HomeMy WebLinkAbout2007-04 ADM MINUTES OF THE REGULAR MEETING OF
THE ADMINISTRATION COMMITTEE
Orange County Sanitation District
Wednesday, April 11, 2007,AT 5:00 P.M.
A meeting of the Administration Committee of the Orange County Sanitation District was held on
April 11, 2007, at 5:00 p.m., in the Sanitation District's Administrative Office.
(1) The roll was called and a quorum declared present, as follows:
ADMINISTRATION COMMITTEE STAFF PRESENT:
MEMBERS: Jim Ruth, General Manager
DIRECTORS PRESENT: Bob Ghirelli, Assistant General Manager
Mark Waldman, Chair Lorenzo Tyner, Director of Finance and
Phil Luebben,Vice Chair Administrative Services
Steven Choi Jim Herberg, Director of Engineering
Jon Dumitru Jeff Reed, Human Resources and Employee
Darryl Miller Relations Manager
Joy Neugebauer Mike White, Controller
Chris Norby Lilia Kovac, Committee Secretary
Ken Parker Rich Spencer
Sal Tinajero Angela Belt
Jim Winder Jim Burror
Doug Davert, Board Vice Chair Norbert Gaia
Bob Geggie
DIRECTORS ABSENT: Randy Kleinman
Bill Dalton
Rich Freschi OTHERS PRESENT:
Jim Ferryman, Board Chair Brad Hogin, General Counsel
Don McLean, Driver-Alliance
Ed Soong, Public Resources Advisory Group
Toby Weissert, Carollo Engineering
Vicki West, Driver-Alliance
NTMENT OF
ID
N2o appointm�lntwas necessaryAlR PRO TEM cgAH EOI THE
(3) PUBLIC COMMENTS N OAAIE1PNpRiK1'255 2007
There were no public comments. BY:
(4) REPORT OF THE COMMITTEE CHAIR
Chair Waldman did not give a report.
Minutes of the Administration Committee
April 11,2007
Page 2
(5) REPORT OF THE GENERAL MANAGER
Assistant General Manager, Bob Ghirelli updated the committee on status of the North County
Yard and its occupancy timeline; and Jim Herberg, Director of Engineering, briefly reviewed the
Capital Improvement Projects for the 2007/08 fiscal year, as well as Engineering process
Improvements.
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance and Administration, reported progress made in the insurance
rate quotation process for acquiring best competitive rates for Excess Workers'Compensation,
Excess Liability coverage,and Property coverage.
(7) REPORT OF GENERAL COUNSEL
Brad Hogin, General Counsel, reported that Kem County has filed a lawsuit against OCSD's
Board-approved biosolids addendum,which provides additional CECA review of the Tule Ranch
operation for land application.
(8) CONSENT CALENDAR ITEMS
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same, as follows:
a. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the March14, 2007
meeting of the Administration Committee.
END OF CONSENT CALENDAR
(9) ACTION ITEMS
a. ADM07-26 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to: (1)Adopt Resolution No. OCSD 07-_,Authorizing the
Execution and Delivery by the District of an Installment Purchase
Agreement, a Trust Agreement, an Escrow Agreement and a Continuing
Disclosure Agreement in connection with the execution and delivery of
Orange County Sanitation District Refunding Certificates of Participation,
Series 2007A,Authorizing the Execution and Delivery of such Certificates
Evidencing Principal in an Aggregate Amount of Not to Exceed
$315,000,000,Approving a Notice of Intention to Sell,Authorizing the
Distribution of an Official Notice Inviting Bids and an Official Statement in
Connection with the Offering and Sale of Such Certificates and
Authorizing the Execution of Necessary Documents and Certificates and
Related Actions.
(2)That the Orange County Sanitation District Financing Corporation
adopt Resolution No. FC-04, Authorizing the Execution and Delivery by
the Corporation of an Installment Purchase Agreement and a Trust
Agreement in connection with the execution and delivery of Orange
Minutes of the Administration Committee
April 11, 2007
Page 3
County Sanitation District Refunding Certificates of Participation, Series
2007A;Authorizing the Execution and Delivery of such Certificates
Evidencing Principal In an Aggregate Amount of Not to Exceed
$315,000,000 and; Authorizing the Execution of Necessary Documents
and Certificates and Related Actions.
b. AOM07-27 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to adopt Ordinance No. OCSD-32,An Ordinance of the Board
of Directors of Orange County Sanitation District Establishing Sanitary
Sewer Service Charges; Establishing Capital Facilities Capacity Charges;
Adopting Miscellaneous Charges and Fees Relating to Industrial Charges,
Source Control Permittees and Wastehaulers,and Repealing Ordinance
No. OCSD-30B.
Directors requested that the agenda report be modified to Include the
amount of the increase.
C. ADM07-28 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board
of Directors to adopt Ordinance No. OCSD-33,Adopting Fees, Revised
Procedures and Policies Concerning Annexation of Properties to the
District and Repealing Ordinance No. OCSD-29.
(10) INFORMATIONAL ITEMS
a. ADM07-29 2006-07 and 2007-08 District Budget Update.
Lorenzo Tyner, Director of Finance and Administrative Services, briefly
updated the Directors on the operating budget as expenses are assessed
and forecasted for the 2007/08 budget.The revenue budget will be
reviewed in May,and summary presentations will be presented to the
committees in June for adoption.
b. ADM07-30 2007/08 Benefits Program Renewal Costs
Rich Spencer, Human Resources Supervisor, reviewed the cost of the
employee benefits for the next fiscal year, and compared the costs to the
current year and two years prior.
C. ADM07-31 Property Tax Credit Adjustments for Class I and Class II Permits
Controller, Mike White, briefly presented the adjustments to standardize
the permit user fees methodology for permittees beginning 2008/09.
Minutes of the Administration Committee
April 11, 2007
Page 4
(11) CONVENE IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION
54957(b)(1). The Committee convened in Closed Session at 6:45 p.m. pursuant to
Government Code Section 54957(b)(1). Confidential Minutes of the Closed Session held
by the Administration Committee have been prepared in accordance with Califomia
Government Code Section 54957(b)(1), and are maintained by the Clerk of the Board in
the Official Book of Confidential Minutes of Board and Committee Closed Meetings.
RECONVENE IN REGULAR SESSION: The Committee reconvened in regular session
at 7:00 p.m.
(12) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
Director Luebben thanked the Sanitation District for providing support to the City of Cypress
Arbor Day, and Mr. Ruth for being the guest speaker at the city council meeting.
(13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
There were none.
(14) FUTURE MEETING DATES
The next regular Administration Committee meeting is scheduled for May 9, 2007, at 5 p.m.
(15) ADJOURNMENT
The Chair declared the meeting adjourned at 7:07 P.M.
Submitted by:
Lilia Kovac
Clerk of the Board
H:Wept\agenoa\CommltteesVWmin Commltlee\0407\041107 Aominls"don Mlnutes.doc
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DATA AIRE INC.E2 0.519 UM on $314 1.19 $563 $1240 W78 San E379 $3M $434 $1,191 W4.W%
POWDERCOAT SERVICES,INC.0 0.131 W2 0.10 0.10 SM $IN $131 Sm SW Us US else Use 30.13%
DISNEY DRESORT 319.947 1223,9]3 65KE E20T BS821 11,38T m-= 5586.381 $178,827 $239,618 E250,738 Sn9, 1 $724,nS $.,1' 5,438 305.02%
PLEION CORPORATION 52 0.6A 120 Sul an SM $1219 fen $48B Em $I= W00 274A6%
LOS ANGELES mME5 COMMUNICATKINS LL 5.0 3, 9A2 .141 KIM E112n S7,230 $4,043 $4.112 $3,7119 $3,220 $11,ln $]Aer 175m%-
PROGRESSNEM METING 1.257 58M 125 SMB E1,B14 E1,IV A56 W16 $418 $492 Sims $1,130 148.41%
B I TECHNOLOGIES.INC. 1. $1,157 1.W SUO 1AS Was $2.711 513-Q $1,10 127 ]SB n9 #.We $1,08 12812%
BOEING COMPANY CYPRESS . 1 ssol 1.0 5472 1.0 sm S1AN 0,15 VU sen wn SM $1,037 ON 1220%
STATEK CORPORATNW p2 0. $316 123 UU 0.13 $52 Sm SM SM S3W sm US $W 3445 111.13%
TAYLOR-0UNN MANUFACTURING COMPANY 1. 14 $11200 428 $1,355 2.7153A0 $1.9]S $1,084 511252 SiA30 3890 69 Wt 107.m%
AIR INDUSTRIES COMPANY-A POC COMP 0.493 124 sm am 1 $1.190 Wag 5588 MAN EIS po. 101.10%
GEONam PACIFlC CORPORATION 2.320 $1,624 16.0 S52M 3.TI 1,T61 $8,652 $3,W1 $4.)W $1,M9 S6,3M 512b1 SBA04 KTW 1W.05%
SEKISUI TA INDUSTRIES,INC. ].601 $5,321 3.91 $1237 $1,= S),BBS $3.TT0 $4,115 $5.550 $1,4W In= 38AW $3,950 95.99%
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IMPRESSIONSPWSXING AND PUDNG 0.2M $178 OZ] $95 0 $125 SM $197 $201 $1M $1M $97-SUS SU3 91.137%
CARANPRECcsICNENGWEERING 0A88 1.0 $01 1A6 $691 ;l,Ml $)9] SIM 5510 sm $532 $1,WB PO 88.4 %
HYATT DIE CA5TWG d ENGINEERING CORP. able ) 1.06 UN 1.06 M $1.198 Sere W20 072 $OW $309 $I,16i 3%] W.31%
A RO SERVICE $159 0.47 $1W 0.47 $25 UM SM $ne $IN $181 SIM Sul 92" 88.30%
VE W ELECTRO FAB INC.B2 0284 $IN 0.04 $13 0.04 $19 $217 Us SIM $193 $16 $15 $22A $101 8233%
WCCMMUN AElIDSTRUCTURES.INC. 3.112 52,118 4.86 $I se4 2.63 E1246 S4,990 $2,144 $2,846 $2,272 $1,808 $962 $5.120 n,n4 M9Sax
2XELE RONKS 0.190 $133 027 $84 0.09 $42 $258 Sim S156 $139 $101 $32 SM $117 74.84%
LWI 3~141CS INC. 0.450 $315 ON $26 0.07 $32 073 51M sm $329 "1 SM S05 $10 74.64%
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0ENERN.CONTNNER CORPORATIW .495 U04 0.79 SM 0.0 INS SB03 $370 013 W17 eWt $254 San Was 70.01%
JEMICOCONTAINERWC. am. $470 2.16 Use am $417 $1A78 $610 sm $491 $BM S321 S1,645 3677 69.92%
CEWI INDUSTRIES INC. 0.289 $1M am $177 am SM $631 SM W04 $188 U14 $205 $615 Sul 69.11%
BEARINGINSPECTIONINC. 0.942 S85S 233 $737 2.14 $IA14 $2.410 $1,13a2 $1A08 SM $BBB 581 SZ39 SM 67.46%
KIRKHILL RUBBER CO. 3.438 $2.406 7.17 $2,210 7.17 E3.401 $B4OT) $3,307 Kno $2.510 $2,139 $2,620 $7,80 wass A.
S P 5 TECHNOLOGIES 5.00 E4,234 S11 $1,61T 4.53 ,1W 58,001 $3,131 M.8]0 $4,410 $1,951 $1,M] Ulan KIM M.)6%
EXCEL MEDIA,LLC O.TM $514 0.11 $M 0.11 SM SW3 $218 3395 5536 S0 $41 5620 Sne 6129%
AWEDFACIRCIRTALSPWROG 0.76.5 WN 209 S863 ON SM $I'M $5W SM $559 $799 sm $I'M SSW 8122%
SELECTCIRCUDS 0.820 $574 0.65 sm 0.19 $m UN $2M EA4 $M9 $247 W9 3B15 Sul M.2B%
BREA COMMUNffY HOSPRN. .738 $1.910 5.71 $1,808 5.71 E2,708 58.433 $2,435 53ABi 81.889 $2.181 E2.WT $am #zees 56m
ANAHEIM EXTRUSION CO.INC. .49 sm 0.9 E3W 1.6 $]m 51,07 1 $89 n64 sin sm 61,377 3482 NM
Frt INDUSTRIES,CANNON .140 513.818 13.15 $4,185 11.65 $5,5W En,513 W,10 $15,31111 $14.413 $6.WA $4261 $23,W8 0,330 M.21%
PURE-CHEM PRWUCTS COLD WC 0.129 SW 022 Ees 0.12 EM $ete $70. 5/M EM EM I 843U129 ne 5266%
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BAAIC ELECTRONICS WC. 0.2n $152 2.38 $747 O3] $114 11.On E213 W S1M
(1)utilizing FIOW Data from FY 05-06 Distributed at the
(2)-Tax Credits based on Taxes paid in FY 05-M Administration Committee
(3)-Per Million Gallons 0 Meeting
(4)Par Thousand Pounds
Fiscal Year 0607 Aotu CBe .UMar Coat of Sary 1 Eat.FY 07-08 CAnr s flatter Net Cost of Sonic 1
Vd,,. Fl Chc i a JgW Chance J22i TSS CIwme Qms LM NO N.11- Flow ® flop TSs is Nei PermH fram PNe, OvOINior
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NEU 0NlCSTAMPINGANDPIATING 1.10 4805 Ole, See 0.09 $45 S083 S207 Nas $843 $36 $34 $913 Wall W.27%
UNNER9ALALLOYCORP. 2.894 S2AM 332 $1.116 3.52 $1.672 54,815 $1,252 53,583 $2113 51347 $1288 $4.748 $1186 3328%
PLEGEL OIL COMPANY Btdk T Efl-AHA. 2.494 S1746 0.06 $18 022 Sim $1.869 64M 51 $t MI $22 Sol $I $480 33.21%
GARGCIL PRODUCTION LLC 0.03 SBBS Om $0 0.W s0 $695 Sim Mee sm GO s0 SIM else 33.01%
KENLENSPEC MESINC. 0.598 $418 Ole $62 Ole $93 35n S134 we S436 s75 Sn i513 f14.3 3252%
NU-TECPOWDERCOATING Olsl 5255 2.0] SON 0.50 Sall $1146 SMS an $79O $182 it 33Bo 31.83%
SUPEMORPROCENING O.nt $512 0.21 S68 0.12 E58 5636 $138 5500 S534 sm Me SIM Sim MR%
TOYOTARACINGDEVELOPMEW#2 03" M&I ON 52N CA SWO $1M MW $7M S421 $3311 278 S1037 MIS 31.57%
CRCCKETTCONTAINERCORP. 1B34 S723 123a S3Li85 122 $578 S5165 S717 $4.5 S754 M S445 0E8 1MT 31.45%
NAHEIM TRUCK DEPOT92 BIN WASH 1AM $1.319 13B U07 139 1610 am 3555 t7E1 Sun.. i SIM S2333, f558 31.22%
AUTOCHLOR SYSTEM OF WMMINGTON CON See 1GO Sam 0.10 $47 S6D7 Me 1 7 See 5703 $162 M.93%
IA HABRA BAKERY 5.137 $3,598 38.35 $12464 13.07 $8,576 524.635 S4,991 S1BBW 751 15031 00B SMSB3 749 M.M%
S FPP.L.P. 0.00 $0 0.12 $37 0.12 $56 5136 S34 {COS Me S49 $1 $31 29.04%
EIECTRORACK PRODUCTS .O4C. 0.ma SW 1.93 Sell 1.97 $934 $2.039 SQII $1541 $516 Enl $n0 $1912 {4E2 M.OTA
UWATEC CORPORATION 0.432 $302 ON Sam On s383 5966 $217 U51 S315 E9S5 E280 S9W s209 VGM
HARBOR TRUCK BODIES INC. onAl S542 1.48 P71 1.47 Sam $1.712 3404 $1 M 5565 $M S539 f18T2 s384 V.81%
SOLDERANSK INC. om $2n 1.80 $me 031 S145 sill $140 U51 S28B $a57 S112 f1 SMa 27.89%
HANSONlORAN CO..INC. 0.620 $4$4 10.00 $3169 Ole $131 53734 SM U&l S463 S3 $101 $1,379 S$14 27.14%
INDEPENDENT FORGE COMPANY 0.799 MW Ole SBY 0.4 S205 $me $IN Sao NO $110 $158 f$5/ 3181 27A2%
PIERO%COMPANY 0.553 SM] 0.00 s0 ow s0 $387 No $319 E404 SO ED 5 NAD%-
RAILAIANERS.INC. 0.088 E8a 010 S84 020 $BB E2M $53 f17a $71 $M $74 $223 S47 M.48%
VALEANi PHARMACEUTI INT. i1w $0481 5.42 $1717 5.42 $2.5n $13n1 740 $11031 S9 BBB $2AT1 $1 $1 B12 M.40%
SOUTH COAST OIL CORPORATION L759 $1.252 0.00 s0 0.00 SO $1252 5218 $10]8 $1306 SO SO {1 s2F0 2B.10e,
ROCK INDUSTRIES,INC. ow $me 1.53 3484 022 $103 Seat $102 AM S244 $584 n sm $190 M.8654
WEBER PRECISION GRAPH 0.313 $119 231 $BBB D.00 S284 $1.3931 SIM i1221 52M $1.073 $219 s+S20 SM 24.61%
WASTE MANAGEMENT OF ORANGE Mo NSF 1.151 $80B 2.90 $915 1.03 E927 MA I $Ml 82.148 $941 $1.107 $714 982 0514 M93%
9 PANLOAWANY &NO $5789 i"08 $51,971 037 En2 E58.025 SZ4021 SsOm 66.031 $62,689 $210 588930 1 3OF am
SANTA ANA PLATING CNK CAPRAL 0.121 Sim 0.48 $148 OA8 $219 M19 $1111 M09 $161 $1761 INN S97 am%
ALLOY TECH ELECTRMMMHING INC. 1.014 VIC O.M S121 ORB $131 082 $161 MCI $740 5146 5101 $107 M.31%
SUNCUPSE.INC. DBA CORRUKRAFT 11 MOOD $If less West 93 N E2 7 $4,42227 Mile $1B11) $8.762 $11.319 $3424 5D6 n.95%
OLYL9+ICPOWDERCOATINGS 0.WO $417 0.52 Sim 0.42 5199 SM2 $139 SIM $435 WOEI f153 $lap $+48 2260%
METAL PCWOERPRODUCTS-ARAHENA 1.7M $120] 1028 S3246 1.05 Sa96 $4,952 $418 K53a $1259 $3A111 $382 I&= Sl.OM 12.64%
JOMNSON CONm01-5.INC. B.Mt S9,213 2.33 $nB 3.06 $1452 M.384 $1480 93a $6470 MCI $1.119 SBABO SI.M11 22.30%
GENERAL CERAMICS CORP. a017 $2,112 OA2 5132 0.M $409 $2.853 191 S2 $159 $318 am 5469 1210%
HARTE-HANKS SHOPPERS 3.331 awl 039 $2.024 5.98 $28M $7185 14f0 $5,775 ace $2442 MAN $7, SIMS 2213%
A P W ENCLOSURE SYSTEMS,W . 2934 R.O5a 2.03 $64d 4.52 E2143 s48I1 St 113,742 52.142 Sm $1651 it B/0 MIA
WEVERHAEUSER COMPANY 92 1.338 iB36 9.17 it 005 3.n $t,nS 53.73i SB00 B19 $917 51 12 $1,364 53572 509 31.6U%
SIOUX HONEYASSOCIAlION 2338 $1.637 1W.17 MGM 125 $594 $47.901 Sam W031 SIJOB Memo Ea58 is1 SIGURM 21.74%
BRASSTECH MC.p2 1.732 $1.212 Ole Ole sm $138] Sim sill n $1265 $75 Sn $I 11 f2M 20.38%
CREST COATING INC. 1.148 MX 533 $1753 1.12 5530 53087 me $2,790 $me S2,114 E40B S] 1 Sam 20.091E
GOMTECH ELECTRONICS WC. 0.210 Etae 035 $1n 0.07 $31 W5 M9 on $152 S215 524 $391 "5 19.99%
SUNCLIPSE.INL. CORRUGATOR PLANT 2766 51,938 14M $4 1235 $5.858 412.400 E2 $2,019 $5354 S4 15 $1 010 lam-
BAZLHOUSTONCO. 1.479 S1.035 138 M38 13a S653 $2.124 5384 $1780 $I'M s5M f503 In Sw 19.81%
M.S.BELLOWS CAN SBB a $83 Ole $124 sm so $M0 $of Sim SIM me s0 1g.58%
M C P F000.51NC. 25.8/3 $1 101 2917.66 P24.2M 40.73 19.324 MCI 712 f2B8 1 318.94T �pl $14,890 $11 US $187 6 19AM
UNITED CUSTOM POl15HING8PlAT01G Olaf $197 0.13 s4D 0.17 NO $317 S61 am $2m $49 $62 $318 $51 1sim
VELIE CIRCURS INC. B.6M 634 5.18 $1,641 1.94 San $7.147 NIS 2 E4A34 $1980 SBn $T $11B3 18.7
PRECKIUS METALS PUTING 0.]OB MG5 0.11 $33 O.M $115 S843 SBB i514 E518 E40 SM 5814 1100 iB.AT%
BODYCOTETHERMALPRCCESSING 3.325 320 1.M $404 1.62 Me W.455 $521 B31 E242B E48] 3557 33An {A9 AM46
ARROWHEAD PRODUCTS CORPORATION 10.IN $7311 Ilse $4.OB2 12N 55,903 $17. 95 $2.848 st 7 S]BM 54823 $4.548 $17099 BSO IBM%
AMFRIPEC INC. 21.181 E11813 298.n 8 BB3 7.35 53487 5112.03 31,038 ittt E15451 E113378 52,667 $131 18 18.21%
KNOTT58ERRY FARM FOODS t4.883 10405 551.43 17586 9.46 13980 200011 184 1B7 B4) 1p 853 211047 16- 12 825 18.01%
(1)UDludng FIOW Data from FY 05-06
(2)-Taa Credits based on Taxes paid in FY 0506
(3)-Per Million Gallons
(4)Per Thousand Pounds
•1
NNW Yaer Wo'Aa.lChm.. near M. n Bt et No Wc1$3ZW
VAISIne FI,Ch,r, J W Clam Jaw TSSC6eme Svc In Net Permk �y� am ],$$-Q NOP _Q from Poor >y PA9[
fi?MP E B 4 1 2 .1 129
C 7 13 I 519 1 8 0
EATONAEROSPACE,LLC .077 $1.314 1.67 A52] 3.12 $1,480 $3,321 $647 $2,B]4 $1.370 $838 $I.I40 $0,147 17.69%
DATA SOLDER INC.. 0.4� 2321 0.14 so 0.15 f72 5430 E80 $us 5335 752 $0 "a 17.61%
MICROMETALS INC.p3 B00 M. 10.93 $3271 190 E1,882 E7.63B 5792 W.WT E2A23 $3,Bd8 E1,2B0 fB4OdB 1]SB%
CIRCURACCESS.INC. AW 11. 53,733 O.W 5256 SO,SB1 ,939 $4,503 E19] fa33d1).06%
FlNEMNE GRGDIT98TEGNNDLDrLY 1N 1.9W 5918 9.M i120 0.93 $1S6 SZ2'B 5126 190 E9$5 f1,449 $122 f2538 1].46%
NORGLL BEVERAGE CO.WC. NCB 19.648 13,6W 510AB 9.48 E9299 3187,223 f187,223 E14,274 $1W,1B1 E7.115 i21B,5W 1728%
fiORILU3 POLISNWG pNDPURNG CORP. 0.89 WW W.77 E248 0.56 f280 S1.2W 159 ft,pW E728 $2BS ft2M 1728%
PRECBKM4 RESOURCE.CAUFORNN DNB 9AW 5.M Et,e t 4.41 $2,OW ES027 38/3 AW $2,891 f2,1W $1,814 $6,629 1723%
LEACH INTERNATIONAL 1A0B 1,W2 022 01B 5138 51,286 $iW i1,132 1,139 1 f1,32B 17.23%
EXQUISITE DESIGNS ING 0.170 119 0.03 OA3 1 E140 $t] St E124 510 1 M S21 1].1)%
GIDILUCPUTWG,INC. 1A46 732-Ohl 182 0.43 f209 51,000 $1d8 p41 ]69 i1% $158 $1.117 itN 17.14%
FABRICATION CONCEPTS 00 110N 3246 2]3 6.03 1,407 $tAW ESAW E818 SS,MB .970 1.7A 1AB0 f4631 $BW 17.W%
ADVANCE TECH PLATING INC. 1A53 1.W] 0.93 am $275 $1,BeB Via $1A95 1,1W 5356 12 .702 17.01%
PMMETECHNOLOGIES,NC. 1 ,3W 9.M ,WB O.B2 $5,821 $304 $5,518 $2.403 $3,714 EJ3B 1T. W%
OL RODUCTSWC. 1A11 $1A5e 2.2E SIM 2.07 S990 W.780 K335 1,1 70 E755 SIM INN 18.87%
SEV UP SOTTLINGD $31,687 M A7 S23Z461 31.54 SK W $279.120 $812 5279,3W M.-W 5260.410 $it SN IBM%
IBM HOLLY STREET LLC 4 0.00 $0 O.W $0 $314 $33 San $327 W7 Is.W%
MULTHFlNELINE ELECTRONIX IN 1 . C33 $Z055 520,290 1,501 ft6,72$ $10.695 $9 Iw 70$ 16.W%
CATALINACYLINDERS.ADN.D M,M] 2.32 SM4 2.57 $1.221 BLOU we W, $2.644 W,8/0 EBBS 19.5W6
GOODWIN COMPANY 1.024 $1,27) a* $13,773 3.17 Sim $16A5I S163 106398 E1= 316A13 1157 $1911102 ]04 19.49%
BRISTOL INDUSTRIES $3.468 2 $7118 Z65 1,210 ,46 T25 IK741 S3.me $M $6.502 Sill 18.05%
ALEXANDEROILCOMPA $ IM 12 111 $In $In SIB 15.88%
MASK TECHNOLOGY INC. .5 7 1 .
ACROBURR INC. 18 SUN am "a IN 15.16%
R B C TRANSPORT DYNMIICS CORP. 0.922 $545 IN Sw 1. 7 ,1 1 ftew ] $Z122 15.1
PRIMAL ELEMENTS 1. $M1 33. $1 $ ,382 $759 $12,093 $ . $ 5,40] SUR 15.059
HIGHTOWER PLATINGB A 1 $2,024 0.21 1 $3.051 $501 SZP9 ] B31 .W
GAlADE CHEMICAL INC. HR $889 0.88 11,48 E 3W 9 M $t,423 .81%
SOUTH COAST CIRCURS p2 2 $757 1.00 22 S1,19] $ 1,1W E]BO E383 $128T 14.65%
GEOROE WESTON BAKERIES INC. 4.049 $2.04 058 $16. 25 ,38) 24,199 $7W $23A0] $2.896 $20,413 $3,380 WO.SW9 UAR 14.53%
WEST AMERICAN RUBBER COMPANY.LLC 7.639 $51348 5.0 $1.739 6.48 BW .681 1,233 $SASS S5.576 $2,W1 $2,007 SB.W2 51,2]4 14.4 %
WESTERN MEDICAL CENTER ANAHEIM 10" $7,374 21.W $6357 21.95 10,421 E24,752 AM M.W9 $7.691 $8.392 $8,030 SUMS 33,OW 14.45%
KODAK PROCESSING LASS 9A71 Sa500 44.W $14.120 267 1,218 S21.8911 $151 $21.74 $6.S42 $17,W2 $938 $24,813 SIM KIM
ANAHEIMGENERALHOSPITAL 6.167 $4,317 12.86 $4,073 12W $6,101 E14.491 42,117 $iZ374 $4.503 $4.913 U.Ml $14.117 $1.70 14.9%
TAORMIWIINWSTRIES,LLCW M5 $1,711 5.38 $1,N6 3.30 1,68) 9W $9W $4A2B $1.765 82,07 $1,2W $5050 $621 14.02%
BGSOREKESONFLAVORS.ING 7 am M5 Et1,229 p12 15,244 9B $14A46 UW $13.540 52,357 $16.690 U.019 13.80%
SPEEDYCRCUITS,FACK."M 1.152 Saw 0.40 $143 0.45 $215 $1,1e5 126 $1.037 §801 $in $IW Ujw 1d3 13.)8%
BURUNGTON ENGINEERING,INC. 0.809 $426 IN $9731 DAB 75 $1,974 S1,810 $4451 $1.173 $212 $1,030 UN 13.70%
AMERICANCIRCURTECHNOLOpYINC. 7.772 NW 22.31 $7008 211 $1.000 $13.506. $341 $13.165 $5.6751 0.523 $771 $10.9W SIAW 13.68%
KCAELECTRONICSINC. NAM E25, 1 13.14 $4.353112.04 $5.711 SMAW W.6261 $31.969 $26.6DI $6.2511 $4,401 S36,282 .313 .49%
SOUTH BAY CHROSM SALES 1A60 $1,0 $1841 0.37 17] SI.4U V133 $1.319 SM39I SMI $136 $1.487 Un 13.48%
ACCURATE COiCUR ENGINEERING 1.108 M4 1 E3,159 $e] f3,W2 SBOS $21356 S332 $3.00 MW 13ZM
NOR-CAL BEVERAGE CO.INC. WUN .127 E32.290 35338 SIII.VQ 8138 ,834 $IMAW ,0W fiW,MB Masi S136A29 $22,065 Sim.17d $M.M 13.0%
CLEUGH-FROZEN FOODS,WC. ams IS= 1W.W $33,7E7 10.04 $QB44 WM_ 8389 $U,431 $6351 $4Q796 $5.351 SUASi $8A2r 12.86%
DERM COSMETICS LABS WC. 0.791 $512 77.32 $24,493 1210 ,741 $30,748 $179 ,688 S534 W9.544 MAN SX6U Am 1287%
INDUSTRIAL METAL RUSHING,ING. 250 Inn 1.30 Bell ON 141 E]34 $703 Sim $495 Sim $W 12.86%
TAG WEST.INC. 11A21 E7.925 74.W S23, 6. 3,2W ,944 $34.90d SS.2W 820.W1 E2A17 .W%
ARTISTIC PLATING S METAL FINISHING N 7.70 $5.445 2.50 1,2 S1,4S5 $745 58,740 85.83 E857 $958 $7,= 12.73%
FULLERTON CULTURED SPECIALRES AM $21.416 023.16 5107,4W 9941 $42A71 $281,351 g1,022 $2W,329 S22.40 $238,117 S32,M1 $23341 S 1 .W%
REMEDYENVIRONMEWALSERVK;ES A61 $W7 2aW W, 3 1 $1.810 $11,817 so $11817 51,009 Slams $1,3W fI3AW AW 12A2%
CRrrEHION MACHINE WORKS 736 015 Qd2 $ AO $3SI $11029 5148 W7B E537 Sim 11 12A9%
ALLOY WE CASTING CO. 1 3.1511 WABD 5. 1,W5 2,971 $1,Qs 288 Van W / 300 E2032 1.OW i9 d18 12.60%
(1)Utilizing FIOW Data from FY 05-06
(2)-Tax Credits based on Taxes paid in IFY 06-06
(3)-Per Million Gallons
(4)Per Thousand Pounds
Fbul Year 0"?Act. CS UMar Cost Sevicidl Est.FY 07-0B Che Un4er NelCwlo/3srvI. t
ILOh18e M C6cmn Bad ChE BW TSSCIame gion Iss "I"or5R R.a BM ISS-O BSIP.9®LL VYRP,fIBr- OverPl15!
SOUTH COAST IRCU M 3271 $2280 11b0 53158 1.1 S549 i8.530 $2388 E1,533 5423 $7 74 1241%
EXCELLO CIRCUITS MANUFACTURING CO 3.999 $2 2.99 $047 024 $112 $3,858 $182 MB $2.620 1142 E08 MASS S452 12.23%
JOHN A.THOMAS 0.103 $17,573 1027 $44434 152E 57.252 S89.258 $0 $029 50329 W,60 $5588 M515 68.257 11.92%
BOEING COMPANY-BLDG 271 2.356 E1,849 3.65 $1157 3.83 $1.721 $4.528 $554 973 St Kim E1,926 $4W 5489 11.8056
HAWKINDUSTRIALU78FORIA 5.087 E3561 43.77 513 a.80 S320 $20.673 $121 SZ0M 53714 516.725 52 B61 389 11.63%
VEG FRESH FARMS LLC 4.799 83360 M.BB E12886 B.BO E3282 $19 $10 f19,355 604 $155W E2 T M.M no 11.52%
_ CHROME TECH i2 1.7g9 $1280 17.30 $5,480 am $1,548 SUN $1 180 S1314 58811 St,t&9 $9117 Par 11.48%
SRASSTECH INC. 2281 $1 N 2A4 $774 2.44 51.159 0.530 am 137 1B86 E933 E03 UAW 5355 11.33%
0.C.ALPHANEIICS INC. 7" 85 501 11.90 $3770 0.91 E433 59]04 $181 $9.550 S5 738 E4 7 $313 510.019 1009 11.19%
PACIFIC OCEAN DYEING AND FINISHING 147" $103311 10559 533,4411 BZ.88 02,742 $166581 $12 1 1 $107 21 SM 7 $22.918 SITI, 8 $1 so 10.89%
ALSTYLE APPAREL-ABM INC. 426.029 f298 160.]9 E521852 M." 31084M E928 0 $4114 S924212 5311074 5529 7 SM591 1023872 90 10.]0%
TROT ELECTRONICS INC. 1.824 $1 A2 $1082 am "at $211 $113 697 E1332 SUN $347 f29as am 10.88%
LOS ALAMITOS MEDICAL CENTER.INC. 1 $13,54] 58 512781 May $19.10 WAM SMOM 5141 $16417 sU.752 mill 10.64%
THCO.C.INCDBAKINDREDHOSMALW &175 W= 10.79 0418 10.79 55120 $12181 $1.440 $10,712 1077E $4,123 53,BM f11&7 f1134 10.59%
CANBROMANUFACTURING SAM R 7,o 52381 To 537 $SM1 5991 "Am 2610 $2,W 52725 $8194 5775 10.4%
STEINER CORP.DM ALSCO a " E14575 171.15 554M7 S8.70 17414 06196 $1,023 585,173 $14BB4 86&527 $13419 $ "I 50 0 10.41%
SUNNYDELIGHTBEVERAGES 32.882 WAS4 20O.M S6301 4L39 20.114 $108,459 $1.321 III NI $23849 $78,573 $15489 SIA 1 $1 703 lam
CUSTOM ENAMELERS INC. 1.751 E1216 CLW S190 0.75 5353 51,770 5152 1618 Et M 8230 SM $1 TBI $IN 10.07%
D UARDA HORE RE 53,744 2157 58833 4.74 E22M $12,826 SBI4 $1 01 0242 51.]93 f13.880 f1250 9.87%
Vol9.
50UTH COAST WATER 2.140 1496 0.15 $47 0.15 $71 1616 588 f1528 $1563 557 E54 if 4 $10 9.56%
RICOH ELECTRONICS 92 1587 1,3W T.75 52,456 ]59 $3.504 57260 414 $I m 52962 52 m0 67 6 t104 9.45%
H.B.OIL OPERATIONS TRUST 1.027 $719 0. 3 0.81 5288 E1501 f1 12 $750 ST22 $1 113
PEPSICOLABOTTLINGGROUP 2&01 $17816 MN E249455 191.51 $90871 S3581M $1685 53 Q9 $185M E30U,903 370,a23 509 031 am
PULMUONE USA.INC. 1&829 .BBl 117.32 WTU8 35.0 $16839 S63170 $1.01 tEe E10 906 QUM $van in 9.1.
STAINLESS MICROFOLISH,INC. 2307 $1.615 0.89 5283 O.M 5204 $2,101 $101 001 $1 341 $167 $2182 In 9.0%
RIGIMEXTECHNOLOGY,INC. am SM3 am S79 0.0 $253 5a38 Sag 5043 $an $195 SBN S7B 9.OT%
POWOERCUAT SERVICES INC.02 0.203 S1M 0.19 $61 0.19 $90 S284 E28 SSW $1M $74 360 SIBS W 9.05%
CHROME TECH,INC. 4.784 $331B im $600 1.09 $517 $4458 E290 230 $3.493 5724 Sm's 34819 i3B0 8.BB%
CCDAWATERS L.L.C. 14.130 SDSg1 1.94 $B15 2.51 S11B2 $11888 most $11002 $10217 $741 wig 511977 075 am%
DARLING INTERNATIONAL INC. &402 382 16.15 $5.115 3.88 $1,841 $&337 $31 $9 7 $2.404 win S1418 $f0013 O98 &0%
UWMC HOSPITAL CARPORATION am 522771 67.82 E21484 67A2 $321B0 $70435 $)T0 S00S68 W751 525914 S24797 574 774 &41%
PETROPR¢E 0.315 =I 0.00 SO am $0 E221 6B U12 E230 50 M $230 10 am
CONTINUWSCOATINGCOR TION Mon $7388 OA7 $275 1.37 $651 S8,M S42B 5700 $7 5331 ESOP $8516
DATAELECTRONICSERWCE8INC. &NIO $3 3.38 $1,0f9 0.82 was 541655 A5 E3.M2 51 f227 $49/9 f374 8.18%
AOUAC NCOMPANY 0.533 SW 0.07 w 02B $139 $80E SSW 802 "a $107 f595 as 8.15%
UNITEDCIRCUITTECIINOLOGYINC. 050 E981 0.0 $156 0.47 Vie $T71 Eat $710 $407 $IN Mn ABBfl$w=
8.14%
AMETFJ(AEROSPACE INC. 1.354 00 2.82 M 252 $1339 $3182 $313 $280 $BBB $1,U79 1 $31006.05%
PLATINUN CIRCURS,INC. 0.290 $161 0.61 E194 0.1E 1 V15 $0 "is Sim 523E 547 SW 789%STREMICKS HER RAGE FOODS LLC 51.5M W.0]6 160.11 500713 453.88 $215257 $76300 $4,299 $758757 $59,534 6591918 185 72 581732g 7.72%STATEKCORPOMTK)N4.g71 890 14A0 54551 5.80 $2753 E10 5908 808 $3.118 NMI 121 5f0741 7.0%SAHMINACOWORATIDN REOHILL it.20 $7.672 4.3E $1371 1.14 $5-2 $B7B5 $209 58576 S&211 E1859 E4Is S107.38%CAPROOILCOMPANY 1.021 $13M 0.00 SO 0.00 SO $1.3Q E38 St W $1,403 SO St 7.37%PIONEERCIRCUITS 8.809 fB.BB6 10.14 83,212 1.01 E1902 811 BBO 53% 51184E 37162W,874 1405 S1 1 ].35%E FT FAST OUAIITY SERWCE INC. &333f2328 21B E684 am EM) 427 $93 333 52428 6837 313 535T7 ].30%GEORUEA.JONES,IMPERIAL R WELL 1.01 $110 0.18 $57 0.2E $111 $1,331 $54 $1 Et 13 EBB 586 SI,w 7.08%SPEEDY CIRCU115,DN.OF PJCTECH. INC 1.776 $1240 &IS $1317 1.01 S01 E&OM 20 $1 51 59m f3 7.07%MANKLAND MANUFACTURING INC. 18.BB3 f11895 4.53 $1435 3.51 $1864 514984 SS43 51d 1 $1207 $1731 $1 $13 20 6.71%TIODEE COMPANY,INC. 2b79 i18&5 0.49 SIM 0.8E $29] 256 $101 lm E1 B83 E188 522a $22911 6.0%MUMMLIA CIRCU INC. 1.466 $1,0M 0.0 $153 0.92 $101 E123 $1,5U9 E1085 $184 $338 51,607 0.51%DEANFOOGSCO.OFCAINC. ILK 38990 $27294 W9a0 $161534 170.98 MIS 5269,90 $1510 $28B T $2840 $194848 $62,507 SUSAN 6.4B%JAZ25EMICONDUCTOR 2 959 S1B54]9 21.39 88 2121.38 $10,15D 820 406 8 it 837 SIM 465 174 VA22 5209 1 6.41%PERFORMANCE MACHINE INC. OM 2.4 )Bt 1.22 R 1)B7 1734 1 6.38%
(1)Utilizing Flow Data from FY 0"6
(2)-Tax Credits based on Taxes paid In FY 06-06 _
(3)-Per Million Gallons
(4)Per Thousand Pounds
Fi�lYur UNef L p418C MarNM Coul ai SOMca1
Vdume Flewm,me 1gw Icy $per TSS Llarae ( ( $�1Q j$�f,� eN tGermL tmm Poor Qr9LE99L
ME 4 .1 3
O 0 55 ] ] 4p ,210 8. %
STRIP CLEAN COMPANY 1.W2 $130 0.01 54 0.01 S5 S140 Et5 p2N $181 S5 $5 flit $IB 8.32%
VICTORY CIRCURS INC, 0.166 $116 0.m $83 0.07 E232 W f232 $121 SIM US f248 $15 52B%
HEALTH CARE APPAREL SERVICES 13.443 $9.410 11.08 93,510 624 E15.880 p$3)1 $BA15 $4234 E2281 $I&= 5959 6.24%
STAR PAINDNG B R FINISHING 1.N] sills 0.14 $44 ET9$ T785 M5 S53 N $834 fN 5.23%
DaSCUSTOMPIATWGINC. 0.)81 E533 0.41 $129 10 Use $45 $810 3558 E1B8 5149 SB80 Wo elf%
WEYERHAEUSER COW 10.882 p,484 45.]5 $15,N1 ,250 .195 $),151 p9, $1,185 S/B,825 $25,B22 $67. 020 6.18%
SOUTH COAST CIRCURS pd 3.8N 2,]IIB 070 $239 0.9N $1N p,114 f$ $2,a23 $2BB $12B "I 1p d11%
AERA ENERGY LLC 2TA51 s1B.M 9.70 $3,074 1. $5p E22A46 E0 p2,N45 $19,751 am S414 $23.Bi3 SIAN 5A8%
ALCOA GLOBAL FASTENERS.INC. 25.754 1SM 23.02 E7.5T1 20. MASI $1,818 4E1542 16AB5 ,140 sTw $35,40 $1A1$ S.T2%
WORLD WASTETECNNOLOGIES.INC. 1.687 $1.151 19.71 Se244 6.73 $3.IN $10,619 $0 10.610 $1,292 i3p E2.481 ft1225 5808 e10%
CHROMA SYSTEMS PARTNERS 128.885 $88,523 119.53 $3),BN 57.62 52T294 $IN= $ROBS $1N0 1 $ AN1 en $211032 $10,351 MAIN e81%
DEAN FCONCO.OFCAING ICEC 15.116 $11,013 292.88 W2.]TB 109.2T EN1A45 $1%.5N $92B $0,]]i ittbl9 E111,910 $98,951 $183380 aA43 SSB%
ACTIVE PUTING ING 4.698 SR2B9 2.94 $931 0.13 S316 $4A8 $0 f4AN $3.431 $1,123 EZpV$2y/ 55T%VAN LAW FOOD PRODUCTS,INC. 8221 $5,155 B32.M S263A44 MM 141.nS $411.1M WS7 $410,S9r sollm 15.018 $10924802 S.SE%RIGID FLEX INTERNATIONAL 0.199 SIM 0.30 $94A
$45 WTe SO Me $145 $113 S35p$ 6A1%EL NII FOODS INC 3.469 $24W 96.56 E3e58] E ,1N $50.813 $3T5 $50A3B S2AN3 E36A93 1e]15fm 538%WINONICS SREI, 2N.6Tr $11A15 4.34 $1,3)5 $2,454 S21A03 $09 $2y1 SIST4B $1ANB S1A81im 5.3610ANAHEIM PLATNG a POLOIHINI ING 3.235 $2265 1.29 E110 $01 $32D5 $106 Al $2362 m E4W538%SMMIM CORPORATIONAIRWAY 16.518 $11,553 3.00 S950 $1.40 $13ABT 53m $13.031 $12A81 $1.10 11N528%BRIDGFORD FOODS CORPDMT N B.Bp $4.58] 28.56 $9.0]1 .80 $21,]92 E825 E5AT6 pOA495.28%POWOERCOATSEWICES.INC.01 0.618 $433 03] $118in 5151 E143 1145.MDSWATEKSCFAMERN:A,LP 38.41E 526,BB3 ).91 p,110S1,B85 E30,980 13 ,0l8 S28ABI 5290] 1.233 'AN SAMCAL-AURUM MUSTRIES MC. 14AR $BATS 0. E10,988 f10.itB $19,2BT San Nfr SAMMIRRYS D &WASH INC. 19848 1 ]95 .w- 183 14.34T ElBB 4.0%WINONICS.INC. 11.N1 p,ip 3.T1 SIAM10A54 10,0p A34 1,4119S 6.95%ELECTRONIC PRECISION SIECWL IN STAT4 O.R $IRS ),B4) 101 p ETAI d.B3%
PRECON,INC. .4p8 E285 1.35 Will I.= p, 5298 651T $1.7OJ 431 IB4%NOLLAC OIL CO $ , .tT $55IM 1,242 pA18 $1.133 $as 51,2I1
T T M TECHNOLOGIES 01 39Al2 $27,212 M.19 $S N 9.17 $4,350 ,148 MAN .SIR ET,914 &M $39,SB0
COASTLINE NSHINGCO 11 ,OBO 1.Y $4W .1 91.4N 67.054 Wis S5,728 $5,309 WQZ $I.IW $7,M 014 4A856
SUPERIOR PlAT04G 1.8,15 $1.2B2 1.41 1,W1 1,89f g1,34] E195 N1 $90 4.51%
MERRY X-KAY 306 14 130 1 $21 f4t0 $221 $10S $100 f42B pe 4.4916
AIR INDUSTRIES COMPAW,APCC TAW MAKU 1].1 114 $18.BIT p.BOB f15A31 $5,140 12 S8.252 $16,005 $570 431%
SRINDI E HOMILS .l 102 ON 50 102 SO 192 $1% p9i N 431%
COPPER CLAD MULMUWR PROD T 55,288 03B slea S5.730 so $5,730 $5.495 i $141 $5,9)5 $Us 4239l6
CRY OF TUSTN,WATER SERVICE(Will S . 2.))4 SI.M OA2 so 1,951 so sll-w O.-M i E1 f2,038 $03 4.23%
THEWATERMAN SAN S4,121 0.19 SOD 0.18 ,211 S9 f$281 $4298 E73 $89 K440 $179 4.1996
PIACENMIINDA HOSPMAL,ING 12.857 SSAW MW 88.350 NM fIXI MAIO p242 E10 pA49 M.974 111114 I,Im
SCIENTIFIC SPRAY FINISHES.INC. 0389 Sm OAS $182 024 Ili 7g w 5281 588 $07 $24. UM
IWINE RANCH WATER DISTRICT4 M 19.680 SIMAW 1.M 5581 3.67 $1,741 $lW.M $IwAz2 $IW,S30 E $1 1 $192,W$ $ .30 4.06%
OMNIMETA PN1SHING.01C. 10202 ST142 1.17 Sp0 1.74 339 1p $B $T,44B ) p,613 ff11 %
PERFORMANCE POWDER,INC. CAR $454 1.10 $846 . 1.092 $1. 3505 $420 5189 f1AeN $N 4.OM
USDF MASS SINVOR N1.51 $10,NO2 110 T 22B ),)35 8 S1HAN E92.280 p0248 f2)1,p$ MAN 3.89%
MARCELELECTRONICSIWERNATONILL 34A09 p4,436 3B all ] 585 1.944 $31,718 82I $LT30 $2, $32,982 $1,181 3.99%
CITYOFANAHEIM-PUBLICUTILITIESD 7.915 SRb11 OB 0 IN Are f9Aib $5.Ti8 p$ p1 $095 f2m $BB%
P C A INDUSTRIES,LLC 1204 $14843 A 1 p,3p 2 1,319 $1)b28 pmm S1e452 ell 048 E . 1 f10.1p 3A4%
WGROSEMI INTEGRATED PRODUCTS 48.1N $32314 1.10 $34 I'm ,ON 181 f30. $33,108 E4Is E $35220 $1,2W 3.82%
ELECTRON PLATING III INC 1318 $1,083 ]i 522N 1 63 2.091 1p pA99 f1,108 #11 f1,9B0 pt 3.7%
ALUMINUM PRECISION PROWCTS ING43 9A99 p.121 ]4 51,184 2lN 51,303 $4,610 $132 NA 52,215 $1,428 Et f4,67 ft'a 3.T6%
IONSBURSKY BROTHERS SUPPLY 1AIR 51.112 1.05 S333 . 1 $521 E1,912 p6 f/A' 51.1W $I'm 1 3.74%
FROZSUN FOODS ING 153N 810,TSB Me 0 5418 E11,486 $0 sli $11= E338 S322 $11AH p2N 3.719
E..INC.03 ,m 353 1.N 19 5590 $4,557 $32 M S3.4N p40 5455 8Bt tN
(1)UOlizing FLOW Data from FY 05-06
(2)-Tax Credits based on Taxes paid In FY 05-06
(3).Per Million Gallons
(4)Per Thousand Pounds
Fiscal Yaw,Da07 Actual Ghana"ume, E .FYOT-0 Cne Un54r NM C0aI&Bank 1
3/W90n1- Fxrx CMMD Igw Cmag, I➢ag TSSCIN, Sual, I$$ NMP-$®LL R, 4n BM TSS® MaLPannit from PHor OIeLPdor
ASTECHENGM IS DPRODUCTS INC. 11.1 X 7 2.02 $639 2.38 $1120 $9.554 $137 $941] $8131 sm Saw $9,]81 $347 3.09%
PRECISION CIRCUITS WEST INC. D.BN 0.33 SIDE 0.17 $79 We $0 $BBB $501 Im 501 f8113 Z• 3.15 %
LA PALMA INTERCOMMUNITY HOSPITAL 11AN E8327 24.80 $7.857 24.80 S11368 $27852 $1, 92 2B2 SB.686 59477 SOMM8 f27."I 3.57%
NELCOPRODUCTS.INC. 10A57 $7.390 5" S1848 520 468 ST.5N S900 $11,206 E770B JIM S1.903 $11599 W$ 3.49%
AN MIL ENT.DBA DANOO METAL SURFACI B.T43 $4713 1.38 S138 2.73 $I.M saw $219 $ 5 SSW 8 M 15 3.45%
LAM PLATE TECH,INC. 0A11 $427 ON $17 OAS 25 Ing SO SUB S20 Sig SUS 16 3.d3%
_ CT'OFTUSMNWATERSERVICE 17)H$T. B5.0119 $BB SOB 0.02 $0 4.77 52205 $68780 SO $68790 $60.3 ) 1745 $71125 3.41%
MEDTRONICHEARTVALVES INC. line $7338 34.34 $10 77 2039 $9.6M $37539 E559 W 0 S7852 19121 ET417 $palm 10 3.N%
MANUFACTURED PACKAGING PRO DUCTS OASS $459 2M S840 0.94 S"5 51,543 SO $1513 "M 5772 3341 51593 50 3.23%
CARTEL ELECTRONICS.INC. 5268 S36R 2.71 1.51 $731 SS270 S5Xo f3837 1 T f5 Is a1B%
KRYLERCORPORATIDN 2.358 VASI 02B $57 0.26 E1N $1,81311 to 51 M $I'M 105 6101 $1927 fSB 3.18%
IIARTWELL CORPORATION 2 1 5.13 $1,= 5.13 496 S5]66 19 S $1.798 51992 1 " fS07 5170 SID%
ANGELICA TEKIILE SERVICES M A W.M WAS 10 31.09 14751 SBD,57i M 0m $51089 BOB it ) N 774 111 309%
CIRTECH INC. 7.874 $5512 7AB $2.405 546 $2 B3B $10,60 $170 $10,475 55.150 $3010 S2033 510.792 9317 3.02%
PACIFIC IMAGE TECHNOLOGY INC. 0.434 =4 0.07 E22 0A7 $33 Bass 50 aw $317 so US Sam Sioll 2,81%
OAE SHIN USA INC. 220 2 SiN/80 135.97 5430T1 95.TB ,M2 E2d2714 St $N1 $160B29 $51955 S3S024 $]A1608 2.83%
SOUIHCOAST CIRCUUSINC. 1.11 S7s1 on 5121 a" E139 $101 $1051 W25 Sim $107 Stairs f2fI 2.60%
MARK OPTICS INC. 0.581 S392 0.38 $124 OM $395 P12 570 $542 S409 5150 E30S SM 4 $221 2.55%
PACIFIC OVART2,INC. --FIN $790 1.13 $359 124 5500 $173B E70 $I888 $624 S433 E454 $1Tt1 2.54%
CLASSIC PLATING INC. 2.2M $1 571 am =5 0.70 $334 $2 10 SO $2210 $1.638 SWO 7 $2 $54 2M%
ORANGE COUNTY PLATING CO..MC. 3.615 52 WI 1.83 =5 0.97 $461 $3318 $10 53A07 $2,640 5392 5355 3B8 $50 242%
GUMKERS ATHLETIC SERVICE 1.950 $1385 120 WSI 1.01 S478 $2224 $23 1 $1424 S400 Sam 252 $51 2.559
DYNAMIC DETAILS INC. 51.576 S38105 18.53 S58B9 15M S72]0 us,243 $30 14 $37.659 $7060 $5602 $503M 1127 2.20%
A S R POWDER COATING INC. 0.641 E449 025 0 am $95 E924 SO SS24 $488 $97 $73 MISS 14 224%
DON MIGUEL ME)OCAN FOODS I . 17.N4 S11931 172.50 W.M. no? 54] S109.121 $321 $108000 $12.445 $65912 $32.705 $1111M
IDEAL UNIFORM RENTAL SERVICE 6A22 S4215 8.08 $2A54 4M 291 S%Oei so $B oat S4 ) S3 N1 $1,768 So 244 $18E 2DM
IACEY CUSTOM LINENS 1.685 E1185 0.0 $151 1.01 1 $in $83 $17M 41,215 SIR Sam $1769 SM 1A
HO60N METAL FINISHING 20.732 $14513 1.52 Salt 4.02 1W8 $16. 03 S43 $1 am $15139 $6BI $1 771 $17In 0 1.95%
TTMTECKNOLOGIESINC. 17.232 $12063 3.75 $1.187 4.39 2083 515233 $0 51 ]33 $12502 101? E1,505 $15619 B 1.87%
EMBEE INC.51 6,470 S45N 0.0 $198 1.55 S736 S5.484 S32 i M2 $,Ln4 $139 3567 $5531 59s 1.82ta
WESTERN YARN DYEING INC. 2975 =,M 46.85 $14.841 30.97 $14.697 552.622 $283 W30 $24 On E17,902 E11 ]O4 1.81%
DUALITYALUMINUM FORGE" 0.070 NIB 1.14 $362 On S340 $1,318 EO $1316 5"2 $07 S282 51M1 $23 1.77%
ROADRUNNER CIRCUR TECHNOLOGIES.IN D.508 5355 D.OB $30 0.13 $59 $dM 5444 71 E30 5452 so 1.76%
BLACK OXIDE INDUSTRIES INC. 4.279 U, 0.47 $14B t" 5683 S3.826 Sao S3768 E3134 178 E52) p 581 1.82%
IA HABRA PLATING CO.INC. 1,282 Saw 0.18 2 0.43 $208 $1,155 $15 $1 In fB38 $62 $150 $1157 i17 1.0%
FRESH FOOD CONCEPTS 11.79E 257 91.0 S290]4 W28 $23899 $61140 $0 $611M SI 13 10 $IBM 562,0119 86 1.42%
TOYOTA MC4NGD LOPMEIT 2076 $1453 4.16 $1.317 4.15 Staff "m $180 "558 51.516 1 1516 "621 ISM
GOGLANIFN BAKERIES 7.317 SSAM 61.73 $19 42.52 $".17T $M,851 596E SN8m M $15 W 7S f369 1.34%
CALIFORNIASTATEUNIVERSITYATFULLE 107.147 $76006 Was $28 7 BTU $31.800 $135.1131 50 $13 113 $78 $34145 S2A,505 $136,885 f1772 1.91%
WEST ANAHEIM MEDICAL CENTER 23.271 SI&M 0.52 S15 70 M.52 $23.022 $5d682 $2.088 $52596 $18BB2 $18 9 $17,740 SSS2T2 507E 1.18%
ABGELECTROPOLISH 3.557 5380 DOT $22 0.14 $67 $479 $0 $479 $ 07 US, M2 "85 $6 1.21%
SHEMIN D.YOELIN BLUE LAKE ENERGY L Din i95 O.OB $18 ON $27 $140 SO $in in 22 521 $142 $2 1.18%
CWUMBINEASSOLIATES 0.137 S96 0.06 $19 ON $26 E143 SO $1M Sim E23 f22 S1M $2 1.18%
PRIME HEALTHCARE HB LLC 11230 $7 BBt 23.41 E7.417 29.41 E11.110 E28 5980 427 $8 $8,945 SB,5B1 f01 WIN) 1.10%
SEMICOA SEMILONDUCTORB 3.21E $2,251 9A1 948 0.88-SUN EB503 145 a56 $2 7 7 $2548
IKON POWDER COATING INC. 0286 Sam 0.69 f220 0.56 S207 S1.037 $0 $1037 $674 f2B5 E2N f1 N6 fB OSd%
EMAEE INC.92 15.508 S10855 4. $1435 Sim 52989 $15279 $=" $1 252 $11 $1.731 303 114 E5B NN 0.88%
ROTO-DIE COMPANY INC. 0.32E ml .17 S54 0.17 Sol Saw 50 S368 40 $65 $3611 i2 D.BBY.
