HomeMy WebLinkAbout07-09-2014 Administration Committee Agenda Orange County Sanitation District SANITATION DISTRICT Wednesday, July 9, 2014
Regular Meeting of the 5:30 P.M.
Administration Committee Administration Building
Board Room
10844 Ellis Avenue
AIR Fountain Valley, CA
(714) 593-7130
1954-2014
AGENDA
PLEDGE OF ALLEGIANCE:
DECLARATION OF QUORUM:
PUBLIC COMMENTS: If you wish to speak, please complete a Speaker's Form and give it to the
Clerk of the Board. Speakers are requested to limit comments to three minutes.
REPORTS: The Committee Chair and the General Manager may present verbal reports on
miscellaneous matters of general interest to the Committee Members. These reports are for information
only and require no action by the Committee.
REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES:
CONSENT CALENDAR:
1. Approve Minutes of the June 11, 2014, Administration Committee Meeting.
2. Recommend to the Board of Directors to:
Adopt Resolution No. OCSD 14-XX, entitled "A Resolution of the Board of
Directors of the Orange County Sanitation District Authorizing the Orange County
Sanitation District's Treasurer to Invest and/or Reinvest District's Funds;
Adopting District's Investment Policy Statement and Performance Benchmarks
for FY 2014-15; and Repealing Resolution No. OCSD 13-13."
07/09/14 Administration Committee Agenda Page 1 of 3
3. Recommend to the Board of Directors to:
Authorize the General Manager to issue Revenue Refunding Certificate
Anticipation Notes, Series 2014B, as two-year fixed-rate obligations, subject to
market conditions, in an amount not to exceed $135.0 million to replace the
$129.625 million Revenue Refunding Certificate Anticipation Notes, Series
2013A maturing on October 16, 2014.
4. Recommend to the Board of Directors to:
Authorize use of Ordinance No. OCSD-44, Section 2.03:B. Cooperative
Purchases for a blanket order agreement to purchase equipment and services for
OCSD's Motorola radio systems, for a total amount not to exceed $250,000 to
include all tax and freight.
5. Recommend to the Board of Directors to:
A. Approve a Purchase Order Agreement with New Tech Solutions, the
lowest responsive and responsible bidder, for Purchase of Wireless Cisco
Parts, Specification No. FE-12-03, for an amount not to exceed
$106,142.49, delivered plus tax; and
B. Approve a contingency of$5,307.12 (5%).
NON-CONSENT CALENDAR:
6. Recommend to the Board of Directors to:
Direct staff to pay down on the District's unfunded actuarial accrued liability with
the Orange County Employee's Retirement System (OCERS) in the amount of
$125 million.
INFORMATION ITEMS:
7. Informational Presentation on Procurement Process
CLOSED SESSION:
None.
07/09/14 Administration Committee Agenda Page 2 of 3
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA
ITEMS, IF ANY:
ADJOURNMENT:
The next Administration Committee meeting is scheduled for Wednesday, September
10, 2014 at 5:30 p.m.
Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability
related accommodations, please contact the Orange County Sanitation District Clerk of the Board's once 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.
Aaenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda
has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis
Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public
records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting
to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board.
NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting,items must be submitted to the
Clerk of the Board 14 days before the meeting.
Kelly A.Lore
Acting Clerk of the Board
(714)593-7433
klore(doosd.com
For any questions on the agenda,Committee members may contact staff at:
General Manager James Herberg (714)593-7300 iherbera(docsd.com
Assistant General Manager Bob Ghirelli (714)593-7400 rohirellifdocsd.com
Director of Finance and Lorenzo Tyner (714)593-7550 ItvneRrdocsd.com
Administrative Services
Director of Human Resources Jeff Reed (714)593-7144 ireeclamsd.com
07/09/14 Administration Committee Agenda Page 3 of 3
ITEM NO. 1
MINUTES OF THE REGULAR MEETING OF
THE ADMINISTRATION COMMITTEE
Orange County Sanitation District
Wednesday, June 11, 2014, at 5:30 P.M.
A regular meeting of the Administration Committee of the Orange County Sanitation
District was held on June 11, 2014, at 5:35 p.m., in the Sanitation District's
Administration Building. Committee Chair Reese led the Flag Salute.
A quorum was declared present, as follows:
COMMITTEE MEMBERS PRESENT: STAFF PRESENT:
Brad Reese, Chair Jim Herberg, General Manager
David Benavides Bob Ghirelli, Assistant General Manager
Joe Carchio Lorenzo Tyner, Director of Finance
Steven Choi & Administrative Services
Tyler Diep Jeff Reed, Director of Human Resources
Peter Kim Rob Thompson, Director of Engineering
Prakash Narain Ed Torres, Director of Operations and
Janet Nguyen Maintenance
Robert Ooten (Alternate) Kelly Lore, Administrative Assistant
Teresa Smith Rich Castillon
Troy Edgar, Board Chair Jim Colston
Tom Beamish, Board Vice-Chair Norbert Gaia
John Withers, Vice-Chair Al Garcia
Ted Gerber
COMMITTEE MEMBERS ABSENT: Laurie Klinger
Roya Sohanaki
Gene Hernandez Rich Spencer
Christine Stanford
Mary Sue Thompson
Mike White
OTHERS PRESENT:
Brad Hogin, General Counsel
Jeff Mosher, NWRI
PUBLIC COMMENTS:
None.
REPORT OF COMMITTEE CHAIR:
Committee Chair Reese did rot provide a report.
0&11=4 Adminishation Committee Minutes Page 1 of 6
REPORT OF GENERAL MANAGER:
General Manager, Jim Herberg, did not provide a report.
REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES:
Director of Finance and Administrative Services, Lorenzo Tyner did not provide a report.
CONSENT CALENDAR:
1. MOVED, SECONDED, AND DULY CARRIED: Approve Minutes of the
May 14, 2014 Administration Committee Meeting.
AYES: Beamish, Carchio, Choi, Diep, Edgar, Narain, Ooten
(Alternate), and Reese
NOES: None
ABSTENTIONS: Kim
ABSENT: Benavides, Hernandez, Nguyen, Smith and Withers
2. MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to:
Adopt Resolution No. OCSD 14-XX, Establishing Use Charges for the FY 2014-
15 Pursuant to the Wastewater Treatment and Disposal Agreement with the
Santa Ana Watershed Project Authority.
AYES: Beamish, Carchio, Choi, Diep, Edgar, Kim, Narain, Ooten
(Alternate), and Reese
NOES: None
ABSTENTIONS: None
ABSENT: Benavides, Hernandez, Nguyen, Smith and Withers
0&11=4 Atlministmtion Committee Minutes Page 2 of 6
3. MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to:
Adopt Resolution No. OCSD 14-XX, Establishing the Annual Appropriations Limit
for Fiscal Year 2014-15, for the District in accordance with the Provisions of
Division 9 of Title 1 of the California Government Code.
AYES: Beamish, Carchio, Choi, Diep, Edgar, Ooten (Alternate), Kim,
Narain, and Reese
NOES: None
ABSTENTIONS: None
ABSENT: Benavides, Hernandez, Nguyen, Smith and Withers
4. MOVED, SECONDED, AND DULY CARRIED:
Recommend to the Board of Directors to:
A. Adopt Resolution No. OCSD14-XX, 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 Wastewater Refunding Revenue Obligations, Series 2014A,
authorizing the execution and delivery of such Revenue Obligations,
evidencing principal in an aggregate amount of not to exceed
$225,000,000, 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 Revenue Obligations and
authorizing the execution of necessary documents and related actions;
and
B. That the Orange County Sanitation District Financing Corporation approve
the documents supporting and authorizing the Revenue Obligations in an
aggregate amount not to exceed $225,000,000.
AYES: Beamish, Carchio, Choi, Diep, Edgar, Kim, Narain, Ooten
(Alternate), and Reese
NOES: None
ABSTENTIONS: None
ABSENT: Benavides, Hernandez, Nguyen, Smith and Withers
1X/11=4 Administration Committee Minutes Page 3 of 6
NON-CONSENT CALENDAR:
5. Lorenzo Tyner, Director of Finance and Administrative Services briefly explained
this item to the Committee.
MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to:
A. Reject the apparent low bid submitted by Office Supply Inc. as deemed
non-responsive in accordance with specification requirements for
Purchase of Cisco Parts, Specification No. E-2014-616BD; and
B. Approve a Purchase Order Agreement with Presidio Networked Solutions,
the lowest responsible and responsible bidder, for Purchase of Cisco
Parts, Specification No. E-2014-6166D, for an amount not to exceed
$435,587; and
C. Approve a contingency of$21,780 (5%).
AYES: Beamish, Carchio, Choi, Diep, Edgar, Kim, Narain, Ooten
(Alternate) and Reese
NOES: None
ABSTENTIONS: None
ABSENT: Benavides, Hernandez, Nguyen, Smith and Withers
Director Benavides was out of the room and returned at 5:38 p.m.
Director Nguyen arrived at 5:38 p.m.
Committee Vice-Chair Withers arrived at 5:41 p.m.
6. Lorenzo Tyner, Director of Finance and Administrative Services, gave a brief
PowerPoint presentation on the proposed FY 2014-15 and FY 2015-16 Budget.
Key points of Mr. Tyner's presentation included: revenues, debt service, cash
flows, reduction of liabilities, etc. He responded to questions from the
Committee.
MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board of
Directors to:
Approve proposed Operating, Capital, Debt/COP Service and Self-Insurance
Budgets for FY 2014-15 and 2015-16.
