to be unconstitutional,
unenforceable or invalid.
Section 11.10. California Law. This Trust Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 11.11. Notices. Any written notice, statement, demand, consent, approval,
authorization, offer, designation, request or other communication to be given hereunder shall be
given to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time, namely:
If to the District: Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,California 92708
Attention: Director of Finance and Administrative Services
If to the Corporation: Orange County Sanitation District Financing Corporation
c/o Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,California 92708
Attention: Treasurer
If to the Trustee: Union Bank of California,N.A.
120 South San Pedro Street, Suite 400
Los Angeles, California 90012
Attention: Corporate Trust Department
Each such notice, statement,demand,consent, approval, authorization,offer,designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic
communication, whether by telex, telegram or telecopier, upon the sender's receipt of an
appropriate answerback or other written acknowledgment, (c) if given by registered or certified
mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours
after such notice is deposited with the United States mail, (d) if given by overnight courier, with
courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any
other means, upon delivery at the address specified in this Section.
Section 11.12. Effective Date. This Trust Agreement shall become effective upon its
execution and delivery.
11.2 TrustA e, ..i.d 42
Section 11.13. Execution in Counterparts. This Trust Agreement may be
simultaneously executed in several counterparts, each of which shall be deemed an original, and
all of which shall constitute but one and the same instrument.
11-27rn Arj MLCIue 43
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be
executed by their respective officers thereunto duly authorized, all as of the day and year first
written above.
UNION BANK OF CALIFORNIA,N.A.,
as Trustee
By:
Authorized Officer
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
By:
Treasurer
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
(SEAL)
Attest:
By:
Secretary of the Board of Directors
11-2 T.IAgee Ld. 44
EXHIBIT A
FORM OF CERTIFICATE
No. R—_ s.s$•a•
Unless this Certificate is presented by an authorized representative of The Depository
Trust Company to the Trustee for registration of transfer, exchange or payment, and any
Certificate executed and delivered is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company and any payment
is made to Cede& Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered
Owner hereof,Cede&Co.,has an interest herein.
ORANGE COUNTY SANITATION DISTRICT
CERTIFICATE OF PARTICIPATION
SERIES 2007E
PRINCIPAL
PAYMENT DATE INTEREST RATE DATED DATE CUSIP
December_,2007
REGISTERED OWNER: Cede&Co.
PRINCIPAL AMOUNT: DOLLARS
TFHS IS TO CERTIFY that the Registered Owner of this Certificate of Participation
(this "Certificate"), as identified above, is the owner of a direct, fractional undivided interest in
certain installment payments ("Installment Payments"), and the interest thereon, payable under
and pursuant to the Installment Purchase Agreement, dated as of December 1, 2007 (the
`Installment Purchase Agreement"), by and between the Orange County Sanitation District (the
"District"), a county sanitation district organized and existing under the laws of the State of
California, and the Orange County Sanitation District Financing Corporation (the
"Corporation"), a nonprofit public benefit corporation organized and existing under the laws of
the State of California. Certain of the rights of the Corporation under the Installment Purchase
Agreement, including the right to receive the Installment Payments, and the interest thereon,
have been assigned without recourse by the Corporation to Union Bank of California, N.A., a
national banking association duly organized and existing under the laws of the United States of
America, as trustee (the "Trustee") under the Trust Agreement, dated as of December 1, 2007
(the "Trust Agreement"), by and among the Trustee, the District and the Corporation.
Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust
Agreement.
11-2 rmA AFmrmr A-1
The District has executed and delivered the Master Agreement for District Obligations,
dated as of August 1, 2000 (the "Master Agreement'), by and between the District and the
Corporation, pursuant to which the District establishes and declares the conditions and terms
upon which obligations such as the Installment Purchase Agreement, and the Installment
Payments and the interest thereon,will be incurred and secured.
This Certificate is one of the duly authorized Orange County Sanitation District
Certificates of Participation, Series 2007B (the "Certificates") evidence principal in the
aggregate amount of$ , executed pursuant to the terms of the Trust Agreement.
The Certificates evidence direct, fractional undivided interests in the Installment Payments, and
the interest thereon, payable under the Installment Purchase Agreement. The Certificates are
executed and delivered to refinance certain improvements to the wastewater collection,treatment
and disposal facilities of the District(the"Wastewater System"),to finance a reserve fund for the
Certificates,to pay the costs of issuance incurred in connection therewith and to pay certain other
related costs.
The Installment Payments,and the interest thereon,are to be paid by the District pursuant
to the Installment Purchase Agreement in consideration for the purchase of certain improvements
to the Wastewater System and for the other agreements and obligations undertaken by the
Corporation under the Installment Purchase Agreement and the Trust Agreement.
The income and revenue received by the District from the operation of the Wastewater
System remaining after the payment of maintenance and operation or ownership costs of the
Wastewater System (as more fully described in the Installment Purchase Agreement, the "Net
Revenues") are, pursuant to the Master Agreement, pledged to the payment of the Senior
Obligations and Reimbursement Obligations with respect to Senior Obligations (as such terms
are defined in the Master Agreement).
The Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall
be subject to the provisions of the Master Agreement,and shall be afforded all of the advantages,
benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement.
The Installment Purchase Agreement is payable on a parity with the other existing Senior
Obligation. The District may at any time incur Senior Obligations in addition to existing Senior
Obligations and the Installment Purchase Agreement payable from Net Revenues as provided in
the Master Agreement on a parity with all other Senior Obligations theretofore incurred, but only
subject to the conditions and upon compliance with the procedures set forth in the Master
Agreement.
The District is not required to advance any moneys derived from any source of income
other than Net Revenues and the other funds provided in the Installment Purchase Agreement for
the payment of the Installment Payments, and the interest thereon, and other payments required
to be made by it under the Installment Purchase Agreement, or for the performance of any
agreements or covenants required to be performed by it contained therein. The obligation of the
District to pay the Installment Payments, and the interest thereon, and other payments required to
be made by it under the Installment Purchase Agreement is a special obligation of the District
payable, in the manner provided in the Installment Purchase Agreement, solely from such Net
Revenues and other funds provided for therein,and does not constitute a debt of the District or of
r-zT wAa =.mr A-2
the State of California, or of any political subdivision thereof, in contravention of any
constitutional or statutory debt limitation or restriction.
Reference is hereby made to the Master Agreement, the Installment Purchase Agreement
and to the Trust Agreement and any and all amendments thereof and supplements thereto for a
description of the terms under which the District's obligation to pay the Installment Payments,
and the interest thereon, is incurred, the Certificates are executed and delivered, the provisions
with regard to the nature and extent of the Net Revenues, and the rights of the Owners of the
Certificates. All of the terms of the Master Agreement,the Installment Purchase Agreement and
the Trust Agreement are hereby incorporated herein. The Trust Agreement constitutes a contract
among the District, the Corporation and the Trustee for the benefit of the Owners of the
Certificates, to all the provisions of which the Owner of this Certificate, by acceptance hereof,
agrees and consents.
The Registered Owner of this Certificate is entitled to receive, subject to the terms of the
Trust Agreement and any right of prepayment as provided herein or therein, on the Principal
Payment Date set forth above, upon presentation and surrender of this Certificate at the principal
corporate trust office of the Trustee in Los Angeles, California (the "Principal Office"), the
Principal Amount specified above, evidencing the Owner's interest in the Installment Payments
coming due on the Principal Payment Date, and to receive on February 1 and August 1 of each
year, commencing on February 1, 2008 (the "Interest Payment Dates"), interest accrued thereon
at the Interest Rate specified above, computed on the basis of a 360-day year consisting of
twelve 30-day months, until said Principal Amount is paid in full, evidencing the Registered
Owner's interest in the interest evidenced by the Installment Payments coming due on each of
said dates.
This Certificate shall evidence interest from the Interest Payment Date next preceding its
date of execution to which interest has been paid in full, unless such date of execution shall be
after the 15th day of the month next preceding an Interest Payment Date,whether or not such day
is a business day (each such date, a "Record Date"), and on or prior to the following Interest
Payment Date, in which case this Certificate shall evidence interest from such Interest Payment
Date,or unless such date of execution shall be on or prior to the first Record Date, in which case
this Certificate shall evidence interest from the Dated Date specified above. Notwithstanding the
foregoing, if, as shown by the records of the Trustee, interest evidenced by the Certificates shall
be in default,this Certificate shall evidence interest from the last Interest Payment Date to which
interest has been paid in full or duly provided for.
Payments of interest evidenced by the Certificates shall be made to the Owners thereof
(as determined at the close of business on the Record Date next preceding the related Interest
Payment Date) by check or draft of the Trustee mailed to the address of each such Owner as it
appears on the registration books maintained by the Trustee pursuant to the Trust Agreement, or
to such other address as may be furnished in writing to the Trustee by such Owner. Payment of
principal and prepayment premium, if any,evidenced by the Certificates,on their stated principal
payment dates or on prepayment in whole or in part prior thereto, shall be made only upon
presentation and surrender of the Certificates at the Principal Office. All such amounts are
payable in lawful money of the United States of America.
II-2Tuust Aff m. . A-3
The Certificates are authorized to be executed and delivered in the form of fully
registered certificates in denominations of$5,000 or any integral multiple thereof("Authorized
Denominations").
This Certificate may be transferred or exchanged by the Registered Owner hereof, in
person or by his attorney duly authorized in writing, at the Principal Office, but only in the
manner, subject to the limitations and upon payment of the charges provided in the Trust
Agreement.
The Trustee shall not be required to transfer or exchange any Certificate during the period
commencing on the date five days before the date of selection of Certificates for prepayment and
ending on the date of mailing of notice of such prepayment, nor shall the Trustee be required to
transfer or exchange any Certificate or portion thereof selected for prepayment from and after the
date of mailing the notice of prepayment thereof.
The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all
purposes, whether or not the principal or interest evidenced by this Certificate shall be overdue,
and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of
the principal and interest evidenced by this Certificate shall be made only to such Registered
Owner, which payments shall be valid and effectual to satisfy and discharge the liability
evidenced by this Certificate to the extent of the sum or sums so paid.
The Certificates with stated Principal Payment Dates prior to February 1, 20_ are not
subject to optional prepayment prior to their stated Principal Payment Dates. The Certificates
with stated Principal Payment Dates on or after February 1, 20_ are subject to optional
prepayment prior to their stated Principal Payment Dates, on any date on or after February 1,
20 , in whole or in part, in Authorized Denominations, from and to the extent of prepaid
Installment Payments paid by the District pursuant to the Installment Purchase Agreement or
from any other available funds, any such prepayment to be at a price equal to the principal
evidenced by the Certificates to be prepaid, plus accrued interest evidenced thereby to the date
fixed for prepayment,without premium.
The Tenn Certificates maturing on February 1, 20_ are subject to prepayment prior to
their stated maturity, in part, by lot, on any February 1 on and after February 1, 20_, at the
principal amount thereof, plus accrued interest to the date fixed for prepayment, without
premium, from Mandatory Sinking Account Payments deposited in the Principal Account. The
Term Certificates maturing on February 1, 20_shall be prepaid(or paid at maturity,as the case
may be) by application of Mandatory Sinking Account Payments in the amounts and upon the
dates set forth below:
11-2 Tm Ag mt doc A4
Term Certificates Maturing February 1,
Mandatory
Sinking Account Mandatory
Payment Dates Sinking Account
(February 1) Payments
S
As provided in the Trust Agreement, at least 30 but not more than 60 days prior to any
prepayment date, notice of prepayment shall be given to the respective Owners of Certificates
designated for prepayment by first class mail, postage prepaid, at their addresses appearing on
the registration books maintained the Trustee as of the close of business on the day before such
notice of prepayment is given. The actual receipt by the Owner of any notice of such
prepayment shall not be a condition precedent to prepayment, and neither failure to receive such
notice nor any defect therein shall affect the validity of the proceedings for the prepayment of
such Certificates or the cessation of interest evidenced thereby on the date fixed for prepayment.
If this Certificate is selected for prepayment, notice of prepayment has been duly given as
provided in the Trust Agreement and moneys for the payment of the prepayment price are held
by the Trustee, then on the prepayment date designated in such notice, this Certificate shall
become payable at the prepayment price specified in such notice; and from and after the date so
designated, the interest evidenced hereby shall cease to accrue, this Certificate shall cease to be
entitled to any benefit or security under the Trust Agreement and the Registered Owner hereof
shall have no rights in respect hereof except to receive payment of such prepayment price, and
such moneys shall be pledged to such prepayment. The Trustee shall, upon surrender for
payment of this Certificate to be prepaid, pay this Certificate at the prepayment price so
designated in the Trust Agreement.
To the extent and in the manner permitted by the terms of the Trust Agreement,the Trust
Agreement and the rights and obligations of the Corporation, the District, the Owners and the
Trustee under the Trust Agreement may be amended or supplemented at any time by an
amendment or supplement thereto which shall become binding when the prior written consents
of the Owners of a majority of the aggregate principal evidenced by the Certificates then
outstanding, exclusive of Certificates disqualified as provided under the Trust Agreement, are
filed with the Trustee. No such supplement or amendment shall (a)extend the stated Principal
Payment Date of any Certificate or reduce the rate of interest evidenced thereby or extend the
time of payment of such interest or reduce the amount of principal evidenced thereby or change
the prepayment terms and provisions or the provisions regarding delivery of notice of
prepayment without the prior written consent of the Owner of each Certificate so affected,
(b) reduce the percentage of Owners whose consent is required for the execution of any
amendment of or supplement to the Trust Agreement without the prior written consent of the
Owners of all Certificates then outstanding, (c)modify any of the rights or obligations of the
Trustee without the prior written consent of the Trustee, or(d)amend the amendment provisions
of the Trust Agreement without the prior written consent of the Owners of all Certificates then
outstanding.
11-2T�Ap..Ldot A-$
To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust '
Agreement and the rights and obligations of the Corporation, the District, the Owners and the
Trustee under the Trust Agreement may also be amended or supplemented at any time by an
amendment or supplement thereto which shall become binding upon execution, without the
written consents of any Owners, but only to the extent permitted by law and only(a)to add to the
agreements, conditions, covenants and terms required by the Corporation or the District to be
observed or performed under the Trust Agreement other agreements, conditions, covenants and
terms thereafter to be observed or performed by the Corporation or the District, or to surrender
any right or power reserved therein to or conferred therein on the Corporation or the District,and
which in either case shall not adversely affect the rights or interests of the Owners, (b)to make
such provisions for the purpose of curing any ambiguity or of correcting, curing or
supplementing any defective provision contained in the Trust Agreement or in regard to
questions arising thereunder which the Corporation or the District may deem desirable or
necessary and not inconsistent therewith, (c)to make such additions, deletions or modifications
as may be necessary or appropriate to assure the exclusion from gross income for federal income
tax purposes of interest evidenced by the Certificates, or (d)for any other reason, provided such
amendment or supplement does not adversely affect the rights or interests of the Owners.
THE DISTRICT HAS CERTIFIED that all acts, conditions and things required by the
statutes of the State of California and by the Trust Agreement to exist, to have happened and to
have been performed precedent to and in connection with the execution and delivery of this
Certificate do exist, have happened and have been performed in regular and due time, form and
manner as required by law, and that the Trustee is duly authorized to execute and deliver this
Certificate.
11.2 Tmst Ayreemmt.dm A-6
IN WITNESS WHEREOF, this Certificate has been executed by the manual signature
of an authorized signatory of the Trustee as of the date set forth below.
Date:
UNION BANK OF CALIFORNIA,N.A.,
as Trustee
By:
Authorized Officer
11-2 TM Apa wt.doc A-7
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer onto
the within-mentioned Certificate and
hereby irrevocably constitute(s) and
appoint(s) attorney, to transfer the same
on the books of the Trustee with full power of substitution in the premises.
Dated:
Note: The signature(s)on this Assignment must correspond with the name(s)as written on the
face of the within registered Certificate in every particular, without alteration or
enlargement or any change whatsoever.
Tax I.D. #:
Signature Guaranteed:
Note: Signature(s)most be guaranteed by m eligible Note: The sigoatme(s)on this Assignment must cortespond
guarantor. with the name(s)as wrinen on the face of the within Cmtifiane
in every pmiculm without alteration or enlargement or my
change whatsoever.
11-2 Trutt Apennenr.doc A-g
Fulbright&Jawomki L.L.P.—Draft 11/2/07
INSTALLMENT PURCHASE AGREEMENT
by and between
ORANGE COUNTY SANITATION DISTRICT
and
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
Dated as of December 1, 2007
Relating to
$300,000,000
Orange County Sanitation District
Certificates of Participation
Series2007B
11-2 huullmmt PurrJtese A®mmrnl.d.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................................................................2
Section1.01. Definitions............................................................................................2
Section 1.02. Definitions in Master Agreement and Trust Agreement......................3
ARTICLE 11 PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE
CORPORATION;PAYMENT OF PURCHASE PRICE...............................3
Section 2.01. Purchase of Project by, and Sale Thereof to,the Corporation.............3
Section 2.02. Payment of Purchase Price...................................................................3
ARTICLE III PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE
DISTRICT; INSTALLMENT PAYMENTS...................................................4
Section 3.01. Purchase and Sale of Project................................................................4
Section3.02. Installment Payments...........................................................................4
Section 3.03. Reserve Fund Payments.......................................................................6
Section 3.04. Obligation Absolute.............................................................................6
Section 3.05. Nature of Agreement............................................................................6
ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENTS;DISCHARGE............6
Section 4.01. Prepayment of Installment Payments...................................................6
Section4.02. Notice...................................................................................................7
Section 4.03. Discharge of Obligations.....................................................................7
ARTICLE COVENANTS.................................................................................................7
Section 5.01. Compliance with Master Agreement...................................................7
Section 5.02. Compliance with Installment Purchase Agreement.............................7
Section 5.03. Protection of Security and Rights........................................................8
Section 5.04. Indemnification of Corporation...........................................................8
Section 5.05. Further Assurances...............................................................................8
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE
CORPORATION.............................................................................................8
Section 6.01. Events of Default................................................................................. 8
Section 6.02. Remedies on Default............................................................................9
Section6.03. Non-Waiver..........................................................................................9
Section 6.04. Remedies Not Exclusive.................................................................... 10
ARTICLE VII AMENDMENTS........................................................................................... 10
Section 7.01. Amendments...................................................................................... 10
ARTICLE VIII MISCELLANEOUS...................................................................................... 11
Section 8.01. Liability of District Limited............................................................... 1
Section 8.02. Limitation of Rights........................................................................... 1
Section8.03. Assignment........................................................................................ 11
Section8.04. Notices............................................................................................... 11
11.21 Wlmat Pmchm AgrcvnmLdoc -i_
TABLE OF CONTENTS -
(continued)
Far
Section 8.05. Successor Is Deemed Included in all References to Predecessor...... 12
Section9.06. Waiver of Personal Liability.............................................................. 12
Section 8.07. Article and Section Headings,Gender and References..................... 12
Section8.08. Partial Invalidity................................................................................. 13
Section8.09. Law Governing.................................................................................. 13
Section8.10. Execution in Counterparts.................................................................. 13
EXHIBIT A DESCRIPTION OF PROJECT........................................................A-1
11.2 Mastimmt RUNue AVe t.doc -11-
INSTALLMENT PURCHASE AGREEMENT
THIS INSTALLMENT PURCHASE AGREEMENT (this `Installment Purchase
Agreement"), dated as of December 1, 2007, is by and between the ORANGE COUNTY
SANITATION DISTRICT, a county sanitation district organized and existing under the laws of
the State of California (the "District'), and the ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing
under the laws of the State of California(the"Corporation').
WITNESSETH:
WHEREAS, the District desires to finance the acquisition, construction and installation
of certain improvements to its wastewater system (the"project');
WHEREAS, in order to finance the Project, the District desires to purchase the Project
from the Corporation, and the Corporation desires to sell the Project to the District, for the
installment payments (the `Installment Payments") to be made by the District pursuant to the
Installment Purchase Agreement, dated as of December 1, 2007 (the `Installment Purchase
Agreement'), by and between the District and the Corporation;
WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of
August 1, 2000, by and between the District and the Corporation,the District has established and
declared the conditions and terms upon which obligations such as this Installment Purchase
Agreement, and the Installment Payments, and the interest thereon, are to be incurred and
secured;
WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to this Installment Purchase Agreement to Union Bank of California,N.A., as
trustee(the"Trustee");
WHEREAS, in consideration of such assignment and the execution and delivery of the
Trust Agreement, dated as of the date hereof, by and among the Trustee,the Corporation and the
District, the Trustee has agreed to execute and deliver Orange County Sanitation District
Certificates of Participation, Series 2007B (the "Certificates"), evidencing direct, undivided
fractional interests in the Installment Payments,and the interest thereon,payable hereunder;
WHEREAS, all acts, conditions and things required by law to exist, to have happened
and to have been performed precedent to and in connection with the execution and delivery of
this Installment Purchase Agreement do exist, have happened and have been performed in
regular and due time, form and manner as required by law, and the parties hereto are now duly
authorized to execute and enter into this Installment Purchase Agreement;
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth
and for other valuable consideration the receipt and sufficiency of which is hereby
acknowledged,the parties hereto do hereby agree as follows:
11.2 Insmllmmt Purchm Agre fflt.E
ARTICLE
DEFINITIONS
Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the
context otherwise requires, the terms defined in this Section shall for all purposes hereof and of
any amendment hereof or supplement hereto and of any report or other document mentioned
herein or therein have the meanings defined herein, the following definitions to be equally
applicable to both the singular and plural forms of any of the terms defined herein:
"Acquisition Fund" means the fund by that name established in accordance with the
Trust Agreement.
"Business Day" means a day other than (a) Saturday or Sunday, (b) a day on which
banking institutions in the city in which the Principal Office is located are authorized or required
by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or
obligated by law or executive order to be closed.
"Certificates" means the Orange County Sanitation District Certificates of Participation,
Series 2007B,executed and delivered under and pursuant to the Trust Agreement.
"Closing Date" means December.2007.
"Corporation" means the Orange County Sanitation District Financing Corporation, a
nonprofit public benefit corporation organized and existing under the laws of the State, and any
successor thereto.
"District" means the Orange County Sanitation District, a county sanitation district
organized and existing under and by virtue of the laws of the State,and any successor thereto.
"Event of Default"means an event described in Section 6.01 hereof.
"Installment Payments" means the Installment Payments required to be made by the
District pursuant to Section 3.02 hereof.
"Installment Payment Date"means each February 1,commencing February 1,2009.
"Installment Purchase Agreement" means this Installment Purchase Agreement, dated
as of December 1,2007, by and between the District and the Corporation, as originally executed
and as it may from time to time be amended or supplemented in accordance with the teens
hereof.
"Interest Payment Date" means February I and August 1 of each year, commencing
February 1,2008.
"Master Agreement" means the Master Agreement for District Obligations, dated as of
August 1, 2000, by and between the District and the Corporation,as originally executed and as it
may from time to time be amended or supplemented in accordance with the terms thereof.
11-2 MAIh1 lPuram AVe Mtduc 2
"Person" means an individual, corporation, limited liability company, firm, association,
partnership, trust, or other legal entity or group of entities, including a governmental entity or
any agency or political subdivision thereof.
"Principal Office" means the Trustee's principal corporate trust office in Los Angeles,
California.
"Project" means the improvements to the Wastewater System to be acquired,
constructed and installed pursuant to this Installment Purchase Agreement, as described in
Exhibit A hereto.
"Trust Agreement" means the Trust Agreement, dated as of December 1, 2007, by and
among the Trustee, the Corporation and the District, as originally executed and as it may from
time to time be amended or supplemented in accordance with its terms.
"Trustee" means Union Bank of California, N.A., a national banking association duly
organized and existing under the laws of the United States of America,or any other bank or trust
company which may at any time be substituted in its place as provided in the Trust Agreement.
Section 1.02. Definitions in Master Agreement and Trust Agreement. Except as
otherwise herein defined and unless the context otherwise requires, the terns defined in the
Master Agreement or the Trust Agreement shall for all purposes hereof and of any amendment
hereof or supplement hereto and of any report or other document mentioned herein have the
meanings defined therein, such definitions to be equally applicable to both the singular and
plural forms of any of the terms defined therein. With respect to any defined term which is given
a different meaning under this Installment Purchase Agreement than under the Master
Agreement or the Trust Agreement,as used herein it shall have the meaning given herein.
ARTICLE U
PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE CORPORATION;
PAYMENT OF PURCHASE PRICE
Section 2.01. Acquisition. Construction and Installation of the Project. The
Corporation hereby agrees to cause the Project to be acquired, constructed and installed by the
District, as agent of the Corporation. The District shall enter into contracts and provide for, as
agent of the Corporation, the complete acquisition, construction and installation of the Project.
The District hereby agrees that it will cause the acquisition, construction and installation of the
Project to be diligently performed. It is hereby expressly understood and agreed that, except to
the extent of proceeds of the Certificates which are deposited in the Acquisition Fund, the
Corporation shall be under no liability of any kind or character whatsoever for the payment of
any Acquisition Costs. In the event the proceeds of the Certificates deposited in the Acquisition
Fund are insufficient to complete the acquisition,construction and installation of the Project,the
District shall cause to be applied from and to the extent of other available District funds, an
amount equal to that necessary to complete the acquisition, construction and installation of the
Project.
11-2 hmWftm tP d mAva Ldoc 3
Section 2.02. Changes to the Project. The District may make any changes in the
composition and description of the Project or any component thereof whenever the District
deems such changes to be necessary and appropriate; provided, however, that no such change
shall impair the ability of the District to make the Installment Payments or cause to be included
in the Project any property not constituting property useful in the performance of the District's
powers, projects and purposes. Any such change shall be implemented by the District's filing
with the Corporation and the Trustee a description of such change and, upon such filing, the
description of the Project contained in Exhibit A shall he deemed to have been modified in
accordance therewith. No such change shall constitute an amendment, change, modification or
alteration of this Installment Purchase Agreement.
Section 2.03. Payment of Purchase Price. On the Closing Date, the Corporation shall
pay to the District, as the purchase price of the Project, the amount of$300,000,000, which
amount shall be paid from the proceeds of the Certificates.
ARTICLE III
PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT;
INSTALLMENT PAYMENTS
Section 3.01. Purchase and Sale of Project. The District hereby purchases from the
Corporation, and the Corporation hereby sells to the District, the Project in accordance with the
provisions of this Installment Purchase Agreement. All right, title and interest in and to the
Project shall immediately vest in the District on the Closing Date without further action on the
part of the District or the Corporation.
Section 3.02. Installment Payments. The District shall, subject to any rights of
prepayment provided in Article IV hereof,pay to the Corporation, solely from Net Revenues and
from no other sources, the purchase price of the Project in Installment Payments, with interest
thereon, as provided herein. The Installment Payments shall be in the aggregate principal
amount of$300,000,000, and shall be payable on the Business Day immediately preceding each
of the Installment Payment Dates in the principal amounts and shall accrue interest at the rates
per annum set forth in the following schedule:
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Installment
Payment Date
February Installment Payment Interest Rate
2009 $ %
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
The Installment Payments shall accrue interest from the Closing Date, at the rates set
forth above, payable on the Interest Payment Dates in each year. Such interest shall accrue on
the basis of a 360-day year consisting of twelve 30-day months. Each Installment Payment, and
each payment of interest thereon, shall be deposited with the Trustee, as assignee of the
Corporation, no later than the Business Day next preceding the Installment Payment Date or
Interest Payment Date on which such Installment Payment or payment of interest is due, in
lawful money of the United States of America, in immediately available funds. If and to the
extent that, on any such date, there are amounts on deposit in the Installment Payment Fund
established under the Trust Agreement, or in any of the accounts therein, which amounts are not
being held for the payment of specific Certificates, such amounts shall be credited against the
Installment Payment,or payment of interest thereon,as applicable,due on such date.
11-2 inaullmmt Pvchm Ai;=M=t. oc 5
Section 3.03. Reserve Fund Payments. The District shall maintain or cause to be
maintained in the Reserve Fund established under the Trust Agreement an amount equal to the
Reserve Requirement; provided, however,that any replenishment thereof shall be payable solely
from Net Revenues. On or before the last Business Day of each month, commencing on or
before the last Business Day of each month during which an event occurs that causes the amount
on deposit in the Reserve Fund to be reduced below, or further below, the Reserve Requirement,
the District shall transfer, from Net Revenues, to the Trustee for deposit in the Reserve Fund,
1/12 of the amount of such reduction, except that no such transfer to the Trustee and deposit in
the Reserve Fund need be made if the amount available and contained therein is at least equal to
the Reserve Requirement.
Section 3.04. Obligation Absolute. The obligation of the District to make the
Installment Payments,and payments of interest thereon,and other payments required to be made
by it under this Article, solely from Net Revenues, is absolute and unconditional, and until such
time as the Installment Payments, payments of interest thereon, and such other payments shall
have been paid in full (or provision for the payment thereof shall have been made pursuant to
Article IV), the District shall not discontinue or suspend any Installment Payments, or payments
of interest thereon, or other payments required to be made by it hereunder when due, whether or
not the Project or any part thereof is operating or operable or has been completed, or its use is
suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such
Installment Payments, payments of interest thereon, and other payments shall not be subject to
reduction whether by offset or otherwise and shall not be conditional upon the performance or
nonperformance by any party of any agreement for any cause whatsoever.
Section 3.05. Nature of Agreement. This Installment Purchase Agreement constitutes
a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement and
shall be afforded all of the advantages, benefits, interests and security afforded Senior
Obligations pursuant to the Master Agreement.
ARTICLE IV
PREPAYMENT OF INSTALLMENT PAYMENTS; DISCHARGE
Section 4.01. Prepayment of Installment Payments. (a) Installment Payments shall be
subject to prepayment prior to their respective Installment Payment Dates, at the option of, and
in the amounts directed by, the District, from any source of available funds, in whole or in part
(in an amount equal to$5,000 or an integral multiple thereof) on any date on or after February 1,
20_, at the principal amount thereof and accrued interest thereon to the date fixed for
prepayment,without premium.
(b) The District may prepay, from any source of available funds, all or any portion of
the Installment Payments by depositing with the Trustee moneys or securities as provided, and
subject to the tems and conditions set forth, in Article X of the Trust Agreement sufficient to pay
such Installment Payments, and the interest thereon, when due or to pay such Installment
Payments, and the interest thereon, through a specified date on which the District has a right to
prepay such Installment Payments pursuant to subsection (a) of this Section, and to prepay such
II-2 lnstallm tRnha Aiie tdoc 6
Installment Payments on such prepayment date, at a prepayment price determined in accordance
with subsection (a)of this Section.
(c) If less than all of the Installment Payments are prepaid pursuant to this Section
then,as of the date of such prepayment pursuant to subsection (a)of this Section,or the date of a
deposit pursuant to subsection (b) of this Section, the schedule of Installment Payments shall be
recalculated in order to take such prepayment into account.
(d) Prepayments of Installment Payments made pursuant to this Section shall be
applied to the prepayment of Certificates as provided in Section 4.01 of the Trust Agreement.
Section 4.02. Notice. The District shall give written notice to the Trustee specifying the
date on which the prepayment will be made prior to making any prepayment pursuant to this
Article, which date shall be not less than 45 nor more than 60 days from the date such notice is
given to the Trustee, unless such time period shall be waived by the Trustee.
Section 4.03. Discharge of Obligations. If all Installment Payments, and the interest
thereon, shall be paid as and when due in accordance with the terms hereof, or prepaid in
accordance with Section 4.01 hereof, and if all Certificates shall be fully paid, or provision
therefor made in accordance with Article X of the Trust Agreement, and the Trust Agreement
shall be discharged by its terns, then all agreements, covenants and other obligations of the
District hereunder shall thereupon cease, terminate and become void and be discharged and
satisfied.
ARTICLE V
COVENANTS
Section 5.01. Commliance with Master Agreement. The District will faithfully
observe and perform all the agreements,conditions, covenants and terms contained in the Master
Agreement required to be observed and performed by it and will not cause, suffer or permit any
default to occur thereunder.
Section 5.02. Commliance with Installment Purchase Agreement. The District will
punctually pay the Installment Payments, and interest thereon,and other payments required to be
made by it hereunder in strict conformity with the terms hereof, and will faithfully observe and
perform all the agreements, conditions, covenants and terns contained herein required to be
observed and performed by it, will not cause,suffer or permit any default to occur hereunder and
will not terminate this Installment Purchase Agreement for any cause including, without limiting
the generality of the foregoing, any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the Project, commercial frustration of purpose, any
change in the tax or other laws of the United States of America or of the State or any political
subdivision of either or any failure of the Corporation to observe or perform any agreement,
condition, covenant or term contained herein required to be observed and performed by it,
whether express or implied, or any duty, liability or obligation arising out of or connected
herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the
Corporation or any force majeure, including acts of God, tempest, storm, earthquake, war,
11.2lnwal tPurd.Age Ldw 7
rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial
disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of
governmental authorities.
Section 5.03. Protection of Security and Rights. The District will preserve and protect
the security hereof and the rights of the Trustee, as assignee of the Corporation, to the
Installment Payments, and interest thereon, and other payments required to be made by the
District hereunder and will warrant and defend such rights against all claims and demands of all
Persons.
Section 5.04. Indemnification of Corporation. To the extent permitted by law, the
District hereby agrees to indemnify and hold the Corporation and its members and officers
harmless against any and all liabilities which might arise out of or are related to the Project, this
Installment Purchase Agreement or the Certificates, and the District further agrees to defend the
Corporation and its members and officers in any action arising out of or related to the Project,
this Installment Purchase Agreement or the Certificates.
Section 5.05. Further Assurances. The District will adopt, deliver, execute and make
any and all further assurances, instruments and resolutions as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance hereof and for the better assuring
and confirming unto the Corporation, or onto the Trustee, as assignee of the Corporation, the
rights and benefits provided herein to the Corporation, or to the Trustee, as assignee of the
Corporation.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION
Section 6.01. Events of Default. The following shall be Events of Default under this
Installment Purchase Agreement, and "Event of Default' shall mean any one or more of the
following events:
(a) if default shall be made by the District in the due and punctual payment of or on
account of any Senior Obligation as the same shall become due and payable;
(b) if default shall be made by the District in the performance of any of the
agreements or covenants required herein, in the Trust Agreement or in the Master Agreement to
be performed by it (other than as specified in (a) above), and such default shall have continued
for a period of 30 days after the District shall have been given notice in writing of such default
by the Corporation or the Trustee; provided,however,that the party or parties giving such notice
may agree in writing to a reasonable extension of such period prior to the expiration of such 30
day period and, provided further, that if the District shall proceed to take curative action which,
if begun and prosecuted with due diligence, cannot be completed within such a period of 30
days, then such period shall be increased without such written extension to such extent as shall
be necessary to enable the District to diligently complete such curative action and such default
shall not become an Event of Default for so long as shall be necessary to diligently complete
such curative action;or
11-2 k"hnmi N r M Awe t.da 8
(c) if the District shall file a petition or answer seeking arrangement or reorganization
under the federal bankruptcy laws or any other applicable law of the United States of America or
any state therein, or if a court of competent jurisdiction shall approve a petition filed with or
without the consent of the District seeking arrangement or reorganization under the federal
bankruptcy laws or any other applicable law of the United States of America or any state therein,
or if under the provisions of any other law for the relief or aid of debtors any court of competent
jurisdiction shall assume custody or control of the District or of the whole or any substantial part
of its property.
Section 6.02. Remedies on Default. Upon the occurrence of an Event of Default, the
Trustee,as assignee of the Corporation, shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce
its rights against the District and to compel the District to perform and carry out its duties under
applicable law and the agreements and covenants required to be performed herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee,as assignee of the Corporation;
(c) by suit in equity require the District to account as the trustee of an express trust;
and to have a receiver or receivers appointed for the Wastewater System and of the issues,
earnings, income, products and profits thereof, pending such proceedings, with such powers as
the court making such appointment shall confer.
Section 6.03. Non-Waiver. Nothing in this Article or in any other provision hereof
shall affect or impair the obligation of the District, which is absolute and unconditional, to pay
the Installment Payments, and the interest thereon, to the Trustee,as assignee of the Corporation,
at the respective due dates from the Net Revenues and the other funds herein committed for such
payment, or shall affect or impair the right of the Trustee, as assignee of the Corporation, which
is also absolute and unconditional, to institute suit to enforce such payment by virtue of the
contract embodied herein.
A waiver of any default or breach of duty or contract by the Trustee, as assignee of the
Corporation, shall not affect any subsequent default or breach of duty or contract or impair any
rights or remedies on any such subsequent default or breach of duty or contract. No delay or
omission by the Trustee, as assignee of the Corporation,to exercise any right or remedy accruing
upon any default or breach of duty or contract shall impair any such right or remedy or shall he
construed to be a waiver of any such default or breach of duty or contract or an acquiescence
therein,and every right or remedy conferred upon the Trustee, as assignee of the Corporation, by
applicable law or by this Article may be enforced and exercised from time to time and as often as
shall be deemed expedient by the Trustee,as assignee of the Corporation.
If any action,proceeding or suit to enforce any right or exercise any remedy is abandoned
or determined adversely to the Trustee, as assignee of the Corporation, the District and the
Trustee, as assignee of the Corporation, shall be restored to their former positions, rights and
remedies as if such action,proceeding or suit had not been brought or taken.
11-2 rn"I iPorrbave AV Ldo 9
Section 6.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee, as assignee of the Corporation, is intended to be exclusive of any other remedy,
and each such remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be
exercised without exhausting and without regard to any other remedy conferred by law.
ARTICLE VII
AMENDMENTS
Section 7.01. Amendments. (a) This Installment Purchase Agreement and the rights
and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation,
may be amended or modified from time to time and at any time by a written amendment hereto
executed by the District, the Corporation and the Trustee, as assignee of the Corporation, with
the written consent of the Owners of a majority of the aggregate principal evidenced by
Certificates then Outstanding. No such amendment shall (i) extend the payment date of any
Installment Payment or reduce the amount of any Installment Payment, or the interest rate
applicable thereto, without the prior written consent of the Owner of each affected Certificate,or
(ii) reduce the percentage of Owners of the Certificates whose consent is required to effect any
such amendment or modification, without the prior written consent of the Owners of all
Certificates then Outstanding.
(b) This Installment Purchase Agreement and the rights and obligations of the
District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or
modified from time to time and at any time by a written amendment hereto executed by the
District, the Corporation and the Trustee, as assignee of the Corporation, without the written
consents of any Owners of the Certificates, but only to the extent permitted by law and only for
any one or more of the following purposes:
(i) to add to the agreements, conditions, covenants and terms required by the
District, the Corporation or the Trustee, as assignee of the Corporation, to be observed
or performed herein other agreements, conditions, covenants and terms thereafter to be
observed or performed by the District,the Corporation or the Trustee,as assignee of the
Corporation, or to surrender any right or power reserved herein to or conferred herein
on the District,the Corporation or the Trustee,as assignee of the Corporation;
(ii) to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein or in
regard to questions arising hereunder which the District,the Corporation or the Trustee,
as assignee of the Corporation, may deem desirable or necessary and not inconsistent
herewith;
(iii) to make such additions, deletions or modifications as may be necessary or
appropriate to assure the exclusion from gross income for federal income tax purposes
of interest on the Installment Payments;and
11.2 lns l.t Pur .Aii a t.d. 10
(iv) to make such other changes herein or modifications hereto as the District,
the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or
necessary,and which shall not materially adversely affect the interests of the Owners of
the Certificates.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Liability of District Limited. Notwithstanding anything contained herein
to the contrary,the District shall not be required to advance any moneys derived from any source
of income other than Net Revenues and the other funds provided herein for the payment of the
Installment Payments, and the interest thereon, and other payments required to be made by it
hereunder, or for the performance of any agreements or covenants required to be performed by it
contained herein. The District may, however, but in no event shall be obligated to, advance
moneys for any such purpose so long as such moneys are derived from a source legally available
for such purpose and may be legally used by the District for such purpose.
The obligation of the District to pay the Installment Payments, and the interest thereon,
and other payments required to be made by it hereunder is a special obligation of the District
payable, in the manner provided herein, solely from Net Revenues and other funds provided for
herein, and does not constitute a debt of the District or of the State, or of any political
subdivision thereof, in contravention of any constitutional or statutory debt limitation or
restriction. Neither the faith and credit nor the taxing power of the District or the State, or any
political subdivision thereof, is pledged to the payment of the Installment Payments, or the
interest thereon, or other payments required to be made hereunder.
Section 8.02. Limitation of Rights. Nothing in this Installment Purchase Agreement
expressed or implied is intended or shall be construed to give to any Person other than the
District, the Corporation and the Trustee, as assignee of the Corporation, any legal or equitable
right, remedy or claim under or in respect of this Installment Purchase Agreement or any
covenant, condition or provision therein or herein contained, and all such covenants, conditions
and provisions are and shall be held to be for the sole and exclusive benefit of the District, the
Corporation and the Trustee,as assignee of the Corporation.
Section 8.03. Assignment. The District and the Corporation hereby acknowledge the
transfer, conveyance and assignment by the Corporation to the Trustee of all of the Corporation's
rights, title and interest in and to this Installment Purchase Agreement (excepting its rights to
indemnification hereunder), including the right to receive Installment Payments, and the interest
thereon, from the District, pursuant to the Trust Agreement.
Section 8.04. Notices. Any written notice, statement, demand, consent, approval,
authorization, offer, designation, request or other communication to be given hereunder shall be
given to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time,namely:
II-2 lnsWjmmt Pumhau Agmnmt.dm II
If to the District: Orange County Sanitation District
10844 Ellis Avenue Fountain Valley, California 92708
Attention: Director of Finance and Administrative Services
If to the Corporation: Orange County Sanitation District Financing Corporation
c/o Orange County Sanitation District
10844 Ellis Avenue Fountain Valley,California 92708
Attention: Treasurer
If to the Trustee: Union Bank of California,N.A.
120 South San Pedro Street, Suite 400
Los Angeles,California 90012
Attention: Corporate Trust Department
Each such notice, statement, demand,consent,approval, authorization,offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic
communication, whether by telex, telegram or telmopier, upon the sender's receipt of an
appropriate answerback or other written acknowledgment, (c) if given by registered or certified
mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours
after such notice is deposited with the United States mail, (d) if given by overnight courier, with
courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any
other means, upon delivery at the address specified in this Section.
Section 8.05. Successor Is Deemed Included in all References to Predecessor.
Whenever the District or the Corporation is named or referred to herein, such reference shall be
deemed to include the successor to the powers, duties and functions that are presently vested in
the District or the Corporation, and all agreements and covenants required hereby to be
performed by or on behalf of the District or the Corporation shall bind and inure to the benefit of
the respective successors thereof whether so expressed or not.
Section 8.06. Waiver of Personal Liability. No official, officer or employee of the
District shall be individually or personally liable for the payment of the Installment Payments, or
the interest thereon,or other payments required to be made by the District hereunder, but nothing
contained herein shall relieve any official, officer or employee of the District from the
performance of any official duty provided by any applicable provisions of law or hereby.
Section 8.07. Article and Section Headings. Gender and References. The headings
or titles of the several Articles and Sections hereof and the table of contents appended hereto
shall be solely for convenience of reference and shall not affect the meaning, construction or
effect hereof, and words of any gender shall be deemed and construed to include all genders. All
references herein to "Articles," "Sections" and other subsections or clauses are to the
corresponding articles, sections, subsections or clauses hereof; and the words"hereby,""herein,"
"hereof," "hereto," "herewith" and other words of similar import refer to this Installment
Purchase Agreement as a whole and not to any particular Article, Section, subdivision or clause
hereof.
I1-2 buWhnmtP &M Agrmnmrd 12
Section 8.08. Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof required hereby to be performed by or on the part of the District or the
Corporation shall be contrary to law, then such agreement or agreements, such covenant or
covenants or such portions thereof shall be null and void and shall be deemed separable from the
remaining agreements and covenants and portions thereof and shall in no way affect the validity
hereof.
Section 8.09. Law Governing. This Installment Purchase Agreement shall be construed
and governed in accordance with the laws of the State.
Section 8.10. Execution in Counternarts. This Installment Purchase Agreement may
be executed in several counterparts, each of which shall be deemed an original, and all of which
shall constitute but one and the same instrument.
1i-21nstdlmmt Pmchm Agrea =Wm 13
IN WITNESS WHEREOF, the parties hereto have executed this Installment Purchase
Agreement by their officers thereunto duly authorized as of the day and year first written above.
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
(SEAL)
Attest:
By:
Secretary of the Board of Directors
ORANGE COUNTY SANITATION
DISTRICT FINANCING CORPORATION
By:
Treasurer
II-3 kgdlm lPmr A® Ldm 14
EXHIBIT A
DESCRIPTION OF PROJECT
The Project is consists of the acquisition, construction and installation of certain
improvements to the Wastewater System, including the acquisition, construction and installation
of improvements to the District's collection system, two wastewater treatment plants, and Ocean
Outfall systems, including the following Project components:
Magnolia Trunk Sewer Trickling Filters at Plant 2
Ellis Avenue Pump Station Sludge Digester at Plant 1
Rocky Point Pump Station Sludge Dewatering at Plant 1 and 2
Bitter Point Pump Station Rehabilitation of Solids Storage
Bitter Point Force Main Rehabilitation Silos C & D at Plant 2
Euclid Relief Improvements- Headworks at Plant 2 Digester Rehabilitation at Plant 2
Primary Treatment System Rehabilitation at Plant 2 Cable Tray Improvements at Plant 1 and 2
New Secondary Treatment System at Plant 1 Rehabilitation of Odor Control Facilities
11-2 W 9[a tPo chax Agr mt.tl A-1
Fulbright&Jaworski L.L.P.— Draft 11/2/07
CONTINUING DISCLOSURE AGREEMENT
by and between
ORANGE COUNTY SANITATION DISTRICT
and
UNION BANK OF CALIFORNIA, N.A.,
as Trustee
Dated as of December 1, 2007
Relating to
$300,000,000
Orange County Sanitation District
Certificates of Participation
Series2007B
II-2 Cwlinuing DIKIM M/Fea Ldoc
CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"),
dated as of December 1, 2007, is by and between the ORANGE COUNTY SANITATION
DISTRICT, a county sanitation district organized and existing under the laws of the State of
California (the "District"), and DIGITAL ASSURANCE CERTIFICATION LLC, as
Dissemination Agent(the "Dissemination Agent").
WITNESSETH :
WHEREAS, the District has caused to be executed and delivered Orange County
Sanitation District Certificates of Participation, Series 2007B (the "Certificates"), evidencing
principal in the aggregate amount of$300,000,000, pursuant to a Trust Agreement, dated as of
the date hereof (the "Trust Agreement"), by and among Union Bank of California, N.A., as
trustee (the "Trustee"), the Orange County Sanitation District Financing Corporation (the
"Corporation")and the District; and
WHEREAS, this Disclosure Agreement is being executed and delivered by the District
and the Dissemination Agent for the benefit of the owners and beneficial owners of the
Certificates and in order to assist the underwriters of the Certificates in complying with the Rule
(as defined herein);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
herein contained,the parties hereto agree as follows:
Section 1. Definitions. Capitalized undefined terms used herein shall have the
meanings ascribed thereto in the Trust Agreement or, if not defined therein, in the Master
Agreement, dated as of August 1, 2000, by and between the District and the Corporation. In
addition,the following capitalized terms shall have the following meanings:
"Annual Report" means any Annual Report provided by the District pursuant to, and as
described in, Sections 2 and 3 hereof.
"Annual Report Date" means the date in each year that is eight months after the end of
the District's fiscal year,which date,as of the date of this Disclosure Certificate, is March 1.
"Disclosure Representative" means the Director of Finance of the District,or such other
officer or employee of the District as the District shall designate in writing to the Trustee from
time to time.
"Dissemination Agent" means an entity selected and retained by the District, or any
successor thereto selected by the District. The initial Dissemination Agent shall be Digital
Assurance Certification LLC.
"Listed Events"means any of the events listed in subsection (a)of Section 4 hereof.
"National Repository" means any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. As of the date hereof, the National
11-2 Continuing Disclosure A,.e .Ldoc
Repositories approved by the Securities and Exchange Commission are identified at
http://www.sec.gov/info/municipal/nrtnsir.htm.
"Official Statement- means the Official Statement, dated , 2007, relating to
the Certificates.
"Participating Underwriter" means any of the original underwriters of the Certificates
required to comply with the Rule in connection with the offering of the Certificates.
"Repository"means each National Repository and each State Repository.
"Rule" means Rule 15c2-12 adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State Repository" means any public or private repository or entity designated by the
State of California as a state repository for the purpose of the Rule and recognized by the
Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no
State Repository.
Section 2. Provision of Annual Reports. (a)The District shall, or shall cause the
Dissemination Agent to, not later than the Annual Report Date, commencing with the report for
the 2007-08 Fiscal Year, provide to each Repository an Annual Report which is consistent with
the requirements of Section 3 hereof. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may include by reference other
information as provided in Section 3 hereof; provided that the audited financial statements of the
District may be submitted separately from the balance of the Annual Report, and later than the
date required above for the filing of the Annual Report if not available by that date. If the
District's fiscal year changes, it shall give notice of such change in the same manner as for a
Listed Event under subsection(t)of Section 4 hereof.
(b) Not later than 15 business days prior to the date specified in subsection(a)
of this Section for the providing of the Annual Report to the Repositories, the District
shall provide the Annual Report to the Dissemination Agent and the Trustee. If by such
date,the Trustee has not received a copy of the Annual Report, the Trustee shall contact
the District and the Dissemination Agent to determine if the District is in compliance
with the first sentence of this subsection(b).
(c) If the Trustee is unable to confirm that an Annual Report has been
provided to Repositories by the date required in subsection (a)of this Section,the Trustee
shall send a notice to the Municipal Securities Rulemaking Board and each State
Repository, if any, in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual
Report the name and address of each National Repository and each State
Repository, if any;and
II-2 Cmsmtiuiii Disclosure Agmurmtdm 2
(ii) file a report with the District and (if the Dissemination Agent is not
the Trustee) the Trustee certifying that the Annual Report has been provided
pursuant to this Disclosure Agreement, stating the date it was provided and listing
all the Repositories to which it was provided.
Section 3. Content of Annual Reports. The District's Annual Report shall contain
or incorporate by reference the following:
(a) Audited financial statements prepared in accordance with generally
accepted accounting principles as promulgated to apply to governmental entities from
time to time by the Governmental Accounting Standards Board. If the District's audited
financial statements are not available by the time the Annual Report is required to be
filed pursuant to subsection (a) of Section 2 hereof, the Annual Report shall contain
unaudited financial statements in a format similar to the financial statements contained in
the Official Statement, and the audited financial statements shall be filed in the same
manner as the Annual Report when they become available.
(b) The following information with respect to the Certificates:
(i) The principal evidenced by the Certificates Outstanding as of the
January I next preceding the Annual Report Dale and the principal amount of
other Senior Obligations outstanding as of the January 1 next preceding the
Annual Report Date.
(ii) The balance in the Reserve Fund, and a statement of the Reserve
Requirement, as of the January 1 next preceding the Annual Report Date.
(c) A summary report showing in reasonable detail Revenues, Operating
Revenues, Maintenance and Operation Costs, Net Revenues, Net Operating Revenues
and debt service with respect to the Senior Obligations for the fiscal year ended the
June 30 next preceding the Annual Report Date.
(d) An update, for the fiscal year ended the June 30 next preceding the Annual
Report Date, of the information contained in the Official Statement in Table Nos. 2, 4, 6
(only with respect to information on 6 under the headings Fiscal Year and Sewer Service
Charge), 8(not to include projections), 9, 10, 11, 12, 13, 14 and 16.
(e) In addition to any of the information expressly required to be provided
under subsections (a), (b), (c) and (d) of this Section, the District shall provide such
further information, if any, as may be necessary to make the specifically required
statements, in the light of the circumstances under which they are made,not misleading.
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the District or related public entities,
which have been submitted to each of the Repositories or the Securities and Exchange
Commission. If the document included by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board. The District shall clearly identify
each such other document so included by reference.
11.2 Continuing Disclosure Agree n[.A 3
Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this
Section, the District shall give, or cause to be given, notice of the occurrence of any of the
following events with respect to the Certificates, if material:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults.
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(5) Substitution of credit or liquidity providers, or their failure to
perform.
(6) Adverse tax opinions or events affecting the tax-exempt status of
the security.
(7) Modifications to rights of security holders.
(8) Contingent or unscheduled Certificate calls.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities.
(11) Rating changes.
(b) The District shall, within one business day of obtaining actual knowledge
of the occurrence of any of the Listed Events, contact the Disclosure Representative,
inform such person of the event, and request that the District promptly notify the Trustee
in writing whether or not to report the event pursuant to subsection(f)of this Section.
(c) Whenever the District obtains knowledge of the occurrence of a Listed
Event, whether because of a notice from the Trustee pursuant to subsection (b) of this
Section or otherwise, the District shall as soon as possible determine if such event would
be material under applicable Federal securities law.
(d) If the District has determined that knowledge of the occurrence of a Listed
Event would be material under applicable Federal securities law, the District shall
promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the
occurrence pursuant to subsection(f)of this Section.
(e) If in response to a request under subsection(b)of this Section, the District
determines that the Listed Event would not be material under applicable Federal
11-2 continuing Diwi mre Aff mmt.doc 4
securities law, the District shall so notify the Trustee in writing and instruct the Trustee
not to report the occurrence pursuant to subsection(f)of this Section.
(f) If the Dissemination Agent has been instructed by the District to report the
occurrence of a Listed Event, the Dissemination Agent shall file a notice of such
occurrence with the Municipal Securities Rulemaking Board and each Repository.
Notwithstanding the foregoing, notice of Listed Events described in paragraphs(8) and
(9) of subsection(a) of this Section need not be given under this subsection any earlier
than the notice(if any) of the underlying event is given to holders of affected Certificates
pursuant to the Trust Agreement.
Section 5. Electronic Filing. Submission of Annual Reports and notices of Listed
Events to DisclosureUSA.org or another "Central Post Office" designated and accepted by the
Securities and Exchange Commission shall constitute compliance with the requirement of filing
such reports and notices with each Repository hereunder, and the District may satisfy its
obligations hereunder to file any notice, document or information with a Repository by filing the
same with any dissemination agent or conduit, including DisclosureUSA.org or another"Central
Post Office" or similar entity, assuming or charged with responsibility for accepting notices,
documents or information for transmission to such Repository, to the extent permitted by the
Securities and Exchange Commission or Securities and Exchange Commission staff or required
by the Securities and Exchange Commission. For this purpose, permission shall be deemed to
have been granted by the Securities and Exchange Commission staff if and to the extent the
agent or conduit has received an interpretive letter, which has not been revoked, from the
Securities and Exchange Commission staff to the effect that using the agent or conduit to
transmit information to the Repository will be treated for purposes of the Rule as if such
information were transmitted directly to the Repository.
Section 6. Termination of Reporting Obligation. The District's obligations under
this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or
payment in full of all of the Certificates. If such termination occurs prior to the final maturity of
the Certificates, the District shall give notice of such termination in the same manner as for a
Listed Event under subsection(f)of Section 4 hereof.
Section 7. Dissemination Agent. The District may, from time to time, appoint or
engage another Dissemination Agent to assist it in carrying out its obligations under this
Disclosure Agreement, and may discharge any such Dissemination Agent, with or without
appointing a successor Dissemination Agent. If at any time there is not any other designated
Dissemination Agent, the Trustee shall be the Dissemination Agent; provided it shall receive
written notice of such designation at the time of such designation.
11.2 C.WW gDiwla Agre Ld- 5
Section 8. Amendment, Waiver. Notwithstanding any other provision of this -
Disclosure Agreement, the District and the Dissemination Agent may amend this Disclosure
Agreement (and the Dissemination Agent shall agree to any amendment so requested by the
District), and any provision of this Disclosure Agreement may be waived, provided that the
following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of subsection(a) of
Section 2 hereof, Section 3 hereof or subsection(a) of Section 4 hereof, it may only be
made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature or status of an obligated
person with respect to the Certificates, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in
the opinion of nationally recognized bond counsel, have complied with the requirements
of the Rule at the time of the primary offering of the Certificates, after taking into
account any amendments or interpretations of the Rule, as well as any change in
circumstances;and
(c) the proposed amendment or waiver (i) is approved by holders of the
Certificates in the manner provided in the Trust Agreement for amendments to the Trust
Agreement with the consent of holders, or (ii) does not, in the opinion of the Trustee or
nationally recognized bond counsel,materially impair the interests of holders.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the annual financial information containing the
amended operating data or financial information shall explain, in narrative form, the reasons for
the amendment and the impact of the change in the type of operating data or financial
information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements,the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting principles
on the presentation of the financial information, in order to provide information to investors to
enable them to evaluate the ability of the District to meet its obligations. To the extent
reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be sent to the Repositories.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the District from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Agreement. If the District chooses to
include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Agreement, the District shall
11-2 Commmng Duct. eA,re ml.d. 6
have no obligation under this Disclosure Agreement to update such information or include it in
any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the District or the Dissemination
Agent to comply with any provision of this Disclosure Agreement, the Trustee may (and, at the
written direction of any Participating Underwriter or the holders of at least 25% of the aggregate
amount of principal evidenced by Outstanding Certificates and upon being indemnified to its
reasonable satisfaction, shall), or any holder or beneficial owner of the Certificates may, take
such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order,to cause the District,Trustee or the Dissemination Agent, as the case
may be, to comply with its obligations under this Disclosure Agreement. A default under this
Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and
the sole remedy under this Disclosure Agreement in the event of any failure of the District, the
Trustee or the Dissemination Agent to comply with this Disclosure Agreement shall be an action
to compel performance.
Section 11. Duties. Immunities and Liabilities of Trustee and Dissemination
Agent. Article VIII of the Trust Agreement is hereby made applicable to this Disclosure
Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Trust
Agreement. Neither the Trustee nor the Dissemination Agent shall be responsible for the form or
content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive
reasonable compensation for its services provided under this Disclosure Agreement. The
Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination
Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement,and
the District agrees to indemnify and save the Dissemination Agent, its officers, directors,
employees and agents, harmless against any loss, expense and liabilities which it may incur
arising out of or in the exercise or performance of its powers and duties hereunder, including the
costs and expenses (including attorneys fees) of defending against any claim of liability, but
excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The
obligations of the District under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Certificates.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and holders
and beneficial owners from time to time of the Certificates,and shall create no rights in any other
person or entity.
Section 13. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
11-2 Cammmii Diul..m Ag...l.d. 7
IN WITNESS WIMREOF,the parties hereto have executed this Disclosure Agreement
as of the date first above written.
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
DIGITAL ASSURANCE CERTIFICATION LLC,
as Dissemination Agent
By:
Authorized Representative
II-2 Cmtnu gMscl s A�I,dm 8
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE
TO FILE ANNUAL REPORT
Name of Issuer: Orange County Sanitation District
Name of Issue: Orange County Sanitation District
Certificates of Participation, Series 2007B
Date of Issuance: ,2007
NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District')
has not provided an Annual Report with respect to the above-named Certificates as required by
Section 6.09 of the Trust Agreement, dated as of December 1, 2007, by and among Union Bank
of California,N.A., as Trustee,the Orange County Sanitation District Financing Corporation and
the District. [The District anticipates that the Annual Report will be filed by .)
Dated: ORANGE COUNTY SANITATION
DISTRICT
By:
cc: Trustee
Dissemination Agent
11-2 Continuing Diulosuo Agreement.don A-1
Fulbright&Jaworski L.L.P.—Draft 11/2107
PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER_,2007
NEW ISSUE—BOOK—ENTRY—ONLY Ratings:
Moody's: « „
Standard&Poor's;'
Fitch: "
(See"RATINGS"herein)
In the opinion a(Falbrighl&J avorski LL.P., SP2elal Counsel, under existing lmv, the Interes!Component of each lutallment
Payment, and fhe aN-able pmrion thereof der tribruable in respect ajan' Ceni fcate, is ezemp!from personal income fares oJlhe
Stine ojCalifornio and, arsuming compliance with the fax covenants desnib herein, fhe/nfer¢st Component of each lmtal ment
Payment, and the a/lornble ppoortion thereof dis1ribar_ble in respell ajarry Cerlificme, is exchrded prnauant fo section 103(n) of the
/nternd Revemre Code of 1986 from the gross income afthe mvner of such Certificate/ar federal Income tax purposes and is not an
item oflas prejerencefm In pares oflhe federal oberarrave minimum tax. See " AX ERS"herein.
$300,000,000'
[District Logo( ORANGE COUNTY SANITATION DISTRICT IDAC Logo)
CERTIFICATES OF PARTICIPATION,SERIES 2007B
Dated: Date orDelivery Due: February 1,as shown below
The Orange County Sanitation District Certificates of Participation, Series 2007B(the"Certificates")evidence direct,fractional
undivided interests of the Owners thereof in the installment payments (the "Installment Payments"), and the interest thereon, to be
made by the Orenga County Sanitation District (the "District") pursuant to the Installment Purchase Agreement, dated as of
December 1, 2007 (the "Installment Purchase Agreement"), by and between the District and the Omnge County Sanitation District
Financing Corporation (the 'Co or
Pursuant to the Master Agreement far District Obligations, dated as of August 1, 2000
(the "Master Agreement"), by and between the District and the Corporation, the District has established conditions and terms upon
which obligations such as the Installment Payments and [he interest thereon, will be incurred and secured. Installment Payments
under the Installment Purchase Agreement are payable solely from Net Revenues(as more fully described in the Master Agreement,
the"Net Revenues")as provided in the Installment Purchase Agreement,consisting primarily of all income and revenue received by
Ne District from the operetion or ownership of the Wastewater System of the Dtslrict (the "Wastewater System") remaining after
ppeeyymmant of Maintenance and Operefion Costs, as further described in "SECURITY AND SOURCES OF PAYMENT FOR THE
CERTffICATES" herein. The Installment Purchase Agreement provides that the obligation of the District to pa the Installment
Payments, and payments of interest thereon, and certain other payments required m be made in accordance with the Installment
me an
Agreement solely from Net Revenues,is absolute and unconditional. See"SECURITY AND SOURCES OF PAYMENT"
herein.
The proceeds of the Certificates, together with other available moneys, will be used to(i)fmance certain improvements to the
Wastewater System.(ii)fund a reserve fund for the Certificates,and(fill pay the costs incurred in connection with the execution and
delivery of the Certificates. See"PLAN OF FINANCE"berein.
Interest evidenced by the Certificates will be payable semiannually on February 1 end August 1 of eacb year, commencing on
February 1,2008. See' HE CERTIFICATES"herein. The Certificates will be initially delivered only in book-entry form and will
be registered in the name of Cede&Co.,as nominee of The Depository Trust Company,New York,New York("DTC"),which will
act as securities doyosimry for the Certificates. Individual purchases of the Certificates will be made in book-entry form only.
Purchasers of Certificates will not receive physical certificates representing their ownership interests in the Certificates purchased.
The Certificates will be delivered in denominations of$5.000 and any itim I multiple thereof. Payments of princippal and interest
evidenced by the Certificates me payable directly to DTC by Union Bank of California,N.A.,as trustee(the`Trustee"). UPan receipt
of paymenta of such principal and interest DTC will in turn distribute such paymrnis ro the beneficial owners of the Certificates. See
APPENDIX E—"BOOK-ENTRY SYSTEM"herein.
The Certificates are subject to prepayment prior to maturity,as described herein. See"THE CERTIFICATES"herein.
THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENTS, AND THE INTEREST THEREON,
AND OTHER PAYMENTS RE UIRED TO BE MADE BY IT UNDER THE INSTALLMENT PURCHASE AGREEMENT IS A
SPECIAL OBLIGATION OF DISTRICT PAYABLE,IN THE MANNER PROVIDED IN THE INSTALLMENT PURCHASE
AGREEMENT, SOLELY FROM NET REVENUES AND OTHER FUNDS PROVIDED FOR IN THE INSTALLMENT
PURCHASE AGREEMENT, AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT OR OF THE STATE OF
CALIFORNIA,OR OF ANY POLITICAL SUBDIVISION THEREOF,IN CONTRAVENTION OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF
THE STATE OF CALIFORNIA,OR ANY POLITICAL SUBDIVISION THEREOF,IS PLEDGED TO THE PAYMENT OF THE
INSTALLMENT PAYMENTS, OR THE INTEREST THEREON,OR OTHER PAYMENTS REQUIRED TO BE MADE UNDER
THE INSTALLMENT PURCHASE AGREEMENT. SEE "SECURITY AND SOURCES OF PAYMENT FOR THE
CERTIFICATES"HEREIN.
This cover page contains information intended for quick reference only. It is not a summary of this issue. Invesmrs must read
the entire Official Statement to obtain information essential to making an informed investment decision.
The Certi rcater are offered when, as and il'executed and delivered and received by the Initial Purchaser,subject to the approval
by Fulbrighl Jmvorski L.L.P., Los Angeles, California,Special Counsel to the District, and certain other conditions. Certain legal
motrers will be Faesed upon/or the DisMcl and the Corporation b))�Woodng Spradlin&Smarl, a Profession/Corporation, Costa
Mesa, California Public Resources Advisory Group Las Ang1l , California has served as financial advisor to the District in
connection with the execution and delivery of the Certificates. It is anticipated that the Certlicales in dejfnitfve form will be available
for delivery to DTC in New York, Nair York on or about December 2007.
BIDS FOR THE PURCHASE OF THE CERTIFICATES WILL BE RECEIVED BY
THE DISTRICT UNTIL 9:00 A.M.PACIFIC TIME ON DECEMBER 11,2007 UNLESS
POSTPONED OR CANCELLED AS SET FORTH IN THE OFFICIAL NOTICE INVITING BIDS.
Dated: December ,2007
Preliminary;subject to change.
