HomeMy WebLinkAbout12-09-2015 Administration Committee Agenda Orange County Sanitation District Wednesday, December 9, 2015
Regular Meeting of the - 5:00 P.M.
ADMINISTRATION Administration Building
COMMITTEE Board Room
10544 Ellis Avenue
Fountain Valley, CA
714 593-7433
AGENDA
PLEDGE OF ALLEGIANCE:
DECLARATION OF QUORUM:
PUBLIC COMMENTS: If you wish to address the Board of Directors on any item, please complete a
Speaker's Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or
notify the Clerk of the Board the item number on which you want to speak. Speakers will be recognized by
the Chairman and are requested to limit comments to three minutes.
REPORTS: The Committee Chair and the General Manager may present verbal reports on
miscellaneous matters of general interest to the Committee Members. These reports are for information
only and require no action by the Committee.
REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES:
CONSENT CALENDAR: The Consent Calendar Items are considered to be routine and will be
enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent
Calendar for separate discussion will be conserved in the regular order of business.
1. APPROVAL OF MINUTES (Clerk of the Board)
RECOMMENDATION: Approve Minutes of the November 12, 2015,
Administration Committee Meeting.
12/09/15 Administration Committee Agenda Page 1 of 3
2. INVEST AND/OR REINVEST DISTRICT'S FUNDS (Lorenzo Tyner)
RECOMMENDATION: Recommend to the Board of Directors to:
Adopt Resolution No. OCSD 15-XX, entitled "A Resolution of the Board of
Directors of the Orange County Sanitation District, Authorizing the Orange County
Sanitation District's Treasurer to Invest and/or Reinvest District's Funds; Adopting
District's Investment Policy Statement and Performance Benchmarks for calendar
year 2016; and Repealing Resolution No. OCSD 14-20."
3. CONFLICT OF INTEREST CODE (Clerk of the Board)
RECOMMENDATION: Recommend to the Board of Directors to:
Adopt Resolution No. OCSD 15-XX entitled, "A Resolution of the Board of
Directors of Orange County Sanitation District adopting a Conflict of Interest Code
which supersedes all prior Conflict of Interest Codes and amendments previously
adopted."
NON-CONSENT CALENDAR:
None.
INFORMATION ITEMS:
4. INVESTMENT PERFORMANCE RESULTS (Lorenzo Tyner)
5. COMMUNITY OUTREACH (Bob Ghirelli)
CLOSED SESSION:
None.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS,
IF ANY:
ADJOURNMENT:
The next Administration Committee meeting is scheduled for Wednesday,
February 10, 2016 at 5:00 p.m.
12/09/15 Administration Committee Agenda Page 2 of 3
Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability
related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at
(714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability
and the type of accommodation requested.
Agenda Postina: In accordance with the requirements of California Government Code Section 54954.2,this agenda
has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis
Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public
records relating to each agenda item,including any public records distributed less than 72 hours prior to the meeting
to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board.
Agenda Description: The agenda provides a brief general description of each item of business to be considered or
discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take
any action which is deemed appropriate.
NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to
the Clerk of the Board 14 days before the meeting.
Kelly A.Lore
Clerk of the Board
(714)593-7433
kloreAocsd.com
For any questions on the agenda, Committee members may contact staff at:
General Manager James Herberg (714)593-7300 iherbem(rpoad.com
Assistant General Manager Bob Ghirelli (714)593-7400 rghirelli(olocsd.com
Director of Finance and Lorenzo Tyner (714)593-7550 Itvnerfgoad.com
Administrative Services
Director of Human Resources Celia Chandler 714 593-7202 cchandler ocsd.com
12/09/15 Administration Committee Agenda Page 3 of 3
ITEM NO. 1
MINUTES OF THE
ADMINISTRATION COMMITTEE
Orange County Sanitation District
THURSDAY, November 12, 2015, at 5:30 P.M.
A regular meeting of the Administration Committee of the Orange County Sanitation
District was called to order by Committee Chair Curry on November 12, 2015, at
5:30 p.m., in the Administration Building of the Orange County Sanitation District.
Committee Vice-Chair Kring led the Flag Salute.
A quorum was declared present, as follows:
COMMITTEE MEMBERS PRESENT: STAFF PRESENT:
Keith Curry, Chair Jim Herberg, General Manager
Lucille Kring, Vice-Chair Bob Ghirelli, Assistant General Manager
Steven Choi Celia Chandler, Director of Human Resources
Tyler Diep Lorenzo Tyner, Director of Finance
James Ferryman Rob Thompson, Director of Engineering
Jim Katapodis Kelly Lore, Clerk of the Board
Peter Kim Jennifer Cabral
Greg Mills Rich Castillon
Teresa Smith Chad Crow
Sal Tinajero Randy Kleinman
John Nielsen, Board Chair Richard Spencer
Greg Sebourn, Board Vice-Chair
OTHERS PRESENT:
COMMITTEE MEMBERS ABSENT: Brad Hogin, General Counsel
Glenn Parker Kendra Carney, Associate General Counsel
Adam Hutchinson, OCWD
Jeffrey Altshuler, Audit Partner, RSM
Gary Ward, AON
PUBLIC COMMENTS:
None.
REPORT OF COMMITTEE CHAIR:
Committee Chair Curry did not provide a report.
11/12/2015 Administration Committee Minutes Page 1 of 6
REPORT OF GENERAL MANAGER:
General Manager, Jim Herberg did not provide a report.
REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES:
Director of Finance and Administrative Services, Lorenzo Tyner did not provide a report.
CONSENT CALENDAR:
1. APPROVAL OF MINUTES (Clerk of the Board)
MOVED, SECONDED AND DULY CARRIED TO: Approve Minutes of the
October 14, 2015, Administration Committee Meeting.
AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills,
Nielsen, and Sebourn
NOES: None
ABSTENTIONS: None
ABSENT: Parker, T. Smith and Tinajero
2. VAX EMULATOR FOR PROCESS CONTROL SYSTEM, MODERNIZATION &
SECURITY IMPROVEMENTS PROJECT (Lorenzo Tyner)
MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of
Directors to:
A. Authorize a Purchase Order Contract with Quayle Consulting, Inc. for the
procurement of Charon-VAX permanent licenses and maintenance in the
amount of$338,401; and
B. Approve a contingency of 10% ($33,840).
AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills,
Nielsen, and Sebourn
NOES: None
ABSTENTIONS: None
ABSENT: Parker, T. Smith and Tinajero
3. MICROSOFT ENTERPRISE LICENSE AGREEMENT (ELA) FOR MICROSOFT
ENTERPRISE SOFTWARE LICENSES (Lorenzo Tyner)
MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of
Directors to:
A. Authorize a Purchase Order with a three-year contract to purchase
Microsoft Enterprise licenses under the Microsoft ELA in accordance with
11112t2015 Administration Committee Minutes Page 2 of 6
Microsoft Volume Enterprise Enrollment — for State and local government,
Riverside County Master Licensing Agreement 01E73134, payable
annually and with contract expiration date of December 31, 2018 for a total
amount not to exceed $874,556.22; and
B. Approve a contingency of 15% ($131,183.43).
AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills,
Nielsen, and Sebourn
NOES: None
ABSTENTIONS: None
ABSENT: Parker, T. Smith and Tinajero
4. ENTERPRISE INFORMATION MANAGEMENT (EIM) STAFFING SUPPORT
(Lorenzo Tyner)
MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of
Directors to:
A. Approve a Service Contract with Project Partners, Inc. for Enterprise
Information Management On-Call Staffing, Specification No.
S-2015-725BD, for a period of January 1, 2016 through
December 31, 2016, for a total annual amount not to exceed $121,800 with
four one-year renewal options; and
B. Approve a contingency of 20% ($24,360).
AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills,
Nielsen, and Sebourn
NOES: None
ABSTENTIONS: None
ABSENT: Parker, T. Smith and Tinajero
5. REPROGRAPHICS AND RELATED SERVICES (Lorenzo Tyner)
MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of
Directors to:
A. Authorize a Purchase Order Contract with ARC Document Solutions, LLC
for reprographics services per County of Orange Master Contract #RCA
MA-017-16010366, for one 3-year period (11/04/15 — 11/03118) for an
aggregate amount not to exceed $200,000 per year; and
B. Approve the option of two additional one-year renewals for an amount not
to exceed $200,000 per year.
AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills,
Nielsen, and Sebourn
11112/2015 Administration Committee Minutes Page 3 of 6
NOES: None
ABSTENTIONS: None
ABSENT: Parker, T. Smith and Tinajero
6. CONSOLIDATED FINANCIAL REPORT FOR THE FIRST QUARTER ENDED
SEPTEMBER 30, 2015 (Lorenzo Tyner)
MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of
Directors to: Receive and file Orange County Sanitation District First Quarter
Financial Report for the period ended September 30, 2015.
AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills,
Nielsen, and Sebourn
NOES: None
ABSTENTIONS: None
ABSENT: Parker, T. Smith and Tinajero
Director Tinajero arrived at 5:40 p.m.
Director T. Smith arrived at 5:44 p.m.
NON-CONSENT CALENDAR:
The Clerk of the Board provided the Committee with late communication regarding
Item 7. Controller Mike White and Jeffrey Altshuler, Audit Partner, RSM, provided an
informative PowerPoint Presentation; distributed a handout regarding the audit of the
District's finances and answered questions from the Committee.
7. ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL
FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2015.
(Lorenzo Tyner)
MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of
Directors to:
Receive and file the Sanitation District's Comprehensive Annual Financial Report
for the year ended June 30, 2015, prepared by staff and audited by McGladrey,
Certified Public Accountants, along with the following reports prepared by
McGladrey:
A. Report to the Administration Committee; and
& Report on internal COMFOls; and
B. Independent Accountants' Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets.
AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills,
Nielsen, Seboum, T. Smith and Tinajero
NOES: None
ABSTENTIONS: None
ABSENT: Parker
11/1 V2015 Administration Committee Minutes Page 4 of 6
Director Choi departed the meeting at 6:10 p.m.
Director of Human Resources Celia Chandler made a brief presentation regarding Item 8
and introduced Gary Ward, Sr. Vice President of Aon Construction Services Group who
then provided a PowerPoint Presentation explaining: OCIP parameters; projects included
and the cost savings.
8. OWNER CONTROLLED INSURANCE PROGRAM EXTENSION
(Celia Chandler)
MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of
Directors to: Approve the purchase of a multi-year extension of the Owner
Controlled Insurance Program at a total cost of$725,612 for five policies covering
three layers of liability coverage, workers compensation coverage, and pollution
coverage, through December 31, 2017.
AYES: Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills, Nielsen,
Sebourn, T. Smith and Tinajero
NOES: None
ABSTENTIONS: None
ABSENT: Choi, and Parker
INFORMATION ITEMS:
9. STORM WATER CAPTURE (Bob Ghirelli)
Adam Hutchinson, Recharge Planning Manager at Orange County Water District
gave an informative PowerPoint presentation on the importance of storm water to
the groundwater supplies of Orange County. He provided a history of the Orange
County Water District; surface recharge operations of the dams built; capture
statistics; challenges and constraints faced; sediment removal technologies; and
preservation efforts and fielded questions from the Committee.
