Loading...
HomeMy WebLinkAbout02-24-2016 Board Meeting Agenda.pdf Orange County Sanitation District Wednesday, February 24, 2016 AND b _ 6:00 P.M. Orange County Sanitation District Board Room Financing Corporation 10844 Ellis Avenue Regular Meeting of the Fountain Valley, CA 92708 BOARD OF DIRECTORS (714) 593-7433 AGENDA CALL TO ORDER INVOCATION AND PLEDGE OF ALLEGIANCE (Teresa Smith, City of Orange) ROLL CALL DECLARATION OF QUORUM (Clerk of the Board) 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 wish to speak. Speakers will be recognized by the Chairman and are requested to limit comments to three minutes. SPECIAL PRESENTATIONS: Employee Recognition — Special Award of Appreciation to Nick Arhontes, Director of Facilities Support Services REPORTS: The Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors. CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Board of Directors, 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 Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1.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 the minutes of the Regular Board of Directors Meeting held on January 27, 2016 and the minutes of the Special Board of Directors Meeting held on February 2, 2016. 02/24/2016 OCSD Board of Directors Agenda Page 1 of 7 2. CONFLICT OF INTEREST CODE UPDATE (Clerk of the Board) RECOMMENDATION: Adopt Resolution No. OCSD 16-02 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." 3. COOPERATIVE PROCUREMENT WITH W.W. GRAINGER (Ed Torres) RECOMMENDATION: Approve a Blanket Purchase Order with W.W. Grainger, Inc. for the purchase of maintenance tools and supplies, in accordance with Ordinance No. OCSD-47, Section 2.03(B): Cooperative Procurement; for the period beginning March 1, 2016 through February 28, 2017 with three one-year renewal option years for a total amount not to exceed $275,000 per year. ADMINISTRATION COMMITTEE: 4. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve minutes of the February 10, 2016 of the Administration Committee Meeting. 5. COOPERATIVE PROCUREMENT WITH ADMIN MINNESOTA MATERIALS MANAGEMENT DIVISION (Lorenzo Tyner) RECOMMENDATION: Authorize a purchase order to procure information technology computer and peripheral equipment using the Admin Minnesota Materials Management Division contract release #C-1084(5) through the contract expiration date, December 31, 2016 for a total amount not to exceed $400,000, with four (4) one-year renewal options, in accordance with Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. 6. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner) RECOMMENDATION: Receive and file District purchases made under the General Manager's authority for the period of October 1, 2015 — December 31, 2015. 02/24/2016 OCSD Board of Directors Agenda Page 2 of 7. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF JANUARY 2016 (Lorenzo Tyner) RECOMMENDATION: Receive and file the report of the investment transactions for the month of January 2016. 8. CONSOLIDATED FINANCIAL REPORT 2ND QUARTER ENDING DECEMBER 31, 2015 (Lorenzo Tyner) RECOMMENDATION: Receive and file Orange County District Second Quarter Financial Report for the period ended December 31, 2015. 9. CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2016-17 AND FY 2017-18 TWO-YEAR BUDGET (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Approve the FY 2016-17 and FY 2017-18 budget assumptions and direct staff to incorporate these parameters in the preparation of this two-year budget. 10. WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A (Lorenzo Tyner) RECOMMENDATION: A. Adopt Resolution No. OCSD16-03, authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A, authorizing the execution and delivery of such Revenue Obligations evidencing principal in an aggregate amount of notto exceed $163,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Revenue Obligations and authorizing the execution of necessary documents and related actions; and Recommend to the Orange County Sanitation District Financing Corporation: B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Revenue Obligations in an aggregate amount not to exceed $163,000,000. Recess OCSD Board of Directors Meeting. ...................................... 02/24/2016 OCSD Board of Directors Agenda Page 3 of 7 ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION The members of the Orange County Sanitation District Board of Directors are each being compensated$212.50 for the Board Meeting; there is no additional compensation for the Financing Corporation Meeting. CALL TO ORDER: Board of Directors, Orange County Sanitation District Financing Corporation. ROLL CALL: (Clerk of the Board) APPROVAL OF MINUTES: FC-1. If no corrections or amendments are made, the minutes for the meeting held on July 22, 2015, will be deemed approved and be so ordered by the Chair. ACTION ITEM: FC-2. RECOMMENDATION: Adopt Resolution No. FC-24 entitled; "A Resolution of the Board of Directors of the Orange County Sanitation District Financing Corporation Authorizing the execution and delivery by the Corporation of an Installment Purchase Agreement and a Trust Agreement in connection with the execution and delivery of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A, Authorizing the Execution and Delivery of such Revenue obligations evidencing principal in an aggregate amount of not to exceed $163,000,000 and authorizing the execution of necessary document and related actions." Adjourn, Board of Directors, Orange County Sanitation District Financing Corporation. . . . . . . . . . . . . . . . . . . 02/24/2016 OCSD Board of Directors Agenda Page 4 of 7 Reconvene, Board of Directors, Orange County Sanitation District. LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE: 11. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve minutes of the February 8, 2016 of the Legislative and Public Affairs Committee Meeting. STEERING COMMITTEE: 12. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve minutes of the January 27, 2016 meeting of the Steering Committee. 13. LABOR RELATIONS - CONTRACT NEGOTIATIONS (Celia Chandler) RECOMMENDATION: Authorize the Board Chair to execute an agreement with the external Chief Negotiator selected by the Ad Hoc Committee. 14. ALTERNATIVE APPROACHES TO INTEGRATED REGIONAL WATER MANAGEMENT (Bob Ghirelli) RECOMMENDATION: Information Only. NON-CONSENT CALENDAR: 15. NEWHOPE - PLACENTIA TRUNK SEWER REPLACEMENT (FULLERTON/ ANAHEIM SEGMENT "A"), CONTRACT NO. 2-72A (Rob Thompson) A. Receive and file Addendum to the 1999 OCSD Strategic Plan Program Environmental Impact Report for additional project analysis for the Newhope-Placentia Trunk Sewer Replacement (Fullerton/Anaheim Segment "A"), Contract No. 2-72A; B. Receive and file bid tabulation and recommendation; C. Award a Construction Contractto Trautwein Construction Inc.for Newhope- Placentia Trunk Sewer Replacement (Fullerton/Anaheim Segment "A"), Contract No. 2-72A, for a total amount not to exceed $21,134,650; and D. Approve a contingency of$2,113,465 (10%). 02/24/2016 OCSD Board of Directors Agenda Page 5 of 7 16. SECOND READING OF PROPOSED ADOPTION OF WASTEWATER DISCHARGE REGULATIONS, ORDINANCE NO. OCSD-48 (Rob Thompson) RECOMMENDATION: A. Motion to read Ordinance No. OCSD-48 by title only and waive reading of said entire Ordinance; and B. Adopt Ordinance No. OCSD48, entitled "An Ordinance of the Board of Directors of Orange County Sanitation District Establishing Wastewater Discharge Regulations, Revising Articles 1 through 8, and repealing Ordinance No. OCSD-39"; and C. Direct the Clerk of the Board to publish summaries of the Ordinance as required by law. AB 1234 REPORTS: INFORMATION ITEMS: CLOSED SESSION: During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate negotiations,pending or potentiallitigation,or personnel matters,pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a)purchase and sale of real property; (b) matters of pending or potential litigation; (c)employment actions or negotiations with employee representatives;or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information. CONVENE IN CLOSED SESSION. (1) CONFERENCE WITH LEGAL COUNSEL RE EXISTING LITIGATION (Government Code Section 54956.9(d)(1)) Number of Cases: 1 Klean Waters, Inc. v. Orange County Sanitation District, United States District Court, Central District of California, Southern Division, Case No. 8:15-cv-00627-JVS-FFM. RECONVENE IN REGULAR SESSION. 02/24/2016 OCSD Board of Directors Agenda Page 6 of 7 CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: Adjourn the Board meeting until the Regular Board of Directors Meeting on March 23, 2016, at 6:00 p.m. Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at(714) 593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda 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, and on the Sanitation District's website at www.ocsd.com, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda Hem,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 a Committee or Board 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 Jim Herberg (714)593-7300 iherbem(o)ocsd.com Assistant General Manager Bob Ghirelli (714)593-7400 rghirelli(docsd.com Director of Engineering Rob Thompson (714)593-7310 r homuson(docsd.com Director of Facilities Support Services Nick Arhontes (714)593-7210 namontes(docsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Ityneraocsd.cem Administrative Services Director of Human Resources Celia Chandler (714)593-7202 cchandler(domd.com Director of Operations&Maintenance Ed Torres 714 593-7080 etorres ocsd.com 02/24/2016 OCSD Board of Directors Agenda Page 7 of ITEM NO. 1A Orange County Sanitation District MINUTES BOARD MEETING January 27, 2016 ANITAT� 9 U N 2 � t o � �cl�N HE ENV�Q,� Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018 0 112 712 01 6 Minutes of Board Meeting Page 1 of 15 ROLL CALL A regular meeting of the Board of Directors of the Orange County Sanitation District was held on January 27, 2016, at 6:07 p.m., in the Administration Building. Director Steven Choi delivered the invocation and led the Pledge of Allegiance. 1. MOVED, SECONDED, AND DULY CARRIED TO: Receive and file Minute Excerpts of member agencies relating to appointments to the Orange County Sanitation District Board, as follows and amended: City/Agencv Active Director Alternate Director City of Brea Glenn Parker Cecilia Hupp City of Fountain Valley Steve Nagel Cheryl Brothers City of Huntington Beach Jim Katapodis Erik Petersen City of Irvine Steven Choi Lynn Schott City of La Palma Peter Kim Michelle Steggell City of Newport Beach Keith Curry Scott Peotter City of Placentia Chad Wanke Constance Underhill City of Seal Beach Ellery Deaton Sandra Massa-Lavitt City of Stanton David Shawver Carol Warren City of Tustin John Nielsen Allan Bernstein City of Villa Park Greg Mills Diana Fascenelli Costa Mesa Sanitary Dist. James Ferryman Bob Ooten Irvine Ranch Water District John Withers Douglas Reinhart Yorba Linda Water District Robert Kiley Michael Beverage City of Buena Park Fred Smith Virginia Vaughn City of Santa Ana Sal Tinajero David Benavides AYES: Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Wanks; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Bartlett and Tinajero The Clerk of the Board stated late communication was received after the posting of the agenda which was placed in the Directors books and has been made available to the public. 01W/2016 Minutes of Board Meeting Page 2 of 15 The Clerk of the Board declared a quorum present as follows: ACTIVE DIRECTORS ALTERNATE DIRECTORS X John Nielsen, Chair Allan Bernstein X Gregory Sebourn, Vice Chair Doug Chaffee X Lisa Bartlett Michelle Steel X Tom Beamish Tim Shaw X Steven Choi Lynn Schott X Keith Curry Scott Peotter X Ellery Deaton Sandra Massa-Lavitt X Joy Neugebauer Al Krippner X James M. Ferryman Bob Ooten X Steven Jones Kris Beard Jim Katapodis X Erik Peterson X Robert Kiley Michael Beverage X Peter Kim Michele Steggell X Lucille Kring Jordan Brandman X Greg Mills Diana Fascenelli X Richard Murphy Shelley Hasselbrink X Steve Nagel Cheryl Brothers X Glenn Parker Cecilia Hupp X David Shawver Carol Warren X Fred Smith Steve Berry X Teresa Smith Mark Murphy A Sal Tinajero David Benavides X Chad Wanke Constance Underhill X John Withers Douglas Reinhart X Mariellen Yarc Stacy Berry STAFF MEMBERS PRESENT: Jim Herberg, General Manager; Bob Ghirelli, Assistant General Manager; Lorenzo Tyner, Director of Finance & Administrative Services; Rob Thompson, Director of Engineering; Celia Chandler, Director of Human Resources; Nick Arhontes, Director of Facility Support Services; Ed Torres, Director of Operations & Maintenance; Kelly Lore, Clerk of the Board; Tina Knapp, Deputy Clerk of the Board; Jennifer Cabral; Rich Castillon; Jim Colston; Norbert Gaia; Al Garcia; Mark Kawamoto; Mark Manzo; Gerry Matthews; Andrew Nau; Lisa Rothbart; Julian Sabri; Roya Sohanaki; and Chris Stacklin. OTHERS PRESENT: Brad Hogin (General Counsel); Allen Bernstein (Alternate Director Tustin); Michael Beverage (Alternate Director YLWD); Rich ten Bosch Black & Veatch; Cheryl Brothers (Alternate Director Fountain Valley); Dan Bunce, Brown and Caldwell; Jason Gambito, AEC; Lucas Gilbert, SAWPA; Vince Guilian, Stepan; Man Huynh, AEC; Kelley Jimenez; Deanna and Brian Kondrath, Paws and Claws Aquamation; Sandra Massa-Levitt (Alternate Director Seal Beach); Mark McDaniel, Paws and Claws; 01W/2016 Minutes of Board Meeting Page 3 of 15 Lisa Ohlund, EOCWD; Bob Ooten (Alternate Director CMSD); Craig Raten, Stepan; and Marina Zeledon, Stepan. PUBLIC COMMENTS: Chair Nielsen stated that requests to speak regarding a specific item would have the ability to speak at that time the item is called. There were no objections and no public comment. SPECIAL PRESENTATIONS: None. Director Bartlett arrived at 6:13 p.m. REPORTS: Chair Nielsen announced the following: OCSD will be hosting the Association of California Cities, Orange County (ACC-OC) meeting and tour at 3:00 p.m. on January 28; and a Special Meeting of the Board of Directors at 10:00 a.m. on Tuesday, February 2, which will include a presentation and tour with the SAWPA Commission members and staff. Chair Nielsen provided a short background and explanation of Item Nos. 19 and 20 which have been brought forth by the GWRS Steering Committee. General Manager Jim Herberg reminded the Board that the Operations Committee Meeting of February 3, 2016 has been cancelled. Director Neugebauer requested that Item 6 be pulled from the Consent Calendar and heard separately. CONSENT CALENDAR: 2. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve the minutes of the Regular Board of Directors Meeting held on December 16, 2015. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: T. Smith ABSENT: Tinajero 01W/2016 Minutes of Board Meeting Page 4 of 15 3. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF DECEMBER 2015 (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Receive and file the report of the investment transactions for the month of December 2015. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: Kim ABSENT: Tinajero 4. DEFERRED PAYMENT AGREEMENT FOR CHARGES AND FEES OWED BY ONE INDUSTRIAL WASTEWATER DISCHARGE PERMITTEE (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Approve the deferred payment agreement negotiated by the General Manager for collection of all charges and fees owed for sanitary sewer service charges, plus interest of 5-25% annum, with Aseptic Technology, in a form approved by General Counsel. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 5. MAXIM SECURITY SYSTEMS, INC. MAINTENANCE AND SERVICES (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: A. Authorize an additional $250,000 to purchase order #105299 OB with Maxim Security Systems, Inc.for utilizing Eastern Municipal Water District's (EMWD) Cooperative agreement#85939, for a total amount not to exceed $335,000, in accordance with Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases; and B. Authorize purchases of information technology security systems, services and software/hardware maintenance using the EMWD's cooperative agreement #85939, commencing October 1, 2016 through September 30, 2018, for a total amount not to exceed $335,000, in accordance with 01W/2016 Minutes of Board Meeting Page 5 of 15 Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases, with four (4) one-year renewal options. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero Chair Nielsen pulled Item 6 for separate consideration. Director Neugebauer questioned the recommendation and legality of the transfer of a 'Sole Source Agreement." General Counsel Brad Hogin assured the Board of its legality and stated the previous contract would be terminated if the item is approved. 6. SALES TAX REIMBURSEMENTS FOR CHEMICAL PURCHASES (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Approve a Sole Source Agreement for Tax Consulting and Advocacy Services with Dakessian Law, Ltd. regarding pursuit of refunds for sales tax paid on chemical purchases. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kring; R. Murphy; Nagel; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: Neugebauer and Mills ABSTENTIONS: Kim ABSENT: Tinajero OPERATIONS COMMITTEE: 7. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the January 6, 2016, Operations Committee Meeting. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 01W/2016 Minutes of Board Meeting Page 6 of 15 8. UNIFORMS AND JANITORIAL ARTICLES RENTAL SERVICE, SPECIFICATION NO. 5-2015-675BD-R (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: A. Award Purchase Order Contract to Prudential Overall Supply for Uniform and Janitorial Articles Rental Service, Specification No. S-2015-675BD-R, for one 3-year period (04/01/2016 — 03/31/2019) for an amount not to exceed $493,370.28 with one 3-year renewal option; and B. Approve a contingency of$49,337 (10%). AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 9. PLANT 1 POTABLE WATER SYSTEM IMPROVEMENTS, PROJECT NO. FE09-04 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: Approve a construction contingency increase of $25,275 (15%) to the construction contract with ODC Engineering and Technology forthe Plant 1 Potable Water System Improvements, Project FE09-04, for a total construction contingency of$50,550 (30%). AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 10. SCADA SYSTEM AND NETWORK UPGRADES, PROJECT NO. P2-107 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a Professional Design Services Agreement with Brown R Caldwell to provide engineering design services for the SCADA System and Network Upgrade, Project No. P2-107,for an amount not to exceed $2,818,197; and B. Approve a contingency of$281,820 (10%). AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; 01W/2016 Minutes of Board Meeting Page 7 of 15 Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 11. CHANGE ORDER TO BRENNTAG PACIFIC CAUSTIC SODA SPECIFICATION NO. C-2013-560 (Ed Torres) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a Change Order for an additional amount of $184,800 for 25% Caustic Soda (Sodium Hydroxide), Purchase Order Specification No. C- 2013-560 with Brenntag Pacific for chemical scrubbers at both Plant No. 1 and Plant No. 2, for the period of July 1, 2015 through June 30, 2016, for a unit price of$560.52 per dry ton (delivery and applicable sales tax included) for a total estimated annual amount of$280,000 with one remaining year of renewal; and B. Approve a (10%) unit price contingency. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 12. REHABILITATION OF WESTERN REGIONAL SEWERS, PROJECT NO. 3-64 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve an increase in the project budget from $112,222,000 to $125,000,000; B. Approve a Professional Design Services Agreement with AECOM Technical Services, Inc., to provide engineering services for Rehabilitation of Western Regional Sewers, Project No. 3-64,for an amount not to exceed $17,639,250; and C. Approve a contingency of$1,763,925 (10%). AYES: Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: Bartlett ABSENT: Tinajero 01W/2016 Minutes of Board Meeting Page 8 of 15 ADMINISTRATION COMMITTEE: 13. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve minutes of the December 9, 2015 of the Administration Committee Meeting. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: Mills ABSENT: Tinajero STEERING COMMITTEE: 14. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve minutes of the December 16, 2015 meeting of the Steering Committee. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 15. GENERAL MANAGER'S FY 2015-2016 WORK PLAN MID-YEAR UPDATE (Jim Herberg) MOVED, SECONDED, AND DULY CARRIED TO: Receive and file the General Manager's Fiscal Year 2015-2016 Work Plan Mid-Year Update. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero 01W/2016 Minutes of Board Meeting Page 9 of 15 16. LABOR RELATIONS — CONTRACT NEGOTIATIONS (Celia Chandler) MOVED, SECONDED, AND DULY CARRIED TO: Authorize/Direct the Steering Committee to form an Ad Hoc Committee for the purpose of interviewing and selecting an external Chief Negotiator for the upcoming contract negotiations with all six (6) bargaining units at the Orange County Sanitation District;and the Board Chair will select the Ad Hoc Committee members. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer, Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero Chair Nielsen pulled Item 17 for separate consideration and called upon the following speakers: Paul Cook, General Manager, Irvine Ranch Water District (IRWD) spoke in favor of Item 17. At the request of Chair Nielsen, Mr. Cook clarified certain technical issues regarding additional flows in perpetuity mentioned in the agreement. Lisa Ohlund, General Manager, East Orange County Water District (EOCWD) spoke in regards to Item 17, stating that the alternate agreement with EOCWD allows all current area and any annexed area flows be committed to OCSD in perpetuity. She further stated that was not included in the proposed IRWD agreement. General Counsel, Brad Hogin and Mr. Herberg responded to questions from the Directors and clarified that the prohibition on diversion of wastewater was status quo under both agreements; and that the terms "annexation' and "expansion' were concluded to have the same meaning under this agreement. 17. LOCAL SEWER FACILITIES TRANSFER AGREEMENT WITH IRVINE RANCH WATER DISTRICT (Jim Herberg) MOVED, SECONDED,AND DULY CARRIED TO: Approve Local Sewer Facilities Transfer Agreement with Irvine Ranch Water District regarding the transfer of local sewers in Service Area 7. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Sebourn; Shawver; F. Smith; Wanks; and Yarc NOES: Mills; Peterson (Alternate) and T. Smith ABSTENTIONS: Withers ABSENT: Tinajero 01W/2015 Minutes of Board Meeting Page 10 of 15 LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE: 18. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve minutes of the December 14, 2015 meeting of the Legislative and Public Affairs Committee. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero GWRS STEERING COMMITTEE: Assistant General Manager Bob Ghirelli introduced and provided a brief background of the item. 19. OCSD JOINT RESOLUTION WITH OCWD OF SUPPORT FOR THE METROPOLITAN WATER DISTRICT INDIRECT POTABLE REUSE PROJECT (Bob Ghirelli) MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD 16-01 entitled, "A Resolution of the Board of Directors of Orange County Water District and the Orange County Sanitation District supporting the Metropolitan Water District of Southern California's efforts to develop a Groundwater Replenishment System type project with Los Angeles County Sanitation District No. in the City of Carson." AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero Mr. Ghirelli introduced and provided a brief background of the proposed legislation and the educational purposes of the item. Director Shawver suggested that a website link to the educational program be listed on the bottle. 20. CO-SPONSOR PROPOSED BILL TO BOTTLE ADVANCED PURIFIED WATER FOR EDUCATIONAL PURPOSES (Bob Ghirelli) MOVED, SECONDED, AND DULY CARRIED TO: Ratify and approve the GWRS Steering Committee recommendation to co-sponsor with Orange County Water 01W/2016 Minutes of Board Meeting Page 11 of 15 District (OCWD) proposed legislation to bottle GWRS water for educational purposes and emergencies. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero Director Withers departed the meeting at 6:41 p.m. NON-CONSENT CALENDAR: Director of Finance and Administrative Services, Lorenzo Tyner introduced and provided a brief background of the item; addressed timing concerns; and clarified that the 19 million in savings suggested by this refunding is "net' savings. 21. WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Authorize the General Manager to issue new fixed rate Certificates of Participation (COP), to be referred to as Wastewater Refunding Revenue Obligations, in an amount sufficient to refund up to $162,780,000 of COP Series 2009A. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Wanke; and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero and Withers Chair Nielsen announced Public Comment would be heard at this time and called upon the following speakers: Brian Kondrath, co-owner of Paws and Claws Aquamation, spoke in opposition of proposed Ordinance OCSD 48 Article 2. Section 212. Prohibition on Liquefaction. Deanna Kondrath, co-owner of Paws and Claws Aquamation, spoke in opposition of proposed Ordinance OCSD 48 Article 2. Section 212. Prohibition on Liquefaction. Jason Dadakis, Director of Health and Regulatory Affairs, Orange County Water District, spoke in favor of the item. Director of Engineering introduced Environmental Compliance Manager, Jim Colston who provided information regarding the proposed Ordinance including changes to the Enforcement and the Appeals processes that were made after the introduction of the Ordinance at the Operations Committee. Mr. Colston referred to an article published 01W/2016 Minutes of Board Meeting Page 12 of 15 today in the Orange County Register regarding the proposed prohibition on liquefaction, and briefly summarized communications received. Concerns were raised and staff responded to questions regarding: Lack of scientific evidence backing prohibition; public perception; acceptable levels of pollutants based on sampling data; unfair burdens placed upon business owners; lack of communication to applicant; assurance of validity of the data reported to the public; business tributary to SARI line; City imposed conditional use requirements; and the need for further investigation and evaluation of the discharge of liquefaction. Considerable discussion ensued, and an alternate recommendation was made. 22. PROPOSED ADOPTION OF WASTEWATER DISCHARGE REGULATIONS, ORDINANCE NO. OCSD-48 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Introduce Ordinance No. OCSD-48, entitled "An Ordinance of the Board of Directors of Orange County Sanitation District Establishing Wastewater Discharge Regulations, Revising Articles 1 through 8, and repealing Ordinance No. OCSD-39" for first reading at the January 27, 2016 Board meeting'; and B. Motion to read Ordinance No. OCSD-48 by title only and waive reading of said entire Ordinance on January 27, 2016; and C. Set February 24, 2016, as the date for the second reading and adoption of Ordinance No. OCSD-48; and D. Direct the Clerk of the Board to publish summaries of the Ordinance as required by law; and E. Article 2. Section 21 Z Prohibition on Liquefaction will be deleted. AYES: Bartlett; Beamish; Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Wanke; and Yarc NOES: None ABSTENTIONS: None ABSENT: Tinajero and Withers General Counsel, Brad Hogin, stated a correction for the record regarding Item 17, in which his previous statement that the two agreements were substantially the same in regards to annexations and reorganization, was in fact not correct. He stated that after further review of the second amendment to the agreement with East Orange County Water District, the provisions of Annexation and Reorganization were slightly different than the IRWD agreement. He provided the Board opportunity for a motion of reconsideration, to which there was none. 01W/2016 Minutes of Board Meeting Page 13 of 15 AB 1234 REPORTS: Director Ferryman provided a brief report on the Borders Committee Meeting attended January 22, and stated that the OCCOG meeting will be held tomorrow at 10:30 a.m. Chair Nielsen stated that he will report on the CASA Winter Conference at the next meeting. INFORMATION ITEMS: None. CLOSED SESSION: CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS: 54956.9(d)(1) and 54957 The Board convened in closed session at 7:34 p.m. to discuss two items. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Sections and are maintained by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee Closed Session Meetings. Directors Beamish, Ferryman, and Wanke departed the meeting during Closed Session at 8:10 p.m. RECONVENED IN REGULAR SESSION: The Board reconvened in regular session at 8:15 p.m. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: At 8:17 p.m. Chair Nielsen adjourned the meeting until the Regular Board Meeting on February 24, 2016 at 6:00 p.m. 01W/2016 Minutes of Board Meeting Page 14 of 15 Kelly A. Lore Clerk of the Board 01W/2016 Minutes of Board Meeting Page 15 of 15 ITEM NO. 1 B Orange County Sanitation District MINUTES SPECIAL BOARD MEETING OCSD/SAWPA Tour February 2, 2016 V�JNjy SANIIgTjQy Q ? ¢ c� o � Fcl�N FIE ENv`P0� Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018 0 210 212 01 6 Minutes of Board Meeting Page 1 of 3 ROLL CALL A Special meeting of the Board of Directors of the Orange County Sanitation District was held on February 2, 2016, at 10:05 a.m., in the Administration Building. Chair Nielsen called the meeting to order and led the Pledge of Allegiance. The Board of Directors were present as follows: ACTIVE DIRECTORS ALTERNATE DIRECTORS X John Nielsen, Chair Allan Bernstein Gregory Sebourn Doug Chaffee Lisa Bartlett Michelle Steel X Tom Beamish Tim Shaw Steven Choi Lynn Schott Keith Curry Scott Peotter Ellery Deaton Sandra Massa-Lavitt James M. Ferryman Bob Dolan Steven Jones Kris Beard Jim Katapodis Erik Peterson X Robert Kiley Michael Beverage X Peter Kim Michele Steggell Lucille Kring James Vanderbilt X Greg Mills Diana Fascenelli Richard Murphy Shelley Hasselbrink X Steve Nagel Cheryl Brothers X Joy Neugebauer Al Krippner Glenn Parker Cecilia Hupp X David Shawver Carol Warren Fred Smith Virginia Vaughn Teresa Smith Mark Murphy Sal Tinajero David Benavides Chad Wanke Constance Underhill X John Withers Douglas Reinhart Mariellen Yarc Stacy Berry STAFF MEMBERS PRESENT: Jim Herberg, General Manager; Bob Ghirelli, Assistant General Manager; Rob Thompson, Director of Engineering; Celia Chandler, Director of Human Resources; Ed Torres, Director of Operations & Maintenance; Kelly Lore, Clerk of the Board; Tina Knapp, Deputy Clerk of the Board; Jennifer Cabral; Norbert Gaia; and Al Garcia. 02/02/2016 Minutes of Board Meeting Page 2 of 3 OTHERS PRESENT: Thomas P. Evans (SAWPA Commission Chair); Ed Killgore (SAWPA Commission Vice Chair); Phil Anthony (SAWPA Commissioner); Ray Rena (SAWPA Alternate Commissioner); Jasmin Hall (SAWPA Alternate Commissioner); Steve Copelan (SAWPA Alternate Commissioner); Celeste Cantu (SAWPA General Manager); Rich Haller (SAWPA Executive Manager, Engineering & Operations); David P. Ruhl (SAWPA Program Manager); Carlos Quintero (SAWPA Senior Project Manager); and Kelly Berry (SAWPA Clerk of the Board/Administrative Services Manager). PUBLIC COMMENTS: None. WELCOME & OPENING REMARKS: (Jim Herberg, General Manager) Chair Nielsen welcomed everyone to the meeting, briefly outlined the plan for the day, and introduced Thomas Evans, SAWPA Commission Chair. SAWPA Commission Chair Evans welcomed everyone to the meeting, thanked OCSD for hosting the day, and introduced the SAWPA Commissioners and staff in attendance. General Manager Jim Herberg welcomed everyone, introduced the OCSD Directors and staff present, and provided direction for beginning the tour, which commenced thereafter. Chair Nielsen departed the meeting at 10:10 a.m. TOURS: The group toured both the Orange County Sanitation District and Groundwater Replenishment System facilities. Director Kim and Director Shawver departed the meeting at 11:00 a.m. At the conclusion of the tour, General Manager Jim Herberg made a presentation on OCSD highlighting general topics of interest, including resource recovery. ADJOURNMENT: At 12:57 p.m. Director Withers adjourned the meeting until the Regular Board Meeting on February 24, 2016 at 6:00 p.m. Kelly A. Lore Clerk of the Board 02/02/2016 Minutes of Board Meeting Page 3 of 3 BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. O2/24/16 AGENDA REPORT ItemNumber IemNumber z 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 16-02 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 BACKGROUND The last biennial review, and formal amendment, to the District's Conflict of Interest Code was in December of 2015. 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 2017), 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 RELEVANT STANDARDS • Political Reform Act, Government Code Sections 81000, at seq • California Government Code Section 87300-87306 • Fair Political Practices Commission (2 Cal. Code of Regs. Section 18100, et seq.) PROBLEM With the reorganization of the District workforce, one designated employee will be eliminated and one designated employee will be created, both positions are required to file statements of economic interest. PROPOSED SOLUTION Staff recommends that the Board of Directors adopt the updated 2016 Conflict of Interest Code to reflect the following changes: • Deletion of Director of Facility Support Services (effective March 19, 2016) • Addition of Director of Environmental Services (effective March 20, 2016) Page 1 of 2 If approved by the Board, the newly approved code will be forwarded to the County of Orange for amendment approval. TIMING CONCERNS The changes in position control will take place in mid-March 2016, and therefore cannot wait until a future meeting. RAMIFICATIONS OF NOT TAKING ACTION Non-compliance with state law. PRIOR COMMITTEE/BOARD ACTIONS December2015—Board of Directors amended the Conflict of Interest Code and approved Resolution No. OCSD 15-26. 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 website (www.ocsd.com) with the complete agenda package: • Proposed Resolution No. OCSD 16-02 • Conflict of Interest Code Page 2 of 2 RESOLUTION NO. OCSD 16-02 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 2016 Conflict of Interest Code for the Orange County Sanitation District, including Exhibits A and B in which members and employees are OCSD 16-02-1 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 February 24, 2016 John Nielsen Board Chair ATTEST: Kelly Lore Clerk of the Board OCSD 16-02-2 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-02 was passed and adopted at a regular meeting of said Board on the 24th day of February 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 24th day of February 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District OCSD 16-02-3 2016 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 Environmental Services, Director of Human Resources, and the Clerk of the Board, 1125713.1 OCSD 16-02-4 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 16-02-5 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 Environmental Services OC41 added effective 3120116 deleted effective 3119/16 11 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 1 OC-08 1125713.1 OCSD 16-02-6 Information Technology Systems & Operations Manager OC-08 Laboratory Supervisor OC-21 Maintenance Manager OC-05 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 OC41 Principal Contracts Administrator OC-05 Principal Financial Analyst OC-12 Principal Human Resources Analyst OCA 1 Principal Public Affairs Specialist OC-05 Public Affairs Manager OC-05 Purchasing Supervisor OC-05 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 OCA0 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: • Director of Facility Support Services— Delete effective March 19, 2016 • Director of Environmental Services—Add effective March 20, 2016 1125713.1 OCSD 16-02-7 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 16-02-8 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 16-02-9 BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. -- 02/24/16 AGENDA REPORT Item Item 3 Orange County Sanitation District FROM: James D. Herberg, General Manager Ed Torres, Director of Operations and Maintenance SUBJECT: COOPERATIVE PROCUREMENT WITH W.W. GRAINGER GENERAL MANAGER'S RECOMMENDATION Approve a Blanket Purchase Order with W.W. Grainger, Inc. for the purchase of maintenance tools and supplies, in accordance with Ordinance No. OCSD47, Section 2.03(B): Cooperative Procurement; for the period beginning March 1, 2016 through February 28, 2017 with three one-year renewal option years for a total amount not to exceed $275,000 per year. SUMMARY BACKGROUND In order to properly maintain and repair Orange County Sanitation District (OCSD) facilities the Operations and Maintenance Department require parts and supplies which may be one-time purchases, or purchased infrequently such that it is not appropriate to stock them in the OCSD's warehouse. RELEVANT STANDARDS • Participate in National Joint Powers Authority (NJPA) cooperative purchasing program. • Stable rates, no large unforeseen rate increases PROBLEM The current Blanket Purchase Order(BPO)with Grainger expires February 29, 2016. Without this agreement in place procurement of parts and supplies necessary for day to day repairs could be delayed and could result in higher individual procurement costs. PROPOSED SOLUTION Approve a BPO with Grainger thereby allowing quick procurement and stable pricing of necessary small tools and equipment for day to day repairs. Page 1 of 3 TIMING CONCERNS The current BPO contract for W.W. Grainger expires on 02/29/16. Approval of a new contract with W.W. Grainger, proposed to start on 03/01/16, will alleviate the demand on Purchasing and Maintenance to individually procure parts and supplies. RAMIFICATIONS OF NOT TAKING ACTION Increased time to procure needed parts and supplies and potentially higher costs. PRIOR COMMITTEE/BOARD ACTIONS February 2014 - Operations Committee approved a BPO for purchases of maintenance tools and supplies from W.W. Grainger, Inc., for a total amount not to exceed $200,000 with (3) additional one-year option periods. ADDITIONAL INFORMATION The National Association of State Procurement Officers (NASPO, formerly WSCA- NASPO) agreements are available to all State of California governmental entities (State agencies, cities, counties, special districts, school districts, universities, etc.) that expend public funds for the acquisition of both goods and services. The State of California purchases a wide variety of goods and services ranging from pencils to temporary labor under these agreements. Annual purchases total nearly $10 billion. The Procurement Division (PD) is the central purchasing authority for all State departments and local government agencies. With a massive marketplace and billions of dollars in purchasing power they are able to offer a lower procurement cost to California's State, County, City, Special District, education and other government entities through their Leveraged Procurement Agreements (LPAs). LPAs allow entities/agencies to buy directly from suppliers through existing contracts and agreements. One of the LPAs that the state offers to California governmental agencies is the National Association of State Procurement Officers (NASPO, formerly WSCA-NASPO) for Commodities, IT Goods & Services, and Telecommunication Goods and Services. CEQA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. Page 2 of 3 Date of Approval Contract Amount Contingency Annual Budget $ 275,000 $ 0 ATTACHMENTS N/A Page 3 of 3 ITEM NO. 4 MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, February 10, 2016, at 5:00 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chair Curry on February 10, 2016, at 5:00 p.m., in the Administration Building of the Orange County Sanitation District. Director Greg Mills 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 Bob Ooten (Alternate) Rob Thompson, Director of Engineering Peter Kim Lorenzo Tyner, Director of Finance & Greg Mills Administrative Services Joy Neugebauer Kelly Lore, Clerk of the Board Teresa Smith Tina Knapp, Deputy Clerk of the Board Sal Tinajero Mike White, Controller John Nielsen, Board Chair Norbert Gaia Greg Sebourn, Board Vice-Chair Mark Manzo Damein Frabizio COMMITTEE MEMBERS ABSENT: Alfredo Garcia Jim Katapodis Glenn Parker OTHERS PRESENT: Kendra Carney, Associate General Counsel PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chair Curry did not provide a report. REPORT OF GENERAL MANAGER: General Manager Jim Herberg reminded the Committee of the upcoming District holiday closures on Friday, February 12, 2016 (Lincoln's Birthday) and Monday, February 15, 2016 (Presidents' Day). MOM Administration Committee Minutes Page 1 of 6 REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: Director of Finance and Administrative Services Lorenzo Tyner reported that in October 2015 a co-operative agreement was approved to allow for the purchase of approximately $500,000 of data recovery equipment. Two purchases were made, which between them exceeded $100,000. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED AND DULY CARRIED TO: Approve Corrected Minutes of the December 9, 2015 Administration Committee Meeting. AYES: Curry, Kim, Kring, Nielsen, Neugebauer, Ooten (Alternate), and Sebourn NOES: None ABSTENTIONS: Mills ABSENT: Choi, Katapodis, Parker, T. Smith, and Tinajero 2. COOPERATIVE PROCUREMENT WITH ADMIN MINNESOTA MATERIALS MANAGEMENT DIVISION (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize a purchase order to procure information technology computer and peripheral equipment using the Admin Minnesota Materials Management Division contract releas, #C-1084(5) through the contract expiration date, December 31, 2016 for a total amount not to exceed $400,000, with four (4) one-year renewal options, in accordance with Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. AYES: Curry, Kim, Kring, Mills, Nielsen, Neugebauer, Ooten (Alternate), and Seboum NOES: None ABSTENTIONS: None ABSENT: Choi, Katapodis, Parker, T. Smith, and Tinajero 3. OUTSIDE ACTIVITIES — EXECUTIVE MANAGEMENT TEAM MEMBER (Celia Chandler) MOVED, SECONDED AND DULY CARRIED TO: Approve outside activities for one member of the District's Executive Management Team, in accordance with the employee's At-Will Employment Agreement. AYES: Curry, Kim, Kring, Mills, Nielsen, Neugebauer, Ooten (Alternate), and Seboum MOM Administration Committee Minutes Page 2 of NOES: None ABSTENTIONS: None ABSENT: Choi, Katapodis, Parker, T. Smith, and Tinajero 4. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file District purchases made under the General Manager's authority for the period of October 1, 2015 — December 31, 2015. AYES: Curry, Kim, Kring, Mills, Nielsen, Neugebauer, Ooten (Alternate), and Seboum NOES: None ABSTENTIONS: None ABSENT: Choi, Katapodis, Parker, T. Smith, and Tinajero 5. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF JANUARY 2016 (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the report of the investment transactions for the month of January 2016. AYES: Curry, Kring, Mills, Nielsen, Neugebauer, Ooten (Alternate), and Sebourn NOES: None ABSTENTIONS: Kim ABSENT: Choi, Katapodis, Parker, T. Smith, and Tinajero 6. CONSOLIDATED FINANCIAL REPORT 2ND QUARTER ENDING DECEMBER 31, 2015 (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file Orange County District Second Quarter Financial Report for the period ended December 31, 2015. AYES: Curry, Kim, Kring, Mills, Nielsen, Neugebauer, Ooten (Alternate), and Seboum NOES: None ABSTENTIONS: None ABSENT: Choi, Katapodis, Parker, T. Smith, and Tinajero 0&10116 Administration Committee Minutes Page 3 of 6 NON-CONSENT CALENDAR: Director of Finance and Administrative Services Lorenzo Tyner indicated that Item No. 7 pertains to refunding of existing debt, which, due to the current low interest rate environment, provides an opportunity for savings. Mr. Tyner introduced Controller Mike White who reported that the potential savings would total $19,000,000 or, as provided by Chair Curry, 8% savings of the total amount due. Director Teresa Smith arrived at 5:04 p.m. 7. WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Adopt Resolution No. OCSD16-XX, authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A, authorizing the execution and delivery of such Revenue Obligations evidencing principal in an aggregate amount of not to exceed $163,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Revenue Obligations and authorizing the execution of necessary documents and related actions. MOVED. SECONDED AND DULY CARRIED TO: Recommend to the Orange County Sanitation District Financing Corporation: B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Revenue Obligations in an aggregate amount not to exceed $163,000,000. AYES: Curry, Kim, Kring, Mills, Nielsen, Neugebauer, Ooten (Alternate), and Seboum NOES: None ABSTENTIONS: T. Smith ABSENT: Choi, Katapodis, Parker, and Tinajero Director of Finance and Administrative Services Lorenzo Tyner introduced Controller Mike White who provided a PowerPoint presentation including review of the FY 2016-17 and FY 2017-18 budget development assumptions (specifically economics, revenue, and reserves); comparison of SFR rates; operating expenses; staffing levels; the Capital Improvement Program (CIP); debt financing; and a preliminary budget summary. MOM Administration Committee Minutes Page 4 of Director Tinajero and Director Choi arrived at 5:07 p.m. Mr. Tyner responded to questions about the surplus available and the possibility of labeling these funds as allocated for "future expenses". Mr. Tyner also answered questions regarding debt service and outstanding UAL paydown. General Manager Jim Herberg indicated the CIP expenditures for FY 16-17 are lower than what may be seen in two to three years as large projects will be upcoming to renew infrastructure that is nearing mid-life/end of life. Mr. Herberg also indicated that the draft budget information, when available, will further clarify expenditure of money. Director of Engineering Rob Thompson responded to questions regarding environmental requirements and the communication of these requirements by various regulatory agencies. Mr. Thompson indicated that there is good communication between agencies impacted by such changes and information is both shared and received. 8. CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2016-17 AND FY 2017-18 TWO-YEAR BUDGET (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Approve the FY 2016-17 and FY 2017-18 budget assumptions and direct staff to incorporate these parameters in the preparation of this two-year budget. AYES: Choi, Curry, Kim, Kring, Mills, Nielsen, Neugebauer, Ooten (Alternate), Sebourn, T. Smith, and Tinajero NOES: None ABSTENTIONS: None ABSENT: Katapodis and Parker INFORMATION ITEMS: None. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY: None. MOM Administration Committee Minutes Page 5 of 6 ADJOURNMENT: Committee Chair Curry declared the meeting adjourned at 5:24 p.m. to the next regularly scheduled meeting of Wednesday, March 9, 2016 at 5:00 p.m. Submitted by: Tina Knapp Deputy Clerk of the Board MOM Administration Committee Minutes Page 6 of ADMINISTRATION COMMITTEE Meng D310 TOBE. Dir. 02/lti10/16 02/24/1Or6 AGENDA REPORT ItemNumber Item Number z s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: COOPERATIVE PROCUREMENT WITH ADMIN MINNESOTA MATERIALS MANAGEMENT DIVISION GENERAL MANAGER'S RECOMMENDATION Authorize a purchase order to procure information technology computer and peripheral equipment using the Admin Minnesota Materials Management Division contract release #C-1084(5) through the contract expiration date, December 31, 2016 for a total amount not to exceed $400,000, with four (4) one-year renewal options, in accordance with Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. SUMMARY OCSD wishes to select the Admin Minnesota Materials Management Division contract release#C-1084(5)as established by The Office of Enterprise Technology (OET)and the Department of Administration, State of Minnesota to standardize specifications for computer desktops, notebooks, tablets, and peripherals. Minnesota's Cooperative Purchasing Venture(CPV), established by Minn. Stat. § 16C.03, subd.10, allows eligible entities to purchase goods, certain services and utilities from contracts established by the Materials Management Division (MMD) for Minnesota state agencies. This program creates a legal relationship so that eligible governmental entities can use these contracts just like state agencies. Minnesota Statutes § 471.59, subd. 1, known as the Joint Powers Act, defines the governmental entities that may join the CPV program. They include counties, cities, towns, townships, and school districts, as well as other entities. Minn. Stat. § 16C.105 adds certain tax-exempt, non-profit entities and charitable organizations to the list of entities eligible to use these contracts. BACKGROUND In order to property maintain and repair Orange County Sanitation District's (OCSD) facilities, the Information Technology division has needs to purchase computers and peripheral parts and supplies. Such item requirements have been forecasted based upon projected obsolete equipment, historical product failure rates, and new items to address general capacity, redundancy, or security. Since technology changes so frequently, it is not appropriate to stock these items in OCSD's warehouses. Page 1 of 3 RELEVANT STANDARDS • OCSD Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases PROBLEM The procurement process on information technology items and services for a local agency like OCSD involves a lot of efforts and associated costs. IT needs to work diligently in finding ways to streamline the procurement process while minimizing cost concomitant of the procurement of technology items. PROPOSED SOLUTION OCSD's purchasing power is limited therefore, utilizing other large agencies' cooperative agreement/s who have completed a vetted procurement process is a viable and economical solution. TIMING CONCERNS Existing purchase order to procure Microsoft technology items expired on December 15, 2015. Deployment of new systems using Microsoft tablets and solutions is imperative to support plant operations and maintenance initiatives. RAMIFICATIONS OF NOT TAKING ACTION Increased cost related to the procurement of technology items; increased risk of being unable to support plant operations and maintenance. PRIOR COMMITTEE/BOARD ACTIONS: June 2015: Board Award M.O. 6/24/2015, Item 9 ADDITIONAL INFORMATION OCSD is using the Microsoft Surface Pro as our standard desktop/notebook replacement. These devices are being used extensively by field staff to connect to our network while away from one's desk. These devices are also being deployed to staff in support of the new Maximo maintenance management system. The State of Minnesota has established standard specifications for computer desktops, notebooks, tablets, and monitors. Each State standard specification has a list of upgrade options that allows agencies to customize configurations for their needs. The Office of Enterprise Technology(OET) and the Department of Administration have approved the implementation of these standards as a mandatory requirement for state agencies. OCSD staff has verified that pricing has been checked for competitiveness based upon volume pricing through this cooperative. CEQA Page 2 of 3 N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases. This item has been budgeted in the established annual Joint Operating budget. Page 3 of 3 ADMINISTRATION COMMITTEE Meng Dat0 TOBE. Dir. 02/lti10/16 02/24/1Or6 AGENDA REPORT Item Item Number 4 fi Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: GENERAL MANAGER APPROVED PURCHASES GENERAL MANAGER'S RECOMMENDATION Receive and file District purchases made under the General Manager's authority for the period of October 1, 2015— December 31, 2015. SUMMARY BACKGROUND Staff provides the Administration Committee and the Board of Directors quarterly reports of General Manager approved purchases between $50,000 and $100,000. RELEVANT STANDARDS • Quarterly Financial Reporting • Ensure that the public's money is wisely spent PROBLEM N/A PROPOSED SOLUTION In accordance with Board purchasing policies, Ordinance No. OCSD47, the General Manager has authority to approve purchases between $50,000 and $100,000. Below is a summary of General Manager approved purchases, in amounts exceeding $50,000, for the second quarter of fiscal year 2015-16. Page 1 of 2 Vendor Name Amount Department Description/Discussion Repair Services for Manhole J R FILANC Facilities Support SUN0155-0125 CONSTRUCTION $55,000.00 Services Sole Source Justification# 1340 Reason: Emergency- Critical Time Sensitive Work IT Hardware Purchase to Replace the Obsolete Internal Controls DATALINK Administrative System Storage Array plus a 3-year NETWORKS, INC. $76,385.61 Services Support Agreement from 10/30/15 to 10/29/18 GSA/CMAS Contract in Accordance with Ordinance OCSD-47,2.03(B) Foul Air Analysis and ALS 00 Operations & Characterization for Plants 1 & 2 $61,235. ENVIRONMENTAL Maintenance from 11/1/15 to 6/30/16 Specification No. S-2015-723 Maintenance on Generators at Plants 1 &2 -Sole Source QUINN POWER $g340400 Operations& Justification# 1374 , . SYSTEMS Maintenance Reason: Original Equipment Manufacturer Parts/Materials Available from Only One Source SHIMADZU Operations & Gas Chromatograph with Single SCIENTIFIC $81,818.17 Maintenance Quadrupole Mass Spectrometer INSTRUMENT Specification No. E-2015-732 PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A CEQA N/A ATTACHMENT The following affachment(s) maybe viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: N/A Page 2 of 2 ADMINISTRATION COMMITTEE Meng Dat0 TOBE. Dir. 02/lti10/16 02/24/1Or6 AGENDA REPORT ItemNumber Item Number s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF JANUARY 2016 GENERAL MANAGER'S RECOMMENDATION Receive and file the Report of The Investment Transactions for the Month of January 2016. SUMMARY BACKGROUND The CA Government Code requires that a monthly report of investment transactions be provided to the legislative body. Attached is the monthly report of investment transactions for the month ended January 31, 2016. RELEVANT STANDARDS CA Government Code: Section 53607 PRIOR COMMITTEE/BOARD ACTIONS N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: Report on the Investment Transactions for the Month Ended January 31, 2016. Page 1 of 1 C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss ACQUISITIONS Purchase 01/02/2016 261908107 74,400.00 Dreyfus Shod IntermediateGov Treasury 1.000 0.09% 74,400.00 0.00 74,400.00 0.00 Cash Management Fd521 Purchase 01/05/2016 261908107 1,232.35 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,232.35 0.00 1,232.35 0.00 Cash Management Fd521 Purchase 01/05/2016 261908107 895.75 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 895.75 0.00 895.75 0.00 Cash Management Fd521 Purchase 01/08/2016 261908107 9,282.28 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 9,282.28 0.00 9,282.28 0.00 Cash Management Fd521 Purchase 01/09/2016 261908107 55,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 55,000.00 0.00 55,000.00 0.00 Cash Management Fd521 Purchase 01/12/2016 161571GC2 2,500,000.00 Chase CHAIT Pool#2013-A8 99.965 1.03% 2,499,121.10 1,893.75 2,501,014.85 0.00 1.01%Due 1 011 5/2 01 8 Purchase 01/12/2016 261908107 18,750.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 18,750.00 0.00 18,750.00 0.00 Cash Management Fd521 Purchase 01/12/2016 261908107 7,500.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 7,500.00 0.00 7,500.00 0.00 Cash Management Fd521 Purchase 01/14/2016 261908107 48,437.50 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 48,437.50 0.00 48,437.50 0.00 Cash Management Fd521 Purchase 01/15Q016 261908107 6,504.56 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 6,504.56 0.00 6,504.56 0.00 Cash Management Fd521 Purchase 01/15/2016 261908107 9,375.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 9,375.00 0.00 9,375.00 0.00 Cash Management Fd521 Purchase 01/15/2016 261908107 2,104.17 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 2,104.17 0.00 2,104.17 0.00 Cash Management Fd521 Purchase 01/15Q016 261908107 3,566.67 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 3,566.67 0.00 3,566.67 0.00 Cash Management Fd521 Purchase 01/15/2016 261908107 304,297.64 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 304,297.64 0.00 304,297.64 0.00 Cash Management Fd521 Purchase 01/15/2016 261908107 1,682.83 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,682.83 0.00 1,682.83 0.00 Cash Management Fd521 Purchase 01/15Q016 261908107 3,355.33 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 3,355.33 0.00 3,355.33 0.00 Cash Management Fd521 Purchase 01/15/2016 261908107 2,585.30 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 2,585.30 0.00 2,585.30 0.00 Cash Management Fd521 Purchase 01/15/2016 261908107 24.34 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 24.34 0.00 24.34 0.00 Cash Management Fd521 Purchase 01/16/2016 261908107 24,375.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 24,375.00 0.00 24,375.00 0.00 Cash Management Fd521 Purchase 01/18/2016 261908107 17,850.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 17,850.00 0.00 17,850.00 0.00 Cash Management Fd521 Ch.ndler Asset Management-CONFIDENTIAL Execution Time:2/JJ20169:55:16 AM C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss ACQUISITIONS Purchase 01/19/2016 261908107 143,716.76 Dreyfus Shod IntermediateGov Treasury 1.000 0.09% 143,716.76 0.00 143,716.76 0.00 Cash Management Fd521 Purchase 01/19/2016 261908107 1,417.79 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,417.79 0.00 1,417.79 0.00 Cash Management Fd521 Purchase 01/20/2016 261908107 6,250.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 6,250.00 0.00 6,250.00 0.00 Cash Management Fd521 Purchase 01/20/2016 261908107 369.88 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 369.88 0.00 369.88 0.00 Cash Management Fd521 Purchase 01/20/2016 261908107 303.71 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 303.77 0.00 303.77 0.00 Cash Management Fd521 Purchase 01/20/2016 261908107 3,212.81 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 3,212.81 0.00 3,212.81 0.00 Cash Management Fd521 Purchase 01/20/2016 261908107 356.33 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 356.33 0.00 356.33 0.00 Cash Management Fd521 Purchase 01/20/2016 261908107 1,735.95 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,736.95 0.00 1,735.95 0.00 Cash Management Fd521 Purchase 01/21/2016 261908107 9,000,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 9,000,000.00 0.00 9,000,000.00 0.00 Cash Management Fd521 Purchase 01/21Q016 261908107 339,949.23 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 339,949.23 0.00 339,949.23 0.00 Cash Management Fd521 Purchase 01/22/2016 261908107 65,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 65,000.00 0.00 65,000.00 0.00 Cash Management Fd521 Purchase 01/22/2016 261908107 2,200,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 2,200,000.00 0.00 2,200,000.00 0.00 Cash Management Fd521 Purchase 01/23Q016 261908107 22,500.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 22,500.00 0.00 22,500.00 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 141.63 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 141.63 0.00 141.63 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 17,710.91 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 17,710.91 0.00 17,710.91 0.00 Cash Management Fd521 Purchase 01/25Q016 261908107 3,188.25 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 3,188.25 0.00 3,188.25 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 24,339.05 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 24,339.05 0.00 24,339.05 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 1,578.86 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,578.86 0.00 1,578.86 0.00 Cash Management Fd521 Purchase 01/25Q016 261908107 5,766.84 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 5,766.84 0.00 5,766.84 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 1,654.34 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,654.34 0.00 1,654.34 0.00 Cash Management Fd521 Ch.ndler Asset Management-CONFIDENTIAL Execution Time:=0169:55:16 AM C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss ACQUISITIONS Purchase 01/25/2016 261908107 760.53 Dreyfus Shod IntermediateGov Treasury 1.000 0.09% 760.53 0.00 760.53 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 10,291.57 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 10,291.57 0.00 10,291.57 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 5,835.81 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 5,835.81 0.00 5,835.81 0.00 Cash Management Fd521 Purchase 01/25Q016 261908107 56.03 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 56.03 0.00 56.03 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 8,220.88 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 8,220.88 0.00 8,220.88 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 1,006.68 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,006.68 0.00 1,006.68 0.00 Cash Management Fd521 Purchase 01/25Q016 261908107 1,040.44 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,040.44 0.00 1,040.44 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 10,630.90 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 10,630.90 0.00 10,630.90 0.00 Cash Management Fd521 Purchase 01/25/2016 261908107 1,380.30 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,380.30 0.00 1,380.30 0.00 Cash Management Fd521 Purchase 01/25Q016 261908107 1,860.83 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 1,860.83 0.00 1,860.83 0.00 Cash Management Fd521 Purchase 01/26/2016 261908107 10,000,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 10,000,000.00 0.00 10,000,000.00 0.00 Cash Management Fd521 Purchase 01/27/2016 261908107 12,500.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 12,500.00 0.00 12,500.00 0.00 Cash Management Fd521 Purchase 01/27/2016 261908107 24,600,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 24,600,000.00 0.00 24,600,000.00 0.00 Cash Management Fd521 Purchase 01/27/2016 261908107 6,073.72 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 6,073.72 0.00 6,073.72 0.00 Cash Management Fd521 Purchase 01/28/2016 261908107 77,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 77,000.00 0.00 77,000.00 0.00 Cash Management Fd521 Purchase 01/28/2016 261908107 11,500.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 11,500.00 0.00 11,500.00 0.00 Cash Management Fd521 Purchase 01/28/2016 261908107 12,900,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 12,900,000.00 0.00 12,900,000.00 0.00 Cash Management Fd521 Purchase 01/29/2016 261908107 4,500,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 4,500,000.00 0.00 4,500,000.00 0.00 Cash Management Fd521 Chmdler Ae &Management-CONFIDENTI4 Execution Time:=0169:55:16 AM C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss ACQUISITIONS Purchase 01/31/2016 261908107 178,614.16 Dreyfus Shod IntermediateGov Treasury 1.000 0.14% 178,614.16 0.00 178,614.16 0.00 Cash Management Fd521 Purchase 01/31/2016 261908107 7,500,000.00 Dreyfus Shod Intermediate Gov Treasury 1.000 0.14% 7,500,000.00 0.00 7,500,000.00 0.00 Cash Management Fd521 Subtotal 74,757,182.97 74,756,304.07 1,893.75 74,758,197.82 0.00 TOTAL ACQUISITIONS 74,757,182.97 74,756,304,07 1,893.75 74,758,197.82 0.00 DISPOSITIONS Sale 01/12/2016 261908107 2,501,014.85 Dreyfus Short-Intermediate Gov Treasury 1.000 0.09% 2,501,014.85 0.00 2,501,014.85 0.00 Cash Management FdS21 Subtotal 2,501,014.85 2,501,014.85 0.00 2,501,014.85 0.00 Paydown 01/08/2016 62888UAA8 9,000.04 NCUA Guaranteed Note CM02010-R2Due 100.000 9,000.04 282.24 9,282.28 0.00 11/6/2017 Paydown 01/15/2016 161571GC2 0.00 Chase CHAIT Pool#2013-A8 100.000 0.00 2,104.17 2,104.17 0.00 1.01%Due 10/15/2018 Paydown 01/15/2016 3133TCE95 2,418.00 FHLMC FSPC E3A 100.000 2,418.00 167.30 2,585.30 0.00 2.892%Due 8/15/2032 Paydown 01/15/2016 31348SWZ3 21.38 FHLMC FH 786064 100.000 21.38 5.01 26.39 0.00 2.262%Due 1/1/2028 Paydown 01/15/2016 477877AD6 0.00 John Deere Owner Trust 2014-B A3 100.000 0.00 3,566.67 3,566.67 0.00 1.07%Due 11/15/2018 Paydown 01/15/2016 89231 MAC9 302,374.83 Toyota Auto Receivables Owner 2014-A 100.000 302,374.83 1,922.81 304,297.64 0.00 0.67%Due 12/15/2017 Paydown 01/15/2016 89231TAB6 0.00 Toyota Auto Receivables Owner 2015-C 100.000 0.00 1,682.83 1,682.83 0.00 0.92%Due V15/2018 Paydown 01/15/2016 89236WAC2 0.00 Toyota Auto Receivables Owner 2015-A 100.000 0.00 3,355.33 3,355.33 0.00 1.12%Due 2/15/2019 Paydown 01/19/2016 3837H4NX9 1,385.22 GNMA PooI#2000-9 100.000 1,385.22 32.57 1417.79 0.00 9.5%Due 2 16/2030 Paydown 01/19/2016 43814GAG4 142,460.70 Honda Auto Receivables 2014-2 A3 100.000 142,460.70 1,256.01 143,716,71 0.00 0.77%Due 3/19/2018 Paydown 01/20/2016 36225CAZ9 330.95 GNMA Poo1#G280023 100.000 330.95 38.93 369.88 0.00 2.816%Due 12/20/2026 Chandler Asset Management-CONFIDENTIAL Execution Time:=0169:55:16 AM C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss DISPOSITIONS Paytlown 01/20/2016 36225CC20 245.60 GNMA Poo1#G2 80088 100.000 245.60 58.17 303.77 Goo 2 817%Due 6/20/2027 Paytlown 01/20/2016 36225CN28 3,061.01 GNMA Poo1#G280408 100.000 3,061.01 151.80 3,212.81 0.00 2.691%Due 5/20/2030 Paytlown 01/20/2016 36225CNM4 338.86 GNMA Poo1#G280395 100.000 338.86 17.47 356.33 0.00 2.877%Due 4/20/2030 Paytlown 01/20/2016 W225DCBB 1,576.43 GNMA Poo1#G280965 100.000 1,576.43 159.52 1,735.95 0.00 2.31%Due 7/20/2034 Paytlown 01/21/2016 43813JAC9 337,863.38 Honda Auto Receivables 2014-1 A3 100.000 337,863.38 2,085.85 339,949.23 0.00 0.67%Due 11121/2 01 7 Paytlown 01/25Q016 03215PFN4 0.00 AMRESCO Residenbal Seventies 1999-1 100.000 0.00 141.63 141.63 0.00 ADue 6/25/2029 Paytlown 01/25Q016 31371NUC7 1,450.11 FNMA FN 257179 100.000 1,450.11 128.75 1,578.86 0.00 4.5%Due 4/1/2028 Paytlown 01/25/2016 31376KT22 4,787.67 FNMA FN 357969 100.000 4,787.67 979.17 5,766.84 0.00 5%Due 9/1/2035 Paytlown 01/25Q016 31381 PDA3 579.22 FNMA FN 466397 100.000 579.22 1,075.12 1,654.34 0.00 3.4%Due 11/1/2020 Paytlown 01/25Q016 3138EG6F6 666.37 FNMA FN AL0869 100.000 666.37 94.16 760.53 0.00 4.5%Due 6/1/2029 Paytlown 01/25/2016 313MJY35 11,801.43 FHLMC FSPC T-5B 2A 100.000 11,801.43 5,909.48 17,710.91 0.00 6.5%Due 9/25/2043 Paytlown 01/25Q016 31397ORED 9,874.84 FNMA FNR 2011-3 FA 100.000 9,874.84 416.73 10,291.57 0.00 0.832%Due 2/25/2041 Paytlown 01/25Q016 31398VJ98 0.00 FHLMC FHMS K006 A2 100.000 0.00 3,188.25 3,188.25 0.00 4.251%Due 1/25/2020 Paytlown 01/25/2016 31403DJZ3 4,908.43 FNMA Pool#745580 100.000 4,908.43 927.38 5,835.81 0.00 5%Due 6/1/2036 Paytlown 01/25Q016 31403GXF4 30.60 FNMA Pool#FN 748678 100.000 30.60 25.43 56.03 0.00 5%Due 10/1/2033 Paytlown 01/25Q016 31406PQYB 6,503.33 FNMA P.I#FN 815971 100.000 6,503.33 1,717.55 8,220.88 0.00 5.47%Due 3/1/2035 Paytlown 01/25/2016 31406XW75 631.88 FNMA P.I#FN 823358 100.000 631.88 374.80 1,006.68 0.00 2.875%Due 2/1/2035 Paytlown 01/25Q016 31407BXH7 866.03 FNMA Pool#FN 826080 100.000 866.03 174.41 1,040.44 0.00 5%Due 7/1/2035 Paytlown 01/25Q016 31410F4V4 8,780.55 FNMA Pool#FN 888336 100.000 8,780.55 1,850.35 10,630.90 0.00 5%Due 7/1/2036 Paytlown 01/25/2016 31417YAY3 1,230.73 FNMA PcoI#FN MA0022 100.000 1,230.73 149.57 1,380.30 0.00 4.943%Due 4/1/2029 Chantller AseM Management-CONFIDENTIAL Execution Time:=0169:55:16 AM C/" Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss DISPOSITIONS Paydown 01/25/2016 78445JAA5 1,662.87 SLMA 2008-9 ADue 4/25/2023 100.000 1,662.87 197.96 1,860.83 0.00 Paydown 01/25/2016 83611MGS1 24,314.62 Soundview Home Equity Loan Tr.2005- 100.000 24,314.62 24.43 24,339.05 0.00 OPT3 A4Due 11/2 512 0 3 5 Paydown 01/27/2016 31396X305 6,009.39 FNMA FNR 2007-114 A6Due 10/27/2037 100.000 6,009.39 64.33 6,073.72 0.00 Subtotal 885,174.47 885,174.47 34,326.18 919,500.65 0.00 Maturity, 01/21/2016 912796GY9 9,000,000.00 US Treasury Bill 100.000 9,000,000.00 0.00 9,000,000.00 0.00 0.18%Due 1/21/2016 Maturity 01/22r2016 69372AAN2 2,200,000.00 Paccar Financial Discount CP 99.967 2,200,000.00 0.00 2,200,000.00 0.00 0.27%Due 1/22/2016 Malunly 0126/2016 313312SG6 10,000,000.00 FFCB Discount Note 100.000 9,997,763.40 2,236.60 10,000,000.00 0.00 0.23%Due 1/26/2016 Maturity 01272016 313384SH3 13,000,000.00 FHLB Discount Note 100.000 13,000,000.00 0.00 13,000,000.00 0.00 0.195%Due 1/27/2016 Maturity 01272016 313396SH7 9,600,000.00 FHLMC Discount Note 100.000 9,600,000.00 0.00 9,600,000.00 0.00 0.175%Due 1/27/2016 Malunly 01272016 313588SH9 2,000,000.00 FNMA Discount Note 100.000 2,000,000.00 0.00 2,000,000.00 0.00 0.23%Due 1/27/2016 Maturity, 01/282016 30229AAU3 2,000,000.00 Enron Mobil Discount CP 99.954 2,000,000.00 0.00 2,000,000.00 0.00 0.4%Due 1/28/2016 Maturity, 01282016 313396SJ3 900,000.00 FHLMC Discount Note 100.000 900,000.00 0.00 900,000.00 0.00 0.11%Due 1/28/2016 Maturity 01282016 912796GZ6 10,000,000.00 US Treasury Bill 100.000 10,000,000.00 0.00 10,000,000.00 0.00 0.15%Due 1/28/2016 Maturity, 01/292016 06538BAV5 1,200,000.00 Bank of Tokyo Mitsubishi NY Discount CP 99.952 1,200,000.00 0.00 1,200,000.00 0.00 0.44%Due 1/29/2016 Maturity 01292016 313384SK6 3,300,000.00 FHLB Discount Note 100.000 3,300,000.00 0.00 3,300,000.00 0.00 0.125%Due 1/29/2016 Malunly 01/312016 912828B41 7,500,000.00 US Treasury Note 100.000 7,500,000.00 0.00 7,500,000.00 0.00 0.375%Due 1/31/2016 Subtotal 70,700,000.00 70,697,763.40 2,236.60 70,700,000.00 0.00 Security 01/29/2016 261908107 68.300,000.00 Dreyfus Short-Intermediate Gov Treasury 1.000 68,300,000.00 0.00 68,300,000.00 0.00 Withdrawal Cash Management Fd521 Chandler Asset Management-CONFIDENTIAL Execution Tme:2/2r10169:55:16 AM C/" Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss DISPOSITIONS Security 01/31/2016 912828WUO 20,072.00 US Treasury Inflation Index Note 99.471 20,072.00 0.00 20,072.00 18779 Withdrawal DA 25%Due 7/15/2024 Subtotal 68,320,072.00 68,320,072.00 0.00 68,320,072.00 187.79 TOTAL DISPOSITIONS 142,406,261.32 142,404,024.72 36,562.78 142,440,587.50 187.79 OTHER TRANSACTIONS Interest 01/02/2016 073902CD8 3,200,000.00 Bear Stearns Note 0.000 74,400.00 0.00 74,400.00 000 4.65%Due 7/2/2018 Interest 01/09/2016 36962G7MO 5,000,000.00 General Electric Capital Corp Callable Note 0.000 55,000.00 0.00 55,000.00 0.00 1 X 12/9/2019 2.2%Due 1/9/2020 Interest 01/12/2016 3137FADN6 5,000,000.00 FHLMC Note 0.000 18,750.00 0.00 18,750.00 0.00 0.75%Due 1/12/2018 Interest 01/12/2016 36962G6Z2 1,000,000.00 General Electric Capital Corp Note 0.000 7,500.00 0.00 7,500.00 0.00 1.5%Due 7/12/2016 Interest 01/14/2016 3137EADVB 5,000,000.00 FHLMC Note 0.000 23,437.50 0.00 23,437.50 ODD 0.75%Due 7/1412017 Interest 01/14/2016 4581XOCG1 5,000,000.00 Inter-American Day Bank Note 0.000 25,000.00 0.00 25,000.00 0.00 1%Due 7/14/2017 Interest 01/15/2016 912828VL1 3,000,000.00 US Treasury Note 0.000 9,375.00 0.00 9,375.00 ODD 0.625%Due 7/15/2016 Interest 01/15/2016 912828WUO 10,417,368.00 US Treasury Inflation Index Note 0.000 6,504.56 0.00 6,504.56 0.00 0.125%Due 7/15/2024 Interest 01/16/2016 40428HPH9 3,000,000.00 HSBC USA Inc Note 0.000 24,375.00 0.00 24,375.00 0.00 1.625%Due 1/16/2018 Interest 01/18/2016 38141GFG4 600,000ol) Goldman Sachs Group Inc Note 0.000 17,850.00 0.00 17,850.00 ODD 5.95%Due 1/1 812 01 8 Interest 01/20/2016 94974BFL9 1,000,000.00 Wells Fargo Corp Note 0.000 6,250.00 0.00 6,250.00 0.00 1.25%Due 7/20/2016 Interest 01/22/2016 94974BGM6 5,000,000.00 Wells Fargo Corp Note 0.000 65,000.00 0.00 65,000.00 0.00 2.6%Due 7/2212020 Interest 01/23/2016 46625HKA7 2,000,000.00 JP Morgan Chase Callable Note Cant 0.000 22,500.00 0.00 22,500.00 0.00 12/23/2019 2.25%Due 1/23/2020 Chandler Asset Management-CONFIDENTIAL Execution Tux,=0169:55:16 AM �'" Orange County Sanitation District Consolidated Transaction Ledger Account#10283 12/31/15 Thru 1/31/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss OTHER TRANSACTIONS Interest 01/272016 3137EADUO 5,000,000.00 FHLMC Note 0.000 12,500.00 0.00 12,500.00 0.00 0.5%Due 1/27/2017 Interest 01/28/2016 064061113X6 1,000,000.00 Bank of New York Note 0.000 11,500.00 0.00 11,500.00 0.00 2.3%Due 7/28/2016 Interest 01/282016 6174MAL3 2,800,000.00 Morgan Stanley Note 0.000 77,000.00 0.00 77,000.00 0.00 5.5%Due 7/28/2021 Interest 01/312016 9128281333 11,000,000.00 US Treasury Note 0.000 82,500.00 0.00 82,500.00 0.00 1.5%Due 1/31/2019 Interest 01/31/2016 9128281341 7,500,000.00 US Treasury Note 0.000 14,062.50 0.00 14,062.50 0.00 0.375%Due 1/312016 Interest 01/312016 912828031 3,500,000.00 US Treasury Note 0.000 801.66 0.00 801.66 0.00 0.374%Due 41302016 Interest 01/312016 912828M6 10,000,000.00 US Treasury Note 0.000 81,250.00 0.00 81,250.00 0.00 1.625%Due 7/312019 Subtotal 90,017,368.00 635,556.22 0.00 635,556.22 0.00 Dividend 01/052016 261908107 14,8B4,900.02 Dreyfus Short-Intermediate Gov Treasury 0.000 895.75 0.00 895.75 0.00 Cash Management Fd521 Dividend 01/052016 261908107 12,950,117.86 Dreyfus Short-Intermediate Gov Treasury 0.000 1,232.35 0.00 1,232.35 0.00 Cash Management Fd521 Subtotal 27,835,017.88 2,128.10 0.00 2,128.10 0.00 TOTAL OTHER TRANSACTIONS 117,852,385.68 637,694.32 0.00 637,694.32 0.00 Chandler Asset Management-CONFIDENTIAL Execution Time:2/2r10169:55:16 AM ADMINISTRATION COMMITTEE Meng Dare TOBd. Dir. 02/eti10/16 02/24/1of6 AGENDA REPORT Item Item Number 6 8 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: CONSOLIDATED FINANCIAL REPORT FOR THE SECOND QUARTER ENDED DECEMBER 31, 2015 GENERAL MANAGER'S RECOMMENDATION Receive and file Orange County Sanitation District Second Quarter Financial Report for the period ended December 31, 2015. SUMMARY BACKGROUND Included in this consolidated report are the following quarterly financial reports for the period ended December 31, 2015: • Second Quarter Budget Review The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the second quarter ended December 31, 2015. • Quarterly Treasurer's Report This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the U.S. and global economic outlook from the Sanitation District's investment manager, Chandler Asset Management. • Certificates of Participation Quarterly Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. RELEVANT STANDARDS • Quarterly financial reporting Page 1 of 4 PROBLEM N/A PROPOSED SOLUTION N/A TIMING CONCERNS N/A RAMIFICATIONS OF NOT TAKING ACTION N/A PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The quarterly treasurer's report contained within the Consolidated Financial Reports for the Second Quarter Ended December 31, 2015 is being submitted in accordance with the District's investment policy that requires the report be submitted to the governing body following the end of each quarter and includes the following information: e Performance results in comparison with the 3- month treasury bill index for the liquid operating portfolio (and the Merrill Lynch Corp./Gout. 1-5 Year Bond index for the long term portfolio as identified in the investment policy and the 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: Portfolio Performance Summary Quarter Ended December 31,2015 Liquid Operating Monies(%) Long-Term Operating Monies(%) Total Rate Total Rate of of Return BenchmadF' Return Benchmark(" 3 Months 0.05 0.03 -0.33 .0.56 6 Months 0.11 0.04 0.19 0.12 9 Months 0.16 0.05 0.03 0.11 12 Months 0.23 0.05 0.85 1.07 Since inception 30 Nov.15 0.22 0.05 0.58 0.69 Page 2 of 4 • A listing of individual securities held at the end of each reporting period (See the detailed listings of each security contained within the report). • Cost and market values of the portfolios: Liquid Ober. Long-Term Cost $131.9 M $316.3 M MV $132.0 M $314.8 M • Modified duration of the portfolio compared to Benchmark: Liquid Ober. Long-Term B.M. 0.15 2.59 Port. 0.21 2.42 • Dollar change in value of the portfolio for a one-percent (1%) change in interest rates: Liquid Oper.- $276,071 Long-Term- $7,612,030 • None of the portfolios are currently invested in reverse repurchase agreements: • The percent of the Liquid Operating Monies portfolio maturing within 90 days: 69.9% • Average portfolio credit quality: Liquid Oper. —AAA/Aal Long-Terre —AA+/Aa1 • Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities: Liquid Portfolio- no exceptions Long Term Portfolio- Percent of portfolio—4.2% Maturity Cost Date Moody S&P Fitch AMRESCO Residential Securities 1999-1 $ 100,432.85 6/25/2029 Not Rated AA+ BBB Goldman Sachs Group Inc. Note $ 1,995,068.00 3/22/2016 A3 BBB+ A Bank of America Corp Note $ 4,334,014.00 12/1/2017 Baal BBB+ A Goldman Sachs Group Inc. Note $ 692,806.00 1/18/2018 A3 BBB+ A American Express Credit Card Note $ 3,377,385.79 3/19/2018 A3 BBB+ A+ Morgan Stanley Note $ 3,200,848.00 7/28/2021 A3 BBB+ A Page 3 of 4 • All investments are in compliance with this policy and the California Government Code, except for the following Lehman Brother holdings that the District is pursuing collection through the bankruptcy court: Lehman Brothers Note-Defaulted $600,000 par value purchased 9/18/2008 Lehman Brothers Note-Defaulted $2,000,000 par value purchased 9/18/2008 • Sufficient funds are available for OCSD to meet its operating expenditure requirements for the next six months. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: Consolidated Financial Report for the second quarter ended December 31, 2015. Page 4 of 4 ADMINISTRATION COMMITTEE Meng Dat0 TOBE. Dir. 02/lti10/16 02/24/1Or6 AGENDA REPORT Item Item Number 8 9 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance &Administrative Services SUBJECT: CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2016-17 AND FY 2017-18 BUDGET TWO-YEAR BUDGET GENERAL MANAGER'S RECOMMENDATION Approve the FY 2016-17 and FY 2017-18 budget assumptions and direct staff to incorporate these parameters in the preparation of this two-year budget. SUMMARY BACKGROUND The Administration Committee establishes the Budget Assumptions and approves the Budget Calendar in the development of the District's two-year budget. Staff will make a brief presentation at the Committee meeting. RELEVANT STANDARDS Produce Operations and CIP budgets every two years with annual update. PROBLEM Lack of approved assumptions may result in a budget that is misaligned with the direction of the Board of Directors. PROPOSED SOLUTION Ensuring alignment through the presentation of the budget assumptions and subsequent approval by the Board of Directors. TIMING CONCERNS The proposed two-year budget, effective July 1st of this year, will be finalized and presented to the Board for adoption in June. Please see the attached budget calendar that lays out the sequential steps for the completion of the proposed budget. Page 1 of 2 RAMIFICATIONS OF NOT TAKING ACTION Lack of approved assumptions may result in a budget that is misaligned with the direction of the Board of Directors. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION Currently, there are no proposed changes to the District's Fiscal Policy. The Fiscal Policy is published in the FY 2014-15 and 2015-16 Budget document (Section 3, Pages 1-8), and is available on the Sanitation District's website. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (AW..ocsd.coml with the complete agenda package: • Preliminary Budget Assumptions • Budget Calendar • Presentation to Administration Committee Meeting February 10, 2016 Page 2 of 2 FY 2016-17 & 2017-18 Preliminary Budget Assumptions Economic Assumptions • Inflation for Orange County in FY 2016-17 is projected to be 2.0 percent based on the 2016 projected percentage change in consumer price index obtained from the December 2015 Economic and Business Review report prepared by Chapman University. A 2.0 percent inflation factor will also be used for FY 2017-18. Revenue Assumptions • Based upon the revised Sewer Service Fee Rate Schedule approved by the Board in May 2015, the single-family residence (SFR) rate will increase by 1.6 percent to $327 in FY 2016-17. • Note that each $1 increase in the SFR rate generates approximately$900,000 per year. • The capital facilities capacity charge (CFCC)fee captures only those infrastructure costs that relate to additional capacity. The CFCC fee will increase for FY 2016-17 by the increase in the Engineering-News Record construction cost index. Other infrastructure costs such as improved treatment, rehabilitation, refurbishment, and replacement, will be supported through user fees. • Given the Facilities Master Plan adopted in December 2009, a rate study was completed in January 2013 to ensure that the CFCC fee methodology remains equitable and to confirm that an appropriate share of system costs would be recovered from new development. • Revenues will be budgeted to reflect little growth in Equivalent Dwelling Unit(EDU) connections that have remained flat over the past five years. • Permit user rates for flow, Biochemical Oxygen Demand (BOD) and Total Suspended Solids (TSS)will follow the most recent Rate Study. • Annexation fees capture both the net current assets and the equivalent property tax allocations totaling $4,235 per acre. • Annexable property in the District's service area sphere is minimal; consequently, no FY 2016-17 income from annexation fees is anticipated. • Property tax revenues are preliminarily estimated to increase by approximately five percent from FY 2015-16 to $92,953,000. A two percent annual increase in Assessed Value is authorized by the state constitution and is included in the increases noted above. The additional increase in assessed value is from authorized increases to market value when property is sold at a higher value. • Earnings on the investment of the District's operating cash and reserves will be budgeted at 1.0 percent of the average cash and investment balance projected for the fiscal year. • No additional debt issuance is scheduled for FY 2016-17. Operating Assumptions • Operating expenses are expected to approximate the adopted FY 2015-16 budget of $149 million. 3 FY 2016-17 & 2017-18 Preliminary Budget Assumptions • Average daily flows are projected at 185 mgd for FY 2016-17 and FY 2017-18. This projection reflects an expectation that increased economic activity and urban runoff will be more than offset by effects of conservation and minimal rainfall, resulting in an overall decrease in the average daily flow. The FY 2016-17 flow projection of 185 mgd reflects no change from the actual for the first 5 months of the current year and is 2 mgd below the final actual flow for FY 2014-15. Employee/Staffing Assumptions • Staffing level is expected to remain flat. No additional positions are anticipated. The total FY 2015-16 authorized staffing level is 624.00 FTEs, excluding Management Discretion positions. • Vacant positions as of 12/31/15 are budgeted at 50 percent of step 1 for the remainder of FY 2015-16 and at 100 percent of step 2 for FY 2016-17. • New positions will be projected at 100 percent of step 1 for FY 2016-17. • A 5.0 percent vacancy factor on authorized positions has been budgeted for FY 2016-17. The actual vacancy factor for 2014-15 was 6.3 percent. This vacancy factor accounts for time spent for recruitment and turnover. • The Memorandums of Understanding (MOUs)for the OCEA, the Local 501, and the Supervisor and Professional (SPMT)groups expire on June 30, 2016. Pending the completion of the negotiation process, no salary adjustments will be included in the budget for COLA for periods beyond the expiration of the current MOUs. • Retirement costs for employees enrolled in OCERS Plans G and H are estimated at a rate of 16.66 percent of the employee's base salary for FY 2016-17 and FY 2017-18, down from 24.25 percent in FY 2015-16. The rates for Plans G and H include the District's pickup of 3.5 percent of employees' required contributions. Employees enrolled in OCERS Plan B are estimated at a rate of 11.06 percent of the employee's base salary for FY2016-17 and FY 2017-18, down from 18.39 percent in FY 2015-16. All employees hired on or after January 1, 2013 are enrolled in OCERS Plan U and are estimated at a rate of 9.76 percent for FY 2016-17 and FY 2017-18, down from 17.52 percent in FY 2015-16. Interns are not enrolled in OCERS so their retirement benefits are calculated at 6.2 percent (FICA rate). • Other employee benefits and insurances will be budgeted to increase in FY 2016-17 and FY 2017-18 by moderate but yet to be determined amounts. Materials, Supplies, & Services Assumptions • The proposed operating budget will continue to reflect an emphasis on safety, security, and maintenance of plant assets and infrastructure. • An amount equal to half of one percent of the Operating materials and services budget will be a contingency for prior year re-appropriations. Since the current year's budget lapses on June 30, a contingency is needed in the succeeding budget year for goods or services ordered at the end of one budget year but not delivered until the following year. • An amount equal to 0.85 percent of the Operating materials and services budget will be the General Manager's contingency budget. These funds will be allocated to appropriate line 4 FY 2016-17 & 2017-18 Preliminary Budget Assumptions items during the year after requests and justifications for unanticipated needs are approved by the General Manager. • Resource needs for strategic initiatives will be included in the budget. Capital Improvement Program Assumptions • The FY 2016-17 and FY 2017-18 cash flow budget, based on the most current Validated Capital Improvement Program (CIP), is the target. • The baseline CIP cash flow for FY 2016-17 is$128 million and for FY 2017-18 is $115 million. • Continual evaluation of the CIP by the Asset Management Team may result in deferral or reduction of some projects and a resultant increase in O&M repair costs for materials and services, if the net cash flow impact is a decrease. • The FY 2016-17 and 2017-18 CIP budget will only increase for critical projects which were not previously identified in the Strategic Plan Update. • For the first five months of FY2015-16, $56.9 million of the $$175.0 million CIP budget, approximately 32.5 percent, was expended. Debt Financing • The District will issue new debt in the form of Certificates of Participation (COP)as needed to fund the CIP and to maintain reserves. • No additional debt issuance is scheduled for FY2016-17 and FY 2017-18. • Debt will only be used for CIP and capital expenses, not for operating expenses. • Capital financing plans no longer include future borrowings over the next ten years as the approved user fee schedule is considered sufficient. • Borrowing is proposed only for facilities which do not add capacity and that are funded by all users for replacement, rehabilitation, and improved treatment. Reserve Assumptions The existing reserve policy is summarized as follows: ► A cash flow reserve will be established to fund operations, maintenance and certificates of participation expenses for the first half of the fiscal year, prior to receipt of the first installment of the property tax allocation and sewer service user fees which are collected as a separate line item on the property tax bill. The level of this reserve will be established as the sum of an amount equal to six months operations and maintenance expenses and the total of the annual debt (COP)service payments due in August each year. ► An operating contingency reserve will be established to provide for non-recurring expenditures that were not anticipated when the annual budget and sewer service fees 5 FY 2016-17 & 2017-18 Preliminary Budget Assumptions were considered and adopted. The level of this reserve will be established at an amount equal to ten percent of the annual operating budget. ► A capital improvement reserve will be maintained to fund annual increments of the capital improvement program. The long-tens target is for one half of the capital improvement program to be funded from borrowing and for one half to be funded from current revenues and reserves. With this program in mind, the target level of this reserve has been established at one-half of the average annual capital improvement program over the next ten years. ► Catastrophic loss, or self-insurance, reserves will be maintained for property damage including fire, flood and earthquake, for general liability and for workers'compensation. These reserves are intended to work with purchased insurance policies, FEMA disaster reimbursements and State disaster reimbursements. The potential infrastructure loss from a major earthquake, of which the District currently has limited outside insurance coverage of$25 million, has been estimated to be as high as $1.3 billion. The level of this reserve has been set at $57 million should such a catastrophic event occur. This reserve amount will assist the District with any short-term funding needs until Federal and State assistance becomes available. ► Accumulated capital funds will be set aside for certain specific, short-term capital improvements as the need and availability arise. ► A capital replacement/renewal reserve policy has been established to provide thirty percent of the funding to replace or refurbish the current collection, treatment and disposal facilities at the end of their useful economic lives. Based on the FY 2011-12 Asset Management Plan, the current replacement value of these facilities is estimated to be $3.14 billion for the collection facilities and $3.12 billion for the treatment and disposal facilities. The initial reserve level has been established at $50 million, which will be augmented by interest earnings and a small portion of the annual sewer user fee, in order to meet projected needs through the year 2030. ► Provisions of the various certificates of participation (COP) issues require debt service reserves to be under the control of the Trustee for that issue. These reserve funds are not available for the general needs of the District and must be maintained at specified levels. The current level of required COP service reserves is projected to be $209.9 million. ► Accumulated funds exceeding the levels specified by District policy will be maintained in a rate stabilization fund. These funds will be applied to future years' needs in order to maintain rates or to moderate annual fluctuations. There is no established target for this reserve. 6 Budget Calendar Tasks Responsibility Event/Due Date PHASE I-BUDGET PREPARATION EMT Strategic Planning Workshop General Manager's 8/27/15 Office Strategic Plan Board of Directors Workshop General Manager's 10/21/15 Office Strategic Plan Update adopted by Board of Directors General Manager's 12/16/15 Office Preliminary Budget Assumptions Identified Financial Planning 12/17/15 Preliminary Budget Assumptions & Draft Budget Calendar Financial 1/7/16 Presented to Managers Team (MT) Management Capital Improvement Program (CIP)— Future Project Engineering 1/8/16 Attributes Reviewed and Updated Planning Preparation for Budget Kickoff/Training Session: Financial Planning 1/13/16 • Salary and benefits downloaded to Excel worksheets • Develop line item worksheets with mid-year actual expense • Prepare/update budget instruction manual Preliminary Budget Assumptions & Draft Budget Calendar Financial 1/14/16 Presented to Executive Management Team (EMT) Management Budget Kickoff/Training Session: Financial Planning 1/20/16 • Distribute budget instruction manual update • Conduct budget training session • Review submission deadlines CIP— Engineering Validation Inputs Complete Engineering Project 1/22/16 Managers CIP—New Project Numbers Assigned Engineering Project 1/29/16 Management Office (PMO) Operating Divisional Budgets: New Position and Change to Divisional Budget 2/4/16 Existing Position Decision Packages Due to Human Coordinators Resources (Richard Spencer, Ext. 7164)with copies to John Ralston Operating Budget: Promotional Items Request Forms Due Divisional Budget 2/4/16 to Dr. Robert Ghirelli (Division 110) Coordinators Capital Equipment Budget: Vehicle Capital Equipment Divisional Budget 2/4/16 Decision Packages Due to Fleet Services (Jim Tintle, Ext. Coordinators 7214) 7 Budget Calendar Tasks Responsibility Event/Due Date Capital Equipment Budget: Computer Capital Equipment Divisional Budget 2/4/16 Decision Packages Due to Information Technology(Rich Coordinators Castillon, Ext. 7283) Budget Assumptions Presented to Administration Financial 2110/16 Committee Management Mid-Year Financial Report to Administration Committee Financial 2110/16 Management Division Budget Packages Due to Financial Planning: Divisional Budget 2/18/16 • Projection of 2015-16 actual operating costs Coordinators • Proposed operating costs for 2016-17 &2017-18 • Operating Budget Expense Detail • Meetings, Memberships and Training Requests • Capital Equipment Decision Packages (other than computer and vehicle decision packages which were due on 2/4/16) • New program decision packages (Financial Planning will collate and bind these items—along with salary information-into the Preliminary Division Budget Document for use during the budget review process.) CIP—Non-engineering CIP project validation forms Non-engineering 2/22/16 completed & approved Project Managers CIP— Preliminary capital equipment request estimates Financial Planning 2/22116 delivered to PMO Mid-Year Financial Report to Board Financial 2124/16 Management Complete the Compilation of the Preliminary Division Financial Planning 2/25/16 Budget Update Packages CIP— Unified Preliminary CIP Budgets& Equipment Engineering PMO 3/3/16 Request Reports and Analysis Created CIP—Validated CIP budgets delivered to IT/Finance Engineering PMO 3/10/16 Department Narrative Updates for Budget Executive EMT 4/7/16 Summary Due to Financial Planning PHASE 11 -BUDGET REVIEW Divisional Budgets- Distribution of Preliminary Line Item Financial Planning 2/29/16 Requested Budgets to Department Heads and Managers along with Analysis/Questions for Review 8 Budget Calendar Tasks Responsibility Event/Due Date Operating Budget— Information on New Positions, Position Human Resources 3/7/16 Upgrades & Reclassifications Submitted to the General Manager Operating Budget— Division Budget Review Meetings with Financial Planning & 3/7/16—3/10/16 Finance and Division Representatives Division Representatives CIP— Review/Adjust Preliminary CIP Budget Engineering 3/7/16 Management CIP— Preliminary Engineering/Finance Budget Review Engineering/Financi 3/10/16 Workshop al Management Operating Budget-Completion of Preliminary Divisional Financial Planning 3/15/16 Budgets and Compilation into Departmental Budgets Operating Budget— Recommendations to General Manager Financial Planning 3/16/16 CIP— Final Adjustments/Confirm 20 Year Cash Flow Engineering/Financi 3/17/16 Schedules/Final capital equipment requests delivered to al Management PMO Final Operating Budget—General Manager Review of Financial Planning, 3/17/16—3/22/16 Budget Recommendations General Manager, & Department Heads Capital Equipment Budget— Requests Reviewed & Financial Planning, 3/17/16—3/22/16 Approved General Manager, & Department Heads Divisional Budgets— Performance Budget Documents Due Divisional Budget 3/18/16 to Financial Planning (John Ralston): Coordinators • Organization Charts • Performance Results (2014-15) • Performance Measures (2016-17 &2017-18) CIP—Approve Proposed CIP Budget EMT 3/24/16 Operating Budget— Report of General Manager's Decisions Human Resources 3/25/16 on New Positions, Position Upgrades& Reclassifications Submitted to the Financial Planning CIP- Operations Committee Review Engineering 416116 PHASE 111 -BUDGET PRESENTATION Operating Budget— Presentation of Preliminary Budget Financial 4/4/16 Update by Division/Department to EMT Management 9 Budget Calendar Tasks Responsibility Event/Due Date Operating Budget Update—Overview to Administration Financial 4/13116 Committee Management CIP- Final CIP Budget Document Preparation and Financial Planning 4/14/16 Incorporation into Final Budget Document CIP— Review draft of Final Budget Document pages with Financial Planning 4/14/16 Engineering Planning & PMO Initial - Proposed Budget finalized Financial Planning 4/25/16 Initial - Proposed 2016-17 &2017-18 Budget Presented to Financial Ops—514116 Committees Management Admin—5/11/16 General Manager's Budget Message Completed General Manager/ 5/6/16 Financial Management Approval of General Manager's Budget Message General Manager 5/11/16 Final - Proposed Budget to Printer Financial Planning 5/18/16 PHASE IV-BUDGET DELIBERATIONS Final Draft- Proposed 2016-17 & 2017-18 Budget Financial Ops—611116 Presented to Committees Management Admin—618/16 Public Hearing & Board Adoption Board of Directors 6/22116 PHASE V—DISTRIBUTION OF BUDGET Final line item budget and equipment budgets posted in Financial Planning 7/8/16 H:\ntglobal PHASE VI -BUDGET DEBRIEFING Budget Debriefing E-mail Message Financial Planning 7/15/16 • Global changes that occurred in this year's budget. • Changes since the Departments' original submittal. • Changes that occurred as a result of Board action. • Results of Budget Survey. • Overview of Budget Monitoring with Oracle JD Edwards EnterpriseOne Software and review of Budget Coordinator's Responsibility. • Overview of CIP Budget Monitoring. • Suggestions for Budget Process Improvements. 10 FY 2016 = 17 and FY 2017 = 18 Budget Assumptions O�JNjv SANITq TT�2 i = 9 ¢ c Orange Sanitation . O 1 A h 9o��cT/N� 7HE EN�\QOa��2 Presenter: Mike White Controller Budget Development Assumptions Economics • Inflation for Orange County is projected to be approximately 2.0% Revenue • Based on the revised Single-family residence (SFR) rate schedule approved by the Board in May 2015, SFR is scheduled to increase 1.6% in FY16-17, to $327, and 1.2% in FY 17-18, to $331. Reserves • Current reserve policy is unchanged w Comparison of SFR Rates (July 2015 ) $800 $784 ` $700 R $600 `m w$500 R c $400 $322 0 $300 $200 155 $0 Operations • Average daily flows are projected to be 185 mgd for FY 2016- 17 and FY 2017-18. This projection reflects an expectation that increased economic activity and urban runoff will be more than offset by efforts of conservation and minimal rainfall; and matches the flows for the first five months of the current fiscal year. • Operating expenses for FY 2016-17 are expected to approximate the adopted FY 2015-16 budget of $149 million . Staffing • No increase in Staffing levels is being proposed (624 FTE) • A 5% vacancy factor will continue to be budgeted for authorized positions • The MOUs for all bargaining units will expire on 6/30/15. No salary adjustments are currently being anticipated in the budget for COLAs. • Moderate increases in benefits are anticipated. Capital Improvement Program ( CIP) • Cash flow assumptions are based on the most recent validated CIP • Baseline CIP is $153.6 million for FY16-17 and $143.6 million for FY 17-18. Debt Financing • COP debt financing is used to supplement user fees in financing the capital program • No additional "new money" debt issuance is scheduled for FY 2016-17 and FY 2017-18 as current user fees and reserves are sufficient to fund CIP over the next two years. • The two-year CANs Series 2014B debt will be maturing in November of 2016 and is expected to be refunded with a new CANs issuance. Preliminary Budget Summary Revenues FY 16-17 Fees and Charges $ 334M (76%) Property Taxes $ 93M (21%) Interest / Other 14M ( 3%) Total Revenues $ 441M Expenditures FY 16-17 Operating $ 150M (36%) CIP / RRR $ 132M (32%) Debt Service $ 127M (31%) Other 3M ( 1%) Total Outlays $ 412M Budget Development Key Meeting Dates Administration Committee • FY 16-17/FY 17-18 Budget Assumptions February • Review of Revenues March • Review of Expenditures April • Budget Elements Review May & June • Budget Overview May & June Budget Development Key Meeting Dates Operations Committee • Budget Overview May, June Board Meeting • FY 16-17 & 17-18 Budget Approval June Questions ? ADMINISTRATION COMMITTEE Meeting Dare TOBd.OfDir. 02/30/16 02/24/16 AGENDA REPORT ItemNumber Item Number o Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A GENERAL MANAGER'S RECOMMENDATION A. Adopt Resolution No. OCSD16-03, authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A,authorizing the execution and delivery of such Revenue Obligations evidencing principal in an aggregate amount of not to exceed $163,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Revenue Obligations and authorizing the execution of necessary documents and related actions; and B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Revenue Obligations in an aggregate amount not to exceed $163,000,000. SUMMARY BACKGROUND On May 7, 2009, the Sanitation District issued $200,000,000 of fixed rate Certificates of Participation, Series 2009A (2009A COPs) to finance certain improvements to the Wastewater System. With the recent drop in tax-exempt interest rates, the 2009A COPS could be refunded and provide attractive savings to the Sanitation District. The outstanding amount of 2009A COPS is currently $180,235,000 of which $162,780,000 are subject to optional redemption prior to maturity. In February 2016, the Board authorized the General Manager to pursue a fixed rate refunding of the callable 2009A COPs. Approval of the recommended actions and the associated legal documents will enable staff to complete the refunding process. Page 1 of 5 RELEVANT STANDARDS OCSD Debt Policy-Financial Management Policy and Procedure No. 201-3-1. • Easy access to low cost credit. PROBLEM As a result of the current low interest rate environment on long term tax exempt debt, the District has as opportunity to refund existing outstanding debt and generate savings from existing debt obligations. PROPOSED SOLUTION The issuance of up to $163 million of COP Series 2009A would generate up to $19 million in present value savings. TIME CONCERNS There is a window of opportunity to refund existing debt at lower interest rates that close in the near term. The proposed refinancing schedule calls for the refinancing to be completed in April. RAMIFICATIONS OF NOT TAKING ACTION Not taking action would result in a lost opportunity to save future debt service costs as the existing debt structure has been taking in to consideration in the development of the current ten-year cash flow forecast. PRIOR COMMITTEE/BOARD ACTIONS January 2016: Authorize the General Manager to issue newfixed rate Certificates of Participation (COP), to be referred to as Wastewater Refunding Revenue Obligations, in an amount sufficient to refund up to $162,780,000 of COP Series 2009A. December 2014: Adopt Resolution No. OCSD 14-19, authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2015A, authorizing the execution and delivery of such Revenue Obligations evidencing principal in an aggregate amount of not to exceed $150,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Revenue Obligations Page 2 of 5 and authorizing the execution of necessary documents and related actions. ADDITIONAL INFORMATION The Sanitation District currently has 12 series of debt issuances outstanding in the par amount of $1.13 billion. The table below lists each issuance, the outstanding amount, and the interest rate mode. IIII'mUlutstanding Interest Rate Par AmounNli Mode eries 2015A Refunding(2) $ 127,510,000 Fixed Rate eries 2014E CANS(3) 120,850,000 Fixed Rate (two-year) eries 2014A Refunding(2) 85,090,000 Fixed Rate eries 2012B Refunding(4) 66,395,000 Fixed Rate eries 2012A Refunding(5) 100,645,000 Fixed Rate eries 2011A Refundingi4x5) 111,465,000 Fixed Rate eries 201006) 157,000,000 Fixed Rate eries 2010Aia) 80,000,000 Fixed Rate eries 2009A(6xa) 176,185,000 Fixed Rate eries 2008B Refundingp) 8,815,000 Fixed Rate eries 2007B(6) 7,110,000 Fixed Rate eries 2007A Refunding(5) 91,885,000 Fixed Rate Total : $1,132,950,000 (1) As of February 2,2016 (2) Refunded a portion of Series 2007B (3) Series 2014B are fixed two-year certificate of anticipation notes(CANS),that refunded a series of previous one-year CANS,that were issued to refund the Series 2006 Daily Variable Rate that were supported by a weak liquidity facility bank. (4) Refunded a portion of Series 2000 (5) Refunded a portion of Sense 2003 (6) New money debt issue (7) Sense 2008B refunded the Series 1993 Synthetic Variable-to-Fixed Rate Debt issue that was supported by a failing insurance provider. Sense 1993 along with the Series 1992 refunded the Series 1986 and a portion of the Series T"COPa, (8) A portion to be refunded by the proposed Series 2016A Legal Authorization and Approvals The Board of Directors and the Financing Corporation will each be required to adopt separate Resolutions to complete this refunding. A Financing Corporation is required by the structure of the Revenue Obligations and was formed in April 2000 solely to satisfy this need. The Board of Directors of the Corporation is the same as the Board of Directors of the Sanitation District and the Corporation meets after an adjournment of the OCSD Board. Page 3 of 5 The OCSD Resolution authorizes the execution and delivery of certain legal documents and the execution and delivery of Wastewater Refunding Revenue Obligations, Series 2016A, evidencing principal in an aggregate amount of not to exceed $163,000,000 all as spelled out in the title as follows: "A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT, AN ESCROW AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH REVENUE OBLIGATIONS EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $163,000,000, APPROVING A NOTICE OF INTENTION TO SELL, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL NOTICE INVITING BIDS AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH REVENUE OBLIGATIONS AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND RELATED ACTIONS." The Resolution of the Corporation is somewhat shorter and simpler. It authorizes three actions that are similarly enumerated in the title as follows: "A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH REVENUE OBLIGATIONS EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $163,000,000 AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND RELATED ACTIONS." Timeline Since the proposed refunding is a fixed-rate debt issuance, staff is proposing to issue the refunding through a competitive sale because it is the most expeditious way to access the market and it is expected to provide the lowest interest cost for this given structure. ➢ Board considers legal and disclosure documents ➢ Financing Corporation considers legal and disclosure February documents ➢ Rating Agency discussions ➢ Publish Notice of Intention to Sell March ➢ Marketing and Sale through a Competitive Sale Process Page 4 of 5 April ➢ Closing ➢ Begin debt administration All costs involved with the refunding, including costs for Public Resources Advisory Group, serving as Financial Advisor, and Norton Rose Fulbright, serving as Special Counsel and Disclosure Counsel, will be paid from the proceeds of the new refunding issue. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENTS The following attachment(s) are included in hard copy and may also be viewed on-line at the OCSDa website(www.ocsd.com) with the complete agenda package: Bond documents attached: 1. District Resolution 2. Corporation Resolution 3. Draft Trust Agreement 4. Draft Installment Purchase Agreement 5. Draft Escrow Agreement 6. Draft Continuing Disclosure Agreement 7. Draft Preliminary Official Statement 8. Draft Official Notice Inviting Bids 9. Draft Notice of Intention to Sell Page 5 of 5 RESOLUTION NO. OCSD 16-03 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT, AN ESCROW AGREEMENT, AND A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH REVENUE OBLIGATIONS EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $163,000,000, APPROVING A NOTICE OF INTENTION TO SELL, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL NOTICE INVITING BIDS AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH REVENUE OBLIGATIONS AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND RELATED ACTIONS WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project"), the Orange County Sanitation District (the "District") has heretofore purchased the Prior Project from the Orange County Sanitation District Financing Corporation (the "Corporation"), and the Corporation has heretofore sold the Prior Project to the District, for the installment payments (the "Prior Installment Payments") made by the District pursuant to the Installment Purchase Agreement, dated as of May 1, 2009 (the "Prior Installment Purchase Agreement"), by and between the District and the Corporation; WHEREAS, to provide the funds necessary to finance the Prior Project, the District caused the execution and delivery of the Orange County Sanitation District Certificates of Participation, Series 2009A (the "Prior Certificates"), evidencing direct, undivided fractional interests in the Prior Installment Payments; WHEREAS, the District desires to refinance all or a portion of the Prior Project by paying and prepaying all or a portion of the remaining Prior Installment Payments, and the interest thereon to the date of prepayment, thereby causing all or a portion of the remaining Prior Certificates to be prepaid; WHEREAS, to provide the funds necessary to pay and prepay a portion of the remaining Prior Installment Payments, the District and the Corporation desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payments (the "Installment Payments") to be made by the District pursuant to an Installment Purchase Agreement by and between the District and the Corporation (such Installment Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Installment Purchase Agreement"); 27003633.3 11WO388 WHEREAS, the Corporation intends to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to U.S. Bank National Association, as trustee (the 'Trustee"), pursuant to a Trust Agreement by and among the Trustee, the Corporation and the District (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement'); WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, the Trustee intends to execute and deliver the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the 'Revenue Obligations"), evidencing direct, undivided fractional interests in the Installment Payments, and the interest thereon; WHEREAS, the District desires to provide for the public sale of the Revenue Obligations; WHEREAS, a form of the Notice of Intention to Sell to be published in connection with the public offering and sale of the Revenue Obligations has been prepared (such Notice of Intention to Sell, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Notice of Intention to Sell"); WHEREAS, a form of the Official Notice Inviting Bids to be distributed in connection with the public offering and sale of the Revenue Obligations has been prepared (such Official Notice Inviting Bids, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Notice Inviting Bids"); WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Revenue Obligations has been prepared (such Preliminary Official Statement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Preliminary Official Statement'); WHEREAS, Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended ('Rule 15c2-12"), requires that the underwriter thereof must have reasonably determined that the District has undertaken in a written agreement or contract for the benefit of the holders of the Revenue Obligations to provide disclosure of certain financial information and certain material events on an ongoing basis; WHEREAS, to cause such requirement to be satisfied, the District desires to enter into a Continuing Disclosure Agreement with the Trustee (such Continuing Disclosure Agreement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure Agreement'); WHEREAS, to cause such requirement to be satisfied, the District desires to enter into an Escrow Agreement with U.S. Bank National Association, as escrow agent (such Escrow Agreement in the form presented to this meeting, with such changes, 27003633.3 OCSD 16-03-2 insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Escrow Agreement"); WHEREAS, there have been prepared and submitted to this meeting forms of: (a) the Installment Purchase Agreement; (b) the Trust Agreement; (c) the Notice of Intention to Sell; (d) the Notice Inviting Bids; (e) the Preliminary Official Statement; (f) the Continuing Disclosure Agreement; and (g) the Escrow Agreement; WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the District is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, the Board of Directors of the District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the District (the 'Board") so finds. Section 2. The Installment Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Chair of the Board, and such other member of the Board as the Chair may designate, the General Manager of the District, the Director of Finance and Administrative Services of the District, and such other officers of the District as the Director of Finance and Administrative Services may designate (the "Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Installment Purchase Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of Installment Payments in excess of $163,000,000, shall not result in a true interest cost for the 27003633.3 OCSD 16-03-3 Installment Payments in excess of 4.5% and shall not result in a final Installment Payment later than February 1, 2039. Section 3. The Trust Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Trust Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Authorized Officer. Section 4. The execution and delivery of Revenue Obligations evidencing principal in an aggregate amount of not to exceed $163,000,000, payable in the years and in the amounts, and evidencing principal of and interest on the Installment Payments as specified in the Trust Agreement as finally executed, are hereby authorized and approved. Section 5. The prepayment of all or a portion of the remaining principal components of the Prior Installment Payments, and the interest components thereof to the dates of prepayment, and the Prior Certificates evidencing interests therein, as determined by any Authorized Officer, is hereby authorized and approved. Section 6. The form of Notice of Intention to Sell, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Notice of Intention to Sell in connection with the offering and sale of the Revenue Obligations is hereby approved. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the District, to cause the Notice of Intention to Sell to be published once in The Bond Buyer (or in such other financial publication generally circulated throughout the State of California or reasonably expected to be disseminated among prospective bidders for the Revenue Obligations as an Authorized Officer shall approve as being in the best interests of the District) at least five days prior to the date set for the opening of bids in the Notice Inviting Bids, with such changes, insertions and omissions therein as an Authorized Officer may require or approve, such requirement or approval to be conclusively evidenced by such publishing of the Notice of Intention to Sell. Section 7. The Notice Inviting Bids, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of the Notice Inviting Bids in connection with the offering and sale of the Revenue Obligations is hereby authorized and approved. The terms and conditions of the offering and sale of the Revenue Obligations shall be as specified in the Notice Inviting Bids. Bids for the purchase of the Revenue Obligations shall be received at the time and place set forth in the Notice Inviting Bids. The Authorized Officers are each hereby authorized and directed, for and in the name 27003633.3 OCSD 16-03-4 and on behalf of the District, to accept the bid for the Revenue Obligations with the lowest true interest cost, or to reject all bids therefor, in accordance with the terms of the Notice Inviting Bids. Section 8. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Revenue Obligations is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the District that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain information permitted by Rule 15c2-12 to be omitted). The Authorized Officers are each hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Revenue Obligations a reasonable number of copies of the Preliminary Official Statement. Section 9. The preparation and delivery of a final Official Statement (the "Official Statement'), and its use in connection with the offering and sale of the Revenue Obligations, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are, and each of them is, hereby authorized and directed to execute the final Official Statement and any amendment or supplement thereto, for and in the name of the District. Section 10. The Continuing Disclosure Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Continuing Disclosure Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such Authorized Officer. Section 11. The Escrow Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Escrow Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Escrow Agreement by such Authorized Officer. Section 12. The Authorized Officers are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for 27003633.3 OCSD 16-03-5 carrying out the execution and delivery of the Revenue Obligations and the transactions contemplated by the notices, agreements and documents referenced in this Resolution. Section 13. All actions heretofore taken by the officers and employees of the District with respect to the execution, delivery and sale of the Revenue Obligations, or in connection with or related to any of the agreements or documents referenced in this Resolution, are hereby approved, confirmed and ratified. Section 14. This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED at a regular meeting of the Board of Directors of the Orange County Sanitation District held on February 24, 2016. John Nielsen Board Chair ATTEST: Kelly Lore Clerk of the Board APPROVED: Brad Hogin General Counsel Orange County Sanitation District 27003633.3 OCSD 16-03-6 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-03 was passed and adopted at a regular meeting of said Board on the 24th day of February, 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 24th day of February 2016. Kelly Lore Clerk of the Board Orange County Sanitation District 27003633.3 OCSD 16-03-7 RESOLUTION NO. FC-24 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2016A, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH REVENUE OBLIGATIONS EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $163,000,000 AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND RELATED ACTIONS WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project"), the Orange County Sanitation District (the "District") has heretofore purchased the Prior Project from the Orange County Sanitation District Financing Corporation (the "Corporation"), and the Corporation has heretofore sold the Prior Project to the District, for the installment payments (the "Prior Installment Payments") made by the District pursuant to the Installment Purchase Agreement, dated as of May 1, 2009 (the "Prior Installment Purchase Agreement"), by and between the District and the Corporation; WHEREAS, to provide the funds necessary to refinance the Prior Project, the District caused the execution and delivery of the Orange County Sanitation District Certificates of Participation, Series 2009A (the "Prior Certificates"), evidencing direct, undivided fractional interests in the related Prior Installment Payments; WHEREAS, the District desires to refinance all or a portion of the Prior Project by paying and prepaying all or a portion of the remaining Prior Installment Payments, and the interest thereon to the date of prepayment, thereby causing all or a portion of the remaining Prior Certificates to be prepaid; WHEREAS, to provide the funds necessary to pay and prepay a portion of the remaining Prior Installment Payments, the District and the Corporation desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payments (the "Installment Payments") to be made by the District pursuant to an Installment Purchase Agreement by and between the District and the Corporation (such Installment Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Installment Purchase Agreement"); 27003634.3 11WO388 WHEREAS, the Corporation intends to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to U.S. Bank National Association, as trustee (the 'Trustee"), pursuant to a Trust Agreement by and among the Trustee, the Corporation and the District (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement'); WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, the Trustee intends to execute and deliver the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations"), evidencing direct, undivided fractional interests in the Installment Payments, and the interest thereon; WHEREAS, there have been prepared and submitted to this meeting forms of: (a) the Installment Purchase Agreement; and (b) the Trust Agreement; WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the actions authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Corporation is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such actions for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, the Board of Directors of the Corporation DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the Corporation (the "Board") so finds. Section 2. The Installment Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The President of the Corporation, the Vice-President of the Corporation, the Treasurer of the Corporation and the Secretary of the Corporation, and such other officers of the Corporation as the President may designate (the "Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the Corporation, to execute and deliver the Installment Purchase Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of Installment Payments in excess of $163,000,000, shall not result in a true interest cost for the Installment Payments in excess of 4.5% and shall not result in a final Installment Payment later than February 1, 2039. 27003634.3 FC-24-2 Section 3. The Trust Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Corporation, to execute and deliver the Trust Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Authorized Officer. Section 4. The execution and delivery of Revenue Obligations evidencing principal in an aggregate amount of not to exceed $163,000,000, payable in the years and in the amounts, and evidencing direct, undivided fractional interests in the Installment Payments, and the interest thereon, as specified in the Trust Agreement as finally executed, are hereby authorized and approved. Section 5. The officers and agents of the Corporation are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the execution and delivery of the Revenue Obligations and the transactions contemplated by the agreements or documents referenced in this Resolution. Section 6. All actions heretofore taken by the officers and agents of the Corporation with respect to the execution, delivery and sale of the Revenue Obligations, or in connection with or related to any of the agreements or documents referenced in this Resolution, are hereby approved, confirmed and ratified. Section 7. This Resolution shall take effect immediately upon its adoption. 27003634.3 FC-24-3 PASSED AND ADOPTED at a regular meeting of the Orange County Sanitation District Financing Corporation held on February 24, 2016. John Nielsen President, Orange County Sanitation District Financing Corporation ATTEST: Kelly Lore Secretary, Orange County Sanitation District Financing Corporation APPROVED: Brad Hogin General Counsel, Orange County Sanitation District Financing Corporation 27003634.3 FC-24-4 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly Lore, Secretary of the Orange County Sanitation District Financing Corporation, do hereby certify that the foregoing Resolution No. FC-24 was passed and adopted at a regular meeting of said Board on the 24th day of February, 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District Financing Corporation this 24th day of February, 2016. Secretary Orange County Sanitation District Financing Corporation 27003634.3 FC-24-5 NRF DRAFT 2/3/16 TRUST AGREEMENT by and among U.S. BANK NATIONAL ASSOCIATION, as Trustee, ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION and ORANGE COUNTY SANITATION DISTRICT Dated as of March 1,2016 Relating to $[Paz Amount] Orange County Sanitation District Wastewater Refunding Revenue Obligations Series 2016A 27003639.4 11600388 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EQUAL SECURITY Section1.01. Definitions........................................................................................................2 Section 1.02. Definitions in Installment Purchase Agreement..............................................9 Section1.03. Equal Security..................................................................................................9 ARTICLE II TERMS AND CONDITIONS OF REVENUE OBLIGATIONS Section 2.01. Preparation and Delivery of Revenue Obligations ..........................................9 Section 2.02. Denomination, Medium and Dating of Revenue Obligations .........................9 Section 2.03. Payment Dates of Revenue Obligations; Interest Computation.................... 10 Section 2.04. Form of Revenue Obligations........................................................................ 11 Section 2.05. Execution of Revenue Obligations and Replacement Certificates................ 11 Section 2.06. Transfer and Payment,Exchange or Cancellation of Revenue Obligations..................................................................................................... 11 Section 2.07. Revenue Obligation Registration Books........................................................ 11 Section 2.08. Temporary Revenue Obligations................................................................... 12 Section 2.09. Revenue Obligations Mutilated, Lost,Destroyed or Stolen.......................... 12 Section 2.10. Book-Entry System........................................................................................ 12 ARTICLE M PROCEEDS OF REVENUE OBLIGATIONS Section 3.01. Delivery of Revenue Obligations................................................................... 15 Section 3.02. Deposit of Proceeds of Revenue Obligations ................................................ 15 Section 3.03. Costs of Issuance Fund.................................................................................. 15 ARTICLE IV PREPAYMENT OF REVENUE OBLIGATIONS Section 4.01. Optional Prepayment..................................................................................... 16 Section 4.02. Mandatory Sinking Account Prepayment...................................................... 16 Section 4.03. Selection of Revenue Obligations for Optional Prepayment......................... 16 Section 4.04. Notice of Prepayment .................................................................................... 16 Section 4.05. Partial Prepayment of Revenue Obligations.................................................. 17 Section 4.06. Effect of Prepayment..................................................................................... 18 ARTICLE V ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS Section 5.01. Assignment and Pledge.................................................................................. 18 Section 5.02. Installment Payment Fund............................................................................. 18 Section5.03. Reserved......................................................................................................... 19 Section 5.04. Investment of Moneys.................................................................................... 19 Section 5.05. Brokerage Confirmations...............................................................................20 27W3639.4 i TABLE OF CONTENTS (continued) Page ARTICLE VI COVENANTS Section 6.01. Compliance with Trust Agreement................................................................20 Section 6.02. Compliance with Installment Purchase Agreement.......................................20 Section 6.03. Compliance with Master Agreement.............................................................20 Section 6.04. Observance of Laws and Regulations............................................................21 Section6.05. Other Liens.....................................................................................................21 Section 6.06. Prosecution and Defense of Suits ..................................................................21 Section 6.07. Accounting Records and Statements.............................................................21 Section 6.08. Tax Covenants ...............................................................................................21 Section 6.09. Continuing Disclosure ...................................................................................25 Section 6.10. Further Assurances.........................................................................................25 ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action upon Event of Default........................................................................25 Section 7.02. Other Remedies of the Trustee......................................................................26 Section7.03. Non-Waiver....................................................................................................26 Section 7.04. Remedies Not Exclusive................................................................................26 Section 7.05. Application of Amounts After Default..........................................................26 Section 7.06. Trustee May Enforce Claims Without Possession of Revenue Obligations.....................................................................................................27 Section 7.07. Limitation on Suits.........................................................................................27 Section 7.08. No Liability by the Corporation to the Owners.............................................28 Section 7.09. No Liability by the District to the Owners.....................................................28 Section 7.10. No Liability of the Trustee to the Owners.....................................................28 ARTICLE VI I THE TRUSTEE Section 8.01. Employment of the Trustee; Duties...............................................................28 Section 8.02. Removal and Resignation of the Trustee.......................................................29 Section 8.03. Compensation and Indemnification of the Trustee........................................30 Section 8.04. Protection of the Trustee................................................................................30 ARTICLE IX AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT Section 9.01. Amendment or Supplement...........................................................................32 Section 9.02. Disqualified Revenue Obligations.................................................................33 Section 9.03. Endorsement or Replacement of Revenue Obligations After Amendment or Supplement...........................................................................33 Section 9.04. Amendment by Mutual Consent....................................................................33 27003639.E ii TABLE OF CONTENTS (continued) Page ARTICLE X DEFEASANCE Section 10.01. Discharge of Revenue Obligations and Trust Agreement.............................34 Section10.02. Unclaimed Moneys........................................................................................35 ARTICLE XI MISCELLANEOUS Section 11.01. Benefits of Trust Agreement..........................................................................35 Section 11.02. Successor Deemed Included in all References to Predecessor......................36 Section 11.03. Execution of Documents by Owners.............................................................36 Section 11.04. Waiver of Personal Liability..........................................................................36 Section 11.05. Acquisition of Revenue Obligations by District............................................36 Section11.06. Content of Certificates...................................................................................36 Section 11.07. Funds and Accounts.......................................................................................37 Section 11.08. Article and Section Headings,Gender and References.................................37 Section 11.09. Partial Invalidity.............................................................................................38 Section 11.10. California Law...............................................................................................38 Section11.11. Notices...........................................................................................................38 Section 11.12. Effective Date................................................................................................39 Section 11.13. Execution in Counterparts..............................................................................39 EXHIBIT A—FORM OF REVENUE OBLIGATION 27W3639.6 111 TRUST AGREEMENT THIS TRUST AGREEMENT (this "Trust Agreement'), dated as of March 1, 2016, is made by and among U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee(the"Trustee"), the ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing under the laws of the State of California (the "Corporation"), and the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District'). WITNESSETH: WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project'), the District has heretofore purchased the Prior Project from the Corporation, and the Corporation has heretofore sold the Prior Project to the District, for the installment payments (the "Prior Installment Payments") made by the District pursuant to the Installment Purchase Agreement, dated as of May 1, 2009 (the"Prior Installment Purchase Agreement'),by and between the District and the Corporation; WHEREAS, to provide the funds necessary to refinance the Prior Project, the District caused the execution and delivery of the Orange County Sanitation District Certificates of Participation, Series 2009A (the "Prior Certificates"), evidencing direct, undivided fractional interests in the related Prior Installment Purchase Agreement and the related Prior Installment Payments; WHEREAS,the District desires to refinance a portion of the Prior Project(the "Project') by prepaying a portion of the remaining Prior Installment Payments, and the interest thereon to the date of prepayment, thereby causing a portion of the Prior Certificates to be retired; WHEREAS, to provide the funds necessary to pay and prepay a portion of the remaining Prior Installment Payments,the District and the Corporation desire that the Corporation purchase the Project from the District and the District sell the Project to the Corporation, and that the District then purchase the Project from the Corporation and the Corporation sell the Project to the District, for the installment payments (the"Installment Payments") to be made by the District pursuant to the Installment Purchase Agreement, dated the date hereof(the"Installment Purchase Agreement'); WHEREAS, the Corporation proposes to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to the Trustee; WHEREAS, in consideration of such assignment and the execution and delivery of this Trust Agreement, the Trustee has agreed to execute and deliver Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations"), which are certificates of participation, evidencing direct, undivided fractional interests in the Installment Purchase Agreement and the related Installment Payments,and the interest thereon; 27003639.4 WHEREAS, a portion of the proceeds of the Revenue Obligations will be used to prepay a portion of the Prior Installment Payments; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Trust Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and deliver this Trust Agreement; NOW, THEREFORE, in consideration of the promises and of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Revenue Obligations and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: "Authorized Corporation Representative"means the President,the Vice President, the Treasurer and the Secretary of the Corporation, and any other Person authorized by the President of the Corporation to act on behalf of the Corporation under or with respect to this Trust Agreement. "Authorized Denominations"means $5,000 and integral multiples thereof. "Authorized District Representative" means the General Manager of the District, the Director of Finance and Administrative Services of the District, the Controller of the District and any other Person authorized by the Director of Finance and Administrative Services of the District to act on behalf of the District under or with respect to this Trust Agreement. "Beneficial Owners" means those individuals, partnerships, corporations or other entities for which the Participants have caused the Depository to hold Book-Entry Certificates. "Book-Entry Certificates" means the Revenue Obligations registered in the name of the nominee of DTC, or any successor securities depository for the Revenue Obligations, as the Owner thereof pursuant to the terms and provisions of Section 2.10 hereof. "Business Day" means a day other than (a) Saturday or Sunday, (b)a day on which banking institutions in the city in which the Principal Office is located are authorized or required by law to be closed, and (c)a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. 27003639.4 2 "Cede & Co." means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Revenue Obligations. "Certificate Year" means each twelve-month period beginning on February 2 in each year and extending to the next succeeding February 1, both dates inclusive, except that the first Certificate Year shall begin on the Closing Date and end on February 1,2017. "Closing Date"means , 2016. "Code" means the Internal Revenue Code of 1986. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of the date hereof, by and between the District and Digital Assurance Certification LLC, as originally executed and as it may from time to time be amended in accordance with the terms thereof. "Corporation' means the Orange County Sanitation District Financing Corporation, a nonprofit public benefit corporation organized and existing under the laws of the State. "Costs of Issuance" means all the costs of executing and delivering the Revenue Obligations, including, but not limited to, all printing and document preparation expenses in connection with this Trust Agreement, the Installment purchase Agreement, the Revenue Obligations and any preliminary official statement and final official statement pertaining to the Revenue Obligations, fees of a financial advisor, rating agency fees, market study fees, legal fees and expenses of counsel with respect to the execution and delivery of the Revenue Obligations, the initial fees and expenses of the Trustee and its counsel and other fees and expenses incurred in connection with the execution and delivery of the Revenue Obligations, to the extent such fees and expenses are approved by the District. "Costs of Issuance Fund" means the fund by that name established in accordance with Section 3.03 hereof. "Depository" means the securities depository acting as Depository pursuant to Section 2.10 hereof. "District" means the Orange County Sanitation District, a county sanitation district organized and existing under the laws of the State, and any successor thereto. "DTC"means The Depository Trust Company,New York,New York and its successors. "Escrow Agent"means U.S. Bank National Association and its successor or assign. "Escrow Agreement" means the Escrow Agreement, dated as of March 1, 2016, between the Escrow Agent and the District. "Escrow Fund" means the escrow fund established under the Escrow Agreement and held by the Escrow Agent. 27003639.4 3 "Event of Default" shall have the meaning set forth in Section 6.01 of the Installment Purchase Agreement. "Fitch" means Fitch Ratings, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason,the term "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency selected by the District. "Government Obligations" means any of the following which are noncallable by the issuer thereof except to the extent not permitted by the laws of the State as an investment for the moneys to be invested therein at the time of investment: (i) (a) direct general obligations of the United States of America, (b)obligations the payment of the principal of and interest on which are unconditionally guaranteed as to the full and timely payment by the United States of America, or (c) any fund or other pooling arrangement whose assets consist exclusively of the obligations listed in clause(a) or (b) of this clause(i) and which is rated at least `P-1" by Moody's; provided that, such obligations shall not include unit investment trusts or mutual fund obligations; (ii) advance refunded tax-exempt obligations that (a) are rated by Moody's and S&P, (b) are secured by obligations specified in clause(i), (c) me tax-exempt because they are secured by obligations specified in clause (i), and (d) have the same ratings as the obligations specified in clause (i); (iii) bonds, debentures or notes issued by any of the following federal agencies: Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation or Fannie Mae; provided, that such bonds, debentures or notes shall be the senior obligations of such agencies (including participation certificates) and have the same ratings by Moody's and S&P as the obligations specified in clause(i); and (iv) bonds, debentures or notes issued by any Federal agency hereafter created by an act of Congress, the payment of the principal of and interest on which are unconditionally guaranteed by the United States of America as to the full and timely payment; provided, that, such obligations shall not include unit investment trusts or mutual fund obligations. "Installment Payment Fund" means the fund by that name established in accordance with Section 5.02 hereof. "Installment Payments" means the Installment Payments required to be made by the District pursuant to Section 3.02 of the Installment Purchase Agreement. "Installment Purchase Agreement" means the Installment Purchase Agreement, dated as of the date hereof, by and between the District and the Corporation, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. 27003639.4 4 "Interest Account" means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. "Interest Payment Date" means February 1 and August 1 of each year, commencing August 1,2016. "Letter of Representations"means the letter of the District delivered to and accepted by the Depository on or prior to the delivery of the Revenue Obligations as Book-Entry Certificates setting forth the basis on which the Depository serves as depository for such Book-Entry Certificates, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute Depository. "Mandatory Sinking Account Payment" means the amount required to be deposited by the District in the Principal Account for the prepayment of Term Revenue Obligations pursuant to Section 4.02 hereof. "Master Agreement" means the Master Agreement for District Obligations, dated as of August 1, 2000, by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms thereof. "Moody's" means Moody's Investors Service, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason,the term"Moody's"shall be deemed to refer to any other nationally recognized securities rating agency selected by the District. "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.10 hereof. "Opinion of Counsel"means a written opinion of Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District. "Outstanding," when used as of any particular time with reference to Revenue Obligations, means (subject to the provisions of Section 9.02 hereof) all Revenue Obligations except (a)Revenue Obligations previously canceled by the Trustee or delivered to the Trustee for cancellation, (b) Revenue Obligations paid or deemed to have been paid within the meaning of Section 10.01 hereof, and (c) Revenue Obligations in lieu of or in substitution for which other Revenue Obligations shall have been executed and delivered by the Trustee pursuant to Section 2.09 hereof. "Owner" means any Person who shall be the registered owner of any Outstanding Revenue Obligation as indicated in the registration books of the Trustee required to be maintained pursuant to Section 2.07 hereof. "Participants" means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Book-Entry Certificates as securities depository. 27003639.4 5 "Participating Underwriter" has the meaning ascribed thereto in the Continuing Disclosure Agreement. "Permitted Investments"means any of the following, except to the extent not permitted by the laws of the State as an investment for the moneys to be invested therein at the time of investment: (1) Government Obligations; (2) Bonds, debentures, notes, participation certificates or other evidences of indebtedness issued, or the principal of and interest on which are unconditionally guaranteed, by the Federal Intermediate Credit Bank, the Federal Home Loan Bank System, the Government National Mortgage Association or any other agency or instrumentality of or corporation wholly owned by the United States of America when such obligations are backed by the full faith and credit of the United States for the full and timely payment of principal and interest; (3) Obligations of any state of the United States or any political subdivision thereof, which at the time of investment are rated "Aa3" or higher by Moody's or"AA-" or higher by S&P or Fitch; or which are rated "VMIG 1" or better by Moody's, "A-1"or better by S&P, or "Fl" or better by Fitch with respect to commercial paper, or "VMIG 1,""SP-1,"or"Fl,"respectively,with respect to municipal notes; (4) Bank time deposits evidenced by certificates of deposit, deposit accounts, and bankers' acceptances, issued by any bank, trust company or national banking association insured by the Federal Deposit Insurance Corporation (including the Trustee); provided, that (a) such bank, trust company or national banking association is rated at least "Al"or"A+"by any two Rating Agencies; and(b)the aggregate of such bank time deposits and bankers' acceptances issued by any bank, trust company or banking association does not exceed at any one time 10% of the aggregate of the capital stock, surplus and undivided profits of such bank,trust company or banking association and that such capital stock, surplus and undivided profits shall not be less than $15,000,000; (5) Repurchase agreements with any bank, trust company or national banking association insured by the Federal Deposit Insurance Corporation(including the Trustee), with subsidiaries (of a parent company), provided the obligations of the subsidiary under the agreement are unconditionally guaranteed by the parent, or with any government bond dealer recognized as a primary dealer by the Federal Reserve Bank of New York, which agreements are fully and continuously secured by a valid and perfected first priority security interest in obligations described in paragraph(1) or (2) of this definition, provided that either such bank, trust company or national banking association which (or senior debt or claims paying ability of the financial entity's guarantor) is rated, at the time of investment,at least"Al"or"A+"by any two Rating Agencies; (6) Repurchase agreements with maturities of not more than one year entered into with financial institutions such as banks or trust companies organized under state law or national banks or banking associations (including the Trustee), insurance companies or 27003639.4 6 government bond dealers reporting to, trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York and a member of the Securities Investor Protection Corporation or with a dealer or parent holding company that is rated, at the time of investment, or whose long-term debt obligations (or senior debt or claims paying ability of the financial entity's guarantor) are rated, at the time of investment, at least "Al" or "A+" by any two Rating Agencies; provided, that such repurchase agreements are in writing, secured by obligations described in paragraphs (1) and (2) of this definition having a fair market value, exclusive of accrued interest, at least equal to the amount invested in the repurchase agreements and in which the Trustee has a perfected first lien in,and retains possession of, such obligations free from all third party claims; (7) Investment agreements, forward purchase agreements and reserve fund put agreements with any corporation, including banking or financial institutions, or agreements entered into with subsidiaries (of a parent company), provided the obligations of the subsidiary under the agreement are unconditionally guaranteed by the parent, the corporate debt of which (or senior debt or claims paying ability of the financial entity's guarantor) is rated, at the time of investment, at least "Al" or "A+" by any two Rating Agencies; (8) Guaranteed investment contracts or similar funding agreements issued by insurance companies, provided that either the long term corporate debt of such insurance company, at the time of investment, is rated, at the time of investment, at least"Al" or "A+" by any two Rating Agencies or which agreements are fully and continuously secured by a valid and perfected first priority security interest in obligations described in paragraph(1) or (2) of this definition, or that the following conditions are met: (a)the market value of the collateral is maintained at levels acceptable to Moody's and S&P or Fitch, (b)the Trustee or a third party acting solely as agent for the Trustee has possession of the collateral, (c)the Trustee has a perfected first priority security interest in the collateral, (d)the collateral is free and clear of third-party liens, and (e) failure to maintain the requisite collateral level will require the Trustee to liquidate collateral; (9) Corporate commercial paper which are rated at least"P-1," "A-1" or"Fl" by any two Rating Agencies at the time of investment; (10) Taxable government money market portfolios which are rated at least ""'Am" or "AAm-G" or "Aaa-mf' or"AAmmf by any two Rating Agencies (including funds for which the Trustee or an affiliate provides investment advice or similar services); and (11) Deposits with the Local Agency Investment Fund of the State, as may otherwise be permitted by law. "Person" means an individual, corporation, limited liability company, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. 27003639.4 7 "Prepayment Account"means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. "Principal Account" means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. "Principal Office" means the Trustee's principal corporate trust office in Los Angeles, California. "Principal Payment Date"means a date on which an Installment Payment evidenced by the Revenue Obligations becomes due and payable. "Prior Certificates" means the District's Certificates of Participation, Series 2009A, maturing in the years 20_through 20_, inclusive. "Prior Trust Agreement" means the Trust Agreement, dated as of May 1, 2009, by and among the Prior Trustee, the Corporation and the District, as amended and supplemented, pursuant to which the Prior Certificates were executed and delivered. "Prior Trustee" means U.S. Bank National Association, as trustee under the Prior Trust Agreement. "Project" has the meaning ascribed thereto in the recitals hereto. "Bating Agency" means Fitch, Moody's or S&P. "Record Date"means, with respect to the interest payable on any Interest Payment Date, the 15th day of the calendar month immediately preceding such Interest Payment Date, whether or not such day is a Business Day. "Revenue Obligations" means the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A, executed and delivered by the Trustee pursuant hereto, which are certificates of participation, evidencing direct, undivided fractional interests in the Installment Purchase Agreement and the related Installment Payments, and the interest thereon. "S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term "S&P" shall be deemed to refer to any other nationally recognized securities rating agency selected by the District. "State"means the State of California. "Term Revenue Obligations" means Revenue Obligations payable at or before their specified maturity date or dates from Mandatory Sinking Account Payments established for that purpose and calculated to retire such Revenue Obligations on or before their specified maturity date or dates. 27003639.4 "Trust Agreement" means this Trust Agreement, dated as of March 1, 2016, by and among the Trustee, the Corporation and the District, as originally executed and delivered and as it may from time to time be amended or supplemented in accordance with the provisions hereof. "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, or any other bank or trust company which may at any time be substituted in its place as provided in Section 8.02 hereof. "Written Certificate"and"Written Request'mean(a)with respect to the Corporation, a written certificate or written request, respectively, signed in the name of the Corporation by an Authorized Corporation Representative, and (b)with respect to the District, a written certificate or written request, respectively, signed in the name of the District by an Authorized District Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. Section 1.02. Definitions in Installment Purchase Agreement. Except as otherwise herein defined and unless the context otherwise requires, the terms defined in the Installment Purchase Agreement shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein have the meanings defined therein, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined therein. With respect to any defined term which is given a different meaning under this Trust Agreement than under the Installment Purchase Agreement, as used herein it shall have the meaning given herein. Section 1.03. Equal Security. In consideration of the acceptance of the Revenue Obligations by the Owners, this Trust Agreement shall be deemed to be and shall constitute a contract between the Trustee and the Owners to secure the full and final payment of the interest and principal evidenced by the Revenue Obligations which may be executed and delivered hereunder, subject to each of the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terns contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit, protection and security of all Owners without distinction, preference or priority as to security or otherwise of any Revenue Obligations over any other Revenue Obligations by reason of the number or date thereof or the time of execution or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. ARTICLE II TERMS AND CONDITIONS OF REVENUE OBLIGATIONS Section 2.01. Preparation and Delivery of Revenue Obligations. The Trustee is hereby authorized, upon the Written Request of the District, to execute and deliver the Revenue Obligations in the aggregate principal amount of $[Par Amount] evidencing the aggregate principal amount of the Installment Payments and each evidencing a direct, fractional undivided interest in the Installment Payments, and the interest thereon. The Installment Payments evidenced by each Revenue Obligation shall constitute the principal evidenced thereby and the 27003639.4 9 interest on such Installment Payments shall constitute the interest evidenced thereby. The Revenue Obligations shall be numbered,with or without prefixes, as directed by the Trustee. Section 2.02. Denomination, Medium and Datlne of Revenue Obligations. The Revenue Obligations shall be designated "Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A" and shall be prepared in the form of fully registered Revenue Obligations, without coupons, in Authorized Denominations and shall be payable in lawful money of the United States of America. The Revenue Obligations shall be dated as of the Closing Date. Each Revenue Obligation shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full, unless such date of execution shall be after a Record Date and on or prior to the following Interest Payment Date, in which case such Revenue Obligation shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to July 15, 2016, in which case such Revenue Obligation shall represent interest from the Closing Date. Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Revenue Obligations shall be in default, each Revenue Obligation shall evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Section 2.03. Payment Dates of Revenue Obligations; Interest Computation. (a)Method and Place of Payment. The principal evidenced by the Revenue Obligations shall become due and payable, subject to prior prepayment, on February 1 of the years, in the amounts, and shall evidence interest accruing at the rates per annum set forth below: Principal Payment Date Principal Interest (February 1) Component Rate Except as otherwise provided in the Letter of Representations, payments of interest evidenced by the Revenue Obligations shall be made to the Owners thereof(as determined at the close of business on the Record Date next preceding the related Interest Payment Date)by check or draft of the Trustee mailed to the address of each such Owner as it appears on the registration books maintained by the Trustee pursuant to Section 2.07 hereof, or to such other address as may be furnished in writing to the Trustee by each such Owner. Except as otherwise provided in the Letter of Representations, payment of principal and prepayment premium, if any, evidenced by the Revenue Obligations, on their stated Principal Payment Dates or on prepayment in whole or in part prior thereto, shall be made only upon presentation and surrender of the Revenue Obligations at the Principal Office. 27003639.4 10 (b) Computation oflnterest. The interest evidenced by the Revenue Obligations shall be payable on each Interest Payment Date to and including their respective Principal Payment Dates or prepayment prior thereto, and shall represent the sum of the interest on the Installment Payments coming due on the Interest Payment Dates in each year. The principal evidenced by the Revenue Obligations shall be payable on their respective Principal Payment Dates in each year and shall represent the Installment Payments coming due on the Principal Payment Dates in each year. Interest evidenced by the Revenue Obligations shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Section 2.04. Form of Revenue Obligations. The Revenue Obligations shall be in substantially the form of Exhibit A hereto, with necessary or appropriate insertions, omissions and variations as permitted or required hereby. Section 2.05. Execution of Revenue Obligations and Replacement Certificates. The Revenue Obligations shall be executed by the Trustee by the manual signature of an authorized signatory of the Trustee. The Trustee shall deliver replacement Revenue Obligations in the manner and as contemplated by this Article. Such replacement Revenue Obligations shall be executed as herein provided and shall be in Authorized Denominations. Section 2.06. Transfer and Payment, Exchange or Cancellation of Revenue Obligations. Each Revenue Obligation is transferable by the Owner thereof, in person or by his attorney duly authorized in writing, at the Principal Office, on the registration books maintained by the Trustee pursuant to the provisions of Section 2.07 hereof,upon surrender of such Revenue Obligation for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Revenue Obligation as the absolute owner of such Revenue Obligation for all purposes, whether or not the principal or interest evidenced by such Revenue Obligation shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal evidenced by such Revenue Obligation shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such Revenue Obligation to the extent of the sum or sums so paid. Whenever any Revenue Obligation shall be surrendered for transfer, the Trustee shall execute and deliver a new Revenue Obligation or Revenue Obligations evidencing principal in the same aggregate amount and having the same stated Principal Payment Date. The Trustee shall require the payment by any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Each Revenue Obligation may be exchanged at the Principal Office for Revenue Obligations evidencing principal in a like aggregate principal amount having the same stated Principal Payment Date in such Authorized Denominations as the Owner thereof may request. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. Whenever in this Trust Agreement provision is made for the cancellation by the Trustee of any Bonds, the Trustee shall destroy such Bonds and deliver a certificate of such destruction to the District. 27003639.4 l l Section 2.07. Revenue Obligation Registration Books. The Trustee shall keep at its Principal Office sufficient books for the registration and transfer of the Revenue Obligations, which books shall be available for inspection and copying by the District at reasonable hours and under reasonable conditions; and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Revenue Obligations on such books as hereinabove provided. Section 2.08. Temporary Revenue Obligations. The Revenue Obligations may be initially delivered in temporary form exchangeable for definitive Revenue Obligations when ready for delivery, which temporary Revenue Obligations shall be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Trustee, shall be in fully registered form and shall contain such reference to any of the provisions hereof as may be appropriate. Every temporary Revenue Obligation shall be executed and delivered by the Trustee upon the same conditions and terms and in substantially the same manner as definitive Revenue Obligations. If the Trustee executes and delivers temporary Revenue Obligations, it shall prepare and execute definitive Revenue Obligations without delay, and thereupon the temporary Revenue Obligations may be surrendered at the Principal Office in exchange for such definitive Revenue Obligations, and until so exchanged such temporary Revenue Obligations shall be entitled to the same benefits hereunder as definitive Revenue Obligations executed and delivered hereunder. Section 2.09. Revenue Obligations Mutilated, Lost. Destroyed or Stolen. If any Revenue Obligation shall become mutilated, the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Revenue Obligation evidencing a like principal amount and having the same stated Principal Payment Date and number in exchange and substitution for the Revenue Obligation so mutilated, but only upon surrender to the Trustee of the Revenue Obligation so mutilated. Every mutilated Revenue Obligation so surrendered to the Trustee shall be canceled by it. If any Revenue Obligation shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Revenue Obligation evidencing a like principal amount and having the same stated Principal Payment Date, numbered as the Trustee shall determine, in lieu of and in substitution for the Revenue Obligation so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Revenue Obligation executed and delivered by it under this Section and of the expenses which may be incurred by it under this Section. Any Revenue Obligation executed and delivered under the provisions of this Section in lieu of any Revenue Obligation alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Revenue Obligations executed and delivered hereunder, and the Trustee shall not be required to treat both the original Revenue Obligation and any replacement Revenue Obligation as being Outstanding for the purpose of determining the amount of Revenue Obligations which may be executed and delivered hereunder or for the purpose of determining any percentage of Revenue Obligations Outstanding hereunder, but both the original and replacement Revenue Obligation shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of executing and delivering a new Revenue Obligation for a Revenue Obligation which has been lost, destroyed or stolen and which evidences principal that is then payable, the 27003639.4 12 Trustee may make payment of such Revenue Obligation to the Owner thereof if so instructed by the District. Section 2.10. Book-Entry System. (a) The Revenue Obligations shall be initially executed and delivered as Book-Entry Certificates, and the Revenue Obligations for each stated Principal Payment Date shall be in the form of a separate single fully registered Revenue Obligation (which may be typewritten). Upon initial execution and delivery, the ownership of each Revenue Obligation shall be registered in the registration books maintained by the Trustee in the name of the Nominee, as nominee of the Depository. Payment of principal or interest evidenced by any Book-Entry Certificate registered in the name of the Nominee shall be made on the applicable Interest Payment Date by wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address which is, on the Record Date, shown for the Nominee in the registration books maintained by the Trustee. (b) With respect to Book-Entry Certificates, the District, the Corporation and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book-Entry Certificates. Without limiting the immediately preceding sentence, the District, the Corporation and the Trustee shall have no responsibility or obligation with respect to (i)the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in Book-Entry Certificates, (ii)the delivery to any Participant or any other Person, other than an Owner as shown in the registration books maintained by the Trustee, of any notice with respect to Book-Entry Certificates, including any notice of prepayment, (in)the selection by the Depository and its Participants of the beneficial interests in Book-Entry Certificates to be prepaid in the event Revenue Obligations are prepaid in part, (iv)the payment to any Participant or any other Person, other than an Owner as shown in the registration books maintained by the Trustee, of any amount with respect to principal, premium, if any, or interest evidenced by Book-Entry Certificates, or(v)any consent given or other action taken by the Depository as Owner. (c) The District, the Corporation and the Trustee may treat and consider the Person in whose name each Book-Entry Certificate is registered in the registration books maintained by the Trustee as the absolute Owner of such Book-Entry Certificate for the purpose of payment of principal, prepayment premium, if any, and interest evidenced by such Revenue Obligation, for the purpose of selecting any Revenue Obligations, or portions thereof, to be prepaid, for the purpose of giving notices of prepayment and other matters with respect to such Revenue Obligation, for the purpose of registering transfers with respect to such Revenue Obligation, for the purpose of obtaining any consent or other action to be taken by Owners and for all other purposes whatsoever, and the District, the Corporation and the Trustee shall not be affected by any notice to the contrary. (d) Reserved. (e) The Trustee shall pay all principal, premium, if any, and interest evidenced by the Revenue Obligations to the respective Owner, as shown in the registration books maintained by the Trustee, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of 27003639.4 13 principal, premium, if any, and interest evidenced by the Revenue Obligations to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books maintained by the Trustee, shall receive a Revenue Obligation evidencing principal, premium, if any, and interest evidenced by the Revenue Obligations. Upon delivery by the Depository to the Owners, the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Trust Agreement shall refer to such nominee of the Depository. (f) To qualify the Book-Entry Certificates for the Depository's book-entry system, the District shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Corporation,the District or the Trustee any obligation whatsoever with respect to Persons having interests in such Book-Entry Certificates other than the Owners, as shown on the registration books maintained by the Trustee. Such Letter of Representations may provide the time, form, content and manner of transmission, of notices to the Depository. In addition to the execution and delivery of a Letter of Representations by the District, the District, the Corporation and the Trustee shall take such other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify Book-Entry Certificates for the Depository's book-entry program. (g) If the District determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Revenue Obligations and that such Revenue Obligations should therefore be made available and notifies the Depository and the Trustee of such determination, the Depository will notify the Participants of the availability through the Depository of certificated Revenue Obligations. In such event, the Trustee shall transfer and exchange certificated Revenue Obligations as requested by the Depository and any other Owners in appropriate amounts. In the event (i)the Depository determines not to continue to act as securities depository for Book-Entry Certificates, or(ii)the Depository shall no longer so act and gives notice to the Trustee of such determination, then the District shall discontinue the Book- Entry system with the Depository. If the District determines to replace the Depository with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered Revenue Obligation for each stated Principal Payment Date of such Book-Entry Certificates, registered in the name of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace the Depository, then the Revenue Obligations shall no longer be restricted to being registered in the registration books maintained by the Trustee in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Revenue Obligations shall designate, in accordance with the provisions of Sections 2.06 and 2.09 hereof. Whenever the Depository requests the District to do so, the District will cooperate with the Depository in taking appropriate action after reasonable notice (i)to make available one or more separate certificates evidencing the Book-Entry Certificates to any Participant having Book-Entry Certificates credited to its account with the Depository, and (ii)to arrange for another securities depository to maintain custody of certificates evidencing the Book-Entry Certificates. 27003639.4 14 (h) Notwithstanding any other provision of this Trust Agreement to the contrary, if DTC is the sole Owner of the Revenue Obligations, so long as any Book-Entry Certificate is registered in the name of the Nominee, all payments of principal, premium, if any, and interest evidenced by such Revenue Obligation and all notices with respect to such Revenue Obligation shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. (i) In connection with any notice or other communication to be provided to Owners pursuant to the Trust Agreement by the District, the Corporation or the Trustee, with respect to any consent or other action to be taken by Owners, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. Notice to the Depository shall be given only when DTC is the sole Owner of the Revenue Obligations. ARTICLE III PROCEEDS OF REVENUE OBLIGATIONS Section 3.01. Delivery of Revenue Obligations. The Trustee is hereby authorized to execute the Revenue Obligations and deliver the Revenue Obligations to the original purchaser thereof upon receipt of a Written Request of the District and upon receipt of the net proceeds of sale thereof. Section 3.02. Deposit of Proceeds of Revenue Obligations. The net proceeds received by the Trustee from the sale of the Revenue Obligations in the amount of$ (which amount includes the security deposit for the Revenue Obligations in the amount of$ on deposit with the Trustee) shall be deposited or transferred by the Trustee as follows: (a) the Trustee shall deposit in the Costs of Issuance Fund the amount of$ , and (b) the Trustee shall transfer to the Escrow Agent for deposit in the Escrow Fund established under the Escrow Agreement the amount of$ from the proceeds of the Revenue Obligations, to apply, together with other available monies released from the Prior Trust Agreement, to the payment and prepayment of a portion of the installment payments related to the Prior Certificates as provided in the Escrow Agreement. Following the above transfers and deposits, the Proceeds Fund shall be closed. Section 3.03. Costs of Issuance Fund. The Trustee shall establish and maintain a separate special fund to be held by the Trustee known as the Costs of Issuance Fund. There shall be deposited in the Costs of Issuance Fund on the Closing Date the amount required to be deposited therein pursuant to Section 3.02 hereof. The Trustee shall disburse moneys from the Costs of Issuance Fund on such dates and in such amounts as are necessary to pay Costs of Issuance, in each case upon the Written Request of the District stating the Person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against the Costs of Issuance Fund. On the date that is six months after the Closing Date, the Trustee shall transfer any amounts then remaining in the 27003639.4 15 Costs of Issuance Fund to the Installment Payment Fund. Upon such transfer, the Costs of Issuance Fund shall be closed. ARTICLE IV PREPAYMENT OF REVENUE OBLIGATIONS Section 4.01. Optional Prepayment The Revenue Obligations maturing on or after February 1, 2027 are subject to optional prepayment prior to their stated Principal Payment Dates, on any date on or after February 1, 2026, in whole or in part, in Authorized Denominations, from and to the extent of prepaid Installment Payments paid pursuant to the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Revenue Obligations to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. Section 4.02. Mandatory Sinkine Account Prepayment. The Term Revenue Obligations maturing on February 1, 20 are subject to prepayment prior to their stated maturity, in part, by lot, on each February 1 on and after February 1, 20_, at the principal amount thereof, plus accrued interest to the date fixed for prepayment, without premium, from Mandatory Sinking Account Payments deposited in the Principal Account. The Term Revenue Obligations maturing on February 1, 20 shall be prepaid (or paid at maturity, as the case may be) by application of Mandatory Sinking Account Payments in the amounts and upon the dates set forth below: Mandatory Sinking Account Mandatory Payment Dates Sinking Account (February 1) Payments `Maturity. Section 4.03. Selection of Revenue Obligations for Optional Prepayment. Whenever less than all the Outstanding Revenue Obligations are to be prepaid on any one date pursuant to Section 4.01 hereof, with respect to optional prepayment of Revenue Obligations, the Trustee shall select the Revenue Obligations to be prepaid among Revenue Obligations with different Principal Payment Dates as directed in a Written Request of the District. Whenever less than all the Outstanding Revenue Obligations with the same stated Principal Payment Date are to be prepaid on any one date pursuant to Section 4.01 hereof, the Trustee shall select the Revenue Obligations with such Principal Payment Date to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate, which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the numbers of the Revenue Obligations 27003639.4 16 so selected for prepayment on such date. For purposes of such selection, any Revenue Obligation may be prepaid in part in Authorized Denominations. Section 4.04. Notice of Prepayment. When prepayment of Revenue Obligations is authorized pursuant to Section 4.01, the Trustee shall give notice, at the expense of the District, of the prepayment of the Revenue Obligations. The notice of prepayment shall specify (a)the Revenue Obligations or designated portions thereof(in the case of prepayment of the Revenue Obligations in part but not in whole) which are to be prepaid, (b)the date of prepayment, (c)the place or places where the prepayment will be made, including the name and address of any paying agent, (d)the prepayment price, (e)the CUSIP numbers assigned to the Revenue Obligations to be prepaid, (f) the numbers of the Revenue Obligations to be prepaid in whole or in part and, in the case of any Revenue Obligation to be prepaid in part only, the principal evidenced by such Revenue Obligation to be prepaid, and (g)the interest rate and stated Principal Payment Date of each Revenue Obligation to be prepaid in whole or in part. Such notice of prepayment shall further state that on the specified date there shall become due and payable upon each Revenue Obligation or portion thereof being prepaid the prepayment price and that from and after such date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of prepayment of Revenue Obligations pursuant to Section 4.01 hereof, unless at the time such notice is given the Revenue Obligations to be prepaid shall be deemed to have been paid within the meaning of Section 10.01 hereof, such notice shall state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Revenue Obligations to be prepaid, and that if such moneys shall not have been so received said notice shall be of no force and effect and the District shall not be required to prepay such Revenue Obligations. If a notice of prepayment of Revenue Obligations contains such a condition and such moneys are not so received, the prepayment of Revenue Obligations as described in the conditional notice of prepayment shall not be made and the Trustee shall, within a reasonable time after the date on which such prepayment was to occur, give notice to the persons and in the manner in which the notice of prepayment was given,that such moneys were not so received and that there shall be no prepayment of Revenue Obligations pursuant to such notice of prepayment. The Trustee shall, at least 20 but not more than 60 days prior to any prepayment date, give notice of prepayment to the respective Owners of Revenue Obligations designated for prepayment by first-class mail, postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Revenue Obligations or the cessation of interest evidenced thereby on the date fixed for prepayment. A certificate by the Trustee that notice of prepayment has been given to Owners as herein provided shall be conclusive as against all parties, and no Owner whose Revenue Obligation is called for prepayment may object thereto or object to the cessation of interest evidenced thereby 27003639.4 17 on the fixed prepayment date by any claim or showing that said Owner failed to actually receive such notice of prepayment. Section 4.05. Partial Prepayment of Revenue Obligations. Upon surrender of any Revenue Obligation prepaid in part only, the Trustee shall execute and deliver to the Owner thereof a new Revenue Obligation or Revenue Obligations evidencing the unprepaid principal with respect to the Revenue Obligation surrendered. Section 4.06. Effect of Prepayment. If notice of prepayment has been duly given as aforesaid and moneys for the payment of the prepayment price of the Revenue Obligations to be prepaid are held by the Trustee, then on the prepayment date designated in such notice, the Revenue Obligations so called for prepayment shall become payable at the prepayment price specified in such notice; and from and after the date so designated, interest evidenced by the Revenue Obligations so called for prepayment shall cease to accrue, such Revenue Obligations shall cease to be entitled to any benefit or security hereunder and the Owners of such Revenue Obligations shall have no rights in respect thereof except to receive payment of the prepayment price thereof The Trustee shall, upon surrender for payment of any of the Revenue Obligations to be prepaid, pay such Revenue Obligations at the prepayment price thereof, and such moneys shall be pledged to such payment. All Revenue Obligations prepaid pursuant to the provisions of this Article shall be canceled by the Trustee and shall not be redelivered. ARTICLE V ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS Section 5.01. Assignment and Pledge. The Corporation hereby transfers, conveys and assigns to the Trustee, for the benefit of the Owners, all of the Corporation's rights, title and interest in and to the Installment Purchase Agreement (excepting its rights to indemnification thereunder), including the right to receive Installment Payments, and the interest thereon, from the District and the right to exercise any remedies provided therein in the event of a default by the District thereunder. The Trustee hereby accepts said transfer, conveyance and assignment, solely in its capacity as Trustee, for the benefit of the Owners, subject to the provisions of this Trust Agreement. All Installment Payments, and the interest thereon, shall be paid directly by the District to the Trustee, and if received by the Corporation at any time shall be deposited by the Corporation with the Trustee immediately upon the receipt thereof. To secure the respective rights of the Owners to the payments required to be made thereto as provided herein, the Corporation and the District hereby irrevocably pledge to the Trustee, for the benefit of the Owners, all of their right, title and interest, if any, in and to all amounts on deposit from time to time in the funds and accounts established hereunder. This pledge shall constitute a first lien on the amounts on deposit in such funds and accounts. Section 5.02. Installment Payment Fund. (a) The Trustee shall establish and maintain the Installment Payment Fund until all required Installment Payments, and the interest thereon, are paid in full pursuant to the Installment Purchase Agreement and until the first date upon which the Revenue Obligations are no longer Outstanding. The Trustee shall deposit in the Installment Payment Fund all Installment Payments, and the interest thereon, paid by the District 27003639.4 18 and received by the Trustee. The moneys in the Installment Payment Fund shall be held in trust by the Tmstee for the benefit of the Owners and shall be used and disbursed only for the purposes and uses herein authorized. (b) The Trustee shall transfer the amounts on deposit in the Installment Payment Fund, at the times and in the manner hereinafter provided, to the following respective accounts within the Installment Payment Fund, each of which the Trustee hereby agrees to establish and maintain until all required Installment Payments, and the interest thereon, are paid in full pursuant to the Installment Purchase Agreement and until the first date upon which the Revenue Obligations are no longer Outstanding. The moneys in each of such accounts shall be held in trust by the Trustee for the benefit of the Owners and shall be used and disbursed only for the purposes and uses herein authorized. (i) Interest Account. The Tmstee, on each Interest Payment Date, shall deposit in the Interest Account that amount of moneys representing the interest on the Installment Payments coming due on such Interest Payment Date. Moneys in the Interest Account shall be used by the Trustee for the purpose of paying the interest evidenced by the Revenue Obligations when due and payable. (ii) Principal Account. The Trustee, on each Principal Payment Date, shall deposit in the Principal Account that amount of moneys representing the Installment Payments coming due on such Principal Payment Date. Moneys in the Principal Account shall be used by the Trustee for the purpose of paying the principal or Mandatory Sinking Account Payments evidenced by the Revenue Obligations when due and payable. (iii) Prepayment Account. The Trustee, on the prepayment date specified in the Written Request of the District filed with the Trustee at the time that any prepaid Installment Payment is paid to the Tmstee pursuant to the Installment Purchase Agreement, shall deposit in the Prepayment Account that amount of moneys representing such prepaid Installment Payment, the accrued interest thereon to the prepayment date and any premium payable with respect thereto. The Trustee shall deposit in the Prepayment Account any other amounts made available by the District that the District, pursuant to a Written Request of the District, instructs the Trustee to apply to the prepayment of Revenue Obligations pursuant to Section 4.01 hereof. Moneys in the Prepayment Account shall be used by the Tmstee for the purpose of paying the interest, premium, if any, and principal evidenced by the Revenue Obligations to be prepaid pursuant to Section 4.01 hereof. Section 5.03. Reserved. Section 5.04. Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Trust Agreement shall be invested by the Trustee solely in Permitted Investments, as directed by the District pursuant to a Written Request of the District at least two (2) Business Days prior to the making of such investment. Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Trust Agreement. Absent timely written direction from the District, 27003639.4 19 the Trustee shall invest any funds held by it in Permitted Investments described in clause (10) of the definition thereof. Permitted Investments that are registemble securities shall be registered in the name of the Trustee. All interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Trust Agreement shall be retained therein. Permitted Investments acquired as an investment of moneys in any fund or account established under this Trust Agreement shall be credited to such fund or account For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued by the Trustee at the market value thereof, such valuation to be performed not less frequently than semiannually on or before each January 15 and July 15. The Trustee or an affiliate may act as principal or agent in the making or disposing of any investment. The Trustee shall sell or present for redemption any Permitted Investment whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether or not such affiliate is acting as an agent of the Trustee or for any third Person or dealing as principal for its own account. Section 5.05. Brokeraee Confirmations. The Trustee shall furnish the District periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the District. Upon the District's election and request, the Trustee shall provide the District online access to such statements. The District waives the right to receive brokerage confirmations of securities transactions effected by the Tmstee as they occur, to the extent permitted by law. The District further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker ARTICLE VI COVENANTS Section 6.01. Compliance with Trust Agreement. The Trustee will not execute or deliver any Revenue Obligations in any manner other than in accordance with the provisions hereof, and the Corporation and the District will not suffer or permit any default by them to occur hereunder, but will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms hereof required to be complied with, kept, observed and performed by them. Section 6.02. Compliance with Installment Purchase Agreement. The Corporation and the District will faithfully comply with, keep, observe and perform all the agreements, 27003639.4 20 conditions, covenants and terms contained in the Installment Purchase Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee, will enforce the Installment Purchase Agreement against the other party thereto in accordance with its terns. Section 6.03. Compliance with Master Agreement The Corporation and the District will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Master Agreement required to be complied with, kept, observed and performed by them and,together with the Trustee,will enforce the Master Agreement against the other party thereto in accordance with its terns. Section 6.04. Observance of Laws and Regulations. The Corporation and the District will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States of America or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses,to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired. Section 6.05. Other Liens. None of the Trustee, the Corporation or the District shall create or suffer to be created any pledge of or lien on the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof. Section 6.06. Prosecution and Defense of Suits. The District will defend against every action, suit or other proceeding at any time brought against the Trustee or any Owner upon any claim arising out of the receipt, deposit or disbursement of any of the Installment Payments, or the interest thereon, or involving the rights of the Trustee or any Owner bereunder; provided, however, that the Trustee or any Owner at its or his election may appear in and defend any such action, suit or other proceeding. Section 6.07. Accountine Records and Statements. The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions made by the Trustee relating to the receipt, deposit and disbursement of the Installment Payments, and the interest thereon, and such accounting records shall be available for inspection by the Corporation and the District at reasonable hours and under reasonable conditions. The Trustee shall not be obligated to provide an accounting for any fund or account that (a)has a balance of $0.00 and (b)has not had any activity since the last reporting date. The Trustee will, upon written request, make copies of the foregoing available to any Owner (at the expense of such Owner). Section 6.08. Tax Covenants. (a) Special Definitions. When used in this Section, the following terms shall have the following meanings: 27003639.4 21 "Bond Counsel" means Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District. "Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Computation Period" means, initially, that period commencing on the date of the execution and delivery of the Revenue Obligations and concluding on the initial Computation Date and,thereafter, each period commencing on the day next following a Computation Date and concluding on the immediately succeeding Computation Date. "Gross Proceeds" of any issue of governmental obligations means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds) of that issue, and any replacement proceeds as defined in section 1.148- 1(c)of the Tax Regulations, of that issue. "Investment"has the meaning set forth in section 1.148-1(b)of the Tax Regulations. "Nonpurpose Investment"means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of an issue are invested and that is not acquired to carry out the governmental purposes of that issue. "Opinion of Bond Counsel"means a written opinion of Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District. "Prior Issue" shall refer to the Prior Certificates (but in the case of any of the foregoing executed and delivered for multiple purposes, only to the portion thereof allocable pursuant to section 1.148-9(b)(4) of the Tax Regulations to other than refunding purposes). "Proceeds," with respect to an issue of governmental obligations, has the meaning set forth in has the meaning set forth in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds, but not replacement proceeds). "Rebate Amount"has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Tax Regulations" means the United States Treasury Regulations promulgated pursuant to sections 103 and 141 through 150 of the Code. "Yield" of (i) any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations and (ii) in respect of the Revenue Obligations has the meaning set forth in section 1.148-4 of the Tax Regulations. (a) Exclusion of Interest from Gross Income. The District will take all actions necessary to establish and maintain the exclusion pursuant to section 103(a) of the Code of interest on the Revenue Obligations from the gross income of the owners thereof for federal income tax purposes, and will not use, permit the use of, or omit to use Gross Proceeds of the 27003639.4 22 Revenue Obligations or any other amounts (or any property the acquisition, construction or improvement of which is to be refinanced directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, would cause the interest on any Revenue Obligation to fail to be excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the Trustee receives a written Opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the exclusion pursuant to section 103(a) of the Code of interest on any Revenue Obligation from the gross income of the owner thereof, the District shall comply with this covenant and each of the specific covenants in this Section. (b) No Private Use or Private Payments. Except as would not cause any Revenue Obligation to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the District shall at all times prior to the payment and cancellation of the last of the Revenue Obligations to be retired: (i) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Revenue Obligations and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terns different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds or the Gross Proceeds of the Prior Issue in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (ii) does not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Revenue Obligations or of the Prior Issue, or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds, other than taxes of general application within the jurisdiction of the District or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (c) No Private Loan. Except as would not cause any Revenue Obligation to become a"private activity bond"within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder,the District shall not use of Gross Proceeds of the Revenue Obligations to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be `loaned" to a person or entity if: (i) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (ii) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or armagement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. For purposes of this covenant, the District will treat any transaction constituting a loan of Gross Proceeds of the Prior Issue as resulting in a loan of Gross Proceeds of the Revenue Obligations. 27003639.4 23 (d) Not to Invest at Higher Yield. Except as would not cause any Revenue Obligation to become an"arbitrage bond"within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the District will not, at any time prior to the final cancellation of the last Revenue Obligation to be retired, directly or indirectly invest Gross Proceeds of the Revenue Obligations in any Investment, if as a result of that investment the yield of any Investment acquired with Gross Proceeds of the Revenue Obligations, whether then held or previously disposed of, would materially exceed the yield of the Revenue Obligations within the meaning of said section 148. (e) Not Federally Guaranteed. Except to the extent such action or failure to act would not pursuant to section 149(b) of the Code and the Tax Regulations and rulings thereunder, adversely affect the exclusion pursuant to section 103(a) of interest on the Revenue Obligations from the gross income of the owners thereof for federal income tax purposes, the District will not take or omit to take any action that would cause any Revenue Obligation to be "federally guaranteed" within the meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder. (f) Information Report. The District will timely file any information necessary to the exclusion pursuant to section 103(a) of the Code of interest on the Revenue Obligations required by section 149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary of the Treasury may prescribe. (g) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, the District will not at any time prior to the final cancellation of the last of the Revenue Obligations to be retired, enter into any transaction that reduces the amount required to be paid to the United States pursuant to section 148(f) of the Code because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the yield on the Revenue Obligations not been relevant to either party. (b) Revenue Obligations Satisfy Section 149(a). The District represents that neither the Prior Issue nor the Revenue Obligations are or will become "hedge bonds" within the meaning of section 149(g) of the Code. Without limitation of the foregoing, with respect to the Prior Issue, (i)(A) on the date of execution and delivery of that issue the District reasonably expected (based upon its own knowledge and upon representations made by other governmental persons upon the issuance of those obligations) that within the tbree-year period commencing on such date no less than 85% of the spendable proceeds of that issue would be expended for the governmental purposes thereof and (B) the District believes and represents that at no time has more than 50% of the proceeds of that issue been invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more, and with respect to the application of Proceeds of the Revenue Obligations other than for refunding purposes, (ii)(A) the District will not deliver the Revenue Obligations unless on the date of the issuance of the Revenue Obligations it reasonably expects that within the three-year period commencing on such date of issuance at least 85% of such spendable proceeds of the Revenue Obligations will be expended for the governmental purpose of the Revenue Obligations and (B) at no time will more than 50% of such spendable proceeds of the Revenue Obligations be invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more. 27003639.4 24 (i) Elections. The District hereby directs and authorizes any Authorized Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Authorized Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Revenue Obligations, in the Tax Certificate (as defined below)or similar or other appropriate certificate, form or document. 0) Tax Certificate. The District agrees to execute and deliver in connection with the execution and delivery of the Revenue Obligations a Tax Certificate as to Arbitrage and the Provisions of Sections 141-150 of the Internal Revenue Code of 1986, or similar document containing additional representations and covenants pertaining to the exclusion of interest with respect to the Revenue Obligations from the gross income of the owners thereof for federal income tax purposes (the "Tax Certificate"), which representations and covenants are incorporated as though expressly set forth herein. Section 6.09. Continuing Disclosure. The District will comply with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it. Notwithstanding any other provision of this Trust Agreement, failure of the District to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; provided, however, the Trustee at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Revenue Obligations and upon being indemnified to its reasonable satisfaction, shall, or any Owner or Beneficial Owner of Revenue Obligations may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. The Trustee is authorized and directed to execute the acceptance and acknowledgement of the Continuing Disclosure Agreement. Section 6.10. Further Assurances. The District will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to carry out the purposes and intentions of this Trust Agreement and for preserving and protecting the rights and interests of the Owners. ARTICLE VU DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action upon Event of Default. An Event of Default under the Installment Purchase Agreement shall constitute an Event of Default hereunder and an Event of Default under the Master Agreement shall constitute an Event of Default hereunder. The Trustee may give notice, as assignee of the Corporation, of an Event of Default under the Installment Purchase Agreement to the District, and shall do so if directed to do so by the Owners of not less than 5%of the aggregate principal evidenced by Revenue Obligations then Outstanding. In each and every case during the continuance of an Event of Default, the Trustee may and, at the direction of the Owners of not less than a majority of the aggregate principal evidenced by Revenue Obligations then Outstanding, shall, upon notice in writing to the District and the Corporation (a)exercise any of the remedies granted to the Corporation under the Installment Purchase Agreement, (b) exercise any of the remedies granted to the Trustee under the Master Agreement, and (c)take whatever action at law or in equity may appear necessary or desirable to 27003639.4 25 enforce its rights pursuant to this Trust Agreement, the Installment Purchase Agreement or the Master Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Trust Agreement, the Revenue Obligations, the Installment Purchase Agreement or the Master Agreement, either at law or in equity or in banlauptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof. Section 7.02. Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof, the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Corporation or the District or any member, director, officer or employee thereof, and to compel the Corporation or the District or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which we unlawful or violate the rights of the Trustee; or (c) by suit in equity upon the happening of any Event of Default hereunder to require the Corporation and the District to account as the trustee of an express trust. Section 7.03. Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee or the Owners shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee or the Owners to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee or the Owners by law or by this Article may be enforced and exercised from time to time and as often as the Trustee shall deem expedient. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse determination,the Trustee, such Owner,the Corporation and the District shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 7.04. Remedies Not Exclusive. Subject to the provisions of Section 7.01 hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other appropriate right or remedy. 27003639.4 26 Section 7.05. Aoulication of Amounts After Default. All damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under this Article shall be deposited into the Installment Payment Fund and as soon as practicable and thereafter applied: (a) to the payment of all amounts due the Trustee under Section 8.03 hereof; (b) unless the unpaid Installment Payments, and the interest thereon, shall have become, and shall remain, immediately due and payable pursuant to the Master Agreement: (i) to the payment of all amounts then due for interest evidenced by the Revenue Obligations, in respect of which, or for the benefit of which, money has been collected (other than Revenue Obligations which have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest evidenced by such Revenue Obligations due and payable; and (ii) to the payment of all amounts then due for principal evidenced by the Revenue Obligations, in respect of which, or for the benefit of which, money has been collected (other than Revenue Obligations which have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal evidenced by such Revenue Obligations due and payable. (c) if the unpaid Installment Payments, and the interest thereon, shall have become, and shall remain, immediately due and payable pursuant to the Master Agreement, to the payment of all amounts then due for principal and interest evidenced by the Revenue Obligations and, if the amount available therefor shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Revenue Obligation over any other Revenue Obligation, to the persons entitled thereto without any discrimination or preference. Section 7.06. Trustee May Enforce Claims Without Possession of Revenue Obligations. All rights of action and claims under this Trust Agreement or the Revenue Obligations may be prosecuted and enforced by the Trustee without the possession of any of the Revenue Obligations or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Owners of the Revenue Obligations in respect of which such judgment has been recovered. Section 7.07. Limitation on Suits. No Owner shall have any right to institute any proceeding,judicial or otherwise,with respect to this Trust Agreement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Owner shall have previously given written notice to the Trustee of a continuing Event of Default hereunder, (b)the 27003639.4 27 Owners of not less than a majority of the aggregate principal evidenced by Revenue Obligations then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, (c) such Owner or Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings, and (e)no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Owners of a majority of the aggregate principal evidenced by Revenue Obligations then Outstanding; it being understood and intended that no one or more Owners of Revenue Obligations shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of any other Owner of Revenue Obligations, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal and ratable benefit of all the Owners of Revenue Obligations. Section 7.08. No Liability by the Corporation to the Owners. Except as expressly provided herein, the Corporation shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payments, and the interest thereon, by the District, or with respect to the performance by the District of the other agreements and covenants required to be performed by it contained in the Installment Purchase Agreement, the Master Agreement or herein, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.09. No Liability by the District to the Owners. Except for the payment when due of the Installment Payments, and the interest thereon, and the performance of the other agreements and covenants required to be performed by it contained in the Installment Purchase Agreement, the Master Agreement or herein, the District shall not have any obligation or liability to the Owners with respect to this Trust Agreement or the preparation, execution, delivery or transfer of the Revenue Obligations or the disbursement of the Installment Payments, and the interest thereon, by the Trustee to the Owners, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.10. No Liability of the Trustee to the Owners. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payments, and the interest thereon, by the District, or with respect to the performance by the Corporation or the District of the other agreements and covenants required to be performed by them, respectively contained in the Installment Purchase Agreement or herein. ARTICLE VIU THE TRUSTEE Section 8.01. Employment of the Trustee; Duties. The Corporation and the District hereby appoint and employ the Trustee to receive, deposit and disburse the Installment Payments, and the interest thereon, to register, execute, deliver and transfer the Revenue 27003639.4 28 Obligations and to perform the other functions contained herein, all in the manner provided herein and subject to the conditions and terms hereof. By executing and delivering this Trust Agreement, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an Event of Default hereunder has occurred and is continuing,the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Trust Agreement, and no implied covenants or obligations shall be read into this Trust Agreement against the Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. Section 8.02. Removal and Resignation of the Trustee. The Corporation and the District may, by an instrument in writing, remove the Trustee initially a party hereto and any successor thereto unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time (a)requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority of the aggregate principal evidenced by the Revenue Obligations at the time Outstanding (or their attorneys duly authorized in writing), or (b)the Trustee shall cease to be eligible in accordance with the following sentence,and shall appoint a successor Trustee. The Trustee shall be a bank having trust powers or a trust company in good standing in or incorporated under the laws of the United States or any state thereof, having (or if such bank or trust company is a member of a bank holding company system, its parent bank holding company shall have) a combined capital and surplus of at least $75,000,000, and be subject to supervision or examination by federal or state banking authorities. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Corporation and the District and by giving notice, by first class mail, postage prepaid, of such resignation to the Owners at their addresses appearing on the registration books maintained by the Trustee. Upon receiving such notice of resignation, the Corporation and the District shall promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the event the District and the Corporation do not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the District, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any successor Trustee appointed under this Trust Agreement shall signify its acceptance of such appointment by executing and delivering to the District and the Corporation and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein;but,nevertheless, at the written request of the District or of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or 27003639.4 29 further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Trust Agreement and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Trust Agreement and vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.03. Compensation and Indemnification of the Trustee. The District shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all its reasonable advances and expenditures (which shall not include "overhead expenses" except as such expenses are included as a component of the Trustee's stated annual fees or disclosed transaction fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys retained by the Trustee, employed by it in the exercise and performance of its rights and obligations hereunder; provided, however, that the Trustee shall not have any lien for such compensation or reimbursement against any moneys held by it in any of the funds or accounts established hereunder. The Trustee may take whatever legal actions are lawfully available to it directly against the Corporation or the District. Except as otherwise expressly provided herein, no provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers hereunder. The District, to the extent permitted by law, agrees to indemnify and save the Trustee, its directors, officers, employees and agents harmless against any costs, expenses, claims and liabilities which it may incur in the exercise and performance of its powers and duties hereunder or any other document related to this Trust Agreement, including but not limited to costs and expenses incurred in defending against any claim or liability, which are not due to its negligence or willful misconduct. Section 8.04. Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent, notice, request, requisition, resolution, statement, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the 27003639.4 30 proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Owners of the Revenue Obligations pursuant to this Trust Agreement, unless such Owners shall have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may consult with counsel, who may be counsel to the Corporation or the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Revenue Obligations or the Installment Purchase Agreement, or of the assignment made to it hereunder, or for statements made in the preliminary or final official statement relating to the Revenue Obligations. The Trustee shall not be required to take notice or be deemed to have notice of any default or Event of Default hereunder, except failure of any of the payments to be made to the Trustee required to be made hereunder or under the Installment Purchase Agreement, unless the Trustee shall be specifically notified in writing of such default or Event of Default by the District, the Corporation or the Owners of not less than 5% of the aggregate principal evidenced by the Revenue Obligations then Outstanding. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the District or a Written Certificate of the Corporation, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Revenue Obligations and may join in any action which any Owner may be entitled to take with like effect as if the Trustee were not a party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Corporation or the District, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Corporation or the District as freely as if it were not the Trustee hereunder. The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall diligently pursue all remedies of the Trustee against such 27003639.4 31 agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the funds established hereunder, except only for its own willful misconduct, negligence or breach of an obligation hereunder. The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Corporation or the District is a party and which, in the opinion of the Trustee and its counsel, affects the Revenue Obligations or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal evidenced by Revenue Obligations then Outstanding, provided the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action. The Trustee will not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence ("unavoidable delay"), including, but not limited to, acts of God or of the public enemy or terrorists, acts of a government, acts of the other parties, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy,material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to any project refinanced with the proceeds of the Revenue Obligations, malicious mischief, condemnation, and unusually severe weather or any similar event and/or occurrences beyond the control of the Trustee. ARTICLE IX AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT Section 9.01. Amendment or Supplement. This Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee hereunder may be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Revenue Obligations then Outstanding, exclusive of Revenue Obligations disqualified as provided in Section 9.02 hereof, are filed with the Trustee. No such amendment or supplement shall (i) extend the stated Principal Payment Date of any Revenue Obligation or reduce the rate of interest evidenced thereby or extend the time of payment of such interest or reduce the amount of principal evidenced thereby or change the prepayment terms and provisions or the provisions regarding delivery of notice of prepayment without the prior written consent of the Owner of each Revenue Obligation so affected, (ii)reduce the percentage of Owners whose consent is required for the execution of any amendment hereof or supplement hereto without the prior written consent of the Owners of all Revenue Obligations then Outstanding, (iii)modify any of the rights or obligations of the Trustee without the prior written consent of the Trustee, or (iv)amend this Section without the prior written consent of the Owners of all Revenue Obligations then Outstanding. 27003639.4 32 (a) This Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution, without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the Corporation or the District to be observed or performed herein other agreements, conditions, covenants and terms thereafter to be observed or performed by the Corporation or the District, or to surrender any right or power reserved herein to or conferred herein on the Corporation or the District; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Corporation or the District may deem desirable or necessary and not inconsistent herewith; or (iii) for any other reason, provided such amendment or supplement does not adversely affect the rights or interests of the Owners. Section 9.02. Disqualified Revenue Obligations. Revenue Obligations owned or held by or for the account of the District (but excluding Revenue Obligations held in any pension or retirement fund of the District) shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Revenue Obligations provided in this Article, and shall not be entitled to consent to or take any other action provided in this Article, and the Trustee may adopt appropriate regulations to require each Owner, before his consent provided for herein shall be deemed effective, to reveal if the Revenue Obligations as to which such consent is given are disqualified as provided in this Section. Section 9.03. Endorsement or Replacement of Revenue Obligations After Amendment or Supplement. After the effective date of any action taken as hereinabove provided in this Article, the Trustee may determine that the Revenue Obligations may bear a notation by endorsement in form approved by the Trustee as to such action, and in that case upon demand of the Owner of any Outstanding Revenue Obligation and presentation of such Revenue Obligation for such purpose at the Principal Office a suitable notation as to such action shall be made on such Revenue Obligation. If the Trustee shall receive an Opinion of Counsel advising that new Revenue Obligations modified to conform to such action are necessary, modified Revenue Obligations shall be prepared, and in that case upon demand of the Owner of any Outstanding Revenue Obligations such new Revenue Obligations shall be exchanged at the Principal Office without cost to each Owner for Revenue Obligations then Outstanding upon surrender of such Outstanding Revenue Obligations. Section 9.04. Amendment by Mutual Consent. The provisions of this Article shall not prevent any Owner from accepting any amendment as to the particular Revenue Obligations owned by such Owner,provided that due notation thereof is made on such Revenue Obligations. 27003639.4 33 ARTICLE X DEFEASANCE Section 10.01. Discharge of Revenue Obligations and Trust Agreement. (a) If the Trustee shall pay or cause to be paid or there shall otherwise be paid (i)to the Owners of all Outstanding Revenue Obligations the interest and principal evidenced thereby at the times and in the manner stipulated herein and therein, and (ii)all other amounts due hereunder and under the Installment Purchase Agreement,then such Owners shall cease to be entitled to the pledge of and lien on the amounts on deposit in the funds and accounts established hereunder, as provided herein, and all agreements and covenants of the Corporation,the District, and the Trustee to such Owners hereunder shall thereupon cease, terminate and become void and shall be discharged and satisfied. (b) Any Outstanding Revenue Obligation shall be deemed to have been paid within the meaning and with the effect expressed in this Section when the whole amount of the principal, premium, if any, and interest evidenced by such Revenue Obligation shall have been paid or when (i)in case said Revenue Obligation or portion thereof has been selected for prepayment in accordance with Section 4.03 hereof prior to its stated Principal Payment Date, the District shall have given to the Trustee irrevocable instructions to give, in accordance with the provisions of Section 4.03 hereof, notice of prepayment of such Revenue Obligation, or portion thereof, (ii)there shall be on deposit with the Trustee, moneys, or Government Obligations, or any combination thereof, the principal of and the interest on which when due, and without any reinvestment thereof, will provide moneys which shall be sufficient to pay when due the principal, premium, if any, and interest evidenced by such Revenue Obligation and due and to become due on or prior to the prepayment date or its stated Principal Payment Date, as the case may be, and (iii) in the event the stated Principal Payment Date of such Revenue Obligation will not occur, and said Revenue Obligation is not to be prepaid, within the next succeeding 60 days, the District shall have given the Trustee irrevocable instructions to give notice, as soon as practicable in the same manner as a notice of prepayment given pursuant to Section 4.03 hereof, to the Owner of such Revenue Obligation, or portion thereof, stating that the deposit of moneys or Government Obligations required by clause(ii) of this subsection has been made with the Trustee and that said Revenue Obligation, or portion thereof, is deemed to have been paid in accordance with this Section and stating such Principal Payment Date or prepayment date upon which moneys are to be available for the payment of the principal, premium, if any, and interest evidenced by said Revenue Obligation, or portion thereof. Neither the moneys nor the Government Obligations deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Government Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the payment of the principal, premium, if any, and interest evidenced by said Revenue Obligation, or portions thereof. If payment of less than all of the Revenue Obligations is to be provided for in the manner and with the effect expressed in this Section, the Trustee or the District, as applicable, shall select such Revenue Obligations, or portions thereof, in the manner specified in Section 4.03 hereof for selection for prepayment of less than all of the Revenue Obligations, in the principal amounts designated to the Trustee by the District. 