O&11/ 014 Atlministmtion Committee Minutes Page 4 of 6
AYES: Beamish, Benavides, Carchio, Choi, Diep, Edgar, Kim,
Narain, Nguyen, Ooten (Alternate), Reese, and Withers
NOES: None
ABSTENTIONS: None
ABSENT: Hernandez and Smith
Director Nguyen stated that while she supports the budget, for the record, she does not
support the increase to sewer service fee assumptions that are made in the budget of
2014-15 and 2015-16.
INFORMATION ITEMS:
7. Collections Systems
Nick Arhontes, Director of Facility Support Services Department, gave a
PowerPoint presentation on the Sanitation District's Collection Facilities. The
presentation included information on: sewer spill statistics, odor complaints,
regulatory compliance, sewage conditioning, etc.
Director Smith arrived at 5:50 p.m.
The Committee had questions regarding: detection of gases, dry weather
diversions, food waste digestion, waste contracts, maintenance of manhole
covers and storm drain screening. Staff responded accordingly to questions.
Director Nguyen left the meeting at 6:20 p.m.
8. Pretreatment Program and Industrial Permitting
Rob Thompson, Director of Engineering introduced Roya Sohanaki, Engineering
Supervisor who provided a PowerPoint presentation on the Overview of OCSD's
Pretreatment Program. The presentation included information on: regulatory and
compliance information, managing the sources of pollutants, effectiveness of
source control, etc.
Director Diep left the meeting at 6:30 p.m.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA
ITEMS, IF ANY:
Director Withers stated he attended a meeting of the Orange County Business Council
Infrastructure Committee recently and commended the presentation made by General
Manager Jim Herberg and Director of Engineering, Rob Thompson who were there
representing the District.
0&11/ 014 Administmtion Committee Minutes Page 5 of 6
Director Kim asked if there was an update on labor negotiations; to which Jeff Reed,
Director of Human Resources, stated that there is intent to agendize the item at the
June Board meeting.
Director Choi informed the Committee that he had been in Spain for a week with the
Energy Coalition.
ADJOURNMENT:
Committee Chair Reese declared the meeting adjourned at 6:40 p.m., to the next
regularly scheduled meeting of July 9, 2014.
Submitted by:
Kelly A. Lore
Acting Clerk of the Board
0&11=4 Atlministmtion Committee Minutes Page 6 of 6
ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir.
07/09/14 07/23/14
AGENDA REPORT em 2mM1e Item Number
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: INVEST AND/OR REINVEST DISTRICT'S FUNDS
GENERAL MANAGER'S RECOMMENDATION
Adopt Resolution No. OCSD 14-XX, entitled "A Resolution of the Board of Directors of
the Orange County Sanitation District, Authorizing the Orange County Sanitation
District's Treasurer to Invest and/or Reinvest District's Funds; Adopting District's
Investment Policy Statement and Performance Benchmarks for FY 2014-15; and
Repealing Resolution No. OCSD 13-13."
SUMMARY
This agenda item presents the annual review of the Orange County Sanitation District's
Investment Policy Statement to the Administration Committee for consideration in the
Committee's capacity as the oversight committee for the Investment Policy (Section
16.2). With adoption of the Resolution, the Board of Directors would readopt the
Sanitation District's current Investment Policy Statement, portfolio performance
benchmarks, and monitoring and reporting requirements for FY 2014-15.
The Sanitation District's Investment Policy Statement is recommended for adoption for
FY 2014-15 with no changes made to the State Government Code relevant to the
District's investment program since the adoption of the FY 2013-14 Investment Policy.
Staff will continue to monitor pending legislative and regulatory proposals in the public
finance area for their potential impact on the Sanitation District's existing financial
programs. Also, the District has engaged its investment advisor to conduct an investment
management search for the day-to-day management of the investments included in its
investment portfolios. Based on the ultimate selection, the future investment
management firm may have recommendations on changes to the investment policy for
Board consideration prior to the next investment policy update a year from now.
The Sanitation District's Investment Policy Statement has received the Investment Policy
Certification of Excellence Award from the California Municipal Treasurers Association.
Page 1 of 3
PRIOR COMMITTEE/BOARD ACTIONS
July 2013 — Board adopted Resolution No. OCSD 13-13, Authorizing the Orange
County Sanitation District's Treasurer to Invest and/or Reinvest District's Funds;
Adopting District's Investment Policy Statement and Performance Benchmarks for FY
2013-14; and, Repealing Resolution No. OCSD 12-11.
ADDITIONAL INFORMATION
Background
The Investment Policy governs the investment activities of Pacific Investment
Management Company (PIMCO), the Sanitation District's external money manager, on
behalf of the District. On December 11, 2012, the Sanitation District's Investment Policy
Statement received the Investment Policy Certification of Excellence Award from the
California Municipal Treasurer's Association. A copy of the letter of certification is
included each year in the annual Investment Policy document. The Sanitation District
received its first Award of Excellence for the Investment Policy Statement in December
1996.
The Investment Policy document itself consists of the Investment Policy Statement and
the following eight appendices:
A. Summary of Investment Authorization
B. Treasury Management Procedures
C. Investment Manager Certification
D. Investment Pool Questionnaire (LAIF)
E. Board Resolution No. OCSD-13-13
F. Sample Monthly & Quarterly Investment Program Monitoring Reports
G. Sections of the California Government Code Pertinent to Investing Public
Funds
H. Glossary of Investment Terms
This document will be updated and delivered to Administration Committee members
following the adoption of the Sanitation District's investment policy statement.
Annual Review of Investment Policy
The Investment Policy includes the requirement that the Sanitation District shall review
its Investment Policy annually (Sections 1.2 and 16.1).
Annual Delegation of Investment Authority
Effective January 1, 1997, Section 53607 of the Code states that governing boards of
local agencies may only delegate authority to invest and/or reinvest agency funds to the
agency's Treasurer for a one-year period.
With adoption of the Resolution, the Board of Directors would renew its delegation of
investment authority to the Director of Finance/Treasurer for a one-year period in
Page 2 of 3
compliance with the requirements of Section 53607. Each year, the Board of Directors
will consider similar actions along with the annual reconsideration of the Sanitation
District's Investment Policy.
CEQA
N/A
BUDGET / PURCHASING ORDINANCE COMPLIANCE
N/A
ATTACHMENTS
• Exhibit A - OCSD FY 2014-15 Investment Policy Statement
• Exhibit B - Performance Monitoring & Reporting Summary
• Proposed Resolution No. OCSD 14-XX
Page 3 of 3
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ORANGE COUNTY SANITATION
DISTRICT
INVESTMENT
POLICY
STATEMENT
Proposed for
Review and Approval
By
Administration Committee
On
July 9, 2014
And for Adoption
By
Board of Directors
On
July 23, 2014
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TABLE OF CONTENTS
Section TODIC Page
1.0 Policy ......................................................................................1
2.0 Scope......................................................................................1
3.0 Standard of Prudence .............................................................1
4.0 Investment Objectives.............................................................2
5.0 Delegation of Authority............................................................2
6.0 Ethics and Conflicts of Interest................................................3
7.0 Authorized Financial Dealers and Institutions.........................4
8.0 Authorized and Suitable Investments......................................5
9.0 Collateralization.......................................................................9
10.0 Safekeeping and Custody.......................................................9
11.0 Diversification..........................................................................9
12.0 Maximum Maturities.............................................................. 11
13.0 Internal Control...................................................................... 12
14.0 Performance Objectives and Benchmarks............................ 12
15.0 Reporting .............................................................................. 12
16.0 Investment Policy Adoption and Revision ............................. 13
Appendix
A. Summary of Investment Authorization
B. Treasury Management Procedures
C. Investment Manager Certification
D. Investment Pool Questionnaire (LAIF)
E. Board Resolution No. OCSD-I4-XX, Authorizing the District's Treasurer to Invest
and/or Reinvest District Funds, and Adopting Investment Policy and Performance
Benchmarks
F. Quarterly Investment Program Monitoring Reports
G. Sections of the California Government Code Pertinent to Investing Public Funds
H. Glossary of Investment Terms
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ORANGE COUNTY SANITATION DISTRICT
INVESTMENT POLICY STATEMENT
1.0 Policy:
It is the policy of the Orange County Sanitation District (OCSD)to invest public funds in
a manner which ensures the safety and preservation of capital while meeting
reasonably anticipated operating expenditure needs, achieving a reasonable rate of
return and conforming to all state and local statutes governing the investment of public
funds.
1.1. This Investment Policy is set forth by OCSD for the following purposes:
1.1.1. To establish a clear understanding for the Board of Directors,
OCSD management, responsible employees and third parties of the
objectives, policies and guidelines for the investment of the OCSD's idle
and surplus funds.
1.1.2. To offer guidance to investment staff and any external
investment advisors on the investment of OCSD funds (see Appendix "A").
1.1.3. To establish a basis for evaluating investment results.
1.2. OCSD establishes investment policies which meet its current investment
goals. OCSD shall review this policy annually, and may change its
policies as its investment objectives change.
2.0 Scope:
This Investment Policy applies to all financial assets of OCSD; except for the proceeds
of OCSD's capital projects financing program, which are invested in accordance with
provisions of their specific bond indentures; and such other funds excluded by law or
other Board-approved covenant or agreement.
These funds are accounted for by OCSD as Enterprise Funds as represented in
OCSD's Comprehensive Annual Financial Report.