11.2 Offidd Statanmt.doc
MATURITY SCHEDULE
$300,000,000
Change County Sanitation District
Certificates of Participation,Series 20078
$ Serial Certificates
Maturity Principal Interest Price or CUSIPt
(February 1) Amount Rate Yield 68( 428P)
$ _%Term Certificates due February 1,20_Priced to Yield:_%CUSIPt:
Preliminary;subject to change.
t CUSM A registered trademark of the American Bankers Association. Copyright 0 1999-2007 Standard&Poor'% a Division of
The McGraw-Hill Companies, Inc. All rights reserved. CUSM data herein is provided by Standard & Poor s CUSIP® Service
Bureau and are for convenience of refetmee only.The District does not assume my responsibility for the accuracy of such timbers.
I1-2 OIfidW Stmemm Aw
ICI
11-2 ofcid SINmmLduq
ORANGE COUNTY SANITATION DISTRICT
Board of Directors
James Ferryman(Chair)—Costa Mean Sanitary District
Doug Davert(Vice Chair)—Tustin
Harry Sidhu—Anaheim Don Webb—Newport Beach
Roy Moore—Brea Jon Dumitru—Orange
Patsy Marshall—Buena Park Constance Underhill—Placentia
Phil Luebben—Cypress Sal Tinsjero—Santa Ana
Larry Crandall—Fountain Valley Charles Antos—Seal Beach
Don Bankhead—Fullerton David Shawver—Stanton
Bill Dalton—Garden Grove Rich Freschi— Villa Park
Cathy Green—Huntington Beach Jim Winder—yorba Linda
Steven Choi—Irvine Joy L.Neugebauer—Midway City Sanitary District
Steve Anderson—La Habra Darryl Miller—!rvine Ranch Water District
Mark Waldman—La Palma Chris Norby—Member of the Orange County
Ken Parker—Los Alamitos Board ofSupervlsors
Executive Manaeement of the District
James D.Ruth,General Manager
Robert P.Ghirelli,PhD.,Assistant General Manager
Lorenzo Tyner,Director of Finance and Administrative Services
James Herberg,Director of Engineering
Ed Torres, Director of Technical Services
Nick Arhontes,Director of Operations&Maintenance
Special Services
Special Counsel and Disclosure Counsel
Fulbright&Jaworski L.L.P.
Los Angeles,California
District General Counsel
Bradley R. Hogin
Woodmff, Spradlin&Smart,a Professional Corporation
Costa Mean,California
Financial Advisor
Public Resources Advisory Group
Los Angeles,California
Trustee
Union Bank of California,N.A.
Los Angeles,California
11.2 Official Ste t.doc
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of the Certificates by any person in any jurisdiction in which it is unlawful for such
person to make such an offer, solicitation or sale. The information set forth herein has been provided by
the District and other sources that are believed by the District to be reliable. No dealer, broker,
salesperson or other person has been authorized to give any information or to make any representations
other than those contained in this Official Statement. If given or made, such other information or
representations must not be relied upon as having been authorized by the District, the Corporation or the
Initial Purchaser in connection with any reoffering.
This Official Statement is not to be construed as a contract with the purchasers of the Certificates.
Statements contained in this Official Statement which involve estimates, projections, forecasts or matters
of opinion, whether or not expressly an described herein, are intended solely as such and are not to be
construed as representations of facts.
The information and expressions of opinion herein are subject to change without notice and
neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances,
create my implication that there has been no change in the affairs of the District or the Corporation since
the date hereof. This Official Statement is submitted with respect to the sale of the Certificates referred to
herein and may not be reproduced or used,in whole or in part, for my other purpose,unless authorized in
writing by the District. All summaries of the documents and laws are made subject to the provisions
thereof and do not purport to be complete statements of my or all such provisions. Preparation of this
Official Statement and its distribution have been duly authorized and approved by the District and the
Corporation.
In connection with the offering of the Certificates, the Initial Purchaser in connection with any
reoffering may over-allot or effect transactions which stabilize or maintain the market price of the
Certificates at a level above that which might otherwise prevail in the open market. Such stabilizing, if
commenced, may be discontinued at my time. The Initial Purchaser in connection with my reoffering
may offer and sell the Certificates to certain dealers, institutional investors and others at prices lower than
the public offering prices stated on the cover page hereof and such public offering prices may be changed
from time to time by the Initial Purchaser.
Certain statements included or incorporated by reference in this Official Statement constitute
forward-looking statements. Such statements are generally identifiable by the terminology used such as
"plan,""expect,""estimate,""budget"or other similar words. The achievement of certain results or other
expectations contained in such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,performance or achievements described to
be materially different from my future results, performance or achievements expressed or implied by
such forward-looking statements.
11.2 Official sra nna dm
TABLE OF CONTENTS
Psse
INTRODUCTION........................................................................................................................................I
General............................................................................................................................................I
TheDistrict......................................................................................................................................2
Security and Sources of Payment for the Certificates....................................................................I
Continuing Disclosure.....................................................................................................................3
Miscellaneous..................................................................................................................................3
PLANOF FINANCE...................................................................................................................................4
SOURCES AND USES OF PROCEEDS OF THE CERTIFICATES ........................................................4
THECERTIFICATES.................................................................................................................................5
General............................................................................................................................................5
Prepayment Provisions....................................................................................................................5
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES.............................................7
InstallmentPayments......................................................................................................................7
NetRevenues..................................................................................................................................8
RateStabilization Account..............................................................................................................9
Allocation of Revenues.................................................................................................................10
Rate Covenant...............................................................................................................................10
ReserveFund.................................................................................................................................I I
Limitations on Issuance of Additional Obligations.......................................................................12
Insurance.......................................................................................................................................14
Allocationof Installment Payments..............................................................................................15
THEDISTRICT.........................................................................................................................................16
Background...................................................................................................................................16
Organization and Administration..................................................................................................17
Services.........................................................................................................................................18
ServiceArea..................................................................................................................................18
Employees.....................................................................................................................................19
RetirementPlan.............................................................................................................................20
Post-Employment Benefits............................................................................................................21
Risk Management..........................................................................................................................21
ExistingFacilities..........................................................................................................................22
Permits. Licenses and Other Regulations.....................................................................................13
Capital Improvement Program......................................................................................................24
GroundwaterReplenishment System............................................................................................27
Preferred Level of Treatment........................................................................................................28
BiosolidsManagement..................................................................................................................29
Urban Runoff................................................................................................................................30
Integrated Emergency Response Program....................................................................................30
DISTRICT REVENUES............................................................................................................................31
SewerService Charges..................................................................................................................31
AdditionalRevenues.....................................................................................................................34
Wastewater Treatment History......................................................................................................36
Customers......................................................................................................................................36
11-20Raal5utemml.Eoc _i_
TABLE OF CONTENTS
(continued)
Pm
Assessed Valuation........................._................................................................_..........................38
Tax Levies and Delinquencies......................................................................................................39
Budgetary Process.........................................................................................................................40
Reserves...................................................................._..................................................................41
Summeryof Operating Data.................._.....................................................................................42
ProjectedOperating Data......................._.....................................................................................42
Management's Discussion and Analysis of Operating Data........................................................44
Investment of District Funds.........._.............................................................................................45
FINANCIAL OBLIGATIONS...................................................................................................................46
ExistingIndebtedness....................................................................................._....._......................46
VariableRate and Swap Obligations............._......................................................_......................46
Anticipated Financings..................................................................................................................48
Direct and Overlapping Banded Debt...........................................................................................48
THECORPORATION......................................................................_........................_.............................50
LIMITATIONS ON TAXES AND REVENUES...................................._................................................51
Article XIIIA of the California Constitution..........................................................._....................51
Legislation Implementing Article XIIIA.......................................................................................51
Article XIIB of the California Constitution.................................................................................31
PropositionIA...............................................................................................................................52
Proposition62.................................................................................._.._.......................................53
Article XIIIC and Article XIIID of the California Constitution................_.................................. 3
OtherInitiative Measures..............................................................................................................55
LEGALMATTERS...................................................................................................................................56
FINANCIALADVISOR..................................................................................................._..........._..........56
ABSENCE OF LITIGATION....................................................................................................................56
FINANCIAL STATEMENTS...............................................................................................................56
TAXMATTERS........................................................................................................................................57
CONT NUING DISCLOSURE........................._............_........................................................................59
RATINGS........................................................................_............................._..........._........._..................60
PURCHASE AND REOFFERING.._........................................................................................................60
MISCELLANEOUS...................................................................................................................................60
11.2 Oerdd smeomn.duc -ii-
TABLE OF CONTENTS
Psee
APPENDIX A - COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE
COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30,
2007....................................................................................................................A-1
APPENDIX B - THE COUNTY OF ORANGE-ECONOMIC AND
DEMOGRAPHIC INFORMATION..................................................................B-1
APPENDIX C - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS....................................C-1
APPENDIX D - FORM OF CONTINUING DISCLOSURE AGREEMENT.............................D-1
APPENDIX E - BOOK-ENTRY SYSTEM.................................................................................E-1
APPENDIX F - FORM OF APPROVING OPINION OF SPECIAL COUNSEL .....................F-1
11-20tTcial Stmemmt. o _�_
OFFICIAL STATEMENT
$300,000,000
ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION,SERIES 200711
INTRODUCTION
This introduction contains only a brief summary of certain of the terms of the Certificates being
offered and a brief description of the Official Statement. All statements contained in this introduction are
qualified in their entirety by reference to the entire Official Statement. References to, and summaries of,
provisions of the Constitution and laws of the State of California (the "State') and any documents
referred to herein do not purport to be complete and such references are qualified in their entirety by
reference to the complete provisions. All capitalized terms used in this Official Statement and not
otherwise defined herein have the meanings set forth in the Trust Agreement, the Installment Purchase
Agreement and the Master Agreement (each, as hereinafter defined). See APPENDIX C— "SUMMARY
OF PRINCIPAL LEGAL DOCUMENTS—Definitions"herein.
General
This Official Statement, including the cover page, inside cover and all appendices hereto,
provides certain information conceming the sale and delivery of $300,000,000 aggregate principal
amount of the Orange County Sanitation District Certificates of Participation, Series 2007B (the
"Certificates") evidencing direct, fractional undivided interests in the Installment Payments (the
"Installment Payments") and the interest thereon, to be made by the Orange County Sanitation District
(the "District") pursuant to the Installment Purchase Agreement, dated as of December 1, 2007 (the
'Installment Purchase Agreement"),to be entered into by and between the District and the Orange County
Sanitation District Financing Corporation (the "Corporation"). Pursuant to the Master Agreement for
District Obligations, dated as of August 1, 2000 (the "Master Agreement"), by and between the District
and the Corporation, the District has established and declared the conditions and terms upon which
obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest
thereon, will be incurred and secured. Installment Payments under the Installment Purchase Agreement
are payable solely from Net Revenues (as defined hereinafter) as provided in the Installment Purchase
Agreement,consisting primarily of all income and revenue received by the District from the operation or
ownership of the Wastewater System of the District(the"Wastewater System")remaining after payment
of Maintenance and Operation Costs, as farther described in "SECURITY AND SOURCES OF
PAYMENT FOR THE CERTIFICATES"herein.
The Certificates are to be executed and delivered pursuant to a Trust Agreement, dated as of
December 1, 2007 (the`Trust Agreement"), by and among the District,the Corporation and Union Bank
of California, N.A., as trustee (the "Trustee"). Proceeds from the sale of the Certificates, together with
other available moneys, will be used to (i)finance certain improvements to the Wastewater System
(ii)fund a reserve fund for the Certificates, and (iii)pay the costs incurred in connection with the
execution and delivery of the Certificates. See"PLAN OF FINANCE"herein.
The Certificates will be executed and delivered in the form of fully registered certificates, dated
as of the date of initial delivery thereof and will mature on February I in each year as set forth on the
cover page hereof Interest evidenced by the Certificates will be payable semiannually on February I and
August I of each year, commencing on February 1, 2008. See "THE CERTIFICATES" herein. The
Certificates will be initially delivered only in book-entry form and will be registered in the name of Cede
& Co., as nominee of The Depository Trust Company, New York,New York("DTC"),which will act as
11.2 Official Slum tl c
securities depository for the Certificates. The Certificates will be delivered in denominations of$5,000
and any integral multiple thereof. So long as the Certificates are in the DTC book-entry system, the
interest, principal, purchase price and prepayment premiums, if any, due with respect to the Certificates
will be payable by the Trustee, or its agent, to DTC or its nominee. DTC, in turn, will make payments
pursuant to its procedures as described under APPENDIX E—"BOOK—ENTRY SYSTEM"herein.
The District
The District is a public agency responsible for regional wastewater collection, treatment and
disposal. The District is the sixth largest wastewater discharger in the United States. The District
provides service to an area with a population of approximately 2.5 million people in the northern and
central portion of the County of Orange (the "County"), in a service area of approximately 479 square
miles, treating 229 million gallons Per day ("mg(d") of wastewater in Fiscal Year 2006-07. See "THE
DISTRICT,""DISTRICT REVENUES"and"FINANCIAL OBLIGATIONS"herein.
Security and Sources of Payment for the Certificates
The Certificates evidence direct, fractional undivided interests in the Installment Payments, and
the interest thereon,paid by the District pursuant to the Installment Purchase Agreement. The obligation
of the District to pay the Installment Payments and the interest thereon and other payments required to be
made by it under the Installment Purchase Agreement is a special obligation of the District payable,in the
manner provided under the Installment Purchase Agreement, solely from Net Revenues, and other funds
as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and
revenue received by the District from the operation or ownership of the Wastewater System remaining
after payment of Maintenance and Operation Costs,all as further provided in the Master Agreement. The
Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions
of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded
Senior Obligations pursuant to the Master Agreement.
The District has Senior Obligations Outstanding evidenced by six series of certificates of
participation and two related interest rate swap agreements, payable on a parity with the Installment
Payments under the Installment Purchase Agreement. The two interest rate swap agreements were
executed by the predecessor special districts in connection with the execution and delivery of certain
Outstanding Senior Certificates. The payments under these swap agreements are payable on a parity with
the Installment Payments under the hrstallment Purchase Agreement and other Senior Obligations, as
provided in the Master Agreement. See"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein
and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement"
attached hereto. The term "Existing Senior Obligations"as used in this Official Statement refers to the
1992 Agreement for Acquisition and Construction,the 1992 Swap, the 1993 Agreement for Acquisition
and Construction, the 1993 Swap, the 2000 Installment Purchase Agreement, the 2003 Installment
Purchase Agreement, the 2006 Installment Purchase Agreement and the 2007A Installment Purchase
Agreement, and the term "Senior Obligations" as used in this Official Statement refers to the Existing
Senior Obligations and any additional Senior Obligations, such as the Installment Purchase Agreement
which may be made payable on a parity basis to the Installment Payments as provided in the Master
Agreement. Senior Obligations, together with any Subordinate Obligations payable on a subordinate
basis to the Installment Payments executed and delivered as provided in the Master Agreement are
referred to collectively as the"Obligations."
Pursuant to the Master Agreement,the District will,to the extent permitted by law, fix,prescribe
and collect fees and charges for the services and facilities of the Wastewater System which will be at least
sufficient to yield during each Fiscal Year (a)Net Revenues equal to 125% of Debt Service on Senior
t r-3 OBud Stitcac d&C 2
Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all
Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and
charges and may make such classification thereof as it deems necessary,but shall not reduce the fees and
charges than in effect unless the Revenues and Net Revenues from such reduced fees and charges will at
all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND
SOURCE OF PAYMENT FOR THE CERTIFICATES—Rate Covenant"herein.
The obligation of the District to pay the Installment Payments and the interest thereon,and
other payments required to be made by it under the Installment Purchase Agreement is a special
obligation of the District payable, in the manner provided in the Installment Purchase Agreement,
solely from Net Revenues and other funds provided for in the Installment Purchase Agreement,and
does not constitute a debt of the District or of the State, or of any political subdivision thereof, in
contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and
credit nor the taxing power of the District or the State or any political subdivision thereof, is
pledged to the payment of the Installment Payments, or the interest thereon, or other payments
required to be made under the Installment Purchase Agreement. The Installment Purchase
Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master
Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior
Obligations pursuant to the Master Agreement. See"SECURITY AND SOURCES OF PAYMENT
FOR THE CERTIFICATES" herein.
Continuing Disclosure
The District has covenanted for the benefit of holders and beneficial owners of the Certificates
(a)to provide certain financial information and operating data (the "Annual Report") relating to the
District and the property in the District not later than eight(8)months after the and of the District's Fiscal
Year(which currently would be March 1), commencing with the report for the 2007-08 Fiscal Yew, and
(b)to provide notices of the occurrence of certain enumerated events, if material. The specific nature of
the information to be contained in the Annual Report or the notices of material events is set forth in the
Continuing Disclosure Agreement. See "CONTINUING DISCLOSURE" herein and APPENDIX D —
"FORM OF CONTINUING DISCLOSURE AGREEMENT'."
Miscellaneous
The descriptions herein of the Trust Agreement,the Master Agreement,the Installment Purchase
Agreement and any other agreements relating to the Certificates are qualified in their entirety by reference
to such documents. Copies of the documents are on file and available for inspection at the corporate trust
office of the Trustee at Union Bank of California, N.A., 120 South San Pedro Street, Suite 400, Los
Angeles,California 90012,Attention: Corporate Trust.
11-2 Omdsl swmeadw 3
PLAN OF FINANCE
Proceeds from the sale of the Certificates will be used to (i)finance the acquisition, construction
and installation of certain improvements to the Wastewater System (the "Project"), (ii) fund a reserve
fund for the Certificates, and(iii)pay the costs incurred in connection with the execution and delivery of
the Certificates. In particular, the Project is expected to include the acquisition, construction and
installation of improvements to the District's collection system, two wastewater treatment plants, and
Ocean Outfall systems including the following Project components:
Magnolia Trunk Sewer Trickling Filters at Plant 2
Ellis Avenue Pump Station Sludge Digester at Plant 1
Rocky Point Pump Station Sludge Dewatering at Plant t and 2
Bitter Point Pump Station Rehabilitation of Solids Storage
Bitter Point Force Main Rehabilitation Silos C&D at Plant 2
Euclid Relief Improvements-Headworks at Plant 2 Digester Rehabilitation at Plant 2
Primary Treatment System Rehabilitation at Plant 2 Cable Tray Improvements at Plant I and 2
New Secondary Treatment System at Plant I Rehabilitation of Odor Control Facilities
From time to time the District undertakes capital projects that are subsequently delayed,
redesigned or deferred for various reasons and no assurance can be given that a Project component
summarized above or designated in the District's current Capital Improvement Program will be completed
in accordance with its original schedule or that any component Project will be completed as currently
planned. See"THE DISTRICT—Capital Improvement Plan"herein.
SOURCES AND USES OF PROCEEDS OF THE CERTIFICATES
The estimated sources and uses of funds with respect to the delivery of the Certificates are
presented below.
Sources
Certificate Proceeds $
Net Original Issue Premium/Discount
Total Sources $
Uses
Project Fund $
Reserve Fund
Initial Purchaser's Discount
Costs of Issuance",
Total Uses $
Cost�Issuence include, among other things, fees of rating agencies, initial fees of the Trustee and Special
Counsel fees.
11.2 Official SutemmLdm 4
THE CERTIFICATES
General
The Certificates will be prepared in the form of fully registered certificates in denominations of
$5,000 and any integral multiple thereof. The Certificates will be dated as of the date of initial delivery
thereof and will mature on February I in each year as set forth on the cover page hereof. Interest
evidenced by the Certificates will be payable semiannually on February 1 and August 1 of each year,
commencing on February 1,2008. See"THE CERTIFICATES"hemin. The Certificates will be initially
delivered only in book-entry form and will be registered in the name of Cede dt Co., as nominee of The
Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for
the Certificates. Individual purchases of the Certificates will be made in book-entry form only.
Purchasers of Certificates will not receive physical certificates representing thew ownership interests in
the Certificates purchased.
The interest evidenced by the Certificates shall be payable on each Interest Payment Date to and
including their respective Principal Payment Dates or prepayment prim thereto, and shall represent the
sum of the interest on the Installment Payments coming due on the Interest Payment Dates in each year.
The principal evidenced by the Certificates shall be payable on their respective Principal Payment Dates
in each year and shall represent the Installment Payments coming due on the Principal Payment Dates in
each year. Each Certificate shall evidence interest from the Interest Payment Date next preceding its date
of execution to which interest has been paid in full, unless such date of execution shall be after a Record
Date and on or prior to the following Interest Payment Date, in which case such Certificate shall evidence
interest from such Interest Payment Date, or unless such date of execution shall be on or prior to
January 15, 2008, in which case such Certificate shall represent interest from its date of initial delivery.
Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the
Certificates shall be in default,each Certificate shall evidence interest from the last Interest Payment Date
to which such interest has been paid in full or duly provided for. Interest evidenced by the Certificates
shall be computed on the basis of a 360-day year consisting of twelve 30-day months. See APPENDIX C
—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement."
Payments of principal and interest evidenced by the Certificates am payable directly to DTC by
Union Bank of California,N.A.,as trustee. Upon receipt of payments of such principal and interest,DTC
will in turn distribute such payments to the beneficial owners of the Certificates. So long as the
Certificates are in the DTC book-entry system, the interest, principal, purchase price and prepayment
premiums,if any,due with respect to the Certificates will be payable by the Trustee, or its agent,to DTC
or its nominee. DTC, in turn, will make payments pursuant to its procedures as described under
APPENDIX E — 'BOOK-ENTRY SYSTEM" herein. So long as the Certificates am in the DTC book-
entry system,the interest,principal and prepayment premiums,if any,due with respect to the Certificates
will be payable by the Trustee, or its agent, to DTC or its nominee. DTC, in turn, will make payments
pursuant to its procedures as described under APPENDIX E—"BOOK-ENTRY SYSTEM"herein.
Prepayment Provisions
Optional PreprWment. The Certificates are subject to optional prepayment prior to their stated
Principal Payment Dates, on any date on or after February 1, 2017, in whole or in part, in Authorized
Denominations, from and to the extent of prepaid Installment Payments paid pursuant to the Installment
Purchase Agreement or from any other source of available funds, any such prepayment to be at a price
' Preliminary;subject to change.
11.20tfidal Sta t.doc 5
equal to the principal evidenced by the Certificates to be prepaid plus acemed interest evidenced thereby
to the date fixed for prepayment.
Mandatory Sinking Account Prepayment. The Term Certificates maturing on February 1,20_
are subject to prepayment prior to their stated maturity, in part, by lot, on any February 1 on and after
February 1,20_, at the principal amount thereof,plus accrued interest to the date fixed for prepayment,
without premium, from Mandatory Sinking Account Payments deposited in the Principal Account. The
Term Certificates maturing on February 1,20_shall be prepaid(or paid at maturity,as the case may be)
by application of Mandatory Sinking Account Payments in the amounts and upon the dates set forth
below:
Term Certificates Maturing February 1,
Mandatory
Sinking Account Mandatory
Payment Dates Sinking Account
(February 1) Payments
Selection of Certificaterforprepayment. Whenever less than all the Outstanding Certificates are
to be prepaid on any one date pursuant to provisions of the Trust Agreement with respect to optional
prepayment of Certificates,the Trustee shall select the Certificates to be prepaid among Certificates with
different Principal Payment Dates as directed in a Written Request of the District. Whenever less than all
the Outstanding Certificates with the same stated Principal Payment Date are to be prepaid on any one
date in accordance with the Trust Agreement,the Trustee shall select the Certificates with such Principal
Payment Date to be prepaid by lot in any manner that the Trustee deems fair and appropriate, which
decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify
the District in writing of the numbers of the Certificates so selected for prepayment on such date. For
purposes of such selection,any Certificate may be prepaid in part in Authorized Denominations.
Notice of Prepayment. When prepayment of Certificates is authorized pursuant to the Tout
Agreement, the Trustee shall give notice, at the expense of the District, of the prepayment of the
Certificates. The notice of prepayment shall specify(a)the Certificates or designated portions thereof(in
the case of prepayment of the Certificates in part but not in whole)which are to be prepaid,(b)the date of
prepayment,(c)the place or places when:the prepayment will be made, including the time and address
of any paying agent, (d)the prepayment price, (e)the CUSIP numbers assigned to the Certificates to be
prepaid, (f)the numbers of the Certificates to be prepaid in whole or in part and in the case of any
Certificate to be prepaid in part only,the principal evidenced by such Certificate to be prepaid,and(g)the
interest rate and stated Principal Payment Date of each Certificate to be prepaid in whole or in part. Such
notice of prepayment shall further state that on the specified date there shall become due and payable
upon each Certificate or portion thereof being prepaid the prepayment price and that from and after such
date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of
optional prepayment of Certificates, unless at the time such notice is given the Certificates to be prepaid
shall be deemed to have been paid within the meaning of the Trust Agreement,such notice shall state that
such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such
prepayment, of moneys sufficient to pay for the prepayment price of the Certificates to be prepaid, and
that if such moneys shall not have been so received said notice shall be of no force and effect and the
District shall not be required to prepay such Certificates. In the event a notice of prepayment of
11.2 Official SYamimldac 6
Certificates contains such a condition and such moneys are not so received,the prepayment of Certificates
as described in the conditional notice of prepayment shall not be made and the Trustee shall, within a
reasonable time after the date on which such prepayment was to occur, give notice to the persons and in
the manner in which the notice of prepayment was given,that such moneys were not so received and that
there shall be no prepayment of Certificates pursuant to such notice of prepayment.
The Trustee shall,at least 30 but not more than 60 days prior to any prepayment date,give notice
of prepayment to the respective Owners of Certificates designated for prepayment by first-class mail,
postage prepaid at their addresses appearing on the registration books maintained by the Trustee as of the
close of business on the day before such notice of prepayment is given.
The actual receipt by the Owner of any notice of such prepayment shall not be a condition
precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the
validity of the proceedings for the prepayment of such Certificates or the cessation of interest evidenced
thereby on the date fixed for prepayment.
Effect of Prepayment If notice of prepayment has been duly given as aforesaid and moneys for
the payment of the prepayment prim of the Certificates to be prepaid are held by the Trustee,then on the
prepayment date designated in such notice, the Certificates so called for prepayment shall become
payable at the prepayment price specified in such notice; and from and after the date so designated,
interest evidenced by the Certificates so called for prepayment shall mase to accrue, such Certificates
shall mesa to be entitled to any benefit or security hereunder and the Owners of such Certificates shall
have no rights in respect thereof except to receive payment of the prepayment price thereof The Trustee
shall, upon surrender for payment of any of the Certificates to be prepaid pay such Certificates at the
prepayment price thereof,and such moneys shall be pledged to such payment.
All Certificates prepaid pursuant to the provisions of the Trust Agreement shall be canceled by
the Trustee and shall not be redelivered.
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES
Installment Payments
Pursuant to the Installment Purchase Agreement,the Project will be acquired by the District from
the Corporation. The District has covenanted to, subject to any rights of prepayment under the
Installment Purchase Agreement, pay to the Corporation, solely from Net Revenues and from no other
sources,the Purchase Prim in Installment Payments, with interest thereon, as provided in the Installment
Purchase Agreement. Pursuant to the Master Agreement, the District has established and declared the
conditions and terms upon which obligations such as the Installment Purchase Agreement, and the
installment Payments and the interest thereon payable under the Installment Purchase Agreement,will be
incurred and secured. The obligation of the District to make the Installment Payments, and payments of
interest thereon, and other payments required to be made by it under the Installment Purchase Agreement,
solely from Net Revenues,is absolute and unconditional,and until such time as the Installment Payments,
payments of interest thereon, and such other payments shall have been paid in full (or provision for the
payment thereof shall have been made pursuant to the Installment Purchase Agreement), the District has
covenanted that it will not discontinue or suspend any Installment Payments when due,whether or not the
Project or any part thereof is operating or operable or has been completed, or its use is suspended
interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments,
payments of interest thereon, and other payments shall not be subject to reduction whether offset or
otherwise and shall not be conditional upon the performance or nonperformance by any party of any
agreement or any cause whatsoever. The District's obligation to make Installment Payments from Net
t 1-z omdm statmMI.&c 7
Revenues is on a parity with the District's obligation to make payments with respect to its Outstanding
Senior Obligations. See'—Net Revenues"below. Pursuant to the Trust Agreement,the Corporation has
assigned to the Trustee for the benefit of the Owners of the Certificates substantially all of its rights, title
and interest in the Installment Purchase Agreement, including its right to receive Installment Payments
and the interest thereon.
The District has Senior Obligations Outstanding evidenced by six series of certificates of
participation and two related interest rate swap agreements, payable on a parity with the Installment
Payments under the Installment Purchase Agreement. The two interest rate swap agreements were
executed by the predecessor special districts in connection with the execution and delivery of certain
Outstanding Senior Certificates. The payments under these swap agreements are payable on a parity with
the Installment Payments under the Installment Purchase Agreement and other Senior Obligations, as
provided in the Master Agreement. See"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein
and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement"
attached hereto.
The obligation of the District to pay the Installment Payments, and the interest thereon,and other
payments required to be made by it order the Installment Purchase Agreement and Master Agreement, is
a special obligation of the District payable, in the manner provided in the Installment Purchase
Agreement, solely from Net Revenues and other funds provided for in the Installment Purchase
Agreement,and does not constitute a debt of the District,the State or of any political subdivision thereof,
in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and
credit nor the taxing power of the District,the Store or any political subdivision thereof, is pledged to the
payment of the Installment Payments, or the interest thereon, or other payments required to be made
under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior
Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the
advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master
Agreement. See`SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES"herein.
Net Revenues
The District is obligated to make Installment Payments solely from Net Revenues as provided in
the Master Agreement, which consist of Revenues remaining after payment of costs paid by the District
for maintaining and operating the Wastewater System ("Maintenance and Operation Costs"). Revenues
are defined in the Master Agreement to mean, for any period, all income and revenue received by the
District during such period from the operation or ownership of the Wastewater System, determined in
accordance with generally accepted accounting principles, including all fees and charges received during
such period for the services of the Wastewater System, investment income received during such period
(but only to the extent that such investment income is generally available to pay costs with respect to the
Wastewater System, including Maintenance and Operation Costs), Net Proceeds of business interruption
insurance received during such period,ad valorem taxes received during such period,payments under the
Agreement Acquiring Ownership Interests, Assigning Rights and Establishing Obligations, entered into
on February 13, 1986, and amendment No. 1 thereto dated December 10, 1986, by and between
predecessor County Sanitation District No. 14 of Orange County and the Irvine Ranch Water District(the
"IRWD Agreement") received during such period and all other money received during such period
howsoever derived by the District from the operation or ownership of the Wastewater System or arising
from the Wastewater System (including any standby or availability charges), but excluding (a)Capital
Facilities Capacity Charges,(b)payments received under Financial Contracts,and(c)refundable deposits
made to establish credit and advances or contributions in aid of construction (which, for purposes of the
Master Agreement, shall not include payments under the IRWD Agreement); provided, however, that
(i)Revenues shall be increased by the amounts, if any, transferred during such period from the Rate
11-2 official Scatcrneu.doc 8
Stabilization Account to the Revenue Account and shall be decreased by the amounts, if any,transferred
during such period from the Revenue Account to the Rate Stabilization Account, and(ii)Revenues shall
include Capital Facilities Capacity Charges collected during such period to the extent that such Capital
Facilities Capacity Charges could be properly expended on a Capital Facilities Capacity Charge Eligible
Project for which the proceeds of Subject Obligations were used or are available to be used. See
"DISTRICT REVENUES—Additional Revenues"herein.
The District's obligation to make the Installment Payments from its Net Revenues is on a parity
with the District's obligation to make payments with respect to its other outstanding obligations described
as Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations,as provided
in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as
such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits,
interests and security afforded Senior Obligations pursuant to the Master Agreement. Pursuant to the
Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations,and the Net Revenues will not be used for
any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to
Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be
apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This
pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations. The term Senior Obligations, generally
means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District
authorized executed,issued and delivered under and pursuant to applicable low,the Installment Purchase
Agreement and all other contracts (including financial contracts) or leases of the District authorized and
executed by the District under and pursuant to applicable law, the installment, lease or other payments
under which are,in accordance with the provisions of the Master Agreement,payable from Net Revenues
on a parity with the payments under the Master Agreement.
The District may at any time incur Subordinate Obligations payable on a subordinate basis to the
Installment Payments executed and delivered as provided in the Master Agreement; provided, however,
that prior to incurring such Subordinate Obligations,the District will have determined that the incurrence
thereof will not materially adversely affect the District's ability to comply with the requirements of the
Master Agreement. The District may at any time incur Reimbursement Obligations with respect to
Subordinate Obligations. For a description of the District's Outstanding Senior Obligations and
Subordinate Obligations, we "FINANCIAL OBLIGATIONS — Existing Indebtedness" herein. There
are currently no Subordinate Obligations or Reimbursement Obligations with respect to Subordinate
Obligations outstanding.
The District may, in connection with the incurrence of Subordinate Obligations, pledge Net
Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to
Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be
junior and subordinate to the pledge of,and lien on,Net Revenues for the payment of Senior Obligations
and Reimbursement Obligations with respect to Senior Obligations.
Rate Stabilization Account
To avoid fluctuations in its fees and charges of the Wastewater System, from time to time the
District may deposit in the Rate Stabilization Account from Net Revenues such amounts as the District
deems necessary or appropriate. From time to time, the District may also transfer moneys from the Rate
Stabilization Account to the Revenue Account to be used by the District, first to pay all Maintenance and
Operations Costs as and when the some shall be due and payable. In addition, any such amount
transferred from the Rate Stabilization Account to the Revenue Account by the District is included as
11.2 Official atatanmtdoc 9
Revenues for any period,but such transferred amount is excluded from determining Operating Revenues
for any period. Revenues will be decreased by the amounts,if any,transferred from the Revenue Account
to the Rate Stabilization Account. There are presently no funds in the Rate Stabilization Account.
Allocation of Revenues
To carry out and effectuate the pledge of Net Revenues under the Master Agreement as described
above, the District agrees and covenants that all Operating Revenues received by the District will be
deposited when and as received in the Revenue Account. Additionally, amounts may, from time to time
as the District deems necessary or appropriate, be transferred from the Rate Stabilization Account and
deposited in the Revenue Account, as described above under "— Rate Stabilization Account." The
District will pay from the Revenue Account all Maintenance and Operations Costs (including amounts
reasonably required to be set aside in contingency reserves for Maintenance and Operations Costs, the
payment of which is not immediately required)as and when the same shall be due and payable.
After having paid, or having made provisions for the payment of, Maintenance and Operations
Costs,the District shall set aside and deposit or transfer, as the case may be, from the Revenue Account
such amounts at such times as provided in the Master Agreement in the following order of priority:
(1) Senior Obligation Payment Account;
(2) Senior Obligation Reserve Funds;
(3) Subordinate Obligation Payment Account;
(4) Subordinate Obligation Reserve Funds;and
(5) Rate Stabilization Account.
Amounts required or permitted to be deposited or transferred as described in items 2, 3, 4 and 5
above, shall not be so deposited or transferred unless the District shall have determined that there will be
sufficient Net Revenues available to make the required deposits or transfers on the dates on which such
deposits or transfers are required to be made as described above. So long as the District has determined
that Net Revenues will be sufficient to make all of the deposits or transfers required to be made pursuant
to items 1, 2,3, 4 and 5 above, on the dates on which such deposits or transfers are required to be made,
Net Revenues on deposit in the Revenue Account may from time to time be used for any purpose for
which the District funds may be legally applied. For additional information, see APPENDIX C —
"SUMMARY OF PRINCIPAL.LEGAL DOCUMENTS—Master Agreement.-
Rate Covenant
Pursuant to the Master Agreement,the District will,to the extent permitted by law, fix,prescribe
and collect fees and charges for the services of the Wastewater System which will be at least sufficient to
yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for
such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for
such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may
make such classification thereof as it deems necessary, but will not reduce the fees and charges then in
effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be
sufficient to meet the requirements of the Master Agreement.
11-2 Official Siammcnt d 10
In addition. the District has covenanted in the Master Agreement to prepare and adopt an annual
budget for the Wastewater System for each Fiscal Year. Such budget will set forth in reasonable detail
the Revenues anticipated to be derived in such Fiscal Year and the expenditures anticipated to be paid or
provided for therefrom in such Fiscal Year, including, without limitation,the amounts required to pay or
provide for the payment of the Obligations during such Fiscal Year, the amounts required to pay or
provide for the payment of Maintenance and Operations Costs during such Fiscal Year and the amounts
required to pay or provide for the payment of all other claims or obligations required to be paid from
Revenues in such Fiscal Year,and will show that Revenues and Net Revenues will be at least sufficient to
satisfy the requirements of the Master Agreement. On or before September I of each Fiscal Year, the
District will file with the Trustee a copy of the adopted budget for such Fiscal Year. See APPENDIX C
— "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement' for additional
information.
Reserve Fund
The Trust Agreement provides for the funding of the Reserve Fund in an amount equal to the
"Reserve Requirement,"which is defined as an amount,as of any date of calculation,equal to the least of
(a) 100A of the original aggregate amount of principal evidenced by the Certificates (or if the amount of
original issue discount or premium applicable to the Certificates exceeds 2%,than 10%of the issue price
of the Certificates), (b)the maximum amount of remaining Installment Payments, and the interest
thereon, coming due in any one Certificate Year, and (c) 125% of the average amount of remaining
Installment Payments, and the interest thereon, coming due in each Certificate Year. Amounts in the
Reserve Fmd may be used to pay principal and interest evidenced by the Certificates to the extent that
amounts in the Principal Account and Interest Account are insufficient therefor. The Trustee shall
establish and maintain the Reserve Fund until all required Installment Payments, and the interest thereon,
are paid in full pursuant to the Installment Purchase Agreement and until the first date upon which no
Certificates are Outstanding. The Reserve Food will be funded with a portion of the net proceeds of the
Certificate in the amount of $ , which amount is sufficient to satisfy the Reserve
Requirement. See"SOURCES AND USES OF PROCEEDS OF THE CERTIFICATES."
The District may substitute a Reserve Facility for all or a part of the moneys on deposit in the
Reserve Fund by depositing such Reserve Facility with the Trustee so long as, at the time of such
substitution, the amount on deposit in the Reserve Fund, together with the amount available under such
Reserve Facility and any previously substituted Reserve Facilities, shall be at least equal to the Reserve
Requirement. Moneys for which a Reserve Facility has been substituted as provided in the Trust
Agreement shall be transferred, at the election of the District, to the Installment Payment Fund, or upon
receipt of an Opinion of Counsel to the effect that such transfer, in and of itself,will not adversely affect
the exclusion of interest evidenced by the Certificates from gross income for federal income tax purposes,
to a special account to be held by the Trustee and applied to the payment of capital costs of the District,as
directed in a Written Request of the District. Any amounts paid pursuant to any Reserve Facility shall be
deposited in the Reserve Food.
If a Reserve Facility is credited to the Reserve Fund to satisfy a portion of the Reserve
Requirement,the Trustee shall make a claim for payment under such Reserve Facility, in accordance with
the provisions thereof, in an amount which, together with other available moneys in the Reserve Fund,
will be sufficient to make said deposit in the Interest Account or Principal Account.
The moneys in the Reserve Fund, and any Reserve Facility, shall be held in trust by the Trustee
for the benefit of the Owners and shall be used and disbursed only for the purposes and uses authorized in
the Trust Agreement. Moneys, if any,on deposit in the Reserve Fund shall be withdrawn and applied by
the Trustee for the final payment of principal and interest evidenced by the Certificates.
11.2 Official Sm m.d. II
Amounts on deposit in the Reserve Fund which were not derived from payments under any
Reserve Facility credited to the Reserve Fund to satisfy a portion of the Reserve Requirement shall be
used and withdrawn by the Trustee prior to using and withdrawing any amounts derived from payments
under any such Reserve Facility. In order to accomplish such use and withdrawal of such amounts not
derived from payments under any such Reserve Facility,the Trustee shall, as and to the extent necessary,
liquidate any investments purchased with such amounts. If and to the extent that more than one Reserve
Facility is credited to the Reserve Fund to satisfy a portion of the Reserve Requirement, drawings
thereunder,and repayment of expenses with respect thereto, shall be made on a pro-rate basis(calculated
by reference to the policy limits available thereunder).
The Trustee shall, from amounts received from the District pursuant to the Installment Purchase
Agreement,deposit in the Reserve Fund an amount of money which,together with the amount already on
deposit therein and the amounts available under all Reserve Facilities, will be equal to the Reserve
Requirement. No deposit need be made in the Reserve Fund so long as there shall be on deposit therein a
sum equal to the amount which, together with the amounts available under all Reserve Facilities, is at
least the Reserve Requirement. The Trustee shall promptly notify the District in writing if the amount on
deposit is less than the Reserve Requirement.
If, as a result of the scheduled payment of principal or interest evidenced by the Certificates, the
Reserve Requirement is reduced. the Trustee shall transfer an amount equal to the amount of such
reduction to the Installment Payment Fund. See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS—Trust Agreement."
Limitations on Issuance of Additional Obligations
Senior Obligations. The District may at any time incur Senior Obligations in addition to the
Existing Senior Obligations payable from Net Revenues as provided in the Master Agreement on a parity
with all other Senior Obligations theretofore incurred but only subject to the following conditions under
the Master Agreement:
(1) Upon the incurrence of such Senior Obligations, no Event of Default will be continuing
under the Master Agreement;and
(2) Subject to the provisions of the Master Agreement, the District will have received either
one of the following:
(i) A Written Certificate of the District certifying that, for a 12 consecutive calendar
month period during the 24 consecutive calendar month period ending in the
calendar month prior to the incurrence of such Senior Obligations (which 12
consecutive calendar month period will be specified in such certificate or
certificates):
(A) Net Revenues,as shown by the books of the District,will have amounted
to at least 125% of Maximum Annual Debt Service on all Senior
Obligations to be outstanding immediately after the incumence of such
Senior Obligations,and
(E) Net Operating Revenues,as shown by the books of the District,will have
amounted to at least 100% of Maximum Annual Debt Service on all
Obligations to be outstanding immediately after the incurrence of such
Senior Obligations.
rtoOfdvStatin ,t.dor 12
For purposes of demonstrating compliance with the foregoing,Net Revenues and
Net Operating Revenues may be adjusted for(x)any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in
effect on the date such Senior Obligations are incurred, but which, during all or
any part of such 12 consecutive calendar month period, were not in effect,
(y)customers added to the Wastewater System subsequent to such 12
consecutive calendar month period but prior to the date such Senior Obligations
are incurred, and (z) the estimated change in available Net Revenues and Net
Operating Revenues which will result from the connection of existing residences
or businesses to the Wastewater System within one year following completion of
any project to be funded or any system to be acquired from the proceeds of such
Senior Obligations;or
(ii) A certificate or certificates from one or more Consultants which, when taken
together, project that, for each of the two Fiscal Years next succeeding the
incurrence of such Senior Obligations:
(A) Net Revenues will amount to at least 125% of Maximum Annual Debt
Service on all Senior Obligations to be outstanding immediately after the
incurrence of such Senior Obligations,and
(B) Net Operating Revenues will amount to at least 100% of Maximum
Annual Debt Service on all Obligations to be outstanding immediately
after the incurrence of such Senior Obligations.
For purposes of demonstrating compliance with the foregoing,Net Revenues and
Net Operating Revenues may be adjusted for(x)any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in
effect on the date such Senior Obligations are incurred or will go into effect prior
to the end of such two Fiscal Year period,(y)customers expected to be added to
the Wastewater System prior to the end of such two Fiscal Year period, and (z)
the estimated change in available Net Revenues and Net Operating Revenues
which will result from the connection of existing residences or businesses to the
Wastewater System within one year following completion of any project to be
funded or any system to be acquired from the proceeds of such Senior
Obligations. For purposes of preparing the certificate or certificates described
above,the Consultant may rely upon financial statements prepared by the District
that have not been subject to audit by an independent certified public accountant
if audited financial statements for the period are not available.
See, also "FINANCIAL OBLIGATIONS — Existing Indebtedness" herein. The provisions
described above in paragraph (2)need not be complied with if the Senior Obligations being incurred are
Short-Tenn Obligations excluded from the calculation of Assumed Debt Service pursuant to clause(H)of
the definition thereof. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —
Defrnitions"herein.
The determination of Net Revenues for use in the calculation described above is more fully
described in APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master
Agreement—Senior Obligations"attached hereto. The provisions described in paragraph(2)above need
not be complied with for such portion of such Senior Obligations incurred for the purpose of providing
funds to refund or refinance such Obligations if(i)a portion(which may be all)of the Senior Obligations
11.2 Official Sreamea.Lac 13
are incurred for the purpose of providing funds to refund or refinance any Obligations, (ii)upon such
refunding or refinancing, debt service on such refunded or refinanced Obligations, or debt service on
bonds, notes or other obligations of an entity other than the District,the debt service on which is payable
from Obligation Payments for such Obligations(the "Related Bonds"),will no longer be included in the
calculation of Assumed Debt Service either because such Obligations, or the Related Bonds of such
Obligations,will have been paid in full or because such debt service is disregarded pursuant to clause(L)
of the definition of Assumed Debt Service, and (iii)Assumed Debt Service in each Fiscal Year for the
portion of such Senior Obligations incurred for the purpose of providing funds to refund or refinance such
Obligations is less than or equal to 105% of Assumed Debt Service in such Fiscal Year for such
Obligations being refunded or refinanced(assuming for such purposes that debt service on such refunded
or refinanced Obligations, or debt service on the Related Bonds of such Obligations, is not disregarded
pursuant to clause(L) of the definition of Assumed Debt Service). See APPENDIX C—"SUMMARY
OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement" attached hereto for additional
information.
The District may at any time incur Reimbursement Obligations with respect to Senior
Obligations.
Subordinate Obligations. The District may at any time incur Subordinate Obligations upon
satisfaction of the conditions provided in the Master Agreement. Sea APPENDIX C—"SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS—Master Agreement"herein for a description of such conditions.
Insurance
The District will procure and maintain or cause to be procured and maintained casualty insurance
on the Wastewater System with responsible insurers,or provide self insurance(which may be provided in
the form of risk-sharing pools), in such amounts and against such risks (including accident to or
destruction of the Wastewater System) as are usually covered in connection with facilities similar to the
Wastewater System. The District will procure and maintain such other insurance which it will dean
advisable or necessary to protect its interests and the interests of the Corporation. See "THE DISTRICT
—Risk Management' and APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—
Master Agreement"herein.
11.2 Official sulemeetdoc 14
Allocation of Installment Payments
Table 1 below sets forth the Installment Payments, together with the estimated interest thereon,
assuming no optional prepayments as described under "THE CERTIFICATES — Prepayment
Provisions"herein. Also set forth are the payments due on Outstanding Senior Obligations.
Table 1
Estimated Installment Payments of the District
Fiscal Year Installment Payments Outstanding Senior
Ending Relating to Certificates Obligation Payments
dune30 Principal Interest Princhad Interesittl Total
200 $ 1,525,000 $17,045,829.93
2009 15,250,000 33,569,862.20
2010 16,310,000 32,737,964.90
2011 17,270,000 31,827,050.85
2012 17,810,000 30,962,339.25
2013 18,695,000 30,028,736.00
2014 33,775,000 28,798,645.70
2015 20,545,000 27,580,443.30
2016 21.355,000 26,745,154.90
2017 26,965,000 25,662,697.30
2018 23,375.000 24,633,864.10
2019 24,285,000 23,728,695.50
2020 25.295,000 22,803,505.50
2021 30,800,000 21,791,955.50
2022 22,700,000 21,328,209.92
2023 27.370,000 20,236,414.23
2024 28,680,000 19,018,621.14
2025 30,115,000 17,699,073.57
2026 31,570,000 16,355,513.60
2027 33,150,000 14,930,403.27
2028 34.665,000 13,539,579.94
2029 36,280,000 12,057,945.43
2030 38,750,000 10,53&170.23
2031 41,940,000 8,900,126.47
2032 41,990,000 7,066,545.09
2033 71,500,000 5,136,913.78
2034 16,590,000 1,754,656.12
2035 17,405,000 1,122,618.15
2036 18,260,000 459,531.16
2037
Total $784,120,005 $547,960,965.93
m Assumes a per annum interest me of 3.75%for all un-hedged variable rate obligations and actual swap Mies for
swapped variable rate obligations. See"FINANCIAL OBLIGATIONS—Existing Indebtedness"and
APPENDIX A—"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY
SANITATION DISTRICT FOR FISCAL YEAR ENDED NNE 30,2007"herein.
t'1 Excludes payments due on or before December 1,2007.
11.2(Midel Stu axat. oc 15
THE DISTRICT
Background
The Orange County Sanitation District is a public agency responsible fa regional wastewater
collection, treatment and disposal. The District is the sixth largest wastewater discharger in the United
States. The District provides service to an area with a population of approximately 2.5 million people in
the northern and central portion of the County by treating 229 mg/d of wastewater in Fiscal Year 2006-07.
The District serves approximately 81% of the County population in approximately 479 square miles, or
59%of the County.
The service area which comprises the District was originally formed in 1954 pursuant to the
County Sanitation District Acl, as amended Section 4700 et seq. of the Health and Safety Code of the
State. The District's service area originally consisted of seven independent special districts in the County
which were each responsible for matters relating to their individual districts. These special districts were
jointly responsible for the treatment and disposal facilities which they each used. The seven independent
districts were successors to the Joint Outfall Sewer Organization, which was formed in 1923 among the
Cities of Anaheim, Santa Ana, Fullerton, and Orange, and the sanitary districts of Placentia, Buena Park,
La Habra, and Garden Grove. The Joint Outfall Sewer Organization constructed a treatment plant and
outfall in the early 1920's to serve its members. It was reorganized in 1947 and 1948 into seven county
sanitation districts - District Nos. 1, 2, 3, 5, 6, 7 and 11. These prior districts were formed based on
engineers' analyses of the gravity flows in the service area. District No. 13 was formed in 1985 and
District No. 14 was added in 1986. These districts were co-participants in a Joint Agreement which
provided for the joint construction,ownership,and operation of the prior districts'joint facilities.
In April 1998, at the request of the District's Board of Directors (the "Board of Directors"), the
Board of Supervisors of the County of Orange (the "County Board") passed Resolution No. 98-140
approving the consolidation of the then existing nine special districts into a new, single sanitation district,
to be known as the Orange County Sanitation District. This action was designed to simplify govemance
structures, reduce the size of the Board of Directors, ease administrative processes, streamline decision-
making and consolidate accounting and auditing processes. The consolidation was effective on July 1,
1998.
Pursuant to the Resolution and Govemmem Code Section 57500, the prior districts transferred
and assigned all of their powers, rights, duties, obligations, functions and properties to the District, and
the District assumed all obligations of the prior districts which were several and not joint including,
without limitation, their obligations to repay the then outstanding certificates of participation. See
"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein. The boundaries of the nine predecessor
special districts were initially used by the District to delineate separate revenue areas (the "Revenue
Areas") for budgeting and accounting purposes and in order to facilitate the imposition of fees and
charges imposed by the District. See"DISTRICT REVENUES—Sewer Service Charges"herein.
The District is managed by the Board of Directors,whose members are appointed by twenty-five
member cities and agencies which are serviced by the District. The District is responsible for
construction and maintenance of a major portion of the wastewater collection, treatment and disposal
facilities within its boundaries. Revenue Area No. 7 is responsible for approximately 152 miles of local
sewers in its service area, whereas local sanitary districts, water districts and cities are responsible for
local sewers in the remainder of the District's service area.
11-2 OtSdal Statemwt.dx 16
Organization and Administration
The District is independent of and overlaps other political jurisdictions. There are many
governmental entities, including the County, that operate within the District's jurisdiction. These entities
are exclusively responsible for the administration of their own fiscal affairs,and the District is not entitled
to operating surpluses of,or responsible for operating deficits of,any of the other entities.
The twenty-five member Board of Directors is comprised of representatives from twenty-one
cities, unincorporated areas of the County and three special districts,including mayors of cities, members
of city councils, directors of independent special districts and one member from the County Board.
Several board committees, made up of members of the Board of Directors, consider topics for action by
the Board of Directors and make recommendations to the Board of Directors. The Chair and the Vice
Chair of the Board of Directors are elected every year by a majority of the Board of Directors, and serve
at the pleasure of the majority of the Board of Directors.
The District has a general manager, general counsel, administrative and operating staff, with
offices located at Reclamation Plant No. 1 in Fountain Valley,California. The District currently employs
an administrative and operating staff of over 600 under the direction of its General Manager, James D.
Ruth.
James D. Ruth is the District's General Manager, and has served in that capacity since
December 2005. Prior to that time, from January 2003 to October 2004, Mr. Ruth served as Chief
Executive Officer for the County of Orange. Mr. Ruth had previously provided 22 years of service to the
city of Anaheim as pmks and recreation director, deputy city manager, assistant city manager and chief
executive officer,a post he held for I 1 years.
Robert P. Ghirelli, Ph.D. is the District's Assistant General Manager, and has served in that
capacity since July 2006. Mr.Ghirelli previously served as Director of Technical Services for the District
since his joining the District in 1998. Prior to joining the District, Mr. Ghirelli served forjust over a year
as managing principal of the Los Angeles office of a national environmental consulting firm, served 20
years in supervisory positions with the State and Regional Water Boards,with 13 years Executive Officer
of the California Regional Water Quality Control Board, Los AngeleslVentura Region.
Loren_o Tyner is the District's Director of Finance and Administrative Services. In
September 2005, Mr. Tyner joined the District with nearly 15 years of public finance and budgeting
experience,most recently serving as the Los Angeles Unified School District Budget Director and Deputy
Chief Financial Officer. Mr. Tyner previously worked in large government organizations including the
City of Los Angeles and the Los Angeles County Metropolitan Transportation Authority and private
sector companies IBM Global Services and Northrop.
James Xerberg, P.B. is the District's Director of Engineering, and has served in that capacity
since November 2006. Prior to becoming Director of Engineering, he was the District's Director of
Operations and Maintenance. Mr. Herberg has over twenty years of experience in water and wastewater
including project management, construction management, design, strategic planning, and operations &
maintenance.
Ed Torres is the District's Director of Technical Services for the District. He has served in this
position since November 2006. Prior to joining the District in 1991, Mr. Torres served in a professional
capacity for the California State University System and TRW Electronics and Defense Sector. Mr.Toms
has twenty-four years of public and private sector experience in protecting public health and the
environment.
11.2 ORdd swmami.d« 17
Nick Arhones, P.E. is the District's Director of Operations and Maintenance and has served the
District since 1988. Mr. Arhontes has over 30 years of experience managing various engineered systems
in the private and public sectors regionally,nationally, and internationally.
Services
The District owns and operates regional wastewater collection, treatment, and disposal facilities
for the metropolitan area in the northern and central portion of the County. The District receives
wastewater from the collection systems of the cities, sanitary districts and unincorporated areas of the
County located within the District. See"THE DISTRICT—Service Areas"herein.
Generally, local agency systems collect wastewater from residential and industrial customers and
convey the wastewater to District trunk sewer pipelines for conveyance to the District's wastewater
treatment plants.
The District's staff is responsible for operating and maintaining the District's infrastructure,
although some operations are provided by external contractors.
Currently, the District has established supply contracts for all chemicals necessary to the
operation and maintenance of the facilities of the District. The District has sufficient standby systems in
the event of equipment failures or system outages.
Service Area
The map on the first page of this Official Statement shows the District's boundaries and selected
cities located within the District. District boundaries were originally established in 1947 and 1948 based
on drainage basins. As the existing cities have grown and new areas have incorporated, city limits have
come to overlap District boundaries. The District currently serves an approximately 471 square-mile area
including 23 of the County's 33 cities and unincorporated areas of the County. The District serves a
population of approximately 2.5 million residents and owns sanitary sewerage facilities with a
replacement value of approximately$5.56 billion.
tt-2 Official amk WDC 18
Table 2 below sets forth the estimated populations of cities and unincorporated areas served by
the District as of June 30,2007.
Table 2
Estimated Populations of Cities and Unincorporated Areas
Served by the Orange County Sanitation District
As of June 30,2007
city Population
Anaheim 345,560
Brea 39,870
Buena Park 82,450
Costa Mesa 113,810
Cypress 49,280
Fountain Valley 57,740
Fullerton 137,370
Garden Grove 172,780
Huntington Beach 202,250
Irvine 202,080
La Habra 62,480
La Palma 16,160
Los Alamitos 12,150
Newport Beach 84,220
Orange 138,640
Placentia 51,600
Santa Ana 353,430
Seal Beach 25,960
Stanton 38,980
Tustin 70,350
Villa Park 6,250
Westminster 92,870
Yorba Linda 67,900
Cities Subtotal1 ) 2,424,180
Unincorporated Areas"' 81A00
Total 2,505,180
Sources? Stet�omia Department of Finance,Demographic Research Unit and
tat Orange County Sanitation District.
Employees
As of June 30, 2007,the District had 634 full-time equivalent("FTE")staff positions. Most of the
employees who occupy these positions are represented by recognized employee organivations, which
include the following: the Orange County Employees Association ("OCEA"), the International Union of
Operating Engineers— Local 501 ("Local 501"), the Supervisor Group, and the Professional Group. As
of October 1, 2007, the District had 591 represented and non-represented employees. Total represented
employees as of October 1,2007 numbered 535,as follows: 99 were represented by the OCEA, 196 were
represented by Local 501 and 240 were represented by the Supervisor and Professional Groups. New
agreements with each of these employee organizations took effect on July 1, 2007. The OCEA and Local
501 agreements are in effect through June 30, 2011; the Supervisor and Professional Group agreements
are in effect through June 30,2010. The OCEA has represented administrativelclerical,technical services
and engineering employees since 1979. Local 501 has represented operations and maintenance
employees since October 1985. The Supervisor and Professional Groups have represented supervisory
i n-2 Vidal Smmrmr.m 19
and professional employees since 1991. The District has historically enjoyed a good working relationship
with the employee organizations and has experienced no work stoppages by represented personnel in the
past.
For a description of the Orange County Employee's Retirement System, in which the District
participates, and the District's deferred compensation plan, see "Retirement Plan" below and Note 7 to
the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Year
Ended June 30,2007,set forth in Appendix A.
Retirement Plan
The District participates in the Orange County Employee's Retirement System ("OCERS"), a
cost-sharing multiple-employer, defined benefit pension plan which is governed and administered by a
nine-member Board of Retirement. OCERS was established in 1945 under the provisions of the County
Employees Retirement Law of 1937,and provides members with retirement,death,disability,and cost of-
living benefits.
All District full-time employees participate in OCERS. Employees who retire at or after age 50
with ten or more years of service are entitled to an annual retirement allowance. The amount of the
retirement allowance is based upon the member's age at retirement, the member's"final compensation"
as defined in Section 31462 of the Retirement Law of 1937,the total years of service under OCERS,and
the employce's classification as a Tier I or Tier 11 member. As of July 1, 2006, the formula to calculate
retirement benefits was enhanced to 2.5%at age 55,or employees retiring at age 55 or older receive 2.5%
of their average salary for every year of service. Average salary is the highest consecutive 12 months of
compensation for Tier I employees and the highest consecutive 36 months of compensation divided by
three for Tier II employees. Benefits fully vest on reaching five years of service. OCERS also provides
death and disability benefits.
As a condition of participation under the provisions of the County Employees Retirement Law of
1937, members are required to contribute a percentage of their annual compensation to OCERS. The
District is required to make periodic contributions to OCERS in amounts that are estimated to remain a
constant percentage of covered employees' compensation such that, when combined with covered
employees' contributions,will fully provide for all covered employees'benefits by the time they retire.
11-2 Otraa]Statment.d« 20
A current comparison of OCERS costs for Fiscal Years 2002-03 through 2006-07 and projected
costs through Fiscal Year 2008-09 is shown in the following table.
Table 3
Orange County Sanitation District
Comparison of OCERS Costs for Fiscal Years 2002-03 through 2008-09
Fiscal Year Rater.. Costrn
2002-03 5.50% $ 1,943,056
2003-04 9.15 3,668,650
2004-05 12.37 5,524,673
2005-06 15.21 7,416,556
2006-07 19.78 9,848,854
2007-081" 20.87 11,724,637
2008-09r31 21.34 12,275,695
Requi�tribution as a percent of covered payroll. Includes amortization of Unfunded Accrued Actuarial
Liability.
rx' Amounts represents employer contributions made by the District.
o� Projected.
For Fiscal Years 2002-03 through 2005-06, the District's required contribution was equal to the
contribution that the District actually made. As noted,the required contribution set forth above includes
amortization of Unfunded Accrued Actuarial Liability ("UAAL"). For the fiscal year ended June 30,
2007, total payroll costs of employees covered by OCERS was $49,788,835. As of the December 31,
2006 valuation,OCERS has an aggregate UAAL ratio of 73.8%,for a total UAAL of$2.29 billion.
For more information regarding OCERS and the District's retirement plan as of June 30, 2007,
see Note 7 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for
Fiscal Year Ended June 30,2007 set forth in Appendix A. The Comprehensive Annual Financial Reports
of the Orange County Employees Retirement System are available on the OCERS website at
http://w w.ocers.org. The information on such website is not incorporated herein by such reference or
otherwise.
Post-Employment Benefits
On June 21, 2004,the Governmental Accounting Standards Board("GASB")approved Statement
No. 45 (GASB 45), accounting standards for other (than pensions) postemployment benefits ("OPEB").
GASB 45 effective dates are phased in, similar to GASB's Statement No. 34 which was implemented in
recent years.The first effective Fiscal Year for the District is Fiscal Year 2007-08.The District's actuary,
Demsey Filliger Associates (the "Actuary"), has prepared a valuation of the District's OPEB liability.
According to the Actuary, the District's unfunded OPEB Liability is approximately $17,300,000. The
District does not believe that its OPEB liability will have a material impact on its District's operational
results. [further detail to come]
Risk Management
As of the date hereof, the District has in force basic all risk property and casualty insurance,
including theft, fire, flood, terrorism and boiler and machinery losses to the Wastewater System. The
District is self-insured for portions of workers' compensation,property damage and general liability. The
self-insurance portion of workers' compensation is $500,000 per person per occurrence with outside
excess insurance coverage to $300 million. The self-insured portion for property damage covering fire
11.2 Onidal Sutement.d. 21
and other disasters is $25,000 per occurrence with outside excess insurance coverage to $1 billion. The
self-insured portion for property damage covering flood is $100,000 per occurrence with outside excess
insurance coverage to$300 million. The District is self-insured for all property damage from the perils of
earthquakes. See "DISTRICT REVENUES — Reserves." The District also maintains outside
comprehensive boiler and machinery insurance, including business interruption insurance, with a $100
million limit with deductibles ranging from $25,000 to $350,000. The District is substantially self-
insured for general liability coverage with a $250,000 self-insured deductible, but has excess general
liability coverage to$25 million.
During the past three fiscal years there have been no settlements in excess of covered amounts.
Claims against the District are processed by outside insurance administrators. The District believes that
there are no unrecorded claims as of October 1,2007 that would materially affect the financial position of
the District.
For more information regarding the District's insurance coverage as of June 30, 2007,see Note 1
to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Yea
Ended June 30,2007 set forth in Appendix A.
Existing Facilities
The District's Wastewater System presently consists of two wastewater treatment plants, an
influent metering and diversion structure, 16 pump stations, various interplant pipelines and connections,
and the ocean outfall facilities. The District's Wastewater System includes approximately 584 miles of
sewers within 12 trunk sewer systems, 152 miles of local sewers located within Revenue Area No. 7,two
treatment plants, two discharge outfalls and two emergency weir outlets. The existing treatment plants
have a rated primary treatment capacity of 366 million gallons per day,including standby capacity.
Treatment Plant No. I (`Plant No. 1") is located in the City of Fountain Valley, about four miles
from the coast, adjacent to the Santa Ana River. Secondary treatment capabilities are provided by a
trickling filter plant and a conventional air activated sludge plant. Up to 15 million gallons per day
("mg/d") of secondary treated effluent is conveyed to an Orange County Water District(the "OCWD")
plant for tertiary treatment prior to ground water recharge.
Treatment Plant No. 2("Plant No. 2")is located in the City of Huntington Beach, 1,500 feet from
the ocean,at the mouth of the Santa Ana River. Secondary treatment capabilities are provided by a pure
oxygen activated sludge plant.
The District employs several phases in the treatment of wastewater. The first phase,preliminary
treatment, removes debris such as eggshells, sand and biodegradable items. See also"Preferred Level of
Treatment" and 'Biosolids Management" below. In the next phase, primary treatment, wastewater is
pumped to large settling basins. The liquids are separated from the remaining solids which settle or float
as the wastewater passes through large settling basins called clarifiers. The settled solids are sent to solids
treatment facilities. Approximately half of the primary treated wastewater flows into the ocean outfall
pumping station where it is blended with secondary treated wastewater before being discharged into the
ocean. The other half is sent to secondary treatment for further processing. During secondary treatment,
the wastewater is placed in aeration basins to which naturally occurring bacteria are added to remove
most of the remaining dissolved and suspended microscopic organic solids. The treated wastewater from
both plants is mixed together at Plant No. 2,where it is then pumped through the ocean outfall pipe that
extends five miles offshore.
11.2 oatir Strn .dm 22
Table 4 below sets forth the treatment plants' approximate current and future treatment capacities.
Table 4
Wastewater System Treatment Capacities
(MG/D)
2006-07 Existing Primary Total Planned
Actual Treatment Existing Secondary Secondug,
Flows capacity Treatment Camel Capacity
Plant No. 1 90 198 110 170
Plant No.2 139 168 90 150
Aggregate Treatment 229 366 200 320
Plant Facilities
The Dunned Total Capacity" is based on the Strategic Plan for planned capacity by 2020, which
estimated the District's requirements to meet future expected primary and secondary capacity demands.
