HomeMy WebLinkAbout2008-11-19 eJ0\y Slim,, r y
ORANGE COUNTY SANITATION DISTRICT
ovember 13, 2008
Of`Sag THE FM\
10B44 She Avenue
Fountain Valley,CA
92JO9-7D18
Meiling Address
P.D.Box8127 NOTICE OF MEETING
Fountain Valley.M
927268127
wvrer.ocsd.cone
Phone BOARD OF DIRECTORS
(7141962-2411 ORANGE COUNTY SANITATION DISTRICT
Fall
1714)962U356
WEDNESDAY, NOVEMBER 19, 2008 - 6:30 P.M.
serving
Aneheim
area ADMINISTRATIVE OFFICES
Boon Park 10844 Ellis Avenue
Lypress Fountain Valley, California 92708
Fountain Valley
Fullerton
Gerden Grove
Handngmn Beach The Regular Meeting of the Board of Directors of the Orange County Sanitation
lrvine District will be held at the above location, time and date.
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Villa Perk
Yorbe Linda Administration Committee - Wednesday, December 10, 2008 at 5:00 p.m.
Cdau,Mae.
sander,Dalrl o Steering Committee - Wednesday, December 17, 2008 at 5:30 p.m.
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Sanitary Oisbyct
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Ceondy of Orange
We protect Public health and Me anmonment by Providing effective wastewater collarbile treatment,end recycling.
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BOARD MEETING DATES
`December 17, 2008
January 28, 2009
February 25, 2009
March 25, 2009
April 22, 2009
'May 20, 2009
June 24, 2009
July 22, 2009
August 26, 2009
September 23, 2009
October 28, 2009
'November 18, 2009
"Meetings are being held on the third Wednesday of the month
H:`depPgmo\750U51IBBWgendW00B Meeting NotioeMN011.2.dom
MINUTES OF THE
OPERATIONS COMMITTEE
Engineering, Operations & Maintenance, and Technical Services
Orange County Sanitation District
November 5, 2008—5:00 p.m.
A meeting of the Operations Committee of the Orange County Sanitation District was held on
November 5, 2008, at 5:00 p.m. in the Sanitation District's Administrative Office.
Following the Pledge of Allegiance, a quorum was declared present, as follows:
Operations Directors Present: Staff Present:
Ken Parker, Chair Nick Arhontes, Dir. of Operations & Maintenance
Bill Dalton, Vice Chair Jim Herberg, Director of Engineering
Gordon Shanks Ed Torres, Director of Technical Services
Don Bankhead Lorenzo Tyner, Director of Finance and
Rose Espinoza Administrative Services
Patsy Marshall Lille Kovac, Committee Secretary
Roy Moore Cana Dillon
Joy Neugebauer Chuck Forman
David Shawver Tod Haynes
Harry Sidhu John Linder
Constance Underhill Brian Reed
Doug Davert, Board Chair Juanita Skillman
Larry Crandall, Board Vice Chair
Operations Directors Absent: Others:
Don Webb Bob Ooten
PUBLIC COMMENTS
There were no public comments.
REPORT OF COMMITTEE CHAIR
Committee Chair Ken Parker reported that Director Dalton was appointed to be the next
Operations Committee Chair, and Director Shawver to the position of Operations Committee
Vice Chair.
REPORT OF GENERAL MANAGER
In the General Manager's absence, Director of Engineering Jim Herberg did not give a report.
CONSENT CALENDAR (1-8)
1. MOVED, SECONDED, AND DULY CARRIED: Approve the minutes of the October 1, 2008
Operations Committee meeting.
Minutes of the Operations Committee
November 5, 2008
Page 2
2. OP08-59 MOVED, SECONDED,AND DULY CARRIED: 1)Approve Amendment No. 2
to the Professional Services Consultant Agreement with Dudek&Associates,
Inc. for Standard Operating Procedures (SOP) Development, Specification
No. CS-2007-322 for an additional amount of$53,800, increasing the total
amount from $115,500 to an amount not to exceed $169,300; and,
2)Approve a contingency Increase of$10,500 (10%).
3. OP08-60 MOVED, SECONDED, AND DULY CARRIED: 1)Approve a Professional
Services Consultant Agreement with AKM Consulting Engineers for a Full-
Time Associate Engineer, Specification No. CS-2008-383BD for an annual
amount not to exceed $180,960, and four one-year renewal options; and,
2)Approve a contingency of$18,096 (10%).
4. OPOB-61 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to approve an agreement with Costa Mesa Sanitary District (CMSD)
transferring ownership and associated easement rights for six local sewers
within the CMSD service area boundaries, in a form approved by General
Counsel.
5. OP08.62 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to authorize the General Manager to execute Memoranda of
Understanding Establishing A County-wide Area Spill Control Program with
Orange County Flood Control District and cities or sanitary districts that own
sanitary sewer collection facility pipelines within Orange County Sanitation
District service area, in a form approved by General Counsel.
6. OP08-63 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to authorize staff to negotiate a Professional Consulting Services
Agreement with Black&Veatch Corporation for construction support services
for Central Generation Automation, Job No. J-79-1.
7. OP08-64 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to: 1) Ratify Change Order No.1 to Purchase Order No. 103261OB
(SSJ-2008-821), issued to U.S. Peroxide L-C, for the application of a
proprietary chemical for the temporary unit gallon price increase for ferrous
chloride from $1.25/gallon delivered, plus tax, to$1.75/gallon delivered, plus
tax, for a total amount not to exceed $147,000,00,for the period of September
24. 2008, through October 6, 2008, due to a declared Force Majeure;
Minutes of the Operations Committee
November 5, 2008
Page 3
2)Approve Change Order No.2 to Purchase Order No. 1032610B(SSJ-
2008-821), issued to U.S. Peroxide LLC,for the application of a proprietary
chemical for a unit gallon price increase for ferrous chloride from$1.25/gallon
delivered, plus tax, to$1.75/gallon delivered, plus tax, for the contract period
of December 1, 2008 through June 30, 2009; and,
3)Authorize a 20% unit cost escalation contingency effective December 1,
2008.
8. OP08-65 MOVED, SECONDED, AND DULY CARRIED: 1)Approve a sole source
Service Contract Agreement with Jamison Engineering for Plant 'I
Headworks Splitter Box Channel Repairs, for an amount not to exceed
$98,735.00; and,
2)Approve a 20%contingency($19,747).
ACTION ITEMS
No items were considered.
INFORMATION ITEMS (9)
9. OP08-66 Coyote Hills Golf Course Manhole Access and Odor Control Project, Project
No. FE08-04.
Mr. Herberg briefly reviewed the project and its environmental Impact
requirements, as outlined in the Mitigation Monitoring and Reporting
Program Report. The report has been made available on the Sanitation
District's website for review. This item will be considered at the
November Board meeting for approval.
DEPARTMENT HEAD REPORTS
Nick Arhontes, Director of Operations and Maintenance, and Brian Reed, Senior Environmental
Specialist, briefly presented the wastewater chemical treatment at various locations, odor control
program, chemical dousing process and benefits to local residents.
Director of Technical Services, Ed Torres, reported that the Sanitation District has been
expecting for several years a federal air permit, and recently received the draft Title V permit
scheduled to be effective the and of 2008.
Mr. Torres also reported that a three-year study by the Southern California Coastal Water
Research Project evaluating potential regional impacts on the marine environment from
pharmaceuticals and personal care products discharged by sewer and storm water agencies is
nearing completion. The results of this comprehensive study will be presented at a conference in
Tampa the week of November 170.
Minutes of the Operations Committee
November 5, 2008
Page 4
Jim Herberg, Director of Engineering, reported that repair work on the exposed SARI line pipe
has been completed and under budget. The work was completed as an emergency prior to the
rainy season to avoid a possible major spill.
Mr. Herberg suggested that the December Operations Committee be held at Plant 2, with a tour
of the secondary treatment work completed to date prior to the meeting.
CLOSED SESSION
CONVENE IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION
54956.9(b): The Operations Committee convened in closed session at 5:22 p.m. pursuant to
Government Cade Section 54956.9(b)to discuss one matter. Confidential minutes of the
Closed Session held by the Operations Committee have been prepared in accordance with
California Government Code Section 54956.9(b)and are maintained by the Clerk of the Board
in the official Book of Confidential Minutes of Board and Committee Closed Meetings.
RECONVENE IN REGULAR SESSION: The Committee reconvened in regular session at
5:46 p.m.
OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
There were none.
ADJOURNMENT
The Chair declared the meeting adjourned at 5:48 p.m. The next Operations Committee
meeting and tour will be held at Plant 2 on Wednesday, December 3, 2008, at 4:15 p.m.
Submitted by:
Lille (ovac
Committee Secretary
H:\dephagendMOpem0ons CommiHee\Opemdons 2008\1 108\110105 OpamUons Minutes.docx
1Fl"111 _ .I.
MINUTES OF THE REGULAR MEETING OF (r/,y�„•/7�
THE ADMINISTRATION COMMITTEE
Orange County Sanitation District
Wednesday, November 12, 2008, at 6:00 P.M.
A meeting of the Administration Committee of the Orange County Sanitation District was held on
November 12, 2008, at 5:00 p.m., in the Sanitation District's Administrative Office.
Following the Pledge of Allegiance, a quorum was declared present, as follows:
ADMINISTRATION COMMITTEE STAFF PRESENT:
MEMBERS: Jim Ruth, General Manager
Jim Herberg, Director of Engineering
DIRECTORS PRESENT: Lorenzo Tyner, Director of Finance and
Mark Waldman, Chair Administrative Services
Phil Luebben, Vice Chair Life Kovac, Committee Secretary
Jim Ferryman Jeff Reed, Human Resources and Employee Relations
Don Hansen Manager
Darryl Miller Mike White, Controller
Chris Norby Wes Bauer
Brad Reese Norbert Gaia
Christina Shea Juanita Skillman
Sal Tinajero
Jim Winder
Doug Davert, Board Chair OTHERS PRESENT:
Larry Crandall, Board Vice Chair Brad Hogin, General Counsel
Jennifer Farr
DIRECTORS ABSENT: Brian Gruber
Jon Dumitru Rich Kikuchi
Steven Parker
Ed Soong
PUBLIC COMMENTS
There were no public comments.
REPORT OF THE COMMITTEE CHAIR
Chair Waldman did not give a report.
REPORT OF THE GENERAL MANAGER
General Manager, Jim Ruth, did not give a report.
Minutes of the Administration Committee +
November 12, 2008
Page 2
REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance and Administrative Services, did not give a report.
REPORT OF GENERAL COUNSEL
Brad Hogin, General Counsel, did not give a report.
CONSENT CALENDAR ITEMS (1 -2)
1. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the November 12,
2008 meeting of the Administration Committee.
2. ADM08-33 MOVED, SECONDED AND DULY CARRIED: Recommend to
the Board of Directors to approve the reclassification of four(4)
OCSD positions affecting incumbents predicated on employees
satisfying position qualifications and the indefinite and ongoing
need to accomplish work at the higher level, and creation of a
new classification providing for:
a) Reclassification of two (2)Administrative Assistant positions
PG 67 ($6,185/month)to Contracts/Purchasing Assistant
PG 67 ($6,185/month) results in no change in pay;
b) Reclassification of a Senior EDM Specialist position PG 80
($8,121/month)to Senior Information Technology Analyst PG
83 ($8,743/month);
c) 1) Reclassification of a Principal Information Technology
Analyst position PG 87 ($10,133/month)to Principal Project
Controls Analyst PG 87 ($10,133/month) results in no
change in pay; and,
2) Creation of a new classification of Principal Project Controls
Analyst with pay range placement at PG 87 (Attachment 1).
ACTION ITEMS (3 -5)
3. ADM08-34 Mike White, Controller, briefly provided an overview of the
Comprehensive Annual Financial Report (CAFR)for year end
June 30, 2008 prepared by Mayer Hoffman McCann.
Clarifications were made to Directors' questions, and minor
typographical errors on the CAFR were noted to be corrected.
It was then:
Minutes of the Administration Committee
November 12, 2008
Page 3
MOVED, SECONDED AND DULY CARRIED: Recommend to
the Board of Directors to receive and file: a) Comprehensive
Annual Financial Report for the year ended June 30, 2008,
prepared by staff and audited by Mayer Hoffman McCann,
Certified Public Accountants;
b) Report on Compliance and Internal Control for the year
ended June 30, 2008; and
c) Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets.
4. ADM08-35 MOVED, SECONDED AND DULY CARRIED to recommend to
the Board of Directors to: 1)Adopt Resolution No. OCSD 08-
20, Authorizing the Execution and Delivery by the District of
one or more Installment Purchase Agreements, Trust
Agreements, and Continuing Disclosure Agreements in
connection with the execution and delivery of Orange County
Sanitation District Certificates of Participation, Series 2008C,
and B necessary, Series 2009A, Authorizing the Execution and
Delivery of such Certificates Evidencing Principal in an
Aggregate Amount of Not to Exceed $200,000,000, Approving
the Distribution of one more Official Notice Inviting Bids and
Official Statements in Connection with the Offerings and Sales
of such Certificates and Authorizing the Execution of
Necessary Documents and Related Actions;
2) That the Orange County Sanitation District Financing
Corporation approve the documents supporting and
authorizing the Certificates of Participation, Series 2008C, and
if necessary, Series 2009A, in an aggregate amount not to
exceed $200 million.
Directors expressed concern over the request to execute and
deliver one or more installment of certificates of participation
without a specific rate or approval process. It was further
MOVED, SECONDED AND DULY CARRIED to recommend to
the Board of Directors to: 3) Establish a true interest cost
target rate of 4.75%with a maximum rate of 5.25%; and,
4) Obtain final approval of the Board Chair and Administration
Committee Chair prior to completing subject debt issuances.
Mr. Tyner advised the Directors that an additional Rem would
be going directly to the Board of Directors in November
requesting approval to refund variable rate debt under
Certificate Anticipation Notes until rates become more
favorable due to the current financial crisis,for a period not to
exceed 13 months.
Minutes of the Administration Committee
November 12, 2008
Page 4
5. ADMOS-36 MOVED, SECONDED AND DULY CARRIED: a) Ratify
Change Order No. 1 to P.O. 102681-OA, issued to Clean Harbors
Environmental Service, Specification No. S-2006-300,for
hazardous waste services for an additional amount of$50,000, for
a total contract amount not to exceed $158,150, for the contract
period ending December 31, 2008;
b) Approve Change Order No. 2 to P.O. 102681-OA, issued to
Clean Harbors Environmental Services, Specification No. 5-2006-
300, for hazardous waste services, approving an increase of
$51,850, for a total contract amount not to exceed $160,000, for
the contract period January 1, 2009 through December 31, 2009,
and all subsequent renewal periods; and,
c) Approve an annual contingency of$16,000 (10%).
END OF CONSENT CALENDAR
INFORMATIONAL ITEMS (6)
6. ADM0B-37 Internal Audit Reports
Controller Mike White introduced Rich Kikuchi and Brian Gruber of Lance,
Sol] & Lunghard, LLP, who then proceeded to review the audits' results
which included contract change orders, Integrated Project Management
Consultants (IPMC) operating agreement, CIP billing of design and
construction progress payments, and travel and expense documentation
and controls.
(7) CLOSED SESSION
There was no closed session.
(8) OTHER BUSINESS. COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
There were none.
(9) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
There were none.
Minutes of the Administration Committee
November 12, 2008
Page 5
(10)ADJOURNMENT AND FUTURE MEETING DATES
The Chair declared the meeting adjourned at 6:08 p.m. The next regular Administration Committee
meeting is scheduled for December 10, 2008, at 5:00 p.m.
Submitted by:
Lilia Kovac
Committee Secretary
H:Wept\agendaWdmin Commi8ee12008\1208\111208Admin Minutes.daot
ROLL CALL
BOARD OF DIRECTORS
ORANGE COUNTY SANITATION DISTRICT
MEETING DATE &TIME: 11/19/08 Q C
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(HARDY) .........................HANSEN ......................
(NARAIN)..........................LUEBBEN.....................
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(DOW)...............................MARSHALL..................
(REINHART).....................MILLER .........................
(GARCIA)..........................MOORE........................
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(NGUYEN) ........................NORBY....................... ✓ ai
(DRISCOLL)......................PARKER....................... ✓ ��� �/
(ULMER)...........................REESE .............. ..... _` r
(CADENA) .......................SHAWVER..................
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(BENAVIDES)...................TINAJERO.................... ✓ v
(AGUIRRE) .......................UNDERHILL ................. . -,Z
(CHAROEN)......................WALDMAN.................... ✓ ✓ �L
(DAIGLE) ..........................WEBB .......................... ✓ v
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STAFF: - /` tw/ IS/93 IS3i9 /sS9LP
Arhontes
Ghirelli
Herberg
Kovac
Kyle
Ruth
Torres
Tyner
OTHERS:
Ho in
11/19/08
H:WepB dmin\BS\DIRECTOR\Directors Rog Call.doc
NOVEMBER 2008 COMPENSATION
Your November compensation and mileage check will be processed for a pay date of
December 3rtl;the District's first pay day in December. Please make any necessary
corrections to your time card, sign it, and return it as soon as possible, so we may add
any additional meetings to your check. (if you prefer to Fax us your time card, please
Fax it to(714) 962-3954, Lenora Crane, Executive Assistant, Finance and Administrative
Services.
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NOVEMBER 2008 COMPENSATION
Your November compensation and mileage check will be processed for]]te; the District's first pay day in December. Please make anycorrections to your time card, sign it, and return it os soon as possible, sany additional meetings to your check. (If you prefer to Fax us your timFax it to (714( 962-3954, Lenora Crane, Executive Assistant, Finance and
Services. —
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November 13, 2008
MEMORANDUM
TO: Chair and Members of the Board of Directors
Orange ounty Sanitation District
FROM: JamaAuth
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. State Budget Crisis
Staff continues to monitor the state fiscal crisis and its potential impact on local
government. Budget restraints are in place relative to hiring, purchasing, capital
improvements, and capital outlay. Staff will keep the Board informed on any potential
fiscal impact to OCSD should the legislature take corrective measures. We will continue
to oppose vigorously any proposal to take away property tax revenues.
2. Strategic Plan Update
Staff incorporated input from our board members at the October 15 workshop into our
updated five-year Strategic Plan. Staff proposed five new initiatives and presented
through issue papers to the Board by members of the EMT. Staff will submit the
updated five-year Strategic Plan to the Board at our November 19 meeting for policy
direction and action. There is no increase in cost to the budget should be Board
approve the new initiatives.
3. New Board Members Orientation
Staff will conduct a new board member workshop on February 4, 2009, from 1-5 p.m.
The orientation will cover board policies, procedures, and operations, and will include a
facility tour.
4. Sale of Kern County Property
Staff has initiated the process to sell 1808 acres of OCSD owned property in Kern
County. In order for OCSD to sell its surplus land in Kings County, the District must first
comply with the California Surplus Lands Act (Act). The Act requires that before
disposing of surplus real property, a district must send a written offer to sell or lease the
property to certain local entities within whose jurisdiction the land is located, for the
development of: 1) low- or moderate-income housing, 2) park and recreation facilities,
or 3)for the creation of open-space purposes.
Board of Directors
Page 2
November 13, 2008
5. Los Alamitos NAS
Bob Ghirelli, Ed Tortes, Mike Moore and I will meet with General Coombs on
Wednesday, November 19 at the Los Alamitos Naval Air Station to explore their
potential interest in acquiring biosolids for land application purposes.
6. SAWPA
Staff contracted with FCS Group to develop user rates for the maintenance, repair, and
ultimate replacement of the Santa Ana Regional Interceptor(SARI line) maintained by
OCSD. These rates are designed to equitably recover costs from SAWPA for usage and
proportionate ownership of the SARI line.
The rate study has been completed and our staffs will meet on November 19 to review
the study and agree upon a rate structure for the future.
7. Orange County Grand Jury
The Orange County Grand Jury visited OCSD October 21 for a briefing and tour of our
facilities. Staff provided the Jury members with an overview of our governance
structure, operations, and construction program followed by a tour of Plant 1 including
the laboratory.
OCSD is one of several major county agencies the Grand Jury will visit this year to learn
about the services provided to the residents of Orange County. The Grand Jury
indicated they would schedule a visit to OCWD and the GWR System in the near future.
8. SARI Line Relocation and Repair
The SARI rock repairs were completed with over 1,400 tons of new rock being placed to
protect the pipeline. The final cost for this emergency work is $410,600, which is less
than the original estimate of$600,000. A meeting with the Colonel from the Corps of
Engineers to discuss expending the EIR/EIS is being held on November 20.
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AGENDA
BOARD OF DIRECTORS
ORANGE COUNTY SANITATION DISTRICT
ADMINISTRATIVE OFFICES
10844 ELLIS AVENUE
FOUNTAIN VALLEY, CA 92708
REGULAR MEETING
November 19, 2008 — 6:30 P.M.
INVOCATION AND PLEDGE OF ALLEGIANCE (Roy Moore - Brea)
ROLL CALL
PUBLIC COMMENTS
REPORTS: The Chair, General Manager and General Counsel may 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.
1. Ratifying payment of claims of the District, by roll call vote, as follows:
ALL DISTRICTS 10/15/08 10/31/08
Totals $27,240,361.24 $11,874,779.57
DIRECTORS: Pursuant to Government Cade 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 specifics of Government Code Section 84308,
please see your Director's Handbook or call the office of General Counsel.
11/19/08
Page 2
CONSENT CALENDAR (2-4)
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same, as follows:
2. Approve the minutes for the special meeting held on October 15, 2008 and the regular
meeting held on October 22, 2008, to be filed and deemed approved, as mailed.
3. a) Approve Plans and Specifications for P1 Miscellaneous Buildings Office
Improvements, Project No. FE07-08, on file at the office of the Clerk of the Board;
b) Approve Addendum Nos. 1, 2, 3, 4, 5, and 6 to the plans and specifications;
c) Receive and file bid tabulation and recommendation;
d). Reject bid received from GTA Construction, Inc. in the amount of$635,000;
e) Award a contract to Avi-Con, Inc., dba CA Construction, for P1 Miscellaneous
Buildings Office Improvements, Project No. FE07-08, for a total amount not to
exceed $673,000; and,
f) Approve a contingency of$100,950 (15%).
4. a) Approve Plans and Specifications for the P1 Engineering Trailer File Room
Improvements, Project No. FE07-12, on file at the office of the Clerk of the Board;
b) Approve Addendum Nos. 1 and 2 to the plans and specifications;
c) Receive and file bid tabulation and recommendation; and,
d) Reject all bids for P1 Engineering Trailer File Room Improvements, Project No.
FE07-12.
STEERING COMMITTEE(5-6)
5. Approve Steering Committee Minutes for the meeting held on October 22, 2008 to be
filed.
6. a) Approve the Five-Year Strategic Plan dated November 2008; and,
b) Direct staff to implement the goals and strategies contained in the Plan.
11/19/08
Page 3
OPERATIONS COMMITTEE (7— 13)
Consider following item from October 1, 2008 Operations Committee meeting.
7. a) Approve Plans and Specifications for the Area 03 Manhole Access Improvements
(3-54), Project No. FE07-01, on file at the office of the Clerk of the Board;
b) Approve Addendum No. 1 to the plans and specifications;
c) Receive and file bid tabulation and recommendation;
d) Reject bid received from Pack Coast Infrastructure,for the amount of$260,200;
e) Award a contract to Mike Bubalo Construction Co., Inc.,for the construction of the
manhole access improvements for an amount not to exceed $305,500; and,
f) Approve a contingency of$106,925(35%).
8. Approve Operations Committee Minutes for the meeting held on November 5, 2008, to
be filed. (Minutes to be distributed at the 11119108 Board meeting).
9. Approve an agreement with Costa Mesa Sanitary District(CMSD)transferring ownership
and associated easement rights for six local sewers within the CMSD service area
boundaries, in a form approved by General Counsel.
10. Authorize the General Manager to execute Memoranda of Understanding Establishing A
County-wide Area Spill Control Program with Orange County Flood Control District and cities
or sanitary districts that own sanitary sewer collection facility pipelines within Orange County
Sanitation District service area, in a form approved by General Counsel.
11. Authorize staff to negotiate a Professional Consulting Services Agreement with Black&
Veatch Corporation for construction support services for Central Generation Automation, Job
No. J-79-1.
12. a) Ratify Change Order No.1 to Purchase Order No. 1032610E(SSJ-2008-821), issued to
U.S. Peroxide LLC, for the application of a proprietary chemical for the temporary unit
gallon price increase for ferrous chloride from $1.25/gallon delivered, plus tax, to
$1.75/gallon delivered, plus tax, for a total amount not to exceed $147,000,00, for the
period of September 24, 2008, through October 6, 2008, due to a declared Force
Majeure;
b) Approve Change Order No.2 to Purchase Order No. 1032610E(SSJ-2008-821), issued
to U.S. Peroxide LLC, for the application of a proprietary chemical for a unit gallon price
increase for ferrous chloride from$1.25/gallon delivered, plus tax, to$1.75/gallon
delivered, plus tax,for the contract period of December 1, 2008 through June 30, 2009;
and,
c) Authorize a 20% unit cost escalation contingency effective December 1, 2008.
11/19/O8
Page 4
13. a) Approve a sole source Service Contract Agreement with Jamison Engineering for `
Plant 1 Headworks Splitter Box Channel Repairs, for an amount not to exceed
$98,735.00; and,
b) Approve a contingency of$19,747 (20%).
ADMINISTRATION COMMITTEE(14- 17)
14. Approve Administration Committee Minutes for the meeting held on November 12, 2008,
to be filed. (Minutes to be distributed at the 11/19/06 Board meeting).
15. Approve the reclassification of four(4) OCSD positions affecting incumbents predicated
on employees satisfying position qualifications and the indefinite and ongoing need to
accomplish work at the higher level, and creation of a new classification providing for:
a) Reclassification of two(2)Administrative Assistant positions PG 67($6,185/month)
to Contracts/Purchasing Assistant PG 67 ($6,185/month) results in no change in pay;
b) Reclassification of a Senior EDM Specialist position PG 80 ($8,121/month) to Senior
Information Technology Analyst PG 83($8,743/month);
c) 1. Reclassification of a Principal Information Technology Analyst position PG 87
($10,133/month)to Principal Project Controls Analyst PG 87 ($10,133/month) results
in no change in pay; and,
2. Creation of a new classification of Principal Project Controls Analyst with pay
range placement at PG 87.
16. Receive and file: a) Sanitation District's Comprehensive Annual Financial Report for the
year ended June 30, 2008, prepared by staff and audited by Mayer Hoffman McCann,
Certified Public Accountants;
b) Report on Compliance and Internal Control for the year ended June 30, 2008;
and,
c) Independent Accountants' Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets.
17, a) Adopt Resolution No. OCSD 08-20, Authorizing the Execution and Delivery by the
District of one or more Installment Purchase Agreements,Trust Agreements, and
Continuing Disclosure Agreements in connection with the execution and delivery of
Orange County Sanitation District Certificates of Participation, Series 2008C, and 'd
necessary, Series 2009A;Authorizing the Execution and Delivery of such Certificates
Evidencing Principal in an Aggregate Amount of Not to Exceed $200,000,000,
Approving the Distribution of one or more Official Notice Inviting Bids and Official
Statements in Connection with the Offerings and Sales of such Certificates and
Authorizing the Execution of Necessary Documents and Related Actions;
' 11/19I08
Page 5
b) Establish a true interest cost target rate of 4.75%with a maximum rate of 5.25%;
and,
c) Obtain final approval of the Board Chair and Administration Committee Chair prior to
completing subject debt issuances.
GWR SYSTEM STEERING COMMITTEE (18)
18. Approve Joint Groundwater Replenishment System Steering Committee Minutes for the
meeting held on October 13, 2008, to be filed.
NON-CONSENT CALENDAR
19. a) Adopt Resolution No. OCSD 08-21, Adopting the Initial Study and Mitigated
Negative Declaration for the Coyote Hills Golf Course Manhole Access and Odor
Control Project, Contract No. FE08-04;
b) Make Certain Findings Relating to Less than Significant Environmental Effects
Identified in the Initial Study/Mitigated Negative Declaration;
c) Adopt a Mitigation Monitoring and Reporting Program;
d) Approve the Coyote Hills Golf Course Manhole Access and Odor Control Project,
Contract No. FE08-04; and,
e) Authorize the Filing of a Notice of Determination.
20. Adopt Resolution No. OCSD 08-22,Authorizing the Execution and Delivery by the District
of an Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement, a
Note Purchase Agreement, and a Continuing Disclosure Agreement in connection with
the execution and delivery of Orange County Sanitation District Refunding Certificates of
Participation, Series 2008D (Certificate Anticipation Notes), such Notes Evidencing
Principal in an Aggregate Amount of Not to Exceed $198,000,000, Approving an Official
Statement in Connection with the Offering and Sale of such Notes and Authorizing the
Execution of Other Necessary Documents and Related Actions.
Recess by Board of Directors, Orange County Sanitation District
21. Call to Order, Board of Directors, Orange County Sanitation District Financing
Corporation:
a. Roll Call
11/19/08
Page 6
b. If no corrections or amendments are made, the minutes for the meetings held on
November 28, 2007, May 14, 2008, and August 27, 2008, will be deemed
approved and be so ordered by the Chair.
C. Report of the Director of Finance
d. Adopt Resolution No. FC-08,Authorizing the Execution and Delivery by the
Corporation of One or More Installment Purchase Agreements and One or More
Trust Agreements in Connection with the Execution and Delivery of Orange
County Sanitation District Certificates of Participation, Series 2008C, and if
necessary, Series 2009A; Authorizing the Execution and Delivery of Such
Certificates Evidencing Principal in an Aggregate Amount of Not to Exceed
$200.000.000: and Authorizing the Execution of Necessary Documents and
Related Actions. (See Agenda Item No. 17 for report.)
e. Adopt Resolution No. FC-09, 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 2008D(Certificate
Anticipation Notes); Authorizing the Execution and Delivery of Such Notes
Evidencing Principal in an Aggregate Amount of Not to Exceed $198,000;
and Authorizing the Execution of Necessary Documents and Notes and
Related Actions. (See Agenda Item No. 20 for report.)
Adjourn, Board of Directors, Orange County Sanitation District Financing Corporation.
Reconvene. Board of Directors. Orange County Sanitation District
CLOSED SESSION (22)
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.
Convene in closed session, H necessary
11/19/08
Page 7
22. CONFERENCE WITH LEGAL COUNSEL RE. EXISTING LITIGATION
(Government Code Section 54956.9(a))
Lynda Heller (Dec.), Christian Heller (App.)vs. Orange County Sanitation District;
Workers Compensation Appeals Board No.: AHM 0098129
Claim No.: 7827-0001-01-0029
Reconvene in regular session
Consideration of action, if any, on matters considered in closed session
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
ADJOURNMENT
The next Board of Directors regular meeting is scheduled for December 17, 2008, at 6:30 p.m.
11/19/08 f
Page 8
Agenda Posting: In accordance with the requirements of California Government 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
date and time above. All public records relating to each agenda item,including any public records distributed less
than 72 hours prior to the meeting to all,or a majority of all,of the members of District's Board,are available for
public inspection in the office of the Clerk of the Board,located at 10844 Ellis Avenue, Fountain Valley,California.
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
meeting dale.
Public Comments: Any member of the public may address the Board of Directors on specific agenda items 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
Speakers Forth(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 volt 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 District Clerk of the
Board's ofice at Q74)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.
NOTICE TO DIRECTORS To place items on the agenda for the Regular Meeting of the Board of
: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 iMh(fitocsd.com
.Assistant General Manager Bob Ghirelli (714)593-7400 rghirelli(@ocsd.com
:Clerk of the Board Penny Kyle (714)593-7130 pkvlef6iocsd.com
.Director of Engineering Jim Herberg (714)593-7300 jherbergGdocsd.con
Director of Fin. 8 Admin Services Lorenzo Tyner (714)593-7550 Ityner(docsd.com
Director of Operations& Nick Arhomes (714)593-7210 narilontes(Ocicsd.com
Maintenance
Director of Technical Services Ed Torres (714)593-7080 etorresittilocsd.com
:General Counsel................__._..._._._._.._,__Brad Hoqin_ 714 415-10118
I-IMeptlagenda\Boartl Agendas14008 Board Agendas\111908 agenda.docx
BOARD OF DIRECTORS deeNg Date To aC.MDr.
llp9/0a
AGENDA REPORT Pen,Numbe Iem Numbe
1
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 specks 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 10/01/08 - 10/15/08 and 10/16/08- 10/31/08
Foam N. rnxioz< Agenda Re -Board
RMsed: f]i0&08
Pagel
Chime Paid From 10/01108 to lOI15108
Warrant No. Vendor Amount Description
Account,Payable-Warren
14801 Brown B Caldwell S 149.673.67 Professional Barman;P2-90&Pt-37
14802 Camp Dresser&Makes,Inc. 91,387.38 Professional Services J47
148M Campo Engineers 149,00.22 Professional Services P2-66,P1.71&Research Strategic Plan
14804 CORRPRO Companies,Inc. 37,583.16 Temporary Employment Serrices
14805 Emerson Process Management.L.L.P. 37.977.10 Computer H8rQw8re/Soff she Maintenance Agreement&Support-Machinery Health analyzer
14808 JCI Jones Chemicals.Inc. 111,143.61 Sodium Hypochlorile
14807 Kemiron Companies 9B.304.76 FeMC Chloride
14806 Malcolm Pimle,Inc. 173241.57 Prohsalonal Services P2-80.1-2.4A.&5-M
14808 Mati.ife Life Insurance Company 42,033.84 Group Ufa,Manager Add'I.Lib.Short&Long-Term Disability&Optional Tenn Life Ins.
14810 Maya&Moore Corporate Accounting 28.00G.50 Professional Sermons-Soils,Concrete&Other Malerlels TestIng far Vericua Capital Proleds
14811 Orenge County Water Diattict 106.544.63 Joint GWRS Project J-36
14812 PolyEMe.Inc. 41574.90 Catimic Polymer NO 3.11-92
14813 South Coast Air Quality Management Dist. 47,07.17 Annual Operating&Emissions,&Misc.Fees
14814 Southern California Edison 97,423.88 Power
14815 Syna eo Waal.Inc. 594,074.08 Residuab Removal NO 3-29-95
14816 Tate Ramlu Magan Fame 240,372.09 Residuals Removal MO 3-29-95
14817 US Peroxide,L.L.C. 46,325.31 Odor&Comoaim Control Treatment far Coll.Sys.;hydrogen Peroxide&Famous Chloride
14818 Woodruff Spadlin&Smart 51.653.84 Legal SeMcee MO 7-26-95
14819 J.F.Shea Construction,Inc. 51433,630.26 ConaWdlon P2-9D
14WO Norman A.Olsson Oenstru lson,Inc. 121,295.70 Construction 7.47
14621 Union Bank of California 603,736.70 Umbucilan P2-90,Relenllon
148U AT&T 415.05 Telephone Service
14823 Acoustical Malenal SeMces 504116 Ceiling Tile
14824 Aerate, 20,011.17 Temporary Employment Se ces
14625 ABIMM Technologies,Inc. 935.62 Lab Pans&Supplies
14626 AGX Corporation 76327 Electrical Paris&Supplies
14827 AICHE 221.M Membership IAmencen Inatilule of Chemical Engineers)
14828 Aligns Safety,Inc. 4.827.93 Safety Supplies
148N All American Moment 19.872.00 Manhole Frome and Cover Replacement Services
14830 AIM Performance Systems 100.00 Training Regismatian
14831 American Society For Microbiology 416.00 Membership
14932 American Socby of Mechanical Engineers 134.00 Membership
14833 AnbMr,Inc. 860.60 Small To ow
148U AppbOno Employment Servloe 22,104.33 Temporary Employment Services
14835 Applied Industrial Technology 103.06 Mechanical Parts&Supplies
148M ARS Enterprises,Inc. 78D.00 Service Maintenance Agreemanh-Autoclave,
14837 AT&T 1.237.09 Telephone Service
14M AT&T CalllornhlMCI 3,344.27 Telephone Service
14839 AT&T Long Divorce, 995.43 Telephone Service
14840 AT&T Moblldy 11,L.L.C. 675.34 Telephone Equipment&AcOvation
14MI AT&T Moblldl'11,L.L.C. 9.551.96 Wireless Tehphene Services
14642 Alkimmon,Andelson,Loya.Rudd&Ruud 5,036.31 Legal Services-Employee Relations
14843 Aurom Pbtuas,Inc. 425.00 Safety Videns
14W Authentic Promotions.Com 4,642.00 Promotional Items for FOG(Fats,Oils&Grease)Program-Platinum Cons
14645 Berm Products Company 1.531.60 Safety Supplies
14MO Bask Chemical Solutions,L.L.C. 7,97D.61 Sodium Hydroxide
14647 Berge's Gavemor SeMos 1,676.70 Mechanical Repair&Maintenance Services-Gevemmr
14US Black B Veatch Corpoadon 14,382.73 Professional Bemuses P1-76
14849 BTB Evenb.Inc. 691.10 2008 Harvest Festival-Renal&Set-Up Fees
X Wep1an XCEL EbVZ SHMFCIalms PiN Re1v4130paaWm3PakpeWn'AusmmamrF10'1506.40 EXHIBITA
nMaM Page i of 13 la72caM
Claim.Paid From 10/01/00 to IOil M
Warrant No. Vendor Amount Description
14850 C Temp.Inc. 1240.96 Mechanical Pegs&Supplies
14051 Calgomla Recreagon Company 2.637.32 Boat Slip Rental Fees for Ocean Monitoring Vessel Nerissa
148U CCP Industrial 9,927.59 Janttmlal Supplies
1480 Circle,Inc. 2,511.42 Office Supplies-Toner CerMdgw
1411 Chan Harbors Environmental SeMcea 8,558.44 Hacardpus West.Management Services
148M Columbia Aalylical Services,Inc. 3,222.00 Mall of Waetmwmea Industrial Waelewatsr&Biosohns
USSIS Consumers Pipe&Supply Co. 2,731.38 Plumbing Paris&Supplies
14557 Corpurafe Business Interiors 1,703.64 Office Modification Services
14US County Wholesale Electric Co. 757.12 Electrical Parts&Supplies
14859 Cram Val Com. 2,436.00 Maintenance Agreement-Only.&Annual lnepections,Cerificaticn&Ouadia lal Teasing
14ND CS-AMSCO 10.290.96 Mechanical Parts&Supplies
14861 CSUF Foundill 15,368.01) Membership-Center for Demographic Research
14662 David GuloB 175.00 Lab Parts&Supplies(Urchin&Kelp Supplies)
14863 Dal Tree Service 4,525.00 Tree Melnt.Service
148U Department of General Seroces 456.81 ConperaOve Purtlrsaing Program-CA Multiple Award Services Discount Fee
14865 Cerebral Instruments Corporation 309.39 Instrument Paris,Supplies&Repairs
14866 Dunn Edwards Corporation 15326 Paint Supplies
14867 Duro-Senor Corpuralien 877.54 Instrument Paris&Supplies
14MB Earth Tell,Inc. 2.077.24 Professional Sernces P1-106
14869 Entach Instruments,Inc. 207.20 Lab Paris&Supplies
14870 Emmunmentel Resource Center 795.00 Training Registration
14871 Environmental Resource Assoclales 1.681 Lab Pane&Supplies
14872 EmAmnmental Water Solutions.Inc. 2,342.74 Plumbing Paris&Supplies
14873 FEDE%Corponstion 74.77 Freight Services
14874 Ferguson Enmrprises,Inc. 368.79 Mechanical Paris&Supplies
14875 Fitter Belts.Inc. 4,732.38 Fitter Press Belts
14876 Fisher Scientific Company,L.L.C. 1.613.14 Lab Pad.&Supplies
14877 Flomaa Penal lc,Inc. 816.85 Mechanical Pads&Supplies
14878 Forked Engineering&Surveying,Inc. 1,P7.50 Surveying Services-Various Capital Projects
14879 Fountain Valley Points,Inc. 378.36 Paint Supplies
14880 Fresco Profiles 20.00 Human Resources Background Checks
14881 Ciyof Fullerton 39.94 Witter Use
14M Gal Lumber Company 279.07 Small Toots
14883 Garrelt Callahan Company 4.415.61 Chemicals&ElaGriwl Parts It Supplies
14W Oaks Fiberglass Intellect 627.75 Repair&Maintenance SeMcas-Impeller
14885 Goldenwest Corp. 415.00 Various Repair&Maintenance Services
14886 Graingso Inc. 1,072.75 Mechanical Supplies&Tool.
14887 Green Riven Goll Club 300.00 Meeting Expenses 241-05
148H HaeinBbn Industrial 2.20.08 Mechanical Parts&Supplies
148N Hall Olmerwions 4W.W On-Sits Employee Health Fair Expanses
14890 HealeO Packets Company 8,886.88 Computer HeMwarel5aflxara-Server
14891 Hill Brothers 4,125.01 Chemicals-Odor&Corrosion Control-Newport Trial
14892 Hilts Boat Service,Inc. 893.79 Oil&Filler Change-Ocean Monitoring Vessel Nedsse
14893 HIM,Inc. 53.77 Electrical Pads&Supplies
148N Hope HealthAl 544.90 Publication-Wellness Newslefien
14895 City of Huntington Beach 13,057.110 Water Use
14896 ID Enhancements,Inc. 1,730.D0 Casi-Ruece I.D.Badges
14897 Insight Public Sector 573.30 Electrical Paris&Supplies
148M Intl.Institute of Municipal Clerks 19U.00 Membership
148N lWynal Inc. 7,121.64 Bunions Maintenance Agreement-Overland Storage Neu 8000
XwBpwe061xCELWc2(MP..kE1Clelma re In A 10.15Aexln E%HIBITA
rl u 1pvc Page 2 of 13 t.Mae
e _
Calms Palo From 10/U1108 to IOil SAN
Warrant No. Vendor Amount Description
14800 Inin min Paris&Services 175.31 Filer
14901 Irvine Ranch Water District 8.57 Water Use
14902 JG Tucker and Son,Inc. 1.595.54 Specially Gaiea
14903 Jamison Engineering Contractors,Inc. 4,996.02 Inselebon&Upgrades of Gas Flaps&Stand Drains-Various Locations
14904 Johnstone Supply 922.W Electrical Pens&Supplies
14905 Kissel Environmenel Lab 100.00 Oulside Laboratory Services
14906 Lab Safety Supply,Mc. 110.67 Waly Supplies
14907 League of Califomia Cities 425.00 Training Registration
14908 DECO Corporation 4.59.41 Lab Pare&Supplies
14M Lorton Education Services &23.0 Trolling Registration
14910 M.J.Schiff and Associates,Inc. 15,1 W.01 Temporary Employment Serviwa
14911 Machado Enviranmenlsl Corp.DBA Atr Dud Cleaning 15,024.01) Atr Duct Cleaning Services
14912 Maledals and Contract Services 5,472.01) Temporary Employment Services
14913 McMaster Cart Supply Co. 537.01 Mechanical Paris&Supplies
14914 Mechanical Seel Roper,.Inc. 64.03 Repeb&Maintenance Somme-Mechanical Seal
14915 Medlin Comma;Co. 2,922.05 Instrument Paris&Supplies
14916 Mid West Assnctetes 14,42828 Pump
14917 Miele,Inc. 2.415.11 Lab Pens&Supplies
14918 Mr.Crane,Inc. 7.371.00 Repair&Maintenance Services-Transportation Vehicle a1 Sunflower Pump Station
14919 National Plant Semcas.Inc. 3.240.00 Polymer Tank Cleaning
149M National Safety Coundl 211.22 Books&PuMlctumns
14921 Neal Supply Do. 1.905.03 Plumbing Suppries
14922 Neutron Products,Inc. 6.2n.34 Anionic Polymer
14923 !heirs Plumbing 278.53 Plumbing Pods&Supplies
14924 Norco Delivery 436.16 Mail Delivery Service
14925 Olin Corporation 15,795.77 Sodium Hydmxee
149N Old Industries 3,334.44 ChamicalOtiolutions
14927 Ormi Dishibulms,Inc. 2.7W.17 Electrical Pane&Supplies
1492E Orange Fluid System Technologies,Inc. 1,016.80 Plumbing Pads&Supplies
149N Oxygen Service Company 955.95 Lab Parts&Supplies
14930 PAWSHER 443.16 Miscellaneous Supples-Liner Bags
14931 PAPA 40.00 Membership
14932 PCS Elryrses,Inc. 239A5 Courier Service
1403 PL Hawn Company,Ina 472.D7 Electrical Pare&Supple.
14934 Pmxeir DuArbution,Inc. 399.11 Lab Pena&Supplies
1405 Primavera Systems.Inc. 12,330.40 SoBwme Maintenance-Prbnavera
14M Progressive Security Technologies,L.L.C. 5.569.18 Soloed,Maintenance Agreement-SCION Lim.
14937 Public Resources Advisory Gmup 4.083.74 Financial Advisory Services
14938 Pump Engineering 652.73 Pump Pans&Supplies
14939 Quicksed Intelligence 3.575.00 Training Ragisimuon
14940 Quinn Group,Inc. 504.36 Air Filled;
14941 Quinn Power System Assoc. 4,160.32 Electrical Repairs&Maintenance Services-Voltage Regulator
14942 RBF Consulting 2,126.W Survaylnp Services-Vancus Locations
14943 RBF Consulting 3,591W Professional Services-SARI Annual Monitoring Survey
14M Restek Corp. 1,552.93 Lab Pans&Supplies
14NS RMS Engineering&Dealgo,Inc. 1,945.00 Engineering Semces-Structural Evaluation of Digealers R&S&Pump Room Roof Deck
14946 Rosemount Analytical,Inc. 1,091.01) Instrument Pavia&Supplies
14947 Royal Whdasale Electric 2.476.55 Mechanical Pens&Supplies
14US Shepard Brothers,Inc. 4,976AS Hydrochloric Add
14949 Selet,,Kk en 170.77 Pane,Washer Lease,&Servica
H vtio W%E%CEL.TvMt MSRARENClelma 14M RepaMY000WaImPtlEReµrl.MeNmanl_A_loiMll.alu EXHIBIT
rm10nc Page 3 of 13 1OW WOa
Claims Pala From 10101108 to 10115108
Warrant No. Vendor Amount Deacrlpeon
14950 SCAMIT 26.92 Social&Publications
14951 City of Seal Beach 366.24 Water Use
14952 Seton Name Plate T03.45 Signs
14953 Sewer Equipment Company of Am.dca 408.81 Hose Paris&Supplies
14954 SGS Teslmm.Inc. 1,53 Telephone Line-District Vehlde SMOG SIalion
14955 Shamrock Supply Co.,Inc. 1,251.36 Paint Supplies&Touts
14956 Sherwm-VWliams Company 302.31 Paint Supplies
14957 Shureluck Saks&Engineering ISOM Mechanical Paris&Supplies
14958 Siemens Energy&Mendelian.Inc. 2.51228 Instrument Pads&Supplies
14959 Siemens Water Technologies Carp. 1295.94 Service Agreement-DI Water Systems at Plank l&2
14980 Skala,Inc. 5.081.25 Lablris0ument Mainlevence Contract-Slala-BODAne,ser
14961 Smith-Emery Company 15,154.42 Soils,Concrete&Other Materials Testing
14982 Trance Company 288.56 Mechanical Paris&Supplies
14963 Southern Counties Wbricanis ll,369.59 Oil
14964 Southwest Concrete ]I11.BT Commit.
14965 Spectrum Systems.Inc. 7,251.30 Software Maintenance Agreement
14966 SPEX CerfiPreP.Inc. 214.63 Lab Pads&Suppliers
14967 SMrkey Steamer International.Inc. 2,199.60 Carpet Cleaning Services
14968 Summit Steel 830.58 Metal
14969 Saraet Industrial Pads 91 Mechanical Pads&Supplies
14WO SYMCAS TSG 1,M8.08 SCADA System VAX SeMce Agreement
14971 Team Tud 4,9M.00 LaMacape Maintenance SeMces
14972 TekSystems 7,51ISM Temporary Employment SeM®s
14973 Tenninix International 954.00 Pest Control
14974 Tana Renewal,L.L.C. 24535.08 Grit&Speenings Removal&Digester Drying Bad Malerial Removal
IM75 Tesfarrat Ontario 2.580.00 Analysis of Blosolids
14976 The Bank of New York Mallon 3,151.17 Administratiorifmstee Fees-OCSD-Liberty Mutual OCIP
149" The Bank of New York Mellon 24,822.06 Asset Adminisiabon Quarterly Fees
14978 Theme Electron North America,L.L.C. 514.96 Lab Pads&Supplies
149n Thompson Industrial Supply,Inc. 18239.12 Mechanical Pads&Supplies
14980 Thompson Publishing Group 418.50 Books&Publications
14981 Tiatro Conslrudion 3.840.00 Painting Services-Administration Building
14982 TriCounty Floe 1,001,15 Meint.Agree.for Annual InspecVSersong Fire Extinguishers at File 1&2,Pump Slas.&Fleet Van.
14983 Truck 8 Auk Supply.Inc. 25.19 Automotive Parts&Supplies
14984 Ultra Scieni 21525 Lab Paris&Supplies
14985 UMed Parcel Sei 111.43 Parcal Services
14MG Valm Corporation Z.031.33 Mactranical Supplies
14987 Valley Detroit Diesel Allison 3.045.56 Repair&Maintenance SerWces-Gerieretors 1&2
149M Valley Spacing Co. 2,500.00 Equipment Repair-Cawayor Belt
14M Vapex,Inc. 1,193.50 Instrument Pads&Supplies
14M Varian Assooate.,Inc. 255.91 Lab Pads&Supplies
14991 Ver¢on Caleornie 103M Telephone Services
14992 Vatican Wireless 2,38525 Wretess Telephone Services
14993 Vemas Plumbing 1,3T5.00 Sallee Contract-Test,,Repair&Carl.SeeMlaw Devicas ai Pit .1&2&Pump St..
14M Vedex Industries.Inc. 2.387.29 Door&Gras Repays-Various Locations
14995 MR Scientific Produces 4,840.29 Lab Pads&Supplies
14996 WEF 346.M Membership-Water Environment Federation
14997 West Coast Lire 2,983.00 Employee Life Insurance
149H West Coast Safety Supply Co. 1.0491 Safely Equipment
14999 West Lila Supply Company,Inc. 344.48 Electoral Pads&Supdies
X:WepllaNExCELNV2PAP5XFflE'GM'vro%le qap-mN,91L4'vmPtieRe�IauTmzn�A t0.�5OGslu EXHIBIT.A
facto, Page 4 of 13 tpRa9eea
Claims Pald From 10/01108 to 1WIS108
Warrant No. Va rdor Amepnl Description
15000 WOdan 6215.00 Engineering Services FEOI-OB
15001 Workplace Reswrce 1.642.11 Offer Furniture&Equipment
15002 Xerox Corporation 83.00 Copier Sens-Equipment Leases.Managed SerNms.B Metered Copy Usage&Charges
15003 Yahoo,Inc. 1244.10 Notices&Ads
15ON Yale/Chase Materials HaMkng.Inc. C101.30 EIeMnO Cart Pads
15005 Orange Comment,6arlk 13,471.30 Conslmclton T<f,Retention
15006 James E.Coh on 300.00 MeelingTraming Expanse Reimbursement
1=7 Kimberly A.Erickson 1,316.91 Meatingfframirg Expanse Reimbursement
Isms Elain Gslvea 475.m Meeting/fmining Expense Reimbursement
16009 Vincent S.Lockyar 5119.60, Meetingrfralning Expense Reimbursement
15DIO Lourdes Luna 174.64 MeetingRraining Expanse Reimbursement
loll Selwyn D.Mansell 499.m Meahngrfraining Expense Reimbursement
IN12 Daniel R.Miranda 610.110 Meeting/Training Expense Reimbursement
15013 Samuel L.Mowbmy W522 MeefingRraining Expense Reimbursement
15014 Joseph W.Park.Jr. 421.60 MeelingRraining Expanse Reimbursement
151H5 JoMny J.Roche 1M.00 M.tirgrtraining E..nse Reimbursement
15016 Camel;Sm th M2 00 Mealingrtraining Expanse Reimbursement
IM17 Rkhard L.Spencer 108.910 Meelingrfraining Expense Reimbursement
15018 Phillip J.Sullivan T34.84 Meeting/Training Expense Reimbursement
tm19 Robed C.Thompson 295.32 MeetingTraining Expense Reimbursement
15020 Gary J.Tuieaosapo-Kemper 513.20 Meetinglfraining Expense Reimbursement
15021 Michael Vuong 508.38 Meeting/Training Expense Romfl ursemerlt
15022 California DoW,rnant of Fish and Game 2m.01) Permit Fees-lake or Skeambed Alterations-SARI
IN23 United States Postal Service S.m0A0 Postage
IN24 Voided Check - -
IN25 Blue Crass of California 524=27 Medical Insurer.Premium
IN26 BP Energy Company W,012.97 Natural Gas-CenGen
1502T Corporate Image Maintenance,Inc. 35.920.010 Custodial Services Spec.No.9NM9
1m28 De0a Dental W.915.14 Dental Insurance Plan
15029 General Petroleum 27.108.59 Engine Oil
15030 HDR Engineering,Inc. 504,344.18 Professional Services P1-101
tm31 JCI Jonas Chemicals,Inc. 103391.35 Sodium Hyporhlonte
15I 32 Kaiser Foundation Heats Plan 91840.32 Medical Insurance Premium
ISD33 Liberty Mutual lnsuran.Company 75.322A2 OCIP Insurance-Liability B Workers Comp.Monthly Payment
15034 National Ass00.of Clean Water Agencies 38.028.00 Membership
1Sm5 Shee Homes of Califmoi.Inc. 215.0121 CFCC Credit-Tapestry DevebpmeM,La Habra,CA
15(i36 Walker Centrifuge Serv4ces,L.L.C. 140,15126 Repair&Maintenance Semicas-Cleaning of Digesters at Plants 182
151137 J F Shea Construction,Inc. 1,O07,230.56 Construction 1-10B
15038 Grange County Sanihtion District 26.808.613 Workers Comp.Reimb.
15039 Blackwall PubliskmJ.Ltd DBA John W ley B9.88 Books&Publicadms
15040 Absolute Standards.Inc. 55.00 Lab Parts&Supplies
15041 Adamson Indusbies 735.07 Lab Pads&Supplies
15042 Advance Business Graphics 534.33 Printing Services-810 Envelopes w/Relum Address B Logo
15043 Aemtek 2240.01) Temporary Employment Sand.
150" Arles Safety,Inc. 94.82 Safety Supplies
15D45 MM Consulting Engineers T,021.g2 Pmfessionel Services-Pad-Toe Dig Almt Technician
15046 Alliant Insurance Services,Inc. 100W Excess Liability&Excess Workers Conperuatim Insurance
ISD47 Arrllech Elevator Semites 1,40D.00 Monthly Elevator Maintenance at PIh.1&2
1504E Aqua Metric Sales t,003A4 Fire Hydrant Meter
15g49 Aquatic Biosyslems.Inc. 390.5111 Leb Parts&Supplies
Yae4�E%eEL EmN3%tPSXTRErLWM1m Pald Repa..C,xnnomdR,ron laNmnl_P_t61508n. EXHISITA
Page 50113 04]rzW0
Claims Paid From 10101MB to 1 Oil 5408
WenadNo. Vendor Amount Description
Ism Askew Industrial Cory. 161.63 Hardware/Fastuew
15D51 Aul Pipe and Tubing.Inc. 357.73 Tubing
15052 Automation Controls&Compounds,Inc. 137.05 Mechanical Paris&Supplies
ISOM AWSI 1,750.00 Oi-SOe Twining-Substance Abuse
ISl Bemelead lnlemallinel 97.67 InsWment Repair&Calibration Services-Lab Autocive Data Logger
INN Battery Specialties IW.19 Batteries
INN Beech War and Cable 975.A3 Computer Hardware-Networking Ores&Cables
15057 Beckman Instruments,Inc. SKOO Instrument Repairs&Maintenance Services
IW58 Bee Men Past Control.Inc. 295.00 Pest Cord
15059 Barges GOVernpr Service 5,622.91 Mechanical Pads&Supplies
1506D BHI Management Consulting 1.69D.00 Professional Sears.-Strategic Planning&Faclllleting Services for EMT Retreat&Boad Workshops
15061 Brawn&Caldwell 250.00 Notices&Ads
15062 Cal Glass,Inc. 577.65 Lab Glass Repelrs
15063 California Dept.of Child Support Sennces 1.598.OD Wage Garnishment
IN" Cameron Compression Systems 558.11 Mechanical Pam&Supplies Far LSVB Cooper Engines
Ism Camp Dresser&McXne,Inc. 22,636.08 Professional Services Pt-97
INN Campbell Window Timing 1.087.00 Wmdow Tilling Beninese
IN67 Center Sates&DlshibWon,L.L.C. 348.03 Motor&Mechanical Parts It Supplies
INN Cavanaugh Machine Works 1.030.00 Repair&Maintenance Services-Pump Bearing
15069 CEPA Company 25BOD Lab Equipment Mount.Service
15070 Con-Way Western Express 713AI Freight Services
15071 Consumers Ripe If Supply Co. 4,472A4 Plumbing Pads&Supplies
IN72 County WhOlesele Etscdc,Co. 3,014.84 Electrical Polls&Supplies
15073 CS-AMSCO 11,995.39 Mechanical If Plumbing Parts&Supplies
15074 CWEA Membership 264.00 Membership(Calif Water Environment Assoc.)
15078 DapPer Ta Co. 3.225.03 Truck Tres
15076 David's Tree Sarvlca 8.395.00 This Man1.Service
1s077 MT Solutions.Inc. 5.773.18 Software Maintenance Agreement-Creole OB Sandal
15078 DLT&V Systems Engineering,Inc. 6,274.62 Software Maintenance-SCADA
15079 Dndek&Aumutes,Inc. 7.307.25 Professional Services 561
15080 Dunn Edwards Corporation 252.27 Paint Supplies
150101 Eagle Protection of California 275.00 Bkg.Seamy Alarm Seances-No.County Yard
15002 Ecology Tire,Inc. 871.50 Waste Management-Tres
15003 Empl"Benefits Specialists,Inc. 12,259.19 Reimbursed Prepaid Employee Medical&Dependent Care
ISD84 En Pointe Technologies 70.04 Computer HeMware(Sofiware-Cameras
15085 Enchanter,Inc. 2,280.00 Ocean Monitoring If Cartel?Inspection&Maintenance
INN Ewing lingered Industrial 1,620.56 Landscape lnigalion Pads B Supplies
INS7 Excelsla Corporation 1,7W.00 Carpel Cleaning Services
INN Express Lem Lab 2.843.57 Safety Glasses
15089 FEDEX Corporation 278.29 Freight SeMces
INN Fisher Scientific Company,L.L.C. 4.150.12 Lab Parts&Supplies
IM91 Rending Environments,Inc. 240.00 Repair&Maintenance Smhces-OveMll Alarm
III Flex A Chad 1.730.44 Office SuRdles-(15)T x 4'Dry Eraser BneM9
15093 Franchise Tex Board 5D.W Wage Garnishment
15094 Franklin Covey 303.21 081ce Studlea
15095 Franco,Inc.DBA Fresco Pacifies, 417.10 Human Refinances,Background Chador
IW96 FTS Llghfing Services 499.88 Eleddml Pods&Supplies
15097 Genshl Lumber Company 269.36 Toole
15WO Ganait Callahan Company 2,980.87 Instrument Paris&Supplies
INN Global Flow DBA ZY-Tech Global Indus. 1,42595 Mechanical Paris&Supplies
H WeaVaurE%CEL.Oa00A9SHARElCxxs Pent RepoMN0xTaw raxRwnNtnmmmnl P_101 SuXn EXHIBITA
Im4lpec Page 6 of 13 Iryaa liss
Claim Paid From 1=1108 to 1/1115108
Wamenl No. Vendor Amoupt Description
1510D Golden State Ovemight Delivery Service 272.62 Courier Service
16101 Goldemveat Corp. 1,225.00 GrouMskeepirlg Services
15102 Grainger,Inc. 772.41 Molar,Tools&Maintenance&Repair Materials
15103 Grayber Electric Company 1.195.19 Elect ical Paris&Supplies
15104 Hach do canton Industries 24.58 Lab Pads&Supplies
15105 Harrington Industrial 4,493.63 Plumbing&Instrument Paris&Supplies
15106 Hayward Gordan Limited 300.56 Mechanical Parts&Su,hrk.
15107 Hill Brothers 11.139.69 Chemicals-Odor&Corrosion Conrd-Newport Trunklinee
151M Hills Brothers Look&Sale 154.00 Gale Repairs at Plant No.2
15109 Hilti,Inc. 528.36 Mechanical Paris&Supplies
15110 HMH Air Conditioning 3.20.00 Professional Services-HVAC Replacement
15111 Home Depot 697.32 Mil.Repair&Maintenance Malarial
15112 Hyed Legal Plans,Inc. 1,082.W Employee Voluntary Legal Plan
15113 IMIene Child Sapporl Bureau M.00 Wage Garnishment
15114 Industrial Dist ibution 180.37 Tools
15115 Insight Public Sector 1,337.70 Electrical Pads&Supplies-UPS
15116 Internal Revenue Service 125.00 Wage Garnishment
15117 Intl.Union of Oper.Eng.AFL CIO Local 501 4.856.51 Dues Deduction
16118 Jamison Engineering Contractors,Inc. 2,780.00 Repair&Maintenance Services-Gas Line
15119 Jays Catering 2,40636 Meeting Expenses
15120 Jahrolone Supply 35361 Electrical ical Pens It Supplies
15121 Keerirs Companies,Inc. 24,893.52 Ferric Chloride
15122 LECO Canporatian 118.32 Lab Paris&Supplies
15123 Court Order 150.00 Wage Garnishment
15124 Los Angeles County 1,84250 Sewer SaMce Conn.Agreement MO 9123198
16126 Deily Pica 50.00 Notices&Ads
151M Luccts Gourmet Footle,Inc 120.68 Meeting Expense
151V Mendic Motors 96.00 Towing Services
15128 MauMUNal Michel Fanatical Group 79.04 Executive Disability Plan Premium
151N Materals and Oonlnct Services 5,780.00 Taerparery Employment Services
1513D Mayer Holleran McCann,PC 20.467.00 Finendal Auditing Services
15131 McMaster Carr Supply Co. 1.671.81 Mechanical Parts&Supplies
15132 McNichols Company M.75 Repair&Maintenance Materials
15133 Court Order 226.W Wage Garnishment
15134 Nabodal Bond&Trust 1,789.95 U.S.Savings Bonds Payroll Deductions
15135 National Notary Aseoctation 8.00 Membership
15136 National Safety Council 295A0 Training Regislralicn
15137 Neal SUPPty Co. 547.97 Plumbing Supplies
15138 Neutron Products,Inc. 3,130.W Anionic Polymer
15139 Nickell Metal Spray 1,210.00 Repair&Maintenance Services
15140 OCB Reprographics 14.363.51 Printing Service-MO 1/ ()
15141 OCEA 561.67 Dues Deduction
15142 Olin Corporation 3,688.37 Sodium Hydradtle
15143 Onesoume Distrbutions.Inc. 6,665.13 Elecbical Pads&Supplies
161" United Way 60.00 Employee Coniributione
15145 Orange County Vector Control District 65.79 Pest Contrd
15146 Orange FIUM System Technologies.Ipa. 527.47 Plumbing Pads&Supplies
15147 Oxygen Service Company 103.05 Rebuild Shop Guests&Lab Pads&Supplies
15148 PadBC Mechanical Supply 1,546.89 Plumbing Supplies
15149 Parkhanse Tire,Inc. 2,359.68 Tires
H:bapfw XMLd.V20WPSHARE1Lhhm PeMRePa117Wa l.I ,P.WRepoa.MaM.A_tO15pe.rly EXHIBITA
andli c Page 7 of 13 102112Ne
Claims Paid From IMIMS to 10IMS
Warrant No. Vaned, Amount Description
Islas Pa.Omcars Cou.Jl of CA 2.014.74 Ouas Deduction,Suparvimrs&Professionals
15151 Perfamence Pipeline Technologles 17.294.70 Sevrerilne Vdeo Inspections-Various
15152 PL Hawn Company.Inc. 481.19 Electrical Paris&Supplies
15163 Plumbers Depot,Inc. 595.13 Mechanical Ports&Supplies
151" oneself,Inc. 113.33 Lab Pens&Supplies
15156 orimroce Ice Co.,Inc. 200.00 Ica For Samples
Islas Procare Work Injury Center 280.00 Medical Screenings
15157 Propipe Professional Pipe Servicas 14,946.96 Se lerline Cleaning for City of Team&Unincorporated County Property
15158 Pruden0al Overall Supply 1,573.15 Links &Related Articles
Islas Pump Englneadng&rOr Oalr Celif.ola 4,771.17 Air Compressor 01
15160 R L Abbott&Associates 2.000.00 Kam County Slosolids Consulting Services
16161 Restek Carp. 640.38 Lob Pans&Supplies
15162 Rockwell Engineering&Equipment Co. 8A54.W Vaughan Pump Pans
15163 Royale Cleaners 12.00 Dry Cleaning S avices
151" RPM Elemic,Motors SB9.91 Mot.Repaire
15165 SCP Science 3.894.00 Lab Pens&Supplies
151M Sea Bid EleWon..Inc. 1,270.00 Lab Instrument Maintenance&Calibration Services
15167 ShemroW Supply Co.,Inc. 6,020.40 Palm,Cleaners.Sealanis Lu alcants1011s.Tcols,&Lock Supplies
15188 Shureluck Sales&Engineering 2.611.58 Mechanical Pens&Supplies
15169 Sigma-Aldr.h,Inc. 4.216.88 Lab Pane&Supplies
15170 Sign A Remo 1.997.52 Retreclable Benner Stands,Digitally Ponled OCSD Banners.&Cady Cases
15171 Smith Ride&Supply.Inc. 127.68 Landscape Irrigation Supplies
15172 SolidVeppor,Inc. 207.00 Training Reglsaatbn
151M Saudis.Celkams Edison 2,824.06 Power
16174 SoMem Counties Lubricants 1,367.42 Oil
15175 Staining lnakummU.Inc 6.S8S.14 Instrument Parts&Supplies
15176 Spec S mi owi Inc. 6.486.63 Enginmring Services J-33-1
16177 Summit Stsel 197.10 New
15178 Sunset Industrial Pens IN." Mechanical Parts&Supplies
15179 Trim Pacific Fire Protection 1.900.00 0nIyJAnnua1 Fire Sprinkler Inspection.Malnl.&Can.at Pit.1&Ph.2
15180 TDC Group,Inc. 1,750.00 Sc&ware.Maintenance&Suppod-Freeance
15181 Terinsix InternaGonel 2.045.00 Pest Control
IS182 Terra Rmewel,U.C. 20.181.78 Gnt&Screenings Removal&Digester Drying Bed Material Removal
15183 Tmlarrerica Ontario 586.00 Analysis of Blosollds
15184 The Standard Insurance Company 5.634.93 Executive Dlsabllky,Insurance
MISS Thompson Industrial Supply,Inc. 17,295.20 Mechanical Pans&Supplies
Islas Tian Construction 3.261 Painting Seri-Plant No.l Administration Building and MMD Shmothe Electrical Room
15187 Time Warner Communication 51.64 Cable Services
15188 Toms Lack&Safe Service&Sales 664.84 Locks&Keys
15189 Tortuga Pool Services 310.00 Weekly Cleaning of Atrium Pond
1519D TSI,Inc. 8.623.83 Safety Supplies
15191 United Padfic Serums,Inc. 17,067.51 Landscape Maintenance at Plants 1&2 and Pump Stations
15192 Linked Parcel Service 85.64 Parcel SerMces
15193 US Peroxide.L.L.C. 20.468A8 Odor&Comoslen Control Treatmml for Coll.Sy..:Hydrogen Parasite&Famus Chloride
151" V&A Consulting Erlginm s 21.814.03 Prof.Services-Sawadine&Video Inspections
15195 Valin Corporation 2,D35.01 Mechanical Pans&Supplies
16196 Ved2on California 711.58 Telephone Services
15197 Vernal Plumbing 316.35 Seri Contract-Testing,Repair&Can.BackOow Devices at Pls.1&2&Pump Sol
15198 Village Nurseries 304.59 Landscaping Supplies
151N Vision Service Plan CA 9.635.40 Vision Service Premium
H Wand WEXCEL EIaMDAPSHAREU.1—Prd Rcrc 20n910.1—Pe'AReWbAnaUmonl A_lateaa tlu EXHIBITA
nral.c Page 8 of 13 1N2ggoa .,
•1
Claims Paid From 10101 OB to 10115108
Warrant No. Vendor Amouil Description
15200 Vortex Industries.arc. 3.511.00 Dpor Replacement
15201 VWR Scientific Products 3.349.48 Leb Parts 8 SlIPPlias
15202 Wallachs,Inc. 2,016.00 Repair B Maintenance Service,-Showers
15203 Waxie Sanitary Supply 93.10 Janitorial Supplies
15200 WEF 924.W Membershp-Water Environment Federation
15205 Wilson Supply.Inc. WSW Plumbing PaM1S B Supplies
16206 WRiec,Inc. 355.04 Computer HaalwarelSo6wars -Memory Board for CRISP VAX Server
15207 Xerox Corporation 665.82 Copier SePdcas-Equipment Leases,Managed Services.8 Metered Copy Usage 8 Chagas
15206 YesiChnce Materials Handling.Inc. 22.50 Electric Cad Paris
15M Caul Order 912.50 Wage Garnishment
15210 Zimmerman Yacht Maintenance 212.00 Repair B Maintenance Service-G®an Moniloring Vessel Neraca
15211 Juan J.Andmc 248.99 Meelingifrainig Expense Reimbursement
15212 Peter H.Brawn 490.01 Meetingrtraining Expense Reimbursement
15213 Richard A.Ca ldlon 284.45 MeelingRraining Expanse Reimbursement
1M14 Ronald C.Codex 556.40 MeetingRraining Expanse Reimbursement
15215 Sleve Grande 158.76 MeelirgRralmng Expense Reimbursement
16216 Thomas A.Hunt 34427 Meetng?raining Expense Reimbursement
15217 Aurelio Jaime 168.76 Meelingrfraininp Expanse Reimbursement
15218 Paul Ward W8.81 Meeting/framing Expense Reimbursement
15219 Ken H.Wong 475.42 Meeling/Trairdlg Expense Reimbursement
15220 Ma0hew T.WpMy 158.76 Meefing(frehdng Expense Relmbursenwnt
15221 County of Orange Audi ar Controller 195.00 Administration Fee-Adjustment to Properly Tax BIII
15222 Robyn WOoox 1.692.79 Employee Computer Loan Program
15223 Wild Rivers Waterpark 1.461.00 Reimbursed Employee Activities Program
1=4 California Department of Fish and Game 500.00 Application Fees-Amendment of Famed-SARI Emergency Repairs
15225 Stole Water Resources Control Board 261.00 Annual Fee lur Storm Water Permit-SARI
15226 Air Products B Chemicals 26,972.63 O 6 M Agreement Oxy.Gen.Sys.MO B-Mg
15227 Amended Express 33.100.37 Purcheshg Coal Program.Misc.Supplies 8 Services
1522E HEIR Engineering,Inc. 42.237.10 Professional Services P"2
15229 JCI Jones Chemicals,Inc. 109.446.24 Sodium HypocMOMe
15230 Kemlre Companies,Inc. 25.430.55 Fend Chloride
15231 Pdydyn..Inc. 0,191.31 Cationic Polymer MO 3-11-92
15232 Synagro West,Inc. 67.896.24 Recidusd Removal MO 3-29,95
15233 Title RenclaiMagan Farms 344.784.89 Residuals Reademl MO 3.2g95
15234 US Peroxide,L.L.C. 47,614.17 Odor 6 Corrosion Coned Tretimenl fro Coll,By$.:Hydrogen Peroxide 8 Ferrous Cdlerde
15236 First Regional Bank of CA 129.987.59 ConsWdion P2-W 6 P2-91.Retention
IN36 Helix Electric,Inc. 135,000.00 Conctmslion Pl-71
15237 J F Shea Construction.Inc. 1,312,651.51 Construction P2-06,Retention
15230 Kiewit Pound Co. 7,352,88510 Construction Pl-1D2
15239 Meon Electric Construction Carp. 111.712.50 Ca ctxm Pt-97
15240 SMmmick Construction Co..Inc. 1,169,888.35 CanlWuction P2408 P2-91
15241 Walls Fargo Bank 816,987.30 Construction Pl-102,Restated
15242 Union Bank of California 69.086.92 Construction P2-66,Relenuon
15243 At,B Waste Management Assoc. 180.00 Membership
152" Aigas Safety,Inc. 40.43 Safety Suppler
15245 Aigas-West 11.10 Laboratory Supplies
15246 Applied Filtar Tectlnology.Inc. 17.428A0 Repair B Maintenance Services-RemavelReplece Made Carbon
15247 AM1 Wireless Operating Compady.Inc. 2587.79 Wireless Services 8 Equipment
IU48 Archie ivy.Inc. 4A16.00 Street Repairs-Asphalt B Striping
15249 Ashbro es Corporation 3,803.70 Mechanical Paris 8 Supplies
X bMNN\E%CFL LUV2al4PSHAnIF0x—G.I,i R. 1a200xGu1mVd!1F.sm-.xd—rx Iol.8tiv EXHIBITA
snc2lesc Page 9 of 13 10@1Me9
Claims Paid From 10/011*8 to 10116106
Warned No. Vendor Amount Description
lum AT&T 0,598.61 Telephone Service
15251 Baker Tanks 2,189A0 Tank Rentals
15252 Basic Chemical Widens.L.L.C. 9,009.SC SaElum Hydroxide
15253 Bee Man Pest Control.Inc. 195.00 Peal Contra!
15250 Blue Diamond Car Wash,Inc. 1,155.99 OCSD Vehicle Washing/Waxing Semces
15255 Bush 8 Associates,Inc. 532.00 Surveying Services-Various Locations
15256 CEPA Company 1.715.00 Lab Equipment Mainl.Sal
15257 Charles P.Crowley Co. 6,861.35 Pump,Pump Pans&Supplies
15258 Chat Frohlich Photography 1.305.61 Photography Services-Treatment Plants Sheol On Women
15259 Otyol Westminster 00.88 Water Use
15260 Compressor Components of Calilomia 8,265.00 Mechanical Pans&Supplies
15nd Continuer Protection Technology,Inc. 10.848.75 Quarterly Maintenance of Batteries.Pensive,and UPS System
I Comad Chevroletl 236.35 Vehicle Pans&Supplies
15M Consumers No.&Supply Co. 8.186.59 Plumbing Paris&SWplieS
15260 Canecil Engineering 5.666.19 Pump Pans&Supplies
15265 County of Orange Auditor Controller 665.00 Encroachment Pemit-Carbon Canyon Dam Sewer&Pump Station Abandonmenl
15M County of Orange Auditor Controller 260.00 Encroachment Permit-SARI River Floodplain
15267 CS-AMSCO 23,535.69 Mechanical Pans&Supplies
15268 CSMFO 330.00 Membership
15269 CXTEC 599.59 CoinWter HardwarardSoltware-DIP Lamp
15210 Delays Tree Service 3,600.00 Tree Maint.Service
15271 DLT&V Systems Engineering,Inc. 576.69 Professional Services FE07-11
16272 Dudek&Associates.Inc. 6,000.00 Professional Services-Potable Water Assessment at Plant No.1
15273 EaM Tech,Inc. 1.001.30 Pohl Semces P1-106
15270 El6cba Boat,Inc. 2,569.06 Repair&Ma:nenance Services-Child Valve
15275 Employers Group 4.243.63 Legal SemcesnVembership
15276 Emimnmental Resource Associates 1,005.90 Lab Parts&Supplies
152" Equipm Sees&Seri 2.03125 Instrument Pare&Supplies
15278 Ewing Ingation Industrial 1,179.55 "reaches Indulged Parts&Supplies
15279 Easpol Peanuts 12822 Photograph Services
15280 Fedex 37.19 Freight Services
15261 Fisher Scientific Company,L.L.Q. 763.32 Lab Pads&Supples
HIM Fishing Boals Unlimited 0,553.71 Repair&Maintenance Services-Coal Monitoring Vessel-Nenssa
15283 Federal Engineering&Surveying.Inc. 800.00 Surveying Services-Various Capital Projects
152M Garrett Callahan Company 5,08928 Chemicals
15285 Cmammenal Accounting Standards Board 226.83 Publication
15286 Goldenwest Corp. 1,220.00 Groundskeep rig Semces
15287 Grainger.Inc. 3,10.19 Eleclncal Parts&Supplies
15288 Graybar Electric Company 7.400.00 Training Registration-Unity BeOwae
Ium GTE.NET,L LC (Verimn Online) 99.99 toneless Telephone Services
15290 Guarantee Records Management 500.77 O8-Site Records Storage&Shredding Services
15291 Hill Equipment Company 085.52 Nine.Vehicle,Paris.Repairs&Service
15292 Hach Up Ponton Industries 629.58 Lab Pans&Supplies
15=1 Healer.Inc. 89.43 Software Maintenance Renewal
152Ba Hill Brothers 12.095,70 Chemicals-Odor&Command Control-Newport Tmnklins
15M Hills Brothers Lock&Safe 1.69881 Gate Repairs-Gafield Gate Sensors
Ism Home Del 188.15 Misc.Repair&Maintenance Malarial
15297 Hub Auto Supply 1,956.18 Vehicle Paris&Supplies
1520 Industrial Distribution Group 60.68 Toes
15299 IBM 5,907.26 Maintenance Agreement AS400
Xbeprla�CEL.ft PAPSMRRE mmftURepv111�ime Repai.AN�_A_10-1W&AU EXHIBITA
.1. Page 10 of 13 10121.009 •.