3.0 Standard of Prudence:
The standard of prudence to be used by OCSD internal staff, and any authorized
investment advisor(s), shall be as described in Section 53600.3 of the California
Government Code as follows: Except as provided in subdivision (a) of Section
27000.3, all governing bodies of local agencies or persons authorized to make
investment decisions on behalf of those local agencies investing public funds
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pursuant to this chapter are trustees and therefore fiduciaries subject to
the prudent investor standard. When investing, reinvesting, purchasing,
acquiring, exchanging, selling, or managing public funds, a trustee shall act with
care, skill, prudence, and diligence under the circumstances then prevailing,
including, but not limited to, the general economic conditions and the anticipated
needs of the agency, that a prudent person acting in a like capacity and
familiarity with those matters would use in the conduct of funds of a like character
and with like aims, to safeguard the principal and maintain the liquidity needs of
the agency. Within the limitations of this section and considering individual
investments as part of an overall strategy, investments may be acquired as
authorized by law.
4.0 Investment Objectives:
The primary objectives of OCSDs investment activities, in priority order, and as
described in Section 53600.5 of the California Government Code, shall be:
4.1 Safety: The safety and preservation of principal is the foremost objective
of the investment program of OCSD. Investments shall be selected in a
manner that seeks to ensure the preservation of capital in OCSD's overall
portfolio. This will be accomplished through a program of diversification,
more fully described in Section 11.0, and maturity limitations, more fully
described in Section 12.0, in order that potential losses on individual
securities do not exceed the income generated from the remainder of the
portfolio.
4.2 Liquidity: The investment program will be administered in a manner that
will ensure that sufficient funds are available for OCSD to meet its
reasonably anticipated operating expenditure needs.
4.3 Return on Investments: The OCSD investment portfolio will be
structured and managed with the objective of achieving a rate of return
throughout budgetary and economic cycles, commensurate with legal,
safety, and liquidity considerations.
5.0 Delegation of Authority:
5.1 Authority to manage OCSD's investment program is derived from the
California Government Code Sections 53600 et seq. and Sections 53635
et seq. The Board of Directors hereby delegates management
responsibility for the OCSD investment program to its Director of Finance
and Administrative Services/Treasurer, who shall establish written
procedures for the operation of the investment program, consistent with
this Policy. The Controller/Assistant Treasurer shall be responsible for
day-to-day administration, monitoring, and the development of written
administrative procedures for the operation of the investment program,
consistent with this Policy. The current treasury management procedures
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are presented in Appendix "B." No person may engage in an investment
transaction except as provided under the terms of this Policy and the
procedures established by the Treasurer. The Treasurer shall be
responsible for all transactions undertaken by OCSD internal staff, and
shall establish a system of controls to regulate the activities of internal
staff and external investment advisors engaged in accordance with
Section 5.3.
5.2 The administrative procedures for the operation of OCSD's investment
program will provide for, but not be limited to, the following:
5.2.1 Formats for monthly and quarterly reports to the Administration
Committee, and the Board of Directors.
5.2.2 Compliance with generally accepted accounting principles of
the Government Accounting Standards Board.
5.2.3 Establishment of benchmarks for performance measurement.
5.2.4 Establishment of a system of written internal controls.
5.2.5 Establishment of written procedures for competitive bids and
offerings of securities that may be purchased or sold by internal OCSD
staff.
5.2.6 Establishment of a Desk Procedures Manual for treasury
operations and management.
5.3 The Board of Directors of OCSD may, in its discretion, engage the
services of one or more registered investment advisors to assist in the
management of OCSD's investment portfolio in a manner consistent with
OCSD's objectives. Such external investment advisors, which shall be
selected through a competitive process, shall be granted discretion to
purchase and sell investment securities in accordance with this
Investment Policy. Such advisors must be registered under the
Investment Advisers Act of 1940, or be exempt from such registration.
6.0 Ethics and Conflicts of Interest:
6.1 Officers and employees of OCSD involved in the investment process shall
refrain from personal business activities that could conflict with proper
execution of OCSD's investment program, or which could impair their
ability to make impartial investment decisions. Employees and investment
officials shall disclose to the General Manager any material financial
interests in financial institutions that conduct business within OCSD's
boundaries, and they shall further disclose any large personal
financial/investment positions, the performance of which could be related
to the performance of positions in OCSD's portfolio.
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7.0 Authorized Financial Dealers and Institutions:
7.1 For investment transactions conducted by OCSD internal staff, the
Treasurer will maintain a list of financial institutions authorized to provide
investment services to OCSD, including "primary" or regional dealers that
qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform
Net Capital rule), and Federal or State of California chartered banks. No
public deposit shall be made except in a qualified public depository as
established by State law.
All financial institutions which desire to become qualified bidders for
investment transactions with OCSD must supply the following for
evaluation by the Treasurer:
7.1.1. Audited financial statements for the institution's three (3) most
recent fiscal years.
7.1.2. A statement, in the format prescribed by the Government
Finance Officers Association (GFOA), certifying that the institution has
reviewed OCSD's Investment Policy and that all securities offered to the
Districts shall comply fully and in every instance with all provisions of the
California Government Code and with this Investment Policy. The current
statement is presented in Appendix "C."
7.1.3. A statement describing the regulatory status of the dealer, and
the background and expertise of the dealer's representatives.
Selection of financial institutions, broker/dealers, and banks authorized to
engage in transactions with OCSD shall be made through a competitive
process. An annual review of the financial condition of qualified
institutions will be conducted by the Treasurer.
7.2 Selection of broker/dealers used by external investment advisors retained
by OCSD, shall be in compliance with contract provisions between OCSD
and any external investment advisors, and shall be in substantially the
following form:
Use of Securities Brokers: Neither the Investment Advisor nor any parent,
subsidiary or related firm shall act as a securities broker with respect to
any purchases or sales of securities which may be made on behalf of
OCSD, provided that this limitation shall not prevent the Investment
Advisor from utilizing the services of a securities broker which is a parent,
subsidiary or related firm, provided such broker effects transactions on a
"cost only" or"nonprofit" basis to itself and provides competitive execution.
The Investment Advisor shall provide the Districts with a list of suitable
independent brokerage firms (including names and addresses) meeting
the requirements of Government Code Section 53601.5, and, unless
otherwise directed by OCSD, the Investment Advisor may utilize the
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service of any of such independent securities brokerage firms it deems
appropriate to the extent that such firms are competitive with respect to
price of services and execution.
8.0 Authorized and Suitable Investments:
All investments shall be made in accordance with the California Government Code
including Sections 16429.1 at seq., 53600 at seq., and 53684, and as described within
this Investment Policy. Permitted investments under this Policy shall include:
8.1 Securities, obligations, participations, or other instruments of, or
issued by, or fully guaranteed as to principal and interest by the US
Government, a federal agency, or a US Government-sponsored
enterprise pursuant to Section 53601 (a) of the California Government
Code. Investment in mortgage-backed bonds and CMOs is not governed
by this Section 8.1, even if such bonds are issued by agencies of the US
Government. See Section 8.2 for conditions of purchase of mortgage-
backed securities. See Section 8.12 for conditions of purchase of CMOs.
8.2 Mortgage-backed securities issued by an agency of the US
Government, which are backed by pools of mortgages guaranteed by the
full faith and credit of the U.S. Government, or an agency thereof.
Purchase of mortgage derivatives, which include interest-only payments
(IOs) and principal-only payments (POs); inverse floaters, and RE-
REMICs (Real Estate Mortgage Investment Conduits), is hereby
prohibited.
8.3 Commercial paper of"prime" quality and rated TV by Moody's Investor
Services (Moody's), and rated "At" by Standard & Poor's Corporation
(S&P), and issued by a domestic corporation organized and operating in
the United States with assets in excess of$500 million and having a rating
of"A" or better on its long-term debt as provided by Moody's or S&P.
Purchases of eligible commercial paper may not exceed 270 days to
maturity from the date of purchase. Purchases of commercial paper shall
not exceed 15% of the market value of the portfolio, except that a
maximum of 25% of the market value of the portfolio may be invested in
commercial paper, so long as the average maturity of all commercial
paper in the portfolio does not exceed 31 days. No more than 5% of the
market value of the portfolio, or 10% of the issuer's outstanding paper,
may be invested in commercial paper issued by any one (1) eligible
corporation.
8.4 Banker's acceptances issued by institutions, the short-term obligations of
which are rated a minimum of TV by Moody's, or"A1" by S&P provided
that: (a) the acceptance is eligible for purchase by the Federal Reserve
System; (b)the maturity does not exceed 180 days; (c) no more than 40%
of the total portfolio may be invested in banker's acceptances; and (d) no
more than 30% of the total portfolio may be invested in the banker's
acceptances of any one (1) commercial bank.
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8.5 Medium term (or corporate) notes of a maximum of five (5) years
maturity issued by corporations organized and operating within the United
States, or issued by depository institutions licensed by the United States,
or any state, and operating within the United States with assets in excess
of$500 million, and which is rated in a rating category of"A" or better on
its long-term debt as provided by Moody's or S&P. Notes eligible for
investment under this section shall be rated at least "A3" or better by
Moody's, or "A-"or better by S&P. If, at the time of purchase, an eligible
note is rated in a rating category of"A" or better by only one rating agency,
the note shall also be rated at least "BBB" by the other rating agency. If,
after purchase, the rating of an eligible note in a rating category of"A" or
better, is downgraded to "BBB," the external investment advisor shall
notify the District of the downgrade, and shall present an analysis and
recommendations as to the disposition of the note consistent with the
investment objectives of this Investment Policy. The above restrictions
pertain to the "direct issuer' and do not extend to the parent corporation of
the direct issuer. No more than 35% of the portfolio may be invested in
both medium term notes, as described here in 8.5, and notes, bonds, or
other obligations, as described in 8.6.
