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Home My WebLink About09-14-2016 Administration Committee Meeting Agenda Orange County Sanitation District Wednesday, September 14, 2016 Regular Meeting of the 5:00 P.M. ADMINISTRATION - Administration Building COMMITTEE Board Room 10844 Ellis Avenue w` Fountain Valley, CA 714 693-7433 AGENDA CALL TO ORDER: PLEDGE OF ALLEGIANCE: DECLARATION OF QUORUM: (Clerk of the Board) PUBLIC COMMENTS: If you wish to address the Committee on any item, please complete a Speaker's Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you want to speak. Speakers will be recognized by the Chairman and 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: The Consent Calendar Items are considered to be routine and will be enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve Minutes of the July 13, 2016 Administration Committee Meeting. 09/14/16 Administration Committee Agenda Page 1 of4 2. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Receive and file District purchases made under the General Manager's authority for the period of April 1, 2016 — June 30, 2016. 3. REIMBURSEMENTS TO BOARD MEMBERS AND STAFF (ANNUAL) (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Receive and file report of reimbursements to Board Members and Staff per Government Code Section 53065.5 for the period of July 1, 2015 through June 30, 2016. 4. PRODUCTION STORAGE ARRAY SYSTEM (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Authorize the purchase of a production storage system to accommodate future system performance and capacity needs with Nimble Storage Array system, using the approved U.S. General Services Agreement (GSA) IT Schedule 70 (M.O. 5/25/16, Item #13) for a total amount not to exceed $284,941.49, in accordance with OCSD Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. B. Approve a contingency fo $28,494 (10%). INFORMATION ITEMS: 5. ORANGE COUNTY SANITATION DISTRICT SECURITY PROGRAM (Celia Chandler) NON-CONSENT: 6. CONTRACT SECURITY SERVICES (Celia Chandler) RECOMMENDATION: Recommend to the Board of Directors to: A. Approve a Service Contract to Securitas Security Services, U.S.A., Specification No. S-2016-775BD, for the period November 1, 2016 through October 31, 2017, for a total annual amount not to exceed $776,704, with up to four (4) one-year renewals; 09/14/16 Administration Committee Agenda Page 2 of 4 B. Approve an increase of $62,681 to Purchase Order 105775 OA, a bridge purchase contract issued to Securitas Security Services, U.S.A., for a total amount not to exceed $160,723, for the period October 1, 2016 through October 31, 2016; and C. Approve a contingency of$77,670 (10%). 7. 2017 BENEFITS INSURANCE RENEWAL (Celia Chandler) RECOMMENDATION: Recommend to the Board of Directors to: Approve the Orange County Sanitation District 2017 benefits insurance renewal for the not-to- exceed amounts specified below: A. Employee Benefit Specialists (medical, dental, and vision plans; Employee Assistance Program)— Not to Exceed $11,121,627; B. Prudential (basic life, short- and long-term disability) — Not to Exceed $685,560; and C. The Standard (EMT & Manager disability)— Not to Exceed $30,000 8. GANN LIMIT RESOLUTION CORRECTION FOR FISCAL YEAR 2015-16 (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 16-XX entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Establishing the Annual Appropriations Limit for Fiscal Year 2015-16, for the District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code; and Repealing Resolution No. OCSD 15-14." 9. REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016B (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Adopt Resolution No. OCSD16-XX entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, such Notes evidencing principal in an aggregate amountof notto exceed $120,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an 09/14/16 Administration Committee Agenda Page 3 of 4 Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Notes and authorizing the execution of other necessary documents and related actions"; and B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Notes in an aggregate amount not to exceed $120,000,000; and C. The proposed financing is structured as another two-year fixed rate maturity that will be sold in a competitive sale. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY: ADJOURNMENT: The next Administration Committee meeting is scheduled for Wednesday, October 12, 2016 at 5:00 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)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Posting: In accordance with the requirements of Califomia 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, Cal'domia, 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 majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board. Agenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate. 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 Clerk of the Board (714)593-7433 klore(docsd.com For any questions on the agenda, Committee members may contact staff at: General Manager James Herberg (714)593-7300 iherbero(cDomd.com Assistant General Manager Bob Ghirelli (714)593-7400 rohirelli(rpocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Itwer(rpomd.com Administrative Services Director of Human Resources Celia Chandler 714 593-7202 cchandler omd.com 09/14/16 Administration Committee Agenda Page 4 of 4 ITEM NO. 1 MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, July 13, 2016 at 5:00 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chair Curry on July 13, 2016 at 5:00 p.m. in the Administration Building of the Orange County Sanitation District. Zander Sternin, Troop 671, led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Keith Curry, Chair Jim Herberg, General Manager Lucille Kring, Vice-Chair Bob Ghirelli, Assistant General Manager Steven Choi Celia Chandler, Director of Human Resources Diana Fascenelli (Alternate) Jim Colston, Director of Environmental Services Jim Ferryman Rob Thompson, Director of Engineering Peter Kim Ed Torres, Director of Operations & Maintenance Joy Neugebauer Lorenzo Tyner, Director of Finance & Erik Peterson (Alternate) Administrative Services John Nielsen, Board Chair Kelly Lore, Clerk of the Board Al Garcia COMMITTEE MEMBERS ABSENT: Rebecca Long Glenn Parker Mark Manzo Teresa Smith Warren Sternin Sal Tinajero Mike White Greg Seboum, Board Vice-Chair OTHERS PRESENT: Brad Hogin, General Counsel Ed Soong, Consultant, PRAG Zander Sternin PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chair Curry did not provide a report. 07/13/2016 Administration Committee Minutes Page 1 of 3 REPORT OF GENERAL MANAGER: General Manager Jim Herberg reminded the Committee of the upcoming Community Open House, to be held jointly with the Orange County Water District, on Saturday, August 13, 2016 from 10 a.m. to 2 p.m. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: Director of Finance and Administrative Services Lorenzo Tyner did not provide a report. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED AND DULY CARRIED TO: Approve Minutes of the June 8, 2016 Administration Committee Meeting. AYES: Choi, Curry, Fascenelli (Alternate), Ferryman, Kim, Kring, Neugebauer, Nielsen, and Peterson (Alternate) NOES: None ABSTENTIONS: None ABSENT: Parker, T. Smith, Seboum and Tinajero NON-CONSENT: Lorenzo introduced Ed Soong, Executive Vice President with Public Resource Advisory Groug (PRAG), who provided an informative PowerPoint presentation regarding the recommended revenue refunding of the CANS Series 2014B. He provided historical data on the cost of refunding, and the benefits and disadvantages of the varying refunding rates. 2. REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016B (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize the General Manager to issue Revenue Refunding Certificate Anticipation Notes, Series 2016B, as two-year fixed-rate obligations, subject to market conditions, in an amount not to exceed $120,000,000 to replace the $120,850,000 Revenue Refunding Certificate Anticipation Notes, Series 2014B maturing on November 15, 2016. AYES: Choi, Curry, Fascenelli (Alternate), Ferryman, Kim, Kring, Neugebauer, Nielsen, and Peterson (Alternate) NOES: None ABSTENTIONS: None ABSENT: Parker, T. Smith, Seboum and Tinajero 07/13/2016 Administration Committee Minutes Page 2 of 3 INFORMATION ITEMS: 3. ENERGY SUPPLY AND DEMAND (Rob Thompson) Assistant General Manager Bob Ghirelli introduced this item, indicating that biogas has become a marketable product and Board policy will be needed as to whether or not sale of the biogas aids or detracts from the Sanitation District's goal of becoming energy independent. Director of Engineering Rob Thompson provided a PowerPoint presentation that identified the Sanitation District's energy supply and demand, how biogas is created and converted into electricity and heat, a proposed policy statement, and research/partnering focus. Alternative energy sources (AquaCritox, Solar) and analysis were discussed, along with the prices/costs of producing marketable products. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: Committee Chair Curry declared the meeting adjourned at 5:33 p.m. to the next regularly scheduled meeting of Wednesday, September 14, 2016 at 5:00 p.m. Submitted by: Kelly A. Lore Clerk of the Board 07/13/2016 Administration Committee Minutes Page 3 of 3 ADMINISTRATION COMMITTEE Melting D310 TOBE.Or Dir. 09/14/16 09/28/16 AGENDA REPORT ItemNumber Item Number z Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: GENERAL MANAGER APPROVED PURCHASES GENERAL MANAGER'S RECOMMENDATION Receive and file District purchases made under the General Manager's authority for the period of April 1, 2016 — June 30, 2016. BACKGROUND Staff provides the Administration Committee and the Board of Directors quarterly reports of General Manager approved purchases between $50,000 and $100,000. RELEVANT STANDARDS • Quarterly financial reporting • Ensure that the public's money is wisely spent PROBLEM N/A PROPOSED SOLUTION In accordance with Board purchasing policies, Ordinance No. OCSD-47, the General Manager has authority to approve purchases between $50,000 and $100,000. Below is a summary of General Manager approved purchases, in amounts exceeding $50,000, for the fourth quarter of fiscal year 2015-16: Vendor Name Amount Department Description/Discussion Convenience Blanket PO to Provide and Dump 40-Yard Trash Dumpsters at Plants 1&2 Operations& 7/1/16 to 6/30/18 CR&R $ 71,600.00 Maintenance GM Article 2,Section 2.2 (b) (1) Membrane Disc Diffusers for Aeration Basins Sole Source Justification#1493 DC FROST Operations& Reason:OEM Parts/Materials Available from ASSOCIATES INC $ 72,000.00 Maintenance Only One Source Page 1 of 3 Vendor Name Amount Department Description/Discussion Annual Software Renewal for Maintenance Service on ESRI (Enterprise Advantage Program) 7/1/16 to 6/30/17 Administrative Sole Source Justification#1532 ESRI INC $ 80,000.00 Services Reason: Unique Product/Service Insecticide Application in OCSD Manholes 7/1/16 to 6/30/17 Sole Source Justification#1454 GOLDEN BELL Facilities Reason:OEM Parts/Materials Available from PRODUCTS $ 85,000.00 Support Services Only One Source Urea Solution for Plants 1&2 7/1/16 to 6/30/17 Operations& with Optional Four(4) 1-year Renewal Periods HILL BROTHERS $ 82,134.00 Maintenance Specification No.C-2016-760 On-Call Odor Control Services- Gas Flaps&Storm Drains JAMISON 7/1/16 to 6/30/17 ENGINEERING Facilities with Optional Four(4) 1-year Renewal Periods CONTRACTOR 1 $ 83,040.00 Support Services Specification No.5-2016-757 Classification&Compensation Study- Compensation Phase Sole Source Justification#1479 Reason:Vendor Change; Move to 2nd Place KOFF& Administrative Vendor for Completion Due to Contract ASSOCIATES INC $ 65,040.00 Services Termination Financial Auditing Services 7/1/16 to 6/30/17 MACIAS GINI & Administrative with Optional Four(4) 1-year Renewal Periods O'CONNELL LLP $ 70,500.00 Services Specification No. CS-2016-749 Annual Software Renewal for Maintenance Service on District Auto Vehicle Locators 7/1/16 to 6/30/17 GSA#GS-07F-5559R in accordance with NETWORKFLEET, Administrative Ordinance OCSD-47,Section 2.03(B) INC. $ 75,000.00 Services Cooperative Purchases Annual Software Maintenance Renewal for JD Edwards Software ORACLE Administrative 7/1/16 to 6/30/17 AMERICA INC. $ 89,458.58 Services Board Award: M.O.5/23/07, Item 11(p) Page 2 of 3 Vendor Name Amount Department Description/Discussion Total Productivity Mgmt.Certification Training PRODUCTIVITY, Operations& Sole Source Justification#1561 LLC $ 73,125.00 Maintenance Reason: Unique Product/Service Convenience Blanket PO for Providing and Servicing 3-Yard Dumpsters at Plants 1&2 RAINBOW Operations& 7/1/16 to 6/30/18 DISPOSAL CO $ 90,000.00 Maintenance GM Article 2,Section 2.2 (b) (1) Convenience Blanket PO for Safety Shoe Services SAFETY SHOE Administrative 7/1/16 to 6/30/17 SERVICES $ 70,000.00 Services GM Article 2,Section 2.2 (b) (1) SEA BIRD SeaCATplus Version 2 Recorder with Pumps, ELECTRONICS Operations& Sensors and other Parts for Ocean Monitoring INC $ 82,738.49 Maintenance Board Award: M.O.5/23/07, Item 11(p) Bridge Contract for Security Services at Plants 1&2 7/1/16 to 9/30/16 SECURITAS Sole Source Justification#1564 SECURITY Administrative Reason:Timely Requirement-Unforeseen SERVICES US $ 98,042.00 Services Delay in Procurement Lab Equipment- BOD Analyzer Operations& Approved CORF Budget: FY 2015-16 SKALAR INC $ 73,385.00 Maintenance Specification No. E-2016-759 Convenience Blanket PO for Water Delivery at Plants 1&2 SPARKLETTS- Administrative 7/1/16 to 6/30/18 DALLAS $ 60,000.00 Services GM Article 2,Section 2.2 (b) (1) THE SOCO Operations& HDAX Low Ash 40 Oil for Plants 1&2 GROUP, INC. $ 84,600.00 Maintenance Specification No. DG-93700 THERMO Lab Equipment-Accelerated Solvent Extractor ELECTRON Approved CORF Budget: FY 2015-16 NORTH Operations& Sole Source Justification#1487 AMERICA $ 50,535.83 Maintenance Reason: Unique Product/Service Convenience Blanket PO for Misc.Supplies, THOMPSON Gaskets, Bearings&Seals INDUSTRIAL Operations& 7/1/16 to 6/30/18 SUPPLY INC $ 55,000.00 Maintenance GM Article 2,Section 2.2 (b) (1) Page 3 of 3 ADMINISTRATION COMMITTEE Neeing Dare TOBE.Or .Dir. 09/14/16 09/28/16 AGENDA REPORT Item Item Number 3 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: REIMBURSEMENTS TO BOARD MEMBERS AND STAFF GENERAL MANAGER'S RECOMMENDATION Receive and file report of reimbursements to Board Members and Staff per Government Code Section 53065.5 for the period July 1, 2015 through June 30, 2016. BACKGROUND Government Code Section 53065.5 requires all Special Districts, including the Orange County Sanitation District(Sanitation District),to disclose any reimbursements paid within the immediately preceding fiscal year of at least one hundred dollars ($100) or more for each individual charge for services or product(s) received. The individual charge includes, but is not limited to, tuition reimbursement, certificate or license reimbursement, meals, lodging, transportation, or registration fee reimbursed to any employee or member of the governing body of the Sanitation District. The disclosure requirement shall be fulfilled by including the reimbursement information in a document published or printed at least annually by a date determined by that district and shall be made available for public inspection. RELEVANT STANARDS • Government Code Section 53065.5 ATTACHMENTS The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: • Report of reimbursements per Government Code Section 53065.5 for the period July 1, 2015 through June 30, 2016. Page 1 of 1 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Abushaban, Randa Associate Engineer 131.00 Stakeholders Committee Meeting Sacramento, CA 9129/15 Alexander, Jennifer L. Senior Plant Operator 340.00 Certification Reimbursement Amezcua,Gerardo Operations Supervisor 340.00 Certification Reimbursement Amin, Anantkumar R. Electrical Technician II 360.00 Certification Reimbursement Andresen, Larry S. Senior Plant Operator 300.00 Certification Reimbursement Aponte, LeAnthony 0. Plant Operator 300.00 Certification Reimbursement Amontes, Nicholas J. Director of Facilities Support Services 847.49 CWEA Collections Systems Meeting Cambria, CA 7/24-7/26/15 Ariston, Emilia Lead Mechanic 662.13 Tuition Reimbursement Armstrong,Jeffrey L. Environmental Supervisor 216.65 Food for Nerissa Trawls Armstrong, Jeffrey L. Environmental Supervisor 145.18 Food for Nerissa Trawls Avalos-Portillo,Jessica Senior Safety and Health Representative 350.00 Certification Reimbursement Barela, Gilbert G. Senior Mechanic 100.00 Certification Reimbursement Barela, Gilbert G. Senior Mechanic 7,506.27 Tuition Reimbursement Barrett, Michael J. Lead Plant Operator 340.00 Certification Reimbursement Basrai, Shabbir S. Senior Engineer 130.00 Membership Renewal Basrai, Shabbir S. Senior Engineer 1,890.00 14ACE CP2 Training Downey,CA 6/12-6/17/16 Basrai, Shabbir S. Senior Engineer 1,930.00 NACE CIP Level 1 Training Downey,CA 10/9- 10/14/16 Bauer II, Wesley G. Safety and Health Specialist 784.64 ASSE SeminarFest Las Vegas, NV 2/7-2/11-16 Berdis,Michael A. Operations Supervisor 340.00 Certification Reimbursement Berokoff, Daniel D. Associate Engineer 115.00 Certification Reimbursement Berokoff, Daniel D. Associate Engineer 336.00 Certification Reimbursement Berokoff, Daniel D. Associate Engineer 500.00 Certification Reimbursement Berokoff, Daniel D. Associate Engineer 1,097.76 CWEA Conference Santa Clara,CA 4/26-4/29/16 Bingman, Brian Engineering Supervisor 200.00 Certification Reimbursement Bingman, Deirdre E. Principal Environmental Specialist 132.58 Biosolids Research Supplies Bradley Jr.,Jan 0. Chief Plant Operator 163.40 Food for Power Outage/EOC Activation Event Bradley Jr.,Jon 0. Chief Plant Operator 340.00 Certification Reimbursement Brown,Jeffrey Senior Engineer 200.00 Certification Reimbursement Brown,Marc A. Principal Staff Analyst 164.00 Membership Renewal Brown, Peter H. Senior Plant Operator 300.00 Certification Reimbursement Brown, Peter H. Senior Plant Operator 923.59 Tristate Seminar Las Vegas, NV 9/21 -9/25/16 Buonacorsi, Curtis Senior Plant Operator 340.00 Certification Reimbursement Burke, Pinky E. Staff Analyst 4,594.53 Tuition Reimbursement 151,085.17 Cabral,James Maintenance Supervisor 638.00 ThState Seminar Las Vegas, NV 9/21 -9/25/16 Prepared By: Lisa Hersh. Page 1 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by OCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Cady, Pongsakdi Principal Information Technology Analyst 815.90 RFP Lab Training 11/1 - 11/3115 Calm Reed Storekeeper 291.00 Tuition Reimbursement Carrillo, Dindo A. Senior Environmental Specialist 164.00 Certification Reimbursement Carrillo, Dindo A. Senior Environmental Specialist 192.00 CWEA Workshop Carrillo, Dindo A. Senior Environmental Specialist 1,187.69 CWEA Conference Santa Clara, CA 4/27-4/29/16 Casanova, Clifford E. Senior Plant Operator 300.00 Certification Reimbursement Cassidy,William D. Engineering Supervisor 115.00 Certification Reimbursement Cassidy,William D. Engineering Supervisor 187.00 Certification Reimbursement Cassidy,William D. Engineering Supervisor 777.01 CWEA Conference Santa Clara,CA 4/26-4129/16 Castillon, Richard A. Information Technology System and Operations Manager 100.00 Membership Renewal Castillon, Richard A. Information Technology System and Operations Manager 561.85 MISAC Conference Monterey,CA 10/3- 1016/15 Castillon, Richard A. Information Technology System and Operations Manager 810.67 Water it Wastewater CIO Forum Oakland, CA 4/18-4/21/16 Castro, Ernesto Lead Plant Operator 340.00 Certification Reimbursement Cecil,Jim D. Plant Operator 170.00 Work Boots Cervellone, Chris A. Engineering Supervisor 116.00 Certification Reimbursement Chang, Esther H. Plant Operator 340.00 Certification Reimbursement Chang, Esther H. Plant Operator 440.00 Certification Reimbursement Childers,Michael E. Maintenance Worker 164.00 Membership Renewal Choi, Samuel Principal Laboratory Analyst 492.71 Certification Reimbursement Choi, Samuel Principal Laboratory Analyst 1,086.14 Recreational Waters Conference New Orleans, LA 4/11 .4/15/16 Choi, Samuel Principal Laboratory Analyst 1,175.22 Tuition Reimbursement Christensen, Kimberly C. Senior Scientist 1,741.33 Pittcon Conference Atlanta, GA 3/5-3/10/16 Clark,Tyler T. Maintenance Worker 587.60 TriState Seminar Las Vegas, NV 9/21 -9/25/16 Cleveland, Donald R. Lead Mechanic 177.00 Certification Reimbursement Cole,Christopher H. Plant Operator 230.00 Certification Reimbursement Collett, David M. Plant Operator 170.00 Certification Reimbursement Collins, Rodney L. Safety and Health Specialist 140.00 Certification Reimbursement Collins, Rodney L. Safety and Health Specialist 150.00 Certification Reimbursement Collins, Rodney L. Safety and Health Specialist 175.00 Certification Reimbursement Colston, James E. Director of Environmental Services 125.00 WaterReuse Conference Santa Rosa,CA 3/13 -3/15/16 Colston, James E. Director of Environmental Services 160.95 CASA Conference San Diego,CA 8/19-8/21/15 Colston, James E. Director of Environmental Services 333.81 WEFTEC Conference Chicago, IL 9/26-9/30/15 Corral, Cesar Senior Mechanic 240.00 Certification Reimbursement Cortez, Ronald C. Lead Plant Operator 340.00 Certification Reimbursement Prepared By: Lisa Henshaw Page 2 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Coss, Ronald J. Environmental Lab and Ocean Monitoring Manager 200.00 Certification Reimbursement Coss, Ronald J. Environmental Lab and Ocean Monitoring Manager 249.00 Membership Renewal Coss, Ronald J. Environmental Lab and Ocean Monitoring Manager 324.12 CWEA Conference Santa Clara, CA 4/27-4/28/16 Coss, Ronald J. Environmental Lab and Ocean Monitoring Manager 407.00 Membership Renewal Coss, Ronald J. Environmental Lab and Ocean Monitoring Manager 915.42 AWWA Conference Salt Lake, UT 11/15- 11/18/15 Coss, Ronald J. Environmental Lab and Ocean Monitoring Manager 2,144.41 NACWA Conference San Diego,CA 2/21 -2/27/16 Crider,Suzanne A. Principal Staff Analyst 1,730.00 Tuition Reimbursement Criscuolo, Keith W. Senior Plant Operator 340.00 Certification Reimbursement Cuellar, Raul Engineering Supervisor 115.00 Certification Reimbursement Cuellar, Raul Engineering Supervisor 211.09 NASTT No-Dig Conference Dallas,TX 3/20-3/23/16 Cutler, Donald W. Construction In Progress Project Manager 200.00 Membership Renewal DaSilva,Andy Engineer 116.00 Certification Reimbursement DaSilva,Andy Engineer 297.00 Membership Renewal DaSflva,Andy Engineer 684.72 Tuition Reimbursement Davies, Cyril Senior Engineer 116.00 Certification Reimbursement Davila, Rudy Engineer 108.16 ESRI Conference San Diego, CA 7/21 -7/22/15 Davis, Heather A. Safety and Health Representative 119.17 OSHA 3015 Training Anaheim, CA 8/17-8/19/15 Davis, Heather A. Safety and Health Representative 122.42 OSHA 510 Training Anaheim, CA 8/24-8/27/15 Davis, Heather A. Safety and Health Representative 143.92 Developing Emotional Intelligence Training Los Angeles,CA 10/19- 10/20/15 Davis, Heather A. Safety and Health Representative 510.00 Certification Reimbursement Desai, Rohit Senior Information Technology Analyst 110.00 Membership Renewal Deterding, Gregg J. Graphics Coordinator 161.84 Holiday Decorations Deterding, Gregg J. Graphics Coordinator 1,250.32 HOW Design Conference Atlanta, GA 8/19- 5/23/16 Dhodia, Hemal Engineer 116.00 Certification Reimbursement Diaz,Arturo Principal Laboratory Analyst 156.00 Certification Reimbursement Dillon, Carla D. Engineering Supervisor 100.00 Membership Renewal Dillon, Carla D. Engineering Supervisor 115.00 Certification Reimbursement Dillon, Carla D. Engineering Supervisor 438.37 WEF Conference Milwaukee,WI 3/20-3/25/16 Dillon, Carla D. Engineering Supervisor 2,059.01 WEFTEC Conference Chicago, IL 9/25-9/30/15 Dragan, Bryce Source Control Inspector II 180.00 Certification Reimbursement Dragan, Bryce Source Control Inspector II 421.57 CAL/EPA Inspector Training Ventura,CA 8/11 -8/14/15 Dubois,Marcus Contract and Purchasing Manager 760.77 CAPPO Conference Santa Barbara,CA 1/26- 1/29/16 Durieux, Shelley J. Human Resources Analyst 368.16 Cornerstone Conference Los Angeles,CA 5110-5/11/16 Durieux, Shelley J. Human Resources Analyst 6,020.00 Tuition Reimbursement Prepared By: Lisa Hersh. Page 3 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Esquer, Mark A. Engineering Manager 198.00 Utility Management Conference San Diego,CA 2/24-2/26/16 Esquer, Mark A. Engineering Manager 276.68 Lunch for CASSE Meeting Fountain Valley, CA 2/11/16 Falkenstein, John B. Engineer 103.93 Plan Check Fee-City of Fountain Valley Falkenstein, Jahn B. Engineer 115.00 Certification Reimbursement Falkenstein, John B. Engineer 280.00 Membership Renewal Farmer, Michele Principal Environmental Specialist 141.46 AWWA Conference Anaheim,CA 6/8-6/10/15 Farmer, Michele Principal Environmental Specialist 250.00 NACWA Conference Lang Beach,CA 5/17- 5/20/16 Fenton, Justin M. Associate Engineer 116.00 Membership Renewal Fenton,Justin M. Associate Engineer 122.00 Certification Reimbursement Fenton,Justin M. Associate Engineer 531.00 TrlState Seminar Las Vegas, NV 9/21 -9/24/15 Fenton,Justin M. Associate Engineer 2,370.80 WEFTEC Conference Chicago, IL 9/26-9/30/15 Fernandez, Birger L. Associate Engineer 116.00 Certification Reimbursement Fernandez, Birger L. Associate Engineer 225.00 Certification Reimbursement Ferry, Cynthia L. Administrative Assistant 162.87 Control Center Kitchen Supplies Ferry, Cynthia L. Administrative Assistant 224.19 Employee Appreciation Lunch Fisher, Dean M. Engineering Manager 200.00 Certification Reimbursement Fladrich,John C. Plant Operator 300.00 Certification Reimbursement Flores, John M. Senior Construction Inspector 130.00 Membership Renewal Flores, John M. Senior Construction Inspector 240.00 Certification Reimbursement Frabizio, Damem E. Mechanic 255.00 Certification Reimbursement Frost,April Senior Plant Operator 340.00 Certification Reimbursement Gadzinski, Joscelynn M. Plant Operator 340.00 Certification Reimbursement Garchow,Matthew N. Senior Information Technology Analyst 543.61 IPACS Conference North Brunswick, NJ 10/13- 10/16/15 Garchow,Matthew N. Senior Information Technology Analyst 1,251.11 LABWARE Conference Denver, CO 4/27-4/29/16 Gerber, Harold T. Engineer 164.00 Membership Renewal Gerber, Harold T. Engineer 710.50 IPACS Conference North Brunswick, NJ 10/13- 10/16/15 GhireNi, Robert P. Assistant General Manager 313.63 CASA Conference Palm Springs,CA 1/20- 1/22/16 Gomez,Charmayne B. Administrative Assistant 621.18 Tuition Reimbursement Gomez, Ruben Senior Construction Inspector 170.00 Safety Shoes Gomez, Ruben Senior Construction Inspector 781.86 Cranes in Construction Training San Diego,CA 11/29- 12/3115 Gonzalez,John G. Maintenance Supervisor 638.00 TnState Seminar Las Vegas, NV 9/21 -9/25/15 Gonzalez, Lorenzo Plant Operator 230.00 Certification Reimbursement Grande, Steve Senior Mechanic 638.00 TnState Seminar Las Vegas, NV 9/21 -9/25/16 Green,Scott A. Plant Operator 300.00 Certification Reimbursement Pre,vred By: Lisa Hensha Page 4of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Hale, Angela A. Principal Accountant 1,760.00 Certification Reimbursement Hall, Brent M. Mechanic 180.00 Certification Reimbursement Halverson, David P. Senior Engineer 115.00 Certification Reimbursement Hamilton, Bradley A. Principal Information Technology Analyst 6,338.62 Tuition Reimbursement Hamilton, Bradley A. Principal Information Technology Analyst 701.72 VeeamON Training Las Vegas,NV 10/25- 10/29/15 Hamilton, Bradley A. Principal Information Technology Analyst 840.44 EnCase Computer Forensic Training Pasadena, CA 7/7-7/10/15 Haney, Lisa Senior Environmental Specialist 101.10 Mileage to 133S Conference Riverside, CA 2/29-3/1/16 Haney, Lisa Senior Environmental Specialist 124.13 CASA Meeting Sacramento, CA 2/11/16 Haney, Lisa Senior Environmental Specialist 864.63 CASQA Conference Monterey,CA 10/18- 10/21/15 Harting,Michael H. Engineer 115.00 Certification Reimbursement Hawthorne, Donald A. Reliability Maintenance Technician 275.00 Certification Reimbursement Hawthorne, Donald A. Reliability Maintenance Technician 982.47 Machinery Lubrication I Training Mesa, AZ 11/30- 12/4/15 Hendy, Thomas S. Senior Plant Operator 300.00 Certification Reimbursement Herberg, James D. General Manager 134.92 Dinner Meeting Washington, DC 4/21116 Herberg, James D. General Manager 145.53 CASA Conference San Diego,CA 8/19-8/21/15 Herberg, James D. General Manager 225.00 Membership Renewal Herberg, James D. General Manager 476.88 Trip to DC-House of Representatives Hearing Washington, DC 4/19-4/22/16 Herberg, James D. General Manager 682.97 CASA Conference San Diego,CA 8/19-8/21/15 Herberg, James D. General Manager 1,106.95 WEFTEC Conference Chicago, IL 9/27-9/30/15 Herbst, Roger B. Senior Mechanic 164.00 Membership Renewal Herrera, Fernando Facilities Worker/Builder 330.00 Irrigation Show Lang Beach,CA 11/11 - 11/12/15 Herrera,Yolanda Data Management Technician I 1,500.00 Tuition Reimbursement Herrigstad, Cart A. Lead Instrumentation Technician 431.10 Employee Appreciation Lunch Hetherington,Michelle R. Senior Engineer 115.00 Certification Reimbursement Higgins, Heather L. Contract/Purchasing Assistant 491.92 Tuition Reimbursement Hoang,Tyler T. Lead Plant Operator 340.00 Certification Reimbursement Hockensmith, Bryce K. Accounting Assistant II 4,440.46 Tuition Reimbursement Huts,Michael R Senior Plant Operator 300.00 Certification Reimbursement Hunt,Thomas A. Lead Plant Operator 340.00 Certification Reimbursement Jimenez,Margil Scientist 848.16 CWEA Conference Santa Clara,CA 4/27-4/29/16 Kams, Douglas Senior Engineer 115.00 Certification Reimbursement Kams, Douglas Senior Engineer 115.00 Certification Reimbursement Kanis, Douglas Senior Engineer 240.00 Certification Reimbursement Kanis, Douglas Senior Engineer 240.00 Certification Reimbursement Prepared By: Lisa Henshaw Page 5 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Karaguezian, Lori Senior Staff Analyst 302.21 Lodging for Cornerstone Conference Los Angeles,CA 5/10- 5/11/16 Kawamoto, Mark H. Engineering Supervisor 116.00 Certification Reimbursement Khublall, Hardat S. Construction in Progress Project Manager 6,678.00 Tuition Reimbursement Khublall, Hardat S. Construction in Progress Project Manager 115.00 Certification Reimbursement Khublall, Hardat S. Construction in Progress Project Manager 164.00 Membership Renewal Khublall, Hardat S. Construction in Progress Project Manager 200.00 Membership Renewal Kim,Jin H. Engineer 200.00 Certification Reimbursement Kim,Jin H. Engineer 614.79 CWEA Conference Santa Clara,CA 4/27-4/28/16 Kleinman, Randall Principal Financial Analyst 970.76 RIMS Conference San Diego,CA 4/10-4/13/16 Klinger, Laurie J. Senior Human Resources Analyst 605.78 CALPELRA HR Training Pleasanton, CA 8/5-8/7115 Knapp,Tina L. Deputy Clerk of the Board 432.94 Clerk Series 100 Training Riverside, CA 3/15-3/18/16 Kottke, Bradly Maintenance Worker 682.80 TriState Seminar Las Vegas, HV 9/21 -9/25/16 Kwiecien, Ricky Senior Construction Inspector 418.29 NASSCO Training Stockton, CA 3/22-3/24/16 Kyl,May T. Senior Engineer 1,762.30 WEF Conference Milwaukee, WI 3/20-3/25/16 Lagade,Jackie M Buyer 198.29 CAPPO Conference Santa Barbara,CA 1/27- 1/29/16 Lagade,Jackie Buyer 1,190.65 Tuition Reimbursement Lahlou,Michael Associate Engineer 997.63 SEI Conference San Francisco, CA 12/9- 12/12/15 Lechner,Jesse J. Plant Operator 230.00 Certification Reimbursement Lee,Tony S. Chief Plant Operator 340.00 Certification Reimbursement Leon, Richard N. Engineer 889.16 WTC Conference San Francisco, CA 4/25-4/27/16 Long, Rebecca Senior Public Information Specialist 550.00 Tuition Reimbursement Long, Rebecca Senior Public Information Specialist 113.18 State of the District Event Supplies Long, Rebecca Senior Public Information Specialist 161.99 Sound System for Public Events Long, Rebecca Senior Public Information Specialist 797.14 Lobby Days meeting Washington, DC 4/20-4/22/16 Long, Rebecca Senior Public Information Specialist 1,443.86 CASA Conference Washington, DC 2/21 -2/24/16 Lore, Kelly A. Clerk of the Board 262.00 International Institute of Municipal Clerks Classes Online Lore, Kelly A. Clerk of the Board 550.96 Board Secretary/Clerks Conference Lake Tahoe,CA 10/18- 10/20/15 Losurdo, Linda Administrative Assistant 120.91 Employee Appreciation Lunch Losurdo, Linda Administrative Assistant 129.60 Cell Phone Cases Losurdo, Linda Administrative Assistant 163.52 Employee Appreciation Lunch Luna, Lourdes Human Resources Assistant 1,674.87 Tuition Reimbursement Lou,Tim Senior Safety and Health Representative 112.21 CSP Exam Prep Training Costa Mesa,CA 9/17-9/19/15 Lou,Tim Senior Safety and Health Representative 140.00 Certification Reimbursement Lou,Tim Senior Safety and Health Representative 350.00 Certification Reimbursement Pre,vred By: Lisa Hensha Page 6 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Lyons,Christopher D. Senior Mechanic 120.00 Certification Reimbursement Lyons,Christopher D. Senior Mechanic 299.99 Certification Reimbursement Malone,Javitta Records Management Specialist 139.66 e-Discovery Exchange Conference Los Angeles,CA 12/7- 1218/15 Malone, Javitta Records Management Specialist 945.51 Managing Electronic Records Conference Chicago, IL 5/21 -5/25/16 Malone,Javitta Records Management Specialist 1,506.16 ARMA Conference Washington, DC 10/3 - 10/7/15 Malpede,Jaime M. Source Control Supervisor 103.00 Food for IPACS Training Malpede,Jaime M. Source Control Supervisor 447.00 TriState Seminar Las Vegas, NV 9/21 -9/25/15 Manzo,Mark A. Information Technology Analyst II 6,389.00 Tuition Reimbursement Martin,Mane C. Accounting Assistant II 5,536.00 Tuition Reimbursement Martinez, Chad M. Source Control Inspector I 350.81 Environmental Crimes Training San Luis Obispo,CA 10/19- 10/30/15 Martinez, Chad M. Source Control Inspector I 794.47 CAL/EPA Inspector Training Ventura,CA 8/11 -8/14/15 McKinley, Lorinda Senior Environmental Specialist 150.77 Setac Meeting San Diego,CA 4/19-4/20/16 McKinley, Lorinda Senior Environmental Specialist 834.69 ACS Training San Francisco, CA 11/8- 11/10/15 MCMurdy,Adam M. Senior Mechanic 1,570.20 Tuition Reimbursement Melby,Mark Operations Supervisor 340.00 Certification Reimbursement Melby,Mark Operations Supervisor 384.31 Tuition Reimbursement Menocal, Jorge Senior Mechanic 105.00 Certification Reimbursement Menocal, Jorge Senior Mechanic 160.00 Certification Reimbursement Meregillano,Tom B. Senior Regulatory Specialist 675.14 Residuals and Biosolids Conference Milwaukee,WI 4/3-4/6116 Michaels, Robert Information Technology Supervisor 394.13 ESRI Conference San Diego,CA 7/20-7/21/15 Michaels, Robert Information Technology Supervisor 795.03 Water Et Wastewater CIO Forum Oakland, CA 4/18-4/21/16 Mohr, Jeffrey D. Engineering Manager 129.00 Certification Reimbursement Moinuddin, Riaz K. Engineering Supervisor 115.00 Certification Reimbursement Moline,William M. Operations Supervisor 340.00 Certification Reimbursement Morns, Robert M. Senior Plant Operator 300.00 Certification Reimbursement Mullins, James C. Senior Engineer 115.00 Certification Reimbursement Murphy,Tracey L. Power Plant Operator II 230.00 Certification Reimbursement Murra, Cindy K. Associate Engineer 558.96 WaterReuse Conference Seattle,WA 9/13 -9/15/15 Murthy, Umesh N. Engineering Supervisor 129.79 Employee Appreciation Lunch Murthy, Umesh N. Engineering Supervisor 152.51 Certification Reimbursement Myers, Dawn K. Senior Laboratory Analyst 3,524.30 Tuition Reimbursement Nasrollahi, Nasrin Associate Engineer 324.71 CWEA Conference Santa Clara,CA 4/28-4/29/16 Nasrollahi, Nasrin Associate Engineer 1,011.33 EWRI Congress West Palm Beach, FL 5/21 - 5/27/16 Newsom,Adam P. Reliability Maintenance Technician 929.24 Machinery Lubrication I Training Mesa,AZ 11/30- 12/4/15 Prepared By: Lisa Hensha Page 7of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Nguyen, Hai Senior Environmental Specialist 696.33 Ph Sensor and OA Monitoring Training Monterey,CA 2/29-3/3/16 Nguyen,Quynh D. Engineering Associate 120.29 ESRI Conference San Diego,CA 7/22/15 Nguyen,Truing T. Reliability Maintenance Technician 847.13 Level 1 Thermographic Training Las Vegas, NV 211 -2/5/16 Nielsen, Jahn Board of Directors 402.26 CASA Conference Palm Springs,CA 1/20- 1/22/16 Nielsen, John Board of Directors 604.02 CASA Conference San Diego,CA 8/19-8/21/15 Oruganti, Jagadish Senior Information Technology Analyst 3,839.80 Tuition Reimbursement Paik,Sang Senior Information Technology Analyst 199.00 Certification Reimbursement Paik,Sang Senior Information Technology Analyst 199.00 Certification Reimbursement Park,Sang Senior Information Technology Analyst 399.00 Certification Reimbursement Park,Sang Senior Information Technology Analyst 612.14 Enfuse Conference Las Vegas, NV 5/22- 5/26/16 Paik,Sang Senior Information Technology Analyst 765.06 Industrial Control System Training Idaho Falls, ID 9/20-9/25/15 Paik,Sang Senior Information Technology Analyst 809.52 EnCase eDISCOVERY Training Pasadena, CA 10/27-10/30/15 Paramo, Giovanni Automotive/Heavy Equipment Assistant 1,859.50 Tuition Reimbursement Patel,Madankumar B. Senior Engineer 116.00 Certification Reimbursement Patel,Sandip S. Engineer 3,420.91 Tuition Reimbursement Patel,Sept. Engineer 116.00 Certification Reimbursement Peckham, Kevin R. Plant Operator 230.00 Certification Reimbursement Perez, Leyla D. Principal Environmental Specialist 101.79 Food for Organizational Awareness Training Perez, Leyla D. Principal Environmental Specialist 131.88 Food for Safety Award Breakfast Perez, Leyla D. Principal Environmental Specialist 164.00 Membership Renewal Phonsid,Vanh Principal Laboratory Analyst 780.45 Agilent 6400 Training Wood Dale, IL 5/16- 5/20/16 Phonsiri,Vanh Principal Laboratory Analyst 2,509.53 Tuition Reimbursement Phuong, Ddaze Lead Plant Operator 340.00 Certification Reimbursement Phuong, Ddaze Lead Plant Operator 1,491.35 CWEA Conference Santa Clara, CA 4/25-4/29/16 Powell, Jonathan E. Lead Source Control Inspector 237.75 Certification Reimbursement Quiroz, Carlos Maintenance Manager 780.33 SMRP Conference Cincinnati,OH 10/11 - 10/14/15 Quiroz, Carlos Maintenance Manager 897.11 International Maintenance Conference Bonita Spring, FL 12/6- 12/10/15 Quiroz, Carlos Maintenance Manager 1,655.12 CWEA Conference Santa Clara, CA 4/26-4/29/16 Ramirez Jr., Javier Plant Operator 170.00 Certification Reimbursement Rampley,Alexander J. Senior Information Technology Analyst 214.65 Legislative Committee Meeting Sacramento, CA 8/20-8/21/15 Rathert, Kurt M. Plant Operator 300.00 Certification Reimbursement Rebai,Mathew D. Senior Plant Operator 300.00 Certification Reimbursement Rech, Doug E. Senior Mechanic 180.00 Certification Reimbursement Rech, Doug E. Senior Mechanic 638.00 Tristate Seminar Las Vegas, NV 9/21 -9/25/15 Prepared By: Lisa Hensha Page 8 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Reynolds, Roy J. Maintenance Supervisor 736.64 SMRP Conference Cincinnati,ON 10/11 - 10/14/15 Rivera,George Security/Emergency Planning Specialist 946.78 OSHA 501 Training San Diego,CA 8/9-8/13/15 Robertson, George L. Senior Scientist 131.71 Wood for Shed and Keys and Deck Screws Robertson, George L. Senior Scientist 617.00 Membership Renewal Robertson, George L. Senior Scientist 952.00 Eastern Pacific Ocean Conference Leaf Lake,CA 9/20-9/23/15 Rocha, Johnny J. Lead Plant Operator 340.00 Certification Reimbursement Rocha, Johnny J. Lead Plant Operator 1,698.23 Tuition Reimbursement Rodriguez, David Engineer 164.00 Certification Reimbursement Rodriguez, David Engineer 200.00 Certification Reimbursement Ruckman, Emest S. Senior Environmental Specialist 997.12 Setac Meeting Salt Lake City, In 11/1 - 1115/15 Ruckman, Emest S. Senior Environmental Specialist 2,703.74 Tuition Reimbursement Ruiz, Luis M. Laboratory Analyst 4,024.97 Tuition Reimbursement Ruiz, Stefanie R. Office Assistant 5,368.00 Tuition Reimbursement Rulison, Doug Principal Information Technology Analyst 461.88 ESRI Conference San Diego,CA 7/18-7/24/15 Rulison, Doug Principal Information Technology Analyst 1,026.40 ESRI Conference Austin,TX 2/8-2/13/16 Sabri, Julian F. Engineering Supervisor 113.38 Screen Protector It Case for District Cell Phone Sabri, Julian F. Engineering Supervisor 116.00 Certification Reimbursement Sabri, Julian F. Engineering Supervisor 164.00 Membership Renewal Sabri, Julian F. Engineering Supervisor 2,491.97 Tuition Reimbursement Sakamoto, Ken A. Senior Environmental Specialist 110.03 Food for a Nerissa Trawl Sakamoto, Ken A. Senior Environmental Specialist 197.52 Food for a Nerissa Trawl Sakamoto, Ken A. Senior Environmental Specialist 252.30 ESRI Ocean Forum Redlands, CA 11/4- 11/6/15 Sakamoto, Ken A. Senior Environmental Specialist 341.90 Food for a Nerissa Trawl Sakamoto, Ken A. Senior Environmental Specialist 540.12 Food for a Nerissa Trawl Salgado, Henry R. Principal Information Technology Analyst 380.37 Cornerstone Conference Los Angeles,CA 5/10-5/11/16 Saqui,Annalisa S. Information Technology Analyst III 6,757.40 Tuition Reimbursement Saqui,Annalisa S. Information Technology Analyst III 296.63 ESRI Conference San Diego,CA 7/21 -7/22/15 Schiefelbein, Cheryl Administrative Assistant 176.27 Tour Supplies Schiefelbein, Cheryl Administrative Assistant 213.62 District Holiday Lunch Deserts Schuler, Kevin A. Maintenance Planner/Scheduler 195.00 Certification Reimbursement Schuler, Kevin A. Maintenance Planner/Scheduler 5,030.00 Tuition Reimbursement Sebourn, Gregory Board of Directors 151.00 Trip to DC-House of Representatives Hearing Washington, DC 4/19-4/22/16 Shelp,Curt V. Operations Supervisor 139.40 Safety Shoes Smith, Duane T. Senior Plant Operator 300.00 Certification Reimbursement Pre,vred By: Lisa Hersh. Page 9 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Smith, Richard A. Senior Plant Operator 340.00 Certification Reimbursement Speakman,Steven R. Engineer 115.00 Certification Reimbursement Spencer, Richard L. Human Resources Manager 150.00 Safety Management Training Costa Mesa,CA 9114-9/18/15 Spencer, Richard L. Human Resources Manager 586.68 CWEA Conference Santa Clara, CA 4/26-4/28/16 Stacklin, Christopher A. Engineer 116.00 Certification Reimbursement Stacklin, Christopher A. Engineer 807.08 WEF Conference Miami, FL 1/28- 1/30/16 Stacklin, Christopher A. Engineer 1,308.51 WaterReuse Conference Seattle,WA 9/12-6/16/15 Stacklin, Christopher A. Engineer 1,776.27 WEF National Policy Forum Washington, DC 4/10-4/14/16 Stacklin, Christopher A. Engineer 2,120.74 WEFTEC Conference Chicago, IL 9/25-9/30/15 Stewart, Ruben L. Senior Plant Operator 300.00 Certification Reimbursement Stokes, Don F. Maintenance Superintendent 150.93 Fans and Gatorade for Employees Stokes, Don F. Maintenance Superintendent 300.00 Certification Reimbursement Stokes, Don F. Maintenance Superintendent 426.97 Employee Appreciation Lunch Stokes, Don F. Maintenance Superintendent 798.52 SMRP Conference Cincinnati,OH 10/11 - 10/14/15 Suarez,Aaron M. Power Plant Operator II 250.00 Gas Turbine Training Online Sullivan, Patrick A. Senior Plant Operator 300.00 Certification Reimbursement Sullivan, Patrick A. Senior Plant Operator 2,290.00 Tuition Reimbursement Swindler,John W. Information Technology Manager 137.16 Cornerstone Conference Los Angeles,CA 5/12- 5/13/16 Swindler,John W. Information Technology Manager 408.94 Cornerstone Conference Las Angeles,CA 5/9-5/11/16 Tafclla, Brian J. Reliability Maintenance Technician 300.00 Certification Reimbursement Tafolla, Brian J. Reliability Maintenance Technician 1,509.92 Machinery Vibrations Training Tempe,AZ 2/22-2/27/16 Tang, Danny Scientist 274.78 Symbiotic Copepoda Workshop Townsville,Australia 7/10-7/16/16 Tang, Danny Scientist 1,085.12 Setac Meeting Salt Lake City, LIT 11/1 - 1115/15 Tang, Luc H. Senior Mechanic 7,756.00 Tuition Reimbursement Terriquez, Laura A. Senior Environmental Specialist 1,058.62 Ph Sensor and OA Monitoring Training Monterey,CA 2/29-3/3/16 Tetxh, Gina A. Occupational Health Nurse 100.90 ASP Exam Prep Training Costa Mesa,CA 9/14-9/16/15 Tetsch, Gina A. Occupational Health Nurse 160.00 Certification Reimbursement Tetsch, Gina A. Occupational Health Nurse 200.00 Certification Reimbursement Tetsch, Gina A. Occupational Health Nurse 933.02 AAOHN Conference Jacksonville, FL 4/8-4/14/16 Thiede, Robert J. Principal Project Controls Analyst 164.00 Certification Reimbursement Thompson, Robert C. Director of Engineering 116.00 Certification Reimbursement Thompson, Robert C. Director of Engineering 211.95 ASCE Books Thompson, Robert C. Director of Engineering 280.00 Membership Renewal Thompson, Robert C. Director of Engineering 768.68 CASA Conference San Diego,CA 8/19-8/21/15 Preovred By: Lisa Hensha Page 10 of12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Tittle,James G. Maintenance Supervisor 476.46 FASTER Conference Norfolk,VA 10/4- 10/7/15 Tjen, Kwen T. Senior Plant Operator 340.00 Certification Reimbursement Torres, Edward M. Director of Operations and Maintenance 115.00 Certification Reimbursement Torres, Edward M. Director of Operations and Maintenance 295.64 CWEA Conference Santa Clara, CA 4/26-4/27/16 Torres, Edward M. Director of Operations and Maintenance 820.58 SMRP Conference Cincinnati,ON 10/11 - 10/14/15 Tsai, Yu-Li Senior Scientist 1,260.84 Environmental Measurement Symposium Chicago, IL 7/12-7/16/15 Tuiasosopo-Kemper, Gary J. Lead Plant Operator 1,890.00 Tuition Reimbursement Velasco,Jesse R. Lead Storekeeper 281.58 Tuition Reimbursement Vellucci, Hai-Thao H. Senior Environmental Specialist 350.00 Certification Reimbursement Villalobos, Ginetto Mobile Crane Operator 650.00 Certification Reimbursement Vitko,Tadao G. Engineer 115.00 Certification Reimbursement Vitko,Tadeo G. Engineer 1,781.08 WEF Conference Milwaukee,WI 3/20-3/24/16 Von Winckelmann,Michael Laboratory Supervisor 363.09 CWEA Conference Santa Clara,CA 4/27-4/29/16 Weedagama,Wasantha Senior Information Technology Analyst 1,270.44 SharePoint Technology Conference Austin,TX 2/20-2/24/16 Wheatley, Caleb Plant Operator 300.00 Certification Reimbursement Wheatley, Caleb Plant Operator 518.58 Tuition Reimbursement Wheatley, Christopher R. Plant Operator 230.00 Certification Reimbursement Whitney, Robert M. Construction Inspector 100.00 Certification Reimbursement Whitney, Robert M. Construction Inspector 587.38 P1-101 Equipment Testing Burlington, IA 7127/15 Whitney, Robert M. Construction Inspector 434.22 P1-101 Equipment Testing Burlington, IA 8/11/15 Whitney, Robert M. Construction Inspector 445.56 P1-101 Equipment Testing Burlington, IA 8/17/15 Whitney, Robert M. Construction Inspector 428.65 P1-101 Equipment Testing Burlington, IA 8/25115 Whitney, Robert M. Construction Inspector 850.08 P1-101 Equipment Testing Burlington, IA 9121/15 Wilcox, Robyn A. Engineer 164.00 Membership Renewal Wilcox, Robyn A. Engineer 185.00 Membership Renewal Willis, Bryan Automotive/Heavy Equipment Technician 658.50 Vactor Mechanics Training Streator, IL 9/13 -9/24/15 Wong, Ken H. Operations Supervisor 340.00 Certification Reimbursement Woodward,Jeff W. Operations Supervisor 340.00 Certification Reimbursement Wride, Brent Data Management Technician II 132.72 Bluebeam Software Training Los Angeles,CA 7/29-7/31/15 Wride, Brent Data Management Technician II 8,550.00 Tuition Reimbursement Wyland, Ryan M. Plant Operator 170.00 Certification Reimbursement Yin, Shuang Senior Engineer 115.00 Certification Reimbursement Yin, Shuang Senior Engineer 200.00 Certification Reimbursement Yin, Shuang Senior Engineer 640.42 WEF Conference Milwaukee,WI 4/3-4/6116 Prepared By: Lim Hensha Page 11 of 12 7/27/2016 Orange County Sanitation District Government Code S 53065-5, Public Disclosure Reports-Reimbursements by DCSD July 1, 2015 through June 30,2016 Employee Name Title Amount Description Site Location Duration Yong, Eros Engineering Supervisor 255.00 Membership Renewal Yong, Eros Engineering Supervisor 920.00 AWWA Conference Chicago, IL 6/19-6122/16 Zedek, Michael 1. Engineer 554.72 ESRI Conference San Diego,CA 7/21 -7/23/15 Prepared By: Lisa Hensha Page 12 of 12 7/27/2016 ADMINISTRATION COMMITTEE Melting Dat0 TOBE.Or Dir. 09/14/16 09/28/16 AGENDA REPORT ItemNumber Item Number 4 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PRODUCTION STORAGE ARRAY SYSTEM (NIMBLE UPGRADE) GENERAL MANAGER'S RECOMMENDATION A. Authorize the purchase of a production storage system to accommodate future system performance and capacity needs with Nimble Storage Array system, using the approved U.S. General Services Agreement (GSA) IT Schedule 70 (M.O. 5/25/16, Item #13) for a total amount not to exceed $284,941.49, in accordance with OCSD Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. B. Approve a contingency of$28,494 (10%). BACKGROUND Orange County Sanitation District (Sanitation District) Information Technology staff is recommending to replace the existing primary production storage system for the office network. This storage system has reached the end of its planned service life and is operating above intended performance and capacity levels. The Sanitation District has been using Nimble Storage Array since 2011 for support of its software applications, enterprise storage, and for backup files. The existing system is scheduled to be replaced based upon standard maintenance practices (5 years). RELEVANT STANDARDS • Data-driven asset intervention — type, life data, inspections, costs, industry standards • Efficiency efforts reduce the cost to provide the current service level or standard • Consider life-cycle costs in all decisions • Ensure that the public's money is wisely spent PROBLEM The existing storage system used in support of critical business processes has reached the end of its expected service life. The agency has started to experience processing inefficiencies from the numerous software applications which rely on this storage system. Page 1 of 2 PROPOSED SOLUTION In order to support the on-going operation of the Sanitation District's office network, the current storage array system should be upgraded to allow for increased processing performance and storage capacity. TIMING CONCERNS The performance and capacity of the current system will continue to degrade over time. RAMIFICATIONS OF NOT TAKING ACTION If no action is taken, existing system performance will continue to decrease, resulting in various process efficiency issues for Sanitation District personnel. Additionally, the Sanitation District will be unable to move forward with additional projects without incurring further performance problems. PRIOR COMMITTEE/BOARD ACTIONS May 2016 - Board Award M.O. 5/25/16, Item #13: Authorize purchases of information technology hardware, software, services, and licensing&maintenance agreements using the U.S. General Services Agreement (GSA) IT Schedule 70. ADDITIONAL INFORMATION The Sanitation District maintains its disaster recovery abilities through the use of storage system replication. It is critical to maintain storage array systems at each processing plant, which continue to provide these capabilities. CEQA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. This item has been budgeted in the FY16/17 and FY17/18 Information Technology Capital Program, Section 8, Page 72. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: N/A Page 2 of 2 ADMINISTRATION COMMITTEE Meeting Date To Bd.of Dir. 0e/14/I6 — AGENDA REPORT Item Number Item Number s — Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: ORANGE COUNTY SANITATION DISTRICT SECURITY PROGAM GENERAL MANAGER'S RECOMMENDATION Information Only. BACKGROUND Each month, staff provides an informational presentation on topics of interest to the Board of Directors. This month's topic is an overview of the Orange County Sanitation District's Security Program. RELEVANT STANDARDS Protection of Orange County Sanitation District assets ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: N/A Page 1 of 1 ADMINISTRATION COMMITTEE Melting D310 TOBE.Or Dir. 09/14/16 09/28/16 AGENDA REPORT Item Item Number 6 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: CONTRACT SECURITY SERVICES GENERAL MANAGER'S RECOMMENDATION A. Approve a Service Contract to Securitas Security Services, U.S.A., Specification No. S-2016-775BD, for the period November 1, 2016 through October 31, 2017, for a total annual amount not to exceed $776,704, with up to four (4) one-year renewals; B. Approve an increase of$62,681 to Purchase Order 105775 OA, a bridge purchase contract issued to Securitas Security Services, U.S.A., for a total amount not to exceed $160,723, for the period October 1, 2016 through October 31, 2016; and C. Approve a contingency of$77,670 (10%). BACKGROUND The Orange County Sanitation District (Sanitation District) provides a secure working environment for employees, visitors and contractors. Through proactive security measures designed to minimize risk and protect people, capital assets and operations against threats of injury and loss or damage by criminal, hostile or malignant acts, the Sanitation District strives to protect the public's significant investment in its facilities. An objective of the Sanitation District Workplace Security Program is to promote plant operational efficiencies, while providing increased workplace security. Contract security services are an important element of the Workplace Security Program for designated Sanitation District facilities. RELEVANT STANDARDS • Protection of Sanitation District assets • Provide a safe and collegial workplace PROBLEM The Sanitation District relies on contract security guards to protect Sanitation District controlled properties throughout the service area. Contract security services are the most visible security presence and the first public contact with security upon entering the facility. Although the security guards are not employed by the Sanitation District, they have a crucial role in the Sanitation District's mission and operations. Page 1 of 3 Contract security guards are primarily responsible for controlling access to District facilities; to assist in ensuring the safety of employees, visitors and contractors while on District property; and to assist in ensuring the security of District property and critical assets. Access control includes checking employees', visitors' and contractors' identification; operating or monitoring security cameras and/or alarms; and reporting crimes and incidents to the Control or Operations Center. Consequently, the Sanitation District relies heavily on contract security guards to be the "eyes and ears" while accomplishing our core mission. RAMIFICATIONS OF NOT TAKING ACTION The current contract with Securitas Security Services, USA is due to expire on October 31, 2016, which may potentially leave our plantfacilities vulnerable to persons who intend to trespass on Sanitation District property in order to commit a malevolent act. Not knowing who or why someone is entering a building or plant facility leaves the Sanitation District vulnerable to those wishing to do harm immediately or plan for offensive action in the future. A wastewater treatment plant that cannot provide adequate capacity or performance due to a malicious activity could discharge an effluent with significant impaired quality that can create a public health hazard or cause environmental damage of the downstream. PRIOR COMMITTEE/BOARD ACTIONS June 2010 — Board Approved Specification No. S-2010468 for a five-year plant security services contract with Securitas Security Services, USA. ADDITIONAL INFORMATION Firm Selection: The Sanitation District requested and advertised for proposals for Security Services Contract on March 21, 2016. The following evaluation criteria were described in the request for proposals and used to determine the most qualified firm. CRITERION WEIGHT Qualifications of Firm 35% Staffing and Project Organization 30% Work Plan 20% Cost 10% Presentation 5% Nine (9) proposals were received on May 12, 2016, and evaluated in accordance with the evaluation process set forth in Ordinance OCSD47, by a pre-selected evaluation team consisting of the following Sanitation District's staff. Page 2 of 3 Richard Spencer Human Resources & Risk Manager Ron Coss Environmental Lab & OM Manager Warren Sternin Information Technology Supervisor John Bradley Chief Plant Operator Following scoring by the evaluation team, four (4)firms were shortlisted for interviews on June 29 and July 5, 2016. Following the interview, each member of the evaluation team ranked the firms based on both the proposals and interviews using the evaluation criteria and weighting described above. In this request for proposal process, cost is a weighted factor and has already been included. This process is different from the professional design services contract where cost is not included. Based on the ranking shown below, Securitas Security Services was selected as the most qualified firm. Securitas Cypress Allied USA SecuritySecurity Barton Security y Security Association Services Services Services Evaluator 1 792.5 pts. 807.6 pts. 767.5 pts. 723.2 pts. Evaluator 2 850.0 pts. 852.6 pts. 825.0 pts. 825.7 pts. Evaluator 3 917.5 pts. 825.1 pts. 910.1 pts. 745.7 pts Evaluator 4 835.0 pts. 857.6 pts. 810.1 pts. 803.2 pts. Total Points 3395 pts. 3342.9 pts. 3312.7 pts. 3097.8 pts. Overall Ranking 1" 2n" V 41h FINANCIAL CONSIDERATIONS Although this item has been included in the approved budget, the changes listed above will result in an increase to the security services contract. The addition of a 24/7 roving security officer, 60 hours per weeks staffing of the security monitoring station, and an additional 60 hours per week staffing in the Administration lobby once the freeway overpass construction begins will result in increased costs of approximately $60,000. These funds will be reallocated form other Human Resources budgeted line items or the General Managers Contingency Fund. This request complies with authority levels of the Sanitation District's Purchasing Ordinance. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: • Service Contract Page 3 of 3 SERVICE CONTRACT Security Services Specification No. S-2016-775BD THIS CONTRACT is made and entered into as of the date fully executed below, by and between Orange County Sanitation District, with a principal place of business at 10844 Ellis Avenue, Fountain Valley, CA 92708-7018 (hereinafter referred to as "OCSD") and Securitas Security Services USA with a principal place of business at 2900 S. State College Blvd. #100, Anaheim, CA 92806 (hereinafter referred to as "Service Provider") collectively referred to as the "Parties". WITNESSETH WHEREAS, OCSD desires to retain the services of Service Provider for Security Services "Services"; and WHEREAS, OCSD has chosen Service Provider to conduct Services in accordance with Ordinance No. OCSD-47; and WHEREAS, on September 28,2016,the Board of Directors of OCSD, by minute order,authorized execution of this Contract between OCSD and Service Provider; and WHEREAS, Service Provider is qualified by virtue of experience, training, and education and expertise to accomplish such Services, NOW THEREFORE, in consideration of the promises and mutual benefits exchanged between the Parties, it is mutually agreed as follows: 1. Introduction 1.1 This Contract and all exhibits hereto (called the "Contract") is made by OCSD and Service Provider. The Terms and Conditions herein exclusively govern the purchase of Services as described in the Scope of Work, attached hereto and incorporated herein by reference as Exhibit "A" 1.2 Exhibits to this Contract are incorporated by reference and made a part of this Contract as though fully set forth at length herein. Exhibits to this Contract are as follows in order of precedence: Exhibit"A" Scope of Work Appendix 1 Best and Final Offer(BAFO) Exhibit"B" Proposal from Service Provider Exhibit"C" Acknowledgement of Insurance Requirements Exhibit"D" Not Used 1.3 In the event of any conflict or inconsistency between the provisions of this Contract and any of the provisions of the exhibits hereto, the provisions of this Contract shall in all respects govern and control. 1.4 The provisions of this Contract may be amended or waived only by a writing executed by authorized representatives of both Parties hereto. 1.5 The various headings in this Contract are inserted for convenience only and shall not affect the meaning or interpretation of this Contract or any Paragraph or provision hereof. Orange County Sanitation District 1 of 10 Specification No. S-2016-775BD 1.6 The term "days", when used in the Contract, shall mean calendar days, unless otherwise noted as business days. 1.7 OCSD holidays (non-working days) are as follows: New Year's Day, Lincoln's Birthday, Presidents' Day Monday, Memorial Day Monday, Independence Day, Labor Day Monday, Veterans Day, Thanksgiving Day, Day after Thanksgiving, Christmas Eve, and Christmas Day. 1.8 The term "hours", when used in this Contract, shall be as defined in Exhibit"A". 1.9 Service Provider shall provide OCSD with all required premiums and/or overtime work at no charge beyond the price provided under"Compensation" below. 1.10 Except as expressly provided otherwise, OCSD accepts no liability for any expenses, losses, or action incurred or undertaken by Service Provider as a result of work performed in anticipation of purchases of said services by OCSD. 2. Compensation Compensation for this project shall not exceed the total amount of Seven Hundred Seventy-Six Thousand Seven Hundred Three and 04/100 Dollars ($776,703.04). 3. California Department of Industrial Relations(D/R)Reoistration and Record of Waaes 3.1 To the extent Service Provider's employees and/or its Subcontractors who will perform Work under this Contract for which Prevailing Wage Determinations have been issued by the DIR and as more specifically defined under Labor Code Section 1720 at seq, Service Provider and its Subcontractors shall comply with the registration requirements of Labor Code Section 1725.5. Pursuant to Labor Code Section 1771.4, the Work is subject to compliance monitoring and enforcement by the DIR. 3.2 The Service Provider and its Subcontractors shall maintain accurate payroll records and shall comply with all the provisions of Labor Code Section 1776, and shall submit payroll records to the Labor Commissioner pursuant to Labor Code 1771.4(a)(3). Penalties for non-compliance with the requirements of Section 1776 may be deducted from progress payments per Section 1776. 3.3 Pursuant to Labor Code Section 1776, the Service Provider and its Subcontractors shall furnish a copy of all certified payroll records to OCSD and/or general public upon request, provided the public request is made through OCSD, the Division of Apprenticeship Standards or the Division of Labor Enforcement of the Department of Industrial Relations. 3.4 The Service Provider and its Subcontractors shall comply with the job site notices posting requirements established by the Labor Commissioner per Title 8, California Code of Regulation Section 16461(e). 4. Payments Payments shall be made upon approval by OCSD Project Manager, Richard Spencer or his designee, of invoices submitted for Services completed as described in Exhibit "A", Appendix 1 and Exhibit"B". OCSD, at its sole discretion, shall be the determining party as to whether the tasks and deliverables have been satisfactorily completed. 5. Invoices 5.1 OCSD shall pay within 30 days of completion and receipt and approval by OCSD Project Manager of an itemized invoice, in a form acceptable to OCSD to enable audit of the charges thereon. Invoices shall include the Purchase Order Number. Orange County Sanitation District 2 of 10 Specification No. S-2016-775BD 5.2 Invoices shall be emailed by Service Provider to OCSD Accounts Payable at APStaff(d).00SD.com and reference the following in the subject line: "INVOICE", the Purchase Order Number, the Project Manager, Richard Spencer and Specification No. S-2016-775BD. 6. Audit Riahts Service Provider agrees that, during the term of this Contract and for a period of three (3)years after its termination, OCSD shall have access to and the right to examine any directly pertinent books, documents, and records of Service Provider relating to the invoices submitted by Service Provider pursuant to this Contract. 