CLOSED SESSION:
None.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS,
IF ANY:
Committee Chair Curry inquired, and the Committee was in favor of changing the starting
time of the Administration Committee Meeting to 5:00 p.m. permanently.
11/12/2015 Administration Committee Minutes Page 5 of 6
ADJOURNMENT:
Committee Chair Curry declared the meeting adjourned at 6:36 p.m. to the next regularly
scheduled meeting of Wednesday, December 9, 2015 at 5:00 p.m.
Submitted by:
Kelly A. Lore
Clerk of the Board
11112/2015 Administration Committee Minutes Page 6 of 6
ADMINISTRATION COMMITTEE Meeting Dare TOBd.Of Dir.
12/09/15 12/16/15
AGENDA REPORT Item Number Item Number
z
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 15-XX, entitled "A Resolution of the Board of Directors of
the Orange County Sanitation District,Authorizing the Orange County Sanitation District's
Treasurer to Invest and/or Reinvest District's Funds;Adopting District's Investment Policy
Statement and Performance Benchmarks for calendar year 2016; and Repealing
Resolution No. OCSD 14-20."
SUMMARY
This agenda item presents an update to the Orange County Sanitation District's
Investment Policy Statement to the Administration Committee for consideration in the
Committee's capacity as the oversight committee for the Investment Policy(Section 16.2).
With adoption of the Resolution, the Board of Directors would readopt the Sanitation
District's current Investment Policy Statement, portfolio performance benchmarks, and
monitoring and reporting requirements for calendar year 2016.
The Sanitation District's Investment Policy Statement was previously approved by the
Administration Committee and Board for calendar year 2015 in December 2014
PRIOR COMMITTEE/BOARD ACTIONS
December 2014 — Board adopted Resolution No. OCSD 14-20, Authorizing the Orange
County Sanitation District's Treasurer to Invest and/or Reinvest District's Funds; Adopting
District's Investment Policy Statement and Performance Benchmarks for calendar year
2015; and, Repealing Resolution No. OCSD 14-10.
ADDITIONAL INFORMATION
The Investment Policy will govem the investment activities of Chandler Asset
Management, the Sanitation District's external money manager, on behalf of the District.
On December 11, 2012, the Sanitation District's Investment Policy Statement received
the Investment Policy Certification of Excellence Award from the Califomia 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.
Page 1 of 3
Annual Review of Investment Pollcv
The Investment Policy includes the requirement that the Sanitation District shall review
its Investment Policy annually (Sections 1.2 and 16.1).
Chandler reviewed the existing policy to ensure that the language remains current with
the California Government Code (CGC).
The proposed investment policy is attached with redlined changes from the most recent
approved policy in December 2014. These proposed changes include:
• Providing a monthly report of investment transactions to the legislative body in
accordance with CGC Section 53607.
• Elimination of the reference to CGC Section 53646 that states an agency "may"
render a quarterly report that"shall" be summited within 30 days following the end
of the quarter covered by the report. The District will continue to prepare and
submit a quarterly treasury's report and all relevant information. However, to
ensure that all information is accurate and that the Administration Committee has
time to receive, review and approve the report prior to being submitted to the full
board, the reports will be presented to the legislative body within 90 days of the
quarter's end.
Annual Delegation of Investment Authority
Effective January 1, 1997, Section 53607 of the Code states that governing boards of
local agencies may only delegate authority to invest and/or reinvest agency funds to the
agency's Treasurer for a one-year period.
With adoption of the Resolution, the Board of Directors would renew its delegation of
investment authority to the Director of Finance/Treasurer for a one-year period, January
1, 2016 to December 31, 2016, in compliance with the requirements of Section 53607.
Each year, the Board of Directors will consider similar actions along with the annual
reconsideration of the Sanitation District's Investment Policy.
CEQA
N/A
BUDGET / PURCHASING ORDINANCE COMPLIANCE
N/A
Page 2 of 3
ATTACHMENTS
The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website
(www.ocsd.com) with the complete agenda package:
• Exhibit A - OCSD Calendar Year 2015 Investment Policy Statement
• Exhibit B - Performance Monitoring & Reporting Summary
• Proposed Resolution No. OCSD 15-XX
Page 3 of 3
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ORANGE COUNTY SANITATION
DISTRICT
INVESTMENT
POLICY
STATEMENT
Proposed for
Review and Approval
By
Administration Committee
On
December 9, 2015
And for Adoption
By
Board of Directors
On
December 16, 2015
TABLE OF CONTENTS
Section TODIC Page
1.0 Policy ......................................................................................2
2.0 Scope......................................................................................2
3.0 Standard of Prudence .............................................................2
4.0 Investment Objectives.............................................................3
5.0 Delegation of Authority............................................................3
6.0 Ethics and Conflicts of Interest................................................4
7.0 Authorized Financial Dealers and Institutions .........................5
8.0 Authorized and Suitable Investments......................................6
9.0 Collateralization..........................................................10
10.0 Safekeeping and Custody.............................................10
11.0 Diversification.............................................................11
12.0 Maximum Maturities.............................................................. 12
13.0 Internal Control...................................................................... 13
14.0 Performance Objectives and Benchmarks............................ 13
15.0 Reporting .............................................................................. 13
16.0 Investment Policy Adoption and Revision ............................. 15
Appendix
A. Summary of Investment Authorization
B. Treasury Management Procedures
C. Investment Manager Certification
D. Investment Pool Questionnaire (LAIF)
E. Board Resolution No. OCSD-I4-XX, Authorizing the District's Treasurer to Invest
and/or Reinvest District Funds, and Adopting Investment Policy and Performance
Benchmarks
F. Quarterly Investment Program Monitoring Reports
G. Sections of the California Government Code Pertinent to Investing Public Funds
H. Glossary of Investment Terms
Page 1
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
Page 2
pursuant to this chapter are trustees and therefore fiduciaries subject to
the prudent investor standard. When investing, reinvesting, purchasing,
acquiring, exchanging, selling, or managing public funds, a trustee shall act with
care, skill, prudence, and diligence under the circumstances then prevailing,
including, but not limited to, the general economic conditions and the anticipated
needs of the agency, that a prudent person acting in a like capacity and
familiarity with those matters would use in the conduct of funds of a like character
and with like aims, to safeguard the principal and maintain the liquidity needs of
the agency. Within the limitations of this section and considering individual
investments as part of an overall strategy, investments may be acquired as
authorized by law.