BOEMGC PANYGENERAL FAC 45.808 S32 N7 89.42 $2B 324 114.23 S54201 $114592 $5930 1 681 S3347 $31165 "1760 51083K Sill
MESA CONSOLIDATED WATER DISTRICT 11.803 SB 2B2 6.60 $20BB 0.50 ".063 EI3.44 50 1 $9618 # 20 52376 NE 513 0O.SB%
THERMAL-VAC TECHNOLOGY INC. 2459 $1721 0.80 E252 1.N M93 $2.466 $0 Km $3N SW 10 $13 0.63%
WHEELSEWICESGROUP MC. 1.357 WO 0.97 E30B O.B9 $421 $1.878 $0 51819 EBB1 P71 $324 $1888 SO0."%
ANODYNE MC. 2999 2100 0.50 159 1.28 0 2B57 "I tro 182 61 843 12 D.41%
(1)Utilizing Flow Data from FY 05-06
(2)-Tax Credits based on Taxes paid in FY 05-06
(3)-Per Million Gallons
(4)Per Thousand Pounds
ur ChM"Under M of tF OTOec Mn nm d oM rvice
VMume Raw Clume I" SAEm4 IQW I.wGW[aB 25111 SH6 N%P3.11 EIM M M TSSM NMPemh *QM PriorWHIND FINISHING INC. 9YeLCDg
4 B , t $84,5ig $61.084 SMIM $802
PI30JATEx INDUSTMESINC. 7.947 $5,563 5.82 1 ,10 S11,B00 $355 5/1,251 SSM $2225 53.45 $11,20 $12 0.11%
WEIR N WATER CONDITION 8.132 SSBB3 0.21 7 ,181 S8,9d1 S11 f8,931 .938 1 SDt Sim 4n o.02%
ALUMINUM PRECIS PRODUCTS INC.DEN2. $1.710 Ulm I.W 1 $2,386 $0 1.180 E223 $3 f2366 -0.0/%
PICOFARAD INC. 1.000 7 0.89 190 1. 13 f1,554 1AB8 E770 E240 E072 i1,498 1 -0.OB%
MWNFOODPMMCTS,1 . Me $2.097 .1 51.30 ,301 352,7BB TIB 2.1BB 531,7B0 ) i T0E -0.12%
COOPER AND BRAIN INC. .0B3 1 5. ,I 3,4B8 E10.72B $709 022 -0. %
Cr1YOF NEWPORTBFACN,GENERALb 1 1,512 1.BB E537 TO 52A52 EO E1.5)/ SB47 IM1
CENTRAL POWDER G 0. 174 0.13 $42 E2B3 m $181 7 1 -0.M%
ACCURATE METAL FABRICATORS M. 3. 2.)30 3.T0 $1,200 1.751 5&a88 uI 52.853 $1, 7 1,980 -0.B114
WERTNEWPORr OIL P u. AS 40.90 $14.07 4L 1,223 $06,530 ,6E0 531,702 17.9 ,ERA W -0.74%
IRVINE SENSORS C 0 0.J2 $100 0. Sim $w 2 w i1.81%
LINGO INDUSTRIES INC. 1.82 012 $3,404 SBI I= tT 920 427 -0AM
SOUTH COAST OIL CO. .512 .12 Dv t 5523 fa E971 T 46 -1.18%
POWDERCOAT bERVICES.INC.p4 0. 183 0.34 $1 In Sin $0 Inn SIM $11S 1$
CULLIGAN WATER CONDITIONING 1 11.763 .30 $11 IN $15.034 WO 1 St ,432 1 •1.M
DRSSENSORS&TARGETING SYSTEMS.INC 1,745 2.B3 $ 1381 E4,DBsSi 51,1 ton 013 -128%
TAYCO ENGINEERING INC. . 55 2B 1.74 $MI $1,769 ,769 1M -1AM
SHREEJI PLATING&COATING INC. .re S20 Si" SO /M E3B T 1 .1419
eOEING COMPANY GNARAM . 26 1.41 .15 S740 1163 13A28 1 $3,270 -1A8%
CYTEC ENGINEERED MATERMLS WC. S f67 .13 $41 0.1 E1T0 170 ftBT -1.84%
OUALIIY ALUMINUM FORGE Y3 .T41 $519 .St S101 0.67 10 1 E1B4 f016 1T -t.7m6
MORAVEK BIOCIIEMICAIA INC. 0.128 .2B $83 0.28 IN 2B4 5100 f298 -1.81%
RTI ELECTRONICS. C. .486 E93B 1.01 5320 1. 1 7B 1.138 f3B0 $" E110B 421 -1.87%
MILL INDUSTRIES .N 772 $247 $230 $79 16 -1.91%
DLSNEYLAND RESORT- 174. 621.13 SISSON MIS 4 , 1 7d18 ,521 $.5MLIff 1 1 19B.12d S180A41 $572,166 1 MI -1.BB%
ULTRAFURE METAL FWISNPIG,I 4A40 $3.184 11 Ee7 3.40 1.010 ,BBS 12S $4,)41 f:fA21 Set 51,244 Egos -1.80%
ST..IOSEPM HOSPITAL 42.BW M.031 89.45 520.3 80.45 441 100.11M E100,5T1 1,324 E34,17T .104 $8%MS 4.35%
CHAPMAN MEDICAL CENTER AM S4,216 12.78 $4,052 ,070 14A1 10 $14,398 $4,480 ,077 S14.006 Q.4B%
FOAMEx L.P. .02 S1,2B3 3.63 $1,1S0 1.7 ,1 SI,160 $1,338 1387 1.371 KOM -260%
M T S MICRO EcT N .13 141 141 EIS $137 -2.50%
THOMPSON ENERGY RC 1. 1 S1,P82 0.90 71 1, 2 $1,782 $1.331 T $1.747 -2.51%
SOUTHERN CLLIFO 6 26 515-M 5. 1, .474 ,931 MMI 1, 1.906 56M 4b
CAL-TRONICS CIRCUIT 0. T Q 2 132 $In $43 S12B .57%
PRO WHEELS POLISHING 0.12 7 0.1 132 IM 1 129 .57%
RENAL RESEARCH I UT , 1 1 4 1 .%) ,SBA E1A19 1, 419 1B 4.58%
ORES NATIONAL DIGITAL MED 1. B 1 ,200 ,988 1A33 1.484 1.301 )
UCI MEDICAL CENTER SI.66T w.- 14 11 1 137.338 4" ,670 SIB. S I SB%
TUSTIN HOSPITAL AND MEDICAL CENTER 4AM $3,100 9M 2A 933 1 1o,408 AN ,233 Sa628 .3T8 -2.68%
MISERPERMAN MEOICALCENTER 2 .. E18 4 M 1S,019 49Y9 ,38) SSS.W $17181 51B,B33 S10022 $60.116 BASE -2AB%
HOAG MEMORIAL HOSPRAL PRESBYTERN M. 143. ,519 143.08 ,1n 1B1.B25 181,923 S50,316 $54,890 E52. 157,)7 T 4.
FAIRVIEW DEVELOPMEMAL CENTER . 1 ) 112.81 112A1 ,434 12&B15 916 $39.47 Ed3,D2B Ed1,1T6 ft 041 .58%
S .JUDE MEDICAL CENTER 12.175 $I.M a.m 7 1 ,019 SB.32B 510,178 SB, ,2M 4 4. %
ANAHEIM MEMORIAL MEDICAL CENTER KISS $21 AB9 .99 E20A7B 84 ,525 Td.502 522,528 E24,5B1 $23.5 f70.632
CHILDRENS HOSPITALOFORANGE $B,580 28.58 M 13.559 .191 191 $10.001 $1 . 14 1 ,443 $31,E00
KYOCERATYCOMCORPORATION 1.3I8 U71 2.89 1 1.373 R80 $1,013 1.1 1 $3.178 -2AI%
SMITHS AEROSPACE TM4 $1,053 3.14 SM4 3.14 UN 53,535 S1,D98 1.1 1,147 f3A44 491 -2A6%
SECHRISTINDUSTRIESANC. .533 $3l3 1.11 E362 1.11 2B 1,253 26 UM -2MI6
UOP LLC 0.230 i1e4 DAB 5135 2 71 1 7 1 E537 41d -2.5836
HITECHSOMER 0.040 332 0.10 0.10 f45 10] $1M 4E .2.58%
METROPOLITAN WATER DISTRI,;I OF SO.Q 1.BB0 $1,398 4.00 $1,ZBS1 4.121 $1.07150,021 1, 0193 410 .2.70%
GRANDE FOODS.A CALIFORNIACORP. 2.130 SI,4BI EBAO f11.850 um $15.mi MM2 U17 Ma IVII.VUUI $2T,519 41m 4.02%
JOINT FORCES TRAINING BASE.LOS ALAMH m.280 sm M18I $17,1"108A0 M.21151 573 So ST3 E25,018 7 fTO Bt$ 62/ 4.85%
(1)Ubll2ing Flow Date from FY 05-06
(2)-Tax Credits based on Taxes paid In FY 05-06
(3)-Per Milllon Gallons
(4)Per Thousand Pounds
FYuI Ye¢r OB-0)Adud C9a es UnOm Cwlof Bery 1 EaFY0T4SCMmo9UoIJwNd to Seml 1
Volume Flow Clams = Chime J4S1 TSS Glen � JM Nd Pe�m9 0m TSS-Q Ild Perm3 hem PHer Clot Pnor
J e H DEBURPoNG INC.i2 1.312 "is 2.86 SIM 3.74 St))5 33,800 526 674 056 St S1 ] p 1B 4155 d.32%
ALI METALS PROCESSING OF O.C.INC. 4461 M 1.98 $631 am 5400 $7.951 S307 $7.643 53 d20 S)el E3.113 5]285 45N .4W
ELTOROMEATSHOP 3.450 415 431 354 B)e9 1322 S]2.o12 E1 $TI 56 $2519 $34 1 1 2 Wa We -4Ta%
CT'OF TUSTIN-MAINTENANCE YARD 0.447 13 0.]e 1A8 $512 S1.071 $1.01 $32] EBB) 5995 $1019 69 AN%
CT'OF HUNTINGTW BEACH FEW DEP 2.e63 S1 1.09 $345 324 $1,530 P)0 0 70 SIM $416 $1,18e 53518 -0.38%
AflK OEBURPoNG ANDTUMBUNG 0.131 0.11 022 E102 $229 SO Me IN $42 $)8 3217 12 4.41%
TECHPLATE,INC. 0.05) E0 0.08 $27 0.14 EBB E133 N33 2 ESt $12$ 49 -0.0%
LBN UNIFORM SUPPLY CO.,INC. 14.728 10310 36.74 1163) 0 253)8 S4).325 $0 $47.325 S10,754 $14.036 519 S4430 919 4.29%
ORANGE COUNTY METAL PROCESSING 14.504 10153 2" Sale 1)SS $6325 S1940 353 18335 510,5901$22.M
56415 States 1 4.35%
HANLTON MATERIALS 3.W4 52719 12M 54011 IBM $9155 15865 $121 1 )81 $2,835 $].054 61412B O1S d56%
GKN AEROSPACE TRANSPARENCY SYSTE m.6W $13158 4b5 $1,413 0� NI 545 853 6 $14.30 .166 533 fe -).42%
IDEAL ANOOMNG INC. 6.325 S4 de 0.72 S22T li m $5,50 $10203 $9821 54619 ]5 10
KIMBERLYL WWORLDWIDE,INC. 425.820 E288 ) 4472e $141,6841266A8 $601,80 Simi 3112T9 i4 372 $310921 5463)93 $145613
PRECISION ANODIZING AND PLATING INC. 12.927 900 223 sm 2e.44 $12W M.300 S994 $219So S%`IW 9667 SI%WT ON e.139
SANTANA SERVICES 0.317 $222 0.03 $8 028 S416 See $1 $'1 $231 1 $582 M .10.88%
VILLA PARK ORCMMS ASSWIATKIN 3e83 $2,188 7.05 S22E3 19.T S1383 $14,403 S0 51 620D6 S] $1 831 4192 -10.91%
GERARD ROOFING TECHNOLOGIES,LLP San $25]4 421 S1,333 WA!I 514332 SI&V9 Sale 1t,41 52665 $11,044 $1 3E8 084 -11.0%
DUNWIMMETALPROCESSING 2228 31,5% 0.68 $216 &M S3206 U. $to $4A)0 $1625 $24TD lm 4914 -1235%
ALUMINUM FORGE-DW.OF ALUM PRECLSI 3.421 $2384 tat ]2 15.10 $7.162 $10.121 $174 SBam $2498 55.519 SS10) 41 -12.M%
CAUR CONSOLIDATED WATER PUPoFIGTI 13.016 0111061 $10 45aa $21e16 $31,120 ease $30,855 $9,504 $16.811 326,54T -13.98%
SERRANOWATEROISTRICT 0890 548) 0.02 S6 3.)6 $1.T62 S22]5 $0 S2 S $50 $1,3]3 S1,688 43B) -16.016
CRY OF ANAHEIM-WATER SERWCES &M2 $5)9) 0.11 M.M m $41T96 SO 541T98 SB ) $27,112 n 4]BM -19.13%
INTEC PRODUCTS,INC. 2.595 $1817 0.32 SID1 49.W S23.285 $0.212 $232 $ 960 $1,695 $IV 517,950 $1 e6] 4 014 -20.07%
GEMINI INDUSTPoESINC. 4017 S33]a 1.07 S30 101.58 $0,198 $51,910 $103 SSI... UZ17 5110 E3].140 Sees 1 ]d0 -20.)3%
LAMLIG4RINGSYSTEM.INC. 0.01 S321 022 $M On $339 W54 WT $0 iS96 Saw U61 $960 5850 WA
CARGILLINC. M371 O.T) $245 O.n sm $BTD $1.173 S0 $271 Sale S282 S848 WA
PATIO AND DOOR OUTLET INC, Mm 104 0.41 $131 0.41 $IN $521 $541 $0 Ea02 $157 $151 $511 511 WA
H.KOCM SSONS W. D.45 $112 021 $67 021 Slot S30 $514 S0 Inn Sal E)e 13311 $$$e WA
PARAMOUNT DISC NANUFACTURIN INC. 0.095 $67 020 $53 0.20 594 5223 $15736 so STB 3T2 S21] S217 WA
I I4. INE TECHNOLOGY INC. D.165 116 0.10 $31 ON $42 188 S226 5121 "1 E32 11B0 51Po WA
PACIFICUTILnYPRWUCTS INC. 0.089 SIR 111$ SSB 0.10 $47 Sim $1)9 $0 $65 EAO S36 I]0 $170 WA
DR.SMOOTHIE ENTERPRISES 0.042 S29 0.0 $28 ON $41 $0 64M SO S33 S32 3B5 IN WA
W VIDEOINC. 0.052 536 0.07 $21 ON 22B S0 0 536 325 120 $83 W WA
IMPERIAL PI.ATING 0.034 524 0.03 $B 0.03 S12 E44 202 0 S26 S10 E10 i44 WA
S fl C OR CORPORATION D0W $21 0.00 Po U.00 521 Stec 50 $22 SO EO $22 $22 WA
W.M.ELLIOTT 0.001 $1 om i0 U.OU 101 51 40 1 30 Sol $1 1 WA
Grano TaMl nmll. 8 a3 53.91 $1,11 .6 13.3
(1)UWizing FIOW Date from FY 05-06
(2)-Tax Credits based on Twos paid in FY 05-06
(3)-Per Million Gallons
(4)Per Thousand Pounds
t
ORANGE COUNTY SANITATION DISTRICT
2007 MARKETING SURVEY
EXCESS WORKERS' EXCESS LIABILITY PROPERTY
COMPENSATION COVERAGE COVERAGE
ACE Insurance Company ACE Insurance Company ACE/Westchester Specialty
ARCH Specialty Insurance Everest Insurance Animal Affiliated FM
CNA Genesis Gen Re Allianz
CSAC- Lexington Arch
Gray Insurance Company Market Berkshire- Hathaway
Liberty Mutual Munich American Risk Partners Munich Re Chubb Custom
Midwest Employers One Beacon Insurance Group CNA
NY Magic Scottsdale Insurance First State/Pacific
National Union Fin Insurance/American St. Paul/Travelers General Star
International Group AIG
Praetorian (U.S. Specialty) Great American Insurance Co.
Safety National Hartford Insurance
Zurich Insurance Insurance Company of the West
Lexington
Liberty Mutual
Lloyd's of London
One Beacon — Homeland
St. PauVFravelers
Swiss Re/ IRI
XL America
Zurich /Steadfast
Distributed at the
Administration Committee
U-//- c Meeting
• ORANGE COUNTY SANITATION DISTRICT(OCSD)
RENEWAL STRATEGY TIMELINE
2007
PROPERTY-BOILER&MACHINERY-JULY 1ST
January February March April May June Jul
LIABILITY-JULY 1 ST
January February March April May June July
EXCESS WORKERS'COMPENSATION-JULY 1S1
January February March Aril May Juuc July
WATERCRAFT-JULYIST
January February March April May June July
CRIME COVERAGE -APRIL 1 ST
January Februa March April May June Jnly
AD&D -JULY 1ST
January February March April May June July
POLLUTION LIABILITY- 3 YEAR POLICY TO EXPIRE JULY 1.200E
January February March April May June July
LEGEND I Renewal Strategy Meeting Presented to Committee
Applications to OCSD Quotes/Indications received Covemge Renewed-Binders Issuetl
Applications Returned to Alliant Preliminary Marketing Report Certificates Issued
Renewal Specifications to Market Proposal to OCSD
OCSD Admin. Committee
April 11. 2007
Prr7pnsed Budget Upd.le
FY 06-07 and FY 07-08
Proposed Budget Update
Orange County Saniation Distnct
Apni 11,"1
$141 million prey of the proposed 2007-08
Budget Is allocated to Operating Expenses.
Capital Implv7ement Prog, S Me M,uxl S 30S M a^1
0e01 service S ee M lnnl S SB M n2fi1
Operaling Ow% 5lee ML 1 $110 Man1
MmN1sl%%M Coe% S 25 M 1411 S 2611.
Cenl21 Ag.1 C S 5MIw S sMuv
Total Erpewftre6 $545M S51414
Operating costs are proposed to
Increase by S2.5 million D.mx
•eeP1r � rr,pew
irmm rr W. 01.ry
U..aM Bel file S75.9M $763M $04M
Ctamite1601Mr Syptiea 25.4 M.1 123)
Comranml Semcea 20.9 242 33
%,.,6 M.m.. 10.4 9.1 0M
Ueueea el 9.9 0.6
Re..11h6M 1.1 1.4 1.5 0A
OIMr Egre 9.7 10.1 0.4
Cost Me[a. (17.M (IBM 1.1
SuPTOMI S13S5 Pwo S25
Self mu—e 26 26 0.0
Tolel Opereling Eal—n SlMAM $1406M 525M
Distributed at the
Administration Committee
J'f—It-01 Meeting 1
OCSD Admin. Committee
AprII 11,2007
Proposed Budget Update
The majority of the expenditure changes
will occur In five expenditure categories:
proposed
change.
t. Chemicals S Other Supplies ($2.3)M
2. Solids&Waste Disposal $2.7 M
3. Repairs&Maintenance ($1.3)M
4. Utilities $0.8 M
5. Cost Allocation $1.1 M
While the cost of Chemicals has Increased,
process optimization has reduced usage.
f 'w P,.p...d Prop..w
FY 0748 Chong. FY 07-00
DIMMecgon $10.0 M ($1.0)M $9.0 M
Odor Control 6.6 (0.7) 5.9
Cosgulen% 6.3 (0.4) 5.9
Other Cheml Supplies 2.5 (0.2) 2.3
Total D .sricab/ $25.4 M ($2.3W $23.1 M
S.PPiies
Blosolids hauling and grit screening
costs rise as total solids Increase.
ad.1W Pr.poee4 Fopoau4
FY 07-08 Change FY 07-H
SOIMS Removal $13.4M $0.9M $14.3M
Residue)Solkls/Grit 0.6 1a 2.4
Darer Correct Services 6.9 0.6 7.5
Taal Cenlradual/ $20.9M $3.3M $24.2M
Proleulonal SeNices
2
OCSD Admin.Committee
April 11, 2007
Proposed Budget Update
Repairs and Maintenance remain constant.
However,some costs are reallocated.
Adapted pm" Ropo
FY 07-0e Ch ry "049
R&M-SWIMS $4.1M ($0.51M 83.8M
R&M-M04065 4.6 (0.6) 4.0
n&M-Older 1.7 (0.2) 1.6
Twel MGM $10A M ($1.3)M $9.1 M
The Utilities budget Is Increased,
as electricity and natural gas costs
continue to rise.
Adopted P 'p Ropooad
EleclrlcXy $6.4 M $0.8 M $7.0 M
NaWW Gas I 0.3 1.3
waler 13 (0.1) 1.4
ONer 0.2 OA 0.2
TMM Unites $9.1 M SIDE M $9.9 M
Coot Allocation
Less direct labor and materials will be allocated
to the CIP than previously anticipated.
Adopts Rmpoeed prepeeed
FY07-H C0an, FT 0149
Seledes ($8.0)M $0.5M ($7.5)M
Expenses ($9.3) 0.6 (aJ)
TOW Coss ($17.3)M $1.1 M ($162p$
A90ea6on
3
OCSD Admin. Committee
April 11,2007
Proposed Budget Update
Next Steps
♦ Revenue detail will be presented at the
May Administration Committee meeting
♦ Summary presentations to the June
Operations and Administration Committees
♦ Presentation and budget adoption at the
June Board meeting
4
OCSD Admin. Committee
April 11, 2007
Capiral/mprovemenr Program
Two-Year Budget Update
Capital Improvement
Program (CIP)
Apn12W7
Projected
User Rate Increases
•OEw Pmpcn
Cuttxit
pax
P acted
w wa w avte t>n un nu uu
wwr�
Projected CIP Budget
.+Curtent euEget
■Pen(spent)
ProlecteE
Future
szw
m v v IIeIY� �� A
Distributed at the
Administration Committee 1
L,y_tt-0'I Meeting
OCSO Admin. Committee
April 11,2007
Capital Improvement Program
Projected CIP Budget
s Mmo-u ..Cument Budget
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OCSD Admin.Committee
April 11,2007
Capital Improvement program
k
Consent Decree
Saconaary Standards
MlleetoneEsenl
1orl1 Coen Yard TIII In P ww Mee
I
Admin.Bid . ee UIIIIaOan
Proposed CIP Adjustments,
Delays and Deferrals
s
OCSD Admin.Committee
April 11,2007
Capital Improvement Pragmm
Growth Slower
Than Projected
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BetterBetter C�IR onln
Assesament Information
Power Reliability
Project Delayed
t
4
OCSD Admin. Committee
April 11,2007
Capital Improvement Program
f t::
Gas Flares at Plant No. 1
OS.Hd'. ction and Management
All
Lower Construction BIds
and Contingency Reduetlons.-
5
OCSD Admin.Committee
April 11, 2007
Capital 6rrprovement Program
Newly Proposed Projects
♦ Security upgrades
• Central generation cooling water system
♦ Research funding
♦ Los Alamitos sewer study
• Administrative office plan/relocations
Questions
I&
Orange County Sanitation District
www.ocsd.com
6
STATE OF CALIFORNIA)
) SS.
COUNTY OF ORANGE )
Pursuant to California Government Code Section 54954.2, 1 hereby certify that
the Notice and the Agenda for the Administration Committee meeting to be held on
April 11, 2007, was duly posted for public inspection in the main lobby of the District's
offices on April 5, 2007.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of April,
2007.
Cilia ov�s�CCle of the Board
Board of Directors
Orange County Sanitation District
H:\DEPnGMO%150%151\BS\FONMSIAGENDA CERTIFICATION-ADMIN.COMMITTEE.DOC
ORANGE COUNTY SANITATION DISTRICT
°2,11 NOTICE OF MEETING
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Wa6ae WEDNESDAY, APRIL 11, 2007 - 5:00 P.M.
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Mae DISTRICT'S ADMINISTRATIVE OFFICES
Aiuntlim 10844 ELLIS AVENUE
Eren FOUNTAIN VALLEY, CALIFORNIA 92708
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To maintain warldalass leadership m wastewater and water resource management.
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ADMINISTRATION COMMITTEE
MEETING DATES
Meeting Date Board Meeting Dates
April 11, 2007 April 25, 2007
May 9, 2007 May 23, 2007
June 13, 2007 June 27, 2007
July 11, 2007 *July 18, 2007
August — Dark August 22, 2007
September 12, 2007 September 26, 2007
October 10, 2007 October 24, 2007
November 14, 2007 November 28, 2007
December 12, 2007 *December 19, 2007
January 2008 — Dark January 23, 2008
February 13, 2008 February 27, 2008
March 12, 2008 March 26, 2008
April 9, 2008 April 23, 2008
*Meetings being held the third Wednesday of the month.
ROLL CALL
ADMINISTRATION COMMITTEE
Finance, Human Resources and Information Technology
Meeting Date: April 11, 2007 Time: 5:00 p.m.
Adjourn:
COMMITTEE MEMBERS (14)
Mark Waldman Chair
Phil Luebben ice Chair
Steven Choi
Bill Dalton
Jon Dumltru
Rich Freschi
Darryl Miller
Joy Neu ebauer
Chris Norb
Ken Parker
Sal Tina'ero
Jim Winder
James M. Ferryman Board Chair
Doug Davert Board Vice Chair
OTHERS
Brad H in, General Counsel
STAFF
Jim Ruth, General Manager
Nick Arhontes, Director of Operations
Bob Ghirelli, Assistant General Manager
Jim Herbs , Director of Engineering
Ed Tortes, Director of Technical Services
Lorenzo Tyner, Director of Finance and
Administrative Services
Lille Kovac, Committee Secretary
Bret Colson, Public Information Manager
Jeff Reed, Human Resources and Employee
Relations Manager
Mike White, Controller
c: Lenora Crane
Hidepr�agenda\CommMeasMmin Cc=Nee1 07\02. Roll Call.doc
AGENDA
REGULAR MEETING OF THE
ADMINISTRATION COMMITTEE
ORANGE COUNTY SANITATION DISTRICT
WEDNESDAY, APRIL 11 , 2007, AT 5:00 P.M.
ADMINISTRATIVE OFFICE
10844 Ellis Avenue
Fountain Valley, California 92708
www.ocsd.com
(1) DECLARATION OF QUORUM
(2) APPOINTMENT OF CHAIR PRO TEM IF NECESSARY
(3) PUBLIC COMMENTS
(4) REPORT OF COMMITTEE CHAIR
(5) REPORT OF GENERAL MANAGER
a. 2007/08 CIP Budget Update
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
(7) REPORT OF GENERAL COUNSEL
(8) CONSENT CALENDAR ITEMS
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same, as follows:
a. Approve minutes of the March 14, 2007 meeting of the Administration Committee.
END OF CONSENT CALENDAR
b. Consideration of items deleted from Consent Calendar, if any.
Book Page 1
April 11, 2007 Page 2
(9) ACTION ITEMS
a. ADM07-26 Recommend to the Board of Directors to: (1)Adopt Resolution No.
OCSD 07-_, Authorizing the Execution and Delivery by the District of an
Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement
and a Continuing Disclosure Agreement in connection with the execution
and delivery of Orange County Sanitation District Refunding Certificates of
Participation, Series 2007A, Authorizing the Execution and Delivery of such
Certificates Evidencing Principal in an Aggregate Amount of Not to Exceed
$315,000,000, Approving a Notice of Intention to Sell,Authorizing the
Distribution of an Official Notice Inviting Bids and an Official Statement in
Connection with the Offering and Sale of Such Certificates and Authorizing
the Execution of Necessary Documents and Certificates and Related
Actions.
(2)That the Orange County Sanitation District Financing Corporation adopt
Resolution No. FC-04,Authorizing the Execution and Delivery by the
Corporation of an Installment Purchase Agreement and a Trust Agreement
in connection with the execution and delivery of Orange County Sanitation
District Refunding Certificates of Participation, Series 2007A;Authorizing the
Execution and Delivery of such Certificates Evidencing Principal in an
Aggregate Amount of Not to Exceed $315,000,000 and; Authorizing the
Execution of Necessary Documents and Certificates and Related Actions.
(Book Page 10)
b. ADM07-27 Recommend to the Board of Directors to adopt Ordinance No. OCSD-32, An
Ordinance of the Board of Directors of Orange County Sanitation District
Establishing Sanitary Sewer Service Charges; Establishing Capital Facilities
Capacity Charges;Adopting Miscellaneous Charges and Fees Relating to
Industrial Charges, Source Control Pennittees and Wastehaulers, and
Repealing Ordinance No. OCSD-30B. (Book Page 112)
C. ADM07-28 Recommend to the Board of Directors to adopt Ordinance No. OCSD-33,
Adopting Fees, Revised Procedures and Policies Concerning Annexation of
Properties to the District and Repealing Ordinance No. OCSD-29. (Book Page 151)
(10) INFORMATIONAL ITEMS
a. ADM07-29 2006-07 and 2007-08 District Budget Update (Book Page 158)
b. ADM07-30 2007/08 Benefits Program Renewal Costs (Book Page 172)
C. ADM07-31 Property Tax Credit Adjustments for Class I and Class II Permits (Book Page 174)
Book Page 2
April 11, 2007 Page 3
(11) CLOSED SESSION
._--------.............................................................---`--_._...----.__..__...._..__..__.._......._._............._..........----------'—
During the course of conducting the business set forth on this agenda as a regular meeting of the Committee,
i the Chair may convene the Committee in closed session to consider matters or pending real estate negotiations,
pending or potential litigation,or personnel matters, pursuant to Government Code sections 54956.8, 54956.9,
54957 or 54957.6,as noted.
Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c)
employee actions or negotiations with employee representatives; or which are exempt from public disclosure
i under the California Public Records Act, may be reviewed by the Committee dudng a permitted closed session
and are not available for public inspection. At such time as final actions are taken by the Committee on any of
;_these subjects,the.minules will reflect all requiretl disclosures of Information.
A. Convene in closed session.
1. Conference with designated representatives Jim Ruth, General Manager; Lorenzo
Tyner, Director of Finance and Administrative Services; Jeff Reed, Human
Resources and Employee Relations Manager; and Paul Loehr, Human Resources
Supervisor, re Meet and Confer Update re contract negotiations for employees
represented by 1). Orange County Employees Association; 2). International Union
of Operating Engineers, Local 501, and 3). Supervisors, Professional Management
Team (part of Peace Officers Council of California) (Government Code Section
54957(b)(1).
B. Reconvene in regular session.
C. Consideration of action, if any, on matters considered in closed session.
(12) OTHER BUSINESS COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY
(13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA
FOR ACTION AND STAFF REPORT
(14) FUTURE MEETING DATES
The next regular Administration Committee meeting is scheduled for May 9, 2007, at 5 p.m.
(15) ADJOURNMENT
Book Page 3
April 11, 2007 Page 4
Agenda Postina: In accordance with the requirements of California Government Code Section 54954.2, this agenda
has been posted in the main lobby of the District's Administrative offices not less than 72 hours prior to the meeting
date and time above. All written materials relating to each agenda item are available for public inspection in the office
of the Clerk of the Board.
Items Not Posted: In the event any matter not listed on this agenda is proposed to be submitted to the Committee for
discussion and/or action, tt will be done in compliance with Section 54954.2(b) as an emergency item or bemuse
there Is a need to take immediate action, which need came to the attention of the Committee subsequent to the
posting of agenda, or as set forth an a supplemental agenda posted in the manner as above, not less than 72 hours
prior to the meeting date.
Public Comments: Any member of the public may address the Administration Committee on specific agenda items or
matters of general interest. As determined by the Chair, speakers may be deferred until the specific item is taken for
discussion and remarks may be limited to three minutes.
Matters of interest addressed by a member of the public and not listed on this agenda cannot have action taken by
the Committee except as authorized by Section 54954.2(b).
Consent Calendar: All matters placed on the consent calendar are considered as not requiring discussion or further
explanation, and unless a particular item is requested to be removed from the consent calendar by a Director of staff
member, there will be no separate discussion of these items. All items on the consent calendar will be enacted by
one action approving all motions, and casting a unanimous ballot for resolutions included on the consent calendar.
All items removed from the consent calendar shall be considered in the regular order of business.
The Committee Chair will determine if any items are to be deleted from the consent calendar.
Items Continued: Items may be continued from this meeting without further notice to a Committee meeting held
within five(5)days of this meeting per Government Code Section 54954.2(b)(3).
Meeting Adioumment: This meeting may be adjourned to a later time and items of business from this agenda may be
considered at the later meeting by Order of Adjournment and Notice in accordance with Government Code Section
54955(posted within 24 hours).
Accommodations for the Disabled: The Board of Directors Meeting Room is wheelchair accessible. If you require
any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the
Board's office at(714)593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature
of the disability and the type of accommodation requested.
Notice to Committee Members:
For any questions on the agenda or to place any items on the agenda, Committee members should contact the Committee Chair
or Clerk of the Board ten days In advance of the Committee meeting.
Committee Chair: Mark Waldman (714)827-1968
Committee Secretary: Lilia Kovac (714)593-7124 Ikovac0ocsd.00m
General Manager: Jim Ruth (714)593-7110 innhAocsd.co
Assistant General Manager Bob Ghirelli (714)593-7400 rahirellifalocsd.com
Director of Finance and Lorenzo Tyner (714)593-7550 Itynereacsd.com
Administrative Services
Human Resources and Employee Jeff Read (714)593-7144 ireedralocsd.com
Relations Manager
H:1dep0agenda\Committees'Admin Commilteet0407103.041107 Administration Agmda.doc
Book Page 4
h
April 11, 2007
ADMINISTRATION COMMITTEE
AGENDA CALENDAR
Item Action
May 2007/08 Budget Action
Book Page 5
MINUTES OF THE REGULAR MEETING OF
THE ADMINISTRATION COMMITTEE
Orange County Sanitation District
WEDNESDAY, March 14, 2007, AT 6:00 P.M.
A meeting of the Administration Committee of the Orange County Sanitation District was held on
March 14, 2007, at 5:00 p.m., in the Sanitation District's Administrative Office.
(1) The roll was called and a quorum declared present, as follows:
ADMINISTRATION COMMITTEE STAFF PRESENT:
MEMBERS: Jim Ruth, General Manager
DIRECTORS PRESENT: Lorenzo Tyner, Director of Finance and
Mark Waldman, Chair Administrative Services
Phil Luebben,Vice Chair Jim Herberg, Director of Engineering
Steven Choi Jeff Reed, Human Resources and Employee
Bill Dalton Relations Manager
Jon Dumitru Mike White, Controller
Rich Freschi Penny Kyle, Clerk of the Board
Darryl Miller Rich Spencer
Joy Neugebauer Laurie Klinger
Chris Norby Randy Kleinman
Ken Parker Jim Burror
Sal Tinajero Juanita Skillman
Doug Davert, Board Vice Chair
OTHERS PRESENT:
DIRECTORS ABSENT: Brad Hogin, General Counsel
Jim Ferryman, Board Chair
Jim Winder
(2) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(3) PUBLIC COMMENTS
There were no public comments.
(4) REPORT OF THE COMMITTEE CHAIR
Chair Waldman did not give a report.
(6) REPORT OF THE GENERAL MANAGER
Jim Ruth, General Manager, recognized Jim Herberg, Director of Engineering, who briefed the
Committee on the CIP budget, and responded to their questions.
Book Page 6
i
Minutes of the Administration Committee
March 14, 2007
Page 2
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance and Administration, introduced Randall Kleinman, Principal
Financial Analyst(Risk Manager).
(7) REPORT OF GENERAL COUNSEL
Brad Hogin, General Counsel, did not give a report.
(8) CONSENT CALENDAR ITEMS
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same, as follows:
a. MOVED, SECONDED AND DULY CARRIED:Approve minutes of the February 14, 2007
meeting of the Administration Committee.
b. ADM07-06 MOVED, SECONDED AND DULY CARRIED: Recommend that the
Board of Directors: (1)Approve the amended Joint Powers Agreement of
the CSAC (California State Association of Counties) Excess Insurance
Authority which supersedes the California Public Entities Insurance
Authority(CPEIA)that provides the District's excess workers'
compensation insurance coverage, in a form approved by General
Counsel; and,
(2)Approve the CSAC Excess Insurance Authority's amended
Memorandum of Understanding for the Excess Workers' Compensation
Program to incorporate non-county public entity membership in the
program, in a form approved by General Counsel.
END OF CONSENT CALENDAR
(9) INFORMATIONAL ITEMS
a. ADM07-07 2006-07 and 2007-08 District Budget Update
Lorenzo Tyner, Director of Finance and Administrative Services, provided
a brief overview of the FY 2007-08 budget.
b. ADM07-08 2007-08 Sewer Service User Fee Estimates
Mike White, Controller, discussed proposed high strength discharge
sewer service fee billing method adjustments. Directors discussed
whether the policy issues should be considered before or after the
completion of the next rate study. It was determined that the impact of
these policy issues beyond 2007-08 would be brought back for further
discussion at the April meeting.
Book Page 7
Minutes of the Administration Committee
March 14, 2007
Page 3
C. ADM07-09 Succession Management Program Update
Rich Spencer, Human Resources Supervisor, gave a brief report and
overview of the Succession Management Program.
(10) CLOSED SESSION
The Committee convened in Closed Session at 6:40 p.m. pursuant to Government Code Section
54957(b)(1). Confidential Minutes of the Closed Session held by the Administration Committee
have been prepared in accordance with California Government Code Section 54957.2, and are
maintained by the Clerk of the Board in the Official Book of Confidential Minutes of Board and
Committee Closed Meetings.
A. Convene in closed session.
1. Conference with designated representatives Jim Ruth, General Manager;
Lorenzo Tyner, Director of Finance and Administrative Services; and Jeff Reed,
Human Resources and Employee Relations Manager, re Meet and Confer
Update re contract negotiations for employees represented by 1). Orange County
Employees Association; 2), International Union of Operating Engineers, Local
501, and 3). Supervisors, Professional Management Team (part of Peace
Officers Council of California) (Government Code Section 54957(b)(1).
B. The Committee reconvened in regular session at 6:45 p.m.
C. Consideration of action, if any, on matters considered in closed session.
(11) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
(12) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
Director Miller requested a report on water conservation measures that could be applied in the
treatment plant and what the projected impact would be on user fees.
Director Neugebauer requested the committee be provided updates on the North County Yard.
(13) FUTURE MEETING DATES
The next regular Administration Committee meeting is scheduled for April 11, 2007, at 5 p.m.
Book Page 8
Minutes of the Administration Committee
March 14,2007
Page 4
(14)ADJOURNMENT
The Chair declared the meeting adjourned at 6:50 p.m.
Submitted by:
v(
Penny K
Clerk of the Board
M:ldepflagendalCommVd a Wmin CommMeBD407106.031407 Adminisealbn Minutwdac
Book Page 9
ADMINISTRATION COMMITTEE mOe Tois omit•
25/07
AGENDA REPORT 1OeMN""biir 1OemNurr6er
ADM07-26
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: CERTIFICATES OF PARTICIPATION (COPS), SERIES 2007A
GENERAL MANAGER'S RECOMMENDATION
(1) Adopt Resolution No. OCSD07-_,Authorizing the Execution and Delivery by the District
of an Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement and a
Continuing Disclosure Agreement in connection with the execution and delivery of
Orange County Sanitation District Refunding Certificates of Participation, Series 2007A,
Authorizing the Execution and Delivery of such Certificates Evidencing Principal in an
Aggregate Amount of Not to Exceed $315,000,000, Approving a Notice of Intention to
Sell,Authorizing the Distribution of an Official Notice Inviting Bids and an Official
Statement in Connection with the Offering and Sale of Such Certificates and Authorizing
the Execution of Necessary Documents and Certificates and Related Actions.
(2) That the Orange County Sanitation District Financing Corporation adopt Resolution
No. FC-04, Authorizing the Execution and Delivery by the Corporation of an Installment
Purchase Agreement and a Trust Agreement in connection with the execution and
delivery of Orange County Sanitation District Refunding Certificates of Participation,
Series 2007A; Authorizing the Execution and Delivery of such Certificates Evidencing
Principal in an Aggregate Amount of Not to Exceed $315,000,000 and; Authorizing the
Execution of Necessary Documents and Certificates and Related Actions.
SUMMARY
The Board of Directors has previously authorized the issuance of new fixed rate Certificates of
Participation (COP)debt sufficient to refund up to$280 million of COP Series 2003 and the
hiring of a financing team. The independent financial advisor is Public Resources Advisory
Group and the bond counsel and disclosure counsel is Orrick, Herrington&Sutcliffe. Woodruff,
Spradlin & Smart, our General Counsel, has also been assisting staff.
The purpose of the financing is to take advantage of the current low interest rate environment
and to advance refund all or a portion of the COP Series 2003. Many maturities of this issue
may be advance refunded for significant economic savings under current market conditions in
excess of three (3) percent as the minimum present value of savings as required by the
Sanitation District's policy.
The draft documents for the financing will be distributed to the rating agencies following the
Administration Committee meeting. These documents will be presented to the OCSD Board of
Directors and Financing Corporation on April 25, 2007 for final approval. Staff and consultants
will make a brief presentation and provide an overview of the draft documents and the financing
schedule at the Administration Committee meeting.
Form No.owtv[a xenw:mrotmr
Page 1
Book Page 10
PRIOR COMMITTEE/BOARD ACTIONS
September 26, 2001: Adoption of Debt Policy
October 25, 2006: Renewed Consultant Agreement with Public Resources Advisory Group
for an additional five years effective November 2006.
February 28, 2007: Directed staff to initiate procedures to refund Certificates of Participation
(COP) Series 2003 up to$280 million in new fixed-rate Certificates of
Participation (COP) debt.
February 28, 2007: Authorized the General Manager to negotiate and enter a Consultant
Services Agreement with Orrick, Herrington & Sutcliffe to provide bond
counsel services.
ADDITIONAL INFORMATION
The most recent Strategic Plan capital improvement program requires approximately$2.2 billion
over the next 10 years, of which approximately$1.2 billion is to be financed through long-term
borrowings in accordance with the District's long-term debt fiscal policy and cash flow
projections
The next new debt issuance of$300 million of COP debt is not scheduled until fiscal year
2007-08. A total of up to $1.2 billion in COP debt issuance is being proposed over the next ten
years with a new issuance scheduled approximately every year for at least the next six years.
These financings are needed early in the 10-year capital improvement program because the
bulk of the construction is scheduled during the next seven years.
Due to the current low interest rate environment, staff is proposing to refund at least $84.0
million of COP Series 2003 maturing in years 2027 through 2030 with annual coupon rates of
5.25 percent, as shown in bold in the chart below. Additional bond maturities may be proposed
to be refunded depending on the existing market rates at the time of issuance.
COP Series 2003
Maturity Bond Type Principal Amount Coupon Call Date Call Price
02/01/21 Serial $ 4,495000 5.25% 08/01/13 100.000
0210122 Serial 15- 10010D0 5.0DOA 08/01/13 100.000
02101/23 Serial 15,805,000 5.00% 08/01/13 . 100.000
02101/24 Serial 16840000 5.00% 08/01/13 100.000
02/01/25 Serial 17,425,000 5.00% 08/01/13 100.000
02101/26 Serial 18,350 000 5.00% 08/01/13 100.000
- 7 .
02101/33 i Term108180000 _ 5.00°h � 08/01/13, 1 100.000�
Total $280,000,000
rwm ea oYwoxa vwi.xoaowr
Page 2
Book Page I I
The Board of Directors and the Financing Corporation are required to adopt separate
Resolutions to complete this borrowing. Drafts of these two Resolutions are attached for
review. A Financing Corporation is required by the structure of the COPS and was formed in
April 2000, solely to satisfy this need. The Board of Directors of the Corporation is the same as
the Board of Directors of the District and the Corporation meets after an adjournment of the
OCSD Board.
The OCSD Resolution authorizes the execution and delivery of certain legal documents and the
execution and delivery of Certificates of Participation evidencing principal in an aggregate
amount of not to exceed $315,000,000 all as spelled out in the title as follows:
"A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY
SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE
DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT, AN
ESCROW AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT IN
CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY
SANITATION DISTRICT REFUNDING CERTIFICATES OF PARTICIPATION, SERIES 2007A,
AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH CERTIFICATES EVIDENCING
PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $315,000,000, APPROVING
A NOTICE OF INTENTION TO SELL, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL
NOTICE INVITING BIDS AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE
OFFERING AND SALE OF SUCH CERTIFICATES AND AUTHORIZING THE EXECUTION OF
NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS"
The Resolution of the Corporation is somewhat shorter and simpler. It authorizes three actions
that are similarly enumerated in the title as follows:
"A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY
SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND
DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND
A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF
ORANGE COUNTY SANITATION DISTRICT REFUNDING CERTIFICATES OF
PARTICIPATION, SERIES 2007A, AUTHORIZING THE EXECUTION AND DELIVERY OF
SUCH CERTIFICATES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO
EXCEED $315,000,000 AND AUTHORIZING THE EXECUTION OF NECESSARY
DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS."
Copies of the Resolutions are enclosed with the agenda along with the Preliminary Official
Statement. To reduce reproduction and postage expenses, copies of the other documents are
not included, but will be available electronically within the Director's website prior to the Board
meeting.
Following is a chart listing the remaining steps to be completed for the issuance of the COP
Series 2007A debt issuance:
➢ Develop rating agency presentation
April ➢ Conduct rating agency presentations
➢ Finalize debt service and cash flow modeling
➢ Board approval of legal and disclosure documents
➢ Conduct Competitive Sale of Fixed Rate COP 2007A
➢ Execute COP 2007A Refunding issue
May ➢ Investment of Bond Proceeds
D Debt Administration
Fotm No.M 102,3 Reulvea:owllol
Page 3
Book Page 12
The Consultant Services Agreements with PRAG and Orrick total a not-to-exceed amount of
$225,000. These and other costs, such as printing the Official Statement, underwriters'
discount, rating agency fees and trustee's fees will be paid from the proceeds of the borrowing.
ATTACHMENTS
1. Proposed Resolution of OCSD
2. Proposed Resolution of the OCSD Financing Corporation
3. Preliminary Official Statement
JDR:LT:mw
Form No.Dw IW 3
Pw+eM.0Y01N)
Page 4
Book Page 13
RESOLUTION NO. OCSD 07-
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION
AND DELIVERY BY THE DISTRICT OF AN INSTALLMENT
PURCHASE AGREEMENT, A TRUST AGREEMENT, AN ESCROW
AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT IN
CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE
COUNTY SANITATION DISTRICT REFUNDING CERTIFICATES OF
PARTICIPATION, SERIES 2007A, AUTHORIZING THE EXECUTION
AND DELIVERY OF SUCH CERTIFICATES EVIDENCING PRINCIPAL
IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $315,000,000,
APPROVING A NOTICE OF INTENTION TO SELL, AUTHORIZING
THE DISTRIBUTION OF AN OFFICIAL NOTICE INVITING BIDS AND
AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING
AND SALE OF SUCH CERTIFICATES AND AUTHORIZING THE
EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES
AND RELATED ACTIONS
WHEREAS, in order to finance the acquisition, construction and installation of certain
improvements to the wastewater system (the "Prior Project') of the Orange County Sanitation
District (the "District'), the District purchased the Prior Project from the Orange County
Sanitation District Financing Corporation (the "Corporation'), and the Corporation sold the Prior
Project to the District, for the installment payments (the "Prior Installment Payments") to be
made by the District pursuant to the Installment Purchase Agreement, dated as of July I, 2003
(the"Prior Installment Purchase Agreement'), by and between the District and the Corporation;
WHEREAS, in order to provide the funds necessary to finance the Prior Project, the
District and the Corporation caused to be executed and delivered the Orange County Sanitation
District Certificates of Participation, Series 2003 (the "Prior Certificates"), evidencing direct,
undivided fractional interests in the Prior Installment Payments,and the interest thereon;
WHEREAS, the District desires to refinance all or a portion of the Prior Project (to the
extent so refinanced, the "Project') by prepaying all or a portion of the Prior Installment
Payments,thereby causing all or a portion of the Prior Certificates to be prepaid;
WHEREAS, in order to provide the funds necessary to prepay the Prior Installment
Payments to be so prepaid, the District and the Corporation desire that the Corporation purchase
the Project from the District, and the District sell the Project to Corporation, and that the District
then purchase the Project from the Corporation, and the Corporation sell the Project to the
District, for the installment payments (the "Installment Payments") to be made by the District
pursuant to an Installment Purchase Agreement (such Installment Purchase Agreement, in the
form presented to this meeting, with such changes, insertions and omissions as are made
pursuant to this Resolution,being referred to herein as the"Installment Purchase Agreement);
OHS WIiSf:2WIS1976.2
91758-I0 GHUMKrI
Book Page 14
WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to Union Bank of California,N.A., as
trustee (the "Tmstee'), pursuant to a Trust Agreement among the Trustee, the Corporation and
the District (such Trust Agreement, in the form presented to this meeting, with such changes,
insertions and omissions as are made pursuant to this Resolution, being referred to herein as the
'"Trust Agreement");
WHEREAS, in consideration of such assignment and the execution and entering into of
the Trust Agreement, the Trustee will execute and deliver Orange County Sanitation District
Refunding Certificates of Participation, Series 2007A (the "Certificates'), evidencing direct,
undivided fractional interests in the Installment Payments,and the interest thereon;
WHEREAS, the funds to pay the Prior Installment Payments to be prepaid, and the
interest thereon, and the Prior Certificates evidencing interests therein, will be applied to such
purpose pursuant to an Escrow Agreement by and between the District and Union Bank of
California, N.A., as prior trustee and escrow bank (such Escrow Agreement, in the form
presented to this meeting, with such changes, insertions and omissions as are made pursuant to
this Resolution,being referred to herein as the"Escrow Agreement");
WHEREAS,the District desires to provide for the public sale of the Certificates;
WHEREAS, a form of the Notice of Intention to Sell to be published in connection with
the public offering and sale of the Certificates has been prepared (such Notice of Intention to
Sell, in the form presented to this meeting, with such changes, insertions and omissions as are
made pursuant to this Resolution,being referred to herein as the"Notice of Intention to Sell");
WHEREAS, a form of the Official Notice Inviting Bids to be distributed in connection
with the public offering and sale of the Certificates has been prepared (such Official Notice
Inviting Bids, in the form presented to this meeting, with such changes, insertions and omissions
as are made pursuant to this Resolution,being referred to herein as the"Notice Inviting Bids");
WHEREAS,a form of the Preliminary Official Statement to be distributed in connection
with the public offering of the Certificates has been prepared (such Preliminary Official
Statement in the form presented to this meeting, with such changes, insertions and omissions as
are made pursuant to this Resolution, being referred to herein as the "Preliminary Official
Statement');
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934
("Rule 15c2-12") requires that, in order to be able to purchase or sell the Certificates, the
underwriter thereof must have reasonably determined that the District has undertaken in a written
agreement or contract for the benefit of the holders of the Certificates to provide disclosure of
certain financial information and certain material events on an ongoing basis;
WHEREAS, in order to cause such requirement to be satisfied, the District desires to
enter into a Continuing Disclosure Agreement with the Trustee (such Continuing Disclosure
Agreement in the form presented to this meeting, with such changes, insertions and omissions as
are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure
Agreement");
OHS WM 2601819762
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WHEREAS,there have been prepared and submitted to this meeting fors of:
(a) the Installment Purchase Agreement;
(b) the Trust Agreement;
(c) the Escrow Agreement;
(d) the Notice of Intention to Sell;
(e) the Notice Inviting Bids;
(f) the Preliminary Official Statement;and
(g) the Continuing Disclosure Agreement;
WHEREAS, all acts, conditions and things required by the Constitution and laws of the
State of California to exist, to have happened and to have been performed precedent to and in
connection with the consummation of the financing authorized hereby do exist, have happened
and have been performed in regular and due time, for and manner as required by law, and the
District is now duly authorized and empowered, pursuant to each and every requirement of law,
to consummate such financing for the purpose, in the manner and upon the terms herein
provided;
NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District
DOES HEREBY RESOLVE,DETERMINE AND ORDER:
Section 1. All of the recitals herein contained are true and correct and the Board of
Directors of the District(the"Board")so finds.
Section 2. The Installment Purchase Agreement, in substantially the form submitted to
this meeting and made a part hereof as though set forth herein, be and the same is hereby
approved. The Chair of the Board of Directors,and such other member of the Board of Directors
as the Chair may designate, the General Manager of the District, the Director of Finance of the
District, and such other officer of the District as the Director of Finance may designate (the
"Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the
name of the District, to execute and deliver the Installment Purchase Agreement in the form
submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer
executing the same may require or approve, such requirement or approval to be conclusively
evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer,
provided, however, that such changes, insertions and omissions shall not result in an aggregate
principal amount of Installment Payments in excess of$315,000,000, shall not result in a true
interest cost for the Installment Payments in excess of 5.00% and shall not result in a final
Installment Payment later than February 1, 2033.
Section 3. The Trust Agreement, in substantially the form submitted to this meeting and
made a part hereof as though set forth in full herein, be and the same is hereby approved. The
Authorized Officers are,and each of them is,hereby authorized and directed, for and in the name
OHS WM:260191W&2
417WOGHINKH 3
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of the District,to execute and deliver the Trust Agreement in the form presented to this meeting,
with such changes, insertions and omissions as the Authorized Officer executing the same may
require or approve, such requirement or approval to be conclusively evidenced by the execution
of the Trust Agreement by such Authorized Officer.
Section 4. The execution and delivery of Certificates evidencing principal in an
aggregate amount of not to exceed $315,000,000, payable in the years and in the amounts, and
evidencing principal of and interest on the Installment Payments as specified in the Trust
Agreement as finally executed,are hereby authorized and approved.
Section 5. The prepayment of all or a portion of the Prior Installment Payments,and the
Prior Certificates evidencing interests therein, is hereby authorized and approved and the
Authorized Officers are, and each of them is, hereby authorized and directed to determine which
of the Prior Installment Payments, and Prior Certificates, are to be so prepaid; provided,
however,that the net present value savings from such prepayment shall not be less than 3.00%.
