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HomeMy WebLinkAbout12-13-2017 Administration Committee Agenda Orange County Sanitation District Wednesday, December 13, 2017 Regular Meeting of fhe 5:00 P.M. ADMINISTRATION Administration Building COMMITTEE Board Room 10844 Ellis Avenue Fountain Valle CA 714 593-7433 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. 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 Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1.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 November 8, 2017 Administration Committee Meeting. 2. 2017 BENEFITS PROGRAM — ONE-TIME FUND REALLOCATION (Celia Chandler) RECOMMENDATION: Recommend to the Board of Directors to: Approve a one-time reallocation of budgeted funds in the amount of $195,000 to be transferred to group health insurance benefits resulting in a total cost of $12,032,187. The reallocation would not result in an increase to the overall 2017 budget. 12/13/2017 Administration Committee Agenda Page 1 of 4 NON-CONSENT: 3. ENTERPRISE ASSET MANAGEMENT PHASE IV - LOCK OUT TAG OUT (LOTO) (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Approve a Professional Services Agreement with Total Resource Management, Inc. for IBM-Maximo Enterprise Asset Management Phase IV - Lock Out Tag Out (LOTO) Software, Specification No. S-2017-871 BD, for a total amount not to exceed $188,318; and B. Approve a contingency in the amount of$37,664 (20%). 4. RIGHT OF WAY AND PROPERTY MANAGEMENT SERVICES (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Approve a Professional Consultant Services Agreement with Paragon Partners Ltd. for Right of Way and Property Management Services, Specification No. CS-2017-879, for the period January 1, 2018 through December 31, 2018, for a total annual amount not to exceed $115,000, with two (2) six-month renewal options; and B. Approve a contingency of$11,500 (10%). 5. INVEST AND/OR REINVEST DISTRICT'S FUNDS (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 17-XX, entitled "A Resolution of the Board of Directors of the Orange County Sanitation District,Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds; Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 16-19." 6. ALLIANT INSURANCE SERVICES (Celia Chandler) RECOMMENDATION: Recommend to the Board of Directors to: A. Approve a Professional Consultant Services Agreement with Alliant Insurance Services, Inc. to act as Broker of Record for the Orange County Sanitation District's assets and operations insurance coverages, Specification No. CS-2017-884-BD, for the period of January 1, 2018 through December 31, 2018 with up to four (4) one-year renewal options; and 12(1312017 Administration Committee Agenda Page 2 of 4 B. No direct payment from the Sanitation District is provided. The Broker of Record, Alliant Insurance Services, will be compensated through commission that is paid directly by the insurance carriers. 7. 2017 FACILITIES MASTER PLAN (Rob Thompson) RECOMMENDATION: Information Only. 8. ORANGE COUNTY SANITATION DISTRICT WASTEWATER REVENUE PROGRAM RATE STUDY (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District's 2017 Wastewater Revenue Program Rate Study completed by Carollo Engineers. 9. PROPOSITION 218 NOTIFICATIONS (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Direct staff to prepare and mail Proposition 218 compliant notifications to affected property owners outlining a five-year regional sewer service fee schedule with annual increases of approximately 1.2 percent over the next five fiscal years beginning with Fiscal Year 2018-19. DEPARTMENT HEAD REPORTS: CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY: ADJOURNMENT: The next Administration Committee meeting is scheduled for Wednesday, February 14, 2018 at 5:00 p.m. 12/13/2017 Administration Committee Agenda Page 3 of 4 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 ofthe disability and the type of accommodation requested. Aaentla Posting: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 108"Ellis Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda Rem, including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board. Aaentla 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 klors,Mocsd.com For any questions on the agenda,Committee members may contact staff at: General Manager James Herberg (714)593-7300 iherbemaocsd.com Assistant General Manager Bob Ghirelli (714)593-7400 rohirelli0ocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 ItvnemDocsd.com Administrative Services Director of Human Resources Celia Chandler 714 593-7202 cchandle ocsd.com 12/13/2017 Administration Committee Agenda Page 4 of 4 ITEM NO. 1 MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, November 8, 2017 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 Wanks on November 8, 2017 at 5:02 p.m. in the Administration Building of the Orange County Sanitation District. Director Teresa Smith led the Flag Salute. Committee Chair Wanks stated that Board Vice-Chair Shawver was excused from the meeting due to a conflict. A quorum was declared present as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Chad Wanks, Chair Jim Herberg, General Manager Jim Ferryman Bob Ghirelli, Assistant General Manager Peter Kim Celia Chandler, Director of Human Resources Al Krippner Jim Colston, Director of Environmental Steve Nagel Services Scott Peotter Rob Thompson, Director of Engineering Theresa Smith Ed Torres, Director of Operations & Greg Seboum, Board Chair Maintenance Lorenzo Tyner, Director of Finance & COMMITTEE MEMBERS ABSENT: Administrative Services Donald P. Wagner, Vice-Chair Kelly Lore, Clerk of the Board Barbara Delgleize Jennifer Cabral Glenn Parker Al Garcia Sal Tinajero Man Nguyen David Shawver, Board Vice-Chair Ddaze Phuong Tyler Ramirez Mike White OTHERS PRESENT: Brad Hogin, General Counsel Peter George, MGO Ann Fang, MGO PUBLIC COMMENTS: None. 11/08/2017 Administration Committee Minutes Page 1 &4 REPORTS: General Manager Jim Herberg presented the CIP Video informational video that is part of the new OCSD video library. Committee Chair Wanke did not provide a report. DEPARTMENT HEAD REPORTS: Director of Finance &Administrative Services Lorenzo Tyner informed the committee that OCSD received the Excellence in Information Technology Practices Award presented by the Municipal Information Systems Association of California (MISAC). The OCSD IT Division has won this award each year since 2008. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the October 11, 2017 Administration Committee Meeting. AYES: Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, and Wanke NOES: None ABSTENTIONS: T. Smith ABSENT: Delgleize, Parker, Shawver, Tinajero and Wagner 2. GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Receive and file District purchases made under the General Manager's authority and additions to the pre-approved OEM Sole Source List for the period of July 1, 2017 to September 30, 2017; and B. Approve the following ADDITIONS TO PRE-APPROVED Original Equipment Manufacturer (OEM) SOLE SOURCE LIST: • GRAHAM CORPORATION — Liquid Ring Pump • HOWDEN ROOTS—Aeration Blowers Service (Replaces OEM manufacturer SIEMENS DEMAG DELAVAL TURBOMACHINERY INC. — Name change) AYES: Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, T. Smith and Wanks NOES: None ABSTENTIONS: None ABSENT: Delgleize, Parker, Shawver, Tinajero and Wagner 11/O8/2017 Administration Committee Minutes Page 2 of 4 Item pulled and heard separately. 3. CONSOLIDATED FINANCIAL REPORT FOR FIRST QUARTER ENDED SEPTEMBER 30, 2017 (Lorenzo Tyner) Director Peotter requested that Item No. 3 be pulled from the Consent Calendar so that a presentation as to the comparison of investments and how they are performing compared to the market could be done. Mr Tyner stated that an informational item will be brought to the Administration Committee in February. MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2017. AYES: Ferryman, Krippner, Nagel, Peotter, Sebourn, T. Smith and Wanke NOES: None ABSTENTIONS: Kim ABSENT: Delgleize, Parker, Tinajero; Shawver, and Wagner NON-CONSENT: Committee Vice-Chair Wagner arrived at the meeting at 5:20 p.m. 4. ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR END JUNE 30, 2017 (Lorenzo Tyner) Mr. Tyner introduced Controller Mike White who in turn introduced Accounting Supervisor Line Hsiao. Ms. Hsiao provided an informative PowerPoint presentation which focused on financial measurements, change in net position, cash and investments, and cost. Ms. Hsiao, Mr. White, and Mr. Tyner responded to questions from the Committee. Ms. Hsiao introduced Peter George, CPA from MGO Certified Public Accountants who performed the audit of the District's financial statements. Mr. George distributed a handout describing the objectives, responsibilities, and standards of the audit completed. Mr. George also responded to questions from the Committee. MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District's Comprehensive Annual Financial Report for the year ended June 30, 2017, prepared by staff and audited by Macias, Gini & O'Connell, LLP (MGO), Certified Public Accountants, along with the following reports prepared by MGO: A. Report to the Board of Directors; and B. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. 11/08/2017 Administration Committee Minutes Page 3 of 4 AYES: Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, T. Smith Wagner and Wanke NOES: None ABSTENTIONS: None ABSENT: Delgleize, Parker, Shawver, and Tinajero INFORMATION ITEMS: None. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: Committee Chair Wanke declared the meeting adjourned at 6:13 p.m.to the next regularly scheduled meeting of Wednesday, December 13, 2017 at 5:00 p.m. Submitted by: Kelly A. Lore, CIVIC Clerk of the Board 1 110 812 01 7 Administration Committee Minutes Page 4 of 4 ADMINISTRATION COMMITTEE Meeting Date TOBd.Ot Dir. 12/13/17 12/20/17 AGENDA REPORT hernNumber Item Number z Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: 2017 BENEFITS PROGRAM — ONE-TIME FUND REALLOCATION GENERAL MANAGER'S RECOMMENDATION Approve a one-time reallocation of budgeted funds in the amount of $195,000 to be transferred to group health insurance benefits resulting in a total cost of $12,032,187. The reallocation would not result in an increase to the overall 2017 budget. SUMMARY The Orange County Sanitation District (Sanitation District) provides group health insurance benefits as a provision contained in its Memoranda of Understanding (MOUs) and Board-approved policies. Group health insurance benefits costs are estimated during annual budget planning. BACKGROUND Annual renewal quotes are estimates from the Sanitation District's benefits insurance broker, Alliant Insurance Services, and are based on prior year enrollments and negotiated plan pricing. The anticipated costs obtained from the broker were included within the Fiscal Year 2016-17 budget. Actual costs incurred each fiscal year can differ from the quotes as they are based on actual employee numbers and plan selection. In September 2016, the Board approved the estimated cost for 2017 in the amount of $11,837,187 toward group health insurance which includes: medical, dental, vision, employee assistance program, life insurance, and disability coverage. RELEVANT STANDARDS • Competitive compensation and benefits PROBLEM As a result of the increase in the number of new employees hired in 2017 and actual employee plan selections differing from what was anticipated, reallocation of additional funds will be required for FY 2017-18. The Sanitation District is obligated to provide these agreed-to benefits as provided for in the MOUs and personnel policies, as approved by the Board of Directors. Page 1 of 3 PROPOSED SOLUTION Approve the one-time reallocation of funds from the 2017 operating budget toward the cost of group health insurance to ensure continued coverage for employees and eligible dependents. TIMING CONCERNS Board approval is necessary to ensure that the Sanitation District can pay all invoices relative to employee health insurance benefits for December of 2017. Timely payments are required to continue coverage for Sanitation District employees and eligible dependents, in accordance with the MOUs and personnel policies. RAMIFICATIONS OF NOT TAKING ACTION Without Board approval, the Sanitation District cannot make the payments due for all employee health insurance benefits. This will result 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 the MOUs and personnel policies. PRIOR COMMITTEE/BOARD ACTIONS In June of 2016, the Board of Directors adopted the proposed Sanitation District budget for FY 2016-17 and 2017-18. In September of 2016, the Board of Directors approved the annual estimates for health insurance benefits for the 2017 calendar year. 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. HMO (Health Maintenance Organization) plans offer comprehensive coverage. Employees have a choice between the Anthem Blue Cross HMO orthe Kaiser HMO plan. The shared cost on HMO plans is 20% employee / 80% employer (10% employee / 90% employer for employee-only coverage). 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. The shared cost on PPO plans is 20% employee / 80% employer. Dental Insurance The Sanitation District provides the Delta Dental plan to all benefit eligible employees. The shared cost on the dental plan is 20% employee / 80% employer. Page 2 d 3 Vision Insurance The Sanitation District currently provides vision insurance to all benefit eligible employees through Anthem Blue View Vision. The employer pays the cost of coverage for employees. 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 employer pays the cost of coverage for employees. 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 employer pays the cost of coverage for employees. 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. The employer pays the cost of coverage for employees with 5+ years of service. Executive Disability The additional long-term disability insurance plan provides increased income protection for executives and managers. The employer pays the cost of coverage for employees. 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. The employer pays the cost of coverage for employees. FINANCIAL CONSIDERATIONS The funds for the 2017 amounts for group health insurance benefits were included in the FY 2016-17 and 2017-18 Sanitation District Operating Budget. No additional budgeted funds are needed due to budgeted savings in other salary and benefit line items. ATTACHMENT The following aftachment(s)may be viewed on-line at the Sanitation District's website(www.ocsd.com)with the complete agenda package: N/A Page 3 of 3 ADMINISTRATION COMMITTEE Meeting Date TOBd.Of Dir. 12/13/17 12/20/17 AGENDA REPORT emNumber Item Number 3 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ENTERPRISE ASSET MANAGEMENT PHASE IV— LOCK OUT TAG OUT (LOTO) GENERAL MANAGER'S RECOMMENDATION A. Approve a Professional Services Agreement with Total Resource Management, Inc. for IBM-Maximo Enterprise Asset Management Phase IV— Lock Out Tag Out (LOTO) Software, Specification No. S-2017-87113D, for a total amount not to exceed $188,318; and B. Approve a contingency in the amount of$37,664 (20%). BACKGROUND The Orange County Sanitation District (Sanitation District) currently owns the IBM-Maximo Enterprise Asset Management software. Total Resource Management, Inc. (TRM) has a specialized LOTO product and an in depth understanding of LOTO concepts and practices. TRM has successfully implemented the first three phases. LOTO application will provide the framework to create and maintain LOTO safety procedures as well as track the application and removal of these procedures on a piece of equipment. The Sanitation District issued a Request for Proposal (RFP) for a LOTO application to supplement Maximo. Only three vendors were solicited per 10/26/11 Board Meeting, Item No. 11 C, which approved the use of the following three vendors for subsequent phases: Total Resource Management, Inc., EMA Group, Inc., and Starboard Consulting, LLC. Only TRM submitted a proposal to Phase IV. There was no response from EMA Group and Starboard Consulting, LLC noted that their Director has been on extended leave and did not have the staffing to provide a proposal. RELEVANT STANDARDS • Provide a safe and collegial workplace • Protection of Orange County Sanitation District assets • Maintain a proactive asset management program • Efficiency efforts reduce the cost to provide the current service level or standard • Meet OSHA training requirements Page 1 of 3 PROBLEM The Sanitation District does not have a centralized system to track LOTO at both Plant No. 1 and Plant No. 2. Operation and Maintenance staff are not aware of all the plant equipment that is currently tagged out of service. Staff does not have a centralized place to view all the LOTO and their statuses. PROPOSED SOLUTION TRM's LOTO module is an integrated application within Maximo. The application will assist staff to seamlessly transition from the work order module to the LOTO module. The LOTO application will also provide a central place to manage all the LOTO throughout the plant that is easily accessible through the Maximo system. TIMING CONCERNS Safety is on the General Manager's work plan and a system that provides a centralized mechanism for tracking LOTO should be implemented as soon as possible to support and accomplish the work plan. RAMIFICATIONS OF NOT TAKING ACTION The centralized LOTO system will provide a method to document the LOTO process and procedures. Not taking this action will hinder the Sanitation District from providing documentation on safety procedures mandated by the OSHA LOTO safety standards. Situations may arise where the Sanitation District may be liable for fines for non-compliance as the current LOTO management process is manual and cumbersome. PRIOR COMMITTEE/BOARD ACTIONS Phases 1-3 were implemented between 2011 and 2013. ADDITIONAL INFORMATION On July 17, 2017, the Sanitation District issued a Request for Proposal (RFP)for a LOTO application to supplement Maximo;the RFP closed on August 17, 2017. Three firms were notified of the RFP and only one company,TRM, provided a response. A panel consisting of seven Sanitation District staff reviewed and ranked the proposal in accordance with Purchasing Ordinance No. OCSD-47. This RFP used the consensus scoring method. During consensus scoring sessions,the evaluation facilitator directed the team's attention to each item in the specifications. The evaluation team considered the proposal, comparing the vendor's proposed offering against the specifications in the underlying RFP. Consensus scoring sessions encouraged open discussions and questions among members of the evaluation team. 1) Operations Supervisor 2) Senior Info Tech Analyst 3) Information Tech Supervisor Page 2 d 3 4) Senior Mechanic 5) Maintenance Specialist 6) Lead Electric Technician 7) Human Resource Manager Evaluators discussed the relative strengths and weaknesses of the vendor's proposal in each area. The following criteria/weights were used to evaluate the proposals: Work Plan (25%), Qualifications of Firm (15%), Proposed Staffing and Project Organization (15%), and Cost Evaluation (20%). The Onsite Presentation (25%) component of the evaluation process was not utilized. The solution proposed by TRM received a score of 640 out of 750. Staff recommends awarding the Professional Services Agreement to Total Resource Management, Inc. for a not-to-exceed amount of$188,318. PROPOSAL EVALUATION TABLE Criteria Weight Weighted TRM EMA GROUP STARBOARD Score CONSULTING Work 25 250 200 No Response No Response Plan/Software Qualifications of 15 150 120 No Response No Response the Firm Staffing and No Response No Response Project 15 150 120 Organization Cost Evaluation 20 200 200 No Response No Response Total 75 750 640 Initial Proposal $191,735 Fee Negotiated Fee $188,318 FINANCIAL CONSIDERATION This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted under SP-100, Asset Management/CMMS System Replacement. ATTACHMENTS The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: Draft Professional Services Agreement Page 3 of 3 PROFESSIONAL SERVICES AGREEMENT IBM-Maximo Enterprise Asset Management System Phase IV-LOTO Specification No. 5-2017-871BD THIS AGREEMENT 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 Total Resource Management, Inc. with a principal business at 510 King Street, Suite 200 Alexandria, VA 22314- 3132(hereinafter referred to as "CONSULTANT") collectively referred to as the "Parties". WITNESSETH WHEREAS, based on CONSULTANT's expertise and experience, OCSD desires to temporarily engage CONSULTANT to provide IBM-MAXIMO ENTERPRISE ASSET MANAGEMENT SYSTEM PHASE IV— LOCK OUT TAG OUT (LOTO) Software and Project Management Services Related to as described in Exhibit "A" Scope of Work; and WHEREAS, CONSULTANT submitted its proposal, dated August 17, 20 ne WHEREAS, OCSD has chosen CONSULTANT to conduct Serviced rdance with Ordinance No. OCSD-47; and V WHEREAS, on December 20, 2017, the Board of DirOLTNT; CSD, by minute order, authorized execution of this Agreement between OCSD and CON and NOW, THEREFORE, in consideration of the mutual promises and mutual benefits exchanged between the Parties, the Parties mutually agree as follows: 1. Definitions ( v 1.1. As-Built Documentation. � term "As-Built Documentation" means the Baseline Documentation plus the Documentation for any Configuration Changes and Customization Modifications. All "As-Built Documentation' shall supplement and not conflict with the terms of this Agreemenl(In the event of a conflict, the terms of this Agreement shall prevail. 1.2. Configurationi `n�gas. The term "Configuration Changes" is defined as any modification or changes other than a Custom Modification. 1.3. CONSULTANT Application Software. The term "CONSULTANT Application Software" is defined as any Software owned or sublicensed, installed and/or configured by CONSULTANT as a component of the Project, whether in machine readable or printed form, including, but not limited to any applications, modules,subsystems, Interfaces,Configuration Changes, Custom Modifications, Updates and Documentation. 1.4. Custom Modification. The term "Custom Modification" is defined as a modification of the CONSULTANT Application Software Source Code or data base structure, which provides new or improved functions or features to address specific requirements of this Agreement. 1.5. Defect. The term "Defect" is defined as any error, failure, deficiency, or any other unacceptable variance or failure of the System or any component thereof to fully conform to the warranties and requirements described in this Agreement. With respect to the CONSULTANT Application Software, the term "Defect' is defined as any error, failure, or deficiency or any other unacceptable variance from any required, specified, or expected Orange County Sanitation District 1 of 19 Specification No.S-2017-871BD —Draft Do Not Use- program behaviors as may be required by OCSD or necessary for the CONSULTANT Application Software to operate correctly and in full compliance with the terms of this Agreement. This includes expected program behaviors as described in any CONSULTANT Application Software Documentation. In the event of a conflict between this Agreement and Documentation provided by CONSULTANT to OCSD, the terms and conditions of this Agreement shall prevail. 1.6. Documentation. The term "Documentation" is defined as all written, electronic, or recorded works including all "As-Built Documentation" that describe the uses, features, functional capabilities, performance standards, and reliability standards of the System, or any subsystem, component, or Interface, and that are published or provided to OCSD by CONSULTANT or its subcontractors, including, without limitation, all end user and System administrator manuals, help files, training aids and manuals, training and support guides, program listings, data models, flow charts, logic diagrams, and other materials related to or for use with the System. 1.7. Final System Acceptance. The term "Final System Acceptance" shall be defined as that date on which all Services under Section Titled "Project Scope and Deliverable" of Exhibit "A" Scope of Work have been successfully completed by CONSULTANV and accepted by OCSD. vv 1.8. Fix Pack. The term "Fix Pack" is defined as a formal releNne programming code and Documentation that provides corrections to any CONSULTANT Application Software programs including, but not limited to, bug fixes, error corrections and patches. 1.9. Functional, Performance and Reliability Specifications and Requirements. The term "Functional, Performance and Reliability Specifications and Requirements" is defined as all definitions, descriptions, requirements, criteria, warranties, and performance standards relating to the System set forth in: (a)this Agreement; (b)any mutually agreed upon Change Orders pursuant to Section 4, Modification to Exhibit "A" Scope of Work; and (c) any functional and/or technical specifications which are published or provided by CONSULTANT or its licensors or suppliers from time to time with respect to the System or any Products. 1.10. Interfaces. The term "Interfaces" is defined as one or more of the specialized software applications developed or sublicensed by CONSULTANT and installed as a part of the Project for the purpose of sharing information (data) between CONSULTANT and/or CONSULTANT Application Software and any other software program or device. Functional requirements for each Interface to be included as a part of the System are provided Exhibit "A", Scope of Work. 1.11. Products. The term "Products" is defined as all Software listed in the Proposal Exhibit "B" and the Best and Final Offer listed at Attachment"C" and respectively 1.12. Project. The term "Project" is defined as the totality of CONSULTANT's obligation under this Agreement to develop, supply, install, configure, test, implement and maintain the System. 1.13. Services. The term "Services" is defined as the implementation, development, training, configuration, loading, testing, project management and other services to be provided by CONSULTANT under this Agreement, including, without limitation, the tasks detailed in Exhibit"A", Scope of Work. 1.14. Software. The term "Software" includes the following components provided and licensed by CONSULTANT under this Agreement: (a) CONSULTANT Application Software; (b) Orange County Sanitation District 2 of 19 Specification No.S-2017-871BD —Draft Do Not Use- Third-Party Software; (c) Custom Modifications and (d) Interfaces. 1.15. System. The term "System" is defined as the collective whole of all Products and Services to be purchased, developed, licensed, supplied, installed, configured, tested and implemented by CONSULTANT under this Agreement. 1.16. System Administrator Documentation. Is defined as that portion of the Documentation addressing the operation and maintenance functions of the System. 1.17. Third-Party Software. The term "Third-Party Software" is defined as any Software to be supplied under this Agreement that is purchased or licensed directly from any source external to CONSULTANT for use with or integration into the System. 1.18. Updates. The term "Updates" is defined as modifications, improvements, additions, and corrections to the Products and/or related Documentation, including functional and/or product enhancements, bug fixes, patches, new releases, new versions, and replacement modules or products that CONSULTANT makes generally available to its customers with or without an additional fee. I 1.19. Go-Live Support. The term "Go-live Support" is as describeExhibit "C" Proposal; Exhibit"C" Best and Final Offer; and "Exhibit"A" Scope of W�tln Agreement. 1.20. Work Product. The term "Work Product" is define s roducts and Services and all other programs, algorithms, reports, information, d i s, plans and other items developed by CONSULTANT under this Agreement, inclu nc I artial, intermediate or preliminary versions thereof. 2. Miscellaneous �` 1 2.1. Access to Premises. OCSD shall provide INSULTANT with reasonable and timely access to the sites and personnel necessary for CONSULTANT to perform its obligations under this Agreement. OCSD shall allow CONSULTANT personnel reasonable access to OCSD site and facilities (telephone, facsimile, parking, etc.) during normal business hours and at other reasonable times as requested by CONSULTANT and pre-approved by OCSD. The assistance or presence of OCSD's personnel will not relieve CONSULTANT of any responsibilitis under this Agreement. 2.2. Amendments o amendment or modification to this Agreement is valid unless it is contained in a writing signed by both parties. 2.3. Approvals in Writing. All approvals or consents required or contemplated by this Agreement must be in writing to be effective. 2.4. Background Checks and Removal of Personnel. Prior to being allowed to perform any work on this Project, all non-OCSD personnel assigned to the Project may be required to submit to and pass a background check by the Fountain Valley, California Police Department. In addition, OCSD shall have the sole and exclusive right to require CONSULTANT to immediately remove any individual from the Project for any reason deemed to be in the best interests of OCSD. CONSULTANT shall replace any employee removed from the project within ten (10) business days of said removal. 2.5. Compliance with Work Rules. CONSULTANT will ensure that, while they are on OCSD premises, CONSULTANT's personnel and subcontractors will comply with OCSD's working rules and policies, including OCSD's security and safety procedures. Orange County Sanitation District 3 of 19 Specification No.S-2017-871BD —Draft Do Not Use- 2.6. Successors and Assigns. This Agreement is binding on and inures to the benefit of the parties and their respective successors and assigns. 2.7. Advertising. CONSULTANT shall not refer to the existence of this Agreement in any press release, advertising or materials distributed to prospective customers without the prior written consent of OCSD. 2.8. This Agreement and all Exhibits hereto (called the "Agreement") is made by OCSD and CONSULTANT. The Terms and Conditions herein exclusively govern the purchase of Services as described in the Scope of Work Exhibit"A". 