The District has the capability to divert a portion of the influent flow from Plant No. 1 to Plant
No.2 through interplant connections. A portion of the flow destined for Plant No. 2 can also be diverted
to Plant No. 1. The treated wastewater from Plant No. I flows by gravity to the outfall system through
interconnecting lines. The combined Plant No. 1 and Plant No. 2 effluent is than pumped through a
120-inch diameter ocean outfall which is approximately five miles long. The last mile of the outfall pipe
is a diffuser that dilutes the wastewater with seawater in a ratio of 148 parts seawater to one part treated
wastewater at an average depth of 185 feet. The 120-inch outfall has a capacity of 480 million gallons per
day at high tide. A smaller 78-inch diameter outfall that terminates at a shallower depth is still
maintained, although it is reserved for use in emergencies. This smaller outfall is estimated to have a
capacity of approximately 230 million gallons a day. There is an interplant gas pipeline between Plant
No. 1 and Plant No.2 which allows digester gas(which is used as fuel for many of the facilities' engines)
from one plant to be used at the other to balance the supply and demand, which results in efficient gas
utilisation.
Permits,Licenses and Other Regulations
The Wastewater System is subject to regulations imposed by the 1972 Clean Water Act, Public
Law 92-500 (the "Clean Water Act"), the California Environmental Quality Act of 1970, as amended
("CEQA")and the Federal Clean Air Act. The regulatory requirements are administered by the United
States Environmental Protection Agency(the`EPA")and the California Regional Water Quality Control
Board("RWQCB"). Regulations of these agencies deal primarily with the quality of effluent which may
be discharged from the treatment plants and the nature of waste material discharged into the collection
system. The Clean Water Act directs the EPA to monitor and to regulate the discharge of pollution into
navigable waterways and to enforce the requirements that all wastewater treatment plants in the nation
provide full secondary treatment for sewage. In 1977, Congress amended the Clean Water Act to allow
waivers of secondary treatment standards for certain ocean dischargers if they can demonstrate, to the
satisfaction of the EPA, that significant adverse environmental impacts would not occur. The District
currently has all applicable permits and licenses necessary to operate its facilities.
The District has discharged treated wastewater into the Pacific Ocean under a permit issued by
the EPA and the RWQCB. The discharge permit included a waiver under the 301(h) provisions of the
Clean Water Act, allowing for less than full secondary treatment based on an ocean discharge of
sufficient depth, distance and dilution. The permit was initially issued in 1985 and was the first modified
Section 301(h) permit issued to a major wastewater treatment facility. The District's permit, which
11.2 Official Staerrmir oC 23
included the Section 301(h)waiver of secondary treatment requirements, was issued on May 6, 1998 and
expired on June 8,2003.
In July 2002, the Board of Directors approved a change from the existing level of treatment, a
blend of 50 percent advanced primary and 50 percent secondary treated wastewater, to full secondary
treatment standards. Sea "Preferred Level of Treatment" and "Urban Runoff' below. As a result, the
District established a policy to subject all wastewater discharges into the ocean to secondary treatment
standards. See "Preferred Level of Treatment" below. To implement this policy, District staff was
directed to immediately proceed with the planning,design,and implementation of treatment methods with
the expressed purposes of eliminating the need for the permit wavier received under Section 301(h).
Following determination by the Board of Directors in July 2002 to implement full secondary
standards, staff prepared the Secondary Treatment National Pollutant Discharge Elimination System
("NPDES") Permit Application that was required to be submitted to the regional office of the EPA and
the RWQCB in December 2002. The NPDES Permit is separate and apart from the permit waiver
received under Section 301(h), and once awarded would negate any necessary waiver. Achieving
secondary treatment standards will take approximately 6 years to complete, with completion expected in
December 2012. But ocean discharge permits are issued for 5 years, and the EPA has no authority to
waive the discharge limits requirements or grant a longer permit(except per Sec. 301(h)). The alternative
was to voluntarily seek a consent decree concurrently with the issuance of the new ocean discharge
permit. This negotiated consent decree(the"Consent Decree")approves the schedule and decrees that no
penalties will be imposed for discharges that exceed the secondary treatment limits during the period of
construction. The Consent Decree was signed by the District, EPA, and the RWQCB and filed with the
U.S. District Court on November 15,2004.
The South Coast Air Quality Management District ("AQMD") is the regional governmental
agency charged with implementing the Federal Clean Air Act. AQMD permits are required before a
sewage treatment improvement project can be constructed. Such permits are project specific and contain
construction process requirements, required equipment and standards for predicted air quality. After
construction is completed,the AQMD issues an operation permit. These permits are also project specific
and contain air quality standards and other appropriate operational guidelines. Most of the District's
facilities are enclosed in order to trap emissions,which are cleaned by air scrubbers that remove odors. In
addition,the District has implemented an air quality risk reduction program which includes a twenty-year
plan to improve treatment plant operations and reduce industrial toxic pollutants. The District currently
has all necessary AQMD permits to operate the Wastewater System.
Capital Improvement Program
Tire Master Plan. The District's 1989 master plan consisted of a 30-year plan of action for
managing wastewater activities to the year 2020, entitled "2020 Vision, Action Plan for Wastewater
Management and Environmental Protection 1990-2020" (the"Master Plan"). The Master Plan integrated
research facilities planning, environmental analysis, toxic control, water conservation and reclamation,
sludge reuse, other wastewater programs and financial planning into a single unified approach. In
connection with the preparation of the Master Plan,an in-depth land use study was performed,resulting in
the creation of a uniform land use classification system and a map of the District's service area. Land use
designations and unit flow factors were used to project wastewater flows in the District's trunk sewers for
than present conditions, through the year 2020. These flows were included in a computer model of the
District's Wastewater System which identified future sewer capacity improvements. A thirty-year capital
improvement program was developed to implement the required sewer capacity improvements. This land
use study included the collection and compilation of the latest available land use plans,reports,maps and
studies from the cities within the District and the County, and interviews with the planning directors or
11-2 Moat stmemmi dm 24
key staff within the District. Land use planning within the District's service area is the responsibility of
the County for unincorporated areas and cities for areas within their boundaries. The California Coastal
Commission has some land use authority within the District's coastal areas.
The Strategic Plan. In October 1999, the District updated the Master Plan with a strategic plan
(the "Strategic Plan"). The Strategic Plan updated the planning process set forth in the Master Plan
through the year 2020 and defined the District's goals, responsibilities, and requirements over the then
following twenty years, including projections through the assumed "build-cut" of the District's service
area to the year 2050. In addition to updating the population and flow assumptions, the Strategic Plan
provided for an operations and financial plan, including a review of the collection,treatment and disposal
facilities, and the District's ocean outfalls. Studies on a preferred level of wastewater treatment and in-
sourcing of the ocean monitoring program were prepared and incorporated in the Strategic Plan. Water
and air regulatory agencies require that all wastewater facilities be designed to meet the needs of
anticipated growth and provide a reasonable reserve capacity. With the adoption of the Strategic Plan,the
District's planning process met these requirements by shifting its approach for the development of master
plans from a"site and build"approach to a broad-based multi-agency cooperative evaluation process.
Many of the assumptions used to develop the Strategic Plan, such as inflation, the projected
service population, the level of building activity, and the volume of wastewater treated were quite
different from what was assumed ten years earlier under the Master Plan. Critical factors such as
population growth, new construction, the volume of wastewater delivered to the plants and viable water
conservation and reclamation programs were reevaluated.
Interim Strategic Plan. In June 2002, an Interim Strategic Plan Update(the "Interim Strategic
Plan") was completed to further update and revise many of the assumptions used to develop the District's
previous planning documents,including population and land-use projections,the level of building activity
in the District's service area and the volume of wastewater to be treated. The Interim Strategic Plan also
provides far an operations and financial plan including a review of the District's collection,treatment and
disposal facilities,and a study of the District's ocean outfall system. In addition,potential changes in the
regulatory climate for the beneficial reuse of biosolids were also considered.
On July 17, 2002. the Board of Directors approved Resolution No. OCSD-14, "Establishing the
Policy for Level of Treatment of Wastewater Discharged into the Ocean." This resolution established the
District's policy to treat all wastewater discharges into the ocean to secondary treatment standards thereby
providing for continued public safety, marine ecosystem protection, and water reclamation opportunities.
To implement this policy, the District staff was directed to immediately proceed with the planning,
design, and implementation of treatment methods that will allow the agency to meet Clem Water Act
secondary treatment standards. The District currently estimates that it will take 5 years (through
December 2012) and additional capital improvement costs of$538 million to reach secondary treatment
discharge standards. In the interim, the District will operate the plants to maximize available secondary
treatment and to reduce effluent biochemical oxygen demand and suspended solid discharges below
currently allowed limits. The current 50 percent secondary portion will increase incrementally as
operations change and new facilities are constructed and placed in service. See "Preferred Level of
Treatment"below.
The District's planning process for development of the Interim Strategic Plan incorporated an
analysis of population growth,dry weather and peak wet weather flows and the maximum use of existing
facilities. The population of the District's service area was projected to grow to 2.7 million by the year
2020. Average flow rates at both treatment plants were projected to increase to 278 million gallons a day
by 2020(134 million gallons a day of treatment at Plant No. 1 and 144 million gallons a day at Plant No.
2),up 15%from the Fiscal Year 2005-06 flow.
11.2 Omc1a aulemm.,im 25
In combination with the Interim Strategic Plan, the District developed its current Capital
Improvement Program ("CIP"). The District expects to meet future demands on the Wastewater System
through the CIP. This program has been developed to satisfy anticipated regulatory requirements,
increased population,additional treatment requirements, conservation, energy and other resource savings
considerations,odor control improvements,and air quality protection needs. Through 2020,the District's
CIP is scheduled to accomplish:
• Major rehabilitation of the existing headworks, primary treatment, secondary treatment,
outfall pumping,and solids handling facilities at both treatment plants;
• Replace and rehabilitate 16 of the District's outlying pumping stations, and 44 trunk
sewer improvement projects;
• Fund cooperative projects to help cities upgrade their sewer systems;
• Disinfect the District's ocean discharge to reduce bacterial levels below State bathing
standards;
• Reclaim 70 millions of gallons per day of the District's effluent,or nearly one-third of the
total daily flow(Groundwater Replenishment System);and
• Achieve full secondary treatment standards.
CIP Validation Study. In preparation of each year's Budget,the District conducts an Annual CIP
Validation Study to ensure that the scopes of the projects were necessary, and that the cost estimates were
accurate. As a result of the completion of the CB' Validation Study and the Secondary Treatment Peer
Review in March 2007, a revised CB' was further developed to meet secondary treatment standards as
quickly as possible while providing for increased flows and rehabilitation and refurbishment of existing
facilities. As identified within the Interim Strategic Plan, and verified through the CIP Validation Study
and Secondary Treatment Review,$538 million of additional capital improvements over the next 5 years
(through December 2012)are needed to reach full secondary standards.
The CIP Validation Study resulted in a revised CIP consisting of 107 large capital projects
managed by the Engineering Department through 2020-21 at a total cost of$2.3 billion, approximately
$750 million of which has been spent to date. The bulk of construction is scheduled during the next ten
years, with average annual expenditures of nearly $300 million projected over the next five years.
Implementation of full secondary treatment standards is scheduled to be completed on or before
December 31, 2012. A summary of total estimated capital costs for the CIP for Fiscal Years 2007-08
through 2020.21 is set forth in Table 5 below.
1 t-2 Official Swaaamtdor 26
Table 5
Estimated Capital Costs
Fiscal Years 2007-08 through 2020-21trt
Project Cost
Collection System Capacity $ 169,005,450
Collection System Repair,Rehabilitation,Replacement 192,087,530
Treatment Plant Capacity 18,329,380
Additional Secondary Treatment 489,817,580
Groundwater Replenishment System,Phase 1 15,793,000
Improved Treatment 110,905,900
Treatment Plant Repair,Rehabilitation,Replacement 505,453,550
Support Facilities 105,791,810
Total Validated Capital Improvement Program $1"607.1g4.100
All coated as of March 23.2007 and are derived from the CIP Validation Study.
Source: (range County Sanitation District.
Of the Fiscal Year 2007-08 proposed CIP cash flow outlay of$302.7 million, the largest cash
outlay within the plant facilities is$54.3 million for the new trickling filters at Treatment Plant No.2 with
a total project cost of$221.2 million. The Headworks replacement at Treatment Plant No. 2 requires
$53.4 million in Fiscal Year 2007-08,with a total project cost of$257.8 million. Another$36.6 million is
required for the replacement of the interplant pumping station on Ellis Avenue to be located at
Reclamation Plant No. 1, with a total project cost of$78.5 million. Of the Fiscal Year 2008-09 proposed
CIP cash flaw budget of$356.0 million, the largest budgeted expenditure within the plant facilities is
$71.8 million for the new secondary treatment facility 2 at Reclamation Plant No. 1. The new trickling
filters at Treatment Plant No. 2 are expected to require $54.1 million in Fiscal Year 2008-09. Another
$39.3 million is being proposed for the Headworks replacement at Treatment Plant No.2.
The largest project in the collection system, in the Fiscal Year 2007-08 CIP, is $8.5 million for
the Bushard Trunk Sewer project,which was completed in July 2007. For Fiscal Year 2008-09,the three
largest projects include $10.8 million for Gisler-Redhill North Trunk Improvements, $15.2 million for
replacement of the Bitter Point Pump Station,and$20.5 million for the Newport Trunk Sewer and Force
Mains project. The total budgets for these three projects are $16.1 million, $34.1 million and $24.4
million,respectively.
Board of&rector's Sewer Service Ckarges Review. In April 2007,the Board of Directors began
consideration of increased sanitary sewer service charges for all single family and multi-family residential
units and most commercial and industrial properties. Any increases in sanitary sewer charges are subject
to approval by ordinance adopted by a 213 vote of the Board of Directors after a noticed public hearing in
compliance with all laws. See "LIMITATION ON TAXES AND REVENUES — Article XIIIC and
Article XHID of the California Constitution" herein. District staff expects sewer service charges to
increase as a result the Board of Director's review. However, specific increases have not yet been
adopted and there can be no assurance that any particular service charge considered during the review
process will be adopted by the Board of Directors.
Groundwater Replenishment System
The District has taken a multi jurisdictional approach to planning for capital facilities because
many of the methods for reducing or managing flows involve other jurisdictions. One such project is the
Groundwater Replenishment System ("GWRS"). In March 2001, the District entered into an agreement
with the OCWD to design and construct Phase 1 of the GWRS. The cost of this project is to be paid
11-2 Official star atdoc 27
equally (50 percent shares)by each agency. The GWRS is a joint effort by the two agencies to provide
reclaimed water for replenishment of the Orange County Groundwater Basin and to augment the seawater
intrusion barrier. The GWRS is planned for three phases, Phase 1 will produce approximately 72,000
acre-feet per year of recycled water by June 2007, Phase 2 will increase the total capacity to 112,000
acre-feet by the year 2010, and Phase 3 will increase the total capacity to 145,600 acre-feet by the year
2020. Following the completion of Phase 1,the extent of the District's commitment to date,the GWRS
will have the capacity to divert up to 100 million gallons per day of flow from the District's ocean
discharge. Costs for Phases 2 and 3 have yet to be approved and programmed.
As of June 30, 2007, the total estimated cost of GWRS Phase I was $492.2 million. Of this
amount, up to $90.0 million may be reimbursed through grants from the U.S. Environmental Protection
Agency, the U.S. Bureau of Reclamation, the State Water Resources Control Board, and others. The
District's estimated share is $246.1 million. Costs incurred by the District through June 30, 2007 total
$186.4 million. As noted above,Phase 1 of the GWRS is nearing completion and the GWRS will require
a cash outlay of$15.6 million in Fiscal Year 2007-08.
Preferred Level of Treatment
In July 2002, the Board of Directors approved a change from the existing level of treatment, a
blend of 50 percent advanced primary and 50 percent secondary treated wastewater, to full secondary
treatment standards. The reasoning behind the decision to move to full secondary standards included(1)
the possibility (no matter how remote) that bacteria from the ocean outfall may at times reach the
shoreline, (2) upgraded treatment will aid additional water reclamation with the Orange County Water
District,(3)and the public clearly stated preference for upgrading wastewater treatment at the time.
In an effort to eliminate most bacteria from being released from the ocean outfall, in 2002 the
District began to use chlorine bleach to disinfect the effluent and than apply sodium bisulfate to remove
any remaining chlorine prior to releasing the treated wastewater to the ocean. In order to protect the
animal life living in the ocean, the District continues to take measures to limit the chlorine residual to a
very low level-essentially non-detectable. This mode of disinfection is anticipated to occur for the short-
term, possibly two or three years, while the District studies, designs and constructs permanent facilities,
and considers alternate disinfection technologies. Beginning in Fiscal Year 2006-07, the addition of
disinfection treatment required an annual outlay of$7 million in additional chemicals within the joint
operating budget of the District.
Following determination by the Board of Directors in July 2002 to implement full secondary
standards, staff prepared the Secondary Treatment NPDES Permit Application that was required to be
submitted to the regional office of Environmental Protection Agency ("EPA") and the RWQCB in
December 2002. An NPDES permit has been issued to the District and the District is currently operating
under the Consent Decree. See"THE DISTRICT—Permits, Licenses and Other Regulations."
The District estimates that it will take approximately 6 years and require additional capital
improvement costs of approximately $649 million to add additional secondary treatment capacity to the
Wastewater System,with completion expected in December 2012. In addition, based upon the District's
most recent projections, upon completion of facilities necessary to meet secondary treatment standards,
operating costs will increase by approximately $7.2 million annually. In the interim, the District will
operate the plants to maximize available secondary treatment and to reduce effluent biochemical oxygen
demand and suspend solid discharges below those currently allowed limits. Each year, the current 50
percent secondary portion will increase incrementally as operations change and new facilities are
constructed and placed in service over the coming years.
11-2 Official Slarencal. c 28
Biosolids Management
The District produces approximately 650 tons of digested and dewatered(Class B)biosolids per
day. By 2020, the District's biosolids production is projected to increase by 2M to 285,000 tons
annually. The District relies on the following technologies and locations for the management of its
biosolids: land application of Class B biosolids in Arizona, land application of chemically-stabilized
Class A biosolids in Kern County, composting to Class A biosolids in Riverside County, Kern County
and La Paz County,Arizona,and landfilling of Class B biosolids in Yount County,Arizona.
Counties throughout California and Arizona have developed,or are in the process of developing,
ordinances that severely restrict or ban the land application of Class B biosolids. In June 2006, Kenn
County voters approved an anti-sludge initiative that bans the land application of both Class B and Class
A biosolids. It has become clear that certain land application options currently available to the District
are anticipated to be eliminated in the near future due to these developments. The District, as well as
most of California's wastewater agencies, is working to develop sustainable products and management
locations for its biosolids.
The dynamic regulatory issues, land application ordinances and bans, and public perception
challenges have prompted the District, with the help of CH2MI-lill, to develop a Lang-Range Biosolids
Management Plan("LRBMP"). This LRBMP was approved by the Board in December 2003. The goal
of the LRBMP was to develop a sustainable, reliable, and economical program for long-range biosolids
management providing environmentally sound practices that meet the stringent federal, state, and local
regulatory requirements. The LRBMP recommendations included new in-plant technologies to reduce
the volume of biosolids, explore the production of Class A biosolids products, and move into the energy
and fuel production and compost markets.
As a result of the LRBMP recommendations,the existing Synagro biosolids management contract
was amended in April 2004 to have 250 tons per day of the District's Class B biosolids composted at
Synagro's South Kem Industrial Center ("SKIC") facility, which is currently scheduled to open in
December 2007. In May 2006,the District entered into a contract with EnerTech Environmental, Inc.to
convert 225 tons of biosolids per day to a renewable fuel at EnerTech's proposed facility in Rialto,
California. The EneTech solution is a relatively new, patented heat treatment process that increases the
ability to dewate biosolids in order to maximize the efficiency of the production of fuel. By decreasing
the moisture content of biosolids prim to drying, a smaller dryer is needed, thus reducing capital and
energy consumption. The fuel product will be recycled and reused, under agreements with area cement
kilns and other fuel uses. Residual ash from the fuel combustion becomes part of the cement product,
resulting in no residual waste product liability. The EnerTech facility is expected to come on-line in late
2008.
Also in April 2005,the Board of Directors approved the amendment of the existing memorandum
of understanding ("MOU") with South Orange County Wastewater Authority ("SOCWA") for
preliminary facility design, permitting, and community relations activities for the development of a
composting facility at the Prima Deshecha Landfill in South Orange County. For the past two years
under the previous existing MOU, SOCWA and the District have been working with the Orange County
Integrated Waste Management Department's Biosolids Committee to site an enclosed biosolids and green
waste composting facility at the Prima Deshecha Landfill in South Orange County. The proposed"South
Orange County Composting Facility"would take in approximately 100 to I10 tons of Class B biosolids
daily from the District and SOCWA and combined with like amounts of wood chips and yard trimmings,
produce approximately 65 to 75 tons of compost per day. The MOU reflects a 50-50 participation
commitment and ownership in the facility between SOCWA and the District,and consent to initiate and
n n-2 OgiaA Smaomr.duc 29
fund the tasks for the initial planning,permitting and concept design of the project. This project is still in
the development process.
As a result of the transition to biosolids-based compost and energy products the war to the
District for biosolids management is expected to increase by about $3 million per year starting in Fiscal
Year 2006-07. The Fiscal Year 2005-06 budget for biosolids management was $9.7 million. The Fiscal
Year 2006-07 budget for biosolids management is $12.8 million. The Fiscal Year 2007-08 biosolids
management budget is currently estimated to be$14.3 million.
Urban Runoff
For a two-month period during the summer of 1999, eight miles of beaches in Huntington Beach
were closed by the OCHCA due to excessive levels of bacteria in the water. A three-month interagency
source investigation did not identify a definitive source of the contamination, but determined that the
District was not at fault Although the initial "signature" of the pollution strongly suggested sewage
contamination, the investigation concluded that none of the District's facilities caused the excessive
bacteria levels and that there was no adverse impact on the capacity of the Wastewater System.
In June 2002, the District's charter was amended by an act of the State Legislature to include
permissive language authorizing the diversion and management of dry weather urban runoff flows. This
charter change will allow the District, in its discretion, to acquire, construct, operate, maintain, and
furnish facilities for the diversion of urban runoff from drainage courses within the District,the treatment
of the urban runoff,the return of the water to the drainage courses,or the beneficial use of the water.
As noted above, in July 2002, the Board of Directors approved the implementation of full
secondary standards. The District is currently discharging treated wastewater into the Pacific Ocean
under a permit issued by the EPA and the RWQCB on May 6, 1998 and currently under an administrative
grant of permission until the EPAIRWQCB issue a new permit to replace it. Following determination by
the Board of Directors in July 2002 to implement full secondary standards, staff prepared the Secondary
Treatment NPDES Permit Application that was required to be submitted to the regional office of the EPA
and the RWQCB. See"THE DISTRICT—Permits,Licenses and Other Regulations."
Integrated Emergency Response Program
In recognition of the potential damage which could occur in the event of a major earthquake,
flood, or other disaster, the District has implemented an Integrated Emergency Response Program (the
"IERP") in 1979. The IERP is a two-volume plan which contains policies, plans and procedures
preparing for, and responding to, emergencies. The District also analyzed disaster preparedness issues
and policies within the Master Plan, and within a 1994 document titled Fault Rupture Hazard
Investigation-Wastewater Treatment Plant No.2.
According to the Master Plan, earthquakes are considered to be the most potentially devastating
natural disaster events which confront the District. The disaster preparedness plan included in the Master
Plan reviewed two possible major earthquake scenarios: an 8.3 Richter magnitude ("M") earthquake on
the southern San Andreas fault system and an M 7.0 earthquake 7.0 Newport-Inglewood fault zone,which
includes Plant No. 2. An M 8.3 earthquake on the southern San Andreas fault,while on the whole more
destructive than the M 7.0 Newport-Inglewood fault even, would probably result in less damage to the
District's service area due to the distance of the fault from most of the service area. However, the 1989
Master Plan stated that damage from such a major earthquake on the San Andreas fault would be
extensive. Alan, the Master Plan indicated that an M 7.0 earthquake on the Newport-Inglewood fault
within five miles of the District's sewerage facilities could cause major destruction to those facilities.
11-2 OIHdd amtaom.A 30
The disaster preparedness plan in the Master Plan indicated that it would not be economically feasible to
upgrade all of the existing sanitary sewerage facilities to survive an earthquake of this magnitude along
the Newport-Inglewood fault. The LERP outlines the policies and employee actions to be taken before,
during and after an earthquake,earthquake response guidelines and damage assessment procedures.
The Master Plan analyzed the vulnerability of the sanitary sewerage facilities and operations of
the District and planned a risk reduction program wherein the vulnerability of many of the District's
sanitary sewerage facilities to an earthquake could be reduced by recommended retrofit construction
measures. The Master Plan also recommended that designs of existing major structures which were
constructed prior to development of current seismic design standards be reviewed and the structures
strengthened, if necessary.
Since the 1989 Master Plan and the 1994 Report, the District has completed retrofitting where
deemed appropriate. Pursuant to the Master Plan, all recent and future projects have been, and will be,
designed to the same high earthquake code standards as set for other essential services, such as hospitals
and fire stations. Many of the older buildings analyzed in the Master Plan have been replaced by
structures built after 1989.
The Army Corps of Engineers' "All-River Plan" has mitigated any future flooding of the Santa
Ana River system and potential threats to the District's Wastewater System. Also, both Plant No. 1 and
Plant No.2 are surrounded by three-foot to six-foot high walls,built to federal standards.
The disaster preparedness plan in the Strategic Plan investigates the damage potential posed by
coastal flooding, tsunamis(large ocean waves generated by seismic activity) and windstorms. However,
based on available information, the District does not believe that any of such events would have a
material adverse impact on the Wastewater System.
The Strategic Plan also makes recommendations regarding fire protection of the Wastewater
System and most of the structures at Plant No. 1 and Plant No. 2 are constructed of fire-resistant
materials. The ARP describes the procedures needed to respond to a possible disaster. For more
information regarding emergency response policies, the disaster preparedness plan described in the
Strategic Plan and the IERP can be reviewed at the District's office.
DISTRICT REVENUES
Sewer Service Charges
General. The District has the power to establish fees and charges for services of the Wastewater
System. Such fees and charges are established by the District's Board of Directors and are not subject to
review or approval by any other agencies.
In Fiscal Year 1997-98, a Rate Advisory Committee (the"RAC")was established comprised of
representatives from industrial, commercial and residential users. The goal of the RAC was to examine
the then current rate structure and if needed, develop recommendations for change. The RAC analyzed
the District's rate structure to determine whether its than current sewer service user fees (now known as
"Sewer Service Charges") were equitable among residences and industry. This review resulted in a
proposal to expand the number of non-residential user categories from one to twenty-three and to provide
for gradual rate increases in seven of the nine Revenue Areas. The increase in the number of categories
provided a more equitable fee structure and also provided for future reductions in single-family residential
Sewer Service Charges. The Sewer Service Charges for those categories were based on the average flow
and strength of wastewater discharged for each property type.
u-x aada Srarenrna.d. 31
Annually, the Board of Directors adopts an ordinance establishing the annual sanitary sewer
service charges. These ordinances are adopted by a two-thirds vote of the Board of Directors as required
under law after conducting a noticed public hearing in compliance with Proposition 218. See
"LIMITATIONS ON TAXES AND REVENUES - Article XIIIC and Article XIIID of the California
Constitution." In May 2002,the Board of Directors adopted District Ordinance No.OCSD 18(the"2002
Ordinance") which was effective on July 1, 2002. The 2002 Ordinance included a single family
residential ("SFR") rate increase, the underlying basis for all sanitary sewer service charges including
sanitary sewer rates for multi-family residential units as well as most commercial and industrial
properties, of $7.50 per year, or 9.4%, to $87.50 per year. In June 2003, the Board of Directors
authorized a Proposition 218 notice on proposed"not to exceed"rate increases for each year over the next
five years. Each year thereafter,the Board of Directors has ratified the next year's actual rate.
Table 6 below sets forth the annual ordinance adoptions following the last Proposition 218 notice
and presents a five-year comparison of the Sewer Service Charge rate for single-family residences.
Table 6
Annual Sewer Service Charges
Single Family Residence Rate
Five Year Rate Schedule
Fiscal Years 2003-04 through 2007-08
Effective Sewer Service Percent
Fiscal Year Ordinance No. Date Charree Increase
2003-04 OCSD-20 7/l/03 $100.00 14.3%
2004-05 OCSD-20 7/l/04 115.00 15.0
2005-06 OCSD-26 7/1/05 151.00 31.3
2006-07 OCSD-30B 7/l/06 165.80 9.8
2007-08 OCSD-32 7/1/07 182.00 9.8
Source: Orange County Sanitation District
In November 2007, the Board of Directors began considering increases in its sanitary sewer
service charges for all single family and multi-family residential units as well as most commercial and
industrial properties. As currently contemplated, this schedule would increase the amount of the annual
charges by amounts ranging from 9%to 12%per year for each of the following five years, commencing
with Fiscal Year 2008-09. Such increases are subject to approval by ordinance adopted by a two-thirds
vote of the Board of Directors after conducting a noticed public hearing in compliance with Proposition
21 S.There is no guaranty that any proposed service charge will be approved.
Assuming an average annual rate increase of 10%,the projected SFR rate of$293.00 in five years
would remain below the current average annual sewer rate of$370.00 per year according to a 2007 survey
of 725 agencies encompassing all 58 counties in California conducted by the State Water Resources
Control Board.
This increase was necessary to meet the District's cash flow needs due to the addition of
disinfection treatment and other operating requirements.As discussed under the caption"THE DISTRICT
— Capital Improvement Program," the CIP Validation Study in the Spring of 2005 and further in
March 2007 developed a capital improvement program to meet secondary treatment standards as quickly
as possible while providing for increased flows and rehabilitation and refurbishment of existing facilities.
As projected out to Fiscal Year 2020-21 the cash flow needs of the CIP total approximately$2.3 billion,
approximately$750 million of which has been spent to date.The bulk of construction is scheduled during
11-2 Ommai Smmaenr m 32
the next ten years,with average annual expenditures of nearly$300 million projected over the next five
years.
The District collects Sewer Service Charges from property owners through the semi-annual
property tax bill distributed by the County throughout the District, except in Revenue Area No. 14.
Pursuant to the IRWD Agreement, the District receives payments from the Irvine Ranch Water District
(the "IRWD") which directly collects fees from customers through a monthly billing procedure in
Revenue Area No. 14.
The District has covenanted in the Master Agreement to fix, prescribe and collect fees and
charges to satisfy certain coverage requirements as further described under "SECURITY AND
SOURCES OF PAYMENT FOR THE CERTIFICATES—Rate Covenant"herein.
Residential Server Service Charges. Pursuant to the 2002 Ordinance, the District established
residential Sewer Service Charges upon a rational basis between the fees charged each customer and the
services and facilities provided to each customer of the District. In accordance with the 2002 Ordinance
and the noticed public hearing held at that time which considered increases in the amount of the annual
charges by approximately 20%per year for each of the then following five years,in May 2005,the Board
of Directors adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06 single family
residential rate 31%, from $115.00 to $151.00 for such year for all ratepayers, except those located in
Revenue Area 14. In May 2006, the Board of Directors adopted Ordinance No. OCSD-30B increasing
the Fiscal Year 2006-07 single family residential rate 9.8%, from $151.00 to $165.80 for such year,
except those located in Revenue Area 14. The average total of fees and charges for Revenue Area No. 14
are $70.80 per year per single-family residential unit and are levied and collected directly by the IRWD
on a monthly basis. The IRWD subsequendy pays fees to the District on a quarterly basis pursuant to the
IRWD Agreement. This increase was necessary in order to meet the District's cash flow needs.
Table 7 below sets forth total average annual Sewer Service Charge for single-family residences
within the District,together with comparable total average annual charges for wastewater service within
the jurisdictions of certain other cities and districts within the State as of July 1,2007.
r r-2 OBtlN suremmr.doc 33
Table 7
Comparison of Total Sewer Service Charges
For Single-Family Residences
As of July 1,2007
Average Dry Annual
Weather Sewer Property
Flow Service Treatment Collection Tax
Entity (m¢/d ") C�'t Levela) Res� income")
San Diego I80 $460 2 Yes No
Los Angeles(City) 447 345 4 Yes No
East Bay MUD go 238 4 No Yes
Sacramento 155 222 3 No Yes
Orange County 250 182 2 No Yes
Sanitation District
Los Angeles County 513 108 4 No Yes
Source: Wormation obtained from respective entities listed.
(2) Treamtent Level Categories:
"1"—Primary treatment.
"2"—Advanced primary or primary with some secondary treatment.
"3"—Secondary treatment.
"4"—Advanced secondary or secondary with some tertiary treatment.
"S'—Tertiary treatment.
In Source: 2006-07 Wastewater User Charge Stuvey Report by the California State Water Resources Control
Board.
Industrial Sewer Service Charges. The District charges industrial Sewer Service Charges to
customers discharging high-strength or high-volume wastes into the sewer systems. Customers subject to
industrial Sewer Service Charges are billed directly by the District. The fee charged to each customer is
based on the customer's sewage volume, the concentration of suspended solids and biochemical oxygen
demand. Pursuant to the 2002 Ordinance, rates for each component factor were revised for certain
industrial users in order to be consistent with the rates charged to residential users. Total industrial Sewer
Service Charges in Fiscal Year 2006-07 were approximately $13 million. Industrial Sewer Service
Charges are applied to both the operating and capital funds.
Additional Revenues
The District has several sources of additional revenue,including property taxes,Capital Facilities
Capacity Charges,capacity rights,permit and inspection fees and interest earnings.
Property Taxer. The District receives approximately 2.5%of the one percent County ad valorem
property tax levy, based on the allocation procedure under State law. Property tax revenues were $41.1
million in Fiscal Year 2001-02, $44.6 million in Fiscal Year 2002-03, $46.9 million in Fiscal Year 2003-
04, $35.8 million in Fiscal Year 2004-05, $40.0 million in Fiscal Year 2005-06 and $55.6 million in
Fiscal Year 2006-07. The $11.2 million decrease in property tax revenues from Fiscal Year 2003-04 to
Fiscal Year 2004-05 is reflective of the State of California's then current fiscal crisis and the
implementation of the first year of a two-year 40% secured property tax shift away from independent
special districts. During the 2004-05 State Budget process, the State Legislature and the Governor
enacted Senate Bill 1096 and Assembly Bill 2115, effectively shifting an additional $1.3 billion in local
property tax revenues from counties, cities, special districts and redevelopment agencies to schools and
t 1-2 official staemandw 34
community colleges. This shift was effective for Fiscal Year 2004-05 and Fiscal Year 2005.06,resulting
in a 409/6 secured property loss for the District. See "LIMITATIONS ON TAXES AND REVENUES—
Proposition IA." This 40% reduction for Fiscal Year 2004-05 was somewhat offset by the continuing
upturn in the real estate market. Total assessed valuations increased over the 2004-05 Fiscal Year by
10.3%, and the full value of these increases was received on all non-secured property tax distributions.
The District expects to receive property tax revenues in its full allotment(no State property tax shift)of
$58.9 million in Fiscal Year 2007-08. Current projections indicate that property tax revenues received by
the District are expected to increase by approximately 6.0%in fiscal year 2007-08 and then 5%each year
thereafter. The apportionment of the ad valorem tax is pursuant to a revenue program adopted by the
District in April 1979 to comply with the EPA, the RWQCB, legal and contractual requirements and
Board of Directors policy.
Capital Faci/Ules Capacity Charges. Capital Facilities Capacity Charges (fomrerly known as
connection fees) are one-time fees with two components, paid at the time property is developed and
connected to the Wastewater System. The fees are imposed by the District pursuant to Section 5471 of
the California Health and Safety Code and are levied to pay a portion of the District's capital costs and for
access to capacity in the Wastewater System. Currently, the District has Capital Facilities Capacity
Charges of $4,517 per residential unit (three-bedroom); however, under the current industrial use
ordinance, additional Capital Facilities Capacity Charges can be imposed on industrial users who place
larger than average demand on the Wastewater System. Member cities and sanitary districts collect
Capital Facilities Capacity Charges for the District when building permits are issued. Capital Facilities
Capacity Charges are reviewed annually to reflect the changes in the value of the Wastewater System to
which a new customer is connecting.
On December 15, 1999, the Board of Directors approved District Ordinance No. OCSD 99-11
(the"1999 Ordinance")which established a comprehensive Capital Facilities Capacity Charge. The 1999
Ordinance, effective as of January 1, 2000, renamed connection fees w Capital Facilities Capacity
Charges and provided a more equitable schedule of fees among industrial, commercial and residential
users. Pursuant to the 1999 Ordinance, Capital Facilities Capacity Charges were revised for high demand
industrial users in five incremental increases from 1999 through 2001.
Pursuant to an agreement with the IRWD, the IRWD is not required to pay Capital Facilities
Capacity Charges and in exchange,the IRWD provides fording to the District for the construction costs
of certain wastewata collection, transmission,treatment and disposal facilities to be used by the IRWD
and is obligated to make certain payments to the District for certain services arising from the Wastewater
System(including any standby or availability charges).
Sale ofCapaciy. The District has entered into agreements with the Santa Ana Watershed Project
Authority ("SAWPA") whereby wastewater from Upper Santa Ana River Basin dischargers can be
transported through the District's Santa Ana River Interceptor to the District's wastewater treatment
facilities. This program was developed in the early 1970's.The agreements establish control mechanisms
regarding the quality of wastes deposited into the Wastewater System. At the present time, SAWPA has
purchased and paid for 30 million gallons a day of capacity rights in the District's Santa Ana River
Interceptor and 13 million gallons a day of capacity in the District's wastewater treatment plants.
Additional treatment plant capacity can be purchased in increments at the District's current replacement
cost.
The Santa Ana River Interceptor Line ("SARI")was built in the Chino Basin Preserve Area in
order to remove dairy farm wastes and accommodate futrne urban development. Salts in the washwater
generated from the cleaning of cows and milking equipment were leaching into the groundwater in the
Chino Basin and the SARI was built to divert the washwater from this area. However, due to the nature
11-1 Orfida SurmieaA 35
of the Chino Basin Preserve,the development of any infrastructure in the area to accommodate the SARI
was limited. The current SARI multi-phase project is designed to connect several dairies to the SARI.
Future expansions of this project could include connecting other dairies and other waste streams with the
SARI line. See"THE DISTRICT—Capital Improvement Program'herein.
Wastewater Treatment History
The average yearly influent flow to the District has remained relatively stable for the preceding
five years. The wastewater flow for Fiscal Year 2004-05 was 243 mg/d, for Fiscal Year 2005-06 was 235
mg/d and for Fiscal Year 2006-07 was 229 mg/d. The highest flow rate experienced was during El Nino
storm periods. Peak flows of 500 mg/d were recorded in December 1997 and February 1998. There were
no sewer failures or overflows during these events.
Customers
The historical number of customers served by the District for the Fiscal Years 2002-03 through
2006-07 and the projected number of customers served by the District for the Fiscal Years 2007-08
through 2011-12, identified in Equivalent Dwelling Units("EDUs"), are set forth in Table 8 below. As
discussed below,sewer service charges are based on the expected amount of wastewater flow for a single
family dwelling. This base amount is considered the"equivulent dwelling unit." The EDU's set forth in
Tables 8 and 9 below equate to total Sewer Service Charge levies.
Table 8
Historical and Projected Equivalent Dwelling Units
Fiscal Years 2002-03 through 2011-12
Historical Projected
Fiscal Year EDUs Fiscal Year EDUstrt
2002-03 897,757 2007-08 911,033
2003-040 894,169 2008-09 914,677
2004-05t2' 893,501 2009-10 919,336
2005-06 910,469 2010-11 922,009
2006-07 907,986 2011-12 925,697
EDU� growth during the projection period is estimated at approximately 0.491a par arum.
�sr With respect to this Fiscal Year,presentation in the Statistical Section of the Comprehensive Anew] Financial
Report set forth in Appendix A include EDU's which equate to total Sewer Service Charge collections.
Source: Orange County Sanitation District.
11.2 oaad Stamaardac 36
Table 9 below shows the number of residential and commercial customers and industrial
customers and the approximate percentages of Sewer Service Charge revenues derived from the
combined residential and commercial use and industrial use for the last five fiscal years.
Table 9
Number of Accounts and Revenues
by Customer Class
for the Fiscal Years 2002-03 through 2006-07
($in Millions)
Residential/Commercial Industrial
Number of Percentage Percentage
Equivalent of Sewer of Sewer
Single- Service Number of Service
Family Total Charge Customer Total Charge
Fiscal Year Dwellines Revenue Revenues Accounts Revenue Revenues
2002-03 897,757 $77.0 92% 603 $6.3 8%
2003-0401 860,156 86.0 92 530 7.5 8
2004-051't 860,634 99.0 90 568 10.5 10
2005-06 872,859 132.0 92 557 12.2 8
2006-07 867,035 143.8 91 531 13.4 9
With_nspect to Fiscal Years, presentation in the Statistical Section of the Comprehensive Annual
Financial Report set forth in Appendix A include EDU's which equate to total Sewer Service Charge
collections rather than levies.
Source:Orange County Sanitation District.
The ten largest principal sewer service customers of the District for the Fiscal Year ended
June 30, 2007 are shown in Table 10 below. These principal sewer service customers paid a total of
$6,817,325.08 for wastewater service from the District.
Table 10
Largest Principal Sewer Service Customers of the District
for the Fiscal Year Ended June 30,2007
Percentage of Total
Sewer Service Sewer Service
User Charees Charge Revenues
Kimberly-Clark Worldwide, Inc. $1,114,919.81 0.66%
Alstyle Apparel—A&G Inc. 1,049,362.16 0.63
Stremicks Heritage Foods, LLC 974,473.67 0.58
MPC Foods, Inc. 921,316.91 0.58
Disneyland Resort 791,746.84 0.47
Disneyland Resort-DCA 567,484.57 0.34
House Foods America Corp. 410,058.85 0.24
Pepsi-Cola Bottling Group 374,306.33 0.22
Seven-Up Bottling Company 335,177.79 0.20
Ameripec Inc. 278,478.15 0.17
TOTAL $6,817,325.09 4.09%
Source: Orange County Sanitation District.
11-2Omam Suuru%Ldoc 37
Assessed Valuation
The assessed valuation of properly in the County is established by the County Assessor, except
for public utility property which is assessed by the State Board of Equalization. Due to changes in
assessment required under State Constitution Article XIIIA, the County assessment Will no longer
purports to be proportional to market value. Sea "LIMITATIONS ON TAXES AND REVENUES"
herein. Generally, property can be reappraised to market value only upon a change in ownership or
completion of new construction. The assessed value of property that has not incurred a change of
ownership or new construction must be adjusted annually to reflect inflation at a rate not to exceed 2%
per year based on the State consumer price index. In the event of declining property value caused by
substantial damage, destruction, economic or other factors, the assessed value must be reduced
temporarily to reflect market value. For the definition of full cash value and more information on
property,tax limitations and adjustments,see"LIMITATIONS ON TAXES AND REVENUES"herein.
The County Assessor determines and enrolls a value for each parcel of taxable real property in the
County every year. The value review may result in a reduction in value. Taxpayers in the County also
may appeal the determination of the County Assessor with respect to the assessed value of their property.
Table I 1 below shows a five-year history of assessed valuations in the District since Fiscal Year
2002-03.
Table 11
Assessed Valuations of Property in the District
Fiscal Years 2002-03 through 2006-07
($in Millions)
Fiscal Year Value %Chimee
2002-03 $188.9 8.91%
2003-04 201.4 6.66
2004-05 219.3 8.85
2005-06 241.8 10.30
2006-07 270.7 11.93
Some: County of Orange Auditor-Controller.
In recent years the Southern California housing market experienced significant price appreciation
with accelerating demand. One factor contributing to such demand in Southern California over these
years was the increasing use of creative financing options for individual home buyers, including
adjustable rate mortgages. Adjustable rate mortgages take various forms,but commonly have low initial
interest rates, which have risen significantly in this year. As interest rates begin to rise and adjustable
rates are reset and result in higher interest rates, homeowners who financed the purchase of their homes
with an adjustable rate mortgage can expect their monthly mortgage payments to increase. In addition,as
interest rates have risen on new loans and adjustable rates are reset on existing loans, there has been a
decrease in home sale prices,resulting in recent homebuyers having loan balances in excess of the value
of their homes. In the past year, a number of public home builders with significant operations in the
Southern California housing market have reported in SEC filings slowing demand significant increases in
sales cancellation rates and increasing inventory build-ups(including increasing investor/speculator resale
inventory)amid rising interest rates.[further revisions to come)
11-2 Offiaet Sta®mr 38
Tax Levies and Delinquencies
Property taxes are based on assessed valuation which is determined as described under
"DISTRICT REVENUES—Assessed Valuation"herein. In accordance with the California Revenue and
Taxation Code, the County tax collector collects secured tax levies for each Fiscal Year. Property taxes
on the secured roll are due in two installments, an November 1 and February 1. The District currently
participates in the County's Teeter Plan under which the District receives annually 100"/n of the secured
property tax levies and Sewer Service Charges to which it otherwise is entitled,regardless of whether the
County has actually collected the levies. This alternative method provides for funding each taxing entity
included in the Teeter Plan with its total secured property taxes during the year the taxes are levied,
including any amount uncollected at fiscal year end. Under this plan,the District's general fund receives
the full amount of secured property taxes levied each year on its behalf and for so long as such plan
remains in effect, the participating entities, such as the District, no longer experience delinquent taxes.
The County's general fund is the designated recipient of future collections of penalties and interest on all
delinquent taxes collected on behalf of participants in this alternative method of apportionment. In recent
years, the County has experienced delinquencies of Sewer Service Charges in the District of
approximately 2%.
Unpaid taxes become delinquent after December 10 and April 10,respectively, and a ten percent
penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to
which taxes are delinquent is declared tax-defaulted on or about June 30. Such property may thereafter be
redeemed by payment of the delinquent taxes and the delinquency penalty, plus costs and redemption
penalty of one and one-half percent per month to the time of redemption. If taxes are unpaid for a period
of five years or more,the tax-defaulted property is subject to sale by the County Treasurer-Tax Collector.
Property taxes an the unsecured roll are due as of the January 1 lien date and become delinquent
if unpaid, on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured
roll and an additional penalty of one and one-half percent per month begins to accrue on November 1.
The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action
against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in
order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency
for recordation in the County Recorder's office in order to obtain a lien an certain property of the
taxpayer, and (4) seizure and sale of personal property, improvements or possessory interests belonging
or assessed to the taxpayer.
Table 12 below shows a five-year history of the District's ad valorem total property tax and
Sewer Service Charge levies. Pursuant to the Teeter Plan described above, which provides for the
County's financing of annual delinquencies, information with respect to outstanding delinquencies in
prior years collected in current fiscal years and the percent of delinquencies to the total tax and Sewer
Service Charge levies.
t t-z omsr9 Suatnum.d. 39
Table 12
Total Property Tax and Sewer Service Charge Levies
in the District for Fiscal Years 2002-03 through 2006-07
(In Thousands)
Total Tax and Sewer
Fiscal Year Service Charge Leyy
2002-03 $12$210
2003-04 134,132
2004-05 1 SZ745
2005-06 191,290
2006-07 209,206
Source: Orange County Auditor-Commiler's Office.
Budgetary Process
The District's operating fund budget relies on revenues from property taxes and Sewer Service
Charges, both of which are collected on the property tax bill. See "DISTRICT REVENUES — Sewer
Service Charges"and"—Additional Revenues." The District receives tax revenues from the County in
eight allocations,with the largest receipts in December and April. The District operates on a Fiscal Year
beginning each July 1. The operating fund budgets include funds to cover the dry period of each tax year,
i.e., the period from the beginning of the Fiscal Year until the first taxes are received. The dry-period
requirement is budgeted at one-half of the annual operating fund budgeted expenditures. The District
uses the accrual method of accounting in its budgets. The District has conformed to its budgets for the
last five fiscal years and is conforming to its budget for the current fiscal year.
The District's annual budget preparation process begins in January of each year and concludes in
June upon its adoption. The General Manager reviews the final operating budgets and then distributes
them to the Directors and District Committees for consideration. The Board of Directors then adopts the
proposed annual budgets,with any revisions,in June of each year.
Budgetary control is exercised at the individual Department level and administrative policies
provide guidelines on budget transfers and the authorization necessary to implement transfers. A budget
adjustment is a transfer which does not change the total appropriated amount and does not require Board
of Directors action. Approval may be granted by the General Manager or the Department Head in certain
circumstances. Department Heads have the discretion to reapportion funds between certain line items
within a division but may not exceed total appropriated amounts for each department. They may also
transfer staff across divisional lines. The General Manager and Board of Directors must approve
additional capital outlay items.
A budget amendment is an adjustment to the total appropriated amount which was not included in
the original budget. These supplemental appropriations require formal action by the Board of Directors.
Prior year reserves or fund balances may be appropriated to fund items not previously included in the
adopted budget. Reserves or fund balances exceeding minimum amounts required by fiscal policies may
be appropriated if it is determined to be in the best interest of the District. Directors may also appropriate
reserves in case of emergencies or unusual circumstances.
t t-2 omciil Snammr.E 40
Reserves
The District has an established reserve policy with eight separate categories for its reserve funds.
The following table sets forth actual reserves at June 30, 2006 and June 30, 2007, and projected reserves
at June 30,2008,for each fund. Increases to the Capital Improvement Program Reserve and Debt Service
Required Reserves are attributable principally to the funding of projected CIP cash flow and the Reserve
Fund for the Certificates. Reserve levels are calculated in accordance with the District's reserve policy.
Table 13
Actual and Projected Reserves
June 30,2006 through 2008
(in Millions)
Juoe30,2006 June30,2007 Juns30.2008tti
Cash Flow Requirements Reserve
Operating Expenses $113 $132 $84
Certificate of Participation Payments — — 65
Operating Contingencies Reserve — — —
Capital Improvement Program Reserve 189 51 86
Catastrophe and Self Insurance 57 57 57
Capital Replacement and Refurbishment 52 53 54
Debt Service Required Reserves 79 79 108
Rate Stabilization Reserve
Total $490 $372 $454
Projectelr d
Source: Orange County Sanitation District.
The Cash Flow Requirements Reserve was established to fund operation, maintenance and
certificates of participation debt service expenses for the first half of the fiscal year,prior to the receipt of
the first installment of the property tax allocation and sewer service user fees which are cellected as a
separate line item on the property tax bill. The level of this reserve is established as the sum of an amount
equal to six months operations and maintenance expense and the total of certificates of participation debt
service expenses due in the subsequent fiscal year. The Operating Contingency Reserve was established
to provide for non-recurring expenditures that were not anticipated when the annual budget and Sewer
Service Charges were adopted. The level of this reserve is equal to ten percent of the District's annual
operating budget. The Capital Improvement Reserve was established to fund annual increments of the
capital improvement program with a target level at one half of the average annual capital improvement
program through the year 2020. Levels higher and lower than the target can be expected while the long-
term financing and capital improvement programs are being finalized. The Catastrophic Loss, or Self-
Insurance Reserve is established for property damage including fire, flood and earthquake, general
liability and workers' compensation. The level of reserve in this fund is maintained at a level to fund the
District's non-reimbursed costs which are estimated to be$57 million.The Capital Replacement/Renewal
Reserve was established to provide thirty percent of the funding to replace or refurbish the current
collection,treatment and disposal facilities. The current replacement value of these facilities is estimated
to be approximately $5.56 billion. The initial reserve level for this fund was established at $50 million
and is augmented by interest earnings and a portion of the annual Sewer Service Charges. Debt Service
Required Reserves(or Obligation Reserve Funds as defined in the Master Agreement)are controlled by a
trustee pursuant to the provisions of certificates of participation issues and are not available for the
general needs of the District. The Rate Stabilization Reserve accumulates all available faids which
exceed the targets for all other reserves. The Rate Stabilization Reserve is a separate fund from the Rate
Stabilization Account established under the Trust Agreement. These funds are applied to future years'
11-2 Omom ate ml.dw 41
needs and must be maintained at specified levels. There is currently no established target for this reserve
and because the reserves of all other funds have not been exceeded,the reserve level for this reserve fund
is Zero for Fiscal Years 2005-05 through 2006-07. See APPENDIX A-"COMPREHENSIVE ANNUAL
FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR
ENDED JUNE 30,2007"herein.
Summary of Operating Data
Set forth in Table 14 below is a summary of historic operating results for the District for Fiscal
Years 2002-03 through 2006-07. The District's CIP cash flow budget for Fiscal Year 2007-08 is$302.7
million, an increase of$36.6 million from the prior year total, for the financing of joint works treatment
and disposal system improvement projects,and collection system improvement projects. This increase is
attributable to the additional infrastructure needs identified in the Interim Strategic Plan and in the CIP
Validation Study. The information presented in the summary should be read in conjunction with the
financial statements and notes. See APPENDIX A - "COMPREHENSIVE ANNUAL FINANCIAL
REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED
JUNE 30,2007"herein.
Table 14
Summary of Historical District Revenues and Expenses
and Other Financial Information
For Fiscal Years 2002-03 Through 2006-07
($In Millions)
2002-03 2003-04 ? 20� 2006-07
Revenues:
Sewer Service Chmgdt) $77.0 $86.0 $99.0 S 132.0 $143.8
Industrial Sewer Service Charges 6.3 7.5 10.5 121 13A
Revenue Area No. 14 Fees 31 5.8 6.9 5.3 52
Ad Valorem Taxes 44.6 46.9 35.8 40.0 60.6
Interest Earnings 25.9 6.8 15.1 10.4 22.2
Capital Facilities Capacity Charges 10.1 9.0 9.8 15.6 31.3
Other Revenues 3.4 4.0 6.1 9.2 J_3
Total Revenues $1705 S166A $1832 5224.7 $284.3
Operations and Maintenance Expenses(2) S 79.7 $95.4 $101.8 $105.6 $112.2
Net Revenues"') $ "M S SId
Debt Service $22.4 $3U S 37.9 1323
Coverage Ratios"') 4.05x U13 2.15Z 31ft 4.Q.0
COP Outlay &I12.9 5149.5 11M MU S287.5
Ending Reserves(°) S39a o S518 0 S4070 S40U $287.0
"_) Net of rebates,if any,to commercial users.
Excludes depreciation and amonintion expenses.
"") Calculated in accordance with the Master Agreement.
N) Excludes debt service reserves in accordance with the District's reserve policy.
Source: (range County Sanitation District.
Projected Operating Data
Set forth in Table 15 below are projected operating results for the District for Fiscal Years 2007-
08 through 2011-12. These projections assume the number of projects and scheduled build out set forth
11-20aa.1smaniut o 42
in the CIP Validation Study, projected increased sewer service rates for Fiscal Years 2007-08 and 2008-
09 at 9.8%. Principal expenditure components of these projections are the Interim Strategic Plan and CIP
Validation Study, which identified 107 large capital projects managed by the Engineering Department
through 2020 at a total cost of$2.3 billion, and currently projected to include nearly $1.5 billion in the
next five years. The District's CIP cash flow budget for Fiscal Year 2007-08 is $302.7 million, an
increase of$36.6 million from the prior yew total. This CIP budget finances joint works treatment and
disposal system improvement projects, and collection system improvement projects. This increase is
attributable to the additional infrastructure needs identified in the Interim Strategic Plan and in the CIP
Validation Study. The preparation of such projections was based upon certain assumptions and certain
forecasts with respect to conditions that may occur in the future. While the District believes that these
assumptions and forecasts are reasonable for the purposes of the projected selected operating data, it
makes no representations that they will in fact occur. To the extent that actual future conditions differ
from those assumed herein,the data will vary.
Table 15
Summary of Projected District Revenues and Expenses
and Other Financial Information
for Fiscal Years 2007-08 through 2011-12
($In Millions)
2007-08 2008-09 2OW10 2010-11 2011-12
Revenues:
Residential&Commercial
Sewer Service Charges $164.6 $181.6 $205.8 $233.3 $264.5
Industrial Sewer Service
Charges 18.2 20.1 22.7 25.8 29.2
Revenue Area No. 14 Fees 23.5 22.7 18.9 19.3 18.6
Ad Valorem Taxes 58.9 61.8 64.9 68.2 71.6
Interest Earnings 16.3 18.2 18.9 20.2 21.4
Capital Facilities Capacity
Charges 11.5 12.1 12.8 13.5 14.2
Other Revenues 9.0 5.7 6.2 5.9 5.7
Total Revenues 302.0 322.2 350.2 396.2 425.2
Operations and
Maintenance
Expenses 134.7 150.4 161.5 174.1 189.2
Net Revenues(1) $155.8 $159.7 $175.9 $198.6 $221.8
Debt Proceeds $300.0 $270.0 $190.0 $140.0 $100.0
Debt Service $ 65.3 $ 85.9 $102.9 $114.9 $123.2
CIP Outlays $302.7 $353.1 $236.9 $202.6 $179.5
Ending Reserves(2) $463.1 $463.3 $499.7 $530.8 $558.4
Coverage Ratios(1) 2.39x 1.86x 1.71x 1.73x 1.80x
at Calm accordance with the Master Agreement.
Excludes debt service reserves in accordance with the District's reserve policy.
Souroe: Orange County Sanitation District.
11-2 Official Staremmtilm 43
Management's Discussion and Analysis of Operating Data
The District's Fiscal Year 2007-08 total operating and capital improvement budget is $513.2
million, a 12.5% increase over the prior year budget of$456.3 million. The District's Fiscal Year 2007-
08 budget includes$302.7 million in capital improvement outlays as the District moves towards reaching
secondary treatment standards by the target date of December 31, 2012, as specified by the Board of
Directors' July 2002 resolution and in keeping with the terms and conditions of its ocean discharge permit
and related Consent Decree.
The Fiscal Year 2007-08 operations budget for the collection, treatment, and disposal of
wastewater is $142.6 million, an $11.3 million, or 8.6% increase from the prior year budget of$131.3
million. This increase is primarily attributable to the proposed increase in personnel costs due mostly to
the current capital improvement program, totaling $2.1 billion over the next 10 years. Personnel costs
were increased $5.5 million, or 7.4%. Although staffing was approved at 634 full time equivalents, a
reduction of ten from the prior year, actual personnel costs will increase by $4.0 million as a result of
recently approved collective bargaining agreement impacts, including medical and other benefit cost
increases. The other significant increase in personnel cost is the$700,000, or 5.7%,increase in retirement
premiums. This increase reflects revised actuarial assumptions, low interest earnings in prior years, as
well as the enhanced retirement benefit program effective July 1, 2005. The contractual services budget
increased$4.1 million,or 23%. The major component of this category is biosolids removal and transport
costs. Contracts have been executed with firths for agricultural reuse of residual solids. Due to the
average removal rate per ton increasing from $46 to $53, biosolids removal increased $1.6 million, or
12.1%from the prior year.The utility budget increased$1.1 million,or 12.5%primarily as a result in the
increase in consumption of electricity compounded by increases in rates charged by utility providers.
Electricity is the largest utility cost incurred by the District and is used to run the plant processes. The
Fiscal Year 2007-08 budget reflects an increase in imported electricity because new government
regulations on air emission limits has forced a reduction in electrical power production at the District's
central generation facilities,a process that converts methane gas into electricity.
The Fiscal Year 2007-08 CIP cash flow budget was approved at$302.7 million,a 13.7% increase
from the prior year budget of$266.1 million. In preparation of the Fiscal Year 2006-07 and 2007-08
budgets, the Board of Directors established a CIP Oversight Committee to review the CIP program and
staffs annual validation effort of the CIP to ensure that the scope of the projects was appropriate and that
the cost estimates were accurate, and to gain an understanding of the impact from the CIP to the current
rate structure. The Fiscal Year 2007-08 CIP includes 79 large capital projects and 27 special projects
with a projected 14-year cash outlay of$1.62 billion. Over this time period,the CIP will accomplish:
• Rehabilitation of the existing headworks, primary treatment, secondary treatment, outfall
pumping,and solids handling facilities at both treatment plants;
• Replacement and rehabilitation of nine of the District's outlying pumping stations, and
rehabilitation and upgrade of 29 trunk sewer improvement projects;
• Optimization of the production of"power"and"biosolids"at each of the treatment plants;
• Reclamation of 70 million gallons per day of the District's effluent,or nearly one-third of the
total daily flow through the Groundwater Replenishment System;and
• Achieve secondary treatment standards by December 2012.
11-2 OR6v Stae tdw 44
Based on the results of the CIP Oversight Committee, the Board of Directors adopted Ordinance
No. OCSD-32 increasing the sanitary sewer service charges by approximately 9.8%for Fiscal Yem 2007-
08. This action increased the single family residence user rate,the basis for all sewer user fee rates,from
$165.80 to $182.00. The review completed by the CIP Oversight Committee in Fiscal Year 2006-07
reaffirmed the need for further rate increases in future years. Annual increases are ordered to be subject
to reaffirmation by the affirmative vote of twoihirds of the members of the Board of Directors prior to
implementation of any such charge for each fiscal year. See "DISTRICT REVENUES— Sewer Service
Charges."
Investment of District Funds
State statutes authorize the District to invest in obligations of the United States Government,state
and local governmental agencies, negotiable certificates of deposits, bankers acceptances, commercial
paper,reverse repurchase agreements and a variety of other investment instruments which are allowable
under California Government Code Section 53600 et seq.
All District funds, except for Obligation Reserve Funds controlled by a bank trustee pursuant to
the provisions of Existing Senior Obligations, are managed by an external money manager, Pacific
Investment Management Company("PIMCO"). Mellon Trust ("Mellon Trust") serves as the District's
independent custodian bank for its investment program. Callan Associates ("Callan") serves as the
District's independent advisor.
At June 30, 2007, the District's externally managed fund consisted of short-tern investment
portfolio of$87,568,000 with an average maturity of 72 days, and a long-tern investment portfolio of
$173,911,000 with average maturities of 2.5 years. Investments consist of United States government
securities, corporate bonds and commercial paper. The District's portfolio contains no reverse purchase
agreements.
Deposits in banks are maintained in financial institutions which provide deposit protection on the
bank balance from the Federal Deposit Insurance Corporation. The California Government Code requires
State banks and savings and loans to secure local government deposits by pledging government securities
equal to 1101/9 of the deposits or by pledging first trust deed mortgage notes equal to 150% of the
deposits.
The District's Investment Policy requires that the District invest public funds in a manner which
ensures the safety and preservation of capital while meeting reasonable anticipated operating expenditure
needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the
investment of public funds. The primary objectives, in order of the District's investment activities are
safety,liquidity and return on investments.
For more information regarding the District's investment portfolio as of June 30, 2007, see Note
2 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Year
Ended June 30,2007 set forth in Appendix A.
FINANCIAL OBLIGATIONS
Existing Indebtedness
Currently the District has Senior Obligations Outstanding payable on a parity with the Installment
Payments under the Installment Purchase Agreement.The table below describes the District's outstanding
certificates of participation as of November 1,2007. The payment obligations in connection with each of
11.2 Olfidd Smemead. 45
these obligations,together with the 1992 Swap and the 1993 Swap described below, constitutes a Senior
Obligation,subject to the provisions of the Master Agreement and shall be afforded all of the advantages,
benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The
District has no outstanding general obligation bonds.
Table 16
Outstanding Certificates of Participation Debt
As of November 1,2007
Principal Issue Outstanding Final
Amount Date Balance Maturity
1992 Certificates $ 160,600,000 12/03/92 $77,340,000 9/1113
1993 Certificates 46,000,000 9/02/93 26,900,000 8/1/16
Series 2000 Certificates 218,600,000 8113/00 196,600,000 8/1/30
Series 2003 Certificates 280,000,000 826/03 191,500,000 2/l/33
Series 2006 Certificates 200,000,000 3/09106 196,600,000 2/1/36
Series 2007A Certificates 95,180,000 522/07 95,180,000 211/30
Total Long-Term Deli $794,120,000
In connection with the execution and delivery of the above-referenced outstanding certificates of
participation, the district entered into certain installment purchase agreements, or equivalent documents
providing for the payment of installment payments or similar payments.
Variable Rate and Swap Obligations
In December 1992, the District caused the execution and delivery of certain certificates of
participation which were subsequently designated as the Orange County Sanitation Refunding Certificates
of Participation, 1992 Series (the "1992 Certificates"). The District entered into an agreement for
acquisition and construction (the "1992 Agreement for Acquisition and Construction'), a Standby
Certificate Purchase Agreement (including as thereafter amended and substituted, the "1992 Standby
Agreement') in order to provide for payment of the purchase price of tendered and umemarketed 1992
Certificates, and an Interest Rate Swap Agreement, as amended (the "1992 Swap") with AIG Financial
Products Corp.
In September 1993, the District caused the execution and delivery of certain certificates of
participation which were subsequently designated as the Orange County Sanitation Refunding Certificates
of Participation, 1993 Series (the "1993 Certificates"). The District entered into an agreement for
acquisition and construction(the"1993 Agreement for Acquisition and Construction"), a Reimbursement
Agreement (including as thereafter amended and substituted, the "1993 Reimbursement Agreement") in
order to provide for payment of the purchase price of tendered and unremmketed 19,93 Certificates, and
an interest rate swap agreement, as amended (the "1993 Swap") with Societe Generale, New York
Branch.
In March 2006, the District caused the execution and delivery of certain certificates of
participation designated as the Orange County Sanitation Refunding Certificates of Participation, 2006
Series (the "2006 Certificates") evidencing $200,000,000 original aggregate principal amount. In
connection with the execution and delivery of the 2006 Certificates, the District and the Corporation
entered into an installment purchase agreement (the "2006 Installment Purchase Agreement") and the
District entered into a Standby Certificate Purchase Agreement, dated as of March 1, 2006 (the "2006
1 r-2 06ad Staemmt.dw 46
Standby Agreement"),with DEPFA Bank plc,acting through its New York Branch in order to provide for
payment of the purchase price of tendered and unremarketed 2006 Certificates.