Section 6. The Escrow Agreement, in substantially the form submitted to this meeting
and made a part hereof as though set forth in full herein, be and the same is hereby approved.
The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the
name of the District, to execute and deliver the Escrow Agreement in the form presented to this
meeting, with such changes, insertions and omissions as the Authorized Officer executing the
same may require or approve, such requirement or approval to be conclusively evidenced by the
execution of the Escrow Agreement by such Authorized Officer.
Section 7. The form of Notice of Intention to Sell, in substantially the form submitted to
this meeting and made a part hereof as though set forth in full herein, with such changes,
insertions and omissions therein as may be approved by an Authorized Officer, is hereby
approved, and the use of the Notice of Intention to Sell in connection with the offering and sale
of the Certificates is hereby approved. The Authorized Officers are each hereby authorized and
directed,for and in the name and on behalf of the District,to cause the Notice of Intention to Sell
to be published once in The Bond Buyer (or in such other financial publication generally
circulated throughout the State of California or reasonably expected to be disseminated among
prospective bidders for the Certificates as an Authorized Officer shall approve as being in the
best interests of the District) at least five days prior to the date set for the opening of bids in the
Notice Inviting Bids, with such changes, insertions and omissions therein as an Authorized
Officer may require or approve, such requirement or approval to be conclusively evidenced by
such publishing of the Notice of Intention to Sell.
Section S. The Notice Inviting Bids, in substantially the form submitted to this meeting
and made a part hereof as though set forth herein, with such changes, insertions and omissions
therein as may be approved by an Authorized Officer, be and the same is hereby approved, and
the use of the Notice Inviting Bids in connection with the offering and sale of the Certificates is
hereby authorized and approved. The terms and conditions of the offering and sale of the
Certificates shall be as specified in the Notice Inviting Bids. Bids for the purchase of the
Certificates shall be received at the time and place set forth in the Notice Inviting Bids. The
Authorized Officers are each hereby authorized and directed,for and in the name and on behalf of
OHS V e :260191976.2
41759-10GHHA9CH 4
Book Page 17
the District, to accept the bid for the Certificates with the lowest true interest cost, or to reject all
bids therefor,in accordance with the terms of the Notice Inviting Bids.
Section 9. The Preliminary Official Statement, in substantially the forth presented to
this meeting and made a part hereof as though set forth in full herein, with such changes,
insertions and omissions therein as may be approved by an Authorized Officer, is hereby
approved, and the use of the Preliminary Official Statement in connection with the offering and
sale of the Certificates is hereby authorized and approved. The Authorized Officers are each
hereby authorized to certify on behalf of the District that the Preliminary Official Statement is
deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of
certain final pricing,rating and related information as permitted by Rule 15c2-12).
The Authorized Officers are each hereby authorized and directed to famish, or cause to
be furnished, to prospective bidders for the Certificates a reasonable number of copies of the
Preliminary Official Statement.
Section 10. The preparation and delivery of a final Official Statement (the "Official
Statement"), and its use in connection with the offering and sale of the Certificates, be and the
same is hereby authorized and approved. The Official Statement shall be in substantially the
form of the Preliminary Official Statement, with such changes, insertions and omissions as may
be approved by an Authorized Officer, such approval to be conclusively evidenced by the
execution and delivery thereof. The Authorized Officers are, and each of them is, hereby
authorized and directed to execute the final Official Statement and any amendment or
supplement thereto,for and in the name of the District.
Section 11. The Continuing Disclosure Agreement, in substantially the form submitted
to this meeting and made a part hereof as though set forth herein, be and the same is hereby
approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for
and in the name of the District, to execute and deliver the Continuing Disclosure Agreement in
the form submitted to this meeting, with such changes, insertions and omissions as the
Authorized Officer executing the same may require or approve, such requirement or approval to
be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such
Authorized Officer.
Section 12. The Authorized Officers are, and each of them hereby is, authorized and
directed to execute and deliver any and all documents and instruments and to do and cause to be
done any and all acts and things necessary or proper for carrying out the execution and delivery
of the Certificates and the transactions contemplated by the agreements or documents referenced
in this Resolution.
Section 13. All actions heretofore taken by the officers and employees of the District
with respect to the execution, delivery and sale of the Certificates, or in connection with or
related to any of the agreements or documents referenced in this Resolution, are hereby
approved,confirmed and ratified.
OHS WE8T:260181976.2
41758-IOGHI/k1KH 5
Book Page 18
Section 14. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED at a regular meeting held April 25,2007.
Chair
ATTEST:
Clerk of the Board
APPROVED:
General Counsel, Orange County
Sanitation District
OHS WESI:260181976.2
41758-100HVMM 6
Book Page 19
STATE OF CALIFORNIA )
) as
COUNTY OF ORANGE )
1, , Cleric of the Board of Directors of the Orange County
Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 07-
was passed and adopted at a regular meeting of said Board on the 25th day of April 2007,by the
following vote,to wit:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
IN WITNESS WHEREOF, I have hereunto ad my hand and affixed the official seal of
Orange County Sanitation District this_day of ,2007.
Clerk of the Board of Directors
Orange County Sanitation District
OHS 260191976.2
61758-10GH1aaat
Book Page 20
RESOLUTION NO.
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT FINANCING CORPORATION
AUTHORIZING THE EXECUTION AND DELIVERY BY THE
CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT
AND A TRUST AGREEMENT IN CONNECTION WITH THE
EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION
DISTRICT REFUNDING CERTIFICATES OF PARTICIPATION,SERIES
2007A, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH
CERTIFICATES EVIDENCING PRINCIPAL IN AN AGGREGATE
AMOUNT OF NOT TO EXCEED S315,000,000 AND AUTHORIZING THE
EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES
AND RELATED ACTIONS.
WHEREAS, in order to finance the acquisition, construction and installation of certain
improvements to the wastewater system (the "Prior Project") of the Orange County Sanitation
District (the "District'), the District purchased the Prior Project from the Orange County
Sanitation District Financing Corporation(the"Corporation"),and the Corporation sold the Prior
Project to the District, for the installment payments (the "Prior Installment Payments") to be
made by the District pursuant to the Installment Purchase Agreement, dated as of July 1, 2003
(the"Prior Installment Purchase Agreement'),by and between the District and the Corporation;
WHEREAS, in order to provide the funds necessary to finance the Prior Project, the
District and the Corporation caused to be executed and delivered the Orange County Sanitation
District Certificates of Participation, Series 2003 (the "Prior Certificates"), evidencing direct,
undivided fractional interests in the Prior Installment Payments,and the interest thereon;
WHEREAS, the District desires to refinance all or a portion of the Prior Project (to the
extent so refinanced, the "Project") by prepaying all or a portion of the Prior Installment
Payments,thereby causing all or a portion of the Prior Certificates to be prepaid;
WHEREAS, in order to provide the funds necessary to prepay the Prior Installment
Payments to be so prepaid, the District and the Corporation desire that the Corporation purchase
the Project from the District,and the District sell the Project to Corporation, and that the District
than purchase the Project from the Corporation, and the Corporation sell the Project to the
District, for the installment payments (the Installment Payments") to be made by the District
pursuant to an Installment Purchase Agreement (such Installment Purchase Agreement, in the
form presented to this meeting, with such changes, insertions and omissions as are made
pursuant to this Resolution,being referred to herein as the"Installment Purchase Agreement");
WHEREAS, the Corporation proposes to assign without recourse certain of its rights
under and pursuant to the Installment Purchase Agreement to Union Bank of California,N.A.,as
trustee (the "Trustee'), pursuant to a Trim Agreement among the Trustee, the Corporation and
the District (such Trust Agreement, in the form presented to this meeting, with such changes,
OHS WM 260182132.2
<175d-IOOH11NOCH
Book Page 21
insertions and omissions as are made pursuant to this Resolution, being referred to herein as the
"Trust Agreement");
WHEREAS, in consideration of such assignment and the execution and entering into of
the Trust Agreement, the Trustee will execute and deliver Orange County Sanitation District
Refunding Certificates of Participation, Series 2007A (the "Certificates', evidencing direct,
undivided fractional interests in the Installment Payments,and the interest thereon;
WHEREAS,there have been prepared and submitted to this meeting forms of
(a) the Installment Purchase Agreement;and
(b) the Trust Agreement;
WHEREAS, all acts, conditions and things required by the Constitution and laws of the
State of California to exist, to have happened and to have been performed precedent to and in
connection with the consummation of the actions authorized hereby do exist, have happened and
have been performed in regular and due time, form and manner as required by law, and the
Corporation is now duly authorized and empowered, pursuant to each and every requirement of
law, to consummate such actions for the purpose, in the manner and upon the terms herein
provided;
NOW, THEREFORE, the Board of Directors of Orange County Sanitation District
Financing Corporation DOES HEREBY RESOLVE,DETERMINE AND ORDER.
Section 1. All of the recitals herein contained are true and correct and the Board of
Directors of the Corporation(the`Board")so finds.
Section 2. The Installment Purchase Agreement, in substantially the form submitted to
this meeting and made a part hereof as though set forth herein, be and the same is hereby
approved. The President of the Corporation,the Vice-president of the Corporation,the Treasurer
of the Corporation and the Secretary of the Corporation, and such other officer of the
Corporation as the President may designate(the "Authorized Officers") are, and each of them is,
hereby authorized and directed, for and in the name of the Corporation, to execute and deliver
the Installment Purchase Agreement in the form submitted to this meeting, with such changes,
insertions and omissions as the Authorized Officer executing the same may require or approve,
such requirement or approval to be conclusively evidenced by the execution of the Installment
Purchase Agreement by such Authorized Officer; provided, however, that such changes,
insertions and omissions shall not result in an aggregate principal amount of Installment
Payments in excess of$315,000,000, shall not result in a true interest cost for the Installment
Payments in excess of 5.00% and shall not result in a final Installment Payment later than
February 1,2033.
Section 3. The Trust Agreement, in substantially the form submitted to this meeting and
made a part hereof as though set forth in full herein, be and the same is hereby approved. The
Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name
of the Corporation, to execute and deliver the Trust Agreement in the form presented to this
meeting, with such changes, insertions and omissions as the Authorized Officer executing the
OHS WM:2b01S2132.2
4173&IOGHI/k1KH 2
Book Page 22
same may require or approve, such requirement or approval to be conclusively evidenced by the
execution of the Trust Agreement by such Authorized Officer.
Section 4. The execution and delivery of Certificates evidencing principal in an
aggregate amount of not to exceed $315,000,000, payable in the years and in the amounts, and
evidencing direct, undivided fractional interests in the Installment Payments, and the interest
thereon, as specified in the Trust Agreement as finally executed, are hereby authorized and
approved.
Section 5. The officers and agents of the Corporation are, and each of them hereby is,
authorized and directed to execute and deliver any and all documents and instruments and to do
and cause to be done any and all acts and things necessary or proper for carrying out the
execution and delivery of the Certificates and the transactions contemplated by the agreements or
documents referenced in this Resolution.
Section 6. All actions heretofore taken by the officers and agents of the Corporation
with respect to the execution, delivery and sale of the Certificates, or in connection with or
related to any of the agreements or documents referenced in this Resolution, are hereby
approved, confirmed and ratified.
Section 7. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED at a meeting held April 25,2007.
President,Orange County Sanitation
District Financing Corporation
ATTEST:
Clerk of the Board
Orange County Sanitation
District Financing Corporation
OHS WEST:26018202.2
41758-100HVMKH 3
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APPROVED:
General Counsel,Orange County
Sanitation District Financing
Corporation
OHS WM:2601821322
41768-10OHMAKH 4
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STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE )
I, ,Clerk of the Board of Directors of the Orange County Sanitation District
Financing Corporation, do hereby certify that the foregoing Resolution No. was
passed and adopted at a meeting of said Board on the 25th day of April, 2007, by the following
vote,to wit:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
Orange County Sanitation District Financing Corporation, California, this _ day of ,
2007.
Clerk of the Board
Orange County Sanitation District
Financing Corporation
OHSWm:2601821312
41758-100HVMM
Book Page 25
OH&S 4/2/07 Draft
This Preliminary Official Statement and the information contained herein are subject to completion or amendment.
Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to
buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be
unlawful.
PRELIMINARY OFFICIAL STATEMENT DATED APRIL_,2007
NEW ISSUE-BOOK-ENTRY-ONLY Ratings:
Moody's:
Standard&Poor's "
Fitch
(See"RATINGS"herein)
In the opinion of Orrick, Herrington&Sure/fe LLP, Los Angeles, California Special Counsel to the District, based upon an
analysis of existing laws, regulations, r7dinga and court decisions, and assuming, among other matters, the accuracy of certain
representations and compliance with certain covenants, the Interest on the Installment Payments paid by the District render the
Installment Purchase Agreement and received by the mvners of the Certificates is excluded from grass income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt front State of California personal income taxes. In
the further opinion of Special Counsel, such Interest is not a speefc preference item for purposes of the federal individual or
corporate alternative minimum taxes, although Special Counsel observes that such interest is included in adjusted current earrings
when calculating corporate alternative minimum tarable income. Special Counsel expresses no opinion regarding any other tar
consequences related to the ownership or disposition of, or the accrual or receipt of interest evidenced by, the Certificates. See 'TAX
MA7TERS"herein.
ORANGE COUNTY SANITATION DISTRICT
REFUNDING CERTIFICATES OF PARTICIPATION,SERIES 2007A
Dated: Date of Delivery Due:February 1,as shown below
The Orange County Sanitation District Refunding Certificates of Participation, Series 2007A (the "Certificates") evidence
direct, fractional undivided interests of the Owners thereof in the installment payments(the"Installment Payments"),and the interest
thereon, to be made by the Orange County Sanitation District(the"District")pursuant to the Installment Purchase Agreement, dated
as of_ 1, 2007(the"Installment Purchase Agreement"), by and between the District and the Orange County Sanitation District
Financing Corporation (the"Corporation"). Pursuant to the Masten Agreement for District Obligations, dated as of August 1, 2000
(the "Master Agreement"), by and between the District and the Corporation, the District has established conditions and terms upon
which obligations such as the Installment Payments and the interest thereon, will be incurred and secured. Installment Payments
under the Installment Purchase Agreement are payable solely from Net Revenues(as more fully described in the Master Agreement,
the"Net Revenues")as provided in the Installment Purchase Agreement,consisting primarily of all income and revenue received by
the District from the operation or ownership of the District's Wastewater System(the"Wastewater System")remaining after payment
of Maintenance and Operation Costs, as further described in 'SECURITY AND SOURCES OF PAYMENT FOR THE
CERTIFICATES" herein. The Installment Purchase Agreement provides that the obligation of the District to pay the Installment
Payments, and payments of interest thereon, and certain other payments required to be made in accordance with the Installment
Purchase Agreement,solely from Net Revenues,is absolute and unconditional. See"SECURITY AND SOURCES OF PAYMENT"
herein.
The proceeds of the Certificates,together with other available moneys,will be rued to(i)prepay all or a portion of the prim
installment payments and relmed certificates of participation in order to refinance certain improvements to its Wastewater System(the
"Project")(ii)fund a reserve fund for the Certificates,and(ill)pay the costs incurred in connection with the execution and delivery of
the Certificates. See"REFUNDING PLAN"herein.
Interest evidenced by the Certificates will be payable semiannually on February 1 and August 1 of each year,commencing on
August 1,2007. See"TIE CERTIFICATES"herein. The Certificates will be initially delivered only in book-entry form and will be
registered in the time of Cede&Co.,as nominee of The Depository Trust Company,New York.New York("DTC"),which will act
as securities depository for the Certificates. Individual purchases of the Certificates will be made in book-entry form only. Purchasers
of Certificates will not receive physical certificates representing their ownership interests in the Certificates purchased. The
Certificates will be delivered in denominations of $5,000 and any integral multiple thereof. Payments of principal and interest
Preliminary,subject to change.
OHS WM:260184418.4
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Book Page 26
evidenced by the Certificates are payable directly to DTC by Union Bank of California.N.A.,as trustee(the"Trustee"). Upon receipt
of payments of such principal and interest, DTC Will in turn distribute such payments to the beneficial owners of the Certificates.See
APPENDIX D-"BOOK-ENTRY-ONLY SYSTEM"herein.
MATURITY SCHEDULE'
$ Serial Certificates
Maturity Rinapal linens, Pncea Matunty Pnncwd Ntc., Pnceor
(Felmvy l) Amount Rate Yield CUSw (February l) Aaovm Rate Yield CUS1P
$ _%Term Certificates Due February 1.20_Yield-_%
S _%Term Certificates Due Februaryl.20_Yield-_%
The Certificates arc subject to prepayment prior to maturity,as described herein.See-THE CERTIFICATES"herein.
THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENTS,AND THE MEREST THEREON,
AND OTHER PAYMENTS REQUIRED TO BE MADE BY IT UNDER THE INSTALLMENT PURCHASE AGREEMENT IS A
SPECIAL OBLIGATION OF THE DISTRICT PAYABLE,IN THE MANNER PROVIDED IN THE INSTALLMENT PURCHASE
AGREEMENT,SOLELY FROM NET REVENUES AND OTHER FUNDS PROVIDED FOR IN THE INSTALLMENT PURCHASE
AGREEMENT,AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT OR OF THE STATE OF CALEFORNIA, OR OF
ANY POLITICAL SUBDIVISION THEREOF. IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATION OR RESTRICTION. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT OR
THE STATE OF CALIFORNIA.OR ANY POLITICAL SUBDIVISION THEREOF,IS PLEDGED TO THE PAYMENT OF THE
INSTALLMENT PAYMENTS,OR THE INTEREST THEREON, OR OTHER PAYMENTS REQUIRED TO BE MADE UNDER
THE INSTALLMENT PURCHASE AGREEMENT. SEE "SECURITY AND SOURCES OF PAYMENT FOR THE
CERTIFICATES"HEREIN.
This cover page contains information intended for quick reference only. It is not a summary of this issue. Investors must
read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms
used in this cover page shall have the meanings given such terms herein.
An investment in the Certificates involves certain risks. See"RISK FACTORS"herein for a discussion of factors than should
be considered in addition to the other matters set forth herein,in evaluating the investment quality of the Certificates.
[The Cerr fcata will be sold by competitive sale an or about May_, 2007 pursuant to the 0 trial Notice Inviting Bids
dated April 2006. See APPENDIX G- "OFFICIAL NOTICE INVITING BIDS" attached hereto. Far additional information
concerning the competitive sale of the Certfcates, contact the District's financial advisor, Public Resources Advisory Group, Las
Angela, Colifornia The Cert fcates are offered when,as and if executed and delivered and received by the Initial Purchaser,subject
to the approval by Orrick, Herrington& Sutcliffe LLP, Los Angela, California, Special Counsel to the District, and certain other
conditions. Certain legal mattes will be passed upon for the District and the Corporation by Woodruff, Spradlin & Smart, a
Professional Corporation,Orange, California and for the Dislria by Orrick,Herrington&Sutcliffe LLP a Disclosure Counsel to the
Distrid. It is anticipated that the Certificates in definitive form will be available far delivery to DTC in Nov York, Nov York an or
about May 20071
(FOR FINAL OFFICIAL STATEMENT. The Certfcmes Were sold by competitive sale an April_ 2007 pursuant to the
Ofyctal Naice Irwlling Bids and Official Bid Form dated April_, 1007. The Certificates are offered when, as and if ex cured and
delivered and received by the Initial Purchaser, subject to the approval by Orrick, Herrington & Sutcliffe LLP, Las Angela,
California, Special Counsel to the District, and certain other conditions. Certain legal matters will be passed upon for the District
and the Corporation by Woodruff Spradlin & Smart, a Profasioaal Corporation, Orange, California. Public Resources Advisory
Group, Los Angela, California has served as financial advisor to the Dishes in connection with the execution aid delivery of the
Certificates. It is anticipated that the Carl fcates in definitive form will be available for delivery to DTC in Nov York, Nov York on
or about Mayes 2007.]
Dated: .2007
OHS West26018,1418A
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MAP OF THE DISTRICT
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ORANGE COUNTY SANITATION DISTRICT
Board of Directors
James Ferryman(Chair)-Costa Mesa Sanitary District
Doug Davert(Vice Chair)-Tustin
Harry Sidhu-Anaheim Don Webb-Newport Beach
Roy Moore-Brea Jon Dumitru-Orange
Patsy Marshall-Buena Park Constance Underhill-Placentia
Phil Luebben-Cypress Sal Tinajero-Santa Ana
Larry Crandall-Fountain Valley Charles Antos-Seal Beach
Don Bankhead-Fullerton David Shavrver-Stanton
Bill Dalton-Garden Grove Rich Freschi- Villa Park
Cathy Green-Huntington Beach Jim Winder- Yorba Linda
Steven Choi-Irvine Joy L.Neugebauer-Midway City Sanitary District
Steve Anderson-La Habra Darryl Miller-Irvine Ranch Water District
Mark Waldman-La Palma
Ken Parker-Los Alamitos Chris Norby-Member of the Orange County
Board of Supervisors
Executive Management of the District
James D. Ruth,General Manager
Robert P.Ghirelli,PhD.,Assistant General Manager
Lorenzo Tyner,Director of Finance and Administrative Services
James Herberg,Director of Engineering
Ed Torres, Director of Technical Services
Nick Arhontes,Director of Operations& Maintenance
Special Services
Special Counsel and Disclosure Counsel
Orrick,Herrington&Sutcliffe LLP
Los Angeles,California
District General Counsel
Bradley R. Hogin
Woodruff, Spradlin& Smart,a Professional Corporation
Orange,California
Financial Advisor
Public Resources Advisory Group
Los Angeles,California
Trustee
Union Bank of California,N.A.
Los Angeles,California
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This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of the Certificates by any person in any jurisdiction in which it is unlawful for such
person to make such an offer, solicitation or sale. The information set forth herein has been provided by
the District and other sources that am believed by the District to be reliable. No dealer, broker,
salesperson or other person has been authorized to give any information or to make any representations
other than those contained in this Official Statement. If given or made, such other information or
representations must not be relied upon as having been authorized by the District,the Corporation or the
Initial Purchaser in connection with any reoffering.
This Official Statement is not to be construed as a contract with the purchasers of the Certificates.
Statements contained in this Official Statement which involve estimates,projections, forecasts or matters
of opinion, whether or not expressly so described herein, are intended solely as such and are not to be
construed as representations of facts.
The information and expressions of opinion herein are subject to change without notice and
neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the District or the Corporation since
the date hereof.This Official Statement is submitted with respect to the sale of the Certificates referred to
herein and may not be reproduced or used,in whole or in part,for any other purpose,unless authorized in
writing by the District. All summaries of the documents and laws are made subject to the provisions
thereof and do not purport to be complete statements of any or all such provisions. Preparation of this
Official Statement and its distribution have been duly authorized and approved by the District and the
Corporation.
In connection with the offering of the Certificates, the Initial Purchaser in connection with any
reoffering may over-allot or effect transactions which stabilize or maintain the market price of the
Certificates at a level above that which might otherwise prevail in the open market. Such stabilizing, if
commenced, may be discontinued at any time. The Initial Purchaser in connection with any reoffering
may offer and sell the Certificates to certain dealers, institutional investors and others at prices lower than
the public offering prices stated on the cover page hereof and such public offering prices may be changed
from time to time by the Initial Purchaser.
Certain statements included or incorporated by reference in this Official Statement constitute
forward-looking statements. Such statements are generally identifiable by the terminology used such as
"plan,""expect,""estimate,""budget"or other similar words. The achievement of certain results or other
expectations contained in such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,performance or achievements described to
be materially different from any future results, performance or achievements expressed or implied by
such forward-looking statements.
CUSIP data included here is subject to Copyright 2007, American Bankers Association. CUSIP
date included herein is provided by the Standard & Poor's CUSEP Service Bureau, a division of The
McGraw-Hill Companies, Inc. and is provided for convenience of reference only. Neither the District,
the Corporation or the Initial Purchaser shall be responsible for the selection or correctness of the CUSIP
numbers set forth herein.
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TABLE OF CONTENTS
Page
INTRODUCTION................................................._........................._..............................._.............. I
General....................................................................._....................................._..............._............ 1
TheDistrict.............................................................._..............................................._..............2
Security and Sources of Payment for the Certificates.................................._.._..................._.._.2
ContinuingDisclosure................................................................._._................._...........................3
Miscellaneous............................................................................................................_...........3
REFUNDINGPLAN...................................._......................................................................_...........3
SOURCES AND USES OF PROCEEDS OF THE CERTIFICATES................................................_.5
THECERTIFICATES........................................................................................................._........._.5
General..................................................................._......................_........................_........_...5
PrepaymentProvisions..........................................._...............................................................6
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES........................................8
InstallmentPayments...............................................................................................................8
NetRevenues........................................._...................................................................................9
Rate Stabilization Account...........................................................................__....................... 10
Allocation of Revenues........................._......................._............................................_........._... 10
RateCovenant............_........................._............................................................................_....... I
ReserveFund........................................._................................................................................... 12
Limitations on Issuance of Additional Obligations....................................................._._..........13
Insurance.................................................................................._........._..................................._.. 15
Allocation of Installment Payments.......................................................................................15
THEDISTRICT ....................................................._............_.........._..................................................16
Background............................................................................................................................ 16
Organization and Administration..........................._..............................................
...._......_._17
Services................................................_............................................................................. 18
ServiceArea........................................................................................................................... 19
Employees............................................._...................._........................._.........._._..............20
RetirementPlan..........................._....................._......................_.............................................21
Post-Employment Benefits.......................................................................................................22
RiskManagement......................................................................................_.._........_.............._...22
ExistingFacilities.........................................................................................._........_.........._.......22
Permits,Licenses and Other Regulations--..................................................................._..........24
Capital Improvement Program.....................................................................................................25
Groundwater Replenishment System......................................................................................_.28
PreferredLevel of Treatment...................._.........................................................................._.28
BiosolidsManagement............................................................................................................29
UrbanRunoff.............................................................._..................................................._..........30
Integrated Emergency Response Program...................................................._._.....................30
DISTRICTREVENUES.........................................................................................._............_.._...........31
SewerService Charges...._......................._.._..........._................................................._._......_...31
AdditionalRevenues............................................_.................................................._............34
Wastewater Treatment History.................................................................................._._......_...36
Customers................................................_.................................................................._............36
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TABLE OF CONTENTS
(continued)
Page
Assessed Valuation......................................................................................................................38
Tax Levies and Delinquencies.....................................................................................................38
Budgetary Process........................................................................................................................39
Reserves.......................................................................................................................................40
Summary of Operating Date........................................................................................................41
Projected Operating Data.............................................................................................................42
Management's Discussion and Analysis of Operating Data........................................................43
Investment of District Funds........................................................................................................44
FINANCIAL OBLIGATIONS...............................................................................................................45
Existing Indebtedness...................................................................................................................45
Variable Rate and Swap Obligations............................................................................................47
AnticipatedFinancings.................................................................................................................48
Direct and Overlapping Bonded Debt..........................................................................................49
THECORPORATION............................................................................................................................51
LIMITATIONS ON TAXES AND REVENUES...................................................................................51
Article XIIIA of the California Constitution................................................................................51
Legislation Implementing Article XIIIA......................................................................................51
Article XIIIB of the California Constitution................................................................................52
PropositionIA.............................................................................................................................53
Proposition62..............................................................................................................................53
Article XIIIC and Article XIIID of the Califomia Constitution...................................................54
Other Initiative Measures.............................................................................................................56
LEGALMATTERS................................................................................................................................56
FINANCIAL ADVISOR.........................................................................................................................56
ABSENCE OF LITIGATION.................................................................................................................56
FINANCIAL STATEMENTS................................................................................................................57
TAXMA17ERS.....................................................................................................................................57
VERIFICATION OF MATHEMATICAL COMPUTATIONS.............................................................59
CONTINUINGDISCLOSURE..............................................................................................................59
RATINGS .....................................................................................................................................59
PURCHASE AND REOFFERING.........................................................................................................60
MISCELLANEOUS...............................................................................................................................60
APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL.REPORT OF THE ORANGE
COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE
30,2006......................................................................................................................... l
APPENDIX B THE COUNTY OF ORANGE-ECONOMIC AND DEMOGRAPHIC
INFORMATION........................................................................................................... I
APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.................................................. 1
APPENDIX D BOOK-ENTRY ONLY SYSTEM................................................................................... 1
APPENDIX E FORM OF APPROVING OPINION OF SPECIAL COUNSEL..................................... 1
APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT............................................ l
APPENDIX G OFFICIAL.NOTICE INVITING BIDS............................................................................ 1
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OFFICIAL STATEMENT
S
ORANGE COUNTY SANITATION DISTRICT
REFUNDING CERTIFICATES OF PARTICIPATION,SERIES 2007A
INTRODUCTION
This introduction contains only a brief summary of certain of the terms of the Certificates being
offered and a brief description of the Official Statement.All statements contained in this introduction ore
qualified in their entirety by reference to the entire Official Statement. References to, and summaries of
provisions of the Constitution and laws of the State of California (the "State') and any documents
referred to herein do nor purport to be complete and such references are qualified in their entirety by
reference to the complete provisions. All capitalised terms cared in this Official Statement and not
otherwise defined herein have the meanings set forth in the Trust Agreement, the Installment Purchase
Agreement and the Master Agreement (each, as hereinafter defined). See APPENDLY C— "SUMMARY
OF PRINCIPAL LEGAL DOCUMENTS—Definitions"herein.
General
This Official Statement, including the cover page and all appendices hereto, provides certain
information concerning the Sale and delivery of S ' aggregate principal amount of the Orange
County Sanitation District Refunding Certificates of Participation, Series 2007A (the "Certificates")
evidencing direct,fractional undivided interests in the Installment Payments(the"Installment Payments")
and the interest thereon,to be made by the Orange County Sanitation District(the"District")pursuant to
the Installment Purchase Agreement, dated as of_ 1, 2007 (the"Installment Purchase Agreement"),
to be entered into by and between the District and the (range County Sanitation District Financing
Corporation(the"Corporation"). Pursuant to the Master Agreement far District Obligations, dated as of
August 1, 20D0 (the"Master Agreement"), by and between the District and the Corporation, the District
has established and declared the conditions and terms upon which obligations such as the Installment
Purchase Agreement,and the Installment Payments and the interest thereon,will be incurred and secured
Installment Payments under the Installment Purchase Agreement are payable Solely from Net Revenues
(as defined hereinafter) as provided in the Installment Purchase Agreement, consisting primarily of all
income and revenue received by the District from the operation or ownership of the District's Wastewater
System (the "Wastewater System") remaining after payment of Maintenance and Operation Costs, as
further described in"SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES"herein.
The Certificates are to be executed and delivered pursuant to a Trust Agreement, dated as of
1, 2007 (the"Trust Agreement"), by and among the District, the Corporation and Union Bank of
California,NA.,as trustee(the"Trustee). Proceeds from the sale of the Certificates,together with other
available moneys,will be used to(i)prepay all or a portion of the prior installment payments and related
certificates of participation in order to refinance certain improvements to its Wastewater System (the
"Project")(ii)fund a reserve fund for the Certificates,and(iii)pay the costs incurred in connection with
the execution and delivery of the Certificates. See"REFUNDING PLAN"herein. The Certificates will
be executed and delivered in the form of fully registered certificates, dated as of the date of initial
delivery thereof and will mature on February 1 in each year as set forth on the cover page hereof. Interest
evidenced by the Certificates will be payable semiannually on February 1 and August I of each year,
commencing on August I, 2007. See"THIN CERTIFICATES"herein. The Certificates will be initially
delivered only in book-entry form and will be registered in the name of Cede& Co., as nominee of The
• Preliminary,subject to change.
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Depository Trust Company, New York New York ("DTC"), which will act as securities depository for
the Certificates. The Certificates will be delivered in denominations of$5,000 and any integral multiple
thereof. So long as the Certificates are in the DTC book-entry system, the interest, principal, purchase
price and prepayment premiums, if any, due with respect to the Certificates will be payable by the
Trustee,or its agent,to DTC or its nominee. DTC,in turn,will make payments pursuant to its procedures
as described under APPENDIX D—"BOOK—ENTRY SYSTEM"herein.
The District
The District is a public agency responsible for regional wastewater collection, treatment and
disposal. The District is the sixth largest wastewater discharger in the United States. The District
provides service to an area with a population of approximately 2.5 million people in the northern and
central portion of the County of Orange (the "County"), in a service area of approximately 479 square
miles, treating 235 million gallons per day ("mg/d") of wastewater in Fiscal Year 2005-06. See "THE
DISTRICT,""DISTRICT REVENUES"AND"FINANCIAL OBLIGATIONS"herein.
Security and Sources of Payment for the Certificates
The Certificates evidence direct, fractional undivided interests in the Installment Payments, and
the interest thereon,paid by the District pursuant to the Installment Purchase Agreement. The obligation
of the District to pay the Installment Payments and the interest thereon and other payments required to be
made by it under the Installment Purchase Agreement is a special obligation of the District payable,in the
manner provided under the Installment Purchase Agreement, solely from Net Revenues, and other funds
as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and
revenue received by the District from the operation or ownership of the Wastewater System remaining
after payment of Maintenance and Operation Costs,all as further provided in the Master Agreement. The
Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions
of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded
Senior Obligations pursuant to the Master Agreement.
Currently,the District has Senior Obligations Outstanding evidenced by five series of certificates
of participation and two related interest rate swap agreements, payable on a parity with the Installment
Payments under the Installment Purchase Agreement. The two swap agreements were executed by the
predecessor special districts in connection with the execution and delivery of certain Outstanding Senior
Certificates. The payments under these swap agreements are payable on a parity with the Installment
Payments under the Installment Purchase Agreement and other Senior Obligations, as provided in the
Master Agreement. See"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein and APPENDIX
C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS— Master Agreement'attached hereto. The
term "Existing Senior Obligations" as used in this Official Statement refers to the 1992 Agreement for
Acquisition and Construction, the 1992 Swap,the 1993 Agreement for Acquisition and Construction,the
1993 Swap,the 2000 Installment Purchase Agreement,the 2003 Installment Purchase Agreement and the
2006 Installment Purchase Agreement, and the term "Senior Obligations" as used in this Official
Statement refers to the Existing Senior Obligations and any additional Senior Obligations, such as the
Installment Purchase Agreement which may be made payable on a parity basis to the Installment
Payments as provided in the Master Agreement. Senior Obligations, together with any Subordinate
Obligations payable on a subordinate basis to the Installment Payments executed and delivered as
provided in the Master Agreement are referred to collectively as the"Obligations."
Pursuant to the Master Agreement,the District will,to the extent permitted by law, fix,prescribe
and collect fees and charges for the services and facilities of the Wastewater System which will be at least
sufficient to yield during each Fiscal Year (a)Net Revenues equal to 125% of Debt Service on Senior
Obligations for such Fiscal Year and (b) Net Operating Revenues equal to 100% of Debt Service on all
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Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and
charges and may make such classification thereof as it deems necessary, but shall not reduce the fees and
charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at
all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND
SOURCE OF PAYMENT FOR THE CERTIFICATES—Rate Covenant"herein.
The obligation of the District to pay the Installment Payments and the interest thereon,and
other payments required to be made by it under the Installment Purchase Agreement is a special
obligation of the District payable,in the manner provided in the Installment Purchase Agreement,
solely from Net Revenues and other funds provided for in the Installment Purchase Agreement,and
does not constitute a debt of the District or of the State, or of any political subdivision thereof, in
contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and
credit nor the taxing power of the District or the Stale or any political subdivision thereof, is
pledged to the payment of the Installment Payments, or the interest thereon, or other payments
required to be made under the Installment Purchase Agreement. The Installment Purchase
Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master
Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior
Obligations pursuant to the Master Agreement. See"SECURITY AND SOURCES OF PAYMENT
FOR THE CERTIFICATES" herein.
Continuing Disclosure
The District has covenanted for the benefit of holders and beneficial owners of the Certificates(a)
to provide certain financial information and operating data (the "Annual Report")relating to the District
and the property in the District not later than eight (8)months after the and of the District's Fiscal Year
(which currently would be March 1), commencing with the report for the 2006.07 Fiscal Year, and(b)to
provide notices of the occurrence of certain enumerated events, if material. The specific nature of the
information to be contained in the Annual Report or the notices of material events is set forth in the
Continuing Disclosure Agreement. Sea "CONTINUING DISCLOSURE" and APPENDIX E —"FORM
OF CONTINUING DISCLOSURE AGREEMENT."
Miscellaneous
The Certificates will be offered when,as and if executed and delivered,and received by the Initial
Purchaser, subject to the approval as to their legality by Special Counsel and certain other conditions. It
is anticipated that the Certificates in definitive form will be available for delivery through the facilities of
DTC on or about__,2007.
The descriptions herein of the Trust Agreement,the Master Agreement,the Installment Purchase
Agreement and any other agreements relating to the Certificates are qualified in their entirely by reference
to such documents. Copies of the documents are on file and available for inspection at the corporate trust
office of the Trustee at Union Bank of California,N.A., , Los Angeles, California
90071,Attention: Corporate Trust.
REFUNDING PLAN
Net proceeds from the sale of the Certificates,together with other available moneys, will be used
to prepay all or a portion of the prior installment payments (the "Refunded Installment Payments")to be
made by the District pursuant to the installment purchase agreement, dated as of July 1, 2003 (the"2003
hlstallment Purchase Agreement") which was executed in connection with the execution and delivery of
the Orange County Sanitation District Certificates of Participation, Series 2003 (the "2003 Certificates")
evidencing$280,000,000 original aggregate principal amount.
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Pursuant to the terms of the trust agreement, dated as of July 1, 2003 (the "Prior Trust
Agreement'), by and among Union Bank of California, N.A.,as trustee,the Corporation and the District
pursuant to which such 2003 Certificates were executed and delivered, the refunding of the Refunded
Certificates will be effected by depositing a portion of the proceeds of the Certificates,together with other
available moneys, in an escrow fund(the"Escrow,Fund")to be created and established under the Escrow
Agreement,dated as of I, 2007, by and between the District and Union Bank of California, N.A.,
as escrow agent. Such proceeds and other monies deposited by the District in the Escrow Fund will be
used to purchase Government Obligations,the principal of and interest on which when due,together with
uninvested proceeds, will be sufficient to provide for the payment of the interest on the Refunded
Installment Payments on each payment date through and including August 1, 2013 (the "Prepayment
Date")and to provide for the prepayment of the Refunded Installment Payments on the Prepayment Date
at a Prepayment Price(the"Prepayment Price")equal to the principal amount thereof, without premium.
In accordance with the Prior Trust Agreement, the Refimded Installment Payments, and the interest
thereon, will be applied to the payment of the 2003 Certificates evidencing interests therein (the
"Refunded Certificates") through and including the Prepayment Date and to the prepayment of the
remaining outstanding Refimded Certificates on the Prepayment Date at a redemption price equal to the
Prepayment Price. See"VERIFICATION OF MATHEMATICAL COMPUTATIONS."
The specific maturities of the 2003 Certificates that will be refunded and prepaid as a result of the
execution and delivery of the Certificates(the"Refunded Certificates")will be determined by District on
the basis of market conditions at or about the time that the District accepts bids for the Certificates by
competitive sale. Such Refunded Certificates may be some or all of the maturities of the 2003
Certificates listed in the following table.
Orange County Sanitation District*
Certificates of Participation,Series 2003
Maturity Principal Interest
(February 1) Amount Rate CUSIP No.
2021 S 4,495,000 5.25% 68428PAA3
2022 15,100,000 5.00 69428PABI
2023 15,805,000 5.00 68428PAC9
2024 16,640,000 5.00 68428PAD7
2025 17,425,000 5.00 68428PAE5
2026 18,350,000 5.00 68428PAF2
2027 19,265,000 5.25 69428PAGO
2028 20,235,000 5.25 6942SPAH8
2030 44,505,000 5.25 68428PAJ4
2033 108,180,000 5.00 68428PAKI
The maturing principal of and the investment income to be derived from the Government
Obligations in the Escrow Fund will held in trust solely for the Refunded Certificates and will not be
available to pay the principal and interest evidenced by the Certificates or any obligations other than the
Refunded Certificates.
• Preliminary,subject to change.
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SOURCES AND USES OF PROCEEDS OF THE CERTIFICATES
The sources and uses of funds with respect to the delivery of the Certificates are shown below.
Sour e�
Certificate Proceeds
Amounts released from Prior Trust Agreement $
Total Sources $
Uses
Escrow Fund
Reserve Fond
Costs of Issuance(0
Total Uses $
t t Costs of issouce include,among other things,fees of rating agencies.initial fees of the Trustee and Special Cwmsel fees.
THE CERTIFICATES
General
The Certificates will be prepared in the form of fully registered certificates in denominations of
$5,000 and any integral multiple thereof. The Certificates will be dated as of the date of initial delivery
thereof and will =lure on February I in each year as set forth on the cover page hereof. Interest
evidenced by the Certificates will be payable semiannually on February I and August 1 of each year,
commencing on August 1, 2007. See"THE CERTIFICATES" herein. The Certificates will be initially
delivered only in book-entry form and will be registered in the name of Cede& Co., as nominee of The
Depository Trust Company, New York, New York("DTC"), which will act as securities depository for
the Certificates. Individual purchases of the Certificates will be made in book-entry form only.
Purchasers of Certificates will not receive physical certificates representing their ownership interests in
the Certificates purchased.
The interest evidenced by the Certificates shall be payable on each Interest Payment Date to and
including their respective Principal Payment Dates or prepayment prior thereto, and shall represent the
sum of the interest on the Installment Payments coming due on the Interest Payment Dates in each year.
The principal evidenced by the Certificates shall be payable on their respective Principal Payment Dates
and Mandatory Sinking Account Payment Dates in each year and shall represent the Installment Payments
coming due on the Principal Payment Dates and Mandatory Sinking Account Payment Dates in each year.
Each Certificate shall evidence interest from the Interest Payment Date next preceding its date of
execution to which interest has been paid in full, unless such date of execution shall be after a Record
Date and on or prior to the following Interest Payment Date, in which case such Certificate shall evidence
interest from such Interest Payment Date, or unless such date of execution shall be on or prior to
15, 2007, in which case such Certificate shall represent interest from its date of initial delivery.
Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the
Certificates shall be in default,each Certificate shall evidence interest from the last Interest Payment Date
to which such interest has been paid in full or duly provided for. Interest evidenced by the Certificates
shall be computed on the basis of a 360-day year consisting of twelve 30-day months. See APPENDIX C
—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement."
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Payments of principal and interest evidenced by the Certificates are payable directly to DTC by
Union Bank of California,N.A.,as trustee. Upon receipt of payments of such principal and interest,DTC
will in turn distribute such payments to the beneficial owners of the Certificates. So long as the
Certificates are in the DTC book-entry system, the interest, principal, purchase price and prepayment
premiums, if any,due with respect to the Certificates will be payable by the Trustee, or its agent,to DTC
or its nominee. DTC, in turn, will make payments pursuant to its procedures as described under
APPENDIX D—"BOOK - ENTRY SYSTEM"herein. So long as the Certificates are in the DTC book-
army system,the interest,principal and prepayment premiums, if any,due with respect to the Certificates
will be payable by the Trustee, or its agent, to DTC or its nominee. DTC, in turn, will make payments
pursuant to its procedures as described under APPENDIX D—"BOOK-ENTRY SYSTEM"herein.
Prepayment Provisions
Optional Prepayment The Certificates are subject to optional prepayment prior to their stated
Principal Payment Dates, on any date on or after February 1, 2017, in whole or in part, in Authorized
Denominations, from and to the extent of prepaid Installment Payments paid pursuant to the Installment
Purchase Agreement or from any other source of available funds, any such prepayment to be at a price
equal to the principal evidenced by the Certificates to be prepaid plus accrued interest evidenced thereby
to the date fixed for prepayment.
Mandan ny Sinking Account Prepayment The Certificates with a stated Principal Payment Date
of February 1, 20 are subject to prepayment prior to their stated Principal Payment Date, in part, from
Mandatory Sinking Account Payments, on each February 1 specified below, at a prepayment price equal
to the principal evidenced thereby, plus accrued interest evidenced thereby to the date fixed for
prepayment, without premium. The principal evidenced by such Certificates to be so prepaid and the
dates therefor will be as follows:
Date
(February 1) Mandatory Sinking Fund Amount
? Stated Principal Payment Date.
The amount of each such prepayment shall be reduced in the event and to the extent that
Installment Payments payable on the corresponding Installment Payment Date are prepaid from any
source of funds available to the District pursuant to the Installment Purchase Agreement, and applied to
the prepayment of Certificates with a stated Principal Payment Date of February 1,20_
The Certificates with a stated Principal Payment Date of February 1, 20_ are subject to
prepayment prior to their stated Principal Payment Date, in part, from Mandatory Sinking Account
Payments, on each February I specified below, at a prepayment price equal to the principal evidenced
thereby,plus accrued interest evidenced thereby to the date fixed for prepayment,without premium. The
principal evidenced by such Certificates to be so prepaid and the dates therefor will be as follows:
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Date
(February 1) Mandatory Sinking Fund Amount
t Stated Principal Payment Date.
The amount of each such prepayment shall be reduced in the event and to the extent that
Installment Payments payable on the corresponding Installment Payment Date are prepaid from any
source of funds available to the District pursuant to the Installment Purchase Agreement, and applied to
the prepayment of Certificates with a stated Principal Payment Date of February 1,20_
Selection of Cerdflexer for prepayment Whenever less than all the Outstanding Certificates are
to be prepaid on any one date pursuant to provisions of the Trust Agreement with respect to optional
prepayment of Certificates, the Trustee shall select the Certificates to be prepaid among Certificates with
different Principal Payment Dates as directed in a Written Request of the District. Whenever less than all
the Outstanding Certificates with the same stated Principal Payment Date are to be prepaid on any one
date in accordance with the Trust Agreement, the Trustee shall select the Certificates with such Principal
Payment Date to be prepaid by lot in any manner that the Trustee deems fair and appropriate, which
decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify
the District in writing of the numbers of the Certificates so selected for prepayment on such date. For
purposes of such selection,any Certificate may be prepaid in part in Authorized Denominations.
Notice of prepayment When prepayment of Certificates is authorized pursuant to the Trust
Agreement, the Trustee shall give notice, at the expense of the District, of the prepayment of the
Certificates. The notice of prepayment shall specify(a)the Certificates or designated portions thereof(in
the case of prepayment of the Certificates in part but not in whole)which are to be prepaid(b)the date of
prepayment, (c)the place or places where the prepayment will be made, including the name and address
of any paying agent, (d)the prepayment price, (e)the CUSIP numbers assigned to the Certificates to be
prepaid (f) the numbers of the Certificates to be prepaid in whole or in part and, in the case of any
Certificate to be prepaid in part only,the principal evidenced by such Certificate to be prepaid and(g)the
interest rate and stated Principal Payment Date of each Certificate to be prepaid in whole or in part. Such
notice of prepayment shall further state that on the specified date there shall become due and payable
upon each Certificate or portion thereof being prepaid the prepayment price and that from and after such
date interest evidenced thereby shall case to accrue and be payable. With respect to any notice of
optional prepayment of Certificates, unless at the time such notice is given the Certificates to be prepaid
shall be deemed to have been paid within the meaning of the Trust Agreement,such notice shall state that
such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such
prepayment, of moneys sufficient to pay for the prepayment price of the Certificates to be prepaid, and
that if such moneys shall not have been so received said notice shall be of no force and effect and the
District shall not be required to prepay such Certificates. In the event a notice of prepayment of
Certificates contains such a condition and such moneys are not so received,the prepayment of Certificates
as described in the conditional notice of prepayment shall not be made and the Trustee shall, within a
reasonable time after the date on which such prepayment was to occur, give notice to the persons and in
the manner in which the notice of prepayment was given,that such moneys were not so received and that
there shall be no prepayment of Certificates pursuant to such notice of prepayment.
The Trustee shall, at last 30 but not more than 60 days prior to any prepayment date,give notice
of prepayment to the respective Owners of Certificates designated for prepayment by first-class mail,
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postage prepaid,at their addresses appearing on the registration books maintained by the Trustee as of the
close of business on the day before such notice of prepayment is given.
The actual receipt by the Owner of any notice of such prepayment shall not be a condition
precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the
validity of the proceedings for the prepayment of such Certificates or the cessation of interest evidenced
thereby on the date fixed for prepayment.
Effect of Napoyment If notice of prepayment has been duly given as aforesaid and moneys for
the payment of the prepayment price of the Certificates to be prepaid are held by the Trustee,then on the
prepayment date designated in such notice, the Certificates so called for prepayment shall become
payable at the prepayment price specified in such notice; and from and after the date so designated,
interest evidenced by the Certificates so called for prepayment shall cease to accrue, such Certificates
shall cease to be entitled to any benefit or security hereunder and the Owners of such Certificates shall
have no rights in respect thereof except to receive payment of the prepayment price thereof. The Trustee
shall, upon surrender for payment of any of the Certificates to be prepaid. pay such Certificates at the
prepayment price thereof,and such moneys shall be pledged to such payment.
All Certificates prepaid pursuant to the provisions of the Trust Agreement shall be canceled by
the Trustee and shall not be redelivered.
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES
Installment Payments
Pursuant to the Installment Purchase Agreement,the Project will be acquired by the District from
the Corporation.The District has covenanted to, subject to any rights of prepayment under the Installment
Purchase Agreement, pay to the Corporation, solely from Net Revenues and from no other sources, the
Purchase Price in Installment Payments, with interest thereon, as provided in the Installment Purchase
Agreement. Pursuant to the Master Agreement, the District has established and declared the conditions
and terms upon which obligations such as the Installment Purchase Agreement, and the Installment
Payments and the interest thereon payable under the Installment Purchase Agreement, will be incurred
and secured. The obligation of the District to make the Installment Payments, and payments of interest
thereon,and other payments required to be made by it under the Installment Purchase Agreement, solely
from Net Revenues, is absolute and unconditional, and until such time as the Installment Payments,
payments of interest thereon, and such other payments shall have been paid in full (or provision for the
payment thereof shall have been made pursuant to the Installment Purchase Agreement),the District has
covenanted that it will not discontinue or suspend any Installment Payments when due,whether or not the
Project or any par thereof is operating or operable or has been completed, or its use is suspended,
interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments,
payments of interest thereon, and other payments shall not be subject to reduction whether offset or
otherwise and shall not be conditional upon the performance or nonperformance by any party of any
agreement or any cause whatsoever. The District's obligation to make Installment Payments from Net
Revenues is on a parity with the District's obligation to make payments with respect to its Outstanding
Senior Obligations. See '—Net Revenues"below. Pursuant to the Trust Agreement, the Corporation has
assigned to the Trustee for the benefit of the Owners of the Certificates substantially all of its rights,title
and interest in the Installment Purchase Agreement, including its right to receive Installment Payments
and the interest thereon.
Currently,the District has Senior Obligations Outstanding evidenced by five series of certificates
of participation and two related interest rate swap agreements, payable on a parity with the Installment
Payments under the Installment Purchase Agreement. The two swap agreements were executed by the
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predecessor special districts in connection with the execution and delivery of certain Outstanding Senior
Certificates. The payments under these swap agreements are payable on a parity with the Installment
Payments under the Installment Purchase Agreement and other Senior Obligations, as provided in the
Master Agreement. See"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein and APPENDIX
C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement"attached hereto.
The obligation of the District to pay the Installment Payments, and the interest thereon,and other
payments required to be made by it under the Installment Purchase Agreement and Master Agreement, is
a special obligation of the District payable, in the manner provided in the Installment Purchase
Agreement, solely from Net Revenues and other funds provided for in the Installment Purchase
Agreement,and does not constitute a debt of the District,the State or of any political subdivision thereof,
in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and
credit nor the taxing power of the District,the State or any political subdivision thereof, is pledged to the
payment of the Installment Payments, or the interest thereon, or other payments required to be made
under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior
Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the
advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master
Agreement. See"SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES"herein.
Net Revenues
The District is obligated to make Installment Payments solely from Net Revenues as provided in
the Master Agreement, which consist of Revenues remaining after payment of costs paid by the District
for maintaining and operating the Wastewater System ("Maintenance and Operation Costs"). Revenues
are defined in the Master Agreement to mean, for any period, all income and revenue received by the
District during such period from the operation or ownership of the Wastewater System, determined in
accordance with generally accepted accounting principles, including all fees and charges received during
such period for the services of the Wastewater System, investment income received during such period
(but only to the extent that such investment income is generally available to pay costs with respect to the
Wastewater System, including Maintenance and Operation Costs), Net Proceeds of business interruption
insurance received during such period,ad valorem taxes received during such period payments under the
Agreement Acquiring Ownership Interests, Assigning Rights and Establishing Obligations, entered into
on February 13, 1986, and amendment No. 1 thereto dated December 10, 1986, by and between
predecessor County Sanitation District No. 14 of Orange County and the Irvine Reach Water District(the
"IRWD Agreement") received during such period and all other money received during such period
howsoever derived by the District from the operation or ownership of the Wastewater System or arising
from the Wastewater System (including any standby or availability charges), but excluding (a) Capital
Facilities Capacity Charges, (b)payments received under Financial Contracts,and(c)refundable deposits
made to establish credit and advances or contributions in aid of construction (which, for purposes of the
Master Agreement, shall not include payments under the IRWD Agreement); provided, however, that (i)
Revenues shall be increased by the amounts, if any, transferred during such period from the Rate
Stabilization Account to the Revenue Account and shall be decreased by the amounts, if any,transferred
during such period from the Revenue Account to the Rate Stabilization Account,and (ii)Revenues shall
include Capital Facilities Capacity Charges collected during such period to the extent that such Capital
Facilities Capacity Charges could be properly expended on a Capital Facilities Capacity Charge Eligible
Project for which the proceeds of Subject Obligations were used or are available to be used. See
"DISTRICT REVENUES—Additional Revenues"herein.
The District's obligation to make the Installment Payments from its Net Revenues is on a parity
with the District's obligation to make payments with respect to its other outstanding obligations described
as Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations,as provided
in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as
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such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits,
interests and security afforded Senior Obligations pursuant to the Master Agreement. Pursuant to the
Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations,and the Net Revenues will not be used for
any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to
Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be
apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This
pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and
Reimbursement Obligations with respect to Senior Obligations. The term Senior Obligations, generally
means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District
authorized,executed, issued and delivered under and pursuant to applicable law,the Installment Purchase
Agreement and all other contracts (including financial contracts) or leases of the District authorized and
executed by the District under and pursuant to applicable law, the installment, lease or other payments
under which are,in accordance with the provisions of the Master Agreement,payable from Net Revenues
on a parity with the payments under the Master Agreement.
The District may at any time incur Subordinate Obligations payable on a subordinate basis to the
Installment Payments executed and delivered as provided in the Master Agreement; provided, however,
that prior to incurring such Subordinate Obligations,the District will have determined that the incurrence
thereof will not materially adversely affect the District's ability to comply with the requirements of the
Master Agreement. The District may at any time incur Reimbursement Obligations with respect to
Subordinate Obligations. For a description of the District's Outstanding Senior Obligations and
Subordinate Obligations, see"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein. There are
currently no Subordinate Obligations or Reimbursement Obligations with respect to Subordinate
Obligations outstanding.
The District may, in connection with the incurrence of Subordinate Obligations, pledge Net
Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to
Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be
junior and subordinate to the pledge of,and lien on,Net Revenues for the payment of Senior Obligations
and Reimbursement Obligations with respect to Senior Obligations.