4.0 Investment Objectives:
The primary objectives of 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
at 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
Page 3
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
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
Page 4
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.
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:
Page 5
Use of Securities Brokers: Neither the Investment Advisor nor any parent,
subsidiary or related firm shall act as a securities broker with respect to
any purchases or sales of securities which may be made on behalf of
OCSD, provided that this limitation shall not prevent the Investment
Advisor from utilizing the services of a securities broker which is a parent,
subsidiary or related firm, provided such broker effects transactions on a
"cost only" or"nonprofit' basis to itself and provides competitive execution.
The Investment Advisor shall provide the Districts with a list of suitable
independent brokerage firms (including names and addresses) meeting
the requirements of Government Code Section 53601.5, and, unless
otherwise directed by OCSD, the Investment Advisor may utilize the
service of any of such independent securities brokerage firms it deems
appropriate to the extent that such firms are competitive with respect to
price of services and execution.
8.0 Authorized and Suitable Investments:
All investments shall be made in accordance with the California Government Code
including Sections 16429.1 at seq., 53600 et 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
Page 6
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 (lOs) 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
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 30% 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
Page 7
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
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. However, no more than 10% of the District's surplus funds
may be invested in shares of beneficial interest of any one (1) mutual fund
pursuant to this section.
8.9 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
at 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
Page 8
financial superviscrial 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
LAIF is an investment alternative for California's local governments and
special districts managed by the State Treasurer's Office. LAIF is more
fully described in the Glossary (See Appendix "H.") The District shall use
LAIF as a short-term cash management facility. Investment of District
funds in LAIF shall be subject to investigation and due diligence prior to
investing, and on a continual basis to a level of review pursuant to Section
3.0, Standard of Prudence, of this Policy. See Appendix "D" for
investment pool questionnaire.
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-
Page 9
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
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 8.8.1; and repurchase agreements, as
more fully described in Section 8.13.1. Collateral will always be held by an independent
third-party, as more fully described in Section 10.1. The right of collateral substitution is
granted.
10.0 Safekeeping and Custody:
10.1 All securities transactions, including collateral for repurchase agreements,
entered into by, or on behalf of OCSD, shall be conducted on a
Page 10
delivery-versus-payment (DVP) 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
issuer, other than the U.S. government or its agencies. Investment in
mutual funds is not governed by this Section 11.3. See Section 11.8 for
conditions of purchase of mutual funds.
11.4 No individual holding shall constitute more than 5% of the total debt
outstanding of any issuer.
11.5 No more than 40% of the portfolio may be invested in banker's
acceptances.
11.6 No more than 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.
However, no more than 10% of the District's portfolio may be invested in
shares of beneficial interest of any one (1) mutual fund.
11.9 No more than 30% of the portfolio may be invested in negotiable
certificates of deposit.
11.10 No more than 10% of the portfolio may be invested in eligible municipal
bonds.
11.11 No more than 20% of the Long Term Operating Monies portfolio may be
invested in a combination of mortgage-backed securities, CMOs and
Page 11
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.
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 Districts'
five-year cash flow forecast, but may never exceed 60 months.
12.2.3 The duration of the Long Term Operating Monies account
portfolio shall never exceed 120% of the duration as established in
Page 12
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
a market cycle which exceeds the return on a market index approved by
the Administration Committee, and by the District's Board of Directors,
when the duration of the portfolio is established. This market index is more
fully described in Board Resolution No. OCSD 14-20.
14.3 The Long Term Operating Monies. The investment performance
objective for the Long Term Operating Monies shall be to earn a total rate
of return over a market cycle which exceeds the return on a market index
selected by the Administration Committee and approved by the Districts'
Board of Directors, when the duration of the portfolio is established. This
market index is more fully described in Board Resolution No. OCSD 14-
20.
15.0 Reporting:
15.1 Monthly transaction reports in accordance with California Government
Code Section 53607 shall be submitted by the Treasurer to the
Administration Committee which shall forward the reports to the District's
Board of Directors.
15.2 Quarterly investment reports shah will be submitted by the Treasurer to
the Administration Committee which shall forward the reports to the
District's Board of Directors. The gUaFtedy F,...,..... Shall be subm tted to
Page 13
this 'W-'PRtFRPRt RAkG• The quarterly reports shall provide clear and
concise status information on the District's portfolios at the end of each
reporting period, including performance measures using the benchmarks
described in Section 14.0 of this Investment Policy. Sample quarterly
reports are presented in Appendix "F." These reports shall contain listings
of individual securities held at the end of each reporting period, and shall
disclose, at a minimum, the following information about the risk
characteristics of OCSD's portfolio:
15.42.1 Cost and accurate and complete market value of the portfolio.
15.42.2 Modified duration of the portfolio compared to Benchmark.
15.42.3 Dollar change in value of the portfolio for a one-percent (1%)
change in interest rates.
15.42.4 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.
15.42.5 For the Liquid Operating Monies account only, the percent of
portfolio maturing within 90 days.