2.9. Exhibits to this Agreement are incorporated by reference and made a part of this Agreement as though fully set forth at length herein. Exhibits to this Agreement are as follows: Exhibit"A" Scope of Work Exhibit'B" Proposal Dated August 17, 2017 Exhibit"C' Best and Final Offer Exhibit"D" Acknowledgment of Insurance Requirements (AOI� Exhibit"E" Professional Service Agreement Addendum +� 2.10. Exhibits to this Agreement are as follows in order olpr{�,,ee�dence. The Exhibits for Proposal and Best and Final Offer, their intended use, purpose, and importance may be synonymous as agreed by both parties until this Agreement is no longer valid.. Order of precedence will be established as negotiated ancragNed upon by both parties.The following order of precedence is provided for referenge Lo be negotiated by both parties. Exhibit "E" Professional Service Agreement Addendum Exhibit "B" Proposal Dated Au$I+�117, 2017 Exhibit"C' Best and Final OJfei� ) Exhibit "A" Scope of Work•( VVV Exhibit"D" Acknowledgment of Insurance Requirements (AOIR) 2.11. In the event of any conflict or inconsistency between the provisions of this Agreement and any of the provisions of the Exhibits hereto, the provisions of this Agreement shall in all respects govern and control. 2.12. This Agreement may not be modified, changed or supplemented, nor may any obligations hereunder be waived or extensions of time for performance granted, except by written instrument signed by both Parties. 2.13. The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any Paragraph or provision hereof. 2.14.The term "workday'. Workdays are defined as all days that are not Friday, Saturday and Sunday, or legally OCSD observed holidays. Meetings with OCSD staff shall be scheduled from Monday through Thursday between the hours of 6:30AM and 4PM PST )and shall conform to OCSD work schedules. OCSD review periods shall not include legally OCSD observed holidays. Orange County Sanitation District 4 of 19 Specification No.S-2017-871BD —Draft Do Not Use- 2.15. 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. 2.16.The term "days", when used in the Agreement, shall mean calendar days, unless otherwise noted as workdays. 2.17.Work Hours: The work required under this Agreement may include normal Business hours, evenings, and weekends. 2.18. CONSULTANT shall provide OCSD with all required premiums and/or overtime work at no charge beyond the price provided under"Compensation" below. 2.19. Except as expressly provided otherwise, OCSD accepts no liability for any expenses, losses, or action incurred or undertaken by CONSULTANT as a result of work performed in anticipation of purchases of said services by OCSD. 2.20. Goods and Services, whether stated separately or in conjunction with each other, shall mean IBM-MAXIMO ENTERPRISE ASSET MANAGEMENT SYSTEM PHASE IV—LOCK OUT TAG OUT (LOTO)and the services related to the provision of such as described in Exhibit'W' 2.21. Construction of Agreement. This Agreemen the product of joint discussions and negotiations at arms' length between the part'r sue, bo of whom are sophisticated and knowledgeable in business matters and o whom have relied on the advice of independent legal counsel. Any rule of I ich would require interpretation of this Agreement against the party that draft 0 h I have no application to this Agreement. 3. Scope of Work: General requirem��nt'�fo�thhee scope of this Project are listed below. A detailed list of tasks and responsibilities;Inclu eed in Exhibit"A", Scope of Work. 3.1. Scope of Work Subject to the terms of this Agreement, CONSULTANT shall perform the Services identified in Exhibit "A Scope of Work CONSULTANT warrants that all of its Services shall be performed in a competent, professional and satisfactory manner. 3.2. Modifications to Equipment and Facilities. OCSD shall be responsible for making OCSD- approved modifications identified in an OCSD approved, Site Analysis Report. Thereafter, CONSULTANT will be precluded from asserting that it is unable to perform its obligations under this Agreement because of any pre-existing condition. During implementation, any changes to the System or any costs that may be incurred in order to complete the requirements of this Agreement but were not identified in the Site Analysis Report will be the sole and exclusive responsibility of CONSULTANT. In addition, if the System is unable to meet the Functional, Performance and Reliability Specifications and Requirements in this Agreement after the identified upgrades and changes have been made,then CONSULTANT will be responsible, at its own expense, for making any further upgrades or changes necessary to achieve this result. 3.3. User Qualifications. OCSD shall use its best efforts to ensure that persons operating the System will be qualified, supervised, and trained in the use of personal computers and normal operations. CONSULTANT will ensure that all training on the System or System components will be conducted professionally and effectively so that each operator trained by CONSULTANT is proficient in its use. Orange County Sanitation District 5 of 19 Specification No.S-2017-871BD —Draft Do Not Use- 3.4. Transition. CONSULTANT will work with OCSD to ensure a smooth and efficient transition from OCSD's current systems to the new System and to minimize disruption to current operations, even if it necessitates working late evening, early morning, or weekend hours. Any required disruptions to OCSD's operations shall be scheduled in advance and approved by OCSD. 4. Modifications to Scope of Work Requests for modifications to the Scope of Work Exhibit"A" hereunder can be made by OCSD at any time. All modifications must be made in writing and signed by both Parties. A review of the time required for the modification will be made by OCSD and CONSULTANT and the Agreement period adjusted accordingly. 5. License 5.1. Grant of License. 5.1.1. CONSULTANT hereby grants to OCSD a perpetual, irrevocable, nonexclusive, and nontransferable license under applicable copyrights and/or trade secrets (either site, node locked or per user as specified in Exhibit"B", Proposal)to use all CONSULTANT Application Software provided under this Agreement for use by OCSD. OCSD shall have the right to use all CONSULTANT Application Software or any%portion thereof on any equipment, either locked on a single computer node (as determined by a specific LAN address), as a site license, or concurrently on a number of computer nodes so long as the number of concurrent uses does not exceed the number licensed for the LAN, or on one or more backup computer nodes. OCSD shall permit CONSULTANT reasonable, pre-scheduled access (Monday thtbugh Friday, 8:00 to 5:00 PM PST) to OCSD facilities for license administration aocy rposes. 5.1.2. OCSD shall have the right to use all CONSULTANT Application Software as maybe necessary in order to operate the System purchased under this Agreement. In addition, OCSD shall have the right to use the CONSULTANT Application Software as necessary to (a) operate the System (b) conduct internal training and testing, and (c) perform disaster recovery, backup, archive and restoration testing and implementation as may be required in OCSD&dgment. This license shall apply to all commercially available Updates through t term of this Agreement. OCSD shall have the right to use all CONSULTANT A tion Software licensed under this Agreement on any equipment at any facility and any location and may make as many copies of the Software as it desires to support its authorized use of the Software, provided the copies include CONSU.�TANT's or the third-party owner's copyright or other proprietary notices. 5.1.3. All license rights of Third Party Software shall originate from the manufacturer. All Third Party Software licenses shall be provided to OCSD and become effective at the time the product is used by OCSD in a production environment. 5.1.4. The approval of CONSULTANT to use CONSULTANT Application Software and Third Party Software and OCSD's use of it shall not constitute a waiver of OCSD's right to reject the System, in whole or in part, if the requirements for Final System Acceptance are not met. 5.2. Limitations on License. Except as licensed to OCSD, CONSULTANT retains all of its current rights, title, and interest in the CONSULTANT Application Software, including Derivative Works, Custom Modifications, Configuration Changes and Updates. Unless authorized by CONSULTANT or required by law, OCSD will not: (1)make available or distribute all or part of the Software to any third party by assignment, sublicense or any other means; or (2) disassemble, decompile, or reverse engineer the Software, or allow any third party to do so. Orange County Sanitation District 6 of 19 Specification No.S-2017-871BD -Draft Do Not Use- 5.3. Security. Certain Software Packages are required to operate in conjunction with a hardware lock device or in conjunction with license administration Software and a license authorization key provided by CONSULTANT or its representative. OCSD shall take no steps to avoid or defeat the purpose of any required lock device or authorization key. Use of any Software Package without a required lock device or authorization key shall be unlicensed under this Agreement. 5.4. Restricted Access. OCSD shall use every reasonable method to restrict access to the CONSULTANT Application Software, or Documentation related thereto, to persons not authorized to use the CONSULTANT Application Software under the terms of this Agreement. OCSD shall not copy the CONSULTANT Application Software or Documentation except as necessary for use under this Agreement. OCSD shall not decrypt, reverse compile or disassemble the CONSULTANT Application Software. OCSD shall not export or re-export the CONSULTANT Application Software or Documentation. Furthermore, OCSD shall abide by all applicable Federal and State Trademark and Copyright laws. 6. Compensation: Compensation to be paid by OCSD to CONSULTANT for the Services and Software provided under this Agreement shall be a total amount not to exceed One Hundred and Eighty-Eight Thousand Three Hundred and Eighteen Dollars($188,318.00).Progress Payments for Services provided by CONSULTANT shall be made in accordan�i Attachment "C" Best and Final Offer. 7. CALIFORNIA DEPARTMENT OF INDUSTRI OT1ONS (DIR) REGISTRATION AND RECORD OF WAGES (NOT USED) O 8. Payment O 8.1. CONSULTANT shall be paid y OCSD upon approval of invoices by OCSD Project Manager, or his designee, for completion of milestone tasks and deliverables. Progress payments shall be made per completed Task as stated in Section 1 of Exhibit"C" Best and final Offer. ��� 8.2. OCSD, at its discretion, shall be the determining party as to whether the tasks and deliverables for each milestone have been satisfactorily completed. 9. Invoices 9.1. 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. 9.2. Invoices shall be emailed by CONSULTANT to OCSD at APStaff@OCSD.com. The Specification and Purchase Order number shall both be referenced in the subject line. 10.Audit Rights: CONSULTANT agrees that, during the term of this Agreement 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 CONSULTANT relating to the invoices submitted by CONSULTANT pursuant to this Agreement. Orange County Sanitation District 7 of 19 Specification No.S-2017-871BD —Draft Do Not Use- 11.Performance:Time is of the essence in the performance of the provisions hereof. 12. Term 12.1.The Services to be provided by CONSULTANT under this Agreement shall commence on the date of the Notice to Proceed (Effective Date), and be completed within (1) one year from the Notice to Proceed (Effective Date). 12.2. Effect on Project Schedule. The time periods and requirements set forth in Exhibit "B" Proposal, will not excuse CONSULTANT from complying with the completion of Tasks set forth in the Labor Task List contained in Exhibit "B" Proposal. Unless otherwise specified, the duration for the completion of these tasks set forth in the Labor Task List constitute the duration by which CONSULTANT must complete the testing required by this Agreement and achieve Final System Acceptance of the System installed. 12.3. Deadline for Final System Acceptance. Final System Acceptance must occur once the System is accepted by OCSD as fully operational and is in full productive use by OCSD. Final System Acceptance must be achieved by the CONSULTANT within (1) one year from the date of the Notice to Proceed (Effective Date). 13. Termination 13.1. OCSD reserves the right to terminate this Agreement for ii enience, with or without cause, in whole or in part, at any time, by written notice from OCSD. Upon receipt of a termination notice, CONSULTANT shall immediately discontinue all work under this Agreement (unless the notice directs otherwise . SD shall thereafter, within thirty (30) days, pay CONSULTANT for work performe&1 and fee) to the date of termination. CONSULTANT expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of this Agreement. Such notice of termination shall terminate this Agreement and release OCSD from any further fee, cost or claim hereunder by CONSULTANT other than for�!ork performed to the date of termination. 13.2. OCSD reserves the r'Ltd. terminate this Agreement immediately upon OCSD's determination that CO� TAINT is not meeting specification requirements, if the level of service is inadeq a y other default of this Agreement. 13.3. OCSD may so�diately cancel for default of this Agreement in whole or in part by written noticgt&ZONSULTANT: • if CONSULTANT becomes insolvent or files a petition under the Bankruptcy Act; or • if CONSULTANT sells its business; or • if CONSULTANT breaches any of the terms of this Agreement; or • if total amount of compensation exceeds the amount authorized under this Agreement. 13.4. All OCSD property in the possession or control of CONSULTANT shall be returned by CONSULTANT to OCSD on demand, or at the termination of this Agreement, whichever occurs first. In addition, CONSULTANT will deliver to OCSD all Work Product currently in existence and for which payment has been made. 13.5. Upon termination or expiration of this Agreement, CONSULTANT will cooperate with OCSD to assist with the orderly transfer of services, functions, and operations provided by CONSULTANT under this Agreement to another provider or to OCSD as determined by OCSD in its sole discretion. Prior to the termination or expiration of this Agreement, OCSD Orange County Sanitation District 8 of 19 Specification No.S-2017-871BD —Draft Do Not Use- may require CONSULTANT to perform those transition services described below that OCSD deems necessary to migrate CONSULTANT's work to another provider or to OCSD. Transition services may include, but are not limited to the following: 13.5.1.Pre-Migration Services. 13.5.1.1. Working with OCSD to jointly develop a mutually agreed upon Transition Services Plan to facilitate the termination of the services; 13.5.1.2. Notifying all affected vendors and subcontractors of CONSULTANT; and 13.5.1.3. Freezing all non-critical changes to the System. 13.5.2.Migration and Post-Migration. 13.5.2.1. Performing the Transition Services Plan activities. 13.5.2.2. Answering questions regarding the services performed by CONSULTANT or the System on an as-needed basis; 13.5.2.3. Providing such other reasonable services needed to effectuate an orderly transition to a new System. 13.6. OCSD agrees to pay CONSULTANT for transition services at an hourly rate of$150 per hour, plus reasonable out-of-pocket expenses not to exceed te0 percent (10%) of the aggregate hourly compensation paid. /YVI 14.Indemnification and Hold Harmless Provision: CONSULTA_NT�ss assume all responsibility for damages to property and/or injuries to persons, includi g cc ntal death, which may arise out of or be caused by CONSULTANT's services under Agreement, or by its subcontractor or by anyone directly or indirectly employed by CONSUL NT, and whether such damage or injury shall accrue or be discovered before or after the termination of the Agreement. Except as to the sole active negligence of or willful misconduct of OCSD, CONSULTANT 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 in11'uI to or death of any person or damage to property or interference with the use of prgtrty, sing out of or in connection with CONSULTANT's performance under the Agreeme 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 Agreement, and/or (c) on account of any goods and services provided under this Agreement. This indemnification provision shall apply to any acts or omissions, will,If�I misconduct, or negligent misconduct, whether active or passive, on the part of CONS ULTANTo'tor anyone employed by or working under CONSULTANT. To the maximum extent pennitted'6y law, CONSULTANT'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. CONSULTANT agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. This section shall survive the expiration or early termination of the Agreement. 15. Warranty 15.1. System Warranty. CONSULTANT warrants that the System will meet the Functional, Performance and Reliability Specifications and Requirements as defined in this Agreement. The System and/or each of its subsystems, components and Interfaces will be capable of operating fully and correctly in conjunction with the System Hardware. CONSULTANT warrants that for the term of this Agreement, the System will perform as described in this Exhibit"C" Best and Final Offer and Exhibit"A" Scope of Work in material and workmanship Orange County Sanitation District 9 of 19 Specification No.S-2017-871BD -Draft Do Not Use- and will remain in good working order. In the event the System does not meet these warranties, CONSULTANT shall provide, at no charge, the necessary software, hardware, and/or services required to attain the levels or standards contained in these warranties. 15.2. CONSULTANT Application Software Warranties. CONSULTANT warrants that it owns or otherwise has the right to license the CONSULTANT Application Software to OCSD and that it possesses all rights and interests necessary to enter into this Agreement. In addition, CONSULTANT warrants that: 15.2.1.AII CONSULTANT Application Software licensed under this Agreement is free of known Defects, viruses, worms and Trojan horses, and any code designed to disable the Software because of the passage of time, alleged failure to make payments due, or otherwise (except for documented security measures such as password expiration functions); 15.2.2. During the term of the Agreement; the CONSULTANT Application Software will meet or exceed the Functional, Performance and Reliability Specifications and Requirements herein; 15.2.3.The CONSULTANT Application Software will: (1) store all date-related information and process all data Interfaces involving dates in a manner that unambiguously identifies the century, for all date values before, during and after the Year 2000; (2) calculate, sort, report and otherwise operate correctly and in a consistent manner for all date information processed, whether before, during or after the Year 2000; (3) calculate, sort, report and otherwise operate correctly, in a consistent manner and without interruption regardless of whether t e te-on which the Software is operated or executed is before, during or after t e 000; (4) report and display all dates with a four-digit date so that the centuryNMambiguously identified; and (5) handle all leap years correctly; 15.2.4.CONSULTANT Application Software are is and will be general release versions that have been fully tested at CONSULTANT's site in accordance with best industry practices, and are not beta or pre-release versions (unless agreed to in writing by OCSD); and, 15.2.5.Custom Modifications and Interfaces have been fully tested in accordance with best industry practices and are free of known Defects. CONSULTANT further agrees that during the term of this Agreement, CONSULTANT will provide OCSD, if OCSD so desires, with any Updates at no additional cost (including any and all costs associated with the installation of those Updates) immediately upon their commercial availability to any other entity. 15.3. Work Quality Warranty. CONSULTANT warrants that all work performed by CONSULTANT and/or its subcontractors under this Agreement will conform to best industry practices and will be performed in a professional and workmanlike manner by staff with the necessary skills, experience and knowledge to do so. 15.4. Regulatory Warranty. CONSULTANT warrants that, for the Term of this Agreement, the System will comply with all processing and reporting requirements for State and Federal laws, and regulations. If the Software requires updating due to a change in a State or Federal law, or regulation, affecting OCSD, CONSULTANT will provide these changes per a mutually agreed to schedule at no additional charge to OCSD. Notwithstanding this provision, in no event shall CONSULTANT provide said update later than the date required by the State or Federal law or regulation affecting OCSD. In the event OCSD is notified of a Orange County Sanitation District 10 of 19 Specification No.S-2017-871BD -Draft Do Not Use- change in State or Federal law or regulations that requires updating the Software, OCSD will notify CONSULTANT of that change as soon as reasonably possible. 15.5. Documentation Warranty. CONSULTANT warrants that, for the Term of this Agreement, the Documentation for all licensed CONSULTANT Application Software will be complete and accurate in all material respects. The Documentation will be revised to reflect all Updates and Interfaces provided by CONSULTANT under this Agreement. This includes Documentation on any Custom Modification or Configuration Changes made to the System by CONSULTANT during the installation process. 15.6. Service Warranty. During the term of this Agreement, CONSULTANT warrants that it will remedy any failure, malfunction, Defect or nonconformity in the System, as follows: 15.6.1.Priority One (Pl) Defects. For purposes of this Warranty, a P1 Defect includes, but is not limited to, loss of data, data corruption, a System or subsystem abort, any condition where productive use of the System or any component thereof is prohibited and no acceptable workaround is available. Examples of P1 Defects include, but are not limited to: 15.6.1.1. System is down 15.6.1.2. Application, module or Interface is down or non-operational 15.6.1.3. An Interface or application critical to System operation is substantially impaired or problematic 15.6.1.4. Loss of data or data corruption after data has been entered 15.6.1.5. A subsystem or component thereof is non-functional 15.6.1.6. Productive use is prohibited 15.6.1.7. a Server or workstation goes down 15.6.1.8. two or more workstations or mobile devices lock up or malfunction intermittently 15.6.1.9. a user cannot log on too the System 15.6.2.Priority Two (P2) Defects. Fo plurposes of this Warranty a P2 Defect includes, but is not limited to, compromise of the primary purpose of the System,subsystem or Interface to an external system. Productive use by the end user is substantially impacted and an acceptable workaround is not available. Examples of P2 Defects include, but are not limited to: 15.6.2.1. a`6oftware function does not work correctly (enter an example, if possible) 15.6.2.2.e The user cannot produce a report with correct calculations 15.6.2.3. System, subsystem or an Interface performance is deemed unacceptable per the Functional, Performance, and Reliability Specifications and Requirements. 15.6.2.4. Incorrect cross streets are displayed on a verified address or location 15.6.2.5. Cannot create a scheduled event 15.6.2.6. A single workstation or mobile device locks up or malfunctions intermittently 15.6.3.Priority Three (P3) Defects. For purposes of this Warranty, a P3 Defect includes, but is not limited to, incomplete operation of a System component which impacts productivity of staff but an acceptable workaround is generally available. Examples of P3 Defects include but are not limited to: 15.6.3.1. Single workstation or mobile device locks up intermittently but infrequently 15.6.3.2. Minor deficiencies occur intermittently in any component of the System 15.6.3.3. A mapping function doesn't work but the failure does not interfere with the user's ability to perform required tasks Orange County Sanitation District 11 of 19 Specification No.S-2017-871BD -Draft Do Not Use- 15.6.3.4. A report does not function or report provides incorrect results 15.6.3.5. An incorrect message is presented in a dialog box 15.6.4.Priority Four (P4) Defects. For purposes of this Warranty, a P4 Defect consists of those problems deemed by OCSD to be mainly cosmetic. Examples of P4 Defects include, but are not limited to: 15.6.4.1. A misspelled word in the header of a report or in a help file 15.6.4.2. A minor error in output that does not interfere with the correct outputting of statistics from the system 15.6.4.3. Minor printing errors in a report that does not impede OCSD's ability to utilize the report for the required purpose. 15.6.4.4. Minor variances in text where the help file does not match the Documentation 15.6.4.5. Minor variances in text where the Documentation doesn't match the functionality but the System works properly 15.6.4.6. A print button doesn't work but the user can still print without opening or closing multiple windows or loosing data or rebooting the System. 15.6.5.Multiple Failures. Any situation involving multiple, contemporaneous failures, regardless of their individual priorities, will be regarded as Priority One Defect if, in OCSD's determination, the situation results in OCSD havessentially no productive use of the System or a major subsystem. ` 15.6.6.Permanent Cure. If OCSD accepts a workarpppppr,���ndlQrJbther temporary cure as the remedy for any reported Defect, CONSULTANT all provide and install at no cost to OCSD a permanent correction or cure with ran ��ryry 0) days after the permanent cure becomes available. �\,v 15.6.7.Third-party Warranty Coverage. Third-party products are provided with a pass-thru- warranty from the original manufacturer. 16.Force Majeure: Neither party shall be liable for delays caused by accident, flood, ads of God, fire, labor trouble, war, ads offffffttt���999999overnment or any other cause beyond its control, but said party shall use reasonable effominimize the extent of the delay. Work affected by a Force Majeure condition rn heduled by mutual consent or may be eliminated from the Agreement. 17.Insurance: CONSANT and all subcontractors shall purchase and maintain, throughout the life of this Agreement and any periods of warranty or extensions, insurance in amounts equal to the requirements set forth in the signed Acknowledgement of Insurance Requirements, Exhibit "D". CONSULTANT shall not commence work under this Agreement until all required insurance is obtained in a form acceptable to OCSD, nor shall CONSULTANT 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 Agreement. 18.Key Personnel: Personnel, as provided in Exhibit"B" Proposal, are considered"key"to the work under this Agreement and will be available for the term of the Agreement. No person designated as key under this Agreement shall be removed or replaced without prior written consent of OCSD. If OCSD asks CONSULTANT to remove a person designated as key under this Agreement, CONSULTANT agrees to do so immediately regardless of the reason, or the lack of reason, for OCSD's request. CONSULTANT shall assign only competent personnel to perform services pursuant to this Agreement. Orange County Sanitation District 12 of 19 Specification No.S-2017-871BD -Draft Do Not Use- 19. Confidentiality and Non-Disclosure 19.1. CONSULTANT acknowledges that in performing the Services hereunder, OCSD may have to disclose to CONSULTANT orally and in writing certain confidential information that OCSD considers proprietary and has developed at great expense and effort. 19.2. CONSULTANT agrees to maintain in confidence and not disclose to any person, firm, or corporation, without OCSD's prior written consent, any trade secret or confidential information, knowledge or data relating to the products, process, or operation of OCSD. 19.3. CONSULTANT further agrees to maintain in confidence and not to disclose to any person, firm, or corporation any data, information, technology, or material developed or obtained by CONSULTANT during the term of this Agreement. 19.4. CONSULTANT agrees as follows: • To use the Confidential Information only for the purposes described herein; to not reproduce the Confidential Information; to hold in confidence and protect the Confidential Information from dissemination to and use by anyone not a party to this Agreement; and to not use the Confidential Information to benefit itself or others. • To restrict access to the Confidential Information to its CONSULTANT or personnel of CONSULTANT who (1) have a need to have such access and (2) have been advised of and have agreed in writing to treat such information in accordance with the terms of this Agreement. • To return all Confidential Information in CONS T's possession upon termination of this Agreement or upon OCSD's request, %hilfhetrccurs first. • To hold in confidence information and if any, developed pursuant to the Services hereunder. `/�' 19.5. The provisions of this Section shaft9U�ti�termination or expiration of this Agreement and shall continue for so long as the material remains confidential. 20. Ownership of Documen�� drawings, specifications, reports, records, documents, memoranda, correspondence, computations, and other materials prepared by CONSULTANT, its employees, subcontractors, and agents in the performance of this Agreement shall be the property of OCSD and shall be promptly delivered to OCSD upon request of the Project Manager or upon the termination of this Agreement, and CONSULTANT shall have no claim for further employment or additional compensation as a result of the exercise by OCSD of its full rights of ownership of the documents and materials hereunder. Any use of such completed documents for other projects and/or use of incomplete documents without specific written authorization by the CONSULTANT will be at OCSD's sole risk and without liability to CONSULTANT. CONSULTANT shall ensure that all its subcontractors shall provide for assignment to OCSD of any documents or materials prepared by them. 21. Ownership of Intellectual Property 21.1. CONSULTANT agrees that all designs, plans, reports, specifications, drawings, schematics, prototypes, models, inventions,and all other information and items made during the course of this Agreement and arising from the Services (hereinafter referred to as "New Developments") shall be and are assigned to OCSD as its sole and exclusive property. 