Rate Stabilization Acmunt
In order to avoid Fluctuations in its fees and charges of the Wastewater System, from time to time
the District may deposit in the Rate Stabilization Account from Net Revenues such amounts as the
District deems necessary or appropriate. From time to time, the District may also transfer moneys from
the Rate Stabilization Account to the Revenue Account to be used by the District, first to pay all
Maintenance and Operations Costs as and when the same shall be due and payable. In addition,any such
amount transferred from the Rate Stabilization Account to the Revenue Account by the District is
included as Revenues for any period, but such transferred amount is excluded from determining
Operating Revenues for any period. Revenues will be decreased by the amounts,if any,transferred from
the Revenue Account to the Rate Stabilization Account. There are presently no funds in the Rate
Stabilization Account.
Allocation of Revenues
In order to carry out and effectuate the pledge of Net Revenues under the Master Agreement as
described above, the District agrees and covenants that all Operating Revenues received by the District
will be deposited when and as received in the Revenue Account. Additionally, amounts may,from time
to time as the District deems necessary or appropriate,be transferred from the Rate Stabilization Account
and deposited in the Revenue Account, as described above under "— Rate Stabilization Account" The
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District will pay from the Revenue Account all Maintenance and Operations Costs (including amounts
reasonably required to be set aside in contingency reserves for Maintenance and Operations Costs, the
payment of which is not immediately required)as and when the same shall be due and payable.
After having paid, or having made provisions for the payment of, Maintenance and Operations
Costs, the District shall set aside and deposit or transfer, as the case may be, from the Revenue Account
such amounts at such times as provided in the Master Agreement in the following order of priority:
(1) Senior Obligation Payment Account;
(2) Senior Obligation Reserve Funds;
(3) Subordinate Obligation Payment Account;
(4) Subordinate Obligation Reserve Funds;and
(5) Rate Stabilization Account.
Amounts required or permitted to be deposited or transferred as described in items 2, 3, 4 and 5
above, shall not be so deposited or transferred unless the District shall have determined that there will be
sufficient Net Revenues available to make the required deposits or transfers on the dates on which such
deposits or transfers are required to be made as described above. So long as the District has determined
that Net Revenues will be sufficient to make all of the deposits or transfers required to be made pursuant
to items 1,2, 3,4 and 5 above,on the dates on which such deposits or transfers are required to be made,
Net Revenues on deposit in the Revenue Account may from time to time be used for any purpose for
which the District funds may be legally applied. For additional information, see APPENDIX C —
"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement"
Rate Covenant
Pursuant to the Master Agreement,the District will,to the extent permitted by law, fix,prescribe
and collect fees and charges for the services of the Wastewater System which will be at least sufficient to
yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for
such Fiscal Year and (b) Net Operating Revenues equal to 100% of Debt Service on all Obligations for
such Fiscal Year.The District may make adjustments from time to time in such fees and charges and may
make such classification thereof as it deems necessary, but will not reduce the fees and charges then in
effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be
sufficient to meet the requirements of the Master Agreement.
In addition, the District has covenanted in the Master Agreement to prepare and adopt an annual
budget for the Wastewater System for each Fiscal Year. Such budget will set forth in reasonable detail
the Revenues anticipated to be derived in such Fiscal Year and the expenditures anticipated to be paid or
provided for therefrom in such Fiscal Yew, including,without limitation, the amounts required to pay or
provide for the payment of the Obligations during such Fiscal Year, the amounts required to pay or
provide for the payment of Maintenance and Operations Costs during such Fiscal Year and the amounts
required to pay or provide for the payment of all other claims or obligations required to be paid from
Revenues in such Fiscal Year,and will show that Revenues and Net Revenues will be at least sufficient to
satisfy the requirements of the Master Agreement. On or before September I of each Fiscal Year, the
District will file with the Trustee a copy of the adopted budget for such Fiscal Year. See APPENDIX C—
"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement"for additional information.
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Reserve Fund
The Trust Agreement provides for the funding of the Reserve Fond in an amount equal to the
"Reserve Requirement,"which is defined as an amount,as of any date of calculation,equal to the least of
(a) ;• (b) I U% of the original aggregate amount of principal evidenced by the Certificates, (c)
the maximum amount of remaining Installment Payments,and the interest thereon,coming due in any one
Certificate Year,and(d) 125%of the average amount of remaining Installment Payments,and the interest
thereon,coming due in each Certificate Year. Amounts in the Reserve Fond may be used to pay principal
and interest evidenced by the Certificates to the extent that amounts in the Principal Account and Interest
Account are insufficient therefor. The Trustee shall establish and maintain the Reserve Fund until all
required Installment Payments, and the interest thereon, are paid in full pursuant to the Installment
Purchase Agreement and until the first date upon which no Certificates are Outstanding. The Reserve
Fund will be funded with a portion of the net proceeds of the Certificate in the amount of S
which amount is sufficient to satisfy the Reserve Requirement. See "SOURCES AND USES OF
PROCEEDS OF THE CERTIFICATES."
The District may substitute a Reserve Facility for all or a part of the moneys on deposit in the
Reserve Fund by depositing such Reserve Facility with the Trustee so long as, at the time of such
substitution, the amount on deposit in the Reserve Fund, together with the amount available under such
Reserve Facility and any previously substituted Reserve Facilities, shall be at least equal to the Reserve
Requirement. Moneys for which a Reserve Facility has been substituted as provided in the Trust
Agreement shall be transferred, at the election of the District, to the Installment Payment Fund, or upon
receipt of an Opinion of Counsel to the effect that such transfer,in and of itself,will not adversely affect
the exclusion of interest evidenced by the Certificates from gross income for federal income tax purposes,
to a special account to be held by the Trustee and applied to the payment of capital costs of the District,as
directed in a Written Request of the District. Any amounts paid pursuant to any Reserve Facility shall be
deposited in the Reserve Fund.
If a Reserve Facility is credited to the Reserve Fund to satisfy a portion of the Reserve
Requirement,the Trustee shall make a claim for payment under such Reserve Facility, in accordance with
the provisions thereof, in an amount which, together with other available moneys in the Reserve Fund,
will be sufficient to make said deposit in the Interest Account or Principal Account.
The moneys in the Reserve Fund, and any Reserve Facility, shall be held in trust by the Trustee
for the benefit of the Owners and shall be used and disbursed only for the purposes and was authorized in
the Trust Agreement. Moneys, if any, on deposit in the Reserve Fund shall be withdrawn and applied by
the Trustee for the final payment of principal and interest evidenced by the Certificates.
Amounts on deposit in the Reserve Fund which were not derived from payments under any
Reserve Facility credited to the Reserve Fund to satisfy a portion of the Reserve Requirement shall be
used and withdrawn by the Trustee prior to using and withdrawing any amounts derived from payments
under any such Reserve Facility. In order to accomplish such use and withdrawal of such amounts not
derived from payments under any such Reserve Facility,the Trustee shall,as and to the extent necessary,
liquidate any investments purchased with such amounts. If and to the extent that more than one Reserve
Facility is credited to the Reserve Fund to satisfy a portion of the Reserve Requirement, drawings
thereunder, and repayment of expenses with respect thereto,shall be made on a pro-ram basis(calculated
by reference to the policy limits available thereunder).
The Trustee shall, from amounts received from the District pursuant to the Installment Purchase
Agreement,deposit in the Reserve Fund an amount of money which,together with the amount already on
• Preliminary,subject to change.
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deposit therein and the amounts available under all Reserve Facilities, will be equal to the Reserve
Requirement. No deposit need be made in the Reserve Fund so long as there shall be on deposit therein a
sum equal to the amount which, together with the amounts available under all Reserve Facilities, is at
least the Reserve Requirement. The Trustee shall promptly notify the District in writing if the amount on
deposit is less than the Reserve Requirement.
If, as a result of the scheduled payment of principal or interest evidenced by the Certificates,the
Reserve Requirement is reduced the Trustee shall transfer an amount equal to the amount of such
reduction to the Installment Payment Fund. See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL
DOCUMENTS—Trust Agreement."
Limitations on Issuance of Additional Obligations
Senior Obligations. The District may at any time incur Senior Obligations in addition to the
Existing Senior Obligations payable from Net Revenues as provided in the Master Agreement on a parity
with all other Senior Obligations theretofore incurred but only subject to the following conditions under
the Master Agreement
(1) Upon the incurrence of such Senior Obligations, no Event of Default will be continuing
under the Master Agreement;and
(2) Subject to the provisions of the Master Agreement, the District will have received either
one of the following:
(i) A Written Certificate of the District certifying that,for a 12 consecutive calendar
month period during the 24 consecutive calendar month period ending in the
calendar month prior to the incurrence of such Senior Obligations (which 12
consecutive calendar month period will be specified in such certificate or
certificates):
(A) Net Revenues,as shown by the books of the District,will have amounted
to at least 125% of Maximum Annual Debt Service on all Senior
Obligations to be outstanding immediately after the incurrence of such
Senior Obligations,and
(B) Net Operating Revenues,as shown by the books of the District,will have
amounted to at least 10OVo of Maximum Annual Debt Service on all
Obligations to be outstanding immediately after the incurrence of such
Senior Obligations.
For purposes of demonstrating compliance with the foregoing,Net Revenues and
Net Operating Revenues may be adjusted for(x)any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in
effect on the date such Senior Obligations are incurred, but which, during all or
any part of such 12 consecutive calendar month period, were not in effect, (y)
customers added to the Wastewater System subsequent to such 12 consecutive
calendar month period but prior to the date such Senior Obligations are incurred,
and (z) the estimated change in available Net Revenues and Net Operating
Revenues which will result from the connection of existing residences or
businesses to the Wastewater System within one year following completion of
any project to be funded or any system to be acquired from the proceeds of such
Senior Obligations;or
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(ii) A certificate or certificates from one or more Consultants which, when taken
together, project that, for each of the two Fiscal Years next succeeding the
incurrence of such Senior Obligations:
(A) Net Revenues will amount to at least 125% of Maximum Annual Debt
Service on all Senior Obligations to be outstanding immediately after the
incurrence of such Senior Obligations,and
(B) Net Operating Revenues will amount to at least 100% of Maximum
Annual Debt Service on all Obligations to be outstanding immediately
after the incurrence of such Senior Obligations.
For purposes of demonstrating compliance with the foregoing,Net Revenues and
Net Operating Revenues may be adjusted for(x)any changes in fees and charges
for the services of the Wastewater System which have been adopted and are in
effect on the date such Senior Obligations are incurred or will go into effect prior
to the end of such two Fiscal Year period,(y)customers expected to be added to
the Wastewater System prior to the end of such two Fiscal Year period, and (z)
the estimated change in available Net Revenues and Net Operating Revenues
which will result from the connection of existing residences or businesses to the
Wastewater System within one year following completion of any project to be
funded or any system to be acquired from the proceeds of such Senior
Obligations. For purposes of preparing the certificate or certificates described
above,the Consultant may rely upon financial statements prepared by the District
that have not been subject to audit by an independent certified public accountant
if audited financial statements for the period we not available.
See, also "FINANCIAL OBLIGATIONS - Existing Indebtedness" herein. The provisions
described above in paragraph (2)need not be complied with if the Senior Obligations being incurred are
Short-Term Obligations excluded from the calculation of Assumed Debt Service pursuant to clause(H)of
the definition thereof. See APPENDIX C - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -
Definitions"herein.
The determination of Net Revenues for use in the calculation described above is more fully
described in APPENDIX C - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - Master
Agreement-Senior Obligations"attached hereto. The provisions described in paragraph(2)above need
not be complied with for such portion of such Senior Obligations incurred for the purpose of providing
funds to refund or refinance such Obligations if(I)a portion(which may be all)of the Senior Obligations
are incurred for the purpose of providing funds to refund or refinance any Obligatons, (ii) upon such
refunding or refinancing, debt service on such refunded or refinanced Obligations, or debt service on
bonds,notes or other obligations of an entity other than the District,the debt service on which is payable
from Obligation Payments for such Obligations(the "Related Bonds"),will no longer be included in the
calculation of Assumed Debt Service either because such Obligations, or the Related Bonds of such
Obligations, will have been paid in full or because such debt service is disregarded pursuant to clause(L)
of the definition of Assumed Debt Service, and (iii) Assumed Debt Service in each Fiscal Year for the
portion of such Senior Obligations incurred for the purpose of providing funds to refund or refinance such
Obligations is less than or equal to 105% of Assumed Debt Service in such Fiscal Year for such
Obligations being refunded or refinanced(assuming for such purposes that debt service on such refunded
or refinanced Obligations, or debt service on the Related Bonds of such Obligations, is not disregarded
pursuant to clause (L) of the definition of Assumed Debt Service). See APPENDIX C - "SUMMARY
OF PRINCIPAL LEGAL DOCUMENTS - Master Agreement" attached hereto for additional
information.
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The District may at any time incur Reimbursement Obligations with respect to Senior
Obligations.
Subordinate Obligations. The District may at any time incur Subordinate Obligations upon
satisfaction of the conditions provided in the Master Agreement. See APPENDIX C—"SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS—Master Agreement'herein for a description of such conditions.
Insurance
The District will procure and maintain or cause to be procured and maintained casualty insurance
on the Wastewater System with responsible insurers,or provide self insurance(which may be provided in
the form of risk-sharing pools), in such amounts and against such risks (including accident to or
destruction of the Wastewater System) as are usually covered in connection with facilities similar to the
Wastewater System. The District will procure and maintain such other insurance which it will deem
advisable or necessary to protect its interests and the interests of the Corporation. See"THE DISTRICT—
Risk Management' and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —
Master Agreement'herein.
Allocation of Installment Payments
Table 1 below sets forth the Installment Payments, together with the estimated interest thereon,
assuming the only prepayments made are the mandatory prepayments described under "THE
CERTIFICATES— Prepayment Provisions"herein. Also set forth are the payments due on Outstanding
Senior Obligations.
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Table 1
Estimated Installment Payments of the District
Find year Outstanding Senior
Fading Installment Payments Obligations Payments
June 30 Principal Interest Principal Interest", Total
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2023
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
(1) Asanna_%for all uo-hedged variable we obligations and actual swap reles for swapped variable rate obligations. See
"FINANCIAL OBLIGATIONS - Existing Indebtedness' and APPENDIX A - "COh1PREHENSIVE ANNUAL
FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED TUNE 30.
2006"herein.
THE DISTRICT
Background
The Orange County Sanitation District is a public agency responsible for regional wastewater
collection, treatment and disposal. The District is the sixth largest wastewater discharger in the United
States. The District provides service to an area with a population of approximately 2.5 million people in
i
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the northern and central portion of the County by treating 235 mg/d of wastewater in Fiscal Year 2005-06.
The District serves approximately 81% of the County population in approximately 479 square miles, or
59%of the County.
The service area which comprises the District was originally formed in 1954 pursuant to the
County Sanitation District Act, as amended, Section 4700 el seg. of the Health and Safety Code of the
State.The District's service area originally consisted of seven independent special districts in the County
which were each responsible for matters relating to their individual districts. These special districts were
jointly responsible for the treatment and disposal facilities which they each used. The seven independent
districts were successors to the Joint Outfall Sewer Organisation, which was formed in 1923 among the
Cities of Anaheim, Santa Ana, Fullerton,and Orange, and the sanitary districts of Placentia, Buena Park,
La Habra, and Garden Grove. The Joint Outfall Sewer Organization constructed a treatment plant and
outfall in the early 1920's to serve its members. it was reorganized in 1947 and 1948 into seven county
sanitation districts - Districts Nos. 1, 2, 3, 5, 6, 7 and 11. These prior districts were formed based on
engineers' analyses of the gravity flows in the service area. District No. 13 was formed in 1985 and
District No. 14 was added in 1986. These districts were co-participants in a Joint Agreement which
provided for the joint construction,ownership,and operation of the prior districts'joint facilities.
In April 1998, at the request of the District's Board of Directors (the "Board"), the Board of
Supervisors of Orange County (the "County Board") passed Resolution No. 98-140 approving the
consolidation of the than existing nine special districts into a new, single sanitation district, to be known
as the Orange County Sanitation District. This action was designed to simplify governance structures,
reduce the size of the Board, ease administrative processes, streamline decision-making and consolidate
accounting and auditing processes.The consolidation was effective on July L 1998.
Pursuant to the Resolution and Government Code Section 57500, the prior districts transferred
and assigned all of their powers, rights, duties, obligations, functions and properties to the District, and
the District assumed all obligations of the prior districts which were several and not joint including,
without limitation, their obligations to repay the then outstanding certificates of participation. See
"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein. The boundaries of the nine predecessor
special districts were initially used by the District to delineate separate revenue areas (the "Revenue
Areas") for budgeting and accounting purposes and in order to facilitate the imposition of fees and
charges imposed by the District. See"DISTRICT REVENUES—Sewer Service Charges"herein.
The District is managed by an administrative organization composed of a Board of Directors
appointed by twenty-five member cities and agencies which are serviced by the District. The District is
responsible for construction and maintenance of a major portion of the wastewater collection, treatment
and disposal facilities within its boundaries. Revenue Area No. 7 is responsible for approximately 152
miles of local sewers in its service area, whereas local sanitary districts, water districts and cities are
responsible for local sewers in the remainder of the District's service area.
Organisation and Administration
The District is independent of and overlaps other formal political jurisdictions. There are many
governmental entities, including the County,that operate within the District's jurisdiction. These entities
are exclusively responsible for the administration of their own fiscal affairs,and the District is not entitled
to operating surpluses of,or responsible for operating deficits of,any of the other entities.
The twenty-five member Board of Directors is comprised of representatives from twenty-one
cities, unincorporated areas of the County and three special districts,including mayors of cities,members
of city councils, directors of independent special districts and one member from the County Board.
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Several board committees, made up of members of the Board of Directors, consider topics for action by
the Board and make recommendations to the Board. The Chair and the Vice Chair of the Board are
elected every year by a majority of the Board,and some at the pleasure of the majority of the Board.
The District has a general manager, general counsel, administrative and operating staff, with
offices located at Reclamation Plant No. 1 in Fountain Valley. The District currently employs an
administrative and operating staff of over 600 under the direction of the General Manager,James D. Ruth.
James D. Ruth,is the District's General Manager,and has served in that capacity since December
2005. Prior to that time, from January 2003 to October 2004,Mr. Ruth served as Chief Executive Officer
for the County of Orange. Mr. Ruth had previously provided 22 years of service to the city of Anaheim
as parks and recreation director,deputy city manager,assistant city manager and chief executive officer,a
post he held for I 1 years.
Robert P. Ghirelli, Ph.D., is the District's Assistant General Manager, and has served in that
capacity since July 2006. Mr. Ghirelli previously served as Director of Technical Services for the District
since his joining the District in 1998. Prior to joining the District, Mr. Ghirelli served forjust over a year
as managing principal of the Los Angeles office of a national environmental consulting firm, served 20
years in supervisory positions with the State and Regional Water Boards,with 13 years Executive Officer
of the California Regional Water Quality Control Board, Los Angeles/Ventura Region.
Lorenzo Tyner, is the District's Director of Finance and Administrative Services. In September
2005, Mr.Tynerjoined the District with nearly 15 years of public finance and budgeting experience,most
recently serving as the Los Angeles Unified School District Budget Director and Deputy Chief Financial
Officer. Mr. Tyner previously worked in large government organizations including the City of Los
Angeles and the Los Angeles County Metropolitan Transportation Authority and private sector companies
IBM Global Services and Northrop.
James Herberg, P.E., is the District's Director of Engineering, and has served in that capacity
since November 2006. Prior to becoming Director of Engineering, he was the District's Director of
Operations and Maintenance. Mr. Herberg has over twenty years of experience in water and wastewater
including project management, construction management, design, strategic planning, and operations &
maintenance.
Ed Torres, has served as Director of Technical Services for the District. Mr. Torres has twenty-
four years of public and private sector experience in protecting public health and the environment. Prior
to joining the District in 1991, Mr. Torres served in a professional capacity for the California State
University System and TRW Electronics and Defense Sector.
Nick Arhontes, P.E., serves as the Director of Operations and Maintenance and has served the
District since 1988. Mr. Arhontes has over 30 years of experience managing various engineered systems
in the private and public sectors regionally,nationally,and internationally.
Services
The District owns and operates regional wastewater collection, treatment, and disposal facilities
for the metropolitan area in the northern and central portion of the County. The District receives
wastewater from the collection systems of the cities, sanitary districts and unincorporated areas of the
County located within the District. See"THE DISTRICT—Service Areas"herein.
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Generally, local agency systems collect wastewater from residential and industrial customers and
convey the wastewater to District trmlk sewer pipelines for conveyance to the District's wastewater
treatment plants.
The District's staff is responsible for operating and maintaining the District's infrastructure,
although some operations are provided by external contractors.
Currently, the District has established supply contracts for all chemicals necessary to the
operation and maintenance of the facilities of the District. The District has sufficient standby systems in
the event of equipment failures or system outages.
Service Area
The map on the inside cover page of this Official Statement shows the District's boundaries and
selected cities located within the District District boundaries were originally established in 1947 and
1948 based on drainage basins. As the existing cities have grown and new areas have incorporated, city
limits have come to overlap District boundaries. The District currently serves an approximately 471
square-mile area including 23 of the County's 33 cities and unincorporated areas of the County. The
District serves a population of approximately 2.5 million residents and owns sanitary sewerage facilities
with a replacement value of approximately$5.56 billion.
Table 2 below sets forth the estimated populations of cities and unincorporated areas served by
the District as of January 1,2006.
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i
Table 2
Estimated Populations of Cities and Uoincorporated Areas
Served by the Orange County Sanitation District
As of January 1,2006
City Population
Anaheim 342,410
Brea 39,560
Buena Park 81,350
Costa Mesa 113,130
Cypress 48,850
Fountain Valley 57,410
Fullerton 136,430
Garden Grove 171,770
Huntington Beach 201.000
Irvine 193,790
La Habra 61,790
La Palma 16,080
Los Alamitos 12,000
Newport Beach 83,360
Orange 137,900
Placentia 51,240
Santa Ana 351,320
Seal Beach 25,300
Stanton 38,760
Tustin 71,770
Villa Park 6,220
Westminster 92,410
Yorba Linda 66.79
Cities Subtotal 240,540
Unincorporated Areas 81,000
Total 2,481,540
Source: Smte of California Department of Finance.Demographic Research Unit and Omnge County Sanitation District.
Employees
As of June 30, 2006. the District had 644 full-time equivalent ("FTE") staff positions and 644
FTE's budgeted for Fiscal Year 2006-07. Certain employees in the District are represented by recognized
employee organizations, which include the following: the Orange County Employee Association
("OCEA"), the International Union of Operating Engineers - Local 501 ("Local 501") and the
Supervisory Professional Management Team ("SPMT"). As of March 1, 2007, the District had 603
represented and non-represented employees. Total represented employees as of March I, 2007 were as
follows: 97 positions were represented by the OCEA, 194 were represented by Local 501 and 250 were
represented by SPMT. Agreements with each of these bargaining units are effective through June 30,
2007. The District is currently in negotiations with its bargaining units for extensions of these
agreements. The OCEA has represented various bargaining units since 1979. Local 501 has represented
the operations and maintenance bargaining unit since October 1985. SPMT has represented the
professional and supervisory bargaining wit since 1991. The District has historically enjoyed a good
working relationship with its bargaining units and has experienced no work stoppages by represented
personnel in the past.
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For a description of the Orange County Employee's Retirement System, in which the District
participates, and the District's deferred compensation plan, see "Retirement Plan" below and Note 7 to
the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Year
Ended June 30, 2006, set forth in Appendix A. The District has no significant or unusual liabilities and
costs associated with other employee benefits, such as vacation, sick leave and other post-employment
benefit liabilities.
Retirement Plan
The District participates in the Orange County Employee's Retirement System (OCERS), a cost-
sharing multiple-employer, defined benefit pension plan which is governed and administered by a nine
member Board of Retirement. OCERS was established in 1945 under the provisions of the County
Employees Retirement Law of 1937, and provides members with retirement, death, disability, and cost-
of-living benefits.
All District full-time employees participate in OCERS. Employees who retire at or after age 50
with ten or more years of service are entitled to an annual retirement allowance. The amount of the
retirement allowance is based upon the member's age at retirement, the member's "final compensation"
as defined in Section 31462 of the Retirement Law of 1937,the total yeas of service under OCERS, and
the employee's classification as a Tier I or Tier II member. As of July 1, 2006, the formula to calculate
retirement benefits was enhanced to 2.5%at age 55,or employees retiring at age 55 or older receive 2.5%
of their average salary for every year of service. Average salary is the highest consecutive 12 months of
compensation for Tier 1 employees and the highest consecutive 36 months of compensation divided by
three for Tier 11 employees. Benefits fully vest on reaching five years of service. OCERS also provides
death and disability benefits.
As a condition of participation under the provisions of the County Employees Retirement Law of
1937, members are required to contribute a percentage of their annual compensation to OCERS. The
District is required to make periodic contributions to OCERS in amounts that we estimated to remain a
constant percentage of covered employees' compensation such that, when combined with covered
employees' contributions,will fully provide for all covered employees' benefits by the time they retire.
A current comparison of OCERS costs for Fiscal Years 2001.02 through 2005-06 and projected
costs through Fiscal Year 2007-08 is shown below.
Table 3
Orange County Sanitation District
Comparison of OCERS Costs for Fiscal Years 2001-02 through 2007-08(t)
Fiscal Year Rate 42) Cost
2001-02 2.36% $ 765,459
2002-03 5.50 1,943,056
2003-04 9.15 3,668,650
2004-05 12.37 5,524,673
2005-06 15.21 7,416,556
2006-07 20.15 9,903,830(3)
2007-08 20.87(a) 11,724,637 In
(1) Amounts represent employer contributions made by the District and employee contributions.
(2) Required contribution as a percent ofcovered payroll. Includes amortization of Unfunded Accrued Actuarial Liability.
(3) Projected.
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i
For Fiscal Years 2001-02 through 2005-06, the required contribution equaled the contribution
actually made. As noted, the required contribution set forth above includes amortization of Unfunded
Accrued Actuarial Liability ("UAAL"). For the fiscal year ended June 30, 2006, total payroll costs of
employees covered by OCERS was$48,761,087. As of the December 31,2005 valuation,OCERS has an
aggregate UAAL ratio of 71.53%,for a total UAAL of$2.30 billion.
For more information regarding OCERS and the District's retirement plan as of June 30, 2005,
see Note 7 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for
Fiscal Year Ended June 30,2006 set forth in Appendix A. The Comprehensive Annual Financial Reports
of the Orange County Employees Retirement System are available on the OCERS website at
http://www.ocers.org. The information on such website is not incorporated herein by such reference or
otherwise.
Post-Employment Benefits
On June 21,2004,the Governmental Accounting Standards Board("GASB")approved Statement
No. 45 (GASB 45), accounting standards for other(than pensions) postemployment benefits ("OPEB").
GASB 45 effective dates are phased in, similar to GASB's Statement No. 34 which was implemented in
recent years. The first effective Fiscal Year for the District is Fiscal Year 2007-08. Preliminary
indications are that the District's potential OPEB liability will not have a material impact on the District's
operational results.
Risk Management
As of the date hereof, the District has in force basic all risk property and casualty insurance,
including theft, fire, flood terrorism and boiler and machinery losses to the Wastewater System. The
District is self-insured for portions of workers' compensation,property damage and general liability. The
self-insurance portion of workers' compensation is $500,000 per person per occurrence with outside
excess insurance coverage to$50 million. The self-insured portion for property damage covering fine and
other disasters is$25,000 per occurrence with outside excess insurance coverage to$1 billion. The self-
insured portion for property damage covering flood is $100,000 per occurrence with outside excess
insurance coverage to$300 million. The District is self-insured for all property damage from the perils of
earthquakes. See "DISTRICT REVENUES — Reserves." The District also maintains outside
comprehensive boiler and machinery insurance, including business interruption insurance, with a $100
million per occurrence combined limit with deductibles ranging from $25,000 to $350,000. The District
is substantially self-insured for general liability coverage with a$250,000 self-insured deductible,but has
excess general liability coverage to$25 million per occurrence.
During the past three fiscal years there have been no settlements in excess of covered amounts.
Claims against the District are processed by outside insurance administrators. The District believes that
there are no unrecorded claims as of June 30, 2006 that would materially affect the financial position of
The District.
For more information regarding the District's insurance coverage as of June 30, 2006, see Note I
to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Year
Ended June 30,2006 set forth in Appendix A.
Existing Facilities
The District's Wastewater System presently consists of two wastewater treatment plants, an
influent metering and diversion structure, 16 pump stations,various interplant pipelines and connections,
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and the ocean outfall facilities. The District's Wastewater System includes approximately 584 miles of
sewers within 12 mark sewer systems, 152 miles of local sewers located within Revenue Area No. 7,two
treatment plants, two discharge outfalls and two emergency weir outlets. The existing treatment plants
have a rated primary treatment capacity of 366 million gallons per day,including standby capacity.
Treatment Plant No. 1 ("Plant No. I") is located in the City of Fountain Valley,about four miles
from the coast, adjacent to the Santa Ana River. Secondary treatment capabilities are provided by a
trickling filter plant and a conventional air activated sludge plant. Up to 15 million gallons per day
("mg/d") of secondary treated effluent is conveyed to an Orange County Water District (the "OCWD")
plant for tertiary treatment prior to ground water recharge.
Treatment Plant No.2("Plant No. 2")is located in the City of Huntington Beach, 1,500 feet from
the ocean, at the mouth of the Santa Ana River. Secondary treatment capabilities are provided by a pure
oxygen activated sludge plant.
The District employs several phases in the treatment of wastewater. The first phone, preliminary
treatment,removes debris such as eggshells, sand and biodegradable items. See,also"Preferred Level of
Treatment" and "Biosolids Management" below. In the next phase, primary treatment, wastewater is
pumped to large settling basins. The liquids are separated from the remaining solids which settle or float
as the wastewater passes through large settling basins called clarifiers. The settled solids are sent to solids
treatment facilities. Approximately half of the primary treated wastewater flows into the ocean outfall
pumping station where it is blended with secondary treated wastewater before being discharged into the
ocean. The other half is sent to secondary treatment for further processing. During secondary treatment,
the wastewater is placed in aeration basins to which naturally occurring bacteria are added to remove
most of the remaining dissolved and suspended microscopic organic solids. The treated wastewater from
both plants is mixed together at Plant No. 2, where it is then pumped through the ocean outfall pipe that
extends five miles offshore.
Table 4 below sets forth the treatment plants' approximate current and future treatment capacities.
Table 4
Wastewater System Treatment Capacities
(MG/D)
2005-06 Existing Primary Total Planned
Actual Treatment Existing Secondary Secondary
Flows Capacity Treatment Capacity capacity",
Plant No. 1 87 198 110 170
Plant No. 2 148 168 90 150
Aggregate Treatment
Plant Facilities 235 366 200 320
(1) The District's "Planned Total Capacity" is based on the Strategic Plan for planned capacity by 2020. which
estimated the District's requirements to meet future expected primary and secondary capacity demands.
The District has the capability to divert a portion of the influent flow from Plant No. I to Plant
No. 2 through interplant connections. A portion of the flow destined for Plant No.2 can also be diverted
to Plant No. 1. The treated wastewater from Plant No. 1 flows by gravity to the outfall system through
interconnecting lines. The combined Plant No. I and Plant No.2 effluent is then pumped through a 120-
inch diameter ocean outfall which is approximately five miles long. The last mile of the outfall pipe is a
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i
diffuser that dilutes the wastewater with seawater in a ratio of 148 parts seawater to one part treated
wastewater at an average depth of 185 feet. The 120-inch outfall has a capacity of 480 million gallons per
day at high tide. A smaller 78-inch diameter outfall that terminates at a shallower depth is still
maintained, although it is reserved for use in emergencies. This smaller outfall is estimated to have a
capacity of approximately 230 million gallons a day. There is an interplant gas pipeline between Plant
No. I and Plant No.2 which allows digester gas(which is used as fuel for many of the facilities' engines)
from one plant to be used at the other to balance the supply and demand, which results in efficient gas
utilization.
Permits,Licenses and Other Regulations
The Wastewater System is subject to regulations imposed by the 1972 Clean Water Act, Public
Law 92-500 (the "Clean Water Act"), the California Environmental Quality Act of 1970, as amended
("CEQA") and the Federal Clean Air Act. The regulatory requirements are administered by the United
States Environmental Protection Agency(the"EPA")and the California Regional Water Quality Control
Board("RWQCB"). Regulations of these agencies deal primarily with the quality of effluent which may
be discharged from the treatment plants and the nature of waste material discharged into the collection
system. The Clean Water Act directs the EPA to monitor and to regulate the discharge of pollution into
navigable waterways and to enforce the requirements that all wastewater treatment plants in the nation
provide full secondary treatment for sewage. In 1977, Congress amended the Clean Water Act to allow
waivers of secondary treatment standards for certain ocean dischargers if they can demonstrate, to the
satisfaction of the EPA, that significant adverse environmental impacts would not occur. The District
currently has all applicable permits and licenses necessary to operate its facilities.
The District has discharged treated wastewater into the Pacific Ocean under a permit issued by
the EPA and the RWQCB. The discharge permit included a waiver under the 301(h) provisions of the
Clean Water Act, allowing for less than full secondary treatment based on an ocean discharge of
sufficient depth,distance and dilution. The permit was initially issued in 1985 and was the first modified
Section 301(h) permit issued to a major wastewater treatment facility. The District's permit, which
included the Section 301(h) waiver of secondary treatment requirements, was issued on May 6, 1998,
expired on June 8,2003.
In July 2002, the Board of Directors approved a change from the existing level of treatment, a
blend of 50 percent advanced primary and 50 percent secondary treated wastewater, to full secondary
treatment standards. See "Preferred Level of Treatment" and "Urban Runoff' below. As a result, the
District established a policy to treat all wastewater discharges into the ocean to secondary treatment
standards. See "Preferred Level of Treatment" below. To implement this policy, District staff was
directed to immediately proceed with the planning,design,and implementation of treatment methods with
the expressed purposes of eliminating the need for the permit wavier received under Section 301(h).
Following determination by the Board of Directors in July 2002 to implement full secondary
standards, staff prepared the Secondary Treatment National Pollutant Discharge Elimination System
("NPDES") Permit Application that was required to be submitted to the regional office of the EPA and
the RWQCB in December 2002. The NPDES Permit is separate and apart from the permit waiver
received under Section 301(h), and once awarded would negate any necessary waiver. Achieving
secondary treatment standards will take approximately 6 years to complete,with completion expected in
December 2012. But ocean discharge permits are issued for five (5)years, and the EPA has no authority
to waive the discharge limits requirements or grant a longer permit (except per Sec. 301(h)). The
alternative was to voluntarily seek a consent decree concurrently with the issuance of the new ocean
discharge permit. This negotiated consent decree (the "Consent Decree") approves the schedule and
decrees that no penalties will be imposed for discharges that exceed the secondary treatment limits during
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the period of construction. The Consent Decree was signed by the District, EPA, and the RWQCB and
filed with the U.S.District Court on November 15,2004.
The South Coast Air Quality Management District ("AQMD") is the regional governmental
agency charged with implementing the Federal Clean Air Act. AQMD permits are required before a
sewage treatment improvement project can be constructed. Such permits are project specific and contain
construction process requirements, required equipment and standards for predicted air quality. After
construction is completed,the AQMD issues an operation permit. These permits are also project specific
and contain air quality standards and other appropriate operetional guidelines. Most of the District's
facilities are enclosed in order to trap emissions,which are cleaned by air scrubbers that remove odors. In
addition,the District has implemented an air quality risk reduction program which includes a twenty-year
plan to improve treatment plant operations and reduce industrial toxic pollutants. The District currently
has all necessary AQMD permits to operate the Wastewater System.
Capital Improvement Program
The Master Plan. The District's 1989 master plan consisted of a 30-year plan of action for
managing wastewater activities to the year 2020, entitled "2020 Vision, Action Plan for Wastewater
Management and Environmental Protection 1990-2020"(the"Master Plan"). The Master Plan integrated
research facilities planning, environmental analysis, toxic control, water conservation and reclamation,
sludge reuse, other wastewater programs and financial planning into a single unified approach. In
connection with the preparation of the Master Plan,an in-depth land use study was performed,resulting in
the creation of a uniform land use classification system and a map of the District's service area. Land use
designations and unit flow factors were used to project wastewater flows in the District's trunk sewers for
then present conditions, through the year 2020. These flows were included in a computer model of the
District's Wastewater System which identified future sewer capacity improvements. A thirty-year capital
improvement program was developed to implement the required sewer capacity improvements. This land
use study included the collection and compilation of the latest available land use plans,reports,maps and
studies from the cities within the District and the County, and interviews with the planning directors or
key staff within the District. Land use planning within the District's service area is the responsibility of
the County for unincorporated areas and cities for areas within their boundaries. The California Coastal
Commission has some land use authority within the District's coastal areas.
The Strategic Plan. In October 1999, the District updated the Master Plan with a strategic plan
(the "Strategic Plan'). The Strategic Plan updated the planning process set forth in the Master Plan
through the year 2020 and defined the District's goals, responsibilities, and requirements over the then
following twenty years, including projections through the assumed "build-out" of the District's service
area to the year 2050. In addition to updating the population and flow assumptions, the Strategic Plan
provided for an operations and financial plan,including a review of the collection,treatment and disposal
facilities, and the District's ocean curtails. Studies on a preferred level of wastewater treatment and in-
sourcing of the ocean monitoring program were prepared and incorporated in the Strategic Plan. Water
and air regulatory agencies require that all wastewater facilities be designed to meet the needs of
anticipated growth and provide a reasonable reserve capacity. With the adoption of the Strategic Plan,the
District's planning process met these requirements by shifting its approach for the development of master
plans from a"size and build"approach to a broad-based multi-agency cooperative evaluation process.
Many of the assumptions used to develop the Strategic Plan, such as inflation, the projected
service population, the level of building activity, and the volume of wastewater treated, were quite
different from what was assumed ten years earlier under the Master Plan. Critical factors such as
population growth, new construction, the volume of wastewater delivered to the plants and viable water
conservation and reclamation programs were reevaluated.
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11
Interim Strategic Plan. In June 2002, a new, or Interim Strategic Plan Update (the "Interim
Strategic Plan" herein) was completed to further update and revise many of the assumptions used to
develop the District's previous planning documents, including population and land-use projections, the
level of building activity in the District's service area and the volume of wastewater to be treated. The
Interim Strategic Plan also provides for an operations and financial plan including a review of the
District's collection, treatment and disposal facilities, and a study of the District's ocean omfall system.
In addition, potential changes in the regulatory climate for the berreficial reuse of biosolids were also
considered.
On July 17, 2002, the Board of Directors approved Resolution No. OCSD-14, "Establishing the
Policy for Level of Treatment of Wastewater Discharged into the Ocean". This resolution established the
District's policy to treat all wastewater discharges into the ocean to secondary treatment standards thereby
providing for continued public safety,marine ecosystem protection, and water reclamation opportunities.
To implement this policy, the District staff was directed to immediately proceed with the planning,
design, and implementation of treatment methods that will allow the agency to meet Clean Water Act
secondary treatment standards. The District currently estimates that it will take 6 years (through
December 2012) and additional capital improvement costs of$538 million to reach secondary treatment
discharge standards. In the interim, the District will operate the plants to maximize available secondary
treatment and to reduce effluent biochemical oxygen demand and suspended solid discharges below
currently allowed limits. The current 50 percent secondary portion will increase incrementally as
operations change and new facilities me constructed and placed in service. See "Preferred Level of
Treatment"below.
The District's planning process for development of the Interim Strategic Plan incorporated an
analysis of population growth, dry weather and peak wet weather flows and the maximum use of existing
facilities. The population of the District's service area was projected to grow to 2.7 million by the year
2020. Average flow rates at both treatment plants were projected to increase to 278 million gallons a day
by 2020(134 million gallons a day of treatment at Plant No. 1 and 144 million gallons a day at Plant No.
2),up 15%from the Fiscal Year 2005-06 flow.
In combination with the Interim Strategic Plan, the District developed its current Capital
Improvement Program ("CIP"). The District expects to meet future demands on the Wastewater System
through the CIP. This program has been developed to satisfy anticipated regulatory requirements,
increased population, additional treatment requirements, conservation, energy and other resource savings
considerations,odor control improvements,and air quality protection needs. Through 2020,the District's
CIP is scheduled to accomplish:
• Major rehabilitation of the existing headworks, primary treatment, secondary treatment,
outfall pumping,and solids handling facilities at both treatment plants.
• Replace and rehabilitate 16 of the District's outlying pumping stations, and 44 trunk
sewer improvement projects.
• Fund cooperative projects to help cities upgrade their sewer systems.
• Disinfect the District's ocean discharge to reduce bacterial levels below Stine bathing
standards.
• Reclaim 70 millions of gallons per day of the District's effluent,or nearly one-third of the
total daily flow(Groundwater Replenishment System).
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. Achieve full secondary treatment standards.
CIP Validation Study. In preparation of each year's Budget,the District conducts an Annual CIP
Validation Study to ensure that the scopes of the projects were necessary,and that the cost estimates were
accurate. As a result of the completion of the CIP Validation Study and the Secondary Treatment Peer
Review in March 2007, a revised CIP was further developed to meet secondary treatment standards as
quickly as possible while providing for increased flows and rehabilitation and refurbishment of existing
facilities. As identified within the Interim Strategic Plan, and verified through the CIP Validation Study
and Secondary Treatment Review, $538 million of additional capital improvements over the next 6 years
(through December 2012)are needed to reach full secondary standards.
The CIP Validation Study resulted in a revised CIP consisting of 107 large capital projects
managed by the Engineering Department through 2020-21 at a total cost of$2.3 billion, approximately
$750 million of which has been spent to date. The bulk of construction is scheduled during the next ten
years, with average annual expenditures of nearly $300 million projected over the next five years.
Implementation of full secondary treatment standards is scheduled to be completed on or before
December 31, 2012. A summary of total estimated capital costs for the CIP for Fiscal Years 2007-08
through 2020-21 is set forth in Table 5 below.
Table 5
Estimated Capital Costs
Fiscal Years 2007-08 through 2020-21 trr
Project Coat
Collection System Capacity $ 169,005,450
Collection System Repair,Rehabilitation,Replacement 192,087,530
Treatment Plant Capacity 18,329,380
Additional Secondary Treatment 489,917,580
Groundwater Replenishment System,Phase 1 15,793,000
Improved Treatment 110,905,900
Treatment Plant Repair,Rehabilitation,Replacement 505,453,550
Support Facilities 105,791,810
Total Validated Capital Improvement Program $1,607,194,100
(1) All costs are estimated as of March 23.2007 and are derived from the CIP Validation Study.
Source:Orange County Sanitation District.
Of the Fiscal Year 2007-08 proposed CIP cash flow outlay of$338.8 million, the largest cash
outlay within the plant facilities is$54.3 million for the new trickling filters at Treatment Plant No.2 with
a total project cost of$221.2 million. The Headworks replacement at Treatment Plant No. 2 requires
$53.4 million in Fiscal Year 2007-08,with a total project cost of$257.8 million. Another$36.6 million is
required for the replacement of the interplant pumping station on Ellis Avenue to be located at
Reclamation Plant No. 1,with a total project cost of$78.5 million. Of the Fiscal Year 2008-09 proposed
CIP cash flow budget of$356.0 million, the largest budgeted expenditure within the plant facilities is
$71.8 million for the new secondary treatment facility 2 at Reclamation Plant No. 1. The new trickling
filters at Treatment Plant No. 2 are expected to require $54.1 million in Fiscal Year 2008-09. Another
$39.3 million is being proposed for the Headworks replacement at Treatment Plant No.2.
The largest project in the collection system,proposed in the Fiscal Year 2007-08 proposed CIP, is
$8.5 million for the Bushard Trunk Sewer project. For Fiscal Year 2009-09, the three largest projects
OHswea2e019e41a4
41759-11 NEWMItlt 27
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include $10.8 million for Gisler-Redhill North Trunk Improvements,$15.2 million for replacement of the
Bitter Point Pump Station,and$20.5 million for the Newport Trunk Sewer and Force Mains project. The 1
total budgets for these three projects are$16.1 million,$34.1 million,and$24.4 million,respectively.
In connection with the preparation of the update to the CIP cash flow budgets for Fiscal Years
2006-07 and 2007-08, the Board's Operations Committee is reviewing and validating staffs annual CIP
review. A new Strategic Plan Update is expected in 2008-09.
Groundwater Replenishment System
The District has taken a multi-jurisdictional approach to planning for capital facilities because
many of the methods for reducing or managing flows involve other jurisdictions. One such project is the
Groundwater Replenishment System (GWRS). In March 2001, the District entered into an agreement
with the OCWD to design and construct Phase 1 of the GWRS. This cost of this project is to be paid
equally (50 percent shares)by each agency. The GWRS is a joint effort by the two agencies to provide
reclaimed water for replenishment of the Orange County Groundwater Basin and to augment the seawater
intrusion barrier. The GWRS is planned for three phases, Phase 1 will produce approximately 72,000
acre-feet per year of recycled water by June 2007,Phase 2 will increase the total capacity to 112,000 acro-
feet by the year 2010.and Phase 3 will increase the total capacity to 145,600 acre-feet by the year 2020.
Following the completion of Phase 1, the extent of the District's commitment to date, the GWRS will
have the capacity to divert up to 100 million gallons per day of flow from the District's ocean discharge.
Costs for Phases 2 and 3 have yet to be approved and programmed
As of June 30, 2006, the total estimated cost of GWRS Phase 1 was $497.10 million. Of this
amount, up to$92.50 million may be reimbursed through grants from the U.S. Environmental Protection
Agency, the U.S. Bureau of Reclamation, the State Water Resources Control Board, and others. The
District's estimated gross and net share is $248.55 million and $202.30 million, respectively. Costs
incurred by the District through June 30, 2006 total $150.89 million. As noted above, Phase I of the
GWRS is nearing completion and the GWRS will not have any funding in the Fiscal Year 2008-09
budget.
Preferred Level of Treatment
In July 2002, the Board of Directors approved a change from the existing level of treatment, a
blend of 50 percent advanced primary and 50 percent secondary treated wastewater, to full secondary
treatment standards. The reasoning behind the decision to move to full secondary standards included (1)
the possibility (no matter how remote) that bacteria from the ocean outfall may at times reach the
shoreline, (2) upgraded treatment will aid additional water reclamation with the Orange County Water
District,(3)and the public clearly stated preference for upgrading wastewater treatment at the time.
In an effort to eliminate most bacteria from being released from the ocean outfall, in 2002 the
District began to use chlorine bleach to disinfect the effluent and then apply sodium bisulfate to remove
any remaining chlorine prior to releasing the treated wastewater to the ocean. In order to protect the
animal life living in the ocean, the District continues to take measures to limit the chlorine residual to a
very low level-essentially non-detectable. This mode of disinfection is anticipated to occur for the short-
term, possibly two or three years, while the District studies, designs and constructs permanent facilities,
and considers alternate disinfection technologies. Beginning in Fiscal Year 2006-07, the addition of
disinfection treatment required an annual outlay of$7 million in additional chemicals within the joint
operating budget of the District.
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Following determination by the Board of Directors in July 2002 to implement full secondary
standards, staff prepared the Secondary Treatment NPDES Permit Application that was required to be
submitted to the regional office of Environmental Protection Agency ("EPA") and the RWQCB in
December 2002. An NPDES permit has been issued to the District and the District is currently operating
under the Consent Decree. See"THE DISTRICT—Permits,Licenses and Other Regulations."
The District estimates that it will take approximately 6 years and require additional capital
improvement costs of approximately $539 million to add additional secondary treatment capacity to the
Wastewater System, with completion expected in December 2012. In addition, based upon the District's
most recent projections, upon completion of facilities necessary to meet secondary treatment standards,
operating costs will increase by approximately $7.2 million annually. In the interim, the District will
operate the plants to maximize available secondary treatment and to reduce effluent biochemical oxygen
demand and suspend solid discharges below those currently allowed limits. Each year, the current 50
percent secondary portion will increase incrementally as operations change and new facilities are
constructed and placed in service over the coming years.
Biosolids Management
The District produces approximately 650 tons of digested and dewatered(Class B) biosolids per
day. By 2020, the District's biosolids production is projected to increase by 20%, to 285,000 tons
annually. The District relies on the following technologies and locations for the management of its
biosolids: land application of Class B biosolids in Arizona, land application of chemically-stabilized
Class A biowlids in Kern County, composting to Class A biosolids in Riverside County, Kent County
and La Paz County,Arizona,and landfilling of Class B biosolids in Yount County,Arizona.
Counties throughout California and Arizona have developed,or are in the process of developing,
ordinances that severely restrict or ban the land application of Class B biosolids. In June 2006, Kern
County voters approved an anti-sludge initiative that bans the land application of both Class B and Class
A biosolids. It has become clear that certain land application options currently available to the District
are anticipated to be eliminated in the near future due to these developments. The District, as well as
most of California's wastewater agencies, is working to develop sustainable products and management
locations for its biosolids.
The dynamic regulatory issues, land application ordinances and bans, and public perception
challenges have prompted the District, with the help of CH2MHill, to develop a Long-Range Biosolids
Management Plan(LRBMP). This LRBMP was approved by the Board in December 2003. The goal of
the LR13MP was to develop a sustainable, reliable, and economical program for long-range biosolids
management providing environmentally sound practices that meet the stringent federal, state, and local
regulatory requirements. The LRBMP recommendations included new in-plant technologies to reduce
the volume of biosolids, explore the production of Class A biosolids products, and move into the energy
and fuel production and compost markets.
As a result of the LRBMP recommendations,the existing Synagro biosolids management contract
was amended in April 2004 to have 250 tons per day of the District's Class B biosolids composted at
Synagro's South Kern, Industrial Center (SKIC) facility, which is currently scheduled to open in
December 2007. In May 2006, the District entered into a contract with EnerTech Environmental, Inc. to
convert 225 tons of biosolids per day to a renewable fuel at EnerTech's proposed facility in Rialto,
California. The EnerTech solution is a relatively new, patented heat treatment process that increases the
ability to dewater biowlids in order to maximize the efficiency of the production of fuel. By decreasing
the moisture content of biosolids prior to drying, a smaller dryer is needed, thus reducing capital and
energy consumption. The fuel product will be recycled and reused, under agreements with area cement
OHS W.060184418.4
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kilns and other fuel users. Residual ash from the fuel combustion becomes part of the cement product,
resulting in no residual waste product liability. The EnerTech facility is expected to come on-line in late
2008.
Also in April 2005, the Board approved the amendment of the existing memorandum of
understanding ("MOU") with South Orange County Wastewater Authority ("SOCWA") for preliminary
facility design, permitting, and community relations activities for the development of a composting
facility at the Prima Deshecha Landfill in South Orange County. For the pest two years under the
previous existing MOU, SOCWA and the District have been working with the Orange County Integrated
Waste Management Department's Biosolids Committee to site an enclosed biosolids and green waste
composting facility at the Prima Deshecha Landfill in South Orange County. The proposed "South
Orange County Composting Facility"would take in approximately 100 to 110 tons of Class B biosolids
daily from the District and SOCWA and,combined with like amounts of wood chips and yard trimmings,
produce approximately 65 to 75 tons of compost per day. The MOU reflects a 50-50 participation
commitment and ownership in the facility between SOCWA and the District, and consent to initiate and
fund the tasks for the initial planning, permitting and concept design of the project. This project is still in
the development process.
As a result of the transition to biosolids-based compost and energy products the cost to the
District for biosolids management is expected to increase by about$3 million per year starting in Fiscal
Year 20%.47. The Fiscal Year 2005-06 budget for biosolids management was$9.7 million. The Fiscal
Year 2006-07 budget for biosolids management is $12.8 million. The Fiscal Year 2007-08 biosolids
management budget is currently estimated to be$14.3 million.
Urban Runoff
For a two-month period during the summer of 1999,eight miles of beaches in Huntington Beach
were closed by the OCHCA due to excessive levels of bacteria in the water. A three-month interagency
source investigation did not identify a definitive source of the contamination, but determined that the
District was not at fault. Although the initial "signature" of the pollution strongly suggested sewage
contamination, the investigation concluded that none of the District's facilities caused the excessive
bacteria levels and that there was no adverse impact on the capacity of the Wastewater System.
In June 2002, the District's charter was amended by an act of the State Legislature to include
permissive language authorizing the diversion and management of dry weather urban runoff flows. This
charter change will allow the District, in its discretion, to acquire, construct, operate, maintain, and
Finnish facilities for the diversion of urban nmoff from drainage courses within the District, the treatment
of the urban nmoff,the return of the water to the drainage courses,or the beneficial use of the water.
As noted above, in July 2002, the Board of Directors approved the implementation of full
secondary standards. The District is currently discharging treated wastewater into the Pacific Ocean
under a permit issued by the EPA and the RWQCB on May 6, 1998 and currently under an administrative
grant of permission until the EPA/RWQCB issue a new permit to replace it. Following determination by
the Board of Directors in July 2002 to implement full secondary standards, staff prepared the Secondary
Treatment NPDES Permit Application that was required to be submitted to the regional office of the EPA
and the RWQCB. See"THE DISTRICT—Permits,Licenses and Other Regulations."
Integrated Emergency Response Program
Growing awareness of the threat to public utilities from natural disasters such as earthquakes,
floods and other perils has made preparedness for these and other events a high priority for the planners,
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engineers, and managers of the District. In recognition of the potential damage which could occm in the
wake of a major earthquake, flood, or other disaster, the District has implemented an Integrated
Emergency Response Program (the "WRP") in 1979. The IERP is a two-volume plan which contains
policies, plans and procedures preparing for,and responding to,emergencies. The District also analyzed
disaster preparedness issues and policies within the Master Plan,and within a 1994 document titled Fault
Rupture Hazard Investigation-Wastewater Treatment Plant No.2.
According to the Master Plan, earthquakes are considered to be the most potentially devastating
natural disaster events which confront the District. The disaster preparedness plan included in the Master
Plan reviewed two possible major earthquake scenarios: an 8.3 Richter magnitude("M')earthquake on
the southern San Andreas fault system and an M 7.0 earthquake 7.0 Newport-Inglewood fault zone,which
includes Plant No. 2. An M 8.3 earthquake on the southern San Andreas fault,while on the whole more
destructive than the M 7.0 Newport-Inglewood fault even, would probably result in less damage to the
District's service area due to the distance of the fault from most of the service area However,the 1989
Master Plan stated that damage from such a major earthquake on the San Andreas fault would be
extensive. Also, the Master Plan indicated that an M 7.0 earthquake on the Newport-Inglewood fault
within five miles of the District's sewerage facilities could cause major destruction to those facilities.
The disaster preparedness plan in the Master Plan indicated that it would not be economically feasible to
upgrade all of the existing sanitary sewerage facilities to survive an earthquake of this magnitude along
the Newport-Inglewood fault. The IERP outlines the policies and employee actions to be taken before,
during and after an earthquake,earthquake response guidelines and damage assessment procedures.
The Master Plan analyzed the vulnerability of the sanitary sewerage facilities and operations of
the District and planned a risk reduction program wherein the vulnerability of many of the District's
sanitary sewerage facilities to an earthquake could be reduced by recommended retrofit construction
measures. The Master Plan also recommended that designs of existing major structures where were
constructed prior to development of current seismic design standards be reviewed and the structures
strengthened, if necessary.
Since the 1989 Master Plan and the 1994 Report, the District has completed retrofitting where
deemed appropriate. Pursuant to the Master Plan, a6 recant and future projects have been, and will be,
designed to the same high earthquake code standards as set for other essential services, such as hospitals
and fire stations. Many of the older buildings analyzed in the Master Plan have been replaced by
structures built after 1989.
The Army Corps of Engineers' "All-River Plan"has mitigated any future flooding of the Santa
Ana River system and potential threats to the District's Wastewater System. Also, both Plant No. 1 and
Plant No.2 are surrounded by 3-foot to 6-fom high walls,built to federal standards.
