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HomeMy WebLinkAbout1995-03 �� County Sanitation Districts '.r:e of iiro Secrst-: - of Orange County,California Sanrlalion l,- J �pisll�<. ,3,� li. �� - P.O.Box 8127 a 10844 Ellis Avenue Fountain Valley, CA 92728-8127 APR 2 61995 Telephone: (714)962-2411 DRAFT MINUTES OF THE STEERING COMMITTEE MARCH 8, 1995 -5:30 P.M. A meeting of the Steering Committee of the County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California was held Wednesday, March 8, 1995, at 5:30 p.m., at the Districts' Administrative office. (1) ROLL CALL The roll was called and a quorum declared present, as follows: STEERING COMMITTEE: OTHERS PRESENT: Present: Thomas L. Woodruff, General Counsel John C. Cox, Jr., Joint Chair Peer A. Swan, Vice Joint Chair STAFF PRESENT: John J. Collins, Chair, PDC Pat McGuigan, Chair, OMTS Don F. McIntyre, General Manager Roger Stanton, VC Finance & Personnel Blake P. Anderson, Assistant General Manager George Brown, Chair, FPC Absent: None (2) APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS There were no comments by any member of the public. Minutes of the Sleering`Cbmmittee Page 2 March 8, 1995 (4) REPORTS OF THE COMMITTEE CHAIR. GENERAL MANAGER AND GENERAL COUNSEL No reports were made. (5) STEERING COMMITTEE RECOMMENDATIONS (a) After a discussion by the Committee, a motion was made, seconded and duly carried to recommend to the Joint Boards to amend Classification and Compensation Resolution No. 79-20, establishing the position classification of Assistant General Manager and authorize two positions and establish salary ranges of $95,000 - $120,000. (b) Staff reported on the issue of privatization and discussed where we now contract for private sector services and what opportunities may exist for additional privatization at the Districts. The Committee expressed a strong opinion that selling the treatment plant outright is not an option for staff to consider. Some of the recommendations were to look at what degree we are automated and is there a dollar savings available if we continue to automate. Staff was directed to first attempt to benchmark our efficiency and costs relative to other POTWs and report back its progress at future meetings of the Steering Committee. Staff was directed to continue to took for opportunities to make our operations more efficient. (c) Discussion of Committee Structure and Charter. After a discussion on the issue of Committee structure and charter, a motion was made, seconded and duly carried to keep the committee structure as it now exists with the following changes in the schedule when the committees meet. Committee Meet Operations, Maintenance and 1st Wed, 5:30 p.m. Technical Services Planning, Design and 1st Thu, 5:30 p.m. Construction Finance and Human Resources 2nd Wed, 5:30 p.m. Executive 3rd Wed, 5:30 p.m. ..d Steering 4th Wed, 5:30 p.m. Joint Boards of Directors 4th Wed, 7:30 p.m. Minutes of the Steerin�tOmmittee Page 3 March 8, 1995 �.J (6) CLOSED SESSION There was no closed session. (7) OTHER BUSINESS There was a discussion of a personnel matter related to seeking addenda to professional services agreements. (8) MATTERS TO BE REPORTED AT A SUBSEQUENT MEETING There were no matters to be reported. (9) MATTERS ON A FUTURE AGENDA FOR ACTION AND A STAFF REPORT There were no matters for a future agenda. (10) CONSIDERATION OF UPCOMING MEETINGS ..d (11) ADJOURNMENT The Steering Committee adjourned at approximately 7 15 p.m. �:W pEocg m W r<omm`D]0895.min STATE OF CALIFORNIA) 3S. COUNTY OF ORANGb wl dad Pursuant to California Government Code Section 54954.2, 1 hereby certify that the Notice and Agenda for the Steering Committee held on Wednesday, March 8, 1995, was duly posted for public inspection in the main lobby of the Districts' offices on Friday, March 3, 1995. IN WITNESS WHEREOF, I have hereunto set my hand this 8th day of March, 1995. Penny Kyl 6crAry of each of the Boards of eckbo of County Sanitation Districts Nos. 1, Z 3, 5, 6, 7, 11, 13 & 14 of Orange County, California avro�wrvu�.i COUNTY SANITATION DISTRICTS OF ORANGE COUNTY, CALIFORNIA P.O.BOX$127,FOUNTAIN VALLEY. CALIFORNIA 92728.8127 c7 r7 1(M4 ELLIS,FOUNTAIN VALLEY, CALIFORNIA 92708-7018 (714)992-2411 March 2, 1995 NOTICE OF MEETING STEERING COMMITTEE COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA WEDNESDAY, MARCH 8, 1995 -5:30 P.M. DISTRICTS' ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE FOUNTAIN VALLEY, CALIFORNIA 92708 A special meeting of the Steering Committee of the Joint Boards of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11. 13 and 14 of Orange County, California, will be held at the above location, time and date. I:wPax�nwrecvee9sn39e9s.aa roll.ste 3/2/95 STEERING COMMITTEE DATE: March 8. 1995 MEETING TIME: 5:30 p.m. ADJOURNED COX (Joint Chair) . . . . . . . . . SWAN (Vice Jt Chair) . . . . . . COLLINS (PDC Chair) . . . MC GUIGAN (OMTS Chair) . . STANTON (County Supv) . . . BROWN (FPC Chair) . . . . . . . STAFF OTHERS MCINTYRE (General Manager) WOODRUFF (Gen Counsell ANDERSON IAsst to Gen Manager) LINDER (Dir of Engineering) . . HODGES (Director of Maint) . . TORRES (Director of Tech Svs) OOTEN (Director of Operations) STREED (Dir of Finance) . . . . HASENSTAB (Dir of Personnel) COUNTY SANITATION DISTRICTS el ORANGE COUNTY. CAUFORNIA IOBY ELLIS AVENUE >0 e0A 8127 FOUNTAIN VALLEY,CALIFORNIA W72Bd127 �. nvl 9B23A11 AGENDA STEERING COMMITTEE JOINT BOARDS OF DIRECTORS COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA DISTRICTS' ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE FOUNTAIN VALLEY, CALIFORNIA 92708 SPECIAL MEETING WEDNESDAY, MARCH 8, 1995 - 5:30 P.M. ................................................................................................................................................................................................... In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted in the main lobby of the Districts' Administrative Offices not less i than 72 hours prior to the meeting date and time above. In the event any matter not listed on this agenda is proposed to be submitted to the Committee for discussion and/or action, it will be done in compliance with Section 54954.2(b) as an emergency item or that there is a need to lake immediate action which need came to the i i attention of the Committee subsequent to the posting of the 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. i.................................................................................................................................................................................................i (1) Roll Call (2) Appointment of Chairman Pro tem, if necessary. (3) Public Comments: All persons wishing to address the Committee on specific agenda items or matters of general interest should do so at this time. As determined by the Chairman, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to five minutes. Matters of interest addressed by a member of the public and not listed on this agenda cannot have action taken by the Committee except as authorized by Section 54954.2(b). 3/8/95 (4) The Committee Chairman, General Manager and General Counsel may present verbal reports on miscellaneous matters of general interest to the Committee Members. These reports are for information only and require no action by the Committee Members. (a) Report of Committee Chairman (b) Report of General Manager (c) Report of General Counsel (5) Steering Committee Recommendations. (a) Consideration of Resolution No. 95-21, amending Classification and Compensation Resolution No. 79-20, as amended, establishing two position classifications of Assistant General Manager. (b) Discussion of Privatization (c) Discussion of Committee Structure and Charter (6) Closed Session. ...................................................................................................................................................................... Closed Session: During the course of conducting the business set forth i on this agenda as a regular meeting of the Committee, the Chairman may convene the Committee in closed session to consider matters of pending or potential litigation, or personnel matters, pursuant to Government Code Sections i 54956.9, 54957 or 54957.6. 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 i i California Public Records Act, may be reviewed by the Committee during a permitted dosed session and are not available for public inspection. At such time i as final actions are taken by the Committee on any of these subjects, the minutes will reflect all required disclosures of information. i...................::.............................................................................................................................................. (a) Convene in closed session, if necessary. (b) Reconvene in regular session. (c) Consideration of action, if any, on matters considered in closed session. (d) Report on discussion taken in closed session, as required. (7) Other business, if any. (8) Matters which a Director would like staff to report on at a subsequent meeting. 3/8/95 a i (9) Matters which a Director may wish to place on a future agenda for action and a staff report. (10) Consideration of upcoming meeting dates. (11) Adjourn. Notice to Committee Members: For any questions on the agenda or to place Items on the agenda, Committee members should contact the Committee Chair orthe Secretary ten days In advance of the Committee meeting. Committee Chair: John C.Cox,Jr. (714)721.8660 Secretary: Eva Rup6 (714)962-2411,Ext.2001 (714)962-0356(Fax) j:WpdocrgmrexeeVeb95t030895.sta STEERING COMMITTL�-r' AGENDA FOR MARCH 8, 1995 (5)(a) Consideration of Resolution No. 95-21, amending Classification and Compensation Resolution No. 79-20, as amended, establishing two position classifications of Assistant General Manager Summary NOTE: This issue is agendized as Item (12)(b)(12) for the Joint Boards meeting following the Steering Committee meeting. The appointment of a new General Manager Is the starling point of the restructuring of the Sanitation Districts and the beginning of a new era of improvement. The top management team will be an important part of bringing improvement to the organization. In the last year,several key staff at the top management and middle management levels have terminated or transferred. In addition,several key spots have remained unfilled for several years. All told,eight positions must now be evaluated for permanent status or reorganization including:Director of Engineering, Director of Technical Services,Director of Maintenance and Operations(or,alternately, Director of Maintenance and Director of Operations),Source Control Manager, Laboratory Manager,Chief Administrative Assistant and Assistant General Manager. As the Screening Committee reported at the February 8th Board of Directors'meeting,the selection of the top candidate for the General Manager slot was not an easy decision. Two candidates, Don McIntyre and Blake Anderson,received the highest marks from an initial field of 52 candidates responding to our nationwide recruitment. Each of the two top candidates had his own unique set of qualities. In the end, the decision was made to select Don because of his demonstrated ability to provide the leadership necessary for the Districts to move into a new era of excellence with the bonus of the hope and expectation that Don and Blake would be capable of working as a team for bringing positive and creative change to the organization. After a transitional period of a few years,then a new General Manager will be appointed to carry on the initiative of continuing quality improvement well into the next decade and beyond. Don and Blake have met and talked on a number of occasions during the last three weeks. They have concluded that they can work with each other very effectively. They share the same expectations and outlook on how management should work. Don has also concluded that to be able to manage the Districts he must quickly forge a top management team to take on the demanding tasks ahead. For this reason, he is recommending that the positions of Assistant General Manager for Operations and Assistant General Manager for Administration be created now and that Blake be asked to fill the Operations position immediately and to recruit for the Administration position quickly. A draft table of organization is attached as Exhibit One. It will be refined after Don comes on board, confers with staff and assesses the organizational needs of the agency. Approval of the table of organization will occur through the budget approval process for fiscal year 1995-96. For reference,our existing table of organization is attached as Exhibit Two. As the Director of Technical Services and the Director of Engineering,Blake had received a salary of $102,377 within a salary range topping out at$119,520. He is currently earning$108,336 for his temporary upgrade as Interim General Manager. Don is recommending salaries of$120,000 with a benefits package equivalent to the General Managers position. Staff will discuss comparable salary issues at the meeting. Recommendation Staff recommends amending Classification and Compensation Resolution No. 79-20, as amended, establishing the position classification of Assistant General Manager and authorizing two positions at an annual salary of$120,000 each. .,d.gmmay.eesw.se