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HomeMy WebLinkAbout07-24-2013 Steering Committee Agenda Packet.pdf Wednesday, July 24, 2013 Orange County Sanitation District 5:30 P.M. Regular Meeting of the Administration Building Steering Committee Conference Rooms A R B 10844 Ellis Avenue Fountain Valley, CA 92708 „ (714) 593-7130 AGENDA 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 Directors. These reports are for information only and require no action by the Directors. • General Manager's Year-End Report and 2013/14 Work Plan • Low-flow Rate Alternative CONSENT CALENDAR: 1. Approve Minutes of the June 26, 2013 Steering Committee Meeting. 2. Approve the placement of a Memorial Plaque at Plant No. 2, Headworks "D" facilities, in recognition of Pamela Koester for her contributions to the Orange County Sanitation District. ACTION ITEMS: 3. A. Consideration of John Collins, past Board Member, as an Honor Walk Brick Recipient for the year 2013. B. Approve nominated retired employees, Ron Wade and Mohammed Babaielivari, as Honor Walk Brick Recipients for the year 2013. 07/24/13 Steering Committee Agenda Page 1 of 4 4. Recommend to the Board of Directors to: A. Declare the Orange County Sanitation District's position on the changes to the Orange County Retirement System (OCERS) Unfunded Actuarial Accrued Liability (UAAL) Amortization Period; and B. Provide direction to the General Manager on measures to be taken in representing declared Board position. INFORMATION ITEMS: 5. Legislative Update CLOSED SESSION: During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a) purchase and sale of real property, (b) matters of pending or potential litigation; (c) employment actions or negotiations with employee representatives;or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information. Convene in closed session. 1. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION (Government Code Sections 54956.9(d)(2), 54956.9(e)(3)) Significant Exposure to Litigation Number of Potential Cases: 1 Kiewit Claim re. P1-102 2. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION (Government Code Section 54956.9(d)(4)) Initiation of Litigation Number of Potential Cases: 2 o SAW PA Enforcement/Cost Recovery Action o Disclosure of Information 3. CONFERENCE WITH LEGAL COUNSEL RE. EXISTING LITIGATION 07/24/13 Steering Committee Agenda Page 2 of 4 (Government Code Section 54956.9(d)(1)) Number of Potential Cases: 1 City of Anaheim v. Matosantos, Sacramento County Superior Court, Case No. 2013-80001529 Reconvene in regular session. Consideration of action, if any, on matters considered in closed session. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: The next Steering Committee meeting is scheduled for Wednesday, August 28, 2013, 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 office at 714 593-7130 at least 72 hours prior to the scheduled meeting. Requests mustspecify the nature of the disability 07/24/13 Steering Committee Agenda Page 3 of 4 and the type of accommodation requested. Agenda 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. Maria E.Ayala Clerk of the Board (714)593-7130 mavala(d)ocsd.com For any questions on the agenda,Committee members may contact staff at: General Manager Jim Herberg (714)593-7110 iherbemaocsd.com Assistant General Manager Bob Ghirelli (714)593-7400 rghireIII(Qocsd.com Director of Engineering Nick Kanstis (714)593-7310 nkanetis0locsd.cem Director of Facility Support Services Nick Arhontes (714)593-7210 narhontesGDocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Itynenfilocsd.com Administrative Services Director of Human Resources Jeff Reed (714)593-7144 ireedlglocsd.com Director of Operations&Maintenance Ed Torres 714 593-7080 etorres ocsd.com 07/24/13 Steering Committee Agenda Page 4 of 4 ITEM 1 MINUTES STEERING COMMITTEE MEETING Orange County Sanitation District The Steering Committee meeting convened on Wednesday, June 26, 2013, at 5:30 p.m. in the Administration Building of the Orange County Sanitation District. A quorum was declared present, as follows: COMMITTEE MEMBERS STAFF PRESENT PRESENT: Jim Herberg, General Manager Troy Edgar, Chair Bob Ghirelli, Assistant General John Anderson, Vice-Chair Manager Tom Beamish, Operations Committee Nick Arhontes, Director of Facilities Chair Support Services Brad Reese, Administration Committee Nick Kanetis, Director of Engineering Chair Jeff Reed, Director of Human John Nielsen Resources John Withers Ed Torres, Director of Operations & Maintenance COMMITTEE MEMBERS ABSENT: Lorenzo Tyner, Director of Finance & Administrative Services None. Maria Ayala, Clerk of the Board Janine Aguilar Jennifer Cabral Al Garcia Norbert Gaia Michael Gold Denise Martinez Rich Spencer OTHERS PRESENT: Brad Hogin, General Counsel Jim Ruth, Consultant PUBLIC COMMENTS: None. COMMITTEE CHAIR REPORT: Chair Edgar reported on the Sanitation District's Strategic Plan planning process. Part of the process may also include a potential legislative leadership group working with the District's lobbyists in the future. Minutes of the Steering Committee June 26, 2013 Page 2 of 3 GENERAL MANAGER REPORT: General Manager, Jim Herberg, announced that his monthly report includes information on the Sanitation District's outreach program. He also announced that next week's Operations Committee Meeting will be held at Plant 2; and a walking tour will be given to the Committee prior to the meeting. CONSENT CALENDAR: 1. MOVED, SECONDED, AND DULY CARRIED: Approve Minutes of the May 22, 2013 Steering Committee Meeting. ACTION ITEMS: None. INFORMATION ITEMS: 2. Legislative Update Michael Gold provided a legislative update on various bills that may pose a significant impact to the District. CLOSED SESSION CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS: 54957.6, 54956.9(d)(4), and 54956.9(d)(2). The Committee convened in closed session at 5:41 p.m. to discuss five items. Confidential Minutes of the closed Session have been prepared in accordance with the above Government Code Sections 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 6:27 p.m. Minutes of the Steering Committee June 26, 2013 Page 3 of 3 CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: The Chair declared the meeting adjourned at 6:27 p.m. Submitted by: Maria E. Ayala Clerk of the Board STEERING COMMITTEE Meeting Dare To ad.of Di, 07,24/13 -- AGENDA REPORT Item Number Item Number 2 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Nick Kanetis, Director of Engineering SUBJECT: PAMELA KOESTER RECOGNITION GENERAL MANAGER'S RECOMMENDATION Approve the placement of a Memorial Plaque at Plant No. 2, Headworks "D" facilities, in recognition of Pamela Koester for her contributions to the Orange County Sanitation District. SUMMARY Pamela (Pam) Koester was an Orange County Sanitation District (OCSD) employee from 2002 until her untimely death in June 2013. For three years prior to this period, she worked at OCSD as a Consultant Project Manager through a technical staffing