Loading...
HomeMy WebLinkAbout02-28-2018 Board Meeting Agenda Packet Orange County Sanitation District Wednesday, February 28, 2018 Regular Meeting of the 6:00 P.M. BOARD OF DIRECTORS Board Room ` 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 AGENDA CALL TO ORDER INVOCATION AND PLEDGE OF ALLEGIANCE (Richard Murphy, City of Los Alamitos) ROLL CALL (Clerk of the Board) 1. RECEIVE AND FILE MINUTE EXCERPTS OF MEMBER AGENCIES RELATING TO APPOINTMENTS TO THE ORANGE COUNTY SANITATION DISTRICT BOARD OF DIRECTORS (Clerk of the Board) AGENCY DIRECTOR ALT. DIRECTOR Orange County Board of Supervisors Michelle Steel Shawn Nelson 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 Chairperson and are requested to limit comments to three minutes. SPECIAL PRESENTATIONS: None. REPORTS: The Board Chairperson 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 Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 02/28/2018 OCSD Board of Directors Agenda Page 1 of 9 2. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve the minutes of the Regular Meeting of the Board of Directors held on January 24, 2018. RECEIVE AND FILE: These items require no action; and without objection, will be so ordered by the Board Chair. 3. COMMITTEE MINUTES (Clerk of the Board) RECOMMENDATION: Receive and file the approved minutes of the following committees: A. Operations Committee Meeting of December 6, 2017 B. Legislative and Public Affairs Meeting of December 11, 2017 C. Administration Committee Meeting of December 13, 2017 D. Steering Committee Meeting of December 20, 2017 4. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF JANUARY 2018 (Lorenzo Tyner) RECOMMENDATION: Receive and file the report of the Investment Transactions for the month of January 2018. OPERATIONS COMMITTEE: 5. ANNUAL MANHOLE REHABILITATION SERVICES CONTRACT (Ed Torres) RECOMMENDATION: A. Award a Service Contract for Specification No. S-2017-8958D, annual manhole rehabilitation services, to Ayala Engineering, for a total amount not to exceed $266,945 for the period beginning April 1, 2018 through March 31, 2019, with four one-year renewal options; and B. Approve a contingency of$40,042 (15%). 6. PLANT NO. 1 ACTIVATED SLUDGE AERATION DIFFUSER MEMBRANE REPLACEMENT REPAIR (Ed Torres) RECOMMENDATION: A. Approve a Purchase Order Contract to CA Construction Inc. to provide rehabilitation services for up to six (6) Aeration Basins at Plant No. 1, Specification No. S-2017-87513D,for a total amount not to exceed $232,001; B. Approve a contingency of$46,400 (20%); and 02/28/2018 OCSD Board of Directors Agenda Page 2 of 9 C. Approve a Sole Source Purchase Order to DC Frost Associates Inc. (exclusive representative for Xylem Sanitaire) for the required mechanical parts for three (3) Aeration Basins at Plant No. 1, for a total amount not to exceed $106,098. 7. HOSE REEL TRAILER FOR TEN-INCH PUMPS (Ed Torres) RECOMMENDATION: A. Award the purchase of 2,640 feet of twelve-inch lay flat sewer hose with mobile hose reel trailer to West Coast Safety Supply, for a total cost of $295,704; and B. Approve a contingency amount of$29,570 (10%). 8. CAPITAL IMPROVEMENT PROGRAM CONTRACT PERFORMANCE REPORT (Rob Thompson) RECOMMENDATION: Receive and file the Capital Improvement Program Contract Performance Report for the period ending December 31, 2017. 9. SECOND AMENDMENT TO THE 1972 WASTEWATER INTERCEPTOR CAPACITY AGREEMENT DATED APRIL 12, 1972 TO MODIFY THE COST-SHARING REACH DEFINITIONS FOR THE NEW PIPING SEGMENTS (Rob Thompson) RECOMMENDATION: Approve a Second Amendment to the Wastewater Interceptor Capacity Agreement dated April 12, 1972, between Orange County Sanitation District and Santa Ana Watershed Project Authority to modify the cost- sharing reach designations for the newly installed pipe and metering station. 10. CONTRACTING AQUATIC BIOASSAY& CONSULTING LABORATORIES, INC. FOR TAXONOMIC SERVICES (Jim Colston) RECOMMENDATION: A. Award a service contract to Aquatic Bioassay & Consulting Laboratories, Inc., Specification No. S-2017-881, to provide taxonomic services, specifically infauna sample sorting and echinoderm (e.g., sea stars) taxonomic identification, for a total amount not to exceed $190,630, for the period March 1, 2018 through February 28, 2019, with four (4) one-year renewal options; and B. Approve a contingency of$19,063 (10%). 02/28/2018 OCSD Board of Directors Agenda Page 3 of 9 11. SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT NO. 1, PROJECT NO. FE15-07 (Rob Thompson) RECOMMENDATION: A. Award a construction contract to Helix Electrical, Inc. for Secondary Treatment and Plant Water VFD Replacement at Plant No. 1, Project No. FE15-07, for a total amount not to exceed $1,797,000; and B. Approve a contingency of $179,700 (10%). 12. PROCESS CONTROL SYSTEMS UPGRADES STUDY, PROJECT NO. SP-196 (Rob Thompson) RECOMMENDATION: A. Approve a Professional Services Agreement with Stantec Consulting Services, Inc. to provide engineering services for the Process Control Systems Upgrades Study, Project No. SP-196, for an amount not to exceed $1,398,866; and B. Approve a contingency of$139,887 (10%). ADMINISTRATION COMMITTEE: 13. GM APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST (Lorenzo Tyner) RECOMMENDATION: A. Receive and file District purchases made under the General Manager's authority for the period of October 1, 2017 to December 31, 2017; and B. Approve the following additions to the pre-approved OEM Sole Source List for the period of October 1, 2017 to December 31, 2017: • AMOT - Gas valves for CenGen engines • ELECTRABOND - Coating of belt filter press rollers • FONTAINE-AQUANOX - PVC stem covers • INGERSOLL RAND -Air compressor valves and parts • OVIVO - Trickling filter parts • PULSAFEEDER - Ferric injection pumps • QUINCY COMPRESSOR -Air compressor parts and service • SAFT AMERICA - UPS batteries • TIRESHARK - Traffic spikes 02/28/2018 OCSD Board of Directors Agenda Page 4 of 9 14. MID-YEAR CONSOLIDATED FINANCIAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2017 (Lorenzo Tyner) RECOMMENDATION: Receive and file Orange County Sanitation District Mid- Year Report for the period ended December 31, 2017. 15. ADOPT RESOLUTION ESTABLISHING AN ENVIRONMENTALLY PREFERABLE PURCHASING AND PRACTICES POLICY (Lorenzo Tyner) RECOMMENDATION: Adopt Resolution No. OCSD 18-02 entitled: "Environmentally Preferable and Practices Policy." 16. CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2018-19 AND FY 2019-20 BUDGET TWO-YEAR BUDGET (Lorenzo Tyner) RECOMMENDATION: Approve the FY 2018-19 and FY 2019-20 budget assumptions and direct staff to incorporate these parameters in the preparation of this two-year budget. LEGISLATIVE & PUBLIC AFFAIRS COMMITTEE: None. STEERING COMMITTEE: 17. ESTABLISH PROJECT NO. J-131 FOR 18350 MT. LANGLEY ST. (Rob Thompson) RECOMMENDATION: A. Establish 18350 Mt. Langley St. Building Purchase and Improvement Project, Project No. J-131, for the purchase and needed improvements of 18350 Mt. Langley Street, Fountain Valley, with a budget of $11,000,000; and B. Approve a supplemental appropriation of $11,000,000 from available reserves to the Net Capital Improvement Program Budgeted Outlays for FY 2017-18, from $148,061,000 to $159,061,000. 18. PROPERTY MAINTENANCE SERVICES FOR 18350 MT. LANGLEY STREET, FOUNTAIN VALLEY (Lorenzo Tyner) RECOMMENDATION: Approve a sole source agreement with The Muller Companyfor Property Management Services, forthe period March 1, 2018 through August 31, 2018, for a management fee of $4,200 per month plus other incurred expenses, including two additional renewal periods of six months each. 02(2812018 OCSD Board of Directors Agenda Page 5 of 9 NON-CONSENT: 19. PROPOSED ORDINANCE ADOPTING REGIONAL SEWER SERVICE CHARGES (Lorenzo Tyner) RECOMMENDATION: A. Motion to read Ordinance No. OCSD-49 by title only and waive reading of said entire ordinance; B. Introduce Ordinance No. OCSD49, entitled: "An Ordinance of the Board of Directors of Orange County Sanitation District Adopting Regional Sewer Service Charges and Repealing Ordinance No. OCSD41 and Ordinance No. OCSD46"; and C. Set March 28, 2018, as the date of the Public Hearing to hear protests and for the second reading of the Ordinance No. OCSD-49. 20. PROPOSED ORDINANCE ADOPTING CAPITAL FACILITIES CAPACITY CHARGES AND FEES (Lorenzo Tyner) RECOMMENDATION: A. Motion to Read Ordinance No. OCSD-50 by title only and waive reading of said entire ordinance; B. Introduce Ordinance No. OCSD-50, entitled: "An Ordinance of the Board of Directors of the Orange County Sanitation District Adopting Capital Facilities Capacity Charges and Repealing Ordinances No. OCSD-40 and No. OCSD- 42"; and C. Set March 28, 2018, as the date of the Public Hearing to hear protests and for the second reading of the Ordinance No. OCSD-50. 21. PROPOSED ORDINANCE ADOPTING MISCELLANEOUS CHARGES AND FEES RELATING TO INDUSTRIAL DISCHARGES, SOURCE CONTROL PERMITTEES AND WASTEHAULERS (Lorenzo Tyner) RECOMMENDATION: A. Motion to Read Ordinance No. OCSD-51 by title only and waive reading of said entire ordinance; B. Introduce Ordinance No. OCSD-51, entitled: "An Ordinance of the Board of Directors of the Orange County Sanitation District Adopting Miscellaneous Charges and Fees Relating to Industrial Dischargers, Source Control Permittees and Wastehaulers and Repealing Ordinance No. OCSD-40 and Ordinance No. OCSD42; and 02/28/2018 OCSD Board of Directors Agenda Page 6 of 9 C. Set March 28, 2018, as the date of the Public Hearing to hear protests and for the second reading of the Ordinance No. OCSD-51. AB 1234 DISCLOSURE REPORTS: This item allows Board members to provide a brief oral report regarding the disclosure of outside committees, conferences, training, seminars, etc. attended at the Agency's expense, per Government Code§53232.3(d). CLOSED SESSION: During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate negotiations,pending or potential litigation,or personnel matters,pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a)purchase and sale of real property; (b) matters of pending or potential litigation; (c)employment actions or negotiations with employee representatives;or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information. CONVENE IN CLOSED SESSION. (1) CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8) Property: 18350 Mt. Langley St. Fountain Valley, CA APN Nos. 156-154-08 and 156-163-17 10950 Virginia Cir. Fountain Valley, CA -APN No.156-165-05; 10870 Spencer Ave. Fountain Valley, CA -APN No.156-163-07; 18480 Pacific St. Fountain Valley, CA -APN No.156-165-04; 18430 Pacific St. Fountain Valley, CA -APN No.156-165-06; 18370 Pacific St. Fountain Valley, CA -APN No.156-165-08; 18429 Pacific St. Fountain Valley, CA -APN No.156-163-09; 18410 Bandilier Cir. Fountain Valley, CA -APN No.156-163-10; 18368 Bandilier Cir. Fountain Valley, CA -APN No.156-163-11; 10700 Spencer St. Fountain Valley, CA-APN No.156-163-16; 10700 Spencer Ave. Fountain Valley, CA -APN No.156-154-07; 18386 Mt. Langley St. Fountain Valley, CA-APN No.156-154-06; 18385 Bandilier Cir. Fountain Valley, CA -APN No.156-163-12; 18401 Bandilier Cir. Fountain Valley, CA -APN No.156-163-13; 18424 Mt. Langley St. Fountain Valley, CA-APN No.156-154-05; 18435 Bandilier Cir. Fountain Valley, CA -APN No.156-163-14; 18475 Bandilier Cir. Fountain Valley, CA -APN No.156-163-15; 10725 Ellis Ave. Fountain Valley, CA -APN No.156-154-04; and 10540 Talbert Ave. Fountain Valley, CA -APN No.156-151-03 Agency negotiators: General Manager, Jim Herberg; Assistant General Manager, Bob Ghirelli; Director of Finance and Administrative Services, Lorenzo Tyner, Director of Engineering, Rob Thompson; Engineering Managers, Kathy Millea and 02(2812018 OCSD Board of Directors Agenda Page 7 of 9 Jeff Mohr; CIP Project Manager, Tom Grant; Kevin Turner and John Gallivan, Cushman and Wakefield. Negotiating parties: K & A Investments LP, APN Nos. 156-154-08 & 156-163-17 Valley Business Park, APN Nos. 156-165-05, 156-165-06, 156-163-07; DK-USA LLC, APN No.156-165-04; Fountain Valley Industrial Parcel 13, APN No.156-165-08; Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust Shabtai, Nevon, APN No. 156-163-16; The Ins Trust, APN No. 156-154-07; Fountain Valley Star LLC, APN No. 156-154-06; TN Sheet Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC, APN No. 156-163-13; Phone Lilly Lin-Lin TR, APN No. 156-154-05; JDK Partners, APN No. 156-163-14; Chandler Real Properties, APN No. 156-163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC, APN No. 156-151-03 Under negotiation: Instruction to negotiator will concern price and terms of payment. (2) CONFERENCE WITH LEGAL COUNSEL —ANTICIPATED LITIGATION Significant exposure to litigation (Government Code Section 54956.9(2)) Claim of Carlos Quiroz. RECONVENE IN REGULAR SESSION. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY: ADJOURNMENT: Adjourn the Board meeting until the Regular Meeting of the Board of Directors on March 28, 2018 at 6:00 p.m. 02/28/2018 OCSD Board of Directors Agenda Page 8 of 9 Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations,please contact the Orange County Sanitation District Clerk of the Board's office at(714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Posting: In accordance with the requirements of 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 welbehe at www.ocsd.com,not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed toss 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 Rem 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 kloneRmsd.com For any questions on the agenda,Committee members may contact stag at: General Manager Jim Herberg (714)593-7300 Iherberg(odocsd.com Assistant General Manager Bob Ghimili (714)593-7400 mhirelli(docsd.com Director of Engineering Rob Thompson (714)593-7310 dhompson(docsdcom Director of Environmental Services Jim Colston (714)593-7450 colston(iiocstl com Director of Finance and Lorenzo Tyner (714)593-7550 Ilvner(docsd.com Administrative Services Director of Human Resources Celia Chandler (714)593-7202 cchandler(docsd.com Director of Operations&Maintenance Ed Torres 714 593-7080 chrome ocsd.com 02/28/2018 OCSD Board of Directors Agenda Page 9 of 9 ITEM NO. 2 Orange County Sanitation District MINUTES BOARD MEETING January 24, 2018 ANITAT� 9 U N 2 ,y t o � ftwowm0i THE ENV�Q, Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018 0 112 412 01 8 Minutes of Board Meeting Page 1 of 7 ROLL CALL A regular meeting of the Board of Directors of the Orange County Sanitation District was called to order by Board Chairman Greg Sebourn on January 24, 2018, at 6:01 p.m., in the Administration Building. Director Tim Shaw delivered the invocation and led the Pledge of Allegiance. The Clerk of the Board, Kelly Lore, provided late communication in regard to Item No. 1 to include additions to the list of minute excerpts received after the publication of the agenda. 1. RECEIVED AND FILED MINUTE EXCERPTS OF MEMBER AGENCIES RELATING TO APPOINTMENTS TO THE ORANGE COUNTY SANITATION DISTRICT BOARD OF DIRECTORS (Clerk of the Board) AGENCY DIRECTOR ALT. DIRECTOR Anaheim Denise Barnes Lucille Kring Brea Glenn Parker Cecilia Hupp Buena Park Fred Smith Virginia Vaughn Fountain Valley Steve Nagel Cheryl Brothers Fullerton Greg Sebourn Jesus Silva Huntington Beach Mike Posey Erik Peterson Irvine Donald Wagner Lynn Schott Irvine Ranch Water District John Withers Douglas Reinhart La Palma Peter Kim Marshall Goodman Los Alamitos Richard Murphy Warren Kusumoto Newport Beach Scott Peotter Brad Avery Placentia Chad Wanke Ward Smith Seal Beach Ellery Deaton SandraMassa-Lavitt Stanton Dave Shawver Carol Warren Tustin Allan Bernstein Chuck Puckett Villa Park Robert Collacott Robert Pitts Yorba Linda Water District Phil Hawkins Brooke Jones The Clerk of the Board declared a quorum present as follows: ACTIVE DIRECTORS ALTERNATE DIRECTORS X Gregory Sebourn, Chair Jesus Silva X Denise Barnes Lucille Kring X Allan Bernstein Chuck Puckett X Robert Collacott Diana Fasoenelli X Ellery Deaton Sandra Massa-Lavitt X James M. Ferryman Bob Ooten X Phil Hawkins Brooke Jones Steven Jones X Kris Beard X Peter Kim Marshall Goodman X Charlie Nguyen Al Krippner 01/24/2018 Minutes of Board Meeting Page 2 of 7 X Richard Murphy Warren Kusumoto X Steve Nagel Cheryl Brothers A Glenn Parker Cecilia Hupp X Scott Peotter Brad Avery Mike Posey X Erik Peterson X Tim Shaw Michael Blazey X David Shaviver Carol Warren X Fred Smith Virginia Vaughn X Teresa Smith Mark Murphy A Michelle Steel Shawn Nelson A Sal Tinajero David Benavides A Donald Wagner Lynn Schott X Chad Wanke Ward Smith X John Withers Douglas Reinhart X I Mariellen Yarc Stacy Berry STAFF MEMBERS PRESENT: Jim Herberg, General Manager; Bob Ghirelli, Assistant General Manager; Celia Chandler, Director of Human Resources; Ed Torres, Director of Operations & Maintenance; Rob Thompson, Director of Engineering; Jim Colston, Director of Environmental Services; Lorenzo Tyner, Director of Finance &Administrative Services; Kelly Lore, Clerk of the Board; Jennifer Cabral; James Campbell; Sam Choi; Arturo Diaz; Mike Dorman; Dean Fisher; John Flores; Al Garcia; Tina Knapp; Mark Manzo; Dawn Meyers; Jeff Mohr; Ddaze Phuong; Jim Spears; and Norman Whiteman. OTHERS PRESENT: Brad Hogin (General Counsel); Alternate Directors Bob Ooten (CMSD) and Ward Smith (YLWD). PUBLIC COMMENTS: No public comments were provided. SPECIAL PRESENTATIONS: Director of Environmental Services Jim Colston presented a 20-year employee service award to Dawn Meyers, Sr. Lab Analyst, Division 630. Director of Engineering Rob Thompson presented a 30-year employee service award to John Flores, Construction Inspection Supervisor, Division 760. REPORTS: Chair Seboum announced that the GWRS 101" Anniversary will be celebrated at the 'Winter Fast" to be held at Orange County Water District on February 16, 2018 from 3:30 p.m. - 6:30 p.m. A flyer was distributed. 01/24/2018 Minutes of Board Meeting Page 3 of 7 Chair Sebourn stated that Administration Committee Chair Wanke and Operations Committee Chair Withers will be attending the CASA Conference on January 25-26 on behalf of the Board of Directors; Assemblyman Tom Daly has agreed to author a statewide bill to amend the Public Contracting Code on behalf of OCSD; and the 2018 Board of Directors Guidelines & Procedures has been updated and was distributed. General Manager Jim Herberg provided information regarding: 14 strategic goals of his FY 2017-18 mid-year workplan and areas which have been completed and a Cost-Savings Memo which depicts various ways that OCSD is efficient and fiscally prudent. Mr. Herberg further stated that presentations, to gain support on OCSD's newly proposed five-year sewer service fee schedule, have been scheduled with Orange County Business Council, Orange County Tax Association, and the Building Industry Association. CONSENT CALENDAR: 2. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve the minutes of the Special Board of Directors Meeting and Regular Meeting of the Board of Directors both held on December 20, 2017. AYES: Barnes; Bernstein; Collacott; Deaton; Ferryman; Hawkins; Kim; R. Murphy; Nagel; Peotter; Peterson (Alternate); Sebourn; Shaw; Shawver; F. Smith; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: Beard (Alternate); Nguyen; and T. Smith ABSENT: Parker; Steel; Tinajero; and Wagner 3. PAYMENT OF ANNUAL OCEAN DISCHARGE PERMIT FEES (Jim Colston) MOVED, SECONDED, AND DULY CARRIED TO: Approve payment in an amount not to exceed $525,537 to the State Water Resources Control Board for the annual National Pollutant Discharge Elimination System (NPDES) (ocean discharge) permit fees. AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Hawkins; Kim; R. Murphy; Nagel; Nguyen; Peotter; Peterson (Alternate); Sebourn; Shaw; Shawver; F. Smith; T. Smith; Wanks; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Parker; Steel; Tinajero; and Wagner 01/24/2018 Minutes of Board Meeting Page 4 of 7 RECEIVE AND FILE: These items require no action; and without objection, will be so ordered by the Board Chair. 4. COMMITTEE MINUTES (Clerk of the Board) Received and filed the approved minutes of the following committees: A. GWRS Steering Committee Meeting of July 10, 2017 B. Steering Committee Meeting of November 15, 2017 5. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF DECEMBER 2017 (Lorenzo Tyner) Received and filed the report of the Investment Transactions for the month of December 2017. OPERATIONS COMMITTEE: None. ADMINISTRATION COMMITTEE: None. LEGISLATIVE & PUBLIC AFFAIRS COMMITTEE: None. STEERING COMMITTEE: 6. LABOR COMPLIANCE PROGRAM MANUAL AND RESOLUTION (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD 18-01, entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District to Approve and Adopt the Labor Compliance Policies and Procedures Manual Dated January 24, 2018 to be Utilized During the Construction of Grant Funded Projects'. AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Hawkins; Kim; R. Murphy; Nagel; Nguyen; Peotter; Peterson (Alternate); Sebourn; Shaw; Shawver; F. Smith; T. Smith; Wanks; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Parker; Steel; Tinajero; and Wagner 01;24;2018 Minutes of Board Meeting Page 5 of 7 7. RESTRUCTURING OF GENERAL MANAGER'S OFFICE (Jim Herberg) MOVED, SECONDED, AND DULY CARRIED TO: A. Create a second Assistant General Manager position with responsibility for the Operations and Maintenance (O&M) and Engineering Departments; and appoint one of the existing department heads to assume these additional responsibilities, while maintaining their current responsibilities; and B. Upon the retirement of the existing Assistant General Manager, appoint one of the existing department heads to that position, overseeing the Finance & Administrative Services and Environmental Services departments. The resulting department head vacancy will remain unfilled. AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Hawkins; Kim; R. Murphy; Nagel; Nguyen; Peotter; Peterson (Alternate); Sebourn; Shaw; Shawver; F. Smith; T. Smith; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Parker; Steel; Tinajero; and Wagner 8. GENERAL MANAGER'S FY 2017-2018 WORK PLAN MID-YEAR UPDATE (Jim Herberg) MOVED, SECONDED, AND DULY CARRIED TO: Receive and File the General Manager's Fiscal Year 2017-2018 Work Plan Mid-Year Update and Cost Savings Measures Memo. AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Hawkins; Kim; R. Murphy; Nagel; Nguyen; Peotter; Peterson (Alternate); Sebourn; Shaw; Shawver; F. Smith; T. Smith; Wanks; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Parker; Steel; Tinajero; and Wagner NON-CONSENT: None. AB 1234 DISCLOSURE REPORTS: None. CLOSED SESSION: The Board did not convene in closed session. O1/24/2018 Minutes of Board Meeting Page 6 of 7 OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Director Ferryman requested that staff investigate community college partnerships which could provide educational opportunities in sewer plant operations and maintenance fields. This request was referred to the Legislative and Public Affairs Committee for discussion. ADJOURNMENT: At 6:20 p.m., Chair Seboum adjourned the meeting until the Regular Meeting of the Board of Directors to be held on February 28, 2018 at 6:00 p.m. Submitted by: Kelly A. Lore, CMC Clerk of the Board 01/24/2018 Minutes of Board Meeting Page 7 of 7 ITEM NO. 3 MINUTES OF THE OPERATIONS COMMITTEE Orange County Sanitation District Wednesday, December 6, 2017, 5:00 p.m. A regular meeting of the Operations Committee was called to order by Committee Chair Withers on Wednesday, December 6, 2017 at 5:04 p.m. in the Administration Building. Director Bernstein led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: John Withers, Chair Jim Herberg, General Manager Ellery Deaton, Vice-Chair Bob Ghirelli, Assistant General Manager Denise Barnes Jim Colston, Director of Environmental Services Allan Bernstein Rob Thompson, Director of Engineering Robert Collacott Ed Torres, Director of Operations & Maintenance Phil Hawkins Lorenzo Tyner, Director of Finance & Richard Murphy Administrative Services Tim Shaw Tina Knapp, Deputy Clerk of the Board Fred Smith Cindi Ambrose Mariellen Yarc Bob Bell Greg Sebourn, Board Chair Jennifer Cabral David Shawver, Board Vice-Chair Don Cutler Mike Dorman COMMITTEE MEMBERS ABSENT: Dean Fisher Steve Jones Alfredo Garcia Michelle Steel Tom Grant Kathy Millea Jeff Mohr Ddaze Phuong Tyler Ramirez Jim Spears Mike White Eros Yong OTHERS PRESENT: Brad Hogin, General Counsel Bob Ooten, Alternate Director (CMSD) PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: i Committee Chair Withers did not provide a report. 1 210 612 017 Operations Committee Minutes Page 1 of 7 REPORT OF GENERAL MANAGER: General Manager Jim Herberg advised the Committee that OCSD received a mutual aid request from the Casitas Municipal Water District asking for the loan of a one megawatt generator to assist with the fires in Los Angeles and Ventura counties. Staff is currently determining if OCSD is able to assist. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED. SECONDED, and DULY CARRIED TO: Approve Minutes of the November 1, 2017 Operations Committee Meeting. AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel 2. ANNUAL CCTV CONTRACT WITH FOUR ADDITIONAL RENEWALS TO COMPLY WITH SSMP REQUIREMENTS (Ed Torres) MOVED SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Award Service Contracts for annual CCTV Sewer Inspection Services to two (2) contractors; Hoffman Southwest Corp. (Primary) and Performance Pipeline Technologies (Secondary), for a total amount not to exceed $350,000 for the period February 1, 2018 through January 31, 2019, with four (4) one-year renewal options; and B. Approve a contingency of$35,000 (10%). AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel 3, FLEET VEHICLE PROCUREMENT THROUGH COOPERATIVE PROCUREMENT WITH NATIONAL AUTO FLEET GROUP (Ed Torres) MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve the purchase of ten (10)vehicles as listed below using the National Joint Powers Alliance (NJPA) cooperative Contract Number 120716-NAF 12/062017 Operations Committee Minutes Page 2 of 7 with National Auto Fleet Group for a total amount not to exceed $286,809 in accordance with Ordinance No. OCSD-47, Section 2.03(B), Cooperative Purchases: 1. Five (5) new/unused 2018 Ford F-150 (X1C) XL 2WD SuperCab 8' Box $149,813.49; 2. Three (3) new/unused 2018 Ford C-Max Hybrid (P5A) SE FWD $79,040.79; 3. One (1) new/unused 2018 Ford Fusion Energi (POP) SE FWD $32,667.96; 4. One (1) new/unused 2018 Ford Transit Connect Van (S6E) XL SWB with Rear Symmetrical Doors $25.286.82; and B. Approve a contingency of$7,170 (2.5%). AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel 4. PURCHASE OF SIX VAPEX SENTINEL S4 UNITS (Ed Torres) MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a sole source Purchase Order to VAPEX ENVIRONMENTAL TECHNOLOGIES for six VAPEX Sentinel S4 units (three units for Plant No. 1 and three units for Plant No. 2)for a total amount not to exceed $290,636; and B. Approve a contingency of$14,532 (5%). AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel This Item was pulled from consideration. 5. TaAI€LV€ INCH NOS€CIE€L AND:RAIL€R{Ill Torres,) MOVE44--S€C9M 8iresters-f� a sale Rewse pupighase eFdeF of tivelve SGII lay flat sewer hare with mighilp tFRq'@F te I.A.Fest Coast Safety Supply Go., Ing. fGF a War 099t A $3'13;507-;and 1 210 512 01 7 Operations Committee Minutes Page 3 of 6. TIFFANY PUMP STATION ODOR CONTROL FACILITY (Ed Torres) MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Approve a Site Access and License Agreement with the Garden Grove Sanitary District (GGSD) to allow utilization of an odor control chemical dosing station and injection of chemicals into the Miller-Holder Interceptorat 12782 Bailey Street in the city of Garden Grove, in a form approved by Special Counsel. AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel 7. SAFETY IMPROVEMENTS PROGRAM, PROJECT NO. J-126 (Rob Thompson) MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: A. Award a Construction Contract to AMTEK Construction for the Safety Improvements Program, Contract No. J-126 A and H, for a total amount not to exceed $452,757; and B. Approve a contingency of$45,276 (10%). AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel 8. EDINGER PUMP STATION REHABILITATION STUDY (Rob Thompson) MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Professional Services Agreement with Lockwood, Andrews & Newnam, Inc., to provide engineering services forthe Edinger Pump Station Rehabilitation Study, Project No. PS15-02, for an amount not to exceed $505,042; and B. Approve a contingency of$50,504 (10%). AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel 12/06I2017 Operations Committee Minutes Page 4 of 7 NON-CONSENT CALENDAR: 9 BAY BRIDGE PUMP STATION AND FORCE MAINS REPLACEMENT PROJECT, PROJECT NO. SP-178 (Rob Thompson) Committee Chair Withers indicated that a revised Agenda Report and Resolution No. OCSD 17-XX are provided as Late Communication materials tonight. An additional attachment, Statement of Facts and Findings, is also provided as Late Communication. Director of Engineering Rob Thompson provided background information pertaining to this Rem. MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Consider, receive, and file the Final Environmental Impact Report for the Bay Bridge Pump Station and Force Mains Replacement Project, Project No. SP-178, dated December 2017; and B. Adopt Resolution No. OCSD 17-XX, entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District Adopting the Environmental Impact Report for the Bay Bridge Pump Station and Force Mains Replacement Project, Project No. SP-178; Adopting the Mitigation Monitoring and Reporting Program; and Approving the Bay Bridge Pump Station and Force Mains Replacement Project, Project No. SP-178." AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Seboum, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel 10. 2017 FACILITIES MASTER PLAN (Rob Thompson) Committee Chair Withers indicated that a revised Executive Summary (an Agenda Report attachment) is provided as Late Communication material tonight. Engineering Manager Kathy Millea indicated color versions of the Executive Summary are available tonight and that the Facilities Master Plan is available should any Director wish to review these materials. Ms. Millea proceeded to provide an informative PowerPoint presentation that included an overview of the Facilities Master Plan process, highlights of the 2017 Plan, 20-Year Capital Improvement Program approach, 2017 flow projections, aging infrastructure, collections projects, and cashflow projection. MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 17-XX entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Adapting the 2017 Facilities Master Plan as the Orange County Sanitation District's New Master Plan for Future Capital Planning and Repealing Resolution No. OCSD 09-18." 12/OM017 Operations CommiO Minutes Page 5 of 7 AYES: Barnes, Bernstein, Collacott, Deaton, Hawkins, Murphy, Sebourn, Shaw, Shawver, F. Smith, Withers and Yarc NOES: None ABSTENTIONS: None ABSENT: S. Jones and Steel INFORMATION ITEMS: 11. ORANGE COUNTY SANITATION DISTRICT RATE PROGRAM (Lorenzo Tyner) Director of Finance and Administrative Services Lorenzo Tyner provided a PowerPoint presentation that provided an overview of the preparation and analysis done pertaining to the rate study, information on what generates revenue, a comparison of single family residential rates, information regarding general user fees and high strength dischargers, capital facilities capacity charge information, connection fee charges, rebates and refunds, and the adoption schedule. Mr. Tyner distributed a page of the budget pertaining to Consolidated Cash Flow Projections. 12, HEADQUARTERS COMPLEX, SITE AND SECURITY, AND ENTRANCE REALIGNMENT PROGRAM, PROJECT NO. P1-128 (Rob Thompson) Mr. Thompson provided a PowerPoint presentation regarding this item that included an overview of the project elements, Plant No. 1 perimeter security and utilities, Plant No. 1 north demolition and site improvements and south demolition, headquarters complex timeline, and next steps. Committee Chair Withers departed the meeting at 5:45 p.m. and Committee Vice-Chair Deaton presided over the balance of the meeting. DEPARTMENT HEAD REPORTS: Mr. Thompson reported that, while replacing pipe in the City of Newport Beach, an unknown condition was encountered which will create unexpected work and costs. To accommodate the unanticipated costs, staff will be seeking an increase to the contingency for this project, Project No. 6-17, at the December Board meeting. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Board Chair Sebourn reminded the Committee of the importance of having a working knowledge of OCSD to aid in the decision-making process and encouraged taking a tour 12/06/2017 Operations Committee Minutes Page 6 of 7 of both Plant Nos. 1 and 2 before the December 20 Board meeting. Committee Vice-Chair Deaton thanked staff for a wonderful State of the District event. ADJOURNMENT Committee Vice-Chair Deaton declared the meeting adjourned at 6:01 p.m. to the next scheduled meeting of Wednesday, February 7, 2018 at 5:00 p.m. Submitted by, Ti a f pp, Mp D put Jerk of the Boa 12/06=17 Operations Committee Minutes Page 7 of 7 MINUTES OF THE LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE Orange County Sanitation District Monday, December 11, 2017 at 12:00 p.m. A meeting of the Legislative and Public Affairs Committee was called to order by Chair Sebourn on Monday, December 11, 2017 at 12:00 p.m. in the Administration Building of the Orange County Sanitation District. Director Kim led the pledge of allegiance. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Greg Sebourn, Board Chair Jim Herberg, General Manager David Shawver, Board Vice-Chair Bob Ghirelli, Assistant General Manager Allan Bernstein, Member-At-Large Jim Colston, Director of Environmental Services Peter Kim, Member-At-Large Rob Thompson, Director of Engineering Chad Wanke, Member-At-Large Lorenzo Tyner, Director of Finance & Administrative Services COMMITTEE MEMBERS ABSENT: Tina Knapp, Deputy Clerk of the Board Donald P. Wagner, Member-At-Large Jennifer Cabral John Withers, Member-At-Large Alfredo Garcia Rebecca Long Kelly Newell Tyler Ramirez OTHERS PRESENT: Brad Hogin, General Counsel Eric O'Donnell, Townsend Public Affairs Cori Williams, Townsend Public Affairs Eric Sapirstein, ENS Resources (via teleconference) PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Chair Sebourn did not provide a report. REPORT OF GENERAL MANAGER: General Manager Jim Herberg did not provide a report. 12/11/2017 Legislative and Public Maim Co nmiltee Minutes Page I f 3 CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, and DULY CARRIED TO: Approve minutes for the Committee meeting held on November 13, 2017. AYES: Bernstein, Kim, Sebourn, Shawver, and Wanke NOES: None ABSTENTIONS: None ABSENT: Wagner and Withers NON-CONSENT CALENDAR: 2. LEGISLATIVE/REGULATORY PLAN AND YEAR-END REVIEW (Bob Ghirelli) Assistant General Manager Bob Ghirelli introduced this item and Rebecca Long, Senior Public Affairs Specialist, provided an informative PowerPoint presentation that provided legislative highlights of 2017, tours and briefings given to State and Federal delegations, and reviewed the 2018 Legislative and Regulatory Plan. Cori Williams, Townsend Public Affairs (TPA), reviewed the status of the legislative concept identified by the Committee regarding bid advertising. MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Approve the Orange County Sanitation District 2018 Legislative and Regulatory Plan. AYES: Bernstein, Kim, Sebourn, Shawver, and Wanks NOES: None ABSTENTIONS: None ABSENT: Wagner and Withers INFORMATION ITEMS: 3. LEGISLATIVE AFFAIRS UPDATE (Rebecca Long) Ms. Long introduced Eric Sapirstein, ENS Resources, who provided an update on the tax bill (H.R. 1 and S. 1), highlighting the elements that have indirect and direct impacts on OCSD. Mr. Sapirstein indicated that further information pertaining to infrastructure policymaking is anticipated at the beginning of 2018. Mr. Sapirstein also provided the names of individuals recently appointed to agencies of interest to OCSD. Ms. Long provided an overview of the recent California Association of Sanitation Agencies State Legislative Committee meeting, indicating that discussions focused on legislation; as well as the priorities of the organization, which are currently flushable wipes and microplastics. In response to a question from the Committee, 12MI12017 Legislative and Public Affairs Committee Minutes Page 2 of Ms. Williams indicated that, in regard to the bid advertising legislative concept being developed by OCSD, the current priority is finding an author. 4. PUBLIC AFFAIRS UPDATE (Jennifer Cabral) Jennifer Cabral, Public Affairs Supervisor, provided an overview of recent Public Affairs activities and reported that the project to update OCSD's video library has been completed and that this was primarily undertaken as an extension of onboarding new Board Members and employees. Ms. Cabral thanked the Committee for attending the State of the District event in November. Two new videos (one pertaining to resource recovery and the other to the flushable three) were shown to the Committee. Ms. Cabral indicated that these videos will be provided to our member agencies for them to share. Vice-Chair Shawver offered local school districts as an additional avenue for sharing the videos. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Vice-Chair Shawver thanked the consultants and staff for their commitment to the legislative efforts of OCSD and commented that it is being recognized by legislators. Director Bernstein echoed Vice-Chair Shawver's suggestion of sharing the videos with local school districts and voiced his appreciation for the Sanitation District's staff and consultants. Vice-Chair Shawver suggested also sharing the videos with Orange Coast Community College. Board Chair Sebourn reminded the Committee that the next Board meeting is December 20. Chair Sebourn reiterated the importance of having a working knowledge of OCSD to aid in the decision-making process and encouraged all Board Members to take the tour of both Plant Nos. 1 and 2 being offered before the December 20 Board meeting and, if unable to participate on this tour date, please contact staff to schedule a date and time. ADJOURNMENT: Chair Sebourn declared the meeting adjourned at 12:37 p.m. to the next Legislative and Public Affairs Committee meeting, Monday, February 5, 2018 at 12:00 p.m. Submitted by: Tina Knapp, CMC Clerk of the Board 12/11/2017 Legislative and Public Affairs Committee Minutes Page 3 of 3 MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, December 13, 2017 at 5:00 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Vice-Chair Wagner on December 13, 2017 at 5:02 p.m. in the Administration Building of the Orange County Sanitation District. Director Scott Peotter led the Flag Salute. A quorum was declared present as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Donald P. Wagner, Vice-Chair Jim Herberg, General Manager Barbara Delgleize Bob Ghirelli, Assistant General Manager Jim Ferryman Celia Chandler, Director of Human Resources Peter Kim Jim Colston, Director of Environmental AI Krippner Services Steve Nagel Rob Thompson, Director of Engineering Scott Peotter Ed Torres, Director of Operations & Theresa Smith Maintenance Greg Sebourn, Board Chair Lorenzo Tyner, Director of Finance & David Shawver, Board Vice-Chair Administrative Services Kelly Lore, Clerk of the Board COMMITTEE MEMBERS ABSENT: Angela Brandt Chad Wanks, Chair Jennifer Cabral Glenn Parker Pongsakdi Cady Sal Tinajero Al Garcia Laura Maravilla Riaz Moinuddin Randy Kleinman Kathy Millea Tyler Ramirez Mike White Eros Yong OTHERS PRESENT: Brad Hogin, General Counsel Pierce Rossum, Carollo PUBLIC COMMENTS: None. i 2113/2017 Administration Committee Minutes Page 1 of 6 REPORTS: Director of Engineering Rob Thompson provided information regarding unforeseen expenses to District Trunk Sewer Relief, Project No. 6-17 that due to time constraints will be proceeding directly to the Steering Committee and Board of Directors rather than the Operations Committee. Committee Vice-Chair Wagner 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 November 8, 2017 Administration Committee Meeting. 