The 1992 Standby Agreement, the 1993 Reimbursement Agreement, and the 2000 Standby
Agreement and the 2006 Standby Agreement each constitutes a Credit Facility Agreement and a Credit
Facility under the Master Indenture. The obligation of the District to repay amounts drawn on or paid
under these agreements,to pay interest on such amounts and to pay any other amounts in connection with
such draw or payment constitutes a Reimbursement Obligation,each with respect to a Senior Obligation.
The District entered into separate interest rate swap agreements in connection with the 1992
Certificates and the 19,93 Certificates. The objective of the interest rate swaps is to lower the District's
borrowing costs when compared against fixed-rate bonds at the time of issuance. The swaps effectively
change the District's variable interest rate to a synthetic fixed rate of 5.55% on the 1992 Certificates and
to a synthetic fixed rate of 4.560/6 on the 1993 Certificates. By their terms,the District receives payments
that are calculated by reference to a Boating interest rate and makes payments that are calculated by
reference to a fixed interest rate. In its annual financial report, the interest rate swap agreements are
accounted for as a hedge by the District,and the associated interest rate differential to be paid or received
is charged to interest expense as interest rates change. See Note 5 to the Comprehensive Annual
Financial Report of the Orange County Sanitation District for Fiscal Year Ended June 30,2007 set forth
in Appendix A.
Under the 1992 Swap,the District receives a variable interest rate equal to the interest paid to the
holders of the 1992 Certificates which is based on a tax exempt daily interest rate as determined by the
remarketing agent on an initial notional amount of$160,600,000. The notional value of the swap declines
in tandem with the principal amount evidenced by the 1992 Certificates. The 1992 Swap matures on
August 1, 2013. Because interest rates have declined since execution of the 1992 Swap,the swap had an
estimated negative fair value of$10.92 million as of June 30,2005.
Under the 1993 Swap,the District receives a variable interest rate equal to the interest paid to the
holders of the 1993 Certificates which is based on a tax exempt daily interest rate as determined by the
remarketing agent on an initial notional amount of$46,000,000. The notional value of the 1993 Swap
declines in tandem with the principal amount evidenced by the 1993 Certificates. The 1993 Swap
matures on August 1, 2016. Because interest rates have declined since execution of the 1993 Swap, the
swap had an estimated negative fair value of$3.43 million as of June 30,2005.
The interest rate swap agreements entail risk to the District. The counterparty may fail or be
unable to perform, interest rates may vary from assumptions and the District may be required to make
significant payments in the event of an early termination of an interest rate swap. The District or the
counterparty may terminate a swap if the other party fails to perform under the tams of the contract. In
the event of termination due to default,the defaulting party will pay to the non-defaulting party the excess
(if any) of the sum of the settlement amount and the unpaid amounts owed less the unpaid amounts due
from the non-defaulting party. Each swap may be terminated by the District if the counterparty's credit
quality rating falls below"AA-"by Standard&Poor's or"Aa3 by Moody's Investors Service. If a swap
is terminated, the related series of certificates of participation would no longer carry a synthetic interest
rate. The District believes that if any such an event were to occur, it would not have a material adverse
impact on its financial position.
As of June 30, 2007, the District was not exposed to credit risk associated with such swaps
because each swap had a negative fair value. However,should interest rates change, and the fair value of
the swap become positive, the District would be exposed to credit risk in the amount of the map's fair
11-2 Orman summmt. o 47
value. Neither swap will expose the District to basis risk because the variable-rate interest paid to the
certificate holders is equal to the variable-rate interest earned on the notional amount of the swap.
Net payments under the terms of the interest rate swap agreements constitute Senior Obligations
under the Master Agreement and are on a parity with the District's payment obligations with respect to
the Certificates. Likewise, termination payments under the interest rate swap agreements would be
payable on a parity with the District's payment obligations with respect to the Certificates.
For more information regarding the District's interest rate swaps as of June 30, 2007,see Notes 4
and 5 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal
Year Ended June 30,2007 set forth in Appendix A.
Anticipated Financings
From time to time the District expects to deliver other obligations to finance and refinance
portions of the CIP. In Fiscal Year 2008-09 the District expects to incur Additional Senior Obligations,in
addition to the Certificates,evidencing principal in an aggregate amount of approximately$270 million.
Direct and Overlapping Bonded Debt
The Table 17 below presents the aggregate direct and overlapping bonded debt of the District as
of June 30,2007.
u-z aed.r smemeatdw 48
Table 17
Direct and Overlapping Bonded Debt of the District
as of June 30,2007
ORANGE COUNTY SANITATION DISTRICT
2006-07 Assessed Valuation(Land&Improvements Only): $238,965,565,239(after deducting S31,727,578,239
Redevelopment Incremental Valuation)
OVERLAPPING TAX AND ASSESSMENT DEBT(Based on redevelopment adjusted all property assessed
valuation of$244,881,211,6118):
Total Debt DIsMet's Share of
6/30/07 %Amlieahlerul Debt 6/30107
Orange County Teeter Plan Obligations $123,725.000 71.896% $ 88.940,934
The Metropolitan Water District of Southern California 359,115,000 15.058 54.075,537
Coast Community College District 353203,867 99.517 351,497,892
North Orange County Joint Community College District 238.124.001 96.861 230.649.299
Rancho Santiago Community College District 324,638,495 99245 319,941.089
Brea-Olinde and Laguna Beach Unified School Districts 60,694.029 97.921& 12.557 29.111312
Newport Mess,Unified School District 172,188.490 100. 172,198,480
Placentia-Yorba Linda Unified School District 92289,003 99.719 91,105,959
Saddleback Valley Unified School District 149.760.000 11.432 17.120563
Sent.Ana Unified School District 130,951207 too. 130,951207
Tustin Unified School District School Facilities
Improvement District No.2002-1 24,081293 98.871 23,90.415
Anaheim Union High School District 126,158,955 t00. 126,159,955
Fullerton Joint Union High School District 62p82,910 90.192 56.354,596
Huntington Beach Union High School District 203,973.794 99.979 201.792243
School Districts 242,015.559 97.529.100. 241273,049
City of Anaheim 5,700,000 99.135 5.650,695
Irvine Reach Water District improvement Districts 199,932.460 Various 199.887216
Rossmoor Community Services District Special Tact Obligations 670,000 100. 670.000
Bonita Canyon Community Facilities District No.98-1 43,155,000 100. 43,155,000
Irvine Unified School District Community Facilities Districts 271,130,000 99.998-100. 271.129265
Tustin Unified School District Community Facilities
District No.88-1 and 97-1 159,822.675 100. 159.822,675
Orange County Community Facilities District No.974 63,414344 99.971 63395.954
Other Community Facilities Districts 348350,000 Various 348.249,982
Orange County Assessment Districts 113273296 100. 113273296
City of Irvine 1915 Act Bonds(Estimate) 938,199.169 100. 838,199,169
City of Tustin 1915 Act Bonds 55,862.000 100. 55.862.000
Other 1915 Ad bonds 21,534.000 100. 21,534.000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT S4244.788,681
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Orange County General Fond Obligations $597.550.000 71.886% $ 429.554,793
Orange County Pension Obligations 99,993,079 71.886 64,620,538
Orange County Board of Education Certificates of Participation 19,720,000 71.896 14,175,919
Orange County Transit District Authority 1,235.000 71.896 887,792
South Orange County Community College District Certificates of Participation 36.910,000 35.123 12.963.899
Brea-Olincia Unified School District Certificates of Participation 30,710.000 97.821 30.040.829
Orange Unified School District Certificates of Participation 51.450.000 96.914 49.839.947
Placentia-Yorba Linda Unified School District Certificates of Participation 96.810315 98.718 95,697,407
Santa Ana Unified School District Certificates of Participation 66,856251 100. 66.856251
Other Unified School District Certificates of Participation 40255254 Various 39,967,949
Union High School District Certificates of Participation 84.955,000 Various 92,445,164
School District Certificates of Participation 62305,000 Various 62.000,932
City of Anaheim General Fund Obligations 696,064.512 99.135 690.043554
City of Costs Mesa General Fond Obligations 48.590.000 100. 43,590,000
City of Fullerton General Food Obligations 30,142,730 100. 30.142.730
City of Huntington Beach General Food and Judgment Obligations SOM9.678 99.992 90.655,158
11.2 Omrial Statenem.doc 49
City of Irvine General Fund Obligations 30,945,000 100. 30945,000
City of Santa Ana General Fond Obligations 121.7252.36 100. 121.7252M
Other City General Fond Obligations 150.534977 Varian 152336,709
Orange County Sanitation Disnia Certificates of Participation 117.705,000 too. 117,705900 m
Irvine Ranch Water District Certificates ofParicipation 41.600.000 99.526 37242.916
Municipal Water District ofOrenge County Water Facilities Corporation 20,800,000 66.493 13AM344
Yorba Linda County Water District Certificates of Participation 10,070.000 97.751 9.843326
Orange County Fire Authority 13,570.000 49906 6,77220
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $227$=A36
Lease Orange County Transit District Authority(80%self-supporting) 710234
City of Anaheim sel4supponing obligatious 409384,622
Older City self-supporting obligations 8.404A28
MWDOC Water Facilities Corporation(100%self-supporting) 13.830344
TOTAL NET OVERLAPPING GENERAL FUND DEBT SI.846.553.608
GROSS COMBINED TOTAL DEBT $6,523,672317 in
NET COMBINED TOTAL DEBT $6.091,342289
t't Percentage of overlapping agency's redevelopment adjusted all property assessed voluntion($244.881,211.608)located
within boundaries ofthe district.
an Excludes eastewater revenue certificates ofpaticipation.
Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
Rados to: Total Overlapping Tax Cross Combined Net Combned
and Assessment Debt Total Debt Total Debt
Land and Improvement Assessed Valuation 1.57% 2.73% 2.55%
All Property Assessed Valuation N/A 2.66% 2.49%
STATE SCHOOL BUILDING Am REPAYABLE AS OF 6/30,U7: $0
Source:California Municipal Statistics
THE CORPORATION
The Corporation was organized June 19, 2000 as a nonprofit public benefit corporation pursuant
to the Nonprofit Public Corporation law of the State. The Corporation's purpose is to render assistance to
the District in its acquisition of equipment, real property and improvements on behalf of the District.
Under its articles of incorporation,the Corporation has all powers conferred upon nonprofit public benefit
corporations by the laws of the State,provided that it will not engage in any activity other than that which
is necessary or convenient for,or incidental to the purposes for which it was formed.
The Corporation is a separate legal entity from the District. It is governed by a twenty-five
member Board of Directors. The Corporation has no employees. All staff work is performed by
employees of the District. The members of the Corporation's Board of Directors are the Board of
Directors of the District.
The District's Director of Finance and Administrative Services and other District employees are
available to provide staff support to the Corporation.
The Corporation has not entered into any material financing arrangements other than those
referred to in this Official Statement. Further information concerning the Corporation may be obtained
from the Orange County Sanitation District office at 10844 Ellis Avenue, Fountain Valley, California,
92708-7018.
11-201ficial Stmanrnrdoc 50
• LIMITATIONS ON TAXES AND REVENUES
Article XIIIA of the California Constitution
On June 6, 1978, California voters approved Proposition 13 ("Proposition IT), which added
Article XIIIA to the State Constitution ("Article XIIIA"). Article X111A, as amended, limits the amount
of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional
ad valorem taxes may be levied to pay debt service on (i)indebtedness approved by the voters prior to
July 1, 1978,(if)(as a result of an amendment to Article XIIIA approved by State voters on Jane 3, 1986)
on bonded indebtedness for the acquisition or improvement of real property which has been approved on
or after July 1, 1978 by two-third of the voters on such indebtedness, and (iii)bonded indebtedness
incurred by a school district or community college district for the construction, reconstruction,
rehabilitation or replacement of school facilities or the acquisition or lease of real property for school
facilities, approved by 55% of the voters of the district, but only if certain accountability measures are
included in the proposition. Article XIIIA defines full cash value to mean 'the county assessor's
valuation of real property as shown on the 1975-76 tax bill under 'WI cash value;' or thereafter, the
appraised value of real property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a
rate not to exceed 2%per year or to reflect a reduction in the consumer price index or comparable data for
the area under the taxing jurisdiction, or reduced in the event of declining property values caused by
substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to
implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad
valorem property tax except to pay debt service on indebtedness approved by the voters as described
above.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIIIA. Under current law,local agencies are no longer permitted to levy directly any property tax(except
to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County
and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in
proportion to the relative shares of taxes levied prior to 1989.
Increases of assessed valuation resulting from reappraisals of property due to new construction,
change in ownership or from the two percent annual adjustment are allocated among the various
jurisdictions in the"taxing area"based upon their respective"situs." Any such allocation made to a local
agency continues as part of its allocation in future years.
Beginning in the 1981-82 fiscal year, assessors in the State no longer record property values on
tax rolls at the assessed value of 25%of market value which was expressed as$4 per$100 assessed value.
All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate is
expressed as$1 per$100 of taxable value. All taxable property value included in this Official Statement
is shown at 1000/6 of market value (unless noted differently) and all tax rates reflect the $1 per $100 of
taxable value.
Article XIIIB of the California Constitution
An initiative to amend the State Constitution entitled"Limitation of Government Appropriations"
was approved on September 6, 1979, thereby adding Article X11113 to the State Constitution ("Article
XIIIB"). Under Article XIIIB,the State and each local governmental entity has an annual "appropriations
limit"and is not permitted to spend certain moneys that are called "appropriations subject to limitation"
11-2 OBiad Std m.dx 51
(consisting of tax revenues, state subventions and certain other funds) in an amount higher than the
appropriations limit. Article XIIIB does not affect the appropriations of moneys that are excluded from
the definition of"appropriations subject to limitation,"including debt service on indebtedness existing or
authorized as of January 1, 1979, or bonded indebtedness subsequently approved by the voters. In
general terms, the appropriations limit is to be based on certain 1978-79 expenditures, and is to be
adjusted annually to reflect changes in consumer prices, populations, and services provided by these
entities. Among other provisions of Article XIIB, if these entities' revenues in any year exceed the
amounts permitted to be spent,the excess would have to be returned by revising tax rates or fee schedules
over the subsequent two years.
"Appropriations subject to limitation" are authorizations to spend `proceeds of taxes," which
consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory
licenses, user charges or other fees to the extent that such proceeds exceed`the cost reasonably bome by
such entity in providing the regulation,product or service," but"proceeds of taxes' excludes tax refunds
and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of
funds which are not`proceeds of taxes," such as reasonable user charges or fees, and certain other non-
tax funds.
Not included in the Article XIIIB limit are appropriations for the debt service costs of bonds
existing or authorized by January I, 1979, or subsequently authorized by the voters, appropriations
required to comply with mandates of courts or the federal government and appropriations for qualified
capital outlay projects. The appropriations limit may also be exceeded in certain cases of emergency.
The appropriations limit for the District in each year is based on the District's limit for the prior
year, adjusted annually for changes in the cost of living and changes in population, and adjusted, where
applicable, for transfer of financial responsibility of providing services to or from another unit of
government. The change in the cost of living is,at the District's option,either(1)the percentage change
in State per capita personal income, or (2) the percentage change in the local assessment roll on
nonresidential property. Either test is likely to be greater than the change in the cost of living index,
which was used prior to Proposition 111. Change in population is to be measured either within the
jurisdiction of the District or the County as a whole.
As amended by Proposition 111, the appropriations limit is tested over consecutive two-year
periods. Any excess of the aggregate "proceeds of taxes" received by a District over such two-year
period above the combined appropriations limits for those two years is to be returned to taxpayers by
reductions in tax rates or fee schedules over the subsequent two years. As originally enacted in 1979,the
District's appropriations limit was based on 197&79 authorizations to expend proceeds of taxes and was
adjusted annually to reflect changes in cost of living and population (using different definitions, which
were modified by Proposition 111). Starting with Fiscal Year 1990-91,the District's appropriations limit
was recalculated by taking the actual Fiscal Year 1986-87 limit,and applying the annual adjustments as if
Proposition I I I had been in effect The District does not anticipate that any such appropriations
limitations will impair its ability to make Installment Payments as required by the Installment Purchase
Agreement.
Proposition IA
Proposition IA ("Proposition W), proposed by the Legislature in connection with the 2004-05
Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local
tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004-05 and 2005-06.
Proposition IA provides that the State may not reduce any local sales tax rate, limit existing local
government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject
11-2 Offiag Statement do 52
to certain exceptions. Proposition IA generally prohibits the State from shifting to schools or community
colleges any share of property tax revenues allocated to local governments for any fiscal year,as set forth
under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues
among local governments within a county must be approved by two-thirds of both houses of the
Legislature.
Proposition IA provides, however,that beginning in Fiscal Year 2008-09, the State may shift to
schools and community colleges up to 80/o of local government property tax revenues,which amount must
be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a
severe state financial hardship, the shift is approved by two thirds of both houses and certain other
conditions ere met. The State may also approve voluntary exchanges of local sales tax and property tax
revenues among local govemments within a county.
Proposition IA also provides that if the State reduces the vehicle license fee ("VLF") rate
currently in effect, 0.65% of vehicle value, the State must provide local governments with equal
replacement revenues. Further, Proposition IA requires the State, beginning July 1, 2005, to suspend
State mandates affecting cities, counties and special districts, excepting mandates relating to employee
rights, schools or community colleges, in any year that the State does not fully reimburse local
governments for their costs to comply with such mandates.
Proposition 62
On November 4, 1986, California voters adopted Proposition 62, a statutory initiative which
amended the California Government Code by the addition of Sections 53720-53730. Proposition 62
requires that(i)any local tax for genend governmental purposes(a"general tax")must be approved by a
majority vote of the electorate;(ii)any local tax for specific purposes(a"special tax")must be approved
by a two-thirds vote of the electorate; (iii)any general tax must be proposed for a vote by two-thirds of
the legislative body; and (iv)proceeds of any tax imposed in violation of the vote requirements must be
deducted from the local agency's property tax allocation. Provisions applying Proposition 62
retroactively from its effective date to 1985 are unlikely to be of any continuing importance;certain other
restrictions were already contained in the Constitution.
Most of the provisions of Proposition 62 were affirmed by the 1995 California Supreme Court
decision in Santa Clara County Local Transportation Authority v. Guardino,which invalidated a special
sales tax for transportation purposes because fewer than two-thirds of the voters voting on the measure
had approved the tax. The District has not imposed any taxes subject to the provisions of Proposition 62
and believes that it will not impair its ability to make its Installment Payments as required by the
Installment Purchase Agreement. The requirements of Proposition 62 have generally been superseded by
the enactment of Article XIIIC of the Constitution(Proposition 218)in 1996.
Article X111C and Article XIIID of the California Constitution
Proposition 218, a State ballot initiative known as the "Right to Vote on Taxes Act," was
approved by the voters on November 5, 1996. The initiative added Articles XIIIC and Xllm to the
California Constitution,creating additional requirements for the imposition by most local governments of
"general taxes,""special taxes,""assessments,""fees,"and`charges." Proposition 218 became effective,
pursuant to its terns, as of November 6, 1996, although compliance with some of its provisions was
deferred until July I, 1997, and certain of its provisions purport to apply to any tax imposed for general
governmental purposes(i.e.,"general taxes") imposed, extended or increased on or after January 1, 1995
and prior to November 6, 1996.
11.2 ORnel Sramraa.dw 53
4
Article XIIID imposes substantive and procedural requirements on the imposition, extension or
increase of any"fee"or"charge" subject to its provisions. A"fee"or"charge"subject to Article XIIID
includes any levy, other than an ad valorem tax,special tax or assessment, imposed by an agency upon a
parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other
things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or
charge, in the event written protests against the proposed fee or charge are presented at a required public
hearing on the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be
imposed Except for fees and charges for water, sewer and refuse collection services, the approval of a
majority of the property owners subject to the fee or charge,or at the option of the agency,by a two-thirds
vote of the electorate residing in the affected area,is required within 45 days following the public hearing
on any such proposed new or increased fee or charge. The California Supreme Court decisions in
Richmond v. Shasta Community Services District, 32 Cal. 4th 409 (2004) ("Richmond"), and Bighorn-
Desert View Water Agency v. Voyd, 39 Cal. 0 205 (2006) ("Bighorn") have clarified some of the
uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In
Richmond, the Shasta Community Services District charged a water connection fee, which included a
capacity charge for capital improvements to the water system and a fire suppression charge. The Court
held that both the capacity charge and the fire suppression charge were not subject to Article XIIID
because a water connection fee is not a property-related fee or charge because it results from the property
owner's voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the
Court stated that a fee for ongoing water service through an existing connection is imposed "as an
incident of property ownership" within the meaning of Article XIIID, rejecting, in Bighorn, the water
agency's argument that consumption-based water charges are not imposed "as an incident of property
ownership"but as a result of the voluntary decisions of customers as to how much water to use.
Article XIIID also provides that"standby charges"are considered"assessments"and must follow
the procedures required for "assessments" under Article XIIID and imposes several procedural
requirements for the imposition of any assessment, which may include (1) various notice requirements,
including the requirement to mail a ballot to owners of the affected property; (2) the substitution of a
property owner ballot procedure for the traditional written protest procedure,and providing that"majority
protest" exists when ballots (weighted according to proportional financial obligation) submitted in
opposition exceed ballots in favor of the assessments; and (3) the requirement that the levying entity
"separate the general benefits from the special benefits conferred on a parcel"of land. Article XIIID also
precludes standby charges for services that are not immediately available to the parcel being charged.
Article XIIID provides that all existing, new or increased assessments are to comply with its
provisions beginning July 1, 1997. Existing assessments imposed on or before November 5, 1996, and
"imposed exclusively to finance the capital costs or maintenance and operations expenses for (among
other things] water" are exempted from some of the provisions of Article XIIID applicable to
assessments.
Article XIIIC extends the people's initiative power to reduce or repeal existing local taxes,
assessments,fees and charges. This extension of the initiative power is not limited by the terms of Article
XIIIC to fees, taxes, assessment fees and charges imposed after November 6, 1996 and absent other
authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. In
Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public
agency's water rates and delivery charges. The Court noted, however, that it was not holding that the
authorized initiative power is free of all limitations, stating that it was not determining whether the
electorate's initiative power is subject to the public agency's statutory obligation to set water service
charges at a level that will "pay the operating expenses of the agency, . . . provide for repairs and
depreciation of works,provide a reasonable surplus for improvements,extensions,and enlargements,pay
I l-2 Official Slaeacm.dw 54
A
the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of
such debt as it may become due."
The District implemented a five-year plan beginning in Fiscal Year 2002-03 which included a
rate increase of$7.50 per year, or 9.4%, for all ratepayers to$87.50 per year. In May 2003,the Board of
Directors approved consideration of a 15%rate increase a year,for each year,over the then following five
years, upon 2/3 vote of the Board of Directors after conducting a noticed public hearing in compliance
with Article XIIID. This level of increase was considered necessary to provide needed capital
improvements,to cover additional treatment and disinfection costs,and to minimize rate increases over an
extended period of time. On July 2, 2003, the Board of Directors adopted Ordinance No. OCSD-20
increasing sanitary sewer service charges for all single family and multi-family residential units as well as
most commercial and industrial properties. The Ordinance was adopted by a 2/3 vote of the Board of
Directors as required under law after conducting a noticed public hearing in compliance with all laws.
The Ordinance increases the amount of the ammal charges by approximately 15%per year for each of the
following five years, commencing with Fiscal Year 2003-04, thereby raising the single family residence
user rate from the then current$87.50 to$100.00,$115.00,$132.00,$152.00, and$175.00 annually. The
Ordinance discounted by 5%the annual increases which were the subject of the required protest hearings
on the fee increase as described above. After the completion of the CIP Validation Study for Fiscal Year
2005-06 that increased its ten year CIP cash flow projects to $2.2 billion, or an average of$220 million
per year, the Board of Directors adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06
single family residential rate 31%, from $115 to $151 for such year. In May 2006,the Board of Directors
adopted Ordinance No. OCSD-30B increasing the Fiscal Year 2006-07 single family residential rate
9.8%, from $151.00 to$165.80 for such year, except those located in Revenue Ares 14. These increases
represented the increase permitted under the protest hearings on the fee increase which was held in 2003.
In April 2007, the Board of Directors began consideration of increased sanitary sewer service
charges for all single family and multi-family residential units and most commercial and industrial
properties. Any such increases are subject to approval by ordinance adopted by a 2/3 vote of the Board of
Directors after conducting a noticed public hearing in compliance with all laws. See "DISTRICT
REVENUES—Sewer Service Charges"and'—Capital Improvement Program"herein.
Pursuant to the Master Agreement,the District will,to the extent permitted by law, fix,prescribe
and collect fees and charges for the services of the Wastewater System which will be at least sufficient to
yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for
such Fiscal Year, and(b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for
such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may
make such classification thereof as it deems necessary, but will not reduce the fees and charges then in
effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be
sufficient to meet the requirements of the Master Agreement. In the event that service charges are
determined to be subject to Article XIIID,and proposed increased service charges cannot be imposed as a
result of a majority protest, such circumstances may adversely effect the ability of the District to generate
revenues in the amounts required by the Master Agreement, and to make Installment Payments as
provided in the Installment Purchase Agreement. No assurance may be given that Articles XIIIC and
XIIID will not have a material adverse impact on Net Revenues.
Other Initiative Measures
Articles XIIIA, XIIB, XIIIC and XIIID were adopted pursuant to California's constitutional
initiative process. From time to time other initiative measures could be adopted by California voters,
placing additional limitations on the ability of the District to increase revenues.
t r-z oadd Sm ,.dw 55
LEGAL MATTERS
The validity of the Certificates and certain other legal matters are subject to the approving
opinion of Full right& Jaworski L.L.P., Los Angeles, California, Special Counsel to the District. A
complete copy of the proposed form of Special Counsel opinion is attached as Appendix F hereto.
Special Counsel, in its capacity as Special Counsel to the District, undertakes no responsibility for the
accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon
for the District and the Corporation by Woodruff, Spradlin & Smart, a Professional Corporation, Costa
Mesa, California, and for the District by Fulbright& Jaworski L.L.P. as Disclosure Counsel to the
District.
FINANCIAL ADVISOR
The District has retained Public Resources Advisory Group as financial advisor(the "Financial
Advisor") in connection with the execution and delivery of the Certificates. The Financial Advisor has
not been engaged,nor have they undertaken,to audit,authenticate or otherwise verify the information set
forth in the Official Statement, or any other related information available to the District, with respect to
accuracy and completeness of disclosure of such information. The Financial Advisor has reviewed this
Official Statement but makes no guaranty, warranty or other representation respecting accuracy and
completeness of the information contained in this Official Statement.
ABSENCE OF LITIGATION
There is no action, suit,proceeding, inquiry or investigation,at law or in equity,before or by any
court, regulatory agency, public board or body, pending or, to the best knowledge of the District,
threatened against the District affecting the existence of the District or the titles of its directors or officers
to their offices or seeking to restrain or to enjoin the sale or delivery of the Certificates,the application of
the proceeds thereof in accordance with the Trust Agreement, or in any way contesting or affecting the
validity or enforceability of the Certificates,the Trust Agreement, the Master Agreement,the Installment
Purchase Agreement or any action of the District contemplated by any of said documents, or in any way
contesting the completeness or accuracy of this Official Statement, or contesting the powers of the
District or its authority with respect to the Certificates or any action of the District contemplated by any of
said documents,nor,to the knowledge of the District is there any basis therefor.
There is no action, suit,proceeding, inquiry or investigation, at law or in equity,before or by any
court, regulatory agency, public board or body pending or, to the best knowledge of the District,
threatened against the District contesting or affecting the ability of the District to collect amounts from
which Installment Payments are payable, or which would have a material adverse effect on the District's
ability to make Installment Payments.
FINANCIAL STATEMENTS
The basic financial statements of the District included in Appendix A to this Official Statement
have been audited by Mayer Hoffman McCann P.C., independent certified public accountants. In
January 2006 Mayer Hoffman McCann P.C. merged the District's former auditors, Conrad and
Associates, L.L.P., into its national practice. See APPENDIX A — "COMPREHENSIVE ANNUAL
FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR
ENDED JUNE 30, 2007" herein. The report issued for the year ended June 30, 2007, received the
Government Finance Officer's Association Certificate of Achievement for "Excellence in Financial
Reporting" for the 13th consecutive year. The audited financial statements, including the footnotes
thereto, should be reviewed in their entirety. Mayer Hoffman McCann P.C. has consented to the
H-2 OOldal Star mmi.dw 56
inclusion of its report as Appendix A but has not undertaken to update its report or to take any action
intended or likely to elicit information concerning the accuracy, completeness or fairness of the
statements made in this Official Statement,and no opinion is expressed by Mayer Hoffman McCann P.C.
with respect to any event subsequent to its report dated October 25,2007.
TAX MATTERS
The Internal Revenue Code of 1986,as amended(the"Code"), imposes certain requirements that
must be met subsequent to the issuance and delivery of the Certificates for the interest component of each
Installment Payment(the"Interest Component"),and the allocable portion thereof distributable in respect
of each Certificate (the "Certificate Interest Distribution"), to be and remain excluded from the gross
income of the owner of such Certificate for federal income tax purposes. Noncompliance with such
requirements could cause such amounts to be included in gross income for federal income tax purposes
retroactive to the date of delivery of the Installment Purchase Agreement and the Certificates. The
District and the Corporation have covenanted in the Installment Purchase Agreement and in the Trust
Agreement to maintain the exclusion pursuant to section 103(a) of the Code of the Interest Component
from the gross income of the District and its assigns, and of the Certificateholders, respectively, for
federal income tax purposes.
Upon the delivery of the Certificates, Fulbright & ]aworski L.L.P., Los Angeles, California,
Special Counsel, will deliver its opinion that, under existing law, and assuming compliance with the
aforementioned covenants, the Interest Component allocable to and the Certificate Interest Distributions
in respect of a Certificate are excluded pursuant to section 103(a) of the Code from the gross income of
the owner of the Certificate for federal income tax purposes; inasmuch as the Installment Purchase
Agreement is not a"specified private activity bond"within the meaning of section 57(a)(5) of the Code,
neither the Interest Component nor any Certificate Interest Distribution is an item of tax preference for
purposes of computing the alternative minimum tax imposed by section 55 of the Code. It is noted that
the Interest Component allocable to and Certificate Interest Distributions in respect of a Certificate owned
by a corporation for federal income tax purposes may affect the computation of the alternative minimum
taxable income, upon which the alternative minimum tax is imposed,to the extent that such amounts are
taken into account in determining the adjusted earnings of that corporation (75 percent of the excess (if
any)of such adjusted current earrings over the alternative minimum taxable income being an adjustment
to the alternative minimum taxable income (determined without regard to the adjustment or to the
alternative tax net operating loss deduction)). Further, on that same day Special Counsel will render its
opinion, based solely on the foregoing, and upon existing provisions of the laws of California, that such
Interest Component and Certificate Interest Distributions are exempt from personal income taxes of the
State of California.
To the extent that a purchaser of a Certificate acquires that Certificate at a price that exceeds the
aggregate amount of scheduled distributions(other than distributions of qualified stated interest within the
meaning of section 1.1273-1 of the Treasury Regulations) to be made on the Certificate(determined, in
the case of a prepayable Certificate, under the assumption described below) (the "Stated Redemption
Price at Maturity"), such excess will constitute "bond premium" under the Code. Section 171 of the
Code, and the Treasury Regulations promulgated thereunder, provide generally that bond premium on a
tax-exempt obligation must be amortized on a constant yield, economic accrual, basis; the amount of
premium so amortized will reduce the owner's basis in such obligation for federal income tax purposes,
but such amortized premium will not be deductible for federal income tax purposes. In the case of a
purchase of a Certificate that is subject to prepayment, the determination whether there is amortizable
bond premium, and the computation of the accrual of that premium, must be made under the assumption
that the Certificate will be prepaid on the permitted date that would minimize the purchaser's yield on the
Certificate (or that the Certificate will not be prepaid prior to the stated maturity date in respect of that
11-2 OffldW amremmrAuc 57
Certificate if that would minimize the purchaser's yield). The rate and timing of the amortization of the
bond premium and the corresponding basis reduction may result in an owner realizing a taxable gain
when a Certificate owned by such owner is sold or disposed of for an amount equal to or in some
circumstances even less than the original cost of the Certificate to the owner.
The excess, if any,of the Stated Redemption Price at Maturity of a Certificate of a maturity over
the initial offering price to the public of the Certificates of that stated maturity set forth on the inside
cover page of this Official Statement is`original issue discount". Such original issue discount accruing in
respect of a Certificate is treated for federal income tax and California personal income tax purposes as
additional interest in respect of that Certificate and is excluded from the gross income of the owner
thereof for federal income tax purposes and exempt from the California personal income tax. Original
issue discount accruing in respect of any Certificate purchased at such initial offering price and pursuant
to such initial offering will accrue on a semiannual basis over the term to the stated maturity date in
respect of the Certificate on the basis of a constant yield method and,within each semiannual period,will
accrue on a ratable daily basis. The amount of original issue discount in respect of such a Certificate
scanning during each period is added to the adjusted basis of such Certificate to determine taxable gain
upon disposition (including upon sale, prepayment or payment on maturity) of such Certificate. The
Code includes certain provisions relating to the accrual of original issue discount in the case of a
purchaser of a Certificate who purchases that Certificate other than at the initial offering price and
pursuant to the initial offering of that Certificate.
Any person considering purchasing a Certificate at a price that includes bond premium should
consult his or her own tax advisors with respect to the amortization and treatment of such bond premium,
including,but not limited to,the calculation of gain or loss upon the sale,prepayment or other disposition
of the Certificate. Any person considering purchasing a Certificate of a maturity in respect of which there
is original issue discount should consult his or her own tax advisors with respect to the tax consequences
of ownership of such Certificate, including the treatment of a purchaser who does not purchase in the
original offering and at the original offering price of that Certificate,the allowance of a deduction for any
loss on a sale or other disposition, and the treatment of accrued original issue discount in respect of such
Certificate order federal individual and corporate alternative minimum taxes.
Special Counsel has not undertaken to advise in the future whether any events after the date of
delivery of the Installment Purchase Agreement and the Certificates may affect the tax status of the
Interest Component and Certificate Interest Distributions. No assurance can be given that future
legislation, or amendments to statutes of the State of California or of the United States, if enacted into
law, will not contain provisions that could directly or indirectly reduce the benefit of the exemption of
such amounts from personal income taxes of the State of California or of the exclusion of such amounts
from the gross income of the owners of Certificates for Federal income tax purposes. Furthermore,
Special Counsel will express no opinion as to any federal, state, or local tax law consequences with
respect to the Installment Purchase Agreement, Certificates, Interest Component, or Certificate Interest
Distributions, if any action is taken with respect to the Installment Purchase Agreement,the Certificates,
or the proceeds thereof, or the Trust Agreement permitted or predicated upon the advice or approval of
counsel if such advice a approval is given by comsel other than Fulbright&Jaworski L.L.P.
Although Special Counsel is of the opinion that Interest Component and Certificate Interest
Distributions in respect of a Certificate are exempt from state personal income taxation and excluded
from the gross income of the owner thereof for federal income tax purposes, an owner's federal, state or
local tax liability may be otherwise affected by the ownership or disposition of the Certificate. The nature
and extent of these other tax consequences will depend upon the owner's other items of income or
deduction. Without limiting the generality of the foregoing,prospective purchasers of Certificates should
be aware that: (i) section 265 of the Code denies a deduction for interest on indebtedness incurred or
11.2 Official amnamtdoc 58
continued to purchase or carry the Certificates or, in the case of financial institution, that portion of an
owner's interest expense allocated to the Certificates; (ii)with respect to insurance companies subject to
the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the deduction for loss
reserves by 15 percent of the sum of certain items, including Interest Component and Certificate Interest
Distributions in respect of Certificates owned by such companies;(iii)Interest Component and Certificate
Interest Distributions accrued in respect of Certificates owned by certain foreign corporations doing
business in the United States for federal income tax purposes could be subject to a branch profits tax
imposed by section 884 of the Code; (iv) passive investment income, including Interest Component and
Certificate Interest Distributions accrued in respect of Certificates,accruing to a Subchapter S corporation
that at the close of a taxable year has Subchapter C earnings and profits may be subject to federal income
taxation under section 1375 of the Code if greater than 25% of the gross receipts of such Subchapter S
corporation in passive investment income; (v)section 86 of the Code requires recipients of certain Social
Security and certain Railroad Retirement benefits to take into account, in determining the taxability of
such benefits, Installments Interest and Certificate Interest Distributions accrued in respect of Certificates
owned by such recipients for federal income tax purposes; and (vi) under section 32(i) of the Code,
receipt of investment income. including Interest Component and Certificate Interest Distributions accrued
in respect of Certificates, may disqualify the owner thereof from obtaining the earned income credit.
Special Counsel has expressed no opinion regarding any such other tax consequences.
Special Counsel's opinion is not a guarantee of a result, but represents its legal judgment based
upon its review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the District and the Corporation described above. No ruling has been
sought from the Internal Revenue Service (the "Service") with respect to the matters addressed in the
opinion of Special Comsel,and Special Counsel's opinion is not binding on the Service. The Service has
an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit
of the Certificates is commenced, under current procedures the Service is likely to treat the District as the
"taxpayer," and the Owners would have no right to participate in the audit process. In responding to or
defending an audit of the tax-exempt status of the interest with respect to the Certificates,the District may
have different or conflicting interest from the Owners. Further,the disclosure of the initiation of an audit
may adversely affect the market price of the Certificates,regardless of the final disposition of the audit.
The proposed form of opinion of Special Counsel is attached hereto as Appendix F.
CONTINUING DISCLOSURE
The District has covenanted for the benefit of holders and beneficial owners of the Certificates
(a)to provide certain financial information and operating data (the "Annual Report') relating to the
District and the property in the District not later than eight(8)months after the end of the District's Fiscal
Year(which currently would be March 1), commencing with the report for the 2007-08 Fiscal Year, and
(b)to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will
be filed by the Trustee on behalf of the District, with each Nationally Recognized Municipal Securities
Information Repository and with each State Repository, if any. The notices of material events will be
filed by the Trustee on behalf of the District with the Municipal Securities Rulemaking Board and with
each State Repository,if any. The specific nature of the information to be contained in the Annual Report
or the notices of material events is set forth in the Continuing Disclosure Agreement. See APPENDIX D
— "FORM OF CONTINUING DISCLOSURE AGREEMENT." These covenants have been made in
order to assist the Initial Purchaser in complying with S.E.C. Rule 15c2-12(the"Rule"). The District has
not failed to comply in all material respects with any previous undertaking with respect to the Rule to
provide annual reports or notices of material events.
11.2 Omda Smaaamm.dw 59
RATINGS
The Certificates will be rated " " by Moody's Investors Service ("Moody's"), "_" by
Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. ('S&P"), and
by Fitch Ratings. Such ratings reflect only the views of the rating agencies,and do not constitute a
recommendation to buy,sell or hold the Certificates. Explanation of the significance of such ratings may
be obtained only from the respective organizations at: Standard & Poor's Ratings Group, 55 Water
Street,New York,New York 10041;Moody's Investors Service,99 Church Street,New York,New York
10017; and Fitch Ratings, One State Street Plaza, New York, New York 10004. There is no assurance
that any such ratings will continue for any given period of time or that they will not be revised downward
or withdrawn entirely by the respective rating agencies, if in the judgment of any such rating agency
circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an
adverse effect on the market price of the Certificates.
PURCHASE AND REOFFERING
(the"Initial Purchaser')has purchased the Certificates from the District
at a competitive sale for a purchase price of$ (representing the aggregate principal amount of
the Certificates, plus a net original issue premium of $ , and less an Initial Purchaser's
discount of$ ). The public offering prices may be changed from time to time by the Initial
Purchaser. The Initial Purchaser may offer and sell Certificates to certain dealers and others at prices
lower than the offering prices shown on the inside cover page hereof.
MISCELLANEOUS
Included herein are brief summaries of certain documents and reports, which summaries do not
purport to be complete or definitive, and reference is made to such documents and reports for full and
complete statements of the contents thereof Any statements in this Official Statement involving matters
of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.
This Official Statement is not to be construed as a contract or agreement between the District and the
purchasers or Owners of any of the Certificates.
The execution and delivery of this Official Statement has been duly authorized by the District.
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
11.2 Official Smle Ld. 60
APPENDIX A
COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY
SANITATION DISTRICT FOR FISCAL YEAR ENDED NNE 30,2007
11-2 Official Stmemmt.doc A-1
APPENDIX B
THE COUNTY OF ORANGE—ECONOMIC AND DEMOGRAPHIC INFORMATION
The County is bordered on the north by Los Angeles County,on the east by Riverside County, on
the southeast by San Diego County and on the west and southwest by the Pacific Ocean. Approximately
42 miles of ocean shoreline provide beaches. marinas and other recreational areas for use by residents
and visitors. The climate in the County is mild,with an average annual rainfall of 13 inches.
Population
The County is the third most populous county in the State and the sixth most populous in the
nation. During the period 1998 through 2007, the population of the County increased by approximately
13.71%, compared to 14.61% for the State and 10.79% for the United States(reflects growth from 19,98
through 2006,the most recent period for which United States population data is available).
TABLE B-1
COUNTY OF ORANGE,STATE OF CALIFORNIA AND
UNITED STATES POPULATION GROWTH
State of United States
Year Orange Counrv(]) California(]) of America(2)
1998 2,724,500 32,862,000 270,248,003
1999 2,776,100 33,417,000 272,690,913
2000 2,863,706 34,098,740 292,216,592
2001 2,918,791 34,784,382 295,226,284
2002 2,963,394 35,392,960 298,125,973
2003 3,005,043 35,990,107 290,7%,023
2004 3,037,949 36,522,026 293,638,158
2005 3,062,275 36,981,931 296,507,061
2006 3,083,894 37,444385 299,398 484
2007 3,098,121 37,662:518 n/a(ai
as of J�each year.
(2) as of July 1 of each year-
in 2007 population daft had not been released for the United States of America as of the date of this Official
Statement.
Source: Orange County and State of California Statistics- California State Department of Finance, Demographic
Research Unit. United States Statistics—Population Estimates Program,Population Division,U.S.Census
Bureau.
Public Schools(Elementary and Secondary)
Public instruction in the County is provided by twelve elementary school districts, three high
school districts and twelve unified (combined elementary and high school) districts. For the 2007-08
academic year, the largest district,the Santa Ana Unified School District, projects student enrollment of
53,693 (excluding charter schools). Public school enrollment for the academic calendar years 2002-03
through 2006-07 is presented in Table B-2.
11.2 OBidd Sravaertdac B-1
TABLE B-2
COUNTY OF ORANGE
PUBLIC SCHOOL ENROLLMENT
2002-03 2003-04 2004-05 2005-06 2006-07
Grade Level
K-8 361,184 360,996 354,841 350,096 340,566
9-12 150 921921 154 468468 158,903 160 018018 163.38_9
Total Enrollment 512,1 515 L44 5 L1,744 5_LQ. 503,255
Source: California Department of Education, Educational Demographics Unit.
Colleges and Universities
The County has a number of top-rated, college-level educational institutions, including the
University of California at Irvine and California State University at Fullerton, several private colleges,
universities and law schools and four community college districts.
Employment
The following table summarizes the historical numbers of workers in the County over the period
2001 through 2006 by industry.
TABLE B-3
COUNTY OF ORANGE
INDUSTRY EMPLOYMENT AND LABOR FORCE-ANNUAL AVERAGE
2001 2002 2003 2004 2005 2006
Farm 7,100 7,300 7,200 6,700 5,300 5,400
Natural Resources and Mining 600 600 500 600 700 600
Construction 80,700 79,200 83,700 92,200 99,300 107.000
Manufacturing 208,500 190.800 183,900 183,500 182,700 183,400
Wholesale Trade 83,900 82,400 83,200 82,400 83,000 82,900
Retail Trade 150,100 151,400 152,800 153,200 157,100 159,500
Transportation,Warehousing Utilities 30,400 28,700 29,000 29.200 28,800 28,400
Information 40,200 36,800 35,200 33,800 32,800 31,700
Financial Activities 105.900 110,200 122,200 132,300 138,200 139,000
Professional and Business Services 248.400 248,800 252.600 254,900 267,000 274.800
Educational and Health Services 114,600 118,400 126,300 151,000 133,300 138,900
Leisure and Hospitality 154.300 155,400 158,600 162,900 164,400 169,500
Other Services 45.200 45,900 46.700 47,400 48,200 47,900
Government 150 900900 155 100100 15y200 153_AOO 15y300 15�_500
Toml All Industries( 1 1,420,800 1,411,000 1,438.103 1,512.800 1541,800 1,527,506
Data may not add due to rounding.
Source: California Employment Development Department.
11-2 Official Swcnmt.doc B-2
Major Employers
TABLE B-4
COUNTY OF ORANGE
MAJOR EMPLOYERS
Employer Name Number of Employees
Walt Disney Company 20,250
University of California, Wine 16,374
Boeing Company 11,242
St. Joseph Health System 9,482
YUM! Brands Inc. 7,000
AT&T Inc. 6,116
California State University, Fullerton 5,337
Hope Depot Inc. 5,200
Memorial Health Services Inc. 4,961
Supervalu Inc. 4,819
Source: Orange County Business Journal 2007 Book ofLlsts.
Labor Force,Employment and Unemployment
Table B-5 summarizes the labor force, employment and unemployment figures over the period
2002 through 2006 for the County and the State.
TABLE B-5
COUNTY OF ORANGE AND STATE OF CALIFORNIA
LABOR FORCE,EMPLOYMENT AND UNEMPLOYMENT
YEARLY AVERAGE
Unemployment
Year and Area Labor Force Employment Unemployment Rate
2002
Orange County 1,531,300 1,454,500 76,800 5.0%
California 17,330,700 16,168,200 1,162,500 6.7
2003
Orange County 1,557,400 1,482,400 75,000 4.8
California 17,403,900 16,212,200 1,191,300 6.8
2004
Orange County 1,580,800 1,512,800 68,000 4.3
California 17,499,600 16,407,900 1,091,700 6.2
2005
Orange County 1,602,200 1,541,800 60,400 3.8
California 17,695,600 16,746,900 948,700 5.4
2006
Orange County 1,623,600 1,568,300 55,300 3.4
California 17,901,900 17,029,300 872,600 4.9
Source.' California Employment Development Department.
114 Official Stetemem.doc B-3
Personal Income and other Demographic Information
Table B-6 summarizes the personal income, per capita personal income, median family income,
public school enrollment and unemployment rate for the County of Orange.
TABLE B-6
COUNTY OF ORANGE
DEMOGRAPHIC INFORMATION[)
Per
Total Personal Capita Median Public
Fiscal Income Personal Family[" School(4i Unemployment
Year (In thousands) Income Income Enrollment ter"
1997-98 $ 90,579,9271?) $ 34,639 $ 61.812 458,000 2.9%
1998-99 96.288,099(2) 34,696 63,478 471,000 2.6
1999-00 106,003,904('1 37,484 69,310 483.000 2.9
2000-01 109,010,27812) 37,851 70,577 494,000 3.0
2001-02 111,750,2941" 38,010 72,998 503,000 4.1
2002-03 117.722,500t" 39,517 73,572 512,000 4.0
2003-04 125,670,100(" 41,654 70,900 517,000 3.6
2004-05 133,031,80d" 43,660 73,545 514,000 3.9
2005-06 141,169,4001" 45,954 76.443 510,114 3.7
20W07 $148,916,000r"ts' 48.068 78,950(6) 503,955 3.9
The—Orange County Sanitation District services 471 square miles or 59%of the total 799 square miles that make
up the boundaries of the County of Orange.
r?3 Data Source:Bureau of Economic Analysis,U.S.Department of Commerce
Data Source:Anderson Center for Economic Research,Chapman University.
Data Source:California Department of Education,Educational Demographics Unit.
t"Data Sauce:State of California,Employment Development Department as of Jane 30 of each fiscal year.
t6'Forecasted number.
Taxable Sales
Table B-7 summarizes the annual volume of taxable transactions from 2001 to 2005.
11.2 Meal Statemmt.dM B-4
TABLE B-7
COUNTY OF ORANGE
TAXABLE TRANSACTIONS
(In Thousands)
Type of Business 2001 2002 2003 2004 2005
Apparel stores group $ 1,446,572 $ 1,508,011 $ 1,697,120 $ 1,881,882 $2,062,892
General merchandise group 4,432,881 4,618,932 4,855,674 59205,075 5,467,357
Specialty stores group 4,999,099 4,937,212 5,085,612 5,700,317 6,028,099
Food stores group 1,534,244 1,551,611 1,574,528 1.563.145 1,716,228
Eating and drinking groups 3,749,604 3,894,398 4,149,117 4,475,791 4,798,676
Household group 1,501,585 1,722,573 1,985,255 2,135,876 2,269,650
Building material group 2,157,196 2.275,964 2,480,249 2,950,592 3,000,086
Automotive group 7,957,760 8,492,604 9,651,049 10,585,091 11.283,156
All other retail stores group 739,760 765,523 909,093 944,184 1,046,700
Retail Stores Totals 28,518,701 29,646,818 32,287,697 35,441,953 37,672,834
Business&Personal Services 2,673,666 2,615,150 2,699,250 2,819,934 2,938,129
All Other Outlets 13.402,947 12,607,188 12,530,119 13,420,172 14,452.283
TOTAL ALL OUTLETS $44,595,314 $44,869,156 $47,517,066 $51,682,059 $55,063,246
Source: CalfJormla State Board of Equalization.
Housing Characteristics
The total number of housing units in the County was estimated by the California State
Department of Finance to be 1,024,692 as of January 1, 2006. This compares to 1,013,842 reported by
the Department of Finance in January 2005. According to California Association of Realtors,the median
resale price of single-family dwelling units in Orange County was$704,150 in May 2005.
Building Permits
The total valuation of building permits issued in the County reached $4.7 billion in 2006, which
represents about a 25%increase relative to 2002. Table B-8 provides a summary of residential building
permit valuations and the number of new dwelling units authorized in the County during the period 2002
through 2006.
i -2OmeaiStaiemmt.d� B-5
TABLE I"
COUNTY OF ORANGE
BUILDING PERMIT ACTIVITY
2002 through 2006
(In Thousands)
2002 2003 2004 2005 2006
Valuation:
Residential $2,328,119 $2,076,977 $2,243,645 $4100,436 $2,336,324
Non-Residential 1,208.6 8.626 1,005.547 1,132,946 1,494,755 2,397,248
Total $3,536,746 $3,082.525 $3,376,491 $3,595,191 $4,733,572
New Housing Units:
Single Family 6,423 5,565 4,395 4,058 3,121
Multiple Family 5�97 3.746 4927 3.148 55.219
Total 12,020 9,311 9,322 7,206 8,340
Source: Construction Industry Research Board.
Water Supply
Maintaining the County's water supply is the responsibility of the Orange County Water District
("OCWD"), manager of the County's groundwater basin, and the Municipal Water District of Orange
County ("MWDOC"), the County's largest manager of imported water. More than 60%of the County's
water is from local groundwater sources; the rest is imported. The County's natural underground
reservoir is sufficient to carry it through temporary shortfall periods, but local supplies alone cannot
sustain the present population.
Recreation and Tourism
The County is a tourist center in Southern California because of the broad spectrum of
amusement parks and leisure, recreational and entertainment activities that it offers. These tourist
attractions are complimented by the year-round mild climate.
Along the County's Pacific Coast shoreline are five state beaches and parks, five municipal
beaches and five County beaches. There are two small-craft docking facilities in Newport Harbor, a third
located at Sunset Beach and a fourth at Dana Point.
Other major recreational and amusement facilities include Disneyland Disney's California
Adventure, Knott's Berry Farm and the Spanish Mission of San Juan Capistrano. Alan located within the
County are the Anaheim Convention Center, Edison International Field of Anaheim, Honda Center,
Orange County Performing Arts Center, Verimn Wireless Amphitheater and the Art Colony at Laguna
Beach with its annual art festival.
The Anaheim Convention Center is located adjacent to Disneyland. It is situated on 53 acres and
is one of the largest convention centers on the West Coast. Table B-9 summarizes the number of
conventions held in the County,as well as attendance for the period 1997 through 2006.
t t-2 Onid.i Sw..,.dw B-6
TABLE B-9
COUNTY OF ORANGE
CONVENTION ACTIVITY
Year Conventions Attendance
1997 431 979,259
1998* 450 750,698
1999* 473 767,689
2000 470 959,593
2001 489 959,000
2002 547 1,009,171
2003 590 1,093,787
2004 666 1,211,476
2005 619 1,113,224
2006 633 1,125,895
Source: Anaheim/Orange County Visitor and Convention Bureau, 2006.
• A portion of the decrease in 1999 and 1999 from attendautce and expenditure levels of prior years is
attributable to the effects of the construction of Dimey's California Adventure theme park and related
infrastructure projects.
Transportation
The County is situated in the most heavily populated area in California and has access to
excellent roads, mil, air and sea transportation. The Santa Ana Freeway (Interstate 5) provides direct
access to downtown Los Angeles and connects with the San Diego Freeway(Interstate 405)southeast of
the City of Santa Ana,providing a direct link with San Diego. The Garden Grove Freeway(State 22)and
the Riverside Freeway(State 91)provide east-west transportation, linking the San Diego Freeway, Santa
Ana Freeway and the Newport Freeway (State 55). The Newport Freeway provides access to certain
beach communities.
Drivers in the County have access to two toll road systems of the Transportation Corridor
Agencies. The San Joaquin Toll Road (73)runs from Costa Mean to San Joan Capistrano connecting to
the 405 and 5 interstate freeways. The Eastern and Foothill Toll Roads (241, 261 and 133)connect the
County to the 91 freeway in the north and the 5 freeway, City of Wine other South County cities,as well
as Laguna Canyon Road. The Transportation Condor Agencies are planning to extend 241 to connect to
the 5 freeway near San Clemente.
Rail freight service is provided by the Burlington Northern Santa Fe Railway and the Union
Pacific Railroad Company. Amtrak provides passenger service to San Diego to the south, Riverside and
San Bernardino Counties to the east, and Los Angeles and Santa Barbara to the north. Metro Link
provides passenger service to San Bernardino and Riverside counties to the east,the City of Oceanside to
the south and Los Angeles County to the north. Bus service is provided by Greyhound Bus Lines. The
Orange County Transportation Authority provides bus service between most cities in the County. Most
interstate common carrier truck lines operating in California serve the County.
The John Wayne Airport, owned and operated by the County, is the only commercial service
airport in the County. It is approximately thirty-five miles south of Los Angeles, between the cities of
Coast Mesa, Irvine, Newport Beach and Santa Ana. Major airlines, including Alaska, Aloha, America
West, American, Continental, Delta, Frontier, Northwest, Southwest and United fly from the airport to
major cities throughout the country. In 2004,approximately 9.2 million passengers were served.
11-2 06ida1 Staeonu.dac B-7
In 1993, the Defense Base Realignment and Closure Commission directed the closure of Marine
Corps Air Station (MCAS) El Toro ("El Toro" or "the base") effective July 1999. The County was
designated the Local Redevelopment Authority("LRA'�for development of a Community Reuse Plan to
guide future development of the former MCAS El Toro. In 1994, Orange County voters narrowly
approved Measure A which zoned the property for use as an international airport. This touched off a
multi-year legal and political battle that ended when 58%of Orange County voters approved Measure W,
the Orange County Central Park and Nature Preserve Initiative, on March 5, 2002. Measure W repeals
Measure A and amends the County General Plan to prohibit aviation uses and limit future development
for the unincorporated portion of El Toro to park, open space, nature preserve and education and
compatible uses. The day after Measure W was approved. the Department of the Navy issued a press
release stating that disposal of the former Base would be accomplished by means of a public auction. The
City of Wine responded by developing the Great Park Plan for El Toro. The City of Irvine was approved
by the Local Agency formation Commission("LAFCO")to annex to the City the property that comprises
the former MCAS El Toro. In light of the passage of Measure W,the County has discontinued all work
related to the planning or development of a commercial airport at El Toro.
Natural Disasters;Seismic Activity/Fires
Natural disasters, including floods, fires and earthquakes, have been experienced in the County.
Seismic records spanning the past half century and historic records dating from the 1700s through the
early 1900s indicate that the County is a seismically active area. The State Office of Emergency Services
indicates that significant tremors are likely to occur in several fault zones during the next 50 to 100 years,
including a tremor of 7.0 on the Richter scale within the Newport-Inglewood fault system. The chance of
a Richter 7.0 earthquake occurring is estimated to be I to 20/a in any year. For this reason,local building
codes require that structures be designed to withstand the expected accelerations for the area without
collapsing or suffering severe structural damage.
Maps published by the State Department of Conservation indicate that portions of the County
may be subject to the risk of earthquake-induced landslides or liquefaction.
11-2 Official Sutehum.doc B-8
APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
11-20fde1 SMt=WLdoc C-1
APPENDIX D
FORM OF CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT(this"Disclosure Agreement"),dated as
of December 1, 2007, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county
sanitation district organized and existing under the laws of the State of California (the "District"), and
DIGITAL ASSURANCE CERTIFICATION LLC,as Dissemination Agent(the"Dissemination Agent").
WITNESSETH:
WHEREAS, the District has caused to be executed and delivered Orange County Sanitation
District Certificates of Participation, Series 2007B (the "Certificates'), evidencing principal in the
aggregate amount of S ,pursuant to a Trust Agreement,dated as of the date hereof(the"Trust
AgreemenP'), by and among Union Bank of California, N.A., as trustee (the "Tmste(e"), the Orange
County Sanitation District Financing Corporation(the"Corporation')and the District;and
WHEREAS, this Disclosure Agreement is being executed and delivered by the District and the
Dissemination Agent for the benefit of the owners and beneficial owners of the Certificates and in order
to assist the underwriters of the Certificates in complying with the Rule(as defined herein);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein
contained,the parties hereto agree as follows:
Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings
ascribed thereto in the Trust Agreement or, if not defined therein, in the Master Agreement, dated as of
August 1, 2000, by and between the District and the Corporation. In addition, the following capitalized
terms shall have the following meanings:
"Annual Report" means any Annual Report provided by the District pursuant to, and as
described in, Sections 2 and 3 hereof.
"Annual Report Date" means the date in each year that is eight months after the end of the
District's fiscal year,which date,as of the date of this Disclosure Certificate, is March 1.
"Disclosure Representative"means the Director of Finance of the District,or such other officer
or employee of the District as the District shall designate in writing to the Trustee from time to time.
"Dissemination Agent" means an entity selected and retained by the District, or any successor
thereto selected by the District. The initial Dissemination Agent shall be Digital Assurance Certification
LLC.
"Listed Events"means any of the events listed in subsection(a)of Section 4 hereof.
"National Repository" means any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. As of the date hereof, the National Repositories approved by the
Securities and Exchange Commission are identified at http://www.sec.gov/info/mmicipall v sir.htm.
"Official Statement" means the Official Statement, dated , 2007, relating to the
Certificates.
11.2 Oadr Su a u.6x D-1
"Participating Underwriter"means any of the original underwriters of the Certificates required
to comply with the Rule in connection with the offering of the Certificates.
"Repository"means each National Repository and each State Repository.
"Rule" means Rule 15c2-12 adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934,as the same may be amended from time to time.
"State Repository" means any public or private repository or entity designated by the State of
California as a state repository for the purpose of the Rule and recognized by the Securities and Exchange
Commission. As of the date of this Disclosure Agreement,there is no State Repository.
Section 2. Provision of Annual Reports. (a) The District shall, or shall cause the
Dissemination Agent to, not later than the Annual Report Date,commencing with the report for the 2007-
08 Fiscal Year,provide to each Repository an Annual Report which is consistent with the requirements of
Section 3 hereof. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 3 hereof;
provided that the audited financial statements of the District may be submitted separately from the
balance of the Annual Report, and later than the date required above for the filing of the Annual Report if
not available by that date. If the District's fiscal year changes, it shall give notice of such change in the
same manner as for a Listed Event under subsection(f)of Section 4 hereof.
(b) Not later than 15 business days prior to the date specified in subsection(a)of this Section
for the providing of the Annual Report to the Repositories,the District shall provide the Annual Report to
the Dissemination Agent and the Trustee. If by such date, the Trustee has not received a copy of the
Annual Report, the Trustee shall contact the District and the Dissemination Agent to determine if the
District is in compliance with the first sentence of this subsection(b).
(c) If the Trustee is unable to confirm that an Annual Report has been provided to
Repositories by the date required in subsection (a) of this Section, the Trustee shall send a notice to the
Municipal Securities Rulemaking Board and each State Repository, if any, in substantially the form
attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name
and address of each National Repository and each State Repository,if any;and
(ii) file a report with the District and (if the Dissemination Agent is not the Trustee)
the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure
Agreement, stating the date it was provided and listing all the Repositories to which it was
provided.
Section 3. Content of Annual Reports. The District's Annual Report shall contain or
incorporate by reference the following:
(a) Audited financial statements prepared in accordance with generally accepted accounting
principles as promulgated to apply to governmental entities from time to time by the Governmental
Accounting Standards Board. If the District's audited financial statements are not available by the time
the Annual Report is required to be filed pursuant to subsection(a)of Section 2 hereof,the Annual Report
shall contain unaudited financial statements in a format similar to the financial statements contained in the
11-2 Oaidel Srete mdo, D-2
Official Statement, and the audited financial statements shall be filed in the same manner as the Annual
Report when they become available.
(b) The following information with respect to the Certificates:
(i) The principal evidenced by the Certificates Outstanding as of the January 1 next
preceding the Annual Report Date and the principal amount of other Senior Obligations
outstanding as of the January 1 next preceding the Annual Report Date.
(ii) The balance in the Reserve Fund and a statement of the Reserve Requirement,as
of the January 1 next preceding the Annual Report Date.
(c) A summary report showing in reasonable detail Revenues, Operating Revenues,
Maintenance and Operation Costs,Net Revenues, Net Operating Revenues and debt service with respect
to the Senior Obligations for the fiscal year ended the June 30 next preceding the Annual Report Date.
(d) An update, for the fiscal year ended the June 30 next preceding the Annual Report Date,
of the information contained in the Official Statement in Table Nos. 2, 4, 6 (only with respect to
information on 6 under the headings Fiscal Year and Sewer Service Charge), 8 (not to include
projections),9, 10, 11, 12, 13, 14 and 16.
(e) In addition to any of the information expressly required to be provided under subsections
(a), (b),(c)and(d) of this Section, the District shall provide such further information, if any, as may be
necessary to make the specifically required statements,in the light of the circumstances under which they
are made,not misleading.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the District or related public entities, which have been
submitted to each of the Repositories or the Securities and Exchange Commission. If the document
included by reference is a final official statement, it most be available from the Municipal Securities
Rulemaking Board. The District shall clearly identify each such other document so included by
reference.
Section 4. Reporting of Significant Events. (a)Pursuant to the provisions of this Section,
the District shall give, or cause to be given,notice of the occurrence of any of the following events with
respect to the Certificates,if material:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults.
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(5) Substitution of credit or liquidity providers,or their failure to perform.
(6) Adverse tax opinions or events affecting the tax-exempt status of the
security.
r is Oaar Srerem tL D-3
(7) Modifications to rights of security holders.
(8) Contingent or unscheduled Certificate calls.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities.
(11) Rating changes.
(b) The District shall, within one business day of obtaining actual knowledge of the
occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the
event, and request that the District promptly notify the Trustee in writing whether or not to report the
event pursuant to subsection(f)of this Section.
(c) Whenever the District obtains knowledge of the occurrence of a Listed Event, whether
because of a notice from the Trustee pursuant to subsection (b) of this Section or otherwise, the District
shall as soon as possible determine if such event would be material under applicable Federal securities
law.
(d) If the District has determined[list knowledge of the occurrence of a Listed Event would
be material under applicable Federal securities law, the District shall promptly notify the Trustee in
writing. Such notice shall instruct the Trustee to report the occurrence pursuant to subsection (f)of this
Section.
(e) If in response to a request under subsection (b) of this Section, the District determines
that the Listed Event would not be material under applicable Federal securities law,the District shall so
notify the Trustee in writing and instruct the Trustee not to report the occurrence pursuant to subsection
(f)of this Section.
(f) If the Dissemination Agent has been instructed by the District to report the occurrence of
a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal
Securities Rulemaking Board and each Repository. Notwithstanding the foregoing, notice of Listed
Events described in paragraphs(8) and(9) of subsection (a)of this Section need not be given under this
subsection any earlier than the notice (if any) of the underlying event is given to holders of affected
Certificates pursuant to the Trust Agreement.
Section S. Electronic Filing. Submission of Annual Reports and notices of Listed Events
to Disclos=USA.org or another "Central Post Office" designated and accepted by the Securities and
Exchange Commission shall constitute compliance with the requirement of filing such reports and notices
with each Repository hereunder, and the District may satisfy its obligations hereunder to file any notice,
document or information with a Repository by filing the same with any dissemination agent or conduit,
including DisclosureUSA.org or another"Central Post Office"or similar entity,assuming or charged with
responsibility for accepting notices,documents or information for transmission to such Repository,to the
extent permitted by the Securities and Exchange Commission or Securities and Exchange Commission
staff or required by the Securities and Exchange Commission. For this purpose, permission shall be
deemed to have been granted by the Securities and Exchange Commission staff if and to the extent the
agent or conduit has received an interpretive letter, which has not been revoked, from the Securities and
Exchange Commission staff to the effect that using the agent or conduit to transmit information to the
11-2 Official Suteaeadoc D-4
Repository will be treated for purposes of the Rule as if such information were transmitted directly to the
Repository.
Section 6. Termination of Reporting Obligation. The District's obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Certificates. If such termination occurs prior to the final maturity of the Certificates,the District
shall give notice of such termination in the same manner as for a Listed Event under subsection (f) of
Section 4 hereof.