Claims Paid From 10MIM to 1DnS08
Warent No. Vander Amount Descdp6on
15300 Interstate Bananas of ON Coast 778.66 CarWebcle Batteries
15301 JG Tucker Add Son.Im. 2,853,46 Fluorescent Road Cores a ad RepallMelnfenanmaCenifimhion SoMod,-Retdevel Devims
15302 Johnsloru Supply 194.88 Electrical Pans&Supplies
1w03 Jorlink USA,Inc. 95.00 Phone Service&Support
15304 Joshua Color,Corporate Training 1.300.00 On-Site Safety Training
1=5 Kissel Envirmmenlal Lab 100.00 Outside laboratory,Stardoms
isms lzwyers Title Company 2.600.00 Title Searches-OCSD Trunk Sewers
16307 Malcolm Pimie,Inc. 15.022.03 Professional Services 5S50
15MB McGraw Hill Companies 82.00 Subscription
15309 McMaster Can Supply Co. 492.86 Mechanical Parts&Supplies
15310 Media Resurfacing Systems,Inc. 3.200.D0 Repairs&Maintenance Services-Belt Press Pans
twit MWR Americas,Inc. 4.852.15 Professional Services P2-74
1w12 NASSCOIPACP 8,955.W On-Site Cured-lo-Place Plus Training
1w13 National Institute of Business signs. 47.04) StAacdpmon
tw14 Neal Supply Co. 263.45 Pumping Supplies
15315 New Horizons.C.L.C.of Santa Ana 150.00 Talking pagination
15316 Nextat Communications 2.037.53 Air Time
1w17 OCB Reprographics 6.365.67 Printing Service-MO 12S00
1w18 Olin Corporation 3.811.57 Sodium Hydroxide
15319 Olresource Distributors.Inc. 1.496.13 Electrical Pane&Supplies
1w20 Orange County Tax Collector 103.72 Property Taxes-Special Assessment User Fees NorthCounty Yard
16321 Oxygen SeMm Company 1.350.82 Rebuild Shop Gases&Lab Parts&So,ows
15322 Pacific Mechanical Supply 1.147.26 PNmbrrg Supplies
1 w23 PCs Express,Inc. 134.41 Courier Service
15324 Plumbers Depol,Inc. 2,941.58 Sawer Hose
15325 Projectlins Technical Services.Inc. 15.621.10 Profe,sion ll Seddon,-FE Annual Design Services
15326 Rainbow,Dialectal Co. 3,779.48 Trash Remmull
iw27 Ramin Instrument,L.L.C. 247.67 Lab Peals&Supplies and Repairs
I=5 RBF Consulting 3,752.00 Surveying Services-Venous Locations
1 BUD RBF Consulting 8,261.80 Engineering Services 2-24-1
1533o Resource Environmental,Inc. 4.925.00 Asbestos Debra Clnan-Up-Blower Bldg.
15331 Rockwall Engineering&Equipment Co. 334.09 Freight Charges
15332 So.,Sloset 6,329.55 Pump Paris&Supplies
15333 Scott Speclalty Gases,Inc. W.51 Lab Paris&Supplies
15334 Shamrock Suppty Co..Inc. 53.62 CManeraf0egraeaera&Tools
15335 Shepard Brothers,Inc. 5,681.97 Hydrochloric Acid
15336 Siemens Water Technologies Corp. 3.451.57 Service Agreement-DI Wok it Systems at Plants i&2
1=7 Smith-Emery Company 24.708.75 Sods.Cancmle&Other Material,Testing
1w38 Snap-On Tools,Inc. 1,677.00 Substrate Maintenance Agradmient-Shopkey Web Goyemmant
ISMS So Cal Gas Company 52D.07 Natural Gas
15340 SpmNe0, 464.40 Drintirg WaterM ler Raises
15341 Shifts Sound of Equalization 69.45 Underground Pamen m Storage Tank Maintenance Fes
15342 Summit Sleat 1,643.138 Metal
15343 Sunset Industrial Pans 146.51 Mechanical Pon&Supplies
153" Tam Factory 123.14 MisWg Expenses
isms TesMmerlm Ontario 16,880.00 Analysis of Moulds
15346 Theme,Election North Americo,L.L.C. 80.49 Lab Pans&Supplies
15347 Thpmpmn Induaidal Suppty,Inc. 1,642.73 Mechanical Pans&Supplies
15346 T-Mobila 106.73 Wireless Air Time
15349 Tonys Lock&Safe Service&Sales 546.24 Locke&Keys
RW,xaa1ExLEleui22N^PSHaRMmb Pale Rssomxoawdmsreaaapmavarnmvmp uo-u soar,aa EXHIBIT
ryy4lryy Page 11 of 13 1e92200D
Claims Paid From 11MIA08 to 1011 MR
Warrant No. Vendor Amount Das.Nptlon
16360 TowrueM Public ANaire 7,500.00 Leglslative&Executive AEvocate for Grant Funding
15351 Training Clinic 3.312.87 On-Site Took ins-Leadership Competency Development
Ism Truck&Aso Supply,Inc. 310,39 Automotive Paris&Supplies
ism ULIm 885.60 Office Supplies
15354 United Feel Services,1.. 4725.00 Landscape Maintenance
ion United Parcel Service 91 Parcel Semces
low Valley Detroit Diesel Allison 1.735.74 Etacneal Pans Supplies
15357 Voters.Inc. 1.937.09 Computer HardwarelSOBWars Support-Momaring Control Systems.Ozanators,etc.
15358 Vanzen California 72.79 Telephone Services
151 Verson CaBomta 1,462.29 Wireless Services
16360 Viltasa Norman. 97.90 Landscaping Supplies
15361 Vonex Industries,Inc. 14.802.41 Door/Gele Repairk-Various
15362 VWR Scientific 392.42 Lob Para&Supplies
15363 The Wekenhut Corporation 5,834.94 Sewcy Services
15364 Water Policy Report 700.00 Books&PUMioare s
loss WEF 812.00 Membership-Water Environment Federation
ism Wast Us Supply Company,Inc. 43.89 Electncel Paris&Supplies
15367 Wright Way Developments 381 Instrument Repair B Maintenance Somices
15M VelelChnse Materials Handling,Inc. 124.94 Electric Can Pane
ism 1-80g-COMmeri 13.60 Telephone Conference Celle
1070 Orion Construction Corporation 9,000.00 Construdion Pt-101A
15371 Union Bank of California 12A72.50 Construction Pl-97,Retention
16372 JeBrsy L.Armstrong 675.68 MeetingRraiang Expense Reimbursement
15373 I.ayne T.Sk i 311.70 MaefingTreining Expense Reimbursement
15374 David M.Chafe 657.20 Maetingfrooming Expense Reimbursement
15375 Micheal D.Moore 123.00 MartagNesiong Expense Reimbursement
15376 Madenkumar B.Patel 125.00 Meeting/Training Expense Rcmursemenl
16377 Christine M.Thomee 2.133.82 MeebngRralning Expense Reimbursement
15378 Joanne Word 522.19 Meefingrrealning Expense Reimbursement
15379 Aloe-Allied.Inc 7,066.60 Construction SP-98
1538D County of Orange Auditor Connecter 555.00 Adminlehstion Fee-Adjustment to Property Tax Bill
15381 City of Founlein ValNuy, 15.50 Buffalos Permit-Resctivaton Fee for Natural Gas Refuefng Station
ism City of Fountain Valleuy 42.50 Plumbing Permit-Readhaton Fee for 3-Inch Natural Gas Liens
15383 City of Fountain Velleuy 27.00 Madraniwl Permit-Reactivation Fee for Pt-40-2 Bldg.6 HVAC
15384 City of painting Voting, 42.60 Electrical Permit-Reactivation Fee for Tamp Transformer and Subpenel
15385 Cly of Fountain Vallouy 115.72 Building Permit-Reactivation Fee for Administration Entrance Awning
15M C)"Fountain Velleuy 291 Seeing Permit-Reactivation Foe for Purchasing Conference Room
15387 City of Fosntafn Velleuy 825.57 Building Permit-Reactivation Fee for Retrofit Warehouse Storage Says
Ion City of FountaM Velleuy 221.82 Building Permll-Reactivation Fee for 24'x 60 Engineering Trailer
15389 Orange County Sardu tion Dbtnd 1,017.42 Petry Cash Relmb.
15390 BARBS 510.00 Training Registration
Total Accounts Payable-Werrenb
Payroll Disbursements
40231- 40260 Employee Paychecks S 4,901 Interim Payroll-ARBN415 Payments(10/01108)
40NI- 40327 Employee Paychecks 122,356.32 Biweekly Payroll(IM8108)
40326. 401 Employee Paychecks 21,402,01 Interim Payroll-Relms(10107108)
181581- 161668 Direct Deposit Statements 36.555.77 Interim Payroll-ARBN415 Payments(10101108)
161661 162249 Direct Deposh Suit ementa I S47.2]5.68 Blweekly Payroll(I010&r08)
Total Payroll Disbursements . 52gg
N'.Wryenwai EL CeVSdIDSHRRFCICIme Past Rapwmta otairsP¢kgpM shimmer_n_t015O0 W EMISITA
OMrMc Page 12 of 13 IeRx[OOa
Claims Paid From 10/01/08 to 101151D0
Warrant No. Vendor Amount Conniption
Wine Tranafor Pavmente
CCSD Payroll Tons B ConDibutlons E )92.01].60 Biweekly Payroll-(t OIOBl08)
Deutsche Bank 262,6e4.91 Series 2006 Cerdriwtes of Padidpa0on September Interest Payment
Sodete Generale,NY Bnmo 10.720.51 Sedes 1993 Refunding COPS Standby Letter of Credo Commission(OBI01108-0911 NOB)
Total WI.Transfer Payments E 1.005.3&1.05
Total Claims Paid 10101/00-10115108 E 2].210.361.20
H.WeammaaceL LNUIDW .ntI ol—PoIO RSr OaelClal=PMdRe,—.. imenl_A_1615Lau. EXHIBIT
niultone Page 13 of 13 tnuuXIMS
Claims Paid From 10I18I08 to 10/31/08
Warted No. Vendor Amount Description
Accounts Pavable-Warrants
15391 ADR Services,Inc. $ 1,635.00 Legal Services-Mediation Gates vs.OCSD
15392 Black&Veatch Cormeatian 340222.30 Professional Services Pt-76,P1-102.&J-33-3
Ism Dudek&Associates,Inc. 25.309A6 Professlonal Services P2-68
1094 Earth Tech,Inc. 33,349.09 Professional Services 3-58
15395 Hewlett Packard Company 76.498." Computer Sof elmel-ardwara-(50)Personal Computers&(50)Monitors
15396 JCI Jones Chemicals,Inc. 63.456.56 Sodium Hypachionte
15397 M.J.Soldiered!Associates,Inc. 35,708.68 Temporary Employment Services
15398 Malcom Pimle,Inc. 54,951.87 Professional Services 1.10
15399 Southern California Edison 495.030.08 Power
15400 Water Environment Ressaroh Foundation 87.630.00 Subscription Renewal-Blowhole Research Collaborative Project
15401 Aanderae Instruments 2,469.00 Instrument Rapers&Maintenance Services-Buoy Repairs
15402 Abel Pumps,Inc. 790.68 Mechanical Pads&Supplies
15403 Able Scale Repair 2,837.12 Repair&Maintenance Services-Loading Scale
15404 Absolute Standards,Inc. 98.00 Lab Pads&Supplies
15405 Acoustical Material Services 206.95 Ceiling Tile
15406 Aerotek 11,111.20 Temporary Employment Services
15407 Ago IndustriesDBA S Cal Sweeping 980.00 Street Sweeping Services
15408 Air Liquids America Corp. 1,152.16 Specialty Gases
16409 Atrgas Safety,Inc. 7. 05.01 Safety Supplies
15410 AIRS Human Capital Solutions,Inc. 3,500.00 Training Registration
15411 American Airlines 4,865.05 Trained Services
15412 Ancon Manna 2,1)1 OCSD's Portion of Spill Response Drill
16413 Applied Induslnal Techrrology 55.62 Mechanical Pads&Supplies
15414 Arnold Orates Design,Inc. 1.620.00 Professional Services-07-08 Annual Report Ad Direction
15415 Ashbrook Corporation 743.36 Mechanical Pads&Supplies
15416 ABBE American Society of Safety Engineers 1.895.00 Trailing Registration
15417 AT&T Mobility I.L.L.C. 259.47 Telephone Equipment&Adivetlon
15418 Atlas Underground.Inc. 4.800.00 Repair&Maintenance Services-Sink Hole
15419 AWSI 750.00 Training Registration
15420 Badger Meter,Inc. 244.44 Flow Meter
15421 Battery Specialties 476.61 Baftenes
15422 BioMedeux Vftek,Inc. 06.69 Lab Pads&Supplies
15423 C&D Technologies all Electrical Pans&Supplies
15424 California Date.of CMW Support 1,596.00 Wage Gamishment
15425 Garold,Edge. 11,159.50 Professional Services-Research Strategic Plan and Engineering Support Services&120'Oudall Repairs
15426 Casual Gourmet 119.60 Meeting Expenses
15427 Charles P.Crowley Co. 2,801.50 Pump
15428 Circle.Inc. 2,903.16 Office Supplies-Toner Cartridges
15429 City of Fountain Valley 795.00 Annual Fire Permit Fee
15M Of,of Garden Grove 10.00 Business Tax Renewal Fee-North County Yard
15431 Communications Supply Corp. 380.48 Computers,SoflwareMardware
IM32 Consumers Pipe&Supply Co. 545.28 Plumbing Pans&Supplies
15433 Corporate Express 7,085.41 Office Supplies
15434 Comly Wholesale EtsNd,Co. 235.43 Electrical Pans&Supplies
15435 CR&R,Inc. 945.00 Conformer Rentals&Waste Disposal Service
15436 CS-AMSCO 4,010.42 Mechanical Pads&Supplies
15437 Culligan of Orange County 51.60 Maint.Agreement-Can Gen Water Softener System
15438 CWEA Membership 395.00 Membership(Colic Water Environment Assoc.)
H eleiAaa EXCEL dI UMAP5HARIM(tolme Pee Rel1wn3)0rCip sPadRepmbAtleMmeN B IOd10exho EXHIBITS
finnlatc Page 1 of 8 III821Ne
Clams Paid From 1 Oil WOO to 10131108
warming No. Vendor Amount Description
15439 CXTEC 8.11=5 Computers,Solhvere/Hardware
15440 Deal Pumps&Palls.Inc. M24 Pump Parts&Supplies
15441 Empoyee Benefits Specialists,Inc. 12.250.19 Reimbursed Prepaid Employee Medical&Dependent Care
15442 En Porno Tectoologies 1.389.98 Computers,Solhvare/Hard Ware
15013 Enchanter.Inc. 3.040.00 Ocean Monitoring&Outlall Inspection&Maintenance
lf4 Erwwrimentel Water Solutions,Inc. 4.184.74 Pump
15445 FEDEX Corporation 29.67 Freight Services
15446 Ferguson Enterprises.Inc. 239.85 Mechanical Palls&Supplies
15447 First American Real Estate Solutions 73250 On-Line Orange County Property Information
15w Fisher Scientific 238.88 Lab Pals&Supplies
15449 Fishing Boob Unlimited 1.885.63 Lab Paris&Supplies
15450 Five Star Metals.Inc. 1,205.00 Mechanical Parts&Supplies
15451 Franchise Tax Boer! 50.00 Wage Garnishment
15452 Frys Electronics 131.61 Computer Supplies
15453 George Yardtey Co. 327.56 Mechanical Parts&Supplies
15454 Glens Alignment&Brake Servica 234.71 Vehicle Alignment Services
1640 Goldenwesl Corp. 715.00 Groundskeeping&Janitorial Services
15456 Grainger,Inc. 2.033.98 Mechanical Supplies&Tools
15457 Graybar Electric Company 616.27 Electrical Repair&Maintenance Services
15458 Great Western Sanitary Supplies 195.02 Janitoral Supplies
15459 Hach clo Portion Industries 6,69022 Lab&Instru a l Pans&Supplies
15460 Hammon Tedder Technical Servces 5,472.00 Professional Servicae-Elacelral Acceptance Tesling-Various Capital Projects
15401 Hardy&Harper,Inc. 2247.00 Repair&Maintenance Services-Asphalt
15482 Harrington Industrial Plastics,Inc, 4,300.36 Mechanical Pads&Supplies
15463 City of Huntington Beach 40.89 Water Use
16464 Hyatt Legal Plans,Inc. 1.062.00 Employee Voluntary Legal Plan
15465 IECOC 50.00 Membership
154M Indiana Child Support Bureau 290.00 Wage Garnishment
15467 Industrial Disobulon Group 624.37 Mechanical.Tools&Paint Supplies
15468 Intergraph Corporation 5.314.23 Sunni a Mainl.Agreement
15469 Internal Revenue Service 125.00 Wage Garnishment
15470 Intl.Union of Omer.Eng.AFL CID Local 501 4.856.51 Dues Deduction
15471 IPI Grammlech,Inc. 18.906.00 Soovare MainL Agreement
154M Irvine Ranch Water District 4426 Water Use
15473 Jamison Engineering Contractors,Inc. 4,950.00 Repair&Maintenance Services-Scaffolding Installation
15474 Jays Catering 1247.37 Meeting Expanses
15475 Johnstone Supply 1,07821 Mechanical Pads&Supplies
15476 Joshua Casey Comorale Twining 5269.38 On-She Safety Twining
154" JTP.Com Limited 11,947.32 Mechanical Paris&Supplies
15478 Kelly Paper 50.13 Paper
IU79 Lab Safety Supply,Inc. 152.60 Lab Parts&Supplies
15480 Court Order 150.00 Wage Garnishment
15481 Marking Smices,Inc. 976.90 Asset Tags
15482 Mail Chlor,Inc. 4.862.70 Mechanical Parts&Supplies
15483 McMaster Can Supply Co. 3.464.98 Mechanical&Lab Parts&Supplies
15484 McNichols Company 1.549.00 Repair&Maintenance Supplies
15485 Mid West Associates 550.71 Mechanical Pans&Supplies
15486 MSA rho MAG Systems 3.986.76 Instrument Pads&Supplies
16487 Mission Abrasive&Janitorial Supplies 12.41 Freight Charges-P.0.68201-OP
H Wao%sadkEXCEL EIa12ANPSHARE%0aImn Pahl FaryN WClarnWaldRenMAI &wn1 B 10-31 a.anx EXHIBIT
mvtlonc Page 2 of 8 t1l&tNa
Claims Paid From 10/16/06 to 10131108
Warrant No. Vendor Amount Description
1548E Mitchell Instrument Co. 3,102.00 Small Tad Expense
15489 Mobile Hose S Hydraulic Supply 4205.49 Repair It Maintenance Services-Hose Replacements
15490 Caud Order 225.00 Wage Garnishment
15491 National Bond&TM51 1,789.95 U.S.Savings Bonds Payroll Deduction
15492 National Safety Council 825.00 Membership
15483 Neutron Products.Inc. 3,123.89 Mbnb Polymer
15494 New Pig 186.66 Spill Absorbent Materials
15495 Newark Electronics 2,023.96 Electrical Pans&Supplies
15496 NRG Engine Services,L.L.C. 3.332.47 Mechanical Pads&Supplies
15497 OCB Reprographics 12,724.19 Printing Service-MO 126100
15496 OCEA 561.67 Dues Deduction
15499 OBice Depot 1,620.31 OBte Supplies
15500 OBiceMax Contrsct,mc/OM Workspace 17,533.35 Installation of Work Stations at Lab Bkg.(7)
16501 Olin Corpwatbn 3,762.88 Sodium Hydroxide
ism Orwsource Distributors,Inc. 7,202.25 Electrical Paris S Supplies
15603 Orange County Tax Collector 1,164.96 Spatial Assessment User Fees-810 E.Balboa Blvd.,hempen Beach
1 SEIM Orange County United Way 60.00 Employee Contributions
15505 Orange Fluid System Technologies,Inc. 2.812.35 Plumbing Pans&Supplies
1006 Oxygen Service Company 875.10 tab Pans&Supplies
15507 Peace Officers Council of CA 2.014.74 Dues Deduction,Supervisors&Professionals
15508 Progressive Business Publicegons 230.00 Books&Publications
15508 Prudential Overall Supply 4,997.16 Uniforms&Related Mlcles
15510 Rob Rooter SOC lal Lake Forest 195.50 Plumbing Services-Drains
15511 Royal Wholesale Electric 1,135.89 Electrical Pads S Supplies
15512 Sf A 2,000.00 Pledge for Water Environment Research FoundationlColumbia University Nitrogen Emissions Study
15513 Sea Boats 1,250.00 Maintenance Services-Ocean Monitoring Vessel Neriesa
15514 Shammok Supply Co.,Inc. 2,976.04 Mechanicel,Tools&Paint Supplies
15515 Shimadzu Scientific Instruments,Inc. 4.766.53 Instrument Repair&Maintenance Services-Shir adzu GC47
15516 Shureluck Sales&Engineering 4.257.64 Mechanical Pads&Supplies
15517 SldtiPath Sominars 299.00 Training Registration
15518 So Cal Gas Company 17.742.81 Natural Gas
15519 Southern California Gas Company 5,953.00 Construction P1-82
16520 Special Plastic Systems.Inc, 2,950.65 Mechanical Pads&Supplies
15521 SPEX Certipm,.Inc. 71.12 Lab Parts&Supplies
15522 Stanley Steamer International,Inc. 1,538.40 CarpetiFumlture Cleaning Services
15523 Bummid Steel 4,5D1.69 Metal
15524 Sunset Industrial Pans 326.68 Mechanical Pans&Supplies
16626 SYMCAS TSG 1,598.DB SCADA System VAX Service Agreement
15526 Techno Coatings 2,640.00 Painting Services
15527 Terminix International 770.00 Pest Control
15525 Tens Renewal, L.L.C. 21,527.84 Grid&Screenings Removal&Digester Drying Bed Material Removal
15529 The Laboratory Safety Institute 50.00 Tndining Ru:ghtmlpn
15530 Theme,Electron North America,L.L.C. 061AS Lab Pans&Supplies
1031 Thompson Industrial Supply,Inc. 8,042.57 Mechanical Pads&Supplies
165M Transcat 502.28 Small Tool Expense
15533 Tri-County Fire 1.486.09 Flre Extinguishers
15534 ULine 206.01 Lab Parls&Supplies
15535 Uhm Scientific 739.92 lab Pans&Supplies
15536 Underground Service Mort of So.Calif 1,510.50 Underground Utility IdentificationtD'g Aled Nolilicetion Service
ftWaplueTE%LELdifSNNPSHFaEILltlma Part Remm30081pnmWeMR -AU� 111031deXu EXHIBIT
MMM. Page 3 of 8 1 uvtma
Claims Paid Fmm 10116M to IW31105
Warrant No. Vendor Amount Description
15537 United Parcel Service 2,026.77 Freight Services
155M Valor Corporation %5.87 Oil Drum
15539 Vapex,ft. 2,408.00 Boosler Pumps&Sensors
15540 Veme's Plumbing 525.00 Service Contract-Testing,Repair&Can.Backflow Devices at Plus.1&2&Pump Sta.
15541 Wellex Irsusldes,Inc. 453.08 Door Repairs
15542 V WR Scientific Products 2,883.77 Lab Pads&Supplies
15543 Waxle Sanilory Supply 289.20 Janitorial Supplies
15544 WEF 217.DD MembersMp-Water Environment Federation
15545 West Coast Safety Supply Co. 1,679.16 Safety Supplies/Equipment
15546 West Life Supply Company,Inc. 282.62 Electrical Parts&Supplies
15547 WelLaba,Inc. 1.346.25 Repair,Maintenance&Calibmllon Services
15548 YaIWChsse Materials Handling,Inc. 1,067.54 Electric Carl Paris
15549 Court Order 912.50 Wage Garnishment
1555D tat Run Computer Services,Inc. 5.228.03 Computer SOBwereMartlware-Fulilsu Srannar
15551 Madan M.Men 1,237.00 Meeting/Training Expense Reimbursement
15562 James E.Colston 333.00 Meeting/Imining Expense Reimbursement
15553 Merit A.Esquer 125.00 MeeBng?mining Expense Reimbursemenl
15554 Victoria L.Francis 307.75 MeeengRrainhg Expense Reimbursement
155M Vladimir A.Kagan 572.96 Meating/fralning Expense Reimbursement
IWK 6 William S.Malik 195.00 Maefing/freining Expense Reimbursement
15557 Robert D.Michaels 163.72 Meeling/fmining Expense Reimbursement
15558 Leyla Perez 102.72 Meetingandriing Expanse Reimbursement
1059 Lucinda Ellen Ray 992.12 Mesting/Training Expense Reimbursement
15560 Mendrick S.Taylor 308J5 Mee9ng/Training Expense Reimbursement
15561 CMTA Division IX 105.DD Meeting Registration-Dlvislon 220
15562 Susan&Kenneth Sohmaling 9111.57 User Fee Refund Regarding Septic Tanks
15563 Brown&Caldwell 15501.50 Professional Services P2-90
15564 Cardlock Fuel Systems,Inc. 25.236.70 Fuel Card Program-DIaWct Vshic es&Monitoring Vessel
15565 CS-AMSCO 48,328.46 Mechanical Pads&Suppites
15566 HDR Ernimemirg.Inc, b12,180.86 Professional Services P1-101
15567 HIII Brothers 35,702.06 Chemical;-Odor&Corrosion Control-Newpod Tronkfim
15568 Jamison Engineering Contractors,Inc. 318,743.35 ConsWction 241 SI and Repairs io Flow Maier at Seal Beach Pump Station
15569 JCI Jones Chemicals.Inc. 231.781.30 Sodium HyPochlori e
15570 Ken Thompson,Inc. 33,004.82 Repair&Maintenance Services-Sink Hole in City of Yams Linda
15571 Menteys Boller,Inc. 25,U18.75 Repair&Maintenance Services-Pit.2 Bodes
15572 MetUfe Life Insurance Company 42=.15 Group Life,Manager Mon,Life,Short&Long-Term Disability&Optional Term Life Ins.
15573 Orange County Water District 76,978.54 Green Acres Water Pull l(GAP)
15574 Polydre,Inc. 53.034.80 Cationic Polymer MO 3-11-92
15575 Sancon Engineering,Inc. 125,306.00 Repair&Melnlemmos Services-Manhole Rehab.Program&Fold&Reformed PVC Pipe Rehab.Program
15576 Southern Callfomia Edison 92,382.21 Power
15577 Tule RancldMagen Farms 247.020.65 Residuals Removal MO 3.29-95
15578 US Peroxids.L.L.C. 122,39D.50 Odor&Corrosion Control Treatment tie Coll.Sys.;Hydrogen Peroxide&Famous Chloride
15579 Woodruff Spri&Smart 58,03CM Legal Services MO 7-26-95
15M J.F.Shas Construction,Inc. 4,23g132.87 Construction P2-90
75SB7 Km Thompson,Inc. 164.700.00 Construction 2.24-1
15582 Norman A.Olason Conslrudion.Inc. 178,486.20 Construction 747
15583 Union Bank of California 471,014.74 Continuation P2-91D,Retention
15564 Amermn Telephone&Telegraph Corp. 207.60 Telephone Service
15585 ADS Environmental Services 554.40 Professional Services-Temporary Flow Monitoring Study
H bapemNf%CfL.Ne1i]WPSMME1LNIme Pad RayrN00TC1x.PxdaepM ArlecM1meM B1OJ1-0B.A. EKHIBITB
aeR10c Page 4 of tl?3f200a <
Claims Paid F.10116108 to 10131MS
Warrant No. Vendor Amount Description
15586 Ames Safety.Inc. 442.83 Safety Supplies
15587 AM Best Company,Inc. a05.00 Books&Publications
15588 American Machinery&Banks.Inc. 167.50 Mechanical Parts&Supplies
15589 Advanced Society of Civil Engineers 249.00 Training Registration
15590 American Society of Safety Engineers 675.00 Training Regleaation
15591 AppleOne Employment Service 17,584.78 Temporary Employment Services
15592 Applied Industrial Technology 791.60 Mechanical Parts&Supplies
15693 Aquatic Bbsyslems,Inc. 393.00 Lab Parts&Supplies
155N ABBE American Society of Safely Engineers 280A0 Membership
16595 AT&T 1.974.20 Telephone Sentice
15596 AT&T CentenniaMlCl 3,257.17 Telephone Service
15597 AT&T Long Distance. 988.85 Telephone Service
15595 AT&T Mobility 11,L.L.C. 398.00 Telephone Equipment&Activation
15599 Atkinson,Andelson,Loys,Rudd&Ruud 5.060.20 Legal Services-Employee Relations
15600 Awards&Trophies Company 134.69 Name Plates
15601 Business&Legal Reports,Inc. 336.83 Beaks&Publications
15602 Bennett Bowen Lighthouse 613.59 Instrument Parts&Supplies
15803 Caffomla Barricade Rentals 1.839.40 Barricade Rental/Pmtedmo
15604 CalBomia Relocation Services,Inc. 652.50 Office Files Moving/Reloca8on Services
15W Cad Warren&Co. 300.00 Insurance Claims Administrator
15606 Carol Engineers 3,031A0 Prod.Sirs.-Investigate Concrete Channel at P-1,Headworks 2,Splinter Box Feeding Primaries for Structural li
15607 CDW Government,Inc. III Computer SollWaleMardware-DLP Projector
15808 Circle,Inc. 1,000.95 Office Supplies-row Cartridges
15609 Columbia Analytical Services,Inc. 870.00 Analysis of Wastawreler,Industrial Washmo ler&9losolids
15610 Consumers Pipe&Supply Co. 22.76 Plumbing Paris&Supplies
15611 Controlled Motion Solutions 225.70 Mechanical Pads&Supplies
15612 Corporate Express 8,813.70 Office Supplies
15613 Cortech Engineering 4.620.04 Pump Supplies
15614 County Of Orange Auditk Conlroller 202.00 Encroachment Permit
15615 CR&R,Inc. 1,260.00 Container Rentals&Waste Disposal Service
15616 CSAC Excess Insurance Authority 3.605.58 Employee Assistance Program
15617 Curtsy Molesale Electric,Inc. 8.603.84 Electrical Paris&Supplies
15618 CWEA Membership 132.00 Membership(Calif.Water Environment Assoc.)
15519 Dapper Tire Co. 281.81 Tmck TIrm
15620 David's Tree Service 3,575.00 Tree Minna.Service
15621 Dennis Greenberger,Ph.D. 1,750.00 Professional Services-Fit for Duty Exam
15622 Dwyer Instruments,Inc. 1,927.75 Instrument Pads&SuppBes
15623 Electra Bond,Inc. 603.43 Repair&Melnlenanca Services-Fusion Bond Coating to Pump Pads
15624 Electronic Balencing Co. 280.00 Repair&Maintenance Services-Balance Impeller&Shaft Assembly
15525 Employee Benefits Specialists,Inc. 803.00 Relmbursed Prepaid Employee Medical&Dependent Care
15620 Employers Gmup 76.00 Training Registration
15627 ENS Resources,Inc. 10,000.00 Professional Services-Legislative Advocate
IN28 Environments]Resource Associates 118.50 Lob Pads&Supplies
15629 Ewing Initiation Industrial 279.09 Landscape forgotten Pads&Supplies
Isom Fuel American Real Estate Solutions 450.00 On-Line Orange County Property Information
15631 Fleming Environmental,Inc. 383.00 Repair&Maintenance Services-Troubleshoot Veeder RW UST Mimicking System
15632 Franklin Covey 34.44 OMce Supplies
15633 Gates Fiberglass Installed; 5,027.50 Repair&Maintenance Services-Tank
15634 Glenna Alignment&Brake Service 728.96 Repair&Maintenance Services-Vehicle Meal Alignments
HMepmME%CELEre1220NP9HAREV]e6m Potl B n)31 Wxsx, EMISIT B
MRIMc Page 5 a(8 11AWN00
Claims Paid From 1 Oil WOO to IW31108
Warrant No. Vendor Amount Description
15635 Goodwin Pumps of America,Inc. 3,950.11 Repair&Maintenance Services- Pumping Services
15636 Golden Slate Ovemght Delivery Service 102.90 Ccuner Service
15637 Buchenwald Corp. 1,578.00 Repair&Maintenance Services-Roof Cleanings&Inslallallon of Bud Spikes
156M Grainger,Inc. 3,210.70 Electrical Pads,Supplies&Tools
15M Graybar Electric Comps" 1,142.15 Instrument Repairs
15640 Gyms Systems 23.0491 Scheme Maintenance,Support,&Upgrade;and.Cyrus AIM Om ile Training Package
15641 Hartzell Fen,Inc. 4.835.58 Direct Drive Fiberglass Fan
15642 Howled Packard Company 16,451.74 Computer SoftwareMardwae-Server/Chassis
15643 Home Depot 1.394.73 Mlsc,Repair&Maintenance Material
1560 Hub Auto Supply 4101 Vehicle Paris&Supplies
15645 Humentech,Inc. 15,023b2 01 Industrial Ergonomics Training
15646 City of Huntington Beach 13,945.00 Wale,Use
16647 Inorganic Ventures,Inc. 505.50 Lab Paris&Supplies
15648 International Public Mgml.Assoc. 290.00 Membership
15649 Jays Catering 700.76 Meeting Expenses
15650 Jobster,Inc 395.00 Notices Is Ada
15651 Joshua Casey Corporate Training 4A38.57 On-SBe Safety Tell
166K Kissel Environmental Lab 50.00 Outside Laboratory Services
15653 L.Johnson Painting 6,010.00 Painting Services
15654 Deily Pilot 56.25 Nations&Ads
ISMS Lustre-Cal 777.62 OCSD 2009 Truck DecalslSlickers
15656 MT Motor Repair 2.592.81 Moor Repairs
15657 Maintenance Technology Corp. Bill Mechanical Parts&Supplies
Ism MassMUNal Michel Financial Group 79.04 Executive Disability Plan Premium
15659 Voided Check - -
15660 MWunkin Red Man Corporation 905.42 Mechanical Parts&Supplies
IN61 McMaster Can Supply Co. 668.16 Mechanical Paris&Supplies
15662 Midway Mfg.&Machining Co. 11,721.58 Mechanical Pads,Supplies&Repairs
15663 NATEC International,Inc. 650.00 Training Registration
15864 National Fire Protection Association 150.00 Membership
15665 Neal Supply Co. 2,900.79 Plumbing Supplies
15666 Neutron Products,Inc 3.129.06 Anlonic Polymer
15667 Newark Electronics 402.60 Instrument Supplies
15668 City of Newport Beach 143.32 Water Use
15669 Nmyo&Moore 1.122.00 Professional Services-Soils,Concrete&Other Materials Testing for Various Capital Projects
15670 Norio Delivery 435.16 Mail Delivery Service
15671 OBhce Depot 2,551 Dike Supplies
15672 Olin Corpoation 3.811.57 Sodium Hydroxide
15673 Olsen Technologies,Inc. 1.049.55 Mechanical Paris&Supplies
15674 Onesource Distributors,Inc. 3.342.73 Electrical Parts&Supplies
15675 Creole Corporation 10,940.98 Software License and Maintenance Agreement Renewals
15676 Orange Courier 21.26 Courier Services
15677 Oxygen Service Company 896.25 Rebuild Shop Gases&Lab Paris&Supplies
15678 Pacific Mechanical Supply 121.60 Plumbing Supplies
15679 PCS Express,Inc. 105.04 Courier Service
15880 Portion IMuslries,Inc. 2.689.80 InslrumeN Paris&Supplies
15681 Primary Souroe Office Furnishings.Inc. 3.608.54 Office Furniture&Misc.Equipment
15682 Primrose Ice Co.,Inc. 200.00 Ice for Samples
15583 Procare Work Injury Center 85.00 Medical Screenings
H:We 11asdIEXCELd1a1220UP5H0l& Ims Pau B 10-31-06 Mo EXHIBIT
antaic Page 6 of 8 r uarzcoe
Claims Pald From 10/16108 to 1DO1108
Warrant No. Vendor Amount Description
16684 Process Equipment Company 724.08 Pump Supplies
15685 Propipe Professional Pipe Services 6,293.82 Bandanna,Cleaning for City of Tuedn&Unincorporated County Property 8 Video Inspection
15686 Providence Publications,L.L.C. 427.00 Books&Publications-On-Line
15687 Prudendel Overall Supply 1.708.89 Uniforms&Related Articles
15688 RBF Consulting 10,648.00 Surveying Services-Various Locedons
15689 Roberti Auto Trim Shop 192.71 Upholstery Repair
Iwo Sweet Votca&Dena,Inc. 2,284.80 Telephone System Maintenance
15691 SETAC 475.00 Mauling Regisirallon-Division 635
15692 Sewer Equipment Company of Amerce 116.20 Hose Guides
15693 SGS Testcom.Inc. 2.29 Telephone Line-District Vehicle SMOG Station
15694 Shamrock Supply Co.,Inc. 371.09 Locks&Keys
15695 Shureluck Sales&Engineering 10.23 Mechanical Paris&Supplies
15696 Siemens Energy&Automation 15.311.20 Instrument Pads If Supplies
151197 Siemens Water Technologies Cap. 1265.94 Service Agreement-DI Water Systems at Plants 1&2
156M SFJIIPath Seminars 149.00 Training Registration
15699 Smldt-Emery Company 1,742.00 Soils,Concrete&Other Materials Testing
15700 Snap On Tools 828.13 Tools
15701 Snap-On Tools,Inc. 89.00 Tool Repair
15702 South Coast Air Quality Management Dist. 9.024.58 Permit Fees-Annual Emission,Operation&Miac.Fees
157D3 South Coast Air Dually Management Disldcl 4.867.37 SCAOMD Permit-Construction of Temporary Fuel Cell Energy Station at Plant No. 1
157134 Southern Counties Lubricants 5,027AG And-Freeze
157D5 Spar Services,Inc. 6.251.72 Engineering Sevices 7-32-1
15706 Summit Steel 3.156.70 Metal
15707 Sunset Industrial Pans 127.26 Mechanical Pads If Supplies
16708 SupennteManl of Documents 88.00 Books&Publications
15709 TekSystem r 3.496.58 Temporary Employment Services
15710 TermlNx International 495.00 Past Control
15711 Tens Renewal,L.L.C. 16,819.66 Did It Screenings Removal&Digester Drying Bed Material Removal
15712 Testamedce Ontario 538.0D Analysis of Biosolids
15713 The Register 54.80 Noll&Ads
15714 The Standard Insurance Company 2.776.74 Executive Dlsabllily Insurance
15715 Thompson Industrial Supply,Inc. 5.450.59 Mechanical Pans&Supplies
15716 Tian Construction 1.200.00 Painting Services
15717 Time Warner Communication 51.0 Cable Services
15718 Turbine Repair Services 2.618.00 Repair It Maintenance Services-Turbine
MIS Uniled Parcel Service 92A1 Freight Services
15720 Utdvemity of New England 199.00 Training Registration
15721 Valid Completion 2.253.36 Mechanical Paris&Supplies
15722 Ve a,Inc. 3.734.00 Pumps
15723 Verson California 102.73 Telephone Services
15724 Venture Plumbing 4,026.00 Repair&Maintenance SeMces-Sink In Lab&BacMlow Device
15725 Vortex Industries,Inc. 295.30 Door Repairs
ISM MR Scientific PmducN 347.85 Lab Pans&Supplies
15727 Wakenhut Corporation 13,846.52 Sawriy,Services
15728 Wale,3 Er mantling,Inc. 3.839.79 Englneenng Services-FE Annual Design Services
15729 Waxle Saddlery Supply 1.499.28 Janitorial Supplies
15730 WEF 409.01) Membamhip-Water Environment Federation
15731 West Lite Supply Company.Inc. 11.64 Electrical Paris&Supplies
15732 Weston Solutions,Inc. 16.344.30 Outside Laboratory Services-Coe Ocean Monhodng Program
HidepM1610ELALVleNPSNAPE\CIPms Pad neMrQ00rUdM$PadRupM.Aruhmera B 10.31eLtlr[ EXHIBITS
a im Page 7of8 11N4e08
Claude Pala From 10/16G8 to 10/31108
Warrant N0. Vander AmWM Description
15733 Wetlabs,Inc. 752.50 Repeir B Calibration Semces-Sensors
15734 Xerox Corporation 21.616.78 Copier Services-Equipment Leases.Managed Sernces.8 Metered Copy Usage 8 Charges
15735 Vale/Chase Matenals Handling.Inc. 125.16 Elecbic Cad Pert
15736 Orange Community Bank 19,831.80 Construction 747,Retention
15737 Jeffrey Brown 1,185.75 MashrupTraming Expense Reimbursement
15738 Moro A.Brown 405.00 Meetingrmining Expense Reimbursement
15739 Terry W.Me 1,134.62 Meetingrtraining Expense Reimbursement
167Q Laura wunnlla 3712D MeetingRraming Expense Reimbursement
15741 Charles F.Wnsor 1.418.98 Meehng/7raining Expense Reimbursement
15742 Brown 8 Caldwatl 250A0 Notices 8 Me
15743 Daisy G.Cavarrubias 81D26 Employee Computer Loan Program
157U County of Orange Auditor Controller 390.00 Administration Fee-Adjustment to Properly Tax Bill
15745 County of Orange Auditor Controller 1.020.00 Administration Fee-Adjustment to Properly Tax Bill
157M Orange County Saturation District 1.290.85 Petty Cash Reimb,
15747 BARBS 1.710.00 Training Registration
Total Accounts Payable-Warrants E 9.187.W4.87
PavWli Olebunamanb
40337 - 40393 Employee Paychecks S 122,056.25 Biweekly Payroll(100!108)
40394 - 40403 Employee Paychecks 33,559.36 Interim Payroll-Robes,Retirement.Terminelion(1021G8-1027G8)
40404 - 40430 Employee Paychecks 4.425.08 Interim Payroll-ARSN415 Payments(1 MUGS payments matle on IM1I09)
162250-162822 Direct Deposit Statements 1,342,931.34 Biweekly Payoll(10/22=)
162823-1629M Direct Deposit Statements 24,135.66 Inlenm Payroll-APJW415 Payments(11I01G8 payments Made m l0/31G8)
Total Payroll Disbursements S 1.52].107.69
Wire Transfer Pavments
OCSD Payroll Taxes 8 Contributions $ 784.631.35 Biweekly Payroll(10127G8)
US Bank 395.965.66 Series 2000 A 8 B ReluMhG CeNticates of Paticipabon Oolober InlerestlPrincipal Payments
Total Wine Transfer Payments S 1.180.58].01
Total Claims Paid t(/18I03-IDMIMB S 11.8T4]79.57
N WeplasmE%CEl Gbrl2pUP5HAHflClavns Pad RepM20C01WimffieNRep aAlraNmml B 1MI-08. v E)(HIBITB
ae21Mc - - tlPage 8 of rvs2opg L_
i
Orange County Sanitation District
MINUTES
SPECIAL MEETING
2009 STRATEGIC PLAN WORKSHOP
October 15, 2008
OJN� SAH TATj�Y
4 A
�cl�N TG HE
ADMINISTRATIVE OFFICES
10844 ELLIS AVENUE
FOUNTAIN VALLEY, CALIFORNIA 92708-7018
Minutes for Board Workshop
10/15/08 1-
Page 2
ROLL CALL
A special meeting of the Board of Directors of the Orange County Sanitation District was held on
October 15, 2008 at 5:00 p.m., in the District's Administrative Offices. Active and alternate
Directors present were as follows:
ACTIVE DIRECTORS ALTERNATE DIRECTORS
X Doug Davert, Chair Jim Palmer
X Larry Crandall, Vice Chair Gus Ayer
X Charles Antos Gordon Shanks
X Don Bankhead Sharon Quirk
X Bill Dalton X Steven Jones
A Jon Dumitru Carolyn Cavecche
Rose Espinoza X James Gomez
X James M. Ferryman X Bob Ooten
X Don Hansen Jill Hardy
X Phil Luebben X Prakash Narain
A Patsy Marshall Jim Dow
X Darryl Miller Douglas Reinhart
X Roy Moore X Ron Garcia
X Joy Neugebauer X Al Krippner
X Chris Norby Janet Nguyen
X Ken Parker Catherine Driscoll
X Brad Reese W. Richard Ulmer
X David Shawver David Cadena
X Christina Shea Steven Choi
X Harry Sidhu Lucille Kring
A Sal Tinailero David Benavides
X Constance Underhill Joseph Aguirre
X Mark Waldman Henry Charoen
X Don Webb Leslie Daigle
X 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; Lilia Kovac; Bret Colson; Barbara Collins; Michael Gold; Jeff Reed; Juanita Skillman;
Paula Zeller
OTHERS PRESENT: Brad Hogin, General Counsel; Brent Ives, BHI Management Consulting
Minutes for Board Workshop
-r 10/15/08
Page 3
OPENING REMARKS
Chair Davert welcomed the Directors to the annual workshop designed to assist in updating the
Strategic Plan. General Manager, Jim Ruth, reported that no increase in costs would be
necessary for any of the initiatives that are being proposed for consideration.
PUBLIC COMMENTS
There were no public comments.
OVERVIEW
Bob Ghirelli, Assistant General Manager, briefly reviewed the Strategic Plan, and noted that
staff was able to complete 27% of the five-year goals established last year.
Proposed New Goals
Proposed new goals for the Strategic Plan update were presented by members of the Executive
Management Team on the Groundwater Replenishment System; Disinfection; Environmental
Footprint Initiative; Risk Register; and Human Resources Strategic Plan.
Staff responded to Directors'questions and received input regarding public perception,
biosolids, and public outreach and education.
All were in agreement that staff should move forward updating the Strategic Plan to include the
recommendations, as follows, and submit the plan to be considered by the Board of Directors at
the November 19' board meeting:
• Reaffirm Board's commitment to GWR System expansion
• Assess modification of current disinfection practices
• Pursue Environmental Footprint Initiative
• Update Risk Register to reflect all manner of risks
• Develop a Human Resources Strategic Plan
ADJOURNMENT: The Chair declared the meeting adjourned at 6:08 p.m.
Penny M. I� e
Clerk of the and
Orange County Sanitation District
, 1
Orange County Sanitation District
MINUTES
BOARD MEETING
October 22, 2008
oJN q SAHITgl�oy
9
c
O y
Fir�N HE ENV����
ADMINISTRATIVE OFFICES
10844 ELLIS AVENUE
FOUNTAIN VALLEY, CALIFORNIA 92708-7018
,
Minutes of Board Meeting
1022/O8 •
Page 2 p
ROLL CALL
A regular meeting of the Board of Directors of the Orange County Sanitation District was
held on October 22, 2008 at 6:30 p.m., in the 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 Doug Davert, Chair Jim Palmer
A Larry Crandall, Vice Chair Gus Ayer
)F Charles Antos Gordon Shanks
X Don Bankhead Sharon Quirk
)F Bill Dalton Steven Jones
X Jon Dumitru Carolyn Cavecche
X Rose Espinoza James Gomez
A James M. Ferryman Bob Ooten
X Don Hansen Jill Hardy
X Phil Luebben Prakash Narain
X Palsy Marshall Jim Dow
X Darryl Miller Douglas Reinhart
Roy Moore X Ron Garcia
-5F Joy Neugebauer AI Krippner
X Chris Norby Janet Nguyen
A Ken Parker Catherine Driscoll
X Brad Reese W. Richard Ulmer
X David Shawver David Cadena
X Christina Shea Steven Choi
A Harry Sidhu Lucille Kring
X Sal Tinajero David Benavides
X Constance Underhill Joseph Aguirre
X Mark Waldman Henry Charoen
X Don Webb Leslie Daigle
X Jim Winder John Anderson
STAFF MEMBERS PRESENT: Jim Ruth, General Manager, Bob Ghirelli, Assistant General
Manager; Penny Kyle, Clerk of the Board; Life Kovac; Jim Herberg; Ed Torres; Lorenzo
Tyner, Layne Barokti; Larry Gibson; Michael Gold; Ryal Wheeler
OTHERS PRESENT: Brad Hogin, General Counsel; Drew Kolosky; Gino Rampagna;
Minutes of Board Meeting
10/22/08
Page 3
PUBLIC COMMENTS
Drew Kolosky advised that his employer, Liberty Composting, was interested in purchasing
the Sanitation District's land in Kings County and was prepared to offer the Sanitation
District a proposal of$42/ton of biosolids for four years, with a minimum of 50,000 tons per
year.
REPORT OF THE CHAIR
Chair Davert announced that Vice Chair Crandall was attending the Water Environment
Federation conference, participating on a leadership panel and the Utility Executives Forum.
He thanked Director Neugebauer and the Midway City Sanitary District's Board of Directors
for their resolution of commendation for the Sanitation District receiving the Coastkeeper's
Protection Award. Director Luebben reported on his participation on an ocean monitoring
demonstration on the Nenssa.
It was also reported that the meeting would be adjourned in memory of Cornell Norby ,,
Director Norby's father.
REPORT OF THE GENERAL MANAGER
Jim Ruth, General Manager, delivered a brief overview on the progress on SAWPA and
IRWD operational issues; participation on the EnerTech Biosolids first phase commissioning
event; chemical scarcity and escalating costs; and delays to the SARI line due to EIR input.
REPORT OF THE GENERAL COUNSEL
Brad Hogin, General Counsel, did not give a 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 09/15/08 09/30/08
Totals $16,597,463.11 $22,798,902.71
Director Dumitru abstained from discussion and voting on Warrant No. 14474 and 14730.
Director Luebben abstained from discussion and voting on Warrant Nos. 14429, 14557, and
14622. Director Shawver abstained from discussion and voting on Warrant Nos. 14666 and
14474. Directors Hansen and Shea abstained from discussion and voting on all warrants.
Abstentions were pursuant to California Government Code Section 84308.
Minutes of Board Meeting ,
10/22/08
Page 4
CONSENT CALENDAR (2—3)
Consideration of motion to approve all agenda items appearing on the Consent Calendar
not specifically removed from same, as follows:
2. MOVED, SECONDED AND DULY CARRIED: Approve the minutes for the regular
meeting held on September 17, 2008, to be filed and deemed approved, as mailed.
3. MOVED, SECONDED AND DULY CARRIED: Adopt Resolution No. OCSD 08-18,
Declaration of Official Intent to reimburse certain of the District's existing capital
reserve funds for certain expenditures made in advance of, and in anticipation of,
capital improvement expenditures,from proceeds of a future long-term borrowing.
STEERING COMMITTEE (4-6)
Chair Davert reported that the committee had approved the revised minutes; considered a
memorandum of understanding with Republic of South Korea Environmental Management
Corporation; and received an update on activities in Sacramento and Washington. The
committee also met in closed session for one item.
4. MOVED, SECONDED AND DULY CARRIED: Approve revised Steering Committee
Minutes for the meeting held on September 17, 2008 to be filed.
5. MOVED, SECONDED AND DULY CARRIED: Adopt Resolution No. OCSD 08-19,
Establishing Award Acceptance Protocols.
6. MOVED, SECONDED AND DULY CARRIED: Approve an Agreement with the City
of Fountain Valley for permitting P1 Miscellaneous Buildings Office
Improvements, Project No. FE07-08, and authorize payment and development
fees for an amount not to exceed $356,835. in a form approved by General
Counsel.
OPERATIONS COMMITTEE (7—16)
Operations Vice Chair, Bill Dalton, reported that Operations Committee Agenda Item
No. OP08-51, regarding recommending the board award a contract to Mike Bubalo
Construction Co., Inc.for Area 03 Manhole Access Improvements(3-54), Project No.
FE07-01, would be considered at the November board meeting.
7. MOVED, SECONDED AND DULY CARRIED: Approve Operations Committee
Minutes for the meeting held on October 1, 2008, to be filed.
8. MOVED, SECONDED AND DULY CARRIED: a)Approve Professional Consultant
Services Agreement with Butler Engineering, Inc. for Construction Management Services
for Newport Trunk Sewer and Force Mains, Bitter Point Pump Station to Coast Trunk
Sewer, Contract No. 5-58,for an amount not to exceed $1,810,925; and,
b)Approve a contingency of$108,656 (60/6).
Minutes of Board Meeting
10/22/08
Page 5
9. MOVED, SECONDED AND DULY CARRIED: a)Approve Professional Design
Services Agreement with MWH Americas, Inc. for Solids Thickening and Processing
Upgrades, Job No. 132-89, providing for engineering design services for an amount
not to exceed $6,983,999; and,
b)Approve a contingency of$698,400 (10%).
10. MOVED, SECONDED AND DULY CARRIED: Approve Amendment No. 2 to
Cooperative Projects Grants Program Contract No. 0503 with City of Placentia providing
for an eight-month time extension.
11. MOVED, SECONDED AND DULY CARRIED: a)Approve Professional Consultant
Services Agreement with Black&Veatch Corporation to provide construction support
services for the Continuous Emissions Monitoring Systems, Contract No. J-79-1A, for an
amount not to exceed $506,680; and,
b)Approve a contingency of$50,669 (10%).
12. MOVED, SECONDED AND DULY CARRIED: a)Approve a contingency increase of
$243,919(5%)to the Professional Services Agreement with Lee& Ro, Inc.,for the
Replacement of the Bitter Point Pump Station, Contract No. 549; Replacement of the
Rocky Point Pump Station, Contract No. 5-50; Rehabilitation for the 10 Street Pump
Station, Contract No. 551; Rehabilitation of the"A" Street Pump Station, Contract No. 5-
52, for a total contingency of$352,278 (7.22%); and,
b)Authorize staff to enter into negotiations with Lee& Ro, Inc.for construction support
services for the Replacement of the Bitter Point Pump Station, Contract No. 5-49.
13. MOVED, SECONDED AND DULY CARRIED: Approve a contingency increase of
$334,511 (6%)to the Professional Services Agreement with Malcolm Pimie, Inc. for the
Replacement of Ellis Avenue Pump Station, Job. No. 1-10,for a total contingency of
$611,530(11%).
14. MOVED, SECONDED AND DULY CARRIED: Receive and file the Waste Discharge
Requirements Sewer System Management Plan Compliance Status Report dated
September 24, 2008.
15. MOVED, SECONDED AND DULY CARRIED: Approve Change Order No. 4 to
Purchase Order No. 102354 OB for Purchase of Ferric Chloride, Specification No. C-
2005-247, issued to Kemira Water at an initial unit price of$610 per dry ton delivered,
plus applicable tax indexed to Iron Age Scrap Index#1 Bushing Chicago listing
benchmark of$635/ton and a pricing correction factor of 34% of the difference of the
benchmark and index on a quarterly basis, for an estimated annual contract amount of
$4,600,925 for the period December 1, 2008 through November 30, 2009.
Minutes of Board Meeting ,
10/22/08
Page 6
16. MOVED, SECONDED AND DULY CARRIED: Authorize staff to negotiate a Professional
Design Services Agreement with Malcolm Pimie Corporation for Phase 2 Pilot Engine
Exhaust Emissions Reduction to furnish, install, and test a pilot system re: Air Quality
Improvements, Job No. J-79.
ADMINISTRATION COMMITTEE(17)
17. MOVED, SECONDED AND DULY CARRIED: Approve Administration Committee
Minutes for the meeting held on October 8, 2008, to be filed.
GWR SYSTEM STEERING COMMITTEE (18)
18. MOVED, SECONDED AND DULY CARRIED: Approve Joint Groundwater
Replenishment System Steering Committee Minutes for the meeting held on
October 8, 2008, to be filed.
NON-CONSENT CALENDAR
No items were considered.
CLOSED SESSION:
CONVENE IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION
54956.8: The Board convened in closed session at 6:55 p.m. pursuant to Government
Code Section 54956.8 to discuss one matter(Agenda Item No. 19). Confidential minutes of
the Closed Session held by the Board of Directors have been prepared in accordance with
California 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.
RECONVENE IN REGULAR SESSION: The Board reconvened in regular session at
7:05 p.m.
ADJOURNMENT: The Chair declared the meeting adjourned in memory of Cornell Norby
at 7:07 p.m.
Penny M.QjyIe 114
Clerk of the BoardF
Orange County Sanitation District
Claims Paid Fran 09M1M8 to 09116M8
Warrant No. Vendor Amami Description
Ax:eoums Payable-Women
14036 AON Risk Insumnce Services West $ 80,000.00 Excess Liability,Polluter Liability,OCIP Pollution Liability Insurance
14037 Bask Chemical Solutions,L.L.C. 28,899.07 Sodium Hydroxide
14038 Black&Veatch Corporation 191,247.63 Prolessional Services P1-102
14 19 Blue Cross of California 620,414.14 Medical Insurance Premium
14010 County of Orange Auditor Controller 58.460.60 2008-09 M"950r5 Public Attribute Files
14041 Della Centel 65.843.85 Dental Insurance Plan
14042 Earth Tech,Inc. 33,557.11 Professional Services 3-58
14043 JCI Jones Chemicals,Inc. 270.821.82 Sodium Hypochbrite
14044 Kalmar Foundation Health Plan 91.224.08 Medical Insurance Premium
14045 Kemim Companies,Inc. 69A88.40 Femc,Chloride
14046 OmrvJe County Water District 84.417.05 Green Acres Water Project(GAP)
14047 Polytlyne,Inc. 50.627.23 Cationic Polymer MO 3.11-92
14048 SAWPA(Sane Me Water Protection Agency) 885,928.99 CCSD Share of Natural Canserve80n Service Good 2414
14049 Tule Rench/Magan Farms 269.170.21 Residuals Removal MO 3.29-95
14050 Water Environment Research Foundation 40.000.00 BioscMs Research Callabomflve Project
14051 J.F.Shea Construction,Inc. 4,529,517.05 Construction P2-W
14052 Union Bank of Califomia 603279.67 Construction P2-90,Retention
1400 Able Scale Repair 870A0 Repair&Maintenance Services-Loading Scales
14054 Madilula Standards.Inc. 340.00 Lab Pads&Supplies
14055 ADS EnWronmental Services 3.311.60 Professional Services-Temporary Flow Monitoring Slutly
14056 Agllenl Technologies,Inc. 1,611 Lab Pads&Supplies
14057 A"vgas Safely,Inc. 86.86 Safety Supplies
14058 AKM Consulting Engineers 6,081.60 Prolesstonal Services-Assistant Engineer Technician W Manage Dig Alert Utility
14059 ALFA-LAVA-INC. 3,192.12 Electrical Pads is Supplies
14060 Applied Industrial Technology 674.n Mechanical Part&Supplies
14061 AT&T Mobility II,L.LC. 1.191 Telephone Equipment&Activation
14062 Stores&Thornburg 10,500.00 Membership-FWOC
14063 Bee Man Pest Commit,Inc. 175.W Pest Control
140" Berg-Nelson Co..he. 1.OD7.16 Repair&Mainienance Services-Ignition Coil Claims,&Testing
14065 Barge's Govemor Service 3,105.0D Mechanical Repair&Maintenance Services-Govemor
14066 Boyle Ergtrleming Corpumilon 4,219.12 Professional Servicas 1-24
14 7 Brenner-FledWr&Assoc.,Inc. 4.249.66 Atr Compressor
14068 Brown&CaldwMl 10.318.03 Professional Services P2-91
14MB C&D Technologies 217.48 Electrical Pads&Supplies
14070 Califomia Auto Collision 1,456.18 Vehicle Body Repairs-V41484
14071 California Relocation Services,Inc. 1.496.25 Office Files MaWnglRelocabon Servkea
14072 Caddo Engineers 6250A7 Professional Services Pl-71
14W3 Chad..P.Crowley Co. 7.081 Pump
14074 Circle,Inc. 2,95020 Office Supplies-Toner Cedndges
14075 City of Fulledon 1,575.00 Repair&Maintenance-Adjustments W OCSD Manholes to Gmde
14076 Compressor Components of California 17,195.90 Mechanical Pads&Supplies
14077 Computer Protection Technology,Inc. 2.895.38 Quarterly Maintenance of Bahamas,ReOflem.and UPS System
14076 Consumers Pipe&Supply Co. 303.51 Plumbing Pads&Supplies
14079 Corporate Express 1.486.12 Office Supplies
14080 County of Orange Auditor Controller 3,140.00 2008.09 Preliminary Tax Rolls-Assessefs Office Crome-Reference Files
14081 County Wholesale Electric Co. 187.68 Electnom Parts&Supplies
14082 David.Tree Service 3.800.00 Tree Malin.Service
HVida&drE%CELL� MI-AflM1dms Pad aepoM]WflClamaPavlFagxl Atlarhmenl A 09-16A8.Yv EXHIBITA
mrz1Mc - Page 1 dig 1050,2008
Claims Paid From 09/01/08 to 0911MIS
Warrant No. Vendor Amount Descrip0an
14083 Dionax Corporation 3725 Lab Parts&Supplies
14084 OLT Solutions,Inc. 14,305.75 Sollware Maintenance Renswal
140415 Dudek&Assoiates,Inc. 13,477.50 Professional Services-SOP Development
14086 Duke Service Company 106.00 Repair&Maintenance-Coffee Services Equipment
14087 Dunn Edwards Corporation 108.61 Paint Supplies
14068 Eagle Protection of California 275.00 Bldg.Security Afa m Services-No.County Yam
14069 Electra Bond.Inc. 3.070,88 Repair&Maintenance Sennces-Fusion Bond Coaling Digester Deere
14090 Enchanter,Inc. 1.600.00 Coaam Mo a drg&OUHaII Inspection&Mainlenance
14091 ESSCO(Engineering Sales Service) 10,954.94 Pump&Pump Supplies
14092 FEDEX Wit W Freight Bases.
14093 Fisher Scientific Company, L.L.C. 3.357.83 Lab Pads&Supplies
140M Forked Engineering&Surveying.Inc. 1,300.00 SurveNn9 Services-Various Capital Projects
14095 Golden State Water Company 134.88 Water Use
14096 Gafoe mist Corp. 740.00 Various Repair andfor Landscape Maintenance Services
14097 Grainger,Inc. 1,0W.14 Electrical Pads,SUPPIMS&T0015
14098 Guidance Software,Inc. 7.093.11 Software Maintenance Renewal
14099 Hach Go Ponton Industries 1,442.33 Instrument Pads&Supplies
14100 Home Depot 199.68 Misc.Repair&Maintenance Material
14101 City of Huntington Beach 754.78 Water Use
14102 Industrial Distribution 1.931.17 Maintenance Paris&Supplies
14103 Intend Litho 7.775.11 Postage for Community Newsletter Mailing-Summer 2008
141N Inorganic Ventures,Inc. 782.31 Lab Parts&Supplies
14105 Irvine RanMn Water Dead 7.50 Water Use
14106 J.Rdmmac,Inc. 4,630.00 Installation of Off.y Approach to Service(2)Manholes -Cash Mesa
14107 Lab Safety Supply,Inc. 223.85 Ant Bait
141M Lorman Education Services 114.21 Training Registration
141M The Melhwunks,Inc. 1.7W.00 Sunbeam Maintenance-Matlab
14110 Mall Chloq Inc. 1.656.75 Electrical Paris It Supplies
14111 MCMuney-Stem 17.632.21 Service Agreement for Cleric of the Board Mobile File System
14112 Measurement Control Systems,Inc. 2,034.96 Repair&Calibration Services-Rotary Gas Meter
14113 Megger 1,076.47 Repair&Maintenance -Meter
14114 Midway Mfg.&Machining Co. 1.061.34 Mechanical Paris&Supplies
14115 Miele.Inc. 65SAI Lab Paris&Supplies
14116 Mission Abrasive&Jargons!Supplies 163.58 Janitorial Supplies
14117 Mitchell Instrument Co. 767.89 Safety Supplies
14118 Norco Delivery 872.32 Mail Delivery Service
14119 Office Depot 676.26 Office Supplies
14120 Olin Corporation 3.769.84 So0lum Hydroxfoe
14121 Omega Industrial Supply,Inc. 1.465.70 Janitorial Supplies
14122 Onesource Distributors,Inc. 251SA8 Electrical Parts&Supplies
14123 Orange Fluid System Technologies,Inc, 1,602.80 Plumbing Paris&Supplies
14124 Oxygen Service Company 243.87 Rebuild Shop Gases
14M Pacific Mechanical Supply 141.14 Plumbing Supplies
14126 Paldot Video PmducOans 512.43 Video&Editing Services
14127 Pit.Hawn Company,Inc. 1.735.36 Electrical Parts&Supplies
14128 Primrose Ice Co.,Inc, 100.00 Ice For Samples
14129 ProdenOal Overall Supply 5.027.78 Uniforms&Related Articles
14130 Royale Cleamars 6.00 Dry Cleaning Services
H'bepv,e CEL dtaV PSHARFMtl Pan!ReMa 11MCkursPa,M ,oft Afta Amem A 09-1&W,Ux EXHIBITA
n Q110c Page 2 of 9 1aRM6
Chilies Paid From 09/01/08 to 09115M
warned rim Vendor Amourn Description
14131 Smiths Aerospace 268.28 Recoddliation User Fee Refund!Program
14132 Sough Coast Environmental Co. 14.243.70 Ab Oualiy,Mcd o g
14133 SCP Science 556.00 Lab Park&Supplies
14134 Siemens Water Technologies Corp. 61.M Service Agreement-DI Water Systems at Plank 1&2
14135 Snap-On Tack,Inc. 166.19 Took
14136 S06choice Cop. 9.296.76 SoBware Licenses&Upgrades-Adobe Acrobat
14137 Southern Counters Lubricants 953.88 AmBreexe
14138 Sweden. 243.60 Drinking Water/Cooler Radials
14139 Spading Instruments,Inc. 18.364.50 Instrument Pads&Supplies-Flow Meter
14140 SPEX Cediprep.Inc. 51.11 Lab Pads&Supplies
14141 Slate Water Re..urces Control Board 308.00 Annual Fee for Stonn Water Permit-2-24-1
14142 Summit Steel 1.511.22 Metal
14143 Termmix International Pest Control 510.00 Past Control
141" Thermo Electron NOM America,L.L.C. 387.90 Lab Pans&Supplies
14145 Thompson Industrial Supply,Inc. 2,894.61 Mechanical Pads&Supplies
14146 Tony's Lock&Safe Service&Sales 626.40 Lodes&Keys
14147 Tied&Auto Supply.Inc. 169.40 Automotive Pads&Supplies
14148 Tuff Skin 200.00 Repair&Maintenance SeMces-Application of Coaling to Air Compressor
14149 Underground Service Alen of So.Cold 1,587.00 Underground Utility IdentifcaB tg Aled Notification Service
141W United Parcel Service 76.58 Parcel Services
14151 United Pumping Service 543.75 Pumping Service
14152 Valve Automation&Controls 1,A3.00 Repair&Maintenance Services-Actuator
14153 Village Nurseries 95.03 Landscaping Supplies
14154 Vision Service Plan CA 9,603.60 Vision Service Premium
14155 Vote.Industries,Inc, 940.00 Door Repairs
14156 VWR Scientific Products 1.653.73 Lab Paris&Supplies
14157 Water Environment Federation 816.00 Membership
14158 WEF 154.00 Membership-Water Enwromed Federation
14159 West Coast Swltc gear,Inc. 6,138.94 Electrical Repairs&Maintenance SaMme
14160 West Life Supply Oompany,Inc. MO Electrical Pans&Supplies
14161 Mac Analyllca0Waston Solutions,Inc. 2,250.00 OukNe Labora"Semmes-Core Ocean Monitoring Program
14162 Westport Apparatus DBA Breaker Supp. 414.01 Ekclical Parts&Supplies
141M Well-abs,Inc. 1,310.00 Repaif/CalibmtiDn Sen4ces-Fluoromekrs
14164 Atlas-Allied,Inc 6.48720 Conslrudlon SP-98
1410 Layne T.Baroldi 279.00 Meeteng/Tmining Expense Reimbursement
141N Mchael I.God 811.02 Meefing/Tminirg Expense Reimbursement
14167 Thomas A.Hunt 60.19 MeetingRrainirp Expense Reimbursement
14168 Jin H.Kim 125.00 Meetng/fminiig Expanse Reimbursement
14169 Vincent S.Lodyer 701.60 Mcetng/Trainirg Expense Reimbursement
14170 Selwyn D.Merest 691.05 Meeling/Tmining Expense Reimbursement
14171 Samuel L.Mowbray 106.09 Meefing/Tmtrdrg Expense Reimbursement
14172 Samir Patel 130.68 Meefing/Trahni g Expense Reimbursement
14173 James D.Ruth 797.18 MeetMgrrism,Expense Reimbursement
14174 Gregg A.Scott 1.022.40 Meeting/Training Expense Reimbursement
14175 Edward M.Tones 477.15 Mee0ng/Tmming Expense Reimbursement
141M Gary J.Tulasos Kemper 702.17 Meetmg/imining Expense Reimbursement
141" Michael Vuong 810.64 MealmgRmining Expense Reimbursement
14178 Paul were 700A1 Meetmg/Traiming Expense Reimbursement
H werearAVEXCEL.eulxlawvSHxmMxwe Pas Repanvamciam+Pamnepnn-nmcnmem a_os ls�Mxsx EXHIBIT A
fv✓l100e Page 3 of 9 tmem
Claims Paid From 09101/08 to U9115m8
W.rt No. Vendor Amount Description
14179 County of Orange Auditor Controller 225.00 Administration Fee-Adquslmec to Property Tax Bill
14180 Orange County Sanilolion District 1.007.72 Petty Cash Reimb.
14181 Air Products&Chemicals 28.439.48 O&M Agreement Oxy.Can.By .MO 8.9-89
141M Can ilo Engineers 146.371.46 Professional Services P2.66
14183 Corporate Image Maintenance,Inc. 36,045.00 Cusbdial Services Spec.No.9899-09
141N CORRPRO Companies,Inc. 39.170.33 Temporary Employment Services
14185 Grande Tortilla 31.672.53 Reconciliation User Fee Refund Program
14186 HDR Engineering.Inc. 818.717.06 Professional Services Pt-101
14187 Hill Brothers 30.482.18 Chemicals-Oft&CorroSion Control-Newport Trunkkne
14188 JCI Jones Chemicals,Inc. 118.759d2 Sodium HypocNonte
141N Kemimn Companies 77,795b1 Ferric Chloride
14190 Liberty Mutual Insurance Company 75,322.42 OCIP Insurance-Liability&Wohkem'Comp-1st Installment
14191 Malcolm Pimle,Inc. 157.246.84 Professional Services I-10&P2-80
14192 MetLife Life Insurance Company 45,426.54 Group Life,Manager Addl.Life.Shod&Long-Term Disability&Optional Term Life Ins.