21.2. CONSULTANT agrees to promptly disclose to OCSD all such New Developments. Upon OCSD's request, CONSULTANT agrees to assist OCSD, at OCSD's expense, to obtain Orange County Sanitation District 13 of 19 Specification No.S-2017-871BD —Draft Do Not Use- patents or copyrights for such New Developments, including the disclosure of all pertinent information and data with respect thereto, the execution of all applications, specifications, assignments, and all other instruments and papers which OCSD shall deem necessary to apply for and to assign or convey to OCSD, its successors and assigns, the sole and exclusive right, title and interest in such New Developments. CONSULTANT agrees to obtain or has obtained written assurances from its employees and contract personnel of their agreement to the terms hereof with regard to New Developments and Confidential Information. 21.3. CONSULTANT warrants that CONSULTANT has good title to any New Developments, and the right to assign New Developments to OCSD free of any proprietary rights of any other party or any other encumbrance whatever. 21.4. The originals of all computations, drawings, designs, graphics, studies, reports, manuals, photographs, videotapes, data, computer files, and other documents prepared or caused to be prepared by CONSULTANT or its subcontractors in connection with these Services shall be delivered to and shall become the exclusive property of OCSD. OCSD may utilize these documents for OCSD applications on other projects or extensions of this Project, at its own risk. e 1 22.Infringement Claims: If an infringement claim occurs, CONSULTANT Vthirty (30)days after the receipt of OCSD's written notice of the claim or the date on which CONSULTANT first becomes aware of the claim, whichever is sooner, to either: (a) procure for OCSD the right to continue using the affected Product, Service, subsystem0 component or Interface and deliver or provide the Product, Service, subsystem, compon^ lAterface to OCSD; or (b) repair or replace the infringing Product, Service, subsystem, onent, or Interface so that it becomes non-infringing, provided the performance of the -- em or any subsystems, components, or Interfaces is not adversely affected by the replacement or modification. In the event CONSULTANT is unable to comply with either subsection (a)or(b)of this paragraph within thirty (30)days, OCSD may terminate this Agreement without any further obligation to CONSULTANT. In the event of termination, in addition to any other legal remedies available to OCSD, CONSULTANT will refund within ten (10) days of OCSD's notice of termination, the license fees OCSD paid to SULTANT for the Product, Service, subsystem, component or Interface. If the inability to ly with either subsection (a) or(b) of this paragraph causes the System to fail to meet the Functional, Performance and Reliability Specifications and Requirements orAotherwise become ineffective, CONSULTANTwill refund OCSD all fees paid to CONSULTANT under this Agreement. 23. No Solicitation of Employees Or Subcontractors 23.1. CONSULTANT agrees that it shall not, during the term of this Agreement and for a period of one(1)year immediately following termination of this Agreement, or any extension hereof, call on, solicit, or take away any of the employees or subcontractors about whom CONSULTANT became aware as a result of CONSULTANT's Services to OCSD. 23.2. CONSULTANT acknowledges that OCSD's employees are critical to its business. CONSULTANT agrees not to employ or otherwise engage OCSD's employees or subcontractors during the term of this Agreement and for a period of one (1) year following termination of this Agreement. Should CONSULTANT violate this provision, CONSULTANT will pay OCSD fifty percent(50%)of the former employee's annual salary which payment is in addition to OCSD's rights and remedies. Orange County Sanitation District 14 of 19 Specification No.S-2017-871BD —Draft Do Not Use- 24.Independent Contractor Capacity 24.1. The relationship of CONSULTANT to OCSD is that of an independent contractor and nothing herein shall be construed as creating an employment or agency relationship. 24.2. CONSULTANT shall act independently and not as an officer or employee of OCSD. OCSD assumes no liability for CONSULTANT's action and performance, nor assumes responsibility for taxes, funds, payments or other commitments, implied or expressed, by or for CONSULTANT. 24.3. CONSULTANT shall not be considered an agent of OCSD for any purpose whatsoever, nor shall CONSULTANT have the right to, and shall not, commit OCSD to any agreement, contract or undertaking. CONSULTANT shall not use OCSD's name in its promotional material or for any advertising or publicity purposes without expressed written consent. 24.4. CONSULTANT shall not be entitled to any benefits accorded to those individuals listed on OCSD's payroll as regular employees including, without limitation, worker's compensation, disability insurance, vacation, holiday or sick pay. CONSULTANT shall be responsible for providing, at CONSULTANT's expense,disability,worker's compensation or other insurance as well as licenses and permits usual or necessary for conducting the Services hereunder. 24.5. CONSULTANT shall be obligated to pay any and all applicable local, state and federal payroll and other taxes incurred as a result of fees hereunder. CONSULTANT hereby indemnifies OCSD for any claims, losses, costs, fees, liabilities, damages or penalties suffered by OCSD arising out of CONSULTANT's^breach of this provision. 24.6. CONSULTANT shall not be eligible to join �CIcipate in any benefit plans offered to those individuals listed on OCSD's payroll as}egular, employees. CONSULTANT shall remain ineligible for such benefits or participation in such benefit plans even if a court later decides that OCSD misclassifed CONSULTANT for tax purposes. 25. Licenses and Permits: CONSULTANT represents and warrants to OCSD that it has obtained all licenses, permits, qualifications 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 Agreement will be paid by CONSULTANJ.`, 26. Governing Law: This Agreement 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 Agreement or the performance thereof. 27.Applicable Laws and Regulations: CONSULTANT shall comply with all applicable federal, state, and local laws, rules, and regulations. CONSULTANT also agrees to indemnify and hold harmless from any and all damages and liabilities assessed against OCSD as a result of CONSULTANT's noncompliance therewith.Any permission required by law to be included herein shall be deemed included as a part of this Agreement whether or not specifically referenced. 28. Consultant's Representations: In the performance of duties under this Agreement, Consultant shall adhere to the highest fiduciary standards, ethical practices and standards of care and competence for their trade/profession. Consultant agrees to comply with all applicable Federal, State and local laws and regulations. Orange County Sanitation District 15 of 19 Specification No.S-2017-8718D —Draft Do Not Use- 29. Familiarity with Work: By executing this Agreement, CONSULTANT 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 Agreement. Should CONSULTANT 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 CONSULTANT's risk, until written instructions are received from OCSD. 30. Dispute Resolution 30.1. In the event of a dispute as to the construction or interpretation of this Agreement, 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. 30.2. 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 et 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 mya be conducted in connection with the arbitration proceeding pursuant to California Co"Cbil Procedure Section 1283.05. The arbitrator, or three arbitrators acting as a boa N"I take such evidence and make such investigation as deemed appropriate and shalltender 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 Su�rior Court for the County of Orange, with a right of appeal from any judgment issued th,EF@in. 31.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 Agreement, 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. 32. Waiver. The waiver of either party of any breach or violation of, or default under, any provision of this Agreement, shall not be deemed a continuing waiver by such party of any other provision or of any subsequent breach or violation of this Agreement or default thereunder. Any breach by CONSULTANT 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. 33. Survival:All provisions of this Agreement that by their nature would reasonably be expected to continue after the termination of this Agreement will survive the termination of this Agreement, including, without limitation, the following Sections and Paragraphs: • Payment • License • Audit • Independent Contractor • Warranties • Indemnification Orange County Sanitation District 16 of 19 Specification No.S-2017-871BD —Draft Do Not Use- • Obligations Upon Expiration or Termination • Transition of Services • Confidentiality and Nondisclosure • Forum for Enforcement 34. Right to Review Services, Facilities, and Records 34.1. OCSD reserves the right to review any portion of the Services performed by CONSULTANT under this Agreement,and CONSULTANT agrees to cooperate to the fullest extent possible. 34.2. CONSULTANT shall furnish to OCSD such reports, statistical data, and other information pertaining to CONSULTANT's Services as shall be reasonably required by OCSD to carry out its rights and responsibilities under its agreements with its bondholders or noteholders and any other agreement relating to the development of the Project(s) and in connection with the issuance of its official statements and other prospectuses with respect to the offering, sale, and issuance of its bonds and other obligations. 34.3. The right of OCSD to review or approve drawings, specifications, procedures, instructions, reports, test results, calculations, schedules, or oth9d�9talhat are developed by CONSULTANT shall not relieve CONSULTANT of any oblipiXiMsst forth herein. 35. Severability: If any section, subsection, or provision of this Agreement, or any agreement or instrument contemplated hereby, or the application of such section, subsection, or provision is held invalid, the remainder of this Agreement or instl4joent in the application of such section, subsection or provision to persons or circumstances th than those to which it is held invalid, shall not be affected thereby, unless the effect of lidity shall be to substantially frustrate the expectations of the Parties. 36. OCSD Safety and Human Resources Policies: OCSD requires all contractors and consultants to follow and ensure their employees and all subcontractors follow all State and Federal regulations as well as OCSD r4itirements while working at OCSD locations. If during the course of a contract it is discovere CSD policies, safety manuals, or contracts do not comply with State or Federal regtiW1k t an the CONSULTANT is required to follow the most stringent regulatory require a o cost to OCSD. CONSULTANT and all their employees and subcontractors, s II ere to all applicable OCSD Safety and Human Resources Policies found at: hops:// .ocsd.com/Home/ShowDocument?id=17591 37. Damage to OCSD's Property.,Any OCSD property damaged by CONSULTANT will be subject to repair or replacement by CONSULTANT at no cost to OCSD. 38.Freight(F.O.B. Destination): CONSULTANT assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products deemed necessary under this Agreement. 39.Assignments: CONSULTANT shall not delegate any duties nor assign any rights under this Agreement without the prior written consent of OCSD. Any such attempted delegation or assignment shall be void. Orange County Sanitation District 17 of 19 Specification No.S-2017-8718D —Draft Do Not Use- 40. Changes In Control of CONSULTANT 40.1. In the event of a change in Control of CONSULTANT, OCSD shall have the option of terminating this Agreement by written notice to CONSULTANT. CONSULTANT shall notify OCSD within ten(10)days of the occurrence of a change in Control. As used in this Section, "Control" is defined as the possession, direct or indirect, of either: 40.1.1. the ownership or ability to direct the voting of fifty-one percent(51%)or more of the equity interests, value, or voting power in CONSULTANT; or 40.1.2. the power to direct or cause the direction of the management and policies of CONSULTANT, whether through ownership of voting securities, by contract, or otherwise. 41. Third Party Rights: Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than OCSD and CONSULTANT. 42. Non-Liability of OCSD Officers and Employees: No officer or employee of OCSD shall be personally liable to CONSULTANT, or any successor-in-interest, in the event of any default or breach by OCSD or for any amount which may become due to CONSULTANT or to its successor, or for breach of any obligation of the terms of this Agreement. I 43. Conflict of Interest and Reporting 43.1. CONSULTANT shall at all times avoid conflict of interest o(ya arance of conflict of interest in performance of this Agreement. y\/\✓ 43.2. CONSULTANT affirms that to the best of its knowledge there exists no actual or potential conflict between CONSULTANT'S families, business or financial interest or its Services under this Agreement, and in the event of change in either its private interests or Services under this Agreement, it will raise with OCSD any question regarding possible conflict of interest which may arise as a result of such change. 44.Authority to Execute: The persons executing this Agreement on behalf of the Parties warrant that they are duly authorized to execute this Agreement and that by executing this Agreement, the Parties are formally bound/. A. 45. Read and Understoo y ing this Agreement, CONSULTANT represents that he has read and understood thCM , d conditions of the Agreement. 46. Entire Agreem Phis Agreement 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 18 of 19 Specification No.S-2017-871BD -Draft Do Not Use- 47. Notices: All notices under this Agreement 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. Any facsimile notice must be followed within three (3) days by written notice. Rejection or other refusal to accept or the inability to deliver because of changed address or 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: Natasha Dubrovski Brandon Garcia Contract Administrator Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708-7018 CONSULTANT: Gamer Bennet, President& CEO Total Resource Management, Inc. 510 King Street, Suite 200 Alexander, VA 22314-3132 IN WITNESS WHEREOF, the Parties hereto have hereunto set t a the day and year indicated below. \V\\ ORANGE COUNTY SRM1lTAT1ON DISTRICT Dated: By: ` z �� C. Seboum, PLS OCir, B aoard of Directors Dated: Y. n^ Clerk of the Board Dated: O( T By: Contracts and Purchasing and Materials Management Manager TOTAL RESOURCE MANAGEMENT INC. Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number Orange County Sanitation District 19 of 19 Specification No.S-2017-871BD -Draft Do Not Use- ADMINISTRATION COMMITTEE Meeting Date TOBd.Of Dir. 17J13/17 12/20/17 AGENDA REPORT IWrnNumber Item Number a Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: RIGHT OF WAY AND PROPERTY MANAGEMENT SERVICES GENERAL MANAGER'S RECOMMENDATION A. Approve a Professional Consultant Services Agreement with Paragon Partners Ltd. for Right of Way and Property Management Services, Specification No. CS- 2017-879, for the period January 1, 2018 through December 31, 2018, for a total annual amount not to exceed $115,000, with two (2) six-month renewal options; and B. Approve a contingency of$11,500 (10%). BACKGROUND The Orange County Sanitation District(Sanitation District)owns and manages real estate, rights-of-ways, and various properties. Recently, the Sanitation District purchased additional properties for future use. Many of these newly acquired properties have existing tenants and require property management resources. Additionally, the Sanitation District maintains various rights-of-ways. Currently, the Sanitation District does not have these property management resources on staff. While evaluating the future needs in this area, staff recommends engaging a firm with this expertise on a short-term basis. RELEVANT STANDARDS • Protection of Orange County Sanitation District assets PROBLEM The Sanitation District owns and maintains real estate and properties which require special expertise. At present, the Sanitation District does not employee staff with this expertise. PROPOSED SOLUTION Engage an outside firm with real estate expertise on a short-term basis while evaluating its needs and developing a long-term strategy to manage these assets. Page 1 of 3 TIMING CONCERNS The Sanitation District has obtained additional properties. Currently, the Sanitation District does not have expertise in this area. RAMIFICATIONS OF NOT TAKING ACTION Sanitation District assets will not be maintained properly. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District requested and advertised for proposals for Right of Way and Property Management Services on August 17, 2017. The following evaluation criteria were described in the request for proposals and used to determine the most qualified firm. Cost was original weighted at 15%, but was not considered during the evaluation phase. CRITERION WEIGHT Qualifications of Firm 35% Staffing and Project 15% Organization Work Plan 20% Presentation 15% Three (3) proposals were received on September 21, 2017, and evaluated in accordance with the evaluation process set forth in Ordinance No. OCSD-47, by a pre-selected evaluation team consisting of the following Sanitation District staff. 1) Director of Engineering 2) Accounting Supervisor 3) Engineering Manager Following scoring by the evaluation team, two (2)firms were shortlisted for interviews on October 17, 2017. 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. Paragon Partners Stadia Realty Ltd. Inc. Evaluator 1 697.50 662.50 Evaluator 850.00 720.00 Evaluator 3 675.00 600.00 Total Weighted Score 740.83 660.84 Page 2 of 3 Consultant shall provide a full array of expert property management and right of way services including managing the Sanitation District's real property portfolio and procuring necessary property easements, entitlements, and encroachments. Other services include: Title services including securing preliminary title commitments or title searches, securing title updates and insurances for all necessary parcels. Documentation of Sanitation District real property holdings in fee and easement right. Develop a management strategy for each non-plant and pump station real estate interest and identify opportunities for each interest or site (leasing or public agency cooperation). Assistance with all stages of acquisition and disposition negotiations, including analyzing title reports, identifying potential title problems, proposing methods to cure title deficiencies, and assisting with closing services when necessary by obtaining updated title commitments and certified copies of instruments of conveyance and ensuring recordation of all instruments. Permit and license acquisition services from private parties, federal, state, local, regulatory, and jurisdictional agencies. Evaluation, assessment, and documentation of the Sanitation District's real property management needs, and recommend enhancements to existing policies and procedures. Identification of areas in which the Sanitation District's portfolio management efforts are not comprehensive and/or not sufficiently coordinated to meet industry standards. Identification of areas where the Sanitation District's property rights are not being fully utilized or protected. Options and recommendations for the development of an organizational structure and processes within the Sanitation District which will allow it to manage its property assets. FINANCIAL CONSIDERATIONS This request complies with the authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Professional Consultant Services Agreement - Right of Way and Property Management Services Page 3 of 3 PROFESSIONAL CONSULTANT SERVICES AGREEMENT Right of Way And Property Management Services Specification No. CS-2017-879 THIS AGREEMENTis 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 Paragon Partners LTD. with a principal place of business at 5660 Katella Ave, Suite 100 Cypress, CA 90630 (hereinafter referred to as "Consultant") collectively referred to as the "Parties". WITNESSETH WHEREAS, based on Consultant's expertise and experience, OCSD wishes to temporarily engage Consultant to provide Right of Way and Property Management Services ("Services") as described in Exhibit"A"; and WHEREAS, Consultant submitted its proposal, dated September 21, 2017 and WHEREAS, on December 20, 2017 the Board of Directors of OCSD, by minute order, authorized execution of this Agreement between OCSD and Consultant; and WHEREAS, OCSD has chosen Consultant to conduct Services in accordance with Ordinance No. OCSD-47; and NOW, THEREFORE, in consideration of the mutual promises and mutual benefits exchanged between the Parties, the Parties mutually agree as follows: 1. Introduction 1.1 This Agreement and all exhibits hereto (called the "Agreement") is made by OCSD and Consultant. The Terms and Conditions herein exclusively govern the purchase of Services as described in Exhibit"A" Scope of Work. 1.2 Exhibits to this Agreement are incorporated by reference and made a part of this Agreement as though fully set forth at length herein. Exhibits to this Agreement are as follows in order of precedence: Exhibit"A" Scope of Work Exhibit"B" Final Cost Proposal submitted by Consultant on November 7, 2017 Exhibit"C" Proposal submitted by Consultant Dated September 21, 2017 Exhibit"D" Acknowledgement of Insurance Requirements Exhibit"E" OCSD Safety Standards 1.3 In the event of any conflict or inconsistency between the provisions of this Agreement and any of the provisions of the exhibits hereto, the provisions of this Agreement shall in all respects govern and control. 1.4 This Agreement may not be modified, changed or supplemented, nor may any obligations hereunder be waived or extensions of time for performance granted, except by written instrument signed by both Parties. Orange County Sanitation District 1 of 11 Specification No. CS-2017-879 1.5 The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any Paragraph or provision hereof. 1.6 The term "days', when used in the Agreement, shall mean calendar days, unless otherwise noted as workdays. 1.7 The term "workday". Workdays are defined as all days that are not Saturday, Sunday, or legally observed holidays. Meetings with OCSD staff shall be scheduled from Monday through Friday between the hours of 8AM and 4PM (exception is operations staff who maintain plant operations 24/7 and work a rotated 12-hour shift) and shall conform to OCSD work schedules. OCSD review periods shall not include legally observed holidays. 1.8 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. 1.9 Work Hours: The work required under this Agreement may include normal Business hours, evenings, and weekends. OCSD will not pay Travel Time. 1.10 Work Hours: All work shall be scheduled Monday through Friday, between 7:30AM and 5:30PM. OCSD will not pay Travel Time. 1.11 Consultant shall provide OCSD with all required premiums and/or overtime work at no charge beyond the prices provided in Exhibit"B". 1.12 Except as expressly provided otherwise, OCSD accepts no liability for any expenses, losses, or action incurred or undertaken by Consultant as a result of work performed in anticipation of purchases of said services by OCSD. 2. Scone of Work Subject to the terms of this Agreement, Consultant shall perform the Services identified in Exhibit"A" and Consultant warrants that all of its Services shall be performed in a competent, professional and satisfactory manner. 3. Modifications to Scone 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. A review of the time required for the modification will be made by OCSD and Consultant and the Agreement period adjusted accordingly. 4. Compensation Compensation to be paid by OCSD to Consultant for the Services provided under this Agreement shall be a total amount not to exceed One Hundred and Fifteen Thousand Dollars ($115,000.00). 5. California Department of Industrial Relations (DIR)Renislrafion and Record of Wanes (Not Used) Orange County Sanitation District 2 of 11 Specification No. CS-2017-879 6. Payment and Invoicing 6.1 Consultant shall be paid monthly by OCSD upon approval of invoices by OCSD Project Manager, or his designee, for Services rendered as outlined in Exhibit "A" Scope of Work. OCSD, at its sole discretion, shall be the determining party as to whether the Services have been satisfactorily completed. 6.2 Invoices shall be emailed by Consultant to OCSD Accounts Payable at APStaff()OCSD.com and"INVOICE"and the Purchase Order number and Specification No. CS-2017-879"shall be referenced in the subject line. 7. Audit Rights Consultant agrees that, during the term of this Agreement 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 Consultant relating to the invoices submitted by Consultant pursuant to this Agreement. 6. Commencementand Term The Services to be provided by Consultant underthis Agreement shall commence on the date of the Notice to Proceed (Effective Date), and be completed within one (1) year from the Effective Date of the Notice to Proceed. 9. Renewals 9.1 OCSD may exercise the option to renew the Agreement for up to two (2) six (6) month periods based upon the criteria set forth in the Scope of Work, Exhibit"A", under the terms and conditions contained herein. OCSD shall make no obligation to renew nor give reason if it elects not to renew. 9.2 Renewals may be made through the OCSD Purchase Order Process. 10. Extensions The Term of this Agreement may be extended only by written instrument signed by both Parties. 11. Performance Time is of the essence in the performance of the provisions hereof. 12. Termination 12.1 OCSD reserves the right to terminate this Agreement for its convenience,with or without cause, in whole or in part, at any time, by written notice from OCSD. Upon receipt of a termination notice, Consultant shall immediately discontinue all work under this Agreement (unless the notice directs otherwise). OCSD shall thereafter, within thirty (30) days, pay Consultant for work performed (cost and fee)to the date of termination. Consultant expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of this Agreement. Such notice of termination shall terminate this Agreement and release OCSD from any further fee, cost or claim hereunder by Consultant other than for work performed to the date of termination. 12.2 OCSD reserves the right to terminate this Agreement immediately upon OCSD's determination that Consultant is not meeting specification requirements, if the level of service is inadequate, or any other default of this Agreement. 12.3 OCSD may also immediately cancel for default of this Agreement in whole or in part by written notice to Consultant: Orange County Sanitation District 3 of 11 Specification No. CS-2017-879 • if Consultant becomes insolvent or files a petition under the Bankruptcy Act; or • if Consultant sells its business; or • if Consultant breaches any of the terms of this Agreement; or • if total amount of compensation exceeds the amount authorized under this Agreement. 12.4 All OCSD property in the possession or control of Consultant shall be returned by Consultant to OCSD on demand, or at the termination of this Agreement, whichever occurs first. 13. Indemnification and Hold Harmless Provision Consultant 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 Consultant's services under this Agreement, or by its subcontractor or by anyone directly or indirectly employed by Consultant, and whether such damage or injury shall accrue or be discovered before or after the termination of the Agreement. Except as to the sole active negligence of or willful misconduct of OCSD, Consultant 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 Consultant's performance under the Agreement, 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 Agreement, and/or(c)on account of any goods and services provided under this Agreement. This indemnification provision shall apply to any acts or omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of Consultant of or anyone employed by or working under Consultant. To the maximum extent permitted by law, Consultant's duty to defend shall apply whether or not such claims, allegations, lawsuits, or proceedings have merit or are mantissa, 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. Consultant agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. This section shall survive the expiration or eady termination of the Agreement. 14. Insurance Consultant and all subconsultant shall purchase and maintain, throughout the life of this Agreement and any periods of warranty or extensions, insurance in amounts equal to the requirements set forth in the signed Acknowledgement of Insurance Requirements, Exhibit V. Consultant shall not commence work under this Agreement until all required insurance is obtained in a form acceptable to OCSD, nor shall Consultant allow any subcontractor/subconsultant 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 Agreement. 15. Key Personnel Key Personnel, as provided in Exhibit"C", are considered "key" to the work under this Agreement and will be available for the term of the Agreement. No person designated as key under this Agreement shall be removed or replaced without prior written consent of OCSD. If OCSD asks Consultant to remove a person designated as key under this Agreement, Consultant agrees to do so immediately regardless of the reason, or the lack of reason, for OCSD's request. Consultant shall assign only competent personnel to perform services pursuant to this Agreement. Orange County Sanitation District 4 of 11 Specification No. CS-2017-979 16. Confidentiality and Non-Disclosure 16.1 Consultant acknowledges that in performing the Services hereunder, OCSD may have to disclose to Consultant orally and in writing certain confidential information that OCSD considers proprietary and has developed at great expense and effort. 