DRAFT-PROPOSED TABLE OF ORGANIZATION 03/0ves Iemrtle of Direeton T ecetary. Gerlml Manager General Counsel OHke Supportsgmenta Assist.M G .ral Manager, Asslstara General Manager, T Opeationa Administrahon X s Policy Development .b Opemlbns Maintenance Technical Services7Planmg and Malntmance Depanmml Department Department J Plant OperaOare Mechanical Labomlory Flnance Human Atlminu4alive Information Maintenance DepamneM Reswrce. Services Sarvoas EwluAm 8 Electrical Scarce CenlmlResearch MaIMem. Financing Hi6ngV Mail Room Computers Instrumenation AlrQuality Promotion. InvesMeMc StantlaMN Reprotluctlon PWlk lnformatlon CollMionSyatema Ocean I...a. Qualifications Recortls Debt Management Training Support Room Services Library PIaM MaiMmarlce elosolitla lasues Accounting EAP/Counceling Autlio Yisual Graphics Projects Regulatory/ Legislative Luwn Purchasing Insurances Compliarc RepoHinp Warehouse SmurBy Contracts Safety/Health Measurements Wellness AuERs Employee ActWles Payroll lUborRelations gmseNorg.gm EXISTING TABLE OF ORGANIZATION 03/02195 D b� Boares of Diredore Board Social General Manager General Counsel Office 5 al 1 of 1 Board Support ;IES ations M.!Wm nce Chief Administrative Director of Personnel Records Department Depadment' Assistant Safety B Security 1100 215 of 228 0 of t 1 of 1 Agreements Services Engineering Public Information Adminiatrative 7OSHA Personnel Security X Depadment• Oepadment' SupportAnalyst¢on el _ 109 of 116 61 of 6a(616 Pat 2 of 2 0 of 2 90110 3 of d (8/2 P/N Mail Room W Finance Information ance RecmKment Security c--Reproduction DepadmeM' Materials55 of 60Management Tound Hidng On Call Seour'Ky Presentation¢ Special Event¢ ions Promotions Gate Guards Information Training Requests Employee EAP/Counseling Nowaletler nomm.es Employee Activists • See details for each department in Directors Handbook for Board Committees. Note: Numbers Indicate actual vs.aNhorized employees. greses/esistorg.gm j. `"STEERING COMMITTLr' AGENDAFOR MARCH 8, 1995 (5)(b) Discussion of Privatization Summary Over the years,the Sanitation Districts have privatized a number of our activities including biosolids recycling at$5 mllliordyear,ocean monitoring at$1.5 million/year,capital project design work at$5 to$10 million/year,outside laboratory services at$100,000/year,operation of the pure oxygen generation plant at $400,000/year and other activities. Recent press coverage of the Reason Foundation's"Rescue Plan" which includes privatization of the Sanitation Districts,Gary Alstors letter to Supervisor Stanton, Gary Alstot's guest editorial in the Register and follow-up articles place the question of privatization in a fairly bright light(see attached). Director Norby has suggested that privatization be agendized for a future Joint Board meeting. Staff is evaluating the attached materials to determine their relevancy to the Districts. All the points will be carefully analyzed to see whatwe should considerto add to our privatization program. Staff will take a wide view of the issue and look at what opportunities exist for additional privatization at the Districts. Some issues staff will pursue are: 1. What is experience with privatization and contract operation in Southern California? a. Los Angeles City 4s' b. San Diego City c. South Orange County 2. What is happening and what is the view in the country regarding privatization? a. Operating agency perspective: Indianapolis,et.al. b. AMSAMEF perspective c. EPA/SWRCB perspective 3. What do we now privatize? a. Areas privatized b. Advantages and disadvantages c. Cost Savings 4. What can we privatize? a. Mission perspective b. Regulatory perspective c. Financial perspective d. Reliabilitylquality of service perspective Staff is now designing a scope of work and schedule and will begin the evaluation after that. Staff will report on its progress at future meetings of the Joint Boards and/or its committees,depending upon the direction we receive. Recommendation Information Item only. wptlxbm�avecya695�sta5b . . iM : �Hwu a 7raa530527 .,.02-IS 15,39 #617 P.01/03 News Release Reason Foundation FOR 1MMWIATE RELEASE Contact: Rich Phillips (310) 391-2245 i Orange County Rescue Plan. Unveiled Privatization, Righfsiung Seen As Only Vulble Alternative to Tax Increase FEBRUARY 15, 1995—LOS ANGELES, Calif.. Robert W. Poole, Jr., president of the Los Angeles-based Reason Foundation, today unveiled the long-awaited plan to rescue Orange County from'bankruptcy without raising taxes. In a speech to the Orange County Forum, Poole presented the report Rescuing Orange Cowuy . which details how the County can replace much of the $1.7 billion 1n lost principal to the investment pool (and cover the annual S160 million in lost interest) through asset sales, workforce reduction, and the outsourcing of .Coutny services. 'Orange County's bankruptcy presents an opportunity to rethink, redesign, and rightsize County government 'for the 21st century,' says Poole. 'The decisions made by Orange County in 1995 could represent a new paradigm for streamlined, more efficient and more effective government which could be emulated across the country.• .. . To replace the lost principal of S1.7 billion, the report proposes County asset sales totalling approximately S1 to S1.5 billion and district sales of S2S billion. According to the report, asset sales over the next few years would expand the County's property out base by S3.5 to $4 billion [See Table 1). The expanded tax base could generate an additional S44 million and$50.5 trillion per year in net new property tax revenues. Based on the most recent allocation of property tax funds, such an expansion of the tax base would provide up to $29 million per year to school districts, $8.6 million to special districts, $3.5 million to redevelopment agencies, $6.1 million to cities, and $4.5 million to the County. •qg.a!a-16 15140 a61't P.02/� "l144v3052't wuNOh 1IWaa C S \ / t. /. &AV CAN IZcraae P1mt Umeded .'Some of the asset sale opporomities that could yield significant financial benefits Table 1 ! require state legislation, and therefore may not - Estimated Asset Sale Proceeds be achievable in the short tecm,v says Poole. S Millions - However, the report points to certain types of Counry Guvernmeat ! asset transactions through which the County Sale &Lcaseback-Office Buildings S259 ! Properties based to Others 67 can raise cash quickly, including the sale of Aipom (John Wayne &El Tom) 250-500 current County properry being leased to others Correctional Facilities 100 through County agencies (such as the Harbors, landfills 261-522 Beaches, and Parks Department), sale of Surplus Lauds -40 surplus lands, and the sale and leaseback of COUNTY TOTAL S977-1,485 Other Agencies County office buildings. Longer-term 5 Largest Water Systems 51.5W recommendations include the sale of Cowry Same tint+ Distrieu t non. correctional facilities. landfills and the wastewater Systems 1►� t combined axle of lobs Wayne and El Toro OTHER AGENCY TOTAL 52,500 airports which could bring in an estimated 5250 million to $500 million. In addition to recouping the $1.7 billion in lost principal, Orange County could generate a net gain of$233 to $238 million per year to offset the $160 million in lost interest by reducing its workforce and omsourcing county services. The County could save $91 million per year with it 10 percent reduction of Its workforce, and another $82 million per year by reducing pay and/or benefits by 10 percent for those re^tiniing. The report recommends that the Board of Supervisors allocate job reductions by setting priorities rather than across-the-board ruts, and by eliminating less-importam programs altogether, allowing the Counry to focus on core functions, and tutting back at the middle-management level. In addition to a County workforce reduction, the report recommends outsourcing a number of county services including animal control, fleet maintenance,jail operations, paramedics, and fire protection for an annual savings of between $56 and $W million (See Table 21. Of the recommendations for outsourcing, privatization of paramedics and fire protection would provide the greatest payback to the cotmry. The Coumy's current EMS 5.02-15 7144530627 1S140 0617 P.e3/03 • •PnOrt I IRM c S ".Ij Q•ange Colony Rescue Ran tirwiled Page 3 of d ,system forbids the private sector to provide paramedic setvice anywhere in Orange County, Table 2 i which means all cities most provide this service .T=mared Saving From Gotwmciag- via their fire departments- Of California's 41 - Aamal Savings (S mum) i largest cities, 17 use private paramedics to both treat and transport, including San Diego, San Animal Con mat Shelter .2�3 3 Fleet Me:.o.,,MMIce,.,,.•. 3.0 Jose, Oakland,and Fresno. Nationwide, about 50 Food Services 2-8 percent of all municipalities use the private sector Jamtonatces ; 8 for paramedic service. Preliminary estimates of -. Jail ppemdvly 6-4 taxpayer cost for the Orange County Fire - Paratnediu` 20.0 Departments paramedic service is $20 million Fire Protecooe -2QJL - annually. According to the Reason Foundation's TOTAL ANNUAL SAVINGS S56.2-603 findings, taxpayers could save the entire$20 -. million If a private firm was contracted to provide •aamt'.eoed Punt stxvices. paramedic treatment and transport with a zero e.d taxpayer subsidy. 'Orange County does not need a bailout from either state or federal government, nor does it need a tax increase; says Poole. 'Om plan is the only viable alternative and the only clear course of action for the Board of Supervisors given the political realities and the goal of long-term economic stability for Orange County.' Rescuing Orange County was funded In part by the Lincoln Club of Orange County and the Howard Jarvis Taxpayers Association. It is the Reason Foundation's latest report on competitive government and privatization. Additional studies include Compegtive Government for a Competitive liar Angeles, Designing a Comprehentive . Privatization Program for Clues, and Righerving Government:Lesront from/America t Public Sector Innovators. Copies of each study may be obtained by calling the Reason Foundation at (310) 391-2245. The Reason Foundation is a national public-policy research organization with a practical, market-based approach and an outside-Washington perspective. Founded in 1978 and based in Los Angeles, Calif., the Reason Foundation has earned a reputation for sound economic research and a how-to-approach that benefits 1�policy makers and elected officials who require practical solutions. 30 - u u �~ SUPERVISOR, FIRST DISTRICT ROGER R. STANTON ORANGE COUNTY BOARD OF SUPERVISOR! S� ORANGE COUNTY MA4 OF ADMINISTRATION 10 CIVIC CENTER PLAL,.SANTA ANA.CALIFORNIA INPOI.4061 FNONE 17141 834-3110 FAX 17141 B]I-S)S< February 10, 1995 Gary Alstot, President Optionomics 3099 Cresta Way Laguna Beach, CA 92651 Dear Mr. Alstot: I am in receipt of your letter of February 3, 1995 regarding Wastewater and Water Contract Operations and Privatization Benefits. I have transmitted copies of your letter to the Executive Directors of the Orange County Sanitation District and Orange County Water U District. Per this letter I am asking them to review and make a recommendation on your proposal. Thank you for your offer to be part of the solution to the challenges that face Orange County. Sincerely, .� . �Rog r . Stanton Supervisor, First District RRS:bbc cc: Blake Anderson, O. C. Sanitation District ✓ Andrew Czorny, O. C. Water Districts rowDN vuEr—cwmFN GrENE—NINIY cEv—SM1LA MIA-wEsrNNs1ER r 9 /'\ YJ © ;1A S C v �r 3099 Cr&a WayeLe6aae BeacheCA 92651 7 V Ntl M V -� (7141 376 1979 a Fax 17141 3769690 APPNia9 the scimicas for optimal choice `✓ February 3, 1995 Supervisor Roger R. Stanton Orange County Hall of Administration .. _.. 