14193 National Plant Services,Inc. W.385.00 Repair&Maint.Services-Barecreon Grid Removal 8 Clean Out Drain&Sludge Lines an Primary Basin O
14194 Norman A.Olson Construction,Inc. 325,M.70 Construction 747
14195 Orange Community Bank 36,144.30 Constrecifen 747,Retention
14196 J F Shea Constmak n,Inc. 1,703,528.30 Construction 2418
14197 Ken Thompson,Inc. 662,346.72 Ccestructlan 2-68
14198 First Chnstian Church 48.897.45 Reconciliation User Fee Refund Program
1410 A W Chesterton 2.778.42 Mechanical Pads&Supplies
14200 Absolute Standards,Inc. 85.00 Lab Pads&Supplies
14201 Aemtek 7.617.50 Temporary Employment Services
142M Ago lndusWeSDBA So-Cal Sweeping 860.00 Street Sweeping Services
14M Agreeya Solutions,Inc. 1,326.01) Professional Services-Records Management Study
14204 Aingas Safety,Inc. 2,D97.90 Safety Supplies
14205 Alan Plummer Associates 11,474.00 Professional Services-Superoxygonalion Process Feasibility Study
14206 Allied Packing&Rubber,Inc. 164.84 Mechanical Pads 8 Supplies
14W7 American Full Assurance Company 529.04 Employee Voluntary Cancer Insurance
14208 Amloch Elevator Services 1,400.00 Monthly Elevator Maintenance at Pits. 1 &2
14209 AppleOne Employment Service 2,966.40 Temporary Employment Sarvlces
14210 ARBrPERP-Air Resources Board 1,725.00 Pennil Fee-Portable Equipment Registration Program Certificate
14211 Ashbrook Simon Hadley Operations 5.566.56 Mechanical Pons&Supplies
14212 Askew Industrial Come. 912.97 Fasteners
14213 AT&T 3,94336 Telephone Service
14214 AT&T Mobility I.L.L.C. 188.91 Telephone Equipment&Activation
14215 AT&T Mobility II,L.L.C. 7.522.59 Wireless Telephone Services
14215 AWSI 60.00 Department of Transportation Program Management&Testing
14217 Business&Legal Reports,Inc. 634.95 Books&Publications
14218 Battery Spectators 174.81 Batteries
14219 Banned Bowen Ughlhouse 2.541.52 Instrument Pads&Supplies
14220 Ell 74.00 Books&Publications
14221 BloMedeux Vdek,Inc. 2,374.92 Computer Software/Hardware Maintenance Agreement
14222 Black Box Coryaratlan 204.64 Computer SD&wareMardnare
14223 Calif.Assoc.0 Sanitation Agendas 425.00 Meeting Registration-Division 620
14224 California Dept of Child Support 1.873.50 Wage Garnishment
14225 Cairene.Recreation Company 2,W1.11 Boat Slip Rental Fees for Ocean Monitoring Vessel Nerissa
14226 Callml,Inc. 5,678.45 Mechanical Pads&Supplies
H Wpn usE%CEL cle l,20APS-ARFCIahre Paid Rero1?)(00mrsPoorl NAvaNmml A_m-15-08 hm EXHIBIT
runt. Page 4 or nudes �.
Claims Paid From 09MI108 to 0911VOS
Warrant No. Vendor Amount Description
14227 Cambridge Integrated Seances Group,Inc. 2.875.00 Professional Services-Workers Compenselion Claims
14228 Cambridge Isotope Labs 766.02 Lab Pads&Supplies
14229 Cards Hurley Dean OBA Dame Pacific 3.874.T7 Crane Rental
14230 Cavanaugh Machine Works 703.0 Repair&Maintenance Semoes-Stuffing Box
142,31 Charles P.Crowley Co. 1.101.63 Pump Pans&SUPPI105
14232 Circle,1., 2,104.95 Office Supplies-Toner Catridges
14M City of Gallen Grove 339.75 Water Use
14234 Clean Harbors Environmental Services 2,011.62 Hazardous Waste Management ServPoes
14235 Womble Analytical Semmes,Inc. 870.00 Alrelysis of Wastewater,Industrial Wastewater&Biosolids
14236 Compressor Components of California 2.685.00 Mechanical Pans&Supplies
14237 Connell CH9vrolenGEO 29720 Vehicle Pads&Supplies
14238 Consumers Pipe&Supply Co. 1.341.53 Plumbing Pans&Supplies
14239 Conveyor Components Company 727.82 Electrical Pans&Supplies
14240 Council on Education in Management 1.945.00 Training Registration
14241 County,of Orange-Health Care Agency 5,493.00 Underground Storage Tank.Hazardous Material,&State Fees
14242 County of Orange-Health Care Agency 5237.00 Urdergrou J Storage Tank,Hazardous Material,&State Fees
14243 County of Orange-Health Care Agency 854.00 Underground Storage Tank,Hazardous Material,&State Fees
14244 County of Orange-Health Care Agency 295.00 Hazadous Materal&State Fees
14245 County of Orange-Health Care Agency 295.00 Hazardous Material&State Fees
14246 County of Orange-Health Care Agency 295.00 Hazardous Material&Stale Fees
14247 Crane Veyor Corp. 716,57 Crone Repairs
14248 CS-AMSCO 16,432.01 Mechanical Pans&Supplies
14249 Celdonia Special District Associefi. 1,500.00 Membership
14250 Culligan of Orange County 675.05 Mont.Agreement-Can Gen Water Softener System
14261 Curley Wholesale Electric,Inc. 8,603.84 Electrical Pads&SUPpfies
14252 CXTEC 1,997.63 Computer Herdwarel5ohware
14253 Do R Right Construction,Inc. 2,800.00 R...VReplacemant of AV Equipment&Existing Wall at Control Center
14254 Dr.Harvey Goldstone 1,260.00 Safety Glasses
14255 Empopes Benefits Specialists,Inc. 14,044.88 Reimbursed Prepaid Employee Medical&Dependent Care
14256 Enlecin Instruments,Inc. 133.93 Lab Paris&Supplies
14267 Environmental&Occupational Risk Mgmt. 1,105.00 Professional Services-Indoor Air Oueety Consulting
14258 Environmental Water Solutions,Inc. 1,529.57 Mechanical Pans&Supplies
14259 FEDEX 85.37 Freight Services
14260 Ferguson Enterprises,Inc. 1.673.29 Mechanical Pans&Supplies
14261 Rsho Scientific Company.L.L.C. 748.45 Lab Paris&Supplies
14262 Filch.Inc. 3,000.00 Annual Surveillance Fee for Series 2000 A&8 Certificates 0 PanMpstion
14M Fleming EmAronmenlal,Inc. 240.00 Repair&Maintenance-Owilow Arm
14264 FLW,Inc. 4.712.40 Mechanical Parts&Supplies
14M Franchise Tax Board 50.00 Wage Garnishment
14266 Franchise Tax Bond 154.00 Wage Garnishment
14257 Franklin Covey 561.18 Office Supplies
14268 Frys Eledrortics 330.67 Computer Supplies
14269 GamaO Callahan Company 2.524.69 Chemicals
14270 Gemini Digital Products Corp. 23.937.00 Computed;-(4)Refurbished VAX CPU Module Workstations
14271 George T.Hall 1,105.73 Electrical Pans&Supplies
14272 G.F.OA.(Government Finance Officers Assoc.) 255.00 Training Registration
14273 Goidenweal Corp. 420.00 Cleaning&Maintenance Services-Storage Shed&A.S.Lab
14274 Govemmsnt Jobs.Com,Inc. 849.00 Training Registration
H WepleWE%CEL do=AA MREICWi Pep Relax Vmaclav xditeFxi Atu&mmlA09.1$ Au EXHIBIT
RWUMa - - Page 5of9 '(WOKpe
Claims Paid From 09MI108 to 08I15/US
Warrant No. Vanden Amount D...rlptlon
14275 Graham Corporalion 13.352.83 Vacuum Pump Replacement
14276 Grainger.Inc. 1,644.79 Electrical&Instrument Pats&Supplies
142n Graybar Electric Company 1.81423 Electrical Repair&Maintenance Services
14278 Great Western Sanitary Supplies 313.89 Janitorial Supplies
14279 GTE.NET.L.L.C.(Verimn Online) 99.99 Wireless Telephone Services
14280 Heaker Equipment Company 593.16 Miac.Vehicle,Pats,Repass&Service
14281 Harrington Industrial Plastics,Inc. 1.619.18 Mechanical Pats&Supplies
14282 Heath Saence Associates 1.393.03 Professional Services-Air Moniloring-Gas Compressor Bldg,Basement
14283 HealMpointe Medical Group,Inc. 75.00 Fdress For Duty Evaluation
14284 Home Depot 522.93 Mac.Repair&Maintenance Material
142M Hub Aulo Supply 280.% Vehicle Pats&Supplies
142M City of Huntington Beach 36.32 Water Use
14287 Hyatt Legal Plans,Inc. 1,080.0o Employee Voluntary Legal Plan
142M Idexx Laboratories.Inc. 3.340.25 lab Paris&Supplies
142M Indiana Child Support Bureau 290.00 Wage Garnishment
14290 Industrial Distribution Group 47.83 Miscellaneous Maintenance Materials&Supplies
14291 Industrial Threaded Products,Inc. 578.57 Mechanical Pats&Supplies
14292 Innedine Engineemg 6,722.50 Sewedine Cleaning&Video Inspections
14M Inorganic Ventures,Inc. 98.08 Lab Pats&Supplies
142M Internal Revenue Service 125.00 Wage Garnishment
14295 Internal Revenue Service 1.412.57 Wage Gamishmenl
14296 Inn Union of Oper.Eng.AFL CIO Local 501 4.789.28 Dues Deduction
14297 ISEC.Inc 3.497.00 Repair&Maintenance Services-Lab Bench Relocation
14298 Jamison Engineering CaMradors,Inc. 13.360.00 Repair&Maintenance SeMces-Plant No.2 Sluke Gale Adjustments
14299 Jays Catering 128.82 Meeting Expenses
14300 Joinder.Inc. 395.00 Notices&Ads
14MI Joshua Casay Corporal.Training 1,720.00 Training Registration
14302 Leading True International USA,Inc. 2,000.00 Training Registration
14303 LECO Copm Jkm 459.40 MachanicaVEleclrical Pads&Supplies
14304 The Library Store,Inc. 76.45 Storage Boxes for Library Shop Drawings
14305 Court Order 150.00 Wage Garnishment
14306 Lymtle-ONwey Company,loc. 60.00 Equlpmenl Maintenance&Rep kr Services-DMI Press/Cuter
143D7 Mark Technology,Inc. 1,570.00 Reconciliation User Fee Refund Program
143DB Materials and Contract Services 5,760.00 Temporary Employment Services
14309 Man Chi Inc. 4,296.80 Valves
14310 Mclunkin Red Man Corporation 355.64 Mechanical Pads 8 Supplies
14311 Mdvlasher Can Supply Co. 2,164.08 Mechanical Pats,Supplies&Tools
14312 Meesun menl Conbol Systems.Mc. 678.32 Repelr&C.lituraton Services-Rotary Gas Melor
14313 Court Order 225.00 Wage Garnishment
14314 MSDS Online.Inc. 854.00 Software Maintenance-MSDS Online Web Server
14315 MVA Archtecls 198.57 Professional Services FE07-08
14316 NAFA.Inc. 450.00 Membership
14317 National Bond&Trust 1,789A5 U.S.Savings Bonds Payroll Deductions
14318 Neal Supply Co. 549.06 PWmbing Supplies
14319 Neutron Products,Inc. 6,113.17 Antonio Polymer
14320 Nickell Metal Spray 1,706.75 Repair&Maintenance Services-Shaft
14321 OCB Reprographics 1,461,13 Roiling Service-MO 1126100
14322 OCEA 579.49 Does Deducton
Poea1 %CeLdraVNAPSHAREVkN¢PaN RepaTZgp8lrA a6RepanAOedimmlA0415La..dv EXHIBITA Page of ..
Claim,Pald From 09101108 to 09115108
Wartant No. Vendor Amount Description
14323 01 AnelyOwl 51SO4 Lab Parts&Supplies
14324 Olen Corporation 3797.66 Sodium Hydroxide
14325 Olympus America 14.854.46 Lab Equipment-Stereo Microscopes
14326 Onesource Dlsbibutors,Inc. 983.29 Electrical Pads&Supplies
14327 Orange County Under Way 60.00 Employee COnldbulmns
14328 Orange Fluid System Technologies.Inc. 3.261.57 Plumbing Parts&Supplies
14329 Oslerbeuer Compressor 12.467.92 All Compressor Paris&Supplies
14330 Oxygen Service Company 1,382.04 Lab Parts&Supplies
14331 PAC 1.020.65 Lab Pads&Supplies
14332 Pacific Mechanical Supply nao Plumbing Supplies
143M PBS&J 10196.61 Professional Servces 3.52
14334 Peace Officros Counul of CA 2,014.74 Dues Deduction,Supervisors If Professionals
14335 Pedolmance Pipeline Technoogi IS 3,255.00 Serwer ine Video Inspections-Various
143M PL Hewn Company.Inc. 614.11 Electrical Pans&Supplies
14337 Prexair,Inc. 70.30 Lab Pads&Suppliers
14338 Primary Source Office Furnishings,Inc. 1,422.30 Repair&Melntanance Se Aces-Olfice WalllCe1t11g Panel translation
14339 Propipe Professional Pipe Services 19,337.84 Sewaline Video Inspections&Sewer firs Cleaning for City of Tustin&Unincorporated County Property
14340 Public Resources Advisory Group 1,124.30 Financial AdWsory Servces
14341 R L Abbott&Assoualos 2.000.00 Kern County Biosolids Consulting SeMces
14342 Rainbow Disposal Co. 3.376.48 Trash Removal
14343 RMS Engineering&Design.Inc. $32.50 Engineering Services FE07-08
14344 Robe lo's Auto Trim Shop 525.43 Upholstery Repairs
14345 Rutland!Tool&Supply 9.89 Small Tools
14348 S&J Supply Cc Inc 2.750.40 Mechanical Paris&Supplies
14347 Sprint PCs Assels,L.L.C. 15,049.27 Refund of Rant Overpayments-Lease Expired
14348 Santa Me Mines Flood Protection Agency 1,100.00 Membership
14349 Sanmlus MechaWnks Cap. 68.40 instrument Pane&Supplies
14350 Suence Appticalmns Intemational 4,844.20 Ocean Monitoring MO 6-8-N
14351 Scott Specialty Gases.Inc. 791.96 Lab Pans&Supplies
14352 Solon Name Plate 303,40 Pipe Marking Tape
14353 Shamrock Supply Co.,Inc 3.716.67 Miscellaneous Maintenance a Safety Suppliers
14354 Shureluck Sales&Engineering 773.13 Mechanical Pans&Supplies
14355 Siemens 2,61272 Instrument Paris If Supplies
14356 Siemens Water Technologies Corp. 5.897.63 Service Agreement-DI Water Systems at Plants 1 If 2
14357 Sigma-Aldrich,Inc. 207.52 Lab Pans&Supplies
14358 SKC West,Inc. 42972 Instrument Raisers&Maintenance
14359 Smith-Emery Company 2,715.68 Soils,Concrete&Other Materials Testing
14360 SD Cal Gas Company 13,600.16 Natural Gas
14361 Voided Check - -
14362 Southern Counties Lubricants 1,BMSS ON
14363 Square D Company 4.300.00 Training Reglakaleon
14364 SST Benefits Consulting&Insurance Servces 15.760.00 Professional Servces-Defended Compensation Programs
14366 Summit Steel 1,879.18 Metal
14306 Sunset Ford 129.28 Vehicle Pans&SeMce
14367 Systems Solution Company 1,654.16 Repairs&Maintenance Services-Access ContmIICCTV Security System
14368 TekSyslems 1,520.00 Temporary Employment SmAces
14369 Tenminix Inlematlonal 59.00 Past Control
14370 Thermo Electron Cap. 12.915.65 Lab Paris&Supplies
H WWW1 EXCEL MWAXAPSHARIBCerrs PrN PBmd�300661eimaPeNRgpa.Aydimpnl A_OA?15.ve Xso EXHIBITA
av21M Page 7 of 9 low"
Calms Paid From 09/01108 to 09115108
Warrant No. Vernier Amount Description
14371 Thermo Flakier Scientific 10,74CM Insmrmad Maintenance Contract-Atlas
14372 Thomas Grey&Assoe. 198.00 Bicsolids AnalysiMAnalyses of Radioadinty Wipe Tests
14373 Osprey Madre Management 1,500.00 Lab Analyses
W74 T-Mobile 106.67 Wireless Air Time
14375 Toro Lode&Safe S.M.&Sales 67.34 Looks&Keys
14376 Tortuga Pool Services 310.00 Weekly Cleaning of Akium Penal
143T, TownseM Public Affairs 7,500.00 Legislative&Executive Advarale for Grant Funding
143M Truck&Auto Supply,Inc. 65.99 Aulomdive Paris&Supplies
14379 TuMmt,Inc 343.71 Sales Tax-P.O.68024-OP
14300 UMa Scismifie 347.84 Lab Pads&Supplies
14381 Union Bank Of California 2203.00 Annual Admmistral ne Fee for Series 2003 Certificates of Participation
143K Unis mince Corporation Purchasing 554.86 Office Supplies
14383 United Pacific Services,Inc. 17.067.51 Landscape Maintenance at Plants 1&2 and Pump Stations
14W United Parcel Service 63.83 Parcel Services
14385 Umled Pumping Service 1,352.06 Pumping Service
14386 US Army Corps of Engineers 10.000.W Cultural Mon0edrg Fees-2-24-1
14387 USA Mobility Wireless,Inc. 845.60 Wireless Services-Pagers
14388 Victory Omar,Inc 1,226.84 Reconci11a8on User Fee Refund Program
14389 Vanam.Inc 216.37 Lab Pads&Supplies
14390 Verumn Coldomia 747.06 Telephone Services
14391 Vemes Plumbing 986.47 Plumbing Services-Operations Center
14392 VOdex Industries,Inc. 229.30 Door Repairs
14393 MR Scientific 341.77 Lab Pens&Supplies
14394 Tine Wakenhut Corporation 5,376.04 Securiy,Services
14395 WEF 154.00 Membership-Water Errvhomnanl Federation
14395 West Coast Safety Supply Co. 450.00 Training Registration
14397 Westin Solutions,Inc. 15.611.55 Outside Laboratory Services-Core Ocean Monitoring Program
14398 Wilson Supply,Ina 64.76 Plumbing Parts&Supplies
14M Wumbus Corporation 1.086.63 Safely Video
14400 Xerox Corporation 3.936.00 Cagier Services-Equipment Leases,Managed Services,&Metered Copy Usage&Charges
14401 Court Order 912.50 Wage Garnishment
14402 Layne T.Behold 627.12 MeeBrgRralnmg Expense Reimbursement
14403 James L.Burmr 487.00 Meatlrgflrsinmg Expanse Reimbursement
14404 James Ferryman 199.00 MeefinglTraming Expense Reimbursement
14405 James D.Herberg 722.12 MeeOngRraming Expense Reimbursement
14406 Vlrs imir A.Kogan 494.06 Meetingrlreining Expense Reimbursement
14407 Jeffrey Y.Shubik 513.21 Meetmg/lraming Expense Reimbursement
14408 Roya Sohanakl 12500 MBBtIng/Treining Expense Reimbursement
14409 County of Orange Auditor Controller 390.00 Administration Fee-Adjustment to Property Tax Bill
14410 County of Orange Auditor Controller 345.00 Administration Fee-Adjustment to Property Tax Bill
14411 Philip Luebben 1,034.16 MeatinglTraining Expense Reimbursement
14412 John Meyer&Dell 2.000.00 Employee Computer Loan Program
14413 Orange County Sanitation District 18,894.77 Wmkafs Comp.Rdmb.
14414 BARBS 1,140.W Training Registration
1"15 Dept.of Fish and Game 200.00 Permit Fee-SARI Emergency Repaire 241-5
Total Accounts Payable-Warrants 13,079,060.72
MVerMaNFJIC£L Ne17ZUAP51NRE1Gaim PeM ReporIV0001LIrumPaOlepvnAOadmieon A Ua-1Sa9.4ee EXHIBITA
aNZlaly Page 8 of 9 10,60406 ..
Claims Paid From MIIIO8 to 09/15108
Warrant No. Vendor Amount Description
Payroll Disbursements
40069 - 40098 Employee Paychecks $ 4,905.08 Interim Payroll-All(OE/02108p
40102 - 40165 Employee Paychecks 109.775.67 Biweeky,Payroll(Wit=8)
Q166 - 40169 Employee Paychecks 683.80 Interim Payroll-Rebr Payments(09109W)
160338 -160421 Direct Conrail Statements 23.655.66 Interim Payroll-ARSA(OMM8)
16MM -161OD3 Di Daposil Statements 1,358,021.62 Biweekly Payroll(D9/10108)
Total Payroll Disbursements 8 . . 1.85
Turned oN M NaM numler wdv an b28M 8 real an ONOM.
When Transfer Payments
OCSC Payroll Taxes 8 Contributions $ 783.120.90 Biweekly Payroll(09/10IOB)
Deutsche Bank 192,570.37 Series 20M CertiOcatea d Participation September Interest Payment
Bank of New York 1,095,669.2E Sens 1993 Refunding Certlfiratea of Participation September Interest Payment&Closing Funds
Total Mrs Transfer Payments S 2.021.380.56
Total Claims Paid 0g/01108.0911 SNB S 18.597.463.11
H:kerlLadMEL ddaMNPSH IilCldidg Pelf ReridVMa1CIi,—PeidRVNd-AII .-dP ¢9.11. N. EXHIBITA
rN21M Pace 9 of 9 rearzada
Claims Paid From 09118108 to 09130108
Warrant No. Vendor Amount Description
Accounts Payable-Warrants
14416 American Express $ 26,320.11 Purchasing Card Program,Miss.Supplies&Services
W17 Black&Veatch Corporation 37.884.67 Professional Services P7-76&J-79-1
14418 Cardlock Fuel Systems,Inc. 31,492.44 Fuel Card Program-DlsMol Vehicles&Monitoring Vessel
14419 Dudek&Associates,Inc. 54,928.00 Professional Services-Potable Water Assessment at Plant No.1
14420 Earth Tach,Inc. 195,294.31 Professional Services 1.2.4&P1-100
14421 Entech Design,Inc. 61.164.89 InstrumentlEleMcal Pads&Supplies-BinMinder Level Ranging System
14422 IPMC No Parsons 1,102,075.00 Engineering Services-Integrated ProgremlProject Management,Temporary Staffing,Mail.&Supplies
14423 Jamison Engineering Contractors,Inc. 79,564.36 Repair&Maintenance Services-Upgrades to Gas Flaps&Primary Influent Pipe Leak
14424 JCI Jones Chemicals,Inc 183,974.04 Sodium Hypuchlorte
W25 Kemira Companies,Inc. 68,563.87 Ferric Chloride
14426 RBnyo&Moore 26.842.50 Professional Services-Soils,Concrete&Other Materials Testing for Various Capital Projects
14427 Polydyne,Inc. 56,219.74 Cationic Polymer MO 3.11-92
14428 Propipe Professimel Pipe Services 41,715.13 Sewedine Cleaning for City of Tustin&Unincorporated County Property
14429 Southern California Edison 2D6,564.97 Power
14430 Synagm West,Inc. 391.235.73 Residuals Removal MO 3.29-95
14431 Tole RsncltlMagan Farms 313,814.69 Residuals Removal MO 3.29-95
14432 US Peroxide,L.L.C. 340.944.04 Odor&Corrosion Control Treatment for Coll.Sys.;Hydrogen Peroxide&Ferrous Chloride
14433 First Regional Bank of CA 194,992.93 Construction P2-80&P2-91,Retention
14434 J F Shea Construction,Inc. 933.826.10 Construction P2-66
14435 Kiewil Pacific Co. 7,574,784.30 Construction P1-002
14436 Miron Electric Construction Corp. 182,g12.50 Construction Pi-97
14437 Shimmick Construction Co..Inc. 1.754.936.37 Construction P2.80&P2-91
14438 Walls Fargo Bank 841,642.70 Construction P7-102,Retention
14439 Union Bank of America Escrow 49.148.75 Construction P2�66,Retention
14440 A W Chesterton 3.937.97 Mechanical Parts&Supplies
14441 Advanced Engine Techologies,Inc. 11,583.28 Air Duality Monitoring-RATA Testing
14442 Agllent Technologies,Inc. 564.61 Lab Parts&Supplies
14443 Aigas Safety 6.122.63 Safety Supplies
14 14 Algas-West 11.47 Laboratory Supplies
14445 Alhambra Foundry Co.,Ltd. 4,083.05 Manhole Frames&Covers and Catch Basin Greta
14446 Allied Packing&Rubber,Inc. 728.61 Pump
14447 American Airlines 5.119.30 Travel Services
14448 American Construction Inspectors Assoc. 85.D0 Training Registration
14449 American Seal&Packing 265.07 Mechanical Paris&Supplies
14450 Applied Industrial Technology 159.86 Mechanical Parts&Supplies
14451 Ario .Instrument 1,370.75 Instrument Repairs&Calibration Services
14452 Askew Industrial Cap. 156.67 Fasteners
14453 AT&T 737.20 Telephone Service
14454 AT&T Mobility 11,L.L.C. 1,794.00 Telephone Equipment&Activation
14455 Autodesk University/Enterprise Event 3.690.00 Training Registration
14456 AWSI 259.00 Department of Transportation Program Management It Testing
14457 Basic Chenucal Solutions,L.L.C. 23.924.57 Sodium Hydroxide
14458 Battery Specialties 762.87 Batteries
14459 BC Wire Rope&Rigging 1,634.86 Mechanical Parts&Supplies
W60 Banned Bowen Lighthouse 1.071.00 CoiluaBon Gases
14461 SKI Management Consulting 1,842.44 Professional Sew.-Strategic Planning&Facilitating Services for EMT Retreat&Boom Workshops
H?bpNWfxCELctd= N "R1BCWims Paid eee3 .q[. EXHIBIT
fiN11Mc Pagel of 9 iWcO e
Claims Paid From 09/16108 to 09/30/08
Warrant No. Vendor Amount Description
14462 Blue Diamond Car Wash,Inc. 1.416.99 OCSD Vehicle WashingMaxfng Services
14463 Brand Scaffold Rental&Erection,Inc. 225.39 Scaffolding Repairs
14464 California Relocation Services.Inc. 652.50 Office Files Moving/Relocation Services
14465 Center Sales&Distribution,L.L.C. 384.87 Electrical Parts&Supplies
14466 Casual Gourmet 121.76 Mee9ng Expenses
14467 CON Isotopes 210.00 Lab Paris&Supplies
14466 Circle,Inc. 536.94 Office Supplies-Toner Cartridges
14469 Coast Rubber Stamp,Mfg. 226.11 Office Supplies
14470 Construction Book Express 110.40 Publications&Books
14471 Corporate Express 378.34 Office Supplies
14472 County Wholesale Electric Co. 893.85 Electrical Parts&Supplies
14473 C.P.I.International 102.36 Lab Parts&Supplies
14474 CR&R,Inc. 1,314.24 Container Rentals&Waste Disposal Service
14475 Cross Current CDMOMOM 1,200.00 Professional Services-Network Penelretlon Testing
14476 CS-AMSCO 9.063.38 Mechanical Parts&Supplies
14477 Culligan of Orange County 51.80 Maint.Agreement-Can Gen Water Softener System
14478 CWEA Membership 264.00 Membership(Calff.Water Environment Assoc.)
14479 C3S.Inc. 2.190.00 Professional Services-Mortar Testing-Sample from 24'Effluent Wastewater Pipeline
14480 Desed Pumps&Parts,Inc. 507.40 Pump Pads&Supplies
14481 DLT&V Systems Engineering,Inc. 631.60 Professional Services FE07-11
14482 Dunn Edwards Corporation 64.14 Point Supplies
14483 DWG Associates 5,312.50 Professional Services-Oxygen Plant Rehabilitation
14484 Electronic Balancing Co. 595.00 Repair&Maintenance Services-Balance Impeller&Shaft Assembly
14485 Elmo Duddy,Inc. 1.925.48 Expansion Tank
14486 Enlech Instruments,Inc. 1,805.00 Lab Instrument Repairs
14487 Eskel PorterConsulCmg,Inc. 3.272.60 Professional Services-Implementation of Microsoft Customer Relationship Management Application
1088 Ewing Initiation Industrial 440.98 Landscape Irrigation Pads&Supplies
14489 FEDEX Comomfion 30.72 Freight Services
14490 First American Reel Estate Solutions 372.00 On-Line Orange County Property Information
14491 Fisher Scientific Company,L.L.C. 714.29 Lab Pans It Supplies
IM92 Ganahl Lumber Company 179.60 Lumben/Hardware
14493 GBC(General Binding Corp) 71.98 Office Supplies
14494 Geary Pacific Supply 3.458.15 Air Conditioner
14495 Giedich Mitchell,Inc. 2.641.12 Mechanical Pads&Supplies
14498 Goldenwesl Corp. 1.628.00 Repair&Maint.Sews,-Install BIM-BGone Bird Spikes at Building M&Leek Repairs at Plant No.1
14497 Grainger,Inc. 1,597.76 Small Tools
14498 Greybar Electric Company 357.98 Mechanical Pads&Supplies
14499 Guaranies Records Management 379.00 Off-Site Records Storage
145M Harrington Industrial PMsucs,Inc. 2,441.16 Mechanics)Pads&Supplies
145D1 Hasler,Inc. 89.43 Meter Rental Charges&Misc.Supplies-Inlelfdouch System Complete Mail System
14502 HDR Engineering,Inc. 14,931.31 Professional Services P1-82&FE0"5
14503 Healthfax,Inc. 5.368.00 Flu Immunization Program
14504 Hill Brothers 14,597.85 Chemicals-Odor&Conocion Control-Newport Tmnkline
14505 Hoerbiger Service,Inc. 310.37 Mechanical Pads&Supplies
14506 Home Depot 658.05 Misc.Repair&Maintenance Material
14507 Informafion Handling Services 3.261.50 Maintenance Agreement-Supportfor NFPA(National Fire Protection Agency)Data Pages
14508 Industrial Threaded Products,Inc. 40.62 Freight Charges-P.O.68272 OP
HMep�sS CELdneMMP5HME WIMP ReraMWB�sP ldReral. amen) B 09JOU9.tiv EXHIBITS
nnrztunc Page 2 of 9 togtlape
Claims Paid From 09/18108 to 09/3D108
Warrard No. Vendor Amount Description
14509 Infrastructure Engineering Corp. 640.69 Professional Services FE07416
14510 Insight Public Sector 17,327.74 Electrical Pads&Supplies-UPS
14511 Interstate Batteries of Cal Coast 636.32 Batteries for Vehicles&Cads
M12 Invensys Systems.Inc. 4.535.38 Instrument Pads&Supplies
14513 tromnan Parts&Slimmer 438.33 Filter
14514 Irvine Ranch Water District 49.61 Water Use
14515 Johnstone Supply 530.03 Electrical Paris&Supplies
14516 Learning That,International USA,Inc. 2.0D0.00 Training Registration
14517 Lorman Education Services 578.00 Training Registration
MIS Lynde-Ordway Company,Inc. 492.69 Equipment Maintenance&Repair Services
14619 McMaster Cart Supply Co. 204.27 Flag Poles&Flags
14520 Mid West Assodiates 21.955.73 Pump Paris&Supplies
14521 Miele,Inc. 821.19 Lab Pads&Supplies
14522 Minsik 139,12 Instrument Supplies
14523 Mitchell Insbumord Co. 654.08 Small Tads
14524 MWH Americas,Inc. 18.847.10 Professional Services P2.74&Reclaiming SARI Flow Study
14525 N.Glantz&Son,Inc. 1,079.65 Reflective Tape
14526 Neal Supply Co. 2.814.51 Plumbing Supplies
14527 Neutron Products,Inc. 3.138.11 Anionic Potynrer
14528 NRG Engine Services,L.L.C. 6.154.97 Mechanical Parts&Supplies
14529 OCB Reprographics 6,368.08 Printing Service-MO 112B/00
14530 O0ice Depot Business Servlare Division 971.72 Office Supplies
14531 Ofin Corporation 3.762.88 Sodium Hydroxide
14532 Onesouroo Distributors,Inc. 187.74 Electrical Parts&Supplies
14533 Oracle USA.Inc. 20,039.19 Software Update Licenses-JD Edwards
14SM Orange County Chapter-ISCEBS 60.00 Meeting Registration Division 240
14535 Orange Fluid System Technologies,Inc. 688.13 Plumbing Pads&Supplies
14536 Oxygen Service Company 1.292.31 Rebuild Shop Gases&Lab Parts&Supplies
14537 PAC 73.75 Lab Parts&Supplies
14538 Penalties Wiping Materials Co. 494.79 Janitorial Supplies
14539 PenvaNe Peninsula Valve&Fitting 2,010-51 Plumbing Pads&Supplies
14540 PL Hawn Company,Inc. 336.05 Electrical Parts&Supplies
14541 Ouickstart Intelligence 2,275.00 Training Registration
14542 Red Wing Shoes 155.16 Safety Shoes
14643 Restak Corp. 743.94 Lab Paris&Supplies
145" Rockwell Engineering&Equipment Co. 340.54 Freight Charges-P.O.67123 OP
14545 Roto Roofer NOCp11 4.700.00 Plumbng Services-Shower Valves
14546 RatlerM Tool&Supply 173.14 Small Tools
14647 Scott Specialty Gases,Inc. 114.13 Lab Pads&Supplies
14548 SETAC 425.00 Training Registration
14549 Shamrock Supply Co.,Inc. 2,627.26 Paint&Electrical Supplies&Small Tools
14550 Shimadzu Scientific Insbumenis,Inc. 800.00 Instrument Pads&Supplies
14551 Sigma Aldrich,Inc. 78.04 Lab Parts&Supplies
14552 Sign Supply USA.Inc. 1.230.00 Computer Equipment Maintenance Contract-Roland Printer
14653 Smith-Emery Company 23,754.43 Soils,Concrete&Other Materials Testing
14554 Snap On Tools 111.77 Smell Tool Expenses
14555 So Cal Gas Company 5,443.65 Natural Gas
n:mpMNFxtELalavzpuPsnxkElcmm Pew RepwNea9wYaMrPaw6epm.aaaanme 009a040.wra EXHIBIT
ewemle Page 3 of 9 1.11,0e
Claims Paid From 09116/08 to 09130MB
Wamant No. Vendor Amount Description
14556 Soltame House International 19,663.30 Software Maintenance&Support-Galaxy
14557 Southern Califomia Edison 1,524.36 Power
14558 Tram Company 4.028.18 Mechanical Parts 8 Supplies
14559 Southern Counties Lubricants 4,676.88 Motor Oil
14560 Soutilem Counties Oil Co. 3.869.90 Diesel Fuel
14551 SPEX Cantors ,Inc. 71.11 Lab Pads&Supplies
14562 Staniey Steamer INamalional,Inc. 2273.85 Carpet Cleaning Services
14563 Stanton Radiator 8,162.17 Radiator Repair
14564 Summit Steel 1,214.60 Metal
14565 Sunset Industrial Pads 1.971.04 Mechanical&Electrical Paris&Supplies
14566 Super Chem Corporation 782.27 Cleaners/Degreasers
14567 Temiinix International 650.00 Pest Control Service
14568 The Register 3,510.16 Notices 8 Ads
14569 Thermo Electron North America,L.L.C. 252.14 Lab Parts&Supplies
14570 Thompson Industrial Supply,Inc. 7.213.09 Mechanical Pads&Supplies
14571 Thom Construction 4.235.00 Repair&Maintenance Services-Sound Panel
14572 Tones Look&Safe Service&Sales 72.00 Locks&Keys
14573 Truck 8 Auto Supply,Inc. 54.98 Aummotive Paris&Supplies
M74 Undergound Service Mari of So.Calif 1,474.50 Underground Utility IdentificalloNDig Aled Notification Service
14575 United Direct Marketing $0.39 Public Notice Printing&Distribution Costs for Various Construction Projects
14576 United Parcel Service 192.54 Parcel Services
145" Velin Corporation 413.42 Mechanical Supplies
14578 Valve Automation B Controls 1,193.85 Repair&Maintenance Servlces-Valve Actuator
14579 Venison California 40.60 Telephone Services
14580 Varizon California 1.647.34 Wireless Services
14581 Veme's Plumbing 4,635.00 Service Contract-Testing,Repair&Cert.Backfiaw Devices at Pits.1 &28 Pump Sta.
14582 Vibralign,Inc. 1,942.23 Small Tools
14583 Mlle Prep&Paint 1.720.00 Repair 8 Maintenance Services-Shower Grout
14554 Village Nurseries 366.24 Landscaping Supplies
14585 Vortex Industries,Inc. 1,716.28 Gate,Door&Look Repairs
14586 VWR Scientific Products 4.250.11 Lab Pads&Supplies
14587 Waters Corporation 2,354.23 Lab Paris&Supplies
14588 Waxle Sanitary Supply 1.073.42 Janitorial Supplies
14589 West Lite Supply Company,Inc. 43.89 Electrical Paris&Supplies
14590 Westport Apparatus DBA Breaker Supp. 2,773.64 Electrical Pads 8 Supplies
14591 Yale/Chase Materials Handling,Inc. 643.72 Electric Can Pads
14592 Ydkogawa Intl.Automation NO RM Controls 360.73 InsWment Supplies
14593 1-800-Confrrence(R) 82.71 Telephone Canferenco Calls
14594 Union Bank of Califomia 20,312.50 Construction P7-97,Retention
14595 Men Adams 354.33 MeelingTmining Expense Reimbursement
14598 Jon O.Bradley,Jr. 344.45 Meeting/Training Expense Reimbursement
14597 Patrick B.Carnahan 855.28 Mee6ngrrialning Expense Reimbursement
14598 David P.Francis 105.00 MeetingRraming Expanse Reimbursement
14599 James R.Hams 2,631.79 Meetingri mini g Expanse Reimbursement
14600 Vladimir A.Kogan 420.17 MeelingRraining Expense Reimbursement
14601 Samir Patel 150.00 MeeBngRnaining Expense Reimbursement
14602 Leyte D.Perez 151.78 MeaOng7rainirg Expense Reimbursement
a:mplmemFxwLeumuaPsrtnBk�clalm.ran aePvrizaoma.Imrrwaepon.rwa��r a 4sao4e..ax EXHIBIT B
aMtgc Page 4 of 9 tov� -I
Claim Paid From 09/16/08 to 09130/08
Warrant No. Vendor Amwnt Description
14603 Gm,g A-Scott 393.12 Meeting/Training Expense Reimbursement
14604 Mahin Talebi 1.810.55 MeefingRreining Expense Reimbursement
14605 James G.True 150.00 Meeting/Training Expense Reimbursement
14606 Simon L.Walson 236.25 MeetingTTraming Expense Reimbursement
14607 Pierre Wog 125.00 MemingTTreintng Expense Reimbursement
14608 Joan Parker-Fray and Dell 1.822.50 Employee Computer Loan Program
14609 Voided Check -w -
14610 Orange Cnty Sanitation District Petty Cash Reimb.
14611 PLanetbids.Inc. 625.00 Meeting Registration-Division 230
14612 CA Regional Water Quality Control 500.00 Water Quality Certification Permit Application Fees-SARI Emergency,
14613 Air Products&Chemicals 26.972.63 O&M Agreement Oxy.Gen.Sys.MO 849-89
14614 Black&Veatch Corporation 404720.75 Professional Services P1-102.J-3M&SP-53
14615 Camp Dresser&McKee.Inc. 68,197.39 Professional Services JA7
14616 City of Fountain Valley 39,530.00 Water Use
14617 HUI Brothers 28.460.00 Chemicals-Colo&Corrosion Control-Newport Trunkime
14618 JCI Jones Chemicals,Inc. 183,570.08 Sodium Hypochloite
14619 K 2 General Con rackes,Inc. 49,611.W Professional Services J-96
14620 Kemirs Water Solutions 58,773.62 Ferric Cblorke
14621 Orange Crony Water District 80.743.32 Green Acres Water Project(GAP)
14622 Southern California Edison 289.594.28 Power
14623 Synagro West,Inc. 920.312.98 Residuals Removal MO 3-29-95
14624 Symms Scieng6c,L.L.C. 43.957.96 Instrument Pam&Supplies
14625 US Peroxide.LLC. 215,871.19 Odo&Corrosion Control Treatment for Coll.Sys.;Hydrogen Peroxide&Ferrous Chloride
14626 J F Shoe Construction,Inc. 1,189,209.22 Conviction 1-1013
14627 Ken Thompson,Inc. 735,940.80 Construction P2-68
14628 A W Chesterton 2,198.52 Mechanical Pads&Supplies
14629 Absolute Standards,Inc. 98.00 Lab Parts&Supplies
14630 Agmeya Solutions,Inc. 5.583.00 Professional Services-Records Management Study
14631 Algas Safety,Inc 6,622.35 Safety Supplies
14632 American Construction Inspector Assoc. 2.700.00 Training Registration-Safety Assessment Evaluator Training(SAP)
14633 American Payroll Institute,Inc. 195.00 Membership
14634 AppleOne Employment Service 10.204.93 Temporary Employment Services
14635 Ashbramk Corporation 3,910.38 Mechanical Pans&Supplies
14636 Atkinson,Andelson,Lays,Rudd&Ruud 7,951 Legal Services-Employee Relations
14637 The Austin Company 2.715.54 Professonal Services J-97
14638 Baker Tanks 2,189.00 Tank Rentals
14639 Basic Chemical Solutions,L.L.C. 12,870.88 Sodium Hydroxide
14640 38I43eau Bureaux interiors 380.14 Office Furniture-Chair
14641 BC Wire Reope&Rigging 45.56 Mechanical Pans&Supplies
14642 Beach Wire and Cable 326.82 Computer Hadware-Netwarldng Wires&Cables
14643 Bennett Bowen Lighthouse 301.70 Calibration Gases
14644 Biosphed®I Instruments,Inc. 267.00 Instrument Repairs B Maintenance
14645 Brown&Caldwell 7,800.94 Professional Services P3-91
14646 Columbia Huntington Beach Hospital 646.58 Reconollud.n User Fee Refund Program
14647 Calf.Assoc.of Sanitation Agencies 2.000.00 Legal Fees Pledge/Funding-CBE vs.SCAOMD Amicus Brief
14648 California Department of Fish and Game 150.00 Application Fees-Amendment of Permit-SARI Emergency Repairs
14649 California Dept.of Child Support 1,873.w Wage Garnishment
X W,VaxME%CEL ftV APSHARE1Glx.Peid Repan12n081delmePelER¢ynAdeNmenr B 09-30M.tlu EXHIBIT B
fim!im Page 5 of 9 1oAVXX8
Claims Paid From 09/16/08 to 09/30108
Warrant No. Vendor Amount Description
14650 Cardomta Relocation Services,Inc. 405.00 Office Files Moving/Relocation Services
14651 CAPPO Conference Registration 340.00 Meeting Registration-Division 230
14652 CAPPO,Inc. 59.00 Meeting Registration-Division 230
14653 Casual Gourmet 115.40 Meeting Expenses
14654 Voided Check - -
W55 CDCE.Inc. 4,997.45 Computer Hardware/Software-Small Vehicle Mount
14656 CMAA 120.00 Membership
14657 Compressor Components of California 3,040.00 Mechanical Parts&Supplies
14658 Computer Protection Technology,Inc. 10.785.33 Quarterly Maintenance of Batteries,Rectifiers,and UPS System
14659 Connell ChevmIe0GEO 262.13 Vehicle Parts&Supplies
146N Consolidated Electrical Distributors.Inc. 374.89 Electrical Pads&Supplies
14661 Control Techniques Americas 203.28 Instrument Parts&Supplies
14662 Corporate Express 598.96 Office Supplies
14663 Conherpart Enterprises,Inc. 6.534.87 Mechanical Parts&Supplies
14664 County of Orange Auditor Controller 535.50 Encroachment Permit 2-24.1
14665 County Wholesale Electric Go. 1,49274 Electrical Paris&Supplies
14666 CR&R,Inc. 315.00 Container Rentals&Waste Disposal Service
14667 CS-AMSCO 6.079.83 Mechanical Parts&Supplies
14668 Desed Pumps&Pads,Inc. 4.948.67 Pump Paris&Supplies
W69 Dezunk Water Codols 3,825.13 Mechanical Pens&Supplies
14670 Duke Service Company 105.00 Repair&Maintenance-Coffee Services Equipment
14671 Electronic Balancing Co. 195.00 Repair&Maintenance Services-Balance Impeller&Shaft Assembly
14672 Employee Benefits Specialists,Inc. 12.444.38 Reimbursed Prepaid Employee Medical&Dependent Gare
14673 Employment Development Dept. 6,661.00 State Unemployment Tax
14674 Enchanter Inc. 3,040100 Ocean Monitoring&Curtail Inspection&Maintenance
14875 ENS Resources,Inc. 10.000-00 Professional Services-Legislative Advocate
14676 Envtronmenlal Express 4.475.00 Equipment Repairs
14677 Environmental Resource Center 1,244.00 Training Registration
14678 Equipment Specialties Co. 2.475.30 Piranha Submersible Pump
14679 Ewing Irrigation Industrial 506.00 Landscape Irrigation Paris&Supplies
14680 Excelsia Corporation 800.00 Carpet Cleaning Services
14681 FEDEX Corporation 27.28 Freight Services
14682 Ferguson Enterprises,Inc. 347.66 Mechanical Parts&Supplies
14683 First American Real Estate Solutions 450.00 On-Line Orange County Property Information
14684 Fischman Occupatenal&E.,Med.Grp. 4X327 Professional Services-Indoor Ad Quality Consulting
14685 Fisher Scientific Company,L.L.C. 10.1977,46 Lab Pads&Supplies
14686 Flaming Environmental,Inc. 2,657.63 Repair&Maintenance Services-Waste Oil Tank
14687 FLW,Inc. 159.07 Mechanical Parts&Supplies
14688 Franchise Tax Board 50.00 Wage Garnishment
14689 Gadand Manufacturing Co. 1,320.50 Mechanical Pam&Supplies
14690 Getinge Castle 210.24 Lab Pans&Supplies
14691 Government Finance Officare Associated 595.00 Training Registration&Membership
14692 Glandstem Neandross&Associates,L.L.C. 255.00 Meeting Registration-Divisions 610&620
14693 Golden State Overnight Delivery Service 292.55 Counter Services
14694 Goldenvrest Corp. 4,429.00 Landscape Maintenance,Window Washing&Electric Can Detailing
14695 Grainger,Inc. 202.37 Electrical Parts&Supplies
14696 Graybar Electric Company 3,383.27 Electrical Parts&Supplies
HMep 15XCEL.UIa12NrOP5HMflLM1Irre EXHIBIT
PoNflewflRDJH�RalaePalEflelxxl-AnMmeM_e_00.1P0a.tlu
mQUY. Page 8 of 9 lag2wl,
Claims Paid From 09116/08 to 09130/09
Warrant No. Vendor Amount Description
14697 Hertington Industrial Plastics,Inc. 555.58 Mechanical Pans&Supplies
14698 Hasler,Inc. 1,94274 Software Maintenance Renewal
14699 Health Science Associates 785.00 Professional Services-Asbestos Study
14700 Home Depot 241.15 Misc.Repair&Maintenance Material
14701 Hub Auto Supply 1.585.50 Vehicle Parts&Supplies
14702 IECOC 35.00 Meeting Registration-Division 620
14703 Indian Child Support Bureau 290.00 Wage Garnishment
14704 Industrial Distrib,bon Group 2.346.52 Mechanical Parts,Supplies&Tools
14705 Inorganic Ventures,Inc. 67.46 Lab Pads&Supplies
14708 Insight Public Sector 24.733.44 Elechical Pans&Supplies-UPS
14707 Internal Revenue Service 125.00 Wage Garnishment
14708 Internal Revenue Service 65.28 Wage Garnishment
14709 Intl.Union of Oper.Eng.AFL CIO Local 501 4.834.10 Dues Deduction
1471D Jamison Engineering Contractors,Inc 727.00 Professional Services-Effluent Inspection
14711 Joshua Casey Corporate Training 2.770.00 Training Registration-Traffic Control Ragger
14712 Labels and Folders.Com 166.34 Office Supplies
14713 Court Older 150.00 Wage Garnishment
14714 Loran Education Services 339.00 Training Registration
14715 Daily Pilot 50.00 Notices&Ads
14716 MCWerizon 1.526.33 Wireless Telephone Services
14717 McMaster Can Supply Co. 3,613.72 Mechanical Pans&Supplies
14718 Mesa Consolidated Water District 36.00 Water Use
14719 MMway Mfg.&Machining Co. 1.74824 Mechanical Pens&Supplies
14720 Court Order 225.00 Wage Garnishment
14721 Municipal Water District of O.C. 16.061.00 Water Use Efficiency Program MID 9.22-99
14722 N.Glantz&Son,Inc. 548A4 Reflective Sheeting
14723 NATEC International.Inc. 395.00 Training Registration
14724 National Bond&Tmst 1,789.95 U.S.Savings Bonds Payroll Deductions
14725 Neutron Products,Inc. 3.091.56 Anionic Polymer
14726 Newark Electronics 1,717.45 Instrument Supplies
14727 Nextel Communications 937.74 Cellular Phones&Air Time
14728 No.Delivery 436.16 Mail Delivery Service
14729 OCB Reprographics 7,379.74 Printing Service-MO 112WO
14730 OCEA 561.67 Dues Deduction
14731 Office Depot 59.72 Office Supplies
14732 Ofin Corporation 3,832.44 Sodum Hydroxide
14733 Omega Industrial Supply,Inc. 1,829.96 Janitorial Supplies
14734 Onesource Distributors,Inc. 1.171.53 Electrical Pens&Supplies
14735 Orange County United Way 60.00 Employee Contributions
14736 ORCO Construction Supply 228.18 Marking Paint
14737 Oxygen Service Company 397.60 Lab Pans&Supplies
14738 Pacific Mechanical Supply 572.36 Plumbing Supplies
14739 Peace Officers Council of CA 2,025.81 Dues Deduction.Supervisors&Professionals
14740 Planelbids,Inc. 7,631.25 Bids Online-Vendor&Bid Management System
14741 Primrose Ice Co.,Inc. 180.00 Ice For Samples
14742 Propipe Professional Pipe Services 7,600.09 Sewerfine Cleaning for City of Tustin&Unincorporated County Property
14743 Prudential Werell Supply 5,022.11 Uniforms&Related Articles
H WernbsNF.XCEI..OuwMPS11AREICINma Pail RoPof X)U8yCXwi PaiERepon-AMa menl_B_0 0L6.r1av EXHIBITS
snrttofc Page 7 of 9 10A V 200a
Claims Paid From 09116108 to 09130/08
Warrant No. Vendor Amount Description
14744 Ragan Communications,Inc. 99.00 Books&Publications
14745 RBF Consulting 1,152.78 Engineering Services 2-24-1
14746 Restek Corp. 671.17 Lab Pads&Supplies
14747 RMS Engineering&Design,Inc. 1.380.00 Facilities Engineering Annual Design Services
14748 Robedo's Auto Trim Shop 436.20 Upholstery Repairs
14749 RPM Electric Motors 2,004.95 Motor Repairs
14750 Schwing Bioset 1.62820 Pump Pads&Supplies
14751 Sce8e1 Voice&Data,Inc. 2284.80 Telephone System Maintenance
14752 Setc n Name Plate 165.86 Pipe Marking Tape
14753 Shamrock Supply Co.,Inc. 751.54 Repair&Maintenance Supplies
14754 Shumluck Sales&Engineering 201.92 Mechanical Pads&Supplies
14755 Siemens Energy&Automation 14,694.03 Instrument Repairs&Maintenance Services
14756 Snap On Tools 716.36 Small Tod Expenses
14757 Snap-On Tads 504.67 Tools
14758 Southern Counties Oil Co.OBA SC Fuels 13,674.20 Diesel Fuel
14759 Sparklers; 1,966.80 DrNkbg Water/Cooler Rentals
14780 Staining Instruments,Inc. 3,948.80 Instrument Pans&Supplies
14761 Slam Morse 6.000.00 Video Production Services
14762 Sunset Ford 341.90 Vehicle Pads&Bernice
14763 Teledyne Analytical 195.06 Instrument Pans&Supplies
14754 Tennnix International 125.00 Pest Commit
14765 Thompson Industrial Supply.Inc. 16.189.16 Mechanical Pans&Supplies
14766 Maw Cmetudion 5.260.00 Repair&Maintenance Services-Painting&Counter Top Modifications
14767 Todd Painting,Inc. 3.952.00 Painting Services
14768 Tri-County Fine 2,009.64 Maint.Agreement- Annual Inspec/Servicing Fire Exting.at Pits.1&2.Pump Stas.&Fleet Vehicles
14769 Truck&Auto Supply,Inc. 3,639.31 Automotive Parts&Supplies
14770 UC Riverside 23.914.05 Professional Services-Strategic Process Study Research Project
14771 UC Regents San Diego 725.00 Training Registration
14772 Ultra Scientific INICS0 Lab Pads&Supplies
14773 United Parcel Service 1,551.55 Parcel Services
14774 VWMC Hospital Corp. 5.80126 Reconciliation User Fee Refund Program
14775 Valin Corporation 786.53 Electrical Pads&Supplies
14A6 Vemes Plumbing 7,430.00 Sarvice Contract-Testing,Repair&Led.Backnow Devices at Pits. 1 &2&Pump Ste.
14777 Vortex Industries,Inc 372.00 Door Repalrs
14778 V WR Scientific Products 3.012.30 Lab Pads&Supplies
14779 Wakenhul Corporation 12.155.30 Security Services
14780 Wells Supply Co. 344.80 Mechanical Paris&Supplies
14781 West Lite Supply Company,Inc. 7.76 Electrical Paris&Supplies
14782 Wed Marine/E&B Discount Marine 316.21 Safety Supplies
14793 Workplace Resource 545.65 Electrical Paris&Supplies
14784 Xerox Corporation 20,825.88 Copier Services-Equipment Leases,Managed Services,and Metered Copy Usage&Charges
14785 Yak lChasa Materials Handling,Inc. 62.56 Electric Cad Pans
14786 Court Order 912.50 Wage Garnishment
14787 James E.Colston 30600 Meeting/7raining Expense Reimbursement
14788 Santiago A.Escobar 590,75 Meeting7rainirrg Expense Reimbursement
14789 Janet L.Gray 996.69 Meefing/Ttaining Expense Reimbursement
14790 David D.Halverson 125.00 Meefingrrmining Expense Reimbursement
M1op11u EXCEL dtaVMVDSIIARMWlms PaloRe,PxUXG1C1amsPueRepon#nemmeM_B_Il5-V-08A. EXHIBIT
11rs10m Page 8of9
Claims Paid From 09/16108 to 09/30108
Warrant N. Vendor Amount Description
14791 Todd A.May 280.00 Meeling?rdlning Expense Reimbursement
14792 Thomas J.Mendez 224.18 Meeting/Training Expense Reimbursement
14793 James D.Ruth 3,460.92 Meenng/Dalning Expense Reimbursement
14794 Unit,A.Sullivan 364.63 Meelingri Boning Expense Reimbursement
14795 Simon L.Watson 573.75 Meeling?raining Expense Reimbursement
14796 Mortis C.Yin 126.00 Meeting/Training Expense Reimbursement
14797 County of Orange Auditor Controller 405.00 Administration Fee-A0lustment to Property Tax Bin
14798 County of Orange Auditor Controller 150.00 Administration Fee-Adjustment to Prop"Tex Bill
14799 Linda Losurdo 2,000.00 Employee Computer Loan Program
14800 Orange County Sanitation District 1,021.96 Petty Cash Reimb.
Total Accounts Payable-Warrants 5 20.084.194.09
Payroll Disbursements
40170 - 40225 Employee Paychecks 5 119,944.79 Biweekly Payroll(09124/O8)
40226 - 40230 Employee Paychecks 4.430.12 Interim Payroll-Room.Vold Ralaaue(O 123108)
161004 - 161580 Direct Deposil Statements 1,347,903.78 Biweekly Payroll(09124/08)
Total Payroll Disbursements 8 1A]2.2B4.89
Wire Transfer PavmenM
OCSD Payroll Taxes B Contributions $ 780,544.40 Biweeklyy Payroll-(09124/OB 809/30/08)
US Bank 461,879.53 Sod"2000 AB B Refunding Ceriinoates of Padldpalions September lnteresVPdncipal Payment
Total Wire Transfer Payments $ 1,242,423.93
Total Claims Paid 09116108-09130108 $ 22.798.902.71
H`AeylbeSEXCEL doi22 NPSMRIBC urre Paid RaoxW00s1CuimePaIdR,x,xdAnarnmenta O 30-08.1 : EXHIBIT B
uuusru Page 9 of 9 in odd,
BOARD OF DIRECTORS Meeting Date Te6d.or .Dir.
711
AGENDA REPORT gam Number gem Number
3
Orange County Sanitation District
Misc.A
Support projects
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Derek Davis
SUBJECT: P1 MISCELLANEOUS BUILDINGS OFFICE IMPROVEMENTS,
PROJECT NO. FE07-08
GENERAL MANAGER'S RECOMMENDATION
1. Approve Plans and Specifications for P1 Miscellaneous Buildings Office
Improvements, Project No. FE07-08, on file at the office of the Clerk of the Board;
2. Approve Addendum Nos. 1, 2, 3, 4, 5, and 6 to the plans and specifications;
3. Receive and file bid tabulation and recommendation;
4. Reject bid received from GTA Construction, Inc. in the amount of$635,000;
5. Award a contract with Avi-Can, Inc., dba CA Construction, for P1 Miscellaneous
Buildings Office Improvements, Project No. FE07-08, for a total amount not to
exceed $673,000; and
6. Approve a contingency of$100,950 (15%).
SUMMARY
• This project will construct new staff offices, conference room, cubicles, and other
minor improvements. These improvements are being built to accommodate moving
the District's Information Technology Division to the Administration Building. The
project also provides for improvements to the Control Center to accommodate the
Americans with Disabilities Act (ADA) requirements, and expands the heating,
cooling, and ventilation system to accommodate new offices.
• Four sealed bids were received on October 28, 2008. After the evaluation by the
Orange County Sanitation District (Sanitation District) Evaluation Team, the lowest
bid was determined to be nonresponsive and Avi-Con, Inc., dba CA Construction,
was determined to be the lowest "Responsible and Responsive" bidder. Summary
information on the bid opening for P1 Miscellaneous Buildings Office Improvements,
Project No. FE07-08, is as follows:
Page 1
Project Budget: $ 1,429,225
Construction Contract Budget: $ 800,000
Engineer's Estimate: $ 700,000
Lowest Responsive, Responsible Bid: $ 673,000
High Bid: $ 828,994
• The low bid contractor listed seventeen subcontractors in its Bid with subcontracts
totaling $474,000 out of the $635,000 (70% of the total Contract Price), which
violates Special Provisions SP-1 Percentage of Work Performed by the Contractor.
SP-1 requires the Contractor to self perform with its own forces Work amounting to
at least 51% of the total Contract Price. The low bidder's bid demonstrates non-
compliance with the bid requirements and is therefore deemed nonresponsive.
BACKGROUND
In December 2000, the Sanitation District proposed a new Administration Building
(Project No. J-84). The cost estimate for this new facility was $18,500,000 and included
the construction of a three-story building to house Information Technology, Human
Resources, and the Finance Departments. Due to the budget constraints, the project
was cancelled in 2006. This project provides improvements to the Control Center,
Laboratory, and Administration Building to allow Information Technology Staff to be
relocated from temporary trailers to the Administration Building. This project also
provides needed heating, ventilation, and air conditioning, and handicap access
improvements.
PRIOR COMMITTEE/BOARD ACTIONS
• April 2008 — Reject bids for SP-127, P1 Multiple Locations Office Modifications.
(The SPA 27 work has been included with FE07-08).
• October 2008—Approve an Agreement with the City of Fountain Valley regarding
the permitting for various administrative buildings including $356,835 in development
fees.
• April 2008 -Approve purchase and installation of modular/systems furniture to Office
Max Workspace in the amount of$125,624.40.
ADDITIONAL INFORMATION
The contractor selection was conducted in accordance with the Sanitation District's
adopted policies and procedures. The four bids received were:
Page 2
Bidder Amount of Bid
GTA Construction, Inc. $635,000.00
Avi-Con, Inc, dba CA Construction $673,000.00
General Consolidated Constructors, Inc. $789,547.07
K-2 General Contractors, Inc. $828,994.00
This Capital Improvement Project complies with authority levels of the Sanitation
District's Delegation of Authority. This item has been budgeted (2007-2008 Budget
Update, Item No. 87, Page A-10 (FE-P1)).
Award Date: 11119108 Contract Amount: $673,000 Contingency: $100,950(15%)
SS:DD:ct:gc
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Page 3
I
BOARD OF DIRECTORS Meeting Date To lid.ofDi,.
11/19/08
AGENDA REPORT Iem Numbe Ren Numbe
4
Orange County Sanitation District
Misc.8
Support Projects
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Derek E. Davis
SUBJECT: P1 Engineering Trailer File Room Improvements,
PROJECT NO. FE07-12
GENERAL MANAGER'S RECOMMENDATION
1. Approve Plans and Specifications for the P1 Engineering Trailer File Room
Improvements, Project No. FE07-12, on file at the office of the Clerk of the Board;
2. Approve Addendum Nos. 1 and 2 to the plans and specifications;
3. Receive and file bid tabulation and recommendation; and,
4. Reject all bids for P1 Engineering Trailer File Room Improvements, Project
No. FE07-12.
SUMMARY
• This project will relocate and improve the filing room and file clerk work areas to
provide a central file location as recommended by a recent External Audit.
• The Orange County Sanitation District (Sanitation District) solicited bids for the work
and two sealed bids were received on October 2, 2008. A summary of the bids is
tabulated below.
• After the evaluation by the Sanitation District Evaluation Team, the lowest bid was
deemed invalid due to the contractor's failure to acknowledge receipt of the
addenda, and for increasing the bid amount after receipt of bids to include the work
associated with the addenda. The second bid is significantly higher than the
Engineer's estimate, and the Bid Evaluation Committee recommended rejecting both
bids.
Page 1
BACKGROUND
To meet the recommendations of the audit, the file "room' needs a controlled access
which is currently unavailable in the current file area. The proposed improvement work
includes moving the document production equipment and work areas to the current file
clerk office, electrical modifications and the addition of new data ports, and
modifications to the layout of the interior walls and the installation of a new door in order
to create a new, secure file room. Work also includes relocating staff into a newly
remodeled space that serves as the main access to the new file room and gives the file
clerks control of the access to the file room.
Since the only responsive, responsible bid is $29,422.50 higher than the Engineer's
Estimate, Staff is developing a more cost-effective plan to satisfy our filing
requirements.
PRIOR COMMITTEEIBOARD ACTIONS
N/A
ADDITIONAL INFORMATION
The contractor selection was conducted in accordance with the Sanitation District's
adopted policies and procedures. The two bids received were:
Bidder Amount of Bid
Texsun Construction' $ 38,680.00
Collins Builders, Inc. $ 79,422.50
'Invalid Bid
This Capital Improvement Project complies with authority levels of the Sanitation
District's Delegation of Authority. This item has been budgeted (2007-2008 Budget
Update, Item No. 87, Page A-10 (FE-P1)).
ATTACHMENT
None
JH:AD:ct
KWep11agmdalBwrd AgeMa Repods1 "Board AgeMa Repods\1108Vte 4.F07-12.dmx
Page 2
MINUTES OF STEERING COMMITTEE MEETING
Orange County Sanitation District
Wednesday, October 22, 2008, at 5:30 p.m.
A meeting of the Steering Committee of the Orange County Sanitation District was held on
Wednesday, October 22, 2008, at 5:30 p.m., in the District's Administrative Office.
A quorum was declared present, as follows:
STEERING COMMITTEE MEMBERS: STAFF PRESENT:
DIRECTORS PRESENT:
Doug Davert, Chair Jim Ruth, General Manager
Mark Waldman, Administration Committee Bob Ghirelli, Assistant General Manager
Chair Nick Arhontes, Director of Oper. &Maintenance
Bill Dalton Jim Herberg, Director of Engineering
Phil Luebben Ed Torres, Director of Technical Services
Lorenzo Tyner, Director of Finance and
DIRECTORS ABSENT Administrative Services
Larry Crandall, Vice Chair Michael Gold, Legislative Affairs Liaison
Ken Parker, Operations Committee Chair Penny Kyle, Clerk of the Board
Jim Ferryman
OTHERS PRESENT:
Ryal Wheeler
Layne Baroldi
Drew Kolosky, Liberty Composting
PUBLIC COMMENTS
Drew Kolosky stated that his employer, Liberty Composting, was interested in purchasing the
Sanitation District's land in Kings County and was prepared to offer the Sanitation District a
proposal of$42/ton of biosolids for four years, with a minimum of 50,000 tons per year.