agency. Pam Koester was completely devoted to OCSD, its mission, and in performing an exemplary job. She committed herself to being the best Project Manager she could be and led project teams by example displaying a strong sense of character and working hard to do whatever needed to be done for the successful completion of her projects. She worked on large and complex projects, some of the most difficult OCSD has ever undertaken, and these projects were a remarkable success in large part due to her detailed planning and her commitment to excellence. Among her many accomplishments as a Project Manager at OCSD, being the Project Manager of Headworks Improvements at Plant No. 2, Project P2-66, was the main focus during her tenure. The project is the largest and most complicated project ever completed by OCSD. Pam spent a significant portion of her life making the new Headworks Facility at Plant No. 2 the best it could be and led a team that transformed a concept on a page to the completed facility in operation today. To recognize Pam for her accomplishments, this item requests the placement of a plaque in her memory on the Headworks Facility at Plant No. 2 pursuant to Board Resolution OCSD 08-08. PRIOR COMMITTEE/BOARD ACTIONS N/A Page 1 of 2 ADDITIONAL INFORMATION The proposed memorial will consist of a brass plaque recognizing Pamela Koester, Project Manager, to be placed at the entrance to the headworks electrical building, Distribution Center "H." This location was chosen since there is an existing brass plaque at this location with the name of the project including the names of the Designers and Contractors for the project. This proposed memorial would be placed adjacent to this existing plaque. CEQA N/A BUDGET/DELEGATION OF AUTHORITY COMPLIANCE This request complies with authority levels of the Orange County Sanitation District's Delegation of Authority. This item has been budgeted. ATTACHMENT None. DF:dm:gc Page 2 of 2 STEERING COMMITTEE Meeting Date To ad.of W. 07,24,13 -- AGENDA REPORT Item Number Item Number 3 Orange County Sanitation District FROM: James D. Herberg, General Manager SUBJECT: SELECTION OF HONOR WALK RECIPIENTS GENERAL MANAGER'S RECOMMENDATION A. Consideration of John Collins, past Board Member, as an Honor Walk Brick Recipient for the year 2013. B. Approve nominated retired employees, Ron Wade and Mohammed Babaielivari, as Honor Walk Brick Recipients for the year 2013. SUMMARY The Steering Committee is being asked to consider and act on the nomination of two retired employees and one past Board Member to receive Honor Walk bricks in 2013. PRIOR COMMITTEE/BOARD ACTIONS June 2008 — Board adopted Resolution No. OCSD 08-08 establishing a policy for naming facilities and placing of monuments and other memorials. ADDITIONAL INFORMATION In 2008 the Steering Committee adopted a resolution that provided a framework for recognizing past Board Members and retired staff for their outstanding contributions. One of the results of this resolution and the discussions that followed was the creation of the Honor Walk in front of the Administration Building in 2009 with the first honoree recognized in 2010. This year, the Steering Committee is being asked to consider nominees to receive an Honor Walk brick in 2013. In late July 2009, the Honor Walk bricks were installed in front of the Administration Building and staff circulated a form to accept nominations for the Walk. Honorees could be past board members or retired staff who made significant contributions to OCSD and the people it serves. The policy and procedures developed by the Steering Committee stipulate that the General Manager makes recommendations to the Steering Committee for retired staff nominees and the Steering Committee will deliberate and decide on past Board Members. Page 1 of 2 The criteria adopted by the Board of Directors for selecting an Honor Walk are: • Have a long standing affiliation with the Orange County Sanitation District. • Enhanced the quality of operations and/or leadership directly contributing to the well-being of the District and people served by the District. • Made an exceptional contribution to the community through their leadership, involvement or substantial commitment of time or improvement of the quality of life. PAST BOARD MEMBER NOMINEE This year, past Board Member John Collins was nominated for an Honor Walk brick by current Board Member James Ferryman. Attached is the nomination form for past Board Member John Collins submitted for consideration by the Steering Committee. RETIRED STAFF NOMINEES Seven employees were nominated for Honor Walk bricks this year; however, a committee of five employees from different divisions representing various years of service, reviewed the seven candidates and made recommendations to the Executive Management Team (EMT). The employee committee carefully reviewed the nominations, interviewed current staff and took additional comments. Based on the complete review the committee is recommending two employees. The two employees collectively have provided over 50 years of service to the public; and have made significant, unique, and outstanding contributions to OCSD. The EMT unanimously accepted these two recommendations and the General Manager is recommending both for an Honor Walk brick this year. ATTACHMENT The following attachment(s) is provided in hard copy and may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: • Honor Walk Recipient Nomination Submittal for John Collins Page 2 of 2 Return to Mende Report July 10, 2013 Honor Walk Nomination for John Collins Submitted by James Ferryman, OCSD Board Member John Collins of Fountain Valley served the Orange County Sanitation District as a member of the Board of Directors from 1990 through 1999 and from 2002 through 2004. During this time, he served as: • Chairman,Joint Board of Directors (1996 through 1998) • Chairman,District 2 Board of Directors (1993-1996) • Chairman,Planning,Design, and Construction Committee (1994-1996) • Chairman,Ad Hoc Strategic Plan Committee (1998-1999) • Member, Steering Committee (1998-1999) • Member, Groundwater Replenishment System Committee (1998-1999;2004);Vice Chairman (1999) John Collins played an integral role in the Development of the 1999 Strategic Plan/Master Plan,both as a concerned member of the Board and as Chair of the Ad Hoc Committee that guided development of the Strategic Plan/Master Plan. As a member of that Committee, he was instrumental in working with the Rate Advisory Committee and the Planning Advisory Committee. The Committees were two of the District's most successful public-outreach efforts; they helped ensure an equitable sewer service rate structure and the development of a Strategic Plan/Master Plan that met Orange County's wastewater treatment needs into the 2P'century. He also served on the Board when those needs changed after the vote to proceed to full secondary treatment and disinfection of the effluent in July 2002. As Chairman of the