2. 2017 BENEFITS PROGRAM — ONE-TIME FUND REALLOCATION (Celia Chandler) I MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Approve a one-time reallocation of budgeted funds in the amount of $195,000 to be transferred to group health insurance benefits resulting in a total cost of$12,032,187. The reallocation would not result in an increase to the overall 2017 budget. AYES: Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, Shawver, T. Smith and Wagner NOES: None ABSTENTIONS: None ABSENT: Delgleize, Parker, Tinajero, and Wanke NON-CONSENT: 3. ENTERPRISE ASSET MANAGEMENT PHASE IV - LOCK OUT TAG OUT (LOTO) (Lorenzo Tyner) Director of Finance and Administrative Services, Lorenzo Tyner, introduced Information Technology Manager John Swindler and Engineering Manager Riaz Moinuddin who provided a brief overview of the item. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Professional Services Agreement with Total Resource Management, Inc. for IBM-Maximo Enterprise Asset Management Phase IV - Lock Out Tag Out (LOTO) Software, Specification No. 5-2017-871 BD, for a total amount not to exceed $188,318; and 12/13/2017 Administration Committee Minutes Page 2 of 6 B. Approve a contingency in the amount of$37,664 (20%). AYES: Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, Shawver, T. Smith and Wagner NOES: None ABSTENTIONS: None ABSENT: Delgleize, Parker, Tinajero, and Wanke Director Delgleize arrived at 5.10 p.m. 4. RIGHT OF WAY AND PROPERTY MANAGEMENT SERVICES (Lorenzo Tyner) Mr. Tyner provided a brief overview of the item describing the services to be rendered. MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Professional Consultant Services Agreement with Paragon Partners Ltd. for Right of Way and Property Management Services, Specification No. CS-2017-879, for the period January 1, 2018 through December 31, 2018, for a total annual amount not to exceed $115,000, with two (2) six-month renewal options; and B. Approve a contingency of$11,500 (10%). AYES: Delgleize, Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, Shawver, T. Smith and Wagner NOES: None ABSTENTIONS: None ABSENT: Parker, Tinajero, and Wanks 5. INVEST AND/OR REINVEST DISTRICT'S FUNDS (Lorenzo Tyner) Mr. Tyner introduced Controller Mike White who provided the changes that were made to the annual Investment policy being proposed and responded to questions from the Committee regarding a change related to adding supranational securities to the list of securities whereas the Sanitation District can invest up to 30% of its portfolio in supranational securities. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 17-XX, entitled "A Resolution of the Board of Directors of the Orange County Sanitation District, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds; Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 16-19." 12/13r12017 AdminislraWn Committee Mingles Page 3 of 6 AYES: Delgleize, Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, Shawver, T. Smith and Wagner NOES: None ABSTENTIONS: None ABSENT: Parker, Tinajero, and Wanke 6. ALLIANT INSURANCE SERVICES (Celia Chandler) Director of Human Resources Celia Chandler introduced Human Resources and Risk Manager Richard Spencer and Principal Financial Analyst Randy Kleinman who provided information regarding the insurance services included in the proposed agreement and the competitive process in the selection of the consultant. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Professional Consultant Services Agreement with Alliant Insurance Services, Inc. to act as Broker of Record for the Orange County Sanitation District's assets and operations insurance coverages, Specification No. CS-2017-884-BD, for the period of January 1, 2018 through December 31, 2018 with up to four (4) one-year renewal options; and B. No direct payment from the Sanitation District is provided. The Broker of Record, Alliant Insurance Services, will be compensated through commission that is paid directly by the insurance carriers. AYES: Delgleize, Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, Shawver, T. Smith and Wagner NOES: None ABSTENTIONS: None ABSENT: Parker, Tinajero, and Wanke 7. 2017 FACILITIES MASTER PLAN (Rob Thompson) Engineering Manager Kathy Millea provided an informative PowerPoint Presentation regarding the 2017 Facilities Master Plan and responded to questions regarding the programmatic EIR. Director T. Smith departed the meeting at 5:42 p.m. 8. ORANGE COUNTY SANITATION DISTRICT WASTEWATER REVENUE PROGRAM RATE STUDY (Lorenzo Tyner) Mr. Tyner distributed the Consolidated Cash Flow projections and provided an informative in-depth PowerPoint presentation regarding the rate study performed by consultant Carollo and responded to questions from the Committee. 1211=017 Atlmin'm&ation Committee Minutes Page 4 of 6 MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the Orange County Sanitation District's 2017 Wastewater Revenue Program Rate Study completed by Carollo Engineers. AYES: Delgleize, Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, Shawver, and Wagner NOES: None ABSTENTIONS: None ABSENT: Parker, T. Smith, Tinajero, and Wanke Director Delgleize stepped out of the room during Item No. 9. 9. PROPOSITION 218 NOTIFICATIONS (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Direct staff to prepare and mail Proposition 218 compliant notifications to affected property owners outlining a five-year regional sewer service fee schedule with annual increases of approximately 1.2 percent over the next five fiscal years beginning with Fiscal Year 2018-19. AYES: Ferryman, Kim, Krippner, Nagel, Peotter, Sebourn, Shawver, and Wagner NOES: None ABSTENTIONS: None ABSENT: Delgleize, Parker, T. Smith, Tinajero, and Wanke INFORMATION ITEMS: None. DEPARTMENT HEAD REPORTS: General Manager Herberg reminded the Committee of the upcoming Special Board Meeting on December 20, 2017 at 3:00 p.m. which will be include a tour of Plant No. 1 and Plant No. 2. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Board Chairman Sebourn reminded everyone that the Board meeting is being held one week early this month due to the holiday. 1 211 3/2 01➢ Atlminishation Committee Minutes Page 5 of 6 ADJOURNMENT: Committee Vice-Chair Wagner declared the meeting adjourned at 6:00 p.m. to the next regularly scheduled meeting of Wednesday, February 14, 2018 at 5:00 p.m. Submitted by: e y A. re, CMC CI rk of rhe Board 12n M01 7 Administration Committee Minutes Page 6 of 6 MINUTES OF THE STEERING COMMITTEE Orange County Sanitation District Wednesday, December 20, 2017 at 6:00 p.m. A regular meeting of the Steering Committee of the Orange County Sanitation District was called to order by Board Chairman Sebourn on Wednesday, December 20,2017 at 5:01 p.m. in the Administration Building of the Orange County Sanitation District. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Greg Seboum, Board Chair Jim Herberg, General Manager Chad Wanke, Administration Committee Bob Ghirelli, Assistant General Manager Chair Celia Chandler, Director of Human John Withers, Operations Committee Resources Chair Rob Thompson, Director of Engineering Ellery Deaton, Member-At-Large Jim Colston, Director of Environmental Tim Shaw, Member-At-Large Services Donald Wagner, Member-Al-Large Ed Torres, Director of Operations & Maintenance COMMITTEE MEMBERS ABSENT: Lorenzo Tyner, Director of Finance & David Shawver, Board Vice-Chair Administrative Services (excused absence) Kelly Lore, Clerk of the Board Angela Brandt Jennifer Cabral Michael Dorman Dean Fisher Al Garcia Tom Grant Tina Knapp Kathy Millea Jeff Mohr Andrew Nau Tyler Ramirez Jim Spears OTHERS PRESENT: Brad Hogin, General Counsel Daniel Fears (Payne & Fears), Special Counsel Roger Cerda (Alston & Bird), Special Counsel 1220/2017 Steering Committee Minutes Page 1 of 4 PUBLIC COMMENTS: Chair Sebourn stated that Mr. Robert Danko, General Counsel for Aseptic Technologies, LLC, will speak prior to Item No. 4. No other public comments were provided. REPORTS: Chair Sebourn provided an update and thanked all who attended today's Special Director's tour highlighting OCSD's Capital Improvement Projects and Operations and Maintenance of both Plant Nos. 1 & 2. General Manager Jim Herberg provided information regarding the Sewer Service Fees & Charges on tonight's Board of Directors agenda. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED SECONDED AND DULY CARRIED TO: Approve Minutes of the Regular Meeting of the Steering Committee held on November 15, 2017. AYES: Deaton; Sebourn, Shaw, Wanke and Withers NOES: None ABSTENTIONS: None ABSENT: Shawverand Wagner 2. ADOPTION OF UPDATED RESOLUTION ON RULES OF PROCEDURE (Bob Ghirelli) MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 17-18, entitled, "A Resolution of the Board of Directors of Orange County Sanitation District Establishing Rules of Procedure for the Conduct of Business of the District, and Repealing Resolution No. OCSD 17-08." AYES: Deaton; Sebourn, Shaw, Wanke and Withers NOES: None ABSTENTIONS: None ABSENT: Shawver and Wagner NON-CONSENT: 3. DISTRICT 6 TRUNK SEWER RELIEF, PROJECT NO. 6-17 (Rob Thompson) Engineering Manager, Dean Thompson provided an informative PowerPoint presentation explaining the processes and explained the requested contingency. 12/20/2017 Steering Committee Minutes Page 2 of 4 Director Wagner arrived at the meeting at 5:10 p.m. MOVED. SECONDED. AND DULY CARRIED TO: Recommend to the Board of Directors to: Approve a contingency increase of $369,930 (10%) to the construction contract with Charles King Co., Inc. for District No. 6 Trunk Sewer Relief, Project No. 6-17, for a total amount not to exceed $739,860 (20%). AYES: Deaton; Seboum, Shaw, Wagner, Wanke and Withers NOES: None ABSTENTIONS: None ABSENT: Shawver 4. DEFERRED PAYMENT AGREEMENT REQUEST FOR CHARGES AND FEES OWED BY ONE INDUSTRIAL WASTEWATER DISCHARGE PERMITTEE (Lorenzo Tyner) Robert Danko, General Counsel of Aseptic Technology LLC, spoke against the item; requested a 90-day plan to pay off the delinquency; and explained plans for the company's recovery. Director of Finance and Administrative Service Lorenzo Tyner provided information leading to staff's recommendation, including a history of the previous two deferred payment agreements. After discussion, the Committee proposed an alternate recommendation. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Beny-the request-for-a-3"' GhaFges and fees owed 149F snits T-ashReliggy, LILG. Negotiate a resolution whereby the permit for Aseptic Technology, LLC will be extended for 90 days in order for Aseptic to become current with their payments, subject to receiving acceptable security as approved by General Counsel and Staff. AYES: Deaton; Sebourn, Shaw, Wagner, Wanks and Withers NOES: None ABSTENTIONS: None ABSENT: Shawver INFORMATION ITEMS: None. 12/20/2017 Steering Committee Minutes Page 3 of 4 CLOSED SESSION: CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS 54956.8 & 54956.9(d)(1): The Committee convened in closed session at 5:32 p.m. to discuss five items. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Sections and are maintained by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee Closed Session Meetings. RECONVENED IN REGULAR SESSION: The Committee reconvened in regular session at 5:58 p.m. CONSIDERATION OF ACTION IF ANY. ON MATTERS CONSIDERED IN CLOSED SESSION: General Counsel Brad Hogin did not provide a report. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: Chair Sebourn declared the meeting adjourned at 5:59 p.m. to the next Steering Committee meeting to be held on Wednesday, January 24, 2018 at 5:00 p.m. +11 .. MCard 12/20/2017 Steering Committee Minutes Page 4 of 4 BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. oz/zsha AGENDA REPORT IternNumber IemNumber a 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 2018 GENERAL MANAGER'S RECOMMENDATION Receive and file the report of the Investment Transactions for the month of January 2018. 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, 2018. RELEVANT STANDARDS CA Government Code Section 53607 PRIOR COMMITTEE/BOARD ACTIONS N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following affachment(s)is included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: Report of the Investment Transactions for the month ended January 31, 2018 Page 1 of 1 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 Post Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss ACQUISITIONS 01/02/2018 31846VS67 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 134,400.0000 1.000000 -134,400.00 134,400.00 0.00 01/03/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVI-OB FD CL Z 12.771.7900 1.000000 -12,771.79 12,771.79 0.00 01/03/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 23,454.0600 1.000000 -23,454.06 23,454.06 0.00 01/05/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 30,000.0000 1.000000 -30,000.00 30,000.00 0.00 01/0812018717081 DWO PURCHASED PAR VALUE OF PFIZER INC 1.200% 6101118(WELLS FARGO 1,000,000.0000 0.997970 -997,970.00 997,970.00 0.00 SECURITIES,LLC/1,000,000 PAR VALUE AT 99.797% 01/09/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 55,000.0000 1.000000 -55,000.00 55,000.00 0.00 01/11/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 4,750,000.0000 1.000000 -4,750,000.00 4,750,000.00 0.00 01/11/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 4,750,000.0000 1.000000 -4,750,000.00 4,750,000.00 0.00 01/11/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVI-OB FD CL Z 17,500,000.0000 1.000000 -17,500,000.00 17,500,000.00 0.00 01/12/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 4,015,000.0000 1.000000 4,015,000.00 4,015,000.00 0.00 01/16/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 6,750.0000 1.000000 -6,750.00 6,750.00 0.00 01/16/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 13,584,062.5000 1.000000 -13,584,062.50 13,584,062.50 0.00 01/16/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVI-OB FD CL Z 3,307,521.6800 1.000000 -3,307,521.68 3,307,521.68 0.00 01/16/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 924,033.9200 1.000000 -924,033.92 924,033.92 0.00 01/17/2018 313385SL1 PURCHASED PAR VALUE OF F H L B DISC NTS 1/30/18 MEFFERIES 4,600,000.0000 0.999531 4,597,940.56 4,597,940.56 0.00 LLC/4,600,000 PAR VALUE AT 99.95305565 01/17/2018 4042BOBF5 PURCHASED PAR VALUE OF HSBC HOLDINGS PLC 2.650 h 1/05/22/HILLTOP 3,000.000.0000 0.990880 -2,972,640.00 2,972,640.00 0.00 SECURITIES INC./3,000,000 PAR VALUE AT 99.088 Y 01/17/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,000,000.0000 1.000000 -1,000,000.00 1,000,000.00 0.00 01/18/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,262.5400 1.000000 -1,262.54 1,262.54 0.00 01/18/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVI-OB FD CL Z 649.725.0000 1.000000 .649,725.00 649,725.00 0.00 01/19/2018 313385SUl PURCHASED PAR VALUE OF F H L B DISC NTS 2107/18/MIZUHO SECURITIES 1,300,000.0000 0.999303 -1,299,094.33 1,299,094.33 0.00 USA FXD INC/1,300,000 PAR VALUE AT 99.93033308% 01/19/2018 313385SW7 PURCHASED PAR VALUE OF F H L B DISC NTS 2/09/18/GOLDMAN SACHS 8 7,400,000.0000 0.999236 -7,394,345.17 7,394,345.17 0.00 CO.LLC/7,400,000 PAR VALUE AT 99.92358338 01/19/2018 313385TH9 PURCHASED PAR VALUE OF F H L B DISC NTS 2/20/18/BONY/TORONTO 1,100,000.0000 0.998809 -1,098,689.78 1,098,689.78 0.00 DOMINION SECURITI/1,100,000 PAR VALUE AT 99.88088909 k 01/19/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 12,100,000.0000 1.000000 -12,100,000.00 12,100,000.00 0.00 01/22/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVI-OB FD CL Z 168.377.1600 1.000000 -168,377.16 168,377.16 0.00 01/22/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 67,243.5400 1.000000 -67,243.54 67,243.54 0.00 01/23/2018 313385SL1 PURCHASED PAR VALUE OF F H L B DISC NTS 1/30/18 NEFFERIES 3,300,000.0000 0.999751 -3,299,178.67 3,299,178.67 0.00 LLC/3,300,000 PAR VALUE AT 99.97511121 01/23/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 11,500.000.0000 1.000000 -11,500,000.00 11,500,000.00 0.00 1 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/23/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 8,022,500.0000 1.000000 -8,022,500.00 8,022,500.00 0.00 01/24/2018 313385SK3 PURCHASED PAR VALUE OF F H L B DISC NTS 1/29118/J.P.MORGAN 15,000,000.0000 0.999819 -14,997,291.67 14,997,291.67 0.00 SECURITIES LLC/15,000,000 PAR VALUE AT 99.98194447% 01/24/2018 313385TJ5 PURCHASED PAR VALUE OF F H L B DISC NTS 2/21/18/GOLDMAN SACHS& 7,500,000.0000 0.998975 -7,492,311.67 7,492,311.67 0.00 CO.LLC/7,500,000 PAR VALUE AT 99.89748893% 01/24/2018 95000U2B8 PURCHASED PAR VALUE OF WELLS FARGO MTN 2.625% 7/22122/MERRILL 1,500,000.0000 0.984130 -1,476,195.00 1,476,195.00 0.00 LYNCH,PIERCE,FENNER&/1,500,000 PAR VALUE AT 98.413% 01/24/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,006,292.0000 1.000000 -1,006,292.00 1,006,292.00 0.00 01/24/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 4,748,586.2500 1.000000 4,748,586.25 4,748,586.25 0.00 01/25/2018 45950KCMO PURCHASED PAR VALUE OF INTL BK M T N 2.250% 1/25/21/J.P.MORGAN 2,970,000.0000 0.997060 -2,961,268.20 2,961,268.20 0.00 SECURITIES LLC/2,970,000 PAR VALUE AT 99.706% 01/2512018 912828N30 PURCHASED PAR VALUE OF U S TREASURY NT 2.125%12/31/22/J.P.MORGAN 5,000,000.0000 0.985313 -4,926,562.50 4,926,562.50 0.00 SECURITIES LLC/5,000,000 PAR VALUE AT 98.53125% 01/25/2018 95000U2B8 PURCHASED PAR VALUE OF WELLS FARGO MTN 2.625% 7122122/MERRILL 1,500,000.0000 0.985550 -1,478,325.00 1,478,325.00 0.00 LYNCH,PIERCE,FENNER&/1,500,000 PAR VALUE AT 98.555% 01/25/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 5,655.0000 1.000000 -5,655.00 5,655.00 0.00 01/25/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 880,229.6700 1.000000 -880,229.67 880,229.67 0.00 01/25/2018 31846VS67 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 14,642.6400 1.000000 -14,642.64 14,642.64 0.00 01/26/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVi OB FD CL Z 100.000.0000 1.000000 -100,000.00 100,000.00 0.00 01/29/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 15,000,000.0000 1.000000 -15,000,000.00 15,000,000.00 0.00 01/29/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 77,000.0000 1.000000 -77,000.00 77,000.00 0.00 01/30/2018 313385TD8 PURCHASED PAR VALUE OF F H L B DISC NTS 2/16/18/BMO CAPITAL 13,000,000.0000 0.999386 -12,992,019.44 12,992,019.44 0.00 MARKETS CORPBONDS/13,000,000 PAR VALUE AT 99.93861108% 01/30/2018 313385TDB PURCHASED PAR VALUE OF F H L B DISC NTS 2/16118/BMO CAPITAL 5,000,000.0000 0.999386 4,996,930.56 4,996,930.56 0.00 MARKETS CORPIBONDS/5,000,000 PAR VALUE AT 99.9386112% 01/30/2018 912796PL7 PURCHASED PAR VALUE OF U S TREASURY BILL 6/14118/BMO CAPITAL 10,000,000.0000 0.994523 -9,945,231.25 9,945,231.25 0.00 MARKETS CORP/BONDS/10,000,000 PAR VALUE AT 99.4523125% 01/3012018 912828568 PURCHASED PAR VALUE OF U$TREASURY NT 0,750% 7/31118/BMO CAPITAL 5,000,000.0000 0.995703 4,978,515.63 4,978,515.63 0.00 MARKETS CORPIBONDS/5,000,000 PAR VALUE AT 99.5703126% 01/31/2018 313385TP1 PURCHASED PAR VALUE OF F H L B DISC NTS 2126/18/NOMURA SECURITIES 7,500,000.0000 0.999054 -7,492,904.17 7,492,904.17 0.00 INTERNATIONN7,500,000 PAR VALUE AT 99.90538893% 01/31/2018 89238BAB8 PURCHASED PAR VALUE OF TOYOTA AUTO 2.100%10115/20/MITSUBISHI UFJ 5,170,000.0000 0.999898 -5,169,471.63 5,169,471.63 0.00 SECURITIES USA/5,170,000 PAR VALUE AT 99.98978008% 01/31/2018 912796PL7 PURCHASED PAR VALUE OF U S TREASURY BILL 6/14/18/J.P.MORGAN 5,000,000.0000 0.994510 4,972,548.61 4,972,548.61 0.00 SECURITIES LLC/5,000,000 PAR VALUE AT 99.4509722% 01/31/2018 912828568 PURCHASED PAR VALUE OF U$TREASURY NT 0,750% 7/31118/BMO CAPITAL 5,000,000.0000 0.995703 4,978,515.63 4,978,515.63 0.00 MARKETS CORPIBONDS/5,000,000 PAR VALUE AT 99.5703126% 2 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Unift Price Net Cash Amt Cost Gain/Loss 01/31/2018 90331HNL3 PURCHASED PAR VALUE OF US BANK NA 2.850% 1/23/23/US BANCORP 5,000,000.0000 0.996320 4,981,600.00 4,981,600.00 0.00 INVESTMENTS INC./5,000,000 PAR VALUE AT 99.632% 01/31/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 56,668,750.0000 1.000000 -56,668,750.00 56,668,750.00 0.00 TOTAL ACQUISITIONS 276,943,257.7500 -276,602,707.22 276,602,707.22 0.00 DISPOSITIONS 01/08/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OR FD CLZ -999203.3300 1.000000 999,203.33 -999,203.33 0.00 01/17/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z 4,597,840.5600 1.000000 4,597,840.56 -4,597,940.56 0,00 01/17/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -2,975,290.0000 1.000000 2,975,290.00 -2,975,290.00 0.00 01/19/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -9,792,129.2800 1.000000 9,792,129.28 -9,792,129.28 0.00 01/23/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -3,299,178.6700 1.000000 3,299,178.67 -3,299,178.67 0.00 01/24/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -14,997,291.6700 1.000000 14,997,291.67 -14,997,291.67 0.00 01/24/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -7,492,311.6700 1.000000 7,492,311.67 -7,492,311.67 0.00 01/25/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -9,346,314.3400 1.000000 9,346,314.34 -9,346,314.34 0.00 01/30/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z 4,996,930.5600 1.000000 4,996,930.56 4,996,930.56 0.00 01/30/2018 31846V567 SOLD UNITS OF FIRST AM GOUT OB FD CL Z -2,142,394.9800 1.000000 2,142,394.98 -2,142,394.98 0.00 01/30/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -12,992.019.4400 1.000000 12,992,019.44 -12,992,019.44 0.00 01/31/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -70,443,968.4100 1.000000 70,443,968.41 -70,443,968.41 0.00 01/31/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -9,961,738.3000 1.000000 9,961,738.30 -9,961,738.30 0.00 01/16/2018 31348SWZ3 PAID DOWN PAR VALUE OF F H L M C#786064 2.762% 1101/28 DECEMBER -16.8100 0.000000 16.81 -16.40 0.41 FHLMC DUE 1/15118 01/16/2018 3133TCE95 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 3.298% 8/15/32 -1,636.8000 0.000000 1,636.80 -1,638.51 (1.71) 01/16/2018 3837H4NX9 PAID DOWN PAR VALUE OF G N M A GTD REMIC 1.764% 2J16/30 -936.1800 16.590997 936.18 -936.18 0.00 01/16/2018 43814QAC2 PAID DOWN PAR VALUE OF HONDA AUTO 1.390% 4115120 -131,569.4200 0.118053 131,569.42 -131,566.87 2.55 01/161201847788NAB4 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.090% 2115119 -295,490.0700 0.000000 295,490.07 -295,472.05 18.02 01/16/2018 47788MAC4 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.360% 4/15120 -201,572.7400 0.000000 201,572.74 -201,541.01 31.73 01/16/201847787XAB3 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.500%10/15/19 -174,059.4700 0.000000 174,059.47 -174,05B.77 0.70 01/16/201865478WAB1 PAID DOWN PAR VALUE OF NISSAN AUTO 1.070% 5115119 -138,703.6200 0.000000 138,703.62 -138,698.16 5.46 01/16/2018 654747ABO PAID DOWN PAR VALUE OF NISSAN AUTO 1.470% 1115/20 -104,493.5600 0.000000 104,493.56 -104,493.03 0.53 01/16/201889236WAC2 PAID DOWN PAR VALUE OF TOVOTA AUTO 1.120% 2/15/19 -139,837.9100 0.111073 139,837.91 -139,816.77 21.14 01/22/2018 36225CAZ9 PAID DOWN PAR VALUE OF G N M A I I#OB0023 2.250%12/20/26 DECEMBER GNMA -195.8000 0.000000 195.80 -199.03 (3.23) DUE 1120118 01/222018 36225CC20 PAID DOWN PAR VALUE OF G N M A 119080088 2.625% 6/20127 DECEMBER GNMA -222.3900 0.000000 222.39 -227.25 (4.86) DUE 1120/18 30111 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/22/2018 36225CNM4 PAID DOWN PAR VALUE OF G N M A 11#080395 2.625% 4/20130 DECEMBER GNMA -1194000 0.000000 11940 -118.32 1.08 DUE 1120118 01/222018 36225CN28 PAID DOWN PAR VALUE OF G N M A 119080408 2.625% 5/20130 DECEMBER GNMA 421.1400 0.000000 421.14 416.86 4.28 DUE 1120118 01/22/2018 36225DCB8 PAID DOWN PAR VALUE OF G N M A 11#080965 2.750% 7/20134 DECEMBER GNMA -859.5000 0.000000 859.50 -858.96 0.54 DUE 1120/18 01/22/2018 43814TAB8 PAID DOWN PAR VALUE OF HONDA AUTO 1.420% 7122119 -152,798.9100 4.322210 152,798.91 -152,795.26 3.65 01/25/2018 31394JY35 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 6.500% 9/25/43 -6,701.7500 0.000000 6,701.75 -7,589.73 (887.98) 01/25/2018 31371NUC7 PAID DOWN PAR VALUE OF F N M A#257179 4.500% 4/01128 DECEMBER FNMA -157.7800 0.000000 157.78 -166.87 (9.09) DUE 1125118 01/25/2018 31376KT22 PAID DOWN PAR VALUE OF F N M A#357969 5.000% 9/01135 DECEMBER FNMA -3,492.1500 0.000000 3,492.15 -3,754.06 (261.91) DUE 1125118 01/25/2018 31381PDA3 PAID DOWN PAR VALUE OFF N M A#466397 3.51332%11/01/20 DECEMBER -642.4800 0.000000 642.48 -628.58 13.90 FNMADUE 1/25/18 01/25/2018 31403DJZ3 PAID DOWN PAR VALUE OFF N M A#745580 5.000% 6101136 DECEMBER FNMA -2.149.9900 0.000000 2,149.99 -2,311.24 (161.25) DUE 1125118 01/25/2018 31403GXF4 PAID DOWN PAR VALUE OF F N M A#748678 5.000%10/01/33 DECEMBER FNMA -14.5500 0.000000 14.55 -15.64 (1.09) DUE 1125/18 01/25/2018 31406PQYB PAID DOWN PAR VALUE OF F N M A#815971 5.000% 3/01135 DECEMBER FNMA -3.931.5500 0.000000 3,931.55 .4,226.42 (294.87) DUE 1125118 01/25/2018 31406XWT5 PAID DOWN PAR VALUE OF F N M A#823358 3.336% 2/01135 DECEMBER FNMA -482.0400 0.000000 482.04 -478.27 3.77 DUE 1125118 01/25/2018 31407BXH7 PAID DOWN PAR VALUE OF F N M A#826080 5.000% 7/01135 DECEMBER FNMA -89.3100 0.000000 89.31 .96.01 (6.70) DUE 1125118 01/25/2018 31410F4V4 PAID DOWN PAR VALUE OF F N M A#888336 5.000% 7/01136 DECEMBER FNMA -3,414.8200 0.000000 3,414.82 -3,670.93 (256.11) DUE 1125118 01/25/2018 3138EG6F6 PAID DOWN PAR VALUE OF F N M A#AL0869 4.500% 6101129 DECEMBER FNMA -309.4500 0.000000 309.45 -327.27 (17.82) DUE 1125118 01/25/2018 31417YAY3 PAID DOWN PAR VALUE OF F N M A#MA0022 4.500% 4101/29 DECEMBER FNMA -490.9800 0.000000 490.98 -519.26 (28.28) DUE 1125/18 01/25/2018 31397QREO PAID DOWN PAR VALUE OF F N M A GTD REMIC 1.113% 2/25/41 -5,357.9400 0.000000 5,357.94 -5,356.27 1.67 01/25/2018 78445JAA5 PAID DOWN PAR VALUE OF S L M A 2.93114% 4/25/23 -1,144.9000 0.000000 1,144.90 -1,140.26 4.64 01/11/2018 313385RR9 MATURED PAR VALUE OF F H L B DISC NTS 1/11/184,750,000 PAR VALUE AT -Q750,000.0000 1.000000 4,746,648.61 A,746,648.61 0.00 100% 01/11/2018 313385RR9 MATURED PAR VALUE OF F H L B DISC NTS 1/111184,750,000 PAR VALUE AT 4,750,000.0000 1.000000 4,746,648.61 4,746,648.61 0.00 100% 01/12/2018 3137EADN6 MATURED PAR VALUE OF F H L M C M T N 0.750% 1/12118 4,000,000 PAR VALUE -Q000,000.0000 1.000000 4,000,000.00 -3,974,000.00 26,000.00 AT 100% 4 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/16/2018 40428HPH9 MATURED PAR VALUE OF HSBC USA INC 1.625% 1/16/181,000,000 PAR VALUE -1,000,000.0000 1.000000 1,000,000.00 -1,000,340.00 (340.00) AT 100% 01/16/2018 40428HPH9 MATURED PAR VALUE OF HSBC USA INC 1.625% 1/16/18 3,000,000 PAR VALUE -3,000.000.0000 1.000000 3,000,000.00 -3,003,290.00 (3,290.00) AT 100% 01/16/2018 24422EST7 MATURED PAR VALUE OF JOHN DEERE M T N 1.350% 1/16/18 1,000,000 PAR -1,000,000.0000 1.000000 1,000,000.00 -999,619.50 380.50 VALUE AT 100% 01/16/2018 46625HGYO MATURED PAR VALUE OF JP MORGAN CHASE&CO 6.000% 1115/181,000.000 PAR -1,000,000.0000 1.000000 1,000,000.00 -1,032,600.00 (32,600.00) VALUE AT 100% 01/16/2018 912828H37 MATURED PAR VALUE OF U S TREASURY NT 0.875% 1/15/18 10,500,000 PAR -10,500,000.0000 1.000000 10,500,000.00 -10,493,983.27 6,016.73 VALUE AT 100% 01/17/2018 313385RX6 MATURED PAR VALUE OF F H L B DISC NTS 1/17118 1,000,000 PAR VALUE AT -1,000,000.0000 1.000000 999,075.56 -999,075.56 0.00 100% 01/18/2018 38141GFG4 MATURED PAR VALUE OF GOLDMAN SACHS GP 5.950% 1/18/18600,000 PAR -600,000.0000 1.000000 600,000.00 -692,806.00 (92,806.00) VALUE AT 100% 01/19/2018 313385RZ1 MATURED PAR VALUE OF F H L B DISC NTS 1/19118 12,100,000 PAR VALUE AT -12,100.000.0000 1.000000 12,089,459.00 -12,089,459.00 0.00 100% 01/23/2018 6937213AP5 MATURED PAR VALUE OF PACCAR FINANCIAL CORP C P 1/23/18 1,500,000 PAR -1,500,000.0000 1.000000 1,497,643.75 -1,497,643.75 0.00 VALUE AT 100% 01/23/2018 880590SD7 MATURED PAR VALUE OF T V A DISC NTS 1/23/1810,000,000 PAR VALUE AT -10,000.000.0000 1.000000 9,988,358.33 -9,988,358.33 0.00 100% 01/23/2018 880590SD7 MATURED PAR VALUE OF T V A DISC NTS 1/23/18 8,000,000 PAR VALUE AT -8,000,000.0000 1.000000 7,990,686.67 -7,990,686.67 0.00 100% 01/24/2018 313385SE7 MATURED PAR VALUE OF F H L B DISC NTS 1/24/18 6,225,000 PAR VALUE AT -6,225.000.0000 1.000000 6,219,094.03 -6,219,094.03 0.00 100% 01/25/2018 06406HCE7 MATURED PAR VALUE OF BANK OF NY MTN 1.300% 1/25/18870,000 PAR VALUE -870,000.0000 1.000000 870,000.00 -869,364.90 635.10 AT 100% 01/29/2018 313385SK3 MATURED PAR VALUE OF F H L B DISC NTS 1/29118 15,000,000 PAR VALUE AT -15,000.000.0000 1.000000 14,997,291.67 -14,997,291.67 0.00 100% 01/30/2018 313385SL1 MATURED PAR VALUE OF F H L B DISC NTS 1/30/18 3,300,000 PAR VALUE AT -3,300,000.0000 1.000000 3,299,178.67 -3,299,178.67 0.00 100% 01/30/2018 313385SL1 MATURED PAR VALUE OF F H L B DISC NTS 1/30/18 3,600,000 PAR VALUE AT -3,600.000.0000 1.000000 3,594,711.00 -3,594,711.00 0.00 100% 01/30/2018 313385SL1 MATURED PAR VALUE OF F H L B DISC NTS 1/30/184,600,000 PAR VALUE AT 4,600,000.0000 1.000000 4,597,840.56 4,597,840.56 0.00 100% 01/30/2018 89233HAW4 MATURED PAR VALUE OF TOYOTA MOTOR CREDIT CO C P 1/30/181,300,000 PAR -1,300.000.0000 1.000000 1,296,197.50 -1,296,197.50 0.00 VALUE AT 100% 01/31/2018 06538CAX9 MATURED PAR VALUE OF BANK OF TOKYO MITSUBIS C P 1/31/18 2,000,000 PAR -2,000,000.0000 1.000000 1,996,355.56 -1,996,355.56 0.00 VALUE AT 100% 5 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/31/2018 313385SM9 MATURED PAR VALUE OF F H L B DISC NTS 1/31/1819,500,000 PAR VALUE AT -19,500,000.0000 1.000000 19,469,76744 -19,469,767.44 0.00 100% 01/31/2018 912828P20 MATURED PAR VALUE OF US TREASURY NT 0.750% 1/31118 35,000.000 PAR .35,000.000.0000 1.000000 35,000,000.00 -34,963,766.76 36,233.24 VALUE AT 100% 01/242018 69353REJ3 FULL CALL-PAR PAR VALUE OF PNC BANK NA MTN 1.500% 2/23/18/CALLS/ -1,000,000.0000 1.000000 1,000,000.00 (1,000,320.00) (320.00) TAL DISPOSITIONS 10,906,881.58 -570,968,]92.84 -61,911.2600 HER TRANSACTIONS 01/112018912828WUO BOOK VALUE OF U S TREASURY I P S 0.125% 7/15124 ADJUSTED BY.104.00 UNITS 0.0000 0.000000 0.00 0.00 0.00 DECREASE TO ADJUST FOR CHANGE IN CPI 0129/2018 912828WUO BOOK VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 104.00 UNITS 0.0000 0.000000 0.00 0.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 01/31/2018 CASH DISBURSEMENT PAID TO UNION BANK OUTGOING DOMESTIC WIRE PER 0.0000 0.000000 (53,000.000.00) 0.00 0.00 DIR DTD 1/29/18 01/112018 CASH RECEIPT RECD FROM UNION BANKA/C XX%XXX3230 INCOMING WIRES DUE 0.0000 0.000000 17,500,000.00 0.00 0.00 Dec 2201712:WIRE REC'D 1111/18 01/112018 912828WUO FED BASIS OF U S TREASURY I P S 0.125% 7115124 ADJUSTED BY.104.00 UNITS 0.0000 0.000000 0.00 (104.00) 0.00 DECREASE TO ADJUST FOR CHANGE IN CPI 0129/2018 912828WUO FED BASIS OF U S TREASURY I PS 0.125% 7/15/24 ADJUSTED BY 104.00 UNITS 0.0000 0.000000 0.00 104.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 01/022018 073902CD8 INTEREST EARNED ON BEAR STEARNS CO INC 4.650% 7102/18$1 PV ON 0.0000 0.000000 74,400.00 0.00 0.00 3200000.0000 SHARES DUE 1/22018 01/02/2018 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 0.0000 0.000000 12,771.79 0.00 0.00 12/31/2017 INTEREST FROM 12/1/17 TO 12/31/17 01/02/2018 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 0.0000 0.000000 23.454.06 0.00 0.00 12/31/2017 INTEREST FROM 12/1/17 TO 12/31/17 01/02/2018 912828WS5 INTEREST EARNED ON U S TREASURY NT 1.625% 6/30/19$1 PV ON 2000000.0000 0.0000 0.000000 16,250.00 0.00 0.00 SHARES DUE 12/31/2017 01/022018 912828XW5 INTEREST EARNED ON U S TREASURY NT 1.750% W3022$1 PV ON 5000000.0000 0.0000 0.000000 43.750.00 0.00 0.00 SHARES DUE 12/312017 01/05/2018 3135GOS38 INTEREST EARNED ON F N M A 2.000% 1/05122$1 PV ON 3000000.0000 0.0000 0.000000 30,000.00 0.00 0.00 SHARES DUE 1/5/2018 01/09/2018 36962G7M0 INTEREST EARNED ON GENERAL ELEC CA MTN 2.200% 1/0920$1 PV ON 0.0000 0.000000 55,000.00 0.00 0.00 5000000.0000 SHARES DUE 1/92018 01/11/2018 313385RR9 INTEREST EARNED ON F H L B DISC NTS 1/11/18$1 PV ON 4750000.0000 0.0000 0.000000 3,351.39 0.00 0.00 SHARES DUE 1/11120184.750,000 PAR VALUE AT 100% 01/112018 313385RR9 INTEREST EARNED ON F H L B DISC NTS 1/11/18$1 PV ON 4750000.0000 0.0000 0.000000 3.351.39 0.00 0.00 SHARES DUE 1/11120184,750,000 PAR VALUE AT 100% 6 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/12/2018 3137EADN6 INTEREST EARNED ON F H L M C M T N 0.750% 1/12118$1 PV ON 4000000.0000 0.0000 0.000000 15,000.00 0.00 0.00 SHARES DUE 1/12/2018 01/16/2018 31348SWZ3 INTEREST EARNED ON F H L M C#786064 2.762% 1/01128$1 PV ON 5.0800 SHARES 0.0000 0.000000 5.08 0.00 0.00 DUE 1/15/2018 NOVEMBER FHLMC DUE 1/15118 01/16/2018 3133TCE95 INTEREST EARNED ON F H L M C MLTCL MTG 3.298% 8115/32$1 PV ON 69.7100 0.0000 0.000000 69.71 0.00 0.00 SHARES DUE 1/15/2018$0.00275/PV ON 25,362.80 PV DUE 1/15/18 01/16/2018 3837H4NX9 INTEREST EARNED ON G N M A GTD REMIC 1.764% 2/16130$1 PV ON 33.1200 0.0000 0.000000 33.12 0.00 0.00 SHARES DUE 1116/2018$0.001661PV ON 19,965.25 PV DUE 1116118 01/16/2018 43814OAC2 INTEREST EARNED ON HONDA AUTO 1.390% 4/15/20$1 PV ON 2043.5900 0.0000 0.000000 2,043.59 0.00 0.00 SHARES DUE 1/15/2018$0.00116/PV ON 1,764,246.46 PV DUE 1/15118 01/16/2018 40428HPH9 INTEREST EARNED ON HSBC USA INC 1.625% 1116118$1 PV ON 1000000.0000 0.0000 0.000000 8.125.00 0.00 0.00 SHARES DUE 1/16/2018 01/16/2018 40428HPH9 INTEREST EARNED ON HSBC USA INC 1.625% 1/16118$1 PV ON 3000000.0000 0.0000 0.000000 24,375.00 0.00 0.00 SHARES DUE 1/1612018 01/16/2018 24422EST7 INTEREST EARNED ON JOHN DEERE M T N 1.350% 1/16/18$1 PV ON 1000000.0000 0.0000 0.000000 6.750.00 0.00 0.00 SHARES DUE 1/16/2018 INTEREST ON MATURITY 1/16118 01/16/2018 47788NAB4 INTEREST EARNED ON JOHN DEERE OWNER 1.090% 2115/19$1 PV ON 711.0800 0.0000 0.000000 711.08 0.00 0.00 SHARES DUE 1/15/2018$0.00091/PV ON 782,842.67 PV DUE 1115/18 01/16/2018 47788MAC4 INTEREST EARNED ON JOHN DEERE OWNER 1.360% 4/15/20$1 PV ON 2533.4500 0.0000 0.000000 2.533.45 0.00 0.00 SHARES DUE 1115/2018$0.00113/PV ON 2,235,401.88 PV DUE 1/15118 01/16/2018 47787XAB3 INTEREST EARNED ON JOHN DEERE OWNER 1.500%10/15/19$1 PV ON 1748.9500 0.0000 0.000000 1,748.95 0.00 0.00 SHARES DUE 1/15/2018$0.00125/PV ON 1,399,163.49 PV DUE 1/15118 01/16/2018 47788BABO INTEREST EARNED ON JOHN DEERE OWNER 1.590% 4/15/20$1 PV ON 1272.0000 0.0000 0.000000 1.272.00 0.00 0.00 SHARES DUE 1/15/2018$0.00133/PV ON 960,000.00 PV DUE 1/15/18 01/16/2018 47788BAD6 INTEREST EARNED ON JOHN DEERE OWNER 1.820%10/15/21 $1 PV ON 1023.7500 0.0000 0.000000 1,023.75 0.00 0.00 SHARES DUE 1/15/2018$0.001521PV ON 675,000.00 PV DUE 1115/18 01/16/2018 46625HGYO INTEREST EARNED ON JP MORGAN CHASE 8 CO 6.000% 1/15/18$1 PV ON 0.0000 0.000000 30,000.00 0.00 0.00 1000000.0000 SHARES DUE 1/1 512 01 8 01/16/2018 65478WAB1 INTEREST EARNED ON NISSAN AUTO 1.070% 5115/19$1 PV ON 640.7600 0.0000 0.000000 640.76 0.00 0.00 SHARES DUE 1/15/2018$0.000891PV ON 718,603.81 PV DUE 1115/18 01/16/2018 654747ABO INTEREST EARNED ON NISSAN AUTO 1.470% 1/15120$1 PV ON 1532.0700 0.0000 0.000000 1.532.07 0.00 0.00 SHARES DUE 1115/2018$0.00123/PV ON 1,250,667.51 PV DUE 1/15118 01/16/2018 89236WAC2 INTEREST EARNED ON TOYOTA AUTO 1.120% 2/15/19$1 PV ON 498.0600 0.0000 0.000000 498.06 0.00 0.00 SHARES DUE 1/15/2018$0.00093/PV ON 533,629.54 PV DUE 1115/18 01/16/2018 912828W UO INTEREST EARNED ON U S TREASURY I P S 0.125% 7/15/24$1 PV ON 0.0000 0.000000 6.752.40 0.00 0.00 10803832.0000 SHARES DUE 1/15/2018 01/16/2018 912828H37 INTEREST EARNED ON U S TREASURY NT 0.875% 1/15/18$1 PV ON 0.0000 0.000000 45,937.50 0.00 0.00 10500000.0000 SHARES DUE 1/15/2018 7 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/17/2018 313385RX6 INTEREST EARNED ON F H L B DISC NITS 1/17/18$1 PV ON 1000000.0000 0.0000 0.000000 92444 0.00 0.00 SHARES DUE 1/17/2018 1.000,000 PAR VALUE AT 100% 01/18/2018 38141GFG4 INTEREST EARNED ON GOLDMAN SACHS GP 5.950% 1/18/18$1 PV ON 0.0000 0.000000 17,850.00 0.00 0.00 600000.0000 SHARES DUE 1/18/2018 01/18/2018 43814PAB6 INTEREST EARNED ON HONDA AUTO 1.570% 1/21/20$1 PV ON 1262.5400 0.0000 0.000000 1,262.54 0.00 0.00 SHARES DUE 1/18/2018$0.00131/PV ON 965,000.00 PV DUE 1118/18 01/18/2018 4581XOCW6 INTEREST EARNED ON INTER AMER DEV BK 2.125% 1/18122$1 PV ON 0.0000 0.000000 31,875.00 0.00 0.00 3000000.0000 SHARES DUE 1/18/2018 01/19/2018 313385RZ1 INTEREST EARNED ON F H L B DISC NITS 1/19/18$1 PV ON 12100000.0000 0.0000 0.000000 10,541.00 0.00 0.00 SHARES DUE 1/19/2018 12,100,000 PAR VALUE AT 100% 01/22/2018 36225CAZ9 INTEREST EARNED ON G N M A 11#080023 2.250%12/20/26$1 PV ON 40.0900 0.0000 0.000000 40.09 0.00 0.00 SHARES DUE 1120/2018 DECEMBER GNMA DUE 1120/18 01/22/2018 36225CC20 INTEREST EARNED ON G N M A 11#080088 2.625% 6/20/27$1 PV ON 54.1700 0.0000 0.000000 54.17 0.00 0.00 SHARES DUE 1/20/2018 DECEMBER GNMA DUE 1/20/18 01/22/2018 36225CNM4 INTEREST EARNED ON G N M A 11#0803952.625% 4/20130$1 PV ON 19.2600 0.0000 0.000000 19.26 0.00 0.00 SHARES DUE 1/20/2018 DECEMBER GNMA DUE 1/20/18 01/22/2018 36225CN28 INTEREST EARNED ON G N M A 11#080408 2.625% 5/20/30$1 PV ON 154.6200 0.0000 0.000000 154.62 0.00 0.00 SHARES DUE 1/20/2018 DECEMBER GNMA DUE 1/20/18 01/22/2018 36225DCBS INTEREST EARNED ON G N M A 11#0809652.750% 7/20/34$1 PV ON 157.1700 0.0000 0.000000 157.17 0.00 0.00 SHARES DUE 1/20/2018 DECEMBER GNMA DUE 1120/18 01/22/2018 43814TAB8 INTEREST EARNED ON HONDA AUTO 1.420% 7/22/19$1 PV ON 1503.2500 0.0000 0.000000 1,503.25 0.00 0.00 SHARES DUE 1/21/2018$0.00118/PV ON 1,270,353.67 PV DUE 1121118 01/22/2018 45950KCJ7 INTEREST EARNED ON INTL FINANCE CORP 1.125% 7/20/21 $1 PV ON 0.0000 0.000000 14,075.00 0.00 0.00 2500000.0000 SHARES DUE 1/20/2018 01/22/2018 94974BGM6 INTEREST EARNED ON WELLS FARGO CO MTN 2.600% 7/22/20$1 PV ON 0.0000 0.000000 65,000.00 0.00 0.00 5000000.0000 SHARES DUE 1/22/2018 01/23/2018 46625HKA7 INTEREST EARNED ON JPMORGAN CHASE CO 2.250% 1/23/20$1 PV ON 0.0000 0.000000 22,500.00 0.00 0.00 2000000.0000 SHARES DUE 1/2 312 01 8 01/23/2018 69372BAP5 INTEREST EARNED ON PACCAR FINANCIAL