7. Scope of Work Subject to the terms of this Contract, Service Provider shall perform the Services identified in Exhibit"A" and Appendix 1. Service Provider shall perform said Services in accordance with generally accepted industry and professional standards. 6. Modifications to Scope of Work Requests for modifications to the Scope of Work hereunder can be made by OCSD at any time. All modifications must be made in writing and signed by both Parties. 9. Contract Term The Services to be provided under this Contract shall commence on the effective date of the notice to proceed, and be completed no later than one (1)year following the effective date of the notice to proceed. 10. Renewals 10.1 OCSD may exercise the option to renew the Contract for up to four (4) one-year periods based upon the criteria set forth in the Scope of Work, Exhibit "A" and Appendix 1, if mutually acceptable contract terms can be negotiated. OCSD shall make no obligation to renew nor give reason if it elects not to renew. 10.2 Renewals may be made through the OCSD Purchase Order process. 11. Extensions The Term of this Contract maybe extended only by written instrument signed by both Parties. 12. Termination 12.1 OCSD reserves the right to terminate this Contract for its convenience, with or without cause, in whole or in part, at any time, by written notice from OCSD of intent to terminate. Upon receipt of a termination notice, Service Provider shall immediately discontinue all work under this Contract(unless the notice directs otherwise). OCSD shall thereafter, within thirty(30) days, pay Service Provider for work performed (cost and fee) to the date of termination. Service Provider expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of this Contract. Such notice of termination shall terminate this Contract and release OCSD from any further fee, cost or claim hereunder by Service Provider other than for work performed to the date of termination. 12.2 OCSD reserves the right to terminate this Contract immediately upon OCSD's determination that Service Provider is not meeting specification requirements, if the level of service is inadequate, or any other default of this Contract. 12.3 OCSD may also immediately cancel for default of this Contract in whole or in part by written notice to Service Provider: • if Service Provider becomes insolvent or files a petition under the Bankruptcy Act; or • if Service Provider sells its business; or • if Service Provider breaches any of the terms of this Contract; or • if total amount of compensation exceeds the amount authorized under this Contract. Orange County Sanitation District 3 of 10 Specification No. S-2016-775BD 12.4 All OCSD property in the possession or control of Service Provider shall be returned by Service Provider to OCSD upon demand, or at the termination of this Contract, whichever occurs first. 13. Insurance Service Provider and all subcontractors shall purchase and maintain, throughout the life of this Contract and any periods of warranty or extensions, insurance in amounts equal to the requirements set forth in the signed Acknowledgement of Insurance Requirements (attached hereto and incorporated herein as Exhibit "C"). Service Provider shall not commence work under this Contract until all required insurance is obtained in a form acceptable to OCSD, nor shall Service Provider allow any subcontractor to commence service pursuant to a subcontract until all insurance required of the subcontractor has been obtained. Failure to maintain required insurance coverage shall result in termination of this Contract. 14. Indemnification and Hold Harmless Provision Service Provider shall assume all responsibility for damages to property and/or injuries to persons,including accidental death,which may arise out of or be caused by Service Provider's services under this Contract, or by its subcontractor or by anyone directly or indirectly employed by Service Provider, and whether such damage or injury shall accrue or be discovered before or after the termination of the Contract. Except as to the sole active negligence of or willful misconduct of OCSD, Service Provider shall indemnify, protect, defend and hold harmless OCSD, its elected and appointed officials, officers, agents and employees, from and against any and all claims, liabilities, damages or expenses of any nature, including attorneys'fees: (a)for injury to or death of any person or damage to property or interference with the use of property, arising out of or in connection with Service Provider's performance under the Contract,and/or(b)on account of use of any copyrighted or uncopyrighted material, composition, or process, or any patented or unpatented invention, article or appliance, furnished or used under the Contract, and/or (c)on account of any goods and services provided under this Contract. This indemnification provision shall apply to any acts or omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of Service Provider of or anyone employed by or working under Service Provider. To the maximum extent permitted by law, Service Provider's duty to defend shall apply whether or not such claims, allegations, lawsuits, or proceedings have merit or are meritless, or which involve claims or allegations that any of the parties to be defended were actively, passively, or concurrently negligent, or which otherwise assert that the parties to be defended are responsible, in whole or in part,for any loss, damage, or injury. Service Provider agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. 15. Safety Standards and Human Resources MR) Policies OCSD requires all contractors and service providers to follow and ensure their employees and all subcontractors follow all State and Federal regulations as well as OCSD requirements while working at OCSD locations. If during the course of a contract it is discovered that OCSD policies, safety manuals, or contracts do not comply with State or Federal regulations then the Service Provider is required to follow the most stringent regulatory requirement at no cost to OCSD. Service Provider and all their employees and subcontractors,shall adhere to all applicable OCSD Safety Standards and Human Resources Policies found at: OCSD.com,"Doc Central"(bottom of page), under"Safety'. OCSD's Safety Standards and Human Resource Policies are hereby incorporated by reference as though fully set forth herein. In addition to the requirements stated herein, Service Provider shall adhere to the following OCSD Safety requirements: SOP-102 PPE 16. Warranties In addition to the Warranties stated in Exhibit"A", the following shall apply: 16.1 Manufacturer's standard warranty shall apply. All manufacturer warranties will begin at date of completion of this Contract. Orange County Sanitation District 4 of 10 Specification No. S-2016-775BD 16.2 Service Provider's warranty: If, within the 12-month period following completion of its Services, OCSD informs Service Provider that any part of the Services fails to meet the standards required under this Contract, Service Provider shall, within the time agreed to by OCSD and Service Provider, take all such actions as are necessary to correct or complete the noted deficiency(ies) at Service Provider's sole expense. 17. Performance Time is of the essence in the performance of this Contract and the provisions hereof. 18. Force Maieure Neither party shall be liable for delays caused by accident, flood, acts of God, fire, labor trouble, war, acts of government or any other cause beyond its control, but said party shall use reasonable efforts to minimize the extent of the delay. Work affected by a Force Majeure condition may be rescheduled by mutual consent or may be eliminated from the Contract. 19. Freight (F.O.B. Destination) Service Provider assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products deemed necessary under this Contract. 20. Familiarity with Work By executing this Contract, Service Provider warrants that: 1) it has investigated the work to be performed; 2) it has investigated the site of the work and is aware of all conditions there; and 3) it understands the facilities, difficulties and restrictions of the work under this Contract. Should Service Provider discover any latent or unknown conditions materially differing from those inherent in the work or as represented by OCSD, it shall immediately inform OCSD of this and shall not proceed, except at Service Provider's risk, until written instructions are received from OCSD. 21. Key Personnel Personnel, as provided in Exhibit "B", are considered "key" to the work under this Contract and will be available for the term of the Contract. No person designated as key under this Contract shall be removed or replaced without prior written consent of OCSD. If OCSD asks Service Provider to remove a person designated as key under this Contract, Service Provider agrees to do so immediately regardless of the reason, or the lack of reason, for OCSD's request. Service Provider shall assign only competent personnel to perform services pursuant to this Contract. 22. Staffing Service Provider shall: 1. Investigate the background and references of each security officer assigned to OCSD. 2. Provide, upon request, those background and reference documents for each security officer who will or is working at OCSD. 3. Complete a criminal history check for all security officers that will work at OCSD. 4. Provide a copy of Individual State Officer License or"Guard Card"of each security officer assigned to OCSD. 5. Ensure that each security officer assigned to OCSD is fluent in English. He or she must have the ability to read, write and speak the English language. 6. Ensure that each security officer is free from narcotics, marijuana and dangerous drugs by conducting medical examination/drug screenings. 23. Trainina Certification When required by applicable federal, state, and local regulation, certificates of training shall be maintained on-site for the duration of the activity that requires an employee to be certified. All Certificates shall be current. Lack of certificates when required will be cause for removal of such personnel form the site, termination of the Contract, or both. Orange County Sanitation District 5 of 10 Specification No. S-2016-775BD 24. Drug-Free Workplace All employees of Service Provider who will work at OCSD's Plant No. 1 (Fountain Valley) and Plant No. 2 (Huntington Beach) must adhere to the California Drug- Free Workplace Act of 1990, California Government Code Sections 8350 through 8357. 25. Regulatory Reguirements Service Provider shall perform all work under this Contract in strict conformance with applicable federal, state, and local regulatory requirements including, but not limited to, 40 CFR 122, 123, 124, 257, 258, 260, 261, and 503, Title 22, 23, and California Water Codes Division 2. 26. Licenses, Permits. Ordinances and Regulations Service Provider represents and warrants to OCSD that it has obtained all licenses, permits, qualification and approvals of whatever nature that are legally required to engage in this work. Any and all fees required by State, County, City and/or municipal laws, codes and/or tariffs that pertain to work performed under the terms of this Contract will be paid by Service Provider. 27. Applicable Laws and Regulations Service Provider shall comply with all applicable federal, state, and local laws, rules, and regulations. Service Provider also agrees to indemnify and hold harmless from any and all damages and liabilities assessed against OCSD as a result of Service Provider's noncompliance therewith. Any permission required by law to be included herein shall be deemed included as a part of this Contract whether or not specifically referenced. 28. Contractor's Employees Compensation 28.1 Davis-Bacon Act - Service Provider will pay and will require all subcontractors to pay all employees on said project a salary or wage at least equal to the prevailing rate of per diem wages as determined by the Secretary of Labor in accordance with the Davis-Bacon Act for each craft or type of worker needed to perform the Contract. The provisions of the Davis-Bacon Act shall apply only if the Contract is in excess of two thousand dollars ($2,000.00) and when twenty-five percent(25%)or more of the Contract is funded by federal assistance. If the aforesaid conditions are met, a copy of the provisions of the Davis-Bacon Act to be complied with are incorporated herein as a part of this Contract and referred to by reference. 28.2 General Prevailing Rate — OCSD has been advised by the State of California Director of Industrial Relations of its determination of the general prevailing rate of per diem wages and the general prevailing rate for legal holiday and overtime work in the locality in which the work is to be performed for each craft or type of work needed to execute this contract, and copies of the same are on file in the office of the engineer of OCSD. The Service Provider agrees that not less than said prevailing rates shall be paid to workers employed on this contract as required by Labor Code Section 1774 of the State of California. Per California Labor Code 1773.2, OCSD will have on file copies of the prevailing rate of per diem wages at its principal office and at each job site, which shall be made available to any interested party upon request. 28.3 Forfeiture For Violation - Service Provider shall, as a penalty to OCSD, forfeit fifty dollars ($50.00) for each calendar day or portion thereof for each worker paid (either by the Service Provider or any subcontractor under it) less than the prevailing rate of per diem wages as set by the Director of Industrial Relations, in accordance with Sections 1770-1780 of the California Labor Code for the work provided for in this contract, all in accordance with Section 1775 of the Labor Code of the State of California. 28.4 Apprentices—Sections 1777.5, 1777.6, 1777.7 of the Labor Code of the State of California, regarding the employment of apprentices are applicable to this contract and the Service Provider shall comply therewith if the prime contract involves thirty thousand dollars ($30,000.00) or more or twenty (20)working days or more; or if contracts of specialty contractors not bidding for work through the general or prime contractor are two thousand dollars ($2,000.00) or more or five (5) working days or more. Orange County Sanitation District 6 of 10 Specification No. S-2016-775BD 28.5 Workday—In the performance of this contract, not more than eight(8)hours shall constitute a day's work, and the Service Provider shall not require more than eight (8) hours of labor in a day from any person employed by him hereunder except as provided in paragraph 19.2 above. Service Provider shall conform to Article 3, Chapter 1, Part 7 (Section 1810 at seq.)of the Labor Code of the State of California and shall forfeit to OCSD as a penalty, the sum of twenty five dollars ($25.00)for each worker employed in the execution of this contract by Service Provider or any subcontractor for each calendar day during which any worker is required or permitted to labor more than eight(8)hours in any one calendar day and forty(40)hours in any one week in violation of said Article. Service Provider shall keep an accurate record showing the name and actual hours worked each calendar day and each calendar week by each worker employed by Service Provider in connection with the project. 28.6 Record of Wages; Inspection-Service Provider agrees to maintain accurate payroll records showing the name, address, social security number, work classification, straight-time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker or other employee employed by it in connection with the project and agrees to require that each of its subcontractors do the same. All payroll records shall be certified as accurate by the applicable Service Provider or subcontractor or its agent having authority over such matters. Service Provider further agrees that its payroll records and those of its subcontractors shall be available to the employee or employee's representative, the Division of Labor Standards Enforcement, and the Division of Apprenticeship Standards and shall comply with all of the provisions of Labor Code Section 1776, in general. Penalties for non-compliance with the requirements of Section 1776 may be deducted from project payments per the requirements of Section 1776. 29. South Coast Air Quality Management District's(SCAQMD)Requirements It is Service Provider's responsibility that all equipment furnished and installed be in accordance with the latest rules and regulations of the South Coast Air Quality Management District(SCAQMD). All contract work practices, which may have associated emissions such as sandblasting, open field spray painting or demolition of asbestos containing components or structures, shall comply with the appropriate rules and regulations of the SCAQMD. 30. Governing Law This Contract shall be governed by and interpreted under the laws of the State of California and the Parties submit to jurisdiction in Orange County, in the event any action is brought in connection with this Contract or the performance thereof. 31. Breach The waiver of either party of any breach or violation of, or default under, any provision of this Contract, shall not be deemed a continuing waiver by such party of any other provision or of any subsequent breach or violation of this Contract or default thereunder. Any breach by Service Provider to which OCSD does not object shall not operate as a waiver of OCSD's rights to seek remedies available to it for any subsequent breach. 32. Remedies In addition to other remedies available in law or equity, if the Service Provider fails to make delivery of the goods or Services or repudiates its obligations under this Contract, or if OCSD rejects the goods or Services or revokes acceptance of the goods or Services, OCSD may(1) cancel the Contract; (2) recover whatever amount of the purchase price OCSD has paid, and/or (3) "cover' by purchasing, or contracting to purchase, substitute goods or Services for those due from Service Provider. In the event OCSD elects to"cover" as described in (3), OCSD shall be entitled to recover from Service Provider as damages the difference between the cost of the substitute goods or Services and the contract price, together with any incidental or consequential damages. Orange County Sanitation District 7 of 10 Specification No. S-2016-775BD 33. Dispute Resolution 33.1 In the event of a dispute as to the construction or interpretation of this Contract, or any rights or obligations hereunder, the Parties shall first attempt, in good faith, to resolve the dispute by mediation. The Parties shall mutually select a mediator to facilitate the resolution of the dispute. If the Parties are unable to agree on a mediator, the mediation shall be conducted in accordance with the Commercial Mediation Rules of the American Arbitration Agreement,through the alternate dispute resolution procedures of Judicial Arbitration through Mediation Services of Orange County ("JAMS"), or any similar organization or entity conducting an alternate dispute resolution process. 33.2 In the event the Parties are unable to timely resolve the dispute through mediation, the issues in dispute shall be submitted to arbitration pursuant to California Code of Civil Procedure, Part 3, Title 9, Sections 1280 at seq. For such purpose, an agreed arbitrator shall be selected, or in the absence of agreement, each party shall select an arbitrator, and those two arbitrators shall select a third. Discovery may be conducted in connection with the arbitration proceeding pursuant to California Code of Civil Procedure Section 1283.05. The arbitrator,or three arbitrators acting as a board, shall take such evidence and make such investigation as deemed appropriate and shall render a written decision on the matter in question. The arbitrator shall decide each and every dispute in accordance with the laws of the State of California. The arbitrator's decision and award shall be subject to review for errors of fact or law in the Superior Court for the County of Orange, with a right of appeal from any judgment issued therein. 34. Attorney's Fees If any action at law or inequity or if any proceeding in the form of an Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this Contract, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which he may be entitled. 35. Survival The provisions of this Contract dealing with Payment, Warranty, Indemnity, and Forum for Enforcement, shall survive termination or expiration of this Contract. 36. Severability If any section, subsection, or provision of this Contract, or any agreement or instrument contemplated hereby, or the application of such section, subsection, or provision is held invalid, the remainder of this Contract or instrument in the application of such section, subsection or provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby, unless the effect of such invalidity shall be to substantially frustrate the expectations of the Parties. 37. Damacre to OCSD's Property Any of OCSD's property damaged by Service Provider, any subcontractors or by the personnel of either will be subject to repair or replacement by Service Provider at no cost to OCSD. 38. Disclosure Service Provider agrees not to disclose, to any third party, data or information generated from this project without the prior written consent from OCSD. 39. Independent Contractor The legal relationship between the parties hereto is that of an independent contractor, and nothing herein shall be deemed to make Service Provider an OCSD employee. During the performance of this Contract, Service Provider and its officers, employees, and agents shall act in an independent capacity and shall not act as OCSD's officers, employees, or agents. Service Provider and its officers, employees, and agents shall obtain no rights to any benefits which accrue to OCSD's employees. Orange County Sanitation District 8 of 10 Specification No. S-2016-775BD 40. Limitations upon Subcontracting and Assignment Service Provider shall not delegate any duties nor assign any rights under this Contract without the prior written consent of OCSD. Any such attempted delegation or assignment shall be void. 40.1 In the event the Service Provider obtains written approval from the Project Manager to delegate duties, assign rights, substitute an approved Subcontractor and/or introduce a new Subcontractor,the Service Provider shall be as fully responsible to OCSD for the acts, errors and omissions of the Subcontractor(s) and of the person(s) either directly or indirectly employed by the Subcontractor(s) as the Service Provider is for the acts, errors and omissions of persons directly employed by the Service Provider. Nothing contained in the Contract shall create any contractual relationship between any Subcontractor and OCSD. 40.2 Each Subcontract agreement shall be approved in writing by OCSD and preserve and protect the rights of OCSD, its directors, officers, agents, and employees under the Contract with respect to the work to be performed by the Subcontractor so that subcontracting thereof will not prejudice such rights, and shall allow to the Subcontractor, unless specifically provided otherwise in the subcontract agreement, the benefits of all rights, remedies and redress against the Service Provider that the Service Provider, by the Contract, has against OCSD. The Service Provider shall make available to each proposed Subcontractor, prior to the execution of the subcontract, copies of the Contract documents. 40.3 This section does not and shall not operate to relieve the Service Provider of any duty or liability under the Contract, nor does it create any duty or liability on the part of OCSD. The Service Provider shall have sole responsibility for promptly settling any disputes between its Subcontractors. 41. Third Party Rights Nothing in this Contract shall be construed to give any rights or benefits to anyone other than OCSD and Service Provider. 42. Non-Liability of OCSD Officers and Employees No officer or employee of OCSD shall be personally liable to Service Provider, or any successor-in-interest, in the event of any default or breach by OCSD or for any amount which may become due to Service Provider or to its successor, or for breach of any obligation for the terms of this Contract. 43. Read and Understood By signing this Contract, Service Provider represents that he has read and understood the terms and conditions of the Contract. 44. Authority to Execute The persons executing this Contract on behalf of the Parties warrant that they are duly authorized to execute this Contract and that by executing this Contract, the Parties are formally bound. 45. Entire Contract This Contract constitutes the entire agreement of the Parties and supersedes all prior written or oral and all contemporaneous oral agreements, understandings, and negotiations between the Parties with respect to the subject matter hereof. Orange County Sanitation District 9 of 10 Specification No. S-2016-775BD 46. Notices All notices under this Contract must be in writing. Written notice shall be delivered by personal service or sent by registered or certified mail, postage prepaid, return receipt requested, or by any other overnight delivery service which delivers to the noticed destination and provides proof of delivery to the sender. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given as provided hereunder shall be deemed to be receipt of the notice,demand or request sent. All notices shall be effective when first received at the following addresses: OCSD: Ludwig R. Lapus, Contracts Administrator Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Service Provider: Kelly Becker, Area Vice President Securitas Security Services USA 2900 S. State College Blvd. #100 Anaheim, CA 92806 Each party shall provide the other party written notice of any change in address as soon as practicable. IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have caused this Contract to be signed by the duly authorized representatives. ORANGE COUNTY SANITATION DISTRICT Dated: By: Chair, Board of Directors Dated: By: Clerk of the Board Dated: By: Contracts/Purchasing Manager COMPANY Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number Orange County Sanitation District 10 of 10 Specification No. S-2016-775BD ADMINISTRATION COMMITTEE Meetl09/14/16 0g/28/16ng Dare T00/.IS Dir. AGENDA REPORT I em Number Item Number Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: 2017 BENEFITS INSURANCE RENEWAL GENERAL MANAGER'S RECOMMENDATION Approve the Orange County Sanitation District 2017 Benefits Insurance Renewal for the not-to-exceed amounts specified below: A. Employee Benefit Specialists (medical, dental, and vision plans; Employee Assistance Program [EAP])— Not to Exceed $11,121,627; B. Prudential (basic life, short- and long-term disability) — Not to Exceed $685,560; and C. The Standard (EMT & Manager disability)— Not to Exceed $30,000 SUMMARY The Orange County Sanitation District (Sanitation District) provides healthcare and welfare insurance benefits as a provision contained in its Memoranda of Understanding (MOU's) and personnel policies. The Human Resources (HR) Department and Sanitation District's operational insurance broker,Alliant, began the renewal process in April and received initial quotes in July. After successfully negotiating with the insurance carriers,Alliant was able to secure competitive rates for the Sanitation District without compromising the level of benefits provided to employees and eligible dependents. The total cost of insurance coverage will increase by 8.62% or$490,038 for 2017. The total cost for 2017 is $11,837,186, which is proportionally shared as follows: • Sanitation District cost: $9,508,674 • Employee cost: $2,328,512 BACKGROUND Historically, the Sanitation District's healthcare and welfare insurance plans have been based on fiscal year, July through June, and projected expenses are approved by the Board every year in June. In May 2015, the Board of Directors approved moving the Page 1 of 4 Sanitation District's medical insurance from direct contract with the carriers to join the insurance risk sharing pool under California State Association of Counties — Excess Insurance Authority (CSAC-EIA). The association with CSAC-EIA resulted in immediate and future cost savings to the Sanitation District in medical insurance premiums and dictated a change from fiscal to calendar-based plan year, from January through December. Staff anticipates presenting the benefits renewal information to the Board of Directors annually every September for an effective date of January 1 . RELEVANT STANDARDS • Competitive compensation and benefits PROBLEM The Sanitation District's healthcare and welfare insurance benefits renew on an annual basis, with initial carrier quotes received in July and final negotiated rates expected as late as August every year. Through its association with CSAC-EIA, the Sanitation District is required to hold an annual benefits open enrollment period every October to provide employees and eligible dependents the opportunity to make changes to their benefit elections, for an effective date of January 1a' PROPOSED SOLUTION Approve the benefits insurance renewals as described above with the respective carriers to ensure continued coverage for employees and eligible dependents. TIMING CONCERNS Board approval is necessary in September 2016 to ensure that the Sanitation District meets its insurance renewal deadlines, to finalize preparations for the October benefits open enrollment, and for continued coverage for Sanitation District employees and eligible dependents, in accordance with MOU's and personnel policies. RAMIFICATIONS OF NOT TAKING ACTION Without Board approval, the Sanitation District cannot finalize the contracts with the insurance carriers for the 2017 Plan Year, resulting in the interruption of medical, dental, vision, EAP, life, and disability coverage and services to employees and eligible dependents; and the Sanitation District would not be meeting its obligation to provide these benefits as provided for in MOU's and personnel policies. PRIOR COMMITTEE/BOARD ACTIONS N/A Page 2 of 4 ADDITIONAL INFORMATION Medical Insurance The Sanitation District's medical benefits are designed to help maintain wellness and protect employees and their families from major financial hardship in the event of illness or injury. The Sanitation District offers a choice of medical plans through Anthem Blue Cross and Kaiser Permanents. HMO (Health Maintenance Organization) plans offer comprehensive coverage. Employees have a choice between the Anthem Blue Cross HMO or the Kaiser HMO plan. PPO (Preferred Provider Organization) plan offers a network of doctors and healthcare facilities that provide services to plan members at special discounted rates. The PPO plan is with Anthem Blue Cross. Dental Insurance The Sanitation District provides the Delta Dental plan to all benefit eligible employees. Vision Insurance The Sanitation District provides vision insurance to all benefit eligible employees through Anthem Blue View Vision. Basic Life Insurance Life insurance provides protection for an employee's beneficiary in the event of death. All benefit eligible full-time and part-time employees automatically receive Basic Life and Accidental Death & Dismemberment insurance coverage through Prudential Insurance Company of America. The benefit amount is $50,000 for employees, $100,000 for managers, and 2x's of salary for executives. Short-Term Disability Insurance The short-term disability insurance plan protects employees when non-work related illness or injury makes it impossible for them to work for a short period of time. Under the plan, income may be continued for up to 26 weeks. The Sanitation District pays the entire cost of coverage for regular full-time and part-time employees. Coverage is offered through Prudential. Long-Term Disability Insurance The long-term disability insurance plan protects employees when an illness or injury makes it impossible for them to work for an extended period of time. Under the plan, employees who are disabled for more than 90 days are eligible to receive a benefit of 67%of their basic monthly pay up to$5,000/month. The Sanitation District pays the entire cost of coverage for regular full-time and part-time employees with five or more years of service. Coverage is offered through Prudential. Executive Disability The additional long-term disability insurance plan provides increased income protection for executives and managers. Under the plan, eligible employees who are disabled for more than 90 days due to a non-work related illness or injury are eligible to receive an Page 3 of 4 additional benefit of $3,100/month. The first $5,000/month is covered by the Sanitation District group long-term disability plan benefit. Coverage is offered through The Standard. Employee Assistance Program The EAP plan protects employees and family members when they need help with personal problems such as marital and relationship problems; stress, anxiety and depression; grief and loss; or substance abuse. Coverage is offered through ComPsych. CEQA N/A BUDGET/PURCHASING ORDINANCE COMPLIANCE The funds for the renewal of these insurances are derived from the Sanitation District Operating Budget. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: N/A Page 4 of 4 ADMINISTRATION COMMITTEE Melting Dat0 TOBE.Or Dir. 09/14/16 09/28/16 AGENDA REPORT ItemNumber Item Number B Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: GANN LIMIT RESOLUTION CORRECTION FOR FISCAL YEAR 2015-16 GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 16-XX entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Establishing the Annual Appropriations Limit for Fiscal Year 2015-16, for the District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code; and Repealing Resolution No. OCSD 15-14." BACKGROUND Resolution No. OCSD 15-14 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Establishing the Annual Appropriations Limit for Fiscal Year 2015-16, for the District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code' was adopted on June 24, 2015. However, the stated dollar amount of the maximum authorized spending limitation for fiscal year 2015-16 was incorrectly stated as$95,984,000 as opposed to the correct amount of$95,682,784. The correct amount was the amount that was actually calculated, but was not properly stated when Resolution No. OCSD 15-14 was prepared. Although the actual spending amount for fiscal year 2015-16 was not close to this lesser amount, the correct amounts should be noted in the proposed revised resolution as this is the basis for the spending limit going forward and was the starting point in the development of the appropriation limit for fiscal year 2016-17, adopted Resolution No. OCSD 16-11. This routine annual action adopts a resolution establishing the spending limit for "proceeds of taxes" in accordance with Article XIII B of the Constitution of the State of California (Section 7910 of the Government Code). The Orange County Sanitation District's (Sanitation District) annual appropriations are well below the limit. In 1979, Proposition 4 (the Gann Initiative) was approved, adding Article XIII B to the State Constitution. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. This initiative was designed to constrain government expenditures by placing an annual limit on jurisdictions' revenue and appropriation growth. The Appropriation Limit is based on actual appropriations during the 1978-1979 fiscal year, as increased each year using specified population and inflationary growth factors. This annual allowance growth is linked to changes in population and cost of living. The passage of Proposition 111 in June 1990 amended Article XIIIB, making changes in the base year upon which the appropriations limit is based, establishing new cost of living factors and new population factors for use by local Page 1 of 2 governments, and increasing appropriations not subject to the limit (primarily qualified capital outlay projects). The financial constraints of Article XIII B apply to the State, all cities, counties, special districts and all other political subdivisions. RELEVANT STANDARDS Produce Operations and CIP budgets every two years with annual update PROBLEM Article XIII B of the State Constitution places limits on the amount of revenue that can be appropriated by all entities of government. On June 24, 2015, the Board adopted Resolution No. OCSD 15-14 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Establishing the Annual Appropriations Limit for Fiscal Year 2015-16, for the District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code". However, the stated dollar amount of the maximum authorized spending limitation was incorrectly stated. PROPOSED SOLUTION Approval of the proposed revised resolution establishing the annual appropriations limit for fiscal year 2015-16 in accordance with the provisions of Division 9 of Title 1 of the California Government Code stating the correct dollar amount of the maximum authorized spending limitation needs action to substantiate appropriations limits in future fiscal years. TIMING CONCERNS The revised fiscal year 2015-16 appropriations limit resolution needs to be approved to substantiate appropriations limits in future fiscal years. RAMIFICATIONS OF NOT TAKING ACTION The District will not be carrying out its financial fiduciary duties. ATTACHMENTS The following attachment(s)is included in hard copy and may also be viewed on-line at the OCSD website (mm w.ocsd.com) with the complete agenda package: Draft Resolution No. OCSD 16-XX Page 2 of 2 RESOLUTION NO. OCSD 16-XX A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT ESTABLISHING THE ANNUAL APPROPRIATIONS LIMIT FOR FISCAL YEAR 2015-16 FOR THE DISTRICT IN ACCORDANCE WITH THE PROVISIONS OF DIVISION 9 OF TITLE 1 OF THE CALIFORNIA GOVERNMENT CODE; AND REPEALING RESOLUTION NO. OCSD 15-14 WHEREAS, Article XIII B of the Constitution of the State of California as proposed by the Initiative Measure approved by the people at the special statewide election held on November 6, 1979, provides that the total annual appropriations limit of each local government agency shall not exceed the appropriations limit of such entity for the prior year, adjusted for changes in the cost of living and population, except as otherwise specifically provided for in said Article; and, WHEREAS, the State Legislature added Division 9 (commencing with Section 7900) to Title 1 of the Government Code of the State of California to implement Article XIII B of the California Constitution; and, WHEREAS, Section 7910 of the Government Code provides that each year the governing body of each local jurisdiction shall, by resolution, establish its appropriations limit for the following fiscal year pursuant to Article XIII B at a regularly-scheduled meeting or a noticed special meeting and that fifteen (15) days prior to such meeting, documentation used in the determination of the appropriations limit shall be available to the public; and, WHEREAS, Section 7902 (a) of the Government Code sets forth the method for determining the appropriations limit for each local jurisdiction for the 2015-16 fiscal year; and, WHEREAS, the Board of Directors wishes to re-establish the appropriations limit for fiscal year 2015-16 for the District. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That it is hereby found and determined that the documentation used in the determination of the appropriations limit for the Orange County Sanitation District, for fiscal year 2015-16, was available to the public in the Finance Department of said District at least fifteen (15) days prior to this date. OCSD 16-XX-1 Section 2: That the appropriations limit for fiscal year 2015-16 for the Orange County Sanitation District, as established in accordance with Section 7902(b) of the California Government Code is$95,682,784 which sum is within the maximum authorized spending limitation for fiscal year 2015-16. Section 3: That the Board of Directors of the Orange County Sanitation District, has determined that the percent change in California per capita personal income from the preceding year would be the cost of living factor to be used and the weighted average population change of the cities within the District would be the population factor to be used in calculating the Orange County Sanitation District's appropriations limit for the Fiscal Year 2015-16. Section 4: The determination of the appropriation limit is based upon the best and most complete information available at this time. The District reserves the right to review and re-establish a new and different limit in the event that it subsequently determines that a modification of the limitation amount is appropriate. Section 5: Resolution OCSD 15-14 is hereby repealed PASSED AND ADOPTED at a regular meeting of the Board of Directors held September 28, 2016. John Nielsen Chairman of the Board ATTEST: Kelly A. Lore Clerk of the Board OCSD 16-XX-2 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-XX was passed and adopted at a regular meeting of said Board on the 28th day of September 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 28th day of September 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District OCSD 16-XX-3 ADMINISTRATION COMMITTEE Melting Dat0 TOBE.Or Dir. 09/14/16 09/28/16 AGENDA REPORT Item Item Number 9 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 2016B GENERAL MANAGER'S RECOMMENDATION A. Adopt Resolution No. OCSD16-XX entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, such Notes evidencing principal in an aggregate amount of not to exceed $120,000,000, 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 Notes and authorizing the execution of other necessary documents and related actions"; and B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Notes in an aggregate amount not to exceed $120,000,000; and C. The proposed financing is structured as another two-year fixed rate maturity that will be sold in a competitive sale. BACKGROUND In March 2006, the Orange County Sanitation District (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 ("2006 Fixed Rate"). 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 variable rate 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. Even with the increase in interest rates during this period of stress, the 4.29% average cost was still lower than the 2006 Fixed Rate of 4.54%. 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 Page 1 of 5 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 refiinancing's at yields at progressively lower yields, and a two-year refinancing in 2014, as summarized below: nnci a o Al os 2009B $ 165,865,000 0.370% 0.559% 2010E 154,665,000 0.360 0.525 2011E 143,205,000 0.225 0.399 2012C 131,700,000 0.210 0.410 2013A 129,625,000 0.170 0.390 20146 120,850,000 0.320 0.523 The interest rate on the currently outstanding Revenue Refunding Certificate Anticipation Notes Series 2014B (201413 CANS) was fixed for two years and the entire $120,850,000 plus interest becomes due and payable on November 15, 2016. The purpose of the proposed financing is to refund all of the 2014B CANS to avoid the use of the Sanitation District's cash reserves to make repayment. Prior to 2014, the Sanitation District annually issued one-year CANS over a six-year period. In 2014, the Sanitation decided to issue a two-year maturity to refund then outstanding CANS as the difference, at the time the decision was made, in cost between a one-year and two-year maturity had narrowed considerably compared to past years. In the current market, the yield difference between one- and two-year maturities is also relatively small at approximately nine basis points (0.09%). A two-year CANs issuance will allow the Sanitation District to lock-in a fixed rate for two years at a cost that is only slightly greater than a one-year CANs. However, if market conditions change and the difference in costs between a one-year CANs and a two-year CANs become greater, the Board may want to reconsider issuing one-year CANs. RELEVANT STANDARDS • OCSD Debt Policy - Financial Management Policy and Procedure No. 201-3-1; Restructuring debt is deemed to be desirable Easy access to low cost credit PROBLEM The 2014B CANS are due and payable on November 15, 2016 in the amount of $123,267,000. The 2014B CANs was issued with a low-cost, two-year rate with the expectation that upon maturity the issue would be refinanced. PROPOSED SOLUTION The issuance of up to $120 million of 2016B CANs would allow the Sanitation District to repay the 2014B CANs and avoid using $120 million of reserves for such purpose. Page 2 of 5 TIMING CONCERNS The Sanitation District must complete a refinancing by no later than November 15, 2016; otherwise, $120 million of reserves will be required to repay the 2014B CANS. RAMIFICATIONS OF NOT TAKING ACTION Not taking action by November 15, 2016 would cause the Sanitation District to use its reserves to repay the 2014B CANS or cause an Event of Default due to lack of repayment to lenders. The economic ramification of an Event of Default would result in a downgrade in credit ratings, reduced access to capital, and higher costs of borrowing. PRIOR COMMITTEE/BOARD ACTIONS July 2016 - The Board authorize the General Manager to issue Revenue Refunding Certificate Anticipation Notes, Series 2016B, as two-year fixed-rate obligations, subject to market conditions, in an amount not to exceed $120,000,000 to replace the $120,850,000 Revenue Refunding Certificate Anticipation Notes, Series 2014B maturing on November 15, 2016. ADDITIONAL INFORMATION The Sanitation District currently has twelve series of debt issuances outstanding in the par amount of $1,092,100,000. The following table lists each issuance, the outstanding amount, and the interest rate mode. Outstanding Interest Rate Par Amount0) Mode Series 2016A Refunding $ 145,880,000 Fixed Rate Series 2015A Refunding 127,510,000 Fixed Rate Series 2014B CANS 120,850,000 Fixed Rate(two-year) Series 2014A Refunding 85,090,000 Fixed Rate Series 2012E Refunding 66,395,000 Fixed Rate Series 2012A Refunding 100,645,000 Fixed Rate Series 2011A Refunding 96,330,000 Fixed Rate Series 2010C 157,000,000 Fixed Rate Series 2010A 80,000,000 Fixed Rate Series 2009A Refunding 13,405,000 Fixed Rate Series 2007E 7,110,000 Fixed Rate Series 2007A Refunding 91,885,000 Fixed Rate Total: $1,092,100,000 (1) As of September 1,2016 Due to the fact that this is a fixed-rate debt issuance, staff is proposing to issue the refunding through a competitive sale because it is the most expeditious way to access Page 3 of 5 the market and it is expected to provide the lowest interest cost for this given structure. All costs involved with the refunding, including costs for Public Resources Advisory Group (Financial Advisor) and Norton Rose Fulbright LLP (Special Counsel and Disclosure Counsel) will be paid from the proceeds of the new refunding issue. Legal Authorization and Approvals The Board of Directors and the Financing Corporation will each be required to adopt separate Resolutions to complete this refunding. A Financing Corporation is required by the structure of the Notes and was formed in April 2000 solely to satisfy this need. The Board of Directors of the Corporation is the same as the Board of Directors of the Sanitation District and the Corporation meets after an adjournment of the Sanitation District Board. The Sanitation District Resolution authorizes the execution and delivery of certain legal documents and the execution and delivery of Revenue Refunding Certificate Anticipation Notes, Series 2016B, evidencing principal in an aggregate amount of not to exceed $120,000,000 all as spelled out in the title as follows: "A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016B, SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $120,000,000, 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 NOTES AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS." The Resolution of the Corporation is somewhat shorter and simpler. It authorizes three actions that are similarly enumerated in the title as follows: "A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016B, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $120,000,000 AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS." Page 4 of 5 Following is a chart listing the remaining steps to be completed for the issuance of the Revenue Refunding Certificate Anticipation Notes, Series 2016B debt issuance: September ➢ Board approval of legal and disclosure documents ➢ Financing Corporation approval of legal and disclosure documents October ➢ Receive ratings from Bond Rating Agencies ➢ Receive competitive bids November ➢ Closing CEQA N/A BUDGET/PURCHASING ORDINANCE COMPLIANCE N/A ATTACHMENTS The following attachments(s) are included in hard copy and may also he viewed on-line at the OCSD web site(www.ocsd.conn with the complete agenda package: • Sanitation District Resolution • Corporation Resolution • Draft Trust Agreement • Draft Installment Purchase Agreement • Draft Preliminary Official Statement (includes Continuing Disclosure Agreement within Appendix D) • Draft Official Notice Inviting Bids • Draft Notice of Intention to Sell Page 5 of 5 DRAFT OF 08/30/16 RESOLUTION NO. OCSD 16-XX A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016B, SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $120,000,000, 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 NOTES AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project") the District caused the execution and delivery of$120,850,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B, of which $120,850,000 in principal amount is currently outstanding (the "Prior Certificates'); WHEREAS, the District desires to prepay all of the Prior Certificates by paying all of the principal component of the installment payment relating to the Prior Certificates (the "Prior Installment Payment"), and the interest component thereof, thereby causing all of the Prior Certificates to be paid; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment to be so paid,the District and the Orange County Sanitation District Financing Corporation (the "Corporation")desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District,for the installment payment(the"Installment Payment")to be made by the District, pursuant to a new installment purchase agreement (the "Installment Purchase Agreement"), and the Corporation and the District have agreed to finance such payment by causing the execution and delivery of up to $120,000,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016E (the "Notes") to be repaid from the sale proceeds of future certificates of participation, other notes or obligations or lawfully available funds of the District; 27431271.3 11609259 OCSD 2016B CANS Disc&Resolution OCSD 16-XX-1 WHEREAS, the Corporation intends to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to U.S. Bank National Association, as trustee (the "Trustee"), pursuant to a Trust Agreement by and among the Trustee, the Corporation and the District (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement'); WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, the Trustee will be instructed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon; WHEREAS, the District desires to provide for the public sale of the Notes in one or more discrete sale transactions; WHEREAS, a form of the Notice of Intention to Sell to be published in connection with the public offering and sale of the Notes has been prepared (such Notice of Intention to Sell, in the form presented to this meeting,with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Notice of Intention to Self'); WHEREAS, a form of the Official Notice Inviting Bids to be distributed in connection with the public offering and sale of the Notes has been prepared (such Official Notice Inviting Bids, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Notice Inviting Bids"); WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Notes has been prepared (such Preliminary Official Statement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the 'Preliminary Official Statement'); WHEREAS, Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended ('Rule 15c2-12"), requires that the underwriter thereof must have reasonably determined that the District has undertaken in a written agreement or contract for the benefit of the holders of the Notes to provide disclosure of certain material events on an ongoing basis; WHEREAS, to cause such requirement to be satisfied, the District desires to enter into a Continuing Disclosure Agreement with a dissemination agent to be named therein and the Trustee (such Continuing Disclosure Agreement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure Agreement'); WHEREAS, there have been prepared and submitted to this meeting forms of: (1) the Installment Purchase Agreement; 27431271.3 OCSD 16-xx-2 (2) the Trust Agreement; (3) the Notice of Intention to Sell; (4) the Notice Inviting Bids; (5) the Preliminary Official Statement; and (6) the Continuing Disclosure Agreement. WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the District is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the District (the "Board") so finds. Section 2. The Installment Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Chair of the Board, and such other member of the Board as the Chair may designate, the General Manager of the District, the Director of Finance and Administrative Services of the District, and such other officers of the District as the Directorof Finance and Administrative Services may designate (the"Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Installment Purchase Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of the Installment Payment in excess of $120,000,000, shall not result in a true interest cost for the Installment Payment in excess of 2.0% per annum and shall not result in an Installment Payment later than [November 15, 2019]. Section 3. The Trust Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Trust Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Authorized Officer. 27431271.3 OCSD 16-xx-3 Section 4. The execution and delivery of Notes evidencing principal in an aggregate amount of not to exceed $120,000,000, payable in the year and in the amount, and evidencing principal of and interest on the Installment Payment as specified in the Trust Agreement as finally executed, are hereby authorized and approved. Section 5. The payment of the remaining principal components of the Prior Installment Payment at maturity, and the interest components thereof, and the Prior Certificates evidencing interests therein, is hereby authorized and approved. Section 6. The form of Notice of Intention to Sell, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the applicable Notice of Intention to Sell in connection with the offering and sale of a series of the Notes is hereby approved. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the District, to cause one or more Notices of Intention to Sell to be published in The Bond Buyer(or in such otherfinancial publication generally circulated throughout the State of California or reasonably expected to be disseminated among prospective bidders for the Notes as an Authorized Officer shall approve as being in the best interests of the District)at least five days prior to the date set for the opening of bids in the Notice Inviting Bids, with such changes, insertions and omissions therein as an Authorized Officer may require or approve, such requirement or approval to be conclusively evidenced by such publishing of the Notice of Intention to Sell. Section 7. The Notice Inviting Bids, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of one or more Notices Inviting Bids in connection with the offering and sale of the Notes is hereby authorized and approved. The terms and conditions of the offering and sale of the Notes shall be as specified in the applicable Notice Inviting Bids. Bids for the purchase of the Notes shall be received at the time and place set forth in the applicable Notice Inviting Bids. The Authorized Officers are each hereby authorized and directed,for and in the name and on behalf of the District,to accept the bid for the Notes with the lowest true interest cost, or to reject all bids therefor, in accordance with the terms of the applicable Notice Inviting Bids. Section 8. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Notes is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the District that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain information permitted by Rule 15c2-12 to be omitted). The Authorized Officers are each hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Notes a reasonable number of copies of the Preliminary Official Statement. 27431271.3 OCSD 16-xx-4 Section 9. The preparation and delivery of a final Official Statement(the"Official Statement"), and its use in connection with the offering and sale of the Notes, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are, and each of them is, hereby authorized and directed to execute the final Official Statement and any amendment or supplement thereto, for and in the name of the District. Section 10. The Continuing Disclosure Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Continuing Disclosure Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such Authorized Officer. Section 11. The Authorized Officers are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the execution and delivery of the Notes and the transactions contemplated by the notices, agreements and documents referenced in this Resolution. The Authorized Officers are further authorized and directed to execute and deliver such additional notes as may be necessary or desirable to pay the Notes at maturity; provided, however, that the documents executed and delivered in connection with any such notes shall be in the form approved pursuant to this Resolution in connection with the Notes. Section 12. All actions heretofore taken by the officers and employees of the District with respect to the execution, delivery and sale of the Notes, or in connection with or related to any of the agreements or documents referenced in this Resolution, are hereby approved, confirmed and ratified. Section 13. This Resolution shall take effect immediately upon its adoption. 27431271.3 OCSD t 6-XX-5 PASSED AND ADOPTED at a regular meeting of the Orange County Sanitation District Board of Directors held on September 28, 2016. John Nielsen Chairman of the Board of Directors ATTEST: Kelly A. Lore Clerk of the Board APPROVED AS TO FORM: Bradley R. Hogin General Counsel 27431271.3 OCBD t 6-XX-6 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-XX was passed and adopted at a regular meeting of said Board on the 2811 day of September, 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 28th day of September, 2016. Kelly A. Lore Clerk of the Board 27431271.3 DRAFT OF 08/30/16 RESOLUTION NO. FC-XX A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016B, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $120,000,000 AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project")the Orange County Sanitation District (the "District") caused the execution and delivery of $120,850,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B, of which $120,820,000 in principal amount is currently outstanding (the "Prior Certificates"); WHEREAS, the District desires to prepay all of the Prior Certificates by paying all of the principal component of the installment payment relating to the Prior Certificates (the "Prior Installment Payment"), and the interest component thereof, thereby causing all of the Prior Certificates to be paid; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment to be so paid, the District and the Orange County Sanitation District Financing Corporation (the "Corporation")desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payments (the "Installment Payment") to be made by the District, pursuant to a new installment purchase agreement (the "Installment Purchase Agreement"), and the Corporation and the District have agreed to finance such payment by causing the execution and delivery of up to $120,000,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes") to be repaid from future certificates of participation, other notes or obligations or lawfully available funds of the District; WHEREAS, the Corporation intends to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to U.S. Bank National Association, as trustee (the "Trustee"), pursuant to a Trust Agreement by and among the Trustee, the Corporation and the District (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement"); 294312313 11609259 OCSD 2016B CAN. Co tim B olutioo FC-XX-1 WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, the Trustee will be instructed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon; WHEREAS, the Corporation desires to assist the District to provide for the public sale of the Notes; WHEREAS, there have been prepared and submitted to this meeting forms of: (a) the Installment Purchase Agreement; and (b) the Trust Agreement. WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the actions authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Corporation is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such actions for the purpose, in the manner and upon the terms herein provided. NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE CORPORATION DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the Corporation (the "Board") so finds. Section 2. The Installment Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The President of the Corporation, the Vice-President of the Corporation, the Treasurer of the Corporation and the Secretary of the Corporation, and such other officers of the Corporation as the President may designate (the "Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the Corporation,to execute and deliver the Installment Purchase Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of Installment Payments in excess of $120,000,000, shall not result in a true interest cost for the Installment Payments in excess of 2.0% per annum and shall not result in a final Installment Payment later than [November 15, 2019]. Section 3. The Trust Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Corporation, to execute and deliver the Trust 27431231.3 FC-XX-2 Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Authorized Officer. Section 4. The execution and delivery of Notes evidencing principal in an aggregate amount of not to exceed $120,000,000, payable in the year and in the amount, and evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon, as specified in the Trust Agreement as finally executed, are hereby authorized and approved. Section 5. The Authorized Officers of the Corporation are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the execution and delivery of the Notes and the transactions contemplated by the agreements or documents referenced in this Resolution. The Authorized Officers are further authorized and directed to assist the District in delivering such additional notes as may be necessary or desirable to pay the Notes at maturity; provided, however, that the documents executed and delivered in connection with any such notes shall be in the form approved pursuant to this Resolution in connection with the Notes. Section 6. All actions heretofore taken by the officers and agents of the Corporation with respect to the execution, delivery and sale of the Notes, or in connection with or related to any of the agreements or documents referenced in this Resolution, are hereby approved, confirmed and ratified. Section 7. This Resolution shall take effect immediately upon its adoption. 