Planning, Design, and Construction Committee, he was also instrumental in reducing the number of change orders for the Capital Improvement Program. He took the responsibilities of Chairman very seriously and spent many hours preparing for committee and board meetings and meeting with staff on issues that came before the Board of Directors. With the passage of special legislation that John helped design, the consolidation of the County Sanitation Districts of Orange County was realized in 1998; nine individual districts were consolidated into one agency. He worked tirelessly for over a year with Sacramento lawmakers and the Local Agency Formation Commission (LAFCO) to gain Return to Mende Report passage of AB 769, a bill signed into law by Governor Pete Wilson that helped streamline the Orange County Sanitation District governance system, guaranteeing ,one city, one vote'. John firmly believed in the concept of the Groundwater Replenishment System and was a member of the Joint Groundwater Replenishment System Cooperative Committee that included members from the Sanitation District and the Orange County Water District. He was an early advocate and actively promoted the project by personally detailing the benefits of the project to some who, at the time, did not see the need for the project, and to some who did not believe the benefits of the project were worth the cost. Through John's leadership, and the support of many others, the project was built and is world-renowned. The expansion project currently under construction will increase production from 70 million gallons per day to 100 million per day. As Chairman of the Board, John frequently used his interpersonal skills to assist the General Manager in promoting positive relationships among the members of the Board and District staff. He took great pride in the positive feedback from staff for his work in helping to make the Committee and Board meetings a venue for transparency and respect in sharing information for the benefit of the District. John Collins made an exceptional contribution to the Orange County Sanitation District through his tireless efforts to seek passage of the consolidation legislation, his unwavering support of the GWRS project, and his commitment of countless hours of his time for the benefit of OCSD and its ratepayers. I am pleased to nominate former Board member and Chairman of the Board John Collins for recognition on the OCSD Honor Walk. James Ferryman, Board Member STEERING COMMITTEE Meeting Date TOBA.Of Dir. 07/24/13 07/24/13 AGENDA REPORT Item Number Item Number 4 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ORANGE COUNTY RETIREMENT SYSTEM (OCERS) UNFUNDED ACTUARIAL ACCRUED LIABILITY (UAAL) AMORTIZATION PERIOD GENERAL MANAGER'S RECOMMENDATION A. Declare the Orange County Sanitation District's position on the changes to the Orange County Retirement System (OCERS) Unfunded Actuarial Accrued Liability (UAAL) Amortization Period; and B. Provide direction to the General Manager on measures to be taken in representing declared Board position. SUMMARY The Sanitation District is a member agency of the Orange County Retirement System (OCERS). Based on the composition of our staff, the Sanitation District makes annual payments to OCERS to ensure there are sufficient funds to support our portion of the system. Currently, as a result of recent investment performance and future economic projections, OCERS has reported an Unfunded Actuarial Accrued Liability (UAAL), a gap between the funds collected and amount required to support the system. OCERS has developed a plan to fund this liability using a 30-year amortization schedule. As a result, all member agencies are required to increase their payments to OCERS during this period. Continuation of the use of this 30-year period was recommended by the OCERS actuarial and approved by the OCERS Board in June. However, the OCERS Board will be reconsidering the 30-year period and potentially shorten the amortization period, perhaps to 25 years or less. Reducing the amortization period would reduce interest costs over the amortization period, but result in increased payments by all member agencies, including the Sanitation District. Page 1 of 2 As a result of OCERS changes to its economic assumptions, the Sanitation District will incur additional payment costs of $2.6 million in 2014 and an additional $2.6 million 2015. As these assumption changes were approved after the completion of our five- year rate program, these impacts are not included in our current cash flow model. It will be necessary to identify expenditure/service/revenue adjustments beyond the planned reserve reduction to accommodate these costs. The shortening of the amortization period from 30 years to 25 years will require additional adjustments beyond that. PRIOR COMMITTEE/BOARD ACTIONS None ADDITIONAL INFORMATION None CEQA None BUDGET / DELEGATION OF AUTHORITY COMPLIANCE None ATTACHMENT The rollowing attachment(s) are provided in hard copy and may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Actuarial Summary • OCERS Actuarial Report Page 2 of 2 Return to Aoenda Reporl ORANGE COUNTY CCERS FMPL nYEFs RETIREMENT SYSTEM sRTw.gmm�rnPH.rra April 30,2013 awnMd n+.NmaR r � CI CANNOREAR, CAeISIRANO COUNTY OF ORANGE James Herberg, P.E. OR.NOECOGNOw Orange County Sanitation District CEmEIERYolsmEt 10844 Ellis Avenue Fountain Valley, CA 92708-7018 ORANGE COUNTY CHILDREN NFAmIpE6 COMM16610N ' ORANGE COUNTY Dear Mr. Herberg, DEPARTMENTOF EDUCATION(CLOaDTO I am writing to provide your agency with some background to an issue that has been NEW MEMREPS) under consideration for several months by the Board of Retirement of the Orange County ORANGECDUNIv EmployeesEMPOYES Retirement System (OCERS) With changes to public pension plan reporting g REEMGMRNTSY.. requirements coming into effect next year due to the implementation of GASB ORANGE COUNTY FIRE (Governmental Accounting Standards Board) 67, it is necessary for OCERS to pull its AurmoM Y existing actuarial funding policy together into a single policy document. OCERS' CHANGE 00mN IY iN-Home actuary, The Segal Company, is taking this opportunity to review current policy and SUPFORTIVE SERVICE6 PUHUCA TORITY recommend some modifications. ORANGECOINI Y LOCAL h AGENCY I The Segal gal Company finds that the majority of OCERS' current funding policies are well within the scope of model practices, and Segal is making only minor change onn^vnncowTY P'T L recommendations. One key modification Segal is recommending is that OCERS change `A`°`E"'RY how long it amortizes future unfunded liabilities caused by changes in actuarial oHANOL COUNTe assumptions. Similar to a home mortgage, an amortization period determines how long it IgRl11,ON OISINCT is going to take for an employer participating in OCERS to pay off its unfunded °x''NG"R`UDN" liabilities...Let's saythat OCERS assumed our members would live another 20 ears 'AIAl L'ORTA1ION Y AU[IIO"LL" following retirement, but experience turns