16.2 Consultant agrees to maintain in confidence and not disclose to any person, firm, or corporation, without OCSD's prior written consent, any trade secret or confidential information, knowledge or data relating to the products, process, or operation of OCSD. 16.3 Consultant further agrees to maintain in confidence and not to disclose to any person, firm, or corporation any data, information,technology, or material developed or obtained by Consultant during the term of this Agreement. 16.4 Consultant agrees as follows: • To use the Confidential Information only for the purposes described herein; to not reproduce the Confidential Information; to hold in confidence and protect the Confidential Information from dissemination to and use by anyone not a party to this Agreement; and to not use the Confidential Information to benefit itself or others. • To restrict access to the Confidential Information to its Consultant or personnel of Consultant who (1) have a need to have such access and (2) have been advised of and have agreed in writing to treat such information in accordance with the terms of this Agreement. • To return all Confidential Information in Consultant's possession upon termination of this Agreement or upon OCSD's request, whichever occurs first. • To hold in confidence information and materials, if any, developed pursuant to the Services hereunder. 16.5 The provisions of this Section shall survive termination or expiration of this Agreement and shall continue for so long as the material remains confidential. 17. Ownership of Documents All drawings, specifications, reports, records, documents, memoranda, correspondence, computations, and other materials prepared by Consultant, its employees, subconsultants, and agents in the performance of this Agreement shall be the property of OCSD and shall be promptly delivered to OCSD upon request of the Project Manager or upon the termination of this Agreement, and Consultant shall have no claim for further employment or additional compensation as a result of the exercise by OCSD of its full rights of ownership of the documents and materials hereunder. Any use of such completed documents for other projects and/or use of incomplete documents without specific written authorization by the Consultant will be at OCSD's sole risk and without liability to Consultant. Consultant shall ensure that all its subconsultants shall provide for assignment to OCSD of any documents or materials prepared by them. 18. Ownership of Intellectual Property 18.1 Consultant agrees that all designs, plans, reports, specifications, drawings, schematics, prototypes, models, inventions, and all other information and items made during the course of this Agreement and arising from the Services (hereinafter referred to as"New Developments") shall be and are assigned to OCSD as its sole and exclusive property. Orange County Sanitation District 5 of 11 Specification No. CS-2017-879 18.2 Consultant agrees to promptly disclose to OCSD all such New Developments. Upon OCSD's request, Consultant agrees to assist OCSD, at OCSD's expense, to obtain patents or copyrights for such New Developments, including the disclosure of all pertinent information and data with respect thereto, the execution of all applications, specifications, assignments, and all other instruments and papers which OCSD shall deem necessary to apply for and to assign or convey to OCSD, its successors and assigns, the sole and exclusive right, title and interest in such New Developments. Consultant agrees to obtain or has obtained written assurances from its employees and contract personnel of their agreement to the terms hereof with regard to New Developments and Confidential Information. 18.3 Consultant warrants that Consultant has good title to any New Developments, and the right to assign New Developments to OCSD free of any proprietary rights of any other party or any other encumbrance whatever. 18.4 The originals of all computations, drawings, designs, graphics, studies, reports, manuals, photographs,videotapes,data, computer files, and other documents prepared or caused to be prepared by Consultant or its subconsultants in connection with these Services shall be delivered to and shall become the exclusive property of OCSD. OCSD may utilize these documents for OCSD applications on other projects or extensions of this project, at its own risk. 19. No Solicitation of Employees Or Subconsultant 19.1 Consultant agrees that it shall not, during the term of this Agreement and for a period of one (1) year immediately following termination of this Agreement, or any extension hereof, call on, solicit, or take away any of the employees or subconsultant about whom Consultant became aware as a result of Consultant's Services to OCSD. 19.2 Consultant acknowledges that OCSD's employees are critical to its business. Consultant agrees not to employ or otherwise engage OCSD's employees or subconsultant during the term of this Agreement and for a period of one (1) year following termination of this Agreement. Should Consultant violate this provision, Consultant will pay OCSD fifty percent (50%) of the former employee's annual salary which payment is in addition to OCSD's rights and remedies. 20. Independent Contractor Capacity 20.1 The relationship of Consultant to OCSD is that of an independent contractor and nothing herein shall be construed as creating an employment or agency relationship. 20.2 Consultant shall act independently and not as an officer or employee of OCSD. OCSD assumes no liability for Consultant's action and performance, nor assumes responsibility for taxes, funds, payments or other commitments, implied or expressed, by or for Consultant. 20.3 Consultant shall not be considered an agent of OCSD for any purpose whatsoever, nor shall Consultant have the right to, and shall not, commit OCSD to any agreement, contract or undertaking. Consultant shall not use OCSD's name in its promotional material or for any advertising or publicity purposes without expressed written consent. Orange County Sanitation District 6 of 11 Specification No. CS-2017-879 20.4 Consultant shall not be entitled to any benefits accorded to those individuals listed on OCSD's payroll as regular employees including, without limitation, worker's compensation, disability insurance, vacation, holiday or sick pay. Consultant shall be responsible for providing, at Consultant's expense, disability, worker's compensation or other insurance as well as licenses and permits usual or necessary for conducting the Services hereunder. 20.5 Consultant shall be obligated to pay any and all applicable local, state and federal payroll and other taxes incurred as a result of fees hereunder. Consultant hereby indemnifies OCSD for any claims, losses, costs, fees, liabilities, damages or penalties suffered by OCSD arising out of Consultant's breach of this provision. 20.6 Consultant shall not be eligible to join or participate in any benefit plans offered to those individuals listed on OCSD's payroll as regular employees. Consultant shall remain ineligible for such benefits or participation in such benefit plans even if a court later decides that OCSD misclassified Consultant for tax purposes. 21. Licenses, Permits Consultant represents and warrants to OCSD that it has obtained and will maintain 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 Agreement will be paid by Consultant. 22. Consultant's Representations In the performance of duties under this Agreement, Consultant shall adhere to the highest fiduciary standards, ethical practices and standards of care and competence for their trade/profession. Consultant agrees to comply with all applicable Federal, State and local laws and regulations. 23. Familiarity with Work By executing this Agreement, Consultant 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 Agreement. Should Consultant 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 Consultant's risk, until written instructions are received from OCSD. 24. Rtpht to Review Services. Facilities. and Records 24.1 OCSD reserves the right to review any portion of the Services performed by Consultant under this Agreement, and Consultant agrees to cooperate to the fullest extent possible. 24.2 Consultant shall furnish to OCSD such reports, statistical data, and other information pertaining to Consultant's Services as shall be reasonably required by OCSD to carry out its rights and responsibilities under its agreements with its bondholders or noteholders and any other agreement relating to the development of the project(s) and in connection with the issuance of its official statements and other prospectuses with respect to the offering, sale, and issuance of its bonds and other obligations. 24.3 The right of OCSD to review or approve drawings, specifications, procedures, instructions, reports, test results, calculations, schedules, or other data that are developed by Consultant shall not relieve Consultant of any obligation set forth herein. Orange County Sanitation District 7 of 11 Specification No. CS-2017-879 25. 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 Agreement. 26. Severability If any section, subsection, or provision of this Agreement, or any agreement or instrument contemplated hereby, or the application of such section, subsection, or provision is held invalid, the remainder of this Agreement 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. 27. WaiverThe waiver of either party of any breach or violation of, or default under, any provision of this Agreement, shall not be deemed a continuing waiver by such party of any other provision or of any subsequent breach or violation of this Agreement or default thereunder. Any breach by Consultant 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. 28. Remedies In addition to other remedies available in law or equity, if the Consultant fails to make delivery of the goods or Services or repudiates its obligations under this Agreement, or if OCSD rejects the goods or Services or revokes acceptance of the goods or Services,OCSD may(1) cancel the Agreement; (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 Consultant. In the event OCSD elects to"cover" as described in (3), OCSD shall be entitled to recover from Consultant as damages the difference between the cost of the substitute goods or Services and the contract price,together with any incidental or consequential damages. 29. Governing Law This Agreement 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 Agreement or the performance thereof. 30.Attorney's Fees If any action at law or in equity or if any proceeding in the form of an Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this Agreement, 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. 31. Dispute Resolution 31.1 In the event of a dispute as to the construction or interpretation of this Agreement, 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. 31.2 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 et seq. For such purpose, an agreed arbitrator Orange County Sanitation District 8 of 11 Specification No. CS-2017-879 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. 32. Damage to OCSD's Property Any OCSD property damaged by Consultant will be subject to repair or replacement by Consultant at no cost to OCSD. 33. OCSD Safety and Human Resources Policies OCSD requires all contractors and Consultants to follow and ensure their employees and all subconsultant 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 Consultant is required to follow the most stringent regulatory requirement at no cost to OCSD. Consultant and all their employees and subconsultant, shall adhere to all applicable OCSD Safety and Human Resources Policies found at https://www.oGsd.com/about-us/transparency/safety-and-human-resources-policy/- folder-631 and Human Resource Policies are hereby incorporated by reference as though fully set forth herein in Exhibit"E". 34. Freight (F.G.B. Destination) Consultant assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products deemed necessary under this Agreement. 35.Assignments Consultant shall not delegate any duties nor assign any rights under this Agreement without the prior written consent of OCSD. Any such attempted delegation or assignment shall be void. 36. Conflict of Interest and Reporting 36.1 Consultant shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this Agreement. 36.2 Consultant affirms that to the best of its knowledge there exists no actual or potential conflict between Consultant's families, business or financial interest or its Services under this Agreement, and in the event of change in either its private interests or Services under this Agreement, it will raise with OCSD any question regarding possible conflict of interest which may arise as a result of such change. 37. Third Party Rights Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than OCSD and Consultant. 38. Non-Liability of OCSD Officers and Employees No officer or employee of OCSD shall be personally liable to Consultant, or any successor-in-interest, in the event of any default or breach by OCSD or for any amount which may become due to Consultant or to its successor, or for breach of any obligation of the terms of this Agreement. Orange County Sanitation District 9 of 11 Specification No. CS-2017-879 39.Authority to Execute The persons executing this Agreement on behalf of the Parties warrant that they are duly authorized to execute this Agreement and that by executing this Agreement, the Parties are formally bound. 40. Read and Understood By signing this Agreement, Consultant represents that he has read and understood the terms and conditions of the Agreement. 41. Entire Agreement This Agreement 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 10 of 11 Specification No. CS-2017-879 42. Notices All notices under this Agreement 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. Any facsimile notice must be followed within three (3) days by written notice. 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: Brandon Garcia Contracts Administrator Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Consultant: Nellie LaValle, President& CEO Paragon Partners LTD. 5660 Katella Avenue, Suite 100 Cypress, CA 90630 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: Gregory C. Sebourn, PLS Chair, Board of Directors Dated: By: Kelly Lore Clerk of the Board Dated: By: Contracts and Purchasing and Materials Management Manager PARAGON PARTNERS LTD. Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number Orange County Sanitation District 11 of 11 Specification No. CS-2017-879 ADMINISTRATION COMMITTEE Meeting Date TOBd.Ot Dir. 12J13/17 12/20/17 AGENDA REPORT IWmNumber Item Number s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: INVEST AND/OR REINVEST DISTRICT'S FUNDS GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 17-XX, entitled "A Resolution of the Board of Directors of the Orange County Sanitation District, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds; Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 16-19." BACKGROUND This agenda item presents an update to the Orange County Sanitation District's (Sanitation District) Investment Policy Statement to the Administration Committee for consideration in the Committee's capacity as the oversight committee for the Investment Policy (Section 16.2). With adoption of the Resolution, the Board of Directors would readopt the Sanitation District's current Investment Policy Statement, portfolio performance benchmarks, and monitoring and reporting requirements for calendar year 2018. The Sanitation District's Investment Policy Statement was previously approved by the Administration Committee and Board for calendar year 2017 in October 2016. RELEVANT STANDARDS • Orange County Sanitation District Investment Policy • California Government Code Sections 53607 and 53646 PROBLEM California Government Code Section 53607 allows for the Board of Directors to delegate authority to invest and/or reinvest the Sanitation District's funds to the Treasurer for a one-year period. California Government Code Section 53646 requires the Sanitation District to review its Investment Policy annually and readopt its Policy at a public meeting, which will establish specific performance benchmarks and objectives, and specific monitoring and reports. On October 26, 2016, the Board of Directors adopted Resolution No. OCSD 16-19, entitled "A Resolution of the Board of Directors of the Orange County Sanitation District, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds, Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 15-25." Authority delegated by the Board of Page 1 of 4 Directors to the Director of Finance/Treasurer to invest and/or reinvest the Sanitation District's funds expires on December 31, 2017. Pursuant to California Government Code Section 53646, the Sanitation District's Investment Policy must be reviewed and readopted prior to December 31, 2017. PROPOSED SOLUTION With adoption of the Resolution, the Board of Directors would renew its delegation of investment authority to the Director of Finance/Treasurer for a one-year period, January 1, 2018 to December 31, 2018, in compliance with the requirements of California Government Code Section 53607. Each year, the Board of Directors will consider similar actions, along with the annual reconsideration of the Sanitation District's Investment Policy. TIMING CONCERNS The Board of Directors delegation of authority to the Director of Finance/Treasurer to invest and/or reinvest the Sanitation District's funds will expire on December 31, 2017. Pursuant to California Government Code Section 53646, the Sanitation District's Investment Policy must be reviewed and readopted prior to December 31, 2017. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District's Director of Finance/Treasurer will not be able to invest and/or reinvest the Sanitation District's funds and the Sanitation District will not be in compliance with California Government Code Section 53646. PRIOR COMMITTEE/BOARD ACTIONS December 2016 - Board adopted Resolution No. OCSD 16-19, entitled "A Resolution of the Board of Directors of the Orange County Sanitation District, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds,Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 15-25. ADDITIONAL INFORMATION The Sanitation District Investment Policy Statement is a comprehensive document describing the policy, authorizations, benchmarks, delegations, and investment limitations contained within these 16 distinct sections. 1.0 Policy 2.0 Scope 3.0 Standard of Prudence 4.0 Investment Objectives 5.0 Delegation of Authority 6.0 Ethics and Conflicts of Interest 7.0 Authorized Financial Dealers and Institutions Page 2 d 4 8.0 Authorized and Suitable Investments 9.0 Collateralization 10.0 Safekeeping and Custody 11.0 Diversification 12.0 Maximum Maturities 13.0 Internal Control 14.0 Performance Objectives and Benchmarks 15.0 Reporting 16.0 Investment Policy Adoption and Revision The Investment Policy will govern the investment activities of Chandler Asset Management, the Sanitation District's external money manager, on behalf of the Sanitation District. On December 11, 2012, the Sanitation District's Investment Policy Statement received the Investment Policy Certification of Excellence Award from the California Municipal Treasurer's Association (CMTA). A copy of the letter of certification is included each year in the annual Investment Policy document. The Sanitation District received its first Award of Excellence for the Investment Policy Statement in December 1996. Annual Review of Investment Policv The Investment Policy includes the requirement that the Sanitation District shall review its Investment Policy annually (Sections 1.2 and 16.1). Chandler Asset Management reviewed the existing policy to ensure that the language remains current with the California Government Code. The proposed Investment Policy is attached with redlined changes from the most recent approved policy in October 2016. These proposed changes include: • Adding Supranational securities to the list of securities that are not subject to the 5% limitation per issuer as requested by the District's Investment Manager, Chandler Asset Management, for the purpose of enhancing returns. • California Government Code Section 53601(q) allows local agencies to invest in securities that are issued by three supranationals: (1) World Bank, (2) International Finance Corporation (IFC), and (3) International American Development Bank(IADB) not to exceed 30%of the agency's investment portfolio. By adding supranational securities to the list of securities that are not subject to the 5% limitation per issuer, the Sanitation District can invest up to 30% of its portfolio in supranational securities. If supranational securities are not added to the list of securities that are not subject to the 5% limitation per issuer, then the Sanitation District would continue to be subject to an investment limit of 15% of its portfolio on supranational securities (5%World Bank, 5% IFC, and 5% IADB). The possible perceived lack of diversification by allowing up to 30% of the portfolio be invested in supranationals is mostly offset by the California Government Code Page 3 of 4 Section 53601(q) requirement that all supranational investments have a rating category of"AA" or better by a nationally recognized statistical rating organization (NRSRO) and the securities must be eligible for purchase and sale within the U.S. • Updating the Sanitation District Treasury Management Procedures to reflect the replacement of Mellon/Boston Trust with U.S. Bank as the Sanitation District's master custodian and safekeeping bank. • Updating the State Treasurer's Local Agency Investment Fund Wiring Instructions Form to include the option of initiating LAW deposits or withdrawals via LAW Online. Annual Delegation of Investment Authority Effective January 1, 1997, California Government Code Section 53607 states that governing boards of local agencies may only delegate authority to invest and/or reinvest agency funds to the agency's Treasurer for a one-year period. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(a)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Exhibit A - OCSD Calendar Year 2017 Investment Policy Statement • Exhibit B - Performance Monitoring and Reporting Schedule and Summary • Proposed Resolution No. OCSD 17-XX • Orange County Sanitation District Treasury Management Procedures Page 4 of 4 ORANGE COUNTY SANITATION DISTRICT INVESTMENT POLICY STATEMENT 1.0 Policy: It is the policy of the Orange County Sanitation District (OCSD) to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the investment of public funds. 1.1. This Investment Policy is set forth by OCSD for the following purposes: 1.1.1. To establish a clear understanding for the Board of Directors, OCSD management, responsible employees and third parties of the objectives, policies and guidelines for the investment of the OCSD's idle and surplus funds. 1.1.2. To offer guidance to investment staff and any external investment advisors on the investment of OCSD funds (see Appendix "A"). 1.1.3. To establish a basis for evaluating investment results. 1.2. OCSD establishes investment policies which meet its current investment goals. OCSD shall review this policy annually, and may change its policies as its investment objectives change. 2.0 Scope: This Investment Policy applies to all financial assets of OCSD; except for the proceeds of OCSD's capital projects financing program, which are invested in accordance with provisions of their specific bond indentures; and such other funds excluded by law or other Board-approved covenant or agreement. These funds are accounted for by OCSD as Enterprise Funds as represented in OCSD's Comprehensive Annual Financial Report. 3.0 Standard of Prudence: The standard of prudence to be used by OCSD internal staff, and any authorized investment advisor(s), shall be as described in Section 53600.3 of the California Government Code as follows: Except as provided in subdivision (a) of Section 27000.3, all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing Page 1 public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law. 4.0 Investment Objectives: The primary objectives of OCSD's investment activities, in priority order, and as described in Section 53600.5 of the California Government Code, shall be: 4.1 Safety: The safety and preservation of principal is the foremost objective of the investment program of OCSD. Investments shall be selected in a manner that seeks to ensure the preservation of capital in OCSD's overall portfolio. This will be accomplished through a program of diversification, more fully described in Section 11.0, and maturity limitations, more fully described in Section 12.0, in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 4.2 Liquidity: The investment program will be administered in a manner that will ensure that sufficient funds are available for OCSD to meet its reasonably anticipated operating expenditure needs. 4.3 Return on Investments: The OCSD investment portfolio will be structured and managed with the objective of achieving a rate of return throughout budgetary and economic cycles, commensurate with legal, safety, and liquidity considerations. 5.0 Delegation of Authority: 5.1 Authority to manage OCSD's investment program is derived from the California Government Code Sections 53600 et seq. and Sections 53635 et seq. The Board of Directors hereby delegates management responsibility for the OCSD investment program to its Director of Finance and Administrative Services/Treasurer, who shall establish written procedures for the operation of the investment program, consistent with this Policy. The Controller/Assistant Treasurer shall be responsible for day-to-day administration, monitoring, and the development of written administrative procedures for the operation of the investment program, consistent with this Policy. The current treasury management procedures are presented in Appendix "B." No person may engage in an investment transaction except as provided under the terms of this Policy and the Page 2 procedures established by the Treasurer. The Treasurer shall be responsible for all transactions undertaken by OCSD internal staff, and shall establish a system of controls to regulate the activities of internal staff and external investment advisors engaged in accordance with Section 5.3. 5.2 The administrative procedures for the operation of OCSD's investment program will provide for, but not be limited to, the following: 5.2.1 Formats for monthly and quarterly reports to the Administration Committee, and the Board of Directors. 5.2.2 Compliance with generally accepted accounting principles of the Government Accounting Standards Board. 5.2.3 Establishment of benchmarks for performance measurement. 5.2.4 Establishment of a system of written internal controls. 5.2.5 Establishment of written procedures for competitive bids and offerings of securities that may be purchased or sold by internal OCSD staff. 5.2.6 Establishment of a Desk Procedures Manual for treasury operations and management. 5.3 The Board of Directors of OCSD may, in its discretion, engage the services of one or more registered investment advisors to assist in the management of OCSD's investment portfolio in a manner consistent with OCSD's objectives. Such external investment advisors, which shall be selected through a competitive process, shall be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such advisors must be registered under the Investment Advisers Act of 1940, or be exempt from such registration. 6.0 Ethics and Conflicts of Interest: 6.1 Officers and employees of OCSD involved in the investment process shall refrain from personal business activities that could conflict with proper execution of OCSD's investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the General Manager any material financial interests in financial institutions that conduct business within OCSD's boundaries, and they shall further disclose any large personal financial/investment positions, the performance of which could be related to the performance of positions in OCSD's portfolio. Page 3 7.0 Authorized Financial Dealers and Institutions: 7.1 For investment transactions conducted by OCSD internal staff, the Treasurer will maintain a list of financial institutions authorized to provide investment services to OCSD, including "primary" or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform Net Capital rule), and Federal or State of California chartered banks. No public deposit shall be made except in a qualified public depository as established by State law. All financial institutions which desire to become qualified bidders for investment transactions with OCSD must supply the following for evaluation by the Treasurer: 7.1.1. Audited financial statements for the institution's three (3) most recent fiscal years. 7.1.2. A statement, in the format prescribed by the Government Finance Officers Association (GFOA), certifying that the institution has reviewed OCSD's Investment Policy and that all securities offered to the Districts shall comply fully and in every instance with all provisions of the California Government Code and with this Investment Policy. The current statement is presented in Appendix "C." 7.1.3. A statement describing the regulatory status of the dealer, and the background and expertise of the dealer's representatives. Selection of financial institutions, broker/dealers, and banks authorized to engage in transactions with OCSD shall be made through a competitive process. An annual review of the financial condition of qualified institutions will be conducted by the Treasurer. 