15.42.6 Average portfolio credit quality.
15.42.7 Percent of portfolio with credit ratings below "A" by any rating
agency, and a description of such securities.
15.42.8 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.
15.42.10 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
Page 14
Administration Committee.
16.0 Investment Policy Adootion 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 15
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
LAIF 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 2016 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 2016 Board only)
February Oct— Dec 2015
March
April
May Jan — March 2016
June
Jul
August Board only) Aril — June 2016
September
October
November Jul —Sept 2016
December
EXHIBIT "B"
ORANGE COUNTY SANTIATION DISTRICT
PERFORMANCE MONITORING & REPORTING SUMMARY
FOR THE
DISTRICT'S INVESTMENT PROGRAM
POLICY
REFERENCE PERFORMANCE CHARACTERISTIC REPORTING PARTY*
Chandler BNY Callan
15.1.1 Cost and market value of the portfolio(monthly mark-to-market). M, Q M, Q Q
15.1.2 Modified duration of the portfolio compared to benchmark. M, Q Q
15.1.3 Dollar change in value of the portfolio for a 1%change in interest rate. M, Q Q
15.1.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which M, Q
matches the maturity of such reverse repurchase agreements with the cash flows which
are available to repay them at maturity.
15.1.5 For the Liquid Operating Monies account only,the percent of portfolio maturing within 90 M, Q Q
days.
15.1.6 Average portfolio credit quality. M, Q Q
15.1.7 Percent of portfolio with credit ratings below"A" by any rating agency, and a description M, Q Q
of such securities.
15.1.8 Listing of any transaction or holdings which do not comply with this policy or with the M, Q
California Government Code.
15.1.9 Time-weighted total rate of return for the portfolio forthe priorthree months,twelve M, Q Q
months, year-to-date, and since inception compared to the benchmark returns for the
same periods.
ADDL* Comparison of portfolio performance to market index benchmark. M, Q Q
ADDL** Comparison of Manager's performance to peer group benchmark. Q
ADDL" Monitoring of organizational and structural changes of investment management firm. Q
ADDL** Audit portfolios for compliance with investment policy guidelines. Q
15.1.10 OCSD will report if sufficient funds are available for it to meet operating expenditure requirements for the next six months, or if
not, state the reason for the shortfall.
Notes
*M = Monthly
*Q =Quarterly
**ADDL= Monitoring of Additional Performance Characteristics
RESOLUTION NO. OCSD 15-XX
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT, AUTHORIZING THE DISTRICT'S
TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS,
AND ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT
AND PERFORMANCE BENCHMARKS; AND REPEALING
RESOLUTION NO. OCSD 14-20
WHEREAS, on December 17, 2014, the Board of Directors adopted Resolution
No. 14-20, 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 15-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 14-20 is hereby repealed.
OCSD 15-XX-2
PASSED AND ADOPTED at regular meeting of the Board of Directors, Orange
County Sanitation District held December 16, 2015.
John Nielsen
Board Chair
ATTEST:
Kelly Lore
Clerk of the Board
OCSD 15-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 15-XX was passed and
adopted at a regular meeting of said Board on the 16th day of December, 2015, by the
following vote, to wit:
AYES: None.
NOES: None.
ABSTENTIONS: None.
ABSENT: None.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of Orange County Sanitation District this 16th day of December, 2015.
Kelly A. Lore
Clerk of the Board of Directors
Orange County Sanitation District
OCSD 15-XX-4
ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir.
12/09/15 12/16/15
AGENDA REPORT Item Item Number
3
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Kelly A. Lore, Clerk of the Board
SUBJECT: CONFLICT OF INTEREST CODE
GENERAL MANAGER'S RECOMMENDATION
Adopt Resolution No. OCSD 15-XX entitled, "A Resolution of the Board of Directors of
Orange County Sanitation District adopting a Conflict of Interest Code which supersedes
all prior Conflict of Interest Codes and amendments previously adopted:'
SUMMARY
The last biennial review, and formal amendment, to the District's Conflict of Interest Code
was in March 2014. Although the Political Reform Act requires that every local agency
review its Conflict of Interest Code biennially(which would bring forth the next amendment
in 2016), staff is proposing this new amendment in order to reflect the current positions
of those designated employees that are required to file statements of economic interests.
Staff recommends that the Board of Directors adopt the 2015 Conflict of Interest Code to
reflect the following changes:
Addition and deletion of several positions
If approved by the Board, the newly approved code will be forwarded to the County of
Orange for approval.
PRIOR COMMITTEE/BOARD ACTIONS
March 2014 — Board amended the Conflict of Interest Code.
ADDITIONAL INFORMATION
N/A
CEQA
N/A
Page 1 of 2
BUDGET/PURCHASING ORDINANCE COMPLIANCE
N/A
ATTACHMENTS
The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD websim
(www.ocsd.corn with the complete agenda package:
• Proposed Resolution No. OCSD 15-XX
• Conflict of Interest Code
Page 2 of 2
RESOLUTION NO. OCSD 15-XX
A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE
COUNTY SANITATION DISTRICT ADOPTING A CONFLICT OF
INTEREST CODE WHICH SUPERSEDES ALL PRIOR CONFLICT
OF INTEREST CODES AND AMENDMENTS PREVIOUSLY
ADOPTED
WHEREAS, the Political Reform Act of 1974, Government Code Section 81000 et.
seq. ("the Act'), requires a local government agency to adopt a Conflict of Interest Code
pursuant to the Act; and
WHEREAS, the Orange County Sanitation District ('District') has previously
adopted a Conflict of Interest Code and that Code now requires updating; and
WHEREAS, amendments to the Act have in the past and foreseeably will in the
future require conforming amendments to be made to the Conflict of Interest Code; and
WHEREAS, the Fair Political Practices Commission has adopted a regulation,
2 California Code of Regulations, Section 18730, which contains terms for a standard
model Conflict of Interest Code, which, together with amendments thereto, may be
adopted by public agencies and incorporated by reference to save public agencies time
and money by minimizing the actions required of such agencies to keep their codes in
conformity with the Political Reform Act.