out to be different and we have to increase the SUF,:RmR couRT GF ! years we assume a retired member will live causing an increase in liability to the fund. Gi L FORv]A,COUNTY Or ORANn Presently we would take 30 years to pay off that liability. The Segal Company, working with the California Actuarial Advisory Panel suggests that the Board lower the faCL,ELL.L A, - corcnmon nGErvass amortization period to 25 years for those future liabilities. Please note that because[hose ua M.O,rAT(INTER AND are future liabilities Segal cannot estimate what the cost impact might be as it has not yet CAN II-((Lareo TO occurred. MR,E,) ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM ♦2223 E. Wellington Avenue,Suite 100,Santa AND. CA 92701 _ Telephone(714)558-6200 Fax(714)558-6234 While Segal has not made a recommendation to change the period for amortizing current liabilities [presently standing at $4.5 billion], questions have been posed to Segal during the discussions as to the impact of either lengthening the amortization period by more than its present 30 year limit, as well as the impact of shortening it even further than the recommended 25 years. Of course taking a longer time to pay (lengthening the amortization period) would lower employer's contribution rates, though it would cost more in total interest over the long term, while shortening the amortization period would - cause employer contribution rates to rise in absolute dollars, though it would save total interest costs over that shortened period of time. The OCERS Board voted at their monthly meeting held on April 15, to return to this topic when they meet on June 17 to allow our various stakeholders time to further study this issue and share their thoughts or recommendations with the OCERS Board at that later date. Please feel free to contact me should you have any questions, comments or concerns regarding this material. Sincerely, Steve Delaney _ CEO Orange County Employees Retirement System 2 Funding Policy Actuarial Funding Policy June 17 , 2013 ANDY YEUNG , ASA, MAAA, FCA, EA Vice President and Associate Actuary The Segal Company 52540810 _T�_ SEGAL I OCERS - Actuarial Funding Policy Funding Policy Components ➢ Actuarial Cost (Funding) Method — allocates costs to time periods , past vs . future ➢ Asset Smoothing Method — assigns a value to assets for determining contribution requirements ➢ UAAL Amortization Policy — how, and how long to fund difference between liabilities and assets ➢ Interest crediting and excess earnings policy Unique to 1937 Act county systems Generally separate from funding policy Slide 2 SEGAL I OCERS - Actuarial Funding Policy Retum to Agenda Report Funding Policy and Annual Cost Amortization of Unfunded Actuarial Accrued Liability Actuarial Unfunded Value of Actuarial Accrued Assets Liability Mesent Value of Future Normal Costs Normal Cost Slide 3 � SEGAL I OCERS - Actuarial Funding Policy General Policy Objectives 1 . Future contributions plus current assets sufficient to fund all benefits for current members y Contributions = Normal Cost + full UAAL payment 2 . Reasonable allocation of cost to years of service y Both expected costs and variations from expected costs 3 . Reasonable management and control of future employer contribution volatility Consistent with other policy objectives Slide 4 � SEGAL OCERS - Actuarial Funding Policy Mu.to Aaende Report General Policy Objectives 4 . Support public policy goals of accountability and transparency ➢ Clear in intent and effect ➢ Allow assessment of whether, how and when sponsor will meet funding requirements ➢ Enhance credibility and objectivity of cost calculations Slide 5 '� SEGAL I OCERS — Actuarial Funding Policy General Policy Objectives ➢ Policy objectives 2 and 3 reflect two aspects of the general policy objective of "interperiod equity" ( IPE ) . ➢ Objective 2 promotes "demographic matching" intergenerational interperiod equity ➢ Objective 3 promotes "volatility management" �, period-to-period interperiod equity ➢ These two aspects of IPE tend to move funding policy in opposite directions . policy objectives 2 and 3 combine to seek to balance intergenerational and period-to-period IPE demographic matching vs. volatility management Slide 6 '� SEGAL OCERS - Actuarial Funding Policy Retum to Agenda Reoort OCERS Current Funding Policy ➢ Cost method Entry Age Normal (EAN) ➢ Asset smoothing method 5-year smoothing period without a market value corridor Reaffirmed by the Board in 2009 ➢ UAAL amortization policy Layered approach for UAAL established after 12/31 /2004 15 years for gains or losses and plan amendments 30 years for assumption changes UAAL prior to 12/31 /2004 combined and amortized over 30 years 22 years left as of 12/31 /2012 Level percent of pay amortization Slide 7 _T�_ SEGAL I OCERS - Actuarial Funding Policy Funding Policy Recommendations ➢ No change to Entry Age Normal cost method Used by other California public retirement systems ➢ No change to asset smoothing method Most California public retirement systems use 5 years y Sacramento CERS & two City of LA plans use 7 years Use the same period to smooth investment gains and losses Slide 8 'T- SEGAL OCERS - Actuarial Funding Policy Ret ` `°AaedaReoort Funding Policy Recommendations ➢ Focus of today's discussion is on amortization policy ➢ Separate decisions on future versus current UAAL ➢ Emerging model practices for (future) UAAL amort. Shorter than 30 years for assumption changes Plan Amendments Shorter periods than for other sources of UAAL r Particularly for Early Retirement Incentive Programs Surplus Longer periods than for UAAL Allows consideration of other Surplus management tools Slide 9 _T�_ SEGAL OCERS — Actuarial Funding Policy Funding Policy Recommendations ➢ Amortization periods for current UAAL Equivalent single amortization period : between 19 and 20 years as of 12/31 /2012 No compelling actuarial reasons for shortening or lengthening the amortization periods for current UAAL Unless goal is to accelerate or decelerate plan's progression to 100% funding • With a corresponding increase or decrease in current employer contributions Slide 10 SEGAL OCERS — Actuarial Funding Policy Realm to Agenda Report Amortization Policy ➢ Component of Annual Contribution Normal cost plus amortization of unfunded liability ➢ Sources of Unfunded Liability Plan changes Assumption or method changes Gains / losses ➢ Amortization policy includes : Structure: Single UAAL or in layers Also: fixed (closed) or rolling (open) amortization Payment pattern : level dollar or level percent of pay Periods: how long to fund the UAAL Slide 11 _T�_ SEGAL OCERS — Actuarial Funding Policy Amortization Structure ➢ OCERS amortizes UAAL in layers ➢ Model approach : multiple amortization layers First layer is the combined UAAL as of December 31 , 2004 Each year, new layer of UAAL for gain/loss, assumption/method changes, plan amendments Can use different periods for different sources of UAAL v OCERS: 15 years for gains or