Section 7. Dissemination Agent. The District may, from time to time, appoint or engage
another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement,
and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination
Agent. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the
Dissemination Agent; provided it shall receive written notice of such designation at the time of such
designation.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the District and the Dissemination Agent may amend this Disclosure Agreement (and the
Dissemination Agent shall agree to any amendment so requested by the District), and any provision of
this Disclosure Agreement may be waived,provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of subsection(a)of Section 2 hereof,
Section 3 hereof or subsection(a)of Section 4 hereof,it may only be made in connection with a change in
circumstances that arises from a change in legal requirements, change in law, or change in the identity,
nature or status of an obligated person with respect to the Certificates,or type of business conducted;
(b) the undertakings herein, m proposed to be amended or waived,would, in the opinion of
nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
primary offering of the Certificates, after taking into account any amendments or interpretations of the
Rule,as well as any change in circumstances;and
(c) the proposed amendment or waiver (i) is approved by holders of the Certificates in the
manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of
holders, or(ii)does not, in the opinion of the Trustee or nationally recognized bond counsel, materially
impair the interests of holders.
If the annual financial information or operating data to be provided in the Annual Report is
amended pursuant to the provisions hereof, the annual financial information containing the amended
operating data or financial information shall explain, in narrative form, the reasons for the amendment
and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed
in preparing financial statements, the annual financial information for the year in which the change is
made shall present a comparison between the financial statements or information prepared on the basis of
the new accounting principles and those prepared on the basis of the former accounting principles. The
comparison shall include a qualitative discussion of the differences in the accounting principles and the
impact of the charge in the accounting principles on the presentation of the financial information,in order
to provide information to investors to enable them to evaluate the ability of the District to meet its
obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the
change in the accounting principles shall be sent to the Repositories.
1 r-2 Official Swemeetdoc D-5
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed
to prevent the District from disseminating any other information, using the means of dissemination set
forth in this Disclosure Agreement or any other means of communication, or including any other
information in any Annual Report or notice of oceurtence of a Listed Event, in addition to that which is
required by this Disclosure Agreement. If the District chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Agreement, the District shall have no obligation under this Disclosure Agreement to update
such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the District or the Dissemination Agent to
comply with any provision of this Disclosure Agreement,the Trustee may(and at the written direction of
any Participating Underwrite or the holders of at least 25% of the aggregate amount of principal
evidenced by Outstanding Certificates and upon being indemnified to its reasonable satisfaction, shall),or
any holds or beneficial owner of the Certificates may, take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to cause the District,
Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this
Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of
Default under the Trust Agreement,and the sole remedy under this Disclosure Agreement in the event of
any failure of the District, the Trustee or the Dissemination Agent to comply with this Disclosure
Agreement shall be an action to compel performance.
Section 11. Duties. Immunities and Liabilities of Trustee and Dissemination Agent.
Article Vill of the Trust Agreement is hereby made applicable to this Disclosure Agreement as if this
Disclosure Agreement were (solely for this purpose) contained in the Trust Agreement. Neither the
Trustee nor the Dissemination Agent shall be responsible for the form or content of any Annual Report or
notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services
provided under this Disclosure Agreement. The Dissemination Agent (if other than the Trustee or the
Trustee in its capacity as Dissemination Agent)shall have only such duties as are specifically set forth in
this Disclosure Agreement, and the District agrees to indemnify and save the Dissemination Agent, its
officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may
incur arising out of or in the exercise or performance of its powers and duties hereunder, including the
costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding
liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the
District under this Section shall survive resignation or removal of the Dissemination Agent and payment
of the Certificates.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
District, the Trustee, the Dissemination Agent, the Participating Underwriter and holders and beneficial
owners from time to time of the Certificates,and shall create no rights in any other person or entity.
Section 13. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
11.2/)Rw Sretemml dm 1}6
IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as of the
date first above written.
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
DIGITAL ASSURANCE CERTIFICATION LLC,
as Dissemination Agent
By:
Authorized Representative
11-2 OMC181 Sta1C1aCaLC D-7
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE
TO FILE ANNUAL REPORT
Name of Issuer: Orange County Sanitation District
Name of Issue: Orange County Sanitation District
Certificates of Participation, Series 2007B
Date of Issuance: ,2007
NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District')has not
provided an Annual Report with respect to the above-named Certificates as required by Section 6.09 of
the Trust Agreement, dated as of December 1, 2007, by and among Union Bank of California, N.A., as
Trustee, the Orange County Sanitation District Financing Corporation and the District. (fhe District
anticipates that the Annual Report will be filed by .]
Dated: ORANGE COUNTY SANITATION DISTRICT
By:
cc: Trustee
Dissemination Agent
11-2 Official St�d A-1
APPENDIX E
BOOK-ENTRY SYSTEM
The description that follows of the procedmes and recordkeeping with respect to beneficial
ownership interests in the Certificates,payment of principal and interest evidenced by the Certificates to
Participants or Beinficial Owners, confirmation and transfer of beneficial ownership interests in the
Certificates and other Certificate-related transactions by and between DTC, Participanis and Beneficial
Owners, is based on information famished by DTC which the District and the Corporation each believes
to be reliable, but the District and the Corporation take no responsibility for the completeness or
accuracy thereof
The Depository Trust Company—Book-Entry System
The Depository Trust Company("DTC'),New York,NY,will act as securities depository for the
securities (the "Certificates'). The Certificates will be issued as fully-registered securities registered in
the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Certificate will be issued for the Certificates in
the aggregate principal amount of such issue,and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and
non-U.S. equity, corporate and municipal debt issues, and money market instrument from over 100
countries that DTC's participants("Direct Participants")deposit with DTC. DTC also facilitates the post-
trade settlement among Direct Participants of sales and other securities transactions in deposited securities
through electronic computerized bookcntry transfers and pledges between Direct Participants' accounts.
This eliminates the need for physical movement of securities certificates. Direct Participants include both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing
Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and
Members of the National Securities Clewing Corporation, Fixed Income Clearing Corporation, and
Emerging Markets Clewing Corporation(NSCC, FICC, and EMCC,also subsidiaries of DTCC), as well
as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks,trust companies, and clearing corporations that
clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants'). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable
to its Participants are on file with the Securities and Exchange Commission. More information about
DTC can be found at wwwAtm.com and wwwAtc.org. The information an such websites is not
incorporated herein by such reference or otherwise.
Purchases of Certificates under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual
purchaser of each Certificate ('Beneficial Owner") is in turn to be recorded an the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are,however,expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
I1-2 06idat 9menmr.dm E-1
Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Certificates, except in the event that use of the book-entry system for the
Certificates is discontinued.
To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are
registered in the time of DTC's partnership nomince, Cede & Co. or such other time as may be
requested by an authorized representative of DTC. The deposit of Certificates with DTC and their
registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records
reflect only the identity of the Direct Participants to whose accounts such Certificates are credited,which
may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take
certain steps to augment transmission to them of notices of significant events with respect to the
Certificates, such as prepayments,tenders, defaults,and proposed amendments to the security documents.
For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the
Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the
alternative,Beneficial Owners may wish to provide their names and addresses to the registrar and request
that copies of the notices be provided directly to them.
Prepayment notices shall be sent to DTC. If less than all of the Certificates within an issue are
being prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant
in such issue to be prepaid.
Neither DTC nor Cede&Co. (nor such other DTC nominee)will consent or vote with respect to
the Certificates unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Certificates are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Prepayment proceeds, distributions, and dividend payments on the Certificates will be made to
Cede&Co.,or such other nominee as may be requested by an authorized representative of DTC. DTC's
practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail
information from the District or the Trustee on payable date in accordance with their respective holdings
shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of such Participant and not of
DTC, nor its nominee, the Trustee, or the District, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of prepayment proceeds, distributions, and dividend
payments to Cede& Co.(or such other nominee as may be requested by an authorized representative of
DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners will be the responsibility of Direct and Indirect Participants.
11-2 olydr suaemmcd. E-2
DTC may discontinue providing its services as securities depository with respect to the
Certificates at any time by giving reasonable notice to the District or the Trustee. Under such
circumstances, in the event that a successor securities depository is not obtained,Certificates are required
to be printed and delivered.
The District may decide to discontinue use of the system of book-entry-only transfers through
DTC (or a successor securities depository). In that event, Certificates will be printed and delivered to
DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that the District believes to be reliable, but the District takes no responsibility for the
accuracy thereof.
Discontinuance of DTC Services
In the event(i)DTC determines not to continue to act as securities depository for the Certificates,
(ii)DTC shall no longer act and give notice to the Trustee of such determination or (iii)the District
determines that it is in the best interest of the Beneficial Owners that they be able to obtain Certificates
and delivers a written certificate to the Trustee to that effect, DTC services will be discontinued. If the
District determines to replace DTC with another qualified securities depository, the District shall prepare
or direct the preparation of a new single, separate, fully registered Certificate for each of the maturities of
the Certificates,registered in the name of such successor or substitute qualified securities depository or its
nominee. If the District fails to identify another qualified securities depository to replace DTC then the
Certificates shall no longer be restricted to being registered in the certificate registration books in the
name of Cede&Co.,but shall be registered in such names as are requested in a certificate of the District,
in accordance with the Trust Agreement.
All Certificates may be presented for transfer by the Owner thereof, in person or by his attorney
duly authorized in writing, at the Principal Office of the Trustee, on the books required to be kept by the
Trustee pursuant to the provisions of the Trust Indenture, upon surrender of such Certifications for
cancellation accompanied by delivery of a duly executed written instrument of transfer in a form
acceptable to the Trustee. The Trustee may treat the Owner of any Certificate as the absolute owner of
such Certificate for all purposes, whether or not such Certificate shall be overdue, and the Trustee shall
not be affected by any knowledge or notice to the contrary; and payment of the interest and principal
evidenced by such Certificate shall be made only to such Owner, which payments shall be valid and
effectual to satisfy and discharge the liability evidenced by such Certificate to the extent of the sum or
sums so paid.
Whenever any Certificates shall be surrendered for transfer,the Trustee shall execute and deliver
new Certificates representing the same principal amount in Authorized Denominations. The Trustee shall
require the payment of any Owner requesting such transfer of my tax or other governmental charge
required to be paid with respect to such transfer. Certificates may be presented for exchange at the
Principal Office of the Trustee for a like aggregate principal amount of Certificates of other Authorized
Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax
or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be
required to transfer or exchange any Certificate during the period in which the Trustee is selecting
Certificates for prepayment, nor shall the Trustee be required to transfer or exchange any Certificate or
portion thereof selected for prepayment from and after the date of mailing the notice of prepayment
thereof.
1 t-2 OrfmW Stmerm .d E-3
V
APPENDIX F
FORM OF APPROVING OPINION OF SPECIAL COUNSEL
Upon the execution and delivery of the Certificates, Fulbright d: Jaworskl L.L.P., Las Angeles,
California, Special Counsel to the District, will render its final approving opinion with respect to the
Certfcates in substantially the followingform:
[Date of Delivery]
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,California 92708
Orange County Sanitation District
Certificates of Participation
Series 2007B
Ladies and Gentlemen:
We have acted as Special Counsel in connection with the$ aggregate principal amount
of Orange County Sanitation District Certificates of Participation, Series 2007B(the"Certificates")which
evidence direct, fractional undivided interests of the Owners thereof in the installment payments (the
"Installment Payments"), and the interest thereon, to be made by the Orange County Sanitation District
(the "District") pursuant to the Installment Purchase Agreement, dated as of December 1, 2007 (the
"Installment Purchase Agreement"), by and between the District and the Orange County Sanitation
District Financing Corporation (the "Corporation'). Pursuant to the Master Agreement for District
Obligations, dated as of August 1, 2000 (the "Master Agreement"), by and between the District and the
Corporation, the District has established conditions and terms upon which obligations such as the
Installment Payments and the interest thereon, will be incurred and secured. Installment Payments under
the Installment Purchase Agreement are payable solely from Net Revenues as provided in the Installment
Purchase Agreement, consisting primarily of all income and revenue received by the District from the
operation or ownership of the Wastewater System of the District (the "Wastewater System") remaining
after payment of Maintenance and Operation Costs. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Installment Purchase Agreement.
The Certificates are to be executed and delivered pursuant to a Trust Agreement, dated as of
December 1, 2007 (the"Trust Agreement'),by and among the District,the Corporation and Union Bank
of California, N.A., as trustee (the "Trustee"). Proceeds from the sale of the Certificates, together with
other available moneys, will be used to (i) finance certain improvements to the Wastewater System, (ii)
fund a reserve fund for the Certificates, and(iii)pay the costs incurred in connection with the execution
and delivery of the Certificates.
11-2 Official alas .Ld. F-I
i
As Special Counsel,we have examined copies certified to us as being true and complete copies of
the Master Agreement, the Trust Agreement, and the Installment Purchase Agreement and the
proceedings of the District in connection with the execution and delivery of the Certificates. We have
also examined such certificates of officers of the District, the Corporation and others as we have
considered necessary for the purposes of this opinion.
Based upon the foregoing,we are of the opinion that:
I. The Master Agreement, the Installment Purchase Agreement and the Trust Agreement
have each been duly and validly authorized, executed and delivered by the District and, assuming the
Master Agreement, the Installment Purchase Agreement and the Trust Agreement each constitutes the
legally valid and binding obligation of the other parties thereto, enforceable against such parties in
accordance with their respective terms, each constitutes the legally valid and binding obligation of the
District,enforceable against the District in accordance with their respective terns.
2. The obligation of the District to pay the Installment Payments, and the interest thereon,
and other payments required to be made by it under the Installment Purchase Agreement is a special
obligation of the District payable, in the manner provided in the Installment Purchase Agreement, solely
from Net Revenues and other funds provided for in the Installment Purchase Agreement lawfully
available therefor.
3. Assuming due authorization, execution and delivery of the Trust Agreement and the
Certificates by the Trustee,the Certificates are entitled to the benefits of the Trust Agreement.
4. The Internal Revenue Code of 1986(the"Code"), imposes certain requirements that must
be met subsequent to the execution and delivery of the Certificates for the component of each Installment
Payment designated as interest in the Installment Purchase Agreement (the "Payment Interest"), and the
allocable portion thereof distributable in respect of each Certificate (the "Certificate Interest
Distribution"), to be and remain excluded from the gross income of the owner thereof for federal income
tax purposes. Noncompliance with such requirements could cause such amounts to be included in gross
income of such owner for federal income tax purposes retroactive to the date of delivery of the
Certificates. The Corporation and the District have each covenanted in the Trust Agreement, and the
District has covenanted in the Installment Purchase Agreement, to maintain the exclusion pursuant to
section 103(a)of the Code of the Payment Interest from the gross income of the owner thereof for federal
income tax purposes.
In our opinion, under existing law, and assuming compliance with the aforementioned covenant,
the Payment Interest allocable to and the Certificate Interest Distributions in respect of a Certificate are
excluded pursuant to section 103(a)of the Code from the gross income of the owner thereof for federal
income tax purposes; inasmuch as the Installment Purchase Agreement is not a"specified private activity
bond"within the meaning of section 57(a)(5)of the Code,neither the Payment Interest nor any Certificate
Interest Distribution is an item of tax preference for purposes of computing the alternative minimum tax
imposed by section 55 of the Code. It is noted that the accrual of Payment Interest allocable to and
Certificate Interest Distributions in respect of a Certificate owned by a corporation may affect the
computation of income, upon which the alternative minimum tax is imposed, to the extent that such
amounts are taken into account in determining the adjusted earnings of that corporation(75 percent of the
excess (if any) of such adjusted current earnings over the alternative minimum taxable income being an
adjustment to the alternative minimum taxable income(determined without regard to the adjustment or to
the alternative tax net operating loss deduction)). Further, based solely on the foregoing, and upon
existing provisions of the California Revenue and Tax Code, we are of the opinion that Payment Interest
11-2 omdm sutemmr F-2
allocable to and the Certificate Interest Distributions in respect of a Certificate are not subject to taxstion
under the California personal income tax.
We have not undertaken to advise in the future whether any events after the date of delivery of
the Installment Purchase Agreement may affect the tax status of the Payment Interest or Certificate
Interest Distributions. No assurance can be given that future legislation, if enacted into law, will not
contain provisions that could directly or indirectly reduce the benefit of the exclusion of such amounts
from the gross income of the owner of Certificates for federal income tax purposes. Furthermore, we
express no opinion as to any federal, state, or local tax law consequences with respect to the Installment
Purchase Agreement, Certificates, Payment Interest, or Certificate Interest Distributions, if any action is
taken with respect to the Installment Purchase Agreement, the Master Agreement, the Trust Agreement,
the Certificates,or the proceeds thereof, permitted or predicated upon the advice or approval of counsel if
such advice or approval is given by counsel other than us.
Except as stated in the preceding three paragraphs, we express no opinion as to any federal or
state tax consequences of the ownership or disposition of the Installment Purchase Agreement or
Certificates. We have not been requested to express, and do not express, any view as to the compliance
by any person with federal and state securities laws. With the exception of the opinions expressed above,
we have not been requested to express and do not express, any opinion as to any matter affected by any
taxing or other law of the State of California.
The rights of the owners of the Certificates and the enforceability of the Certificates, the Master
Agreement, the Tmst Agreement and the Installment Purchase Agreement may be subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or
hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. The
enforceability of the Certificates, the Master Agreement, the Trost Agreement and the Installment
Purchase Agreement is subject to the effect of general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, to the possible unavailability of
specific performance or injunctive relief,regardless of whether considered in a proceeding in equity or at
law,and to the limitations on legal remedies against governmental entities in California.
No opinion is expressed herein on the accuracy, completeness or fairness of the Official
Statement or other offering material relating to the Certificates.
Our opinions us based on existing law, which is subject to change. Such opinions are further
based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our
opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any
changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a
guarantee of result and are not binding on the Intemal Revenue Service; rather, such opinions represent
our legal judgment based upon our review of existing law that we deem relevant to such opinions and in
reliance upon the representations and covenants referenced above.
Respectfully submitted,
11.2 Official Stet rdoc F-3
Fulbright&Jaworski L.L.P.—Draft 11/2/07
OFFICIAL NOTICE INVITING BIDS
$300,000,000
ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION
SERIES 2007B
(Book-Entry-Only)
NOTICE IS HEREBY GIVEN that bids will be received by the Orange County Sanitation
District (the "District") for the purchase of$300,000,000' original principal amount of Orange County
Sanitation District Certificates of Participation, Series 2007B(the"Certificates"). Bids for less than all of
the Certificates will not be accepted.The bids will be received in the form,at the place,and up to the time
specified below(unless postponed as described herein):
Date: Tuesday,December 11,2007
11:30 a.m.,New York Time
Place: Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,CA 92708-7018
Electronic Bids: As an accommodation to bidders,electronic proposals may be submitted
through the ideal LLC bid service (the "Electronic Service"). The
Electronic Service will act as agent of the bidder and not of the District
in connection with the submission of bids and the District assumes no
responsibility or liability for bids submitted through the Electronic
Service. See"Information Regarding Electronic Proposals"herein.
No Facsimile Bids: No bids will be accepted by facsimile.
Terms of the Certificates
The Preliminary Official Statement for the Certificates, dated_, 2007, including the cover
page and all appendices thereto (the "Preliminary Official Statement"), provides certain information
concerning the sale and delivery of $300,000,000 aggregate principal amount of the Certificates
evidencing direct, undivided fractional interests in the Installment Payments (the "Installment
Payments"), and the interest thereon, payable by the District pursuant to the Installment Purchase
Agreement, dated as of December 1, 2007 (the "Installment Purchase Agreement"), by and between the
District and the Orange County Sanitation District Financing Corporation (the "Corporation"). Each
bidder must have obtained and reviewed the Preliminary Official Statement prior to bidding for the
Certificates. This Official Notice Inviting Bids contains certain information for quick reference only, is
not a summary of the issue and governs only the terns of the sale of,bidding for and closing procedures
with respect to the Certificates. Bidders must read the entire Preliminary Official Statement to obtain
information essential to the making of an informed investment decision.
Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the
"Master Agreement'), by and between the District and the Corporation, the District has established and
declared the conditions and terns upon which obligations such as the Installment Purchase Agreement,
and the Installment Payments and the interest thereon,will be incurred and secured. Installment Payments
under the Installment Purchase Agreement are payable solely from Net Revenues, as provided in the
Master Agreement and the Installment Purchase Agreement, consisting primarily of all income and
11-2 Oaic..1 NoOce Nvitmg aids.doc
revenue received by the District from the operation or ownership of the Wastewater System of the
District(the"Wastewater System")remaining after payment of Maintenance and Operation Costs.
The Issue
The proceeds from the sale of the Certificates will be used to: (i)finance the acquisition,
construction and installation of certain improvements to the Wastewater System, (ii)fund a reserve fund
for the Certificates and(iii)pay costs of execution and delivery of the Certificates.The Certificates are to
be executed and delivered pursuant to a Trust Agreement, dated as of December 1, 2007 (the 'Trust
Agreement"), by and among the District,the Corporation and Union Bank of California, N.A., as trustee
(the"Trustee"). Capitalized terms not defined herein shall have the same definitions as used in the Trust
Agreement or the Master Agreement.
Authorization
On November 28, 2007,the District and the Corporation authorized the execution and delivery of
the Installment Purchase Agreement and the Trust Agreement in connection with the execution and
delivery of the Certificates.
Outstanding Senior Obligations
The District has outstanding Senior Obligations, evidenced by six series of certificates of
participation and two interest rate swaps, payable on a parity with the Installment Payments under the
Installment Purchase Agreement. The two swap agreements were executed by the predecessor special
districts to the District in connection with the execution and delivery of certain outstanding Senior
Certificates.The payments under these swaps are payable on a parity with the Installment Payments under
the Installment Purchase Agreement and other Senior Obligations,as provided in the Master Agreement.
The tern "Existing Senior Obligations" as used in the Preliminary Official Statement refers to the 1992
Agreement for Acquisition and Construction, the 1992 Swap, the 1993 Agreement for Acquisition and
Construction,the 1993 Swap, the 2000 Installment Purchase Agreement, the 2003 Installment Purchase
Agreement, the 2006 Installment Purchase Agreement and the 2007 Series A Installment Purchase
Agreement.
Security and Source of Payments
The Certificates evidence direct, undivided fractional interests in the Installment Payments, and
the interest thereon,paid by the District pursuant to the Installment Purchase Agreement.The obligation
of the District to pay the Installment Payments and the interest thereon and other payments required to be
made by it under the Installment Purchase Agreement is a special obligation of the District payable,in the
manner provided under the Installment Purchase Agreement, solely from Net Revenues and other fiords
as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and
revenue received by the District from the operation or ownership of the Wastewater System remaining
after payment of Maintenance and Operation Costs,all as further provided in the Master Agreement.
The District's obligation to make Installment Payments from Net Revenues is on a parity with the
District's obligation to make payments with respect to its other outstanding obligations described as
Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations,as provided in
the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and is
subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests
and security for Senior Obligations pursuant to the Master Agreement. Pursuant to the Master
Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and
11-201firiel NWmInvitl gaids.dm 2
.V
Reimbursement Obligations with respect to Senior Obligations,and the Net Revenues will not be used for
any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to
Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be
apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This
pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations. The term Senior Obligations, generally
means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District
authorized,executed, issued and delivered under and pursuant to applicable law,the Installment Purchase
Agreement and all other contracts(including financial contracts) or leases of the District authorized and
executed by the District under and pursuant to applicable law, the installment, lease or other payments
under which are,in accordance with the provisions of the Master Agreement,payable from Net Revenues
on a parity with the payments under the Master Agreement.
The District may at any time incur Subordinate Obligations; provided, however, that prior to
incurring such Subordinate Obligations,the District will have determined that the incurrence thereof will
not materially adversely affect the District's ability to comply with the requirements of the Master
Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate
Obligations. For a description of the District's outstanding Senior Obligations and Subordinate
Obligations, see "FINANCIAL. OBLIGATIONS — Existing Indebtedness" in the Preliminary Official
Statement.
The District may, in connection with the incurrence of Subordinate Obligations, pledge Net
Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to
Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be
junior and subordinate to the pledge of,and lien on,Net Revenues for the payment of Senior Obligations
and Reimbursement Obligations with respect to Senior Obligations.
Pursuant to the Master Agreement,the District is required, to the extent permitted by law,to fix,
prescribe and collect fees and charges for the services and facilities of the Wastewater System which will
be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on
Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100%of Debt Service
on all Obligations for such Fiscal Year.The District may make adjustments from time to time in such fees
and charges and may make such classification thereof as it deems necessary,but shall not reduce the fees
and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will
at all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND
SOURCES OF PAYMENT FOR THE CERTIFICATES - Rate Covenant" in the Preliminary Official
Statement.
The Trust Agreement provides for the funding of the Reserve Fund in an amount equal to the
"Reserve Requirement,"which is defined as an amount,as of any date of calculation,equal to the least of
(a) 109/o of the original aggregate amount of principal evidenced by the Certificates (or if the amount of
original issue discount or premium applicable to the certificates exceeds 2%, then 10% of the issue price
of the Certificates), (b) the maximum amount of remaining Installment Payments, and the interest
thereon, coming due in any one Certificate Year, and (c) 125% of the average amount of remaining
Installment Payments, and the interest thereon, coming due in each Certificate Year. Amounts in the
Reserve Fund may be used to pay principal of and interest evidenced by the Certificates to the extent that
amounts in the Principal Account and Interest Account are insufficient therefore. A portion of the
proceeds of the Certificates in an amount equal to the Reserve Agreement will be deposited into the
Reserve Fund.
II-20Bdal Notice lawn Bidcdoc 3
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Additional Obligations
In addition to the Existing Senior Obligations, the District may at any time incur Obligations
payable on a parity or on a subordinate basis to the payment by the District of the Installment Payments
upon satisfaction of conditions provided in the Master Agreement See "SECURITY AND SOURCES
OF PAYMENT FOR THE CERTIFICATES — LIMITATIONS ON ISSUANCE OF ADDITIONAL
OBLIGATIONS"in the Preliminary Official Statement.
Book-Entry-Only
The Certificates will be executed and delivered in the form of fully registered certificates payable
in lawful money of the United States of America.The Certificates will be initially delivered only in book-
entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York ("DTC"), which will am as securities depository for the Certificates.
Individual purchases of the Certificates will be made in book-entry form only.Purchasers of Certificates
will not receive physical certificates representing then ownership interests in the Certificates purchased.
The Certificates will be delivered in denominations of$5,000 and any integral multiple thereof.Payments
of principal and interest evidenced by the Certificates are payable directly to DTC by the Trustee. Upon
receipt of payments of such principal and interest, DTC will in turn distribute such payments to the
beneficial owners of the Certificates. So long as the Certificates are in the DTC book-entry system, the
interest, principal, purchase price and prepayment premiums, if any, due with respect to the Certificates
will be payable by the Trustee,or its agent,to DTC or its nominee.
Principal and Interest Payments
The Certificates will be dated as of the date of initial delivery and will evidence interest from that
date (computed on the basis of a 360day year of twelve 30-day months). Interest evidenced by the
Certificates is payable semiannually on February I and August 1 of each year, commencing on
February 1, 2008. Payment of principal and prepayment premium, if any, evidenced by the Certificates
will be paid in lawful money of the United States of America upon presentation and surrender thereof at
the Principal Office of the Trustee.
With respect to Book-Entry Certificates,the District,the Corporation and the Trustee shall have
no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant
holds an interest in such Book-Entry Certificates. Without limiting the immediately preceding sentence,
the District,the Corporation and the Trustee shall have no responsibility or obligation with respect to(i)
the accuracy of the records of the Depository, the Nominee or any Participant with respect to any
ownership interest in Book-Entry Certificates, (ii) the delivery to any Participant or any other Person,
other than an Owner as shown in the registration books maintained by the Trustee, of any notice with
respect to Book-Entry Certificates, including any notice of prepayment, (iii) the selection by the
Depository and its Participants of the beneficial interests in Book-Entry Certificates to be prepaid in the
event Certificates are prepaid in part, IN)the payment to any Participant or any other Person,other than
an Owner as shown in the registration books maintained by the Trustee, of any amount with respect to
principal, premium, if any, or interest evidenced by Book-Entry Certificates, or(v)any consent given or
other action taken by the Depository as Owner.
11-20riciW Nouce lnwing Bi&.doc 4
Principal Amortization
The Certificates will be executed and delivered in the approximate aggregate original principal
amount of$300,000,000 and will be subject to principal amortization either through serial maturities or
sinking fund redemptions or a combination thereof on February 1 in the years 200_though 20_in the
amounts set forth in the Official Bid Form.
Serial Maturities and/or Term Maturities
Bidders may provide that all the Certificates be executed and delivered as serial maturities or may
provide that any two or more consecutive =usl principal amounts of a series be combined into one or
more term maturities.Each term bond shall bear the same rate of interest.
Mandatory Sinking Account Prepayment
If the successful bidder designates principal amounts to be combined into one or more term
maturities,each such term maturity shall be subject to mandatory sinking account payments commencing
on February 1 of the first year which has been combined to form such term maturities and continuing on
February 1 in each year thereafter until the stated maturity date of that term maturity, provided that no
tern maturity maturing on or after February 1,2018 may have sinking fund payments prior to February 1,
2017. The prepayment price will be equal to the principal amount for such year set forth in the Official
Bid Form, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium.
The amount of each such prepayment shall be reduced in the event and to the extent that Installment
Payments payable on the corresponding Installment Payment Date are prepaid pursuant to provisions of
the Installment Purchase Agreement governing optional prepayment.
Optional Prepayment
The Certificates with stated Principal Payment Dates prior to February 1, 2018 are not subject to
optional prepayment prior to their stated Principal Payment Dates. The Certificates with stated Principal
Payment Dates on or after February 1, 2018 are subject to optional prepayment prior to their stated
Principal Payment Dates, on any date on or after February 1, 2017, in whole or in part, in Authorized
Denominations, from and to the extent of prepaid Installment Payments paid pursuant to the Installment
Purchase Agreement or from any other source of available funds, any such prepayment to be at a price
equal to the principal evidenced by the Certificates to be prepaid,plus accrued interest evidenced thereby
to the date fixed for prepayment,without premium.
Selection of Certificates for Prepayment
Whenever less than all the Outstanding Certificates are to be prepaid on any one date pursuant to
provisions of the Trust Agreement with respect to optional prepayment of Certificates, the Trustee shall
select the Certificates to be prepaid among Certificates with different Principal Payment Dates as directed
in a Written Request of the District. Whenever less than all the Outstanding Certificates with the same
stated Principal Payment Date are to be prepaid on any one date pursuant to the Trust Agreement, the
Trustee shall select the Certificates with such Principal Payment Date to be prepaid by lot in any manner
that the Trustee deems fair and appropriate, which decision shall be final and binding upon the District
and the Owners. The Trustee shall promptly notify the District in writing of the numbers of the
Certificates so selected for prepayment on such date.
II-20Rdaf N.ti.Nv=gai4s.Eoc 5
Notice of Redemption
The Trustee shall, at least 30 but not more than 60 days prior to any prepayment date, give notice
of prepayment to the respective Owners of Certificates designated for prepayment by first-class mail,
postage prepaid,at their addresses appearing on the registration books maintained by the Trustee as of the
close of business on the day before such notice of prepayment is given.The actual receipt by the Owner
of any notice of such prepayment shall not be a condition precedent to prepayment,and neither failure to
receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment
of such Certificates or the cessation of interest evidenced thereby on the date fixed for prepayment.
Interest Rates,Reoffering Prices,and Premium or Discount Bids
Bidders must bid to purchase all and not part of the Certificates and most submit thew bids on the
Official Bid Form. Bidders must specify a rate of interest for each maturity of the Certificates. The rates
of interest must be expressed in multiples of one-eighth (Va) or one-twentieth (4m)of one percent(1%),
and no interest rate can exceed 6% per annum. All Certificates of the same maturity most evidence
interest at the same rate. For each Certificate maturing from February 1, 2018 through 2037, inclusive,
bidders may bid reoffering prices of no less than 98%of par on any maturity.
The successful bidder will,within 30 minutes after being notified of the award of the Certificates,
advise the District of the initial bona fide public reoffering prices of each maturity of the Certificates on
the date of award. The successful bidder will also be required, prior to delivery of the Certificates, to
famish to the District a certificate ("Bidder's Certificate")acceptable to Special Counsel and taking into
account any post bid adjustment of the principal amount of any of the maturities of the Certificates,which
states with respect to each maturity of the Certificates that such successful bidder either(A)has purchased
the applicable maturity of the Certificates for its own account and not with a view to distribution or resale
and not in the capacity of a bond house,broker or other intermediary and the price at which such purchase
was made, or(B)(1)has made a bona fide public offering to the public of each applicable maturity of the
Certificates at the prices indicated in the information supplied on the date of the award,and(2)an amount
at least equal to 10 percent of each such maturity of the Certificates was sold to the public at the prices
indicated on the date of the award, with the exception of those maturities, if any, identified in such
Bidder's Certificate,as to which such certificate shall explain the reasons why at least 10 percent of each
such maturity was not sold to the public at the price indicated fm each such maturity on the date of the
award. For the purposes of the information submitted on the date of the award and the Bidder's
Certificate,the"public"does not include bond houses, brokers or similar persons or organizations acting
in the capacity of underwriters or wholesalers. In making such representations,the successful bidder must
reflect the anticipated existence, if any, of a "derivative product' (e.g., a tender option) offered or to be
offered by the bidder or its affiliate in connection with the initial sale of any of the Certificates. The
successful bidder may also be asked by Special Counsel to clarify any discrepancies between the Bidder's
Certificate and publicly available information relating to trades of the Certificates and to explain the
failure to sell at least 10°%of each maturity to the public at the prices indicated on the date of the award.
Bidders may bid to purchase Certificates from the District at a discomt or with a premium;
however, no bid will be considered if the bid is to purchase Certificates at an aggregate price less than
99% or more than 104% of the aggregate principal amount of the Certificates. No bid will be accepted
which contemplates the waiver of any interest or other concession by the bidder as substitute for payment
in full of the purchase price. Bids which do not conform to the terms of this section may be rejected. See
"Right to Reject Bids;Waive Irregularities"below.
11-20fficd Noun lnvift Bidsdw 6
u
Insurance
The successful bidder may purchase municipal bond insurance, if available, for some or all of the
Certificates. However, the delivery of the Certificates shall not be conditioned upon the issuance of any
such insurance. The District makes no representation as to whether the Certificates qualify for insurance.
Payment of any insurance premium and satisfaction of any conditions to the issuance of a municipal bond
insurance policy, including payment for any legal opinion to be delivered to any insurer, shall be the sole
responsibility of the bidder. In particular, the District, at its option, may not enter into any additional
agreements with respect to the provision of any such insurance. FAILURE OF THE INSURANCE
PROVIDER TO ISSUE ITS POLICY SHALL NOT JUSTIFY FAILURE OR REFUSAL BY THE
SUCCESSFUL BIDDER TO ACCEPT DELIVERY OF, OR PAY FOR, THE CERTIFICATES. Each
successful bidder must provide the District with the municipal bond insurance commitment, if my,
including the amount of the policy premium, and information with respect to the municipal bond
insurance policy and insurance provider for the inclusion in the final Official Statement within two
business days following the award of the bid by the District.The successful bidder will be required,prior
to the delivery of the Certifieate% to fomish to the District a certificate acceptable to Special Counsel,
Fulbright&Jaworski L.L.P.,stating that,in its opinion,the amount of the premium paid for the municipal
bond insurance policy is not in excess of the present value of the expected interest savings as a result of
such policy.
Form of Bid
BIDS FOR LESS THAN ALL OF THE CERTIFICATES WILL NOT BE ACCEPTED. Each
bid must be on the Official Bid Form. All electronic proposals shall be deemed to incorporate the
provisions of the Official Bid Form and must be unconditional and irrevocable. Except for proposals
submitted in accordance with the following paragraph, each bid must be accompanied by the applicable
bid check or Surety Bond described under the caption "Bid Check" below. In addition, each bidder is
requested to supply an estimate of the true interest cost resulting from its bid computed as prescribed
below under the caption "Award, Delivery and Payment,"which shall be considered as informative only
and not binding on either the bidder or the District. Each bid must be in accordance with the terms and
conditions set forth in this Official Notice Inviting Bids.
The District will make its best efforts to accommodate the electronic bids;however,the District,
the Financial Advisor(Public Resources Advisory Group) and Special Counsel assume no responsibility
for any error contained in any electronic bid, or for the failure of any electronic bid to be transmitted or
received at the official time for receipt of such bids. The official time for receipt of bids will be
determined by the District at the place of the bid opening,and the District shall not be required to accept
the time kept by Electronic Service as the official time. The District assumes no responsibility for
informing any bidder prior to the deadline that its bid is incomplete,or not received
If multiple timely bids are received from a single bidder the District shall accept the best of such
bids and each bidder agrees that by submitting any bid to be bound by its best bid.
Information Regarding Electronic Proposals
Electronic proposals must be submitted through the Electronic Service. If any provision of this
Official Notice Inviting Bids conflicts with information provided by the Electronic Service,this Official
Notice Inviting Bids shall control. The District is not responsible for the proper operation of, and shall
have no liability for any delays or interruptions of or any damages caused by the Electronic Service.The
District is using the Electronic Service as a communication mechanism and not as the District's agent to
conduct electronic bidding for the Certificates. The District is not bound by any advice of or
11-2 Omdd Nonceh hind aidedw 7
determination by the Electronic Service to the effect that any particular bid complies with the terms of
this Official Notice Inviting Bids. All costs and expenses incurred by prospective bidders in connection
with their submission of bids through the Electronic Service are the sole responsibility of such bidders
and the District is not responsible for any such costs or expenses. Further information about the Electronic
Service, including any fee charged may be obtained from ideal LLC, 1359 Broadway, Second Floor,
New York, NY 10018 (212-849-5021). The District assumes no responsibility or liability for bids
submitted through the Electronic Service.The District shall be entitled to assume that any bid submitted
through the Electronic Service has been made by a duly authorized agent of the bidder.
Bid Check
Each bidder must provide with its bid a certified or cashier's check payable in same day or next
day funds drawn on a responsible bank having an office in Orange County, California equal to
$3,000,000.00 ("Bid Check Amount")payable to the order of"Orange County Sanitation District," or a
financial surety bond ("Surety Bond") in the amount of the Bid Check Amount issued by an insurance
company rated AAA by Standard & Poor's and licensed to issue such a bond in the State of California,
naming the District as the beneficiary and identifying the bidder whose deposit is guaranteed by the
Surety Bond. If the successful bidder has provided a Surety Bond such bidder shall wire transfer to the
District the amount of the Bid Check Amount in immediately available federal funds not later than 3:00
p.m. (New York Time)on the business day next succeeding the day of acceptance of the proposal which
amount shall be deposited in an escrow fund or account or a similar fund and applied to the purchase
price of the Certificates. If the District has not received such federal funds wire transfer by the time stated
the District may draw upon the Surety Bond to satisfy the successful bidders deposit requirements. The
check accompanying any accepted proposal shall be cashed and deposited in an escrow fund or account or
a similar fund and applied to the purchase price of the Certificates at the time of delivery of the
Certificates. If after the award of the Certificates,the successful bidder fails to complete the purchase on
the terms stated in its proposal,unless such failure of performance shall be caused by any act or omission
of the District, any amount received from such bidder by the District, whether by paid check or pursuant
to the Surety Bond procedure set forth above, shall be retained by the District as stipulated liquidated
damages.Any check accompanying an unaccepted proposal will be returned promptly.No interest will be
paid upon the deposit made by any bidder. If the aggregate principal amount of the Certificates is adjusted
as described under the caption "Adjustment of Principal Amounts After Receipts of Bids,"the successful
bidder will not be required to deposit an additional bid check or Surety Bond and will not be entitled to
the return of any portion of the bid check or Surety Bond previously delivered except as described in this
paragraph.
Official Statement
The District has approved a Preliminary Official Statement for the Certificates,dated the date of
this Official Notice Inviting Bids, which the District has "deemed final" for purposes of Rule 15c2-12
promulgated by the Securities and Exchange Commission, as amended(the"Rule"), although subject to
revision,amendment and completion in conformity with the Rule.The District will provide the successful
bidder such reasonable number of printed copies of the final Official Statement as such bidder may
reasonably request no later than seven business days after the day the Certificates are awarded. Up to 250
copies of the final Official Statement will be furnished without coat to the successful bidder and further
copies, if desired, will be made available at the successful bidder's expense. The successful bidder shall
file the final Official Statement with a nationally recognized municipal securities information repository
on a timely basis.The successful bidder shall, by accepting the award, agree at all times to comply with
the provisions of the Rule and with all applicable rules of the Municipal Securities Rulemaking Board.
11-20Qicial Notice 1nvitin6Bi&&c 8
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Award,Delivery and Payment
If satisfactory bids are received,the Certificates will be awarded to the highest responsible bidder
not later than 24 hours after the time established for the receipt of bids. The highest bidder shall be the
bidder submitting the best price for the Certificates,which best price shall be that resulting in the lowest
true interest cost with respect to the Certificates.The true interest cost shall be computed by doubling the
semi-annual interest rate (compounded semi-annually) necessary to discount the debt service payments
from their respective payment dates to the date of the Certificates and to the price bid. For the purpose of
calculating the true interest cost, the principal amount of Certificates scheduled for mandatory sinking
account prepayment as part of a term maturity shall be treated as a serial maturity in each year. If two or
more bidders have bid the same true interest cost, the award shall be made at the sole discretion of the
District.
Delivery of the Certificates is expected to occur on or about December_,2007.The Certificates
will be delivered through the facilities of DTC,New York,New York. The successful bidder shall pay for
the Certificates on the date of delivery in Los Angeles,California in immediately available federal funds.
Any expenses of providing federal funds shall be home by the purchaser. Payment on the delivery date
shall be made in amount equal to the price bid for the Certificates less the amount of the good-faith
deposit.
Right to Reject Bids; Waive Irregularities
The District reserves the right to reject any and all bids and to the extent permitted by law to
waive any irregularity or informality in any bid.
CUSIP Numbers
It is anticipated that CUSIP numbers will be printed on the Certificates, but the District will
assume no obligation for the assignment or printing of such numbers on the Certificates or for the
correctness of such numbers,and neither the failure to print such numbers on any Certificate nor any error
with respect thereto shall constitute cause for a failure or refusal by the purchasers thereof to accept
delivery of and make payment for the Certificates. The cost for the assignment of CUSIP numbers to the
Certificates will be the responsibility of the successful bidder.
California Debt and Investment Advisory Commission
The successful bidder will be required to pay all fees due to the California Debt and Investment
Advisory Commission ("CDIAC") under California law. CDIAC will invoice the successful bidder after
the delivery of the Certificates.
Legal Opinions
The District will furnish to the successful bidder at the closing of the Certificates, the legal
opinion of Special Counsel to the effect that,in the opinion of Special Counsel,based upon an analysis of
existing laws, regulations, mlings and court decisions, and assuming, among other matters, the accuracy
of certain representations and compliance with certain covenants, the interest component of each
Installment Payment and the allocable portion thereof distributable in respect of each Certificate is
excluded from gross income for federal income tax purposes under section 103 of the Internal Revenue
Code of 1986 and is exempt from State of California personal income taxes and that in the further opinion
of Special Counsel the interest component of each Installment Payment and the allocable portion thereof
distributable in respect of each Certificate is not a specific preference item for purposes of the federal
11.20nidal Notice kvinncll,6 do 9
9
individual or corporate alternative minimum taxes,although Special Counsel observes that such interest is
included in adjusted current earnings when calculating corporate alternative minimum taxable income.
Special Counsel will express no opinion regarding any other tax consequences related to the ownership or
disposition of,or the accrual or receipt of interest on,the Certificates.
Change in Tax Exempt Status
At any time before the Certificates are tendered for delivery, the successful bidder may disaffirm
and withdraw its proposal if the interest on the same type and character as that evidenced by the
Certificates(as determined by Special Counsel)shall be declared to be includable in gross income under
federal income tax laws,either by a oiling of the Internal Revenue Service or by a final decision of any
federal court,or shall be declared taxable by the terms of any federal income tax law enacted subsequent
to the date of this Official Notice Inviting Bids.
Closing Documents
The District will famish to the successful bidder at the time of delivery of the Certificates: (1)a
certificate certifying(i) that as of and at the time of delivery of the Certificates, there is no action, suit,
proceeding or investigation, pending or, to the best knowledge of the District, threatened against or
affecting the District,(A)which affects or seeks to prohibit,restrain or enjoin the execution and delivery
of the Certificates or the Trust Agreement, (B) in any way contesting the validity of the Certificates,the
Installation Purchase Agreement or the Trust Agreement or the powers of the District to enter into or
perform its obligations under such documents to which it is a party or the existence of the District, or
(C)wherein an unfavorable decision, ruling or finding would materially and adversely affect the District,
or the validity or enforceability of the Certificates, the Installation Purchase Agreement or the Trust
Agreement or the ability of the District to perform its obligations under such documents to which it is a
party, (ii)that the Preliminary Official Statement did not on the date of sale of the Certificates and the
Official Statement does not on the date of delivery contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein, in light of the circumstances
under which they were made, not misleading, and (2) a receipt of the District showing that the purchase
price of the Certificates has been received by the District.
Continuing Disclosure
To assist the successful bidder in complying with the Rule, the District will undertake,pursuant
to the Continuing Disclosure Agreement, to provide certain annual financial information, and notices of
the occurrence of certain events, if material.A description of the Continuing Disclosure Agreement is set
forth in the Preliminary Official Statement and will be set forth in the final Official Statement.
Additional Information
Electronic copies of the Tmst Agreement, the Installment Purchase Agreement, the Master
Agreement, this Official Notice Inviting Bids, the Official Bid Form, and the Preliminary Official
Statement will be famished to any potential bidder upon request made to the District's Financial Advisor
at: Public Resources Advisory Group, 11945 West Olympic Boulevard, Suite 640, Los Angeles, CA
90064,310-477-8487,via e-mail at Ichoi@pmgla.com.
Right to Modify or Amend
The District reserves the right to modify or amend this Official Notice Inviting Bids including,
but not limited to the right to adjust and change the principal amount of the Certificates being offered;
I1.20ffdd Notice In tm&B&do 10
1
u
provided, however, that such notifications or amendments shall be made not later than December 10,
2007, by 3:00 p.m., New York Time and communicated through Thomson Municipal Market Monitor
(available at http://wlrlv.tm3.com)and by facsimile transmission to any qualified bidder timely requesting
such notice. Bidders are required to bid upon the Certificates as so modified.
Cancellation or Postponement
The District reserves the right to cancel or postpone, from time to time, the date established for
the receipt of bids for any reason at any time. Any such postponement will be announced by Thomson
Municipal Market Monitor. If any date fixed for the receipt of bids and the sale of the Certificates is
postponed, any alternative sale date (either a Tuesday, Wednesday or Thursday) will be announced via
Thomson Municipal Market Monitor at least 48 hours prior to such alternative sale date and will be
provided by facsimile transmission to any qualified bidder timely requesting such notice. On any such
alternative sale date,any bidder may submit a scaled bid for the purchase of the Certificates in conformity
in all respects with the provisions of this Official Notice Inviting Bids except for the date of sale and
except for the changes announced by Thomson Municipal Market Monitor at the time the sale date and
time are announced.
Dated:November l2,2007
II-20ffioal Notice hailing Bids.dm ll
0
OFFICIAL BID FORM
$300,000,000
ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION
SERIES 2007B
,2007
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,CA 92709-7018
Attn: Lorenzo Tyner
Ladies and Gentlemen:
We hereby offer to purchase all of the $300,000,000 aggregate principal amount of the Orange County
Sanitation District, Certificates of Participation Series 2007B (the "Certificates"), more particularly
described in your Official Notice Inviting Bids dated November 12,2007,which is incorporated herein by
reference,and made a part thereof,at a purchase price of$ (which purchase price is not less
than 99% or more than 104% of the aggregate principal amount of the Certificates). This offer is for
Certificates evidencing interest at the rates and in the form of serial maturities or tern maturities with
mandatory sinking account prepayments as set forth in the table on the following page.
Of the principal maturities set forth in the table on the following page, for those years,if any, which have
been combined into a term maturity or term maturities, the principal amounts shown in the table shall be
the mandatory sinking account prepayments in such years except that the amount shown in the year of the
term maturity date shall mature in such year. The bid is subject to acceptance not later than 24 hours after
the expiration of the time established for the final receipt of bids.
Our calculation of the true interest cost, which is considered to be informative only and not a part of the
bid is %.
(PLEASE CHECK ONE OF THE FOLLOWING TWO PARAGRAPHS)
[ ] There is enclosed herewith a certified check or cashier's check for $3,000,000 drawn on a
responsible bank having an office in Orange County, California payable in same day or next day funds to
the order of the Orange County Sanitation District(the"District").
[ ] A surety bond has been provided to the District in the amount of $3,000,000 issued by an
insurance company rated AAA by Standard & Poor's and licensed to issue such a bond in the State of
California, naming the District as beneficiary and identifying the bidder whose deposit is guaranteed by
the surety bond.
We have noted that payment of the purchase price is to be made in immediately available Federal Funds
at the time of delivery of the Certificates. If we are the successful bidder,we will (1)within one hour after
being notified of the award of the Certificates, advise the District of the initial public offering prices of
the Certificates, (2) prior to delivery of the Certificates, furnish a certificate, acceptable to Special
Counsel, Fulbright& Jaworski L.L.P., as to the "issue price" of the Certificates within the meaning of
Section 1273 of the Internal Revenue Code of 1986; and (3) if municipal bond insurance has been
purchased for some or all of the Certificates, prior to delivery of the Certificates famish a certificate,
11-2 Official Notia Inviting Bids, o
IMPROVING OUR ENVIRONMENO
I� , NE MILESTONE 1 1 Tim',,.
. F
COMPREHENSIVE ANNUAL
PN. SANry FINANCIAL REPORT
o
for the Fiscal Year Ended June 30, 2007
ORANGE COUNTY SANITATION DISTRICT, CALIFORNIA
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Cr/N� THE EN ,P
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acceptable to said Special Counsel, as to the present value of the expected interest savings as a result of
such insurance.
Maturity Principal Interest Serial Sinking
February 1 Amount Rate Maturi Account
Payment
(Check One Column)
[2008] %
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
We represent that we have full and complete authority to submit this bid on behalf of our bidding
syndicate and the undersigned will serve as the lead manager for the group if the Certificates are awarded
pursuant to this bid. We certify (or declare) under penalty of perjury under the laws of the State of
California that this proposal is genuine, and not a sham or collusive, nor made in the interest of or on
behalf of any person not herein named, and that the bidder has not directly or indirectly induced or
solicited any other bidder to put in a sham bid or any other person, firm or corporation to refrain from
Preliminary,subject to change.
1 I-2()Rad Notice Inviting BidsAm
1
1
acceptable to said Special Counsel, as to the present value of the expected interest savings as a result of
such insurance.
Maturity Principal Interest Serial Sinking
February I Amount Rate Maturity Account
Payment
(Check One Column)
[20091 %
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
We represent that we have full and complete authority to submit this bid on behalf of our bidding
syndicate and the undersigned will serve as the lead manager for the group if the Certificates are awarded
pursuant to this bid. We certify (or declare) under penalty of perjury under the laws of the State of
California that this proposal is genuine, and not a sham or collusive, nor made in the interest of or on
behalf of any person not herein named, and that the bidder has not directly or indirectly induced or
solicited any other bidder to put in a sham bid or any other person, firm or corporation to refrain from
Preliminary,subject to change.
11-2()RaW Nolim Inviting Bid.
a
(
bidding, and that the bidder has not in any manner sought by collusion to secure for himself an advantage
over any other bidder.
Respectfully Submitted,
Account Manager:
By:
Address(for Return of Unsuccessful Bid Check):
City:
State:
Telephone:
Following(or attached)is a list of the members of our account on whose behalf this bid is made.
11-2 Onidal Nmice Invm,Bld d.
r Fulbright& Jaworski L.L.P.— Draft 11/2/07
0
NOTICE OF INTENTION TO SELL
$300,000,000
Orange County Sanitation District
Certificates of Participation
Series 2007B
NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the "District")
intends to receive sealed bids and electronic bids until 11:30 p.m.,New York time,on Tuesday,
December 11,2007,
through the use of an electronic bidding service offered by i-deal LLC bid service, for the
purchase of all of the above-captioned Certificates of Participation (the "Certificates") dated as
of the date of initial delivery, and maturing on such dates as described in the related Official
Notice Inviting Bids (the"Notice"). No bids will be accepted by facsimile. Bids for less than all
of the Certificates will not be accepted. The District reserves the right to postpone the date
established for the receipt of bids as more fully described under the paragraph "Cancellation or
Postponement" in the Notice.
NOTICE IS HEREBY FURTHER GIVEN that electronic copies of the Notice and the
Preliminary Official Statement issued in connection with the sale of the Certificates may be
obtained from the District's financial advisor, Public Resources Advisory Group, 11845 West
Olympic Blvd., Suite 640, Los Angeles, California 90064, 310-477-8487, via e-mail:
Ichoi(alora¢la.com.
Orange County Sanitation District
Dated: , 2007
11.2 Notice of(mention to Sel.doc
Orange County Sanitation District
Financing Corporation
MINUTES
April 25, 2007
SANITgT�oy
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Fcr'NG NT EN�����
ADMINISTRATIVE OFFICES
10844 ELLIS AVENUE
FOUNTAIN VALLEY, CALIFORNIA 92708-7018
a
ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION
ROLL CALL
A regular meeting of the board of Directors of the Orange County Sanitation District
Financing Corporation (OCSDFC)was called to order on April 25, 2007 at 7:10 p.m., in
the District's Administrative Offices. The roll was called, and the Clerk of the Board
reported a quorum present as follows:
ACTIVE DIRECTORS ALTERNATE
DIRECTORS
X James M. Ferryman, Chair Bob Ooten
X Doug Davert, Vice Chair Jim Palmer
X Steve Anderson Tom Beamish
X Charles Antos Gordon Shanks
X Don Bankhead Sharon Quirk
A Jon Dumitru Carolyn Cavecche
T Steven Choi Sukhee Kang
X Larry Crandall Gus Ayer
X Bill Dalton Mark Rosen
X Richard Freschi Brad Reese
X Cathy Green Don Hansen
X Phil Luebben Prakash Narain
A7 Patsy Marshall Jim Dow
7-'Darryl Miller Douglas Reinhart
Tj Roy Moore Ron Garcia
X Joy Neugebauer At Krippner
X Chris Norby Janet Nguyen
X Ken Parker Catherine Driscoll
X David Shawver David Cadena
A Harry Sidhu Lucille Kring
73F Sal Tlnajero David Benavides
X Constance Underhill Joseph Aguirre
X Mark Waldman Ralph Rodriguez
Don Webb X Leslie Daigle
X Jim Winder John Anderson
STAFF MEMBERS PRESENT: Jim Ruth, General Manager; Penny Kyle, Clerk of the
Board; Nick Arhontes; Bob Ghirelli; Jim Herberg; Ed Torres; Lorenzo Tyner; Michael
Gold; Rich Cas411on; Juanita Skillman; Paula Zeller
OTHERS PRESENT: Brad Hogin, General Counsel; Alternate Director Bob Ooten;
Arlene Schafer; Brittany McDermott
b. MOVED, SECONDED AND DULY CARRIED: Order the Minutes for the meeting
held on March 28, 2007,to be filed and deemed approved, as mailed.
C. Lorenzo Tyner, Director of Finance, reported that the Financing Corporation
would need to adopt the following resolution in order to proceed with Refunding
Certificates of Participation, Series 2007A.
d. MOVED, SECONDED AND DULY CARRIED:Adopt Resolution No. FC-04,
Authorizing the Execution and Delivery by the Corporation of an Installment
Purchase Agreement and a Trust Agreement in connection with the execution
and delivery of Orange County Sanitation District Refunding Certificates of
Participation, Series 2007A; Authorizing the Execution and Delivery of such
Certificates Evidencing Principal in an Aggregate Amount of Not to Exceed
$315,000,000 and; Authorizing the Execution of Necessary Documents and
Cerfificates and Related Actions.
ADJOURNMENT: The Chair declared the meeting of the Orange County Sanitation
District Financing Corporation adjourned at 7:11 p.m.
Penny M. I e
Clerk of the Board
Orange County Sanitation District Financing
Corporation
November 21, 2007
MEMORANDUM
TO: Chair and Board of Directors
Orange County Sanitation District
FROM: Jim Ruth, General Manager
Orange County Sanitation District
SUBJECT: Strategic Planning Process
I want to take this opportunity to thank the Chair and members of our Board, as well as the
alternates, for your active participation in this strategic planning process.
We have been actively engaged in this process for the past 90 days and have held four
workshops to thoroughly consider the major initiatives that will impact our levels of service, our
infrastructure reliability, the continued implementation of our$2.5 billion CIP program, and our
responsibility and commitment to provide a safe and healthy environment for the 2.4 million
residents we serve.
Our District manages over $5 billion in assets, much of it highly technical, requiring highly skilled
staff, a well informed board, and timely policy decision making to help us meet our fiduciary
obligations.
Thanks to your support and leadership, we have made significant progress in streamlining our
organization and implementing greater efficiencies, throughout all departments, and preparing
ourselves for the future. We continue to look at new technologies, conduct research on our
own, seek out new funding sources, and look for ways to minimize the financial impact on our
ratepayers and at the same time providing high quality service while protecting the environment.
At our fourth workshop on October 111", the Board arrived at consensus on the following policy
issues:
1. Agreement on the proposed Mission Statement.
2. Agreement on the proposed Vision Statement—Version 2
3. GW RS—no capital investment for phases II and III at this time, but continue cooperative
planning.
The Chair and Board of Directors
Page 2
November 21, 2007
4. Biosolids— Invest in new technology and markets for remaining 1/3 production with landfill
options as a back up.
5. Odor Control— Invest an additional $17 million in two projects at P1 and P2 starting fiscal
year201012011.
6. Air Quality— Invest$17 million to reduce air emissions below notification levels starting fiscal
year 2010/2011. Revisit$14 million for AQMD compliance when new regulations are
adopted.
Board members also directed staff to review our debt coverage policy and consider dropping it
below 1.7 and possibly move additional rehabilitation projects further out in the CIP program.
Staff was also requested to bring back for Board consideration a rate plan that keeps rates
below 10%.
As you can see we have made significant progress addressing these important policy issues.
Your policy direction will provide the foundation to effectively and efficiently continue the
implementation of approximately 2.6 billion dollars in a long range CIP that would culminate in
2020.
Over the past 3 months your Board has deliberated about the mission and vision of this agency.
We are presenting to you a strategic plan that reaffirms our important mission and lays out an
ambitious vision of the future. The rate structure we are recommending as part of the strategic
plan is necessary to do the projects that will turn those visionary statements into action.
In our October 11" meeting, staff presented a proposed financing plan for your consideration
that would enable the District to provide a desirable Level of Service, and meet our regulatory
requirements.
That financial plan proposed rate increases of 10% - 12% - 12%- 10% - 10% over the next five
years when our CIP is at its highest peak.
Based on input from Board members at the October 11 workshop, staff has revisited our
proposed financial plan to explore the feasibility of deferring additional capital improvement
projects, looking for further operational efficiencies and cost reduction, and developing several
financing options that will enable the Board to determine an acceptable level of service.
Conclusions:
1. CIP—Staffs analysis of our CIP reveals very little flexibility in deferring or removing
additional projects from our CIP program. The District manages over$5.5 billion in
assets, much of which is at least 35+years old. Further delay in these projects could
place the District at significant risk.
In order to reduce the proposed increases from 12% to a flat five-year 10%, it would be
necessary to eliminate $50 million in our CIP program in the first year and another$100
million in the second year. Based on our existing projects already under contract and
The Chair and Board of Directors
Page 3
November 21, 2007
under construction,we do not have that flexibility. Jim Herberg, Director of Engineering,
will review our long range CIP with you.
2. Operations—Thanks to the support of the Board, staff has implemented numerous
operational changes these past two years. The number of departments was reduced
from eight to four, 10 positions were eliminated from the budget, 20 positions were
reclassified downward, and numerous operational efficiencies were implemented.
Further reductions in staff could jeopardize safety and productivity at a time when
several new facilities will be coming on line that will require additional personnel in
accordance with our 2006 staffing study.
3. Financing —As there is little short-term flexibility in the Capital Improvement Program
and known inflation factors will result in increased operating costs,finance staff has
focused on various financing options,with the goal of minimizing projected rate
increases while protecting our AA+ credit rating.
As a result of this review,we believe that the initiatives presented during the strategic
planning workshops, along with the District's other required activities, can be supported
with this financial plan. This reduction from the previously presented rate increases is
primarily a result of adjustments in interest rate assumptions of both our variable rate
debt program and in our future debt financings.
After a more detailed review of the District's debt financing program and consultation
with the District's financial advisors, we believe that interest rates, and the resulting debt
service payments,will be less than originally budgeted. These adjustments can be
incorporated into our financial plan, allowing the District to maintain a debt coverage
ratio above 1.8 and maintain our current bond rating.
However, there are financial risks involved with changing these assumptions. While we
believe that these are acceptable risks, please note that an increase in interest rates will
result in increased debt service payments, the need for program reductions and the
possible downgrade of our existing and future debt. A significant increase in rates might
necessitate the use of District reserves or an additional Proposition 218 notification.
It is our recommendation that the Board approve a Strategic Plan that includes a five
year financial plan with annual rates as follows:
2007-08 2008.09 2009-10 2010.11 2011.12 2012-13
Current Year Year Year Year Years
Annual Fee $182 $201 $221 $243 $267 $293
$Per Month $15 $17 $18 $20 $22 $24
% Increase 10% 10.5% 10% 10% 9.8% 9.8%
The Chair and Board of Directors
Page 4
November 21, 2007
Staff is very respectful of the Board's difficult policy decision in addressing our levels of service
and the corresponding rate increase, and is prepared to implement your ultimate direction.
This recommendation provides funding for the Biosolids, Odor Control, and Air Quality initiatives
as described during the Strategic Planning workshops. -
Please note that this proposal assumes that the AQMD will at some point impose new and more
stringent air quality regulations. However, recognizing the Board's direction to delay any
implementation pending passage of these new regulations, no expenditures would be made in
support of new air quality initiatives without specific Board approval. As it is anticipated that the
majority of these expenditures would not take place for three to four years, this action would not
impact rates in the immediate term.
This Strategic Plan balances the need for services and fiscal responsibility as it provides $2.6
billion in capital Improvements, long-term operating resources while minimizing debt with rates
below the statewide average.
We believe this proposal will:
1. Result in the lowest total rate increase to the ratepayer
2. Require less debt than previously anticipated
3. Accomplish our btosolids,odor impact, and air emissions objectives
4. Save the rate payer$230 over the original 2007-08 projected 12-year financing plan
This financial plan provides the means to deliver a level of service of which we can all be
proud:
• 70 mgd of recycled water (GWRS)
• 100% beneficial reuse of biosolids as compost, fertilizer and energy production
Full secondary treatment of all wastewater
• Significant reduction in the level of odors at both treatment plants
• 2.5 mgd of urban runoff treatment
Reduction in toxic air emissions below public notification levels
• Sewer rates that are consistently below the statewide average
• Maintain AA+ bond rating
As your general manager, I have had the privilege over the last two years to work with you and
our very professional staff in our collective effort to streamline our operations, implement cost
savings measures, and prepare for the future.
I believe we have achieved significant success in each of these areas, and commend the
members of the Board on your unwavering support of these actions.
As we attempt to provide closure to the strategic plan process, it is imperative that the Board
has confidence that our staff has aggressively pursued your direction to reduce costs, and to
look for efficiencies in our operations and, where practical and feasible, explore reducing our
capital costs or extending these capital improvements over a greater period of time.
The Chair and Board of Directors
Page 5
November 21, 2007
Staff has diligently pursued those efforts and believes that our organization has stretched those
efforts to the point where our risks may be reaching an unacceptable level.
With your support, our proposal can achieve an acceptable level of capital improvement and
operating initiatives that will sustain and, in certain critical areas, enhance our current levels of
service.
A plan containing these initiatives and a substantially similar financial plan was reviewed by the
Steering Committee on October 24(this revised plan calls for slightly reduced rates). It was the
unanimous decision of that committee to recommend staffs proposal to the full Board of
Directors.
I hope you will give careful consideration to staffs proposal on how we can finance these vital
improvements that are necessary to protect the health and safety of the residents that we serve.