8.6 Notes, bonds, or other obligations that are at all times secured by a
valid first priority security interest in securities of the types listed by
California Government Code Section 53651 as eligible securities for the
purpose of securing local agency deposits having a market value at least
equal to that required by California Government Code Section 53652 for
the purpose of securing local agency deposits. The securities serving as
collateral shall be placed by delivery or book entry into the custody of a
trust company or the trust department of a bank that is not affiliated with
the issuer of the secured obligation, and the security interest shall be
perfected in accordance with the requirements of the Uniform Commercial
Code or federal regulations applicable to the types of securities in which
the security interest is granted. No more than 35% of the portfolio may be
invested in securities described in 8.5 and 8.6.
8.7 Shares of mutual funds investing in securities permitted under this policy
and under Section 53601 (k) of the California Government Code. Such
funds must either: (1) attain the highest ranking, or the highest letter and
numerical rating, provided by not less than two of the three largest
nationally recognized rating services; or (2) have an Investment Advisor
registered with the Securities and Exchange Commission with not less
than five (5) years of experience investing in the securities and obligations
authorized under this Policy and under California Government Code
Section 53601, and with assets under management in excess of$500
million. The purchase price of shares of beneficial interest purchased
pursuant to this policy, and the California Government Code may not
include any commission that the companies may charge, and shall not
exceed 15% of the District's surplus money that may be invested pursuant
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to this section. However, no more than 10% of the District's surplus funds
may be invested in shares of beneficial interest of any one (1) mutual fund
pursuant to this section.
8.8 Certificates of deposit:
8.8.1 Secured (collateralized) time deposits issued by a nationally or
state-chartered bank or state or federal savings and loan association, as
defined by Section 5102 of the California Financial Code, and having a net
operating profit in the two (2) most recently completed fiscal years.
Collateral must comply with Chapter 4, Bank Deposit Law, Section 16500
et seq., and Chapter 4.5, Savings and Loan Association and Credit Union
Deposit Law, Section 16600 et seq., of the California Government Code.
8.8.2 Negotiable certificates of deposit (NCDs) issued by a nationally
or state-chartered bank or state of federal savings and loan association,
as defined by Section 5102 of the California Financial Code; and which
shall have a rating of"A" or better on its long-term debt as provided by
Moody's or S&P; or which shall have the following minimum short-term
ratings by at least two (2) rating services: "P1" for deposits by Moody's,
"Al" for deposits by S&P, or comparably rated by a nationally recognized
rating agency which rates such securities; or as otherwise approved by
the District's Board of Directors.
8.8.3 To be eligible to receive local agency money, a bank, savings
association, federal association, or federally insured individual loan
company shall have received an overall rating of not less than
"satisfactory" in its most recent evaluation by the appropriate federal
financial supervisorial agency of its record of meeting the credit needs of
California's communities, including low and moderate income
neighborhoods, pursuant to Section 2906 of Title 12 of the United States
Code.
8.9 Taxable or tax-exempt municipal bonds issued by any of the 50 United
States. Such securities must be rated "AY or higher by Moody's, or "A-"
or higher by S&P; or as otherwise approved by the Districts' Board of
Directors.
8.10 The State of California Local Agency Investment Fund (LAIF). The
LAIF is an investment alternative for California's local governments and
special districts managed by the State Treasurer's Office. LAIF is more
fully described in the Glossary (See Appendix "H.") The District shall use
LAIF as a short-term cash management facility. Investment of District
funds in LAIF shall be subject to investigation and due diligence prior to
investing, and on a continual basis to a level of review pursuant to Section
3.0, Standard of Prudence, of this Policy. See Appendix "D" for
investment pool questionnaire.
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8.11 The Orange County Treasurer's Money Market Commingled
Investment Pool (OCCIP). The OCCIP is a money market investment
pool managed by the Orange County Treasurer's Office. OCCIP is more
fully described in the Glossary. (See Appendix "H.") The District has no
funds invested in OCCIP at this time. Investment of District funds in
OCCIP would be subject to investigation and due diligence prior to
investing, and on a continual basis to a level of review pursuant to Section
3.0, Standard of Prudence, of this Policy.
8.12 Collateralized mortgage obligations (CMOs) issued by agencies of the
US Government which are backed by pools of mortgages guaranteed by
the full faith and credit of the U.S. Government, or an agency thereof, and
asset-backed securities rated "Aaa" by Moody's and "AAA" by S&P.
Selection of mortgage derivatives, which include interest-only payments
(IOs) and principal-only payments (POs); inverse floaters, and RE-
REMICS (Real Estate Mortgage Investment Conduits), is hereby
prohibited. Securities eligible for purchase under this Section 8.11 shall
be issued by an issuer having a rating on its unsecured long-term debt of
"A" or higher. Combined purchases of mortgage-backed securities, CMOs
and asset-backed securities as authorized under within Section 8.0, may
not exceed 20% of the total Long-Term Operating Monies portfolio.
8.13 Repurchase agreements provided that:
8.13.1 All repurchase agreements shall be collateralized with
securities eligible for purchase under this Policy. In order to anticipate
market changes and to provide a level of security for all repurchase
agreement transactions, collateralization shall be maintained at a level of
at least 102% of the market value of the repurchase agreements, and
shall be adjusted no less than weekly.
8.13.2 All repurchase agreements must be the subject of a Master
Repurchase Agreement between OCSD and the provider of the
repurchase agreement. The Master Repurchase Agreement shall be
substantially in the form developed by The Bond Market Association.
8.14 Reverse repurchase agreements provided that:
8.14.1 No more than five percent (5%) of OCSD's portfolio shall be
invested in reverse repurchase agreements, and there shall be no long-
term reverse repurchase agreements unless otherwise authorized by the
Districts' Board of Directors.
8.14.2 The maximum maturity of reverse repurchase agreements shall
be ninety (90) days.
8.14.3 Reverse repurchase agreements shall mature on the exact
date of a known cash flow which will be unconditionally available to repay
the maturing reverse repurchase agreement.
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8.14.4 Proceeds of reverse repurchase agreements shall be used
solely to supplement portfolio income or to provide portfolio liquidity, and
shall not be used to speculate on market movements.
8.14.5 All reverse repurchase agreements must be the subject of a
Master Repurchase Agreement between OCSD and the provider of the
reverse repurchase agreement. The Master Repurchase Agreement shall
be substantially in the form developed by The Bond Market Association.
8.15 Sales of OCSD-owned securities in the secondary market may incur
losses in order to improve the risk or return characteristics of the portfolio,
to prevent anticipated further erosion of principal, or when trading for
securities that result in an expected net economic gain to OCSD.
8.16 If securities owned by the OCSD are downgraded by either Moody's or
S&P to a level below the quality required by this Investment Policy, it shall
be OCSD's policy to review the credit situation and make a determination
as to whether to sell or retain such securities in the portfolio. If a decision
is made to retain the downgraded securities in the portfolio, their presence
in the portfolio will be monitored and reported monthly to the OCSD
General Manager, the Administration Committee and Board of Directors.
9.0 Collateralization:
Generally, the value to secure deposits under this Policy shall comply with Section
53652 of the California Government Code. Collateralization will be required for secured
time deposits, as more fully described in Section 8.8.1; and repurchase agreements, as
more fully described in Section 8.13.1. Collateral will always be held by an independent
third-party, as more fully described in Section 10.1. The right of collateral substitution is
granted.
10.0 Safekeeping and Custody:
10.1 All securities transactions, including collateral for repurchase agreements,
entered into by, or on behalf of OCSD, shall be conducted on a
delivery-versus-payment (I)VP) basis. Securities will be held by
OCSD's third-party custodian bank, which shall be selected through a
competitive process, or that agent's representative, or in the agent's
account at the Federal Reserve Bank, or within clearing corporations in
the U.S., and evidenced by book entry statements.
11.0 Diversification:
OCSD will diversify its investments by security type, issuer, and financial institution in
accordance with the following:
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11.1 There is no limit on investment in securities issued by or guaranteed by
the full faith and credit of the U.S. government.
11.2 No more than 20% of the portfolio may be invested in securities of a single
agency of the U.S. government, which does not provide the full faith and
credit of the U.S. government.
11.3 No more than 5% of the portfolio may be invested in securities of any one
issuer, other than the U.S. government or its agencies. Investment in
mutual funds is not governed by this Section 11.3. See Section 11.8 for
conditions of purchase of mutual funds.
11.4 No individual holding shall constitute more than 5% of the total debt
outstanding of any issuer.
11.5 No more than 40% of the portfolio may be invested in banker's
acceptances.
11.6 No more than 15% of the portfolio may be invested in commercial paper,
except that 25% of the portfolio may be so invested so long as the
average maturity of all commercial paper in the portfolio does not exceed
31 days.
11.7 No more than 30% of the portfolio may be invested in medium-term
(corporate) notes.
11.8 No more than 15% of the portfolio may be invested in mutual funds.
However, no more than 10% of the District's portfolio may be invested in
shares of beneficial interest of any one (1) mutual fund.
11.9 No more than 30% of the portfolio may be invested in negotiable
certificates of deposit.
11.10 No more than 10% of the portfolio may be invested in eligible municipal
bonds.
11.11 No more than 20% of the Long Term Operating Monies portfolio may be
invested in a combination of mortgage-backed securities, CMOs and
asset-backed securities. Mortgage-backed securities, CMOs and asset-
backed securities may only be purchased by the Districts' external money
managers, Pacific Investment Management Company (PIMCO), with prior
Board approval (authorized by Board Minute Order, January 22, 1997),
and may not be purchased by the District's staff.
11.12 No more than the lesser of 15% of the portfolio or the statutory maximum
may be invested in LAIF.
11.13 No more than 15% of the portfolio may be invested in the Orange County
Investment Pool.
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11.14 No more than 20% of the portfolio may be invested in repurchase
agreements.
11.15 No more than 5% of the portfolio may be invested in reverse repurchase
agreements.