losses and plan amendments v 30 years for assumption or method changes ➢ Key issue: current UAAL layers as of December 31 , 2013 (proposed effective date) Current net amortization equivalent to about 19-20 years Could simply continue current declining amortization periods Or adopt a shorter/longer period — with immediate cost impact Slide 12 SEGAL I OCERS - Actuarial Funding Policy Return to Agenda Reoon Illustration of Amortization Methods 7.25% interest 30 years 30 years 25 years 20 years 15 years 3.75% salary incr. Flat dollar % of pay % of pay % of pay % of pay Increase in AAL 1,000,000 1 ,000,000 1 ,000,000 1 ,000,000 1 ,000,000 Amortization factor 12.1037 18.0116 16.1061 13.8568 11.2017 (first year) 0.082620 0.055520 0.062088 0.072167 0.089272 Amortization amount Year $ 82,620 $ 55,520 $ 62,088 $ 72,167 $ 89,272 Year15 $ 82,620 $ 92,957 $ 103,954 $ 120,828 $ 149,469 Year20 $ 82,620 $ 111 ,743 $ 124,963 $ 145,248 $ 0 Year30 $ 82,620 $ 161 ,474 $ 0 $ 0 $ 0 Total amount paid Principal $ 1 ,000,000 $ 1 ,000,000 $ 1 ,000,000 $ 1 ,000,000 $ 1 ,000,000 Interest 1 ,478,589 1 ,986,918 1 ,500,357 1 ,094,084 754,709 Total $ 2,478,589 $ 2,986,918 $ 2,500,357 $ 2,094,084 $ 1 ,754,709 Slide 13 _T�_ SEGAL OCERS - Actuarial Funding Policy Illustration of Amortization Periods - Annual Payment ($ in 000s) $200 —C-30 Years Level Dollar t30 Years Level Percent —A�25 Years Level Percent t20 Years Level Percent t15 Years Level Percent $150 N 0 0 c_ w c E $100 m a m 3 c c Q $50 Annual Payment on $1 Million UAAL $o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Beginning of Year Slide 14 SEGAL OCERS - Actuarial Funding Policy Return to Aaentla Reootl Negative Amortization ➢ $ 1 , 000 , 000 liability, 7 .25% interest ➢ First year interest only is $72 , 500 ➢ With level dollar payments , payments are always greater than interest ➢ With level percentage payments , early payments can be less than interest UAAL increases (but not as a percentage of payroll ! ) Eventually larger payments cover interest plus increased UAAL With current assumptions, negative amortization if amort. period is longer than about 20 years Slide 15 '� SEGAL OCERS - Actuarial Funding Policy Illustration of Amortization Periods — Outstanding UAAL Balance ($ in 000s) $1,500 —C-30 Years Level Dollar t30 Years Level Percent —A�25 Years Level Percent t20 Years Level Percent t15 Years Level Percent $1 Million Initial UAAL Balance H c $1,000 C_ N U C N m3 C C $500 A N 3 ° Outstanding UAAL Balance $o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Beginning of Year Slide 16 SEGAL I OCERS - Actuarial Funding Policy Return to Agenda Reoon Model Fixed Layer Periods ➢ Tradeoff between demographic matching and volatility management Two aspects of Interperiod equity" Constraint: consideration of negative amortization Exception : volatility generally N/A for plan changes ➢ Under 15 years : too volatile ➢ Over 20 (25?) years : too much neg . amortization s 25 is the new 30 : "out of bounds marker" s 30 years reserved for surplus r Normal Cost requires UAAL/surplus "asymmetry" Slide 17 _T�_ SEGAL OCERS — Actuarial Funding Policy Model Amortization Periods ➢ Gains and losses : 15 to 20 years y Volatility management, but avoid too long a period ➢ Assumption and method changes : 20 to 25 years y Long term remeasurements , so could justify longer amortization than for gains and losses To illustrate impact, what if assumption changes approved in the last 6 years were amortized over 25 year instead of 30 years? (see Segal's April 4 , 2013 letter) r 0 . 3% to 0.9% of payroll , depending on Rate Group Slide 18 SEGAL OCERS - Actuarial Funding Policy Return to Agenda ReQoN Model Amortization Periods ➢ Plan amendments : demographic ( 15 yrs . or less) y Avoid any negative amortization since changes are within control of plan sponsor s Demographic matching for actives or inactives s Much shorter for Early Retirement Incentives (< 5 yrs) Slide 19 _T�_ SEGAL OCERS - Actuarial Funding Policy Contributions when Plan has surplus ➢ Usual contribution is NC plus UAAL amortization ➢ Surplus : contribute NC minus Surplus amortization ➢ Short surplus amortization periods means contribution holidays , even with modest surplus See late 1990s for real life examples ➢ Recommended approach : minimum contribution 30 year amortization of surplus ➢ CaIPEPRA further limits amortization of surplus Funded ratio has to be > 120% Slide 20 '� SEGAL I OCERS - Actuarial Funding Policy Return to AgendaReootl Alternative Periods for Future UAALs ➢ Applies only to future changes in UAAL No immediate impact to contribution rates Any changes would be implemented in 12/31 /2013 valuation and would apply to any new changes in UAAL on or after 1 /1 /2013 Source Current Alt #1 Alt #2 Alt #3 Actuarial Gains or 15 15 20 15 Losses Assumptions or 30 20 20 25 Method Changes Plan Amendments 15 15 or less 15 or less 15 or less ERIPs 15 Up to 5 Up to 5 Up to 5 Actuarial Surplus 15 30 30 30 Slide 21 '� SEGAL I OCERS — Actuarial Funding Policy Alternative Periods for Future UAALs ➢ Option discussed at February 19 meeting Source Current Option Actuarial Gains or 15 20 Losses Assumptions or 30 30 Method Changes Plan Amendments 15 15 or less ERIPs 15 Up to 5 Actuarial Surplus 15 30 Balance policy objective 2 (demographic matching) vs objective 3 (volatility management) Need to consider balance between intergenerational and period-to-period IPE Slide 22 _T�_ SEGAL OCERS - Actuarial Funding Policy ReW m to Agenda Report Q U E S T 10 N S Slide 23 '� SEGAL I OCERS — Actuarial Funding Policy Alternative Periods for Current UAA1 ➢ Board may consider shorter (or longer) amortization period for current UAAL ➢ Most clear and direct actuarial policy action to accelerate plan 's progression to 100% funding ➢ Impact of shorter amortization for current UAAL s Any change would not be implemented until 12/31 /13 valuation s Re-amortize UAAL from 12/31 /12 s Re-amortize change in investment return assumption r Would already have been included in UAAL as of 12/31 /12, with 30 year amortization Slide 24 '� SEGAL I OCERS — Actuarial Funding Policy Return to Agenda Report Alternative Periods for Current UAAL ➢ Impact of shorter amortization for current UAAL on employer rate: UAAL Change in ER Rate (% of Pay)* Dollar 10 Yrs 15 Yrs 20 Yrs Amount 12/31/12 UAAL excl. $4,741 .1 M +13.5% +3.6% -1 .3% Assumption Changes 12/31/12 $934.6 M +3.9% +1 .9% +0.9% Assumption Changes Total $5,675.7 M +17.4% +5.5% -0.4% " Does not include adjustment for 18-month delay in contribution rate implementation. Slide 25 '� SEGAL OCERS — Actuarial Funding Policy Alternative Periods for Current UAAL ➢ Other amortization periods for current UAAL discussed at February 19 meeting — shorter than current: UAAL Change in ER Rate (% of Pay)* Dollar 16 Yrs 17 Yrs 18 Yrs 19 Yrs Amount 12/31/12 UAAL excl. Assumption $4,741 .1 M +2.4% +1 .3% +0.3% -0.5% Changes 12/31/12 Assumption $934.6 M +1 .7% +1 .4% +1 .3% +1 .1 % Changes Total $5,675.7 M +4.1 % +2.7% +1 .6% +0.6% Does not include adjust. for 18-month delay in contribution rate implementation. Slide 26 SEGAL I OCERS — Actuarial Funding Policy Return to Agenda Report Alternative Periods for Current UAAL ➢ Other amortization periods for current UAAL discussed at February 19 meeting — longer than current: UAAL Change in ER Rate (% of Pay)* Dollar 25 Yrs 30 Yrs Amount 12/31/12 UAAL excl. Assumption $4,741 .1 M -4.2% -6.0% Changes 12/31/12 Assumption $934.6 M +0.4% +0.0% Changes Total $5,675.7 M -3.8% -6.0% Does not include adjust. for 18-month delay in contribution rate implementation. Slide 27 '� SEGAL OCERS — Actuarial Funding Policy Alternative Periods for Current UAAL ➢ Other amortization period for current UAAL discussed at February 19 meeting — future working lifetime: Funding the UAAL over the years the current active employees are expected to work before receiving benefit Referred to as average future working lifetime, average future service years, average remaining service lifetime, etc. No universal agreement on terminology or method of calculation Under one definition used for corporate pension plan: About 11 years for OCERS ➢ Balance policy objective 2 (demographic matching) vs objective 3 (volatility management) ➢ Need to consider balance between intergenerational and period-to-period IPE Slide 28 SEGAL I OCERS - Actuarial Funding Policy Return to Agenda Reoort Alternative Periods for Current UAAL ➢ Reverse pickups by certain employees y Agreement between employer and employee to pay for the past and/or future cost of benefit enhancements s Use at Orange County and some other California public retirement systems y Terms of agreement not under purview of the board of retirement Slide 29 _T�_ SEGAL OCERS — Actuarial Funding Policy Funding Policy Recommendations ➢ EAN Cost method No changes recommended ➢ Asset smoothing method No changes recommended ➢ UAAL amortization policy For (current) UAALs established prior to 12/31 /2012 No changes recommended unless the Board wishes to accelerate or decelerate progress to 100% funding For (future) UAALs established after 12/31 /2012 Consider one of the alternative sets of amortization period (Alt #1 , #2 or #3) Slide 30 SEGAL I OCERS — Actuarial Funding Policy Return to Agenda Report Future Discussion Topics ➢ Aggregation of Tier 1 and Tier 2 normal cost ➢ Employer/member sharing of the cost of annual payoffs ➢ Anticipated COLA as an assumption in determining optional forms of retirement benefit ➢ GASB 67/68 Slide 31 � SEGAL OCERS - Actuarial Funding Policy Q U E S T 10 N S Slide 32 STEERING COMMITTEE Neebngoate To ad.of W. 07,24/13 -- AGENDA REPORT Item Number Item Number s Orange County Sanitation District FROM: Nick Kanetis, Director of Engineering Originator: Jim Colston, Environmental Compliance Manager SUBJECT: LEGISLATIVE UPDATE GENERAL MANAGER'S RECOMMENDATION Information Only SUMMARY This report is the monthly legislative update that includes legislative and political information from Washington, D.C. and Sacramento, lobbyists' activities, and other information. ADDITIONAL INFORMATION Grants Activity for the Month Staff is reviewing the California State Coastal Conservancy Climate Ready Grant to determine if we have any projects that might be eligible for funding. Projects will be funded from $50,000 to $200,000. Staff is in the process of submitting invoices for grant funding of project P1-101, new solids drying facilities. PRIOR COMMITTEE/BOARD ACTIONS N/A CEQA N/A BUDGET / DELEGATION OF AUTHORITY COMPLIANCE N/A ATTACHMENTS The following attachment(s) are provided in hard copy and may also be viewed on-line at the OCSD website(www.ocsd.coml with the complete agenda package: • Legislative Updates: State and Federal Page 1 of 1 Return to Mende Report L1i 1WV/ RESOVRCES MEMORANDUM TO: Jim Colston FROM: Eric Sapirstein DATE:J July 11, 2013 SUBJECT: Washington Update The House and Senate continued to spar over fiscal year 2014 funding issues and agriculture policy rewrites. At the same time,progress,albeit slow, is being made on core issues of interest to the District. Generally,the next few weeks appear to be shaping up as weeks that will define the final months of the legislative session and set the stage for the second session that begins in January. Among the issues that we anticipate grabbing congressional attention are:WRDA,fiscal year 2014 budget and sequestration resolution,a Farm Bill with provisions to support POTW watershed management needs, continued availability of tax-exempt financing at the local level of government, and renewal of the SRF program and authorization of innovative funding of wastewater infrastructure. Additionally, Representative Gary Miller and a number of his colleagues,including Representatives Rohrabacher and Sanchez, continue to work to advance the District's priority to revise the appointment process to select officials to sit on a regional water board. The following summarizes the status of pending policy issues of interest to the District. House Committee Continues to Develop WRDA Rewrite The Committee on Transportation and Infrastructure staff continues, on a bipartisan basis,to develop a base WRDA bill that can be considered and marked up. Chairman Bill Shuster(R-PA) continues to make this a priority. Once a core bill is agreed upon, the chair is expected to seek committee members' input on issues to address within any rewrite. For the District,when the call for Member input is made,it presents an opportunity to seek clarification on the wisdom of mandating further expenditures by the District to remove riprap along the stretch of the Santa Ana River. We have had preliminary discussions with committee staff on the issue. We recommend that the District consider the economic and environmental impacts of the mandate to restore segments of the river and develop a formal request to the congressional delegation for programmatic language to provide equitable treatment of any regulatory mandate related to riverbank improvements. ENS Resources,Inc. 110114th Street.N.W.,Suite 350 Washington,D.C.20005 More 202.466.3755/Telefax 202.466.3787 Return b Mende Report USEPA Administrator Nominee Set to Be Considered by Senate Gina McCarthy,the President's nominee to be USEPA Administrator,is expected to be considered for confirmation by the Senate before the August Recess begins. Senate Majority Leader Harry Reid (D-NV) has filed cloture on the nomination to eliminate endless debate. It appears that McCarthy may enjoy the critical threshold of 60 votes to break any filibuster. However,Senator Roy Blunt(R-MO) continues to maintain a "hold" on the nomination and it is unclear whether this would thwart an actual vote. Additionally,the delay on the McCarthy vote (along with other nominations) has led to an effort to reform the rules governing filibusters. Reid is preparing to go "nuclear" and rule that the Senate rules governing filibusters of nominations can be changed by a simple majority of 51 rather than 60 votes. If