REPORT OF THE COMMITTEE CHAIR
Chair Davert reported that the board meeting would be adjourned in memory of Cornell Norby,
Director Norby's father.
He also reported that Director Crandall was attending the WEFTEC conference in Chicago
where he was participating on a leadership panel and also the Utility Executive's Forum.
Minutes of the Steering Committee j
October 22, 2008
Page 2
REPORT OF GENERAL MANAGER
Jim Ruth, General Manager, advised staff was proceeding with preparing the update to the
Strategic Plan, and the update would be ready for presentation at the November board meeting.
He also provided a brief update on negotiations with SAWPA, a tour of EnerTech in Rialto, and
status on SARI line repairs.
REPORT OF GENERAL COUNSEL
There was no report.
ACTION ITEMS (1 -2)
1. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the September 17,
2008 Steering Committee meeting.
2. MOVED, SECONDED AND DULY CARRIED: Recommend to the Board of Directors to
approve an agreement with the City of Fountain Valley for permitting Pt Miscellaneous
Buildings Office Improvements, Project No. FE07-08, and authorize payment and
development fees for an amount not to exceed $356,835, in a forth approved by General
Counsel.
INFORMATION ITEMS (3 -4)
3. Legislative Affairs Report—Government Affairs Manager, Michael Gold, informed the
Committee that the list of state bills being tracked by OCSD was in their packet with the
final actions taken by the Governor. Gold mentioned that many of the bills OCSD
opposed were vetoed. As a result of the growing state budget deficit, it is likely that a
special session will be called by the Governor after the election to deal with the
impending crtsis; however, a bright spot in the state's situation was that the Governor
was successful in selling about $5 billion in bonds to the public to cover the short-term
cash crunch.
In Washington, D.C., Gold reported that the likelihood of a stimulus package including
infrastructure funding was growing when the Federal Reserve Chairman expressed his
support for it. With Bemanke's support, the President signaled he also might be willing
to support infrastructure funding.
Finally, Gold reported that at the November Steering Committee meeting, the lobbyists
would be available to discuss the implications of the election.
4. Republic of(South) Korea Environmental Management Corporation —Jim Herberg,
Director of Engineering, noted that the Memorandum of Understanding focuses on key
areas of exchange of information, technology,joint research and cooperative projects,
and future visits to OCSD.
Minutes of the Steering Committee
;✓ October 22, 2008
Page 3
CLOSED SESSION
The Steering Committee convened at 5:46 p.m. in Closed Session, pursuant to Government
Code Section 54956.8 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.
The Steering Committee reconvened at 5:58 p.m. in regular session.
OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
There were none.
ADJOURNMENT
The next Steering Committee meeting is scheduled for Wednesday, November 19, 2008. The Chair
declared the meeting adjourned at 5:58 p.m.
Submitted by:
A
Penny M. I s
Clerk of the Board
STEERING COMMITTEE neew9 Date Toad.of Dir.
11/19/08 11/lg/Oa
AGENDA REPORT Item Numbe iem Number
2 6
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Robert P. Ghirelli, Assistant General Manager
Project Managers: Barbara Collins and Michael Gold
SUBJECT: Five-Year Strategic Plan
GENERAL MANAGER'S RECOMMENDATION
1) Approve the Five-Year Strategic Plan dated November 2008; and,
2) Direct staff to implement the goals and strategies contained in the Plan.
SUMMARY
The Strategic Plan has been updated for 2009 and contains a summary of
accomplishments over the past year as well as levels of service and new goals. The
Plan also includes OCSD's mission, vision and core values and does not carry any
additional costs associated with the new goals.
PRIOR COMMITTEE/BOARD ACTIONS
November 28, 2007: Five-Year Strategic Plan adopted by the Board of Directors
ADDITIONAL INFORMATION
Strategic Plan Update Process
In 2007, the Board of Directors held a series of workshops to develop a Five-Year
Strategic Plan containing not only goals and levels of service, but also updated
statements of mission, vision and core values. The three month process culminated in
the adoption of a new plan on November 28, 2007.
To update the Plan for 2009, staff began with internal discussions about continually
improving operations and refining the goals and levels of service. In July 2008, the
Executive Management Team held a retreat to discuss preliminary ideas and
suggestions. These suggested goals were discussed at a joint meeting of department
heads, managers and supervisors in August.
Following this meeting, the issues were then distilled into five new goals proposed for
the next five years. Staff drafted one-page issue papers to be presented to the Board
that described the new goals.
Board Input
On October 15, the Board of Directors participated in a workshop facilitated by Brent
Ives to discuss the five new goals. The well-attended meeting generated some
comments and questions. While the discussion did not yield any new goals or significant
modification of existing plans, several board members had comments and questions.
Questions and comments (as well as responses) are below:
• To increase GWR flows, the Board asked if staff is researching more
opportunities for water recycling and staff responded that it has been looking into
it.
• Board members asked that OCSD coordinate efforts with Orange County Water
District and the Irvine Ranch Water District on the future of the Green Acres
Project.
• Board members questioned if political and financial risks are included as part of
the risk register goal and staff noted these are part of the planning efforts.
• Related to political and economic risks, the Board discussed the need to be
proactive in our efforts and staff responded that the legislative and risk
management programs have been, and will continue to, proactively address
political and financial risks. Moreover, the topic was discussed at a recent
Administration Committee meeting.
• Finally, the Board asked if staff was researching cost effective strategies to
reduce infiltration and inflow in the collection systems and staff responded that
these would be part of the Engineering Facilities Master Plan.
Continual Improvement
In addition to the new goals (marked "need') there are some other minor changes from
last year's plan. One existing goal and level of service has been refined, but not
significantly changed, and the presentation has been changed to help readability.
The workplace safety level of service was dropped and replaced by two items:
employee participation and lost workday rate.
Overall, the updated Strategic Plan continues OCSD's goal of moving from good to
great through annual assessments and incremental changes. Each year, the Board will
be asked to provide strategic leadership and guidance as District staff sets goals and
levels of service.
The Steering Committee and Board are asked to adopt the new Five-Year Strategic
Plan, which contains no new costs and will help guide the organization and staff.
The Operations Committee minutes for
the meeting held November 5, 2008 will
be distributed at the November 19, 2008
Board of Directors meeting .
Once the minutes are finalized , they will
also be available on the Sanitation
District's website (www.ocsd .com).
OPERATIONS COMMITTEE Meeting Date To Be.ofDir.
10/01108 11/19/08
AGENDA REPORT lien,oP08-51 NunsiDer
NUM i
Orange County Sanitation District
ns
(�6ociliti s
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: Derek E. Davis
SUBJECT: AREA 03 MANHOLE ACCESS IMPROVEMENTS (3-54),
PROJECT NO. FE07-01
GENERAL MANAGER'S RECOMMENDATION
1. Approve Plans and Specifications for the Area 03 Manhole Access Improvements
(3-54), Project No. FE07-01, on file at the office of the Clerk of the Board;
2. Approve Addendum No. 1 to the plans and specifications;
3. Receive and file bid tabulation and recommendation;
4. Reject bid received from Pacific Coast Infrastructure, for the amount of$260,200;
5. Award a contract to Mike Bubalo Construction Co., Inc., for the construction of the
manhole access improvements for an amount not to exceed $305,500; and,
6. Approve a contingency of$106,925 (35%).
SUMMARY
• This project will provide access to two manholes located on the slopes of a Caltrans
bridge embankment. The project will include retaining walls, sitework, and manhole
reconstruction. All work will take place within Caltrans right of way.
• Lee & Ro, Inc. completed the plans and specifications for Area 03 Manhole Access
Improvements (3-54), Project No. FE07-01, in March 2008.
• Seven sealed bids were received on August 21, 2008. After the evaluation by the
Orange County Sanitation District (Sanitation District) Evaluation Team, the lowest
bid was determined to be nonresponsive and Mike Bubalo Construction Co., Inc.
was determined to be the lowest "Responsible and Responsive" bidder. Summary
Page 1
information on the bid opening for Area 03 Manhole Access Improvements (3-54),
Project No. FE07-01, is as follows:
Project Budget $ 582,530
Contract Budget $ 375,600
Engineer's Construction Estimate $ 313,000
Lowest Responsive, Responsible Bid: $ 305,500
High Bid: $ 553,500
• The low bid contractor did not submit all of the information required in the Bid
Documents and was deemed nonresponsive. Subsequently, the low bid contractor
attempted to provide the Sanitation District with additional documentation to support
its bid after the bids were opened. In accordance with the California Public Contract
Code, the Sanitation District informed the contractor that it cannot accept additional
information in support of a bid after Bid opening.
• The period for written protest began on September 2, 2008, and ended on
September 8, 2008. No written protests were submitted during or after the protest
period.
• The contingency amount was increased to 35% to address the risks inherent with
work that is within the Caltrans right-of-way and adjacent to live freeway traffic, a
railroad track, and the potential of encountering unknown utilities. The duration of
actual construction work is about 90 days. Without sufficient contingency, the
project would need to be stopped for additional Board approval. Stopping the
project would incur costs for contractor delays.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
The contractor selection was conducted in accordance with the Sanitation District's
adopted policies and procedures. The seven bids received were:
Bidder Amount of Bid
Pacific Coast Infrastructure, Inc.' $260,200
Mike Bubalo Construction Co., Inc $305,500
GCI Construction, Inc. $322,800
Bali Construction, Inc. $355,772
Atlas Underground, Inc. $435,725
4-Con Engineering, Inc. $553,500
'Nonresponsive Bid
Page 2
d
This Capital Improvement Project complies with authority levels of the Sanitation
District's Delegation of Authority. This item has been budgeted (2007-2008 Budget
Update, Item 37, Page A-7 (FE-C)).
Award Date: 11119/0810122108 Contract Amount: $306,600 Contingency: $106,926
(36%)
JH:AD:ct
R%depnagenda\Boerd Agenda Repons%2008 Beard Agenda Reports\1 f 0a\Item 7FE07-01 to Board on 11-19-M(2).d=
Page 3
This Capital Improvement Project complies with authority levels of the Sanitation
District's Delegation of Authority. This item has been budgeted (2007-2008 Budget
Update, Item 37, Page A-7 (FE-Q.
Award Date: 11/1 910 81 012 2/0 8 Contract Amount: $305,50D Contingency: $106,925
(35%)
JH:AD:ct
KWept,agendalBoard Agenda Repo0s12008 Board Agenda Reports\710BVtw 7.FE07-01 to Board on 11-19-08(2).docx
Page 3
OPERATIONS COMMITTEE MeetIng Date To Bd.ofDir.
11/05/08 11/19/08
AGENDA REPORT Item Number Item Number
_ OPOS-61 9
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Nick Arhontes, Director of Operations and Maintenance
SUBJECT: AGREEMENT WITH COSTA MESA SANITARY DISTRICT TO TRANSFER
SEWER PIPELINES AND ASSOCIATED EASEMENT RIGHTS
GENERAL MANAGER'S RECOMMENDATION
Approve an agreement with Costa Mesa Sanitary District (CMSD) transferring
ownership and associated easement rights for six local sewers within the CMSD service
area boundaries, in a form approved by General Counsel.
SUMMARY
• CMSD sent a letter to the Orange County Sanitation District (OCSD) dated
December 28, 2007 requesting OCSD to transfer six local sewers within the CMSD
service area boundaries to CMSD. These six local sewers were identified as sewers
that had the potential for future residential and/or commercial connections due to
anticipated future development.
• OCSD staff, CMSD staff and two Board members from CMSD met in two separate
meetings on August 5 and September 17, 2008 to negotiate and discuss the scope,
terms and details of the proposed transfer of these six local sewers. It was agreed
that from these six local sewers, a total of 57 manholes and 57 separate sewer
pipeline segments between manholes comprising 15,842 linear feet of sewer pipes
from 8-inches to 18-inches in diameter, should be transferred to CMSD.
PRIOR COMMITTEEIBOARD ACTIONS
None
ADDITIONAL INFORMATION
After the proposed transfer of these local sewers is completed, CMSD would be able to
charge any future residential, commercial owner, or developers requesting a connection
permit from CMSD, the applicable CMSD sewer connection permit fees in existence at that
time. In addition, since OCSD will continue to be the regional sewer collection agency, any
Form N0.UW102-2 R...0101 P
Page 1
and all applicable OCSD Capital Facilities Capacity Charges would still apply and OCSD
will be entitled to continue collecting those fees as future development within the CMSD
service area occurs. OCSD currently collects no revenue stream for provision of local
sewer services in this area.
ATTACHMENTS
Exhibit A Transfer Area
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H:Wep0agendat and Agenda Rep nst 008 Board Agenda Repons\1 OBgtw 9_CMSD.dwx
Form No.0 1013 amaee avnir9l
Page 2
Santa Ana
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_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ cr -
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„i�, mnnr Exhibit
o CMSD-Trwsfe� cMso Tn,ner.n Transfer Area
® OC9D�flalalneE OCSD-e.., C
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5.MN'M" 1.200 600 0 1,200 Feet Free
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OPERATIONS COMMITTEE Reefing DaW Te BO.ur Dlr.
11/05/08 11/1g/O8
AGENDA REPORT Rem Number Rem Number
OPOS-62 10
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Nick Arhontes, Director of Operations and Maintenance
SUBJECT: Memorandum of Understanding for County-wide Area Spill Control
Program
GENERAL MANAGER'S RECOMMENDATION
Authorize the General Manager to execute Memoranda of Understanding Establishing a
County-wide Area Spill Control Program with Orange County Flood Control District and
cities or sanitary districts that own sanitary sewer collection facility pipelines within
Orange County Sanitation District service area, in a form approved by General Counsel.
SUMMARY
During 2007 and 2008, the County of Orange Public Works staff has been meeting on a
monthly basis with OCSD staff along with staff from the cities of Orange and Tustin to
form a cooperative program called the Countywide Area Spill Control (CASC) Program.
This program is designed to share costs and responsibilities and improve the
effectiveness for spill response, containment, and cleanup. Any sewage spill that would
end up in an Orange County Flood Control District (OCFCD) flood control channel has
the potential to impact surface waters. OCSD is only obligated to pay for costs due to
spills from its system. OCSD would not be responsible for any costs caused by spills
from another city's or agency's system.
The County of Orange would like to formalize this CASC Program with an MOU
between OCFCD, OCSD, and expand it to include any city or sanitary district that owns
sanitary sewer pipelines within the OCSD service area. Two firms have previously been
selected through a Request for Proposal (RFP) process to provide services on a time
and material basis. They are on call on a 24-hour basis to supply the necessary labor,
equipment and materials. The city or agency responsible for the spill pays the costs for
the services requested. Staff supports this approach and recommends this action.
PRIOR COMMITTEE/BOARD ACTIONS
None
ADDITIONAL INFORMATION
Fain,Nn nW in:':' Rwi OE 01M
Page 1
This is an expansion of a previous pilot project developed with the County of Orange
and OCSD called The Tustin Area Spill Control (TASC) program. The pilot project
started on August 30, 2000. It has served as a statewide model and is also adaptable
for non-sewage related events such as firefighting liquid runoff and hazardous
materials. The selected firms have had prior experience in oil spill containment and
cleanup in harbor situations. Table top and field training exercises have been conducted
in the past in areas tributary to upper Newport Bay.
The County of Orange is leading out on this effort and wants to establish a separate
three-way CASC MOU between OCFCD, OCSD and each city or sanitary district that
owns sanitary sewers in close proximity to OCFCD flood control channels within the
OCSD service area. The first city that appears to be ready to sign such an MOU is the
City of Orange. The County has a plan to eventually sign up all such cities and/or
sanitary districts within the OCSD service area.
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H:Wep(\agendaM3oaN Agenda Reports12008 Board Agenda Reports\710811Iem 10.MOU re Spill Conlrel.docx
Fam No Y 102 2 Fmwa ONnxl]
Page 2
OPERATIONS COMMITTEE Meeting Date To ad.orar.
11/05/08 11/19/08
AGENDA REPORT Rem Number Rem Number
OP08-63 11
Orange County Sanitation District
®P14nt Automation
compu on
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
Project Manager: David MacDonald
SUBJECT: CENTRAL GENERATION AUTOMATION, JOB NO. J-79-1
GENERAL MANAGER'S RECOMMENDATION
Authorize staff to negotiate a Professional Consulting Services Agreement with Black &
Veatch Corporation for construction support services for Central Generation
Automation, Job No. J-79-1.
SUMMARY
• The project will replace the engine control systems for the Central Generation
Systems at Plant No. 1 and Plant No. 2. The project will also provide improved
electrical load management, operating communications between Plant No. 1 and
Plant No. 2, and improved control of exhaust emissions.
• Black & Veatch Corporation has satisfactorily furnished engineering services for the
design of the new engine control systems. Black & Veatch Corporation is uniquely
qualified to provide engineering services during construction.
PRIOR COMMITTEEIBOARD ACTIONS
December 2007— Rejected a bid to install new control systems on Central Generation
engines at Plant No.1 and Plant No. 2. Authorized staff to implement a market survey
which identifies firms that meet the technical requirements of the Project. Authorize
staff to pursue qualifications based procurement process with firms who specialize in
the engine-generator installation and retrofit field.
February 2007—Approve Amendment No. 1 in an amount not to exceed $98,814, to
prepare record documents of the existing Central Generation Systems and to design a
communication link between the Central Generation Systems at Plant No. 1 and
Plant No. 2.
I'm No.M 102-2 n =1107
Page 1
February 2005—Approve a Professional Design Services Agreement with Black &
Veatch Corporation to prepare plans and specifications for the new engine control
systems as part of the Central Generation Automation, Job No. J-79-1, which also
included the installation of the Continuous Emissions Monitoring System (CEMS) units,
Contract No. J-79-1A.
ADDITIONAL INFORMATION
The existing engine control systems (En-Tronics FT-100 and FT-210) are aging and are
not supported by the original equipment supplier. The existing control systems do not
provide feedback signals to control the engine exhaust emissions as required by the
new SCAQMD Rule 1110.2.
In October 2008, the Orange County Sanitation District (Sanitation District) received
proposals to furnish and install new control systems on each engine in the Central
Generation Systems at Plant No. 1 and Plant No. 2.
Black & Veatch Corporation prepared the preliminary and final design for the upgraded
engine control systems, as well as the CEMS units which will be installed on each
engine under Contract J-79-11A.
The Sanitation District requires engineering services during construction which include
clarifications to the plans and specifications, review of submittals, and requests for
equipment substitutions. The Consultant will also oversee the engine programming,
software development and commissioning of each new control system.
This recommendation complies with authority levels of the Sanitation District's
Delegation of Authority. This item has been budgeted. (Line item: Section 8, Page 65).
Award Date: NIA Contract Amount: NIA Contingency: NIA
JH:DM:tic:gc
H9dep11agenda%Bwrd Agenda Repods@008 Board Agenda Repodstl OBVIem 11.J-79-1do
FOM No.O 102 3 P a5VIW
Page 2
OPERATIONS COMMITTEE Meetmg Date T"Bd.of
11/05108 11/19/08
AGENDA REPORT Hwn Number Item Numb&
OP08-64 12
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Nick Arhontes, Director of Operations and Maintenance
SUBJECT: UNIT PRICE INCREASE RE PROPRIETARY CHEMICAL PROCESS
FOR ODOR AND CORROSION CONTROL
GENERAL MANAGER'S RECOMMENDATION
1. Ratify Change Order No.1 to Purchase Order No. 1032610E (SSJ-2008-821),
issued to U.S. Peroxide LLC, for the application of a proprietary chemical for the
temporary unit gallon price increase for ferrous chloride from $1.25/gallon
delivered, plus tax, to $1.75/gallon delivered, plus tax, for a total amount not to
exceed $147,000,00, for the period of September 24, 2008, through October 6,
2008, due to a declared Force Majeure;
2. Approve Change Order No.2 to Purchase Order No. 103261 OB (SSJ-2008-821),
issued to U.S. Peroxide LLC, for the application of a proprietary chemical for a
unit gallon price increase for ferrous chloride from $1.25/gallon delivered, plus
tax, to $1.75/gallon delivered, plus tax, for the contract period of December 1,
2008 through June 30, 2009; and,
3. Authorize a 20% unit cost escalation contingency effective December 1, 2008.
SUMMARY
• U.S. Peroxide (USP) provides OCSD continuous treatment using peroxide
regenerated iron for sulfide control (PRI-SC). This process uses ferrous chloride
and hydrogen peroxide. In addition, each of the chemicals may be used alone to
control odor and corrosion in the regional trunk sewer system. PRI-SC treatment has
been used in the regional trunk system since 2002.
• The raw material cost of scrap steel, hydrochloric acid and byproduct pickle liquor
used to manufacture ferrous chloride, along with cost of power and transportation,
have all been increasing in 2008, and this has resulted in significantly higher unit
prices from ferrous chloride producers. These conditions have further accelerated
since this contract was implemented. Additionally, because of the volatility in the
market, ferrous chloride producers are seeking shorter term pricing agreements,
making three to six month price adjustment terms the none compared to annual or
multiyear agreements in the past.
10/07/08
r
C
• Due to the unforeseen and accelerated rate of change in the ferrous chloride market,
price conditions since the execution of the current contract, USP is no longer able to
supply OCSD with ferrous chloride at the current contract price, and is buying
product and has stated that they are selling at a loss to fulfill their obligations under
the contract. USP is asking for a price increase from $1.25/gallon to $1.75/gallon.
Staff recommends this increase.
• The contractor also provides leased equipment and on-going labor for services such
as maintenance, remote monitoring of the chemical and feed rates, optimization, and
field sampling. Prices for those services remain as is.
PRIOR COMMITTEE/BOARD ACTIONS
Approved sole-source contract with US Peroxide, LLC on June 25, 2008, item 9(d)
ADDITIONAL INFORMATION
• Due to these recent events, staff has researched prices for ferrous chloride from
alternate sources and offers for other treatment facilities in Southern California.
USP's proposed price is equal or lower than prices offered from other suppliers to
agencies with similar-sized contracts.
• Treatment in the regional trunks provides a secondary benefit of controlling
hydrogen sulfide and odors entering the treatment plants. Newly designed capital
projects at the treatment plants have been designed based on continuous chemical
treatment for odor control in the regional trunks.
• Most recently, OCSD has been utilizing solely ferrous chloride as a treatment
process chemical and as a baseline for further PRI-SC evaluations. The current
volume of ferrous chloride required during these evaluations is significantly higher
than the prior process conditions.
• The ferrous chloride market has also been in a very tight supply situation in 2008
due to increased demand and limited raw materials supply. In addition, hurricane
Ike, which impacted the U. S. gulf coast, has caused an interruption of raw material
supply to west coast manufacturers causing at least one ferrous chloride supplier
California Water Technologies LLC, (CWf)to claim force majeure status. This has
further driven costs and prices up for ferrous chloride on the west coast. While
actual production and supply chain conditions will eventually return to normal, the
cost pressures on raw materials are expected to continue even after the force
majeure status has ended.
• In addition, because CWf has not been able to supply all of OCSD's current need
for ferrous chloride since August 1, 2008, USP has been forced to buy the product
10/07/08
from Kemira, an alternate supplier, at an increased price due to the current market
situation.
This action must be approved by the Board of Directors as required by OCSD
Delegation of Authority (DOA) levels. This item has been budgeted in Divisions 420,
830, and 840, line item 55. However, budget reappropriations may be necessary due to
the extraordinary price increase.
Award Date: 6125/08 Contract Amount: $1.25/gal+tax(FeC12) Contingency: 10%
$1.59/gal+tax(27% 1-12O2)
$2.85/gal+tax(50% H2O2)
Award Date: 11/19/08 Contract Amount: $1.75/gal+tax(FeC6) Contingency: 20%
$1.59/gal+tax(27% H2O2)
$2.85/gal+tax(50% H2O2)
KWepllegerxIMBoard Agenda Reporls12008 Board Agenda ReportsN 108Utem 12.US Perotlde.doox
10/07/08
OPERATIONS COMMITTEE ""�1gDa1 TOB° vf'
11/OS/OB 1U39/OB
AGENDA REPORT Aem -65e Hem 1
OPou 33
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Nick Arhontes, Director of Operations and Maintenance
SUBJECT: PLANT NO. 1 HEADWORKS SPUTTER BOX CHANNEL
REPAIR SERVICES
GENERAL MANAGER'S RECOMMENDATION
1) Approve a sole source Service Contract Agreement with Jamison Engineering for
Plant 1 Headworks Splitter Box Channel Repairs, for an amount not to exceed
$98,735.00; and,
2) Approve a contingency of$19,747 (20%).
SUMMARY
• The purpose of this work is to repair leaking joints on the No. 2 channel in the Plant
No.1 headworks splitter box, which has been in service 1989. Although this repair is
not considered an emergency, it is urgent as the leak is getting worse and it may
start to cause undermining of the soils supporting the structure.
• While the structure is out of service, the protective coating on the concrete walls will
also be repaired. Approximately 800 square feet of coating has failed which is
causing the concrete to corrode which can accelerate structural problems.
• The work will also make it possible to isolate a section of the plant that has to be
taken out of service for an upcoming Capital Improvement Project.
PRIOR COMMITTEE/BOARD ACTIONS
None
ADDITIONAL INFORMATION
Jamison Engineering is uniquely qualified as they recently completed a similar type of
repair on the No. 1 channel in order to complete an emergency repair on the two 90
inch diameter primary clarifier feed lines that were leaking. Jamison Engineering worked
Fm No.M-102-2 R...=W7
Page 1
with staff engineers to develop a long-term repair solution that can be applied to all
three-channel joints. The repairs on the No. 3 channel are planned to coincide with the
Capital Improvement Project that will require the isolation of that channel.
This authorization complies with authority levels of OCSD's Delegation of Authority.
This item was not budgeted but funds are currently available in the overall joint
operating budget, as other planned maintenance projects of lower risk have not yet
been completed. We will manage the budget to possibly perform the planned projects
later this fiscal year or defer them to FY 09/10 based on risks.
Award Date: 11119/08 Contract Amount: $98,735 Contingency: $19,747(20%)
H'.WeptWgenda\Board Agenda Repods@DDB Board Agenda ReporiskllMtcan 13.Jamison Eng.dmx
Fam No.M 102 2 11e+vM O IV7
Page 2
The Administration Committee minutes
for the meeting held November 12, 2008
will be distributed at the November 19,
2008 meeting .
Once the minutes are finalized , they will
also be available on the Sanitation
District's website (www.ocsd .com).
- ADMINISTRATION COMMITTEE MeeNngDate To Bd.01Dill
11/12/08 11/19/08
AGENDA REPORT R m N.mEe, tram Numt�er
ADMOS-33 is
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: MID-YEAR STAFFING MODIFICATIONS - RECLASSIFICATION ADJUSTMENTS
GENERAL MANAGER'S RECOMMENDATION
Approve the reclassification of four(4) OCSD positions affecting incumbents predicated
on employees satisfying position qualifications and the indefinite and ongoing need to
accomplish work at the higher level, and creation of a new classification providing for.
1) Reclassification of two (2)Administrative Assistant positions PG 67
($6,185/month) to Contracts/Purchasing Assistant PG 67 ($6,185/month) results
in no change in pay;
2) Reclassification of a Senior EDM Specialist position PG 80($8,121/month)to
Senior Information Technology Analyst PG 83($8,743/month);
3) a) Reclassification of a Principal Information Technology Analyst position
PG 87($10,133/month)to Principal Project Controls Analyst PG 87
($10,133/month) results in no change in pay; and,
b) Creation of a new classification of Principal Project Controls Analyst with pay
range placement at PG 87.
SUMMARY
In an effort to support OCSD's staffing plan, it is necessary to review and modify job
titles and pay grades to address changes in work. This occurs in situations where
staffing requirements result in the need for higher levels of skill and knowledge.
Furthermore, the need for the higher skill and knowledge levels must be indefinite and
ongoing. The Personnel Policies and Procedures Manual Section 2.1, as well as
bargaining unit Memorandums of Understanding, address this process. Both state that
requests are considered twice per year, once during the annual budgeting process and
again in November.
During the current period, nine(9) requests were submitted for consideration. The
Human Resources Division reviewed each request in detail and discussions ensued with
the appropriate supervisor, manager, or department head. Consequently, the Human
Resources Division recommends that four(4)of the requests be approved.
Four(4)of the nine (9) requests will result in classification changes to positions with
incumbents, effective immediately following Board approval. Three (3)of the four(4)
classification changes to positions are lateral reclassifications with no change in salary,
Fp N. D'N�02.]
flevuaE.O301N7
Page 1
only changes in classifications that properly reflect the nature of the work being
performed. The remaining classification change is a result of the employee performing a
higher level of duties. This employee has met the criteria outlined in the Reclassification
Guidelines, which are summarized below:
1. The incumbent has been in the position being considered for reclassification and
performing the higher level duties for at least 6 months.
2. The incumbent meets the qualifications for the position being considered for
reclassification.
3. The incumbent's classification is not being reclassified from a non-supervisory to a
supervisory classification.
Detailed information regarding each of the requests is documented in the additional
information section.
PRIOR COMMITTEEIBOARD ACTIONS
N/A
ADDITIONAL INFORMATION
230—Contracts. Purchasing. and Materials Management Division
Laterally reclassify two(2)Administrative Assistant positions at PG 67($6,185/month)to
Contracts/Purchasing Assistant positions at PG 67 ($6,185/month)to properly reflect the
nature of the work being performed. These changes place the positions in the proper
job family, and will not result in any changes in pay.
740 —Engineering Planning Division and 250—Information Technology (IT) Division
Reclassify and transfer position occupied by Doug Rulison from Senior Engineering Data
Management Specialist PG 80($8,121/month) in the Engineering Planning Division 740
to Senior Information Technology Analyst PG 83 ($8,743/month) in the Information
Technology Division 250.
Moving the position from the Engineering Planning Division to the IT Division will
increase District effectiveness and efficiency by providing support to the Engineering
Department's entire technology portfolios that include enterprise GIS, CAD, and
Enterprise Content Management Systems.
The IT Strategic Plan stipulates that all enterprise applications and technology solutions
will be supported by embedding IT staff in specific business units. The IT Strategic Plan
commits to a business-driven consultative approach where senior IT staff is distributed
within key business units.
With IT support embedded within the Engineering Department, the duties and
responsibilities of the incumbent Doug Rulison have broadened in scope to cover
managing all technology-related solutions and projects for engineering. In aligning with
the IT Strategic Plan, the Enterprise Content Management Systems will envelope
several Engineering stand-alone efforts.
Form N. OVF102a RwbeO'.owtwl
Page 2
750 —Prciect Manaaement Office(Engineering Department)
Laterally reclassify position occupied by Robert Thiede from Principal IT Analyst
PG 87 ($10,133/month)to Principal Project Controls Analyst PG 87($10,133/month),
and will not result in any changes in pay. This change requires creating a new
classification of Principal Project Controls Analyst.
The Director of Engineering has transferred functions from the vendor, Integrated Project
Management Consultants (IPMC), to District staff to reduce District costs.
Part of IPMC's responsibility was establishing and managing cost throughout the life
cycle of the District's Capital Improvement Program cash outlays. Establishment of this
infrastructure was critical to ensure the scopes of the projects were appropriate, and that
the cost estimates were accurate.
The functions transferred from the vendor provide professional and technical expertise in
the following three (3) distinct categories:
• Data Management
• Construction Scheduling
• Cost Estimating
Construction scheduling and cost estimating data feed into the data management
system from which forecast, trends, and variance analyses, are conducted to assist in
management decision-making. Over the past year, Robert Thiede, Principal Information
Technology Analyst, has been directed to understand, from a functional and enterprise-
wide systems perspective, all aspects of the data management system currently handled
by IPMC. Data management is the hub and backbone into which data flows.
By laterally reclassifying Robert Thiede to the new classification of Principal Project
Controls Analyst, it will more appropriately reflect current functions and responsibilities.
RECLASSIFICATION REQUESTS
Current Proposed
E to a Div Classification Title Reclassification Title
Hagerty, Wends 230 Anminlstrstive Assistant Contracta/Purchasing Assistant
Evans,Theresa Step 5 PG 67 Step 5 PG 67
(8a.ia8/MoMn) (38.186/1hortn
Senior EDM Specialist Senior IT Analyst
Rulison, Doug 740 Step 4-PG 80 Step 4-PG 83
From Div 740 To Div 250
88.121/MontM1 811,743/N1orrh
Thled., Robert 750 Principal ITAnayat For Project Controls Analyst
Step 5-PG 87 Step 5-PG 87
From DN 250 To DN 750
510133/Monih $10,133/MOMM1
NEW CLASSIFICATION REQUEST
Proposed
Requester Div Job Title
Pr Project controls Analyst
Englneering Dept 7W PG 87
($10,133/month)
Fam No.[W102.3 �p1p1
Page 3
ADMINISTRATION COMMITTEE meebn9 Dare TOBtl.uf Dh.
w. 11/12/OB 11/19/O8
AGENDA REPORT It`n1NO1nbef RmNuinber
ADMDB-34 16
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, 2008
GENERAL MANAGER'S RECOMMENDATION
Receive and file the:
1) Sanitation District's Comprehensive Annual Financial Report for the year
ended June 30, 2008, prepared by staff and audited by Mayer Hoffman
McCann, Certified Public Accountants;
2) Report on Compliance and Internal Control for the year ended
June 30,2008; 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, 2008, 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 Farr, 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 fourteen 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.
Fo No.wI-m3 IiwIW.MIV7
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, 2008.
(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.
4. Report on Required Communication with Those in Governance.
Form No.DW�102a F_.0=1101
Page 2
Mayer Hoffman McCann P.C.
An Independent CPA firm
Conrad Government Services Division
2301 Dupont Drive, Suite 200
Irvine, California 92612
949474�2020 ph
949-263-5520 fz
w .rnhrn-pcxom
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, 2008, 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.
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 there 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. Matters conforming to this definition are as follows:
(1) Capital Asset Deletions
The District has good controls to identify and write off old furniture and equipment that
has been disposed of. For disposal of larger capital assets (pipelines, facilities), the
Project Manager informs the Finance Department of replacement projects when the
capital project is established in the accounting system. During our testing of capital asset
additions, we noted certain projects that involved replacement of old fully depreciated
assets. Since the Finance Department was not made aware of the disposal of old assets,
to assets were not removed from the accounting system. The financial impact of
removing these assets is $0 because the assets had been fully depreciated. However, it is
important that the District's subsidiary listing of capital assets only include assets
currently in use.
Recommendation
We recommend that the District review the capital asset detail for fully depreciated assets
that may no longer be in use. These assets should be removed from the District's
accounting records.
t
Orange County Sanitation District
Page 2
(2) Adherence to Purchasing Policv
The District's purchasing policy requires purchase orders for all goods and services
greater than $100. During our test of cash disbursement transactions, we noted that two
transactions requiring purchase orders were initiated prior to obtaining the purchase
order. This was evidenced by a purchase order date that was later than the date on the
vendor invoice.
Recommendation
We recommend that the District follow the purchasing policy by obtaining purchase
orders prior to initiating purchases.
(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 one
former employee who had been terminated for over six months.
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.
Irvine,California
October 30, 2008
i
Mayer Hoffman McCann P.C.
An Independent CPA Flrm
Conrad Government Services Division
2301 Dupont Drive, Suite 200
Irvine,California 92612
949-474-2020 ph
949-263-5520 fx
v v.mhm-pc.00m
Board of Directors
Orange County Sanitation District
Fountain Valley, California
Independent Accountants' Report on Aereed-Upon Procedures
Applied to Appropriations 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, 2008. 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 NUB Appropriations
Limitation Uniform Guidelines) were performed solely to assist the Orange County Sanitation
District in meeting the requirements of Section 1.5 of Article XMB 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:
1. 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.
2. We recalculated the mathematical computations reflected in the District worksheets.
Results: No exceptions were noted as a result of our procedures.
t
Board of Directors
Orange 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 30, 2008
Mayer Hoffman McCann P.C.
An Independent CPA Firm
2301 Dupont Drive,Suite 200
Irvine,California 92612
949474.2020 ph
949-263-5520 fx
www.nnhm-pc.com
Administration Committee
Orange County Sanitation District
Fountain Valley, CA
We have audited the financial statements of the Orange County Sanitation District for the year
ended June 30, 2008 and have issued our report thereon dated October 30, 2008. Professional
standards require that we provide you with the following information related to our audit.
Our Responsibility under U.S. Generally Accepted Auditing Standards
Our responsibility, as described by professional standards, is to express opinions about whether
the financial statements prepared by management with your oversight are fairly presented, in all
material respects, in conformity with U.S. generally accepted accounting principles. Our audit of
the financial statements does not relieve you or management of your responsibilities.
Scope and Timing of the Audit
The scope and timing of the audit was communicated to the Chair of the Administration
Committee in a separate letter dated May 19, 2008.
Significant Audit Findings
Qualitative Asoects of Accountine Practices
Management is responsible for the selection and use of appropriate accounting policies. We will
advise management about the appropriateness of accounting policies and their application. The
significant accounting policies used by the District's are described in Note 1 to the financial
statements. GASB Statement No. 45 was implemented during the fiscal year ended June 30,
2008. No other new accounting policies were adopted and the application of existing policies
was not changed during the fiscal year. We noted no transactions entered into by the District
during the year for which there is a lack of authoritative guidance or consensus. There are no
significant transactions that have been recognized in the financial statements in a different period
than when the transaction occurred.
Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most sensitive estimate
affecting the financial statements is:
Management's judgments concerning which projects should be expensed as ordinary
maintenance activities necessary to keep an asset operational for its originally intended useful
life versus significant improvement, replacement, and life extending projects that should be
r
Administration Committee
Orange County Sanitation District
Page 2
capitalized as additions to capital assets. We select a sample of capital asset additions to
determine that management's judgments are reasonable in relation to the financial statements
taken as a whole.
Difficulties Encountered in Performing the Audit
We encountered no difficulties in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are trivial, and communicate them to the appropriate level
of management. The following adjustments were detected by the audit process:
Adjustment to GASB 45 OPEB liability of approximately $1 million to account for
changes to the liability balance subsequent to the actuarial valuation date. Management
has corrected this misstatement.
In addition, District staff chose to account for the following item in a manner that is not in
conformance with generally accepted accounting principles due to the lack of materiality to the
financial statements taken as a whole.
Additional capitalization of interest in accordance with FASB 34 in the amount of$13.8
million to account for interest allocated to capital projects that did not have bond funding.
In essence, District staff preferred to immediately recognize interest expense of $13.8
million as opposed to amortizing this expense over the life of the capital projects that did
not have bond funding.
Disamements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction,
that could be significant to the financial statements or the auditor's report. We are pleased to
report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the
management representation letter dated October 30,2008.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a
consultation involves application of an accounting principle to the District's financial statements
or a determination of the type of auditor's opinion that may be expressed on those statements,
our professional standards require the consulting accountant to check with us to determine that
the consultant has all the relevant facts. To our knowledge,there were no such consultations with
other accountants.
Administration Committee
Orange County Sanitation District
Page 3
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the District's auditors.
However, these discussions occurred in the normal course of our professional relationship and
our responses were not a condition to our retention.
This information is intended solely for the use of the Administration Committee and
management of the District and is not intended to be and should not be used by anyone other
than these specified parties.
Aur
October30,2008
Irvine,California
+ Meeting Date To ad.of Dir.
ADMINISTRATION COMMITTEE 11/12/08 11/19/08
AGENDA REPORT Item Numbfs Item Number
ADMOS-35 17
Orange County sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: NEW MONEY CERTIFICATES OF PARTICIPATION (COPS)
GENERAL MANAGER'S RECOMMENDATION
1) Adopt Resolution No. OCSD 08-20,Authorizing the Execution and Delivery by the
District of one or more Installment Purchase Agreements, Trust Agreements, and
Continuing Disclosure Agreements in connection with the execution and delivery of
Orange County Sanitation District Certificates of Participation, Series 2008C, and if
necessary, Series 2009A, Authorizing the Execution and Delivery of such Certificates
Evidencing Principal in an Aggregate Amount of Not to Exceed $200,000,000,
Approving the Distribution of one more Official Notice Inviting Bids and Official
Statements in Connection with the Offerings and Sales of such Certificates and
Authorizing the Execution of Necessary Documents and Related Actions;
2) That the Orange County Sanitation District Financing Corporation approve the
documents supporting and authorizing the Certificates of Participation, Series 2008C,
and 'd necessary, Series 2009A, in an aggregate amount not to exceed $200 million;
3) Establish a true interest cost target rate of 4.75%with a maximum rate of 5.25%; and,
4) Obtain final approval of the Board Chair and Administration Committee Chair prior to
completing subject debt issuances.
SUMMARY
The Administration Committee and the Board of Directors have previously authorized the
execution and delivery of$200 million of new Certificates of Participation and approved
the financing team 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 2008-09 and FY 2009-10. None of the proceeds will be
used for operations and maintenance needs. This financing is included in the 2008-09
approved budget.
The financing is structured as new fixed rate Certificates of Participation that is to be
sold in one or more competitive sales. The draft documents will be presented to the
Board and the OCSD Financing Corporation on November 19, 2008, for final approval.
Staff and consultants 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.
Page 1
PRIOR COMMITTEE/BOARD ACTIONS
October 22, 2008: Approved Resolution declaring District's intent to reimburse
ourselves for capital outlays from a future long-term financing.
October 8, 2008: Directed staff to initiate procedures to issue up to $200 million in
new fixed-rate Certificates of Participation (COP) debt.
September 12, 2007: Approved a Consulting Services Agreement with Fulbright&
Jaworski, L.L.P to provide bond counsel services.
ADDITIONAL INFORMATION
Strategy
The impact of the global financial crisis has also negatively affected the municipal bond market.
Immediately following the bankruptcy of Lehman Brothers and the Federal bailout of AIG in mid-
September, investor demand for tax-exempt bonds became nearly non-existent, causing tax-
exempt interest rates to dramatically increase and primary market bond safes volume to
precipitously shrink due to lack of investor demand (and heavy selling by large investors).
However, in recent weeks, investors have returned to the municipal bond market, accompanied
by lower yields and increasing sales volume. The following charts illustrate the recent volatility
of the tax-exempt interest rates and the changes in issuance volume.
Bond Buyer Revenue 25 Index (RBI)
7.0 60%
6.5 —RBI Index 50% m
Volatility
x 6.0 40% mod
rn
5.5 30% D v
m 5.0 20% >
4.5 10% j
4.0 0%
0 0 0 0 0 0 0 0 0 0 0 0
Municipal Bond Primary Issuance Volume by Week
10 (se
5.5
6 54e 6.5
6 Average = 5.7
$7.56 4.5
2
4
5.22.d6
1.9 1.5 1.0
0
912 919 9116 9123 9130 101`7 10114 10121 10128
These extremely volatile market conditions make it difficult for issuers, like the District, to
forecast when may be a good time to enter the market and opportunities may arise suddenly.
Page 2
Therefore, it is prudent to provide for maximum flexibility with which to allow for the District's
sale of COP debt. Although, today's borrowing costs may not be the most attractive by recent
historic standards, by adopting the Resolutions this month, the District would have the ability,
but not the obligation, to price its COP debt as soon as early December 2008. With this
flexibility, the District could, if market conditions become more favorable, price the COP debt
with less than a week's notice to the marketplace. Otherwise, an approval by the Board in
December, or later, would delay the earliest pricing date to January 2009 or beyond. Thus, by
adopting the Resolutions in November,the District is afforded a larger window of opportunity
over which it could price its COPS, and potentially mitigating pressure to sell under unfavorable
market conditions.
To ensure that the District would be issuing debt when the market conditions are relatively
favorable, staff is proposing that an upper limit of 5.75% be set on the true interest cost on the
COPS to be issued. Although it is higher than tax-exempt interest rates prior to the current
global financial crisis, the proposed limit compares favorably to current long-term proxy indices,
such as the Bond Buyer Revenue 25 Index at 6.12% and the higher-rated benchmark Municipal
Market Data's AAA GO 20-year index at 5.72%. In addition, bid parameters for the sale will
include provisions to allow the District to retain the ability to economically refund the COPS in
the event tax-exempt interest rates were to decline in the future, limiting the District's exposure
to higher interest cost.
Impact on Financing Ratios
The most recent Strategic Plan capital improvement program requires approximately $1.074
billion over the next five years, of which approximately$550 million is to be financed through
long-term borrowings over the next five years In accordance with the District's long-term debt
fiscal policy and cash flow projections. The issuance of$200 million of COP debt this fiscal year
is anticipated for a portion of capital improvements to be constructed over the next year.
As shown in the report prepared by the District's financial advisor and included as an
attachment in the October 8, 2008 Agenda Report, the issuance of$200 million in COP debt will
preserve strong financial ratios for the District, including debt service coverage, debt-to-equity
ratio, and liquidity ratios.
Variable Rate Debt Exposure
Another result of the current global financial crisis has been the impact on the financial strength
and ratings on various financial institutions which provide bank liquidity facilities used for the
issuance of variable rate bonds issued by municipal entities. As a result, these related variable
rate bonds have experienced higher than expected interest rate resets, as investors are
unwilling to hold bonds secured by these weakening financial institutions. The universe of
financial institutions that are not perceived by investors of having financial difficulties is shrinking
and these remaining banks have limited ability to service the entire$500 billion tax-exempt
variable rate market. The issuance of fixed rate debt will provide the District with a balanced
overall debt portfolio consisting of a mix of fixed rate and variable rate debt, while limiting
additional exposure in this uncertain market.
The District's current variable rate debt exposure includes its outstanding 2006 COPS secured
by a liquidity facility from DEPFA Bank plc which is one of the financial institutions experiencing
financial difficulties, thus leading to higher than expected rate resets for the District. Staff and
the District's consultants have been monitoring this situation and have developed both a short-
and a long-tens strategy to manage this exposure. In particular, staff is exploring the optimal
method to have the District purchase the 2006 COPS on a temporary basis. (Note that, in
response to the recent market dislocations, the Internal Revenue Service (IRS) now allows
Page 3
municipal issuers to purchase their own debt obligations without cancellation and without impact `
on the tax-exempt status of such purchased bonds through December 2009.) The optimal
method may possibly involve actions by the Orange County Sanitation District Financing
Corporation, require amendments to existing bond documents and/or the investment policy of
the District. The District's General Counsel is currently reviewing what necessary steps must be
taken to allow for these purchases. Prior to the expiry of the December 2009 temporary period
allowed by the Internal Revenue Code, it is anticipated that market conditions will normalize
making either liquidity facilities or fixed rate bonds less costly. At that time, the 2006 COPs will
either be secured by a new liquidity facility or refunded with fixed rate bonds, depending on
market conditions.
Interest and Issuance Costs
The$200 million that is borrowed will be repaid with interest over the next 30 years. The total
interest cost is expected to be less than 5.75% (or less than approximately $225 million). Some
of the interest cost will be offset by interest earnings while the funds are waiting to be used, and
earnings from a debt service reserve fund.
The financing of the $200 million of fixed rate COP debt may be completed with more than one
issuance. Based on an arbitrage analysis conducted by PRAG in the Capital Improvement
Program Financing Plan, dated October 1, 2008, a multi-sale issuance structure would (1)
reduce negative arbitrage and (2) mitigate potential size penalties in the current uncertain
market resulting in a net savings to the District of approximately$1.5 million.
The Consultant Services Agreements with PRAG and Fulbright total a not-to-exceed amount of
$185,000 for each series issued under the authorized Resolution, excluding expenses. 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 each series issued under the
authorized Resolution.
Legal Authorization and Approvals
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 20D0, 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 $200,000,000 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 ONE OR MORE INSTALLMENT PURCHASE AGREEMENTS, ONE OR MORE
TRUST AGREEMENTS,AND ONE OR MORE CONTINUING DISCLOSURE AGREEMENTS
IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY
SANITATION DISTRICT CERTIFICATES OF PARTICIPATION, SERIES 2008C, AND IF
NECESSARY, SERIES 2009A,AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH
CERTIFICATES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO
EXCEED$200,000.000,APPROVING ONE OR MORE NOTICES OF INTENTION TO SELL,
AUTHORIZING THE DISTRIBUTION OF ONE OR MORE OFFICIAL NOTICES INVITING BIDS
AND ONE OR MORE OFFICIAL STATEMENTS IN CONNECTION WITH THE OFFERING
AND SALE OF SUCH CERTIFICATES, AND AUTHORIZING THE EXECUTION OF
NECESSARY DOCUMENTS AND RELATED ACTIONS."
Page 4
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 ONE OR MORE INSTALLMENT PURCHASE
AGREEMENTS AND ONE OR MORE TRUST AGREEMENTS IN CONNECTION WITH THE
EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION, SERIES 2008C, AND IF NECESSARY, SERIES 2009A,
AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH CERTIFICATES EVIDENCING
PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT-TO-EXCEED$200,000,000 AND;
AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES AND
RELATED ACTIONS."
Following is a chart listing the steps to be completed for the initial (if more than one) issuance of
the new money COP debt issuance assuming the earliest possible pricing date:
➢ Finalize debt service and cash flow modeling
November ➢ Board approval of legal and disclosure documents
➢ Rating Agency Presentations
➢ Marketing and Sale of the COPs through a Competitive Sale
Process(depending on market conditions,eadiest possible
December pdcing date)
➢ Execute up to$200 million Fixed-Rate COP laws
➢ Investment of Bond Proceeds
➢ Debt Administration
ATTACHMENTS
1. District Resolution
2. Corporation Resolution
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
Page 5
RESOLUTION NO.OCSD 08-20
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION
AND DELIVERY BY THE DISTRICT OF ONE OR MORE
INSTALLMENT PURCHASE AGREEMENTS, ONE OR MORE TRUST
AGREEMENTS, AND ONE OR MORE CONTINUING DISCLOSURE
AGREEMENTS IN CONNECTION WITH THE EXECUTION AND
DELIVERY OF ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION, SERIES 2008C, AND IF
NECESSARY, SERIES 2009A, AUTHORIZING THE EXECUTION AND
DELIVERY OF SUCH CERTIFICATES EVIDENCING PRINCIPAL IN
AN AGGREGATE AMOUNT OF NOT TO EXCEED $200,000,000,
APPROVING ONE OR MORE NOTICES OF INTENTION TO SELL,
AUTHORIZING THE DISTRIBUTION OF ONE OR MORE OFFICIAL
NOTICE INVITING BEDS AND ONE OR MORE OFFICIAL
STATEMENTS 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, 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 one or more Installment Purchase
Agreements (collectively, 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 each 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 (each 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 collectively as the"Trust Agreement");
WHEREAS, in consideration of such assignment and the execution and delivery 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 each series of the
Certificates in one or more discrete sale transactions;
80341666.4
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");
WHEREAS, a forth 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 forth 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-I2"), 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
one or more Continuing Disclosure Agreements (each 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;
80341666.4 2
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 officers 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 one or
more Installment Purchase Agreements 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 such 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$200,000,000, shall not result in a true interest cost for the Installment
Payments in excess of 5.75% and shall not result in a final Installment Payment later than
February 1,2039.
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 one or more Trust Agreements 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 the Certificates evidencing principal in an
aggregate amount of not to exceed $200,000,000, payable in the years and in the amounts, and
evidencing principal of and interest on the applicable Installment Payments as specified in the
applicable Trust Agreement as finally executed, are hereby authorized and approved. The
Certificates may be executed and delivered in one or more series, and sold in one or more
discrete sale transactions, all as determined by an Authorized Officer.
Section 5. 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 applicable Notice of Intention to Sell in connection with the offering
and sale of a series 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 one or
more Notices of Intention to Sell to be published 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 District)at least five days prior to the date set for the
opening of bids under the applicable Notice Inviting Bids, with such changes, insertions and
80341666,4 3
omissions therein as an Authorized Officer may require or approve, such requirement or
approval to be conclusively evidenced by the publishing of such 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 one or more Notices 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 a series of the Certificates shall be as specified in applicable Notice Inviting
Bids. Bids for the purchase of a series of the Certificates shall be received at the time and place
set forth in the applicable 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 a
series of the Certificates with the lowest true interest cost, or to reject all bids therefor, in
accordance with the terms of the applicable 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 one or more Preliminary Official Statements in connection with the
offering and sale of a series of the Certificates is hereby authorized and approved. The
Authorized Officers are each hereby authorized to certify on behalf of the District that a
Preliminary Official Statement with respect to a series of the Certificates 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 fumish, or cause to be furnished, to prospective bidders for a series of the
Certificates a reasonable number of copies of the applicable Preliminary Official Statement.
Section 8. The preparation and delivery of one or more final Official Statements (the
"Official Statement'), and their use in connection with the offering and sale of a series of the
Certificates, be and the same is hereby authorized and approved. An Official Statement shall be
in substantially the form of the applicable 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 a 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 one or more Continuing Disclosure
Agreements in the forth 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 such Continuing Disclosure
Agreement by such Authorized Officer.
80341666.4 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 19,2008.
Chair
ATTEST:
Clerk of the Board
APPROVED:
General Counsel
Orange County Sanitation District
80341666.4 5
STATE OF CALIFORNIA )
ss
COUNTY OF ORANGE )
1, Penny M. Kyle, Clerk of the Board of Directors of the Orange County Sanitation
District, do hereby certify that the foregoing Resolution No. OCSD 08- was passed and
adopted at a regular meeting of said Board on the 191h day of November 2008, 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 19" day of November 2008.
Clerk of the Board of Directors
Orange County Sanitation District
803 1666.4
RESOLUTION NO. FC-08
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT FINANCING CORPORATION
AUTHORIZING THE EXECUTION AND DELIVERY BY THE
CORPORATION OF ONE OR MORE INSTALLMENT PURCHASE
AGREEMENTS AND ONE OR MORE TRUST AGREEMENTS IN
CONNECTION WITH THE EXECUTION AND DELIVERY OF
ORANGE COUNTY SANITATION DISTRICT CERTIFICATES OF
PARTICIPATION, SERIES 2008C,AND IF NECESSARY, SERIES 2009A,
AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH
CERTIFICATES EVIDENCING PRINCIPAL IN AN AGGREGATE
AMOUNT OF NOT TO EXCEED $200,000,000 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,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 one or more Installment Purchase
Agreement (collectively, 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 each applicable Installment Purchase Agreement to Union Bank of
California, N.A., as trustee (the "Trustee"), pursuant to one or more Trust Agreements each
among the Trustee, the Corporation and the District (each 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 collectively as the"Trust Agreement');
WHEREAS, in consideration of such assignment and the execution and delivery 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 applicable 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;
803416104
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 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
one or more Installment Purchase Agreements in the forth 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 such
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$200,000,000, shall not result in a true interest cost for the Installment
Payments in excess of 5.75% and shall not result in a final Installment Payment later than
February 1,2039.
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 one or more Trust Agreements 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 such Trust Agreement by such Authorized Officer.
Section 4. The execution and delivery of Certificates evidencing principal in an
aggregate amount of not to exceed $200,000,000, payable in the years and in the amounts, and
evidencing direct, undivided fractional interests in the applicable Installment Payments, and the
interest thereon, as specified in the applicable Trust Agreement as finally executed, are hereby
authorized and approved.
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
80341610.4 2
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 19,2008.
President
Orange County Sanitation District
Financing Corporation
ATTEST:
Clerk of the Board of Directors,
Orange County Sanitation District
Financing Corporation
APPROVED:
General Counsel,
Orange County Sanitation District
Financing Corporation
80341610.4 3
STATE OF CALIFORNIA )
as
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 foregoini Resolution No. FC-08, was
passed and adopted at a regular meeting of said Board on the 19 day of November 2008, 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 190 day of November 2008.
Clerk of the Board of Directors
Orange County Sanitation District
Financing Corporation
80341610.4
Fulbrigbt&Jaworski L.L.P.—Draft 10/31/08
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, 2008
Relating to
$_,000,000
Orange County Sanitation District
Certificates of Participation
Series2008C
sosaoess.3
' TABLE OF CONTENTS
Pop
ARTICLE 1
DEFINITIONS;EQUAL SECURITY
Section1.01. Definitions........................................................................................................2
Section 1.02. Definitions in Installment Purchase Agreement..............................................9
Section1.03. Equal Security................................................................................................ 10
ARTICLE 11
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
Section2.04. Form of Certificates....................................................................................... 12
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 Tmstee...................................................... 12
Section 2.06. Transfer and Payment of Certificates;Exchange of Certificates................... 12
Section 2.07. Certificate Registration Books....................................................................... 12
Section2.08. Temporary Certificates.................................................................................. 13
Section 2.09. Certificates Mutilated, Lost,Destroyed or Stolen......................................... 13
Section2.10. Book-Entry System........................................................................................ 13
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........................................................._..........................
Section 4.02. Mandatory Sinking Account Prepayment...................................................... 17
Section 4.03. Selection of Certificates for Optional Prepayment........................................ 18
Section4.04. Notice of Prepayment.................................................................................... 18
Section 4.05. Partial Prepayment of Certificates................................................................. 19
Section4.06. Effect of Prepayment..................................................................................... 19
ARTICLE V
ASSIGNMENT AND PLEDGE;FUNDS AND ACCOUNTS
Section5.01. Assignment and Pledge.................................................................................. 19
80340485.3 1
}
TABLE OF CONTENTS
(continued)
Page
Section 5.02. Installment Payment Fund.............................................................................20
Section 5.03. Reserve Fund.................................................................................................21
Section5.04. Rebate Fund...................................................................................................22
Section5.05. Investment of Moneys....................................................................................23
Section 5.06. Brokerage Confirmations...............................................................................24
ARTICLE VI
COVENANTS
Section 6.01. Compliance with Trust Agreement....................................._.........................24
Section 6.02. Compliance with Installment Purchase Agreement.......................................24
Section 6.03. Compliance with Master Agreement.............................................................24
Section 6.04. Observance of Laws and Regulations............................................................24
Section6.05. Other Liens.....................................................................................................24
Section 6.06. Prosecution and Defense of Suits..................................................................25
Section6.07. Accounting Records and Statements.............................................................25
Section6.08. Tax Covenants...............................................................................................25
Section 6.09. Continuing Disclosure ...................................................................................28
Section6.10. Further Assurances.............................................................._.........................29
ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY
Section 7.01. Action upon Event of Default........................................................................29
Section 7.02. Other Remedies of the Trustee......................................................................29
Section7.03. Non-Waiver....................................................................................................30
Section7.04. Remedies Not Exclusive................................................................................30
Section 7.05. Application of Amounts After Default..........................................................30
Section 7.06. Trustee May Enforce Claims Without Possession of Certificates.................31
Section7.07. Limitation on Suits.........................................................................................31
Section 7.08. No Liability by the Corporation to the Owner...............................................31
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 Vlll
THE TRUSTEE
Section 8.01. Employment of the Trustee;Duties...............................................................32
Section 8.02. Removal and Resignation of the Trustee.......................................................32
Section 8.03. Compensation and Indemnification of the Trustee........................................33
Section8.04. Protection of the Trustee...................................................._..........................34
90340495.3 ii
TABLE OF CONTENTS
(continued)
Page
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT
Section 9.01. Amendment or Supplement...........................................................................36
Section 9.02. Disqualified Certificates................................................................................36
Section 9.03. Endorsement or Replacement of Certificates After Amendment or
Supplement....................................................................................................37
Section 9.04. Amendment by Mutual Consent....................................................................37
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Certificates and Trust Agreement.............................................37
Section10.02. Unclaimed Moneys........................................................................................39
ARTICLE XI
MISCELLANEOUS
Section 11.01. Benefits of Trust Agreement..........................................................................39
Section 11.02. Successor Deemed Included in all References to Predecessor......................39
Section 11.03. Execution of Documents by Owners.............................................................39
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.......................................................................................40
Section 11.08. Article and Section Headings,Gender and References.................................41
Section 11.09. Partial Invalidity.............................................................................................41
Section11.10. California Law...............................................................................................41
Section11.11. Notices...........................................................................................................41
Section 11.12. Effective Date................................................................................................42
Section11.13. Execution in Counterparts..............................................................................42
EXHIBIT A—FORM OF CERTIFICATE
80340495.3 iii
TRUST AGREEMENT
THIS TRUST AGREEMENT(this "Trust Agreement'), dated as of December I, 2008,
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, 2008 (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
Trust Agreement, the Trustee has agreed to execute and deliver Orange County Sanitation
District Certificates of Participation, Series 2008C (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:
80340485.3
i
ARTICLE I
DEFINITIONS; EQUAL SECURITY
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 the Certificates and of any certificate,
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
80340485.3 2
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
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, 2009.
"Certificates" means the Orange County Sanitation District Certificates of Participation,
Series 2008C,executed and delivered by the Trustee pursuant hereto.
"Closing Date"means December_, 2008.
"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 Digital Assurance Certification LLC,
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,
80340485.3 3
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.
"Depository" means the securities depository acting as Depository pursuant to
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 "P-1" 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"Asa" 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.
$0340485.3 4
"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 be amended in accordance with the provisions thereof
"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 I of each year, commencing
February 1, 2009.
"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.
"Outstanding,"when used as of any particular time with reference to Certificates, means
(subject to the provisions of Section 9.02 hereof) 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
sas0485.3 5
(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.
"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 "VMIGI"or better and by S&P
"A-I+" 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
"AO" 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,
80340485.3 6
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
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-teen 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-1+"
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
So34M5.3 7
"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.
"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 then 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
80340485.3 8
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.
"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.
"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, 2008, 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.
8osaa85.3 9
Section 1.03. Equal Security. In consideration of the acceptance of the Certificates by
the Owners, this Trust 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.
ARTICLE 11
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$_,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 2008C" 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, 2009,
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:
803a0495.3 10
Principal Payment Date Principal Interest
(February 1) Component Rate
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.
90340485.3 I 1
(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
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 360-0ay 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 Date 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.
Section 2.07. Certificate Registration 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
80340485.3 12
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 Office 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.
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
80340485.3 13
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) Reserved.
(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
80340485.3 14
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.
(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.
roxsass.s 15
(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$ ,
(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 whom
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 Fond. All moneys in the
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;
9034oa853 16
(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 Fund 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 August 1,2018,
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.
Section 4.02. 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:
80340485.3 17
Term Certificates Maturing February 1,20
Mandatory
Sinking Account Mandatory
Payment Dates Sinking Account
(February 1) Payments
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 as directed in a Written Request of the District, or at the discretion of the
District 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 Preju vment. 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, (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 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
80340485.3 18
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 20 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 unprepaid 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
80340485.3 19
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.
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 Fond 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
80340485.3 20
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
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
e030485 3 21
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
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 rata basis (calculated by reference to the policy
limits available thereunder).
(e) Upon any transfer from the Reserve Fond 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.
(t) 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 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.
(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
80340985.3 22
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.
(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 Fond; 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.
803400653 23
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.
Section 5.06. Brokerage Confirmations. The District acknowledges that to the extent
regulations of the Comptroller of the Currency or other applicable regulatory entity grant the
District the right to receive brokerage confirmations of securities transactions under this Trust
Agreement,the District specifically waives receipt of such confirmations to the extent permitted
by law. The Trustee is required hereunder to furnish the District with periodic cash transaction
statements which include detail for all securities transactions made by the Trustee on behalf of
the District hereunder.
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 terms 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
terms.
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.
90340485.3 24
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 made
by the Trustee 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 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 Imesiment"means any investment property,as defined in section 148(b)of
the Code, in which Gross Proceeds of the issue 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 but not replacement 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.
80340485.3 25
"T= 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 in respect of the Certificates has the meaning set forth in section 1.1484 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
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
mlings 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
80340485.3 26
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 any Certificate to
become an "arbitrage bond' within the meaning of section 148 of the Code and the Tax
Regulations and rulings thereunder, the District will not, at any time prior to the final
cancellation of the last Certificate to be retired,directly or indirectly invest Gross Proceeds of the
Certificates in any Investment, if as a result of that investment the yield of any Investment
acquired with Gross Proceeds of the Certificates, whether then held or previously disposed of,
would materially exceed the yield of the Certificates within the meaning of said section 148.
(f) Not Federally Guaranteed. Except to the extent such action or failure to act
would not pursuant to section 149(b) of the Code and the Tax Regulations and rulings
thereunder, adversely affect the exclusion pursuant to section 103(a) of interest on the
Certificates from the gross income of the owners thereof for federal income tax purposes, the
District will not 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 will timely file any information necessary to the
exclusion pursuant to section 103(a) of the Code of interest on the Certificates required by
section 149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other
form and in such place as the Secretary of the Treasury 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 fequently 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
smaNss..r 27
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(e)(2) 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 (90%) 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.
(i) 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
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.
(j) 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 Nonputpose 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.
80340485.3 28
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.
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;
80340485.3 29
(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.
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
or taken.
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. Aonlication 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
8034N85.3 30
(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.
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(a)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
80340a85 3 31
s
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 or 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
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 VIII
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 rase 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
8034M85.3 32
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
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,
ipeo facto, shall be and become successor trustee under this Trust Agreement and vested with all
the trusts, powers, discretions, 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
80340495.3 33
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.
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
90340485.3 34
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,
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 he 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.
80340485.3 35
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
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. Disaualifled 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
90340485.3 36
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.
ARTICLE X
DEFEASANCE
Section 10.01. Discharge 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
80340S5.3 37
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.
(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 Govemment 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.
80340495.3 38
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.
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 sworn 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.
80340485.3 39
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,
(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 tern 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
80340485.3 40
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 Headines. 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 terns 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
be null and void to the extent contrary to law and shall be deemed separable from the remaining
agreements, conditions, covenants and terms 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
I0844 Ellis Avenue
Fountain Valley, California 92708
Attention: Director of Finance and Administrative Services
8034e4e5.3 41
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.
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.
80340a353 42
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.
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
By:
Treasurer
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
(SEAQ
Attest:
By:
Clerk of the Board of Directors
UNION BANK OF CALIFORNIA,N.A.,
as Trustee
By:
Authorized Officer
sowoass 3 43
EXHIBIT A
FORM OF CERTIFICATE
No. R— ***$***
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 2008C
PRINCIPAL
PAYMENT DATE INTEREST RATE DATED DATE CUSIP
December_, 2008
REGISTERED OWNER: Cede&Co.
PRINCIPAL AMOUNT: DOLLARS
THIS 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, 2008 (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, 2008
(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.
80340495.3 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 2008C (the "Certificates") evidence principal in the
aggregate amount of$_,000,000, 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
80340485.3 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 I of each
year, commencing on February 1, 2009 (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.
8034W853 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 are subject to prepayment prior to their stated Principal Payment Dates
in accordance with 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.
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
80340485.3 A-4
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.
80340485.3 A-5
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
90340485.3 A-6
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
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: Signatures)town be guaranteed by an eligible Now: The sigoalme(s)on this Assignment must correspond
guarantor. with the nanw(s)as written on the face ofthe within Cenificste
in every Particular without attention m enlargement or my
change whatsoever.
sosaoaas.n A-7
Fulbright&Jaworski L.L.P.— Draft 10/31/08
INSTALLMENT PURCHASE AGREEMENT
by and between
ORANGE COUNTY SANITATION DISTRICT
and
ORANGE COUNTY SANITATION DISTRICT
FINANCING CORPORATION
Dated as of December 1,2008
Relating to
$_,000,000
Orange County Sanitation District
Certificates of Participation
Series2008C
soxoes2.2
TABLE OF CONTENTS
Page
ARTICLE 1 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. Acquisition,Construction and Installation of the Project....................3
Section2.02. Changes to the Project.........................................................................4
Section 2.03. Payment of Purchase Price...................................................................4
ARTICLE III PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE
DISTRICT;INSTALLMENT PAYMENTS...................................................4
Section 3.01. Purchase and Sale of Project................................................................4
Section 3.02. Installment Payments...........................................................................4
Section 3.03. Reserve Fund Payments.......................................................................6
Section 3.04. Obligation Absolute.............................................................................6
Section 3.05. Nature of Agreement...........................................................................6
ARTICLE W 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........................................................9
Section 5.04. Indemnification of Corporation...........................................................8
Section5.05. Further Assurances...............................................................................8
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE
CORPORATION.............................................................................................8
Section 6.01. Events of Default.................................................................................8
Section6.02. 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...................................................................................... I I
Section 8.01. Liability of District Limited............................................................... I I
Section 8.02. Limitation of Rights........................................................................... l l
Section8.03. Assignment........................................................................................ 11
Section8.04. Notices............................................................................................... 11
Section 8.05. Successor Is Deemed Included in all References to Predecessor...... 12
Section 8.06. Waiver of Personal Liability.............................................................. 12
e034as2.3 _i_
r
TABLE OF CONTENTS ,
(continued)
Page
Section 8.07. Article and Section Headings,Gender and References..................... 12
Section 8.08. Partial Invalidity................................................................................. 13
Section 8.09. Governing Law.................................................................................. 13
Section 8.10. Execution in Counterparts.................................................................. 13
EXHIBIT A DESCRIPTION OF PROJECT........................................................A-1
BM04923 -11-
INSTALLMENT PURCHASE AGREEMENT
THIS INSTALLMENT PURCHASE AGREEMENT (this "Installment Purchase
Agreement"), dated as of December 1, 2008, 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, 2008 (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 the Orange County Sanitation District
Certificates of Participation, Series 2008C (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 good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged,the parties hereto do hereby agree as follows:
80340482.3
ARTICLE 1
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
Trost AgreemenL
"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 2008C, executed and delivered under and pursuant to the Trost Agreement.
"Closing Date"means December_,2008.
"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 Def mie,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 1,2010.
"Installment Purchase Agreement" means this Installment Purchase Agreement, dated
as of December 1, 2008, 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 1 and August I of each year, commencing
February 1, 2009.
"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.
80340482.3 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, 2008, 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 terms 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 II
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.
9OMN82.3 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 be 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 $_,000,000, which
amount shall be paid from the proceeds of the Certificates.
ARTICLE III
PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT;
INSTALLMENT PAYMENTS
Section 3.01. Purchase and Sale of Project. The District hereby purchases from the
Corporation, and the Corporation hereby sells to the District, the Project in accordance with the
provisions of this Installment Purchase Agreement. All right, title and interest in and to the
Project shall immediately vest in the District on the Closing Date without further action on the
part of the District or the Corporation.
Section 3.02. Installment Payments. The District shall, subject to any rights of
prepayment provided in Article N hereof, pay to the Corporation, solely from Net Revenues and
from no other sources, the purchase price of the Project in Installment Payments, with interest
thereon, as provided herein. The Installment Payments shall be in the aggregate principal
amount of$_,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:
SONNS2.3 4
Installment
Payment Date
(February I) Installment Payment Interest Rate
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.
8034N82.3 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 August 1,
2018, 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
803e0492.3 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 30 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 terms, 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. Compliance 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. Compliance 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 terms 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,
80340482.3 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 unto 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
8034w83.3 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 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, 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.
9034W82.3 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 Vll
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 perforated 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
9034N82 3 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 Vill
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 Stale, 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:
80340482.3 11
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 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.
80340492.3 12
Section 8.08. Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof required hereby to he 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. Governine Law. This Installment Purchase Agreement shall be construed
and governed and construed in accordance with the laws of the State.