7.2 Selection of broker/dealers used by external investment advisors retained by OCSD, shall be in compliance with contract provisions between OCSD and any external investment advisors, and shall be in substantially the following form: Use of Securities Brokers: Neither the Investment Advisor nor any parent, subsidiary or related firm shall act as a securities broker with respect to any purchases or sales of securities which may be made on behalf of OCSD, provided that this limitation shall not prevent the Investment Advisor from utilizing the services of a securities broker which is a parent, subsidiary or related firm, provided such broker effects transactions on a "cost only" or"nonprofit" basis to itself and provides competitive execution. The Investment Advisor shall provide the Districts with a list of suitable independent brokerage firms (including names and addresses) meeting the requirements of Government Code Section 53601.5, and, unless Page 4 otherwise directed by OCSD, the Investment Advisor may utilize the service of any of such independent securities brokerage firms it deems appropriate to the extent that such firms are competitive with respect to price of services and execution. 8.0 Authorized and Suitable Investments: All investments shall be made in accordance with the California Government Code including Sections 16429.1 et seq., 53600 at seq., and 53684, and as described within this Investment Policy. Permitted investments under this Policy shall include: 8.1 Securities, obligations, participations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by the US Government, a federal agency, or a US Government-sponsored enterprise pursuant to Section 53601 (f) of the California Government Code. US Treasury securities must make up at least 10% of the portfolio. 8.2 Supranational Obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. Securities must be eligible for purchase in the United States and be US dollar denominated senior unsecured unsubordinated obligations, with a maximum maturity of five years. Securities eligible for purchase under this section must be rated "AA" or better by a Nationally Recognized Statistical Rating Organization (NRSRO) and shall not exceed 30% of the total portfolio. 8.3 Mortgage pass-through security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease- backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond of a maximum maturity of five years. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by an NRSRO and rated in a rating category of"AA" or its equivalent or better by an NRSRO. Purchase of securities authorized by this subdivision may not exceed 20 percent of the agency's surplus moneys that may be invested pursuant to this section. Purchase of mortgage derivatives, which include interest-only payments (IOs) and principal-only payments (POs); inverse floaters, and RE-REMICs (Real Estate Mortgage Investment Conduits), is hereby prohibited. 8.4 Commercial paper of"prime" quality of the highest ranking or of the highest letter and number rating as provided by an NRSRO, and issued by a domestic corporation organized and operating in the United States with assets in excess of$500 million and having a rating of"A" or better on its long-term debt as provided by an NRSRO. Purchases of eligible commercial paper may not exceed 270 days to maturity from the date of Page 5 purchase. Purchases of commercial paper shall not exceed 25% of the market value of the portfolio. No more than 5% of the market value of the portfolio, or 10% of the issuer's outstanding paper, may be invested in commercial paper issued by any one (1) eligible corporation. 8.5 Banker's acceptances issued by institutions, the short-term obligations of which are rated of the highest ranking or the highest letter and number rating as provided by an NRSRO provided that: (a) the acceptance is eligible for purchase by the Federal Reserve System; (b)the maturity does not exceed 180 days; (c) no more than 40% of the total portfolio may be invested in banker's acceptances; and (d) no more than 5% of the total portfolio may be invested in the banker's acceptances of any one (1) commercial bank. 8.6 Medium term (or corporate) notes of a maximum of five (5) years maturity issued by corporations organized and operating within the United States, or issued by depository institutions licensed by the United States, or any state, and operating within the United States with assets in excess of$500 million, and which is rated in a rating category of"A" or better on its long-term debt as provided by an NRSRO. If, after purchase, the rating of an eligible note falls below the minimum rating category stipulated above, the external investment advisor shall notify the District of the downgrade, and shall present an analysis and recommendations as to the disposition of the note consistent with the investment objectives of this Investment Policy. No more than 30% of the portfolio may be invested in medium term notes. 8.7 Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by California Government Code Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by California Government Code Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank that is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. 8.8 Shares of mutual funds investing in securities permitted under this policy and under Section 53601 (1) of the California Government Code. Such funds must either: (1) attain the highest ranking, or the highest letter and numerical rating, provided by not less than two of the three largest nationally recognized rating services; or (2) have an Investment Advisor registered with the Securities and Exchange Commission with not less than five (5) years of experience investing in the securities and obligations authorized under this Policy and under California Government Code Page 6 Section 53601, and with assets under management in excess of$500 million. The purchase price of shares of beneficial interest purchased pursuant to this policy, and the California Government Code may not include any commission that the companies may charge, and shall not exceed 20% of the District's surplus money that may be invested pursuant to this section. No more than 10% of the District's surplus funds may be invested in shares of beneficial interest of any one (1) mutual fund pursuant to this section. Money market mutual funds are limited to 20% per issuer and are not subject to the 10% stipulation. 8.9 Certificates of deposit: 8.9.1 Secured (collateralized) time deposits issued by a nationally or state-chartered bank or state or federal savings and loan association, as defined by Section 5102 of the California Financial Code, and having a net operating profit in the two (2) most recently completed fiscal years. Collateral must comply with Chapter 4, Bank Deposit Law, Section 16500 et seq., and Chapter 4.5, Savings and Loan Association and Credit Union Deposit Law, Section 16600 et seq., of the California Government Code. 8.9.2 Negotiable certificates of deposit (NCDs) issued by a nationally or state-chartered bank or state of federal savings and loan association, as defined by Section 5102 of the California Financial Code; and which shall have a rating of"A" or better on its long-term debt as provided by a NRSRO; or which shall have the highest letter and number rating for deposits as provided by a NRSRO; or as otherwise approved by the District's Board of Directors. No more than 30% of the portfolio may be invested in securities pursuant to this section. 8.9.3 To be eligible to receive local agency money, a bank, savings association, federal association, or federally insured individual loan company shall have received an overall rating of not less than "satisfactory" in its most recent evaluation by the appropriate federal financial supervisorial agency of its record of meeting the credit needs of California's communities, including low and moderate income neighborhoods, pursuant to Section 2906 of Title 12 of the United States Code. 8.10 Taxable or tax-exempt municipal bonds issued by any of the 50 United States. Such securities must be rated `A" or higher by a NRSRO; or as otherwise approved by the Districts' Board of Directors. 8.11 The State of California Local Agency Investment Fund (LAIF). The LAW is an investment alternative for California's local governments and special districts managed by the State Treasurer's Office. LAIF is more fully described in the Glossary (See Appendix "H.") The District shall use LAW as a short-term cash management facility. Investment of District funds in LAIF shall be subject to investigation and due diligence prior to Page 7 investing, and on a continual basis to a level of review pursuant to Section 3.0, Standard of Prudence, of this Policy. See Appendix "D" for investment pool questionnaire. 8.12 The Orange County Treasurer's Money Market Commingled Investment Pool (OCCIP). The OCCIP is a money market investment pool managed by the Orange County Treasurer's Office. OCCIP is more fully described in the Glossary. (See Appendix"H") The District has no funds invested in OCCIP at this time. Investment of District funds in OCCIP would be subject to investigation and due diligence prior to investing, and on a continual basis to a level of review pursuant to Section 3.0, Standard of Prudence, of this Policy. 8.13 Repurchase agreements provided that: 8.13.1 All repurchase agreements shall be collateralized with securities eligible for purchase under this Policy. In order to anticipate market changes and to provide a level of security for all repurchase agreement transactions, collateralization shall be maintained at a level of at least 102% of the market value of the repurchase agreements, and shall be adjusted no less than weekly. 8.13.2 All repurchase agreements must be the subject of a Master Repurchase Agreement between OCSD and the provider of the repurchase agreement. The Master Repurchase Agreement shall be substantially in the form developed by The Bond Market Association. 8.14 Reverse repurchase agreements provided that: 8.14.1 No more than five percent (5%)of OCSD's portfolio shall be invested in reverse repurchase agreements, and there shall be no long- term reverse repurchase agreements unless otherwise authorized by the Districts' Board of Directors. 8.14.2 The maximum maturity of reverse repurchase agreements shall be ninety (90) days. 8.14.3 Reverse repurchase agreements shall mature on the exact date of a known cash Flow which will be unconditionally available to repay the maturing reverse repurchase agreement. 8.14.4 Proceeds of reverse repurchase agreements shall be used solely to supplement portfolio income or to provide portfolio liquidity, and shall not be used to speculate on market movements. 8.14.5 All reverse repurchase agreements must be the subject of a Master Repurchase Agreement between OCSD and the provider of the reverse repurchase agreement. The Master Repurchase Agreement shall Page 8 be substantially in the form developed by The Bond Market Association. 8.15 Sales of OCSD-owned securities in the secondary market may incur losses in order to improve the risk or return characteristics of the portfolio, to prevent anticipated further erosion of principal, or when trading for securities that result in an expected net economic gain to OCSD. 8.16 If securities owned by the OCSD are downgraded below the quality required by this Investment Policy, it shall be OCSD's policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If a decision is made to retain the downgraded securities in the portfolio, their presence in the portfolio will be monitored and reported monthly to the OCSD General Manager, the Administration Committee and Board of Directors. 9.0 Collateralization: Generally, the value to secure deposits under this Policy shall comply with Section 53652 of the California Government Code. Collateralization will be required for secured time deposits, as more fully described in Section 8.9.1; and repurchase agreements, as more fully described in Section 8.13.1. Collateral will always be held by an independent third-party, as more fully described in Section 10.1. The right of collateral substitution is granted. 10.0 Safekeeping and Custody: 10.1 All securities transactions, including collateral for repurchase agreements, entered into by, or on behalf of OCSD, shall be conducted on a delivery-versus-payment (I)VP) basis. Securities will be held by OCSD's third-party custodian bank, which shall be selected through a competitive process, or that agent's representative, or in the agent's account at the Federal Reserve Bank, or within clearing corporations in the U.S., and evidenced by book entry statements. 11.0 Diversification: OCSD will diversify its investments by security type, issuer, and financial institution in accordance with the following: 11.1 There is no limit on investment in securities issued by or guaranteed by the full faith and credit of the U.S. government. 11.2 No more than 20% of the portfolio may be invested in securities of a single agency of the U.S. government, which does not provide the full faith and credit of the U.S. government. 11.3 No more than 5% of the portfolio may be invested in securities of any one Page 9 issuer, other than Supranationals, the U.S. government or its agencies. Investment in mutual funds is not governed by this Section 11.3. See Section 11.8 for conditions of purchase of mutual funds. 11.4 No individual holding shall constitute more than 5% of the total debt outstanding of any issuer. 11.5 No more than 40% of the portfolio may be invested in banker's acceptances. 11.6 No more than 25% of the portfolio may be invested in commercial paper. 11.7 No more than 30% of the portfolio may be invested in medium-term (corporate) notes. 11.8 No more than 20% of the portfolio may be invested in mutual funds. No more than 10% of the District's portfolio may be invested in shares of beneficial interest of any one (1) mutual fund. Money market mutual funds are limited to 20% per issuer and are not subject to the 10% stipulation. 11.9 No more than 30% of the portfolio may be invested in negotiable certificates of deposit. 11.10 No more than 10% of the portfolio may be invested in eligible municipal bonds. 11.11 No more than 20% of the Long Term Operating Monies portfolio may be invested in a combination of mortgage-backed securities, CMOs and asset-backed securities. 11.12 No more than the lesser of 15% of the portfolio or the statutory maximum may be invested in LAIF. 11.13 No more than 15% of the portfolio may be invested in the Orange County Investment Pool. 11.14 No more than 20% of the portfolio may be invested in repurchase agreements. 11.15 No more than 5% of the portfolio may be invested in reverse repurchase agreements. 12.0 Maximum Maturities: To the extent possible, OCSD will attempt to match its investments with reasonably anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall designate, from time-to-time, the amounts to be allocated to the investment portfolio. Page 10 OCSD monies invested in accordance with this Policy are divided into two (2) categories: 12.1 Liquid Operating Monies. Funds needed for current operating and capital expenditures are known as Liquid Operating Monies. 12.1.1 The maximum final stated maturity of individual securities in the Liquid Operating Monies account portfolio shall be one (1) year from the date of settlement. 12.1.2 The average duration of the Liquid Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts' cash flow requirements, but may never exceed 180 days. 12.2 Long Term Operating Monies. Funds needed for longer term purposes are known as the Long Term Operating Monies. 12.2.1 The maximum final stated maturity of individual securities in the Long Term Operating Monies account portfolio shall be five (5) years from the date of settlement. 12.2.2 The duration of the Long Term Operating Monies account portfolio shall be recommended by the Treasurer based on the District's five-year cash flow forecast, but may never exceed 60 months. 12.2.3 The duration of the Long Term Operating Monies account portfolio shall never exceed 120% of the duration as established in accordance with Section 12.2.2. 12.2.4 The duration of the Long Term Operating Monies account portfolio shall never be less than 80% of the duration as established in accordance with Section 12.2.2 13.0 Internal Control: 13.1 The Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. The current treasury management procedures are presented in Appendix "B." 14.0 Performance Objectives and Benchmarks: 14.1 Overall objective. The investment portfolio of OCSD shall be designed with the overall objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with investment risk constraints and reasonably anticipated cash Flow needs. 14.2 The Liquid Operating Monies. The investment performance objective for the Liquid Operating Monies shall be to earn a total rate of return over Page 11 a market cycle which exceeds the return on a market index approved by the Administration Committee, and by the District's Board of Directors, when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. 0054)-36-1-90CSD 17-XX (see Appendix "E"). 14.3 The Long Term Operating Monies. The investment performance objective for the Long Term Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index selected by the Administration Committee and approved by the District's Board of Directors, when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. OSSD-36- 490CSD 17-XX (See Appendix "E"). 15.0 Reporting: 15.1 Monthly transaction reports in accordance with California Government Code Section 53607 shall be submitted by the Treasurer to the District's Board of Directors. 15.2 Quarterly investment reports will be submitted by the Treasurer to the Administration Committee which shall forward the reports to the District's Board of Directors. The quarterly reports shall provide clear and concise status information on the District's portfolios at the end of each reporting period, including performance measures using the benchmarks described in Section 14.0 of this Investment Policy. Sample quarterly reports are presented in Appendix "IF." These reports shall contain listings of individual securities held at the end of each reporting period, and shall disclose, at a minimum, the following information about the risk characteristics of OCSD's portfolio: 15.2.1 Cost and accurate and complete market value of the portfolio. 15.2.2 Modified duration of the portfolio compared to Benchmark. 15.2.3 Dollar change in value of the portfolio for a one-percent (1%) change in interest rates. 15.2.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.2.5 For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. 15.2.6 Average portfolio credit quality. Page 12 15.2.7 Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities. 15.2.8 State that all investments are in compliance with this policy and the California Government Code, or provide a listing of any transactions or holdings which do not comply with this policy or with the California Government Code. 15.2.9 Time-weighted total rate of return for the portfolio for the prior three months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods. 15.2.10 State that sufficient funds are available for OCSD to meet its operating expenditure requirements for the next six months, or if not, state the reasons for the shortfall. 15.2 OCSD's Treasurer shall meet quarterly with the Administration Committee to review investment performance, proposed strategies and compliance with this Investment Policy. External investment advisors may be required to attend said meetings at the discretion of the Chairman of the Administration Committee. 16.0 Investment Policy Adoption and Revision: 16.1 The Investment Policy of OCSD shall be reviewed by the Administration Committee and shall be adopted by resolution of the Board of Directors of OCSD. The Policy shall be reviewed on an annual basis in accordance with California Government Code Section 53646, and this Investment Policy, by the Administration Committee, which shall recommend revisions, as appropriate, to the Board of Directors. Any modifications made thereto shall be approved by the Board of Directors. 16.2 The Administration Committee shall serve as the oversight committee for the District's Investment program and shall adopt guidelines for the ongoing review of duration, quality and liquidity of the District's portfolio. Page 13 APPENDIX "A" SUMMARY OF INVESTMENT AUTHORIZATION INTERNAL AND EXTERNAL MANAGERS SHORT TERM OPERATING FUND INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Supranationals NO OK Mortgage-backed NO NO Commercial paper OK OK Banker's Accept. OK OK Medium Term Notes Fixed coupon, fixed mat.* OK Mutual Funds Money Market Only** Money Market Only Negotiable CDs Fixed coupon, fixed mat.* OK Municipal Bonds OK* NO LAW OK NO OCIP OK NO CMOs NO OK Asset-backed NO OK Repurchase Agree. OK OK Reverse Repos OK* OK LONG TERM OPERATING PORTFOLIO INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Supranationals NO OK Mortgage-backed NO OK Commercial Paper OK OK Banker's Acceptances OK OK Medium Term Notes Fixed coupon, fixed mat.* OK Mutual Funds Money Market Only** OK Negotiable CDs Fixed coupon, fixed mat.* OK Municipal Bonds OK* OK LAIF OK NO OCIP OK NO CMOs NO OK Asset-backed NO OK Repurchase Agree. OK OK Reverse Repos OK* OK *With prior approval of the Administration Committee. **Using financial institutions approved by the Administration Committee. EXHIBIT "B" Calendar Year 2018 Performance Monitoring & Reporting Schedule For the Administration Committee The Quarterly Investment and Board of Directors meetings of: Management Program Report to be resented for the period of: January 2018 Board Only) February Oct— Dec 2017 March April May Jan — March 2018 June Jul August Board only) Aril —June 2018 September October November Jul —Sept 2018 December Pagel of 2 EXHIBIT "B" ORANGE COUNTY SANTIATION DISTRICT PERFORMANCE MONITORING & REPORTING SUMMARY FOR THE DISTRICT'S INVESTMENT PROGRAM POLICY REFERENCE PERFORMANCE CHARACTERISTIC REPORTING PARTY* Chandler U.S. Bank Callan 15.2.1 Cost and market value of the portfolio(monthly mark-to-market). M, Q M, Q Q 15.2.2 Modified duration of the portfolio compared to benchmark. M, Q Q 15.2.3 Dollar change in value of the portfolio for a 1%change in interest rate. M, Q Q 15.2.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which M, Q matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.2.5 For the Liquid Operating Monies account only,the percent of portfolio maturing within 90 M, Q Q days. 15.2.6 Average portfolio credit quality. M, Q Q 15.2.7 Percent of portfolio with credit ratings below"A" by any rating agency, and a description M, Q Q of such securities. 15.2.8 Listing of any transaction or holdings which do not comply with this policy orwith the M, Q California Government Code. 15.2.9 Time-weighted total rate of return for the portfolio for the prior three months,twelve M, Q Q months, year-to-date, and since inception compared to the benchmark returns for the same periods. ADDL** Comparison of portfolio performance to market index benchmark. M, Q Q ADDL** Comparison of Manager's performance to peer group benchmark. Q ADDL** Monitoring of organizational and structural changes of investment management firm. Q ADDL** Audit portfolios for compliance with investment policy guidelines. Q 15.2.10 OCSD will report if sufficient funds are available for it to meet operating expenditure requirements for the next six months, or if not, state the reason for the shortfall. Notes *M = Monthly *Q =Quarterly **ADDL= Monitoring of Additional Performance Characteristics Page 2 of 2 RESOLUTION NO. OCSD 17-XX A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT, AUTHORIZING THE DISTRICT'S TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS; ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS; AND REPEALING RESOLUTION NO. OCSD 16-19 WHEREAS, on October 26, 2016, the Board of Directors adopted Resolution No. 16-19, readopting the District's Investment Policy Statement, and establishing specific performance benchmarks and objectives, together with a schedule of frequency of investment performance reports; and WHEREAS, pursuant to California Government Code Section 53607, the Board of Directors may delegate authority to invest and/or reinvest District's funds to the Treasurer for a one-year period; and WHEREAS, pursuant to California Government Code Section 53646, the District is required to review its Investment Policy annually and readopt its Policy at a public meeting,which Policy will establish specific performance benchmarks and objectives, and specific monitoring and reports. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That the authority of the Board of Directors to invest or reinvest District's surplus funds, or to sell or exchange securities so purchased, or to deposit for safekeeping the funds and investments of the Districts with depositories, as provided for in California Government Code Sections 53608 and 53630, is hereby delegated to the District's Treasurer for a one-year period commencing on the date this Resolution is adopted, as authorized by California Government Code Section 53607. OCSD 17-XX-1 Section 2: That the Board of Directors hereby adopts the Investment Policy Statement of the Orange County Sanitation District, as set forth in Exhibit "A", attached hereto and incorporated herein by reference. Section 3: That the Board of Directors hereby adopts the following specific performance benchmarks for their two investment funds in accordance with Section 14.0 of the District's Investment Policy: LIQUID OPERATING MONIES: The Short-Term Operating Fund will be compared to the three-month T-Bill rate, and the Callan Active Cash Flow Income Style Group. The Callan Active Cash Flow Income Style Group represents a peer group of managers who operate with a maximum maturity of one year. LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be compared to the Merrill Lynch Government and Corporate One-to-Five Year Maturity Index and to the Callan Defensive Fixed Income Style Group. Section 4: That the Board of Directors hereby adopts a performance monitoring and reporting schedule, as required by Section 15.0 of the District's Investment Policy, which schedule is attached hereto as Exhibit"B", and incorporated herein by reference. Section 5: That Resolution No. OCSD 16-19 is hereby repealed. OCSD 17-XX-2 PASSED AND ADOPTED at regular meeting of the Board of Directors, Orange County Sanitation District held December 20, 2017. Gregory C. Sebourn, PLS Board Chair ATTEST: Kelly A. Lore, CIVIC Clerk of the Board OCSD 17-XX-3 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 17-XX was passed and adopted at a regular meeting of said Board on the 20th day of December 2017, 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 20th day of December 2017. Kelly A. Lore, CIVIC Clerk of the Board of Directors Orange County Sanitation District OCSD 17-XX-4 Appendix "B" Revised: lsleye�..o. eF 1 ' January 1. 2018 Orange County Sanitation District Treasury Management Procedures 1.0 Purpose 1.1 The purpose of this policy is to establish uniform guidelines and procedures for use in the administration of the District's Treasury functions consistent with the California Government Code and the District's adopted Investment Policy Statement. 2.0 Authority to Investment and/or Reinvestment of District Funds: 2.1 Is delegated annually to the Director of Finance/Treasurer in accordance with California Government Code Section 53607. 3.0 Formal Investment Policy Statement: 3.1 Is prepared by the Treasurer. 3.2 Is reviewed by the District's Administration Committee (ADM), in its role as the finance oversight committee. 3.3 Is submitted to and adopted by the District's Board of Directors annually at a public meeting in accordance with California Government Code Section 53646. 4.0 Delegation of some or all of the investment portfolio management to one or more registered investment advisors (external money managers): 4.1 Is authorized by the District's Investment Policy; 4.2 Applies to the District's entire investment portfolio except for: 4.2.1 A maximum of $65 million that is maintained within the State Local Agency Investment Fund (LAIF)for managing cash flows (i.e., deposits of large revenues, such as property tax and user fee proceeds, and the bi-weekly disbursements of payroll and accounts payable); 4.2.2 A peg amount of approximately $50,000 is maintained within the District's checking account at Union Bank to serve as compensating balances to offset banking charges (note: the District's Board of Directors has selected Union Bank to serve as the District's commercial bank (the "Bank"); and 4.2.3 Based on a determination by the District's Treasurer on what is most advantageous to the District, the checking account residual amounts may be invested as follows: Orange County Sanitation District Treasury Management Procedures Revised: NovemberJanuary 1, 20186 Page 2 of 7 4.2.3.1 Bank balances exceeding the peg balance (as a result of outstanding accounts payable and payroll warrants) may be invested overnight under a repurchase agreement with the Bank; or 4.2.3.2 The District may elect to receive earnings credit against bank charges on all bank balances including the peg amount equal to the 91 Day T-Bill Average. 5.0 Investment transactions involving the LAIF are approved by the Treasurer prior to their execution by the Controller. The approval function indicates that the transactions are in accordance with the District's Investment Policy. The Accounting MaaaWSupervisor will serve as backup for the approval function upon the absence of any either of these two employees. 5.1 Specific Procedures involving LAIF include (note: all deposits and withdrawals of funds toffrom LAIF may only be processed through the District's checking account with the Bank): 5.1.1 A "State Treasurer's Local Agency Investment Fund Authorization Form" (see Attachment "A") must be completed prior to the execution of the transaction indicating: 5.1.1.1 The effective date of the transaction; 5.1.1.2 The dollar amount to be withdrawn from or deposited into LAIF; 5.1.1.3 The date and signature approval by the Controller authorizing the transaction; and 5.1.1.4 The date and signature approval of the Treasurer approving the transaction. 5.1.2 The execution of the transaction will be done in accordance with the "State Treasurer's Local Agency Investment Fund Wire Transfer Instructions" (see Attachment "B"). Key internal control features include: 5.1.2.1 The requirement of the District's Personnel Identification Number (PIN)for either deposits or withdrawals, known only by the Treasurer and Controller. 