27431231.3 FC-XX-3 PASSED AND ADOPTED at a meeting of the Orange County Sanitation District Financing Corporation held on September 28, 2016. John Nielsen President, Orange County Sanitation District Financing Corporation ATTEST: Kelly A. Lore Secretary, Orange County Sanitation District Financing Corporation APPROVED: Bradley R. Hogin General Counsel, Orange County Sanitation District Financing Corporation 27431231.3 FC-XX-4 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly Lore, Secretary of the Orange County Sanitation District Financing Corporation, do hereby certify that the foregoing Resolution No. FC-XX was passed and adopted at a regular meeting of said Board on the 281h day of September, 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District Financing Corporation this 2811 day of September, 2016. Kelly A. Lore Secretary of the Orange County Sanitation District Financing Corporation 294312313 DRAFT OF 08/30/16 TRUST AGREEMENT by and among U.S. BANK NATIONAL ASSOCIATION, as Trustee, ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION and ORANGE COUNTY SANITATION DISTRICT Dated as of October 1,2016 Relating to Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B 294318013 11609259 OCSD 2016B CANS TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EQUAL SECURITY Section1.01. Definitions........................................................................................................2 Section 1.02. Definitions in Installment Purchase Agreement.............................................. 8 Section1.03. Equal Security.................................................................................................. 8 ARTICLE II TERMS AND CONDITIONS OF NOTES Section 2.01. Preparation and Delivery of Notes...................................................................9 Section 2.02. Denomination, Medium and Dating of Notes..................................................9 Section 2.03. Payment of Notes; Interest Computation.........................................................9 Section 2.04. Form of Notes................................................................................................ 10 Section 2.05. Execution of Notes and Replacement Notes.................................................. 10 Section 2.06. Transfer and Payment of Notes; Exchange of Notes..................................... 10 Section 2.07. Note Registration Books................................................................................ 10 Section2.08. Reserved......................................................................................................... 10 Section 2.09. Notes Mutilated, Lost,Destroyed or Stolen................................................... 10 Section 2.10. Book-Entry System........................................................................................ 11 ARTICLE III PROCEEDS OF NOTES Section 3.01. Delivery of Notes........................................................................................... 13 Section 3.02. Deposit and Transfer of Proceeds of Notes................................................... 13 Section 3.03. Costs of Issuance Fund.................................................................................. 13 ARTICLE IV PREPAYMENT OF NOTES Section 4.01. Optional Prepayment..................................................................................... 14 Section4.02. Reserved......................................................................................................... 14 Section 4.03. Selection of Notes for Optional Prepayment................................................. 14 Section 4.04. Notice of Prepayment .................................................................................... 14 Section 4.05. Partial Prepayment of Notes.......................................................................... 15 Section 4.06. Effect of Prepayment..................................................................................... 15 ARTICLE V ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS Section 5.01. Assignment and Pledge.................................................................................. 15 Section 5.02. Installment Payment Fund............................................................................. 16 Section 5.03. Investment of Moneys.................................................................................... 17 Section 5.04. Brokerage Confirmations............................................................................... 17 27431801.3 i TABLE OF CONTENTS (continued) Page ARTICLE VI COVENANTS Section 6.01. Compliance with Trust Agreement................................................................ 18 Section 6.02. Compliance with Installment Purchase Agreement....................................... 18 Section 6.03. Compliance with Master Agreement............................................................. 18 Section 6.04. Observance of Laws and Regulations............................................................ 18 Section6.05. Other Liens..................................................................................................... 18 Section 6.06. Prosecution and Defense of Suits .................................................................. 18 Section 6.07. Accounting Records and Statements............................................................. 18 Section 6.08. Tax Covenants ............................................................................................... 19 Section 6.09. Continuing Disclosure ...................................................................................22 Section 6.10. Further Assurances.........................................................................................22 ARTICLE VB DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action upon Event of Default........................................................................22 Section 7.02. Other Remedies of the Trustee ......................................................................23 Section7.03. Non-Waiver....................................................................................................23 Section 7.04. Remedies Not Exclusive................................................................................24 Section 7.05. Application of Amounts After Default..........................................................24 Section 7.06. Trustee May Enforce Claims Without Possession of Notes..........................24 Section 7.07. Limitation on Suits.........................................................................................25 Section 7.08. No Liability by the Corporation to the Owner...............................................25 Section 7.09. No Liability by the District to the Owners.....................................................25 Section 7.10. No Liability of the Trustee to the Owners.....................................................25 ARTICLE VIII THE TRUSTEE Section 8.01. Employment of the Trustee; Duties...............................................................26 Section 8.02. Removal and Resignation of the Trustee.......................................................26 Section 8.03. Compensation and Indemnification of the Trustee........................................27 Section 8.04. Protection of the Trustee................................................................................28 ARTICLE IX AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT Section 9.01. Amendment or Supplement...........................................................................29 Section 9.02. Disqualified Notes .........................................................................................30 Section 9.03. Endorsement or Replacement of Notes After Amendment or Supplement ....................................................................................................30 Section 9.04. Amendment by Mutual Consent....................................................................30 27431801.3 ii TABLE OF CONTENTS (continued) Page ARTICLE X DEFEASANCE Section 10.01. Discharge of Notes and Trust Agreement......................................................31 Section 10.02. Unclaimed Moneys........................................................................................32 ARTICLE XI MISCELLANEOUS Section 11.01. Benefits of Trust Agreement..........................................................................32 Section 11.02. Successor Deemed Included in all References to Predecessor......................32 Section 11.03. Execution of Documents by Owners.............................................................33 Section 11.04. Waiver of Personal Liability..........................................................................33 Section 11.05. Acquisition of Notes by District....................................................................33 Section 11.06. Content of Written Certificates......................................................................33 Section 11.07. Funds and Accounts.......................................................................................34 Section 11.08. Article and Section Headings, Gender and References.................................34 Section 11.09. Partial Invalidity.............................................................................................34 Section 11.10. California Law...............................................................................................35 Section11.11. Notices...........................................................................................................35 Section 11.12. Effective Date ................................................................................................35 Section 11.13. Execution in Counterparts..............................................................................35 EXHIBIT A—FORM OF NOTE 27431801.3 lll TRUST AGREEMENT THIS TRUST AGREEMENT (this "Trust Agreement"), is dated as of October 1, 2016, by and among U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the"Trustee"), the ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing under the laws of the State of California (the "Corporation"), and the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District"). WITNESSETH: WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project") the District caused the execution and delivery of $120,850,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B, of which $120,850,000 in principal amount is currently outstanding(the"Prior Notes"); WHEREAS, the District desires to prepay all of the Prior Notes by paying all of the principal component of the installment payment relating to the Prior Notes (the "Prior Installment Payment"), and the interest component thereof,thereby causing all of the Prior Notes to be paid; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment, the District and the Corporation desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payment (the "Installment Payment") to be made by the District, pursuant to a new installment purchase agreement (the "Installment Purchase Agreement"), and the Corporation and the District have agreed to finance such payment by causing the execution and delivery of $ in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes"), which are certificates of participation evidencing direct, fractional undivided interests in the Installment Payment and the interest thereon, to be made by the District pursuant to the Installment Purchase Agreement; WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of August 1, 20009 by and between the District and the Corporation, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment, and the interest thereon, are to be incurred and secured; WHEREAS, the Corporation proposes to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to the Trustee; and 27431801.3 WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Trust Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and deliver this Trust Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the context otherwise requires, the terns defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Notes and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terns defined herein: "Authorized Corporation Representative" means the President,the Vice President, the Treasurer and the Secretary of the Corporation, and any other Person authorized by the President of the Corporation to act on behalf of the Corporation under or with respect to this Trust Agreement. "Authorized Denominations"means $5,000 and integral multiples thereof. "Authorized District Representative" means the General Manager of the District, the Director of Finance and Administrative Services of the District, the Controller of the District and any other Person authorized by the Director of Finance and Administrative Services of the District to act on behalf of the District under or with respect to this Trust Agreement. "Beneficial Owners" means those individuals, partnerships, corporations or other entities for which the Participants have caused the Depository to hold Book-Entry Notes. "Book-Entry Notes" means the Notes registered in the name of the nominee of DTC, or any successor securities depository for the Notes, as the Owner thereof pursuant to the terms and provisions of Section 2.10 hereof. "Business Day" means a day other than (a) Saturday or Sunday, (b)a day on which banking institutions in the city in which the Principal Office is located are authorized or required by law to be closed, and (c)a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. "Cede & Co." means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Notes. 27431801.3 2 "Closing Date"means November_,2016. "Code" means the Internal Revenue Code of 1986. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of the date hereof,by and between the District and Digital Assurance Certification LLC, as dissemination agent thereunder, as originally executed and as it may from time to time be amended in accordance with the terms thereof. "Corporation" means the Orange County Sanitation District Financing Corporation, a nonprofit public benefit corporation organized and existing under the laws of the State. "Costs of Issuance"means all the costs of executing and delivering the Notes, including, but not limited to, all printing and document preparation expenses in connection with this Trust Agreement, the Installment Purchase Agreement, the Notes and any preliminary official statement and final official statement pertaining to the Notes, rating agency fees, market study fees, legal fees and expenses of counsel with respect to the execution and delivery of the Notes, the initial fees and expenses of the Trustee and its counsel and other fees and expenses incurred in connection with the execution and delivery of the Notes, to the extent such fees and expenses are approved by the District. "Costs of Issuance Fund" means the fund by that name established in accordance with Section 3.03 hereof. "Depositary" means the securities depository acting as Depository pursuant to Section 2.10 hereof. "District" means the Orange County Sanitation District, a county sanitation district organized and existing under the laws of the State, and any successor thereto. "DTC"means The Depository Trust Company,New York,New York and its successors. "Event of Default" shall have the meaning set forth in Section 6.01 of the Installment Purchase Agreement. "Government Obligations" means any of the following which are noncallable by the issuer thereof except to the extent not permitted by the laws of the State as an investment for the moneys to be invested therein at the time of investment: (i) (a) direct general obligations of the United States of America, (b)obligations the payment of the principal of and interest on which are unconditionally guaranteed as to the full and timely payment by the United States of America or (c)any fund or other pooling arrangement whose assets consist exclusively of the obligations listed in clause(a) or (b) of this clause(i) and which is rated at least "P-l"by Moody's; provided that, such obligations shall not include unit investment trusts or mutual fund obligations; 27431801.3 3 (ii) advance refunded tax-exempt obligations that (a) are rated by Moody's and S&P, (b) are secured by obligations specified in clause (i), (c) are tax-exempt because they are secured by obligations specified in clause (i) and (d) have the same ratings as the obligations specified in clause (i); (iii) bonds, debentures or notes issued by any of the following federal agencies: Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation or Federal National Mortgage Association; provided, that such bonds, debentures or notes shall be the senior obligations of such agencies (including participation certificates) and have the same ratings by Moody's and S&P as the obligations specified in clause(i); and (iv) bonds, debentures or notes issued by any Federal agency hereafter created by an act of Congress, the payment of the principal of and interest on which are unconditionally guaranteed by the United States of America as to the full and timely payment; provided, that, such obligations shall not include unit investment trusts or mutual fund obligations. "Installment Payment Fund" means the fond by that name established in accordance with Section 5.02 hereof. "Installment Payment" means the Installment Payment required to be made by the District pursuant to Section 3.02 of the Installment Purchase Agreement. "Installment Purchase Agreement" means the Installment Purchase Agreement, dated as of the date hereof, by and between the District and the Corporation, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. "Interest Account" means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. "Interest Payment Date" means May 15 and November 15 of each year, commencing May 15,2017,through and including the Maturity Date. "Letter of Representations"means the letter of the District delivered to and accepted by the Depository on or prior to the delivery of the Notes as Book-Entry Notes setting forth the basis on which the Depository serves as depository for such Book-Entry Notes, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute Depository. "Master Agreement" means the Master Agreement for District Obligations, dated as of August 1, 2000,by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terns thereof. "Maturity Date"means [November 15,2019]. "Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the 27431801.3 4 term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the District. "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.10 hereof. "Notes" means the Orange County Sanitation District Revenue Refunding Certificates of Participation (Certificate Anticipation Notes), Series 2016B, also known as the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, executed and delivered by the Trustee pursuant hereto. "Opinion of Counsel"means a written opinion of Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District. "Outstanding," when used as of any particular time with reference to Notes, means (subject to the provisions of Section 9.02 hereof) all Notes except (a)Notes previously canceled by the Trustee or delivered to the Trustee for cancellation, (b)Notes paid or deemed to have been paid within the meaning of Section 10.01 hereof, and (c)Notes in lieu of or in substitution for which other Notes shall have been executed and delivered by the Trustee pursuant to Section 2.09 hereof. "Owner" means any Person who shall be the registered owner of any Outstanding Note as indicated in the registration books of the Trustee required to be maintained pursuant to Section 2.07 hereof. "Participants" means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Book-Entry Notes as securities depository. "Participating Underwriter" has the meaning ascribed thereto in the Continuing Disclosure Agreement. "Permitted Investments"means any of the following, except to the extent not permitted by the laws of the State as an investment for the moneys to be invested therein at the time of investment: (1) Government Obligations; (2) Bonds, debentures, notes, participation certificates or other evidences of indebtedness issued, or the principal of and interest on which are unconditionally guaranteed, by the Federal Intermediate Credit Bank, the Federal Home Loan Bank System, the Government National Mortgage Association or any other agency or instrumentality of or corporation wholly owned by the United States of America when such obligations are backed by the full faith and credit of the United States for the full and timely payment of principal and interest; (3) Obligations of any state of the United States or any political subdivision thereof, which at the time of investment are rated "Aa3" or higher by Moody's and 27431801.3 5 "AA-"or higher by S&P; or which are rated by Moody's "VMIGI" or better and by S&P "A-1+" or better with respect to commercial paper, or "VMIGI" and "SP-1," respectively, with respect to municipal notes; (4) Bank time deposits and bank deposit accounts evidenced by certificates of deposit, deposit accounts, bankers' acceptances, issued by any bank, trust company or national banking association insured by the Federal Deposit Insurance Corporation (including the Tmstee); provided that (a) such bank, trust company or national banking association be rated"Aa3"or better by Moody's and"AA-" or better by S&P; and (b)the aggregate of such bank time deposits and bankers' acceptances issued by any bank, trust company or banking association does not exceed at any one time 10% of the aggregate of the capital stock, surplus and undivided profits of such bank, trust company or banking association and that such capital stock, surplus and undivided profits shall not be less than $15,000,000; (5) Repurchase agreements with any bank, trust company or national banking association insured by the Federal Deposit Insurance Corporation(including the Trustee), with subsidiaries (of a parent company), provided the obligations of the subsidiary under the agreement are unconditionally guaranteed by the parent, or with any government bond dealer recognized as a primary dealer by the Federal Reserve Bank of New York, which agreements are fully and continuously secured by a valid and perfected first priority security interest in obligations described in paragraph (1) or(2) of this definition, provided that either such bank, trust company or national banking association which (or senior debt or claims paying ability of the financial entity's guarantor) is rated, at the time of investment,"Aa3"or better by Moody's and"AA-"or better by S&P; (6) Repurchase agreements with maturities of not more than one year entered into with financial institutions such as banks or trust companies organized under state law or national banks or banking associations (including the Trustee), insurance companies or government bond dealers reporting to, trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York and a member of the Securities Investor Protection Corporation or with a dealer or parent holding company that is rated, at the time of investment, or whose long-term debt obligations (or senior debt or claims paying ability of the financial entity's guarantor) are rated, at the time of investment, "Aa3" or better by Moody's and"AA-"or better by S&P,provided such repurchase agreements are in writing, secured by obligations described in paragraphs (1) and (2) of this definition having a fair market value, exclusive of accrued interest, at least equal to the amount invested in the repurchase agreements and in which the Trustee has a perfected first lien in, and retains possession of, such obligations free from all third party claims; (7) Investment agreements, forward purchase agreements and reserve fund put agreements with any corporation, including banking or financial institutions, or agreements entered into with subsidiaries (of a parent company), provided the obligations of the subsidiary under the agreement me unconditionally guaranteed by the parent, the corporate debt of which (or senior debt or claims paying ability of the financial entity's guarantor) is rated, at the time of investment, "Aa3" or better by Moody's and "AA-" or better by S&P; 27431801.3 6 (8) Guaranteed investment contracts or similar funding agreements issued by insurance companies, provided that either the long term corporate debt of such insurance company, at the time of investment, is rated, at the time of investment, "AaY or better by Moody's and "AA-" or better by S&P or which agreements are fully and continuously secured by a valid and perfected first priority security interest in obligations described in paragraph(1) or (2) of this definition, or that the following conditions are met: (a)the market value of the collateral is maintained at levels acceptable to Moody's and S&P, (b)the Trustee or a third party acting solely as agent for the Trustee has possession of the collateral, (c)the Trustee has a perfected first priority security interest in the collateral, (d)the collateral is free and clew of third-party liens, and (e)failure to maintain the requisite collateral level will require the Trustee to liquidate collateral; (9) Corporate commercial paper rated"P-1"or better by Moody's and"A-1+" or better by S&P at the time of investment; (10) Taxable government money market portfolios which are rated"AAAm"or "AAAm-G"by S&P and "P-l"by Moody's (including funds for which the Trustee or an affiliate provides investment advice or similar services); and (11) Deposits with the Local Agency Investment Fund of the State, as may otherwise be permitted by law. "Person" means an individual, corporation, limited liability company, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Principal Account" means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. "Principal Office" means the Trustee's principal corporate trust office in Los Angeles, California. "Prior Notes"has the meaning ascribed thereto in the recitals hereto. "Prior Notes Trustee"means MUFG Union Bank,N.A., as trustee for the Prior Notes. "Record Date"means, with respect to the interest payable on any Interest Payment Date, the first day of the calendar month on which such Interest Payment Date falls, whether or not such day is a Business Day. "S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term "S&P" shall be deemed to refer to any other nationally recognized securities rating agency selected by the District. "State"means the State of California. 27431801.3 7 "Tax Certificate" means the Tax Certificate as to Arbitrage and the Provisions of Sections 103 and 141-150 of the Internal Revenue Code of 1986, relating to the Notes, executed by the District at the time of execution and delivery of the Notes, as amended or supplemented from time to time. "Trust Agreement" means this Trust Agreement, dated as of October 1, 2016, by and among the Trustee, the Corporation and the District, as originally executed and delivered and as it may from time to time be amended or supplemented in accordance with the provisions hereof. "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, or any other bank or trust company which may at any time be substituted in its place as provided in Section 10.02 hereof. "Written Certificate"and"Written Request'mean(a)with respect to the Corporation, a written certificate or written request, respectively, signed in the name of the Corporation by an Authorized Corporation Representative, and (b)with respect to the District, a written certificate or written request, respectively, signed in the name of the District by an Authorized District Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. Section 1.02. Definitions in Installment Purchase Agreement. Except as otherwise herein defined and unless the context otherwise requires, the terms defined in the Installment Purchase Agreement shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein have the meanings defined therein, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined therein. With respect to any defined term which is given a different meaning under this Trust Agreement than under the Installment Purchase Agreement, as used herein it shall have the meaning given herein. Section 1.03. Equal Security. In consideration of the acceptance of the Notes by the Owners, this Trust Agreement shall be deemed to be and shall constitute a contract between the Trustee and the Owners to secure the full and final payment of the interest and principal evidenced by the Notes which may be executed and delivered hereunder, subject to each of the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit,protection and security of all Owners without distinction,preference or priority as to security or otherwise of any Notes over any other Notes by reason of the number or date thereof or the time of execution or delivery thereof or for any cause whatsoever,except as expressly provided herein or therein. 27431801.3 8 ARTICLE II TERMS AND CONDITIONS OF NOTES Section 2.01. Preparation and Delivery of Notes. The Trustee is hereby authorized, upon the Written Request of the District, to execute and deliver the Notes in the aggregate principal amount of$ evidencing the aggregate principal amount of the Installment Payment and each evidencing a direct, fractional undivided interest in the Installment Payment, and the interest thereon. The Installment Payment evidenced by the Notes shall constitute the principal evidenced thereby and the interest on such Installment Payment shall constitute the interest evidenced thereby. The Notes shall be numbered, with or without prefixes, as directed by the Trustee. Section 2.02. Denomination. Medium and Dating of Notes. The Notes shall be designated as the "Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B" and shall be prepared in the form of fully registered Notes, without coupons, in Authorized Denominations and shall be payable in lawful money of the United States of America. The Notes shall be dated the Closing Date. Each Note shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full,unless such date of execution shall be after a Record Date and on or prior to the following Interest Payment Date, in which case such Note shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to May 1, 2017, in which case such Note shall represent interest from the Closing Date. Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Notes shall be in default, each Note shall evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Section 2.03. Payment of Notes: Interest Computation. (a) Method and Place of Payment. Except as otherwise provided in the Letter of Representations, payments of interest evidenced by the Notes shall be made to the Owners thereof(as determined at the close of business on the Record Date next preceding the related Interest Payment Date) by check or draft of the Trustee mailed to the address of each such Owner as it appears on the registration books maintained by the Trustee pursuant to Section 2.07 hereof, or to such other address as may be furnished in writing to the Trustee by each such Owner. Except as otherwise provided in the Letter of Representations, payment of principal and prepayment premium, if any, evidenced by the Notes, on the Maturity Date or on prepayment in whole or in part prior thereto, shall be made only upon presentation and surrender of the Notes at the Principal Office. The Owner of$1,000,000 or more in aggregate principal amount of Notes may request in writing that the Trustee pay the interest thereon by wire transfer to an account in the United States, such request to be filed with the Trustee not later than the applicable Record Date. (b) Computation of Interest. The Notes shall bear interest at a rate of % per annum. The interest evidenced by the Notes shall be payable on each Interest Payment Date to and including the Maturity Date or prepayment prior thereto, and shall represent the sum of the interest on the Installment Payment coming due on the Interest Payment Dates in each year. The 27431801.3 9 principal evidenced by the Notes shall be payable on the Maturity Date and shall represent the Installment Payment coming due on the Maturity Date. Interest evidenced by the Notes shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Section 2.04. Form of Notes. The Notes shall be in substantially the form of Exhibit A hereto, with necessary or appropriate insertions, omissions and variations as permitted or required hereby. Section 2.05. Execution of Notes and Replacement Notes. The Notes shall be executed by the Trustee by the manual signature of an authorized signatory of the Trustee. The Trustee shall deliver replacement Notes in the manner and as contemplated by this Article. Such replacement Notes, shall be executed as herein provided and shall be in Authorized Denominations. Section 2.06. Transfer and Payment of Notes Exchange of Notes. Each Note is transferable by the Owner thereof, in person or by his attorney duly authorized in writing, at the Principal Office, on the registration books maintained by the Trustee pursuant to the provisions of Section 2.07 hereof, upon surrender of such Note for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Note as the absolute owner of such Note for all purposes, whether or not the principal or interest evidenced by such Note shall be overdue,and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal evidenced by such Note shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such Note to the extent of the sum or sums so paid. Whenever any Note shall be surrendered for transfer, the Trustee shall execute and deliver a new Note or Notes evidencing principal in the same aggregate amount. The Trustee shall require the payment by any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Each Note may be exchanged at the Principal Office for Notes evidencing principal in a like aggregate principal amount in such Authorized Denominations as the Owner thereof may request. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. Section 2.07. Note Registration Books. The Trustee shall keep at its Principal Office sufficient books for the registration and transfer of the Notes, which books shall be available for inspection and copying by the District at reasonable hours and under reasonable conditions; and upon presentation for such purpose the Trustee shall,under such reasonable regulations as it may prescribe, register or transfer the Notes on such books as hereinabove provided. Section 2.08. Reserved. Section 2.09. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become mutilated, the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Note evidencing a like principal amount and number in exchange and substitution for the Note so mutilated, but only upon surrender to the Trustee of the Note so mutilated. Every mutilated Note 27431801.3 10 so surrendered to the Trustee shall be canceled by it. If any Note shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Note evidencing a like principal amount, numbered as the Trustee shall determine, in lieu of and in substitution for the Note so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Note executed and delivered by it under this Section and of the expenses which may be incurred by it under this Section. Any Note executed and delivered under the provisions of this Section in lieu of any Note alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Notes executed and delivered hereunder, and the Trustee shall not be required to treat both the original Note and any replacement Note as being Outstanding for the purpose of determining the amount of Notes which may be executed and delivered hereunder or for the purpose of determining any percentage of Notes Outstanding hereunder, but both the original and replacement Note shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of executing and delivering a new Note for a Note which has been lost, destroyed or stolen and which evidences principal that is then payable, the Trustee may make payment of such Note to the Owner thereof if so instructed by the District. Whenever in this Trust Agreement provision is made for the cancellation by the Trustee of any Notes,the Trustee shall destroy such Notes and deliver a certificate of such destruction to the District. Section 2.10. Book-Entry System. (a) The Notes shall be initially executed and delivered as Book-Entry Notes, and the Notes shall be in the form of a separate single fully registered Note. Upon initial execution and delivery of the Notes, the ownership of each Note shall be registered in the registration books maintained by the Trustee in the name of the Nominee, as nominee of the Depository. Payment of principal or interest evidenced by any Book-Entry Note registered in the name of the Nominee shall be made on the Maturity Date by wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address which is, on the Record Date, shown for the Nominee in the registration books maintained by the Trustee. (b) With respect to Book-Entry Notes, the District, the Corporation and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book-Entry Notes. Without limiting the immediately preceding sentence, the District, the Corporation and the Trustee shall have no responsibility or obligation with respect to (i)the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in Book-Entry Notes, (ii)the delivery to any Participant or any other Person, other than an Owner as shown in the registration books maintained by the Trustee, of any notice with respect to Book-Entry Notes, (iii)the selection by the Depository and its Participants of the beneficial interests in Book-Entry Notes to be prepaid in the event Notes are prepaid in part, (iv)the payment to any Participant or any other Person, other than an Owner as shown in the registration books maintained by the Trustee, of any amount with respect to principal or interest evidenced by Book-Entry Notes, or (v)any consent given or other action taken by the Depository as Owner. 27431801.3 11 (c) The District, the Corporation and the Trustee may treat and consider the Person in whose time each Book-Entry Note is registered in the registration books maintained by the Trustee as the absolute Owner of such Book-Entry Note for the purpose of payment of principal and interest evidenced by such Note, for the purpose of selecting any Notes, or portions thereof, to be prepaid, for the purpose of giving notices of matters with respect to such Note, for the purpose of registering transfers with respect to such Note, for the purpose of obtaining any consent or other action to be taken by Owners and for all other purposes whatsoever, and the District,the Corporation and the Trustee shall not be affected by any notice to the contrary. (d) Reserved. (e) The Trustee shall pay all principal and interest evidenced by the Notes to the respective Owner, as shown in the registration books maintained by the Trustee, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal and interest evidenced by the Notes to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books maintained by the Trustee, shall receive a Note evidencing principal and interest evidenced by the Notes. Upon delivery by the Depository to the Owners,the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Date,the word Nominee in this Trust Agreement shall refer to such nominee of the Depository. (f) To qualify the Book-Entry Notes for the Depository's book-entry system, the District shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Corporation, the District or the Trustee any obligation whatsoever with respect to Persons having, interests in such Book-Entry Notes other than the Owners, as shown on the registration books maintained by the Trustee. Such Letter of Representations may provide the time, form, content and manner of transmission, of notices to the Depository. In addition to the execution and delivery of a Letter of Representations by the District, the District, the Corporation and the Trustee shall take such other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify Book-Entry Notes for the Depository's book-entry program. (g) If the District determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Notes and that such Notes should therefore be made available and notifies the Depository and the Trustee of such determination, the Depository will notify the Participants of the availability through the Depository of certificated Notes. In such event, the Trustee shall transfer and exchange certificated Notes as requested by the Depository and any other Owners in appropriate amounts. If(i) the Depository determines not to continue to act as securities depository for Book-Entry Notes, or (ii)the Depository shall no longer so act and gives notice to the Trustee of such determination, then the District shall discontinue the Book-Entry system with the Depository. If the District determines to replace the Depository with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered Note for such Book-Entry Notes, registered in the name of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace the Depository, then the Notes shall no longer be restricted to being registered in the registration books maintained by the Trustee in 27431801.3 12 the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Notes shall designate, in accordance with the provisions of Sections 2.06 and 2.09 hereof. Whenever the Depository requests the District to do so, the District will cooperate with the Depository in taking appropriate action after reasonable notice (i)to make available one or more separate certificates evidencing the Book-Entry Notes to any Participant having Book-Entry Notes credited to its account with the Depository, and (it)to arrange for another securities depository to maintain custody of certificates evidencing the Book- Entry Notes. (h) Notwithstanding any other provision of this Trust Agreement to the contrary, if DTC is the sole Owner of the Notes, so long as any Book-Entry Note is registered in the name of the Nominee, all payments of principal and interest evidenced by such Note and all notices with respect to such Note shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. (i) In connection with any notice or other communication to be provided to Owners pursuant to the Trust Agreement by the District, the Corporation or the Trustee, with respect to any consent or other action to be taken by Owners, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. Notice to the Depository shall be given only when DTC is the sole Owner of the Notes. ARTICLE III PROCEEDS OF NOTES Section 3.01. Delivery of Notes. The Trustee is hereby authorized to execute the Notes and deliver them to the original purchaser thereof upon receipt of a Written Request of the District and on receipt of the proceeds of sale of the Notes. Section 3.02. Deposit and Transfer of Proceeds of Notes. On the Closing Date, the Trustee shall transfer a portion of the net proceeds received by the Trustee from the sale of the Notes in the amount of$ to the Prior Notes Trustee for deposit in the Installment Payment Fund relating to the Prior Notes and shall deposit a portion of the net proceeds received by the Trustee from the sale of the Notes in the amount of$ in the Costs of Issuance Fund. The Trustee shall establish special fund known as the Proceeds Fund to facilitate the transfer required by this Section 3.02 to the Prior Notes Trustee. The Proceeds Fund shall be closed immediately following the transfer. Section 3.03. Costs of Issuance Fund. The Trustee shall establish and maintain a separate special fund to be held by the Trustee known as the Costs of Issuance Fund. There shall be deposited in the Costs of Issuance Fund on the Closing Date the amount required to be deposited therein pursuant to Section 3.02 hereof. The Trustee shall disburse moneys from the Costs of Issuance Fund on such dates and in such amounts as we necessary to pay Costs of Issuance, in each case upon the Written Request of the District stating the Person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against the Costs of Issuance Fund. On the date that is 27431801.3 13 six months after the Closing Date, the Trustee shall transfer any amounts then remaining in the Costs of Issuance Fund to the Installment Payment Fund. Upon such transfer, the Costs of Issuance Fund shall be closed. ARTICLE IV PREPAYMENT OF NOTES Section 4.01. Optional Prepayment. The Notes are subject to optional prepayment prior the Maturity Date, on any date on or after November 1, 2017, in whole or in part, in Authorized Denominations, from and to the extent of prepayment of the Installment Payment paid pursuant to Section 4.01 of the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Notes to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. Section 4.02. Reserved. Section 4.03. Selection of Notes for Optional Prepayment. Whenever less than all the Outstanding Notes are to be prepaid on any one date pursuant to Section 4.01 hereof,Notes to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate, which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the numbers of the Notes so selected for prepayment on such date. For purposes of such selection, any Notes may be prepaid in part in Authorized Denominations. Section 4.04. Notice of Prepayment. When prepayment of the Notes is authorized pursuant to Section 4.01, the Trustee shall give notice, at the expense of the District, of the prepayment of the Notes. The notice of prepayment shall specify (a)the Notes or designated portions thereof(in the case of prepayment of the Notes in part but not in whole) which are to be prepaid, (b)the date of prepayment, (c)the place or places where the prepayment will be made, including the name and address of any paying agent, (d)the prepayment price and(e)the CUSIP number assigned to the Notes to be prepaid. Such notice of prepayment shall further state that on the specified date there shall become due and payable upon each Note or portion thereof being prepaid the prepayment price and that from and after such date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of prepayment of the Notes pursuant to Section 4.01 hereof, unless at the time such notice is given the Notes to be prepaid shall be deemed to have been paid within the meaning of Section 10.01 hereof, such notice shall state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Notes to be prepaid, and that if such moneys shall not have been so received said notice shall be of no force and effect and the District shall not be required to prepay such Notes. If a notice of prepayment of the Notes contains such a condition and such moneys are not so received, the prepayment of the Notes as described in the conditional notice of prepayment shall not be made and the Trustee shall, within a reasonable time after the date on which such prepayment was to occur, give notice to the persons and in the manner in which the notice of prepayment was given, that such moneys were 27431801.3 14 not so received and that there shall be no prepayment of the Notes pursuant to such notice of prepayment. The District shall provide written notice to the Trustee of its intention to prepay the Notes at least twenty-five (25) days prior to any prepayment date, unless such time period shall be waived by the Trustee. The Trustee shall, at least twenty(20) but not more than sixty(60) days prior to any prepayment date, give notice of prepayment to the respective Owners of the Notes designated for prepayment by first-class mail, postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Notes or the cessation of interest evidenced thereby on the date Fixed for prepayment. A certificate or other confirmation provided by the Trustee that notice of prepayment has been given to Owners as herein provided shall be conclusive as against all parties, and no Owner whose Note is called for prepayment may object thereto or object to the cessation of interest evidenced thereby on the fixed prepayment date by any claim or showing that such Owner failed to actually receive such notice of prepayment. Section 4.05. Partial Prepayment of Notes. Upon surrender of any Note prepaid in part only, the Trustee shall execute and deliver to the Owner thereof a new Note or Notes evidencing the unprepaid principal with respect to the Note surrendered. Section 4.06. Effect of Prepayment. If notice of prepayment has been duly given as aforesaid and moneys for the payment of the prepayment price of the Notes to be prepaid are held by the Trustee, then on the prepayment date designated in such notice, the Notes so called for prepayment shall become payable at the prepayment price specified in such notice; and from and after the date so designated, interest evidenced by the Notes so called for prepayment shall cease to accrue, such Notes shall cease to be entitled to any benefit or security hereunder and the Owners of such Notes shall have no rights in respect thereof except to receive payment of the prepayment price thereof. The Trustee shall, upon surrender for payment of any of the Notes to be prepaid, pay such Notes at the prepayment price thereof, and such moneys shall be pledged to such payment. All Notes prepaid pursuant to the provisions of this Article shall be canceled by the Trustee and shall not be redelivered. ARTICLE V ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS Section 5.01. Assianment and Pledee. The Corporation hereby transfers, conveys and assigns to the Trustee, for the benefit of the Owners, all of the Corporation's rights, title and interest in and to the Installment Purchase Agreement (excepting its rights to indemnification thereunder), including the right to receive the Installment Payment, and the interest thereon, from the District and the right to exercise any remedies provided therein in the event of a default by 27431801.3 15 the District thereunder. The Trustee hereby accepts said transfer, conveyance and assignment, solely in its capacity as Trustee, for the benefit of the Owners, subject to the provisions of this Trust Agreement. All of the Installment Payment, and the interest thereon, shall be paid directly by the District to the Trustee, and if received by the Corporation at any time shall be deposited by the Corporation with the Trustee immediately upon the receipt thereof. To secure the respective rights of the Owners to the payments required to be made thereto as provided herein, the Corporation and the District hereby irrevocably pledge to the Trustee, for the benefit of the Owners, all of their right, title and interest, if any, in and to all amounts on deposit from time to time in the funds and accounts established hereunder. This pledge shall constitute a first lien on the amounts on deposit in such funds and accounts. Section 5.02. Installment Payment Fund. (a) The Trustee shall establish and maintain the Installment Payment Fund until the required Installment Payment and the interest thereon, is paid in full pursuant to the Installment Purchase Agreement and until the first date upon which the Notes are no longer Outstanding. The Trustee shall deposit in the Installment Payment Fund the Installment Payment, and the interest thereon, paid by the District and received by the Trustee. The moneys in the Installment Payment Fund shall be held in trust by the Trustee for the benefit of the Owners and shall be used and disbursed only for the purposes and uses herein authorized. (b) The Trustee shall transfer the amounts on deposit in the Installment Payment Fund, at the times and in the manner hereinafter provided, to the following respective accounts within the Installment Payment Fund, each of which the Trustee hereby agrees to establish and maintain until the required Installment Payment, and the interest thereon, is paid in full pursuant to the Installment Purchase Agreement and until the first date upon which the Notes are no longer Outstanding. The moneys in each of such accounts shall be held in trust by the Trustee for the benefit of the Owners and shall be used and disbursed only for the purposes and uses herein authorized. (i) Interest Account. The Trustee, on or before the each Interest Payment Date, shall deposit in the Interest Account that amount of moneys representing the interest on the Installment Payment coming due on each Interest Payment Date. Moneys in the Interest Account shall be used by the Trustee for the purpose of paying the interest evidenced by the Notes when due and payable. (ii) Principal Account. The Trustee, on or before the Maturity Date, shall deposit in the Principal Account that amount of moneys representing the Installment Payment coming due on such date. Moneys in the Principal Account shall be used by the Trustee for the purpose of paying the principal evidenced by the Notes when due and payable. (iii) Prepayment Account. The Trustee, on the prepayment date specified in the Written Request of the District filed with the Trustee at the time that any prepaid Installment Payment is paid to the Trustee pursuant to the Installment Purchase Agreement, shall deposit in the Prepayment Account that amount of moneys representing such prepaid Installment Payment, the accrued interest thereon to the prepayment date 27431801.3 16 and any premium payable with respect thereto. The Trustee shall deposit in the Prepayment Account any other amounts made available by the District that the District, pursuant to a Written Request of the District, instructs the Trustee to apply to the prepayment of Notes pursuant to Section 4.01 hereof. Moneys in the Prepayment Account shall be used by the Trustee for the purpose of paying the interest, premium, if any, and principal evidenced by the Notes to be prepaid pursuant to Section 4.01 hereof. Section 5.03. Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Trust Agreement shall be invested by the Trustee solely in Permitted Investments, as directed by the District pursuant to a Written Request of the District at least two (2) Business Days prior to the making of such investment. Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Trust Agreement. Absent timely written direction from the District, the Trustee shall invest any funds held by it in Permitted Investments described in clause (12) of the definition thereof. Permitted Investments that are registerable securities shall be registered in the time of the Tmstee. All interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Trust Agreement shall be retained therein. Permitted Investments acquired as an investment of moneys in any fund or account established under this Trust Agreement shall be credited to such fund or account. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued by the Trustee at the market value thereof. The Trustee or an affiliate may act as principal or agent in the making or disposing of any investment. The Trustee shall sell or present for redemption any Permitted Investment whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether or not such affiliate is acting as an agent of the Trustee or for any third Person or dealing as principal for its own account. Section 5.04. Brokeraee Confirmations. The Trustee shall furnish the District periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the District. Upon the District's election, such statements will be delivered via the Trustee's online service and upon electing such service, paper statements will be provided only upon request. The District waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The District further understands that trade confinnations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. 27431801.3 17 ARTICLE VI COVENANTS Section 6.01. Compliance with Trust Agreement. The Trustee will not execute or deliver any Notes in any manner other than in accordance with the provisions hereof, and the Corporation and the District will not suffer or permit any default by them to occur hereunder, but will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms hereof required to be complied with,kept,observed and performed by them. Section 6.02. Compliance with Installment Purchase Agreement. The Corporation and the District will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Installment Purchase Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee, will enforce the Installment Purchase Agreement against the other party thereto in accordance with its terms. Section 6.03. Compliance with Master Agreement. The Corporation and the District will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terns contained in the Master Agreement required to be complied with, kept, observed and performed by them and,together with the Trustee,will enforce the Master Agreement against the other party thereto in accordance with its terms. Section 6.04. Observance of Laws and Regulations. The Corporation and the District will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States of America or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses,to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired. Section 6.05. Other Liens. None of the Trustee, the Corporation or the District shall create or suffer to be created any pledge of or lien on the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof. Section 6.06. Prosecution and Defense of Suits. The District will defend against every action, suit or other proceeding at any time brought against the Trustee or any Owner upon any claim arising out of the receipt, deposit or disbursement of the Installment Payment, or the interest thereon, or involving the rights of the Trustee or any Owner hereunder; provided, however, that the Trustee or any Owner at its or his election may appear in and defend any such action, suit or other proceeding. Section 6.07. Accounting Records and Statements. The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions made by the Trustee relating to the receipt, deposit and disbursement of the Installment Payment, and the interest thereon, and such accounting records shall be available for inspection by the 27431801.3 18 Corporation and the District at reasonable hours and under reasonable conditions. The Trustee shall not be obligated to provide an accounting for any fund or account that (a) has a balance of $0.00 and (b)has not had any activity since the last reporting date. The Trustee will, upon written request, make copies of the foregoing available to any Owner (at the expense of such Owner). Section 6.08. Tax Covenants. (a) Special Definitions. When used in this Section, the following terms shall have the following meanings: "Bond Counsel" means Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District and reasonably satisfactory to and approved by the Trustee. "Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Computation Period" means, initially, that period commencing on the date of the execution and delivery of the Notes and concluding on the initial Computation Date and, thereafter, each period commencing on the day next following a Computation Date and concluding on the immediately succeeding Computation Date. "Gross Proceeds" of any issue of governmental obligations means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds) of that issue, and any replacement proceeds as defined in section 1.148-1(c)of the Tax Regulations, of that issue. "Investment"has the meaning set forth in section 1.148-1(b)of the Tax Regulations. "Nonpurpose Investment"means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of an issue are invested and that is not acquired to carry out the governmental purposes of that issue. "Opinion of Bond Counsel"means a written opinion of Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District and reasonably satisfactory to and approved by the Trustee. "Prior Issue" shall refer to the Prior Notes (but in the case of any of the foregoing executed and delivered for multiple purposes, only to the portion thereof allocable pursuant to section 1.148-9(b)(4) of the Tax Regulations to other than refunding purposes). "Proceeds," with respect to an issue of governmental obligations, has the meaning set forth in has the meaning set forth in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds, but not replacement proceeds). "Tax Regulations" means the United States Treasury Regulations promulgated pursuant to sections 103 and 141 through 150 of the Code. 27431801.3 19 "Yield' of (i) any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations and (ii) in respect of the Notes has the meaning set forth in section 1.148-4 of the Tax Regulations. (b) Exclusion of Interest from Gross Income. The District will take all actions necessary to establish and maintain the exclusion pursuant to section 103(a) of the Code of interest on the Notes from the gross income of the owners thereof for federal income tax purposes, and will not use, permit the use of, or omit to use Gross Proceeds of the Notes or any other amounts (or any property the acquisition, construction or improvement of which is to be refinanced directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, would cause the interest on any Note to fail to be excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the Trustee receives a written Opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the exclusion pursuant to section 103(a) of the Code of interest on any Note from the gross income of the owner thereof, the District shall comply with this covenant and each of the specific covenants in this Section. (c) No Private Use or Private Payments. Except as would not cause any Note to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the District shall at all times prior to the payment and cancellation of the last of the Notes to be retired: (i) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Notes and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds or the Gross Proceeds of any Prior Issue in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (ii) does not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Notes or of any Prior Issue, or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds, other than taxes of general application within the jurisdiction of the District or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan. Except as would not cause any Note to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the District shall not use of Cross Proceeds of the Notes to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be `loaned" to a person or entity if. (i) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such 27431801.3 20 person or entity in a transaction that creates a debt for federal income tax purposes; (ii) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. For purposes of this covenant, the District will treat any transaction constituting a loan of Gross Proceeds of any of the Prior Issues as resulting in a loan of Gross Proceeds of the Notes. (e) Not to Invest at Higher Yield. Except as would not cause any Note to become an "arbitrage bond" within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the District will not, at any time prior to the final cancellation of the last Note to be retired, directly or indirectly invest Gross Proceeds of the Notes in any Investment, if as a result of that investment the yield of any Investment acquired with Gross Proceeds of the Notes, whether then held or previously disposed of, would materially exceed the yield of the Notes within the meaning of said section 148. (f) Not Federally Guaranteed. Except to the extent such action or failure to act would not, pursuant to section 149(b) of the Code and the Tax Regulations and rulings thereunder, adversely affect the exclusion pursuant to section 103(a) of interest on the Notes from the gross income of the owners thereof for federal income tax purposes,the District will not take or omit to take any action that would cause any Note to be "federally guaranteed"within the meaning of section 149(b)of the Code and the Tax Regulations and rulings thereunder. (g) Information Reoort. The District will timely file any information necessary to the exclusion pursuant to section 103(a) of the Code of interest on the Notes required by section 149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary of the Treasury may prescribe. (h) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, the District will not at any time prior to the final cancellation of the last of the Notes to be retired, enter into any transaction that reduces the amount required to be paid to the United States pursuant to section 148(f) of the Code because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the yield on the Notes not been relevant to either party. (i) Notes Satisfy Section 149(g). The District represents that none of the Prior Issue or the Notes are or will become"hedge bonds"within the meaning of section 149(g)of the Code. Without limitation of the foregoing,with respect to the Prior Issue, (i)(A) on the date of issuance of that issue the District reasonably expected (based upon its own knowledge and upon representations made by other governmental persons upon the issuance of those obligations)that within the three-year period commencing on such date no less than 85% of the spendable proceeds of that issue would be expended for the governmental purposes thereof and (B) the District believes and represents that at no time has more than 50% of the proceeds of that issue been invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more, and with respect to the application of Proceeds of the Notes other than for refunding purposes, (ii)(A) the District will not deliver the Notes unless on the date of the 27431801.3 21 issuance of the Notes it reasonably expects that within the three-year period commencing on such date of issuance at least 85% of such spendable proceeds of the Notes will be expended for the governmental purpose of the Notes and (B) at no time will more than 50% of such spendable proceeds of the Notes be invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more. 0) Elections. The District hereby directs and authorizes any Authorized Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Authorized Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Notes, in the Tax Certificate relating to the Notes or similar or other appropriate certificate, form or document. (k) Tax Certificate. The District agrees to execute and deliver in connection with the execution and delivery of the Notes a Tax Certificate as to Arbitrage and the Provisions of Sections 141-I50 of the Internal Revenue Code of 1986, or similar document containing additional representations and covenants pertaining to the exclusion of interest with respect to the Notes from the gross income of the owners thereof for federal income tax purposes (the "Tax Certificate"), which representations and covenants are incorporated as though expressly set forth herein. Section 6.09. Continuimt Disclosure. The District will comply with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it. Notwithstanding any other provision of this Trust Agreement, failure of the District to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; provided, however, the Trustee, at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Notes and upon being indemnified to its reasonable satisfaction, shall, or any Owner or Beneficial Owner of Notes may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. The Trustee is authorized and directed to execute the acceptance and acknowledgement of the Continuing Disclosure Agreement. Section 6.10. Further Assurances. The District will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to carry out the purposes and intentions of this Trust Agreement and for preserving and protecting the rights and interests of the Owners. ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action noon Event of Default. An Event of Default under the Installment Purchase Agreement shall constitute an Event of Default hereunder and an Event of Default under the Master Agreement shall constitute an Event of Default hereunder. The Trustee may give notice, as assignee of the Corporation, of an Event of Default under the Installment Purchase Agreement to the District, and shall do so if directed to do so by the Owners of not less than 5%of the aggregate principal evidenced by Notes then Outstanding. In each and every case 27431801.3 22 during the continuance of an Event of Default, the Trustee may and, at the direction of the Owners of not less than a majority of the aggregate principal evidenced by Notes then Outstanding, shall, upon notice in writing to the District and the Corporation (a)exercise any of the remedies granted to the Corporation under the Installment Purchase Agreement, (b) exercise any of the remedies granted to the Trustee under the Master Agreement, and (c)take whatever action at law or in equity may appear necessary or desirable to enforce its rights pursuant to this Trust Agreement, the Installment Purchase Agreement or the Master Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Trust Agreement, the Notes, the Installment Purchase Agreement or the Master Agreement, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof. Section 7.02. Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof,the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Corporation or the District or any member, director, officer or employee thereof, and to compel the Corporation or the District or any such member, director, officer or employee to perform or cant' out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or (c) by suit in equity upon the happening of any Event of Default hereunder to require the Corporation and the District to account as the trustee of an express trust. Section 7.03. Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee or the Owners shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee or the Owners to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee or the Owners by law or by this Article may be enforced and exercised from time to time and as often as the Trustee shall deem expedient If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse determination,the Trustee, such Owner,the Corporation and the District shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. 27431801.3 23 Section 7.04. Remedies Not Exclusive. Subject to the provisions of Section 7.01 hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other appropriate right or remedy. Section 7.05. Application of Amounts After Default. All damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under this Article shall be deposited into the Installment Payment Fund and as soon as practicable thereafter applied: (a) to the payment of all amounts due the Trustee under Section 8.03 hereof; (b) unless the unpaid Installment Payment, and the interest thereon, shall have become, and shall remain, immediately due and payable pursuant to the Master Agreement: (i) to the payment of all amounts then due for interest evidenced by the Notes, in respect of which, or for the benefit of which, money has been collected (other than Notes which have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest evidenced by such Notes due and payable; and (ii) to the payment of all amounts then due for principal evidenced by the Notes, in respect of which, or for the benefit of which, money has been collected (other than Notes which have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal evidenced by such Notes due and payable. (c) if the unpaid Installment Payment, and the interest thereon, shall have become, and shall remain, immediately due and payable pursuant to the Master Agreement, to the payment of all amounts then due for principal and interest evidenced by the Notes and, if the amount available therefor shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Note over any other Note, to the persons entitled thereto without any discrimination or preference. Section 7.06. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Trust Agreement or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the 27431801.3 24 Trustee, its agents and counsel,be for the ratable benefit of the Owners of the Notes in respect of which such judgment has been recovered. Section 7.07. Limitation on Suits. No Owner shall have any right to institute any proceeding,judicial or otherwise,with respect to this Trust Agreement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Owner shall have previously given written notice to the Trustee of a continuing Event of Default hereunder, (b) the Owners of not less than a majority of the aggregate principal evidenced by Notes then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, (c) such Owner or Owners shall have afforded to the Tmstee indemnity reasonably satisfactory to the Tmstee against the costs, expenses and liabilities to be incurred in compliance with such request, (d)the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings, and(e)no direction inconsistent with such written request shall have been given to the Tmstee during such 60-day period by the Owners of a majority of the aggregate principal evidenced by Notes then Outstanding; it being understood and intended that no one or more Owners of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of any other Owner of Notes, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal and ratable benefit of all the Owners of Notes. Section 7.08. No Liability by the Corporation to the Owner. Except as expressly provided herein, the Corporation shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payment, and the interest thereon, by the District, or with respect to the performance by the District of the other agreements and covenants required to be performed by it contained in the Installment Purchase Agreement, the Master Agreement or herein, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.09. No Liability by the District to the Owners. Except for the payment when due of the Installment Payment, and the interest thereon, and the performance of the other agreements and covenants required to be performed by it contained in the Installment Purchase Agreement,the Master Agreement or herein, the District shall not have any obligation or liability to the Owners with respect to this Trust Agreement or the preparation, execution, delivery or transfer of the Notes or the disbursement of the Installment Payment, and the interest thereon,by the Trustee to the Owners, or with respect to the performance by the Tmstee of any right or obligation required to be performed by it contained herein. Section 7.10. No Liability of the Trustee to the Owners. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payment, and the interest thereon, by the District, or with respect to the performance by the Corporation or the District of the other agreements and covenants required to be performed by them, respectively, contained in the Installment Purchase Agreement or herein. 27431801.3 25 ARTICLE VIH THE TRUSTEE Section 8.01. Employment of the Trustee; Duties. The Corporation and the District hereby appoint and employ the Trustee to receive, deposit and disburse the Installment Payment, and the interest thereon, to prepare, execute, deliver and transfer the Notes and to perform the other functions contained herein, all in the manner provided herein and subject to the conditions and terms hereof. By executing and delivering this Trust Agreement, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof Other than when an Event of Default hereunder has occurred and is continuing, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Trust Agreement, and no implied covenants or obligations shall be read into this Trust Agreement against the Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. Section 8.02. Removal and Resianation of the Trustee. The Corporation and the District may, by an instrument in writing, remove the Trustee initially a party hereto and any successor thereto unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time (a)requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority of the aggregate principal evidenced by the Notes at the time Outstanding (or their attorneys duly authorized in writing), or (b)the Trustee shall cease to be eligible in accordance with the following paragraph, and shall appoint a successor Trustee. The Trustee shall be a bank having trust powers or a trust company in good standing in or incorporated under the laws of the United States or any state thereof, having (or if such bank or trust company is a member of a bank holding company system, its parent bank holding company shall have) a combined capital and surplus of at least $75,000,000, and be subject to supervision or examination by federal or state banking authorities. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Corporation and the District and by giving notice, by first class mail, postage prepaid, of such resignation to the Owners at their addresses appearing on the registration books maintained by the Trustee. Upon receiving such notice of resignation, the Corporation and the District shall promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the event the District and the Corporation do not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the District, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any successor Trustee 27431801.3 26 appointed under this Trust Agreement shall signify its acceptance of such appointment by executing and delivering to the District and the Corporation and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but,nevertheless, at the written request of the District or of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Trust Agreement and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Trust Agreement and vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.03. Compensation and Indemnification of the Trustee. The District shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all its reasonable advances and expenditures (which shall not include "overhead expenses" except as such expenses are included as a component of the Trustee's stated annual fees or disclosed transaction fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys retained by the Trustee, employed by it in the exercise and performance of its rights and obligations bereunder; provided, however, that the Trustee shall not have any lien for such compensation or reimbursement against any moneys held by it in any of the funds or accounts established hereunder. The Trustee may take whatever legal actions are lawfully available to it directly against the Corporation or the District. Except as otherwise expressly provided herein, no provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers hereunder. The District, to the extent permitted by law, agrees to indemnify and save the Trustee, its directors, officers, employees and agents harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder, including but not limited to 27431801.3 27 costs and expenses incurred in defending against any claim or liability, which are not due to its negligence or willful misconduct. Section 8.04. Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent, notice, request, requisition, resolution, statement, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Owners of the Notes pursuant to this Trust Agreement, unless such Owners shall have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may consult with counsel, who may be counsel to the Corporation or the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Notes or the Installment Purchase Agreement, or of the assignment made to it hereunder, or for statements made in the preliminary or final official statement relating to the Notes. The Trustee shall not be required to take notice or be deemed to have notice of any default or Event of Default hereunder, except failure of any of the payments to be made to the Trustee required to be made hereunder or under the Installment Purchase Agreement, unless the Trustee shall be specifically notified in writing of such default or Event of Default by the District, the Corporation or the Owners of not less than 5% of the aggregate principal evidenced by the Notes then Outstanding. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the District or a Written Certificate of the Corporation, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Notes and may join in any action which any Owner may be entitled to take with like effect as if the Trustee were not a party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Corporation or the District, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Corporation or the District as freely as if it were not the Trustee hereunder. 27431801.3 28 The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable cue; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall diligently pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the funds established bereunder, except only for its own willful misconduct, negligence or breach of an obligation hereunder. The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Corporation or the District is a party and which, in the opinion of the Trustee and its counsel, affects the Notes or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal evidenced by Notes then Outstanding,provided the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action. ARTICLE IX AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT Section 9.01. Amendment or Supplement. (a) This Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee hereunder may be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Notes then Outstanding, exclusive of Notes disqualified as provided in Section 9.02 hereof, are filed with the Trustee. No such amendment or supplement shall (i) extend the stated Maturity Date of any Note or reduce the rate of interest evidenced thereby or extend the time of payment of such interest or reduce the amount of principal evidenced thereby, (ii)reduce the percentage of Owners whose consent is required for the execution of any amendment hereof or supplement hereto without the prior written consent of the Owners of all Notes then Outstanding, (iii)modify any of the rights or obligations of the Trustee without the prior written consent of the Trustee, or (iv) amend this Section without the prior written consent of the Owners of all Notes then Outstanding. (b) This Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution, without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: 27431801.3 29 (i) to add to the agreements, conditions, covenants and terms required by the Corporation or the District to be observed or performed herein other agreements, conditions, covenants and terns thereafter to be observed or performed by the Corporation or the District, or to surrender any right or power reserved herein to or conferred herein on the Corporation or the District; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Corporation or the District may deem desirable or necessary and not inconsistent herewith; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest evidenced by the Notes; or (iv) for any other reason, provided such amendment or supplement does not adversely affect the rights or interests of the Owners. Section 9.02. Disqualified Notes. Notes owned or held by or for the account of the District (but excluding Notes held in any pension or retirement fund of the District) shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Notes provided in this Article, and shall not be entitled to consent to or take any other action provided in this Article, and the Trustee may adopt appropriate regulations to require each Owner,before his consent provided for herein shall be deemed effective, to reveal if the Notes as to which such consent is given are disqualified as provided in this Section. Section 9.03. Endorsement or Replacement of Notes After Amendment or Supplement. After the effective date of any action taken as hereinabove provided in this Article, the Trustee may determine that the Notes may bear a notation by endorsement in form approved by the Trustee as to such action, and in that case upon demand of the Owner of any Outstanding Note and presentation of such Note for such purpose at the Principal Office a suitable notation as to such action shall be made on such Note. If the Trustee shall receive an Opinion of Counsel advising that new Notes modified to conform to such action are necessary, modified Notes shall be prepared, and in that case upon demand of the Owner of any Outstanding Notes such new Notes shall be exchanged at the Principal Office without cost to each Owner for Notes then Outstanding upon surrender of such Outstanding Notes. Section 9.04. Amendment by Mutual Consent. The provisions of this Article shall not prevent any Owner from accepting any amendment as to the particular Notes owned by such Owner,provided that due notation thereof is made on such Notes. 27431801.3 30 ARTICLE X DEFEASANCE Section 10.01.Discharge of Notes and Trust Agreement. (a) If the Trustee shall pay or cause to be paid or there shall otherwise be paid (i)to the Owners of all Outstanding Notes the interest and principal evidenced thereby at the times and in the manner stipulated herein and therein, and (ii) all other amounts due hereunder and under the Installment Purchase Agreement, then such Owners shall cease to be entitled to the pledge of and lien on the amounts on deposit in the funds and accounts established hereunder, as provided herein, and all agreements and covenants of the Corporation, the District, and the Trustee to such Owners hereunder shall thereupon cease,terminate and become void and shall be discharged and satisfied. (b) Any Outstanding Note shall be deemed to have been paid within the meaning and with the effect expressed in this Section when the whole amount of the principal, premium, if any, and interest evidenced by such Note shall have been paid or when (i) in case said Note or portion thereof has been selected for prepayment in accordance with Section 4.03 hereof prior to the Maturity Date, the District shall have given to the Trustee irrevocable instructions to give, in accordance with the provisions of Section 4.03 hereof, notice of prepayment of such Note, or portion thereof, (ii)there shall be on deposit with the Trustee, moneys, or Government Obligations, or any combination thereof, the principal of and the interest on which when due, and without any reinvestment thereof,will provide moneys which shall be sufficient to pay when due the principal, premium, if any, and interest evidenced by such Note and due and to become due on or prior to the prepayment date or the Maturity Date, as the case may be, and(iii) in the event the Maturity Date will not occur, and said Note is not to be prepaid, within the next succeeding 60 days, the District shall have given the Trustee irrevocable instructions to give notice, as soon as practicable in the same manner as a notice of prepayment given pursuant to Section 4.03 hereof, to the Owner of such Note, or portion thereof, stating that the deposit of moneys or Government Obligations required by clause(ii) of this subsection has been made with the Trustee and that said Note, or portion thereof, is deemed to have been paid in accordance with this Section and stating the Maturity Date or prepayment date upon which moneys are to be available for the payment of the principal, premium, if any, and interest evidenced by said Note, or portion thereof. Neither the moneys nor the Government Obligations deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Government Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the payment of the principal and interest evidenced by said Note, or portions thereof. If payment of less than all of the Notes is to be provided for in the manner and with the effect expressed in this Section, the Trustee or the District, as applicable, shall select such Notes, or portions thereof in the principal amounts designated to the Trustee by the District. (c) After the payment of all the interest and principal evidenced by all Outstanding Notes and all other amounts due hereunder and under the Installment Purchase Agreement as provided in this Section, the Trustee shall execute and deliver to the Corporation and the District all such instruments as may be necessary or desirable to evidence the discharge and satisfaction of this Trust Agreement, the Trustee shall pay over or deliver to the District all moneys or 27431801.3 31 securities held by it pursuant hereto which are not required for the payment of the interest and principal evidenced by such Notes and all other amounts due hereunder and under the Installment Purchase Agreement. (d) Prior to any defeasance becoming effective under this Article, the District shall cause to be delivered (i) an executed copy of a report, addressed to the Trustee and the District, in form and in substance acceptable to the Trustee and the District, of a nationally recognized certified public accountant, or firm of such accountants, verifying that the Government Obligations and cash, if any, satisfy the requirements of subsection(b) of this Section (a "Verification"), (ii)a copy of the escrow deposit agreement entered into in connection with such defeasance, which escrow deposit agreement shall provide that no substitution of Government Obligations shall be permitted except with other Government Obligations and upon delivery of a new Verification and no reinvestment of Government Obligations shall be permitted except as contemplated by the original Verification or upon delivery of a new Verification, and(iii) a copy of an Opinion of Counsel, dated the date of such defeasance and addressed to the Trustee and the District, in form and in substance acceptable to the District, to the effect that such Notes have been paid within the meaning and with the effect expressed in this Trust Agreement, and all agreements and covenants of the Corporation, the District and the Trustee to the Owners of such Notes under this Trust Agreement have ceased, terminated and become void and have been discharged and satisfied. Section 10.02.Unclaimed Moneys. Any moneys held by the Trustee in trust for the payment and discharge of the interest or principal evidenced by any of the Notes which remain unclaimed for two years after the date when such interest or principal evidenced by such Notes have become payable, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the date when the interest and principal evidenced by such Notes have become payable, shall be repaid by the Trustee to the District as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of the interest and principal evidenced by such Notes. ARTICLE XI MISCELLANEOUS Section 11.01.Benefits of Trust Agreement. Nothing contained herein, expressed or implied, is intended to give to any Person other than the Corporation, the District, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the Corporation or the District shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 11.02.Successor Deemed Included in all References to Predecessor. Whenever the Corporation, the District or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Corporation, the District or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or 27431801.3 32 performed by or on behalf of the Corporation, the District or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03.Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the Person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient. The ownership of any Notes and the amount, payment date, number and date of owning the same may be proved by the registration books maintained by the Trustee pursuant to the provisions of Section 2.07 hereof. Any declaration, request or other instrument in writing of the Owner of any Note shall bind all future Owners of such Note with respect to anything done or suffered to be done by the Corporation,the District or the Trustee in good faith and in accordance therewith. Section 11.04.Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the District or the Corporation shall be individually or personally liable for the payment of any moneys, including without limitation, the interest or principal evidenced by the Notes, but nothing contained herein shall relieve any member, officer or employee of the District or the Corporation from the performance of any official duty provided by any applicable provisions of law, by the Installment Purchase Agreement or hereby. Section 11.05.Acouisition of Notes by District. All Notes acquired by the District, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. Section 11.06.Content of Written Certificates. Every Written Certificate of the District and every Written Certificate of the Corporation with respect to compliance with any agreement, condition, covenant or term contained herein shall include (a) a statement that the Person making or giving such certificate has read such agreement, condition, covenant or term and the definitions herein relating thereto, (b)a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based, (c) a statement that, in the opinion of the signer, the signer has made or caused to be made such examination or investigation as is necessary to enable the signer to express an informed opinion as to whether or not such agreement, condition, covenant or term has been complied with, and (d)a statement as to whether, in the opinion of the signer, such agreement, condition, covenant or term has been complied with. 27431801.3 33 Any Written Certificate of the District and any Written Certificate of the Corporation may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless the Person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which each Person's certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon information which is in the possession of the District or the Corporation upon a representation by an officer or officers of the District or the Corporation, as the case may be, unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which such counsel's opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Section 11.07.Funds and Accounts. Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Notes and the rights of the Owners. The Trustee may establish such funds and accounts as it deems necessary to perform its obligations hereunder. Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Trust Agreement. Section 11.08.Article and Section Headines, Gender and References. The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to "Articles," "Sections," subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words "hereby," "herein," "hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section, subsection or clause thereof. Section 11.09.Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Corporation, the District or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terns hereof and shall in no way affect the validity hereof or of the Notes, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law. The Corporation, the District and the Trustee hereby declare that they would have executed this Trust Agreement, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Notes pursuant hereto irrespective of the fact that any one or 27431801.3 34 more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any Person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 11.10.California Law. This Trust Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.11.Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the District: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Director of Finance and Administrative Services If to the Corporation: Orange County Sanitation District Financing Corporation c/o Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Treasurer If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 24'Floor Los Angeles, California 90071 Attention: Corporate Trust Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, e.g. facsimile, telecopier or email (with a PDF attachment, if applicable), upon the sender's receipt of an appropriate written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e)if given by any other means,upon delivery at the address specified in this Section. Section 11.12.Effective Date. This Trust Agreement shall become effective upon its execution and delivery. Section 11.13.Execution in Counterparts. This Trust Agreement may be simultaneously executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 27431801.3 35 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above. ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION By: Treasurer ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors (SEAL) Attest: By: Clerk of the Board of Directors MUFG UNION BANK,N.A., as Trustee By: Authorized Officer 27431801.3 36 EXHIBIT A FORM OF NOTE No. R-1 $ Unless this Note is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Note executed and delivered is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered Owner hereof, Cede & Co., has an interest herein. ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE OF PARTICIPATION, SERIES 2016B (CERTIFICATE ANTICIPATION NOTE) DATED DATE INTEREST RATE MATURITY DATE CUSU' November_, 2016 _% [November 15,20191 REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: THIS IS TO CERTIFY that the Registered Owner of this Orange County Sanitation District Revenue Refunding Certificate of Participation, Series 2016B (Certificate Anticipation Note) (this "Note"), as identified above, is the owner of a direct, fractional undivided interest in an installment payment (the "Installment Payment'), and the interest thereon, payable under and pursuant to the Installment Purchase Agreement, dated as of October 1, 2016 (the "Installment Purchase Agreement'), by and between the Orange County Sanitation District (the "District'), a county sanitation district organized and existing under the laws of the State of California, and the Orange County Sanitation District Financing Corporation (the"Corporation"), a nonprofit public benefit corporation organized and existing under the laws of the State of California. Certain of the rights of the Corporation under the Installment Purchase Agreement, including the right to receive the Installment Payment, and the interest thereon, have been assigned without recourse by the Corporation U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, as trustee (the"Trustee") under the Trust Agreement, dated as of October 1, 2016 (the "Trust Agreement'),by and among the Trustee,the District and the Corporation. Capitalized undefined terns used herein shall have the meanings ascribed thereto in the Trust Agreement. 27431801.3 A-1 The District has executed and delivered the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement'), by and between the District and the Corporation, pursuant to which the District establishes and declares the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon, will be incurred and secured. This Note is one of the duly authorized Orange County Sanitation District Revenue Refunding Certificates of Participation, Series 2016B (Certificate Anticipation Notes)evidencing principal in the aggregate amount of $ executed and delivered pursuant to the terms of the Trust Agreement. The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, payable under the Installment Purchase Agreement. The Notes are executed and delivered to refinance certain improvements to the wastewater collection, treatment and disposal facilities of the District(the"Wastewater System") and to pay the costs of issuance incurred in connection therewith. The Installment Payment, and the interest thereon, are to be paid by the District pursuant to the Installment Purchase Agreement in consideration for the purchase of certain improvements to the Wastewater System and for the other agreements and obligations undertaken by the Corporation under the Installment Purchase Agreement and the Trust Agreement. The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, from Net Revenues, and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement, and shall be afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The Installment Purchase Agreement is payable on a parity with the other existing Senior Obligation. The District may at any time incur Senior Obligations in addition to existing Senior Obligations and the Installment Purchase Agreement payable from Net Revenues as provided in the Master Agreement on a parity with all other Senior Obligations theretofore incurred, but only subject to the conditions and upon compliance with the procedures set forth in the Master Agreement. The obligation of the District to pay the Installment Payment and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided in the Installment Purchase Agreement, and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt 27431801.3 A-2 limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other payments required to be made under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. Reference is hereby made to the Master Agreement, the Installment Purchase Agreement and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terns under which the District's obligation to pay the Installment Payment, and the interest thereon, is incurred, the Notes are executed and delivered, the provisions with regard to the nature and extent of the Net Revenues and other lawfully available funds of the District, and the rights of the Owners of the Notes. All of the terms of the Master Agreement, the Installment Purchase Agreement and the Trust Agreement are hereby incorporated herein. The Trust Agreement constitutes a contract among the District, the Corporation and the Trustee for the benefit of the Owners of the Notes, to all the provisions of which the Owner of this Note, by acceptance hereof,agrees and consents. The Registered Owner of this Note is entitled to receive, subject to the terms of the Trust Agreement on the Maturity Date set forth above, upon presentation and surrender of this Note at the principal corporate trust office of the Trustee (the "Principal Office'), the Principal Amount specified above, evidencing the Owner's interest in the Installment Payment coming due on the Maturity Date, and to receive on each Interest Payment Date, interest accrued thereon at the interest rate specified above, computed on the basis of a 360-day year consisting of twelve 30- day months, evidencing the Registered Owner's interest in the interest evidenced by the Installment Payment coming due on such date. Payments of interest evidenced by the Notes shall be made on each Interest Payment Date to the Owners thereof(as determined at the close of business on the Record Date next preceding such Interest Payment Date or any other date fixed for payment)by check or draft of the Trustee mailed to the address of each such Owner as it appears on the registration books maintained by the Trustee pursuant to the Trust Agreement, or to such other address as may be famished in writing to the Trustee by such Owner. Payment of principal evidenced by the Notes, on the Maturity Date, shall be made only upon presentation and surrender of the Notes at the Principal Office. All such amounts are payable in lawful money of the United States of America. The Notes are authorized to be executed and delivered in the form of fully registered notes in denominations of$5,000 or any integral multiple thereof. This Note may be transferred or exchanged by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office,but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement. The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, whether or not the principal or interest evidenced by this Note shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the principal and interest evidenced by this Note shall be made only to such Registered Owner, 27431801.3 A-3 which payments shall be valid and effectual to satisfy and discharge the liability evidenced by this Note to the extent of the sum or sums so paid. The Notes are subject to prepayment prior to the Maturity Date as set forth in the Trust Agreement. To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee under the Trust Agreement may be amended or supplemented at any time by an amendment or supplement thereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Notes then outstanding, exclusive of Notes disqualified as provided under the Trust Agreement, are filed with the Trustee. No such supplement or amendment shall (a)extend the stated Maturity Date or reduce the rate of interest evidenced thereby or extend the time of payment of such interest or reduce the amount of principal evidenced thereby, (b)reduce the percentage of Owners whose consent is required for the execution of any amendment of or supplement to the Trust Agreement without the prior written consent of the Owners of all Notes then outstanding, (c)modify any of the rights or obligations of the Trustee without the prior written consent of the Trustee or(d)amend the amendment provisions of the Trust Agreement without the prior written consent of the Owners of all Notes then outstanding. To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee under the Trust Agreement may also be amended or supplemented at any time by an amendment or supplement thereto which shall become binding upon execution, without the written consents of any Owners,but only to the extent permitted by law and only(a)to add to the agreements, conditions, covenants and terms required by the Corporation or the District to be observed or performed under the Trust Agreement other agreements, conditions, covenants and terms thereafter to be observed or performed by the Corporation or the District, or to surrender any right or power reserved therein to or conferred therein on the Corporation or the District, and which in either case shall not adversely affect the rights or interests of the Owners, (b)to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained in the Trust Agreement or in regard to questions arising thereunder which the Corporation or the District may deem desirable or necessary and not inconsistent therewith, (c)to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest evidenced by the Notes or (d) for any other reason, provided such amendment or supplement does not adversely affect the rights or interests of the Owners. THE DISTRICT HAS CERTIFIED that all acts, conditions and things required by the statutes of the State of California and by the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Note do exist, have happened and have been performed in regular and due time, form and manner as required by law,and that the Trustee is duly authorized to execute and deliver this Note. 27431801.3 A-4 IN WITNESS WHEREOF, this Note has been executed by the manual signature of an authorized signatory of the Trustee as of the date set forth below. Date: , 2016 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 27431801.3 A-5 ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned Note and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises. Dated: Note: The signature(s)on this Assignment must correspond with the name(s) as written on the face of the within registered Note in every particular, without alteration or enlargement or any change whatsoever. Tax I.D. #: Signature Guaranteed: Note: Signature(s)must be guaranteed by an eligible Note: The signature(s)on this Assignment must correspond guarantor. with the camels)as written on the face of the within Note in every particular without alteration or enlargement or any change whatsoever. 27431801s A-6 DRAFT OF 08/30/16 INSTALLMENT PURCHASE AGREEMENT by and between ORANGE COUNTY SANITATION DISTRICT and ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION Dated as of October 1,2016 Relating to Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B 294316913 11609259 OCSD 2016B CANS TABLE OF CONTENTS Page ARTICLE I DEFINITIONS.................................................................................................2 Section 1.01. Definitions............................................................................................2 Section 1.02. Definitions in Master Agreement and Trust Agreement......................3 ARTICLE II PURCHASE OF PROJECT BY,AND SALE THEREOF TO, THE CORPORATION; PAYMENT........................................................................4 Section 2.01. Acquisition of the Project....................................................................4 Section 2.02. Payment of Purchase Price...................................................................4 ARTICLE IH PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT; INSTALLMENT PAYMENT.....................................................4 Section 3.01. Purchase and Sale of Project................................................................4 Section 3.02. Installment Payment.............................................................................4 Section3.03. Reserved...............................................................................................4 Section 3.04. Obligation Absolute............................................................................. 5 Section 3.05. Nature of Agreement............................................................................ 5 ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENT; DISCHARGE .............. 5 Section 4.01. Prepayment of Installment Payment.................................................... 5 Section4.02. Notice................................................................................................... 5 Section 4.03. Discharge of Obligations..................................................................... 5 ARTICLE COVENANTS .................................................................................................6 Section 5.01. Compliance with Master Agreement...................................................6 Section 5.02. Compliance with Installment Purchase Agreement.............................6 Section 5.03. Protection of Security and Rights........................................................6 Section 5.04. Indemnification of Corporation...........................................................6 Section 5.05. Further Assurances...............................................................................6 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION.............................................................................................7 Section 6.01. Events of Default.................................................................................7 Section 6.02. Remedies on Default............................................................................7 Section6.03. Non-Waiver.......................................................................................... 8 Section 6.04. Remedies Not Exclusive...................................................................... 8 ARTICLE VII AMENDMENTS ............................................................................................. 8 Section7.01. Amendments........................................................................................ 8 ARTICLE VIII MISCELLANEOUS........................................................................................9 Section 8.01. Liability of District Limited.................................................................9 Section 8.02. Limitation of Rights........................................................................... 10 Section8.03. Assignment ........................................................................................ 10 Section8.04. Notices............................................................................................... 10 27431691.3 _i_ TABLE OF CONTENTS (continued) Page Section 8.05. Successor Is Deemed Included in all References to Predecessor...... 10 Section 8.06. Waiver of Personal Liability.............................................................. 11 Section 8.07. Article and Section Headings, Gender and References..................... 11 Section 8.08. Partial Invalidity................................................................................. 11 Section 8.09. Governing Law.................................................................................. 11 Section 8.10. Execution in Counterparts.................................................................. 11 EXHIBIT A - DESCRIPTION OF PROJECT..........................................................................A-1 27431691.3 -11- INSTALLMENT PURCHASE AGREEMENT THIS INSTALLMENT PURCHASE AGREEMENT (this "Installment Purchase Agreement"), dated as of October 1, 2016, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District"), and the ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing under the laws of the State of California(the"Corporation"). WITNESSETH: WHEREAS, to finance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project') the District caused the execution and delivery of $120,850,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificates Anticipation Notes, Series 2014B, of which $120,850,000 in principal amount is currently outstanding(the"Prior Notes"); WHEREAS, the District desires to prepay all of the Prior Notes by paying at maturity all of the principal component of the installment payment relating to the Prior Notes (the "Prior Installment Payment"), and the interest thereon; WHEREAS,to provide the funds necessary to pay the Prior Installment Payment and the interest thereon to be so paid, the District and the Corporation desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payment (the "Installment Payment') to be made by the District, pursuant to a new installment purchase agreement (the "Installment Purchase Agreement"),and the Corporation and the District have agreed to finance such prepayment by causing the execution and delivery of $ in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes"), which are certificates of participation evidencing direct, fractional undivided interests in the Installment Payment and the interest thereon,to be made by the District pursuant to the Installment Purchase Agreement; WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000, by and between the District and the Corporation,the District has established and declared the conditions and terms upon which obligations such as this Installment Purchase Agreement, and the Installment Payment, and the interest thereon, are to be incurred and secured; WHEREAS, the Corporation proposes to assign without recourse certain of its rights under and pursuant to this Installment Purchase Agreement to U.S. Bank National Association, as trustee(the"Trustee"); 294316913 WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, dated as of the date hereof, by and among the Trustee, the Corporation and the District, the Trustee has agreed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon,payable hereunder; WHEREAS, a portion of the proceeds of the Notes, together with other available funds, will be used to prepay the Prior Installment Payment; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Installment Purchase Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Installment Purchase Agreement; NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: "Business Day" means a day other than (a) Saturday or Sunday, (b) a day on which banking institutions in the city in which the Principal Office is located are authorized or required by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. "Closing Date"means November.2016. "Corporation" means the Orange County Sanitation District Financing Corporation, a nonprofit public benefit corporation organized and existing under the laws of the State, and any successor thereto. "District" means the Orange County Sanitation District, a county sanitation district organized and existing under and by virtue of the laws of the State, and any successor thereto. "Event of Default"means an event described in Section 6.01 hereof. "Installment Payment" means the Installment Payment required to be made by the District pursuant to Section 3.02 hereof. "Installment Payment Date"means [November 15,2019]. 294316913 2 "Installment Purchase Agreement" means this Installment Purchase Agreement, dated as of October 1, 2016, by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms hereof. .Interest Payment Date" means May 15 and November 15 of each year, commencing May 15,2017,through and including the Installment Payment Date. "Master Agreement" means the Master Agreement for District Obligations, dated as of August 1, 2000, by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terns thereof. "Notes" means the Orange County Sanitation District Revenue Refunding Certificates of Participation (Certificate Anticipation Notes), Series 2016B, also known as the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, executed and delivered by the Trustee pursuant to the Trust Agreement. "Person" means an individual, corporation, limited liability company, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Principal Office" means the Trustee's principal corporate trust office in Los Angeles, California. "Project" means the improvements to the Wastewater System, as described in Exhibit A hereto. "Trust Agreement" means the Trust Agreement, dated as of October 1, 2016, by and among the Trustee, the Corporation and the District, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, or any other bank or trust company which may at any time be substituted in its place as provided in the Trust Agreement. Section 1.02. Definitions in Master Agreement and Trust Agreement. Except as otherwise herein defined and unless the context otherwise requires, the terms defined in the Master Agreement or the Trust Agreement shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein have the meanings defined therein, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined therein. With respect to any defined term which is given a different meaning under this Installment Purchase Agreement than under the Master Agreement or the Trust Agreement, as used herein it shall have the meaning given herein. 294316913 3 ARTICLE II PURCHASE OF PROJECT BY,AND SALE THEREOF TO, THE CORPORATION; PAYMENT Section 2.01. Acauisition of the Project. The District represents and warrants that it is the sole and exclusive owner of the Project. The Corporation hereby purchases from the District, and the District hereby sells to the Corporation, the Project in accordance with the provisions of this Installment Purchase Agreement. All right, title and interest in and to the Project shall immediately vest in the Corporation on the Closing Date without further action on the part of the Corporation or the District. Section 2.02. Payment of Purchase Price. On the Closing Date, the Corporation shall pay to the District, as the purchase price of the Project, the amount of$ , which amount shall be paid from the net proceeds of the Notes. ARTICLE IH PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT; INSTALLMENT PAYMENT Section 3.01. Purchase and Sale of Project. The District hereby purchases from the Corporation, and the Corporation hereby sells to the District, the Project in accordance with the provisions of this Installment Purchase Agreement. All right, title and interest in and to the Project shall immediately vest in the District on the Closing Date without further action on the part of the District or the Corporation. Section 3.02. Installment Payment. The District shall pay to the Corporation, from Net Revenues and other lawfully available funds of the District,the purchase price of the Project in a single Installment Payment, with interest thereon, as provided herein. The Installment Payment shall be in the aggregate principal amount of$ , and shall be payable on or before the Installment Payment Date. The Installment Payment shall accrue interest from the Closing Date, at the rate of % per annum, payable on the Interest Payment Dates. Such interest shall accrue on the basis of a 360-day year consisting of twelve 30-day months. The Installment Payment, and the payment of interest thereon, shall be deposited with the Trustee, as assignee of the Corporation, no later than the Installment Payment Date or Interest Payment Date on which such Installment Payment or payment of interest is due, in lawful money of the United States of America, in immediately available funds. If and to the extent that, on any such date, there are amounts on deposit in the Installment Payment Fund established under the Trust Agreement, or in any of the accounts therein, which amounts are not being held for the payment of specific Notes, such amounts shall be credited against the Installment Payment, or payment of interest thereon, as applicable, due on such date. Section 3.03. Reserved. 294316913 4 Section 3.04. Obligation Absolute. The obligation of the District to make the Installment Payment, and payments of interest thereon, and other payments required to be made by it under this Article, from Net Revenues and other lawfully available funds of the District, is absolute and unconditional, and until such time as the Installment Payment, payments of interest thereon, and such other payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article IV), the District shall not discontinue or suspend any Installment Payment, or payments of interest thereon, or other payments required to be made by it hereunder when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payment, payments of interest thereon, and other payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever. Section 3.05. Nature of Agreement. This Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement and shall be afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENT; DISCHARGE Section 4.01. Preuayment of Installment Payment. (a) The Installment Payment shall be subject to prepayment prior to the Installment Payment Date as provided in Article IV of the Trust Agreement. (b) The District may prepay, from any source of available funds, all or any portion of the Installment Payment by depositing with the Trustee moneys or securities as provided, and subject to the terns and conditions set forth, in Article X of the Trust Agreement sufficient to pay the Installment Payment, and the interest thereon, when due or to pay the Installment Payment, and the interest thereon, through a specified date on which the District has a right to prepay such Installment Payment pursuant to subsection (a) of this Section, and to prepay the Installment Payment on such prepayment date, at a prepayment price determined in accordance with subsection(a)of this Section. Section 4.02. Notice. The District shall give written notice to the Trustee specifying the date on which the prepayment will be made prior to making any prepayment pursuant to this Article, which date shall be not less than 25 days from the date such notice is given to the Trustee,unless such time period shall be waived by the Trustee. Section 4.03. Discharge of Obligations. If the Installment Payment, and the interest thereon, shall be paid as and when due in accordance with the terms hereof, or prepaid in accordance with Section 4.01 hereof, and if all Notes shall be fully paid, or provision therefor made in accordance with Article X of the Trust Agreement, and the Trust Agreement shall be discharged by its terms, then all agreements, covenants and other obligations of the District hereunder shall thereupon cease,terminate and become void and be discharged and satisfied. 294316913 5 ARTICLE V COVENANTS Section 5.01. Compliance with Master Aareement. The District will faithfully observe and perform all the agreements, conditions, covenants and terns contained in the Master Agreement required to be observed and performed by it and will not cause, suffer or permit any default to occur thereunder. Section 5.02. Compliance with Installment Purchase Aareement. The District will punctually pay the Installment Payment, and interest thereon, and other payments required to be made by it hereunder in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, will not cause, suffer or permit any default to occur hereunder and will not terminate this Installment Purchase Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political subdivision of either or any failure of the Corporation to observe or perform any agreement, condition, covenant or tern contained herein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Corporation or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities. Section 5.03. Protection of Security and Rights. The District will preserve and protect the security hereof and the rights of the Trustee, as assignee of the Corporation, to the Installment Payment, and interest thereon, and other payments required to be made by the District hereunder and will warrant and defend such rights against all claims and demands of all Persons. Section 5.04. Indemnification of Corporation. To the extent permitted by law, the District hereby agrees to indemnify and hold the Corporation and its members and officers harmless against any and all liabilities which might arise out of or are related to the Project, this Installment Purchase Agreement or the Notes, and the District further agrees to defend the Corporation and its members and officers in any action arising out of or related to the Project, this Installment Purchase Agreement or the Notes. Section 5.05. Further Assurances. The District will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Corporation, or unto the Trustee, as assignee of the Corporation, the rights and benefits provided herein to the Corporation, or to the Trustee, as assignee of the Corporation. 294316913 6 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION Section 6.01. Events of Default. The following shall be Events of Default under this Installment Purchase Agreement, and "Event of Default' shall mean any one or more of the following events: (a) if default shall be made by the District in the due and punctual payment of or on account of any Senior Obligation as the same shall become due and payable; (b) if default shall be made by the District in the performance of any of the agreements or covenants required herein, in the Trust Agreement or in the Master Agreement to be performed by it (other than as specified in (a) above), and such default shall have continued for a period of 30 days after the District shall have been given notice in writing of such default by the Corporation or the Trustee; provided, however, that the party or parties giving such notice may agree in writing to a reasonable extension of such period prior to the expiration of such 30 day period and, provided further, that if the District shall proceed to take curative action which, if begun and prosecuted with due diligence, cannot be completed within such a period of 30 days, then such period shall be increased without such written extension to such extent as shall be necessary to enable the District to diligently complete such curative action and such default shall not become an Event of Default for so long as shall be necessary to diligently complete such curative action; or (c) if the District shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the District seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the District or of the whole or any substantial part of its property. Section 6.02. Remedies on Default. Upon the occurrence of an Event of Default, the Trustee,as assignee of the Corporation, shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the District and to compel the District to perform and carry out its duties under applicable law and the agreements and covenants required to be performed herein; (b) by suit in equity to enjoin any acts or things which we unlawful or violate the rights of the Trustee, as assignee of the Corporation; (c) by suit in equity to require the District to account as the trustee of an express trust; and to have a receiver or receivers appointed for the Wastewater System and of the issues, earnings, income, products and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. 