12.0 Maximum Maturities:
To the extent possible, OCSD will attempt to match its investments with reasonably
anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow
forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall
designate, from time-to-time, the amounts to be allocated to the investment portfolio.
OCSD monies invested in accordance with this Policy are divided into two (2)
categories:
12.1 Liquid Operating Monies. Funds needed for current operating and
capital expenditures are known as Liquid Operating Monies.
12.1.1 The maximum final stated maturity of individual securities in the
Liquid Operating Monies account portfolio shall be one (1) year from the
date of purchase.
12.1.2 The average duration of the Liquid Operating Monies account
portfolio shall be recommended by the Treasurer based on the Districts'
cash flow requirements, but may never exceed 180 days.
12.2 Long Term Operating Monies. Funds needed for longer term purposes
are known as the Long Term Operating Monies.
12.2.1 Except for the purchase of securities by the District's external
money manager, PIMCO, the maximum final stated maturity of individual
securities in the Long Term Operating Monies account portfolio shall be
five (5) years from the date of purchase. PIMCO may purchase any
security that is permitted under Section 8.0 of this policy, including those
which may have a stated maturity of more than five (5) years from the date
of purchase when, in the opinion of PIMCO, such an investment meets the
investment objectives of this portfolio and the duration requirements are
met below.
12.2.2 The duration of the Long Term Operating Monies account
portfolio shall be recommended by the Treasurer based on the Districts'
five-year cash flow forecast, but may never exceed 60 months.
12.2.3 The duration of the Long Term Operating Monies account
portfolio shall never exceed 120% of the duration as established in
accordance with Section 12.2.2.
12.2.4 The duration of the Long Term Operating Monies account
portfolio shall never be less than 80% of the duration as established in
accordance with Section 12.2.2
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13.0 Internal Control:
13.1 The Treasurer shall establish an annual process of independent review by
an external auditor. This review will provide internal control by assuring
compliance with policies and procedures. The current treasury
management procedures are presented in Appendix "B."
14.0 Performance Objectives and Benchmarks:
14.1 Overall objective. The investment portfolio of OCSD shall be designed
with the overall objective of obtaining a rate of return throughout budgetary
and economic cycles, commensurate with investment risk constraints and
reasonably anticipated cash flow needs.
14.2 The Liquid Operating Monies. The investment performance objective
for the Liquid Operating Monies shall be to earn a total rate of return over
a market cycle which exceeds the return on a market index approved by
the Administration Committee, and by the District's Board of Directors,
when the duration of the portfolio is established. This market index is more
fully described in Board Resolution No. OCSD-00-16 (see Appendix"E").
14.3 The Long Term Operating Monies. The investment performance
objective for the Long Term Operating Monies shall be to earn a total rate
of return over a market cycle which exceeds the return on a market index
selected by the Administration Committee and approved by the Districts'
Board of Directors, when the duration of the portfolio is established. This
market index is more fully described in Board Resolution No. OCSD-00-16
(See Appendix "E").
15.0 Reporting:
15.1 Quarterly investment reports shall be submitted by the Treasurer to the
Administration Committee which shall forward the reports to the District's
Board of Directors. The quarterly reports shall be submitted to the
Administration Committee within 30 days of the end of the month in
accordance with California Government Code Sections 53607, 53646, and
this Investment Policy. The quarterly reports shall provide clear and
concise status information on the District's portfolios at the end of each
reporting period, including performance measures using the benchmarks
described in Section 14.0 of this Investment Policy. Sample quarterly
reports are presented in Appendix "F." These reports shall contain listings
of individual securities held at the end of each reporting period, and shall
disclose, at a minimum, the following information about the risk
characteristics of OCSD's portfolio:
15.1.1 Cost and accurate and complete market value of the portfolio.
15.1.2 Modified duration of the portfolio compared to Benchmark.
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15.1.3 Dollar change in value of the portfolio for a one-percent (1%)
change in interest rates.
15.1.4 Percent of portfolio invested in reverse repurchase
agreements, and a schedule which matches the maturity of such reverse
repurchase agreements with the cash flows which are available to repay
them at maturity.
15.1.5 For the Liquid Operating Monies account only, the percent of
portfolio maturing within 90 days.
15.1.6 Average portfolio credit quality.
15.1.7 Percent of portfolio with credit ratings below "A" by any rating
agency, and a description of such securities.
15.1.8 State that all investments are in compliance with this policy and
the California Government Code, or provide a listing of any transactions or
holdings which do not comply with this policy or with the California
Government Code.
15.1.9 Time-weighted total rate of return for the portfolio for the prior
three months, twelve months, year to date, and since inception compared
to the Benchmark returns for the same periods.
15.1.10 State that sufficient funds are available for OCSD to meet its
operating expenditure requirements for the next six months, or if not, state
the reasons for the shortfall.
15.2 OCSD's Treasurer shall meet quarterly with the Administration Committee
to review investment performance, proposed strategies and compliance
with this Investment Policy. External investment advisors may be required
to attend said meetings at the discretion of the Chairman of the
Administration Committee.
16.0 Investment Policy Adoption and Revision:
16.1 The Investment Policy of OCSD shall be reviewed by the Administration
Committee and shall be adopted by resolution of the Board of Directors of
OCSD. The Policy shall be reviewed on an annual basis in accordance
with California Government Code Section 53646, and this Investment
Policy, by the Administration Committee, which shall recommend
revisions, as appropriate, to the Board of Directors. Any modifications
made thereto shall be approved by the Board of Directors.
16.2 The Administration Committee shall serve as the oversight committee for
the District's Investment program and shall adopt guidelines for the
ongoing review of duration, quality and liquidity of the District's portfolio.
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APPENDIX "A"
SUMMARY OF INVESTMENT AUTHORIZATION
INTERNAL AND EXTERNAL MANAGERS
SHORT TERM OPERATING FUND
INVESTMENT INTERNAL EXTERNAL
U.S. Treasuries OK OK
Federal Agencies Fixed coupon, fixed mat. OK
Mortgage-backed NO NO
Commercial paper OK OK
Banker's Accept. OK OK
Medium Term Notes Fixed coupon, fixed mat.* OK
Mutual Funds Money Market Only** Money Market Only
Negotiable CDs Fixed coupon, fixed mat.* OK
Municipal Bonds OK* NO
LAIF OK NO
OCIP OK NO
CMOs NO NO
Asset-backed NO NO
Repurchase Agree. OK OK
Reverse Repos OK* OK
LONG TERM OPERATING PORTFOLIO
INVESTMENT INTERNAL EXTERNAL
U.S. Treasuries OK OK
Federal Agencies Fixed coupon, fixed mat. OK
Mortgage-backed NO OK
Mutual Funds Money Market Only** OK
Negotiable CDs Fixed coupon, fixed mat.* OK
Municipal Bonds OK* OK
LAIF OK NO
OCIP OK NO
CMOs NO With Board Approval
Asset-backed NO With Board Approval
Repurchase Agree. OK OK
Reverse Repos OK* OK
*With prior approval of the Administration Committee.
**Using financial institutions approved by the Administration Committee.
H Weptlaetl lO1 a neNdminCommADMINID141JULY1ln a n"iry 130011314 d x
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EXHIBIT "B"
FY 2014-15 Performance Monitoring & Reporting Schedule
For the Administration Committee The Quarterly Investment
and Board of Directors meetings of: Management Program Report to be
resented for the period of:
July 2014
August Board only)
September Aril —June 2014
October
November Jul — Set 2014
December
January '15 Board only)
February Oct— Dec 2014
March
April
May Jan — March 2015
June
EXHIBIT "B" Return W Aaenda Reo.,
ORANGE COUNTY SANTIATION DISTRICT
PERFORMANCE MONITORING R REPORTING SUMMARY
FOR THE
DISTRICT'S INVESTMENT PROGRAM
POLICY
REFERENCE PERFORMANCE CHARACTERISTIC REPORTING PARTY*
PIMCO MELLON CALLAN
15.1.1 Cost and market value of the portfolio (monthly mark-to-market). M, Q M, Q Q
15.1.2 Modified duration of the portfolio compared to benchmark. M, Q Q
15.1.3 Dollar change in value of the portfolio for a 1%change in interest rate. M, Q Q
15.1.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which M, Q
matches the maturity of such reverse repurchase agreements with the cash flows which
are available to repay them at maturity.
15.1.5 For the Liquid Operating Monies account only,the percent of portfolio maturing within 90 M, Q Q
days.
15.1.6 Average portfolio credit quality. M, Q Q
15.1.7 Percent of portfolio with credit ratings below "A" by any rating agency, and a description M, Q Q
Of such securities.
15.1.8 Listing of any transaction or holdings which do not comply with this policy or with the M, Q
California Government Code.
15.1.9 Time-weighted total rate of return for the portfolio for the prior three months,twelve M, Q Q
months, year-to-date, and since inception compared to the benchmark returns for the
same periods.
ADDL* Comparison of portfolio performance to market index benchmark. M, Q Q
ADDL** Comparison of Manager's performance to peer group benchmark. Q
ADDL** Monitoring of organizational and structural changes of investment management firm. Q
ADDL** Audit portfolios for compliance with investment policy guidelines. Q
15.1.10 OCSD will report if sufficient funds are available for it to meet operating expenditure requirements for the next six months, or if
not, state the reason for the shortfall.