10 Civic Center Plaza Santa Ana, CA 92701 - Subject: Wastewater and Water Contract Operations and Privatization Benefits Supervisor Stanton: You have expressed interest in new ideas to reduce government costs and increase efficiency through privatizing to reduce the impact of the County Investment pool debacle. Here are two articles describing the privatization of three water Iwaste) treatment plants I managed ten years ago. Savings of 15% to 45% are seen in construction, financing, maintenance and operation costs which agrees with the Reason Foundation research. These projects included the design, construction, financing, ownership and operation of the facilities for 20 years. Other projects included only the operation and maintenance of existing plants. It should be noted labor cost benefits of privatization are not related to whether workers are public or private employees but rest in incentives, innovation, deregulation and management direction of employees. In my experience the transfer of existing plants to private operation always included the existing employees. The savings were obtained by applying the benefits in financing, tax laws, equipment selection, ownership, maintenance, operation and the elements of competition inherent in this wedding of public and private interests, all extending from the willingness to innovate and the commitment necessary to make it work. Lessons learned would apply to other privatization efforts. Orange County public owned and operated water and wastewater facilities could be privatized to raise cash and reduce operating expenses. The Sanitation District of Orange County, Irvine Ranch Water District, Orange County Water District and Moulton Niguel Water District had nearly $1 billion in the County Fund which could create a need for cash. Fixed asset value of Sanitation District of Orange County treatment facilities exceeds $1 billion. While the value of the facilities, if sold today, would have to be determined based on depreciated value, outstanding debt and interest rates, financial firms become very interested in loaning money at attractive rates when they understand the income stability of treatment plants. Wastewater treatment plants are a monopoly and the users have no alternative. Existing costs to operate and maintain the facilities are known, but being a monopoly, it is unknown whether the costs are high or low. The costs to operate the Sanitation District of Orange County, plants is nearly 50 million dollars per year. Reductions in operating costs of 10 % to 40 % could save $5 to $20 million each �...i year. In addition, plant expansion for growth and new discharge requirements could be privatized. The solution has been used in other financial crises and is being used today. , With the passage of the 1972 Clean Water Act, local governments could look to Washington to provide much of the funding for the facilities required by that law. The federal government paid 75 percent of the cost of designing and building a treatment plant -- more, if the plant qualified as innovative technology. Ten years later Washington's share of federal money spent on wastewater treatment declined.and the total funding available covered a very small percent of the estimated need. This must have been one of the earliest unfunded Federal mandates. A community planning to build a treatment plant could expect it to cost the local taxpayers more. Many plants are using contract operations but communities without additional bonding capacity or the desire to add more debt are privatizing. Assuming local laws would permit the Orange County wastewater facilities to be sold, the President's Executive Order 12893 now allows projects built with federal money to be sold to private entities. (ENR 10124/94) Perhaps the first, Miami Valley Conservancy District, is awaiting an Internal Revenue Service ruling on a proposed sale of its 5 million gallon-per-day wastewater treatment plant in Franklin, Ohio. Some of the benefits of this privatization approach are: 1 Single point of responsibility. 2 Private owner pays taxes. 3 Private owner can receive tax incentives. 4 Low operating costs relate to long-term profitability for a private operator. Owner will take risks on innovative technology. 5 The private sector is less bound by administrative regulations. EPA was not concerned about the plant design, the sole concern was discharge. 6 Flexibility in plant expansion size and redundancy. 7 Equipment selected for performance not "or equal" 8 Saving time is money during construction. To determine the possible savings proposals should be solicited to: 1 operate and maintain the wastewater and water treatment plants and 2 sell the Orange County Wastewater facilities to pre-qualified private firms. Orange County's innovative and entrepreneurial spirit can turn this financial debacle into a success for the nation to follow. If you have any questions, call me. Sincerely, OPTIONOMICS ary Alstot, President Enc. ?cc•"-+r. Fan Alafcn 1385 7ss:e v' Area Deve=ooment Nlag3z se privatization bf �- Wastewater Treatment Facilities: What It Means To Industry Privatization of wastewater facilities may be the most cost-effective way for industry to provide mandated treatment processes. By Cary Alstot service firms have preferred to leave in that particular field—is a tradi- Vice President the problems of ownership in the tional precept of business and in- Matcalf& Eddy,Inc. hands of owners. dustry. Based on the acknowledg- The birth of privatization repre- meat that few industries arc in the AiLELY two years ago, the sears a completely new way of business of wastewater manage" concept of privatization of thinking—by professional- service meat, privatization offers industry wastewater treatment facili- fuss,municipalities,and industries. some interesting opportunities for ties was introduced to municipal of- It represents a management option improved efficiency and reduced fi:2 The concept was based on that is firmly rooted in effective and capital expenditures. several factors, most notably the cost-efficient business techniques. rapidly shrinking federal and state and that may have a profound im- funding options available to munic- pact on the manner in which industry Mod is privatization? ipalities for the development of and the public approach wastewater Privatization refers to the owner- wastewater treatment facilities and management throughout the fu• sbip—financing, design, comtruc- increased cost-efficiency.. turn lion,operation.and maintenance— Several years earlier,professional To data the privatisation option of a treatment facility by a private services firms had offered a related has been offered primarily to mu" puma who provides services to a service that was probably the fore- nicipalities. Before much longer, separate private or public authority. runner to today's privatization ser- however, industry will undoubtedly Services are provided for a fixed vices—contract operations. or the approach the new management op- annual fee for a period of from 20 to assumption of operational responsi" tion with as much interest as has 30 yam.The owner of the treatment bitty, by the service firm. Like on- been exhibited by cities and mans facility is responsible for maintaining vatization, contract operations was across the United States. compliance, repairing equipment based on money,unlike privatization. The reasons for municipal interest and machinery, and staff manage• it was based on a recognition that no in this alternative management op- ment:in short,for everything usually federal funds were available for op- tion reflect a growing demand for required of the owner of any busi- eration of a treatment facility, that financing assistance.costefficiency, ness. facility owners were becoming in. adequate maintersana, and elimi- The contracting organization,on crcmngly concerned about cost. nation of the operational responsi- the other hand. is responsible for efficiency, and that professional bilities for staff,proczss coutroi and payment of the fee and fen providing services firms were often capable of compliance.The interest also repre" the agreed-upon quality and quantity operating a treatment facility at sents a growing recognition that of wastewater to the facility. grater efficiency and at lower or municipalities are not in the business There is a legitimate question similar cost. of wastewater managemat—and about how a company offering pri- Both privatization and contract that those firms that are in the vatitation services can do so and operations respond to a need for al- business of wastewater management make money. After all, the bottom tanative methods of financing and tan undoubtedly operate facilities lineofany businesses making money. managing treatment facilities. For more efficiently than an organ;"- And,fa the municipality or ministry municipalities,the burden of funding tioos with other conceros and re- cagioma are tostructca to adapt the treatment plants is a new problem. sponsibilities facility. The contracted firm is ex- Far industry, however, that burden This recognition—that effective peneaad in operations—tbe mam- haa been a familiar tau of doing management of a particular baseness tenaoce of equipment for minimiad f, business. YeL until stow,professional is bat accomplished by professionals downtime and the management of staff to mmrmse :urnover ah,. :. Toe committed firm for mr4, ooclussa satisfaction. In addition. toe con- =uon a enargea with operating a Pmauzauon u a new wriecoc traetec f Ime is abie to pureness treatmem punt fora period of from tntroaucm mutually to munimoauues ' supplies. matimais. and egmpment 20 to 30 years. (The average length confronted by reuuced funding op. at a reduced cost of a Contra=operations agreement mom for the eieagn and cons[ruwon On me other hand the contracting is five yeue still a significant period of treatment plants.Yet.the s=vrce agency curnmatm the need for cap- of time.) Will the company east in will undoubtedly appeal to industry, itai expenditur= for the design and five years? Has the company estab- construrnon of a treatment lane lishtd a record of accomplishments? Where m[b even greater re only P P Whereas facing the demon are high After construction, potential prob- Cair the Company be trusted to re- lately faeang the demand for high lams with compliance. staff. or main financially stable throughout degrees of cost-efficiency in the equipment become the responsibility the attracted period. Has the firm ry of t:'.e owner. established a credible record within PathOO be of publicre of the inns to has long been aware of the need T'hc possibility of unezpemrd e:- the wastewater management corn• conduct business in a reliable.reliable. txsst- t- peas is nonexis[ene the contracting munity? efficient manner. Furthermore, in- agency knows exactly what the 2. The contm=ed firm will be du Gas i history ry of contracting w yearly eznse will he. rid, in the celled on to design, manage the outt for for orxservicesry services such as unlikely event that a privatized fa- constiu=ion,operate.and mann[am refuse collection and dispnsai utili- cility is in noncompiustim the re- the facility.Does the company have tie and water. spousfoility for payment of fees a proven track record in these capa- Within the next few ytan,many belongs to the facility owner. biliues? Does the firm have the industries will investigate the op. An additional management ben- muludisnplined in-house capabilities pormaities offered through privati- efit becomes evident:the industry is to perform all design,management. moon of their mandated ireatment afforded the opporntmry to direst its and. operauonal functions? Is the facilities.And undoubtedly,the eye full attention to what it does best— company in the business of waste- of industry will be turned not in pn- is industrial operations—while ob-- water management? Dar the firm's to�n.cq vastawater management internal orgammuon appear capable butte tone s vinterestingidea.' savnar from a firm doing what it of assembling a comprehensive butmthe new service pragmatic and.real c menus does best—wastewater manage- projtmt «am spee"fitally selected isti cc improving meat and charged with meeting the needs effidenryand cost-effemivrntzt.❑ of each individual privatized fa- Cautions city? ., _ 3-The contacted firm is required - The concept of privatization is not:only to design and operate the relatively new.But.if the concept is treatment facility, but to assume new, the capabilities to design add responsibiliry for compliance of the operate an efficient tratment facil- facility. Has the Firm proven itself iry shoved not be new to the con. capable of pcivati=uon contracts? traacc. firm. The cautious that Has.mc firm aebieved a mild track should be considered in selecting rccm m assuming responsibility for priv;iu:mnon semar are similar to the opemdon of a treatment plant on the cautious that must be cansiacred a contracted bun? Does the firm in entering into any long-term con-- have a list of satisfied clients? Does tray the firm have comprehensive opera- Numerous firms are now entering now and main[tman« capabili- into the fields of privauaation and ti=? contra=operations. Many of these 4. The firm will be called on to funs are amble. Othcn are not. provide the fonds needed for design, because thev lack the technical.op- commumon.aria ongoing opemuon. cranonal. and purchasing power What is the financial picture of the necc sary to ensure cast-efficient contracted film? Can they be OWOertltlp or operation of a Ueat- Wunrea on to pay for nnnconrphan« meat plant-Still mbcm=y have the fin, if neeessary­or will they de- apabiliu=.. but they lack the fi- dare banwptcy? Can they be nancial backing tha[.is mival to counted on to replace defective such a long-term relationship. equipment? Cad they pay for modi- Any agency—municipal.or in- ficauons to the facility? Can they dustimi--cousidering privatizauoa stand the fmannat mst of designing =' 'ofits ireatment.facili[im ora con- and-commuamg a new fatality or s._...;; eta= operations agreement with a se+eml new facilities. simWm- professional servimfum.would do acou+ly? well to mntiderscveral.fa=ae.in. y;,.., eluding the following_ Privatization : The Public / Private Partnership as an Alternative for Financing Wastewater Treatment Facilities Presented at the 1986 Water Pollution Control Federation Conference by Gary Alstot Los Angeles Convention Center October 7, 1986 PRIVATIZATION: THE PUBLIC/PRIVATE PARTNERSHIP AS AN ALTERNATIVE FOR FINANCING WASTEWATER TREATMENT FACILITIES By Gary Alstot, Metcalf i Eddy Communities nationwide are proving that privatization--or the "public/private partnership"--is a financial and management alternative that works for water pollution control facilities. The construction costs can be 25 percent below that of a facility designed and constructed under traditional EPA procedures. The long-term cost benefits can be even greater. Through our experience and the experiences of cities we've worked with, we've learned that the benefits to a public agency is proportionate to the amount of care taken when setting up the arrangement with the privatization partner. It must be a well-thought-out process if it is to work. outlined in this paper are the benefits of privatization and the qualifications to demand in a private firm so you can actually realize those benefits. REPRESENTATIVE EG MPLES OF SUCCESSFUL PARTNERSHIPS Auburn, Alabama, has two new treatment facilities that we financed, desigi� and constructed. We w"./wn and operate these plants for 25 years. This is one of the first such privatization projects in the nation, and the first in the Southeast. The first plant was completed under budget and almost 50 percent ahead of schedule--only 12 months from the date of bond issue. The second plant, also under budget and ahead of schedule, went on-line in July. Compared with financing the facilities through more traditional means, privatization will save Auburn about $25 million over the life of the agreement. Baltimore, Maryland, will soon have a new sludge composting facility under privatization. This is another first in the United States. We are responsible for the design of buildings, construction, operations and maintenance, and also for marketing the compost. The facility will convert one- third of the sewage sludge produced at the main treatment plant into a dry, odor-free soil conditioner used in turf grass, land reclamation, and horticultural applications. Greenville, South Carolina, will also have a new treatment plant under a 20-year privatization agreement with us that will save customers about $6 million over the contract term. CLIENT BENEFITS Like Auburn, Baltimore, and Greeville, communities can reap a -2- variety of bene' s from privatization: • The privatized facility is normally in operation sooner than a funded facility since the focus is less on �..