Section 8.10. Execution in Counterparts. 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.
9034M2.3 13
IN WITNESS WHEREOF, the parties hereto have executed this Installment Purchase
Agreement by their officers[hereunto 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:
Clerk of the Board of Directors
ORANGE COUNTY SANITATION
DISTRICT FINANCING CORPORATION
By:
Treasurer
80340482.3 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 following Project components:
80340482.3 A_1
Fulbright&Jaworski L.L.P.— Draft 10/31/08
CONTINUING DISCLOSURE AGREEMENT
by and between
ORANGE COUNTY SANITATION DISTRICT
and
DIGITAL ASSURANCE CERTIFICATION LLC,
as Dissemination Agent
Dated as of December 1, 2008
Relating to
$_,000,000
Orange County Sanitation District
Certificates of Participation
Series 2008C
80340497 3
CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"),
dated as of December 1, 2008, is by and between the ORANGE COUNTY SANITATION
DISTRICT, a county sanitation district organized and existing under the laws of the State of
California (the "District"), and DIGITAL ASSURANCE CERTIFICATION LLC, as
Dissemination Agent(the"Dissemination Agent").
WITNESSETH:
WHEREAS, the District has caused to be executed and delivered Orange County
Sanitation District Certificates of Participation, Series 2008C (the "Certificates"), evidencing
principal in the aggregate amount of$_,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 and Administrative
Services of the District, or such other officer or employee of the District as the District shall
designate in writing to the Dissemination Agent and 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.
80340497.3 1
"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/municipal/nrmsir.htm.
"Official Statement" means the Official Statement, dated December _, 2008, 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 provide, annually,
an electronic copy of the Annual Report to the Dissemination Agent, together with a copy for the
Trustee, not later than 15 days prior to the Annual Report Date. Promptly upon receipt of an
electronic copy of the Annual Report, the Dissemination Agent shall provide an Annual Report
to each National Repository and the State Depository(if any)not later than March 1 after the end
of each fiscal year of the District, commencing with the fiscal year ending June 30, 2009. The
Annual Report may be submitted as a single document or as separate documents comprising a
package, and may cross reference other information as provided in Section 3 of this Disclosure
Agreement. 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) If on the fifteenth (15th) day prior to the Annual Report Date, the Dissemination
Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the
Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the
District of its undertaking to provide the Annual Report pursuant to Section 2(a).
(c) If the Dissemination Agent has not received an Annual Report by 12:00 noon on
the first business day following the Annual Report Date for the Annual Report, the District
irrevocably directs the Dissemination Agent to immediately send a notice to each National
Repository or the MSRB and the State Depository (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
80340497 3 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 Reoorts. 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
1 next preceding the Annual Report Date and the principal amount of other Senior
Obligations outstanding as of the January I 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 Table No. 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.
80340497.3 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.
(I1) 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 Dissemination Agent in
writing whether or not to report the event pursuant to subsection(0 of this Section.
(c) Whenever the District obtains knowledge of the occurrence of a Listed Event,
whether because of a notice from the Dissemination Agent 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
Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent 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,
80340497,3 4
the District shall so notify the Dissemination Agent in writing and instruct the Dissemination
Agent 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 DisclosurcUSA.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.
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
80340497.3 5
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 and 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
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
90340997.3 6
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
ent. 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.
803404973
IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement
as of the date first above written.
ORANGE COUNTY SANITATION DISTRICT
By:
Lorenzo Tyner
Director of Finance and Administrative Services
DIGITAL ASSURANCE CERTIFICATION LLC,
as Dissemination Agent
By:
Authorized Representative
Acknowledged and Accepted:
UNION BANK OF CALIFORNIA, N.A.,
as Trustee
By:
Authorized Officer
80340497.3 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 2008C
Date of Issuance: ,2008
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, 2008, 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
80340897.3
Fulbright&Jaworski L.L.P.—Draft 11/5/08
g PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER_,2008
NEW ISSUE—BOOK-ENTRY-ONLY RATINGS:
Zs S&P: "
Oo N "
i (See-RATINGS-hereto)
In the opinion of Fulbright& Jaworskt LLP., Los Angeles, Cdtfornia, Special Counsel, under existing
v low the Interest Component of each Installment Payment, and the allocable portion thereof distributable in respect
f any pt f�p� ! ! ! 8 compliance y c o Cerd c�te, w exam and income!axes a the Store o Cdt ornia old, assuming tom mote rvith
the tar coverrmns described herein, the Interest Component of each Installment Payment, and the allocable portion
thereof distributable in respect of arty Certificate, is excluded pursuant to section 103(a) of the Internal Revenue
0 9 Code of 1986(the "Code")from the grows income ofthe mvners lhereaffwfederd income tax purposes and is not
an item of tarprtterence under section 57(a)of the Code for purposes of thefediaral dternmtve minimum lax. See
go "TAXMATTERS"herein.
S1
F s ]District Logo] $_,000,000' ]DAC Login
.;� ORANGE COUNTY SANITATION DISTRICT
0 5 CERTIFICATES OF PARTICIPATION,SERIES 2008C
S: o
Dated: Date of Delivery Due: February 1,as shown below
The $ ,000,000. Orange County Sanitation District Certificates of Participation, Series 2008C (the
"Certificates")evidence direct,factional undivided interests of the Owners thereof in the installment payments(the
5 "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, 2008 (the "Installment
5 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,
8 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
e 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
p^ 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
2 Maintenance and Operation Costs,as further described in"SECURITY AND SOURCES OF PAYMENT FOR THE
.E.9 CERTIFICATES"herein. The Installment Purchase Agreement provides that the obligation of the District to pay
the Installment Payments, and payments of interest thereon, and certain other payments required to be made in
g z accordance with the Installment Purchase Agreement.solely from Net Revenues,is absolute and unconditional. See
? "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES"herein.
€'o The proceeds of the Certificates will be used to(i)finance certain improvements to the Wastewater System,
6 00 fund a reserve fund for the Certificates and (iii)pay the costs incurred in connection with the execution and
c delivery of the Certificates. See"PLAN OF FINANCE"herein.
ca
Interest evidenced by the Certificates will be payable semiannually on February I and August 1 of each
, o year, commencing on February 1, 2009. See "THE CERTIFICATES" herein The Certificates initially will be
delivered only in book-entry form and will be registered in the time of Cede&Co.,as nominee of The Depository
�.o Treat 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
N receive physical certificates representing their ownership interests in the Certificates purchased. The Certificates
zi
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 Union Bank of California, N.A., as trustee (the
o 2 "Trustee"). Upon receipt of payments of such principal and interest, OTC will in turn distribute such payments to
C the beneficial owners of the Certificates. See APPENDIX E—"BOOK-ENTRY SYSTEM"herein.
it
Ea
$ Preliminary,subject to change.
8033%11.6
THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENTS, AND THE
INTEREST THEREON, AND OTHER PAYMENTS REQUIRED TO BE MADE BY IT TINDER 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 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.
Investors must read the entire Official Statement to obtain information essential to making an informed
investment decision.
BIDS FOR THE PURCHASE OF THE CERTIFICATES WILL BE RECEIVED BY THE DISTRICT UNTIL
10:30 A.M.NEW YORK TIME ON DECEMBER 3,2008 UNLESS POSTPONED OR CANCELLED AS
SET FORTH IN THE OFFICIAL NOTICE INVITING BIDS.
The Cenjficales are offered when, as and if executed and delivered and received by
as the Initial Purchaser, subject to the approval of Pnlbrighi& Jmvorski L.L.P., Los Angela, Californta,
Special Counsel to the District, and certain other conditions. Certain legal matters will be passed upon for the
District and the Corporation by Woodruff Sprodlin & Smarr, a Professional Corporation, Costa Mesa,
California. Public Ravurces Advisory Group,Los Angeles, California, has served as financial adviser to the
District in connection with the exemnon and delivery of the Certifncaret. It is anticipated that the Cerilfncmer
In de.,yinitiveform will be available for deliver),through the book-enrryfacilitter of DTC on or about December
2008.
Dated: December_,2008
9033MI 1.6
MATURITY SCHEDULE
Maturity Principal Interest Price or CUSIP
(February 1) Amount Rate Yield 684( 28Pt)
t CUSIP numbers herein are provided by Standard & Poor's CUSIP Service Bureau and are for convenience of
reference only. The District does not assume any responsibility for the accuracy of such numbers. CUSIPe is a
registered trademark of the American Bankers Association Copyright® 1999-2008 Standard&Poor's.a Division
of The McGraw-Hill Companies,Inc. All rights reserved.
90336611.6
ill
eau�ue
ORANGE COUNTY SANITATION DISTRICT
Board of Directors
Doug Davert(Chair)— Tustin
Larry Crandall—(Vice Chair)—Fountain Valley
Harry Sidhu—Anaheim Jon Dumitru—Orange
Roy Moore—Brea Constance Underhill—Placentia
Patsy Marshall—Buena Park Sal Tinajero—Santa Ana
Phil Luebbeo—Cypress Charles Antos—Seal Beach
Don Bankhead—Fullerton David Shawver—Stanton
Bill Dalton—Garden Grove Brad Reese— Villa Park
Don Hansen—Huntington Beach Jim Winder— Yorba Linda
Christina Shea—Irvine James Ferryman—Costa Mesa Sanitary District
Rose Espinoza—La Habra Darryl Miller—Irvine Roach Water District
Mark Waldman—La Palma Joy L. Neugebouer—Midway City Sanitary
District
Ken Parker—Los Alamitos Chris Norby—Member of tire Orange County
Don Webb—Newport Beach Board of Supervisors
Executive Management of the District
James D. Ruth,General Manager
Robert P.Ghirelli,Ph.D.,Assistant General Manager
Lorenzo Tyner,Director oJFinance and Administrative Services
James Herberg,Director of Eagineering
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 Mesa,California
Financial Advisor
Public Resources Advisory Group
Los Angeles, California
Trustee
Union Bank of California,N.A.
Los Angeles,Califomia
80336611,6
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 so 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 any 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 any 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 any 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 any time. The Initial Purchaser in connection with any 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 inside 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 any fmure results, performance or achievements expressed or implied by
such forward-looking statements.
80336611.6
TABLE OF CONTENTS
Pare
INTRODUCTION......................................................................................................................... 1
General............................................................................................................................... l
TheDistrict........................................................................................................................2
Security and Sources of Payment for the Certificates.......................................................2
Continuing Disclosure.......................................................................................................3
Miscellaneous....................................................................................................................3
PLAN OF FINANCE.................................._..................................................................._............4
ESTIMATED SOURCES AND USES OF FUNDS......................................................._............4
THECERTIFICATES..................................................................._................................_............4
General..............................................................................._................................_............4
PrepaymentProvisions.......................................................................................................5
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES...............................7
InstallmentPayments.........................................................................................................7
NetRevenues....................................................................._..............................................8
Rate Stabilization Account................................................................................................9
Allocation of Revenues......................................................................................................9
RateCovenant.......................:.......................................................................................... 10
ReserveFund................................................................................................................... I
Limitations on Issuance of Additional Obligations......................................................... 12
Insurance.......................................................................................................................... 14
Allocationof Installment Payments......................................................................_......... 15
THEDISTRICT.............................................................................._.......................................... 16
Background...................................................................................................................... 16
Organizationand Administration......................._............................................................ 17
Services.............................................................._............................................................ 18
ServiceArea..................................................................................................................... Is
Employees........................................................................................................................ 19
RetirementPlan................................................................................................................20
Other Post-Employment Benefits....................................................................................21
RiskManagement............................................................................................................22
ExistingFacilities.............................................................................................................22
Permits,Licenses and Other Regulations........................................................................23
CapitalImprovement Program.........................................................................................24
Groundwater Replenishment System...............................................................................27
Preferred Level of Treatment...........................................................................................28
Biosolids Management.....................................................................................................28
UrbanRunoff...................................................................................................................29
IntegratedEmergency Response Program.......................................................................30
90336611.6 i
TABLE OF CONTENTS
(continued)
pmm
DISTRICTREVENUES..............................................................................................................31
SewerService Charges....................................................................................................31
AdditionalRevenues........................................................................................................33
Wastewater Treatment History........................................................................................35
Customers........................................................................................................................35
AssessedValuation..........................................................................................................37
Tax Levies and Delinquencies.........................................................................................38
BudgetaryProcess..............................................._...........................................................39
Reserves...........................................................................................................................40
Summary of Operating Data............................................................................................41
ProjectedOperating Data.................................................................................................41
Management's Discussion and Analysis of Operating Data_..........................................43
Investment of District Funds............................................................................................44
FINANCIAL OBLIGATIONS........................................................_..........................................45
ExistingIndebtedness......................................................................................................45
VariableRate Obligations................................................................................................46
AnticipatedFinancings....................................................................................................46
Direct and Overlapping Bonded Debt..............................................................................46
THECORPORATION................................................................................................................48
LIMITATIONS ON TAXES AND REVENUES........................................................................49
Article XIIIA of the California Constitution...................................................................49
Legislation Implementing Article XIIIA.........................................................................49
Article XIIIB of the California Constitution....................................................................49
PropositionIA.................................................................................................................50
Proposition62..................................................................................................................51
Article XIIIC and Article XHID of the California Constitution......................................51
OtherInitiative Measures.................................................................................................53
LEGALMATTERS.....................................................................................................................53
FINANCIAL ADVISOR..............................................._............................................................ 54
ABSENCE OF LITIGATION........................................................»...........................................54
FINANCIALSTATEMENTS.....................................................................................................54
TAXMATTERS..........................................................................................................................54
CONTINUINGDISCLOSURE...................................................................................................57
RATINGS....................................................................................................................................57
PURCHASEAND REOFFERING............................................................................................. 57
MISCELLANEOUS....................................................................................................................58
SM6611.6 ii
TABLE OF CONTENTS
(continued)
Psee
APPENDIX A - COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE
ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR
ENDED JUNE 30.2008....................................................................................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
8033661L6 111
OFFICIAL STATEMENT
S_,000,000-
ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION,SERIES 2008C
INTRODUCTION
This introduction contains only a brief summary of certain of the terms of the Certificates being
offered and a brief description of the O,fFcial Statement. All statements contained in this introduction are
quaked 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 capitalised 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 and all appendices hereto, provides certain
information concerning the sale and delivery of$_,000,000+aggregate principal amount of the Orange
County Sanitation District Certificates of Participation, Series 2008C (the "Certificates") evidencing
direct, tractional 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 1,2008(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
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 further 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, 2008 (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 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.
' Preliminary,subject to change.
80336611.6
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 1 in each year as set forth on the
inside 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, 2009. See`THE CERTIFICATES"
herein. The Certificates initially will be 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 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 more than 2.5 million people in the northern and central
portion of the County of Orange (the "County"), in a service area of approximately 471 square miles,
treating 221 million gallons per day ("mgld") of wastewater in Fiscal Year 2007-08. See "THE
DISTRICT,""DISTRICT REVENUES"and"FINANCIAL OBLIGATIONS"heroin.
Security and Sources of Payment for the CerllBentes
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 currently has Outstanding Senior Obligations payable from Net Revenues on a parity
with the Installment Payments under the Installment Purchase Agreement. See "PLAN OF FINANCE,"
ESTIMATED SOURCES AND USES OF FUNDS," "FINANCIAL OBLIGATIONS — Existing
Indebtedness" and "THE DISTRICT' herein and APPENDIX C — "SUMMARY OF PRINCIPAL
LEGAL DOCUMENTS — Master Agreement" attached hereto. The District has no Subordinate
Obligations currently outstanding.
80336611.6 2
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
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
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 months after the end of the District's Fiscal
Year(which currently would be March 1). commencing with the report for the 2008-09 Fiscal Year, 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 tout
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.
90336611.6 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 collection,treatment and disposal facilities of
the District(the"Wastewater System"),(ii) fund a reserve fund for the Certificates, and (iii)pay costs of
issuance of the Certificates. In particular, the Project is expected to include the financing of
improvements to the Wastewater System including particularly, but without limitation, the District's
collection system, two wastewater treatment plants, and Ocean Outfall, and further as follows: the
acquisition,construction,installation,rehabilitation,replacement,or repair of the Westside Pump Station,
Ellis Avenue Pump Station, Bitter Point Pump Station, Bitter Point Force Main Rehabilitation, College
Ave. Pump Station,Coast Trunk Sewer, Headworks at Plant 2,Primary Treatment System Rehabilitation
at Plata 2, New Secondary Treatment System at Plant 1, Trickling Filters at Plant 2, North County
Collections Yard, Sludge Dewatering& Odor Control at Plant 1, Primary Sludge Feed System Project at
Plant 2,Central Generation Automation,and 66KV Substation at Plant 1.
From time to time projects which are undertaken are delayed, redesigned or deferred by the
District for various reasons and no assurance can be given that a project summarized above or designated
in the District's current Capital Improvement Program will be completed in accordance with its original
schedule or that any project will be completed as currently planned. See "TIE DISTRICT — Capital
Improvement Plan"herein.
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds and other amounts in connection with the delivery of the
Certificates are presented below.
Sources
Certificate Proceeds $
Net Original Issue Premium/Discoum
Total Sources $
Uses
Reserve Fund S
Initial Purchaser's Discount
Costs of Issuance..
Total Uses $
1 Costs of Issuance include,among other things,fees of rating agencies, Special Counsel fees and expenses and
the initial fees of the Trustee.
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 1 in each year as set forth on the inside cover page hereof Interest
evidenced by the Certificates will be payable semiannually on February 1 and August 1 of each year,
commencing on February 1,2009. See"THE CERTIFICATES"herein. The Certificates initially will be
delivered only in book-entry form and will be registered in the name of Cede&Co.,as nominee of The
80336611.6 4
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 their 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 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. 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, 2009, 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 3604ey 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 are 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 held 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.
Prepayment Provisions
Optionaf Prepayment The Certificates are subject to optional prepayment prior to their stated
Principal Payment Dates, on any date on or after August 1, 2018, 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.
Mandatory Sinking Account Prepayment, 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 I, 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:
Preliminary:subject to change.
90336611.6 5
Tenn Certificates Maturing February 1,
Mandatory
Sinking Account Mandatory
Payment Dates Sinking Account
(February 1) Payments
Maturity.
Sefecdon ojCarr#Icares jor Prepayment Whenever less than all the Outstanding Certificates are
to be prepaid on my 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 as directed in a Written Request of the District, or at the discretion of the
District 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 Trust
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 where the prepayment will be made, including the name 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
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 Tr stce 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 20 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,
80336611.6 6
postage prepaid, at their addresses appearing on the registration books maintained by the Trustee m 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 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 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 many rights of prepayment under the Installment
Purchase Agreement, pay to the Corporation, solely from Net Revenues and from no other sources, the
Purchase Price 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 terns 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
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 certain Existing Senior Obligations Outstanding payable from Net Revenues on a
parity with the Installment Payments under the Installment Purchase Agreement. The term "Existing
Senior Obligations"as used in this Official Statement refers to the 2000 Installment Purchase Agreement,
the 2003 Installment Purchase Agreement the 2006 Installment Purchase Agreement, the
80336611.6 7
2007A Installment Purchase Agreement, the 2007B Installment Purchase Agreement, the 2008A
Installment Purchase Agreement, the 2008B 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,that 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." The District has no Subordinate Obligations currently outstanding. 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 under the Installment Purchase Agreement and Master Agreement,is
a special obligation of the District payable, in the =mer 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 our the taxing power of the District,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.
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. I 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
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.
80336611.6 8
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, w
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 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 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, see "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 same 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
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
8033MI1,6 9
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.
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.
80336611.6 10
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) 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 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 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 Fund will be funded with a portion of the net proceeds of the
Certificates in the amount of S , which amount is sufficient to satisfy the Reserve
Requirement See"ESTIMATED SOURCES AND USES OF FUNDS."
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 Fund.
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 bust 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.
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 mom 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-rata 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
9033"11.6 11
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 ISSaaaCC 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 incurrence of such
Senior Obligations,and
(B) Net Operating Revenues,as shown by the books of the District,will have
amounted to at least 1000/6 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, 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
8033b811.6 12
(if) 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-Term 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 —
Definitions"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
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.
80336611.6 13
The District may at any time incur Reimbursement Obligations with respect to Senior
Obligations.
Subordinate Ob/igadans. The District may at any time incur Subordinate Obligations upon
satisfaction of the conditions provided in the Master Agreement. See 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 deem
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.
[Remainder of page intentionally left blank.]
90336611.6 14
Allocation of Installment Payments
Table I below sets forth the estimated Installment Payments with respect to the Certificates. Also
set forth are the payments due on Outstanding Senior Obligations.
Table 1
Estimated Installment Payments of the District
Installment Payments Outstanding Senior
Fiscal Year Relating to Certificates Obligation Payments
Ending
June 30 Principal Interest Principal Interese" Total
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
Total
Assumes per annum interest rate of 3.75% for all 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 JUNE 30,
2008"herein
80336611.6 l5
THE DISTRICT
Background
The Orange County Sanitation 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 more than 2.5 million people in the
northern and central portion of the County by treating 221 mg/d of wastewater in Fiscal Year 2007-08.
The District serves approximately 81% of the County population in approximately 471 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 Act, as amended, Section 4700 at 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 governance
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 Government 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.
90336611.6 16
Organimtion 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 of
Supervisors. 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 Vim Chair of the Board of Directors sue 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. I 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 parks and recreation director, deputy city manager, assistant city manager and chief
executive officer,a post he held for 11 years.
Robert P. Ghimili, 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 for just 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 AngelesfVentura Region.
Lorenzo 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 Herberg, P.E. 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.Torres
has twenty-four years of public and private sector experience in protecting public health and the
environment.
80336611.E 1
Nick Arhonies, P.E. is the District's Director of Operations and Maintenance and has served the
District since 1988. W. 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"TIE 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 inside cover 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 more than 2.5 million residents and owns sanitary sewerage facilities with
a replacement value of approximately S6.26 billion.
[Remainder of page intentionally left blank.]
90336611.6 18
Table 2 below sets forth the estimated populations of cities and unincorporated areas served by
the District as of January I,2008.
Table 2
Estimated Populations of Cities and Unincorporated Areas
Served by the Orange County Sanitation District
As of January 1,2008
Citv Population
Anaheim 346,823
Brea 40,001
Buena Park 82,768
Costa Mesa 113,955
Cypress 49,541
Fountain Valley 57,925
Fullerton 137,437
Garden Grove 173,067
Huntington Beach 201,993
Irvine 209,806
La Habra 629635
La Palma 16,176
Los Alamitos 12,191
Newport Beach 84,554
Orange 1409849
Placentia 51,727
Santa Ana 353,184
Seal Beach 25,986
Stanton 39,276
Tustin 74,218
Villa Park 6,259
Westminster 93,027
Yorba Linda 68312
Cities Subtotal 2,441,790
Unincorporated Areas 81,000
(estimated)
Total 2,522,790
Sources: State of California Department of Finance, Demographic Research Unit for city population data: Orange
County Sanitation District for population of unincorporated areas.
Employees
As of November 1,2008,the District had full-time equivalent ("FTE") staff positions. Most
of the employees who occupy these positions are represented by recognized employee organizations,
which include the following: the Orange County Employees Association ("OCEA"), the International
Union of Operating Engineers — Local 501 ("Local 501"), the Supervisor Croup, and the Professional
Croup. As of November I,2008,the District had 604 represented and non-represented employees. Total
represented employees as of November 1, 2008 numbered_, as follows: _were represented by the
OCFA,_were represented by focal 501 and 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
803366116 19
Group agreements are in effect through June 30,2010.The OCEA has represented administrative/clerical,
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 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 30,2008,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. 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
employee'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 under the OCERS retirement plan on reaching five years
of service. Employees who retire at or after age 50 with ten or more years of service are entitled to an
annual retirement allowance. 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.
A current comparison of OCERS costs for Fiscal Years 2003-04 through 2007-08 and projected
costs for Fiscal Years 2008-09 through 2009-10 is shown in the following table.
90336611.6 20
Table 3
Orange County Sanitation District
Comparison of OCERS Costs for Fiscal Years 2003-04 through 2007-N
and Projected Costs for Fiscal Years 2008-09 through 2009-10
Fiscal Year Rate01 Cose1
2003-04 9.15% $ 3,668,650
2004-05 1237 5,524,673
2005-06 15.21 7,416,556
2006-07 19.78 9,848,854
2007-08 20.47 10,877,737
20019-On' 2134 12,392,491
2009-10131 2134 13,221,264
1' Req�on as a percent of covered payroll. includes amortization of Unfunded Acmarial Accrued
Liability.
1't Amounts represents employer contributions made by the District.
01 Projected.
Source: Orange County Sanitation District.
For Fiscal Years 2003-04 through 2007-08, 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 Actuarial Accrued Liability ("UAAL"). For the Fiscal Year ended June 30,
2008, total payroll costs of employees covered by OCERS was $53,148,097. As of the December 31,
2007 valuation, OCERS has an aggregate UAAL ratio of 72.9%, for a total UAAL of$2.71 billion. The
District expects the next OCERS valuation to occur on or about December 31,2008.
For more information regarding OCERS and the District's retirement plan as of June 30, 2008,
see Note 7 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for
Fiscal Year Ended June 30,2008 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://rvwlv.ocers.org. The information on such website is not incorporated herein by such reference or
otherwise.
Other Post-Employment Benefits
The Governmental Accounting Standards Board ("GASB") in April 2004 issued Statement
No.43, which requires state and local governmental employers to determine, on an actuarial basis, the
total liability of post-employment benefits other than pension benefits(known as other post-employment
benefits or 'WEB"), including healthcare and life insurance expenses and related liabilities, and an
annual required contribution to fund such liabilities. In June 2004, GASB issued Statement No.45,
which requires state and local governmental employers to fund the actuarially determined annual required
contribution ("ARC")for its OPEB or record the entire amount of the unfunded liability of its OPEB in
its financial statements. The District was required to implement GASB Statement No.43 for the Fiscal
Year ended June 30, 2007, and was required to implement GASB Statement No.45 for the Fiscal Year
ended June 30,2008.
The District's OPEB program currently includes medical and prescription drug benefits and a
program of cash payments, known as Additional Retiree Benefit Account ("ARBA") benefits. Benefits
vest upon retirement after qualifying public service often years. Most of the District's retirees under the
age of 65 are covered under the same medical and prescription drug plans as active employees of the
District,but an additional retiree-only fee for service plan called"Blue Card"is also available.
ae336611.6 21
According to the District's actuary, Demsey Fiiliger Associates (the "Actuary'), the unfunded
OPEB liability as of July 1,2007 is approximately$17.4 million. The ARC is$1,764,000 for Fiscal Year
2008-09. Calculation of the ARC is based on the present value of benefits accruing in the current year,a
30-year amortization of the unfunded OPEB liability and an assumed rate of return on investments in the
retiree fund of 5% per annum. The District does not believe that its OPEB liability will have a material
impact on its operational results.
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 the statutory limit. The self-insured portion for property damage covering
fire 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 self-insured for general
liability coverage up to$250,000 per occurrence,with excess general liability coverage up 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 June 30, 2008 that would materially affect the financial position of
the District.
For more information regarding the District's insurance coverage as of June 30, 2008, see Note I
to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Year
Ended June 30,2008 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 off-plant pump stations, various interplant pipelines and
connections, and the ocean outfall facilities. The District's Wastewater System includes approximately
568 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 372 mg/d, including standby capacity.
Treatment Plant No. 1 ("Plant No. I") 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 105 mg/d of secondary treated
effluent is conveyed to an Orange County Water District(the"OCWD")plant for tertiary treatment prior
to reclamation and 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 other non-biodegradable items. See also"Preferred
Level of Treatment" and `Biosolids Management" below. In the next phase, primary treatment,
80336611.6 22
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 25 percent 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 75 percent is sent to secondary treatment for further processing.
During secondary treatment, the wastewater is placed in aeration basins to which naturally occurring
bacteria are used 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.
Table 4 below sets forth the treatment plants' approximate current and future treatment capacities.
Table 4
Wastewater System Treatment Capacities
(mgld)
2007-08 Existing Primary Total Planned
Actual Treatment Existing Secondary Secondar�l
Flows Ca aci Treatment Catracity Capacity
Plant No. 1 92 204 110 170
Plant No. 2 129 168 90 150
Aggregate Treatment 221 372 200 320
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.
Source: (range County Sanitation District.
The District also has the capability to divert a portion of the influent flow from Plant No. t 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. Another interplant facility allows gas generated during solids treatment to be
transported between Plant No. 1 and Plant No. 2 and 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 utilization..
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.
8033MI 1.6 23
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
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 500/. advanced primary and 50% secondary treated wastewater, to full secondary treatment
standards. See "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 was originally projected to take six years to complete, with completion
expected in December 2012. Because ocean discharge permits are issued for only five years, and the
EPA has no authority to waive the discharge limits requirements or grant a longer permit (except in
accordance with See.301(h)),the District decided 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, the EPA and the RWQCB and filed with the U.S. District Court on November 15, 2004. The
District is in compliance with the decree and has successfully completed four of the seven milestones
within the specified deadlines required by the deem.
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. Aftw
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 20-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
The 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
90336611.6 24
then 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
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-out" 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 curtails. 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"sin 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 for 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 02-14, "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 Clain
Water Act secondary treatment standards. The District currently estimates that it will take approximately
four years (through December 2012) and total capital improvement costs of $630.6 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 then current 50% secondary portion would 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
80336611.6 25
2020. Average flow rates at both treatment plants were projected to increase to 278 mg/d by 2020 (134
mg/d of treatment at Plant No. I and 144 mg/d at Plant No.2), up 26% from the Fiscal Year 2007-08
flow.
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;
• Reduce fence line odor to levels that do not generate odor complaints;
• Disinfect the District's ocean discharge to reduce bacterial levels below State bathing
standards;
• Reclaim 70 mg/d 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 all projects are necessary and that most recent cost estimates are accurate.
As identified in the Interim Strategic Plan, and verified through the 2008 CIP Validation Study and
Secondary Treatment Review, $456.1 million of additional capital improvements over the next four years
(through December 2012)are needed to reach full secondary standards.
The 2008 CIP Validation Study resulted in proposed revisions to the CIP. The proposed CIP now
consists of 114 individual capital projects through Fiscal Year 2020-21 at a total cost of$2.48 billion,
approximately $1 billion of which has been spent to date. The bulk of construction is scheduled during
the next six years, with average annual expenditures of$200 million. 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 proposed CIP for Fiscal Years 2008-09 through 2020-21 is set forth in
Table 5 below.
80336611.6 26
Table 5
Capital Improvement Program —Estimated Costs
Fiscal Years 2008-09 through 2020-21
Proieet Cost
Collection System Capacity $ 142,693,300
Collection System Repair,Rehabilitation,Replacement 194,679,8W
Treatment Plant Capacity 113,537,750
Additional Secondary Treatment 50,561,150
Groundwater Replenishment System,Phase 1 2,766,000
Improved Treatment 506,800,400
Treatment Plant Repair,Rehabilitation,Replacement 415,743,500
Support Facilities 47,904,100
Total Validated Capital Improvement Program $IA74-686-000
Source: Orange County Sanitation District.
The proposed CIP contemplates expenditures of$373.7 million in Fiscal Year 200". Of this
total, the largest cash outlay within the plant facilities category is $100.1 million for a new secondary
treatment system at Reclamation Plant No. 1, with a total project cost of$265.9 million. New trickling
filters at Treatment Plant No.2 will require$73.7 million in Fiscal Yea 2008-09,with a total project cost
of$221.2 million. Another $25.8 million is required for Headworks improvements at Treatment Plant
No.2,with a total project coat of$254.5 million. The proposed CIP contemplates expenditures of$228.9
million in Fiscal Yew 2009-10. Of this total,the largest expenditure within the plant facilities category is
$56.9 million for new trickling filters at Treatment Plant No.2. The new secondary treatment system at
Reclamation Plant No. 1 is expected to require $21.5 million in Fiscal Year 2009-10. Another $13.2
million during this period is proposed for Headworks replacement at Treatment Plant No.2.
The proposed CIP's largest collection system project for Fiscal Year 2008-09 is$22.4 million for
the Bitter Point Force Main Rehabilitation project. For Fiscal Year 2009-10, the three largest projects
include$18.0 million for replacement of the Rocky Point Pump Station, $13.1 million for replacement of
the Bitter Point Pump Station and $7.1 million for the Gisler-Redhill System Improvements, Reach B
project The total budgets for these three projects are $31.0 million, $36.5 million and $9.4 million,
respectively.
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 I of the GWRS. The cost of this Phase is to be paid
equally (50% 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 phased expansions. Phase 1 recently commenced and once it
becomes fully operational Phase 1 is expected to produce approximately 72,000 acre-feet per year of
recycled water. Future phases will be funded solely by OCWD and could expand capacity up to 145,600
acre-feet per year. With the completion of Phase 1,the GWRS has the capacity to divert up to 100 mg/d
of flow from the District's ocean discharge.
$0336611.6 27
As of June 30, 2008, the total estimated cost of GWRS Phase I was $496.8 million. Of this
amount, approximately $90.0 million has been 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 $248.4 million. Costs incurred by the District through June 30, 2008
total $204.1 million. As noted above, Phase I of the GWRS has commenced operations and the GWRS
will require a cash outlay of$2.8 million in Fiscal Yea 200"to complete construction,commissioning
and contract closeout retention payments.
Preferred Level of Treatment
In July 2002, the Board of Directors approved a change from the existing level of treatment, a
blend of 50% advanced primary and 50916 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 then apply sodium bisulfate to remove
remaining chlorine prior to releasing the treated wastewater to the ocean. The District continues to take
measures to limit the chlorine residual to a very low level prior to release. This mode of disinfection is
expected to continue 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$7.2 million for additional chemicals from the 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 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."
Currently, the District estimates that it will take approximately four years and require additional
capital improvement costs of approximately $456.1 million to add additional secondary treatment
capacity to the Wastewater System,with completion expected in December 2012. In addition,operating
costs will increase by approximately $7.2 million annually upon completion of facilities necessary to
meet secondary treatment sandar& 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. The District expects its secondary treatment capacity to
increase incrementally each year as operations change and new facilities are constructed and placed in
service.
Biosolids Management
The District produces approximately 650 tons per day(tpd) of digested and dewatered biosolids.
By 2012, when new secondary treatment processes are expected to be fully operational, the District's
biosolids production is projected to increase to 830 tpd, though with the planned installation of
centrifuges, such production is expected to decrease to 750 tpd in 2014 and 700 tpd in 2016. The District
relies on the following technologies and locations for the management of its biosolids: land application of
biosolids in Arizona, land composting to high-grade soil amendment in Riverside County, Kent County
and La Paz County,Arizona,and landfilling of biosolids in Yuma County,Arizona.
90336611.6 28
Counties throughout Cafifomia and Arizona have developed, or are in the process of developing,
ordinances that severely restrict or ban the land application of biosolids. In June 2006, Kern County
voters approved an anti-sludge initiative that bans the land application of 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,and 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 prompted the District, with the help of CH2MHill, 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 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 high-grade 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 biosalids composted at Synagro's
South Kern Compost Manufacturing Facility. This composting facility is receiving its full allocation of
contracted biosolids. 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 EnerTech 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 began receiving biosolids from the
District in November 2008.
Currently, the balance of the bioolids not managed by either Synagro or EnerTech are being
managed by Tole Ranch pursuant to a fivo-year contract by either land application or landfill disposal in
Arizona. The District anticipates releasing a Request for Proposals for long-term biosolids management
for the remainder of the biosolids not managed via existing long-term contracts by either Synagro or
EnerTech by June 2009.
As a result of the transition to biosolids-based compost and energy products the cost to the
District for biosolids management has increased. The Fiscal Year 2006-07 management budget for
biosolids was $12.8 million. The Fiscal Year 2007-08 management budget for biosolids was $14.3
million. The actual cost of biosolids management in Fiscal Year 2006-07 and Fiscal Year 2007-08 was
$11.7 million and $13.5 million,respectively. The Fiscal Year 2008-09 biosolids management budget is
$19.9 million.
Urban Runoff
In June 2002, legislation was passed that allows the District's charter to include permissive
language authorizing the diversion and management of dry weather urban runoff flows. This legislation
allows the District to acquire,construct,operate,maintain,and famish 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.
The legislation allows the District to divert up to 10 million gallons a day and consider more
extensive options, such as building artificial wetlands that would naturally filter the runoff, or building a
80336611.6 29
runoff treatment plant, similar to a $9.5 million facility built in Santa Monica that recycles 500,000
gallons of runoff a day.
The County's beaches have been affected by storm water and urban runoff pollution. As a result,
the Santa Ana Regional Quality Control Board has taken direct action to control discharge of pollutants to
tributaries and recreational water bodies in the County by issuing a Storm Water Permit to the County and
cities. In order to comply with the provisions of the permit, the County and cities have increased
resources to fund municipal storm water/urban runoff management and treatment services. However,this
effort has been difficult to sustain given the complexity of the program and the competing demands on
limited resources.
The District, the County and other local agencies, are currently considering whether to explore
public support for levying a fee to property owners to fund regional storm water/urban runoff
management and treatment services within the County.
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. Also, 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.
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 IERP 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.
80336611.6 30
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. I 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 IERP describes the procedures needed to respond to a possible disaster. For more
infornation 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 then current sewer service user fees (now known as
"Sewer Service Charges") were equitable among residential and industrial customers. 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 furore 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 and remain currently in
use.
The Board of Directors establishes the annual sanitary sewer service charges by ordinance. The
sanitary sewer service charge 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.
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 quarterly fee 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.
8033M 11.6 31
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.
Residentlat and Cornmerclat Sewer 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, except those located in
Revenue Area No. 14. The noticed public hearing held in connection with the 2002 Ordinance 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, the underlying basis for all sewer service charges,
by 31%, from $115.00 to $151.00 for all ratepayers, except those located in Revenue Area No. 14. In
June 2007, the Board of Directors adopted Ordinance No.OCSD-32 increasing the Fiscal Year 2007-08
single family residential rate by 9.8%.
On February 27, 2008, the Board of Directors approved increases in its sanitary sewer service
charges for all single family and multi-family residential units, and for all commercial properties. The
Board increased the single family residential rate,which is the basis for all of the District's sewer service
charges, by 10.5% for Fiscal Year 2008-09, 10% for Fiscal Year 2009-10, 10% for Fiscal Year 2010-11,
9.8%for Fiscal Year 2011-12 and 9.8%for Fiscal Year 2012-13.
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 2004-05 through 2008-09
Effective Sewer Service Percent
Fiscal Year Ordinance No. Date Charee rune ease
2004-05 OCSD-20 07/01/04 $115.00 15.0%
2005-06 OCSD-26 07/01/05 151.00 31.3
2006-07 OCSD-30B 07/01/06 165.80 9.8
2007-08 OCSD-32 07/01/07 182.00 9.8
2008-09 OCSD-35 07/01/08 201.00 10.5
Source: Orange County Sanitation District.
Table 7 below sets forth total average annual Sewer Service Charge for single-family residences
within the District,together with comparable total average annual changes for wastewater service within
the jurisdictions of certain other cities and districts within the State as of July 1, 2008. The District's
projected SFR rate of S293 in Fiscal Year 2012-13 remains below the current average annual sewer rate
of $406 according to a Fiscal Year 2007-08 survey of 726 agencies encompassing all 58 counties in
California conducted by the State Water Resources Control Board.
8033MI1.6 32
Table 7
Comparison of Total Sewer Service Charges
For Single-Family Residences
As of July 1,2008
Average Dry Annual
Weather Sewer Property
Flow Service Treatment Collection Tax
PI nl IrlPl P) P)
Entity (me/d) Charge Level Responsibility Income
City of San Diego 168 $531 2 Yes No
City of Los 428 360 4 Yes No
Angeles
East Bay MUD so 247 4 No Yes
Sacramento 140 237 3 No Yes
Orange County 233 201 2 No Yes
Sanitation
District
Los Angeles 497 117 4 No Yes
County
Somc�ormation obtained from respective entities listed.
RI Treatment Level Categories:
"1"—Primary treatment.
"2"—Advanced primary or primary with some secondary treatment.
113 Secondary treatment.
"4"—Advanced secondary or secondary with some tertiary treatment.
1» " "5 —Tertiary treatment.
Soma: 2007-08 Wastewater User Charge Survey 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 2007-08 were approximately $12 million. Industrial Sewer Service
Charges are applied to both operating and capital funds.
The Sewer Service Charge increases described above are necessary to meet the District's cash
flow needs arising from 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 (as further updated in the 2008 CIP Validation Study) 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 $2.48 billion, approximately $1 billion of
which has been spent to date. The bulk of construction is scheduled during the next six years, with
average annual expenditures of$200 million.
80336611.6 33
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.
Properly Taxes. 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 $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, 560.6 million in Fiscal Year 2006-07 and $65.2 million in
Fiscal Yew 2007-08. 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
community colleges. This shift was effective for Fiscal Year 2004-05 and Fiscal Year 2005-06,resulting
in a 40% 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 than existing
strength in the real estate market. Total assessed valuations increased in the 2005-06 Fiscal Year by
10.3%over the 2004-05 Fiscal Year,and the full value of these increases was received on all non-secured
property tax distributions. The District received property tax revenues in its full allotment (no State
property tax shift)of$65.2 million in Fiscal Year 2007-08. The District expects its property tax receipts
to be approximately 5% in Fiscal Year 2008-09. See Table 11 below. The District currently projects its
property tax receipts to increase by 5%each year thereafter. This projection reflects the fact that declines
in the market value of property in the County do not necessarily result in decreased property tax revenue
in the new tern because of the limiting effect of Proposition 13 on assessed valuations and other factors.
The apportionment of the ad valorem tax is pursuant to a revenue program adopted by the District in
April 1979 to comply with EPA and RWQCB mandates, legal and contractual requirements and Board of
Directors policy.
Capital Facilities Capaciy Charger. Capital Facilities Capacity Charges (formerly 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 Colifonria 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 as 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. For a summary of historical and
projected revenues derived from Capital Facilities Capacity Charges, see Table 14 and Table 15 below.
Pursuant to an agreement with the IRWD, the IRWD is not required to pay Capital Facilities
Capacity Charges and in exchange,the IRWD provides funding to the District for the construction costs
of certain wastewater collection, transmission, treatment and disposal facilities to be used by the IRWD
90336611.6 34
n
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 of Capacity. 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 mg/d of capacity rights in the District's Santa Ana River Interceptor and 17
mg/d 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 future urban development. Salts in the wastewater
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
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
four years. The wastewater flow for Fiscal Year 2004-05 was 243 mg(d,for Fiscal Year 2005-06 was 235
mg/d, for Fiscal Year 2006-07 was 229 mg/d and for Fiscal Year 2007-09 was 221 mg/d. The highest
flow rate experienced was during El Nmo 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 2003-04 through
2007-08 and the projected number of customers served by the District for the Fiscal Years 2008-09
through 2012-13, identified in Equivalent Dwelling Units ("EDUs"), am 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"equivalent dwelling wit." The EDUs ad forth in
Tables 8 and 9 below equate to total Sewer Service Charge levies.
90336611.6 35
9
Table 8
Historical and Projected Equivalent Dwelling Units
Fiscal Years 2003-04 through 2012-13
Historical Projected
Fiscal Year EDUs Fiscal Year EDUs01
2093_04121 884,169 2008-09 914,677
2004-051r1 893,501 2009-10 918,336
2005-06 910,469 2010-11 922,009
2006-07 907,986 2011-12 925,697
2007-08 911,033 2012-13 929,400
EDP U growth during the projection period is estimated at approximately 0.4%per annum.
m With respect to such Fiscal Years, presentation in the Statistical Section of the District's Comprehensive
Annual Financial Report set forth in Appendix A includes EDUs that equate to total Sewn Service Charge
collections rather than levies.
Source: Orange County Sanitation District.
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 2003-04 through 2007-08
($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 Dwellings Revenue Revenues Accounts Revenue Revenues
2003-041n 860,156 $ 86.0 92% 530 $ 7.5 8%
2004-05(" 860,634 99.0 90 5" 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
2007-08 875,824 159.4 93 520 12.1 7
With respect to such Fiscal Years, presentation in the Statistical Section of the Comprehensive Annual
Financial Report set forth in Appendix A includes EDUs that 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, 2009 are shown in Table 10 below. These principal sewer service customers paid a total of
$5,711,033 for wastewater service from the District.
80336611.6 36
Table 10
Largest Principal Sewer Service Customers of the District
for the Fiscal Year Ended June 30,2008
Percentage of Total
Sewer Service Sewer Service
User Charges Charge Revenues
Kimberly-Clark Worldwide, 0.56%
Inc. $1,032,500
Alstyle Apparel—A&G Inc. 1,023,517 0.56
MPC Foods,Iaa 798,449 0.43
Stremicks Heritage Foods, 037
LLC 689,749
House Foods America Corp. 525,676 0.29
Ameripec Inc. 414,671 0.23
Pepsi-Cola Bottling Group 384371 0.21
Seven-Up Bottling Company 304,864 0.17
Van Law Food Products Inc. 2729011 0.15
Nor-Cal Beverage Co. Inc. 268.225 0.15
TOTAL $5,7119033 3.12%
Source: Orange County Sanitation District.
Assessed Valuation
The assessed valuation of property in the County is established by the County Assessor, except
for public utility property which is assessed by the State Board of Equalization. Due to changes in
assessment required under State Constitution Article XIIIA, the County assessment roll no longer
purports to be proportional to market value. See "LIMITATIONS ON TAXES AND REVENUES"
herein. Generally, property can be reappraised to market value only upon a change in ownership or
completion of new construction. The assessed value of property that has not incurred a change of
ownership or new construction must be adjusted annually to reflect inflation at a rate not to exceed 2%
per year based on the State consumer price index. In the event of declining property value caused by
substantial damage, destruction, economic or other factors, the assessed value must be reduced
temporarily to reflect market value. For the definition of full cash value and more information on
property tax limitations and adjustments,see"LIMITATIONS ON TAXES AND REVENUES"herein.
The County Assessor determines and enrolls a valtre for each parcel of taxable real property in the
County every year. The value review may result in a reduction in value. Taxpayers in the County also
may appeal the determination of the County Assessor with respect to the assessed value of their property.
Table I I below shows a five-year history of assessed valuations in the District since Fiscal Year
2004-05.
90336611.6 37
Table Il
Assessed Valuations of Property in the District
Fiscal Years 2004-05 through 2008-09
($in Billions)
Fiscal Year Value %Change
2004-05 $219.3 8.85%
2005-06 241.8 10.30
2006-07 270.7 11.93
2007-08 292.7 8.13
2008-09 307.6 5.09
Source: County of(range Auditor-Controller.
Prior to 2006, the housing market in Southern California experienced significant price
appreciation and accelerated demand. During this period, many homebuyers financed the purchase of
their now homes using non-conventional loans. Such loans were made with little or no down payment
and included adjustable interest rates subject to being reset at higher rates on a specified date or upon the
occurrence of specified conditions. In addition, many of these loans allow the borrower to pay interest
only for an initial period, in some cases up to ten years.
Starting in 2006, housing developers, appraisers and real estate consultants began to report
weakening of prices for single-family homes. There has been tightening of underwriting criteria for
mortgage loans such that most lenders now require down payments,stricter verification,higher income to
loan ratios,higher credit ratios or some combination of such factors. These factors have contributed to a
decrease in home sales as prospective purchasers are unable to qualify for loans. Declining home sales in
some areas of Southern California have resulted in a decrease in home prices. As home values decline,
homebuyers may not be able to obtain replacement financing because the outstanding low balances
exceed the value of their homes. Due to the limiting effect of Proposition 13 on assessed valuations,
declines in the market value of property in the Comfy will not necessarily result in decreased property tax
revenue in the near term. In fact, assessed valuations of property in the District for Fiscal Year 2008-09
have increased by $14.9 billion, or 5.09%, over Fiscal Year 2007-08 valuations. Under certain
circumstances, however, the County may reduce assessed valuations as a result of decreases in market
value,leading to decreased property tax collections.
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, on November 1 and February 1. The District currently
participates in the Comty's Teeter Plan order which the District receives annually 100a/a of the secured
property tax levies and Sewer Service Charges to which it otherwise is entitled,regardless of whether the
Comfy has actually collected the levies. This alternative method provides for fording 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
80336611.6 38
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 10"/u
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 on the unsecured roll are due as of the January 1 lien date and become delinquent,
if unpaid, on August 31. A 10% 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 on 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 presents a five-year history of the District's ad valorem total property tax and
Sewer Service Charge levies.
Table 12
Total Property Tax and Sewer Service Charge Levies
in the District for Fiscal Years 2003-04 through 2007-08
(In Thousands)
Total Tax and Sewer
Fiscal Year Service Charge Lew
2003-04 $134,132
2004-05 152,745
2005-06 191,290
2006-07 209,206
2007-08 228,622
Source: Orange County Auditor-Controller'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.
80336611.6 39
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.
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, 2008, projected reserves at June 30, 2009, and
proposed reserves at June 30, 2010, for each fund. Reserve levels are calculated in accordance with the
District's reserve policy.
Table 13
Actual and Projected Reserves
June 30,2008 through 2010
(In Millions)
June 30,2007 June 30,2008 June 30,2009trr
Cash Flow Requirements Reserve—
Operating Expenses $110 $ 70 $73
Certificates of Participation Payments - 65 84
Operating Contingencies Reserve 22 14 15
Capital Improvement Program Reserve 51 165 83
Catastrophe and Self Insurance 57 57 58
Capital Replacement and Refurbishment 53 54 55
Debt Service Required Reserves 79 108 133
Total $372 $533 $501
projc_
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 collected 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 Contingencies Reserve was established
90336611.6 40
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 10%of the District's annual operating
budget. The Capital Improvement Program 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 boss, 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 and
Refurbishment Reserve was established to provide 30%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 $6.26 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 funds 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'
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 2005-06 through 2008-09. See APPENDIX A — "COMPREHENSIVE
ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR
FISCAL YEAR ENDED JUNE 30,2008"herein.
Summary of Operating Data
Set forth in Table 14 below is a summary of historic operating results for the District for Fiscal
Years 2003-04 through 2007-08. 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 creeds 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 30,2008"herein.
80336611.6 41
Table 14
Summary of Historical District Revenues and Expenses
and Other Financial Information
For Fiscal Years 2003-04 through 2007-08
is in Millions)
2003-04 2004-05 2005-06 2006-07 2007-08
Revenues:
Sewer Service Charges(" $86.0 $ 99.0 $ 132.0 $143.8 $159.4
Industrial Sewer Service
Charges 7.5 10.5 12.2 13.4 12.1
Revenue Area No. 14 Fees 5.8 6.9 5.3 5.2 7.1
Ad Valorem Taxes 46.9 35.8 40.0 60.6 65.2
Interest Earnings 6.8 15.1 10.4 22.2 20.2
Capital Facilities Capacity
Charges
("CFCC") 9.0 9.8 15.6 313 19.8
Other Revenues 4.0 6.1 9.2 8.3 6.9
Total Revenues $166.0 $183- $224.7 $284.8 $290.7
Operations and Maintenance
Expensex121 $95.4 $101.8 $105.6 $112.2 $131.9
Net Revenues(31 $61.6 $ 71.6 S103$ SL41.3 $139.0
Debt Service UM $ 37.2 � $ 48-6 LAA
Coverage Ratios") 2.17x 1.89x 2.47x 2.91x 3.25x
CIP Outlay 5142 $187.9 $26R8 S28M gjj5,g
Ending Reserves(" 551U $407.0 $40" MU $434.0
Net of rebates,if any,to commercial users.
t't Excludes depreciation and amortization expenses.
14' Calculated in accordance with the Master Agreement,which excludes CFCC from Net Revenues.
Excludes debt service reserves in accordance with the District's reserve policy.
Source: Orange County Sanitation District.
Projected Operating Data
Set forth in Table 15 below are projected operating results for the District for Fiscal Years 2008-
09 through 2012-13. These projections assume the number of projects and scheduled build out set forth
in the CIP Validation Study,and reflect Board-approved annual increases in sewer service rates of 10.5%,
100/6, 10%, 9.8% and 10.5% over this five-year period. Principal expenditure components of these
projections are derived from the CIP Validation Study, which identified 114 large capital projects
managed by the Engineering Department through 2020-21 at a total cost of$2.48 billion, and currently
projected to include over $1.1 billion in the next five years. The District's CIP cash flow budget for
Fiscal Year 2008-09 is $373.7 million, an increase of$94.4 million from the prior year estimated total.
This CIP budget finances joint works treatment and disposal system improvement projects, and collection
system improvement projects. This increase is attributable to the additional infrastructure needs identified
in the CIP Validation Study. The preparation of such projections was based upon certain assumptions and
certain forecasts with respect to conditions that may occur in the future. While the District believes that
these assumptions and forecasts are reasonable for the purposes of the projected selected operating data,it
makes no representations that they will in fact occur. To the extent that actual future conditions differ
from those assumed herein,the data will vary.
80336611.6 42
Table 15
Summary of Projected District Revenues and Expenses
and Other Financial Information
for Fiscal Years 2008-09 through 2012-13
($in Millions)
2008-09 2009-10 2010-11 2011-12 2012-13
Revenues:
Residential&Commercial Sewer
Service Charges $191.3 $211.3 $234.2 $257.4 $284.7
Industrial Sewer Service Charges 9.5 10.4 11.5 12.6 13.8
Revenue Area No. 14 Fees 30.2 17.3 20.3 21.2 23.1
Ad Valorem Taxes 64.9 68.2 71.6 75.2 78.9
Interest Earnings 19.2 18.6 19.5 20.6 21.8
Capital Facilities Capacity Charges("CFCC") 21.7 22.9 24.2 25.6 27.0
Other Revenues 19.2 15.2 18.0 18.2 18.9
Total Revenues $356.0 $363.9 $399.3 $430.8 $468.2
Operations and Maintenance Expenses 146.8 154.0 184.1 199.7 216.9
Net Revenues.. $187.5 $187.0 $191.0 $205.5 $224.3
Debt Proceeds $200.0 $120.0 $ 90.0 $ 60.0 $ 80.0
Debt Service $ 74.6 $ 84.3 $ 91.2 $ 95.8 $100.5
CIP Outlays $373.7 $228.9 $182.5 $169.8 $188.6
Ending Reserves") $333.9 $341.4 $365.0 $385.8 $421.6
Coverage Ratios1n 2.51x 2.22x 2.09x 2.15x 2.23x
Caic�accordance with the Trust Agreement,which excludes CFCC from Net Revenues.
Irl Excludes debt service reserves in accordance with the District's reserve policy.
al Calculated in accordance with the Master Agreement,which excludes CFCC from Net Revenues.
Assumptions:
(a) Annual growth in equivalent dwelling units is projected to increase 0.4%over the next five years.
(b)The Residential and Commercial Sewer Service Charge and the Industrial Sewer Service Charges are
forecasts are based on the total projected equivalent dwelling units, the actual 10.5% increase for
2008-09, and the approved rate increases of 10.0%, 10.0% and 9.8%, respectively, for the
following three fiscal years.
(c) The Capital Facilities Capacity Charge forecast is based on the total projected equivalent dwelling units
along with a 5.0%project annual increase in the rate.
(d) Revenue Area No. 14 fees are derived based on the projected contribution of sewage flows to the
District from the Irvine Ranch Water District
(e) Ad valorem tax revenues are projected to increase at 5.0%per year.
(f) Interest eamings are projected as 4.0%of average annual cash balances.
(g) Operating and Maintenance Expenses are projected to increase 7.0%per year.
(h) Annual CIP Outlays is based on the cash Flow projections developed from the CIP Validation Study.
Source: Orange County Sanitation District
Management's Discussion and Analysis of Operating Data
The District's Fiscal Year 2008-09 total operating and capital improvement budget is $601.0
million, a 17.1% increase over the prior year budget of$513.2 million. The District's Fiscal Year 2008-
09 budget includes $72.3 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.
8033W L6 43
The Fiscal Year 2008-09 operations budget for the collection, treatment, and disposal of
wastewater is $148.8 million, an $6.2 million increase from the prior year budget of$142.6 million. This
increase is primarily attributable to the proposed increase in personnel costs due mostly to the current
capital improvement program, totaling $2.48 billion over the next ten years. Personnel costs increased
$3.9 million, or 4.9%. The contractual services budget increased $7.1 million, or 33.1%. The major
component of this category is biosolids removal and transport costs. Contracts have been executed with
firths for agricultural reuse of residual solids. The utility budget decreased by $0.2 million, or 2.0%,
primarily as a result of utility rates not increasing as much as anticipated. Electricity is the largest utility
cost incurred by the District and is used to run the plant processes. The Fiscal Year 2008-09 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 2008-09 CIP cash flow budget was approved at $373.7 million an increase of
$94.4 million from the prior year estimated total. 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
stairs 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 2008-09 CIP includes 86 large capital projects and 28 special projects
with a projected 15-year cash outlay of$1.47 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 mg/d 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.
A 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 two-thirds of the members of the Board of Directors prior to implementation of
any such charge for each fiscal year. Based on the results of the CIP Oversight Committee, the Board of
Directors adopted Ordinance No. OCSD-35 increasing the sanitary sewer service charges by
approximately 10.5% for Fiscal Year 2008-09. This action increased the single family residence user
rate, the basis for all sewer user fee rates, from $182 to $201. 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 at 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
90336611.6 44
independent custodian bank for its investment program. Callen Associates ("Callan") serves as the
District's independent advisor.
At June 30, 2008, the District's externally managed fund consisted of short-term investment
portfolio of$98,300,000 with an average maturity of 73 days, and a long-term investment portfolio of
$313,700,000 with average maturities of 2.3 years. Investments consist of United States government
securities, corporate bonds and commercial paper. The District's portfolio contains no structured
investment vehicles(SIV s)or reverse repurchase 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 govemment securities
equal to 1100/6 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.
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 December 1, 2008. The payment obligations in connection with each
series of these certificates constitute Senior Obligations, subject to the provisions of the Master
Agreement and shall be afforded all of the 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 December 1,2008
Original
Principal Issue Outstanding Fitwl
Amount Date Balance Maturl
2000 Certificates $218,600,000 08/13/00 S 195,800,000 09/01/30
2003 Certificates 280,000,000 08/26/03 191,500,000 02/01/33
2006 Certificates 200,000,000 03/08/06 196,600,000 02/01/36
2007A Certificates 95,180,000 05/22/07 93,655,000 02/01/30
2007B Certificates 300,000,000 12/20/07 300,000,000 02/01/37
2009A Certificates 77,615,000 05/29/08 61,665,000 08/01/13
2008B Certificates 27,900,000 09/11/08 27.800.000 09/01/16
Total Long-Term Debt $1,067,020,000
80336611.6 45
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 Obligations
In August 2000, the District caused the execution and delivery of the Orange County Sanitation
District Refunding Certificates of Participation, Series 2000-A (the "2000-A Certificates") and the
Orange County Sanitation District Refunding Certificates of Participation, Series 2000-B (the "2000-B
Certificates"and,together with the 2000-A Certificates,the"2000 Certificates")in the original aggregate
principal amount of$218,600,000, of which $195,900,000 will be outstanding as of December 1, 2008.
In connection with the execution and delivery of the 2000 Certificates, the District entered into an
installment purchase agreement(the"2000 Installment Purchase Agreement")and a Standby Agreement,
dated as of August 1,2000(the"2000 Standby Agreement"),by and among the District,the Trustee and
Dexia Credit Local,acting through its New York Agency.
In March 2006, the District mused the execution and delivery of the Orange County Sanitation
Refunding Certificates of Participation, 2006 Series (the "2006 Certificates") in the original aggregate
principal amount of$200,000,000, of which $196,600,000 will be outstanding as of December 1, 2008.
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
Standby Agreement'), with DEPFA Bank plc, acting through its New York Branch, to provide for
payment of the purchase price of tendered and unremarketed 2006 Certificates.
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.
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
(including the principal amount of the Certificates) in an aggregate principal amount of approximately
S200 million. Over the next four years, the District expects to incur Additional Senior Obligations in an
aggregate principal amount of approximately$350 million.
Direct and Overlapping Bonded Debt
Table 17 below presents the aggregate direct and overlapping bonded debt of the District as of
June 30,2008.
8033661 L6 46
Table 17
Direct and Overlapping Bonded Debt of the District
as of June 30,2008
2007-08 Assessed Valuation(Land&Improvements Only): $294733,304,931
Redevelopment Incremental Valuation: 35,564345,092
Adjusted Assessed Valuation, S257.168,959,859
OVERLAPPING TAX AND ASSESSMENT DEBT
(Based on redevelopment adjusted all property assessed valuation of S264.164343.096):
Tot[Debt District's Shire of
6/30/08 %Applicable fll Debt 6/30109
Orange County Teeter Plan Obligations $123,725.000 71.841% $ 38"277
The Metropolitan Water District of Southern California 327215,000 14.941 4SA9,193
Coast Community College District 347,758,867 99.495 346.004695
North Orange County Joint Community College District 233,349,001 %.922 226.166,519
Rancho Santiago Community College District 321,779339 93.363 316,511,911
Brea-Olinda and Laguna Beach Unified School Districts 59,649,029 99.936&12.793 29.155,237
Newport Mesa Unified School District 168,563,480 100. 169,563.490
Placentia-Yorba Linda Unified School Disaicl 169,069,034 99.707 166,884971
Saddleback Valley Unified School District 142,490,000 11.915 16.976,492
Santa Ana Unified School District 126,037,965 100. 126,037,965
Tustin Unified School District School Facilities Improvement District No,2002-1 43,693.929 99.010 4325I,458
Anaheim Union High School District 123,493.955 100. 123,493,955
Fullerton Joint Union High School District 61552,910 90240 55,545.346
Huntington Beach Union High School District 232274,998 98.919 229,764,105
School Districts 236,130,071 97.319-100. 236.344957
City of Anaheim 5,220,000 99.083 5,172,133
Wine Ranch Water District improvement Districts 271,221,669 Various 271,137,342
Rossmoor Community Services District Special Tao Obligations 625.000 100. 625,000
Bonita Canyon Community Facilities District No.99.1 42,619.000 100. 42.615,000
Irvine Unified School District Community Facilities Districts 266,430,000 99.998-100. 266,428.353
Tustin Unified School District Community Facilities Districts 232.730,345 100. 232,730,345
Orange County Community Facilities District No.874 59,984929 99.905 59,826,039
Other Community Facilities Districts 402,455,000 Various 402,358,006
Orange County Assessment Districts 119,048,296 100. 118,04U%
City of Irvine 1915 Act Bonds 905,675,000 100. 905.675.000
City of Tustin 1915 Act Bonds 52,442,000 100. 52,442,0W
Other 1915 Act bonds 20,306,000 100. 20306.W0
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT S4,599,822,965
Total Debt Distid's Share of
DIRECT AND OVERLAPPING GENERAL FUND DEBT: 6/30/08 %Apoliceble(I Debt 6/30/09
Onstage County General Fund Obligations S532326,000 71.941% $ 382,428,322
Orange County Pension Obligations 72.729,967 71.841 52249,864
Orange County Board of Education Certificates of Participation 195901000 71.841 14.073,652
South Orange County Community College District Certificates of Participation 34.945,000 35.613 12,444,963
BresOlinda Unified School District Certificates of Participation 29.800.000 99.936 29,780,928
Orange Unified School District Certificates of Participation 49,326,604 96.966 49.326.604
Placentin-Ymba Linda Unified School District Certificates of Participation 86,810,315 98.639 85,629,827
Santa Are Unified School District Certificates of Participation 64,855,%S 100. 64,855,968
Otbm Unified School District Certificates of Participation 39,317,502 Various 38,998,126
Union High School District Certificates of Participation 117.751,090 Various 114,970,458
School District Certificates of Participation 59.%01000 Various 59,650,779
City of Anaheim General Fund Obligations 679,632.465 99.093 673,400,235
City of Coals Mesa General Fond Obligations 45,970,000 100. 45,970.000
City of Fullerton General Fund Obligations 28,302,784 100. 28302.784
City of Huntington Beach General Fund and Judgment Obligations 76,300,000 99.980 76,284,740
City of Wine General Fund Obligations 24,170,000 100. 24,170,000
City of Santa Ann General Fund Obligations 116,220,000 100. 116.220,000
Other City General Fund Obligations 172,570,000 Various 145,890,247
Oraage County Saoltation District Certifirmes of Participation 0 100. 0(2)
Wine Ranch Water District Certificates of Participation 38,800,000 89.621 34,772.948
Municipal Water District of Orange County Water Facilities Corporation 19.295.000 66.611 12,852592
(Confirmed on neat page.)
80336611.6 47
(Continued from previous page.)
Total Debt Giants'.Share of
DIRECT AND OVERLAPPING GENERAL FUND DEBT: 6/30109 Applicable fU Debt 6130/08
Varian Linde County Weser District Ce tilasam of Participation 9.860,000 97.773 9.640.418
German County Fire Authority 10,365.000 50.310 5,214,632
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $2.077,117.097
Leas: Santa Am Unified School District self-supporting Qualified Zone Academy Bonds 2,042,300
City of Armloim self-supporting obligations 650.281.304
Other City ad6auppmting obligations 30,162.670
MWDOC Wares Facilities Corporation(100%self-supporting) 12,852,592
TOTAL NET OVERLAPPING GENERAL FUND DEBT S1.381,778.221
GROSS COMBINED TOTAL DEBT S6,676.940,052(2)
NET COMBINED TOTAL DEBT $5.981,601,186
(1) Percentage of overlapping agency's redevelopment adjusted all property assessed valuation 1$264.164.343,096)located vvindn
boundaries of the district.
(2) Excludesw hew lammmu ifi=mofpmticipation. Previouslyclassifiedce ificmaofpmticipetimhavebeenteclassified
as district revenue supported issues and ere no longer included as direct debt in the debt statement.
(3) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revoaue and tax allocation bonds and non-bonded capital
k ern obligations.
Ralf to:
2007-08 Land and improvement
Aseased Valuation
Total Overlapping Tea and Assessment Debt 1.57%
Adjusted Adjusted All Property
Load&Imorovemrnl Assessed Volatile
Gross Combined Total Debt 2.60% 2.33%
Net Combined Total Debt 2.33% 2.26%
STATE SCHOOL BUILDING AID REPAYABLE AS OF : SO
Source: California Municipal Statistic
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 Corpomfion may be obtained
from the Orange County Sanitation District office at 10844 Ellis Avenue, Fountain Valley, California,
92708-7018.
80336613.6 48
LIMITATIONS ON TAXES AND REVENUES
Article XIIIA of the California Constitution
On June 6, 1978, California voters approved Proposition 13 ("Proposition 13"), which added
Article XIIIA to the State Constitution("Article XIIW). Article XlUA, 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,(ii)(as a result of an amendment to Article XIIIA approved by State voters on June 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 `Yell 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
XII1A. 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 2% annual adjustment are allocated among the various jurisdictions in
the `taxing area" based upon then 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 fall 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 100% 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 XIUB to the State Constitution ("Article
XIIIB"). Under Article XUIB,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"
(consisting of tax revenues, state subventions and certain other £ands) in an amount higher than the
appropriations limit. Article XIIIB does not affect the appropriations of moneys that are excluded from
80336611.6 49
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 XIIIB, 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 home 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 1, 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 1978-79 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 III 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 IA"), 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 lA 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
to certain exceptions. Proposition I A generally prohibits the State from shifting to schools or community
colleges any share of property tax revenues allocated to local govemments for any fiscal yew,as set forth
under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues
80336611.6 50
among local governments within a county must be approved by two-thirds of both houses of the
Legislature.
Proposition I provides, however,that beginning in Fiscal Year 2008-09, the State may shift to
schools and community colleges up to 8%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 are met. Such a shift may not occur more than twice in any ten-year period. The State may
also approve voluntary exchanges of local sales tax and property tax revenues among local governments
within a county.
Proposition ]A 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 ]A requires the State 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 November4, 1996, 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 general 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")most 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 XIIIC 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 XIIID 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 1, 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.
Article XIIID imposes substantive and procedural requirements on the imposition, extension or
increase of any "fee"or"charge"subject to its provisions. A "fce" 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
80336611.6 51
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. VeOUI, 39 CalAth 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 procedures
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
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 9A%, 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 213 vote of the Board of Directors after conducting a noticed public hearing in compliance
90336611.6 52
with Article XIIID. The Board of Directors considered this increase 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 annual 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 Area 14. These increases
represented the increase permitted under the protest hearings on the fee increase which was held in 2003.
In June 2007,the Board of Directors adopted Ordinance No.OCSD-32 increasing the Fiscal Year 2007-
08 single family residential rate by 9.8%. In February 2008, after a noticed public hearing, the Board of
Directors adopted Ordinance No.OCSD-35, which provides for annual increases in the single family
residential rate of 10.5%, 10%, 10%, 9.8% and 9.8%, respectively, for Fiscal Years 2008-09 through
2012-13.
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, XIIIB, 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.
LEGAL MATTERS
The validity of the Certificates and certain other legal matters are subject to the approving
opinion of Fulbright& 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 Comsat to the
District.
90336611.6 53
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. See
APPENDIX A—"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY
SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30, 2008" herein. The District has
received the Government Finance Officer's Association Certificate of Achievement for "Excellence in
Financial Reporting"for 13 consecutive years. The audited financial statements, including the footnotes
thereto, should be reviewed in their entirety. Mayer Hoffman McCann P.C. has consented to the
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 concerting 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 ,2008.
TAX MATTERS
The internal Revenue Code of 1986(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
90336611.6 54
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 & Jaworski 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(ax5)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%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, 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 most 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, most 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
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 tern 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
accruing 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
90336611.6 55
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 amortisation 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 under federal individual and corporate alternative minimum taxes.
Special Counsel has not undertaken to advise in the fidure 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 or approval is given by counsel 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
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(bx5XBxi) reduces the deduction for loss
reserves by 15% 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,accming 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.
80336611.6 56
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 Counsel,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 months after the end of the District's Fiscal
Year(which currently would be March 1). commencing with the report for the 2008-09 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 my. 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"). During the past
five years, the District has never 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.
RATINGS
The Certificates will be rated " " by Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc. ("S&P"), and"_" by Fitch Ratings ("Fitch"). 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
organisations at: Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041 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, less a net original issue discount 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.
80336611.6 57
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
90336611.6 58
APPENDIX A
COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY
SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30,2008
BMW 1.6 A-1
APPENDIX B
THE COUNTY OF ORANGE-ECONOMIC AND DEMOGRAPHIC INFORMATION
80336611.6 B_j
APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
9033661 L6 (]_]
APPENDIX D
FORM OF CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT(this"Disclosure Agreement"), dated as
of December 1, 2008, 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 2008C (the "Certificates"), evidencing principal in the
aggregate amount of$_,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 and Administrative Services of the
District, or such other officer or employee of the District as the District shall designate in writing to the
Dissemination Agent and 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.govrinfo/mmicipal/ r ir.htm.