Notes
*M = Monthly
*Q = Quarterly
**ADDL= Monitoring of Additional Performance Characteristics
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RESOLUTION NO. OCSD 14-XX
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT, AUTHORIZING THE DISTRICT'S
TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS,
AND ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT
AND PERFORMANCE BENCHMARKS; AND REPEALING
RESOLUTION NO. OCSD 13-13
WHEREAS, on July 24, 2013, the Board of Directors adopted Resolution
No. 13-13, readopting the District's Investment Policy Statement, and establishing
specific performance benchmarks and objectives, together with a schedule of frequency
of investment performance reports; and
WHEREAS, pursuant to California Government Code Section 53607, the Board
of Directors may delegate authority to invest and/or reinvest District's funds to the
Treasurer for a one-year period; and
WHEREAS, pursuant to California Government Code Section 53646, the District
is required to review its Investment Policy annually and readopt its Policy at a public
meeting, which Policy will establish specific performance benchmarks and objectives,
and specific monitoring and reports.
NOW, THEREFORE, the Board of Directors of the Orange County Sanitation
District, DOES HEREBY RESOLVE, DETERMINE AND ORDER:
Section 1: That the authority of the Board of Directors to invest or reinvest
District's surplus funds, or to sell or exchange securities so purchased, or to deposit for
safekeeping the funds and investments of the Districts with depositories, as provided for
in California Government Code Sections 53608 and 53630, is hereby delegated to the
District's Treasurer for a one-year period commencing on the date this Resolution is
adopted, as authorized by California Government Code Section 53607.
OCSD 14-XX-1
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Section 2: That the Board of Directors hereby adopts the Investment Policy
Statement of the Orange County Sanitation District, as set forth in Exhibit "A", attached
hereto and incorporated herein by reference.
Section 3: That the Board of Directors hereby adopts the following specific
performance benchmarks for their two investment funds in accordance with Section
14.0 of the District's Investment Policy:
LIQUID OPERATING MONIES: The Short-Term Operating Fund will be
compared to the three-month T-Bill rate, and the Callan Active Cash Flow
Income Style Group. The Callan Active Cash Flow Income Style Group
represents a peer group of managers who operate with a maximum maturity of
one year.
LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be
compared to the Merrill Lynch Government and Corporate One-to-Five Year
Maturity Index and to the Callan Defensive Fixed Income Style Group.
Section 4: That the Board of Directors hereby adopts a performance
monitoring and reporting schedule, as required by Section 15.0 of the District's
Investment Policy, which schedule is attached hereto as Exhibit "B", and incorporated
herein by reference.
OCSD 14-XX-2
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Section 5: That Resolution No. OCSD 13-13 is hereby repealed.
PASSED AND ADOPTED at regular meeting of the Board of Directors, Orange
County Sanitation District held July 23, 2014.
Tom Beamish
Board Chair
ATTEST:
Maria E. Ayala
Clerk of the Board
OCSD 14-XX-3
ADMINISTRATION COMMITTEE r4eeting Date TOBd.of Dir.
07/09/14 07/23/14
AGENDA REPORT Item 3 bar Hem Number
3
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES
2014B
GENERAL MANAGER'S RECOMMENDATION
Authorize the General Manager to issue Revenue Refunding Certificate Anticipation
Notes, Series 2014B, as two-year fixed-rate obligations, subject to market conditions, in
an amount not to exceed $135.0 million to replace the $129.625 million Revenue
Refunding Certificate Anticipation Notes, Series 2013A maturing on October 16, 2014.
SUMMARY
In March 2006, the Sanitation District issued $200 million of variable rate Certificates of
Participation (COP), Series 2006 (2006 COPs). Alternatively, the Sanitation District
could have issued debt at an estimated cost of 4.54% on a fixed rate basis in 2006.
From inception through August 2008, the average variable rate on the 2006 COPs was
2.95% or 0.22% less than the SIFMA index (weekly market index of tax-exempt variable
rate obligations). As the global financial crisis took hold in the late summer of 2008,
there was a significant increase in the variable rate borrowing cost of the Sanitation
District, including all municipal borrowers, as the 2006 COPs averaged 4.29% (or 1.56%
above the SIFMA index) for the period between September 2008 and December 2008.
The amount of the increase in variable rate cost above the SIFMA index can be
attributed to the weakened financial strength of the bank, DEPFA Bank plc, that was
providing liquidity support on the 2006 COPs.
In December 2008, the Sanitation District proactively refunded the 2006 COPS with the
Refunding COP Series 2008C Certificate Anticipation Notes (2008C CANS) to reduce its
exposure to then higher and more volatile variable rate costs. The yield on the 2008C
CANs was 0.98% for a one-year period. The issuance of the 2008C CANs allowed the
Sanitation District to redeem the 2006 COPS at an all-in cost of less than 1.25% and
avoid paying a bank rate of 4.75% which would have been effective starting a month
later. Since the 2008C CANs issuance, the Sanitation District completed five additional
one-year refinancings at yields at progressively lower yields as summarized below:
2009E $ 165,865,000 0.370% 0.559%
2010B 154,665,000 0.360 0.525
2011B 143,205,000 0.225 0.399
2012C 131,700,000 0.210 0.410
2013A 129,625,000 0.170 0.390
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The interest rate on the currently outstanding Revenue Refunding Certificate
Anticipation Notes Series 2013A (2013A CANS) was fixed for only one year and the
entire $129.625 million plus interest becomes due and payable on October 16, 2014.
The Sanitation District is responsible for the total repayment, including interest, of
$132.218 million or the Sanitation District could choose to refinance the 2013A CANS.
Due to the expected low tax-exempt cost of refinancing CANS and the ability to
generate higher taxable earnings on reserves, staff does not recommend the use of
$130 million of reserves to repay the 2013A CANS; therefore, there are a number of
refinancing options for consideration of the Sanitation District.
PRIOR COMMITTEE/BOARD ACTIONS
June 2014 — The Board adopted Resolution No. OCSD14-xx, 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 Wastewater Refunding
Revenue Obligations, Series 2014A, authorizing the execution and delivery of such
Revenue Obligations, evidencing principal in an aggregate amount of not to exceed
$225,000,000, 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 Revenue Obligations and authorizing the execution of other necessary
documents and related actions.
ADDITIONAL INFORMATION
Financing Options Available to the Sanitation District
1. Refund the Maturing 2013A CANS with Fixed Rate Debt
The issuance of long-term fixed rate debt to refund the 2013A CANS will eliminate
any future market access risks (ability to issue debt to refinance maturing debt) and
interest rate risk (additional costs if rates reset higher or are higher upon a future
refinancing). After the issuance of fixed rate debt, the Sanitation District will no
longer be exposed to changing market conditions.
The issuance of long-term fixed rate debt in the current market would result in an
average borrowing yield of approximately 3.70%. Fixed rate debt would also remove
the interest rate hedge originally desired by the Sanitation District (in 2006) which
was intended to insulate the District from changes in the District's Fluctuating
investment portfolio earnings as the variable rates on the 2006 COPS were expected
to move in tandem with changes in short-term interest rates.
The following is a current market cost summary (subject to changing market
conditions) of Option 1. (Fixed Rate Debt) over the next year.
3.650% Assumed Average Fixed Rate
0.021 Costs of Issuance (amortized over life of COPS)
0.031 Underwriter Costs (amortized over life of COPS)
3.701% Fixed Rate Cost
Page 2 of 6
2. Refund the Maturing 2013A CANs with Variable Rate Debt
Current variable rates for highly-rated California municipal borrowers (such as the
District) are extremely low at approximately 0.05% for traditional variable rate debt
supported by a commercial bank. However, the availability of bank support
continues to be relatively expensive at approximately seven times the cost of current
variable rates. The terms and conditions currently demanded by banks are also
more onerous than during the period prior to the global financial crisis. Recently,
alternative variable rate products have been developed that do not require bank
support, but these products are generally used by issuers to diversify among a
portfolio containing many different variable rate products, unlike the Sanitation
District's single issuance of short-term interest rate exposure (2013A CANs). In
addition, there are limited investors for these alternative products.
The following is a current market cost comparison (subject to changing market
conditions) of traditional variable rate debt versus Option 1. (Fixed Rate Debt) over
the next year.
Variable% Average Variable Rate
0.354 Bank Liquidity Fee
0.075 Remarketing Fee
0.026 Costs of Issuance (amortized over life of COPS)
0.037 Annual Variable Rate fees (ratings and bank renewal)
0.006 Underwriter Costs (amortized over life of COPs)
0.498% + Variable% (current total of approximately 0.55%) or
If compared to Option 1, average break-even variable rate of 3.15%
3. Refund the Maturing 2013A CANs with a New One-Year CANs issue
Since the issuance of the 2013A CANs, short-term interest rates have continue
to remain low as the current market yield for a one-year CANs is slightly lower
than last year's levels and presently about 0.12%. The issuance of refunding
CANs will continue to allow the Sanitation District to accrue savings at a rate that
is fixed while insulating the District from the possibility of short-term rates
increasing over the fixed rate period. The CANs structure will avoid the payment
of high fees to liquidity banks and eliminate the risk of interest rates resetting
higher from historic low levels during the course of the next year. Although
current variable rates are low at 0.05% (see Option 2. above), there is almost no
room for rates to go lower.
Page 3 of 6
The following is a current market cost summary (subject to changing market
conditions) of Option 3. (one-year CANs) over the next year.
0.120% Assumed One-Year Rate
0.220 Costs of Issuance (amortized over one year)
0.008 Underwriter Costs (amortized over one year)
0.347% or
3.35% less than Option 1. (equal to $3.1 million of cash flow savings)
A comparison of the one-year CANS refinancing structure to Option 2. above
(Variable Rate Debt) shows that future unknown variable rates must be less than
zero for variable rate debt to generate a better economic result.
4. Refund the Maturing 2013A CANS with a New Two-Year CANS issue
In the current market, the difference between a one-year CAN and a two-year
CAN is smaller than in previous years. Last year, when the Sanitation District
was considering the refinancing options of the then outstanding Series 2012C
CANS, the difference in all-in-costs between one-year CANs and two-year CANs
was approximately 0.33% (33 bps (or basis points)).