� administrative procedures and more on fast-track construction • The public partner can reserve its debt capacity for other badly needed services • The community's only expense is a predetermined and fixed operations fee • The construction completion date is guaranteed, and the public partner is relieved from construction management and change-order negotiation burdens • The private firm has single-point responsibility, which means that there are no finger-pointing contests when a process or piece of equipment doesn't work • it is a staffing solution because the private partner is responsible for labor relations, employee management, and training • Lastly, and perhaps most importantly, the private partner guarantees long-term reliability and compliance with -3- effluent disc -ge requirements WHY THE PRIVATE SECTOR CAN DO IT CHEAPER These advantages aside, there are always skeptics who ask, "How can a company that is in business to make a profit compete with a non-profit municipality?" A major reason is that the private sector has tax benefits available to it that enable privatization partnerships to be structured cost- effectively. Other reasons that private firms can provide services at a lower cost include: • We are less bound by administrative regulations. Instead of spending time and money complying with voluminous EPA administrative procedures, we can focus our spending on building the plant and meeting discharge requirements • The private sectorcan be flexible in its designs. Federal regulations deem that funded facilities be designed for a projected population. But the private sector can build a plant for the community's present needs, with provisions for expansion • We have the authority to choose contractors and plant equipment based on their effects on long-term operations-- not based on the lowest bid or equal pricing requirements of public bidding laws -4- • The contractor lis more cooperative. onvy-pical projects, the contractor lacks incentive if he knows that future jobs always go to the lowest bidder. But in `✓ privatization, he knows that being a good team player may win future contracts. This allows for a fast-track, design-and-build project that cuts both construction costs and the capitalized interest paid during the construction period • We accept technological innovation as a normal business risk because of its potential for saving money. And this risk is not passed on to the client • Because the privatizer-s organization includes both the designers and operators, responsibility for a design that encourages cost-effective operations is a closed loop. The designers know the importance of low operating costs to long-term profitability, know the capabilities of the operators, and know what has increased costs in other plants that the firm has designed or is operating WHAT TO LOOK FOR IN A PRIVATE FIRM What approach must a public agency take to get the most benefit from its privatization arrangement and enjoy a successful project? Since privatization is, in fact, a -5- financial alters, vve, the financial considr' ions are paramount. But try extend far beyond the i�Rediate design of the facility to incorporate projected needs and changes throughout the life of the partnership. And that requires hiring a reputable privatization firm. Reputable privatizers have three qualities in common: a depth of understanding, a qualified and proven team, and demonstrable stability. Understanding The reputable privatizer will have a depth of understanding in a variety of issues: operations, legal constraints, client relations, effective pricing, client control, current employees, and purchase of facility. Operations. what most determines the long-term success of a privatization agreement is the degree to which the privatizes understands operations and maintenance, both in terms of costs and hands-on experience. In proposals, many people rely too heavily on the capital cost portion of the quotation and not enough on the operations and maintenance portion. Our experience with environmental facilities indicates that total OEM costs generally exceed capital costs by the tenth year of the -6- project. The privatization experts who ignore O&M costs say that these costs are speculative and unpredictable. Perhaps they are to �..d those inexperienced in environmental processes, but a qualified firm should be willing to guarantee O&M costs for the life of the facility. Guaranteed and subject only to adjustment factors--changes in treatment standards, flow quantities, and composition; and rising labor, power, and chemical prices to match published cost indexes. Up until now the term O&M has been used here just as everyone in this business uses it. In fact, the "O" and the "M" represent quite different costs. "O" represents the cost of providing a current service. "M" represents the cost of preventing capital assets from deteriorating. Unfortunately, when O&M are treated as a single cost and budgets are tight, the one that inevitably suffers is maintenance. Given a choice to lay off workers or rehabilitate a major item of equipment, government officials may choose, understandably, to defer maintenance. In the private sector, managers and even accountants recognize that maintenance is critical to low costs over the long term. Our balance sheets reflect the cost of deferring maintenance by showing the decreased value of assets. we know that maintenance that prevents this loss of value is an L.� -7- investment, not \ ,o St. \ Legal constraints. The private firm, as well as the client, needs to also understand the .legal constraints of privatization. A few of these follow: • The local government agency must have the authority to enter into long-term contracts • It may need authority to assess user fees or otherwise obtain revenues that will be used to pay for the privatizer's services • It may need to convey existing public facilities to private ownership or facilitate the issuance of bonds to finance a facility owned '3y a private company • The jurisdiction of state public utility commissions and the applicability of land-use regulations, procurement laws, and other statutes must be favorable. Client. The private firm must understand the client. That includes not only the city manager or city engineer, but also the citizens, business owners, and employees at the current facility. Does the firm have a good public education program that addresses the concerns of your community? -8- Price. Can the"-,"vate firm offer lower op. ting costs because it is involved with a number of other facilities and buys operating supplies, such as chemicals, in bulk? Is their price guaranteed? Was it realistically determined and subject to rational adjustment? If the privatizer stops making a profit because of an unreasonably low bid, it will either reduce the quality of service to achieve a satisfactory return on investment or go out of business. Client control. A privatization agreement does not take control away from the client. The privatizer should not exclude the client from major policy decisions or ignore its suggestions and requests. Rather, the privatizer should function as a department in the town, as a listening and concerned partner. You should feel completely comfortable in asking to see the books, in having yo•:r own inspectors on- site during construction, in reviewing designs, and dropping in to view the subsequent operations of the facility. A reputable firm will consider any request the client makes. Current Employees. Is the private firm willing to take on the current employees, invest time and money in providing meaningful training, and provide real career advancement? The privatizer must be prepared for and understand facility managers who 'see privatization as an invasion of their turf and unionized employees who may fear losing their jobs. -9- Purchase of Paci /. If the public partne ects nct to extend the service agreement after 20 to 25 years, it can purchase the facility at fair market value. Therefore, the facility must be designed and equipped for more than the life of a short 20-year contract. Preventive maintenance cannot be neglected. The client should require provisions in the contract that give him the authority to monitor and enforce maintenance activities when municipal ownership is pending. Team A reputable private firm will have the right players on its team, players with proven track records. The privatizer must be able to attract and retain quality players in all areas-- legal, financial, design, construction, and operations. Whether they come from inside or outside the firm, players d.d must possess not only the technical skills of their particular disciplines, but also the managerial skills. It is also important that the players work together well as a team. Stability Because the privatization partnership is a long-term commitment, the potential client must look for a partner it can trust. You need to be confident that you are in good hands throughout the life of the agreement. Therefore, look -10- for demonstrated stability in two areas: financial and , experience. Does the private firm have the financial reserves to build a facility and operate it over the life of the contract, absorbing the liability costs and other risks that may materialize? Will it still be around in 20 to 30 years and not go bankrupt serving you? On the experience side, does the private firm have successful pilot projects that demonstrate experience in making privatization work? Do each of the players on its team have a stable history of providing technical and operational solutions? CONCMSION Privatization, when approached as a public/private partnership, can prove to be a successful and beneficial alternative to financing and managing wastewater treatment facilities. Since the financial considerations are paramount, the wise client will look for a private partner whose capabilities and concerns extend beyond the immediate design of the facility to the needs of the municipality throughout the life of the partnership. i- The I9 d short of it is that ale- I/ I to s s m nty must entor \ al information s e dataII d- about what the coupnd, 's as opposed to what spending the su- _ 5 a1 .'t-R(,- �a+n.