27003639.4 34 (c) After the payment of all the interest, prepayment premium, if any, and principal evidenced by all Outstanding Revenue Obligations and all other amounts due hereunder and under the Installment Purchase Agreement as provided in this Section, the Trustee shall execute and deliver to the Corporation and the District all such instruments as may be necessary or desirable to evidence the discharge and satisfaction of this Trust Agreement, the Trustee shall pay over or deliver to the District all moneys or securities held by it pursuant hereto which are not required for the payment of the interest, prepayment premium, if any, and principal evidenced by such Revenue Obligations and all other amounts due hereunder and under the Installment Purchase Agreement. (d) Prior to any defeasance becoming effective under this Article, the District shall cause to be delivered (i)an executed copy of a report, addressed to the Trustee and the District, in form and in substance acceptable to the District, of a nationally recognized certified public accountant, or fimr of such accountants, verifying that the Government Obligations and cash, if any, satisfy the requirements of clause (ii) of subsection(b) of this Section (a "Verification"), (ii) a copy of the escrow deposit agreement entered into in connection with such defeasance, which escrow deposit agreement shall provide that no substitution of Government Obligations shall be permitted except with other Government Obligations and upon delivery of a new Verification and no reinvestment of Government Obligations shall be permitted except as contemplated by the original Verification or upon delivery of a new Verification, and(iii) a copy of an Opinion of Counsel, dated the date of such defeasance and addressed to the Trustee and the District, in form and in substance acceptable to the District, to the effect that such Revenue Obligations have been paid within the meaning and with the effect expressed in this Trust Agreement, and all agreements and covenants of the Corporation, the District and the Trustee to the Owners of such Revenue Obligations under this Trust Agreement have ceased, terminated and become void and have been discharged and satisfied. Section 10.02. Unclaimed Moneys. Any moneys held by the Trustee in trust for the payment and discharge of the interest or principal evidenced by any of the Revenue Obligations which remain unclaimed for two years after the date when such interest or principal evidenced by such Revenue Obligations have become payable, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the date when the interest and principal evidenced by such Revenue Obligations have become payable, shall be repaid by the Trustee to the District as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of the interest and principal evidenced by such Revenue Obligations. ARTICLE XI MISCELLANEOUS Section 11.01. Benefits of Trust Agreement. Nothing contained herein, expressed or implied, is intended to give to any Person other than the Corporation, the District, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the 27003639.4 35 Corporation or the District shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 11.02. Successor Deemed Included in all References to Predecessor. Whenever the Corporation, the District or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Corporation, the District or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Corporation, the District or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03. Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the Person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient. The ownership of any Revenue Obligations and the amount, payment date, number and date of owning the same may be proved by the registration books maintained by the Trustee pursuant to the provisions of Section 2.07 hereof. Any declaration, request or other instrument in writing of the Owner of any Revenue Obligation shall bind all future Owners of such Revenue Obligation with respect to anything done or suffered to be done by the Corporation, the District or the Trustee in good faith and in accordance therewith. Section 11.04. Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the District or the Corporation shall be individually or personally liable for the payment of any moneys, including without limitation, the interest or principal evidenced by the Revenue Obligations, but nothing contained herein shall relieve any member, officer or employee of the District or the Corporation from the performance of any official duty provided by any applicable provisions of law, by the Installment Purchase Agreement or hereby. Section 11.05. Acauisition of Revenue Obligations by District. All Revenue Obligations acquired by the District, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. Section 11.06. Content of Certificates. Every Written Certificate of the District and every Written Certificate of the Corporation with respect to compliance with any agreement, 27003639.4 36 condition, covenant or term contained herein shall include (a)a statement that the Person making or giving such certificate has read such agreement, condition, covenant or term and the definitions herein relating thereto, (b)a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based, (c) a statement that, in the opinion of the signer, the signer has made or caused to be made such examination or investigation as is necessary to enable the signer to express an informed opinion as to whether or not such agreement, condition, covenant or term has been complied with, and (d)a statement as to whether, in the opinion of the signer, such agreement, condition, covenant or term has been complied with. Any Written Certificate of the District and any Written Certificate of the Corporation may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless the Person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which each Person's certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon information which is in the possession of the District or the Corporation upon a representation by an officer or officers of the District or the Corporation, as the case may be, unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which such counsel's opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Section 11.07. Funds and Accounts. Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Revenue Obligations and the rights of the Owners. The Trustee may establish such funds and accounts as it deems necessary to perform its obligations hereunder. Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Trust Agreement. Section 11.08. Article and Section Headings. Gender and References. The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to "Articles," "Sections," subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words "hereby," "herein," "hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section, subsection or clause thereof. 27003639.4 37 Section 11.09. Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Corporation, the District or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Revenue Obligations, and the Owners shall retain all the benefit,protection and security afforded to them under any applicable provisions of law. The Corporation, the District and the Trustee hereby declare that they would have executed this Trust Agreement, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Revenue Obligations pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any Person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 11.10. California Law. This Trust Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.11. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the District: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Director of Finance and Administrative Services If to the Corporation: Orange County Sanitation District Financing Corporation c/o Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Treasurer If to the Trustee: U.S. Bank Corporate Trust Services 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust Services Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, e.g. facsimile or telecopier or e-mail (with a PDF attachment, if applicable), upon the sender's receipt of an appropriate written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, 27003639.4 38 with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e)if given by any other means, upon delivery at the address specified in this Section. Section 11.12. Effective Date. This Trust Agreement shall become effective upon its execution and delivery. Section 11.13. Execution in Counterparts. This Trust Agreement may be simultaneously executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [Remainder of page intentionally left blank.] 27003639.4 39 IN WITNESS WHEREOF,the parties hereto have caused this Trust Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above. ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION By: Treasurer ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors (SEAL) Attest: By: Clerk of the Board of Directors U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 27003639.4 40 EXHIBIT A FORM OF REVENUE OBLIGATION No. R— •*•$•*• Unless this Revenue Obligation is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Revenue Obligation executed and delivered is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered Owner hereof, Cede&Co.,has an interest herein. ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATION SERIES 2016A Such revenue obligations are certificates of participation evidencing direct,undivided fractional interests in the Installment Purchase Agreement,dated as of March 1,2016,by and between the Orange County Sanitation District and the Orange County Sanitation District Financing Corporation and the related Installment Payments,and the interest thereon. PRINCIPAL PAYMENT DATE INTEREST RATE DATED DATE CUSIP February 1, - 2016 REGISTERED OWNER: Cede&Co. PRINCIPAL AMOUNT: DOLLARS THIS IS TO CERTIFY that the Registered Owner of this Revenue Obligation (this "Revenue Obligation"), as identified above, is the owner of a direct, fractional undivided interest in certain installment payments ("Installment Payments"), and the interest thereon,payable under and pursuant to the Installment Purchase Agreement, dated as of March 1, 2016 (the "Installment Purchase Agreement'), by and between the Orange County Sanitation District (the "District'), a county sanitation district organized and existing under the laws of the State of California, and the Orange County Sanitation District Financing Corporation (the"Corporation"), a nonprofit public benefit corporation organized and existing under the laws of the State of California. Certain of the rights of the Corporation under the Installment Purchase Agreement, including the right to receive the Installment Payments, and the interest thereon, have been assigned without recourse by the Corporation to U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, as trustee (the"Trustee") under the Trust Agreement, dated as of March 1,2016 (the"Trust Agreement'),by and among the Trustee,the District and the Corporation. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust Agreement. 27003639.4 A-1 The District has executed and delivered the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement'), by and between the District and the Corporation, pursuant to which the District establishes and declares the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest thereon, will be incurred and secured. This Revenue Obligation is one of the duly authorized Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations") evidencing principal in the aggregate amount of$[Par Amount], executed pursuant to the terms of the Trust Agreement. The Revenue Obligations evidence direct, fractional undivided interests in the Installment Payments, and the interest thereon, payable under the Installment Purchase Agreement. The Revenue Obligations are executed and delivered to refinance certain improvements to the wastewater collection, treatment and disposal facilities of the District (the "Wastewater System") and to pay the costs of issuance incurred in connection therewith and to pay certain other related costs. The Installment Payments, and the interest thereon, are to be paid by the District pursuant to the Installment Purchase Agreement in consideration for the purchase of certain improvements to the Wastewater System and for the other agreements and obligations undertaken by the Corporation under the Installment Purchase Agreement and the Trust Agreement. The income and revenue received by the District from the operation of the Wastewater System remaining after the payment of maintenance and operation or ownership costs of the Wastewater System (as more fully described in the Installment Purchase Agreement, the "Net Revenues") are, pursuant to the Master Agreement, pledged to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations (as such terms are defined in the Master Agreement). The Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement, and shall be afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The Installment Purchase Agreement is payable on a parity with the other existing Senior Obligations. The District may at any time incur Senior Obligations in addition to existing Senior Obligations and the Installment Purchase Agreement payable from Net Revenues as provided in the Master Agreement on a parity with all other Senior Obligations theretofore incurred,but only subject to the conditions and upon compliance with the procedures set forth in the Master Agreement. The District is not required to advance any moneys derived from any source of income other than Net Revenues and the other funds provided in the Installment Purchase Agreement for the payment of the Installment Payments, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement, or for the performance of any agreements or covenants required to be performed by it contained therein. The obligation of the District to pay the Installment Payments, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District 27003639.4 A-2 payable, in the manner provided in the Installment Purchase Agreement, solely from such Net Revenues and other funds provided for therein, and does not constitute a debt of the District or of the State of California, or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Reference is hereby made to the Master Agreement, the Installment Purchase Agreement and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terms under which the District's obligation to pay the Installment Payments, and the interest thereon, is incurred, the Revenue Obligations are executed and delivered, the provisions with regard to the nature and extent of the Net Revenues, and the rights of the Owners of the Revenue Obligations. All of the terms of the Master Agreement, the Installment Purchase Agreement and the Trust Agreement are hereby incorporated herein. The Trust Agreement constitutes a contract among the District, the Corporation and the Trustee for the benefit of the Owners of the Revenue Obligations, to all the provisions of which the Owner of this Revenue Obligation,by acceptance hereof, agrees and consents. The Registered Owner of this Revenue Obligation is entitled to receive, subject to the terms of the Trust Agreement and any right of prepayment as provided herein or therein, on the Principal Payment Date set forth above, upon presentation and surrender of this Revenue Obligation at the principal corporate trust office of the Trustee in St. Paul, Minnesota (the `Principal Office"),the Principal Amount specified above, evidencing the Owner's interest in the Installment Payments coming due on the Principal Payment Date, and to receive on February I and August 1 of each year, commencing on August 1, 2016 (each an "Interest Payment Date"), interest accrued thereon at the Interest Rate specified above, computed on the basis of a 360-day year consisting of twelve 30-day months, until said Principal Amount is paid in full, evidencing the Registered Owner's interest in the interest evidenced by the Installment Payments coming due on each of said dates. This Revenue Obligation shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full, unless such date of execution shall be after the 15th day of the month next preceding an Interest Payment Date, whether or not such day is a business day (each such date, a "Record Date"), and on or prior to the following Interest Payment Date, in which case this Revenue Obligation shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to the first Record Date, in which case this Revenue Obligation shall evidence interest from the Dated Date specified above. Notwithstanding the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Revenue Obligations shall be in default, this Revenue Obligation shall evidence interest from the last Interest Payment Date to which interest has been paid in full or duly provided for. Payments of interest evidenced by the Revenue Obligations shall be made to the Owners thereof(as determined at the close of business on the Record Date next preceding the related Interest Payment Date) by check or draft of the Trustee mailed to the address of each such Owner as it appears on the registration books maintained by the Trustee pursuant to the Trust Agreement, or to such other address as may be famished in writing to the Trustee by such Owner. Payment of principal and prepayment premium, if any, evidenced by the Revenue Obligations, on their stated principal payment dates or on prepayment in whole or in part prior 27003639.4 A-3 thereto, shall be made only upon presentation and surrender of the Revenue Obligations at the Principal Office. All such amounts are payable in lawful money of the United States of America. The Revenue Obligations are authorized to be executed and delivered in the form of fully registered certificates in denominations of$5,000 or any integral multiple thereof("Autorized Denominations"). This Revenue Obligation may be transferred or exchanged by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office,but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement. The Trustee shall not be required to transfer or exchange any Revenue Obligation during the period commencing on the date five days before the date of selection of Revenue Obligations for prepayment and ending on the date of mailing of notice of such prepayment, nor shall the Trustee be required to transfer or exchange any Revenue Obligation or portion thereof selected for prepayment from and after the date of mailing the notice of prepayment thereof. The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, whether or not the principal or interest evidenced by this Revenue Obligation shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the principal and interest evidenced by this Revenue Obligation shall be made only to such Registered Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by this Revenue Obligation to the extent of the sum or sums so paid. The Revenue Obligations are subject to prepayment prior to their stated Principal Payment Dates in accordance with the Trust Agreement. To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee under the Trust Agreement may be amended or supplemented at any time by an amendment or supplement thereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Revenue Obligations then outstanding, exclusive of Revenue Obligations disqualified as provided under the Trust Agreement, are filed with the Trustee. No such supplement or amendment shall (a)extend the stated Principal Payment Date of any Revenue Obligation or reduce the rate of interest evidenced thereby or extend the time of payment of such interest or reduce the amount of principal evidenced thereby or change the prepayment terms and provisions or the provisions regarding delivery of notice of prepayment without the prior written consent of the Owner of each Revenue Obligation so affected, (b)reduce the percentage of Owners whose consent is required for the execution of any amendment of or supplement to the Trust Agreement without the prior written consent of the Owners of all Revenue Obligations then outstanding, (c)modify any of the rights or obligations of the Trustee without the prior written consent of the Trustee, or (d)amend the amendment provisions of the Trust Agreement without the prior written consent of the Owners of all Revenue Obligations then outstanding. 27003639.4 A-4 To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee under the Trust Agreement may also be amended or supplemented at any time by an amendment or supplement thereto which shall become binding upon execution, without the written consents of any Owners,but only to the extent permitted by law and only(a)to add to the agreements, conditions, covenants and terns required by the Corporation or the District to be observed or performed under the Trust Agreement other agreements, conditions, covenants and terns thereafter to be observed or performed by the Corporation or the District, or to surrender any right or power reserved therein to or conferred therein on the Corporation or the District, and which in either case shall not adversely affect the rights or interests of the Owners, (b)to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained in the Trust Agreement or in regard to questions arising thereunder which the Corporation or the District may deem desirable or necessary and not inconsistent therewith or (c) for any other reason, provided such amendment or supplement does not adversely affect the rights or interests of the Owners. THE DISTRICT HAS CERTIFIED that all acts, conditions and things required by the statutes of the State of California and by the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Revenue Obligation do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Revenue Obligation. IN WITNESS WHEREOF, this Revenue Obligation has been executed by the manual signature of an authorized signatory of the Trustee as of the date set forth below. Date: 20_ U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 27003639.4 A-$ ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned Revenue Obligation and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises. Dated: Note: The signature(s)on this Assignment must correspond with the narne(s) as written on the face of the within registered Revenue Obligation in every particular, without alteration or enlargement or any change whatsoever. Tax I.D. #: Signature Guaranteed: Now: Signatme(s)must be guaranteed by an eligible Note: The signature(s)on this Assignment must correspond guarantor. with the name(s)as written on the face of the within Revenue Obligation in every particular without alteration or enlargement or any change whatsoever. 27003639.4 A-6 NRF DRAFT 2/3/16 INSTALLMENT PURCHASE AGREEMENT by and between ORANGE COUNTY SANITATION DISTRICT and ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION Dated as of March 1, 2016 Relating to $[Paz Amount] Orange County Sanitation District Wastewater Refunding Revenue Obligations Series 2016A 290036384 11411481 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.01. Definitions............................................................................................2 Section 1.02. Definitions in Master Agreement and Trust Agreement......................3 ARTICLE II PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE CORPORATION; PAYMENT OF PURCHASE PRICE Section 2.01. Acquisition of the Project....................................................................4 Section 2.02. Payment of Purchase Price...................................................................4 ARTICLE IH PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT; INSTALLMENT PAYMENTS Section 3.01. Purchase and Sale of Project................................................................4 Section 3.02. Installment Payments...........................................................................4 Section3.03. Reserved...............................................................................................6 Section 3.04. Obligation Absolute.............................................................................6 Section 3.05. Nature of Agreement............................................................................6 ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENTS Section 4.01. Prepayment of Installment Payments...................................................7 Section4.02. Notice...................................................................................................7 Section 4.03. Discharge of Obligations.....................................................................7 ARTICLE V COVENANTS Section 5.01. Compliance with Master Agreement...................................................7 Section 5.02. Compliance with Installment Purchase Agreement.............................7 Section 5.03. Protection of Security and Rights........................................................ 8 Section 5.04. Indemnification of Corporation........................................................... 8 Section 5.05. Further Assurances............................................................................... 8 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION Section 6.01. Events of Default................................................................................. 8 Section 6.02. Remedies on Default............................................................................9 Section6.03. Non-Waiver..........................................................................................9 Section 6.04. Remedies Not Exclusive.................................................................... 10 ARTICLE VII AMENDMENTS Section 7.01. Amendments...................................................................................... 10 ARTICLE VIII MISCELLANEOUS Section 8.01. Liability of District Limited............................................................... 11 Section 8.02. Limitation of Rights........................................................................... 11 Section8.03. Assignment ........................................................................................ 11 Section8.04. Notices............................................................................................... 12 27W3638.6 _i_ TABLE OF CONTENTS (continued) Page Section 8.05. Successor Is Deemed Included in all References to Predecessor...... 12 Section 8.06. Waiver of Personal Liability.............................................................. 12 Section 8.07. Article and Section Headings, Gender and References..................... 12 Section 8.08. Partial Invalidity................................................................................. 13 Section 8.09. Governing Law.................................................................................. 13 Section 8.10. Execution in Counterparts.................................................................. 13 EXHIBIT A DESCRIPTION OF PROJECT........................................................A-1 27W3638.6 -11- INSTALLMENT PURCHASE AGREEMENT THIS INSTALLMENT PURCHASE AGREEMENT (this "Installment Purchase Agreement'), dated as of March 1, 2016, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District'), and the ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing under the laws of the State of California(the"Corporation"). WITNESSETH: WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the `Prior Project'), the District has heretofore purchased the Prior Project from the Corporation, and the Corporation has heretofore sold the Prior Project to the District, for the installment payments (the `Prior Installment Payments") made by the District pursuant to the Installment Purchase Agreement, dated as of May 1, 2009 (the`Prior Installment Purchase Agreement'),by and between the District and the Corporation; WHEREAS, to provide the funds necessary to refinance the Prior Project, the District caused the execution and delivery of the Orange County Sanitation District Certificates of Participation, Series 2009A (the "Prior Certificates"), evidencing direct, undivided fractional interests in the related Prior Installment Payments; WHEREAS,the District desires to refinance a portion of the Prior Project(the "Project') by prepaying a portion of the remaining Prior Installment Payments, and the interest thereon to the dates of prepayment, thereby causing a portion of the remaining Prior Certificates to be prepaid; WHEREAS,to provide the funds necessary to pay and prepay a portion of the remaining Prior Installment Payments,the District and the Corporation desire that the Corporation purchase the Project from the District and the District sell the Project to the Corporation, and that the District then purchase the Project from the Corporation and the Corporation sell the Project to the District, for the installment payments (the`Installment Payments") to be made by the District pursuant to this Installment Purchase Agreement; WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000,by and between the District and the Corporation,the District has established and declared the conditions and terms upon which obligations such as this Installment Purchase Agreement, and the Installment Payments, and the interest thereon, are to be incurred and secured; WHEREAS, the Corporation proposes to assign without recourse certain of its rights under and pursuant to this Installment Purchase Agreement to U.S. Bank National Association, as trustee(the"Trustee"); 2900363&4 WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, dated as of the date hereof, by and among the Trustee, the Corporation and the District, the Trustee has agreed to execute and deliver the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations"), evidencing direct, undivided fractional interests in the Installment Payments, and the interest thereon,payable hereunder; WHEREAS, a portion of the proceeds of the Revenue Obligations will be used to prepay a portion of the Prior Installment Payments; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Installment Purchase Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Installment Purchase Agreement; NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: "Business Day" means a day other than (a) Saturday or Sunday, (b) a day on which banking institutions in the city in which the Principal Office is located are authorized or required by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. "Closing Date"means ,2016. "Corporation" means the Orange County Sanitation District Financing Corporation, a nonprofit public benefit corporation organized and existing under the laws of the State, and any successor thereto. "District" means the Orange County Sanitation District, a county sanitation district organized and existing under and by virtue of the laws of the State, and any successor thereto. "Event of Default"means an event described in Section 6.01 hereof. "Installment Payments" means the Installment Payments required to be made by the District pursuant to Section 3.02 hereof. 290036384 2 "Installment Payment Dates"means each February 1, commencing February 1, 20. "Installment Purchase Agreement" means this Installment Purchase Agreement, dated as of March 1, 2016, by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms hereof. "Interest Payment Date" means February 1 and August 1 of each year, commencing August 1,2016. "Master Agreement" means the Master Agreement for District Obligations, dated as of August 1, 2000, by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms thereof. "Person" means an individual, corporation, limited liability company, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Principal Office" means the Trustee's principal corporate trust office in [Los Angeles], California. "Project" means the improvements to the Wastewater System, as described in Exhibit A hereto. "Revenue Obligations" means the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A, executed and delivered by the Trustee, which are certificates of participation, evidencing direct, undivided fractional interests in the Installment Payments, and the interest thereon, executed and delivered under and pursuant to the Trust Agreement. "Trust Agreement" means the Trust Agreement, dated as of March 1, 2016, by and among the Trustee, the Corporation and the District, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, or any other bank or trust company which may at any time be substituted in its place as provided in the Trust Agreement. Section 1.02. Definitions in Master Agreement and Trust Agreement. Except as otherwise herein defined and unless the context otherwise requires, the terns defined in the Master Agreement or the Trust Agreement shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein have the meanings defined therein, such definitions to be equally applicable to both the singular and plural forms of any of the terns defined therein. With respect to any defined term which is given a different meaning under this Installment Purchase Agreement than under the Master Agreement or the Trust Agreement, as used herein it shall have the meaning given herein. 290036384 3 ARTICLE II PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE CORPORATION; PAYMENT OF PURCHASE PRICE Section 2.01. Acquisition of the Protect. The District represents and warrants that it is the sole and exclusive owner of the Project. The Corporation hereby purchases from the District, and the District hereby sells to the Corporation, a portion of the Project equal to $[Par Amount] as described in Exhibit A hereto in accordance with the provisions of this Installment Purchase Agreement. All right, title and interest in and to such portion of the Project shall immediately vest in the Corporation on the Closing Date without further action on the part of the Corporation or the District. Section 2.02. Payment of Purchase Price. On the Closing Date, the Corporation shall pay to the District, as the purchase price of the applicable portion of the Project specified in Section 2.01, the amount of$ , which amount shall be paid from the proceeds of the Revenue Obligations. ARTICLE IU PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT; INSTALLMENT PAYMENTS Section 3.01. Purchase and Sale of Protect. The District hereby purchases from the Corporation, and the Corporation hereby sells to the District, the Project in accordance with the provisions of this Installment Purchase Agreement. All right, title and interest in and to the Project shall immediately vest in the District on the Closing Date without further action on the part of the District or the Corporation. Section 3.02. Installment Payments. The District shall, subject to any rights of prepayment provided in Article W hereof, pay to the Corporation, solely from Net Revenues and from no other sources, the purchase price of the Project in Installment Payments, with interest thereon, as provided herein. The Installment Payments and the interest thereon shall be payable on the Business Day immediately preceding each of the Installment Payment Dates in the amounts and at the interest rates per annum set forth in the following schedule: 290036384 4 Interest on Payment Installment Installment Interest Date Payment Payment Total Rate The Installment Payments shall accrue interest from the Closing Date, at the rates set forth above, payable on the Interest Payment Dates in each year. Such interest shall accrue on the basis of a 360-day year consisting of twelve 30-day months. Each Installment Payment, and each payment of interest thereon, shall be deposited with the Trustee, as assignee of the Corporation, no later than the Business Day next preceding the Installment Payment Date or Interest Payment Date on which such Installment Payment or payment of interest is due, in lawful money of the United States of America, in immediately available funds. If and to the extent that, on any such date, there are amounts on deposit in the Installment Payment Fund established under the Trust Agreement, or in any of the accounts therein, which amounts are not being held for the payment of specific Revenue Obligations, such amounts shall be credited against the Installment Payment, or payment of interest thereon, as applicable, due on such date. Section 3.03. Reserved. 290036384 5 Section 3.04. Obligation Absolute. The obligation of the District to make the Installment Payments, and payments of interest thereon, and other payments required to be made by it under this Article, solely from Net Revenues, is absolute and unconditional, and until such time as the Installment Payments, payments of interest thereon, and such other payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article IV), the District shall not discontinue or suspend any Installment Payments, or payments of interest thereon, or other payments required to be made by it hereunder when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments, payments of interest thereon, and other payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever. Section 3.05. Nature of Agreement. This Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement and shall be afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENTS Section 4.01. Prepayment of Installment Payments. (a) The Installment Payments shall be subject to prepayment prior to their respective Installment Payment Dates as provided in Article IV of the Trust Agreement. (b) The District may prepay, from any source of available funds, all or any portion of the Installment Payments by depositing with the Trustee moneys or securities as provided, and subject to the terms and conditions set forth, in Article X of the Trust Agreement sufficient to pay such Installment Payments, and the interest thereon, when due or to pay such Installment Payments, and the interest thereon, through a specified date on which the District has a right to prepay such Installment Payments pursuant to subsection(a) of this Section, and to prepay such Installment Payments on such prepayment date, at a prepayment price determined in accordance with subsection(a)of this Section. (c) If less than all of the Installment Payments are prepaid then, as of the date of such prepayment pursuant to subsection (a) of this Section, or the date of a deposit pursuant to subsection (b) of this Section, the schedule of Installment Payments shall be recalculated to take such prepayment into account. Section 4.02. Notice. The District shall give written notice to the Trustee specifying the date on which the prepayment will be made prior to making any prepayment pursuant to this Article, which date shall be not less than 25 nor more than 60 days from the date such notice is given to the Trustee,unless such time period shall be waived by the Trustee. 290036384 6 Section 4.03. Discharge of Obligations. If all Installment Payments, and the interest thereon, shall be paid as and when due in accordance with the terms hereof, or prepaid in accordance with Section 4.01 hereof, and if all Revenue Obligations shall be fully paid, or provision therefor made in accordance with Article X of the Trust Agreement, and the Trust Agreement shall be discharged by its terms,then all agreements, covenants and other obligations of the District hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. ARTICLE V COVENANTS Section 5.01. Compliance with Master Agreement. The District will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Master Agreement required to be observed and performed by it and will not cause, suffer or permit any default to occur thereunder. Section 5.02. Compliance with Installment Purchase Agreement. The District will punctually pay the Installment Payments, and interest thereon, and other payments required to be made by it hereunder in strict conformity with the terns hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, will not cause, suffer or permit any default to occur hereunder and will not terminate this Installment Purchase Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political subdivision of either or any failure of the Corporation to observe or perform any agreement, condition, covenant or tern contained herein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Corporation or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities. Section 5.03. Protection of Security and Rights. The District will preserve and protect the security hereof and the rights of the Trustee, as assignee of the Corporation, to the Installment Payments, and interest thereon, and other payments required to be made by the District hereunder and will warrant and defend such rights against all claims and demands of all Persons. Section 5.04. Indemnification of Corporation. To the extent permitted by law, the District hereby agrees to indemnify and hold the Corporation and its members and officers harmless against any and all liabilities which might arise out of or are related to the Project, this Installment Purchase Agreement or the Revenue Obligations, and the District further agrees to defend the Corporation and its members and officers in any action arising out of or related to the Project,this Installment Purchase Agreement or the Revenue Obligations. 290036384 7 Section 5.05. Further Assurances. The District will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Corporation, or unto the Trustee, as assignee of the Corporation, the rights and benefits provided herein to the Corporation, or to the Trustee, as assignee of the Corporation. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION Section 6.01. Events of Default. The following shall be Events of Default under this Installment Purchase Agreement, and "Event of Default' shall mean any one or more of the following events: (a) if default shall be made by the District in the due and punctual payment of or on account of any Senior Obligation as the same shall become due and payable; (b) if default shall be made by the District in the performance of any of the agreements or covenants required herein, in the Trust Agreement or in the Master Agreement to be performed by it (other than as specified in (a) above), and such default shall have continued for a period of 30 days after the District shall have been given notice in writing of such default by the Corporation or the Trustee; provided, however, that the party or parties giving such notice may agree in writing to a reasonable extension of such period prior to the expiration of such 30 day period and, provided further, that if the District shall proceed to take curative action which, if begun and prosecuted with due diligence, cannot be completed within such a period of 30 days, then such period shall be increased without such written extension to such extent as shall be necessary to enable the District to diligently complete such curative action and such default shall not become an Event of Default for so long as shall be necessary to diligently complete such curative action; or (c) if the District shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the District seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the District or of the whole or any substantial part of its property. Section 6.02. Remedies on Default. Upon the occurrence of an Event of Default, the Trustee,as assignee of the Corporation, shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the District and to compel the District to perform and carry out its duties under applicable law and the agreements and covenants required to be performed herein; 290036384 8 (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee, as assignee of the Corporation; (c) by suit in equity to require the District to account as the trustee of an express trust; and to have a receiver or receivers appointed for the Wastewater System and of the issues, earnings, income, products and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. Section 6.03. Non-Waiver. Nothing in this Article or in any other provision hereof shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the Installment Payments, and the interest thereon, to the Trustee, as assignee of the Corporation, at the respective due dates from the Net Revenues and the other funds herein committed for such payment, or shall affect or impair the right of the Trustee, as assignee of the Corporation, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein. A waiver of any default or breach of duty or contract by the Trustee, as assignee of the Corporation, shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee, as assignee of the Corporation,to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee, as assignee of the Corporation,by applicable law or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee, as assignee of the Corporation. If any action,proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Trustee, as assignee of the Corporation, the District and the Trustee, as assignee of the Corporation, shall be restored to their former positions, rights and remedies as if such action,proceeding or suit had not been brought or taken. Section 6.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee, as assignee of the Corporation, is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by law. ARTICLE VII AMENDMENTS Section 7.01. Amendments. (a) This Installment Purchase Agreement and the rights and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or modified from time to time and at any time by a written amendment hereto executed by the District, the Corporation and the Trustee, as assignee of the Corporation, with the written consent of the Owners of a majority of the aggregate principal evidenced by Revenue Obligations then Outstanding. No such amendment shall (i) extend the payment date of any 270036384 9 Installment Payment or reduce the amount of any Installment Payment, or the interest rate applicable thereto, without the prior written consent of the Owner of each affected Revenue Obligation, or(ii)reduce the percentage of Owners of the Revenue Obligations whose consent is required to effect any such amendment or modification, without the prior written consent of the Owners of all Revenue Obligations then Outstanding. (b) This Installment Purchase Agreement and the rights and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or modified from time to time and at any time by a written amendment hereto executed by the District, the Corporation and the Trustee, as assignee of the Corporation, without the written consents of any Owners of the Revenue Obligations, but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the District, the Corporation or the Trustee, as assignee of the Corporation, to be observed or performed herein other agreements, conditions, covenants and terms thereafter to be observed or performed by the District,the Corporation or the Trustee, as assignee of the Corporation, or to surrender any right or power reserved herein to or conferred herein on the District,the Corporation or the Trustee,as assignee of the Corporation; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the District,the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or necessary and not inconsistent herewith; and (iii) to make such other changes herein or modifications hereto as the District, the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or necessary, and which shall not materially adversely affect the interests of the Owners of the Revenue Obligations. ARTICLE VIII MISCELLANEOUS Section 8.01. Liability of District Limited. Notwithstanding anything contained herein to the contrary, the District shall not be required to advance any moneys derived from any source of income other than Net Revenues and the other funds provided herein for the payment of the Installment Payments, and the interest thereon, and other payments required to be made by it hereunder, or for the performance of any agreements or covenants required to be performed by it contained herein. The District may, however, but in no event shall be obligated to, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the District for such purpose. The obligation of the District to pay the Installment Payments, and the interest thereon, and other payments required to be made by it hereunder is a special obligation of the District payable, in the manner provided herein, solely from Net Revenues and other funds provided for 290036384 10 herein, and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State, or any political subdivision thereof, is pledged to the payment of the Installment Payments, or the interest thereon, or other payments required to be made hereunder. Section 8.02. Limitation of Rights. Nothing in this Installment Purchase Agreement expressed or implied is intended or shall be construed to give to any Person other than the District, the Corporation and the Trustee, as assignee of the Corporation, any legal or equitable right, remedy or claim under or in respect of this Installment Purchase Agreement or any covenant, condition or provision therein or herein contained, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the District, the Corporation and the Trustee, as assignee of the Corporation. Section 8.03. Assignment. The District and the Corporation hereby acknowledge the transfer, conveyance and assignment by the Corporation to the Trustee of all of the Corporation's rights, title and interest in and to this Installment Purchase Agreement (excepting its rights to indemnification bereunder), including the right to receive Installment Payments, and the interest thereon,from the District,pursuant to the Trust Agreement. Section 8.04. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the District: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Director of Finance and Administrative Services If to the Corporation: Orange County Sanitation District Financing Corporation c/o Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Treasurer If to the Trustee: U.S. Bank Corporate Trust Services 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust Services Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by facsimile or telecopier, upon the sender's receipt of an appropriate answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such 270036384 11 notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means,upon delivery at the address specified in this Section. Section 8.05. Successor is Deemed Included in all References to Predecessor. Whenever the District or the Corporation is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the District or the Corporation, and all agreements and covenants required hereby to be performed by or on behalf of the District or the Corporation shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 8.06. Waiver of Personal Liability. No official, officer or employee of the District shall be individually or personally liable for the payment of the Installment Payments, or the interest thereon, or other payments required to be made by the District hereunder, but nothing contained herein shall relieve any official, officer or employee of the District from the performance of any official duty provided by any applicable provisions of law or hereby. Section 8.07. Article and Section Headings, Gender and References. The headings or fitles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subsections or clauses are to the corresponding articles, sections, subsections or clauses hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith" and other words of similar import refer to this Installment Purchase Agreement as a whole and not to any particular Article, Section, subdivision or clause hereof. Section 8.08. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the District or the Corporation shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants and portions thereof and shall in no way affect the validity hereof. Section 8.09. Governing Law. This Installment Purchase Agreement shall be construed and governed and construed in accordance with the laws of the State. Section 8.10. Execution in Counterparts. This Installment Purchase Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 2700363&4 12 IN WITNESS WHEREOF,the parties hereto have executed this Installment Purchase Agreement by their officers thereunto duly authorized as of the day and year first written above. ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors (SEAL) Attest: By: Clerk of the Board of Directors ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION By: Treasurer 290036384 13 EXHIBIT A DESCRIPTION OF PROJECT The Project is consists of the acquisition, construction and installation of certain improvements to the Wastewater System, including particularly, but without limitation, the District's collection system, two wastewater treatment plants, and Ocean Outfall, and further as follows: the acquisition, construction, installation, rehabilitation, replacement, or repair of the Westside Pump Station, Ellis Avenue Pump Station, Bitter Point Pump Station, Bitter Point Force Main Rehabilitation, College Ave. Pump Station, Coast Trunk Sewer, Headworks at Plant 2, Primary Treatment System Rehabilitation at Plant 2, New Secondary Treatment System at Plant 1, Trickling Filters at Plant 2, North County Collections Yard, Sludge Dewatering & Odor Control at Plant 1, Primary Sludge Feed System Project at Plant 2, Central Generation Automation, and 66KV Substation at Plant 1. A portion of the Project in the amount of$ shall be sold and purchased as described in Article II of this Installment Purchase Agreement. 290036384 A-1 NRF DRAFT 1/21/16 ESCROW AGREEMENT by and between ORANGE COUNTY SANITATION DISTRICT and U.S. NATIONAL ASSOCIATION, as Escrow Agent and Prior Trustee Dated as of March 1, 2016 Orange County Sanitation District Certificates of Participation Series 2009A 27003636.1 11600388 ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Escrow Agreement"), dated as of March 1, 2016, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as escrow agent (the "Escrow Agent") and as trustee under the Prior Trust Agreement referenced below (the "Prior Trustee"). WITNESSETH: WHEREAS, to finance the acquisition, construction and installation of certain improvements to its wastewater system (the `Prior Project"), the District has heretofore purchased the Prior Project from the Orange County Sanitation District Financing Corporation (the "Corporation"), and the Corporation has heretofore sold the Prior Project to the District, for the installment payments (the "Prior Installment Payments") to be made by the District pursuant to the Installment Purchase Agreement, dated as of May 1, 2009 (the "Prior Installment Purchase Agreement"),by and between the District and the Corporation; WHEREAS, to provide the funds necessary to finance the Prior Project, the District caused the execution and delivery of the Orange County Sanitation District Certificates of Participation, Series 2009A (the `Prior Certificates"), evidencing direct, undivided fractional interests in the related Prior Installment Payments, pursuant to the Trust Agreement, dated as of May 1, 2009 (the "Prior Trust Agreement"), by and among the Prior Trustee, the Corporation and the District; WHEREAS, the District has determined to refinance a portion of the Prior Project by paying and prepaying a portion of the remaining principal components of the Prior Installment Payments (the "Refunded Installment Payments"), and the interest components thereof to the date of prepayment, thereby causing to be prepaid a portion of the currently outstanding Prior Certificates maturing on February 1 in the years 20[19] through 20[39], inclusive, in the aggregate principal amount of$ (the "Refunded Certificates"); WHEREAS, to provide the funds necessary to pay and prepay the Refunded Installment Payments, the District has caused to be executed and delivered the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations"), evidencing principal in the aggregate amount of $ , pursuant to the Trust Agreement, dated as of March 1, 2016, by and among , as trustee, the Corporation and the District; WHEREAS, in accordance with the Prior Trust Agreement, the prepayment of the Refunded Installment Payments will be applied to the payment of principal and interest evidenced by the Refunded Certificates to and including February 1, 2019 (the "Prepayment Date") and to the prepayment of the outstanding Refunded Certificates on the Prepayment Date at a prepayment price equal to the principal amount thereof plus accrued interest thereon,without premium (the "Prepayment Price"),pursuant to this Escrow Agreement; 29003636A NOW THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: Section 1. Definitions. Unless otherwise defined herein, capitalized terns used herein shall have the meanings ascribed to such terns in the Prior Trust Agreement. Section 2. The Escrow Fund. (a) There is hereby established a fund (the "Escrow Fund") to be held as an irrevocably pledged escrow by the Escrow Agent, which the Escrow Agent shall keep separate and apart from all other funds of the District and the Escrow Agent and to be applied solely as provided in this Escrow Agreement. Pending application as provided in this Escrow Agreement, amounts on deposit in the Escrow Fund are hereby pledged solely to the payment of the principal and interest evidenced by the Refunded Certificates to and including the Prepayment Date and the payment of the Prepayment Price on the Prepayment Date, which amounts shall be held in trust by the Escrow Agent for the Owners of the Refunded Certificates. (b) The Prior Trustee is hereby instructed to release $ held in the Reserve Fund established under the Prior Trust Agreement (the "Prior Reserve") for deposit in the Escrow Fund. As reflected in the report of the nationally recognized firm of independent certified public accountants delivered in connection herewith,upon the execution and delivery of the Revenue Obligations, there shall be deposited in the Escrow Fund$ received from the proceeds of the sale of the Revenue Obligations and $ from release of the Prior Reserve for a total of$ (the"Escrow Deposit'). (c) The District has determined or caused to be determined that upon the deposit of the Escrow Deposit pursuant to Section 2(b) hereof, $ of the moneys on deposit in the Escrow Fund will be invested in the Government Obligations specified in Schedule I hereto which, together with uninvested cash in the amount of $ , will be sufficient to make the payments required by Section 4 hereof. Section 3. Use of Moneys in Escrow Fund. (a) The Escrow Agent hereby acknowledges deposit of the moneys described in Section 2(b) hereof and agrees to invest such moneys credited to the Escrow Fund described in Section 2(c) in the Government Obligations specified in Schedule I hereto. (b) The Owners of the Refunded Certificates shall have a first and exclusive lien on the moneys and Government Obligations credited to the Escrow Fund until such moneys and Government Obligations are used and applied as provided in this Escrow Agreement and the Prior Trust Agreement to pay principal and interest evidenced by the Refunded Certificates to and including the Prepayment Date and to prepay in full then outstanding Refunded Certificates on the Prepayment Date. (c) The Escrow Agent shall not be held liable for investment losses resulting from compliance with the provisions of this Escrow Agreement. 29003636.E 3 Section 4. Payment of Refunded Certificates. From the uninvested money and proceeds of maturing Government Obligations held in the Escrow Fund, the Escrow Agent shall apply such amounts to the payment of the principal and interest evidenced by the Refunded Certificates to and including the Prepayment Date and to the payment of the Prepayment Price of the Refunded Certificates on the Prepayment Date, all as set forth in Schedule II hereto. To the extent that the amount on deposit in the Escrow Fund on the Prepayment Date is in excess of the amount necessary to make the required payments with respect to the Refunded Certificates, such excess shall be transferred to the Trustee for deposit in the Installment Payment Fund established under the Prior Trust Agreement. Section 5. Irrevocable Instructions to Mail Notices. The District hereby irrevocably instructs the Prior Trustee to give notice within five business days of delivery of the Revenue Obligations of defeasance of the Refunded Certificates to the Owners thereof and to Assured Guaranty Municipal Corp., as successor to Financial Security Assurance Inc., substantially in the form set forth in Exhibit A hereto. The District hereby designates the Refunded Certificates for prepayment on the Prepayment Date and hereby irrevocably instructs the Prior Trustee, to give, in accordance with the provisions of Section_ of the Prior Trust Agreement, notice of prepayment of such Refunded Certificates to the Owners thereof, substantially in the form set forth in Exhibit B hereto. Section 6. Performance of Duties: Acknowledgement with Respect to Irrevocable Instructions. The Escrow Agent hereby agrees to perform the duties set forth herein and agrees that the irrevocable instructions to the Escrow Agent herein provided are in a form satisfactory to it. Section 7. Substitution of Government Obligations. (a) Upon the written direction of the District, subject to the conditions and limitations set forth in paragraph (c) below, the Escrow Agent shall sell, transfer and request the redemption of or otherwise dispose of the initial Government Obligations held in and credited to the Escrow Fund; provided that, subject to paragraph (c) below, there are substituted therefor and delivered to the Escrow Agent other Government Obligations as hereinafter provided. (b) Upon the written direction of the District, subject to the conditions and limitations set forth in paragraph (c) below, the Escrow Agent shall reinvest cash balances in the Escrow Fund in Government Obligations; provided, that any such securities purchased pursuant to this paragraph (b) shall mature (1) on the next Interest Payment Date for any of the Refunded Certificates or(2) as on such other date or dates necessary to meet the requirements of Section 4 hereof, as certified by a nationally recognized firm of independent certified public accountants. (c) The District, by this Escrow Agreement, hereby covenants and agrees that it will not request the Escrow Agent to exercise any of the powers described in paragraph (a) or (b) above in any manner, which if such exercise of powers had been reasonably expected on the date of delivery of the Refunded Certificates, would cause any of the Refunded Certificates to be arbitrage bonds within the meaning of section 103(c) of the Internal Revenue Code of 1986 (the "Code"), and the regulations thereunder in effect on the date of such request and applicable to obligations issued on the date of such Refunded Certificates. Any purchase of substitute securities by the Escrow Agent shall be accomplished in accordance with paragraph (a) above to 27003636A 4 the extent such purchases are to be made with the proceeds derived from the sale, transfer, redemption or other disposition of the Government Obligations. Such sale, transfer, redemption or other disposition of the Government Obligations and such substitution may be effected only by a simultaneous transaction and only if(i)a nationally recognized firm of independent certified public accountants shall certify that (a) such substitute securities, together with the Government Obligations and cash which will continue to be held in the Escrow Fund, will mature in such principal amounts and earn interest in such amounts and at such times so that sufficient moneys will be available from such maturing principal and interest to pay, as the same become due, all principal,premium and interest payable with respect to the Refunded Certificates which have not previously been paid, and (b) the amounts and dates of the anticipated payments by the Escrow Agent of the principal, premium and interest payable with respect to the Refunded Certificates will not be diminished or postponed thereby, (ii) the Escrow Agent shall have received an opinion of nationally recognized bond counsel to the effect that the sale, transfer, redemption or other disposition and substitution of the Government Obligations does not cause interest on either the Revenue Obligations or the Refunded Certificates to be subject to federal income taxation under relevant provisions of the Code and the regulations thereunder in effect on the date of such sale, transfer, redemption or other disposition and substitution and applicable to obligations issued on the date of execution and delivery of the Revenue Obligations. Section 8. Escrow Agent's Authority to Make Investments. Except as expressly provided in Sections 3 and 7 hereof, the Escrow Agent shall have no power or duty to invest any funds held under this Escrow Agreement. The Escrow Agent shall have no power or duty to transfer or otherwise dispose of the moneys held hereunder except as provided herein. Section 9. Indemnity. To the extent permitted by law, the District hereby assumes liability for, and hereby agrees to indemnify, protect, save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees, expenses and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at any time in any way relating to or arising out of the execution, delivery and performance of this Escrow Agreement, the establishment hereunder of the Escrow Fund, the acceptance of the moneys deposited therein, and any payment, transfer or other application of moneys by the Escrow Agent in accordance with the provisions of this Escrow Agreement; provided, however, that the District shall not be required to indemnify the Escrow Agent against the Escrow Agent's own negligence or willful misconduct or the negligence or willful misconduct of the Escrow Agent's respective successors, assigns, agents and employees or the material breach by the Escrow Agent of the terms of this Escrow Agreement. In no event shall the District or the Escrow Agent be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this Section. The indemnities contained in this Section shall survive the termination of this Escrow Agreement. Section 10. Responsibilities of Escrow Agent. The Escrow Agent makes no representation as to the sufficiency of the funds deposited in accordance with Section 2(b) and invested pursuant to Section 3(a) and earnings thereof, if any, to accomplish the prepayment of the Refunded Certificates pursuant to the Prior Trust Agreement or to the validity of this Escrow Agreement as to the District and, except as otherwise provided herein, the Escrow Agent shall 29003636A 5 incur no liability in respect thereof. The Escrow Agent shall not be liable in connection with the performance of its duties under this Escrow Agreement except for its own negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent shall be determined by the express provisions of this Escrow Agreement. The Escrow Agent may consult with counsel, who may or may not be counsel to the District, and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Escrow Agreement, such matter (except the matters set forth herein as specifically requiring a certificate of a nationally recognized firm of independent certified public accountants or an opinion of counsel of recognized standing in the field of law relating to municipal bonds) may be deemed to be conclusively established by a written certification of the District. The Escrow Agent shall famish the District periodic cash transaction statements which include detail for all investment transactions effected by the Escrow Agent or brokers selected by the District. Upon the District's election, such statements will be delivered via the Escrow Agent's online service and upon electing such service, paper statements will be provided only upon request. The District waives the right to receive brokerage confirmations of security transactions effected by the Escrow Agent as they occur, to the extent permitted by law. The District further understands that trade confirmations for securities transactions effected by the Escrow Agent will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. The Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement and no implied duties, covenants or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent may resign by giving written notice to the District, and upon receipt of such notice the District shall promptly appoint a successor Escrow Agent. If the District does not appoint a successor Escrow Agent within thirty (30) days of receipt of such notice, the resigning Escrow Agent may petition a court of competent jurisdiction for the appointment of a successor Escrow Agent, which court may thereupon, upon such notice as it shall deem proper, appoint a successor Escrow Agent. Upon acceptance of appointment by a successor Escrow Agent, the resigning Escrow Agent shall transfer all amounts held by it in the Escrow Fund to such successor Escrow Agent and be discharged of any further obligation or responsibility hereunder. Section 11. Amendments. The District and the Escrow Agent may(but only with the consent of the Owners of all of the Refunded Certificates) amend this Escrow Agreement or enter into agreements supplemental to this Escrow Agreement. Section 12. Term. This Escrow Agreement shall commence upon its execution and delivery and shall terminate on the date upon which the Refunded Certificates have been paid in accordance with this Escrow Agreement. 29003636A 6 Section 13. Comoensation. The District shall from time to time pay or cause to be paid to the Escrow Agent the agreed upon compensation for its services to be rendered hereunder, and reimburse the Escrow Agent for all of its reasonable advances in the exercise and performance of its duties hereunder; provided, however, that under no circumstances shall the Escrow Agent be entitled to any lien whatsoever on any moneys or obligations in the Escrow Fund for the payment of fees and expenses for services rendered or expenses incurred by the Escrow Agent under this Escrow Agreement or otherwise. Section 14. Severability. If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the District or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement. Section 15. Counterparts. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as an original but all of which shall constitute and be but one and the same instrument. Section 16. Governing Law. This Escrow Agreement shall be construed under the laws of the State of California. 29003636A 7 IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date first above written. U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent and Prior Trustee By: Authorized Officer ORANGE COUNTY SANITATION DISTRICT By: Lorenzo Tyner,Director of Finance and Administrative Services 29003636A SCHEDULE I INITIAL GOVERNMENT OBLIGATIONS IN ESCROW FUND 1 pe Maturity Date Principal Amount Interest Rate 27003636.1 I-1 SCHEDULED PAYMENT REQUIREMENTS OF THE REFUNDED CERTIFICATES Principal Period Endine Interest Prepaid Total 29003636A Il-I EXHIBIT A NOTICE OF DEFEASANCE ORANGE COUNTY SANITATION DISTRICT CERTIFICATES OF PARTICIPATION SERIES 2009A MATURING ON FEBRUARY 1 IN THE YEARS 20_THROUGH 20_, INCLUSIVE Stated Principal CUSIP Payment Date Interest Rate Principal Outstandine Number* NOTICE IS HEREBY GIVEN that on March , 2016, the Orange County Sanitation District (the "District") caused there to be deposited with U.S. Bank National Association, as escrow agent (the "Escrow Agent"), pursuant to an Escrow Agreement, dated as of March 1, 2016, by and between the District and the Escrow Agent, proceeds of its Wastewater Refunding Revenue Obligations, Series 2016A, together with other available monies, which will be sufficient (i) to pay the principal and interest evidenced by the District's Certificates of Participation, Series 2009A maturing on February 1 in the years 20 through 20 , inclusive (the "Refunded Certificates"), to and including February 1, 2019 (the "Prepayment Date") and (ii) to pay all of the principal evidenced by the Refunded Certificates, plus accrued interest evidenced thereby to the Prepayment Date, without premium (the `Prepayment Price"), on the Prepayment Date. Thus, on the Prepayment Date there will become due and payable with respect to each of the Refunded Certificates the Prepayment Price thereof, and from and after such Prepayment Date, the interest evidenced thereby shall cease to accrue and be payable. The Escrow Agent is obligated to pay or cause to be paid to the Owners of the Refunded Certificates all sums due thereon, but only from moneys deposited with the Escrow Agent as described in this paragraph. 29003636A A-1 Dated: 12016 By: U.S. BANK NATIONAL ASSOCIATION, as Trustee and Escrow Agent on behalf of the Orange County Sanitation District • Neither the District nor the Trustee/Escrow Agent shall have any responsibility for any defect in the CUSIP numbers that appear in this defeasance notice. The CUSIP numbers have been assigned by an independent service for convenience of reference, and neither the District nor the Trustee/Escrow Agent shall not be liable for any inaccuracy in such number. 2900363G1 A-2 EXHIBIT B NOTICE OF PREPAYMENT ORANGE COUNTY SANITATION DISTRICT CERTIFICATES OF PARTICIPATION SERIES 2009A MATURING ON FEBRUARY 1 IN THE YEARS 20 THROUGH 20_, INCLUSIVE Principal Stated CUSIP Payment Date Interest Rate Principal Outstandine Number* NOTICE IS HEREBY GIVEN that the Orange County Sanitation District Certificates of Participation, Series 2009A, in the maturities and principal amounts specified above (the "Refunded Certificates") are hereby subject to prepayment on February 1, 2019 (the "Prepayment Date") at a price equal to the principal evidenced by the Refunded Certificates,plus accrued interest evidenced thereby to the Prepayment Date, without premium (the "Prepayment Price"). On the Prepayment Date there will become due and payable with respect to each of the Refunded Certificates the Prepayment Price thereof, and from and after such Prepayment Date, the interest evidenced thereby shall cease to accrue and be payable. The Refunded Certificates shall be surrendered at the address of U.S. Bank National Association, as Trustee, set forth below. [to come] The method of presentation and delivery of a Refunded Certificate is at the option and risk of the owner of each Refunded Certificate(the"Owner"). If mail is used, insured registered mail, return receipt requested is suggested. The Trustee may be obligated to withhold a percentage of the Prepayment Price from any Owner who fails to famish the Trustee with a valid taxpayer identification number or a certification that such Owner is not subject to backup withholding. Owners who wish to avoid the application of these provisions should submit a completed IRS Form W-9 when presenting their Refunded Certificates. Dated: 20 29003636A B-1 By: U.S. Bank National Association, as Trustee and Escrow Agent on behalf of the Orange County Sanitation District * Neither the District nor the Trustee/Escrow Agent shall have any responsibility for any defect in the CUSIP numbers that appear in this prepayment notice. The CUSIP numbers have been assigned by an independent service for convenience of reference, and neither the District nor the Trustee/Escrow Agent shall not be liable for any inaccuracy in such number. 29003636.t B-2 CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement'),dated as of March 1, 2016, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District'), and DIGITAL ASSURANCE CERTIFICATION LLC, as Dissemination Agent(the"Dissemination Agent'). WITNESSETH: WHEREAS, the District has caused to be executed and delivered the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the `Revenue Obligations"), evidencing principal in the aggregate amount of$ ,pursuant to a Trust Agreement,dated as of the date hereof(the"Trust Agreement"),by and among U.S. Bank National Association,as trustee(the "Trustee"), the Orange County Sanitation District Financing Corporation (the "Corporation") and the District;and WHEREAS, this Disclosure Agreement is being executed and delivered by the District and the Dissemination Agent for the benefit of the owners and beneficial owners of the Revenue Obligations and in order to assist the purchaser of the Revenue Obligations in complying with the Rule (as defined herein); NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained,the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust Agreement or, if not defined therein, in the Master Agreement, dated as of August 1, 2000, by and between the District and the Corporation. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the District pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means the date in each year that is eight months after the end of the Fiscal Year,which date,as of the date of this Disclosure Agreement,is March 1. "Disclosure Representative" means the Director of Finance and Administrative Services of the District, or such other officer or employee of the District as the District shall designate in writing to the Dissemination Agent and the Trustee from time to time. "Dissemination Agent" means an entity selected and retained by the District, or any successor thereto selected by the District. The initial Dissemination Agent shall be Digital Assurance Certification LLC. "EMMA" shall mean Electronic Municipal Market Access system, maintained on the internet at http://emma.msrb.org by the MSRB. "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30, or any twelve-month or fifty-two week period hereafter selected by the District,with notice of such selection or change in fiscal year to be provided as set forth herein. 1 "Listed Events" means any of the events listed in Section 4 hereof and any other event legally required to be reported pursuant to the Rule. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with the MSRB are to be made through EMMA. "Official Statement" means the Official Statement, dated March _, 2016, relating to the Revenue Obligations. "Participating Underwriter" means any of the original purchasers of the Revenue Obligations required to comply with the Rule in connection with the offering of the Revenue Obligations. "Repository"means,until otherwise designated by the SEC,EMMA. "Rule" means Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same has been or may be amended from time to time. "SEC" shall mean the United States Securities and Exchange Commission. Section 2. Provision of Annual Reports. (a) The District shall provide, or shall cause the Dissemination Agent to provide, to MSRB, through EMMA, not later than 15 days prior to the Annual Report Date, an Annual Report which is consistent with the requirements of Section 3 of this Disclosure Agreement The Annual Report must be submitted in electronic Format, accompanied by such identifying information as provided by the MSRB. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 3 of this Disclosure Agreement. Not later than 15 Business Days prior to such date, the District shall provide the Annual Report to the Dissemination Agent. If the Fiscal Year changes for the District, the District shall give notice of such change in the manner provided under Section 4(e)hereof. (b) If by 15 Business Days prior to the date specified in subsection(a) for providing the Annual Report to the MSRB, through EMMA, the Dissemination Agent has not received a copy of the Annual Report the Dissemination Agent shall contact the District to determine if the District is in compliance with subsection(a). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be famished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection(a), the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine the electronic filing address of, and then-current procedures For submitting Annual Reports to, the MSRB each year prior to the date for providing the Annual Report; and 2 (ii) (if the Dissemination Agent is other than the Trustee), to the extent appropriate information is available to it, file a report with the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided. Section 3. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Bond. If the District's audited financial statements are not available by the Annual Report Date,the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The principal evidenced by the Revenue Obligations Outstanding as of the June 30 next preceding the Annual Report Date and the principal amount of other Senior Obligations outstanding as of the June 30 next preceding the Annual Report Date. (c) Updated information (not to include projections), for the Fiscal Year ended the June 30 next preceding the Annual Report Date, comparable to the information contained in the Official Statement in Table Nos. 2,4, 6 (only with respect to information on 6 under the headings Fiscal Year and Sewer Service Charge), 8,9, 10, 11, 12, 13, 14 and 16. (d) In addition to any of the information expressly required to be provided under subsections (a), (b) and (c) of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made,not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the District is an"obligated person" (as defined by the Rule), which are available to the public on EMMA or filed with the SEC. The District shall clearly identify each such document to be included by reference. Section 4. Reportine of Sienificant Events. (a) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Revenue Obligations, in a timely manner not more than ten(10)Business Days after the event: (1) principal and interest payment delinquencies; (2) defeasances; (3) tender offers; (4) rating changes; (5) adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- 3 TER)or other material notices or determinations with respect to the tax-status of the Revenue Obligations; (6) unscheduled draws on the debt service reserves reflecting financial difficulties; (7) unscheduled draws on credit enhancements reflecting financial difficulties; (8) substitution of credit or liquidity providers or their failure to perform; or (9) bankruptcy,insolvency,receivership or similar proceedings. For these purposes,any event described in the immediately preceding paragraph(9)is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. (b) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Revenue Obligations, if material: (1) mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated persons or their termination; (2) appointment of a successor or additional Trustee or the change of the time of a Trustee; (3) nonpayment related defaults; (4) modifications to the rights of Owners; (5) a notices of prepayment or (6) release, substitution or sale of property securing repayment of the Revenue Obligations. (c) Whenever the District obtains knowledge of the occurrence of a Listed Event, described in subsection(b)of this Section 4,the District shall as soon as possible determine if such event would be material under applicable federal securities law. (d) If the District determines that knowledge of the occurrence of a Listed Event described in subsection(b) of this Section 4 would be material under applicable federal securities law, the District shall promptly notify the Dissemination Agent in writing and instruct the Dissemination Agent to report the occurrence to the Repository in a timely manner not more than ten(10)Business Days after the event. (e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event,the Dissemination Agent shall file a notice of such occurrence with the MSRB. 4 Section 5. Filings with the MSRB. All information, operating data, financial statements, notices and other documents provided to the MSRB in accordance with this Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination of Reporting Obligation. The District's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Revenue Obligations. If such termination occurs prior to the final maturity of the Revenue Obligations, the District shall give notice of such termination in the same manner as for a Listed Event under Section 4 hereof. Section 7. Dissemination Agent. The District may, from time to time, appoint or engage another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent,with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Trustee, if the Trustee agrees to act, shall be the Dissemination Agent; provided it shall receive written notice of such designation at the time of such designation. Notwithstanding any other provision to this Disclosure Agreement to the contrary,the District may provide any Annual Report to Beneficial Owners by means of posting such Annual Report on an intemet site that provides open access to Beneficial Owners. Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Agreement, the District may amend this Disclosure Agreement, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such party, and any provision of this Disclosure Agreement may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the District and the Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the District or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate amount of principal evidenced by Outstanding Revenue Obligations and upon being indemnified to its reasonable satisfaction, shall, or any holder or beneficial owner of the Revenue Obligations may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District, Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the District, the Trustee or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. 5 Section 11. Duties. Immunities and Liabilities of Trustee and Dissemination Agent. Article Vill of the Trust Agreement is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Trust Agreement. Neither the Trustee nor the Dissemination Agent shall be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents,harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Revenue Obligations. Section 12. Beneficiaries. This Disclosure Agreement shall more solely to the benefit of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Revenue Obligations, and shall create no rights in any other person or entity. Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 6 IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as of the date first above written. ORANGE COUNTY SANITATION DISTRICT By: Lorenzo Tyner Director of Finance and Administrative Services DIGITAL ASSURANCE CERTIFICATION LLC, as Dissemination Agent By: Authorized Representative Acknowledged and Accepted: U.S.BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 7 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: Orange County Sanitation District Name of Issue: Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A Date of Execution and Delivery: , 2016 NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District")has not provided an Annual Report with respect to the above-captioned Revenue Obligations as required by Section 6.09 of the Trust Agreement, dated as of March 1, 2016, by and among U.S. Bank National Association, as Trustee, the Orange County Sanitation District Financing Corporation and the District. [The District anticipates that the Annual Report will be filed by j Dated: , 20 ORANGE COUNTY SANITATION DISTRICT By Title: cc: Trustee Dissemination Agent A-1 DRAFT OF 02/03/16 PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY_,2016 NEW ISSUE—BOOK-ENTRY-ONLY RATINGS: y 3 S&P: " Fitch: " o (See"RATINGS"herein.) O c In the opinion of Norton Rose Fu@right US LLP, Los Angeles, California, Special Counsel, under existing Estatutes, regulations, ratings and court decisions, and assuming compliance liance with the tax covenants described herein,:= gu o m the interest component of each Installment Payment, and the allocable portion thereofdistributable in respect ofany t" a Revenue Obligation, is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross o income ofthe owners thereoffor federal income tax purposes and is not an item oftax preference for purposes of the n$ federal alternative minimum tax. It is also the opinion of Special Counsel that under existing law the interest .9 la component of each Installment Payment, and the allocable portion thereof distributable in respect of any Revenue 6 Obligation, is exempt from personal income taxes of the State of California. See, however, "TAX MATTERS" .�3 herein. E.5 g c )District Logo] $ IDAC Logo] ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS .� SERIES 2016A T Dated: Date of Delivery Due: as shown on the inside cover The $ ' Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the `Revenue Obligations") are certificates of participation that evidence direct, fractional undivided interests of the Owners thereof in certain installment payments(the"Installment Payments"),and the interest thereon, to be made by the Orange County Sanitation District (the "District") pursuant to the Installment Purchase Agreement, dated as of March 1, 2016 (the "Installment Purchase Agreement"), by and between the as°z District and the Orange County Sanitation District Financing Corporation (the "Corporation"). Pursuant to the E_ Master Agreement for District Obligations, dated as of August 1, 2000(the"Master Agreement"),by and between the District and the Corporation, the District has established conditions and terms upon which obligations such as 2 the Installment Payments, and the interest thereon, will be incurred and seemed. Installment Payments under the Id Z Installment Purchase Agreement are payable solely from Net Revenues (as more fully described in the Master Agreement, the "Net Revenues") as provided in the Installment Purchase Agreement, consisting primarily of all u income and revenue received by the District from the operation or ownership of the Wastewater System of the �$ District (the "Wastewater System") remaining after payment of Maintenance and Operation Costs, as further described in"SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein. The Installment Purchase Agreement provides that the obligation of the District to pay the Installment Payments, and ° payments of interest thereon, and certain other payments required to be made in accordance with the Installment Purchase Agreement, solely from Net Revenues,is absolute and unconditional. See"SECURITY AND SOURCES . 2 OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein. a . o� The proceeds of the Revenue Obligations will be used to(i)prepay a portion of the District's Certificates of y wParticipation, Series 2009A, currently outstanding in the aggregate principal amount of$176,185,000, and (ii)pay o the costs incurred in connection with the execution and delivery of the Revenue Obligations. See "REFUNDING 9 c PLAN'herein. Interest evidenced by the Revenue Obligations will be payable semiannually on February l and August 1 of g= each year, commencing on August 1, 2016. See `THE REVENUE OBLIGATIONS" herein. The Revenue Obligations initially will be delivered only in book-entry form and will be registered in the name of Cede&Co, as E 5 nominee of The Depository Trust Company,New York,New York("DTC"),which will set as securities depository m for the Revenue Obligations. Individual purchases of the Revenue Obligations will be made in book-entry form only. Purchasers of Revenue Obligations will not receive physical certificates representing their ownership interests k s in the Revenue Obligations purchased. The Revenue Obligations will be delivered in denominations of$5,000 and �,.t any integral multiple thereof. Payments of principal and interest evidenced by the Revenue Obligations are payable c 0 'E � `Preliminary,subject to change. �Is 27002232.5 11600388 directly to DTC by U.S. Bank National Association, as trustee(the"Trustee"). Upon receipt of payments of such principal and interest, DTC will in tum distribute such payments to the beneficial owners of the Revenue Obligations. See APPENDIX E—"BOOK-ENTRY SYSTEM"herein. THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENTS, AND THE INTEREST THEREON, AND OTHER PAYMENTS REQUIRED TO BE MADE BY IT UNDER THE INSTALLMENT PURCHASE AGREEMENT IS A SPECIAL OBLIGATION OF THE DISTRICT PAYABLE,IN THE MANNER PROVIDED IN THE INSTALLMENT PURCHASE AGREEMENT, SOLELY FROM NET REVENUES AND OTHER FUNDS PROVIDED FOR IN THE INSTALLMENT PURCHASE AGREEMENT, AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT OR OF THE STATE OF CALIFORNIA,OR OF ANY POLITICAL SUBDIVISION THEREOF, IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE INSTALLMENT PAYMENTS, OR THE INTEREST THEREON, OR OTHER PAYMENTS REQUIRED TO BE MADE UNDER THE INSTALLMENT PURCHASE AGREEMENT. SEE"SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"HEREIN. This cover page contains information intended for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. BIDS FOR THE PURCHASE OF THE REVENUE OBLIGATIONS WILL BE RECEIVED BY THE DISTRICT UNTIL 10:45 A.M.NEW YORK TIME ON MARCH_,2016 UNLESS POSTPONED OR CANCELLED AS SET FORTH IN THE OFFICIAL NOTICE INVITING BIDS. The Revenue Obligations are offered when, as and if executed and delivered and received by , as the Initial Purchaser, subject to the approval of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel and Disclosure Counsel to the District, and certain other conditions. Certain legal matters will be passed upon for the District and the Corporation by Woodruff Spradlin & Stuart, a Professional Corporation, Costa Mesa, California. Public Resources Advisory Group, Los Angeles, California, has served as financial advisor to the District in connection with the execution and delivery of the Revenue Obligations. It is anticipated that the Revenue Obligations in definitive form will be available far delivery through the book-entry facilities of DTC on or about March , 2016. Dated: March ,2016 2]002232.5 MATURITY SCHEDULE* Maturity Date Principal Interest CUSIPt (February 1) Amount* Rate Yield Price (Base No.68428T) Term Revenue Obligations maturing on February 1,_,Price_%,CUSIP: Preliminary,subject to change. t CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. None of the District, the Initial Purchaser or the Financial Advisor is responsible for the selection or correctness of the CUSIP numbers set forth herein. 2]002232.5 [INSERT MAP[ 2]0022325 ORANGE COUNTY SANITATION DISTRICT Board of Directors John Nielsen (Chair) Tustin Greg Seboum—(Vice Chair)—Fullerton Lucille KringAnaheim Teresa Smith—Orange Glenn Parker—Brea Chad Wanke—Placentia Fred Smith—Buena Park Sal Tinajem—Santa Ana Mariellen YarcCypress Ellery DeatonSeal Beach Steve Nagel—Fountain Valley David Shmvver—Stanton Steve Jones—Garden Grove Greg Mills— Villa Park Jim Katapodis Huntington Beach James M. Ferryman Costa Mesa Sanitary District Steven Choi—Irvine John Withers—Irvine Ranch Water District Tom BeamishLa Habra Joy Neugebauer Midway City Sanitary District Peter Kim La Palma Robert Kiley Yorba Linda Water District Richard Murphy—Los Alamitos Lisa Bartlett— Member of the Orange County Keith Curry Newport Beach Board of Supervisors Executive Manaeement of the District James Herberg, General Manager Robert P. Ghirelli,D.Env.,Assistant General Manager Lorenzo Tyner,Director of Finance and Administrative Services Ed Torres,Director of Operations and Maintenance Nick Arhontes,Director offacilities Support Services Robert Thompson,Director of Engineering Celia Chandler,Director of Human Resources Special Services Special Counsel and Disclosure Counsel Norton Rose Fulbright US LLP Los Angeles,California District General Counsel Bradley R.Begin Woodruff, Spmdlin& Smart,a Professional Corporation Costa Mesa,California Financial Advisor Public Resources Advisory Group Los Angeles,California Trustee Verification Agent U.S. Bank National Association Los Angeles,California 2]002232.5 This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Revenue Obligations by any person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. The information set forth herein has been provided by the Orange County Sanitation District (the "District') and other sources that are believed by the District to be reliable. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement. If given or made, such other information or representations must not be relied upon as having been authorized by the District,the Corporation or the Initial Purchaser in connection with any reoffering. This Official Statement is not to be construed as a contract with the purchasers of the Revenue Obligations. Statements contained in this Official Statement which involve estimates, projections, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District or the Corporation since the date hereof This Official Statement is submitted with respect to the sale of the Revenue Obligations referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the District. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. Preparation of this Official Statement and its distribution have been duly authorized and approved by the District and the Corporation. In connection with the offering of the Revenue Obligations, the Initial Purchaser in connection with any reoffering may over-allot or effect transactions which stabilize or maintain the market price of the Revenue Obligations at a level above that which might otherwise prevail in the open market. Such stabilizing,if commenced,may be discontinued at any time. The Initial purchaser in connection with any reoffering may offer and sell the Revenue Obligations to certain dealers,institutional investors and others at prices lower than the public offering prices stated on the inside cover page hereof and such public offering prices may be changed from time to time by the Initial purchaser. Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements. Such statements we generally identifiable by the terminology used such as "plan,""expect,""estimate,""budget'or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results,performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 2]002232.5 TABLE OF CONTENTS Page INTRODUCTION.......................................................................................................................................I General............................................................................................................................................I TheDistrict.....................................................................................................................................2 Security and Sources of Payment for the Revenue Obligations.....................................................2 ContinuingDisclosure....................................................................................................................3 Miscellaneous.................................................................................................................................3 REFUNDINGPLAN...................................................................................................................................4 ESTIMATED SOURCES AND USES OF FUNDS ...................................................................................5 THE REVENUE OBLIGATIONS..............................................................................................................5 General............................................................................................................................................5 Prepayment Provisions....................................................................................................................6 SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS..........................8 InstallmentPayments......................................................................................................................8 AvailableFunds of the District.......................................................................................................9 NetRevenues..................................................................................................................................9 Rate Stabilization Account...........................................................................................................11 Allocation of Revenues.................................................................................................................11 RateCovenant...............................................................................................................................12 Limitations on Issuance of Additional Obligations......................................................................12 Insurance.......................................................................................................................................14 Allocation of Installment Payments..............................................................................................14 THEDISTRICT.........................................................................................................................................16 Background...................................................................................................................................16 Organization and Administration..................................................................................................17 Services.........................................................................................................................................18 ServiceArea..................................................................................................................................18 Employees.....................................................................................................................................19 RetirementPlan.............................................................................................................................20 Other Post-Employment Benefits.................................................................................................22 RiskManagement.........................................................................................................................22 ExistingFacilities.........................................................................................................................23 Permits,Licenses and Other Regulations.....................................................................................24 District Planning and Capital Improvement Program...................................................................25 Groundwater Replenishment System............................................................................................26 Preferred Level of Treatment........................................................................................................27 BiosolidsManagement..................................................................................................................27 UrbanRunoff................................................................................................................................28 Integrated Emergency Response Program....................................................................................29 Five-Year Strategic Planning........................................................................................................30 DISTRICT REVENUES............................................................................................................................31 SewerService Charges.................................................................................................................31 AdditionalRevenues.....................................................................................................................34 27002232.5 -i- TABLE OF CONTENTS (continued) Page WastewaterTreatment History.....................................................................................................36 Customers.....................................................................................................................................36 AssessedValuation.......................................................................................................................38 BudgetaryProcess.........................................................................................................................40 Reserves........................................................................................................................................41 Summaryof Operating Data.........................................................................................................42 Forecasted Operating Data............................................................................................................44 Management's Discussion and Analysis of Operating Data.........................................................46 Investmentof District Funds.........................................................................................................47 FINANCIAL OBLIGATIONS..................................................................................................................47 ExistingIndebtedness...................................................................................................................47 AnticipatedFinancings.................................................................................................................48 Direct and Overlapping Bonded Debt...........................................................................................48 THECORPORATION..............................................................................................................................48 LIMITATIONS ON TAXES AND REVENUES......................................................................................49 Article XIIIA of the California Constitution.................................................................................49 Legislation Implementing Article XHIA......................................................................................49 Article XIIH3 of the California Constitution.................................................................................50 Proposition IA and Proposition 22...............................................................................................51 Article XIIIC and Article XHID of the California Constitution...................................................52 Other Initiative Measures..............................................................................................................54 LEGALMATTERS...................................................................................................................................54 FINANCIAL ADVISOR...........................................................................................................................54 ABSENCE OF LITIGATION...................................................................................................................54 FINANCIAL STATEMENTS...................................................................................................................55 TAXMATTERS........................................................................................................................................55 TaxExemption..............................................................................................................................55 Tax Accounting Treatment of Bond Premium and Original Issue Discount................................57 Other Tax Consequences..............................................................................................................58 VERIFICATION OF MATHEMATICAL COMPUTATIONS................................................................58 CONTINUING DISCLOSURE.................................................................................................................59 RATINGS..................................................................................................................................................59 PURCHASE AND REOFFERING...........................................................................................................59 MISCELLANEOUS..................................................................................................................................60 APPENDIX A — COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED JUNE30,2015........................................................................................................A-1 APPENDIX B — THE COUNTY OF ORANGE—ECONOMIC AND DEMOGRAPHIC INFORMATION....................................................................................................B-1 APPENDIX C — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS........................................C-1 27002232.5 -ii - TABLE OF CONTENTS (continued) Page APPENDIX D — FORM OF CONTINUING DISCLOSURE AGREEMENT..................................D-1 APPENDIX E — BOOK-ENTRY SYSTEM......................................................................................E-1 APPENDIX F — FORM OF APPROVING OPINION OF SPECIAL COUNSEL............................F-1 -iii- OFFICIAL STATEMENT ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS SERIES 2016A INTRODUCTION This introduction contains only a brief summary of certain of the terms of the Revenue Obligations being offered and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. References to, and summaries of,provisions of the Constitution and laws of the State of California (the "State') and any documents referred to herein do not purport to be complete and such references are qualified in their entirety by reference to the complete provisions. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Trust Agreement, the Installment Purchase Agreement and the Master Agreement (each, as hereinafter defined). See APPENDIX C — "SUMMARY OFPRINCIPAL LEGAL DOCUMENTS—Definitions"herein. General This Official Statement, including the cover page and all appendices hereto, provides certain information concerning the sale and delivery of $ * aggregate principal amount of the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations"), which are certificates of participation evidencing direct, fractional undivided interests in certain installment payments (the "Installment Payments") and the interest thereon, to be made by the Orange County Sanitation District(the "District") pursuant to the Installment Purchase Agreement, dated as of March 1,2016(the"Installment Purchase Agreement"),by and between the District and the Orange County Sanitation District Financing Corporation(the"Corporation"). Unless the context clearly indicates to the contrary, a reference herein to either of the Installment Purchase Agreement or the Revenue Obligations is intended to refer to the corresponding interest in the Installment Purchase Agreement Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement"), by and between the District and the Corporation, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest thereon,will be incurred and secured. Installment Payments under the Installment Purchase Agreement are payable solely from Net Revenues (as defined hereinafter) as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District(the "Wastewater System")remaining after payment of Maintenance and Operation Costs, as further described in "SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein. Preliminary,subject to change. 