JDR:gg
NNepllpma11tl,110P0TM1U1XNNESMMtl MA112107 M mBODRS 1P mM pCRIS.MY
.. ORANGE COUNTY SANITATION DISTRICT
ORANGE COUNTY, CALIFORNIA
.e COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2007
Prepared By:
Administrative Services Department
s, Financial Management Division
Michael D. White, CPA
Controller
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ORANGE COUNTY SANITATION DISTRICT
Comprehensive Annual Financial Report
Table of Contents
^� For the Year Ended June 30, 2007
Page
INTRODUCTORY SECTION:
Letterof Transmittal..................................................................................................................... i
GFOA Certificate of Achievement................................................................................................ vin
Boardof Directors........................................................................................................................ ix
OrganizationChart....................................................................................................................... x
Mapof Service Area..................................................................................................................... xi
FINANCIAL SECTION:
.. Independent Audftors'Report....................................................................................................... 1
Management's Discussion and Analysis—Required Supplementary Information....................... 3-8
Basic Financial Statements:
Statementof Net Assets...................................................................................................... 10
Statement of Revenues, Expenses,and Changes in Net Assets................................-- 11
Statement of Cash Flows.................................................................................................... 12
Notes to Basic Financial Statements................................................................................... 13-32
.. Supplementary Information:
Scheduleof Net Assets....................................................................................................... 34
Schedule of Revenues, Expenses,and Changes in Net Assets........................................ 35
Schedule of Cash Flows...................................................................................................... 36
STATISTICAL SECTION:
Net Assets by Component—Last Seven Fiscal Years................................................................. 38
Revenues and Gross Capital Contributions by Source—Last Ten Fiscal Years......................... 39
Expenses by Type—Last Ten Fiscal Years................................................................................. 40
Change in Net Assets—Last Seven Fiscal Years........................................................................ 41
Cash and Investment Reserve Balances—Last Ten Fiscal Years.............................................. 42
., Sewer Service Fees—Last Eight Fiscal Years&Next Fiscal Year............................................. 43
Number of Accounts and Revenues by Customer Class—Last Ten Fiscal Years...................... 44
Principal Sewer Service Customers—Current Fiscal Year and Nine Years Ago......................... 45
Ratio of Annual Debt Service to Total Expenses—Last Ten Fiscal Years.................................. 46
'r Debt Coverage Ratios—Last Nine Fiscal Years.......................................................................... 47
Computation of Direct and Overlapping Debt—Current Fiscal Year........................................... 48
Ratios of Outstanding Debt—Last Ten Fiscal Years................................................................... 49
Comparison of the Volume of Wastewater Treated—Last Ten Flecal Years.............................. 50
Authorized Full-time Equivalents by Function—Last Ten Fiscal Years....................................... 51
Biosolids Produced—Last Ten Fiscal Years................................................................................ 52
Capital Asset Statistics—Last Ten Fiscal Years.......................................................................... 53
�+ Demographic Statistics—Last Ten Fiscal Years......................................................................... 54
Estimated Populations Served by Orange County Sanitation District—Current Fiscal Year....... 55
Major Orange County Employers................................................................................................. 56
OperatingStatistics...................................................................................................................... 57
OTHER DATA&TRENDS:
Cash and Investment Portfolio—Current Fiscal Year.................................................................. 60
d Property Tax Rates—Direct and Overlapping Govemments—Last Ten Fiscal Years................ 61
Assessed and Estimated Actual Value of Taxable Property—Last Ten Fiscal Years................. 62
Property Tax and User Fee Levies and Collections—Last Ten Fiscal Years.............................. 63
Property Value and Construction—Last Ten Fiscal Years.......................................................... 64
Insurance in Force—Next Fiscal Year ........................................................................................ 65
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OCSD
Introductory Section
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ORANGE COUNTY SANITATION DISTRICT
October 25, 2007
p
0141962-24141 1 The Board of Directors of the
fax: Orange County Sanitation District,
(714)2620356 Orange County, California
a,ww.atad.c.m
Submitted herewith is the Comprehensive Annual Financial Report of the Orange County Sanitation
:s.mss emra..:PO. Box 8127 District, Orange County, California for the fiscal year ended June 30, 2007. This report includes the
asntam vsuev,cA financial position and activity of individual revenue areas, as described within the Governmental Structure
9272e-6127 below, as of June 30, 2007 and was prepared by the Financial Management Division of the Sanitation
ansat add. .: District's Administrative Services Department.
1B44 Ellis Avenue
eantam v.nav,CA Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation,
92738-7018 including all disclosures, rests with the Sanitation District. To the best of our knowledge and belief, the
enclosed data is accurate in all material respects and is reported in a manner designed to present fairly
Moines, the financial position and results of operations of the Sanitation District. All disclosures necessary to
A....1 t enable the reader to gain an understanding of the agency's financial activities have been included.
•
cit.. Included within the accompanying financial statements are all of the organizations, activities, and functions
controlled by the Sanitation District's Board of Directors in accordance with the Govemmental Accounting
Moroi. Standards Board Statement Number 14, "The Financial Reporting Entity'. For the purpose of this
area
Buena Park evaluation, control was determined by the Board's responsibility for: (1) adoption of the budget and user
Lyprea. charges, (2) taxing authority, and (3) establishment of policies. The reporting entity and its services are
Founnuo Vanay described in further detail in Note 1 of the financial statements.
Fullerton
GeMen Grove
vnuneron Beach An audit of the books, financial records and transactions of the Sanitation District is conducted annually by
Irvine independent certified public accountants. The Sanitation District selected the accounting firm of Mayer
La Habra a Palma Hoffman McCann P.C. to perform the audit for the year ended June 30, 2007, The auditors' report on the
Loa alamiroa Sanitation District's basic financial statements and supplementary information is located on page 1 within
nlawdorc Beach the financial section of this report. This report renders an unqualified opinion on the Sanitation District's
Orange basic financial statements for the year ended June 30, 2007.
Rosanna
Banta Ana
Seal Beech Management's discussion and analysis (MDBA) immediately follows the independent auditor's report and
Stanton provides a narrative introduction, overview, and analysis of the basic financial statements. The MDBA
VillaTustio Park complements this letter of transmittal and should be read in conjunction with it.
yarEe Linda
set, .f Draaye GOVERNMENTAL STRUCTURE
B.nit.:y District. The Orange County Sanitation District encompasses the Northern section of Orange County. The
Sanitation District provides wastewater treatment for an area of the County covering 471 square miles and
costa Moos serving a population of approximately 2.5 million, or 81 percent of the County's population. The Sanitation
Midway city District was originally incorporated in 1954 as nine separate public corporations, or districts. In April of
'Vator aistritw 1998, at the Sanitation District's request, the Board of Supervisors of the County of Orange passed
Irvine Ranch Resolution No. 98-140 ordering the consolidation of these nine County Sanitation Districts into a new,
single sanitation district,to be known as the Orange County Sanitation District, effective July 1, 1998. This
action was recommended to the Board by the Local Agency Formation Commission in order to simplify
governance structures, reduce the size of the Board, ease administrative processes, streamline decision-
making and consolidate accounting and auditing processes. The boundaries of the nine previous districts
had remained intact for the purpose of collecting sewer user fees at the previously established rate
schedules, and were referred to as nine individual revenue areas through June 30, 2000. Effective July 1,
i
To maintain world-class leadership io wastewater and water resource management.
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2003, all Revenue Areas, except Revenue Area 14, consolidated user fee rates and all enterprise fund
accounting and budgeting activities and are now known as the Consolidated Revenue Area.
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The Sanitation District is managed by an administrative organization composed of directors appointed by
the agencies or cities which are serviced by the Sanitation District. Each of the two remaining Revenue
Areas, the Consolidated Revenue Area and Revenue Area 14, has its own budget and is responsible for
the construction and maintenance of its own collection system. All Revenue Areas, except Revenue Area
14 and the portion of the Consolidated Revenue Area previously known as Revenue Area 13, receive their
own share of the one-percent ad valorem property tax levy. In addition, all Revenue Areas except
Revenue Area 14, collect user fees from property owners. Revenue.Area 14 receives all of its revenues u
from service charges to the Irvine Ranch Water District.
The purpose of the Sanitation District's wastewater management program is to protect the public's health,
preserve the beneficial uses of the coastal waters, and maintain air quality. The objectives of operating L.I
the treatment plants are to process and dispose of the treated wastewater and the separated solids in
accordance with Federal, state, and local laws including the Environmental Protection Agency. I I
The Sanitation District sewerage system includes approximately 581 miles of sewers that convey u
wastewater generated within the Sanitation District's boundaries to the Sanitation District's two wastewater
treatment plants, Reclamation Plant No. 1 located in the City of Fountain Valley, and Treatment Plant No.
2 located in the City of Huntington Beach.
Plants No. 1 and No. 2 have primary treatment capacities, including standby, of 204 million gallons per ( ,
day (mgd) and 168 mgd, respectively. Approximately 75 percent of the advanced primary effluent also IL�I
receives secondary treatment. Both plants are master-planned for a future primary and secondary
treatment capacity of 235 mgd for a combined total of 470 mgd by the year 2070.
Outflows of treated wastewater from the two plants are combined and discharged to the ocean off the
Huntington Beach coast through an outfall pipe that is 120 inches in diameter and approximately five miles
long. The last mile of the ouffall pipe is a diffuser that dilutes the wastewater with seawater in a ratio of II
148 parts seawater to one part treated wastewater at an average depth of 185 feet. U
ECONOMIC CONDITIONS AND OUTLOOK
In June 2007. the Anderson Center for Economic Research at Chapman University forecasted payroll job �I
growth in Orange County of 1.2 percent in 2007, or the creation of 18,500 jobs, and 1.1 percent growth in '
2008, or the creation of 16,700 additional new jobs. This projection is a dedine from the actual job growth U
of 2.0 percent and 2.3 percent in 2006 and 2005, respectively. Most of this decline is being attributed to
the slow down in home sales and meltdown of the subprime mortgage Industry. Over the first five months
of 2007, 3,440 layoffs occurred by mortgage companies who are either going through bankruptcy or
reducing their work force to survive. However, the unemployment rate for Orange County increased to 3.9 u
percent in FY 2006-07 from the 3.7 percent in the prior year.
Total taxable sales is forecasted to increase 5.1 percent in 2007 and 4.5 percent in 2008 while personal
income is forecasted to increase over the same time period 5.5 percent and 5.1 percent, respectively. LLLIII
Reflective of the national slowdown in housing starts, residential building permits increased 103 percent,
or $216.5 million in 2006 but is now forecasted to decrease 11.3 percent, or $262.0 million in 2007.
Somewhat offsetting this decline, non-residential building permits increased 60.6 percent, or $905.8 u
million in 2006, but with only a forecasted increase of 11.9 percent, or $286.7 million in 2007, and 1.2
percent, or$32.4 million in 2008. According to Chapman University, the drop in permit valuation will place
downward pressure on the formation of construction jobs that is projected to remain flat in 2007, with a
modest decline of one-half percent in 2008.
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` A sharp decline in speculative home purchases and a change in the expectations about the future
direction of home prices coupled with tighter mortgage underwriting standards and a sharp decline in
availability of subprime mortgage loans are reducing the demand for home sales. The latter affects first-
time homebuyers particularly hard who,faced with a very low housing affordability rate,will not be qualified
to purchase homes below or at the median price. As a result, Chapman University is forecasting a
continuing decline in housing price,from increases of 27.4 percent, 10.8 percent,and 2.7 percent in 2004,
2005, and 2006, respectively, to forecasted declines of 4.1 percent in 2007 and 4.7 percent in 2008.
.. MAJOR INITIATIVES
A New Ocean Discharge Permit
The Sanitation District's Board of Directors decided In July 2002 to voluntarily give up its modified ocean
discharge permit, issued under section 301(h) of the Federal Clean Water Act, which allowed the
Sanitation District to discharge a higher level of Suspended Solids and Biochemical Oxygen Demand than
otherwise required by the Act if adequate environmental and public health protection was demonstrated.
To obtain a renewal of its ocean discharge permit without the modification(often referred to as a"waiver"),
the Sanitation District is undertaking a massive capital Improvement program ("CIP")of building new, and
rehabilitating existing, facilities in order for the Sanitation District to operate Its facilities in a manner that
will allow It to achieve secondary treatment standards as defined by the Act.
Construction of the capital improvements necessary to achieving secondary treatment standards will take
until December 31, 2012. Permits are issued for five (5) years duration, and the U.S. Environmental
Protection Agency (EPA) has no authority to waive the discharge limits requirements or grant a longer
permit (except per Sec. 301(h)). In November 2004, a consent decree was signed by EPA and filed with
the U.S. District Court that approved the construction schedule and decrees that no penalties will be
imposed for discharges that exceed the secondary treatment limits during the period of construction.
Seven milestones towards achieving secondary treatment standards were Identified within the consent
decree along with due dates. The District Is In compliance with the decree and has successfully
completed three of these milestones within the time permitted,as follows:
. On March 15, 2006-Completion of the new$44.4 million"Trickling Filter Facility"at Plant No. 1.
. On November 15, 2006 - Completion of the design and advertising for construction of the "New
Activated Sludge System"at Plant No. 1.
. On January 15, 2007-Completion of the design and advertising for construction of"Trickling Filters at
Plant No. 2".
Groundwater Replenishment System
` The Sanitation District and the Orange County Water District (OCWD) are currently developing the
Groundwater Replenishment (GWR) System project that will be the largest water reclamation project in
the nation. GWR System is a joint effort by the two agencies to initially provide 72,000 acre-feet per year
of reclaimed water for replenishment of the Orange County Groundwater Basin and to augment the
seawater intrusion barrier.
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The GWR System will have the capacity to divert up to 100 million gallons of water a day from the
Sanitation District's ocean discharge during peak winter storms, which will allow the Sanitation District to
defer construction of an additional ocean curial at an estimated cost of$170 million.
The Sanitation District and OCWD have agreed to match the funding for this project. The Sanitation
District alone has budgeted $246.1 million through FY 2007-08. Through FY 2006-07, $186.4 million of L
this amount has been incurred and the project is expected to be completed in FY 2007-08. Federal and
State Grants of$45 million will offset part of the Sanitation District's costs.
Biosolids Prooram I
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The Sanitation District produces approximately 240,000 tons of digested and dewatered (Class B)
biosolids annually at a current disposal cost of $14.3 million. By 2020. the Sanitation District's biosolids I
production is projected to increase by 15 percent, to 272,000 tons annually. The Sanitation District 4
currently relies on the following technologies and locations for the management of Its biosolids: land
application of Class B biosolids in Arizona, land application of chemically-stabilized Class A biosolids in
Kern County, composting to Class A biosolids in Riverside County, Kern County and La Paz County,
Arizona,and landfilling of Class B biosolids in Yuma County and Maricopa County,Arizona.
Counties throughout California and Arizona have developed, or are in the process of developing,
ordinances that severely restrict or ban the land application of Class B biosolids. In June 2006, Kern LI
County voters approved an anti-sludge initiative (Measure E)that bans the land application of both Class
B and Class A biosolids. Even though a federal court ruled that Measure E was illegal thus enabling the
Sanitation District to continue to land apply Class A biosolids in Kern County, the long-term sustainability L'
of land application in Kern County is uncertain. The Sanitation District, as well as most of California's
wastewater agencies, is working to develop sustainable products and management locations for its
biosolids.
The dynamic regulatory issues, land application ordinances and bans, and public perception challenges w
have prompted the District to develop a Long-Range Biosolids Management Plan ('LRBMP"). This
LRBMP was approved by the Board in December 2003. The goal of the LRBMP was to develop a V
sustainable, reliable, and economical program for long-range biosolids management providing
environmentally sound practices that meet the stringent federal, state, and local regulatory requirements.
The LRBMP recommendations included new in-plant technologies to reduce the volume of biosolids,
explore the production of Class A biosolids products, and move into the energy and fuel production and L
compost markets.
As a result of the LRBMP recommendations, the existing Synagro biosolids management contract was
amended in April 2004 to have 250 tons per day of the District's Class B biosolids composted at Synagro's LJ
South Kern Industrial Center("SKIC")facility,which became operational in December 2007. In May 2006,
the Sanitation District entered into a contract with EnerTech Environmental, Inc. to convert 225 tons of
biosolids per day to a renewable fuel at EnerTech's proposed facility in Rialto, California. The EnerTech jr
solution is a relatively new, patented heat treatment process that increases the ability to dewater biosolids
in order to maximize the efficiency of the production of fuel. By decreasing the moisture content of
biosolids prior to drying, a smaller dryer is needed, thus reducing capital and energy consumption. The
fuel product will be recycled and reused, under agreements with area cement kilns and other fuel users.
Residual ash from the fuel combustion becomes part of the cement product, resulting in no residual waste _
product liability. The EnerTech facility is expected to come on-line in late 2008.
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With the Synagro and EnerTech contracts in place, the Sanitation District has entered into long-term,
sustainable agreements for approximately two-thirds of Its biosolids capacity. The Sanitation District is
exploring other long-term sustainable management options for the remaining one-third its capacity.
Options being considered Include gasification, heat drying and deep well Injection. The City of Los Li
Angeles is evaluating deep well injection at its Terminal Island treatment plant under a demonstration
permit with the US EPA. In October 2007, the Sanitation District amended its contract with Tule
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Ranch/Magan Farms to induce a management option to transport a portion of Its biosolids to Terminal
Island for processing through deep well injection. The Sanitation District will continue to utilize land
application of Class A biosolids in Kem County and Class B biosolids in Arizona while exploring these
more sustainable, long-term energy options for our biosolids.
SERVICE EFFORTS AND ACCOMPLISHMENTS
In March 2007, the Construction Management Association of America, Southern California Chapter,
named the Sanitation District's Trickling Filter Facility and Plant No. 1 as the Project of the Year for
construction projects under$50 million. The criteria for consideration of this award is based on scope and
complexity of the proposed project, construction management principles used, team effort involved, and
whether the project will be considered a success. The $33 million trickling filter facility has been in
operation for a year and is part of the secondary treatment process that uses organisms grown on plastic
media to eat dissolved biodegradable organics (fats, sugars, and proteins), converting them into settle-
able sludge.
On June 22, 2007, the Sanitation District received a 2007 Protos Award from the Orange County chapter
of the Public Relations Society of America (PRSA) for an article published in the January 2007 issue of
Pollution Engineering on the Groundwater Replenishment (GWR) System. The GWR System is a joint
project of the Orange County Water District and Orange County Sanitation District that takes highly
treated sewer water currently released into the ocean and purifies it using the same technologies that
purify baby food, fruit juices, medicines and bottled water. The GWR System will create a new supply of
near-distilled quality water, totaling 70 million gallons per day. The new water will be used to expand the
already existing seawater intrusion barrier along the coast and to augment groundwater supplies for 2.3
million north and central Orange County residents.
` ACCOUNTING AND BUDGETARY CONTROLS
The Sanitation District's accounting records are maintained on the accrual basis. In developing and
evaluating the Sanitation District's accounting system, consideration is given to the adequacy of internal
accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute,
assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition;
and (2) the reliability of financial records for preparing financial statements and maintaining accountability
for assets. The concept of reasonable assurance recognizes that: (1) the cost of a control should not
exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates
and judgments by management. We believe that the Sanitation District's internal accounting controls
adequately safeguard assets and provide reasonable assurance of proper recording of financial
transactions.
Each year the Sanitation District's Board of Directors adopts an annual operating plan. A joint works
w budget is first prepared that identifies the specific capital projects and operating activities to be undertaken
by the Sanitation District during the year. The budgetary level of control, the level at which expenses
cannot exceed budget, is exercised at the individual district, or fund level. The Sanitation District has
adopted a Uniform Purchasing Policy that identifies the agreed upon purchasing standards.
CASH MANAGEMENT
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The Sanitation District's investment portfolio, except for the Sanitation District's debt service reserves,
investments with the State Loral Agency Investment Fund, and overnight repurchase agreements of idle
cash within the Sanitation District's general bank account, are managed by an outside money manager,
Pack Investment Management Company(PIMCO), who performs the daily investment activities, and by
Mellon Trust, who serves as the Sanitation District's independent custodian bank. This externally
managed portfolio consists of a short term investment pool of $87,568,000 at June 30, 2007 that has
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average maturities out to 72 days, and a long-term investment pool of $173,811.000 that has average
maturities out to 2.5 years. Investments of this externally managed investment portfolio consist of U.S.
Government securities, corporate bonds, commercial paper, and money market mutual funds. L
Investments of the Sanitation District's debt service reserves totaling $84.7 million consist of bank
investment contracts of $60.7 million and U.S. Government securities and open-ended mutual funds of
$23.9 million. The Bank Investment Contracts are with AG ($15.6 million, of which $12.4 million is j
maturing in 2013 and the remaining $3.2 million maturing in 2016). Bayerische Landesbank Girozentrale V
($17.3 million maturing in 2016), MBIA Inc. ($18.3 million maturing in 2036), and FSA Capital
Management Services LLC($9.5 million maturing in 2030).
Investment income includes changes in the fair value of investments. Increases or decreases in fair value `+
during the current year do not necessarily represent trends that will continue; nor is it always expected that
such amounts will be realized, especially in the instance of temporary changes in the fair value of
investments.
Investment earnings for the year were $22,244,000, an increase of$11,818,000 from the prior fiscal year
total of $10,426,000. This increase in Investment and interest income is attributable to higher yields
earned on investments, as investments earnings yielded 5.5 percent, a increase from the prior year
earnings rate of 2.4 percent. The increase in the yields earned on investments can also be partially
attributed to the change in unrealized gains and losses from year-to-year. As of June 30, 2007, the
Sanitation District went from an unrealized loss on investments of $870,000 at June 30, 2006 to an i.d
unrealized gain of$16,000, or a total increase in market value on investments of$886,000. However, the
Sanitation District's investment policy is structured conservatively towards liquidity to avoid having to sell
investments at a loss and having unrealized losses actually becoming realized losses. L
As of June 30, 2007, the Sanitation District's designated net assets totaled $372 million, and have been
earmarked for the following specific purposes in accordance with the Sanitation District's reserve policy:
Designated For Cash Flow Contingency $132 million L
Designated For Self-Insurance 57 million
Designated For Capital Improvements 104 million
Designated For Debt Service Requirements 79 million }r
Total Designated Net Assets $372 million
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RISK MANAGEMENT
For the year ended June 30, 2007, the Sanitation District was self-insured for a portion of workers' L
compensation and property damage. The self-insured portion for workers' compensation was $500,000
per person per occurrence with outside excess insurance coverage to $200 million. The self-insured
portion for property damage covering fire, and other perils other than flood and earthquake was $25,000 L
per occurrence with outside excess insurance coverage to $1.0 billion. The self-insured portion for
property damage covering flood was $100,000 per occurrence with outside excess insurance coverage to _
$300 million. The Sanitation District was self-insured for all property damage from the perils of
earthquakes. The Sanitation District also maintained outside comprehensive boiler and machinery V
insurance with a $100 million per occurrence combined limit with deductibles ranging from $25,000 to
$350,000. The Sanitation District was insured for general liability up to $25 million per occurrence with a -
self-insured portion of$250,000. 1 ;
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Sanitation District management believes that there are no outstanding claims as of June 30, 2007 that
would materially affect the financial position of the Sanitation District. I
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CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE
IN FINANCIAL REPORTING
The Government Finance Officers' Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the Orange County Sanitation District
for the Sanitation District's comprehensive annual financial report for the year ended June 30, 2006. This
was the thirteenth consecutive year that the Sanitation District has received this award. In order to be
awarded a Certificate of Achievement,a governmental unit must publish an easily readable and efficiently
organized comprehensive annual financial report, whose contents conform to program standards. Such
reports must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
r, comprehensive annual financial report continues to meet the Certificate of Achievement Program
requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
ACKNOWLEDGMENTS
This report could not have been accomplished without the dedicated services of the Financial
Management Division staff, and I would like to especially express my appreciation to those who assisted in
its preparation. 1 would also like to thank the Sanitation District's Board of Directors, the General
Manager, and the Director of Finance and Administrative Services for their interest and support in
conducting the financial operations of the Sanitation District in a responsible and progressive manner.
a+ Respectfully submitted,
vsp�7 ,V�
r Michael D.White, CPA
Controller
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for Excellence
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PICNO a m
Orange County L
Sanitation District
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For its Compmhemive Nmual I
Fi.iai Repots L
for the Flaeai Year Ended
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ORANGE COUNTY SANITATION DISTRICT
Board of Directors
As of June 30, 2007
AGENCY ACTIVE DIRECTOR ALTERNATE DIRECTOR
Cities:
Anaheim Harry Sidhu Lucille Kring
.. Brea Roy Moore Ron Garcia
Buena Park Patsy Marshall Jim Dow
.+ Cypress Phil Luebben Prakash Narain
Fountain Valley Larry Crandall Gus Ayer
Fullerton Don Bankhead Sharon Quirk
.. Garden Grove Bill Dalton Mark Rosen
Huntington Beach Cathy Green Don Hansen
r. Irvine Steven Choi Sukhee Kang
La Habra Steve Anderson Tom Beamish
La Palma Mark Waldman Ralph Rodriguez
Los Alamitos Ken Parker Catherine Driscoll
Newport Beach Don Webb Leslie Daigle
.. Orange Jon Dumitru Carolyn Cavecche
Placentia Constance Underhill Joseph Aguirre
Santa Ana Sal Trnajero David Benavides
.. Seal Beach Charles Antos Gordon Shanks
Stanton David Shawver David Cadena
Tustin Doug Davert Jim Palmer
Villa Park Richard A. Freschi Brad Reese
Yorba Linda Jim Winder John Anderson
r Sanitary/Water Districts:
Costa Mesa Sanitary District James M. Ferryman Robert Oolen
Midway City Sanitary District Joy L. Neugebauer Allan P. Krippner
Irvine Ranch Water District Darryl Miller Douglas Reinhart
County Areas:
Member of the Board of Supervisors Chris Norby Janet Nguyen
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ORANGE COUNTY SANITATION DISTRICT Lr
Organizational Chart
As of June 30,2007 I
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Map of Service Area
As of June 30, 2007
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DISCLAIMER:
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SOURCE:OCSD GIS Dean,Tmmaa BrMners 2006
REVISED:M19QM7
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Mayer Hoffman McCann P.C.
An Independent CPA Firm
Conrad Government Services Division
2301 Dupont Drive,Suite 200
Irvine, California 92612
949-474-2020 ph
949-263-5520 fx
w .mhmpc.com
Board of Directors
Orange County Sanitation District
Fountain Valley, California
_ Independent Auditors' Report
We have audited the accompanying basic financial statements of the Orange County Sanitation District ("District"),
as of and for the year ended June 30, 2007, as listed in the table of contents. These financial statements are the
responsibility of the management of the District. Our responsibility is to express an opinion on these financial
statements based on our audit. The prior year partial comparative information has been derived from the financial
statements of the District for the year ended June 30, 2006 and, in our report dated August 31, 2006, we expressed
an unqualified opinion on those financial statements
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of the District, as of June 30, 2007, and the changes in financial position and cash flows of the District for the year
then ended in conformity with accounting principles generally accepted in the United States of America.
The information identified in the accompanying table of contents as management's discussion and analysis is not a
required part of the basic financial statements, but is supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise
the District's basic financial statements. The introductory section, supplementary information, statistical tables and
other data and trends are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The supplementary information has been subjected to the auditing procedures applied in the
audit of the basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole. The introductory section, statistical tables and other data and trends
have not been subjected to the auditing procedures applied in the audit of the basic financial statements and,
_ accordingly,we express no opinion on them.
In accordance with Govemment Auditing Standards, we have also issued a report dated October 25, 2007 on our
consideration of the Orange County Sanitation District's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on the internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in assessing the results of our audit.
Irvine, California
October 25, 2007
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Management Discussion and Analysis
June 30, 2007
r This section of the financial statements of the Orange County Sanitation District (Sanitation District) is
management's narrative overview and analysis of the financial activities of the Sanitation District for the
fiscal year ended June 30, 2007. The information presented here is to be considered in conjunction with
additional information provided within the letter of transmittal located in the Introductory Section of this
report.
Financial Highlights
• As of June 30, 2007, the assets of the Sanitation District exceeded its liabilities by $1,189.7 million
s' (net assets). Of this amount, $299.4 million (unrestricted net assets) may be used to meet the
Sanitation District's ongoing obligations to citizens and creditors.
• The Sanitation District's total net assets increased $100.6 million, or 9.2 percent over the prior year.
s, • Net Capital Assets, consisting of non-depreciable capital assets and depreciable capital assets net of
accumulated depreciation, Increased$232.0 million, or 17.0 percent over the prior year.
• Net Assets invested in capital assets, net of related debt increased$222.4 million, or 33.5 percent.
• Unrestricted Net Assets decreased$122.7 million, or 29.1 percent from the prior year.
Overview of the Basic Financial Statements
r The Sanitation District operates as a utility enterprise and presents its financial statements using the
economic resources measurement focus and the full accrual basis of accounting. As an enterprise fund,
the Sanitation District's basic financial statements comprise two components: financial statements and
r notes to the financial statements. This report also contains other supplementary information in addition to
the basic financial statements themselves.
In accordance with Governmental Accounting Standards Board (GASS)Statement No. 34, the Sanitation
District's financial statements include a statement of net assets, statement of revenues, expenses and
changes in net assets, and a statement of cash flows. The statement of net assets includes all of the
Sanitation District's assets and liabilities and provides information about the nature and amounts of
s investments in resources (assets) and the obligations to Sanitation District creditors (liabilities). It also
provides the basis for computing the rate of return, evaluating the capital structure of the Sanitation
District, and assessing the liquidity and financial flexibility of the Sanitation District.
.. The statement of revenues, expenses, and changes in net assets accounts for the current year's
revenues and expenses. This statement measures the success of the Sanitation District's operations
over the past year and can be used to determine the Sanitation District's creditworthiness. It also
® highlights the Sanitation District's dependency on property tax revenues in supplementing user fees and
other charges for recovering total costs.
The final required financial statement is the statement of cash flows. The statement reports rash
receipts, cash payments, and net changes in cash resulting from operations and investments during the
reporting period.
•. Net Assets
As previously staled, net assets increased $100.6 million, or 9.2 percent to $1,189.7 million in FY 2006-
07 over the prior year. In comparison, net assets increased $47.8 million, or 4.6 percent, to $1,089.1
million in FY 2005-06 over FY 20D4-05.
d
3
L
(Dollars in thousands) W
Percentage
June 30, June 30, Increase Increase I
2007 2006 (Decrease) (Decrease) L
Assets
Current and other assets $ 444,222 $ 588,834 $ (144,612) -24.6%
Capital assets, net 1,595,454 1,363,462 231,992 17.0% W
Total assets 2,039,676 1,952,296 87,380 4.5%
Liabilities L+
Long-term debt outstanding 773,395 795,717 (22,322) -2.8%
Other liabilities 76,544 67,479 9,065 13.4%
Total liabilities 849,939 863,196 (13,257) -1.5%
Net assets:
Investment in capital assets, L
net of related debt 886,463 664,060 222,403 33.5%
Restricted 3,904 3,003 901 30.0%
Unrestricted 299,370 422,036 (122,666) -29.1%
Total net assets $ 1,189,737 $ 1.089,099 $ 100,638 9.2% u
Current and other assets decreased$144.6 million, or 24.6 percent, due primarily to the funding of$292.5 j t
million in capital improvements. This decrease was somewhat offset by net cash provided by operations 6J
of$82.6 million and net non-operating revenues of$88.4 million.
Capital assets, net increased $232.0 million, or 17.0 percent, due primarily to the $216.9 million net
additions to construction in progress during the year. These additions included within the capital u
improvement program includes construction of the Groundwater Replenishment System(GWRS), a 50:50
joint cost sharing effort between the Orange County Sanitation District and the Orange County Water
District that will initially provide 72,000 acre-feet per year of reclaimed water for replenishment of the L+
Orange County Groundwater Basin and to augment the seawater intrusion barrier at a total project cost of
$492.2 million. The Sanitation District incurred $35.5 million in construction during FY 2006-07 for this
project bringing the Sanitation District total project cost-to-date to $186.4 million of its $246.1 share of
total project cost with a projected completion date in FY 2007-08.
Another major project underway is the Headworks Improvements at Plant No. 2. This project is the
replacement of the existing headworks due to failing gates and the ineffectiveness of the bar screens and
grit chambers that are allowing grit screenings to pass through into the downstream processes causing
increased operating costs. This project is to include an influent diversion and metering structure, bar
screens influent pump station, vortex grit chambers primary influent splitter and metering structure, ferric
chloride toed facilities, headworks and trunk line odor control facilities, screenings handling building
including Huycor washer/compactors, grit handling building, an electrical building that includes standby
power. In FY 2006-07, $87.7 million of the estimated $257.8 million was incurred bringing the total cost-
to-date to$149.7 million with completion expected in FY 2010-11. y
The Replacement of the Ellis Avenue Pump Station at Plant No. 1 is another ongoing construction
project. This project is the construction of a new pump station, 60-inch gravity sewer, and 484nch force-
main to replace the existing Ellis Avenue Pump Station. The existing station, used to divert flow from L'
upstream of Plant No. 2 to Plant No. 1, is rated for only 10 mgd, receiving flow only from the Magnolia
Trunk. This new pump station is to be rated for 50 mgd and will receive flows from the Magnolia, Knott
and Miller-Holder trunk sewers. In addition, this project will construct a new 84-inch interplant pipeline to y
supplement the existing 78-inch interplant pipeline in Ellis Avenue. The Sanitation District incurred $18.4
million in construction costs on this project during FY 2006-07 for total project outlay to date of $22.9
million. The total projected cost is$79.3 million with completion expected in FY 2008-09. I
4
4
See page 7 for the Schedule of Capital Assets and a listing of the other major capital additions for FY
2006-07.
�+ Net assets invested in capital assets, net of related debt increased $222.4 million, or 33.5 percent over
the prior year primarily as a result of the$232.0 million increase in the net capital assets.
Unrestricted net assets decreased $122.7 million, or 29.1 percent over the prior year, primarily due to the
partial funding of the $222.4 million increase in net capital assets with beginning unrestricted available
resources.
Changes In Net Assets
Net assets increased$100.6 million in FY 2006-07,a 9.2 percent increase over the prior year.
.. (Dollars in thousands)
Percentage
June 30, June 30, Increase Increase
2007 2006 (Decrease) (Decrease)
Revenues:
Operating revenues
Service Charges $ 167,790 $ 154,291 $ 13,499 8.7%
Permit and inspection fees 1,866 874 992 113.5%
Total operating revenues 169,656 155,165 14,491 9.3%
Non-operating revenues
Property taxes 60,565 39,958 20,607 51.6%
•+ Investment and interest income 22,244 10,426 11,818 113.4%
Capital facilitites capacity charges 31,278 15,632 15.646 100.1%
Other 1,068 3,477 (2,409) -69.3%
.. Total non-operating revenues 115,155 69,493 45,662 65.7%
Total revenues 284,811 224,658 60,163 26.8%
r Expenses:
Operating expense other than
depreciation and amortization 112,155 105,632 6,523 6.2%
Depreciation and amortization 64,239 60,733 3,506 5.8%
Non-operating expense 26,708 27,799 (1,091) -3.9%
Total expenses 203,102 194,164 3,938 4.6%
Income before capital
contributions 81,709 30,494 51,215 168.0%
Capital contributions
(distributions), net 18,929 17,358 1,571 9.1%
�. Increase in net assets 100,638 47,852 52,786 110.3%
Beginning net assets 1,089,099 1,041,247 47,852 4.6%
Ending net assets $ 1,109,737 $ 1,089,099 $ 100,638 9.2%
5
es
r
Sources of Revenue Functional Expenses
June 30,2007 June 30.2001
12% 11% 11% DCollections
21%
❑Interest e�° ❑Treatment&
■User Fees Disposal
❑Taxes Levied 32°h ❑Depreciation& -
Amortization
❑Other
AW41% ❑Interest
Expense
09%
As previously staled, an enterprise fund is used to account for the operations of the Sanitation District, r
which is financed and operated in a manner similar to private business enterprises. This allows the
Sanitation District to determine that the costs (expenses, including depreciation and amortization) of
providing wastewater management services on a continuing basis are financed or recovered primarily
through user charges. r
Sewer service user fees are evaluated annually based primarily on budget requirements for total
operation, maintenance and capital expenditures for providing wastewater management services. ..
Property tax revenues are dedicated for the payment of debt service.
In FY 2006-07, operating revenues increased $14.5 million, or 9.3 percent over the prior year that is
predominately reflective of the$13.5 million, or 8.7 percent increase in service charges. The increase in
service charges is primarily due to the 9.8 percent increase in the average sewer user fee rate over the
prior year.
The $45.7 million, or 65.7 percent, increase in non-operating revenues consists of a $15.6 million, or
100.1 percent increase in capital facilities rapacity charges, a $20.6 million, or 51.6 percent increase in
property tax revenues, and an$11.8 million, or 113.4 percent increase in investment and interest income.
These increases are partially offset by a $2.4 million, or 69.3 percent decrease in other non-operating
revenues. The increase in capital facilities capacity charges is reflective of the increase in nonresidential
permit valuations in calendar year 2006 of 60.6 percent over the prior year. Property tax revenue
increases are primarily the result of the reinstatement of the full property tax allocation to independent r
special districts. Due to the State's fiscal crisis in 2004, the State diverted away from independent special
districts 40 percent of property tax revenues in FY 2004-05 and FY 2005-06. This shift was restored to
independent special districts beginning in FY 2006-07. In addition, total assessed valuations increased
over the prior year by 11.2 percent due to the upturn in the real estate market during this time period. r
The increase in investment and interest income is attributable to the higher yields earned on investments
over the prior year that were somewhat offset by lower average cash and investment balances. Yields
earned on investments increased from 2.4 percent in FY 2005-06 to 5.5 percent in FY 2006-07.
However, cash balances declined during this same time period from $490 million to $372 million. The
decrease in other non-operating revenues is reflective of the one-time $2.4 million grant reimbursement
received in the prior year from the Federal Emergency Management Agency.
Of the $6.5 million, or 6.2 percent, increase in operating expense before depreciation and amortization,
operating salary and benefits, totaling $57.8 million, increased 8.6 percent over the prior year. These
operating salary and benefit costs are part of the overall increase of $4.6 million when including the r
salaries and benefits capitalized within capital improvement program. Overall, total Sanitation District
salaries and benefits were $71.6 million, a 6.9 percent increase over the prior year total of$67.0 million.
This increase is mostly attributable to the$2.8 million,or 30.9 percent increase in the employer's share of
retirement contributions as imposed by the Orange County Employee's Retirement System and a $1.2
million increase in regular salaries, or 3.0 percent, that is primarily driven by cost of living wage increases
as staffing levels have remained relatively constant over the prior three years.
6
Contractual services operating cost was the only other notable line item increase over the prior year at
$1.3 million, or 6.9 percent. This increase is attributable to the$1.3 million increase in biosolids removal.
Although an increase over the prior year, this line Item was expected to increase due to the Increase unit
.. cost per ton for biosolid removal,and actually came in under estimated costs by$1.0 million.
The 5.8 percent, or $3.5 million increase in depreciation and amortization expense is due to the recent
completion of$68.2 million in construction project assets now being depreciated. Included in the list of
construction projects placed Into service in FY 2006-07 are the $10.7 million le St. Pump Station
Rehabilitation, the $10.0 million °A' Street Pump Station Rehabilitation, the $6.4 million Long-Term
Monitoring Program, the $5.0 million Utilities Rehabilitation and Refurbishment Project, the $3.9 million
Peak Flow Management Projects, the$3.7 million Sunflower Interceptor Manhole Rehabilitation, the$3.2
million Water Conservation Cooperative Projects, the $3.2 million Anaerobic Baffled Reactor Project, the
$3.2 million Financial Information System Upgrade, the $2.5 million Big Canyon Renewal Project, the
$1.4 million Laboratory Rehabilitation, and the $1.1 million Headworks Construction Trailers at Plant No.
2.
Capital Assets
r At June 30, 2007, the Sanitation District had a net investment of $1.595 billion in capital assets. This
amount represents a net increase (Including additions and deletions) of $232.0 million, or 17.0 percent
over the prior year.
Schedule of Capital Assets
(Net of Depreciation and Amortization)
.. (Dollars in thousands)
Percentage
r June 30, June 30, Increase Increase
2007 2006 (Decrease) (Decrease)
1e Land $ 13,021 $ 13,021 $ - 0.0
Construction in Progress 803,680 586,713 216,967 37.0
Sewage collection facilities 301,458 276,194 25,264 9.1
Sewage treatment facilities 351,379 348,171 3,208 0.9%
Effluent disposal facilities 52,324 54.725 (2,401) -4.4%
Solids disposal facilities - - - 0.0
General and administrative facilities 73,592 84,638 (11.046) -13.1%
Capital assets, net 1,595,454 1,363,462 231,992 17.0
Major capital asset additions for the current fiscal year included the following:
$87.7 million-Headworks Replacement at Plant No.2
$35.5 million-Ground Water Replenishment System
_ . $27.7 million-Bushard Trunk Sewer Rehabilitation
$19.2 million-Activated Sludge Facilities Rehabilitation at Plant No. 1
$18.4 million-Replacement of Ellis Avenue Pump Station
$ 9.5 million-New Secondary Treatment Systems at Plant No. 2
$ 8.0 million -Secondary Treatment Facilities Rehabilitation at Plant No. 2
$ 6.7 million-Effluent Pump Station Annex
$ 6.2 million-North County Collections Yard
r More detailed information about the Sanitation District's capital assets is provided in Notes 1 and 3 of
Notes to the Financial Statements.
7
I
Debt Administration
At June 30, 2007, the Sanitation District had $801.8 million outstanding in COP debt, a net decrease of y
$6.8 million, or 0.8 percent from the prior year. This decrease is due to the $13.5 million in principal
installment payments made by the District that was largely offset by the issuance of the $95.2 COP
Refunding Series 2007A that refunded $88.5 million of the $280.0 million COP Series 2003. as no'new
money debt was issued.
The Sanitation District maintains an Aa3 from Moody's Investor Services, an AAIA-1 from Standard and .
Poor's Corporation, and an AA from Fitch. The Sanitation District's long-range financing plan is designed L+
to maintain these high ratings. Over the next ten years, the Sanitation District is projecting an additional
$2.1 billion in future treatment plant and collection system capital improvements. In accordance with the
Sanitation District's long-tenn debt fiscal policy, the Sanitation District will restrict long-tern borrowing to
capital improvements that cannot be financed from current revenue. V'
In December 2007, the Sanitation District expects to issue $300 million of new COP fixed rate debt. A
total of$1.2 billion in COP debt issuance is being proposed over the next seven years. These financings r,
are needed early in the 20-year capital improvement program because the bulk of the construction is
scheduled during the next ten years.
For more detailed information on long-term debt activities, refer to Note 4 of the Notes to Basic Financial ..
Statements.
V
Economic Factors and Next Year's Budgets and Rates
• The unemployment rate within the County of Orange is currently 3.9 percent, which is an increase
from a rate of 3.7 percent a year ago. �+
• Inflation for Orange County in 2006 increased 4.3 percent based on the 2006 actual percentage
change in the consumer price index according to the June 2007 Economic and Business Review
report prepared by Chapman University.
• The actual rate of return on investments increased from the 2.4 percent earnings rate in FY 2005-06
to 5.5 percent for FY 2006-07.
All of these factors were considered in preparing the Sanitation District's budget update for FY 2007-08.
The Sanitation District's user fee schedule was increased by 9.8 percent for FY 2007-08 over the prior y
year. The annual fee applicable to the Sanitation District's largest customer base, the single-family
residential fee, increased by$16.20, from $165.80 to $182.00. These rate increases were necessary to
finance the Sanitation District's cash flow needs as capital improvement outlays alone are projected to be L
$302.7 million in FY 2007-08, approximating the current year's outlay, and are projected to total $2.1
billion over the next 10 years in order to rehabilitate and upgrade existing facilities and provide for full
secondary treatment standards.
Requests for Information
The financial report is designed to provide a general overview of the Sanitation District's finances.
Questions conceming any of the information provided in this report or requests for additional financial
information should be addressed to the Financial Management Division, Orange County Sanitation
District, P.O. Box 8127, Fountain Valley, CA 92728-8127. y
IW
8
ORANGE COUNTY SANITATION DISTRICT
BASIC FINANCIAL STATEMENTS
e.
9
y
ORANGE COUNTY SANITATION DISTRICT
Statement of Net Assets
June 30, 2007 L
(With Comparative Data for June 30, 2006)
2007 2006 `+
Current assets:
Cash and cash equivalents $ 55.472,715 $ 66,989,448
Investments 231,710.077 318,430,977 1
Accounts receivable, net of allowance for uncollectibles 12.703.227 18,240,805
Accrued interest receivable 2,815.784 3,850,987
Due from other governmental agencies 6,332,508 8,371,250
Connection fees receivable 962,754 1,335,169
Property tax receivable 2.459.657 1,883,915
Inventories 4,834.811 4,561,139
Prepaid expenses and retirement 1,281,524 11,309,975 V
Other current assets - 23,961
Total current assets 318,573,057 433.997.626 . .
Noncurrent assets:
Restricted:
Cash and cash equivalents 23,946,510 53,656,177
Investments 60,776,180 51,763,180 y
Accrued interest receivable 567,380 666,390
Unrestricted:
Non-depreciable capital assets 816,701,436 599,734.815 `+
Depreciable capital assets, net of accumulated depreciation 778,752,792 763,727,093
Deferred charges 4,277.005 4,354,633
Excess purchase price over book value on acquired assets, net 6,167,111 6,824,820 y
Other noncurrent assets, net 29,914.713 37,561,184
Total noncurrent assets 1,721,103,127 1,518,298,292
Total assets 2,039,676,184 1,952,295,918 rr
Current liabilities:
Accounts payable 18,966,641 21,743,791
Accrued expenses 15.084,007 8.444,239
Retentions payable 6,959.199 9,245,573
Interest payable 7,023.945 9,566.321
Current portion of long-tens obligations 28,510,896 18.479,060
Total current liabilities 76,544,688 67,478.984
Noncurrent liabilities:
Noncurrent portion of long-term obligations 773.394,732 795,717,487
Total liabilities 849,939,420 863,196,471
1„I
Net assets:
Invested in capital assets, net of related debt 886,462,575 664,060,499
Restricted for debt service 3,904,212 3,002,672 r
Unrestricted 299,369,977 422,036,276
Total net assets $ 1,189,736,764 $ 1,089,099,447
L
See Accompanying Notes to Basic Financial Statements.
ii
Irl
10 LL
ORANGE COUNTY SANITATION DISTRICT
Statement of Revenues, Expenses, and Changes in Net Assets
For the Year Ended June 30, 2007
(With Comparative Data for the Year Ended June 30, 2006)
r 2007 2006
Operating revenues:
Service charges $ 167,789.660 $ 154,291,040
Permit and inspection fees 1,866,411 874,383
r Total operating revenues 169,656,071 155,165,423
Operating expenses other than depreciation
and amortization:
Salaries and benefits 57,802,102 53,245,819
Utilities 8,072,262 7,563,227
r+ Supplies, repairs and maintenance 21,050,912 21,173,357
Contractual services 20,389,454 19,073,353
Directors'fees 131,750 141,270
Meetings and training 1,124,852 890,357
Other 3,583,792 3,544,697
Total operating expenses other than
r depreciation and amortization 112.155,124 105,632,080
Operating income before depreciation
and amortization 57,500,947 49,533,343
Depreciation and amortization 64,238,714 60.732,836
r
Operating loss (6,737,767) (11,199,493)
Non-operating revenues:
Property taxes 60,565,308 39,958,325
Investment and interest income 22,243,554 10,426,117
Capital facilities rapacity charges 31.277,647 15,631,439
Other 1,067,794 3,476,996
Total non-operating revenues 115,154,303 69,492,877
Non-operating expenses:
Interest 21,746,852 20,078,050
.. Capital grants to member agencies 2,127,154 3,399,627
Other 2,834.392 4,321,287
Total non-operating expenses 26,708,398 27,798,964
Income before capital contributions 81.708,138 30,494,420
.. Capital contributions from other agencies . 18,929,179 17,358,147
Change in net assets 100,637,317 47,852,567
Total net assets-beginning 1,089,099,447 1,041,246,880
Total net assets-ending $ 1,189,736,764 $ 1,089,099,447
See Accompanying Notes to Basic Financial Statements.
11
it
ORANGE COUNTY SANITATION DISTRICT L
Statement of Cash Fbws
For the Year Ended June 30,2007 1
(With Comparative Data for the Year Ended June 30,2006) L
2007 2006
Cash flows from operating activities: V
Receipts from customers and users $ 183.133.292 $ 154.204.532
Payments to employees (59,691,912) (52,939,029)
Payments to suppliers (40,809,378) (52,964,354)
Net cash provided by operations 82,632,002 48.301,149
Cash flows from noncapital financing activities:
Proceeds from property faces 59,989,SW 39.725,891
Capital grams to member agencies (2,127,154) (3,399,627) 64
Net cash provided by noncaphal financing activities 57,862,412 36,326.264
Cash Bows from capital and related financing activities:
Capital facilities capacity charges 31,650,062 15,SO4,050
Additions to property, plant and equipment (281,135,639) (250.789,059)
Arbitrage payment (53,100) (918,80m)
Interest paid (35,250.887) (29.069.376)
Principal payments on certificates of participation (101,965,000) (12,755,W0) L
Proceeds from certificates of participation issuance 89.818.081 199,859,470
Certificates of participation issuance costs (319,698) (484,375)
Proceeds from capital contributions 14.163.366 9,729,346 i
Net cash provided(used)by capital and related financing activities (283,092,825) (78.623,744) r
Cash flows from investing activities:
Proceeds from this sale of investments 5,282,3B4,356 4,929,113,553
Purchases of investments (5,204,660,027) (4,898,529.313)
Interest received 24,647,682 121W0.956
Net cash provided(used)by investing activities 102.372.011 42.945,305
Net increase(decrease)in cash and cash equivalents (40,228,400) 48,948,976 L
Cash and cash equivalents,beginning of year 119,645.625 70.696,650
Cash and cash equivalents,end of year $ 79,419,225 $ 119,645.625
u
Reconciliation of operating loss to net cash provided by operating activities'.
Operating loss $ (6,737,767) $ (11,199.493)
Adjustments to reconcile operating loss to net cash provided by operations:
Depreciation and amortization 64,238,714 80,732,836 L
Bad debt expense (67.284) 45,389
Omer non-operating revenues and expenses 1,488,143 1,507,875
(Increaseydecrease in operating assets.
Accounts receivable 5,604,862 (7,124.857)
Due from other governmental agencies 6,804,565 2,888,970
Inventories (284.670) (170,16B)
Prepaid and other assets 10,052,412 (10,725,365) L
Ircreaset(decrease)in operating liabilities:
Accounts payable (2,777,150) 7,442,788
Accrued expenses 6,639.768 1,744,432
Retentions payable (2,288,374) 3,452,468 L
Compensated absences 311.438 (51,366)
Claims and judgments (354,655) (50,358)
Net cash provided by operations $ 82,832,002 $ 48,301,149 Lr
Noxash Activities:
Unrealized gain(Ion)on 8re fair value of investments $ 16,429 $ (870.177)
Net disposal of assets with no cash effect (3,243.743) (2,365,888) L
Certificates of participation issuance cost-underwriters fee (468,044) (140,53D)
Capital contributions from other agencies 4.765,823 7,628,801 I
See Accompanying Notes to Basic Financial Statements. tra
12
u
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
(1) Summary of Significant Accountinn Policies
Reporting Entity
.. The Orange County Sanitation District(OCSD) is a public agency which owns and operates certain
wastewater facilifies in order to provide regional wastewater collection, treatment, and disposal
services to approximately 2.5 million people in the northern and central portion of the County of
Orange, California. OCSD is managed by an administrative organization comprised of directors
appointed by the agencies and cities which are serviced by OCSD.
OCSD's service area was originally formed in 1954 pursuant to the County Sanitation District Act
.., and consisted of seven independent special districts. Two additional districts were formed and
additional service areas were added in 1985 and 1986. These special districts were jointly
responsible for the treatment and disposal facilities which they each used. In April of 1998, the
Board of Supervisors of Orange County passed Resolution 98-140 approving the consolidation of
the existing nine special districts into a new, single sanitation district. This action was taken in
order to simplify the govemance structures, reduce the size of OCSD's Board of Directors, ease
administrative processes, streamline decision-making and consolidate accounting and auditing
r, processes. Pursuant to the Resolution and Government Code Section 57500, the predecessor
special districts transferred and assigned all of their powers, rights, duties, obligations, functions
and properties to OCSD, including all assets, liabilities, and equity.
.. Effective July 1, 1998, the organization became known as the Orange County Sanitation District.
The boundaries of one of the previous districts, now known as Revenue Area No. 14, have been
maintained separately because their use of OCSD's collection, treatment, and disposal system is
.. funded by the Irvine Ranch Water District. The boundaries of the other eight districts have been
consolidated and are collectively referred to as the Consolidated Revenue Area. OCSD utilizes joint
operating and capital outlay accounts to pay joint treatment, disposal, and construction costs.
These joint costs are allocated to each revenue area based on gallons of sewage Flow. The
�+ supplemental schedules and statements show internal segregations and are not intended to
represent separate funds for presentation as major or non-major funds in the basic financial
statements.
The accompanying financial statements present OCSD and its blended component unit, the
Orange County Sanitation District Financing Corporation. The Corporation is a legally separate
entity although in substance it is considered to be part of OCSD's operations. OCSD is considered
to be financially accountable for the Corporation which is governed by a board comprised entirely of
OCSD's board members. There is no requirement for separate financial statements of the
Corporation; consequently, separate financial statements for the Corporation are not prepared.
The Corporation had no financial activity during the fiscal year ended June 30, 2007, other than
principal and interest payments on outstanding certificates of participation (see Note 4).
OCSD is independent of and overlaps other formal political jurisdictions. There are many
governmental entities, including the County of Orange, that operate within OCSD's jurisdiction;
however, financial information for these entities is not included in the accompanying financial
statements in accordance with the provisions of Governmental Accounting Standards Board
r (GASS)Statement 14.
Measurement Focus and Basis of Accounting
_ OCSD operates as an enterprise activity. Enterprise funds account for operations that are financed
and operated in a manner similar to private business enterprises, where the intent of the Board of
Directors is that the costs(expenses, including depreciation and amortization)of providing services
13
L
ORANGE COUNTY SANITATION DISTRICT I
Notes to Basic Financial Statements u
For the Year Ended June 30,2007
to the general public on a continuing basis be financed or recovered primarily through user V
charges.
I :
Basis of accounting refers to when revenues and expenses are recognized in the accounts and
reported in the financial statements. Enterprise funds are accounted for on the flow of economic
resources measurement focus and use the accrual basis of accounting, whereby revenues are
recognized when earned and expenses are recognized when incurred, regardless of the timing of
related cash flows. OCSD applies all GASB pronouncements currently in effect as well as
Financial Accounting Standards Board Statements and Interpretations, Accounting Principal Board
Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on
or before November 30, 1989, unless those pronouncements conflict with or contradict GASS L
pronouncements.
Operating Plans L
Each year, OCSD staff prepares an annual operating plan which is adopted by the Board of
Directors. The annual operating plan is used to serve as a basis for monitoring financial progress,
estimating the levy and collection of taxes, and determining future service charge rates. During the
year,these plans may be amended as circumstances or levels of operation dictate.
Cash Equivalents
Investments with original maturities of three months or less are considered to be cash equivalents.
Investments
All investments are stated at fair value (the value at which a financial instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation
sale). Changes in fair value that occur during the fiscal year are reported as part of investment and
interest income. Investment and interest income includes interest earnings and realized and ..
unrealized changes in fair value.
Accounts Receivable
Accounts receivable is shown net of the allowance for uncollectible receivables which was ..
$193,767 at June 30, 2007. Any unbilled sewer service receivables are recorded at yearend.
Inventory �.
Inventory is stated at cost,which approximates market,on a weighted-average basis.
Capital Assets
Outlays for property, plant, equipment, and construction in progress are recorded in the revenue
area which will use the asset Such outlays may be for individual revenue area assets or for a I
revenue area's share of joint assets.
Capital assets of property, plant, and equipment are defined as assets with an initial, individual cost L
of more than $5.000 and an estimated useful life of at least three years. Such assets are recorded
at cost, except for assets acquired by contribution, which are recorded at fair market value at the
time received. Cost includes labor, materials; outside services; vehicle and equipment usage;
allocated indirect charges such as engineering, purchasing, supervision and other fringe benefits;
and certain administrative and general expenses. Net interest costs are capitalized on projects. V
During the fiscal year ended June 30,2007, net interest costs of$10.03 million were capitalized.
L
14
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
m Depreciation of plant and equipment is provided for over the estimated useful lives of the assets
using the straight-line method. OCSD generally follows the guidelines of estimated useful lives as
recommended in the State of California Controller's Uniform System of Accounts for Waste
Disposal Districts, which range from 3 to 75 years. The following are estimated useful lives for
major classes of depreciable assets: Sewage collection facilities — 50 years, Sewage treatment
facilities — 40 years, Sewage disposal facilities — 40 years, and General plant and administrative
facilities—11.5 years.
Amortization
Amortization of the excess purchase price over the book value of assets acquired is provided using
., the straight-line method over an estimated useful life of 30 years.
Discounts and deferred charges on the certificates of participation are amortized to interest
expense over the respective terms of the installment obligations based on their effective interest
rates (note 4).
Restricted Assets
Certain assets are classified as restricted because their use is limited by applicable debt
covenants. Specifically, the assets are restricted for installment payments due on certificates of
participation or are maintained by a trustee as a reserve requirement for the certificates of
participation. When both restricted and unrestricted resources are available for use, It is OCSD's
policy to use restricted resources first, then unrestricted resources as they are needed.
Compensated Absences
OCSD's employees, other than operations and maintenance personnel, are granted vacation and
sick leave in varying amounts with maximum accumulations of 200 hours and 560 hours for
vacation and sick days earned but unused, respectively. Operations and maintenance personnel
accrue between 80 and 220 personal leave hours per year depending on years of service.
Personal leave can be accumulated up to a maximum of 400 hours.
Vacation and sick leave benefits and personal days are recorded as an expense and liability when
earned by eligible employees. In determining the estimated sick leave liability at June 30 of each
year, OCSD assumes that all employees' accumulated sick leave balances will ultimately be paid
out at 35 percent of the ending balance. The distribution between current and long-temt portions of
,r the liability is based on historical trends.
Claims and Judgments
.,, OCSD records estimated losses, net of any insurance coverage under its self-insurance program
when it is probable that a claim liability has been incurred and when the amount of the loss can be
reasonably estimated. Claims payable includes an estimate for incurred but unreported claims.
The distribution between current and long-term portions of the liability is based on historical trends.
Property Taxes
The County is permitted by State law (Proposition 13) to levy taxes at one percent of full market
value (at time of purchase) and can increase the assessed value no more than two percent per
year. OCSD receives a share of this basic levy, proportionate to what was received in the 1976 to
1978 period.
Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on July
1 and are payable in two installments which become delinquent after December 10 and April 10.
15
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2007
The County bills and collects the property taxes and remits them to OCSD in installments during La
the year. Property tax revenues are recognized when levied to the extent that they are available to
finance current operations. The Board of Directors has designated property tax revenue to be
used for the annual debt service requirements prior to being used as funding for current L
operations.
Capital Facilities Capacity Charges
V
Capital facilities rapacity charges represent fees imposed at the time a structure is newly
connected to the District's system, directly or indirectly, or an existing structure or category of use
is increased. This charge is to pay for District facilities in existence at the time the charge is L
imposed or to pay for new facilities to be constructed that are of benefit to the property being
charged.
Capital Contributions L
Capital contributions consist of charges to certain special districts and agencies for their agreed-
upon share of additions to capital assets. I
Operating and Non-operating Revenues and Expenses v
Operating revenues and expenses result from collecting, treating, and disposing of wastewater and
inspection and permitting services. OCSO's operating revenues consist of charges to customers L+
for the services provided. Operating expenses include the cost of providing these services,
administrative expenses, and depreciation and amortization expenses. All revenues and expenses
not meeting these definitions and which are not capital in nature are reported as non-operating j
revenues and expenses. it
Construction Commitments
OCSD has active construction projects to add additional capacity, improve treatment, or
replace/rehabilitate existing assets. At June 30, 2007, the outstanding commitments with
contractors totaled$414 million.
Self-insurance Plans �+
For the year ended June 30, 2007, OCSD was self-insured for portions of workers' compensation,
property damage, and general liability. The self-insurance portion of the workers' compensation
exposure is the$500,000 deductible per occurrence below the outside excess insurance coverage
to $200 million. The self-insurance portion of the property damage exposure covering fire and
other perils is the $25,000 per occurrence deductible (for most perils) under the outside excess
property insurance coverage to $1 billion. The self-insurance portion of the property damage "
exposure covering flood is the $100,000 per occurrence deductible with outside excess property
insurance coverage to$300 million. OCSD is self-insured for virtually all property damage from the
peril of earthquake. The self-insurance portion of the boiler&machinery exposure is the deductible
ranging from $25.000 to $350,000 under the outside excess boiler & machinery insurance 6,
coverage to $100 million per occurrence combined limit. The self-insurance portion of the general
liability exposure is the $250,000 per occurrence deductible ($500,000 for employment practices
liability) under the outside excess liability coverage to $25 million per occurrence and aggregate.
The self-insurance portion of the pollution liability exposure is the $100,000 per loss deductible
under the outside pollution liability insurance coverage to $10 million. The significant changes in
insurance coverage during the fiscal year ended June 30, 2007 are as follows:
Lv
• The excess insurance coverage for workers' compensation increased from $150 million to
$200 million.
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
r For the Year Ended June 30, 2007
d+ OCSD purchased pollution liability insurance with a $10 million limit of liability and a
$100,000 per loss deductible.
During the past three fiscal years there have been no settlements in excess of covered amounts.
"tl Claims against OCSD are processed by outside insurance administrators. These claims are
charged to claims expense based on amounts which will ultimately be paid. Claims incurred but
not yet reported have been considered in determining the accrual for loss contingencies. OCSD
�. management believes that there are no unrecorded claims as of June 30, 2007 that would
materially affect the financial position of OCSD.
Deferred Compensation Plan
OCSD offers its employees a deferred compensation plan established in accordance with Internal
Revenue Code Section 457. The plan permits all employees of OCSD to defer a portion of their
salary until future years. The amount deferred is not available to employees until termination,
refirement, death or for unforeseeable emergency. The assets of the plan are held in trust for the
exclusive benefit of the participants and their beneficiaries. Since the plan assets are administered
by an outside party and are not subject to the claims of OCSD's general creditors, in accordance
with GASS Statement 32, the plan's assets and liabilities are not included within OCSD's financial
statements.
�+ (2) Cash and Investments
Cash and investments as of June 30, 2007 are classified within the accompanying Statement of
Net Assets as follows:
Statement of Net Assets:
Current, Unrestricted:
Cash and cash equivalents $ 55,472,715
Investments 231,710,077
Subtotal-current, unrestricted 287,182.792
Restricted:
Cash and cash equivalents 23,946,510
Investments 60,776.180
r Subtotal-restricted 84,722,690
Total cash and cash equivalents and investments $ 371,905,482
,r Cash and investments consist of the following as of June 30, 2007,
Cash on hand $ 4,000
.. Deposits with financial institutions 3,984,549
Investments 283,194,243
Monies held by trustees:
Investments $23,946,510
r Investment contracts 60,776,180
Subtotal-monies held by trustees 84.722,690
Grand total cash and investments $ 371,905,482
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements IJ
For the Year Ended June 30, 2007
Investments Authorized by the California Government Code and OCSD's Investment Policy L
The table below identifies the investment types that are authorized by the California Government
Code and OCSD's investment policy. The table also identifies certain provisions of either the
California Government Code or OCSD's investment policy (whichever is more restrictive) that
address interest rate risk, credit risk, and concentration of credit risk.
A separate table addresses investments of debt proceeds that are held by trustees. Those jy
investments are governed by the provisions of the debt agreements rather than the general
provisions of the California Government Code or OCSD's investment policy.
I
Authorized Maximum N
by OCSD's Maximum Investment
Investment Type-Authorized by the Investment Maximum Percentage in a Single
California Government Code Policy? Maturity(1)t3) of Portfolio(1) Issuer(i
Local Agency Bonds Yes 5 years None None
U.S.Treasury Obligations Yes 5years None None
California State Treasury Obligations Yes 5years None None 'v
U.S.Agency Securities Yes 5years None None
Banker's Acceptances Yes 160days 40% 30
Commercial Paper Yes 270 days/31 days 15%/25°/ 10%
Negotiable Certificates of Deposit Yes 5 years 30% None
Repurchase Agreements Yes 1year None None
Reverse Repurchase Agreements Yes 90 days(2) 5%la None
Corporate Medium-Term Notes Yes 5 years 30e/ None V
Mutual Funds Yes WA 15%l21 10%
Money Market Mutual Funds Yes N/A 15%m None
Mortgage Pass-Through Secunties/CMO Yes 5 years 20% None
County Investment Pools Yes WA None None
Local Agency Investment Fund(LAIF) Yes NIA None Now
Notes L
(1)Restrictions are in accordance with th California Govemment Coda unless indicated otherwise.
(2)The ns nclion is in accordance with 0CSD's Imrestment Policy which is more restrictive than the California Govemment Code. .I
(3)As allowed by Califomia Govemment Code section 53601,the Board of Directors has Mooted a polio/or no maximum maturity v
for immsMents purchased by 0CSD's egemal money manager for the hmg-tenn inwslmem porlicho. However,the duration
of the langdemr inwsbnenl porbollo can never exceed 60 months. biwastmenb pumimsed for the shot-term portfolio are
arlbjed to the makrdty resbictions noted in this table. v
Investments Authorized by Debt Agreements
The investment of debt proceeds held by trustees is governed by provisions of the debt Lr
agreements, rather than the general provisions of the California Government Code on OCSD's
investment policy. The table below identifies the investment types that are authorized for
investments held by OCSD's trustees. The table also identifies certain provisions of these debt
agreements that address interest rate risk, credit risk,and concentration of credit risk.
V
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
Maximum
Maximum Investment
Investment Type-Authorized by the Maximum Percentage in a Single
r California Government Code Maturity of Portfolio Issuer
State and Local Agency Bonds 5 years None None
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptances 180 days 40% 10%
Commercial Paper 270 days/31 days 15%130% 10%
Negotiable Certificates of Deposit 5 years 30% 10%
Repurchase Agreements 1 year None None
Corporate Medium-Tenn Notes 5 years 300/6 None
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% None
Local Agency Investment Fund(LAIF) N/A None None
Guaranteed Investment Contracts N/A None None
Disclosures Relating to Interest Rate Risk
.., Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment Generally, the longer an investment has before maturity, the greater the
sensitivity of its fair value to changes in market interest rates. One of the ways that OCSD
manages its exposure to interest rate risk is by purchasing a combination of shorter tern and
longer term investments and by timing cash flows from maturities so that a portion of the portfolio is
maturing or coming close to maturity evenly over time, as necessary to provide the cash flow and
liquidity needed for operations.
r OCSD monitors the interest rate risk inherent in its managed portfolio by measuring the modified
duration of its portfolio. The duration of monies held for shorter term purposes is recommended by
OCSD's Treasurer and is based on OCSD's cash flow requirements in meeting current operating
and capital needs. The average duration of monies invested for shorter term purposes may never
exceed 180 days. The duration of monies held for longer term purposes is recommended annually
by OCSD's Treasurer and is based on OCSD's five-year cash flow forecast. The average duration
may not exceed 120 percent nor be less than 80 percent of the recommended duration. The
average duration of monies invested for longer term purposes may never exceed 60 months.