+t -f seCtr •w pervisors have it in their power to cut t t7` ig — can't be provided by the staff UM ORANGE GRO IF we're paying ample sums to steer '.e this $3.7Bruce billioNestn de, chairman Filtering cash from our affluent effluent �e Bruce Nestande, chairman or the ig audit-oversight committee,hit the is- sue on the head: "If the county can't A answer these kinds of primary ques- ow that we realize the allows projects built with federal money e tions about what it can and can't do, Orange County investment GARY MMUT to be sold to private entities. Perhaps .e what's going on?" pool was really a cesspool, the first Miami Valley Conservancy He might have added: Are we we ought seriously to consid- savings. District, is awaiting an Internal Reve- l- He today in Santa Ana, or in er means of getting the coun- Also,since it costs nearly S50 million a nue Service ruling on a proposed s ' f Hooterville? ty quickly out of the muck before tax- year to operate the SDOC, reduction in its 5 million gallon-per-day wast - d It seems county supervisors have payers are pulled under. This analogy treatment-plant operating costs of 10 treatment plant in Franklin, Ohi s slept Contentedly for years with a may meaningfully be expanded by not- percent to 40 percent would result in Some of the benefits of the privatiza. u blissful lack coof ntentedly in such i with a ing how the county's once affluent efflu- annual savings of SS million to $20 mil. tion approach are: e blissful a where the dollars h i why, ent is presently treated. lion. Reductions like these are common ►1. Single point of responsibility. y and vancie whose command. The audit It comes as no suprise that the county with contract operations,when a private ►2. Private owner pays taxes. V committee and the audit it will over- supervisors failed to "supervise" coun- firm operates the system. ►3.Private owner receives tax incen- commil,one hopes,het radii those ty operations; lack of oversight long has Labor cost benefits of contract opera- tives. '- P P Y been standard procedure in govern- tions are unrelated to whether workers ►4. Low operating cost assures long- -f years of official snoring. ment. A good example is the Sanitation are public or private employees,but in- term profitability for a private operator. District of Orange County (SDOC) with stead rest on incentives, innovation,de- Owner will take risks on innovative tech- its 30 directors. If five supervisors can't regulation, and management direction nology. ��Cts supervise, how can 30 directors be ex- , of employees. ►S.The private sector is less bound by u petted to direct? And if they're not di- Additionally, the SDOC treatment fa- administrative regulations. recting, what are they doing? Yet we cilities have a marketable value; fixed ►6. Flexibility in plant design. witness daily the leaden outpourings of assets exceed $I billion. Although the ►7. Equipment selected for perfor- Europeans appear ponderous groups like these as the chief value of the facilities would be deter- mane only. rested to it for fear means toward progress, then wonder mined based on depreciated value,out- ►8. Saving time is money during con- resigned progress never comes. It's like try- standing debt, and interest rates, lend. struction. of losing Cradle-to- ing to fight a raging military battle with ers become very interested in offering To determine the possible savlr a committee, when decisiveness is all attractive rates when they come to un- proposals should be solicited from a tgrave SerViCCs, that matters. derstand the income stability of treat- tied private firms to operate, mail The SDOC and Irvine Ranch Water ment plants. Wastewater treatment andlor buy all the Orange County waste- District (IRWD) were the third highest plants are a monopoly, remember. water and water treatment facilities. mind,the Times notes; as one exam- investors in the cesspool, with S750 mil- This solution has been employed in Orange County's innovative and en- ple, the newspaper cites studies of lion committed. Other water purveyors other financial crises and remains in use trepreneurial spirit can turn this finan- Germans who, despite a reputation also sank money in the pool.This surely today. Although many plants are using cial debacle into a sucess for the nation for tax compliance,are now increas- creates a present need for cash.Costs to contract operations, communities with- to follow. Let's get the Orange juice ingly saying they are willing to cheat operate and maintain the facilities are out additional bonding capacity or the Rowing again. because they're getting less for their known, but as a monopoly, it remains desire to add more debt are privatizing. tax dollars. So whyno outcry) unknown whether the costs are high or Assuming local laws would permit the ea low.We do know that reducing the num- county's wastewater facilities to be sold, Mr.Alstot is a free-lance writer in Laguna It's that Europeans appear re- ber of directors would represent a major presidential Executive Order 12893 now Beach. signed to it for fear of losing a life- style — cradle-to-grave services at their fellow taxpayers' expense MALLA 1D FB.LMOB•E Bruce Tinsle that they believe they couldn't doo 3r without, the Times story concludes. In other words, they're hooked. Herein lies the proverbial caution- _` •I � ary tale for Americans. Welfare in ...din its hrnadret ccnca — ncn"r:••u.. �..- fAWIG'F R,m all .n� . .i ORANCOUNTY SANITATIOISTRICTS EWSPAPER CLIPPI S Pam I >f 2- Name of Paper Section I Page Date ::rn/11a V1a Ifs I Subject Re2l5' ,fr Dews 1 Z 28 45 I�rtVa'ti '17ub(fc SerVi Public problems Since Goldsmith, 47, took of- fice: ►ilargest cif , the nation's nu largest city, has sliced the private solutions number 0f employees to 3.970 from he cif ' 25 percent drop. ►The city's annual budget has shrunk from PSI minion in 1991 PRIVATIZATION: Indi- Gray,solid,conservative Indi. to$471 million, a 2 percent drop. ana olis is the nation's anapolis is the nation's grandest To many, Goldsmith is India- laboratory for reinventing gov- napolis' philosopher king. But leader at placing public ernment.Republican Mayor Ste- others can't help but see the car- services III private phen Goldsmith is the scientist casses of 500,000 gizzard shad p running the experiments. And bobbing on the White River when hands. There are Sav- Orange County,awash in propos- they think of his vision of campe- 1D S — and C8Sllt11t1eS. als to privatize everything from tition. g car repairs to housing prisoners, Privatization has halved the 6y TERI SFORZA can learn much from tiseir tri- cost of running the plants, and m The Orange County Register uphs and failures over the past ,critics blame the fish kfns on three years. --skimping by the new private INDIANAPOLIS—Rick Farn- Indianapolis would love to sell management The state is still ham is perched on a bare bluff its assets outright — a tack investigating, but the city above the White River, near the Orange County may embrace— blames it on heavy rains, which cove where a hall-million fish but tax laws make that a difficult caused holding ponds to over- died last fan. and time-consuming option. In- flow,spilling raw sewage into the That bubbly white foam swirl- stead,Indianapolis stresses cons. river before it reached the plant. ing in the eddies isn't crud, ex- petition as the swiftest way to Goldsmith accepts the criti- plains Farnham, a manager at film bloated government. cism as an unavoidable part of Goldsmith has turned more his revolution. the largest privately run sewage- than So city services over to the "We're trying to force compe- treatmen[plant in America: It's private sector since taking office tition in order to drive down costs what happens when you pump in 1992. This has allowed him to and increase responsiveness," lots of oxygen through the efau- slice the city's budget by$10 mil- said Goldsmith. ant before you release it into na- lion and redirect SM.5 Million to Skip Stitt, Goldsmith's free. ` ure. And oxygen helps prevent core concerns of public safety market gum who visited Orange fish kills. and infrastructure. That means County recently to assess the The great fish kill of last fall 100 more police officers on the damage,said Indianapolis is cre- has caused fierce headaches in street today than three years ating incentives for efficient gov. the nation's pain dish of privati- ago, and M million in infra- ernment for the first time, and zation. But the pain isn't just structure improvements. hasn't axed a single union em- about fish: It's about whether sa- Private companies now run the ployee in the process. cred public services — such as public golf courses and some of 'But it isn't a zero-risk envi- waste-water treatment—should the public trash collection in ad- ronment,' Stitt said. "We do be entrusted to private, profit- dtion to the waste-water treat- many things here without a net. motivated hands. ment plants. Private companies We'll make some mistakes,but if The fish suffocated on a spill of handle the city's photocopying, our actions are consistent with raw sewage,which critics blame microfilming, sewer billing and our core philosophy and our pro- on corner-cutting by the new messenger services. comes are well thought out, it's management. The city says the And the sudden rivalry has in- OK. There is freedom to make kill had nothing to do with the spired city workers to become mistakes" plant. fiercely competitive to keep their And the net does have some jobs: The guys who fix potholes holes. Take, for example, the The dead fish have emerged as cut costs by 25 percent when pit- saga of the golf courses. a symbol of an that is at stake as ted against outside opponents. Indianapolis owns 12 of them, Please see PRIVATE Page 14 And just last week, jittery ga- once the purview of its parks and rage mechanics beat out three recreation department. The FROM 1 big national firms for the right to greens were brown and withered governments embrace privatize- repair and maintain the city's then. The service was poor. The tion: the public's right to protect 2,700 cars and trucks, coming in ire of golfers was on the rise. Lion, information and account- $8,000 cheaper than their closest ability.It's a fight sure to rage in competitor. By forsaking raises, Orange County as it tutus to pri- thinning their own ranks, and vatization as an escape chute cranking every minute of the from the madhouse of bankrupt- work day, they kept their jobs. cv. Goldsmithman o decided 7- e-f 2- take bids `/ the management of the golf co courses in 1992, and 20 contracts t t e e were awardedded that fall. the vsh to ready the courseses for mng tee-offs, the new, private _ •r ; "'Gtanagers did what they alwaysi`1I do when they needed work done: They called a handful of private contractors, got the best price, and hired them to do the jobs. ` - Oops. Those jobs — hundreds of thousands of dollars' worth of , ._ __ f work—were subject to state bid. — �—�= �, ding laws. �••\ I don't want to overstate it, '1` but the democratic process and ••� s \ accountability got a small black eye,"said Jeff Modisett,a Dem. •� octal who lost his bid for reelec• "on in November. "In other cit- ' !s that have gone headlong into privatization, there are indepen- dent committees responsible for overseeing the budget and veri- fying the actual costs and sav- ings. We don't have that here. _ Accountability is extremely diffi- cult and it's hard to know how much the city is really saving hWienapolis's Belmont waste-Water treatment planC •" '- e,aw+poi because all the numbers come from the city administration." The dry of Indianapolis is the nations leader wl While most everyone agrees comes to privatizing public services and introds. that the golf courses have bags-been no real sav-manage- competition imothe'govemment monopoly.' tent,there has been n romed under Here are examples of what the city has saved b s' `fogs. u it ►Privatizing management of waste-water City-County Council member treatment plains:$65 million. Rozelle Boyd is also concerned �'� ` ►Competitively bidding trash collection:$15 n that openness may fall victim to j ►Competitively bidding or and truck repair:I the quest for savings. million. Op Privatizing sewer billing:$2.35 million. "Democracy isn't the most et- �_ ►Privatizing copying and priming:T600,000. ficient system—but[baps one of - ►Privatizing microfilming:S42.5,000. its liabilities I'm willing to ac- .+r• I-Privatizing towing of abandoned vehicles: cept," Boyd said. "It's better �'�d. % , $200,000. than creating a culture that does 1 lip Privatizing messenger services:$100,000. the public's business outside of the public's scrutiny." FIVE-YEARTOTAU ST33.5 million A bill pending in the state Leg- Indianapolis Maya Stephen Goldsmith - so,,,rr:City a mai islature would allow Indianapolis to negotiate privatization con- tracts in private. TO: ORANGE COUNTY 'Look into privatization.But the people of FROM: INDIANAPOLIS Orange County will be better served if,from tl RE: PRIVATIZATION beginning,there's an oversight mechanism 'The mistakes that have been made(here) established.I think its important that every have generally been a function of not citizen know where their money is being spen creatively considering at the time of the and how it's being spent,and that the city isn' party to favoring one contractor over another contract what the quality and pricing criteria depressing wages.' would be—inadequate contract monitoring. Also,the public needs to be convinced that — Maaaesz ferm.r pine. the Crown Jewels aren't being sold.If you do 'Form some community consensus that this things without scrutiny and openness,the important.I'm not sure everyone fully undew. public tends to get suspicious.We try to the gravity of the situation out there.There 'r operate here at a speed nobody else has needs to be dramatic,creative,short-term done;the savings will be greater if you take a thinking on how to get through the neat few longer bit of time to work them out.Fire sales months—the best way to lose weight is to tend to not enhance the price of the asset.' exercise and eat right,not to chop off your ar .Mr srepin eeNvidth You have to look hard at what services you're 'Make sure that all the goals are clearly providing,start all over again and say. 