80336611.6 D-I
"Official Statement" means the Official Statement, dated December_, 2008, 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 provide, annually, an
electronic copy of the Annual Report to the Dissemination Agent, together with a copy for the Trustee,
not later than 15 days prior to the Annual Report Date. Promptly upon receipt of an electronic copy of the
Annual Report,the Dissemination Agent shall provide an Annual Report to each National Repository and
the State Depository (if any) not later than March 1 after the end of each fiscal year of the District,
commencing with the fiscal year ending June 30, 2009. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may cross reference other information as
provided in Section 3 of this Disclosure Agreement. 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) If on the fifteenth (15th) day prior to the Annual Report Date, the Dissemination Agent
has not received a copy of the Annual Report, the Dissemination Agent shall contact the Disclosure
Representative by telephone and in writing (which may be by e-mail) to remind the District of its
undertaking to provide the Annual Report pursuant to Section 2(a).
(c) If the Dissemination Agent has not received an Annual Report by 12:00 noon on the first
business day following the Annual Report Date for the Annual Report,the District irrevocably directs the
Dissemination Agent to immediately send a notice to each National Repository or the MSRB and the
State Depository(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 time
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
80336611.6 D-2
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:
0) The principal evidenced by the Certificates Outstanding as of the January I 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 must 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.
8033M 11.6 D-3
(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 Dissemination Agent 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 Dissemination Agent 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 Dissemination
Agent in writing. Such notice shall instruct the Dissemination Agent 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 Dissemination Agent in writing and instruct the Dissemination Agent 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 DisciosureUSA.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
80336611.6 D-4
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.
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 and 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
aa336611.6 D_$
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 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 Aeent.
Article VQI 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.
80336611.6 D-6
IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as of the
date first above written.
ORANGE COUNTY SANITATION DISTRICT
By:
Lorenzo Tyner
Director of Finance and Administrative Services
DIGITAL ASSURANCE CERTIFICATION LLC,
as Dissemination Agent
By:
Authorized Representative
Acknowledged and Accepted:
UNION BANK OF CALIFORNIA,N.A.,
as Trustee
By:
Authorized Officer
80336611.E 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 2008C
Date of Issuance: December ,2008
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, 2008, 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
80336611.6 D-8
APPENDIX E
BOOK-ENTRY SYSTEM
The description that follows of the procedures and recordkeeping with respect to beneficial
ownership interests in the Certificates payment of principal and interest evidenced by the Certificates to
Participants or Benficial Owners, confirmation and transfer of beneficial ownership interests in the
Certificates, and other Certificate-related transactions by and between DTC, Participants and Beneficial
Owners, is based on information furnished by DTC which the District and the Corporation each believes
to be reliable, but the District and the Corporation take no respomsibillty 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 time 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 3.5 million U.S. and non-U.S.
equity issues, corporate and municipal debt issues, and money market instruments (from over 100
countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the
post4mde settlement among Direct Participants of sales and other securities transactions in deposited
securities,through electronic computerized book-entry 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 is the holding company for DTC, National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing
agencies. DTCC is owned by the users of its regulated subsidiaries. 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 www.dtcc.com and www.dtc.org. The information on 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 tun to be recorded on 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
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
9033MI L6 E-1
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 nominee, Cede & Co. or such other name 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 MMI 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.
90336611.6 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-entryonly 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
time of Cede&Co.,but shall be registered in such names as are requested in a certificate of the District,
in accordance with the Taut 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 Agreement, 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 any 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.
90376611.6 B_9
APPENDIX F
FORM OF APPROVING OPINION OF SPECIAL COUNSEL
Upon the execution and delivery of the Certificates, Fulbright& Jaworski L.L.P., Los Angeles,
California, Special Counsel to the District, will render its final approving opinion with respect to the
Certificates in substantially the following form:
[Date of Delivery]
Orange County Sanitation District
IOW Ellis Avenue
Fountain Valley,California 92708-7018
$_,000,000
Orange County Sanitation District
Certificates of Participation
Series 2008C
Ladies and Gentlemen:
We have acted as Special Counsel in connection with the $_,000,000 aggregate principal
amount of Orange County Sanitation District Certificates of Participation, Series 2008C (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, 2008 (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, 2008 (the "Trust Agreement"),by and among the District,the Corporation and Union Bank
of California,N.A., as trustee (the "Trusted'). Proceeds from the sale of the Certificates 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.
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
80336611.6 F-I
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 each has 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 its respective terms, each constitutes the legally valid and
binding obligation of the District, enforceable against the District in accordance with its
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 most be met subsequent to the execution and delivery of the Certificates for the component of
each 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
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 owners 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% 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 Taxation Code, we are of the opinion that
Payment Interest allocable to and the Certificate Interest Distributions in respect of a Certificate
are not subject to taxation under the California personal income tax.
90336611.6 F-2
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 Agrcement,Certificates, Payment Interest,
or Certificate Interest Distributions, if any action is taken with respect to the Installment Purchase
Agreement,the Master Agreement,the Trot 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 the 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 Trust 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 Trust 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 are 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 hereafter wine to our attention or to reflect any
changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a
guarantee of result and are not binding on the Internal 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
9033MI L6 F_3
Fulbright&Jaworoki L,L.P.—Draft 1115108
OFFICIAL NOTICE INVITING BIDS
$_000 0W
ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION
SERIES 2008C
(Book-Entry-Only)
NOTICE IS HEREBY GIVEN that bids will be received by the Orange County Sanitation
District (the"District") for the purchase of$_,000,000' original principal amount of Orange County
Sanitation District Certificates of Participation, Series 2008C(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 w described herein):
Date: Wednesday,December 3,2008
10:30 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
to Ipreo LLC; at www.newissuehome.i-deal.com and the Parity bid
delivery system (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,November. 2008, including the cover
page and all appendices thereto (the "Preliminary Official Statement"), provides certain information
concerning the sale and delivery of $_,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, 2008 (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 terms 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 making 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 terms upon which obligations such as the Installment Purchase Agreement,
Preliminary,subject to change.
ao 04%.e
, J
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
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 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, 2008 (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 19,2008,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 payable on a parity with the Installment
Payments under the Installment Purchase Agreement. The term "Existing Senior Obligations"as used in
the Preliminary Official Statement refers to the 2000 Installment Purchase Agreement, the 2003
Installment Purchase Agreement, the 2006 Installment Purchase Agreement, the 2007A Installment
Purchase Agreement, the 2007B Installment Purchase Agreement, the 2008A Installment Purchase
Agreement and the 2008E 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 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 father 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
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
80340496.4 2
V
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 Yew.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) 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 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 and, at the District's option, certain other available monies of the District, in
an amount equal to the Reserve Requirement will be deposited into the Reserve Fund.
80340496.4 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 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 their ownership interests in the Certificates purchased.
The Certificates will be delivered in Authorized 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 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 360-day year of twelve 30day months). Interest evidenced by the
Certificates is payable semiannually on February 1 and August I of each year, commencing on
February 1, 2009. 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.
Principal Amortkation
The Certificates will be executed and delivered in the approximate aggregate original principal
amount of $ ,000,000' and will be subject to principal amortization through serial maturities on
February I in the years 20_though 20_in the amounts set forth in the Official Bid Form.
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 I of the first year which has been combined to form such term maturities and continuing on
February I in each year thereafter until the stated maturity date of that term maturity, provided that no
term maturity maturing on or after February 1, 20—may have sinking fund payments prior to February 1,
20 . 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
Preliminary,subject to change.
803404964 4
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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, 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 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 as directed in a
Written Request of the District, or at the discretion of the District 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.
Notice of Prepayment
The Trustee shall,at least 20 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 must submit their bids on the
Official Bid Fom. 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 ('/r) or one-twentieth (r/m)of one percent (1%),
and no interest rate can exceed 7.00% per annum. All Certificates of the same maturity must evidence
interest at the same rate.
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
smtes 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
90340496A 5
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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 for 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 discount or with a premium;
however, no bid will be considered if the bid is to purchase Certificates at an aggregate price less than
990A or more than [103]%of the aggregate principal amount of the Certificates.The reoffering price for
each maturity of the Certificates maturing in 2019 and thereafter shall not be less than 97%of the
principal amount of such maturity. No difference greater than 3%will be permitted between the
highest and lowest rates of interest specified.
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 terns of
this section may be rejected. See"Right to Reject Bids, Waive Irregularities"below.
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 insurunce.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 most provide the District with the municipal bond insurance commitment, if any,
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 one
business days following the award of the bid by the District.The successful bidder will be required,prior
to the delivery of the Certificates, to furnish 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 most be on the Official Bid Form. All electronic proposals shall be deemed to incorporate the
3034N964 6
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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
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 Ipreo LLC, 1359 Broadway, Second Floor,
New York NY 10019 (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 most 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
$ .00("Bid Check Amount")payable to the order of"Orange County Sanitation District,"and
delivered to the following address: Orange County Sanitation District, 10944 Ellis Avenue, Fountain
Valley, CA 92708-7018, Attention: Lorenzo Tyner. Bid checks will be held by the District, un-cashed
until the Certificates are awarded to the successful bidder. Any check accompanying an unaccepted bid
will be returned promptly to the unsuccessful bidder by the District. Alternatively, the bidder may
provide its bid with 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
W
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 bidder's 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.No interest will be paid upon the deposit made by any bidder.
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 I5c2-12
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 cost 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 mmicipal 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.
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. 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_,2008. 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
s03404%.4 8
rtl
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, rulings 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 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 ruling of the Internal Revenue Service or by a final decision of any
federal court, or shall be declared taxable by the temus of any federal income tax law enacted subsequent
to the date of this Official Notice Inviting Bids.
Closing Documents
The District will furnish 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 the light of the
80340496.4 9
0
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 Trust Agreement, the Installment Purchase Agreement, the Master
Agreement, this Official Notice Inviting Bids, the Official Bid Form, and the Preliminary Official
Statement will be furnished to any potential bidder upon request made to the District's Financial Advisor
at: Public Resources Advisory Group, 11845 West Olympic Boulevard, Suite 640, Los Angeles, CA
90064, 310-477-8487,via e-mail at bsiembieda@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;
provided,however,that such notifications or amendments shall be made not later than December 2,2008,
by 3:00 p.m., New York Time and communicated through Thomson Municipal Market Monitor
(available at http:11w .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 will be announced via Thomson Municipal Market Monitor at least
24 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 sealed
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 Markel Monitor at the time the sale date and time are announced.
Dated: November ,2008
80340496.4 10
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OFFICIAL BID FORM
$ ,00o,000
ORANGE COUNTY SANITATION DISTRICT
CERTIFICATES OF PARTICIPATION
SERIES 2008C
December_,2008
Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley,CA 92708.7018
Attn: Lorenzo Tyner
Ladies and Gentlemen:
We hereby offer to purchase all of the $ ,000,000+ aggregate principal amount of the Orange County
Sanitation District Certificates of Participation Series 2008C (the "Certificates"), more particularly
described in your Official Notice Inviting Bids dated November_,2008,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 [103]% 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 as set forth in the table on
the following page.
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 $ 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").
[ j A surety bond has been provided to the District in the amount of$ issued by an
insurance company rated AAA by Standard & Poor's and licensed to issue such a bond in the State of
Califomia, 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, famish 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,
, Preliminary,subject to change.
90340,196.4
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a
acceptable to said Special Counsel, as to the present value of the expected interest savings as a result of
such insurance.
Maturity Principal Interest
(February I1 Amount Rate
Total
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
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.
Preliminary,subject to change.
SON0496.4 2
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NOTICE OF INTENTION TO SELL
$_,000,000-
Orange County Sanitation District
Certificates of Participation
Series 2008C
NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District")
intends to receive sealed bids and electronic bids until 10:30 a.m., New York time, on
Wednesday,
December 3,2008,
through the use of an electronic bidding service offered by Ipreo LLC; at www.newissuehome.i-
deal.com and the Parity bid delivery service, for the purchase of all of the District's Certificates
of Participation, Series 2008C (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:
bsiembieda@pragla.com.
Orange County Sanitation District
Dated: November—,2008
' Preliminary,subject to change.
80342394.3
Preliminary
Subject to Approval
MINUTES
GROUNDWATER REPLENISHMENT SYSTEM STEERING COMMITTEE
STEERING COMMITTEE
Monday, October 13, 2008, 5:30 p.m.
Committee Members
Philip L. Anthony OCWD Director, Chairman .....................Present
Jim Ferryman OCSD Director,Vice Chairman...............Present
Kathryn Barr OCWD Director .......................................Present
Larry Crandall OCSD Director ........................................Present
Roger Yoh OCWD Director................................ Not Present
Don Bankhead OCSD Director .................................Not Present
Alternates
Jan Debay OCWD Director(No. 1)............................Present
Darryl Miller OCSD Director (No. 1).....................Not Present
Denis Bilodeau OCWD Director(No. 2).....................Not Present
Mark Waldman OCSD Director (No.2) ....................Not Present
Steve Sheldon OCWD Director(No. 3).................... Not Present
Don Webb OCSD Director (No. 3) ....................Not Present
Other Directors Present
OCWD—Wes Bannister, Iry Pickier and Claudia Alvarez
Staff/Consultants Present
Michael R. Markus, OCWD
Jim Ruth,OCSD
Mike Wehner, OCWD
Joel Kuperberg, Rutan 3 Tucker
Wendy Sevenandt, OCSD
Ingrid Hellebrand, OCSO
Eleanor Torres, OCW D
Debbie Burris DDB Engineering, Inc.
CONSENT CALENDAR(ITEM NO.1) MonoWVoTE ACTION TAKEN
1. MINUTES OF PREVIOUS MEETING ANTHONY— AYE
RECOMMENDATION:Approve Minutes of the September 8, 2008 FERRYMAN—SECOND,AYE APPROVED
Groundwater Replenishment System BARR— AYE
Steering Committee Meeting as mailed CRANDALL— MOTION,AYE
DEBAY— AYE
MATTERS FOR CONSIDERATION
2. REQUEST FOR PROPOSALS:GWR SYSTEM BRANDING ANTHONY— AYE
PACKAGE FERRYMAN—SECOND,AYE APPROVED
RECOMMENDATION:Agendize for October 15 OCWD Board BARR— AYE
meeting: Authorize Issuance of Request for CRANDALL— MOTION,AYE
Proposals for the design and DEBAY— AYE
Implementation of a GWRS System
Branding Package
INFORMATIONAL ITEMS
3. GWR SYSTEM REGULATORY UPDATE INFORMATIONAL
- 1 -
Preliminary
Subject to Approval
4. GAR SYSTEM OPERATIONAL PROGRESS INFORMATIONAL
5. STATUS REPORT INFORMATIONAL
• Grants and Loans Update
• Public information and education update
DIRECTORS'ANNOUNCEMENTS/REPORTS
GENERAL MANAGERS'REPORTS
CONFERENCE WITH GENERAL COUNSEL—ANTICIPATED COMMITTEE ACTION:
LITIGATION-Initiation of Litigation AGENDIZE FOR
(GOVERNMENT CODE SECTION 54956.9(c)] One(l)case: OCTOBER 15
Damage to OCWD pipeline due to SR-22 construction CLOSED SESSION
ADJOURNMENT
} 130ARD OF DIRECTORS
I 11/19/OB
AGENDA REPORT ID" N °g 10a 19
19
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Jim Herberg, Director of Engineering
SUBJECT: COYOTE HILLS GOLF COURSE MANHOLE ACCESS AND ODOR
CONTROL PROJECT, CONTRACT NO. FE08-04
GENERAL MANAGER'S RECOMMENDATION
1. Adopt Resolution No. OCSD 08-21, Adopting the Initial Study and Mitigated Negative
Declaration for the Coyote Hills Golf Course Manhole Access and Odor Control Project,
Contract No. FE08-04;
2. Make Certain Findings Relating to Less than Significant Environmental Effects Identified
in the Initial Study/Mitigated Negative Declaration;
3. Adopt a Mitigation Monitoring and Reporting Program;
4. Approve the Coyote Hills Goff Course Manhole Access and Odor Control Project,
Contract No. FE08-04; and,
5. Authorize the Filing of a Notice of Determination.
SUMMARY
• The IS/MND for the Coyote Hills Golf Course Manhole Access and Odor Control Project,
Contract No. FEOB-04 (Project) was presented to the Operations Committee prior to
consideration for adoption by the Orange County Sanitation District's (Sanitation District)
Board of Directors (Board) on November 19, 2008. A copy of the IS/MND was posted
on the Board's website for review.
• Pursuant to the provisions of the California Environmental Quality Act(CEQA), this
proposed project requires passage of a Resolution by the Sanitation District Board,
certifying compliance with the provisions of CEQA for the Project, and indicating the
Board's approval to proceed with the Project.
• The Project includes improving access to several manholes and the potential for an odor
control dosing station within the Coyote Hills Golf Course. The manholes are within a
protected habitat area that encroaches into the Golf Course. The collection system odor
control dosing station is proposed for a disturbed area adjacent to the Golf Courses
maintenance yard that is outside the designated habitat.
• The Coyote Hills Golf Course is located in the City of Fullerton adjacent to the City of
Brea. The area is primarily open space. The open space area is protected and
operated by the Center for Natural Lands Management(CNLM).
Fmm N0.DW1022 Rw, EO 10I
Page 1
T
• Sanitation District staff has met with the Golf Course's management and the CNLM.
The Sanitation District will be contracting with the CNLM for habitat protection and
restoration services as part of the Project, as they are the manager of the protected
habitat proposed to be disturbed. The total habitat area to be disturbed is 0.094 acres
and will be replaced at up to 5 to 1 ratio as required by the Federal Endangered Species
Act.
• The IS/MND was circulated for a 30-day public review in September. At the time of this
writing, no substantive comments have been received for the Project.
PRIOR COMMITTEE/BOARD ACTIONS
None.
ADDITIONAL INFORMATION
The impact analysis concluded that the Project would have no significant unavoidable
impacts with the mitigation measures proposed for the Project. The primary mitigation
measure is the replacement of protected habitat to be disturbed during the Project.
Because the CNLM manages the habitat protection area, the Sanitation District will be
contracted with them for construction monitoring and habitat restoration services required
by the Federal Endangered Species Act.
At the time of this writing, the following agencies sent acknowledgement comment letters on
the IS/MND: County of Orange, California Department of Transportation, Department of
Toxic Substances Control, and Governor's Office of Planning and Research.
This action complies with authority levels of the Sanitation District's Delegation of Authority.
This item has been budgeted. (Line item: Section 8, Page 38).
ATTACHMENTS
1. Resolution
2. ExhibitA— MMRP
JB:MG:sa
H:tntBlobaMpenda Draft ReporlsZoard of DirerdorsTE08-04-Board M MND.dw
Form No IM4 Rw owrm•
Page 2
RESOLUTION NO. OCSD 08-21
MAKING CERTAIN FINDINGS RELATING TO LESS THAN SIGNIFICANT
ENVIRONMENTAL EFFECTS IDENTIFIED IN THE INITIAL
STUDY/MITIGATED NEGATIVE DECLARATION FOR THE COYOTE
HILLS GOLF COURSE MANHOLE ACCESS AND ODOR CONTROL
PROJECT, CONTRACT NO. FEOM4; ADOPTING THE INITIAL
STUDYIMITIGATED NEGATIVE DECLARATION AND MITIGATION
MONITORING AND REPORTING PROGRAM FOR THE PROJECT;
APPROVING SAID PROJECT; AND AUTHORIZING THE FILING OF A
NOTICE OF DETERMINATION FOR SAID PROJECT
WHEREAS, the Board of Directors of the Orange County Sanitation District
(Sanitation District), ("Board of Directors"), is considering the approval of the Coyote Hills
Golf Course Manhole Access and Odor Control Project("Project), Contract No. FE08-
04 to provide access to six manholes and install an odor control facility at an additional
manhole within the Coyote Hills Golf Course, in the City of Fullerton; and,
WHEREAS,the existing manholes require access for routine manhole
maintenance and odor control improvements are needed to control odors within the
Sanitation District Collection System; and,
WHEREAS, because the Sanitation District will be undertaking the Project, the
Sanitation District is the lead agency for the Project pursuant to the California
Environmental Quality Act of 1970("CEQA") (Public Resources Code §21000 at. seq.),
as amended, and the CEQA Guidelines ("CEQA Guidelines") (14 Cal. Code Regs.
§ 15000 at. seq.); and,
WHEREAS, pursuant to the CEQA and the CEQA Guidelines, the Sanitation
District staff prepared an Initial Study/Mitigated Negative Declaration to assess the
potentially-significant environmental impacts and recommend mitigation measures
associated with the Project; and,
WHEREAS, in accordance with CEQA Guidelines 15070, Sanitation District staff
determined that an Initial Study/Mitigated Negative Declaration resulted in a
determination that there were only less than significant impacts associated with the
proposed Project if certain mitigation measures were implemented, therefore an Initial
Study/Mitigated Negative Declaration was prepared; and,
WHEREAS, the Sanitation District has consulted with other public agencies and
the general public, giving them an opportunity to comment on the Initial Study/Mitigated
Negative Declaration, as required by CEQA; and,
WHEREAS, the Sanitation District has objectively evaluated, received, and filed
comments from public agencies and persons who reviewed the Initial Study/Mitigated
Negative Declaration; and,
WHEREAS, the comments and recommendation received on the Initial
Study/Mitigated Negative Declaration, either in full or in summary, related to significant
environmental concerns raised in the review, have been included in the record of
proceeding; and,
WHEREAS, Sanitation District staff presented to the Board the Initial
Study/Mitigated Negative Declaration for review and consideration prior to the final
approval of, and commitment to, the Initial Study/Mitigated Negative Declaration for the
Coyote Hills Golf Course Manhole Access and Odor Control Project; and,
WHEREAS, Sanitation District has prepared a Mitigation Monitoring and Reporting
Program,designed to ensure that the approved mitigation measures are implemented
during the Project's design, construction, and operation.
NOW, THEREFORE, the Board of Directors hereby resolves, determines and finds
that:
1. Changes or alterations have been required in, or incorporated into, the
proposed Project, before the proposed Initial Study/Mitigated Negative
Declaration was released for public review, which avoid or mitigate significant
environmental effects or substantially lessen the significant effects of the
Project identified in the Initial Study/Mitigated Negative Declaration; and,
2. There is no substantial evidence that the Project will have a significant impact
on the environment; and,
3. The Initial Study/Mitigated Negative Declaration reflects the Sanitation District's
independent judgment and analysis; and,
4. The documents and other materials that constitute the record of proceedings
upon which the Sanitation District's decision is based are located at the Orange
County Sanitation District, 10844 Ellis Avenue, Fountain Valley, California,
92708. The custodian of the record of proceedings is the Sanitation District
Clerk of the Board. Project files are located in the Sanitation District
Engineering Planning Division.
5. The Board of Directors adopts the Initial Study/Mitigated Negative Declaration;
and,
6. The Sanitation District will implement the mitigation measures recommended in
the Initial Study/Mitigated Negative Declaration to reduce the significant
impacts of the Project to a less than significant level; and,
7. The Board of Directors approves the mitigation measures, and adopts the
Mitigation Monitoring and Reporting Program for the Project, attached hereto
as"Exhibit A" and incorporated herein by reference,to ensure that all mitigation
measures are implemented; and,
• 8. The Board of Directors hereby approves the Coyote Hills Goff Course Manhole
Access and Odor Control Project, Contract No. FE08-04; and,
9. The Board of Directors authorizes and directs the Clerk of the Board to file the
Notice of Determination and any other documents in accordance with the
requirements of CEQA and the District's CEQA Procedures.
PASSED AND ADOPTED at a regular meeting held November 19, 2008.
Chair
ATTEST:
Clerk of the Board
TABLE A-1
Mdigation Monitoring and Reporting Program for the Coyote Hills Gott Course Manhole Access and Odor Control Project
Biological Resources
Impact B-1: The proposed Project could impact nesting birds,including the California Gnatcatcher(PoHoptile califomics)and the Least Bell's Vireo(Vireo belle
pusillus).
Mitigation Measure B-1: Vegetation removal and project construction will take dace outside the active bird nesting season,Including the California
Gnatcatcher breeding season(February 1 to August 30),and a qualified biologist will be present during vegetation removal to ensure that the impacts are
restricted to the areas identified and that no gnalcatchers are injured or killed during the vegetation removal.
Implementation Procedures Actions Responsibility Schedule
1. Ensure vegetation removal is Document date of vegetation removal Sanitation District, CNLM, USFWS During Construction
outside the active bird nesting activities for administrative record.
season.
2. Retain a qualified biologist to Maintain monitoring notes of the Sanitation District, CNLM, USFWS During Construction
monitor vegetation removal. qualified biologist for administrative
record.
Impact B-2: The proposed Project would permanently impact coastal sage scrub,which is habitat for the federally-threatened,California Gnatcatcher(Pohopfila
celffomica),and the federally-endangered,Least Bell's Vireo(Vireo bellff pusillus).
Mitigation Measure B-2: The permanent 0.071 acre impact to coastal sage scrub vegetation at Site 2 and the permanent 0,006 acre impact to low lying
native vegetation,including black sage(Salvia spp.),coastal goldenbush(Isocome menziessr),and mule fat(Baccharis selicifolie),at Site 1 (both within the
HCP),will be mitigated at a ratio of 5:1,consistent with the USFWS prior approval of the Minor Amendment to the HCP). The permanent 0.017 acre impact to
native vegetation,including mule fat(Beccharis salfcifolia)and buckwheat(Enogonum hasciculatum),at Site 3(outside the HCP)will be mitigated at a ratio of
3:1. Specifically,0.44 acre of non-native grassland and Italian thistle-dominated habitat will be converted to Ventumn-Diegan coastal sage scrub. A
Mitigation Plan has been prepared by the Sanitation District and approved by the Center for Natural Lands Management(CNLM)and the U.S. Fish and
Wildlife Service(USFWS). The Mitigation Plan includes provisions for the Sanitation District to fund CNLM for the purpose of implementing this mitigation. All
work specific to the implementation of this mitigation will be performed by CNLM staff or contractors hired by CNLM. The Mitigation Plan details
implementation requirements,which at a minimum include:
• Pre-implementation funding:Funding will be provided prior to any groundcleanng by the Sanitation District. Wdhin 30 days of funding the restoration
account by the Sanitation District, CNLM will submit a Draft Restoration Plan detailing the location, process,and success criteria for the restoration
program.
• Year 1:During the first growing season,the 0.44 acre will receive intensive weed control. This will involve a combination of herbicide application and
hand or mechanical removal,and at the completion of this phase the site will have exposed sails. It is anticipated that prior to this site preparation,
the Sanitation District will begin clearing access to these manholes. All surface soils removed from the access paths will be conserved and later
spread onto the enhancement site;if the site is not prepared when the Sanitation District has removed the topsoil from the access paths,than the
Sanitation District will stockpile the soils in a location selected by CNLM. Seeds from native shrubs will be collected from elsewhere in the Coyote
Hills East Preserve,and these seeds will be imprinted into the exposed sills of the entire 0.44 acre. No irrigation will be used to assist germination.
Throughout the growing season,weed control efforts will be applied as necessary. Five permanent transacts will be established within the
restoration site in a stratified distribution;the plant community will be monitored on these transacts annually for a minimum of five years to assess the
success of the restoration program. Photodocumentation will also serve to visually monitor the success of the restoration effort;one photo will be
captured annually from the leading end of each transect. A progress report will be submitted to USFWS by the end of the first calendar year.
• Year 2-5:Weed control volt continue as necessary. Erosion control may be needed due to exposure of soils,but the need will diminish with each
successive year as native vegetation establishes. Vegetation monitoring transacts and photodocumentation points will be samples annually in March
and April. A progress report will be submitted to USFWS at the and of each year. Any patches within the restoration area that do not demonstrate
growth of native vegetation will receive focused enhancement efforts,including supplemental seeding with seed collected elsewhere on the preserve.
• Year 6+:If any funds remain in the restoration account established by the Sanitation District,those funds will be used to continue habitat
enhancement activities on the 0.44 scre. This is likely to consist of follow-up weed control. Once the Sanitation District contribution is expended,any
weed control or habitat enhancement efforts will be funded through the existing endowment.
Implementation Procedures Actions Responsibility Schedule
1. Issue pne implements ion funding Document date and record of funding Sanitation District,CNLM Prior to Commencement of
from Sanitation District to CNLM. transfer for administrative record. Construction Activities
2. Draft Restoration Plan submitted Maintain copy of Draft Restoration Sanitation District, CNLM Within 30 Days of Funding the
by CNLM. Plan for administrative record. Restoration Account
3. Execute Year 1 restoration Maintain monitoring notes, Sanitation District,CNLM,USFWS End of First Calendar Year
activities. photodocumradation,and progress
report,for administrative record.
4. Execute Year 2-5 restoration Maintain monitoring notes and Sanitation District,CNLM End of Year 2-5 Calendar Year
activities, photodocumentation for administrative
record.
5. Execute Year 6+restoration Maintain record of any continued Sanitation District,CNLM Year 6+
activities. habitat enhancement activities.
Impact B-2a: The proposed Project would permanently remove native vegetation from the HCP.
Mitigation Measure S-2: (Refer to Mitigation Measure B-2, Biological Resources).
Implementation Procedures Actions Responsibility Schedule
1. Refer to Mitigation Measure B-2 Refer to Mitigation Measure B-2 Refer to Mitigation Measure B-2 Refer to Mitigation Measure B-2
Impact B-3: The proposed Project would conflict with an applicable habitat consmwafion plan.
Mitigation Measure B-3: Prior to initiating proposed Project activities within the HCP area,the HCP may be amended as agreed to with the U.S. Fish and
Wildlife Service and CNLM so that the proposed Project will not conflict with the HCP.
Implementation Procedures Actions Responsibility Schedule
1. Acquire agreement from USFWS Retain agreement from USFWS for Sanitation District, USFWS,CNLM Prior to Commencement of
and CNLM for activities within the administrative record. Construction Activities
HCP area.
Hazards and Hazardous Materials
Impact H-1: The proposed Project would include transport,storage,and use of odor control compounds that could cause a spill or accidental release hazard.
Mitigation Measure H-1: Transportation,storage and use of hazardous materials will comply with state and federal regulations and storage and dispensing
permits will be obtained as necessary
Mitigation Measure H-2: The Sanitation District will follow procedures to ensure proper handling and storage of hazardous materials and reduce potential for
spills impacting the public or the environment. At a minimum,the procedures will include:
• Obtain a permit to store hazardous material from the local fire department;
• Provide notification to the Orange County Health Care Agency of the odor control facility;
• Equip chemical delivery trucks with spill cleanup equipment to contain and dean up any spills;
• Provide chemical storage tanks with adequate secondary containment;
• Modify the Sanitation District's Spill Prevention Containment and Countermeasure(SPCC)Plan to include the odor control facility or ensure that
transport contractors have adequate SPCC Plans in place covering the odor control facility. The SPCC Plan will cover chemical transfer activities
(Including DOT requirements),public notification and placarding requirements,secondary containment,emergency spill response actions,routine
site access control,and site management and maintenance procedures. The c ntractor's SPCC Plan would require approval by the Sanitation
District's Safety Division.
Mitigation Measure 143: The Sanitation District shall require that all personnel working with hazardous chemicals have health and safety training. This is a
legal OSHA requirement under the Worker Right to Know regulations in the Federal Code of Regulations,The 29. The training shall include.at a minimum,
the proper use of safety equipment,hazard identification, and proper handling and disposal of spilled hazardous materials.
Mitigation Measure H<: Access to the odor control facility will be controlled to allow access only to authorized personnel.
Implementation Procedures Actions Responsibility Schedule
1. Comply Wth applicable legal Maintain record of compliance, Sanitation District Prior to Operation of Odor Control
requirements and regulations and including permits,for administrative Facility
acquire appropriate permits. record.
2. Ensure SPCC Plan in place Retain copy of SPCC Plan applicable Sanitation District Prior to Operation of Oda Control
applicable to Odor Control Facility. to Odor Control Facility fa Facility
administrative record.
3. Ensure that Odor Control Facility Document that Odor Control Facility Sanitation District Prior to Operation of Odor Control
access is controlled to only allow access is controlled to only allow Facility
access for authorized personnel access for authorized personnel for
administrative record.
Hydrology and Water Quality
Impact W-1: The proposed Project could violate rater quality standards or waste discharge requirements during construction.
Mitigation Measure W-1: Prior to the initiation of ground-disturbing activities,the Sanitation District(or its designee)will obtain approval from the State Water
Resources Control Board(SWRCB)under the National Pollutant Discharge Elimination System(NPDES)General Permit(Water Quality Order 99-08-DWQ)
for Discharges of Storm Water Associated Wth Construction Activity(General Permit). This includes submitting a Notice of Intent(NOI)to the SWRCB and
developing and implementing a Storm Water Pollution Prevention Plan(SWPPP). The SWPPP will identify potential sources of sediment and other pollutants
that could affect the quality of the stormwater discharge,and will specify best management practices(BMPs)to prevent or minimize the introduction of
sediment and pollutants into surface waters from the construction site. BMP methods of erosion and sediment control could include straw bales,silt fences,
and other control techniques. Monitoring and maintenance requirements shall be specified in the SWPPP.
Implementation Procedures Actions Responsibility Schedule
1. Submit NOI to SWRCB and Maintain record of NOI and SWPPP Sanitation District Prior to Commencement of
develop and implement a SWPPP for administrative record. Construction Activities
Impact W-2: The proposed Project could violate water quality standards orwaste discharge requirements during operations.
Mitigation Measure H-2: (Refer to Mitigation Measure H-2,Hazards and Hazardous Materials).
Mitigation Measure H-3: (Refer to Mitigation Measure H-3,Hazards and Hazardous Materials).
Implementation Procedures Actions Responsibility Schedule
1. Refer to Mitigation Measure's H-2 Refer to Mitigation Measure's H-2 and Refer to Mitigation Measure's H-2 and Refer to Mitigation Measure's H-2 and
and H-3 H-3 H-3 H-3
Land Use and Planning
Impact L-1: The proposed Project would conflict with an applicable habitat conservation plan.
Mitigation Measure B-3: (Referto Mitigation Measure B-3,Biological Resources).
Implementation Procedures Actions Responsibility Schedule
1. Refer to Mitigation Measure&3. Refer to Mitigation Measure B-3. Refer to Mitigation Measure&3. Refer to Mitigation Measure B-3.
BOARD OF DIRECTORS mee&V Date Toad.dob.
11/19/aB
AGENDA REPORT ""nN nhe 1Oe NM b'
zo
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 2008D
(CERTIFICATE ANTICIPATION NOTES)
GENERAL MANAGER'S RECOMMENDATION
1) Adopt Resolution No. OCSD 08-22,Authorizing the Execution and Delivery by the
District of an Installment Purchase Agreement, a Trust Agreement, an Escrow
Agreement, a Note Purchase Agreement, and a Continuing Disclosure Agreement in
connection with the execution and delivery of Orange County Sanitation District
Refunding Certificates of Participation, Series 2008D (Certificate Anticipation Notes),
such Notes Evidencing Principal in an Aggregate Amount of Not to Exceed
$198,000,000, Approving an Official Statement in Connection with the Offering and
Sale of such Notes and Authorizing the Execution of Other Necessary Documents
and Related Actions; and,
2) That the Orange County Sanitation District Financing Corporation approve the
documents supporting and authorizing the Refunding Certificates of Participation,
Series 2008D (Certificate Anticipation Notes) in an amount not to exceed
$198,0D0,000.
SUMMARY
The current global financial crisis has negatively impacted the financial strength and ratings
of many financial institutions that provide bank liquidity facilities securing variable rate bonds
issued by municipal entities. Variable rate issues secured by banks with the least favorable
investor perception have experienced higher than expected interest rate resets as investors
are less willing to hold bonds secured by these weakening banks. In many cases, investors
have tendered the bonds to the banks(Bank Bonds)to preempt any possibility of the
liquidity bank not being able to provide funds in the future.
The District's current variable rate debt exposure includes its outstanding Certificates of
Participation, Series 2006 ("2006 COPS") secured by a liquidity facility from DEPFA Bank pic
("DEPFA°)which is one of the banks experiencing financial difficulties, thus leading to higher
than expected rate resets in general and more specifically Bank Bonds for the District. The
current Bank Bond rate is based on the Prime Rate (currently 4%)with the rate increasing
by an additional 0.75% beginning in January. Although the Bank Bond rate is less than
current fixed rates, it is significantly higher than the recent variable rates the District is
paying on its 2000 COPS (averaging less than 1%). As discussed in the Administration
Committee Agenda Report on New Money Certificates of Participation (COPS) dated
November 12, 2008, staff and the District's consultants have been monitoring this situation
and began the process of requesting approval to use District funds to temporarily purchase
the 2006 COPs. The temporary purchase of the 2006 COPS would provide the maximum
F.N..DMIM AWft Re -a W
Renfetl: lVNI 8
Page 1
r
flexibility to the District in anticipation of better liquidity bank pricing or lower fixed rate debt
costs.
More recently, the current market yields on short-term securities issued in anticipation of
permanent financing (Bond/Certificate Anticipation Notes or BANS) have significantly
lowered in cost to issuers. In the current market, 13-month tax-exempt BANS are yielding
less than 2%. Instead of using District funds to temporarily purchase Bank Bonds, the
District could issue BANs to redeem the DEPFA Bank Bonds at a cost of less than 2%while
waiting for the markets to stabilize.
The District's 2006 COPS debt was issued in 2006 as daily variable rate debt and has
averaged 3.25%to date. However, the current Bank Bond characteristics have increased
recent costs to over 4.00%.
Options Available to the District
1. Do Nothing
Since the issuance of the 2006 COPs, the District has benefited from an average interest
rate of 3,25%. The liquidity fee charged by DEPFA is only 11 basis points and is effective
until March 2013. If the perception of DEPFA's financial condition improves, the 2006 COPS
may once again be remarketed at market rates.
However, if the District takes no action at this time, the current Bank Bond rate of 4.00%will
Increase by 0.75% in January. Also, the Bank Bond rate may further increase should
DEPFA experience additional financial distress and its borrowing cost from other banks rise.
In addition, the District will be required to start repaying principal to DEPFA starting in 2013
(District can pay interest only through 2013).
2. Replace DEPFA with New Bank
The replacement of DEPFA with a stronger bank might allow the 2006 COPs to be
remarketed at current attractive levels(recent rates on the 2000 COPS are averaging
0.90%).
Due to the liquidity crisis facing many banks, there are a limited number of banks willing to
provide credit facilities to municipalities, even highly rated issuers such as the District. The
few banks willing to extend credit in the current market are requesting annual fees in excess
of 100 basis points per year for no more than three years with relatively onerous terms and
conditions. As a point of reference, the District's most recent Request of Proposals for
banks in October 2007 resulted in two banks offering liquidity at ten basis points for three-
year facilities. The District will be subject to unknown bank renewal or replacement risk
upon the expiration of the liquidity facility. Meanwhile, the District would be subject to the
risk of the creditworthiness of the replacement bank. It is important to recognize there are
no assurances that even today's strongest financial institution will retain its financial strength
for any extended period of time.
Fo1m No.O -102 Agenda Ra —Board
Revised: 1MO ift
Page 2
i
Y The following is a cost comparison verses Option 1 (Do Nothing) over the next year:
0.9000/0 COP Series 2000 Current Daily Rate
0.239% One Month Delay (Liquidity documentation negotiations)
1.125% Assumed Replacement Liquidity Fee
0.050% Remarketing Fee
0.033% Costs of Issuance
0.000% Underwriter Costs
(0.160%) less Liquidity and Remarketing Fees (Option 1)
(4.750%) less Assumed Bank Rate (Option 1)
2.5630,E or$5.1 Million of savings compared to Option 1
3. Refund the 2006 COPS with Fixed Rate Debt
The issuance of fixed rate refunding bonds will eliminate variable rate risks and financial
exposure to DEPFA. After issuance, the District will not be subject to changing market
conditions.
The long average fife of the 2006 COPS (21.2 years)would result in a fixed rate borrowing
cost of approximately 5.30% in the current market. In addition, recent demand for long
municipal bonds has been spotty and the District may cannibalize market access for its
$200 million of fixed rate new money COPS with a fixed rate refunding of$196 million of
2006 COPS.
The following is a cost comparison verses Option 1 (Do Nothing) over the next year
5.300% Assumed Average Fixed Rate
0.000% One Month Delay (Liquidity documentation negotiations)
0.000% Assumed Replacement Liquidity Fee
0.000% Remarketing Fee
0.015% Costs of Issuance ($375,000 amortized over fife of COPS)
0.040% Underwriter Costs ($980,000 amortized over fife of COPS)
(0.160%) less Liquidity and Remarketing Fees (Option 1)
(4.7500%) less Assumed Bank Rate (Option 1)
0.445% or$880,000 more costly than Option 1 (over first year only)
4. Refund the 2006 COPS with BANS
The current market rate for BANs is less than 2.00%. The issuance of BANS to temporarily
fix the rate at a low interest cost will allow the District to wait for a more attractive opportunity
to structure a longer term solution for the 2006 COPS. The BAN structure will eliminate
exposure to DEPFA and variable rate risks over the next year. Although current variable
rates are low(Option 2), it is unknown whether rates will be expected to stay below 1.00%.
A comparison of the economics of this BAN structure to Option 2 shows that unknown
variable rates must average less than 0.593% over the next year for Option 2 to generate a
better net economic result.
Form No.M-102 Ageoda Repel-BoaN
ReYisetl'. 11x18/00
Page 3
The major risk with a BAN structure occurs W the District does not have market access to
remarket the BANS at maturity. However, if the District currently contemplates using a
portion of its reserves to temporarily redeem the 2006 COPS, the issuance of BANs allows
the District to defer such action for approximately one year. Interest rates could be
substantially higher upon maturity, but it is expected that the District would carefully monitor
the market over the next year to take advantage of any low rate opportunities.
The following is a cost comparison verses Option 1 (Do Nothing) over the next year:
1.750% Assumed One-Year Rate
0.000°k One Month Delay (Liquidity documentation negotiations)
0.0D0% Replacement Liquidity Fee
0.0D0% Remarketing Fee
0.164% Costs of Issuance($325,000 amortized over one year)
0.126% Underwriter Costs ($250,000 amortized over one year)
(0.160%) less Liquidity and Remarketing Fees(Option 1)
(4.750%) less Assumed Bank Rate (Option 1)
(2.870%) or$5.7 million of savings compared to Option 1
Staff is recommending Option 4 the refunding of the 2006 COPS with BANS that enables the
District to lock-in a low rate for approximately one year without encumbering its cash
reserves. If the District pursues Option 4 given the large single maturity, BANs are best sold
in this uncertain market on a negotiated basis. Staff is recommending Banc of America
Securities LLC to serve as underwriter on the BANS for the following reasons:
1) First firm to propose BAN concept for the 2006 COPS and has provided frequent updates.
2) Remarketing performance on 2000 COPS:
a. Average rate of 2.10°/6 since taking over the program from UBS in August 2008.
b. Average rate of 0.71%in November 2008.
3) Dexia Credit Local is the liquidity bank on the 2000 COPS and many remarketing agents
have tendered Dexia-backed bonds.
Staff and consultants will make a brief presentation and provide an overview of the draft
documents and the financing schedule at the Board meeting.
PRIOR COMMITTEEIBOARD ACTIONS
N/A
ADDITIONAL INFORMATION
The Board of Directors and the Financing Corporation will each be required to adopt
separate Resolutions to complete this refinancing. 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, 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.
Form No M-102 A d.Repm—B.W
ReWgl: 1NOBI08
Page 4
The OCSD Resolution authorizes the execution and delivery of certain legal documents and
the execution and delivery of Refunding Certificates of Participation, Series 2008D
(Certificate Anticipation Notes)evidencing principal in an aggregate amount of not to exceed
$198,000,000 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,
AN ESCROW AGREEMENT,A NOTE PURCHASE AGREEMENT, AND A CONTINUING
DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY
OF ORANGE COUNTY SANITATION DISTRICT REFUNDING CERTIFICATES OF
PARTICIPATION, SERIES 2008D (CERTIFICATE ANTICIPATION NOTES), SUCH NOTES
EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED
$198,000,000,APPROVING AN OFFICIAL STATEMENT IN CONNECTION WITH THE
OFFERING AND SALE OF SUCH NOTES, AND AUTHORIZING THE EXECUTION OF
OTHER 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 REFUNDING
CERTIFICATES OF PARTICIPATION, SERIES 2008D (CERTIFICATE ANTICIPATION
NOTES);AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH NOTES
EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT-TO-EXCEED
$198,000,000 AND; AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS
AND NOTES AND RELATED ACTIONS."
Following is a chart listing the remaining steps to be completed for the issuance of the COP
Series 2008D(Certificate Anticipation Notes) debt issuance:
➢ Board approval of legal and disclosure documents
November ➢ Receive Ratings from Bond Rating Agencies
➢ Negotiated Pricing
December ➢ Closing
➢ Redemption Notice
ATTACHMENTS (The following attachments will be available prior to the board meeting.)
1. District Resolution
2. Corporation Resolution
3. Draft Trust Agreement
4. Draft Installment Purchase Agreement
5. Draft Continuing Disclosure Agreement
6. Draft Preliminary Official Statement
7. Draft Note Purchase Agreement
8. Draft Escrow Agreement
F.W p 16f Age Repot-BwM
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MINUTES
November 28, 2007
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November 28, 2007
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111 07
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 November 28, 2007 at 7:05
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 Dolan
X Doug Davert, Vice Chair Jim Palmer
Steve Anderson X Tom Beamish
X Charles Antos Gordon Shanks
X Don Bankhead Sharon Quirk
X Steven Choi Sukhee Kang
X Larry Crandall Gus Ayer
X 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
A Darryl Miller Douglas Reinhart
X Roy Moore Ron Garcia
X Joy Neugebauer All 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
X 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; Life Kovac; Bob Bell; Jim Burror, Rich Castillon;
Bob Chenowith; Barbara Collins; Marc Dubois; Norbert Gaia; Michael Gold; Gary Prater,
Jeff Reed; Juanita Skillman; Rob Thompson; Simon Watson; Ryal Wheeler; Paula Zeller
OTHERS PRESENT: Brad Hogin, General Counsel; Alternate Director All Krippner;
Gino Rampagna; Cory Morales;Jan Vandersloot
ti OCSD Finance Corporation
11/28/07
b. MOVED, SECONDED AND DULY CARRIED: Order the minutes for the meeting
held on April 25, 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 issuance of
Certificates of Participation, Series 2007B.
d. MOVED, SECONDED AND DULY CARRIED: Adopt Resolution No. FC-05,
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.
ADJOURNMENT: The Chair declared the meeting of the Orange County Sanitation
District Financing Corporation adjourned at 7:08 p.m.
1 •
Penny M. Ule
Clerk of the Board
Orange County Sanitation District Financing
Corporation
Orange County Sanitation District
Financing Corporation
MINUTES
May 14, 2008
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May 14, 2008
Page 2
ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION
ROLL CALL
A special meeting of the Board of Directors of the Orange County Sanitation District
Financing Corporation (OCSDFC)was called to order on May 14, 2008 at 5:15 p.m., in
the District's Administrative Offices. The roll was called, and the Associate Clerk of the
Board reported a quorum present as follows:
ACTIVE DIRECTORS ALTERNATE DIRECTORS
X James M. Ferryman, Chair Bob Dolan
X Doug Davert,Vice Chair Jim Palmer
X Charles Antos Gordon Shanks
T Don Bankhead Sharon Quirk
T Larry Crandall Gus Ayer
73F Bill Dalton Steven Jones
T Jon Dumitru Carolyn Cavecche
A Rose Espinoza James Gomez
X I Richard Freschi Brad Reese
X Don Hansen Jill Hardy
X Phil Luebben Prakash Narain
A Patsy Marshall Jim Dow
X Darryl Miller Douglas Reinhart
X Roy Moore Ron Garcia
X Joy Neugebauer AlKdppner
X Chris Norby Janet Nguyen
X Ken Parker Catherine Driscoll
X Christina Shea Steven Choi
T David Shawver David Cadena
A Harry Sidhu Lucille Kring
A Sal Tinajero David Benavides
-3F Constance Underhill Joseph Aguirre
X Mark Waldman Henry Charoen
A Don Webb Leslie Daigle
X Jim Winder John Anderson
STAFF MEMBERS PRESENT: Jim Ruth, General Manager; Bob Ghirelli, Assistant
General Manager, Lllia Kovac, Associate Clerk of the Board; Nick Arhontes; Lorenzo
Tyner; Norbert Gaia; Gail Garrett; Bob Gaggle; Randy Kleinman; Jeff Reed; Juanita
Skillman
OTHERS PRESENT: Brad Hogin, General Counsel; Al Krippner; Don McLean
OCSD Finance Corporation
May 14, 2008
Page 3
Lorenzo Tyner, Director of Finance, reported that the Financing Corporation would need
to adopt the following resolution in order to proceed with refunding of Certificates of
Participation, Series 2008A.
MOVED, SECONDED, AND DULY CARRIED: Adopt Resolution No. FC-06, Authorizing
the Execution and Delivery by the Corporation 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,
Refunding Series 2008A,Authorizing the Execution and Delivery of such Certificates
Evidencing Principal in an Aggregate Amount of Not to Exceed $85,000,000, 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.
ADJOURNMENT: The Chair declared the meeting of the Orange County Sanitation
District Financing Corporation adjourned at 5:20 p.m.
Life Kovac
Associate Clerk of the Board
Orange County Sanitation District
Financing Corporation
HAdeptagendMoard Minutest2008 Swrd Minutes%051408 OCSD Fina .do=
OCSD Finance Corporation
May 14, 2008
Page 3
Lorenzo Tyner, Director of Finance, reported that the Financing Corporation would need
to adopt the following resolution in order to proceed with refunding of Certificates of
Participation, Series 2008A.
MOVED, SECONDED, AND DULY CARRIED: Adopt Resolution No. FC-06, Authorizing
the Execution and Delivery by the Corporation 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,
Refunding Series 2008A, Authorizing the Execution and Delivery of such Certificates
Evidencing Principal in an Aggregate Amount of Not to Exceed $85,000,000, 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.
ADJOURNMENT: The Chair declared the meeting of the Orange County Sanitation
District Financing Corporation adjourned at 5:20 p.m.
J
Lilia Kovac
Associate Clerk of the Board
Orange County Sanitation District
Financing Corporation
H4depC genda\Board Minutes\2008 Board Minutes\051508 OCSO Finanmdxx
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August 27, 2008
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Page 2
A special meeting of the Board of Directors of the Orange County Sanitation District
Financing Corporation (OCSDFC)was called to order on August 27, 2008 at 7:22 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 Doug Davert, Chair Jim Palmer
X Larry Crandall, Vice Chair Gus Ayer
X Charles Antos Gordon Shanks
)F Don Bankhead Sharon Quirk
5F Bill Dalton Steven Jones
)F Jon Dumitru Carolyn Cavecche
_jF Rose Espinoza James Gomez
X James M. Ferryman Bob Ooten
X Don Hansen Jill Hardy
X Phil Luebben Prakash Narain
X Patsy Marshall Jim Dow
X Darryl Miller Douglas Reinhart
X Roy Moore Ron Garda
X Joy Neugebauer AI Krippner
X Chris Norby Janet Nguyen
A Ken Parker Catherine Driscoll
X Brad Reese W. Richard Ulmer
)F David Shawver David Cadena
X Christina Shea Steven Choi
X Harry Sidhu Lucille Kring
A Sal Tinajero David Benavides
X Constance Underhill Joseph Aguirre
X Mark Waldman Henry Charoen
5F Don Webb Leslie Daigle
X Jim Winder John Anderson
STAFF MEMBERS PRESENT: Jim Ruth, General Manager, Bob Ghirelli, Assistant
General Manager; Penny Kyle, Clerk of the Board; Jim Herberg; Lille Kovac; Ed Torres;
Lorenzo Tyner; Carla Dillon; Bret Colson; Michael Gold; Linda Kirshner, Ryal Wheeler,
Paula Zeller
OTHERS PRESENT: Brad Hogin, General Counsel; Bob Ooten, Gino Rampagna; Ed
Soong; David Moshier
OCSD Finance Corporation
August 27, 2008
Page 3
b. Director of Finance, Lorenzo Tyner, reported that the refinancing of
refunding of COPS requires the Financing Corporation approval.
C. MOVED, SECONDED AND DULY CARRIED: Adopt Resolution
No. FC-07, a Resolution of the Board of Directors of the Orange County
Sanitation District Finance Corporation Authorizing the Execution and
Delivery by the Corporation 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, Refunding Series 2008B, Authorizing the
Execution and Delivery of such Certificates Evidencing Principal in an
Aggregate Amount of Not to Exceed $32,000,000,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.
ADJOURNMENT: The Chair declared the meeting of the Orange County Sanitation
District Financing Corporation adjourned at 7:22 p.m.
Penny ) e 49,
Clerk of the Board
Orange County Sanitation District
Financing Corporation
H:Wepragenda\Board Mlnutest20D8 Board Minutes\082708 OCSD Finanmd=
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Orange County Sanitation District
Five - Year Strategic Plan
TABLE OF CONTENTS
OCSD BOARD OF DIRECTORS
STRATEGIC PLAN PROJECT TEAM
MESSAGE FROM THE GENERAL MANAGER
EXECUTIVE SUMMARY iv
A UNIFIED STRATEGIC PLAN 5
OVERVIEW 6
MISSION STATEMENT 7
VISION STATEMENT 8
CORE VALUES 9
STRATEGIC GOALS & LEVELS OF SERVICE 10
Environmental Stewardship 12
Business Principles 14
Wastewater Management 16
Workplace Environment 18
APPENDIX A: ISSUE PAPERS 20
APPENDIX B: PREVIOUS ISSUES PAPERS 26
APPENDIX C: GLOSSARY 32
OCSD BOARD OF DIRECTORS
Chair Doug Davert
Vice Chair Larry Crandall —
City 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 Don Hansen
Irvine Christina Shea
La Habra Rose Espinoza -
La Palma Mark Waldman
Los Alamitos Ken Parker
Newport Beach Don Webb
Orange Jon Dumitru
Placentia Constance Underhill
Santa Ana Sal Tinajero -
Seal Beach Charles Antos
Stanton David Shawver
Tustin Doug Davert -
Villa Park Brad Reese
Yorba 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
Orange County Board of Supervisors Chris Norby —
STRATEGIC PLAN PROJECT TEAM
James D. Ruth General Manager _
Robert P.Ghirelli Assistant General Manager
Nick Arhontes Director of Operations and Maintenance
James Herberg Director of Engineering
Edward Torres Director of Technical Services -
Lorenzo Tyner Director of Administrative Services
Barbara Collins Principal Analyst
Michael Gold Government Affairs Manager r
Brent Ives BHI Consulting
ad
ii -
MESSAGE FROM
THE GENERAL MANAGER
— Throughout our distinguished history,the Orange County Sanitation District has
protected public health and the environment by providing the highest levels of
service,maintaining excellent relationships with our member cities and agencies,
and ratepayers and regulators,while spending public dollars wisely.We are
proud to be an internationally recognized leader in our industry.
The OCSds success is due to the strength of people serving this fine
organization:our Board of Directors provides strategic leadership and our staff
make every day possible.
Following our successful Strategic Plan adopted by the Board of Directors in November 2007, 1 am proud
to present this plan that continues charting our course for the next five years.The mission,vision,and
core values adopted as part of the last plan form the building blocks for a continuation of our efforts.
In the past year alone,we completed nearly 30 percent of the goals,yet we are not content to maintain
the status quo.As I step back and look over our accomplishments of the past year:passing a sound
financial plan for five years,an aggressive capital improvement program injecting$1 million per day into
Orange Countys economy,and the successful dedication of the Groundwater Replenishment System, I
am confident that our Board and staff will continue to strive for excellence and maintain an eye towards
future challenges.
Moving forward,this strategic plan adds five new goals that are as diverse as the population we serve
and I am pleased that initial implementation of these goals will add no new costs to the budget. I look
— forward to a thoughtful discussion with staff and the Board of Directors on these important issues.
With significant challenges ahead, I am confident that this strategic plan charts a course for success over
the next year and beyond. I am grateful to the Board of Directors for their leadership and support and
also to our staff for their dedication.
Respectfully submitted,
James D. Ruth
General Manager
iii
EXECUTIVE SUMMARY r
In November 2007,the Board of Directors adopted a new comprehensive strategic plan to drive OCSD's
efforts and engage the organization to envision service and operations for the next five years.
r
This year,the Strategic Plan is being updated to continue looking at a five-year horizon. Following a
similar process to last years plan,the General Manager's Office initiated the planning effort with the
r
Executive Management Team,then solicited input and Ideas from managers and supervisors. In October
2008,the staff-generated ideas were presented to the Board of Directors during a workshop, where
-
Board Members discussed and deliberated changes and additions to the plan. r
Driven by our mission,vision and core values,this Strategic Plan, updated for 2009,continues our
aggressive efforts to meet the sanitation, health,and safety needs of the more than 2.5 million people
we serve while protecting the environment where we live.
In the past year, nearly 30 percent of the goals were completed. For 2009,this Strategic Plan presents
five new goals and maintains the high standards set in the past plan.
These new goals were discussed at the October 15 Board of Directors workshop and include the r
following:
• Reaffirming OCSD's commitment to expand the Groundwater Replenishment System, including
completion of the Steve Anderson Lift Station and studying the potential to include flows from the r
Santa Ana River Interceptor.
• Analyzing whether adding chlorine to disinfect effluent into the ocean is cost-effective in
comparison to other alternatives that maintain protection of public health and safety.
• Evaluating and promoting OCSD's environmental initiatives and seeking additional opportunities to
utilize emerging technologies.
• Continuing to assess and identify risks to OCSD, including political and financial risks, and developing
mitigation strategies.
• Developing a comprehensive human resources strategic plan to connect employees with the overall
mission,values,and vision of the organization and preparing employees for future leadership r
opportunities.
This Strategic Plan continues to chart a focused roadmap of success for the future of the Orange County
Sanitation District. It addresses critical operations and construction issues,financial and budgeting
-
challenges,and gives clear and concise direction to staff, ratepayers, regulatory agencies, the public,and
r
our Board of Directors.
r
r
ry
r
A UNIFIED STRATEGIC PLAN
_ In creating this document,a considerable amount of thought was given to how a variety of existing
planning resources would be used to create a unified Strategic Plan.The graphic below shows the
relationship of these resources and how they relate to the overall structure and execution of the plan.
Board of Directors
— Mission
Vision
Core Values
Five-Year Strategic Plan
Goals
Levels of Service
Assessment
of Risks
Annual Business Plans
Business Accountability Charters
Staffing Plan
Financial Plan
Facilities Master Plan
Asset Management Plan
S
OVERVIEW
Since 1954,the Orange County Sanitation District has provided wastewater treatment to the residents
and businesses of northern and central Orange County and is the third largest wastewater treatment
agency west of the Mississippi River.During fiscal year 2007-08,OCSD collected,treated and disposed
of 221 million gallons of wastewater every day.OCSD also recycled 100 percent of its biosolids and
reclaimed 17 percent of its treated wastewater,with a future goal of 40 percent.
In July 2002,the Board approved disinfecting the effluent _
and proceeding with the planning,design,and construction
of facilities that will ultimately allow OCSD effluent to meet
Federal Clean Water Act secondary treatment standards. _
The current disinfection program includes nearly$5 million
annually for chemicals,while the estimated capital
construction cost to meet secondary treatment standards is
$649 million.OCSD is currently in the midst of a$2.6 billion,
20-year capital improvement program with an annual
capital budget of nearly$300 million. ,.
Reclamation Mn,No. I in Founuin Valk,
In addition to the OCSD's partnership in the Groundwater
Replenishment System and secondary treatment expansion,
our capital improvement program includes critical
rehabilitation of aging collection systems 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 over 2.5
million people in the most effective and efficient way
possible,the strategic planning process began in 2D07 to T,� P,,,,,N. 2 Bead,
continually map a five-year strategy.
Beginning with gathering input from the staff,with the leadership of the Board of Directors,OCSD "
developed its mission,vision,and values to allow all levels of the organization to take ownership in the
stratgeic planning process.
The original plan,along with OCSD's mission,vision and values was adopted in November 2007.For this update,the Executive Management Team once again developed ideas seeking input from _
managers and supervisors and presented five new goals for discussion by the Board of Directors.
In the past year,several goals were completed by staff in the areas of climate change,engine emissions, _
information technology, biosolids,and leadership development.
r
6
r
OCSD MISSION STATEMENT
The Mission Statement is the basic foundation that defines why we exist.
"We protect public health and the environment by providing
effective wastewater collection, treatment, and recycling."
i
t.
OCSD VISION STATEMENT
The Vision Statement supports the Mission Statement by expressing a broad philosophy of what the
Orange County Sanitation District strives to achieve now and in the future in the delivery of services 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 '
r to produce optimum financial, environmental
' and societal results.
e.
�- Cooperating with other stakeholders to protect W
the ocean and regional water resources for the
people we serve. _
r
Beneficially recycling wastewater, biosolids and
_ other resources using safe and effective processes
and systems.
r
Developing the best possible workforce by
providing employees with opportunities to _
advance their careers through enhanced growth,
responsibility, and professional development. r
w
r
e
r
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 and 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.
9
STRAGEGIC GOALS &
LEVELS OF SERVICE -
On the following pages are the strategic goals and levels of service for the next five years. New goals for —
this report are noted and all goals include projected completion time.The levels of service standards are
measures of service that are seen by our customers as high priorities.Goals and levels of service are
divided into four areas:
• Environmental Stewardship
• Business Principles
• Wastewater Management —
• Workplace Environment
1A —
1
6 �
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-
10
Goals Completed in the Past Year
During the past year,the following goals were completed:
Environmental Stewardship
Management System for Environmental Compliance
• Implement a management control system for environmental compliance information
that Incorporates a dashboard-style report.
Engine Emission Compliance
• Complete study to evaluate alternatives for complying with lower emission limits in the
South Coast Air quality Management's Rule 1110.2. Initiate planning and design of
demonstration testing of the most promising technology(s)identified in the study.
Climate Change/Greenhouse Gasses
• Complete development of statewide emission inventory protocol for publicly-owned
treatment works and submit mandatory emission inventory to the California Air
Resources Board for Fiscal Year 2007-08.
Business Principles
Enterprise Information Technology Strategic Plan
• Complete a District-wide information technology strategic plan.
Wastewater Management
Sustainable Biosollds Program
• Evaluate the feasibility of deep injection/methane recovery including commissioning a
study of the geological formations below Plants 1 and 2,and availability and
acceptability of any existing wells.
• Evaluate option of processing some biosolids at the City of Los Angeles Terminal Island
demonstration well.
• Complete new in-county Compost Take-Back Program Plan strategy.
Workplace Environment
Succession Plan
• Implement the succession management plan including management training and the
creation of a Leadership Academy.
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Environmental Stewardship Goals
OCSD participates collaboratively in the protection of regional water resources for the benefit of the
people we serve. _
Goals and Targeted Completion Date
Santa Ana River Interceptor Line Relocation
• Work in conjunction with the County of Orange and the Federal Government to relocate the -
Santa Ana River Interceptor Line by March 2012. _
Targeted for completion in FY 11-12
Management System for Environmental Compliance
• Implement management control system for the scope of environmental requirements
Targeted for completion in FY9-10
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 are CPCs identified that r.
require control.
Targeted for completion in FY09-10
Engine Emission Compliance
• Complete demonstration testing and negotiate engine emission limits and schedule with
SCAC MD. r
Targeted for completion in FY 10-11
• Implement capital improvements or operations modifications in order to achieve compliance.
Targeted for completion in FY 13-14
Reclaiming SARI Line Flows
• Meet with stakeholders,develop a list of obstacles that need to be overcome to reclaim the
SARI Line and develop a strategy to obtain regulatory approval of reclaiming SARI Line flows.
Targeted for completion in FY 09-10
Environmental Footprint Initiative(new)
• Determine environmental footprint for both treatment plants
Targeted for completion 09-10
• Develop outreach materials describing initiatives already undertaken by OCSD that have
r
reduced our environmental footprint
Targeted far completion in 09-10
• Conduct research on emerging technologies and evaluate additional initiatives that should be
ti
considered by the Board
Ongoing goal to be completed annually
• Maximize the use of digester gas
Targeted for completion in 10-11
r
12
Environmental Stewardship Levels of Service
OCSD will protect public health and the environment FY 07-08 FY 08-09
Results Target
Provide capacity to collect and treat dry weather urban runoff 1.65 mgd Up to 4 mgd
� Moxlmum
10mgdby
2020
.. Maximum off-site odor impact
. Reclamation Plant No. 1 42 D/T 42 D/T
la 0/rby 2016
. Treatment Plant No.2 48 D/T 48 D/T
120/Tby2016
Air emissions health risk to community and employees, < 10 < 10
per one million people(for each treatment plant)
Permit compliance (air, land,and water) 100% 100%
OCSD will be a good neighbor FY 07 08 FY 08 09
Results Target
Odor complaint response:
. Treatment Plants within 1 hour 100% 100%
. Collections System within 1 working day 100% 100%
Number of odor complaints:
. Reclamation Plant No. 1 34 32
. Treatment Plant No.2 8 4
. Collection System 21 34
Restore collection service to customer within 8 hours 100% 100%
Respond to collection system spills within 1 hour 100% 100%
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Business Principles
OCSD makes every decision based on short and long-term environmental,societal,and financial impacts
(the triple bottom line).
Goals and Targeted Completion Date
Strategic Business Plan
• With Board concurrence,annually update and implement the Strategic Plan and Business Plan. r
Ongoing goal to be completed annually
Review Interagency Agreements
• Conduct a comprehensive review of agreements with the Santa Ana Watershed Project
Authority,and, if appropriate, reopen for discussion. _
Targeted for completion in FY 09-10
• Conduct a comprehensive review of agreements with the Irvine Ranch Water District and, if
appropriate,reopen for discussion.
Targeted for completion in FYII-12
r
Complete Facilities Master Plan Update
• Complete a comprehensive update of the Facilities Master Plan and obtain Board approval.
Targeted for completion in FY 09-10 .,
Sewer Rate for Green Development
• Submit for board approval an amendment to sewer rate ordinance with incentives for green r
developments.
Targeted for completion in FY 09-10
Business Accountability Charters
• Create Business Accountability Charters for each department consistent with those developed
by managers and supervisors. r
Ongoing goal to be completed annually
Local Sewer Services
• Implement the Board's four recommendations based on findings of staffs revenue adequacy
report.Continue to seek an asset transfer to other agencies.Also transfer other local assets
back to cities that are not serving a true regional purpose.
Ongoing goal to be completed in FY 11-12
Updating OCSD's Risk Register(new)
• Review and update OCSD's risk register to include an assessment of technical, regulatory,
financial,and political risks(among others)and possible mitigation strategies.
Targeted for completion in FY 10-11
Ir
14
Business Principles Levels of Service
OCSD will exercise sound financial management FY 07-08 FY 08-09
Results Target
COP service principle and interest <0&M expenses <0&M expenses
Annual user fees Sufficient Sufficient to cover all
O&M requirements
_ Actual annual increase in collection,treatment, and
disposal costs per million gallons in comparison with the 4.3% <10%
budget
Annual variance from adopted reserve policy 128.50% >95%
OCSD will be responsive to our customers FY 07-08 FY 08-09
Results Target
_ Respond to public complaints or inquires regarding 100% >90%
construction projects within 1 working day
New connection permits processed within 92 4% >90%
one working day
�5
Wastewater Management ..
OCSD beneficially reuses and recycles water and other resources using safe and effective wastewater
systems.
r
Goals and Targeted Completion Date
Sustainable Biosolids Program
• Monitor both opposition to land application in Kern County and Arizona,and availability of �+
sustainable cost-effective alternatives and provide management and Board with
recommendation on whether to pursue proposal for selecting a technology to manage the
remaining one-third of our biosolids capacity �+
• Ongoing goal to be completed annually
• Develop agreement
Targeted for completion in FY 10-11
• Implement management option. r
Targeted for completion in FY 11-12
• Monitor City of Los Angeles'deep injection project and evaluate the regulatory and public r
relations components of undertaking the project.
Ongoing goal to be completed annually
r
• Conduct research to reduce the amount of biosolids produced.
Ongoing goal to be completed annually
r
Implement Energy Master Plan
• After the completion of the plan,assess final recommendations to ensure adequate power
resources and energy management.
Ongoing goal to be completed annually
Odor Control r
• Implement Odor Control Projects at Plant 1(trickling filters)and Plant 2(solids loading facility)
by 2016. _
Targeted for completion in FY IS-16
Groundwater Replenishment System(new) _
• Maximize the production of GWR System product water to augment and protect the Orange
County groundwater basin with a goal of 70 mgd.
Targeted far completion in FY 09-10
Disinfection of Final Effluent(new)
• Develop a cost effective program to sustain protection of public health associated with bacteria `.
in the effluent and gain acceptance of any changes in the program by the public, regulators and
other stakeholders.
Targeted for completion in FY 09-10 r
L•
16
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war Wastewater Management Levels of Service
OCSD will provide a safe reliable effluent for recycling FY 07-08 FY 08-09
Results Target
Concentration of emerging chemical constituents 30 NDMA< 150 plat
of concern in Plant No. 1 secondary effluent 1.6 1,4-Dioxane<
2 ppb
Thirty-day geometric mean of total coliform bacteria in effluent 266 < 1,000 mpn
after initial dilution of 180:1
Industry compliance with permits to discharge into OCSO sewers 100% 100%permit
compliance
BOD 45 mg/L BOD 100 mg/L
r 80030mgA by 2012
Meet secondary treatment standards TSS 33 mg/L
TSS 55 mg/L
TSS 30 molt by 2012
rlia
OCSD will manage flows reliably FY 07-08 FY 08-09Results Target
Frequency of use of emergency one-mile(78-inch diameter) 0 per year during
outfall 0 dry weather
less than once per 3 years
In peak wet weather
.. Sanitary sewer spills per 100 miles 0.9 < 2.1
Contain sanitary sewer spills within 5 hours 100% 100%
OCSD's effluent will be recycled
FY 07.08 FY 08-09
Results Target
_ Provide up to 104 mgd specification effluent to the 35.3 mgd 104 mgd
Groundwater Replenishment System during Initial
start-up year
OCSD will Implement a sustainable biosolids management FY 07-08 FY 08-09
program Results Target
wa National Biosolids Partnership Certification for Biosolids Recertified Maintain
Environmental Management System July 2008 certification
Percent of biosolids recycled 100%recycled >95%recycled
0%landfill <5%landfill
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Workplace Environment r
OCSD provides an environment of partnership,growth,opportunity,responsibility and accountability.
Goals and Targeted Completion Date
Space Planning Study Recommendations
• Complete relocation of staff housed in Information Technology Trailers,Administration
Building,Control Center and Building 6. r
Targeted for completion in FY 09-10 -
North County Yard r
• 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-wide needs as _
appropriate.
Targeted for completion in FY 09-10
Safety and Health Strategic Plan
• Develop and implement a Safety and Health Strategic Plan for all OCSD activities.
Targeted for completion in FY09-10
Human Resources Strategic Plan (new)
• Design,develop and implement human resources policies, practices systems and tools to r
ensure OCSD has a workforce that meets future needs of OCSD and the public it serves.