CORP C P 1/23/18$1 PV ON 0.0000 0.000000 2,356.25 0.00 0.00 1500000.0000 SHARES DUE 1/23/2018 1.500,000 PAR VALUE AT 100% 01/23/2018 880590SD7 INTEREST EARNED ON T V A DISC NITS 1123118$1 PV ON 10000000.0000 0.0000 0.000000 11.641.67 0.00 0.00 SHARES DUE 1/23/2018 10,000,000 PAR VALUE AT 100% 01/23/2018 880590SD7 INTEREST EARNED ON T V A DISC NITS 1/23118$1 PV ON 8000000.0000 0.0000 0.000000 9,313.33 0.00 0.00 SHARES DUE 1/23/2018 8.000,000 PAR VALUE AT 100% 01/24/2018 313385SE7 INTEREST EARNED ON F H L B DISC NITS 1/24/18$1 PV ON 6225000.0000 0.0000 0.000000 5.905.97 0.00 0.00 SHARES DUE 1/24120186,225,000 PAR VALUE AT 100% 01/24/2018 69353REJ3 INTEREST EARNED ON PNC BANK NA MTN 1.500% 2/23/18$1 PV ON 0.0000 0.000000 6,291.67 0.00 0.00 1000000.0000 SHARES DUE 1/24/2018 ACCRUED INTEREST ON 1/24/2018 FULL CALL 8 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/25/2018 03215PFN4 INTEREST EARNED ON AMRESCO 2.49213% 625/29$1 PV ON 277.7500 0.0000 0.000000 27775 0.00 0.00 SHARES DUE 1/25/2018$0.00208/PV ON 133,743.29 PV DUE 1125/18 01/252018 06406HCE7 INTEREST EARNED ON BANK OF NY MTN 1.300% 125118$1 PV ON 870000.0000 0.0000 0.000000 5.655.00 0.00 0.00 SHARES DUE 1/25/2018 INTEREST ON MATURITY 125118 0125/2018 808513AJ4 INTEREST EARNED ON CHARLES SCHWAB CORP 2.200% 7/25118$1 PV ON 0.0000 0.000000 10,230.00 0.00 0.00 930000.0000 SHARES DUE 1/25/2018 0125/2018 31398VJ98 INTEREST EARNED ON F H L M C MLTCL MTG 4.251% 1125120$1 PV ON 3188.2500 0.0000 0.000000 3.188.25 0.00 0.00 SHARES DUE 1/25/2018$0.00354/PV ON 900,000.00 PV DUE 125/18 0125/2018 31394JY35 INTEREST EARNED ON F H L M C MLTCL MTG 6.500% 9125/43$1 PV ON 4752.6400 0.0000 0.000000 4,752.64 0.00 0.00 SHARES DUE 1/25/2018$0.00542/PV ON 877,411.70 PV DUE 1125/18 01252018 31371NUC7 INTEREST EARNED ON F N M A#257179 4.500% 4/0128$1 PV ON 78.3400 0.0000 0.000000 78.34 0.00 0.00 SHARES DUE 1/25/2018 DECEMBER FNMA DUE 1125118 0125/2018 31376KT22 INTEREST EARNED ON F N M A#357969 5.000% 9/01/35$1 PV ON 564.3100 0.0000 0.000000 564.31 0.00 0.00 SHARES DUE 1/25/2018 DECEMBER FNMA DUE 1/25/18 0125/2018 31381 PDA3 INTEREST EARNED ON F N M A#466397 3.51332%11/0120$1 PV ON 1030.5900 0.0000 0.000000 1.030.59 0.00 0.00 SHARES DUE 1125/2018 DECEMBER FNMA DUE 1125118 0125/2018 31403DJZ3 INTEREST EARNED ON F N M A#745580 5.000% 6/01/36$1 PV ON 544.3800 0.0000 0.000000 544.38 0.00 0.00 SHARES DUE 1/2 512 01 8 DECEMBER FNMA DUE 1/25/18 01252018 31403GXF4 INTEREST EARNED ON F N M A#748678 5.000%10/01/33$1 PV ON 14.3300 0.0000 0.000000 14.33 0.00 0.00 SHARES DUE 1125/2018 DECEMBER FNMA DUE 1125118 0125/2018 31406PQYB INTEREST EARNED ON F N M A#815971 5.000% 3/01/35$1 PV ON 940.3800 0.0000 0.000000 940.38 0.00 0.00 SHARES DUE 1/25/2018 DECEMBER FNMA DUE 1/25/18 01252018 31406XWT5 INTEREST EARNED ON F N M A#823358 3.336% 2/01135$1 PV ON 366.2300 0.0000 0.000000 366.23 0.00 0.00 SHARES DUE 1125/2018 DECEMBER FNMA DUE 1125118 0125/2018 31407BXH7 INTEREST EARNED ON F N M A#826080 5.000% 7/01/35$1 PV ON 102.7400 0.0000 0.000000 102.74 0.00 0.00 SHARES DUE 1/25/2018 DECEMBER FNMA DUE 1/25/18 01252018 31410F4V4 INTEREST EARNED ON F N M A#888336 5.000% 7/01136$1 PV ON 1056.2500 0.0000 0.000000 1.056.25 0.00 0.00 SHARES DUE 1/25/2018 DECEMBER FNMA DUE 1125118 0125/2018 3138EG6F6 INTEREST EARNED ON F N M A#AL0869 4.500% 6/01/29$1 PV ON 54.6600 0.0000 0.000000 54.66 0.00 0.00 SHARES DUE 1/25/2018 DECEMBER FNMA DUE 1/25/18 01252018 31417YAY3 INTEREST EARNED ON F N M A#MA0022 4.500% 4101129$1 PV ON 89.9900 0.0000 0.000000 89.99 0.00 0.00 SHARES DUE 1125/2018 DECEMBER FNMA DUE 1125118 0125/2018 31397OREO INTEREST EARNED ON F N M A GTD REMIC 1.113% 2/25/41 $1 PV ON 487.0900 0.0000 0.000000 487.09 0.00 0.00 SHARES DUE 1/25/2018$0.00186/PV ON 261,859.76 PV DUE 1125/18 01252018 78445JAA5 INTEREST EARNED ON S L M A 2.93114% 4/2523$1 PV ON 222.2200 SHARES 0.0000 0.000000 222.22 0.00 0.00 DUE 125/2018$0.00733/PV ON 30,325.61 PV DUE 1/25118 0126/2018 45905BFY4 INTEREST EARNED ON INTL BK 2.000% 126/22$1 PV ON 10000000.0000 0.0000 0.000000 100,000.00 0.00 0.00 SHARES DUE 1/26/2018 9 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/29/2018 313385SK3 INTEREST EARNED ON F H L B DISC NTS 1/29/18$1 PV ON 15000000.0000 0.0000 0.000000 2,708.33 0.00 0.00 SHARES DUE 1/29/2018 15,000,000 PAR VALUE AT 100% 01/29/2018 61747WAL3 INTEREST EARNED ON MORGAN STANLEY 5.500% 7128/21 $1 PV ON 0.0000 0.000000 77,000.00 0.00 0.00 2800000.0000 SHARES DUE 1/28/2018 01/30/2018 313385SL1 INTEREST EARNED ON F H L B DISC NTS 1/30/18$1 PV ON 3300000.0000 0.0000 0.000000 821.33 0.00 0.00 SHARES DUE 1/30/2018 3.300,000 PAR VALUE AT 100% 01/30/2018 313385SL1 INTEREST EARNED ON F H L B DISC NTS 1/30/18$1 PV ON 3600000.0000 0.0000 0.000000 5.289.00 0.00 0.00 SHARES DUE 1/30/2018 3,600,000 PAR VALUE AT 100% 01/30/2018 313385SL1 INTEREST EARNED ON F H L B DISC NTS 1/30/18$1 PV ON 4600000.0000 0.0000 0.000000 2,159.44 0.00 0.00 SHARES DUE 1/30120184.600,000 PAR VALUE AT 100% 01/30/2018 89233HAW4 INTEREST EARNED ON TOYOTA MOTOR CREDIT CO C P 1/30118$1 PV ON 0.0000 0.000000 3.802.50 0.00 0.00 1300000.0000 SHARES DUE 1/30/2018 1,300,000 PAR VALUE AT 100% 01/312018 06538CAX9 INTEREST EARNED ON BANK OF TOKYO MITSUBIS C P 1/31/18$1 PV ON 0.0000 0.000000 3,644.44 0.00 0.00 2000000.0000 SHARES DUE 1/31/2018 2.000,000 PAR VALUE AT 100% 01/312018 313385SM9 INTEREST EARNED ON F H L B DISC NTS 1/31/18$1 PV ON 19500000.0000 0.0000 0.000000 30.232.56 0.00 0.00 SHARES DUE 1/31/2018 19,500,000 PAR VALUE AT 100% 01/31/2018 912828P20 INTEREST EARNED ON U S TREASURY NT 0.750% 1/31/18$1 PV ON 0.0000 0.000000 131,250.00 0.00 0.00 35000000.0000 SHARES DUE 1/312018 01/312018 912828568 INTEREST EARNED ON U S TREASURY NT 0.750% 7/31/18$1 PV ON 0.0000 0.000000 37.500.00 0.00 0.00 10000000.0000 SHARES DUE 1/31/2018 01/31/2018 91282BN89 INTEREST EARNED ON U S TREASURY NT 1.375% 1/3121 $1 PV ON 6000000.0000 0.0000 0.000000 41,250.00 0.00 0.00 SHARES DUE 1/31/2018 01/312018 912828833 INTEREST EARNED ON U S TREASURY NT 1.500% 1/31/19$1 PV ON 0.0000 0.000000 82.500.00 0.00 0.00 11000000.0000 SHARES DUE 1/31/2018 01/31/2018 912828W W6 INTEREST EARNED ON U S TREASURY NT 1.625% 7/31/19$1 PV ON 5000000.0000 0.0000 0.000000 40,625.00 0.00 0.00 SHARES DUE 1/31/2018 01/312018 91282BV72 INTEREST EARNED ON U S TREASURY NT 1.875% 1/3122$1 PV ON 3000000.0000 0.0000 0.000000 28.125.00 0.00 0.00 SHARES DUE 1/31/2018 01/08/2018717081DWO PAID ACCRUED INTEREST ON PURCHASE OF PFIZER INC 1.200% 6/01/18 0.0000 0.000000 -1,233.33 0.00 0.00 01/17/2018 404280BF5 PAID ACCRUED INTEREST ON PURCHASE OF HSBC HOLDINGS PLC 2.650% 0.0000 0.000000 -2,650.00 0.00 0.00 1/05122 01/242018 950001.2138 PAID ACCRUED INTEREST ON PURCHASE OF WELLS FARGO MTN 2.625% 0.0000 0.000000 -218.75 0.00 0.00 7/22/22 0125/2018 912828N30 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 2.125%12/31/22 0.0000 0.000000 -7,337.71 0.00 0.00 01/252018 950001.2138 PAID ACCRUED INTEREST ON PURCHASE OF WELLS FARGO MTN 2.625% 0.0000 0.000000 -328.13 0.00 0.00 7/22/22 10 of 11 U.S. Bank Transaction History 01/01/2018 Thru 01/31/2018 PostDate CUSIPId Explanation Units Price Net Cash Amt Cost Gain/Loss 01/30/2018 912828568 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 0.750% 7/31/18 0.0000 0.000000 -18,648.10 0.00 0.00 01/31/2018 90331HNI-3 PAID ACCRUED INTEREST ON PURCHASE OF US BANK NA 2.850% 1/23123 0.0000 0.000000 -3,166.67 0.00 0.00 01/11/2018 912828WUO PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY-104.0000 UNITS -104.0000 0.000000 0.00 0.00 0.00 DECREASE TO ADJUST FOR CHANGE IN CPI 01/29/2018 912828WUO PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 104.0000 UNITS 104.0000 0.000000 0.00 0.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 01/11/2018 912828WUO STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY-104.00 UNITS 0.0000 0.000000 0.00 0,00 0.00 DECREASE TO ADJUST FOR CHANGE IN CPI 01/29/2018 912828WUO STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 104.00 UNITS 0.0000 0.000000 0.00 0.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI TOTAL OTHER TRANSACTIONS 0.0000 .34,30 0.00 0.00 11 of 11 OPERATIONS COMMITTEE Meeting Date TOBd.Ot Dir. 0 2 /0 711 8 oz/ze�ia AGENDA REPORT emNumber Item Number 3 5 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: ANNUAL MANHOLE REHABILITATION SERVICES CONTRACT GENERAL MANAGER'S RECOMMENDATION A. Award a Service Contract for Specification No. S-2017-8956D, annual manhole rehabilitation services, to Ayala Engineering, for a total amount not to exceed $266,945 for the period beginning April 1, 2018 through March 31, 2019, with four one-year renewal options; and B. Approve a contingency of$ 40,042 (15%). BACKGROUND Sewer inspection and condition assessment are two of the Orange County Sanitation District's (Sanitation District) major preventive maintenance tasks that are listed in the Sanitation District's Sewer System Management Plan (SSMP). The Sanitation District has committed to properly maintaining, rehabilitating, and replacing collection assets. This program includes the rehabilitation of sewer manholes throughout the collections system on an as-needed basis. RELEVANT STANDARDS • Maintain a proactive asset management program • Protection of Orange County Sanitation District assets PROBLEM The previous manhole rehabilitation contract expired in December 2017 and did not have any remaining renewals. The Sanitation District bid an annual contract, with provisions for four renewals. PROPOSED SOLUTION Award a new manhole rehabilitation contract with four (4)optional renewals to the lowest responsive and responsible bidder. Page 1 of 2 TIMING CONCERNS There are no timing concerns; however, the current contract has lapsed and the Sanitation District requires a Contractor to perform this annual work. RAMIFICATIONS OF NOT TAKING ACTION If no action is taken at this time,there should not be adverse situations to place Sanitation District facilities at risk; however, the current contract has lapsed and a Contractor is needed due to the amount of work that is completed each year. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District issued a Notice Inviting Bid in November of 2017. Two (2) bids were received as follows: Ayala Engineering $266,945 Sancon Engineering $288,500 Ayala Engineering was found to be the lowest responsive and responsible bidder; therefore, staff recommends awarding to this company. CEQA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted in the FY2016-17, FY2017-18 Budget, Collections Facilities (Line item: Professional and Contractual Services, Section 6, Page 76). Date of Approval Contract Amount Contingency 02/28/2018 $266,945 $40,042 (15%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Service Contract Page 2 d 2 SERVICE CONTRACT Manhole Rehabilitation Services Specification No. S-2017-895BD THIS CONTRACT is made and entered into as of the date fully executed below, by and between Orange County Sanitation District, with a principal place of business at 10844 Ellis Avenue, Fountain Valley, CA 92708 (hereinafter referred to as "OCSD") and Ayala Engineering with a principal place of business at 8482 East Meadowridge Street, Anaheim, CA 92808 (hereinafter referred to as "Contractor")collectively referred to as the"Parties". WITNESSETH WHEREAS, OCSD desires to temporarily retain the services of Contractor for Manhole Rehabilitation Services "Services" as described in Exhibit"A"; and WHEREAS, OCSD has chosen Contractor to conduct Services in accordance with Ordinance No. OCSD-47; and WHEREAS, on February 28, 2018, the Board of Directors of OCSD, by minute order, authorized execution of this Contract between OCSD and Contractor; and WHEREAS, Contractor is qualified by virtue of experience, training, and expertise to accomplish such Services, NOW, THEREFORE, in consideration of the mutual promises and mutual benefits exchanged between the Parties, the Parties mutually agree as follows: 1. Introduction 1.1 This Contract and all exhibits hereto (called the "Contract") is made by OCSD and the Contractor. The terms and conditions herein exclusively govern the purchase of Services as described in Exhibit"A". 1.2 Exhibits to this Contract are incorporated by reference and made a part of this Contract as though fully set forth at length herein. Exhibits to this Contract are as follows in order of precedence: Exhibit"A" Scope of Work Exhibit"B" Bid Price Form Exhibit"C" Acknowledgement of Insurance Requirements Exhibit"D" OCSD Safety Standards Exhibit"E" Not Used 1.3 In the event of any conflict or inconsistency between the provisions of this Contract and any of the provisions of the exhibits hereto, the provisions of this Contract shall in all respects govern and control. 1.4 The provisions of this Contract may be amended or waived only by a writing executed by authorized representatives of both Parties hereto. 1.5 The various headings in this Contract are inserted for convenience only and shall not affect the meaning or interpretation of this Contract or any paragraph or provision hereof. Orange County Sanitation District 1 of 9 Specification No. S-2017-895BD Version 052217 1.6 The term "days", when used in the Contract, shall mean calendar days, unless otherwise noted as business days. 1.7 OCSD holidays (non-working days) are as follows: New Year's Day, Lincoln's Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, Day after Thanksgiving, Christmas Eve, and Christmas Day. 1.8 The term "hours", when used in this Contract, shall be as defined in Exhibit"A". 1.9 Contractor shall provide OCSD with all required premiums and/or overtime work at no charge beyond the price provided under"Compensation" below. 1.10 Except as expressly provided otherwise, OCSD accepts no liability for any expenses, losses, or action incurred or undertaken by Contractor as a result of work performed in anticipation of purchases of said services by OCSD. 2. Compensation Compensation to be paid by OCSD to Contractor for the Services provided under this Contract shall be a total amount not exceed Two Hundred Sixty-Six Thousand Nine Hundred Forty-Five Dollars ($266,945.00). 3. California Department of Industrial Relations(DIR)Registration and Record of Wailes 3.1 To the extent Contractors employees and/or its subcontractors who will perform Work during the design and preconstruction phases of a construction contract for which Prevailing Wage Determinations have been issued by the DIR and as more specifically defined under Labor Code Section 1720 at seq, Contractor and its subcontractors shall comply with the registration requirements of Labor Code Section 1725.5. Pursuant to Labor Code Section 1771.4, the work is subject to compliance monitoring and enforcement by the DIR. 3.2 The Contractor and its subcontractors shall maintain accurate payroll records and shall comply with all the provisions of Labor Code Section 1776, and shall submit payroll records to the Labor Commissioner pursuant to Labor Code 1771.4(a)(3). Penalties for non- compliance with the requirements of Section 1776 may be deducted from progress payments per Section 1776. 3.3 Pursuant to Labor Code Section 1776, the Contractor and its subcontractors shall furnish a copy of all certified payroll records to OCSD and/or general public upon request, provided the public request is made through OCSD, the Division of Apprenticeship Standards or the Division of Labor Standards Enforcement of the Department of Industrial Relations. 3.4 The Contractor and its subcontractors shall comply with the job site notices posting requirements established by the Labor Commissioner per Title 8, California Code of Regulation Section 16461(e). 4. Payments and Invoicing 4.1 OCSD shall pay, net thirty (30) days, upon receipt and approval, by OCSD's Project Manager or designee, of itemized invoices submitted for Services completed in accordance with Exhibit "A". OCSD, at its sole discretion, shall be the determining party as to whether the Services have been satisfactorily completed. 4.2 Invoices shall be emailed by Contractor to OCSD Accounts Payable at APStaff(ccDOCSD.com and "INVOICE" with the Purchase Order Number and Specification No. S-2017-895BD shall be referenced in the subject line. Orange County Sanitation District 2 of 9 Specification No. 5-2017-895BD Version 052217 5. Audit Rights Contractor agrees that, during the term of this Contract and for a period of three (3) years after its termination, OCSD shall have access to and the right to examine any directly pertinent books, documents, and records of Contractor relating to the invoices submitted by Contractor pursuant to this Contract. 6. Scone of Work Subject to the terms of this Contract, Contractor shall perform the Services identified in Exhibit"A". Contractor shall perform said Services in accordance with generally accepted industry and professional standards. 7. Modifications to Scope of Work Requests for modifications to the Scope of Work hereunder can be made by OCSD at any time. All modifications must be made in writing and signed by both Parties. 8. Contract Term The Services provided under this Contract shall be completed within three hundred sixty-five (365)calendar days effective April 1, 2018. 9. Renewals 9.1 OCSD may exercise the option to renew this Contract for up to four (4) one-year periods based upon the criteria set forth in Exhibit "A", under the terms and conditions contained herein. OCSD shall make no obligation to renew nor give reason if it elects not to renew. 9.2 This Contract may be renewed by OCSD Purchase Order. 10. Extensions The term of this Contract may be extended only by written instrument signed by both Parties. 11. Performance Time is of the essence in the performance of the provisions hereof. 12. Termination 12.1 OCSD reserves the right to terminate this Contract for its convenience, with or without cause, in whole or in part, at any time, by written notice from OCSD of intent to terminate. Upon receipt of a termination notice,Contractor shall immediately discontinue all work under this Contract(unless the notice directs otherwise). OCSD shall thereafter, within thirty (30) days, pay Contractor for work performed (cost and fee)to the date of termination.Contractor expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of this Contract. Such notice of termination shall terminate this Contract and release OCSD from any further fee, cost or claim hereunder by Contractor other than for work performed to the date of termination. 12.2 OCSD reserves the right to terminate this Contract immediately upon OCSD's determination that Contractor is not complying with the Scope of Work requirements, if the level of service is inadequate, or any other default of this Contract. 12.3 OCSD may also immediately cancel for default of this Contract in whole or in part by written notice to Contractor: • if Contractor becomes insolvent or files a petition under the Bankruptcy Act; or • if Contractor sells its business; or • if Contractor breaches any of the terms of this Contract; or • if total amount of compensation exceeds the amount authorized under this Contract. 12.4 All OCSD property in the possession or control of Contractor shall be returned by Contractor to OCSD upon demand, or at the termination of this Contract, whichever occurs first. Orange County Sanitation District 3 of 9 Specification No. S-2017-895BD Version 052217 13. Insurance Contractor and all subcontractors shall purchase and maintain, throughout the life of this Contract and any periods of warranty or extensions, insurance in amounts equal to the requirements set forth in the signed Acknowledgement of Insurance Requirements (attached hereto and incorporated herein as Exhibit "C"). Contractor shall not commence work under this Contract until all required insurance is obtained in a form acceptable to OCSD, nor shall Contractor allow any subcontractor to commence service pursuant to a subcontract until all insurance required of the subcontractor has been obtained. Failure to maintain required insurance coverage shall result in termination of this Contract. 14. Indemnification and Hold Harmless Provision Contractor shall assume all responsibility for damages to property and/or injuries to persons, including accidental death, which may arise out of or be caused by Contractor's services under this Contract, or by its subcontractor(s) or by anyone directly or indirectly employed by Contractor, and whether such damage or injury shall accrue or be discovered before or after the termination of the Contract. Except as to the sole active negligence of or willful misconduct of OCSD, Contractor shall indemnify, protect, defend and hold harmless OCSD, its elected and appointed officials, officers, agents and employees, from and against any and all claims, liabilities, damages or expenses of any nature, including attorneys'fees: (a)for injury to or death of any person or damage to property or interference with the use of property, arising out of or in connection with Contractor's performance under the Contract, and/or (b) on account of use of any copyrighted or uncopyrighted material, composition, or process, or any patented or unpatented invention, article or appliance, furnished or used under the Contract, and/or (c) on account of any goods and services provided under this Contract. This indemnification provision shall apply to any acts or omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of Contractor of or anyone employed by or working under Contractor. To the maximum extent permitted by law, Contractor's duty to defend shall apply whether or not such claims, allegations, lawsuits, or proceedings have merit or are meritless, or which involve claims or allegations that any of the parties to be defended were actively, passively, or concurrently negligent, or which otherwise assert that the parties to be defended are responsible, in whole or in part, for any loss, damage, or injury. Contractor agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. 15. OCSD Safety Standards OCSD requires Contractor and its subcontractor(s)to follow and ensure their employees follow all Federal, State, and local regulations as well as OCSD Safety Standards while working at OCSD locations. If during the course of the Contract it is discovered that OCSD Safety Standards do not comply with Federal, State, or local regulations, then the Contractor is required to follow the most stringent regulatory requirement at no additional cost to OCSD. Contractor and all of its employees and subcontractors, shall adhere to all applicable OCSD Safety Standards attached hereto in Exhibit"D". 16. Warranties In addition to the warranties stated in Exhibit"A", the following shall apply: 16.1 Manufacturer's standard warranty shall apply. All manufacturer warranties shall commence on the date of acceptance by the OCSD Project Manager or designee of the work as complete. 16.2 Contractor's Warranty (Guarantee): If within a one (1) year period of completion of all work as specified in Exhibit "A", OCSD informs Contractor that any portion of the Services provided fails to meet the standards required under this Contract, Contractor shall, within the time agreed to by OCSD and Contractor, take all such actions as are necessary to correct or complete the noted deficiency(ies) at Contractor's sole expense. Orange County Sanitation District 4 of 9 Specification No. 5-2017-895BD Version 052217 17. Force Maleure Neither party shall be liable for delays caused by accident, flood, acts of God, fire, labor trouble, war, acts of government or any other cause beyond its control, but said party shall use reasonable efforts to minimize the extent of the delay. Work affected by a Force Majeure condition may be rescheduled by mutual consent or may be eliminated from the Contract. 18. Frefaht(F.O.B. Destination) Contractor assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products deemed necessary under this Contract. 19. Familiarity with Work By executing this Contract, Contractor warrants that: 1) it understands the work to be performed; and 2) it understands the facilities, difficulties and restrictions of the work under this Contract. Should Contractor discover any latent or unknown conditions materially differing from those inherent in the work or as represented by OCSD, it shall immediately inform OCSD of this and shall not proceed, except at Contractor's risk, until written instructions are received from OCSD. 20. Reau/atory Requirements Contractor shall perform all work under this Contract in strict conformance with applicable Federal, State, and local regulatory requirements including, but not limited to, 40 CFR 122, 123, 124, 257, 258, 260, 261, and 503, Title 22, 23, and California Water Codes Division 2. 21. Licenses, Permits. Ordinances and Reaulations Contractor represents and warrants to OCSD that it has obtained all licenses, permits, qualifications, and approvals of whatever nature that are legally required to engage in this work. Any and all fees required by Federal, State, County, City and/or municipal laws, codes and/or tariffs that pertain to the work performed under the terms of this Contract will be paid by Contractor. 22. Applicable Laws and Reaulations Contractor shall comply with all applicable Federal, State, and local laws, rules, and regulations. Contractor also agrees to indemnify and hold harmless from any and all damages and liabilities assessed against OCSD as a result of Contractor's noncompliance therewith. Any permission required by law to be included herein shall be deemed included as a part of this Contract whether or not specifically referenced. 23. Contractor's Employees Compensation 23.1 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 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. 23.2 General Prevailing Rate — OCSD has been advised by the State of California Director of Industrial Relations of its determination of the general prevailing rate of per diem wages and the general prevailing rate for legal holiday and overtime work in the locality in which the work is to be performed for each craft or type of work needed to execute this Contract, and copies of same are on file in the Engineering Department. The Contractor agrees that not less than said prevailing rates shall be paid to workers employed on this Contract as required by Labor Code Section 1774 of the State of California. Per California Labor Code 1773.2, Orange County Sanitation District 5 of 9 Specification No. S-2017-895BD Version 052217 OCSD will have on file copies of the prevailing rate of per diem wages at its principal office and at each project site,which shall be made available to any interested party upon request. 23.3 Forfeiture For Violation—Contractor shall, as a penalty to OCSD,forfeit fifty dollars ($50.00) for each calendar day or portion thereof for each worker paid (either by the 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. 23.4 Apprentices—Sections 1777.5, 1777.6, 1777.7 of the Labor Code of the State of California, regarding the employment of apprentices are applicable to this Contract and the Contractor shall comply therewith if the prime contract involves thirty thousand dollars ($30,000.00) or more or twenty(20)working days or more;or if contracts of specialty contractors not bidding for work through the general or prime Contractor are two thousand dollars ($2,000.00) or more or five (5)working days or more. 23.5 Workday—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 it hereunder. Contractor shall conform to Article 3, Chapter 1, Part 7 (Section 1810 at seq.)of the Labor Code of the State of California and shall forfeit to OCSD as a penalty, the sum of twenty-five dollars ($25.00)for each worker employed in the execution of this Contract by 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 (1) calendar day and forty (40) hours in any one (1) 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. 23.6 Record of Wages; Inspection — Contractor agrees to maintain accurate payroll records showing the name, address, social security number, work classification, straight-time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker or other employee employed by it in connection with the project and agrees to require that each of its subcontractors do the same. All payroll records shall be certified as accurate by the applicable Contractor or subcontractor or its agent having authority over such matters. Contractor further agrees that its payroll records and those of its subcontractors shall be available to the employee or employee's representative, the Division of Labor Standards Enforcement, and the Division of Apprenticeship Standards and shall comply with all of the provisions of Labor Code Section 1776, in general. Penalties for non-compliance with the requirements of Section 1776 may be deducted from project payments per the requirements of Section 1776. 24. South Coast Air Quality Management District's (SCAQMD) Requirements It is Contractor's responsibility that all equipment furnished and installed be in accordance with the latest rules and regulations of the South Coast Air Quality Management District (SCAQMD). All Contract work practices, which may have associated emissions such as sandblasting, open field spray painting or demolition of asbestos containing components or structures, shall comply with the appropriate rules and regulations of the SCAQMD. 25. Governing Law This Contract shall be governed by and interpreted under the laws of the State of California and the Parties submit to jurisdiction in the County of Orange, in the event any action is brought in connection with this Contract or the performance thereof. Orange County Sanitation District 6 of 9 Specification No. 5-2017-895BD Version 052217 26. Breach The waiver of either party of any breach or violation of, or default under, any provision of this Contract, shall not be deemed a continuing waiver by such party of any other provision or of any subsequent breach or violation of this Contract or default thereunder. Any breach by Contractor to which OCSD does not object shall not operate as a waiver of OCSD's rights to seek remedies available to it for any subsequent breach. 27. Remedies In addition to other remedies available in law or equity, if the Contractor fails to make delivery of the goods or Services or repudiates its obligations under this Contract, or if OCSD rejects the goods or Services or revokes acceptance of the goods or Services, OCSD may (1) cancel the Contract; (2) recover whatever amount of the purchase price OCSD has paid, and/or (3) "cover' by purchasing, or contracting to purchase, substitute goods or Services for those due from Contractor. In the event OCSD elects to "cover as described in (3), OCSD shall be entitled to recover from Contractor as damages the difference between the cost of the substitute goods or Services and the Contract price, together with any incidental or consequential damages. 26. Dispute Resolution 28.1 In the event of a dispute as to the construction or interpretation of this Contract, or any rights or obligations hereunder, the Parties shall first attempt, in good faith, to resolve the dispute by mediation. The Parties shall mutually select a mediator to facilitate the resolution of the dispute. If the Parties are unable to agree on a mediator, the mediation shall be conducted in accordance with the Commercial Mediation Rules of the American Arbitration Agreement, through the alternate dispute resolution procedures of Judicial Arbitration through Mediation Services of Orange County ("JAMS"), or any similar organization or entity conducting an alternate dispute resolution process. 28.2 In the event the Parties are unable to timely resolve the dispute through mediation, the issues in dispute shall be submitted to arbitration pursuant to California Code of Civil Procedure, Part 3, Title 9, Sections 1280 et seq. For such purpose, an agreed arbitrator shall be selected, or in the absence of agreement, each party shall select an arbitrator, and those two(2)arbitrators shall select a third. Discovery may be conducted in connection with the arbitration proceeding pursuant to California Code of Civil Procedure Section 1283.05. The arbitrator, or three (3) arbitrators acting as a board, shall take such evidence and make such investigation as deemed appropriate and shall render a written decision on the matter in question. The arbitrator shall decide each and every dispute in accordance with the laws of the State of California. The arbitrators decision and award shall be subject to review for errors of fact or law in the Superior Court for the County of Orange, with a right of appeal from any judgment issued therein. 29. Attorney's Fees If any action at law or inequity or if any proceeding in the form of an Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this Contract, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which he may be entitled. 30. Survival The provisions of this Contract dealing with Payment, Warranty, Indemnity, and Forum for Enforcement, shall survive termination or expiration of this Contract. 31. Severability If any section, subsection, or provision of this Contract, or any agreement or instrument contemplated hereby, or the application of such section, subsection,or provision is held invalid,the remainder of this Contract or instrument in the application of such section, subsection or provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby, unless the effect of such invalidity shall be to substantially frustrate the expectations of the Parties. Orange County Sanitation District 7 of 9 Specification No. 5-2017-895BD Version 052217 32. Damage to OCSD's Property Any of OCSD's property damaged by Contractor, any subcontractors or by the personnel of either will be subject to repair or replacement by Contractor at no cost to OCSD. 33. Disclosure Contractor agrees not to disclose, to any third party, data or information generated from this project without the prior written consent from OCSD. 34. Independent Contractor The legal relationship between the parties hereto is that of an independent contractor, and nothing herein shall be deemed to make Contractor an OCSD employee. During the performance of this Contract, Contractor and its officers, employees, and agents shall act in an independent capacity and shall not act as OCSD's officers, employees, or agents. Contractor and its officers, employees, and agents shall obtain no rights to any benefits which accrue to OCSD's employees. 35. Limitations upon Subcontractina and Assignment Contractor shall not delegate any duties nor assign any rights under this Contract without the prior written consent of OCSD. Any such attempted delegation or assignment shall be void. 36. Third Party Rights Nothing in this Contract shall be construed to give any rights or benefits to anyone other than OCSD and Contractor. 37. Non-Liability of OCSD Officers and Employees No officer or employee of OCSD shall be personally liable to Contractor, or any successor-in-interest, in the event of any default or breach by OCSD or for any amount which may become due to Contractor or to its successor, or for breach of any obligation for the terms of this Contract. 38. Read and Understood By signing this Contract, Contractor represents that he has read and understood the terms and conditions of the Contract. 39. Authority to Execute The persons executing this Contract on behalf of the Parties warrant that they are duly authorized to execute this Contract and that by executing this Contract, the Parties are formally bound. 40. Entire Contract This Contract constitutes the entire agreement of the Parties and supersedes all prior written or oral and all contemporaneous oral agreements, understandings, and negotiations between the Parties with respect to the subject matter hereof. Orange County Sanitation District 8 of 9 Specification No. S-2017-895BD Version 052217 41. Notices All notices under this Contract must be in writing. Written notice shall be delivered by personal service or sent by registered or certified mail, postage prepaid, return receipt requested, or by any other overnight delivery service which delivers to the noticed destination and provides proof of delivery to the sender. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given as provided hereunder shall be deemed to be receipt of the notice, demand or request sent. All notices shall be effective when first received at the following addresses: OCSD: Larry Roberson Senior Contracts Administrator Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708 Contractor: Ricardo Ayala Owner Ayala Engineering 8482 East Meadowridge Street Anaheim, CA 92808 Each party shall provide the other party written notice of any change in address as soon as practicable. IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have caused this Contract to be signed by the duly authorized representatives. ORANGE COUNTY SANITATION DISTRICT Dated: By: Chair, Board of Directors Dated: By: Clerk of the Board Dated: By: Contracts, Purchasing and Materials Management Manager AYALA ENGINEERING Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number Orange County Sanitation District 9 of 9 Specification No. S-2017-895BD Version 052217 OPERATIONS COMMITTEE Meeting Date TOBd.Of Dir. 0 2 /0 711 8 oz/ze�ia AGENDA REPORT emNumber Item Number 4 6 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: PLANT NO. 1 ACTIVATED SLUDGE AERATION DIFFUSER MEMBRANE REPLACEMENT REPAIR GENERAL MANAGER'S RECOMMENDATION A. Approve a Purchase Order Contract to IDA Construction Inc. to provide rehabilitation services for up to six (6)Aeration Basins at Plant No. 1, Specification No. S-2017-87513D, for a total amount not to exceed $232,001; B. Approve a contingency of$46,400 (20%); and C. Approve a Sole Source Purchase Order to DC Frost Associates Inc. (exclusive representative for Xylem Sanitaire)for the required mechanical parts for three (3) Aeration Basins at Plant No. 1, for a total amount not to exceed $106,098. BACKGROUND The Activated Sludge Process uses aeration systems to treat primary effluent using dissolved oxygen systems and highly concentrated bacteria to metabolize organic matter in wastewater. The dissolved oxygen in these systems is introduced into the wastewater by a system of fine bubble air diffusers that cover the bottom of the aeration basins. These diffusers are disc shaped membranes, made of a porous rubber material. Compressed air is piped in from blowers to these discs so that the wastewater is completely saturated with air bubbles. Approximately every 10 years the discs must be replaced, as the holes in the discs become stretched or clogged and the rubber becomes brittle. As a result, the efficiency of the whole system is diminished. There are more than 48,000 discs that are over 10 years old at Plant No. 1 Activated Sludge (AS-1). RELEVANT STANDARDS • Meet volume and water quality needs to support GW RS System • Maintain a proactive asset management program • Maintain a culture of improving efficiency PROBLEM Some of the Plant No. 1 AS-1 diffuser membranes have been in operation for over 10 years and are in need of replacement—the oxygen transfer efficiency has diminished Page 1 of 3 which results in higher energy costs. Staff anticipates six (6) aeration basins will require this work to be performed in the interim. PROPOSED SOLUTION Approve a low bid Purchase Order Contract with IQA Construction (Spec. No. S-2017-87513D) for the work of replacing aeration diffusers on up to six (6) aeration basins. The Contractor shall supply personnel and expertise to perform the repairs accordingly. TIMING CONCERNS The project must start soon to coincide with Project No. P1-129, AS-1 RAS Header Piping Replacement, planned in the same area. This strategy will help to reduce the effect on overall plant operations and maintain the quality of the treated effluent at Plant No. 1. RAMIFICATIONS OF NOT TAKING ACTION Inefficient oxygen transfer results in higher energy costs. In addition, there are various known issues, such as leaks which are affecting the performance of Plant No. 1 AS-1. If not corrected, the AS-1 plant performance will eventually drop to unacceptable levels, negatively affecting effluent water quality and Orange County Sanitation District (Sanitation District) operations. PRIOR COMMITTEE/BOARD ACTIONS December 2016 - Board approved sole source OEM list to include Xylem as a preapproved OEM for parts and services. DC Frost Associates Inc. is the sole local distributor for Xylem parts in Fountain Valley. ADDITIONAL INFORMATION The Sanitation District issued a Notice Inviting Bids in October of 2017. Six (6) bids were received as follows: CA Construction $232,001 Jamison Engineering Contractors, Inc. $242,064 B.R. Frost Company $283,200 PCL Construction, Inc. $322,938 W.M. Lyles Co. $389,058 Environmental Construction, Inc. $495,600 IQA Construction was found to be the lowest responsive and responsible bidder. Therefore, staff recommends awarding to the firm. A contingency of 20% is recommended because of the potential for additional work which may be required once the aeration system is disassembled. Page 2 of 3 The Sanitation District currently has enough mechanical diffuser parts on-hand to supply parts for up to three(3) basins; however, additional sets for the remaining three(3) basins will need to be purchased. It is proposed to also approve a Sole Source Purchase Order to DC Frost Associates Inc.forthe required mechanical parts of three (3)Aeration Basins. DC Frost Associates Inc. is the sole distributor for the OEM parts. CEQA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation Districts Purchasing Ordinance. This item has been budgeted in the Operating Budget FY 17-18 (Section 6, Pg. 92, Line items: Repairs and Maintenance). Date of Approval Contract Amount Contingency 02/28/2018 (IQA Construction) $232,001 $46,400(20%) 02/28/2018 (DC Frost) $106,098 N/A ATTACHMENT The following affachment(s) maybe viewed on-line at the QCSD website (www.ocsd.com) with the complete agenda package: N/A Page 3 of 3 OPERATIONS COMMITTEE Meeting Date TOBd.Of Dir. 02J07118 02/28/18 AGENDA REPORT emNumber Item Number 6 7 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: HOSE REEL TRAILER FOR TEN-INCH PUMPS GENERAL MANAGER'S RECOMMENDATION A. Award a purchase order for 2,640 feet of twelve-inch lay flat sewer hose with mobile hose reel trailer to West Coast Safety Supply, Specification No. E-2017- 910BD for a total cost of$295,704; and B. Approve a contingency amount of$29,570 (10%). BACKGROUND The Orange County Sanitation District (Sanitation District) procured two (2) ten-inch portable sewer pumps to support collections system maintenance activities and provide emergency pumping capacity in the event of plugged sewers or pump station failure. A lay flat hose and a powered hose reel trailer is required for the new pumping equipment. The motorized reel is for delivering or moving the lay flat sewer hose because it is too heavy to manually handle. RELEVANT STANDARDS Less than 2.1 sewer spills per 100 miles Protection of Orange County Sanitation District assets PROBLEM Project No. FE16-11, Von Karmen Trunk at the Lane Channel Crossing, provides technical support and inspection for the Orange County Flood Control District's (OCFCD) Channel Improvement. One of the Sanitation District's responsibilities consists of providing a sewer bypass protection plan and resources should the Sanitation District's sewer be damaged. The Lane Channel contingency plan consists of two (2) ten-inch portable pumps and associated twelve-inch lay flat sewer hose. These resources are needed in place by May 2018. PROPOSED SOLUTION Staff recommends the purchase of a heavy duty twelve-inch lay flat sewer hose with mobile trailer sold by West Coast Safety Supply who was selected through a competitive Page 1 of 3 bid process. They are able to deliver these products within the time frame to allow the Sanitation District to meet Lane Channel project schedule. TIMING CONCERNS The sewer bypass pumping equipment for Project No. FE16-11 Von Karmen Trunk at the Lane Channel Crossing must be in place in May 2018 to prevent delay of the OCFCD's Lane Channel project. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District is concerned that the OCFCD's contractor could damage sewer lines that cross the channel. The damage could lead to sewage discharge into the storm channel. Without the lay flat sewer hose and mobile trailer, the Sanitation District will lack the ability to create a sewer bypass around the damaged pipe section. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District issued a Notice Inviting Bids in December of 2017. Two (2) bids were received as follows: West Coast Safety Supply $295,704 Xylem Dewatering $103,224 West Coast Safety Supply was found to be the lowest responsive and responsible bidder. Therefore, staff recommends awarding to the firm. Xylem Dewatering was found to be unresponsive as they were unable to provide all the equipment (trailer) listed in the Scope of Work. A contingency of 10% is recommended because of unexpected charges in freight and handling fees. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. (Fiscal Year 2017-2018 Budget - Appendix (Line Item: 822-Fleet Services, Pages A20—A21). Date of Aooroval Contract Amount Continaencv 02/28/2018 $295,704 $29,570 (10%) Page 2 d 3 ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: N/A Page 3 d 3 OPERATIONS COMMITTEE Meeting Date TOBd.Ot Dir. oz/o7/ta oz/zaha AGENDA REPORT IWrnNumber Item Number s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: CAPITAL IMPROVEMENT PROGRAM CONTRACT PERFORMANCE REPORT GENERAL MANAGER'S RECOMMENDATION Receive and file the Capital Improvement Program Contract Performance Report for the period ending December 31, 2017. BACKGROUND The Capital Improvement Program involves awarding and managing many construction and consulting contracts. In 2008, the Orange County Sanitation District (Sanitation District) Board of Directors began awarding contingencies along with construction and consulting contracts. The contingencies allow the General Manager to approve change orders for construction contracts and amendments for consulting contracts up to the amount of the approved contingency. This practice reduces administrative costs, expedites resolution of project issues that arise, helps avoid Contractor delay claims, and facilitates efficient management of many contracts. The Capital Improvement Program Contract Performance Report summarizes construction and consulting contract performance and activities for the quarter ending December 31, 2017. This report is updated quarterly. RELEVANT STANDARDS • Ensure the public's money is wisely spent ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (wwwocsd.conn with the complete agenda package: • Capital Improvement Program Contract Performance Report for the period ending December 31, 2017 JM:dm:gc Page 1 of 1 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending December 31, 2017 DATE: January 26, 2018 TO: Orange County Sanitation District Board of Directors FROM: James D. Herberg, General Manager Through: Rob Thompson, Director of Engineering This report summarizes the status, activities, and performance of public works construction contracts and consultant agreements. This report also identifies the names and status of projects being performed under master budgets for facilities engineering, planning studies, and research. PART 1 - CONSTRUCTION CONTRACTS When the Orange County Sanitation District (Sanitation District) Board awards a construction contract, a contingency is also approved which allows the General Manager to approve contract change orders up to the amount of the contingency. One of the purposes of this report is to document how that contingency is managed and how much of the contingency is utilized.A project's change order rate can only be documented when the work is complete. As such, the change order performance charts in this report are based only on projects closed since the Board began approving contingencies in 2008. Activity in Last Quarter 2-72A Newhope-Placentia Trunk Sewer Final Completion 05-Oct-17 Replacement, Segment A P1-100 Digester Rehabilitation at Plant 1 Final Completion 06-Oct-17 FE16-08 Carbon Canyon Clay Pipe Repairs Final Completion 17-Nov-17 Page 1 of 4 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending December 31, 2017 Anticipated Activity in Next Quarter FE16-12 Garfield Road Perimeter Security Contract Award 2-Feb-18 Fence FE 15-07 Secondary Treatment and Plant Contract Award 21-Feb-18 Water VFD Replacement at Plant 1 FE16-10 East Basin Distribution Box Repair Contract Award 28-Mar-18 7-37 Gisler- Red Hill Trunk Improvements - Final Completion 30-Mar-18 Reach B FE13-04 Plant No. 2 Trickling Filter Chemical Final Completion 30-Mar-18 Odor Control PART 2— DESIGN CONSULTANT AGREEMENTS The Sanitation District engages design consultants through Professional Design Services Agreements (PDSAs), Professional Consultant Services Agreements (PCSAs), and Master Professional Services Agreements (Master Agreements). PDSAs are used to obtain design engineering services, and PCSAs are a subsequent agreement with the design consultant to provide support services during construction. Master Agreements are issued to a pool of pre-qualified consultants for smaller projects. On those smaller projects, the Sanitation District solicits task order proposals from three or four of the firms, and awards a task order to the most qualified consultant. There are currently four sets of Master Agreements, including three design sets from 2009, 2012, and 2015, a set for CEGA studies, a set for collection-systems planning studies, and a set for plant-related planning studies. The two older design sets have expired, meaning no new task orders can be issued under them, but previously-issued task orders remain active until completed. The other Master Agreements have $200,000 task order limits per Sanitation District Ordinance No. OCSD-47. No task orders have yet been issued for the CEQA, Collections Planning Studies, and Plant Planning Studies sets. Page 2 of 4 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending December 31, 2017 Activity in Last Quarter 5-67 Bay Bridge Pump Station Replacement PDSA Award 25-Oct-17 J-124 Digester Gas Facilities Rehabilitation PDSA Award 15-Nov-17 P2-123 Return Activated Sludge Piping RFP 30-Oct-17 Replacement at Plant 2 Advertisement PSI 5-02 Edinger Pump Station RFP 20-Dec-17 Rehabilitation Study Advertisement Anticipated Activity in Next Quarter PSI 7-03 Active Fault Location Study at Plant RFP 29-Jan-18 No. 2 Advertisement P1-132 Uninterruptable Power Supply RFP 14-Feb-18 Improvements at Plant 1 Advertisement P2-124 Interim Food Waste Receiving RFP 23-Feb-18 Facility Advertisement SP-196 Process Control Systems Upgrades PDSA Award 28-Feb-18 Study RE17-02 Biogas Scrubber Evaluation PDSA Award 28-Feb-18 P2-123 Return Activated Sludge Piping PDSA Award 28-Mar-18 Replacement at Plant 2 PART 3— MASTER BUDGET PROJECTS The Board-adopted budget for Fiscal Years 2016-17 and 2017-18 includes master program budgets that allow staff to more quickly initiate, execute, and manage smaller projects that fit within the scope of a particular program. The projects chartered under these program budgets are referred to as sub-projects, and are managed to the same standards as projects specifically listed in the adopted budget. A status table for each of these programs listing the sub-projects is attached. Page 3 of 4 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending December 31, 2017 Master Program Title Status Table Planning Studies Table 3.1 Research Program Table 3.2 Facilities Engineering Program — Collections Table 3.3 Facilities Engineering Program — Plant Table 3.4 Information Technology Capital Program Table 3.5 PART 4—STAFF AUGMENTATION CONTRACT In May 2016, the Sanitation District Board of Directors approved a $41 million professional services agreement with Jacobs Project Management Co. to provide supplemental engineering and support staff services for a four-year term with the option of three one-year renewals. The benefits of using staff augmentation, as opposed to hiring full-time staff or limited-term employees, include rapid mobilization of highly skilled/technical staff, flexibility to change the mix of staff positions on an immediate and as-needed basis, the ability to reduce staff as workloads decrease, access to technical experts to support special tasks, and access to staff with wastewater project experience. CHARTS AND TABLES Chart 1.1 — Program Overview Chart 1.2 — Change Order Rates Over Time—All Closed Projects Chart 1.3—Change Order Rates Over Time—Collections Projects Chart 1.4 — Change Order Rates Over Time— Plant Projects Table 1.1 — Summary of Closed Projects by Category Table 1.2— Construction Contract Performance—Active Projects Table 1.3—Active Construction Contracts by Contractor Table 2.1 —Active Design Consultant Contracts by Consultant Table 2.2—Activity Report for 2012 Master Professional Design Services Agreements Table 2.3—Activity Report for 2015 Master Professional Design Services Agreements Table 3.1 — Planning Studies Status Report Table 3.2— Research Program Status Report Table 3.3— Facilities Engineering Program — Collections Status Report Table 3.4— Facilities Engineering Program — Plant Status Report Table 3.5— Information Technology Capital Program Status Report Table 4.1 —Staff Augmentation Contract Status Table 4.2—Staff Augmentation Labor Summary Page 4 of 4 Chart 1.1 Program Overview CUMULATIVE DATA THROUGH QUARTER ENDING DECEMBER 31,2017 2 QTR FY17/18 •Collections .Collections •Plant Projects •Plant Projects 41 CLOSED PROJECTS DISTRIBUTION BY CATEGORY' ACTIVE PROJECTS DISTRIBUTION BY CATEGORY Total Base Contract Value $ 1,233,271,140 Total Base Contract Value $ 237,286,910 Collections $ 297,116,525 24.0% Collections $ 20,520,301 8.6% Plant Projects $ 936,154,615 76.0% Plant Projects $ 216,766,609 91.4% Total Base#of Contracts 69 Total Base#of Contracts 15 Collections 30 Collections 3 Plant Projects 39 Plant Projects 12 •Projects closed since 2 QTR FY07/08 Chart 1.2 Change Order Rates Over Time All Closed Projects 7.00% 6.08% 6.00% 5.65% 5.20% 4.97% 5.00% 4.66% 4.75% 4.75% 4'�% 4.85% 4.99% 4.62% 4.67% 4.59% 3.84% 4.00% 3.]8% 3.76% 3.51% 3.52% 3.37. 3.00% Change Contracts Closed in Last Quarter Original Value Orders 2.00% P1-100 Digester Rehabilitation at Plant 1 $33,500,000 28.70% 2-72A Newhope-Placentia Trunk Sewer $21,134,650 2.20% Replacement,Segment 1.00% FE16-08 Carbon Canyon Clay Pipe Repairs $303,563 0.00% 0.00% p N p p p O O O O O O O S O S S .Oi 2 e. N N N 8 8 M M M O V P Q O/1 N N N b b S O O O S Ow W Chart 1.3 Change Order Rates Over Time Closed Collections Projects 14.00% 12.35% 12.00% 11.19% 10.00% 9.53% 8.92% 8.00% 7.14% 6 97% 7.14% 7.10% 6.77% 6.19% 5.88% 5.88% 5.81% 6.00% 5.52% 5.51% 5.34%5.51%5.43% 5.51% - 4.00% 2.00% 0.00% 0 0 0 0 0 & & 8 8 8 8 8 8 8 8 8 8 8 0 0 0 0 8 8 8 8 d d d d c c c c o 0 0 8 8 8 Chart 1.4 Change Order Rates Over Time Closed Plant Projects 7.00% 6.00% 13% 5.00% 4.31% q 2896 4.36% 4.19% 4.18% 4.11% 4'20% 4.03% 3.89% 4.00% 3.11% 3.00% 2.88% 2.90% 2.90% 2.70% 2.59% 2.00% 1.00% 0.00% a $ eo o a $ oe o o $ oe o o $ oe o o $ eo a o $ eo c c B 8 c c B 8 c c B 8 c c $ 8 c c a a a $ $ $ $ o 0 0 o e e e e �n a a a c a a 0 Table 1.1 Summary of Closed Projects by Category Original Contract Approved Change Final Change Order Category Project Category Value Orders Contract Value Percentage Change Order Goal COLLECTIONS $297,116,525 $26,470,338 $323,586,863 8.91% 6.50% PLANT PROJECTS $936,154,615 $37,669,129 $973,823,744 4.02% 2.75% Total $1,233,271,140 S 64,139,467 $1,297,410,607 5.20% 5.00% Table 1.2 Construction Contract Performance - Active Projects Construction Original Contract ApproveclChange CurrentContract Project No %Complete Amount Orders Amount Collections 6-17 32.00% $ 3,699,301 $ - $ 3,699,301 7-37 89.00% $ 15,432,000 $ 1,196,359 $ 16,628,359 FE15-10 3.00% $ 1,389,000 $ - $ 1,389,000 Plant Projects 131-101 98.00% $ 126,908,300 $ 2,494,767 $ 129,403,067 PI-115B 1.00% $ 2,235,563 $ - $ 2,235,563 P2-92 79.00% $ 49,850,000 $ 777,585 $ 50,627,585 P2-92A 15.00% $ 3,304,000 $ - $ 3,304,000 132-110 19.00% $ 16,730,000 $ - $ 16,730,000 132-118 4.00% $ 906,975 $ - $ 906,975 J-126BFG 4.00% $ 557,759 $ - $ 557,759 J-126E 16.00% $ 418,000 $ - $ 418,000 J-117A 33.00% $ 12,609,012 $ - $ 12,609,012 FE13-04 97.00% $ 2,514,000 $ - $ 2,514,000 FE14-03 70.00% $ 594,000 $ - $ 594,000 FE16-05 0.00% $ 139,000 $ - $ 139,000 Table 1.3 Active Construction Contracts by Contractor Contractor/Project Number Project Name Current Contract Value Abhe&Svoboda, Inc. P2-118 Activated Sludge Aeration Basin Deck Repair at Plant No. 2 $ 906,975 Access Pacific J-126E Roof Fall Protection and Skylights $ 418,000 AMPCO Contracting FE16-05 Buried Water Valve Support Upgrades at Plant 2 $ 139,000 Amtek Construction J-126BFG Lights, Ladder and Walkway Hazards $ 557,759 Charles King Company,Inc. 6-17 District 6 Trunk Sewer Relief $ 3,699,301 FE35-10 East Lido Force Main Rehabilitation $ 1,389,000 Flatiron West Inc P2-110 Consolidated Demolition and Utility Improvements at Plant 2 $ 16,730,000 Kiewit Infrastructure West Co. 7.37 Gisler- Red Hill Trunk Improvements-Reach B $ 15,432,000 FE13-04 Plant No. 2 Trickling Filter Chemical Odor Control $ 2,514,000 P2-92A Truck Loading Bay Odor Control at Plant 2 $ 3,304,000 Kiewit Infrastructure West.Co. FE13-04 Plant No.2 Trickling Filter Chemical Odor Control $ 2,514,000 CDC Engineering and Technology P1-115B Rehabilitation of Fleet Services Building, Building 8 and Paving Area $ 2,235,563 Shimmick Construction Co.,Inc. J-217A Interplant Effluent Pipeline Rehabilitation $ 12,609,012 P2-92 Sludge Dewatering and Odor Control at Plant 2 $ 49,850,000 Tharsos,Inc. FE14-03 Rehabilitation of Digester Mixing Pumps at P2 Digesters E, H, R,S, and T $ 594,000 WM Lyles Company P1-101 Sludge Dewatering and Odor Control at Plant 1 $ 126,908,300 Table 2.1 Active Design Consultant Contracts by Consultant Project Agreement Original Number of Amendments Number Project Name Type Value Amendments To Date AECOM Technical Services,Inc. $ 20,923,626 3 $ 154,636 3-64 Rehabilitation of Western Regional Sewers PDSA $ 17,639,250 3 $ 154,636 PI-100 Digester Rehabilitation at Plant l PCSA $ 2,761,337 0 $ - P3429 ASI RAS Header Piping Replacement at Plant 1 PDSA $ 523,039 0 $ - Arcadis $ 8,677,000 1 $ 1,500,000 5-67 Bay Bridge Pump Station Replacement PDSA $ 7,137,000 0 $ - J-126 Safety Improvements Program PDSA $ 1,540,000 1 $ 1,500,000 Atkins North America,Inc. $ 611,307 2 $ 61,019 J-110 Final Effluent Sampler and Building Area Upgrades PCSA $ 611,307 2 $ 61,019 Black&Veatch $ 21,169,014 6 $ 981,376 J-111 Cengen Emissions Control Project PSA $ 62,035 0 $ - P2-98 Primary Treatment Rehabilitation at Plant 2 PDSA $ 18,141,423 3 $ 808,756 PS15-01 Skeolids Master Plan PSA $ 2,965,556 3 $ 172,620 Brown and Caldwell $ 29,518,131 20 $ 4,679,405 5-60 Newport Force Main Rehabilitation PCSA $ 2,231,925 4 $ 839,714 J-117 Ocean Outfall System Rehabilitation PDSA $ 6,778,015 13 $ 3,572,148 J-117A Interplant Effluent Pipeline Rehabilitation PCSA $ 1,121,666 0 $ - J-124 Digester Gas Facilities Rehabilitation PDSA $ 11,770,000 0 $ - P2-107 SCADA System and Network Upgrades PDSA $ 2,818,197 3 $ 267,543 P2-92 Sludge Dewatering and Odor Control at Plant 2 PCSA $ 4,798,328 0 $ - Carollo Engineers $ 21,190,979 6 $ 797,973 PI-105 Headworks Rehabilitation and Expansion at Plant I PDSA $ 17,528,957 1 $ 589,562 PI-123 Trunk Line Odor Control Improvements PCSA $ 529,970 0 $ - PSIS-10 2017 Facilities Master Plan PSA $ 3,132,052 5 $ 208,411 CDM Smith $ 5,319,930 0 $ P2-122 Headworks Modifications at Plant 2 for GWRS Final Expansion PDSA $ 5,319,930 0 $ - Dudek IS,Associates,Inc. $ 256A78 0 $ - PSIS-07 Pressurization and Odor Control Study at Newport Beach PSA $ 256,478 0 $ - GeosyntecConsultants $ 2,578,028 0 $ PS35.06 Seismic Hazard Evaluation at Plant Nos.1 and 2 PSA $ 2,578,029 0 $ - HDR Engineering,Inc. $ 19,057,648 3 $ 1,228,613 FEI6-21 Lane Channel Crossing PDCSSA $ 131,939 0 $ - P3-101 Sludge Dewatering and Odor Control at Plant 1 PCSA $ 7,140,000 2 $ 1,131,373 PI-128 Headquarters Complex,Site and Security,and Entrance Realignment Program PDSA $ 11,785,709 1 $ 97,240 Lee&go $ 11,722,178 5 $ 434,974 2-72 Newhope-Placentia Trunk Replacement PDSA $ 8,468,232 4 $ 434,974 PCSA $ 3,253,946 1 $ - Table 2.1 Active Design Consultant Contracts by Consultant Project Agreement Original Number of Amendments Number Project Name Type Value Amendments To Date Lockwood,Andrews&Newnam,Inc(LAN) $ 505,042 0 $ PSIS-02 Edinger Pump Station Rehabilitation Study PSA $ 505,042 0 $ - LSA ASSOCIATES INC $ 420,927 1 $ PS-128 Headquarters Complex,Site and Security,and Entrance Realignment Program PSA $ 420,927 1 $ - MICHAEL BAKER INTERNATIONAL,INC. $ 1,287,225 1 $ 241-8 SARI Rack Stabilizers Removal PDSA $ 399,008 0 $ - PSA $ 172,917 1 $ - PSI6-01 Stormwater Master Plan PSA $ 715,300 0 $ - PMWebinc $ 1,022,500 a $ J-129 Project Management Information System PSA $ 1,022,500 0 $ - RBFCONSULTING,INC. $ 475,308 3 $ 37,466 SP-178 Bay Bridge Pumpstatlon and Force Mains Rehabilitation Study PSA $ 475,308 3 $ 37,466 RMC Water&Environment $ 3,092,675 2 $ 19,372 6-17 District 6 Trunk Sewer Relief PCSA $ 290,000 1 $ - PSIS-08 Collections Capacity Evaluation Study PSA $ 2,802,675 1 $ 19,372 Stantec Consulting Services,Inc. $ 10,616,812 5 $ 737,629 362 Seal Beach Pump Station Rehabilitation PDSA $ 6,917,175 4 $ 641,768 P2-110 Consolidated Demolition and Utility Improvements at Plant 2 PCSA $ 1,499,839 0 $ - P2-89 Solids Thickening and Processing Upgrades PCSA $ 2,199,798 1 $ 95,861 Tetra Tech,Inc. $ 270,000 1 $ 10,000 7-37 Gisler-Red Hill Trunk Improvements-ReachB PCSA $ 270,000 1 $ 10,000 THE AUSTIN COMPANY $ 2,806,622 6 $ 549,321 PI-115 Title 24 Access Compliance and Building Rehabilitation Project PDSA $ 2,200,000 6 $ 549,321 PCSA $ 606,622 0 $ - Table 2.2 Activity Report for 2012 Master Professional Design Services Agreement Firm Task Order Status PROJECT TITLE/DESCRIPTION FY12.13 FY13-14 FY14.15 FE13-02, Repairs to Bar Screen at D Headworks at 12-00-01-01 Closed P2 $ 27,980.00 FE13-02 Amendment No.1 $ 9,200.00 FE13-02 Amendment No.2 $ 6,770.00 FR12-035,Edinger Pump Station Record Drawing $ 42,511.00 LEE&RO, INC 12-00-01-02 Closed Preparation PO#104615-OB FR12-035 Amendment No. 1 $ 10,455.00 Contract No.FE12-00-01 Closed FE13-01,(5-60)Newport Force Main Rehabilitation $ 74,600.00 12-00-01-03 FE13-01 5-60 Amendment No. 1 $ 24,943.00 FR13-020, Plant No.2 Gas Compressor Building $ 68,917.00 12-00-01-04 Open Piping Replacement FR13-020 Amendment No. 1 $ 30,568.00 FR13-020 Amendment No.2 $ 25,896.00 CUMULATIVE $ 43,950.00 $ 152,509.00 $ 125381.00 12-00-02-01 Closed FE12-06,84-inch P2 PI Line for Dist.Box B Rehab. $ 64,095.00 and Flow Meter Structure Alban.CLOSED DUDEK&ASSOCIATES, INC. FE09-04, P1 Potable Water System Improvements $ 50,472.00 PO#104616-OB 12-00-02-0240ossedContract No.FE12-00-02 FE09-04 Amendment No.1 $ 13,320.00 12-00-02-03FE14-04, Primary Influent Channels Repair at Plant l $71,841.00 CUMULATIVE $ 64,095.00 $ 63,792.00 $ 71,841.00 FR12-003,Warner Avenue Manholes StructuralRMC WATER AND ENVIRONMENT 12-00-03-01Repair Project $ 42,081.00 PO#104611-OB FR12-003 Amendment No. 1 $ 24,739.00 Contract No.FE12-00-03 12-00-03-02 Closed FR13-012,Santa Ana River Interceptor $ 56,404.00 CUMULATIVEI $ 66,820.00 1 $ 56,404.00 1E Table 2.2 Activity Report for 2012 Master Professional Design Services Agreement Firm Task Order Status PROJECT TITLE/DESCRIPTION FY12-13 FY13-14 FY14-15 TRAN CONSULTING ENGINEERS 12-00-04-01 Closed FR32-012,Slater Ave VFD Replacement $ 39,963.00 PO#104617-OB Contract No.FE12-00-04 FR12-012 Amendment No. 1 $ 26,968.00 CUMULATIVE $ 66,931.00 $ $ FE30-19, Landscaping and Miscellaneous $ 74,957.00 RBF CONSULTING 12-00-05-01 Closed Improvements Along Ellis Avenue PO#104626-OB FE10-19 Amendment No.1 $ 12,295.00 Contract No.FE12-00-05 I FE10-19 Amendment No.2 $ 5,876.00 CUMULATIVE $ 93128.00 $ $ 12-00-06-01 Closed FR12-030,P2 Solids Loading Station Truck Loading $ 15,935.00 Auger Access FE12-05, 15th St,Rocky Point and Bitter Point Pump IDS GROUP 12-00-06-02 Closed Station Fall Protection Improvements $ 40,575.00 PO#Contract No.FE FE12-05 Amendment No.1 $ 2,330.00 Contract No.FE12-00-06 12-00-06-03 Open FE12-10, IT Server Room Cooing Improvements $ 43,470.00 12-00-06-04 Closed FE14-01, Plant 1 Primary Sludge Handling $6,200.00 Modifications CUMULATIVE $ 58,840.00 $ 43,470.00 $ 6,200.00 PSOMAS 12-00-07-01 Closed FE12-02, Pl Hazardous Waste Storage Relocation $ 51,400.00 PO#104610-OB Contract No. FE12-00-01 CUMULATIVE $ 51400.00 $ $ Table 2.2 Activity Report for 2012 Master Professional Design Services Agreement Finn Task Order Status PROJECT TITLEIDESCRIPTION FY12-13 FY13-14 FY14-15 FE10-21,Area 02 Craig Regional Park Manhole $ 58,440.00 12-00-08-01 Open Improvements FE10-21 Amendment No.1 $ 18,780.00 FE10-21 Amendment No.2 $ 22,780.00 GRID 12-00-08-02 Closed FE32-07, Upgrade PLC Panels at P3 and P2- $ 69,940.00 PO#104612-OB FE33-04, Plant 2 Trickling Filter Odor Control System $ 74,910.00 Contract No.FE12-00-08 Upgrade 12-00-08-03 Open FE13-04 Amendment No.1 $ 9,635.00 FE13-04 Amendment No.2 $ 14,455.00 FE13-04 Amendment No.3 $ 24,235.00 FE13-04 Amendment No.4 $ 11,095.00 CUMULATIVE $ 169840.00 $ $ 134330.00 RMS ENGINEERING&DESIGN, INC. 12-00-09-01 Closed FE12-08, P2 TF/SC Blower Insultation Modifications $ 57,351.00 PO#104625-OB Contract No.FE12-00-09 FE12-08 Amendment No. 1 $ 27,390.00 CUMULATIVE $ $ 84741.00 $ HARRIS AND ASSOCIATES PO#104613-OB Contract No.FE12-00-10 CUMULATIVE $ $ $ TOTAL $ 615 004.00 $ 400 916.00 $ 331752.00 Table 2.3 Activity Report for 2015 Master Professional Design Services Agreement Firm Task Order Status Project Title/Description FY15-16 FY16-17 FY17-18 FE14-05,Plant No. 1 Fleet Services UST Leak $86,116.00 DUDEK FE15-00-01-01 Open Remediation PURCHASE ORDER NO.10543506 FE14-05 Amendment No. 1 $53,137.00 CONTRACT NO.FE15-00-01 FE15-00-01-02 Open lFEI5-09, CenGen Hot Water Pipe Bracing at P1 $146,516.00 FISCAL YEAR TOTAL $138 253.00 $146 516.00 $0.00 LEE& RO, INC. PURCHASE ORDER NO. 105436OB CONTRACT NO. FE15-00-02 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 GHD,INC. PURCHASE ORDER NO. 105469OB CONTRACT NO.FE15-00-03 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 FE15-00-04-01 Open PS17-02Guidelines for Development in the Area of $93,186.61 AECOM OCSD Facilities PURCHASE ORDER NO. 105440OB CONTRACT NO.FE15-00-04 FISCAL YEAR TOTAL $0.00 $0.00 $93,186.61 HAZEN AND SAWYER PURCHASE ORDER NO. 105451OB CONTRACT NO.FE15-00-05 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 RNICFE15-00-06-01 Open PS16-04, Rectangular Primary Clarifier Reliability $156,518.00 PURCHASE WATER AND ENVIRONMENT PURCHASE ORDER NO. 105441OB Study at Plant CONTRACT NO.FE15.00.06 FISCAL YEAR TOTAL $0.00 $0.00 $156 518.00 Table 2.3 Activity Report for 2015 Master Professional Design Services Agreement Firm Task Order Status Project Title/Description FY15-16 FYI 6-17 FY17-18 PROJECTLINE TECHNICAL FE15-00-07-01 Closed FE15-02, Plant No.2 Control Center Server Room $83,624.00 SERVICES,INC. HVAC Upgrade PURCHASE ORDER NO.105452OB CONTRACT NO.FE15-00-07 FISCAL YEAR TOTAL $83,624.00 $0.00 $0.00 TAIT&ASSOCIATES,INC. PURCHASE ORDER NO. 105449OB CONTRACT NO.FE15-00-08 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 BEYAZ&PATEL,INC. PURCHASE ORDER NO. 105445OB CONTRACT NO.FE15-00-09 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 IDS GROUP,INC. PURCHASE ORDER NO. 105437OB CONTRACT NO.FE15-00-10 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 KLEINFELDER,INC. PURCHASE ORDER NO.105433OB CONTRACT NO.FE15-00-11 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 FE15-00-12-01 Open FE16-10, East Basin Distribution Box Repair $79,990.00 RMS ENGINEERING&DESIGN,INC. PURCHASE ORDER NO. 105439OB CONTRACT NO.FE15-00-12 FISCAL YEAR TOTAL $0.00 $79,990.02 TOTAL $222,877.00 $226,506.00 $249,704.61 Table 3.1 Planning Studies Status Report Pr Project Name . Status LAllocated Budget PS15-01 PS15-01 Biosolids Master Plan Project Develop. $ 4,150,000 P515-02 PS15.02 Edinger Pump Station Rehabilitation Study Project Develop. $ 971,000 P515-03 P515-03 Slater Pump Station Rehabilitation Study Project Develop. $ 348,400 PSIS-04 P515-04 Network Architecture Master Plan Cancelled $ 7,511 PS15-05 PS35-05 SARI Sewershed Capacity Study Cancelled $ 3,043 PS15-06 PS35-06 Seismic Hazard Evaluation at Plant Nos. 1 and 2 Project Develop. $ 3,860,000 PS35-07 PS35-07 Pressurization and Odor Control Study at Newport Beach Project Develop. $ 535,200 PSIS-08 PS35-08 Collections Capacity Evaluation Study Project Develop. $ 4,529,678 PS15-09 PS15-09 Wastehauler and Fueling Stations Relocation Study Closed $ 164,577 P515-10 PS15.10 2017 Facilities Master Plan Project Develop. $ 4,150,000 P515-11 PS35-21 Office Trailer Relocation Evaluation Closed $ 35,781 PS16-01 PS16-015tormwater Master Plan Project Develop. $ 1,415,700 PS16-02 P516-02 SCE Feed Reliability Improvements Study Project Develop. $ 293,000 P516-03 PS36-03 Banning Gate Study Cancelled $ - PS16-04 PS36-04 Rectangular Primary Clarifier Reliability Study at Plant No.1 Project Develop. $ 420,000 PS37-01 PS37-01 Fire Flow Testing at Plant No. 1 Project Develop. $ 78,000 PS17-02 PS17-02 Guidelines for Development in the Area of OCSD Facilities Project Develop. $ 176,000 PS17-03 PS17.03 Active Fault Location Study at Plant No.2 Project Develop. $ 1,121,000 Grand Total $ 22,258,890 Total Chartered Project 18 Board Approved Program Budget $ 28,652,000 Remaining Unallocated Budget $ 6,393,110 Table 3.2 Research Program Status Report AM Project Name Status (located Budget RE16-01 RE16-01 Operational Research Technical Support FY16-17 Closed $ 66,773 RE17-01 RE17.01 Operational Research Technical Support FY17.18 Project Develop. $ 100,000 RE17-02 RE17-02 Biogas Scrubber Evaluation Project Develop. $ 865,000 RE17-03 RE17-03 Reliant Wet Well Wizard Test Project Develop. $ 74,000 Grand Total $ 1,105,773 Total Chartered Project 4 Board Approved Program Budget $ 8,500,000 Remaining Unallocated Budget $ 7,394,227 Table 3.3 Facilities Engineering Program - Collections Status Report Pr Project Name Status Allocated Budget FEIG-21 FE10-21 Area 02 Craig Regional Park Manhole Improvements Design $ 1,359,000 FE15.01 FE15.01 Fullerton Creek Channel Crossing Design $ 260,000 FE25-03 FEI5-03 Safety Improvements at all Pump Stations Cancelled $ 13,580 FE15-10 FEIS-10 East Lido Force Main Rehabilitation Construction $ 2,628,000 FEIS-13 FE15-13 Doig Drive Building Improvements Cancelled $ 54,683 FEI6-01 FE16-01 Big Canyon Nature Park Improvements Project Develop. $ 533,000 FEI6-02 FE36-02 Jamboree Sewer Realignment at Big Canyon Project Develop. $ 896,000 FE36-04 FE36-04 Rehabilitation of the Bushard Diversion Box Cancelled $ - FEI6-08 FE16-08 Carbon Canyon Clay Pipe Repairs Construction $ 1,131,000 FEI6.11 FE16-11 Lane Channel Crossing Project Develop. $ 1,251,000 FE26-13 FE36-13 Collections Infrastructure Relocation at Plant 2,Phase 1B Project Develop. $ 216,000 FEI6-14 FE16-14 Slater Pump Station Valve Replacements Project Develop. $ 906,000 FE37-01 FE17-01 Carbon Canyon Pipeline Sag Repairs Preliminary Des. $ 500,000 FE37-04 FE37-04 Storm Water Compliance Improvements at 3 Pump Stations Project Develop. $ 570,000 Grand Total $ 10,318,263 Total Chartered Project 13 Board Approved Program Budget $ 14,192,000 Remaining Unallocated Budget $ 3,873,737 Table 3.4 Facilities Engineering Program - Plant Status Report BUCKET TYPE M-FE-PLANT Project Number Project Name Status Allocated Budget FEIO-20 FEIO-202011 Miscellaneous Fall Protection Improvements Closed $ 1,031,558 FE12-09 FE12-08 TF/SC Modifications to Blower Building and Air Piping Closed $ 295,853 FE12-10 FE12-10 IT Server Room Cooling Improvements Warranty $ 960,000 FE13-04 FE13-04 Plant No.2 Trickling Filter Chemical OdorControl Construction $ 4,730,000 FE14-01 FE34-01 Plant I Primary Sludge Handling Modifications Closed $ 289,710 FE14-02 FE34-02 Plant I Primary West Side Sludge Pumping Modifications Closed $ 10,109 FE34-03 FE34-03 Rehabilitation of Digester Mixing Pumps at P2 Digesters E,H,R,S,a Construction $ 1,360,000 FE14-04 FE34-04 Primary Influent Channels Repair at Plant 1 Closed $ 692,153 FE14-OS FE34-05 Plant No.1 Fleet Services UST Leak Remediation Design $ 7,032,000 FE34-06 FE34-06 Plant No.2 Repairs to Air Dampers at COBS Closed $ 213,028 FEIS-02 FEIS-02 Plant No.2 Control Center Server Room HVAC Upgrade Cancelled $ 139,339 FEIS-04 FEIS-04 Plant No.1 Primary Clarifier Backwash System Demo Closed $ 67,307 FEIS-05 FEIS-05 Main Exit Gate Card Reader at Plant 2 Closed $ - FEIS-06 FEIS-06 Gas Compressor Building Piping Replacement at Plant 2 Construction $ 3,924,000 FEIS-07 FE15-07 Secondary Treatment and Plant Water VFD Replacement at Plant 1 Design $ 3,315,000 FEIS-09 FE15-08 ASI RAS Header Piping Replacement at Plant I Cancelled $ 70,655 FEIS-09 FE35-09 CenGen Hot Water Pipe Bracing at Plant 1 Design $ 425,000 FE16-03 FE36-03 Return Activated Sludge Piping Replacement at Plant 2 Cancelled $ - FE16-OS FEI6-OS Buried Water Valve Support Upgrades at Plant 2 Project Develop. $ 500,000 FE16-06 FE36-06 Fuel Cell Facilities Demolition Project Develop. $ 166,000 FE16-07 FEI6-07 Security Monitoring and Source Control Trailers at Plant 1 Cancelled $ - FE16-09 FEI6-09 Server Room Power Reliability Upgrades Plant 1 Cancelled $ - FE16-10 FEI6-10 East Basin Distribution Box Repair Bid and Award $ 854,000 FE16-12 FEI6-12 Garfield Road Perimeter Security Fence Project Develop. $ 121,000 FE17-02 FE17-02 Trailer Complex at Plant I Cancelled $ - FE17-03 FE17-03 Battery Storage System at Plant No.1 Project Develop. $ 250,000 Grand Total $ 26,446,712 Total Chartered Project 25 Board Approved Program Budget $ 43,325,000 Remaining Unallocated Budget $ 16,878,288 Table 3.5 Information Technology Capital Program Status Report Project Number Project Name Status Allocated Budget IT36-01 IT16-01 Enterprise Storage Arrays Active 1 $ 300,000 IT16.02 ITI6-02 Conference Room Monitors Active $ 43,000 IT16-03 IT36-03 Plant 2 Internet Connection Active $ 50,000 IT16-04 IT36-04 Replace back-up Web Proxy(TMG) Active $ 70,000 IT36-05 IT16-05 Plant 2 Radio Repeater Upgrade Active $ 35,000 IT36-06 IT36-06 Network Equipment 2016-17 Active $ 101,900 IT36-07 IT36-07 Server Replacement and Obsolescence Active $ 309,600 IT36-08 ITI6-08 IT Security 2016-17 Active $ 162,000 IT16-09 ITI6-09 iPACS Enhancements Active $ 85,000 IT16.10 IT16-10 LIMS Compliance Improv Project Active $ 490,000 IT16-11 IT16-11 Business Continuity Plan Active $ 490,000 IT17-01 IT17-01 VMWare Server Implementation Active $ 400,000 IT17-02 IT17-02 Upgrade Active Directory Directory to 2016 Active $ 56,000 IT17-03 IT17-03 Upgrade Shore7el System Server Active $ 190,000 IT17-04 IT17-04 Setup Virtual VAX Servers Active $ 44,000 IT17-05 IT17-05 Conference Room Monitor Upgrade Active $ 75,000 IT17-06 IT17-06 Upgrade MFP Equipment Active $ 350,000 IT17.07 IT17-07 Implement Safety Management Suite Active $ 106,000 Grand Total $ 3,357,500 Total Chartered Project 18 Board Approved Program Budget $ 10,000,000 Remaining Unallocated Budget $ 6,642,500 Table 4.1 Staff Augmentation Contract Status Total Fees Time Contract $41,000,000 86 months Iti Actuals to Date $8,243,504 20% 20 months 23% Remaining $32,756,496 80% 66 months 77% Assuming three 1-year extensions Table 4.2 Staff Augmentation Labor Summary This Quarter Inception to Date Labor Hours 8,731 58,804 Full Time Equivalents 19.4 19.6 Labor Costs(no expenses) $1,141,276 $8,080,002 Average Hourly Rate $131 $137 OPERATIONS COMMITTEE Meeting Date TOBd.Ot Dir. oz/o71rs o21ze�ia AGENDA REPORT emNumber Item Number 8 9 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: SECOND AMENDMENT TO THE 1972 WASTEWATER INTERCEPTOR CAPACITY AGREEMENT DATED APRIL 12, 1972 TO MODIFY THE COST-SHARING REACH DEFINITIONS FOR THE NEW PIPING SEGMENTS GENERAL MANAGER'S RECOMMENDATION Approve a Second Amendment to the Wastewater Interceptor Capacity Agreement dated April 12, 1972, between Orange County Sanitation District and Santa Ana Watershed Project Authority to modify the cost-sharing reach designations for the newly installed pipe and metering station. BACKGROUND Santa Ana Watershed Project Authority (SAWPA) and the Orange County Sanitation District (Sanitation District) have been working cooperatively with the County of Orange to realign the Santa Ana River Interceptor pipe from the Riverside/Orange County line through Anaheim. The new pipe alignment is different than the old pipe with different points of inflow from the local systems. The original Agreement called for cost-sharing percentages that were based on flow capacity splits owned by each party in each reach. A reach is defined as a portion or segment of the proposed Santa Ana River Interceptor, selected for cost-allocation purposes. The Agreement defined eight individual reaches. The reaches defined as reaches 5, 6, 7, and S in the original Agreement were replaced by the County of Orange project. The proposed Amendment redefines the cost split for future capital and maintenance costs for the new pipeline using the same capacity utilization methodology. Generally, SAWPA will pay the on-going capital and maintenance costs for their30 million gallons per day percentage of the pipeline's total capacity. RELEVANT STANDARDS • Maintain collaborative and cooperative relationships with neighboring agencies • Maintain a proactive asset management program Page 1 d 2 PROBLEM The Santa Ana River Interceptor pipeline has been realigned. The cost-sharing proportions defined in the old Agreement need to be adjusted to match the new pipe reaches. PROPOSED SOLUTION Amend the 1972 Agreement to reflect the new pipe alignment. TIMING CONCERNS This administrative change should be completed as soon as possible to clearly define the financial responsibilities of both parties. RAMIFICATIONS OF NOT TAKING ACTION Lack of contractual clarity will result in unequal cost sharing. PRIOR COMMITTEE/BOARD ACTIONS November 2013 - First Amendment to the Wastewater Interceptor Capacity Agreement approved by the Board of Directors. April 1972 - Wastewater Interceptor Capacity Agreement approved by the Board of Directors. ADDITIONAL INFORMATION N/A CECIA N/A FINANCIAL CONSIDERATIONS There are no new cost implications to this contractual clarification. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: • Second Amendment to Wastewater Interceptor Capacity Agreement • Exhibit B to the Agreement KM:sa:gc Page 2 of 2 SECOND AMENDMENT TO WASTE WATER INTERCEPTOR CAPACITY AGREEMENT This Second Amendment to Waste Water Interceptor Capacity Agreement is entered into by and between the Santa Ana Watershed Project Authority("SAWPA") and the Orange County Sanitation District("OCSD"). This Second Amendment shall be effective as of February. 2018. SAWPA and OCSD are sometimes collectively referred to herein as the`Parties,"and individually referred to as each 'Party." RECITALS WHEREAS, on April 12, 1972,the Chino Basin Municipal Water District("Chino Basin") and County Sanitation District No. 2 of Orange County ("CSD No. 2") entered into the "Waste Water Interceptor Capacity Agreement" ("1972 Capacity Agreement'),and SAWPA and OCSD,respectively,are the successors-in-interest to Chino Basin and CSD No. 2 under the 1972 Capacity Agreement; and WHEREAS, on July 24, 1996, SAWPA and County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County entered into the "Wastewater Treatment and Disposal Agreement' ("1996 Treatment Agreement'), Secton C.27 of the 1996 Treatment Agreement amended the second sentence of Section D.8 of the 1972 Capacity Agreement, and OCSD is the successor-in-interest to County Sanitation Districts Nos. 1,2, 3, 5, 6, 7, 11, 13 and 14 of Orange County under the 1996 Treatment Agreement; and WHEREAS, on November 21, 2013, SAWPA and OCSD entered into the"First Amendment to Waste Water Interceptor Capacity Agreement"("First Amendment'); and WHEREAS,the Parties desire to make certain other amendments to the 1972 Capacity Agreement, as set forth below. Now, therefore,the Parties agree to amend the Waste Water Interceptor Capacity Agreement as follows: AGREEMENT 1. The Recitals above are deemed true and correct, are hereby incorporated in this Amendment as though fully set forth herein, and the Parties acknowledge and agree that they are bound by the same. 2. The table in Section D.2 of the 1972 Capacity Agreement is amended and restated in its entirety as follows: Reach %Cost Audited Capital Cost of Reach 1 37.5% 2 43.0% 1259164.1 3 49.0% 4 55.5% 5 Abandoned 65.0% 6 Abandoned 81.0% 7 Abandoned 85.5% 8 Abandoned 100.0% A 65.0% B 70.0% C 100% D 100% 3.. Section D.5 of the 1972 Capacity Agreement is amended and restated in its entirety as follows: 5. Operation and Maintenance Expense. SAWPA shall pay annually,upon billing by OCSD, its proportional share of all operating and maintenance expenses applicable to each reach of the Santa Ana River Interceptor,including ordinary repair and property taxes,but not including depreciation. SAWPA's proportional share for each reach shall be based on the percentages set forth in Section D.2 above for capital payments. 4.. Exhibit`B"to the 1972 Capacity Agreement is repealed and restated in its entirety with Exhibit`B"attached hereto. 5.. Except as expressly provided herein,this Second Amendment does not modify the 1972 Capacity Agreement or the First Amendment. 6.2. This Second Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement. ////Signatures continue on following page//// 1259164.1 Dated: �2017 Santa Ana Watershed Project Authority By: Title: Dated: � 2017 Orange County Sanitation District By: Title: Dated: �2017 Santa Ana Watershed Project Authority By: Title: Clerk Dated: _,2017 Orange County Sanitation District By: Title: Clerk Approved as to Fonn Santa Ana Watershed Project Authority Dated: , 2017 By: Title: General Counsel Approved as to Form Orange County Sanitation District Dated: _, 2017 By: Title: General Counsel 1259164.1 EXHIBIT "B rr ^ ♦ E \ F REACH A REACH B REACH D tREA C Anaheim v.M F 111.Ps.N. LSar Kos - 4 i ange �a Y! ate. 1 f r ro, jSan[ y° �roN f iJl _ wYMa $ N• i In., T on I l • Reach MAS to MAS Percentage SAWPA ® --- - 1 SAR0345 37.5% hvinr Treatment 2 SAR0345 to SAR0390 43.0 Plant No.1 - �� 0 3 SAR0390 to SAR0420 49.0% 4 SAR0420 to SAR0450 55.5% e° A SAR0450 to SAR0700 65.0% B SAR0700 to SAR0811 70.0% r4.en C SAR0811 to SAR0815 100% D SAR0815 to SARO680 100%D District ABBREVIATIONS DISCLAIMER ■ Treatment Plant No. 1 O M„7h,IV 4.,,MWII%oar,,.na.n ss�,DmK Boundary RCH- REACH -mw,VVhM1 Te . . Yorba Linda MAS- Maintenance Access D'R � Spur Odor amol Sewer Mains Structure Station r Maintenance 8 Gate Structure A Access ❑N Meter Station 00 0.512 Structure (MAS) Miles OPERATIONS COMMITTEE Meeting Date TOBd.Of Dir. oz/o71ts oz/ze�ia AGENDA REPORT emNumber Item Number 9 10 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: James Colston, Director of Environmental Services SUBJECT: CONTRACTING AQUATIC BIOASSAY& CONSULTING LABORATORIES, INC. FOR TAXONOMIC SERVICES GENERAL MANAGER'S RECOMMENDATION A. Award a service contract to Aquatic Bioassay & Consulting Laboratories, Inc., Specification No. S-2017-881, to provide taxonomic services, specifically infauna sample sorting and echinoderm (e.g., sea stars)taxonomic identification, for a total amount not to exceed $190,630, for the period March 1, 2018 through February 28, 2019, with four(4) one-year renewal options; and B. Approve a contingency of$19,063 (10%). BACKGROUND A significant part of the Orange County Sanitation District's (Sanitation District) NPDES permit-mandated Ocean Monitoring Program is assessing the health of invertebrate communities in the monitoring area. This requires the identification of all invertebrate animals to species-level that are collected from 68 sites (97 total samples) per year. The first step of the laboratory process is sample sorting. This involves removing the animals from the rocks and other debris that are collected along with the animals and to sort them into five major taxonomic groups (i.e., worms, snails, sea stars, shrimps, miscellaneous). This is a time and labor-intensive process that is more cost-effective to outsource than to have the Sanitation District staff perform. In addition, two Ocean Team staff are still in training and some species identifications by the contractor are needed until their training is completed. The total cost, not to exceed $190,630 annually, is based on all possible taxonomic services that could be required of the contractor. This includes the majority of the program elements which are currently being performed by the Sanitation District Ocean Team staff. The actual annual expenditure is estimated to be $70,000 for sample sorting and echinoderm taxonomy. RELEVANT STANDARDS NPDES permit requirements Page 1 of 3 PROBLEM The Sanitation District is mandated by the NPDES permit to annually monitor and report on benthic (ocean bottom) community health in the ocean environment that receives the treated wastewater effluent. There is not enough staff to sort the benthic samples, nor would it be cost-effective to hire staff for this purpose. Therefore, outside contractor support is necessary to meet this environmental monitoring requirement. PROPOSED SOLUTION The contracting of Aquatic Bioassay & Consulting Laboratories, Inc. will provide the skill set necessary to meet our permit requirements. During this time, staff will continue the training necessary to be self-sufficient in invertebrate species identification. TIMING CONCERNS Ocean invertebrate samples were collected in January 2018 and are awaiting processing and analysis. More samples will be collected in July 2018. The sorting of the January 2018 samples must be completed by May 2018 to meet taxonomic, data analysis, and reporting requirements for the 2017-18 Marine Monitoring Annual Report submittal to regulators. RAMIFICATIONS OF NOT TAKING ACTION Ocean Discharge permit compliance will not be met for receiving waters monitoring as required. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District issued a Notice Inviting Bids in October 2017. Two bids were received as follows: Aquatic Bioassay & Consulting Laboratories, Inc. $190,630 Marine Taxonomic Services, LTD $227,100 Aquatic Bioassay & Consulting Laboratories, Inc. was found to be the lowest responsive and responsible bidder. Therefore, staff recommends awarding to the firm. CEQA N/A Page 2 d 3 FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. (Budget Update FY2017-18, Line item: Page 43, Operating Expense, Professional/Contractual Services). Date of Approval contract Amount Contingency 02/28/2018 $190,630 $19,063 (10%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Service Contract Page 3 of 3 SERVICE CONTRACT Benthic Infauna Sorting and Taxonomic Services Specification No. S-2017.881 THIS CONTRACT is made and entered into as of the date fully executed below, by and between Orange County Sanitation District, with a principal place of business at 10844 Ellis Avenue, Fountain Valley, CA 92708 (hereinafter referred to as "OCSD") and Aquatic Bioassay & Consulting Laboratories, Inc. with a principal place of business at 29 N. Olive St. Ventura, CA 93001 (hereinafter referred to as "Service Provider")collectively referred to as the "Parties". WITNESSETH WHEREAS, OCSD desires to temporarily retain the services of Service Provider for Benthic Infauna Sorting and Taxonomic Services"Services" as described in Exhibit"A"; and WHEREAS, OCSD has chosen Service Provider to conduct Services in accordance with Ordinance No. OCSD-47; and WHEREAS, on February 28, 2018, the Board of Directors of OCSD, by minute order, authorized execution of this Contract between OCSD and Contractor; and WHEREAS, Service Provider is qualified by virtue of experience, training, and expertise to accomplish such Services, NOW, THEREFORE, in consideration of the mutual promises and mutual benefits exchanged between the Parties, the Parties mutually agree as follows: 1. Introduction 1.1 This Contract and all exhibits hereto (called the "Contract") is made by OCSD and the Service Provider. The terms and conditions herein exclusively govern the purchase of Services as described in Exhibit"A". 1.2 Exhibits to this Contract are incorporated by reference and made a part of this Contract as though fully set forth at length herein. Exhibits to this Contract are as follows in order of precedence: Exhibit"A" Scope of Work, including Appendix A Exhibit"B" Bid Price Form Exhibit"C" Acknowledgement of Insurance Requirements Exhibit"D" OCSD Safety Standards Exhibit"E" Not Used 1.3 In the event of any conflict or inconsistency between the provisions of this Contract and any of the provisions of the exhibits hereto, the provisions of this Contract shall in all respects govern and control. 1.4 The provisions of this Contract may be amended or waived only by a writing executed by authorized representatives of both Parties hereto. Orange County Sanitation District 1 of 10 Specification No. S-2017-881 Version 052217 1.5 The various headings in this Contract are inserted for convenience only and shall not affect the meaning or interpretation of this Contract or any paragraph or provision hereof. 1.6 The term "days", when used in the Contract, shall mean calendar days, unless otherwise noted as business days. 1.7 OCSD holidays (non-working days) are as follows: New Year's Day, Lincoln's Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, Day after Thanksgiving, Christmas Eve, and Christmas Day. In the case that a holiday falls on a weekend day, OCSD observance of the holiday shall be on the nearest business day. 1.8 The term "hours", when used in this Contract, shall be as defined in Exhibit"A". 1.9 Service Provider shall provide OCSD with all required premiums and/or overtime work at no charge beyond the price provided under"Compensation" below. 1.10 Except as expressly provided otherwise, OCSD accepts no liability for any expenses, losses, or action incurred or undertaken by Service Provider as a result of work performed in anticipation of purchases of said services by OCSD. 2. Compensation Compensation to be paid by OCSD to Service Provider for the Services provided under this Contract shall be a total amount not to exceed One Hundred Ninety Thousand Six Hundred Thirty Dollars ($190.630.00). 3. California Department of Industrial Relations(DIR)Registration and Record of Wailes 3.1 To the extent Service Provider's employees and/or its subcontractors who will perform Work during the design and preconstruction phases of a construction contract for which Prevailing Wage Determinations have been issued by the DIR and as more specifically defined under Labor Code Section 1720 at seq, Service Provider and its subcontractors shall comply with the registration requirements of Labor Code Section 1725.5. Pursuant to Labor Code Section 1771.4, the work is subject to compliance monitoring and enforcement by the DIR. 3.2 The Service Provider and its subcontractors shall maintain accurate payroll records and shall comply with all the provisions of Labor Code Section 1776, and shall submit payroll records to the Labor Commissioner pursuant to Labor Code 1771.4(a)(3). Penalties for non- compliance with the requirements of Section 1776 may be deducted from progress payments per Section 1776. 3.3 Pursuant to Labor Code Section 1776, the Service Provider and its subcontractors shall furnish a copy of all certified payroll records to OCSD and/or general public upon request, provided the public request is made through OCSD, the Division of Apprenticeship Standards or the Division of Labor Enforcement of the Department of Industrial Relations. 3.4 The Service Provider and its subcontractors shall comply with the job site notices posting requirements established by the Labor Commissioner per Title 8, California Code of Regulation Section 16461(e). 4. Payments and Invoicing 4.1 OCSD shall pay, net thirty (30) days, upon receipt and approval, by OCSD's Project Manager or designee, of itemized invoices submitted for completion of tasks and Orange County Sanitation District 2 of 10 Specification No. S-2017-881 Version 052217 deliverables in accordance with Exhibit "A" and Exhibit "B". OCSD, at its sole discretion, shall be the determining party as to whether the tasks and deliverables have been satisfactorily completed. 4.2 Invoices shall be emailed by Service Provider to OCSD Accounts Payable at APStaffCcDOCSD.com and "INVOICE" with the Purchase Order Number and 5-2017-881 shall be referenced in the subject line. 5. Audit Riahts Service Provider agrees that, during the term of this Contract and for a period of three (3)years after its termination, OCSD shall have access to and the right to examine any directly pertinent books, documents, and records of Service Provider relating to the invoices submitted by Service Provider pursuant to this Contract. 6. Scope of Work Subject to the terms of this Contract, Service Provider shall perform the Services identified in Exhibit"A". Service Provider shall perform said Services in accordance with generally accepted industry and professional standards. 7. Modifications to Scope of Work Requests for modifications to the Scope of Work hereunder can be made by OCSD at any time. All modifications must be made in writing and signed by both Parties. 6. Contract Tenn The Services provided under this Contract shall commence on March 1, 2018 through February 28, 2019. 9. Renewals 9.1 OCSD may exercise the option to renew this Contract for up to four (4) one-year periods based upon the criteria set forth in Exhibit "A", under the terms and conditions contained herein. OCSD shall make no obligation to renew nor give reason if it elects not to renew. 9.2 This Contract may be renewed through the OCSD Purchase Order process. 10. Extensions The term of this Contract may be extended only by written instrument signed by both Parties. 11. Performance Time is of the essence in the performance of the provisions hereof. 12. Termination 12.1 OCSD reserves the right to terminate this Contract for its convenience, with or without cause, in whole or in part, at any time, by written notice from OCSD of intent to terminate. Upon receipt of a termination notice, Service Provider shall immediately discontinue all work under this Contract(unless the notice directs otherwise). OCSD shall thereafter,within thirty (30)days, pay Service Provider for work performed (cost and fee)to the date of termination. Service Provider expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of this Contract. Such notice of termination shall terminate this Contract and release OCSD from any further fee, cost or claim hereunder by Service Provider other than for work performed to the date of termination. 12.2 OCSD reserves the right to terminate this Contract immediately upon OCSD's determination that Service Provider is not complying with the Scope of Work requirements, if the level of service is inadequate, or any other default of this Contract. Orange County Sanitation District 3 of 10 Specification No. S-2017-881 Version 052217 12.3 OCSD may also immediately cancel for default of this Contract in whole or in part by written notice to Service Provider: • if Service Provider becomes insolvent or files a petition under the Bankruptcy Act; or • if Service Provider sells its business; or • if Service Provider breaches any of the terms of this Contract; or • if total amount of compensation exceeds the amount authorized under this Contract. 12.4 All OCSD property in the possession or control of Service Provider shall be returned by Service Provider to OCSD upon demand, or at the termination of this Contract, whichever occurs first. 13. Insurance Service Provider and all subcontractors shall purchase and maintain,throughout the life of this Contract and any periods of warranty or extensions, insurance in amounts equal to the requirements set forth in the signed Acknowledgement of Insurance Requirements (attached hereto and incorporated herein as Exhibit "C"). Service Provider shall not commence work under this Contract until all required insurance is obtained in a form acceptable to OCSD, nor shall Service Provider allow any subcontractor to commence service pursuant to a subcontract until all insurance required of the subcontractor has been obtained. Failure to maintain required insurance coverage shall result in termination of this Contract. 14. Bonds (Not Used) 15. Indemnification and Hold Harmless Provision Service Provider shall assume all responsibility for damages to property and/or injuries to persons, including accidental death, which may arise out of or be caused by Service Provider's services under this Contract, or by its subcontractor(s)or by anyone directly or indirectly employed by Service Provider, and whether such damage or injury shall accrue or be discovered before or after the termination of the Contract. Except as to the sole active negligence of or willful misconduct of OCSD, Service Provider shall indemnify, protect, defend and hold harmless OCSD, its elected and appointed officials, officers, agents and employees, from and against any and all claims, liabilities, damages or expenses of any nature, including attorneys'fees: (a)for injury to or death of any person or damage to property or interference with the use of property, arising out of or in connection with Service Provider's performance under the Contract, and/or (b) on account of use of any copyrighted or uncopyrighted material, composition, or process, or any patented or unpatented invention, article or appliance, furnished or used under the Contract, and/or (c) on account of any goods and services provided under this Contract. This indemnification provision shall apply to any ads or omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of Service Provider of or anyone employed by or working under Service Provider. To the maximum extent permitted by law, Service Provider's duty to defend shall apply whether or not such claims,allegations, lawsuits, or proceedings have merit or are meritless, or which involve claims or allegations that any of the parties to be defended were actively, passively, or concurrently negligent, or which otherwise assert that the parties to be defended are responsible, in whole or in part, for any loss, damage,or injury. Service Provider agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. 16. OCSD Safety and Human Resources Policies OCSD requires Service Provider and its subcontractor(s) to follow and ensure their employees follow all Federal, State, and local regulations as well as OCSD Safety Standards while working at OCSD locations. If during Orange County Sanitation District 4 of 10 Specification No. S-2017-881 Version 052217 the course of the Contract it is discovered that OCSD Safety Standards do not comply with Federal, State, or local regulations, then the Service Provider is required to follow the most stringent regulatory requirement at no additional cost to OCSD. Service Provider and all of its employees and subcontractors, shall adhere to all applicable OCSD Safety Standards, SOP-607 Hazard Communication, SOP-102 PPE, and Human Resources Policies found at: OCSD.com, under "About Us", 'Transparency", "Safety and Human Resources Policy". All applicable OCSD Safety and Human Resources Policies are hereby incorporated by reference as though fully set forth herein in Exhibit"D". 17. Warranties Service Provider's Warranty (Guarantee): If within a one (1) year period of completion of all work as specified in Exhibit"A", OCSD informs Service Provider that any portion of the Services provided fails to meet the standards required under this Contract, Service Provider shall, within the time agreed to by OCSD and Service Provider, take all such actions as are necessary to correct or complete the noted deficiency(ies) at Service Provider's sole expense. 18. Liguidated Damages (Not Used) 19. Force Majeure Neither party shall be liable for delays caused by accident, flood, acts of God, fire, labor trouble, war, acts of government or any other cause beyond its control, but said party shall use reasonable efforts to minimize the extent of the delay. Work affected by a Force Majeure condition may be rescheduled by mutual consent or may be eliminated from the Contract. 20. Freight (F.O.B. Destination) Service Provider assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products deemed necessary under this Contract. 21. Familiarity with Work By executing this Contract, Service Provider warrants that: 1)it has investigated the work to be performed; and 2) it understands the facilities, difficulties and restrictions of the work under this Contract. Should Service Provider discover any latent or unknown conditions materially differing from those inherent in the work or as represented by OCSD, it shall immediately inform OCSD of this and shall not proceed, except at Service Provider's risk, until written instructions are received from OCSD. 22. Regulatory Requirements Service Provider shall perform all work under this Contract in strict conformance with applicable Federal, State, and local regulatory requirements including, but not limited to, 40 CFR 122, 123, 124, 257, 258, 260, 261, and 503, Title 22, 23, and California Water Codes Division 2. 23. Licenses, Permits. Ordinances and Regulations Service Provider represents and warrants to OCSD that it has obtained all licenses, permits, qualifications, and approvals of whatever nature that are legally required to engage in this work. Any and all fees required by Federal, State, County, City and/or municipal laws, codes and/or tariffs that pertain to the work performed under the terms of this Contract will be paid by Service Provider. 24. Applicable Laws and Regulations Service Provider shall comply with all applicable Federal, State, and local laws, rules, and regulations. Service Provider also agrees to indemnify and hold harmless from any and all damages and liabilities assessed against OCSD as a result of Service Provider's noncompliance therewith. Any permission required by law to be included herein shall be deemed included as a part of this Contract whether or not specifically referenced. Orange County Sanitation District 5 of 10 Specification No. S-2017-881 Version 052217 25. Service Provider's Employees Compensation 25.1 Davis-Bacon Act — Service Provider will pay and will require all subcontractors to pay all employees on said project a salary or wage at least equal to the prevailing rate of per diem wages as determined by the Secretary of Labor in accordance with the Davis-Bacon Act for each craft or type of worker needed to perform the Contract. The provisions of the Davis- Bacon Act shall apply only if the Contract is in excess of two thousand dollars ($2,000.00) and when twenty-five percent (25%) or more of the Contract is funded by Federal assistance. If the aforesaid conditions are met, a copy of the provisions of the Davis-Bacon Act to be complied with are incorporated herein as a part of this Contract and referred to by reference. 25.2 General Prevailing Rate — OCSD has been advised by the State of California Director of Industrial Relations of its determination of the general prevailing rate of per diem wages and the general prevailing rate for legal holiday and overtime work in the locality in which the work is to be performed for each craft or type of work needed to execute this Contract, and copies of same are on file in the Engineering Department. The Service Provider agrees that not less than said prevailing rates shall be paid to workers employed on this Contract as required by Labor Code Section 1774 of the State of California. Per California Labor Code 1773.2,OCSD will have on file copies of the prevailing rate of per diem wages at its principal office and at each project site, which shall be made available to any interested party upon request. 25.3 Forfeiture For Violation — Service Provider shall, as a penalty to OCSD, forfeit fifty dollars ($50.00)for each calendar day or portion thereof for each worker paid (either by the Service Provider or any subcontractor under it) less than the prevailing rate of per diem wages as set by the Director of Industrial Relations, in accordance with Sections 1770-1780 of the California Labor Code for the work provided for in this Contract, all in accordance with Section 1775 of the Labor Code of the State of California. 25.4 Apprentices—Sections 1777.5, 1777.6, 1777.7 of the Labor Code of the State of California, regarding the employment of apprentices are applicable to this Contract and the Service Provider shall comply therewith if the prime contract involves thirty thousand dollars ($30,000.00) or more or twenty (20) working days or more; or if contracts of specialty contractors not bidding for work through the general or prime Service Provider are two thousand dollars ($2,000.00)or more or five (5)working days or more. 25.5 Workday—In the performance of this Contract, not more than eight(8)hours shall constitute a day's work, and the Service Provider shall not require more than eight (8) hours of labor in a day from any person employed by it hereunder. Service Provider shall conform to Article 3, Chapter 1, Part 7 (Section 1810 et seq.)of the Labor Code of the State of California and shall forfeit to OCSD as a penalty, the sum of twenty-five dollars ($25.00) for each worker employed in the execution of this Contract by Service Provider or any subcontractor for each calendar day during which any worker is required or permitted to labor more than eight (8) hours in any one (1) calendar day and forty (40) hours in any one (1) week in violation of said Article. Service Provider shall keep an accurate record showing the name and actual hours worked each calendar day and each calendar week by each worker employed by Service Provider in connection with the project. 25.6 Record of Wages; Inspection—Service Provider agrees to maintain accurate payroll records showing the name, address, social security number, work classification, straight-time and overtime hours worked each day and week, and the actual per diem wages paid to each Orange County Sanitation District 6 of 10 Specification No. S-2017-881 Version 052217 journeyman, apprentice, worker or other employee employed by it in connection with the project and agrees to require that each of its subcontractors do the same. All payroll records shall be certified as accurate by the applicable Service Provider or subcontractor or its agent having authority over such matters. Service Provider further agrees that its payroll records and those of its subcontractors shall be available to the employee or employee's representative, the Division of Labor Standards Enforcement, and the Division of Apprenticeship Standards and shall comply with all of the provisions of Labor Code Section 1776, in general. Penalties for non-compliance with the requirements of Section 1776 may be deducted from project payments per the requirements of Section 1776. 26. South Coast Air Quality Management District's (SCAQMD)Requirements It is Service Provider's responsibility that all equipment furnished and installed be in accordance with the latest rules and regulations of the South Coast Air Quality Management District(SCAQMD). All Contract work practices, which may have associated emissions such as sandblasting, open field spray painting or demolition of asbestos containing components or structures, shall comply with the appropriate rules and regulations of the SCAQMD. 27. Governing Law This Contract shall be governed by and interpreted under the laws of the State of California and the Parties submit to jurisdiction in the County of Orange, in the event any action is brought in connection with this Contract or the performance thereof. 26. Breach The waiver of either party of any breach or violation of, or default under, any provision of this Contract, shall not be deemed a continuing waiver by such party of any other provision or of any subsequent breach or violation of this Contract or default thereunder. Any breach by Service Provider to which OCSD does not object shall not operate as a waiver of OCSD's rights to seek remedies available to it for any subsequent breach. 29. Remedies In addition to other remedies available in law or equity, if the Service Provider fails to make delivery of the goods or Services or repudiates its obligations under this Contract, or if OCSD rejects the goods or Services or revokes acceptance of the goods or Services, OCSD may(1)cancel the Contract; (2)recover whatever amount of the purchase price OCSD has paid, and/or (3) "cover' by purchasing, or contracting to purchase, substitute goods or Services for those due from Service Provider. In the event OCSD elects to "cover" as described in (3), OCSD shall be entitled to recover from Service Provider as damages the difference between the cost of the substitute goods or Services and the Contract price, together with any incidental or consequential damages. 30. Dispute Resolution 30.1 In the event of a dispute as to the construction or interpretation of this Contract, or any rights or obligations hereunder, the Parties shall first attempt, in good faith, to resolve the dispute by mediation. The Parties shall mutually select a mediator to facilitate the resolution of the dispute. If the Parties are unable to agree on a mediator, the mediation shall be conducted in accordance with the Commercial Mediation Rules of the American Arbitration Agreement, through the alternate dispute resolution procedures of Judicial Arbitration through Mediation Services of Orange County ("JAMS"), or any similar organization or entity conducting an alternate dispute resolution process. 30.2 In the event the Parties are unable to timely resolve the dispute through mediation, the issues in dispute shall be submitted to arbitration pursuant to California Code of Civil Procedure, Part 3, Title 9, Sections 1280 at seq. For such purpose, an agreed arbitrator shall be selected, or in the absence of agreement, each party shall select an arbitrator, and Orange County Sanitation District 7 of 10 Specification No. S-2017-881 Version 052217 those two(2)arbitrators shall select a third. Discovery may be conducted in connection with the arbitration proceeding pursuant to California Code of Civil Procedure Section 1283.05. The arbitrator, or three (3) arbitrators acting as a board, shall take such evidence and make such investigation as deemed appropriate and shall render a written decision on the matter in question. The arbitrator shall decide each and every dispute in accordance with the laws of the State of California. The arbitrator's decision and award shall be subject to review for errors of fact or law in the Superior Court for the County of Orange, with a right of appeal from any judgment issued therein. 31. Attorney's Fees If any action at law or in equity or if any proceeding in the form of an Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this Contract, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which he may be entitled. 32. Survival The provisions of this Contract dealing with Payment, Warranty, Indemnity, and Fomm for Enforcement, shall survive termination or expiration of this Contract. 33. Severablllty If any section, subsection, or provision of this Contract, or any agreement or instrument contemplated hereby, or the application of such section, subsection,or provision is held invalid,the remainder of this Contract or instrument in the application of such section, subsection or provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby, unless the effect of such invalidity shall be to substantially frustrate the expectations of the Parties. 34. Damage to OCSD's Property Any of OCSD's property damaged by Service Provider, any subcontractors or by the personnel of either will be subject to repair or replacement by Service Provider at no cost to OCSD. 35. Disclosure Service Provider agrees not to disclose, to any third party, data or information generated from this project without the prior written consent from OCSD. 36. Independent Contractor The legal relationship between the parties hereto is that of an independent contractor, and nothing herein shall be deemed to make Service Provider an OCSD employee. During the performance of this Contract,Service Provider and its officers, employees, and agents shall act in an independent capacity and shall not act as OCSD's officers, employees, or agents. Service Provider and its officers, employees, and agents shall obtain no rights to any benefits which accrue to OCSD's employees. 37. Limitations upon Subcontracting and Assignment Service Provider shall not delegate any duties nor assign any rights under this Contract without the prior written consent of OCSD. Any such attempted delegation or assignment shall be void. 36. Third Party Rights Nothing in this Contract shall be construed to give any rights or benefits to anyone other than OCSD and Service Provider. 39. Non-Liability of OCSD Officers and Employees No officer or employee of OCSD shall be personally liable to Service Provider, or any successor-in-interest, in the event of any default or breach by OCSD or for any amount which may become due to Service Provider or to its successor, or for breach of any obligation for the terms of this Contract. 40. Read and Understood By signing this Contract, Service Provider represents that he has read and understood the terms and conditions of the Contract. Orange County Sanitation District 8 of 10 Specification No. S-2017-881 Version 052217 41. Authority to Execute The persons executing this Contract on behalf of the Parties warrant that they are duly authorized to execute this Contract and that by executing this Contract, the Parties are formally bound. 42. Entire Contract This Contract constitutes the entire agreement of the Parties and supersedes all prior written or oral and all contemporaneous oral agreements, understandings, and negotiations between the Parties with respect to the subject matter hereof. Orange County Sanitation District 9 of 10 Specification No. S-2017-881 Version 052217 43. Notices All notices under this Contract must be in writing. Written notice shall be delivered by personal service or sent by registered or certified mail, postage prepaid, return receipt requested, or by any other overnight delivery service which delivers to the noticed destination and provides proof of delivery to the sender. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given as provided hereunder shall be deemed to be receipt of the notice, demand or request sent. All notices shall be effective when first received at the following addresses: OCSD: Clarice M. Marcin Senior Contracts Administrator Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708 Service Provider: Aquatic Bioassay&Consulting Laboratories, Inc. Scott Johnson 29 N. Olive Street Ventura, CA 93001 Each party shall provide the other party written notice of any change in address as soon as practicable. IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have caused this Contract to be signed by the duly authorized representatives. ORANGE COUNTY SANITATION DISTRICT Dated: By: Gregory C. Sebourn, PLS Chair, Board of Directors Dated: By: Kelly Lore Clerk of the Board Dated: By: Contracts, Purchasing and Materials Management Manager AQUATIC BIOASSAY& CONSULTING LABORATORIES, INC. Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number Orange County Sanitation District 10 of 10 Specification No. S-2017-881 Version 052217 OPERATIONS COMMITTEE Meeting Date TO Bd.of Dir. OJJ07/IS 02/28/18 AGENDA REPORT Item Number Rem Number 10 11 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT NO. 1, PROJECT NO. FE15-07 GENERAL MANAGER'S RECOMMENDATION A. Award a construction contract to Helix Electrical, Inc.for Secondary Treatment and Plant Water VFD Replacement at Plant No. 1, Project No. FE15-07, for a total amount not to exceed $1,797,000; and B. Approve a contingency of$179,700 (10%). BACKGROUND Variable frequency drives (VFDs) are used to control the speed of motors, allowing for control of equipment to accommodate changing process conditions. VFDs and the associated power and control cables for nine large horsepower pumps and 10 small horsepower pumps/mixing arms located at Plant No. 1 have reached the end of their useful life and require replacement. RELEVANT STANDARDS • 24/7/365 treatment plant reliability • CA Government Code Section 20753: Award to the "Lowest Responsive and Responsible Bidder" PROBLEM The VFDs have reached their useful life and replacement parts are becoming harder to locate. Subsequent failures would pose safety and reliability concerns and could impact the treatment process operations. Power and control cables associated with these VFDs will also need to be replaced. PROPOSED SOLUTION Replace the VFDs and associated cables with new, more reliable equipment while following the Orange County Sanitation District (Sanitation District) design standards. Page 1 of 3 TIMING CONCERNS The schedule driver for this project is to replace VFDs prior to failure, which could potentially result in additional costly repairs. RAMIFICATIONS OF NOT TAKING ACTION Reliability risks associated with the loss of these VFDs will continue, along with the potential need for expensive and disruptive emergency repairs. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District advertised Project No. FE15-07 for bids on October 18, 2017 and five sealed bids were received on December 19, 2017. A summary of the bid opening follows: Engineer's Estimate $1,918,226 Bidder Amount of Bid Helix Electric, Inc. $ 1,797,000 LEED Electric, Inc. $ 1,984,000 KDC, Inc. dba Dynalectric $ 2,109,769 CSI Electrical Contractors, Inc. $ 2,185,000 Baker Electric, Inc. $ 2,681,130 The bids were evaluated in accordance with the Sanitation District's policies and procedures. A notice was sent to all bidders on January 12, 2018 informing them of the intent of Sanitation District staff to recommend award of the construction contract to Helix Electric, Inc. Staff recommends awarding a construction contract to the lowest responsive bidder, Helix Electrical, Inc. for the Secondary Treatment and Plant Water VFD Replacement at Plant No. 1, Project No. FE15-07. CEQA This project is exempt from CEQA under the Class 1 categorical exemptions set forth in California Code of Regulations Section 15301. Section 15301 (Class 1) exempts from CEQA "the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency's determination' including "(b) Existing facilities of both Page 2 of 3 investor and publicly-owned utilities used to provide electric power, natural gas, sewerage, or other public utility services." The project consists of minor alterations to existing public facilities. A Notice of Exemption will be filed with Orange County Clerk-Recorder following the Board approval of the agenda report. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation Districts Purchasing Ordinance. This item has been budgeted under the Facilities Engineering Program - Plant, (Budget Update FY 2017-18, Appendix A-9, M-FE-Plant) and the budget is sufficient for the recommended action. Date of Approval Contract Amount Contingency 02/28/2018 $1,797,000 $179,700 (10%) ATTACHMENT The following attachment(s)may be viewed on-line at the OCSD website(www.ocsd.com)with the complete agenda package: • Construction Contract • PowerPoint Presentation from Operations Committee Meeting 02/07/08 RB:dm:gc Page 3 of 3 PART A CONTRACT AGREEMENT C-CA-011317 TABLE OF CONTENTS CONTRACT AGREEMENT SECTION - 1 GENERAL CONDITIONS..................................................................1 SECTION -2 MATERIALS AND LABOR.................................................................4 SECTION -3 PROJECT..........................................................................................4 SECTION -4 PLANS AND SPECIFICATONS ........................................................5 SECTION -5 TIME OF COMMENCEMENT AND COMPLETION ..........................5 SECTION -6 TIME IS OF THE ESSENCE .............................................................5 SECTION -7 EXCUSABLE DELAYS......................................................................6 SECTION -8 EXTRA WORK...................................................................................6 SECTION -9 CHANGES IN PROJECT...................................................................7 SECTION - 10 LIQUIDATED DAMAGES FOR DELAY.............................................7 SECTION - 11 CONTRACT PRICE AND METHOD OF PAYMENT.........................7 SECTION - 12 SUBSTITUTION OF SECURITIES IN LIEU OF RETENTION OF FUNDS ..............................................................................................9 SECTION - 13 COMPLETION.................................................................................10 SECTION - 14 CONTRACTOR'S EMPLOYEES COMPENSATION.......................10 SECTION - 15 SURETY BONDS ............................................................................12 SECTION - 16 INSURANCE....................................................................................13 SECTION - 17 RISK AND INDEMNIFICATION.......................................................21 SECTION - 18 TERMINATION................................................................................21 SECTION - 19 WARRANTY....................................................................................22 SECTION -20 ASSIGNMENT.................................................................................23 SECTION -21 RESOLUTION OF DISPUTES ........................................................23 SECTION -22 SAFETY& HEALTH ........................................................................23 SECTION -23 NOTICES.........................................................................................23 C-CA-011317 CONTRACT AGREEMENT ORANGE COUNTY SANITATION DISTRICT PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 THIS AGREEMENT is made and entered into, to be effective, this February 28, 2018, by and between Helix Electric, 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. A. Contract Documents Order of Precedence "Contract Documents" refers to those documents identified in the definition of"Contract Documents" in the General Conditions—Definitions. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 1 of 25 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 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 2 of 25 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. 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. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 3 of 25 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 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. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 4 of 25 SECTION -4 PLANS AND SPECIFICATONS The Work to be done is shown in a set of Plans and Specifications entitled: PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 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 690 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 Five (5) calendar days determined by OCSD likely to be inclement weather when CONTRACTOR will be unable to work. 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, C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 5 of 25 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. SECTION—S 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. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 6 of 25 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". 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 One Million Seven Hundred Ninety-Seven Thousand ($1,797,000) 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 7 of 25 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. 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. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 8 of 25 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. 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 et seq., the CONTRACTOR may, at its sole expense, substitute securities as provided in General Conditions—"Retained Funds; Substitution of Securities." C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 9 of 25 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 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 10 of 25 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 shall comply therewith if the prime contract involves Thirty Thousand Dollars ($30,000.00) or more. E. Workday: 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 seq.)of the Labor Code of the State of California and shall forfeit to OCSD as a penalty, the sum of Twenty-five Dollars ($25.00)for each worker employed in the execution of this Contract by CONTRACTOR or any Subcontractor for each calendar day during which any worker is C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 11 of 25 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 Wages: 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). SECTION-15 SURETYBONDS 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 12 of 25 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. 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 13 of 25 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. 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 General Requirements. 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 requirements) 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: Five Million Dollars ($5,000,000) per occurrence and a general aggregate limit of Five Million Dollars ($5,000,000)for bodily injury, personal injury and property damage. Coverage shall include each of the following: C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 14 of 25 a. Premises-Operations. b. Products and Completed Operations, with limits of at least Five Million Dollars ($5,000,000) per occurrence and a general aggregate limit of Five Million Dollars ($5,000,000)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. 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. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 15 of 25 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 Five Million Dollars ($5,000,000) and a general aggregate limit of Five Million Dollars ($5,000,000)for bodily injury, personal injury and property damage; Or alternatively, (2) Five Million Dollars ($5,000,000) 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. Drone Liability Insurance: If a drone will be used, drone liability insurance must be maintained by CONTRACTOR in the amount of One Million Dollars ($1,000,000) in a form acceptable by OCSD. 5. 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 16 of 25 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 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. 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- C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 17 of 25 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. 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 18 of 25 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 State Compensation Insurance Fund for the required policy of workers 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. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 19 of 25 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. 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. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 20 of 25 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. Reauired State Compensation Insurance Fund Endorsements a. Waiver of Subrogation Endorsement No. 2570 b. Cancellation Notice Endorsement No. 2065 4. Additional Reauired Endorsements a. Notice of Policy Termination Manuscript Endorsement 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 21 of 25 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 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. C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 22 of 25 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. 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 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 23 of 25 Bradley R. Hogin, Esquire Woodruff, Spradlin &Smart 555 Anton Boulevard Suite 1200 Costa Mesa, California 92626 TO CONTRACTOR: Helix Electric, Inc. 6795 Flanders Drive San Diego, CA 92121 Copy to: Raff Oghassabian Vice President of Estimating Helix Electric, Inc. 6795 Flanders Drive San Diego, CA 92121 C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 24 of 25 IN WITNESS WHEREOF, the parties hereto have executed this Contract Agreement as the date first hereinabove written. CONTRACTOR: Helix Electric, Inc. 6795 Flanders Drive San Diego, CA 92121 By Printed Name Its CONTRACTOR's State License No. 483309 (Expiration Date 11/30/2019) OCSD: Orange County Sanitation District By Gregory C. Sebourn, PLS Chair, Board of Directors By Kelly A. Lore Clerk of the Board By Marc Dubois Contracts, Purchasing and Materials Management Manager C-CA-011317 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 25 of 25 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 PROGRESSPAYMENTS 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.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 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.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 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.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 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 filed 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.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 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 filed 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.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 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.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 6 of 8 ATTACHMENT 1 —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 Ads 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 Ad 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 Subcontractors performance. Name Title Dale C-EXA-080414 PROJECT NO.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 7 of 8 ATTACHMENT SCHEDULE OF PRICES See next pages for Bid Submittal Forms (Helix Electric, Inc.) BF-14 Schedule of Prices, Page 1 -2 C-EXA-080414 PROJECT NO.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 CONFORMED Page 8 of 8 Bid Submitted By: Helix Electric, Inc. tNrma of FLrm) BF-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 Bid. 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 detennine the Total Amount of Bid. 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 rovalties 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. Bidders shall accurately reflect the cost to perform the Work. OCSD may reject unbalanced Bids. Refer to Part 2—INSTRUCTIONS TO BIDDERS. BF-14 SCHEDULE OF PRICES C-BF-050517 PROJECT NO.FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 Page 1 of 2 Bid Submitted By:_ Helix Electric. Inc. )Name of Firm) EXHIBIT A SCHEDULE OF PRICES BASE BID ITEMS (Refer to Note 1 in the Instructions): it.. Deacrlton Unit of Measurement r UN[Price Extended Price 1. Mobilization: Furnish all labor, materials and equipment and other activities required for mobilization in conformance with the Contract Documents. The amount for this Bid Item shall not exceed[A�G"f the Total Amount of Lump Sum 1 = $ 70 000 Bid and shall be in conformance with the Contract Documents for the lump sum price of... 2. Furnish all labor, materials, equipment and services necessary for the completion of the Contract Work of PROJECT NO. FE15-07,SECONDARY 7 21 000 TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1, Lump Sum 1 T 1, i except for the work specified under Bid Item No. 1, in conformance with the Contract Documents, for a lump sum price o/... p TOTAL AMOUNT OF BID(BASIS OF AWARD) $ I,191r 000 BF-14 SCHEDULE OF PRICES C-BF-050517 PROJECT NO. FE15-07 SECONDARY TREATMENT AND PLANT WATER VFD REPLACEMENT AT PLANT 1 Page 2 of 2 00 Secondary Treatment and Plant Water VFD Replacement Project No. FE15-07 ask- February Operations Committee Construction Contract Variable Frequency Drive Replacement � +� ry yr• �D I J — v0000 � oaao { i _ a � o MEM MINE ENEM \ENEiEMEME SOMME ' �B��e. iMMM! MiNt�- MUMEM _ 6MMOM Primary Effluent Pump Station Return Activated Sludge Plant Water Pump Station (1) 250 hp Pump (5) 200 hp (3) 400 hp r rD T 3 n rD �. Q T a G N O_ m fD ri C: fD , 1 3 - x' \V N S � lJl 6 D n O N 0 C (D � v uii= ®� iniiiini �. LL T • =mill =iiiiii qq . 0 Fill _ 9 m CD Bill L7111n `V 101 rF Recommendations • Award a construction contract to Helix Electrical, Inc. for Secondary Treatment and Plant Water VFD Replacement at Plant No . 1, Project No . FE15-07, for a total amount not to exceed $ 1,797,000; and • Approve a contingency of $ 179,700 ( 10%) OPERATIONS COMMITTEE Meeting Date Toaa. Dir. 02107/18 g2/28/1m8 AGENDA REPORT Item Nu bar Item Number Nu 12 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: PROCESS CONTROL SYSTEMS UPGRADES STUDY, PROJECT NO. SP-196 GENERAL MANAGER'S RECOMMENDATION A. Approve a Professional Services Agreement with Stantec Consulting Services, Inc. to provide engineering services for the Process Control Systems Upgrades Study, Project No. SP-196, for an amount not to exceed $1,398,866; and B. Approve a contingency of$139,887 (10%). BACKGROUND The process Supervisory Control and Data Acquisition (SCADA) system provides essential monitoring, control and archiving of data, and is required for regulatory compliance. The existing SCADA system utilizes programmable logic controllers (PLCs) and a Human-Machine-Interface (HMI) system consisting of networks, servers, workstations, software, and a data archiving system referred to as a historian. The existing HMI was built on the use of VAX workstations originally sold by DEC computers and discontinued in the 1990s. The system requires the use of VAX workstations or newer computers running emulation software. The HMI software package, CRISP, is no longer supported by any vendor, and there are few people in the workforce outside the Orange County Sanitation District (Sanitation District) who can support the software. This situation is likely to become increasingly difficult with time. The existing PLC model has reached the end of commercial availability and requires the selection of a new model for future designs. Sufficient spare parts have been purchased by the Sanitation District for system maintenance. RELEVANT STANDARDS • 1, 5, 20-year planning horizons • 24/7/365 treatment plant reliability PROBLEM The current HMI system cannot be maintained and upgraded in the long term. The current PLC model is no longer available for purchase. Page 1 of 5 PROPOSED SOLUTION Conduct a study to plan the replacement of the HMI and PLC systems. The size and complexity of this study requires the services of a Consultant experienced with SCADA system upgrades at other large facilities. TIMING CONCERNS The existing HMI and PLC systems have been in service for over 20 years and have become obsolete. Finding programmers with the appropriate skill set in the HMI system is becoming difficult. The existing SCADA system needs to be replaced in a phased approach. The SCADA Replacement Study is the first step to replace the existing system. RAMIFICATIONS OF NOT TAKING ACTION It will become difficult over time to support and maintain the HMI software due to staff and Consultant retirements in the next 10 years. Repair of the current PLC hardware will not be available over time. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION Consultant Selection The Sanitation District requested and advertised for proposals for Process Control Systems Upgrades Study, Project No. SP-196, on September 22, 2017. The following evaluation criterion were described in the Request for Proposals (RFP) and used to determine the most qualified Consultant. CRITERION WEIGHT Project Understanding and Approach 40% Related Project Experience 30% Project Team and Staff Qualifications 30% Three proposals were received on November 29, 2017. An Evaluation Team consisting of the following Sanitation District staff reviewed the proposals. Richard Birdsall Project Manager Sterling Harris Project Engineer Mike Dorman Engineering Manager Page 2 of 5 Riaz Moinuddin Engineering Manager Frank Steiger Engineering Supervisor Dave Halverson Engineering Supervisor (Non-Voting member) Natasha Dubrovski Principal Contract Administrator (Non-Voting member) Ludwig Lapus Contract Administrator (Non-Voting member) The Evaluation Team reviewed and ranked each of the proposals in accordance with the evaluation process set forth in the Sanitation District's Purchasing Ordinance. After reviewing and scoring the proposals, three Consultant firms were ranked according to the score achieved. The Evaluation Committee interviewed the top two proposing firms to meet the proposed key team members and further evaluate the firms' proposals. Pursuant to the results of the interview, the Evaluation Committee selected Stantec Consulting Services, Inc. as the top-ranked firm as shown in Table 1. Based on the ranking shown below, Stantec Consulting Services, Inc. was selected as the most qualified Consultant. TABLE 1 PROPOSAL EVALUATION Consultant Evaluator Stantec Consulting EMA Services, Inc. Evaluator 1 1 2 Evaluator 2 1 2 Evaluator 3 1 2 Evaluator 4 1 2 Evaluator 5 1 2 Combined Ranking 1 2 Stantec Consulting Services, Inc. was selected based on the strength of their previous experience and approach to determining the best SCADA system and documenting the process. Review of Fee Proposal and Negotiations Proposals were accompanied by sealed fee proposals. In accordance with the Sanitation District's Purchasing Ordinance, the fee proposal of only the highest-ranked firm was opened after approval by the Director of Engineering of the Evaluation Committee's recommendation. Page 3 of 5 The evaluation and selection process is based on procedures pursuant to the California Government Code requiring the Sanitation District to select "the best qualified firm" for architectural and engineering services and to negotiate a "fair and reasonable" fee with that firm. Staff conducted multiple negotiation meetings with Stantec Consulting Services, Inc. to clarify the requirements of the Scope of Work, the assumptions used for the estimated level of effort, and the proposed approach to meet the goals and objectives for the project. Original Fee Proposal Negotiated Fee Total Hours 4,994 5,355 Total Fee $1,346,122 $1,398,866 The Consultant's fringe and overhead costs, which factor into the billing rate, have been substantiated. The contract profit is 8.16%, which is based on an established formula based on the Sanitation District's standard professional agreements. Based on the above, staff has determined that the final negotiated fee is fair and reasonable for the level of effort required for this project and recommends award of the Professional Services Agreement to Stantec Consulting Services, Inc. CEQA The proposed Study is exempt from CEQA pursuant to the Feasibility and Planning Studies statutory exemption (CEQA Guidelines section 15262). CEQA Guidelines section 15262 exempts from CEQA those projects "involving only feasibility or planning studies for possible future actions which the agency, Board, or commission has not approved, adopted, or funded." Thus, a project involving only feasibility or planning studies for possible future actions which the agency has not approved, adopted, orfunded does not require that preparation of an EIR or negative declaration. The proposed Process Control Systems Upgrades Study, Project No. SP-196, will be used solely as a planning tool to evaluate possible future actions and develop long-term planning strategies for upgrading the current system. The Sanitation District has not approved, adopted, funded, or otherwise authorized any future actions relating to the Process Control Systems or any other facilities to be analyzed in the Study. The Study is therefore eligible for an exemption from CEQA under CEQA Guidelines section 15262 and no further action is required The Sanitation District will file and record a Notice of Exemption for this project with the County of Orange Clerk-Recorder, following Board award of this construction contract. Page 4 of 5 FINANCIAL CONSIDERATIONS This request complies with the authority levels in the Sanitation District's Purchasing Ordinance. This item has been budgeted (Line item: FY 2016-17 and 2017-2018, Section 8, Page 77) and the project budget is sufficient for the recommended action. Date of Approval Contract Amount Contingency 02/28/2018 $1,398,866 $139,887 (10%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: • Professional Services Agreement • PowerPoint Presentation from Operations Committee Meeting 02/07/08 RB:dm:gc Page 5 of 5 PROFESSIONAL SERVICES AGREEMENT THIS AGREEMENT, is made and entered into to be effective the 28" day of February 2018, by and between the ORANGE COUNTY SANITATION DISTRICT, hereinafter referred to as "SANITATION DISTRICT", and Stantec Consulting Services, Inc., for purposes of this AGREEMENT hereinafter referred to as"CONSULTANT". The SANITATION DISTRICT and CONSULTANT are referred to herein collectively as the "Parties"or individually as a "Party." WITNESSETH: WHEREAS, the SANITATION DISTRICT desires to engage a consultant for Process Control Systems Upgrades Study, Project No. SP-196, to provide professional services and provide services for the study project to review and evaluate commercially available Supervisory Control and Data Acquisition (SCADA)systems and Distributed Control Systems (DCS) and select an appropriate replacement for the existing CRISP human machine interface (HMI)and Modicon Quantum programmable logic controllers (PLCs). In addition, the study will include recommendations for future enhancements and development of a preliminary implementation plan; and, WHEREAS, CONSULTANT is qualified to provide the necessary services in connection with these requirements and has agreed to provide the necessary professional services; and, WHEREAS, the SANITATION DISTRICT has adopted procedures for the selection of professional services and has proceeded in accordance with said procedures to select CONSULTANT to perform this work; and, WHEREAS, at its regular meeting on February 28, 2018 the Board of Directors, by Minute Order, accepted the recommendation of the Operations Committee to approve this AGREEMENT between the SANITATION DISTRICT and CONSULTANT. NOW, THEREFORE, in consideration of the promises and mutual benefits, which will result to the parties in carrying out the terms of this AGREEMENT, it is mutually agreed as follows: 1. SCOPE OF WORK CONSULTANT agrees to furnish necessary professional services to accomplish those project elements outlined in the Scope of Work attached hereto as "Attachment A", and by this reference made a part of this AGREEMENT. A. The CONSULTANT shall be responsible for the professional quality, technical accuracy, and completeness and coordination of the work and services furnished by the CONSULTANT under this AGREEMENT, including the work performed by its Subconsultants. Where approval by the SANITATION DISTRICT is indicated, it is understood to be conceptual approval only and does not relieve the CONSULTANT of responsibility for complying with all applicable laws, regulations, codes, industry standards and liability for damages caused by errors, omissions, noncompliance with industry standards, and/or negligence on the part of the CONSULTANT or its Subconsultants. PSA -1- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY B. CONSULTANT is responsible for the quality of work prepared under this AGREEMENT and shall perform its work in accordance with engineering standards in effect for clarity, uniformity, and completeness. CONSULTANT shall timely respond to all comments, suggestions, and recommendations from the SANITATION DISTRICT. All comments from the SANITATION DISTRICT, or its agent, shall be incorporated into the work prior to the next review deadline or addressed, in writing, as to why the comment(s) has/have not been incorporated. CONSULTANT shall ensure that each submittal is 100% accurate for the level of work submitted (i.e. correct references, terms, capitalization or equal status, spelling, punctuation, etc.) C. In the event that CONSULTANTS services and/or work product(s) is not to the satisfaction of the SANITATION DISTRICT and/or does not conform to the requirements of this AGREEMENT or the applicable industry standards, the CONSULTANT shall, without additional compensation, promptly correct or revise any errors or deficiencies in its work product(s)within the timeframe specified by the Project Manager. The SANITATION DISTRICT may charge to CONSULTANT all costs, expenses and damages associated with any such corrections or revisions. D. Any CADD drawings, figures, and other work produced by CONSULTANT and Subconsultants using the SANITATION DISTRICT CAD Manual. Conversion of CADD work from any other non-standard CADD format to the SANITATION DISTRICT format shall not be acceptable in lieu of this requirement. Electronic files shall conform to the SANITATION DISTRICT specifications. Any changes to these specifications by the CONSULTANT are subject to review and require advance written approval of the SANITATION DISTRICT. Electronic files shall be subject to an acceptance period of thirty (30)calendar days during which the SANITATION DISTRICT shall perform appropriate reviews and including CAD Manual compliance. CONSULTANT shall correct any discrepancies or errors detected and reported within the acceptance period at no additional cost to the SANTITATION DISTRICT. E. All professional services performed by the CONSULTANT, including, but not limited to, all drafts, data, correspondence, proposals, and reports compiled or composed by the CONSULTANT, pursuant to this AGREEMENT, are for the sole use of the SANITATION DISTRICT, its agents and employees. Neither the documents nor their contents shall be released to any third party without the prior written consent of the SANITATION DISTRICT. This provision does not apply to information that(a)was publicly known, or otherwise known to the CONSULTANT, at the time that it was disclosed to the CONSULTANT by the SANITATION DISTRICT, or(b) subsequently becomes publicly known to the CONSULTANT other than through disclosure by the SANITATION DISTRICT. 2. COMPENSATION Total compensation shall be paid to CONSULTANT for services in accordance with the following provisions: PSA -2- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY A. Total Compensation Total compensation shall be in an amount not to exceed One Million Three Hundred Ninety-Eight Thousand Eight Hundred Sixty-Six Dollars ($1,398,866). Total compensation to CONSULTANT including burdened labor(salaries plus benefits), overhead, profit, direct costs, and Subconsultant(s)fees and costs shall not exceed the sum set forth in Attachment"E"- Fee Proposal. B. Labor As a portion of the total compensation to be paid to CONSULTANT, the SANITATION DISTRICT shall pay to CONSULTANT a sum equal to the burdened salaries (salaries plus benefits)actually paid by CONSULTANT charged on an hourly-rate basis to this project and paid to the personnel of CONSULTANT. Upon request of the SANITATION DISTRICT, CONSULTANT shall provide the SANITATION DISTRICT with certified payroll records of all employees' work that is charged to this project. An hourly base rate of$110 per hour is agreed upon by the CONSULTANT as a maximum billing base rate for staff once it is actually realized by each employee performing the work and is supported by the certified payroll if requested. In the event of change in personnel if approved by the SANITATION DISTRICT billing fixed base rate for the Project Manager shall remain without change. C. Overhead As a portion of the total compensation to be paid to CONSULTANT, the SANITATION DISTRICT shall compensate CONSULTANT and Subconsultants for overhead at the rate equal to the percentage of burdened labor as specified in Attachment"E"- Fee Proposal. D. Profit Profit for CONSULTANT and Subconsultants shall be a percentage of consulting services fees (Burdened Labor and Overhead). When the consulting or subconsulting services amount is $250,000 or less, the maximum Profit shall be 10%. Between $250,000 and $2,500,000, the maximum Profit shall be limited by a straight declining percentage between 10% and 5%. For consulting or subconsulting services fees with a value greater than $2,500,000, the maximum Profit shall be 5%. Addenda shall be governed by the same maximum Profit percentage after adding consulting services fees. As a portion of the total compensation to be paid to CONSULTANT and Subconsultants, the SANITATION DISTRICT shall pay profit for all services rendered by CONSULTANT and Subconsultants for this project according to Attachment"E"- Fee Proposal. E. Subconsultants For any Subconsultant whose fees for services are greater than or equal to $100,000 (excluding out-of-pocket costs), CONSULTANT shall pay to Subconsultant total compensation in accordance with the Subconsultant amount specified in Attachment"E"- Fee Proposal. PSA -3- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY For any Subconsultant whose fees for services are less than $100,000, CONSULTANT may pay to Subconsultant total compensation on an hourly-rate basis per Attachment"J"— Minor Subconsultant Hourly Rate Schedule and as specified in the Scope of Work. The SANITATION DISTRICT shall pay to CONSULTANT the actual costs of Subconsultant fees and charges in an amount not to exceed the sum set forth in Attachment"E"- Fee Proposal. F. Direct Costs The SANITATION DISTRICT shall pay to CONSULTANT and Subconsultants the actual costs of permits and associated fees, travel and licenses for an amount not to exceed the sum set forth in Attachment"E"- Fee Proposal. The SANITATION DISTRICT shall also pay to CONSULTANT actual costs for equipment rentals, leases or purchases with prior approval of the SANITATION DISTRICT. Upon request, CONSULTANT shall provide to the SANITATION DISTRICT receipts and other documentary records to support CONSULTANT's request for reimbursement of these amounts, see Attachment"D"-Allowable Direct Costs. All incidental expenses shall be included in overhead pursuant to Section 2 -COMPENSATION above. G. Other Direct Costs Other Direct Costs incurred by CONSULTANT and its Contractor due to modifications in scope of work resulting from field investigations and field work required by Contract. These items may include special equipment, test equipment and tooling and other materials and services not previously identified. Refer to attachment"D"Allowable Direct Costs for payment information. H. Reimbursable Direct Costs The SANITATION DISTRICT will reimburse the CONSULTANT for reasonable travel and business expenses as described in this section and further described in Attachment"D"-Allowable Direct Costs to this AGREEMENT. The reimbursement of the above mentioned expenses will be based on an "accountable plan" as considered by Internal Revenue Service (IRS). The plan includes a combination of reimbursements based upon receipts and a "per diem" component approved by IRS. The most recent schedule of the per diem rates utilized by the SANITATION DISTRICT can be found on the U.S. General Service Administration website at http://www.asa.aov/portal/category/104711#. The CONSULTANT shall be responsible for the most economical and practical means or management of reimbursable costs inclusive but not limited to travel, lodging and meals arrangements. The SANITATION DISTRICT shall apply the most economic and practical method of reimbursement which may include reimbursements based upon receipts and/or"per diem" as deemed the most practical. CONSULTANT shall be responsible for returning to the SANITATION DISTRICT any excess reimbursements after the reimbursement has been paid by the SANITATION DISTRICT. PSA -4- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY Travel and travel arrangements—Any travel involving airfare, overnight stays or multiple day attendance must be approved by the SANITATION DISTRICT in advance. Local Travel is considered travel by the CONSULTANT within the SANITATION DISTRICT geographical area which includes Orange, Los Angeles, Ventura, San Bernardino, Riverside, San Diego, Imperial and Kern Counties. Automobile mileage is reimbursable if CONSULTANT is required to utilize personal vehicle for local travel. Lodging—Overnight stays will not be approved by the SANITATION DISTRICT for local travel. However, under certain circumstances overnight stay may be allowed at the discretion of the SANITATION DISTRICT based on reasonableness of meeting schedules and the amount of time required for travel by the CONSULTANT. Such determination will be made on a case-by-case basis and at the discretion of the SANITATION DISTRICT. Travel Meals— Per-diem rates as approved by IRS shall be utilized for travel meals reimbursements. Per diem rates shall be applied to meals that are appropriate for travel times. Receipts are not required for the approved meals. Additional details related to the reimbursement of the allowable direct costs are provided in the Attachment"D"-Allowable Direct Costs of this AGREEMENT. I. Limitation of Costs If, at any time, CONSULTANT estimates the cost of performing the services described in CONSULTANT's Proposal will exceed seventy-five percent (75%) of the not-to-exceed amount of the AGREEMENT, including approved additional compensation, CONSULTANT shall notify the SANITATION DISTRICT immediately, and in writing. This written notice shall indicate the additional amount necessary to complete the services. Any cost incurred in excess of the approved not-to-exceed amount, without the express written consent of the SANITATION DISTRICT's authorized representative shall be at CONSULTANT's own risk. This written notice shall be provided separately from, and in addition to any notification requirements contained in the CONSULTANT's invoice and monthly progress report. Failure to notify the SANITATION DISTRICT that the services cannot be completed within the authorized not-to-exceed amount is a material breach of this AGREEMENT. 3. REALLOCATION OF TOTAL COMPENSATION The SANITATION DISTRICT, by its Director of Engineering, shall have the right to approve a reallocation of the incremental amounts constituting the Total Compensation, provided that the Total Compensation is not increased. 