NOW, THEREFORE, the Board of Directors of the Orange County Sanitation
District, DOES HEREBY RESOLVE, DETERMINE AND ORDER:
Section 1. The terms of 2 California Code of Regulations, Section 18730, any
amendments to it duly adopted by the Fair Political Practices Commission, and all
additional guidance by the Fair Political Practices Commission, are hereby incorporated
by reference and, together with the 2015 Conflict of Interest Code for the Orange County
Sanitation District, including Exhibits A and B in which members and employees are
OCSD 15-XX-1
designated and disclosure categories are set forth, constitute the Conflict of Interest Code
of the Orange County Sanitation District.
Section 2. The provisions of all Conflict of Interest Codes and Amendments
thereto previously adopted by the Orange County Sanitation District are hereby
superseded.
Section 3. The Filing Officer is hereby authorized to forward a copy of this
Resolution to the Clerk of the Orange County Board of Supervisors for review and
approval by the Orange County Board of Supervisors as required by California
Government Code Section 87303.
PASSED AND ADOPTED at a regular meeting of the Board of Directors
held December 16, 2015.
John Nielsen
Board Chair
ATTEST:
Kelly Lore
Clerk of the Board
OCSD 15-XX-2
STATE OF CALIFORNIA )
ss
COUNTY OF ORANGE )
I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation
District, do hereby certify that the foregoing Resolution No. OCSD 15-XX was passed and
adopted at a regular meeting of said Board on the 16th day of December, 2015, by the
following vote, to wit:
AYES: None.
NOES: None.
ABSTENTIONS: None.
ABSENT: None.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of Orange County Sanitation District this 16th day of December, 2015.
Kelly A. Lore
Clerk of the Board of Directors
Orange County Sanitation District
OCSD 15-XX-3
2015 CONFLICT OF INTEREST CODE FOR THE
ORANGE COUNTY SANITATION DISTRICT
The Political Reform Act, Government Code Sections 81000, et seq.,
requires state and local government agencies to adopt and promulgate Conflict of
Interest Codes. The Fair Political Practices Commission has adopted a regulation
(2 Cal. Code of Regs. Section 18730) which contains the terms of a standard
Conflict of Interest Code, which may be incorporated by reference in an agency's
code. After public notice and hearing, it may be amended by the Fair Political
Practices Commission to conform to amendments in the Political Reform Act.
Therefore, the terms of 2 California Code of Regulations Section 18730, any
amendments to it duly adopted by the Fair Political Practices Commission, and all
additional guidance by the Fair Political Practices Commission, are hereby
incorporated by reference. This regulation and the attached Appendix designating
officials and employees and establishing disclosure categories, shall constitute the
Conflict of Interest Code of the Orange County Sanitation District.
Designated employees shall file statements of economic interests with the
District's Clerk of the Board who will make the statements available for public
inspection and reproduction (Government Code Section 87500). Upon receipt of
the statements of the Orange County Sanitation District Board of Directors, Orange
County Sanitation District Financing Corporation, General Manager, General
Counsel, Assistant General Manager, Director of Engineering, Director of Finance
& Administrative Services, Director of Operations & Maintenance, Director of
Facility Support Services, Director of Human Resources, and the Clerk of the
1125713.1 OOSD 15-XX-4
Board, the Filing Officer shall make and retain a copy and forward the original of
these statements to the Clerk of the Orange County Board of Supervisors.
Statements for all other designated employees will be retained by the Filing Officer.
1125713.1 OCSD 15-XX-5
EXHIBIT A
ORANGE COUNTY SANITATION DISTRICT
LIST OF DESIGNATED POSITIONS
CONFLICT OF INTEREST CODE
Disclosure
Designated Positions Categories
Accounting Supervisor OC-05
Assistant General Manager OC-01
Buyer OC-05
Capital Improvement Program Project Manager OC-41
Chief Plant Operator OC-05
Clerk of the Board OC-05
Construction Inspection Supervisor OC-05
Construction Inspector OC-10
Consultant OC-30
Contracts & Purchasing Manager OC-05
Contracts Administrator OC-05
Contracts Supervisor OC-05
Controller OC-05
*Deputy Clerk of the Board OC-05
Director of Engineering OC-41
Director of Facility Support Services OC-41
Director of Finance &Administrative Services OC-41
Director of Human Resources OC-41
Director of Operations & Maintenance OC-41
*Engineer OC-29, OC-41
Engineering Manager OC-05
Engineering Supervisor OC-05
Environmental Compliance & Regulatory Affairs Manager OC-05
Environmental Laboratory & Ocean Monitoring Manager OC-05
Environmental Supervisor OC-29
Facilities Manager OC-05
General Counsel OC-01
General Manager OC-01
*Human Resources & Risk Manager OC-11
Human Resources Supervisor OC-11
Information Technology Manager OC-08
Information Technology Supervisor OC-08
Information Technology Systems & Operations Manager OC-08
Laboratory Supervisor OC-21
Maintenance Manager OC-05
1125713.1 OOSD 15-XX-6
Maintenance Supervisor OC-05
Materials Control Supervisor OC-05
Operations Manager OC-05
Operations Supervisor OC-05
Orange County Sanitation District Financing Corporation Board OC-01
of Directors
Principal Accountant OC-41
Principal Contracts Administrator OC-05
Principal Financial Analyst OC-12
*Principal Human Resources Analyst OC-11
*Principal Public Affairs Specialist OC-05
Public Affairs Manager OC-05
Purchasing Supervisor OC-05
±RWkA4anaW OC-12
Safety & Health Supervisor OC-05
Secretary of the Orange County Financing Corporation OC-05
Senior Buyer OC-05
Senior Construction Inspection Supervisor OC-05
Senior Construction Inspector OC-10
Senior Contracts Administrator OC-05
Senior Engineer OC-05
Senior Scientist OC-21
*Source Control Supervisor OC-29
Treasurer of the Orange County Financing Corporation OC-41
*The following amendments are made:
• Human Resources & Risk Manager— modified to combine Human
Resources Manager and Risk Manager
• Principal Human Resources Analyst—added
• Principal Public Affairs Specialist— added
• Deputy Clerk of the Board — added
• Source Control Supervisor— added
• Engineer- added
1125713.1 OCSD 15-XX-7
EXHIBIT B
ORANGE COUNTY SANITATION DISTRICT
DISCLOSURE CATEGORIES
CONFLICT OF INTEREST CODE
Disclosure
Category Disclosure Description
OC-01 All interests in real property in Orange County or the District, as well as
investments, business positions and sources of income (including gifts,
loans and travel pa ments).