Targeted for completion in FY09-10
r
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la
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Workplace Environment Levels of Service
OCSD will take care of Its people FY 07-08 FY 08-09
Results Target
Training hours per employee 42.04 45 per year
District 5.8 Industry
Employee injury incident rate O&M 2.6 average
5.2
Mandatory OSHAtraining requirements 14% 100%
Hours worked since last lost work day NA* 1,000,000
Lost work day rate NA* 3.2
*Results not available because these are new levels of service.
19
r
APPENDIX A: ISSUE PAPERS
In preparation for the October 15,2008 Board Workshop to discuss the proposed goals for 2009,staff
prepared five issue papers related to the new goals.These papers are attached for your reference.The
appendix includes issue papers on the following topics:
• Groundwater Replenishment System ,r
• Disinfection of Final Effluent
• Environmental Footprint Initiative -
• Updating OCSD's Risk Register
r
• Human Resources Strategic Plan
A Groundwater `
4 Replenishment System
w .
GWR System Commissioning DOicauon on January 25.2008
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Groundwater Replenishment System
Why is this issue important to OCSD?
The Orange County Sanitation District(OCSD) has shared in construction costs for Phase 1 of the
+ Groundwater Replenishment(GWR)System with the Orange County Water District(OCWD), each
agency paying equal shares of 50 percent.The first phase has been constructed to reclaim up to 70
million gallons per day(mgd) of water, and will defer the need for OCSD to construct a new ocean
+ outfall. Ultimate planning for the GWR System allows for reclaiming up to 130 mgd.The major GWR
System pipelines and other components have been sized to accommodate this expansion; however, the
advanced water purification facilities are sized for 70 mgd.OCSD has not committed additional funding
+ for expanding the GWR System beyond the present phase.
The GWR System began operation in January 2008,and is presently producing about 45 mgd of product
+ water, reducing OCSD's ocean discharge flow from 225 mgd to 180 mgd. Completion of the Steven
Anderson Lift Station (formerly Ellis Avenue Pump Station)will increase the amount of treated
secondary effluent(specification water) available to the OCWD, allowing GWR System production to
increase to near 70 mgd.
Goals
+ ➢ Continue to strive for 104 mgd supply of specification water for reclamation with no planned
OCSD capital cost contribution for expansion of the GWR System;
+ ➢ Complete construction of Steven Anderson Lift Station in the fourth quarter of FY 2008-09 and
Y Continue to study the potential for treating flow from the Santa Ana River Interceptor at
Reclamation Plant No. 1 to increase the supply of specification water for reclamation.
Desired Outcome
+ Y Maximizing the production of GWR System product water to augment and protect the Orange
County groundwater basin with a goal of 70 mgd of product water by the end of FY 2008-09.
+
21
Disinfection of Final Effluent
Why is this issue important to OCSD?
OCSD began disinfection of our treated effluent in 2002 in response to two factors:
• concern from the public that our effluent might be the cause or contributing to elevated
bacteria levels in Huntington State Beach and
• ocean monitoring data suggesting that on at least one occasion our effluent plume had come to
within Y mile of the Newport Pier.
Since 2002 evidence has shown that OCSD's effluent was not the source of shoreline bacteria in r
Huntington Beach and that our plume is not coming to shore and creating a public health concern.
The annual budget for adding chlorine to the effluent for disinfection and sodium bisulfite to remove
most of the chlorine before discharging to the ocean is approximately$7.0 million.Since OCSD's r
facilities were not originally designed with disinfection in mind,there are physical constraints to
operating in an efficient manner.
In 2006,staff believed that it was prudent to have an independent review of our disinfection program to `
determine if it is meeting the intended purpose of protecting public health in a cost-effective manner
and not increasing risks to the marine environment.The independent review panel was composed of
nine members including a medical doctor, a wastewater engineer,a marine ecologist,a regulator,and a `
chemist among others.
Goals
➢ Through the National Water Research Institute (NWRI),commission a panel of experts to review
OCSD's disinfection program and provide feedback and recommendations;
Obtain final recommendations from the N W RI Panel on the appropriateness of our current
disinfection program and alternatives that should be considered and
➢ Develop and implement strategies for responding to the recommendations including
demonstration testing, regulatory approval and outreach to stakeholders.
Desired Outcome
➢ Cost effective program to sustain protection of public health associated with bacteria in our `
effluent and
➢ Acceptance of any changes to our disinfection program by regulators, public and stakeholders
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Environmental Footprint Initiative
_ Why is this issue important to OCSD?
The issue of global climate change is gaining considerable interest from both the public and policy
makers.As a public agency chartered with the mission to protect public health and the environment,
OCSD should demonstrate leadership in this area. Moreover,wastewater operations consume large
amounts of energy and produce green house gases(GHG). Despite the scientific disagreements about
climate change,policy makers are addressing the issue.There are many opportunities for OCSD to also
address these issues and shrink our environmental footprint.
Goals
Y Calculation of the environmental footprint of OCSD's facilities;
Y Develop outreach materials describing green initiatives undertaken by OCSD;
Y Evaluate additional initiatives that the OCSD Board should consider;
Y Evaluate information from OCSD's research program on emerging green technologies and
Y Maximize the use of renewable fuels(digester gas).
Desired Outcomes
Greater awareness of OCSD's sustainable initiatives;
Y Reduction in OCSD's environmental footprint through immediate greenhouse gas reduction
measures and
Y A plan for implementing future sustainable initiatives.
23
Updating OCSD's Risk Register r
Why is this issue important to OCSD?
Many leading organizations are formally applying risk management processes to identify and manage r
risks across many aspects of their business.The formalization of risk management processes is a logical
step towards increased accountability and transparency placed on the Board and District management.
In February 2006,strategic level risk assessment and mitigation workshops were completed by OCSD's
Executive Management Team and District Managers. In May 2008, the register was updated to include
additional information and to ensure alignment with current strategic plan. r
Assessment of these risks and their potential impacts must be identified, reviewed and mitigated in
alignment with OCSD's Strategic Plan. r
Goals
r
Identify and assess strategic and organization-wide risks facing OCSD(including technical,
regulatory,financial,and political(and to develop a high level risk register;
r
Identify mitigation measures that OCSD currently has in place;
: Propose additional mitigation measures that OCSD considers appropriate to manage; r
: Review of risk register to ensure it represents a balanced portfolio of the risks and that the
mitigation strategies are appropriate;
: Develop a plan to monitor the effect of mitigation strategies to ensure that controls are in place
and effective;
Develop a formal reporting process to the Board that includes possible revisions to the overall
risk profile;
o- Develop protocols to provide assurance to stakeholders that in the annual strategic business
plan processes are in place to manage risks organization wide and _
: Develop an action plan of responsibilities and timeframes for follow-up.
Desired Outcome
: An update of the Risk Register including mitigation strategies(current and proposed)
responsibilities,and timeframes
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r
Human Resources Strategic Plan
Why is this issue important to OCSD?
r
Human Resources(HR) management has become more complex,evolving from primarily processing
employee transactions to serving as a business partner, change agent and leader.
r OCSD's most Important asset is its workforce.As a generation of this workforce retires,OCSD must be
prepared to fill vacancies and prepare the next generation for opportunities, including leadership
continuity.
The HR strategic plan provides the focus for HR,the outcomes to be achieved and the associated roles
and competencies needed. It creates clarity for planning and allocating resources.A long-range HR
r strategy will assure that actions are aligned with OCSD's overall vision, mission,values,and strategies.
Goals
r Y Improve HR processes, systems and infrastructure to provide high levels of efficiency, quality,
customer service and cost-effectiveness.
➢ Develop leading practices in the recruitment, retention and development of our workforce.
➢ Support and promote the health and well-being of the workforce.
➢ Foster and maintain a working and learning environment that is inclusive, supportive and free
from discrimination.
D Provide for organizational change initiatives through labor relations program that have been
Identified by management to grow a performance-based culture.
D Focus the HR community on the needs of its customers through programs such as recognition
and succession management.
Desired Outcome
➢ Design,develop,fund and implement HR policies,strategies, practices,systems,and tools to
ensure OCSD has a workforce that meets the future needs of OCSD and the public it serves.
25
APPENDIX B: PREVIOUS ISSUE PAPERS
Due to the complex nature of many of the challenges that went into the preparation of this Strategic
Plan, a series of position papers were created to assist in better understanding the issues currently
facing the Orange County Sanitation District. Included in appendix are position papers on the following
subjects: _
• Blosolids Management
• Groundwater Replenishment System
• Air Quality _
• Odor Control
• Proposition 218 Notification -
r
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1 r
srl
Initial mechanical sgrs-up of EnerTmhi Regional B—ol ids Processing Faolny m Rolm on October I6.2008.
26
Setting OCSD's Level of Service
for Biosolids Management
November 2007
Policy Issue for LOS Determination: Recognizing the Board's Resolution(OCSD 06-10)that supports blosolids
_ reuse and encourages its member agencies to use compost made from blosolids,should OCSD continue to pursue
our beneficial reuse policy or Include disposal options for the remaining 1/3 of Its non-contractually committed
blosolids production?
Staff Recommendation: OCSD should continue to pursue beneficial reuse of the remaining 1/3 of Its blosolids
production.Staff will continue to utilize cost-effective land application reuse options In Kern County and Arizona
for as long as possible(anticipated to be less than five years)while pursuing a blosolids-to-energy alternative for
the balance of Its blosolids production.
Analysis: OCSD currently produces 650 tons of blosolids per day,by 2012 when the new secondary treatment
processes are fully operational,blosolids production Is projected to Increase by approximately 30%to 840 tons per
day.OCSD currently manages its blosolids as follows via two contracts using five options:
• 24 percent is land applied as Class A biosollds in Kern County($43.07/ton)
• 26 percent is land applied as Class B blosolids In Yuma County,Arizona($45.44)
• 38 percent is composted to Class A in Kern County($63.09)
• 12 percent is composted to Class A La Paz County,Arizona($49.74)
• 3 percent 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 blosolids management options
• Limit participation in any market to one-half of the blosolids produced
• Limit contracts to one-third of total blosolids production
• Strive for Increased blosolids-based compost use in Orange County
• Since the completion of the Plan,OCSD has entered Into two long-term contracts that will service
approximately two-thirds of OCSD's blosolids production.
• EnerTech:225 tons/day of blosolids-to-fuel in Rialto($72.40)
_ (on line 12/08)
• Synagro:250 tons/day of blosolids composting in Kern County($63.09)
_ Staff is primarily investigating biosolids-to-energy technologies and markets for the remaining one-third of OCSD's
blosolids production because of our concern that blosolids composting markets are being saturated which could
result in de-valuing of the product,making it non-sustainable.The private sector has already significantly Invested
In developing blosolids-to-energy technologies which enables wastewater agencies to participate In proven and
sustainable markets.Staff will also be Investigating biosolids management via deep-well Injection and methane
production which is currently being evaluated by the City of Los Angeles.
Alternatives: OCSD will pursue long term contracts if possible for non-beneficial reuse landfill disposal.
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
27
r
Setting OCSD's Level of Service •+
for the Groundwater Replenishment System
November 2007
r
Policy Issue for LOS Determination: The Orange County Sanitation District(OCSD)has shared in construction
costs for Phase 1 of the Groundwater Replenishment(GWR)System with the Orange County Water District
(OCWD),with each agency paying equal shares of 50%.Phase 1 will reclaim up to 70 million gallons per day(mgd) r
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;however,the advanced water purification facilities r
are sized for 70 mgd.OCSD has not committed additional funding for expanding the GWR System beyond
the present phase.
r
Staff Recommendation: OCSD will maintain its commitment for Phase 1 of the GWR System.This commitment
for Phase 1 of GWR System includes the following:
r
• Providing OCWD with secondary effluent to produce 70 mgd of reclaimed water
• Providing 50 percent of capital costs($250 million)for Phase 1
• Providing 50 percent of O&M costs($500,000 per year)to remove 1,4-Dioxane and NOMA
r
• 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 r
• Considering grant funding of future sewer diversion projects
Analysis: In 1999,the OCSD Board of Directors(Board)approved Phase 1 of the GWR System,a joint funded r,
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 ocean outfall beyond 2020.
r
The GWR 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 mgd 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 r
GWR System at its full 70 mgd capacity.
Even though sufficient flows will be available for Phase 1 of the GWR System,the daily low flow period(1:00 am to r
8:00 am)will limit water availability for expansion of the System beyond Phase 1.Camp Dresser and McKee(CDM)
has 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 r
of service versus the 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.
r
Alternatives: OCSD will be directing all available reclaimable flows to Plant No. 1 to maximize reclamation. In the
future,as OCSD flows increase substantially,staff will recommend implementation of the most feasible and cost-
effective options for increasing the quantity of flow available for reclamation. W
Estimated Cost Implications for Future Phases:
• OCSD Diversions and Infrastructure—up to$700 million r
• Expansion of OCWD Advanced Water Purification Facilities—about$150 million
• Every$1 million in OCSD expenditures increases single family user rates by$1.13 per year.
r
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r
Setting OCSD's
Level of Service for Air Quality
November 2007
Policy Issue: OCSD expects the South Coast Air Quality Management District 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 improvement
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 avoid issuing notifications by proactively installing air pollution control equipment to reduce the air
toxic emissions below
the notification level.
Analysis: Currently,State law 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 non-cancer risk exceeds 1.This means
that 30 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 full secondary facilities in 2012,OCSD will exceed the threshold established by
South Coast Air Quality Management District and OCSD will be required to notify affected communities.
New regulations proposed by the South Coast Air Quality Management District would require 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(if the new regulations are not enacted):
• Notify the affected public of the potential health risk from OCSVs toxic air emissions.OCSO 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 cost-effective controls in order to reduce the air toxic
emissions below the health risk notification level
to the surrounding community and OCSD employees.
29
r
Setting OCSD's r
Level of Service for Odor Control
November 2007
r
Policy Issue: Thousands of homes surround OCSD's two treatment plants.Under current operating procedures,
OCSD's goal Is to contain odor nuisances within our property boundary.Historically,OCSD based our Level of
Service on meeting hydrogen sulfide levels at the exhaust of odor control equipment within the treatment plant r
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 r'
wishes to achieve for communities surrounding our treatment plants.The Board must then choose the desired
LOS.
r
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 processing equipment.OCSD used a panel of 6-8 people,with average r
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 stronger the odor.Staff then fed the data r
Into a computer model to predict the impact to the community.
r
With the modeling analyses completed,staff concluded that under normal operation conditions,by using a
guideline of 10 D/T(dilutions to threshold)OCSD would eliminate odor to the surrounding community.OCSD
currently meets a 40-50 D/T,which is 4 to 5 times greater than 10 D/T.After the currently approved CIP projects r
are constructed,OCSD is estimated to reach a level of 25-30 D/T(2.5 to 3 times greater than 10 D/T).
Alternatives: r
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 level is 10 D/T but case-by-case modeling for the r
projects will be required.The result is no cost Impact to the current approved CIP.
• Adopt a treatment plant and future project design and construction LOS for odor control of 30
dilutions/threshold(within the fence line of OCSD)and Incorporate four additional odor control projects into r
the CIP.The result Is an increase of$69.6 million to the CIP and$648,000 for O&M.
Staff Recommendation: Establish OCSD odor standard based on total odor(D/T).Design all new processes, r
structures and equipment at the wastewater treatment plants so that odors remain within treatment plant
boundaries.Add two additional odor control projects(Plant 1 trickling filters and Plant 2 blosolids truck loading)to
the CIP.The result Is an Increase of$17.6 million to the CIP and$300,000 annually for O&M.Conduct research on "
cost-effective 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 odor control.
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Proposition 218 Notices for
Annual Sewer Service User Fees
November 2007
Proposition 218 was a constitutional initiative governing the establishment of any new taxes,property-related fees
or assessments.This initiative was approved by the state's voters in November 1996 and applies to each of
California's nearly 7,000 cities,counties,special districts,schools,community college districts,redevelopment
agencies,and regional organizations.
In order to raise a new tax,assessment,or property-related fee,or to increase an existing one,local governments
must comply with Proposition 218 regulations.
In general,these requirements are that local governments may use assessments and property-related fees only to
finance projects and services that directly benefit property and that most revenue-raising measures be approved in
an election.
Sewer service user fees are specifically exempted from some of the requirements of Proposition 219.Most
notably,they are exempt from the election requirements,but not the requirement that fees cannot exceed the
reasonable cost of service.
The Board has agreed with staff,however,that we will comply with all of the rest of the requirements,in a spirit of
good governance.A notice of rate changes is mailed to every property owner whenever the rates are proposed to
increase.
Based on the approval to charge for local 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 approval of the Board.
Proposition 218 Notices notify the property owners of the public hearing that coincides with the second reading of
the ordinance.Notices must be mailed to property owners 45 days before the public hearing.
Mailing of Proposition 218 notices requires significant Sanitation District resources and staff time as staff works
with all stakeholders to ensure that notices are printed correctly and mailed to over 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.In addition to written responses(including
email),phone calls are also noted and tallied by city of residence.This information is made available to the
Directors prior to the public hearing.
31
APPENDIX C: GLOSSARY
Activated-sludge process—A secondary biological wastewater treatment process
where bacteria reproduce at a high rate with the introduction of excess air or oxygen,and consume °1
dissolved nutrients in the wastewater.
Biochemical Oxygen Demand SOD —The amount of(SOD) oxygen used when organic matter undergoes
decomposition by microorganisms.Testing for BOD is done to assess the amount of organic matter in
water.
Biosolids—Biosolids are nutrient rich organic and highly treated solid materials produced by the
wastewater treatment process.This high-quality 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.coil are the most common
bacteria in wastewater.
Collections system—In wastewater,it is the system of typically underground pipes that receive and
convey sanitary 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.
r
Dilution to Threshold (D/T)—the dilution at which the majority of the people detect the odor becomes
the D/T for that air sample.
1,4-Dioxane—A chemical used in solvents for manufacturing,fumigants and automotive coolant. Like
NDNIA,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 are considered the cause
of global warming("greenhouse effect').
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GLOSSARY continued
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 water 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(MPN)—Number of organisms per 100 ml that would yield a test result or the
observed test result with the greatest frequency.Commonly used for coliform bacteria.
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.
National Biosolids 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.
O&M—Operations and maintenance of the treatment plants facilities and collections system.
Publicly-owned Treatment Works(POTW)—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 ocean 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 run-off.
.. South Coast Air quality Management District(SCAQMD)—Regional regulatory agency that develops
plans and regulations designed to achieve public health 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.
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GLOSSARY continued
Sludge—Untreated solid material created by the treatment of wastewater.
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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.
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Urban run-off—Water from city streets and domestic properties that carry pollutants into the storm
drains, rivers, lakes,and oceans.
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Wastewater—Any water that enters the sanitary sewer.
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Watershed—A land area from which water drains to a particular water body.OCSD's service area is in
the Santa 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
Imw
IMPROVING OUR ENVIRONMENT
ONE MILESTONE AT A TIME
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
for the Fiscal Year Ended June 30, 2008
ORANGE COUNTY SANITATION DISTRICT, CALIFORNIA
ORANGE COUNTY SANITATION DISTRICT
ORANGE COUNTY, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2008
d
Prepared By:
Administrative Services Department
Financial Management Division
Michael D.White, CPA
Controller
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ORANGE COUNTY SANITATION DISTRICT
Comprehensive Annual Financial Report
r Table of Contents
For the Year Ended June 30, 2008
Pace
,r INTRODUCTORY SECTION:
Letterof Transmittal..................................................................................................................... i
GFOA Certificate of Achievement................................................................................................ vill
Boardof Directors........................................................................................................................ ix
OrganizationChart....................................................................................................................... x
Mapof Service Area..................................................................................................................... A
FINANCIAL SECTION:
Independent Auditors'Report....................................................................................................... 1-2
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
Statementof Cash Flows.................................................................................................... 12
Notes to Basic Financial Statements................................................................................... 13-35
Supplementary Information:
Scheduleof Net Assets....................................................................................................... 38
Schedule of Revenues, Expenses, and Changes in Net Assets ........................................ 39
rSchedule of Cash Flows...................................................................................................... 40
STATISTICAL SECTION:
Net Assets by Component—Last Eight Fiscal Years................................................................... 42
Revenues and Gross Capital Contributions by Source—Last Ten Fiscal Years......................... 43
Expenses by Type—Last Ten Fiscal Years................................................................................. 44
Change in Net Assets—Last Eight Fiscal Years.......................................................................... 45
Cash and Investment Reserve Balances—Last Ten Fiscal Years.............................................. 46
Sewer Service Fees—Last Nine Fiscal Years& Next Fiscal Year.............................................. 47
Number of Accounts and Revenues by Customer Class—Last Ten Racal Years...................... 48
Principal Sewer Service Customers—Current Fiscal Year and Nine Years Ago......................... 49
r Ratio of Annual Debt Service to Total Expenses—Last Ten Fiscal Years.................................. 50
Debt Coverage Ratios—Last Ten Fiscal Years........................................................................... 51
Computation of Direct and Overlapping Debt—Current Fiscal Year........................................... 52
Ratios of Outstanding Debt—Last Ten Fiscal Years................................................................... 53
r Comparison of the Volume of Wastewater Treated—Last Ten Fiscal Years.............................. 54
Authorized Full-time Equivalents by Function—Last Ten Fiscal Yom....................................... 55
Biosolids Produced—Last Ten Fiscal Years................................................................................ 56
r Capital Asset Statistics—Last Ten Fiscal Years.......................................................................... 57
Demographic Statistics—Last Ten Fiscal Years.......................................................................... 58
Estimated Populations Served by Orange County Sanitation District—Current Fiscal Year....... 59
Principal Orange County Employers—Current Fiscal Year and Nine Years Ago........................ 60
OperatingIndicators..................................................................................................................... 61
OTHER DATA&TRENDS:
Cash and Investment Portfolio—Current Fiscal Year.................................................................. 64
Property Tax Rates—Direct and Overlapping Governments—Last Ten Fiscal Years................ 66
Assessed and Estimated Actual Value of Taxable Property—Last Ten Fiscal Years................. 66
Property Tax and User Fee Levies and Collections—Last Ten Fiscal Years.............................. 67
Property Value and Construction—Last Ten Fiscal Years........................................................... 68
Insurance in Force—Next Fiscal Year ........................................................................................ 69
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OCSD
Introductory Section
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ORANGE COUNTY SANITATION DISTRICT
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October 25, 2008
10844 Ellis ANenue
—Fpanreln vegar,r The Board of Directors of the
92]09-]01e Orange County Sanitation District,
Meiling Address Orange County, California
P.O.Box 9127
�Poan.In Vegay.CA,92]28-Bt 2] Submitted herewith is the Comprehensive Annual Financial Report of the Orange County Sanitation
District, Orange County, California for the fiscal year ended June 30, 2008. This report includes the
www.acad.aom financial position and activity of individual revenue areas, as described within the Governmental
Phi Structure below, as of June 30, 2008 and was prepared by the Financial Management Division of the
(714)962-2411 Sanitation District's Administrative Services Department.
Fax Responsibility for both the accuracy of the data, and the completeness and fairness of the
(]141962{1366 p Y p
presentation, 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
sang to present fairly the financial position and results of operations of the Sanitation District. All
disclosures necessary to enable the reader to gain an understanding of the agency's financial activities
Anaheim have been included.
area
B.N.Pare Included within the accompanying financial statements are all of the organizations, activities, and
gpre� functions controlled by the Sanitation District's Board of Directors in accordance with the
Foameln u Iley Governmental Accounting Standards Board Statement Number 14, 'The Financial Reporting Entity'.
For the purpose of this evaluation, control was determined by the Board's responsibility for: (1)
wne,mn adoption of the budget and user charges, (2) taxing authority, and (3) establishment of policies. The
Sardan crora reporting entity and its services are described in further detail in Note 1 of the financial statements.
Hundn9.n Beech
rmna An audit of the books, financial records and transactions of the Sanitation District is conducted
annually by independent certified public accountants. The Sanitation District selected the accounting
La Hebre firm of Mayer Hoffman McCann P.C. to perform the audit for the year ended June 30, 2008. The
L.Palma auditors' report on the Sanitation District's basic financial statements and supplementary information is
too Alad sda located on page 1 within the financial section of this report. This report renders an unqualified opinion
nlsapon Beanh on the Sanitation District's basic financial statements for the year ended June 30, 2008.
Orange Management's discussion and analysis (MDBA) immediately follows the independent auditor's report
Plecenda and provides a narrative introduction, overview, and analysis of the basic financial statements. The
San.Ana MDBA complements this letter of transmittal and should be read in conjunction with it.
Seal Beech
SisnLit GOVERNMENTALSTRUCTURE
Tustin
Was Park The Orange County Sanitation District encompasses the Northern section of Orange County. The
rorba Linda Sanitation District provides wastewater treatment for an area of the County covering 471 square miles
and serving a population of approximately 2.5 million, or 81 percent of the County's population. The
cos.Masa Sanitation District was originally incorporated in 1954 as nine separate public corporations, or districts.
Sandary Olsi ct In April of 1998, at the Sanitation District's request, the Board of Supervisors of the County of Orange
M11idi 04 passed Resolution No. 98-140 ordering the consolidation of these nine Count Sanitation Districts into
Seni.ry0isbiR p 9 Y
a new, single sanitation district, to be known as the Orange County Sanitation District, effective July 1,
1n oshn.,`hc 1998. This action was recommended to the Board by the Local Agency Formation Commission in
C W,of Orange 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
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We pra.c4 public health and the em.nmena by nowner,effective waaLa.wr collection, deavnea.and recycling.
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previously established rate schedules, and were referred to as nine individual revenue areas through
June 30, 2000. Effective July 1,2003, all Revenue Areas, except Revenue Area 14, consolidated user I
fee rates and all enterprise fund accounting and budgeting activities and are now known as the u
Consolidated Revenue Area.
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 tJ
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 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 the treatment plants are to process and dispose of the treated wastewater and the separated u
solids in accordance with Federal, state, and local laws including the Environmental Protection
Agency.
The Sanitation District sewerage system includes approximately 568 miles of sewers that convey Ll
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. In fiscal year 2007-08, approximately 73 percent of the )
advanced primary effluent also received secondary treatment. Both plants are master-planned for a u
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 Ilt
Huntington Beach coast through an outfall pipe that is 120 inches in diameter and approximately five
miles long. The last mile of the outfall pipe is a diffuser that dilutes the wastewater with seawater in a I '
ratio of 148 parts seawater to one part treated wastewater at an average depth of 185 feet.
ECONOMIC CONDITIONS AND OUTLOOK
In June 2008, the Anderson Center for Economic Research at Chapman University forecasted a
decline in total payroll employment for Orange County of 1.2 percent in 2008. or the loss of 18,000
payroll jobs, and a 0.9 percent growth in 2009, or the creation of 14,200 additional new jobs. This
projection is a decline from the actual job growth of 0.0 percent and 2.0 percent in 2007 and 2006,
respectively. The major factor that lead to net job losses was a sharp drop in jobs in construction and n
in financial services. The weakness in these two sectors has negatively impacted the retail and IL.II
professional and business services sectors leading to a broad-based slowdown as Orange County
entered into a recession, defined as two consecutive quarterly job losses, in the second half of 2007.
In addition, the unemployment rate for Orange County increased to 5.3 percent in fiscal year 2007-08 I I
from the 3.9 percent in the prior year. Personal income in Orange County is expected to increase by u
2.9 and 3.7 percent in 2008 and 2009, respectively, that is expected to keep pace with inflation rates.
Following increases of 8.7 percent and 7.4 percent in 2004 and 2005, respectively, taxable sales have L.I
fallen steadily to projected increases of 1.2 percent and 3.4 percent in 2008 and 2008, respectively.
According to Chapman University, these projections are the result of the impact of the recessionary
forces and in the anemic growth in jobs and income that will reduce consumer spending in 2008, and I
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• Implementation of a management control system for environmental compliance
• Completion and submittal of an emission inventory to the California Air Resources Board
• Developing alternatives for South Coast Air Quality Management lower emission limits
• Annual update of the strategic and business plan
• Completion of Departmental Business Accountability Charters
• Completion of feasibility study on deep injection and methane recovery options for biosclids
• Evaluation of processing biosolids at the City of Los Angeles Terminal Island injection well
• Completion of in-county Compost Take-Back Program Plan strategy
• Implementation of the District's Succession Management Plan
r In addition, five new goals were identified and incorporated into the ongoing Five-Year Strategic Plan
including:
.. • Expansions to the Groundwater Replenishment System.
• Re-evaluation of current disinfection practices.
• Identify and assess current and future risks and mitigation measures.
• Develop Human Resources Strategic Plan.
Identify current sustainable environmental practices, evaluate alternatives, and maximize the use
of renewable fuels to minimize impact on the environment.
SERVICE EFFORTS AND ACCOMPLISHMENTS
.. Pioneering work to develop the world's largest water purification plant for groundwater recharge has
earned the Orange County Water District and the Orange County Sanitation District, California, USA,
the 2008 Stockholm Industry Water Award. The Stockholm Industry Water Award honors and
r encourages business sector contributions to sustainable development in the water sector and is
presented each August at the World Water Week in Stockholm. It was established in 2000 by the
Stockholm Water Foundation in collaboration with the Royal Swedish Academy of Engineering
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Sciences and the World Business Council for Sustainable Development.
In July 2008, the Sanitation District received a Gold `Peak Performance" Award from the National
Association of Clean Water Agencies. This prestigious award recognizes the Sanitation District's
r outstanding work in protecting the nation's water resources. The award recognizes both the Sanitation
District's Reclamation Plant No. 1 and Treatment Plant No. 2 for 100 percent compliance with its
National Pollutant Discharge Elimination System permit for an entire year.
ACCOUNTING AND BUDGETARY CONTROLS
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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.
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Each year the Sanitation District's Board of Directors adopts an annual operating plan. A joint works
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 iy
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.
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CASH MANAGEMENT
The Sanitation District's investment portfolio, except for the Sanitation District's debt service reserves,
investments with the State Local Agency Investment Fund, and overnight repurchase agreements of
idle cash within the Sanitation District's general bank account, are managed by an outside money L
manager, Pacific 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 tens investment pool of$97,962,000 at June 30,
2008 that has average maturities out to 60 days, and a long-term investment pool of$311,244,000 that L
has average maturities out to 2.3 years. Investments of this externally managed investment portfolio
consist of U.S. Government securities, corporate bonds, commercial paper, and money market mutual
funds. Investments of the Sanitation District's debt service reserves totaling $98.6 million consist of Lr
bank investment contracts of $47.8 million and U.S. Govemment securities and open-ended mutual
funds of$50.7 million. The Bank Investment Contracts are with AIG ($2.7 million maturing in 2016, but
was subsequently terminated by mutually agreement between AIG and the Sanitation District and
invested in an open-ended mutual fund on September 30,2008), Bayerische Landesbank Girozentrale Li
($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 L
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. L
Investment earnings for the year were $20,235,000, a decrease of $2,009,000 from the prior fiscal I',
year total of $22,244,000. This decrease in investment and interest income is attributable to lower V
yields earned on investments, as investments earnings yielded 4.8 percent, a decrease from the prior
year earnings rate of 5.5 percent. The decrease 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,
2008, the Sanitation District went from an unrealized gain on investments of$16,000 at June 30, 2007 r
to an unrealized loss of$1,312,000, or a total decrease in market value on investments of$1.328.000.
However, the Sanitation Districts investment policy is structured conservatively towards liquidity to
avoid having to sell investments at a loss and having unrealized losses actually becoming realized
losses.
As of June 30, 2008, the Sanitation District's designated net assets totaled $533 million, and have
been earmarked for the following specific purposes in accordance with the Sanitation District's reserve V
policy:
Designated For Cash Flow Contingency $149 million L
Designated For Self-Insurance 57 million
Designated For Capital Improvements 219 million
Designated For Debt Service Requirements 108 million I
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Total Designated Net Assets $533 million
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RISK MANAGEMENT
For the year ended June 30, 2008, the Sanitation District was self-insured for a portion of workers'
compensation and property damage. The self-insured portion for workers' compensation was
$500,000 per person per occurrence with outside excess insurance coverage to $300 million. The
self-insured portion for property damage covering fire, and other perils other than flood and earthquake
was $25,000 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 Distrct was self-insured for all property damage
from the perils of earthquakes. The Sanitation District also maintained outside comprehensive boiler
and machinery 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. The self-insurance portion of the pollution liability
exposure is $100,000 per the loss deductible under the outside pollution liability insurance coverage
up to$10 million.
Sanitation Distrct management believes that there are no outstanding claims as of June 30, 2008 that
would materially affect the financial position of the Sanitation District.
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,
2007. This was the fourteenth 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
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. I 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.
Res `nyitted
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Michael D.White, CPA
Controller
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Certificate of
Achievement L
for Excellence
in Financial
Reporting L
Prasemted to
Orange County Sanitation L
District, California
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For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended L
June 30.2007
A Certificate of Achievement for Excellence in Financial L
Reporting is presented by the Oovemmmt Finance Officers
Awociation ofthe United stares and Canada to
govemment win and public camloyee retirement --
systems whose c:omprebemive avmal fimnciel 1 I
repent;(CAFR L s)achieve the highest
standards in goveramCat accounting
and financial rcporong. —
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President L
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Executive Director
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r ORANGE COUNTY SANITATION DISTRICT
Board of Directors
As of June 30, 2008
ALTERNATE
r AGENCY ACTIVE DIRECTOR DIRECTOR
Cities:
r Anaheim Harry Sidhu Lucille Kring
Brea Roy Moore Ron Garcia
r 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 Dabon Steve Jones
r Huntington Beach Don Hansen Jill Hardy
Irvine Christina Shea Steven Choi
La Habra Rose Espinoza James Gomez
r La Palma Mark Waldman Henry Charoen
Los Alamitos Ken Parker Catherine Driscoll
r Newport Beach Don Webb Leslie Daigle
Orange Jon Dumitru Carolyn Cavecche
Placentia Constance Underhill Joseph Aguirre
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Santa Ana Sal Tinajero David Benavides
Seal Beach Charles Antos Gordon Shanks
r Stanton David Shawver David Cadena
Tustin Doug Davert Jim Palmer
Villa Park Brad Reese Rich Ulmer
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Yorba Linda Jim Winder John Anderson
Sanitary/Water Districts:
Costa Mesa Sanitary District James M. Ferryman Robert Ooten
Midway City Sanitary District Joy L. Neugebauer Allan P. Kdppner
r 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 Lt
Organizational Chart
As of June 30, 2008 I
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D OF DIRECTORS .-.
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GENERAL GENERAL L
MANAGER COUNSEL
GENERAL OFFICE
MANAGEMENT
ADMINISTRATION
V
ADMINISTRATIVE TECHNICAL OPERATIONS
Ga w SERVICES SERVICES ENGINEERING AND
Monagemem MAINTENANCE
mministration Y/
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ORANGE COUNTY SANITATION DISTRICT
Map of Service Area
As of June 30, 2008
105 ANGELES COUNTv
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Mayer Hoffman McCann P.C.
An Incepentlent CPA Firm
Conrad Government Services Division
2301 Dupont Drive, Suite 200
Irvine.California 92612
949 474-2020 ph
949 263-5520 fa
vmw.mhm-pc.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, 2008, 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, 2007 and, in
our report dated October 25, 2007,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 Stales. 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, 2008. and the changes in financial position and cash Bows
of the District for the year then ended in Conformity with accounting principles generally accepted in the
United States of America.
As described further in note t to the financial statements, the District changed its method of accounting
for post employment benefits for fiscal years ending on or after June 30,2008.
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 Stales 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 staled 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.
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Board of Directors L
Orange County Sanitation District
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In accordance with Government Auditing Standards, we have also issued a report dated October 30,
2008 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 LW
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 L
of an audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
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Irvine, California I
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October 30,2008
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Management Discussion and Analysis
June 30,2008
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, 2008. 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, 2008, the assets of the Sanitation District exceeded its liabilities by $1,276.0 million
(net assets). Of this amount, $420.3 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$86.3 million, or 7.2 percent over the prior year.
.. • Net Capital Assets, consisting of non-depreciable capital assets and depreciable capital assets net of
accumulated depreciation, increased$227.8 million, or 14.2 percent over the prior year.
• Net Assets invested in capital assets, net of related debt decreased$34.1 million, or 3.8 percent.
• Unrestricted Net Assets increased$120.9 million,or 40.4 percent from the prior year.
Overview of the Basic Financial Statements
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 are comprised of two components:financial statements
w. and notes to the financial statements. This report also contains other supplementary information in
addition to the basic financial statements themselves.
In accordance with Governmental Amounting Standards Board (GASB) 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
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 amounts 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 cash
receipts, cash payments, and net changes in cash resulting from operations and investments during the
reporting period.
.. Net Assets
As previously stated, net assets increased $86.3 million, or 7.2 percent to $1,276.0 million in FY 2007-08
over the prior year. In comparison, net assets increased $100.6 million, or 9.2 percent, to $1,189.7
million in FY 2006-07 over FY 2005-06.
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(Dollars in thousands) L
Percentage
June 30, June 30, Increase Increase L
2008 2007 (Decrease) (Decrease)
Assets
Current and other assets $ 599,545 $ 438,055 $ 161,490 36.9% l
Capital assets, net 1,829,383 1,601,621 227,762 14.2% V
Total assets 2.428,928 2,039,676 389,252 19.1%
Liabilities
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Current liabilities 84,087 76,544 7,543 9.9%
Noncurrent liabilities 1,068,854 773,395 295,459 38.2% L
Total liabilities 1,152,941 $49,939 303,002 35.6%
Net assets:
Investment in capital assets, I
net of related debt 852,385 886,463 (34,078) -3.8% Lr
Restricted 3,311 3,904 (593) -15.2%
Unrestricted 420,291 299,370 120,921 40.4% L
Total not assets $ 1,275,967 $ 1,189,737 $ 86,260 7.2%
Current and other assets increased $161.5 million, or 36.9 percent, due primarily to the issuance of L
$300.0 million in certificates of participation (COP) debt financing issued in December 2007, net cash
provided by operations of$71.8 million, and net non-operating revenues of$64.9 million. These increases
were partially offset by the funding of$275.4 million in capital improvements.
Capital assets, net increased $227.8 million, or 14.2 percent, due primarily to the ongoing capital L
improvement program which generated capital outlays of$275.5 million in FY 2007-08 that was partially
offset by depreciation of$47.7 million. Included in total capital outlays was the Headworks Improvements L
at Plant No. 2. This project is replacing 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 L
influent spli0er and metering structure,ferric chloride feed facilities, headworks and trunk line odor control
facilities, screenings handling building including a washer/compactor, grit handling building, and an
electrical building that includes standby power. In IY 2007-08, $53.5 million of the estimated $257.8
million was trimmed bringing the total outlay to$203.2 million with completion expected in FY 2011-12.
Another major project underway is the expansion of the secondary treatment facilities at Plant No. 1. This
project is one of several capital improvements that are necessary to achieve secondary treatment
standards by December 31, 2012 in accordance with a consent decree signed by EPA and filed with the u
U.S. District Court. This project Includes construction of aeration basins, clarifiers, a blower building, and
waste sludge pumping stations, that will provide additional secondary treatment capacity of 60 million
gallons per day at Plant No. 1. Capital outlays of $53.3 million were incurred in FY 2007-08 with total
project outlays to date of $71.9 million. The total projected cost is $265.9 million with completion
expected in FY 2011-12.
The completion of the Groundwater Replenishment System (GWRS)was another project with significant
capital outlays in FY 2007-08. A 50:60 joint cost sharing effort between the Orange County Sanitation
District and the Orange County Water District, GWRS has initially provided 72,000 acre-feet per year of
reclaimed water for replenishment of the Orange County Groundwater Basin and has augmented the L
seawater intrusion barrier at a total project cast of$492.2 million. The Sanitation District incurred $14.7
million in construction during FY 2007-08 on this project bringing the Sanitation District's share of total
project cost-to-0ate to$201.1 million.
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See page 7 for the Schedule of Capital Assets and a listing of the other major capital additions for FY
2007-08.
r Net assets invested in capital assets, net of related debt decreased$34.1 million, or 3.8 percent over the
prior year primarily as a result of the $300 million of new money COP debt proceeds that was mostly
offset by the $227.8 million increase in net capital assets, a $4 million increase in deferred charges, a
�+ $14.3 million increase in debt service reserves,and debt service principal payments of$8.9 million.
Unrestricted net assets increased $120.9 million, or 40.4 percent over the prior year, and is primarily due
r to the overall increase in net assets of$86.3 coupled with the reduction in Investments invested in capital
assets net of related debt of$34.1 million.
Changes in Net Assets
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Net assets increased $86.3 million in FY 2007-08, a 7.2 percent increase over the prior year.
r (Dollars in thousands)
Percentage
June 30, June 30, Increase Increase
r 2008 2007 (Decrease) (Decrease)
Revenues:
r Operating revenues
Service Charges $ 184.180 $ 167,790 $ 16,390 9.8%
Permit and inspection fees 1,196 1,866 (670) -35.9%
Total operating revenues 185,376 169,656 15,720 9.3%
Nonvperating revenues
Property taxes 65,210 60,565 4,645 7.7%
Investment and interest income 20,235 22,244 (2,009) -9.0%
r Capital facilitites capacity charges 19,816 31,278 (11.462) -36.6%
Other 13 1,068 (1,055) 98.8%
Total non-operating revenues 105,274 115,155 (9,881) -8.6%
r Total revenues 290,650 284,811 51839 2.1%
Expenses:
r Operating expense other than
depreciation and amortization 131,890 112,155 19.736 17.6%
Depreciation and amortization 47,767 53,111 (5,344) -10.1%
Non-operating expense 40,334 37,837 2,497 6.6%
r Total expenses 219,991 203,103 16,888 8.3%
Income before capital
contributions 70,659 81,708 (11,049) -13.5%
Capital contributions
(distributions), net 15,592 18,929 (3,337) -17.6%
Increase in net assets 86.251 100,637 (14,386) -14.3%
Beginning net assets 1,189,736 1,089,099 100,637 9.2%
Ending net assets $ 1,275,987 $ 1,189,736 $ 86,251 7.2%
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Sources of Revenue Functional Expenses
June 30,2008 June 30.2008 ®Collections
7% 8% @Treatment&
Dlnlerest 22% TY.
Disposal
MUser Fees 10% Mepreclation 8
Amortization
OTaxes Levied
❑Other 22% Dlnterest Expense
■Other
As previously stated, an enterprise fund is used to account for the operations of the Sanitation District,
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.
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 2007-08, operating revenues increased $15.7 million, or 9.3 percent over the prior year that is
predominately reflective of the $16.4 million, or 9.8 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$9.9 million, or 8.6 percent decrease in non-operating revenues consists of an$11.5 million, or 36.6
percent decrease in capital facilities capacity charges, a $2.0 million, or 9.0 percent decrease in
investment and interest income, and a $1.1 million, or 98.8 percent decrease in other non-operating
revenues. These decreases are partially offset by a $4.6 million, or 7.7 percent increase in property tax
revenues. The decrease in capital facilities capacity charges is reflective of the decrease in total building
permit valuations in calendar year 2007 of 19.5 percent and a projected decrease of 22.0 percent in
calendar year 2008. The decrease in investment and interest income is attributable to the lower yields
earned on investments over the prior year that were somewhat offset by higher average rash and
investment balances. Yields earned on investments decreased from 5.5 percent in FY 2006-07 to 4.8
percent in FY 2007-08. However, cash balances increased during this same time period from $372
million to $533 million. The decrease in other non-operating revenues is primarily reflective of the one-
time $747,000 grant reimbursement received in the prior year from the Natural Resources Conservation
Services of the U.S. Department of Agricultural. Property tax revenue increases are primarily the result
of the total assessed valuation increase of 8.1 percent over the prior year due to the upturn in the real
estate market during this time period.
Of the$19.7 million, or 17.6 percent increase in operating expense before depreciation and amortization,
operating salaries and benefits, totaling $67.6 million, increased $9.8 million, or 17.0 percent over the
prior year. These operating salaries and benefits cost are part of the overall increase of$12.0 million in
total salaries and benefits when including the salaries and benefits capitalized within capital improvement
program. Overall, total Sanitation District salaries and benefits were $83.5 million, a 16.7 percent
increase over the prior year total of$71.6 million. This increase is mostly attributable to the $5.9 million
recognition of net benefit obligation owed by the District under the Additional Retirement Benefit Account
(AREA) pension program. ARBA was previously administered by the Orange County Retirement System.
The administration of ARBA was brought in-house during FY 2007-08 as a result of the drop-off in
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pension investment earnings and the underfunding of the net benefit obligation. There was also a $2.5
million increase in regular salaries, or 5.9 percent, that was primarily driven by existing bargaining
agreements as total authorized staffing levels were reduced by 10 full time equivalent positions to 634.
r The remaining $3.6 million increase is attributable to increases in retirement premiums and Insurance
benefit costs.
Supplies, repairs and maintenance operating expense increased $4.9 million, or 23.4 percent due to a
'+ $4.1 million increase in repairs and maintenance expenses. These expenses are attributed to
maintenance on aging equipment and infrastructure including co-generation engine overhauls and the
cleaning of digesters. Contractual services operating expense increased $3.2 million, or 15.7 percent
r over the prior year primarily due to the$2.6 million increase in biosolid and other waste disposal. Biosolid
cost increase is due to the approximate 15 percent increase in biosolid hauling costs and to a small
increase in the volume of biosolids. The volume of biosolids will continue to grow as the District moves
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towards full secondary treatment standards by December 2012.
Capital Assets
r At June 30, 2008, the Sanitation District had a net investment of $1.829 billion in capital assets. This
amount represents a net increase (including additions and deletions) of $227.8 million, or 14.2 percent
over the prior year.
r Schedule of Capital Assets
(Net of Depreciation and Amortization)
(Dollars in thousands)
r Percentage
June 30, June 30, Increase Increase
2008 2007 (Decrease) (Decrease)
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Land $ 13,021 $ 13,021 $ - 0.0%
Construction in Progress 937,487 803,680 133,807 16.6%
r Sewage collection facilities 301,564 301,458 106 0.0%
Sewage treatment facilities 436,896 351,379 85,517 24.3%
Effluent disposal facilities 49,940 52,324 (2,384) 4.6%
Solids disposal facilities 384 - 384 0.0%
General and administrative facilities 84,581 73,592 10,98g 14.9%
Assets acquired in excess of book value 5,510 8,187 857 -10.7%
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Capital assets, net 1,829,383 1,8 2-1 227,782 14.2%
Major capital asset additions for the current fiscal year included the following:
r . $53.5 million-Headworks Replacement at Plant No. 2
• $53.3 million-New Secondary Treatment Systems at Plant No. 1
. $37.1 million-Replacement of Ellis Avenue Pump Station
• $36.8 million-New Trickling Filters at Plant No. 2
. $14.7 million-Ground Water Replenishment System
• $ 9.3 million-Primary Treatment Rehabilitation at Plant No. 2
r $ 6.8 million -New Primary Sludge Feed System at Plant No. 2
• $ 6.2 million-Expansion of Reclamation Electrical Service Main to 66kV at Plant No. 1
More detailed information about the Sanitation District's capital assets is provided in Notes 1 and 3 of
r Notes to the Financial Statements.
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Debt Administration
At June 30, 2008, the Sanitation District had $1.08 billion outstanding in COP debt, a net increase of
$280.6 million, or 35.0 percent over the prior year. This increase is primarily due to the$300.0 million of I
new COP fixed rate debt issued in December 2007(COP Series 2007B)to assist in the $275.5 million in LI
capital outlays that had taken place during the year and to assist in the $373.7 million scheduled to be
spent in the FY 2008-09. In addition, a second fixed rate COP debt issuance of$77.2 million was made
in May 2008 (COP Series 2008A) to refund the $85.5 million outstanding principal balance of the COP V
Series 1992 synthetic variable-to-fixed rate debt.
The Sanitation District achieved a rating of AAA from Standard and Poor s Corporation, and has
maintained ratings of AA from Fitch and Aa3 from Moody's Investor Services. The Sanitation District's L
long-range financing plan is designed to maintain these high ratings. Over the next ten years, the
Sanitation District is projecting an additional $2.0 billion in future treatment plant and collection system
capital improvements. In accordance with the Sanitation District's long-term debt fiscal policy, the L
Sanitation District will restrict long-term borrowing to capital improvements that cannot be financed from
current revenue.
In September 2008, COP Series 2008B fixed rate debt in the amount of $27.8 million was issued to L
refund the $26.8 million outstanding principal balance of the COP Series 1993 synthetic variable-to-fixed
rate debt.
In December 2008, the Sanitation District is scheduled to issue $200 million of new COP fixed rate debt. L
A total of$550 million in COP debt issuance is being proposed over the next five years. These financings
are needed early in the 10-year capital improvement program because the bulk of the construction is
scheduled during the next six years. V
For more information on long-term debt activities, see Note 4 of the Notes to Basic Financial Statements.
Economic Factors and Next Year's Budgets and Rates
• The unemployment rate within the County of Orange is currently 5.3 percent, which is an increase
from a rate of 3.9 percent a year ago.
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• Inflation for Orange County in 2007 increased 3.3 percent based on the 2007 actual percentage
change in the consumer price index according to the June 2008 Economic and Business Review I'
report prepared by Chapman University. L
• The actual rate of return on investments decreased from the 5.5 percent earnings rate in FY 2006-07
to 4.8 percent for FY 2007-08. 1
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All of these factors were considered in preparing the Sanitation District's two-year budget for FY 2008-09
and FY 2009-10. L
The Sanitation District's user fee schedule was increased by 10.4 percent for FY 2008-09 over the prior
year. The annual fee applicable to the Sanitation District's largest customer base and the underlying _
basis for all other user rates: the single-family residential fee, increased by $19.00, from $182.00 to j
$201.00. This rate increase was necessary to finance the Sanitation District's cash flow needs as capital L
improvement outlays alone are projected to be $373.7 million in FY 2008-09 and are projected to total
$2.0 billion over the next 10 years in order to rehabilitate and upgrade existing facilities and provide for
full secondary treatment standards. L
Requests for Information
The financial report is designed to provide a general overview of the Sanitation District's finances. i
Questions concerning any of the information provided in this report or requests for additional financial j.+
information should be addressed to the Financial Management Division, Orange County Sanitation
District, P.O. Box 8127, Fountain Valley, CA 92728-8127.
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ORANGE COUNTY SANITATION DISTRICT
BASIC FINANCIAL STATEMENTS
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ORANGE COUNTY SANITATION DISTRICT
Statement of Net Assets L
June 30, 2008
(Wirth Comparative Data for June 30, 2007)
2008 2007 L
Current assets:
Cash and cash equivalents $ 104,012,814 $ 55,472,715
Investments 330,161.649 231,710,077 L+
Accounts receivable, net of allowance for uncollectibles 11,805.761 12.703,227
Accrued interest receivable 2,855,232 2815784 L
Due from other governmental agencies 5,025,176 6:332:508
Connection fees receivable 1.286,927 962.764
Property tax receivable 3.296,089 2,459,657
Inventories 4,985,388 4,834.811 L
Prepaid expenses 814,3D4 1,281,524
Total current assets 464,243,340 318,573,057
Noncurrent assets:
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Restricted:
Cash and cash equivalents 50.737,114 23,946,510
Investments 47,829,179 60,776,180
Accrued interest receivable 386.960 567,380
Unrestricted: L
Non-Depreciable capital assets 950,506,192 816,701.436
Depreciable capital assets, net of accumulated depreciation 876,875,030 784.919.903
Deferred charges 8,269,966 4.277,005
Other noncurrent assets, net 28,078.450 29,914,713 LI
Total noncurrent assets 1.964,684,891 1,721,103,127
Total assets 2,428,928,231 2,039,676,184
Current liabilities: L
Accounts payable 27,577,766 18,966,641
Accrued expenses 8,894,308 15,084.007 I
Retentions payable 7,786,756 6.959,199 L
Interest payable 12.107,963 7,023.945
Current portion of long-tenn obligations 27.720.592 28.510,896
Total current liabilities 84.087,385 76.544,688 L
Noncurrent liabilities:
Noncurrent portion of long-term obligations 1,068,853.560 773,394,732 V
Total liabilities 1,152,940.945 849.939.420
Net assets: L
Invested in capital assets, net of related debt 852,384.563 886,462.675
Restricted for debt service 3,311,187 3.904,212
Unrestricted 420,291,536 299,369977
Total net assets $ 1,275,987,286 $ 1,189,736,764 V
See Accompanying Notes to Basic Financial Statements. r.r
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ORANGE COUNTY SANITATION DISTRICT
Statement of Revenues, Expenses, and Changes in Net Assets
.. For the Year Ended June 30, 2008
(With Comparative Data for the Year Ended June 30, 2007)
2008 2007
Operating revenues:
Service charges $ 184,180,220 $ 167,789,660
r Permit and inspection fees 1,196,320 1,866,411
Total operating revenues 185,376,540 169,656,071
Operating expenses other than depreciation
and amortization:
Salaries and benefits 67,628,651 57,802,102
,y Utilities 8.092,317 8,072,262
Supplies, repairs and maintenance 25,970,799 21,050.912
Contractual services 23,687,835 20,389.454
Directors'fees 144,117 131,750
r Meetings and training 1,007.255 1,124,852
Other 5,458,868 3,583,792
r„ Total operating expenses other than
depreciation and amortization 131,889,842 112,155,124
Operating income before depreciation
r and amortization 53.486,698 57,500,947
Depreciation and amortization 47,766,956 53,110,609
�+ Operating income 5,719,742 4,390,338
Non-operating revenues:
Property taxes 65,209.461 60,565,308
r Investment and Interest income 20,235,214 22.243,554
Capital facilities capacity charges 19,816.293 31,277,647
Other 12,773 1,067,794
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Total non-opereting revenues 105,273,741 115,154,303
Non-operating expenses:
Interest 22,517,174 21,746,852
Feasibility studies 12,994,472 11.128,105
Capital greens to member agencies 1,769,894 2,127,154
r Other 3,053,282 2,834,392
Total non-operating expenses 40,334,822 37,836,503
r Income before capital contributions 70,658,661 81,708,138
Capital contributions from other agencies 15,591,861 18,929,179
Change in net assets 86,250.522 100,637,317
Total net assets-beginning 1,189,736,764 1.089,099,447
Total net assets-ending $ 1,275,987,288 $ 1.189.736.764
r See Accompanying Notes to Basic Financial Statements.
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ORANGE COUNTY SANITATION DISTRICT
Statement of Cash Flows
For the Year Ended June 30,2008
(With Comparative Data for the Year Ended June 30,2007) 611
2008 2007
Cash flows from operating activities: u
Receipts from customers and users $ 192,439,636 $ 183.133,202
Payments to employees (58,897,860) (59,691,912)
Payments to suppliers (61,79D,653) (40,809,378)
Net cash provided by operations 71,751,123 82.632,002 Li
Cash flows from noncepital financing activities.
Proceeds from property taxes 64.373,029 59,989,588
Capital grants to member agencies (1,769,894) (2,127,154) L
Net cash provided by noncepital financing activities 62,003,135 57,862.412
Cash flows from capital and related financing activities:
Capital facilities capacity charges 19,492,120 31,650,082
Additions to property,plant and equipment (275,406,057) (281,135,639)
Arbitrage payment (307.934) (53.100)
Interest paid (31,78%973) (35.250,887)
Principal payments on certificates of participation (96,530,000) (101,965.000) Ir
Proceeds from certificates of participation issuance 378.898.828 89,818.081
Certificates of participation issuance costs (675.401) (319,695)
Proceeds from capital contributions 10,750.712 14.163,356
Net cash provided(used)by capital and related financing activities 4,433,095 (283.092.825)
Cash flows from investing activities:
Proceeds from the sale of investments 3,793,917,222 5,282,384,356
Purchases of investments (3,8111I.M,353) (5,204,660,027) L
Interest mcelved 23,359.481 24,647,8a2
Net cash provided(used)by investing schvitles (83,456,650) 102.372,011
Net increase(decrease)in cash and cash equivalents 75.330.703 (40,226,400) II
Cash and cash equivalents,beginning of year 79,419.225 119.645,625
Cash and cash equivalents,end of year $ 154,749.928 $ 79.119.225
Reconciliation of operating income to net cash provided by operating activities: V
Operating income $ 5.719.742 $ 4.390,338
Adjustments to reconcile operating income to net cash provided by operations: -
Depreciation and amortization 47,766,9% 53,110,609
Bad debt"Parise (4,376) (67.284) v
Other non-operating revenues and expenses (289.933) 1.488.143
(Increaseydecrease in operating assets:
Accounts receivable 2.022,391 5,604,862 Y4
Due from other governmental agencies 5.027,932 6.804.565
Inventories (264.741) (284,670)
Prepaid and other assets 467,220 10,052,412
Increasel(decrease)in operating liabilities: LI
Accounts payable 8,611.125 (2,777,150)
Accrued expenses (6,189,699) 6.639.768
Retentions payable 827,557 (2,286,374) '
Penslon1OPEB payable 6,261,477 - y
Compensated absences 545,278 311,438
Claims and judgments 1,250.194 (364.655)
Net cash provided by operations S 716751=123 $ 32,632.002
W
Noncash Activities:
Unrealized gain(loss)on the fair value of investments S (1,311,560) $ 16,429
Net disposal of assets with no cash effect (1,973,078) (3,243.743)
Certificates of participation issuance cost-underwriters fee (3,995.218) (468,044) L
Capital contributions from other agencies 4,841,149 4,765,823
Certificates of participation original issue premium 14.051.290 183,654
Feasibility studies with no cash effect (12,994,472) (11,128,105)
See Accompanying Notes to Basic Financial Statements.
12
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
(11 Summary of Significant Accounting Policies
Reporting Entitv
The Orange County Sanitation District(OCSD) is a public agency which owns and operates certain
wastewater facilities 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 governance structures, reduce the size of OCSD's Board of Directors, ease
administrative processes, streamline decision-making and consolidate accounting and auditing
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, 2008, other than
principal and interest payments on outstanding certificates of participation (see Note 4).
r, 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 Accountng Standards Board
(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
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements L
For the Year Ended June 30, 2008
L
to the general public on a continuing basis be financed or recovered primarily through user
charges.
Basis of accounting refers to when revenues and expenses are recognized in the accounts and L
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 GASS 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.
Ooeratino 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 I
All investments are stated at fair value (the value at which a financial instrument could be 60
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 L
Accounts receivable is shown net of the allowance for uncollectible receivables which was
$189,391 at June 30, 2008. Any unbilled sewer service receivables are recorded at year-end.
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 L
revenue area's share of joint assets.
Capital assets of property, plant, and equipment are defined as assets with an initial, individual cost
of more than $5,000 and an estimated useful life of at least three years. Such assets are recorded 4
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; L
and certain administrative and general expenses. Net interest costs are capitalized on projects.
During the fiscal year ended June 30, 2008, net interest costs of$13.25 million were capitalized.
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14 U
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30.2008
r 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 defamed 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 440 hours.
r 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-term 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.
r 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.
r
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 L
Notes to Basic Financial Statements
For the Year Ended June 30,2008
L
The County bills and collects the property taxes and remits them to OCSD in installments during
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 operations. v
Capital Facilities Capacity Charges
Capital facilities capacity charges represent fees imposed at the time a structure is newly V
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 imposed
or to pay for new facilities to be constructed that are of benefit to the property being charged. L
Capital Contributions
Capital contributions consist of charges to certain special districts and agencies for their agreed- L
upon share of additions to capital assets.
Operating and Non-operating Revenues and Expenses L
Operating revenues and expenses result from collecting, treating, and disposing of wastewater and
inspection and permitting services. OCSD's operating revenues consist of charges to customers
for the services provided. Operating expenses include the cost of providing these services,
administrative expenses, and depreciation and amortization expenses. All revenues and expenses L
not meeting these definitions and which are not capital in nature are reported as non-operating
revenues and expenses.
Construction Commitments L
OCSD has active construction projects to add additional capacity, improve treatment, or
replace/rehabilitate existing assets. At June 30, 2008, the outstanding commitments with L
contractors totaled$424 million.
Self-Insurance Plans
i ,
For the year ended June 30, 2008, OCSD was self-insured for portions of workers' compensation, V
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 $300 million. The self-insurance portion of the property damage exposure covering fire and L
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 v
peril of earthquake. The self-insurance portion of the boiler& machinery exposure is the deductible
ranging from $26,000 to $350,000 under the outside excess boiler & machinery insurance
coverage to$100 million per occurrence combined limit. The self-insurance portion of the general V
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 W
insurance coverage during the fiscal year ended June 30, 2008 are as follows:
• The excess insurance coverage for workers'compensation increased from $200 million to V
$300 million.
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2008
During the past three fiscal years there have been no settlements in excess of covered amounts.
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, 2008 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,
retirement, 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 GASB Statement 32, the plan's assets and liabilities are not included within OCSD's financial
statements.
.. Pension Accounting
OCSD has two pension programs: a pension plan and additional retirement benefit account
(ARBA). The pension plan, which is administered by the Orange County Employees' Retirement
System (OCERS), has been reported since GASB Statement No. 27, 'Accounting for Pensions by
State and Local Governmental Employers" was established. The ARBA plan has been
administered by OCERS in the past; in the current fiscal year it was brought in-house and is now
directly administered by OCSD. Since an actuarial study has assigned a value to the liabilities of
s the program, the ARBA benefit is row recognized on OCSD's statements and reported in note 7.
OPEB Accountinc
OCSD adopted GASS Statement No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions." Issued in June 2004, this statement addresses
how state and local governments should account for and report their costs and obligations related
to postemployment healthcare and other nonpension benefits, collectively referred to as other
postemployment benefits (OPEB). The statement generally requires that state and local
governmental employers account for and report the annual cost of OPEB and the outstanding
obligations and commitments related to OPEB in essentially the same manner as they currently do
for pensions. OCSD adopted Statement 45 as a 'Phase I Agency", required to implement for the
fiscal year beginning July 1, 2007.
(2) Cash and Investments
Cash and investments as of June 30, 2008 are classified within the accompanying Statement of
.. Net Assets as follows:
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17
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ORANGE COUNTY SANITATION DISTRICT I
Notes to Basic Financial Statements L
For the Year Ended June 30, 2008
L
Statement of Net Assets:
Current, Unrestricted:
Cash and cash equivalents $ 104,012,814 L;
Investments 330,161,649
Subtotal -current, unrestricted 434,174,463
Restricted:
Cash and cash equivalents 50,737,114 I"
Investments 47,829,179
Subtotal -restricted 98,566,293 L
Total cash and cash equivalents and investments $532,7 00,756
Cash and investments consist of the following as of June 30, 2008: I
Ir
Cash on hand $ 2,0W
Deposits with financial institutions 3,209,284
Investments 430,963,179 L
Monies held by trustees:
Investments $50,737,114
Investment contracts 47,829,179 L
Subtotal -monies held by trustees 98,566,293
Grand total cash and investments $ 532 740,756
L
Investments Authorized by the California Government Code and OCSD's Investment Policy
The table below identifies the investment types that are authorized by the California Government
Code and OCSO'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 L
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 I
investments are governed by the provisions of the debt agreements rather than the general LW
of the California Govemment Code or OCSD's investment policy.
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2008
Authorized Maximum
by OCSD's Maximum Investment
Investment Type-Authorized by the Investment Maximum Percentage in Single
California Government Code Policy? Maturity ln(3) of Portfolio(1) Issuer(1)
Local Agency Bonds Yes 5years None None
U.S.Treasury Obligations Yes 5 years None None
California State TreasuryObligations
g ations Yes 5 years None None
U.S.Agency Securities Yes 5 years None None
Banker's Acceptances Yes 180 days 40% 30%
Commercial Paper Yes 270 days/31 days 15%125% 10%
Negotiable Certificates of Deposit Yes 5 years 30aA None
Repurchase Agreements Yes 1 year None None
Reverse Repurchase Agreements Yes 90 days al 5%p) None
Corporate Medum-Teml Notes Yes 5 years 30% None
Mutual Funds Yes N/A 15%(2) 10%
Money Market Mutual Funds Yes N/A 15%(2) None
Mortgage Pass-Through Securitles/CMO Yes 5 years 20% None
County Investment Pools Yes N/A None None
Local Agency Investment Fund(LAIF) Yes N/A None None
r Notes
(1)Restrictions are in accordance with the Calitomia Govemment Code unless indicated othermse.
r (2)The resinction is in accordance with 0050's Imostmerd Policy whits is more restrictive Nan the California Government Code.
(3)As allowed by California Gmemmem Code Section 536()1,the Board!of Dimcbms has adopted a policy of no madmum maturity
for investments purchased by OCSD's exlemal money manager for the tong-tern investment portfolio. Nome er.the duration
of the long-term investment pomoho can never exceed so months. Investments purchased for Me shod-tetm portfolio are
r subject to the maturity restrictions noted in this table.
Investments Authorized by Debt Agreements
r
The investment of debt proceeds held by trustees is governed by provisions of the debt
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.
19
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2008
L
Maximum
Maximum Investment
Investment Type -Authorized by the Maximum Percentage in a Single L
California Government Code Maturity of Portfolio Issuer
State and Local Agency Bonds 5 years None None
U.S. Treasury Obligations 5years None None L
U.S. Agency Securities 5 years None None
Bankefs Ameptances 180 days 40% 10%
Commercial Paper 270 days/31 days 15%/30% 10%
Negotiable Certificates of Deposit 5 years 30% 10%
Repurchase Agreements tyear None None
Corporate Medium-Term Notes 5 years 30% None
Mutual Funds N/A 20% 10%
Money Market Mutual Funds WA 20% None
Local Agency Investment Fund (LAIF) WA None None L
Guaranteed Investment Contracts N/A None None
Disclosures Relatina to Interest Rate Risk L
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 OCSO L
manages its exposure to interest rate risk is by purchasing a combination of shorter term 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. L
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 L
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 80 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. Ir
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2008
Modified Modified
Duration Duration
Investment Type Fair Value in ears in months
Short-Term Portfolio:
U.S.Treasury Bills $ 7,262.825 0.121 1.47
U.S.Agency Securities 55,445,452 0.253 3.08
Commercial Paper 12,461,899 0.058 0.71
Corporate Medium-Term Notes 3.474,048 0.442 5.38
Negotiable Certificates of Deposit 3,500,000 0.210 2.56
Repurchase Agreements 15,700,000 - -
Money Market Mutual Funds 116,265 0.083 1.01
Short-term portfolio subtotal $ 97,960,489 0.761 9.26
Long-Term Portfolio:
U.S.Treasury Notes $ 56,992,380 2.241 27.27
U.S.Agency Securities 177,253.171 3.383 41.16
d U.S. Govt. Backed Mortgage Pools 869,787 3.658 44.51
Commercial Paper 4,780,667 0.042 0.51
Corporate Medium-Term Notes 66,297,290 2.162 26.30
.,, Money Market Mutual Funds 354,139 0.083 1.01
Mortgage Pass-Through Securities/CMO 4,696.419 1.204 14.65
Long-term portfolio subtotal $ 311,243,853 2.901 35.30
r
OCSD monkas 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.
Fair Value Maturities
Investments hell by fiscal agents:
Money Market Mutual Funds:
Fidelity Treasury Class 111 Fund 696 $ 2,517,905 WA
First American Treasury Obligation 998,821 WA
Blackrock Institutional Funds 19,370,367 N/A
GS Financial Square Treasury Obligations 45,541 N/A
Blackrock Institutional T-Fund 429 WA
Blackrock Institutional T-Fund 20,021,082 N/A
a+ First American Government Obligation 7,782,969 N/A
Guaranteed Investment Agreements:
AIG- 1993 COP 2,690,000 July 14, 2018
..� Bayedsche Landesbank Girozentrale-2000 COP 17,311,427 August 1,2016
MBIA Inc. -2006 COP 18,309,752 February 1,2036
FSA Capital Management Services LLC-2007A COP 9,518,000 January 30, 2030
Loral Agency Investment Fund (LAIF) 17,992,592 212 day average
Fair Value of Other Investments $ 116,558,885
21
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ORANGE COUNTY SANITATION DISTRICT L
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
L
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 L
information provided above):
• Mortgage-backed securities: These securities are subject to early payment in a period of L
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$43,527,568. L
Disclosures Relatino to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the y
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: L
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ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2008
Investment Type and the Lowest Rating Reported at Year End Fair Value
Investments with no legal minimum rating&no required disclosure:
U.S.Treasury Obligations $ 68.021,450
,r U.S.Agency Securities-GNMA 869,787
Subtotal $ 68.891,237
Investments with no legal minimum rating:
U.S.Agency Securities(other than GNMA):
Rating of AAA(Filch) 82.206.032
Rating of AGY(Standard &Pooes) 150,492.591
Negotiable Certificates of Deposit
se Not rated at fiscal year end 3.500,000
Repurchase Agreements:
Not rated at fiscal year end 15,700,000
r Local Agency Investment Fund (LAIF):
Not rated at fiscal year end 17,992,592
Investments with fiscal agents-Guaranteed Investment Contracts:
Not rated at fiscal year end 47,829,179
Subtotal 317.720,394
Investments with a legal minimum rating(or its equivalent)of A:
Commercial Paper.
Rating of A-1 (Standard&Poor's) 3.795,783
Rating of P-1 (Moody) 13,446,783
Corporate Medium-Tenn Notes:
Rating of A+(Standard&Poor's) 8,047,465
Rating of A(Standard&Pooes) 10.749,798
Rating of At (Moody) 1,166,244
Rating of A2(Moody) 8,790,018
Rating of AA+(Standard&Pooes) 826.200
Rating of AA-(Fitch) 8,166.837
Rating of AA(Fitch) 4.679,603
Rating of AA2(Moody) 6.191,278
Rating of AA3(Moody) 12,743,487
Rating of AAA(Standard&Poor's) 4,452,D05
Rating of BAA1 (Moody)* 1266,989
Rating of BBB(Standard&Poofsr 897.606
Rating of BBB-(Standard&Pooes)* 1.793,808
Money Market Mutual Funds:
Rating of AAA(Standard&Poots) 470,404
Invested with fiscal agents:
Rating of Aaa(Moody) 50,737,114
Not rated at fiscal year end
.. Subtotal 138.221,422
Investments with a legal minimum rating for its equivalent)of AA:
Mortgage Pass-Through Securities/CMO:
r Rating of AAA(Standard&Poor's) 726,813
Rating of AGY(Standard&Pooes) 3,969.606
Not rated at fiscal year end -
Subtotal 4,696.419
r Total $529.529,472
Invesment was in compliance with legal requmMents at the time it was purchased
23
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ORANGE COUNTY SANITATION DISTRICT L
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
L
Concentration of Credit Risk
Limitations on the amount that OCSD is allowed to invest in any one issuer have been identifed y
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 L
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$56,319,421 L
• Federal Home Loan Mortgage Corporation(U.S.Agency Securities),totaling$72.764,762
Federal National Mortgage Association (U.S.Agency Securities),totaling$103,297.068
Custodial Credit Risk L
Custodial credit risk for deposits is the risk that in the event of the failure of a depository financial L
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 I
local governmental units by pledging securities in an undivided collateral pool held by a depository y
regulated under state law (unless so waived by the governmental unit). The market value of the
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 parry. 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.