5.1.2.2 Secondary confirmation requirement by the Bank for the Orange County Sanitation District Treasury Management Procedures Revised: Noveml)erJanuary 1, 20186 Page 3 of 7 withdrawals/deposits from/to the Bank or LAIF. The confirmation can be made by the Controller or Treasurer(the person that didn't make the original request), the Accounting MaaaWSuoervisor, or the Principal Accountant. 5.1.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the PrincipalSenior Accountant and Controller. 6.0 Investment transactions involving the District's external investment program and performed by the independent investment firms are as follows: 6.1 The District's Board of Directors has selected Chandler Asset Management (Chandler) to manage two portfolios: the Districts' Liquid Operating Monies Fund, and the Long-term Operating Monies Fund. 6.1.1 Chandler has authorization to purchase and sell investment securities in accordance with the strict investment guidelines set forth in the District's Investment Policy (Section 8.0). 6.1.2 Hard copy confirmation reporting to the District is required on all transactions. 6.2 The District's Board of Directors has selected MWIAR'Q '^^ T'••^^ T•••^`U.S. Bank (the "Custodian") to serve as the District's master custodian and safekeeping bank. In their capacity as Custodian, MellealBostea--TrustU.S. Bank shall perform the following duties to settle purchases and sales and engage in other transactions in the administration of the District's accounts: 6.2.1 Upon execution of any transaction by Chandler, all investment securities are recorded in book entry by the Custodian through either the Depository Trust Company or the Federal Reserve Bank; 6.2.2 Hold the property in safekeeping facilities of the Custodian or of other custodian banks or clearing corporations in the U.S.; 6.2.3 Collect all income payable to and all distributions due to the District's account and sign on the District's behalf all declarations, affidavits, and certificates of ownership required to collect income and principal payments; 6.2.4 Collect all proceeds from securities, certificates of deposit or other investments which may mature or be called; Orange County Sanitation District Treasury Management Procedures Revised: Neveml)erJanuary 1, 20186 Page 4 of 7 6.2.5 Submit or cause to be submitted to the District or the external money manager, as designated by the District, on a best effort basis all information received by the Custodian regarding the ownership rights pertaining to property held in the account; 6.2.6 Attend to involuntary corporation actions; 6.2.7 Determine the fair market value of the District's account on a monthly basis as of such dates as the Districts and the Custodian may agree upon, in accordance with methods consistently followed and uniformly applied; 6.2.8 Render to District, with copies to the external money manager, monthly statements for securities held hereunder; and 6.2.9 Provide the District with copies of the Custodian's financial statements filed with the State of California, or any agency thereof, within thirty(30) days after such filing. 6.3 The District's Board of Directors has selected Callan Associates as the District's Independent Investment Advisor (the `Advisor"). In their capacity as Advisor, Callan shall perform the following duties on behalf of the District: 6.3.1 Monitor and report on Chandler's compliance with the investment requirements of the Districts' Investment Policy, using data from transaction reports prepared by MellenlBosten-TsustU.S. Bank, on a quarterly basis; 6.3.2 Review Chandler's investment strategy quarterly; 6.3.3 Monitor and report on the performance of Chandler against the performance benchmark standards established in the District's Investment Policy for both the Liquid Operating Monies Fund and the Long-term Operating Monies Fund on a quarterly basis; and 6.3.4 Review both Liquid and Long-term Operating Funds by asset allocation, asset flow, quarterly factors and cumulative results on a quarterly basis. 6.4 Specific procedures in depositing to or withdrawing funds from the investment portfolio managed by the District's external money manager include: (note: all deposits and withdrawals of funds from the District's investment portfolio managed by Chandler and Me"onlBosten Tru6 U.S. Bank may only be processed through the District's checking account at the Bank): 6.4.1 A"Wire Transfer Form" (see Attachment" C")must be completed by the Orange County Sanitation District Treasury Management Procedures Revised: NovemberJanuary 1, 20186 Page 5 of 7 Controller prior to the execution of the transaction indicating: 6.4.1.1 The dollar amount to be withdrawn/deposited from/to the Bank checking account to/from the Chandler Liquid Operating or Chandler Long-term Operating Monies Funds; 6.4.1.2 The effective date of the transaction; 6.4.1.3 The date and signature or electronic review by the Controller; and 6.4.1.4 The date and signature or electronic approval of the Treasurer approving the transaction. 6.4.2 The execution of the transaction requires a verbal confirmation call from the Custodian to the Controller at the time of the transaction, and a written confirmation the following day. 6.4.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the PrincipalSenior Accountant and Controller. 7.0 Recording of investment transactions: 7.1 For investment transactions conducted by District staff with the LAIF, and with the transfer/withdrawal of funds with the Custodian: 7.1.1 Is done by the Controller who maintains a file of all investment transactions. 7.1.2 Is done within the accounting records by the--PripeipalSenior Accountant, who receives a signed copy of all investment transactions from the Controller. 7.2 For investment transactions conducted by the external money manager: 7.2.1 Is done by the Custodian who posts all investment transactions daily within their record keeping system and provides the District with a monthly report that provides both a summary and detail listing of all investment transactions. 7.2.2 Is done on a monthly basis by the Account:ng "anagefaenior Accountant within the accounting records at a summary level using Monthly Transaction Reports prepared by the Custodian. Orange County Sanitation District Treasury Management Procedures Revised: Noveml a January 1, 20186 Page 6 of 7 8.0 Verification of external money manager transactions is performed by: 8.1 The Custodian within their record keeping system (i.e., matching broker confirmations to custodian records), and is reported to the District and Chandler on a monthly basis. 8.2 Chandler through their internal compliance office and reported monthly to the District as required by the District's Investment Policy. 8.3 The PARGipalSenior Accountant through reconciliation of Chandler's monthly investment transaction report against the monthly transaction report provided by the Custodian. 9.0 Safeguarding of Assets and Records: 9.1 Reconciliation of investment records to the accounting records is done by the PFineipalSenior Accountant, or in 4etheir absence, the Asseuaiing ManagerPrincipal Accountant on a monthly basis. 9.2 Reconciliation of investment records to bank statements is performed by the PFinsipalSenior Accountant (or in their absence, the Asseunting Supery seFPdncioal Accountant) within one week following the receipt of the bank statement. 9.3 Review of financial condition, safety, liquidity, and potential yields of investment instruments and reputation and financial condition of investment brokers is done by the District's external money manager, who is authorized to utilize the services of independent securities brokerage firms as deemed appropriate, and which meets the requirements of Government Code Section 53601.5. 10.0 The periodic review of the investment portfolio, including investment types, purchase price, market values, maturity dates, and investment yields as well as conformance to the stated Investment Policy will be performed monthly by the Controller, quarterly by the Advisor, and annually by the District's external independent auditors. 11.0 The District's Administration Committee will serve as the Oversight Investment Advisory Committee to assist the Board of Directors in monitoring treasury management activities. 11.1 The District's Treasurer submits a Quarterly Investment Program Performance Report which includes, but is not limited to, the following information: 11.1.1 Quarterly interest earnings and rates of return; Orange County Sanitation District Treasury Management Procedures Revised, NevemberJanuary 1, 20186 Page 7 of 7 11.1.2 The market value of the portfolios; 11.1.3 The annualized earnings of the portfolios; 11.1.4 Market recap; 11.1.5 Comparisons with pre-determined benchmarks; 11.1.6 Market forecast; and 11.1.7 Proposed investment strategy for the upcoming quarter. Internal Control Strengths 1. The specific responsibility for the performance of duties is assigned and lines of authority and reporting are clearly identified. 2. Responsibilities are commensurate with the capabilities of the personnel assigned. 3. Incompatible functions have been properly segregated to prevent errors or fraud. 4. All transactions are authorized by an appropriate responsible individual. 5. Safeguards over assets and records are in place to ensure that recorded assets exist and are properly recorded. 6. Management controls are in place to ensure that significant transactions are properly performed and recorded. X1 VM =0 COMMONIINVESMENT RGLIC 17 DECEMBER ATTACHMENT"A" Orange County Sanitation District State Treasurer's Local Agency Investment Fund Transaction Authorization Form LAIF Account No. 70-30-006 Effective Date of Transaction Confirmation Number LAIF Representative UBOC Representative Wire transfer deposit from Union Bank of California Checking Account#2740013230 in the amount of Wire transfer (withdrawal)to Union Bank of California Checking Account#2740013230 in the amount of Prepared by: Authorized by: Approved by: Name Name Name Senior Accountant Controller Director of FinancelTreasurer Position Position Position Date Date Date XME DT2%C0MMCMINVESWEW P CW09 DECEMBER ATTACHMENT "B" State Treasurer's Local Agency Investment Fund Wiring Instructions Form Deposits or withdrawals that are to take place by the end of the banking day must be made between 7:30 a.m. and 9:30 a.m. Deposits or withdrawals that are to take place on a future date can be made between 7:30 a.m. to 9:30 a.m. or 11:00 a.m. to 4:00 p.m. You must be sure to give the effective date of the future transaction. To Deposit Funds: Step 1: 1. Call LAIF at(916)-653-3001 or log in to LAIF Online, and let them know: a. That you would like to make a wire transfer deposit. b. The Districts LAIF account#70-30-006. C. Your PIN number. d. The dollar amount of deposit. e. That the money will be coming from Union Bank Account No. 274-0013-230. 2. LAIF will give you a confirmation number. Step 2: 1. Call Union Bank of California at 1-800-798-6466, and let them know: a. You're making a wire transfer from Account No. 274-0013-230. b. The dollar amount of the wire transfer. C. The transfer is going to the District's LAIF Account No. 70-30-006. d. The LAIF account ABA number at Union Bank is 121000496. 2. The confirmation number of this transaction (see Step 1, Item 2 above). Step 3: 1. Give the above information to the Senior Accountant who will confirm this transaction with Union Bank. To Withdraw Funds: Step 1: 1. Call LAIF at(916)-653-3001 or log in to LAIF Online, and let them know: a. That you would like to make a wire transfer withdrawal. b. The Districts LAIF account#70-30-006. C. Your PIN number. d. The dollar amount of withdrawal. e. The Union Bank account receiving the funds is No. 274-0013-230. 2. LAIF will give you a confirmation number. XME DT2%COMMOMINVESWEW P CW09 DECEMBER ATTACHMENT "C" (Deposit) L' wvv TO: SEE DISTRIBUTION LIST FROM: Michael D. White, Controller DATE: January 4, 2018 SUBJECT: RECEIPT AND INVESTMENT OF WIRE TRANSFER OF FUNDS IN THE AMOUNT OF $XX MILLION, THURSDAY, DAY MONTH 2O18 On Thursday, Day Month 2018, you will receive a wire transfer of funds in the exact sum of $XX million, for Immediate investment in the District's Liquid Operating Monies Portfolio, as follows: FROM: MUFG Union Bank, N.A. ABA No: 122000496 Debit to: General Account Account No: XXXXXXXXXX TO: U.S. Bank IT&C California ABA No: 0910000222 Credit to: OCS Chandler Liquid Operating Port 6745046600 Account No: XXXXXXXXXX DATE: Thursday, Day Month 2018 NOTE: WIRE TRANSFER MUST BE COMPLETED AND CONFIRMED NO LATER THAN 2:00 P.M. ON Day Month 2018. Please confirm transfer completion with Mike White (mwhitena.ocsd.com)& Rhea de Guzman (rdeouzman0.ocsd.com). DISTRIBUTION LIST Amy Marks/Tim Banach, U.S. Bank Operations Team, Chandler Asset Management William Dennehy/Ted Piorkowski, Chandler Asset Management N ODEW\ M22%C0MMON9NVESTMEM Po lCY 17 DEWMBER ATTACHMENT"C" (Withdrawal) CO p C� TO: SEE DISTRIBUTION LIST FROM: Michael D. White, Controller DATE: January 4, 2017 SUBJECT: WIRE TRANSFER WITHDRAWAL OF FUNDS IN THE AMOUNT OF $XX MILLION, THURSDAY, DAYMONTH2O17 On Thursday, Day Month 2018, you are instructed to wire transfer the exact sum of$XX million, from the District's Liquid Operating Monies Portfolio to the District's general bank account with Union Bank of California, as follows: FROM: U.S. Bank IT&C California ABA No: 091000022 Credit to: OCS Chandler Liquid Operating Port 6745046600 Account No: XXXXXXXXXX TO: MUFG Union Bank, N.A. ABA No: 122000496 Debit to: General Account Account No: XXXXXXXXXX DATE: Thursday, Day Month 2018 NOTE: WIRE TRANSFER MUST BE COMPLETED AND CONFIRMED NO LATER THAN 9:00 A.M. ON Day Month 2018. Please confirm transfer completion with Mike White (mwhite(a)ocsd.coml & Rhea de Guzman (rdeouzman(a)ocsd.com). DISTRIBUTION LIST _Amy Marks/Tim Banach, U.S. Bank Operations Team, Chandler Asset Management William Dennehy/Ted Piorkowski, Chandler Asset Management H DEPM501220 MM11 MNVESTMEWPo lCY 17 DEWMBER ADMINISTRATION COMMITTEE Meeting Date TOBd.Ot Dir. 12J13/17 12/20/17 AGENDA REPORT emNumber Item Number 6 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: ALLIANT INSURANCE SERVICES A. Approve a Professional Consultant Services Agreement with Alliant Insurance Services, Inc.to act as Brokerof Record forthe Orange County Sanitation District's assets and operations insurance coverages, Specification No. CS-2017-884-13D, for the period of January 1, 2018 through December 31, 2018 with up to four (4) one-year renewal options; and B. No direct payment from the Sanitation District is provided. The Broker of Record, Alliant Insurance Services, will be compensated through commission that is paid directly by the insurance carriers. BACKGROUND Annually, the Orange County Sanitation District (Sanitation District) works with the insurance Broker of Record to purchase five major insurance coverages for its assets and operations, which include: 1. Excess General Liability Insurance 2. Excess Workers' Compensation 3. All-Risk Property and Flood Insurance 4. Boiler& Machinery Insurance 5. Earthquake Insurance The insurance broker also assists with smaller coverages such as crime insurance and watercraft insurance. The broker surveys the insurance market to find coverage that meets the Sanitation District's specific needs at the lowest possible premiums. This ensures the Sanitation District receives the best possible premiums and coverage. Alliant is highly experienced with California governmental agencies, as it insures the vast majority of California counties, along with hundreds of California cities and special districts. Alliant also has experience with many California sanitation districts. Alliant's Public Entity Property Insurance Program is considered one of the largest programs available. Alliant also provides access to workers compensation insurance provided by the California State Association of Counties (CSAC) Excess Insurance Authority which includes multiple agencies and serves as a risk pool. Page 1 d 3 The Sanitation District does not pay the broker directly for these services; rather, the broker is paid by the individual insurance carrier through a commission. The commission is included in the premiums the insurance carrier quotes. RELEVANT STANDARDS • Ensure the public's money is wisely spent • Protection of Orange County Sanitation District assets PROBLEM Annually, through the expert services of an insurance broker, the Sanitation District purchases a variety of insurances designed to protect its assets and operations. PROPOSED SOLUTION Authorize the selected firm to act as the Sanitation District's Insurance Broker of Record. TIMING CONCERNS The Sanitation District has a five-year agreement for insurance brokerage services that expires on December 31, 2017. The Sanitation District will be without a Broker of Record to approach and negotiate with insurance carriers until a new professional services agreement is approved by the Board. RAMIFICATIONS OF NOT TAKING ACTION Most commercial insurance is arranged through brokers and the Sanitation District will be unable to purchase insurance to protect its assets and operations until a new Broker of Record is selected. PRIOR COMMITTEE/BOARD ACTIONS December 2012 - Competitive RFP involving large insurance brokerage firms, the Board selected Alliant Insurance Services as the operational insurance broker of record. ADDITIONAL INFORMATION The Sanitation District requested and advertised for proposals for Insurance Broker Services on August 31, 2017. The following evaluation criteria were described in the request for proposals and used to determine the most qualified firm. Page 2 of 3 CRITERION WEIGHT Qualifications of Firm 40% Staffing and Project Organization 20% Work Plan 10% Interview 30% Three (3)proposals were received on September 28, 2017, and all three(3)were evaluated in accordance with the evaluation process set forth in Ordinance No. OCSD47, by a pre-selected evaluation team consisting of the following Sanitation District staff. Human Resources / Risk Manager Principal Staff Analyst Principal Staff Analyst Each member of the evaluation team ranked the fines based on the proposals using the evaluation criteria and weighting described above. The following table reflects the ranking outcome for the three (3) evaluated firms. This process is different from the professional design services contract where cost is not included. Alliant AON Gallagher Evaluator 1 1at 2nd 2nd Evaluator tat 3rd 2nd Evaluator tat 2nd 3rd Ranking 1st 3rd 2nd Based on the results of the public bid process, staff recommends retaining Alliant Insurance Services. CEQA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation DistricPs Purchasing Ordinance. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: • Professional Consultant Services Agreement Page 3 of 3 PROFESSIONAL CONSULTANT SERVICES AGREEMENT Insurance Broker of Record Services Specification No. CS-2017-884BD THIS AGREEMENTis 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 Alliance Insurance Services, Inc. with a principal place of business at 1301 Dove Street Suite 200 Newport Beach, CA 92660 (hereinafter referred to as "Consultant") collectively referred to as the "Parties". WITNESSETH WHEREAS, based on Consultant's expertise and experience, OCSD wishes to temporarily engage Consultant to provide Insurance Broker of Record Services ("Services") as described in Exhibit"A"; and WHEREAS, Consultant submitted its proposal, dated September 28, 2017; and WHEREAS, on December 20,2017, the Board of Directors of OCSD, by minute order, authorized execution of this Agreement between OCSD and Consultant; and WHEREAS, OCSD has chosen Consultant to conduct Services in accordance with Ordinance No. OCSD-47; and NOW, THEREFORE, in consideration of the mutual promises and mutual benefits exchanged between the Parties, the Parties mutually agree as follows: 1. Introduction 1.1 This Agreement, all exhibits and appendix hereto (called the "Agreement") is made by OCSD and Consultant. The Terms and Conditions herein exclusively govern the purchase of Services as described in the Scope of Work. 1.2 Exhibits and appendix to this Agreement are incorporated by reference and made a part of this Agreement as though fully set forth at length herein. Exhibits and appendix to this Agreement are as follows in order of precedence: Exhibit"A" Scope of Work Appendix 1 Addendum 1 Dated September 11, 2017 Exhibit"B" Proposal Submitted by Consultant Dated September 28, 2017 Exhibit"C" Acknowledgement of Insurance Requirements Exhibit"D" OCSD Safety Standards 1.3 In the event of any conflict or inconsistency between the provisions of this Agreement and any of the provisions of the exhibits and appendix hereto, the provisions of this Agreement shall in all respects govern and control. 1.4 This Agreement may not be modified, changed or supplemented, nor may any obligations hereunder be waived or extensions of time for performance granted, except by written instrument signed by both Parties. Orange County Sanitation District 1 of 10 Specification No. CS-2017-884BD 1.5 The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any Paragraph or provision hereof. 1.6 The term "days", when used in the Agreement, shall mean calendar days, unless otherwise noted as workdays. 1.7 The term "workday". Workdays are defined as all days that are not Saturday, Sunday, or legally observed holidays. Meetings with OCSD staff shall be scheduled from Monday through Thursday between the hours of 8AM and 4PM (exception is operations staff who maintain plant operations 24/7 and work a rotated 12-hour shift) and shall conform to OCSD work schedules. OCSD review periods shall not include legally observed holidays. 1.8 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. 1.9 Work Hours: The work required under this Agreement may include normal Business hours, evenings, and weekends. OCSD will not pay Travel Time. 1.10 Consultant shall provide OCSD with all required premiums and/or overtime work at no charge. 1.11 Except as expressly provided otherwise, OCSD accepts no liability for any expenses, losses, or action incurred or undertaken by Consultant as a result of work performed in anticipation of purchases of said services by OCSD. 2. Scone of Work Subject to the terms of this Agreement, Consultant shall perform the Services identified in Exhibit "A". Consultant warrants that all of its Services shall be performed in a competent, professional and satisfactory manner. 3. Modifications to Scone of Work Requests for modifications to the Scope of Work Exhibit "A" hereunder can be made by OCSD at any time. All modifications must be made in writing and signed by both Parties. A review of the time required for the modification will be made by OCSD and Consultant and the Agreement period adjusted accordingly. 4. Compensation Consultant's sole compensation will be a reasonable commission as determined by OCSD at the time OCSD purchases an Insurance Premium. At the time of presenting an Insurance Premium to OCSD, Consultant shall fully disclose to OCSD all commission to be received as a result of OCSD's purchase of the Insurance Premium the Consultant brokered. OCSD shall determine a reasonable commission percentage based on industry standards 5. California Department of Industrial Relations (DIR)Registration and Record of Wages (Not Used) 6. Audit Rights Consultant agrees that, during the term of this Agreement 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 Consultant relating to the invoices submitted by Consultant pursuant to this Agreement. Orange County Sanitation District 2 of 10 Specification No. CS-2017-884BD 7. Commencement and Term The Services to be provided by Consultant under this Agreement shall commence on the Effective Date January 1, 2018, and be completed in accordance with this Agreement. 8. Renewals 8.1 OCSD may exercise the option to renew the Agreement for up to four (4) one-year periods based upon the criteria set forth in the specifications, Exhibit"A", under the terms and conditions contained herein. OCSD shall make no obligation to renew nor give reason if it elects not to renew. 8.2 Renewals may be made through the OCSD Purchase Order Process. 9. Extensions The Term of this Agreement may be extended only by written instrument signed by both Parties. 10. Performance Time is of the essence in the performance of the provisions hereof. 11. Termination 11.1 OCSD reserves the right to terminate this Agreement for its convenience,with or without cause, in whole or in part, at any time, by written notice from OCSD. Upon receipt of a termination notice, Consultant shall immediately discontinue all work under this Agreement (unless the notice directs otherwise). OCSD shall thereafter, within thirty (30) days, pay Consultant for work performed (cost and fee)to the date of termination. Consultant expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of this Agreement. Such notice of termination shall terminate this Agreement and release OCSD from any further fee, cost or claim hereunder by Consultant other than for work performed to the date of termination. 11.2 OCSD reserves the right to terminate this Agreement immediately upon OCSD's determination that Consultant is not meeting specification requirements, if the level of service is inadequate, or any other default of this Agreement. 11.3 OCSD may also immediately cancel for default of this Agreement in whole or in part by written notice to Consultant: • if Consultant becomes insolvent or files a petition under the Bankruptcy Act; or • if Consultant sells its business; or • if Consultant breaches any of the terms of this Agreement; or • if total amount of compensation exceeds the amount authorized under this Agreement. 11.4 All OCSD property in the possession or control of Consultant shall be returned by Consultant to OCSD on demand, or at the termination of this Agreement, whichever occurs first. 12. Indemnification and Hold Harmless Provision Consultant 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 Consultant's services under this Agreement, or by its subcontractor or by anyone directly or indirectly employed by Consultant, and whether such Orange County Sanitation District 3 of 10 Specification No. CS-2017-884BD damage or injury shall accrue or be discovered before or after the termination of the Agreement. Except as to the sole active negligence of or willful misconduct of OCSD, Consultant 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 Consultant's performance under the Agreement, 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 Agreement, and/or(c)on account of any goods and services provided under this Agreement. This indemnification provision shall apply to any acts or omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of Consultant of or anyone employed by or working under Consultant. To the maximum extent permitted by law, Consultant'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. Consultant agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. This section shall survive the expiration or early termination of the Agreement. 13. Insurance Consultant and all subcontractors shall purchase and maintain, throughout the life of this Agreement and any periods of warranty or extensions, insurance in amounts equal to the requirements set forth in the signed Acknowledgement of Insurance Requirements, Exhibit V. Consultant shall not commence work under this Agreement until all required insurance is obtained in a form acceptable to OCSD, nor shall Consultant 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 Agreement. 14. Key Personnel Personnel, as provided in Exhibit"B", are considered "key'to the work under this Agreement and will be available for the term of the Agreement. No person designated as key underthis Agreement 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 Agreement, 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 Agreement. 15. Confidentiality and Non-Disclosure 15.1 Consultant acknowledges that in performing the Services hereunder, OCSD may have to disclose to Consultant orally and in writing certain confidential information that OCSD considers proprietary and has developed at great expense and effort. 15.2 Consultant agrees to maintain in confidence and not disclose to any person, firm, or corporation, without OCSD's prior written consent, any trade secret or confidential information, knowledge or data relating to the products, process, or operation of OCSD. 15.3 Consultant further agrees to maintain in confidence and not to disclose to any person, firm, or corporation any data, information,technology, or material developed or obtained by Consultant during the term of this Agreement. Orange County Sanitation District 4 of 10 Specification No. CS-2017-884BD 15.4 Consultant agrees as follows: • To use the Confidential Information only for the purposes described herein; to not reproduce the Confidential Information; to hold in confidence and protect the Confidential Information from dissemination to and use by anyone not a party to this Agreement; and to not use the Confidential Information to benefit itself or others. • To restrict access to the Confidential Information to its Consultant or personnel of Consultant who (1) have a need to have such access and (2) have been advised of and have agreed in writing to treat such information in accordance with the terms of this Agreement. • To return all Confidential Information in Consultant's possession upon termination of this Agreement or upon OCSD's request, whichever occurs first. • To hold in confidence information and materials, if any, developed pursuant to the Services hereunder. 15.5 The provisions of this Section shall survive termination or expiration of this Agreement and shall continue for so long as the material remains confidential. 