'Shwk identified.Make sure irs a level playing field.' be in this business at all. —C- .:.v.eu....munrilmember —SIJPsts¢euprsmlaoff se Wmiioe In ORANG'" COUNTY SANITATIODI DISTRICTS `.NEWSPAPER CLIPPIC�.a Name of Paper Becton Papa Date (i s subject 1 �sfu Ncws / .2;28-95 i�i �zdi`nvt of VkS(�wa�er'rVrw^ f Sewage Richard Farnham worked at Belmont for 11 years—9f for the city, 11 for the white River. soonTwo years ago I would have r7 told p) Nis coWdn't be done;' said Farnham,technical service story of manager. The city system is rigid. You have six or seven different layers of bureaucracy, and the person SUtCeSS at the bottom of the food chain waits for someone on top of the food chain to tat him to move two feet to the right;' he said. PRIVATIZATION: Indi- Statistics released after the plant's first year under private anapolis has realized management seem to bolster its cost and manpower claims of efficiency: BaVmj;s in its waste- �Under city ement, 98. 99 percent of pollutants were re- water treatment pro- moved from the water. Under White River's management, thegram. rate is identical. By FERI SFOaiA ►Under the city, suspended solids averaged five parts per The Orange County Register million. White River: four. Per- Sewage — any city's least mit limit: 10. glamorous service—is cited as a 0-Under the city, oxygen-con- sterling success story in India- suming organisms averaged six napolis. parts. White River: seven. Per- It took 328 people and SM mil- mit limit: 20. lion a year for the city to run its �Under the city, ammomas two waste-water treatment averaged 1.33 parts. White Riv- plants. er: 1.15. Permit limit: 3.5. Then it contracted maoa e- I-Under the city, fecal cloro- ment out to the White River En- form averaged 95 parts. White vironmental Partnership. River: 51. Permit limit: 200. Now it takes only 176 people On legal liability issues, the and Sty million a year to run city negotiates differently from them. deal to deal,officials said.But it That's a 50 percent reduction usually remains liable for what in cost and a 46 percent reduction existed before private manage. in manpower. ment took over — a 20-year-old In the Belmont plant's Mission building's structural problems, Control room, Mark Powers for instance—while the private studies a dizzying array of color manager usually becomes liable computer monitors that blink for accidents that can be shown and beep and tell him exactly to result directly from their man- what's happening in its many agement. mysterious chambers. Private companies make their He remembers when four su. money by bringing their market pervisors oversaw what now expertise to bear on operations takes one to oversee.He remem- —one of White River's partners bers the days when there were 10 is a giant French waste-water People on a shift that four people treatment firm —and by paring are now assigned to. middle management. In this "Things are better now," he case, residents pay their sewer said. bills to the city,and the city pays White River. COUNTY SANITATION DISTRICTS of ORANGE COUNTY, CAUFORNIA February 28, 1995 1�E B4Y NNE FOUNTNN VAN Y,CALIMRNIA 9Q]d 127 UWMa 11 MEMORANDUM TO: Blake P. Anderson FROM: Edwin E. Hodges L! SUBJECT: Outsourcing 0 Following are the Areas within the Maintenance Department where we are currently outsourcing: 1. Grounds- $ 41,470 2. Janitorial- 60,000 3. Window Washing- 18,000 4. Street Sweeping- 15,000 5. Pest Control- 7,000 ✓ 6. Bacidlow Preventers- 12,000 7. Tree Trimming- 35,000 8. Recycle- 10,000 9. Floors- 6,000 10. Sewer TVing- 15,000 11. Manhole Rehab- 24,000 12. Power Relay- 46,000 13. Elevators - 2,000 14. Cranes S Lifts- 18,000 15. Water Conditioning- 5,000 16. Batteries- 5,000 17. Filter Repl. @OOBS- 32,000 18. Filter Repl. @Lab- 45,000 19. Inst. Contract Labor- 6,000 20. Lorain UPS- 6,000 21. Emerson UPS- 22.000 22. Excide UPS- 5,000 23. Truck Scales- 6,000 24. Security Gates- 4,500 25. Fire Alarm System- 6,000 26. Taylor Software- 7,000 27. Pagenet Pagers- 8,500 ..✓ 28. LCI @ OOBS- 10,000 29. Districts Pagers- 8,000 30. Districts Radios- 18,000 r 31. LCD Pwr @Cen Gen- 5,000 32. Leak Alert for fuel tanks- 6 000 TOTAL $ 514,470 Other areas where the Districts are outsourcing: 1. APCI Contract- $ 400,000 2. Biosolids Mgmt.- 5,525,000 3. Outside Lab Services- 85,000 4. Other Waste Disposal- 100,000 5. Counsel- 600,000 6. Audit &Acctg.- 90,000 7. Engrg: 64,000 8. Enviro Monitoring- 2,400,000 9. Air Quality Monitoring- 200,000 TOTAL $ 9,464,000 GRAND TOTAL $ 9,978,470 This represents 20.14% of our overall JO Budget. EEH:cm � ( R=PD0CW10IEME&V UTSOURCsPA `mow' r `'STEERING COMMITTLV' AGENDA FOR MARCH 8, 1995 (5)(C) Discussion of Committee Structure and Charter u ma In August of last year, discussions began on restructuring the Districts' committees and establishing charters for each of them. The purpose of changing the committee structure was to improve the directors' understanding of the Districts' operations, to provide more informed policy oversight and to improve the coordination of the Districts' programs and projects. In September, the Boards adopted Resolution No. 94-109, Fixing and Establishing Rules of Procedure for the Conduct of Business of the Districts. In February, the Directors were each provided with a copy of the "Directors' Handbook for Board Committees" which includes the finalized mission and charter of each committee. Resolution No. 94-109 and excerpts from the Handbook are attached. Presently the Joint Boards committee structure is organized as follows: Committee Meets Reports To Operations, Maintenance and Ist Wed Executive Committee Technical Services Planning, Design and 1st Thursday Executive Committee Construction Finance and Personnel 3rd Wed Executive Committee Steering Call of Chair Joint Boards Executive 4th Wed Joint Boards This month will mark the sixth month of this committee structure, the start of Don McIntyre as the new General Manager and the initial proposal of a new staff table of organization (see item 5a). For these reasons its appropriate to stand back for a moment and assess how well the committee structure is operating and what, if anything, needs to be changed to make its structure or operation more effective. Recommendation Staff recommends that the Steering Committee discuss this issue in a roundtable format. Staff will be available to answer questions and to participate in the discussion, upon the direction of the Committee. wpdxgmbcxWb951s1e5e w RESOLUTION NO. 94-109 �...d FIXING AND ESTABLISHING RULES OF PROCEDURE FOR THE CONDUCT OF BUSINESS OF THE DISTRICTS (AMENDMENT NO. 3 RE BOARD COMMITTEE RESTRUCTURING) A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA, AMENDING RESOLUTION NO. 87-51, AS AMENDED, FIXING AND ESTABLISHING RULES OF PROCEDURE FOR THE CONDUCT OF BUSINESS OF THE DISTRICTS RELATIVE TO RESTRUCTURING OF THE BOARDS' COMMITTEES . . . . . . . . . . . . . . . . WHEREAS, Resolution No. 87-51 established rules of procedure to facilitate the orderly handling of business to come before the Joint Administrative Organization of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California; and, WHEREAS, these Boards deem it desirable and appropriate to amend said rules of procedure relative to restructuring of the Boards' Committees. NOW, THEREFORE, BE IT RESOLVED: Section 1. That Sections 10 and 13 of Resolution No. 87-51, establishing rules of procedure for the conduct of business of the Districts, be amended to read as follows: "10. BOARD SECRETARY AND MINUTES - The Boards of Directors of the Joint Administrative Organization shall appoint a person to serve as Board Secretary at the pleasure of the Boards. Said person shall also be the Board Secretary of each of the individual Districts, parties to the Joint Agreement. The Secretary shall attend all meetings of the Boards of Directors, unless excused by the Chairman, and shall prepare an accurate record of each meeting for submission to the Directors and subsequent approval at the following meeting; provided, however, that when an adjourned, special or special adjourned meeting of the Board of Directors immediately precedes a regular meeting, Minutes of said meeting shall be submitted for approval at the next meeting of the Board following said regular meeting. In the preparation of Official Minutes of a meeting of the Board of Directors, the Secretary will not record the name of the Director who moves or who seconds the adoption of a motion or resolution. The Minutes will reflect the votes of Directors as required by provisions of state low. U 1" AGENDA ITEM #11(b) (4) (a) - ALL DISTRICTS 11U-1" Section 2. That the contract provision for fees be increased for Phase 3 of the Districts' Capital Projects Management Function by an amount not to exceed $60,000.00, increasing the total authorized compensation from an amount not to exceed $235,000.00 to an amount not to exceed $295,000.00. Section 3: That the Chairman and Secretary of District No. 1, acting for itself and on behalf of Districts Nos. 2, 3, 5, 6, 7, 11, 13 and 14, are hereby authorized and directed to execute said Addendum No. 2 in form approved by the General Counsel. PASSED AND ADOPTED at a regular meeting held September 14, 1994. aeo7.ros 7-2" AGENDA ITEM #11(b)(3) - ALL DISTRICTS "T-2" In the absence of the Board Secretary, a Secretary pro tem shall be appointed to exercise the duties of the Board Secretary." d.d "13. STAMDANG COMMITTEES: (a) STANDING COMMITTEES (e)lf/ EXECUTIVE COMMITTEE - There shall be a permanent Committee designated as the Executive Committee which shall consist of the Chairman of the Board of Directors of Each District, or the Chair Pro Tom, if the Chair is unable to attend,the Directors who represent the Orange County Board of Supervisors, and the Chairmen and Vice Chairman of the Joint Administrative Organization. Each past Chairmen of the Joint Administrative Organization shall also serve as a member of the Executive Committee provided that said person serves as an active Director of a District Board. Any-person 6emmitieeFneMI88 . The Chairman and Vice Chair of the Joint Administrative Organization shall be the Chairmen and the Vice Chair of the Executive Committee, respectively. The Committee may fix a FeqUIaF Meeting time and pleas shall meet on the fourth Wednesday of each month, or may meet at the call of the Chairman. The Committee shall review the reports and recommendations of the other Standing Committees and may also consider matters related to the joint ownership, operation and construction of all of the Districts and make recommendations thereon to the Joint Boards of Directors. -2- "U-2" AGENDA ITEM #11(b) (4)(a) - ALL DISTRICTS "U-2" u (b)(2) �k FINANCE AND PERSONNEL COMMITTEE - There shall be a permanent F seo! Peliey Finance and Personnel Committee to advise the staff and make recommendations on iR �...r matters feletiv related to the financial, budgeting and personnel policies end programs of the Joint Administrative Organization. The Committee shall review with staff the procedures for development, preparation and format of the annual Joint Works budgets and recommend appropriate changes, and counsel the staff during the budget process to assure the proper interpretation and implementation of the Boards' peliey policies and that the desired procedures have been followed. The Committee ' shall recommend proposed Joint Works budgets te-the lixeeetive The responsibility for consideration and adoption of the respective individual District budgets rests with each individual District Board. The Committee is responsible to periodically interview and recommend the selection of outside auditors. The Committee shell review the result of the annual audit of the Districts'accounts with representatives of the outside audit firm, including any comments received recommending improvements. The Committee shell review management's response to these comments and make appropriate recommendations for implementation. Periodically the Committee shall recommend employment of an outside firm to audit internal control procedures to safeguard the assets of the Joint Districts. -3- ""U-3" AGENDA ITEM #11(b)(4)(a) - ALL DISTRICTS "U-3" e The Committee shell interview and make recommendations on the employment of investment-banking firms, bond counsel and, it necessary or desired, financial advisors to be used in connection with the Districts'financing programs. The Committee shell periodically coordinate recommendations on personnel audits of the Joint Districts'operations or segments of the operations on an as-needed basis. The Committee shall make recommendations on personnel policies and procedures, labor negotiations, insurers and coverage, procurement procedures, and such other related activities as may be needed or appropriate. ■ Reeemmendat ens a! GPA Aedkws ■ ■ preeyrBWBHf.pe{ieies ■ lnsurar+ee ■ Debt-Finaneirg Pei ieiaS ■ P:_.