294316913 7 Section 6.03. Non-Waiver. Nothing in this Article or in any other provision hereof shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the Installment Payment, and the interest thereon, to the Trustee, as assignee of the Corporation, at the respective due dates from the Net Revenues and the other funds herein committed for such payment, or shall affect or impair the right of the Trustee, as assignee of the Corporation, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein. A waiver of any default or breach of duty or contract by the Trustee, as assignee of the Corporation, shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee, as assignee of the Corporation,to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee, as assignee of the Corporation, by applicable law or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee, as assignee of the Corporation. If any action,proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Trustee, as assignee of the Corporation, the District and the Trustee, as assignee of the Corporation, shall be restored to their former positions, rights and remedies as if such action,proceeding or suit had not been brought or taken. Section 6.04. Remedies Not Exclusive. No remedy herein confered upon or reserved to the Trustee, as assignee of the Corporation, is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by law. ARTICLE VII AMENDMENTS Section 7.01. Amendments. (a) This Installment Purchase Agreement and the rights and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or modified from time to time and at any time by a written amendment hereto executed by the District, the Corporation and the Trustee, as assignee of the Corporation, with the written consent of the Owners of a majority of the aggregate principal evidenced by Notes then Outstanding. No such amendment shall (i) extend the payment date of any Installment Payment or reduce the amount of any Installment Payment, or the interest rate applicable thereto, without the prior written consent of the Owner of each affected Note, or (ii) reduce the percentage of Owners of the Notes whose consent is required to effect any such amendment or modification,without the prior written consent of the Owners of all Notes then Outstanding. (b) This Installment Purchase Agreement and the rights and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or modified from time to time and at any time by a written amendment hereto executed by the 274316913 8 District, the Corporation and the Trustee, as assignee of the Corporation, without the written consents of any Owners of the Notes, but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the District, the Corporation or the Trustee, as assignee of the Corporation, to be observed or performed herein other agreements, conditions, covenants and terms thereafter to be observed or performed by the District,the Corporation or the Trustee, as assignee of the Corporation, or to surrender any right or power reserved herein to or conferred herein on the District,the Corporation or the Trustee,as assignee of the Corporation; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the District,the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or necessary and not inconsistent herewith; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest on the Installment Payment; and (iv) to make such other changes herein or modifications hereto as the District, the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or necessary, and which shall not materially adversely affect the interests of the Owners of the Notes. ARTICLE VIII MISCELLANEOUS Section 8.01. Liability of District Limited. Notwithstanding anything contained herein to the contrary,the District shall not be required to advance any moneys derived from any source of income other than Net Revenues and the other funds provided herein for the payment of the Installment Payment, and the interest thereon, and other payments required to be made by it hereunder, or for the performance of any agreements or covenants required to be performed by it contained herein. The District may, however, but in no event shall be obligated to, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the District for such purpose. The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it hereunder is a special obligation of the District payable, in the manner provided herein, from Net Revenues and other funds provided for herein, and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State, or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other payments required to be made hereunder. 294316913 9 Section 8.02. Limitation of Rights. Nothing in this Installment Purchase Agreement expressed or implied is intended or shall be construed to give to any Person other than the District, the Corporation and the Trustee, as assignee of the Corporation, any legal or equitable right, remedy or claim under or in respect of this Installment Purchase Agreement or any covenant, condition or provision therein or herein contained, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the District, the Corporation and the Trustee, as assignee of the Corporation. Section 8.03. Assignment. The District and the Corporation hereby acknowledge the transfer, conveyance and assignment by the Corporation to the Trustee of all of the Corporation's rights, title and interest in and to this Installment Purchase Agreement (excepting its rights to indemnification hereunder), including the right to receive Installment Payment, and the interest thereon,from the District,pursuant to the Trust Agreement Section 8.04. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the District: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Director of Finance and Administrative Services If to the Corporation: Orange County Sanitation District Financing Corporation c/o Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Treasurer If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 240 Floor Los Angeles, California 90071 Attention: Corporate Trust Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by facsimile,telecopier or email (with a PDF attachment, if applicable), upon the sender's receipt of an appropriate written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section. Section 8.05. Successor Is Deemed Included in all References to Predecessor. Whenever the District or the Corporation is named or referred to herein, such reference shall be 274316913 10 deemed to include the successor to the powers, duties and functions that are presently vested in the District or the Corporation, and all agreements and covenants required hereby to be performed by or on behalf of the District or the Corporation shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 8.06. Waiver of Personal Liability. No official, officer or employee of the District shall be individually or personally liable for the payment of the Installment Payment, or the interest thereon, or other payments required to be made by the District hereunder, but nothing contained herein shall relieve any official, officer or employee of the District from the performance of any official duty provided by any applicable provisions of law or hereby. Section 8.07. Article and Section Headings. Gender and References. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subsections or clauses are to the corresponding articles, sections, subsections or clauses hereof; and the words "hereby,""herein," "hereof," "hereto," "herewith' and other words of similar import refer to this Installment Purchase Agreement as a whole and not to any particular Article, Section, subdivision or clause hereof. Section 8.08. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the District or the Corporation shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants and portions thereof and shall in no way affect the validity hereof. Section 8.09. Governing Law. This Installment Purchase Agreement shall be construed and governed and construed in accordance with the laws of the State. Section 8.10. Execution in Counterparts. This Installment Purchase Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 274316913 11 IN WITNESS WHEREOF, the parties hereto have executed this Installment Purchase Agreement by their officers thereunto duly authorized as of the day and year first written above. ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors (SEAL) Attest: By: Clerk of the Board of Directors ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION By: Treasurer 294316913 12 EXHIBIT A DESCRIPTION OF PROJECT The Project includes in general the acquisition, construction and installation of certain improvements to the wastewater collection,treatment and disposal facilities of the District and in particular including, without limitation, the financing of improvements to the Wastewater System including particularly, but without limitation, the District's collection system, two wastewater treatment plants, and Ocean Outfall, and further as follows: the acquisition, construction, installation, rehabilitation, replacement, or repair of the North County Yard, Bushard Trunk Sewer, Gisler-Redhill Trunk Sewer, Magnolia Trunk Sewer, Bay Bridget Pump Station, Bitter Point Pump Station, Ellis Avenue Pumps Station, Rocky Point Pump Station, Headworks at Plant 2, Primary Clarifiers at Plant 1, Primary Treatment System at Plant 2 Secondary Treatment System at Plant 1, Activated Sludge at Plant 1, Trickling Filters at Plant 1 and 2; Sludge Digester at Plant 1, Sludge Dewatering at Plant 1 and 2, Truck Wash and Dewatering Beds at Plant 1, Primary sludge Feed System at Plant 2, Digester at Plant 2, Effluent Pump Station Annex, Groundwater Replenishment System, and Odor Control Facilities. 294316913 A-1 DRAFT OF 08/30/16 PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER_,2016 0 o NEW ISSUE—BOOK-ENTRY-ONLY RATINGS: S&P: " " °o Fitch: " " 8 (See"RATINGS"herein.) .E In the opinion of Norton Rose Fulbright US LIP, Los Angeles, California, Special Counsel, under existing statutes, r,alcumns, v „ ratings and court decisions, and assuming compliance with the tax covenants described herein, the interest component of the Installment i .r Payment, and the alterable portion thereof disMbutable in respect rotator Note, is excluded pursuant to section 103(a) of the Internal q t� Revenue Code of 1986 from the gross income gjthe owners thereoffor federal income tax purposes and is not an item of lax preference for purposes of the federal alternative minimum tax.It is also the opinion of Special Counsel that under existing law the interest component of — the Installment Payment, and the allocable portion thereof distributable in respect ofany Note is exempt from personal income tares of the �a StateofC Iiforum. Seghowever, "TAXMATTERS"herein. r [District Logo] $ ]DAC Logo] .� ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES ✓z SERIES 2016B °a Dated: Date of Delivery Maturity Date: ,20_ a � ar Interest Rate: _% Price: % Yield:_% CUSIP No. The S 'Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes,Series 2016B(the"Notes") evidence direct,fractional undivided interests ofthe Owners thereof in an installment payment(the"Installment Payment'),and the interest thereon,to be made by the Orange County Sanitation District(the`District')pursuant to the Installment Purchase Agreement,dated as of oOctober I,2016(the"Installment Purchase Agreement),by and between the District and the Orange County Sanitation District Financing Corporation (the "Corpomtion"). Pursuant to the Master Agreement for District Obligations, dated as of August I, 2000 (the "Master R Agreement"),by and between the District and the Corporation,the District has established conditions and terms upon which obligations, `o s such as the Installment Payment and the interest thereon, will be incurred and secured. The Installment Payment under the Installment e c Purchase Agreement is payable from(i)Net Revenues(as more fully described in the Master Agreement,the"Net Revenues"),as provided y° u in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or a m ownership of the Wastewater System of the District(the"Wastewater System') remaining after Payment of Maintenance and Operation E >, Costs, and(h)other lawfully available funds of the District, as further described in"SECURITY AND SOURCES OF PAYMENT FOR $ R THE NOTES"herein. 9 s The Notes will mature on , 20_(the"Maturity Date"). The District expects the principal of the Notes to be paid from proceeds of the sale, on or prior to the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District. The sale and delivery of a future series of certificates of participation,notes or other obligations of the District will depend on y— market conditions, certain approvals by the District and the Corporation and other factors. See "SECURITY AND SOURCES OF v s PAYMENT FOR THE NOTES"herein. G The Notes are subject to prepayment prior to their maturity. See"THE NOTES—Prepayment Provisions"herein. The proceeds of the Notes, together with other amounts, will be used to (i)prepay all of the Orange County Sanitation District R Revenue Refunding Certificate Anticipation Notes,Series 2014B,currently outstanding in the aggregate principal meant of S120,850,000, and(it)pay the costs incurred in connection with the execution and delivery of the Notes. See"PLAN OF FINANCE"herein. 8 Interest evidenced by the Notes will accrue from the date of their initial delivery and will be payable on each May 15 and November g15,commencing May 15,2017,through and including the Maturity Data See"THE NOTES"herein. The Notes initially will be delivered o R only in book-entry form and will be registered in the time of Cede&Co.,as nominee of The Depository Trust Company,New York,New c York("DTC"),which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book-entry form only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. The Notes owill be delivered in denominations of S5,000 and any integral multiple tthereof. Payments of principal and interest evidenced by the Notes p are payable directly to DTC by U.S.Bards National Association,as trustee(the"Trustee"). Upon receipt of payments of such principal and SA interest, DEC will in tutu distribute such payments to the beneficial owners of the Notes. See APPENDIX E — "BOOK-ENTRY .-0 SYSTEM"herein. a 9 THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENT,AND THE INTEREST THEREON,AND OTHER PAYMENTS REQUIRED TO BE MADE BY IT UNDER THE INSTALLMENT PURCHASE AGREEMENT IS A SPECIAL �? OBLIGATION OF THE DISTRICT PAYABLE, IN THE MANNER PROVIDED IN THE INSTALLMENT PURCHASE AGREEMENT,FROM NET REVENUES AND OTHER LAWFULLY AVAILABLE FUNDS OF THE DISTRICT,AS PROVIDED IN o THE INSTALLMENT PURCHASE AGREEMENT, AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT OR OF THE STATE OF CALIFORNIA, OR OF ANY POLITICAL SUBDIVISION THEREOF, IN CONTRAVENTION OF ANY _ CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE R PAYMENT OF THE INSTALLMENT PAYMENT, OR THE INTEREST THEREON, OR OTHER PAYMENTS REQUIRED TO BE MADE UNDER THE INSTALLMENT PURCHASE AGREEMENT. SEE "SECURITY AND SOURCES OF PAYMENT FOR THE �..G NOTES"HEREIN. This cover page contains information intended for quick reference only. It is not a summary of this issue. Investors must E read the entire Official Statement to obtain information essential to making an informed investment decision. c a BIDS FOR THE PURCHASE OF THE NOTES WILL BE RECEIVED BY THE DISTRICT a v 9 UNTIL_:_A.M.NEW YORK TIME ON OCTOBER 20,2016 UNLESS POSTPONED OR CANCELLED F m 3 AS SET FORTH IN THE OFFICIAL NOTICE INVITING BIDS. 'Preliminary,subject to change. 21823490A The Notes are o{(oed when,as and if executed and delivered subject to the approval ofNonon Rose Fulbrlght US LLP,Los Angeles, California,Special Counsel and Disclosure Counsel to the District,and certain other conditions. Certain legal matters will be passed upon for the District and the Corporation by Woodruff Spradlin & Stuart, a Professional Corporation, Costa Mesa, California Public Resources Advisory Group,Los Angeles, California, has served as financial advisor to the District in connection with the execution and delivery of the Notes. It is anticipated that the Notes in defzni6ve form will be available for delivery through the book-entry facilities of DTC on or about November 1,2016. Dated: October.2016 218234"A [MAP] 118134904 ORANGE COUNTY SANITATION DISTRICT Board of Directors John Nielsen—(Chair)—Tustin Greg Seboum—(Vice Chair)—Fullerton Lucille Kring—Anaheim Teresa Smith—Orange Glenn Parker—Brea Chad Wanke—Placentia Fred Smith—Buena Park Sal Tmajero Santa Ana Mariellen Yarc—Cypress Ellery Denton—Seal Beach Steve Nagel—Fountain Valley David ShawverStanton Steve Jones Garden Grove Greg Mills Villa Park Jim Kampodis—Huntington Beach James M. Fenyman—Costa Mesa Sanitary District Steven Choi—Irvine John Withers—Irvine Ranch Water District Tom BeamishLa Habra Joy Neugebauer Midway City Sanitary District Peter Kim—La Palma Robert Kiley—Yorba Linda Water District Richard Murphy Los Alamitos Michelle Steel Member of the Orange County Keith Curry Newport Beach Board of Supervisors Executive Manatement of the District James Herberg, General Manager Robert P. Ghirelli,D.Env.,Assistant General Manager Lorenzo Tyner,Director of Finance and Administrative Services Ed Torres,Director of Operations and Maintenance James Colston,Director of Environmental Services Robert Thompson,Director of Engineering Celia Chandler,Director of Human Resources Special Services Special Counsel and Disclosure Counsel Norton Rose Fulbright US LLP Los Angeles,California District General Counsel Bradley R.Hogin Woodruff, Spradlin&Smart,a Professional Corporation Costa Mesa,California Financial Advisor Public Resources Advisory Group Los Angeles,California Trustee U.S.Bank National Association Los Angeles,California ztsz34%.a No dealer, salesman or any other person has been authorized by the Orange County Sanitation District (the "District") or (the "Initial Purchaser") to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the District or the Initial Purchaser. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Notes by any person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. The information set forth herein has been provided by the District and other sources that are believed by the District to be reliable.No dealer,broker, salesperson or other person has been authorized m give any information or to make any representations other than those contained in this Official Statement. If given or made, such other information or representations must not be relied upon as having been authorized by the District, the Corporation or the Initial Purchaser in connection with any reoffering. This Official Statement is not to be construed as a contract with the purchasers of the Notes. Statements contained in this Official Statement which involve estimates, projections, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District or the Corporation since the date hereof. This Official Statement is submitted with respect to the sale of the Notes referred to herein and may not be reproduced or used,in whole or in part, for any other purpose,unless authorized in writing by the District. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. Preparation of this Official Statement and its distribution have been duly authorized and approved by the District and the Corporation. In connection with the offering of the Notes, the Initial Purchaser in connection with any reoffering may over-allot or effect transactions which stabilize or maintain the market price of the Notes at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Initial Purchaser in connection with any reoffering may offer and sell the Notes to certain dealers, institutional investors and others at prices lower than the public offering prices stated on the cover page hereof and such public offering prices may be changed from time to time by the Initial Purchaser. Certain statements included or incorporated by reference in this Official Statement constitute forward- looking statements. Such statements are generally identifiable by the terminology used such as "plan," "expect,""estimate,""budget"or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results,performance or achievements described to be materially different from any future results,performance or achievements expressed or implied by such forward-looking statements. CUSIP is a registered trademark of the American Bankers Association. CUSIP data on the cover hereof and herein is provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. The District,the Financial Advisor and the Initial Purchaser are not responsible for the selection or correctness of the CUSIP numbers set forth on the cover hereof or herein. 21823490.4 TABLE OF CONTENTS Page INTRODUCTION.......................................................................................................................................1 General............................................................................................................................................1 TheDistrict.....................................................................................................................................2 Security and Sources of Payment for the Notes..............................................................................2 ContinuingDisclosure....................................................................................................................3 Miscellaneous.................................................................................................................................3 PLANOF FINANCE...................................................................................................................................4 ESTIMATED SOURCES AND USES OF FUNDS ...................................................................................4 THENOTES................................................................................................................................................5 General............................................................................................................................................5 PrepaymentProvisions....................................................................................................................5 SECURITY AND SOURCES OF PAYMENT FOR THE NOTES............................................................6 Sale Proceeds of Future Obligations...............................................................................................6 InstallmentPayment........................................................................................................................7 AvailableFoods of the District.......................................................................................................8 NetRevenues..................................................................................................................................8 RateStabilization Account.............................................................................................................9 Allocation of Revenues...................................................................................................................9 RateCovenant...............................................................................................................................10 Limitations on Issuance of Additional Obligations......................................................................11 Insurance.......................................................................................................................................13 Allocation of Installment Payment...............................................................................................14 THEDISTRICT.........................................................................................................................................15 Background...................................................................................................................................15 Organization and Administration..................................................................................................15 Services.........................................................................................................................................17 ServiceArea..................................................................................................................................17 Employees.....................................................................................................................................18 RetirementPlan.............................................................................................................................19 Other Post-Employment Benefits.................................................................................................21 RiskManagement.........................................................................................................................21 ExistingFacilities.........................................................................................................................21 Permits,Licenses and Other Regulations.....................................................................................22 District Planning and Capital Improvement Program...................................................................24 Groundwater Replenishment System............................................................................................25 Preferred Level of Treatment........................................................................................................26 BiosolidsManagement..................................................................................................................26 UrbanRunoff................................................................................................................................27 Integrated Emergency Response Program....................................................................................28 Five-Year Strategic Planning........................................................................................................29 DISTRICT REVENUES............................................................................................................................29 SewerService Charges.................................................................................................................29 AdditionalRevenues.....................................................................................................................32 WastewaterTreatment History.....................................................................................................33 21823490.4 i TABLE OF CONTENTS (continued) Page Customers.....................................................................................................................................34 AssessedValuation.......................................................................................................................35 Tax Levies and Delinquencies......................................................................................................36 BudgetaryProcess.........................................................................................................................37 Reserves........................................................................................................................................38 Summary of Operating Data.........................................................................................................39 ForecastedOperating Data............................................................................................................41 Management's Discussion and Analysis of Operating Data.........................................................43 Investment of District Funds.........................................................................................................44 FINANCIAL OBLIGATIONS..................................................................................................................44 ExistingIndebtedness...................................................................................................................44 AnticipatedFinancings.................................................................................................................45 Direct and Overlapping Bonded Debt...........................................................................................45 THECORPORATION..............................................................................................................................45 LIMITATIONS ON TAXES AND REVENUES......................................................................................46 Article XIHA of the California Constitution.................................................................................46 Legislation Implementing Article XIIIA......................................................................................46 Article XIIIB of the California Constitution.................................................................................47 Proposition IA and Proposition 22...............................................................................................48 Article XIIIC and Article XIIID of the California Constitution...................................................48 Other Initiative Measures..............................................................................................................51 LEGALMATTERS...................................................................................................................................51 FINANCIALADVISOR...........................................................................................................................51 ABSENCE OF LITIGATION...................................................................................................................51 FINANCIAL STATEMENTS...................................................................................................................51 TAXMATTERS........................................................................................................................................52 CONTINUING DISCLOSURE.................................................................................................................54 RATINGS..................................................................................................................................................54 PURCHASE AND REOFFERING...........................................................................................................54 MISCELLANEOUS..................................................................................................................................55 APPENDIX A — COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDEDJUNE 30,2015...........................................................................................A-1 APPENDIX B — THE COUNTY OF ORANGE—ECONOMIC AND DEMOGRAPHIC INFORMATION......................................................................................................B-1 APPENDIX C — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS..........................................C-1 APPENDIX D — FORM OF CONTINUING DISCLOSURE AGREEMENT...................................D-1 APPENDIX E — BOOK-ENTRY SYSTEM.... ......................................E-1 APPENDIX F — FORM OF APPROVING OPINION OF SPECIAL COUNSEL..............................F-1 21823490.4 ii OFFICIAL STATEMENT ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES SERIES 2016B INTRODUCTION This introduction contains only a brief summary of certain of the terms of the Notes being offered and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. References to, and summaries of, provisions of the Constitution and laws of the State of California (the "State') and any documents referred to herein do not purport to be complete and such references are qualified in their entirety by reference to the complete provisions. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Trust Agreement, the Installment Purchase Agreement and the Master Agreement(each, as hereinafter defined). See APPENDIX C— "SUMMARY OFPRINCIPAL LEGAL DOCUMENTS—Definitions"herein. General This Official Statement, including the cover page and all appendices hereto, provides certain information concerning the sale and delivery of$ ' aggregate principal amount of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes"), which are certificates of participation evidencing direct, fractional undivided interests in an installment payment (the `Installment Payment") and the interest thereon, to be made by the Orange County Sanitation District(the "District') pursuant to the Installment Purchase Agreement, dated as of October 1, 2016 (the `Installment Purchase Agreement"), by and between the District and the Orange County Sanitation District Financing Corporation (the "Corporation"). Unless the context clearly indicates to the contrary, a reference herein to either of the Installment Purchase Agreement or the Notes is intended to refer to the corresponding interest in the Installment Purchase Agreement. Pursuant to the Master Agreement for District Obligations,dated as of August 1,2000 (the"Master Agreement'),by and between the District and the Corporation, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon, will be incurred and secured. The Installment Payment under the Installment Purchase Agreement is payable from (i)Net Revenues (as defined hereinafter) as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the "Wastewater System") remaining after payment of Maintenance and Operation Costs, and (i)other lawfully available funds of the District, as further described in "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES" herein. The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of October 1, 2016 (the "Trost Agreement"), by and among the District, the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds from the sale of the Notes will be used to (i)prepay all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B, currently outstanding in the aggregate principal amount of$120,850,000 (the "Prior Notes"), and (ii)pay the costs incurred in connection with the execution and delivery of the Notes. See "PLAN OF FINANCE"herein. Preliminary,subject to change. 218234%.4 The Notes me subject to prepayment prior to their maturity. See "THE NOTES — Prepayment Provisions"herein. The Notes will be executed and delivered in the form of fully registered certificates, dated as of the date of initial delivery thereof and will mature on , 20_ (the "Maturity Date"). Interest evidenced by the Notes will be payable on each May 15 and November 15, commencing May 15, 2017, through and including the Maturity Date (each,an"Interest Payment Date"). See"THE NOTES"herein. The Notes initially will be delivered only in book-entry form and will be registered in the time of Cede &Co., as nominee of The Depository Trust Company,New York,New York("DTC"),which will act as securities depository for the Notes. The Notes will be delivered in denominations of$5,000 and any integral multiple thereof. So long as the Notes are in the DTC book-entry system, the interest and principal due with respect to the Notes will be payable by the Trustee,or its agent,to DTC or its nominee. DTC, in turn, will make payments pursuant to its procedures as described under APPENDIX E — "BOOK—ENTRY SYSTEM"herein. The District The District is a public agency responsible for regional wastewater collection, treatment and disposal. The District is the sixth largest wastewater discharger in the United States. The District provides service to an area with a population of approximately 2.6 million people in the northern and central portion of the County of Orange (the "County"), in a service area of approximately 479 square miles, treating an average of 184 million gallons per day("mg/d")of wastewater in Fiscal Year 2015-16. See"THE DISTRICT,""DISTRICT REVENUES"and"FINANCIAL OBLIGATIONS"herein. Security and Sources of Payment for the Notes The Notes, which me certificates of participation, evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, from Net Revenues, and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District expects the principal of the Notes to be paid from proceeds of the sale,on or prior to the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District. The sale and delivery of a future series of certificates of participation,notes or other obligations of the District will depend on market conditions, certain approvals by the District and the Corporation and other factors. See"SECURITY AND SOURCES OF PAYMENT FOR THE NOTES—Sale Proceeds of Future Obligations." The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District currently has Outstanding Senior Obligations payable from Net Revenues on a parity with the Installment Payment under the Installment Purchase Agreement. See"FINANCIAL OBLIGATIONS—Existing Indebtedness" and "THE DISTRICT" herein and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL 218234".4 2 DOCUMENTS — Master Agreement" attached hereto. The District has no Subordinate Obligations currently outstanding. Pursuant to the Master Agreement, the District will, to the extent permitted by law, fix, prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year (a)Net Revenues equal to 125% of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary,but shall not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND SOURCE OF PAYMENT FOR THE NOTES—Rate Covenant"herein. The obligation of the District to pay the Installment Payment and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided for in the Installment Purchase Agreement, and does not constitute a debt of the District or of the State,or of any political subdivision thereof,in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other payments required to be made under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES"herein. Continuing Disclosure The District has covenanted for the benefit of holders and beneficial owners of the Notes (a)to provide certain financial information and operating data(the"Annual Report")relating to the District and the property in the District not later than eight months after the end of the District's Fiscal Year (which currently would be March 1), commencing with the report for the 2015-16 Fiscal Year, and(b)to provide notices of the occurrence of certain enumerated events. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See "CONTINUING DISCLOSURE" herein and APPENDIX D — "FORM OF CONTINUING DISCLOSURE AGREEMENT." Miscellaneous The descriptions herein of the Trust Agreement,the Master Agreement, the Installment Purchase Agreement, the Continuing Disclosure Agreement and any other agreements relating to the Notes are qualified in their entirety by reference to such documents. Copies of the Trust Agreement, the Master Agreement and the Installment Purchase Agreement are on file and available for inspection at the corporate trust office of U.S. Bank National Association, Los Angeles, California, Attention: Corporate Trust. 21823490.4 3 PLAN OF FINANCE A portion of the net proceeds from the sale of the Notes, together with other available moneys, will be used to prepay on November 1, 2016 the installment payment(the"Funded Installment Payment") to be made by the District in connection with the Prior Notes. Under the terms of the Trust Agreement, dated as of October 1, 2014 (the "Prior Trust Agreement"), pursuant to which the Prior Notes were executed and delivered, the payment of the Prior Notes will be effected by depositing a portion of the proceeds of the Notes into the Installment Payment Fund established under the Prior Trust Agreement (the "Payment Fund"). Such moneys will be in an amount sufficient to provide for the payment of the interest on the Funded Installment Payment through and including November 1, 2016 and to provide for the payment of the principal represented by the Funded Installment Payment. In accordance with the Prior Trust Agreement, the Funded Installment Payment will be applied to the payment of interest with respect to the outstanding Prior Notes and to the payment of the principal of the outstanding Prior Notes on the maturity date thereof. The amounts deposited in the Payment Fund will be held in trust solely for the Prior Notes and will not be available to pay the principal and interest evidenced by the Notes or any obligations other than the Prior Notes. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds and other amounts in connection with the delivery of the Notes are presented below. Sources Principal Amount of Notes $ Premium District Contribution Total Sources Uses Payment of Prior Notes $ Costs of Issuance") Total Uses Costs of Issuance include,among other things,the Initial Purchaser's discount,fees of rating agencies, Special Counsel and Disclosure Counsel fees and expenses and the initial fees of the Trustee. 21823490.4 4 THE NOTES General The Notes will be prepared in the form of fully registered certificates in Authorized Denominations of$5,000 and any integral multiple thereof. The Notes will be dated the date of initial delivery thereof and will mature on 20—(the "Maturity Date"). Interest evidenced by the Notes will accrue from their date of initial delivery and will be payable semiannually on each May 15 and November 15, commencing May 15, 2017, through and including the Maturity Date (each, an "Interest Payment Date"). Each Note shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full, unless such date of execution shall be after a Record Date and on or prior to the following Interest Payment Date, in which case such Note shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to May 1, 2017, in which case such Note shall represent interest from its date of initial delivery. Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Notes shall be in default, each Note shall evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Interest evidenced by the Notes shall be computed on the basis of a 360-day year consisting of twelve 30-day months. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS Trust Agreement." The Notes initially will be delivered only in book-entry form and will be registered in the name of Cede .& Co., as nominee of The Depository Trust Company,New York, New York("DTC"),which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book-entry form only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. Payments of principal and interest evidenced by the Notes are payable directly to DTC by U.S. Bank National Association, as trustee. Upon receipt of payments of such principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Notes. So long as the Notes are held in the DTC book-entry system,the interest and principal due with respect to the Notes will be payable by the Trustee, or its agent, to DTC or its nominee. DTC, in turn, will make payments pursuant to its procedures as described under APPENDIX E — "BOOK-ENTRY SYSTEM" herein. Prepayment Provisions Optional Prepayment The Notes are subject to optional prepayment prior to the Maturity Date, on any date on or after 1,20 , in whole or in part,in Authorized Denominations,from and to the extent of prepayment of the Installment Payment paid pursuant to the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Notes to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment,without premium. Selection of Notes for Prepayment Whenever less than all the Outstanding Notes are to be prepaid on any one date in accordance with the Trust Agreement, the Trustee shall select the Notes to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate, which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the Notes so selected for prepayment on such date. For purposes of such selection, any Note may be prepaid in part in Authorized Denominations. Notice of Prepayment When prepayment of Notes is authorized pursuant to the Trust Agreement, the Trustee shall give notice, at the expense of the District, of the prepayment of the Notes. The notice of prepayment shall specify (a) the Notes or designated portions thereof (in the case of prepayment of the Notes in part but not in whole) which are to be prepaid, (b)the date of prepayment, 21823490.4 5 (c)the place or places where the prepayment will be made, including the name and address of any paying agent, (d)the prepayment price and (e)the CUSIP numbers assigned to the Notes to be prepaid. Such notice of prepayment shall further state that on the specified date there shall become due and payable upon each Note or portion thereof being prepaid the prepayment price and that from and after such date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of optional prepayment of Notes, unless at the time such notice is given the Notes to be prepaid shall be deemed to have been paid within the meaning of the Trust Agreement,such notice shall state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Notes to be prepaid, and that if such moneys shall not have been so received said notice shall be of no force and effect and the District shall not be required to prepay such Notes. In the event a notice of prepayment of Notes contains such a condition and such moneys are not so received,the prepayment of Notes as described in the conditional notice of prepayment shall not be made and the Trustee shall,within a reasonable time after the date on which such prepayment was to occur, give notice to the persons and in the manner in which the notice of prepayment was given, that such moneys were not so received and that there shall be no prepayment of Notes pursuant to such notice of prepayment. The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice of prepayment to the respective Owners of Notes designated for prepayment by first-class mail, postage prepaid,at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Notes or the cessation of interest evidenced thereby on the date fixed for prepayment. Effect of prepayment. If notice of prepayment has been duly given as aforesaid and moneys for the payment of the prepayment price of the Notes to be prepaid are held by the Trustee, then on the prepayment date designated in such notice, the Notes so called for prepayment shall become payable at the prepayment price specified in such notice; and from and after the date so designated, interest evidenced by the Notes so called for prepayment shall cease to accrue, such Notes shall cease to be entitled to any benefit or security hereunder and the Owners of such Notes shall have no rights in respect thereof except to receive payment of the prepayment price thereof The Trustee shall, upon surrender for payment of any of the Notes to be prepaid, pay such Notes at the prepayment price thereof, and such moneys shall be pledged to such payment. SECURITY AND SOURCES OF PAYMENT FOR THE NOTES Sale Proceeds of Future Obligations The District expects the principal of the Notes to be paid from proceeds of the sale,on or prior to the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District,that will amortize over a term of approximately 19 years(the"Future Obligations"). The issuance of the Future Obligations will require future authorizations by the governing boards of the District and the Corporation, as well as the preparation of suitable legal and disclosure documents for the issue. The District is currently unaware of any material impediment to obtaining such authorizations and documents. In addition, the issuance and sale of the Future Obligations will be contingent on the District's ability to access the municipal capital markets, which will depend on the District's creditworthiness and market conditions during the weeks immediately preceding the Maturity Date. The District is unable to predict such matters with certainty and therefore cannot guarantee that the Fur=Obligations will be successfully issued and sold. 218234".4 6 Installment Payment The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement See"DISTRICT REVENUES"herein. Pursuant to the Master Agreement, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon payable under the Installment Purchase Agreement, will be incurred and secured. The obligation of the District to make the Installment Payment, and payments of interest thereon, and other payments required to be made by it under the Installment Purchase Agreement, from Net Revenues, and other lawfully available funds of the District,is absolute and unconditional,and until such time as the Installment Payment, payments of interest thereon, and such other payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to the Installment Purchase Agreement), the District has covenanted that it will not discontinue or suspend the Installment Payment when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payment, payments of interest thereon, and other payments shall not be subject to reduction whether offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or any cause whatsoever. The District's obligation to make the Installment Payment from Net Revenues is on a parity with the District's obligation to make payments with respect to its Outstanding Senior Obligations. See "Net Revenues" below. Pursuant to the Trust Agreement, the Corporation has assigned to the Trustee for the benefit of the Owners of the Notes substantially all of its rights, title and interest in and to the Installment Purchase Agreement, including its right to receive the Installment Payment and the interest thereon. The District has certain Existing Senior Obligations Outstanding payable from Net Revenues on a parity with the Installment Payment under the Installment Purchase Agreement. The term "Existing Senior Obligations" as used in this Official Statement refers to the Installment Purchase Agreements relating to the District's currently Outstanding Senior Obligations, as set forth on Table 16 under the caption "FINANCIAL OBLIGATIONS—Existing Indebtedness"herein. The term"Senior Obligations" as used in this Official Statement refers to the Existing Senior Obligations and to any additional Senior Obligations, such as the Installment Purchase Agreement, that may be made payable on a parity basis to the Installment Payment as provided in the Master Agreement. Senior Obligations, together with any Subordinate Obligations payable on a subordinate basis to the Installment Payments incurred as provided in the Master Agreement, are referred to collectively as the "Obligations." The District has no Subordinate Obligations currently outstanding. See "FINANCIAL OBLIGATIONS Existing Indebtedness" herein and APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS Master Agreement"attached hereto. The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement and Master Agreement, is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided for in the Installment Purchase Agreement, and does not constitute a debt of the District, the State or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District, the State or any political 21823490.4 7 subdivision thereof,is pledged to the payment of the Installment Payment,or the interest thereon,or other payments required to be made under the Installment Purchase Agreement The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. See"SECURITY AND SOURCES OF PAYMENT FOR THE NOTES"herein. Available Funds of the District As Senior Obligations under the Master Agreement, the Installment Payments are payable from and secured by a pledge of Net Revenues. Should Net Revenues prove insufficient, the Installment Purchase Agreement father provides that the Installment Payments are payable from any other lawfully available funds of the District. The primary lawfully available funds of the District are its reserve funds, other than trustee-held amounts required to be in any Obligation Reserve Fund securing certain of the District's Senior Obligations, as described in the Master Agreement At June 30, 2015, the District's Debt Service Required Reserves totaled $129.0 million, of which $33.0 million were trustee-held amounts in Obligation Reserve Funds as required under the Master Agreement. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —Master Agreement" attached hereto. District reserve funds are maintained in accordance with the District's reserve policy. See `DISTRICT REVENUES — Reserves." Available reserves at June 30, 2015 were approximately $588.0 million (consisting of$556.9 million in cash and investments and $31.1 million due from the Orange County Flood Control District) and available reserves at June 30, 2016 were approximately $ million (consisting of$_million in cash and investments and$ million due from the Orange County Flood Control District). See"DISTRICT REVENUES—Reserves,""—Summary of Operating Data"and"— Projected Operating Data." Net Revenues The District is obligated to make the Installment Payment from, among other things, Net Revenues as provided in the Master Agreement, which consist of Revenues remaining after payment of costs paid by the District for maintaining and operating the Wastewater System ("Maintenance and Operation Costs"). Revenues we defined in the Master Agreement to mean, for any period, all income and revenue received by the District during such period from the operation or ownership of the Wastewater System, determined in accordance with generally accepted accounting principles, including all fees and charges received during such period for the services of the Wastewater System, investment income received during such period (but only to the extent that such investment income is generally available to pay costs with respect to the Wastewater System, including Maintenance and Operation Costs), Net Proceeds of business interruption insurance received during such period, ad valorem taxes received during such period, payments under the Agreement Acquiring Ownership Interests, Assigning Rights and Establishing Obligations, entered into on February 13, 1986, and amendment No. I thereto dated December 10, 1986 (the "IRWD Agreement"), by and between predecessor County Sanitation District No. 14 of Orange County and the Irvine Ranch Water District(the"IRWD")received during such period and all other money received during such period howsoever derived by the District from the operation or ownership of the Wastewater System or arising from the Wastewater System(including any standby or availability charges), but excluding (a)Capital Facilities Capacity Charges, (b)payments received under Financial Contracts, and (c)refundable deposits made to establish credit and advances or contributions in aid of construction (which, for purposes of the Master Agreement, shall not include payments under the IRWD Agreement); provided, however, that (i)Revenues shall be increased by the amounts, if any, transferred during such period from the Rate Stabilization Account to the Revenue Account and shall be decreased by the amounts, if any, transferred during such period from the Revenue Account to the Rate Stabilization Account, and (ii)Revenues shall include Capital Facilities Capacity Charges collected during such period to the extent that such Capital Facilities Capacity Charges could be properly expended on a Capital Facilities Capacity Charge Eligible Project for which the proceeds of 218234".4 8 Senior Obligations were used or are available to be used. Any Federal Subsidy payments received by the District will constitute Revenues as defined in the Master Agreement. See "DISTRICT REVENUES— Additional Revenues"herein. The District's obligation to make the Installment Payment from its Net Revenues is on a parity with the District's obligation to make payments with respect to its other outstanding obligations described as Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations,as provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. Pursuant to the Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations, and the Net Revenues will not be used for any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. The term"Senior Obligations,"generally means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District authorized, issued,executed and delivered under and pursuant to applicable law, the Installment Purchase Agreement, and all other contracts (including financial contracts) or leases of the District authorized and executed by the District under and pursuant to applicable law, including, without limitation, installment, lease or other payments which are, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a parity with the payments under the Master Agreement. The District may at any time incur Subordinate Obligations payable on a subordinate basis to the Installment Payment as provided in the Master Agreement; provided, however, that prior to incurring such Subordinate Obligations, the District shall have determined that the incurrence thereof will not materially adversely affect the District's ability to comply with the requirements of the Master Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate Obligations. For a description of the District's Outstanding Senior Obligations and Subordinate Obligations, see "FINANCIAL OBLIGATIONS Existing Indebtedness" herein. There are currently no Subordinate Obligations or Reimbursement Obligations with respect to Subordinate Obligations outstanding. The District may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be junior and subordinate to the pledge of, and lien on,Net Revenues for the payment of Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. Rate Stabilization Account To avoid fluctuations in its fees and charges of the Wastewater System, from time to time the District may deposit in the Rate Stabilization Account from Net Revenues such amounts as the District deems necessary or appropriate. From time to time, the District may also transfer moneys from the Rate Stabilization Account to the Revenue Account to be used by the District, first to pay all Maintenance and Operations Costs as and when the same shall be due and payable. In addition, any such amount transferred from the Rate Stabilization Account to the Revenue Account by the District is included as Revenues for any period,but such transferred amount is excluded from determining Operating Revenues for any period. Revenues will be decreased by the amounts,if any,transferred from the Revenue Account to the Rate Stabilization Account. There are presently no funds in the Rate Stabilization Account. 218234".4 9 Allocation of Revenues To carry out and effectuate the pledge of Net Revenues under the Master Agreement as described above, the District agrees and covenants that all Operating Revenues received by the District will be deposited when and as received in the Revenue Account. Additionally, amounts may, from time to time as the District deems necessary or appropriate, be transferred from the Rate Stabilization Account and deposited in the Revenue Account,as described above under" Rate Stabilization Account'above. The District will pay from the Revenue Account all Maintenance and Operations Costs (including amounts reasonably required to be set aside in contingency reserves for Maintenance and Operations Costs, the payment of which is not immediately required)as and when the same shall be due and payable. After having paid, or having made provisions for the payment of, Maintenance and Operations Costs, the District shall set aside and deposit or transfer, as the case may be, from the Revenue Account such amounts at such times as provided in the Master Agreement in the following order of priority: (1) Senior Obligation Payment Account; (2) Senior Obligation Reserve Funds(the Notes are not secured by any Reserve Fund); (3) Subordinate Obligation Payment Account; (4) Subordinate Obligation Reserve Funds;and (5) Rate Stabilization Account. Amounts required or permitted to be deposited or transferred as described in items 2, 3, 4 and 5 above, shall not be so deposited or transferred unless the District shall have determined that there will be sufficient Net Revenues available to make the required deposits or transfers on the dates on which such deposits or transfers are required to be made as described above. So long as the District has determined that Net Revenues will be sufficient to make all of the deposits or transfers required to be made pursuant to items 1, 2, 3, 4 and 5 above, on the dates on which such deposits or transfers are required to be made, Net Revenues on deposit in the Revenue Account may from time to time be used for any purpose for which the District funds may be legally applied. For additional information, see APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS Master Agreement" Rate Covenant Pursuant to the Master Agreement, the District will, to the extent permitted by law, fix, prescribe and collect fees and charges for the services of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but will not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. In addition, the District has covenanted in the Master Agreement to prepare and adopt an annual budget for the Wastewater System for each Fiscal Year. Such budget will set forth in reasonable detail the Revenues anticipated to be derived in such Fiscal Year and the expenditures anticipated to be paid or provided for therefrom in such Fiscal Year, including, without limitation, the amounts required to pay or provide for the payment of the Obligations during such Fiscal Year, the amounts required to pay or provide for the payment of Maintenance and Operations Costs during such Fiscal Year and the arnounts required to pay or provide for the payment of all other claims or obligations required to be paid from Revenues in such Fiscal Year,and will show that Revenues and Net Revenues will be at least sufficient to 218234".4 10 satisfy the requirements of the Master Agreement. On or before September 1 of each Fiscal Year, the District will file with the Trustee a copy of the adopted budget for such Fiscal Year. See APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS Master Agreement" for additional information. The District has an established reserve policy with eight separate reserve fund categories. Over the next ten years,the year ending reserve total for each year is projected not to fall below$500 million as indicated in the District's ten-year cash flow forecast for fiscal years 2013-14 through 2022-23. At its election, the District may use unrestricted reserves to help satisfy the rate covenant described above. See "DISTRICT REVENUES Reserves"herein. Limitations on Issuance of Additional Obligations Senior Obligations. The District may at any time incur Senior Obligations in addition to the Existing Senior Obligations payable from Net Revenues as provided in the Master Agreement on a parity with all other Senior Obligations theretofore incurred but only subject to the following conditions under the Master Agreement: (1) Upon the incurrence of such Senior Obligations, no Event of Default will be continuing under the Master Agreement;and (2) Subject to the provisions of the Master Agreement, the District will have received either one of the following: (i) A Written Certificate of the District certifying that,for a 12 consecutive calendar month period during the 24 consecutive calendar month period ending in the calendar month prior to the incurrence of such Senior Obligations (which 12 consecutive calendar month period will be specified in such certificate or certificates): (A) Net Revenues,as shown by the books of the District,will have amounted to at least 125% of Maximum Annual Debt Service on all Senior Obligations to be outstanding immediately after the incurrence of such Senior Obligations,and (B) Net Operating Revenues,as shown by the books of the District,will have amounted to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such Senior Obligations. For purposes of demonstrating compliance with the foregoing,Net Revenues and Net Operating Revenues may be adjusted for(x) any changes in fees and charges for the services of the Wastewater System which have been adopted and are in effect on the date such Senior Obligations are incurred, but which, during all or any part of such 12 consecutive calendar month period, were not in effect, (y)customers added to the Wastewater System subsequent to such 12 consecutive calendar month period but prior to the date such Senior Obligations are incurred, and (z) the estimated change in available Net Revenues and Net Operating Revenues which will result from the connection of existing residences or businesses to the Wastewater System within one year following completion of any project to be funded or any system to be acquired from the proceeds of such Senior Obligations;or 218234".4 11 (ii) A certificate or certificates from one or more Consultants which, when taken together, project that, for each of the two Fiscal Years next succeeding the incurrence of such Senior Obligations: (A) Net Revenues will amount to at least 125% of Maximum Annual Debt Service on all Senior Obligations to be outstanding immediately after the incurrence of such Senior Obligations,and (B) Net Operating Revenues will amount to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such Senior Obligations. For purposes of demonstrating compliance with the foregoing,Net Revenues and Net Operating Revenues may be adjusted for(x) any changes in fees and charges for the services of the Wastewater System which have been adopted and are in effect on the date such Senior Obligations are incurred or will go into effect prior to the end of such two Fiscal Yew period, (y) customers expected to be added to the Wastewater System prior to the end of such two Fiscal Year period, and (z) the estimated change in available Net Revenues and Net Operating Revenues which will result from the connection of existing residences or businesses to the Wastewater System within one year following completion of any project to be funded or any system to be acquired from the proceeds of such Senior Obligations. For purposes of preparing the certificate or certificates described above,the Consultant may rely upon financial statements prepared by the District that have not been subject to audit by an independent certified public accountant if audited financial statements for the period are not available. See, also "FINANCIAL OBLIGATIONS — Existing Indebtedness" herein. The District is not required to comply with the provisions described above in paragraph(2) if the Senior Obligations being incurred are Short-Term Obligations excluded from the calculation of Assumed Debt Service pursuant to clause (H) of the definition thereof. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Definitions"herein. The determination of Net Revenues for use in the calculation described above is more fully described in APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement — Senior Obligations" attached hereto. The District is not required to comply with the provisions described in paragraph (2) above for such portion of Senior Obligations incurred for the purpose of providing funds to refund or refinance Senior Obligations if (i)upon such refunding or refinancing, debt service on such refunded or refinanced Obligations, or debt service on bonds, notes or other obligations of an entity other than the District,the debt service on which is payable from Obligation Payments for such Obligations (the "Related Bonds"), will no longer be included in the calculation of Assumed Debt Service either because such Obligations, or the Related Bonds of such Obligations, will have been paid in full or because such debt service is disregarded pursuant to clause (L) of the definition of Assumed Debt Service, and (ii)Assumed Debt Service in each Fiscal Year for the portion of such Senior Obligations incurred for the purpose of providing funds to refund or refinance such Obligations is less than or equal to 105% of Assumed Debt Service in such Fiscal Year for such Obligations being refunded or refinanced (assuming for such purposes that debt service on such refunded or refinanced Obligations, or debt service on the Related Bonds of such Obligations, is not disregarded pursuant to clause (L) of the definition of Assumed Debt Service). See APPENDIX C — `SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement'attached hereto for additional information. The District may at any time incur Reimbursement Obligations with respect to Senior Obligations. 218234vo.4 12 Subordinate Obligations. The District may at any time incur Subordinate Obligations upon satisfaction of the conditions provided in the Master Agreement. See APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement'herein for a description of such conditions. Insurance The District will procure and maintain or cause to be procured and maintained casualty insurance on the Wastewater System with responsible insurers,or provide self-insurance(which may be provided in the form of risk-sharing pools), in such amounts and against such risks (including accident to or destruction of the Wastewater System) as are usually covered in connection with facilities similar to the Wastewater System. The District will procure and maintain such other insurance which it will deem advisable or necessary to protect its interests and the interests of the Corporation. See `THE DISTRICT Risk Management" and APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS Master Agreement'herein. [Remainder of page intentionally left blank.] 218234".4 13 Allocation of Installment Payment Set forth in Table I below is the estimated hutallment Payment with respect to the Notes. Also set forth we the payments due on Other Senior Obligations, excluding the Prior Notes. The District ultimately expects the Notes to be paid with obligations that will amortize over a term of approximately 19 years,but there is no guarantee that such refinancing will occur. Table 1 Estimated Installment Payment and Outstanding Existing Senior Obligations of the District (As of October 1,2016) Fiscal Year Installment Payment Other Senior Ending Relating to Notes Obligation Payments0) June 30 Principal Interest Principal Interest Total 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 Total of Includes the Prior Notes. 21823490.4 14 THE DISTRICT Background The District is managed by the Board of Directors, whose members are appointed by 25 member cities and agencies which are serviced by the District. The District is a public agency responsible for construction and maintenance of a major portion of the wastewater collection, treatment and disposal facilities within its boundaries and is the sixth largest wastewater discharger in the United States. The District provides service to an area with a population of approximately 2.6 million people in the northern and central portion of the County by treating an average of 184 mg/d of wastewater in Fiscal Year 2015- 16. The District serves approximately 81% of the County population in approximately 479 square miles, or approximately 60% of the County's area. Local sanitary districts, water districts and cities me responsible for local sewers in the District's service area. The District reuses more than 50 percent of the total wastewater flow that it receives. The service area which comprises the District was originally formed in 1954 pursuant to the County Sanitation District Act, as amended, Section 4700 et seq. of the Health and Safety Code of the State. The District's service area originally consisted of seven independent special districts in the County which were each responsible for matters relating to their individual districts. These special districts were jointly responsible for the treatment and disposal facilities which they each used. The seven independent districts were successors to the Joint Outfall Sewer Organization, which was formed in 1923 among the Cities of Anaheim, Santa Ana,Fullerton, and Orange, and the sanitary districts of Placentia, Buena Park, La Habra, and Garden Grove. The Joint Outfall Sewer Organization constructed a treatment plant and outfall in the early 1920s to serve its members. It was reorganized in 1947 and 1948 into seven county sanitation districts — District Nos. 1, 2, 3, 5, 6, 7 and 11. These prior districts were formed based on engineers' analyses of the gravity flows in the service area. District No. 13 was formed in 1985 and District No. 14 was added in 1986. These districts were co-participants in a Joint Agreement which provided for the joint construction,ownership,and operation of the prior districts'joint facilities. In April 1998, at the request of the Board of Directors of the District (the "Board of Directors"), the Board of Supervisors of the County of Orange (the "County Board") passed Resolution No. 98-140 approving the consolidation of the then existing nine special districts into a new, single sanitation district, to be known as the Orange County Sanitation District. This action was designed to simplify governance structures, reduce the size of the Board of Directors, ease administrative processes, streamline decision- making and consolidate accounting and auditing processes. The consolidation was effective on July 1, 1998. Pursuant to Resolution No. 98 140 and Government Code Section 57500, the prior districts transferred and assigned all of their powers, rights, duties, obligations, functions and properties to the District, and the District assumed all obligations of the prior districts which were several and not joint including, without limitation, their obligations to repay the then outstanding certificates of participation. The boundaries of the nine predecessor special districts were initially used by the District to delineate separate revenue areas (the "Revenue Areas") for budgeting and accounting purposes and in order to facilitate the imposition of fees and charges imposed by the District. See "DISTRICT REVENUES — Sewer Service Charges"herein. 218234".4 15 Organization and Administration The District is independent of and overlaps other political jurisdictions. There are many governmental entities,including the County,that operate within the District's jurisdiction. These entities are exclusively responsible for the administration of their own fiscal affairs,and the District is not entitled to operating surpluses of,or responsible for operating deficits of,any of the other entities. The 25-member Board of Directors is composed of representatives from 20 cities, four special districts and a member representing the County. Several board committees, made up of members of the Board of Directors, consider topics for action by the Board of Directors and make recommendations to the Board of Directors. The Chair and the Vice Chair of the Board of Directors are elected every year by a majority of the Board of Directors, and serve at the pleasure of a majority of the Board of Directors. The District has a general manager, outside general counsel, and administrative and operating staff, with offices located at Reclamation Plant No. 1 in Fountain Valley, California. The District currently employs an administrative and operating staff of approximately 600 under the direction of its General Manager,James Heiberg. James Herberg, P.E. is the General Manager of the District and has served in this capacity since April 2013. During his 20 years with the District,he has held the positions of Assistant General Manager, Director of Engineering, and Director of Operations and Maintenance. Mr. Herberg has more than 27 years of experience in the water and wastewater industries, including six years at the Orange County Water District with whom the District has partnered on the Groundwater Replenishment System project. Robert P. Ghirelli,D.Env. is the Assistant General Manager of the District,and has served in that capacity since July 2006. Dr. Ghirelli previously served as Director of Technical Services for the District since his joining the District in 1998. Prior to joining the District, Dr. Ghirelli served for just over a year as managing principal of the Los Angeles office of a national environmental consulting firm, and served 20 years in supervisory positions with the State Water Resources Control Board and Regional Water Quality Control Boards, including 13 years serving as Executive Officer of the California Regional Water Quality Control Board,Los AngelesfVentura Region. Lorenzo Tyner is the District's Director of Finance and Administrative Services. In September 2005, Mr. Tyner joined the District with more than 20 years of public finance and budgeting experience, most recently serving as the Los Angeles Unified School District Budget Director and Deputy Chief Financial Officer. Mr. Tyner previously worked in large government organizations including the City of Los Angeles and the Los Angeles County Metropolitan Transportation Authority and with private sector companies IBM Global Services and TRW Space and Defense. Ed Torres is the District's Director of Operations and Maintenance for the District. He has served the District since 1991. Prior to joining the District, Mr. Torres served in a professional capacity for the California State University System and TRW Electronics and Defense Sector. Mr. Torres has more than 25 years of public and private sector experience in protecting public health and the environment. 218234".4 16 Robert Thompson,P.E. is the District's Director of Engineering. He has worked for the District since 1995. Mr. Thompson has served as manager in several departments with OCSD, including Information Technology, Operations and Maintenance, and Engineering. He has had a lead role in creating and maintaining engineering,programming,tagging and asset standards for the District. Celia Chandler is the District's Director of Human Resources. In October 2015, Ms. Chandler joined the District with more than 20 years of experience in all aspects of Human Resources in both public and private sector organizations, most recently serving as the Director of Academic Labor Relations for the California State University system. Ms. Chandler previously worked in large government organizations including the City of Corona,the City of Murrieta and the County of Riverside, and with private sector company Stone&Webster Engineering Services Company. James Colston, JD. is the District's Director of Environmental Services. He has served in this position since May 2016 and he has worked for the District since 1989, serving as the Environmental Compliance & Regulatory Affairs Manager, Environmental Supervisor, Legal & Regulatory Affairs Liaison and in other prior positions.Mr. Colston has the lead role overseeing the District's Environmental Laboratory, Ocean Monitoring Program and Vessel, Pretreatment Program, and Environmental Compliance Program including Clean Water Act and Clean Air Act permits. Services The District owns and operates regional wastewater collection, treatment, and disposal facilities for the metropolitan area in the northern and central portion of the County. The District receives wastewater from the collection systems of the cities, sanitary districts and unincorporated areas of the County located within the District. See`THE DISTRICT—Service Areas"herein. Generally, local agency systems collect wastewater from residential and industrial customers and convey the wastewater to District trunk sewer pipelines for conveyance to the District's wastewater treatment plants. The District's staff is responsible for operating and maintaining the District's infrastructure, although some work is performed by external contractors. Currently, the District has established supply contracts for all chemicals necessary to the operation and maintenance of the facilities of the District. The District has sufficient standby systems in the event of equipment failures or system outages. Service Area The map on the inside cover of this Official Statement shows the District's boundaries and selected cities located within the District. District boundaries were originally established in 1947 and 1948 based on drainage basins. As the existing cities have grown and new areas have incorporated, city limits have come to overlap District boundaries. The District currently serves an approximately 479 square-mile area including 23 of the County's 34 cities and various unincorporated areas of the County. The District serves a population of approximately 2.6 million residents. 218234".4 17 Set forth in Table 2 below is the estimated populations of cities and unincorporated areas served by the District as of January 1,2016. Table 2 Estimated Populations of Cities and Unincorporated Areas Served by the Orange County Sanitation District As of January 1,2016 CRY Population Anaheim 358,136 Brea 43,710 Buena Park 83,347 Costa Mesa 114,603 Cypress 49,743 Fountain Valley 56,714 Fullerton 142,457 Garden Grove 177,303 Huntington Beach 195,212 Irvine 258,386 La Habra 62,064 La Palma 16,057 Los Alamitos 11,738 Newport Beach 84,270 Orange 141,420 Placentia 52,263 Santa Ana 342,930 Seal Beach 25,078 Stanton 39,751 Tustin 82,717 Villa Park 5,948 Westminster 94,073 Yorba Linda 67,637 Cities Subtotal(') 2,505,557 Unincorporated Areas(estimated)() 72,822 Total 2.578.379 1'3 Demographic Research Unit,State of California Department of Finance. 1�3 Center for Demographic Research,California State University,Fullerton. Employees As of July 19, 2016, the District had a total of 567 employees. The majority of District employees are represented by recognized employee organizations, which include the following: the Orange County Employees Association("OCEA"),representing administrative/clerical,technical services and engineering employees since 1979, the International Union of Operating Engineers — Local 501 ("Local 501"), representing operations and maintenance employees since October 1985, and the Supervisory and Professional Management Group ("SPMT"), representing employees within the Supervisor Group and Professional Group since 1991. The total number of represented employees as of July 19, 2016 was 533, and is broken down as follows: 103 employees represented by DULA, 186 employees represented by Local 501, and 244 employees represented by the SPMT. In 2015, the District reached final agreement with all bargaining units on the most recent set of labor contracts. All labor contracts recently expired on June 30, 2016. The District is currently engaged in negotiations with all of 218234".4 18 its employee organizations. Historically,the District has experienced positive and collaborative working relationships with each organization and has not endured any work stoppages since the early 1980s. Retirement Plan The District participates in the Orange County Employees Retirement System ("OCERS"), a cost-sharing multiple-employer defined benefit pension plan, which is governed and administered by a nine-member Board of Retirement. OCERS was established in 1945 under the provisions of the County Employees Retirement Law of 1937,and provides members with retirement,death,disability, and cost of- living benefits. All full-time and part-time District employees participate in OCERS. Contributions are based on an OCERS actuarial-determined rate structure and age at time of employment; contributions are deducted on a pre-tax basis. Most employees do not pay into Social Security with the exception of 1.45% of gross income, which is paid into the Medicare portion of Social Security. The amount of the retirement allowance is based upon the member's age at retirement,the member's"final compensation"as defined in Section 31462 of the Retirement Law of 1937, the total years of service under OCERS, and the employee's classification as a Plan B, G, H or U member. Plan U applies to all full-time and pan-time employees hired on or after January 1, 2013. Plan B applies to supervisor and professional employees hired on or after October 1, 2010, Local 501 employees hired on or after July 1, 2011 and OCEA employees hired on or after August 1, 2011. Plan G applies to employees hired before September 21, 1979. Plan H applies to employees hired on or after September 21, 1979 and prior to the eligibility dates for Plan B or Plan U. Plan G and H provide 2.5% of final compensation per year of service at age 55. Plan B provides 1.667% of final compensation per year of service at age 57.5, and Plan U provides 2%at 62. "Final compensation"is the highest consecutive 12 months of compensation for Plan G members and the highest consecutive 36 months of compensation divided by three for Plan B, H, and U members. Benefits fully vest under the OCERS retirement plan upon reaching five years of service. Employees who retire at or after age 50 with ten or more years of service are eligible to receive an annual retirement allowance,but at a reduced benefit for those employees retiring prior to age 62 for Plan U members, 57.5 for Plan B members, or prior to age 55 for Plan G and H members. OCERS also provides death and disability benefits. As a condition of participation under the provisions of the County Employees Retirement Law of 1937, members are required to contribute a percentage of their annual compensation to OCERS. The District contributes a portion of the employee's contribution to OCERS for members of Plans G and H based on a percentage of the covered employee's base salary. Members of Plans U and B do not receive any contributions toward employee contribution to OCERS. As of the December 31, 2015 valuation, OCERS had an aggregate Unfunded Actuarial Accrued Liability ("UAAL") of$4.8 billion, and a funded ratio of 71.72%. 21823490.4 19 Set forth in Table 3 below is a current comparison of the District's required contributions to OCERS for Fiscal Years 2011-12 through 2015-16 and projected required contributions for Fiscal Year 2016-17. Table 3 Orange County Sanitation District District Required Contributions to OCERS for Fiscal Years 2011-12 through 2015-16 and Projected Required Contributions for Fiscal Year 2016-17 District Required Fiscal Year R tell Contributions 2011-12 26.10% $15,767,050 2012-13 27.35 16,363,917 2013-14 31.09 18,920,212 2014-15 28.06 17,201,569 2015-16 20.44 12,222,849 2016-17(2) 12.50 7,290,080 01 Required contribution as a percent of covered payroll. Includes amortization of Unfunded Actuarial Accrued Liability. Combined rate for all Plans. (2) Projected. Source: Orange County Sanitation District. For Fiscal Years 2011-12 through 2015-16, the District's required contribution was equal to the contribution that the District actually made, except for Fiscal Year 2014-15,when the District contributed an additional $125 million to OCERS to pay down the District's net pension liability. On September 3, 2015, the District again made an additional contribution to OCERS, in the amount of$50 million. The District's net pension liability was approximately $57 million as of July 1, 2015 and approximately $42 million as of July 1, 2016. For the Fiscal Year ended June 30, 2016, total payroll costs of District employees covered by OCERS was$59,789,927. The District's retirement program includes Additional Retiree Benefit Account ("ARBA") benefits. ARBA benefits provide a monthly payment to retirees towards the premium costs of health insurance for the retiree and eligible dependents. The retiree is not required to use this amount for health insurance premium or to remain on the OCERS medical plan. Benefits vest upon retirement. The District pays 100%of the cost for the ARBA plan and utilizes a pay-as-you-go method for funding the plan. The District paid $565,380 in AR13A benefits during Fiscal Year 2015-16. As of August 1, 2011, AR13A benefits are no longer available to new OCEA Group employees of the District. For more information regarding OCERS and the District's retirement plan as of June 30, 2016, see Note 5 and 6 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for the Year Ended June 30, 2016 set forth in Appendix A. The Comprehensive Annual Financial Reports of the Orange County Employees Retirement System we available on the OCERS website at http://wnnv.ocers.org. The information on such website is not incorporated herein by such reference or otherwise. The District cannot predict whether the OCERS investment portfolio will experience additional losses in the future; however, any future losses could result in material increases in the District's required contributions. 218234".4 20 Other Post-Employment Benefits In June 2004, Governmental Accounting Standards Board ("GASB") issued Statement No. 45, which requires state and local governmental employers to fund the actuarially determined annual required contribution ("ARC")for its post-employment benefits other than pension benefits (known as other post- employment benefits or"OPEB") or record the entire amount of the unfunded liability of its OPEB in its financial statements. OPEB includes healthcare and life insurance expenses and related liabilities, and an annual required contribution to fund such liabilities. The District adopted Statement No. 45 for the fiscal year beginning July 1, 2007, as required of a GASB "Phase 1 Agency." According to the District's actuary, Demsey Filliger Associates (the "Actuary"),the unfunded OPEB liability as of July 1, 2015 was approximately $9.4 million. The ARC was determined to be $755,078 for Fiscal Year 2014-15 and $559,620 for each of Fiscal Years 2015-16 and 2016-17, the period covered by the last actuarial valuation. Calculation of the ARC is based on the present value of benefits seeming in the current year,a 30-year amortization of the unfunded OPEB liability and an assumed rate of return on investments in the retiree fund of 3.75%per annum. The District does not believe that its OPEB liability will have a material impact on its operational results. Risk Management As of the date hereof, the District has in force basic all risk property and casualty insurance, including theft, fire, flood terrorism and boiler and machinery losses at its plants and pump stations. The District is self-insured for portions of workers' compensation,property damage and general liability. The self-insurance portion of workers' compensation is $1,000,000 per person per occurrence with outside excess insurance coverage to the statutory limit. The self-insured portion for property damage covering fire and other disasters is $250,000 per occurrence with outside excess insurance coverage to $1 billion. The self-insured portion for property damage covering flood is $100,000 per occurrence with outside excess insurance coverage to $300 million. The District also maintains outside comprehensive boiler and machinery insurance, including business interruption insurance, with a $100 million limit with deductibles ranging from$25,000 to$350,000. The District is self-insured for general liability coverage up to $500,000 per occurrence, with excess general liability coverage up to $40 million. In addition, the District has limited earthquake insurance partially covering several key structures; beyond that, the District relies on a combination of self-insurance and District reserves for all property damage from the perils of seismic activity as well as the expectation that some disaster relief funds may be available from the Federal Emergency Management Agency("FEMA") to address any resulting damage. See "DISTRICT REVENUES—Reserves" and '— Integrated Emergency Response Program." There is no assurance that, in the event of a significant seismic event, a combination of self-insurance, District reserves or FEMA assistance would be available or sufficient for the repair or replacement of the affected property. During the past five fiscal years there have been no settlements in excess of covered amounts. Claims against the District are primarily processed by outside claim administrators or the District's General Counsel. The District believes that there we no unrecorded claims as of June 30, 2016 that would materially affect the financial position of the District. For more information regarding the District's insurance coverage as of June 30, 2015, see Note 1 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for the Year Ended June 30,2015 set forth in Appendix A. Existing Facilities The Wastewater System presently consists of two wastewater treatment plants, an influent metering and diversion structure, 15 off-plant pump stations,various interplant pipelines and connections, 218234".4 21 and the ocean outfall facilities. The District's Wastewater System includes approximately 396 miles of sewers within 11 tank sewer systems, two treatment plants, two discharge omfalls and two emergency weir outlets. The existing treatment plants have a rated primary treatment capacity of 376 mg/d, including standby capacity. Treatment Plant No. 1 ("Plant No. 1") is located in the City of Fountain Valley, about four miles from the coast, adjacent to the Santa Ana River. Secondary treatment capabilities are provided by a trickling filter plant and two conventional air activated sludge plants. Up to 130 mg/d of secondary treated effluent is conveyed to a plant owned by the Orange County Water District (the "OCWD") for tertiary treatment prior to reclamation and groundwater recharge. See "Groundwater Replenishment System"below. Treatment Plant No.2("Plant No.2")is located in the City of Huntington Beach, 1,500 feet from the ocean, at the mouth of the Santa Ana River. Secondary treatment capabilities are provided by a Pure Oxygen Activated Sludge plant and a Solids Contact Trickling Filter plant. The District employs several phases in the treatment of wastewater. The first phase,preliminary treatment,removes debris such as eggshells, sand and other non-biodegradable items. See also`Preferred Level of Treatment" and `Biosolids Management" below. In the next phase, primary treatment, wastewater is pumped to large settling basins. The liquids are separated from the remaining solids which settle or float as the wastewater passes through large settling basins called clarifiers. The settled solids are sent to solids treatment facilities. All of the wastewater received by the District is sent to secondary treatment for further processing. During secondary treatment, the wastewater is treated with naturally occurring bacteria to remove most of the remaining dissolved and suspended microscopic organic solids. The treated wastewater from both plants is mixed together at Plant No. 2,where it is then pumped through the ocean outfall pipe that extends five miles offshore. Set forth in Table 4 below are the treatment plants' approximate treatment capacities. Table 4 Wastewater System Treatment Capacities (mg/d) As of June 30,2016 Primary Secondary 2015-16 Treatment Treatment Actual Flows Capacity Capacity Plant No. 1 208 182 Plant No. 2 168 150 Aggregate Treatment 376 332 Source: Orange County Sanitation District. The District also has the capability to divert a portion of the influent flow from Plant No. 1 to Plant No. 2 through interplant connections. A portion of the flow destined for Plant No. 2 can also be diverted to Plant No. 1. Another interplant facility allows gas generated during solids treatment to be transported between Plant No. 1 and Plant No. 2 and allows digester gas (which is used as fuel for many of the facilities' engines)from one plant to be used at the other to balance the supply and demand, which results in efficient gas utilization. 218234".4 22 Permits,Licenses and Other Regulations The District is subject to laws, roles and permits issued by federal, state, regional and local regulatory bodies. The Wastewater System is subject to regulations imposed by the 1972 Clean Water Act,as amended(the"Clean Water Act'),the California Environmental Quality Act of 1970, as amended ("CEQA")and the Federal Clean Air Act. The regulatory requirements are primarily administered by the United States Environmental Protection Agency (the "EPA"), the California Air Resources Board, the Santa Ana Regional Water Quality Control Board ("RWQCB"), and the South Coast Air Quality Management District ("AQMD"). Regulations of these agencies deal primarily with the quality of effluent which may be discharged from the treatment plants and air quality emissions. The Clean Water Act directs the EPA to monitor and to regulate the discharge of pollution into navigable waterways and to enforce the requirements that all wastewater treatment plants in the nation provide full secondary treatment for sewage. In 1977, Congress amended the Clean Water Act to allow waivers of secondary treatment standards for certain ocean dischargers, if they can demonstrate to the satisfaction of the EPA that significant adverse environmental impacts would not occur. The District currently has all applicable permits and licenses necessary to operate its facilities. The District has discharged treated wastewater into the Pacific Ocean under a permit issued by the EPA and the RWQCB. The discharge permit included a waiver under the Section 301(h) provisions of the Clean Water Act, allowing for less than full secondary treatment based on an ocean discharge of sufficient depth, distance and dilution. The permit was initially issued in 1985 and was the first modified Section 301(h)permit issued to a major wastewater treatment facility. The permit was re-issued on May 6, 1998 and expired on June 8,2003. On July 17, 2002, the Board of Directors adopted Resolution No. OCSD 02-14, "Establishing the Policy for Level of Treatment of Wastewater Discharged into the Ocean." This resolution established the District's policy to treat all wastewater discharges into the ocean to secondary treatment standards, thereby providing for continued public safety, marine ecosystem protection, and water reclamation opportunities. To implement this policy, District staff was directed to immediately proceed with the planning, design, and implementation of treatment methods that will allow the District to meet Clean Water Act secondary treatment standards with the expressed purposes of eliminating the need for the permit waiver received under Section 301(h). The District completed these improvements on time by December 2012 at a total capital improvement cost of$537.8 million. Following the determination by the Board of Directors in July 2002 to implement full secondary standards, staff prepared the Secondary Treatment National Pollutant Discharge Elimination System ("NPDES") Permit Application that was required to be submitted to the regional office of the EPA and the RWQCB in December 2002. The NPDES permit was approved by the EPA and became effective on October 31, 2004, and is subject to renewal every five years. The District's current NPDES permit became effective on July 20, 2012 and will expire on July 19, 2017. Federal regulations require permittees to apply for a new application at least 180 days prior to the current permit expiration date. District staff has begun the process of preparing a permit application in advance of the 2017 permit expiration date. The District is also subject to the requirements of the Federal Clean Air Act which mandates attainment with national ambient air quality standards for criteria pollutants (ozone, particulate matter, carbon monoxide,lead,nitrogen dioxide,and sulfur dioxide). Criteria air pollutants cause adverse effects on human health and environment. AQMD is the local air pollution control agency charged with implementing the Federal Clean Air Act. In addition to criteria pollutants, AQMD also implements numerous federal and State requirements related to the toxic air pollutants which can cause cancer or other severe localized health effects. For example,the State's Air Toxic Hot Spots Act requires facilities to conduct health risk assessments and notify the neighboring communities if the health risk exceeds the regulatory thresholds. 218234o.4 23 Pursuant to AQMD's requirements, the District must obtain permits before sewage treatment improvement projects can be constructed and operated. Such permits are project-specific and may contain conditions that govern design criteria,operating parameters,and emissions standards. Most of the District's treatment facilities are enclosed in order to capture and treat emissions to meet regulatory emissions standards and to minimize odor impact to the neighboring communities. The District's treatment plants are also subject to the requirements of Title V of the Federal Clean Air Act amendments. The Title V permit is a single air quality permit for a facility that consolidates and replaces all of the air permits for individual pieces of equipment previously issued by the local air quality district. The permit contains all of the applicable local, state, and federal requirements, including periodic self-certification of compliance and mandatory self-reporting of permit deviation. All Title V permit-related reporting and documents submitted to the AQMD must be signed by the highest District official — in this case, the General Manager. The Title V program also demands facilities to organize and conduct extensive training of the staff involved,including the field operation and maintenance staff. Another Title V important feature is a possibility of the public active participation and intervention in the cases of potential emission limits and monitoring violations. The District Title V permits did not receive any negative public responses or comments during the required public review period. The District received initial Title V permits for the treatment plants in January 2009. Title V permits are issued for a five-year period. Title V permits for both plants were issued on April 16, 2014. They will expire on April 16,2019. District Planning and Capital Improvement Program In November 2007, the Board of Directors adopted a new comprehensive strategic plan to consider the District's service levels and operational needs for the next five years. The Strategic Plan has subsequently been updated annually to continue looking at a five-year horizon (each, a "Five-Year Strategic Plan"). See"THE DISTRICT—Five-Year Strategic Planning." In December 2009, the Board of Directors adopted a Facilities Master Plan (the "Master Plan"). The Master Plan updated the planning processes set forth in the 1989 Master Plan,the 1999 Strategic Plan and the 2002 Interim Strategic Plan Update. The Master Plan also incorporates and implements the levels of services defined by the Board of Directors that are included in the 2007 Five-Year Strategic Plan. The result is a plan that integrates research, facilities planning, water conservation and reclamation, sludge reuse, other wastewater programs and financial planning into a single unified approach. Key components of the Master Plan include updated flow projections and collection system hydraulic modeling. The District expects to satisfy required sewer capacity and rehabilitation improvements for the Wastewater System through its Capital Improvement Program ("CIP"). The District annually reviews and validates its CIP. The CIP was developed to satisfy anticipated regulatory requirements, increased population, anticipated rehabilitations and replacements, additional treatment requirements, conservation, energy and other resource savings considerations, odor control improvements, and air quality protection needs. Through Fiscal Year 2025-26,the current CIP is scheduled to accomplish: • Major rehabilitation of existing headworks, primary treatment, outfall pumping, solids handling facilities, and central generation at both treatment plants; • Relocation of District headquarters complex, including the relocation of the front entrance at Plant No. l; • Upgrade of the Supervisory Control and Data Acquisition ("SCADA") system and network at Plant No.2,replacement of the process control systems,uninterruptible power supply("UPS")system,and electrical power distribution system at both treatment plants; 218234".4 24 • Replacement or rehabilitation of seven of the District's outlying pumping stations, abandonment of one pump station, and nine trunk sewer improvement projects; • Reduction of fence line odor to levels that minimize odor complaints; and • Safety improvements at both treatment plants. The 2016 CIP validation effort resulted in revisions to the CIP. The CIP currently consists of 81 individual capital projects through Fiscal Year 2025-26, [with remaining outlays of approximately$2.4 billion]. [but reference page 321 Over the next five years, the District contemplates average annual capital outlays of$197 million based on the 2016 CIP validation effort, without taking into account CIP savings and deferrals. Set forth in Table 5 below is a summary of total estimated capital costs for the CIP for Fiscal Years 2016-17 through 2025-26. Table 5 Capital Improvement Program—Estimated Capital Costs Fiscal Years 2016-17 through 2025-26 Project Cost Collection System Capacity $ 162,400,000 Collection System Repair,Rehabilitation,Replacement 408,600,000 Treatment Plant Capacity 46,300,000 Additional Secondary Treatment 40,200,000 Improved Treatment 135,500,000 Treatment Plant Repair, Rehabilitation, Replacement 1,083,900,000 Support Facilities 240,000,000 Total Validated Capital Improvement Program 2.116.900.000 Source: 2016-17 CIP Validation,Orange County Sanitation District. The CIP originally included budgeted outlays of$190.3 million in Fiscal Year 2016-17. After factoring in CIP savings and deferrals, such budgeted outlays were reduced to $171.3 million. There are currently 30 projects in the construction phase with proposed capital outlay spending in Fiscal Year 2016- 17. The two most significant projects in the construction phase are the Sludge Dewatering and Odor Control Project at Plant No. 2 and the Newhope-Placentia Trunk Replacement Project with projected Fiscal Yew 2016-17 outlays of$23.5 million and$20.9 million,respectively. Groundwater Replenishment System The District has taken a multi jurisdictional approach to planning for capital facilities because many of the methods for reducing or managing flows involve other jurisdictions. One such project is the Groundwater Replenishment System (the "GWRS"). In March 2001, the District entered into an agreement with the OCWD to design and construct Phase I of the GWRS. The capital cost of this Phase was shared equally (50% shares) by each agency. The GWRS is a joint effort by the two agencies to provide reclaimed water for replenishment of the Orange County Groundwater Basin and to augment the seawater intrusion barrier. Phase I of the GWRS became operational in January of 2008. In 2015, the GWRS produced approximately 92,300 acre-feet. The Phase II expansion broke ground in January 2012 to add approximately 31,000 acre-feet per year and was completed in Jane 2015, resulting in purifying 100 percent of the treated wastewater from the District's Fountain Valley-based Plant No. 1. Phase II expansion was funded solely by the OCWD. In April 2015, the District and the OCWD approved a $2 million joint study to explore the Phase III expansion which would increase flows to GWRS by an additional 30 MOD. The Phase III expansion would require additional infrastructure and treatment that 218234".4 25 would likely be funded by the OCWD, and no capital funding is anticipated from the District for such expansion. Preferred Level of Treatment In July 2002, the Board of Directors approved a change from the existing level of treatment, a blend of 50% advanced primary and 50% secondary treated wastewater, to full secondary treatment standards. The District completed all of the necessary expansion projects to support full secondary treatment by December 2012. On July 20, 2012, the District received a new NPDES permit, which reflects the full secondary treatment requirements. The new NPDES permit will expire on July 19, 2017. See"THE DISTRICT—Permits,Licenses and Other Regulations." Biosolids Management Through the treatment of wastewater,the District recovers and treats nutrient-rich, organic matter (solids) to produce biosolids. Consistent with EPA's regulations and the regulations in place at the end- use sites, the District's biosolids are recycled through composting, fertilizing non-food farm fields (land application), and disposed in a landfill for methane gas recovery. The District's goal is to ensure our biosolids management strategies align with existing market conditions and continue a sustainable,reliable and economical biosolids management program that provides environmentally-sound practices and meets federal, State and local regulatory requirements. The District's biosolids averaged about 775 tons per day("tpd") in Fiscal Year 2015-16,with an annual average cost per ton of$62.13 for management at offsite locations, as described in the following table. Costs have remained stable with in part due to diesel prices remaining low. The biosolids management costs totaled about $17.6 million last fiscal year, which was 101% of the $17.4 million budgeted. Costs and biosolids production in Fiscal Year 2016-17 are anticipated to remain stable with a budget of$17.4 million. The District's biosolids tonnage will begin trending down in Fiscal Year 2017-18 as new solids facilities complete construction. This will also reduce biosolids management costs. Plant No. 1 thickening and dewatering centrifuge facility is currently under construction, and by early 2018 it is anticipated to create drier solids which will reduce hauling costs. Irvine Ranch Water District is constructing solids processing facilities, and the agency will stop sending solids to the District during 2018. Plant No.2 centrifuges will begin operating during 2019. Biosolids Management Contracts Current tons Contract per day Average (Minimum tons managed cost per ton Contractor Location Product Per day and term) (approximate) (June 2016) Synagro Ken County,CA Compost 250 tpd—Expires 12/27/16 250 tpd $75.25 Synagro La Paz County,AZ Compost 0 tpd—Expires 12/27/16 70 tpd $60.98 Tale Ranch Yuma County,AZ Land 0 tpd—10 years plus one 350 tpd $54.50 application five-year renewal;first renewal 1/1/18 Orange County Waste Orange County,CA Local 0 tpd-8 years plus one 70 tpd Facility: $41.19 10-year renewal;first 21823490.4 26 &Recycling Landfill renewal 6/30/18 Hauling:$8.96 Total: $50.15 Inland Empire Rancho Cucamonga, Compost 0 tpd-1 year plus up to 35 tpd Facility: $56.00 Regional Composting CA three renewals;first Hauling:$14.99 Facility renewal 7/31/17 Total: $70.99 The District's contractors provide back-up biosolids management capacity in California and Arizona that include compost, land application, lime stabilization before land application and landfill. Together, these options have the additional available capacity to manage more than ten times the District's daily biosolids production to ensure sustainable,consistent and reliable operations. On June 16, 2016, OCSD posted a request for qualification (RFQ) for composting (including hauling) services. OCSD expects to award two separate contracts before Synagro's current composting contract expires on December 27, 2016. The new contractors will begin hauling December 27, 2016. [update] The District has started work on a Biosolids Master Plan, which includes evaluating onsite and offsite management options in order to make recommendations for the Capital Improvement Plan and potentially longer-term management options for the future. The final Plan is anticipated to be complete in spring of 2017. In 2003,the District was certified by the National Biosolids Partnership for its biosolids program. The District's biosolids program has continued to develop under this certification over the last decade. In late 2015, the District started transitioning its biosolids management system to an internal standard, as outside certification is not required for the District's biosolids program. The District's intemal standard is intended to maintain sound practices while allowing the District to streamline areas to increase efficiency and redirect staff resources. Urban Runoff Recognizing that County beaches were being affected by pollution carried by urban runoff, the Board of Directors adopted a number of resolutions agreeing to accept dry weather urban runoff into the sewer system. In June 2002, Assembly Bill 1892 amended the District's charter to formally allow the diversion and management of dry weather urban runoff flows. Resolution No. 01-07, adopted March 28, 2001, declared that the District will initially waive fees and charges associated with authorized discharges of dry weather urban runoff to the sewer system until the total volume of all runoff discharges exceeds four million gallons per day ("mg/d") calculated on a monthly average. For the fast 12 years of the Urban Runoff Program, the average monthly flow averages remained less than the four mg/d threshold, thus avoiding user fee costs being assessed to the diversion pennittees. In 2012, the District received a number of diversion proposals to deal with bacteria and selenium loading to the upper Newport Bay. The discharge from the additional proposed diversions combined with the existing diversion flows would eventually exceed the four mg/d fee threshold. On June 12, 2013, the Board of Directors adopted Resolution No. 13-09 expanding the waiver of fees or charges on the treatment of dry weather urban runoff from four mg/d to ten mg/d. According to the Board of Directors, the change was necessary not only to protect the Comfy's coastal resources, but also to provide an economic benefit to the local economy by helping to keep the County's beaches open. The Dry Weather Urban Runoff Program is administered by the District's Resource Protection Division (formerly known as the Environmental Compliance Division), which issues a discharge permit for each of the diversion structures. The permit functions as a control mechanism that specifically prohibits storm runoff and authorizes discharge only during periods of dry weather. The permit also establishes specific discharge limits, constituent monitoring, and flow metering requirements. The 21823490.4 27 District conducts quarterly sampling and analysis of the urban runoff discharges to ensure discharge limit compliance with the various regulated constituents. There are currently 20 active urban mnoff diversion structures; three owned and operated by the County of Orange, 11 owned and operated by the City of Huntington Beach,two owned and operated by the City of Newport Beach,three owned and operated by the IRWD, and one owned and operated by PH Finance (present owner of the Pelican Point Resort). In 2015, the Big Canyon Diversion was added to OCSD's urban runoff program. To further remediate elevated selenium concentrations entering into the waters of the Upper Newport Bay, the City of Newport Beach is evaluating a second diversion in the lower Big Canyon wetlands area. Also in the proposal stage are three City of Santa Ana diversions: the Delhi, Santa Fe, and Lane flood control channels. The Peters Canyon Diversion went on-line in August 2016. This diversion is projected to add an additional 1.8 mg/d of flow, possibly doubling the average monthly flow tally. The District continues to work with the Orange County Public Works Department (OC Watersheds)to prioritize existing and proposed diversion projects to ensure that the District's limited capacity is effectively utilized to improve coastal water quality. Integrated Emergency Response Program In recognition of the potential damage which could occur in the event of a major earthquake, flood, or other disaster, the District implemented an Integrated Emergency Response Program (the "IERP") in 1979.The IERP is a two-volume plan which contains policies,plans and procedures preparing for, and responding to, emergencies. The District also analyzed disaster preparedness issues and policies within the Master Plan, and within a 1994 report titled Fault Rupture Hazard Investigation—Wastewater Treatment Plant No.2(the"1994 Report"). The disaster preparedness plan included in the Master Plan reviewed two possible major earthquake scenarios: an 8.3 Richter magnitude ("M") earthquake on the southern San Andreas fault system and an M 7.0 earthquake on the Newport-Inglewood fault zone,which includes Plant No. 2. An M 8.3 earthquake on the southern San Andreas fault,while on the whole more destructive than the M 7.0 Newport-Inglewood fault, may result in less damage to the District's service area due to the distance of the fault from most of the service area. However,the Master Plan stated that damage from such a major earthquake on the San Andreas fault would be extensive. Also, the Master Plan indicated that an M 7.0 earthquake on the Newport-Inglewood fault within five miles of the District's sewerage facilities could cause major destruction to those facilities. The disaster preparedness plan in the Master Plan indicated that it would not be economically feasible to upgrade all of the existing sanitary sewerage facilities to survive an earthquake of this magnitude along the Newport-Inglewood fault. The IERP outlines the policies and employee actions to be taken before, during and after an earthquake, earthquake response guidelines and damage assessment procedures. The Master Plan analyzed the vulnerability of the sanitary sewerage facilities and operations of the District and planned a risk reduction program wherein the vulnerability of many of the District's sanitary sewerage facilities to an earthquake could be reduced by recommended retrofit construction measures. The Master Plan also recommended that designs of existing major structures which were constructed prior to development of current seismic design standards be reviewed and the structures strengthened,if necessary. Since the Master Plan and the 1994 Report, the District has completed retrofitting where deemed appropriate. Pursuant to the Master Plan, all recent and future projects have been, and will be, designed to the same high earthquake code standards as set for other essential services, such as hospitals and fire stations. Many of the older buildings analyzed in the Master Plan have been replaced by structures built after 1989. 218234".4 28 The Amy Corps of Engineers' "All-River Plan" has mitigated any future flooding of the Santa Ana River system and potential threats to the District's Wastewater System. Also, both Plant No. 1 and Plant No.2 are built to federal standards. The IERP takes into account the damage potential posed by coastal flooding, tsunamis (large ocean waves generated by seismic activity) and windstorms. No assurance can be given that any such events would not have a material adverse impact on the Wastewater System. The District's High Flow Emergency Response Plan is included as a section in the IERP. This plan is based on a color code system from blue to yellow to orange to red and then purple that identifies specific actions to be taken by staff in response to expected and actual increasing flow coming into the District's treatment plants and collection sewers. The District believes that wastewater collection, treatment and disposal systems typically undertaken in anticipation of normal wet weather should be able to withstand, for example, an"expected/average"El Nino event without significant disruption. While no assurances can be given, the District believes that the likelihood of a system failure is low due to the operational readiness of all of its equipment and the District's high level of equipment redundancy. The Strategic Plan and IERP makes recommendations regarding fire protection of the Wastewater System. Most of the structures at Plant No. 1 and Plant No. 2 we constructed of fire-resistant materials. The IERP describes the procedures needed to respond to a possible disaster. For more information regarding emergency response policies, the disaster preparedness plan described in the IERP can be reviewed at the District's office. Five-Year Strategic Planning The District maintains a Strategic Plan to address service levels and operational needs over a five- year horizon. The Strategic Plan envisions an organizational culture that adheres to the District's core values and makes efficient and effective use of all available resources. The District is committed to focusing efforts on customer service, protecting public health and the environment, fiscal responsibility, communications,partnering with others,and creating the best possible workforce. Eight strategic goals were identified 0lrough planning workshops, individual interviews with members of the Board of Directors, and employee and management focus groups. The following eight strategic goals were adopted in 2013: 1. Odor Control—Completion of the Odor Control Master Plan. 2. Future Biosolids Management Options — Study biosolids management options including third party contracts and onsite capital facilities. 3. Energy Efficiency— Continue to research new energy efficiency and energy conversion technologies. 4. Disinfection of Ocean Discharge — Develop an implementation plan that includes the technical,financial and societal factors associated with cessation of disinfection of the ocean discharge. 5. Local Sewer Transfers—Complete the transfer of 174 miles of local sewers serving parts of the City of Tustin and unincorporated areas north of the City of Tustin and local sewer transfers in the City of Santa Ana. 6. Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy and public outreach program. 21823490.4 29 7. Future Water Recycling — Determine partnerships, needs, strategies, benefits and costs associated with recycling of Plant No. 2 effluent water. 8. Workforce Planning and Workforce Development—This initiative is ongoing and part of a comprehensive workforce planning and development effort to ensure that the District has the right people with the right skills and abilities, in the right place,at the right time. The five-year Strategic Plan is updated annually.The most recent update to the Strategic Plan was in December 2015. Two years into the five-year Plan, two of the strategic goals have been completed and strides have been made towards accomplishing the remaining six.The completed strategic goals are: (a) Disinfection of Ocean Discharge— Develop an implementation plan that includes the technical, financial and societal factors associated with cessation of disinfection of the ocean discharge. (b) Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy and public outreach program. DISTRICT REVENUES Server Service Charges General. The District has the power to establish fees and charges for services of the Wastewater System. Such fees and charges are established by the District's Board of Directors and are not subject to review or approval by any other agencies. In Fiscal Year 1997-98, a Rate Advisory Committee (the "RAC") was established comprised of representatives from industrial, commercial and residential users. The goal of the RAC was to examine the then current rate structure and, if needed, develop recommendations for change. The RAC analyzed the District's rate structure to determine whether its then current sewer service user fees (now known as "Sewer Service Charges") were equitable among residential and industrial customers. This review resulted in a proposal to expand the number of non-residential user categories from one to 23 and to provide for gradual rate increases in seven of the nine Revenue Areas. The Sewer Service Charges for those categories were based on the average flow and strength of wastewater discharged for each property type and remain currently in use. The Board of Directors establishes the annual sanitary sewer service charges by ordinance. The sanitary sewer service charge ordinances are adopted by a two-thirds vote of the Board of Directors as required under law after conducting a noticed public hearing in compliance with Proposition 218. See "LIMITATIONS ON TAXES AND REVENUES — Article XIIIC and Article XIIID of the California Constitution." The District collects Sewer Service Charges from property owners through the semi-annual property tax bill distributed by the County throughout the District, except in Revenue Area No. 14. Pursuant to the IRWD Agreement, the District receives quarterly fee payments from the IRWD which directly collects fees from customers through a monthly billing procedure in Revenue Area No. 14. The District currently participates in the County's Teeter Plan under which the District receives annually 100% of the secured property tax levies to which it otherwise is entitled, regardless of whether the County has actually collected the levies. The District has covenanted in the Master Agreement to fix, prescribe and collect fees and charges to satisfy certain coverage requirements as further described under "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES—Rate Covenant"herein. 218234".4 30 Residential and Commercial Sewer Service Charges. In December 2012,the Board of Directors authorized a Proposition 218 notice on proposed rate increases for each year over the next five years. Pursuant to the adoption of Ordinance No. OCSD-41 on March 27, 2013, the District established residential Sewer Service Charges, except within Revenue Area No. 14,based on the cost of services and facilities provided to each customer of the District. The noticed public hearing held in connection with the adoption of this ordinance considered an increase in the single family residential rate, the underlying rate for all of the District's sewer service charges, of 4.8% for Fiscal Year 2013-14 and thereafter by an average annual increase of 2.4%for each Fiscal Year through Fiscal Year 2017-18. These increases were approved by the Board through the adoption of Ordinance No. OCSD-41. Following the first two years of this rate plan,however,District staff recommended and the Board of Directors approved a reduction of the rate increase for the last three years of the plan, lowering the average of these increases from 2.4% to 1.6%. Set forth in Table 6 below is a comparison of the Sewer Service Charge rate for single family residences("SFRs")for the fiscal years shown. Table 6 Annual Sewer Service Charges Single Family Residence Rate Fiscal Years 2009-10 through 2017-18 Fiscal Sewer Service Percentage Year Charge Change 2009-10 $221 - 2010-11 244 10.4% 2011-12 267 9.4 2012-13 294 10.1 2013-14 308 4.8 2014-15 316 2.6 2015-16 322 1.9 2016-17 327 1.6 2017-18 331 1.2 Source: Orange County Sanitation District. Set forth in Table 7 below are the total average annual Sewer Service Charges for SFRs within the District, together with comparable total average annual charges for wastewater service within the jurisdictions of certain other cities and districts within the State as of July 1, 2016. The District's approved SFR rate of$327 for Fiscal Year 2015-16 remains below the average annual sewer rate of S475 according to a Fiscal Year 2014-15 survey of 482 agencies encompassing all 58 counties in California conducted by the State Water Resources Control Board. 