16. Ownership of Documents All drawings, specifications, reports, records, documents, memoranda, correspondence, computations, and other materials prepared by Service Provider, its employees, subcontractors, and agents in the performance of this Agreement shall be the property of OCSD and shall be promptly delivered to OCSD upon request of the Project Manager or upon the termination of this Agreement, and Service Provider shall have no claim for further employment or additional compensation as a result of the exercise by OCSD of its full rights of ownership of the documents and materials hereunder. Any use of such completed documents for other projects and/or use of incomplete documents without specific written authorization by the Service Provider will be at OCSD's sole risk and without liability to Service Provider. Service Provider shall ensure that all its subcontractors shall provide for assignment to OCSD of any documents or materials prepared by them. 17. Ownership of Intellectual Property 17.1 Consultant agrees that all designs, plans, reports, specifications, drawings, schematics, prototypes, models, inventions, and all other information and items made during the course of this Agreement and arising from the Services (hereinafter referred to as"New Developments") shall be and are assigned to OCSD as its sole and exclusive property. 17.2 Consultant agrees to promptly disclose to OCSD all such New Developments. Upon OCSD's request, Consultant agrees to assist OCSD, at OCSD's expense, to obtain patents or copyrights for such New Developments, including the disclosure of all pertinent information and data with respect thereto, the execution of all applications, specifications, assignments, and all other instruments and papers which OCSD shall deem necessary to apply for and to assign or convey to OCSD, its successors and assigns, the sole and exclusive right, title and interest in such New Developments. Consultant agrees to obtain or has obtained written assurances from its employees and contract personnel of their agreement to the terms hereof with regard to New Developments and Confidential Information. 17.3 Consultant warrants that Consultant has good title to any New Developments, and the right to assign New Developments to OCSD free of any proprietary rights of any other party or any other encumbrance whatever. Orange County Sanitation District 5 of 10 Specification No. CS-2017-884BD 17.4 The originals of all computations, drawings, designs, graphics, studies, reports, manuals, photographs,videotapes, data, computer files, and other documents prepared or caused to be prepared by Consultant or its subcontractors in connection with these Services shall be delivered to and shall become the exclusive property of OCSD. OCSD may utilize these documents for OCSD applications on other projects or extensions of this project, at its own risk. 1 tt. No Solicitation of Employees Or Subcontractors 18.1 Consultant agrees that it shall not, during the term of this Agreement and for a period of one (1) year immediately following termination of this Agreement, or any extension hereof, call on, solicit, or take away any of the employees or subcontractors about whom Consultant became aware as a result of Consultant's Services to OCSD. 18.2 Consultant acknowledges that OCSD's employees are critical to its business. Consultant agrees not to employ or otherwise engage OCSD's employees or subcontractors during the term of this Agreement and for a period of one (1) year following termination of this Agreement. Should Consultant violate this provision, Consultant will pay OCSD fifty percent (50%) of the former employee's annual salary which payment is in addition to OCSD's rights and remedies. 19. Independent Contractor Capacity 19.1 The relationship of Consultant to OCSD is that of an independent contractor and nothing herein shall be construed as creating an employment or agency relationship. 19.2 Consultant shall act independently and not as an officer or employee of OCSD. OCSD assumes no liability for Consultant's action and performance, nor assumes responsibility for taxes, funds, payments or other commitments, implied or expressed, by or for Consultant. 19.3 Consultant shall not be considered an agent of OCSD for any purpose whatsoever, nor shall Consultant have the right to, and shall not, commit OCSD to any agreement, contract or undertaking. Consultant shall not use OCSD's name in its promotional material or for any advertising or publicity purposes without expressed written consent. 19.4 Consultant shall not be entitled to any benefits accorded to those individuals listed on OCSD's payroll as regular employees including, without limitation, worker's compensation, disability insurance, vacation, holiday or sick pay. Consultant shall be responsible for providing, at Consultant's expense, disability, worker's compensation or other insurance as well as licenses and permits usual or necessary for conducting the Services hereunder. 19.5 Consultant shall be obligated to pay any and all applicable local, state and federal payroll and other taxes incurred as a result of fees hereunder. Consultant hereby indemnifies OCSD for any claims, losses, costs, fees, liabilities, damages or penalties suffered by OCSD arising out of Consultant's breach of this provision. 19.6 Consultant shall not be eligible to join or participate in any benefit plans offered to those individuals listed on OCSD's payroll as regular employees. Consultant shall remain ineligible for such benefits or participation in such benefit plans even if a court later decides that OCSD misclassified Consultant for tax purposes. Orange County Sanitation District 6 of 10 Specification No. CS-2017-884BD 20. Licenses, Permits Consultant represents and warrants to OCSD that it has obtained and will maintain 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 Agreement will be paid by Consultant. 21. Consultant's Representations In the performance of duties under this Agreement, Consultant shall adhere to the highest fiduciary standards, ethical practices and standards of care and competence for their trade/profession. Consultant agrees to comply with all applicable Federal, State and local laws and regulations. 22. Familiarity with Work By executing this Agreement, Consultant 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 Agreement. Should Consultant 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 Consultant's risk, until written instructions are received from OCSD. 23. Riaht to Review Services. Facilities. and Records 23.1 OCSD reserves the right to review any portion of the Services performed by Consultant under this Agreement, and Consultant agrees to cooperate to the fullest extent possible. 23.2 Consultant shall furnish to OCSD such reports, statistical data, and other information pertaining to Consultant's Services as shall be reasonably required by OCSD to carry out its rights and responsibilities under its agreements with its bondholders or noteholders and any other agreement relating to the development of the project(s) and in connection with the issuance of its official statements and other prospectuses with respect to the offering, sale, and issuance of its bonds and other obligations. 23.3 The right of OCSD to review or approve drawings, specifications, procedures, instructions, reports, test results, calculations, schedules, or other data that are developed by Consultant shall not relieve Consultant of any obligation set forth herein. 24. Force Maleure Neither party shall be liable for delays caused by accident,flood, acts of God, fire, labor trouble, war, ads 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 Agreement. 25. Severability If any section, subsection, or provision of this Agreement, or any agreement or instrument contemplated hereby, or the application of such section, subsection, or provision is held invalid, the remainder of this Agreement 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. 26. Waiver The waiver of either party of any breach or violation of, or default under, any provision of this Agreement, shall not be deemed a continuing waiver by such party of any other provision or of any subsequent breach or violation of this Agreement or default thereunder. Any breach by Consultant 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. Orange County Sanitation District 7 of 10 Specification No. CS-2017-884BD 27. Remedies In addition to other remedies available in law or equity, if the Consultant fails to make delivery of the goods or Services or repudiates its obligations under this Agreement, or if OCSD rejects the goods or Services or revokes acceptance of the goods or Services,OCSD may(1)cancel the Agreement; (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 Consultant. In the event OCSD elects to"cover as described in (3), OCSD shall be entitled to recover from Consultant as damages the difference between the cost of the substitute goods or Services and the contract price,together with any incidental or consequential damages. 28. Governing Law This Agreement 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 Agreement or the performance thereof. 29.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 Agreement, 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. 30. Dispute Resolution 30.1 In the event of a dispute as to the construction or interpretation of this Agreement, 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. 30.2 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. 31. Damage to OCSD's Property Any OCSD property damaged by Consultant will be subject to repair or replacement by Consultant at no cost to OCSD. 32. 00SD Safety and Human Resources Policies OCSD requires all contractors and Consultants 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 Consultant is required to follow the most Orange County Sanitation District 8 of 10 Specification No. CS-2017-884BD stringent regulatory requirement at no cost to OCSD. Consultant and all their employees and subcontractors, shall adhere to all applicable OCSD Safety and Human Resources Policies found at: https://www.ocsd.com/about-us/transparency/safety-and-human-resources-policy/- folder-631 and Human Resource Policies are hereby incorporated by reference as though fully set forth herein in Exhibit"D". 33. Freight (F.O.B. Destination) Consultant assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products deemed necessary under this Agreement. 34.Assianments Consultant shall not delegate any duties nor assign any rights under this Agreement without the prior written consent of OCSD. Any such attempted delegation or assignment shall be void. 35. Conflict of Interest and Reporting 35.1 Consultant shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this Agreement. 35.2 Consultant affirms that to the best of its knowledge there exists no actual or potential conflict between Consultant's families, business or financial interest or its Services under this Agreement, and in the event of change in either its private interests or Services under this Agreement, it will raise with OCSD any question regarding possible conflict of interest which may arise as a result of such change. 36. Third Party Rights Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than OCSD and Consultant. 37. 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 of the terms of this Agreement. 36.Authority to Execute The persons executing this Agreement on behalf of the Parties warrant that they are duly authorized to execute this Agreement and that by executing this Agreement, the Parties are formally bound. 39. Read and Understood By signing this Agreement, Consultant represents that he has read and understood the terms and conditions of the Agreement. 40. Entire Agreement This Agreement 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. CS-2017-884BD 41. Notices All notices under this Agreement 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. Any facsimile notice must be followed within three (3) days by written notice. 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: Brandon Garcia Contracts Administrator Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Consultant: Dennis Mulqueeney, Senior Vice President Alliant Insurance Services, Inc. 1301 Dove Street, Suite 200 Newport Beach, CA 92660 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: Gregory C. Seborn, PLS Chair, Board of Directors Dated: By: Kelly Lore Clerk of the Board Dated: By: Contracts/Purchasing and Materials Management Manager Alliant Insurance Services, Inc. Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number Orange County Sanitation District 10 of 10 Specification No. CS-2017-884BD ADMINISTRATION COMMITTEE Meeting Date To ad.of Dir. 12J13/17 — AGENDA REPORT IWm Number Item Number 7 — Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: 2017 FACILITIES MASTER PLAN GENERAL MANAGER'S RECOMMENDATION Information Only. BACKGROUND Since its inception, the Orange County Sanitation District (Sanitation District) has managed its facilities through the preparation and implementation of long-term master plans. Most recent master planning efforts include the 1999 Strategic Plan, 2002 Strategic Plan Update, 2006 Collection System Model and Strategic Plan Update, and 2009 Facilities Master Plan. Since the last master planning effort, the Sanitation District has been working towards creating a more comprehensive Capital Improvement Program (CIP) plan. The Engineering Department has been developing a more detailed 20-year plan for facility rehabilitation, refurbishment, and replacement. Staff has evaluated the condition, capacity, level of service requirements, and technology opportunities in each treatment plant process area and in the collection system. To address these needs and issues, a list of potential projects with scope elements has been developed for the next 20 years. The 2017 Facilities Master Plan (Master Plan)validated the scopes and budgets for these projects, prioritized them based on needs and criticality, and developed a CIP plan for the next 20 years. The 20-year CIP for both the collection system and treatment plants totals $5 billion. • The Master Plan identifies the capital improvement needs of the Sanitation District through 2037, to meet level of service standards identified in the Five-Year Strategic Plan. • The Master Plan recommends a large number of capital improvements for rehabilitation, renewal and replacement, and the supporting studies. • The Master Plan incorporates the results of three recently completed planning projects including the Effluent Reuse Study, the Odor Control Master Plan, and the Biosolids Master Plan. These projects evaluated alternatives and recommended CIP projects needed to address mid-and long-term biosolids needs, and to meet Sanitation District initiatives such as maximizing beneficial reuse of effluent and minimizing odor impacts to neighbors. Three of the eight strategic goals from the Sanitation District's current Five-Year Strategic Plan were addressed by these projects. Page 1 of 3 • The costs of these improvements were previously identified by the Asset Management Plan and incorporated into the Rate Program in the 'Rehabilitation, Renewal and Replacement' line item. The Rate Program will be adjusted by transferring the $721 million cost from this line item to the CIP line item. • The completion and adoption of the Master Plan allows the Sanitation District to stay in compliance with the Capacity Assurance Planning requirement of the Statewide Waste Discharge Requirements Order, which was adopted by the State Water Resource Control Board in May 2, 2006. RELEVANT STANDARDS • 1, 5, 20-year planning horizons • Maintain a proactive asset management program PRIOR COMMITTEE/BOARD ACTIONS July 2016 - Approved a Professional Services Agreement with Carollo Engineers, Inc. to provide professional services for 2017 Facilities Master Plan, Project PS15-10, for an amount not to exceed $3,132,052; and approved a contingency of$313,205 (10%). ADDITIONAL INFORMATION A rate study recommending sewer connection fees and user fees was conducted as part of the 2017 Facilities Master Plan. CEQA CEQA Guidelines Section 15262 provides that a project involving only feasibility or planning studies for possible future actions,which the agency has not approved, adopted, or funded, does not require the preparation of an EIR or negative declaration, but does require consideration of environmental factors. This exemption does not apply to the adoption of a plan that will have a legally binding effect on later activities. The 2017 Facilities Master Plan is a feasibility/planning study that will be used to assist in the evaluation and planning of future projects. The Facilities Master Plan will not have a legally binding effect on later activities, but will instead be used to analyze potential future actions, which the Sanitation District has not yet approved, adopted, or funded. Pursuant to CEQA Guidelines Section 15262, the Facilities Master Plan does not require the preparation of an EIR or Negative Declaration. Thus, a Notice of Exemption was filed for this project on July 28, 2016. All projects evaluated under the 2017 Facilities Master Plan must comply with CEQA before they are approved, adopted, or implemented. The Sanitation District may choose to perform a CEQA determination for multiple projects via a Programmatic EIR, or for each individual project. Page 2 of 3 FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: 2017 Facilities Master Plan Executive Summary 2017 Facilities Master Plan (electronic documents) KM:EY:sa Page 3 of 3 . t A- i Y • , , _ 1 .�• r �4 j r T Ilk , � Rt - ORANGE COUNTY SANITATION DISTRICT 2017 Wastewater Collection and Treatment Facilities Master Plan ..........................................................................................I...I....: Executive Summary -j Engineers...Working Wonders With Water Y i Al di This 2017 Facilities Master Plan provides framework . the continuation of sustainable wastewater collection • treatment in Central and Northern Orange Planning Division SupervisorEngineering NOW Message from Our Director of Engineering Dear Orange County Residents: Many things have happened since preparation of our last Master Plan in 2009. The Orange County Sanitation District (OCSD) has completed capital expenditures of over$500 million for transition to full secondary treatment facilities to improve the quality of our treated wastewater discharge to the Ocean as well as provide a higher quality effluent to support our partnership with the Orange County Water District in the world's largest indirect potable reuse program,the Groundwater Replenishment System. As Orange County continues to grow and evolve to a more urban environment, OCSD must grow with it to provide resilient service and enhanced resource recovery. For the past year, OCSD has been developing our 2017 Facilities Master Plan.This plan provides a comprehensive analysis of the condition and capacity of our wastewater infrastructure, including our collection system trunk sewers and pump stations,as well as our treatment facilities at both Plant No. 1 in Fountain Valley and Plant No. 2 in Huntington Beach. Understanding the condition and capacity of the existing facilities,the Master Plan assessed new technology opportunities,anticipated regulatory changes,and resource recovery options to create a roadmap of facility evaluation which supports our mission over the next 20 years. This Executive Summary provides an overview of the information obtained and generated during preparation of this Master Plan. It is a compilation of the status of OCSD's existing infrastructure as well as OCSD's future direction for adding, rehabilitating,and replacing facilities.The Master Plan provides a framework for the evolution of sustainable wastewater collection and treatment throughout Central and Northern Orange County. A //.� Rob Thompson, P.E. Director of Engineering i A • Ali* Nip i 1Awl 1 ' 1 N mul ' 9 TABLE OF CONTENTS 7 Introduction to the 2017 Facilities Master Plan A quick explanation of who we are, what we are doing,and why we are doing it OCSD's Wastewater Treatment 1 O and Resource Recovery What we do with Orange County's Wastewater 12 Drivers that Shape the 2017 Facilities Master Plan Our response to the challenges and opportunities we face in the next 20 years Recommended Projects: 14 COLLECTION SYSTEM Improvements to maintain the integrity of our trunk sewer system and pump stations 16 Recommended Projects: TREATMENT PLANTS Replacing aging treatment facilities and adopting newer technologies Our Capital 19 Improvement Program What our projects will cost and how they will be paid for r 2 O PROJECT LIST A list of projects defined by the master planning process �U ,A 0 SITE PLANS IV 24 Site plans showing master planned projects and future facilities 2 (� What's Next? lVS Where we go from here ........................... ... ... ... ... ... .......................................................... . ii Who We Are W1 The Orange County Sanitation District (OCSD) is the third largest regional wastewater agency west of the ■ Mississippi River, providing wastewater collection, t treatment, and recycling services for the 2.6 m*io , people of central and northern Orange Count - 1�1 alE with an average daily wastewater Flow of 185 It�7 nr gallons per day (MGD) from residential, commercial, � I and industrial sources. i 6 . Introduction to the 2017 Facilities Master Plan OCSD's sewer service has two main components:the collection system and the treatment and recycling facilities.The collection system contains 15 pump stations OCSD is governed by and 396 miles of regional trunk sewer that collect wastewater from OCSD's member Board 479-square-mile service area.This wastewater is conveyed to Reclamation Plant Directorsof • No. 1 in Fountain Valley and Treatment Plant No.2 in Huntington Beach,where treatment and resource recovery take place. representative appointed from each of our twenty While some of this treated water is released five miles off shore through a deep cities,four special districts, water ocean outfall system,most is recovered into Orange County's main water supply.This is accomplished by way of a joint project with the Orange County and the Orange County Water District,the Groundwater Replenishment System-the world's largest Board of pe ' advanced water purification system for indirect potable reuse. 40 OUR MEMBER �°^� AGENCIES wura s Anaheim Brea u Buena Park �rxmr vnrs n% • Cypress • Fountain Valley • Fullerton 1 - Garden Grove "r • Huntington Beach • Irvine Reclamation Plant No. 1 • La Habra • La Palma I MINE • Los Alamitos Treatment Plant No.2 • Newport Beach Emergency Outlall • Orange 1.5 mile longs • Placentia 6.5400t diameter srwcx Santa Ana Offshore Outfall • Seal Beach 5 miles long 10-foot diameter • Stanton service • Tustin regional 479 area • Villa Park • Costa Mesa Sanitary District 3 9 6 trunk sewer square MILES MILES • Midway Sanitary District • Irvine Ranch Water District 15 pump • Yorba Linda Water District stations • County of Orange 1 WHAT IS A MASTER PLAN AND WHY DO WE NEED ONE? A facilities master plan is a long-term planning document that addresses the wastewater collection,treatment, recycling, and ocean outfall facility needs for OCSD over a defined planning period.The major goals of this Facilities Master Plan are to identify a phased 20-year program of capital improvement projects that maintain reliability and accommodate future growth, as well as meet future regulatory requirements, level of service goals,and strategic initiatives.With this plan, OCSD can identify the capital investments needed to achieve its goals and adjust rate structures to produce the necessary cash flow. The four major drivers of this Facilities Master Plan, CONDITION CAPACITY REGULATIONS INITIATIVES Aging Infrastructure Increases in wastewater New regulations and OCSD's service goals requiring rehabilitation flow and loading requirements and strategic initiatives or replacement In this Master Plan,most of the projects identified are the result of the need to rehabilitate and replace aging infrastructure in the collection system and treatment plants. It is OCSD's charge to maintain the integrity of assets that serve as the basis for its every day operation.The identified projects prepare the facilities to operate for the next 20-30 years with asset management. r .................................................................. THE MASTER PLAN CONTAINS THE 2017 Facilities Master Plan (FMP) Project Development FOLLOWING MAJOR CHAPTERS DATA COLLECTION Chapters 1-6 CONDITION ♦2009 FMP • Provide comprehensive descriptions of ASSESSMENT existing facilities - ................ Chapter 7 CONDITION y ; CAPACITY i Planning Assumptions: • Evaluates future demands that must REGULATIONS Ill , ♦OCSD INITIATIVES I. .............. be met, including wastewater flows ................ 1 and loads,regulatory requirements, y and OCSD service goals and strategic '• initiatives. ` ® i Chapter 8 j .................I................ End of Life Analysis: • Evaluates the condition and remaining useful life of the collection system and treatment facilities to determine when ............................. major rehabilitation or replacement must f occur. Chapter 9 i Project Identification: .................�................. • Identifies specific projects to meet future demands and to rehabilitate or replace E aging facilities. Chapter 10 E Implementation Plan: • Identifies specific implementation timing of projects and cash flow needs for the r 20-year planning period. i................................................................ I - M ...� 1 :1 • - - M - ' - - ' - 9 WHAT WE DO WITH ORANGE COUNTY WASTEWATER The wastewater treatment process treats municipal,commercial,and industrial sewage, removing contaminants before sending the water to Orange County Water District for the Groundwater Replenishment System IGWRS) for reuse or before releasing to the ocean. In 2001, OCSD's Board of Directors voted to take their operating facilities to full secondary treatment,a higher level of treatment that uses biological processes to remove up to 90 percent of organic matter from wastewater.This investment was made to ensure that high-quality water is released into the ocean and provided to the GWRS. Full secondary treatment was achieved in 2012. OCSD is a leader in water,energy,and solids resource recovery;the process of capturing specific waste materials and repurposing them into viable next use,much like municipal waste recycling and composting. For wastewater treatment,this process extends to collecting, extracting,and reusing resources in wastewater. OCSD actively engages in these cost-effective and environmentally safe recycling efforts to return pure drinking water, usable biosolids,and ' clean energy to the community. ............................................................................................................................................... STEP © PRELIMINARY TREATMENT Screening and grit removal remove larger objects and materials that clog-up ' downstream treatment processes; anything from rags and floss to coffee grounds.At this point,the water still includes biodegradable solids and dissolved organics. STEP COLLECTION r When you flush the toilet,take a shower, or drain dishwater from your sink,the wastewater goes down the drain and into a series of sewer pipes that connect to one of OCSD's - treatment plants. RESOURCES THAT ARE RECOVERED FROM THE TREATMENT PROCESS Biosolids • OCSD produces over 500 million pounds of biosolids a year,which are recycled to agricultural land or used to produce compost materials used in nurseries and landscaping.These highly treated biosolids are beneficial as soil amendments and are an environmentally friendly alternative to fossil-fuel intensive fertilizers. Water Reuse • The GWRS's high-quality water replenishes the groundwater basin. It is locally controlled and drought resilient,and costs less than imported water. It produces 100 million gallons per day of highly purified water,enough to meet the needs of 850,000 people. Energy 0 • Methane gas captured in the anaerobic digesters is used to fuel engine-generators that produce electricity and heat.This energy source powers over 60 percent of OCSD's energy needs,which saved rate payers$4.8 million dollars in energy costs in 2015-2016. In addition, this non-fossil fuel energy source offsets fossil fuel consumption and reduces OCSD's carbon footprint. 0 ............................................................................................................................................................................................................ STEP PRIMARY ADVANCED TREATMENT TREATMENT -GROUNDWATER (PHYSICAL) REPLENISHMENT SYSTEM The wastewater passes into large (ORANGE COUNTY WATER DISTRICT) settling tanks where the remaining solids sink to the bottom of the tank, lel The treated water flows to the Groundwater removing 80 percent of solids in the Replenishment System,where it undergoes a water.The resulting sludge and scum STEP state-of-the-art purification process consisting are sent to the plants digesters to of microfiltration, reverse osmosis,and ultraviolet undergo anaerobic digestion. SECONDARY TREATMENT light with hydrogen peroxide for disinfection (BIOLOGICAL) t The partially treated wastewater is sent to aeration basins or trickling filters for further treatment.Microorganisms feed on the remaining organic materials in th wastewater.Aker the microorganisms (secondary sludge) are removed,the treated water is then sent to the Groundwater Replenishment System or released into the Pacific Ocean. RESOURCE RECOVERY POINT:The RESOURCE RECOVERY POINT:Anaerobic digestion is the process Groundwater Replenishment System in which microorganisms break down and convert biodegradable generates 100 million gallons of nearly distilled materials into useful binges and biosolids.Anaerobic digestion is quality water per day.This reliable water not only cost-efficient and generative of reusable resources,but supply is used to prevent seawater intrusion can also greatly reduce the amount of organic matter that would and replenish Orange County's aquifer. otherwise need to be hauled off site for reuse. ShapeDrivers that the 2017 Facilities Master Plan OUR RESPONSE TO THE CHALLENGES AND OPPORTUNITIES WE FACE IN THE NEXT 20 YEARS GWRS Final Expansion Every day,OCSD provides up to 130 million gallons of treated wastewater to GWRS,which produces approximately 100 million gallons of purified water for residents of Orange County. In November 2016,OCWD and OCSD committed to the GWRS Final Expansion,a project that will further increase the GWRS treatment capacity to 130 million gallons per day,enough water to meet the needs of one million people.This requires OCSD to provide approximately 40 million more gallons of secondary-treated wastewater to OCWD per day.This G W R S increase will be accommodated through changes and additions to infrastructure •� that will allow treated effluent from Plant No.2 in Huntington Beach to be delivered to the GWRS treatment system in Fountain Valley. In addition,OCSD 7osres �,ke weer has committed to the collection and treatment of up to 10 VIGO of dry weather __ . r urban runoff to help protect local beaches from dry weather urban runoff contamination.This additional water source will add to the amount of water available for GWRS recovery and reuse. \� 3� �AO' _ ; ✓ Aging Infrastructure OCSD's capital improvement program has been evolving OCSD PROJECTED WASTEWATER FLOW over time. In the beginning,the program focused on 350 creating the initial infrastructure of the collections and 3W eR,nn treatment system.The focus then shifted to expansion 2°°9 vror of capacity and over the past ten years,OCSD's capital nso Actuaiii w 2011 Prnieca-r, improvement program has centered on improving treatment E ruac°`�°° - quality.The 2017 Facilities Master Plan wastewater flow €2. -- zov projection projections show that capacity is no longer a driving s asc (lower Bound) factor to our capital improvement program. Instead, OCSD's biggest challenge is aging infrastructure and 100 obsolescence of assets. In fact,the largest driver for the future projects identified by the 2017 Facilities Master 50 Plan is the replacement and rehabilitation of OCSD's aging 0 infrastructure and maximizing resource recovery. 