The disaster preparedness plan in the Strategic Plan investigates the damage potential posed by
coastal flooding, tsunamis (large ocean waves generated by seismic activity) and windstorms. However,
based on available information,the District does not consider any of such events to be a significant threat
to the Wastewater System.
The Strategic Plan also makes recommendations regarding fire protection of the Wastewater
System and most of the structures at Plant No. I and Plant No.2 are constructed of fire-resistant
materials. The IERP describes the procedures needed to respond to a possible disaster. For more
information regarding emergency response policies, the disaster preparedness Plan described in the
Strategic Plan and the IERP can be reviewed at the District's office.
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i
DISTRICT REVENUES I,
Sewer Service Charges
General. The District has the power to establish fees and charges for services of the Wastewater
System. Such fees and charges are established by the District's board of directors and are not subject to
review or approval by any other agencies.
In Fiscal Year 1997-98, a Rate Advisory Committee (the "RAC")was established comprised of
representatives from industrial, commercial and residential users. The goal of the RAC was to examine
the then current rate structure and, if needed, develop recommendations for change. The RAC analyzed
the District's rate structure to determine whether its then current sewer service user fees (now known as
"Sewer Service Charges") were equitable among residences and industry. This review resulted in a
proposal to expand the number of non-residential user categories from one to twenty-three and to provide
for gradual rate increases in seven of the nine Revenue Areas. The increase in the number of categories
provided a more equitable fee structure and also provided for future reductions in single-family residential
Sewer Service Charges. The Sewer Service Charges for those categories were based on the average flow
and strength of wastewater discharged for each property type.
In May 2002,the Board adopted District Ordinance No. OCSD 18 (the"2002 Ordinance")which
was effective on July 1, 2002. The 2002 Ordinance included a rate increase of$7.50 per year, or 9.4%,
for all ratepayers to $87.50 per year. On July 2, 2003, the Board adopted Ordinance No. OCSD-20
increasing sanitary sewer service charges for all single family and multi-family residential units as well as
most commercial and industrial properties. The Ordinance was adopted by a 2/3 vote of the Board as
required under law after conducting a noticed public hearing in compliance with all laws. The Ordinance
increases the amount of the annual charges by approximately 15%per year for each of the following five
years, commencing with Fiscal Year 2003-04, thereby raising the single family residence user rate from
the then current $87.50 to $100.00, $115.00, $132.00, $152.00, and $175.00 annually. In May 2005,the
Board adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06 single family residential rate
31%. from $115.00 to $151.00 for such year. In May 2006, the Board adopted Ordinance No. OCSD-
30B increasing the Fiscal Year 2006-07 single family residential rate 9.8%, from $151.00 to $165.90 for
such year.
In April 2007, the Board began its considerations towards increasing sanitary sewer service
charges for all single family and multi-family residential units as well as most commercial and industrial
properties. As currently contemplated,this schedule would increase the amount of the annual charges by
approximately 11%per year for each of the following five years, commencing with Fiscal Year 2007-08,
increasing the Fiscal Year 2007-08 single family residential rate 9.8%,increasing the Fiscal Year 2008-09
single family residential rate 12.9%, increasing the Fiscal Year 2010-11 single family residential rate
12.90/a,increasing the Fiscal Year 2011-12 single family residential rate 12.9%,increasing the Fiscal Year
2012-13 single family residential rate 12.75%, increasing the Fiscal Year 2013-14 single family
residential rate 5.3%, increasing the Fiscal Year 2014-15 single family residential rate 5.3% and
increasing the Fiscal Year 2015-16 single family residential rate 5.3%. Such increases are subject to
approval by ordinance adopted by a 2/3 vote of the Board after conducting a noticed public hearing in
compliance with all laws. The resulting increased sewer rates for each fiscal year are well below the
average annual sewer Tate of $337.00 par year currently being charged according to a survey of 904
agencies encompassing all 58 counties in the State conducted by the State Water Resources Control
Board.
This increase was necessary in order to meet the District's cash flow needs due to the addition of
disinfection treatment and other operating requirements. As discussed under the caption 'THE
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DISTRICT—Capital Improvement Program,"the CIP Validation Study in the Spring of 2005 and further
in March 2007 developed a capital improvement program to meet secondary treatment standards as
quickly as possible while providing for increased flows and rehabilitation and refurbishment of existing
facilities. As projected out to 2020, the CIP cash flow needs total approximately $2.3 billion, with the
bulk of the construction scheduled during the next ten years and average annual expenditures of nearly
$300 million projected over the next five years.
The District collects Sewer Service Charges from property owners through the semi-annual
property tax bill distributed by the County throughout the District, except in Revenue Area No. 14.
Pursuant to the IRWD Agreement, the District receives payments from the Irvine Reach Water District
(the "IRWD") which directly collects fees from customers through a monthly billing procedure in
Revenue Area No. 14.
The District has covenanted in the Master Agreement to fix, prescribe and collect fees and
charges to satisfy certain coverage requirements as further described under "SECURITY AND
SOURCES OF PAYMENT FOR THE CERTIFICATES—Rate Covenant"herein.
Residential Sewer Service Charges. Pursuant to the 2002 Ordinance the District established
residential Sewer Service Charges upon a rational basis between the fees charged each customer and the
Services and facilities provided to each customer of the District. In accordance with the 2002 Ordinance
and the noticed public hearing held at that time which considered increases in the amount of the annual
charges by approximately 20%per year for each of the then following five years,in May 2005,the Board
adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06 single family residential rate 31%,
from $115.00 to $151.00 for such year for all ratepayers, except those located in Revenue Area 14. such
year. In May 2006, the Board adopted Ordinance No. OCSD-30B increasing the Fiscal Year 2006-07
single family residential rate 9.8%, from $151.00 to $165.80 for such year, except those located in
Revenue Area 14. The average total of fees and charges for Revenue Area No. 14 are$70.80 per year per
single-family residential unit and are levied and collected directly by the IRWD on a monthly basis. The
IRWD subsequently pays fees to the District on a quarterly basis pursuant to the IRWD Agreement. This
increase was necessary in order to meet the District's cash flow needs. Table 6 below sets forth a five-
year comparison of the Sewer Service Charge rate for single-family residences.
Table 6
Annual Sewer Service Charges
Single Family Residence Rate
Five Year Rate Schedule
Fiscal Years 2002-03 through 2006-07
Fiscal Year Sewer Service Charge
2002-03 $ $7.50
2003-04 100.00
2004-05 115.00
2005-06 151.00
2006-07 165.80
Source:thege County Sanitation Distdd.
Table 7 below sets forth Fiscal Year 2005-06 total average yearly Sewer Service Charge for
single-family residences within the District,together with the tax comparable total average annual Sewer
Service Charge,within the jurisdictions of certain other cities and districts within the State.
OHS W.,26a1W1&4
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Table 7
Comparison of Total Sewer Service Charges
For Single-Family Residences tit
For The Year Ended June 30,2006
Annual
Average Dry Sewer
Weather Flow Service Treatment Collection Property Tax
Entity (mgld) Charge Level P1 Responsibility"' Income(4)
San Diego 180 $422 2 Yes No
Los Angeles(City) 447 294 4 Yes No
East Bay MUD 80 205 4 No Yes
Sacramento 155 204 3 No Yes
Orange County Sanitation Distrito') 235 166 2 No Yes
Los Angeles(County) 524 96 4 No Yes
(1) Treatment Level Categories:
"1"-Primary trentmcat.
'T'—Advanced primary or primary with some secondary treatment.
"3"-Seexodary treatment.
"4"-Advanced secondary or secondary with some tertiary treatment.
"5"-Tertiary urra rnect.
(2) Osage County Sanitation District Sewer Smices Charges a4rysted to Fiscal Year 2006-07.
(3) Source: 2005-06 Wastewater User Charge Survey Report by the California State Water Resources Control Board.
(4) Source: 2002 Survey by the Association of Metropolitan Sewage Agencies.
Indtatrial Sewer Service Charges. The District charges industrial Sewer Service Charges to
customers discharging high-strength or high-volume wastes into the sewer systems. Customers subject to
industrial Sewer Service Charges are billed directly by the District. The fee charged to each customer is
based on the customer's sewage volume, the concentration of suspended solids and biochemical oxygen
demand. Pursuant to the 2002 Ordinance, rates for each component factor were revised for certain
industrial users in order to be consistent with the rates charged to residential users. Total industrial Sewer
Service Charges in Fiscal Year 2005-06 were approximately $11.0 million. Industrial Sewer Service
Charges are applied to both the operating and capital funds.
Additional Revenues
The District has several sources of additional revenue, including property taxes,Capital Facilities
Capacity Charges,capacity rights,permit and inspection fees and interest earnings.
Property Taxes. The District receives approximately 2.5%of the one percent County ad valorem
property tax levy, based on the allocation procedure under State law. Property tax revenues were $38.4
million in Fiscal Year 2000-01, $41.1 million in Fiscal Year 2001-02,$44.6 million in Fiscal Year 2002-
03, $46.9 million in Fiscal Year 2003-04, $35.8 million in Fiscal Year 2004.05 and $40.0 million in
Fiscal Year 2005-06. The $11.2 million decrease in property tax revenues from Fiscal Year 2003-04 to
Fiscal Year 2004-05 is reflective of the State of California's than current fiscal crisis and the
implementation of the first year of a two-year 40% secured property tax shift away from independent
special districts. During the 2004-05 State Budget process, the State Legislature and the Governor
enacted Senate Bill 1096 and Assembly Bill 2115, effectively shifting an additional $1.3 billion in local
property tax revenues from counties, cities, special districts and redevelopment agencies to schools and
community colleges. This shift was effective for Fiscal Year 2004-05 and Fiscal Year 2005-06,resulting
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in a 40%secured property loss for the District. See"LIMITATIONS ON TAXES AND REVENUES -
Proposition 1A." This 40% reduction for Fiscal Year 2004-05 was somewhat offset by the continuing
upturn in the real estate market. Total assessed valuations increased over the 2004-05 Fiscal Year by
10.3%, and the full value of these increases was received on all non-secured property tax distributions.
The District expects property tax revenues in its full allotment (no State property tax shift) of$55.6
million in Fiscal Year 2006-07. Current projections indicate that property tax revenues received by the
District are expected to increase by approximately 54% in fiscal year 2006-07 and then 5% each year
thereafter. The apportionment of the ad valorem tax is pursuant to a revenue program adopted by the
District in April 1979 to comply with the EPA, the RWQCB, legal and contractual requirements and
Board policy.
Capital Facilitier Capacity Charges. Capital Facilities Capacity Charges (formerly known as
connection fees) are one-time fees with two components, paid at the time property is developed and
connected to the Wastewater System. The fees are imposed by the District pursuant to Section 5471 of
the California Health and Safety Code and are levied to pay a portion of the District's capital costs and for
access to capacity in the Wastewater System. Currently, the District has Capital Facilities Capacity
Charges of $2,890 per residential unit (three-bedroom); however, under the current industrial use
ordinance, additional Capital Facilities Capacity Charges can be imposed on industrial uses who place
larger than average demand on the Wastewater System. Member cities and sanitary districts collect
Capital Facilities Capacity Charges for the District when building permits are issued. Capital Facilities
Capacity Charges are reviewed annually to reflect the changes in the value of the Wastewater System to
which a new customer is connecting.
On December 15, 1999, the Board approved District Ordinance No. OCSD 99-11 (the "1999
Ordinance")which established a comprehensive Capital Facilities Capacity Charge. The 1999 Ordinance,
effective as of January 1, 2000, renamed connection fees as Capital Facilities Capacity Charges and
provided a more equitable schedule of fees among industrial, commercial and residential users. Pursuant
to the 1999 Ordinance,Capital Facilities Capacity Charges were revised for high demand industrial uses
in five incremental increases from 1999 through 2001.
Pursuant to an agreement with the IRWD, the IRWD is not required to pay Capital Facilities
Capacity Charges and in exchange,the IRWD provides funding to the District for the construction costs
of certain wastewater collection, transmission,treatment and disposal facilities to be used by the IRWD
and is obligated to make certain payments to the District for certain services arising from the Wastewater
System(including any standby or availability charges).
Sale ofCapaciry. The District has entered into agreements with the Santa Ana Watershed Project
Authority ("SAWPA") whereby wastewater from Upper Santa Ana River Basin dischargers can be
transported through the District's Santa Ana River Interceptor to the District's wastewater treatment
facilities.This program was developed in the early 1970's.The agreements establish control mechanisms
regarding the quality of wastes deposited into the Wastewater System. At the present time, SAWPA has
purchased and paid for 30 million gallons a day of capacity rights in the District's Santa Ana River
Interceptor and 13 million gallons a day of capacity in the District's wastewater treatment plants.
Additional treatment plant capacity can be purchased in increments at the District's current replacement
cost.
The Santa Ana River Interceptor Line ("SARI") was built in the Chino Basin Preserve Area in
order to remove dairy farm wastes and accommodate future urban development. Salts in the washwater
generated from the cleaning of cows and milking equipment were leaching into the groundwater in the
Chino Basin and the SARI was built to divert the washwater from this area. However, due to the nature
of the Chino Basin Preserve,the development of any infrastructure in the area to accommodate the SARI
OHS Wm26018441&4
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i
was limited. The current SARI multi-phase project is designed to connect several dairies to the SARI. 1
Future expansions of this project could include connecting other dairies and other waste streams with the I
SARI line. See"THE DISTRICT—Capital Improvement Program"herein.
Wastewater Treatment History
The average yearly influent flow to the District has remained relatively stable for the preceding
five years. The wastewater flow for Fiscal Year 2000-01 was 246 mg/d, for Fiscal Year 2004-05 was 243
mg/d and for Fiscal Year 2005-06 was 235 mg/d. The highest flow rate experienced was during El Nino
storm periods. Peak flows of 500 mg/d were recorded in December 1997 and February 1998. There were
no sewer failures or overflows during these events.
Customers
The historical number of customers served by the District for the Fiscal Years 2000-01 through
2004-05 and the projected number of customers Served by the District for the Fiscal Years 2005-06
through 2009-10, identified in Equivalent Dwelling Units C EDUs"), are set forth in Table 8 below. As
discussed below, sewer service charges are based on the expected amount of wastewater flow for a single
family dwelling. This base amount is considered the "equivalent dwelling unit". The EDU's set forth in
Tables 8 and 9 below equate to total Sew"Service Charge levies.
Table 8
Historical and Projected Equivalent Dwelling Units
Fiscal Years 2001-02 through 2010-11
Historical Projected
Fiscal Year EDUs Fiscal Year EDUstt)
2001-02 898,031 2006-07 907,986
2002-03 897,757 2007-08 911,618
2003-04 RI 894,169 2008-09 915,264
2004-05"1 893,501 2009-10 918,925
2005-06 910,469 2010.11 922,601
(1) EDU growth during the projection period is estimated at approximately 0.4%per atmum.
(2) With respect to this Fiscal Year.presentation in the Statistical Section of the Comprehensive Annual Financial Report set
forth in Appendix A include EDU's which equate to total Sewer Service Charge collections.
Source:Orange County Sanitation District.
Table 9 below shows the number of residential and commercial customers and industrial
customers end the approximate percentages of Sewer Service Charge revenues derived from the
combined residential and commercial use and industrial use for the last five fiscal years.
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Table 9
Number of Accounts and Revenues
by Customer Class
for the Fiscal Years Ending June 30
(S Millions)
Residential/Commercial Industrial
Percent
age of
Number of Sewer
Equivalent Percentage of Service
Single- Sewer Service Number of Charge
Family Total Charge Customer Revenu
Fiscal Year Dwellings Revenue Revenues Accounts Total Revenue as
200"2 998,031 $70.3 90% 573 $ 7.5 10'Yo
2002-03 897,757 77.0 92 603 6.3 8
2003-041t1 860,156 86.0 92 530 7.5 8
2004-05 01 860,634 99.0 90 568 10.5 10
2005-06 872,859 132.0 92 557 12.2 8
(1) With respect to this Fiscal Year,presentation in the Statistical Section of the Comprehensive Annual Financial Report set
foot in Appendix A include EDU's which equate to total Sewer Service Charge collections rather than levies.
Source: Orange County Sanitation District.
The ten largest industrial customers of the District for the Fiscal Year ended June 30, 2006 are
shown in Table 10 below. These industrial customers paid a total of$6,331,911 for services of the
District, or approximately 57% of the District's approximately $11 million of total revenues received
from industrial customers, and approximately 4.10% of the District's total Sewer Service Charge
revenues of approximately$132 million.
Table 10
Largest Customers of the District
for the Fiscal Year Ended June 30,2006
Percentage of Total
Sewer Service Saver Service
User Charges Charge Revenues
Kimberly-Clark Worldwide,Inc. $ 948,680 0.61%
WC Foods, Inc. 875,884 0.57
Alstyle Apparel—A&G Inc. 845,474 0.55
Stremicks Heritage Foods,LLC 694,946 0.45
Disneyland Resort 676,876 0.44
Nor-Cal Beverage Co. Inc. 574,081 0.37
Disneyland Resort-DCA 534,899 0.35
House Foods America Corp. 480,413 0.31
Van Law Food Products, Inc. 374,478 0.24
Pepsi-Cola Bottling Group 326,180 0.21
TOTAL $6,331,911 4.10%
Source: Ormge County Sanitation District.
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i
Assessed Valuation
i
The assessed valuation of property in the County is established by the County Assessor, except
for public utility property which is assessed by the State Board of Equalization. Due to changes in
assessment required under State Constitution Article XIIIA, the County assessment roll no longer
purports to be proportional to market value. See "LIMITATIONS ON TAXES AND REVENUES"
herein. Generally, property can be reappraised to market value only upon a change in ownership or
completion of new construction. The assessed value of property that has not incurred a change of
ownership or new construction must be adjusted annually to reflect inflation at a rate not to exceed 2%
per year based on the State consumer price index. In the event of declining property value caused by
substantial damage, destruction, economic or other factors, the assessed value must be reduced
temporarily to reflect market value. For the definition of full cash value and more information on
property tax limitations and adjustments,see"LIMITATIONS ON TAXES AND REVENUES"herein.
The County Assessor determines and enrolls a value for each parcel of taxable real property in the
County every year. The value review may result in a reduction in value. Taxpayers in the County also
may appeal the determination of the County Assessor with respect to the assessed value of their property.
Table 11 below shows a five-year history of assessed valuations in the District since Fiscal Year
2001-02. Over the years shown, assessed valuations in the District have increased at an average rate of
approximately 8.7%per fiscal year.
Table 11
Assessed Valuations of Property in the District
Fiscal Years 2001-02 through 2005-06
is Millions)
Fiscal Year Value %Change
2001-02 173.4 8.85
2002-03 188.9 8.91
2003-04 201.4 6.66
2004.05 219.3 8.85
2005-06 241.8 10.30
Some: County of Orange Audiloo-Controller.
Since 2002, the Southern California housing market has experienced significant price
appreciation with accelerating demand. One factor contributing to such demand in Southern California
over the past several years has been the increasing use of creative financing options for individual home
buyers, including adjustable rate mortgages. Adjustable rate mortgages take various forms, but
commonly have low initial interest rates, which have risen significantly in this year. As interest rates
begin to rise and adjustable rates are reset and result in higher interest rates, homeowners who financed
the purchase of their homes with an adjustable rate mortgage can expect their monthly mortgage
payments to increase. In addition,it is possible that as interest rates rise on new loans and adjustable rates
are reset on existing loans, there will be a decrease in home sale prices, resulting in recent homebuyers
having loan balances in excess of the value of their homes. In the past several months,a number of public
home builders with significant operations in the Southern California housing market have reported in
SEC filings slowing demand, significant increases in sales cancellation rates and increasing inventory
build-ups(including increasing investor/speculator resale inventory)amid rising interest rates.
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Tax Levies and Delinquencies
Property taxes are based on assessed valuation which is determined as described under
"DISTRICT REVENUES—Assessed Valuation"herein. In accordance with the California Revenue and
Taxation Code,the County tax collector collects secured tax levies for each Fiscal Year. Property taxes on
the secured roll are due in two installments, on November I and February 1. The District currently
participates in the County's Teeter Plan under which the District receives annually 100% of the secured
property in levies and Sewer Service Charges to which it otherwise is entitled,regardless of whether the
County has actually collected the levies. This alternative method provides for funding each taxing entity
included in the Teeter Plan with its total secured property taxes during the year the taxes are levied,
including any amount uncollected at fiscal year end. Under this plan,the District's general fund receives
the full amount of secured property taxes levied each year on its behalf and, for so long as such plan
remains in effect, the participating entities, such as the District, no longer experience delinquent taxes.
The County's general fund is the designated recipient of future collections of penalties and interest on all
delinquent taxes collected on behalf of participants in this alternative method of apportionment. In recent
years, the County has experienced delinquencies of Sewer Service Charges in the District of
approximately 2%.
Unpaid taxes become delinquent after December 10 and April 10, respectively,and a ten percent
penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to
which taxes are delinquent is declared tax-defaulted on or about June 30. Such property may thereafter be
redeemed by payment of the delinquent taxes and the delinquency penalty, plus costs and redemption
penalty of one and one-half percent per month to the time of redemption. If taxes are unpaid for a period
of five years or more,the tax-defaulted property is subject to sale by the County Treasurer-Tax Collector.
Property taxes on the unsecured roll are due as of the January I lien date and become delinquent,
if unpaid, on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured
roll and an additional penalty of one and one-half percent per month begins to accrue on November I.
The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action
against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in
order to obtain ajudgment lien on certain property of the taxpayer,(3)filing a certificate of delinquency
for recordation in the County Recorder's office in order to obtain a lien on certain property of the
taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging
or assessed to the taxpayer.
Table 12 below shows a five-year history of the District's ad valorem total property tax and
Sewer Service Charge levies. Pursuant to the Teeter Plan described above, which provides for the
County's financing of annual delinquencies, information with respect to outstanding delinquencies in
prior yews collected in current fiscal years and the percent of delinquencies to the total tax and Sewer
Service Charge levies.
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i
i
I
i
Table 12
Total Property Tax and Sewer Service Charge Levies
in the District for ;
Fiscal Years 2001-02 through 2005-06
Fiscal Total Tax and
Year Sewer Service Charge Levy
2001-02 $112,087,000
2002-03 122,210,000
2003-04 134,132,000
2004-05 152,745,000
2005-06 191,290,000
Source:O=ge County Auditor-Controller's Office.
Budgetary Process
The District's operating fund budget relies on revenues from property taxes and Sewer Service
Charges, both of which are collected can the property tax bill. See "DISTRICT REVENUES — Sewer
Service Charges" and"— Additional Revenues." The District receives tax revenues from the County in
eight allocations, with the largest receipts in December and April. The District operates on a Fiscal Year
beginning each July 1. The operating fund budgets include fords to cover the dry period of each tax year,
i.e., the period from the beginning of the Fiscal Year until the first taxes are received. The dry-period
requirement is budgeted at one-half of the annual operating fund budgeted expenditures. The District
uses the accrual method of accounting in its budgets.The District has conformed to its budgets for the last
five fiscal years and is conforming to its budget for the current fiscal year.
The District's annual budget preparation process begins in January of each year and concludes in
June upon its adoption. The General Manager reviews the final operating budgets and then distributes
them to the Directors and District Committees for consideration. The Board of Directors then adopts the
proposed annual budgets,with any revisions,in June of each year.
Budgetary control is exercised at the individual Department level and administrative policies
provide guidelines on budget transfers and the authorization necessary to implement transfers. A budget
adjustment is a transfer which does not change the total appropriated amount and does not require Board
action. Approval may be granted by the General Manager or the Department Head in certain
circumstances. Department Heads have the discretion to reapportion funds between certain line items
within a division but may not exceed total appropriated amounts for each department. They may also
transfer staff across divisional lines. The General Manager and Board of Directors must approve
additional capital outlay items.
A budget amendment is an adjustment to the total appropriated amount which was not included in
the original budget. These supplemental appropriations require formal action by the Board of Directors.
Prior year reserves or fund balances may be appropriated to fund items not previously included in the
adopted budget. Reserves or fund balances exceeding minimum amounts required by fiscal policies may
be appropriated if it is determined to be in the best interest of the District. Directors may also appropriate
reserves in case of emergencies or unusual circumstances.
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Reserves
The District has an established reserve policy with eight separate categories for its reserve funds.
The following table sets forth actual reserves at June 30, 2005 and 2006, and projected reserves at June
30, 2007, for each fund. Increases to the Capital Improvement Program Reserve and Debt Service
Required Reserves are attributable principally to the funding of projected CIP cash Flow and the Reserve
Fund for the Certificates. Reserve levels are calculated in accordance with the District's reserve policy.
Table 13
Actual and Projected Reserves
Fiscal Years 2004-05 through 2006-07
($ Millions)
June30,2005 June30,2006 June30,2007
Cash Flow Requirements Reserve
Operating Expenses $108 $113 $65
Certificate of Participation Payments — -- 54
Operating Contingencies Reserve — -- 13
Capital Improvement Program Reserve 191 189 43
Catastrophe and Self Insurance 57 57 57
Capital Replacement and Refurbishment 51 52 53
Debt Service Required Reserves 65 79 79
Rate Stabilization Reserve
Total $472 $490 $364
+ Projected.
Source: (range Cowry Sanitation District.
The Cash Flow Requirements Reserve was established to fund operation, maintenance and
certificates of participation debt service expenses for the first half of the fiscal year,prior to the receipt of
the first installment of the property tax allocation and sewer service user fees which are collected as a
separate line item on the property tax bill. The level of this reserve is established as the sum of an amount
equal to six months operations and maintenance expense and the total of certificates of participation debt
service expenses due in the subsequent fiscal year. The Operating Contingency Reserve was established
to provide for non-recurring expenditures that were not anticipated when the annual budget and Sewer
Service Charges were adopted. The level of this reserve is equal to ten percent of the District's annual
operating budget. The Capital Improvement Reserve was established to fund annual increments of the
capital improvement program with a target level at one half of the average annual capital improvement
program through the year 2020. Levels higher and lower than the target can be expected while the long-
term financing and capital improvement programs are being finalized. The Catastrophic Loss, or Self-
Insurance Reserve is established for property damage including fire, flood and earthquake, general
liability and workers' compensation. The level of reserve in this fund is maintained at a level to fund the
District's non-reimbursed costs which are estimated to be $57 million. The Capital
Replacement/Renewal Reserve was established to provide thirty percent of the funding to replace or
refurbish the current collection,treatment and disposal facilities. The current replacement value of these
facilities is estimated to be approximately $5.56 billion. The initial reserve level for this fund was
established at $50 million and is augmented by interest eamings and a portion of the annual Sewer
Service Charges. Debt Service Required Reserves(or Obligation Reserve Funds as defined in the Master
Agreement)are controlled by a trustee pursuant to the provisions of certificates of participation issues and
is not available for the general needs of the District. The Rate Stabilization Reserve accumulates all
available funds which exceed the targets for all other reserves. The Rate Stabilization Reserve is a
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separate fund from the Rate Stabilization Account established under the Trust Agreement. These funds
are applied to future years' needs and must be maintained at specified levels. There is currently no
established target for this reserve and,because the reserves of all other funds have not been exceeded,the
reserve level for this reserve fund is zero for Fiscal Years 2005-05 through 2006-07. See APPENDIX A
- "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY
SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30,2006"heroin.
Summary of Operating Data
Set forth in Table 14 below is a summary of historic operating results for the District for Fiscal
Years 2001-02 through 2005.06. The District's CEP cash flow budget for Fiscal Year 2005-06 is $260.8
million, an increase of$72.9 million from the prior year total, for the financing of joint works treatment
and disposal system improvement projects,and collection system improvement projects. This increase is
attributable to the additional infrastructure needs identified in the Interim Strategic Plan and in the CIP
Validation Study. The information presented in the summary should be read in conjunction with the
financial statements and notes. Sea APPENDIX A - "COMPREHENSIVE ANNUAL FINANCIAL
REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED
JUNE 30,2006"herein.
Table 14
Summary of Historical District Revenues and Expenses
and Other Financial Information
For Fiscal Years 2001-02 Through 2005-06
($Mullions)
2001-02 2002-03 2003-04 2004-05 2005-06
Revenues:
Sewer Service Charges(') $ 70.3 S 77.0 S 86.0 $ 99.0 $ 132.0
Industrial Sewer Service 7.5 6.3 7.5 10.5 122
Charges
Revenue Area No. 14 Fees 22 3.2 5.8 6.9 5.3
Ad Valorem Taxes 41.1 44.6 46.9 35.8 40.0
Interest Earnings 27.8 25.9 6.8 15.1 10.4
Capital Facilities Capacity Charges 10.6 10.1 9.0 9.8 15.6
Other Revenues 2.5 3.4 4.0 6.1 9.2
Total Revenues SI62A 5170.5 5166.0 5183.2 5224.7
Operations and Maintenance Expenses S 68.6 S 79.7 $ 95.4 $ 101.8 $ 105.6
Net Revenuesn' S 93.4 S 90.8 S 70.6 S 81.4 S 119.1
Debt Service $ 23.4 S 22.4 S 34.1 $ 37.9 $ 32.3
Coverage Ratios121 3.99x 4.05x 2.07x 2.15x 3.69x
CIP Outlay S 83.9 $112.9 $149.5 $187.9 S260.8
Ending Rawr,,Slrl 5429.7 $394.0 $518.0 5407.0 5411.0
(1) Net ofrebotm if my,to cemmerdel users.
(2) Calculated in aceordance with the Master Agreement.
(3) Fxcludes debt service reserves in accordance with the District's reserve policy.
Source: Orange County Sanitation District.
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Projected Operating Data
Set forth in Table 15 below are projected operating results for the District for Fiscal Years 2006-
07 through 2010-1 1. These projections assume the number of projects and scheduled build out set forth
in the CIP Validation Study, increased sewer service rates for Fiscal Year 2006-07 and projected
increased sewer service rates for Fiscal Years 2007-08 and 2008-09 at 9.8% and thereafter at 12.9o/a.
Principal expenditure components of these projections we the Interim Strategic Plan and CIP Validation
Study, which identified 107 large capital projects managed by the Engineering Department through 2020
at a total cost of$2.3 billion, and currently projected to include nearly$1.5 billion in the next five years.
The District's CIP cash flow budget for Fiscal Year 2006-07 is$266.1 million,an increase of$5.8 million
from the prior year total. This CUP budget finances joint works treatment and disposal system
improvement projects, and collection system improvement projects. This increase is attributable to the
additional infrastructure needs identified in the Interim Strategic Plan and in the CIP Validation Study.
The preparation of such projections was based upon certain assumptions and certain forecasts with respect
to conditions that may occur in the future. While the District believes that these assumptions and
forecasts are reasonable for the purposes of the projected selected operating data, it makes no
representations that they will in fact oocm. To the extent that actual future conditions differ from those
assumed herein,the data will vary.
Table 15
Summary of Projected District Revenues and Expenses
and Other Financial Information
for Fiscal Years 2006-07 through 2010-11
($Millions)
2006-07 2007-08 2008-09 2009-10 2010-11
Revenues:
Sewer Service Charges $149.3 $164.6 $186.6 $211.5 $239.8
Industrial Sewer Service Charges 17.1 18.9 21.4 24.2 27.5
Revenue Area No. 14 Fees 19.8 24.0 18.5 18.2 20.4
Ad Valorem Taxes 55.6 58.3 61.2 64.3 67.5
Interest Earnings 17.3 15.5 17.4 18.9 20.5
Grants 2.4 4.0 -- - -
Capiml Facilities Capacity Charges 11.1 11.7 12.3 13.0 13.6
Other Revenues 29.6 10.4 7.8 8.0 8.1
Total Revenues $301.2 $307.4 $325.3 $358.1 $397.4
Operations and Maintenance Expenses $129.1 $135.6 $147.1 $157.7 $169.8
Net Revenues.. $172.1 $171.8 $1781 5200.4 $227.6
Debt proceeds - $300.0 $255.0 $225.0 $225.0
Debt Service2l $ 54.4 $ 65.3 $ 85.4 $103.1 $119.5
Coverage Ratim")12) 3.16x 2.63x 2.09x 1.94x 1.90x
CIP Outlay $266.1 $338.8 $309.4 $278.3 $293.2
Ending Reserveslrl $285.3 $319.0 $331.3 $352.8 $370.7
(1) Calculated in accordance with the Master Agreement.
(2) Preliminary.subject to chaage. Assumes the refoading ofthe 2027 though 2029 maturities of the 2003 Certificates,which is
the minimum the District expects to refund. The specific maturiies and amount ofthe Refunded Certificates will be
MS Wat:2601&l41&4
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dctemdned by District on the basis of market conditions at or about the time that the District accepts bids for the
Certificates.
(3) Excludes debt service reserves in accordance with the District's reserve policy.
Source: Orange County Sanitation District.
Management's Discussion and Analysis of operating Data
The District's Fiscal Year 2006-07 total operating and capital improvement budget is $456.3
million,a 0.3%increase over the prior year budget of$455.1. The District's Fiscal Year 2006-07 budget
includes$266.1 million in capital improvement outlays as the District moves towards reaching secondary
treatment standards by the target date of December 31, 2012, as specified by the Board's July 2002
resolution and in keeping with the terms and conditions of its ocean discharge permit and related Consent
Decree.
The Fiscal Year 2006-07 operations budget for the collection, treatment, and disposal of
wastewater is $129.1 million, an $11.3 million, or 9.6% increase from the prior year budget of$117.9
million. This increase is primarily attributable to the proposed increase in personnel costs due mostly to
the current capital improvement program,totaling$1.6 billion over the next 10 years. Personnel costs are
being proposed for increase at 6.9°/a,or$4.8 million. Contractual services budget increased$2.9 million,
or 19.9"/o due primarily to the $2.7 million, or 27.2% increase in solids removal. This increase is
reflective of a projected 18.0% increase in hauling and land application costs compounded by a 4.0%
increase in the volume of solids generated, from 250,000 tons to 261,000 tons. Repairs and maintenance
budget increased $2.2 million, or 26.8% primarily due to the $1.2 million maintenance replacement of
activated sludge diffusers that supply aeration to the basins. In addition, $750,000 was approved for the
cleaning of three digesters and another $700,000 for the overhaul of two central generation system
engines used to supplement electricity from digester gas produced from the treatment plants. Another
significant increase is in operating materials and supplies, up SI A million or 6.7%, due primarily to the
combined increases in chemicals for treatment, odor control, and disinfection approximating one million
dollars. These chemical increases are primarily a result of unit price increases of up to 25%. The cost per
million gallons of wastewater treated,an industry-wide performance measurement,is expected to increase
in Fiscal Year 2006-07 to $1,358, a $141, or 11.6% increase over the prior year actual of $1,217.
Wastewater flow through the treatment system is expected to increase from the actual 235 million gallons
per day(mgd)in Fiscal Year 2005-06 to 250 mild in Fiscal Year 2006-07,a 6.4%increase.
The Fiscal Year 2006-07 Capital Improvement Program (CIP)cash flow budget was approved at
$266.1 million, a 4.0% decrease from the prior year budget of $277.1 million. These budgeted cash
outlays are based on a valuation study of the CIP conducted by staff to ensure the appropriateness of all
capital projects and the accuracy of the cost estimates. The Fiscal Year 2006-07 CIP identified 85 large
capital projects and 23 special projects over a 15 year period at a total cost of$1.87 billion. This total
represented a S435 million decrease from the Fiscal Year 2005-06 CIP. Based on this study, the Board
adapted Ordinance No. OCSD-30B increasing the sanitary sewer service charges by approximately 9.8%
for Fiscal Year 2006-07. This action increased the single family residence user rate, the basis for all
sewer user fee rates, from $151.00 to $165.80. The completion of the CIP Validation Study for Fiscal
Year 2006-07 reaffirms the need for further rate increases in future years. Annual increases are ordered to
be subject to reaffirmation by the affirmative vote of 2/3 of the members of the Board of Directors prior
to implementation of any such charge for each fiscal year. See"DISTRICT REVEN(JES-Sewer Service
Charges."
The CIP Validation Study and Secondary Treatment Review conducted in March 2007 updated
the CIP with the continue goal of meeting secondary treatment standards as quickly as possible while
providing for increased flows and rehabilitation and refurbishment of existing facilities. This updated
CIP Validation Study resulted in a revised CIP consisting of 107 large capital projects through 2020 at a
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total cost of$2.3 billion. The CIP cash flows over the next ten years is now projected to be$1.6 billion;
average annual expenditures of nearly $300 million projected over the next five years, and the
implementation of full secondary treatment standards to be completed on or before December 31,2012.
Investment of District Funds
State statutes authorize the District to invest in obligations of the United States Government, state
and local governmental agencies, negotiable certificates of deposits, bankers acceptances, commercial
paper, reverse repurchase agreements and a variety of other investment instruments which are allowable
under California Government Code Section 53600 w seq.
All District funds, except for Obligation Reserve Funds controlled by a bank trustee pursuant to
the provisions of Existing Senior Obligations, are managed by an external money manager, Pacific
Investment Management Company ("PIMCO"). Mellon Trust ("Mellon Trust") serves as the District's
independent custodian bank for its investment program. Callan Associates ("Callan") serves as the
District's independent advisor.
At June 30, 2006, the District's externally managed fund consisted of short-tenn investment
portfolio of$72,171,454 with an average maturities of 85 days, and a long-term investment portfolio of
$295,290,776 with average maturities of 2.7 years. Investments consist of United States government
securities, corporate bonds and commercial paper. The District's portfolio contains no reverse purchase
agreements. [TO COME: At March 31, 2007,the District's externally managed fund consisted of short-
term investment portfolio of $ with an average maturities of _ days, and a long-term
investment portfolio of$ with average maturities of_years. Investments consist of United
States government securities, corporate bonds and commercial paper. The District's portfolio contains no
reverse purchase agreements.]
Deposits in banks are maintained in financial institutions which provide deposit protection on the
bank balance from the Federal Depository Insurance corporation. The California Government Code
requires State banks and savings and loans to secure local government deposits by pledging government
securities equal to 1100/. of the deposits or by pledging first trust deed mortgage notes equal to 150%of
the deposits.
The District's Investment Policy requires that the District invest public funds in a manner which
ensures the safety and preservation of capital while meting reasonable anticipated operating expenditure
needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the
investment of public funds. The primary objectives, in order, of the District's investment activities are
safety,liquidity and return on investments.
For more information regarding the District's investment portfolio as of June 30,2006, we Note
2 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal Year
Ended June 30,2006 set forth in Appendix A.
FINANCIAL OBLIGATIONS
Existing Indebtedness
Currently the District has Senior Obligations Outstanding payable on a parity with the Installment
Payments under the Installment Purchase Agreement. The table below describes the District's
outstanding certificates of participation as of April 1, 2007. The payment obligations in connection with
each of these obligations,together with the 1992 Swap and the 1993 Swap described below, constitutes a
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Senior Obligation, subject to the provisions of the Master Agreement and shall be afforded all of the
advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master
Agreement. The District has no outstanding general obligation bonds.
Table 16
Outstanding Certificates of Participation Debt at April 1,2007
Principal Issue Outstanding Final
Amount Date Balance Maturity
1992 Certificates $ 660,6 00,000 12/3/92 $ 85,505,000 8/1113
1993 Certificates 46,000,000 9/2/93 32,200,000 8/1/16
Series 2000 Certificates 218,600,000 9113/00 197,400,000 811130
Series 2003 Certificates* 290,000,000 9/26103 280,000,000 211/33
Series 2006 Certificates 200,000,000 3/8/06 200,000,000 2/1/36
Total Long-Term Debt $905,200,000 $795,105,000
• All or a portion of the Series 2003 Cemfleites are being refunded with proceeds from the sale of the Certificates.
In connection with the execution and delivery of the above-referenced outstanding certificates of
participation, the district entered certain installment purchase agreements, or equivalent documents
providing for the payment of installment payments or similar payments. In December 1992,the District
mused the execution and delivery of certain certificates of participation which were subsequently
designated as the Orange County Sanitation Refunding Certificates of Participation, 1992 Series (the
"1992 Certificates"). The District entered into an agreement for acquisition and construction(the"1992
Agreement for Acquisition and Construction"), a Standby Certificate Purchase Agreement (including as
thereafter amended and substituted, the "1992 Standby Agreement") in order to provide for payment of
the purchase price of tendered and un marketed 19,92 Certificates,and an Interest Rate Swap Agreement,
as amended(the"1992 Swap")with AIG Financial Products Corp.
In September 1993, the District mused the execution and delivery of certain certificates of
participation which were subsequently designated as the Orange County Sanitation Refunding Certificates
of Participation, 1993 Series (the "1993 Certificates"). The District entered into an agreement for
acquisition and construction (the"1993 Agreement for Acquisition and Construction"),a Reimbursement
Agreement (including as thereafter amended and substituted, the"1993 Reimbursement Agreement") in
order to provide for payment of the purchase price of tendered and mmanarketed 1993 Certificates, and
an interest rate swap agreement, as amended (the "1993 Swap') with Societe G6nerale, New York
Branch.
In August 2000,the District caused the execution and delivery of the Certificates of Participation,
Series 2000-A (the "2000-A Certificates") and the Orange Comfy Sanitation District Refunding
Certificates of Participation, Series 2000-B (the "2000-B Certificates" and together with the 2000-A
Certificates the 112000 Certificates"). In connection with the execution and delivery of the 2000
Certificates,the District entered into an installment purchase agreement (the"2000 Installment Purchase
Agreement")and a Standby Agreement, dated as of August 1, 2000(the"2000 Standby Agreement"),by
and among the District,the Trustee and Dexia Credit Local,acting through its New York Agency in order
to provide for payment of the purchase price of tendered and unremarketed 2000 Certificates.
On August 2003, the District caused the execution and delivery of the Orange County Sanitation
District Certificates of Participation, Series 2003 (the "2003 Certificates") evidencing $280,000,000
original aggregate principal amount,a portion of which are being refunded with proceeds from the sale of
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the Certificates. In connection with the execution and delivery of the 2003 Certificates, the District and
the Corporation entered into an installment purchase agreement (the "2003 Installment Purchase
Agreement").
In Match 2006, the District caused the execution and delivery of certain certificates of
participation designated as the Orange County Sanitation Refunding Certificates of Participation, 2006
Series (the "2006 Certificates") evidencing $200,000,000 original aggregate principal amount. In
connection with the execmion and delivery of the 2006 Certificates, the District and the Corporation
entered into an installment purchase agreement (the "2006 Installment Purchase Agreement") and the
District entered into a Standby Certificate Purchase Agreement, dated m of March 1, 2006 (the "2006
Standby Agreement"),with Depfa Bank plc, acting through its New York Branch in order to provide for
payment of the purchase price of tendered and unremarketed 2006 Certificates.
The 1992 Standby Agreement, the 1993 Reimbursement Agreement, and the 2000 Standby
Agreement and the 2006 Standby Agreement each constitutes a Credit Facility Agreement and a Credit
Facility.The obligation of the District to repay amounts drawn on or paid under these agreements,to pay
interest on such amounts and to pay any other amounts in connection with such draw or payment
constitutes a Reimbursement Obligation,each with respect to a Senior Obligation.
For more information regarding the District's outstanding indebtedness and interest rate swaps as
of Jane 30, 2006, see "Variable Rate and Swap Obligations" and Notes 4 and 5 to the Comprehensive
Annual Financial Report of the Orange County Sanitation District for Fiscal Year Ended June 30, 2006
set forth in Appendix A.
Variable Rate and Swap Obligations
The District entered into separate interest rate swap agreements in connection with the 1992
Certificates and the 1993 Certificates. The objective of the interest rate swaps is to lower the District's
borrowing costs when compared against fixed-rate bonds at the time of issuance. The swaps effectively
change the District's variable interest rate to a synthetic fixed rate of 5.55% on the 1992 Certificates and
to a synthetic fixed rate of 4.56%on the 1993 Certificates. By their terms,the District receives payments
that are calculated by reference to a floating interest rate and makes payments that are calculated by
reference to a fixed interest rate. In its annual financial report, the interest rate swap agreements are
accounted for as a hedge by the District,and the associated interest rate differential to be paid or received
is charged to interest expense as interest rates change. See Note 5 to the Comprehensive Annual
Financial Report of the Orange County Sanitation District for Fiscal Year Ended June 30, 2006 set forth
in Appendix A.
Under the 1992 Swap,the District receives a variable interest rate equal to the interest paid to the
holders of the 1992 Certificates which is based on a tax exempt daily interest rate as determined by the
remarketing agent on an initial notional amount of$160,600,000. The notional value of the swap declines
in tandem with the principal amount evidenced by the 1992 Certificates. The 1992 Swap matures on
August 1,2013. Because interest rates have declined since execution of the 1992 Swap,the swap had an
estimated negative fair value of$10.92 million as of lane 30,2005.
Under the 1993 Swap,the District receives a variable interest rate equal to the interest paid to the
holders of the 1993 Certificates which is based on a tax exempt daily interest rate as determined by the
remarketing agent on an initial notional amount of$46,000,000. The notional value of the 1993 Swap
declines in tandem with the principal amount evidenced by the 1993 Certificates. The 1993 Swap
matures on August 1, 2016. Because interest rates have declined since execution of the 1993 Swap,the
swap had an estimated negative fair value of$3.43 million as of June 30,2005.
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The interest rate swap agreements entail risk to the District. The counterparty may fail or be
unable to perform, interest rates may vary from assumptions and the District may be required to make
significant payments in the event of an early termination of an interest rate swap. The District or the
counterparty may terminate a swap if the other party fails to perform under the terms of the contract. In
the event of termination due to default,the defaulting parry will pay to the nondef tulting party the excess
(if any)of the sum of the settlement amount and the unpaid amounts owed less the unpaid amounts due
from the non-defaulting party. Each swap may be terminated by the District if the counterparty's credit
quality rating falls below"AA=by Standard&Poor's or"Aa3 by Moody's Investors Service. If a swap
is terminated, the related series of certificates of participation would no longer carry a synthetic interest
rate. The District believes that if any such an event were to occur, it would not have a material adverse
impact on its financial position.
As of June 30, 2006, the District was not exposed to credit risk associated with such swaps
because each swap had a negative fair value. However,should interest rates change,and the fair value of
the swap become positive, the District would be exposed to credit risk in the amount of the swap's fair
value. Neither swap will expose the District to basis risk because the variable-rate interest paid to the
certificate holders is equal to the variable-rate interest camed on the notional amount of the swap.
Net payments under the terms of the interest rate swap agreements constitute Senior Obligations
under the Master Agreement and are on a parity with the District's payment obligations with respect to
the Certificates. Likewise, termination payments under the interest rate swap agreements would be
payable on a parity with the District's payment obligations with respect to the Certificates.
For more information regarding the District's interest rate swaps as of June 30,2006,see Notes 4
and 5 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Fiscal
Year Ended June 30,2006 set forth in Appendix A.
Anticipated Financings
As projected out to 2020, the CIP cash flow needs will be approximately $2.3 billion in fidure
wastewater treatment improvements and in future collection system capital improvements, with average
annual expenditures of nearly $300 million projected over the next five years, and with the bulk of the
construction scheduled during the next ten years. Sixty percent of these improvements are expected to be
funded through current revenues and the balance will be funded through the issuance of new debt. In
Fiscal Year 2007-08 the District expects to incur Additional Senior Obligations evidencing principal in an
aggregate amount of approximately$300 million.
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Direct and Overlapping Bonded Debt
The Table 17 below presents the aggregate direct and overlapping bonded debt of the District as
of June 30,2006.
Table 17
Direct and Overlapping Bonded Debt of the District
as of June 30,2006
ORANGE COUNTY SANITATION DISTRICT
2005.06 Assessed Valuation(Land&Improvements Only): $241,849,995,272
Redevelopment Incremental Valuation: 26,265,003,329
Adjusted Assessed Valuation: $215,594,991,943
OVERLAPPING TAX AND ASSESSMENT DEBT (Based on redevelopment adjusted all property assessed
valuation of$221,268,184,347):
%Aoolic Ail Debt 6130/O6
Orange County Teeter Plan Obligations 71.832% $ 88,874,142
Metropolitan Water District of Southern California 15.119 58,898,332
Coast Community College District 99.525 102,230,952
North Orange County Joint Community College District 96.872 234,666,609
Rancho Santiago Community College District 98.200 206,906,581
Brea-Olinda and Laguna Beach Unified School Districts 97.858& 29,019,956
10.973
Newport-Mesa Unified School District 100.000 104,770,000
Placentia-Yorba Linda Unified School District 98.689 95,793,033
Saddleback Valley Unified School District 11.256 10.594,147
Santa Ana Unified School District 100.000 135,923,187
Tustin Unified School District School Facilities Improvement District No.2002-1 98.944 28,353,349
Anaheim Union High School District 100.000 128,308,955
Fullerton Joint Union High School District 90.440 57,187,844
Huntington Beach Union High School District 99.013 202,440,796
School Districts 97.608-100 200,2369997
City of Anaheim 99.100 6,114,470
Irvine Ranch Water District Improvement Districts Various 160,422,350
Rossmoor Community Services District Special Tax Obligations 100.000 715,000
Bonita Canyon Community Facilities District No.98-1 100.000 43.615,000
Irvine Unified School District Community Facilities District No.86-1 100.000 277,245,000
Tustin Unified School District Community Facilities District No.88.1 and 97.1 100.000 161,3229675
Orange County Community Facilities District No. 874 99.974 66,537,433
Other Community Facilities Districts Various 278,029,298
Orange County Assessment Districts 100.000 115,919,296
City of Irvine 1915 Act Bonds 100.000 735,464,169
City of Tustin 1915 Act Bonds 100.000 39,039,000
Other 1915 Act Bonds 100.000 27,508,000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT S3,616,135,561
(continued)
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(continued from previous page)
DIRECT AND OVERLAPPING GENERAL FUND DEBT: %Amplicable Debt 6/30/06
Orange County General Fund Obligations 71.832% $ 452,557,403
Orange County Pension Obligations 71.832 71,628,211
Orange County Board of Education Certificates of Participation 71.832 14,237,102
Orange County Transit District Authority 71.832 1,774,250
Coast Community College District Certificates of Participation 99.525 6.663,199
South Orange County Community College District Certificates of Participation 34.495 13.390,611
Brea-01inda Unified School District Certificates of Participation 97.858 30,883,985
Orange Unified School District Certificates of Participation 96.729 50,260,388
Placentia-Yorba Linda Unified School district Certificates of Participation 99.689 85,721,576
Santa Ana Unified School District Certificates of Participation 100,000 44,699,711
Other Unified School District Certificates of Participation Various 25,066,152
Union High School District Certificates of Participation Various 59,508,612
School District Certificates of Participation Various 62,899,163
City of Anaheim General Fund Obligations 99.100 650,376,520
City of Fullerton General Fund Obligations 100.000 32.330,993
City of Huntington Beach General Fund and Judgment Obligations 99.969 95,206,488
City of Irvine General Fund Obligations 100.000 37,170,000
City of Santa Ana General Fund Obligations 100.000 128,149,066
Other City General Fund Obligations Various 180,668.898
Orange County Sanitation District Certificates of Participation 100.000 130,370,000
Irvine Ranch Water District Certificates of Participation 89.144 39,401,648
Municipal Water District of Orange County Water Facilities Corporation 66.566 18,774,940
Yorba Linda County Water District Certificates of Participation 97.697 10,038,367
Orange County Fire Authority 49.923 8,305,494
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $2,240,072,777
Less: Orange County Transit District Authority(80%self-supporting) 1,419,400
City of Anaheim self-supporting obligations 620,579,172
Other City self-supporting obligations 9,094,147
MWDOC Water Facilities Corporation(100%self-supporting) 18,774,940
TOTAL NET OVERLAPPING GENERAL FUND DEBT $1,590,205,118
GROSS COMBINED TOTAL DEBT $5,856,208,33811r
NET COMBINED TOTAL DEBT $5,206,340,679
to Percentage of overlapping agency's redevelopment adjusted all property assessed valuation
($221.268,184,347)located within boundaries of the district.
1r1 Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and tax allocation
bonds.non-bonded capital lease obligations and the Certificates.
Total Overlapping Tax and Gross Combined Net Combined
Ratios to: Assessment Debt Total Debt Total Debt
Land and Improvement Assessed Valuation 1.50% 2.72% 2.41%
Land Property Assessed Valuation N/A 2.65% 2.35%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30105:$948,026
Source: California Municipal Statistics,Inc.
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THE CORPORATION
The Corporation was organized June 19, 2000 as a nonprofit public benefit corporation pursuant
to the Nonprofit Public Corporation law of the State. The Corporation's purpose is to render assistance to
the District in its acquisition of equipment, real property and improvements on behalf of the District.
Under its articles of incorporation,the Corporation has all powers conferred upon nonprofit public benefit
corporations by the laws of the State,provided that it will not engage in any activity other than that which
is necessary or convenient for,or incidental to the purposes for which it was formed.
The Corporation is a separate legal entity from the District. It is governed by a twenty-five
member Board of Directors. The Corporation has no employees. All staff work is performed by
employees of the District. The members of the Corporation's Board of Directors are the Board of
Directors of the District.
The District's Director of Finance and Administrative Services and other District employees are
available to provide staff support to the Corporation.
The Corporation has not entered into any material financing arrangements other than those
referred to in this Official Statement. Further information concerning the Corporation may be obtained
from the Orange County Sanitation District office at 10844 Ellis Avenue, Fountain Valley, California,
92708-7018.
LIMITATIONS ON TAXES AND REVENUES
Article XIIIA of the California Constitution
On Jenne 6, 1978, California voters approved Proposition 13 ("Proposition 13'), which added
Article XIIIA to the State Constitution ("Article XIIIA'). Article XBIA, as amended, limits the amount
of any ad valorem tax on real property to one percent of the full cads value thereof,except that additional
ad valorem taxes may be levied to pay debt service on (i) indebtedness approved by the voters prior to
July 1, 1978,(ii)(as a result of an amendment to Article XIIIA approved by State voters on June 3, 1996)
on bonded indebtedness for the acquisition or improvement of real property which has been approved on
or after July 1, 1978 by two-third of the voters on such indebtedness, and (iii) bonded indebtedness
incurred by a school district or community college district for the construction, remnstruction,
rehabilitation or replacement of school facilities or the acquisition or lease of real property for school
facilities, approved by 55% of the voters of the district, but only if certain accountability measures are
included in the proposition. Article XIIIA defines full cash value to mean 'the county assessor's
valuation of real property as shown on the 1975-76 tax bill under `full cash value," or thereafter, the
appraised value of real property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a
rate not to exceed 2%per year or to reflect a reduction in the consumer price index or comparable data for
the area under the taxing jurisdiction, or reduced in the event of declining property values caused by
substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to
implement Article XIIIA provides that notwithstanding any other law,local agencies may not levy any ad
valorem property tax except to pay debt service on indebtedness approved by the voters as described
above.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIIIA. Under current law,local agencies are no longer permitted to levy directly any property tax(except
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to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County
and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in
proportion to the relative shares of taxes levied prior to 1989,
Increases of assessed valuation resulting from reappraisals of property due to new construction,
change in ownership or from the two percent annual adjustment are allocated among the various
jurisdictions in the"taxing area"based upon their respective"situs." Any such allocation made to a local
agency continues as part of its allocation in future years.
Beginning in the 1981-82 fiscal year, assessors in the State no longer record property values on
tax rolls at the assessed value of 25%of market value which was expressed as$4 per$100 assessed value.
All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate is
expressed as $1 per$100 of taxable value. All taxable property value included in this Official Statement
is shown at 100% of market value (unless noted differently) and all tax rates reflect the $1 per $100 of
taxable value.