4. PAYMENT A. Monthly Invoice: CONSULTANT shall include in its monthly invoice, a detailed breakdown of costs associated with the performance of any corrections or revisions of the work for that invoicing period, in a format acceptable to the PSA -5- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY SANITATION DISTRICT. CONSULTANT shall warrant and certify the accuracy of these costs and provide all support documentation required by the SANITATION DISTRICT. CONSULTANT understands that submitted costs are subject to Section 12 Audit Provisions. B. CONSULTANT will submit monthly statements covering services and/or work performed for payment for those items included in Section 2 hereof no later than the second Wednesday of the following month and in the format required by the SANITATION DISTRICT. The format must include, as a minimum: 1) current billing period invoicing, 2) current billing period "total percent invoiced to date", 3) future activities, 4) previous billing period "total invoiced to date", 5) potential items that are not included in the Scope of Work, 6) concerns and possible delays, 7) percentage of completion to date, and 8) budget status and amount remaining. Such requests shall be accompanied by such supporting data as may be required by the SANITATION DISTRICT. Upon approval of such payment request by the SANITATION DISTRICT, payment shall be made to CONSULTANT as soon as practicable of one hundred percent(100%)of the invoiced amount. If the SANITATION DISTRICT determines that the work under this AGREEMENT or any specified project element hereunder, is incomplete and that the amount of payment is in excess of: I. The amount considered by the SANITATION DISTRICT's Director of Engineering to be adequate for the protection of the SANITATION DISTRICT;or ii. The percentage of the work accomplished for each project element, The SANITATION DISTRICT may, at the discretion of the Director of Engineering, retain an amount equal to that which insures that the total amount paid to that date does not exceed the percentage of the completed work for the Project in its entirety. C. CONSULTANT may submit periodic payment requests for each 30-day period of this AGREEMENT for the profit as set forth in Section 2 - COMPENSATION above. Said profit payment request shall be proportionate to the work actually accomplished to date on a per-project-element basis. In the event the SANITATION DISTRICT's Director of Engineering determines that no satisfactory progress has been made since the prior payment, or in the event of a delay in the work progress for any reason, the SANITATION DISTRICT shall have the right to withhold any scheduled proportionate profit payment. D. Upon satisfactory completion by CONSULTANT of the work called for under the terms of this AGREEMENT, and upon acceptance of such work by the SANITATION DISTRICT, CONSULTANT will be paid the unpaid balance of any money due for such work based on the monthly statements, including any retained percentages relating to this portion of the work. E. Upon satisfactory completion of the work performed hereunder and prior to final payment under this AGREEMENT for such work, or prior settlement upon termination of this AGREEMENT, and as a condition precedent thereto, PSA -6- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY CONSULTANT shall execute and deliver to the SANITATION DISTRICT a release of all claims against the SANITATION DISTRICT arising under or by virtue of this AGREEMENT other than such claims, if any, as may be specifically exempted by CONSULTANT from the operation of the release in stated amounts to be set forth therein. F. Pursuant to the California False Claims Act (Government Code sections 12650- 12655), any CONSULTANT that knowingly submits a false claim to the SANITATION DISTRICT for compensation under the terms of this AGREEMENT may be held liable for treble damages and up to a $10,000 civil penalty for each false claim submitted. This section shall also be binding on all Subconsultants. A CONSULTANT or Subconsultant shall be deemed to have submitted a false claim when the CONSULTANT or Subconsultant: (a) knowingly presents or causes to be presented to an officer or employee of the SANITATION DISTRICT a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the SANITATION DISTRICT; (c) conspires to defraud the SANITATION DISTRICT by getting a false claim allowed or paid by the SANITATION DISTRICT; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to the SANITATION DISTRICT; or(a) is a beneficiary of an inadvertent submission of a false claim to the SANITATION DISTRICT, and fails to disclose the false claim to the SANITATION DISTRICT within a reasonable time after discovery of the false claim. S. PREVAILING WAGES A. To the extent CONSULTANT intends to utilize employees who will perform work during the contract, as more specifically defined under Labor Code Section 1720, CONSULTANT shall be subject to prevailing wage requirements with respect to such employees. 6. CALIFORNIA DEPARTMENT OF INDUSTRIAL RELATIONS (DIR) REGISTRATION AND RECORD OF WAGES A. To the extent CONSULTANT's employees and/or Subconsultants who will perform Work during the design and preconstruction phases of a construction contract for which Prevailing Wage Determinations have been issued by the DIR and as more specifically defined under Labor Code Section 1720 at seq, CONSULTANT and Subconsultants shall comply with the registration requirements of Labor Code Section 1725.5. Pursuant to Labor Code Section 1771.4, the Work is subject to compliance monitoring and enforcement by the DIR. B. The CONSULTANT and Subconsultants shall maintain accurate payroll records and shall comply with all the provisions of Labor Code Section 1776, and shall submit payroll records to the Labor Commissioner pursuant to Labor Code Section 1771.4(a)(3). Penalties for non-compliance with the requirements of Section 1776 may be deducted from progress payments per Section 1776. C. Pursuant to Labor Code Section 1776, the CONSULTANT and Subconsultants shall furnish a copy of all certified payroll records to SANITATION DISTRICT PSA -7- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY and/or general public upon request, provided the public request is made through SANITATION DISTRICT, the Division of Apprenticeship Standards or the Division of Labor Enforcement of the Department of Industrial Relations. D. The CONSULTANT and Subconsultants shall comply with the job site notices posting requirements established by the Labor Commissioner per Title 8, California Code of Regulation Section 16461(3). 7. DOCUMENT OWNERSHIP—CONSULTANT PERFORMANCE A. Ownership of Documents for the Professional Services performed. All documents in all forms (electronic, paper, etc.), including, but not limited to, studies, sketches, drawings, computer printouts, disk files, and electronic copies prepared in connection with or related to the Scope of Work or Professional Services, shall be the property of the SANITATION DISTRICT. The SANITATION DISTRICT's ownership of these documents includes use of, reproduction or reuse of and all incidental rights, whether or not the work for which they were prepared has been performed. The SANITATION DISTRICT ownership entitlement arises upon payment or any partial payment for work performed and includes ownership of any and all work product completed prior to that payment. This Section shall apply whether the CONSULTANT's Professional Services are terminated: a) by the completion of the AGREEMENT, or b) in accordance with other provisions of this AGREEMENT. Notwithstanding any other provision of this paragraph or AGREEMENT, the CONSULTANT shall have the right to make copies of all such plans, studies, sketches, drawings, computer printouts and disk files, and specifications. B. CONSULTANT shall not be responsible for damage caused by subsequent changes to or uses of the study or deliverable where the subsequent changes or uses are not authorized or approved by CONSULTANT, provided that the service rendered by CONSULTANT was not a proximate cause of the damage. 8. INSURANCE A. General I. Insurance shall be issued and underwritten by insurance companies acceptable to the SANITATION DISTRICT. ii. Insurers must have an"A-" Policyholders Rating,or better, and Financial Rating of at least Class Vill, or better, in accordance with the most current A.M. Best's Guide Rating. However,the SANITATION DISTRICT will accept State Compensation Insurance Fund,for the required policy of Workers Compensation Insurance subject to the SANITATION DISTRICT's option to require a change in insurer in the event the State Fund financial rating is decreased below"B". Further, the SANITATION DISTRICT will require CONSULTANT to substitute any insurer whose rating drops below the levels herein specified. Said substitution shall occur within twenty(20)days of written notice to CONSULTANT, by the SANITATION DISTRICT or its agent. III. Coverage shall be in effect prior to the commencement of any work under this AGREEMENT. PSA -8- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY B. General Liability The CONSULTANT shall maintain during the life of this AGREEMENT, including the period of warranty, Commercial General Liability Insurance written on an occurrence basis providing the following minimum limits of liability coverage: One Million Dollars ($1,000,000) per occurrence with One Million Dollars ($1,000,000) aggregate. Said insurance shall include coverage for the following hazards: Premises-Operations, blanket contractual liability (for this AGREEMENT), products liability/completed operations (including any product manufactured or assembled), broad form property damage, blanket contractual liability, independent contractors liability, personal and advertising injury, mobile equipment, and cross liability and severability of interest clauses. A statement on an insurance certificate will not be accepted in lieu of the actual additional insured endorsement(s). If requested by SANITATION DISTRICT and applicable, XCU coverage (Explosion, Collapse and Underground) and Riggers/On Hook Liability must be included in the General Liability policy and coverage must be reflected on the submitted Certificate of Insurance. C. Umbrella Excess Liability The minimum limits of general liability and Automotive Liability Insurance required, as set forth herein, shall be provided for through either a single policy of primary insurance or a combination of policies of primary and umbrella excess coverage. Umbrella 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 automotive liability. D. AutomotiveNehicle liability Insurance The CONSULTANT shall maintain a policy of Automotive 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: Combined single limit of One Million Dollars ($1,000,000) or alternatively, One Million Dollars ($1,000,000) per person for bodily injury and One Million Dollars ($1,000,000) per accident for property damage. A statement on an insurance certificate will not be accepted in lieu of the actual additional insured endorsement. E. Worker's Compensation Insurance The CONSULTANT shall provide such Workers' Compensation Insurance as required by the Labor Code of the State of California in the amount of the statutory limit, including Employer's Liability Insurance with a minimum limit of One Million Dollars ($1,000,000) per occurrence. Such Worker's Compensation Insurance shall be endorsed to provide for a waiver of subrogation in favor of the SANITATION DISTRICT. A statement on an insurance certificate will not be accepted in lieu of the actual endorsements unless the insurance carrier is State of California Insurance Fund and the identifier"SCIF" and endorsement numbers 2570 and 2065 are referenced on the certificate of insurance. If an exposure to Jones Act liability may exist, the insurance required herein shall include coverage for Jones Act claims. PSA -9- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY F. Errors and Omissions/Professional Liability CONSULTANT shall maintain in full force and effect, throughout the term of this AGREEMENT, standard industry form professional negligence errors and omissions insurance coverage in an amount of not less than Five Million Dollars ($5,000,000)with limits in accordance with the provisions of this Paragraph. If the policy of insurance is written on a "claims made" basis, said policy shall be continued in full force and effect at all times during the term of this AGREEMENT, and for a period of five (5) years from the date of the completion of the services hereunder. In the event of termination of said policy during this period, CONSULTANT shall obtain continuing insurance coverage for the prior acts or omissions of CONSULTANT during the course of performing services under the term of this AGREEMENT. Said coverage shall be evidenced by either a new policy evidencing no gap in coverage or by separate extended "tail" coverage with the present or new carrier. In the event the present policy of insurance is written on an "occurrence' basis, said policy shall be continued in full force and effect during the term of this AGREEMENT or until completion of the services provided for in this AGREEMENT, whichever is later. In the event of termination of said policy during this period, new coverage shall be obtained for the required period to insure for the prior acts of CONSULTANT during the course of performing services under the term of this AGREEMENT. CONSULTANT shall provide to the SANITATION DISTRICT a certificate of insurance in a form acceptable to the SANITATION DISTRICT indicating the deductible or self-retention amounts and the expiration date of said policy, and shall provide renewal certificates not less than ten (10)days prior to the expiration of each policy term. G. Proof of Coverage The CONSULTANT shall furnish the SANITATION DISTRICT with original certificates and amendatory endorsements effecting coverage. Said policies and endorsements shall conform to the requirements herein stated. All certificates and endorsements are to be received and approved by the SANITATION DISTRICT before work commences. The CONSULTANT shall provide the SANITATION DISTRICT with access to copies of its insurance certificates and amendatory endorsements affecting coverage at its regional office in Irvine, California during normal working hours. Confidential information may be redacted from said policies, provided that verification of coverage may not be redacted. Said policies and endorsements shall conform to the requirements herein stated. The following are approved forms that must be submitted as proof of coverage: PSA -10- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY • Certificate of Insurance ACORD Form 25 (512010) or equivalent. • Additional Insurance (ISO Form) CG2010 11 85 or (General Liability) The combination of(ISO Forms) CG 2010 10 01 and CG 2037 10 01 All other Additional Insured endorsements must be submitted for approval by the SANITATION DISTRICT, and the SANITATION DISTRICT may reject alternatives that provide different or less coverage to the SANITATION DISTRICT. • Additional Insured Submit endorsement provided by carrier for the (Auto Liability) SANITATION DISTRICT approval. • Waiver of Subrogation State Compensation Insurance Fund Endorsement No. 2570 or equivalent. • Cancellation Notice State Compensation Insurance Fund Endorsement No. 2065 or equivalent. H. Cancellation Notice 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. The Cancellation Section of ACORD Form 25 (5/2010) shall state the required thirty (30) days' written notification. The policy shall not terminate, nor shall it be cancelled, nor the coverage reduced until thirty(30) days after written notice is given to the SANITATION DISTRICT except for nonpayment of premium, which shall require not less than ten (10) days written notice to the SANITATION DISTRICT. Should there be changes in coverage or an increase in deductible or SIR amounts, the CONSULTANT shall send to the SANITATION DISTRICT a certified letter which includes a description of the changes in coverage and/or any increase in deductible or SIR amounts. The certified letter must be sent to the attention of Risk Management, Div. 260, and shall be received by the SANITATION DISTRICT not less than thirty (30)days prior to the effective date of the change(s) if the change would reduce coverage or increase deductibles or SIR amounts or otherwise reduce or limit the scope of insurance coverage provided to the SANITATION DISTRICT. I. Primary Insurance All liability policies shall contain a Primary and Non Contributory Clause. Any other insurance maintained by the SANITATION DISTRICT shall be excess and not contributing with the insurance provided by CONSULTANT. J. Separation of Insured All liability policies shall contain a "Separation of Insureds" clause. PSA -11- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY K. Non-Limiting (if applicable) Nothing in this document shall be construed as limiting in any way, nor shall it limit the indemnification provision contained in this AGREEMENT, or the extent to which CONSULTANT may be held responsible for payment of damages to persons or property. L. Deductibles and Self-Insured Retentions Any deductible and/or self-insured retention must be declared to the SANITATION DISTRICT on the Certificate of Insurance. All deductibles and/or self-insured retentions require approval by the SANITATION DISTRICT. At the option of the SANITATION DISTRICT, either: the insurer shall reduce or eliminate such deductible or self-insured retention as respects the SANITATION DISTRICT; or the CONSULTANT shall provide a financial guarantee satisfactory to the SANITATION DISTRICT guaranteeing payment of losses and related investigations, claim administration and defense expenses. The SANITATION DISTRICT will not invoke the option expressed in this paragraph unless it has reasonable cause to question CONSULTANT's financial strength. M. Defense Costs Liability policies (except Errors and Omissions/Professional Liability)shall have a provision that defense costs for all insureds and additional insureds are paid in addition to and do not deplete any policy limits. N. Subconsultants The CONSULTANT shall be responsible to establish insurance requirements for any Subconsultant hired by the CONSULTANT. The insurance shall be in amounts and types reasonably sufficient to deal with the risk of loss involving the Subconsultant's operations and work. O. Limits Are Minimums If the CONSULTANT maintains higher limits than any minimums shown above, then SANITATION DISTRICT requires and shall be entitled to coverage for the higher limits maintained by CONSULTANT. Nothing in this section, however, requires CONSULTANT in the absence of litigation to reveal its Errors and Omissions/Professional Liability limits beyond that required above in other sections. 9. SCOPECHANGES In the event of a change in the Scope of Work or a change in the proposed Project, as requested by the SANITATION DISTRICT, the Parties hereto shall execute an Amendment to this AGREEMENT setting forth with particularity all terms of the new AGREEMENT, including, but not limited to any additional CONSULTANT's fees. PSA -12- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY 10. PROJECT TEAM AND SUBCONSULTANTS CONSULTANT shall provide to SANITATION DISTRICT, prior to execution of this AGREEMENT, the names and full description of all Subconsultants and CONSULTANT's project team members anticipated to be used on this Project under this AGREEMENT by CONSULTANT. CONSULTANT shall include a description of the work and services to be done by each Subconsultant and each of CONSULTANT's Project team member. CONSULTANT shall include the respective compensation amounts for CONSULTANT and each Subconsultant, broken down as indicated in Section 2-COMPENSATION. There shall be no substitution of the listed Subconsultants and CONSULTANT's project team members without prior written approval by the SANITATION DISTRICT. 11. ENGINEERING REGISTRATION The CONSULTANTS personnel and Subconsultants are comprised of registered engineers and a staff of specialists and draftsmen in each department. The firm itself is not a registered engineer but represents and agrees that wherever, in the performance of this AGREEMENT, the services of a registered engineer is required, such services hereunder will be performed under the direct supervision of registered engineers who are registered in California. 12. AUDIT PROVISIONS A. SANITATION DISTRICT retains the reasonable right to access, review, examine, and audit, any and all books, records, documents and any other evidence of procedures and practices that the SANITATION DISTRICT determines are necessary to discover and verify that the CONSULTANT is in compliance with all requirements under this AGREEMENT. The CONSULTANT shall include the SANITATION DISTRICT's right as described above, in any and all of their subcontracts, and shall ensure that these rights are binding upon all Subconsultants. B. SANITATION DISTRICT retains the right to examine CONSULTANT's books, records, documents and any other evidence of procedures and practices that the SANITATION DISTRICT determines are necessary to discover and verify all direct and indirect costs, of whatever nature, which are claimed to have been incurred, or anticipated to be incurred or to ensure CONSULTANT's compliance with all requirements under this AGREEMENT during the term of this AGREEMENT and for a period of three (3)years after its termination. C. CONSULTANT shall maintain complete and accurate records in accordance with generally accepted industry standard practices and the SANITATION DISTRICT's policy. The CONSULTANT shall make available to the SANITATION DISTRICT for review and audit, all project related accounting records and documents, and any other financial data within 15 days after receipt of notice from the SANITATION DISTRICT. Upon SANITATION DISTRICT's request, the CONSULTANT shall submit exact duplicates of originals of all requested records to the SANITATION DISTRICT. If an audit is performed, CONSULTANT shall ensure that a qualified employee of the CONSULTANT will be available to assist SANITATION DISTRICT's auditor in obtaining all Project related accounting records and documents, and any other financial data. PSA -13- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY 13. LEGAL RELATIONSHIP BETWEEN PARTIES The legal relationship between the parties hereto is that of an independent contractor and nothing herein shall be deemed to transform CONSULTANT, its staff, independent contractors, or Subconsultants into employees of the SANITATION DISTRICT. CONSULTANT'S staff performing services under the AGREEMENT shall at all times be employees and/or independent contractors of CONSULTANT. CONSULTANT shall monitor and control its staff and pay wages, salaries, and other amounts due directly to its staff in connection with the AGREEMENT. CONSULTANT shall be responsible for hiring, review, and termination of its staff and shall be accountable for all reports and obligations respecting them, such as social security, income tax withholding, unemployment compensation, workers' compensation and similar matters. 14. NOTICES All notices hereunder and communications regarding the interpretation of the terms of this AGREEMENT, or changes thereto, shall be effected by delivery of said notices in person or by depositing said notices in the U.S. mail, registered or certified mail, return receipt requested, postage prepaid and addressed as follows: SANITATION DISTRICT: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Attention: Natasha Dubrovski, Principal Contracts Administrator Copy: Richard Birdsall, Project Manager CONSULTANT: Stantec Consulting Services, Inc. 38 Technology Drive, Suite 100 Irvine, CA 92618 Attention: Pete Perciavalle, Vice President-Director All communication regarding the Scope of Work, will be addressed to the Project Manager. Direction from other SANITATION DISTRICT staff must be approved in writing by the SANITATION DISTRICT's Project Manager prior to action from the CONSULTANT. 15. TERMINATION The SANITATION DISTRICT may terminate this AGREEMENT at any time, without cause, upon giving thirty (30) days written notice to CONSULTANT. In the event of such termination, CONSULTANT shall be entitled to compensation for work performed on a prorated basis through and including the effective date of termination. CONSULTANT shall be permitted to terminate this AGREEMENT upon thirty (30)days written notice only if CONSULTANT is not compensated for billed amounts in accordance with the provisions of this AGREEMENT, when the same are due. Notice of termination shall be mailed to the SANITATION DISTRICT at the address listed in Section 14 - NOTICES. PSA -14- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY 16. DOCUMENTS AND STUDY MATERIALS The documents and study materials for this Project shall become the property of the SANITATION DISTRICT upon the termination or completion of the work. CONSULTANT agrees to furnish to the SANITATION DISTRICT copies of all memoranda, correspondence, electronic materials, computation and study materials in its files pertaining to the work described in this AGREEMENT, which is requested in writing by the SANITATION DISTRICT. 17. COMPLIANCE CONSULTANT certifies by the execution of this AGREEMENT that it pays employees not less than the minimum wage as defined by law, and that it does not discriminate in its employment with regard to race, color, religion, sex or national origin; that it is in compliance with all federal, state and local directives and executive orders regarding non-discrimination in employment; and that it agrees to demonstrate positively and aggressively the principle of equal opportunity in employment. 18. AGREEMENT EXECUTION AUTHORIZATION Both the SANITATION DISTRICT and CONSULTANT do covenant that each individual executing this document by and on behalf of each Party is a person duly authorized to execute this AGREEMENT for that Party. 19. DISPUTE RESOLUTION In the event of a dispute arising between the parties regarding performance or interpretation of this AGREEMENT, the dispute shall be resolved by binding arbitration under the auspices of the Judicial Arbitration and Mediation Service ("JAMS"), or similar organization or entity conducting alternate dispute resolution services. 20. ATTORNEYS FEES, COSTS AND NECESSARY DISBURSEMENTS If any action at law or in equity or if any proceeding in the form of an Alternative Dispute Resolution (ADR) is necessary to enforce or interpret the terms of this AGREEMENT, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which he may be entitled. 21. WARRANTY CONSULTANT shall perform its services in accordance with generally accepted industry and professional standards. If, within the 12-month period following completion of its services, the SANITATION DISTRICT informs CONSULTANT that any part of the services fails to meet those standards, CONSULTANT shall, within the time prescribed by the SANITATION DISTRICT, take all such actions as are necessary to correct or complete the noted deficiency(ies). PSA -15- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY 22. INDEMNIFICATION To the fullest extent permitted by law, CONSULTANT shall indemnify, defend (at CONSULTANT's sole cost and expense and with legal counsel approved by the SANITATION DISTRICT, which approval shall not be unreasonably withheld), protect and hold harmless the SANITATION DISTRICT and all of SANITATION DISTRICT's officers, directors, employees, CONSULTANT's, and agents (collectively the "Indemnified Parties"), from and against any and all claims, damages, liabilities, causes of action, suits, arbitration awards, losses,judgments, fines, penalties, costs and expenses (including, without limitation, attorneys' fees, disbursements and court costs, and all other professional, expert or CONSULTANT's fees and costs and the SANITATION DISTRICT's general and administrative expenses; individually, a "Claim"; collectively, "Claims")which may arise from or are in any manner related, directly or indirectly, to any work performed, or any operations, activities, or services provided by CONSULTANT in carrying out its obligations under this AGREEMENT to the extent of the negligent, recklessness and/or willful misconduct of CONSULTANT, its principals, officers, agents, employees, CONSULTANT's suppliers, CONSULTANT, Subconsultants, subcontractors, and/or anyone employed directly or indirectly by any of them, regardless of any contributing negligence or strict liability of an Indemnified Party. Notwithstanding the foregoing, nothing herein shall be construed to require CONSULTANT to indemnify the Indemnified Parties from any Claim arising solely from: (A)the active negligence or willful misconduct of the Indemnified Parties; or (B)a natural disaster or other act of God, such as an earthquake; or (C)the independent action of a third party who is neither one of the Indemnified Parties nor the CONSULTANT, nor its principal, officer, agent, employee, nor CONSULTANT's supplier, CONSULTANT, Subconsultant, subcontractor, nor anyone employed directly or indirectly by any of them. Exceptions (A)through (B) above shall not apply, and CONSULTANT shall, to the fullest extent permitted by law, indemnify the Indemnified Parties, from Claims arising from more than one cause if any such cause taken alone would otherwise result in the obligation to indemnify hereunder. CONSULTANT's liability for indemnification hereunder is in addition to any liability CONSULTANT may have to the SANITATION DISTRICT for a breach by CONSULTANT of any of the provisions of this AGREEMENT. Under no circumstances shall the insurance requirements and limits set forth in this AGREEMENT be construed to limit CONSULTANT's indemnification obligation or other liability hereunder. The terms of this AGREEMENT are contractual and the result of negotiation between the parties hereto. Accordingly, any rule of construction of contracts (including, without limitation, California Civil Code Section 1654)that ambiguities are to be construed against the drafting party, shall not be employed in the interpretation of this AGREEMENT. PSA -16- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY 23. DUTY TO DEFEND The duty to defend hereunder is wholly independent of and separate from the duty to indemnify and such duty to defend shall exist regardless of any ultimate liability of CONSULTANT and shall be consistent with Civil Code section 2782.8. Such defense obligation shall arise immediately upon presentation of a Claim by any person if, without regard to the merit of the Claim, such Claim could potentially result in an obligation to indemnify one or more Indemnified Parties, and upon written notice of such Claim being provided to CONSULTANT. Payment to CONSULTANT by any Indemnified Party or the payment or advance of defense costs by any Indemnified Party shall not be a condition precedent to enforcing such Indemnified Party's rights to indemnification hereunder. In the event a final judgment, arbitration, award, order, settlement, or other final resolution expressly determines that the claim did not arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the CONSULTANT, to any extent, then the DISTRICT will reimburse CONSULTANT for the reasonable costs of defending the Indemnified Parties against such claims. CONSULTANT'S indemnification obligation hereunder shall survive the expiration or earlier termination of this AGREEMENT until such time as action against the Indemnified Parties for such matter indemnified hereunder is fully and finally barred by the applicable statute of limitations. 24. COMPLIANCE WITH SANITATION DISTRICT POLICIES AND PROCEDURES CONSULTANT shall be required to comply with all SANITATION DISTRICT policies and procedures including the OCSD Safety Standards, as applicable, all of which may be amended from time to time. 25. CLOSEOUT When the SANITATION DISTRICT determines that all Work authorized under the AGREEMENT is fully complete and that the SANITATION DISTRICT requires no further work from CONSULTANT, or the AGREEMENT is otherwise terminated or expires in accordance with the terms of the AGREEMENT, the SANITATION DISTRICT shall give the Consultant written notice that the AGREEMENT will be closed out. CONSULTANT shall submit all outstanding billings, work submittals, deliverables, reports or similarly related documents as required under the AGREEMENT within thirty(30) days of receipt of notice of AGREEMENT closeout. Upon receipt of CONSULTANT'S submittals, the SANITATION DISTRICT shall commence a closeout audit of the AGREEMENT and will either: I. Give the CONSULTANT a final AGREEMENT Acceptance: or ii. Advise the CONSULTANT in writing of any outstanding item or items which must be furnished, completed, or corrected at the CONSULTANT'S cost. CONSULTANT shall be required to provide adequate resources to fully support any administrative closeout efforts identified in the AGREEMENT Such support must be provided within the timeframe requested by the SANITATION DISTRICT. PSA -17- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY Notwithstanding the final AGREEMENT acceptance, the CONSULTANT will not be relieved of its obligations hereunder, nor will the CONSULTANT be relieved of its obligations to complete any portions of the work, the non-completion of which were not disclosed to the SANITATION DISTRICT(regardless of whether such nondisclosures were fraudulent, negligent, or otherwise), and the CONSULTANT shall remain obligated under all those provisions of the AGREEMENT which expressly or by their nature extend beyond and survive final AGREEMENT Acceptance. Any failure by the SANITATION DISTRICT to reject the work or to reject the CONSULTANT's request for final AGREEMENT Acceptance as set forth above shall not be deemed to be acceptance of the work by the SANITATION DISTRICT for any purpose nor imply acceptance of, or agreement with, the CONSULTANT's request for final AGREEMENT Acceptance. 26. ENTIRE AGREEMENT This AGREEMENT constitutes the entire understanding and agreement between the Parties and supersedes all previous negotiations between them pertaining to the subject matter thereof. PSA -18- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY IN WITNESS WHEREOF, this AGREEMENT has been executed in the name of the SANITATION DISTRICT, by its officers thereunto duly authorized, and CONSULTANT as of the day and year first above written. ORANGE COUNTY SANITATION DISTRICT By Gregory C. Seboum, PLS Date Chair, Board of Directors By Kelly A. Lore Date Clerk of the Board STANTEC CONSULTING SERVICES, INC. By Date By Date ORANGE COUNTY SANITATION DISTRICT By Marc Dubois Date Contracts, Purchasing and Materials Management Manager Attachments: Attachment"A'—Scope of Work Attachment"B"—Labor Hour Matrix Attachment"C"—Not Used Attachment"D"—Allowable Direct Costs Attachment"E"—Fee Proposal Attachment"F"— Not Used Attachment"G"—Cost Matrix Attachment"H"—Not Used Attachment"I"— Not Used Attachment"J"— Not Used Attachment"K"—OCSD Safety Standards ND:LL:ms PSA -19- PROJECT NO. SP-196 Revision 091217 PROCESS CONTROL SYSTEMS UPGRADES STUDY o- q u x Nn.� rsi�xc rcc� p 0 U ux esxs IX:�t lc bN� bN �TR�, .9n® —i iaN„Wc �� ®�.. ex• Y J wt xv i wars wx us/� wars Process Project . . • oar � nb'o N February 7, 2018 Operations Committee ^� p Award PSA �' ZIT SCADA Network Architecture Laser Printer Historical Data SCADA Server 1 Server SCADA Server 2 IIEMMIMMMMM.�, I L II Core Core - - - - Switch Switch SW Timm; Distribution I`rrDistribution .......... Switch 'A' witch 'B' Local HMI Access Switch Access Switch Field Devices rv,�307 PLC Remote 1/0 Human Machine Interface • CRISP, 24 years old • 3800 graphics • Uses VAX workstation and emulation software • 14 - PC Servers, 19 — Proxy Servers • 100 — HMI Workstations u �G+ -'J a iC+ Human Machine Interface • OCSD owns the software code • Added features over the years to meet our needs • Programmers reaching retirement age VMU � 1 `• n TRANSFER S R wWN A I P C n R I ---TF- S P ' l uCxV PUOmC MWM RC WCHM SUUWM WMwC 12LC Programmable Logic Controllers • PLC — Modicon Quantum • -44,000 input/output points • 150 — Networked PLC's • 25+ - Non-NW PLC's ' • 20 Years Old • Processors no longer manufactured • Input/output modules no longer manufactured in the near future ` • Maintainability Plan • Spares in warehouse for replacement and near term future projects • Using next generation Modicon PLC (M580) for new projects P2-107/J-117B SP = 196 Scope of Work • Define SCADA System Features • Available SCADA technology • Smart devices and instruments • Integration with business and maintenance systems • Predictive maintenance • Advanced control feature • Historian • Selection Process • Request for Information (RFI) to Vendors • RFI Evaluation • Vendor Interviews and Pricing Evaluation • Implementation • System Architecture • Implementation Plan Future Implementation • SCADA Replacement Project (J-120) • J-120 will replace the existing CRISP hardware and graphics • Develop new HMI graphic standards • Develop PLC/DCS programming standards • Potentially replace the Wonderware Historian and migrate the data Schedule • SP-196 Schedule Milestone Dates • Start: April 2018 • Select Vendor: August 2019 • Completion : December 2019 • J-120 Anticipated to Start: December 2020 r Consultant Selection • Three proposals received, two invited to interview • Stantec unanimously selected as most qualified • Strong technical team performing studying on similar size SCADA system • Deep understanding of the available SCADA systems • Comprehensive approach evaluating the SCADA systems and documenting the selection process Summary of Major Negotiated Changes Decreased: Increased: • Number of design standards • Workshops that need updating • SCADA feature evaluation • Training workshop support . J-120 vendor scope of work • Site visit trips with OCSD . Compile and document selection process • Pricing templates ��Ill Original Fee Proposal 4,994 $1,346,122 Negotiated Agreement 5,355 $1,398,866 Change +361 +$52,744 Recommendations • Approve a Professional Services Agreement with Stantec Consulting Services, Inc. to provide engineering services for the Process Control Systems Upgrades Study, Project No. SP-196, for an amount not to exceed $ 1,398,866; and • Approve a contingency of $ 139,887 ( 10%) ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir. 0 2/1 4 11 8 o2/2B1ia AGENDA REPORT emNumber Item Number 2 13 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST GENERAL MANAGER'S RECOMMENDATION A. Receive and file District purchases made under the General Manager's authority for the period of October 1, 2017 to December 31, 2017; and B. Approve the following additions to the pre-approved OEM Sole Source List for the period of October 1, 2017 to December 31, 2017: • AMOT - Gas valves for CenGen engines • ELECTRABOND - Coating of belt filter press rollers • FONTAINE-AQUANOX - PVC stem covers • INGERSOLL RAND -Air compressor valves and parts • OVIVO - Trickling filter parts • PULSAFEEDER - Ferric injection pumps • QUINCY COMPRESSOR -Air compressor parts and service • SAFT AMERICA - UPS batteries • TIRESHARK - Traffic spikes BACKGROUND Orange County Sanitation District staff provides the Administration Committee and the Board of Directors quarterly reports of General Manager approved purchases between $50,000 and $100,000 and additions to the pre-approved OEM Sole Source List. The list of additions to the pre-approved OEM Sole Source List displays the original equipment manufacturers (OEM)added this quarter that require sole source procurement to maintain, service, or replace equipment currently in operation at District facilities, because the parts and/or service can only be provided by the OEM or their designated representative. RELEVANT STANDARDS • Quarterly financial reporting • Ensure the public's money is wisely spent Page 1 of 2 PRIOR COMMITTEE/BOARD ACTIONS December 2016 - Minute Order 12(b) authorized the General Manager to ratify additions or deletions to the OEM Sole Source list on the General Manager's quarterly approved purchases agenda report. ADDITIONAL INFORMATION In accordance with Board purchasing policies, Ordinance No. OCSD-471 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 2017-18: Vendor Name Amount Department Description/Discussion JA N Digester M Ten Removal at Plant 2 ENGINEERING $99 995.00 Engineering Task Order Bid TOB-2017-889 of CONTRACTORS INC Master Service Contract S-2015-700-4 JAMISON Urgent Repairs to Primary Clarifier J ENGINEERING Operations & at Plant 2 CONTRACTORS $77,188.00 Maintenance Sole Source Justification 1855 INC Reason: Time is of the Essence- Potential Permit Violation Risk MANLEY'S BOILER Operations & CenGen Boiler Retubing and Repair INC $80,534.00 Maintenance for Unit 2 at Plant 2 Specification No. S-2017-882BD SHIMMICK Sunflower Pump Station Fall Arrest CONSTRUCTION $68,185.00 Operations & System CO INC Maintenance Task Order Bid TOB-2017-890 of Master Service Contract S-2015-700-8 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: N/A Page 2 of 2 ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir. o�i41rs oz1ze�ia AGENDA REPORT emNumber Item Number 3 14 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: MID-YEAR CONSOLIDATED FINANCIAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2017 GENERAL MANAGER'S RECOMMENDATION Receive and file Orange County Sanitation District Mid-Year Financial Report for the period ended December 31, 2017. BACKGROUND Included in this consolidated report are the following mid-year reports for the period ended December 31, 2017: • Mid-Year Budget Review The Budget Review Summary provides the Board of Directors, staff, and the general public with a comprehensive overview of the mid-year financial results of the Orange County Sanitation District (Sanitation District) for the period ended December 31, 2017. • Mid-Year 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 Mid-Year 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 ADDITIONAL INFORMATION The mid-year treasurers report contained within the Consolidated Financial Reports for the period ended December 31, 2017 is being submitted in accordance with the Sanitation Page 1 of 3 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: • Performance results in comparison with the 3-month treasury bill index for the liquid operating portfolio; and the Merrill Lynch Corp./Govt. 