Reid pulls the trigger on this change, it will likely mean that the pending presidential nominations will sail through the Senate after years of delays. For the District, this is an important development. If the Senate changes the rules governing votes on nominees,it could mean that Kenneth Kopocis,Assistant Administrator for Water—Nominee could be approved swiftly. Kopocis has been receptive to the District's priority to revise the USEPA rule governing appointments to water boards. His approval might lead to timely revisions of the rule and avoid the need to secure legislative directives. Sunshine on Conflicts Act(H.R. 836) We continued to advocate for the District's priority to bring about equitable criteria to govern the selection of appointees to state water boards. Representative Gary Miller's staff informed us that the legislation remains a high priority and are hopeful for movement in the coming months. Over the past month,we met with Committee on Transportation and Infrastructure staff to discuss next steps. Staff indicated that they are drafting an SRF reauthorization measure. As part of this effort,they are open to considering the incorporation of the Miller language into the legislation. This is a major step in progress as it indicates that the committee appreciates the importance of the policy objective. We continue to work with Miller's staff to ensure that the language is incorporated into the SRF rewrite. This rewrite could become available for review by stakeholders later this summer with a goal for committee consideration in the fall. In addition to legislative actions,we continue to monitor USEPA's anticipated regulatory notice seeking comments on how to revise the current standard of conflict. We expect the notice to be issued in late summer. When the notice is available,the District will need to provide comments on the priority to revise the existing rule. ENS Resources,Inc. 110114th street.N.W.,Suite 350 Washington,D.C.20005 More 202.466.3755/Telefax 202.466.3787 Return to Mende Report Tax Reform and Municipal Bonds As noted in the last update, congressional tax policy committees are aggressively taking steps to establish a framework for tax reform in the coming year. The recent news that the federal deficit is anticipated to shrink dramatically,due to economic growth,tax increases and sequestration,has only served to enhance prospects for reform of the tax code. This is the case since the ability to preserve tax expenditures improves as the deficit shrinks and lost revenues do not impose as large an impact on the federal treasury. One area that remains a continued priority for review by both Congress and the White House is state and local governmental tax-exempt financings. The threat to eliminate or significantly curtail the use and availability of this funding tool is real. Therefore,it is strongly recommended that the District transmit a letter of concern to the congressional delegation outlining the impacts of any restrictions to the cost of financing water infrastructure needs at the District. House Approves Farm Bill After a failed effort to pass a House Farm Bill,the House Republican Leadership brought a pared back agriculture program rewrite (excluding nutrition programs) to the House Floor and secured passage of the measure by the slimmest of margins. The measure now must be reconciled with the Senate-passed bill that addresses all elements of agriculture policy issues including nutrition programs. For the District,the House and Senate will need to find common ground on Senate approved provisions that would make funding available to support wastewater watershed management projects that are collaborations with agricultural interests. The program within the Senate bill would provide$100 million in grants assistance. Alternative Energy and Wastewater Agencies Both the House and Senate Committees on Appropriations have finalized their respective versions of spending bills for the Department of Energy. Within both bills is language that directs the DOE to refocus its priorities for the biomass energy program. Specifically,the Department is directed to consider the value of projects that rely on the use of"municipal biosolids"to generate alternative energy. Current DOE biomass program policy discriminates against such noncelluosic biomass energy techniques and the language offers the chance to leverage DOE programs in support of developing alternative energy technologies as part of the DOE energy efficiency agenda. The action is important to the District because it could lead to enhancing the District's green energy program. ENS Resources,Inc. 110114th Street.N.W.,Suite 350 Washington,D.C.20005 More 202.466.375S/Telefax 202.466.3787 Return to Mende Report T 0 W N S E N D PU BLIC 1, S — TPA MEMORANDUM TO: Orange County Sanitation District FROM: Townsend Public Affairs, Inc. Christopher Townsend, President Heather Stratman, Senior Director Casey Elliott, State Capitol Director DATE: July 15, 2013 SUBJECT: Monthly Status Report On June 27t', the Governor signed the FY 2013-14 budget. The budget plan outlines $96.3 billion in General Fund spending with a $1.1 billion budget reserve. The Governor characterized the budget as an investment in education and health care that brings the state finances in very solid shape. Despite the appearance that state revenues are on a continued upward trend, the budget plan takes a somewhat modest approach in its proposals. Budget provisions take into account that future General Fund revenues may trail off due to the anticipated drop in capital gains tax receipts and federal spending cuts. The budget does not include the Governor's original proposal to eliminate the state's Enterprise Zone Program. While not technically part of the budget, the Governor was also able to work with the Legislature to pass a new economic development program which is intended to attract and retain jobs in California. This program will take the place of several existing economic development programs, including the Enterprise Zone program. Other Major components of the FY 13-14 budget include: • Increases funding for the Governor's effort to reform K-12 education finance; • Implements the Local Control Funding Formula that directs more revenues to school districts with higher numbers of low-income and English learning students; • A state-based approach to implement Medi-Cal expansion under the federal Patient Protection and Affordable Care Act; • $500 million in additional Medi-Cal spending; • Enacting the Middle Class Scholarship Program; • Major spending augmentation in mental health services. The Assembly recessed with the 4' of July holiday and the Senate recessed for the summer on July 12'". Both Houses return to session in August and will have a quick sprint to the end of session, which is on September 13". Prior to their summer recesses, both Houses were focused on conducting policy committee hearings for measures which are currently in the Return to Mende