V
As of June 30, 2008, 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 $ 50,737,114 `.
Guaranteed investment contracts 47,829,179
Total 598.E 223 L
Investment in State Investment Pool
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
LAW for the entire LAW portfolio (in relation to the amortized cost of that portfolio). The balance V
available for withdrawal is based on the accounting records maintained by IAIF, which are
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 L
that vary according to changes in rates greater than a one-tor-one basis,and structured notes.
L
24 L
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
r (3) Capital Assets
Capital asset activity for the year ended June 30,2008 is as follows:
r
Balance at Balance at
June 30,2007 Additions Deletions June 30,2008
Capital assets not depreciated:
r Cost:
Land If 13,021,400 $ - $ - It 13,021,480
Construction In progress 803,679,056 275,529.104 (141.722.348) 937,486,712
r
Total nondepreciable assets 816,701,438 275.5294104 (141,722,348) 950,508.192
Depreciable capital assets:
Cost
Sewage collection facilities 503,914,944 9.674.711 - 513,609,655
r Sewage treatment facll9les 764,870,945 109.904.220 - 874.865,165
Effluent disposal facilities 97,014.520 - - 97,014,820
Solids disposal facilities 3,W4,494 388,742 3,483,236
General and administrative facilities 173218.585 21,854,878 (241,257) 194.642.004
Excess purchase price over book value
on acquired assets 19,979,000 - - 19.979.000
Subtotal 1.662.072.788 141,722,349 (241,257) 1.703.553.800
r Accumulated depreciation:
Sewage collection facilities (202,457,199) (8,588,753) - (212,025,952)
Sewage treatment facilities (413,492,082) (24,476,784) - (437,esa.m)
Effluent disposal facilities (44,690,679) (2,384.536) - (47,075,215)
r Solids disposal facilities (3.074,493) (4,012) - (3,078.505)
General and administrative facilities (99,626,563) (10,675,182) 240,991 (110,000.754)
Excess purchase price over book value
on acquired assets (13,811,889) (e57,709) - (14,489.598)
Subtotal (777.152.885) (47,766,956) 240,991 824,678,850
Net depreciable assets 784.919.903 93.955,393 (266) 878,875.030
sr Net capital assets $ 1,601,621,339 $ 369,484,497 $ (141,]22,614) $ 1,829,353,222
(4) Lono-Term Liabilities
The following is a summary of the changes in long-term liabilities for the year ended June 30, 2008:
Certificates
,r Arbitrage Comilsnsated Claims and of Net Pension Net OPEB
Payable Absences Judgments Parlicipafion Obligation Obligation Totals
Balance,July $ 340,100 $ 5.885,818 $ 1.025,195 $ 801,785,000 $ 5,493,378 $ - $ 814.529,491
Additions 663,300 6,059,694 1.631,080 377,185,000 657,552 941.961 387,118,587
Oelellons (307,900) (5,514,416) (380,888) (96,530,000) (230,330) (601,084) (103.564.616)
Balance,June 30 695,500 6,431.095 2,275.389 1.082.420,000 5,920,600 340,877 1,098,083,482
Due whin one year 239,900 5,741,602 284.010 21.455.000 27,720,592
Unamortized discount
(premium) - (13,629.542)
Unamortized deferred
amount on refundings - - 15,138,652 - - 15.138.852
Long-Term amount 8 455,600 $ 689,414 $ 1,991,379 $ 1,059,455,690 8 5,920,600 $ 3/0,877 $ 1,068,853,560
25
r
L
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
I
Lr
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, 2008 is
$455.600 for future years'remittances.
Comoensated Absences
OCSD's policies related to compensated absences are described in Note 1. OCSD's liability at
June 30, 2008 is $6,431,095 with an estimated $5,741,682 to be paid or used within the next fiscal L
year.
Claims and Judgments Payable
OCSD is self-insured in a number of areas as described in Note 1. The following is a summary of low
the claims and judgments payable as of June 30, 2008 and 2007:
2007-08 2DO6.07 L
Claim s and judgments payable at July 1 $1,025,195 $1.379.850
Claims incurred during the fiscal year 87,463 222,771
Adjustments to the prior year 1,543,617 (278,374) L
Payments on claims during the fiscal year (380,886) 299.052
Claims and judgments payable at Ju ne 30 2.275.389 1.025,195
Less: current portion (284,010) (340.480 L
Total long-term claims and judgments payable $1,991.379 $ 684,715
i
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, 2008 are summarized as follows:
Amount I
1993 refunding certificates of participation $ 26,900.000 Ir
2000 refunding certificates of participation 196,600,000
2003 certificates of participation 191,500,000
2006 certificates of participation 196,600,000 L
2007A refunding certificates of participation 93,655,000
2007B certificates of participation 300,000,000
2008A refunding certificates of participation 77,165,000 L
Total certificates of participation payable $ 1,082,420,000
L
Outstanding Certificates of Participation
All of the outstanding debt of OCSD is senior lien debt with rate covenants that require a L
minimum coverage ratio of 1.25. The minimum coverage ratio is the ratio of net annual
revenues available for debt service requirements to total annual debt service requirements. As
of June 30, 2008, the coverage ratio for senior lien debt was 3.25. L
26 L
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30,2008
September 1993 Refundina Certificates of Participation
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
balance of the 1990-92 Series B certificates of participation.
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,
2008 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.
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2008 reserve of $2,690,000 is held by the
r 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
participation. The certificates were issued to refund the remaining outstanding principal
balance of the 1990-92 Series A, B, and C certificates of participation and to reimburse OCSD
for 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,
�+ 2008 was 2.72 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, 2008 reserve of $18,055,366 is held by US
Bank,the trustee, and meets the reserve requirement.
r 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
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.
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2008 reserve of$19,369,619 is held by Union
Bank,the trustee, and meets the reserve requirement.
r
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,
2008 was 2.74 percent. Annual principal payments are due on February 1, beginning February
1, 2022.
27
L
ORANGE COUNTY SANITATION DISTRICT L
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
L
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2008 reserve of $18,309,753 is held by
Deutsche Bank,the trustee,and meets the reserve requirement.
V
May 2007 Certificates of Participation
On May 22. 2007, OCSD completed the sale of $95,180,000 of refunding certificates of V
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. i..
The trust agreement for the certificates requires the establishment of a reserve which was
funded from certificate proceeds. The June 30, 2008 reserve of$9,518,014 is held by Union L
Bank, the trustee, and meets the reserve requirement.
December 2007 Certificates of Participation L
On December 20, 2007, OCSD completed the sale of $300,000,000 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 i
system. The interest rate on the refunding certificates is fixed and ranges from 4.00 percent to Li
5.25 percent. Annual principal payments are due on February 1, beginning February 1, 2008.
The trust agreement for the certificates requires the establishment of a reserve which was V
funded from certificate proceeds. The June 30, 2008 reserve of$19,982,813 is held by Union
Bank, the trustee, and meets the reserve requirement.
May 2008 Certificates of Participation
On May 29, 2008, OCSD completed the sale of $77,165,000 of refunding certificates of
participation. The certificates were issued to refund the $85,505,000 outstanding principal
balance of the 1992 Series certificates of participation. The interest rate on the refunding �+
certificates is fixed and ranges from 2.95 percent to 4.0 percent. Annual principal payments
are due on February 1, beginning February 1, 2009.
The aggregate difference in debt service between the refunding debt and the refunded debt is
a positive amount of approximately $6.3 million. The total future payments for the new debt
provides a net present value loss of approximately $1.0 million to refund the old debt in
payments. The trust agreement for the certificates requires the establishment of a reserve i..
which was funded from certificate proceeds. The June 30, 2008 reserve of$7,716,500 is held
by US Bank, the trustee, and meets the reserve requirement.
Annual Amortization Reouirements
The annual requirements to amortize all debt related to certificates of participation as of June 30,
2008, are as follows:
v
28
u
ORANGE COUNTY SANITATION DISTRICT
r Notes to Basic Financial Statements
For the Year Ended June 30,2008
r
Estimated
Year Interest Rate
Ending Estimated Swaps, Net
June 30, Principal Interest (See Note 5) Total
2009 $ 21,455,000 $ 37.379,800 $ (117.755) $ 58,717,045
2010 21,540,000 36.559,822 (117,095) 57,982,727
2011 22,455,000 35,693.097 (116.435) 58,031,662
2012 23,065,000 35,087,525 (115,775) 58,036,750
2013 24,090,000 34,444,312 (114.913) 58,419,399
r 2014-2018 159,020,000 158,052,381 (241.450) 316,830.931
2019-2023 176.660,000 137,565,749 - 314,225,749
2024-2028 212,460,000 103,349,842 - 316,809,842
r 2029-2033 300.120,000 56,904,524 - 357,024.524
2034-2037 121,555,000 8.T74.730 130,M730
Total $ 1,082,420,000 $643.811.782 $ (823,423) $ 1.725,408,359
r
(5) Interest Rate Swaps on Certificates of Participation
r As indicated in Note 4, OCSO has entered into an interest rate swap agreement in connection with
the 1993 Refunding Certificates of Participation.
r Objective: The objective of the Interest rate swap is to lower OCSD's borrowing costs when
compared against fixed-rate bonds at the time of issuance. The swap effectively changes OCSD's
variable interest rate to a synthetic fixed rate of 4.56 percent on the 1993 Refunding Certificates of
Participation.
r
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 $2.86 million as of June 30, 2008. 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
hypothetical zero coupon bonds due on the date of each future net settlement on the swap.
!' Credit Risk: As of June 30, 2008. 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
r
29
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
L
counterparty, Societe Generale Bank, was rated AA- by Standard & Pools and Aa2 by Moodys
Investors Service as of June 30, 2008. To mitigate the potential for credit risk, it the counterpartys -
credit quality falls below AA- by Standard & Poor's or Aa3 by Moodys Investors Service, the fair
value of the swap (if the swap has a positive fair value)will be collateralized by the counterparty as L
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 61
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. I
Basis Risk: The swap does not expose OCSD to basis risk because the variable-rate interest paid Ir
to the certificate holders is equal to the variable-rate interest earned on the notional amount of the
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 i
party will pay to the non-defaulting party the excess (if any) of the sum of the settlement amount 6+
and the unpaid amounts owed less the unpaid amounts due from the non-defaulting parry. The
swap may be terminated by OCSD if the counterpartys credit quality rating falls below AA- by
Standard & Poor's or Aa3 by Moodys Investors Service. If the swap is terminated, the variable- y
rate certificates of participation would no longer carry a synthetic interest rate.
(6) Net Assets i
The difference between assets and liabilities is reported as net assets. Net assets are classed as L,
restricted, unrestricted, or invested in capital assets, net of related debt. Net assets at June 30,
2008 consisted of the following:
r
June 30, 2008
Invested in capital assets, net of related debt:
Capital assets, net of accumulated depreciation $ 1,829,383,222
Outstanding debt issued to acquire capital
assets, net of: unamortized bond discount,
deferred amount on refundings, and
unspent proceeds (985,268,625)
Unamortized deferred charges of debt issued
to acquire capital assets 8,269,966
r
Subtotal 852,384,563
Restricted by debt covenants for debt service on
certificates of participation 3,311,187 v
Unrestricted 420,291,536
Total Net Assets $ 1,275,967,286 I
(7) Pension Benefits IL
OCSD has two pension plans for retirees: a defined benefit pension plan maintained through and L+
by the Orange County Employees' Retirement System(OCERS)and the Additional Retiree Benefit
Account(ARBA)administered directly by OCSD.
30 L
ORANGE COUNTY SANITATION DISTRICT
r Notes to Basic Financial Statements
For the Year Ended June 30,2008
Pension Plan
OCSD participates in the Orange County Employee's Retirement System (OCERS), a cost-sharing
r 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
r 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.
Benefits: All OCSD employees except for interns 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 employee's classification as a Tier I or Tier II member.
Benefits full vest on reaching five y g years of service. OCERS also provides death and disability
benefits.
r Contributions: 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 II covered employees are required to contribute 9.72% -
14.14% and 9.30% - 14.14%, 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
,r retire. For the fiscal years ended June 30,2008,2007, and 2006, the required contribution equaled
the contribution actually made. Required contributions,which are actuarially determined,are set by
OCERS.
The following table provides salary and contributions requirements for the two previous fiscal years
and the current year.
,r For the Fiscal Year Ending
June 30.2006 June 30.2007 June 30, 2008
Total Payroll Costs $ 51,589,226 $ 53,175,199 $ 56.671.683
Payroll Costs of Employees Covered by OCERS 48,761,087 49,788,835 53,576,940
r Contributions Requirements:
Contributed by Employees 3,095.591 3,513,302 3,753,147
Contributed by the District on Behalf of Employees 1,717,959 1,732,296 1851089
�+ Total Employee Required Contribution 4,813,550 5,245,598 5.604,236
District Required Contribution 7,416,556 9,848,854 11011693
Total Contribution $ 12,230.106 $ 15,094,452 $ 16.615.929
r Total Actual Contribution as a Percent of
Required Contribution 100.00% 100.00% 100.00%
r Employee Required Contribution as a Percent of
Covered Payroll 9.87% 10.54% 10.46%
District Required Contribution as a Percent of
Covered Payroll 15.21% 19.78% 20.55%
Total Contribution as a Percent of all Participating
Entides'Contributions 5.98% 5.51% ( 1
31
r
L
ORANGE COUNTY SANITATION DISTRICT L
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
L
Additional Retiree Benefit Account(ARBAI
The OCSD AREA plan is a single-employer defined benefit plan which was administered by
OCERS unfil February 29, 2008, when OCSD began direct administration. This benefit was
established by the OCSD Board of Directors on October 25, 1992. It provides a monthly payment
to retirees towards the premium costs of health insurance for the retiree and eligible dependents. L,
The retiree is not required to use this amount for health insurance premium or to remain on the
OCSD medical plan. The plan is currently paying benefits to 113 retirees. The plan is included in
OCSD's financial statements;stand-alone financial statements are not issued for the plan.
Benefits: Employees who refire receive $10 per month for every year of service up to a maximum
of 25 years, or $250 per month. This amount is independent of salary and is fixed at retirement.
Because the District cannot ensure the use of the benefit for payment of eligible health insurance
expenditures, the benefit is taxable to the retiree. Survivor benefits are provided in the event that a
retiree pre-deceases his/her spouse. For retirees hired prior to July 1, 1988,OCSD provides health
insurance for coverage for 2% months per year of service. AREA benefits begin immediately after
this benefit ends. For those hired on or after July 1, 1988, ARBA benefits begin immediately upon 1r
retirement and continue for life.
Funding: There are no employee contributions for this plan; OCSD covers 100% of the cost. An L
actuarial evaluation was performed as of June 30, 2007, using the Projected Unit Credit Cost
method. This method represents the present value of benefits earned to date assuming that an
employee eams benefits ratably over his/her career. An investment rate of return of 6.0% per year
was used, and no cost of living or salary adjustment was used due to the flat dollar nature of the v
benefit. The unfunded actuarial liability was amortized on a level dollar basis over 30 years. OCSD
utilizes a pay-as-you-go method for funding the plan. L
The annual pension cost and net pension obligation for the year ended June 30, 2006, 2007 and
2008 were as follows.
For the Fiscal Year Ending L
June 30,2006 June 30, 2007 June 30, 2008
Annual required contribution $ 710,336 $ 727.037 $ 727,037
Interest on net pension obligation 277,493 303.663 329,603 L
Adjustment to annual required contribution (335,993) (367,680) 399,088
Annual pension cost 651,836 663,020 657,552
Contributions made (215.670) (230,698) 230,330 L
Increase in net pension obligation 436,166 432,322 427,222
Net pension obligation, beginning of year 4,624,890 5,061,056 5,493,378
Net pension obligation, end of year $ 5,061,056 S 5,493,378 $ 5,920,600 L
(8) Other Postemolovment Benefits
OCSD offers medical insurance to active and retired employees, as well as their qualified L,
dependents. This is a single-employer defined benefit plan administered by OCSD. All retirees
may choose coverage in an OCSD medical plan, with retirees paying the full premium. However,
for employees hired prior to July 1, 1988, medical benefits begin immediately at retirement with
OCSD paying 2.6 months of premium for each year of continuous service toward the cost of 6'
coverage under OCSD medical plans. At the termination of this period the retiree may elect to
continue coverage at his/her own expense. This plan was established and may be modified only by
L
32
64
ORANGE COUNTY SANITATION DISTRICT
Notes to Basic Financial Statements
For the Year Ended June 30, 2008
action of the OCSD Board of Directors. The plan is included in the OCSD financial statements;
stand-alone financial statements are not issued.
As of the date of the actuarial valuation, there were 585 active employees, 158 retirees paying
premiums, and 44 retirees whose premium is fully paid by OCSD. Premiums ranged between
$322.69 and$1,587.96 per month, depending on the plan and number of dependents covered.
Funding Policy: OCSD funds the plan on a pay-as-you-go basis. For fiscal year 2007-08. OCSD
contributed$601.084 and retirees contributed $209,702 to cover current year expenditures.
r Annual OPEB Cost and Nei OPEB Obligation: The annual OPEB cost is calculated based on the
annual required contribution of the employer (ARC), an amount actuarially determined in
accordance with the parameters of GASS Statement 45. The ARC represents a level of funding
that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize the
r unfunded actuarial liabilities over 30 years.
The following OPEB cost and net OPEB obligation was determined for the year ended June 1,
_ 2008:
Net OPES obligation as of June 30, 2007 $ -
Annual OPEB cost for the fiscal year ended June 30, 2008 941,961
Contributions made in the fiscal year ended 601,084
Net OPEB obligation as of June 30, 2008 $ 340.877
Funded Status and Progress: The funding status of the plan as of the most recent actuarial
valuation date is as follows:
Unfunded AAL
r Actuarial as a
Actuarial Actuarial Accrued Unfunded Percentage of
Valuation Value of Liability AAL Funded Covered Covered
,r Date Assets (AAL) (UAAL) Ratio Payroll Payroll
7/1/2007 9,949,638 9,949,638 ON 49,788,835 19.98%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Actuarially
determined amounts are subject to continual revision as actual results are compared with past
expectations and new estimates are made about the future. The schedule of funding progress,
presented as required supplementary information following the notes to the financial statements,
compares whether the actuarial values of plan assets are increasing or decreasing over time
relative to the actuarial liabilities for benefits.
r
Actuarial methods and assumptions: Projections of benefits for financial reporting purposes are
based on the substantive plan (the plan as understood by the employer and plan members) and
include the types of benefits provided at the time of each valuation and the historical pattern of
sharing the benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce the effects of
short-tern volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with
r the long-term perspective of the calculations.
33
L
ORANGE COUNTY SANITATION DISTRICT L
Notes to Basic Financial Statements
For the Year Ended June 30,2008
L
The ARC for the current year was determined as part of the 7/t/07 actuarial valuation using the
Projected Unit Credit cost method. The actuarial assumptions include a 6% investment rate of
return and an annual healthcare cost bend rate of 9% reduced by decrements of 1°/ per year to an L
ultimate rate of 5% after the 6P year. The UAAL is being amortized ratably over 30 years. Inflation
assumptions are included as part of the healthcare cost trend.
L
(9) 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
LY
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 u
to the newly created district and recorded capacity rights revenue at the time of the sale.
In accordance with the negotiated agreement between OCSD and IRWD, IRWD paid OCSD Lr
$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 I
determined to be $14,553.000 as of June 30, 1986; these assets were recorded at book value in L
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 L
original assets acquired. As of June 30, 2008, after recognizing current year amortization of
$657,709, the unamortized amount of the excess of purchase price over the assets' book value
was$5,509,402, 1
V
Annual Transactions
IRWD entered into a separate agreement with Revenue Area No. 14 whereby IRWD agreed to 1
annually fund payment of Revenue Area No. 14's proportionate share of OCSD's joint capital outlay L
revolving fund budget requirements and certain capital improvements during the term of the
agreement,which contribution amounted to$15,591,861 in 2008.
(10) Commitments L'
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
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 first phase of the GWRS
became operational in January 2008 with an annual production goal of approximately 72,000 acre- L
feet per year of recycled water.Future phases of the GWRS will be built in increments over the next
20-25 years based on availability of wastewater flows to a planned built-out capacity of 145,600
acre-feet per year. 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. Lr
As of June 30, 2008, the total estimated cost of GWRS Phase 1 was $496.80 million. Of this L
amount, up to $92.50 million may be reimbursed through grants from the U.S. Environmental
34 Li
ORANGE COUNTY SANITATION DISTRICT
,. Notes to Basic Financial Statements
For the Year Ended June 30,2008
Protection Agency, the U.S. Bureau of Reclamation,the State Water Resources Control Board, and
others. OCSD's estimated gross and net share is$248.40 million and$202.15 million, respectively.
Costs incurred by OCSD through June 30, 2008 total$201.08 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
,r 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$631 million to reach secondary treatment discharge standards. Secondary
treatment discharge standards are scheduled to be reached at the end of 2012. In the interim,
OCSD will operate the plants to maximize available secondary treatment and to reduce effluent
biochemical oxygen demand and suspended solid discharges below currently allowed limits.
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ORANGE COUNTY SANITATION DISTRICT
SUPPLEMENTARY INFORMATION
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ORANGE COUNTY SANITATION DISTRICT
Schedule of Net Assets
June 30,2008 V
With Comparative Totals for June 30,2007
V
Revenue Consolidated Totals
Area No.14 Revenue Area Eliminations 2008 2007
Current assels: L
Cash and cash equivalents $ - $ 104.012,814 $ - $ 104,012,814 $ 55,472,715
Investments - 330.161.649 - 330.161,649 231.710,077
Due from other Revenue Area - 5,695,020 (5,595,020) - -
Accounts receivable, net of allowance L
for uncollectibles - 11,805,761 - 11,805,761 12.703.227
Accrued interest receivable 162,748 2,692,484 - 2,855,232 2,816.784
Due from other governmental agencies 5.025,176 - - 5.025,176 6,332.508 1
Connection fees receivable - 1.286,927 - 1,286,927 962,754 'y
Property tax receivable 101,072 3,195.017 - 3,296.089 2,459.657
Inventones 286.854 4.698,534 - 4.985.388 4,834.811
Prepaid expenses 46,418 767,886 - 814.304 1.281,524 L
Total current assets 5.622,268 464,216,092 (5.595,020) 464,243.340 318.573.057
Noncurrent assets:
Restricted:
Cash and cash equivalents - 50,737,114 - 50.737.114 23.946.510
Investments - 47,829,179 - 47,829.179 60,776180
Accrued interest receivable - 386.960 - 386.960 567:380 L
Unrestricted:
Non-depreciable capital assets 52,828,079 897.680,113 - 950,508.192 816,701.436
Depreciable capital assets,net of
accumulated depreciation 59.674.092 819.200,938 - 878.875.030 784.919.903
Deferred charges - 8-69.966 - 8.209,966 4,277,005
Other noncurrent assets,net 1.610,894 26.467.5% M078.450 29.914,713 I
Total noncurrent assets 114,113,065 1,850,571,826 1,964,684 L
,891 1,721,103,127
Total assets 119,735.333 2.314.787,918 (5,595,020) 2,429,928,231 2,039,676,184
Current liabilities:
Accounts payable 1,565,096 26.011.670 - 27.577.766 18.966,641
Accrued expenses 413.627 8,480,681 - 8.894,308 15.054.007
Due to other Revenue Area 5,595.020 - (5,595,020) - -
Retentions payable 453,959 7,332,797 - 7,786,756 6.959.199 L
Interest payable - 12,107,963 - 12,107,963 7,023,945
Current portion of
long-tens obligations 361,264 27.359.328 27.720.592 28,510.696 L
Total current liabilities 8.389,956 81.292.439 (5,595.020) 84.087,386 76,544,688
Noncurrent liabilities: L
Nonwmant portion of
long-term obligations 511,847 1,068,341,713 1.068.853.560 773.394,732
Total liabilities 8,901.813 1.149.634,152 (5,595,020) 1.152.940.945 849,939,420 V
Net assets:
Invested in capital assets, L
ne(of related debt 112,502,171 739,88 852 2,392 - ,384,563 886.462,57s
Restricted for debt service - 3.311.187 - 3.311.187 3,904,212
Unrestricted (1,658,651) 421,960.187 420.291.536 299,369.977
Total net assets $110.833,520 $1,165,153.766 $ $1.275.987,286 $1,189,736.764 L
w L
r ORANGE COUNTY SANITATION DISTRICT
Schedule of Revenues,Expenses,and Changes In Net Assets
For the Year Ended June 30,2008
With Comparative Totals for June 30,2007
r
Revenue Consolidated Totals
Area No. 14 Revenue Area 2008 2007
Operating revenues:
r Service charges $ 5,071,634 It 179,108,586 $ 184,180,220 $ 167,789.660
Permit and inspection fees 38,604 1,157,710 1,196,320 1,866.411
r Total operating revenues 5,110,238 180,266,302 186,376,540 169,656,071
Operating expenses other than depreciation
and amortization:
r Salaries and benefits 3,414,669 64,213,982 67,628,651 57,802,102
Utilities 517,346 7,574,971 8,092,317 8,072,262
Supplies,repairs and maintenance 1.247,208 24,723,591 25,970,799 21.050,912
Contractual services 1,174,173 22,413,682 23.687.835 20.389,454
Directors'feas 31,980 112,137 144,117 131,750
Meetings and training 58,845 948,410 1.007,255 1.124.852
Other 287,918 5,170,950 5,458,11W 3,583,792
Total operating expenses other than
depreciation and amortization 6,732,139 125,157,703 131,889,842 112,155,124
Operaft Income(loss)before
depreciation and amortization (1,621,901) 55,108,599 53.486,698 57,500,947
Depreciation and amortization 4,033,482 43,733.474 47,766,956 53,110,609
Operating Income(low) (5,655,383) 11,375,125 5,719,742 4,390,338
Non-operating revenues:
Property tense 1.947,311 63,262,15D 65,209.461 60.565.308
Investment and interest income(loss) 15,110 20,220,098 20,235.214 22.243,554
Capital facilities capacity charges - 19,816.293 19,816.293 31,277.647
Other 12,773 12,773 1,067.794
r
Total norwPeretin9 revenues 1,975.200 103.298.541 105.273J41 115,154,303
Non-operating expenses:
r Interest 389,027 22,128,147 22,517.174 21,746.852
Feasibllity studies 748,222 12,246.250 12.994.472 11,128,105
Capital grants to member agencies - 1,769,894 1,769.894 2,127.154
r Other 73,724 2,979,558 3,053,282 2,834,392
Total non-operating expenses 1,210,973 39,123,849 40.334,822 37,836,503
Income(loss)before
capital contributions (4,891.156) 75.549.817 70,658,661 81,708,138
Capital contributions from other agencies 15,591,861 15,591,861 18,929,179
Change in net assets 10,700.705 75,549,817 86.250.522 10D,637,317
Total net assets-beginning 1110,132,815 1,089.603,949 1.189.736.764 1,089,090,447
r Total net assets-ending $ 110.833,520 $ 1.165.153,766 $ 1,275,987286 $ 1,189,736,784
39
ORANGE COUNTY SANITATION DISTRICT V
Schedule of Cash Flows
For the Year Ended June 30,2008
With Comparative Totals for June 3Q 2007 1.1
Revenue Consolidated Totals
Area No.14 Revenue Area Eliminations 2008 2007 V
Cash tows from operating customers and ius
PaymRentseents to mployesand users S 10,972.758 $ 181,484,876 E - S 192,439,638 $ IW,133,292
Payments to suppliers
(2,9R,901) (55.925,359) - (56.89]p80) (59.891,912)
Payments to suppliers 13.082.937I (58.]2].718) (81,]9D.853) I40.809.3781
r
Net man provitletl by operations 4,939.320 66.611.803 71.751.123 82.632.002
Cash flows from rencapital finandng activitles:
Proceeds Bons property taxes 1,916.734 62.456295 - ".373,029 59.989.586
Grants to member agencies (1,769,894) 0.769,8941 (2127,154) V
Net cash provided by non api al Gnanung activities 1,916,734 60.686.401 62, 03.135 57,862,412
Cash Dews from capital and related financing advities: I
Capital facilitiescapadry classes - 19.492.120 - 19.492,120 31,650,062 L
Additions to promrty.plant and equipment (17.203.458) (259.412,922) 1,210,330 (275,406.057) (281.135,639)
Disposal of property.plant,and equipment - 1,210,330 (1210,330) -
Arbllregepayment (307.934) - (307.934) (53.100)
Additions to other assets (15,733) - 45,733 - -
Disposalofotherassets - 45.733 (45.733) - �t
Interest paid (389,027) 131.399.946) - (31.788.973) (35,250,887)
principal payments on certificates of mNcipallon - (98,53l,000) - (98,630.000) (101.965,000)
proceeds from ceNficates of participation issuance - 378,898628 - 378.898,628 89,616,08'
Certificates of paNclpation issuance costs (675,401) - (675.401) (319.898) W
proceeds from capital contrbutors 10.780.712 10.750.712 14.183,358
Net cash provided(used)by capital and related
finapscng activities (6AB7.008) 11,320,601 4.433.095 (283,092.1l
Cash sows from investing activitles: V
Proceeds from the sale of investments 3.793.917,222 - 3,793,917.222 5,282,384.356
Purchasas of investments (3.880,733.353) - (3,880,733.353) (5.204,060,027)
Interestre .d 31.452 23.328.029 23.359.481 24.647,682
Nei cash provided(used)by investing activities 31.452 (63,406,1021 (63,456.6501 102,372,011
Net increase(decrease)in cash and cash equivalerts - 75,330,703 - 75.330,703 (40228400)
Cash and cash equivalents,beginning of year - 79,419,225 79,419.225 119.645.825 I
Cash and man equivalents.erM of year E S 154.749.928 S $ 154,749,928 S ]9,119.225 Yrl
Reconciliation of operating income(Ion)to net cash provided
by operating activities:
Operating income(loss) S (5.655.383) S 11,375.125 $ - E 5,719.742 E 4.390.338
Adjustments to reconcile operating Income(loss)to net
.an provided by operations:
Depredation and amortization 4,033,482 43.733,474 - 47,768,968 53,110.609
Bad debt expense 990 (5,36(1) - (4.376) (67.284) Ir1
Other nonoperatirg revenues and expenses 11206 (301,139) - (289.933) 1.4 .143
(Increasaydecrease In operating assets:
Due from other Revenue Area - 411.905 (411,905) -
Accountsreceivable 1.235.720 786.671 - 2A22,391 1.604,862 Isr
Duefrom other governmental agencies 5.027.932 - - 5,027.932 6,804,585
Inventories 16.818 (281.559) - (264.741) (254,6]0)
Prepaid and other risers 35.085 432.135 - 4672M 10,052.412
Increasel(demase)in operating liabilities:
Accounts payable 468.140 8,142,985 - 8.611,125 (2.777,150) )r.
Accrued expenses (293.132) (5,896,587) (6,189A9) 6.639.768
Due to other Revenue Area (411,905) 411,905 -
Retentions payable 36,797 790,700 - 827A57 (2,286,374) l
PensloniOpEB payable 356.904 5,900,573 - 6261,477 law
absences 12,171 533.107 - 545218 311.438
Claims and judgments Si 1,195.6% 121 181 (354,60)
Net msh provided by operations 5 4.939,320 S 66.811,803 E - S 71751,123 S 52A32.002
Nmncash Activities: V
Unrealized gain(ion)on the fair value of investments S S (1,311,550) E - $ (1,311,56(l) E 16.429
Nei disposal of assets with no man effect (65.308) (1.907.770) - (1,973.078) (3243.743) ( ..
Candidates of paNdpation issuance msl-anderwnte(s lee - (3,995,219) - (3,995218) (488,044)
Capital contributions from other agendas 4,841149 - - 4,841.149 4,785,823 V
Certificates of participation anginal issue premium - 14.051.290 - 14,051= 183954
Feentalily trudges with no cash effect (748.222) (12.246,250) - (12,994,472) (11.128.105)
40
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OCSD
Statistical Section
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r ORANGE COUNTY SANITATION DISTRICT
STATISTICAL SECTION
r
This part of the comprehensive annual financial report of the Orange County Sanitation District(OCSD)
presents detailed information as a context 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
OCSD's financial position and how OCSD's financial performance and well-being have
changed overtime. 42-46
Revenue Capacity
These schedules contain information to help the reader assess OCSD's most
.. significant revenue source of sewer service fees. 47-49
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,many 50-53
r 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
r OCSD's financial report relates to the services it provides and the activities it performs. 54-57
r Demographic and Economic Factors
These schedules offer demographic information to help the reader understand the
environment within which OCSD's financial activities take place. 58-61
r
r
r
41
ORANGE COUNTY SANITATION DISTRICT
Net Assets by Component -
(Dollars in Thousands)
Last Eight Fiscal Years(Note 1)
-
$1,40D,000
$1,200,000
$1,000,000
$800,000
$600.000
No—
$400,000
$200,000
bu
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Dinvested In capital Assets,Net of Related Debt
aResbiMel for Debt Service 8 Capital Aceuieiii. `
DunresNned
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
2007-08 852,385 3,311 420,291 1,275,987
Note 1: Net Assets are calculated as a result of GASB 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.
r
42
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
$94.384
$70,788
$47,192
$23.596
$0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-OB
oO,m ,pnavema eNon rating Rewme OCwinMed Caplal
Capacity
Operating Revenue Non-Operating Revenue Rights 8
Permit& Cap.Facilities Total Capital
Fiscal service Inspection Total Property Capacity Non- Contrib-
Year Charges Fees Operating Taxes Interest Charges Other Operating utions
1998-99 $ 69,453 7 423 $ 69,876 $ 32,836 $ 17,944 $ 8,751 $ 3,332 $ 62,863 $ 141
1999-00 81,241 396 81,637 35,557 20,836 7,867 2,573 66,933 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 10,146 706 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
2007-06 184,180 1,196 185,376 65,210 20,235 19,816 13 105,274 15,592
Source: Orange County Sanitation DistricCs Financial Management Division.
43
ORANGE COUNTY SANITATION DISTRICT
Expenses by Type r
(Dollars in Thousands)
Last Ten Fiscal Years
r
r
$180,000
$170,000
$160,000 r
$150,000
$140.000
$130,000
$120,000 r
$110,000
$100,000
$90.000 r
$80.000 ,
$70.000
$60,000
$50,000 r
$40,000
$30,000
$20,000 +'
$10,000
$0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-M 2006-07 2007-08
r
e0p 0,Eegme ONon Opemb,eveme
Operating Non-Operating r
Fiscal Personnel Maint 8 Depr& Total Interest Total Non.
Year Services Utilities Other Amort Operating Expense Other(1) Operating
1998-99 $ 28.809 $ 3,320 $ 22,546 $ 42,470 $ 97.145 $ 18,359 $ 92 $ 18,451 ee
1999-00 33,581 3.621 22.213 36,333 95.748 18,151 23,123 41,274
2000-01 33.734 5,524 23,062 42,797 105,117 17,923 1,479 19.402
2001-02 35,629 4,967 27,967 45,703 114,266 14,406 8,896 23,302
2002-03 38.733 4,622 36,314 41,966 121,635 12,731 2,922 15,653 r
2003-04 48,711 5.408 41,284 44.412 139,815 15.524 6,102 21.626
2004-05 53,048 6.473 42,325 48,095 149.941 17.470 8,172 25,642
2005-06 53,246 7,563 44,823 49,887 155.519 20,078 18,567 38,645 r
2006-07 57,802 8,072 46,281 53.111 165,266 21,747 16,089 37,836
2007-08 67,629 8.092 56,169 47.767 179,657 22,517 17,618 40,335
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Notes
(1) - For FY 1999-00, Other Non-Operating Expense includes $22,994,647 for the loss on investment in the
r
Orange County Investment Pool.
Source: Orange County Sanitation District's Financial Management Division. r�
44
r
_ ORANGE COUNTY SANITATION DISTRICT
Change in Net Assets
(Dollars in Thousands)
Last Eight Fiscal Years (Note 1)
$1,400,000
$1.200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
_ $0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
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
2007-08 306,242 219,992 86,250 1,189,737 1,275,987
Note 1: Net Assets are calculated as a result of GASS 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.
45
L
ORANGE COUNTY SANITIATION DISTRICT L
Cash and Investment Reserve Balances
(Dollars in Millions)
Last Ten Fiscal Years
La
Capital Debt
Cash Flaw Self- Improvement Service
Fiscal Year Contingency Insurance Program Requirements Total
1998-99 $ 56 $ 54 $ 233 $ 33 $ 376
1999-00 60 57 284 32 433 u
2000-01 77 56 311 33 477
2001-02 70 57 303 35 465
2002-03 100 57 237 33 427 Lj
2003-04 71 57 390 88 606
2004-05 71 57 242 65 472
2005-06 92 57 257 84 490 L
2006-07 139 57 91 85 372
2007-08 191 57 186 99 533
L
Notes: L
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.
L.1
The Self-Insurance Reserve is to provide requirements for property damage including fire,flood and earthquake,general
liability and workers'compensafion. j
The Capital Improvement Program Reserve is to fund annual increments of the capital improvement program with a Ir
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 participation issues, and the monies are not available for the general needs of the District.
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Source: Orange County Sanitation District's Financial Management Division. LI
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46 i
_ ORANGE COUNTY SANITATION DISTRICT
Sewer Service Fees
Single Family Residence Rate
Last Nine Fiscal Years and Next Fiscal Year
r 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 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 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.
Sewer Service
Fiscal Year Charge
1999-00 $ 81.02
2000-01 78.00
2001-02 80.00
2002-03 87.50
2003-04 100.00
2004-05 115.00
2005-06 151.00
2006-07 165.80
2007-08 182.00
2008-09 201.00
Annual Sewer Service Fees
Single Family Residence
r 250
2 200
LL
C
150
C
a
K
H 100
50
0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Fiscal Year
Source: Orange County Sanitation District's Financial Management Division.
47
ORANGE COUNTY SANITATION DISTRICT
Number of Accounts and Revenues by Customer Class r
(Dollars in Millions)
Last Ten Fiscal Years
Residential/Commercial 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 Amounts Revenue Revenues
1998-99 882,103 $61.6 89% 678 $7.8 11%
1999-00 919,072 72.0 89% 649 9.1 11% r
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% r
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%
2007-08 875,739 159.4 93% 517 12.1 7%
r
$200.000.000
$180,000,000 Will
$160.000,000
$140,000,000 V
$120,000,000 -
6.
$100,000.000 - -
$80,000,000
$60,000.000 y
$40,000.000 V
$20,000.000 tual
$0
r
1998-99 1999-00 2000-01 2001-02 2002A3 2003-04 200405 2005-08 2006-07 2007-08
eRasltleMYYCamnrtMUesn er,60Ml Uten I
he
Source:Orange County Sanitation District's Financial Management Division.
✓r
48
r
ORANGE COUNTY SANITATION DISTRICT
Principal Sewer Service Customers
For the Current Racal Year and Nine Years Ago
r Fiscal Year Ended 6130108 Fiscal Year Ended 6130/99
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. $1,032,500 1 0.56% $518.458 1 0.75%
r Alstyle Apparel-A&G Inc. 1.023.517 2 0.56%
Disneyland Resort 874,942 3 0.47% 193,851 5 0.28%
MCP Foods, Inc. 798,44g 4 0.43% 291,377 3 0.42%
Stremicks Heritage Foods, LLC 689,749 5 0.37%
Disneyland California Adventure 623,095 6 0.34%
House Foods America Corp. 525,676 7 0.29%
Ameripeo Inc. 414,671 8 0.23%
r Pepsi-Cola Bottling Group 381,371 9 0.21%
Seven-Up Bottling Company 304,864 10 0.17%
Adohr Farms 358,870 2 0.62%
Favorite Foods 208,902 4 0.30%
AERA Energy 144,871 6 0.21%
Rockwell Semiconductor 134.148 7 0.19%
Sunder Brands 110,108 8 0.16%
Knotts Berry Farm Foods 109,216 9 0.16%
Dean Foods 100,716 10 0.15%
,r $6,668,734 3.63% $2,170,517 3.14%
,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.
r
r
Source: Orange County Sanitation District's Financial Management Division.
r
49
ORANGE COUNTY SANITATION DISTRICT
Ratio of Annual Debt Service to Total Expenses -
(Dollars in Thousands)
Last Ten Fiscal Years
-
60.0%
50.0%
40.0%
-
30.0%
20.0%
10.0%
0.0%
199899 1999-00 4000-01 2001.02 200203 200304 20D405 200506 2006-07 2007L8
Ratio of Debt
Total Service to Total
Fiscal Principal Total Debt Operating Operating
Year 1111 Interest Service(3) Expenses(2) Expenses
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
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
2007-08 11,025 21,724 32,749 131,890 24.83 -
Notes
(1)-Excludes principal reductions due to advanced refunding. V
(2)-Excludes depreciation and amortization expense.
(3)-Al debt consists of certificates of participation.
L
1w
Source: Orange County Sanitation District's Financial Management Division.
l
50
ORANGE COUNTY SANITATION DISTRICT
Debt Coverage Ratios
(Dollars In Millions)
Last Tan Fiscal Years
The Orange County Sanitation District has no legal debt limits as imposed by Slate 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.
4.00
3.50
3.00
2.50
2.00
_ 1.50
1.00
0.50
1998-99 1999.00 2000.01 2001-02 2002-03 2003-04 200445 20054)6 200647 2007-08
Fiscal Year Ending June 30,
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Operating 8 Non-operating Revenues:
Service Charges,Net of Refunds $ 61.6 $ 72.0 $ 64.5 S 70.3 $ 77.0 $ 86.0 $ 99.0 $ 132.0 $ 143.8 $ 159.4
Industrial Sewer Service Charges 7.8 9.1 6.6 7.5 6.3 7.5 10.5 12.2 13.4 12.1
Revenue Area No.14 Fees 0.7 2.2 2.0 2.2 3.2 5.8 6.9 5.3 5.2 7.1
Ad Valorem Taxes 32.8 35.6 38.4 41.1 44.6 46.9 35.8 40.0 80.6 65.2
Interest Earnings 17.9 20.5 39.4 27.8 25.9 6.8 15.1 10.4 22.2 20.2
Capital Facilities Capacity Charges 9.5 7.9 7.3 10.6 10.1 9.0 9.8 15.6 31.3 19.8
Other Revenues 2.4 1.2 2.5 2.5 3.4 4.0 6.1 9.2 8.3 6.9
Total Revenues 132.7 148.5 160.7 162.0 170.5 166.0 183.2 224.7 284.8 290.7
_ Operating Expenses(1) 54] 59A 62.3 68.6 79.7 95.4 101.8 105.6 112.2 131.9
Net Revenues $ 78.0 $ 89.1 $ 98.4 S93.4 $ 90.8 $ 70.6 S 81.4 $ 119.1 $ 172.6 $ 156.8
Debt Service Requirements
Principal Payments 12.1 12.9 13.8 10.4 11.0 11.6 12.0 12.8 13.5 11.0
Interest Payments 18.5 17.2 16] 13.0 11.7 16.8 25.9 29.1 35.1 31.8
Total Debt Service Requirements $ 30,6 $ 30.1 $=0.5 $®3.4 $�2.7 $28.4 $37.9 $ 41.9 $ 48.6 $ 42.8
Coverage Ratios(2) 224 2.70 2.99 3.54 3.56 2.17 1.89 2.47 2.91 3.25
Ending Reserves(3) $ 343.0 $ 401.0 $ 444.0 $ 430.0 $ 394.0 $ 518.0 $407V $ 406.0 $ 287.0 $ 434.0
Notes
(1)-0perating expenses exclude depreciation and amortization expenses.
(2)-Calculated In accordance with the Debt Service Master Agreements.
(3)-Ending reserve balances exclude monies in debt service hinds,
Source:Orange County Sanitation Districts Financial Management Division.
51
L
ORANGE COUNTY SANITATION DISTRICT
Computation of Direct and Overlapping Debt
June 30,2008
2 M-08 Assured Valuation(Lnnd R lmpmvemens Only): S21T,168.959.859(a8er dedecting535,564,)4S.092 redaveepmmt ineamansel Valuation)
OVRRLappM[TAX ANO AeSESSMFNT pFBT(Bored on mdevelopmenl a4j..d all nucleus,mined valuatbn of$264.164,343.06): l
TOW Debt Dierd'e5hueof less
6(]0lfl$ %Aeefindalef11 Deb,6410,01,
Graters,Conner Tenor Pia Oblipticus SIMMS,= 71.041% S II11,885375
Meuenolien Water District of9umhem Gluons 327215,000 14.941 48.889,193
Comm Community College Diestin 30.758.867 "As 346A02,685
Noll Grantee Canty Joint Communiq Collette Diwin 233349A01 K922 226,166,519
Reaches Sonuga Community College Mmtet 321.7N,339 98.M3 316,511.811
Bm-OlinN sued IANna Bunch Unified Schm1 Minieu 59,1019A29 99.936A 12J83 29,15S237
Pannone Mm Unified!Sehool District 1611,363,480 IN.. 168.50.480
Meceoue-Yobs,Linda Unified School District 169,069AN IMM Ifte2,971
Soddlcbre4 Vale,Unifid School District 142A1110.000 11.913 16,976,492 W
Sense Me Unified Schm1 Dimnct 126,037.965 IN. 126dD37. M
Tustin United Sclwd Manuel SCSool Facilities lmpmvementWrct No.2000-1 43,683,929 99.010 43251,458
Attention Union Hip Sehuul Diar4t 123,483.955 IN. 123,483,955
Failure.Joint Union High School comet 61,552.910 90.240 55.6452d6
Humd.gmn Be rat Union High Sehool Menkt 232274,998 98.919 229,764,105
Seheol Must. 236.130.071 97.319.100. 236342,957
CiyofAMhNm 5220,W0 99.M3 5,172,133
IDiw Rauh Water District lmpmvemem Dieree 271221,669 VMoue 271,137,342
Rossmoor Communiq Services District Special Tax Obliptiam 6260M IN. 62SA00
Borden Cagan Community Facilities Disrrt No.9M1 42,615,000 IN. 42AI5000
Irvine Unified Sclmol Disrts Community Facilities Oimicn 266430.00) 99.998-I0D. 266p26313
Tustin Unified School District Community Futilities Mereu 232.73045 IN. 232,736145
Oren,Cowry Community Facilities Metric.No.874 59,882928 99.M5 $9,826039
Color Communiq Facilities Dioncte 402A55,000 Vdms 402,358,006
Omnp Canny Aeeeamem Districts 118A462915 100. 118.048,296 4
City oflevime 1915 Act BmMs 905A75,000 100. 905.675,W0
City ofTustin 1915 Act Honda 52A42,000 IN. 52,442,000
Oeea 1915 MI bon& 26306000 IN. 20.306000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $4,599.822,910
DIRECT AND OVERLAPPING GENERAL tND DEBT:
Gaup County General Fund Ob0gmlons $532326000 71.841% S 38L42U22
Coup County Pension Glut iactions M.M9,867 71.11,11 52,249.864
0.,crony Boom of Education Cerileme,ofPertin'tut. 19."Rom 71.841 14,073,652
South Creole Court,Community College Ground Carfake of Panidpada. M.M3,0M 35.613 12,4,4,963 L
Bona-Olide UniOd School Dianna Canitkalw afpeAcipmion 29,g %m 99.936 29,Tg0,928
(Andorra,Unlfld School Disral Cerifcarts ofParucipation 49,326, 04 96966 49,326,604
Plecenlia,YorM Linda Untried School Disnia Caufwtes offeaud,smn, MA10215 99639 85,629,1127
Sense An UMfid School District CarOessea of Participation M.M01968 IN, M,855,968 L
OIhe ULifd School Guarico fentflcate ofPelictmum 39217,502 Venous 38,90.126
Union High Sdmol NMd Cerefwlas ofPutieinrtim 111,751,W0 Vdme 114,970,458
School Desrct Ceufirela of Participation 59,9M,OM van. 591656T9
City ofAmebeim Demand Fund Obligations 6WA32,465 99.03 673.4N235
Cis,ofCoua M.Gewrad Fund Obldµimu M.W0,00) IN. 45,9MdMD j
Chy 9fFalermn Geural Fund Obliµi. 28,302,1114 IN. 28,3M,7M L
Cis,of Medellin Bench Gewral Fund and Judigmmnt Obliptimu 76,30MM 99.990 T62114,740
Cis,of lrvive Garsal Fund Obllgatiom 24,I70.000 IN. N,IMJ)R)
Cis,of Serb Me General Fund OEliamiaw 116220A00 IN. 1162M,000
Other Ciy Geeral Fund Old ficaut 1722T6W0 Venoms 145,890247 j
Onnga County Sanitation Courts CertBcew ofPeNctµlon 0 IN. 0 (2) 1.1,
Irvine Reach Water District Candlemas of Partieiptiou 39.110,000 89.621 34,772,9411
Mmidpel Water District ofOrcep County Water FacidiOa Corporation I9295,00o 66.611 12,852,592
Y�ore bN tide Country nry Water District Certificates efPauticips6an 9,860,000 97.773 9,W,418
Oseoge CmOq Fire Authouty 10,365.000 50.310 5214612
TOTAL GROSS OVERLAPPING GENERAL FIND DEBT SILM7.I17,087
Lars,: Sure Am Unified School Mason,velf.,cminnB QddiOed taw Acedamy Bolls 2,W;M0 ICI
City of Maladies self-supporting obligations 650291,34
Otircr Cdq sed6supwing cbligafow 3616216T0
MWDOC Water Facilities Continuative(IM m1f-empnring) 12SSLSM
TOTAL NET OVERI.3PPIHG GENERAL FUND DEBT S1,981,778221
GROSS COMBINED TOTAL DEBT M.6T6946052 p) W
NET COMBINED TOTAL DEBT M,981.601,186
O) PorwnupofoveMpping 4ancye rtdevelopm<matl)tend tllpmperry wend wluation(f2M,1M2q,0M)Ioestedw1e10 bandanas ofeM dbrn.
(2) Esau criinvaterrcvewet dibttuWofprtciduuon. Prcvimrly deuifdcerilesea ofparkiletim love bum rtdml0dutldenct rtvaue wppord 6mesand lust
w Imgm indudd ea direct Lab on Ns,debt eaem,re
(]) Exaluda sex end revenue enlicipnion nomv,<memdrt rtvenw,mmgepe revenue and sex allocation horde and non-bonded capital cater abliplions.
BMIOLr: Tate Overlannino Tax and Aevncmenl Debt Gass Combined Total Debt Net Cmmbind Total Deb
Lend ell lmpmvemem Maresca Valuation 1.5N6 2,60% 2.33% 6Y1
All Property Mvesd Valuation NIA 2.53% 2.26%
STATEcurce:SCHOOL
OCalifornis BUILDING
red AID REPAYABLE AS OF 613MS:
M
W
52 L
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) Income Estimate(2) Capita
1998-99 $ 374,135,000 $ 63,478 0.017% 2,386,375 $ 156.78
1999-00 361,255.000 69,310 0.019% 2,213,925 163.17
2000-01 386,370,D00 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 73,572 0.020% 2,408,050 151.56
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
., 2006-06 808,570,000 76,443 0.009% 2,481,540 325.83
2006-07 801,785,000 78.960 0,010% 2,505,180 320.05
2007-08 1,082,420.000 83,015 (e) 0.008% 2.522,820 429.05
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.
r
53
LL
ORANGE COUNTY SANITATION DISTRICT I
Comparison of the Volume of Wastewater Treated V
With Revenues and Expenses
Last Ten Fiscal Years
V
Millions of
Gallons of Collection,
Waste- Treatment
water &Disposal Total Total Total Total L
Treated Cost per Operating Non-Opera ding Operating Non-Operating _
Fiscal Per Million costs costs Revenues Revenues
Year Day Gallons (In Thousands) (In Thousands) _ (In Thousands) Dn Thousands) Lr
1998-99 241 580.06 $ 97,145 $ 18,451 $ 69,876 $ 62,863
1999-00 241 620.42 95,748 41,274 81,637 66,833
2000-01 246 647.46 105,117 19,402 73,254 87,446 L
2001-02 234 794.05 114,266 23,302 80,005 81,975
2002-03 239 880.25 121,635 15.653 89,164 81,332
2003-04 238 1,068.43 139.815 21.626 102,327 63,655 L
2004-05 243 11095.79 149,941 25,642 121,415 61.747
2005-D6 235 1,216.77 155,519 38,645 155,165 69,493
2006-07 229 1,268.38 165,266 37,836 169,656 115,154
2007.08 221 1,541.18 179,657 40,335 185,376 105.274
V
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 2007-08 Increased$104.4 million, or 90.3 percent since FY 1998-99, primarily as a result of(1) V
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 `j
beginning in FY 2002-03 at an additional cost in chemicals of$7 million annually.
Maintenance, chemicals,utililuts, and other operating costs represent 37 percent of the Increase, primarily due to the
increase In the levels of treatment referred to above. Depreciation expense represents another 5 percent c the
Increase as a result of the previous expansion in capital facilities and the financing associated with the expansion. in FY
2007-08, personnel expenses rose 17.0 percent over the prior year. This increase is mainly due to recognition of net
pension and OPEB obligations as well as increases in health insurance and retirement premiums;the full-time V
equivalent positions authorized decreased by 10 In FY 2007-08.
As depicted from the chart above,actual wastewater treatment flows have generally remained between 234 mgd and
244 mgd in the past,other than in FY 2000-01 which reached 246 mgd. Due to unusually dry weather conditions during
the last two years, FY 2006-07 and FY 2007-08 had flows of only 229 mgd and 221 mgd respectively.
4
Source: Orange County Sanitation District I
Lr
54
ORANGE COUNTY SANITATION DISTRICT
Authorized Full-time Equivalents by Function
Last Ten Fiscal Years
350
300
250
200
150
100
50
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
OGeneral Management NAdministraOve Services 12Te06o1 Servims OEngmeenng sogerations and Maintenance
Fiscal Year Ending June 30,
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
General Management 15 13 12 17 17 17 17 2 25 30
_ Administrative Services 81 87 88 97 107 116 123 145 102 98
Technical Services 93 88 87 95 94 100 112 114 119 109
Engineering 67 75 73 104 79 80 95 99 98 104
Operations and Maintenance 286 255 250 261 272 285 282 284 300 293
Total FTE's 542 518 510 574 569 598 629 644 644 634
Source: Orange County Sanitation District's Financial Management Division.
55
ORANGE COUNTY SANITATION DISTRICT
Bicsolids Produced
Last Ten Fiscal Years
55,000 r
sa.oao
45,000
40,000
r
35.000
30.000 r
25,000
r� r
20,000
0199b99 •199940 e20W 01 0200142 5200243 r
.2003-04 020W45 0205&06 820W-07 .200706
r
Fiscal Year Tonnage
1998-99 41,127 r
1999-00 42,831
2000-01 42,254 r
2001-02 42,505
2002-03 47,631 _
2003-04 50,519
2004-05 51,700
2005-06 49,554
2006-07 49,184
2007-08 50,884
r
r
Source: Orange County Sanitation District's Environmental Compliance&Regulatory Affairs Division.
r
56
ORANGE COUNTY SANITATION DISTRICT
r Capital Asset Statistics
Last Ten Fiscal Years
r
Miles of Number Primary Secondary
Trunk& of Treatment Treatment
Fiscal Subtrunk Pump Capacity Capacity
r Year Sewers Stations (1) (1)
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
r 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
2007-08 568 17 372 200
Notes
(1)-C-Capacity is presented as million gallons treated per day.
r
r
r
r
Source: Orange County Sanitation District
r
57
ORANGE COUNTY SANITATION DISTRICT
Demographic Statistics
Covering The Entire County of Orange(1)
Last Ten Fiscal Years
W
Total (4) (6)
(2) Personal Per Capita Median Public (6)
Fiscal Population Income Personal Family School Unemployment Year Estimates (in thousands) Income Income Enrollment Rate
u
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% V
2001-02 2,940,000 111,750,294 (3) 38,010 72,998 503,000 4.1%
2002-03 2,979,000 117,722,500 (3) 39,517 73,572 512,000 4.0% -
2003-04 3,017,000 125.798,400 (4) 41,697 70,900 517,000 3.6% L
2004-05 3,047,000 135,687,900 (4) 44,499 73,545 514,000 3.9%
2005-06 3,072,000 143,949,000 (4) 46,858 76,443 510,114 3.7% - -
2006-07 3,098,000 150,271,700 (4) 48,506 78,950 503,955 3.9% V
2007-08 3,090,000 154,665.000 (4),(7) 50.053 83,015 (7) 503,492 5.3%
W
Notes and Data Sources
(1) - The Orange County Sanitation District services 471 square miles or 59% of the total 799 square miles that Lj
make up the boundaries of the County of Orange.
(2)-Data Source:Demographic Research Unit, California Department of Finance. 1
W
(3)-Data Source:Bureau of Economic Analysis, U.S. Department of Commerce
(4)-Data Source:Anderson Center for Economic Research,Chapman University. L'
(5)-Data Source:California Department of Education, Educational Demographics Unit. i
u
(6)-Data Source:State of California, Employment Development Department as of June 30 of each fiscal year.
(7)-Forecasted number. L
u
Li
i
W
58 L
ORANGE COUNTY SANITATION DISTRICT
Estimated Populations Served by the
Orange County Sanitation District
June 30, 2008
Population
_ as of
January 1,2008
Anaheim 346.820
Brea 40.080
Buena Park 82,770
Costa Mesa 113,960
_ Cypress 49,540
Fountain Valley 57,930
Fullerton 137.440
_ Garden Grove 173,070
Huntington Beach 201,990
Irvine 209,810
La Habra 62,640
' La Palma 16,180
Los Alamitos 12,190
Newport Beach 84,550
Orange 140,850
Placentia 51,730
Santa Ana 353,180
Seal Beach 25,990
Stanton 39,280
Tustin 74,220
�+ Villa Park 6,260
Westminister 93,030
Yorba Linda 68,310
Subtotal City(1) 2.441.820
Estimated Population Served in
Unincorporated Areas(2) 81,000
2,522,820
Data Sources:
(1) Demographic Research Unit, California Department of Finance.
(2)Orange County Sanitation District Financial Management Division.
59
ORANGE COUNTY SANITATION DISTRICT I
Principal Orange County Employers(1) W
For the Current Fiscal Year and Nine Years Ago
tl
Fiscal Year Ended 6/30/08 Fiscal Year Ended 6/30/99
Percentage of Percentage of
Number of Total County Number of Total County (r
Employers Employeas(2) Rank Employment(3) Employees (2) Rank Employment(4)
Walt Disney Co. 20,000 1 1.29% 13,300 2 0.94% -
County of(range 18.748 2 1.20% 15,408 1 1.09% L
University of California,Irvine 17.579 3 1.13% 12,861 3 0.91%
St.Joseph Health System 10.047 4 0.65% 8,150 5 0.58%
Boeing Co. 9,961 5 0.64% 12,000 4 0.85%
YUM!Brands Inc. 7,200 6 0.46% u
AT 8 T, Inc. 6,000 7 0.39%
California State University,Fullerton 5.634 8 0.36%
Home Depot 5,450 9 0.35%
Bank of America Corp. 5,000 10 0.32% 4.843 9 0.34%
American Stores Co. 7,543 6 0.53%
Tenet Healthcare Corp. 7,221 7 0.51%
Ralphs Grocery Co. 5,000 8 0.35%
Tricon Global Restaurants, Inc. 4,820 10 0.34%
Total 105,619 6.79% 91,146 6.445
y
L
Notes& Data Sources
(1)- Data is for Me entire County of Orange.
(2)- Data Sources:Orange County Business Journal Book of Lists,County of Orange L
(3)-Data Source: State of California,Employment Development Department.
-Percentage is calculated by dividing employees by total employment of 1,555,900 as of June 2008.
(4)-Data Source:State of California, Employment Development Department. I
-Percentage is calculated by dividing employees by total employment of 1,417,300 as of June 1999. I�
L
U
L
L
60 i
ORANGE COUNTY SANITATION DISTRICT
Operating Indicators
June 30, 2008
r 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:
r 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
r Cypress Los Alamitos Villa Park
Fountain Valley Newport Beach Westminster
Fullerton Orange Yorba Linda
Garden Grove Placentia
r Special Districts:
Midway City Sanitary District
Costa Mesa Sanitary District
r
Revenue Area No. 14
County of Orange (unincorporated areas)
r
Cities:
Irvine
Orange
Tustin
r Special District:
Irvine Ranch Water District
Governing Body: 25-member Board of Directors
Authorized Full-Time Equivalent Employees: 634
Operational Date: July 1, 1954
r Authority: California Health 8 Safety Code Section 4700 at. seq.
Services: Wastewater collection, treatment, and disposal
Service Area: 471 square miles
Population Served: 2.5 million
r Total Miles of Sewers(Including force mains): 568 miles
Number of Pumping Stations: 17
r
Wastewater System Treatment Capacities(Million Gallons per Day)
Existing Primary Existing Secondary Planned Secondary
Actual Flows Treatment Capacity Treatment Capacity Capacity by 2020
r Plant 1 92 204 110 170
Plant 2 119 168 9Q 150
Total �], ',ijy 2aQ
Source: Orange County Sanitation DistricCs Financial Management Division.
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OCSD
Other Data & Trends Section
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ORANGE COUNTY SANITATION DISTRICT
OTHER DATA&TRENDS
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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.
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63
ORANGE COUNTY SANITIATION DISTRICT
Cash and Investment Portfolio L+
as of June 30,2008
I
Cost Markel Value Net Unmalized Gain/Loss V
Shares Par Be" Base %&TOW Base
Imma menl Portfolio:
Cash and Cash Equivalents(U.S.Dollar): V
Pending Trades $ - $ (4,111.B1376) S (4,111,813.76) .1.0DYo S -
Cash - 1,338A0 1.338.00 0.00% -
Certifirateso/Deposit-Domestic 3.50 .000.00 3.500,000.0D 3,500,000.00 eaS% -
CommeroalPaper-Discount 17,400,00000 17242.565.21 17242.55521 4.18% - L
Fed Hm Loan Bulk-Less man l Year 1821)0.000.00 18,099,449.67 18,099,449.67 4.38% -
Federzi Home loan Mortgage-Less Than 1 Yr 40,800,000.00 40,618714.11 40,618,774.11 9.84% -
FNMA Issues-Less Than 1 Year 15.771.000.01) 15,634,62B.W 15,634,628.35 3.79% -
Mutual Funds 470,403.61 47g403.61 41M. 61 0.11% - V
Repurchase Agreements 15.700.000.00 15,mat)(1.00 15,700,000.00 3.SD%
Treasury Bills-Less Than 1 Year 7,300,000.00 7262,824.84 7262,824.84 1.M%
Sutural 119,141,403.61 114,418,170.03 114,418,170.03 2771%
Feed Income Securities(U.S.Dollar): L(
Asxt Barked Secvnlies-Home Equity 808,974.48 796.33427 726,B1a01 all (a8,521.26)
Alessi Backed Securities-Small Bus Admin 1.812.621.80 1,812,621.80 1,873,36429 0.45% 60.742.49
Banking B Finance 67250.00DD0 87078,B28.O0 66,M7,727.W 16.09% (631,100.M)
Collateralized Mortgage Obligation 661,301.37 6F7901.96 683,656.96 0.17% 5.755.00 V
FHLMC Muaidass 1295.629.41 1282.683.50 1,300,635.98 0.31% 17,952.48
FHLMC Pools 24,344,943.64 24,486,055.95 24,305,127.37 5.89% (1813,928.48)
FNMA Pools 17.818.1211kI 18.115.02128 17,734,586.86 429% (380'434.42)
FNMA Femic 389,810.46 375.611.80 385.480.93 O.M 9,869.13 LI
GNMA Multi Family Pools 880,845.48 859,3T7.70 886,506.46 021% 7,128.78
GNMA Single Family Pools 3.156.66 3.313.01 3.280.18 D.OD% (32,83)
PVT Placements-Mare Than I Year 752,000.00 826,199M 826,199.84 020%
U.S.Agencies 116,471,848.29 1M,M,497.22 121I.W.584.89 29.21% (143.912.33) L
U.S.Governments 59710,000.00 60,988,826.50 60758,625.13 14.71% (230201.37)
Utility-Electric 900.000.00 9DO.000.00 897.606.00 0.22% (2,394.00)
Uglily-Telephone 700.00D.00 700.000.00 699.S59.00 0.17% (441.00)
Subtotal 293.800251.63 299,693=13 298,155,754.58 72.20% (1,537,518.15) V
Convertible Smuddes(U.S,Dollar):
Convertible Bonds 400.000.00 400200.00 398,000.00 0.10% (2200.00)
Subtotal 4004000.00 4002ilaw 398,000.00 0.10% (2=,00) L
Tobe InvestmentP rae 842lio S 413.Ml.655.24 414,511. .76 412,971,924.61 100.00% S (1,539,718.15)
Demand Cash Accounts 3,209,948.00 3209,946.00
Monies Held Wlh Fiscal Agents 98.566.293.00 98,566,293.00
Monies with the Loral Agency Investment Fund 17,993,487.50 174992,51 1.7fi
Total Cash and Investments S 534281.36928 S 532,740,755.37 y
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Source: Mellon Trust and the Orange County Sanitation District's Financial Management Division. Yd
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ORANGE COUNTY SANITATION DISTRICT
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
1908-99 1.00% 0.02% 1.02% 2.80%
1999-00 1.00% 0.00% 1.00% 2.80%
2000-01 1.00% 0.00% 1.00% 2.80%
r' 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%
2004-05 1.00% 0.00% 1.00% 1.60%
2005-06 1.00% 0.00% 1.00% 1.60%
200647 1.00% 0.00% 1.00% 2.80%
2007-08 1.00% 0.00% 1.00% 2.80%
Nola
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% fixed amount,
r property owners were charged taxes as a percentage of assessed property values for
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.
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ORANGE COUNTY SANITATION DISTRICT
Assessed and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
swomomo
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Percent
Changein
Fiscal Assessed
Year Secured Unsecured Total Value
1998-99 131,295,000 3,394,000 134.689.000 2.21%
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%
�►
2001-02 189,357,000 4,OB6.000 173,423,000 8.85%
2002-03 183.223.000 5.657,000 188,880.000 8,91%
2003-04 197,143.000 4,309,000 201,452,000 6.66%
2004-05 214,529,000 4,743,000 219,272,000 8.85%
2005-06 236,826,573 5,023,423 241,849,995 10.30%
2006-07 264.241,033 6,452,111 270,693,144 11.93%
2007-08 288.051,467 4.681.838 292.733.305 8.14%
In 1978,the voters of the State of California 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,
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 price of
the property 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 same.
Source: Orange County Auditor-Controller's Office.
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ORANGE COUNTY SANITATION DISTRICT
Property Tax and User Fee Levies and Collections
(Dollars in Thousands)
Last Ten Fiscal Years
$250,000
$200,000
$150,000
$100,000
$50,000
s-
1998.99 1999.00 2000-01 2001-02 2002.03 2003-04 2004-05 2005-06 2006.07 2007-08
CTMel Te.ene uen Poe Levy STOW T..WW U..r Fe.C.Ilecnon
Current Total Tax %of
Total Tax Tax and Percent of Delin- and User %of Total D/S Delinquen-
Flscal and User ERAF III User Fee Levy quent Fee Collection Delinquen- ties to Tax
Year Fee Levy Deduction Collection Collected Collection Collection to Levy Cleo Levy
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
2000-01 105.890 - 105,646 99.77 94 105,740 99.86 245 0.23
2001-02 112,419 - 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
2003-04 134,389 - 134.132 99.81 94 134,226 99.88 257 0.19
2004-05 153,187 (16,198) 152,745 99.71 92 152.837 99.77 442 0.29
2005-06 191,711 (16,198) 191,290 99.78 122 191,412 99.84 421 0.22
2006-07 209,766 - 209.206 99.73 215 209,421 99.64 560 0.27
2007-08 228.622 - 228,635 100.01 329 228,964 100.15 (13) (0.01)
Source:Orange County Auditor-Controller's Office,
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ORANGE COUNTY SANITATION DISTRICT
Property Value and Construction V
Covering The Entire County of Orange(1)
(Dollars In Thousands)
Last Ten Fiscal Years
Non-
Assessed Residential Residential
Property Value(2) Conatr.(3) Construction(3) Total
Fiscal Calendar No.of Construction
Year Value Year Value Units Value Value(3) L
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 3972917 i 1
2000-01 228,548,301 2001 1,349,607 8.646 1,905,321 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 2,076,976 3,082,523
2003-04 287,923,828 2004 1,132,848 9,322 2,243,642 3.376.490 L
2004-05 311,802,395 2005 1,494,759 7,206 2,100.436 3,595,1195
2005-M 342,576,859 2006 2,400,589 8,371 2,316,948 4,717 L
617 I
2006-07 381.007,391 2007 2,005,173 7,070 1.791.488 3,796:001
2007-08 412.669,779 2008 (4) 1,465.990 5,824 1,494,697 2,960,687
Notes and Data Sources L
(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-Controlter's Office. L
(3)-Data Source-'The Chapman University Economic&Business Review."
(4)-Forecasted numbers.
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ORANGE COUNTY SANITATION DISTRICT
Insurance in Force
As of July 1,2008
Type Insurer Deductible Limit
All-Risk ProuerN
Fire and Other Penis Public Entity Property $25.000 per $1 billion/occurrence
Insurance Program occurrence
(Lexington and others)
Flood Public Entity Property $100.000 per $300 million/occurtence
Insurance Program occurrence
Earthquake Not Applicable Not Applicable Self-insured
Boiler& Machinery Public Entity Property $25,000 to $100 million/accurrence
Insurance Program $350,000
(Lexington and others)
Employee Dishonesty/ National Union Fire $25.000 $1 millionAoss:
Faithful Performance/ $4 million excess policy
Errors&Ommissions
Excess Everest National Insurance Go. $250,000 $30 millionloccumence
General LlebilFN (first$10 million layer): $500.000 for and annual aggregate
American Merchants Casualty EPLI
Ins.Co.($20 million layer
excess$10 million)
Travel &Accident Chubb Group of Insurance None Accidental Death 8 Dismemberment:
Companies Class 1: Elected Officials,
$500,000 per occurrence
Class 2:Employees, 1OX annual
salary, up to$500,000 per occur.
Excess Workers' CSAC Excess Insurance $500,000 Unlimited statutory coverage
Compensation Authority Each Accident each accident, each employee
$5 million employers liability
Pollution Liability CSAC Excess Insurance $100,000 $10,000,000 per loss
Authority
Watercraft
Liability Northern Assurance Co.of Am. $15.000 $10 million
Hull &Machinery Northern Assurance CA.of Am. $15.000 $1.3 million
Pollution Liability Great American Ins.Co, None $5 million
OCIP Main Basket COCIP"=Owner Contolled Ins. Program for Constructicn)
.. Workers Comp. Liberty Mutual $250.000/occur. Unlimited statutory coverage
General Liability Liberty Mutual $250,000/occur. $2 million/occumence;$4 million egg.
OCIP Excess Liability AIG $10,000 $100 million
OCIP Pollution Liablllty Liberty Surplus $250,000 $15 million
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.ocsdxom
6/30/08