2]002232.5 The Revenue Obligations are to be executed and delivered pursuant to a Trust Agreement, dated as of March 1, 2016 (the "Trust Agreement'),by and among the District,the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds from the sale of the Revenue Obligations will be used to (i)prepay a portion of the District's Certificates of Participation, Series 2009A, currently outstanding in the aggregate principal amount of $176,185,000, and (it)pay the costs incurred in connection with the execution and delivery of the Revenue Obligations. See "REFUNDING PLAN" herein. The Revenue Obligations will be executed and delivered in the form of fully registered certificates of participation, dated as of the date of initial delivery thereof and will mature on February 1 in each such year as set forth on the inside cover page hereof. Interest evidenced by the Revenue Obligations will be payable semiannually on February 1 and August 1 of each year, commencing on August 1, 2016. See"THE REVENUE OBLIGATIONS"herein. The Revenue Obligations initially will be delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company,New York, New York ("DTC"), which will act as securities depository for the Revenue Obligations. The Revenue Obligations will be delivered in denominations of$5,000 and any integral multiple thereof. So long as the Revenue Obligations are in the DTC book-entry system,the interest, principal, purchase price and prepayment premiums, if any, due with respect to the Revenue Obligations will be payable by the Trustee, or its agent,to DTC or its nominee. DTC, in turn,will make payments pursuant to its procedures as described under APPENDIX E — "BOOK—ENTRY SYSTEM" herein. The District The District is a public agency responsible for regional wastewater collection, treatment and disposal. The District is the sixth largest wastewater discharger in the United States. The District provides service to an area with a population of approximately 2.5 million people in the northern and central portion of the County of Orange (the "County"), in a service area of approximately 479 square miles, treating an average of 190 million gallons per day("mg/d")of wastewater in Fiscal Year 2014-15. See"THE DISTRICT,""DISTRICT REVENUES"and"FINANCIAL OBLIGATIONS"herein. Security and Sources of Payment for the Revenue Obligations The Revenue Obligations, which me certificates of participation, evidence direct, fractional undivided interests in the Installment Payments, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement The obligation of the District to pay the Installment Payments and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, solely from Net Revenues, and other funds as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District currently has Outstanding Senior Obligations payable from Net Revenues on a parity with the Installment Payments under the Installment Purchase Agreement. See "ESTIMATED SOURCES AND USES OF FUNDS," "FINANCIAL OBLIGATIONS — Existing Indebtedness" and "THE DISTRICT"herein and APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS— Master Agreement"attached hereto. The District has no Subordinate Obligations currently outstanding. 27002232.5 2 Pursuant to the Master Agreement, the District will,to the extent permitted by law, fix, prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year (a)Net Revenues equal to 125% of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary,but shall not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND SOURCE OF PAYMENT FOR THE REVENUE OBLIGATIONS—Rate Covenant"herein. The obligation of the District to pay the Installment Payments and the interest thereon,and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, solely from Net Revenues and other funds provided for in the Installment Purchase Agreement,and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State or any political subdivision thereof, is pledged to the payment of the Installment Payments, or the interest thereon, or other payments required to be made under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. See"SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein. Continuing Disclosure The District bas covenanted for the benefit of holders and beneficial owners of the Revenue Obligations (a)to provide certain financial information and operating data(the"Annual Report")relating to the District and the property in the District not later than eight months after the end of the District's Fiscal Year (which currently would be March 1), commencing with the report for the 2015-16 Fiscal Year, and (b)to provide notices of the occurrence of certain enumerated events. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See "CONTINUING DISCLOSURE" herein and APPENDIX D —'FORM OF CONTINUING DISCLOSURE AGREEMENT." Miscellaneous The descriptions herein of the Trust Agreement, the Master Agreement, the Installment Purchase Agreement, the Continuing Disclosure Agreement and any other agreements relating to the Revenue Obligations are qualified in their entirety by reference to such documents. Copies of the Trust Agreement, the Master Agreement and the Installment Purchase Agreement are on file and available for inspection at the corporate trust office of U.S. Bank National Association, Los Angeles, California Attention: Corporate Trust. 27002232.5 3 REFUNDING PLAN A portion of the net proceeds of sale of the Revenue Obligations, together with other available moneys, will be used to prepay and retire a portion of the installment payments (the "Refunded Installment Payments")to be made by the District pursuant to an Installment Purchase Agreement, dated as of May 1, 2009 (the "2009A Installment Purchase Agreement"), by and between the District and the Corporation. Contemporaneous with the execution and delivery of the 2009A Installment Purchase Agreement, the District caused the execution and delivery of its Certificates of Participation, Series 2009A (the "2009A Certificates") evidencing direct, fractional undivided interests in certain installment payments (the "2009A Installment Payments") and the interest thereon, to be made by the District pursuant to the 2009A Installment Purchase Agreement. The 2009A Certificates were executed and delivered on May 7, 2009 in the aggregate principal amount of$200,000,000, of which $176,185,000 is currently outstanding. Pursuant to the terms of the Trust Agreement, dated as May 1, 2009 (the "2009A Trust Agreement"), by and among the District, the Corporation and U.S. Bank National Association, as trustee thereunder, the prepayment of the 2009A Installment Payments (the "Refunded Installment Payments"),and prepayment of the 2009A Certificates maturing on February 1 in the years 2020* through 2039*, inclusive, in the aggregate principal amount of$162,780,000' in respect thereof(the "Refunded 2009A Certificates"),will be effected by depositing a portion of the proceeds of the Revenue Obligations, together with other available moneys, in an escrow fund (the "Escrow Fund") to be created and established under the Escrow Agreement,dated as of March 1,2016,by and between the District and U.S. Bank National Association,as escrow agent thereunder. Refunded 2009A Certificates Principal CUSIP Maturity Date* Amount Number** (February 1) Outstanding (68428P) 2020 $ 4,925,000 EJO 2021 5,170,000 EK7 2022 5,425,000 EL5 2023 5,700,000 EM3 2024 5,985,000 ENl 2025 6,285,000 EP6 2026 6,595,000 EQ4 2027 6,925,000 ER2 2028 7,275,000 ESO 2029 7,635,000 ET8 2030 8,020,000 EU5 2035 46,525,000 EV3 2039 46,315,000 EWl 'Preliminary,subject to change. ** CUSIP numbers herein are provided by Standard&Poor's CUSIP Service Bureau and are for the convenience of reference only. The District does not assume any responsibility for the accuracy of such numbers. CUSIP® is a registered trademark of the American Bankers Association. Copyright C 1999-2009 Standard&Poor's,a Division of The McGraw-Hill Companies,Inc. All rights reserved. 27002232.5 4 The District will cause the Escrow Fund deposit to be invested in Government Obligations (as defined in the 2009A Trust Agreement). The Government Obligations will pay principal and interest sufficient to pay the Refunded Installment Payments and interest thereon and to make scheduled distributions thereof with respect to the Refunded 2009A Certificates due and payable through February 1, 2019, and on February 1,2019 to prepay without premium the unpaid Refunded Installment Payments, and through distribution of such prepayment to prepay the Refunded 2009A Certificates,all in accordance with the terms of the 2009A Installment Purchase Agreement, the 2009A Trust Agreement and the Refunded 2009A Certificates. See "VERIFICATION OF MATHEMATICAL COMPUTATIONS" herein. The amounts deposited in the Escrow Fund will be held in trust solely for the Refunded 2009A Certificates and will not be available to pay the principal and interest evidenced by the Revenue Obligations or any obligations other than the Refunded 2009A Certificates. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds in connection with the execution and delivery of the Revenue Obligations are presented below. Sources Principal Amount of Revenue Obligations $ Premium or Discount Refunded 2009A Certificates Reserve Release Total Sources $ Uses Deposit to Escrow Fund $ Initial Purchaser's Discount Costs of lssuanceO Total Uses $ (p Costs of Issuance include, among other things,fees and expenses of rating agencies,verification agent, Special Counsel and Disclosure Counsel,and the initial fees of the Trustee. THE REVENUE OBLIGATIONS General The Revenue Obligations will be prepared in the form of fully registered certificates of participation in denominations of$5,000 and any integral multiple thereof. The Revenue Obligations will be dated as of the date of initial delivery thereof and will mature on February 1 in such years as set forth on the inside cover page hereof. Interest evidenced by the Revenue Obligations will be payable semiannually on February 1 and August 1 of each year, commencing on August 1, 2016. The Revenue Obligations initially will be delivered only in book-entry form and will be registered in the name of Cede &Co., as nominee of The Depository Trust Company,New York,New York("DTC"),which will act as securities depository for the Revenue Obligations. Individual purchases of the Revenue Obligations will be made in book-entry form only. Purchasers of Revenue Obligations will not receive physical certificates representing their ownership interests in the Revenue Obligations purchased. The interest evidenced by the Revenue Obligations shall be payable on each Interest Payment Date to and including their respective Principal Payment Dates or prepayment prior thereto, and shall represent the sum of the interest on the Installment Payments coming due on the Interest Payment Dates in each year. The principal evidenced by the Revenue Obligations shall be payable on their respective 27002232.5 5 Principal Payment Dates in each year and shall represent the Installment Payments coming due on the Principal Payment Dates in each year. Each Revenue Obligation shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full,unless such date of execution shall be after a Record Date and on or prior to the following Interest Payment Date, in which case such Revenue Obligation shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to July 15, 2016, in which case such Revenue Obligation shall represent interest from its date of initial delivery. Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Revenue Obligations shall be in default, each Revenue Obligation shall evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Interest evidenced by the Revenue Obligations shall be computed on the basis of a 360-day year consisting of twelve 30-day months. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS Trust Agreement." Payments of principal and interest evidenced by the Revenue Obligations axe payable directly to DTC by U.S. Bank National Association, as trustee. Upon receipt of payments of such principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Revenue Obligations. So long as the Revenue Obligations are held in the DTC book-entry system, the interest, principal, purchase price and prepayment premiums, if any, due with respect to the Revenue Obligations will be payable by the Trustee, or its agent, to DTC or its nominee. DTC, in turn, will make payments pursuant to its procedures as described under APPENDIX E—"BOOK-ENTRY SYSTEM"herein. Prepayment Provisions' Optional Prepayment. The Revenue Obligations maturing on or after February 1, 2027` are subject to optional prepayment prior to their stated Principal Payment Dates, on any date on or after February 1, 2026% in whole or in part, in Authorized Denominations, from and to the extent of prepaid Installment Payments paid pursuant to the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Revenue Obligations to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. Mandatory Sinking Account Prepayment. The Revenue Obligations maturing on February 1, 20—(the "Term Revenue Obligations") are subject to prepayment prior to their stated maturity, in part, by lot, on each February 1 on and after February 1, 20_ at the principal amount thereof, plus accrued interest to the date fixed for prepayment, without premium, from Mandatory Sinking Account Payments deposited in the Principal Account. The Term Revenue Obligations shall be prepaid(or paid at maturity, as the case may be)by application of Mandatory Sinking Account Payments in the amounts and upon the dates set forth below: Mandatory Sinking Account Mandatory Payment Dates Sinking Account (February 1) Payments Maturity. Preliminary,subject to change. 27002232.5 6 Selection of Revenue Obligations for Prepayment Whenever less than all the Outstanding Revenue Obligations are to be prepaid on any one date pursuant to provisions of the Trust Agreement with respect to optional prepayment of Revenue Obligations, the Trustee shall select the Revenue Obligations to be prepaid among Revenue Obligations with different Principal Payment Dates as directed in a Written Request of the District. Whenever less than all the Outstanding Revenue Obligations with the same stated Principal Payment Date are to be prepaid on any one date in accordance with the Trust Agreement, the Trustee shall select the Revenue Obligations with such Principal Payment Date to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate, which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the numbers of the Revenue Obligations so selected for prepayment on such date. For purposes of such selection, any Revenue Obligation may be prepaid in part in Authorized Denominations. Notice of Prepayment When prepayment of Revenue Obligations is authorized pursuant to the Trust Agreement, the Trustee shall give notice, at the expense of the District, of the prepayment of the Revenue Obligations. The notice of prepayment shall specify(a) the Revenue Obligations or designated portions thereof(in the case of prepayment of the Revenue Obligations in part but not in whole)which are to be prepaid, (b) the date of prepayment, (c)the place or places where the prepayment will be made, including the time and address of any paying agent, (d)the prepayment price, (e)the CUSIP numbers assigned to the Revenue Obligations to be prepaid, (1)the numbers of the Revenue Obligations to be prepaid in whole or in part and, in the case of any Revenue Obligation to be prepaid in part only, the principal evidenced by such Revenue Obligation to be prepaid, and (g)the interest rate and stated Principal Payment Date of each Revenue Obligation to be prepaid in whole or in part. Such notice of prepayment shall further state that on the specified date there shall become due and payable upon each Revenue Obligation or portion thereof being prepaid the prepayment price and that from and after such date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of optional prepayment of Revenue Obligations, unless at the time such notice is given the Revenue Obligations to be prepaid shall be deemed to have been paid within the meaning of the Trust Agreement, such notice shall state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Revenue Obligations to be prepaid,and that if such moneys shall not have been so received said notice shall be of no force and effect and the District shall not be required to prepay such Revenue Obligations. In the event a notice of prepayment of Revenue Obligations contains such a condition and such moneys are not so received, the prepayment of Revenue Obligations as described in the conditional notice of prepayment shall not be made and the Trustee shall,within a reasonable time after the date on which such prepayment was to occur, give notice to the persons and in the manner in which the notice of prepayment was given, that such moneys were not so received and that there shall be no prepayment of Revenue Obligations pursuant to such notice of prepayment. The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice of prepayment to the respective Owners of Revenue Obligations designated for prepayment by first-class mail,postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Revenue Obligations or the cessation of interest evidenced thereby on the date fixed for prepayment. Effect of Prepayment I£notice of prepayment has been duly given as aforesaid and moneys for the payment of the prepayment price of the Revenue Obligations to be prepaid are held by the Trustee, 27002232.5 7 then on the prepayment date designated in such notice,the Revenue Obligations so called for prepayment shall become payable at the prepayment price specified in such notice; and from and after the date so designated,interest evidenced by the Revenue Obligations so called for prepayment shall cease to accrue, such Revenue Obligations shall cease to be entitled to any benefit or security hereunder and the Owners of such Revenue Obligations shall have no rights in respect thereof except to receive payment of the prepayment price thereof. The Trustee shall, upon surrender for payment of any of the Revenue Obligations to be prepaid, pay such Revenue Obligations at the prepayment price thereof, and such moneys shall be pledged to such payment. SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS Installment Payments Pursuant to the Installment Purchase Agreement, the Project will be reacquired by the District from the Corporation. The District has covenanted to, subject to any rights of prepayment under the Installment Purchase Agreement, pay to the Corporation, solely from Net Revenues and from no other sources, the Purchase Price in Installment Payments, with interest thereon, as provided in the Installment Purchase Agreement. Pursuant to the Master Agreement, the District has established and declared the conditions and terns upon which obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest thereon payable under the Installment Purchase Agreement,will be incurred and seemed. The obligation of the District to make the Installment Payments, and payments of interest thereon,and other payments required to be made by it under the Installment Purchase Agreement, solely from Net Revenues,is absolute and unconditional,and until such time as the Installment Payments, payments of interest thereon, and such other payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to the Installment Purchase Agreement), the District has covenanted that it will not discontinue or suspend any Installment Payments when due,whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments, payments of interest thereon, and other payments shall not be subject to reduction whether offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or any cause whatsoever. The District's obligation to make Installment Payments from Net Revenues is on a parity with the District's obligation to make payments with respect to its Outstanding Senior Obligations. See "Net Revenues" below. Pursuant to the Trust Agreement, the Corporation has assigned to the Trustee for the benefit of the Owners of the Revenue Obligations substantially all of its rights, title and interest in and to the Installment Purchase Agreement, including its right to receive Installment Payments and the interest thereon. The District has certain Existing Senior Obligations Outstanding payable from Net Revenues on a parity with the Installment Payments under the Installment Purchase Agreement. The term "Existing Senior Obligations" as used in this Official Statement refers to the Installment Purchase Agreements relating to the District's currently Outstanding Senior Obligations, as set forth on Table 16 under the caption "FINANCIAL OBLIGATIONS—Existing Indebtedness"herein. The term"Senior Obligations" as used in this Official Statement refers to the Existing Senior Obligations and to any additional Senior Obligations, such as the Installment Purchase Agreement, that may be made payable on a parity basis to the Installment Payments as provided in the Master Agreement. Senior Obligations, together with any Subordinate Obligations payable on a subordinate basis to the Installment Payments incurred as provided in the Master Agreement, are referred to collectively as the "Obligations." The District has no Subordinate Obligations currently outstanding. See "FINANCIAL OBLIGATIONS Existing Indebtedness" herein and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement"attached hereto. 27002232.5 8 The obligation of the District to pay the Installment Payments, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement and Master Agreement, is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, solely from Net Revenues and other funds provided for in the Installment Purchase Agreement, and does not constitute a debt of the District,the State or any political subdivision thereof,in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District, the State or any political subdivision thereof, is pledged to the payment of the Installment Payments, or the interest thereon, or other payments required to be made under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuam to the Master Agreement. See "SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS"herein. Available Funds of the District As Senior Obligations under the Master Agreement, the Installment Payments are payable from and secured by a pledge of Net Revenues. Should Net Revenues prove insufficient, the Installment Purchase Agreement further provides that the Installment Payments are payable from any other lawfully available funds of the District. The primary lawfully available funds of the District are its reserve funds, other than trustee-held amounts required to be in any Obligation Reserve Fund securing certain of the District's Senior Obligations, as described in the Master Agreement. At June 30, 2015, the District's Debt Service Required Reserves totaled $129.0 million, of which $33.0 million were trustee-held amounts in Obligation Reserve Funds as required under the Master Agreement. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —Master Agreement" attached hereto. District reserve funds are maintained in accordance with the District's reserve policy. See "DISTRICT REVENUES — Reserves." Available reserves at June 30, 2014 were approximately $713.7 million (consisting of$673 million in cash and investments and$40.7 million due from the Orange County Flood Control District) and available reserves at June 30, 2015 were approximately $588.0 million (consisting of$556.9 million in cash and investments and $31.1 million due from the Orange County Flood Control District). See "DISTRICT REVENUES — Reserves," "— Summary of Operating Data" and "— Projected Operating Data." Net Revenues The District is obligated to make Installment Payments from, among other things, Net Revenues as provided in the Master Agreement, which consist of Revenues remaining after payment of costs paid by the District for maintaining and operating the Wastewater System ("Maintenance and Operation Costs"). Revenues are defined in the Master Agreement to mean, for any period, all income and revenue received by the District during such period from the operation or ownership of the Wastewater System, determined in accordance with generally accepted accounting principles, including all fees and charges received during such period for the services of the Wastewater System, investment income received during such period(but only to the extent that such investment income is generally available to pay costs with respect to the Wastewater System, including Maintenance and Operation Costs), Net Proceeds of business interruption insurance received during such period, ad valorem taxes received during such period,payments under the Agreement Acquiring Ownership Interests,Assigning Rights and Establishing Obligations, entered into on February 13, 1986, and amendment No. 1 thereto dated December 10, 1986 (the "IRWD Agreement"), by and between predecessor County Sanitation District No. 14 of Orange County and the Irvine Ranch Water District (the "IRWD") received during such period and all other money received during such period howsoever derived by the District from the operation or ownership of the Wastewater System or arising from the Wastewater System (including any standby or availability 27002232.5 9 charges), but excluding (a)Capital Facilities Capacity Charges, (b)payments received under Financial Contracts, and (c)refundable deposits made to establish credit and advances or contributions in aid of construction(which, for purposes of the Master Agreement, shall not include payments under the IRWD Agreement); provided, however, that (i)Revenues shall be increased by the amounts, if any, transferred during such period from the Rate Stabilization Account to the Revenue Account and shall be decreased by the amounts, if any, transferred during such period from the Revenue Account to the Rate Stabilization Account, and(ii)Revenues shall include Capital Facilities Capacity Charges collected during such period to the extent that such Capital Facilities Capacity Charges could be properly expended on a Capital Facilities Capacity Charge Eligible Project for which the proceeds of Senior Obligations were used or we available to be used. Any Federal Subsidy payments received by the District will constitute Revenues as defined in the Master Agreement. See"DISTRICT REVENUES—Additional Revenues"herein. The District's obligation to make the Installment Payments from its Net Revenues is on a parity with the District's obligation to make payments with respect to its other outstanding obligations described as Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations,as provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement Pursuant to the Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations, and the Net Revenues will not be used for any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. The term"Senior Obligations"generally means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District authorized, issued,executed and delivered under and pursuant to applicable law, the Installment Purchase Agreement, and all other contracts (including financial contracts) or leases of the District authorized and executed by the District under and pursuant to applicable law, including, without limitation, installment, lease or other payments which are, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a parity with the payments under the Master Agreement. The District may at any time incur Subordinate Obligations payable on a subordinate basis to the Installment Payments as provided in the Master Agreement; provided, however, that prior to incurring such Subordinate Obligations, the District shall have determined that the incurrence thereof will not materially adversely affect the District's ability to comply with the requirements of the Master Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate Obligations. For a description of the District's Outstanding Senior Obligations and Subordinate Obligations, see "FINANCIAL OBLIGATIONS — Existing Indebtedness" herein. There me currently no Subordinate Obligations or Reimbursement Obligations with respect to Subordinate Obligations outstanding. The District may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be junior and subordinate to the pledge of, and lien on,Net Revenues for the payment of Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. 27002232.5 10 Rate Stabilization Account To avoid fluctuations in its fees and charges of the Wastewater System, from time to time the District may deposit in the Rate Stabilization Account from Net Revenues such amounts as the District deems necessary or appropriate. From time to time, the District may also transfer moneys from the Rate Stabilization Account to the Revenue Account to be used by the District, first to pay all Maintenance and Operations Costs as and when the same shall be due and payable. In addition, any such amount transferred from the Rate Stabilization Account to the Revenue Account by the District is included as Revenues for any period, but such transferred amount is excluded from determining Operating Revenues for any period. Revenues will be decreased by the amounts,if any,transferred from the Revenue Account to the Rate Stabilization Account. There are presently no funds in the Rate Stabilization Account. Allocation of Revenues To carry out and effectuate the pledge of Net Revenues under the Master Agreement as described above, the District agrees and covenants that all Operating Revenues received by the District will be deposited when and as received in the Revenue Account. Additionally, amounts may, from time to time as the District deems necessary or appropriate, be transferred from the Rate Stabilization Account and deposited in the Revenue Account,as described above order'—Rate Stabilization Account'above. The District will pay from the Revenue Account all Maintenance and Operations Costs (including amounts reasonably required to be set aside in contingency reserves for Maintenance and Operations Costs, the payment of which is not immediately required)as and when the same shall be due and payable. After having paid, or having made provisions for the payment of, Maintenance and Operations Costs, the District shall set aside and deposit or transfer, as the case may be, from the Revenue Account such amounts at such times as provided in the Master Agreement in the following order of priority: (1) Senior Obligation Payment Account; (2) Senior Obligation Reserve Funds (the Revenue Obligations are not secured by any Reserve Fund); (3) Subordinate Obligation Payment Account; (4) Subordinate Obligation Reserve Funds;and (5) Rate Stabilization Account. Amounts required or permitted to be deposited or transferred as described in items 2, 3, 4 and 5 above, shall not be so deposited or transferred unless the District shall have determined that there will be sufficient Net Revenues available to make the required deposits or transfers on the dates on which such deposits or transfers we required to be made as described above. So long as the District has determined that Net Revenues will be sufficient to make all of the deposits or transfers required to be made pursuant to items 1, 2, 3, 4 and 5 above, on the dates on which such deposits or transfers are required to be made, Net Revenues on deposit in the Revenue Account may from time to time be used for any purpose for which the District fonds may be legally applied. For additional information, see APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement." 27002232.5 11 Rate Covenant Pursuant to the Master Agreement, the District will,to the extent permitted by law, fix, prescribe and collect fees and charges for the services of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but will not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. In addition, the District has covenanted in the Master Agreement to prepare and adopt an annual budget for the Wastewater System for each Fiscal Year. Such budget will set forth in reasonable detail the Revenues anticipated to be derived in such Fiscal Yew and the expenditures anticipated to be paid or provided for therefrom in such Fiscal Year, including, without limitation, the amounts required to pay or provide for the payment of the Obligations during such Fiscal Year, the amounts required to pay or provide for the payment of Maintenance and Operations Costs during such Fiscal Year and the amounts required to pay or provide for the payment of all other claims or obligations required to be paid from Revenues in such Fiscal Year,and will show that Revenues and Net Revenues will be at least sufficient to satisfy the requirements of the Master Agreement. On or before September 1 of each Fiscal Yen, the District will file with the Trustee a copy of the adopted budget for such Fiscal Year. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement' for additional information. The District has an established reserve policy with eight separate reserve fund categories. Over the next ten years,the yew ending reserve total for each yew is projected not to fall below$500 million as indicated in the District's ten-year cash flow forecast for Fiscal Years 2015-16 through 2024-25. At its election,the District may use unrestricted reserves to help satisfy the rate covenant described above. See "DISTRICT REVENUES—Reserves"herein. Limitations on Issuance of Additional Obligations Senior Obligations. The District may at any time incur Senior Obligations in addition to the Existing Senior Obligations payable from Net Revenues as provided in the Master Agreement on a parity with all other Senior Obligations theretofore incurred but only subject to the following conditions under the Master Agreement: (1) Upon the incurrence of such Senior Obligations, no Event of Default will be continuing under the Master Agreement;and (2) Subject to the provisions of the Master Agreement, the District will have received either one of the following: (i) A Written Certificate of the District certifying that,for a 12 consecutive calendar month period during the 24 consecutive calendar month period ending in the calendar month prior to the incurrence of such Senior Obligations (which 12 consecutive calendar month period will be specified in such certificate or certificates): (A) Net Revenues,as shown by the books of the District,will have amounted to at least 125% of Maximum Annual Debt Service on all Senior 27002232.5 12 Obligations to be outstanding immediately after the incurrence of such Senior Obligations,and (B) Net Operating Revenues,as shown by the books of the District,will have amounted to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such Senior Obligations. For purposes of demonstrating compliance with the foregoing,Net Revenues and Net Operating Revenues may be adjusted for(x) any changes in fees and charges for the services of the Wastewater System which have been adopted and are in effect on the date such Senior Obligations are incurred, but which, during all or any part of such 12 consecutive calendar month period, were not in effect, (y)customers added to the Wastewater System subsequent to such 12 consecutive calendar month period but prior to the date such Senior Obligations are incurred, and (z) the estimated change in available Net Revenues and Net Operating Revenues which will result from the connection of existing residences or businesses to the Wastewater System within one year following completion of any project to be funded or any system to be acquired from the proceeds of such Senior Obligations;or (ii) A certificate or certificates from one or more Consultants which, when taken together, project that, for each of the two Fiscal Years next succeeding the incurrence of such Senior Obligations: (A) Net Revenues will amount to at least 125% of Maximum Annual Debt Service on all Senior Obligations to be outstanding immediately after the incurrence of such Senior Obligations,and (B) Net Operating Revenues will amount to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such Senior Obligations. For purposes of demonstrating compliance with the foregoing,Net Revenues and Net Operating Revenues may be adjusted for(x) any changes in fees and charges for the services of the Wastewater System which have been adopted and are in effect on the date such Senior Obligations are incurred or will go into effect prior to the end of such two Fiscal Year period, (y) customers expected to be added to the Wastewater System prior to the end of such two Fiscal Year period, and (z) the estimated change in available Net Revenues and Net Operating Revenues which will result from the connection of existing residences or businesses to the Wastewater System within one yen following completion of any project to be funded or any system to be acquired from the proceeds of such Senior Obligations. For purposes of preparing the certificate or certificates described above,the Consultant may rely upon financial statements prepared by the District that have not been subject to audit by an independent certified public accountant if audited financial statements for the period are not available. See also "FINANCIAL OBLIGATIONS — Existing Indebtedness" herein. The District is not required to comply with the provisions described above in paragraph(2) if the Senior Obligations being incurred are Short-Term Obligations excluded from the calculation of Assumed Debt Service pursuant to 27002232.5 13 clause (H) of the definition thereof. See APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Definitions"herein. The determination of Net Revenues for use in the calculation described above is more fully described in APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS Master Agreement — Senior Obligations" attached hereto. The District is not required to comply with the provisions described in paragraph (2) above for such portion of Senior Obligations incurred for the purpose of providing funds to refund or refinance Senior Obligations if (i)upon such refunding or refinancing, debt service on such refunded or refinanced Obligations, or debt service on bonds, notes or other obligations of an entity other than the District,the debt service on which is payable from Obligation Payments for such Obligations (the "Related Bonds"), will no longer be included in the calculation of Assumed Debt Service either because such Obligations, or the Related Bonds of such Obligations, will have been paid in full or because such debt service is disregarded pursuant to clause (L) of the definition of Assumed Debt Service, and (ii)Assumed Debt Service in each Fiscal Year for the portion of such Senior Obligations incurred for the purpose of providing funds to refund or refinance such Obligations is less than or equal to 105% of Assumed Debt Service in such Fiscal Year for such Obligations being refunded or refinanced (assuming for such purposes that debt service on such refunded or refinanced Obligations, or debt service on the Related Bonds of such Obligations, is not disregarded pursuant to clause (L) of the definition of Assumed Debt Service). See APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —Master Agreement' attached hereto for additional information. The District may at any time incur Reimbursement Obligations with respect to Senior Obligations. Subordinate Obligations. The District may at any time incur Subordinate Obligations upon satisfaction of the conditions provided in the Master Agreement. See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —Master Agreement"herein for a description of such conditions. There are currently no Subordinate Obligations outstanding. Insurance The District will procure and maintain or cause to be procured and maintained casualty insurance on the Wastewater System with responsible insurers, or provide self- insurance (which may be provided in the form of risk-sharing pools), in such amounts and against such risks (including accident to or destruction of the Wastewater System) as are usually covered in connection with facilities similar to the Wastewater System. The District will procure and maintain such other insurance which it will deem advisable or necessary to protect its interests and the interests of the Corporation. See `THE DISTRICT —Risk Management" and APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS— Master Agreement'herein. Allocation of Installment Payments Set forth in Table 1 are the principal and interest payments on the Revenue Obligations. Also set forth are the payments due on Existing Senior Obligations,including the Refunded 2009A Certificates. 27002232.5 14 Table 1 Payments Relating to the Revenue Obligations and Existing Senior Obligations of the District As of February 2,2016 Fiscal Year Installment Payments Other Ending Relating to Revenue Obligations Senior Oblieationsl1ll21 June 30 Principal Interest Principal Interest Total 2016 - $ 2,417,000 $ 2,417,000 2017 $ 35,575,000 53,305,102 88,880,102 2018 32,415,000 52,220,019 84,635,019 2019 31,940,000 51,126,019 83,066,019 2020 33,535,000 49,531,869 83,066,869 2021 35,210,000 47,858,069 83,068,069 2022 35,735,000 46,139,569 81,874,569 2023 37,365,000 44,499,979 81,864,979 2024 38,940,000 42,928,029 81,868,029 2025 40,710,000 41,153,559 81,863,559 2026 42,300,000 39,572,141 81,872,141 2027 44,575,000 37,639,841 82,214,841 2028 50,710,000 35,659,666 86,369,666 2029 52,985,000 33,381,541 86,366,541 2030 55,370,000 30,998,666 86,368,666 2031 57,840,000 28,530,591 86,370,591 2032 63,720,000 26,310,569 90,030,569 2033 78,775,000 23,358,936 102,133,936 2034 54,910,000 19,775,556 74,685,556 2035 57,400,000 17,033,832 74,433,832 2036 60,020,000 14,165,660 74,185,660 2037 52,625,000 11,164,364 63,789,364 2038 34,290,000 8,325,855 42,615,855 2039 35,920,000 6,395,648 42,315,648 2040 24,575,000 4,375,150 28,950,150 2041 20,805,000 2,912,640 23,717,640 2042 12,430,000 1,581,120 14,011,120 2043 9,795,000 785,600 10,580,600 2044 2,480,000 158,720 2,638,720 Total 1.132950.000 $773305305 1.906255305 f1 The District intends to refinance its Revenue Refunding Certificate Anticipation Notes, Series 2014B ("2014B Certificates") on or before their maturity on November 15, 2016. Assumes principal is amortized from 2022 through 2036 and an interest rate of 3% per arr um. See "FINANCIAL OBLIGATIONS — Recent and Anticipated Financings"herein. (3) Includes payments with respect to the Refunded 2009A Certificates,a portion of which are to be refunded with the proceeds of the Revenue Obligations. See"REFUNDING PLAN'herein. 27002232.5 15 THE DISTRICT Background The Orange County Sanitation District is a public agency responsible for regional wastewater collection, treatment and disposal. The District is the sixth largest wastewater discharger in the United States. The District provides service to an area with a population of approximately 2.5 million people in the northern and central portion of the County by treating an average of 190 mg/d of wastewater in Fiscal Year 2014-15. The District serves approximately 81% of the County population in approximately 479 square miles,or approximately 60%of the County's area. The service area which comprises the District was originally formed in 1954 pursuant to the County Sanitation District Act, as amended, Section 4700 et seq. of the Health and Safety Code of the State. The District's service area originally consisted of seven independent special districts in the County which were each responsible for matters relating to their individual districts. These special districts were jointly responsible for the treatment and disposal facilities which they each used. The seven independent districts were successors to the Joint Outfall Sewer Organization, which was Formed in 1923 among the Cities of Anaheim, Santa Ana, Fullerton, and Orange, and the sanitary districts of Placentia, Buena Park, La Habra, and Garden Grove. The Joint Outfall Sewer Organization constructed a treatment plant and outfall in the early 1920s to serve its members. It was reorganized in 1947 and 1948 into seven county sanitation districts — District Nos. 1, 2, 3, 5, 6, 7 and 11. These prior districts were formed based on engineers' analyses of the gravity flows in the service area. District No. 13 was formed in 1985 and District No. 14 was added in 1986. These districts were co-participants in a Joint Agreement which provided for the joint construction,ownership,and operation of the prior districts'joint facilities. In April 1998, at the request of the Board of Directors of the District (the `Board of Directors"), the Board of Supervisors of the County of Orange (the "County Board") passed Resolution No. 98-140 approving the consolidation of the then existing nine special districts into a new, single sanitation district, to be known as the Orange County Sanitation District This action was designed to simplify governance structures, reduce the size of the Board of Directors, ease administrative processes, streamline decision- making, and consolidate accounting and auditing processes. The consolidation was effective on July 1, 1998. Pursuant to Resolution No. 98-140 and Government Code Section 57500, the prior districts transferred and assigned all of their powers, rights, duties, obligations, functions and properties to the District, and the District assumed all obligations of the prior districts which were several and not joint including, without limitation, their obligations to repay the then outstanding certificates of participation. The boundaries of the nine predecessor special districts were initially used by the District to delineate separate revenue areas (the "Revenue Areas") for budgeting and accounting purposes and in order to facilitate the imposition of fees and charges imposed by the District. See "DISTRICT REVENUES — Sewer Service Charges"herein. The District is managed by the Board of Directors, whose members are appointed by 25 member cities and agencies which are serviced by the District. The District is responsible for construction and maintenance of a major portion of the wastewater collection, treatment and disposal facilities within its boundaries. Revenue Area No. 7 is responsible for approximately 170 miles of local sewers in its service area, whereas local sanitary districts, water districts and cities are responsible for local sewers in the remainder of the District's service area. 27002232.5 16 Organization and Administration The District is independent of and overlaps other political jurisdictions. There are many governmental entities,including the County,that operate within the District's jurisdiction. These entities are exclusively responsible for the administration of their own fiscal affairs,and the District is not entitled to operating surpluses of,or responsible for operating deficits of,any of the other entities. The 25-member Board of Directors is composed of representatives from 20 cities, four special districts and a member representing the County. Several board committees, made up of members of the Board of Directors, consider topics for action by the Board of Directors and make recommendations to the Board of Directors. The Chair and the Vice Chair of the Board of Directors are elected every year by a majority of the Board of Directors, and serve at the pleasure of a majority of the Board of Directors. The District has a general manager, outside general counsel, and administrative and operating staff, with offices located at Reclamation Plant No. 1 in Fountain Valley, California. The District currently employs an administrative and operating staff of approximately 600 under the direction of its General Manager,James Heiberg. James Herberg, P.E. is the General Manager of the District and has served in this capacity since April 2013. During his 20 years with the District,he has held the positions of Assistant General Manager, Director of Engineering, and Director of Operations and Maintenance. Mr. Herberg has more than 27 years of experience in the water and wastewater industries, including six years at the Orange County Water District with whom the District has partnered on the Groundwater Replenishment System project. Robert P. Ghirelli, D.Env. is the Assistant General Manager of the District,and has served in that capacity since July 2006. Dr. Ghirelli previously served as Director of Technical Services for the District since his joining the District in 1998. Prior to joining the District, Dr. Ghirelli served for just over a year as managing principal of the Los Angeles office of a national environmental consulting firm, and served 20 years in supervisory positions with the State Water Resources Control Board and Regional Water Quality Control Boards, including 13 years serving as Executive Officer of the California Regional Water Quality Control Board,Los Angeles/Ventura Region. Lorenzo Tyner is the District's Director of Finance and Administrative Services. In September 2005, Mr. Tyner joined the District with more than 20 years of public finance and budgeting experience, most recently serving as the Los Angeles Unified School District Budget Director and Deputy Chief Financial Officer. Mr. Tyner previously worked in large government organizations including the City of Los Angeles and the Los Angeles County Metropolitan Transportation Authority and with private sector companies IBM Global Services and TRW Space and Defense. Ed Torres is the District's Director of Operations and Maintenance for the District. He has served the District since 1991. Prior to joining the District, Mr. Torres served in a professional capacity for the California State University System and TRW Electronics and Defense Sector. Mr. Torres has more than 25 years of public and private sector experience in protecting public health and the environment. Nick Arhontes, P.E. is the District's Director of Facilities Support Services and has served the District since 1988. Mr. Arhontes has more than 30 years of experience managing various engineered systems in the private and public sectors regionally,nationally, and internationally. 27002232.5 17 Robert Thompson,P.E. is the District's Director of Engineering. He has worked for the District since 1995. Mr. Thompson has served has served as manager in several departments with OCSD, including Information Technology, Operations and Maintenance,and Engineering. He has had a lead role in creating and maintaining engineering,programming,tagging and asset standards for the District. Celia Chandler is the District's Director of Human Resources. In October 2015, Ms. Chandler joined the District with more than 20 years of experience in all aspects of Human Resources in both public and private sector organizations, most recently serving as the Director of Academic Labor Relations for the California State University system. Ms. Chandler previously worked in large government organizations including the City of Corona,the City of Murrieta and the County of Riverside, and with private sector company Stone&Webster Engineering Services Company. Services The District owns and operates regional wastewater collection, treatment, and disposal facilities for the metropolitan area in the northern and central portion of the County. The District receives wastewater from the collection systems of the cities, sanitary districts and unincorporated areas of the County located within the District. See"THE DISTRICT—Service Areas"herein. Generally, local agency systems collect wastewater from residential and industrial customers and convey the wastewater to District trunk sewer pipelines for conveyance to the District's wastewater treatment plants. The District's staff is responsible for operating and maintaining the District's infrastructure, although some work is performed by external contractors. Currently, the District has established supply contracts for all chemicals necessary to the operation and maintenance of the facilities of the District. The District has sufficient standby systems in the event of equipment failures or system outages. Service Area The map on the inside cover of this Official Statement shows the District's boundaries and selected cities located within the District. District boundaries were originally established in 1947 and 1948 based on drainage basins. As the existing cities have grown and new areas have incorporated, city limits have come to overlap District boundaries. The District currently serves an approximately 479 square-mile area including 23 of the County's 34 cities and various unincorporated areas of the County. The District serves a population of approximately 2.5 million residents. 27002232.5 18 Set forth in Table 2 below is the estimated populations of cities and unincorporated areas served by the District as of January 1,2015. Table 2 Estimated Populations of Cities and Unincorporated Areas Served by the Orange County Sanitation District As of January 1,2015 Ci�t v Population Anaheim 351,433 Brea 43,328 Buena Park 82,767 Costa Mesa 113,455 Cypress 49,184 Fountain Valley 57,021 Fullerton 141,042 Garden Grove 174,774 Huntington Beach 198,389 Irvine 250,384 La Habra 62,079 La Palma 15,965 Los Alamitos 11,779 Newport Beach 87,249 Orange 140,094 Placentia 52,427 Santa Ana 335,264 Seal Beach 24,684 Stanton 39,219 Tustin 79,601 Villa Park 5,960 Westminster 92,106 Yorba Linda 67,719 Cities Subtotal(') 2,475,923 Unincorporated Areas(estimated)(2) 72,822 Total .52 4R_745 0) Demographic Research Unit,State of California Department of Finance. (2) Center for Demographic Research,California State University,Fullerton. Employees As of June 30, 2015, the District had a total of 587 employees. The majority of District employees are represented by recognized employee organizations, which include the following: the Orange County Employees Association("OCEA"),representing administrative/clerical,technical services and engineering employees since 1979, the International Union of Operating Engineers — Local 501 ("Local 501"), representing operations and maintenance employees since October 1985, and the Supervisory and Professional Management Croup ("SPMT"), representing employees within the Supervisor Group and Professional Group since 1991. The total number of represented employees as of June 30, 2015 was 542, and is broken down as follows: 100 employees represented by OCEA, 189 employees represented by Local 501, and 253 employees represented by the SPMT. The District recently 27002232.5 19 negotiated labor contracts with all bargaining units, reaching final agreement in 2015. All labor contracts are set to expire on June 30, 2016. The District is currently engaged in negotiations with all of its employee organizations. Historically, the District has experienced positive and collaborative working relationships with each organization and has not endured any work stoppages since the early 1980s. Retirement Plan The District participates in the Orange County Employees Retirement System ("OCERS'), a cost-sharing multiple-employer defined benefit pension plan, which is governed and administered by a nine-member Board of Retirement. OCERS was established in 1945 under the provisions of the County Employees Retirement Law of 1937,and provides members with retirement,death,disability,and cost of- living benefits. All full-time and part-time District employees participate in OCERS. Contributions are based on an OCERS actuarial-determined rate structure and age at time of employment; contributions are deducted on a pre-tax basis. Most employees do not pay into Social Security with the exception of 1.45% of gross income, which is paid into the Medicare portion of Social Security. The amount of the retirement allowance is based upon the member's age at retirement,the member's"final compensation"as defined in Section 31462 of the Retirement Law of 1937, the total years of service under OCERS, and the employee's classification as a Plan B, G, H or U member. Plan U applies to all full-time and part-time employees hired on or after January 1, 2013. Plan B applies to supervisor and professional employees hired on or after October 1, 2010, Local 501 employees hired on or after July 1, 2011 and OCEA employees hired on or after August 1, 2011. Plan G applies to employees hired before September 21, 1979. Plan H applies to employees hired on or after September 21, 1979 and prior to the eligibility dates for Plan B or Plan U. Plan G and H provide 2.5% of final compensation per year of service at age 55. Plan B provides 1.667% of final compensation per year of service at age 57.5,and Plan U provides 2%at 62. "Final compensation"is the highest consecutive 12 months of compensation for Plan G members and the highest consecutive 36 months of compensation divided by three for Plan B, H, and U members. Benefits fully vest under the OCERS retirement plan upon reaching five years of service. Employees who retire at or after age 50 with ten or more years of service are eligible to receive an annual retirement allowance, but at a reduced benefit for those employees retiring prior to age 62 for Plan U members, 57.5 for Plan B members, or prior to age 55 for Plan G and H members. OCERS also provides death and disability benefits. As a condition of participation under the provisions of the County Employees Retirement Law of 1937, members are required to contribute a percentage of their annual compensation to OCERS. The District contributes a portion of the employee's contribution to OCERS for members of Plans G and H based on a percentage of the covered employee's base salary. Members of Plans U and B do not receive any contributions toward employee contribution to OCERS. As of the December 31, 2014 valuation, OCERS had an aggregate Unfunded Actuarial Accrued Liability("UAAL")of$5.29 billion, and a funded ratio of 69.42%. 27002232.5 20 Set forth in Table 3 below is a current comparison of the District's required contributions to OCERS for Fiscal Years 2010-11 through 2014-15 and projected required contributions for Fiscal Year 2015-16. Table 3 Orange County Sanitation District District Required Contributions to OCERS for Fiscal Years 2010-11 through 2014-15 and Projected Required Contributions for Fiscal Year 2015-16 District Required Fiscal YearRate(') Contributions 2010-11 24.04% $14,370,158 2011-12 26.10 15,767,050 2012-13 27.35 16,363,917 2013-14 31.09 18,920,212 2014-15 28.06 17,201,569 2015-16i21 22.20 14,045,400 r'I Required contribution as a percent of covered payroll. Includes amortization of Unfunded Actuarial Accrued Liability. Combined rate for all Plans. (z) Projected. Source: Orange County Sanitation District. For Fiscal Years 2010-11 through 2014-15, the District's required contribution was equal to the contribution that the District actually made, except for Fiscal Year 2014-15,when the District contributed an additional $125 million to OCERS to pay down the District's net pension liability. On September 3, 2015, the District again made an additional contribution to OCERS, in the amount of$50 million. The District's net pension liability was approximately$194 million as of July 1, 2014 and approximately$57 million as of July 1, 2015. For the Fiscal Year ended June 30, 2015, total payroll costs of District employees covered by OCERS was$61,295,869. The District's retirement program includes Additional Retiree Benefit Account ("ARBA') benefits. ARBA benefits provide a monthly payment to retirees towards the premium costs of health insurance for the retiree and eligible dependents. The retiree is not required to use this amount for health insurance premium or to remain on the OCERS medical plan. Benefits vest upon retirement. The District pays 100%of the cost for the ARBA plan and utilizes a pay-as-you-go method for funding the plan. The District paid $500,640 in AR13A benefits during Fiscal Year 2014-15. As of August 1, 2011, AR13A benefits are no longer available to new OCEA Group employees of the District. For more information regarding OCERS and the District's retirement plan as of June 30, 2015, see Note 5 and 6 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for the Year Ended June 30, 2015 set forth in Appendix A. The Comprehensive Annual Financial Reports of the Orange County Employees Retirement System are available on the OCERS website at http://www.ocers.org. The information on such website is not incorporated herein by such reference or otherwise. The District cannot predict whether the OCERS investment portfolio will experience additional losses in the future; however, any future losses could result in material increases in the District's required contributions. 27002232.5 21 Other Post-Employment Benefits In June 2004, Governmental Accounting Standards Board ("GASB") issued Statement No. 45, which requires state and local governmental employers to fund the actuarially determined annual required contribution ("ARC")for its post-employment benefits other than pension benefits (known as other post- employment benefits or"OPEB") or record the entire amount of the unfunded liability of its OPEB in its financial statements. OPEB includes healthcare and life insurance expenses and related liabilities, and an annual required contribution to fund such liabilities. The District adopted Statement No. 45 for the fiscal year beginning July 1, 2007, as required of a GASB "Phase 1 Agency." According to the District's actuary, Demsey Filliger Associates (the "Actuary"), the unfunded OPEB liability as of July 1, 2013 is approximately $11.6 million. The ARC was determined to be $900,035 for Fiscal Year 2013-14 and $755,078 for each of Fiscal Years 2014-15 and 2015-16, the period covered by the last actuarial valuation. Calculation of the ARC is based on the present value of benefits accruing in the current year,a 30-year amortization of the unfunded OPEB liability and an assumed rate of return on investments in the retiree fund of 4%per annum. The District does not believe that its OPEB liability will have a material impact on its operational results. Risk Management As of the date hereof, the District has in force basic all risk property and casualty insurance, including theft, fire, flood,terrorism and boiler and machinery losses at its plants and pump stations. The District is self-insured for portions of workers' compensation,property damage and general liability. The self-insurance portion of workers' compensation is $750,000 per person per occurrence with outside excess insurance coverage to the statutory limit. The self-insured portion for property damage covering fire and other disasters is $250,000 per occurrence with outside excess insurance coverage to $1 billion. The self-insured portion for property damage covering flood is $100,000 per occurrence with outside excess insurance coverage to $300 million. The District also maintains outside comprehensive boiler and machinery insurance, including business interruption insurance, with a $100 million limit with deductibles ranging from$25,000 to$350,000. The District is self-insured for general liability coverage up to $500,000 per occurrence, with excess general liability coverage up to $40 million. In addition, the District relies on a combination of self-insurance and District reserves for all property damage from the perils of seismic activity as well as the expectation that some disaster relief funds may be available from the Federal Emergency Management Agency("FEMA") to address any resulting damage. See "DISTRICT REVENUES —Reserves" and "— Integrated Emergency Response Program." There is no assurance that, in the event of a significant seismic event, a combination of self-insurance, District reserves or FEMA assistance would be available or sufficient for the repair or replacement of the affected property. During the past five fiscal years there have been no settlements in excess of covered amounts. Claims against the District are processed by outside claim administrators. The District believes that there are no unrecorded claims as of June 30, 2015 that would materially affect the financial position of the District. For more information regarding the District's insurance coverage as of June 30, 2015, see Note 1 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for Year Ended June 30,2015 set forth in Appendix A. 27002232.5 22 Existing Facilities The Wastewater System presently consists of two wastewater treatment plants, an influent metering and diversion structure, 15 off-plant pump stations,various interplant pipelines and connections, and the ocean outfall facilities. The District's Wastewater System includes approximately 403 miles of sewers within 11 trunk sewer systems, 170 miles of local sewers located within a portion of Revenue Area No. 7, two treatment plants, two discharge outfalls and two emergency weir outlets. The existing treatment plants have a rated primary treatment capacity of 372 mg/d, including standby capacity. Treatment Plant No. 1 ("Plant No. 1") is located in the City of Fountain Valley, about four miles from the coast, adjacent to the Santa Ana River. Secondary treatment capabilities are provided by a trickling filter plant and two conventional air activated sludge plants. Up to 105 mg/d of secondary treated effluent is conveyed to a plant owned by the Orange County Water District (the "OCWD") for tertiary treatment prior to reclamation and groundwater recharge. See "Groundwater Replenishment System"below. Treatment Plant No. 2 ("Plant No.2")is located in the City of Huntington Beach, 1,500 feet from the ocean, at the mouth of the Santa Ana River. Secondary treatment capabilities are provided by a Pure Oxygen Activated Sludge plant and a Solids Contact Trickling Filter plant. The District employs several phases in the treatment of wastewater. The first phase,preliminary treatment,removes debris such as eggshells, sand and other non-biodegradable items. See also"Preferred Level of Treatment" and `Biosolids Management" below. In the next phase, primary treatment, wastewater is pumped to large settling basins. The liquids are separated from the remaining solids which settle or float as the wastewater passes through large settling basins called clarifiers. The settled solids are sent to solids treatment facilities. All of the wastewater received by the District is sent to secondary treatment for further processing. During secondary treatment, the wastewater is treated with naturally occurring bacteria to remove most of the remaining dissolved and suspended microscopic organic solids. The treated wastewater from both plants is mixed together at Plant No.2,where it is then pumped through the ocean outfall pipe that extends five miles offshore. Set forth in Table 4 below are the treatment plants' approximate treatment capacities. Table 4 Wastewater System Treatment Capacities (mg/d) 2014-15 Primary Secondary Actual Flows Treatment Capacity Treatment Capacity Plant No. 1 98 204 182 Plant No. 2 92 168 150 Aggregate Treatment 120 372 332 Source: Orange County Sanitation District. The District also has the capability to divert a portion of the influent flow from Plant No. 1 to Plant No. 2 through interplant connections. A portion of the flow destined for Plant No. 2 can also be diverted to Plant No. 1. Another interplant facility allows gas generated during solids treatment to be transported between Plant No. 1 and Plant No. 2 and allows digester gas(which is used as fuel for many 27002232.5 23 of the facilities' engines)from one plant to be used at the other to balance the supply and demand, which results in efficient gas utilization. Permits,Licenses and Other Regulations The District is subject to laws, rules and permits issued by federal, state, regional and local regulatory bodies. The Wastewater System is subject to regulations imposed by the 1972 Clean Water Act,as amended(the"Clean Water Act"),the California Environmental Quality Act of 1970, as amended ("CEQA")and the Federal Clean Air Act. The regulatory requirements are primarily administered by the United States Environmental Protection Agency (the "EPA"), the California Air Resources Board, the Santa Ana Regional Water Quality Control Board (`RWQCB"), and the South Coast Air Quality Management District ("AQMD"). Regulations of these agencies deal primarily with the quality of effluent which may be discharged from the treatment plants and air quality emissions. The Clean Water Act directs the EPA to monitor and to regulate the discharge of pollution into navigable waterways and to enforce the requirements that all wastewater treatment plants in the nation provide full secondary treatment for sewage. In 1977, Congress amended the Clean Water Act to allow waivers of secondary treatment standards for certain ocean dischargers, if they can demonstrate to the satisfaction of the EPA that significant adverse environmental impacts would not occur. The District currently has all applicable permits and licenses necessary to operate its facilities. The District has discharged treated wastewater into the Pacific Ocean under a permit issued by the EPA and the RWQCB. The discharge permit included a waiver under the Section 301(h) provisions of the Clean Water Act, allowing for less than full secondary treatment based on an ocean discharge of sufficient depth, distance and dilution. The permit was initially issued in 1985 and was the first modified Section 301(h)permit issued to a major wastewater treatment facility. The permit was re-issued on May 6, 1998 and expired on June 8,2003. On July 17, 2002, the Board of Directors adopted Resolution No. OCSD 02-14, "Establishing the Policy for Level of Treatment of Wastewater Discharged into the Ocean." This resolution established the District's policy to treat all wastewater discharges into the ocean to secondary treatment standards, thereby providing for continued public safety, marine ecosystem protection, and water reclamation opportunities. To implement this policy, District staff was directed to immediately proceed with the planning, design, and implementation of treatment methods that will allow the District to meet Clean Water Act secondary treatment standards with the expressed purposes of eliminating the need for the permit waiver received under Section 301(h). The District completed these improvements on time by December 2012 at a total capital improvement cost of$537.8 million. Following the determination by the Board of Directors in July 2002 to implement full secondary standards, staff prepared the Secondary Treatment National Pollutant Discharge Elimination System ("NPDES") Permit Application that was required to be submitted to the regional office of the EPA and the RWQCB in December 2002. The NPDES permit was approved by the EPA and became effective on October 31, 2004, and is subject to renewal every five years. The District's current NPDES permit became effective on July 20, 2012 and will expire on July 19, 2017. Federal regulations require pemuttees to apply for a new application at least 180 days prior to the current permit expiration date. District staff has begun the process of preparing a permit application in advance of the 2017 permit expiration date. The District is also subject to the requirements of the Federal Clean Air Act which mandates attainment with national ambient air quality standards for criteria pollutants (ozone, particulate matter, carbon monoxide,lead,nitrogen dioxide,and sulfur dioxide). Criteria air pollutants cause adverse effects on human health and environment. AQMD is the local air pollution control agency charged with 27002232.5 24 implementing the Federal Clean Air Act. In addition to criteria pollutants, AQMD also implements numerous federal and State requirements related to the toxic air pollutants which can cause cancer or other severe localized health effects. For example,the State's Air Toxic Hot Spots Act requires facilities to conduct health risk assessments and notify the neighboring communities if the health risk exceeds the regulatory thresholds. Pursuant to AQMD's requirements, the District must obtain permits before sewage treatment improvement projects can be constructed and operated. Such permits are project-specific and may contain conditions that govern design criteria,operating parameters, and emissions standards. Most of the District's treatment facilities are enclosed in order to capture and treat emissions to meet regulatory emissions standards and to minimize odor impact to the neighboring communities. The District's treatment plants are also subject to the requirements of Title V of the Federal Clean Air Act amendments. The Title V permit is a single air quality permit for a facility that consolidates and replaces all of the air permits for individual pieces of equipment previously issued by the local air quality district. The permit contains all of the applicable local, state, and federal requirements, including periodic self-certification of compliance and mandatory self-reporting of permit deviation. All Title V permit-related reporting and documents submitted to the AQMD must be signed by the highest District official — in this case, the General Manager. The Title V program also demands facilities to organize and conduct extensive training of the staff involved,including the field operation and maintenance staff. Another Title V important feature is a possibility of the public active participation and intervention in the cases of potential emission limits and monitoring violations. The District Title V permits did not receive any negative public responses or comments during the required public review period. The District received initial Title V permits for the treatment plants in January 2009. Title V permits are issued for a five-year period. Title V permits for both plants were issued on April 16, 2014. They will expire on April 16,2019. District Planning and Capital Improvement Program In November 2007, the Board of Directors adopted a new comprehensive strategic plan to consider the District's service levels and operational needs for the next five years. This comprehensive strategic plan has been updated annually to continue looking at a five-year horizon (each, a `Strategic Plan"). See"THE DISTRICT—Five-Yew Strategic Planning." In December 2009, the Board of Directors adopted a Facilities Master Plan (the "Master Plan"). The Master Plan updated the planning processes set forth in the 1989 Master Plan,the 1999 Strategic Plan and the 2002 Interim Strategic Plan Update. The Master Plan also incorporates and implements the levels of services defined by the Board of Directors that are included in the 2009 Strategic Plan. The result is a plan that integrates research, facilities planning, water conservation and reclamation, sludge reuse, other wastewater programs and financial planning into a single unified approach. Key components of the Master Plan include updated flow projections and collection system hydraulic modeling. The District expects to satisfy required sewer capacity and rehabilitation improvements for the Wastewater System through its Capital Improvement Program ("CIP"). The District annually reviews and validates its CIP. The CIP was developed to satisfy anticipated regulatory requirements, increased population, anticipated rehabilitations and replacements, additional treatment requirements, conservation, energy and other resource savings considerations, odor control improvements, and air quality protection needs. Through Fiscal Year 2031-32,the current CIP is scheduled to accomplish: • Major rehabilitation of the existing headworks, primary treatment, secondary treatment, outfall pumping, and solids handling facilities at both treatment plants; 27002232.5 25 • Replacement and rehabilitation of nine of the District's outlying pumping stations and 27 trunk sewer improvement projects;and • Reduction of fence line odor to levels that minimize odor complaints. The 2015 CIP Validation Study resulted in revisions to the CIP. The CIP currently consists of 85 large capital projects through Fiscal Year 2031-32 with remaining outlays of$ approximately 2.1 billion. Over the next five years, the District contemplates average annual capital expenditures of$164.5 million based on the 2015 CIP Validation Study,without taking into account CIP savings and deferrals. Set forth in Table 5 below is a summary of total estimated capital costs for the CIP for Fiscal Years 2015-16 through 2031-32. Table 5 Capital Improvement Program—Estimated Capital Costs Fiscal Years 2015-16 through 2031-32 Project Cost Collection System Capacity $ 277,900,000 Collection System Repair,Rehabilitation,Replacement 365,600,000 Treatment Plant Capacity 53,500,000 Additional Secondary Treatment 76,700,000 Improved Treatment 146,700,000 Treatment Plant Repair,Rehabilitation, Replacement 1,090,500,000 Support Facilities 41,900.000 Total Validated Capital Improvement Program 2.052.R00.000 Source: 2015-I6 CIP Validation Study,Orange County Sanitation District. The CIP originally included budgeted expenditures of$181.9 million in Fiscal Year 2015-16. After factoring in CIP savings and deferrals, such budgeted expenditures were reduced by$6.9 million to $175.0 million. There are currently [37] projects in the construction phase with proposed capital outlay spending in 2015-16. [The two most significant projects in the construction phase are the Sludge Dewatering and Odor Control at Plant 1 and the Newport Force Main Rehabilitation with projected Fiscal Year 2015-16 expenditures of$ million and$ million,respectively.][update] Groundwater Replenishment System The District has taken a multi jurisdictional approach to planning for capital facilities because many of the methods for reducing or managing flows involve other jurisdictions. One such project is the Groundwater Replenishment System (the "GWRS"). In March 2001, the District entered into an agreement with the OCWD to design and construct Phase I of the GWRS. The capital cost of this Phase was shared equally (50% shares) by each agency. The GWRS is a joint effort by the two agencies to provide reclaimed water for replenishment of the Orange County Groundwater Basin and to augment the seawater intrusion barrier. Phase I of the GWRS became operational in January of 2008. In 2015, the GWRS produced approximately 92,300 acre-feet. The Phase II expansion broke ground in January 2012 to add approximately 33,000 acre-feet per year and was completed in June 2015, resulting in purifying 100 percent of the treated wastewater from the District's Fountain Valley-based Plant No. 1. In April 2015, the District and the OCWD approved a $2 million joint study to explore the possibility of using flows from the District's Plant No. 2, which may require additional infrastructure and treatment. The Phase R expansion and all future phases are funded solely by the OCWD. The District has committed 27002232.5 26 168,000 acre-feet per year of secondary effluent to these future expanded operations; however, no capital funding is anticipated or dedicated from the District for such expansion. The OCWD and the District have agreed to share equally in the cost of the Joint GWRS Microfiltration Backwash Redirection Project which will increase the quantity of water available during the early morning hours when the flows are low. This project will save the District operational costs in the form of reduced primary treatment chemical usage. Preferred Level of Treatment In July 2002, the Board of Directors approved a change from the existing level of treatment, a blend of 50% advanced primary and 50% secondary treated wastewater, to full secondary treatment standards. The District completed all of the necessary expansion projects to support full secondary treatment by December 2012. On July 20, 2012, the District received a new NPDES permit, which reflects the full secondary treatment requirements. The new NPDES permit will expire on July 19, 2017. See"THE DISTRICT—Permits,Licenses and Other Regulations." Biosolids Management Through the treatment of wastewater,the District recovers and treats nutrient-rich, organic matter (solids) to produce biosolids. Consistent with EPA's regulations and the regulations in place at the end- use sites, the District's biosolids are recycled through composting, fertilizing non-food farm fields (land application), and disposed in a landfill for methane gas recovery. The District's goal is to ensure our biosolids management strategies align with existing market conditions and continue a sustainable,reliable and economical biosolids management program that provides environmentally-sound practices and meets federal, State and local regulatory requirements. The District's biosolids averaged about 756 tons per day("tpd") in Fiscal Year 2014-15,with an annual average cost per ton of$62.38 for managing at offsite locations, as described in the table below. Prices have remained stable with some decreasing due to the District's interim-term contracts as well as diesel prices remaining low. The biosolids management costs totaled about $17.2 million last fiscal year, which was about 94%of the$18.3 million budgeted. Costs and biosolids production in Fiscal Year 2015- 16 are anticipated to remain stable with a budget of$17.4 million, which is a reduction of 5% in the allocated budget over last fiscal year. The District's biosolids tonnage will begin trending down as new solids facilities complete construction and come online to reduce biosolids costs. Plant No. 1 centrifuges are currently under construction and by Spring 2017 are anticipated to create drier solids which will reduce hauling costs. Irvine Ranch Water District is constructing solids processing facilities and will stop sending their solids to the District in 2017. Plant No.2 centrifuges will begin operating by early 2019. 27002232.5 27 Biosolids Management Contracts Current tons Contract per day Average (Minimum tons managed cost per ton Contractor Location Product per day and term) (approximate) (July 2014) Synagro Kern County,CA Compost 250 tpd—Expires 12/27/16 250 tpd $75.10 Synagro La Paz County,AZ Compost 0 tpd—Expires 12/27/16 70 tpd $61.51 Tole Roach Yuma Cowry,AZ Land 0 tpd—10 years plus one 350 tpd $54.50 application five-year renewal;first renewal 1/l/18 Orange Orange County,CA Local 0 tpd—8 years plus one to- 70 tpd Facility:$41.19 County Landfill year renewal;first renewal Hauling:out for Waste& 6/30/I8 bid Recycling Inland Rancho Cucamonga, Compost 0 tpd—1 year plus up to 35 tpd Facility:$56.00 Empire CA three renewals;first Hauling:out for Regional renewal 5/31/16 bid Composting Facility The District's contractors provide back-up biosolids management capacity in California and Arizona that include compost, land application, lime stabilization before land application and landfill. Together, these options have the additional available capacity to manage more than ten times the District's daily biosolids production to ensure sustainable,consistent and reliable operations. In Fiscal Year 2014-15, the District signed an agreement with Inland Empire Composting Authority to deliver two trucks per day to their Inland Empire Regional Compost Facility. The hauling contract for this facility and the landfill is currently out for bid. The District has started work on a contract to replace the expiring Synagro compost contract, as well as the Biosolids Master Plan, which includes evaluating onsite and offsite management options in order to make recommendations for the Capital Improvement Plan and potentially longer-term management options for the future. In 2003,the District was certified by the National Biosolids Partnership for its biosolids program. The District's biosolids program has continued to develop under this certification over the last decade. In late 2015, the District decided to transition its biosolids management system to an internal standard, as outside certification is not required for the District's biosolids program. The District's internal standard is intended to maintain sound practices while allowing the District to streamline areas to increase efficiency and redirect staff resources. Urban Runoff Recognizing that County beaches were being affected by pollution carried by urban runoff, the Board of Directors adopted a number of resolutions agreeing to accept dry weather urban runoff into the sewer system. In June 2002, Assembly Bill 1892 amended the District's charter to formally allow the diversion and management of dry weather urban runoff flows. Resolution No. 01-07, adopted March 28, 27002232.5 28 2001, declared that the District will initially waive fees and charges associated with authorized discharges of dry weather urban runoff to the sewer system until the total volume of all runoff discharges exceeds four million gallons per day ("mg/d") calculated on a monthly average. For the first 12 years of the Urban Runoff Program, the average monthly flow averages remained less than the four mg/d threshold, thus avoiding user fee costs being assessed to the diversion permittees. In 2012, the District received a number of diversion proposals to deal with bacteria and selenium loading to the upper Newport Bay. The discharge from the additional proposed diversions combined with the existing diversion flows would eventually exceed the £our mg/d fee threshold. On June 12, 2013, the Board of Directors adopted Resolution No. 13-09 expanding the waiver of fees or charges on the treatment of dry weather urban runoff from four mg/d to ten mg/d. According to the Board of Directors, the change was necessary not only to protect the County's coastal resources, but also to provide an economic benefit to the local economy by helping to keep the County's beaches open. The Dry Weather Urban Runoff Program is administered by the District's Environmental Compliance Division, which issues a discharge permit for each of the diversion structures. The permit functions as a control mechanism that specifically prohibits storm runoff and authorizes discharge only during periods of dry weather. The permit also establishes specific discharge limits, constituent monitoring, and flow metering requirements. In addition, the District conducts quarterly sampling and analysis of the urban runoff discharges to ensure discharge limit compliance with the various regulated constituents. There are currently 19 active urban runoff diversion structures, three owned and operated by the County of Orange, 11 owned and operated by the City of Huntington Beach,two owned and operated by the City of Newport Beach, two owned and operated by the IRWD, and one owned and operated by PH Finance (present owner of the Pelican Point Resort). In 2015, the City of Newport Beach added their second diversion on Big Canyon Creek, an upper Newport Bay tributary. IRWD is currently constructing a pipeline to divert the Peters Canyon Wash, the biggest contributor of selenium in the San Diego Creek watershed in dry weather. The diversion of the Peters Canyon Wash is expected to be completed in 2016. The City of Santa Ana is proposing three additional urban runoff diversions to deal with bacteria and selenium loading to the Newport Back Bay Watershed: the Delhi, Santa Fe and Lane flood control channels. The total flow for the proposed urban runoff diversions could result in an additional 3 mg/d of urban runoff discharge to the sewer. Since 1999, the District has treated a total of 8.3 billion gallons of dry-weather urban runoff that would otherwise have been discharged into the ocean with no treatment. During Fiscal Year 2014-15,the daily average urban runoff flow ranged between 0.70 and 1.48 mg/d with a cumulative total diversion of 408 million gallons for this period. At the existing operations and maintenance cost of$1,697 per million gallons (the Fiscal Year 2014-15 rate), the District's cost for treating the urban runoff discharge for this period is estimated at$692,036. Integrated Emergency Response Program In recognition of the potential damage which could occur in the event of a major earthquake, flood, or other disaster, the District implemented an Integrated Emergency Response Program (the "IERP") in 1979. The IERP is a two-volume plan which contains policies, plans and procedures preparing for, and responding to, emergencies. The District also analyzed disaster preparedness issues and policies within the Master Plan, and within a 1994 report titled Fault Rupture Hazard Investigation— Wastewater Treatment Plant No.2 (the"1994 Report"). The disaster preparedness plan included in the Master Plan reviewed two possible major earthquake scenarios: an 8.3 Richter magnitude ("M") earthquake on the southern San Andreas fault 27002232.5 29 system and an M 7.0 earthquake on the Newport-Inglewood fault zone, which includes Plant No. 2. An M 8.3 earthquake on the southern San Andreas fault,while on the whole more destructive than the M 7.0 Newport-Inglewood fault, may result in less damage to the District's service area due to the distance of the fault from most of the service area. However,the Master Plan stated that damage from such a major earthquake on the San Andreas fault would be extensive. Also, the Master Plan indicated that an M 7.0 earthquake on the Newport-Inglewood fault within five miles of the District's sewerage facilities could cause major destruction to those facilities. The disaster preparedness plan in the Master Plan indicated that it would not be economically feasible to upgrade all of the existing sanitary sewerage facilities to survive an earthquake of this magnitude along the Newport-Inglewood fault. The IERP outlines the policies and employee actions to be taken before, during and after an earthquake, earthquake response guidelines and damage assessment procedures. The Master Plan analyzed the vulnerability of the sanitary sewerage facilities and operations of the District and planned a risk reduction program wherein the vulnerability of many of the District's sanitary sewerage facilities to an earthquake could be reduced by recommended retrofit construction measures. The Master Plan also recommended that designs of existing major structures which were constructed prior to development of current seismic design standards be reviewed and the structures strengthened,if necessary. Since the Master Plan and the 1994 Report, the District has completed retrofitting where deemed appropriate. Pursuant to the Master Plan, all recent and future projects have been, and will be, designed to the same high earthquake code standards as set for other essential services, such as hospitals and fire stations. Many of the older buildings analyzed in the Master Plan have been replaced by structures built after 1989. The Amy Corps of Engineers' "All-River Plan" has mitigated any future flooding of the Santa Ana River system and potential threats to the District's Wastewater System. Also, both Plant No. 1 and Plant No.2 me built to federal standards. The IERP takes into account the damage potential posed by coastal flooding, tsunamis (large ocean waves generated by seismic activity) and windstorms. No assurance can be given that any such events would not have a material adverse impact on the Wastewater System. The Strategic Plan and IERP makes recommendations regarding fire protection of the Wastewater System. Most of the structures at Plant No. 1 and Plant No. 2 are constructed of fire-resistant materials. The IERP describes the procedures needed to respond to a possible disaster. For more information regarding emergency response policies, the disaster preparedness plan described in the IERP can be reviewed at the District's office. Five-Year Strategic Planning The District maintains an annual Strategic Plan to address service levels and operational needs over a five-year horizon. The Strategic Plan envisions an organizational culture that adheres to the District's core values and makes efficient and effective use of all available resources. Through a new Vision Statement, the District is committed to focusing efforts on customer service, protecting public health and the environment, fiscal responsibility, communications, partnering with others, and creating the best possible workforce. Through planning workshops,individual interviews with members of the Board of Directors, and employee and management focus groups,the following eight strategic goals were identified: 27002232.5 30 1. Odor Control—Completion of the Odor Control Master Plan. 2. Future Biosolids Management Options — Study biosolids management options including third party contracts and onsite capital facilities. 3. Energy Efficiency— Continue to research new energy efficiency and energy conversion technologies. 4. Disinfection of Ocean Discharge — Develop an implementation plan that includes the technical, financial and societal factors associated with cessation of disinfection of the ocean discharge. 5. Local Sewer Transfers—Complete the transfer of 174 miles of local sewers serving parts of the City of Tustin and unincorporated areas north of the City of Tustin and local sewer transfers in the City of Santa Ana. 6. Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy and public outreach program. 7. Future Water Recycling — Determine partnerships, needs, strategies, benefits and costs associated with recycling of Plant No. 2 effluent water. 8. Workforce Planning and Workforce Development—This initiative is ongoing and part of a comprehensive workforce planning and development effort to ensure that the District has the right people with the right skills and abilities,in the right place,at the right time. Since the adoption of the 2013 Strategic Plan, the District made strides to improve technical operations, biosolids management, odor control, and regulatory compliance. This resulted in the completion of two of the eight strategic goals: Disinfection of Ocean Discharge and Legislative Advocacy and Public Outreach. Under the latest Strategic Plan update of November 2015, the District continues to work towards accomplishing the remaining six strategic goals. DISTRICT REVENUES Sewer Service Charges General. The District has the power to establish fees and charges for services of the Wastewater System. Such fees and charges are established by the District's Board of Directors and are not subject to review or approval by any other agencies. In Fiscal Year 1997-98, a Rate Advisory Committee (the "RAC") was established comprised of representatives from industrial, commercial and residential users. The goal of the RAC was to examine the then current rate structure and, if needed, develop recommendations for change. The RAC analyzed the District's rate structure to determine whether its then current sewer service user fees (now known as "Sewer Service Charges") were equitable among residential and industrial customers. This review resulted in a proposal to expand the number of non-residential user categories from one to 23 and to provide for gradual rate increases in seven of the nine Revenue Areas. The Sewer Service Charges for those categories were based on the average flow and strength of wastewater discharged for each property type and remain currently in use. The Board of Directors establishes the annual sanitary sewer service charges by ordinance. The sanitary sewer service charge ordinances are adopted by a two-thirds vote of the Board of Directors as 27002232.5 31 required under law after conducting a noticed public hearing in compliance with Proposition 218. See "LIMITATIONS ON TAXES AND REVENUES — Article XIIIC and Article XIIID of the California Constitution." The District collects Sewer Service Charges from property owners through the semi-annual property tax bill distributed by the County throughout the District, except in Revenue Area No. 14. Pursuant to the IRWD Agreement, the District receives quarterly fee payments from the IRWD which directly collects fees from customers through a monthly billing procedure in Revenue Area No. 14. The District currently participates in the County's Teeter Plan under which the District receives annually 100% of the secured property tax levies to which it otherwise is entitled, regardless of whether the County has actually collected the levies. The District has covenanted in the Master Agreement to fix, prescribe and collect fees and charges to satisfy certain coverage requirements as further described under "SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS—Rate Covenant"herein. Residential and Commercial Sewer Service Charges. In December 2012,the Board of Directors authorized a Proposition 218 notice on proposed rate increases for each year over the next five years. Pursuant to the adoption of Ordinance No. OCSD-41 on March 27, 2013, the District established residential Sewer Service Charges, except within Revenue Area No. 14,based on the cost of services and facilities provided to each customer of the District. The noticed public hearing held in connection with the adoption of this ordinance considered an increase in the single family residential rate, the underlying rate for all of the District's sewer service charges, of 4.8% for Fiscal Year 2013-14 and thereafter by an average annual increase of 2.4%for each Fiscal Year through Fiscal Year 2017-18. These increases were approved by the Board through the adoption of Ordinance No. OCSD41. Following the first two years of this rate plan,however,District staff recommended and the Board of Directors approved a reduction of the rate increase for the last three years of the plan, lowering the average of these increases from 2.4%to 1.6%. 27002232.5 32 Set forth in Table 6 below is a comparison of the Sewer Service Charge rate for single family residences("SFRs")for the fiscal years shown. Table 6 Annual Sewer Service Charges Single Family Residence Rate Fiscal Years 2009-10 through 2017-18 Fiscal Sewer Service Percentage Year Char¢e Chanee 2009-10 $221 - 2010-11 244 10.4% 2011-12 267 9.4 2012-13 294 10.1 2013-14 308 4.8 2014-15 316 2.6 2015-16 322 1.9 2016-17 327 1.6 2017-18 331 1.2 Source: Orange County Sanitation District. Set forth in Table 7 below are the total average annual Sewer Service Charges for SFRs within the District, together with comparable total average annual charges for wastewater service within the jurisdictions of certain other cities and districts within the State as of July 1, 2015. The District's approved SFR rate of$322 for Fiscal Year 2015-16 remains below the average annual sewer rate of 5475 according to a Fiscal Yew 2014-15 survey of 482 agencies encompassing all 58 counties in California conducted by the State Water Resources Control Board. 27002232.5 33 Table 7 Comparison of Total Sewer Service Charges For Single Family Residences As of duly 1, 2015 Average Dry Annual Weather Sewer Flow Service Treatment Collection Property Tax Enti LmjZ dlt'I Charaeol Levellrlt3l Responsibility l'I Incomet'3 City of San Diego 168 $573 2 Yes No City of Los Angeles 428 464 4 Yes No East Bay MUD 80 355 4 No Yes County of Sacramento 140 384 3 No Yes Orange County Sanitation District 221 322 3 No Yes County of Los Angeles 497 155 4 No Yes (D Source: Information obtained from respective entities listed. (2) Treatment Level Categories: "I"—Primary treatment. "2"—Advanced primary or primary with some secondary treatment. "3"—Secondary treatment. "4"—Advanced secondary or secondary with some tertiary treatment. "5"—Tertiary treatment. 1'l Source: Wastewater User Charge Survey Report by the California State Water Resources Control Board. Industrial Sewer Service Charges. The District charges industrial Sewer Service Charges to customers discharging high-strength or high-volume wastes into the sewer systems. Customers subject to industrial Sewer Service Charges are billed directly by the District. The fee charged to each customer is based on the customer's sewage volume, the concentration of suspended solids and biochemical oxygen demand. Total industrial Sewer Service Charges in Fiscal Year 2014-15 were approximately $14.2 million. Industrial Sewer Service Charges are applied to both operating and capital funds. The Sewer Service Charge increases described above are necessary to meet the District's cash flow needs arising from the addition of disinfection treatment and other operating requirements. As projected through Fiscal Year 2031-32, the cash flow needs of the CIP total approximately $2.1 billion. Over the next five years the District contemplates average annual capital expenditures of$164.5 million. In addition, over the next five years the District contemplates expenditures of$106 million, or an annual average of $21 million, to finance projects currently unknown or unidentified as forecasted by the District's Asset Management Program(the"Asset Management Program'). Additional Revenues The District has several sources of additional revenue, including property taxes, Capital Facilities Capacity Charges,capacity rights,permit and inspection fees and interest earnings. Property Taxes. The District receives approximately 2.5%of the one percent County ad valorem property tax levy, based on the allocation procedure under State law. Property tax revenues were $64.3 million in Fiscal Yew 2010-11, $67.9 million in Fiscal Year 2011-12, $79.2 million in Fiscal Yew 2012-13, $74.9 million in Fiscal Year 2013-14 and $79.8 million in Fiscal Year 2014-15. The District currently estimates that its property tax receipts will increase by approximately 5.0% each year from 27002232.5 34 Fiscal Year 2015-16 through Fiscal Year 2019-20. The apportionment of the ad valorem tax is made pursuant to a revenue program adopted by the District in April 1979 to comply with EPA and RWQCB mandates,legal and contractual requirements and Board of Director's policy. Capital Facilities Capacity Charges. Capital Facilities Capacity Charges (commonly referred to as connection fees) are one-time fees with two components, paid at the time property is developed and connected to the Wastewater System. The fees are imposed by the District pursuant to Section 5471 of the California Health and Safety Code and are levied to pay a portion of the District's capital costs and for access to capacity in the Wastewater System. The District currently has Capital Facilities Capacity Charges of $3,588 per residential unit (three-bedroom); however, under the current industrial use ordinance, additional Capital Facilities Capacity Charges can be imposed on industrial users who place larger than average demand on the Wastewater System. Member cities and sanitary districts collect Capital Facilities Capacity Charges for the District when building permits are issued. Capital Facilities Capacity Charges are reviewed annually to reflect the changes in the value of the Wastewater System to which a new customer is connecting. On December 15, 1999, the Board of Directors approved District Ordinance No. OCSD 99-11 (the"1999 Ordinance")which established a comprehensive Capital Facilities Capacity Charge. The 1999 Ordinance, effective as of January 1, 2000, renamed connection fees as Capital Facilities Capacity Charges and provided a more equitable schedule of fees among industrial, commercial and residential users. Pursuant to the 1999 Ordinance, Capital Facilities Capacity Charges were revised for high demand industrial users in five incremental increases from 1999 through 2001. For a summary of historical and projected revenues derived from Capital Facilities Capacity Charges, see Table 14 and Table 15 below. Pursuant to an agreement with the IRWD, the IRWD is not required to pay Capital Facilities Capacity Charges and, in exchange, the IRWD provides funding to the District for the construction costs of certain wastewater collection, transmission, treatment and disposal facilities to be used by the IRWD and is obligated to make certain payments to the District for certain services arising from the Wastewater System(including any standby or availability charges). Sale of Capacity. The District bas entered into agreements with the Santa Ana Watershed Project Authority ("SAWPA") whereby wastewater from Upper Santa Ana River Basin dischargers can be transported through the District's Santa Ana River Interceptor to the District's wastewater treatment facilities. This program was developed in the only 1970s. The agreements establish control mechanisms regarding the quality of wastes deposited into the Wastewater System. At the present time, SAWPA has purchased and paid for 30 mg/d of maximum regulated flow capacity rights in the District's Santa Ana River Interceptor and 17 mg/d of monthly average flow capacity in the District's wastewater treatment plants. Projected revenues from SAWPA range from$2.5 million to$3.0 million over the next five years. Additional treatment plant capacity can be purchased in increments at the District's current replacement cost. Federal Subsidy Payments. In connection with the District's Revenue Obligations,Series 2010A (the "2010A Revenue Obligations") and the District's Revenue Obligations, Series 2010C (the "2010C Revenue Obligations"), issued as "Build America Bonds," the District is scheduled to receive certain federal subsidy payments of approximately $5.1 million annually through 2031 and lesser amounts thereafter until 2044. Subsidy payments with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations constitute Revenues as defined in the Master Agreement. In its financial reports,the District accounts for subsidy payments received in connection with the 2010A Revenue Obligations and the 2010C Revenue Obligations as a reduction in interest expense with respect to such obligations. 27002232.5 35 For the 2010A Revenue Obligations and the 2010C Revenue Obligations to be and remain Build America Bonds, the District must comply with certain covenants and establish certain facts and expectations with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations, the use and investment of proceeds thereof and the use of property financed thereby. Thus, it is possible that the District may not receive the federal subsidy payments due to the District's noncompliance. The federal subsidy payments are also subject to offset against amounts that may, for unrelated reasons, be owed by the District to any agency of the United States of America. On March 1, 2013, the federal government announced the implementation of certain automatic spending cuts (mown as the sequester. As a result of the sequester, federal subsidy payments for the 2010A Revenue Obligations were reduced by 8.7% (or$67,872; second half of the year only), 7.2% (or $112,339), 7.3% (or $114,882), and 6.8% (or $53,049; first half of the year only) for the federal fiscal years ended September 30, 2013, 2014, 2015, and 2016, respectively; and federal subsidy payments for the 2010C Revenue Obligations were reduced by 8.7% (or $152,807; second half of the year only) by 7.2% (or $252,922), 7.3% (or $256,435), and 6.8% (or $119,435; first half of the year only) for the federal fiscal years ended September 30, 2013, 2014, 2015, and 2016, respectively. The District is obligated to make all payments with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations from Revenues as defined in the Master Agreement,regardless of whether it receives the full amount of federal subsidy payments. The District cannot predict whether future reductions in federal subsidy payments will occur due to the sequester. However, the District does not believe that any reduction in federal subsidy payments will have a material adverse effect on the District's ability to pay the 2010A Revenue Obligations or the 2010C Revenue Obligations. Wastewater Treatment History The wastewater flows for Fiscal Year 2009-10 through Fiscal Year 2014-15 were 196 mg/d,207 mg/d, 201 mg/d,200 mg/d, 198 mg/d and 190 mg/d, respectively. The highest flow rate experienced was during El Niiio storm periods. Peak flows of 500 mg/d were recorded in December 1997 and February 1998. There were no sewer failures or overflows during these events. [discuss current El Nino impact] Customers The historical number of customers served by the District for the Fiscal Years 2010-11 through 2014-15 and the projected number of customers served by the District for the Fiscal Years 2015-16 through 2019-20, identified in Equivalent Dwelling Units ("EDUs"), are set forth in Table 8 and Table 9 below. As discussed below, sewer service charges are based on the expected amount of wastewater flow for a single family dwelling. This base amount is considered the "equivalent dwelling unit" Set forth in Table 8 below are the EDUs that equate to total Sewer Service Charge levies,while the EDUs set forth in Table 9 equate to total sewer service charge collections. 27002232.5 36 Table 8 Historical and Projected Equivalent Dwelling Units Fiscal Years 2010-11 through 2019-20 Historical Projected Fiscal Year EDUso) Fiscal Year EDUs 2010-11 924,622 2015-16 936,850 2011-12 924,525 2016-17 939,567 2012-13 915,685 2017-18 942,292 2013-14 916,812 2018-19 945,024 2014-15 934,141 2019-20 947,765 (n With respect to such Fiscal Years,presentation in the Statistical Section of the District's Comprehensive Annual Financial Report set forth in Appendix A includes EDUs that equate to total Sewer Service Charge collections rather than levies. Set forth in Table 9 below are the number of residential and commercial customers and industrial customers and the approximate percentages of Sewer Service Charge revenues derived from the combined residential and commercial use and industrial use for the last five fiscal years. Table 9 Number of Accounts and Revenues by Customer Class for the Fiscal Years 2010-11 through 2014-15 ($in Millions) Residential/Commercial Industrial Number of Percentage Percentage Equivalent of Sewer of Sewer Single- Service Number of Service Family Total Charge Customer Total Charge Fiscal Year Dwellines Revenue Revenues Accounts Revenue Revenues 2010-11 874,130 $213.3 95% 479 $10.1 5% 2011-12 869,709 232.2 96 516 9.5 4 2012-13 879,443 258.6 96 527 10.8 4 2013-14 869,461 267.8 95 489 14.4 5 2014-15 806,585 254.9 95 467 14.2 5 Source: Orange County Sanitation District. 