Report Second House. The Senate's policy committee deadline is this Friday (July 12th) while the Assembly's deadline is August 16". Any measure that has not been passed out of the Second House policy committee before those deadlines will not be eligible for consideration until January 2014. The Legislature has begun to look ahead to modifying the water bond, which is currently scheduled to appear on the November 2014 ballot. The Assembly Democrats, headed by Assemblyman Anthony Rendon, has developed a set of guiding principles that they will try to follow for any upcoming negotiations over the provisions of the water bond. At this point, it is unclear if the Legislature will be able to agree on the provisions of an amended water bond or if they will negotiate over the interim and act on a revised measure in early 2014. TPA will continue to monitor and engage where appropriate on behalf of the OCSD. OCSD Specific Legislation of Interest AB 371 (Sales) This bill is intended to address the dumping of sewage (sludge) and its effects on the health, safety and water quality in rural areas of Kern County. It is intended to clarify the original legislative objective to protect the rights of local communities to adopt environmental protection standards. According to Assembly Member Sales, "Uncontrolled dumping of sewage sludge threatens our water and the public health of our communities. The recent court interpretation of California law is an unacceptable outcome for the residents of Kern County". Conversely, according to the California Association of Sanitation Agencies, "The type of ban which Kern County has previously sought to enforce, and which could be authorized by AB 371, is in conflict with the Integrated Waste Management Act (IWMA), in conflict with the regional welfare doctrine, and contrary to the overwhelming weight of scientific evidence that land application of bio-solids is a safe and beneficial practice. This bill would circumvent the legal process and establish a one-off rule for Kern County that has already been rejected by the courts". OCSD took an oppose position on the bill. The bill was heard in the Assembly Local Government committee and was held on the suspense file. AB 371 will not be able to be heard or modified before January 2014, and has become a two-year bill. AB 690 (Campos) The Assembly on Local Government Committee received overwhelming opposition to AB 690, arguing that the bill would unfairly divert necessary property tax revenues from districts. In response to the immense amount of opposition, the bill has now been amended to be aligned with current law requiring local agencies' consent prior to property tax revenue diversion for the creation of a Jobs and Infrastructure District (JID) program. OCSD took an oppose unless amended position on the bill. The bill was set to be heard on April 151h but was postponed. The bill will not be eligible to be heard again prior to the legislature adjourning in September. The bill will be eligible to be taken back and/or amended when the Legislature reconvenes in January 2014. SIB 785 (Wolk) 2 Return to Aaenda Report The bill makes three substantive changes to current law: (1) Lowering, from $2.5 million to $1 million, the value of projects that counties can construct using design-build; (2) Eliminating the sunset dates that would have automatically repealed some statutes authorizing the use of the design-build method; (3) Eliminates the cap on the number of projects that the state can construct using the design-build method for specked types of projects. According to the California Legislative Analyst's Office, this bill is intended to "...rewrite design- build statutes to eliminate inconsistencies in existing law and consolidate state and local agencies' statutory authority to develop projects using design-build. By consolidating statutes and creating more uniform requirements, SB 785 makes the state laws governing the design- build method clearer, more flexible, and easier to use". OCSD took a support in concept position on the bill. Senator Wolk pulled the bill just prior to the last committee hearing and placed it on the inactive file. The bill will not be eligible to be taken back up or amended prior to January 2014. SB 785 was facing significant opposition from the labor unions, and Senator Wolk decided to continue working on the bill to determine if the opposition's concerns could be rectified. SB 691 (Hancock) This bill is intended to narrowly target one-day violations that affect great numbers of individuals affected by air quality violation with higher civil penalties. Senator Hancock stated that current single-day violations of air quality regulations that affect entire communities lack adequate financial consequences. He also stated that having adequate penalties for non-compliance is essential to protecting public health and safety. However, opponents of the bill stated that immensely increasing the penalties would impose a penalty based simply on allegations of annoyance, whether or not the actual emissions are harmful or in violation of an existing permit standard or requirement. OCSD took an oppose position on the bill, and TPA has been working with OCSD on amendments to the bill to carve out Sanitation Districts from the bill's intent. Senator Hancock amended the bill to explicitly exempt nuisance odors from the penalty. However, the District still has concerns regarding the Title V language, because the District could still technically get fined if they did something beyond a nuisance odor. TPA will continue to work with OCSD staff to determine what other language modifications can be made to the bill so it is acceptable. The bill is scheduled to be heard in Assembly Natural Resources on August 12th. Specific Activities of the Month: • TPA is continually monitoring legislation that could have any potential impact on the District. • TPA is working with the OCSD on language to modify SB 691 (Hancock) to ensure it does not have the potential to negatively impact the District. • TPA is working with OCSD staff to create a FY 13-14 Legislative activity plan for consideration by the Steering Committee and Board. This plan will include outreach and advocacy activities by appropriate Board Members. 3 ORANGE COUNTY SANITATION DISTRICT Agenda Terminology Glossary AQMD Air Quality Management District ASCE American Society of Civil Engineers BOO 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) 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 OOBS 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 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. 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. Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (DR) — the dilution at which the majority of the people detect the odor becomes the D(f 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. NOMA— 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. 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.