Article XIIIB of the California Constitution
An initiative to amend the State Constitution entitled"Limitation of Govemment Appropriations"
was approved on September 6, 1979, thereby adding Article XIIIB to the State Constitution ("Article
XIIIB"). Under Article XIIIB,the State and each local governmental entity has an annual"appropriations
limit' and is not permitted to spend certain moneys that ere called "appropriations subject to limitation"
(consisting of tax revenues, state subventions and certain other funds) in an amount higher than the
appropriations limit. Article XIIIB does not affect the appropriations of moneys that are excluded from
the definition of"appropriations subject to limitation,"including debt service on indebtedness existing or
authorized as of January 1, 1979, or bonded indebtedness subsequently approved by the voters. In
general terms, the appropriations limit is to be based on certain 1978.79 expenditures, and is to be
adjusted annually to reflect changes in consumer prices, populations, and services provided by these
entities. Among other provisions of Article XIIIB, if these entities' revenues in any year exceed the
amounts permitted to be spent,the excess would have to be returned by revising tax rates or fee schedules
over the subsequent two years.
"Appropriations subject to limitation" are authorizations to spend "proceeds of taxes," which
consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory
licenses,user charges or other fees to the extent that such proceeds exceed"the cost reasonably home by
such entity in providing the regulation,product or service," but proceeds of taxes" excludes tax refunds
and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of
funds which are not "proceeds of taxes," such as reasonable user charges or fees, and certain other non.
tax funds.
Not included in the Article XRIB limit are appropriations for the debt service costs of bonds
existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations
required to comply with mandates of courts or the federal government and appropriations for qualified
capital outlay projects. The appropriations limit may also be exceeded in certain cases of emergency.
The appropriations limit for the District in each year is based on the District's limit for the prior
year, adjusted annually for changes in the cost of living and changes in population, and adjusted, where
applicable, for transfer of financial responsibility of providing services to or from another unit of
government. The change in the cost of living is,at the District's option,either(1)the percentage change
in State per capita personal income, or (2)the percentage change in the local assessment roll on
nonresidential property. Either test is likely to be greater than the change in the cost of living index,
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which was used prior to Proposition I11. Change in population is to be measured either within the
jurisdiction of the District or the County as a whole.
As amended by Proposition 111, the appropriations limit is tested over consecutive two-year
periods. Any excess of the aggregate "proceeds of taxes" received by a District over such two-year
period above the combined appropriations limits for those two years is to be returned to taxpayers by
reductions in tax rates or fee schedules over the subsequent two years. As originally enacted in 1979,the
District's appropriations limit was based on 1978-79 authorirations to expend proceeds of taxes and was
adjusted annually to reflect changes in cost of living and population (using different definitions, which
were modified by Proposition I 11). Starting with Fiscal Year 1990-91,the District's appropriations limit
was recalculated by taking the actual Fiscal Year 1986-87 limit,and applying the annual adjustments as if
Proposition I l l had been in effect. The District does not anticipate that any such appropriations
limitations will impair its ability to make Installment Payments as required by the Installment Purchase
Agreement.
Proposition 1A
Proposition IA ("Proposition IA"), proposed by the Legislature in connection with the 2004-05
Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local
tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004-05 and 2005-06.
Proposition 1A provides that the State may not reduce any local sales tax rate, limit existing local
government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject
to certain exceptions. Proposition IA generally prohibits the State from shifting to schools or community
colleges any share of property tax revenues allocated to local governments for any fiscal year,as set forth
under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues
among local governments within a county must be approved by two-thirds of both houses of the
Legislature.
Proposition 1A provides, however, that beginning in Fiscal Year 2008-09, the State may shift to
schools and community colleges up to 8%of local government property tax revenues,which amount must
be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a
severe state financial hardship, the shift is approved by two thirds of both houses and certain other
conditions are met. The State may also approve voluntary exchanges of local sales tax and property tax
revenues among local governments within a county.
Proposition IA also provides that if the State reduces the vehicle license fee ("VLF") rate
currently in effect, 0.65% of vehicle value, the State must provide local governments with equal
replacement revenues. Further, Proposition IA requires the State, beginning July 1, 2005, to suspend
State mandates affecting cities, counties and special districts, excepting mandates relating to employee
rights, schools or community colleges, in any year that the State does not fully reimburse local
governments for their costs to comply with such mandates.
Proposition 62
On November 4, 1986, California voters adopted Proposition 62, a statutory initiative which
amended the California Government Code by the addition of Sections 53720-53730. Proposition 62
requires that(I)any local tax for general governmental purposes(a"general tax")must be approved by a
majority vote of the electorate;(ii)any local tax for specific purposes(a"special tax")must be approved
by a two-thirds vote of the electorate; (III) any general tax must be proposed for a vote by two-thirds of
the legislative body; and (iv) proceeds of any tax imposed in violation of the vote requirements must be
deducted from the local agency's property tax allocation. Provisions applying Proposition 62
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retroactively from its effective date to 1985 are unlikely to be of any continuing importance;certain other
restrictions were already contained in the Constitution.
Most of the provisions of Proposition 62 were affirmed by the 1995 California Supreme Court
decision in Santa Clara County Local Transportation Authority v. Guardino,which invalidated a special
sales tax for transportation purposes because fewer than two-thirds of the voters voting on the measure
had approved the tax. The District has not imposed any taxes subject to the provisions of Proposition 62
and believes that it will not impair its ability to make its Installment Payments as required by the
Installment Purchase Agreement. The requirements of Proposition 62 have generally been superseded by
the enactment of Article XIIIC of the Constitution(Proposition 218)in 1996.
Article XIIIC and Article XIIID of the California Constitution
Proposition 218, a State ballot initiative known as the "Right to Vote an Taxes Act," was
approved by the voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the
California Constitution,creating additional requirements for the imposition by most local governments of
"general taxes,""special taxes,""assessmens,""fees,"and"charges.- Proposition 218 became effective, `
pursuant to its terms, as of November 6, 1996, although compliance with some of its provisions was
deferred until July 1, 1997, and certain of its provisions purport to apply to any tax imposed for general
governmental purposes(i.e., "general taxes') imposed,extended or increased on or after January 1, 1995
and prior to November 6, 1996.
Article XIIID impose; substantive and procedural requirements on the imposition, extension or
increase of my"fce"or"charge" subject to its provisions. A "fee" or"charge" subject to Article XIIID
includes my levy,other than an ad valorem tax, special tax or assessment, imposed by an agency upon a
parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other
things, the imposition of my proposed fee or charge, and, possibly, the increase of my existing fee or
charge, in the event written protests against the proposed fee or charge are presented at a required public
hearing an the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be
imposed. Except for fees and charges for water, sewer and refuse collection services,the approval of a
majority of the property owners subject to the fee or charge,or at the option of the agency,by a two-thirds
vote of the electorate residing in the affected area,is required within 45 days following the public hearing
on my such proposed new or increased fee or charge. The California Supreme Court decisions in
Richmond v. Shasta Community Services District, 32 Cal. 4th 409 (2004) ("Richmond"), and Bighorn-
Desert View Water Agency v. Vedil (published July 24, 2006) ("Bighorn") have clarified some of the
uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In
Richmond, the Shasta Community Services District charged a water connection fee, which included a
capacity charge for capital improvements to the water system and a fire suppression charge. The Court
held that both the capacity charge and the fire suppression charge were not subject to Article XIIID
because a water comection fee is not a property-related fee or charge because it results from the property
owner's voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the
Court stated that a fee for ongoing water service through an existing connection is imposed "as an
incident of property ownership" within the meaning of Article XIIID, rejecting, in Bighorn, the water
agency's argument that consumption-based water charges are not imposed "as an incident of property
ownership"but as a result of the voluntary decisions of customers as to how much water to use.
Article XIIID also provides that"standby charges"are considered"assessments"and must follow
the procedures required for "assessments" under Article XIIID and imposes several procedural
requirements for the imposition of my assessment, which may include (1) various notice requirements,
including the requirement to mail a ballot to owners of the affected property; (2) the substitution of a
property owner ballot procedure for the traditional written protest procedure,and providing that"majority
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protest" exists when ballots (weighted according to proportional financial obligation) submitted in
opposition exceed ballots in favor of the assessments; and (3) the requirement that the levying entity
"separate the general benefits from the special benefits conferred on a parcel"of land. Article XIIID also
precludes standby charges for services that we not immediately available to the parcel being charged.
Article XIIID provides that all existing, new or increased assessments are to comply with its
provisions beginning July 1, 1997. Existing assessments imposed on or before November 5, 1996, and
"imposed exclusively to finance the capital costs or maintenance and operations expenses for [among
other things] water" are exempted from some of the provisions of Article XIIID applicable to
assessments.
Article XIIIC extends the people's initiative power to reduce or repeal existing local taxes,
assessments,fees and charges. This extension of the initiative power is not limited by the terms of Article
XIIIC to fees, taxes, assessment fees and charges imposed after November 6, 1996 and absent other
authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. hi
Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public
agency's water rates and delivery charges. The Court noted, however, that it was not holding that the
authorized initiative power is free of all limitations, stating that it was not determining whether the
electorate's initiative power is subject to the public agency's statutory obligation to set water service
charges at a level that will "pay the operating expenses of the agency, ... provide for repairs and
depreciation of works,provide a reasonable surplus for improvements,extensions,and enlargements,pay
the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of
such debt as it may become due."
The District implemented a five-year plan beginning in Fiscal Year 2002-03 which included a
rate increase of$7.50 per year, or 9.4%, for all ratepayers to $87.50 per year. In May 2003, the Board
approved consideration of a 15% rate increase a year, for each year, over the then following five years,
upon 2/3 vote of the Board after conducting a noticed public hearing in compliance with Article XIIID.
This level of increase was considered necessary to provide needed capital improvements, to cover
additional treatment and disinfection costs, and to minimize rate increases over an extended period of
time. On July 2, 2003, the Board adopted Ordinance No. OCSD-20 increasing sanitary sewer service
charges for all single family and multi-family residential units as well as most commercial and industrial
properties. The Ordinance was adopted by a 2/3 vote of the Board as required under law after conducting
a noticed public hearing in compliance with all laws. The Ordinance increases the amount of the annual
charges by approximately 15% per year for each of the following five years, commencing with Fiscal
Year 2003-04, thereby raising the single family residence user rate from the then current $87.50 to
$100.00,$115.00, $132.00, $152.00, and $175.00 annually. The Ordinance discounted by 5%the annual
increases which were the subject of the required protest hearings on the fee increase as described above.
After the completion of the CIP Validation Study for Fiscal Year 2005-06 that increased its ten year CIP
cash flow projects to $2.2 billion, or an average of$220 million per year, the Board adopted Ordinance
No. OCSD-26 increasing the Fiscal Year 2005-06 single family residential rate 31%, from $115 to $151
for such year. In May 2006, the Board adopted Ordinance No. OCSD-30B increasing the Fiscal Year
2006-07 single family residential rate 9.8%, from $151.00 to $165.80 for such year, except those located
in Revenue Area 14. These increases represented the increase permitted under the protest hearings on the
fee increase which was held in 2003.
In April 2007, the Board began its considerations towards increasing sanitary sewer service
charges for all single family and multi-family residential wits as well as most commercial and industrial
properties. Any such increases are subject to approval by ordinance adopted by a 213 vote of the Board
after conducting a noticed public hearing in compliance with all laws. See"DISTRICT REVENUES —
Sewer Service Charges"herein.
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Pursuant to the Master Agreement,the District will,to the extent permitted by law, fix, prescribe
and collect fees and charges for the services of the Wastewater System which will be at least sufficient to
yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for
such Fiscal Year, and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for
such Fiscal Year.The District may make adjustments from time to time in such fees and charges and may
make such classification thereof as it deems necessary, but will not reduce the fees and charges then in
effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be
sufficient to meet the requirements of the Master Agreement. In the event that service charges are
determined to be subject to Article X111D, and proposed increased service charges cannot be imposed as a
result of a majority protest, such circumstances may adversely effect the ability of the District to generate
revenues in the amounts required by the Master Agreement, and to make Installment Payments as
provided in the Installment Purchase Agreement. No assurance may be given that Articles XBIC and
XMD will not have a material adverse impact on Net Revenues.
Other Initiative Memares
Articles XIIIA, XIIIB, XIIIC and XUID were adopted pursuant to Califamia's constitutional
initiative process. From time to time other initiative measures could be adopted by Calif rmia voters,
placing additional limitations on the ability of the District to increase revenues.
LEGAL MATTERS
The validity of the Certificates and certain other legal matters are subject to the approving
opinion of Orrick, Herrington & Sutcliffe LLP,Los Angeles, California, Special Counsel to the District
A complete copy of the proposed form of Special Comsel opinion is contained in Appendix E hereto.
Special Counsel, in its capacity as Special Comm] to the District, undertakes no responsibility for the
accuracy, completeness or fairness of this Official Statement Certain legal matters will be passed upon
for the District and the Corporation by Woodruff, Spradlin& Smart,a Professional Corporation, Orange,
California and for the District by Orrick Herrington & Sutcliffe LLP as Disclosure Comm] to the
District.
FINANCIAL ADVISOR
The District has retained Public Resources Advisory Croup as financial advisor (the "Financial
Advisor") in connection with the execution and delivery of the Certificates. The Financial Advisor has
not been engaged,nor have they mderaken,to audit,authenticate or otherwise verify the information set
forth in the Official Statement, or any other related information available to the District, with respect to
accuracy and completeness of disclosure of such information. The Financial Advisor has reviewed the
Official Statement but makes no guaranty, warranty or other representation respecting accuracy and
completeness of the information contained in the Official Statement.
ABSENCE OF LITIGATION
There is no action, suit,proceeding,inquiry or investigation,at law or in equity,before or by any
court, regulatory agency, public board or body, pending or, to the best knowledge of the District,
threatened against the District affecting the existence of the District or the titles of its directors or officers
to their offices or seeking to restrain or to enjoin the sale or delivery of the Certificates,the application of
the proceeds thereof in accordance with the Trust Agreement, or in my way contesting or affecting the
validity or enforceability of the Certificates,the Trust Agreement,the Master Agreement,the Installment
Purchase Agreement or my action of the District contemplated by my of said documents, or in my way
contesting the completeness or accuracy of this Official Statement, or contesting the powers of the
oxs Wac26n81QSA
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District or its authority with respect to the Certificates or any action of the District contemplated by any of
said documents,nor,to the knowledge of the District is there any basis therefor.
There is no action, suit, proceeding, inquiry or investigation,at law or in equity,before or by any
court, regulatory agency, public board or body pending or, to the best knowledge of the District,
threatened against the District contesting or affecting the ability of the District to collect amounts from
which Installment Payments are payable, or which would have a material adverse effect on the District's
ability to make Installment Payments.
FINANCIAL STATEMENTS
The basic financial statements of the District included in Appendix A to this Official Statement
have been audited by Mayer Hoffimm McCann P.C.,independent certified public accountants. In January
2006 Mayer Hoffman McCann P.C.merged the District's former auditors,Conrad and Associates,L.L.P.,
into its national practice. See APPENDIX A—"COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30,
2006" herein. The report issued for the year ended June 30, 2006, received the Government Finance
Officer's Association Certificate of Achievement for "Excellence in Financial Reporting" for the 13th
consecutive year. The audited financial statements,including the footnotes thereto,should be reviewed in
their entirety. Mayer Hoffman McCann P.C. has consented to the inclusion of its report as Appendix A
but has not undertaken to update its report or to take my action intended or likely to elicit information
concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and
no opinion is expressed by Mayer Hoffinan McCann P.C. with respect to any event subsequent to its
report dated August 31,2006.
TAX MATTERS
In the opinion of Orrick,Herrington&Sutcliffe LLP("Special Counsel"),based upon an analysis
of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the
accuracy of certain representations and compliance with certain covenants,interest components evidenced
by the Certificates is excluded from gross income for federal income tax purposes under Section 103 of
the Internal Revenue Code of 1986(the"Code")and is exempt from State of California personal income
taxes. Special Counsel is of the further opinion that interest components evidenced by the Certificates are
not a specific preference item for purposes of the federal individual or corporate alternative minimum
taxes, although Special Counsel observes that such interest is included in adjusted current earnings when
calculating corporate alternative minimum taxable income. A complete copy of the proposed form of
opinion of Special Counsel is set forth in Appendix E hereto.
To the extent the issue price of any maturity of the Certificates is less than the amount to be paid
at maturity of such Certificates(excluding amounts stated to be interest and payable at least amuaily over
the term of such Certificates),the difference constitutes"original issue discount,"the accrual of which,to
the extent properly allocable to each Beneficial Owner thereof, is treated as interest components
evidenced by the Certificates which is excluded from gross income for federal income tax purposes and
State of California personal income taxes. For this purpose,the issue price of a particular maturity of the
Certificates is the first price at which a substantial amount of such maturity of the Certificates is sold to
the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of
underwriters,placement agents or wholesalers). The original issue discount with respect to any maturity
of the Certificates accrues daily over the term to maturity of such Certificates on the basis of a constant
interest rate compounded semiannually (with straight-line interpolations between compounding dates).
The accruing original issue discount is added to the adjusted basis of such Certificates to determine
taxable gain or loss upon disposition (including sale, prepayment, or payment on maturity) of such
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Certificates. Beneficial Owners of the Certificates should consult their own tax advisors with respect to
the tax consequences of ownership of Certificates with original issue discount, including the treatment of
Beneficial Owners who do not purchase such Certificates in the original offering to the public at the first
price at which a substantial amount of such Certificates is sold to the public.
Certificates purchased,whether at original issuance or otherwise, for an amount higher than their
principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium
Certificates") will be treated as having amortizable bond premium. No deduction is allowable for the
amortizable bond premium in the case of bonds, like the Premium Certificates, the interest components
evidenced by which is excluded from gross income for federal income tax purposes. However, the
amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Certificate,will be
reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner.
Beneficial Owners of Premium Certificates should consult their own tax advisors with respect to the
proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions,conditions and requirements relating to the exclusion from I'I
gross income for federal income tax purposes of interest components evidenced by obligations such as the
Certificates. The District has made certain representations and covenanted to comply with certain
restrictions, conditions and requirements designed to ensure that interest components evidenced by the
Certificates will not be included in federal gross income. Inaccuracy of these representations or f rilum to
comply with these covenants may result in interest components evidenced by the Certificates being
included in gross income for federal income tax purposes,possibly from the date of original delivery of
the Certificates. The opinion of Special Counsel assumes the accuracy of these representations and
compliance with these covenants. Special Counsel has not undertaken to determine (or to inform any
person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other
matters coming to Special Counsel's attention after the date of delivery of the Certificates may adversely
affect the value of, or the tax status of interest components evidenced by, the Certificates. Accordingly,
the opinion of Special Counsel is not intended to, and may not, be relied upon in connection with any
such action,events or matters.
Although Special Counsel is of the opinion that interest components evidenced by the Certificates
are excluded from gross income for federal income tax purposes and are exempt from State of California
personal income taxes, the ownership or disposition of, or the accrual or receipt of interest components
evidenced by, the Certificates may otherwise affect a Beneficial Owner's federal, state or local tax
liability. The nature and extent of these other tax consequences depends upon the particular tax status of
the Beneficial Owner or the Beneficial Owner's other items of income or deduction. Special Counsel
expresses no opinion regarding any such other in consequences.
Future legislation, if enacted into law,or clarification of the Code may cause interest components
evidenced by the Certificates to be subject,directly or indirectly,to federal income taxation,or otherwise
prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The
introduction or enactment of any such future legislation or clarification of the Code may also affect the
market price for, or marketability of, the Certificates. Prospective purchasers of the Certificates should
consult their own tax advisers regarding any pending or proposed federal tax legislation, as to which
Special Counsel expresses no opinion.
The opinion of Special Counsel is based on current legal authority, covers certain matters not
directly addressed by such authorities, and represents Special Counsel's judgment as to the proper
treatment of the Certificates for federal income tax purposes. It is not binding on the Intemal Revenue
Service ("IRS") or the courts. Furthermore, Special Counsel cannot give and has not given any opinion
or assurance about the future activities of the District, or about the effect of future changes in the Code,
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the applicable regulations,the interpretation thereof or the enforcement thereof by the IRS. The District
has covenanted,however,to comply with the requirements of the Code.
Special Counsel's engagement with respect to the Certificates ends with the delivery of the
Certificates, and, unless separately engaged, Special Counsel is not obligated to defend the District or the
Beneficial Owners regarding the tax-exempt status of the Certificates in the event of an audit examination
by the IRS. Under current procedures,parties other than the District and its appointed counsel, including
the Beneficial Owners, would have little, if any, right to participate in the audit examination process.
Moreover, because achieving judicial review in connection with an audit examination of tax-exempt
bonds is difficult, obtaining an independent review of IRS positions with which the District legitimately
disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the
Certificates for audit, or the course or result of such audit, or an audit of bonds presenting similar tax
issues may affect the market price for,or the marketability of,the Certificates,and may cause the District
or the Beneficial Owners to incur significant expense.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Causey Demgen & Moore Inc., certified public accountants (the "Verification Agent"), will
deliver a report stating that the firm has verified the accuracy of mathematical computations concerning
(a)the adequacy of the maturing principal amounts of and interest earned on the Government Obligations
initially deposited in the Escrow Fund to provide for the payment of the interest due on each of the
Refunded Certificates to and including the Redemption Date, and to pay on the Redemption Date the
principal or redemption price thereof, and (b) the computations of yield on the Certificates and of
investments in the Escrow Fund.
The report of the Verification Agent will include the statement that the scope of their engagement
was limited to verifying the mathematical accuracy of the computations contained in such schedule;
provided to them and that they have no obligations to update their report because of event occurring, or
data or information coming to their attention,subject to the date of their report.
CONTINUING DISCLOSURE
The District has covenanted for the benefit of holders and beneficial owners of the Certificates(a)
to provide certain financial information and operating data (the"Annual Report')relating to the District
and the property in the District not later then eight(8)months after the and of the District's Fiscal Year
(which currently would be March 1),commencing with the report for the 2006-07 Fiscal Year,and(b)to
provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be
filed by the Trustee on behalf of the District, with each Nationally Recognized Municipal Securities
Information Repository and with each State Repository, if any. The notices of material events will be
filed by the Trustee on behalf of the District with the Municipal Securities Rulemaking Board and with
each State Repository,if any. The specific nature of the information to be contained in the Annual Report
or the notices of material events is set forth in the Continuing Disclosure Agreement. See"APPENDIX E
—FORM OF CONTINUING DISCLOSURE AGREEMENT." These covenants have been made in order
to assist the Initial Purchaser in complying with S.E.C.Rule 15c2-12(b)(5)(the"Rule'). The District has
not failed to comply in all material respects with any previous undertaking with respect to the Rule to
provide annual reports or notices of material events.
RATINGS
The Certificates are rate) " _," and"_" by Fitch Ratings, Moody's Investors Service
and Standard & Pooes Ratings Services,a Division of The McGraw Hill Companies, Inc., respectively.
OILS WM2601844184
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Such ratings reflect only the views of the rating agencies,and do not constitute a recommendation to buy,
sell or hold the Certificates. Explanation of the significance of such ratings may be obtained only from
the respective organizations at: Fitch Ratings, One State Street Plaza, New York, New York 10004;
Moody's Investors Service, 99 Church Street, New York, New York 10017; and Standard & Poor's
Ratings Group, 55 Water Street, New York, New York 10041. There is no assurance that any such
ratings will continue for any given period of time or that they will not be revised downward or withdrawn
entirely by the respective rating agencies, if in the judgment of any such rating agency circumstances so
warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the
market price of the Certificates.
PURCHASE AND REOFFERING
(the "Initial Purchaser") has purchased the Certificates from the District at a
competitive sale at an aggregate purchase price of $ (representing the aggregate principal
amount of the Certificates, less a net original issue discount of$ and less an Initial Purchaser's
discount of The public offering prices may be changed from time to time by the Initial
Purchaser. The Initial Purchaser may offer and sell Certificates to certain dealers and others at prices
lower than the offering prices shown on the cover page hereof.
MISCELLANEOUS
Included herein are brief summaries of certain documents and reports, which summaries do not
purport to be complete or definitive, and reference is made to such documents and reports for full and
complete statements of the contents thereof. Any statements in this Official Statement involving matters
of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.
This Official Statement is not to be construed as a contract or agreement between the District and the
purchasers or Owners of any of the Certificates.
The execution and delivery of this Official Statement has bean duly authorized by the District.
ORANGE COUNTY SANITATION DISTRICT
By:
Chair of the Board of Directors
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APPENDIX A
COMPREHENSIVE ANNUAL FINANCIAL REPORT OF
THE ORANGE COUNTY SANITATION DISTRICT
FOR FISCAL YEAR ENDED JUNE 30,2006
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APPENDIX B
THE COUNTY OF ORANGE-ECONOMIC AND DEMOGRAPHIC INFORMATION
The County is bordered on the north by Los Angeles County,on the east by Riverside County,on
the southeast by San Diego County and on the west and southwest by the Pacific Ocean. Approximately
42 miles of ocean shoreline provide beaches.marinas and other recreational areas for use by residents and
visitors. The climate in the County is mild with an average annual rainfall of 13 inches.
Population
The County is the third most populous county in the State and the sixth most populous in the
nation. During the period 1997 through 2006, the population of the County increased by approximately
13.3%,compared to 13.3%for the State and 10.6%for the United States.
TABLE B-1
COUNTY OF ORANGE,STATE OF CALIFORNIA AND
UNITED STATES POPULATION GROWTH
United States
Year Orauae Couotr•t1 State ofCaliforalalti ofAmerlca01
1997 2,672.800 32,452,000 267,783,607
1998 2,724.500 32,962,000 270,248,003
1999 2,776,100 33,417,000 272,690,813
2000 2.963,706 34,098,740 292,216,592
2001 2,91&791 34,794,392 285,226,294
2002 2,963,394 35,392,960 288,125,973
2003 3,005,043 35.990,107 290,796,023
2004 3,037,949 36.522,026 293,638,158
2005 3.062,275 36,981,931 296,507,061
2006 3,083,994 37,444,385 299,398,494
as of January 1 of each year.
to as of July I of each year.
Source: Orange County atdSime ofCnlifornlo Statistics-Caljfwnia Stme Depanmem ofFiwnee.Demographic Research
Unit. United Stares Swntier-Papdatinn Est-w-Program.Papulatiwt Dmsion. U.S.Cemur Bureau.
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Public Schools(Elementary and Secondary)
Public instruction in the County is provided by twelve elementary school districts, duce high
school districts and twelve unified (combined elementary and high school) districts. For the 2005-06
academic year, the largest district, the Santa Ana Unified School District, had 59,310 students enrolled.
Public school enrollment for the academic calendar years 2001-02 through 2005-06 is presented in Table
B-2.
TABLE B-2
COUNTY OF ORANGE
PUBLIC SCHOOL ENROLLMENT
20DI-02 2002-03 2003-04 200405
Grade Level
K-8 359.609 361.184 360,996 354,841 350,096
9-12 144,743 150 921 154,468 158,903_ 160,018
Total Enrollment 503�.53 _ 5] 515-464 U17M $J
S..: California Depanmew afEdumrimG Edge .af Demog aphict Una.
Colleges and Universities
The County has a number of top-rated, college-level educational institutions, including the
University of California at Irvine and California State University at Fullerton, several private colleges,
universities and law schools and four community college districts.
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Employment
The following table summarizes the historical numbers of workers in the County over the period
2001 through 2005 by industry.
TABLE B-3
COUNTY OF ORANGE
INDUSTRY EMPLOYMENT AND LABOR FORCE—ANNUAL AVERAGE
2001 2002 2003 2004 2005
Farm 7,100 7.300 7,200 6,700 5,300
Natuml Resources and Mining 600 600 500 600 700
Construction 80,700 79.20D 83,700 92200 99,300
Manufacturing 208,500 190.800 183.900 183.500 182.700
Wholesale Trade 83,900 82,400 93.200 82,400 83,000
Retail Trade 150.100 151.400 152.800 153,200 157.100
Transportation.Warehoming and 30A00 28,700 29.000 29.200 28,800
Utilities
hdormation 40.200 36,800 35200 33,800 32,800
Financial Activities 105.900 110.200 122.200 132,300 138,200
Professional and Business Services 248,400 248,800 252.600 254.900 267,000
Educational and Health Services 114.600 118.400 126,300 151.000 133,300
Leisure and Hospitality 154,300 155.400 159,600 162.900 164,400
Other Services 45.200 45,900 46.700 47.400 49,200
Government 150 900900 155 100 154 200 1533 155.3 00
Total All hrdustries111 1A2A8Q0 J 411—M L438JV3 J.5]u82t1 11 800
rO Data my not add duc to rounding
Source: Cnlifomla Emplmmreal Developmem Depmimem.
Major Employers
TABLE B4
COUNTY OF ORANGE
MAJOR EMPLOYERS
Employer Name Number of Employees
Walt Disney Company 20.250
University of California,Irvine 16.374
Boeing Company 11,242
St.Joseph Health System 9,482
YUM! Brands Inc. 7,000
AT&T Inc. 6,116
California State University,Fullerton 5,337
Hope Depot Inc. 5,200
Memorial Health Services Inc. 4.961
Supervalu Inc. 4,819
Source: Orange C"u ,Ba,..✓mrrnd 1007 Book ofLwm
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Labor Force,Employment and Unemployment
Table B-5 summarizes the labor force, employment and unemployment figures over the period
2001 through 2005 for the County and the State.
TABLE B-5
COUNTY OF ORANGE AND STATE OF CALIFORNIA
LABOR FORCE,EMPLOYMENT AND UNEMPLOYMENT
YEARLY AVERAGE
Unemployment
Year and Area Labor Form Employment Unemployment Rate
2001
Orange County 1,513,000 1,452,800 60,200 4.0
California 17,152.100 16.220,000 932,100 5.4
2002
Orange County 1,531,300 1,454,500 76,800 5.0
California 17,330,700 16,168,200 1,162,500 6.7
2003
Orange County 1,557,400 1,482,400 75,000 4.8
California 17,403,900 16.212,200 1,191,300 6.8
2004
Orange County 1,580,800 1,512.800 68,000 4.3
California 17,499,600 16,407,900 1,091,700 62
2005
Orange County 1.602.200 1,541,800 60,400 3.8
California 17,695,600 16,746,900 948,700 5.4
Source: California Emplovment Development Department.
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Personal Income
Table B-6 summarizes the total effective buying income for the County,the State and the United
States for 2001 through 2005.
TABLE B-6
COUNTY OF ORANGE,STATE OF CALIFORNIA AND
UNITED STATES PERSONAL INCOME
(In Thousands)
Total Median Household
Area ERective Buying Income" Effective Buying Income*
2001
Orange County 62,568,674 53,277
California 650,521,407 43,532
United States 5,303,481,498 38,365
2002
Orange County 60,602,515 49,726
California 647,879,427 42,494
United States 5.340,682,818 38,035
2003
Orange County 63,712.940 50,755
California 674,721,020 42,924
United States 5,466,880,008 38,201
2004
Orange County 66,473,235 51,823
California 705,108,410 43,915
United States 5,692,909,567 39.324
2005
Orange County 67,941.889 53,099
California 720,798,122 44,681
United States 5,894,664,154 40,529
Source: Sales and Marketing Management"Survey of8uving Pmver"(2001-2004);Demographics USA(2005).
• "Effective Buying Income.-also referred to as"disposable"or"after tax'income,consists of personal income less personal
tax and certain non-tax payments. Personal income includes wages and salaries, other labor-related income (such as
employer contributions to private pension funds), and certain other income (e.g. proprietor's income: natal income;
dividends and interest:pensions:Social Security;unemployment compensation;and welfare assistance).Deducted from this
total are personal taxes (federal. mate and local)- certain non-tm payments (e.g. fines. fees and penalties), and personal
contributions to a retirement program.
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Taxable Sales
Table B-7 summarizes the annual volume of taxable transactions from 2001 to 2005.
TABLE B-7
COUNTY OF ORANGE
TAXABLE TRANSACTIONS
(In Thousands)
Type of Business jQQ,t 2002 2003 2004 2005
Apparel stores group $ 1,446,572 $ 1,508,011 $ 1,697,120 $ 1,881,882 $ 2.062.892
General merchandise group 4,432,881 4,618,932 4,955,674 5,205,075 5,467,357
Specialty stores group 4.999,099 4,937,212 5,085,612 5,700.317 6,028,089
Food stores group 1,534,244 1.551,611 1,574,528 1,563,145 1,716.228
Eating and drinking groups 3,749,604 3.894,388 4,149,117 4,475,791 4,798.676
Household group 1,501,585 L722,573 1,985,255 2,135,876 2,269,650
Building material group 2,157,196 2,275,964 2,480,249 2,950,592 3,000,086
Automotive group 7,957,760 8,492,604 9,651,049 10,585.091 119293,156
All other retail stores group 739,760 7659523 809,093 944,194 1,046,700
Retail Stores Totals 28.518,701 29,646,918 32,287,697 35,441,953 37,672,834
Business&Personal Services 2,673,666 2,615,150 2,699.250 2,819.934 2,938,129
All Other Outlets 13,402.947 12.607,188 12,530,119 13,420,172 14,452,293
TOTAL ALL OUTLETS $44,595,314 $44,869,156 $47,517,066 $51,692,059 $55,063,246
Saume: California Slate Board ofEqualhation.
Housing Characteristics
The total number of housing units in the County was estimated by the California State
Department of Finance to be 1,013,842 as of January 1, 2005. This compares to 1,003,904 reported by
the Department of Finance in January 2004.According to California Association of Realtors,the median
resale price of single-family dwelling units in Orange County was$704,150 in May 2005.
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Building Permits
The total valuation of building permits issued in the County reached $4.7 billion in 2006, which
represents about a 25% increase relative to 2002. Table B-8 provides a summary of residential building
permit valuations and the number of new dwelling units authorized in the County during the period 2002
through 2006.
TABLE M
COUNTY OF ORANGE
BUILDING PERMIT ACTIVITY
2002-06
(In Thousands)
2002 2003 2004 2005 2006
Valued
Residential $2,328,119 S2,076,977 $2,243,645 $2,100,436 $2,336,324
Non-Residential 1,208,626 1,005,547 1,132,846 1,494,755 32. 97,248
Total $3,536,746 $3,082,525 $3,376,491 $3,595,191 $4,733,572
New Housina Units:
Single Family 6,423 5,565 4,395 4,058 3,121
Multiple Family 5.597 3.746 A4ZZ 3�48 5.219
Total 12,020 9,311 9,322 7,206 8,340
Source: Construction Industry Research Board.
Water Supply
Maintaining the County's water supply is the responsibility of the Orange County Water District
("OCWD"), manager of the County's groundwater basin, and the Municipal Water District of Orange
County ("MWDOC"), the County's largest manager of imported water. More than 60% of the County's
water is from local groundwater sources;the rest is imported.The County's natural underground reservoir
is sufficient to carry it through temporary shortfall periods, but local supplies alone cannot sustain the
present population.
Recreation and Tourism
The County is a tourist center in Southern California because of the broad spectrum of
amusement parks and leisure, recreational and entertainment activities that it offers. These tourist
attractions are complimented by the year-round mild climate.
Along the County's Pacific Coast shoreline are five state beeches and parks, five municipal
beaches and five County beaches.There are two small-craft docking facilities in Newport Harbor, a third
located at Sunset Beach and a fourth at Dana Point.
Other major recreational and amusement facilities include Disneyland, Disney's California
Adventure, Knott's Berry Farm and the Spanish Mission of San Juan Capistrano. Also located within the
County are the Anaheim Convention Center, Edison International Field of Anaheim, Honda Center,
Orange County Performing Arts Center, Verizon Wireless Amphitheater and the Art Colony at Laguna
Beach with its annual art festival.
The Anaheim Convention Center is located adjacent to Disneyland. It is situated on 53 acres and
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I
is one of the largest convention centers on the West Coast. Table B-9 summaries the number of
conventions held in the County,as well as attendance for the period 1997 through 2006.
TABLE B-9
COUNTY OF ORANGE
CONVENTION ACTIVITY
Year Conventions Attendance
1997 431 979,259
1998• 450 750,698
1999' 473 767,689
2000 470 858,593
2001 489 959,000
2002 547 1,008,171
2003 590 1,093,787
2004 666 1,211,476
2005 619 1,113,224
2006 633 1,125,895
Smrme:Anahein✓OwnBe Counp,Visitor and Cor vemion Bumau,2006.
" A portion of the decrees¢in 1998 end 1999 from anendance end expenditure levels ofprior years is attributable to the
effects of the construction of Disney's California Adventure theme park and related infrastructure projects.
Transportation
The County is situated in the most heavily populated area in California and has access to
excellent roads, mil, air and sea transportation. The Santa Ana Freeway (Interstate 5) provides direct
access to downtown Los Angeles and connects with the San Diego Freeway(Interstate 405) southeast of
the City of Santa Ana,providing a direct link with San Diego. The Garden Grove Freeway(State 22)and
the Riverside Freeway (State 91) provide east-west transportation, linking the San Diego Freeway, Santa
Ana Freeway and the Newport Freeway (State 55). The Newport Freeway provides access to certain
beach communities.
Drivers in the County have access to two toll road systems of the Transportation Corridor
Agencies. The San Joaquin Toll Road (73) runs from Costa Mesa to San Joan Capistrano connecting to
the 405 and 5 interstate freeways. The Eastern and Foothill Toll Roads (241, 261 and 133) connect the
County to the 91 freeway in the north and the 5 freeway, City of Irvine other South County cities, as well
as Laguna Canyon Road. The Transportation Condor Agencies are planning to extend 241 to connect to
the 5 freeway near San Clemente.
Rail freight service is provided by the Burlington Northern Santa Fe Railway and the Union
Pacific Railroad Company. Amtrak provides passenger service to San Diego to the south, Riverside and
San Bernardino Counties to the east, and Los Angeles and Santa Barbara to the north. Metro Link
provides passenger service to San Bernardino and Riverside counties to the east,the City of Oceanside to
the south and Los Angeles County to the north. Bus service is provided by Greyhound Bus Lines. The
Orange County Transportation Authority provides bus service between most cities in the County. Most
interstate common carrier truck lines operating in California serve the County.
The John Wayne Airport, owned and operated by the County, is the only commercial service
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airport in the County. It is approximately thirty-five miles south of Los Angeles, between the cities of
Coast Mesa, Wine, Newport Beach and Santa Ana. Major airlines, including Alaska, Aloha, America
West, American, Continental, Delta, Frontier, Northwest, Southwest and United fly from the airport to
major cities throughout the country. In 2004,approximately 9.2 million passengers were served.
hi 1993,the Defense Base Realignment and Closure Commission directed the closure of Marine
Corps Air Station (MCAS) El Toro ("El Tore' or "the base') effective July 1999. The County was
designated the Local Redevelopment Authority (LRA) for development of a Community Reuse Plan to
guide future development of the former MCAS El Toro. In 1994, Orange County voters narrowly
approved Measure A which coned the property for use as an international airport. This touched off a
multi year legal and political battle that ended when 58%of Orange County voters approved Measure W,
the Orange County Central Park and Nature Preserve Initiative, on March 5, 2002. Measure W repeals
Measure A and amends the County General Plan to prohibit aviation uses and limit future development
for the unincorporated portion of El Toro to park, open space, nature preserve and education and
compatible uses. The day after Measure W was approved, the Department of the Navy issued a press
release stating that disposal of the former Base would be accomplished by means of a public auction. The
City of Wine responded by developing the Great Park Plan for El Toro. The City of Irvine was approved
by the Local Agency formation Commission (LAFCO) to annex to the City the property that comprises
the former MCAS El Toro. In light of the passage of Measure W,the County has discontinued all work
related to the planning or development of a commercial airport at El Toro.
Natural Disasters; Seismic Activity/Fires
Natural disasters, including floods, fires and earthquakes, have been experienced in the County.
Seismic records spanning the past half century and historic records dating from the 1700s through the
early 1900s indicate that the County is a seismically active area. The State Office of Emergency Services
indicates that significant tremors are likely to occur in several fault zones during the next 50 to 100 years,
including a tremor of 7.0 on the Richter scale within the Newport-Inglewood fault system.The chance of
a Richter 7.0 earthquake occurring is estimated to be I to 2% in any year. For this reason, local building
codes require that structures be designed to withstand the expected accelerations for the area without
collapsing or suffering severe structural damage.
Maps published by the State Department of Conservation indicate that portions of the County
may be subject to the risk of earthquake-induced landslides or liquefaction.
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APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX D
BOOK-ENTRY ONLY SYSTEM
The description that follows of the procedures and recordPeeping with respect to beneficial
ownership interests in the Certificates, payment of principal of and interest on the Certificates to
Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the
Certfcares, and other Certificates-related transactions by and between DTC,Participants and Berreficial
Owners, is based on information famished by DTC which the District and the Corporation each believes
to be reliable, but the District and the Corporation take no responsibility for the completeness or
accuracy thereof
The Depository Trust Company—Book-Entry Only System
The Depository Trust Company("DTC"),New York,NY,will act as securities depository for the
securities(the"Certificates").The Certificates will be issued as fully-registered securities registered in the
name of Cede & Co. (DTC's partnership nominee) or such other time as may be requested by an
authorized representative of DTC.One fully-registered Certificate will be issued for the Certificates in the
aggregate principal amount of such issue,and will be deposited with DTC.
DTC,the world's largest depository,is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code,and a"clearing agency"registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million
issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument
from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also
facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in
deposited securities through electronic computerized book-entry, transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct
Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust At Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income
Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also
subsidiaries of DTCC),as well as by the New York Stock Exchange, Inc.,the American Stock Exchange
LLC,and the National Association of Securities Dealers,Inc. Access to the DTC system is also available
to others such as both U.S. and non-U.S. securities brokers and deaters, banks, trust companies, and
clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor s highest rating: AAA.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.
More information about DTC can be found at wwwAtcc.com and wwwAtc.org. The information on such
websites is not incorporated herein by such reference or otherwise.
Purchases of Certificates under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual
purchaser of each Certificate (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are,however,expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
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Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing thew
ownership interests in the Certificates, except in the event that use of the book-entry system for the
Certificates is discontinued.
To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. or such other time as may be
requested by an authorized representative of DTC. The deposit of Certificates with DTC and their
registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records
reflect only the identity of the Direct Participants to whose accounts such Certificates are credited,which
may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take
certain steps to augment transmission to them of notices of significant events with respect to the
Certificates,such as prepayments,tenders,defaults,and proposed amendments to the security documents.
For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the
Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the
alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request
that copies of the notices be provided directly to them.
Prepayment notices shall be sent to DTC. If less than all of the Certificates within an issue are
being prepaid DTC's practice is to determine by lot the amount of the interest of each Direct Participant
in such issue to be prepaid.
Neither DTC nor Cede&Co. (nor such other DTC nominee)will consent or vote with respect to
the Certificates unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Certificates are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Prepayment proceeds, distributions, and dividend payments on the Certificates will be made to
Cede &Co.,or such other nominee as may be requested by an authorized representative of DTC. DTC's
practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail
information from the District or the Trustee on payable date in accordance with their respective holdings
shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of such Participant and not of
DTC, nor its nominee, the Trustee, or the District, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of prepayment proceeds, distributions, and dividend
payments to Cede&Co. (or such other nominee as may be requested by an authorized representative of
DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners will be the responsibility of Direct and hrdirect Participants.
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A Beneficial Owner shall give notice to elect to have its Certificates purchased or tendered,
through its Participant,to the Tender or Remarketing Agent,and shall effect delivery of such Certificates
by causing the Direct Participant to transfer the Participant's interest in the Certificates, on DTC's
records, to the Tender or Remarketing Agent. The requirement for physical delivery of Certificates in
connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership
rights in the Certificates are transferred by Direct Participants on DTC's records and followed by a book-
entry credit of tendered Certificates to the Tender or Remarketing Agent's DTC account.
DTC may discontinue providing its services as securities depository with respect to the
Certificates at any time by giving reasonable notice to the District or the Trustee. Under such
circumstances, in the event that a successor securities depository is not obtained,Certificates are required
to be printed and delivered.
The District may decide to discontinue use of the system of book-entrybnly transfers through
DTC (or a successor securities depository). In that event, Certificates will be printed and delivered to
DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that the District believes to be reliable, but the District takes no responsibility for the
accuracy thereof.
Discontinuance of DTC Services
In the event(i)DTC determines not to continue to act as securities depository for the Certificates,
(ii) DTC shall no longer act and give notice to the Trustee of such determination or (iii) the District
determines that it is in the best interest of the Beneficial Owners that they be able to obtain Certificates
and delivers a written certificate to the Trustee to that effect, DTC services will be discontinued. If the
District determines to replace DTC with another qualified securities depository,the District shall prepare
or direct the preparation of a new single, separate, fully registered Certificate for each of the maturities of
the Certificates,registered in the name of such successor or substitute qualified securities depository or its
nominee. If the District fails to identify another qualified securities depository to replace DTC then the
Certificates shall no longer be restricted to being registered in the certificate registration books in the
name of Cede&Co., but shall be registered in such names as are requested in a certificate of the District,
in accordance with the Trust Agreement.
All Certificates may be presented for transfer by the Owner thereof, in person or by his attorney
duly authorized in writing, at the Principal Office of the Trustee, on the books required to be kept by the
Trustee pursuant to the provisions of the Trust Indenture, upon surrender of such Certifications for
cancellation accompanied by delivery of a duly executed written instrument of transfer in a form
acceptable to the Trustee. The Trustee may treat the Owner of any Certificate as the absolute owner of
such Certificate for all purposes, whether or not such Certificate shall be overdue, and the Trustee shall
not be affected by any knowledge or notice to the contrary; and payment of the interest and principal
evidenced by such Certificate shall be made only to such Owner, which payments shall be valid and
effectual to satisfy and discharge the liability evidenced by such Certificate to the extent of the sum or
sums so paid.
Whenever any Certificates shall be surrendered for transfer,the Trustee shall execute and deliver
new Certificates representing the same principal amount in Authorized Denominations. The Trustee shall
require the payment of any Owner requesting such transfer of any tax or other governmental charge
required to be paid with respect to such transfer. Certificates may be presented for exchange at the
Principal Office of the Trustee for a like aggregate principal amount of Certificates of other Authorized
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Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any taxli
or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be
required to transfer or exchange any Certificate during the period in which the Trustee is selecting
Certificates for prepayment, nor shall the Trustee be required to transfer or exchange any Certificate or
portion thereof selected for prepayment from and after the date of mailing the notice of prepayment
thereof.
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APPENDIX E
FORM OF APPROVING OPINION OF SPECIAL COUNSEL
Upon the execution and delivery of the Certificates, Orrick, Herrington & Sutcliffe LLP, Los
Angeles, California, Special Counsel to the District,proposes to render its final approving opinion with
respect to the Certificates in substantially the followingform:
[Date of Delivery)
Orange County Sanitation District
109"Ellis Avenue
Fountain Valley,California
Orange County Sanitation District
Refunding Certificates of Participation.Series 2007A
(Final Opinion)
Ladies and Gentleman:
We have acted as special counsel to the Orange County Sanitation District (the "District") in
connection with the execution and delivery of Orange County Sanitation District Refunding Certificates
of Participation, Series 2007A evidencing principal in the aggregate amount of $
(collectively, the "Certificates"). In such connection, we have reviewed the Master Agreement for
District Obligations, dated as of August 1, 2000(the "Master Agreement"), by and between the District
and the Orange County Sanitation District Financing Corporation (the "Corporation"), the Installment
Purchase Agreement,dated as of 1,2007(the"Installment Purchase Agreement"),by and between
the District and the Corporation, the Trust Agreement, dated as of _ 1, 2007 (the "Trust
Agreement"),by and among the District,the Corporation, and Union Bank of California,N.A.,as trustee
(the"Trustee"),the Tax Certificate of the District, dated the date hereof(the"Tax Certificate-), opinions
of counsel to the District, the Corporation, the Trustee and others, certificates of the District, the
Corporation, the Trustee and others, and such other documents, opinions and matters to the extent we
deemed necessary to tender the opinions ad forth herein. Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Installment Purchase Agreement.
The opinions expressed herein are based on an analysis of existing laws, regulations,rulings and
court decisions and cover certain matters not directly addressed by such authorities. Such opinions may
be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken
to determine,or to inform any person,whether any such actions are taken or omitted or events do occur or
any other matters come to our attention after the date hereof. Our engagement with respect to the
Certificates has concluded with their execution and delivery, and we disclaim any obligation to update
this letter. We have assumed the genuineness of all documents and signatures;presented to us(whether as
originals or as copies)and the due and legal execution and delivery thereof by, and validity against, any
parties other than the District. We have assumed, without undertaking to verify, the accuracy of the
factual matters represented, warranted or certified in the documents, referred to in the first paragraph
hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the
Master Agreement, the Installment Purchase Agreement, the Trust Agreement and the Tax Certificate,
including (without limitation) covenants and agreements compliance with which is necessary to assure
that future actions,omissions or events will not cause interest on the Installment Payments evidenced by
the Certificates to be included in gross income for federal income tax purposes.
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i
i
In addition, we call attention to the fact that the rights and obligations under the Certificates,the
Master Agreement,the Installment Purchase Agreement,the Trust Agreement and the Tax Certificate and
their enforceability are subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of
equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on
legal remedies against public bodies such as the District in the State of California. We express no opinion
with respect to the enforceability of any indemnification, contribution, penalty, choice of law, choice of
fonrm,choice of venue or waiver provisions contained in the foregoing documents,nor do we express any
opinion with respect to the state or quality of title to or interest in any of the real or personal property
described in the Master Agreement or the Installment Purchase Agreement or the accuracy or sufficiency
of the description contained therein of any such property. Finally, we express no opinion herein with
respect to the accuracy, completeness or fairness of the Official Statement or other offering material
relating to the Certificates.
Based on and subject to the foregoing,and in reliance thereon,as of the date hereof,we are of the
following opinions:
1. The Master Agreement, the Installment Purchase Agreement and the Trust Agreement
have been duly executed and delivered by,and constitute valid and binding obligations of,the District.
2. The obligation of the District to pay the Installment Payments, and the interest thereon, ,
and other payments required to be made by it under the Installment Purchase Agreement is a special
obligation of the District payable, in the manner provided in the Installment Purchase Agreement, solely
from Net Revenues and other funds provided for in the Installment Purchase Agreement lawfully
available therefor.
3. Assuming due authorization, execution and delivery of the Trust Agreement and the
Certificates by the Trustee,the Certificates are entitled to the benefits of the Trust Agreement.
4. Interest on the Installment Payments paid by the District under the Installment Purchase
Agreement and received by the registered owners of the Certificates is excluded from gross income for
federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from
State of California personal income taxes. Such interest is not a specific preference item for purposes of
the federal individual or corporate alternative minimum taxes, although we observe that it is included in
adjusted current earnings when calculating corporate alternative minimum taxable income. We express no
opinion regarding other tax consequences related to the accrual or receipt of such interest or the
ownership or disposition of the Certificates.
Faithfully yours,
ORRIC&HERRINGTON& SUTCLIFFE LLP
per
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APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
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APPENDIX G
OFFICIAL NOTICE INVITING BIDS
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ADMINISTRATION COMMITTEE Meeting Date TUBG.MDIr.
04/11/07 09/zslo7
AGENDA REPORT Item Number Item Number
ADM07-D
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: PROPOSED 2007-08 SEWER SERVICE USER FEES
GENERAL MANAGER'S RECOMMENDATION
Adopt Ordinance No. OCSD-32, An Ordinance of the Board of Directors of Orange
County Sanitation District Establishing Sanitary Sewer Service Charges; Establishing
Capital Facilities Capacity Charges; Adopting Miscellaneous Charges and Fees
Relating to Industrial Charges, Source Control Permittees and Wastehaulers, and
Repealing Ordinance No. OCSD-30B:
ADOPTING REVISED TABLE A RE RESIDENTIAL USER FEES, REVISED TABLE B
RE PROPERTY USE CLASSIFICATIONS FOR COMMERCIAL OR INDUSTRIAL
USERS, REVISED TABLE C RE CAPITAL FACILITIES CAPACITY CHARGES, NEW
TABLE D RE PLAN CHECK AND INSPECTION FEES, REVISED TABLE E RE
SUPPLEMENTAL CAPITAL FACILITIES CAPACITY CHARGES (FORMERLY TABLE
D), REVISED TABLE F RE ADMINISTRATIVE FEES AND CHARGES RELATING TO
PERMITTEES (FORMERLY TABLE E), REDESIGNATED TABLE G (FORMERLY
TABLE F), REVISED TABLE H RE CLASS I AND CLASS II PERMITTEES AND
SPECIAL PURPOSE DISCHARGE PERMITTEES CHARGES FOR USE (FORMERLY
TABLE G), REVISED TABLE I RE WASTEHAULER CHARGES FOR USE
(FORMERLY TABLE H), AND REAFFIRMING ALL OTHER CHARGES
a. Motion to read Ordinance No. OCSD-32 by title only and waive reading of said
entire ordinance. (The waiver of the reading of the entire ordinance must be adopted by
a unanimous vote of Directors present.)
b. Motion to introduce Ordinance No. OCSD-32, and pass to second reading and
public hearing on May 23, 2007.
SUMMARY
Historically, the District has increased our overall sewer user fees in fairly small annual
increments, using some debt financing to smooth the impact of the capital improvement
program. With the public interest in improved effluent quality and the Board's decision
to meet secondary treatment discharge standards rapidly, it is appropriate to evaluate
larger rate increases on the front-end of the capital improvement program in order to
match the requirements of the program itself and to reduce the long-term rate impacts
of additional future debt financing and interest costs.
Book Page 112
The Directors adopted a plan in 2003 that included debt financing for $1.4 billion of the
$2.8 billion capital improvement and rehabilitation, refurbishment and replacement
program. By authorizing this amount of borrowing, the Directors were able to limit
projected annual sewer user fee increases to approximately 15% (approximately $18
per year) each year through 2007-08. The Board agreed with this plan and asked that
the proposed fee increases be considered annually by the Board for implementation.
2007-05 will be the fifth year of this 5-year plan.
Staff has re-evaluated every project in the Validated Capital Improvement Program and
many newly proposed projects as a part of the 2006-07 and 2007-08 budget preparation
process. Approximately $474 million of budgeted construction costs will be delayed or
deferred. In addition, the Sanitation District contracted with Carollo Engineers to
complete a Revenue Program and Rate Analysis study. The result of these efforts was
to reduce projected 2006-07 and 2007-08 single family residential rate (SFR) increases,
the basis for all sewer service charges, from 20.0% to 9.8%.
Included in staffs recommendation on "Adopting Revised Table B re Property Use
Classifications for Commercial or Industrial Users" is new proposed use codes for the
U.S. Post Office and Open Air Entertainment Venues. These use codes are necessary
in order for the District to accurately bill these unique property uses, as further detailed
on the attached Staff Report of March 14, 2007.
One other proposed change of note pertains to refunding capital facilities capacity
charges. The existing ordinance does not allow any refunds of capital facilities capacity
charges because of non-use or change of use, or any other reason. Staff is proposing
to allow for a capital facilities capacity charge refund for those instances where a
connection has not made, and the request for connection is withdrawn within 12 months
of the payment date. These capital facilities capacity charges will be refunded upon
establishing proof from the City or County of a canceled permit. This revised refund
policy will match most public agency refund policies pertaining to building permits.
Without a Board action (by 2/3 majority), the SFR rate for 2007-08 will remain at
$165.80 per year. The$182 rate recommended for 2007-08 will generate
approximately $183.5 million of user fees; an annual increase of$17.0 million over the
prior year.
There are no extraordinary costs associated with the recommendation.
ADDITIONAL INFORMATION
Schedule for Implementing Sewer Service Fee Increase
1't Reading of Fee Ordinance April 25, 2007
2nd Reading, Public Hearing, & Adoption of Fee Ordinance May 23, 2007
Ordinance is Effective in 30 days, or in the New F.Y. July 1, 2007
Fees per parcel due to County Auditor-Controller August 11, 2007
N:Nq,tbaPo,CelLemmMeei W pmin LommMaol W OTD]-3].Pmo OM hura 31p]A0."cc
Page 2
Book Page 113
Rate Increase Chronoloav
June 2003
1) 1 n June 2003, the Board approved a revised Capital Improvement Plan (CIP).