27002232.5 37 Set forth in Table 10 below are the ten Ingest principal sewer service customers of the District for the Fiscal Yew ended June 30,2015. Table 10 Largest Principal Sewer Service Customers of the District for the Fiscal Year Ended June 30,2015 Sewer User Service Charees House Foods America Corp. $1,055,843 Kimberly-Clark Worldwide, Inc. 1,047,510 Stremicks Heritage Foods, LLC 811,061 MCP Foods,Inc. 738,346 Pulmuone Wildwood,Inc. 571,057 Jazz Semiconductor 521,890 Ameripec Inc. 517,583 Nor-Cal Beverage Co.hie. (NCB) 461,589 Alta Dena Certified Dairy,LLC 457,496 Nor-Cal Beverage Co. Inc. (Main) 387,579 Source: Orange County Sanitation District. Assessed Valuation The assessed valuation of property in the County is established by the County Assessor, except for public utility property which is assessed by the State Board of Equalization. Due to changes in assessment required under State Constitution Article XIIIA, the County assessment roll no longer purports to be proportional to market value. See "LIMITATIONS ON TAXES AND REVENUES" herein. Generally,property can be reappraised upward to market value only upon a change in ownership or completion of new construction. The assessed value of property that has not incurred a change of ownership or new construction must be adjusted annually to reflect inflation at a rate not to exceed 2% per year based on the State consumer price index. In the event of declining property value caused by substantial damage, destruction, economic or other factors, the assessed value must be reduced temporarily to reflect market value. For the definition of full cash value and more information on property tax limitations and adjustments,see"LIMITATIONS ON TAXES AND REVENUES"herein. The County Assessor determines and enrolls a value for each parcel of taxable real property in the County every year. The value review may result in a reduction in value. Taxpayers in the County also may appeal the determination of the County Assessor with respect to the assessed value of their property. 27002232.5 38 Set forth in Table 11 below is a five-year history of assessed valuations in the District for the fiscal years shown. Table 11 Assessed Valuations of Property in the District Fiscal Years 2011-12 through 2015-16 ($in Billions) Fiscal Year Value Percent Chance 2011-12 $308.7 1.45% 2012-13 316.4 2.49 2013-14 329.3 4.08 2014-15 350.5 6.44 2015-16 372.2 6.19 Source: County of Orange Auditor-Controller. Tax Levies and Delinquencies Property taxes are based on assessed valuation which is determined as described under "DISTRICT REVENUES—Assessed Valuation"herein. In accordance with the California Revenue and Taxation Code, the County tax collector collects secured tax levies for each Fiscal Year. Property taxes on the secured roll are due in two installments, on November 1 and February 1. The District currently participates in the County's Teeter Plan under which the District receives annually 100% of the secured property tax levies and Sewer Service Charges to which it otherwise is entitled,regardless of whether the County has actually collected the levies. This alternative method provides for funding each taxing entity included in the Teeter Plan with its total secured property taxes during the year the taxes are levied, including any amount uncollected at fiscal year-end. Under this plan,the District's general fund receives the full amount of seemed property taxes levied each year on its behalf and, for so long as such plan remains in effect, the participating entities, such as the District, no longer experience delinquent taxes. The County's general fund is the designated recipient of future collections of penalties and interest on all delinquent taxes collected on behalf of participants in this alternative method of apportionment. 27002232.5 39 Set forth in Table 12 below is a five-year history of the District's ad valorem total property tax and Sewer Service Charge levies. Table 12 Total Property Tax and Sewer Service Charge Levies in the District for Fiscal Years 2011-12 through 2015-16 (In Thousands) Total Property Tax and Sewer Fiscal Year Service Charee Lew 2011-12 $314,077 2012-13 340,298 2013-14 356,607 2014-15 362,978 2015-16 375,927 Source: County of Orange Auditor-Controller. Budgetary Process The District's operating fund budget relies on revenues from Sewer Service Charges and property taxes,both of which are collected on the property tax bill, as previously described under the captions'— Sewer Service Charges" and " Additional Revenues." The District receives tax revenues from the County in eight allocations, with the largest receipts in December and April. The District operates on a Fiscal Year beginning each July 1. The operating fund budgets include funds to cover the dry period of each tax year, i.e.,the period from the beginning of the Fiscal Year until the first taxes are received. The dry-period requirement is budgeted at one-half of the annual operating fund budgeted expenditures. The District uses the accrual method of accounting in its budgets. The District has conformed to its budgets for the last five fiscal years and is conforming to its budget for the current fiscal yen. The District's annual budget preparation process begins in January of each year and concludes in June upon its adoption. The General Manager reviews the final operating budgets and then distributes them to the Directors and District Committees for consideration. The Board of Directors then adopts the proposed annual budgets,with any revisions,in June of each year. Budgetary control is exercised at the individual Department level and administrative policies provide guidelines on budget transfers and the authorization necessary to implement transfers. A budget adjustment is a transfer which does not change the total appropriated amount and does not require Board of Directors action. Approval may be granted by the General Manager or the Department Head in certain circumstances. Department Heads have the discretion to reapportion funds between certain line items within a division but may not exceed total appropriated amounts for each department. They may also transfer staff across divisional lines. The General Manager and Board of Directors must approve additional capital outlay items. A budget amendment is an adjustment to the total appropriated amount which was not included in the original budget. These supplemental appropriations require formal action by the Board of Directors. Prior year reserves or fund balances may be appropriated to fund items not previously included in the adopted budget. Reserves or fund balances exceeding minimum amounts required by fiscal policies may be appropriated if it is determined to be in the best interest of the District. Directors may also appropriate reserves in case of emergencies or unusual circumstances. 27002232.5 40 Reserves The District has an established reserve policy with eight separate categories for its reserve funds. Collectively, these individual reserve requirements total over $500 million for each yew of the current ten-year cash flow forecast. Set forth in Table 13 below are the actual reserves at June 30, 2013, June 30, 2014 and June 30, 2015, and projected reserves at June 30,2016 for each fund. Table 13 Cash Reserves June 30,2013 through 2015 and Projected at June 30,2016 (In Millions) Projected 2013 2014 2015 2016 June 30 June 30 June 30 June 30 Cash Flow Requirements Reserve: Operating Expenses $ 76 $ 76 $ 76 $75 Certificates of Participation Payments 98 98 86 92 Operating Contingencies Reserve 15 15 15 15 Capital Improvement Program Reserve 210 275 163 173 Catastrophe and Self Insurance 57 57 57 57 Capital Replacement and Refurbishment 61 61 62 63 Debt Service Required Reserves0) 135 132 129 117 Rate Stabilization Reserve Total $632 $]14 $588 $592 r'r "Debt Service Required Reserves" constitute all amounts held in Obligation Reserve Funds, together with additional amounts held by the District that may be used for the payment of debt service on District obligations in accordance with the District's reserve policy. As of June 30, 2015, $129 million of Debt Service Required Reserves were held in Obligation Reserve Funds, of which $33.0 million is restricted by covenant for the specific obligations for which such Obligation Reserve Funds were established. Source: Orange County Sanitation District. The District's reserves consist of the following components: • The Cash Flow Requirements Reserve was established to fund operation, maintenance and certificates of participation debt service expenses for the first half of the fiscal year, prior to the receipt of the first installment of the property tax allocation and sewer service user fees which are collected as a separate line item on the property tax bill. The level of this reserve is established as the sum of an amount equal to six months operations and maintenance expense and the total of certificates of participation debt service expenses due in the subsequent fiscal yen. • The Operating Contingencies Reserve was established to provide for non-recurring expenditures that were not anticipated when the annual budget and Sewer Service Charges were adopted. The level of this reserve is equal to 10%of the District's annual operating budget. • The Capital Improvement Program Reserve was established to fund annual increments of the Capital Improvement Program with a target level at one-half of the average annual Capital 27002232.5 41 Improvement Program through the year 2020. Levels higher and lower than the target can be expected while the long-term financing and capital improvement programs are being finalized. • The Catastrophic Loss, or Self-Insurance Reserve is established for property damage including fire, flood and earthquake, general liability and workers' compensation. The level of reserve in this fund is maintained at a level to fund the District's non-reimbursed costs which are estimated to be$57 million. • The Capital Replacement and Refurbishment Reserve was established to provide 30% of the funding to replace or refurbish the current collection, treatment and disposal facilities. The current replacement value of these facilities is estimated to be approximately $6.2 billion. The initial reserve level for this fund was established at $50 million and is augmented by interest earnings and a portion of the annual Sewer Service Charges. • Debt Service Required Reserves include trustee-held amounts in any Obligation Reserve Fond and additional amounts held by the District for the payment of debt service in accordance with the District's reserve policy. The District's current policy is to maintain reserves (including trustee- held reserves) for debt service in the amount of 10% of the principal amount of the District's outstanding debt obligations. • The Rate Stabilization Reserve accumulates all available funds which exceed the targets for all other reserves. The Rate Stabilization Reserve is a separate fund from the Rate Stabilization Account established under the Trust Agreement. There is currently no established target for this reserve and,because the reserves of all other funds have not been exceeded, the reserve level for this reserve fund has been zero for Fiscal Years 2012-13 through 2015-16. • In Fiscal Year 2009-10, Financial Management staff and the Board of Directors concluded that given the nature of the likely events that may cause a withdrawal from the District's reserves and the degree of overlap among reserve categories,the total amount reserved need not equal the sum of each separate reserve category. As a result, the District adjusted the application of its reserve policy, leading to a reduction of $40 million of the accumulated total, or approximately 8%. Reserve levels are calculated in accordance with the District's reserve policy. Summary of Operating Data Set forth in Table 14 below is a summary of historic operating results for the District for Fiscal Years 2010-11 through Fiscal Year 2014-15. The information presented in the summary should be read in conjunction with the financial statements and notes. See APPENDIX A — "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED JUNE 30,2015." 27002232.5 42 Table 14 Summary of District Historical Revenues and Expenses and Other Financial Information For Fiscal Years 2010-11 through 2014-15 ($in Millions) Audited 2010-11 2011-12 2012-13 2013-14 2014-15 Revenues: Residential&Commercial Sewer Service Charges(') Regional $213.3 $232.2 $258.6 $267.8 $260.5 Local 5.7 5.7 5.8 5.7 5.5 Industrial Sewer Service Charges 10.1 9.5 13.5 14.4 14.2 Revenue Area No. 14 Fees 21.4 18.0 27.5 23.6 28.3 Ad Valorem Taxes 64.3 67.9 77.3 72.8 77.6 Interest Earnings 10.1 15.7 (3.6) 6.1 4.8 Other Revenues 5.7 3.6 4.6 5.1 6.2 Total Revenues $330.6 $352.6 $383.7 $395.5 $397.1 Operations and Maintenance Expenses(') 143.4 172.30) 149.8 146.4 149.2 Net Revenues S1 R7 2 $180 3 $233 9 SUE S247.9 Debt Service $ 72, $ 65.4 S 77, $ 92.8 $$1 5 Coverage Ratios 2.59x 2.76x 3.01x 2.68x 3.04x IJAAL Payment(°) S1250 CIP Outlay S160,Z $101.7 S 97.6 $ 87.5 5182.6 Ending Reserves S597 0 $608 0 $651.8 $713 7 S588 0 o) Net of rebates,if any,to commercial users. (2) Excludes depreciation and amortization expenses. (s) Includes a one-time write-down of$34.2 million for costs of feasibility studies to properly conform to generally accepted accounting principles. These costs were previously capitalized and were being amortized over a five- year period. (4) As of July 1,2014,the District had an unfunded acmarial seemed pension liability in its defined pension benefit plan administered by the Orange County Employees Retirement System of$194 million. In Fiscal Year 2014- 15,the District paid down$125 million of this liability. Source: Orange County Sanitation District. 27002232.5 43 Forecasted Operating Data Set forth in Table 15 below are forecasted operating results for the District for Fiscal Years 2015-16 through 2019-20. These projections assume the number of projects and scheduled build out set forth in the 2015 CIP Validation Study, and reflect the Board-approved annual rate increases of 1.90%, 1.55% and 1.22% for Fiscal Year 2015-16, Fiscal Year 2016-17, and Fiscal Year 2017-18, respectively. Principal expenditure components of these projections are derived from the 2015 CIP Validation Study, which identified 85 large capital projects with a 10-year projected outlay of$1.7 billion. Much of the construction is scheduled during the next five years, with average annual capital outlays of $164.5 million. The District's CIP cash flow budget for Fiscal Year 2015-16 is$181.9 million. This CIP budget finances joint works treatment and disposal system improvement projects, and collection system improvement projects. The preparation of such projections was based upon certain assumptions and certain forecasts with respect to conditions that may occur in the future. While the District believes that these assumptions and forecasts are reasonable for the purposes of the projected selected operating data,it makes no representation that they will in fact occur. To the extent that actual future conditions differ from those assumed herein,the data will vary. [Remainder of page intentionally left blank.] 27002232.5 44 Table 15 Summary of Forecasted District Revenues and Expenses and Other Financial Information for Fiscal Years 2015-16 through 2019-20 ($in Millions)(" 2015-16 2016-17 2017-18 2018-19 2019-20 Revenues Residential&Commercial Sewer Service Charges(') $ 294.1 $ 299.6 $ 299.2 $ 303.8 $ 309.4 Industrial Sewer Service Charges 13.6 13.8 13.9 14.1 14.3 IRWD Assessments 13.7 8.9 4.6 5.4 6.2 SAWPA Assessments 2.7 2.8 2.9 3.0 3.1 Ad Valorem Taxes 88.5 93.0 97.6 102.5 107.6 Interest Earnings 6.1 9.0 9.7 13.7 17.1 Other Revenues 1.5 2.1 2.2 2.2 2.2 Total Revenues 420.2 429.2 430.1 444.7 459.9 Build America Bonds Federal Subsidy 5.1 5.1 5.1 5.1 5.1 Operations and Maintenance Expenses (149.3) (150.4) (151.8 1 1( 57.81 (164.1) Net Revenues(') S 276.0 S 283 283. S 292.0 $ 2�.9 Debt Service $ 91.8 $ 96.8 $ 92.8 $ 91.3 $ 91.3 Build America Bonds Federal Subsidy 5.1 5.1 5.1 5.1 5.1 Gross Debt Service 96 h 1.9 01.9 97.9 96.4 h 96.4 Coverage Ratiosl3l 2.85x 2.7 2.89 3.03x 3.11x CIP Outlays S 175.0 S 128.5 S 114. S 150.3 18 .2 Replacement,Refurbishment and Rehabilitation(4) $ $ 3.7 S 20, S 31.4 $ 50.6 Ending Reserves $592 0 $620.7 $680,4 $703.8 $679.7 (D Assumptions: a) Annual growth in equivalent dwelling units is projected to average 0.3%over the next five years. b) The Residential, Commercial, and Industrial Sewer Service Charge forecasts are based on the total projected equivalent dwelling units, the actual rate increase of 1.9% in Fiscal Year 2015-16, Board approved rate increases for Fiscal Years 2016-17 and 2017-18 averaging 1.4%per year and additional rate increases over the next two years averaging 1.4%per year. c) Revenue Area No. 14 Fees are derived based on the projected contribution of sewage flows to the District from the Irvine Ranch Water District. d) Ad Valorem Taxes are projected with annual increases of 5%. e) Interest earnings are projected to average 2.0%of annual cash balances. I) Operating and Maintenance Expenses are forecasted with a base increase of 1.0%per year for Fiscal Years 2015-16 through 2017-18 with adjustments for known periodic outlays that do not occur annually. g) Annual CIP Outlays are based on the cash flow projections developed from the CIP Validation Study,with adjustments for CIP savings and deferrals. ca) Reflects projected reduction of approximately$6 million annually in Sewer Service Charge revenues beginning in Fiscal Year 2017-18 due to expected transfer of local sewers currently owned by the District to another public agency. (3) Calculated in accordance with the Master Agreement and the Installment Purchase Agreement. (4) Replacement, Refurbishment &Rehabilitation me known future capital outlays that have been identified within the District's Asset Management program but have not yet been developed into specific proposed projects and included within the CIP Program. Source: Orange County Sanitation District. 27002232.5 45 Management's Discussion and Analysis of Operating Data The District's Fiscal Year 2015-16 total operating, capital improvement, debt service, and other financing requirement budget is $469.7 million, a 15.3% decrease over the prior year budget of$554.4 million. This overall decrease is primarily attributable to a planned reduction of$125 million in long- term liabilities in Fiscal Year 2014-15 and an additional planned reduction of$50 million in Fiscal Year 2015-16. These planned reductions resulted from pushing back a portion of the Fiscal Year 2013-14 CIP program into fixture years and the receipt of unexpected one-time revenues in Fiscal Year 2013-14. The $125 million reduction in Fiscal Year 2014-15 and the$50 million reduction in Fiscal Year 2015-16 each consists of a pay-down of a portion of the $194 million unfunded accrued actuarial pension liability as of July 1, 2014. Excluding these planned reductions the total approved cash flow budget for Fiscal Year 2015-16 totals S420 million, a 2% decrease over the prior year. This overall decrease consists of a decrease in capital outlay of $11.5 million or 6.2%, an increase in debt service requirements of $5.8 million or 6.3%,and a decrease in operating expenses of$2.8 million or 1.8%. The Fiscal Year 2015-16 approved budget to operate, maintain and manage the District's sewage collection, treatment and disposal system is $151.9 million, a decrease of 1.8%. Personnel costs have decreased by $4.4 million, or 4.4%, due primarily to the projected savings of$8.9 million in employee retirement premiums as the District's employer contribution rates have dropped approximately 45.5%due to the $125 million lump sum payment against the unfunded actuarial accrued liability in Fiscal Year 2014-15. These retirement savings were partially offset by increased salaries of$2.8 million attributable to provisions of the existing bargaining unit agreements. As of December 31,2015,there were 51 vacant positions, or 8.2%of the total budgeted staffing level of 624.0 full-time equivalent positions. Operating materials and supplies are budgeted to increase by$1.4 million or 8.9% over the prior year. Of this increase, $1.2 million or 9.4% over the prior year represents increases in chemicals used throughout the treatment plants for enhanced settling and separation of solids, odor control and disinfection. These increases are reflected of increases in unit cost and in the quantity being used. Repairs and maintenance costs were approved at a decrease of $0.8 million or 6.1%. This decrease is mostly attributable to decreases in basic repairs and maintenance costs including the scheduling of one central generation engine overhaul totaling$893,000 in the prior year. In preparation of the Fiscal Yew 2016-18 biennium budget, District staff will be developing for the Board of Directors a Capital Improvement Program to deliver the levels of service included in the District's five-year rolling Strategic Plan. These levels of service and associated capital projects are included in the Strategic Plan, last updated in November 2015. In addition, District staff validated the active CIP projects currently being executed to ensure that the scope of work on the active projects remains appropriate, and that the cost estimates have been accurately updated. The Fiscal Year 2015-16 CIP cash flow budget was approved at $181.9 million. After factoring in CIP savings and deferrals, this CIP budget was reduced by $6.9 million to $175.0 million. The 2015 validated CIP includes 85 large capital projects with 10-year outlays totaling$1.7 billion. The completion of the CIP Validation Study in 2013 reaffirmed the need for rate increases in future years. Based on the results of the CIP Validation Study and the Strategic Plan, the Bond of Directors adopted Ordinance No. OCSD-41, increasing the sanitary sewer service charges by approximately 4.8% in Fiscal Year 2013-14, and by an average of 2.4% over the following four years. These rate increases were approved by a vote of two-thirds of the members of the Board of Directors and are not subject to reaffirmation in any of the future fiscal years covered by this five-year period. Following the first two years of this rate plan, however, District staff recommended and the Board of Directors approved a reduction of the rate increase for the last three years of the plan, lowering the 27002232.5 46 average of these increases from 2.4% to 1.6%. This action resulted in the single family residence user rate, the basis for all sewer user fee rates, increasing from$316 in Fiscal Year 2014-15 to $322 in Fiscal Year 2015-16. See"DISTRICT REVENUES—Sewer Service Charges." Investment of District Funds State statutes authorize the District to invest in obligations of the United States Government,state and local governmental agencies, negotiable certificates of deposits, bankers acceptances, commercial paper, reverse repurchase agreements and a variety of other investment instruments which are allowable under California Government Code Section 53600 et seq. All District funds, except for Obligation Reserve Funds controlled by a bank trustee pursuant to the provisions of Existing Senior Obligations, are managed by an external money manager, Pacific Investment Management Company. Mellon Trust serves as the District's independent custodian bank for its investment program. Callan Associates serves as the District's independent advisor. As of December 31, 2015, the District's externally managed fund consisted of a short-term investment portfolio of$132.0 million with an average maturity of 77 days, and a long-term investment portfolio of$314.9 million with average maturities of 2.9 years. Investments consist of United States government securities, corporate bonds and commercial paper. The District's portfolio contains no structured investment vehicles("SlVs")or reverse repurchase agreements. Deposits in banks are maintained in financial institutions which provide deposit protection on the bank balance from the Federal Deposit Insurance Corporation. The California Government Code requires State banks and savings and loans to secure local government deposits by pledging government securities equal to 110% of the deposits or by pledging first trust deed mortgage notes equal to 150% of the deposits. The District's Investment Policy requires that the District invest public fonds in a manner which ensures the safety and preservation of capital while meeting reasonable anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the investment of public fonds. The primary objectives, in order, of the District's investment activities are safety, liquidity and return on investment. FINANCIAL OBLIGATIONS Existing Indebtedness Currently, the District has Senior Obligations Outstanding payable on a parity with the Revenue Obligations. The table below describes the District's outstanding parity certificates of participation as of February 2, 2016. The payment obligations in connection with each series of these certificates of participation constitute Senior Obligations,subject to the provisions of the Master Agreement and shall be afforded all of the benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District has no general obligation bonds or subordinate bonds outstanding. 27002232.5 47 Table 16 Outstanding Senior Obligations As of February 2,2016 Original Principal Issue Outstanding Final Amount Date Balance Maturi 2007A Certificates $ 95,180,000 05/22/07 $ 91,885,000 02/01/30 2007B Certificates 300,000,000 12/20/07 7,110,000 02/01/17 2008B Certificates 27,800,000 09/11/08 8,815,000 08/01/16 2009A Certificates(0 200,000,000 05/07/09 176,185,000 02/01/39 2010A Revenue Obligations 80,000,000 05/18/10 80,000,000 02/01/40 2010C Revenue Obligations 157,000,000 11/29/10 157,000,000 02/01/44 2011A Revenue Obligations 147,595,000 10/03/11 111,465,000 02/01/26 2012A Revenue Obligations 100,645,000 03/22/12 100,645,000 02/01/33 2012B Revenue Obligations 66,395,000 08/16/12 66,395,000 02/01/26 2014A Revenue Obligations 85,090,000 08/07/14 85,090,000 02/01/27 2014B Certificates(') 120,850,000 10/08/14 120,850,000 11/15/16(2) 2015A Revenue Obligations 127,510.000 02/12/15 127,510.000 02/01/37 Total Senior Obligations 1.SORA65.000 1.132950.00 0) Includes the Refunded 2009A Certificates to be refunded with the proceeds of the Revenue Obligations. See "REFUNDING PLAN"herein. (r) The District may in the future refund the 2014B Certificates with Senior Obligations amortizing over a term of approximately 20 years. In connection with the execution and delivery of the above-referenced outstanding certificates of participation, the District entered into certain installment purchase agreements, or equivalent documents, providing for the payment of installment payments or similar payments. Anticipated Financings From time to time the District may incur other obligations to finance portions of the CIP. Over the next five years, however, the District does not expect to issue any additional debt, other than refunding debt. The District expects to refund outstanding obligations from time to time, such as the 2014B Certificates mentioned in Table 16 above. Direct and Overlapping Bonded Debt The aggregate direct and overlapping bonded debt of the District as of June 30, 2015 is set forth on page 64 of Appendix A. THE CORPORATION The Corporation was organized on June 19, 2000 as a nonprofit public benefit corporation pursuant to the Nonprofit Public Corporation law of the State. The Corporation's purpose is to render assistance to the District in its acquisition of equipment,real properly and improvements on behalf of the District. Under its articles of incorporation, the Corporation has all powers conferred upon nonprofit public benefit corporations by the laws of the State,provided that it will not engage in any activity other than that which is necessary or convenient for, or incidental to the purposes for which it was formed. 27002232.5 48 The Corporation is a separate legal entity from the District. It is governed by a twenty-five member Board of Directors. The Corporation has no employees. All staff work is performed by employees of the District. The members of the Corporation's Board of Directors are the Board of Directors of the District. The District's Director of Finance and Administrative Services and other District employees are available to provide staff support to the Corporation. The Corporation has not entered into any material financing arrangements other than those referred to in this Official Statement. Further information concerning the Corporation may be obtained from the Orange County Sanitation District office at 10844 Ellis Avenue, Fountain Valley, California, 92708-7018. LIMITATIONS ON TAXES AND REVENUES Article XIIIA of the California Constitution On June 6, 1978, California voters approved Proposition 13 ("Proposition 13"), which added Article XIIIA to the State Constitution ("Article XIIIA"). Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof,except that additional ad valorem taxes may be levied to pay debt service on (i)indebtedness approved by the voters prior to July 1, 1978,(it)(as a result of an amendment to Article XIIIA approved by State voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-third of the voters on such indebtedness, and (iii)bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures are included in the proposition. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash value," or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." The fall cash value may be adjusted annually to reflect inflation at a rate not to exceed 2%per year or to reflect a reduction in the consumer price index or comparable data for the area under the taxing jurisdiction, or reduced in the event of declining property values caused by substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law,local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law,local agencies are no longer permitted to levy directly any property tax(except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to a local agency continues as part of its allocation in future years. 27002232.5 49 Beginning in the 1981-82 fiscal year, assessors in the State no longer record property values on tax rolls at the assessed value of 25%of market value which was expressed as$4 per$100 assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1 per$100 of taxable value. All taxable property value included in this Official Statement is shown at 1000/. of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value. Article XIIIB of the California Constitution An initiative to amend the State Constitution entitled"Limitation of Government Appropriations" was approved on September 6, 1979, thereby adding Article XIBB to the State Constitution ("Article XIIIB"). Under Article XIIIB,the State and each local governmental entity has an annual"appropriations limit" and is not permitted to spend certain moneys that are called "appropriations subject to limitation" (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the appropriations limit. Article XIBB does not affect the appropriations of moneys that are excluded from the definition of"appropriations subject to limitation,"including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved by the voters. In general terms, the appropriations limit is to be based on certain 1978-79 expenditures, and is to be adjusted annually to reflect changes in consumer prices, populations, and services provided by these entities. Among other provisions of Article XIIIB, if these entities' revenues in any year exceed the amounts permitted to be spent,the excess would have to be retained by revising tax rates or fee schedules over the subsequent two years. "Appropriations subject to limitation" are authorizations to spend `proceeds of taxes," which consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed`the cost reasonably borne by such entity in providing the regulation, product or service,"but"proceeds of taxes" excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of funds which are not "proceeds of taxes," such as reasonable user charges or fees, and certain other non- tax funds. Not included in the Article XIIIB limit are appropriations for the debt service costs of bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government and appropriations for qualified capital outlay projects. The appropriations limit may also be exceeded in certain cases of emergency. The appropriations limit for the District in each year is based on the District's limit for the prior year, adjusted annually for changes in the cost of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the District's option, either(1)the percentage change in State per capita personal income, or (2) the percentage change in the local assessment roll on nonresidential property. Either test is likely to be greater than the change in the cost of living index, which was used prior to Proposition 111. Change in population is to be measured either within the jurisdiction of the District or the County as a whole. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of the aggregate "proceeds of taxes" received by a District over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years. As originally enacted in 1979, the District's appropriations limit was based on 1978-79 authorizations to expend proceeds of taxes and was adjusted annually to reflect changes in cost of living and population (using different definitions, which 27002232.5 50 were modified by Proposition 111). Starting with Fiscal Year 1990-91,the District's appropriations limit was recalculated by taking the actual Fiscal Year 1986-87 limit, and applying the annual adjustments as if Proposition 111 had been in effect. The District does not anticipate that any such appropriations limitations will impair its ability to make Installment Payments as required by the Installment Purchase Agreement. Proposition lA and Proposition 22 Proposition I ("Proposition lA"), proposed by the Legislature in connection with the 2004-05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004-05 and 2005-06. Proposition lA provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition lA generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year,as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition IA provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8%of local government property tax revenues,which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. Such a shift may not occur more than twice in any ten-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition IA was generally superseded by the passage of a new initiative constitutional amendment at the November 2010 election, known as Proposition 22 ("Proposition 22"). The effect of Proposition 22 is to prohibit the State, even during a period of severe fiscal hardship, from delaying the distribution of tax revenues for transportation,redevelopment, or local government projects and services. It prevents the State from redirecting redevelopment agency property tax increment to any other local government or from temporarily shifting property taxes from cities, counties and special districts to schools. This is intended to, among other things, stabilize local government revenue sources by restricting the State's control over local property taxes. Prior to the passage of Proposition 22, the State invoked Proposition lA to divert $1.935 billion in local property tax revenues in fiscal year 2009-10 from cities, counties,and special districts to the State to offset State general fund spending for education and other programs. Approximately$5 million of the District's property tax revenues were diverted to the State as a result of this Proposition lA suspension. The District participated in a Proposition IA Securitization Program (the "Program") sponsored by the California Statewide Communities Development Authority. The Program allowed the District to exchange its anticipated State property tax receivable for an equal amount of cash. In addition,the State's adopted 2009-10 budget included a $1.7 billion diversion in local property tax revenues from local redevelopment agencies. Many California Redevelopment Association members are actively engaged in litigation to block such diversion and recoup certain payments already made under certain legislation passed in July 2009 that is beyond the reach of Proposition 22,known as"ABX4 26." Proposition IA also provides that if the State reduces the vehicle license fee ("VLF") rate currently in effect, 0.65% of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition lA requires the State to suspend State mandates affecting 27002232.5 51 cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. Article XIIIC and Article XIIID of the California Constitution Proposition 218, a State ballot initiative (mown as the "Right to Vote on Taxes Act," was approved by the voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the California Constitution, creating additional requirements for the imposition by most local governments of "general taxes,""special taxes,""assessments,""fees,"and"charges." Proposition 218 became effective, pursuant to its terms, as of November 6, 1996, although compliance with some of its provisions was deferred until July 1, 1997, and certain of its provisions purport to apply to any tax imposed for general governmental purposes (Le., "general taxes") imposed, extended or increased on or after January 1, 1995 and prior to November 6, 1996. Article XIIID imposes substantive and procedural requirements on the imposition, extension or increase of any"fee" or"charge" subject to its provisions. A "fee" or"charge" subject to Article XIIID includes any levy, other than an ad valorem tax, special tax or assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or charge, in the event written protests against the proposed fee or charge are presented at a required public hearing on the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be imposed. Except for fees and charges for water, sewer and refuse collection services, the approval of a majority of the property owners subject to the fee or charge,or at the option of the agency,by a two-thirds vote of the electorate residing in the affected area, is required within 45 days following the public hearing on any such proposed new or increased fee or charge. The California Supreme Court decisions in Richmond v. Shasta Community Services District, 32 Ca1.4th 409 (2004) (`Richmond"), and Bighorn- Desert View Water Agency v. Verjil, 39 CalAth 205 (2006) (Bighorn') have clarified some of the uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In Richmond, the Shasta Community Services District charged a water connection fee, which included a capacity charge for capital improvements to the water system and a fire suppression charge. The Court held that both the capacity charge and the fire suppression charge were not subject to Article XIIID because a water connection fee is not a property-related fee or charge because it results from the property owner's voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the Court stated that a fee for ongoing water service through an existing connection is imposed "as an incident of property ownership" within the meaning of Article XIIID, rejecting, in Bighorn, the water agency's argument that consumption-based water charges are not imposed "as an incident of property ownership"but as a result of the voluntary decisions of customers as to how much water to use. Article XIIID also provides that"standby charges"are considered"assessments"and must follow the procedures required for "assessments" under Article XIIID and imposes several procedural requirements for the imposition of any assessment, which may include (1) various notice requirements, including the requirement to mail a ballot to owners of the affected property; (2) the substitution of a property owner ballot procedure for the traditional written protest procedure,and providing that"majority protest" exists when ballots (weighted according to proportional financial obligation) submitted in opposition exceed ballots in favor of the assessments; and (3) the requirement that the levying entity "separate the general benefits from the special benefits conferred on a parcel"of land. Article XIIID also precludes standby charges for services that are not immediately available to the parcel being charged. Article XIIID provides that all existing, new or increased assessments are to comply with its provisions beginning July 1, 1997. Existing assessments imposed on or before November 5, 1996, and 27002232.5 52 "imposed exclusively to finance the capital costs or maintenance and operations expenses for [among other things] water" are exempted from some of the provisions of Article XIIID applicable to assessments. Article XBIC extends the people's initiative power to reduce or repeal existing local taxes, assessments, fees and charges. This extension of the initiative power is not limited by the terms of Article XIIIC to fees, taxes, assessment fees and charges imposed after November 6, 1996 and absent other authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. In Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public agency's water rates and delivery charges. The Court noted, however, that it was not holding that the authorized initiative power is free of all limitations, stating that it was not determining whether the electorate's initiative power is subject to the public agency's statutory obligation to set water service charges at a level that will "pay the operating expenses of the agency, . . . provide for repairs and depreciation of works,provide a reasonable surplus for improvements,extensions,and enlargements,pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due." The District implemented a five-year plan beginning in Fiscal Year 2002-03 which included a rate increase of$7.50 per year, or 9.4%, for all ratepayers to$87.50 per year. In May 2003,the Board of Directors approved a 15%rate increase per year, for each year, over the then following five years, upon 2/3 vote of the Board of Directors after conducting a noticed public hearing in compliance with Article XBID. The Board of Directors considered this increase necessary to provide needed capital improvements,to cover additional treatment and disinfection costs, and to minimize rate increases over an extended period of time. On July 2, 2003, the Board of Directors adopted Ordinance No. OCSD-20 increasing sanitary sewer service charges for all single family and multi-family residential units as well as most commercial and industrial properties. The Ordinance was adopted by a 2/3 vote of the Board of Directors as required under law after conducting a noticed public hearing in compliance with all laws. The Ordinance increases the amount of the annual charges by approximately 15%per year for each of the following five years, commencing with Fiscal Year 2003-04, thereby raising the single family residence user rate from the then current$87.50 to $100.00, $115.00,$132.00, $152.00, and$175.00 annually. The Ordinance discounted by 5%the annual increases which were the subject of the required protest hearings on the fee increase as described above. After the completion of the CIP Validation Study for Fiscal Year 2005-06 that increased its ten year CIP cash flow projects to $2.2 billion, or an average of$220 million per year, the Board of Directors adopted Ordinance No. OCSD-26 increasing the Fiscal Year 2005-06 single family residential rate 31%, from$115 to $151 for such year. In May 2006, the Board of Directors adopted Ordinance No. OCSD-30B increasing the Fiscal Year 2006-07 single family residential rate 9.8%, from$151.00 to $I65.80 for such year, except those located in Revenue Area 14. These increases represented the increase permitted under the protest hearings on the fee increase which was held in 2003. In June 2007, the Board of Directors adopted Ordinance No. OCSD-32 increasing the Fiscal Year 2007- 08 single family residential rate by 9.8%. In February 2008, after a noticed public hearing, the Board of Directors adopted Ordinance No. OCSD-35, which provides for annual increases in the single family residential rate of 10.4%, 10.0%, 10.4%, 9.4%and 10.1%,respectively, for Fiscal Yews 2008-09 through 2012-13. On March 27, 2013, the Board of Directors adopted Ordinance No. OCSD-41 approving increases in its sanitary sewer service charges for all single family residences, multi-family residential units, and all non-residential properties. The Board of Directors increased the single family residential rate, which is the basis for all of the District's sewer service charges, by 4.8% for Fiscal Year 2013-14 and thereafter by an average of 2.4%annually for each Fiscal Year through Fiscal Year 2017-18. Pursuant to the Master Agreement, the District will, to the extent permitted by law, fix,prescribe and collect fees and charges for the services of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for 27002232.5 53 such Fiscal Year, and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but will not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. If service charges are determined to be subject to Article XIIID, and proposed increased service charges cannot be imposed as a result of a majority protest, such circumstances may adversely affect the ability of the District to generate revenues in the amounts required by the Master Agreement, and to make Installment Payments as provided in the Installment Purchase Agreement. No assurance may be given that Articles XIDC and XIIID will not have a material adverse impact on Net Revenues. Other Initiative Measures Articles XIIIA, XIIIB, XIIIC and XIIID were adopted pursuant to California's constitutional initiative process. From time to time other initiative measures could be adopted by California voters, placing additional limitations on the ability of the District to increase revenues. LEGAL MATTERS The validity of the Revenue Obligations and certain other legal matters me subject to the approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel to the District. A complete copy of the proposed form of Special Counsel opinion is attached as Appendix F hereto. Special Counsel, in its capacity as Special Counsel to the District,undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed on for the District and the Corporation by Woodruff, Spradlin & Smart, a Professional Corporation, Costa Mesa, California, and for the District by Norton Rose Fulbright US LLP, Disclosure Counsel to the District. FINANCIAL ADVISOR The District has retained Public Resources Advisory Group as an independent registered municipal advisor(the"Financial Advisor")in connection with the execution and delivery of the Revenue Obligations. The Financial Advisor bas not been engaged, nor have they undertaken, to audit, authenticate or otherwise verify the information set forth in the Official Statement, or any other related information available to the District, with respect to accuracy and completeness of disclosure of such information. The Financial Advisor has reviewed this Official Statement but makes no guaranty, warranty or other representation respecting accuracy and completeness of the information contained in this Official Statement. ABSENCE OF LITIGATION There is no action, suit,proceeding, inquiry or investigation,at law or in equity,before or by any court, regulatory agency, public board or body, pending or, to the best knowledge of the District, threatened against the District affecting the existence of the District or the titles of its directors or officers to their offices or seeking to restrain or to enjoin the sale or delivery of the Revenue Obligations, the application of the proceeds thereof in accordance with the Trust Agreement, or in any way contesting or affecting the validity or enforceability of the Revenue Obligations, the Trust Agreement, the Master Agreement, the Installment Purchase Agreement or any action of the District contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement, or contesting the powers of the District or its authority with respect to the Revenue Obligations or any action 27002232.5 54 of the District contemplated by any of said documents, nor, to the knowledge of the District is there any basis therefor. There is no action, suit,proceeding, inquiry or investigation,at law or in equity,before or by any court, regulatory agency, public board or body pending or, to the best knowledge of the District, threatened against the District contesting or affecting the ability of the District to collect amounts from which Installment Payments are payable, or which would have a material adverse effect on the District's ability to make Installment Payments. FINANCIAL STATEMENTS The basic financial statements of the District included in Appendix A to this Official Statement have been audited by McGladrey LLP, independent certified public accountants. See APPENDIX A— "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED TUNE 30, 2015" herein. The District has received the Government Finance Officers Association Certificate of Achievement for "Excellence in Financial Reporting" for over 20 consecutive years. The audited financial statements, including the footnotes thereto, should be reviewed in their entirety. McGladrey LLP, the District's independent auditor, has not been engaged to perform, and has not performed, since the date of its report included in Appendix A,any procedures on the financial statements addressed in that report. McGladrey LLP also has not performed any procedures relating to this Official Statement. TAX MATTERS Tax Exemption The Internal Revenue Code of 1986 (the"Code")imposes certain requirements that must be met subsequent to the execution and delivery of the Installment Purchase Agreement for the interest component of each Installment Payment (the "Interest Component"), and the allocable portion thereof distributable in respect of each Revenue Obligation(each a "Certificate Interest Distribution"),to be and remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Noncompliance with such requirements could cause such amounts to be included in gross income for federal income tax purposes retroactive to the date of delivery of the Installment Purchase Agreement and the Revenue Obligations. The District has covenanted to maintain the exclusion of the Interest Components and the Certificate Interest Distributions from the gross income of the owners thereof for federal income tax purposes. Upon the execution and delivery of the Installment Purchase Agreement,Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel, will deliver its opinion that under existing law, and assuming compliance with the covenants referred to herein, each Interest Component, and each Certificate Interest Distribution in respect thereof,is excluded pursuant to section 103(a)of the Code from the gross income of the owner thereof for federal income tax purposes. Further, on that same day Special Counsel will render its opinion,based solely on the foregoing, and upon existing provisions of the laws of California, that each Interest Component, and each Certificate Interest Distribution in respect thereof, is exempt from personal income taxes of the State of California. Special Counsel will render its further opinion that, under existing statutes, regulations, rulings and court decisions, the Installment Purchase Agreement will not constitute a "specified private activity bond" within the meaning of section 57(a)(5) of the Code and, therefore, that neither any Interest Component, nor any Certificate Interest Distribution in respect thereof, will be treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of an Interest Component allocable to, or Certificate Interest Distribution in respect of a Revenue Obligation owned by, a corporation may 27002232.5 55 affect the computation of the alternative minimum taxable income of that corporation. A corporation's alternative minimum taxable income is the basis upon which the alternative minimum tax imposed by section 55 of the Code is computed. Pursuant to the Installment Purchase Agreement and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the District in connection with the execution and delivery of the Installment Purchase Agreement, and the issuance of the Revenue Obligations, the District will make representations relevant to the determination of, and will make certain covenants regarding or affecting, the exclusion of the Interest Component of the Installment Payments, and of each Certificate Interest Distribution in respect thereof, from the gross income of the owners thereof for federal income tax purposes. In reaching its opinions described above, Special Counsel will assume the accuracy of each such representation and the present and future compliance by the District with each of its covenants. Except as stated in this section above, Special Counsel will express no opinion as to any federal or state tax consequence of the receipt or accrual of an Interest Component of an Installment Payment, or of a Certificate Interest Distribution in respect thereof, or of the ownership or disposition of, a Revenue Obligation. Furthermore, Special Counsel will express no opinion as to any federal, state or local tax law consequences with respect to the Installment Purchase Agreement or the Revenue Obligations, or of the Interest Components or Certificate Interest Distributions in respect thereof, if any action is taken with respect to the Installment Purchase Agreement, or the use or investment of proceeds thereof, the Trust Agreement or the Revenue Obligations predicated or permitted upon the advice or approval of other counsel. Special Counsel has not undertaken to advise in the future whether any events after the date of execution and delivery of the Installment Purchase Agreement may affect the tax status of Interest Components or Certificate Interest Distributions or the tax consequences of the ownership of a Revenue Obligation. Special Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the District described above. No ruling has been sought from the Internal Revenue Service (the `Service") with respect to the matters addressed in the opinion of Special Counsel, and Special Counsel's opinion is not binding on the Service. The Service has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Installment Purchase Agreement and Revenue Obligations is commenced, under current procedures the Service is likely to treat the District as the "taxpayer,"and the owners of the Revenue Obligations would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the Interest Components and Certificate Interest Distributions, the District may have different or conflicting interests from the owners. Public awareness of any future audit of the Installment Purchase Agreement and Revenue Obligations could adversely affect the value and liquidity of the Revenue Obligations during the pendency of the audit,regardless of its ultimate outcome. Existing law may change to reduce or eliminate the benefit to bondholders of the exclusion of interest on the Interest Components and Certificate Interest Distributions accrued in respect of Revenue Obligations from gross income for federal income tax purposes. Any proposed legislation or administrative action,whether or not taken, could also affect the value and marketability of the Revenue Obligations. Prospective purchasers of the Revenue Obligations should consult with their own tax advisors with respect to any proposed or future changes in tax law. A copy of the proposed form of opinion of Special Counsel relating to the Revenue Obligations is included in Appendix F. 27002232.5 56 Tax Accounting Treatment of Bond Premium and Original Issue Discount For purposes of the following discussion, each Revenue Obligation should be treated as a debt instrument, the scheduled payments of principal of and interest on which are the scheduled distributions of Installment Principal and Installment Interest, respectively, to be allocated to that Revenue Obligation in accordance with the terns of the Installment Purchase Agreement and Revenue Obligation. To the extent that a purchaser of a debt instrument acquires that debt instrument at a price that exceeds the aggregate amount of scheduled interest payments (other than payments of"qualified stated interest" as defined in section 1.1273-1 of the Treasury Regulations) to be made on that debt instrument (determined, in the case of a prepayable debt instrument, under the assumption described below) (the "stated redemption price at maturity" of the instrument), such excess will constitute "bond premium" under the Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder,provide generally that bond premium on a tax-exempt obligation must be amortized on a constant yield,economic accrual, basis; the amount of premium so amortized will reduce the owner's basis in such obligation for federal income tax purposes, but such amortized premium will not be deductible for federal income tax purposes. In the case of a purchase of a Revenue Obligation that is subject to redemption(in whole or in part)upon a permitted optional prepayment of an Installment Payment, the detem»nation whether there is amortizable bond premium, and the computation of the accrual of that premium, must be made under the assumption that the Installment Payment will be prepaid on the permitted date that would minimize the yield on the Revenue Obligation (or that the Revenue Obligation will not be prepaid prior to the stated maturity date in respect of that Revenue Obligation if that would minimize the purchaser's yield). The rate and timing of the amortization of the bond premium and the corresponding basis reduction may result in an owner realizing a taxable gain when a Revenue Obligation owned by such owner is sold or disposed of for an meant equal to or in some circumstances even less than the original cost of the Revenue Obligation to the owner. The excess,if any, of the stated redemption price at maturity of a Revenue Obligation of a stated maturity over the initial offering price to the public of the Revenue Obligations of that stated maturity set forth on the inside cover page of this Official Statement is `original issue discount" Original issue discount accruing in respect of a Revenue Obligation is treated for federal income tax and California personal income tax purposes as additional interest in respect of that debt instrument and is excluded from the gross income of the owner thereof for federal income tax purposes and exempt from the California personal income tax to the same extent as would be stated interest on that debt instrument. Original issue discount accruing in respect of any Revenue Obligation purchased at its initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term to the stated maturity date in respect of the Revenue Obligation on the basis of a constant yield method and, within each semiannual period, will accrue on a ratable daily basis. The amount of original issue discount in respect of such a Revenue Obligation accruing during each period is added to the adjusted basis of such Revenue Obligation to determine taxable gain upon disposition (including upon sale, prepayment or payment on maturity) of such Revenue Obligation. The Code includes certain provisions relating to the accrual of original issue discount in the case of a purchaser of a Revenue Obligation who purchases that Revenue Obligation other than at the initial offering price and pursuant to the initial offering of that Revenue Obligation. Any person considering purchasing a Revenue Obligation at a price that includes bond premium should consult his or her own tax advisors with respect to the amortization and treatment of such bond premium, including, but not limited to, the calculation of gain or loss upon the sale, prepayment or other disposition of the Revenue Obligation. Any person considering purchasing a Revenue Obligation of a maturity in respect of which there is original issue discount should consult his or her own tax advisors with respect to the tax consequences of ownership of such Revenue Obligation,including the treatment of 27002232.5 57 a purchaser who does not purchase in the original offering and at the original offering price of that Revenue Obligation, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount in respect of such Revenue Obligation under federal individual and corporate alternative minimum taxes. Other Tax Consequences Although each Interest Component, and each Certificate Interest Distribution in respect thereof, may be excluded pursuant to section 103(a) of the Code from the gross income of the owner thereof for federal income tax purposes, an owner's federal, state or local tax liability may be otherwise affected by the ownership or disposition of the Revenue Obligations. The nature and extent of these other tax consequences will depend upon the owner's other items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Revenue Obligations should be aware that (i)section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Revenue Obligations and the Code contains additional limitations on interest deductions applicable to financial institutions that own tax-exempt obligations (such as the Revenue Obligations), (it)with respect to insurance companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(13)(i)reduces the deduction for loss reserves by 15%of the sum of certain items, including Interest Component and Certificate Interest Distributions in respect of the Revenue Obligations, (iii)Interest Component and Certificate Interest Distributions accrued in respect of Revenue Obligations owned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income, including Interest Component and Certificate Interest Distributions seemed in respect of Revenue Obligations, may be subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25%of the gross receipts of such Subchapter S corporation is passive investment income, (v) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, Interest Distributions and Certificate Interest Distributions accrued in respect of Revenue Obligations owned by such recipients for federal income tax purposes, and (vi) under section 32(i) of the Code, receipt of investment income, including Interest Components and Certificate Interest Distributions accrued in respect of Revenue Obligations, may disqualify the recipient thereof from obtaining the earned income credit. Special Counsel has expressed no opinion regarding any such other tax consequences. VERIFICATION OF MATHEMATICAL COMPUTATIONS a firm of independent arbitrage consultants,will verify the accuracy of (i)mathematical computations concerning the adequacy of the maturing principal amounts of and interest earned on the Government Obligations deposited in the Escrow Fund,together with amounts held as cash therein, to provide for payment of the prepayment prices (including seemed interest) of the Refunded 2009A Certificates on the Prepayment Date and (ii)certain mathematical computations supporting the conclusion that the Revenue Obligations are not"arbitrage bonds"under the Code,which will be used in part by Special Counsel in concluding that the Interest Components and Certificate Interest Distributions accrued in respect of Revenue Obligations are excluded from gross income for federal income tax purposes under present laws, including applicable provisions of the Code, existing court rulings, regulations and Internal Revenue Service rulings. The report of such independent arbitrage consultants will include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them and that they have no obligation to update their report because of events occurring,or data or information coming to their attention, subsequent to the date of their report. 27002232.5 58 CONTINUING DISCLOSURE The District has covenamed for the benefit of holders and beneficial owners of the Revenue Obligations (a)to provide certain financial information and operating data(the"Annual Report")relating to the District and the property in the District not later than eight months after the end of the District's Fiscal Year (which currently would be March 1), commencing with the report for the 2015-16 Fiscal Year, and(b)to provide notices of the occurrence of certain enumerated events. The Annual Report will be filed by the District, or the Dissemination Agent on behalf of the District, with the Municipal Securities Rulemaking Board. The notices of enumerated events will be filed by or on behalf of the District with the Municipal Securities Rulemaking Board. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See APPENDIX D — "FORM OF CONTINUING DISCLOSURE AGREEMENT." These covenants have been made in order to assist the Initial Purchaser in complying with S.E.C. Rule 15c2-12(the`Rule"). During the past five years,the District has never failed to comply in all material respects with any previous undertaking with respect to the Rule to provide annual reports or notices of enumerated events. RATINGS The Revenue Obligations will be rated " " by Standard & Poor's Financial Services LLC ("S&P")and" "by Fitch Ratings ("Fitch"). Such ratings reflect only the views of the rating agencies, and do not constitute a recommendation to buy, sell or hold the Revenue Obligations. Explanation of the significance of such ratings may be obtained only from the respective organizations at: Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041 and Fitch Ratings, One State Street Plaza, New York,New York 10004. There is no assurance that any such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by the respective rating agencies, if in the judgment of any such rating agency circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Revenue Obligations. PURCHASE AND REOFFERING (the "Initial Purchaser') has purchased the Revenue Obligations from the District at a competitive sale for a purchase price of$ (representing the aggregate principal amount of the Revenue Obligations, plus a premium of $ , and less an Initial Purchaser's discount of$ ). The public offering prices may be changed from time to time by the Initial Purchaser. The Initial Purchaser tray offer and sell Revenue Obligations to certain dealers and others at prices lower than the offering prices shown on the inside cover page hereof. 27002232.5 59 MISCELLANEOUS Included herein are brief summaries of certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the District and the purchasers or Owners of any of the Revenue Obligations. The execution and delivery of this Official Statement has been duly authorized by the District. ORANGE COUNTY SANITATION DISTRICT By Chair of the Board of Directors 27002232.5 60 APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED JUNE 30,2015 2]0022325 [INSERT APPENDIX B] 2]0022325 [INSERT APPENDIX Cl 2]0022325 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT(this "Disclosure Agreement"), dated as of March 1, 2016, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District'), and DIGITAL ASSURANCE CERTIFICATION LLC,as Dissemination Agent(the"Dissemination Agent"). WITNESSETH: WHEREAS, the District has caused to be executed and delivered the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations"), evidencing principal in the aggregate amount of$ pursuant to a Trust Agreement,dated as of the date hereof(the`Trust Agreement"),by and among U.S. Bank National Association,as trustee (the "Trustee"), the Orange County Sanitation District Financing Corporation (the "Corporation") and the District;and WHEREAS, this Disclosure Agreement is being executed and delivered by the District and the Dissemination Agent for the benefit of the owners and beneficial owners of the Revenue Obligations and in order to assist the purchaser of the Revenue Obligations in complying with the Rule (as defined herein); NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained,the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust Agreement or, if not defined therein, in the Master Agreement, dated as of August 1, 2000, by and between the District and the Corporation. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the District pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means the date in each year that is eight months after the end of the Fiscal Year,which date,as of the date of this Disclosure Agreement, is March 1. "Disclosure Representative"means the Director of Finance and Administrative Services of the District, or such other officer or employee of the District as the District shall designate in writing to the Dissemination Agent and the Trustee from time to time. "Dissemination Agent" means an entity selected and retained by the District, or any successor thereto selected by the District. The initial Dissemination Agent shall be Digital Assurance Certification LLC. "EMMA" shall mean Electronic Municipal Market Access system, maintained on the internet at htto://emma.msrb.ore by the MSRB. "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30, or any twelve-month or fifty-two week period hereafter selected by the District,with notice of such selection or change in fiscal year to be provided as set forth herein. D-1 "Listed Events" means any of the events listed in Section 4 hereof and any other event legally required to be reported pursuant to the Rule. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 1513(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with the MSRB are to be made through EMMA. "Official Statement" means the Official Statement, dated March , 2016, relating to the Revenue Obligations. "Participating Underwriter" means any of the original purchasers of the Revenue Obligations required to comply with the Rule in connection with the offering of the Revenue Obligations. "Repository"means,until otherwise designated by the SEC,EMMA. "Rule" means Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same has been or may be amended from time to time. "SEC" shall mean the United States Securities and Exchange Commission. Section 2. Provision of Annual Reports. (a) The District shall provide, or shall cause the Dissemination Agent to provide, to MSRB, through EMMA, not later than 15 days prior to the Annual Report Date, an Annual Report which is consistent with the requirements of Section 3 of this Disclosure Agreement. The Annual Report must be submitted in electronic format, accompanied by such identifying information as provided by the MSRB. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 3 of this Disclosure Agreement. Not later than 15 Business Days prior to such date, the District shall provide the Annual Report to the Dissemination Agent. If the Fiscal Year changes for the District, the District shall give notice of such change in the manner provided under Section 4(e)hereof. (b) If by 15 Business Days prior to the date specified in subsection(a) for providing the Annual Report to the MSRB, through EMMA, the Dissemination Agent has not received a copy of the Annual Report the Dissemination Agent shall contact the District to determine if the District is in compliance with subsection(a). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection(a), the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine the electronic filing address of, and then-current procedures for submitting Annual Reports to, the MSRB each year prior to the date for providing the Annual Report; and D-2 (if) (if the Dissemination Agent is other than the Trustee), to the extent appropriate information is available to it, file a report with the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided. Section 3. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District's audited financial statements are not available by the Annual Report Date,the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The principal evidenced by the Revenue Obligations Outstanding as of the June 30 next preceding the Annual Report Date and the principal amount of other Senior Obligations outstanding as of the June 30 next preceding the Annual Report Date. (c) Updated information (not to include projections), for the Fiscal Year ended the June 30 next preceding the Annual Report Date, comparable to the information contained in the Official Statement in Table Nos. 2,4, 6 (only with respect to information on 6 under the headings Fiscal Year and Sewer Service Charge), 8,9, 10, 11, 12, 13, 14 and 16. (d) In addition to any of the information expressly required to be provided under subsections (a), (b) and (c) of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made,not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the District is an"obligated person" (as defined by the Rule), which we available to the public on EMMA or filed with the SEC. The District shall clearly identify each such document to be included by reference. Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Revenue Obligations, in a timely manner not more than ten(10)Business Days after the event: (1) principal and interest payment delinquencies; (2) defeasances; (3) tender offers; (4) rating changes; (5) adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability,Notices of Proposed Issue (IRS Form 5701- D-3 TEB)or other material notices or determinations with respect to the tax-status of the Revenue Obligations; (6) unscheduled draws on the debt service reserves reflecting financial difficulties; (7) unscheduled draws on credit enhancements reflecting financial difficulties; (8) substitution of credit or liquidity providers or their failure to perform; or (9) bankruptcy,insolvency,receivership or similar proceedings. For these purposes, any event described in the immediately preceding paragraph(9)is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. (b) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Revenue Obligations, if material: (1) mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated persons or their termination; (2) appointment of a successor or additional Trustee or the change of the time of a Trustee; (3) nonpayment related defaults; (4) modifications to the rights of Owners; (5) a notices of prepayment; or (6) release, substitution or sale of property securing repayment of the Revenue Obligations. (c) Whenever the District obtains knowledge of the occurrence of a Listed Event, described in subsection(b)of this Section 4,the District shall as soon as possible determine if such event would be material under applicable federal securities law. (d) If the District determines that knowledge of the occurrence of a Listed Event described in subsection(b) of this Section 4 would be material under applicable federal securities law, the District shall promptly notify the Dissemination Agent in writing and instruct the Dissemination Agent to report the occurrence to the Repository in a timely manner not more than ten(10)Business Days after the event. (e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event,the Dissemination Agent shall file a notice of such occurrence with the MSRB. D-4 Section 5. Filings with the MSRB. All information, operating data, financial statements, notices and other documents provided to the MSRB in accordance with this Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination of Reuorting Obligation. The District's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Revenue Obligations. If such termination occurs prior to the final maturity of the Revenue Obligations, the District shall give notice of such termination in the same manner as for a Listed Event under Section 4 hereof. Section 7. Dissemination Agent. The District may, from time to time, appoint or engage another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent,with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Trustee, if the Trustee agrees to act, shall be the Dissemination Agent; provided it shall receive written notice of such designation at the time of such designation. Notwithstanding any other provision to this Disclosure Agreement to the contrary,the District may provide any Annual Report to Beneficial Owners by means of posting such Annual Report on an internet site that provides open access to Beneficial Owners. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the District may amend this Disclosure Agreement, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such party, and any provision of this Disclosure Agreement may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the District and the Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the District or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate amount of principal evidenced by Outstanding Revenue Obligations and upon being indemnified to its reasonable satisfaction, shall, or any holder or beneficial owner of the Revenue Obligations may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District, Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the District, the Trustee or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. D-5 Section 11. Duties. Immunities and Liabilities of Trustee and Dissemination Agent. Article VIII of the Trust Agreement is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Trust Agreement Neither the Trustee nor the Dissemination Agent shall be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Revenue Obligations. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Revenue Obligations, and shall create no rights in any other person or entity. Section 13. Counteroarts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. D-6 IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as of the date first above written. ORANGE COUNTY SANITATION DISTRICT By: Lorenzo Tyner Director of Finance and Administrative Services DIGITAL ASSURANCE CERTIFICATION LLC, as Dissemination Agent By: Authorized Representative Acknowledged and Accepted: U.S.BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer D-7 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: Orange County Sanitation District Name of Issue: Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A Date of Execution and Delivery: , 2016 NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District')has not provided an Annual Report with respect to the above-captioned Revenue Obligations as required by Section 6.09 of the Trust Agreement, dated as of March 1, 2016, by and among U.S. Bank National Association, as Trustee, the Orange County Sanitation District Financing Corporation and the District. [The District anticipates that the Annual Report will be filed by .] Dated: , 20 ORANGE COUNTY SANITATION DISTRICT By Title: cc: Trustee Dissemination Agent 27002232.5 D-g APPENDIX E BOOK-ENTRY SYSTEM The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Revenue Obligations, payment of principal and interest evidenced by the Revenue Obligations to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Revenue Obligations, and other Revenue Obligation-related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by OTC which the District and the Corporation each believes to be reliable, but the District and the Corporation take no responsibility for the completeness or accuracy thereof. The Depository Trust Company—Book-Entry System The Depository Trust Company("DTC"),New York,NY,will act as securities depository for the securities (the "Revenue Obligations"). The Revenue Obligations will be issued as fully-registered securities registered in the name of Cede& Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for the Revenue Obligations in the aggregate principal amount of such issue, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations,and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly("Indirect Participants"). DTC has a Standard&Poor's rating of"AA+." The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated herein by such reference or otherwise. Purchases of Revenue Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for the Revenue Obligations on DTC's records. The ownership interest of each actual purchaser of each Revenue Obligation (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Revenue Obligations are to be accomplished by entries made on 27002232.5 E-1 the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Revenue Obligations, except in the event that use of the book-entry system for the Revenue Obligations is discontinued. To facilitate subsequent transfers, all Revenue Obligations deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee,Cede&Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Revenue Obligations with DTC and their registration in the time of Cede&Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Revenue Obligations; DTC's records reflect only the identity of the Direct Participants to whose accounts such Revenue Obligations are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Revenue Obligations may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Revenue Obligations, such as prepayments, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Revenue Obligations may wish to ascertain that the nominee holding the Revenue Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Prepayment notices shall be sent to DTC. If less than all of the Revenue Obligations within an issue are being prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be prepaid. Neither DTC nor Cede & Co. (nor such other DTC nominee)will consent or vote with respect to the Revenue Obligations unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures,DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Revenue Obligations are credited on the record date(identified in a listing attached to the Omnibus Proxy). Prepayments with respect to the Revenue Obligations will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the District or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, nor its nominee, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of prepayment proceeds,distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Revenue Obligations at any time by giving reasonable notice to the District or the Trustee. Under such 27002232.5 E-2 circumstances, in the event that a successor securities depository is not obtained,Revenue Obligations are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Revenue Obligations will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. Discontinuance of DTC Services In the event (i)DTC determines not to continue to act as securities depository for the Revenue Obligations, (ii)DTC shall no longer act and give notice to the Trustee of such determination or(iii)the District determines that it is in the best interest of the Beneficial Owners that they be able to obtain Revenue Obligations and delivers a written certificate to the Trustee to that effect, DTC services will be discontinued. If the District determines to replace DTC with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered Revenue Obligation for each of the maturities of the Revenue Obligations,registered in the name of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace DTC then the Revenue Obligations shall no longer be restricted to being registered in the certificate registration books in the name of Cede&Co.,but shall be registered in such names as are requested in a certificate of the District, in accordance with the Trust Agreement. All Revenue Obligations may be presented for transfer by the Owner thereof, in person or by his attorney duly authorized in writing,at the Principal Office of the Trustee,on the books required to be kept by the Trustee pursuant to the provisions of the Trust Agreement, upon surrender of such Certifications for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Revenue Obligation as the absolute owner of such Revenue Obligation for all purposes, whether or not such Revenue Obligation shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal evidenced by such Revenue Obligation shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such Revenue Obligation to the extent of the sum or sums so paid. Whenever any Revenue Obligations shall be surrendered for transfer, the Trustee shall execute and deliver new Revenue Obligations representing the same principal amount in Authorized Denominations. The Trustee shall require the payment of any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Revenue Obligations may be presented for exchange at the Principal Office of the Trustee for a like aggregate principal amount of Revenue Obligations of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to transfer or exchange any Revenue Obligation during the period in which the Trustee is selecting Revenue Obligations for prepayment, nor shall the Trustee be required to transfer or exchange any Revenue Obligation or portion thereof selected for prepayment from and after the date of mailing the notice of prepayment thereof. 27002232.5 E-3 APPENDIX F FORM OF APPROVING OPINION OF SPECIAL.COUNSEL Upon the execution and delivery of the Revenue Obligations, Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel to the District, will render its final approving opinion with respect to the Revenue Obligations in substantially the following form: [Date of Delivery] Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,California 92708-7018 Orange County Sanitation District Wastewater Refunding Revenue Obligations Series 2016A Ladies and Gentlemen: We have acted as Special Counsel in connection with the $ aggregate principal amount of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations') which are certificates of participation that evidence direct, fractional undivided interests of the Owners thereof in the installment payments (the `Installment Payments"), and the interest thereon, to be made by the Orange County Sanitation District(the "District') pursuant to the Installment Purchase Agreement, dated as of March 1, 2016 (the `Installment Purchase Agreement'), by and between the District and the Orange County Sanitation District Financing Corporation (the "Corporation"). Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement"), by and between the District and the Corporation, the District has established conditions and terms upon which obligations such as the Installment Payments, and the interest thereon, will be incurred and secured. Installment Payments under the Installment Purchase Agreement are payable solely from Net Revenues as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the "Wastewater System") remaining after payment of Maintenance and Operation Costs. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Installment Purchase Agreement. The Revenue Obligations me to be executed and delivered pursuant to a Trust Agreement, dated as of March 1, 2016(the "Trust Agreement),by and among the District,the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds from the sale of the Revenue Obligations will be used to (i)prepay a portion of the District's outstanding Certificates of Participation, Series 2009A and (it)pay the costs incurred in connection with the execution and delivery of the Revenue Obligations. As Special Counsel,we have examined copies certified to us as being true and complete copies of the Master Agreement,the Trust Agreement and the Installment Purchase Agreement and the proceedings of the District in connection with the execution and delivery of the Revenue Obligations. We have also examined such certificates of officers of the District, the Corporation and others as we have considered necessary for the purposes of this opinion. 27002232.5 F-I Based upon the foregoing,we are of the opinion that: 1. The Master Agreement, the Installment Purchase Agreement and the Trust Agreement each has been duly and validly authorized,executed and delivered by the District and, assuming the Master Agreement, the Installment Purchase Agreement and the Trust Agreement each constitutes the legally valid and binding obligation of the other parties thereto, each constitutes the legally valid and binding obligation of the District, enforceable against the District in accordance with its respective terns. 2. The obligation of the District to pay the Installment Payments, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, solely from Net Revenues and other funds provided for in the Installment Purchase Agreement lawfully available therefor. 3. Assuming due authorization, execution and delivery of the Trust Agreement and the Revenue Obligations by the Trustee, the Revenue Obligations are entitled to the benefits of the Trust Agreement. 4. Under existing statutes, regulations, rulings and court decisions, and, assuming compliance with the covenants mentioned below, the component of each Installment Payment designated as "Interest on Installment Payment" in Section 3.02 of the Installment Purchase Agreement (each, an "Interest Component"), and the allocable portion thereof distributable in respect of any Revenue Obligation (the "Certificate Interest Distribution"), is excluded pursuant to section 103(a)of the Internal Revenue Code of 1986(the"Code")from the gross income of the owners thereof for federal income tax purposes. We are further of the opinion that under existing statutes, regulations, rulings and court decisions, the Installment Purchase Agreement is not a "specified private activity bond" within the meaning of section 57(a)(5) of the Code and, therefore, that the Interest Components and the Certificate Interest Distributions will not be treated as items of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of an Interest Component allocable to, or Certificate Interest Distribution in respect of a Revenue Obligation owned by, a corporation may affect the computation of the alternative minimum taxable income of that corporation. A corporation's alternative minimum taxable income is the basis upon which the alternative minimum tax imposed by section 55 of the Code is computed. We are further of the opinion that under existing laws of the State of California the Interest Component allocable to and the Certificate Interest Distributions in respect of a Revenue Obligation are exempt from personal income taxes of the State of California under present state law. Pursuant to the Installment Purchase Agreement and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986,to be delivered by the District in connection with the execution and delivery of the Revenue Obligations, the District has made representations relevant to the determination of, and has undertaken certain covenants regarding or affecting,the exclusion of the Interest Component,and the Certificate Interest Distribution, from the gross income of the owners thereof for federal income tax purposes. In reaching the opinions described in the immediately preceding paragraph, we have assumed the accuracy of such representations and the present and future compliance by the District with its covenants. Except as stated in the second preceding paragraph, we express no opinion as to any federal or state tax consequence of the ownership or disposition of the Installment Purchase 27002232.5 F-2 Agreement or the Revenue Obligations. Furthermore, we express no opinion as to any federal, state or local tax law consequence with respect to the Installment Purchase Agreement or the Revenue Obligations,or of the Interest Components or Certificate Interest Distributions in respect thereof, if any action is taken with respect to the Installment Purchase Agreement, or the use or investment of the proceeds thereof, the Master Agreement, the Trust Agreement, the Revenue Obligations permitted or predicated upon the advice or approval of other counsel. The rights of the owners of the Revenue Obligations and the enforceability of the Revenue Obligations,the Master Agreement,the Trust Agreement and the Installment Purchase Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. The enforceability of the Revenue Obligations, the Master Agreement, the Trust Agreement and the Installment Purchase Agreement is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific performance or injunctive relief,regardless of whether considered in a proceeding in equity or at law, and to the limitations on legal remedies against governmental entities in California. No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Revenue Obligations. Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of result; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above. Respectfully submitted, 27002232.5 F-3 NRF DRAFT 2/3/16 OFFICIAL NOTICE INVITING BIDS $ ' ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS SERIES 2016A (Book-Entry-Only) NOTICE IS HEREBY GIVEN that bids will be received by the Orange County Sanitation District (the "District') for the purchase of $ ' original principal amount of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A Evidencing Direct, Fractional Undivided Interests of the Owners Thereof in Installment Payments to be Made by the Orange County Sanitation District to the Orange County Sanitation District Financing Corporation(the"Revenue Obligations"). Bids for less than all of the Revenue Obligations will not be accepted. The bids will be received in the form, in the manner and up to the time specified below (unless postponed as described herein): Date: March.2016 10:45 a.m.,New York Time Electronic Bids: Electronic proposals may be submitted to linen, at www.newissuehome.i-deal.com and the Parity electronic bid submission system (the "Electronic Service"). The Electronic Service will act as agent of the bidder and not of the District in connection with the submission of bids and the District assumes no responsibility or liability for bids submitted through the Electronic Service. See `Information Regarding Electronic Proposals"herein. No facsimile,hand delivery or sealed bids will be accepted. Terms of the Revenue Obligations The Preliminary Official Statement for the Revenue Obligations, dated February . 2016, including the cover page and all appendices thereto (the "Preliminary Official Statement"), provides certain information concerning the sale and delivery of$ 'aggregate principal amount of the Revenue Obligations, which are certificates of participation evidencing direct, undivided fractional interests in the Installment Payments (the "Installment Payments"), and the interest thereon, payable by the District pursuant to the Installment Purchase Agreement, dated as of March 1, 2016 (the"Installment Purchase Agreement"), by and between the District and the Orange County Sanitation District Financing Corporation (the"Corporation"). Each bidder must have obtained and reviewed the Preliminary Official Statement prior to bidding for the Revenue Obligations. This Official Notice Inviting Bids, including all exhibits and attachments, contains certain information for quick reference only, is not a summary of the issue and governs only the terms of the sale of, bidding for and closing procedures with respect to the Revenue Obligations. Bidders must read the entire Preliminary Official Statement to obtain information essential to making an informed investment decision. Preliminary,subject to change. Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement"), by and between the District and the Corporation, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest thereon, will be incurred and secured. Installment Payments under the Installment Purchase Agreement are payable solely from Net Revenues, as provided in the Master Agreement and the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the"Wastewater System")remaining after payment of Maintenance and Operation Costs. The Issue The proceeds from the sale of the Revenue Obligations will be used to (i)prepay and retire a portion of the District's outstanding Certificates of Participation, Series 2009A (the"Prior Certificates"), currently outstanding in the aggregate principal amount of$ and (ii)pay costs of execution and delivery of the Revenue Obligations. The Revenue Obligations are to be executed and delivered pursuant to a Trust Agreement, dated as of March 1, 2016 (the "Trust Agreement'), by and among the District, the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Capitalized terms not defined herein shall have the same definitions as used in the Trust Agreement or the Master Agreement. Authorization On , 2016, the District and the Corporation authorized the execution and delivery of the Installment Purchase Agreement,the Trust Agreement and the Revenue Obligations. Outstanding Senior Obligations The District has outstanding Senior Obligations payable on a parity with the Installment Payments under the Installment Purchase Agreement. The term"Existing Senior Obligations"as used in the Preliminary Official Statement refers to the 2007A Installment Purchase Agreement, the 2007B Installment Purchase Agreement, the 2008B Installment Purchase Agreement, the 2009A Installment Purchase Agreement, the 2010A Installment Purchase Agreement, the 2010C Installment Purchase Agreement, the 201 IA Installment Purchase Agreement,the 20I2A Installment Purchase Agreement, the 2012B Installment Purchase Agreement, the 2014A Installment Purchase Agreement, the 2014B Installment Purchase Agreement and the 2015A Installment Purchase Agreement. Security and Source of Payments The Revenue Obligations are certificates of participation which evidence direct, undivided fractional interests in the Installment Payments, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payments and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, solely from Net Revenues and other funds as provided in the hrstalhnent Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs,all as further provided in the Master Agreement. The District's obligation to make Installment Payments from Net Revenues is on a parity with the District's obligation to make payments with respect to its other outstanding obligations described as Senior Obligations and all Reimbursement Obligations, if any, with respect to Senior Obligations, as 2 provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security for Senior Obligations pursuant to the Master Agreement. Pursuant to the Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations, and the Net Revenues will not be used for any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be apportioned such sums for such purposes as we expressly permitted by the Master Agreement. This pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. The term Senior Obligations, generally means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District authorized, executed,issued and delivered under and pursuant to applicable law,the Installment Purchase Agreement and all other contracts (including financial contracts) or leases of the District authorized and executed by the District under and pursuant to applicable law, the installment, lease or other payments which are, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a parity with the payments under the Master Agreement. The District may at any time incur Subordinate Obligations; provided, however, that prior to incurring such Subordinate Obligations, the District will have determined that the incurrence thereof will not materially adversely affect the District's ability to comply with the requirements of the Master Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate Obligations. Currently, there are no Subordinate Obligations outstanding. For a description of the District's outstanding Senior Obligations, see"FINANCIAL OBLIGATIONS— Existing Indebtedness" in the Preliminary Official Statement. The District may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be junior and subordinate to the pledge of, and lien on,Net Revenues for the payment of Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. Pursuant to the Master Agreement, the District is required, to the extent permitted by law, to fix, prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125% of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but shall not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS Rate Covenant"in the Preliminary Official Statement. Additional Obligations In addition to the Existing Senior Obligations, the District may at any time incur Obligations payable on a parity or on a subordinate basis to the payment by the District of the Installment Payments upon satisfaction of conditions provided in the Master Agreement. No Obligations payable on such a subordinate basis are currently outstanding. See "SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS — Limitations on Issuance of Additional Obligations" in the Preliminary Official Statement. 3 Book-Entry-Only The Revenue Obligations will be executed and delivered in the form of fully registered certificates payable in lawful money of the United States of America. The Revenue Obligations will be initially delivered only in book-entry form and will be registered in the name of Cede& Co., as nominee of The Depository Trust Company, New York, New York ("DTC'), which will act as securities depository for the Revenue Obligations. Individual purchases of the Revenue Obligations will be made in book-entry form only. Purchasers of Revenue Obligations will not receive physical certificates representing their ownership interests in the Revenue Obligations purchased. The Revenue Obligations will be delivered in Authorized Denominations of$5,000 and any integral multiple thereof. Payments of principal and interest evidenced by the Revenue Obligations are payable directly to DTC by the Trustee. Upon receipt of payments of such principal and interest,DTC will in turn distribute such payments to the beneficial owners of the Revenue Obligations. So long as the Revenue Obligations are in the DTC book- entry system, the interest, principal and prepayment premiums, if any, due with respect to the Revenue Obligations will be payable by the Trustee,or its agent,to DTC or its nominee. Principal and Interest Payments The Revenue Obligations will be dated as of the date of initial delivery and will evidence interest from that date(computed on the basis of a 360-day year of twelve 30-day months). Interest evidenced by the Revenue Obligations is payable semiannually on February 1 and August 1 of each yen, commencing on August 1, 2016. Payment of principal and prepayment premium, if any, evidenced by the Revenue Obligations will be paid in lawful money of the United States of America upon presentation and surrender thereof at the Principal Office of the Trustee. Principal Amortization The Revenue Obligations will be executed and delivered in the original principal amount of $ 'and will be subject to principal amortization on February 1 in the years 2020'through 2039' in the amounts set forth in the Official Bid Form. Mandatory Sinking Account Prepayment If the successful bidder designates principal amounts to be combined into a term maturity, such term maturity shall be subject to mandatory sinking account payments commencing on February I of the first year which has been combined to form such term maturity and continuing on February 1 in each year thereafter until the stated maturity date of that term maturity The prepayment price will be equal to the principal amount for such year set forth in the Official Bid Form,plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. The amount of each such prepayment shall be reduced in the event and to the extent that Installment Payments payable on the corresponding Installment Payment Date are prepaid pursuant to provisions of the Installment Purchase Agreement governing optional prepayment. 'Preliminary,subject to change. 4 Optional Prepayment The Revenue Obligations with stated Principal Payment Dates on or after February 1, 2027' are subject to optional prepayment prior to their stated Principal Payment Dates, on any date on or after February 1, 2026", in whole or in part, in Authorized Denominations, from and to the extent of prepaid Installment Payments paid pursuant to the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Revenue Obligations to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. Selection of Revenue Obligations for Prepayment Whenever less than all the Outstanding Revenue Obligations me to be prepaid on any one date pursuant to provisions of the Trust Agreement with respect to optional prepayment of Revenue Obligations, the Trustee shall select the Revenue Obligations to be prepaid among Revenue Obligations with different Principal Payment Dates as directed in a Written Request of the District. Whenever less than all the Outstanding Revenue Obligations with the same stated Principal Payment Date are to be prepaid on any one date pursuant to the Trust Agreement, the Trustee shall select the Revenue Obligations with such Principal Payment Date to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate,which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the numbers of the Revenue Obligations so selected for prepayment on such date. Notice of Prepayment The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice of prepayment to the respective Owners of Revenue Obligations designated for prepayment by first-class mail,postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Revenue Obligations or the cessation of interest evidenced thereby on the date fixed for prepayment. Interest Rates,Reoffering Prices,Premium or Discount Bids and Certificate of Initial Purchaser Bidders must bid to purchase all and not part of the Revenue Obligations and must submit their bids on the Official Bid Form. Bidders must specify a rate of interest for each maturity of the Revenue Obligations. The rates of interest must be expressed in multiples of either one-eighth (''s) or one- twentieth ('/zo) of one percent (1°/u), and no interest rate on Revenue Obligations maturing on or after February 1, 20_ may be less than [5.01% per annum. All Revenue Obligations of the same maturity must evidence interest at the same rate. The successful bidder will, within 30 minutes after being notified of the award of the Revenue Obligations, advise the District of the initial bona fide public reoffering prices of each maturity of the Preliminary;subject to change. 5 Revenue Obligations on the date of award. The successful bidder will also be required to furnish to the District a certificate ("Certificate of Initial Purchaser') in the form of the Certificate of Initial Purchaser attached hereto(with such modifications as may be acceptable to Special Counsel). At any time before or after delivery of the Revenue Obligations to the successful bidder, that successful bidder also may be required by the District or Special Counsel to clarify any discrepancies between the Certificate of Initial Purchaser and publicly available information relating to trades of the Revenue Obligations that might suggest that the initial sale of a substantial portion of any maturity of the Revenue Obligations to the public was at a materially higher price than the price stated for that maturity in the Certificate of Initial Purchaser. Bidders may bid to purchase the Revenue Obligations from the District at a discount or with a premium; however, no bid will be considered if the bid is to purchase Revenue Obligations at an aggregate price less than [115% or more than 124%] of the aggregate principal amount of the Revenue Obligations. No bid will be accepted that contemplates the waiver of any interest or other concession by the bidder as substitute for payment in full of the purchase price. Bids that do not conform to the terms of this section may be rejected. See"Right to Reject Bids,Waive Irregularities"below. Adjustment of Principal Amounts After Receipt of Bids The principal amounts of the Revenue Obligations set forth in the Official Bid Form reflect estimates of the District as to the likely interest rates of the winning bid and the premium or discount contained in the winning bid. After selecting the winning bid,the amortization schedule for the Revenue Obligations will be adjusted in $5,000 increments, to reflect the actual interest rates and any discount or premium in the winning bid to properly fund the purchase price of the Prior Certificates and to accommodate certain other requirements or preferences of the District. Such adjustments will not change any Revenue Obligation in any year by more than 10% of the principal amount for such year. The dollar amount bid for the Revenue Obligations by the winning bidder will be adjusted to reflect such adjustment in the applicable amortization schedule. Any such adjustment will change the total (but not the per Revenue Obligation) dollar amount of purchaser's discount and original issue discount or premium, if any, provided in such bid. Any such adjustment will be communicated to the winning bidder within 24 hours after receipt of such bid by the District. Changes in the amortization schedule made as described in this paragraph will not affect the determination of the winning bidder or give the winning bidder any right to reject the Revenue Obligations. No Insurance THE SUCCESSFUL BIDDER SHALL NOT PURCHASE MUNICIPAL BOND INSURANCE IN CONNECTION WITH THE REVENUE OBLIGATIONS. Form of Bid BIDS FOR LESS THAN ALL OF THE REVENUE OBLIGATIONS WILL NOT BE ACCEPTED. Each bid must be on the Official Bid Form, submitted through the Electronic Service as specified herein. All electronic proposals shall be deemed to incorporate the provisions of the Official Bid Form and must be unconditional and irrevocable. In addition, each bidder is requested to supply an estimate of the true interest cost resulting from its bid, computed as prescribed below under the caption "Award, Delivery and Payment,"which shall be considered as informative only and not binding on either the bidder or the District. Each bid must be in accordance with the terms and conditions set forth in this Official Notice Inviting Bids. 6 The District will make its best efforts to accommodate electronic bids; however, the District, the Financial Advisor (Public Resources Advisory Group) and Special Counsel assume no responsibility for any error contained in any electronic bid, or for the failure of any electronic bid to be transmitted or received at the official time for receipt of such bids. The official time for receipt of bids will be determined by the District at the place of the bid opening, and the District shall not be required to accept the time kept by Electronic Service as the official time. The District assumes no responsibility for informing any bidder prior to the deadline that its bid is incomplete,or not received. If multiple timely bids are received from a single bidder the District shall accept the best of such bids and each bidder agrees,by submitting any bid,to be bound by its best bid. Information Regarding Electronic Proposals All proposals must be submitted through the Electronic Service. If any provision of this Official Notice Inviting Bids conflicts with information provided by the Electronic Service, this Official Notice Inviting Bids shall control. The District is not responsible for the proper operation of, and shall have no liability for any delays or interruptions of or any damages caused by the Electronic Service. The District is using the Electronic Service as a communication mechanism and not as the District's agent to conduct electronic bidding for the Revenue Obligations. The District is not bound by any advice of or determination by the Electronic Service to the effect that any particular bid complies with the terms of this Official Notice Inviting Bids. All costs and expenses incurred by prospective bidders in connection with their submission of bids through the Electronic Service are the sole responsibility of such bidders and the District is not responsible for any such costs or expenses. Further information about the Electronic Service, including any fee charged, may be obtained from Ipreo, 1359 Broadway, Second Floor, New York, NY 10018 (212-849-5023). The District assumes no responsibility or liability for bids submitted through the Electronic Service. The District shall be entitled to assume that any bid submitted through the Electronic Service has been made by a duly authorized agent of the bidder. Bid Security Deposit Each bidder most provide with its bid a wire transfer of immediately available federal funds in the amount of$ (the`Bid Security Deposit'). Bid Security Deposit wive transfers must be received in federal funds prior to the deadline for examination of the bids.Contact the District's Financial Advisor,Public Resources Advisory Group, 310-477-8487 or by e-mail at IchoiApraeadvisors.com. for wire instructions. The wire transfers of unsuccessful bidders will be returned promptly on the bid date after the examination of bids. The wire transfer of the successful bidder will be retained by the District and applied to the purchase price at the time of delivery of the Revenue Obligations. The District disclaims any liability for funds sent by wire transfer,except for any willful misconduct or reckless disregard for its duties. If after the award of the Revenue Obligations,the successful bidder fails to complete the purchase on the terms stated in its bid,unless such failure of performance shall be caused by any act or omission of the District, the Bid Security Deposit shall be retained by the District as stipulated liquidated damages. No interest will be paid upon any Bid Security Deposit. 