The following is a current market cost summary (subject to changing market
conditions) of Option 4. (two-year CANs) over the next year.
0.260% Assumed Two-Year Rate
0.110 Costs of Issuance
0.025 Underwriter Costs
0.395% or
3.31% less than Option 1. (equal to $3.1 million of cash flow savings)
A comparison of a two-year CANs refinancing structure to Option 3. above (one-year
CANs) shows only a five bps difference in the all-in costs which is much lower than
the 33 bps differential last year. A two-year CANs issuance will allow the Sanitation
District to lock-in a two-year fixed rate at a cost that is only slightly greater than a
one-year CAN.
The major risk with any CANs structure occurs if the Sanitation District does not
have market access to remarket the CANs at maturity (in 2016 for two-year CANs).
However, the Sanitation District (1) has successfully issued one-year CANs in each
of the last six years, (2) is a AAA/AAA-rated entity, and (3) holds a substantial
amount of reserves that could (if the Board chooses) be used to redeem CANs if
market access is not available. Staff intends to build in safeguards to avoid the use
of Sanitation District reserves unless absolutely necessary: for example, beginning
the process of refinancing well in advance of the maturity date of the CANs [and
structuring the two-year CANS with a short optional call right which will allow the
Sanitation District to redeem the CANs in advance of the maturity date].
Page 4 of 6
To further reduce interest rate risk (additional costs if rates reset higher or are higher
upon a future refinancing) the Sanitation District could reinstate the Accelerated
Rate Management (ARM) program with a CANs refinancing debt issuance.
Between 2006 and 2012, the ARM program used accrued savings (e.g., 0.41% cost
on 2012C CANS) compared to a fixed rate assumption (e.g., fixed rate of 4.54%
available in 2006) to reduce the outstanding amount of debt on a yearly basis. As
less debt is outstanding, the Sanitation District significantly reduces its interest rate
risk (if higher interest rates occur, the negative effect is mitigated as the higher
interest cost is calculated on a smaller principal amount). The implementation of the
ARM program since the issuance of the 2006 COPS has (1) reduced the outstanding
principal by over$70 million and (2) decreased the interest rate risk to the Sanitation
District as the break-even rate (the average future interest rate for the remaining
debt from the 2006 COPS issuance) is now over 10.8%. The original variable rate
structure of the 2006 COPs and the six past CANs refinancings have already saved
the District over $35.7 million compared to the alternative of the District issuing fixed
rate debt in 2006. However, staff does not believe it is the appropriate time to
reinstate the ARM program as the break-even rate is so high that it is extremely
unlikely that any future debt costs will negate the already accrued savings. If the
Sanitation District refinances the 2013A CANs with two-year CANs at current market
conditions and does not reinstate the ARM Program, the break-even rate will still
increase to over 12.70% (in 2016). In addition, the Sanitation District is currently
earning xx% on its investment portfolio which hedges the short-term rate of the
CANs; therefore, the Sanitation District benefits from not using its higher yielding
cash to repay principal on lower costing debt. In addition, the ARM program has
already reduced the outstanding prinicipal amount by $39 million more than the
amount that would have been amortized if the bonds were originally issued as fixed
rate bonds.
The Sanitation District could also extend beyond two years with a CANs refunding
issuance to lock in rates for a longer period of time; however the costs of extending
each additional year of 29-37 bps is much greater than the five bps for extending
from one to two years. The following table presents the current market results for 3-
5 year CANs periods:
e Years
Rate 0.580% 0.96% 1.300%
Costs of Issuance 0.073 0.063 0.050
Underwriter Costs 0.033 0.038 0.040
Total over next ear : 0.687% 1.060% 1.390%
Even as long-term interest rates have been volatile, short-term debt continues to
remain low and attractive, especially rates within one and two years. In addition,
short-term rates act as a hedge on the Sanitation District's cash reserves.
Therefore, staff is recommending Option 4., the refunding of the 2013A CANs with a
new two-year CAN that will enable the Sanitation District to lock-in a low rate for two
years without (a) encumbering cash reserves; (b) exposing the District to relatively
high bank liquidity costs associated with variable rate debt; and, (c) avoiding higher
fixed rates which would increase near-term debt costs by approximately $3.1 million
per year.
Page 5 of 6
Assuming that the staff receives approval to pursue a refinancing, staff will return to
the Administration Committee in September with financing documents to complete
the refinancing. There is the possibility that interest rates may change before
September and, at the time of approval of the financing documents and based on
market conditions at that time, staff may recommend a different refinancing term
(e.g. one-year CANs).
If the Sanitation District pursues Options 1., 3., or 4. (fixed rate options), the
refunding CANS can be sold on a competitive basis in order to obtain the lowest
financing cost possible.
[Staff and consultants will be available to make a brief presentation and provide an
overview of the financing schedule at the Administration Committee meeting.]
Following is a chart listing the remaining steps to be completed for the issuance of
the Revenue Refunding Certificate Anticipation Notes, Series 2014B debt issuance:
➢ Board approval of legal and disclosure documents
September ➢ Financing Corporation approval of legal and disclosure documents
➢ Receive ratings from Bond Rating Agencies
October ➢ Receive competitive bids
➢ Closing
CEQA
N/A
BUDGET / PURCHASING ORDINANCE COMPLIANCE
N/A
Page 6 of 6
ADMINISTRATION COMMITTEE Meeting Date TO 12.of Dir.
07/Og/1a 7/23/14
AGENDA REPORT em 4mbe Item Number
a
Orange County Sanitation District
FROM: James Herberg, General Manager
Originator: Lorenzo Tyner, Director, Finance and Administrative Services
SUBJECT: COMMUNICATION RADIO SYSTEM REPLACEMENT AND UPDATE
GENERAL MANAGER'S RECOMMENDATION
Authorize use of Ordinance No. OCSD-44, Section 2.03:13. Cooperative Purchases for a
blanket order agreement to purchase equipment and services for OCSD's Motorola
radio systems, for a total amount not to exceed $250,000 to include all tax and freight.
SUMMARY
OCSD currently operates a Motorola two-way radio system to communicate with staff in
support of the normal and emergency operations of the treatment plants and collection
system. The existing Motorola radio system was updated in December 2011 however,
and is capable of operating in a digital mode provided all of the handsets are digital
capable. Existing "digital-ready" handheld, vehicle radios, and two transmitters
operating in analog mode will be programed to digital and approximately 100 handheld
radios will be purchased to replace existing analog handheld radios that are not digital
capable.
After the conversion, current radio reception will be evaluated to address and increase
coverage at critical areas of both plants and to mitigate low-to-no reception issues as
identified in the SP-145 Facility-wide Safety Assessment study.
This authorization will allow OCSD to utilize the County of Orange Cooperative
Agreement, No. MA-060-10012594 and procure from accredited vendors and service
providers for Motorola. OCSD will use this agreement to procure parts and services.
This capital requirement is included as SP-165, Communication Radio System
Replacement.
PRIOR COMMITTEE/BOARD ACTIONS
December—2010: Authorized the General Manager to permanently establish Motorola
radio system equipment as OCSD's standard for the licensed,
privately operated, mobile radio system; and,
Page 1 of 2
Authorized use of Resolution No. OCSD 07-04, Section 3.08:
Cooperative Procurement, for purchases of equipment and services
of Motorola radio systems, for a total amount not to exceed
$250,000, to include all tax and freight.
ADDITIONAL INFORMATION
In 2010, the Federal Communications Commission (FCC) mandated the conversion of
existing systems to technology that will allow more channels to operate in the existing
licensed frequency spectrum, otherwise known as "narrowbanding." The previous
Motorola radio system was replaced and upgraded by 2012 to comply with this FCC
mandate. The majority of the existing components can be reprogrammed to meet the
new standards.
CEQA
N/A
BUDGET / PURCHASING ORDINANCE COMPLIANCE
This request complies with authority levels of OCSD Ordinance No. OCSD-44. This
item has been budgeted under the Capital Improvement Project SP-165. Project
contingency funds will not be used for this project.
Page 2 of 2
ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir.
07/09/14 07/23/14
AGENDA REPORT Item Number Item Number
s
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director, Finance and Administrative Services
SUBJECT: PURCHASE OF COMPUTER WIRELESS NETWORK PARTS
GENERAL MANAGER'S RECOMMENDATION
A. Approve a Purchase Order Agreement with New Tech Solutions, the lowest
responsive and responsible bidder, for Purchase of Wireless Cisco Parts,
Specification No. FE-12-03, for an amount not to exceed $106,142.49, delivered
plus tax; and
B. Approve a contingency of$5,307.12 (5%).
SUMMARY
This procurement provides information technology networking equipment required to
complete the Plant No. 2 outdoor Wi-Fi access system. This system was designed to
provide field staff wireless access to online corporate resources such as CMMS,
Maximo, e-mails, and electronic manuals while working in the process areas using
portable tablet computers.
This purchase is in conjuction with Engineering project FE12-03 (Wi-Fi Installation P2)
that will provide the installation of computer wireless network parts in this Specification
No. FE-12-03,
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
This procurement was competitively bid with seven bid packages received. All bid
prices include sales tax and freight. The results are as follows:
Purchase of Wireless Cisco Parts
Bid Date —June 23, 2014 @ 2:00 PM (Pacific)
FE-12-03
Bidder Amount of Bid
New Tech Solutions $106,142.49
NetExperts, Inc. $109,465.90
Page 1 of 2
Presidio Networked $109,545.18
OM Office Supply Inc. $110,078.80
Aprisa Technology $110,328.82
Micro Trends $126,991.28
E.I. Computer Systems $127,116.64
Staff recommends New Tech Solutions be awarded a purchase order for the Purchase
of Cisco Parts as the lowest responsible and responsive bidder.