There is no stated maturity for the Money Market Mutual Funds.
.. Following is a table which summarizes OCSD's investments by purpose with the modified duration.
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ORANGE COUNTY SANITATION DISTRICT L
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
Modified Modified L
Duration Duration
Investment Type Fair Value inyears) in months
Short-Term Portfolio: r
U.S.Agency Securities $ 68,710,698 0.279 3.39
Commercial Paper 7,402,836 0.375 4.56 1
Corporate Medium-Term Notes 5,501,888 0.315 3.83
Negotiable Certificates of Deposit 5,700,000 0.179 2.18
Money Market Mutual Funds 252.921 0.083 1.01
Short-term portfolio subtotal $ 87,568,321 0283 3.44 L
Long-Terre Portfolio: 1
U.S. Treasury Notes $ 34.541.690 1.658 20.17
GNMA 1.351.295 2.917 35.49 v
U.S.Agency Securities 106.283,199 3.724 45.31
Commercial Paper 1,084,294 0.221 2.69
Corporate Medium-Term Notes 22.664,617 1.403 17.07 1
Money Market Mutual Funds 1,075.020 0.083 1.01 V
Mortgage Pass-Through Securities/CMO 6,810,424 1.300 15.82
Long-term portfolio subtotal $ 173,810.539 3.038 36.95 i
I.i
OCSD monitors the interest rate risk inherent in its other investments using specific identification of
the investments. Following is a table of these investments as of fiscal year end.
r
Fair Value Maturities
Investments held by fiscal agents:
Money Market Mutual Funds:
US Bank $ 66,099 N/A
Fidelity Treasury Class III Fund 696 2,434.706 N/A
First American Treasury Obligation 1,177,276 WA V
Blackrock Institutional Funds 20,109.579 WA
GS Financial Square Treasury Obligations 110,604 WA
BlaGvock Institutional T-Fund 48,246 WA
Guaranteed Investment Agreements: tr
AIG- 1992 COP 12,417,000 August 1,2013
AIG- 1993 COP 3.220,000 July 14, 2018
Bayerische Landesbank Girozentrale-2000 COP 17,311,427 August 1,2016 y
MBIA Inc. -2006 COP 18,309,753 February 1,2036
FSA Capital Management Services LLC-2007A COP 9,518,000 January 30,2030
Local Agency Investment Fund (LAIF) 21,815,383 176 day average
Fair Value of Other Investments $ 106,538,073
V
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations
OCSD's investments (including investments held by trustees) include the following investments that
are highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the
information provided above):
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
. Mortgage-backed securities: These securities are subject to early payment in a period of
declining interest rates. The resulting reduction in expected total cash flows affects the fair
value of these securities, making them highly sensitive to change in interest rates. At fiscal
year end, the fair value of investments in mortgage-backed securities totaled$32,878.377.
. U.S. Agency Securities with a step-up interest rate: At each call date, should the issuer not
call the security, the coupon rate of the note increases by an amount specified at inception.
The call feature embedded within a step-up security causes the fair value of the instrument to
be highly sensitive to interest rate changes. At fiscal year end, the fair value of investments
with step interest rates totaled $6,016,850.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. The following table presents the minimum rating as
required by the California Government Code, OCSD's investment policy, or debt agreements, and
the actual rating as of year-end for each investment type:
21
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements LA
For the Year Ended June 30,2007
Investment Type and the Lowest Rating Reported at Year End Fair Value L
Investments with no legal minimum rating&no required disclosure:
U.S.Treasury Obligations $ 34.541,690
U.S.Agency Securities-GNMA 1,351,295 L
Subtotal $ 35,892.985
Investments with no legal minimum rating:
U.S.Agency Securities(other than GNMA):
Rating of AAA(Filch) 50.347,375 y
Rating of AGY(Standard& Poor's) 124,646,522
Negotiable Certificates of Deposit:
Not rated at fiscal year end 5,700,000
Local Agency Investment Fund(LAIF):
Not rated at fiscal year end 21,815,383
Investments with fiscal agents-Guaranteed Investment Contracts: y
Not rated at fiscal year end 60,776,180
Subtotal 263,285,480 i
Investments with a legal minimum rating(or its equivalent)of A: law
Paper:
Rating of A+(Fitch) 600,000
Rating of P-1 (Moody) 4,246,698
Not rated at fiscal year end 3,638,432
Corporate Medium-Term Notes:
Rating of A+(Standard&Poor's) 1,467,885
Rating of Al (Moody) 3.202,180
Rating of A2(Moody) 3,102,778
Rating of AA(Standard& Pones) 4,702,961 -
Rating of AA-(Standard&Poor's)
Rating of AA-(Fitch) 3,000.450
Rating of AA+(Fitch) 826,200
Rating of AA2(Moody) 600,186
Rating of AA3(Moody) 5,272,003
Rating of AAA(Standard&Poor's) 3,302,964
Rating of BBB(Standard&Pooes)' 901,260
Rating of BBB+(Standard& Pooes)' 1,787.616
Money Market Mutual Funds: "
Rating of AAA(Standard&Poor's) 1,327,941
Invested with fiscal agents:
Rating of Asa (Moody) 23.880,411 V
Not rated at fiscal year end 66.099
Subtotal 61,928,064
Investments with a legal minimum rating(or its equivalent)of AA: L
Mortgage Pass-Through Securities/CMO:
Rating of AGY(Standard&Poor's) 4,255,430
Rating of UST(Standard&Poor's) 2.052,056
Not rated at fiscal year end 502,938 W
Subtotal 6,810424 _
Total $367,916.933
•i,westmenl was In mmpliance with legal re4uirements at the time ti was purMasett. L
A I
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22
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61
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
.., Concentration of Credit Risk
Limitations on the amount that OCSD is allowed to invest in any one issuer have been identified
previously in the section, "Investments Authorized by the California Government Code and OCSD's
.,, Investment Policy" and in the section, "Investments Authorized by Debt Agreements," OCSD
follows whichever guideline is the most restrictive. As of fiscal year end, OCSD has investments in
the following types of securities, each of which represents more than 5 percent of OCSD's
investments:
Federal Home Loan Bank(U.S.Agency Securities),totaling$56,922,751
• Federal Home Loan Mortgage Corporation (U.S.Agency Securities),totaling$40,600,133
.+ Federal National Mortgage Association (U.S. Agency Securities),totaling$56,593,117
Custodial Credit Risk
r Custodial credit risk for deposits is the risk that in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The California Government
Code and OCSD's investment policy contain legal requirements that limit the exposure to custodial
credit risk for deposits as follows: a financial institution must secure deposits made by state or
local governmental units by pledging securities in an undivided collateral pool held by a depository
regulated under state law (unless so waived by the governmental unit). The market value of the
,r pledged securities in the collateral pool must equal at least 110% of the total amount deposited by
the public agencies. California law also allows financial institutions to secure deposits by pledging
first trust deed mortgage notes having a value of 150%of the secured public deposits.
Custodial credit risk for investments is the risk that in the event of the failure of the counterparty,
(e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its
investment or collateral securities that are in the possession of another party. The California
Government Code and OCSD's investment policy do not contain legal or policy requirements that
would limit the exposure to custodial credit risk for investments.
As of June 30, 2007, OCSD's investments in the following investment types were held by the fiscal
agent's safekeeping department of the broker-dealer(counterparty) used to buy the securities.
Money market mutual funds $23.946,510
.. Guaranteed investment contracts 60,776.180
Total $84.722 690
Investment in State Investment Pool
r
OCSD is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the Treasurer of the State of
California. The fair value of OCSD's investment in this pool is reported in the accompanying
financial statements at amounts based upon OCSD's pro-rata share of the fair value provided by
LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance
available for withdrawal is based on the accounting records maintained by LAIF, which are
r recorded on an amortized cost basis. Included in LAIF's investment portfolio are mortgage-backed
securities, other asset-backed securities, loans to certain state funds, securities with interest rates
that vary according to changes in rates greater than a one-forme basis, and structured notes.
23
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements u
For the Year Ended June 30,2007
(3) Capital Assets u
Capital asset activity for the year ended June 30, 2007 is as follows:
y
Balance at Balance of
June 30,2006 Additions Deletions June 30,2007
Capital assets not depreciated:
Cost:
Land $ 13.021,480 $ 9,122 $ (9,122) $ 13,021.480
Construction in progress 586,713,335 287,519,848 (70,553,227) 803,679,956
Total nondepreciable assets 599,734,815 28715289970 (70,562,349) 8169701,436 y
Depreciable capital assets:
Cost: V
Sewage collection facilities 466,245,986 37,725,316 (56,358) 503,914.944
Sewage treatment facilities 736,011,012 31,095,726 (2,235,793) 764,870,945
Effluent disposal facilities 97,014,820 271,366 (271,366) 97,0149820
Solids disposal facilities 3,074.494 8,609 (8,609) 3,074,494
General and administrative facilities 172,410,447 1,452,210 (644,072) 173,218.585
Subtotal 1,474.756,769 70.5539227 (3,216,198) 1,542,093.788
I
Accumulated depreciation: iw
Sewage collection facilities (190,051,e90) (12,442,394) 37,085 (202,457.199)
Sewage treatment facilities (387,840.166) (26,804,421) 1,152,525 (413.492.062)
Effluent disposal facilities (42,290.487) (2,524,489) 124,297 (44.690,679)
Solids disposal facilities (3,074.493) (8,571) 8,571 (3,074.493) �+
General and administrative facilities (87,772.630) (12,271,118) 417,185 (99,626,663)
Subtotal (711,029,666) (54,050.993) 117391663 (763,340,996
Net depreciable assets 763,727.093 16,502,234 (1,476,535) 778,752,792 r
Net capital assets $ 1,363,461.908 $ 304.0319204 E eL038,a84) S 1,585,454,228
6w
(4) Long-Term Liabilities
I
The following is a summary of the changes in long-term liabilities for the year ended June 30, 2007: V
Certificates
Arbitrage Compensated Claims and of
Payable Absences Judgments Participation Totals
Balance,July 1 $ 393,200 It 5.574,380 $ 1,379.850 $ 808.570.000 $ 815,917,430 -
Additions (63,100) 5.763.782 (55.603) 95,180,000 100,835,079
Deletions - (5,452,344) (299.052) (101,965,000) (107,716,396) d
Balance,June 30 340,100 5,885.818 1.025,195 801.785.000 809,036,113
Due within one year 307,900 5,272,516 340,480 22,590,000 28,510,896
Unamortized discount - - - 395,231 395,231 L
Unamortized deferred
amount on refundings - - - 6,735.254 6,735,254
Lang-tern amount $ 32,200 $ 613,302 S 684.716 S 772.064,515 $ 773,394,732
v
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
Arbitrage Payable
The Tax Reform Act of 1986 (the Act) requires OCSD to calculate and remit rebatable arbitrage
earnings to the Internal Revenue Service. Certain of OCSD's debt and interest earnings on the
proceeds thereof are subject to the requirements of the Act. OCSD's liability at June 30, 2007 is
$32,200 for future years' remittances.
Compensated Absences
OCSD's policies related to compensated absences are described in Note 1. OCSD's liability at
June 30, 2007 is$5,885,818 with an estimated $5,272,516 to be paid or used within the next fiscal
year.
Claims and Judgments Pavable
OCSD is self-insured in a number of areas as described in Note 1. The following is a summary of
the claims and judgments payable as of June 30, 2007 and 2006:
2006-07 2005-06
Claims and judgments payable at July 1 $1.379.850 $1,430,208
Claims incurred during the fiscal year 222,771 117,561
Adjustments to the prior year (278.374) 43,580
Payments on claims during the fiscal year (299,052) 211,499
Claims and judgments payable at June 30 1,025,195 1,379,850
Less: current portion (340,480) 359,450
Total long-term claims and judgments payable $ 684,715 $1,020,400
Certificates of Participation
OCSD issues certificates of participation in order to finance construction of the treatment facilities.
Each certificate of participation represents a direct and proportionate interest in the semi-annual
interest payments. Installment payments for the issues are payable from any source of lawfully
available funds of OCSD. Certificates of participation at June 30, 2007 are summarized as follows:
Amount
r 1992 refunding certificates of participation $ 85.505,000
1993 refunding certificates of participation 32,200,000
2000 refunding certificates of participation 197.400,000
2003 certificates of participation 191,500,000
2006 certificates of participation 200,000,000
2007A refunding certificates of participation 95180,000
Total certificates of participation payable $801,785,DD0
Outstanding Certificates of Participation
December 1992 Refunding Certificates of Participation
On December 3, 1992, OCSD completed the sale of$160,600,000 of refunding certificates of
participation. The certificates were issued to refund the remaining outstanding principal
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ORANGE COUNTY SANITATION DISTRICT L
Notes to Basic Financial Statements
For the Year Ended June 30, 2007
balance of the 1986 certificates of participation and $38,350,000 of the outstanding principal
Ir
balance of the 1990-92 Series B certificates of participation.
I
The interest rate on the refunding certificates is adjusted by the remarketing agent daily based it
on market interest rates. The weighted average interest rate for the fiscal year ended June 30,
2007 was 3.39 percent On October 1, 1992, OCSD and a brokerage company entered into -
an interest rate exchange swap agreement (Note 5). Annual principal payments are due on L
August 1, beginning August 1, 1991
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2007 reserve of $12,483,037 is held by the V
trustee, US Bank, and meets the reserve requirement. Additionally, AMBAC provides municipal
bond insurance for the certificates.
September 1993 Refunding Certificates of Participation L
On September 2, 1993, OCSD completed the sale of $46,000,000 of refunding certificates of
participation. The certificates were issued to refund $39,740,000 of the outstanding principal V
balance of the 1990-92 Series B certificates of participation (see above).
The interest rate on the refunding certificates is adjusted by the remarketing agent daily based I
on market interest rates. The weighted average interest rate for the fiscal year ended June 30, L
2007 was 3.53 percent. On September 1, 1993, OCSD and a brokerage company entered into
an interest rate exchange swap agreement (Note 5). Annual principal payments are due on
August 1, beginning August 1, 1995.
v
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2007 reserve of $3,220,000 is held by the
trustee, JPMorgan, and meets the reserve requirement-
August 2000 Refunding Certificates of Participation
On August 31, 2000, OCSD completed the sale of $218,600,000 of refunding certificates of r
participation. The certificates were issued to refund the remaining outstanding principal
balance of the 1990-92 Series A, B, and C certificates of participation (see above) and to
reimburse OCSD for improvements made to the wastewater system.
u
The interest rate on the refunding certificates is adjusted by the remarketing agent daily based
on market interest rates. The weighted average interest rate for the fiscal year ended June 30,
2007 was 3.48 percent Annual principal payments are due on August 1, beginning August 1,
2001,
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2007 reserve of$17,746,587 is held by US
Bank, the trustee, and meets the reserve requirement.
August 2003 Certificates of Participation
On August 26,2003, OCSD completed the sale of$280,000,000 of certificates of participation.
The certificates were issued to finance and to reimburse OCSD for the acquisition,
construction, and installation of additional improvements made to the wastewater system. The v
interest rate on the certificates is fixed and ranges from 5.00 percent to 5.25 percent Annual
principal payments are due on February 1, beginning February 1,2021.
26
u
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2007
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2007 reserve of$20,107,236 is held by Union
Bank,the trustee, and meets the reserve requirement.
March 2006 Certificates of Participation
On March 8, 2006, OCSD completed the sale of $200,000,000 of certificates of participation.
The certificates were issued to finance and to reimburse OCSD for the acquisition,
construction, and installation of additional improvements made to the wastewater system. The
interest rate on the refunding certificates is adjusted by the remarketing agent daily based on
market interest rates. The weighted average interest rate for the fiscal year ended June 30,
r 2007 was 3.48 percent. Annual principal payments are due on February 1, beginning February
1,2022.
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2007 reserve of $18,309,753 is held by
Deutsche Bank,the trustee,and meets the reserve requirement.
. May 2007 Certificates of Participation
On May 22, 2007, OCSD completed the sale of $95,180,000 of refunding certificates of
participation. The certificates were issued to refund $88,500,000 of the outstanding principal
balance of the 2003 Series certificates of participation (see above) . The interest rate on the
refunding certificates is fixed and ranges from 4.00 percent to 4.5 percent. Annual principal
payments are due on February 1, beginning February 1, 2008.
r The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2007 reserve of$9,519,244 is held by Union
Bank, the trustee, and meets the reserve requirement.
Annual Amortization Requirements
The annual requirements to amortize all debt related to certificates of participation as of June 30,
.. 2007, are as follows:
Estimated
Year Interest Rate
` Ending Estimated Swaps, Net
June 30, Principal Interest (See Note 5) Total
2008 $ 22,590.000 $ 32,534,673 $ 1,714,792 $ 56,839,365
2009 15,250,000 31,871,606 1,451,192 48,572,798
2010 16,310,000 31,278,661 1,165,281 48,753,942
2011 17,270,000 30,650,250 861,233 48.781,483
2012 17,810,000 29.997,782 744,992 48.552,774
2013.2017 121,235,000 136,637.622 1,111,956 258,984,578
2018-2022 129,625,000 114,303,864 - 243,928,864
r 2023-2027 149,710,000 86,533,339 - 236,243,339
2028-2032 189,405,000 49,745.026 - 239,150,026
2033-2036 122,580,000 7,138,163 129718163
r Total $801,785,000 $550,690,886 $ 7.049,446 $ 1,359,525,332
27
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements V
For the Year Ended June 30, 2007
L
(5) Interest Rate Swaps on Certificates of Participation
As indicated in Note 4, OCSD has entered into interest rate swap agreements in connection with
the 1992 and the 1993 Refunding Certificates of Participation. 6"
Objective: The objective of the interest rate swaps is to lower OCSD's borrowing costs when
compared against fixed-rate bonds at the time of issuance. The swaps effectively change OCSD's y
variable interest rate to a synthetic fixed rate of 5.55 percent on the 1992 Refunding Certificates of
Participation and to a synthetic fixed rate of 4.56 percent on the 1993 Refunding Certificates of
Participation.
V
1992 Refunding Certificates of Participation
Terms of the Swap: On October 1, 1992, OCSD and a brokerage company entered into an interest ITV
rate exchange swap agreement pursuant to which OCSD will pay a fixed interest rate of 5.55
percent. OCSD will receive a variable interest rate equal to the interest paid to the holders of the
certificates which is based on a tax exempt daily interest rate as determined by the remarketing
agent on an initial notional amount of $160,600,000. The notional value of the swap declines in U
tandem with the principal amount of the associated debt. This interest rate swap agreement is
accounted for as a hedge, and the associated interest rate differential to be paid or received is
charged to interest expense as interest rates change. The 20-year swap agreement matures on j
August 1, 2013- L
Fair Value: Because interest rates have declined since execution of the swap agreement, the
swap had an estimated negative fair value of $5.11 million as of June 30, 2007. Because the V
variable-rate certificates adjust to changing interest rates, the certificates do not have a
corresponding fair value increase. The fair value was estimated using the zero-coupon method.
This method calculates the future net settlement payments required by the swap, assuming that
the current forward rates implied by the yield curve correctly anticipate future spot interest rates.
These payments are then discounted using the spot rates implied by the current yield curve for
hypothetical zero-coupon bonds due on the date of each future net settlement on the swap.
Credit Risk: As of June 30, 2007, OCSD was not exposed to credit risk because the swap had a
negative fair value. However, should interest rates change, and the fair value of the swap become
positive, OCSD would be exposed to credit risk in the amount of the swap's fair value. The swap's
counterparty, AIG Financial Products Corporation, was rated AA by Standard & Poor's and Aa2 by 6d
Moody's Investors Service as of June 30, 2007. To mitigate the potential for credit risk, if the
counterparty's credit quality falls below AA- by Standard & Poor's or Aa3 by Moody's Investors
Service,the fair value of the swap(if the swap has a positive fair value)will be collateralized by the
counterparty as follows: 1) with bonds, debentures and other debt issued or guaranteed by the
United States of America equaling 106 percent of the fair value, or 2)with securities issued by the
Federal Home loan Mortgage Corporation or the Federal National Mortgage Association equaling j
108 percent of the fair value, or 3) other securities to be agreed upon and in an amount to be u
agreed upon by OCSD, the counterparty, and the Swap Insurer. The collateral would be held by a
third-party custodian.
Basis Risk: The swap does not expose OCSD to basis risk because the variable-rate interest paid t"
to the certificate holders is equal to the variable-rate interest earned on the notional amount of the
swap.
W
Termination Risk: OCSD or the counterparty may terminate the swap if the other party fails to
perform under the terms of the contract. In the event of termination due to default, the defaulting
W
28
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
r For the Year Ended June 30, 2007
party will pay to the non-defaulting party the excess (if any) of the sum of the settlement amount
and the unpaid amounts owed less the unpaid amounts due from the non-defaul8ng party. The
swap may be terminated by OCSD if the ceunterparty's credit quality rating falls below AA- by
Standard & Poor's or Aa3 by Moody's Investors Service. If the swap is terminated, the variable-
rate certificates of participation would no longer carry a synthetic interest rate.
1993 Refunding Certificates of Participation
Terms of the Swap., On September 1, 1993, OCSD and a brokerage company entered into an
interest rate exchange swap agreement pursuant to which OCSD will pay a fixed interest rate of
4.56 percent OCSD will receive a variable interest rate equal to the interest paid to the holders of
the certificates which is based on a tax exempt daily interest rate as determined by the remarketing
agent on an initial notional amount of $46,000,000. The notional value of the swap declines in
tandem with the principal amount of the associated debt. This interest rate swap agreement is
accounted for as a hedge, and the associated interest rate differential to be paid or received is
charged to interest expense as interest rates change. The 22-year swap agreement matures on
August 1,2016.
Fair Value. Because interest rates have declined since execution of the swap agreement, the
swap had an estimated negative fair value of $1.57 million as of June 30, 2007. Because the
variable-rate certificates adjust to changing interest rates, the certificates do not have a
corresponding fair value increase. The fair value was estimated using the zero-coupon method.
This method calculates the future net settlement payments required by the swap, assuming that
the current forward rates implied by the yield curve correctly anticipate future spot interest rates.
These payments are then discounted using the spot rates implied by the current yield curve for
d. hypothetical zero-coupon bonds due on the date of each future net settlement on the swap.
Credit Risk: As of June 30, 2007, OCSD was not exposed to credit risk because the swap had a
negative fair value. However, should interest rates change, and the fair value of the swap become
.d positive, OCSD would be exposed to credit risk in the amount of the swap's fair value. The swap's
counterparty, Societe Generale Bank, was rated AA by Standard & Pwr's and Aal by Moody's
Investors Service as of June 30, 2007. To mitigate the potential for credit risk, if the oounterparty's
credit quality falls below AA- by Standard & Poor's or Aa3 by Moody's Investors Service, the fair
value of the swap(if the swap has a positive fair value)will be collateralized by the counterparty as
follows: 1) with securities issued or guaranteed by the United States Government equaling 106
percent of the fair value, or 2) with securities issued by the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or the Government National Mortgage
Association equaling 108 percent of the fair value, or 3) other securities to be agreed upon and in
an amount to be agreed upon by OCSD, the counterparty, and the Swap Insurer. The collateral
.. would be held by a third-party custodian.
Basis Risk: The swap tices not expose OCSD to basis risk because the variable-rate interest paid
to the certificate holders is equal to the variable-rate interest earned on the notional amount of the
r swap.
Termination Risk., OCSD or the counterparty, may terminate the swap if the other party fails to
perform under the terms of the contract. In the event of termination due to default, the defaulting
party will pay to the non-defaulfing party the excess (if any) of the sum of the settlement amount
and the unpaid amounts owed less the unpaid amounts due from the non-defaulting party. The
swap may be terminated by OCSD if the counterparty's credit quality rating falls below AA- by
Standard & Poor's or Aa3 by Moody's Investors Service. If the swap is terminated, the variable-
rate certificates of participation would no longer carry a synthetic interest rate.
29
L
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements L+
For the Year Ended June 30, 2007
L
(6) Net Assets
The difference between assets and liabilities is reported as net assets. Net assets are classified as
restricted, unrestricted, or invested in capital assets, net of related debt. Net assets at June 30, W
2007 consisted of the following:
June 30,2007
Invested in capital assets, net of related debt: V
Capital assets, net of accumulated depreciation $ 1,595,454,228
Outstanding debt issued to acquire capital
assets, net of: unamortized bond discount, 1.
deferred amount on refundings,and
unspent proceeds (713,268,658)
Unamortzed deferred charges of debt issued L
to acquire capital assets 4,277,005
Subtotal 886,462,575
Restricted by debt covenants for debt service on L
certificates of participation 3,904,212
Unrestricted 299,369,977
Total Net Assets $ 1,189,73fi,764 L
I
(71 Pension Plan U
OCSD participates in the Orange County Employee's Retirement System (OCERS), a cost-sharing
multiple-employer, defined benefit pension plan which is governed and administered by a nine
member Board of Retirement. OCERS was established in 1945 under the provisions of the County
Employees Retirement Law of 1937, and provides members with retirement, death, disability, and
cost-of-living benefits. OCERS issues a stand-alone comprehensive annual financial report which
can be obtained from OCERS at 2223 Wellington Avenue, Santa Ana, California 92701. L+
Benefits
All OCSD employees except for interns participate in OCERS. Employees who refire at or after L
age 50 with ten or more years of service are entitled to an annual retirement allowance. The
amount of the retirement allowance is based upon the member's age at retirement, the members
"final compensation" as defined in Section 31462 of the Retirement Law of 1937, the total years of V
service under OCERS, and the employee's classification as a Tier I or Tier II member. Benefits
fully vest on reaching five years of service. OCERS also provides death and disability benefits.
Contributions L
As a condition of participation under the provisions of the County Employees Retirement Law of
1937, members are required to contribute a percentage of their annual compensation to OCERS
Tier I and Tier 11 covered employees are required to contribute 9.76% - 14.20% and 9.34% - jr
14.20%, respectively, of their annual compensation to OCERS. OCSD is required to make periodic
contributions to OCERS in amounts that are estimated to remain a constant percentage of covered
employees' compensation such that, when combined with covered employees' contributions, will
fully provide for all covered employees' benefits by the time they retire. For the fiscal years ended V
June 30, 2007, 2006, and 2005, the required contribution equaled the contribution actually made.
L
30
L.
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2007
The following table provides salary and contributions requirements for the current and two prior
fiscal years.
For the Fiscal Year Ending
June 30.2007 June 30, 2006 June 30,2005
Total Payroll Costs $ 53,175.199 $ 51.589.226 $49,332,630
Payroll Costs of Employees Covered by OCERS 49,788,835 48.761.087 44,669.861
r Contributions Requirements:
Contributed by Employees 3,513.302 3.095,591 1,250,374
Contributed by the District on Behalf of Employees 1,732.296 1,717,959 1,996.310
Total Employee Required Contribution 5.245,598 4,813,550 3,246,684
District Required Contribution 9.848,854 7,416,556 5,524.673
Total Contribution $ 15,094,452 $ 12.230.106 $ 8,771,357
Total Actual Contribution as a Percent of
Required Contribution 100.00% 100.00% 100.00%
Employee Required Contribution as a Percent of
Covered Payroll 10.54% 9.87% Z27%
District Required Contribution as a Percent of
Covered Payroll 19.78% 15.21% 12.37%
Total Contribution as a Percent of all Participating
Entities'Contributions 5.51% 5.98% 4,78%
r
(8)Transactions with Irvine Ranch Water District-Revenue Area No. 14
Formation of Revenue Area No. 14& Excess Purchase Price Over Book Value of Acquired Assets
On July 1, 1985, Revenue Area No. 14 was formed as an independent special district as a result of
a negotiated agreement between OCSD and Irvine Ranch Water District (IRWD). At the time of
Revenue Area 14's creation, OCSD consisted of eight independent special districts (see Note 1 -
Reporting Entity). The eight existing districts sold a portion of the joint treatment facilities and land
to the newly created district and recorded capacity rights revenue at the time of the sale.
In accordance with the negotiated agreement between OCSO and IRWD, IRWD paid OCSD
$34,532,000 for an initial 15,000,000 gallons per day capacity in OCSD's joint treatment facilities
(with an ultimate collection capacity of 32,000,000 gallons per day)and for a pro-rata interest in real
property(based on flow of 32,000,000 gallons per day). The book value of the assets acquired was
determined to be $14,553,000 as of June 30, 1986; these assets were recorded at book value in
Revenue Area 14. The excess of the purchase price over the assets' book value was$19,979,000
and was recorded as an intangible asset in Revenue Area No. 14. The excess of the purchase
price over the assets' book value is being amortized over the remainder of the useful lives of the
original assets acquired. As of June 30, 2007, the unamortized amount of the excess of purchase
price over the assets' book value was$6,167,111.
31
L
ORANGE COUNTY SANITATION DISTRICT I
Notes to Basic Financial Statements L+
For the Year Ended June 30, 2007
Annual Transactions
IRWD entered into a separate agreement with Revenue Area No. 14 whereby IRWD agreed to
annually fund payment of Revenue Area No. 14's proportionate share of OCSD's joint capital outlay
revolving fund budget requirements and certain capital improvements during the term of the
agreement,which contribution amounted to$18,929,179 in 2007.
(9)Commitments u
Groundwater Replenishment System: In March 2001, OCSD entered into an agreement with the
Orange County Water District California, to design and construct Phase 1 of the "Groundwater
Replenishment System"(GWRS). OCSD has no explicit, measurable equity interest in GWRS. No r"
separate financial statements are prepared for GWRS.
The cost of this project is to be paid equally (50 percent shares) by each agency. The GWRS is a
joint effort by the two agencies to provide reclaimed water for replenishment of the Orange County
Groundwater Basin and to augment the seawater intrusion barrier. The GWRS is planned for three
phases, Phase 1 will produce approximately 72,000 acre-feet per year of recycled water by
November 2007, Phase 2 will increase the total capacity to 112,000 acre-feet by the year 2017, and
Phase 3 will increase the total capacity to 145,600 acre-feet per year by the year 2025. Following
the completion of Phase 1, the GWRS will have the capacity to divert up to 100 million gallons per
day of flow from OCSD's ocean discharge for peak flow storm relief.
As of June 30, 2007, the total estimated cost of GWRS Phase 1 was $492.18 million. Of this
amount, up to $92.50 million may be reimbursed through grants from the U.S. Environmental
Protection Agency,the U.S. Bureau of Reclamation, the State Water Resources Control Board, and u
others. OCSD's estimated gross and net share is$246.09 million and$199.84 million,respectively.
Costs incurred by OCSD through June 30,2007 total$186.41 million.
Secondary Treatment: On July 17, 2002, the Board of Directors Approved Resolution No. OCSD- `+
14, "Establishing the Policy for Level of Treatment of Wastewater Discharged into the Ocean". This
resolution established OCSD's policy to treat all wastewater discharges into the ocean to secondary
treatment standards thereby providing for continued public safety, marine ecosystem protection, �+
and water reclamation opportunities. To implement this policy, OCSD staff was directed to
immediately proceed with the planning, design, and implementation of treatment methods that will
allow the agency to meet Federal Clean Water Act secondary treatment standards.
OCSD estimates that it will take a total of approximately eleven years and additional capital
improvement costs of$271 million to reach secondary treatment discharge standards. Secondary
treatment discharge standards are scheduled to be reached in 2013. In the interim, OCSD will I.
operate the plants to maximize available secondary treatment and to reduce effluent biochemical
oxygen demand and suspended solid discharges below currently allowed limits. Each year the
current 50 percent secondary portion will increase incrementally as operations change and new
facilities are constructed and placed in service.
b
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32
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r ORANGE COUNTY SANITATION DISTRICT
SUPPLEMENTARY INFORMATION
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r
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33
i
ORANGE COUNTY SANITATION DISTRICT V
Schedule of Net Assets
June 30,2007 1
With Comparative Totals for June 30.2006 L
Revenue Consolidated Totals Lr
Area No.14 Revenue Area Eliminations 2007 2006
Current assets:
Cash sad cash eaeNalens E - E 55,472715 E - E 56.472,715 E 65,989.448
Inves0nenta - 231710,077 - 231.710.OT7 318.430,977
Due boss other Revenue Area - 6.0%.925 (6,008.925) - -
Accounts receivable,net of sllowahce
far uncellectibles 118,161 12,587,W6 - 12,703227 18,240805
ACGueEinterestrace N.ble 179.084 2.636.700 - 2.815.784 3850:07
Due from other governmental agendas 6,332,508 - 6,332.508 8:371.250
Comideban lees receivable - 962.754 - 962.754 1,335,188
Properly tax receivable 70.495 2,369.162 - 2.488,857 1,883.915
th"iflones 310.621 4.524,290 - 4.834,611 4561139
Prepaid expenses and retirement 81.503 1,200,021 - 1.281.524 11:309:975
Other mount assets 23,981
Total overt asses 7,020272 317,489.710 (6.006,925) 318,573A57 433,987,628 1
Nerouranl aesa(s: L
Restricted:
Cash and rash equivalents - 23,846,510 - 23,946.510 53.656,177
Investments - e07J6,180 - 60.T78,180 51,763,180
Accrued interest recevable - 567,360 - 667.380 666,3W 6rl
Unrestricted:
Non-depredable capital assets 45,322,877 771.378.559 - 816.701.436 599,734,815
Depredable capital assets,net of
accumulated depredation 48.591,463 730,161.330 - 778,762,792 783.727,093 y
Mlaned charges 4.277.005 - 4,277,605 41. 8 ,633
Excess purchase pride over book
value on se tan )assets,net 6,167.111 - - 6,167.111 6,824.11M
Other noncurrent asses,not 1.829,445 28,285,268 - 29,914.713 37,561,184 V
Total nonworeN assets 101,710,806 1,619,392.241 1,M.103.127 1,518,298.292
Total assets 108,801 158 1.936.881,951 (6,006,925) 2,039,676,184 1,952,295,918
Cunant llablldes: L
Accounts payable I097.958 17,868,685 - 18.966,641 21.743,791
Ace ued expenses 7W.759 14.377.248 - 15,OB4.007 8.444,239
Due to other Revenue Area 6.006,925 (6,006,925) - - V
Retentions payable 417,162 6,542,037 - 6,968,199 9245.673
Interest payable 7,023,945 - 7.023.945 %M.321
Cunene pardon of
loop-term oteld9atiens 356.987 28.153.909 28,510,890 18.479,050 L4
Total current liabilities 8,585,789 73,965,824 (6.006.925) 76,W.688 67,478.954
Nenarenl liabilities:
Noncurrent portion of 4
lone-term ob08ations 82,654 773.312,1711 773.384.732 795.717,487
Total liabilities 8,608,343 847,278.002 (8.W8.925) 849.939,420 863,196.471
V
Net assets:
Invested in laterewpitald easels,
net of!for denseebt 93.914,330 782.W,245 - BB3.904,212 884,OW.49B
Restricted!for tleDl service - 3,804,212 - 3,804,2/2 3,002,672 V
Unreetrded 6,218,485 293,151.492 28B.369.9T! /3:036,278
Total net assets E 100.132,815 E 1,089.BW,808 E E 1 1189,738,764 E 1,OBB,089,447
L
L
34 L
ORANGE COUNTY SANITATION DISTRICT
Schedule of Revenues, Expenses, and Changes in Net Assets
For the Year Ended June 30,2007
With Comparative Totals for June 30,2006
Revenue Consolidated Totals
Area No. 14 Revenue Area 2007 2006
Operating revenues:
.. Service charges $ 3.338,646 $ 164.451,014 $ 167.789.660 $ 154.291.040
Penn and inspection fees 26.628 1.839.783 1,885.411 874,383
Total operating revenues 3,385.274 166,290,797 169,656,071 155.165,423
Operating expenses other than depredation
and amortization:
_ Salaries and benefits 3,274.195 54.527.906 57,802,102 53,245.819
Utilities 555,298 7,516.964 8,072,282 7.563,227
Supplies, repairs and maintenance 1.038,446 20,012,466 21.050.912 21.173,357
Contractual services 1,158,892 19,230,562 20.389.454 19.073,353
Directors'fees 13,863 117.887 131,750 141,270
Meetings and training 71.779 1,063,073 1.124.852 890,357
Other 239,237 3,344,555 3,583.792 3.544,697
s Total operating expenses other than
depredation and amortization 6.351,711 105.803,413 112,155,124 105.632,080
Operating income(loss)before
depredation and amortization (2,986,437) 60,487.384 57.500,947 49,533.343
Depredation and amortization 5.868.091 50,369,823 $4,238,714 60.732.836
Operating loss (8,855,328) 2,117.561 (6,737.767) (11,199,493)
Nor-operating revenues:
Property taxes 1,699,378 58.865.930 60,665,308 39,958.325
Investment and interest income(loss) 105.380 22.138.174 22.243,554 10,426,117
Capital facilities capacity charges - 31,277,647 31,277,647 15,631,439
Other 11.823 1,055,071 1,067,794 3,478.996
e Total non-operating revenues 11818,581 113,337,722 115,154.303 69,492,877
Non-operating expenses.
Interest 32.672 21.714,180 21,746,852 20,078,050
Capital grants to member agencies - 2.127,154 2,127,154 3.399,627
Other 147,385 2,667,007 2.834.392 4.321,287
.. Total non-operating expenses 190,057 28,528,341 26,708.398 27.798.964
Income floss)before
capital contributions (7218,804) 88.926.942 81,705,138 30.494,420
Capital contributions from other agencies 18.929,179 18.91 17,358.147
Change in net assets 11,710,375 88,926.942 100,637,317 47,852.567
Total net assets-beginning 88.422440 1,000,677.007 1,089,099,447 1,041,246,SW
Total net assets-ending $ 100.132.815 $ 1,089,603,949 $ 1,189,736.764 $ 1,089,099,447
35
ORANGE COUNTY SANITATION DISTRICT L
Schedule of Cash Flows
For the Year Ended June 30,213O7
With Comparative Totals for June 30,2006
Revenue Consolidated Totals
Cash flows from ounsfing
Area No.14 Revenue Ares Eliminations 200T 2006 L
activities:
Receipts from ousmtomelomers and users E 9,399.498 E 173,733,799 f - $ (59,193292 E 154209,09
Payments to employees (3279,093) (5 .412,819) - (Q.1109,972) (52,964,3641
Payments to suppliers 12298.0301 (38.510,4401 (40A09.378) 152.864,35O
sr
Net cash provided by operations 3.821,467 78.810.535 82.832.002 18.301,149
Cash flows from noncapbal finatdng acivil
Pranced.from property taxes 1,682,457 56.307.109 - 59.989,555 39.725,891
Grants to member agendas (2,127,154) - (2,127,154) (3,399,627) L
Net man provided by noncaphal financing activities 1.682.457 56.179.90 Via82p12 36.3211,264
Cash flows from Nobel and mi.tetl financing activities: I
Capital facilities capacity Merges - 31,850.062 - 31,650,062 15.904,050 6w
Addidom to properly.plant and squlPment (19,648.304) (266,782,066) 5.294.731 (281,135,639) (260,789.059)
Disposal of property,plant and equipment - 5,294,731 (5,2911,731) - -
Arbitragepayment - (53,100) (53.700) (918.800)
Addl9ons to other assets (10B4O%) - 109,0% - -
Disposal of other assets - 109,0% (109,%0) -Interest paid (32.112) (35,218,215) - (36.250,887) (29,069,376)
Principal payments on oedificates of participation - (101,988,0%) - (101,9%,000) (12.755,000)
Proceeds from caNfiwtes of participation issuance - 89,818.081 - 80.818,061 199.859.470
CenSmates of pertldpathm IssWme coats - (310,698) - (319,698) (484.375) 60
Proceeds from capital contributions 14.163,356 - 14,103,356 9.729.346
Net cash provided(used)by colonel and related! I
financing activities (5.626.620) (2A,4%,205) - (283,092,825) (78,623.74q I
Cash flovn from investing activities: Yi
Proceeds from the sale of investments - 5,282,384,3% - 5,2W.W,34ill 4.09.113,653
Purchases of investments - (5,204,660.027) - (5204.650.027) (4,898,529,313)
Interest rewivarl 122,896 24,524,9% - 24,647,682 12.350,956
Net rash provided(ueetl)by Investing activities 122.6% 102.249.315 102.372.011 42,945.3%
Net increase(dome")In cash and rash equivalents - (40.225.400) - (40,226.400) 48.948,976
Cash and cash a tuivalems,beginning of year 119.645,625 119,645,625 70.696.650 y
Cash and cash equivalents,and of year E E 7B,418,225 E E ]9,418,225 8 119,696.825
Reconciliation of operating Win to net cash provided iw
by operating Sotivilles:
Opareting loss E (8,655,328) $ 2.117,561 If - E (6,737,767) $ (11.199.493)
Adjusmrents to recondle operating loss to net
cash provided by opeatons:
Depredation ant amortisation 5,668,891 0.369.823 - 81238,714 60,732.838 V
Bed debt expeme 47 (67.331) - (67.284) 45,369
Other nonoperaeng revenues and expenses 10.003 1.478,140 - 1,466,143 1.507.875
(Imor aseydecrea.e in operating assets:
Due from other Revenue Area - 7,206,509 (7,205,509) - - (all
Accounts receivable 61 (819,463) - 5,1104,882 (7,124,857)
Due from other governmental agencies 6,809,5% - - 6.804,555 2,888,970
Inventories (74.423) (210.247) - (284JIM (170.166)
Prepaid and other assets 495.531 9.555,681 - 10.052,412 (10,725,355)
Inaeased(deorasse)in operating hatolihies:
Accounts payable (13.952) (2,763.198) - (2.M.15(f) 7.442.786
Accrued expenses 373,586 6268,180 - 6.639.768 1,744,432
Due to other Revenue Area (7,208,569) - 7206,509 - -
Retentionspayable (91,170) (2,195,204) - (2,285,374) 3,462,468 1.1
Compensated absencas %,048 221,390 - 311,438 (51.366)
Claims and judgments (5,169) (349,486) (354,6551 (50.3581
Net cash provided by operations E 3,821,467 $ 78.810,535 $ E 52,632002 $ 48.301.199
V
ooncash Activities'
Unrealized gain(loss)on the fair value of investments $ - $ 16,429 $ - $ 16,420 It (870,177)
Net disposal of assets Win no cash effect (144,936) (3,098,807) - (3243,743) (2,366,808)
Certificates of Participation issuance costurMemntera fee - (4(8,044) - (468.O44) (140.530)
Capital contributions from other agencies 4,765,823 - - 4.7W.823 7.628,801
36 L
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Statistical Section
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ORANGE COUNTY SANITATION DISTRICT
STATISTICAL SECTION
r
This part of the comprehensive annual financial report of the Orange County Sanitation District
,r (OCSD) presents detailed information as a content for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about OCSD's
overall financial health.
r
Contents Paces
Financial Position and Trends
These schedules contain current and trend information to help the reader understand
r OCSD's financial position and how OCSD's financial performance and well-being
have changed overtime. 38-42
r
Revenue Capacity
These schedules contain information to help the reader assess OCSD's most
r significant revenue source of sewer service fees. 43 - 45
Debt Capacity
These schedules present information to help the reader assess the affordability of
OCSD's current levels of outstanding debt and OCSD's ability to issue additional debt
in the future. All of OCSD's debt is recorded in a proprietary fund; consequently, 48-49
r many of the schedules which are applicable to governmental funds are not presented.
Operating Information
These schedules contain data to help the reader understand how the information in
OCSD's financial report relates to the services it provides and the activities it
performs. 50. 53
Demographic and Economic Factors
These schedules offer demographic
og phlc information to help the reader understand the
environment within which OCSD's financial activities take place. 54 - 57
r
37
ORANGE COUNTY SANITATION DISTRICT
Net Assets by Component
(Dollars in Thousands)
Last Seven Fiscal Years(Note 1)
$1.2D0.000
$1,000.000
$6DD,Dcc
$600,000 W 000 000 000 000 -
$400,000
$200,000
$o
2000-01 2D01-02 2002-03 2003-04 20D4-05 2005-06 200647
D Unrestricted
■Resulcted for Debt Service&Capital Acquisition
D Invested in Capital Assets,Net of Related Debt
Invested in Restricted for
Capital Assets, Debt Service
Net of Related &Capital
Fiscal Year Debt Acquisition Unrestricted Total Net Assets
2000-01 $463,935 $ 36,468 $446,558 $ 946,961
2001.02 501,997 36,070 435,906 973,973
2002-03 578,647 35,182 396,518 1,010,347
2003-04 418,267 88,519 517,346 1,024.132
2004-05 558,391 64,514 418,342 1,041,247
2005-06 664,060 3,003 422,036 1,089,099 '
2006-07 886,463 3,904 299,370 1,189,737
Note 1: Net Assets are calculated as a result of GASS 34, which was implemented In FY
2001-2, retrospective to 2000-01. Ten years data will eventually be presented as data is
accumulated.
Source: Orange County Sanitation District's Financial Management Division.
38
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ORANGE COUNTY SANITATION DISTRICT
Revenues and Gross Capital Contributions by Source
(Dollars in Thousands)
Last Ten Fiscal Years
$188,768
$165,172
$141,576
$117,980
594 84
AM 'Am
S70.788
S47,192
$23,596
so
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003.04 2004-05 2005-M 20D6-07
❑Operating Revenue ■Non-Operating Revenue ❑Contributed Capital
Capacity
Operating Revenue Non-Operating Revenue Rights&
Permit& Cap.Facilities Total Capital
Fiscal service Inspection Total Property Capacity Non- Contrib-
Year Charges Fees Operating Taxes Interest Charges OMa Operating utions
1997-98 $ 55,962 $ 329 $56,291 $ 31,287 $ 27,897 $ 11,251 $ 3,283 $ 73.718 $ -
1998-99 69,453 423 69,876 32,836 17,944 8,751 3,332 62,863 141
1999-00 81.241 396 81,637 35.557 20.836 7.857 2,573 66,833 4.589
2000-01 72,566 688 73,254 38,411 39,868 7,332 1,835 87,446 1,271
2001-02 79,609 396 80,005 41.140 28,073 10,560 2,202 81,975 8,603
2002-03 88,640 524 89.164 44,591 25.889 10,746 706 81.332 3.166
2003-04 101.995 332 102,327 46,943 6,786 8,998 928 63.655 9,245
2004-05 120,917 498 121,415 35,764 15.118 9,814 1,051 61,747 9,536
2005-06 154,291 874 155,165 39,958 10,426 15,632 3,477 69.493 17,358
2006-07 167.790 1,866 169.656 60.565 22.243 31,278 1.068 115,154 18,929
Source:Orange County Sanitation District's Financial Management Division.
39
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ORANGE COUNTY SANITATION DISTRICT
Expenses by Type r
(Dollars in Thousands)
Last Ten Fiscal Years
r
$16o,o00
$170,000
$180,000
$150,000
$140,000
$130.000
$120,000
$110,000
$10op00
$90.00o I
$80,000 �W
$70,000
$fio=
$50.000
$40,000 r
$30.000
$20.000
$10,000
$0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
■Operating Expense ONon Operating Expense r
Operating Non-Operating
Fiscal Personnel Maint& Oepr& Total Interest Total Non- r
Year Services Utilities Other Amort Operating Expense Other 11) Operating
1997-98 $ 28,725 $ 3,328 T 17,812 $ 35,841 $ 85,706 $ 19,232 $ 1,330 $ 20,562
1998-99 28,809 3,320 22,546 42,492 97,167 18,359 70 18,429
1999-00 33,581 3,621 22,213 36,383 95,798 18,151 23,073 41,224
2000-01 33,734 5,524 23,062 44,188 106,508 17,923 88 18,011
2001-02 35,629 4,987 27,967 46,990 115,553 14.406 7,609 22,015 r
2002-03 38,733 4,622 36,314 43,694 123,363 12,731 1,194 13,925
2003-04 48,711 5,408 41,284 46,118 141,521 15,524 4,396 19,920
2004-05 53,048 6,473 42,325 53,211 155,057 17,470 3,056 20,526 r
2005-06 53,246 7,563 44,823 60,733 166,365 20,078 7,721 27,799
2006-07 57,802 8,072 46,281 64,239 176,394 21,747 4,961 26,708
Notes
(1) - For FY 1999-00, Other Non-Operating Expense includes $22,994,647 for the loss on investment in the
Orange County Investment Pool. r
Source:Orange County Sanitation Distdct's Financial Management Division. r
40
ORANGE COUNTY SANITATION DISTRICT
Change in Net Assets
(Dollars in Thousands)
Last Seven Fiscal Years(Note 1)
$1,200,000 �1 /
$1,000,000
$800,000 /
$600,000
$400,000 /
$200,000
r $0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Ending Net Assets by Fiscal Year
Fiscal Total Total Change in Beginning Ending
Year Revenues Expenses Net Assets Net Assets Net Assets
2000-01 $161,971 $ 133,543 $ 28,428 $ 918,533 $ 946,961
2001-02 164,580 137,568 27,012 946,961 973,973
2002-03 173,662 137,288 36,374 973,973 1,010,347
2003-04 175,226 161,441 13,785 1,010,347 1,024,132
2004-05 192,698 175,583 17.115 1,024,132 1,041,247
2005-06 242,016 194,164 47,852 1,041,247 1,089,099
2006-07 303,740 203,102 100,638 1,089,099 1,189,737
Note 1: Net Assets are calculated as a result of GASB 34,which was implemented in FY 2001-02,
retrospective to 2000-01. Ten years information will eventually be presented as data is accumulated.
Source:Orange County Sanitation District's Financial Management Division.
41
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ORANGE COUNTY SANITIATION DISTRICT
Cash and Investment Reserve Balances L
(Dollars in Millions)
Last Ten Fiscal Years
i
V
Capkel Debt
Cash Flow Self- Improvement Service r,
Fiscal Year Confingency Insurance Program Requirements Total
1997-98 $ 63 $ 89 $ 188 $ 33 $ 373
1998-99 56 64 233 33 376 L
1999-00 60 57 284 32 433
2000-01 77 56 311 33 477
2001-02 70 57 303 35 465
2002-03 100 57 237 33 427 L�
2003-04 71 57 390 88 606
2004-05 108 57 242 65 472
2005-06 92 57 257 84 490 v
2006-07 139 57 91 85 372
L
Notes:
The Cash Flow Contingency Reserve is to fund operations,maintenance,and certificates of participation debt service
expenses for the first half of the fiscal year,prior to the receipt of the first installment of the property tax allocation and sewer
service user fees.
V
The Self-Insurance Reserve is to provide requirements for property damage including fire,flood and earthquake,general
liability and workers'compensation.
�+
The Capital Improvement Program Reserve is to fund annual Increments of the capital improvement program with a target
level at one half of the average annual capital improvement program through the year 2020.
The Debt Service Required Reserves are monies held and controlled by a trustee pursuant to the provisions of certificates of V
participation issues,and the monies are not available for the general needs of the District.
v
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Source:Orange County Sanitation Districts Financial Management Division. 'y
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ORANGE COUNTY SANITATION DISTRICT
r Sewer Service Fees
Single Family Residence Rate
Last Eight Fiscal Years and Next Fiscal Year(Note 1)
` Sewer service fees are comprised of three categories: residential customers, commercial customers, and
industrial customers. Although the majority of sewer service fee revenues are from residential and
commercial customers(see the schedule of Number of Accounts and Revenues by Customer Class), the fee
r paid by each residential and commercial customer is less than the individual fees paid by industrial customers.
The rates for commercial and industrial customers are derived from the base sewer service fee charged for a
single-family residence and are based on the type of business and the strength and volume of waste that is
r discharged into the sewer system. Due to the complexity of the rate structure for commercial and industrial
customers and since the rates are derivatives of the single-family residence rate, only the single-family
residence rate is presented within the statistical section.
r Sewer Service
Fiscal Year Charge
1999-00 $ 81.02
r 2000-01 78.00
2001-02 80.00
2002-03 87.50
2003-04 100.00
r 2004-05 115.00
2005-06 151.00
2006-07 165.80
2007-08 182.00
Note 1: Prior to FY 1999100, the District was comprised of nine separate Districts, and each District had its
r own rate. Data on the Districts single rate will be Compiled and will be added to this schedule until ten year's
accumulated data is available.
r
Annual Sewer Service Fees
Single Family Residence
r 200
in
r 160
_ 140
120
`c
< 100
s u
N ae
60
Q
20
0
199900 20DO.01 2001-02 2002-03 2003M 200605 20OS96 200607 200749
` Flatnl Year
Source: Orange County Sanitation Districts Financial Management Division.
43
ORANGE COUNTY SANITATION DISTRICT
Number of Accounts and Revenues by Customer Class r
(Dollars in Millions)
Last Ten Fiscal Years
ResidentiallCommercial Industrial
Number of Total Percentage Total Percentage
Equivalent Sewer Svc. of Sewer Number of Sewer Svc. of Sewer
Single-Family Charge Service Charge Customer Charge Service Charge
Fiscal Year Dwellings Revenue Revenues Accounts Revenue Revenues
1997-98 851.770 $62.2 929/6 678 $5.7 8%
1998-99 882.103 61.6 89% 678 7.8 11%
1999-00 919.072 72.0 89% 649 9.1 11%
2000-01 883,603 64.5 91% 596 6.6 9%
2001-02 898,031 70.3 90% 573 7.5 10%
2002-03 897,757 77.0 92% 603 6.3 8%
2003-04 860,156 86.0 92% 530 7.5 8%
2004-05 860,634 99.0 90% 568 10.5 10%
2005-06 872.859 132.0 92% 557 12.2 8%
2006-07 867,035 143.8 91% 531 13.4 9%
$180.000,000
$180,000,000 - - _
$140,000.000
r
$120,000,000 - -. -
E10D.0D0.000 -
r
$80.D0(1
$60.000.000 I r
I
$40,000,000
r
E20,OOD,000
$0
1997-98 1998-N 199900 200P01 2DOI-02 2=-03 2DO3-04 20(4_05 2005-dis 20pg07
■RmNentlaVCanrnercWue ■Industrai Users
r
Source. Orange County Sanitation District's Financial Management Division.
44
ORANGE COUNTY SANITATION DISTRICT
r Principal Sewer Service Customers
For the Current Fiscal Year and Nine Years Ago
r
Fiscal Year Ended 6130107 Fiscal Year Ended 6130/98
Industrial Industrial
permittee %to Total Permittee %to Total
r Service Service Charge Service Service Charge
User Charges Rank Revenue Charges Rank Revenue
Kimberly-Clark Worldwide, Inc. $1,114,920 1 0.66% $401,126 1 0.67%
r Alstyle Apparel-A&G Inc. 1,049,362 2 0.63%
Stremicks Heritage Foods,LLC 974,474 3 0.58%
MCP Foods,Inc. 921.317 4 0.55% $182.430 5 0.31%
Disneyland Resort 791,747 5 0.47% 140,117 7 0.24%
r Disneyland Resort—DCA 667,485 6 0.34%
House Foods America Corp. 410,059 7 0.24%
Pepsi-Cola Bottling Group 374,306 8 022%
Seven-Up Bottling Company 335.178 9 020%
Amenpec Inc. 278,478 10 0.17%
Adohr Farms 357,647 2 0.60%
r Rockwell Semiconductor 232.842 3 0.39%
Favorite Foods 188,395 4 0.32%
Marine Corps Air Station 145,600 6 0.24%
r Sundor Brands 137,606 8 0.23%
U.S.Dyeing 8 Finishing 134,466 9 0.23%
AERA Energy 132,666 10 0.22%
$6,817.326 4.06% $2,052,895 3.45%
r
Although the majority of sewer service fee revenues are from residential and commercial customers (see the schedule of
Number of Accounts and Revenues by Customer Class),the fee paid by each residential and commercial customer is less
than the individual fees paid by industrial customers. Consequently, this schedule shows the largest sewer service fee
customers.
Source: Orange County Sanitation District's Financial Management Division.
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45
ORANGE COUNTY SANITATION DISTRICT
Ratio of Annual Debt Service to Total Expenses -
(Dollars in Thousands)
Last Ten Fiscal Years
-
70.0%
r
60.0%
50.0%
40.0%
r.
30.0%
20.0% -
10.0%
0.0%
1997-90 199099 199900 200"1 200102 200M 200344 2004-0 200545 200M7
r
Ratio of Debt
Total Service to Total
Fiscal Principal Total Debt Operating Operating r
Year 11) Interest Service(3) Expenses(2) Expenses
1997-98 $ 11,320 $ 20,008 $ 31,328 $ 49,865 62.83%
1998-99 12.120 18,475 30,595 54,675 55.96 -
1999-00 12,880 17,169 30,049 59,415 50.57
2000-01 13,790 16,690 30,480 62,320 48.91
2001-02 10,370 13,051 23,421 68,563 34.16 -
2002-03 11,025 11,433 22,458 79,669 28.19
2003-04 11,610 22,508 34,118 95,403 35.76 is
2004-05 12,040 25.871 37,911 101,846 37.22
2005-06 12,755 19,636 32,391 105,632 30.66
2006-07 13,465 21,438 34,903 112,155 31.12 r
Notes
(1)-Excludes principal reductions due to advanced refunding.
(2)-Excludes depreciation and amortization expense.
(3) -All debt consists of certificates of participation.
r
Source:Orange County Sanitation District's Financial Management Division.
r
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46
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ORANGE COUNTY SANITATION DISTRICT
Debt Coverage Ratios
(Dollars In Millions)
Last Nine Fiscal Years(Note 1)
The Orange County Sanitation District has no legal debt limits as Imposed by State legislation. The District does have
contractual covenants within the existing Certificates of Participation indenture agreements which require minimum coverage
ratios of 1.25. The coverage ratio Is calculated as the ratio of net annual revenues available for debt service payments to total
annual debt service requirements.
4.50
4.00
3.50
3.00
2.50
2.00
- 1.50
1.00
- 0.50
1998-99 1999-00 2000-01 2001-02 2002-03 T2003-04 2004-05 2005-06 2006-07
- Fiscal Year Ending June 30,
1999 2000 2001 2002 2003 2004 2005 2006 2007
Operating 8 Non-operating Revenues:
- Service Charges,Net of Refunds $ 61.6 $ 72.0 $ 64.6 $ 70.3 $ 77.0 $ 86.0 $ 99.0 $ 1a2.0 $ 143.8
Industrial Sewer Service Charges 7.8 9.1 6.6 7.5 6.3 7.5 10.5 12.2 13.4
Revenue Area No. 14 Fees 0.7 2.2 2.0 2.2 3.2 5.8 6.9 5.3 5.2
Ad Valorem Texas 32.8 35.6 38.4 41.1 44.6 46.9 35.8 40.0 60.6
Interest Earnings 17.9 20.5 39.4 27.8 25.9 6.8 15.1 10.4 22.2
Capital Facilities Capacity Charges 9.5 7.9 7.3 10.6 10.1 9.0 9.8 15.6 31.3
Other Revenues 2.4 1.2 2.5 2.5 3.4 4.0 6.1 9.2 8.3
_ Total Revenues 132.7 148.5 160.7 162.0 170.5 166.0 183.2 224.7 284.8
Operating Expenses(2) 54.7 59.4 62.3 68.6 79.7 95.4 101.8 105.6 112.2
Net Revenues $ 78.0 $ 89.1 $ 98.4 $ 93.4 $ 90.8 $ 70.6 $ 81.4 $ 119.1 $ 172.6
Debt Service Requirements
Principal Payments 12.1 12.9 13.8 10.4 11.0 11.6 12.0 12.7 13.6
Interest Payments 18.5 17.2 16.7 13.0 11.4 22.5 25.9 19.6 21.4
Total Debt Service Requirements $ 30.6 $ 30.1 $ 30.5 $ 23.4 $ 22.4 $ 34.1 $ 37.9 $ 32.3 $ 34.9
Coverage Ratios(3) 2,24 2,70 2.99 3.54 3.60 1,81 1.89 3.20 4.05
Ending Reserves(4) $ 343.0 $ 401.0 $ 444.0 $ 430.0 $ 394.0 $ 518.0 $407.0 $ 406.0 $ 287.0
Notes
(1)-Ten years data will eventually be presented as data is accumulated.
(2)-Operating expenses exclude depreciation and amortization expenses.
- (3)-Calculated in accordance with the Debt Service Master Agreements.
(4)-Ending reserve balances exclude monies in debt service funds.
Source: Orange County Sanitation District's Financial Management Division.
47
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ORANGE COUNTY SANITATION DISTRICT
Computation of Direct and Overlapping Debt
Julie 30.2007 L
20 7 Asxsrel Valuation(Land&Impmwmmre ONr): 3238,965,565,239Inflm deducting W I.TV,573.239 mdewlopmmt Incmmenwl Valuation)
{e✓F' $ E_(HUW on rakrebpmenl adjusted ell xopeny annul vtlwian of52M,881,211,608):
Toell Dew Distriel's Shma or
.10 %AeolksMefll Dew W=7 tool
Om 9e County Tener Plan Obliµenom 3123,725.00o 71.816% 5 g8,910,9M
Meaopollwn Water Disn tMSou Califamu 359.115,000 15.058 N,075,537
Corot Commwiry College Diinid SSS,TB,867 99.517 331,19'f,892
NorN Coop County Joint Commwil7 College Dienin mikIN.Mi %.861 MO6,19.219 I
RencSo Santiago Conwuniry mon College Di 3N,W8.4% ".N3 318,9/1,OA y
ern-01inde ane Lagoon Beach Unifii School Done, 60,69iil. 9 W.VIAt 11557 29,11012
Newport Mesa Unified SCAwl Mono 172,1118,110 100.000 MISS.180
Placntia-Toro Lille Unified School DisOin 92,]A9,003 M.718 91,1Mil" I
W -
Sdw lecB Valk,Unified 5clool Billion. 119.760,000 I I.<32 .7,I N,363
Smn Ain Unified School Doran IM,951,20f 100.000 1".01,207 v
Tustin Unified Selina]union.Shad Facilities leipmvnrcnl Dimla No.2W2-1 N,031" 98.1ul 23,809,113
Anehcim Union High School Dlmia 1W.136.955 IW.= 126,15M53
Fullerton loins Union High School Dimon 62,482,910 MAW M.351,586
Hwuinglon Beach Union High School Diebin 203,875,791 MM MI,Mi2/3
Se ool Dunim 112,01S.5" 91.SM-100. NI,P3,049 Ir
CiryolAnheom S.MAW 99.135 3,650,05
Wine Bench Water Dunn lmpmvement Disaicss 189,932,130 Varbm 189,88'l,216
Rosaroor COmmwlry Smv]m Disoicl Spnod Tex ONigetiore 670,000 100.000 670A0
Bonin Cenion Cononeeniry Facilities Dimity No.98-1 43,ISSAW 100.000 43,153,000
Irvine Unified Shod Bonnet Commwiry Facilities D'nnices W1,INAw 99.998-100. 271,IMAS y
Tustin Urefid Seltool Disnin Commwiry Fxilities Dorms No.U-1 ell 974 Mimes 100.000 159,M;673
Orange Cowry Community Fxiliun Dimia No.$74 0,111J11 ".."1 0,395,9N
ONV Cmmmmiry Facgiun Bovine NB)SOA00 Vmiom NB,N9,982
Owoee Camry Meamnm Dimim 11)�133,296 10BM 113.T73-296
City WAvme 1915 Aa Bondv(Estimate) 838,IK,169 100.M 638,10.169 V
Ciry orTustin 191$Am Bones SSA62,000 100.000 55,862,000
OIM 1915 An hood, 21,51NA00 100.Ooo 215Nd1M
TOTALOVERLAPPOJG TA%AND ASSESSMLM DEBT N,2M,738,681
Orange CowryGmcxl Full Loom core 1597,550,000 71.BB6Y. 8 6644:10,793
Omege Cowry Pauiw Obligetiore 89.893AW 71.886 M.175.919
Orange Cowry Bond ofEoict Au ionty ter olPar3Gpation 11.230AW 71.886 11,173.919
Orange Cautery Tmmir DmWcl AUcosiry 1,]IN= 71.8ft 197,792
SOUK Orange Cowry Comm wiry College Dunon CatiRnrmof Pertieipuipn 36,910A00 "MI 30, W.M Y.I
Bnln,,Un United Schoolnct Catifi of PofPmticipenw 30,710A00 K821 3g010,829
Owlgc UnOied Sahwl Downed CcnolwmntPmticipetiw 51.MgOW W718 19A9,N7
Placentia-Yobs Londe D)Disen.C Diann Caton., ofPminpuon "AlOj15 9&718 63,R9'7,10'7
Sinn Ana Uri Soo SC Dumind rain Cmifintesof Pi anon w 36,656,251 IOBOOD 36,856,251
UOili�nion
UdRed Simi Dine,CCmelve,o o!lvuciw3on 10.2 SAW VmbOa 39,96'I,N9 r1
Union High School Dunne Caufinwof Perticipetiw 8zM.Ow V. 4000,IM
School District Certifiuoes vfPmnCimlipn 62,305A80 Yahoo A00,832
Clryof CostiM GmcM FUM OA0blipo 648"A2 99.133 690,I90,550
Ciry ofCow Mac Oercrel FUMillWinriore 10,390A00 100.000 18,590,000
Ciry ofFdlmm General FwM0NhlniDN 30,162,730 100.000 M..MI12,1 In,Ciryof Hwnwgon Each Oen Full and Fu end JMgmmtONiptiore pA69,6'A 09.912 80655,1M 38
CiryollrvAw GmmIFUM ONigetiore 30,915,000 100.000 3p,9a3.000
CiryofSwh Aw Cmxnl FUM Obliguiore 121,T25.9.36 Ivnren 121,733j36
Other Ciryeen eSa FUM 061ieetiore 117,MSA!7 wM ll?.ISZ ODD I
Orange nneliW mind n Dimicl Ccn]fiaOnneiM of io ipauon 11.60(lAW 100.000 II7.242,916 (2)
Muni Renck Watn Bisect OmiM Colon Pomcirmion 61,600A00 69.526 13,M.516 L
Mudchpdwam Dimity ofomnge Cowry edam Fepf2ln Cnryooeuon 20,W0.000 W.751 19.W. M
OY.ftne,Lille County W.Diahia Cmifiotet ofPmticipetion IO.WD.M 97.731 9,813,326 _
Orange count,I.AutAonry 13,570,000 19.906 9.sohm
TOTAL GROSSOVERLAPPDJGGENERAL MWDEBT 52,276.BWAM
Less: CiV"Cowryinelf-1 Disnin Autbontions if pWninB) 31 .6n
C]ryociWeelmxroffinpmung obligations re 109�61,622
OIAm OC xlf-supportice Cor,orimm 38".6N
MWDOC Wetn Fugines Coryoretiw U00%ttlf-mpponing) 13.810.5M
TOTAL NET OVERLAPPMGGENERAL FUND DEBT SI,Nb,331,603
GRDSSCOINEE)T TAL DMTBT Sg323,672,317 (3)
NET COMBINED TOTAL DEBT 5b,09012j89
(I) Pemnngc ofoverlepping agencys mdevelopmmlBdjY9led ell pmq:rry acsesttd velwtipn(33M,881,211,60g)lonled wiNin Aouneeein ofOo Junin
(3) ExclMes.wnenxr ttvenw Certi(Iwtes otperticipanon. lad
(l) FxlMn nx ell mvnue mticiptipn town,nterynx rtvenn,monga8e revenue end sex mlpestipn Aondsene raw-boMeA wpiW lweobligMom.