7 Official Statement The District has approved a Preliminary Official Statement for the Revenue Obligations, dated February_ 2016, which the District has"deemed final"for purposes of Rule 15c2-12 promulgated by the Securities and Exchange Commission, as amended (the "Rule"), although subject to revision, amendment and completion in conformity with the Rule. The District will provide the successful bidder such reasonable number of printed copies of the final Official Statement as such bidder may reasonably request no later than seven business days after the day the Revenue Obligations are awarded. Up to [501 copies of the final Official Statement will be famished without cost to the successful bidder and farther copies, if desired, will be made available at the successful bidder's expense. The successful bidder shall file the final Official Statement with a nationally recognized municipal securities information repository on a timely basis. The successful bidder shall, by accepting the award, agree at all times to comply with the provisions of the Rule and with all applicable rules of the Municipal Securities Rulemaking Board. Award,Delivery and Payment If satisfactory bids are received, the Revenue Obligations will be awarded to the highest responsible bidder not later than two hours after the time established for the receipt of bids. The highest bidder shall be the bidder submitting the best price for the Revenue Obligations,which best price shall be that resulting in the lowest true interest cost with respect to the Revenue Obligations. The true interest cost shall be computed by doubling the semi-annual interest rate (compounded semi-annually) necessary to discount the debt service payments from their respective payment dates to the date of the Revenue Obligations and to the price bid. If two or more bidders have bid the same true interest cost, the award shall be made at the sole discretion of the District. Delivery of the Revenue Obligations is expected to occur on or about , 2016. The Revenue Obligations will be delivered through the facilities of DTC,New York,New York. The successful bidder shall pay for the Revenue Obligations on the date of delivery in Los Angeles, California in immediately available federal funds. Any expenses of providing federal funds shall be home by the purchaser. Payment on the delivery date shall be made in an amount equal to the price bid for the Revenue Obligations less the amount of the bid security deposit. Right to Reject Bids,Waive Irregularities The District reserves the right to reject any and all bids, and to the extent permitted by law, to waive any irregularity or informality in any bid. CUSIP Numbers It is anticipated that CUSIP numbers will be printed on the Revenue Obligations, but the District will assume no obligation for the assignment or printing of such numbers on the Revenue Obligations or for the correctness of such numbers, and neither the failure to print such numbers on any Revenue Obligation nor any error with respect thereto shall constitute cause for a failure or refusal by the purchasers thereof to accept delivery of and make payment for the Revenue Obligations. The cost for the assignment of CUSIP numbers to the Revenue Obligations will be the responsibility of the successful bidder. 8 California Debt and Investment Advisory Commission The successful bidder will be required to pay all fees due to the California Debt and Investment Advisory Commission ("CDIAC') under California law. CDIAC will invoice the successful bidder after the delivery of the Revenue Obligations. Legal Opinions The District will famish to the successful bidder at the closing of the Revenue Obligations the legal opinion of Special Counsel to the effect that, in the opinion of Special Counsel, based upon an analysis of existing laws,regulations,rulings and court decisions,and assuming, among other matters,the accuracy of certain representations and compliance with certain covenants,the interest component of each Installment Payment and the allocable portion thereof distributable in respect of each Revenue Obligation is excluded from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986 and is not a specific preference item for purposes of the federal alternative minimum tax and is exempt from State of California personal income taxes. Special Counsel will express no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on,the Revenue Obligations. Closing Documents The District will famish to the successful bidder at the time of delivery of the Revenue Obligations: (1)a certificate certifying (i) that as of and at the time of delivery of the Revenue Obligations,there is no action, suit,proceeding or investigation,pending or,to the best knowledge of the District, threatened against or affecting the District, (A) which affects or seeks to prohibit, restrain or enjoin the execution and delivery of the Revenue Obligations or the Trust Agreement, (13) in any way contesting the validity of the Revenue Obligations, the Installation Purchase Agreement or the Trust Agreement or the powers of the District to enter into or perform its obligations under such documents to which it is a party or the existence of the District, or (C)wherein an unfavorable decision, ruling or finding would materially and adversely affect the District,or the validity or enforceability of the Revenue Obligations, the Installation Purchase Agreement or the Trust Agreement or the ability of the District to perform its obligations under such documents to which it is a party, (ii)that the Preliminary Official Statement did not on the date of sale of the Revenue Obligations and the Official Statement does not on the date of delivery contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, and (2) a receipt of the District showing that the purchase price of the Revenue Obligations has been received by the District. Continuing Disclosure To assist the successful bidder in complying with the Rule, the District will undertake, pursuant to the Continuing Disclosure Agreement, to provide certain annual financial information, and notices of the occurrence of certain enumerated events. A description of the Continuing Disclosure Agreement is set forth in the Preliminary Official Statement and will be set forth in the final Official Statement. 9 Additional Information Electronic copies of the Trust Agreement, the Installment Purchase Agreement, the Master Agreement, this Official Notice Inviting Bids, the Official Bid Form, and the Preliminary Official Statement will be famished to any potential bidder upon request made to the District's Financial Advisor at: Public Resources Advisory Group, 11500 West Olympic Boulevard, Suite 502, Los Angeles, CA 90064,310-477-8487,via e-mail at Ichoi@pmgadvisom.com. Right to Modify or Amend The District reserves the right to modify or amend this Official Notice Inviting Bids, including but not limited to the right to adjust and change the principal amount of the Revenue Obligations being offered; provided, however, that such notifications or amendments shall be made not later than the business day prior to the date fixed for the receipt of bids, by 4:00 p.m., New York Time and communicated through Thomson Municipal News (available at http://w .tm3.com) and by facsimile transmission to any qualified bidder timely requesting such notice. Bidders are required to bid for the Revenue Obligations as so modified. Cancellation or Postponement The District reserves the right to cancel or postpone, from time to time, the date established for the receipt of bids for any reason at any time. Any such postponement will be announced by Thomson Municipal News. If any date fixed for the receipt of bids and the sale of the Revenue Obligations is postponed, any alternative sale date will be announced via Thomson Municipal News at least 24 hours prior to such alternative sale date and will be provided by facsimile transmission to any qualified bidder timely requesting such notice. On any such alternative sale date, any bidder may submit a sealed bid for the purchase of the Revenue Obligations in conformity in all respects with the provisions of this Official Notice Inviting Bids except for the date of sale and except for the changes announced by Thomson Municipal News at the time the sale date and time are announced. Dated: February_,2016 10 EXHIBIT A FORM OF CERTIFICATE OF INITIAL PURCHASER 2016 Orange County Sanitation District Fountain Valley,California Norton Rose Fulbright US LLP Los Angeles,California Ladies and Gentlemen: We have served as the Underwriter in connection with the execution and delivery on behalf of the Orange County Sanitation District (the "District") of $ Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A(the"Revenue Obligations"). We hereby certify that: (i) , 2016 was the fast day on which there was a binding contract in writing for the sale or exchange of the Revenue Obligations by the District to the Underwriter, and on that day(the "Sale Date"), we undertook pursuant to such contract to make a bona fide public offering of all of the Revenue Obligations. On the Sale Date all of each maturity of the Revenue Obligations was offered in a bona fide initial offering to the general public at the initial offering price or initial offering yield (the "Initial Offering Price") shown, for such maturity on the inside cover page of the Official Statement, dated , 2016, relating to such offering (the"Official Statement"). The Initial Offering Price for each maturity represented: (i) our reasonable determination of a fair market value on the Sale Date of that maturity of the Revenue Obligations; and (ii) the price at which we reasonably expected to sell all the Revenue Obligations of that maturity to the general public; (ii) based upon our records and other information available to us that we believe to be correct,the first price at which a substantial portion(but in no event less than ten percent) of each maturity of the Revenue Obligations[, (except for the Revenue Obligations maturing in (the "Unsold Maturity"),] was sold by the Underwriter to the general public was the Initial Offering Price in respect of that maturity as described above. [For [the] [each]Unsold Maturity,on the Sale Date we reasonably expected that a substantial portion (at least ten percent) of that Unsold Maturity would be sold at the initial offering price or yield in respect of that maturity]; (iii) at the time that we agreed to purchase the Revenue Obligations, based upon then prevailing market conditions, we had no reason to believe that the first sale of any of the Revenue Obligations to a member of the general public would be at an initial offering price greater than or an initial offering yield less than the fair market value thereof; (iv) taking into account the aggregate amount of each maturity, and treating the Initial Offering Price as the issue price of each Revenue Obligation of that maturity, the aggregate issue price of the Revenue Obligations is $ ; and (v) we provided the yield proof attached hereto as Exhibit A to Special Counsel;we make no representations regarding its legal sufficiency for any purpose. For purposes of this Certificate, the term"general public"does not include bond houses,brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers. The undersigned understands that the statements made herein will be relied upon by the District in its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986 (the "Code"), and will be relied upon by Special Counsel in rendering its legal opinion, concerning the exclusion from gross income for federal income tax purposes of the interest component of each Installment Payment under the Installment Purchase Agreement, dated as of Much 1, 2016,and described in more detail in the Official Statement,and the amount thereof distributable with respect to the Revenue Obligations. [INITIAL PURCHASER], as Underwriter By: Title: 2 Exhibit A Yield Proof (See attached) 3 OFFICIAL BID FORM ORANGE COUNTY SANITATION DISTRICT WASTEWATER REFUNDING REVENUE OBLIGATIONS SERIES 2016A , 2016 Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,CA 92708-7018 Attn: Lorenzo Tyner Ladies and Gentlemen: We hereby offer to purchase all of the $ ' aggregate principal amount of the Orange County Sanitation District (the "District") Wastewater Refunding Revenue Obligations, Series 2016A (the `Revenue Obligations"), more particularly described in the Official Notice Inviting Bids, dated 2016 (the "Official Notice Inviting Bids"), which is incorporated herein by reference, and made a part thereof, at a purchase price of$ . This offer is for Revenue Obligations evidencing interest at the rates and in the form of serial maturities or term maturities with mandatory sinking account prepayments as set forth in the table on the following page. The bid is subject to acceptance not later than two hours after the expiration of the time established for the final receipt of bids. Our calculation of the true interest cost, computed in accordance with the instructions in the Official Notice Inviting Bids, and which is considered to be informative only and not a part of the bid, is With this bid we are providing the District a wire transfer in immediately available federal funds in the amount of$ to an account specified by the District or its representative, in accordance with the Official Notice Inviting Bids. We have noted that payment of the purchase price is to be made in immediately available Federal Funds at the time of delivery of the Revenue Obligations. If we are the successful bidder,we will (1)within 30 minutes after being notified of the verbal award of the Revenue Obligations, advise the District of the initial public offering prices of the Revenue Obligations; and (2) prior to delivery of the Revenue Obligations famish a certificate,acceptable to Special Counsel,Norton Rose Fulbright US LLP,as to the "issue price"of the Revenue Obligations in the form specified in the Official Notice Inviting Bids. ' Preliminary,subject to change. Sinking Maturity Principal Interest Serial Account (February I Amount* Rate Maturity Prepayment (Check one column) We represent that we have full and complete authority to submit this bid on behalf of our bidding syndicate and the undersigned will serve as the lead manager for the group if the Revenue Obligations are awarded pursuant to this bid. We certify(or declare)under penalty of perjury under the laws of the State of California that this proposal is genuine, and not a sham or collusive, nor made in the interest of or on behalf of any person not herein named, and that the bidder has not directly or indirectly induced or solicited any other bidder to put in a sham bid or any other person, firm or corporation to refrain from bidding, and that the bidder has not in any manner sought by collusion to secure for himself an advantage over any other bidder. Respectfully Submitted, Account Manager: By: Address: City: State: Telephone: Following(or attached)is a list of the members of our account on whose behalf this bid is made. Preliminary,subject to change. 2 NOTICE OF INTENTION TO SELL Orange County Sanitation District Wastewater Refunding Revenue Obligations Series 2016A NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District') intends to receive electronic bids until 10:45 a.m.,New York time, on March 2016, through the use of an electronic bidding service offered by Ipreo; at www.newissuehome.i- deal.com and the Parity electronic bid submission system, for the purchase of all of the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2016A (the "Revenue Obligations"), dated as of the date of initial delivery, and maturing on such dates as described in the related Official Notice Inviting Bids (the "Notice"). No bids will be accepted by facsimile. Bids for less than all of the Revenue Obligations will not be accepted. The District reserves the right to postpone the date established for the receipt of bids as more fully described under the paragraph"Cancellation or Postponement"in the Notice. NOTICE IS HEREBY FURTHER GIVEN that electronic copies of the Notice and the Preliminary Official Statement issued in connection with the sale of the Revenue Obligations may be obtained from the District's financial advisor, Public Resources Advisory Group, 11500 West Olympic Boulevard, Suite 502, Los Angeles, California 90064, 310-477-8487, via e-mail: lchoi@pmgadvisors.com. Orange County Sanitation District Dated: February_, 2016 ` Preliminary, subject to change. APPENDIX B THE COUNTY OF ORANGE—ECONOMIC AND DEMOGRAPHIC INFORMATION The County is bordered on the north by Los Angeles County, on the east by Riverside County,on the southeast by San Diego County and on the west and southwest by the Pacific Ocean. Approximately 42 miles of ocean shoreline provide beaches,marinas and other recreational areas for use by residents and visitors. The climate in the County is mild,with an average annual rainfall of 13 inches. Population The County is the third most populous county in the State and the sixth most populous in the nation. TABLE B-1 COUNTY OF ORANGE,STATE OF CALIFORNIA AND UNITED STATES POPULATION GROWTH[') State of United States Year Orange Countv California of America 2006 2,952,610 35,979,208 298,593,212 2007 2,957,307 36,226,122 301,579,895 2008 2,988,541 35,580,371 304,374,846 2009 3,023,265 36,961,664 307,006,550 2010 3,017,089 37,318,481 308,745,538 2011 3,043,964 37,578,616 311,800,000 2012 3,090,132 38,041,430 313,914,040 2013 3,114,363 38,332,521 316,128,839 2014 3,145,515 38,802,500 321,418,820 2015 Not Available 39,144,818 321,442,019 0) As of July 1 of each year,except 2010 data as of April 1,2010. Source: United States Statistics—Population Estimates Program,Population Division, U.S. Census Bureau. Public Schools(Elementary and Secondary) Public instruction in the County is provided by twelve elementary school districts, three high school districts and twelve unified (combined elementary and high school) districts. For the 2014-15 academic year,the Ingest district in the County,the Santa Ana Unified School District,reported a student enrollment of 56,815. Public school enrollment for the academic calendar years 2010-11 through 2014-15 is presented in Table B-2. Enrollment data for 2015-16 has not yet been released TABLE B-2 COUNTY OF ORANGE PUBLIC SCHOOL ENROLLMENT 2010-11 2011-12 2012-13 2013-14 2014-15 Total Enrollment 502,895 502,205 501,801 500,487 497,116 Source: California Department of Education,Data Quest Report. B-1 Colleges and Universities The County has a number of top-rated, college-level educational institutions, including the University of California at Irvine and California State University at Fullerton, several private colleges, universities and law schools and four community college districts. Employment The following table summarizes the historical numbers of workers in the County over the period 2010 through 2014 by industry.2015 figures not yet available. TABLE B-3 COUNTY OF ORANGE INDUSTRY EMPLOYMENT AND LABOR FORCE-ANNUAL AVERAGE(o 2010 2011 2012 2013 2014 Farts 3,800 3,000 2,700 2,800 2,800 Natural Resources and Mining 500 500 500 600 700 Construction 67,100 70,800 71,300 82,000 82,000 Manufacturing 150,400 156,300 157,800 158,000 158,700 Wholesale Trade 77,600 77,000 76,700 79,400 81,700 Retail Trade 140,100 141,300 142,200 145,500 148,700 Transportation,Warehousing Utilities 26,700 27,400 27,700 27,500 26,600 Information 24,800 24,000 24,200 25,000 24,200 Financial Activities 103,500 107,500 108,100 113,100 114,100 Professional and Business Services 243,500 250,100 255,900 267,300 275,800 Educational and Health Services 155,500 162,300 163,400 184,200 190,300 Leisure and Hospitality 168,600 177,900 180,500 187,800 193,500 Other Services 42,200 43,700 44,300 45,600 47,700 Government 152,300 148,300 147,800 148,700 151,900 Total0) 1,357,400 1,390,000 1,403,000 1,462,400 1,498,700 (n Totals for all categories. These categories do not represent all employment categories. Source: California Employment Development Department. B-2 Major Employers The following table lists the major employers in the County for 2015. TABLE B-4 COUNTY OF ORANGE MAJOR EMPLOYERS 2015 Number of Employees Employer Name (Full and Part-Time) Walt Disney Company 27,000 University of California,Irvine 22,385 County of Orange 18,135 St.Joseph Health System 12,227 Kaiser Permanente 7,000 Boeing Co. 6,890 Walmart 6,000 Memorial Care Health System 5,650 Bank of America 5,500 Target Corporation 5,400 Source: Orange County Business Journal, 2015 for all employers other than the County, number of County employees,provided by the County Budget Office(number offilled positions). B-3 Labor Force,Employment and Unemployment Table B-5 summarizes the labor force, employment and unemployment figures over the period 2009 through 2014,and for December of 2015, for the County and the State. Annual figures for 2015 not yet available. TABLE B-5 COUNTY OF ORANGE AND STATE OF CALIFORNIA LABOR FORCE,EMPLOYMENT AND UNEMPLOYMENT YEARLY AVERAGE Year and Unemployment Area Labor Force Employment Unemployment Rate 2009 Orange 1,589,600 1,448,800 140,700 8.9% County Califomi 18,215,700 16,151,100 2,064,600 11.3 a 2010 Orange 1,592,500 1,441,500 151,000 9.5 County Califomi 18,330,500 16,063,500 2,267,000 12.4 a 2011 Orange 1,596,200 1,456,800 139,400 8.7 County Califomi 18,407,900 16,249,600 2,168,300 11.8 a 2012 Orange 1,613,600 1,491,600 122,000 7.6 County Califomi 18,519,900 16,589,700 1,929,300 10.4 a 2013 Orange 1,610,900 1,510,600 100,400 6.2 County Califomi 18,596,800 16,933,300 1,633,300 8.9 a 2014 Orange 1,575,600 1,489,200 86,400 5.5 County Califomi 18,811,400 17,397,100 1,414,300 7.5 a 20151'1 B-4 Orange 1,602,100 1,537,000 65,100 4.1 County Californi 18,934,500 17,842,900 1,091,600 5.8 a (') As of October 2014. Source: California Employment Development Department. B-5 Table B-6 summarizes the accrued volume of taxable transactions in the County in 2009 through 2012. Annual figures for 2014 and 2015 are unavailable. TABLE B-6 COUNTY OF ORANGE TAXABLE TRANSACTIONS 2009 through 201301 (in Thousands) Type of Business 2009 2010 2011 2012 2013 Motor vehicles and parts dealers $ 4,902,480 $ 5,244,266 $ 5,777,582 $ 6,551,466 $ 7,147,519 Furniture and home furnishings stores 850,889 869,868 909,455 965,018 1,050,308 Electronics and appliance stores 1,978,869 2,058,383 2,319,992 2,536,415 2,488,963 Bldg.maid.and garden equipment and supplies 2,039,686 2,112,467 2,267,363 2,351,574 2,581,968 Food and beverage stores 1,894,642 1,911,192 1,990,893 2,056,803 2,111,209 Health and personal care stores 784,067 824,719 894,003 948,220 983,067 Gas stations 3,383,678 3,801,651 4,826,228 5,063,762 4,706,666 Clothing and clothing accessories stores 2,742,626 2,923,680 3,164,857 3,510,757 3,764,088 Sporting goods,hobby,book and music stores 1,074,579 1,075,996 1,101,159 1,133,702 1,176,097 General merchandise stores 4,376,154 4,527,201 4,771,143 5,026,911 5,169,057 Miscellaneous store retailers 1,625,880 1,611,739 1,656,162 1,738,955 1,766,849 Nonstore retailers 484,692 481,563 459,941 635,707 893,254 Food services and drinking places 5,024,379 5,109,393 5 449,117 5,853,267 6,186,983 TOTAL RETAIL AND FOOD SERVICES $31,162,619 $32,552,107 $35,587,795 $38,372,456 $40,025,929 All Other Oudets 14 550,164 15,115,073 16 143,344 16 858,156 17,565289 TOTAL ALL OUTLETS $45,712,784 $47,667,179 $51,731,139 $55,230,612 $57,591,217 0)2014 and 2015 figures unavailable, Source: California State Board of Equalization. Building Permits The total valuation of building permits issued in the County reached$4.6 billion in 2014. Table B-9 provides a summary of residential building permit valuations and the number of new dwelling units authorized in the County during the period 2008 through 2014. 2015 figures not yet available. B-6 TABLE B-9 COUNTY OF ORANGE BUILDING PERMIT ACTIVITY 2008 through 2013 ($in Thousands) 2009 2010 2011 2012 2013 2014 Valuation: Residential $ 855,193 $1,029,407 $1,238,932 $1,554,904 $2,596,543 $2,633,471 Non-Residential 952.480 1,151.929 1,299.352 1,271,035 1,578,467 2,000,168 Total $1,807,673 $2,181,336 $2,538,284 $2,825,939 54,175,010 54,633,639 New Housing Units: Single Family 1,376 1,553 1,890 2,438 3,889 3,646 Multiple Family 824 1.538 2 928 3 725 6,5 6990 Total 2,200 3,091 4,818 6,163 10,453 10,636 Source: Comtrocdon Indoshy Research Board; CHFI CIRB for 20I2,2013 and 2014. Water Supply Maintaining the County's water supply is the responsibility of the Orange County Water District ("OCWD"), manager of the County's groundwater basin, and the Municipal Water District of Orange County ("MWDOC"), the County's largest manager of imported water. More than 60% of the County's water is from local groundwater sources; the rest is imported. The County's natural underground reservoir is sufficient to carry it through temporary shortfall periods, but local supplies alone cannot sustain the present population. Recreation and Tourism The County is a tourist center in Southern California because of the broad spectrum of amusement parks and leisure, recreational and entertainment activities that it offers. These tourist attractions are complimented by the year-round mild climate. Along the County's Pacific Coast shoreline are five state beaches and parks, five municipal beaches and five County beaches. There are two small-craft docking facilities in Newport Harbor, a third located at Sunset Beach and a fourth at Dana Point. Other major recreational and amusement facilities include Disneyland, Disney's California Adventure,Knott's Berry Farm and the Spanish Mission of San Juan Capistrano. Also located within the County are the Anaheim Convention Center, Edison International Field of Anaheim, Honda Center, Orange County Performing Arts Center, Verizon Wireless Amphitheater and the Art Colony at Laguna Beach with its annual art festival. The Anaheim Convention Center is located adjacent to Disneyland. It is situated on 53 acres and is one of the largest convention centers on the West Coast. Table B-10 summarizes the number of conventions held in the County, as well as attendance for the period 2008 through 2013. 2014 figures not yet available. B-7 TABLE B-10 COUNTY OF ORANGE CONVENTION ACTIVITY Year Conventions Attendance 2008 766 1,224,586 2009 584 1,292,179 2010 576 1,171,626 2011 476 973,071 2012 488 1,230,812 2013 489 1,085,643 Source.: Anahei WOrange County Visitor and Convention Bureau. Transportation The County has access to excellent roads,rail,air and sea transportation. The Santa Ana Freeway (Interstate 5)provides direct access to downtown Los Angeles and connects with the San Diego Freeway (Interstate 405) southeast of the City of Santa Ana, providing a direct link with San Diego. The Garden Grove Freeway(State 22) and the Riverside Freeway (State 91) provide east-west transportation, linking the San Diego Freeway, Santa Ana Freeway and the Newport Freeway(State 55). The Newport Freeway provides access to certain beach communities. Drivers in the County have access to two toll road systems of the Transportation Corridor Agencies. The San Joaquin Toll Road (73)runs from Costa Mesa to San Juan Capistrano connecting to the 405 and 5 interstate freeways. The Eastern and Foothill Toll Roads (241, 261 and 133) connect the County to the 91 freeway in the north and the 5 freeway, City of Irvine other South County cities,as well as Laguna Canyon Road. The Transportation Corridor Agencies are planning to extend 241 to connect to the 5 freeway near San Clemente. Rail freight service is provided by the Burlington Northern Santa Fe Railway and the Union Pacific Railroad Company. Amtrak provides passenger service to San Diego to the south, Riverside and San Bernardino Counties to the east, and Los Angeles and Santa Barbara to the north. Metro Link provides passenger service to San Bernardino and Riverside counties to the east,the City of Oceanside to the south and Los Angeles County to the north. Bus service is provided by Greyhound Bus Lines. The Orange County Transportation Authority provides bus service between most cities in the County. Most interstate common carrier truck lines operating in California serve the County. The John Wayne Airport, owned and operated by the County, is the only commercial service airport in the County. It is approximately thirty-five miles south of Los Angeles, between the cities of Coast Mesa, Irvine, Newport Beach and Santa Ana. Major airlines, including Alaska, Aloha, America West, American, Continental, Delta, Frontier, Northwest, Southwest and United fly from the airport to major cities throughout the country. In 2010,more than 8 million passengers were served. In 1993, the Defense Base Realignment and Closure Commission directed the closure of Marine Corps Air Station (MCAS) El Toro ("El Toro" or "the base") effective July 1999. The County was designated the Local Redevelopment Authority("LRA") for development of a Community Reuse Plan to guide future development of the former MCAS El Toro. In 1994, Orange County voters narrowly approved Measure A which zoned the property for use as an international airport. This touched off a multi-year legal and political battle that ended when 58%of Orange County voters approved Measure W, the Orange County Central Park and Nature Preserve Initiative, on March 5, 2002. Measure W repeals B-8 Measure A and amends the County General Plan to prohibit aviation uses and limit future development for the unincorporated portion of El Toro to park, open space, nature preserve and education and compatible uses. The day after Measure W was approved, the Department of the Navy issued a press release stating that disposal of the former Base would be accomplished by means of a public auction. The City of Irvine responded by developing the Great Park Plan for El Toro. The City of Irvine was approved by the Local Agency formation Commission("LAFCO")to annex to the City the property that comprises the former MCAS El Toro. In light of the passage of Measure W,the County has discontinued all work related to the planning or development of a commercial airport at El Toro. Natural Disasters; Seismic Activity Natural disasters, including floods, fires and earthquakes, have been experienced in the County. Seismic records spanning the past half century and historic records dating from the 1700s through the early 1900s indicate that the County is a seismically active area. The State Office of Emergency Services indicates that significant tremors are likely to occur in several fault zones during the next 50 to 100 years, including a tremor of 7.0 on the Richter scale within the Newport-Inglewood fault system. The chance of a Richter 7.0 earthquake occurring is estimated to be I to 2% in any year. For this reason, local building codes require that structures be designed to withstand the expected accelerations for the area without collapsing or suffering severe structural damage. Maps published by the State Department of Conservation indicate that portions of the County may be subject to the risk of earthquake-induced landslides or liquefaction. B-9 ITEM NO. FC-1 Orange County Sanitation District Financing Corporation MINUTES July 22, 2015 O NS ANITgr� 9 U N ? ,y t O ti l�A,N THE NV�� Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018 0 712 212 01 5 Minutes of Financing Corporation Meeting Page 1 of 3 ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION CALL TO ORDER: Chair Nielsen called the Board of Directors, Orange County Sanitation District Financing Corporation meeting to order at 6:27 p.m. ROLL CALL: The Clerk of the Board declared a quorum as follows: ACTIVE DIRECTORS ALTERNATE DIRECTORS X John Nielsen, Chair Allan Bernstein X Gregory Sebourn Doug Chaffee X Lisa Bartlett Michelle Steel X Tom Beamish Rose Espinoza A Steven Choi Lynn Schott X Keith Curry Scott Peotter X Ellery Deaton Sandra Massa-Lavitt X Tyler Diep Joy Neugebauer X James M. Ferryman Bob Ooten X Steven Jones Kris Beard X Jim Katapodis Erik Peterson X Robert Kiley Michael Beverage X Peter Kim Michele Steggell X Lucille Kring Jordan Brandman X Greg Mills Robert Collacott X Richard Murphy Shelley Hasselbrink X Steve Nagel MichaelVo X Glenn Parker Cecilia Hupp X David Shawver Carol Warren X Fred Smith Steve Berry X Teresa Smith Mark Murphy Sal Tinajero X David Benavides X Chad Wanke Constance Underhill X John Withers Douglas Reinhart Mariellen Yarc X Stacy Berry Kelly Lore, Clerk of the Board, announced that the members of the Orange County Sanitation District Board of Directors were each being compensated $212.50 for the Board Meeting; there is no additional compensation for the Financing Corporation Meeting. 07/22/2015 Minutes of Financing Corporation Meeting Page 2 of 3 APPROVAL OF MINUTES: FC-1. Hearing no corrections or amendments made, the minutes for the meeting held on December 17, 2014, were deemed approved as so ordered by the Chair. AYES: Bartlett; Beamish; Benavides (Alternate); Stacy Berry (Alternate); Curry; Deaton; Diep; Ferryman; Jones; Katapodis; Kiley; Kring; Mills; R. Murphy; Nagel; Nielsen; Parker; Sebourn; Shawver; F. Smith; T. Smith; Wanks; and Withers. NOES: None ABSTENTIONS: Kim ABSENT: Choi Director Benavides left the room for the following item. ACTION ITEM: Director of Finance and Administrative Services, Lorenzo Tyner, provided a brief report regarding the outstanding debt of the Corporation. FC-2. MOVED, SECONDED, AND DULY CARRIED TO: Receive and File the Annual Status Report of the Orange County Sanitation District Financing Corporation. AYES: Bartlett; Beamish; Stacy Berry (Alternate); Curry; Deaton; Diep; Ferryman; Jones; Katapodis; Kiley; Kim; Kring; Mills; R. Murphy; Nagel; Nielsen; Parker; Seboum; Shawver; F. Smith; T. Smith; Wanks; and Withers. NOES: None ABSTENTIONS: None ABSENT: Benavides (Alternate) and Choi ADJOURNMENT: Chair Nielsen adjourned the meeting of the Board of Directors, Orange County Sanitation District Financing Corporation at 6:32 p.m. Kelly A. Lore Clerk of the Board 07/22/2015 Minutes of Financing Corporation Meeting Page 3 of 3 ITEM NO. 11 MINUTES OF THE LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE Orange County Sanitation District Monday, February 8, 2016 at 8:00 a.m. A regular meeting of the Legislative and Public Affairs Committee was called to order by Vice-Chair Sebourn on Monday, February 8, 2016 at 8:01 a.m., in the Administration Building of the Orange County Sanitation District. Director Beamish led the pledge of allegiance. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: John Nielsen, Board Chair Jim Herberg, General Manager Greg Sebourn, Board Vice-Chair Bob Ghirelli, Assistant General Manager Tom Beamish, Director Nick Arhontes, Director of Facilities Robert Kiley, Director Support Services Peter Kim, Director Celia Chandler, Director of Human Lucille Kring, Director Resources John Withers, Director Rob Thompson, Director of Engineering Ed Torres, Director of Operations & COMMITTEE MEMBERS ABSENT: Maintenance None. Lorenzo Tyner, Director of Finance & Administrative Services Kelly Lore, Clerk of the Board Jennifer Cabral Norbert Gaia Al Garcia Mark Manse, Rebecca Long OTHERS PRESENT: Kendra Carney, Associate General Counsel Eric Sapirstein, ENS (via Teleconference) Eric O'Donnell, Townsend Public Affairs James Peterson, Townsend Public Affairs Cori Williams, Townsend Public Affairs PUBLIC COMMENTS: None. 02/06/2016 Legislative and Public Affairs Committee Minutes Page 1 of CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Board of Directors, alter 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) MOVED, SECONDED and DULY CARRIED TO: Approve minutes for the Committee meeting held on December 14, 2015. AYES: Beamish, Kiley, Kim, Seboum and Withers NOES: None ABSTENTIONS: None ABSENT: Kring and Nielsen NON-CONSENT CALENDAR: None. INFORMATION ITEMS: 2. PUBLIC AFFAIRS UPDATE (Jennifer Cabral) Principal Public Affairs Specialist, Jennifer Cabral, presented new visual communication rebranding efforts including: photographs of a new 'Resource Recovery" lobby wall display; inclusion of statistics on recyclables; a new PowerPoint presentation template, and a display of new letterhead and business cards. Ms. Cabral provided information on media relations with the Discovery Science channel, and KTLA Channel 5, which focused on the Groundwater Replenishment System and featured General Manager Jim Herberg and OCWD General Manager Mike Markus. Ms. Cabral announced two new social media campaigns: "OCSD at Work" and "Wastewater Word Wednesday" and further explained the increasing efforts and benefits of social media. Director Beamish suggested adding the tagline "Resource Recovery" to the new letterhead and business cards. Finally, Ms. Cabral provided statistics on the community education outreach for the previous two months. Chair Nielsen arrived at 8:08 a.m, and presided. 3. LEGISLATIVE UPDATE (Rebecca Long) Senior Public Affairs Specialist, Rebecca Long introduced and welcomed James Peterson, Townsend Public Affairs, and provided an update on the following: 02/Oa/2016 Legislative and Public Affairs Committee Minutes Page 2 d4 2016 Legislative Plan; legislative key note cards and the progress of SB 163 (Hertzberg). Ms. Long announced that Assemblymember Gordon agreed to be the author of the new water bottle bill, and OCSD, OCWD and WateReuse are the sponsors. A copy of the draft bill was distributed. Director Kring arrived at 8:11 a.m. Eric Sapirstein joined the meeting via teleconference. Mr. Sapirstein provided a federal legislative update on the following: Senator Feinstein's drought bill; feasibility study process through the U.S. Bureau of Reclamation, development of a renewed Water Resources Reform and Development Act bill; water recycling; and the President's final budget. Mr. Sapirstein announced a White House Water Summit will be held on March 22, to raise awareness of water issues and potential solutions in the United States. Cori Williams, Townsend Public Affairs (TPA), introduced the newest member of the TPA team, James Peterson, and provided a state legislative update on the following: Current 2-year and newly introduced bills; cap and trade revenue; Governor's budget update; natural resources agency funding; and emergency drought mandate statistics. Director Withers suggested communicating the mandate goal reduction successes of GWRS to member agencies and the public. Ms. Williams provided additional information regarding the proposed water bottle bill, its author Assemblymember Rich Gordon, and the bill process and deadlines. Discussion on the process of drafting the bill ensued. Staff responded to questions regarding the District's position on SB 163 (Hertzberg) and the grant funding process. At the request of Chair Nielsen, Ms. Long and Ms. Cabral provided feedback and noted success on the recent ACC-OC event hosted by OCSD. 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. Chair Nielsen did not provide a report. General Manager Jim Herberg reiterated the efforts of staff who track grants and opportunities for funding projects that increase recycling. Mr. Herberg announced that he and OCWD General Manager, Mike Marcus will be presenting at the Utility Management Conference in San Diego on February 24. 02/06/2016 Legislative and Public Affairs committee Minutes Page 3 of 4 Director of Engineering Rob Thompson distributed a map of the proposed entrance modifications to the OCSD Administration Building and informed the Committee of the current plan to widen the 1-405 freeway and the construction of a new southbound onramp proposed by OCTA. Discussion of the impact to OCSD staff, contractors and the public ensued. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Director Kring stated that the Orange County Vector control is recommending the removal of all standing water due to the mosquito-bome Zika virus. Mr. Sapirstein announced that Ms. Long will be attending the CASA Washington DC Policy Forum on February 22. ADJOURNMENT: Chair Nielsen declared the meeting adjourned at 8:56 a.m. to the next Legislative and Public Affairs Committee Meeting, March 14, 2016 at 8:00 a.m. Submitted by: Kelly A. Lore Clerk of the Board 02/Oa/2016 Legislative and Public Affairs Committee Minutes Page 4 of ITEM NO. 12 MINUTES OF THE STEERING COMMITTEE Orange County Sanitation District Wednesday, January 27, 2016 at 5:00 p.m. A regular meeting of the Steering Committee of the Orange County Sanitation District was called to order by Chair Nielsen on Wednesday, January 27, 2016 at 5:05 p.m. in the Administration Building of the Orange County Sanitation District. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: John Nielsen, Chair Jim Herberg, General Manager Greg Sebourn, Vice-Chair Bob Ghirelli, Assistant General Manager Keith Curry, Administration Committee Rob Thompson, Director of Engineering Chair Nick Arhontes, Director of Facility John Withers, Operations Committee Support Services Chair Celia Chandler, Director of Human Tom Beamish, Member-At-Large Resources Lucille Kring, Member-At-Large Lorenzo Tyner, Director of Finance & David Shawver, Member-At-Large Administrative Services Ed Torres, Director of Operations & COMMITTEE MEMBERS ABSENT: Maintenance None. Kelly A. Lore, Clerk of the Board Jennifer Cabral Jim Colston Ann Crafton Norbert Gaia Al Garcia OTHERS PRESENT: Brad Hogin, General Counsel Paul Cook, IRWD PUBLIC COMMENTS: Chair Nielsen announced that written communication had been received by the Clerk of the Board and a copy had been included in the Director folders. REPORTS Chair Nielsen announced the following: OCSD will be hosting the Association of California Cities, Orange County (ACC-OC) meeting and tour at 3:00 p.m. on January 28; and a Special Meeting of the Board of Directors at 10:00 a.m. on Tuesday, February 2, which will include a presentation and tour with the SAWPA Commission 01W/16 Steering Committee Minutes Page 1 of4 members and staff. Chair Nielsen provided a short background and explanation of Board Items 19 and 20 which have been brought forth by the GWRS Steering Committee. General Manager Jim Herberg 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 December 16, 2015 Regular Steering Committee Meeting. AYES: Beamish; Curry; Kring; Nielsen; Sebourn; Shawver and Withers NOES: None ABSTENTIONS: None ABSENT: None 2. GENERAL MANAGER'S FY 2015-2016 WORK PLAN MID-YEAR UPDATE (Jim Herberg) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the General Manager's Fiscal Year 2015-2016 Work Plan Mid-Year Update. AYES: Beamish; Curry; Kring; Nielsen; Sebourn; Shawver and Withers NOES: None ABSTENTIONS: None ABSENT: None NON-CONSENT CALENDAR: 3. LABOR RELATIONS — CONTRACT NEGOTIATIONS (Celia Chandler) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize/Direct the Steering Committee to form an Ad Hoc Committee for the purpose of interviewing and selecting an external Chief Negotiator for the upcoming contract negotiations with all six(6)bargaining units at the Orange County Sanitation District; and the Board Chair will select the Ad Hoc Committee members. 01/27/2016 Sleenag Committee Agenda Page 2 of 3 AYES: Beamish; Curry; Kring; Nielsen; Sebourn; Shawver and Withers NOES: None ABSTENTIONS: None ABSENT: None Chair Nielsen called upon speaker, Paul Cook, General Manager, Irvine Ranch Water District, who spoke in favor of Item No. 4. Mr. Herberg clarified the variations in the two agreements and stated that with a few exceptions, they are substantially the same. Director Withers stated his intent to abstain on this item as a precaution of conflict of interest. At the request of Chair Nielsen, Mr. Cook clarified certain technical issues regarding additional flows in perpetuity mentioned in the agreement. 4. LOCAL SEWER FACILITIES TRANSFER AGREEMENT WITH IRVINE RANCH WATER DISTRICT (Jim Herberg) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Approve Local Sewer Facilities Transfer Agreement with Irvine Ranch Water District regarding the transfer of local sewers in Service Area 7. AYES: Beamish; Curry; Kring; Nielsen; Sebourn; and Shawver NOES: None ABSTENTION: Withers ABSENT: None INFORMATION ITEMS: None. CLOSED SESSION: Mr. Herberg announced that Item No. CS-3, Threat to Public Services or Facilities, will not be heard at the Steering Committee. CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS: 54956.9(d)(1) and 54957(b)(1) The Board convened in closed session at 5:23 p.m. to discuss two items. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Sections and are maintained by the Clerk of the Board in the 01/27/2016 Sleenag Committee Agenda Page 3 of 3 Official Book of Confidential Minutes of Board and Committee Closed Session Meetings. RECONVENED IN REGULAR SESSION: The Committee reconvened in regular session at 5:44 p.m. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: The Chair declared the meeting adjourned at 5:45 p.m. to the next Steering Committee meeting to be held on Wednesday, February 24, 2016 at 5:00 p.m. Submitted by: Kelly A. Lore Clerk of the Board 01/27/2016 Sleenag Committee Agenda Page 4 of 3 STEERING COMMITTEE Meng D310 TOBE. Dir. 02/lti24/16 02/24/1Or6 AGENDA REPORT Item Item Number 2 13 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: LABOR RELATIONS — CONTRACT NEGOTIATIONS GENERAL MANAGER'S RECOMMENDATION Authorize the Board Chair to execute an agreement with the external Chief Negotiator selected by the Ad Hoc Committee. SUMMARY BACKGROUND On January 27, 2016, the Steering Committee approved the formation of an Ad Hoc Committee for the purpose of interviewing and selecting an external Chief Negotiator for the upcoming contract negotiations with all six (6) bargaining units at the Orange County Sanitation District. The Ad Hoc Committee consists of the Board Chair, the Board Vice-Chair, and the Administration Committee Chair. The Ad-Hoc Committee is meeting to interview and select from the following list of firms: • Liebert, Cassidy, &Whitmore • Rutan & Tucker • Filarsky & Watt • Andleson, Atkinson, Loya, Ruud, & Romo On February 19, 2016, the Ad Hoc Committee conducted interviews with the firms. The Committee will report their recommendation to the Steering Committee and the Board of Directors at their regular February 24, 2016 meetings. RELEVANT STANDARDS • Highly qualified, well trained, motivated, and diverse workforce • Competitive compensation and benefits • Positive employer, employee relations • Negotiate fair and equitable labor agreements Page 1 of 3 PROBLEM Contract negotiations are expected to begin with all six (6) bargaining units prior to the expiration of their respective MOU's in June, 2016. In preparation for the upcoming negotiations, the OCSD labor negotiations team and OCSD's Chief Negotiator will need to work closely with board leadership to set parameters and develop negotiation strategies. PROPOSED SOLUTION Authorize the Board Chair to execute an agreement with the external Chief Negotiator selected as by the Ad Hoc Committee Chief Negotiator selection process in accordance with Ordinance NO. OCSD-47, Section 3.03.E Contractors Reporting to the Board. OCSD-47 is an ordinance of the Board of Directors of the Orange County Sanitation District establishing requirements and procedures forthe purchase of goods, services, and public works projects. OCSD-47 Section 3.03.E Contractors Reporting to the Board, lists that the provisions listed under Article 3 (Professional Services), shall not apply to the retention of Professional Service firms or individuals that are selected by the Board and report directly to the Board. For such contracts, the Board shall determine the method of selection, consistent with the requirements of applicable law. TIMING CONCERNS On June 30, 2016, the Memorandums of Understanding (MOU's)with all six (6)of the OCSD's bargaining units will expire. It is anticipated that the selection of the Chief Negotiator will be presented to the Board of Directors for consideration and authorization during the February, 2016 Board Meeting, leaving approximately four(4) months for preparation and negotiation once the Chief Negotiator is hired. PRIOR COMMITTEE/BOARD ACTIONS On January 27, 2016, the Steering Committee formed an Ad Hoc Committee for the purpose of interviewing and selecting an external Chief Negotiator for the upcoming contract negotiations with all six (6) bargaining units at the Orange County Sanitation District. ADDITIONAL INFORMATION On June 30, 2016, the Memorandums of Understanding (MOU's) with all six (6) of the Orange County Sanitation District bargaining units will expire. Three (3)of the bargaining units are represented by the Orange County Employees Association (OCEA). OCEA represents 96 OCSD employees, who perform paraprofessional and administrative jobs. One (1) bargaining unit is represented by the International Union of Operating Engineers - Local 501 (Local 501). Local 501 represents 191 OCSD employees, who perform operations, maintenance and other trade-related jobs. The remaining two (2) bargaining Page 2 of 3 units are represented by the Supervisor and Professional Management Group (SPMT) affiliated with the American Federation of State, County and Municipal Employees (AFSCME). SPMT/AFSCME represent 55 OCSD employees that are responsible for supervisory duties across all Divisions. In addition, SPMT/AFSCME represent 192 OCSD employees holding professional, exempt-level positions who perform analytical work. CECA N/A FINANCIAL CONSIDERATIONS It is estimated that the cost for labor relations consulting for all negotiations will total $60,000. This request complies with authority levels of the Sanitation District's Purchasing Ordinance OCSD-47 Section 3.03 B, Contractors Reporting to the Board. This item has been budgeted. (Line item: FY 2015-16 Budget Section 53256). ATTACHMENT The following attachment(s) maybe viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: N/A Page 3 of 3 STEERING COMMITTEE Meeing Dare TOBA.of Dir. OV24/16 02/24/16 AGENDA REPORT Item Number Item Nu bar 3 14 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Robert P. Ghirelli, Assistant General Manager SUBJECT: ALTERNATIVE APPROACHES TO INTEGRATED REGIONAL WATER MANAGEMENT GENERAL MANAGER'S RECOMMENDATION Information Only. SUMMARY BACKGROUND The CA Department of Water Resources (DWR) manages an Integrated Regional Water Management (IRWM) Program for the purpose of allocating Prop. 84 and Prop. 1 water bond grant funds. DWR specifies grant allotments to 12 funding areas statewide; north central Orange County is part of the Santa Ana watershed funding area, along with portions of Riverside and San Bernardino counties. The Santa Ana Watershed Project Authority (SAWPA) administers the grant program in this funding area. Approximately$63 million dollars in grant funds will be made available in 2017 to fund IRWM projects in the Santa Ana funding area. RELEVANT STANDARDS • Constantly identify and implement increases in efficiency • Support OCWD expansion of GWRS • Secure outside funding (grants)for recycled water or other capital program • Maintain collaborative and cooperative relationships with stakeholders PROBLEM There needs to be a more equitable process for allocating grant funds to ensure each region within the funding area receives its fair share of the available monies. For example, Orange County might garner a greater share of grant funds if the allocation formula was based on land area and population. Page 1 of 2 PROPOSED SOLUTION Representatives of several Orange County agencies are discussing and evaluating options to work with SAWPA on alternatives to the current allocation process. OCSD is one of several entities (along with the County of Orange, Irvine Ranch Water District, and Orange County Water District) proposing to engage SAWPA and its member agencies in a discussion to refine the IRWM funding process for Prop. 1. The goal is to work in a cooperative fashion with our SAWPA partners to put in place an allocation formula that is a more participatory and transparent process for funding projects within the Santa Ana funding area. TIMING CONCERNS With the next round of Prop. 1 funding less than a year away, it is important to engage SAWPA now to increase the likelihood that an alternative funding approach is in place to guide the 2017 grant allocations. The joint OCSD/OCWD effluent reuse study will be complete in summer 2016 and may recommend construction of projects that could be eligible to receive grant funds in the next round of funding. RAMIFICATIONS OF NOT TAKING ACTION Failure to seek a change in the IRWM funding process could mean Orange County misses out on receiving millions of dollars in Prop 1 grant funds that would otherwise be spent on projects outside Orange County. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A CEQA N/A FINANCIAL CONSIDERATIONS N/A 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 BOARD OF DIRECTORS Meeting Dare I TO%40/f Dir. 02/2 /16 AGENDA REPORT em Number Item Numbe is Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT (FULLERTON/ANAHEIM SEGMENT "A"), CONTRACT NO. 2-72A GENERAL MANAGER'S RECOMMENDATION A. Receive and file Addendum to the 1999 OCSD Strategic Plan Program Environmental Impact Report for additional project analysis for the Newhope- Placentia Trunk Sewer Replacement (Fullerton/Anaheim Segment "A"), Contract No. 2-72A; B. Receive and file bid tabulation and recommendation; C. Award a Construction Contract to Trautwein Construction Inc. for Newhope- Placentia Trunk Sewer Replacement (Fullerton/Anaheim Segment "A"), Contract No. 2-72A, for a total amount not to exceed $21,134,650; and D. Approve a contingency of$2,113,465 (10%). SUMMARY BACKGROUND The upper reaches of the Newhope-Placentia Trunk and the Rolling Hills Subtrunk carry flow from portions of the Cities of Brea, Fullerton, and Anaheim to Plant No. 1 for reclamation. Because the Newhope-Placentia Trunk has limited capacity, approximately S mgd is diverted away from the Newhope-Placentia Trunk into the SARI line at three flow diversion structures and the Yorba Linda Pump Station. Because the SARI Line includes nonreclaimable wastes, all of its flow is diverted to Plant No. 2 and not reclaimed. The Newhope-Placentia Trunk was constructed in 1959, and the Rolling Hills Subtrunk was constructed in 1966. The Yorba Linda Pump Station was constructed in 1974. RELEVANT STANDARDS • Operate and maintain facilities to minimize impacts on surrounding communities, including odor, noise, and lighting. • Less than 2.1 sanitary sewer spills per 100 miles. Page 1 of 4 • Use all practical and effective means for recovering wastewater for reuse. • CA Public Contract Code Section 20103.8, Award Construction Contract to lowest responsive, responsible bidder. PROBLEM Previous modeling efforts completed under The Orange County Sanitation District (Sanitation District) 1999 and 2006 Strategic Plan Update, and 2009 Facilities Master Plan identified capacity deficiencies in the upper reaches of the Newhope- Placentia Trunk and Rolling Hills Subtrunk. The Yorba Linda Pump Station would require extensive rehabilitation if it were to remain in service. PROPOSED SOLUTION The Newhope-Placentia Trunk Sewer Replacement project, Project No. 2-72, will increase the capacity of the Newhope-Placentia Trunk Sewer and Rolling Hills Subtrunk to satisfy current and future flows, allow abandonment of Yorba Linda Pump Station, and add flexibility to the collections system to divert reclaimable flows to Plant No. 1. This project also provides capacity for future development, minimizing the risk of sewer spills in the future. A subsequent project will abandon the Yorba Linda Pump Station. The project has been divided into three packages to facilitate bidding and construction. Package A includes the Newhope-Placentia Trunk on Yorba Linda Blvd from Campus Drive to State College Boulevard, and on State College Boulevard from Yorba Linda Boulevard to just south of the 91 Freeway. Package B will continue south on State College Boulevard from the 91 Freeway to Orangewood Avenue. Package C will address the Rolling Hills Subtrunk. This action will award a construction contract for Package A. TIMING CONCERNS The design of Package A was expedited at the City of Fullerton's request to take advantage of the Orange County Transportation Authority (OCTA) and City of Fullerton's State College Grade Separation Project that has closed a significant segment of State College Boulevard within the City of Fullerton until winter 2017. The closure will significantly reduce traffic on State College Boulevard, which will then reduce the impact of the Package A construction. Package A also includes construction along the north and west perimeters of California State University Fullerton (CSUF). To minimize impacts on CSUF, the City of Fullerton is requiring that construction in the area occur during breaks and the summer sessions. The plans and specifications have been prepared to comply with Page 2 of 4 this requirement, but delays during the allowable construction periods could have an amplified impact on the cost and time to complete the project. RAMIFICATIONS OF NOT TAKING ACTION • Missing opportunity to start work during CSUF's 2016 summer recess to reduce public impacts. • Requirement to rehabilitate, maintain, and operate the Yorba Linda Pump Station. • Restricted capacity for anticipated future flows and potential wastewater spills in public streets with associated fines. • Difficulty or inability to clean and maintain existing sewers. • Continue diversion of flows into the SARI line which are not reclaimable. • Missing opportunity to take advantage of current Grade Separation traffic closure to reduce public impacts. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District advertised Project 2-72A for bids on November 16, 2015. Seven sealed bids were received on January 21, 2016. The bids were evaluated in accordance with the Sanitation District's policies and procedures. Staff recommends awarding a construction contract to the lowest responsive bidder, Trautwein Construction Inc., for Newhope-Placentia Trunk Sewer Replacement (Fullerton/Anaheim Segment "A"), Contract No. 2-72A, for a total amount not to exceed $21,134,650. This project's design has gone through an extensive review including construction and design reviews via third-party Consultants, as well as a complete geotechnical and utility evaluation to help mitigate construction concerns. These efforts notwithstanding, a contingency of 10% for construction change orders on this project is recommended due to the higher than normal risk associated with performing work on State College Boulevard, in the Cities of Fullerton and Anaheim, California, a roadway heavily congested with underground utilities. These risks are associated with multiple construction headings, multiple traffic control setups, and Contractor requirement to complete work only during the summer months near CSUF campus. These considerations necessitate a higher than normal contingency to help insure the project proceeds without delay. Page 3 of 4 Summary information on the bid opening for Newhope-Placentia Trunk Sewer Replacement (Fullerton/Anaheim Segment "A"), Contract No. 2-72A is as follows: Project Budget (All 3 Packages) $104,890,000 Construction Contract Budget (All 3 Packages) $ 66,726,002 Engineer's Estimate (Package A- i.e. 2-72A) $ 23,000,000 Bidder Amount of Bid Trautwein Construction Inc. $ 21,134,650 OHL USA, Inc. dba Group OHL USA, Inc. $ 21,343,964* Steve P. Rados, Inc. $ 23,998,100 W.A. Rasic Construction Co., Inc. $ 24,445,000 Steve Bubalo Construction Co. $ 24,877,350 GRFCO, Inc. $ 26,262,800 Kiewit Infrastructure West Co. $ 26,477,300 *Bid amount after correction of math error CEQA The Sanitation District, as lead agency, prepared a Program Environmental Impact Report (PEIR) entitled 1999 OCSD Strategic Plan. The Board certified the PEIR on October 27, 1999. The Sanitation District filed a Notice of Determination on October 29, 1999. The Sanitation District has determined that the project is within the scope of the PEIR, and that an Addendum to the PEIR should be prepared. The Addendum is attached hereto as Exhibit"A." FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted (Line item: Budget Update FY2015-16 Section 8, Page 23. Date of Approval Contract Amount Contingency 02/24/16 $21,134,650 10% ATTACHMENT The following attachment(s) maybe viewed on-line at the OCSD website (Mm w.ocsd.com) with the complete agenda package: • Construction Contract • Addendum to PEIR RC:dm:gc Page 4 of 4 PART A CONTRACT AGREEMENT C-CA-121914 TABLE OF CONTENTS CONTRACT AGREEMENT SECTION - 1 GENERAL CONDITIONS..................................................................1 SECTION -2 MATERIALS AND LABOR.................................................................4 SECTION -3 PROJECT..........................................................................................5 SECTION -4 PLANS AND SPECIFICATONS ........................................................5 SECTION -5 TIME OF COMMENCEMENT AND COMPLETION ..........................5 SECTION -6 TIME IS OF THE ESSENCE .............................................................6 SECTION -7 EXCUSABLE DELAYS......................................................................6 SECTION -8 EXTRA WORK...................................................................................7 SECTION -9 CHANGES IN PROJECT...................................................................7 SECTION - 10 LIQUIDATED DAMAGES FOR DELAY.............................................8 SECTION - 11 CONTRACT PRICE AND METHOD OF PAYMENT.........................8 SECTION - 12 SUBSTITUTION OF SECURITIES IN LIEU OF RETENTION OF FUNDS ............................................................................................10 SECTION - 13 COMPLETION.................................................................................10 SECTION - 14 CONTRACTOR'S EMPLOYEES COMPENSATION.......................10 SECTION - 15 SURETY BONDS ............................................................................13 SECTION - 16 INSURANCE....................................................................................14 SECTION - 17 RISK AND INDEMNIFICATION.......................................................23 SECTION - 18 TERMINATION................................................................................23 SECTION - 19 WARRANTY....................................................................................23 SECTION -20 ASSIGNMENT.................................................................................24 SECTION -21 RESOLUTION OF DISPUTES ........................................................24 SECTION -22 SAFETY& HEALTH ........................................................................25 SECTION -23 NOTICES.........................................................................................25 C-CA-121914 CONTRACT AGREEMENT ORANGE COUNTY SANITATION DISTRICT PROJECT NO. 2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT (FULLERTON/ANAHEIM SEGMENT "A") THIS AGREEMENT is made and entered into, to be effective, this February 24, 2016, by and between Trautwein Construction Inc., hereinafter referred to as"CONTRACTOR" and the Orange County Sanitation District, hereinafter referred to as "OCSD". WITNESSETH That for and in consideration of the promises and agreements hereinafter made and exchanged, OCSD and CONTRACTOR agree as follows: SECTION-1 GENERAL CONDITIONS CONTRACTOR certifies and agrees that all the terms, conditions and obligations of the Contract Documents as hereinafter defined, the location of the job site, and the conditions under which the Work is to be performed have been thoroughly reviewed, and enters into this Contract based upon CONTRACTOR's investigation of all such matters and is in no way relying upon any opinions or representations of OCSD. It is agreed that this Contract represents the entire agreement. It is further agreed that the Contract Documents are each incorporated into this Contract by reference, with the same force and effect as if the same were set forth at length herein, and that CONTRACTOR and its Subcontractors, if any, will be and are bound by any and all of said Contract Documents insofar as they relate in any part or in any way, directly or indirectly, to the Work covered by this Contract. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 1 of 26 A. Contract Documents Order of Precedence "Contract Documents" refers to those documents identified in the definition of"Contract Documents" in the General Conditions—Definitions. 1. In the event of a conflict between one Contract Document and any of the other Contract Documents, the provisions in the document highest in precedence shall be controlling. The order of precedence of the Contract Documents is as follows: a. Supplemental Agreements—the last in time being the first in precedence b. Addenda issued prior to opening of Bids—the last in time being the first in precedence c. Contract Agreement d. Permits and other regulatory requirements e. Special Provisions f. General Conditions (GC) g. Notice Inviting Bids and Instruction to Bidders h. Geotechnical Baseline Report(GBR), if attached as a Contract Document I. Plans and Specifications—in these documents the order of precedence shall be: i. Specifications (Divisions 01-17) ii. Plans H. General Requirements (GR) iv. Standard Drawings and Typical Details j. CONTRACTOR'S Bid C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 2 of 26 2. In the event of a conflict between terms within an individual Contract Document, the conflict shall be resolved by applying the following principles as appears applicable: a. Figured dimensions on the Contract Documents shall govern. Dimensions not specified shall be as directed by the ENGINEER. Details not shown or specified shall be the same as similar parts that are shown or specified, or as directed. Full-size details shall take precedence over scale Drawings as to shape and details of construction. Specifications shall govern as to material and workmanship. b. The Contract Documents calling for the higher quality material or workmanship shall prevail. Materials or Work described in words, which so applied, have a well known technical or trade meaning shall be deemed to refer to such recognized standards. In the event of any discrepancy between any Drawings and the figures thereon, the figures shall be taken as correct. C. Scale Drawings, full-size details, and Specifications are intended to be fully complementary and to agree. Should any discrepancy between Contract Documents come to the CONTRACTOR's attention, or should an error occur in the efforts of others, which affect the Work, the CONTRACTOR shall notify the ENGINEER, in writing, at once. In the event any doubts or questions arise with respect to the true meaning of the Contract Documents, reference shall be made to the ENGINEER whose written decision shall be final. If the CONTRACTOR proceeds with the Work affected without written instructions from the ENGINEER, the CONTRACTOR shall be fully responsible for any resultant damage or defect. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A-) CONFORMED Page 3 of 26 d. Anything mentioned in the Specifications and not indicated in the Plans, or indicated in the Plans and not mentioned in the Specifications, shall be of like effect as if indicated and mentioned in both. In case of discrepancy in the Plans or Specifications, the matter shall be immediately submitted to OCSD's ENGINEER, without whose decision CONTRACTOR shall not adjust said discrepancy save only at CONTRACTOR's own risk and expense. The decision of the ENGINEER shall be final. In all matters relating to the acceptability of material, machinery or plant equipment; classifications of material or Work; the proper execution, progress or sequence of the Work; and quantities interpretation of the Contract Documents, the decision of the ENGINEER shall be final and binding, and shall be a condition precedent to any payment under the Contract, unless otherwise ordered by the Board of Directors. B. Definitions Capitalized terms used in this Contract are defined in the General Conditions, Definitions. Additional terms may be defined in the Special Provisions. SECTION—2 MATERIALS AND LABOR CONTRACTOR shall furnish, under the conditions expressed in the Plans and Specifications, at CONTRACTOR'S own expense, all labor and materials necessary, except such as are mentioned in the Specifications to be furnished by OCSD, to construct and complete the Project, in good workmanlike and substantial order. If CONTRACTOR fails to pay for labor or materials when due, OCSD may settle such claims by making demand upon the Surety to this Contract. In the event of the failure or refusal of the Surety to satisfy said claims, OCSD may settle them directly and deduct the amount of payments from the Contract Price and any amounts due to CONTRACTOR. In the event OCSD receives a stop payment notice from any C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 4 of 26 laborer or material supplier alleging non-payment by CONTRACTOR, OCSD shall be entitled to deduct all of its costs and expenses incurred relating thereto, including but not limited to administrative and legal fees. SECTION-3 PROJECT The Project is described as: PROJECT NO. 2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT (FULLERTON/ANAHEIM SEGMENT "A") SECTION -4 PLANS AND SPECIFICATONS The Work to be done is shown in a set of Plans and Specifications entitled: PROJECT NO. 2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT (FULLERTON/ANAHEIM SEGMENT"A") Said Plans and Specifications and any revision, amendments and addenda thereto are attached hereto and incorporated herein as part of this Contract and referred to by reference. SECTION—5 TIME OF COMMENCEMENT AND COMPLETION CONTRACTOR agrees to commence the Project within 15 calendar days from the date set forth in the "Notice to Proceed"sent by OCSD, unless otherwise specified therein and shall diligently prosecute the Work to completion within 545 calendar days from the date of the "Notice to Proceed" issued by OCSD, excluding delays caused or authorized by OCSD as set forth in Sections 7, 8, and 9 hereof, and applicable provisions in the General Conditions. The time for completion includes 15 calendar days determined by OCSD likely to be inclement weather when CONTRACTOR will be unable to work. In addition, CONTRACTOR shall accomplish such milestones within the periods of performance set forth in Appendix A of the Special Provisions entitled "Work Completion Schedule." C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A-) CONFORMED Page 5 of 26 SECTION-6 TIME IS OF THE ESSENCE Time is of the essence of this Contract. As required by the Contract Documents, CONTRACTOR shall prepare and obtain approval of all shop drawings, details and samples, and do all other things necessary and incidental to the prosecution of CONTRACTOR's Work in conformance with an approved construction progress schedule. CONTRACTOR shall coordinate the Work covered by this Contract with that of all other contractors, subcontractors and of OCSD, in a manner that will facilitate the efficient completion of the entire Work and accomplish the required milestone(s), if any, by the applicable deadline(s) in accordance with Section 5 herein. OCSD shall have the right to assert complete control of the premises on which the Work is to be performed and shall have the right to decide the time or order in which the various portions of the Work shall be installed or the priority of the work of subcontractors, and, in general, all matters representing the timely and orderly conduct of the Work of CONTRACTOR on the premises. SECTION—7 EXCUSABLE DELAYS CONTRACTOR shall only be excused for any delay in the prosecution or completion of the Project as specifically provided in General Conditions, "Extensions for Delay", and the General Requirements, "By CONTRACTOR or Others— Unknown Utilities during Contract Work". Extensions of time and extra compensation arising from such excusable delays will be determined in accordance with the General Conditions, "Extension of Time for Delay" and "Contract Price Adjustments and Payments", and extensions of time and extra compensation as a result of incurring undisclosed utilities will be determined in accordance with General Requirements, "By CONTRACTOR or Others— Unknown Utilities during Contract Work". OCSD's decision will be conclusive on all parties to this Contract. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 6 of 26 SECTION—8 EXTRA WORK The Contract Price as set forth in Section 11, includes compensation for all Work performed by CONTRACTOR, unless CONTRACTOR obtains a Change Order signed by a designated representative of OCSD specifying the exact nature of the Extra Work and the amount of extra compensation to be paid all as more particularly set forth in Section 9 hereof and the General Conditions, "Request for Change (Changes at CONTRACTOR's Request)", "OWNER Initiated Changes", and "Contract Price Adjustments and Payments". In the event a Change Order is issued by OCSD pursuant to the Contract Documents, OCSD shall extend the time fixed in Section 5 for completion of the Project by the number of days, if any, reasonably required for CONTRACTOR to perform the Extra Work, as determined by OCSD's ENGINEER. The decision of the ENGINEER shall be final. SECTION—9 CHANGES IN PROJECT OCSD may at any time, without notice to any Surety, by Change Order, make any changes in the Work within the general scope of the Contract Document, including but not limited to changes: 1. In the Specifications (including Drawings and designs); 2. In the time, method or manner of performance of the Work; 3. In OCSD-furnished facilities, equipment, materials, services or site; or 4. Directing acceleration in the performance of the Work. No change of period of performance or Contract Price, or any other change in the Contract Documents, shall be binding until the Contract is modified by a fully executed Change Order. All Change Orders shall be issued in accordance with the requirements set forth in the General Conditions, "Request for Change (Changes at CONTRACTOR's Request)" and "OWNER Initiated Changes". C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 7 of 26 SECTION—10 LIQUIDATED DAMAGES FOR DELAY Liquidated Damages shall be payable in the amounts and upon the occurrence of such events or failure to meet such requirements or deadlines as provided in the Special Provisions, "Liquidated Damages and Incentives." SECTION—11 CONTRACT PRICE AND METHOD OF PAYMENT A. OCSD agrees to pay and the CONTRACTOR agrees to accept as full consideration for the faithful performance of this Contract, subject to any additions or deductions as provided in approved Change Orders, the sum of Twenty-One Million One Hundred Thirty-Four Thousand Six Hundred Fifty Dollars ($21,134,650)as itemized on the Attached Exhibit"A". Upon satisfaction of the conditions precedent to payment set forth in the General Requirements, Additional General Requirements and General Conditions (including but not limited to Sections entitled "Mobilization Payment Requirements"and "Payment Itemized Breakdown of Contract Lump Sum Prices"), there shall be paid to the CONTRACTOR an initial Net Progress Payment for mobilization. OCSD shall issue at the commencement of the job a schedule which shows: 1. A minimum of one payment to be made to the CONTRACTOR for each successive four(4)week period as the Work progresses, and 2. The due dates for the CONTRACTOR to submit requests for payment to meet the payment schedule. After the initial Net Progress Payment, and provided the CONTRACTOR submits the request for payment prior to the end of the day required to meet the payment schedule, the CONTRACTOR shall be paid a Net Progress Payment on the corresponding monthly payment date set forth in the schedule. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 8 of 26 Payments shall be made on demands drawn in the manner required by law, accompanied by a certificate signed by the ENGINEER, stating that the Work for which payment is demanded has been performed in accordance with the terms of the Contract Documents, and that the amount stated in the certificate is due under the terms of the Contract. Payment applications shall also be accompanied with all documentation, records, and releases as required by the Contract, Exhibit A, Schedule of Prices, and General Conditions, "Payment for Work—General". The Total amount of Progress Payments shall not exceed the actual value of the Work completed as certified by OCSD's ENGINEER. The processing of payments shall not be considered as an acceptance of any part of the Work. B. As used in this Section, the following defined terms shall have the following meanings: 1. "Net Progress Payment" means a sum equal to the Progress Payment less the Retention Amount and other qualified deductions (Liquidated Damages, stop payment notices, etc.). 2. "Progress Payment" means a sum equal to: a. the value of the actual Work completed since the commencement of the Work as determined by OCSD; b. plus the value of material suitably stored at the worksite, treatment plant or approved storage yards subject to or under the control of OCSD since the commencement of the Work as determined by OCSD; C. less all previous Net Progress Payments; d. less all amounts of previously qualified deductions; e. less all amounts previously retained as Retention Amounts. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTO WANAHEIM SEGMENT-A-) CONFORMED Page 9 of 26 3. "Retention Amount"for each Progress Payment means the percentage of each Progress Payment to be retained by OCSD to assure satisfactory completion of the Contract. The amount to be retained from each Progress Payment shall be determined as provided in the General Conditions—"Retained Funds; Substitution of Securities." SECTION—12 SUBSTITUTION OF SECURITIES IN LIEU OF RETENTION OF FUNDS Pursuant to Public Contract Code Section 22300 at seq., the CONTRACTOR may, at its sole expense, substitute securities as provided in General Conditions—"Retained Funds; Substitution of Securities." SECTION—13 COMPLETION Final Completion and Final Acceptance shall occur at the time and in the manner specified in the General Conditions, "Final Acceptance and Final Completion", "Final Payment" and Exhibit A- Schedule of Prices. Upon receipt of all documentation, records, and releases as required by the Contract from the CONTRACTOR, OCSD shall proceed with the Final Acceptance as specified in General Conditions. SECTION-14 CONTRACTOR'S EMPLOYEES COMPENSATION A. Davis-Bacon Act: CONTRACTOR will pay and will require all Subcontractors to pay all employees on said Project a salary or wage at least equal to the prevailing rate of per diem wages as determined by the Secretary of Labor in accordance with the Davis-Bacon Act for each craft or type of worker needed to perform the Contract. The provisions of the Davis-Bacon Act shall apply only if the Contract is in excess of Two Thousand Dollars ($2,000.00)and when twenty-five percent (25%) or more of the Contract is funded by federal assistance. If C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 10 of 26 the aforesaid conditions are met, a copy of the provisions of the Davis-Bacon Act to be complied with are incorporated herein as a part of this Contract and referred to by reference. B. General Prevailing Rate: OCSD has been advised by the State of California Director of Industrial Relations of its determination of the general prevailing rate of per diem wages and the general prevailing rate for legal holiday and overtime Work in the locality in which the Work is to be performed for each craft or type of Work needed to execute this Contract, and copies of the same are on file in the Office of the ENGINEER of OCSD. The CONTRACTOR agrees that not less than said prevailing rates shall be paid to workers employed on this public works Contract as required by Labor Code Section 1774 of the State of California. Per California Labor Code 1773.2, OCSD will have on file copies of the prevailing rate of per diem wages at its principal office and at each job site, which shall be made available to any interested party upon request. C. Forfeiture for Violation: CONTRACTOR shall, as a penalty to OCSD, forfeit Two Hundred Dollars ($200.00)for each calendar day or portion thereof for each worker paid (either by the CONTRACTOR or any Subcontractor under it) less than the prevailing rate of per diem wages as set by the Director of Industrial Relations, in accordance with Sections 1770-1780 of the California Labor Code for the Work provided for in this Contract, all in accordance with Section 1775 of the Labor Code of the State of California. D. Apprentices: Sections 1777.5, 1777.6, 1777.7 of the Labor Code of the State of California, regarding the employment of apprentices are applicable to this Contract and the CONTRACTOR C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A-) CONFORMED Page 11 of 26 shall comply therewith if the prime contract involves Thirty Thousand Dollars ($30,000.00) or more. E. Workdav: In the performance of this Contract, not more than eight(8) hours shall constitute a day's work, and the CONTRACTOR shall not require more than eight (8) hours of labor in a day from any person employed by him hereunder except as provided in paragraph (B)above. CONTRACTOR shall conform to Article 3, Chapter 1, Part 7 (Section 1810 at sec.)of the Labor Code of the State of California and shall forfeit to OCSD as a penalty, the sum of Twenty-five Dollars ($25.00)for each worker employed in the execution of this Contract by CONTRACTOR or any Subcontractor for each calendar day during which any worker is required or permitted to labor more than eight(8) hours in any one calendar day and forty (40) hours in any one week in violation of said Article. CONTRACTOR shall keep an accurate record showing the name and actual hours worked each calendar day and each calendar week by each worker employed by CONTRACTOR in connection with the Project. F. Registration: Record of Waces: Inspection: CONTRACTOR shall comply with the registration requirements of Labor Code Section 1725.5. Pursuant to Labor Code Section 1771.4, the Work is subject to compliance monitoring by the California Department of Industrial Relations. CONTRACTOR shall maintain accurate payroll records and shall submit payroll records to the Labor Commissioner pursuant to Labor Code Section 1771.4(a)(3). Penalties for non-compliance with the requirements of Section 1776 may be deducted from progress payments per Section 1776. CONTRACTOR shall comply with the job site notices posting requirements established by the Labor Commissioner per Title 8, California Code of Regulations Section 16461(a). C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 12 of 26 SECTION — 15 SURETY BONDS CONTRACTOR shall, before entering upon the performance of this Contract, furnish Bonds approved by OCSD's General Counsel—one in the amount of one hundred percent (100%)of the Contract amount, to guarantee the faithful performance of the Work, and the other in the amount of one hundred percent (100%)of the Contract amount to guarantee payment of all claims for labor and materials furnished. As changes to the Contract occur via approved Change Orders, the CONTRACTOR shall assure that the amounts of the Bonds are adjusted to maintain 100% of the Contract Price. This Contract shall not become effective until such Bonds are supplied to and approved by OCSD. Bonds must be issued by a Surety authorized by the State Insurance Commissioner to do business in California. The Performance Bond shall remain in full force and effect through the warranty period, as specified in Section 19 below. All Bonds required to be submitted relating to this Contract must comply with California Code of Civil Procedure Section 995.630. Each Bond shall be executed in the name of the Surety insurer under penalty of perjury, or the fact of execution of each Bond shall be duly acknowledged before an officer authorized to take and certify acknowledgments, and either one of the following conditions shall be satisfied: A. A copy of the transcript or record of the unrevoked appointment, power of attorney, by- laws, or other instrument, duly certified by the proper authority and attested by the seal of the insurer entitling or authorizing the person who executed the Bond to do so for and on behalf of the insurer, is on file in the Office of the County Clerk of the County of Orange; or B. A copy of a valid power of attorney is attached to the Bond. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTO WANAHEIM SEGMENT-A-) CONFORMED Page 13 of 26 SECTION — 16 INSURANCE CONTRACTOR shall purchase and maintain, for the duration of the Contract, insurance against claims for injuries to persons, or damages to property which may arise from or in connection with the performance of the Work hereunder, and the results of that Work by CONTRACTOR, its agents, representatives, employees, or Subcontractors, in amounts equal to the requirements set forth below. CONTRACTOR shall not commence Work under this Contract until all insurance required under this Section is obtained in a form acceptable to OCSD, nor shall CONTRACTOR allow any Subcontractor to commence Work on a subcontract until all insurance required of the Subcontractor has been obtained. CONTRACTOR shall maintain all of the foregoing insurance coverages in force through the point at which the Work under this Contract is fully completed and accepted by OCSD pursuant to the provisions of the General Conditions, "Final Acceptance and Final Completion". Furthermore, CONTRACTOR shall maintain all of the foregoing insurance coverages in full force and effect throughout the warranty period, commencing on the date of Final Acceptance. The requirement for carrying the foregoing insurance shall not derogate from the provisions for indemnification of OCSD by CONTRACTOR under Section 17 of this Contract. Notwithstanding nor diminishing the obligations of CONTRACTOR with respect to the foregoing, CONTRACTOR shall subscribe for and maintain in full force and effect during the life of this Contract, inclusive of all changes to the Contract Documents made in accordance with the provisions of the General Conditions, "Request for Change (Changes at CONTRACTOR's Request)" and/or"OWNER Initiated Changes", the following insurance in amounts not less than the amounts specified. OCSD reserves the right to amend the required limits of insurance commensurate with the CONTRACTOR's risk at any time during the course of the Project. No vehicles may enter OCSD Premises/worksite without Possessing the required insurance coverage. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 14 of 26 CONTRACTOR's insurance shall also comply with all insurance requirements prescribed by agencies from whom permits shall be obtained for the Work and any other third parties from whom third party agreements are necessary to perform the Work (collectively, the "Third Parties"), The Special Provisions may list such requirements and sample forms and requirements from such Third Parties may be included in an attachment to the Specifications Section entitled "Permits". CONTRACTOR bears the responsibility to discover and comply with all requirements of Third Parties, including meeting specific insurance requirements, that are necessary for the complete performance of the Work. To the extent there is a conflict between the Third Parties' insurance requirements and those set forth by OCSD herein, the requirement(s) providing the more protective coverage for both OSCD and the Third Parties shall control and be purchased and maintained by CONTRACTOR. A. Limits of Insurance 1. General Liability: Twenty Five Million Dollars ($25,000,000) per occurrence and a general aggregate limit of Twenty Five Million Dollars ($25,000,000)for bodily injury, personal injury and property damage. Coverage shall include each of the following: a. Premises-Operations. b. Products and Completed Operations, with limits of at least Twenty Five Million Dollars ($25,000,000) per occurrence and a general aggregate limit of Twenty Five Million Dollars ($25,000,000)which shall be in effect at all times during the warranty period set forth in the Warranty section herein, and as set forth in the General Conditions, "Warranty(CONTRACTOR's Guarantee)", plus any additional extension or continuation of time to said warranty period that may be required or authorized by said provisions. C. Broad Form Property Damage, expressly including damage arising out of explosion, collapse, or underground damage. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTOWANAHEIM SEGMENT"A") CONFORMED Page 15 of 26 d. Contractual Liability, expressly including the indemnity provisions assumed under this Contract. e. Separation of Insured Clause, providing that coverage applies separately to each insured, except with respect to the limits of liability. f. Independent CONTRACTOR's Liability. To the extent first dollar coverage, including defense of any claim, is not available to OCSD or any other additional insured because of any SIR, deductible, or any other form of self insurance, CONTRACTOR is obligated to assume responsibility of insurer until the deductible, SIR or other condition of insurer assuming its defense and/or indemnity has been satisfied. CONTRACTOR shall be responsible to pay any deductible or SIR. g. If a crane will be used, the General Liability insurance will be endorsed to add Riggers Liability coverage or its equivalent to cover the usage of the crane and exposures with regard to the crane operators, riggers and others involved in using the crane. h. If divers will be used, the General Liability insurance will be endorsed to cover marine liability or its equivalent to cover the usage of divers. 2. Automobile Liability: The CONTRACTOR shall maintain a policy of Automobile Liability Insurance on a comprehensive form covering all owned, non-owned, and hired automobiles, trucks, and other vehicles providing the following minimum limits of liability coverage: Either(1)a combined single limit of Fifteen Million Dollars ($15,000,000)and a general aggregate limit of Fifteen Million Dollars ($15,000,000)for bodily injury, personal injury and property damage; C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 16 of 26 Or alternatively, (2) Fifteen Million Dollars ($15,000,000) per person for bodily injury and Five Million Dollars ($5,000,000) per accident for property damage. 3. Umbrella Excess Liability: The minimum limits of general liability and automobile liability insurance required, as set forth above, shall be provided for either in a single policy of primary insurance or a combination of policies of primary and umbrella excess coverage. Excess liability coverage shall be issued with limits of liability which, when combined with the primary insurance, will equal the minimum limits for general liability and automobile liability. 4. Worker's Compensation/Emolover's Liability: CONTRACTOR shall provide such Worker's Compensation Insurance as required by the Labor Code of the State of California, including employer's liability with a minimum limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease. If an exposure to Jones Act liability may exist, the insurance required herein shall include coverage with regard to Jones Act claims. Where permitted by law, CONTRACTOR hereby waives all rights of recovery by subrogation because of deductible clauses, inadequacy of limits of any insurance policy, limitations or exclusions of coverage, or any other reason against OCSD, its or their officers, agents, or employees, and any other contractor or subcontractor performing Work or rendering services on behalf of OCSD in connection with the planning, development and construction of the Project. In all its insurance coverages related to the Work, CONTRACTOR shall include clauses providing that each insurer shall waive all of its rights of recovery by subrogation against OCSD, its or their officers, agents, or employees, or any other contractor or subcontractor performing Work or rendering services at the Project. Where permitted by law, CONTRACTOR C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A-) CONFORMED Page 17 of 26 shall require similar written express waivers and insurance clauses from each of its Subcontractors of every tier. A waiver of subrogation shall be effective as to any individual or entity, even if such individual or entity (a)would otherwise have a duty of indemnification, contractual or otherwise, (b)did not pay the insurance premium, directly or indirectly, and (c)whether or not such individual or entity has an insurable interest in the property damaged. 5. Pollution Liability Insurance: CONTRACTOR shall purchase and maintain insurance for pollution liability covering bodily injury, property damage (including loss of use of damaged property or property that has not been physically injured or destroyed), cleanup costs, and defense costs (including costs and expenses for investigation, defense, or settlement of claims). Coverage shall carry limits of at least One Million Dollars ($1,000,000) Dollars and shall apply to sudden and non-sudden pollution conditions (including sewage spills), both at the site or needed due to migration of pollutants from the site, resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials, or other irritants, contaminants or pollutants. If CONTRACTOR provides coverage written on a claims-made basis, OCSD has the right to approve or reject such coverage in its own discretion. If written on a claims- made basis, the CONTRACTOR warrants that any retroactive date applicable to coverage under the policy precedes the effective date of this Contract, and that continuous coverage will be maintained, or an extended discovery period will be exercised, for a period of two years beginning from the time that the Project under this Contract is completed. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 18 of 26 6. Limits are Minimums: If CONTRACTOR maintains higher limits than the minimums shown in this Section, OCSD requires and shall be entitled to coverage for the higher limits maintained by the CONTRACTOR. B. Deductibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by OCSD. At the option of OCSD, either: the Insurer shall reduce or eliminate such deductibles or self- insured retentions as respects OCSD, its Directors, officers, agents, CONSULTANTS, and employees; or CONTRACTOR shall provide a financial guarantee satisfactory to OCSD guaranteeing payment of losses and related investigations, claim administration, and defense expenses. C. Other Insurance Provisions 1. Each such policy of General Liability Insurance and Automobile Liability Insurance shall be endorsed to contain, the following provisions: a. OCSD, its Directors, officers, agents, CONSULTANTS, and employees, and all public agencies from whom permits will be obtained, and their Directors, officers, agents, and employees are hereby declared to be additional insureds under the terms of this policy, but only with respect to the operations of CONTRACTOR at or from any of the sites of OCSD in connection with this Contract, or acts and omissions of the additional insured in connection with its general supervision or inspection of said operations related to this Contract. b. Insurance afforded by the additional insured endorsement shall apply as primary insurance, and other insurance maintained by OCSD shall be excess only and not contributing with insurance provided under this policy. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A-) CONFORMED Page 19 of 26 2. Each insurance policy required herein shall be endorsed to state that coverage shall not be cancelled by either party, except after thirty (30)days prior written notice by certified mail, return receipt requested, and that coverage shall not be cancelled for non-payment of premium except after ten (10)days prior written notice by certified mail, return receipt requested. Should there be changes in coverage or an increase in deductible or SIR amounts, CONTRACTOR undertakes to procure a manuscript endorsement from its insurer giving 30 days prior notice of such an event to OCSD, or to have its insurance broker/agent send to OCSD a certified letter describing the changes in coverage and any increase in deductible or SIR amounts. The certified letter must be sent Attention: Risk Management and shall be received not less than twenty (20) days prior to the effective date of the change(s). The letter must be signed by a Director or Officer of the broker/agent and must be on company letterhead, and may be sent via e-mail in pdf format. 3. Coverage shall not extend to any indemnity coverage for the active negligence of any additional insured in any case where an agreement to indemnify the additional insured would be invalid under California Civil Code Section 2782(b). 4. If required by a public agency from whom permit(s)will be obtained, each policy of General Liability Insurance and Automobile Liability Insurance shall be endorsed to specify by name the public agency and its legislative members, officers, agents, CONSULTANTS, and employees, to be additional insureds. D. Acceptability of Insurers Insurers must have an "A-", or better, Policyholder's Rating, and a Financial Rating of at least Class Vill, or better, in accordance with the most current A.M. Best Rating Guide. OCSD recognizes that State Compensation Insurance Fund has withdrawn from participation in the A.M. Best Rating Guide process. Nevertheless, OCSD will accept C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 20 of 26 State Compensation Insurance Fund for the required policy of worker's compensation insurance, subject to OCSD's option, at any time during the term of this Contract, to require a change in insurer upon twenty (20)days written notice. Further, OCSD will require CONTRACTOR to substitute any insurer whose rating drops below the levels herein specified. Said substitution shall occur within twenty (20)days of written notice to CONTRACTOR by OCSD or its agent. E. Verification of Coverage CONTRACTOR shall furnish OCSD with original certificates and mandatory endorsements affecting coverage. Said policies and endorsements shall conform to the requirements herein stated. All certificates and endorsements are to be received and approved by OCSD before Work commences. OCSD reserves the right to require complete, certified copies of all required insurance policies, including endorsements, affecting the coverage required by these Specifications at any time. F. Subcontractors CONTRACTOR shall be responsible to establish insurance requirements for any Subcontractors hired by CONTRACTOR. The insurance shall be in amounts and types reasonably sufficient to deal with the risk of loss involving the Subcontractor's operations and work. OCSD and any public agency issuing permits for the Project must be named as "Additional Insured"on any General Liability or Automobile Liability policy obtained by a Subcontractor. The CONTRACTOR must obtain copies and maintain current versions of all Subcontractors' policies, Certificate of Liability and mandatory endorsements effecting coverage. Upon request, CONTRACTOR must furnish OCSD with the above referenced required documents. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONAANAHEIM SEGMENT-A-) CONFORMED Page 21 of 26 G. Required Forms and Endorsements 1. Required ACORD Form a. Certificate of Liability Form 25 2. Required Insurance Services Office, Inc. Endorsements (when alternative forms are shown, they are listed in order of preference) In the event any of the following forms are cancelled by Insurance Services Office, Inc. (ISO), or are updated, the ISO replacement form or equivalent must be supplied. a. Commercial General Liability Form CG-0001 10 01 b. Additional Insured Including Form CG-2010 10 01 and Products-Completed Operations Form CG-2037 10 01 C. Waiver of Transfer of Rights of Form CG-2404 11 85; or Recovery Against Others to Us/ Form CG-2404 10 93 Waiver of Subrogation 3. Required State Compensation Insurance Fund Endorsements a. Waiver of Subrogation Endorsement No. 2570 b. Cancellation Notice Endorsement No. 2065 4. Additional Required Endorsements a. Notice of Policy Termination Manuscript Endorsement 5. Pollution Liability Endorsements There shall be a Separation of Insured Clause or endorsement, providing that coverage applies separately to each insured, except with respect to the limits of liability. There shall also be an endorsement or policy language containing a waiver of subrogation rights on the part of the insurer. OCSD, its directors, officers, agents, CONSULTANTS and employees and all public agencies from whom permits will be obtained as well as their directors, officers, agents, and employees shall be included as insureds under the policy. Any C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 22 of 26 additional insured endorsement shall contain language at least as broad as the coverage language contained in ISO form CG 20 10 11 85 or alternatively in both CG 20 10 10 01 and CG 20 37 10 01 together. SECTION—17 RISK AND INDEMNIFICATION All Work covered by this Contract done at the site of construction or in preparing or delivering materials to the site shall be at the risk of CONTRACTOR alone. CONTRACTOR shall save, indemnify, defend, and keep OCSD and others harmless as more specifically set forth in General Conditions, "General Indemnification". SECTION-18 TERMINATION This Contract may be terminated in whole or in part in writing by OCSD in the event of substantial failure by the CONTRACTOR to fulfill its obligations under this Agreement, or it may be terminated by OCSD for its convenience provided that such termination is effectuated in a manner and upon such conditions set forth more particularly in General Conditions, "Termination for Default" and/or"Termination for Convenience", provided that no termination may be effected unless proper notice is provided to CONTRACTOR at the time and in the manner provided in said General Conditions. If termination for default or convenience is effected by OCSD, an equitable adjustment in the price provided for in this Contract shall be made at the time and in the manner provided in the General Conditions, "Termination for Default" and "Termination for Convenience". SECTION—19 WARRANTY The CONTRACTOR agrees to perform all Work under this Contract in accordance with the Contract Documents, including OCSD's designs, Drawings and Specifications. The CONTRACTOR guarantees for a period of at least one (1) year from the date of Final Acceptance of the Work, pursuant to the General Conditions, "Final Acceptance and Final C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 23 of 26 Completion' that the completed Work is free from all defects due to faulty materials, equipment or workmanship and that it shall promptly make whatever adjustments or corrections which may be necessary to cure any defects, including repairs of any damage to other parts of the system resulting from such defects. OCSD shall promptly give notice to the CONTRACTOR of observed defects. In the event that the CONTRACTOR fails to make adjustments, repairs, corrections or other work made necessary by such defects, OCSD may do so and charge the CONTRACTOR the cost incurred. The CONTRACTOR's warranty shall continue as to any corrected deficiency until the later of(1)the remainder of the original one-year warranty period; or(2)one year after acceptance by OCSD of the corrected Work. The Performance Bond and the Payment Bond shall remain in full force and effect through the guarantee period. The CONTRACTOR's obligations under this clause are in addition to the CONTRACTOR's other express or implied assurances under this Contract, including but not limited to specific manufacturer or other extended warranties specified in the Plans and Specifications, or state law and in no way diminish any other rights that OCSD may have against the CONTRACTOR for faulty materials, equipment or Work. SECTION-20 ASSIGNMENT No assignment by the CONTRACTOR of this Contract or any part hereof, or of funds to be received hereunder, will be recognized by OCSD unless such assignment has had prior written approval and consent of OCSD and the Surety. SECTION—21 RESOLUTION OF DISPUTES OCSD and the CONTRACTOR shall comply with the provisions of California Public Contract Code Section 20104 at. seq., regarding resolution of construction claims for any Claims which arise between the CONTRACTOR and OCSD, as well as all applicable dispute and Claims provisions as set forth in the General Conditions and as otherwise required by law. C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 24 of 26 SECTION — 22 SAFETY & HEALTH CONTRACTOR shall comply with all applicable safety and health requirements mandated by federal, state, city and/or public agency codes, permits, ordinances, regulations, and laws, as well as these Contract Documents, including but not limited to the General Requirements, Section entitled "Safety" and Exhibit B OCSD Safety Standards. SECTION-23 NOTICES Any notice required or permitted under this Contract may be given by ordinary mail at the address set forth below. Any party whose address changes shall notify the other party in writing. TO OCSD: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708-7018 Attn: Clerk of the Board Copy to: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708-7018 Attn: Construction Manager Bradley R. Hogin, Esquire Woodruff, Spradlin &Smart 555 Anton Boulevard Suite 1200 Costa Mesa, California 92626 TO CONTRACTOR: Trautwein Construction Inc. 12223 Highland Ave, Ste 106 Box 546 Rancho Cucamonga, CA 91739 Copy to: Mark Trautwein, President Trautwein Construction Inc. 12223 Highland Ave, Ste 106 Box 546 Rancho Cucamonga, CA 91739 C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 25 of 26 IN WITNESS WHEREOF, the parties hereto have executed this Contract Agreement as the date first hereinabove written. CONTRACTOR: Trautwein Construction Inc. 12223 Highland Ave, Ste 106 Box 546 Rancho Cucamonga, CA 91739 By Printed Name Its CONTRACTOR's State License No. 773764 (Expiration Date 01131/2018) OCSD: Orange County Sanitation District By Chair, Board of Directors By Kelly A. Lore Clerk of the Board By Marc Dubois Contracts, Purchasing and Materials Management Division Manager C-CA-121914 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A") CONFORMED Page 26 of 26 EXHIBIT A SCHEDULE OF PRICES C-EXA-080414 TABLE OF CONTENTS EXHIBIT A SCHEDULE OF PRICES EXA-1 BASIS OF COMPENSATION ..............................................................................1 EXA-2 PROGRESS PAYMENTS....................................................................................1 EXA-3 RETENTION AND ESCROW ACCOUNTS .........................................................1 EXA-4 STOP PAYMENT NOTICE ..................................................................................3 EXA-5 PAYMENT TO SUBCONTRACTORS..................................................................3 EXA-6 PAYMENT OF TAXES.........................................................................................3 EXA-7 FINAL PAYMENT ................................................................................................4 EXA-8 DISCOVERY OF DEFICIENCIES BEFORE AND AFTER FINAL PAYMENT.....5 ATTACHMENT 1 CERTIFICATION FOR REQUEST FOR PAYMENT........................7 ATTACHMENT 2 SCHEDULE OF PRICES ...........................................................8 C-EXA-080414 EXHIBIT A SCHEDULE OF PRICES EXA-1 BASIS OF COMPENSATION CONTRACTOR will be paid the Contract Price according to the Schedule of Prices, and all other applicable terms and conditions of the Contract Documents. EXA-2 PROGRESS PAYMENTS Progress payments will be made in accordance with all applicable terms and conditions of the Contract Documents, including, but not limited to: 1. Contract Agreement—Section 11 —"Contract Price and Method of Payment;" 2. General Conditions—"Payment—General"; 3. General Conditions—"Payment—Applications for Payment"; 4. General Conditions—"Payment— Mobilization Payment Requirements;" 5. General Conditions—"Payment— Itemized Breakdown of Contract Lump Sum Prices"; 6. General Conditions—"Contract Price Adjustments and Payments"; 7. General Conditions—"Suspension of Payments"; 8. General Conditions—"OCSD's Right to Withhold Certain Amounts and Make Application Thereof"; and 9. General Conditions—"Final Payment." EXA-3 RETENTION AND ESCROW ACCOUNTS A. Retention: OCSD shall retain a percentage of each progress payment to assure satisfactory completion of the Work. The amount to be retained from each progress payment shall be determined as provided in General Conditions— "Retained Funds; Substitution of Securities". In all contracts between CONTRACTOR and its Subcontractors and/or Suppliers, the retention may not exceed the percentage specified in the Contract Documents. C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 1 of 8 B. Substitution of Securities: CONTRACTOR may, at its sole expense, substitute securities as provided in General Conditions—"Retained Funds; Substitution of Securities." Payment of Escrow Agent: In lieu of substitution of securities as provided above, the CONTRACTOR may request and OCSD shall make payment of retention earned directly to the escrow agent at the expense of the CONTRACTOR. At the expense of the CONTRACTOR, the CONTRACTOR may direct the investment of the payments into securities consistent with Government Code §16430 and the CONTRACTOR shall receive the interest earned on the investments upon the same terms provided for in this article for securities deposited by the CONTRACTOR. Upon satisfactory completion of the Contract, the CONTRACTOR shall receive from the escrow agent all securities, interest and payments received by the escrow agent from OCSD, pursuant to the terms of this article. The CONTRACTOR shall pay to each Subcontractor, not later than twenty (20)calendar days after receipt of the payment, the respective amount of interest earned, net of costs attributed to retention withheld from each Subcontractor, on the amount of retention withheld to ensure the performance of the Subcontractor. The escrow agreement used by the escrow agent pursuant to this article shall be substantially similar to the form set forth in §22300 of the California Public Contract Code. C. Release of Retention: Upon Final Acceptance of the Work, the CONTRACTOR shall submit an invoice for release of retention in accordance with the terms of the Contract. D. Additional Deductibles: In addition to the retentions described above, OCSD may deduct from each progress payment any or all of the following: 1. Liquidated Damages that have occurred as of the date of the application for progress payment; 2. Deductions from previous progress payments already paid, due to OCSD's discovery of deficiencies in the Work or non-compliance with the Specifications or any other requirement of the Contract; 3. Sums expended by OCSD in performing any of the CONTRACTOR'S obligations under the Contract that the CONTRACTOR has failed to perform, and; 4. Other sums that OCSD is entitled to recover from the CONTRACTOR under the terms of the Contract, including without limitation insurance deductibles and assessments. C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 2 of 8 The failure of OCSD to deduct any of the above-identified sums from a progress payment shall not constitute a waiver of OCSD's right to such sums or to deduct them from a later progress payment. EXA-4 STOP PAYMENT NOTICE In addition to other amounts properly withheld under this article or under other provisions of the Contract, OCSD shall retain from progress payments otherwise due the CONTRACTOR an amount equal to one hundred twenty-five percent (125%)of the amount claimed under any stop payment notice under Civil Code§9350 at. seq. or other lien filed against the CONTRACTOR for labor, materials, supplies, equipment, and any other thing of value claimed to have been furnished to and/or incorporated into the Work; or for any other alleged contribution thereto. In addition to the foregoing and in accordance with Civil Code§9358 OCSD may also satisfy its duty to withhold funds for stop payment notices by refusing to release funds held in escrow pursuant to public receipt of a release of stop payment notice executed by a stop payment notice claimant, a stop payment notice release bond, an order of a court of competent jurisdiction, or other evidence satisfactory to OCSD that the CONTRACTOR has resolved such claim by settlement. EXA-5 PAYMENT TO SUBCONTRACTORS Requirements 1. The CONTRACTOR shall pay all Subcontractors for and on account of Work performed by such Subcontractors, not later than seven (7) days after receipt of each progress payment as required by the California Business and Professions Code §7108.5. Such payments to Subcontractors shall be based on the measurements and estimates made pursuant to article progress payments provided herein. 