OC-05 All investments in, business positions with and income (including gifts,
loans and travel payments)from sources that provide services, supplies,
materials, machinery, equipment (including training and consulting
services) used by the department or District, as applicable.
OC-08 All investments in, business positions with and income (including gifts,
loans and travel payments)from sources that develop or provide
computer hardware/software, voice data communications, or data
processing goods, supplies, equipment, or services (including training
and consulting services) used by the department or District, as
applicable.
OC-10 All investments in, business positions with and income (including gifts,
loans and travel payments)from sources that are engaged in any real
estate activity including, but not limited to real estate appraisal,
development, construction, planning/architectural design, engineering,
sales, brokerage, leasing, lending, insurance, rights of way, and/or
studies; and/or property or facilities management/maintenance/custodial
and utility services as used by the department or provides capital for the
purchase of property used or sold by Orange County or the District.
OC-11 All interests in real property in Orange County or located entirely or
partly within District boundaries, as well as investments in, business
positions with and income (including gifts, loans and travel payments)
from sources that are engaged in the supply of equipment related to (i)
recruitment, employment search & marketing, classification, training, or
negotiation with personnel; (ii) employee benefits; and (iii) health and
welfare benefits.
OC-12 All interests in real property in Orange County, as well as investments
in, business positions with and income (including gifts, loans and travel
payments)from sources that invest funds or engage in the business of
insurance including, but not limited to insurance companies, carriers,
holding companies, underwriters, brokers, solicitors, agents, adjusters,
claims mangers and actuaries; from financial institutions including but
not limited to, banks, savings & loan associations and credit unions or
sources that have filed a claim, or have a claim pending, against Orange
County.
1125713.1 OCSD 15-XX-8
EXHIBIT B
ORANGE COUNTY SANITATION DISTRICT
DISCLOSURE CATEGORIES
CONFLICT OF INTEREST CODE
Disclosure
Category Disclosure Description
OC-21 All investments in, business positions with and income (including gifts,
loans and travel payments)from sources that provide laboratory or
chemical — related goods, supplies, equipment, or services (including
training and cons Iting services).
OC-29 All investments in, business positions with and income (including gifts,
loans and travel payments)from sources that are subject to inspection
or re ulation b the department.
OC-30 Consultants shall be included in the list of designated employees and
shall disclose pursuant to the broadest category in the code subject to
the following limitation: The Department Head/Director/General
Manager/SuperintendenUetc. may determine that a particular
consultant, although a "designated position," is hired to perform a range
of duties that is limited in scope and thus is not required to fully comply
with the disclosure requirements in this section. Such written
determination shall include a description of the consultant's duties and,
based upon that description, a statement of the extent of disclosure
required. The determination of disclosure is a public record and shall be
filed with the Form 700 and retained by the Filing Officer for public
inspection.
OC41 All interests in real property in Orange County or the District, as
applicable, as well as investments in, business positions with and
income (including gifts, loans and travel payments)from sources that
provide services, supplies, materials, machinery, vehicles, or equipment
(including training and consulting services) used by the department or
District, as applicable.
1125713.1 OCSD 15-XX-9
ADMINISTRATION COMMITTEE Date To ad.of Dir.
Melting09f15 —
AGENDA REPORT Item Number Item Number
a —
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative Services
SUBJECT: INVESTMENT PERFORMANCE RESULTS
GENERAL MANAGER'S RECOMMENDATION
Information only.
SUMMARY
Chandler Asset Management began serving as the District's Investment Manager in
November 2014. The portfolio manager and Senior Vice President, William Dennehy,
CFA, will be providing an informational presentation on the performance of the District's
short term and long term investment portfolios over the past year.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
N/A
CEQA
N/A
BUDGET/PURCHASE ORDINANCE COMPLIANCE
N/A
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the
complete agenda package:
N/A
Page 1 of 1
ADMINISTRATION COMMITTEE Melting Date To ad.of Dir.
Melting
-
AGENDA REPORT Item Number Item Number
s —
Orange County Sanitation District
FROM: James D. Herberg, General Manager
Originator: Bob Ghirelli, Assistant General Manager
SUBJECT: COMMUNITY OUTREACH
GENERAL MANAGER'S RECOMMENDATION
Information Only.