-:_._ I. :_ deemed a__:-_b'_ that ___ __-,b_, of the E___..: -4- "U-4" AGENDA ITEM #11(b)(4)(a) - ALL DISTRICTS "U-4" The Chairmen and Vice Chair of the tissa✓•Polley Finance and 1 Personnel Committee shall be appointed by the Joint Chairmen. The FisealPaliey Finance and Personnel Committee shall meet on the third Wednesday of each month or at the call of its Chairman. (3) OPERA TONS_COMMITTEE- There shafl be a permanent Committee designated the Operations Committee. With the goal of compliance with all public health and environmentallaws and regulations, the Operations Committee shall review and submit appropriate recommendations on the matters pertaining to the operation of the Joint Treatment Works, including such matters as current and projected service/flow needs, level and quality of treatment, conservation, recycling and reuse activities and air quality issues. The Committee shaft also review issues pertaining to the Districts' NPDES Ocean Outfall Discharge Permit, including annual review of the contractor(s)performing the ocean monitoring and research programs required as a condition of said permit, and related issues regarding protection of the marine waters off metropolitan Orange County's coastline from impacts resulting from the Districts'operations and discharge of treated wastewater. The Committee shah also review matters pertaining to contractual arrangements by the Districts to provide sewerage services to areas outside the Districts'boundarfes or approved spheres of influence. The Committee shall review plans for the future needs of the Districts, explore altematives and make recommendations on solutions to the Engineering and Construction Committee. In carrying out its responsibilities, the Committee shelf regularly study, visit and observe the various operational functions of the Joint Treatment Works. -5- "U-5" AGENDA ITEM #11(b) (4) (a) - ALL DISTRICTS "U-5" The Chair and Vice Chair of the Operations Committee sha//be appointed by the Joint Chair. Because of the special interest of the coastal communities in ocean issues, one representative of each member agency within the Districts'boundaries with coastal shoreline shaft be a member of the Committee. The Operations Committee shall meet on the first Wednesday of each month, or at the call of its Chair. t4) ENGINEERING AND CONSTRUCTION COMMITTEE- There shell be a permanent Committee designed the Engineering and Construction Committee. The Engineering and Construction Committee shell review and submit appropriate recommendations on matters pertaining to capital projects which address operational needs identified by the Operations Committee, including the selection of professional consulting services to assist in studying, planning and designing needed Joint Treatment Works and support facilities, including computerized systems, in accordance with the Boards' established policies and procedures for procuring such services; the Committee shall further review construction projects for said facilities in accordance with applicable public works laws and Board policies. Said oversight shall include the contracts for professional services and public works construction projects and addenda or change orders thereto. In carrying out its responsibilities, the Committee shall receive -heads up" and regular status reports on the projects from staff, and monitor, visit and observe the Joint Treatment Works operational functions and major capital construction projects. The Chair and Vice Chair of the Engineering and Construction Committee shell be appointed by the Joint Chair. gar -6- "U-6" AGENDA ITEM #11(b) (4) (a) - ALL DISTRICTS "U-6" u The Engineering and Construction Committee shall meet on the first Thursday of each month, or at the call of its Chair. 8eer93 MembeFship at the Gemm nee shall eansist of the Gha FFROA and the fbl ST 69M COMMITTEE- In addition to the Standing Committees, the Joint Chair may appoint a Steering Committee comprised of the Joint Chair, the Vice Joint Chair and the Chairs of the Operations, Engineering and Construction, and Finance and Personnel Standing Committees to assist in coordinating the flow of activities to the Committees and Boards. This Committee shall also conduct an annual performance evaluation of the General Manager and submit recommendations on compensation to the Executive Committee and the Joint Boards of Directors. The Committee shall also review the General Manager's evaluation and compensation of senior management direct reports, based on established criteria, and senior management's goals and objectives for the following year. The Steering Committee shell meet at the cafl of the Joint Chair. lcl SPECIAUAD HOC COMMITTEES - In addition to the Standing Committees, the Chair of the Joint Administrative Organization, or the Chair of a Standing Committee, or upon vote of a majority of the Districts, the Boards may appoint, from time to time, special or ad hoc committees to study and report on specific -7- "U-7" AGENDA ITEM #11(b)(4)(a) - ALL DISTRICTS "U-7" matters. Such Committees shall be temporary in nature and their assignments shell pertain to a current, specific issue. Upon completion of the assigned task, the ad hoc or special committee w#1 be dissolved. The Chair and Vice Chair of Special and Ad Hoc Committees shall be appointed by the Chair of the appointing authority. Special or Ad Hoc Committees she#meet at the call of its Chair. Section 2. Section 15 of Resolution No. 87-51,as amended, are hereby repealed. Section 3. All other terms and provisions of Resolution No. 87.51, as amended, shall remain in full force and effect. Section 4. This Resolution shall become effective October 1, 1994. PASSED AND ADOPTED at a regular meeting held September 14, 1994. -8- "U-8" AGENDA ITEM #11(b)(4)(a) - ALL DISTRICTS "U-8" ,I EXECUTIVE COMMITTEE OVERVIEW BACKGROUND , • The Executive Committee meets on the 4th Wednesday of each month or at the call of the Chair • Reports to the Joint Boards in the following month • The Chair and Vice Chair of the Joint Boards are the Chair and Vice Chair of the Executive Committee COMMITTEE MISSIONICHARTER The Executive Committee consists of the Chair of the Board of Directors of each individual District, or the Chair pro tem if the Chair is unable to attend, the Directors who represent the Orange County Board of Supervisors, and the Chair and the Vice Chair of the Joint Administrative Organization. Each past Chair of the Joint Administrative Organization also serves as a member of the Executive Committee provided that said person serves as an active Director of a District Board. The Executive Committee meets monthly or upon the call of its Chair, and reviews the reports and recommendations of the other Standing Committees, and may also consider matters related to the joint ownership, operation and construction of the Districts and make recommendations thereon to the Joint Boards of Directors. February 1995 DA a" STEERING COMMITTEE OVERVIEW BACKGROUND • The Steering Committee meets at the call of the Joint Chair • Reports to the Joint Boards • The Steering Committee consists of the Chair and Vice Chair of the Joint Boards, and the Chairs of the Operations, Maintenance and Technical Services (OMITS) Committee; the Planning, Design and Construction (PDC) Committee; and the Finance and Personnel Committee (FPC). COMMITTEE MISSION/CHARTER The Steering Committee shall assist in coordination the flow of activities to the other standing committees and Boards. The Steering Committee shall also conduct an annual performance evaluation of the General Manager and submit recommendations on compensation to the Executive Committee and the Joint Boards of Directors. The Committee shall also review the General Manager's evaluation and compensation of senior management direct reports, based on established criteria, and senior management's goals and objectives for the following year. February 1995 E-1 OPERATIONS MAINTENANCE AND TECHNICAL SERVICES (OMTS) COMMITTEE OVERVIEW BACKGROUND INFORMATION • The OMTS Committee meets on the list Wednesday of each month • Reports through the Executive Committee to the Joint Boards of Directors • Officers (Chair and Vice Chair) are appointed by the Joint Chair annually or upon an office vacancy • The OMTS Committee combines the following committees: • Conservation, Recycle and Reuse Committee • Select Committee to Advise the Staff • Special Selection Committee re Ocean Monitoring • Ad Hoc Committee re Service to Areas Outside the Districts COMMITTEE MISSION/CHARTER The OMTS Committee shall advise the staff and make recommendations to the Boards of Directors on matters related to plant operational issues and requirements, with the general goal of compliance with all public health and environmental laws and regulations. The OMTS Committee shall: • Review and submit recommendations regarding the operation of the Joint Treatment Works, current and projected service/flow/treatment needs, level and quality of sewage treatment, conservation, recycling and reuse activities, and air quality issues. • Review ocean discharge permits, ocean monitoring services contracts, and other marine protection issues relating to the Orange County coastline as they are affected by the Districts' operations and treated effluent discharge. • Review sewerage service contract arrangements for areas outside the Districts' boundaries or spheres of influence. • Review plans for future needs, explore alternatives and make recommendations on solutions to the Planning, Design and Construction (PDC) Committee. • Regularly study, visit, and observe the various operational functions of the Joint Treatment Works February 1996 F-1 9 PLANNING, DESIGN AND CONSTRUCTION (PDC) COMMITTEE OVERVIEW BACKGROUND INFORMATION • The PDC Committee meets on the first Thursday of each month • Reports through the Executive Committee to the Joint Boards of Directors • Officers (Chair and Vice Chair) are appointed by the Joint Chair annually or upon an office vacancy • The PDC Committee combines the following committees: Design and Construction Committee Building Committee Special Selection Committee re Computers Joint Works Selection Committee COMMITTEE MISSION/CHARTER The PDC Committee shall advise the staff and make recommendations to the Boards of yr Directors on matters related to planning, design and construction of the Districts' wastewater collection, treatment and disposal facilities with the goal of compliance with all public health and environmental laws and regulations. The PDC Committee shall: • Review and submit recommendations on matters pertaining to capital projects which address the operational needs identified by the Operations, Maintenance and Technical Services Committee • On an annual basis, review the Districts' ongoing capital construction program and provide recommendations accordingly • Select professional consulting firms to assist in studying, planning and designing needed Joint Treatment Works and support facilities, including computerized systems • Review construction projects • Provide oversight of contracts and addenda for professional consulting services • Provide oversight of contracts and change orders for public works construction projects • Receive regular status reports on projects from staff • Visit and observe Joint Treatment Works operational functions and major capital construction projects for the purpose of planning and monitoring the capital construction program February 1995 G-1 Y FINANCE AND PERSONNEL COMMITTEE (FPC) BACKGROUND INFORMATION • The FPC meets on the third Wednesday of each month. • Reports through the Executive Committee to the Joint Boards of Directors • Officers (Chair and Vice Chair) are appointed by the Joint Chair annually or upon an office vacancy • The FPC combines the former Fiscal Policy and Personnel Committees COMMITTEE MISSION/CHARTER The Finance and Personnel Committee shall advise the staff and make recommendations on matters related to the financial, budgeting, and personnel policies and programs of the Joint Administrative Organization. The Finance and Personnel Committee shall: • Review with staff the procedures for development, preparation, and format of the annual Joint Works budgets and recommend changes, and counsel the staff during the budget process to ensure proper interpretation and implementation of the Boards' policies. • Recommend proposed Joint Works budgets. • Periodically interview and recommend selection of outside auditors, review the result of annual audit, review management's response and make recommendations for implementation. • Periodically recommend employment of an outside firm to audit internal control procedures to safeguard the Districts' assets. • Interview and recommend employment of investment-banking firms, bond counsel and financial advisors, if needed, for the financing program. • Periodically coordinate recommendations on personnel audits of the Joint Districts' operations, or segments of the operations. • Recommend policies and procedures regarding personnel, labor negotiations, insurers and coverage, procurement procedures and other related activities as needed or appropriate. b./ February 1995 H4 e FPC COMMITTEE GUIDELINES v This section contains the operating philosophy of the Committee, its policy and decision-making responsibilities, staff involvement, the Committee's relationship to other committees, and other important details about Committee activities. OPERATING PHILOSOPHY • A forward-looking and within-context approach will be applied to issues coming before the Committee so that, over time, a "big picture" perspective can be applied to Committee responsibilities and the Districts' mission. STAFF PRESENTATIONS • Written and oral reporting by staff will be used in presenting issues to the Committee with maximum utilization of graphic presentations. For most issues, senior staff will make oral presentations to the Committee but project staff may also make oral presentations from time-to-time, depending upon the issue and the level of specific detail needed. AGENDA MATERIAL • An executive summary cover piece followed by"sufficient" backup material will be used to describe the major issues of the item and form the basic model of agenda material coming before the Committee. MEETING FORMAT • An informal two-way interchange between the Committee and staff will be used while keeping presentations concise and to the