2. Except as specifically provided by law, the CONTRACTOR shall pay all Subcontractors any and all retention due and owing for and on account of Work performed by such Subcontractors not later than seven (7)days after CONTRACTOR'S receipt of said retention proceeds from OCSD as required by the California Public Contract Code§7107. EXA-6 PAYMENT OF TAXES Unless otherwise specifically provided in this Contract, the Contract Price includes full compensation to the CONTRACTOR for all taxes. The CONTRACTOR shall pay all federal, state, and local taxes, and duties applicable to and assessable against any Work, including but not limited to retail sales and use, transportation, export, import, business, and special taxes. The CONTRACTOR shall ascertain and pay the taxes when due. The CONTRACTOR will maintain auditable records, subject to OCSD reviews, confirming that tax payments are current at all times. C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 3 of 8 EXA-7 FINAL PAYMENT After Final Acceptance of the Work, as more particularly set forth in the General Conditions, "Final Acceptance and Final Completion", and after Resolution of the Board authorizing final payment and satisfaction of the requirements as more particularly set forth in General Conditions—"Final Payment", a final payment will be made as follows: 1. Prior to Final Acceptance, the CONTRACTOR shall prepare and submit an application for Final Payment to OCSD, including: a. The proposed total amount due the CONTRACTOR, segregated by items on the payment schedule, amendments, Change Orders, and other bases for payment; b. Deductions for prior progress payments; c. Amounts retained; d. A conditional waiver and release on final payment for each Subcontractor(per Civil Code Section 8136); e. A conditional waiver and release on final payment on behalf of the CONTRACTOR (per Civil Code Section 8136); f. List of Claims the CONTRACTOR intends to file at that time or a statement that no Claims will be filed, g. List of pending unsettled claims, stating claimed amounts, and copies of any and all complaints and/or demands for arbitration received by the CONTRACTOR; and h. For each and every claim that resulted in litigation or arbitration which the CONTRACTOR has settled, a conformed copy of the Request for Dismissal with prejudice or other satisfactory evidence the arbitration is resolved. 2. The application for Final Payment shall include complete and legally effective releases or waivers of liens and stop payment notices satisfactory to OCSD, arising out of or fled in connection with the Work. Prior progress payments shall be subject to correction in OCSD's review of the application for Final Payment. Claims filed with the application for Final Payment must be otherwise timely under the Contract and applicable law. 3. Within a reasonable time, OCSD will review the CONTRACTOR'S application for Final Payment. Any recommended changes or corrections will then be forwarded to the CONTRACTOR. Within ten (10) calendar days after receipt of recommended changes from OCSD, the CONTRACTOR will make the changes, or list Claims that will be filed as a result of the changes, and shall submit the revised application for Final Payment. Upon C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A") CONFORMED Page 4 of 8 acceptance by OCSD, the revised application for Final Payment will become the approved application for Final Payment. 4. If no Claims have been fled with the initial or any revised application for Final Payment, and no Claims remain unsettled within thirty-five (35) calendar days after Final Acceptance of the Work by OCSD, and agreements are reached on all issues regarding the application for Final Payment, OCSD, in exchange for an executed release, satisfactory in form and substance to OCSD, will pay the entire sum found due on the approved application for Final Payment, including the amount, if any, allowed on settled Claims. 5. The release from the CONTRACTOR shall be from any and all Claims arising under the Contract, except for Claims that with the concurrence of OCSD are specifically reserved, and shall release and waive all unreserved Claims against OCSD and its officers, directors, employees and authorized representatives. The release shall be accompanied by a certification by the CONTRACTOR that: a. It has resolved all Subcontractors, Suppliers and other Claims that are related to the settled Claims included in the Final Payment; b. It has no reason to believe that any party has a valid claim against the CONTRACTOR or OCSD which has not been communicated in writing by the CONTRACTOR to OCSD as of the date of the certificate; c. All warranties are in full force and effect, and; d. The releases and the warranties shall survive Final Payment. 6. If any claims remain open, OCSD may make Final Payment subject to resolution of those claims. OCSD may withhold from the Final Payment an amount not to exceed one hundred fifty percent (150%)of the sum of the amounts of the open claims, and one hundred twenty-five percent (125%) of the amounts of open stop payment notices referred to in article entitled stop payment notices herein. 7. The CONTRACTOR shall provide an unconditional waiver and release on final payment from each Subcontractor and Supplier providing Work under the Contract(per Civil Code Section 8138) and an unconditional waiver and release on final payment on behalf of the CONTRACTOR (per Civil Code Section 8138)within thirty (30)days of receipt of Final Payment. EXA-8 DISCOVERY OF DEFICIENCIES BEFORE AND AFTER FINAL PAYMENT Notwithstanding OCSD's acceptance of the application for Final Payment and irrespective of whether it is before or after Final Payment has been made, OCSD shall not be precluded from subsequently showing that: 1. The true and correct amount payable for the Work is different from that previously accepted; C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 5 of 8 2. The previously-accepted Work did not in fact conform to the Contract requirements, or; 3. A previous payment or portion thereof for Work was improperly made. OCSD also shall not be stopped from demanding and recovering damages from the CONTRACTOR, as appropriate, under any of the foregoing circumstances as permitted under the Contract or applicable law. C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A-) CONFORMED Page 6 of 8 ATTACHMENTI CERTIFICATION FOR REQUEST FOR PAYMENT I hereby certify under penalty of perjury as follows: That the claim for payment is in all respects true, correct; that the services mentioned herein were actually rendered and/or supplies delivered to OCSD in accordance with the Contract. I understand that it is a violation of both the federal and California False Claims Acts to knowingly present or cause to be presented to OCSD a false claim for payment or approval. A claim includes a demand or request for money. It is also a violation of the False Claims Acts to knowingly make use of a false record or statement to get a false claim paid. The term "knowingly" includes either actual knowledge of the information, deliberate ignorance of the truth or falsity of the information, or reckless disregard for the truth or falsity of the information. Proof of specific intent to defraud is not necessary under the False Claims Acts. I understand that the penalties under the Federal False Claims Act and State of California False Claims Act are non-exclusive, and are in addition to any other remedies which OCSD may have either under contract or law. I hereby further certify, to the best of my knowledge and belief, that: 1. The amounts requested are only for performance in accordance with the Specifications, terms, and conditions of the Contract; 2. Payments to Subcontractors and Suppliers have been made from previous payments received under the Contract, and timely payments will be made from the proceeds of the payment covered by this certification; 3. This request for progress payments does not include any amounts which the prime CONTRACTOR intends to withhold or retain from a Subcontractor or Supplier in accordance with the terms and conditions of the subcontract; and 4. This certification is not to be construed as Final Acceptance of a Subcontractor's performance. Name Title Date C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") CONFORMED Page 7 of 8 ATTACHMENT SCHEDULE OF PRICES See next pages for Bid Submittal Forms (Trautwein Construction Inc.) BF-14 Schedule of Prices, Page 1 -4 C-EXA-080414 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT-A-) CONFORMED Page 8 of 8 Bid Submitted By: Trautwein construction Inc. (Name of Firm) SF-14 SCHEDULE OF PRICES INSTRUCTIONS A. General For Unit Prices, it is understood that the following quantities are approximate only and are solely for the purpose of estimating the comparison of Bids, and that the actual value of Work will be computed based upon the actual quantities in the completed Work, whether they be more or less than those shown. CONTRACTOR's compensation for the Work under the Contract Documents will be computed based upon the lump sum amount of the Contract at time of award, plus any additional or deleted costs approved by OCSD via approved Change Orders, pursuant to the Contract Documents. Bidder shall separately price and accurately reflect costs associated with each line item, leaving no blanks. Any and all modifications to the Bid must be initialed by an authorized representative of the Bidder in accordance with the Instructions to Bidders, Preparation of aid. Bidders are reminded of Instruction to Bidders, Discrepancy In Bid Items,which, in summary, provides that the total price for each item shall be based on the Unit Price listed for each item multiplied by the quantity: and the correct Total Price for each item shall be totaled to determine the Total Amount of Bitl, All applicable costs including overhead and profit shall be reflected In the respective unit costs and the TOTAL AMOUNT OF BID. The Bid price shall include all costs to complete the Work, including profit overhead etc unless otherwise specified in the Contract Documents All applicable sales taxes state and/or federal, and any other special taxes, patent rights or royalties shall be included in the prices quoted in this Bid. B. Basis of Award AWARD OF THE CONTRACT WILL BE MADE ON THE BASIS OF THE LOWEST RESPONSIVE AND RESPONSIBLE BID. THE LOWEST BID IS DEFINED AS THE'TOTAL AMOUNT OF BID" LISTED IN THIS BID, UNLESS OTHERWISE SPECIFIED BELOW. Note 1: Base Bid. Includes all costs necessary to furnish all labor, materials, equipment and services for the construction of the Project per the Contract Documents, BF-14 SCHEDULE OF PRICES C-BF-021115 PROJECT NO.2.72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A') ADDENDUM NO.2 Page 1 of 4 Bid Submitted By: Trautwein Construction Inc (Name of Firml EXHIBIT A SCHEDULE OF PRICES BASE BID ITEMS (Refer to Note 1 in the Instructions): IT Item Description Unit of ApOprox Unit Price Extended Price No. Measurement __1 _...___ 1. Mobilization as described in Division 01, Section 01155 and in conformance with the Contract Documents for the lump sum price of... Lump Sum = $ 550,000.00 2. Sheeting, Shoring &Bracing as described in Division 01, Section 01155 Lump Sum = $ 1,500,000.00 and in conformance with the Contract Documents for the lump sum price of... 3, Contaminated Soil Transport and Disposal as described in Division 01, Section 01155 and in conformance with the Contract Documents for the Cubic Yard 200 x $ 100.00 = $20.000.00 cubic yard unit price and total price of... 4. Prepare and Implement Stormwater Pollution Prevention Plan (SWPPP) as described in Division 01, Section 01155 and in conformance Lump Sum - $15U,UUo.oU with the Contract Documents for the lump sum price of... 5. City of Fullerton,Anaheim, Caltrans,Orange County Flood Control District Encroachment Permits,Traffic Control Plan Check Fees,and Allowance = $ 210.000.00 Inspection Fees(Allowance)as described in Division 01, Section 01155 and in conformance with the Contract Documents, 5. Relocation of Gas lines by Southern California Gas Company (Allowance) as defined in Division 01, Section 01155 and in conformance Allowance = $ 200,000,00 with the Contract Documents. 7. Demolition and Disposal of Three(3)Groundwater Monitoring Wells as described in Division 01, Section 01155 and in conformance with the Lump Sum = $ 20,000.00 Contract Documents for the lump sum price of... 8. Construct 15" Diameter VCP Sewer Pipe by Open Cut Pipe Trench as described in Division 01, Section 01155 and in conformance with the Linear Foot 158 x $ 1,000.00 = $ 158,000.00 Contract Documents for the linear foot unit price and total price of... BF-14 SCHEDULE OF PRICES C-BF-021115 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEVVER REPLACEMEN I (FULLER I ON/ANAHNM SEGMENT 'A') ADDENDUM NO 2 Page 2 of 4 Bid Submitted By: Trautwein Construction Inc (Name of Firm) EXHIBIT A SCHEDULE OF PRICES (continued) Item Description Una of App a Unit Price EMendm!Price No, Measurement Qty 9. Construct Triple Barrel 18" FRP or VCP Sewer Pipe by Open Cut Pipe Trench as described in Division 01, Section 01155 and in conformance with Linear Foot 450 x $ 1,300,00 = $585,000.00 the Contract Documents for or the linear foot unit price and total price of... 10. Construct 30" Diameter VCP Sewer Pipe by Open Cut Pipe Trench as described in Division 01, Section 01155 and in conformance with the Linear Foot 6,308 x 1 $950,00 = $ 5,992,600.00 Contract Documents for the linear foot unit price and total price of... 11. Construct 36" Diameter VCP Sewer Pipe by Open Cut Pipe Trench as described in Division 01, Section 01155 and in conformance with the Linear Foot 1,650 x $ 1,oriodo - $1 650,000.00 Contract Documents for the linear foot unit price and total price of... 12. Construct 48"Diameter FRP or RCP Sewer Pipe by Open Cut Pipe Trench as described in Division 01, Section 01155 and in conformance Linear Foot 2,930 x $ 1.300,00 = $ 3,809,000.00 with the Contract Documents for the linear foot unit price and total price of. 13. Excavation of Unsuitable Material,as described in Division 01, Section 01155 and in conformance with the Contract Documents for the cubic yard Cubic Yard 500 x $ 60.00 = $ 30.000.00 unit price and total price of.., 14. Construct City of Fullerton 48" Diameter Manhole as described in Division 01, Section 01155 and in conformance with the Contract Each 3 x $5,000.00 = $ 15,000.00 Documents for the unit price and total price of... 15. Construct 72"Diameter PVC Lined Manhole as described in Division 01, Section 01155 and in conformance with the Contract Documents for the Each 27 x $25,000.00 = $ 675,000.00 unit price and total price of... '.. BF-14 SCHEDULE OF PRICES C-BF-021115 PROJECT NO. 2-72A NEWHOPE-PIACENTIA TRUNK SEWER REPLACEMENT(FULLERTONIANAHEIM SEGMENT"A-) ADDENDUM NO.2 Page 3 of 4 Bid submitted By: Trautwein Construction Inc (Name of Firm) EXHIBIT A SCHEDULE OF PRICES (continued) Item Description Unit of Approx Unk Price Exuaii Price No. Measurement on, 16, Construct 84" Diameter PVC Lined Manhole as described in Division 01, 1, Section 01155 and in conformance with the Contract Documents for the Each 12 z $27,000.00 = $ 324,000.00 unit price and total price of... 17. Construct 120" Diameter PVC Lined Manhole as described in Division 01, Section 01155 and in conformance with the Contract Documents for the Each 2 x $ 50,000.00 = $ 100,000.00 unit pace and total price of... 18. Final Grind and Cap Asphalt Concrete Pavement as described in Square Division 01, Section 01155 and in conformance with the Contract Foot 455,000 x $1.31 = $ 596,050,00 Documents for the square foot unit price and total price of.., 19. City of Fullerton Traffic Signal Video Detection System Installation Tn'l—fall (Allowance)as described in Division 01, Section 01155 and in conformance Allowance = $ 100,000.00 with the Contract Documents_ - 20. All Other Portions of the Work set forth in the Contract Documents except for the Work performed in Items 1 through 19 inclusive,and Item 21 inclusive as described in Division 01, Section 01155 and in Lump Sum = g1�1360 cpr eo conformance with the Contract Documents for a lump sum price of_. 21. Demobilization including final progress payment, clean-up and restoration of the project site as described in Division 01, Section 01155 Lump Sum $ 150,000.00 and in conformance with the Contract Documents for a lump sum price of... TOTAL AMOUNT OF BID (BASIS OF AWARD) $ 'It f I34 r(,SO, eO BF-14 SCHEDULE OF PRICES C-BF-021115 PROJECT NO.2-72A NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT(FULLERTON/ANAHEIM SEGMENT"A") ADDENDUM NO. 2 Page 4 of 4 Roadway Construction Noise Model (RCN M),Version 1.1 Report dat, 7/10/2015 Case Descr LRO-02 Descriptior Land Use Residential Church Equipment Spec Actual Receptor Estimated Impact Lmax Lmax Distance Shielding Description Device Usage(%) (dBA) (dBA) (feet) (dBA) Dump Truck No 40 76.5 150 0 Crane No 16 80.6 150 0 Calculated (dBA) Equipment "Lmax Leq Dump Truck 66.9 62.9 Crane 71 63 Total 71 66 "Calculated Lmax is the Loudest value. Roadway Construction Noise Model (RCNM),Version 1.1 Report dat, 7/10/2015 Case Descr LRO-02 Descriptior Land Use Residential Residential Equipment Spec Actual Receptor Estimated Impact Lmax Lmax Distance Shielding Description Device Usage(%) (dBA) (dBA) (feet) (dBA) Dump Truck No 40 76.5 1700 0 Crane No 16 80.6 1700 0 Calculated (dBA) Equipment -Lmax Leq Dump Truck 45.8 41.8 Crane 49.9 42 Total 49.9 44.9 "Calculated Lmax is the Loudest value. Roadway Construction Noise Model (RCN M),Version 1.1 Report dat, 7/10/2015 Case Descr LRO-02 Descriptior Land Use Residential Senstiive Habitat Equipment Spec Actual Receptor Estimated Impact Lmax Lmax Distance Shielding Description Device Usage(%) (dBA) (dBA) (feet) (dBA) Dump Truck No 40 76.5 300 0 Crane No 16 80.6 300 0 Calculated (dBA) Equipment "Lmax Leq Dump Truck 60.9 56.9 Crane 65 57 Total 65 60 "Calculated Lmax is the Loudest value. BOARD OF DIRECTORS Melting Dat0 TOBE.Or Dir. 01/27/16 02/24/16 AGENDA REPORT Item Item Number 22 16 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: SECOND READING OF PROPOSED ADOPTION OF WASTEWATER DISCHARGE REGULATIONS, ORDINANCE NO. OCSD48 GENERAL MANAGER'S RECOMMENDATION A. Motion to read Ordinance No. OCSD48 by title only and waive reading of said entire Ordinance; and B. Adopt Ordinance No. OCSD48, entitled "An Ordinance of the Board of Directors of Orange County Sanitation District Establishing Wastewater Discharge Regulations, Revising Articles 1 through 8, and repealing Ordinance No. OCSD-39'; and C. Direct the Clerk of the Board to publish summaries of the Ordinance as required by law. SUMMARY The proposed revisions to the Wastewater Discharge Regulations include revisions to the Local Limits table and changes that are administrative and regulatory in nature. These revisions are a result of changes required or recommended by the United States Environmental Protection Agency (EPA) and the Santa Ana Regional Water Quality Control Board. The Orange County Sanitation District (OCSD) is making additional changes to facilitate OCSD's ability to achieve long-term compliance for the National Pretreatment Program under the Clean Water Act, National Safe Drinking Water Act, the National Pollutant Discharge Elimination System (NPDES) Permit, water recycling, biosolids requirements, and air quality. BACKGROUND OCSD's Environmental Compliance Division is responsible for administering and enforcing OCSD's Wastewater Discharge Regulations and National Pretreatment Program through an extensive permitting, monitoring, and enforcement program to regulate the discharge into local sewers of pollutants from industrial and commercial facilities. The National Pretreatment Program is derived from the federal Clean Water Act amendments of 1977 (CWA). The Pretreatment Program was established to regulate the introduction of pollutants into the sewer system from industrial sources. Discharges targeted for regulation include those that will interfere with a treatment or Page 1 of 4 reclamation facility operation, that may pass through the treatment works and cause environmental harm, or that are otherwise incompatible with such works. The Pretreatment Program is also intended to improve opportunities to reclaim municipal wastewater and biosolids. Recognizing the need to control the quality of wastewater discharges, the Board of Directors adopted the first Ordinance in February 1954, which was amended in February 1958, and again in April 1970. The 1970 amendments formally established OCSD's Source Control Program for the purpose of issuing permits, setting discharge limits, and monitoring industrial discharges to the sewer system. In July 1976, the Ordinance was expanded to include numerical discharge limits for heavy metals. In July 1983, the Ordinance was again amended to include enforcement of EPA's newly promulgated categorical pretreatment regulations and to modify OCSD's local limits for cadmium, copper, and toxic organics at the levels currently enforced. In September 1989, the Ordinance was further amended to include revisions to the Federal Categorical Pretreatment Standards and other provisions for implementation of a waste minimization program and escalated enforcement proceedings. In February 1992, the Ordinance was revised to incorporate new federal and state regulatory mandates for the administrative and civil penalties. In July 1998, the Ordinance was again amended to include the newly-adopted policy pertaining to fees and charges for the use of OCSD's sewer system. In May 2007, the Ordinance was amended to transfer sanitary sewer charges into a separate Fee Ordinance. In September 2009, administrative updates were made to the Ordinance. RELEVANT STANDARDS • Federal Clean Water Act Requirements, Ocean Discharge Permit • Code of Federal Regulations (CFR), Title 40, Pretreatment Regulations • Support the Groundwater Replenishment System • California Code of Regulations, Title 22 PROBLEM OCSD is required to have a Pretreatment Program that is approved by the EPA and California Regional Water Quality Control Board, Santa Ana Region (RWQCB). As part of this requirement, OCSD must operate pursuant to legal authority enforceable in federal, state or local courts, which authorizes or enables the Publicly Owned Treatment Works (POTW) to apply and enforce any pretreatment requirements developed pursuant to the CWA and implementing regulations [40 CFR 403.9(b)] and to "provide a written technical evaluation of the need to revise local limits under 40 CFR 403.5(c)(1), following National Pollution Discharge Elimination System (NPDES) permit issuance or reissuance" [40 CFR 122.440)(2)(ii)], and must continue to develop and revise local limits as necessary [40 CFR 403.5(c)(1)]. Page 2 of 4 PROPOSED SOLUTION OCSD has performed a technical evaluation of the need to revise local limits and is promulgating changes to the Wastewater Discharge Regulations in accordance with federal and state law. OCSD's Wastewater Discharge Regulations: is a legal mechanism implemented by OCSD that sets out requirements for the discharge of pollutants into OCSD's collection system, reclamation and treatment facilities; ensures that OCSD has adequate legal authority to effectively implement its local Pretreatment Program; and contains Local Limits controlling discharge of pollutants that Users of OCSD's sewer collection systems must meet. TIMING CONCERNS OCSD staff recommends prudent action to the General Manager's recommendations in consideration of reasonable implementation under 40 CFR 403.2, which states, "A POTW must act reasonably by implementing its pretreatment requirements consistent with an effective pretreatment program: i.e., a program that will prevent interference and pass through, and improve opportunities to recycle municipal and industrial waste streams and sludges." RAMIFICATIONS OF NOT TAKING ACTION Sections 309(b) and (d) of the CWA give EPA plenary authority to bring a civil action for injunctive relief and penalties against a municipality that has violated the pretreatment implementation requirements contained in its NPDES permit and any requirements contained in an approved pretreatment program incorporated by reference into the permit. EPA also can enforce the pretreatment regulations, 40 CFR 403, if the permit (or approved program incorporated by reference into the permit) appropriately references the regulations. Specifically, EPA's cause of action under Section 8309(b) and (d), in those circumstances, is that the POTW has violated a permit condition authorized by the statute for the purpose of implementing Section 307 of the Act. PRIOR COMMITTEE/BOARD ACTIONS January 2016 — Board of Directors waived reading of the full text of Ordinance No. OCSD48, introduced and read it a first time by title only, approved bringing it back for second reading and adoption at its February 24, 2016 meeting, and directing the Clerk of the Board to publish summaries as required by law. September 2009: Adopted Ordinance No. OCSD-39, An Ordinance of the Board of Directors of Orange County Sanitation District adopting Wastewater Discharge Regulations and repealing Ordinance No. OCSD-37 at the regular Board meeting. ADDITIONAL INFORMATION N/A Page 3 of 4 CEQA N/A - statutorily exempt under the California Environmental Quality Act pursuant to the provisions of Public Resources Code Section 21080(b)(8) and California Code of Regulations Section 15273(a) and categorically exempt pursuant to California Code of Regulations Sections 15307 and 15308. FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)are attached in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: Proposed Ordinance No. OCSD48 Establishing Wastewater Discharge Regulations and Repealing Ordinance No. OCSD-39 Page 4 of 4 ORDINANCE NO. OCSD-48 AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AMENDING WASTEWATER DISCHARGE REGULATIONS, AND REPEALING ORDINANCE NO. OCSD-39 OCSD-48-1 CONTENTS ARTICLE 1. GENERAL PROVISIONS............................................................................5 101. PURPOSE AND POLICY................................................................................5 102. DEFINITIONS .................................................................................................6 103. CONFIDENTIAL INFORMATION..................................................................21 104. SALE OR CHANGE OF OWNERSHIP.......................................................211 105. RESERVED................................................................................................222 106. AUTHORITY...............................................................................................222 107. DELEGATION OF AUTHORITY.................................................................233 108. SIGNATORY REQUIREMENTS.................................................................233 109. RECORD KEEPING REQUIREMENTS......................................................234 ARTICLE 2. GENERAL PROHIBITIONS, LIMITS AND REQUIREMENTS FOR DISCHARGE...............................................................................................................255 201. PROHIBITED DISCHARGES .....................................................................255 202. PROHIBITION ON DILUTION.......................................................................27 203. PROHIBITION ON SURFACE RUNOFF AND GROUNDWATER................27 204. PROHIBITION ON UNPOLLUTED WATER.................................................27 205. PROHIBITION ON SLUG DISCHARGES AND NOTIFICATION REQUIREMENT........................................................................................................28 206. PROHIBITION ON THE USE OF GRINDERS..............................................28 207. PROHIBITION ON POINT OF DISCHARGE................................................28 208. HAZARDOUS WASTE DISCHARGE NOTIFICATION REQUIREMENT......28 209. PROHIBITION AND REQUIREMENTS FOR WASTEHAULER DISCHARGES TO THE OCSD SEWERAGE SYSTEM AND WASTEHAULER STATION................29 210. PROHIBITION ON MEDICAL WASTE........................................................300 211. PROHIBITION ON DISPOSAL OF SPENT SOLUTIONS AND SLUDGES 300 212. RESERVED 31 213. MASS EMISSION RATE DETERMINATION ..............................................311 214. MAXIMUM ALLOWABLE LOCAL DISCHARGE LIMITS ............................322 ARTICLE 3. DISCHARGE PERMITS, CERTIFICATIONS, CHARGES, AND FEES...333 301. INTRODUCTION ........................................................................................333 302. CLASS I WASTEWATER DISCHARGE PERMITS ....................................333 303. CLASS II WASTEWATER DISCHARGE PERMITS ...................................400 304. DRY WEATHER URBAN RUNOFF DISCHARGE PERMITS.......................47 305. SPECIAL PURPOSE DISCHARGE PERMITS .............................................49 OCSD-48-2 306. WASTEHAULER DISCHARGE PERMIT......................................................51 307. DISCHARGE CERTIFICATIONS..................................................................54 308. OUT OF DISTRICT PERMITS/DISCHARGERS...........................................55 309. RESERVED..................................................................................................56 310. RESERVED..................................................................................................56 ARTICLE 4. FACILITIES REQUIREMENTS.................................................................57 401. DRAWING SUBMITTAL REQUIREMENTS..................................................57 402. PRETREATMENT FACILITIES.....................................................................57 403. SPILL CONTAINMENT FACILITIES/ACCIDENTAL SLUG CONTROL PLANS ................................................................................................... 58 404. MONITORING/METERING FACILITIES.......................................................59 405. WASTE MINIMIZATION REQUIREMENTS..................................................59 ARTICLE 5. MONITORING, REPORTING, NOTIFICATION, AND INSPECTION REQUIREMENTS .........................................................................................................70 501. MONITORING AND REPORTING CONDITIONS ........................................60 ARTICLE 6. ENFORCEMENT ......................................................................................71 601. PURPOSE AND SCOPE ..............................................................................71 602. DETERMINATION OF NON COMPLIANCE WITH DISCHARGE LIMITS....72 603. ENFORCEMENT PROCEDURES AND APPLICABLE FEES ......................72 604. REGULATORY COMPLIANCE SCHEDULE AGREEMENT (RCSA)...........75 605. PERMIT SUSPENSION................................................................................76 606. PERMIT REVOCATION................................................................................78 607. WASTEHAULER NON-COMPLIANCE WITH PERMIT CONDITIONS.........80 608. DAMAGE TO FACILITIES OR INTERRUPTION OF NORMAL OPERATIONS...........................................................................................................81 609. INDUSTRIAL WASTEWATER PASS THROUGH ........................................81 610. PUBLICATION OF VIOLATION....................................................................81 611. PUBLISHED NOTICES FOR SIGNIFICANT NON-COMPLIANCE...............81 612. PUBLIC NUISANCE .....................................................................................82 613. TERMINATION OF SERVICE ......................................................................82 614. EMERGENCY SUSPENSION ORDER ........................................................82 615. INJUNCTION ................................................................................................83 616. CIVIL PENALTIES........................................................................................83 617. CRIMINAL PENALTIES................................................................................86 618. APPEALS TO GENERAL MANAGER ..........................................................87 OCSD-48-3 619. PAYMENT OF CHARGES............................................................................88 620. RECOVERY OF COSTS INCURRED BY OCSD..........................................89 621. FINANCIAL SECURITY/AMENDMENTS TO PERMIT.................................89 622. JUDICIAL REVIEW.......................................................................................90 ARTICLE 7. SEWER SERVICE CHARGES-CAPITAL FACILITY CAPACITY CHARGES ......................................................................................................................................93 701. SANITARY SEWER SERVICE CHARGE.....................................................93 702. CAPITAL FACILITIES CAPACITY CHARGE................................................93 ARTICLE 8. SEVERABILITY.........................................................................................94 801. SEVERABILITY ............................................................................................94 802. GENERAL APPLICATION ............................................................................94 OCSD-48-4 The Board of Directors of the Orange County Sanitation District (OCSD) does hereby FIND: A. That OCSD is required by federal and state law, including the Clean Water Act (33 U.S.C. 1251, et sec.), the General Pretreatment Regulations (40 CFR 403), and the Porter-Cologne Water Quality Control Act (Water Code Sections 13000, at seq.), to implement and enforce a program for the regulation of Wastewater discharges to OCSD's sewers; and B. That OCSD is required by federal, state, and local law to meet applicable standards of treatment plant effluent quality; and C. Thatthe adoption of this Ordinance is statutorily exempt under the California Environmental Quality Act pursuant to the provisions of Public Resources Code Section 21080(b)(8) and California Code of Regulations Section 15273(a) and categorically exempt pursuant to California Code of Regulations Sections 15307 and 15308. NOW,THEREFORE, the Board of Directors of the Orange County Sanitation District does ORDAIN: Section I: Wastewater Discharge Regulations governing the use of OCSD's Sewerage Facilities are hereby restated and amended to provide as follows: ARTICLE 1. GENERAL PROVISIONS 101. PURPOSE AND POLICY This ordinance sets uniform requirements for Users of OCSD's Sewerage Facilities and enables OCSD to comply with all applicable state and federal laws, including the Clean Water Act (33 United States Code [U.S.C.] section 1251, at seq.) and the General Pretreatment Regulations (Title 40 of the Code of Federal Regulations [CFR] Part 403). This Ordinance shall be interpreted in accordance with the definitions set forth in Section 102. The provisions of the Ordinance shall apply to the direct or indirect discharge of all liquid wastes carried to facilities of OCSD. A. The purpose of this Ordinance is to provide for the maximum public benefit from the use of OCSD's Sewerage Facilities. This shall be accomplished by regulating sewer use and Wastewater discharges; by providing equitable distribution of costs, in compliance with applicable federal, state, and local regulations; and by supporting the proper disposal of Prescription Drugs as noted in the guidelines published by the Office of National Drug Control Policy. The revenues to be derived from the application of this Ordinance shall be used to defray all costs of providing sewerage service by OCSD, including, but not limited to, administration, operation, monitoring, maintenance, financing, capital construction, replacement and recovery, OCSD-48-5 and provisions for necessary reserves; B. This ordinance is meant to protect both OCSD personnel who may be affected by Wastewater, sludge, and biosolids in the course of their employment and the general public. C. To comply with federal, state, and local policies and to allow OCSD to meet applicable standards of treatment plant effluent quality, biosolids quality, and air quality, provisions are made in this Ordinance for the regulation of Wastewater discharges to the public sewer. This Ordinance establishes quantity and quality limits on all Wastewater discharges which may adversely affect OCSD's Sewerage System, processes, effluent quality, biosolids quality, air emission characteristics, or inhibit OCSD's ability to beneficially reuse or dispose of its treated Wastewater, biosolids or meet biosolids discharge criteria. D. It is the intent of these limits to improve the quality of Wastewater being received for treatment and to encourage water conservation and Wastewater minimization by all Users connected to a public sewer. This Ordinance also provides for regulation of the degree of Wastewater Pretreatment required, the issuance of permits for Wastewater discharge and connections and other miscellaneous permits, and establishes penalties for violation of the Ordinance. E. OCSD is committed to: 1) a policy of Wastewater reclamation and reuse to provide alternate sources of water supply for OCSD and agencies with which OCSD has agreements for Wastewater reclamation; and 2) a policy for the protection of groundwater. OCSD is also committed to help protect groundwater goals as established by various water quality and water purveyor agencies. To fulfill these commitments, OCSD may implement more stringent quality requirements on Wastewater discharges through regulation, including revisions to this Ordinance. F. OCSD is committed to a policy for the beneficial use of biosolids, the implementation of programs to land-apply or provide for the marketing and distribution of biosolids, which may necessitate more stringent quality requirements on Wastewater discharges. G. OCSD is also committed to meet applicable air quality goals established by the South Coast Air Quality Management District, which may further necessitate more stringent quality requirements on Wastewater discharges. 102. DEFINITIONS A. Unless otherwise defined herein, terms related to water quality shall be as adopted in the latest edition of Standard Methods for the Examination of OCSD-48-6 Water and Wastewater, published by the American Public Health Association, the American Water Works Association, and the Water Environment Federation. The testing procedures for Wastewater constituents and characteristics shall be as provided in 40 CFR 136 (Code of Federal Regulations; Title 40; Protection of Environment; Chapter I, Environmental Protection Agency; Part 136, Guidelines Establishing Test Procedures for the Analyses of Pollutants), or as specified. Other terms not herein defined shall have the same meaning as defined in the latest California Building and Construction Codes, Title 24, California Code of Regulations. 1. Act or "the Act" shall mean the Federal Water Pollution Control Act, also known as the Clean Water Act, as amended, 33 U.S.C. section 1251, at seq. 2. Approved POTW Pretreatment Program or Program or POTW Pretreatment Program shall mean a program administered by a POTW that meets the criteria established in 40 CFR 403.8 and 403.9 and which has been approved by a Regional Administrator or State Director in accordance with 40 CFR 403.11. 3. Authorized Representative or Designated Signatory shall mean: a) If the applicant or User is a corporation: (1) The president, secretary, treasurer, or a vice president of the corporation in charge of a principal business function, or any other person who performs similar policy or decision making functions for the corporation; or (2) The manager of one or more manufacturing, production, or operation facilities, provided the manager is authorized to make management decisions that govern the operation of the regulated facility including having the explicit or implicit duty of making major capital investment recommendations, and initiate and direct other comprehensive measures to assure long-term environmental compliance with environmental laws and regulations; can ensure that the necessary systems are established or actions taken to gather complete and accurate information for individual Wastewater discharge permit requirements; OCSD-48-7 and where authority to sign documents has been assigned or delegated to the manager in accordance with corporate procedures. b) If the applicant or User is a partnership or sole proprietorship: a general partner or proprietor, respectively. c) If the applicant or User is a federal, state, or local governmental facility: a director or highest official appointed or designated to oversee the operation and performance of the activities of the government facility, or the designee. d) The individuals described in paragraphs (a) through (c) above, as Responsible Officers, may designate an Authorized Representative if the authorization is in writing, the authorization specifies the individual or position responsible for the overall operation of the facility from which the discharge originates or having overall responsibility for environmental matters for the company or organization, and the written authorization is submitted to OCSD. e) An applicant or User not falling within one of the above categories must designate as the Responsible Officer an individual responsible for the overall operation of the facility. The Responsible Officer may designate an Authorized Representative. 4. Best Management Practices (BMPs) shall mean schedules of activities, prohibitions of practices, maintenance procedures, operating procedures, practices to control spillage or leaks, treatment requirements, and other management practices to prevent or reduce pollution or to meet Article 2 standards. Such BMPs shall be considered local limits and Pretreatment Standards as stated in 40 CFR 403.5(c)(4). 5. Biochemical Oxygen Demand (BOD) shall mean a measurement of oxygen utilized by the decomposition of organic material, over a specified time period (usually 5 days) in a Wastewater sample. It is used as a measurement of the readily decomposable organic content of Wastewater. 6. Board shall mean the Board of Directors of the Orange County Sanitation District. 7. Bypass shall mean the intentional diversion of wastestreams from any portion of a User's treatment facility. OCSD-48-8 8. Capital Facilities Capacity Charge shall mean the payment of a fee, imposed by the governing Board of OCSD, to pay for the future costs of constructing new sewerage collection, treatment, and disposal facilities; and as a contributive share of the cost of the existing facilities. This charge shall be paid by all property owners at the time they develop the property and connect directly or indirectly to OCSD's Sewerage Facilities as a new system User. This charge, which rates are set forth in a separate Ordinance, is expressly authorized by the provisions of California Health & Safety Code Sections 5471 and 5474. 9. Charge For Use shall mean OCSD's sanitary sewer service charge, a charge established and levied by OCSD upon residential, commercial, and industrial Users of OCSD's Sewerage System, pursuant to Sections 302.6(F), or 303.6(E) of this Ordinance, in proportion to the use of the treatment works by their respective class, that provides for the recovery of the costs of operation and maintenance expenses, capital facilities rehabilitation or replacement, and adequate reserves for the POTW. The minimum charge for use is the Annual Sewer Service Fee Residential Users. 10. Chemical Oxygen Demand (COD) shall mean a measure of the oxygen required to oxidize all compounds, both organic and inorganic, in Wastewater. 11. Class I User shall mean any User who discharges Wastewater that: a) is a Significant Industrial User; or b) Is determined to have a reasonable potential for adversely affecting OCSD's operation or for violating any Pretreatment Standard, Local Limit, or discharge requirement, or may cause Pass Through affecting OCSD's ability to comply with its NPDES Permit or other regulations and standards; or c) may cause pass through or Interference with OCSD's Sewerage Facilities. 12. Class 11 User shall mean any User whose charge for use is greater than the special assessment "OCSD Sewer User Fee" included on the County of Orange secured property tax bill exclusive of debt service, that discharges wastes other than sanitary, and that is not otherwise required to obtain a Class I permit. 13. Code of Federal Regulations (CFR)shall mean the codification of the OCSD-48-9 general and permanent regulations published in the Federal Register by the executive departments and agencies of the federal government. 14. Compatible Pollutant shall mean a combination of biochemical oxygen demand, suspended solids, pH, fecal coliform bacteria, plus other Pollutants that OCSD's treatment facilities are designed to accept and/or remove. Compatible Pollutants are non-compatible when discharged in quantities that have an adverse effect on OCSD's Sewerage System or NPDES permit, or when discharged in qualities or quantities violating any Federal Categorical Pretreatment Standards, local limit, or other discharge requirement. 15. Composite Sample shall mean a collection of individual samples obtained at selected intervals based on an increment of either flow or time. The resulting mixture (composite sample) forms a representative sample of the wastestream discharged during the sample period. 16. Connection Permit shall mean a permit issued by OCSD, upon payment of a capital facilities capacity charge, authorizing the Permittee to connect directly to an OCSD's Sewerage Facilities or to a sewer which ultimately discharges into an OCSD's Sewerage Facilities. 17. Department Head shall mean that person duly designated by the General Manager to perform those delegated duties as specified in this Ordinance. 18. Discharger shall mean any Person who discharges or causes a discharge of Wastewater directly or indirectly to a public sewer. Discharger shall mean the same as User. 19. District shall mean the Orange County Sanitation District or OCSD. 20. Division Head shall mean that person duly designated by the General Manager to implement the OCSD Pretreatment Program and perform the duties as specified in this Ordinance. 21. Domestic Septage shall mean the liquid and solid material removed from food service establishments, or a septic tank, cesspool, portable toilet, Type III marine sanitation device, or similar treatment works that receives only domestic Wastewater. 22. Domestic Wastewater shall mean the liquid and solid waterborne wastes derived from the ordinary living processes of humans of such OCSD-48-10 character as to permit satisfactory disposal, without special treatment, into the public sewer or by means of a private disposal system. 23. Downstream Sampling or Monitoring shall mean sampling or monitoring usually conducted in a city or agency owned sewer for the purpose of determining the compliance status of an industrial or commercial Discharger. 24. Dry Weather Urban Runoff shall mean surface runoff flow that is generated from any drainage area within OCSD's service area during a period that does not fall within the definition of Wet Weather. It is surface runoff that contains Pollutants that interfere with or prohibit the recreational use and enjoyment of public beaches or cause an environmental risk or health hazard. 25. Enforcement Compliance Schedule Agreement (ECSA) shall mean a mutual agreement between OCSD and Permittee requiring implementation of necessary Pretreatment practices and/or installation of equipment to ensure permit compliance. 26. Enforcement Response Plan shall mean a plan containing detailed procedures indicating how OCSD will investigate and respond to instances of Industrial User non-compliance in accordance with 40 CFR 403.8(f)(1) or other Users in accordance with OCSD non- compliance procedures. 27. Federal Categorical Pretreatment Standards shall mean any regulation containing Pollutant discharge limits promulgated by the U.S. EPA in accordance with Sections 307(b) and (c) of the Clean Water Act (33 U.S.C. 1317) which apply to a specific category of Industrial Users and which appear in 40 CFR Chapter I, Subchapter N, Parts 405471. 28. Federal Regulations shall mean any applicable provision of the Federal Water Pollution Control Act, also known as the Clean Water Act, as amended, Title 33, United States Code, Section 1251 and following, and any regulation promulgated by the United States Environmental Protection Agency under Title 40 CFR implementing that act. 29. Flow Monitoring Facilities shall mean equipment and structures provided at a User's expense to measure, totalize, and/or record, the incoming water to the facility or the Wastewater discharged to the sewer. OCSD-48-11 30. General Manager shall mean the individual duly designated by the Board of Directors of OCSD to administer this Ordinance (see also Section 107). 31. Grab Sample shall mean a sample taken from a wastestream on a one-time basis without regard to the flow in the wastestream and without consideration of time. 32. Indirect Discharge or Discharge shall mean the introduction of Pollutants into a POTW from any non-domestic source regulated under section 307(b), (c) or(d) of the Act. 33. Industrial User shall mean any User that discharges Industrial Wastewater. 34. Industrial Wastewater shall mean all liquid carried wastes and Wastewater of the community, excluding domestic Wastewater and domestic septage, and shall include all Wastewater from any producing, manufacturing, processing, agricultural, or other operation. 35. Inspector shall mean a person authorized by the General Manager to inspect any existing or proposed Wastewater generation, conveyance, processing, and disposal facilities. 36. Instantaneous Limit (see the Maximum Allowable Discharge Limit) 37. Interference shall mean any discharge which, alone or in conjunction with a discharge or discharges from other sources, either: a) inhibits or disrupts OCSD, its treatment processes or operations, or its biosolids processes, use, or disposal; or b) is a cause of a violation of any requirement of OCSD's NPDES permit or prevents lawful biosolids or treated effluent use or disposal. 38. LEL (Lower Explosive Limit) shall mean the minimum concentration of a combustible gas or vapor in air(usually expressed in percent by volume at sea level) which will ignite if an ignition source (sufficient ignition energy) is present. 39. Letter to Discharge shall mean a letter authorizing a User to discharge to the sewer without having to obtain a Special Purpose Discharge Permit. The discharge volume is generally limited to less than 1 million gallons. OCSD-48-12 40. Local Limit shall mean specific discharge limits developed and enforced by OCSD upon industrial or commercial facilities to implement the general and specific discharge prohibitions listed in 40 CFR 403.5(a)(1) and (b). 41. Local Sewering Agency shall mean any public agency or private corporation responsible for the collection and disposal of Wastewater to OCSD's Sewerage Facilities duly authorized under the laws of the State of California to construct and/or maintain public sewers. 42. Me or Violation shall mean a discharge over the permitted discharge limit, as determined by the result of a sample analysis, as follows: a) a discharge exceeding a Mass Emission Rate limit by 20% or more, or b) a discharge exceeding a concentration limit by 20% or more, or c) a pH discharge less than 5.0. 43. Mass Emission Rate shall mean the weight of material discharged to the sewer system during a given time interval. Unless otherwise specified, the mass emission rate shall mean pounds per day of a particular constituent or combination of constituents. 44. Maximum Allowable Discharge Limit shall mean the maximum quantity or concentration of a Pollutant allowed to be discharged at any period of time, determined from the analysis of any discrete or composited sample collected, independent of the industrial flow rate and the duration of the sampling event. 45. Medical Waste shall mean the discharge of isolation wastes, infectious agents , human blood and blood byproducts, pathological wastes, sharps, body parts, fomites, etiologic agents, contaminated bedding, surgical wastes, potentially contaminated laboratory wastes, and dialysis wastes. 46. Milligrams Per Liter (mg/L or ma/I) shall mean a unit of the concentration of a constituent or compound that is found in water or Wastewater. It is 1 milligram of the constituent or compound in 1 liter of water or Wastewater. 47. Minor Violation shall mean a discharge over the permitted discharge limit as determined by the result of a sample analysis, as follows: OCSD-48-13 a) a discharge exceeding a Mass Emission Rate limit by less than 20%, or b) a discharge exceeding a concentration limit by less than 20%, or. c) a pH discharge equal to or greater than 5.0, but less than 6.0, or d) a pH discharge greater than 12.0. 48. National Pretreatment Standard, Pretreatment Standard. or Standard shall mean any regulation containing Pollutant discharge limits promulgated by the EPA in accordance with section 307 (b) and (c) of the Act, which applies to Industrial Users. This term includes prohibitive discharges and categorical standards established pursuant to 40 CFR 403.5 and 40 CFR 403.6. 49. North American Industry Classification System (NAICS) shall mean an industry classification system that groups establishments into industries based on the activities in which they are primarily engaged. 50. National Pollutant Discharge Elimination System Permit (NPDES Permit shall mean the permit issued to control the discharge to surface waters of the United States as detailed in Public Law 92 500, Section 402. 51. New Source shall mean those sources that are new as defined by 40 CFR 403.3(m) as revised. 52. Non-compatible Pollutant shall mean any Pollutant which is not a Compatible Pollutant as defined herein. 53. OCSD shall mean Orange County Sanitation District. 54. OCSD's Sewerage Facilities or System shall mean any property belonging to OCSD used in the treatment, reclamation, reuse, transportation, or disposal of Wastewater, or biosolids. 55. Ordinance shall mean that document entitled "Wastewater Discharge Regulations" containing OCSD requirements, conditions, and limits for connecting and discharging to the sewer system, as may be amended and modified. OCSD-48-14 56. pH shall mean both acidity and alkalinity on a scale ranging from 0 to 14 where 7 represents neutrality, numbers less than 7 increasing acidity, and more than 7 increasing alkalinity, and is the logarithm of the reciprocal of the quantity of hydrogen ions in moles per liter of solution. 57. Pass Throuah shall mean discharge through OCSD's Sewerage Facilities to Waters of the U.S. which, alone or in conjunction with discharges from other sources, is a cause of a violation of OCSD's NPDES permit. 58. Permittee shall mean a Person who has received a permit to discharge Wastewater into OCSD's Sewerage Facilities subject to the requirements and conditions established by OCSD. 59. Person shall mean any individual, partnership, copartnership, company, firm, association, corporation or public agency, joint stock company, trust, estate, or any other legal entity; or their legal representatives, agents, assigns, including all federal, state, and local governmental entities. 60. Pesticides shall mean those compounds classified as such under federal or state law or regulations including, but not limited to DDT (dichlorodiphenyltrichloro-ethane, both isomers); DDE (dichlorodiphenyl-ethylene); DDD (dichlorodiphenyldichloroethane); aldrin, benzene hexachloride (alpha [a], beta [[i], and gamma [y] isomers); chlordane; endrin; endrin aldehyde; 2,3,7,8- tetrachlorodibenzo-p-dioxin (TCDD); toxaphene; a-endosulfan; 0- endosulfan; endosulfan sulfate; heptachlor; heptachlor epoxide; dieldrin; demeton; guthion; malathion; methoxychlor; mirex; and parathion. 61. Pollutant shall mean any constituent, compound, or characteristic of Wastewaters on which a discharge limit or requirement may be imposed either by OCSD or the regulatory bodies empowered to regulate OCSD. 62. Polychlorinated Biohenvls (PCB) shall mean those compounds classified as such under federal or state law including, but not limited to Aroclors 1016, 1221, 1228, 1232, 1242, 1248, 1254, 1260, and 1262. 63. Pretreatment shall mean the reduction of the amount of Pollutants, the elimination of Pollutants, or the alteration of the nature of Pollutant properties in Wastewater to a level authorized by OCSD prior to, or in lieu of, discharge of the Wastewater into OCSD's OCSD-48-15 Sewerage System. The reduction or alteration can be obtained by physical, chemical or biological processes, by process changes, or by other means. 64. Pretreatment Facility shall mean any works or devices that the General Manager determines are appropriate to treat, restrict, or prevent the Flow of Industrial Wastewater prior to discharge into a public sewer. 65. Pretreatment Requirements shall mean any substantive or procedural requirement related to Pretreatment, other than a National Pretreatment Standard, imposed on an Industrial User. 66. Priority Pollutants shall mean the most recently adopted list of toxic Pollutants identified and listed by EPA as having the greatest environmental impact. They are classified as Non-compatible Pollutants and may require Pretreatment prior to discharge to prevent: a) Interference with OCSD's operation; or b) biosolids contamination; or c) Pass Through into receiving waters or into the atmosphere. 67. Public Agency shall mean the State of California and any city, county, district, other local authority or public body of or within this state. 68. Public Sewer shall mean a sewer owned and operated by OCSD, a city or other local sewering Public Agency which is tributary to OCSD's Sewerage Facilities. 69. Publicly Owned Treatment Works or POTW shall mean a treatment works as defined by section 212 of the Act, which is owned by a state or municipality (as defined by section 502(4) of the Act). This definition includes any devices and systems used in the storage, treatment, recycling and reclamation of municipal Sewage or industrial wastes of a liquid nature. It also includes sewers, pipes and other conveyances only if they convey Wastewater to a POTW Treatment Plant. The term also means the municipality as defined in section 502(4) of the Act, which has jurisdiction over the Indirect Discharges to and the discharges from such a treatment works. 70. RCRA shall mean Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901, at seq.) and as amended. OCSD-48-16 71. Regulatory Agencies shall mean those agencies having jurisdiction over the operation of OCSD including, but not limited to, the following: a) United States Environmental Protection Agency, Region IX, San Francisco and Washington, DC (EPA). b) California State Water Resources Control Board (SWRCB). c) California Regional Water Quality Control Board, Santa Ana Region (RWQCB). d) South Coast Air Quality Management District (SCAQMD). e) California Environmental Protection Agency (Cal-EPA). 72. Regulatory Compliance Schedule Agreement(RCSA) shall mean an agreement between OCSD and Permittee requiring the Permittee to implement Pretreatment practices and/or install equipment to ensure compliance with future revised categorical Pretreatment Standards or revised discharge limits. 73. Responsible Officer shall mean: a) If the applicant or User is a corporation: (1) The president, secretary, treasurer, or a vice president of the corporation in charge of a principal business function, or any other person who performs similar policy or decision making functions for the corporation; or (2) The manager of one or more manufacturing, production, or operation facilities, provided the manager is authorized to make management decisions that govern the operation of the regulated facility including having the explicit or implicit duty of making major capital investment recommendations, and initiate and direct other comprehensive measures to assure long-term environmental compliance with environmental laws and regulations; can ensure that the necessary systems are established or actions taken to gather complete and accurate information for individual Wastewater discharge permit requirements; and where authority to sign documents has been assigned or delegated to the manager in accordance OCSD-48-17 with corporate procedures. b) If the applicant or User is a partnership or sole proprietorship: a general partner or proprietor, respectively. c) If the applicant or User is a federal, state, or local governmental facility: a director or highest official appointed or designated to oversee the operation and performance of the activities of the government facility, or the designee. d) An applicant or User not falling within one of the above categories must designate as the Responsible Officer an individual responsible for the overall operation of the facility. 74. Sample Point shall mean a location accepted by OCSD, from which Wastewater can be collected that is representative in content and consistency of the entire flow of Wastewater being sampled. 75. Sampling Facilities shall mean structure(s) provided at a User's expense for OCSD or User to measure and record Wastewater constituent mass, concentrations, collect a representative sample, or provide access to plug or terminate the discharge. 76. Sanitary Waste shall mean domestic Wastewater, human excrement, and gray water (e.g., water from household showers, dishwashing operations, etc.). 77. Septic Waste shall mean any Sewage from holding tanks such as vessels, chemical toilets, campers, trailers, and septic tanks. 78. Service Area shall mean an area for which OCSD has agreed to either provide sewer service, or Wastewater treatment, or Wastewater disposal. 79. Sewage shall mean Wastewater. 80. Sewerage Facilities or System shall mean any and all facilities used for collecting, conveying, pumping, treating, and disposing of Wastewater or sludge or biosolids. 81. Significant Industrial User, except as provided in 40 CFR 403.3 (v)(2) and (v)(3), shall mean: (i)All Industrial Users subject to Categorical Pretreatment Standards under 40 CFR 403.6 and 40 CFR chapter I, subchapter N; and (ii) Any other Industrial User that: discharges an average of 25,000 gallons per day or more of process Wastewater to the POTW (excluding sanitary, noncontact cooling and boiler OCSD-48-18 blowdown Wastewater); contributes a process wastestream which makes up 5 percent or more of the average dry weather hydraulic or organic capacity of the POTW Treatment plant; or is designated as such by OCSD on the basis that the Industrial User has a reasonable potential for adversely affecting the POTW's operation or for violating any Pretreatment Standard or requirement (in accordance with 40 CFR 403.8(f)(6)). 82. Significant Non-Compliance(SNC)shall mean the compliance status of an Industrial User who is in violation of one or more of the criteria as described in 40 CFR 403.8(f)(2)(viii). 83. Slug Load or Slug Discharge shall mean any discharge at a flow rate or concentration, which could cause a violation of the prohibited discharge standards in Section 201 of this Ordinance. A Slug Discharge is any Discharge of a non-routine, episodic nature, including but not limited to an accidental spill or a non-customary batch Discharge, which has a reasonable potential to cause Interference or Pass Through, or in any other way violate the POTW's regulations, Local Limits, or Permit conditions. 84. Sludge shall mean any solid, semi-solid or liquid decant, subnate or supernate from a manufacturing process, utility service, or Pretreatment Facility. 85. Special Assessment Credit shall mean the portion of the secured property tax bill that represents the regional special assessment sewer User fee as defined by OCSD. 86. Special Purpose Use shall mean any Discharger who is granted a Special Purpose Discharge Permit by OCSD to discharge unpolluted water, storm runoff, or groundwater to OCSD's Sewerage Facilities. 87. Spent Solutions shall mean any concentrated Industrial Wastewater or Wastewater that is not authorized to be discharged to a Sewage facility until appropriately treated. 88. Spill Containment shall mean a protection system installed by the Permittee to prohibit the discharge to the sewer of non-compatible Pollutants. 89. Standard Methods shall mean procedures described in the current edition of Standard Methods for the Examination of Water and Wastewater, as published by the American Public Health Association, the American Water Works Association and Water Pollution Control Federation. OCSD-48-19 90. Suspended Solids shall mean any insoluble material contained as a component of Wastewater and capable of separation from the liquid portion of said Wastewater by laboratory filtration as determined by the appropriate testing procedure and expressed in terms of milligrams per liter. 91. Total Organic Carbon (TOC)shall mean the measure of total organic carbon in mg/L using heat, oxygen, ultraviolet irradiation, chemical oxidants, or combinations of these oxidants that convert organic carbon to carbon dioxide, rounded to two significant figures.As such, Total Toxic Organics is a subset of TOC. 92. Total Toxic Organics (TTO) shall mean the summation of all quantifiable values greater than 0.01 milligrams per liter for the organics regulated by the EPA or OCSD for a specific industrial category. 93. Unpolluted Water shall mean water to which no Pollutant has been added either intentionally or accidentally. 94. User shall mean any Person who discharges or causes a discharge of Wastewater directly or indirectly to a public sewer. User shall mean the same as Discharger. User includes Industrial Users as a type of User. 95. Waste-Tracking Form shall mean that receipt which is retained by the generator of hazardous wastes as required by the State of California or the United States Government pursuant to RCRA, or the California Hazardous Materials Act, or that receipt which is retained by the generator for recyclable wastes or liquid non- hazardous wastes as required by OCSD. The Waste-Tracking Form is typically known as a "waste manifest." 96. Wastehauler shall mean any Person carrying on or engaging in vehicular transport of brine, domestic septage (except the SAWPA Sewer Service Area in compliance with the 1996 OCSD/SAWPA Agreement), or Wastewater as part of, or incidental to, any business for the purpose of discharging directly or indirectly said Wastewater into OCSD's Sewerage System. 97. Wastewater shall mean the liquid and water-carried wastes of the community and all constituents thereof,whether treated or untreated, discharged into or permitted to enter a public sewer. 98. Wastewater Constituents and Characteristics shall mean the OCSD-48-20 individual chemical, physical, bacteriological, and radiological parameters, including volume and flow rate and such other parameters that serve to define, classify or measure the quality and quantity of Wastewater. 99. Wet Weathershall mean any period of time during which measurable rainfall occurs within OCSD's service area. This period shall include the time following the cessation of rainfall until OCSD determines that the wet weather event is no longer impacting OCSD's Sewerage System. 100. Working Day shall mean the period of time during which production or operation is taking place or any period during which discharge to the sewer is occurring. 101. Zero Discharge Certification shall mean a control mechanism that is issued by OCSD to insure that specific facilities are not discharging a Pollutant(s) that may otherwise qualify the facility for a discharge permit. B. Words used in this Ordinance in the singular may include the plural and the plural the singular. Terms used in the masculine form shall include feminine, and terms used in the feminine form shall include masculine. 103. CONFIDENTIAL INFORMATION All user information and data on Tile with OCSD shall be available to the public and governmental agencies without restriction unless the User specifically requests and is able to demonstrate to the satisfaction of OCSD that the release of such information would divulge information, processes or methods which would be detrimental to the User's competitive position. The demonstration of the need for confidentiality made by the Permittee must meet the burden necessary for withholding such information from the general public under applicable state and federal law. Any such claim must be made at the time of submittal of the information by marking the submittal "Confidential Business Information" on each page containing such information. Information which is demonstrated to be confidential shall not be transmitted to anyone other than a governmental agency without prior notification to the User. Wastewater constituents and characteristics and other effluent data, as defined in 40 CFR 2.302 shall not be recognized as confidential information and shall be available to the public. 104. SALE OR CHANGE OF OWNERSHIP A. Permits issued under this Ordinance are for a specific User, for a specific operation at a specific location or for a specific Wastehauler, and create no vested rights. Notwithstanding 104.C, the existing permit will be terminated OCSD-48-21 upon sale or change of ownership. B. No permit may be transferred to allow a discharge to a public sewer from a point other than the location for which the permit was originally issued. C. When the permittee is a legal entity (such as a corporation, partnership, limited liability company, or other legal entity), the permittee is deemed to have undergone a change of ownership when any other legal entity or person acquires direct or indirect ownership or control of more than fifty percent (50%) of the total ownership interest in the permittee. D. At least thirty (30) days prior to the sale or change of ownership of any business operating under a permit issued by OCSD, the Permittee shall notify OCSD in writing of the proposed sale or change of ownership. The successor owner shall apply to OCSD for a new permit at least fifteen (15) days prior to the sale or change of ownership in accordance with the provisions of this Ordinance. A successor owner shall not discharge any Wastewater for which a permit is required by this Ordinance until a new permit is issued by OCSD to the successor owner. E. The written notification of intended sale or change of ownership shall be in a form approved by OCSD and shall include a written certification by the new owner or Authorized Representative, which shall include as a minimum: 1. the specific date on which the sale or change of ownership is to occur; and 2. an acknowledgement to comply fully with all the terms, conditions, limits, and provisions of this Ordinance and the new permit. 105. RESERVED 106. AUTHORITY A. OCSD is regulated by several agencies of the United States Government and the State of California, pursuant to the provisions of federal and state Law. Federal and state laws grant to OCSD the authority to regulate and/or prohibit, by the adoption of ordinances or resolutions, and by issuance of discharge certifications, or discharge permits, the discharge of any Wastewater, directly or indirectly, to OCSD's Sewerage Facilities. Said authority includes the right to establish limits, conditions, and prohibitions; to establish flow rates or prohibit flows discharged to OCSD's Sewerage Facilities; to require the development of compliance schedules for the installation of equipment systems and materials by all Users; and to take all actions necessary to enforce its authority including implementation of the OCSD-48-22 Enforcement Response Plan, whether within or outside OCSD's boundaries, including those Users that are tributary to OCSD or within areas for which OCSD has contracted to provide sewerage services. B. Four jurisdictions contribute to and are under the purview of OCSD's Pretreatment program: a section of the Irvine Ranch Water District; a section of the Sanitation Districts of Los Angeles County, which has several Dischargers at the county border; the South Orange County Wastewater Authority, and the Santa Ana Watershed Project Authority(SAWPA),whose discharge is delivered via the Santa Ana River Interceptor (SARI) and is comprised of mostly Wastewater brines. Nothing in this Ordinance is intended to preclude the discharge from SAWPA's SARI Service Area of discharges consisting solely of Wastewater brines that are compliant with all regulations and agreements. C. OCSD has the authority pursuant to California Health and Safety Codes 5471 and 5474 to prescribe, revise, and collect all fees and charges for services and facilities furnished by OCSD either within or without its territorial limits. 107. DELEGATION OF AUTHORITY Whenever any power is granted to or a duty is imposed upon the General Manager, the power may be exercised or the duty may be performed by any person so authorized by the General Manager. 108. SIGNATORY REQUIREMENTS Reports and permit applications required by this Ordinance shall contain the following certification statement: "I certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system, or those persons directly responsible for gathering the information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations." The statement shall be signed by an authorized representative of the Industrial User as defined in 40 CFR 403.12(I) or as defined and designated by OCSD. 109. RECORD KEEPING REQUIREMENTS Any User subject to OCSD's reporting requirements shall maintain and make available OCSD-48-23 for inspection and copying records of all information obtained pursuant to, or resulting from, any monitoring activities required by OCSD, including documentation associated with Best Management Practices, and any additional records or information obtained pursuant to monitoring activities undertaken by the User independent of such requirements. Such records shall include information as shown in 40 CFR 403.12(o)(1) and (2). These records shall remain available for a period of at least three (3)years. This period shall be automatically extended for the duration of any litigation concerning the User or OCSD, or where the User has been specifically notified of a longer retention period by the General Manager. OCSD-48-24 ARTICLE 2. GENERAL PROHIBITIONS, LIMITS AND REQUIREMENTS FOR DISCHARGE 201. PROHIBITED DISCHARGES These prohibitions apply to all Users of OCSD's Sewerage Facilities whether or not they are subject to Federal Categorical Pretreatment Standards or any other national, state, or local Pretreatment Standards or requirements. A. General Prohibitions. 1. No User shall introduce or cause to be introduced into OCSD's Sewerage Facilities any Pollutant,Wastewater, orflow which causes Pass Through or Interference or would cause OCSD to violate any federal, state, or local regulatory requirement. 2. No User shall increase the contribution of flow, Pollutants, or change the nature of Pollutants where such contribution or change does not meet applicable standards and requirements or where such contribution would cause OCSD to violate any federal, state, or local regulatory permit. 3. No Person shall transport Wastewater from one location or facility to another for the purpose of treating or discharging it directly or indirectly to OCSD's Sewerage Facilities without written permission from OCSD. 4. No Person shall deliver by vehicular transport, rail car, or dedicated pipeline, directly or indirectly to OCSD's Sewerage Facilities, Wastewater which contains any substance that is defined as a hazardous waste by the Regulatory Agencies. B. Specific Prohibitions. No User shall introduce or cause to be introduced into the Sewerage Facilities, any Pollutant, substance, or Wastewater which: 1. Creates a fire or explosive hazard in the Sewerage Facilities including, but not limited to, wastestreams with a closed-cup flashpoint of less than 140 degrees Fahrenheit (60 degrees Centigrade) using the test methods specified in 40 CFR 261.21; or produces a gaseous mixture that is 10% or greater of the lower explosive limit (LEL). 2. Causes obstruction to the flow in the Sewerage Facilities resulting in interference or damage to the Sewerage Facilities. OGSD-48-25 3. Produces noxious or malodorous liquids, gases, solids, or other Wastewater which, either singly or by interaction with other Wastes, is sufficient to create a public nuisance or a hazard to life, or to prevent entry into the Sewerage Facilities for maintenance or repair. 4. Results in toxic gases, vapors, or fumes within the Sewerage Facilities in a quantity that may cause acute worker health and safety problems. 5. Contains any radioactive Wastes or isotopes except in compliance with applicable regulations from other governmental agencies empowered to regulate the use of radioactive materials. 6. Causes, alone or in conjunction with other sources, OCSD's treatment plant effluent to fail a toxicity test. 7. Causes OCSD's effluent or any other product of the treatment process, residues, biosolids, or scums, to be unsuitable for reclamation, reuse or disposal. Examples of items which may cause these conditions include, but are not limited, to food packaging, product containers, and non-dispersible products. 8. Causes discoloration or any other condition which affects the quality of OCSD's influent or effluent in such a manner that inhibits OCSD's ability to meet receiving water quality, biosolids quality, or air quality requirements established by Regulatory Agencies. 9. Creates excessive foaming in the Sewerage Facilities. 10. Violates any applicable Federal Categorical Pretreatment Standards, statute, regulation, or ordinance of any public agency or Regulatory Agency having jurisdiction over the operation of or discharge of Wastewater through the Sewerage Facilities. 11. Has a temperature higher than 140 degrees Fahrenheit, (60 degrees Centigrade), or which causes the temperature at the treatment plant to exceed 104 degrees Fahrenheit (40 degrees Centigrade). 12. Has a pH less than 6.0 or greater than 12.0. 13. Causes corrosion, fouling, occlusion, or damage to the POTW beyond normal wear and tear. 14. Is released in a discharge at a flow rate and/or Pollutant concentration (including oxygen-demanding Pollutant (BOD, etc.)) OCSD-48-26 which will cause interference with OCSD's Sewerage Facilities. 15. Is in excess of the permitted Mass Emission Rates established in accordance with Section 213, or the concentration limits set forth in Table 1, or the discharge permit. 16. Contains material which will readily settle or cause an obstruction to flow in the Sewerage Facilities resulting in interference, such as, but not limited to, sand, mud, glass, metal filings, diatomaceous earth, cat litter, asphalt, wood, bones, hair, fleshings, food packaging, product containers, and non-dispersible products. 17. Includes petroleum oil, non-biodegradable cutting oil, or products of mineral oil origin in amounts that will cause interference or Pass Through. 18. Causes the Orange County Water District Groundwater Replenishment System product water to exceed its TOC limit of 0.5 mg/L. 202. PROHIBITION ON DILUTION No User shall increase the use of water or in any other manner attempt to dilute a discharge as a partial or complete substitute for treatment to achieve compliance with this Ordinance and the User's permit or to establish an artificially high flow rate for permit Mass Emission Rates. 203. PROHIBITION ON SURFACE RUNOFF AND GROUNDWATER A. No Person shall discharge groundwater, surface runoff, or subsurface drainage directly or indirectly to OCSD's Sewerage Facilities except as provided herein. Pursuant to Section 304 or 305, et seq., OCSD may approve the discharge of such water only when no alternate method of disposal is reasonably available or to mitigate an environmental risk or health hazard. B. The discharge of such waters shall require a Dry Weather Urban Runoff Discharge Permit or a Special Purpose Discharge Permit from OCSD. C. If a permit is granted for the discharge of such water into a Public Sewer, the User shall pay all applicable charges and shall meet such other conditions as required by OCSD. 204. PROHIBITION ON UNPOLLUTED WATER A. No Person shall discharge unpolluted water such as single pass cooling OCSD-48-27 water directly or indirectly to OCSD's Sewerage Facilities except as provided herein. Pursuant to Section 305, at seq., OCSD may approve the discharge of such water only when no alternate method of disposal or reuse is reasonably available or to mitigate an environmental risk or health hazard. B. The discharge of such waters shall require a Special Purpose Discharge Permit from OCSD. C. If a permit is granted for the discharge of such water into a public sewer, the User shall pay all applicable charges and shall meet such other conditions as required by OCSD. 205. PROHIBITION ON SLUG DISCHARGES AND NOTIFICATION REQUIREMENT OCSD has the right to control slug discharges, if it is determined to be necessary. All Significant Industrial Users are required to notify OCSD immediately of any changes at their facilities that could affect the potential for a slug discharge. 206. PROHIBITION ON THE USE OF GRINDERS A. Waste from industrial or commercial grinders shall not be discharged into a Public Sewer, except wastes generated in packing or preparing food or food products. Such grinders must shred the waste to a degree that all particles will be carried freely under normal Flow conditions prevailing in the Public Sewer. B. Waste from Food Service Establishments operating a grinder is prohibited and shall not be discharged into a Public Sewer unless written authorization from the General Manager is obtained. 207. PROHIBITION ON POINT OF DISCHARGE No Person, except Local Sewering Agencies involved in maintenance functions of sanitary sewer facilities, shall discharge any Wastewater directly into a manhole or other opening in a sewer other than through an approved building sewer, unless approved by OCSD upon written application by the User and payment of the applicable fees and charges established therefor. 208. HAZARDOUS WASTE DISCHARGE NOTIFICATION REQUIREMENT Any User that discharges any hazardous waste into the Sewerage System shall notify OCSD immediately as required by 40 CFR 403.12(p). OCSD-48-28 209. PROHIBITION AND REQUIREMENTS FOR WASTEHAULER DISCHARGES TO OCSD'S SEWERAGE SYSTEM AND WASTEHAULER STATION A. No Wastehauler shall discharge to OCSD's Sewerage System, domestic septage or other approved waste or wastewater from a vacuum pumping truck or other liquid waste transport vehicle, without first obtaining both a valid Orange County Health Care Agency (OCHCA) registration or other control mechanism (where applicable), and a OCSD Wastehauler Permit as required by Section 306. Such Wastewaters shall be discharged only at locations designated by OCSD, and at such times as established by OCSD. OCSD may collect samples of each hauled load to ensure compliance with applicable standards. B. No Wastehauler shall discharge domestic septage orother approved Waste or Wastewater constituents in excess of Limits in Table 1. C. The discharge of industrial Wastewater by any Wastehauler is prohibited unless written permission of the General Manager has been obtained, the proper permits have been obtained, and the Industrial Wastewater meets federal and state limits applicable to the User or generator from which the Industrial Wastewater was obtained; or the Maximum Local Discharge Limits as specified in Table 1, whichever are more stringent. The discharge of hauled Industrial Wastewater is subject to all other requirements of this Ordinance. D. No Wastehauler shall discharge or deliver Wastewater to a Sewerage System that is tributary to OCSD's Sewerage Facilities that are from a source that is not within OCSD's service area unless prior authorization for such Wastewater is granted by the General Manager. E. No Wastehauler shall deliver directly to OCSD's Sewerage Facilities any Wastewater originating within OCSD's boundaries, from an industrial user subject to categorical Pretreatment Standards, and is greater than the categorical Pretreatment Standards, OCSD's Local Limits, or hazardous waste levels defined by RCRA or 40 CFR 261. F. Notwithstanding E above, no Wastehauler shall deliver directly to OCSD's Sewerage Facilities any Wastewater originating within OCSD's boundaries, from a commercial or an industrial user not subject to categorical Pretreatment Standards, and is greater than OCSD Local Limits or hazardous Waste levels defined by RCRA or 40 CFR 261. G. No Wastehauler shall add chemicals into Wastehauler trucks while on OCSD premises before discharging to the OCSD Wastehauler Station unless approved by OCSD. OCSD-48-29 H. No Wastehauler shall discharge Wastewater to the OCSD Wastehauler Station, which contains mixed load types, i.e., car wash Wastewater, domestic septage, brine, etc. I. Wastehaulers shall provide a Waste-Tracking Form for every load. This form shall include, at a minimum, the name and address of the industrial Wastehauler, permit number, truck identification, names and addresses of sources of Wastewater, and volume and characteristics of Wastewater. J. Discharge at the OCSD Wastehauler Station shall be through an appropriate hose and connection to the discharge port. Discharging Wastewater directly to the surface area of the Wastehauler Station is prohibited. K. Wastehauler hoses must be connected to the Wastehauler Station discharge port when being cleaned. L. Transferring loads between trucks or from portable toilets to trucks on OCSD property is prohibited unless permission from OCSD is obtained. 210. PROHIBITION ON MEDICAL WASTE A. No solid Wastes consisting of, but not limited to, hypodermic needles, syringes, instruments, utensils or other paper and plastic items from hospitals, clinics, offices of medical doctors, convalescent homes, medical laboratories or other medical facilities shall be discharged to the Sewerage System, unless prior written approval for such discharges has been granted by the General Manager. B. OCSD shall have the authority to require that any discharge of etiologic agents or infectious agents or substances to the Sewerage System be rendered inactive and noninfectious prior to discharge if the infectious Waste is deemed to pose a threat to the public health and safety, or can become an etiologic agent subsequent to discharge to the Sewerage System, or will result in any violation of applicable Wastewater discharge requirements. C. No unused, unwanted, or expired pharmaceuticals (both over the counter and prescription-only medications) shall be disposed of in the Sewerage System, except in accordance with federal and state regulations, or in the absence of such regulations, using Best Management Practices. 211. PROHIBITION ON DISPOSAL OF SPENT SOLUTIONS AND SLUDGES Spent solutions, sludges, and materials of quantity or quality in violation of, or prohibited by this Ordinance, or any permit issued under this Ordinance must be disposed of in OCSD-48-30 compliance with all regulatory requirements at a permitted point of disposal as defined by OCSD or Regulatory Agency with jurisdiction thereof. If the point of disposal is at an OCSD-permitted treatment facility, all Waste-Tracking Forms shall be retained for a minimum of three years by the facility and Wastehauler of said Wastewater, and made available for copying for review upon request. 212. RESERVED 213. MASS EMISSION RATE DETERMINATION A. Mass Emission Rates for non-compatible or Compatible Pollutants that are present or anticipated in the User's Wastewater discharge may be set for each User and made an applicable part of each User's permit. These rates shall be based on Table 1, Maximum Allowable Local Discharge Limits, or Federal Categorical Pretreatment Standards, and the User's average daily Wastewater discharge for the past three years, the most recent representative data, or other data acceptable to the General Manager. B. To verify the User's operating data, OCSD may require the User to submit an inventory of all Wastewater streams and/or records indicating production rates. C. OCSD may revise limits or Mass Emission Rates previously established in the discharger's permit at any time, based on: current or anticipated operating data of the discharger or OCSD; OCSD's ability to meet NPDES limits; or changes in the requirements of Regulatory Agencies. D. The excess use of water to establish an artificially high flow rate for Mass Emission Rate determination is prohibited. OCSD-48-31 214. MAXIMUM ALLOWABLE LOCAL DISCHARGE LIMITS OCSD's Maximum Allowable Local Discharge Limits are shown in Table 1 below. TABLE 1 MAXIMUM ALLOWABLE LOCAL NON-DOMESTIC DISCHARGE LIMITSM CONSTITUENT MILLIGRAMS/LITER 1,4-dioxanehl 1.0 Ammonia Masstat Arsenic 2.0 Biochemical Oxygen Demand (BOD) Masstat Cadmium 1.0 Chromium (Total) 20.0 Copper 3.0 Cyanide(Total) 5.0 Lead 2.0 Mercury 0.03 Molybdenum 2.3 Nickel 10.0 Pesticides 0.01 Oil and Grease of Mineral or Petroleum Origin(4) 100.0 Polychlorinated Biphenyls(PCB) 0.01 Selenium 3.9 Silver 15.0 Sulfide (Dissolved) 0.5 Sulfide (Total) 5.0 Zinc 10.0 MAXIMUM ALLOWABLE DISCHARGE LIMITS FOR WASTEHAULERS DISCHARGING DOMESTIC SEPTAGE TO THE OCSD WASTEHAULER STATION CONSTITUENT MILLIGRAMS/LITER Cadmium 1.0 Chromium 35.0 Copper 25.0 Lead 10.0 Nickel 10.0 Zinc 50.0 (')Users subject to Federal Categorical Pretreatment Standards may be required to meet more stringent limits. ai 1,4-diomne is also known as"p-dioximi Pi BOD and ammonia mass discharged will be tracked by OCSD and Users. It is the Permittes's responsibility to report the intended technically-based mass use to OCSD. 01"Oil and Grease of Mineral or Petroleum Ongin"is also known as"Petroleum Oil and Grease as Silica Gel Treated n- Hexane Extractable Material"or"SGT-HEM Non-Polar Material." OCSD-48-32 ARTICLE 3. DISCHARGE PERMITS, CERTIFICATIONS, CHARGES, AND FEES 301. INTRODUCTION A. To provide the maximum public benefit from the use of OCSD's Sewerage Facilities, written authorization to use said facilities is required. This written authorization shall be in the form of a discharge permit or certification. No vested right shall be given by issuance of permits or certifications provided for in this Ordinance. OCSD reserves the right to establish, by Ordinance regulation, or in Wastewater Discharge Permits or certifications, more stringent standards or requirements on discharges to OCSD Sewerage Facilities if deemed by the General Manager appropriate to comply with this Ordinance and the requirements of Regulatory Agencies. B. The discharge permit shall be in one of five forms and is dependent upon the type of discharger, volume, and characteristics of discharge. The five discharge permits are: 1. Class I Wastewater Discharge Permit. 2. Class II Wastewater Discharge Permit. 3. Dry Weather Urban Runoff Discharge Permit. 4. Special Purpose Discharge Permit. 5. Wastehauler Discharge Permit. C. The Discharge Certification is issued to those Users that are discharging regulated Wastewater but are not otherwise required to obtain a discharge permit. D. The Zero Discharge Certification is issued to certify that a particular Pollutant or process is not used or discharged to OCSD, even though regulated process Wastewater may still be generated on-site and eventually wastehauled or otherwise eliminated. Such a facility does not require a discharge permit, but may require a Zero Discharge Certification. 302. CLASS I WASTEWATER DISCHARGE PERMITS A. No User requiring a Class I permit shall discharge Wastewater without obtaining a Class I Wastewater Discharge Permit. B. Class I Wastewater Discharge Permits shall be expressly subject to all provisions of this Ordinance and all other regulations, charges for use, and fees established by OCSD. The conditions of Wastewater Discharge OCSD-48-33 Permits shall be enforced by OCSD in accordance with this Ordinance and applicable state and federal regulations. C. All Class I Users proposing to discharge directly or indirectly into the OCSD Sewerage Facilities shall obtain a Wastewater Discharge Permit by filing an application pursuant to Section ARTICLE 2 and paying the applicable fees pursuant to Section 302.3. For purposes of this Ordinance, a Class I User is any User: 1. Subject to Federal Categorical Pretreatment Standards under 40 CFR 403.6 and 40 CFR chapter I, subchapter N; or 2. That discharges an average of 25,000 gallons per day or more of process Wastewater to the POTW (excluding sanitary, noncontact cooling and boiler blowdown Wastewater); or 3. Contributes a process wastestream which makes up 5 percent or more of the average dry weather hydraulic or organic capacity of the OCSD POTW; or 4. That is designated as such by OCSD on the basis that the Industrial User has a reasonable potential for adversely affecting the OCSD POTW's operation or for violating any Pretreatment Standard, local limit or requirement (in accordance with 40 CFR 403.8(f)(6)); or 5. That may cause Pass Through affecting OCSD's ability to comply with its NPDES Permit or other regulations and standards; or 6. That may cause Interference with OCSD's Sewerage Facilities. 302.1 Class I Wastewater Discharge Permit Application A. Any User required to obtain a Class I Wastewater Discharge Permit shall complete and file with OCSD, prior to commencing discharge, an application on the form prescribed by OCSD. The applicant shall submit, in units and terms appropriate for evaluation, the following information: 1. Name, address, assessor's parcel number(s), NAICS number(s), description of the manufacturing process or service activity. 2. (Whichever is applicable) name, address of any and all principals/owners/major shareholders of company; Articles of Incorporation; most recent Report of the Secretary of State; Business License. 3. Volume of Wastewater to be discharged. OCSD-48-34 4. Name of individual who can be served with notices other than officers of corporation. 5. Name and address of property owner, landlord and/or manager of the property. 6. Water supplier and water account numbers. 7. Wastewater constituents and characteristics as required by OCSD, including, but not limited to, those mentioned in Section 213, Mass Emission Rate Determination, and Table 1, Local Discharge Limits, of this Ordinance. These constituents and characteristics shall be determined by a laboratory selected by the discharger and acceptable to OCSD. 8. Time and duration of discharge. 9. Number of employees per shift and hours of work per employee per day for each shift. 10. Waste minimization, best management practices, and water conservation practices. 11. Production records, if applicable. 12. Waste-Tracking Forms, if applicable. 13. Landscaped area in square feet, if applicable. 14. Tons of cooling tower capacity, if applicable. 15. EPA Hazardous Waste Generator Number, if applicable. 16. Any other information as specified. B. Applicants may be required to submit site plans,floor plans, mechanical and plumbing plans, and details to show all sewers, spill containment, clarifiers, Pretreatment equipment, and appurtenances by size, location, and elevation for evaluation. C. Applicants may also be required to submit information related to the applicant's business operations, processes, and potential discharge as may be requested by OCSD to properly evaluate the permit application. D. After evaluation of the data, OCSD may issue a Wastewater Discharge OCSD-48-35 Permit, subject to terms and conditions set forth in this Ordinance and as otherwise determined by the General Manager to be appropriate to protect OCSD's Sewerage Facilities. E. The permit application may be denied if the applicant fails to establish to OCSD's satisfaction that adequate Pretreatment equipment is included within the applicant's plans to ensure that the discharge limits will be met or if the applicant has, in the past, demonstrated an inability to comply with applicable discharge limits. F. The permit application may be denied if the applicant has in the past demonstrated an inability to keep current with OCSD invoices for items such as Permit Fees, Non-Compliance Resampling Fees, Civil Penalties, Administrative Civil Penalties, Charges for Use, and Supplemental Capital Facilities Capacity Charges. 302.2 Class I Permit Conditions. and Limits A. A Class I permit shall contain all of the following conditions or limits: 1. Mass Emission Rates and concentration limits regulating non- compatible Pollutants. 2. Requirements to notify OCSD in writing prior to modification to processes or operations through which Industrial Wastewater may be produced. 3. Location of the User's on-site sampling point. 4. Requirements for submission of self-monitoring reports, technical reports, production data, discharge reports, compliance with Pretreatment Standards, BMP-based Categorical Pretreatment Standards and/or local limits, and/or Waste-Tracking Forms. 5. Requirements for maintaining, fora minimum of three(3)years, plant records relating to Wastewater discharge, and Waste-Tracking Forms as specified by OCSD. 6. Requirements to submit copies of tax and water bills. B. A Class I permit may contain any of the following conditions and/or limits: 1. Requirements for the User to construct and maintain, at his own expense, appropriate Pretreatment equipment, pH control, Flow Monitoring Facilities, and sampling facilities. OCSD-48-36 2. Limits on rate and time of discharge or requirements for flow regulation and equalization. 3. Requirements to self-monitor. 4. Assumed values for BOD and suspended solids characteristics that typify the Discharger's effluent for determination of the charge for use. 5. Other terms and conditions which may be appropriate to ensure compliance with this Ordinance or determined by the General Manager to be appropriate to protect OCSD's Sewerage System. 302.3 Class I Permit Fee A. The Class I permit fee shall be in an amount adopted by Ordinance of the Board of Directors. The permit fee shall be payable at the time a permit application is submitted for the issuance of a new permit or a renewed permit. Payment of permit fees must be received by OCSD prior to issuance of either a new permit or a renewed permit. Permittee shall also pay any delinquent invoices in full prior to permit renewal. B. Any permit issued for a location wherein the Permittee is not the property owner may be conditioned upon depositing financial security to guarantee payment of all annual fees and charges to be incurred, in accordance with the provisions of Section 623.(E)of this Ordinance. 302.4 Class I Permit Modification of Terms and Conditions A. The terms and conditions of an issued permit may be subject to modification and change in the sole determination by the General Manager during the life of the permit based on: 1. The Discharger's current or anticipated operating data; 2. OCSD's current or anticipated operating data; 3. Changes in the requirements of Regulatory Agencies which affect OCSD; or 4. A determination by the General Manager that such modification is appropriate to further the objectives of this Ordinance. B. New source indirect Dischargers shall be required to install and start up any necessary pollution control equipment before beginning discharge, and comply with applicable Federal Categorical Pretreatment Standards not to OCSD-48-37 exceed thirty (30) days after the commencement of discharge. C. Permittee may request a modification to the terms and conditions of an issued permit. The request shall be in writing stating the requested change, and the reasons for the change. OCSD shall review the request, make a determination on the request, and respond in writing. D. Permittee shall be informed of any change in the permit limitations, conditions, or requirements at least forty-five (45) days prior to the effective date of change. Any changes or new conditions in the permit shall include a reasonable time schedule for compliance. 302.5 Class I Permit Duration and Renewal Class I permits shall normally be issued for a period not to exceed four(4)years. At least forty-five (45) days prior to the expiration of the permit, the User shall apply for renewal of the permit in accordance with the provisions of this Article 3. 302.6 Class I Permit Charge for Use A. The purpose of a charge for use is to ensure that each recipient of sewerage service from OCSD pays its reasonably proportionate share of all the costs of providing that sewerage service. Charges for use to recover the cost of conveying, treating, and disposing of Sewage in OCSD's Sewerage Facilities are exclusive of any fees levied by local sewering agencies. The charge for use shall be based on the total maintenance, operation, capital expenditures, and reserve requirements for providing Wastewater collection, treatment, and disposal. B. A Discharger who is issued a Class I Wastewater Discharge Permit under the provisions of this Ordinance shall pay a charge for use in accordance with the formula contained herein and the unit charge rates adopted by Ordinance of the Board of Directors. These fees shall be invoiced on a quarterly basis. The quarterly invoice shall be based upon an estimate of the annual use as determined by OCSD. OCSD shall compute the charge for use based upon actual use for the preceding fiscal year on an annual reconciliation statement. C. The charge for use is payable within forty-five (45) days of invoicing by OCSD. A special assessment credit will be allowed for any regional sanitary sewer service charge adopted by the Board of Directors by separate Ordinance and levied against the permitted property. D. In order for OCSD to determine actual annual water use, the User shall provide to OCSD copies of its water bills. If these water bill copies are not received by August 15th of each year for the 12 month period ended closest OCSD-48-38 to June 30, OCSD will endeavor to obtain the water use data. Data obtained by OCSD will be considered correct and will not be adjusted before the next annual reconciliation statement. There shall be a fee levied for OCSD administrative costs when OCSD obtains water use data. OCSD's Board of Directors shall adopt the amount of the fee. E. The charge for use shall be computed by the following formula: Charge for Use = VoV + BoB + SoS— Special Assessment Credit Where V = total annual volume of flow, in millions of gallons B = total annual discharge of biochemical oxygen demand, in thousands of pounds S = total annual discharge of suspended solids, in thousands of pounds Vo, Bo, So = Unit Charge rates established and adopted by Ordinance of OCSD's Board of Directors, based upon the funding requirements of providing sewerage service, in dollars per unit as described in Paragraph F below: F. The Unit Charge rates in the charge-for-use formula shall be determined by the following method: 1. An Operations and Maintenance component of the Unit Charge for the total annual operation and maintenance funding requirements of the Sewerage System shall be levied at a rate to be determined from time to time by the Board of Directors. This Charge shall be allocated among the three Wastewater charge parameters of flow, biochemical oxygen demand and suspended solids in accordance with the General Manager's determination as to the costs associated with each parameter and pursuant to applicable requirements of state and federal Regulatory Agencies. The operation and maintenance costs as distributed to flow, biochemical oxygen demand and suspended solids shall be divided by the projected annual total flow volume and weights of biochemical oxygen demand and suspended solids to be treated by the Sewerage System in the budgeted year. 2. A Capital Facilities Replacement Service component of the Unit Charge for capital replacement and capital improvement shall be levied at a rate to be determined from time to time by the Board of Directors. This charge shall be allocated among Wastewater charge parameters of flow, biochemical oxygen demand, and suspended OCSD-48-39 solids in accordance with the General Manager's determination of which portion of the charge predominantly relates to each parameter. The capital facilities charge distributed to biochemical oxygen demand, and suspended solids shall be divided by the projected annual weights of biochemical oxygen demand and suspended solids to be treated by the Sewerage System in the budgeted year. 3. The Unit Charge rates for each respective Wastewater component in (1) and (2) above shall be summed. The Unit Charge rates so determined will be expressed in dollars per million gallons for Vo, and in dollars per thousand pounds for Bo and So. G. Other measurements of the organic content of the Wastewater of a Discharger, such as COD or TOC, may be used instead of BOD. However, the Discharger must establish to the General Manager's satisfaction a relationship between the BOD of the Wastewater and the parameter of measure. This relationship shall be used by OCSD in determining the charge for use. When Wastewater from sanitary facilities is discharged separately from the other Wastewater of a Discharger, the charge for use for discharging the Wastewater may be determined by using the following: 1. 25 gallons per employee per eight-hour working day. 2. BOD and suspended solids to be calculated at domestic Wastewater strength per employee per year. The number of employees will be considered as the average number of people employed full time on a daily basis. This may be determined by averaging the number of people employed at the beginning and end of each quarter, or other period that reflects normal employment fluctuations. 303. CLASS II WASTEWATER DISCHARGE PERMITS A. No User requiring a Class II permit shall discharge Wastewater without obtaining a Wastewater Discharge Permit. B. Class II Wastewater Discharge Permits shall be expressly subject to all provisions of this Ordinance and all other regulations, charges for use and fees established by OCSD. The conditions of Wastewater Discharge Permits shall be enforced by OCSD in accordance with this Ordinance and applicable state and federal regulations. C. All Class II Users proposing to discharge directly or indirectly into the OCSD-48-40 OCSD's Sewerage Facilities shall obtain a Wastewater discharge Permit by filing an application pursuant to Section ARTICLE 1 and paying the applicable fees pursuant to Section 303.3. For purposes of this Ordinance, a Class II User is any User: 1. Whose charge for use is greater than the special assessment"OCSD Sewer User Fee'included on the County of Orange secured property tax bill exclusive of debt service; and 2. Discharging Wastewater other than sanitary; and 3. Not otherwise required to obtain a Class I permit. 303.1 Class II Wastewater Discharge Permit Application A. Any User required to obtain a Class II Wastewater Discharge Permit shall complete and file with OCSD, prior to commencing discharge, an application on the form prescribed by OCSD. The applicant shall submit, in units and terms appropriate for evaluation, the following information: 1. Name, address, assessor's parcel number(s)and NAICS number(s); description of the manufacturing process or service activity. 