21823490.4 31 Table 7 Comparison of Total Sewer Service Charges For Single-Family Residences As of July 1,2016 Average Dry Annual Weather Sewer Flow Service Treatment Collection Property Tax Entity m d (a) Charge[') Levefo(3) Resuonsibilityia) Income( City of San Diego 168 $573 2 Yes No City of Los Angeles 428 464 4 Yes No East Bay MUD 80 355 4 No Yes Sacramento 140 384 3 No Yes Orange County Sanitation District 221 327 3 No Yes Los Angeles County 497 155 4 No Yes (D Source: Information obtained from respective entities listed. (2) Treatment Level Categories: "l"—Primary treatment. "2"—Advanced primary or primary with some secondary treatment. "3"—Secondary treatment. "4"—Advanced secondary or secondary with some tertiary treatment. "5"—Tertiary treatment. (3) Source: Wastewater User Charge Survey Report by the California State Water Resources Control Board. Industrial Sewer Service Charges. The District charges industrial Sewer Service Charges to customers discharging high-strength or high-volume wastes into the sewer systems. Customers subject to industrial Sewer Service Charges are billed directly by the District. The fee charged to each customer is based on the customer's sewage volume, the concentration of suspended solids and biochemical oxygen demand. Total industrial Sewer Service Charges in Fiscal Year 2015-16 were approximately $12.6 million. Industrial Sewer Service Charges are applied to both operating and capital funds. The Sewer Service Charge increases described above are necessary to meet the District's cash flow needs arising from the addition of disinfection treatment and other operating requirements. As projected through Fiscal Year 2025-26, the cash flow needs of the CIP total approximately $2.4 billion. Over the next five years the District contemplates average annual capital outlays of$197. In addition, over the next five years the District contemplates outlays of $106 million [will update], or an annual average of S21 million [will update], to finance projects currently unknown or unidentified as forecasted by the District's Asset Management Program(the"Asset Management Program"). Additional Revenues The District has several sources of additional revenue, including property taxes, Capital Facilities Capacity Charges,capacity rights,permit and inspection fees and interest earnings. Property Taxes. The District receives approximately 2.5%of the one percent County ad valorem property tax levy, based on the allocation procedure under State law. Property tax revenues were $67.9 million in Fiscal Year 2011-12, $79.2 million in Fiscal Year 2012 13, $74.9 million in Fiscal Yew 201314, $79.8 million in Fiscal Year 2014-15 and $84.4 million in Fiscal Yen 2015-2016. The District currently estimates that its property tax receipts will increase by approximately 5.0% each year from Fiscal Year 2016-17 through Fiscal Year 2020-21. The apportionment of the ad valorem tax is pursuant to the Revenue Program adopted in April 1979 to comply with regulations of the Environmental 218234vo.4 32 Protection Agency, the State Water Resources Control Board and in accordance with COP documents and Board of Directors' policy. Capital Facilities Capacity Charges. Capital Facilities Capacity Charges (commonly referred to as connection fees) are one-time fees with two components, paid at the time property is developed and connected to the Wastewater System. The fees are imposed by the District pursuant to Section 5471 of the California Health and Safety Code and are levied to pay a portion of the District's capital costs and for access to capacity in the Wastewater System. The District currently has Capital Facilities Capacity Charges of $3,710 per residential unit (three-bedroom); however, under the current industrial use ordinance, additional Capital Facilities Capacity Charges can be imposed on industrial users who place larger than average demand on the Wastewater System. Member cities and sanitary districts collect Capital Facilities Capacity Charges for the District when building permits are issued. Capital Facilities Capacity Charges are reviewed annually to reflect the changes in the value of the Wastewater System to which a new customer is connecting. On December 15, 1999, the Board of Directors approved District Ordinance No. OCSD 99-11 (the"1999 Ordinance")which established a comprehensive Capital Facilities Capacity Charge. The 1999 Ordinance, effective as of January 1, 2000, renamed connection fees as Capital Facilities Capacity Charges and provided a more equitable schedule of fees among industrial, commercial and residential users. Pursuant to the 1999 Ordinance, Capital Facilities Capacity Charges were revised for high demand industrial users in five incremental increases from 1999 through 2001. For a summary of historical and projected revenues derived from Capital Facilities Capacity Charges, see Table 14 and Table 15 below. Pursuant to an agreement with the IRWD, the IRWD is not required to pay Capital Facilities Capacity Charges and, in exchange, the IRWD provides funding to the District for the construction costs of certain wastewater collection, transmission, treatment and disposal facilities to be used by the IRWD and is obligated to make certain payments to the District for certain services arising from the Wastewater System(including any standby or availability charges). Sale of Capacity. The District bas entered into agreements with the Santa Ana Watershed Project Authority ("SAWPA") whereby wastewater from Upper Santa Ana River Basin dischargers can be transported through the District's Santa Ana River Interceptor to the District's wastewater treatment facilities. This program was developed in the early 1970s. The agreements establish control mechanisms regarding the quality of wastes deposited into the Wastewater System. At the present time, SAWPA has purchased and paid for 30 mg/d of maximum regulated flow capacity rights in the District's Santa Ana River Interceptor and 17 mg/d of monthly average flow capacity in the District's wastewater treatment plants. Projected revenues from SAWPA range from$3.3 million to$3.8 million over the next five years. Additional treatment plant capacity can be purchased in increments at the District's current replacement cost. Federal Subsidy Payments. In connection with the District's Revenue Obligations,Series 2010A (the "2010A Revenue Obligations") and the District's Revenue Obligations, Series 2010C (the "2010C Revenue Obligations"), issued as "Build America Bonds," the District is scheduled to receive certain federal subsidy payments of approximately $5.1 million annually through 2031 and lesser amounts thereafter until 2044. Subsidy payments with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations constitute Revenues as defined in the Master Agreement. In its financial reports,the District accounts for subsidy payments received in connection with the 2010A Revenue Obligations and the 2010C Revenue Obligations as a reduction in interest expense with respect to such obligations. For the 2010A Revenue Obligations and the 2010C Revenue Obligations to be and remain Build America Bonds, the District most comply with certain covenants and establish certain facts and expectations with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations, the use and investment of proceeds thereof and the use of property financed thereby. Thus, it is possible that the 218234".4 33 District may not receive the federal subsidy payments due to the District's noncompliance. The federal subsidy payments are also subject to offset against amounts that may, for unrelated reasons, be owed by the District to any agency of the United States of America. On March 1, 2013, the federal government announced the implementation of certain automatic spending cuts known as the sequester. As a result of the sequester, federal subsidy payments for the 2010A Revenue Obligations were reduced by 8.7% (or$67,872; second half of the year only), 7.2% (or $112,339), 7.3% (or $114,882), and 6.8% (or $53,049; first half of the year only) for the federal fiscal years ended September 30, 2013, 2014, 2015, and 2016, respectively; and federal subsidy payments for the 2010C Revenue Obligations were reduced by 8.7% (or $152,807; second half of the year only) by 7.2% (or $252,922), 7.3% (or $256,435), and _% (or $ ; first half of the year only) for the federal fiscal yews ended September 30, 2013, 2014, 2015, and 2016, respectively. The District is obligated to make all payments with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations from Revenues as defined in the Master Agreement,regardless of whether it receives the full amount of federal subsidy payments. The District cannot predict whether future reductions in federal subsidy payments will occur due to the sequester. However, the District does not believe that any reduction in federal subsidy payments will have a material adverse effect on the District's ability to pay the 2010A Revenue Obligations or the 2010C Revenue Obligations. Wastewater Treatment History The wastewater flows for Fiscal Year 2011-12 through Fiscal Year 2015-16 were 201 mg/d, 200 mg/d, 198 mg/d, 190 mg/d and 184/mg/d, respectively. The highest flow rate experienced was during El Nifio storm periods. Peak flows of 500 mg/d were recorded in December 1997 and February 1998. There were no sewer failures or overflows during these events. See "THE DISTRICT—Integrated Emergency Response Program" Customers The historical number of customers served by the District for the Fiscal Years 2011-12 through 2015-16 and the projected number of customers served by the District for the Fiscal Years 2016-17 through 2020-21, identified in Equivalent Dwelling Units ("EDUs"), are set forth in Table 8 and Table 9 below. As discussed below, sewer service charges are based on the expected amount of wastewater flow for a single family dwelling. This base amount is considered the "equivalent dwelling unit" Set forth in Table 8 below are the EDUs that equate to total Sewer Service Charge levies,while the EDUs set forth in Table 9 equate to total sewer service charge collections. Table 8 Historical and Projected Equivalent Dwelling Units Fiscal Years 2010-11 through 2020-21 Historical Projected Fiscal Year EDUs(u Fiscal Year EDUs 2011-12 924,525 2016-17 939,567 2012-13 915,685 2017-18 942,292 2013-14 916,812 2018-19 945,024 2014-15 934,141 2019-20 947,765 2015-16 936,850 2020-21 Sowce: Orange County Sanitation District. 21823490.4 34 03 With respect to such Fiscal Years,presentation in the Statistical Section of the District's Comprehensive Annual Financial Report set forth in Appendix A includes EDUs that equate to total Sewer Service Charge collections rather than levies. Set forth in Table 9 below are the number of residential and commercial customers and industrial customers and the approximate percentages of Sewer Service Charge revenues derived from the combined residential and commercial use and industrial use for the last five fiscal years. Table 9 Number of Accounts and Revenues by Customer Class for the Fiscal Years 2011-12 through 2015-16 ($in Millions) Residential/Commercial Industrial Number of Percentage Percentage Equivalent of Sewer of Sewer Single- Service Number of Service Family Total Charge Customer Total Charge Fiscal Year Dwellines Revenue Revenues Accounts Revenue Revenues 2011-12 869,709 $232.2 96% 516 $ 9.5 4% 2012-13 879,443 258.6 96 527 10.8 4 2013-14 869,461 267.8 95 489 14.4 5 2014-15 806,585 254.9 95 467 14.2 5 2015-16 450 12.6 Source: Orange County Sanitation District. Set forth in Table 10 below are the ten largest principal sewer service customers of the District for the Fiscal Year ended June 30,2016. Table 10 Largest Principal Sewer Service Customers of the District for the Fiscal Year Ended June 30,2016 Sewer User Service Charees House Foods America Corp. Kimberly-Clark Worldwide, Inc. Stremicks Heritage Foods,LLC MCP Foods,Inc. Pulmuone Wildwood,Inc. Jazz Semiconductor Ameripec Inc. Nor-Cal Beverage Co. Inc. (NCB) Alta Dena Certified Dairy,LLC Nor-Cal Beverage Co. Inc. (Main) Total Source: Orange Cowry Sanitation District. 218234".4 35 Assessed Valuation The assessed valuation of property in the County is established by the County Assessor, except for public utility property which is assessed by the State Board of Equalization. Due to changes in assessment required under State Constitution Article XIIIA, the County assessment roll no longer purports to be proportional to market value. See "LIMITATIONS ON TAXES AND REVENUES" herein. Generally,property can be reappraised upward to market value only upon a change in ownership or completion of new constriction. The assessed value of property that has not incurred a change of ownership or new construction most be adjusted annually to reflect inflation at a rate not to exceed 2% per year based on the State consumer price index. In the event of declining property value caused by substantial damage, destruction, economic or other factors, the assessed value must be reduced temporarily to reflect market value. For the definition of full cash value and more information on property tax limitations and adjustments,see"LIMITATIONS ON TAXES AND REVENUES"herein. The County Assessor determines and enrolls a value for each parcel of taxable real property in the County every year. The value review may result in a reduction in value. Taxpayers in the County also may appeal the determination of the County Assessor with respect to the assessed value of their property. Set forth in Table I below is a five-year history of assessed valuations in the District for the fiscal years shown. Table 11 Assessed Valuations of Property in the District Fiscal Years 2011-12 through 2015-16 ($in Billions) Fiscal Year Value Percent Change 2012-13 $316.4 2.49% 2013-14 329.3 4.08 2014-15 350.5 6.44 2015-16 372.2 6.19 2016-17 Source: County of Orange Auditor-Controller. Tax Levies and Delinquencies Property taxes are based on assessed valuation which is determined as described under "DISTRICT REVENUES—Assessed Valuation"herein. In accordance with the California Revenue and Taxation Code, the County tax collector collects secured tax levies for each Fiscal Year. Property taxes on the secured roll are due in two installments, on November 1 and February 1. The District currently participates in the County's Teeter Plan under which the District receives annually 100% of the secured property tax levies and Sewer Service Charges to which it otherwise is entitled,regardless of whether the County has actually collected the levies. This alternative method provides for funding each taxing entity included in the Teeter Plan with its total secured property taxes during the year the taxes are levied, including any amount uncollected at fiscal year-end. Under this plan, the District's general fond receives the full amount of secured property taxes levied each yen on its behalf and, for so long as such plan remains in effect, the participating entities, such as the District, no longer experience delinquent taxes. The Country's general fund is the designated recipient of future collections of penalties and interest on all delinquent taxes collected on behalf of participants in this alternative method of apportionment. 218234".4 36 Set forth in Table 12 below is a five-year history of the District's ad valorem total property tax and Sewer Service Charge levies. Table 12 Total Property Tax and Sewer Service Charge Levies in the District for Fiscal Years 2012-13 through 2016-17 (in Thousands) Total Property Tax and Sewer Fiscal Year Service Charee Levy 2012-13 $340,298 2013-14 356,607 2014-15 362,978 2015-16 375,927 2016-17 Source: County of Orange Auditor-Controller. Budgetary Process The District's operating fund budget relies on revenues from Sewer Service Charges and property taxes,both of which me collected on the property tax bill, as previously described under the captions'— Sewer Service Charges" and '— Additional Revenues." The District receives tax revenues from the County in eight allocations, with the largest receipts in December and April. The District operates on a Fiscal Year beginning each July 1. The operating fund budgets include funds to cover the dry period of each tax year, i.e.,the period from the beginning of the Fiscal Year until the first taxes are received. The dry-period requirement is budgeted at one-half of the annual operating fund budgeted expenditures. The District uses the accrual method of accounting in its budgets. The District has conformed to its budgets for the last five fiscal years and is conforming to its budget for the current fiscal year. The District's annual budget preparation process begins in January of each year and concludes in June upon its adoption. The General Manager reviews the final operating budgets and then distributes them to the Directors and District Committees for consideration. The Board of Directors then adopts the proposed annual budgets,with any revisions,in June of each year. Budgetary control is exercised at the individual Department level and administrative policies provide guidelines on budget transfers and the authorization necessary to implement transfers. A budget adjustment is a transfer which does not change the total appropriated amount and does not require Board of Directors action. Approval may be granted by the General Manager or the Department Head in certain circumstances. Department Heads have the discretion to reapportion funds between certain line items within a division but may not exceed total appropriated amounts for each department. They may also transfer staff across divisional lines. The General Manager and Board of Directors most approve additional capital outlay items. A budget amendment is an adjustment to the total appropriated amount which was not included in the original budget. These supplemental appropriations require formal action by the Board of Directors. Prior you reserves or fund balances may be appropriated to fund items not previously included in the adopted budget. Reserves or fund balances exceeding minimum amounts required by fiscal policies may be appropriated if it is determined to be in the best interest of the District. Directors may also appropriate reserves in case of emergencies or unusual circumstances. 21823490.4 37 Reserves The District has an established reserve policy with eight separate categories for its reserve funds. Collectively, these individual reserve requirements total over $500 million for each year of the current ten-year cash flow forecast. Set forth in Table 13 below are the actual reserves at June 30, 2013, June 30, 2014 and June 30, 2015, and unaudited reserves at June 30,2016 for each fund. Table 13 Cash Reserves June 30,2013 through 2015 and Unaudited at June 30,2016 (In Millions) Unaudited 2013 2014 2015 2016 June 30 June 30 June 30 June 30 Cash Flow Requirements Reserve: Operating Expenses $ 76 $ 76 $ 76 Certificates of Participation Payments 98 98 86 Operating Contingencies Reserve 15 15 15 Capital Improvement Program Reserve 210 275 163 Catastrophe and Self Insurance 57 57 57 Capital Replacement and Refurbishment 61 61 62 Debt Service Required Reserves0) 135 132 129 Rate Stabilization Reserve Total 652 $714 588 (n "Debt Service Required Reserves" constitute all amounts held in Obligation Reserve Funds, together with additional amounts held by the District that may be used for the payment of debt service on District obligations in accordance with the District's reserve policy. As of June 30,2015,$129 million of Debt Service Required Reserves were held in Obligation Reserve Funds,of which$33.0 million is restricted by covenant for the specific obligations for which such Obligation Reserve Funds were established. Source: Orange County Sanitation District. The District's reserves consist of the following components: • The Cash Flow Requirements Reserve was established to fund operation, maintenance and certificates of participation debt service expenses for the first half of the fiscal year, prior to the receipt of the first installment of the property tax allocation and sewer service user fees which are collected as a separate line item on the property tax bill. The level of this reserve is established as the sum of an amount equal to six months operations and maintenance expense and the total of certificates of participation debt service expenses due in the subsequent fiscal year. • The Operating Contingencies Reserve was established to provide for non-recurring expenditures that were not anticipated when the annual budget and Sewer Service Charges were adopted. The level of this reserve is equal to 10%of the District's annual operating budget. • The Capital Improvement Program Reserve was established to fund annual increments of the Capital Improvement Program with a target level at one-half of the average annual Capital Improvement Program through the year 2020. Levels higher and lower than the target can be expected while the long-term financing and capital improvement programs are being finalized. 218234vo.4 38 • The Catastrophic Loss, or Self-Insurance Reserve is established for property damage including fire, flood and earthquake, general liability and workers' compensation. The level of reserve in this fund is maintained at a level to fund the District's non-reimbursed costs which are estimated to be$57 million. • The Capital Replacement and Refurbishment Reserve was established to provide 30% of the funding to replace or refurbish the current collection, treatment and disposal facilities. The current replacement value of these facilities is estimated to be approximately $6.2 billion. The initial reserve level for this fund was established at $50 million and is augmented by interest earnings and a portion of the annual Sewer Service Charges. • Debt Service Required Reserves include trustee-held amounts in any Obligation Reserve Fund and additional amounts held by the District for the payment of debt service in accordance with the District's reserve policy. The District's current policy is to maintain reserves (including trustee- held reserves) for debt service in the amount of 100/. of the principal amount of the District's outstanding debt obligations. • The Rate Stabilization Reserve accumulates all available funds which exceed the targets for all other reserves. The Rate Stabilization Reserve is a separate fund from the Rate Stabilization Account established under the Trust Agreement. There is currently no established target for this reserve and,because the reserves of all other funds have not been exceeded, the reserve level for this reserve fund has been zero for Fiscal Years 2012-13 through 2015-16. • In Fiscal Year 2009-10, Financial Management staff and the Board of Directors concluded that given the nature of the likely events that may cause a withdrawal from the District's reserves and the degree of overlap among reserve categories,the total amount reserved need not equal the sum of each separate reserve category. As a result, the District adjusted the application of its reserve policy, leading to a reduction of $40 million of the accumulated total, or approximately 8%. Reserve levels are calculated in accordance with the District's reserve policy. Summary of Operating Data Set forth in Table 14 below is a summary of historical audited operating results for the District for Fiscal Years 2010-I1 through Fiscal Year 2014-15 and unaudited operating results for the District for the Fiscal Year 2015-16. The information presented in the summary should be read in conjunction with the financial statements and notes. See APPENDIX A — "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED JUNE 30,2015." 21823490.4 39 Table 14 Summary of District Historical Revenues and Expenses and Other Financial Information For Fiscal Years 2010-11 through 2014-15 and Unaudited for Fiscal Year 2015-16 ($in Millions) Audited Unaudited 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Revenues: Residential&Commercial Sewer Service Chargest'1 Regional $213.3 $232.2 $258.6 $267.8 $260.5 Local 5.7 5.7 5.8 5.7 5.5 Industrial Sewer Service Charges 10.1 9.5 13.5 14.4 14.2 Revenue Area No. 14 Fees 21.4 18.0 27.5 23.6 28.3 Ad Valorem Taxes 64.3 67.9 77.3 72.8 77.6 Interest Earnings 10.1 15.7 (3.6) 6.1 4.8 Other Revenues 5.7 3.6 4.6 5.1 6.2 Total Revenues $330.6 $352.6 $383.7 $395.5 $397.1 Operations and Maintenance Expenses(2) 143.4 172.301 149.8 146.4 149.2 Net Revenues $187.2 $180 3 MIS SNE S97S Debt Service 2.4 65.4 $_77.6 $ 92.8 S8L5 Coverage Ratios 2.59x 2.76x 3.01x 2.68x 3.04x UAAL Payment(4) $125, CIP Outlay 1160.7 $101 7 $ 97.6 $$7.5 $182-6 Ending Reserves $597.0 $608.0 1651.8 $713.7 Mu (D Net of rebates,if any,to commercial users. (t) Excludes depreciation and amortization expenses. (3) Includes a one-time write-down of$34.2 million for costs of feasibility studies to properly conform to generally accepted accounting principles. These costs were previously capitalized and were being amortized over a five- year period. (4) As of July 1,2014,the District had an unfunded actuarial accrued pension liability in its defined pension benefit plan administered by the Orange County Employees Retirement System of$194 million. In Fiscal Year 2014- 15,the District paid down$125 million of this liability. Source: Orange County Sanitation District. 218234".4 40 Forecasted Operating Data [section to be updated[ Set forth in Table 15 below are forecasted operating results for the District for Fiscal Years 2015-16 through 2019-20. These projections assume the number of projects and scheduled build out set forth in the 2015 CIP Validation Study, and reflect the Board-approved annual rate increases of 1.90%, 1.55% and 1.22% for Fiscal Year 2015-16,Fiscal Year 2016-17,and Fiscal Year 2017-18, respectively. Principal outlay components of these projections are derived from the 2015 CIP Validation Study, which identified 85 large capital projects with a 10-year projected outlay of $1.7 billion. Much of the construction is scheduled during the next five years, with average annual capital outlays of$164.5 million. The District's CIP cash flow budget for Fiscal Year 2015-16 is $181.9 million. This CIP budget finances joint works treatment and disposal system improvement projects, and collection system improvement projects. The preparation of such projections was based upon certain assumptions and certain forecasts with respect to conditions that may occur in the future. While the District believes that these assumptions and forecasts are reasonable for the purposes of the projected selected operating data, it makes no representation that they will in fact occur. To the extent that actual future conditions differ from those assumed herein,the data will vary. [Remainder of page intentionally left blank.] 218234".4 41 Table 15 Summary of District Forecasted Revenues and Expenses and Other Financial Information for Fiscal Years 2016-17 through 2020-21 ($in Millions)('( 2016-17 2017-18 2018-19 2019-20 2020-21 Revenues Residential&Commercial Sewer Service Changes(e) $ 299.6 $ 299.2 $ 303.8 $ 308.4 Industrial Sewer Service Charges 13.8 13.9 14.1 14.3 IRWD Assessments 8.9 4.6 5.4 6.2 SAWPA Assessments 2.8 2.9 3.0 3.1 Ad Valorem Taxes 93.0 97.6 102.5 107.6 Interest Earnings 9.0 9.7 13.7 17.1 Other Revenues 2.1 2.2 2.2 2.2 Total Revenues 429.2 430.1 444.7 458.9 Build America Bonds Federal Subsidy 5.1 5.1 5.1 5.1 Operations and Maintenance Expenses (150.4) (151.8) 157.8 1! 64.1) Net Revenues(o $ 283,4 $2283, S 292, $_299,9 Debt Service S 96.8 S 92.8 $ 91.3 $ 91.3 Build America Bonds Federal Subsidy 5.1 5.1 5.1 5.1 Gross Debt Service $ 101.9 $ 97.9 6�.4 S- 6%4 Coverage Ratios(') 2 79x 2 89x 3.03 3 11x CIP Outlays $ 128.5 S 114 $ 150.3 S 1 2 Replacement,Refurbishment and Rehabilitation(4) S 3 S 20. S 31. 1 50.6 Ending Reserves $610 7 $680 4 $703 R 1= (n Assumptions: a) Annual growth in equivalent dwelling units is projected to average 0.3%over the next five years. b) The Residential, Commercial, and Industrial Sewer Service Charge forecasts are based on the total projected equivalent dwelling units, Board approved rate increases for Fiscal Years 2016-17 and 2017-18 averaging 1.4%per year and additional rate increases over the next two years averaging 1.4%per year. c) Revenue Area No. 14 Fees are derived based on the projected contribution of sewage flows to the District from the Irvine Ranch Water District. d) Ad Valorem Taxes are projected with annual increases of 5%. e) Interest earnings are projected to average 2.0%of annual cash balances. it Operating and Maintenance Expenses are forecasted with a base increase of 1.0%per year for Fiscal Years 2016-17 through 2017-18 with adjustments for known periodic outlays that do not occur annually. g) Annual CIP Outlays are based on the cash flow projections developed from the CIP Validation Study,with adjustments for CIP savings and deferrals. (2) Reflects projected reduction of approximately$6 million annually in Sewer Service Charge revenues beginning in Fiscal Year 2017-18 due to expected transfer of local sewers currently owned by the District to another public agency. (a) Calculated in accordance with the Master Agreement and the Installment Purchase Agreement. (4) Replacement,Refurbishment&Rehabilitation are known future capital outlays that have been identified within the District's Asset Management Program but have not yet been developed into specific proposed projects and included within the CIP Program Source: Orange County Sanitation District. 21823490.4 42 Management's Discussion and Analysis of Operating Data The District's Fiscal Year 2015-16 total operating, capital improvement, debt service, and other financing requirement budget is $469.7 million, a 15.3% decrease over the prior year budget of$554.4 million. This overall decrease is primarily attributable to a planned reduction of$125 million in long- term liabilities in Fiscal Year 2014-15 and an additional planned reduction of$50 million in Fiscal Year 2015-16. These planned reductions resulted from pushing back a portion of the Fiscal Year 2013-14 CIP program into future years and the receipt of unexpected one-time revenues in Fiscal Year 2013-14. The $125 million reduction in Fiscal Year 2014-15 and the$50 million reduction in Fiscal Year 2015-16 each consists of a pay-down of a portion of the $194 million unfunded accrued actuarial pension liability as of July 1, 2014. Excluding these planned reductions the total approved cash flow budget for Fiscal Year 2015-16 totals $420 million, a 2% decrease over the prior year. This overall decrease consists of a decrease in capital outlay of $11.5 million or 6.2%, an increase in debt service requirements of $5.8 million or 6.3%,and a decrease in operating expenses of$2.8 million or 1.8%. The Fiscal Year 2015-16 approved budget to operate, maintain and manage the District's sewage collection, treatment and disposal system is $151.9 million, a decrease of 1.8%. Personnel costs have decreased by $4.4 million, or 4.4%, due primarily to the projected savings of$8.9 million in employee retirement premiums as the District's employer contribution rates have dropped approximately 45.5%due to the $125 million lump sum payment against the unfunded actuarial accrued liability in Fiscal Year 2014-15. These retirement savings were partially offset by increased salaries of$2.8 million attributable to provisions of the existing bargaining unit agreements. As of December 31, 2015,there were 51 vacant positions, or 8.2%of the total budgeted staffing level of 624.0 full-time equivalent positions. Operating materials and supplies are budgeted to increase by$1.4 million or 8.9%over the prior year. Of this increase, $1.2 million or 9.4°/a over the prior year represents increases in chemicals used throughout the treatment plants for enhanced settling and separation of solids, odor control and disinfection. These increases are reflected of increases in unit cost and in the quantity being used. Repairs and maintenance costs were approved at a decrease of $0.8 million or 6.1%. This decrease is mostly attributable to decreases in basic repairs and maintenance costs including the scheduling of one central generation engine overhaul totaling$893,000 in the prior year. In preparation of the Fiscal Year 2016-18 biennium budget, District staff will be developing for the Bond of Directors a Capital Improvement Program to deliver the levels of service included in the District's five-year rolling Strategic Plan. These levels of service and associated capital projects me included in the Strategic Plan, last updated in November 2015. In addition, District staff validated the active CIP projects currently being executed to ensure that the scope of work on the active projects remains appropriate, and that the cost estimates have been accurately updated. The Fiscal Year 2015-16 CIP cash flow budget was approved at $181.9 million. After factoring in CIP savings and deferrals, this CIP budget was reduced by $6.9 million to $175.0 million. The 2015 validated CIP includes 138 individual capital projects with 10-year outlays totaling approximately$2.1 billion. The completion of the CIP Validation Study in 2013 reaffirmed the need for rate increases in future years. Based on the results of the CIP Validation Study and the Strategic Plan, the Board of Directors adopted Ordinance No. OCSD-41, increasing the sanitary sewer service charges by approximately 4.8% in Fiscal Year 2013-14, and by an average of 2.4% over the following four years. These rate increases were approved by a vote of two-thirds of the members of the Board of Directors and are not subject to reaffirmation in any of the future fiscal years covered by this five-year period. Following the first two years of this rate plan, however, District staff recommended and the Bond of Directors approved a reduction of the rate increase for the last three years of the plan, lowering the average of these increases from 2.4% to 1.6%. This action resulted in the single family residence user 2182349e.4 43 rate, the basis for all sewer user fee rates, increasing from $316 in Fiscal Year 2014-15 to $322 in Fiscal Year 2015-16. See"DISTRICT REVENUES—Sewer Service Charges." Investment of District Funds State statutes authorize the District to invest in obligations of the United States Government,state and local governmental agencies, negotiable certificates of deposits, bankers acceptances, commercial paper, reverse repurchase agreements and a variety of other investment instruments which are allowable under California Government Code Section 53600 et seq. All District funds, except for Obligation Reserve Funds controlled by a bank trustee pursuant to the provisions of Existing Senior Obligations, are managed by an external money manager, Pacific Investment Management Company. Mellon Trust serves as the District's independent custodian bank for its investment program. Callan Associates serves as the District's independent advisor. As of June 30, 2016, the District's externally managed fund consisted of a short-tern investment portfolio of$139.4 million with an average maturity of 48 days, and a long-term investment portfolio of $332.7 million with average maturities of 2.9 years. Investments consist of United States government securities, corporate bonds and commercial paper. The District's portfolio contains no structured investment vehicles("SNs")or reverse repurchase agreements. Deposits in banks are maintained in financial institutions which provide deposit protection on the bank balance from the Federal Deposit Insurance Corporation. The California Government Code requires State banks and savings and loans to secure local government deposits by pledging government securities equal to 110% of the deposits or by pledging first trust deed mortgage notes equal to 150% of the deposits. The District's Investment Policy requires that the District invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonable anticipated operating expenditure needs, achieving a reasonable rate of retain and conforming to all state and local statutes governing the investment of public funds. The primary objectives, in order, of the District's investment activities are safety,liquidity and return on investment. FINANCIAL OBLIGATIONS Existing Indebtedness Currently, the District has Senior Obligations Outstanding payable on a parity with the Notes. The table below describes the District's outstanding parity certificates of participation as of February 2, 2016. The payment obligations in connection with each series of these certificates of participation constitute Senior Obligations, subject to the provisions of the Master Agreement and shall be afforded all of the benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District has no general obligation bonds or subordinate bonds outstanding. 218234".4 44 Table 16 Outstanding Senior Obligations As of November 1,2016 Original Principal Issue Outstanding Final Amount Date Balance Maturity 2007A Certificates $ 95,180,000 05/22/07 $ 91,885,000 02/01/30 2007B Certificates 300,000,000 12/20/07 7,110,000 02/01/17 2009A Certificates 200,000,000 05/07/09 13,405,000 02/01/19 2010A Certificates 80,000,000 05/18/10 80,000,000 02/01/40 2010C Revenue Obligations 157,000,000 11/29/10 157,000,000 02/01/44 2011A Revenue Obligations 147,595,000 10/03/11 96,330,000 02/01/26 2012A Revenue Obligations 100,645,000 03/22/12 100,645,000 02/01/33 2012B Revenue Obligations 66,395,000 08/16/12 66,395,000 02/01/26 2014A Revenue Obligations 85,090,000 08/07/14 85,090,000 02/01/27 2014B Certificatesl'I 120,850,000 10/08/14 120,850,000 11/15/16l'I 2015A Revenue Obligations 127,510,000 02/12/15 127,510,000 02/01/37 2016A Revenue Obligations 145,880,000 03/30/16 145,880,000 02/01/39 Total Senior Obligations L626.145.000 $1.092.100.000 (')To be paid with the sale proceeds of the Notes and other sources of funds. See"PLAN OF FINANCE." In connection with the execution and delivery of the above-referenced outstanding certificates of participation, the District entered into certain installment purchase agreements, or equivalent documents, providing for the payment of installment payments or similar payments. Anticipated Financings From time to time the District may incur other obligations to finance portions of the CIP. Over the next five years, however, the District does not expect to issue any additional debt, other than refunding debt. The District expects to refund outstanding obligations from time to time, such as the 2014B Certificates mentioned in Table 16 above. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES—Sale Proceeds of Future Obligations." Direct and Overlapping Bonded Debt The aggregate direct and overlapping bonded debt of the District as of June 30, 2015 is set forth on page 64 of Appendix A. THE CORPORATION The Corporation was organized on June 19, 2000 as a nonprofit public benefit corporation pursuant to the Nonprofit Public Corporation law of the State. The Corporation's purpose is to render assistance to the District in its acquisition of equipment,real property and improvements on behalf of the District. Under its articles of incorporation, the Corporation has all powers conferred upon nonprofit public benefit corporations by the laws of the State,provided that it will not engage in any activity other than that which is necessary or convenient for,or incidental to the purposes for which it was formed. The Corporation is a separate legal entity from the District. It is governed by a twenty-five member Board of Directors. The Corporation has no employees. All staff work is performed by 218234".4 45 employees of the District. The members of the Corporation's Board of Directors are the Board of Directors of the District. The District's Director of Finance and Administrative Services and other District employees are available to provide staff support to the Corporation. The Corporation has not entered into any material financing arrangements other than those referred to in this Official Statement. Further information concerning the Corporation may be obtained from the Orange County Sanitation District office at 10844 Ellis Avenue, Fountain Valley, California, 92708-7018. LIMITATIONS ON TAXES AND REVENUES Article XIIIA of the California Constitution On June 6, 1978, California voters approved Proposition 13 ("Proposition 13'), which added Article XIIIA to the State Constitution (`Article XIIIA ). Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof,except that additional ad valorem taxes may be levied to pay debt service on (i)indebtedness approved by the voters prior to July 1, 1978,(ii)(as a result of an amendment to Article XIIIA approved by State voters on Jane 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-third of the voters on such indebtedness, and (iii)bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures are included in the proposition. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash value," or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment" The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2%per year or to reflect a reduction in the consumer price index or comparable data for the area under the taxing jurisdiction, or reduced in the event of declining property values caused by substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law,local agencies me no longer permitted to levy directly any property tax(except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment me allocated among the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to a local agency continues as part of its allocation in future years. Beginning in the 1981-82 fiscal year, assessors in the State no longer record property values on tax rolls at the assessed value of 25%of market value which was expressed as$4 per$100 assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $I per$100 of taxable value. All taxable property value included in this Official Statement 218234".4 46 is shown at 1000/6 of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value. Article XIIIB of the California Constitution An initiative to amend the State Constitution entitled"Limitation of Government Appropriations" was approved on September 6, 1979, thereby adding Article XIIIB to the State Constitution ("Article XIIIB"). Under Article XIIIB,the State and each local governmental entity has an annual"appropriations limit' and is not permitted to spend certain moneys that are called "appropriations subject to limitation" (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the appropriations limit. Article XIIIB does not affect the appropriations of moneys that are excluded from the definition of"appropriations subject to limitation," including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved by the voters. In general terms, the appropriations limit is to be based on certain 1978-79 expenditures, and is to be adjusted annually to reflect changes in consumer prices, populations, and services provided by these entities. Among other provisions of Article XIIIB, if these entities' revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. "Appropriations subject to limitation" are authorizations to spend "proceeds of taxes," which consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed`the cost reasonably bome by such entity in providing the regulation, product or service," but"proceeds of taxes" excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of funds which are not "proceeds of[axes," such as reasonable user charges or fees, and certain other non- tax funds. Not included in the Article XIIIB limit are appropriations for the debt service costs of bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government and appropriations for qualified capital outlay projects. The appropriations limit may also be exceeded in certain cases of emergency. The appropriations limit for the District in each year is based on the District's limit for the prior year, adjusted annually for changes in the cost of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the District's option, either(1) the percentage change in State per capita personal income, or (2) the percentage change in the local assessment roll on nonresidential property. Either test is likely to be greater than the change in the cost of living index, which was used prior to Proposition 111. Change in population is to be measured either within the jurisdiction of the District or the County as a whole. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of the aggregate "proceeds of taxes" received by a District over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years. As originally enacted in 1979,the District's appropriations limit was based on 1978-79 authorizations to expend proceeds of taxes and was adjusted annually to reflect changes in cost of living and population (using different definitions, which were modified by Proposition 111). Starting with Fiscal Year 1990-91,the District's appropriations limit was recalculated by taking the actual Fiscal Year 1986-87 limit, and applying the annual adjustments as if Proposition 111 had been in effect. The District does not anticipate that any such appropriations limitations will impair its ability to make Installment Payments as required by the Installment Purchase Agreement. 218234".4 47 Proposition lA and Proposition 22 Proposition lA ("Proposition IA"), proposed by the Legislature in connection with the 2004-05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004-05 and 2005-06. Proposition lA provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition lA generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year,as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county most be approved by two-thirds of both houses of the Legislature. Proposition IA provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8%of local government property tax revenues,which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. Such a shift may not occur more than twice in any ten-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition IA was generally superseded by the passage of a new initiative constitutional amendment at the November 2010 election, known as Proposition 22 ("Proposition 22"). The effect of Proposition 22 is to prohibit the State, even during a period of severe fiscal hardship, from delaying the distribution of tax revenues for transportation,redevelopment, or local government projects and services. It prevents the State from redirecting redevelopment agency property tax increment to any other local government or from temporarily shifting property taxes from cities, counties and special districts to schools.This is intended to, among other things,stabilize local government revenue sources by restricting the State's control over local property taxes. Prior to the passage of Proposition 22, the State invoked Proposition lA to divert $1.935 billion in local property tax revenues in fiscal year 2009-10 from cities, counties,and special districts to the State to offset State general fund spending for education and other programs. Approximately$5 million of the District's property tax revenues were diverted to the State as a result of this Proposition IA suspension. The District participated in a Proposition IA Securitization Program (the "Program") sponsored by the California Statewide Communities Development Authority. The Program allowed the District to exchange its anticipated State property tax receivable for an equal amount of cash. In addition,the State's adopted 2009-10 budget included a $1.7 billion diversion in local property tax revenues from local redevelopment agencies. Many California Redevelopment Association members are actively engaged in litigation to block such diversion and recoup certain payments already made under certain legislation passed in July 2009 that is beyond the reach of Proposition 22,known as"ABX4 26" Proposition IA also provides that if the State reduces the vehicle license fee ("VLF") rate currently in effect, 0.65% of vehicle value, the State most provide local governments with equal replacement revenues. Further, Proposition lA requires the State to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. Article XIIIC and Article XIIID of the California Constitution Proposition 218, a State ballot initiative known as the "Right to Vote on Taxes Act," was approved by the voters on November 5, 1996. The initiative added Articles XIIIC and XDID to the 21823490.4 48 California Constitution, creating additional requirements for the imposition by most local governments of "general taxes,""special taxes,""assessments,""fees,"and"charges." Proposition 218 became effective, pursuant to its terms, as of November 6, 1996, although compliance with some of its provisions was deferred until July 1, 1997, and certain of its provisions purport to apply to any tax imposed for general governmental purposes (i.e., "general taxes") imposed, extended or increased on or after January 1, 1995 and prior to November 6, 1996. Article XIIID imposes substantive and procedural requirements on the imposition, extension or increase of any "fee" or"charge" subject to its provisions. A"fee" or"charge"subject to Article XIIID includes any levy,other than an ad valorem tax, special tax or assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or charge, in the event written protests against the proposed fee or charge are presented at a required public hearing on the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be imposed. Except for fees and charges for water, sewer and refuse collection services, the approval of a majority of the property owners subject to the fee or charge,or at the option of the agency,by a two-thirds vote of the electorate residing in the affected area,is required within 45 days following the public hearing on any such proposed new or increased fee or charge. The California Supreme Court decisions in Richmond v. Shasta Community Services District, 32 Cal.41h 409 (2004) ("Richmond'), and Bighorn- Desert View Water Agency v. Veryd, 39 CalAth 205 (2006) (`Bighorn') have clarified some of the uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In Richmond, the Shasta Community Services District charged a water connection fee, which included a capacity charge for capital improvements to the water system and a fire suppression charge. The Court held that both the capacity charge and the fire suppression charge were not subject to Article XIIID because a water connection fee is not a property-related fee or charge because it results from the property owner's voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the Court stated that a fee for ongoing water service through an existing connection is imposed "as an incident of property ownership" within the meaning of Article XIIID, rejecting, in Bighorn, the water agency's argument that consumption-based water charges are not imposed "as an incident of property ownership"but as a result of the voluntary decisions of customers as to how much water to use. Article XIIID also provides that"standby charges"are considered"assessments"and must follow the procedures required for "assessments" under Article XIS and imposes several procedural requirements for the imposition of any assessment, which may include (1) various notice requirements, including the requirement to mail a ballot to owners of the affected property; (2) the substitution of a property owner ballot procedure for the traditional written protest procedure,and providing that"majority protest" exists when ballots (weighted according to proportional financial obligation) submitted in opposition exceed ballots in favor of the assessments; and (3) the requirement that the levying entity "separate the general benefits from the special benefits conferred on a parcel"of land. Article XIIID also precludes standby charges for services that are not immediately available to the parcel being charged. Article XIIID provides that all existing, new or increased assessments are to comply with its provisions beginning July 1, 1997. Existing assessments imposed on or before November 5, 1996, and "imposed exclusively to finance the capital costs or maintenance and operations expenses for [among other things] water" are exempted from some of the provisions of Article XIIID applicable to assessments. Article XIIIC extends the people's initiative power to reduce or repeal existing local taxes, assessments,fees and charges. This extension of the initiative power is not limited by the terms of Article XIIIC to fees, taxes, assessment fees and charges imposed after November 6, 1996 and absent other authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. In Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public agency's water rates and delivery charges. The Court noted, however, that it was not holding that the 218234".4 49 authorized initiative power is free of all limitations, stating that it was not determining whether the electorate's initiative power is subject to the public agency's statutory obligation to set water service charges at a level that will `pay the operating expenses of the agency, . . . provide for repairs and depreciation of works,provide a reasonable surplus for improvements,extensions,and enlargements,pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due." The District implemented a five-year plan beginning in Fiscal Year 2002-03 which included a rate increase of$7.50 per year, or 9.4%, for all ratepayers to$87.50 per year. In May 2003,the Board of Directors approved a 15%rate increase per year, for each year, over the then following five years, upon 2/3 vote of the Bond of Directors after conducting a noticed public hearing in compliance with Article XIIID. The Board of Directors considered this increase necessary to provide needed capital improvements,to cover additional treatment and disinfection costs,and to minimize rate increases over an extended period of time. On July 2, 2003, the Bond of Directors adopted Ordinance No. OCSD-20 increasing sanitary sewer service charges for all single family and multi-family residential units as well as most commercial and industrial properties. The Ordinance was adopted by a 2/3 vote of the Board of Directors as required under law after conducting a noticed public hearing in compliance with all laws. The Ordinance increases the amount of the annual charges by approximately 15%per year for each of the following five years, commencing with Fiscal Year 2003-04, thereby raising the single family residence user rate from the then current$87.50 to$100.00, $115.00,$132.00, $152.00, and$175.00 annually. The Ordinance discounted by 5%the annual increases which were the subject of the required protest hearings on the fee increase as described above. After the completion of the CIP Validation Study for Fiscal Year 2005-06 that increased its ten year CIP cash flow projects to $2.2 billion, or an average of$220 million per year, the Board of Directors adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06 single family residential rate 31%,from$115 to$151 for such year. In May 2006,the Board of Directors adopted Ordinance No. OCSD-30B increasing the Fiscal Year 2006-07 single family residential rate 9.8%, from$151.00 to $I65.80 for such year, except those located in Revenue Area 14. These increases represented the increase permitted under the protest hearings on the fee increase which was held in 2003. In June 2007, the Board of Directors adopted Ordinance No. OCSD-32 increasing the Fiscal Year 2007- 08 single family residential rate by 9.8%. In February 2008, after a noticed public hearing, the Board of Directors adopted Ordinance No. OCSD-35, which provides for annual increases in the single family residential rate of 10.4%, 10.0%, 10.4%, 9.4%and 10.1%,respectively, for Fiscal Years 2008-09 through 2012-13. On March 27, 2013, the Bond of Directors adopted Ordinance No. OCSD-41 approving increases in its sanitary sewer service charges for all single family residences, multi-family residential units, and all non-residential properties. The Bond of Directors increased the single family residential rate, which is the basis for all of the District's sewer service charges, by 4.8% for Fiscal Year 2013-14 and thereafter by an average of 2.4%annually for each Fiscal Year through Fiscal Year 2017-18. Pursuant to the Master Agreement, the District will,to the extent permitted by law, fix, prescribe and collect fees and charges for the services of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for such Fiscal Year, and(b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Yen. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but will not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. If service charges are determined to be subject to Article XIIID, and proposed increased service charges cannot be imposed as a result of a majority protest, such circumstances may adversely affect the ability of the District to generate revenues in the amounts required by the Master Agreement, and to make the Installment Payment as provided in the Installment Purchase Agreement No assurance may be given that Articles XIIIC and XIIID will not have a material adverse impact on Net Revenues. 21823490.4 50 Other Initiative Measures Articles XIEA, XIIIB, XIIIC and XIIID were adopted pursuant to California's constitutional initiative process. From time to time other initiative measures could be adopted by California voters, placing additional limitations on the ability of the District to increase revenues. LEGAL MATTERS The validity of the Notes and certain other legal matters are subject to the approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel to the District A complete copy of the proposed form of Special Counsel opinion is attached as Appendix F hereto. Special Counsel, in its capacity as Special Counsel to the District, undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed on for the District and the Corporation by Woodruff, Spradlin & Smart, a Professional Corporation, Costa Mesa, California,and for the District by Norton Rose Fulbright US LLP,Disclosure Counsel to the District. FINANCIAL ADVISOR The District has retained Public Resources Advisory Group as an independent registered municipal advisor(the "Financial Advisor") in connection with the execution and delivery of the Notes. The Financial Advisor has not been engaged,nor have they undertaken,to audit,authenticate or otherwise verify the information set forth in the Official Statement, or any other related information available to the District, with respect to accuracy and completeness of disclosure of such information. The Financial Advisor has reviewed this Official Statement but makes no guaranty, warranty or other representation respecting accuracy and completeness of the information contained in this Official Statement. ABSENCE OF LITIGATION There is no action, suit,proceeding, inquiry or investigation,at law or in equity,before or by any court, regulatory agency, public board or body, pending or, to the best knowledge of the District, threatened against the District affecting the existence of the District or the titles of its directors or officers to their offices or seeking to restrain or to enjoin the sale or delivery of the Notes, the application of the proceeds thereof in accordance with the Trust Agreement, or in any way contesting or affecting the validity or enforceability of the Notes, the Trust Agreement, the Master Agreement, the Installment Purchase Agreement or any action of the District contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement, or contesting the powers of the District or its authority with respect to the Notes or any action of the District contemplated by any of said documents,nor,to the knowledge of the District is there any basis therefor. There is no action, suit, proceeding, inquiry or investigation,at law or in equity,before or by any court, regulatory agency, public board or body pending or, to the best knowledge of the District, 03reatened against the District contesting or affecting the ability of the District to collect amounts from which the Installment Payment is payable,or which would have a material adverse effect on the District's ability to make the Installment Payment FINANCIAL STATEMENTS The basic financial statements of the District included in Appendix A to this Official Statement have been audited by McGladrey LLP, independent certified public accountants. See APPENDIX A — "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED JUNE 30,2015"herein. The District has received the Government Finance Officers Association Certificate of Achievement for"Excellence in Financial Reporting"for over 20 consecutive years. The audited financial statements, including the footnotes thereto, should be reviewed in their entirety. McGladrey LLP, the District's independent auditor, has not been engaged to 218234".4 51 perform, and has not performed, since the date of its report included in Appendix A, any procedures on the financial statements addressed in that report. McGladrey LLP also has not performed any procedures relating to this Official Statement. TAX MATTERS The Internal Revenue Code of 1986 (the "Code") imposes certain requirements that must be met subsequent to the execution and delivery of the Notes for the interest component of the Installment Payment (the "Interest Component"), and the allocable portion thereof distributable in respect of each Note(the"Note Interest Distribution"),to be and remain excluded pursuant to section 103(a)of the Code from the gross income of the owners thereof from the gross income of the owner thereof for federal income tax purposes. Noncompliance with such requirements could cause such amounts to be included in gross income for federal income tax purposes retroactive to the date of delivery of the Installment Purchase Agreement and the Notes. In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel, under existing statutes,regulations,mlings and court decisions,the Interest Component of the Installment Payment and the Note Interest Distributions in respect thereof are exempt from personal income taxes of the State of California and, assuming compliance with the covenants referred to herein, are excluded pursuant to section 103(a)of the Code from the gross income of the owners thereof for federal income tax purposes. In the further opinion of Special Counsel,under existing statutes, regulations,rulings and court decisions, the Notes me not"specified private activity bonds" within the meaning of section 57(a)(5) of the Code and,therefore,the Interest Component allocable to and the Note Interest Distributions in respect of a Note will not be treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of an Interest Component or of a Note Interest Distribution owned by a corporation may affect the computation of the alternative minimum taxable income. A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will be computed. The initial public offering price for the Notes is greater than the principal amount payable on the Notes at maturity. To the extent that a purchaser of a Note who treats the stated interest payable at maturity as qualified stated interest (as described above) acquires the Note at a price greater than the aggregate amount (other than such qualified stated interest) payable on such Note, such excess will constitute "bond premium" under the Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder, provide generally that bond premium on a non-callable tax-exempt obligation must be amortized over the remaining term of the obligation: the amount of premium so amortized will reduce the owner's basis in such Note for federal income tax purposes, but such amortized premium will not be deductible for federal income tax purposes. Consequently, an owner of a Note who purchased the Note with bond premium and held the Note until paid at maturity generally will not realize tax gain or loss on such Note. The rate and timing of the amortization of the bond premium and the corresponding basis reduction may result in an owner realizing a taxable gain when a Note owned by such owner is sold or disposed of for an amount equal to or in some circumstances even less than the original cost of the Note to the owner. Purchasers should consult their own tax advisors as to the computation and treatment of such amortizable bond premium, including, but not limited to, the calculation of gain or loss upon the sale,maturity or other disposition of a Note. Pursuant to the Trost Agreement and in the Tax Certifcate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the District and the Corporation in connection with the issuance of the Notes,the District and the Corporation will make representations relevant to the determination of, and will make certain covenants regarding or affecting, the exclusion of interest on the Notes from the gross income of the owners thereof for federal income tax purposes. In reaching its opinions described above, Special Counsel will assume the accuracy of such representations and the present and future compliance by the District and the Corporation with 218234".4 52 such covenants referred to herein. Further, except as stated above, Special Counsel will express no opinion as to any federal or state tax consequences of the receipt of interest on, or the ownership or disposition of,the Notes. Special Counsel has not undertaken to advise in the future whether any events after the date of execution and delivery of the Installment Purchase Agreement and the Notes may affect the tax status of the Interest Component or the Note Interest Distributions. No assurance can be given that future legislation, if enacted into law, will not contain provisions that could directly or indirectly reduce the benefit of the exemption of such amounts from personal income taxation by the State of California or of the exclusion of the interest on the Notes from the gross income of the owners thereof for federal income tax purposes. Furthermore, Special Counsel will express no opinion as to any federal, state or local tax law consequences with respect to the Installment Purchase Agreement, the Notes,the Interest Component or Note Interest Distributions, if any action is taken with respect to the Installment Purchase Agreement, the Notes or the proceeds thereof, or the Trust Agreement predicated or permitted upon the advice or approval of other counsel. Special Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the District and the Corporation described above. No rating has been sought from the Internal Revenue Service (the "Service") with respect to the matters addressed in the opinion of Special Counsel,and Special Counsel's opinion is not binding on the Service. The Service has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Notes is commenced, under current procedures the Service is likely to treat the District as the "taxpayer," and the owners would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the Interest Component and Note Interest Distributions accrued in respect of Notes, the District may have different or conflicting interest from the owners. Public awareness of any future audit of the Notes could adversely affect the value and liquidity of the Notes during the pendency of the audit,regardless of its ultimate outcome. Although Special Counsel is of the opinion that Interest Component and Note Interest Distributions in respect of a Note are exempt from California personal income tax and excluded from the gross income of the owners thereof for federal income tax purposes,an owner's federal, state or local tax liability may be otherwise affected by the ownership or disposition of the Notes. The nature and extent of these other tax consequences will depend upon the owner's other items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Notes should be aware that (i) section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Notes and the Code contains additional limitations on interest deductions applicable to financial institutions that own tax-exempt obligations (such as the Notes), (ii) with respect to insurance companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(13)(i) reduces the deduction for loss reserves by 15% of the sum of certain items, including Interest Component and Note Interest Distributions in respect of the Notes, (iii) Interest Component and Note Interest Distributions accrued in respect of Notes owned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income,including Interest Component and Note Interest Distributions accrued in respect of Notes,may be subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25%of the gross receipts of such Subchapter S corporation is passive investment income, (v) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, Interest Distributions and Note Interest Distributions accrued in respect of Notes owned by such recipients for federal income tax purposes,and(vi)under section 32(i) of the Code, receipt of investment income, including Interest Component and Note Interest Distributions accrued in respect of Notes,may disqualify the recipient thereof from obtaining the earned income credit. Special Counsel has expressed no opinion regarding any such other tax consequences. 