CEQA
N/A
BUDGET/PURCHASING ORDINANCE COMPLIANCE
This request complies with authority levels of the OCSD's Purchasing Ordinance. This
item has been budgeted in Capital Improvement Project SP-03 (Strategic Information
Architecture). Project contingency funds will be used for this bid.
Date of Approval Contract Amount Contingency
7/9/2014 $ 106,142.49 $5,307.12
ATTACHMENT
N/A
Page 2 of 2
ADMINISTRATION COMMITTEE Meeting fate Toed.of M.
07/09/14 07/23/14
AGENDA REPORT Item 6mbe Item Number
6
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: REDUCTION IN LONG-TERM LIABILITIES
GENERAL MANAGER'S RECOMMENDATION
Direct staff to pay down on the District's unfunded actuarial accrued liability with the
Orange County Employee's Retirement System (OCERS) in the amount of$125 million.
SUMMARY
During the budget development process, staff informed the Board that projected
reserves would exceed the amount required by fiscal policy. Additionally, it was
determined that the District could prudently use these excess funds to reduce the
District's long-term liabilities. As a result, the Adopted FY 2014-15 Budget includes $125
million to reduce its long-term liabilities.
The two available options to reduce long-term liabilities include paying down a portion of
the District's $195 million unfunded actuarial accrued liability (UAAL) administered by
OCERS or paying down the District's $1.2 billion outstanding bonded debt.
The District requested OCERS to provide a UAAL contribution rate for every 1 million of
additional contributions made against the UAAL. Last month, OCERS informed staff
that their actuary had determined that the UAAL rate would be reduced by 0.11% for
each $1 million of additional contributions made by the District towards the UAAL. A
$125 million pay down on the UAAL would result in a decline of the current UAAL rate
by 13.75% (125 X .11%), or from 25.60% to 11.85%.
The following compares the two options of reducing long-term liabilities:
$125 MILLION EARLY PAYMENT OPTIONS(in millions)
Current Status Option 1 Option 2
Payment Categories (No Payment) Pay Down Pay Down
OCERS UAAL Debt
Debt Service(5%) ($ 6.25) ($ 6.25) $ 0.00
Interest Revenue (2%) $ 2.50 $ 0.00 $ 0.00
Normal (OCERS Non-Unay ($ 6.43) ($ 6.43) ($ 6.43)
UAAL Paid to OCERS ($15.85) ($ 7.34) ($15.85)
Total Annual Payment ($26.03) ($20.02) ($22.28)
Annual Savings I (current vs option) 1 $ 6.02 $ 3.75
Page 1 of 2
Based on the comparison above, paying down the OCERS UAAL by $125 million would
yield an annual savings of $6.01 million ($26.03 - $20.02) as opposed to paying down
on bonded debt which would yield an annual savings of$3.75 million ($26.03 - $22.28).
Therefore, staff recommends making a $125 million payment to OCERS paying and
reducing the UAAL.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
BUDGET/PURCHASING ORDINANCE COMPLIANCE
This item has been budgeted.
ATTACHMENT
N/A
Page 2 of 2
ADMINISTRATION COMMITTEE Meebnl ting Date TO Bd.of Dir.
0 4 —
AGENDA REPORT Item Numbe Item Number
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: INFORMATIONAL PRESENTATION ON PROCUREMENT PROCESS
GENERAL MANAGER'S RECOMMENDATION
Information Only.
SUMMARY
As part of the ongoing Board Member Orientation effort, OCSD staff will provide a
general presentation on specific topics that the Board of Directors requested via a survey
conducted in October 2013. Each month a different topic will be presented to both the
Operations Committee and Administration Committee.
This presentation will provide a brief and general overview of the Procurement Process.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
The following informational presentations have been provided to both Operations and
Administration Committees:
• February - OCSD Budget and Finances
• March - Water Quality and OCSD's Disinfection Program
• April - Community Outreach Program
• May- Reserves, Investments and Financial Policies
• June - Collections
CEQA
N/A
BUDGET/PURCHASING ORDINANCE COMPLIANCE
N/A
Page 1 of 1
ORANGE COUNTY SANITATION DISTRICT
Agenda
Terminology Glossary
Glossary of Terms and Abbreviations
AQMD Air Quality Management District
ASCE American Society of Civil Engineers
BOD Biochemical Oxygen Demand
CARB California Air Resources Board
CASA California Association of Sanitation Agencies
CCTV Closed Circuit Television
CEQA California Environmental Quality Act
CRWQCB California Regional Water Quality Control Board
CWA Clean Water Act
CWEA California Water Environment Association
EIR Environmental Impact Report
EMT Executive Management Team
EPA U.S. Environmental Protection Agency
FOG Fats, Oils, and Grease
FSSD Facilities Support Services Department
gpd Gallons per day
GWR System Groundwater Replenishment System (also called GWRS)
ICS Incident Command System
IERP Integrated Emergency Control Plan
LOS Level of Service
MGD Million gallons per day
NACWA National Association of Clean Water Agencies
NPDES National Pollutant Discharge Elimination System
NWRI National Water Research Institute
O&M Operations and Maintenance
OCCOG Orange County Council of Governments
OCHCA Orange County Health Care Agency
OCSD Orange County Sanitation District
OCWD Orange County Water District
GOBS Ocean Outfall Booster Station
OSHA Occupational Safety and Health Administration
POTW Publicly Owned Treatment Works
ppm Parts per million
RFP Request For Proposal
RWQCB Regional Water Quality Control Board
SARFPA Santa Ana River Flood Protection Agency
Glossary of Terms and Abbreviations
SARI Santa Ana River Inceptor
SARWQCB Santa Ana Regional Water Quality Control Board
SAWPA Santa Ana Watershed Project Authority
SCADA Supervisory Control and Data Acquisition system
SCAP Southern California Alliance of Publicly Owned Treatment Works
SCAQMD South Coast Air Quality Management District
SOCWA South Orange County Wastewater Authority
SSMP Sanitary Sewer Management Plan
SSO Sanitary Sewer Overflow
SWRCB State Water Resources Control Board
TDS Total Dissolved Solids
TMDL Total Maximum Daily Load
TSS Total Suspended Solids
WDR Waste Discharge Requirements
WEF Water Environment Federation
WERF Water Environment Research Foundation
Activated-sludge process — A secondary biological wastewater treatment process where bacteria
reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved
nutrients in the wastewater.
Benthos— The community of organisms, such as sea stars, worms and shrimp, which live on, in, or
near the seabed, also know as the benthic zone.
Biochemical Oxygen Demand (BOD)—The amount of oxygen used when organic matter undergoes
decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in
water.
Biosolids — Biosolids are nutrient rich organic and highly treated solid materials produced by the
wastewater treatment process. This high-quality product can be recycled as a soil amendment on
farm land or further processed as an earth-like product for commercial and home gardens to improve
and maintain fertile soil and stimulate plant growth.
Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets.
Also includes treatment improvements, additional capacity, and projects for the support facilities.
Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also
occasionally found elsewhere used as indicators of sewage pollution. E. coli are the most common
bacteria in wastewater.
Collections system — In wastewater, it is the system of typically underground pipes that receive and
convey sanitary wastewater or storm water.
Certificate of Participation (COP) —A type of financing where an investor purchases a share of the
lease revenues of a program rather than the bond being secured by those revenues.
Glossary of Terms and Abbreviations
Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic
wastewater contaminants.
Dilution to Threshold (D!f) — the dilution at which the majority of the people detect the odor
becomes the DrT for that air sample.
Greenhouse gases — In the order of relative abundance water vapor, carbon dioxide, methane,
nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse
effect").
Groundwater Replenishment (GWR) System — A joint water reclamation project that proactively
responds to Southern California's current and future water needs. This joint project between the
Orange County Water District and the Orange County Sanitation District provides 70 million gallons a
day of drinking quality water to replenish the local groundwater supply.
Levels of Service (LOS)—Goals to support environmental and public expectations for performance.
NDMA— N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been
found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide
with extra ultra-violet treatment.
National Biosolids Partnership (NBP) — An alliance of the National Association of Clean Water
Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S.
Environmental Protection Agency (EPA). NBP is committed to developing and advancing
environmentally sound and sustainable biosolids management practices that go beyond regulatory
compliance and promote public participation in order to enhance the credibility of local agency
biosolids programs and improved communications that lead to public acceptance.
Plume—A visible or measurable concentration of discharge from a stationary source or fixed facility.
Publicly-owned Treatment Works (POTW)— Municipal wastewater treatment plant.
Santa Ana River Interceptor (SARI) Line — A regional brine line designed to convey 30 million
gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the
ocean for disposal, after treatment.
Sanitary sewer — Separate sewer systems specifically for the carrying of domestic and industrial
wastewater. Combined sewers carry both wastewater and urban run-off.
South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that
develops plans and regulations designed to achieve public health standards by reducing emissions
from business and industry.
Secondary treatment — Biological wastewater treatment, particularly the activated-sludge process,
where bacteria and other microorganisms consume dissolved nutrients in wastewater.
Sludge—Untreated solid material created by the treatment of wastewater.
Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater.
Trickling filter — A biological secondary treatment process in which bacteria and other
microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in
wastewater as it trickles over them.
Glossary of Terms and Abbreviations
Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm
drains, rivers, lakes, and oceans.
Wastewater—Any water that enters the sanitary sewer.
Watershed —A land area from which water drains to a particular water body. OCSD's service area is
in the Santa Ana River Watershed.