2. (Whichever is applicable) Name, address of any and all principals/owners/major shareholders of company; Articles of Incorporation; most recent Report of the Secretary of State; Business License. 3. Volume of Wastewater to be discharged. 4. Name of individual who can be served with notices other than officers of corporation. 5. Name and address of property owner, landlord and/or manager of the property. 6. Water supplier and water account numbers. 7. Wastewater constituents and characteristics as required by OCSD, including, but not limited to, those mentioned in Section 213, Mass Emission Rate Determination, and Table 1, Local Discharge Limits of this Ordinance. These constituents and characteristics shall be determined by a laboratory selected by the Discharger and acceptable to OCSD. 8. Time and duration of discharge. OCSD-48-41 9. Number of employees and average hours of work per employee per day. 10. Production records, if applicable. 11. Waste-Tracking Forms, if applicable. 12. Landscaped area in square feet, if applicable. 13. Tons of cooling tower capacity, if applicable. 14. EPA Hazardous Waste Generator Number, if applicable. 15. Any other information as specified. B. Applicants may be required to submit site plans,floor plans, mechanical and plumbing plans, and details to show all sewers, spill containment, clarifiers, Pretreatment systems, and appurtenances by size, location, and elevation for evaluation. C. Applicants may also be required to submit other information related to the applicant's business operations, processes, and potential discharge as may be requested to properly evaluate the permit application. D. After evaluation of the data furnished, OCSD may issue a Wastewater Discharge Permit, subject to terms and conditions set forth in this Ordinance and as otherwise determined by the General Manager to be appropriate to protect the OCSD system. E. The permit application may be denied if the applicant fails to establish to OCSD's satisfaction that adequate Pretreatment equipment is included within the applicant's plans to ensure that the discharge limits will be met or if the applicant has, in the past, demonstrated an inability to comply with applicable discharge limits. 303.2 Class II Permit Conditions and Limits A. A Class II permit shall contain all of the following conditions and/or limits: 1. Applicable Mass Emission Rates and concentration limits regulating non-compatible Pollutants. 2. Requirements to notify OCSD in writing prior to modification to processes or operations through which Industrial Wastewater may be produced. OCSD-48-42 3. Location of the User's on-site sample point. 4. Requirements for submission of technical reports, production data, discharge reports, and/or Waste-Tracking Forms. 5. Requirements to submit copies of tax and water bills. B. A Class II permit may contain any of the following conditions and/or limits: 1. Requirements for the User to construct and maintain, at his own expense, appropriate Pretreatment equipment, pH control, Flow monitoring and/or sampling facilities. 2. Limits on rate and time of discharge or requirements for flow regulation and equalization. 3. Assumed values for BOD and suspended solids characteristics that typify the Discharger's effluent for determination of the charge for use. 4. Requirements to self-monitor. 5. Requirements for maintaining, for a minimum of three years, plant records relating to Wastewater discharge, and Waste-Tracking Forms as specified by OCSD. 6. Other provisions which may be appropriate to ensure compliance with this Ordinance. 7. Otherterms and conditions determined by the General Manager to be appropriate to protect OCSD's Sewerage System. 303.3 Class II Permit Fee A. The Class II permit fee shall be in an amount adopted by Ordinance of the Board of Directors. The permit fee shall be payable at the time a permit application is submitted for the issuance of a new permit or a renewed permit. Payment of the permit fee must be received by OCSD prior to issuance of either a new permit or a renewed permit. Permittee shall also pay any delinquent invoices in full prior to permit renewal. B. Any permit issued for a location wherein the Permittee is not the property owner may be conditioned upon depositing financial security to guarantee payment of all annual fees and charges to be incurred, in accordance with the provisions of Section 623.(E)of this Ordinance. OCSD-48-43 303.4 Class II Permit Modification of Terms and Conditions A. The terms and conditions of an issued permit may be subject to modification and change in the sole determination by the General Manager during the life of the permit based on: 1. The Discharger's current or anticipated operating data; 2. OCSD's current or anticipated operating data; 3. Changes in the requirements of Regulatory Agencies which affect OCSD; or 4. A determination by the General Manager that such modification is appropriate to further the objectives of this Ordinance. B. The Permittee may request a modification to the terms and conditions of an issued permit. The request shall be in writing stating the requested change, and the reasons for the change. OCSD shall review the request, make a determination on the request, and respond in writing. C. Permittee shall be informed of any change in the permit limitations, conditions, or requirements at least forty-five (45) days prior to the effective date of change. Any changes or new conditions in the permit shall include a reasonable time schedule for compliance. 303.5 Class II Permit Duration and Renewal Class II permits shall normally be issued for a period not to exceed five (5)years. At least forty-five (45) days prior to the expiration of the permit, the User shall apply for renewal of the permit in accordance with the provisions of this Article 3. 303.6 Class II Permit Charge for Use A. The purpose of a charge for use is to ensure that each recipient of sewerage service from OCSD pays its reasonably proportionate share of all the costs of providing that sewerage service. Charges for use to recover the cost of conveying, treating, and disposing of Sewage in OCSD's Sewerage Facilities are exclusive of any fees levied by local sewering agencies. The charge for use shall be based on the total maintenance, operation, capital expenditures, and reserve requirements for providing Wastewater collection, treatment, and disposal. B. A Discharger who is issued a Class II Wastewater Discharge Permit under the provisions of this Ordinance shall pay a charge for use in accordance with the formula contained herein and the Unit Charge rates adopted OCSD-48-44 annually by Ordinance of the Board of Directors. These fees shall be invoiced on a quarterly basis. The quarterly invoice shall be based upon an estimate of the annual use as determined by OCSD. Annually, OCSD shall compute the charge for use based upon actual use for the preceding fiscal year on an annual reconciliation statement. The charge for use is payable within forty-five (45) days of invoicing by OCSD. A special assessment credit will be allowed for any regional sanitary sewer service charge adopted by the Board of Directors by separate Ordinance and levied against the permitted property. C. In order for OCSD to determine actual annual water use, the User shall provide to OCSD copies of its water bills. If these water bill copies are not received by August 15th of each year for the 12 month period ended closest to June 30, OCSD will endeavor to obtain the water use data. Data obtained by OCSD will be considered correct and will not be adjusted before the next annual reconciliation statement. There shall be a fee levied for OCSD administrative costs when water use data is obtained by OCSD. The amount of the fee shall be adopted by the OCSD Board of Directors. D. The charge for use shall be computed by the following formula: Charge for Use = VoV + BoB + SoS—Special Assessment Credit Where V = total annual volume of flow, in millions of gallons B = total annual discharge of biochemical oxygen demand, in thousands of pounds S = total annual discharge of suspended solids, in thousands of pounds Vo, Bo, So = Unit Charge rates adopted annually by Ordinance of OCSD's Board of Directors, based upon the funding requirements of providing sewerage service, in dollars per unit as described in Paragraph E below. E. The unit charge rates in the charge for use formula shall be established annually and shall be determined by the following method: 1. An Operations and Maintenance component of the Unit Charge for the total annual operation and maintenance funding requirements of the Sewerage System shall be levied at a rate to be determined from time to time by the Board of Directors. This charge shall be allocated among the three Wastewater charge parameters of flow, biochemical oxygen demand and suspended solids in accordance with the OCSD-48-45 General Manager's determination as to the costs associated with each parameter and pursuant to applicable requirements of state and federal Regulatory Agencies. The operation and maintenance costs as distributed to flow, biochemical oxygen demand and suspended solids shall be divided by the projected annual total flow volume and weights of biochemical oxygen demand and suspended solids to be treated by the Sewerage System in the budgeted year. 2. A Capital Facilities Replacement component of the Unit Charge for capital replacement and capital improvement shall be levied at a rate to be determined from time to time by the Board of Directors. This charge shall be allocated among the three Wastewater charge parameters of flow, biochemical oxygen demand and suspended solids in accordance with the General Manager's determination of which portion of the charge predominantly relates to each parameter. The capital facilities charge distributed to biochemical oxygen demand and suspended solids shall be divided by the projected annual weights of biochemical oxygen demand and suspended solids to be treated by the Sewerage System in the budgeted year. 3. The unit charge rates for each respective Wastewater component in (1) and (2) above shall be summed. The Unit Charge rates so determined will be expressed in dollars per million gallons for Vo, and in dollars per thousand pounds for Bo and So. F. Other measurements of the organic content of the Wastewater of a Discharger, such as COD or TOC, may be used instead of BOD. However, the Discharger must establish to the General Manager's satisfaction a relationship between the BOD of the Wastewater and the other parameter of measure. This relationship shall be used by OCSD in determining the charge for use. When Wastewater from sanitary facilities is discharged separately from the other Wastewater of a Discharger, the charge for use for discharging the sanitary Wastewater may be determined by using the following: 1. 25 gallons per employee per eight-hour working day. 2. BOD and suspended solids to be calculated at domestic Wastewater strength per employee per year. The number of employees will be considered as the average number of people employed full time on a daily basis. This may be determined by averaging the number of people employed at the OCSD-48-46 beginning and end of each quarter, or other period that reflects normal employment fluctuations. 304. DRY WEATHER URBAN RUNOFF DISCHARGE PERMITS A. No User shall discharge urban runoff directly to OCSD's Sewerage System without obtaining a Dry Weather Urban Runoff Discharge Permit. B. OCSD shall determine whether the dry weather urban runoff proposed to be discharged into OCSD's Sewerage System may cause a potential environmental risk and/or health hazard that cannot be economically or practically controlled by alternative disposal methods. C. Dry Weather Urban Runoff Discharge Permits shall be subject to all provisions of this Ordinance and all other regulations, charges for use, and fees established by OCSD. D. All Users required to obtain a Dry Weather Urban Runoff Discharge Permit proposing to discharge directly or indirectly into OCSD's Sewerage Facilities shall file an application pursuant to Section 304 and pay the applicable fees pursuant to Sections 304.3 and 304.6. 304.1 Dry Weather Urban Runoff Discharge Permit Application A. An applicant shall contact OCSD prior to any construction of facilities and discharge of dry weather urban runoff into the Sewerage System to determine if the discharge of dry weather urban runoff to the OCSD's Sewerage Facilities is feasible. B. Applicants shall complete and file with OCSD, prior to commencing discharge, an application in the form prescribed by OCSD. This application shall be accompanied by applicable fees, design plans, a detailed analysis of other disposal alternatives, or other data as needed by OCSD for review. The applicant shall provide justification that disposal alternatives for the dry weather urban runoff are not economically or practically feasible in lieu of sewer discharge. C. In addition to the discharge permit, OCSD may require that the permit applicant enter into an agreement setting forth the terms under which the dry weather urban runoff discharge is authorized. D. Applicants shall provide adequate Pretreatment and/or Best Management Practices included within the applicants' plans to ensure that the applicable discharge limits shall be met. OCSD-48-47 304.2 Dry Weather Urban Runoff Discharge Permit Condition and Limits The issuance of a Dry Weather Urban Runoff Discharge Permit may contain any the following conditions or limits: A. Mass Emission Rates and concentration limits regulating non-compatible Pollutants. B. Requirements forthe User to construct and maintain, at the User's expense, appropriate Pretreatment equipment, Flow Monitoring Facilities, and devices to prevent storm water discharge into OCSD's Sewerage System during a wet weather event (rain event). C. Requirements for the User to provide OCSD with its operations and maintenance plan, best management practices, and pollution prevention strategies designed to minimize or eliminate dry weather urban runoff Pollutants. D. Limits on rate and time of discharge or requirements for flow regulation and equalization prior to discharge to the Sewerage System. E. Requirements to self-monitor the discharge to the Sewerage System. F. The General Manager may impose additional requirements as may be appropriate to reduce the burden on OCSD's Sewerage Facilities. G. Prohibitions on the discharge, which may cause OCSD's effluent, biosolids, or any other product of its treatment process, to be unsuitable for reclamation, reuse, or disposal. 304.3 Dry Weather Urban Runoff Discharge Permit Fee The Dry Weather Urban Runoff Discharge Permit fee shall be paid by the applicant in an amount established in the applicable Ordinance adopted by OCSD's Board of Directors. Payment of permit fees must be received by OCSD prior to issuance of either a new permit or a renewed permit. Each Permittee shall also pay delinquent invoices in full prior to permit renewal. 304.4 Dry Weather Urban Runoff Discharge Permit Modification of Terms and Conditions A. The terms and conditions of an issued permit may be subject to modification and change in the sole determination by OCSD during the life of the permit based on: 1. The discharger's current or anticipated operating data; OCSD-48-48 2. OCSD's current or anticipated operating data; 3. Changes in the requirements of Regulatory Agencies, which affect OCSD; or 4. A determination by the General Manager that such modification is appropriate to further the objectives of this Ordinance. B. A Permittee may request a modification to the terms and conditions of an issued permit. The request shall be in writing stating the requested changes and the reasons for the change. OCSD shall review the request, make a determination on the request, and respond accordingly. C. A Permittee shall be informed of any changes in the permit at least forty- five (45) days prior to the effective date change. Any changes or new conditions in the permit shall include a reasonable time schedule for compliance. 304.5 Dry Weather Urban Runoff Discharge Permit Duration and Renewal Dry Weather Urban Runoff Discharge Permit shall normally be issued for a period not to exceed five (5)years. At least forty-five (45)days prior to the expiration of the permit, the User shall apply for renewal of the permit in accordance with the provisions of this Article 3. 304.6 Dry Weather Urban Runoff Discharge Permit Charge for Use A Discharger who is issued a Dry Weather Urban Runoff Discharge Permit under the provision of this Ordinance shall pay a charge for use in accordance with rates established by Ordinance adopted by OCSD's Board of Directors. 305. SPECIAL PURPOSE DISCHARGE PERMITS A. No User requiring a Special Purpose Discharge Permit shall discharge Wastewater without obtaining a Special Purpose Discharge Permit. Alternatively, at the discretion of the OCSD Division Head or Department Head, OCSD may issue a Letter to Discharge in lieu of a Special Purpose Discharge Permit. B. Special Purpose Discharge Permits shall be expressly subject to all provisions of this Ordinance and all other regulations, charges for use, and fees established by OCSD. The conditions of Special Purpose Discharge Permits shall be enforced by OCSD in accordance with this Ordinance and applicable state and federal regulations. C. All Special Purpose Discharge Permit Users proposing to discharge directly OCSD-48-49 or indirectly into OCSD's Sewerage Facilities shall obtain a Special Purpose Discharge Permit by filing an application pursuant to Section 305 and paying the applicable fees pursuant to Sections 305.3 and 305.6. This discharge permit may be granted when no alternative method of disposal is reasonably available, or to mitigate an environmental risk or health hazard. 305.1 Special Purpose Discharge Permit Application A. Applicants seeking a Special Purpose Discharge Permit shall complete and file with OCSD, prior to commencing discharge, an application in the form prescribed by OCSD. This application shall be accompanied by the applicable fees, plumbing plans, a detailed analysis of the alternatives for water disposal, or other data as needed by OCSD for review. B. The permit application may be denied when the applicant has failed to establish to OCSD's satisfaction that adequate Pretreatment equipment is included within the applicants' plans to ensure that the discharge limits will be met or that the applicant has, in the past, demonstrated an inability to comply with applicable discharge limits. 305.2 Special Purpose Discharge Permit Conditions and Limits A. Discharge conditions and limits shall be no less stringent than Section 201(A), General Prohibitions; 201(B), Specific Prohibitions; Section 213, Mass Emission Rate Determination; and Table 1, Local Discharge Limits. B. Monitoring requirements for the discharge shall be for those non-compatible Pollutants known to exist in the discharge. At least one set of baseline analysis prior to or upon sewer discharge may be required for all constituents contained in the most current Environmental Protection Agency (EPA) "Priority Pollutant" list, excluding asbestos, as listed in Appendix A of 40 CFR 423, or as subsequently amended. C. OCSD may specify and make part of each Special Purpose Discharge Permit specific Pretreatment Requirements or other terms and conditions determined by the General Manager to be appropriate to protect OCSD's Sewerage Facilities, the Local Sewering Agency, to comply with Regulatory Agencies' requirements, to ensure compliance with this Ordinance, and to assess a charge for use. 305.3 Special Purpose Discharge Permit Fee The special purpose discharge permit fee shall be paid by the applicant in an amount adopted by Ordinance of the Board of Directors. Payment of permit fees must be received by OCSD prior to issuance of either a new permit or a renewed permit. Each Permittee shall also pay delinquent invoices in full prior to permit renewal. OCSD-48-50 305.4 Special Purpose Discharge Permit Modification of Terms and Conditions A. The terms and conditions of an issued permit may be subject to modification and change in the sole determination by OCSD during the life of the permit based on: 1. The Discharger's current or anticipated operating data; 2. OCSD's current or anticipated operating data; 3. Changes in the requirements of Regulatory Agencies which affect OCSD; or 4. A determination by the General Manager that such modification is appropriate to further the objectives of this Ordinance. B. A Permittee may request a modification to the terms and conditions of an issued permit. The request shall be in writing stating the requested change, and the reasons for the change. OCSD shall review the request, make a determination on the request, and respond in writing. C. A Permittee shall be informed of any changes in the permit at least forty five (45) days prior to the effective date of change. Any changes or new conditions in the permit shall include a reasonable time schedule for compliance. 305.5 Special Purpose Discharge Permit Duration and Renewal Special purpose discharge permits shall normally be issued for a period not to exceed five (5) years, but may be renewed as determined by the General Manager. Users seeking permit renewal shall comply with all provisions of this Article 3. 305.6 Special Purpose Discharge Permit Charge for Use The General Manager shall establish a charge for use to cover all costs of OCSD for providing sewerage service and monitoring. A deposit determined by the General Manager to be sufficient to pay the estimated charges for use shall accompany the Special Purpose Discharge Permit application, and said deposit shall be applied to the charges for use. 306. WASTEHAULER DISCHARGE PERMIT A. Wastehauler Discharge Permits shall be expressly subject to all provisions of this Ordinance and all other regulations, charges for use, and fees established by OCSD. The conditions of Wastehauler discharge permits OCSD-48-51 shall be enforced by OCSD in accordance with this Ordinance and applicable state and federal regulations. B. A Wastehauler proposing to discharge Waste and/or Wastewater into the OCSD Wastehauler Station shall obtain and keep current both a valid Orange County Health Care Agency registration (where applicable), and a OCSD Wastehauler Permit. 306.1 Wastehauler Discharge Permit Application A. No User or Wastehauler shall discharge waste and/or Wastewater without both a valid Orange County Health Care Agency registration (where applicable) and an OCSD Wastehauler Discharge Permit. B. Any User or Wastehauler required to obtain a Wastehauler Discharge Permit shall complete and file with OCSD prior to commencing discharge, an application in a form prescribed by OCSD. This application shall be accompanied by the applicable fees. The applicant shall submit, in units and terms appropriate for evaluation, the following information: 1. Name, address, telephone number, and description of the industries or clients using the applicant's services. 2. (Whichever is applicable) Name and address of any and all principals/owners/major shareholders of the company, Articles of Incorporation, most recent Report of the Secretary of State, and Business License. 3. Name and address of leaseholder of the vehicle or trailer, if applicable. 4. Number of trucks and trailers and the license numbers and tank hauling capacity of each truck or trailer. 5. A copy of the applicant's valid Orange County Health Care Agency registration, where applicable. C. Other information related to the applicant's business operations and potential discharge may be requested to properly evaluate the permit application. D. After evaluation of the data furnished, OCSD may issue a Wastehauler Discharge Permit, subject to terms and conditions set forth in this Ordinance and as otherwise determined by the General Manager to be appropriate to protect OCSD's Sewerage System. OCSD-48-52 306.2 Wastehauler Discharge Permit Conditions and Limits The issuance of a Wastehauler permit may contain any of the following conditions or limits: A. Limits on discharge of heavy metals and other priority Pollutants. B. Requirements for maintaining and submitting Wastehauling records and Waste-Tracking Forms, and a valid copy of a current Orange County Health Care Agency registration (where applicable). C. Additional requirements as otherwise determined to be appropriate by the General Manager to protect OCSD's Sewerage System or as specified by other Regulatory Agencies. D. Other terms and conditions which may be applicable to ensure compliance with this Ordinance. 306.3 Wastehauler Discharge Permit Fee The Wastehauler discharge permit fee shall be paid by the applicant in an amount adopted by Ordinance of the Board of Directors. Payment of permit fees must be received by OCSD prior to issuance of either a new permit or a renewed permit. A Permittee shall also pay any delinquent invoices in full prior to permit renewal. 306.4 Wastehauler Identification Decal and Access Card Transfer A. The identification decal is non-transferable. B. If a gate access card is issued, it shall be issued to a specific permitted vehicle and is non-transferable unless previously authorized in writing by OCSD. 306.5 Wastehauler Discharge Permit Modification of Terms and Conditions A. The terms and conditions of an issued permit maybe subject to modification and change in the sole determination by OCSD during the life of the permit based on: 1. The Discharger's current or anticipated operating data; 2. OCSD's current or anticipated operating data; 3. Changes in the requirements of Regulatory Agencies which affect OCSD; or OCSD-48-53 4. A determination by the General Manager that such modification is appropriate to further the objectives of this Ordinance. B. Permittee may request a modification to the terms and conditions of an issued permit. The request shall be in writing stating the requested change, and the reasons for the change. OCSD shall review the request, make a determination on the request, and respond in writing. C. Permittee shall be informed of any change in the permit limits, conditions, or requirements at least forty five (45) days prior to the effective date of change. Any changes or new conditions in the permit shall include a reasonable time schedule for compliance. 306.6 Wastehauler Discharge Permit Duration and Renewal Wastehauler Discharge Permits shall be issued for a period not to exceed three(3)years. The Wastehauler Discharge Permit is contingent upon the Permittee maintaining a valid Orange County Health Care Agency Permit registration throughout the duration of the Wastehauler Discharge Permit. If at any time, the Permittee is determined to not have a valid OCHCA registration, the OCSD Wastehauler Discharge Permit will be immediately revoked. Upon expiration of the permit, the User and/or Wastehauler shall apply for renewal of the permit in accordance with the provisions of Article 3. 306.7 Wastehauler Discharge Permit Charge for Use A charge for use to cover all costs of OCSD for providing the Wastehauler Station service and monitoring shall be established by Ordinance of the Board of Directors. 307. DISCHARGE CERTIFICATIONS A. Discharge Certifications may be issued to those Users that are discharging regulated Wastewater but are not otherwise required to obtain a discharge permit. B. No User requiring a Discharge Certification or a Zero Discharge Certification shall discharge non-domestic Wastewater to OCSD without obtaining certification. C. Discharge Certifications shall be expressly subject to all provisions of this Ordinance and all other regulations, charges for use, and fees established by OCSD. The conditions of the Discharge Certifications shall be enforced by OCSD in accordance with this Ordinance and applicable state and federal regulations. D. All Users subject to Discharge Certifications proposing to discharge directly or indirectly into the OCSD's Sewerage Facilities shall obtain a Discharge OCSD-48-54 Certification by filing an application and paying all applicable fees thereto. E. A User required to obtain a Discharge Certification may be required, at OCSD's discretion, to submit a completed application, and OCSD will approve the certification or otherwise proceed as required by federal law. F. The Discharge Certification shall contain as a minimum: 1. BMPs to regulate the quality of Wastewater discharged; 2. Requirements to periodically certify that appropriate BMPs are being practiced or are no longer necessary; 3. Requirements to notify OCSD in writing prior to modification to processes or operations through which regulated Wastewater may be produced; 4. Notice that OCSD may inspect the facility as necessary to assess and assure compliance with all discharge requirements; and 5. Requirements to comply with Resource Conservation and Recovery Act (RCRA) and state hazardous waste regulations regarding the proper disposal of hazardous waste. G. A Zero Discharge Certification shall contain as a minimum: 1. A statement that no discharge of regulated Wastewater is permitted; 2. Requirements to notify OCSD of any changes in operation resulting in a potential for discharge; 3. Requirements to periodically certify that no discharge of regulated Wastewater has occurred; 4. Notice that OCSD may inspect the facility as necessary to assess and assure compliance with the "no discharge" requirement; and 5. Requirements to comply with Resource Conservation and Recovery Act (RCRA) and state hazardous waste regulations regarding the proper disposal of hazardous waste. 308. OUT OF DISTRICT PERMITS/DISCHARGERS A. Industrial Wastewater Discharge Permits for Dischargers located outside OCSD's boundaries but within the OCSD service area and tributary to OCSD's Sewerage Facilities, may be issued by a Local Sewering Agency OCSD-48-55 after approval by OCSD. OCSD shall have the right of inspection and sampling of the User's discharge to determine compliance with Industrial Wastewater discharge regulations. Such inspection and sampling will be performed under a coordinated plan developed with the Local Sewering Agency. The more stringent of the industrial Wastewater discharge regulations and effluent limits of OCSD and the local agency shall apply to the Discharger. B. Pursuant to Article 6 herein, OCSD shall have the right to enforce the Federal Regulations,the provisions of this Ordinance, and permit conditions and limits applicable to any User located outside of OCSD's service area, but whose discharge is tributary to OCSD's Sewerage Facilities. C. The fees for use shall be determined by OCSD and set forth in a use agreement with the Local Sewering Agency. D. The requirements for a liquid wastehauler program may be established by a local sewering agency after obtaining written permission from OCSD. OCSD-48-56 ARTICLE 4. FACILITIES REQUIREMENTS 401. DRAWING SUBMITTAL REQUIREMENTS Upon request by OCSD: A. Applicants or Users may be required to submit three copies of detailed facility plans. The submittal shall be in a form and content acceptable to OCSD for review of existing or proposed Pretreatment facilities, spill containment facilities, monitoring facilities, metering facilities, and operating procedures. The review of the plans and procedures shall in no way relieve the User of the responsibility of modifying the facilities or procedures in the future, as necessary to produce a discharge acceptable to OCSD, and to meet the requirements of this Ordinance or any requirements of other Regulatory Agencies. B. The drawing shall depict as a minimum the manufacturing process (Wastewater generating sources), spill containment, monitoring or metering facilities, and Pretreatment facilities. C. The applicant or User shall submit a schematic drawing of the Pretreatment facilities, piping and instrumentation diagram, and Wastewater characterization report. D. Users and applicants may also be required to submit for review site plans, floor plans, mechanical and plumbing plans, and details to show all sewers, spill containment, clarifiers, and appurtenances by size, location, and elevation for evaluation. E. OCSD may require the drawings be prepared by a California Registered Chemical, Mechanical, or Civil Engineer. F. Permittees shall be required to submit updated detailed facility plans. 402. PRETREATMENT FACILITIES A. All Users shall provide Wastewater treatment as necessary to comply with this ordinance and shall achieve compliance with all Categorical Pretreatment Standards, Table 1, Local Discharge Limits, and the prohibitions set out in Sections 201 (A) & (B) of this Ordinance within the time limitations specified by EPA, the state, or OCSD, whichever is more stringent. Any facilities necessary for compliance shall be provided, operated by a qualified operator, and maintained in proper operating condition at the User's expense. OCSD-48-57 B. All Users may also be required by OCSD to submit Wastewater analysis plans, contingency plans, and meet other necessary requirements to ensure proper operation of the Pretreatment facilities and compliance with permit limits and this Ordinance. C. No User shall increase the use of water or in any other manner attempt to dilute a discharge as a partial or complete substitute for treatment to achieve compliance with this Ordinance and the User's Permit. 403. SPILL CONTAINMENT FACILITIES/ACCIDENTAL SLUG CONTROL PLANS A. All Users shall provide spill containment for protection against discharge of prohibited Pollutants, materials or other Wastewaters regulated by this Ordinance. Such protection shall be designed to secure the discharges and to prevent them from entering into the Sewerage System in accordance with reasonable engineering standards. Such facilities shall be provided and maintained at the User's expense. B. The General Manager shall require any Significant Industrial User to develop and implement an accidental discharge/slug control plan. OCSD may evaluate whether each Industrial User needs such a plan. Any User required to develop and implement an accidental discharge/control slug plan shall submit a plan which addresses, at a minimum, the following: 1. Description of discharge practices, including non-routine batch discharges. 2. Description of stored chemicals. 3. Procedures for immediately notifying OCSD of any accidental of slug discharge. Such notification must also be given for any discharge which would violate any of the prohibited discharges in Article 2 of this Ordinance. 4. Procedures to prevent adverse impact from any accidental or slug discharge. Such procedures include, but are not limited to, inspection and maintenance of storage areas, handling and transfer of materials, loading and unloading operations, control of plant site run-off, worker training, building of containment structures or equipment, measures for containing toxic organic Pollutants (including solvents), and measures and equipment for emergency response. OCSD-48-58 404. MONITORING/METERING FACILITIES All Wastewater samples must be representative of the User's discharge. Wastewater monitoring and flow measurement facilities shall be properly operated, kept clean, and maintained in good working order at all times. The failure of a User to keep its monitoring facility in good working order shall not be grounds for the User to claim that sample results are unrepresentative of its discharge. A. OCSD may require the User to construct and maintain in proper operating condition at the User's sole expense, flow monitoring, constituent monitoring and/or sampling facilities. B. Permittees may be required to install and maintain an appropriate effluent flow monitoring device. Calibration of such flow monitoring device shall be done annually or as specified in the Wastewater discharge permit. C. The monitoring or metering facilities may be required to include a security closure that can be locked with an OCSD provided hasp lock during sampling or upon termination of service. D. The location of the monitoring or metering facilities shall be subject to approval by OCSD. E. The User shall provide immediate, clear, safe and uninterrupted access to OCSD to the User's monitoring and metering facilities. F. For all industries permitted by OCSD, domestic Wastewaters shall be kept segregated from all Industrial Wastewaters until the Industrial Wastewaters have passed through any required Pretreatment system or device and the Permittee's sample point. 405. WASTE MINIMIZATION REQUIREMENTS A. As required by a User's permit, the User shall provide waste minimization plans to reduce or eliminate Pollutant discharge to the Sewerage System and conserve water. The User shall investigate product substitution, housekeeping practices, provide inventory control, implement employee education, and other steps as necessary to minimize Wastewater produced. B. Upon approval by OCSD, a User may certify that their facility does not discharge any type of Wastewater containing Pollutants that may directly or indirectly discharge into OCSD's Sewerage System as a form of Best Management Practice (BMP). OCSD-48-59 ARTICLE 5. MONITORING, REPORTING, NOTIFICATION, AND INSPECTION REQUIREMENTS 501. MONITORING AND REPORTING CONDITIONS A. Monitoring for Annual Charge for Use The Wastewater constituents and characteristics of a Discharger needed for determining the annual charge for use shall be submitted in the form of self-monitoring reports by the User to OCSD, if requested. The frequency of analyses and reporting shall be set forth in the User's permit. The analyses of these constituents and characteristics shall be by a laboratory acceptable to OCSD, and at the sole expense of the Permittee. Analyses performed by OCSD's personnel may be used in the determination of the annual charge for use. B. Monitoring for Compliance with Permit Conditions or Reporting Requirements OCSD may require reports for self-monitoring of Wastewater constituents and characteristics of the Discharger needed for determining compliance with any limit or requirements as specified in the User's permit, federal or state regulations, or this Ordinance. The federal Pretreatment regulations at 40 CFR 403.12(g)(3) and (4) contain requirements for collecting samples such as requiring that sampling must be representative of conditions occurring during the reporting period and that grab samples must be collected for certain parameters. These reports include: 1. Baseline Monitoring Reports. a) Within either one hundred eighty(180)days after the effective date of a categorical Pretreatment Standard, or the final administrative decision on a category determination under 40 CFR 403.6(a)(4), whichever is later, existing Significant Industrial Users subject to categorical Pretreatment Standard(s) currently discharging to or scheduled to discharge to OCSD shall submit to the General Manager a report which contains the information listed in paragraph b), below. At least ninety (90) days prior to commencement of their discharge, New Sources, and sources that become Significant Industrial Users subsequent to the promulgation of an applicable categorical Standard, shall submit to the General Manager a report which contains the information listed in paragraph c), below. A New Source shall report the method of Pretreatment it intends to use to meet applicable categorical Pretreatment Standards. A New Source also shall OCSD-48-60 give estimates of its anticipated Flow and quantity of Pollutants to be discharged. b) Users described above shall submit the information set forth below. (1) All information required in Section ARTICLE 23 including requirements in 40 CFR 403.12(b)(1)-(7). (2) Measurement of Pollutants. a) The User shall provide the following information. 1) The categorical Pretreatment Standards applicable to each regulated process and any new categorically regulated processes for Existing Sources. 2) The results of sampling and analysis identifying the nature and concentration, and/or mass, where required by the Standard or by the General Manager, of regulated Pollutants in the discharge from each regulated process. 3) Instantaneous, Daily Maximum, and long-term average concentrations or mass, where required, shall be reported. 4) The sample shall be representative of daily operations and shall be analyzed in accordance with procedures set out in Section 501.2 of this Ordinance. Where the Standard requires compliance with a BMP or pollution prevention alternative, the User shall submit documentation as required by the General Manager or the applicable Standards to determine compliance with the Standard. 5) Sampling must be performed in accordance with procedures set out in Section 602 of this Ordinance. b) The User shall take a minimum of one representative sample to compile that data OCSD-48-61 necessary to comply with the requirements of this paragraph. c) Samples should be taken immediately downstream from Pretreatment facilities if such exist or immediately downstream from the regulated process if no Pretreatment exists. If other Wastewaters are mixed with the regulated Wastewater prior to Pretreatment the User should measure the flows and concentrations necessary to allow use of the Combined Wastestream Formula in 40 CFR 403.6(e) to evaluate compliance with the Pretreatment Standards. Where an alternate concentration or mass limit has been calculated in accordance with 40 CFR 403.6(e) this adjusted limit along with supporting data shall be submitted to OCSD; d) Sampling and analysis shall be performed in accordance with this Ordinance; e) The General Manager may allow the submission of a baseline report which utilizes only historical data so long as the data provides information sufficient to determine the need for industrial Pretreatment measures; f) The baseline report shall indicate the time, date and place of sampling and methods of analysis, and shall certify that such sampling and analysis is representative of normal work cycles and expected Pollutant discharges to OCSD. (3) Compliance Certification. A statement, reviewed by the User's Authorized Representative as defined in this Ordinance and certified by a qualified professional, indicating whether Pretreatment Standards are being met on a consistent basis, and, if not, whether additional operation and maintenance (0&M) and/or additional Pretreatment is required to meet the Pretreatment Standards and Requirements. (4) Compliance Schedule. If additional Pretreatment and/or O&M will be required to meet the Pretreatment Standards,the shortest schedule by which the User will OCSD-48-62 provide such additional Pretreatment and/or O&M must be provided. The completion date in this schedule shall not be later than the compliance date established forthe applicable Pretreatment Standard. A compliance schedule pursuant to this Section must meet the requirements set forth in this Ordinance. (5) Signature and Report Certification. All baseline monitoring reports must be certified in accordance with this Ordinance and signed by an Authorized Representative. 2. Compliance Schedule Progress Reports. The following conditions shall apply to the compliance schedule required by this Ordinance: a) The schedule shall contain progress increments in the form of dates for the commencement and completion of major events leading to the construction and operation of additional Pretreatment required for the User to meet the applicable Pretreatment Standards (such events include, but are not limited to, hiring an engineer, completing preliminary and final plans, executing contracts for major components, commencing and completing construction, and beginning and conducting routine operation); b) No increment referred to above shall exceed nine (9) months; c) The User shall submit a progress report to the General Manager no later than fourteen (14) days following each date in the schedule and the final date of compliance including, as a minimum, whether or not it complied with the increment of progress, the reason for any delay, and, if appropriate, the steps being taken by the User to return to the established schedule; and d) In no event shall more than nine (9) months elapse between such progress reports to the General Manager. 3. 90-Day Compliance Reports. Within ninety (90) days following the date for final compliance with applicable categorical Pretreatment Standards, or in the case of a OCSD-48-63 New Source following commencement of the introduction of Wastewater into OCSD, any User subject to such Pretreatment Standards and Pretreatment Requirements shall submit to the General Manager a report containing the information described in this Ordinance. For Users subject to equivalent mass or concentration limits, this report shall contain a reasonable measure of the User's long-term production rate. For all other Users subject to categorical Pretreatment Standards expressed in terms of allowable Pollutant discharge per unit of production (or other measure of operation), this report shall include the User's actual production during the appropriate sampling period. All compliance reports must be signed and certified in accordance with this Ordinance. All sampling will be done in conformance with Section 602. 4. Periodic Compliance Reports. a) Except as otherwise specified in this Ordinance, all Significant Industrial Users must, at a frequency determined by the General Manager, submit no less than twice per year on dates specified by OCSD reports indicating the nature, concentration of Pollutants in the discharge which are limited by Pretreatment Standards and the measured or estimated average and maximum daily flows for the reporting period. In cases where the Pretreatment Standard requires compliance with a Best Management Practice (BMP) or pollution prevention alternative, the User must submit documentation required by the General Manager or the Pretreatment Standard necessary to determine the compliance status of the User including documentation associated with Best Management Practices. b) OCSD will meet reporting requirements as specified by 40 CFR Part 3 (Cross-Media Electronic Reporting). Therefore, Users that send electronic (digital) documents to OCSD to satisfy the requirements of this Section must register for the system online and submit a signed Subscriber Agreement to OCSD for review and approval. 5. Notification of the Discharge of Hazardous Waste. a) Any User who commences the discharge of hazardous waste shall notify OCSD, the EPA Regional Waste Management Division Director, and state hazardous waste authorities, in writing, of any discharge into OCSD of a substance which, if otherwise disposed of, would be a hazardous waste under 40 OCSD-48-64 CFR Part 261. The User shall receive written approval from the OCSD to discharge hazardous waste. Such notification must include the name of the hazardous waste as set forth in 40 CFR Part 261, the EPA hazardous waste number, and the type of discharge (continuous, batch, or other). If the User discharges more than one hundred (100) kilograms of such waste per calendar month to OCSD, the notification also shall contain the following information to the extent such information is known and readily available to the User: an identification of the hazardous constituents contained in the wastes, an estimation of the mass and concentration of such constituents in the wastestream discharged during that calendar month, and an estimation of the mass of constituents in the wastestream expected to be discharged during the following twelve (12) months. All notifications must take place no later than one hundred and eighty (180) days after the discharge commences. Any notification under this paragraph need be submitted only once for each hazardous waste discharged. However, notifications of changed conditions must be submitted under subdivision 6 below. The notification requirement in this Section does not apply to Pollutants already reported by Users subject to categorical Pretreatment Standards under the self-monitoring requirements of this Ordinance. b) Dischargers are exempt from the requirements of paragraph (a), above, during a calendar month in which they discharge no more than fifteen (15) kilograms of hazardous wastes, unless the wastes are acute hazardous wastes as specified in 40 CFR 261.30(d) and 261.33(e). Discharge of more than fifteen (15) kilograms of non-acute hazardous wastes in a calendar month, or of any quantity of acute hazardous wastes as specified in 40 CFR 261.30(d) and 261.33(e), requires a one-time notification. Subsequent months during which the User discharges more than such quantities of any hazardous waste do not require additional notification. c) In the case of any new regulations under section 3001 of RCRA identifying additional characteristics of hazardous waste or listing any additional substance as a hazardous waste, the User must notify the General Manager, the EPA Regional Waste Management Waste Division Director, and state hazardous waste authorities of the discharge of such substance within ninety (90)days of the effective date of such regulations. OCSD-48-65 d) In the case of any notification made under this Section, the User shall certify that it has a program in place to reduce the volume and toxicity of hazardous wastes generated to the degree it has determined to be economically practical. e) This provision does not create a right to discharge any substance not otherwise permitted to be discharged by this Ordinance, a permit issued thereunder, or any applicable federal or state law. 6. Reports of Changed Conditions Each User must notify the General Manager of any significant changes to the User's operations or system which might alter the nature, quality, or volume of its Wastewater in advance of the change. The notification must be made promptly, but normally within 30 days. In certain cases, this period may be longer. a) The General Manager may require the User to submit such information as may be deemed necessary to evaluate the changed condition, including the submission of a Wastewater discharge permit application under this Ordinance. b) The General Manager may issue a Wastewater discharge permit under this Ordinance or modify an existing Wastewater discharge permit under this ordinance in response to changed conditions or anticipated changed conditions. 7. Reports of Potential Problems a) In the case of any discharge, including, but not limited to, accidental discharges, discharges of a non-routine, episodic nature, a non-customary batch discharge, a Slug Discharge or Slug Load, that might cause potential problems for OCSD, the User shall follow the notification procedures under Notification of Spill or Slug Loading in Article 5. This notification shall also include the location of the discharge, type of Wastewater, concentration and volume, if known, and corrective actions taken by the User. b) Within five (5) days following such discharge, the User shall, unless waived by the General Manager, submit a detailed written report. This written notification shall include, but not be limited to, the date of the incident, the reasons for the discharge or spill, what steps were taken to immediately correct the problem, and what steps are being taken to OCSD-48-66 prevent the problem from recurring. c) Such notification shall not relieve the User of any expense, loss, damage, or other liability which might be incurred as a result of damage or loss to OCSD, natural resources, or any other damage to person or property; nor shall such notification relieve the User of any fees, fines, penalties, or other liability which may be imposed pursuant to this Ordinance or other applicable law. d) A notice shall be permanently posted on the User's bulletin board or other prominent place advising employees who to call in the event of a discharge described in paragraph a, above. Employers shall ensure that all employees, who could cause such a discharge to occur, are advised of the emergency notification procedure. e) Significant Industrial Users are required to notify the General Manager immediately of any changes at its facility affecting the potential for a Slug Discharge. 8. Reports from Unpermitted Users All Users not required to obtain a Wastewater discharge permit shall provide appropriate reports to the General Manager as the General Manager may require. 9. Notice of Violation/Repeat Sampling and Reporting If sampling performed by a User indicates a violation, the User must notify the General Manager within twenty-four (24) hours of becoming aware of the violation. The User shall also repeat the sampling and analysis and submit the results of the repeat analysis to the General Manager within thirty (30)days after becoming aware of the violation. Resampling by the User is not required if OCSD performs sampling at the User's facility at least once a month, or if OCSD performs sampling at the User's facility between the time when the initial sampling was conducted and the time when the User or OCSD receives the results of this sampling, or if OCSD has performed the sampling and analysis in lieu of the User. 10. Other reports as required by OCSD. a) Monitoring reports of the analyses of Wastewater constituents and characteristics shall be in a manner and form approved by OCSD and shall be submitted upon request of OCSD. OCSD-48-67 When applicable, the self-monitoring requirement and frequency of reporting may be set forth in the User's permit as directed by OCSD. The analyses of Wastewater constituents and characteristics and the preparation of the monitoring report shall be done at the sole expense of the User. b) Failure by the User to perform any required monitoring, or to submit monitoring reports required by OCSD constitutes a violation of this Ordinance, may result in determining whether the Permittee is in significant non-compliance, and be cause for OCSD to initiate all necessary tasks and analyses to determine the Wastewater constituents and characteristics for compliance with any limits and requirements specified in the User's permit or in this Ordinance. The User shall be responsible for any and all expenses of OCSD in undertaking such monitoring analyses and preparation of reports. 501.1 Inspection and Sampling Conditions A. OCSD may inspect and sample the Wastewater generating and disposal facilities of any User to ascertain whether the intent of this Ordinance is being met and the User is complying with all requirements. B. OCSD shall have the right to place on the User's property or other locations as determined by OCSD, such devices as are necessary to conduct sampling or metering operations. Other sampling locations may include downstream manholes, usually in the Sewerage System,for the purpose of determining the compliance status of an industrial or commercial Discharger. C. OCSD may require the User to install and maintain sample points in areas acceptable to OCSD outside the User's facility, within the reasonable control of the User or OCSD. OCSD may also require lockable sample boxes fully containing the sample points. The User shall grant OCSD access to the sample points and sample boxes in accordance with this Ordinance. D. In order for OCSD to determine the Wastewater characteristics of the Discharger for purposes of determining the annual use charge and for compliance with permit requirements, the User shall make available for inspection and copying by OCSD all notices, self-monitoring reports, Waste-Tracking Forms, and records including, but not limited to, those related to production, Wastewater generation, Wastewater disposal, and those required in the Pretreatment Requirements without restriction but subject to the confidentiality provision set forth in Section 103 herein. All such records shall be kept by the User a minimum of three (3) years. OCSD-48-68 E. If a Discharger falsifies, tampers with, or knowingly renders inaccurate any monitoring device or sample collection method, the Discharger may be subject to imposition of penalties, permit suspension or permit revocation. 501.2 Analytical Requirements All Pollutant analyses, including sampling techniques, to be submitted as part of a Wastewater discharge permit application or report shall be performed in accordance with the techniques prescribed in 40 CFR Part 136 and amendments thereto, unless otherwise specified in an applicable categorical Pretreatment Standard. If 40 CFR Part 136 does not contain sampling or analytical techniques for the Pollutant in question, or where the EPA determines that the Part 136 sampling and analytical techniques are inappropriate for the Pollutant in question, sampling and analyses shall be performed by using validated analytical methods or any other applicable sampling and analytical procedures, including EPA-approved procedures or procedures approved by the General Manager. 501.3 Right of Entry A. Persons or occupants of premises where Wastewater is created or discharged shall allow OCSD, or its representatives, reasonable access to all parts of the Wastewater generating and disposal facilities for the purposes of inspection and sampling during all times the Discharger's facility is open, operating, or any other reasonable time. No Person shall interfere with, delay, resist or refuse entrance to authorized OCSD personnel attempting to inspect any facility involved directly or indirectly with a discharge of Wastewater to OCSD's Sewerage System. B. Where a User has security measures in place, the User shall make necessary arrangements so that personnel from OCSD shall be permitted to enter without delay for the purpose of performing their specific responsibilities. 501.4 Notification of Spill or Slug Loading A. In the event the Discharger is unable to comply with any permit condition due to a breakdown of equipment, accidents, or human error, or the Discharger has reasonable opportunity to know that a discharge will exceed the discharge provisions of the User's permit, Sections 201(A) & (B) or Table 1, Local Discharge Limits, the Discharger shall immediately notify OCSD by telephone. If the Wastewater or material discharged to the sewer has the potential to cause or result in a fire or explosion hazard, the Discharger shall immediately notify the local fire department and OCSD. Also see Reports of Potential Problems in this Article. OCSD-48-69 501.5 Bypass Prohibition: Notification of Bypass A. Bypass of Industrial Wastewater to the Sewerage System is prohibited. OCSD may take enforcement action against the User, unless: 1. Bypass was unavoidable because it was done to prevent loss of life, personal injury, or severe property damage; 2. There were no feasible alternatives to the Bypass, such as the use of auxiliary treatment facilities, retention of untreated Wastes, elective slow-down or shut-down of production units or maintenance during periods of production downtime. This condition is not satisfied if adequate backup equipment could have been feasibly installed in the exercise of reasonable engineering judgment to prevent a Bypass which occurred during normal periods of equipment downtime or preventative maintenance; and 3. The Permittee submitted notices as required under Section 501.4(A). B. If a Permittee knows in advance of the need for a Bypass, it shall submit a written request to allow the Bypass to OCSD, if possible, at least ten (10) days before the date of the Bypass. C. OCSD may approve an anticipated Bypass at its sole discretion after considering its adverse effects, and OCSD determines that the conditions listed in Section 501.5(A)(1-3) are met. D. A Permittee shall provide telephone notification to OCSD of an unanticipated Bypass that exceeds its permitted discharge limits within four hours from the time the Permittee becomes aware of the Bypass. A written report shall also be provided within five (5) days of the time the Permittee becomes aware or could reasonably have been aware of the Bypass. The report shall contain a description of the Bypass and its cause; the duration of the Bypass, including exact dates and times, and, if the Bypass has not been corrected, the anticipated time it is expected to continue; and steps taken or planned to reduce, eliminate, and prevent recurrence of the Bypass. Failure to comply with the oral notice or written report may be grounds for permit revocation. OCSD-48-70 ARTICLE 6. ENFORCEMENT 601. PURPOSE AND SCOPE A. The Board finds that in order for OCSD to comply with the laws, regulations, and rules imposed upon it by Regulatory Agencies and to ensure that OCSD's Sewerage Facilities and treatment processes are protected and are able to operate with the highest degree of efficiency, and to protect the public health and environment, specific enforcement provisions must be adopted to govern the discharges to OCSD's Sewerage System by Permittees or by facilities required to obtain Zero Discharge Certifications. Certain violations may result in civil or criminal penalties for violation of Pretreatment Standards and requirements, and any applicable compliance schedule. Such schedules may not extend the compliance date beyond applicable federal deadlines. B. To ensure that all interested parties are afforded due process of law and that non-compliance and violations are resolved as soon as possible, the general policy of OCSD is that: 1. Any determination relating to a Zero Discharge Certification, Probation Order, Enforcement Compliance Schedule Agreement (ECSA), or Regulatory Compliance Schedule Agreement (RCSA) will be made by the Division Head of the OCSD Pretreatment Program, with a right of appeal by the Permittee to the General Manager pursuant to the procedures set forth in Section 618. 2. Any permit suspension or revocation recommended by the Division Head responsible for the OCSD Pretreatment Program will be heard and a recommendation made to the General Manager by an OCSD Department Head or other person designated by the General Manager. 3. Actions and decisions by the Division Head or Department Head are made pursuant to a delegation of authority by the General Manager as authorized by Section 107 of this Ordinance. 4. The Board of Directors may adopt rules of procedure to establish the conduct of certain administrative proceedings. C. OCSD, at its discretion, may utilize any one, combination, or all enforcement remedies provided in this Article 6 in response to any permit or Ordinance violation. OCSD-48-71 602. DETERMINATION OF NONCOMPLIANCE WITH DISCHARGE LIMITS A. Sampling Procedures 1. Sampling of all Permittees' facilities, Wastewater and discharges shall be conducted in the time, place, manner, and frequency determined at the sole discretion of OCSD. 2. Non-compliance with Mass Emission Rate limits, concentration limits, permit discharge conditions, or any discharge provision of this Ordinance may be determined by an analysis of a grab or composite sample of the effluent of a User. Non-compliance with Mass Emission Rate limits shall be determined by an analysis of a composite sample of the User's effluent, except that a grab sample may be used to determine compliance with Mass Emission Rate limits when the discharge is from a closed (batch) treatment system in which there is no Wastewater flow into the system when the discharge is occurring, the volume of Wastewater contained in the batch system is known, the time interval of discharge is known, and the grab sample is homogeneous and representative of the discharge. 3. All Wastewater samples must be representative of the User's discharge. Any sample taken from a sample point is considered to be representative of the discharge to the public sewer. 4. Wastewater monitoring and flow measurement facilities shall be properly operated, kept clean, and maintained in good working order at all times. The failure of a User to keep its monitoring facility in good working order shall not be grounds for the User to claim that sample results are unrepresentative of its discharge. 5. If a User subject to the reporting requirement in this section monitors any regulated Pollutant at the appropriate sampling location more frequently than required by the General Manager, using the procedures prescribed in this Ordinance, the results of this monitoring shall be included in the report. 603. ENFORCEMENT PROCEDURES AND APPLICABLE FEES A. Self-Monitoring Requirements as a Result of Non-Compliance 1. If analysis of any sample obtained by OCSD or by a Permittee shows non-compliance with the applicable Wastewater discharge limits set forth in this Ordinance or in the Permittee's discharge permit, OCSD OCSD-48-72 may impose self-monitoring requirements on the Permittee. 2. A Permittee shall perform required self-monitoring of constituents in a frequency, at the specific location, and in a manner directed by OCSD. 3. All analyses of self-monitoring samples shall be performed by an independent laboratory acceptable to OCSD and submitted to OCSD in the form and frequency determined by OCSD. 4. All self-monitoring costs shall be bome by the Permittee. 5. Nothing in this section shall be deemed to limit the authority of OCSD to impose self-monitoring as a permit condition. B. Purpose of Non-Compliance Resampling Fees The purpose of the non-compliance resampling fee is to compensate OCSD for costs of additional sampling, monitoring, laboratory analysis, treatment, disposal, and administrative processing incurred as a result of the non- compliance, and shall be in addition to and not in lieu of any penalties as may be assessed pursuant to Sections 616 and 617. C. Non Compliance Resampling Fees for Composite Samples 1. Each violation of a Permittee's permit limit or condition is a violation of this Ordinance. a) If analysis of any composite sample of a Permittee's discharge obtained by OCSD shows a major violation by the Permittee of the Mass Emission Rates or concentration limits specified in the Permittee's discharge permit or in this Ordinance, then the Permittee shall pay non-compliance resampling fees to OCSD pursuant to fee schedules adopted by OCSD's Board of Directors. b) If analysis of any composite sample of a Permittee's discharge obtained by OCSD shows a minor violation by the Permittee of the Mass Emission Rates or concentration limits specified in the Permittee's discharge permit or in this Ordinance, then OCSD shall impose non-compliance resampling fees pursuant to fee schedules adopted by OCSD's Board of Directors. 2. The fees specified in subsection 603.C.1.a), C.1.b) and D herein shall be imposed for each date on which OCSD conducts sampling OCSD-48-73 as a result of a violation by a Permittee. D. Non-Compliance Resampling Fees for Grab Samples and Self-Monitoring Results 1. If analysis of any grab sample of a Permittee's discharge shows non- compliance with any concentration limits as set forth in the User's permit or in this Ordinance, OCSD may impose non-compliance resampling fees, pursuant to fee schedules adopted by the OCSD Board of Directors, for resampling conducted by OCSD as a result of a violation by the Permittee. 2. If any self-monitoring analysis of a Permittee's discharge shows non- compliance with any concentration limits or Mass Emission Rates as set forth in the User's permit or in this Ordinance, OCSD may impose non-compliance resampling fees, pursuant to fee schedules adopted by the OCSD Board of Directors, for sampling conducted by OCSD as a result of a violation by the Permittee. 603.1 Probation Order A. Grounds In the event the Division Head determines that a Permittee has violated any provision of this Ordinance, or the terms, conditions and limits of its discharge permit, or has not made payment of all amounts owed to OCSD for User charges, non-compliance resampling fees or any other fees, the General Manager may issue a Probation Order, whereby the Permittee must comply with all directives, conditions and requirements therein within the time prescribed. B. Provisions The issuance of a Probation Order may contain terms and conditions including, but not limited to, installation of Pretreatment equipment and facilities, requirements for self-monitoring, submittal of drawings or technical reports, operator certification, audit of Waste minimization practices, payment of fees, limits on rate and time of discharge, or other provisions to ensure compliance with this Ordinance. C. Probation Order- Expiration A Probation Order issued by the General Manager shall be in effect for a period not to exceed ninety (90) days. OCSD-48-74 603.2 Enforcement Compliance Schedule Agreement (ECSA) A. Grounds Upon determination that a Permittee is in non-compliance with the terms, conditions or limits specified in its permit or any provision of this Ordinance, and needs to construct and/or acquire and install equipment related to Pretreatment, the General Manager may require the Permittee to enter into an ECSA which will, upon the effective date of the ECSA, amend the Permittee's permit. The ECSA shall contain terms and conditions by which a Permittee must operate during its term and shall provide specific dates for achieving compliance with each term and condition for construction and/or acquisition and installation of required equipment related to Pretreatment. B. Provisions The issuance of an ECSA may contain terms and conditions including but not limited to requirements for self-monitoring, installation of Pretreatment equipment and facilities, submittal of drawings or reports, operator certification, audit of Waste minimization practices, payment of fees, limits on rate and time of discharge, deposit of performance guarantee, interim limits, or other provisions to ensure compliance with this Ordinance. C. ECSA- Payment of Amounts Owed OCSD shall not enter into an ECSA until such time as all amounts owed to OCSD, including User fees, non-compliance resampling fees, deposits, or other amounts due are paid in full, or an agreement for deferred payment secured by collateral or a third party, is approved by the General Manager. Failure to pay all amounts owed to OCSD shall be grounds for permit suspension or permit revocation as set forth in Section 605 and 606. D. ECSA- Permit Suspension/Revocation If compliance is not achieved in accordance with the terms and conditions of an ECSA during its term, the General Manager may issue an order suspending or revoking the discharge permit pursuant to Section 605 or 606 of this Ordinance. 604. REGULATORY COMPLIANCE SCHEDULE AGREEMENT (RCSA) A. Grounds If at any time subsequent to the issuance of a Wastewater Discharge Permit to an Industrial User, Federal Categorical Pretreatment Standards are adopted or revised by the United States Environmental Protection Agency, OCSD-48-75 or in the event OCSD enacts revised or new discharge limits, the General Manager, upon determination that an Industrial User would not be in compliance with the adopted revised or new limits, may require the industrial User to enter into a RCSA with OCSD under terms and conditions that would provide for achieving compliance with all new standards by the industrial User on a specific date. The RCSA shall have a maximum term of two hundred-seventy (270) days. The General Manager may approve a longer term, upon a showing of good cause. B. Provisions The issuance of a RCSA may contain terms and conditions including but not limited to requirements for installation of Pretreatment equipment and facilities, submittal of drawings or reports, waste minimization practices or other provisions to ensure compliance with this Ordinance. C. RCSA - Non-Compliance Resampling Fee During the period a RCSA is in effect, any discharge by Permittee in violation of the RCSA will require payment of non-compliance resampling fees in accordance with this Article 6. 605. PERMIT SUSPENSION A. Grounds The General Manager may suspend any permit when it is determined that a Permittee: 1. Fails to comply with the terms and conditions of either an ECSA or RCSA. 2. Knowingly provides a false statement, representation, record, report, or other document to OCSD. 3. Refuses to provide records, reports, plans, or other documents required by OCSD to determine permit terms, conditions, or limits, discharge compliance, or compliance with this Ordinance. 4. Falsifies, tampers with, or knowingly renders inaccurate any monitoring device or sample collection method. 5. Fails to report significant changes in operations or Wastewater constituents and characteristics. 6. Violates a Probation Order. OCSD-48-76 7. Refuses reasonable access to the Permittee's premises for the purpose of inspection and monitoring. 8. Does not make timely payment of all amounts owed to OCSD for User charges, non-compliance sampling fees, permit fees, or any other fees imposed pursuant to this Ordinance. 9. Violates any condition or limit of its discharge permit or any provision of OCSD's Ordinances or regulations. B. Notice/Hearing When the General Manager has reason to believe that grounds exist for permit suspension, he shall give written notice thereof via personal delivery, mail with proof of delivery, or a similar method to the permittee setting forth a statement of the facts and grounds deemed to exist, together with the time and place where the charges shall be heard by the General Manager's designee. The hearing date shall be not less than fifteen (15)calendar days nor more than forty-five (45) calendar days after the mailing of such notice. 1. At the suspension hearing, the Permittee shall have an opportunity to respond to the allegations set forth in the notice by presenting written or oral evidence. The hearing shall be conducted in accordance with procedures established by the General Manager and approved by OCSD's General Counsel. 2. After the conclusion of the hearing, the General Manager's designee shall submit a written report to the General Manager within thirty(30) calendar days after the conclusion of the hearing setting forth a brief statement of facts found to be true, a determination of the issues presented, conclusions, and a recommendation. Upon receipt of the written report, the General Manager shall make his determination and should he/she find that grounds exist for suspension of the permit, he/she shall issue his/her decision and order in writing within twenty (20) calendar days. The written decision and order of the General Manager shall be sent via personal delivery, mail with proof of delivery, or a similar method to the Permittee or its legal counsel/representative at the Permittee's business address. C. Effect 1. Upon issuance, an order of permit suspension issued by the General Manager shall be final in all respects. OCSD-48-77 2. The permittee shall immediately cease and desist its discharge of any Wastewater, directly or indirectly to OCSD's Sewerage System for the duration of the suspension. All costs for physically terminating and reinstating service shall be paid by the Permittee. 3. Any owner and responsible management employee of the Permittee shall be bound by the order of suspension. 606. PERMIT REVOCATION A. Grounds The General Manager may revoke any permit when it is determined that a Permittee: 1. Knowingly provides a false statement, representation, record, report, or other document to OCSD. 2. Refuses to provide records, reports, plans, or other documents required by OCSD to determine permit terms, conditions, or limits, discharge compliance, or compliance with this Ordinance. 3. Falsifies, tampers with, or knowingly renders inaccurate any monitoring device or sample collection method. 4. Fails to report significant changes in operations or Wastewater constituents and characteristics. 5. Fails to comply with the terms and conditions of an ECSA, permit suspension, or probation order. 6. Discharges effluent to OCSD's Sewerage System while its permit is suspended. 7. Refuses reasonable access to the Permittee's premises for the purpose of inspection and monitoring. 8. Does not make timely payment of all amounts owed to OCSD for User charges, non-compliance resampling fees, permit fees, or any other fees imposed pursuant to this Ordinance. 9. Causes interference with OCSD's collection, treatment, or disposal system. 10. Fails to submit oral notice or written report of a Bypass occurrence. OCSD-48-78 11. Violates any condition or limit of its discharge permit or any provision of OCSD's Ordinances or regulations. B. Notice/Hearing When the General Manager has reason to believe that grounds exist for the revocation of a permit, he/she shall give written notice via personal delivery, mail with proof of delivery, or a similar method thereof to the Permittee setting forth a statement of the facts and grounds deemed to exist together with the time and place where the charges shall be heard by the General Manager's designee. The hearing date shall be not less than fifteen (15) calendar days nor more than forty five (45) calendar days after the mailing of such notice. 1. At the hearing, the Permittee shall have an opportunity to respond to the allegations set forth in the notice by presenting written or oral evidence. The revocation hearing shall be conducted in accordance with the procedures established by the General Manager and approved by OCSD's General Counsel. 2. After the conclusion of the hearing, the General Manager's designee shall submit a written report to the General Manager within thirty(30) calendar days setting forth a brief statement of facts found to be true, a determination of the issues presented, conclusions, and a recommendation. 3. Upon receipt of the written report, the General Manager shall make his/her determination and should he/she find that grounds exist for permanent revocation of the permit, he/she shall issue his/her decision and order in writing within twenty (20) calendar days. The written decision and order of the General Manager shall be sent via personal delivery, mail with proof of delivery, or a similar method to the Permittee or its legal counsel/representative at the Permittee's business address. 4. In the event the General Manager determines to not revoke the permit, he/she may order other enforcement actions, including, but not limited to, a temporary suspension of the permit, under terms and conditions that he/she deems appropriate. C. Effect 1. Upon issuance, an order of permit revocation issued by the General Manager shall be final in all respects. 2. The Permittee shall immediately cease and desist its discharge of OCSD-48-79 any Wastewater directly or indirectly to OCSD's Sewerage System. All costs for physical termination shall be paid by the Permittee. 3. Any owner or Authorized Representative of the Permittee shall be bound by the order of revocation. 4. Any future application for a permit at any location within OCSD by any Person subject to an order of revocation will be considered by OCSD after fully reviewing the records of the revoked permit, which records may be the basis for denial of a new permit. 607. WASTEHAULER NON-COMPLIANCE WITH PERMIT CONDITIONS A Wastehauler's non-compliance with permit requirements shall be determined by an analysis of a sample of the discharge for any constituent or conditions specified in the Wastehauler's discharge permit or this Ordinance. If the discharge of a Wastehauler is found by the analysis to be in excess of the concentration limits specified in the Wastehauler's discharge permit or in this Ordinance, the Wastehauler shall, after receiving a demand from OCSD, identify in writing, all sources of the discharge. OCSD reserves the right to sample and inspect any Wastehauler that delivers Wastewater to any facility which is tributary to OCSD's Sewerage Facilities. Even if it is established to the satisfaction of the General Manager that the origin of the discharge is domestic septage, or septic Waste, OCSD may still elect not to accept Wastewater from that particular source. If the discharge is Industrial Wastewater from an industrial source(s)and exceeds permit concentration limits or limits specified in this Ordinance, the following shall apply: A. First Violation 1. The Permittee shall pay a non-compliance resampling fee. 2. The Wastehauler permit for disposal privileges shall be suspended for five (5) days. B. Second Violation 1. The Permittee shall pay a non-compliance resampling fee. 2. The Wastehauler permit for disposal privileges shall be suspended for ten (10) days. 3. The Wastehauler permit may be revoked in accordance with Section OCSD-48-80 606. 608. DAMAGE TO FACILITIES OR INTERRUPTION OF NORMAL OPERATIONS A. Any User who discharges any Wastewater which causes or contributes to any obstruction, interference, damage, or any other impairment to OCSD's Sewerage Facilities or to the operation of those facilities shall be liable for all costs required to clean or repair the facilities together with expenses incurred by OCSD to resume normal operations. Such discharge shall be grounds for permit revocation. A service charge of twenty five percent (25%)of OCSD costs shall be added to the costs and charges to reimburse OCSD for miscellaneous overhead, including administrative personnel and record keeping. The total amount shall be payable within forty five(45)days of invoicing by OCSD. B. Any User who discharges a Wastewater which causes or contributes to OCSD violating its discharge requirements established by any Regulatory Agency incurring additional expenses or suffering losses or damage to the facilities, shall be liable for any costs or expenses incurred by OCSD, including regulatory fines, penalties, and assessments made by other agencies or a court. 609. INDUSTRIAL WASTEWATER PASS THROUGH Any User whose discharge results in a Pass Through event affecting OCSD or its Sewerage Facilities shall be liable for all costs associated with the event, including treatment costs, regulatory fines, penalties, assessments, and other indirect costs. The Discharger shall submit to OCSD plans to prevent future recurrences to the satisfaction of OCSD. 610. PUBLICATION OF VIOLATION Upon a determination in a permit suspension, permit revocation, or civil penalty proceedings that a User has discharged in violation of its permit or any provision under this Ordinance, OCSD may require that the User notify the public and/or other Users of the OCSD's Sewerage Facilities of such violation, of actions taken to correct such violation, and of any administrative or judicial orders or penalties imposed as a result of such violation. 611. PUBLISHED NOTICES FOR SIGNIFICANT NON-COMPLIANCE In accordance with Federal Regulations, OCSD shall annually cause to be published the names of all Industrial Users in significant non-compliance. Upon a minimum of a thirty (30) day notification to the User, said publication shall be made in a newspaper(s) of general circulation that provides meaningful public notice within the jurisdiction(s) served by OCSD. OCSD-48-81 612. PUBLIC NUISANCE Discharge of Wastewater in any manner in violation of this Ordinance or of any order issued by the General Manager, as authorized by this Ordinance, is hereby declared a public nuisance and shall be corrected or abated as directed by the General Manager. Any Person creating a public nuisance is guilty of a misdemeanor. 613. TERMINATION OF SERVICE A. OCSD, by order of the General Manager, may physically terminate sewerage service to any property as follows: 1. On a term of any order of emergency suspension or revocation of a permit; or 2. Upon the failure of a Person not holding a valid discharge permit to immediately cease discharge, whether direct or indirect, to OCSD's Sewerage Facilities; or 3. Upon the failure of a facility not holding a valid discharge permit or certification. B. All costs for physical termination shall be paid by the User as well as all costs for reinstating service. 614. EMERGENCY SUSPENSION ORDER A. OCSD may, by order of the General Manager, suspend sewerage service or Wastehauler discharge service when the General Manager determines that such suspension is necessary in order to stop an actual or impending discharge which presents or may present an imminent or substantial endangerment to the health and welfare of persons, or to the environment, or may cause interference to the OCSD's Sewerage Facilities,or may cause OCSD to violate any state or federal law or regulation. Any Discharger notified of and subject to an Emergency Suspension Order shall immediately cease and desist the discharge of all Industrial Wastewater to the Sewerage System. B. As soon as reasonably practicable following the issuance of an Emergency Suspension Order, but in no event more than five (5) days following the issuance of such order,the General Manager shall hold a hearing to provide the User the opportunity to present information in opposition to the issuance of the Emergency Suspension Order. Such a hearing shall not stay the effect of the Emergency Suspension Order. The hearing shall be conducted in accordance with procedures established by the General Manager and OCSD-48-82 approved by the OCSD General Counsel. The General Manager shall issue a written decision and order within two (2) business days following the hearing, which decision shall be sent via personal delivery, mail with proof of delivery, or a similar method to the User or its legal counsel/representative at that User's business address. The decision of the General Manager following the hearing shall be final in all respects. 615. INJUNCTION Whenever a Discharger of Wastewater is in violation of or has the reasonable potential to violate any provision of this Ordinance, permit condition, or any Federal Categorical Pretreatment Standards or Pretreatment Requirements as set forth in 40 CFR Section 403.8, at seq., fails to submit required reports, or refuses to allow OCSD entry to inspect or monitor the User's discharge, OCSD may petition the Superior Court for the issuance of a preliminary or permanent injunction, or both, as may be appropriate to restrain the continued violation or to prevent threatened violations by the Discharger. 616. CIVIL PENALTIES A. Authority All Users of OCSD's Sewerage System and facilities are subject to enforcement actions administratively orjudicially by OCSD, U.S. EPA, State of California Regional Water Quality Control Board, or the County of Orange District Attorney. Said actions may be taken pursuant to the authority and provisions of several laws, including but not limited to: (1) Federal Water Pollution Control Act, commonly known as the Clean Water Act (33 U.S.C.A. Section 1251, at seq.); (2)California Porter-Cologne Water Quality Control Act (California Water Code Section 13000, at seq.); (3) California Hazardous Waste Control Law (California Health & Safety Code Sections 25100 to 25250); (4) Resource Conservation and Recovery Act of 1976 (42 U.S.C.A Section 6901, et seq.); and (5) California Government Code, Sections 54739-54740. B. Recovery of Fines or Penalties In the event OCSD is subject to the payment of fines or penalties pursuant to the legal authority and actions of other Regulatory Agencies or enforcement agencies based on a violation of law or regulation or its permits, and said violation can be established by OCSD, as caused by the discharge of any User of OCSD's Sewerage System which is in violation of any provision of this Ordinance or the User's permit, OCSD shall be entitled to recover from the User all costs and expenses, including, but not limited to, the full amount of said fines or penalties to which OCSD has been subjected. OCSD-48-83 C. Ordinance Pursuant to the authority of California Government Code Sections 54739 - 54740, any Person who violates any provision of this Ordinance; any permit condition, prohibition or effluent limit; or any suspension or revocation order shall be liable civilly for a sum not to exceed $25,000.00 per violation for each day in which such violation occurs. Pursuant to the authority of the Clean Water Act, 33 U.S.C. Section 1251, at seq., any Person who violates any provision of this Ordinance, or any permit condition, prohibition, or effluent limit shall be liable civilly for a sum not to exceed $25,000.00 per violation for each day in which such violation occurs. The General Counsel of OCSD, upon order of the General Manager, shall petition the Superior Court to impose, assess, and recover such penalties, or such other penalties as OCSD may impose, assess, and recover pursuant to federal and/or state legislative authorization. D. Administrative Civil Penalties 1. Pursuant to the authority of California Government Code Sections 54740.5 and 54740.6, OCSD may issue an administrative complaint to any Person who violates: a) any provision of this Ordinance; b) any permit condition, prohibition, or effluent limit, or certification requirement; or c) any suspension or revocation order. 2. The administrative complaint shall be served via personal delivery, mail with proof of delivery, or a similar method on the Person and shall inform the Person that a hearing will be conducted, and shall specify a hearing date within sixty (60) days. The administrative complaint will allege the act or failure to act that constitutes the violation of OCSD requirements, the provisions of law authorizing civil liability to be imposed, and the proposed civil penalty. The matter shall be heard by the General Manager's designee. The Person to whom an administrative complaint has been issued may waive the right to a hearing, in which case a hearing will not be conducted. 3. At the hearing, the Person shall have an opportunity to respond to the allegations set forth in the administrative complaint by presenting written or oral evidence. The hearing shall be conducted in accordance with the procedures established by the General Manager and approved by OCSD's General Counsel. OCSD-48-84 4. After the conclusion of the hearing, the General Manager's designee shall submit a written report to the General Manager within thirty(30) calendar days setting forth a brief statement of the facts found to be true, a determination of the issues presented, conclusions, and a recommendation. 5. Upon receipt of the written report, the General Manager shall make his/her determination and should he/she find that grounds exist for assessment of a civil penalty against the Person, he/she shall issue his/her decision and order in writing within twenty(20)calendar days. 6. If, after the hearing or appeal, if any, it is found that the Person has violated reporting or discharge requirements, the General Manager may assess a civil penalty against that Person. In determining the amount of the civil penalty, the General Manager may take into consideration all relevant circumstances, including but not limited to the extent of harm caused by the violation, the economic benefit derived through any non-compliance, the nature and persistence of the violation, the length of time over which the violation occurs, and corrective action, if any, attempted or taken by the Person involved. 7. Civil penalties may be assessed as follows: a) In an amount which shall not exceed two thousand dollars ($2,000.00) for each day for failing or refusing to furnish technical, monitoring reports, or any other required documents; b) In an amount which shall not exceed three thousand dollars ($3,000.00)for each day for failing or refusing to timely comply with any compliance schedules established by OCSD; c) In an amount which shall not exceed five thousand dollars ($5,000.00) per violation for each day of discharge in violation of any Wastewater discharge limit, permit condition, or requirement issued, reissued, or adopted by OCSD; d) In any amount which does not exceed ten dollars ($10.00) per gallon for discharges in violation of any suspension, revocation, cease and desist order or other orders, or prohibition issued, reissued, or adopted by OCSD; 8. Any Person aggrieved by an order issued by the General Manager assessing administrative civil penalties may, within fifteen (15) days after the General Manager issues the order, file an appeal with the OCSD-48-85 Governing Board. The evidence on appeal shall consist solely of the General Manager's order and the administrative record before the hearing officer. The Governing Board shall determine whether to uphold, modify, or reverse the General Manager's order. The decision of the Governing Board shall be set forth in writing and be sent by certified mail to the appellant. The decision of the Governing Board shall be final in all respects. If no appeal of the General Manager's decision is filed within fifteen (15)days of its issuance, the General Manager's order becomes final in all respects. 9. Copies of the administrative order shall be served on the party served with the administrative complaint, either by personal service or by registered mail to the Person at his business or residence address, and upon other persons who appeared at the hearing and requested a copy of the order. 10. Any Person aggrieved by a final decision issued by the Governing Board, may obtain review in the superior court, pursuant to Government Code Section 54740.6, by filing in the court a petition for writ of mandate within thirty (30) days following the service of a copy of the Governing Board decision. 11. Payment of any order setting administrative civil penalties shall be made within thirty(30)days of the date the order becomes final. The amount of any administrative civil penalties imposed which have remained delinquent for a period of sixty (60) days shall constitute a lien against the real property of the Discharger from which the discharge resulting in the imposition of the civil penalty originated. The lien shall have no effect until recorded with the county recorder. OCSD may record the lien for any unpaid administrative civil penalties on the ninety-first (91st) day following the date the order becomes final. 12. No administrative civil penalties shall be recoverable under Section 616.D for any violation for which OCSD has recovered civil penalties through a judicial proceeding filed pursuant to Government Code Section 54740. 617. CRIMINAL PENALTIES Any Person who violates any provision of this Ordinance is guilty of a misdemeanor,which upon conviction is punishable by a fine not to exceed $1,000.00, or imprisonment for not more than thirty (30) days, or both. Each violation and each day in which a violation occurs may constitute a new and separate violation of this Ordinance and shall be subject to the penalties contained herein. OCSD-48-86 618. APPEALS TO GENERAL MANAGER A. General Any User, permit applicant, or Permittee affected by any decision, action or determination made by the Division Head may file with the General Manager a written request for an appeal hearing. The request must be received by OCSD within fifteen (15) days of mailing of notice of the decision, action, or determination of OCSD to the appellant. The request for hearing shall set forth in detail all facts supporting the appellant's request. Filing of an appeal shall stay the proceedings and furtherance of the action being appealed B. Notice The General Manager shall, within fifteen (15)days of receiving the request for appeal, and pursuant to Section 107, designate a Department Head or other person to hear the appeal and provide written notice to the appellant of the hearing date, time and place via personal delivery, mail with proof of delivery, or a similar method. The hearing date shall not be more than thirty (30) days from the delivery date of such notice to the appellant unless a later date is agreed to by the appellant. If the hearing is not held within said time due to actions or inactions of the appellant, then the staff decision shall be deemed final. C. Hearing At the hearing, the appellant shall have the opportunity to present information supporting its position concerning the Division Head's decision, action or determination. The hearing shall be conducted in accordance with procedures established by the General Manager and approved by OCSD's General Counsel. D. Written Determination After the conclusion of the hearing, the Department Head (or other designee) shall submit a written report to the General Manager setting forth a brief statement of facts found to be true, a determination of the issues presented, conclusions, and a recommendation whether to uphold, modify or reverse the Division Head's original decision, action or determination. Upon receipt of the written report, the General Manager shall make his/her determination and shall issue his/her decision and order within thirty (30) calendar days of the hearing by his/her designee. Upon issuance, the order of the General Manager shall be final in all respects. The written decision and order of the General Manager shall be sent via personal delivery, mail with proof of delivery, or a similar method to the appellant or its legal OCSD-48-87 counsel/representative at the appellant's business address. 619. PAYMENT OF CHARGES A. Except as otherwise provided, all fees, charges and penalties established by this Ordinance are due and payable upon receipt of notice thereof. All such amounts are delinquent if unpaid forty five (45) days after date of invoice. B. Any charge that becomes delinquent shall have added to it a penalty in accordance with the following: 1. Forty six(46)days after date of invoice, a basic penalty of ten percent (10%) of the base invoice amount, not to exceed a maximum of $1,000.00; and 2. A penalty of one and one-half percent (1.5%) per month of the base invoice amount and basic penalty shall accrue from and after the forty-sixth (46th) day after date of invoice. C. Any invoice outstanding and unpaid after ninety (90) days shall be cause for immediate suspension of the permit. D. Penalties charged under this Section shall not accrue to those invoices successfully appealed. E. Payment of disputed charges is still required by the due date during OCSD review of any appeal submitted by Permittees. 620. COLLECTION OF DELINQUENT ACCOUNTS Collection of delinquent accounts shall be in accordance with OCSD's policy resolution establishing procedures for collection of delinquent obligations owed to OCSD, as amended from time to time by the Board of Directors. Any such action for collection may include an application for an injunction to prevent repeated and recurring violations of this Ordinance. 621. APPEAL OF CHARGES AND FEES Except for non-compliance charges and penalties, any User, permit applicant, or Permittee affected by any decision, action, or determination by OCSD, relating to fiscal issues of OCSD in which the User, applicant, or Permittee is located, including but not limited to the imposition and collection of fees, such as capital facility capacity charges, sewer use charges, special purpose discharge use charges and Wastehauler fees, may request that OCSD reconsider imposition of such fees or charges. Following review of such a request, OCSD shall notify the User, permit applicant, or Permittee via personal OCSD-48-88 delivery mail with proof of delivery, or a similar method of OCSD's decision on the reconsideration request. Any User, permit applicant, or Permittee adversely affected by OCSD's decision on the reconsideration request may file an appeal which shall be heard by the Board of Directors. The notice of appeal must be received by OCSD within thirty (30) days of the mailing of OCSD's decision on the reconsideration request. 622. RECOVERY OF COSTS INCURRED BY OCSD In the event any User, permit applicant, or permittee fails to comply with any of the terms and conditions of this Ordinance, a probationary order, an order of permit suspension or revocation, an ECSA, a RCSA, a certification, or a permit issued hereunder, OCSD shall be entitled to reasonable attorney's fees and costs which may be incurred in order to enforce any of said terms and conditions, with or without filing proceedings in court. 623. FINANCIAL SECURITY/AMENDMENTS TO PERMIT A. Compliance Deposit Permittees that have been subject to enforcement and/or collection proceedings may be required to deposit with OCSD an amount determined by the General Manager as necessary to guarantee payment to OCSD of all charges, fees, penalties, costs and expenses that may be incurred in the future, before permission is granted for further discharge to the sewer. B. Delinquent Accounts OCSD may require an amendment to the permit of any Permittee who fails to make payment in full of all fees and charges assessed by OCSD, including reconciliation amounts, delinquency penalties, and other costs or fees incurred by Permittee. C. Bankruptcy Every Permittee filing any legal action in any court of competent jurisdiction, including the United States Bankruptcy Court, for purposes of discharging its financial debts or obligations or seeking court ordered, protection from its creditors, shall, within ten (10) days of filing such action, apply for and obtain the issuance of an amendment to its permit. D. Permit Amendments OCSD shall review and examine Permittee's account to determine whether previously incurred fees and charges have been paid in accordance with time requirements prescribed by this Ordinance. OCSD may thereafter issue an amendment to the User's permit in accordance with the provisions of Article 3 and subsection E below. OCSD-48-89 E. Security An amendment to a Wastewater discharge permit issued pursuant to subdivisions (B), (C)and (D)above, may be conditioned upon the Permittee depositing financial security in an amount equal to the average total fees and charges for two (2) calendar quarters during the preceding year. Said deposit shall be used to guarantee payment of all fees and charges incurred for future services and facilities furnished by OCSD and shall not be used by OCSD to recover outstanding fees and charges incurred prior to the Permittee filing and receiving protection from creditors in the United States Bankruptcy Court. F. Return of Security In the event the Permittee makes payment in full within the time prescribed by this Ordinance of all fees and charges incurred over a period of two (2) years following the issuance of an amendment to the permit pursuant to subdivisions (B), (C) and (D), OCSD shall either return the security deposit posted by the Permittee or credit their account. 624. JUDICIAL REVIEW A. Purpose and Effect Pursuantto Section 1094.6 of the California Code of Civil Procedure, OCSD hereby enacts this part to limit to ninety (90) days following final decisions in adjudicatory administrative hearings the time within which an action can be broughtto review such decisions by means of administrative mandamus. B. Definitions As used in this Section, the following terms and words shall have the following meanings: 1. Decision shall mean and include adjudicatory administrative decisions that are made after hearing, or after revoking, suspending, or denying an application for a permit. 2. Complete Record shall mean and include the transcript, if any exists, of the proceedings, all pleadings, all notices and orders, any proposed decision by the General Manager, the final decision, all admitted exhibits, all rejected exhibits in the possession of OCSD or its offices or agents, all written evidence, and any other papers in the case. OCSD-48-90 3. Party shall mean a Person whose permit has been denied, suspended, or revoked. C. Time Limit for Judicial Review Judicial review of any decision of OCSD or its officer or agent may be made pursuant to Section 1094.5 of the Code of Civil Procedure only if the petition for writ of mandate is filed not later than the ninetieth (90th) day following the date on which the decision becomes final. If there is no provision for reconsideration in the procedures governing the proceedings or if the date is not otherwise specified, the decision is final on the date it is made. If there is provision for reconsideration, the decision is final upon the expiration of the period during which such reconsideration can be sought; provided that if reconsideration is sought pursuant to such provision the decision is final for the purposes of this Section on the date that reconsideration is rejected. D. Preparation of the Record The complete record of the proceedings shall be prepared by the OCSD officer or agent who made the decision and shall be delivered to the petitioner within ninety (90) days after he/she has filed written request therefor. OCSD may recover from the petitioner its actual costs for transcribing or otherwise preparing the record. E. Extension If the petitioner files a request for the record within ten (10) days after the date the decision becomes final, the time within which a petition, pursuant to Section 1094.5 of the Code of Civil Procedure, may be filed shall be extended to not later than the thirtieth (30th)day following the date on which the record is either personally delivered or mailed to the petitioner or the petitioner's attorney of record. F. Notice In making a final decision, OCSD shall provide notice to the party that the time within which judicial review must be sought is governed by Section 1094.6 of the Code of Civil Procedure. G. Administrative Civil Penalties Notwithstanding the provisions in this Section, and pursuant to Government Code Section 54740.6, judicial review of an order of the General Manager imposing administrative civil penalties pursuant to Section 616.D may be made only if the petition for writ of mandate is filed not later than the thirtieth OCSD-48-91 (30th) day following the day on which the order of the General Manager becomes final. OCSD-48-92 ARTICLE 7. SEWER SERVICE CHARGES —CAPITAL FACILITY CAPACITY CHARGES 701. SANITARY SEWER SERVICE CHARGE Every parcel of real property located within OCSD which is improved with structures designed for residential, commercial, or industrial use, and connected to the OCSD's Sewerage System, shall pay a sanitary sewer service charge in an amount adopted by the Board of Directors by separate Ordinance. 702. CAPITAL FACILITIES CAPACITY CHARGE Every parcel of real property located within OCSD which is improved with structures designed for residential, commercial, or industrial use, and connected to the OCSD's Sewerage System, shall pay a capital facilities capacity charge in an amount adopted by the Board of Directors by separate Ordinance. OCSD-48-93 ARTICLE 8. SEVERABILITY 801. SEVERABILITY If any provision of these Regulations or the application to any circumstances is held invalid, the remainder of the regulations or the application of such provision to other persons or other circumstances shall not be affected. 802. GENERAL APPLICATION The provisions of this Ordinance shall apply to all properties within OCSD including those properties otherwise deemed exempt from payment of taxes or assessments by provisions of the state Constitution or statute, including properties owned by other public agencies or tax-exempt organizations. Section II: This Ordinance is enacted in order to preserve the public health and safety, and in order to continue the provision of sewer services by OCSD. The facts requiring the public health and safety to be preserved are that the regulation of the discharge of industrial and sanitary Sewage is regulated by federal and state law, and protection of individuals' health and the environment require that no discharges of untreated Sewage/Wastewater are allowed to occur that are not in accord with technical specifications and requirements. Section III: Effective Date. This Ordinance shall take effect July 1, 2016. Section IV: Repeal. Ordinance No. OCSD-39 is hereby repealed. Section V: The Clerk of the Board shall certify to the adoption of this Ordinance and shall cause a summary to be published in a newspaper of general circulation as required by law. PASSED AND ADOPTED by the Board of Directors of the Orange County Sanitation District at a Regular Meeting held the 24th day of February, 2016. John Nielsen Chair, Board of Directors Orange County Sanitation District OCSD-48-94 ATTEST: Kelly A. Lore Clerk of the Board Orange County Sanitation District Bradley R. Hogin, General Counsel OCSD-48-95 STATE OF CALIFORNIA ) )SS. COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of Orange County Sanitation District, do hereby certify that the above and foregoing Ordinance No. OCSD48 was introduced for first reading at a regular meeting of said Board on the 27th day of February 2016, and passed and adopted at a regular meeting of said Board on the 24th day of February, 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 24th day of February, 2016. Kelly A. Lore Clerk of the Board Orange County Sanitation District OCSD-48-96 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 PCSA Professional Consultant Services Agreement POTW Publicly Owned Treatment Works ppm Parts per million PSA Professional Services Agreement RFP Request For Proposal Glossary of Terms and Abbreviations RWQCB Regional Water Quality Control Board SARFPA Santa Ana River Flood Protection Agency SARI Santa Ana River Inceptor SARWQCB Santa Ana Regional Water Quality Control Board SAW PA 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 BOO 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. Glossary of Terms and Abbreviations Certificate of Participation (COP) -A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Contaminants of Potential Concern (CPC) - Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (D!f) - the dilution at which the majority of the people detect the odor becomes the D(f for that air sample. Greenhouse gases - In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse effect"). Groundwater Replenishment (GWR) System - A joint water reclamation project that proactively responds to Southern California's current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons a day of drinking quality water to replenish the local groundwater supply. Levels of Service (LOS)-Goals to support environmental and public expectations for performance. NOMA- N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP) - An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S. Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. Plume-A visible or measurable concentration of discharge from a stationary source or fixed facility. Publicly-owned Treatment Works (POTW)- Municipal wastewater treatment plant. Santa Ana River Interceptor (SARI) Line - A regional brine line designed to convey 30 million gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer - Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off. South Coast Air Quality Management District (SCAQMD) - Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment - Biological wastewater treatment, particularly the activated-sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge - Untreated solid material created by the treatment of wastewater. Total suspended solids (TSS)-The amount of solids floating and in suspension in wastewater. Glossary of Terms and Abbreviations Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed —A land area from which water drains to a particular water body. OCSD's service area is in the Santa Ana River Watershed.