218234o.4 53 Existing law may change to reduce or eliminate the benefit to noteholders of the exclusion of interest on the Interest Component and Note Interest Distributions accrued in respect of the Notes from gross income for federal income tax purposes. Any proposed legislation or administrative action,whether or not taken, could also affect the value and marketability of the Notes. Prospective purchasers of the Notes should consult with their own tax advisors with respect to any proposed or future changes in tax law. A copy of the form of opinion of Special Counsel to be delivered at the closing of the Notes is included in Appendix F. CONTINUING DISCLOSURE The District has covenanted for the benefit of holders and beneficial owners of the Notes (a)to provide certain financial information and operating data(the"Annual Report')relating to the District and the property in the District not later than eight months after the end of the District's Fiscal Year (which currently would be March 1), commencing with the report for the 2015-16 Fiscal Year, and(b)to provide notices of the occurrence of certain enumerated events. The Annual Report will be filed by the Trustee on behalf of the District, with the Municipal Securities Rulemaking Board. The notices of enumerated events will be filed by the Trustee on behalf of the District with the Municipal Securities Rulemaking Board. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See APPENDIX D — "FORM OF CONTINUING DISCLOSURE AGREEMENT." These covenants have been made in order to assist the Initial Purchaser in complying with S.E.C.Rule 15c2-12(the"Rule"). RATINGS The Notes will be assigned long-term ratings of-by S&P Global Ratings,a business unit of Standard & Poor's Financial Services LLC("S&P"), and " " by Fitch Ratings ("Fitch"). The Notes will be assigned a short-term rating by Fitch of" " S&P and Fitch affirmed the long-term ratings of " "and"_,"respectively, on the District's Existing Senior Obligations. Such ratings reflect only the views of the rating agencies, and do not constitute a recommendation to buy, sell or hold the Notes. Explanation of the significance of such ratings may be obtained only from the respective organizations at: Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041 and Fitch Ratings, One State Street Plaza, New York, New York I0004. There is no assurance that any such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by the respective rating agencies, if in the judgment of any such rating agency circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Notes. PURCHASE AND REOFFERING (the "Initial Purchaser") has purchased the Notes from the District at a competitive sale for a purchase price of$ (representing the aggregate principal amount of the Notes,plus a premium of$ less an underwriter's discount of$ ). The public offering price may be changed from time to time by the Initial Purchaser. The Initial Purchaser may offer and sell Notes to certain dealers and others at prices lower than the offering price shown on the cover page hereof. MISCELLANEOUS Included herein are brief summaries of certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. 218234".4 54 This Official Statement is not to be construed as a contract or agreement between the District and the purchasers or Owners of any of the Notes. The execution and delivery of this Official Statement has been duly authorized by the District. ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors 218234".4 55 APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30,2015 218234%.4 A-1 APPENDIX B THE COUNTY OF ORANGE-ECONOMIC AND DEMOGRAPHIC INFORMATION 218234%.4 B-I APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS 218234".4 C-1 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT(this "Disclosure Agreement'), dated as of October 1, 2016, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District'), and DIGITAL ASSURANCE CERTIFICATION LLC,as Dissemination Agent(the"Dissemination Agent'). WITNESSETH: WHEREAS, the District has caused to be executed and delivered the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes"), evidencing principal in the aggregate amount of$ pursuant to a Trust Agreement,dated as of the date hereof (the "Trust Agreement'), by and among U.S. Bank National Association, as trustee (the "Trustee"), the Orange County Sanitation District Financing Corporation(the"Corporation")and the District; and WHEREAS, this Disclosure Agreement is being executed and delivered by the District and the Dissemination Agent for the benefit of the owners and beneficial owners of the Notes and in order to assist the underwriter of the Notes in complying with the Rule(as defined herein); NOW, THEREFORE, for and in consideration of the premises and of the mutual covenants herein contained,the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust Agreement or, if not defined therein, in the Master Agreement, dated as of August 1, 2000, by and between the District and the Corporation. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the District pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means the date in each yew that is eight months after the end of the Fiscal Year,which date,as of the date of this Disclosure Agreement, is March 1. "Disclosure Representative" means the Director of Finance and Administrative Services of the District, or such other officer or employee of the District as the District shall designate in writing to the Dissemination Agent and the Trustee from time to time. "Dissemination Agent" means an entity selected and retained by the District, or any successor thereto selected by the District. The initial Dissemination Agent shall be Digital Assurance Certification LLC. "EMMA" shall mean Electronic Municipal Market Access system, maintained on the internet at htto://emma.mwb.ore by the MSRB. "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30, or any twelve-month or fifty-two week period hereafter selected by the District,with notice of such selection or change in fiscal year to be provided as set forth herein. 218234".4 D-1 "Listed Events" means any of the events listed in Section 4 hereof and any other event legally required to be reported pursuant to the Rule. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with the MSRB are to be made through EMMA. "Official Statement"means the Official Statement,dated , 2016,relating to the Notes. "Participating Underwriter" means any of the original purchaser(s) of the Notes required to comply with the Rule in connection with the offering of the Notes. "Repository"means,until otherwise designated by the SEC,EMMA. "Rule" means Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same has been or may be amended from time to time. "SEC" shall mean the United States Securities and Exchange Commission. Section 2. Provision of Annual Reports. (a) The District shall provide, or shall cause the Dissemination Agent to provide, to MSRB, through EMMA, not later than 15 days prior to the Annual Report Date, an Annual Report which is consistent with the requirements of Section 3 of this Disclosure Agreement. The Annual Report must be submitted in electronic format, accompanied by such identifying information as provided by the MSRB. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 3 of this Disclosure Agreement. Not later than 15 Business Days prior to such date, the District shall provide the Annual Report to the Dissemination Agent If the Fiscal Year changes for the District, the District shall give notice of such change in the manner provided under Section 4(e)hereof. (b) If by 15 Business Days prior to the date specified in subsection(a) for providing the Annual Report to the MSRB, through EMMA, the Dissemination Agent has not received a copy of the Annual Report the Dissemination Agent shall contact the District to determine if the District is in compliance with subsection(a). The District shall provide a written certification with each Annual Report famished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection(a), the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine the electronic filing address of, and then-current procedures for submitting Annual Reports to, the MSRB each year prior to the date for providing the Annual Report; and 21823490.4 D-2 (ii) (if the Dissemination Agent is other than the Trustee), to the extent appropriate information is available to it,file a report with the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided. Section 3. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District's audited financial statements are not available by the Annual Report Date,the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The principal evidenced by the Notes Outstanding as of the June 30 next preceding the Annual Report Date and the principal amount of other Senior Obligations outstanding as of the June 30 next preceding the Annual Report Date. (c) Updated information (not to include projections), for the Fiscal Year ended the June 30 next preceding the Annual Report Date, comparable to the information contained in the Official Statement in Table Nos.2,4, 6(only with respect to information on 6 under the headings Fiscal Year and Sewer Service Charge), 8,9, 10, 11, 12, 13, 14 and 16. (d) In addition to any of the information expressly required to be provided under subsections (a), (b) and (c) of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made,not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the District is an"obligated person" (as defined by the Rule), which are available to the public on EMMA or filed with the SEC. The District shall clearly identify each such document to be included by reference. Section 4. Reportine of Shmificant Events. (a) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes, in a timely manner not more than ten(10)Business Days after the event: (1) principal and interest payment delinquencies; (2) defeasances; (3) tender offers; (4) rating changes; (5) adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB)or other material notices or determinations with respect to the tax status of the Notes; 21823490.4 D-3 (6) unscheduled draws on the debt service reserves reflecting financial difficulties; (7) unscheduled draws on credit enhancements reflecting financial difficulties; (8) substitution of credit or liquidity providers or their failure to perform; or (9) bankruptcy,insolvency,receivership or similar proceedings. For these purposes, any event described in the immediately preceding paragraph(9) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District,or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. (b) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes, if material: (1) mergers, consolidations,acquisitions,the sale of all or substantially all of the assets of obligated persons or their termination; (2) appointment of a successor or additional Trustee or the change of the name of a Trustee; (3) nonpayment related defaults; (4) modifications to the rights of Owners; (5) a notices of prepayment; or (6) release, substitution or sale of property securing repayment of the Notes. (c) Whenever the District obtains knowledge of the occurrence of a Listed Event, described in subsection(b)of this Section 4,the District shall as soon as possible determine if such event would be material under applicable federal securities law. (d) If the District determines that knowledge of the occurrence of a Listed Event described in subsection(b) of this Section 4 would be material under applicable federal securities law, the District shall promptly notify the Dissemination Agent in writing and instruct the Dissemination Agent to report the occurrence to the Repository in a timely manner not more than ten(10)Business Days after the event. (e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event,the Dissemination Agent shall file a notice of such occurrence with the MSRB. 21823490.4 D-4 Section 5. Filings with the MSRB. All information, operating data, financial statements, notices and other documents provided to the MSRB in accordance with this Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination of Reporting Obligation. The District's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Notes. If such termination occurs prior to the final maturity of the Notes,the District shall give notice of such termination in the same manner as for a Listed Event under Section 4 hereof. Section 7. Dissemination Agent. The District may, from time to time, appoint or engage another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent,with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Trustee, if the Trustee agrees to act, shall be the Dissemination Agent; provided, it shall receive written notice of such designation at the time of such designation. Notwithstanding any other provision to this Disclosure Agreement to the contrary,the District may provide any Annual Report to Beneficial Owners by means of posting such Annual Report on an internet site that provides open access to Beneficial Owners. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the District may amend this Disclosure Agreement, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such party, and any provision of this Disclosure Agreement may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the District and the Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the District or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate amount of principal evidenced by Outstanding Notes and upon being indemnified to its reasonable satisfaction, shall, or any holder or beneficial owner of the Notes may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District, Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the District,the Trustee or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. 218234".4 D-5 Section 11. Duties. Immunities and Liabilities of Trustee and Dissemination Agent. Article Vill of the Trust Agreement is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Trust Agreement. Neither the Trustee nor the Dissemination Agent shall be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents,harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Notes. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Notes, and shall create no rights in any other person or entity. Section 13. Counteruarts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as of the date first above written. ORANGE COUNTY SANITATION DISTRICT By: Lorenzo Tyner Director of Finance and Administrative Services DIGITAL ASSURANCE CERTIFICATION LLC, as Dissemination Agent By: Authorized Representative Acknowledged and Accepted: U.S.BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 21823490.4 D-6 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: Orange County Sanitation District Name of Issue: $ Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B(the"Notes") Date of Execution and Delivery: ,2016 NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District')has not provided an Annual Report with respect to the above-captioned Notes as required by Section 6.09 of the Trust Agreement,dated as of October 1,2016,by and among U.S.Bank National Association,as Trustee, the Orange County Sanitation District Financing Corporation and the District. [The District anticipates that the Annual Report will be filed by .] Dated: , 20 ORANGE COUNTY SANITATION DISTRICT By: Title: cc: Trustee Dissemination Agent 218234".4 D-g APPENDIX E BOOK-ENTRY SYSTEM The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Notes,payment of principal and interest evidenced by the Notes to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Notes, and other Note-related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the District and the Corporation each believes to be reliable, but the District and the Corporation take no responsibility far the completeness or accuracy thereof. The Depository Trust Company—Book-Entry System The Depository Trust Company(`DTC"),New York,NY,will act as securities depository for the securities (the "Notes"). The Notes will be issued as fully-registered securities registered in the time of Cede & Co. (DTC's partnership nominee) or such other time as may be requested by an authorized representative of DTC. One fully-registered note will be issued for the Notes in the aggregate principal amount of such issue, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations,and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust &Clearing Corporation("DTCC"). DTCC is the holding company for DTC,National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly("Indirect Participants"). DTC has a Standard&Poor's rating of"AA+." The DTC Rules applicable to its Participants site on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated herein by such reference or otherwise. Purchases of Notes under the DTC system must be made by or through Direct Participants,which will receive a credit for the Notes on DTC's records. The ownership interest of each actual purchaser of each Note (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Notes, except in the event that use of the book-entry system for the Notes is discontinued. 218234%.4 E-1 To facilitate subsequent transfers, all Notes deposited by Direct Participants with DTC me registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Notes with DTC and their registration in the name of Cede&Co. or such other nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Notes may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Notes, such as prepayments, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Notes may wish to ascertain that the nominee holding the Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Prepayment notices shall be sent to DTC. If less than all of the Notes within an issue are being prepaid,DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be prepaid. Neither DTC nor Cede & Co. (nor such other DTC nominee)will consent or vote with respect to the Notes unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy). Prepayments with respect to the Notes will be made to Cede&Co.,or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the District or the Trustee on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, nor its nominee, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of prepayment proceeds, distributions, and dividend payments to Cede& Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Notes at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained,Notes are required to be printed and delivered. 21823490.4 E-2 The District may decide to discontinue use of the system of book-entry-only transfers through DTC(or a successor securities depository). In that event,Notes will be printed and delivered to OTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. Discontinuance of DTC Services In the event (i)DTC determines not to continue to act as securities depository for the Notes, (ii)DTC shall no longer net and give notice to the Trustee of such determination or (iii)the District determines that it is in the best interest of the Beneficial Owners that they be able to obtain Notes and delivers a written certificate to the Trustee to that effect, DTC services will be discontinued. I£ the District determines to replace DTC with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered Note for each of the maturities of the Notes, registered in the time of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace DTC then the Notes shall no longer be restricted to being registered in the certificate registration books in the name of Cede & Co., but shall be registered in such names as are requested in a certificate of the District, in accordance with the Trust Agreement. All Notes may be presented for transfer by the Owner thereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, on the books required to be kept by the Trustee pursuant to the provisions of the Trust Agreement, upon surrender of such Certifications for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Note as the absolute owner of such Note for all purposes,whether or not such Note shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal evidenced by such Note shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such Note to the extent of the sum or sums so paid. Whenever any Notes shall be surrendered for transfer,the Trustee shall execute and deliver new Notes representing the same principal amount in Authorized Denominations. The Trustee shall require the payment of any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Notes may be presented for exchange at the Principal Office of the Trustee for a like aggregate principal amount of Notes of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to transfer or exchange any Note during the period in which the Trustee is selecting Notes for prepayment,nor shall the Trustee be required to transfer or exchange any Note or portion thereof selected for prepayment from and after the date of mailing the notice of prepayment thereof. 218234%.4 E3 APPENDIX F FORM OF APPROVING OPINION OF SPECIAL COUNSEL Upon the execution and delivery of the Notes, Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel to the District, will render its final approving opinion with respect to the Notes in substantially the following form: [Date of Delivery] Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,California 92708-7018 Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B Ladies and Gentlemem We have acted as Special Counsel in connection with the $ aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes'), which evidence direct, fractional undivided interests of the Owners thereof in the installment payment (the "Installment Payment'), and the interest thereon, to be made by the Orange County Sanitation District(the "District") pursuant to the Installment Purchase Agreement, dated as of October 1, 2016 (the "Installment Purchase Agreement"), by and between the District and the Orange County Sanitation District Financing Corporation(the"Corporation"). Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement'), by and between the District and the Corporation, the District has established conditions and terms upon which obligations such as the Installment Payment and the interest thereon, will be incurred and secured. The Installment Payment under the Installment Purchase Agreement is payable from (i)Net Revenues as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the `Wastewater System") remaining after payment of Maintenance and Operation Costs, and (ii)other lawfully available funds of the District. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Installment Purchase Agreement. The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of October 1, 2016 (the "Trust Agreement"), by and among the District, the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds from the sale of the Notes will be used to (i)prepay all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B, currently outstanding in the aggregate principal amount of$120,850,000, and (ii)pay the costs incurred in connection with the execution and delivery of the Notes. 218234".4 F-1 As Special Counsel,we have examined copies certified to us as being true and complete copies of the Master Agreement, the Trust Agreement and the Installment Purchase Agreement and the proceedings of the District in connection with the execution and delivery of the Notes. We have also examined such certificates of officers of the District,the Corporation and others as we have considered necessary for the purposes of this opinion. Based upon the foregoing,we are of the opinion that: I. The Master Agreement, the Installment Purchase Agreement and the Trust Agreement each has been duly and validly authorized,executed and delivered by the District and, assuming the Master Agreement, the Installment Purchase Agreement and the Trust Agreement each constitutes the legally valid and binding obligation of the other parties thereto, each constitutes the legally valid and binding obligation of the District, enforceable against the District in accordance with its respective terms 2. The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other funds provided for in the Installment Purchase Agreement lawfully available therefor. 3. Assuming due authorization, execution and delivery of the Trust Agreement and the Notes by the Trustee,the Notes are entitled to the benefits of the Trust Agreement. 4. Under existing statutes, regulations, ratings and court decisions, and, assuming compliance with the covenants mentioned below, the component of the Installment Payment designated as `Interest on Installment Payment" in Section 3.02 of the Installment Purchase Agreement (the "Interest Component"), and the allocable portion thereof distributable in respect of any Note (the "Note Interest Distribution"), is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 (the "Code") from the gross income of the owners thereof for federal income tax purposes. We are further of the opinion that under existing statutes, regulations, ratings and court decisions, the Installment Purchase Agreement is not a "specified private activity bond"within the meaning of section 57(a)(5)of the Code and,therefore,that each Interest Component and each Note Interest Distribution in respect thereof will not be treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of an Interest Component, or Note Interest Distribution in respect thereof, owned by a corporation may affect the computation of the alternative minimum taxable income of that corporation. A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will be computed We are further of the opinion that any Interest Component allocable to and the Note Interest Distributions in respect of a Note,are exempt from personal income taxes of the State of California under present state law. Pursuant to the Trust Agreement and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the District in connection with the execution and delivery of the Notes, the District will make representations relevant to the determination of, and will make certain covenants regarding or affecting,the exclusion of the Interest Component and the Note Interest Distribution from the gross income of the owners thereof for federal income tax purposes. In reaching the opinions described in the immediately preceding paragraph, we have assumed the accuracy of such representations and the present and future compliance by the District with such covenants. 218234".4 F-2 Except as stated in the second preceding paragraph, we express no opinion as to any federal or state tax consequence of the ownership or disposition of the Installment Purchase Agreement or the Notes. Furthermore,we express no opinion as to any federal, state or local tax law consequences with respect to the Installment Purchase Agreement, Notes, Interest Component, or Note Interest Distributions, if any action is taken with respect to the Installment Purchase Agreement, the Master Agreement, the Trust Agreement, the Notes or the proceeds thereof,permitted or predicated on the advice or approval of counsel,if such advice or approval is given by counsel other than us. The rights of the owners of the Notes and the enforceability of the Notes, the Master Agreement, the Trust Agreement and the Installment Purchase Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. The enforceability of the Notes, the Master Agreement, the Trust Agreement and the Installment Purchase Agreement is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific performance or injunctive relief,regardless of whether considered in a proceeding in equity or at law,and to the limitations on legal remedies against governmental entities in California. No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Notes. Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of result; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above. Respectfully submitted, 218234".4 F3 DRAFT OF 08/30/16 OFFICIAL NOTICE INVITING BIDS S[Par Amount]" ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES,SERIES 2016B (Book-Entry-Only) NOTICE IS HEREBY GIVEN that bids will be received by the Orange County Sanitation District (the "District") for the purchase of$[Par Amount]* original principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes"). Bids for less than all of the Notes will not be accepted. The bids will be received in the form, in the manner and up to the time specified below(unless postponed as described herein): Date: October_2016 a.m.,New York Time Electronic Bids: Electronic proposals may be submitted to Ipreo, at www.newissuehome.i-deahcom and the Parity electronic bid submission system (the "Electronic Service'). The Electronic Service will act as agent of the bidder and not of the District in connection with the submission of bids and the District assumes no responsibility or liability for bids submitted through the Electronic Service. See"Information Regarding Electronic Proposals"herein. No facsimile,hand delivery or sealed bids will be accepted. Terms of the Notes The Preliminary Official Statement for the Notes, dated October . 2016, including the cover page and all appendices thereto (the "Preliminary Official Statement"), provides certain information concerning the sale and delivery of$[Par Amount]'aggregate principal amount of the Notes, which are certificates of participation evidencing direct, undivided fractional interests in the Installment Payment (the "Installment Payment'), and the interest thereon,payable by the District pursuant to the Installment Purchase Agreement, dated as of October 1, 2016 (the `Installment Purchase Agreement'), by and between the District and the Orange County Sanitation District Financing Corporation (the "Corporation"). Each bidder must have obtained and reviewed the Preliminary Official Statement prior to bidding for the Notes. This Official Notice Inviting Bids,including all exhibits and attachments, contains certain information for quick reference only, is not a summary of the issue and governs only the terms of the sale of, bidding for and closing procedures with respect to the Notes. Bidders must read the entire Preliminary Official Statement to obtain information essential to making an informed investment decision. Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement, by and between the District and the Corporation, the District has established and declared the conditions and terns upon which obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest thereon, will be incurred and secured. The Installment 'Preliminary,subject to change. Payment under the Installment Purchase Agreement is payable solely from Net Revenues, as provided in the Master Agreement and the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the"Wastewater System")remaining after payment of Maintenance and Operation Costs. The Issue The proceeds from the sale of the Notes will be used to: (i)prepay on November 1, 2016 all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B, currently outstanding in the aggregate principal amount of$120,850,000,and(ii)pay the costs incurred in connection with the execution and delivery of the Notes. The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of October 1, 2016 (the "Trust Agreement"), by and among the District, the Corporation and U.S. Bank National Association, as trustee (the "Trustee'). Capitalized terms not defined herein shall have the same definitions as used in the Trust Agreement or the Master Agreement. Authorization On September_, 2016, the District and the Corporation authorized the execution and delivery of the Installment Purchase Agreement,the Trust Agreement and the Notes. Existing Senior Obligations The District has outstanding Senior Obligations payable on a parity with the Installment Payment under the Installment Purchase Agreement, as described in the Preliminary Official Statement. The proceeds from the sale of the Notes will be applied to terminate the District's obligations under the 2014B Installment Purchase Agreement. Security and Source of Payments The Notes are certificates of participation which evidence direct, undivided fractional interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, solely from Net Revenues and other funds as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs,all as further provided in the Master Agreement. The District's obligation to make the Installment Payment from Net Revenues is on a parity with the District's obligation to make payments with respect to its other outstanding obligations described as Senior Obligations and all Reimbursement Obligations, if any, with respect to Senior Obligations, as provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security for Senior Obligations pursuant to the Master Agreement. Pursuant to the Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations,and the Net Revenues will not be used for any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be apportioned such sums for such purposes as me expressly permitted by the Master Agreement. This 2 pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. The term Senior Obligations, generally means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District authorized, executed,issued and delivered under and pursuant to applicable law,the Installment Purchase Agreement and all other contracts (including financial contracts) or leases of the District authorized and executed by the District under and pursuant to applicable law, the installment, lease or other payments which are, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a parity with the payments under the Master Agreement. The District may at any time incur Subordinate Obligations; provided, however, that prior to incurring such Subordinate Obligations, the District will have determined that the incurrence thereof will not materially adversely affect the District's ability to comply with the requirements of the Master Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate Obligations. Currently, there are no Subordinate Obligations outstanding. For a description of the District's outstanding Senior Obligations, see "FINANCIAL OBLIGATIONS Existing Indebtedness" in the Preliminary Official Statement. The District may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be junior and subordinate to the pledge of, and lien on,Net Revenues for the payment of Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. Pursuant to the Master Agreement, the District is required, to the extent permitted by law, to fix, prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125% of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary,but shall not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES Rate Covenant"in the Preliminary Official Statement. Additional Obligations In addition to the Senior Obligations Outstanding, the District may at any time incur Obligations payable on a parity or on a subordinate basis to the payment by the District of the Installment Payment upon satisfaction of conditions provided in the Master Agreement. No Obligations payable on such a subordinate basis are currently outstanding. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES — Limitations on Issuance of Additional Obligations" in the Preliminary Official Statement. Book-Entry-Only The Notes will be executed and delivered in the form of fully registered certificates payable in lawful money of the United States of America. The Notes will be initially delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book-entry form only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. The Notes will be 3 delivered in Authorized Denominations of $5,000 and any integral multiple thereof. Payments of principal and interest evidenced by the Notes are payable directly to DTC by the Trustee. Upon receipt of payments of such principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Notes. So long as the Notes are in the DTC book-entry system, the interest,principal and prepayment premiums,if any,due with respect to the Notes will be payable by the Trustee,or its agent,to DTC or its nominee. Principal and Interest Payments The Notes will mature on ,20_'(the"Maturity Date"). The Notes will be dated as of the date of initial delivery and will evidence interest from that date (computed on the basis of a 360-day year of twelve 30-day months). Interest evidenced by the Notes is payable semiannually on May 15 and November 15 of each year, commencing on May 15, 2017. Payment of principal of the Notes will be paid in lawful money of the United States of America upon presentation and surrender thereof at the Principal Office of the Trustee. The District expects the principal of the Notes to be paid from proceeds of the sale, prior to the Maturity Date, of a future series of certificates of participation,notes or other obligations of the District. The sale and delivery of a future series of certificates of participation, notes or other obligations of the District will depend on market conditions, certain approvals by the District and the Corporation and other factors. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES" in the Preliminary Official Statement. Optional Prepayment The Notes are subject to optional prepayment prior to the Maturity Date on any date on or after 20 in whole or in part, in Authorized Denominations, from and to the extent of prepayment of the Installment Payment paid pursuant to the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Notes to be prepaid,plus accrued interest evidenced thereby to the date fixed for prepayment,without premium. Selection of Notes for Prepayment Whenever less than all the Outstanding Notes are to be prepaid pursuant to provisions of the Trust Agreement with respect to optional prepayment thereof,the Trustee shall select the Notes to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate,which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the Notes so selected for prepayment on such date. Notice of Prepayment The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice of prepayment to the respective Owners of Notes designated for prepayment by first-class mail, postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment,and neither failure to receive Preliminary; subject to change. 4 such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Notes or the cessation of interest evidenced thereby on the date fixed for prepayment. Interest Rates,Reoffering Prices,Premium Bids,and Certificate of Initial Purchaser Bidders must bid to purchase all and not part of the Notes and must submit their bids on the Official Bid Form. Bidders must specify a rate of interest for the Notes, expressed in multiples of either [one-eighths ('/s) or one-twentieths ('/zo) of one percent (1%); and no interest rate can exceed 5% per] annum. The successful bidder will, within 30 minutes after being notified of the award of the Notes, advise the District of the initial bona fide public reoffering prices of the Notes on the date of award. The successful bidder will also be required to famish to the District a certificate ("Certificate of Initial Purchaser") in the form of the Certificate of Initial Purchaser attached hereto as Exhibit A (with such modifications as may be acceptable to Special Counsel). At any time before or after delivery of the Notes to the successful bidder,that successful bidder also may be required by the District or Special Counsel to clarify any discrepancies between the Certificate of Initial Purchaser and publicly available information relating to trades of the Notes that might suggest that the initial sale of a substantial portion of the Notes to the public was at a materially higher price than the price stated for that maturity in the Certificate of Initial Purchaser. Bidders may bid to purchase Notes from the District with a premium; however, no bid will be considered if the bid is to purchase Notes at an aggregate price less than 100%of the aggregate principal amount of the Notes. No bid will be accepted that contemplates the waiver of any interest or other concession by the bidder as substitute for payment in full of the purchase price. Bids that do not conform to the terms of this section maybe rejected. See"Right to Reject Bids,Waive Irregularities"below. Adjustment of Principal Amount After Receipt of Bids The principal amount of the Notes set forth in the Official Bid Form reflects an estimate of the District as to the likely interest rate of the winning bid and the premium contained in the winning bid. After selecting the winning bid,the principal amount of the Notes may be adjusted in$5,000 increments, if the District elects to do so, to reflect the actual interest rate and any premium in the winning bid to generate a dollar amount bid of at least $ while maintaining the same `per Note" purchaser's original issue premium, if any, provided in such bid. Any such adjustment will be communicated to the winning bidder within 24 hours after receipt of such bid by the District. Changes in the principal amount of the Notes made as described in this paragraph will not affect the determination of the winning bidder or give the winning bidder any right to reject the Notes. No Insurance THE SUCCESSFUL BIDDER SHALL NOT PURCHASE MUNICIPAL BOND INSURANCE IN CONNECTION WITH THE NOTES. Form of Bid BIDS FOR LESS THAN ALL OF THE NOTES WILL NOT BE ACCEPTED. Each bid must be on the Official Bid Form. All electronic proposals shall be deemed to incorporate the provisions of the Official Bid Form and must be unconditional and irrevocable. In addition, each bidder is requested to 5 supply an estimate of the true interest cost resulting from its bid, computed as prescribed below under the caption "Award, Delivery and Payment," which shall be considered as informative only and not binding on either the bidder or the District. Each bid must be in accordance with the terms and conditions set forth in this Official Notice Inviting Bids. The District will make its best efforts to accommodate electronic bids; however, the District, the Financial Advisor (Public Resources Advisory Group) and Special Counsel assume no responsibility for any error contained in any electronic bid, or for the failure of any electronic bid to be transmitted or received at the official time for receipt of such bids. The official time for receipt of bids will be determined by the District at the place of the bid opening, and the District shall not be required to accept the time kept by Electronic Service as the official time. The District assumes no responsibility for informing any bidder prior to the deadline that its bid is incomplete,or not received. If multiple timely bids are received from a single bidder the District shall accept the best of such bids and each bidder agrees,by submitting any bid,to be bound by its best bid. Information Regarding Electronic Proposals Electronic proposals must be submitted through the Electronic Service. If any provision of this Official Notice Inviting Bids conflicts with information provided by the Electronic Service, this Official Notice Inviting Bids shall control. The District is not responsible for the proper operation of, and shall have no liability for any delays or interruptions of or any damages caused by the Electronic Service. The District is using the Electronic Service as a communication mechanism and not as the District's agent to conduct electronic bidding for the Notes. The District is not bound by any advice of or determination by the Electronic Service to the effect that any particular bid complies with the terms of this Official Notice Inviting Bids. All costs and expenses incurred by prospective bidders in connection with their submission of bids through the Electronic Service are the sole responsibility of such bidders and the District is not responsible for any such costs or expenses. Further information about the Electronic Service, including any fee charged, may be obtained from Ipreo at 1359 Broadway, Second Floor, New York, NY 10018, (212)849-5023. The District assumes no responsibility or liability for bids submitted through the Electronic Service. The District shall be entitled to assume that any bid submitted through the Electronic Service has been made by a duly authorized agent of the bidder. Bid Security Deposit Each bidder must provide with its bid (i) a financial surety bond ("Surety Bond") in the amount of$ (the`Bid Security Deposit"). Bid Security Deposit wire transfers must be received in federal funds prior to the deadline for examination of the bids.Contact the District's Financial Advisor,Public Resources Advisory Group, 310-477-8487 or by e-mail at Ichoi(a praeadvisors.com, for wire instructions. The wire transfers of unsuccessful bidders will be returned promptly on the bid date after the examination of bids.The wire transfer of the successful bidder will be retained by the District and applied to the purchase price at the time of delivery of the Notes. The District disclaims any liability for funds sent by wire transfer,except for any willful misconduct or reckless disregard for its duties. If after the award of the Notes, the successful bidder fails to complete the purchase on the terms stated in its bid,unless such failure of performance shall be caused by any act or omission of the District, the Bid Security Deposit shall be retained by the District as stipulated liquidated damages. No interest will be paid upon any Bid Security Deposit. 6 Official Statement The District has approved a Preliminary Official Statement, dated October , 2016, which the District has "deemed final" for purposes of Rule 15c2-12 promulgated by the Securities and Exchange Commission, as amended (the "Rule"), although subject to revision, amendment and completion in conformity with the Rule. The District will provide the successful bidder such reasonable number of printed copies of the final Official Statement as such bidder may reasonably request no later than seven business days after the day the Notes are awarded. Up to 25 copies of the final Official Statement will be famished without cost to the successful bidder and further copies, if desired,will be made available at the successful bidder's expense. The successful bidder shall file the final Official Statement with a nationally recognized municipal securities information repository on a timely basis. The successful bidder shall,by accepting the award, agree at all times to comply with the provisions of the Rule and with all applicable rules of the Municipal Securities Rulemaking Board. Award,Delivery and Payment If satisfactory bids are received, the Notes will be awarded to the highest responsible bidder not later than two hours after the time established for the receipt of bids. The highest bidder shall be the bidder submitting the best price for the Notes, which best price shall be that resulting in the lowest modified true interest cost with respect to the Notes. The modified true interest cost shall be computed by doubling the semi-annual interest rate(compounded semi-annually)necessary to discount the debt service payments from their respective payment dates to the date of the Notes, assuming that the Notes are redeemed on their first call date of ,20_ and to the price bid. If two or more bidders have bid the same true interest cost,the award shall be made at the sole discretion of the District. Delivery of the Notes is expected to occur on or about November 1, 2016. The Notes will be delivered through the facilities of DTC, New York, New York. The successful bidder shall pay for the Notes on the date of delivery in Los Angeles, California in immediately available federal fords. Any expenses of providing federal funds shall be borne by the purchaser. Payment on the delivery date shall be made in an amount equal to the price bid for the Notes less the amount of the bid security deposit. Right to Reject Bids,Waive Irregularities The District reserves the right to reject any and all bids and to the extent permitted by law to waive any irregularity or informality in any bid. CUSIP Numbers It is anticipated that CUSIP numbers will be printed on the Notes,but the District will assume no obligation for the assignment or printing of such numbers on the Notes or for the correctness of such numbers, and neither the failure to print such number on any Note nor any error with respect thereto shall constitute cause for a failure or refusal by the purchasers thereof to accept delivery of and make payment for the Notes. The cost for the assignment of CUSIP numbers to the Notes will be the responsibility of the successful bidder. California Debt and Investment Advisory Commission The successful bidder will be required to pay all fees due to the California Debt and Investment Advisory Commission("CDIAC")under California law. CDIAC will invoice the successful bidder after the delivery of the Notes. 7 Legal Opinions The District will famish to the successful bidder at the closing of the Notes, the legal opinion of Special Counsel to the effect that, in the opinion of Special Counsel, based upon an analysis of existing laws,regulations,rulings and court decisions,and assuming, among other matters,the accuracy of certain representations and compliance with certain covenants,the interest component of the Installment Payment and the allocable portion thereof distributable in respect of each Note is excluded from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986 and is not a specific preference item for purposes of the federal alternative minimum tax and is exempt from State of California personal income taxes. Special Counsel will express no opinion regarding any other tax consequences related to the ownership or disposition of,or the second or receipt of interest on,the Notes. Closing Documents The District will furnish to the successful bidder at the time of delivery of the Notes: (1)a certificate certifying (i) that as of and at the time of delivery of the Notes, there is no action, suit, proceeding or investigation, pending or, to the best knowledge of the District, threatened against or affecting the District, (A)which affects or seeks to prohibit,restrain or enjoin the execution and delivery of the Notes or the Trust Agreement, (B) in any way contesting the validity of the Notes, the Installation Purchase Agreement or the Trust Agreement or the powers of the District to enter into or perform its obligations under such documents to which it is a party or the existence of the District, or(C)wherein an unfavorable decision,rating or finding would materially and adversely affect the District, or the validity or enforceability of the Notes, the Installation Purchase Agreement or the Trust Agreement or the ability of the District to perform its obligations under such documents to which it is a party, (ii)that the Preliminary Official Statement did not on the date of sale of the Notes and the Official Statement does not on the date of delivery contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, and(2) a receipt of the District showing that the purchase price of the Notes has been received by the District. Continuing Disclosure To assist the successful bidder in complying with the Rule, the District will undertake, pursuant to the Continuing Disclosure Agreement, to provide certain annual financial information and notices of the occurrence of certain enumerated events. A description of the Continuing Disclosure Agreement is set forth in the Preliminary Official Statement and will be set forth in the final Official Statement. Additional Information Electronic copies of the Trust Agreement, the Installment Purchase Agreement, the Master Agreement, this Official Notice Inviting Bids, the Official Bid Form, and the Preliminary Official Statement will be famished to any potential bidder upon request made to the Districfs Financial Advisor at: Public Resources Advisory Croup, 11500 West Olympic Boulevard, Suite 502, Los Angeles, CA 90064,310-477-8487,via e-mail at lchoK4maeadvisors.com. Right to Modify or Amend The District reserves the right to modify or amend this Official Notice Inviting Bids, including but not limited to the right to adjust and change the principal amount of the Notes being offered; provided, however, that such notifications or amendments shall be made not later than the business day prior to the date fixed for the receipt of bids, by 4:00 p.m., New York Time and communicated through 8 Thomson Municipal News (available at http:llw .ttn3.com) and by facsimile transmission to any qualified bidder timely requesting such notice. Bidders are required to bid for the Notes as so modified. Cancellation or Postponement The District reserves the right to cancel or postpone, from time to time, the date established for the receipt of bids for any reason at any time. Any such postponement will be announced by Thomson Municipal News. If any date fixed for the receipt of bids and the sale of the Notes is postponed, any alternative sale date will be announced via Thomson Municipal News at least 24 hours prior to such alternative sale date and will be provided by facsimile transmission to any qualified bidder timely requesting such notice. On any such alternative sale date, any bidder may submit a bid for the purchase of the Notes in conformity in all respects with the provisions of this Official Notice Inviting Bids except for the date of sale and except for the changes announced by Thomson Municipal News at the time the sale date and time are announced. Dated: ,2016 9 Exhibit A Form of Certificate of Initial Purchaser ,2016 Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,CA 92708-7018 Norton Rose Fulbright US LLP 555 South Flower Street,41"Floor Los Angeles,CA 90071 Ladies and Gentlemen: We have served as the Underwriter in connection with the execution and delivery on behalf of the Orange County Sanitation District(the "Districf) of$ Orange County Sanitation District Wastewater Revenue Refunding Certificate Anticipation Notes, Series 2016B (the"2016 Notes"). We hereby certify that: (i) , 2016 was the first day on which there was a binding contract in writing for the sale or exchange of the 2016 Notes by the District to the Underwriter, and on that day(the "Sale Date"), the Underwriter undertook pursuant to such contract to make a bona fide public offering of all of the 2016 Notes. On the Sale Date all of the 2016 Notes was offered in a bona fide initial offering to the general public at the initial offering price or initial offering yield (the "Initial Offering Price") shown, on the cover page of the Official Statement dated , 2014 relating to such offering (the "Official Statement'). The Initial Offering Price represented: (i) the Underwriter's reasonable determination of a fair market value on the Sale Date of the 2016 Notes; and(ii)the price at which the Underwriters reasonably expected to sell all the 2016 Notes to the general public; (ii) based upon our records and other information available to us that we believe to be correct, the first price at which a substantial portion (but in no event less than ten percent) of the 2016 Notes was sold by the Underwriter to the general public was the Initial Offering Price in respect of the 2016 Notes as described above; (iii) at the time that the Underwriter agreed to purchase the 2016 Notes, based upon then prevailing market conditions, the Underwriter had no reason to believe that the first sale of any of the 2016 Notes to a member of the general public would be at an initial offering price greater than or an initial offering yield less than the fair market value thereof; (iv) taking into account the aggregate amount of the 2016 Notes, and treating the Initial Offering Price as the issue price of each 2016 Note, the aggregate issue price of the 2016 Notes is$ (the 2016 Notes having been sold with premium of$ );and (v) we provided the yield proof attached hereto as Exhibit A to Special Counsel;we make no representations regarding its legal sufficiency for any purpose. A-1 For purposes of this Certificate,the term"general public"does not include bond houses,brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers. The undersigned understands that the statements made herein will be relied upon by the District in its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986 (the "Code"), and will be relied upon by Special Counsel in rendering its legal opinion, concerning the exclusion from the gross income for federal income tax purposes of interest with respect to the 2016 Notes. [INITIAL PURCHASER], as Underwriter By: Title: A-2 Exhibit A Yield Proof (See attached) A-3 OFFICIAL BID FORM $[Par Amount]" ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES,SERIES 2016B ,2016 Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,CA 92708-7018 Attention: Lorenzo Tyner Ladies and Gentlemen: We hereby offer to purchase all of the $[Par Amount]* aggregate principal amount of the Orange County Sanitation District (the "District") Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes"), more particularly described in your Official Notice Inviting Bids, dated 2016 (the "Official Notice Inviting Bids"), which is incorporated herein by reference, and made a part thereof, at a purchase price of $ (which purchase price is not less than 100% of the aggregate principal amount of the Notes). This offer is for Notes evidencing interest at the rate per annum of_%. The bid is subject to acceptance not later than two hours after the expiration of the time established for the final receipt of bids. Our calculation of the true interest cost, computed in accordance with the instructions in the Official Notice Inviting Bids, and which is considered to be informative only and not a part of the bid, is (PLEASE CHECK ONE OF THE FOLLOWING TWO PARAGRAPHS) [ ] A surety bond has been provided to the District in the amount of$ issued by an insurance company rated in one of the top two rating categories by Moody's Investors Service, Fitch Ratings or Standard & Poor's Ratings Services, without regard to any modification of the rating, and licensed to issue such a bond in the State of California, naming the District as the beneficiary and identifying our bidding syndicate whose deposit is guaranteed by the surety bond. [ ] With this bid we are providing the District a wire transfer in immediately available federal funds in the amount of$ to an account specified by the District or its representative, in accordance with the Official Notice Inviting Bids. We have noted that payment of the purchase price is to be made in immediately available Federal Funds at the time of delivery of the Notes If we are the successful bidder, we will (I) within 30 minutes after being notified of the verbal award of the Notes, advise the District of the initial public offering prices of the Notes; and (2) prior to delivery of the Notes famish a certificate, acceptable to Special Counsel, Norton Rose Fulbright US LLP, as to the "issue price" of the Notes in the form specified in the Official Notice Inviting Bids. Preliminary; subject to change. We represent that we have full and complete authority to submit this bid on behalf of our bidding syndicate and the undersigned will serve as the lead manager for the group if the Notes are awarded pursuant to this bid. We certify (or declare) under penalty of perjury under the laws of the State of California that this proposal is genuine, and not a sham or collusive, nor made in the interest of or on behalf of any person not herein named, and that the bidder has not directly or indirectly induced or solicited any other bidder to put in a sham bid or any other person, firm or corporation to refrain from bidding, and that the bidder has not in any manner sought by collusion to secure for himself an advantage over any other bidder. Respectfully Submitted, Account Manager: By: Address: City: State: Telephone: Following(or attached)is a list of the members of our account on whose behalf this bid is made. DRAFT OF O8/30/16 NOTICE OF INTENTION TO SELL Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes Series 2016B NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District') intends to receive sealed bids and electronic bids until a.m.,New York time,on , ,2016, through the use of electronic bidding service offered by Ipreo, at www.newissuebome.i-deal.com and the Parity electronic bid submission system, for the purchase of all of the District's Revenue Refunding Certificate Anticipation Notes, Series 2016B (the "Notes"), dated as of the date of initial delivery, and maturing on , 20 , as described in the related Official Notice Inviting Bids (the"Notice"). No bids will be accepted by facsimile. Bids for less than all of the Notes will not be accepted. The District reserves the right to postpone the date established for the receipt of bids as more fully described under the paragraph "Cancellation or Postponement" in the Notice. NOTICE IS HEREBY FURTHER GIVEN that electronic copies of the Notice and the Preliminary Official Statement issued in connection with the sale of the Notes may be obtained from the District's financial advisor, Public Resources Advisory Group, 11500 West Olympic Boulevard, Suite 502, Los Angeles, California 90064, 310477-8487, via e-mail: lchoi@pmgadvisots.com. Orange County Sanitation District Dated: ,2016 ' Preliminary,subject to change. 2743452U 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 CIP Capital Improvement Program 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 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 COBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration PCSA Professional Consultant Services Agreement POTW Publicly Owned Treatment Works ppm Parts per million PSA Professional Services Agreement RFP Request For Proposal Glossary of Terms and Abbreviations 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 SRF State Revolving Fund 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 WIFIA Water Infrastructure Financing and Innovation Act 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 known 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. Blogas — A gas that is produced by the action of anaerobic bacteria on organic waste matter in a digester tank that can be used as a fuel. 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. coil are the most common bacteria in wastewater. Glossary of Terms and Abbreviations 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 (D/T) — the dilution at which the majority of the people detect the odor becomes the D/T 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 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. Glossary of Terms and Abbreviations 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.