point. POLICY-MAKING AND OVERSIGHT RESPONSIBILITIES • The Districts' mission and goals relevant to finance and personnel will be periodically revisited by the Committee. The Committee will convey any proposed revisions for consideration by the Joint Boards through the Executive Committee. • The Committee shall review the scope of its policy-making and oversight responsibilities on an as-needed basis but no less frequently then annually. PERFORMANCE TRACKING • Staff and the Committee will develop reporting tools that will effectively and concisely measure the Districts' performance in achieving the mission and goals relevant to the Committee. • The frequency and detail of reporting will depend upon the relative "risk" perceived and importance implied by the issue to be measured to ensure timeliness, priority and focus. February 1995 H-2 • The Committee will review, on an as-needed basis, perhaps annually, the performance measurement reporting tools for their ongoing relevancy and adequacy with respect to the Committee's mission and purpose. ISSUES REVIEW • Staff will provide status reports to the Committee, on an as-needed basis, when issues of concern or potential concern arise. There is also a need for the Committee to have information on ongoing projects, programs and activities of the Districts sufficient for the Committee to note changes in status and prompt staff to provide status reports accordingly. • Staff will provide project reports and other fortes of detailed evaluation for proposed new actions so that the Committee can review the issues and alternatives in formulating recommendations to the Joint Boards. COMMITTEE INTERACTION WITH STAFF, OTHER COMMITTEES AND JOINT BOARDS • The Committee will review the protocol and procedures used for moving action items and review items through the committee process and to the Joint Boards. • With goals of streamlining, focusing and eliminating duplication of effort, the FPC will consider. What actions should be referred to the Executive Committee and to the Joint Boards? What actions can the Committee refer directly to staff? y What steps will help streamline the process? What issues such as status reports, remain within the exclusive jurisdiction of the Committee? COMMITTEE ORIENTATION • Oral presentations by staff, graphical and video tools can be utilized to orient members of the Committee if desired. • The Committee will have special orientation sessions when special issues are anticipated. r.d February 1995 HJ a APPENDIX B AN OVERVIEW OF OUR WASTEWATER MANAGEMENT STRATEGY by SLAKE R ANDERSON February 1995 Appendix B-1 Q 1 . PLANNING u Information from these • U.S. Environmental Protection Agency customers • Southern California Assoc. of Gov'ts. • South Coast AQMD • State Water Quality Control Board • County of Orange • 23 Cities and 5 Special Districts • Utility Agencies • The Public • Ourselves (Directors and staff) Is used to make these • Population and flow projections estimates • Air emission projections and requirements • Wastewater characteristics and requirements • Power needs and opportunities • Biosolids projections and opportunities • Environmental and public health needs To plan for these • Wastewater collection facilities facilities and practices • Wastewater treatment facilities • Ocean disposal facilities • Biosolids reuse practices and facilities • Source control and prevention • Water conservation practices • Water reclamation practices and facilities • Project schedules • Budget needs u February 1995 Appendix B-2 v 2. PROJECT DESIGN Use engineering, technical, • Meet codes (electrical, seismic, scientific and financial resources plumbing, building and fire) of the Districts' Directors, staff and consultants to • Obtain permits (city, county, state) • Prepare designs • Coordinate with cities • Coordinate with other projects • Provide lowest life cycle costs • Provide reliability • Provide 100% compliance By • Developing Scope of Work • Issuing Professional Services Agreements and Addenda • Managing plans and specifications preparation Preparing cost estimates and schedules February 1995 Appendix B-3 e 3. CONSTRUCTION MANAGEMENT Use engineering and • Review and award contract to construction skills coordinating lowest responsible bidder with operations and maintenance (or cities, county, • Approve equipment and CALTRANS, etc.) to: material submittals . Coordinate with cities • Coordinate with other projects . Maintain continuous operation u • Ensure compliance with plans and specifications • Prepare monthly project payments • Prepare contract changes (change orders) • Provide survey control and materials testing • Comply with state and federal laws (labor, safety, public works) February 1995 Appendix 6-4 a 4. START-UP AND COMPLETION Engineering, consultants, • Check out, test all systems operations and maintenance, technical services, and - Walk-through with all contractor work together to: customers • Provide operations and maintenance training - Provide manuals and procedures • Manage start-up services �r • Complete Closeout Agreement. February 1995 Appendix B-5 a S. OPERATION Operations and maintenance • Provide 24-hour operation staff (primarily) with support from engineering, finance and • Monitor incoming wastewater technical services staff . Run, adjust, tune systems Measure performance • Provide preventative maintenance Provide emergency maintenance -. . Watch trends • Monitor effluent quality • Monitor ocean conditions • Monitor air emissions • Report to regulators • Go back to No. 1. February 1995 Appendix B-6 4 ACTIVE PROJECTS (Completion this decade, mostly) PLANNING • 27 Projects • $130 million (and counting) • Regional water reclamation project • Second ocean outfall • Miscellaneous improvements • Districts' sewers DESIGN • 53 Projects • $200 million • Primary treatment expansion at Plant No. 1 • Secondary treatment expansion at Plant No. 1 • Seismic improvements • Miscellaneous improvements • Districts' sewers CONSTRUCTION • 28 Projects • $115 million Secondary treatment expansion at Plant No. 2 • Seismic improvements • Miscellaneous improvements Districts' sewers February 1995 Appendix B-7 CHANGE ORDER COMPARISONS OCSD: 5.24% on $200 Million of Recently-completed Treatment Work Projects «� 1 Correction Department of Corrections(10% for custom) 2 California Water Resources "i Lr Control Board (5% allowed for rrelated work) Yf' 3 EPA (5% allowed for related work) p*y #.'et 4 Corps of Engineers, Portland v - J District (10%) 4 5 CALTRANS (7°/) va i 6 LA City, Dept.of Sanitation (9%) IT �♦ C 7 LA County, Dept.of Harbors 2 (10%) - 8 LASCD "in-House"(4.66%) 9 CSDOC (5.24%for all work) 1 2 3 4 a a 7 a 9 February 1995 / Appendix B-8 1 1 9 OUR BIGGEST PROJECT ISSUES AHEAD • NEW OCEAN OUTFALL • STAGING FUTURE PRIMARY CAPACITY • STAGING FUTURE SECONDARY CAPACITY • REGIONAL WATER RECLAMATION PROJECT • LONG-TERM BIOSOLIDS REUSE • AUTOMATION/COMPUTERIZATION WILL BE ADDRESSED BY • CONDUCTING NEEDS ASSESSMENTS • PROJECTING FINANCIAL IMPACTS • ASSESSING STAFFING IMPACTS • ESTABLISHING PRIORITIES February 1995 Appendix B-9 a AVERAGE WASTEWATER FLOWS VS TREATMENT CAPACITY 1994 Average Flow 231 Million gallons per day (mgd) 2000 Average Flow 250 mgd (projected) 2020 Average Flow 360 mgd (projected) Primary Treatment Capacity (all flow receives primary treatment) Plant 1 Operating Capacity 90 mgd (+18 mgd standby) Plant 2 Operating Capacity 156 mgd (+30 mgd standby) Total Operating Capacity 246 mgd (+48 mgd standby) Plant 1 Operating Capacity in 1998 120 mgd (+24 mgd standby) Plant 2 Operating Capacity in 1998 156 mgd (+30 mgd standby) Total Operating Capacity by 2000 276 mgd (+54 mgd standby) Secondary Treatment Capacity (half of all flow receives secondary treatment) Plant 1 Operating Capacity 66 mgd Plant 2 Operating Capacity 75 mgd Total Operating Capacity 131 mgd Plant 1 Capacity in 1997 100 mgd Plant 2 Capacity in 1998 90 mgd Total Capacity by 2000 190 mgd *Two wild cards: Reclamation and future permit conditions. u February 1995 Appendix B-10 i PEAK WASTEWATER FLOWS vs HYDRAULIC CAPACITY 1995 Peak Flow 550 Million gallons per day (mgd) 2000 Peak Flow 600 mgd 2020 Peak Flow 740 mgd Influent Capacity Plant 1 210 mgd (+130 mgd standby) Plant 2 262 mgd (+288 mgd standby) Total 478 mgd (+418 mgd standby) Effluent Capacity Outfall Pump Station 480 mgd (+120 mgd standby) Outfall Pipe 480 mgd Standby Pipe (+150 mgd standby) Future Capacity New Outfall Pipe Under study February 1995 Appendix B-11 FUTURE UNCERTAINTIES / TOUGH ISSUES • Wastewater Flow: Population Economy Changing practices • Level of Treatment: 60% Secondary or 100% Secondary • Air Quality Requirements: Federal Clean Air Act California Clean Air Act South Coast Air Quality Management District • Water Reclamation: Cost / Price Market Regulations • Biosolids Reuse: Cost / Price Market Regulations NIMBY U February 1995 Appendix B-12 AUTOMATION AND COMPUTERIZATION SHORT-TERM SOLUTIONS (next 6 months) • Philosophy: Don't prejudice long-range solution Coherent with long-range solution • Features: Initial Financial Information System decisions Laboratory Information Management System fixes (LIMS) Capacity monitoring and planning LONG-RANGE SOLUTIONS • Philosophy: Integrate systems as appropriate Open architecture versus proprietary systems Accommodate hardware upgrades Futurism • Features: Continue plant automation efforts New Strategic Information Systems Plan: Office Automation Financial Information System Electronic Transactions/Business Practices February 1995 Appendix B-13 a OUR OVERALL STRATEGY • 100% Compliance • Reliable Systems • Cost-Effective Solutions • Cross Media Considerations (air, land, water, energy) • Remain flexible about the future • Maximize site utilization • Masters of our own fate • Keep the genie in the bottle (prevention and conservation) February 1995 Appendix B-14 JOINT BOARDS OF DIRECTORS REGULAR MEETING AGENDA FOR JANUARY 11 , 1995 Agenda Item (13): Minutes of the Steering Committee Summary Attached are the draft minutes of the Steering Commitee meeting held on December 8, 1994. Executive Committee Recommendation Receive and file draft Steering Committee Minutes for the meeting held on December 8, 1994. wptlm'pmy16d9S7-95.73 b I County Sanitation Districts I of Orange County,California P.O.Box 8127 • 10844 Ellis Avenue Fountain Valley,CA 92728-8127 Telephone: (714)962-2411 MINUTES OF THE STEERING COMMITTEE DECEMBER 8, 1994 -6:00 P.M. A meeting of the Steering Committee of the County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California was held on Thursday, December 8, 1994. at 6:00 p.m., at the Districts'Administrative office. The roll was called and a quorum declared present, as follows: STEERING COMMITTEE: OTHERS PRESENT: Present: Director Don Griffin Director Burnie Dunlap John C. Cox, Jr., Joint Chair Thomas L. Woodruff, General Counsel Peer A. Swan, Vice Joint Chair Patty Gorczyca, Public Financial Management Pat McGuigan, Chair, OMTS Michael Ahrens, Bronson, Bronson & McKinnon Cindy Dennis, Bronson, Bronson & McKinnon Kay Chandler, Chandler Liquid Investments Absent: Victor Hsu, Orrick, Herrington & Sutcliffe Paul Webber, Orrick, Herrington & Sutcliffe John J. Collins, Chair, PDC Roger Stanton, VC Finance & Personnel STAFF PRESENT: Blake P. Anderson, General Manager Gary Streed, Director of Finance ACTIONS CONCERNING DEVELOPMENTS OF THE COUNTY'S COMMINGLING INVESTMENT POOL. The Steering Committee convened in closed session to discuss the County's Commingling Investment Pool. After a discussion of policy actions, the Steering Committee made the following recommendations: (a) Join other County depositors, as appropriate, to form a coalition(s) and authorize expenditures to support legal firm(s) retained by the coalition(s). (b) Retain Bronson, Bronson & McKinnon, as bankruptcy counsel to act on behalf of the Districts. i Minutes of the Steering Committee Page 2 December S, 1994 (c) (1) Appoint Director of Finance as the Districts' Treasurer; (2) authorize the Director of Finance to establish deposit accounts to address immediate cash needs; (3) establish associated accounting procedures using CPA firm. (d) Authorize the Districts' Treasurer to invest any new monies in very short, very safe, very liquid investments, purchased through a competitive bidding process and held by a trustee. (a) Hire Brown and Wood, as Bond Counsel, to serve the Districts and review action if litigation occurs. (f) Direct a Board subcommittee, staff and Public Financial Management, to proactively communicate with the rating agencies. This may include scheduling visits with Moody's and Standard & Poor's and developing an on-going communication forum. (g) (1) Establish an Action Team consisting of the Steering Committee of the Joint Boards, staff and consultants; (2) authorize Steering Committee to act on behalf of the Joint Boards for actions up to $50,000 related to the County bankruptcy or the finance program of the Districts. ADJOURNMENT The Steering Committee adjourned at approximately 7:25 p.m. 1:Moaoc`am'amcM3o8Be v it JOINT BOARDS OF DIRECTORS REGULAR MEETING AGENDA FOR JANUARY 11 , 1995 Agenda Item (13): Minutes of the Steering Committee Summary Attached are the draft minutes of the Steering Commitee meeting held on December 8, 1994, Executive Committee Recommendation +✓ Receive and file draft Steering Committee Minutes for the meeting held on December 8, 1994. wpdoo�gmylbd95N-85.13