Raw,J4: Tmel Ovcleoone Tea end Azaessment petit Gpn Cumhi�TOW Dell o.>_S IM1121211 3ebt
Lndwlmpmvemmt Anneal Vmwtim 1,5'M/. 273% 355% 4
All Prapesry Assessed Vdwtiw N/A 265% 2A9fe L
STATEF W
$ours:California Mwichpm Swiatin -
L
48
V
ORANGE COUNTY SANITATION DISTRICT
Ratios of Outstanding Debt
Last Ten Fiscal Years
(5) Debt as a
Total (3) Percentage
Outstanding Median of Median (4) Debt
Fiscal COP Family Family Population per
_ Year Debt Income(1) Incorne Estimate(2) Capita
1997-98 $ 386,240,000 $ 61,812 0.016% 2.340,000 $ 165.06
1998-99 374,135.000 63,478 0.017% 2.386,375 156.78
�.. 1999-00 361,255,000 89.310 0.019% 2.213.925 163.17
2000-01 386,370,000 70.577 0.018% 2,400,425 160.96
2001-02 376,000,000 72,998 0.019% 2,336,400 160.93
2002-03 364,975,000 73.672 0.020% 2.408,050 151.58
2003-04 633,365.000 70.900 0.011% 2,441,350 259.43
2004-05 621,325.000 73,545 0.012% 2,467,850 251.77
2005-06 808,570,000 76.443 0.009% 2,481,540 325.83
2006-07 801.785,000 78,950 (s) 0.010% 2,505.180 320.05
Notes& Data Sources
(1)-Data is for the entire County of Orange.
(2)-Data is for the estimated population served by the Orange County Sanitation District.
(3)-Data Source: Center for Economic Research, Chapman University.
(4)-Data Source: Demographic Research Unit, California Department of Finance.
(5)-Data Source: Orange County Sanitation District.
(6)-Forecasted number.
49
L
ORANGE COUNTY SANITATION DISTRICT L
Comparison of the Volume of Wastewater Treated
With Revenues and Expenses
Last Ten Fiscal Years
I
Millions of V
Gallons of Collection,
Waste. Treatment
water 8 Disposal Total Total Total Total V
Treated Cost per OpeoBng Non-Operating Operating Non-Operating
Fiscal Per Million Costs Costs Revenues Revenues "
Year Day Gallons (In Thousands) (In Thousands) Pn Thousands) (In Thousands) L
1997-98 254 534.45 $ 85,708 $ 20.562 $ 56,291 $ 73,718
1998-99 241 580.06 97,167 18,429 69,876 62,863
1999-00 241 620.42 95,798 41.224 81,637 66,833
2000-01 246 647.46 106,508 18,011 73.254 87,446
2001-02 234 794.05 115,553 22,015 80,005 81,975
2002-03 239 880.25 123,363 13,925 89,164 81,332 W
2003-04 238 1,068.43 141,621 19,920 102,327 63,655
2004-05 243 1,095.79 155,057 20,526 121,415 61,747
2005-06 235 1,216.77 186,365 27,799 155,165 69,493
2006-07 229 1,268.38 176,394 26,708 169,656 115,154
L
An Interim Strategic Plan Update to the year 2020 was completed in September 2002 that projects wastewater
treatment flows to increase to 284 millions of gallons per day(mgd)in 2010,to 302 mgd in 2015.and to 321 mgd in the
year 2020. In order to manage the anticipated increase in wastewater flows,the District has identified a$2.4 billion
capital expansion plan through 2020. -
Total expenses in FY 2006-07 increased$96.8 million, or 91.1 percent since FY 1997-98, primarily as a result of(1)
OCSD's decision beginning in FY 2002-03 to maximize existing secondary treatment facilities as OCSD moves from a
50)50 mix of primary and secondary effluent treatment to meeting secondary treatment standards by December 31,
2012,and(2)OCSD's decision to eliminate most bacteria from the ocean outfall discharge by disinfecting the effluent r,
beginning in FY 2002-03 at an additional cost in chemicals of$7 million annually.
Depreciation expense represents 29 percent of the increase as a result of the previous expansion in capital facilities
and the financing associated with the expansion. Maintenance,chemicals,utilities,and other operating costs represent
another 34 percent of the increase,primarily due to the increase in the levels of treatment referred to above. In FY
2006-07, personnel expenses rose 8.6 percent over the prior year. This increase is mainly due to increases in health
insurance and retirement premiums;the full-time equivalent positions authorized remained constant in FY 20W07. 1r
As depicted from the chart above,actual wastewater treatment flows have consistently remained between 234 mgd and -
244 mgd in the past,other than in FY 1997-98 which reached a high of 254 mgd and in FY 2000-01 which reached 246 L
mgd. Due to unusually dry weather conditions during the year,FY 2006-07 had flows of only 229 mgd.
6n
Source. Orange County Sanitation District. I
L
50 1
L
ORANGE COUNTY SANITATION DISTRICT
r Authorized Full-time Equivalents by Function
Last Ten Fiscal Years
350
300
250
200
r
150
r
100
r
50
r p
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
r DGeneral Management ■Administrative Services 0Technical Services
=Engineering ■Operations and Maintenance
Fiscal Year Ending June 30,
1998 1999 2000 2001 2002 2003 2004 2006 2006 2007
General Management 16 15 13 12 17 17 17 17 2 25
_ Administrative Services 83 81 87 88 97 107 116 123 145 102
Technical Services 100 93 88 87 95 94 100 112 114 119
Engineering 72 67 75 73 104 79 80 95 99 98
Operations and Maintenance 289 286 255 250 261 272 285 282 284 300
Total FTE's 560 542 518 510 574 569 598 629 644 644
Source: Orange County Sanitation District's Financial Management Division.
51
r
ORANGE COUNTY SANITATION DISTRICT
Biosolids Produced r
Last Ten Fiscal Years
r
55,000 j r
50,000
45,000 r
40,000
r r
35,000
30,000 r
25,000
r
20,000
❑1997-98 E 1998-99 ❑1999-00 ❑2000-01 02001-02 _
02002-03 02003-04 0200405 02005-06 02005-07
Fiscal Year Tonnage
1997-98 42,645
r
1998-99 41,127
1999-00 42,831
r
2000-01 42,254
2001-02 42,505
r
2002-03 47,831
2003-04 50,519
r
2004-05 51,700
200"6 49,554
2006-07 49,184 r
r
r
Source: Orange County Sanitation Districts Environmental Assessment Division,
r
52
ORANGE COUNTY SANITATION DISTRICT
Capital Asset Statistics
Last Ten Fiscal Years
Miles of Number Primary Secondary
Trunk& of Treatment Treatment
Fiscal Subtrunk Pump Capacity Capacity
.. Year Sewers Stations (1) (1)
1997-98 650 22 276 156
1998-99 650 22 276 200
1999-00 650 20 276 200
2000-01 650 20 266 200
2001-02 650 20 276 200
2002-03 650 20 276 200
2003.04 650 20 276 170
2004-05 620 18 306 170
2005-06 584 16 366 200
r 2006.07 581 16 372 200
r
Notes
(1)-C-Capacity is presented as million gallons treated per day.
r
Source: Orange County Sanitation District
r
53
r
ORANGE COUNTY SANITATION DISTRICT
Demographic Statistics r
Covering The Entire County of Orange(1)
Last Ten Fiscal Years
u
Total µ) (5)
(2) Personal Per Capita Median Public (s) rr
Fiscal Population Income Personal FamBy School Unemployment
Year Estimates fin thousands) Income Income Enrollment Rate
1997-98 2.615,000 $ 90.579,927 (3) $ 34,639 $ 61.812 458.000 2.9% 69
1998-99 2.776.000 96,288,099 (3) 34,686 63,478 471,000 2.6% -.
1999-00 2,828,000 106,003,904 (3) 37,484 69.310 483,000 2.9% `
2000-01 2,880.000 109,010.278 (3) 37,851 70,577 494,000 3.0% L
2001-02 2,940,000 111,750,294 (3) 38,010 72,998 503,000 4.1%
2002-03 2,979,000 117,722,50D (4) 39,517 73,572 512,000 4.0% .
2003.04 3,017,000 125,670,100 (4) 41,654 70,900 517.000 3.6% �+
2004-05 3,047,000 133,031.800 (4) 43,660 73,545 514,000 3.9% _
2005-06 3,072.000 141,169.400 (4) 45.954 76.443 510.114 3.7%
2006-07 3.098,000 148,916,000 (46f7) 48,068 78,950 (7) 503,955 3.9%
u
Notes and Data Sources r'
(1) - The Orange County Sanitation District services 471 square miles or 59% of the total 799 square miles that
make up the boundaries of the County of Orange.
u
(2)-Data Source: Demographic Research Und, California Department of Finance.
(3)- Data Source: Bureau of Economic Analysis, U.S. Department of Commerce
r
(4) -Data Source: Anderson Center for Economic Research, Chapman University.
(5)-Data Source: California Department of Education, Educational Demographics Unit.
(6)-Data Source: State of California, Employment Development Department as of June 30 of each fiscal year.
r
(7)-Forecasted number.
r
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La
54
r
ORANGE COUNTY SANITATION DISTRICT
Estimated Populations Served by the
Orange County Sanitation District
June 30, 2007
Population
as of
January 1,2007
Anaheim 345.560
Brea 39,870
Buena Park 82,450
Costa Mesa 113,810
Cypress 49,280
Fountain Valley 57,740
Fullerton 137,370
Garden Grove 172,780
Huntington Beach 202,250
Irvine 202,080
La Habra 62,480
La Palma 16,160
Los Alamitos 12,150
Newport Beach 84,220
Orange 138,640
Placentia 51,600
Santa Ana 363,430
Seal Beach 25,960
Stanton 38,980
Tustin 70,350
Villa Park 6,250
Westminister 92,870
Yorba Linda 67,900
Subtotal City(1) 2,424,180
Estimated Population Served in
Unincorporated Areas(2) 81,000
2,505,180
Data Sources:
(1) Demographic Research Unit, California Department of Finance.
r (2)Orange County Sanitation District Financial Management Division.
55
r
V
ORANGE COUNTY SANITATION DISTRICT
Major Orange County Employers(1)
Y,J
Number of Employees
Employers 2005 2004 2003 2002 2001
Le
Wall Disney Co. 21,000 21.000 21,000 21,275 21,275
County of Orange 18,748 18,029 17,597 17,751 17,741
University of California,Irvine 15,500 15,500 15.500 14,981 14,981
Boeing Co. 11,160 11,160 11,160 11,179 11,179
St.Joseph Health System 8,975 8,975 8,975 9,435 9,435
Alberlsons Inc. 8,700 8,700 8,700 9,500 9,500
YUM! Brands Inc. 6,500 6,500 6,500
SBC Communications, Inc. 5,658 5,658 5,658 7,100 7,100
Target Corp. 5,436 5,436 5,436 4,878 4,878
Tenet Healthcare Corp. 4,185 8,389 8,389 8,389 8,389 _
Bank of America Corp. 4,813 4,813 _
Total Employees 105,862 109,347 108,916 109,301 109,291 W
v
y
V
Notes
(1)-The Orange County Sanitation District services 471 square miles or 59% of the total 799 square
miles that make up the boundaries of the County of Orange. Available data is two years behind the it
District's fiscal year-end and is currently only available for the past five years. As data is accumulated,
this information will be provided for the current year and for the previous nine years.
V
r
r
V
Source: County of Orange
u
56
ORANGE COUNTY SANITATION DISTRICT
Operating Indicators
June 30, 2007
District Organization: The Orange County Sanitation District is one consolidated district made up of two
revenue areas which service unincorporated county areas and twenty-three cities and related special districts,
as follows:
Consolidated Revenue Area
County of Orange(unincorporated areas)
Cities:
Anaheim Huntington Beach Santa Ana
Brea Irvine Seal Beach
Buena Park La Habra Stanton
Costa Mesa La Palma Tustin
Cypress Los Alamitos Villa Park
Fountain Valley Newport Beach Westminster
Fullerton Orange Yorba Linda
Garden Grove Placentia
Special Districts:
Midway City Sanitary District
Costa Mesa Sanitary District
Revenue Area No. 14
County of Orange (unincorporated areas)
Cities:
r Irvine
Orange
Tustin
Special District:
Irvine Ranch Water District
Governing Body: 25-member Board of Directors
Authorized Full-Time Equivalent Employees: 644
Operational Date: July 1, 1954
r Authority: California Health &Safely Code Section 4700 et. seq.
Services: Wastewater collection, treatment, and disposal
Service Area: 471 square miles
Population Served: 2.5 million
Total Miles of Sewers(including force mains): 581 miles
Number of Pumping Stations: 16
Wastewater System Treatment Capacities(Million Gallons per Day)
Existing Primary Existing Secondary Planned Secondary
Actual Flows Treatment Capacity Treatment Capacity Capacity by 2020
Plant 1 91 204 110 170
Plant 2 138 168 90 15
Total
Source: Orange County Sanitation Districts Financial Management Division.
57
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(THIS PAGE INTENTIONALLY LEFT BLANK) II
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68
OCSD
Other Data & Trends Section
-
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.y
ORANGE COUNTY SANITATION DISTRICT
OTHER DATA&TRENDS
Information within this section consists of other data and trends including additional
annual disclosures as required by the Sanitation District's Certificates of Participation
r debt covenants beyond what is allowed to be reported in the Statistical Section.
a
r
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59
6.
ORANGE COUNTY SANITIATION DISTRICT
Cash and Investment Portfolio
as of June 30,2007 6d
Cost Mmket valve Nat umeatlaetl GaiNLass y
Shares Par Bead Base %of Toow Bear
IveMment Portfolio:
Cash and Cash Equivalents(U.S.Dollar)
Pending Trades E - $ (39,486,894.58) E (39,486,89a.5B) -15.10% E - V
Cemihrates of Deposit-Domestic 5.700.0110.W 5,700,000.00 5,=,000.00 2,18% -
Commercial Paw-Diseound 11100.000A0 7AS7,130.64 7,867,130.64 3.02% -
Fed Hm Loan Bnk-Lacs Than 1 Year 13.90D.000A0 13,721,486.80 13,721,486.80 5.25% -
Fecieral Home Loan Mortgage-Less Than 1 Yr 15.40a=W 15,117,167.45 15,117,167.45 5.78% - V
FNMA Issues-Less Than l Year 16,102,000.00 15,745,091.41 15,745,091.41 8.02% -
Mutual Funds 1,327,941.32 1,327,941.32 1,327,941.32 051% -
Omer U.S.Government OMigalbm 17,30g000.00 17,178,849.54 17,178,849.54 6.57% I
Subotal 77,B29p41.32 37210,772.58 37,210,772.58 1424% V
Fixed Income Securities(U.S.Wller):
Banking B Finance 25,750,ODD.OD 25,731,794.90 25,738291.00 9.85% 6.496.10
C Iideralimd Mortgage 001gation 1.1362W.82 1,126.Y12.89 1,137,32639 0.44% 11,10350 v
FHLMC Multiclass 2,786,668.44 2,748,547.0 2,757,852.96 1.08% 9,305.31
FHLMC Pools 20.213.71 19,721.00 20,367.33 0.01% 646.33
FNIMPools 24,352,72155 24ARgA15.34 23,713,037A9 907% 4976,57825)
FNMA Remtc 801,268.81 587,245.90 592,884.82 023% 5.638.92 Y.l
GNMA Mulli Family Foote 1,328,806.79 1,323.56520 1,347,381.46 0.52% 23,816.28
GNMA single Family Pools 3,892.43 4.02226 3,913.95 0.00% (10831)
hlduetral W0.000.00 6W.240.00 600,186.00 0.23% (54.00)
F Flecemerm-More Than 1 Year 752AW 00 816,199.84 828,190.84 0.W% - y
US.Ageicam 90.5 6?9.14 88,171,34126 86,777.0911.99 33Sa% 605,757.73
U.S.Govemmenh, 77,17a,472.07 76.957.72824 77.051.740.91 29.48% 84.012.67
UBliy-Electric 900AW.OD 900.00D.00 9012W.OD 0.34% 1,260.00
UbW-Telephone 7011,0110.0D 701).OW.W 7110,546.0D 02M 54800 hN
Subtotal 228.673.633.79 224395,244.48 224,168,095.74 85.76% (228,157.74)
Total Investment P fdfo $ 301.503.775.11 261,607,017.06 261,378,859.32 10(1.00% $ (228.15T74)
Demand Cash Accounts 3,95111,11,1900 3.988,549.W
Monies Hed WM Feral Agents 84,722,690.00 84,722,69D.00
Monies v h Me Loral Agency investment Fund 21,825,313.15 21,815,383.11
Tomi Cash and Imestmems E 372,143,569.21 $ 371,905,481.43
v
W
V
W
Source: Mellon Trust and the Orange County Sanitation District's Financial Management Division.
i..
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60
ORANGE COUNTY SANITATION DISTRICT
r, Property Tax Rates-Direct and Overlapping Governments
Last Ten Fiscal Years
Tax Rate
OCSD
1958 OCSD's
General Average
Fiscal Basic Obligation Total Share of
Year Levy Bonds Tax Rate Basic Levy
1997-98 1.00% 0.01% 1.01% 2.80%
1998-99 1.00% 0.02% 1.02% 2.80%
1999-00 1.00% 0.00% 1.00°A 2.80%
20OD-01 1.00% 0.00% 1.00% 2.80%
2001-02 1.00% 0.00% 1.00% 2.80%
2002-03 1.00% 0.00% 1.00% 2.80%
2003-04 1.00% 0.00% 1.00% 2.80%
r 2004-05 1.00% 0.00% 1.00% 1.60%
2005-06 1.00% 0.0D% 1.00% 1.60%
2006-07 1.00% 0.00% 1.00% 2.80%
r
Notes
In 1978, California voters passed Proposition 13 which set the property tax rate at a
1.00% fixed amount of assessed value. This 1.00% is shared by all taxing agencies
within which the subject property resides. In addition to the 1.00% fired amount,
property owners were charged taxes as a percentage of assessed property values for
r the payment of OCSD general obligation bonds (which were paid in full in fiscal year
1998-99).
Source:County of Orange Auditor-Controller's Office.
11„I
r
61
ORANGE COUNTY SANITATION DISTRICT
Assessed and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years "'
ax
]]aa,aao.ow
see
]�omo wo
]mo.on.aao s.
w,aowo
as
]+mess o0
r
twam.oa
14BIBs IwCY] 'BB100 ]PoOe1 MO30], ]Ol)dl ]Wld ]WOOS N]SW ]5601
■Secured 0 Unsecured
Percent
Change in
Fiscal Assessed
Year Secured Unsecured Total Value
1997-98 125,018,000 3,302,000 128,320,000 2.21% ass
1998-99 131,295,000 3,394,000 134,689,000 4,96%
1999-00 142,126,000 3,507,000 145,633,000 8.13%
2000-01 155,544,000 3,778,000 159,322,000 9.40% as
2001-02 169,357,000 4,066,000 173,423,000 8,85%
2002-03 183,223,000 5,657,000 188,880,000 8.91%
2003-04 197,143,000 4,309,000 201,462,000 6.66%
2004-05 214,529,000 4,743,000 219,272,000 B.85%
2005-06 236,826,573 5,023,423 241,849,996 10.30% Was
2006-07 264,241,033 6,452,111 270.693,144 11.93%
In 1978,the voters of the State of CeliPornia passed Proposition 13 which limited property taxes to a
total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, ass
the assessed value of property may be increased by an inflation factor which is limited to a maximum
increase of 2%. With few exceptions, property is only reassessed at the time that it is sold to a new
owner. At that point, the new assessed value in reassessed at the purchase once of the property ass
sold. The assessed valuation data shown above represents the only data currently available with
respect to the actual market value of taxable property and is subject to the limitations described
above. Consequently,the assessed and estimated values are the some.
r
Source: Orange County Auditor-Controller's Office.
ses
62
ORANGE COUNTY SANITATION DISTRICT
Property Tax and User Fee Levies and Collections
r (Dollars in Thousands)
Last Ten Fiscal Years
r
$250,000
r
$200,000
5150.000
3100.000 -
55o,ao0
1997-98 1998-99 1999-00 20(il 200102 200203 2W-04 2004-05 2005-06 200607
Metal Tax and User Fee Ill 0Total Tax and User Foe Collection
Current Total Tax %of
Total Tax Tax and Percent of Delln- and User %of Total ols Delinquen-
Flscal and User ERAF III User Fee Levy quent Fee Collection Delinquen- ties to Tax
r Year Fee Levy Deduction Collection Collected Collection Collection to Levy ties Levy
1997-9B $90,589 $ - $ 90,078 99,44 $ 81 $ 90,159 99,53 $ 510 0.56
1998-99 98.557 - 98,267 99.71 74 98,341 99,78 291 0,30
1999-00 107,948 - 107,794 99,86 72 107.866 99.92 154 0.14
2000-01 1D5SM - 105,646 99.77 94 105,740 99.86 245 0.23
_ 2001-02 112419 - 112.087 99.70 83 112.170 99.78 332 0.30
2002-03 122,450 - 122,210 99.80 98 122,308 99.88 241 0.20
2D03.04 134.389 - 134,132 99.81 94 134,226 99.88 257 0.19
20D4-D5 153.187 (16.198) 152.745 99.71 92 152,837 99.77 442 0.29
2005-DB 191.711 (16,198) 191,290 99.78 122 191,412 99.84 421 0.22
2006-07 209,768 - 209,206 99.73 215 2D9,421 99.84 560 0.27
Source: Orange County Auditor-Controller's Office.
63
L
ORANGE COUNTY SANITATION DISTRICT I
Property Value and Construction W
Covering The Entire County of Orange(1)
(Dollars In Thousands) L
Last Ten Fiscal Years
Non-
Assessed Residential Residential
Property Value(2) Constr.13) Construction(3) Total LI
Fiscal Calendar No.of Construction
Year Value Year Value Units Value Value(3)
1997.98 $ 182,284,316 1998 $ 1,629,698 10.101 $ 1.864,084 $ 3,393,782 V
1998-99 192,625,739 1999 1,614,422 12,348 2.262,492 3,876,914
1999.00 209,136,472 2000 1,762,142 12,367 2.210,775 3,972,917 I
2000.01 228,548,301 2001 1,349,607 8,646 1.906,321 3,254,928 Li
2001-02 248,966,581 2002 1,208,626 12.020 2,328,123 3,536,749
2002-03 269,684.864 2003 1.005,547 9,311 2,076.978 3,082,523 L
2003.04 287,923.828 2004 1.132,848 9,322 2,243,642 3,376,490
20D4-05 311,802,395 2005 1,494,759 7,206 2,100,438 3,595,195
2005.06 342,576.869 2006 2,400,569 8,371 2,316,948 4,717,517
2006-07 381,007,391 2007 (4) 2,687,231 7,459 2,054,963 4,742,194
Notes and Data Sources
(1) - The Orange County Sanitation District services 471 square miles or 59% of the total 799 square
miles that make up the boundaries of the County of Orange.
(2) -Data Source-Orange County Auditor-Controller's Office.
V
(3) -Data Source-"The Chapman University Economic&Business Review."
(4) -Forecasted numbers. Li
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64
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ORANGE COUNTY SANITATION DISTRICT
Insurance in Force
As of July 1,2007
Type Insurer Deductible Limit
All-Risk Property
Fire and Other Perils Public Entity Property $25,000 per occurrence $1 billion/occurrence
Insurance Program
(Lexington and others)
Flood Public Entity Property $100,000 per occurrence $300 million/occurrence
Insurance Program
Earthquake Not Applicable Not Applicable Self-insured
Boiler& Machinery Public Emily Property $25.000 to $100 million/occurrence
Insurance Program $350,000
(Lexington and others)
Employee Dlshonesty/ Hartford Fire, National Union $2,500 $1 million loss;
Faithful Performance/ Fire, and Great American $4 million excess policy
Errors &Ommissions Insurance Companies
Excess Everest National Insurance $250,000 $25 million/occurrence
General Liability Co.(first$10 million $500,000 for EPLI and annual aggregate
layer); North American
Specialty Ins. Go.($15
million layer excess$10 million)
Travel&Accident Chubb Group of Insurance None Accidental Death&
Companies Dismemberment:
Class 1: Elected Officials;
$500,000 per occurrence
Class 2: Employees;
10 X annual salary, up to
$50D,000 per occurrence
Excess Workers' CSAC Excess Insurance $500,000 $300 million each accident,
Compensation Authority Each Accident each employee
Pollution CSAC Excess Insurance $100.000 $10,OOD,OOD per loss
Authority
Source: Orange County Sanitation District's Risk Management Office.
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ORANGE COUNTY SANITATION DISTRICT
Financial Management Division
10844 Ellis Avenue
Fountain Valley, California
92708-7018
(714) 962-2411
www.ocsd,com
6/30/07
Orange County Sanitation District
i -Y ar Strategic Plan •
i -
� R
O
" We protect public health and th a vir • rf by pr • vi • ing
effective wastewater collection, tr m nt, and re din • . '
v
November 2007
Orange County Sanitation District
_ Five -Year Strategic Plan
November 2007
Orange County Sanitation District
10844 Ellis Avenue, Fountain Valley, CA 92708
714-962-2411 w .ocsd.com
TABLE OF CONTENTS
_ OCSD BOARD OF DIRECTORS ............................................... ii
STRATEGIC PLAN PROJECT TEAM.......................................... ii
_ MESSAGE FROM THE GENERAL MANAGER .............................iii
EXECUTIVE SUMMARY ..........................................................it,
A UNIFIED STRATEGIC PLAN ..................................................v
OVERVIEW ........................................................................... 1
OCSD MISSION STATEMENT .................................................2
OCSD VISION STATEMENT....................................................3
_ CORE VALUES ......................................................................4
LEVELS OF SERVICE..............................................................5
_ Environmental Stewardship...............................................6
Business Principles ........................................................... 8
_ Wastewater Management................................................ 10
Workplace Environment.................................................. 12
_ FINANCIAL PLAN................................................................ 14
APPENDIX A: POSITION PAPERS.......................................... 15
APPENDIX B: GLOSSARY ....................................................24
i
OCSD BOARD OF DIRECTORS
for Fiscal Year 2007-08
Chair: James Ferryman
Vice Chair: Doug Divert
Agency/Cities........................................Active Director
Anaheim....................................................Harry Sidhu
Brea...........................................................Roy Moore
Buena Park................................................Patsy Marshall
Cypress......................................................Phil Luebben
Fountain Valley.........................................Larry Crandall
Fullerton....................................................Don Bankhead
_ Garden Grove...........................................Bill Dalton
Huntington Beach....................................Cathy Green
Irvine.........................................................Steven Choi
_ La Habra....................................................Steve Anderson
LaPalma....................................................Mark Waldman
Los Alamitos.............................................Ken Parker
Newport Beach.........................................Don Webb
Orange.......................................................Jon Dumrtm
Placentia....................................................Constance Underhill
Santa Ana..................................................Sal Tinajero
Seal Beach.................................................Charles Antos
Stanton......................................................David Shawwer
Tustin........................................................Doug Divert
Villa Park...................................................Rich Freschi
Yorbi Linda..............................................Jim Winder
Sanitary/Water Districts
Costa Mesa Sanitary District....................James M. Ferryman
Midway City Sanitary District..................Joy L.Neugebauer
Irvine Ranch Water District.....................Darryl Miller
County Areas
Member of the Board
of Supervisors............................................Chris Norby
_ STRATEGIC PLAN PROJECT TEAM
James D. Ruth ................---..................General Manager
Robert P. Ghirclli .............................. ......Assistant General Manager
Nick Arhontes........................................... Director of operations and Maintenance
Jim Herberg............................................... Director of Engineering
Edward M.Torres.....................................Director of Technical Services
Lorenzo Tyner...........................................Director of Finance
Barbara Collins.........................................Strategic Plan Project Manager
Brent Ives..................................................BHI Consulting
ii
_ MESSAGE FROM
THE GENERAL MANAGER
Throughout our 53-year history, the Orange County Sanitation District has
operated at a high level of service by maintaining excellent relationships with our
member cities and agencies,mtepxpers and regulators.We are proud of at long
track record of innovation,planning and sound financial management.
Building on this success,the Districts Board of Directors and staff are charting a
_ course for continued success in the future through the development and execution
of this Strategic Plan.The Plan defines the mission,vision,values,goals and finure
business strategy for(X]SD.
Chi goals fall into four essential areas of our business:wastewater management,
environmental stewaniship,business principles,and workplace environment.
While our cure business has remained constant Over time, this plan directs our
efforts to rake on the complex issues and challenges facing the Sanitation District
in the next several year,.
In developing this Strategic Plan,we focused on four key points:
. Our most important responsibility is to provide safe,effective wastewater
_ treatment;
. We arc continuing to make decisions by incorporating social,
environmental and financial considerations;
. We remain leaders in the protection of the environment,collaborating
with other stakeholder- in the watershed to ensure we effectively meet the
_ needs of our customers;and
. We continue to provide employees with resources to do their jobs and give
them opportunities for career growth.
As we mme roward final approval and implementation of this Strategic Plan,
detailed action plans will be developed by each department and division,outlining
_ the tasks and results necessary to implement each service target and goal.We will
also review the plan periodically to readjust these goals as changing conditions
dictate.With the support of the Board of Directors, 1 am confident this plan will
_ help us achieve the exp ecrations of those we sere in the months and years to
come.
Respectfully submitted,
�mes�D R rl�
General Manager
iii
EXECUTIVE SUMMARY
Beginning in summer 2007,the Cenral Manager's Office initiated the process of
creating this Strategic Plan,soliciting assistance from all levels of the organization.
Input included meetings with staff members who helped to retool the Mission
.. Statement,Vision Statement and Core Values during a series of management
workshops and Executive Management Team retreats.This was followed by a series
of four workshops with the Board of Directors to provide additional input and
direction.As a result, this Strategic Plan addresses several major objectives and
critical challenges facing the Orange County Saturation District now, in the next
fve years,and further into the future.They include:
. Achieve a comprehensive foelear plan that focuses our present and frture
efforts to meet the s:inuation, health and safety needs of the 2.5 million
people we sent.
. Plan,design and build$2.6 billion worth of essential capital improement
projects eter a twenty-year period that continue to meet the regulatory,
environmental,health and safety needs of a growing population.
. Continue to direct sufficient resources and keep investigating
new rechnologies to effectively deal with odor issues.
. Apply sufficient fords to meet regulatory requirements related
to air emissions.
. Continue to support the Groundwater Replenishment System
in partnership with the Orange County Water District.
. Continue to aggressively pursue alternatbes that make fiscal and
environmental sense in the final disposition of biosolids.
. Apply sufficient resources to ensure the maintenance of our assets
remains a priority.
. Address risk assessment issues to protecr the environment,our employees
and the public's health.
. Sustain and enhance a skilled work force capable of managing
a highly technical operation in a dynamic and technologically
challenging environment.
. Protect our resenes and credit rating while maintaining a responsible
rare stnacnare that is at or below other sanitation agencies.
This Strategic Plan charts a focused roadmap of success for the farure of the
Orange County Saturation District. It addresses critical operations and
mnsrnerion issues, (financial and budgeting challenges,and goes a clear and
concise direction to staff, ratepayers,regulatory agencies,the general public
and our Bxird of Directors.
is
A UNIFIED STRATEGIC PLAN
r In creating this document,a considerable amount of thought xas given ro how a
variety of existing planning resources would be used to create a unified Strategic
Plan.The graphic below shoxs the relationship of these resources and how they
r relate to the metal]structure and execution of the Plan.
Mission
r
Vision
r
Levels of Service
Environmemal Business Wastewater Workplace
_ Stewardship P.inuple Management Environmem
C. -
ondtOSrareen -
a"P,,5) -
r
Business Plan
Business Staffing FinaracW Capital Asset
Accoun[abiliry fl Improvement Management
Charters Plan Plan Program Plan
r
V
OCSD Five-Year Strategic Plan
OVERVIEW
Since 1954, the Orange County Sanitation District has provided wastewater
treatment to the residents and businesses of northem and central Orange Cinmty.
It is the third largest wastewater treatment agency west of the Mississippi River,
_ and collects, treats,and disposes of 230 million gallons of wastewater eery day.
The Sanitation District also recycles nearly 100 percent of its biosolids and will
soon reclaim nearly one third of its treated wastewater.
Reclamation Plant No. 1 in Fountain Valley and Treatment Plant No. 2 in Huntington Beach,CA
In July 2002, the Board approved disinfecting the effluent and proceeding with
the planning,design,and construction of facilities that will ultimately allow the
Sanitation District effluent to meet Federal Clean Water Act secondary treatment
standards.The current disinfection program includes nearly$9 million annually
for chemicals.The estimated capital construction cost to meet secondary treatment
standards is$049 million.The Sanitation District is currently in the midsr of a
$2.6 billion, 20,year capital improvement program with an annual capital budget
of nearly$300 million.
In addition to the Sanitation District's partnership in the Groundwater
Replenishment System and secondary treatment expansion,our capital
imprmemenr program includes critical rehabilitation of our aging collections
system and treatment plant facilities,and upgrades to provide enhanced odor
control and reduced air emissions.
Against this backdrop of challenging issues, and to meet the large and complex
needs of providing services to 2.5 million people in the most effective and efficient
way possible,the strategic planning process began by engaging a facilitating
consultant to coordinate the effort. Input was gathered from Sanitation District
smff related to vision, mission,core values, levels of service, and goals.This gave
employees the opportunity to take ownership in the Strategic Plan and play a
foundational role in the development of the Mission and Vision statements and
Cote Values.
The Fxecutive Management Team then focused on a series of Level of service
issues and presented recommendations to the Board of Directors for their
consideration in the Fall of 2007.
The resulting input forms the basis for this Strategic Plan.
1
0(SD one Year Strategic Plan
OCSD MISSION STATEMENT
The Me,sion Statement is the haxic tmindation that defines,It% the llrum_c
Comm Sanitation District exists.
"We protect public health and
_ the environment by providing
effective wastewater collection,
treatment, and recycling."
AV ;
z
OCSD Five-Year Strategic Plan
_ OCSD VISION STATEMENT
The Vision Statement suplx,as the Mission Statement by expre.<Mng a broad
philosophy of what the Orange County Sanitation District strives to achieve now
and in the future in the delivery of sen'ices to our customers,vendors,other
agencies,the general public and each other.
The Orange County Sanitation District is committed to:
Making decisions in an open and
honest way to produce optimum
financial, environmental and
societal results.
Cooperating with other
_ stakeholders to protect the r� ttt �
ocean and regional water
resources for the people
we serve.
t
Beneficially recycling wastewater,
_ biosolids and other resources pl
using safe and effective
processes and systems. —
Developing the best possible
workforce by providing
employees with opportunities
to advance their careers through
enhanced growth, responsibility,
and professional development.
3
OCSD Five-Year Strategic Plan
CORE VALUES
The Core Values support the Mission and Vision Statements by expressing
the values, beliefs,and philosophy that guides our daily actions.They help form
the framework of our organization and reinforce our professional work ethic.
HONESTY, TRUST and RESPECT
We aspire to the highest degree of integrity, honesty, trust, and respect in our
interaction with each other, our suppliers, our customers, and our community.
TEAMWORK and PROBLEM SOLVING
We strive to reach OCSD goals through cooperative efforts and collaboration
with each other and our constituencies.We work to solve problems in a creative,
cost-effective and safe manner, and we acknowledge team and individual efforts.
LEADERSHIP and COMMITMENT
We lead by example,acknowledging the value of our resources and using them
wisely and safely to achieve our objectives and goals.We are committed to act
in the best interest of our employees, our organization, and our community.
LEARNING/TEACHING - Talents, Skills and Abilities
We continuously develop ourselves.enhancing our talents, skills, and abilities,
knowing that only through personal growth and development will we continue
to progress as an agency and as individuals.
RECOGNITION/REWARDS
We seek to recognize, acknowledge and reward contributions to OCSD by our
many talented employees.
4
OCSD Five-Year Strategic Plan
_ LEVELS OF SERVICE
The Icvels of Service standards,m the hollowing pages are measures of sen'ice
that are seen by our customers as high priorities.Additionally,a comprehensKi:
assessment of risks w.w conducted in 2006 that generated some of the targets.
These LOS standards are based on environmental,business and customer sen ice
considerations and will be monitored and periodically updated as conditions
wwrant.
c=
-v
5
OCSD Five-Year Strategic Plan
Environmental Stewardship
OCSD participates collaboratively in the protection of regional water resources for
the benefit of the people we serve. Orals to su pIxnt the Environmental
Stewanlship Level of Service inCludc:
1. SARI Line Relocation -Support the County of Orange Resources and
Developmenr Management Department effort to relocate the SARI Line
by 2011.
-. Management System for Environmental Compliance- Implement's
management control system for environmental compliance information that
incorporates a"dashboard" repotting approach.
i. Contaminants of Potential Concern(CPC) -Complete three phase testing
and analysis of 550«CPC, prepare report on findings and recommendations,
develop initial source control strategy if there arc CPCs identified that
require control.
4. Climate Change/Greenhouse Ganes-Complete development of statewide
emission inventory protocol for Publicly-owned Treatment Works and submit
mandatory emission invcnrory to the California Air Resources Board
for FY 07-08.
5. Engine Emission Compliance-Complete srdy to evaluare alternatives
for complying with lower emission limits in the South Coast Air Quality
Management's Rude 1110.2. Initiate planning and design of demonstration
testing of the most promising technology(s) identified in the study.
6. Reclaiming SARI Line frays -Meet with stakeholders,develop a list of
obstacles that need to be overcome to reclaim the SARI Line,and develop
an initial strategy for obtaining regulatory approval to allow SARI Line flows
to be treated at Reclamation Plant No. 1.
6
OCSD Five-Year Strategic Plan
Environmental Stewardship Levels of Service
FY 08-09
OCSD will protect public health and the environment. Target
Provide capacity to collect and treat dry weather urban runoff Up to 4 mgd to c..ee by
2020
Maximum off-site odor impact(in D/T*)
• Reclamation Plant No. 1 42 D/T la D/r by 2016
• Treatment Plant No. 2 48 D/T 17 DIT by 2016
Air emissions health risk to community and employees, <25 <10 by 2014
per one million people (for each treatment plant)
Permit compliance(air, land, and water) 100%
FY 08-09
OCSD will be a good neighbor. Target
Odor complaint response:
• Treatment Plants within 1 hour 100%
• Collections System within I working day 100%
Number of odor complaints:
• Reclamation Plant No. 1 32
• Treatment Plant No. 2 4
• Collection System 34
Restore collection service to customer within 8 hours 100%
Respond to collection system spills within 1 hour 100%
D/T. Dilution to Threshold:
The dilution at which the majority of people detect the odor becomes
the D/T for that sample.
7
OCSD Five-Year Strategic Plan
Business Principles
.. OCSD makes every decision based on short and longterm environmental,societal,
and financial impacts(tire triple bottom line). Goels to support the Business
Principles Level of Service include:
I. Strategic and Business Plan-With hoard concurrence,annually update and
implement the Strategic Plan and Business Plan.
2. Review Interagency Agreements-Conduct a comprehensive review of
agreements with the Santa Ana Watershed Project Authority and Imine Ranch
Water District and, if appropriate, reopen for discussion.
9. Enterprise Information Technology Strategic Plan-Complete a District-
wide information technology Strategic Plan.
4. Complete Facilities Master Plan Update-Complete a comprehensive update
of the Facilities Master Plan and obtain Board approc:d.
_ 5. Sewer Rate for"Green Development"-Submit for board apprrn:d an
amendment to sever rate ordinance with incentives for green developments.
6. Business Accountability Charters -Create BACs for each department
consistent with BACx developed by managers and supervisors.
7. Neal Sewer Services- Implement the Board's four recommendations based
on findings of staffs Revenue Adequacy Report. Continue to seek an asset
transfer to another agency.Also transfer other local assets back to cities that
arc not serving a true regional purpose.
8. Annex Unincorporated Areas -With board concurrence,annex
unincorporated areas into OCSD's sc-mice area.
rr s
.t,t't'�4+till .mow
�r
8
OCSD Five-Year Strategic Plan
Business Principles Levels of Service
OCSD will exercise sound financial management. FY O8-09
Target
COP service principle and interest < O&M expenses
Annual user fees Sufficient to cover all
O&M requirements
Annual increase in collection, treatment, and disposal <10%
costs per million gallons
Annual variance from adopted reserve policy <5%
OCSD will be responsive to our customers. FY 08-09
Target
Respond to public complaints or inquires regarding >90%
construction projects within 1 working day
New connection permits processed within >90%
one working day
9
OCSD Five-Year Strategic Plan
Wastewater Management
OCSD beneficially reuses and recycles water and other resources using safe and
effective wastewater systems. Goals to support the Wastewater Management I-evel
of Service include:
I. Sustainable Biosolids Program - Prepare request for proposal or sole source
for selecting a technology for managing the remaining one-third of our
_ biosolids capacity. Develop long-term agreement and implement management
option. Evaluate the feasibility of deep well injection/methane recovery
including commissioning a study of the geological formations below Plants I
and 2, and availability and acceptability of any existing wells;and processing
some of our biosolids at the City of Los Angeles Terminal Island
demonstration well.Complete new In-county Compost Take-flack Program
Plan strategy.
2. Implement Energy Master Plan -The Energy Master Plan is in final stages
and rill provide recommendations to ensure adequate power resources and
energy management.
1. Odor Control - Implement Odor Control Projects at Plant I (trickling filters)
,,. and Plant 2 (solids loading facility)by 2016.
= -,nn�mI9111111111111lE ' III
i
k
OCSD Five-Year Strategic Plan
Wastewater Management Levels of Service
.. OCSD will provide an effluent quality suitable
for protecting public health and being a source FY 08-09
for water recycling. Target
Concentration of emerging chemical constituents NDMA' < 150 Fist
of concern in Plant No. 1 secondary effluent 1,4-Dioxane < 2ppb
Thirty-day geometric mean of total coliform bacteria <1,000 mpn
in effluent after initial dilution of 180:1
Industry compliance with permits to discharge into 100%permit
OCSD sewers compliance
Meet secondary treatment standards BOD 100 mg/L
T55 55 mg/L
OCSD will manage flows reliably. FY O8-09
Target
Frequency of use of emergency one-mile (78-Inch 0 per year during dry aOD 30 mg/l
diameter)outfall weather, less than r5530 mg/L
2012
once per 3 years in
peak wet weather
Sanitary sewer spills per 100 miles <2.1
Contain sanitary sewer spills within 5 hours 100%
OCSD effluent will be recycled. FY 08-09
Target
Provide up to 104 mgd specification effluent to the 104 mgd
Groundwater Replenishment System
.. OCSD will implement a sustainable biosolids FY 08-09
management program. Target
National Biosolids Partnership Certification for Maintain certification
Biosolids Environmental Management System
Percent of biosolids recycled >95%recycled
<5%landfill
' NDMA- N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent.
it has been found in the Groundwater Replenishment System process and
is eliminated using hydrogen peroxide with extra ultra-violet treatment.
11
OCSD Five-Year Strategic Plan
Workplace Environment
OCSD provides an environment of partnership,gramth,opportunity,
responsibility and accountability.Orals to support the Workplace Environment
Ixvel of Setvice include:
I. Succession Plan - Implement the elements of the succession plan including
management training and the creation of a Leadership Academy to train
_ future leaders.
2. Improve the Sanitation District's Security- Provide longterm security
enhancements at both treatment plants and within OCSD's Collections
Sysrem.
3. Space Planning Study Recommendations-Complete relocations of staff
housed in Information Technology Trailers.Administration Building,Control
Center and Building 6.
4. North County Yard -Open the North County Yard and training facility
and complete the relocation of selected staff and equipment to the facility.
Implement flex space for added agency- ide needs as appropriate.
5. Safety and Health Strategic Plan -Develop and implement a Safety and
Health Strategic Plan for all Sanitation District activities.
s i
t '
OCSD Five-Year Strategic Plan
Workplace Environment Levels of Service
OCSD will take care of its people. FY 08-09
Target
Training hours per employee 45 per year
Employee injury Incident rate Industry average
Mandatory OSHA training requirements 100%
Annual employee volunteer participation in programs 15%per Division
that enhance safety and security culture and
awareness
13
OCSD Five-Year Strategic Plan
FINANCIAL PLAN
During a series of workshops held August through October 2007,the Ik)ard
of Directors and staff reviewed option;for financing the Sanitation District's
operating and capital programs for the next five years.On October 24. 2007,
the Steering Committee unanimously approved a financing plan to support
implementation of Strategic Plan.
Staff recommended a slightly mmlified plan that invokes a fhegear rate sm¢mre
that will owwase the annual single fnnih sewer usw rate as follows:
2m70N 2(tlala) 10 2010.11 201112 201211
Current Year I Year Z Year 3 Year 4 Year 5
A,nual K, $182 $201 $221 $243 $267 $293
$Pcr Month $15 $17 $18 $20 $22 $24
%ImTea" 10% 10.5% 10% 10% 9.8% 9.8%
With Board apply al of the Strategic Plan and the Financial Plan,staff will begin
the Proposition 218 process,requiring notification to rate pagers of the proposed
rate increase.This notification will inform rate payers that sewer fees will increase
as shown above for Fiscal Years 20D8,D9 through 2012-13.
14
OCSD Five-Year Strategic Plan
_ APPENDIX A: POSITION PAPERS
Doc to the complex nature of many of the challenges that went into rile
preparation of this Strategic Plan,a series of position papers were created to assist
in better Understanding the issues currently facing the Orange Counry Sanitation
District. Included in appendix are position papers on the following subjects:
Biosolids Management
Groundwater Replenishment System
Air Quality
Odor Control
Proposition 218 Notification
15
OCSD Five-Year Strategic Plan
Setting OCSD's Level of Service
for Biosolids Management
Policy Issue for LOS Determination: Recognizinc the Baard's Resulutiou
(OCSD 0&10)that supports biosolids reuse and encour.ecs its member a'."H, �
to use compost made from bimolids,should OCSD cunrinue to pursue our
beneficial reuse policy or include disposal optioms for the remaining 1/3 of its
non4:onrracnially committed biosolids production?
Scoff Recommendation: OCSD should continue to pursue beneficial reuse
of the remaining 1/3 of its biosolids production. Staff will continue to utilize
costcffectne land application reuse options in Kern County and Arizona for as
long as possible(anticipated to be less than five years)while pursuing a bicssolids
ro-energy alternative for the balance of its biose lids production.
Analysis: OCSD currently produces 650 tots of biosolids per day,by 2012 when
the new secondary treatment processes are filly operational,biosolids production
is projected to increase by approximately 30%to 840 tons per day.OCSD
currently manages its bic solids as follows via two contracts using five options:
• 24%is land applied as Class A biosolids in Kern County($43.07/ton)
• 26%is land applied as Class B biosolids in Yuma County,
Arizona($45.44)
38%is composted to Class A in Kern County($63.09)
12%is composred to Class A La Paz County,Arizona($49.74)
• 3%is land filled in Yuma County.Arizona($45.44)
In 2003,OCSD adopted the Long-Range Biosolids Master Plan(Plan).The main
policy recommendations from the Plan were:
• Obtain at least three diverse biosolids management options
Limit participation in any marker to onehalf of the biosolids produced
• Limit contracts to one-third of total biosolids production
• Strive for increased biosolidsbased compost use in Orange County
Since the completion of the Plan,OCSD has entered into two long4erm contracts
that will service approximately mwothirds of OCSD's biosolids production.
• EnerTech: 225 tons/day of biosolidsto�hrel in Rialto($72.40)
_ (on line 12/08)
• Synagro: 250 tons/day of biosolids composring in Kern COUnry($63.09)
Staff is primarily investigating biomlicls-toenergy technologies and markets for the
remaining one4hird of OCSD's biosolids production because of our concern that
biosolids composting markers are being saturated which could result in de-aluing
of the product, making it non-sustainable.The private sector has already
16
OCSD Five-Year Strategic Plan
continued Setting OCSD's Level of Service
for Biosolids Management
significantly invested in developing biosolidsstcenergy technologies which enables
wastewater agencies to participate in proven and sustainable markets. Staff will also
be investigating biosolids management via deetrwell injection and methane
pnxluction which is currently being evaluated led by the City of Los Angeles.
Alternatives. UCSD will pursue long term contracts if possible for non•beneficial
,. reuse landfill disimsal.
Cost Implications for the remaining 1/3 of OCSD's biosolids(2007 dollars).
Energy Production: $85/ton -Annual cost-$7.8M
Deep Well Injection: $40/ton -Annual cost-$3.7M
Landfill Disposal: $60/ton -Annual cost-$5.5M
17
OCSD Five-Year Strategic Plan
Setting OCSD's Level of Service for the
Groundwater Replenishment System
Policy Issue for LOS Determination, The Orange County Sanitation District
(CXSD)has shared in construction costs for Phase I of the Groundwater
Replenishment(GWR)System with the Orange County Water District(OCWD),
with each agency Paying equal shares of 50%. Phase I will reclaim up to 70 million
gallons per day(mgd)of water, and will defer the need for OCSD to construct
a new ocean outfall estimated at$200 million. Ultimate planning for the GWR
System allows for reclamation up to 130 mgd.The major GWR System pipelines
and other components have been sized to accommodate this expansion; huwevrq
the advanced water purification facilities are sized for 70 mgd. OCSD has
nor committed additional finding for expanding the GWR System beyond
the present phase.
Staff Recommendation OCSD will maintain its commitment for Phase I of the
GWR System. This commitment for Phase 1 of GWR System includes the
following:
. Providing OCWD with secondary effluent to produce 70 mgd
of reclaimed water
. Providing 50%of capiril costs($250 million)for Phase 1
. Providing 50%of O&M costs($500,000 per year)to remove
IA .Dioxane and NDMA
In addition to the commitment for Phase 1,staff recommends exploring"low cost"
or"no cost'options to expand water availability for the GWR System, including:
. Revisiting the potential use of the SARI with the Department
of Health Services
•� . Considering grant finding of future sewer diversion projects
Analysis, In 1999,the OCSD Board of Directors(Board)approved Phase I
of the GWR System,a joint-fi nded project of OCSD and OCWD.The objective
of Phase 1 Is to maximize the use of treated effluent for water recycling and
to manage OCSD's peak Flow,deferring the construction of a second mean outfall
beyond 2020.
The OWR System is anticipated to be fully operational in November 2007.
Currently, OCSD Reclamation Plant No. 1 has sufficient wastewater to allow
the GWR System to produce about 55 road of reclaimed water for the first year
of operations. When the new Ellis Pump Station is completed in 2009, there will
be sufficient flow to operate the GWR System at its full 70 mgd capacity.
Even though sufficient flows will be available for Phase 1 of the GWR System,
the daily Ina flow period (1:00 am to 8:00 am)will limit water availability for
expansion of the System beyond Phase I. Camp Dresser and McKee(CDM) has
18
OCSD Five-Year Strategic Plan
continued Setting OCSD's Level of Service for the
Groundwater Replenishment System
r analyzed options to pump additional flows to Plant No.1, segregating reclaimable
and non-reclaimable(SAWPA flows)wastewater streams,and constructing separate
treatment plants. In light of the benefits of the current level of sen ice versus the
r high costs of making future flow available for the GWR System,staff recommends
that OCSD continue to work with OCWD to study lower cost options to
maximize the amount of water that can be reclaimed.
Altennativest OCSD will be directing all available reclaimable flows to Plant No. I
to maximize reclamation. In the frmsre, as OCSD flows increase substantially, staff
r will recommend implementation of the most feasible and costeffective options for
increasing the quantity of flow available for reclamation.
r Estimated Cost Implications for Future Phases,
OCSD Diversions and Infrastructure- up to$700 million
r Expansion of OCWD Advanced Water Reification Facilities- about$150 million
Every$1 million in OCSD expenditures increases single family user rates by$1.13 per year.
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OCSD Five-Year Strategic Plan
Setting OCSD's Level of Service
for Air Quality
Policy Issue: The Disrrict expects the South Coast Air Quality Management
Disrrict to amend existing regulations to require significant reductions in common
pollutants(smog,visibility impairment)in December 2007.A secondary public
health benefit of this regulation is the reduction in air toxic emissions.The
estimated capital imprurinenr cost to meet the new requirements is$31 million.
• If the new regulations are not approved then OCSD will be required
by 2012,under the existing regulations,to notify all affected residents
and business surrounding our facilities of health risks associated
with our emissions.
OCSD can aaoid issuing notificarias by proacthely installing air
pollution control equipment to reduce the air roxic emissions below
the noritcation level.
Analysis: Currently,State haw and the South Coast Air Quality Management
District require facilities to inventory their air toxic emissions and conduct a
Health Risk Assessment of the health risk impact of their emissions to
surrounding residents and businesses.
Public notification is required if the cancer risk exceeds 10 in one million and
noncancer risk exceeds 1.This means that 10 out of 1 million residents exposed
to District air emissions,over a 70-year period,can contract cancer. It is
anticipated that after completion of fill secondary facilities in 2012,OCSD will
exceed the threshold established by SOUth Coast Air Quality Management District
and the District will be required to notify affected communities.
New regulations proposed by the South Coast Air Quality Management District
would tequire OCSD to make significant reductions in common pollutants.
The most technically feasible and lowest cost solution will be to add air pollution
controls to the existing engines,which would provide the added benefit of
reducing air toxic emissions below levels that require public notification.
Alternatives W the near reculation.v are not enscrrdh
• Notify the affected public of the potential health risk from OCSD's toxic
air emissions.The District would notify the public via direct mailings
to the residents,businesses,and schools followed by public meetings.
The corresponding materials will also be listed on the SCAQMD Web site
and, possibly, printed in local newspapers.
• Add air pollution controls to reduce risk to community below public
_ notification level.
Staff Recommendation. OCSD should apply feasible and covtcffective controls
in order to reduce the air toxic emissions below the health risk notification level
to the surrounding community and OCSD employees.
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OCSD Five-Year Strategic Plan
Setting OCSD's Level of Service
for Odor Control
Policy Issue: Thousands of homes surround the District's two treatment plants.
Under current operating procedures,OCSD's goal is to contain odor nuisances
within our property boundary. Historically,OCSD(rased our Level of Service on
meeting hydrogen sulfide levels at the exhaust of odor control equipment within
the treatment plant and at the fenceline of our property.Through significant
study,staff has determined that hydrogen sulfide is not the best indicator of odor
due to the presence of other odorous compounds.To gauge accurately odor
nuisances,OCSD is changing to a scientifically based method of odor detection
to determine accurately the Level of Service it wishes to achieve for communities
surrounding our treatment plants.The Board must then chorse the desired LOS.
Analysis: In 2002,OCSD completed the Odor Control Master Plan,which
provided specific recommendations and measures to control and reduce odors.
Staff conducted an extensive evaluation of OCSD facilities by collecting and
analyzing odor samples from the plant proving equipment.The District used
a panel of 68 people,with average olfactory sensitivity,to determine the odor
detection thresholds scientifically based on the number of times the sample
needed to be diluted before the panelist detected odor.Staff then assigned an odor
unit to the sample-the higher the number of dilutions needed to achieve the
threshold,the stranger the odor.Staff then fed the data into a computer model
to predict the impact to the community.
With the modeling analyses completed,staff concluded that tinder normal
operation conditions,by u sing a guideline of 10 D/f(dilutions to threshold)
OCSD would eliminate odor to the surrounding community.OCSD currently
meets a 40450 D/T,which is 4 to 5 times greater than 10 D/T.After the currently
approved CIP projects are consmicred,OCSD is estimated to reach a level of
25-30 D/f(2.5 to 3 times greater than 10 DID.
Alternatives:
• Adopt a treatment plant LOS of 25-30 dilutions/threshold. LOS will be
achieved when the projects approved in the current CIP are constructed.
Design and construct all future projects to a service level that will keep
odors from that project on District property.Staff believes this Ic el is
10 D/r but caseArycase modeling for the projects will be required.
The result is no cost impact to the current approved CIP.
• Adopt a treatment plant and fume project design and construction
LOS for odor control of 10 dilutions/threshold(within the fence line
of OCSD)and incorporate four additional odor control projects into the
CIP.The result is an increase of$69.6 million to the CIP and$648,000
for O&M.
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OCSD Five-Year Strategic Plan
continued Setting OCSD's Level of Service
for Odor Control
Staff Recommendation, b_stahlish OCSD odor srmdanl based on total odor
(D/d). Lksign all new processes,structures and equipmenr at the xastewater
treatment plants so that odors remain xithin treatment plan,[boundaries.Add two
additional odor control projects(Plano I rrickline filrers and Plant 2 bicsolids
truck loading)to the CIP.The result is an inerc,w of$17.6 million to the CIP and
$300,000 annually for O&M.Qmduct research on costcffective alternatives to
control odors from the primary treatment facilities at both plants and report back
to the Board on future staff recommendations for any further Mint control.
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OCSD Five-Year Strategic Plan
Proposition 218 Notices for
Annual Sewer Service User Fees
Proposition 218 was a constitutional inio.itne governing the establishment of any
new taxes, property-related fees or assessments.This initiative was approved by
the scare's Wters in Nrnember 1996 and applies ro each of CGdifornia's nearly
7,000 cities,counties,special districts,schools,community college districts,
redevelopmenr agencies,and regional organizations.
In order to raise a new tax,assessment,or property related fee,or to increase an
existing one, local governments most comply with Proposition 218 regulations.
In general, these mcluiremcnis am that local governments may use assessments and
property-related fees only to finance projects and services that directly benefir
property and that most rerenue•mising measures be approved in an election.
Sewer service user fees am specifically exempted from some of the requirements
of Proposition 218. Most notably, they are exempt from the election requirements,
hot not the requirement that fees cannot exceed the reasonable cost of service.
The Board has agreed with stiff, however,that we will comply with all of the rest
of the requirements, in a spirit of good gmernance.A notice of rare changes
is mailed to every property Owner whenever the rates are proposed to increase.
Based on the appnw:l to charge for loc l sewer services,a second (separate)
Proposition 218 notice would be included. The rates are adopted through the
ordinance process, and that requires a public hearing, two Board meetings and
a 2/3 majority appnwal of the Board.
Proposition 218 Notices notify the property ownets of the public hearing that
coincides with the second reading of the ordinance.Notices musr be mailed
to property owners 45 days before the public hearing.
Mailing of Proposition 218 notices requires significant Sanitation District
resources and staff rime as staff works with all stakeholders to ensure that notices
are printed correctly and mailed mover 550,000 property owners.Additional
temporary staff is needed to answer phone calls from customers. Historically, three
OCSD staff and two temporary staff answer phone calls for a minimum of four
weeks.The city in which the customer resides and their comment is recorded for
reporting purlwses.Written and email responses are also recorded.This
information is made available to the Directors prior to the public hearing.
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OCSD Five-Year Strategic Plan
_ APPENDIX B : GLOSSARY
Activatedeludge process-A secondary biological wastewater treatment process
where bacteria reproduce at a high rare with the introduction of excess air or
oxygen,and consume dissolved nutrients in the wastewater.
Biochemical Oxygen Demand(BOD) -The amount of oxygen used when organic
_ matter undergoes decomposition by microorganisms.Testing for BOD is done to
assess the amount of organic matter in water.
Biomlids- Biosolids am nutrient rich organic and highly treated solid materials
produced by the wastewater treatment process.This highqualiry product can be
recycled as a soil amendment on farm land or further processed as an earth-like
product for commercial and home gardens to improve and maintain fertile soil
and stimulate plant growth.
Business Accountability Charters -A business unit strategic plan.
Capital Improvement Program (CIP)- Projects for repair, rehabilitation,and
replacement of assets. Also includes treatment improvements,additional capacity,
and projects for the support facilities.
Coliform bacteria-A group of bacteria found in the intestines of humans and
other animals,but also occasionally found elsewhere used as indicators of sewage
_ pollution. E.coli are the most common bacteria in wastewater.
Collections system - In wastewater, it is the system of typically underground pipes
that receive and convey s nitary wastewater or storm water.
Certificate of Participation(COP) -A type of financing where an investor
purchases a share of the lease revenues of a program rather than the bond being
_ secured by those revenues.
Contaminants of Potential Concern(CPC) - Pharmaceuticals, hormones,
and other organic wastewater contaminants.
Dashboard -A computer based business tool used to visually track performance.
Dilution to Threshold(DM - the dilution at which the majority of the people
detect the odor lxcomes the D/T for that air sample.
1,4-Dioxane-A chemical used in solvents for manufacturing,himigants and
automotive coolant. Like NDMA, it occurs in the Groundwater Replenishment
System water and is eliminated with hydrogen peroxide and additional ultra,violet
treatment.
Greenhouse gases- In the order of relative abundance water vapor,carbon
dioxide,methane, nitrous oxide,and ozone gases that arc considered the cause
of global warming("greenhouse effect").
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OCSD Five-Year Strategic Plan
continued GLOSSARY
Groundwater Replenishment(GWR)System-A joint water reclamation project
that proactively responds to Southern California's current and future Water needs.
This joint project between the Orange County,Water District and the Orange
County Sanitation District will provide 70 million gallons a day of drinking quality
waver to replenish the local groundwater supply.
Levels of Service(LOS) -Goals to support environmental and public expectations
for performance.
Million gallons per day(mgd) -A measure of flow used in the Water industry.
Most Probable Number(MM -Number of organisms per 100 ml that would
yield a rest result or the observed tea result with the greatest frequency.
Commonly used for coliform bacteria.
NDMA-N-Nitracodimerhylamine is an N-nitrosoamine suspected canceraausing
agent. It has been found in the Groundwater Replenishment System process and
is eliminated using hydrogen peroxide With extra ulMMOlet treatment.
National Bimolids Partnership(NBP) -An alliance of the National Association
of Clean Water Agencies(NACWA)and Water Environment Federation(WEF),
With advisory support from the U.S.Environmental Protection Agency(EPA).
NBP is committed to developing and advancing environmentally sound and
sustainable biosolids management practices that go beyond regulatory compliance
and promote public participation in order to enhance the credibility of local
agency biosolids programs and improved communications that lead to
public acceptance.
C&M- Operations and maintenance of the treatment plants facilities
and collections system.
Publiclyowned Treatment Works(POTVA -Municipal wastewater
treatment plant.
Recycling-The conversion of solid and liquid waste into usable materials
or energy.
Risk Register-An internal document that describes vulnerabilities of the
Sanitation District.
Santa Ana River Interceptor(SARI) Line -A regional brine line designed
to convey 30 million gallons Per day(MGD)of non-reclaimable wastewater
_ from the upper Santa Ana River basin to the mean for disposal, after treatment.
Sanitary sewer-Separate sewer systems specifically for the carrying of
domestic and industrial Wastewater.Combined sewers carry both wastewater
and urban runoff.
25
OCSD Five-Year Strategic Plan
_ continued GLOSSARY
South Coast Air Quality Management District(SCAQMD) - Local regulatory
agency that develops plans and regulations designed to achieve public health
r standards by reducing emissions from business and industry.
Secondary treatment- Biological wastewater treatment, particularly the activated,
_ sludge process,where bacteria and other microorganisms consume dissolved
nutrients in wastewater.
Sludge- Untreated solid material created by the treatment of wastewater.
Total suspended solids(TSS) -The amount of solids floating and in suspension
in wastewater.
Trickling filter-A biological secondary treatment process in which bacteria and
other microorganisms,growing as slime on the surface of rocks or plastic media,
consume nutrients in wastewater as it trickles over them.
Urban runoff-Water from city streets and domestic properties that carry
pollutants into the storm drains, rivers, lakes,and oceans.
Wastewater-Any water that enters the sanitary sewer.
Watershed-A land area from which water drains to a particular water body.
OCSD's sen ice area is in the Satin Ana River Watershed.
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ORANGE COUNTY SANITATION DISTRICT
10844 Ellis Avenue
Fountain Valley, California 92708-7018
(714) 962-2411
www.ocsd.com r
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