SUMMARY
At the Orange County Sanitation District's Strategic Planning Session on October 21, one
of the topics discussed was OCSD's community outreach efforts. As a follow up, staff will
provide an informational presentation on OCSD outreach at this month's committee
meetings.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
ADDITIONAL INFORMATION
N/A
CEQA
N/A
BUDGET/PURCHASING ORDINANCE COMPLIANCE
N/A
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the
complete agenda package:
N/A
NJA:pe
Page 1 of 1
ORANGE COUNTY SANITATION DISTRICT
Agenda
Terminology Glossary
Glossary of Terms and Abbreviations
AQMD Air Quality Management District
ASCE American Society of Civil Engineers
BOD Biochemical Oxygen Demand
CARB California Air Resources Board
CASA California Association of Sanitation Agencies
CCTV Closed Circuit Television
CEQA California Environmental Quality Act
CRWQCB California Regional Water Quality Control Board
CWA Clean Water Act
CWEA California Water Environment Association
EIR Environmental Impact Report
EMT Executive Management Team
EPA U.S. Environmental Protection Agency
FOG Fats, Oils, and Grease
FSSD Facilities Support Services Department
gpd Gallons per day
GWR System Groundwater Replenishment System (also called GWRS)
ICS Incident Command System
IERP Integrated Emergency Control Plan
LOS Level of Service
MGD Million gallons per day
NACWA National Association of Clean Water Agencies
NPDES National Pollutant Discharge Elimination System
NWRI National Water Research Institute
O&M Operations and Maintenance
OCCOG Orange County Council of Governments
OCHCA Orange County Health Care Agency
OCSD Orange County Sanitation District
OCWD Orange County Water District
GOBS Ocean Outfall Booster Station
OSHA Occupational Safety and Health Administration
POTW Publicly Owned Treatment Works
ppm Parts per million
RFP Request For Proposal
RWQCB Regional Water Quality Control Board
SARFPA Santa Ana River Flood Protection Agency
Glossary of Terms and Abbreviations
SARI Santa Ana River Inceptor
SARWQCB Santa Ana Regional Water Quality Control Board
SAWPA Santa Ana Watershed Project Authority
SCADA Supervisory Control and Data Acquisition system
SCAP Southern California Alliance of Publicly Owned Treatment Works
SCAQMD South Coast Air Quality Management District
SOCWA South Orange County Wastewater Authority
SSMP Sanitary Sewer Management Plan
SSO Sanitary Sewer Overflow
SWRCB State Water Resources Control Board
TDS Total Dissolved Solids
TMDL Total Maximum Daily Load
TSS Total Suspended Solids
WDR Waste Discharge Requirements
WEF Water Environment Federation
WERF Water Environment Research Foundation
Activated-sludge process — A secondary biological wastewater treatment process where bacteria
reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved
nutrients in the wastewater.
Benthos— The community of organisms, such as sea stars, worms and shrimp, which live on, in, or
near the seabed, also know as the benthic zone.
Biochemical Oxygen Demand (BOD)—The amount of oxygen used when organic matter undergoes
decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in
water.
Biosolids — Biosolids are nutrient rich organic and highly treated solid materials produced by the
wastewater treatment process. This high-quality product can be recycled as a soil amendment on
farm land or further processed as an earth-like product for commercial and home gardens to improve
and maintain fertile soil and stimulate plant growth.
Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets.
Also includes treatment improvements, additional capacity, and projects for the support facilities.
Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also
occasionally found elsewhere used as indicators of sewage pollution. E. coli are the most common
bacteria in wastewater.
Collections system — In wastewater, it is the system of typically underground pipes that receive and
convey sanitary wastewater or storm water.
Certificate of Participation (COP) —A type of financing where an investor purchases a share of the
lease revenues of a program rather than the bond being secured by those revenues.
Glossary of Terms and Abbreviations
Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic
wastewater contaminants.
Dilution to Threshold (D!f) — the dilution at which the majority of the people detect the odor
becomes the DrT for that air sample.
Greenhouse gases — In the order of relative abundance water vapor, carbon dioxide, methane,
nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse
effect").
Groundwater Replenishment (GWR) System — A joint water reclamation project that proactively
responds to Southern California's current and future water needs. This joint project between the
Orange County Water District and the Orange County Sanitation District provides 70 million gallons a
day of drinking quality water to replenish the local groundwater supply.
Levels of Service (LOS)—Goals to support environmental and public expectations for performance.
NDMA— N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been
found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide
with extra ultra-violet treatment.
National Biosolids Partnership (NBP) — An alliance of the National Association of Clean Water
Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S.
Environmental Protection Agency (EPA). NBP is committed to developing and advancing
environmentally sound and sustainable biosolids management practices that go beyond regulatory
compliance and promote public participation in order to enhance the credibility of local agency
biosolids programs and improved communications that lead to public acceptance.
Plume—A visible or measurable concentration of discharge from a stationary source or fixed facility.
Publicly-owned Treatment Works (POTW)— Municipal wastewater treatment plant.
Santa Ana River Interceptor (SARI) Line — A regional brine line designed to convey 30 million
gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the
ocean for disposal, after treatment.
Sanitary sewer — Separate sewer systems specifically for the carrying of domestic and industrial
wastewater. Combined sewers carry both wastewater and urban run-off.
South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that
develops plans and regulations designed to achieve public health standards by reducing emissions
from business and industry.
Secondary treatment — Biological wastewater treatment, particularly the activated-sludge process,
where bacteria and other microorganisms consume dissolved nutrients in wastewater.
Sludge—Untreated solid material created by the treatment of wastewater.
Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater.
Trickling filter — A biological secondary treatment process in which bacteria and other
microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in
wastewater as it trickles over them.
Glossary of Terms and Abbreviations
Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm
drains, rivers, lakes, and oceans.
Wastewater—Any water that enters the sanitary sewer.
Watershed —A land area from which water drains to a particular water body. OCSD's service area is
in the Santa Ana River Watershed.