2) To support this CIP, staff recommended a five-year plan which included rate
increases averaging 20%.
3) The Board directed staff to issue a Proposition 218 public notice stating the rates
would increase by an amount not to exceed a total of 20% annually increase over
the next five year period.
4) While the increases were tentatively approved and noticed, the Board chose not to
implement the full 20% increase for 2003/04.
5) The Board did discussed alternatives between 10-20%.
6) Ultimately, the Board acted to implement a 15% increase in 2003/04.
7) Staff reset the budget and long-term cash flow model to reflect the annual increases
of 15% for the subsequent five-year period.
8) Board policy stated that 50% of all future capital improvements (approximate
percentage of non-capacity related projects), would be funded from current revenues
and the remaining 50% through debt financing. However, reducing the projected
annual rate increases to 15% required as deviation from that policy in order to
support the capital program. As of July 2003, the ratio of CIP funded debt increased
to 62 percent. By July 2005, this ratio decreased to 58 percent. The debt fiscal
policy has subsequently been changed to provide additional flexibility when
addressing this District's capital program and debt issuances.
9) While the five-year plan was still in place, the Board directed staff that to bring back
the rate schedule for annual adoption.
June 2004
1. Through the adoption of the 2004/05 Budget, the Board acted to implement a portion
of the 20% rate increase included in the five-year plan.
2. The Board acted to implement a 15% rate increase for 2004/05.
June 2005
1. The CIP increased by $400M, from $1.94B to 2.38B.
2. Additionally, Operations costs increased by $400M, from $1.3B to $1.713.
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Book Page 114
i
3. To support these increased costs, rates needed to be increased above 15%.
4. The Board approved a 31% rate increase for 2005-06, instead of 15%.
5. The additional increase was based on only 15% increases in each of the previous
two years.
6. Both the 2005-06 Adopted Budget and the existing ordinance include 20% rate
increases for 06-07 and 07-08.
7. Proposition 218 notices were issued based on the 20% figure.
8. As the Board must act to implement any rate increase, it reserves the option to
approve any rate increase, under the existing Proposition 218 notice, that does not
exceed 20% in fiscal year 2006-07, or 40% over the next two years.
June 2006
1. The CIP decreased by$549M, from $2.38B to $1.8313 as budgeted construction
costs were delayed or deferred.
2. The Sanitation District contracted with Carollo Engineers to complete a Revenue
Program and Rate Analysis study. The result of these efforts reduced projected
2006-07 and 2007-08 single-family residential rate (SFR) increases, the basis for all
sewer service charges, from 20.0% to 9.8%.
3. The Carollo rate model developed proposed revised capital facility capacity charges
(CFCC) that increases the benchmark 3-bedroom, SFR from $2,890 to $4,360, or
50.9 percent, and the average demand for commercial industrial from $1,050 to
$1,306, or 24.4 percent.
4. The previous CFCC rates have not been increased over the last two-and-one-half
years. It has generally been the practice of the Sanitation District not to update
CFCC rates until the completion of an Interim Strategic Plan Update, which generally
occurs only once in approximately five years. With the implementation of this new
rate ordinance, staff recommended that these fees be adjusted annually, based on a
commonly accepted price indicator, the Engineering News Record Construction Cost
Index for Los Angeles, to reflect the current value of the facilities or the current cost
of capital projects.
ATTACHMENTS
1. Staff Report on Proposed Non-Residential Sewer Service Fee Billing Method
Adjustments dated March 14, 2007.
2. Ordinance No. OCSD-32.
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March 14, 2007
STAFF REPORT
Proposed Non-Residential Sewer Service Fee Billing Method Adjustments
Annually, the District considers the need to adjust sewer service fee rates to its
residential, commercial, and industrial customers to ensure that the appropriate fees are
captured to cover its costs, and that the fees are set proportionate to the service
received. This process is completed through the update of the District's rate ordinance
that becomes effective 30 days following Board adoption. The adoption process
requires a reading at two separate board meetings and a public hearing. Staff is
targeting the April board meeting for the first reading of the newly proposed ordinance
with a tentative 9.8 percent increase in all rates. In addition, staff will be requesting a
new U. S. Post Office user fee rate and an Entertainment Venue—Open Air Facilities
rate, based on attendance, to ensure that these customers are paying their fair share.
Background
The major revenue source of the Sanitation District is the sewer service fee that is
assessed on each improved parcel within the District's service area through the
property tax bill of the County of Orange (County), and then subsequently collected and
remitted by the County to the District. The sewer service fee covers the District's cost of
collection,treatment and disposal of all wastewater received from the individual parcels.
The fees are established by ordinance of the District Board and vary according to the
use of the parcel and the level of service that is required.
The Sanitation District service area includes over 550,000 parcels, approximately
526,500 of which indicate improvements and are included in the District's sewer service
fee program. Of these 526,500 improved parcels, approximately 477,500 parcels are
single or multi-family residential parcels. The remaining 49,000 parcels consist of
commercial, industrial, and governmental classifications, and have the most potential for
reclassification and additional revenue. The single-family residents (SFR) are assessed
a flat rate fee, the multi-family residents are charged a flat rate fee on a per unit basis,
and commercial, industrial, and governmental parcels are assessed a fee per 1,000
square foot of building improvements based on their individual property user fee code.
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i
Sewer Service Fee Billing Methods i
March 14, 2007
Page 2 of 3
1
Commercial user fees generate approximately $70 million each year. These properties
are billed a rate per thousand square feet which corresponds to the specific use code of
their property. The use code and square footage have been obtained through the
Orange County Assessor Office Data Center, a main frame program, updated every 12
months. In October of 2003, the Revenue Division moved this database in-house and
designed a program specific for our use. As a result, we have more flexibility and total
control over how the database is used. For example, when construction or demolition
takes place, we can ensure square footage changes are effective immediately. Our
foremost concern is the accuracy of the use code and square footage information that
we use to calculate the fees for our customers.
During the course of the past fiscal year, staff has evaluated the use codes and billing
methods that are currently in our ordinance and have established two areas for
improvement or modification. This report outlines those areas and then a
recommended solution for billing purposes.
United States Post Offices
Currently, there is no U.S. Post Office use code in the Sanitation District's sewer service
fee ordinance and the District has no way of accurately billing parcels that contain only
U.S. Post Offices. U.S. Post Offices are currently placed in the Governmental Use
category (118) and the rate is 82 percent of the SFR rate, or$135.96 per 1,000 square
feet. Based upon actual water consumption received from the U. S. Post Office on
several post offices in our service area, the Governmental Use category may result in
overcharges up to 300 percent. At the request of the U. S. Post Office, staff evaluated
the current use code for U.S. Post Offices and determined that in order to accurately bill
these parcels for their wastewater discharge, a separate use code for U.S. Post Offices
should be established. Staff has obtained the flow, chemical oxygen demand (COD),
and suspended solids (SS) assumptions used by the County Sanitation Districts of Los
Angeles County (CSDLAC) within their sewer service fee program and converted their
load measurement of COD to the District's load measurement of biochemical oxygen
demand (BOD).
Based on the proportion of flow, BOD, and SS concentrations for U.S. Post Offices used
by CSDLAC to the District's flow, BOD, and SS concentrations for single-family
residences (SFR), staff is recommending a new use code, U.S. Post Office (225), which
will charge 35 percent of the SFR rate per 1,000 square feet. This rate would have
been $58.03 per 1,000 square feet for FY 2006-07 compared to $135.96 per 1,000
square feet for the Governmental Use Code (118).
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Sewer Service Fee Billing Methods
March 14, 2007
Page 3 of 3
Entertainment Venues- Open Air Facilities
Our current ordinance bills entertainment venues such as Knott's Berry Farm,Angel
Stadium of Anaheim, Honda Center (formerly the Arrowhead Pond of Anaheim), Los
Alamitos Race Course, Anaheim Convention Center and Soak City USA based upon
the square footage of improvements that are currently listed by the assessor's office on
their secured property tax bill. Disneyland and California Adventure are currently on
Industrial Wastewater Discharge Permits that require the District to obtain flow data and
perform annual reconciliations. A subset of entertainment venues are open-air facilities.
Because open-air facilities such as Angel Stadium of Anaheim and the Los Alamitos
Race Course have minimal square footages listed by the assessor's office, the current
billing methodology does not accurately charge these venues for the wastewater that
they are discharging. Based on a study performed by Carollo Engineers, a more fair
and equitable billing methodology would be attendance rate based because of the large
number of visitors that attend these venues throughout the year resulting in an
abundance of wastewater discharged into the system. Angel Stadium of Anaheim is an
excellent example. The assessor's office lists 46,575 square feet and their sewer
service fee is only $11,199.87. The square footage captured on the property tax bill
does not fully capture the amount of wastewater being discharged because the square
footage is only for enclosed facilities. Staff has reviewed the entertainment venues and
the information that we have regarding their discharge and sewer service fees. We are
recommending that we charge open-air facilities based upon their attendance on an
annual basis. The facilities would provide their annual attendance for the prior year and
we would bill them 15gpd per attendee and place the fee on their annual secured
property tax bill. This billing method provides a more accurate fee for the actual
discharge into the system. The open-air facilities would pay a rate per MG based upon
the related flow, bod and tss charge for single family residences.
MG 2006-07
Est'd 2003 GIRD Per per Rate per Attendance Actual
Entertainment Center Attendance Attendee" year MG" Based Fee 06-07 SSF
Angel Stadium of
Anaheim 3,250,000 15 48.75 $1,795.43 $87,527.21 $11,119.87
Los Alamitos Race
Course 900,000 15 13.5 $1,795.43 $24.238.31 $2,176.29
'Last available attendance documentation
"GPD per Attendee according to Entertainment Rate Class Evaluation prepared by Carollo Engineers
***Rate pr MG based upon SFR unit costs for flow, bod, and tee
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ORDINANCE NO. OCSD-XXX32
ADOPTING REVISED TABLE A RE RESIDENTIAL USER FEES, REVISED
TABLE B RE PROPERTY USE CLASSIFICATIONS FOR COMMERCIAL OR
INDUSTRIAL USERS. REVISED TABLE C RE CAPITAL FACILITIES
CAPACITY CHARGES, NEW TABLE D RE PLAN CHECK AND INSPECTION
FEES, REVISED TABLE E RE SUPPLEMENTAL CAPITAL FACILITIES
CAPACITY CHARGES(FORMERLY TABLE D). REVISED TABLE F RE
ADMINISTRATIVE FEES AND CHARGES RELATING TO PERMITTEES
(FORMERLY TABLE E). REDESIGNATED TABLE G (FORMERLY TABLE F).
REVISED TABLE H RE CLASS I AND CLASS II PERMITTEES AND SPECIAL
PURPOSE DISCHARGE PERMITTEES CHARGES FOR USE(FORMERLY
TABLE G). REVISED TABLE I RE WASTEHAULER CHARGES FOR USE
(FORMERLY TABLE H). AND REAFFIRMING ALL OTHER CHARGES
AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE
COUNTY SANITATION DISTRICT ESTABLISHING SANITARY SEWER
SERVICE CHARGES; ESTABLISHING CAPITAL FACILITIES
CAPACITY CHARGES; ADOPTING MISCELLANEOUS CHARGES AND
FEES RELATING TO INDUSTRIAL CHARGES, SOURCE CONTROL
PERMITTEES AND WASTEHAULERS; AND REPEALING ORDINANCE
NO. 00SD-30626.
WHEREAS, the Board of Directors of the Orange County Sanitation
District ('District") has previously adopted Ordinance No. OCSD-2630B,
establishing annual Sanitary Sewer Service Charges for all uses, establishing
Capital Facilities Capacity Charges to be imposed when properties either newly-
connect to the District's system, or expand the use of the property previously
connected to the District; establishing miscellaneous industrial discharger fees,
source control/non-compliance sampling fees, and wastehauler charges, which
Ordinance is presently in full force and effect; and
WHEREAS, for purposes of improved efficiency and effectiveness of the
District's operations, it is the intent, by the adoption of this Ordinance, to
establish sanitary sewer service charges and capital facilities fees, and to provide
for increases in certain miscellaneous charges and fees.
NOW, THEREFORE, the Board of Directors of the Orange County
Sanitation District does hereby ORDAIN:
Section I. Fees and Charges Ordinance—Adopted
TABLE OF CONTENTS
ARTICLE I: RECITAL OF FINDINGS
Section 1.01, Findings — Declaration of Intent
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ARTICLE II: SANITARY SEWER SERVICE CHARGES
Section 2.01, Purpose and Scope
Section 2.02, Annual Sanitary Sewer Service Charge
Section 2.03
A. Exemptions
B. Application for Rebate
C. Application for Refund
D. Limitation Period
E. Determination
F. Administrative Fee
Section 2.04, Annual Charge Based on Fiscal Year
Section 2.05, Method of Collection
Section 2.06, Credit for Industrial Permittees
Section 2.07 Open-Air Facilities
Table A Annual Sewer Service Charges for
Residential Users
Table B Annual Sewer Service Charges
Property Use Classifications for
Commercial or Industrial Users
ARTICLE III: CAPITAL FACILITIES CAPACITY CHARGES
i
Section 3.01, Purpose and Scope
Section 3.02, Definitions
Section 3.03, Connection Permits: Required
Section 3.04, Capital Facilities Capacity Charge: Payment
Section 3.05, Capital Facilities Capacity Charge:
Time of Payment
Section 3.06, Capital Facilities Capacity Charge:
Schedule of Amounts
Table C Capital Facilities Capacity Charges
Table D Plan Check and Inspection Fee Schedule
Section 3.07, Supplemental Capital Facilities Capacity
Charge: Significant Commercial— Industrial
Users— Special Purpose Dischargers—
Definitions
Section 3.08, Supplemental Capital Facilities Capacity
Charge: New Significant Commercial —
Industrial Users
Section 3.09, Supplemental Capital Facilities Capacity
Charge: New Special Purpose Dischargers
Section 3.10, Supplemental Capital Facilities Capacity
Charge: Existing Significant Commercial —
Industrial Users—Special Purpose
Dischargers
Table GE Supplemental Capital Facilities Capacity
Charges
Section 3.11, Capital Facilities Capacity Charge:
Replacement
Section 3.12, Capital Facilities Capacity Charge: Remodeled
Section 3.13, Payment of Capital Facilities Capacity Charge:
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Off-Site Sewers Not Part of Master Plan
Relative to Reimbursement Agreements
Section 3,14, No Refund or Transfer
Section 3.15, Baseline Transferability
Section 3.16 Annual Updates
Section 3.17 Affordable Housing Projects
ARTICLE IV: MISCELLANEOUS CHARGES AND FEES RELATING
TO INDUSTRIAL DISCHARGERS, SOURCE CONTROL
PERMITTEES AND WASTEHAULERS
Section 4.01, Purpose and Scope
Section 4.02, Administrative Fees and Charges
Relating to Permittees
Section 4.03, Industrial Discharger, Source Control,
and Non-Compliance Sampling Fees
Section 4.04, Special Purpose Discharge Permittees;
Charges for Use
Section 4.05, Class I and Class II Permittees—Charges
for Use
Section 4.06, Wastehauler Charges for Use
Section 4.07, Administrative Appeals
Table €F Administrative Fees and Charges Relating
To Permittees
Table FG Industrial Discharger, Source Control and
Non-Compliance Sampling Fees
Table GH Class I and Class II Permittees and Special
Purpose Discharge Permittees Charges
For Use
Table HI Wastehauler Charges for Use
ARTICLE V: MISCELLANEOUS
Section 5.01,Application of Ordinance
Section 5.02, Exceptions
Section 5.03, Severability
Section 5.04, Effective Date
Section 5.05, Repeal
Section 5.06, Certification and Publication
ARTICLE I
RECITAL OF FINDINGS
Section 1.01. Findings — Declaration of Intent. The Board of
Directors of District has previously adopted Master Plans, as more particularly
described in Findings B, C, D, and E below, setting forth the financial and
engineering needs of the District, and hereby adopts the following Findings
supporting the amounts of charges and fees adopted pursuant to this Ordinance.
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A. That the former County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11,
13 and 14 of Orange County, California (the "Predecessor Districts"), were nine
individual County Sanitation Districts, organized pursuant to the County
Sanitation District Act (California Health & Safety Code Section 4700 at seq.). By
action of the Board of Directors of the Predecessor Districts, pursuant to speck
legislation enacted by the California State Legislature in 1996, an application was
submitted to the Orange County Local Agency Formation Commission to legally
consolidate the nine Predecessor Districts into one single Sanitation District for
all purposes. The application was approved, with an effective date of July 1, j
1998- As of July 1, 1998, the Predecessor Districts ceased to exist, and one
single consolidated County Sanitation District, known as the Orange County
Sanitation District, came into existence in place of the Predecessor Districts. The
District was formed to carry on the functions of the Predecessor Districts.
B. That a comprehensive 30-year Master Plan of Capital �
Facilities, entitled "Collection, Treatment and Disposal Facilities Master Plan — i
1989", hereinafter referred to as the "Master Plan", which includes detailed
financial and engineering reports, was prepared, approved, and adopted by the
Boards of Directors of the Predecessor Districts in 1989, setting forth and
identifying the required future development of District Facilities, including the
financial projections for providing sewer service to all properties within the
individual service areas of each of the nine Predecessor Districts.
C. That the financial and engineering reports of the Master Plan
were made available to the public, both prior to and subsequent to the adoption
of the Master Plan, and were subject to noticed public hearings, all in accordance
with the provisions of the California Constitution and Government Code Section
66016, and other provisions of law.
D. That the District, in 1997, as part of its maintenance and
updating of its Master Plan, undertook a comprehensive evaluation and study of
its operational and financial needs for the next 20 years, including a detailed
assessment of all types and categories of users; the demands on the system and
capacity needs of the system to provide necessary service to the multiple
categories of users; the total costs of the existing and future facilities in the
system; and alternate methodologies for establishing fair and equitable charges
to connect to and gain access to the system. These comprehensive planning,
engineering, and financial studies led to the development of an updated
Comprehensive Master Plan of Capital Facilities, which was approved and
adopted by OCSD Resolution No. 99-21 of the Board of Directors on October 27,
1999.
E. That in support of this Ordinance and the revised charges for
sewer service and/or Capital Facilities Capacity Charges as provided for on
Tables A, C, D and G herein, the Board of Directors finds that the Capital
Improvement Program ("CIP") Validation Study for Fiscal year 2003-04 and the
Secondary Treatment Peer Review, as approved by the Board of Directors, has
resulted in the development of a Capital Improvement Program that provides for
the implementation of secondary treatment standards, thereby improving effluent
quality in a reasonably short period of time, consistent with the goals and policies
of the Board of Directors, the member agencies, and the public, while also
providing for the construction of necessary improvements to accommodate
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projected increased flows and the rehabilitation and refurbishment of existing
facilities. The Board further finds that programming annual adjustments in sewer
service charges over a period of years is appropriate and ensures adequate
revenues to finance the improvements and programs necessary to implement
secondary treatment standards, accommodate increased flows, rehabilitate and
refurbish existing facilities, and retire any necessary or prudent debt incurred to
finance such improvements in a reasonable manner and over a reasonable
period of time. The Board of Directors also finds that such Sanitary Sewer
Service Charges and Capital Facilities Capacity Charges are reasonably related
to, and do not exceed the cost of providing sewer services.
F. That the financial requirements of the District, as shown in
reports prepared by Staff and Consultants relating to the Strategic Plan and the
CIP validation studies, are based on current, reliable information and data
relating to population projections, wastewater flow, and capital facilities' needs,
and are expected to be realized in each year as described in the reports.
G. That the revenues derived under the provisions of this
Ordinance will be used for the acquisition, construction, reconstruction,
maintenance, and operation of the sewage collection, wastewater treatment and
disposal facilities of the District; to repay principal and interest on debt
instruments; to repay federal and state loans issued for the construction and
reconstruction of said sewerage facilities, together with costs of administration
and provisions for necessary reserves; and to assist in the payment of costs to
the District to provide all regulatory administration and laboratory services related
to the industrial dischargers, source control permittees, and wastehauler users of
the District's systems.
H. That the owners or occupants of properties upon which all
fees and charges established by this Ordinance are levied, discharge wastewater
to the District's collection, treatment and disposal facilities. The costs of
operating and maintaining said facilities have constantly increased due in part to
increased regulatory requirements to upgrade the treatment process.
I. That the need for upgraded and improved treatment of all
wastewater collection, treatment and disposal facilities is required to protect the
public health and safety, and to preserve the environment without damage.
J. That the Sanitary Sewer Service Charges established and
levied by this Ordinance are to allow the District to recover the reasonable costs
to provide a service to individual properties which have been improved for any of
numerous types of uses. The basis for the respective charge is the request of
the owner of property or a structure thereon, for the benefit of him/her/itself, or
the occupants of the property, to receive a service based upon actual use,
consumption, and disposal of water to the District's system in lieu of disposal by
other means.
K. That the Sanitary Sewer Service Charges established by this
Ordinance are not imposed as a condition of approval of a development project,
as defined in California Government Code Section 66001, and do not exceed the
estimated reasonable cost to provide the sewer service for which the fee is
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levied, as provided in Government Code Sections 66013 and 66016 and
California Constitution Article XIIID.
L. That the Sanitary Sewer Service Charges adopted herein
will not necessarily result in an expansion of facilities to provide for growth
outside the existing service area. The adoption of these Sanitary Sewer Service
Charges will not result in any speck project, nor result in a direct physical
change in the environment.
i
M. That the Sanitary Sewer Service Charges adopted herein
are established upon a rational basis between the fees charged each customer
and the service and facilities provided to each customer of the District, a portion
of which are necessary to replace the loss of ad valorem property taxes to the
State General Fund as a result of state legislative action on September 2, 1992,
and in subsequent years.
N. That the Board of Directors has previously, by duly adopted
Ordinances, commencing in 1969, and most recently by Ordinance No. OCSD-
2630B, established Capital Facilities Capacity Charges, formerly known
commonly as "connection charges" or "fees", to be paid by all persons obtaining
a permit to connect to the District's system. Said Charges are required as a
financial payment to have access to and use of the District's wastewater
collection, treatment and disposal facilities in existence at the time of connecting
to the system, and for future facilities to be constructed.
O. That the Sanitary Sewer Service Charges and Capital
Facilities Capacity Charges established here, are an incident but not a condition
of development, payable only on request to receive service by the property
owner for the benefit of those persons on the property that use the service. The
charges are not an incident of property ownership, nor are they a property-
related service having a direct relationship to property ownership. Accordingly,
the provisions of California Constitution Article XIIID are not applicable.
P. That the District's previous and present Capital Facilities
Capacity Charges Ordinances, include[d] authority for the District to levy an
excess or supplemental capacity charge upon commercial and industrial users
who discharge quantities or high strength wastewater greater than the
established base line of authorized discharge.
Q. That the Capital Facilities Capacity Charges re-enacted by
this Ordinance are non-discriminatory, as applied to all users of the system, and
are established upon a rational basis between the fees charged each category of
property that is connecting, and the service and facilities provided to each
connected property or structure, by the District, within a given category.
R. That the miscellaneous charges and fees re-enacted by this
Ordinance without change are established upon a rational basis between the
fees charged to each industrial discharger, source control permittee, or
wastehauler and the service and facilities provided to each.
S. That the District is required by federal and state law,
including the Federal Water Pollution Control Act, also known as the Federal
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Clean Water Act (33 U.S.C. 1261, at seq.), the General Pretreatment
Regulations (40 C.F.R. 403), and the Porter-Cologne Water Quality Control Act
(California Water Code Sections 13000 at seq.) to implement and enforce a
program for the regulation of wastewater discharges to the District's sewers.
T. That the District is required by federal, state and local law, to
meet applicable standards of treatment plant effluent quality.
U. That pursuant to these requirements, the Board of Directors
has adopted an ordinance establishing Wastewater Discharge Regulations.
V. That the District incurs additional costs in conducting non-
compliance sampling of those industrial wastewater dischargers who violate the
District's Wastewater Discharge Regulations and in administering the industrial,
wastehauler, and special discharge permit programs.
W. That the ordinance establishing Wastewater Discharge
Regulations provides that the Board of Directors is to establish various fees and
charges to recover those costs to the District which are made necessary by
industrial dischargers and wastehaulers who violate the District's Wastewater
Discharge Regulations.
X. That the industrial discharger, source control, and
wastehauler fees and charges hereby established by this Ordinance do not
exceed the estimated reasonable costs to the District of industrial discharger,
source control, or wastehauler use of the District's facilities and for the
administration and implementation of permit and fee processing, non-compliance
sampling, and related services associated with the District's Source Control
Program.
Y. That all fees and charges established herein have been
approved by the District's Board of Directors at a noticed public meeting, all in
accordance with applicable provisions of law.
Z. That the adoption of this Ordinance is statutorily exempt
under the California Environmental Quality Act pursuant to the provisions of
Public Resources Code Section 21080(b)(8) and California Code of Regulations
Section 15273(a).
AA. That each of the Findings set forth in previous Ordinances
Nos. OCSD-05, OCSD-06, OCSD-11, OCSD-13, OCSD-15, OCSD-18,
OCSD-19, OCSD-20, OCSD-22, apA-OCSD-24 OCSD-26. and OCSD 30B are
reaffirmed and readopted hereat, except to the extent that they have been
specifically superseded or otherwise amended by specific Findings herein.
ARTICLE II
SANITARY SEWER SERVICE CHARGES
Section 2.01. Purpose and Scope. The purpose of this Ordinance
is to establish Sanitary Sewer Service Charges required to be paid by property
owners for the services and facilities furnished by the District in connection with
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its sanitation treatment works and sewage collection system. Revenues derived
under the provisions of this Ordinance shall be used for the acquisition,
construction, reconstruction, maintenance, and operation of the wastewater 1
collection, treatment and disposal facilities of the District; to repay principal and
interest on debt instruments; or to repay federal and state loans issued for the
construction and reconstruction of said sewerage facilities, together with costs of
administration and provisions for necessary reserves.
Section 2.02. Annual Sanitary Sewer Service Charge.
Commencing with the effective date of this Ordinance, the owner of each parcel
of real property located within the District which is improved with structures
designed for residential, commercial, or industrial use and which, at the request
of the owner or the owner's predecessor-in-interest, is connected to the District's
system, shall pay an annual Sanitary Sewer Service Charge based on the
respective class of users, in the sum or sums, as set forth in Tables A and B of
this Ordinance, below. The annual Sanitary Sewer Service Charges for i
residential users are set forth in Table A. The applicable single family
residential rate shown in Table A is multiplied by the applicable percentage figure
shown on Table B with respect to the particular use classification to arrive at the
annual Sanitary Sewer Service Charge rate per 1,000 square feet for the
commercial or industrial user. The annual Sanitary Sewer Service Charges for
commercial or industrial users are dependent upon the respective classifications
of property use, determined by reference to Table B.
i
Section 2.03. A. Exemptions. It is the intent of the District that
the legal owner(s) of parcels of real property, otherwise subject to the levy and
payment of the Sanitary Sewer Service Charges, as prescribed herein, be
relieved, in whole or in part, from the payment of said charges, in certain
circumstances and under conditions prescribed herein, and be entitled to either a
rebate or a refund with respect to charges paid, as more specifically set forth in
Subparagraphs 2.0313 and 2.03C below, provided an inequity is established or a
billing error is proven, as specified in Subparagraphs B or C.
B. Application for Rebate. Any property owner
may apply to the District for a rebate of Sanitary Sewer Service Charges paid to
the District by establishing that an unfair valuation of the property has been made
by the District. An applicant for a rebate must establish, by proof satisfactory to
the General Manager of the District, or his designee, that an inequity exists
between the amount of the charge paid and the amount of wastewater
discharged to the District's system, resulting in an unfair valuation. Satisfactory
proof shall establish that either:
(1) The principal water use is agricultural or
horticultural; or
(2) The property is devoted to any other use
wherein the amount of wastewater discharged to the District's system is
significantly less on a regular basis than the amount that would normally be
expected to be discharged by the class of property in question.
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Satisfactory proof shall include, but not be limited to, documentation
showing actual water usage for each billing cycle during the entire period for
which the rebate is sought.
The amount of any rebate shall not reduce the charge payable by any
property owner, whose property is connected to the District's system, to less than
the single family residential charge shown on the applicable Table attached
hereto.
C. Application for Refund. Any property owner may
apply to the District for a refund of Sanitary Sewer Service Charges paid to the
District by establishing that the amount paid was pursuant to an error in the
amount billed or the amount paid. The applicant for a refund must submit proof
satisfactory to the General Manager of the District, or his designee, that a billing
error has been made by the District, or the County Tax Collector. Such proof
shall include, but not be limited to, proof that:
(1) The owner's parcel of property is not
connected to the District's system; or
(2) The property has not been classified in the
proper property use classification code land-use-sategery; or
(3) A clerical error has been made.
D. Limitations Period. Applications for rebates and
refunds shall be deemed to be governed by the provisions of California Revenue
& Taxation Code Sections 5096 and 5097, allowing for refunds for a period of
four (4) years from the date of payment of the second installment of the bill
claimed to be either inequitable or incorrect.
E. Determination. All applications for rebates or refunds
of the Sanitary Sewer Service Charge will be determined by the General
Manager of the District, or his designee, who, based on the submitted proof, may
grant a full or partial rebate or refund.
F. Administrative Fee. At the time of filing the
application for rebate or refund, the property owner shall pay District an
administrative fee for the processing of such application. The amount of the fee
shall be equal to the total of all fees and charges imposed on the District by any
other public entity, such as the Orange County Tax Collector, the Orange County
Auditor, or the Orange County Recorder, in connection with the rebate or refund.
Section 2.04. Annual Charge Based on Fiscal Year. The Sanitary
Sewer Service Charges established by this Ordinance shall be effective as of
July 1 of each year, as set forth in Tables A and B, attached hereto, for the
District's fiscal year, and shall remain in effect until such time as the rates
adopted herein are changed by District Ordinance. There shall be no proration of
such charges in any fiscal year.
Section 2.05. Method of Collection.
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A. Pursuant to the authority granted by California Health &
Safety Code Section 5473, and except as otherwise provided in Subparagraph
2.05E below, all sanitary sewer service charges established herein shall be ;
collected on the County Tax Roll in the same manner, by the same persons, and
at the same time as, together with, and not separately from, its general taxes.
The County Tax Collector is authorized and hereby ordered to make said
collections in accordance with the terms and conditions of agreements between
the County of Orange and the District.
B. In the event District determines that, due to billing or
payment error, or to inequity in the amount billed, a property owner has
underpaid annual Sanitary Sewer Service Charges payable to District, District,
within four (4) years after the date of mailing of the tax bill, may:
(1) collect the amount of any deficiency directly on the
County Tax Roll; ,
(2) off-set the amount of any deficiency against any
amounts that District determines is owing, by District, to the property owner, as a
rebate or refund under this Ordinance; or
(3) submit, directly to the property owner, a bill for the
amount of any deficiency, which shall be due and payable within thirty (30) days
of the invoice date and which, if not paid, shall become a lien on said property.
Section 2.06. Credit for Industrial Penmittees. A credit shall be
allowed to all dischargers permitted pursuant to Article 3 of District Ordinance
No. OCSD-01, as amended, in an amount equal to the annual Sanitary Sewer
Service Charge established by Section 2.02 of this Ordinance, in the same
manner as credit is allowed for ad valorem taxes pursuant to Sections 302.6(B),
and 303.6(B) of District Ordinance No. OCSD-01, as amended.
Section 2.07 Open-Air Facilities. Sanitary Sewer Service Charges
for open-air facilities will be based on annual attendance records. Open-Air
facilities will pay a rate per million gallons based urwn the related sewage flow.
Biochemical Oxygen Demand ("BOD") and Suspended Solids ("SS") charge for
single family residences. The usage per attendee will be 15 gallons.
TABLE A
ANNUAL SEWER SERVICE USER FEES
RESIDENTIAL USERS
FISCAL YEAR 2003-04 2004-05 2005-M 2006-07 2007-08
SFR" $100.00 $115.00 $151.00 $165.80 $182.00
MFR $ 70.00 $ 80.50 $105.70 $116.06 $127.40
SFR= SINGLE FAMILY RESIDENTIAL
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MFR = MULTI FAMILY RESIDENTIAL
' The SFR fee is the minimum sanitary sewer service charge any user must pay.
All properties located within Revenue Area No. 14 pay no annual service fees.
District costs relating to providing service to these properties are billed by the
District directly to the Irvine Ranch Water District, the local agency providing the
local sewer service.
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TABLE B I
ANNUAL SEWER SERVICE CHARGES
PROPERTY USE CLASSIFICATIONS FOR
COMMERCIAL OR INDUSTRIAL USERS
Percentage of SFR
Assessor Use Code Description Per 1.000 SF or Unit
1 Vacant Land Parcel 00/u
5 Common Area Parcel 0%
6 'Hold' Parcel 0%
a Equivalent to Vacant 0%
121 Parcel of Minimal or No Value 0%
122 Subsurface Parcels 0%
124 OillMineral Rights 0%
125 Mineral Rights Equipment 0%
126 Vacant Comm. Area-IMP Alloc. 0%
201 Homeowners Exemption AddT 0%
666 Unassigned Vacant 0%
777 Septic Tank Property 0%
112 Steel Building 7% �
113 Mini-Warehouse 7%
58 Nurseries(Plants) 10%
100 Drive-In Theater 10%
44 Lumber/Constr. Material Yard 17%
71 Parking Garage 17%
72 Paved Parking Lot 17%
110 Warehouse—Single Tenant 17%
111 Warehouse—Multi Tenant 17%
115 Recreational Vehicle Storage 17%
116 Truck Terminal 17%
33 Church Buildings 20%
94 Department Store 23%
95 Discount Store 23%
96 Unattached Single Store 23%
97 Strip Store 23%
74 Recreational Vehicle Park 27%
36 Financial Buildings 27%
40 Health Club 29%
68 High Rise Office 30%
225 United States Post Office 35%
21 Automobile Dealership 41%
22 Auto Repair Shop 41%
23 Automotive Service 41%
24 Used Car Lot 41%
39 Golf Course 41%
57 Motorcycle/Small Vehicle Building 41%
83 Automotive Service Station 41%
TABLE B (CONTINUED)
ANNUAL SEWER SERVICE CHARGES
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PROPERTY USE CLASSIFICATIONS FOR
COMMERCIAL OR INDUSTRIAL USERS
Percentage of SFR
Assessor Use Code Description Per 1,000 SF or Unit
84 Marine Service Station 41%
86 Combin.-Service Station/Convenience 41%
65 Single Office Bldgs. to 3 Stories 41%
66 Small Office Center 41%
67 Office Complex 41%
69 Converted Residence to Office 41%
7 Mobile Home 50%
55 Mobile Home Park 50%
107 Light Industrial—Single Tenant 50%
108 Light Industrial—Multi Tenant 50%
109 Research and Development 500/0
114 Industrial Park 50%
37 Fraternal Buildings 51%
101 Unattached Theater 51%
26 Airport and Related Buildings 53%
45 Marinas 53%
88 Low Flow Shopping Center 53%
3 Two or More Residences 700/6
10 Duplex Only 70%
11 Triplex Only 70%
12 04-Units Only 70%
13 5 to 16 Units 70%
14 17 to 25 Units 70%
15 26 to 40 Units Only 70%
16 41-99 Units Only 70%
17 100 or More Units 70%
18 Developed with a Mix of Forms 70%
63 Low Rise Retirement Building 70%
64 High Rise Retirement Building 70%
56 Motels 70%
81 Pre-Schools, Nursery or Care 82%
82 Private Schools 82%
98 Store with Offices or Living Quarter 82%
99 Store with Office Upstairs 82%
118 Governmental Use Vacant/Develop. 82%
19 SFR with for 2 rental units 85%
34 Dormitory 97%
42 Hospital 97%
43 Hotel 97%
0 Conversion-C/1, Rural PC 1000/0
2 One Residence 100%
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i
TABLE B (CONTINUED)
ANNUAL SEWER SERVICE CHARGES
i
PROPERTY USE CLASSIFICATIONS FOR
I
COMMERCIAL OR INDUSTRIAL USERS
Percentage of SFR
Assessor Use Code Description Per 1,000 SF or Unit
4 Miscellaneous Improvement 100%
85 Comb. Serv. Stn./Restaurant 1000/4
103 Chemical Tank and Bulk Storage 100%
104 Food Processing Plant 100%
105 Cold Storage Plant 100%
106 Factory 100%
119 Public Utility 100%
120 Water Mutual or Company 100%
888 Conversion-Composite Prop. 100%
32 Cemetery& Related Buildings 101%
38 Funeral Home 101%
60 Nursing Home 102%
61 Convalescent Hospitals 102%
62 Converted Res. Used as Nursing 102%
28 Bowling Alleys 112% �
92 Skating Rinks 112%
50 Single Medical Bldgs. to 3 Stories 124%
51 Small Medical Center 124%
52 Medical Center Complex 124%
53 High Rise Medical 124%
54 Converted Residence to Medical 124%
89 Average Flow Shopping Center 139%
20 Amusement Parks 144%
35 Entertainment Center 144%
73 Recreation 144%
30 Coin Operated Car Wash 151%
47 Supermarket 151%
48 Convenience Market 151%
224 Nightclub 2000/6
90 High Flow Shopping Center 226%
76 Restaurant—Take Out 300%
77 Restaurant—Coffee Shop 600%
78 Restaurant—Dinner House 600%
79 Restaurant—Conversion from SF 600%
29 Conventional Car Wash 796%
223 Laundromat 1,800%
NOTE: Multiply the Table A Single Family Residential Rate by the percentage figure above
In order to determine the rate per 1,000 square feet for the commercial or industrial user.
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ARTICLE III
CAPITAL FACILITIES CAPACITY CHARGES
Section 3.01. Purpose and Scope. The purpose of this Ordinance
is to impose Capital Facilities Capacity Charges when properties, either newly-
connect to the District's system, or expand the use of the property previously
connected to the District. Revenues derived under the provisions of this
Ordinance will be used for the acquisition, construction, and reconstruction of the
wastewater collection, treatment and disposal facilities of the District; to repay
principal and interest on debt instruments; or to repay federal or state loans for
the construction and reconstruction of said sewerage facilities, together with
costs of administration and provisions for necessary reserves.
Section 3.02. Definitions.
A. "Actual construction costs" include the cost of all activities
necessary or incidental to the construction of a District facility, such as financing,
planning, designing, acquisition of the property or interests in the property,
construction, reconstruction, rehabilitation, and repair.
B. "Capital Facilities Capacity Charge" means a one-time, non-
discriminatory charge imposed at the time a building or structure is newly
connected to the District's system, directly or indirectly, or an existing structure or
category of use is expanded or increased. Said charge is to pay for District
facilities in existence at the time the charge is imposed, or to pay for new facilities
to be constructed in the future, that are of benefit to the property being charged.
This charge does not apply to temporary facilities or operations that are regulated
under the provisions of a Special Purpose Discharge Permit.
C. "Connection fee" means a fee equal to the cost necessary to
physically connect a property to the District's system, including but not limited to,
installation of meters, meter boxes, pipelines, and appurtenances to make the
connection and which fee does not exceed the actual cost of labor, materials,
and overhead for the installation of those facilities.
D. "Non-discriminatory" means that the Capital Facilities
Capacity Charge does not exceed an amount determined on the basis of the
same objective criteria and methodology applicable to comparable public or non-
public users, and is not in excess of the proportionate share of the cost of the
District's facilities of benefit to the person or property being charged, based upon
the proportionate share of use of those facilities.
E. "Public agency" means the United States or any of its
agencies, the State or any of its agencies, the Regents of the University of
California, a county, city, district, school district, local or regional public authority,
or any other political entity, subdivision or public corporation of the State.
F. The Supplemental Capital Facilities Capacity Charge, as
provided for in Sections 3.07, 3.08, 3.09, and 3.10 of this Ordinance, is an annual
charge payable to the District on a quarterly or annual basis, as determined by
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the District. Said charge is required to be paid by dischargers that exceed the
maximum quantity of flow or constituents (BOD or SS) allowed as a base use for
which the CFCC is paid.
Section 3.03. Connection Permits: Required.
A. Connection permits are required of each and every dwelling
unit, and each commercial or industrial building, and structure connecting directly
or indirectly to the District's sewerage system facilities. Included are the
connections of laterals to local municipal sewerage facilities, and the connection
of local municipal sewerage facilities and laterals to the District's facilities.
Multiple detached structures on a single parcel of property shall each be required
to obtain a connection permit.
I
B. Except as authorized by the issuance of a Special Purpose
Discharge Permit under Sections 305 — 305.6 of the District's Wastewater
Discharge Regulations, or as authorized pursuant to a special extra territorial
service agreement approved by the Board of Directors, no permit shall be valid
unless the real property to be served by use of the permit is included within the
boundaries of the District and within the boundaries of a local sewering agency
authorized to maintain public sewering facilities. However, a permit, as
authorized above, may be issued for property to be served outside the 1
boundaries of a local sewering agency if a local sewering agency makes
application for the issuance of such permit.
There will be a non-discriminatory Capital Facilities Capacity Charge
assessed to public agencies for connecting directly or indirectly to the District's
sewerage system facilities, and a connection permit must be obtained.
Section 3.04. Capital Facilities Capacity Charqe: Payment
Required. No application for a permit for a connection of a structure to a District
sewerage facility, or to any sewerage facility which discharges into a District
sewerage facility, shall be approved, nor a permit issued, until a District Capital
Facilities Capacity Charge is paid by the applicant, except as provided for
discharges under a Special Purpose Discharge Permit. No connection permit
shall be issued unless there is an established category of use of the property to
be served or a valid building permit issued which establishes the category of use
of said property.
Section 3.05. Capital Facilities Capacity Charge: Time of Pavment.
A. Payment of the Capital Facilities Capacity Charge
established by this Ordinance for connection to the District's sewerage system
facilities shall be required at the time of issuance of the building permit for all
construction within the District, excepting in the case of a building legally exempt
from the requirement of obtaining a permit. The payment of the Capital Facilities
Capacity Charge for such exempt buildings will be required at the time of and
prior to the issuing of a plumbing connection permit for any construction within
the territorial limits of the District, or if none, prior to the issuance of a Certificate
of Occupancy.
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B. Upon application of any property owner seeking to connect
to the District's system, the Board of Directors of District, in its sole and absolute
discretion and upon a finding of compelling need, may, pursuant to the authority
of California Health & Safety Code Section 5474, approve of an agreement with
the property owner for the payment of the applicable connection charge in
installments over a period of not to exceed five (5) years, bearing an interest rate
on the unpaid balance of not to exceed ten (10%) percent per annum, and that
the charges and interest shall constitute a lien on the property.
Section 3.06. Capital Facilities Capacity Charge and Plan Check
and Inspection Fees: Schedule of Amounts.
Am Every person or entity connecting any new or expanded
building or structure to the District's system facilities shall pay a Capital Facilities
Capacity Charge in the amount for the applicable category of use set forth on
Table C, below.
B. Every person or entity connecting any new or expanded
building or structure directly to the District's local or regional system facilities
shall pay Plan Check and Inspection Fees in the amount set forth on Table D,
below.
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TABLE C
CAPITAL FACILITIES CAPACITY CHARGES (CFCC)
Use Category Rate Basis Base Charge
Commercial — Industrial Per 1,000 square feet'
Low Demand' Per 1,000 square feet $ 2108.00'
Average Demand' Per 1,000 square feet $1,31957.00'
High Demand' Per 1,000 square feet
$3,440222.00'
Single Family Residential (SFR)5- . % of Base Base Charge
5+ Bedrooms (Per Unit) 1.39
$6,060278.00
4 Bedrooms (Per Unit) 1.19
$5,490377.00
3 Bedrooms (Per Unit) 1.00 (Base)
$4,360517.00
2 Bedrooms (Per Unit) 0.81
$3,530657.00
1 Bedroom (Per Unit) 0.62 $2,70097.00
Multi-Family Residential (MFR)� ' % of Base Base Charge
4+ Bedrooms (Per Unit) 1.08
$4,74i) 80.00
3 Bedrooms (Per Unit) 0.89
$34,880020.00
2 Bedrooms (Per Unit) 0.70
$3,050160.00
1 Bedroom (Per Unit) 0.50
$2,4-80258.00
Studio (Per Unit) 0.32 $1,40050.00
Supplemental CFCC for Permit Users, includes 5% cost of funds.
Flow, gallons per day $0.00139244
BOD, pounds per day
$0.755473081900
SS, pounds per day
$0.0947205022
'Provided that the minimum Capital Facilities Capacity Charge for such new construction shall be $4360
Fa 517:and all calculations shall be on a 1,000 square foot,or portion thereof, basis.
A schedule of the Capital Facilities Capacity Charges specified herein Will be on file in the Offica of the
Board Secretary of the District,and in the Building Department of each City within the District.
2Low Demand connections are the following categories of Users: Nurseries;Warehouses; Churches. Truck
Terminals _F_V Parks'. the restroom offices and areas related to the offices for Parking Structures_'. RV
Storage Yards, Lumber/Construction Yards, Public Storage Buildings; and other dischargers whose flow is
similar in volume to these listed categories.
2Hloh Demand connections are the following categories of users: Restaurants, Supermarkets; Car Washes;
Coin Laundries; Amusement Parks; Shopping Centers with one or more Restaurants or Food Court; Food
Processing Faclities;Textile Manufacturers;and other dischargers whose flow is similar in volume to these
listed categories.
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'All o1w connections are AveMe demand ueeB.
'Bedrooms include loft office.berm room or other additions which could potentially be used as a becroom.
Bedroom additions are considered a change of use and a CFCC must be paid.
6MFR units consist of multiple units that receive one secured Property tax bill such as apartments
'SFR—The rates for each size of SFR and MFR are established with a 3-bedroom SFR having a base of
1.0.and all others are a relative percentage higher or lower than 1.0.depending on size of unit,as noted.
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TABLE D
PLAN CHECK AND INSPECTION FEE TABLE 1
INSPECTION FEES FOR SINGLE CONNECTIONS FEE
Normal lateral installation to property line with clean out $500.00
I
Lateral Installation to existing manhole stub with clean out $500.00
Core drilling in to an existing manhole base - add $300.00
Installation of new manhole with stub over existing line $1,000.00
INSPECTION FEES FOR MULTIPLE CONNECTIONS
Plan check and inspection fees of 20 percent of the sewer construction cost for
new tract sewers, sewer extensions or special facilities are required when plans
are submitted for plan check.
If additional funds are needed, they must be deposited as soon as they are
requested to complete the inspection on the proiect. If funds are required after
the work is completed they must be paid before OCSD finals the sewer project.
Section 3.07. Supplemental Capital Facilities Capacity Chame:
Significant Commercial — Industrial Users and Special Purpose Dischargers —
Definitions.
A. A Significant Commercial — Industrial User ("SCIU") is any
person or entity who discharges commercial or industrial process flow, but
excluding domestic sewage flow, in an amount greater than 25,000 gallons per
day ("gpd"), or Biochemical Oxygen Demand ("BOD") greater than 150 pounds
per day, or Suspended Solids ("SS") greater than 150 pounds per day, or who is
required to obtain a Waste Discharge Permit, as prescribed by Article 3 of the
District's Wastewater Regulations, due to having federally or District regulated or
significant discharges.
B. A special purpose discharger ("SPD") is any person or entity
who discharges to the sewer system wastewater or process flow in an amount
greater than 25,000 gpd (excluding domestic, industrial or commercial) and who
is required to obtain a Special Purpose Discharge Permit as prescribed in
Section 305 of the District's Wastewater Regulations.
C. An Existing SCIU or SPD is any SCIU or SPD connected
and discharging to the District's system prior to January 1, 2000.
D. A New SCIU or SPD is any user who connects and
discharges to the District's system pursuant to a Waste Discharge Permit issued
on or after January 1, 2000; or if previously connected and not an SCIU, as
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defined in Subparagraphs 3.07A and B above, but, subsequent to January 1,
2000, increases flow, or BOD, or SS to a level as to constitute an SCIU or SPD.
E. The maximum discharge allowed to a user, for which a base
Capital Facilities Capacity Charge is paid, as per Table C, above, is 25,000
gallons per day ("gpd"), or 150 pounds each of BOD and SS (the "base use").
Discharge of flow, or BOD, or SS in amounts greater than allowed by this
Subsection 3.07E shall be subject to the provisions of Sections 3.08 and 3.09
hereof.
F. Each Existing SCIU shall have a baseline of allowed
discharge of flow, and BOD, and SS established by the District as of January 1,
2000. The baseline shall be based upon the discharge for Fiscal Year 1998-99,
or upon such other discharge data which the District determines is representative
of the user's actual annual discharge to the sewerage system. Dischargers who
are deemed to be SCIU's solely because of the requirements to obtain a Waste
Discharge Permit, pursuant to Section 3.07A above, shall have a minimum
baseline established as follows: Flow — 25,000 gallons per day; BOD — 150
pounds per day; and SS — 150 pounds per day. The SCIU shall be authorized to
discharge flow, and BOD, and SS up to the baseline amounts without payment of
a Supplemental Capital Facilities Capacity Charge.
G. Each Existing SPD shall have a baseline of 25,000 gpd;a50
The Existing SPD shall be
authorized to discharge flow up to 25,000 gpd without payment of a
Supplemental Capital Facilities Capacity Charge.
H. The Supplemental Capital Facilities Capacity Charge, as
prescribed by Sections 3.08, 3.09, and 3.10 below, shall be payable commencing
with the effective date of this Ordinance.
I. Within two (2) years from the date of the District's written
notice to the existing SCIU of its baseline amounts, the existing SCIU, as
described in Section 3.07C, shall have a right to appeal the District's established
baseline for the SCIU. The appeal shall be to the General Manager, or his
designated representative, who shall have discretion, based upon extraordinary
circumstances, wherein the established baseline is not representative of the
historical average daily discharge by the SCIU for a yearly period, to modify the
baseline amounts for the current year, or on a permanent basis, subject to terms
and conditions as prescribed by the General Manager. The decision of the
General Manager shall be final.
Section 3.08. Supplemental Capital Facilities Capacity Charge: New
Significant Commercial — Industrial Users. In addition to the base Capital
Facilities Capacity Charge, as prescribed in Table C, for commercial — industrial
use category properties, all New SCIU's shall pay a Supplemental Capital
Facilities Capacity Charge for each gallon of flow, or pound of BOD, or SS,
exceeding the base use discharge maximums, in the amount shown in Table
BE.
Section 3.09. Supplemental Capital Facilities Capacity Charge:
New Special Purpose Dischargers. All New SPDs shall pay a Supplemental
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i
Capital Facilities Capacity Charge of $0494344.001392 per gallon per day for
each gallon of flow exceeding 25,000 gallons per day. Upon issue of permission 4
to discharge, SPD with discharges above 25,000 gpd shall pay a nonrefundable
Supplemental Capital Facilities Capacity Charge, prior to discharge, for one
million gallons above 25,000 gpd. The deposit will be credited by the District
against future Supplemental Capital Facilities Capacity Charges.
i
Section 3.10. Supplemental Capital Facilities Capacity Charge: 1
Existing Significant Commercial — Industrial Users and Special Purpose
Dischargers.
A. All Existing Significant Commercial — Industrial Users
connected to and discharging to the District's system shall be required to pay a
Supplemental Capital Facilities Capacity Charge upon the occurrence of either (i)
an increase of discharge flow of 25,000 gallons per day ("gpd"), or 25% per day
over its established baseline authorization, whichever is lesser; or (ii) an increase
of either BOD or SS discharge of 150 pounds each per day, or 25% each per
day, whichever is lesser, over its established baseline authorization.
B. The Supplemental Capital Facilities Capacity Charge shall
be in the following amounts for each component that is increased as provided in
Section 3.10A above.
1
TABLE DE
SUPPLEMENTAL CAPITAL FACILITIES CAPACITY CHARGES
Daily Chame
Flow Gallons Per Day $0.00134492
BOD Pounds Per Day $0.75473081900
SS Pounds Per Day $0.0917295022
C. All Existing SPDs connected and discharging to the sewer
shall be required to pay a Supplemental Capital Facilities Capacity Charge upon
occurrence of an increase of discharge flow over 25,000 gpd. The Supplemental
Capital Facilities Capacity Charge shall be $ 0.001344392 per gallon per day of
discharge for each gallon above 25,000 gpd.
D. The Supplemental Capital Facilities Capacity Charge shall
be calculated on the basis of the average daily quantity of discharge in excess of
the User's baseline or 25,000 gpd for SPDs. The daily averages will be based on
the daily discharges for a year, utilizing discharge records and reports of the
District.
Section 3.11. Capital Facilities Capacity Charge: Replacement
Structures. For new construction replacing former structures, the Capital
Facilities Capacity Charge shall be calculated and paid to the District on the rate
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basis of the category of the new use and the amounts as set forth in Table C,
less a credit amount, up to the amount of the new Capital Facilities Capacity
Charge, equal to a charge, as prescribed in Table C that would be for the prior
category of use which was terminated and removed.
Section 3.12. Capital Facilities Capacity Charge: Remodeled
Structures. In the case of existing structures connected to the District's system
facilities, to which new construction or alteration is made to change or increase
the category of use or number of bedrooms, a Capital Facilities Capacity Charge
shall be calculated and paid to the District on the rate basis of the category of the
new use and the amounts as set forth in Table C, less a credit amount, up to the
amount of the new Capital Facilities Capacity Charge, equal to a charge, as
prescribed in Table C for the prior category of use.
Section 3.13. Payment of Capital Facilities Capacity Charge: Off-
Site Sewers Not Part of Master Plan Relative to Reimbursement Agreements. A
charge for connection to off-site sewers which are not included as part of the
District Master Plan and for which a Non-Master Plan Reimbursement
Agreement has been entered into between the District and the property owner,
shall be paid in the amount provided for in said Agreement, to be known as a
Non-Master Plan Capital Facilities Capacity Charge. The amount set forth in
said Agreement shall be the amount due, provided the original Agreement is still
in force. The Non-Master Plan Capital Facilities Capacity Charge shall be in
addition to the other Capital Facilities Capacity Charges provided for in Sections
3.06 through 3.10 hereinabove, established for property connecting to said
facilities.
Section 3.14. No Refund or Transfer. A Capital Facilities Capacity
Charge is paid for the connection of a specific building or structure on a parcel of
property. No refund of any charge shall be made because of non-use or change
of use, or any other reason once the connection has been made. If the
connection is not maa: and the request for connection is withdrawn within 12
months of the paymer, date. the charges paid will be refunded upon establishing
proof from the City_a ,ounty of a canceled permit. The connection permit is
non-transferable to any other parcel of property.
Section 3.15. Baseline Transferability. The baseline of allowed
discharge of flow, BOD and SS used to calculate a Supplemental Capital
Facilities Capacity Charge shall not be transferable, nor shall a credit for such
previously existing baseline be provided to another SCIU concurrently or
subsequently occupying the same property. Each such SCIU shall pay
Supplemental Capital Facilities Capacity Charges in accordance with Section
3.08 above.
Section 3.16 Capital Facilities Capacity Charge Annual Updates.
The Capital Facilities Capacity Charge is based upon the most recently
completed Capital Strategic Plan Update. This charge is Updated annually based
upon the increase in the Engineering News-Record construction cost index for
Los Angeles as of December of the prior year until the completion of the next
Strategic Plan Update.