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 vor Biosolids Master Plan Due to aging structures and seismic risks,the digestion facilities at Plant No. 2 in Huntington Beach will need to be replaced.OCSD recently completed a Biosolids Master Plan to evaluate the biosolids markets and technology options.The plan keeps in mind OCSD's goal to accommodate Orange County's food waste diversion needs. It will serve as the road map for sustainable and cost-effective biosolids management options over a 20-year period and will diversify our biosolids portfolio. The result is a higher quality biosolids product that can be beneficially reused as fertilizer for farmland or as compost for agriculture,nurseries, and home gardens. Co-Digestion of Food Waste The State of California mandates that local jurisdictions reduce the amount ofAO organic material entering landfills by 75 percent by 2025.With the anaerobic y p digestion facilities already in place,OCSD can serve a vital role in helping the state meet its goal by receiving food waste to be co-digested with its solids to increase �! biogas production and energy. OCSD has planned to construct an interim and permanent food waste receiving facilities.The receiving facilities are planned to be located at Plant No. 2 in Huntington Beach. Co-digestion at OCSD is an important step towards energy self-sufficiency from increased gas production,which meets (`0 ,� OCSD's energy policy goals. MPOS LONG-TERM PLANNING NEEDS Beyond the 20-year planning addressed in this 2017 Facilities Master Plan,additional existing facilities will eventually require replacement.The existing treatment plant sites are or will be nearly fully utilized and future replacement of major processes while maintaining the services they provide will be challenging. Many non- process facilities can potentially be located at newly acquired off-site properties,freeing up treatment plant land for long-term process replacement.This,along with other long-term options for land use planning,will need to be evaluated in greater depth in future studies. IMPROVEMENTS TO MAINTAIN THE INTEGRITY OF OUR REGIONAL TRUNK SEWER SYSTEM AND PUMP STATIONS R OCSD's 479-square-mile service area is divided into 11 sewer sheds.The trunk '. sewer system consists of approximately 396 miles of gravity pipelines,and force mains,and numerous access and flow diversion structures.The majority �'• of the system operates by gravity flow; however, 15 off-site pump stations are necessary to lift the wastewater at various locations throughout the service area. The majority of the pipelines were originally constructed between 1950 and 1979, making them up to 67-years-old,and pump stations up to 60-years-old. OCSD COLLECTION SYSTEM � h �l -----------------------• i �l 1 , —Sewers ' —Sewers Requiring Rehabilitation ,' r Pump Stations Ir Pump Stations Requiring Rehabilitation Sewers and Pump Stations that are included in the 2017 Facilities Master Plan. t To evaluate the condition1collection and 1 identify projects, planning processincluded an d of life assessment.This assessment estimates when a particular asset,facility, process will not be able to perform intended purpose. 1 1 1 involved evaluationan of OCSD's closed circuit televisioninspection data.OCSD currently has an ongoing program t1 inspectgravity sewers with CCTV every seven years. Forstudy, 1 of the collectionpipelines were inspecteda 1 reviewed for defects" 1 1 indicate renewalor repairneeds. d of life assessment for ' pump stations was conducted through physical site visits 1y a multi-discipline inspection '1 the physical condition of each facility. �e s COLLECTION SYSTEM Based on the end of life assessment,the following 37 projects were PROJECT COST BREAKDOWN included in this Master Plan for the collection system: ///��� 12 projects for the pump stations: PUMP 1 / • Most of these projects focus on mechanical and electrical STATIONS I EC rehabilitation by way of replacing aging and deteriorated equipment. PROJECTS 25 projects for the sewer pipelines: 1 • Approximately 40 miles of pipe rehabilitation were identified. Most 1 , of these projects focus on sewer rehabilitation with a lesser amount of sewers identified for replacement. //f'''��� r By completing these projects,the quality and integrity of the collection SEWER / L. system should remain intact for the next 20 years. PI PES L J Only condition driven projects were identified for this Master Plan.A new PROJECTS study,scheduled to be completed in 2018 will identify capacity driven projects,if any,which will then be incorporated into the 20-year CIP. t , • 1 REPLACING AGING TREATMENT FACILITIES AND ADOPTING NEWER TECHNOLOGIES Assessments were conducted at Reclamation Plant No. 1 and Treatment Plant No. 2 to determine asset condition and identify necessary improvement or replacement projects. More detailed assessments for 14 older facilities were conducted by physical site visits - - with a multi-discipline inspection team.The inspection team reviewed when the facilities were last rehabilitated and what the rehabilitation entailed,and then performed a condition assessment. i } � I ? � I -�I - 1 .................................................................................... RLJNr s n ppRL The condition of existing facilities are evaluated through inspection „ r r C � by amulti-disciplined team S SIt ( r Z RL 0 i , tr / / r 4. ?C. q. n�em•w rFML Plant No. 1 will undergo replacement of Plant No.2 will include new solids digestion facilities Primary Clarifiers 3,4,and 5 to produce higher quality biosolids TREATMENT PLANTS In many cases the assessment revealed that the structural facilities are in PROJECT COST BREAKDOWN sound condition, but the mechanical systems must be either rehabilitated or replaced due to age,obsolescence,and deterioration. PLANT A total of 47 projects were identified for the two treatment plants: NO. PROJECTS 16 projects for Plant No. 1: • Most of these projects focus on replacing or rehabilitating r ' components used in all stages of the treatment process—primary, r secondary,solids treatment,and power generation. 24 projects for Plant No. 2: PLANT �� • Most of these projects focus on two major drivers: N0. 2 1 j rehabilitation of components in all stages of the treatment PROJECTS process and power generation,and 2) implementation of the recommendations of the Biosolids Master Plan to address seismic risks,to produce higher quality biosolids and accept food waste. Some of these projects will incorporate upgraded equipment and parts into the plant as well as new technologies. B joint plant projects: Q • Most of these projects focus on plant-wide replacement and JOINT o rehabilitation projects at both facilities such as tunnels,piping and PROJECTS ocean outfall. 'awl �, _ s 1 l! O Our Capital Improvement • • WHAT OUR PROJECTS WILL COST PROJECTED ANNUAL CIP OUTLAY The projects identified in the master planning process were incorporated into the existing 10-Year Total: 20-Year Total: Capital Improvement Program (CIP).This program $2,451,000,000 $5,023,000,000 identifies an implementation schedule for each project and develops annual expenditures required over the 20-year planning period to implement the projects.The projects are scheduled based on a prioritization process that takes into account facility condition, evaluation of remaining useful life, criticality of the facility, avoidance of implementation conflicts,and cash flow and resource constraints. The Master Plan provides a listing of all newly HII ,o identified projects,including justification for the x = project, project description,cost estimate,and recommendation for implementation timing.The 20-year CIP which includes existing projects authorized by the Board of Directors and projects identified in this Master FUTURE PROJECTS IDENTIFIED THROUGH Plan totals$5 Billion,and averages approximately$250 Million per year. MASTER PLANNING PROCESS HOW WILL THE PROJECTS BE PAID FOR PUMP Sewer system user fees and connection fees are collected to pay down STATIONS 6% prior project debt,fund capital improvements,and pay for system SEWER PLANT 26% operation and maintenance costs. User fees are charged based on PIPES 13% No.t the quantity and strength of wastewater discharged by various user categories.These user fees are collected on the County-wide annual property tax bill.Connection fees are charged when new customers are added to the system to recover the cost for capacity to serve new users. JOINT OCSD currently carries a balance of approximately one billion dollars FACILITIES 12% of debt for the previous projects including the construction that was required to achieve full secondary treatment.This debt is paid down over time, similar to a home mortgage.The CIP identified in this Master Plan will not require OCSD to take on additional debt. Projects have been planned for implementation based on projected availability of funds collected from the user and connection fees. PLANT 43% WILL OUR RATES CHANGE Na 2 The cost of wastewater treatment is subject to inflation and experiences cost increases with time,similar to other goods and services,mainly due to increased cost of electricity,treatment chemicals, labor,and raw materials for new construction. Most utilities experience a nominal increase every few years that reflects these increased costs. User rates and connection fees already include an amount for expected future capital expenditures. It is anticipated that customers will not experience a rate increase that is substantially different than the normal annual inflationary rate change. Collections Project PUMP STATIONS Project No. Project Description Proposed Project Cost Project Start Date 2-73* Yorba Linda Pump Station Abandonment $10,811,000 Oct-2021 11-33* Edinger Pumping Station Upgrade and Rehabilitation $17,868,000 Mar-2023 11-34* Slater Avenue Pump Station Rehabilitation $13,059,000 Mar-2027 7-64* Main Street Pump Station Rehabilitation $60,398,000 Mar-2028 7-63* MacArthur Pump Station Rehabilitation $14,136,000 Dec-2028 X-023 Lido Pump Station Rehabilitation $25,313,000 Dec-2028 X-024 Rocky Point Pump Station Rehabilitation $11,936,000 Sep-2033 X-025 Bitter Point Pump Station Rehabilitation $14,084,000 Sep-2033 X-022 15th Street Pump Station Rehabilitation $20,563,000 Dec-2033 X-041 A Street Pump Station Rehabilitation $29,148,000 Dec-2033 X-040 College Ave Pump Station Rehabilitation $17,047,000 Mar-2034 5-66* Crystal Cave Pumping Station Upgrade and Rehabilitation $11,335,000 Jul-2034 Total $245,698,000 *Projects that have been approved by Me Board of Directors i r r ` t � v i * 1 EWE Project No. Project Description Proposed Project Cost Project Start Date X-064 Knott Ave.Small Diameter Sewer Rehabilitation $6,852,000 Jul-2017 5-68* Newport Beach Pump Station Odor Control Improvements $4,066,000 Mar-2018 1-101* Hall and Bristol Street Sewer Extension $7,075,000 Apr-2018 7-65* Gisler-Red Hill Interceptor Rehabilitation $14,793,000 Jul-2019 X-074 Santa Ana Trunk Sewer-Plant 1 Influent Trunk Sewer $2,052,000 Jul-2019 Replacement X-076 Alton Avenue Trunk Sewer Rehabilitation $52,673,000 Mar-2020 X-060 Newhope Placentia Odor Control Chemical Dosing Station $4,785,000 Oct-2021 3-60* Beach Trunk/Knott Interceptor Sewer Relief $136,299,000 Nov-2022 X-078 Air Jumper Additions and Rehabilitation $34,355,000 Dec-2022 X-075 Fairview Trunk Sewer Rehabilitation $3,554,000 Dec-2023 X-062 Caballero Blvd Trunk Sewer Rehabilitation $14,717,000 Mar-2024 X-026 College Ave. Force Main Rehabilitation $483,000 Mar-2025 11-25* Edinger Balsa Chica Trunk Improvements $5,159,000 Jul-2025 2-49* Taft Branch Improvements $2,130,000 Oct-2025 X-063 Imperial Highway/91 Freeway Trunk Sewer Rehabilitation $29,639,000 Mar-2026 X-067 Western Ave./Hoover St.Trunk Sewer Rehabilitation $33,488,000 Mar-2027 X-071 Balsa Chico/Edinger/Springdale Trunk Sewer Rehabilitation $19,133,000 Sep-2027 X-065 Santiago Canyon Road Trunk Sewer Rehabilitation $10,196,000 Jul-2029 X-061 Imperial Highway Trunk Sewer Rehabilitation $22,481,000 Sep-2033 X-073 Broadway/Main St.Trunk Sewer Rehabilitation $27,683,000 Mar-2034 X-066 Mead St.Trunk Sewer Spot Repairs $24,890,000 Jul-2034 X-069 Main St./l7th St.Trunk Sewer Rehabilitation $15,351,000 Jul-2034 X-070 Santa Ana Metro Link Trunk Sewer Rehabilitation $9,035,000 Oct-2034 X-072 Broadway St.Trunk Sewer Rehabilitation $11,967,000 Dec-2034 X-068 Chapman Ave.Trunk Sewer Rehabilitation $4,415,000 Mar-2035 Total $497,271,000 *Projects that have been approved by the Board of Directors Plant • 1 and Plant No. Project List RECLAMATION PLANT N0. 1 Project No. Project Description Proposed Project Cost Project Start Date X-056 Relocation of MF Backwash from OCWD to Primary Effluent $1,998,000 Aug-2018 at Plant No. 1 X-055 Primary Influent Splitter Box Rehabilitation at Plant No. 1 $5,059,000 Aug-2018 P1-126* Primary Clarifiers Replacements and Improvements at Plant $98,820,000 Mar-2020 No. 1 X-046 Relocation of Wastehauler Station at Plant No. 1 $9,256,000 Apr-2021 X-077 Svdtchgear Replacement at Central Generation at Plant No. 1 $13,317,000 Mar-2022 X-048 Activated Sludge- 1 Aeration Basin and Blower $150,211,000 Sep-2023 Rehabilitation at Plant No. 1 X-017 Primary Clarifiers 6-31 Rehabilitation at Plant No. 1 $83,335,000 May-2025 P1-127* Central Generation Rehabilitation at Plant No. 1 $70,847,000 Sep-2027 X-038 City Water Pump Station Rehabilitation at Plant No. 1 $9,702,000 Dec-2028 X-049 Activated Sludge-1 Clarifier and RAS Pump Station $127,572,000 Mar-2029 Rehabilitation at Plant No. 1 X-043 DAFT Demolition at Plant No. 1 $11,644,000 Jul-2029 X-015 Trickling Filters Rehabilitation at Plant No. 1 $131,784.000 Dec-2030 P1-114* Primary Scrubber Rehabilitation at Plant 1 $121,453,000 Dec-2032 X-018 Activated Sludge 2 Rehabilitation at Plant No. 1 $172,120,000 Mar-2033 X-006 Waste Sidestream Pump Station 1 Upgrade at Plant No. 1 $17,145,000 Jul-2033 X-039 Plant Water Pump Station Rehabilitation at Plant No. 1 $15,061,000 Dec-2033 Total $1,039,324,000 *Projects that have been approved by the Board ofDireetors f I TREATMENT PLANT NO.2 Project No. Project Description Proposed Project Cost Project Start Date P2-125* Southwest Perimeter Screening at Plant No.2 $2,800,000 Jan-2018 P2-126* Warehouse Relocation at Plant No.2 $9,800,000 Jun-2019 P2-120* Banning Gate Relocation and Grading at Plant No.2 $2,931,000 Ju1-2019 P2-127* Collections Yard Relocation at Plant No.2 $1,500,000 Jul-2019 X-050 Activated Sludge Aeration Basin at Plant 2 $419,000,000 Mar-2020 P2-128* TPAD Digester Facility at Plant No.2 $158,000,000 May-2020 X-032 Truck Loading Facility Rehabilitation at Plant No. 2 $10,025,000 Sep-2023 X-047 I SCE Feed Reliability at Plant No.2 $46,533,000 Sep-2023 X-054 Waste Side-stream Pump Station C Rehabilitation at Plant No.2 $15,144,000 Dec-2023 X-034 Sodium BisuBite Station Replacement and Bleach Station $261,583,000 Jul-2024 Demolition at Plant No. 2 P2-129* Digester P,Q,R and S Replacement at Plant No.2 $168,538,000 Dec-2025 X-051 Activated Sludge Clarifier Rehabilitation at Plant No.2 $25,129,000 Sep-2027 P2-119* Central Generation Rehabilitation at Plant No. 2 $131,595,000 Sep-2027 X-008 Operations Center Replacement at Plant 2 $4,959,000 Mar-2028 XP2-131 Digester IX Replacement at Plant No.2 $13,523,000 Nov-2028 X-036 City Water Pump Station Rehabilitation at Plant No. 2 $3,587,000 Dec-2028 X-037 Plant Water Pump Station and 12 KV Distribution Center A $56,234,000 Dec-2029 Demolition at Plant 2 X-052 Activated Sludge RASNVAS/PEPSNaponzers Rehabilitation at $56,366,000 Sep-2032 Plant No. 2 X-030 Headworks Rehabilitation at Plant No. 2 $46,339,000 Sep-2032 XP2-130 Food Waste Receiving Facility at Plant No. 2 $55,748,000 Sep-2032 X-014 Trickling Filter Solids-Contact Odor Control $7,423,000 Mar-2033 X-031 Trickling Filter Solids-Contact Rehabilitation at Plant No.2 $20,620,000 Mar-2033 X-007 Waste Side-stream Pump Station 2A Upgrade at Plant No.2 $117,000,000 Jul-2033 XP2-132 Digester Demolition at Plant No.2 $26,000,000 Jan-2035 Total $1,660,377,000 JOINT FACILITIES Project No. Project Description Proposed Project Cast Project Start Date J-98* Plantwide Miscellaneous Electrical Power Distribution System $10,483,000 Jan-2018 Improvements J-120* Plantwide Miscellaneous Process Control Systems Upgrades $102,399,000 Jan-2018 X-053 Long Outtall Rehabilitation $4,726,000 May-2019 X-044 Steve Anderson Lift Station Rehabilitation $10,056,000 Dec-2019 J-121 UPS System Upgrades $46,011,000 Jul-2023 X-057 Plantwide Miscellaneous Yard Structures Rehabilitation or $63,525,000 Dec-2023 Replacement at Plant No. 1 and Plant No.2 X-058 Plantwide Miscellaneous Yard Piping Replacement $93,891,D00 Dec-2023 X-059 Plantwide Miscellaneous Tunnels Rehabilitation at Plant No. 1 $148,997,000 Dec-2023 and Plant No.2 Total 1 $480,088,000 *Projects Mat have been approved by the Board of Directors ❑ MASTER PLANN 34 9 ❑ FACILITIES TO E ❑ GWRS FACILITIE ❑ FUTURE PROCE 261 26 26 4 10 26 2fi 26 26 6 26 26 29 NsaFic 30� ®' 26 <26 as 45 4 6 v \. 31 26 30 26 < I r 31 5 26 � 26 26 a9 1 \, 39 13 2 1�9YEQ. 13 1 2 1 YY 16 O21 jyL �111f�iawM ,4 3 3 3 .�.� � 11 13 Mr uo.,ar .i d o 0 13 9 EI ED FACILITIES "w.EE;I-IN' 3E REHABILITATED =S (OCWD) :SS AREAS ® PPDG�BAR�NAME ® FMCS E�� ME M.ST1.11BE 2� DIG STAY PUMP FROM LIFE STATION MOE,TRUCK LOADING VAN S6TEENS DEC ISSUDER INFLUENT PUMPS CENTRAL GENERATION BUILDING FEWER BOILING R i CHAMBER IRPSTIM SCREENINGS HANDLING U NG BUILDING CnWATER PUMP STATION X HYDROGEN PEROBDE FACILITY36 PLANT WATER PUMP Z \ BE/SURE L EMEP USSR XTBOL FACIMES OPXEXNUNG DART. 12 PRIMARY NFL, IS PRICARRY EXPORTS POLYMER FACW VX sO W Rl BWNINRG 14 40 LOVED FACILITIES A �� MMP STATIONS COLECTION1 YANG �ppp m/ iXICFLIN6 FlLTRPB PU o E UPIESBUl FOR EXCLLUDING PAN 3PRIMARYEFFWEST PUMP STATION 11 GUN HANDLING� ATTEND XG AERATION BUILDING EXSPACE BUILDING 3 ARYSTAFFERs GALXWASEXGOR 21 SECOND 46 DGEiswM PUMP srAITDx BUGGER STUSTION 24 THIGH NIXG a DESUATERIXG PASTRIES 4 S wMPI£% 51 IT INFRASTRUCTURE DIGESTIER8000 - 62 FUMES STRUCTURE 1 y STRUCTURES -�FXM� .. BOX PRO EMET RING R STION DS EWE BUILDING PIT MARY PT GATHELTION.1 40 - BOX MPUT MARY 9B EFFLIUI SPTIO PPYPA ON PLANT WATER PUMP OX UDGE U LEEONMERY"FOiIPLCXA _LTFRICK,NO FILTEREPIT ENTRIES BURSTER B0% TIRBCSTESSEESTPEMCUUMPSTRi0IER wssys— P 9 i�f 21 2i PLANT NO. 1 BEYOND 2037 SITE PLAN t9 2017 FACILITIES MASTER PLAN Orange County Sanitation District Oho = OO o O �; ti•It oSIX O °O _4 IT _ O o � 5 '•= p. O O ,n. ❑© ® , xE„ ON STERNICEIRDEFER,�wEF.a E� M a r .P'AD Call NA XeLl..xEIS AEIRN­ �, ,.E. \ T Ica j1p,caT 4 owEuox rxrti¢ C J \•\� RUN c ND. ADS a SON,ERl A DGERED x«-11E..xx `r IRA Dl i ' ' � 1 ' . s BABI „� al ENARN1 s — — ascams=,:,00 Q.DO-K AT FARLD, ❑ MASTER PLANNED FACILITIES s © FACILITIES TO BE REHABILITATED ❑ GWRS FACILITIES (OCWD) ❑ FUTURE PROCESS AREAS ' e" M-4-���4ww ,w z Q o ❑ ❑ o - _ � 00 0 0 0 �❑� 0 0 FA o 0 0 0 ® 0 ❑%; o o ° ❑O o o �❑ o 0 0 0 0 p PLANT NO. 2 BEYOND 2037 SITE PLAN O 2017 FACILITIES MASTER PLAN a Orange County ;� Sanitation District What's Next? As projects identified in this Master Plan approach the time for implementation,they will be brought to the OCSD Board of Directors for approval as part of the annual budget update process.The management of these projects is a large endeavor that will require the participation and support from staff throughout the agency. OCSD is committed to providing reliable,high-quality wastewater collection,treatment and beneficial reuse to Orange County's residents,while implementing sustainable, cost-effective practices that benefit our community and the environment. OCSD's asset management program allows us to operate and maintain our assets to deliver the required level of service in the most cost-effective manner. Efforts from all departments are well planned, clearly communicated and closely coordinated. These asset management efforts include operations,planned maintenance, corrective maintenance, condition assessments and capital improvements projects such as those identified in this Master Plan. Finally,we must continually plan for the future by routinely evaluating our facilities' conditions and capabilities and measuring them against future demands and regulatory _ requirements.We will update this Master Plan regularly to ensure OCSD continues to _ provide a reliable and necessary service to our rate payers well into the future. 1 i ADMINISTRATION COMMITTEE Meeting Date TOBd.Ot Dir. S2J13/17 12/20/17 AGENDA REPORT IWmNumber Item Number B Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ORANGE COUNTY SANITATION DISTRICT WASTEWATER REVENUE PROGRAM RATE STUDY GENERAL MANAGER'S RECOMMENDATION Receive and file the Orange County Sanitation District's 2017 Wastewater Revenue Program Rate Study completed by Carollo Engineers. BACKGROUND To ensure the appropriate allocation of costs and fees, the Orange County Sanitation District (Sanitation District) has engaged an engineering consulting firm, Carollo Engineers, to provide an independent analysis of the Sanitation District's cash flow modeling and a cost of service study. The study demonstrates that the Sanitation District's proposed fees are appropriate and reasonable and will support its projected capital and operating requirements. Carollo Engineers has just completed the facilities master plan update. In conjunction with this update, Carollo was tasked with performing an updated sewer rate study to determine the appropriate rates going forward to support the facilities master plan update. RELEVANT STANDARDS • Stable rates, no large unforeseen rate increases PROBLEM The Sanitation District's Board of Directors approved a five-year rate schedule which expires at the end of the current fiscal year. PROPOSED SOLUTION Develop a new proposed five-year rate schedule based on the 2017 rate study completed by Carollo Engineers. TIMING CONCERNS Based on the 2017 rate study, staff will be developing a proposed five-year rate schedule, beginning in July 2018, for Administration and Board consideration in February 2018. Page 1 d 2 RAMIFICATIONS OF NOT TAKING ACTION Sewer service fees will be insufficient to support the facilities master plan update. PRIOR COMMITTEE/BOARD ACTIONS January 2013-Approval of the previous Sanitation District Wastewater Revenue Program Rate Study. ADDITIONAL INFORMATION Based on the results of the rate study completed by Carollo Engineers, Sanitation District staff is in the process of recommending a five-year revenue program which includes an increase of approximately 1.2 percent annually for the next five years. ATTACHMENT The following attachment(s)are available in hard copyand may also be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Orange County Sanitation District Wastewater Revenue Program Rate Study (separate document) Page 2 of 2 ADMINISTRATION COMMITTEE Meeting Date TOBd.Ot Dir. S2J13/17 12/20/17 AGENDA REPORT emNumber Item Number 9 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPOSITION 218 NOTIFICATIONS GENERAL MANAGER'S RECOMMENDATION Direct staff to prepare and mail Proposition 218 compliant notifications to affected property owners outlining a five-year regional sewer service fee schedule with annual increases of approximately 1.2 percent over the next five fiscal years beginning with Fiscal Year 2018-19. BACKGROUND The Orange County Sanitation District's (Sanitation District) current five-year sewer fee rate schedule expires at the end of the current fiscal year. The Sanitation District engaged Carollo Engineers, an engineering consulting firm, to provide an independent analysis of the Sanitation District's cash flow modeling and a cost of service study to ensure the appropriate allocation of costs and fees. This study has been completed and presented to the Administration Committee at this meeting as a separate agenda item. Based on this information, the Facilities Master Plan,forecasted operating expenses, and cash flow modeling, staff recommends annual increases of approximately 1.2%. RELEVANT STANDARDS • Stable rates, no large unforeseen rate increases PROBLEM Proposition 218 requires that the Sanitation District notify the affected property owners within the Sanitation District service area of proposed rate increases and to conduct a public hearing that coincides with the second reading of the ordinance. Notices must be mailed to property owners 45 days prior to the public hearing. PROPOSED SOLUTION With Board approval, a notice of rate changes will be mailed to every affected property owner within the Sanitation District service area. These rates will be scheduled for adoption through the ordinance process that requires a public hearing, two Board meetings, and a 2/3 majority approval of the Board. The estimated cost of mailing is approximately $300,000. Page 1 d 2 TIMING CONCERNS Rate approval schedule: • December 2017: Administration & Operations Committees— Rate Structure presentation • December 2017: Board Meeting —Approval of Proposition 218 Notices • February 2018: Proposition 218 45-day notices mailed for Sanitary Sewer Fees • February 2018: Board Meeting — let Reading of the Ordinance • March 2018: Board Meeting —2"d Reading of the Ordinance, Public Hearing & Adoption • July 1, 2018: New rates go into effect RAMIFICATIONS OF NOT TAKING ACTION Existing sewer service fees will be insufficient to support the Sanitation District's operating expenses and new facilities included in the Facilities Master Plan update. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Proposed Annual Single Family Residential Fee Schedule: Current $331 FY 2018-19 $335 FY 2019-20 $339 FY 2020-21 $343 FY 2021-22 $347 FY 2022-23 $351 FINANCIAL CONSIDERATION This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted in the FY 2017-18 budget. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: N/A Page 2 of 2 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 CARS 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 US Environmental Protection Agency FOG Fats, Oils, and Grease gpd gallons per day GWRS Groundwater Replenishment System ICS Incident Command System IERP Integrated Emergency Response 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 & Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District OOBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration PCSA Professional Consultant/Construction Services Agreement PDSA Professional Design Services Agreement POTW Publicly Owned Treatment Works ppm parts per million PSA Professional Services Agreement RFP Request For Proposal RWQCB Regional Water Quality Control Board Glossary of Terms and Abbreviations SARFPA Santa Ana River Flood Protection Agency SARI Santa Ana River Interceptor SARWQCB Santa Ana Regional Water Quality Control Board SAW PA Santa Ana Watershed Project Authority SCADA Supervisory Control And Data Acquisition SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SRF Clean Water State Revolving Fund SSMP Sewer System 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 W ERF Water Environment & Reuse Foundation WIFIA Water Infrastructure Finance and Innovation Act WIIN Water Infrastructure Improvements for the Nation Act W RDA Water Resources Development 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. Biogas—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 farmland or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Glossary of Terms and Abbreviations Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere, used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater. Collections system— In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP)—A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (DIT) — The dilution at which the majority of people detect the odor becomes the D/T for that air sample. Greenhouse Gases (GHG) — 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 System (GWRS) — 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 per day of drinking quality water to replenish the local groundwater supply. Levels Of Service (LOS) — Goals to support environmental and public expectations for performance. N-Nitrosodimethylamine (NDMA) — A N-nitrosamine 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 and Water Environment Federation, with advisory support from the US Environmental Protection Agency. NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation 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. Glossary of Terms and Abbreviations Publicly Owned Treatment Works (POTW) —A 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 runoff. South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment — Biological wastewater treatment, particularly the activated sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge—Untreated solid material created by the treatment of wastewater. Total Suspended Solids (TSS)—The amount of solids floating and in suspension in wastewater. Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Urban runoff—Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed—A land area from which water drains to a particular water body. The Orange County Sanitation District's service area is in the Santa Ana River Watershed.