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Section 3.17 Affordable Housing Projects. Per Resolution 06-18,
development projects that include lower income housing units shall not be denied
approval of an application for service, nor shall conditions be imposed thereon or
services reduced which are applied for, unless the District makes specific written !
findings that the denial, condition, or reduction is necessary due to the existence
of one or more of the following: j
(a) insufficient water supply or insufficient water treatment or
distribution capacity: I
(b) a State Department of Health Services order prohibiting new
water connections:
(c) insufficient sewer treatment or collection capacity:
(d) a Regional Water Quality Control Board order prohibiting new
sewer connections
(a) the applicant has failed to agree to reasonable terms and
conditions
ARTICLE IV I
i
MISCELLANEOUS CHARGES AND FEES RELATING
TO INDUSTRIAL DISCHARGERS, SOURCE CONTROL
PERMITTEES AND WASTEHAULERS
t
Section 4.01. Purpose and Scope. The purpose of this Ordinance
is to recover those costs incurred by the District (i) on account of industrial
dischargers' and wastehaulers' use of the District's facilities; (ii) when
administering the District's Source Control Program; and (iii) when performing
non-compliance sampling of industrial wastewater dischargers who have violated
the District's Wastewater Discharge Regulations or the terms and conditions of
the discharger's permit. Revenues derived under the provisions of this
Ordinance shall be used to defray the costs incurred by the District (i) on account
of such use of the District's facilities; and (ii) in performing these tasks.
Section 4.02. Administrative Fees and Charges Relating to
Permittees. Administrative fees and charges relating to permittees are hereby
established in the sum or sums as set forth in Table€F, below.
Section 4.03. Source Control Non-Compliance Fees. Source
control noncompliance fees are hereby established for dischargers' non-
compliance sampling and for self-monitoring and data reporting non-compliance,
in the sum or sums as set forth in Table€G, below.
Section 4.04. Special Purpose Discharge Permittees7 Charges for
Use. As authorized by Sections 305.5 and 305.6 of the District's Wastewater
Discharge Regulations, charges for use are hereby established for Special
Purpose Discharge Permittees, as set forth in Table GH, below
Section 4.05. Class I and Class II Permittees — Charges for Use.
As authorized by Sections 302.3, 302.6, 303.3 and 303.6 of the District's
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Wastewater Discharge Regulations, the charges for use are hereby established
for Class I and Class II Permittees as set forth in Table GH, below.
Section 4.06. Wastehauler Charges for Use. As authorized by
Sections 306.3 and 306.7 of the District's Wastewater Discharge Regulations ,
the charges for use are hereby established for wastehaulers as set forth in Table
Idl, below.
Section 4.07. Administrative Appeals.
A. Any user, permit applicant, or permittee affected by any
decision, action, or determination by the District may, within forty-five (45) days of
the date of mailing by the District of the initial invoice for fees imposed pursuant
to this Ordinance, request that the District reconsider imposition of such fees.
Following review of such a request, the District shall notify the user, permit
applicant, or permittee by certified mail of the District's decision on the
reconsideration request.
B. Any user, permit applicant, or permittee adversely affected
by the District's decision on the reconsideration request, may file an appeal in
accordance with Sections 617 and 619 of the District's Wastewater Discharge
Regulations.
TABLE €F
ADMINISTRATIVE FEES AND CHARGES
RELATING TO PERMITTEES
Permit Fees Charges
A. Class I Wastewater Discharge Permit $765.00/year
B. Class II Wastewater Discharge Permit $170.00/year
C. Special Purpose Discharge Initial Permit Issue $1,050.00/year
Nonrefundable Deposit for First 1 Million As Defined in
Gallons— New Permit Only Table GH
Special Purpose Discharge Permit Renewal $750.00/year
D. Wastehauler Discharge Permit $190.00/year
Wastehauler Fees Charges
F. Permit Decal Initial Issue $25.00
G. Permit Decal Replacement $50.00
H. Entry Card Initial Issue $50.00
1. Entry Card Replacement $100.00
J. After Hours Discharge— Prearranged $102.00/event
K. After Hours Discharge— Emergency $165.00.00/event
Administrative/Processing Fees Charges
L. District's Collection of Tax Data $100.00/permit
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i
M. District's Collection of Water Consumption Data $100.00/permit I
N. Appeal Hearing Filing Fee $400/appeal
i
I
1
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i
TABLE G€
INDUSTRIAL DISCHARGER, SOURCE CONTROL
AND NON-COMPLIANCE SAMPLING FEES
Charge
Cost of Processing and Sampling
Following a Minor Violation $225.00/event
Cost of Processing and Sampling
Following a Major Violation $500.00/event
Cost of Analysis Charge
Heavy Metals: $35.00/each
-Aluminum
-Antimony
-Arsenic
- Cadmium
- Chromium
- Copper
- Gold
- Lead
- Molybdenum
- Nickel
- Palladrum
- Platinum
- Selenium
-Silver
-Thallium
-Zinc
Mercury $78.00
601/602 $152.00
604 $223.00
606 $254.00
608 $523.00
610 $73.00
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TABLE€G (CONTINUED) 1
INDUSTRIAL DISCHARGER. SOURCE CONTROL
AND NON-COMPLIANCE SAMPLING FEES
Charge
612 $200.00
624 $355.00
625 $661.00
Ammonia Analysis as Nitrogen $ 21.00
Biochemical Oxygen Demand (BOD) $ 44.00
BOD and Suspended Solids (SS)Analysis $ 67.00
Chemical Oxygen Demand $ 44.00
Conductivity $ 15.00
Cyanide (Amenable) $ 70.00
Dissolved Mineral Solids $ 15.00
Gamma Radiation Determination $115.00
Gross Alpha and Beta Determination $ 50.00
Tritium Determination $ 50.00
Oil & Grease (Hexane Soluble Matter) $ 74.00
Oil & Grease (Mineral Partition) $ 74.00
Total Organic Nitrogen $ 48.00
pH $ 8.00
Fluoride $ 51.00
Suspended Solids (Total) $ 23.00
Suspended Solids (Total and Volatile) $ 44.00
Total Dissolved Solids $ 14.00
Total Sulfides $ 29.00
SELF-MONITORING AND DATA REPORTING
NON-COMPLIANCE
Cost of Processing and Issuing Significant
Non-Compliance Notification $165.00
Cost of Processing Annual SNC and Publication $260.00
ws&s-BWpj:2me60:0armne 28
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TABLE GH
CLASS I AND CLASS II PERMITTEES AND
SPECIAL PURPOSE DISCHARGE PERMITTEES
CHARGES FOR USE
Class I and II
Permit User FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08
Flow(') $316.38 $577.30 $637.55 $700.03 7$ 68.63
B.O.D. (") $216.13 $270.68 $288.50 $316.77 $347.81
S.S. (—) $207.35 $414.27 $432.14 $474.49 5$ 20.99
Special Purpose
Discharge
Permit FY 2003.04 FY 2004-05 FY 2005-08 FY 2006-07 FY 2007-08
Flow(') $316.38 $577.30 $637.55 $70D.03 7$ 68.63
BBD. nr)$246 43 $270 a $28&.50 $34fi.7a
S.S.. (T)s207.36 $444.2;tt
(') Flow Per million gallons of Flow
(") B.O.D. Per thousand pounds of Biochemical Oxygen Demand
("') S.S. Per thousand pounds of Suspended Solids
All properties located within Revenue Area No. 14 pay no annual service fees. District costs
relating to providing service to these properties are billed by OCSD directly to the Irvine Ranch
Water District,the local agency providing the local sewer service.
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TABLEIH
WASTEHAULER CHARGES FOR USE
Wastehauler Fees Charges
Charge for Use—Waste originating $0.05/gallon of truck capacity
-within Orange County;
-within service area: and
-within District Boundaries
Charge for Use-Waste originating $0.12/gallon of truck capacity
outside-Orange-County
-within Orange County:
-within service area: and outside
District Boundaries
Charge for Use - Waste originating $0.12/gallon of truck capacity
-Outside Orange County; and within
service area
Waste hauled from a source that is not wthin the District's service area is
prohibited unless authorized by the General Manager. Service area is defined as
any area the District has an agreement to serve.
ARTICLE V
MISCELLANEOUS
Section 5.01. Application of Ordinance. The provisions of this
Ordinance shall be in addition to the provisions of the District's Wastewater
Discharge Regulations for use of District's sewage facilities, including provisions
for payment of charges or fees related thereto; District's ordinance establishing
Fees Concerning Annexations of Territory to the District; and any other District
Ordinances and Resolutions not in conflict herewith.
Section 5.02. Exceptions. The provisions of this Ordinance shall
apply to all owners of properties within the District, including those properties
otherwise deemed exempt from payment of taxes or assessments by provisions
of the State Constitution or statute, including properties owned by other public
agencies or tax-exempt organizations, except as expressly provided herein.
Section 5.03 Out of Area Sewer Service Agreements. The District
is empowered to contract for the transport, treatment and disposal of
wastewaters originating within areas outside of the District if it is in the best
interest of the District to do so. These Out of Area Sewer Service Agreements
will establish fees and charges relative to the services provided by the District for
each individual agreement.
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The Board of Directors of the Orange County Sanitation District does further
hereby ORDAIN:
Section II. Severabilitv. If any provision of this Ordinance, or the application to
any person or circumstances is held invalid by order of Court, the remainder of
the Ordinance, or the application of such provision to other persons or other
circumstances, shall not be affected.
Section 111. Effective Date. This Ordinance shall take effect July 1, 20067.
Section IV. Repeal. Ordinance No. OCSD-2630B is hereby repealed.
Section V. Certification and Publication. The Secretary of the Board shall certify
to the adoption of this Ordinance, and shall cause a summary to be published in
a newspaper of general circulation as required by law.
WSBS-BRH:pj201660D420105 31
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Book Page 149
i
PASSED AND ADOPTED by a vote of not less than two-thirds of the Board of
Directors of the Orange County Sanitation District at a Regular Meeting
held
CHAIR, BOARD OF DIRECTORS
ORANGE COUNTY SANITATION DISTRICT
ATTEST:
i
SECRETARY, BOARD OF DIRECTORS
ORANGE COUNTY SANITATION DISTRICT
BRADLEY R. HOGIN, GENERAL COUNSEL
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Book Page 150
ADMINISTRATION COMMITTEE Meeting Date TOBtl.of Dir.
0,1"107 09/25I07
AGENDA REPORT rwn Nam IDem Number
ADM07-28
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: FEES FOR PROPERTIES ANNEXING TO THE DISTRICT
GENERAL MANAGER'S RECOMMENDATION
Adopt Ordinance No. OCSD-33, Adopting Fees, Revised Procedures and Policies
Concerning Annexation of Properties to the District and Repealing Ordinance
No. OCSD-29.
SUMMARY
• The current Ordinance governing annexations was adopted in 2004 and needs to be
updated to include procedures for deferring annexation fees for large annexations until
the time of a sewer connection to a public sewer.
• A new Ordinance has been prepared that now includes a section regarding deferring
payment of annexation fees.
PRIOR COMMITTEE/BOARD ACTIONS
The last Board action related to annexation fees was January 2004.
ADDITIONAL INFORMATION
The changes to the Ordinance are being requested to codify a procedure for the Orange
County Sanitation District (Sanitation District) Board and staff where annexations may
precede actual sewer connections. This procedure will require an action by the Board to
defer annexation fee collection until a sewer connection is made for the property.
There are still a few unincorporated areas within the County of Orange, also not within the
Sanitation District. These areas are all on septic tanks which are subject to failures;
recently leading to numerous residents requesting connections to public sewers. The
annexation process can cost over $8,000 and require 6 to 18 months to complete. Staff
has been working with residents in these areas to minimize their costs and time
associated with the conversion to a public sewer.
Fo,m No.V 1033 Hvimd NN1N7
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The ability to process larger annexations prior to septic tank failures offers two benefits.
The first benefit is a distribution of fixed administrative costs over a larger number of
residents. This is estimated to save each resident about $4,000. The second benefit is j
that pre-annexation can allow immediate connection to public sewers at any time the
property owner chooses.
The difficulty in proceeding with large annexations has been the immediate cost to
property owners for administrative annexation fees. This is especially true for residents
not planning to conned to a public sewer, or who are too far from a public sewer to 1
feasibly conned at this time. To date, the ability to delay these costs has reduced
opposition in the areas annexing. This is because it balances the needs for residents in 4
these areas wishing to immediately conned to a public sewer and residents that do not
have an immediate need to replace their septic tanks. [
JDR:LT:mw
Form No.q io23 Re,ieM'.OW01M7
Page 2
Book Page 152
ORDINANCE NO. OCSD-2-9 XX33
AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE
COUNTY SANITATION DISTRICT ADOPTING FEES, PROCEDURES,
AND POLICIES CONCERNING ANNEXATIONS OF TERRITORY TO
THE DISTRICT, AND REPEALING ORDINANCE NO. OCSD-2993
WHEREAS, the Board of Directors of the Orange County Sanitation District("District")
has previously adopted Ordinance No. OCSD4429-adopting fees, procedures, and
policies concerning annexations of territory to the District, which Ordinance is presently
in full force and effect; and
WHEREAS, for purposes of continued efficiency and effectiveness of the District's
operations, preservation of the public health and safety, and in order to continue the
provision of wastewater collection, treatment and disposal services, it is the intent, by
adoption of this Ordinance, to continue said procedures and policies in effect, without
interruption; and
WHEREAS, the Board of Directors of the District has received a management report,
including financial needs of the District, and wishes to reaffirm the policy of imposing
annexation fees when new territory is annexed to the District, and to adopt findings
supporting the amount of the fees adopted pursuant to this Ordinance.
The Board of Directors of the Orange County Sanitation District does hereby FIND:
A. That a comprehensive 30-year Master Plan of Capital Facilities, entitled "Collection,
Treatment and Disposal Facilities Master Plan— 1989", hereinafter referred to as the
"Master Plan", which includes detailed financial and engineering reports, was prepared,
approved, and adopted by the Boards of Directors of the Predecessor Districts in 1989,
setting forth and identifying the required future development of District facilities, including
the financial projections for providing sewer service to all properties within the individual
service areas of each of the nine Predecessor Districts; and
B.That the financial and engineering reports of the Master Plan were made available to
the public, both prior to and subsequent to the adoption of the Master Plan, and were
subject to noticed public hearings, all in accordance with the provisions of the California
Constitution and Government Code Section 66016, and other provisions of law; and
C. That the District, in 1997, as part of its maintenance and updating of its Master Plan,
undertook a comprehensive evaluation and study of its operational and financial needs
for the next 20 years, including a detailed assessment of all types and categories of
users; the demands on the system and capacity needs of the system to provide
necessary service to the multiple categories of users; the total costs of the existing and
future facilities in the system; and alternate methodologies for establishing fair and
equitable charges to connect to and gain access to the system. These comprehensive
planning, engineering, and financial studies led to the development of an updated
Comprehensive Master Plan of Capital Facilities, which was approved and adopted by
OCSD Resolution No. 99-21 of the Board of Directors on October 27, 1999; and
D. That the properties upon which the fees established by this Ordinance are levied, will,
subsequent to payment of an additional Capital Facilities Capacity Charge, be allowed to
discharge wastewater to the District's collection, treatment and disposal facilities; that
the costs of operating and maintaining said facilities have constantly increased due in
Book Page 153
i
part to increased regulatory requirements to upgrade the treatment process; and that f
said costs will exceed the amounts of any ad valorem tax revenues derived from said
property; and
i
E. That the District will not receive any tax exchange from said annexed properties
because of an agreement with the County of Orange under which there is no tax
exchange for newly-annexed property; and
1
F. That the annexation fees established here are an incident but not a condition of
development, payable only on request to receive service by the property owner for the
benefit of those persons on the property that use the service. The fees are not an
incident of property ownership, nor are they a property-related service having a direct
relationship to property ownership. Accordingly, the provisions of California Constitution
Article MID are not applicable.
G. That the annexation fees imposed by authority of this Ordinance do not exceed the 1
estimated amount required to provide access to the sewer service for which the fee is
levied, as provided in California Government Code Section 66013: and
H. That the fees established by this Ordinance will not necessarily result in an expansion
of facilities to provide for growth outside the existing service area. The collection of these
annexation fees will not result in any speck project, and will not result in a direct
physical change in the environment; and
I. That the fees adopted by this Ordinance are established upon a rational basis between
the fees charged each property that is annexing, and the service and facilities provided
to each annexed property by the District, a portion of which is necessary to replace the
loss of ad valorem property taxes to the State General Fund as a result of State
legislative action on September 2, 1992, and in subsequent years; and
J. That all fees and charges established herein have been approved by the District's
Board of Directors at a noticed public meeting, all In accordance with applicable
provisions of law; and
K. That the adoption of this Ordinance is statutorily exempt under the California
Environmental Quality Act from further environmental assessment pursuant to the
provisions of California Public Resources Code Section 21080(b)(8), and 14 California
Code of Regulations Section 15273(a).
NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, does
hereby ORDAIN:
Section 1: That the purpose of this Ordinance is to establish fees required to be paid by
property owners for the annexation of property to the District. Said fees are in lieu of
property taxes not allocated to the District while the property was outside of the District,
and in lieu of future property tax allocations through a Tax Exchange Agreement.
Revenues derived under the provisions of this Ordinance may be used for the
acquisition, construction, and reconstruction of the wastewater collection, treatment and
disposal facilities of the District; to repay principal and interest on debt instruments; or to
repay federal or state loans issued for the construction and reconstruction for said
Book Page 154
sewerage facilities, together with costs of administration and provisions for necessary
reserves.
Section 2: That the proponents of any application for annexation of any territory to the
District are requesting that the annexed property become a part of the District's
jurisdiction, and that by doing so, they become entitled to receive the benefits of having
access to the use of the extensive capital facilities system and to receive the District's
service, and shall, as a condition to securing approval of the Board of Directors of the
District to such annexation, agree to and comply with the following requirements:
A. Payment of all administrative costs incurred by the District in processing the
annexation.
B. Payment of annexation acreage fees, as follows: Beginning January 1, 2004, the sum
to be paid for annexation of territory to the District for which no tax exchange is
negotiated between all affected agencies is hereby fixed:
Consolidated Revenue Area Nos. 1-13: $4,235/acre
Revenue Area No. 14: N/A
C. The annexed territory shall be subject to the terms and conditions of all Ordinances
and Resolutions pertaining to fees for connection to the District's facilities and use of
said facilities, including but not limited to, industrial discharge permit fees, capital
facilities capacity charges, and sewer service user fees.
D. The annexed territory shall be annexed into an appropriate local sewering agency, or
obtain the written approval of the designated local sewering agency, such as a city, for
the purpose of obtaining access to and use of the local sewer system, including pumping
stations and force mains, which connects to the District's facilities and system.
E. The territory, upon annexation, shall be subject to all ad valorem taxes required for
the retirement of the existing and future bonds of the District, and all other applicable ad
valorem taxes of the District.
F. In the case of territory outside of the District's adopted sphere of influence that is
provided service pursuant to District Resolution 99-05, Section 2(as the same may be
amended from time to time),the following areas shall not be subject to fees equivalent to
annexation fees:
• That portion of land that is subject to a permanent easement for open space
preserve or dedication for open space preserve. This exception shall not apply
to areas that are internal to developments. Portions of property to be used for
public and private parks intended for recreation purposes shall be subject to the
fees. Individual open space areas that are surrounded or substantially
surrounded by development shall be subject to the fees,
• Land that is designated for use as a golf course, except that all portions of golf
course land which are utilized for access road, parking, and clubhouse shall be
included.
• Land designated for use as a flood control or water quality basin.
Book Page 155
If the use of any portion of territory previously exempted from payment of the fees
hereunder is changed to a non-exempt use, the then-owner of that portion of the territory
shall pay the fees equivalent to annexation fees at the amount then in effect for that
portion of the territory that is no longer exempt.
i
Section 3: The General Manager Is hereby authorized and directed to establish
procedures and fees for processing annexation of territory to the District. Said
procedures may include provisions for collection by the District of fees charged by other
local and state agencies involved in the annexation process for submittal to said
agencies by the District on behalf of the annexation proponent. 1
The District's Staff is hereby directed to provide the proponents of any proposed ;
annexation a copy of procedures and fee schedules established pursuant to the
authority of this Section.
Not withstanding the foregoing, upon application of any property owner seeking
permission to connect to the District's system. the District Board of Directors may defer
payment of the applicable annexation fees until such time as the applicant actually
connects to the District's system.
Section 4: That the Staff be directed to transmit to the Orange County Local Agency
Formation Commission a certified copy of this Ordinance.
Section 5: If any of the provisions of this Ordinance, or the application to any persons or
circumstance are held invalid by order of Court, the remainder of this Ordinance, or the
application of such provision to other persons or other circumstances, shall not be
affected.
Section 6: That the provisions of this Ordinance shall become effective thirty(30) days
after adoption and shall apply to all annexations to the District on or after said date.
Section 7: That Ordinance No. OCSD-249 is repealed effective upon the effective date
of this Ordinance.
Section 8: That the Secretary of the Board shall certify to the adoption of this Ordinance
and shall cause a summary to be published in a newspaper of general circulation as
required by law.
PASSED AND ADOPTED by the affirmative vote of not less than two-thirds of the Board
of Directors of the Orange County Sanitation District at a regular meeting held
20067.
Chair, Board of Directors
Orange County Sanitation District
Book Page 156
ATTEST:
Sesretar�Clerk of the -Board of-Directers
Orange County Sanitation District
BRADLEY R. HOGIN
GENERAL COUNSEL
Book Page 157
ADMINISTRATION COMMITTEE Meetlng Date To Bd.of W.
04/11/07
AGENDA REPORT Item Number Ian Number
ADM07-29
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: 2007-08 DISTRICT BUDGET UPDATE
GENERAL MANAGER'S RECOMMENDATION
Informational item.
SUMMARY
For continued discussion of the update to the OCSD 2006-07 and 2007-08, line item
detail for the operating budget has been included.
The budget will be presented for adoption at the June 27, 2007 Board meeting.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
N/A
ATTACHMENTS
1. 2007-08 Budget Development Operating Budget Detail
JDR:LT:lc
kWM'aeatlelCom,rtitlBMWUmin rommm.ewaoTm-2elow�e ewes oeul ea
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Book Page 158
FT 2007-08 BUDGET UPDATE-OPERATING BUDGET DETAIL
Adopted Proposed Change$ Change%
Salaries.Wages.&Benefits
a Salary and Wages 55,446.900 55.708,100 261,200 0%
b Retirement Costs 12,824,160 12,972,560 148,400 1%
c Group Insurance 6,852,800 6,851,400 (1,400) 0°h
d Other 774,600 792,500 17,900 2%
1)TOTAL SALARIES,WAGES AND BENEFITS 75,898,460 76,324,560 426,100 1%
Chemicals
a Disinfection 9.971,000 9,007,300 (963,700) -10%
b Coagulants 6,327,200 5,913,460 (413,740) -7%
c Odor Control 6,644.700 5.914.600 (730,100) -11%
d Other Supplies and Tools 2,449,980 2,251,980 (198,000) -8%
2)TOTAL CHEMICALS AND OTHER SUPPLIES 25,392,880 23,087,340 (2,305,540) -9%
Solids and Waste Disposal
a Solids Removal 13,370.000 14,302,450 932,450 7%
b Other Residual Solids and Waste 6501000 2,450,000 1,800,000 277%
Total Solids and Waste Disposal 14,020,000 16,752,450 2,732,450 19%
Other Contractual Services
c Groundskeeping,Janitorial and Security 1,064,000 1,192,100 128,100 12%
d Outside Lab Services 8 Oxygen Plant Ops 597,000 510,500 (86,500) -14%
e County Service Fee 474,000 474,000 0 0%
f Temporary Services 400,480 306,390 (94,090) -23%
g Other 1,352,000 1.878,000 526,000 39%
Total Other Contractual Services 3,887,480 4,360,990 473,510 12%
Professional Services
h Legal,Audit and Accounting Services 838,980 918,580 79,600 9%
i Engineering and Environmental Consulting 711,000 789,900 78,900 11%
j Technology Support and Software Consulting 387,060 347.360 (39.700) -10%
k Advocacy Efforts 291,000 249,000 (42,000) -14%
1 Other 793,200 783,100 (10,100) -1%
Total Professional Services 3,021,240 3,087,940 66,700 2%
3)TOTAL CONTRACTUAL AND PROFESSIONAI 2D,928,720 24,201,380 3,272,660 16%
Repairs and Maintenance
a Repairs and Maintenance-Services 4,156,850 3,632,6DO (524,250) -13%
b Repairs and Maintenance-Materials 4,559,980 3,922,560 (637,420) -14%
c Service Maintenance Agreements 1,659,040 1.499.690 (159,350) -10%
4)TOTAL REPAIRS AND MAINTENANCE 10,375,870 9,054,850 (1,321,020) -13%
Utilities
a Electricity 6,417,640 7,033.240 615,600 10%
b Natural Gas 1,041,100 1,279.000 237,9D0 23%
c Water 1,480,180 1,352,520 (127,660) -9%
d Telephone 199,340 218,500 19,160 10%
5)TOTAL UTILITIES 9,138,260 9,883,260 746,000 8%
Research and Monitoring
a Environmental Monitoring 756,000 690,000 (66.000) -9%
b Air Quality Monitoring 172,000 226,000 54,000 31%
c Research 496,390 589,440 93,050 19%
6)TOTAL RESEARCH AND MONITORING 1,424,390 1,505,440 81,050 6%
Book Page 159
FY 2007-08 BUDGET UPDATE-OPERATING BUDGET DETAIL
Adopted Proposed Change $ Change%
Other Expenses
a Capital Grants to Member Agencies 2,500,000 2.500.000 0 0%
It, Property and General Liability Insurance 1,998,2DO 1,998,200 0 0%
c Operating Contingency Funds 1,137,800 1,137,800 0 0%
d Administrative Expenses 1,259,080 1,505,740 246.660 20%
e Training and Meetings 1,430,900 1,419,140 (11,760) -1°/
1 Printing and Publication 5522M 636,730 84,450 15%
g Regulatory Operating Fees 446,OD0 518,000 72,DDO 16%
h Other Operating Supplies 406,390 389.160 (1923m -5%
7)TOTAL OTHER EXPENSES 9,732,650 10,104,770 372,120 4%
SUB-TOTAL-OPERATING BUDGET 162,891,230 154,161,600 1.270,370 1%
Cost Allocation
Salaries (8,018,136) (7,503,400) 514,736 -6%
Expenses (9,270,964) (8,675,800) 595,164 -6%
8)TOTAL COST ALLOCATION (17,289,100) (16,179,200) 1,109,900 B%
TOTAL OPERATING BUDGET 136,602,130 137,982,400 2,380,270 2%
Book Page 160
FY 2007-08 BUDGET UPDATE—OPERATING BUDGET DETAIL
Adopted Proposed
1) SALARIES,WAGES AND BENEFITS $75.9 $76.3
1a) Salary and Wages $55.4 $55.7
1b) Retirement Costs $12.8 $13.0
District employees are members of the Orange County Employees' Retirement
System (OCERS). Preliminary information from OCERS indicates that an
increase in rates is expected. The employer's required contribution rate has
been increased from 20.15% to 20.87%. In addition, the District pays 3.5% on
behalf of each employee.
1c) Group Insurance $6.9 $6.8
Includes Medical, Dental, Vision, Life Insurance, Medicare, Disability.
1d) Other $0.8 $0.8
This category includes Workers' Compensation, Tuition Reimbursement, and
Uniform Rental. The proposed appropriation of$559,000 for the workers'
compensation item is needed to maintain the recommended level of reserve
within the workers' compensation self-insurance fund.
2) CHEMICALS AND OTHER SUPPLIES $25.4 $23.1
2a) Disinfection $10.0 $ 9.0
The largest cost related to Disinfection is for chemicals, specifically bleach.
Sodium Hypochlorite (Bleach) —Over 96%of the bleach is used for effluent
disinfection. The remaining bleach usage is for odor control, disinfection of
plant water, and the control of filamentous organisms in activated sludge in the
secondary treatment process. It is anticipated that the District will use 11.69
million gallons in FY 2007-08. While this reflects an increase in projected use,
the proposed disinfection budget for bleach of$8.5 million is less than what was
adopted due to a lower than expected unit cost.
Sodium Bisulfite—Sodium bisulfite is used for dechlorination of outfall effluent
to ensure that no residual chlorine is discharged into the ocean. It is anticipated
that the District will use 640,000 gallons of sodium bisulfate in FY 2007-08, for a
proposed budget of$461,000.
1
Book Page 161
FY 2007-08 BUDGET UPDATE— OPERATING BUDGET DETAIL
Adopted Proposed
2b) Chemical Coagulants $6.3 $6.9
Anionic Polymer—Anionic polymer is added to the primary clarifiers in
combination with ferric chloride to enhance primary clarifier performance. The
proposed budget for anionic polymer is $0.3 million.
Cationic Polymer—Cationic polymer is added to digested sludge prior to
dewatering in order to improve the sludge and water separation process.
Cationic polymer is also added to the waste activated sludge dissolved air
flotation thickeners (DAFTs)to improve solid(s) coagulation. Solution polymer
will be used in the DAFTs at Plant No. 1 while Mannich polymer will be used in
dewatering at Plant No. 1. Mannich polymer is used in both the DAFTs and
dewatering at Plant No. 2. Approximately 19.5% of total polymer used for both
plants is solution, and the remaining 81.5% of polymer used is Mannich. The
total proposed budget for cationic polymer is $1.6 million.
Ferric Chloride— Ferric chloride is an iron salt which is currently used to
increase the solids removal efficiencies in the primary treatment process and to
control digester hydrogen sulfide. As the amount of ferric chloride is optimized
in primary treatment an additional amount of ferric chloride will be added to the
digesters to control hydrogen sulfide. The projected ferric chloride usage for FY
2007-08 is 8,200 dry tons, a 3.5% decrease in estimated usage from the FY
2006-07 budget. The proposed budget for ferric chloride is $4.0 million,
2c) Odor Control $6.6 $5.9
Hydrogen Peroxide— Hydrogen peroxide is principally used in the trunk
sewers for control of sulfides, and some is used in the foul air scrubbers to
control hydrogen sulfide. Sulfide and odor control is dependent upon several
factors including water temperature, pH of the water and level of upstream
treatment and maintenance. Assuming FY 2006-07 environmental conditions
with unchanged levels of upstream chemical treatment, hydrogen peroxide
usage for FY 2007-08 is estimated at 1.23 million gallons at a cost of$1.5
million ($1.4 million and $0.1 million for Plants No. 1 and No. 2 respectively).
Sodium Hydroxide (Caustic Soda)—Sodium hydroxide (caustic soda) is used
in the foul air scrubbers and in the Districts' main trunk lines tributary to the
treatment plants. It is estimated that the District will use 594 dry tons of caustic
soda in the scrubbers and 395 dry tons in the trunk lines. In treating the trunk
sewers for sulfides, it has been determined that 40% of the usage and cost
applies to the treatment plant and the remaining 60% applies to the collection
facilities. For FY 2007-08, staff projects the usage for the treatment plant to be
752 dry tons and the usage for the collection system to be 237 dry tons for a
total caustic budget of$503,000.
Murlatic Acid —Muriatic Acid (hydrochloric Acid) is used to backwash the
media In the foul air scrubbers, associated piping, and pumps. This cleans
deposits caused by hard water, sulfides from the reaction with the foul air, and
caustic soda used in the scrubbing process. The projected usage for FY 2007-
08 is 40,000 gallons at a cost of$36,000.
2
Book Page 162
FY 2007-08 BUDGET UPDATE— OPERATING BUDGET DETAIL
Odor Neutralizers— Odor neutralizers are used in the solids processing
facilities of both plants to mask the odors from the processed biosolids as they
are loaded into the trucks for reuse. Over 63% of the chemical neutralizer is
used at Plant No. 2. During FY 2007-08, the anticipated usage is 40,000
gallons at a cost of$31,500.
Peroxide Regenerated Iron for Sulfide Control (PRISC)
This covers chemicals, tanks, pumps and servicing for continuous treatment for
odor control for 3 trunklines. It includes 3 dosing locations for ferrous chloride
and 3 dosing locations for hydrogen peroxide. Estimated usage for FY 2007-08
is 1.85 million gallons for a total projected cost of$2.9 million.
Magnesium Hydroxide—Trunklines
This includes chemicals for continuous odor control treatment for the Newport
Beach trunkline, the chemical, tank, pumps and equipment servicing. The total
projected cost is $663,000.
Adopted Proposed
3) CONTRACTUALIPROFESSIONAL SERVICES $20.9 $24.2
3a) Solids Removal $13.4 $14.3
The proposed FY 2007-08 biosolids hauling and land application budget is
$14.3 million.
In FY 2007-08, biosolids production at Plant No. 1 is assumed to increase by
30% as a result of completing the secondary treatment plant. Plant No. 2
biosolids production is expected to remain similar to FY 2006-07. The total
estimated biosolids production is 260,590 wet tons for FY 2007-08. The total
estimated budget for biosolids reuse will increase by 12%, to $14.3 million.
This significant increase is due to the anticipated change in land application
facilities, the subsequent unit price increases at these facilities, and completion
of the secondary plant expansion at plant 1. The cost per ton for biosolids
reuse is estimated to be $55 for FY 2007-08.
3b) Other Residual Solids and Waste $0.7 $2.5
The other residuals solids and waste category includes disposal costs for grit
and screening waste, digester cleaning waste, and hazardous materials. The
FY 2007-08 budget is proposed to increase from the original estimate by $1.25
million resulting from increased costs for disposal of digester waste. The
adopted budget was prepared assuming the District would have consolidated
contracts for biosolids and digester disposal. However, it has been determined
that the material removed during digester cleaning is not at a level that can be
used for biosolids recycling. Consequently, a separate contract is needed for
digester waste disposal.
3c) Grounds keeping/Janitorial/Security $1.1 $1.2
This line item represents the total of the District's contracted service accounts
for grounds keeping,janitorial, and security services.
3
Book Page 163
FY 2007-08 BUDGET UPDATE— OPERATING BUDGET DETAIL
Adopted Proposed
3d) Outside Lab Services & Oxygen Plant Operations $0.6 $0.5
The District contracts out certain laboratory services that are not cost efficient to
perform in-house. Examples include bio-solids testing and hi-resolution mass
spectroscopy. The first requires registration and certification which is cheaper to
contract out as opposed to hiring and obtaining the skills required to do in-house.
The second would require over $1 million in equipment and facilities to complete
in-house as opposed to the $20,000 to $30,000 required to complete through an
outside laboratory. OCSD is required to purchase oxygen for plant operations
during plant facility shutdowns which result from construction activity.
3e) County Service Fee $0.5 $0.5
The County Service Fee is the fee charged by the County of Orange for the
inclusion of the District's sanitation fees on the County of Orange Property Tax
Bill and for the collection of these fees by the County on behalf of the District.
3f) Temporary Services $0.4 $0.3
Temporary services are used agency-wide as a stop gap measure for
unplanned terminations of essential staff members as well as for short term
projects that require additional staffing resources.
3g) Other $1.4 $1.9
Other smaller contractual services are collectively reported within this line item.
The $500K proposed increase is for costs related to the groundwater
replenishment program which will now treat for NDMA contaminants.
3h) Legal, Audit and Accounting $0.8 $0.9
Legal services are the services provided by General Counsel. Audit and
accounting services represent the cost for the District's independent annual
financial audit and contracted internal auditing services as well as required
program audits.
31) Engineering & Environmental Consulting Services $0.7 $0.8
Engineering services are generally required to support the Districts regional
assets and services. Environmental consulting services support the ocean
monitoring program, the fats, oil, and grease inspection and monitoring
program, and watershed management initiatives.
3j) Technology Support and Software Consulting $0.4 $0.3
These support costs are needed in order to maintain the District's software
applications that include human resources, payroll, general ledger and financial
reporting, budgeting, fixed assets, accounts payable, accounts receivable,
purchasing, inventory, and contract administration processes.
3k) Advocacy Efforts $0.3 $0.2
Funds are for promoting the District's interests at the state and federal levels.
31) Other $0.8 $0.8
Other smaller professional services are collectively reported within this line.
4
Book Page 164
FY 2007-08 BUDGET UPDATE — OPERATING BUDGET DETAIL
Adopted Proposed
4) REPAIRS AND MAINTENANCE $10.4 $9.1
4a) Repairs and Maintenance—Services $4.2 $3.6
The activated sludge facility at Plant 1 uses diffusers to supply aeration to the
basins. The diffusers are operating at 50% efficiency. In FY 2007-08, the
diffusers will be replaced at an estimated cost of$1 million, and this will reduce
future power costs by approximately $822,000 annually.
Four CenGen engine overhauls to preserve electrical reliability for the treatment
plants are budgeted at $1 million.
4b) Repairs and Maintenance—Materials $4.6 $3.9
Other 2007-08 scheduled maintenance includes: Amount
Mechanical maintenance base budget $1,716,000
Electrical maintenance base budget $900,000
CenGen catalytic oxidizer media replacement $350,000
Rehabilitation digesters $150,000
Rehaul belt filter presses $180,000
Total Other Maintenance $3,296,000
4c) Service Maintenance Agreements $1.7 $1.6
$1.2 million of these resources are allocated for computer-related hardware /
software maintenance and licensing agreements in the following categories:
Service Agreements Amount
General/Enterprise Support $334,000
Computing Management Support $205,000
Financial Support $154,000
Process Support $100,000
Enterprise upgrade to Microsoft Enterprise License $ 96,000
Engineering Tools $ 78,000
Software Development $ 73,000
GIB Support $ 66,000
Safety/Security Support $ 45,000
Total Service Agreements 1,161,000
5
Book Page 165
FY 2007-08 BUDGET UPDATE— OPERATING BUDGET DETAIL
Adopted Proposed
5) UTILITIES $9.1 $9.9
6a) Electricity $6.4 $7.0
The estimated consumption and resulting costs for electrical energy purchased
from Southern California Edison for FY 2007-08 is shown below and totals
$6,398,000. This budgetary number contains no contingency and excludes the
electricity requirements of all pump stations. The FY 2007-08 proposed budget
is 15% higher than the FY 2006-07 budget. The budget reflects an increase in
energy imports because of reduced electrical power production at the District's
Central Generation Facilities(CenGen). CenGen production has been reduced
to meet new air emissions limits. The estimated consumption values are based
on the actual values experienced for FY 2006-07 as shown the following table:
FY 2007-08
Estimated Proposed Budget
Item Consumption Cost per kWh Value
(kWh/year)
Plant No. 1 Energy Charges 22,400,000 1 @$0.095 $2,128,000
Plant No. 2 Energy Charges 19,000,000 @$0.085 $1,615,000
Plant No. 1 Demand Charges $ 942,000
Plant No. 2 Demand Charges $ 442,000
Plant No. 1 Fixed Charges $ 400,000
Plant No. 2 Fixed Charges $ 360,000
Plant No. 1 Control Center 0 @$0.13 $ 1,000
Total Plants $5,888,000
Laboratory 3,000, 0 @$0.13 $ 390,000
Administration Building 920,00006 @$0.13 $ 120,000
Total $6,398,000
5b) Natural Gas $1.0 $1.3
The District's budget for natural gas is$1,279,000 for FY 2007-08, based on
projected use at the predicted natural gas commodity prices. The estimated
natural gas to be purchased from SoCalGas and a gas marketer for Treatment
Plant Nos. 1 and 2 for FY 2007-08 is shown below. The "core subscription" is
natural gas purchased directly from the Gas Company and used mainly for
building heating. The natural gas used for central generation is purchased from a
gas marketer, Occidental Energy, and transported through the Gas Company
conveyance system at an average cost of$0.93ftherm.
6
Book Page 166
FY 2007-08 BUDGET UPDATE—OPERATING BUDGET DETAIL
FY 2007-08
User Estimated Cost Per Total Cost
Consumption Therm
Plant No. 1 Core Subscription 80,000 therms $1.00/therm $ 80,000
Plant No. 1 Central Generation 70,000 therms $0.93/therm $ 65,000
Plant No. 2 Core Subscription 18,000 therms $1.00ttherm $ 18,000
Plant No. 2 Central Generation 1,200,000 therms $0.93ttherm $1,116,000
Total 1,368,000 therms $1,279,000
5c) Water $1.5 $1.4
Green Acres Project(Gap)Water—GAP water is made up of secondary
treated effluent from the District that is further treated by the Orange County
Water District. GAP water is significantly less expensive then potable water
and is used in the process wherever possible. The major uses of GAP water
include cooling water, solids handling, and landscaping. The projected budget
for FY 2007-08 is $880,000 and includes a 17% decrease in usage and a 25%
increase in the rate.
Potable Water—The potable water budget includes the water supplied by the
City of Fountain Valley for Plant No. 1 and the City of Huntington Beach for
Plant No. 2. Approximately 5% of the potable water at Plant No. 1 is used for
domestic uses and less than 1% is used for irrigation. The majority of the
irrigation at both plants uses reclaimed water. Less than 1% of the potable
water used at Plant No. 2 is for domestic uses due to the relatively small
number of employees at Plant No. 2. Plant 1 usage is estimated to increase by
5% and Plant 2 usage is estimated to increase by 2%; there is an anticipated
increase in rates of 5%for each plant. The proposed total potable water cost
for FY 2007-08 is $464,000.
5d) Telephone $0.2 $0.2
The telephone expense is essentially unchanged
7
Book Page 167
FY 2007-08 BUDGET UPDATE— OPERATING BUDGET DETAIL
Adopted Proposed
6) RESEARCH AND MONITORING $1.4 $1.5
6a) Environmental Monitoring $0.8 $0.7
The budget line item for "Environmental Monitoring" includes costs associated
with the District's National Pollution Discharge Elimination System (or NPDES)
permit-required ocean monitoring program. This program consists of three
elements:
Core Monitoring represents routine, long-term sampling that is used to
determine compliance with permit criteria and to determine changes in the
coastal ocean over time.
Strategic Process Studies are non-routine studies that address specific ocean
processes or emerging issues that are not readily answered by the Core
Monitoring program element. These studies are developed by District staff
and approved and incorporated into our permit by the US Environmental
Protection Agency, Region IX and Regional Water Quality Control Board,
Region 8.
Regional Monitoring occurs every 4-5 years and samples the coastal ocean
from Point Conception in the north to the US-Mexico Border in the south.
This is a cooperative, multi-agency effort; most recently, it included 65 other
agencies and organizations.
In addition to the funds needed to conduct the permit-required ocean
monitoring program, Environmental Monitoring also includes operating funds
for the District's ocean monitoring vessel, the MN Nerissa."
6b) Air Quality Monitoring $0.2 $0.2
Periodic monitoring and analysis of air emissions requires testing from various
sources including the central generation facilities, validation of emissions from
continuous monitoring equipment, source testing after CIP installation/
modification (i.e. P1 trickling filters, P1 primary basin install and modifications,
etc.). Periodically, there is a requirement to test the waste gas flares.
6c) Other Research $0.5 $0.6
OCSD contributes annually to research organizations such as the Southern
California Coastal Water Research Project and the Water Environmental
Research Foundation.
8
Book Page 168
FY 2007-08 BUDGET UPDATE — OPERATING BUDGET DETAIL
Adopted Proposed
7) Other District Expense $9.7 $10.1
7a) Cooperative Projects $2.5 $2.5
The Cooperative Projects Grants Program co-funds projects sponsored by a
member agency to eliminate or reduce inflow and/or infiltration of storm water
and groundwater from local wastewater collection lines and to repair or replace
poor performing, aging local wastewater collection system infrastructure. The
District will fund projects by contributing up to fifty percent matching funds
against a member agency's contribution to an eligible project. All member
agencies of the District are eligible to participate in this program. The annual
cash flow budget is $2.5 million with a cap of$7.5 million for total outstanding
obligations.
7b) Property and General Liability Insurance $2.0 $2.0
The District's outside excess general liability insurance coverage is $25 million
with a self- insurance retention of$250,000.
The District's property insurance coverage of$1 billion for perils other than
flood and fire and $175 million for flood is subject to a self-insurance retention
of 5 percent per unit of insurance up to $25,000 for fire and $100,000 for flood.
The District is fully self-insured for earthquake.
The proposed appropriation of$2.0 million is needed to maintain the
recommended level of reserve within the general liability and property self-
insurance fund.
7c) Operating Contingency $1.1 $1.1
These funds are centrally budgeted and expended at the discretion of and by
specific approval of the General Manager. These funds are used to support
unanticipated District needs or requests of the Board.
Since the operating budget lapses at the end of each fiscal year, funds need to
be set aside for contacts, purchases, commitments, and other legal obligations
that have been incurred prior to June 30 but the goods or services have not
been delivered until after June 30 in the new budget year.
9
Book Page 169
FY 2007-08 BUDGET UPDATE—OPERATING BUDGET DETAIL
Adopted Proposed
7d) Administrative Expenses $1.3 $1.5
Administrative expenses include small, non-operating expenses collectively
reported within this one line item.
Small Computer Items $0.5 $0.6
In 1999, OCSD consolidated the budget for all non-CIP Office Automation and
Small Computer items into a single line item.
Memberships $0.4 $0.3
The General Manager has reviewed all membership requests for necessity and
redundancy and has limited this amount to a responsible level. OCSD's largest
membership costs are for district-wide participation in groups such as the
National Association of Clean Water, the Orange County Business Council, the
California Association of Sanitation Agencies, the Southern California Alliance
of Publicly Owned Treatment Works, the Association of California Water
Agencies, and the Center for Demographic Research.
Office Supplies $0.1 $0.1
Office supplies include such items as envelopes, letterhead, notebooks,
calendars, business cards, pens, and pencils, etc.
Postage $0.1 $0.3
This line item is for postage costs associated with all District mailings and
required notices.
Other $0.2 $0.2
Other smaller expenses collectively reported within this one line item.
7e) Training and Meetings $1.4 $1A
Training $1.0 $1.0
An amount equal to approximately 2% of the Regular Salaries budget is
allocated to Training. Training activities are coordinated though the Human
Resources Division. This category includes ongoing technical training and
materials for staff; expansion of the supervisory training program, required
training for computerized plant monitoring and control systems and training to
allow for a more adaptive and flexible work force.
Meetings $0.4 $0.4
The General Manager has reviewed all meeting request budgets for necessity,
duplication, and redundancy and has limited this amount to a responsible level.
10
Book Page 170
FY 2007-08 BUDGET UPDATE - OPERATING BUDGET DETAIL
Adopted Proposed
7f) Printing and Publishing $0.6 $0.7
In-House Publishing $0.5 $0.5
Although the budget provides for some outside printing costs, the majority of
OCSD printing activities are completed In-house, reflecting an expanded
management information system, administrative requirements, and a
continuing demand by the public and regulatory agencies for information.
These activities including printing of District's maps, brochures, Board reports
and agenda items, budget materials, etc.
7g) Regulatory Fees $0.5 $0.5
This item is for payments to the South Coast Air Quality Management District,
the County of Orange, and the State Water Resources Control Board for permit
and operating fees.
7h) Other $0.4 $0.4
Other smaller expenses collectively reported within this one line item, including
freight charges and miscellaneous equipment rentals.
Adopted Proposed
6) COST ALLOCATION ($17.3) ($16.2)
This represents direct and indirect labor, benefits, materials, and services
charged to the Capital Improvement Program (CIP)for which the related work
was performed.
11
Book Page 171
ADMINISTRATION COMMITf EE m4a19oatr ru etl.or ar.
o trg D
AGENDA REPORT 1ADM00 1en N°""'
No m b
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: FY 2007/08 BENEFITS PROGRAM RENEWAL COSTS
GENERAL MANAGER'S RECOMMENDATION
Information only.
SUMMARY
The total cost of insurance coverage will increase approximately 13.3% for the
forthcoming fiscal year. Staff has been working with the insurance broker, Alliant
Insurance Services, to determine renewal rates so that appropriate funds are budgeted
for the increases. Staff anticipates the following premium increases:
Insurance Provider Rate Change Comments
Medical Blue Cross 17.5%
Medical Kaiser Permanents 21.9%
Dental Della Dental 9.8% 2-year rate guarantee
Vision VSP -4.7% 4-year rate guarantee
EAP MHN/CSAC 10.0% Estimate-final rate available in May
Llfe/Disabifity MetLife 6.3% 3-year rate guarantee
The total cost increase for FY2007/2008 is $1,076,938, which is proportionally shared
as follows:
• OCSD cost: $ 871,411
• Employee cost: 205,527
• Total $1,076,938
Historical Summary:
Anticipated Rate Rate Increase Pate Increase Rate Increase
Increase FY 07108 1 FY 06107 FY 05106 FY 04105
Blue Cross 17.5% 8.8% 4.0% 3.0%
Kaiser 21.9% -0.3% 4.7% 16.5%
Dena Dental 9.8% 0.0% 1.5% 1 -4.2%
Page 1
Hook Page 172
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
Staff and Alliant Insurance Services have been working together to determine how
medical plan benefits can be modified to maintain a competitive benefits program while
bringing plan benefits in line with industry trends. Prescription drugs remain the fastest
growing component of healthcare costs, reflecting double digit increases since 1998;
this also continues to be the most widely used employee health benefit. Alliant
Insurance Services provided benchmarking information demonstrating that OCSD's
pharmacy co-pays are 50% below the national average. Additionally, benchmarking
information illustrated that OCSD's HMO office visit co-pay is 50% below that of other
similarly-situated Southern California public sector agencies.
ALTERNATIVES
Alliant Insurance Services presented alternative renewal options which more closely
reflect trends in pharmacy and HMO office co-pays. These options would potentially
reduce the total Blue Cross medical premium. Changes to the benefits plan would be
subject to the meet and confer process.
JDR:LT:lc
Form No.ow-192.e nwieea...1.7
Page 2
Book Page 173 I,
ADMINISTRATION COMMITTEE meeting Date To ea or Dtr.
04/11/07 04/25/07
AGENDA REPORT Item Number IbynNumher
eM NU 31
Orange County Sanitation District
FROM: Jim Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: PROPERTY TAX CREDIT ADJUSTMENTS FOR CLASS I AND
CLASS II PERMITS
GENERAL MANAGER'S RECOMMENDATION
Informational Item.
SUMMARY
Currently the Sanitation District's rate structure calculates Class I and Class II permittee
rates without taking into consideration property tax revenues received from the related
parcels. Ordinance No. OCSD-01 then provides for a tax credit equal to the annual ad
valorem tax basic levy allocated to the District for the property for which a permit has
been issued by the District to be given to the permittee at year end. This tax credit is
applied at the end of the year when the actual cost is determined based on actual flow,
BOD, and SS discharges, and reconciled against the estimated payments made during
the year by the permittee.
Beginning with the proposed rate structure for FY 2008-09, staff will be proposing new
permittee rates net of property tax revenues received. This methodology is consistent
with the rest of the Sanitation District's current rate structure for all other customers. By
taking into consideration property taxes received by the District in deriving the new
permittee rates for FY 2008-09, the need to provide a property tax credit will no longer
exist.
1970 to 1997-98 — rates based upon gross revenue needs allowing line item tax
credit
1998 to 2004—rates incorrectly based upon net revenue needs while allowing
line item tax credit
2005 to present— rates corrected based upon gross revenue needs allowing line
item tax credit
The financial cost to the Sanitation District of implementing the staff recommendation
will be minimal. A notice of the proposed rates and methodology change will need to be
mailed to every Permit User informing them of the change that is proposed and the
rates that are projected for 2008-09. Of course, the Board will consider these rates
separately each year along with the annual sewer service fee rates.
Book Page 174
The cost to some Permit Users will be significant. A schedule that estimates the total
annual cost to each Permit User will be provided at the meeting.
There will be additional, but unquantified costs to the Sanitation District from explaining
these costs to various Permit Users.
PRIOR COMMITTEE/BOARD ACTIONS
On July 1, 1998, the Board adopted Ordinance No. OCSD-01, An Ordinance of the
Board of Directors of Orange County Sanitation District, Adopting Wastewater
Regulations as a Reenactment of the Regulations Adopted and In Effect By
Predecessor Districts.
ADDITIONAL INFORMATION
Since the inception of the Permit User Fee program in 1970, users of the District's
system that discharge high volumes or high strength wastewater have been required to
obtain a discharge permit (either a Class I or Class II Permit) and to pay fees directly to
the District for the cost of service. The fees are initially calculated on the basis of actual
flow, BOD and SS discharged to the sewer and subsequently reduced by the actual
property taxes they have paid to the District. This practice was intended to ensure that
these users paid their actual cost of service through a combination of user fees and
property taxes.
Beginning in 1998-99, an additional step was added to reduce the parameter rates even
more. The intent of this adjustment was to make the Permit User parameter rates
equivalent to those implicit in the annual flat rate sanitary sewer service user fee.
These individual rates are the de facto rates paid by all of the users who do not have
Source Control permits.
From 1998-2004 these reduced de facto rates were presented to the Board for adoption
as Permit User rates. There are approximately 500 Permit Users that pay for sewer
services based upon their actual flow, BOO and SS discharge to the sewer. The
individual user rate (reduced de facto rate) that was adopted from 1998-99 through
2004-05 for each of these parameters was calculated based upon net revenue
requirements for operations and maintenance (O&M) and the validated capital
improvement program (CIP), after subtracting other projected revenues, including
property taxes, from our total revenue and spending requirements. The issue with using
these rates came from the Ordinance that provides for Permit User rates. Ordinance
No. OCS"l requires that the annual cost of service calculated from the actual Permit
User discharge and the adopted Permit User rates must be reduced by the property tax
paid by that individual user. However, these taxes were already considered during the
calculation of the reduced rates that are equivalent to the flat rate sanitary sewer service
user fee. In July of 2004, staff recommended that it was appropriate to modify the
computation of the rates for flow, BOD and SS so that Permit Users were not allowed
two reductions for property taxes. Correcting this calculation was approved by the
Board effective January 1, 2005.
H'baq�6%^de���eee`MMn G M-W=W2 �T .creene.aoc
mum Page 2
Book Page 175
In April 2006, Carollo Engineers completed a comprehensive rate study on the District's
total user fee program that considered the single-family residential rate (SFR), the
underlying rate that is used in determining all commercial rates, the capital facilities
capacity charges, and the supplemental facilities capacity charges. In addition,
Carollo's rate study determined the individual BOD, TSS, and flow component rates
used in billing high-strength dischargers under permit. These component rates for
permittees were developed net of anticipated property tax revenues, the same
methodology used for all other sewer service fees. In analyzing the impact to current
permittees using this net cost of service methodology, staff estimated that
approximately 75 percent of all permittees would be paying less than the SFR
percentage increase while the remaining 25 percent would be paying a greater amount
that, in some cases, totaling thousands of dollars. At that time, the Committee made
the decision to stay with the current "gross of property to)C' rate methodology for
permittees, and equally valid rate methodology as the "net cost of service" metholodgy",
and implement a flat increase to the each permittee component unit equal to the SFR
percentage increase. Staff was further directed staff to report back to the Committee in
the future on options for implementing the net cost of service methodology that would
minimize the rate increases to those permittees who would be heavily impacted.
Staff is currently completing a strategic plan update to its capital improvement. This CIP
update is completed approximately every five years unless there are substantial
changes in variables and assumptions that would require one to be completed sooner.
One component of this strategic plan update is the completion of a new rate study to
that takes into consideration these changes in assumptions in developing the new rate
plan. The strategic plan update and rate study are projected to be completed in time for
consideration of the FY 2008-09 rate ordinance. Instead of considering significant
adjustments to some individual permittee rates two consecutive years, staff is
recommending the continuance of the "gross of property tax" rate methodology for
permittees in the FY 2007-08 rate ordinance, and again tie the BOD, TSS, and flow
component rates to the increase in the SFR.
Alternative
In future years, continue to calculate permit user rates for Flow, Bod and SS, gross of
property tax revenue and allow line-item credit for property taxes paid by each individual
permittee. Carollo Engineers has determined that the"gross of property tax revenue"
rate methodology is a valid and acceptable alternative.
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Book Page 176
ORANGE COUNTY SANITATION DISTRICT
(714) 962-2411
www.ocsd.com
Mailing Address:
P.O. Box 8127
Fountain Valley, California
92728-8127
Street Address:
10844 Ellis Avenue
Fountain Valley, California
92708-7018