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, six months, nine months, twelve months, and since inception compared to the Benchmark returns for the same periods: Portfolio Performance Summary As of December 31,2017 Liquid Operating Monies(%) Long-Tenn Operating Monies(%) Total Rate Total Rate of of Return Benchmark Return Benchmark 3 Months 0.28 0.28 -0.24 -0.32 6 Months 0.55 0.55 0.18 0.06 9 Months 0.75 0.75 0.64 0.54 12 Months 0.89 0.86 1.16 1.02 Annualized Since incep0on 30 Nov 2014 0.52 0.40 1.06 0.99 • 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 Oper. Long-Term Cost $145.2 M $397.5 M MV $145.5 M $396.6 M • Modified duration of the portfolio compared to Benchmark: Liquid Oper. Long-Term District Policy < 0.50 < 5.00 B.M. 0.16 2.58 Port. 0.15 2.26 • Dollar change in value of the portfolio for a one-percent (1%) change in interest rates: Liquid Oper. - $225,095 Long-Term - $8,980,647 • None of the portfolios are currently invested in reverse repurchase agreements. • The percent of the Liquid Operating Monies portfolio maturing within 90 days: 86.1% Page 2 of 3 • Average portfolio credit quality: Liquid Oper. —AA+/Aaa Long-Term —AA+/Aal • 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— 1.7% Maturity Cost Date Moody S&P Fitch AMRESCO Residential Securities 1999-1 $ 100,432.85 6/25/2029 Not Rated A+ BBB Goldman Sachs Group Inc. Note $ 692,806.00 1/18/2018 A3 BBB+ A American Express Credit Note $ 3,377,385.79 3/19/2018 A3 BBB+ A Morgan Stanley Note $ 3,200,848.00 7/28/2021 A3 BBB+ A • All investments are in compliance with this policy and the California Government Code, except for the following Lehman Brothers holdings that the Sanitation District is pursuing collection through the bankruptcy court: Lehman Brothers Note-Defaulted $ 600,000 par value defaulted 9/19/2008 Lehman Brothers Note-Defaulted $2,000,000 par value defaulted 9/18/2008 • Sufficient funds are available for the Sanitation District 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.coml with the complete agenda package: • Mid-Year Consolidated Financial Reports for the period ended December 31, 2017 Page 3 of 3 c mn p� Dill i rt MENE■ D CD Z Q m n• z CL Q MORK v a Cl) s 3 O o � ' z r NMI room O � ' 9� 1 o i� t � v Table of Contents ExecutiveSummary...................................................................................................1 Budget Review Section 1 —Consolidated Financial Reports..........................................................................1 Section 2—Operating Budget Review Chart of the Cost per Million Gallons by Department—Budget and Actual..............1 Chart of the Net Expenses by Major Category— Budget and Actual........................1 Divisional Contributions to Cost Per Million Gallons ................................................2 Comparison of Expenses by Department.................................................................3 Summary of Collection, Treatment, and Disposal Expenses by Major Category.....4 Summary of District-Wide Revenues .......................................................................5 Summary of Collection, Treatment and Disposal Revenues....................................5 Summary of Collection, Treatment, and Disposal Expenses by Line Item...............6 Summary of Collection, Treatment, and Disposal Expenses by Process.................8 Chartof Staffing Trends...........................................................................................9 Section 3—Capital Improvement Program Budget Review Capital Improvement Program Graphs by Type and Funding Source......................1 Summary of Capital Improvement Construction Requirements- Current Year........2 Summary of Capital Improvement Construction Requirements - Project Life..........6 Section 4—Capital Assets Schedule & Debt Service Budget Review CapitalAssets Schedule ..........................................................................................1 Debt Service Budget Review....................................................................................1 Section 5—Self Insurance Budget Review General Liability and Property Fund Budget Review................................................1 Workers' Compensation Fund Budget Review.........................................................2 Quarterly Treasurers Repo rt........................................................................................1 QuarterlyCOP Reoort.................................................................................................1 FY 2017-18 Mid-Year Financial Report This Page Intentionally Left Blank Executive Summary Consolidated Financial Reports For the Mid-Year Ended December 31, 2017 Included in this consolidated report are the following quarterly financial reports for the period ended December 31, 2017: Mid-Year Budget Review: The Consolidated Financial Reports Section provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the mid-year ended December 31, 2017. Contained within the Consolidated Financial Reports is the budget-to-actual status of the Collections, Treatment and Disposal Operations, the Capital Improvement Program, the Self-Insurance Program, and Debt Service Outlays. Also included is a Capital Assets Schedule as of December 31, 2017. Various detail information can be found in this report. In summary: a) Most major expense categories are anticipated to be at or below budget. b) Total revenues are at 53.5 percent of the $439.3 million budget. Except for IRWD Intra District Sewer Use, IRWD Capital Assessments, and Interest Earnings, all other major revenue sources are currently tracking close to or exceeding revenue estimates. Overall, total revenues are projected to exceed budget at year-end. More detailed information on District revenues is provided within Section 1 — Pages 3 through 5. c) Collection, Treatment and Disposal Costs: As indicated within the Consolidated Financial Reports Section of this report, the net operating requirements through the mid-year of $72.8 million is currently tracking at 48.0 percent of the $151.9 million budget. In addition, net operating expenses have increased $5.2 million or 7.7 percent in comparison with the same period last year. Overall, staff expects the total operating costs to remain within budget throughout the remainder of the year. More detailed information on District operating expenses is provided within Section 1- Pages 1 through 3. The total cost per million gallons is $2,125 based on flows of 186.3 million gallons per day. This is $125 per million gallons, or 5.6 percent lower than the budgeted cost per million gallons per day. A further description of these costs and benchmarking with other agencies is contained within Section 1 — Pages 6 through 8. d) The total projected capital outlay cash flow of the Capital Improvement Program (CIP) for FY 2017-18 has been revised to $137.3 million, or 77.5 Page 1 FY 2017-18 Mid-Year Report percent of the board approved cash outlay of$177.1 million. The actual cash outlay spending through the mid-year is $50.2 million, or 28.3 percent of the total budgeted outlay. More detailed information on the CIP budget review can be found in Section 3. • 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 national economic outlook from the Sanitation District's money manager, Chandler Asset Management (Chandler). Chandler notes that although the Long-Term Portfolio quarterly return was negative, the negative return of 24 basis points still outperformed the Bank of America Merrill Lynch 1-5 year AAA-A U.S. Corporate and Government Index negative return of 32 basis points, while the Liquid Operating Monies Portfolio quarterly return matched the three-month Treasury Bill index return benchmark of 28 basis points. Chandler further notes the yield curve flattened meaningfully in 2017, with the 2- year/10-year Treasury yield spread narrowing from 126 basis points the end of 2016 to as low as 52 basis points at the end of December, the tightest spread since October 2007. In December, the 2-year Treasury yield increased about ten basis points to 1.88% and the 10-year Treasury yield was essentially unchanged. During 2017, the Federal Reserve raised the fed funds rate three times by a total of 75 basis points, which largely fueled the increase in shorter rates. However, inflation expectations were muted, which kept a lid on longer-term rates. All else being equal, we believe the Fed's ongoing efforts to normalize the balance sheet should help promote a steeper yield curve, but we don't expect the impact of this to be reflected in the market until later this year. We also believe tax reform is likely to provide a tailwind to economic growth and help drive yields at the long end of the curve higher. Global demand for Treasuries will also continue to influence yields. The Federal Open Market Committee's (FOMC) economic projections indicate the Fed plans to hike the fed funds rate three times this year to a median level of 2.1%. We believe the rotation of new voting members into the FOMC this year, as well as a new Fed Chairman, may make for a more hawkish FOMC this year. Assuming inflation remains contained below 2.0% and the US dollar does not materially appreciate, we think three rate hikes are likely this year. While we expect the Fed to remain on a path toward monetary policy normalization, we continue to believe that the Fed's terminal rate forecast of 2.8% is too high, and believe the long-run rate is probably closer to 2.5%. As such, we see little room for additional rate hikes beyond this year, unless there is a significant pick-up in economic growth and inflation. We are forecasting GDP growth of about 2.5% in 2018, which is in line with the Fed's forecast and the market consensus. This would equate to a slight increase over the 2017 GDP growth consensus estimate of 2.3%. Overall, economic data was quite favorable heading into 2018, with the exception of still-sluggish inflation readings. The economy is Page 2 Executive Summary at or near full employment, consumer confidence is strong, and leading indicators suggest the economy will continue to grow modestly. The Treasury yield curve continued to flatten in December. The 2-year Treasury yield increased about ten basis points in December to 1.88% and the 10-year Treasury yield was essentially unchanged. The Consumer Price Index (CPI) was up 2.1% year-over-year in December, versus up 2.2% year-over-year in November. Core CPI (CPI less food and energy) was up 1.8% year-over-year in December, versus up 1.7% year-over-year in November. Core CPI remains soft but did move higher. The Personal Consumption Expenditures (PCE) index was up 1.8% year-over-year in November, versus up 1.6% year-over-year in October. However, Core PCE (excluding food and energy) was up just 1.5% on a year-over-year basis in November. PCE inflation remains well below the Fed's 2.0% target. Economic Outlook The global economy is experiencing a modest amount of synchronized global growth and risk assets globally have responded in kind. The S&P 500 returned 19.42% in 2017, a very strong finish to the year after being up 12.35% YTD through the end of the third quarter 2017. Treasury yields also moved higher during the quarter, but more in a bear flattening fashion with shorter maturity notes leading the way while yields at the ten-year maturity point and longer were much more contained. Investment grade credit spreads continued to perform with year to date new issue volume remaining elevated and spreads firm as the option adjusted spread of the credit index moved tighter in the fourth quarter. The recently passed legislation on tax reform should provide a tailwind to the domestic economy in 2018. Interest rates should continue to move modestly higher and normalize, but Chandler maintains the view the terminal fed funds rate at equilibrium will be 2.50% or lower, versus the FOMC's higher forecast. The flat shape of the Treasury yield curve remains a concern, but based on our analysis risk assets are not susceptible to a sharp correction based on the shape of the yield curve alone. Most spreads in the investment grade sectors are tight; however, we expect some potential widening in the Mortgage sector later this year, coinciding with a larger amount of the Fed's balance sheet reduction, which will likely pressure spreads in alternative high quality product as well. New issue volume in the Corporate market should be lower than the elevated levels of the past two years, but we still anticipate the new issue market will provide ample opportunities to adjust the Corporate exposure of the portfolio. • Quarterly Certificates of Participation (COP) Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. Page 3 FY 2017-18 Mid-Year Report This Page Intentionally Left Blank Page 4 Consolidated Financial Reports Mid-Year Financial Report December 31, 2017 Financial Management is pleased to present the FY 2017-18 mid-year financial report. This report provides a comprehensive overview of the financial condition of the Sanitation District and reports on the status of all capital projects in progress. A summary of the sections contained within this report is provided below. Operating Budget Review., This section reports on collection, treatment and disposal net operating requirements. At December 31, 2017, 48.0 percent, or $72.8 million of the FY 2017-18 net operating budget of $151.9 million has been expended. Net operating expenses increased from the same period last year by $5.2 million, or 7.7 percent, mainly due to an increase of $2.1 million in Repairs and Maintenance, $1.3 million in Salaries and Benefits, $538,000 in Other Operating Supplies, $504,000 in Administrative Expenses, $448,000 in Contractual Services, $418,000 in Professional Services, $278,000 in Utilities, $203,000 in Operating Materials and Supplies, $67,000 in Research and Monitoring, and $33,000 in Other Non-Operating Expenses. These increases to net operating expenses have been partially offset by an increase of $656,000 in indirect costs allocated out to capital projects. These and other variances that factor into this net increase in expenses are discussed in more detail below. Overall, staff expects the total operating costs to remain at or slightly below budget throughout the remainder of the year. Significant operating results as of December 31, 2017 include the following: • Salaries. Wages and Benefits — Personnel costs of$45.9 million are on target at 49.1 percent of budget through the mid-year of FY 2017-18. Although the budget is based on a 5 percent vacancy factor, staffing is 41 full-time equivalents (FTE's), or 6.5 percent below the total 635 FTE's approved in the FY 2017-18 budget. Salary and benefit costs are $1.3 million or 3.0 percent higher than the $44.5 million incurred in the same period last year, mainly due to an increase of $1.4 million in salaries and wages due to a budgeted increase in FTE's of 8 or 1.3 percent and cost of living adjustments included in the new Memorandums of Understanding for all employee bargaining units. Net operating personnel costs are expected to approximate budget throughout the remainder of the year. • Administrative Expenses — Administrative Expenses totaled $1.3 million, or 62.4 percent of the $2.0 million budget through December 31. These costs are $504,000 or 66.2 percent higher at December 31 in comparison with the prior year mainly due to increases of $261,000 in postage for mailing Prop 218 notifications; $153,000 in purchases of small computer items, primarily HP tablets and portable two-way radios; and $80,000 in minor furniture and fixtures for workstation installations and ergonomic chairs. It is anticipated that the administrative costs will approximate budget at year-end. Section 1 - Page 1 FY 2017-18 Mid-Year Report • Printing and Publication Expenses — Printing and Publication Expenses totaled $153,000, or 37.9 percent of the $404,000 budget through December 31. These costs are $17,000 or 12.9 percent higher at December 31 in comparison with the prior year, mainly due to an increase of $15,000 in outside printing services. It is anticipated that the printing and publication costs will be below budget at year-end • Training and Meetings — Training and meetings of $421,000 are below target at 33.6 percent of the $1.3 million budget. This account is lower than the proportionate budget due to the timing and need for training throughout the year. These costs have decreased over the same period last year by $26,000 or 5.8 percent, primarily due to Total Productive Maintenance Certification Program costs incurred in the prior period. Total training and meeting costs are anticipated to be below budget at year-end. • Operating Materials and Supplies — Operating materials and supplies of $7.8 million is on target at 49.3 percent of the $15.7 million budget through December 31. Operating Materials and Supplies have increased from the prior year by $203,000 or 2.7 percent, primarily due to increases in Odor Control of $318,000 and Tools of $57,000, offset by decreases in Chemical Coagulants of$140,000 and Gasoline, Diesel and Oil of$37,000. The increases are mainly brought about by the proactive treatment of odor control chemicals in the trunk lines, as outlined in the odor control action plan, and an increase in purchases of tools and equipment from the prior year. Based on current processes, operating materials and supplies are anticipated to approximate budget at year-end. • Contractual Services — Contractual services is on target at $11.8 million or 48.2 percent of the $24.5 million budget through December 31. Contractual Services is higher by $448,000 or 3.9 percent over the same period last year. Solids Removal costs, budgeted at $15.9 million, comprise the majority of this expense category, and decreased $1.1 million or 12.9 percent from the prior year primarily due to the renegotiation of composting contract rates. Solids removal costs totaled $7.7 million, or 48.4 percent of budget at December 31. Temporary Services increased by $712,000 due to position vacancies and Other Contractual Services increased by $515,000 due to an increase in preventive maintenance services for the Civil Assets Management Program (CAMP). In addition, Security Services increased by $376,000 due to heighted security and the addition of armed patrol services at both plants. These increases were offset by a decrease of $47,000 in Other Waste Disposal due to a decrease in removal of hazardous waste materials from the same period last year. County Service Fees totaled only $25,000, or 3.8 percent of the $659,000 budget through the mid-year as the preponderance of these fees are billed by the County in the fourth quarter. Total contractual services costs are anticipated to approximate budget at year-end. • Professional Services — Professional services costs totaled $1.9 million or 37.5 percent of the $5.1 million budget through December 31. Professional service costs, such as Engineering, Environmental Scientific Consulting, Advocacy Efforts, Section 1 - Page 2 Consolidated Financial Reports and Other Services, are proportionately low through December 31 due to a variety of factors such as timing of services and re-evaluation of needs for services. These costs are $418,000 or 27.8 percent higher at December 31 in comparison with the prior year mainly attributable to increases of $267,000 in Engineering, due to an increase in engineering services for the Civil Assets Management Program (CAMP), and $136,000 in Other Services due to an increase in on-site training services. It is anticipated that the costs for this category will be below budget at year-end. • Research and Monitoring — Research and monitoring costs totaled $413,000, or 46.4 percent of the $889,000 budget through December 31. These costs are $67,000, or 19.3 percent higher at December 31 in comparison with the prior year, mainly due to an increase in Environmental Monitoring costs such as vessel services and ocean monitoring. Total Research and Monitoring costs are anticipated to approximate budget at year-end. • Repairs and Maintenance — Repair and maintenance costs totaled $8.2 million, or 51.6 percent of the $15.9 million budget through December 31. These costs are $2.1 million, or 34.0 percent higher at December 31 in comparison with the prior year, mainly due to an increase in repair materials purchased, such as engine components to remedy gas leaks, and an increase in service maintenance agreements due to timing of payments. It is anticipated that the costs for this category will approximate budget at year-end. • Utilities — Utilities costs totaled $3.7 million, or 46.3 percent of the $7.9 million budget through December 31. These costs are $278,000 or 8.2 percent higher at December 31 in comparison with the prior year, primarily attributable to an increase in power charges of$280,000 due to a Plant 2 CenGen shutdown and an increase in electricity costs. It is anticipated that the costs will approximate budget at year- end. • Other Operating Supplies — Other operating supplies costs totaled $1.4 million, or 43.7 percent of the $3.3 million budget through December 31. Property and General Liability Insurance comprise the majority of this expense category. These costs are $500,000 or 90.0 percent higher at December 31 in comparison with the prior year primarily due to an increase in budgeted in-lieu premium charges in order to maintain recommended reserve balances. It is anticipated that the costs will approximate budget at year-end. • Revenues — Service Fees and Property Taxes — Through December 31, revenues from service fees are at $162.7 million, or 55.9 percent of budget and property taxes are $44.5 million, or 47.5 percent of budget. These items comprise the majority of the Sanitation District's revenues and are mostly collected by the County through the property tax roll and distributed to the Sanitation District throughout the year based on a set distribution schedule that begins in November of each year. An increase of $4.1 million or 2.6 percent in service fee revenue over the prior period is due in part to an increase in sewer service rates and a decrease in user fee rebates issued in the current period, partially offset by the transfer of local sewer service fees Section 1 - Page 3 FY 2017-18 Mid-Year Report to East Orange County Water District. An increase of $2.9 million or 7.0 percent in property tax revenues over the prior period is due to an increase in assessed property values. These revenues are expected to approximate budget at year- end. • Revenues — Permittee User Fees — Permittee User Fees are at $9.0 million, or 69.3 percent of the $12.9 million budget. The revenues through the mid-year are higher than the same period last year by $2.9 million or 49.1 percent due to an increase in the strength of the discharge from the permittees. The number of permittees fluctuates from year to year as businesses are established or close their operations. It is estimated that the permittee user charges will exceed budget at year-end. • Revenues — Inter District Sewer Use — SAWPA and SBSD — Inter District Sewer revenues - SAWPA and SBSD are at $1.4 million, or 43.7 percent of the $3.3 million budget. This revenue is derived from charges to the Santa Ana Watershed Protection Agency (SAWPA) and Sunset Beach Sanitary District (SBSD) for treatment of flows. These revenues are expected to approximate budget at year- end. • Revenues — Intra District Sewer Use — IRWD — Intra District Sewer revenues- IRWD are at $910,000, or 20.0 percent of the $4.6 million budget. This revenue is derived from charges to the Irvine Ranch Water District (IRWD) for treatment of flows. The revenues through the mid-year are higher than the same period last year by $149,000 or 19.5 percent, mainly due to an increase in unit costs of operation and maintenance charges to IRWD. These revenues are expected to be below budget at year-end. • Revenues - Sludge Disposal — IRWD — Sludge Disposal fees - IRWD are at $5.9 million, or 100.0 percent of the $5.9 million budget. The revenue is for the handling, treatment and disposal of solids, derived from flows discharged from IRWD to the Sanitation District. The revenues through the mid-year are higher than the same period last year by $888,000 or 17.8 percent, mainly due to an increase in the estimated costs and volume of solids processed by OCSD on behalf of IRWD. The quarterly billing to IRWD is based on estimates. These revenues are expected to exceed budget at year-end. • Revenues — Capital Assessments — IRWD — Capital Assessments-IRWD and Other Agencies are at $1.3 million, or 24.7 percent of the $5.4 million budget. The revenues through the mid-year are higher than the same period last year by $400,000 or 43.1 percent mainly due to an increase in joint capital costs allocable to IRWD. It is estimated that the capital assessments will be below budget at year-end. • Revenues — Capital Facilities Capacity Charoes (CFCC) — CFCC are at $5.9 million, or 59.7 percent of the $9.9 million budget. The revenues through the mid-year are higher than the same period last year by $137,000 or 2.4 percent due to higher supplemental capital facilities capacity charges assessed industrial Section 1 - Page 4 Consolidated Financial Reports dischargers than at this time last year, somewhat offset by decreased construction activity. These revenues are expected to exceed the budget at year-end. • Revenues — Interest Earnings — Interest Earnings are at $1.5 million or 18.3 percent of the $8.4 million budget. The revenues through the mid-year are higher than the same period last year by $2.9 million or 209.1 percent due to a rebound in the current market value of securities held in the investment portfolios following the prior year decline. It is estimated that the interest earnings will be below the budget amount at year-end. • Revenues — CIP Reimbursements — CIP Reimbursements are at $1.1 million or 52.9 percent of the $2.1 million budget. These revenues consist of reimbursements for construction projects. No reimbursements were received during the same period last year. These revenues are expected to approximate budget at year-end. • Revenues — Wastehauler — Wastehauler revenues are at $343,000 or 42.9 percent of the $800,000 budget. This revenue is derived from fees charged to wastehaulers allowing them to dump waste into the Sanitation District's system. These revenues are expected to approximate budget at year-end. • Revenues — CNG Sales — CNG Sales revenues are at $74,000 or 17.5 percent of the $420,000 budget. This revenue is derived from public sales at the District's Compressed Natural Gas (CNG) fueling station. The revenues through the mid-year are lower than the same period last year by $154,000 or 67.7 percent due to mechanical failures of the public CNG fueling station that resulted in the station being offline for several months. These revenues are expected to be below budget at year-end. Section 1 - Page 5 FY 2017-18 Mid-Year Report Comparison of Mid-Year Cost per Million Gallon Results with Budget Last Five Years $2,300 $2,250 $2,200 $2,150 I 1.167 $2,100 52,117 21225 $2,050 szors az.oe $2,000 fz,aa av $1,950 $1,900 $1,850 $1,800 $1,750 $1,700 $1,650 $1,600 $1,550 $1,500 13-14 14-15 15-16 16-17 17-18 2nd Annual 2nd Annual 2nd Annual 2nd Annual 2nd Annual Qtr Budget Qtr Budget an, Budget Qtr Budget at Budget As demonstrated in the preceding graph for each of the last four fiscal years, the cost per million gallons at the end of the mid-year has been between 3.5 percent higher to 7.2 percent lower than the annual budget. The FY 2017-18 mid-year cost per million gallons of $2,125 is 5.6 percent lower when compared with this year's budget. The increase in cost per million gallons of$113 from the previous year is primarily due to an increase in operating expenses, which are 7.7 percent higher than the same period last year, offset by an increase in flows, which are 2.0 percent higher than the same period last year. Staff believes that overall operating costs will be below budget at year-end. The total cost per million gallons at December 31 is $2,125 based on flows of 186.3 million gallons per day. This is $125 per million gallons, or 5.6 percent, lower than the budgeted cost per million gallons of $2,250. There is an inverse relationship between the amount of flows and the cost per unit of collection, treatment, and disposal. Consequently, the lower cost per million gallons is due to net expenses being 4.1 percent less than the proportionate budget through December 31 and flows of 186.3 million gallons per day being 0.7 percent higher than the budgeted flow of 185 million gallons per day. More detailed information on operating revenues, costs, and related information is provided within Section 2. Section 1 - Page 6 Consolidated Financial Reports Following are data tables showing the last five years of Single Family Residential User Fees (SFR) and the cost per MG to collect, treat, and dispose of wastewater for OCSD and for similar agencies. The agencies used in the table were determined to be those that most closely resembled OCSD in terms of services provided and treatment levels. The summaries demonstrate that OCSD's SFR and cost per million gallons are each one of the lowest in their respective group. Benchmark Study Five-Year Single Family Residential Rate Rates as of July 2013 2014 2015 2016 2017 Agency SFR SFR SFR SFR SFR Notes San Francisco $ 701.40 $ 744.83 $ 784.44 $ 842.14 $ 937.44 City of San Diego $ 572.58 $ 572.58 $ 572.58 $ 572.58 $ 572.58 Note 5 Central Contra Costa Sanitary District $ 405.00 $ 439.00 $ 471.00 $ 503.00 $ 530.00 City of Los Angeles $ 409.20 $ 435.40 $ 464.04 $ 494.77 $ 526.58 Note 1 Vallejo Sanitation/Flood Control District $ 507.48 $ 520.20 $ 520.20 $ 520.20 $ 520.20 Sacramento County $ 312.00 $ 348.00 $ 384.00 $ 420.00 $ 432.00 Dublin San Ramon SerHces District $ 355.44 $ 372.96 $ 382.38 $ 382.38 $ 397.38 Union Sanitary District $ 337.76 $ 357.02 $ 377.00 $ 380.05 $ 393.35 East Bay MUD $ 331.10 $ 358.14 $ 355.18 $ 372.50 $ 390.52 City of Hayward $ 327.24 $ 337.08 $ 347.16 $ 357.60 $ 375.48 Orange County Sanitation District $ 308.00 $ 316.00 $ 322.00 $ 327.00 $ 331.00 City of Fresno $ 309.00 $ 309.00 $ 309.00 $ 309.00 $ 309.00 Note 4 IMne Ranch Water District $ 220.80 $ 246.00 $ 288.60 $ 309.00 $ 309.00 Note 2 Oro Loma Sanitary District $ 195.00 $ 200.00 $ 206.00 $ 221.00 $ 238.00 Los Angeles County $ 150.00 $ 151.00 $ 155.00 $ 159.00 $ 163.00 Note 3 Notes: (1)-Data is for the typical SFR customer rate and is not the average rate. (2)-Data represents the usage of 10 hundred cubic feet per unit. (3)-Data for 2013 and 2014 has been revised to remove ad valorem monies that were inadvertently included. (4)-Data represents the minimum SFR rate not including flow. (5)-Data represents the base sewer fee plus the average usage of 9 hundred cubic feet per month. Section 1 - Page 7 FY 2017-18 Mid-Year Report Benchmark Study Five-Year Cost per MG FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 Agency Svc. TO. CosIJMG Cost)MG Cost/MG Cost/MG Cost/MG Notes Central Contra Costa Sanitary District B 4 $4,621.84 $5,778.43 $6,280.58 $6,453.65 $6,081.00 San Francisco B 3 $5,006.74 $5,400.28 $5,357.97 $5,268.23 $4,916.37 Note 1 Vallejo Sanitation/Flood Control District B 3 $5,435.00 $6,153.00 $5,590.00 $5,396.00 $4,745.00 Union Sanitary District B 3 $3,805.40 $3,832.47 $3,910.73 $3,957.08 $4,038.79 City of San Diego B 4 $3,340.35 $3,156.43 $3,591.69 $3,605.97 $3,834.07 Dublin San Ramon Serdces District B 4 $2,159.49 $2,506.60 $2,522.00 $2,895.95 $2,961.07 Sacramento County T 4 $2,143.16 $2,375.47 $2,494.40 $2,571.14 $2,752.11 Note 2 City of Los Angeles B 4 $2,062.00 $2,163.00 $2,269.00 $2,452.00 $2,487.00 East Bay MUD T 3 $2,359.40 $2,559.18 $2,727.97 $2,598.53 $2,353.15 Orange County Sanitation District B 3 $1,906.01 $1,935.05 $2,070.97 $2,110.43 $2,054.56 City of Fresno B 3 $1,411.89 $1,552.39 $1,628.91 $1,678.28 $ 1,795.67 Los Angeles County B 4 $1,008.00 $1,223.72 $1,239.40 $1,371.06 $ 1,151.44 Note 3 Legend for SeMce Prodded and Treatment Leval: B-Pgencyoperates both collection and treatment facilities T-Pgencyproddes treatmenlserdces but not collection 3-Secondary treatment 4-Advanced secondaryor secondarywith some terfarytreatment Notes: (1)-Beginning in Fiscal Year 2012-13,dataset represents wastewater flows from finalized publicly available audited documents. (2)-Mles of sewers number changed in 2012 to include parallel force main pipes per the 2011 State of the District Report (3)-Does not include source control or overhead costs. Section 1 - Page 8 Consolidated Financial Reports Capital Outlay Review: $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 12/31/17 Actual Projected 2017-18 2017-18 Capital Outlay Capital Outlay Capital Outlay Cashflow Budget $50,210,840 $137,298,300 $177,125,657 As depicted by the preceding chart, Capital Outlays totaled $50.2 million or 28.3 percent of the capital outlay cash Flow budget for FY 2017.18 as of December 31, 2017. Costs are proportionately low through the mid-year as some projects are still in the design phase or have experienced various delays or deferrals. Examples as of December 31 are Safety Improvements at Plants Nos. 1 and 2, which has a budget of $10.0 million but actual costs of only $714,000 and Rehabilitation of Western Regional Sewers, which has a budget of $9.5 million but actual costs of only $792,000. Overall, the capital outlay costs of the capital improvement program are expected to approximate $137.3 million, or 77.5 percent of the capital outlay cash flow budget at year-end. More detailed information on the capital improvement program is provided within Section 3. Capital Assets Schedule and Debt Service Budget Review: Section 4 is the Capital Assets Schedule and Debt Service Section. This section shows the cost value of the Sanitation District's capital facilities at December 31, 2017, as well as the debt service costs resulting from the need to provide funding for the construction of capital facilities. The majority of principal payments on debt issues are due in August during the first quarter, and in February during the third quarter of each fiscal year. As of December 31, 2017, 53.0 percent of the principal payments have been made through the end of the mid-year. Total principal payments are expected to approximate budget at year- Section 1 - Page 9 FY 2017-18 Mid-Year Report end. Interest costs are expensed ratably throughout the fiscal year. Interest expense is anticipated to approximate budget at year-end. Self-Insurance Budget Reviews: Section 5 is the Self-Insurance Section. Through December 31, the Self-Insurance Fund revenues totaled $1.3 million or 50.0 percent of the budget, while expenses were $1.1 million or 45.1 percent of the budget. Separate fund accounting is used for recording the revenue and expenses incurred in managing these liability claims. The revenues to these funds represent charges to operating divisions. Expenses to these funds include actual claims paid, claims administration, and excess loss policies. Section 1 - Page 10 Operating Budget Review Cost per Million Gallons by Department Budget and Actual December 31, 2017 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $500 $500 $400 $300 az00 $100 $0 el uE z3 K y � �eutlget �Aclual Collection, Treatment, & Disposal Expenses by Major Category Budget and Actual (in thousands) December 31, 2017 $75,000 $70,000 M'000 $00,000 $55,000 E5o,000 U5,000 U0,000 $35,000 $30.000 $25,000 dM $20.000 $15.000 $10,000 E5,000 $0 Eu o' 2 3 Meuaeac Nnmai Section 2-Page 1 2017-18 Mid-Year Report Divisional Contributions to Cost Per Million Gallons For the Six Months Ended December 31,2017 2017-18 12/31/15 12131/16 Annual 12/31/17 Actual Actual Budget Actual Flow in Million Gallons 33,974 26 33,601.95 67,525.00 34,284.89 Flow In Million Gallons per Day 184.64 182.62 185.00 186.33 Executive Management Department General Management Administration $ 31.50 $ 36.87 $ 43.12 $ 37.11 Board Services 6.67 8.07 8.92 9.27 Public Affairs 13.11 15.05 16.42 14.81 Subtotal 51.28 59.99 68.46 61.19 Human Resources Department Human Resources 56.17 54.33 59.81 53.80 Risk Management/Safety I Security 43.67 60.60 95.17 83.75 Subtotal 99.84 114.93 154.98 137.55 Administrative Services Department Administrative Services 9A3 7.66 9.25 7.24 Financial Management 46.69 42.54 56.78 53.97 Contracts,Purchasing,&Materials Mgmt. 61.57 63.24 65.49 65.85 Information Technology 157.32 143.82 156.51 159.00 Subtotal 275.01 257.26 288.03 286.08 Facilities Support Services Department Facilities Support Administration 14.91 - - - Facilities Support 32.14 - - - Collections Engineering 42.60 - - - NPDES Source Inspection 34.61 - - - Odor and Corrosion Control 105.34 - - - Collection Facilities O&M 56.94 Subtotal 286.54 Environmental Services Department Environmental Services Administration - 12.16 12.23 12.57 Resource Protection - 81.92 85.27 81.58 Laboratory,Monitoring and Compliance 146.20 158.87 152.00 Subtotal 240.28 256.37 246.15 Engineering Department Engineering Administration 7.75 6.72 6.49 7.49 Planning 50.91 49.05 46.78 47.21 Project Management Office 37.39 39.75 42.49 37.41 Civil and Mechanical Engineering 140.56 127.49 127.80 122.86 Electrical&Control System Engineering - 61.45 77.54 69.63 Environmental Compliance 105.11 Subtotal 341.72 284.46 301.10 284.60 Operations&Maintenance Department Operations&Maintenance Administration 13.23 7.29 10.89 8.39 Collections Facilities 0&M - 166.05 181.93 191.55 Fleet Services - 28.10 29.10 27.35 Plant No. 1 Operations 489.49 414.15 412.69 376.33 Plant No.2 Operations 309.99 302.10 287.14 286.06 Plant No. 1 Maintenance 226.80 256.09 216.64 229.93 Maintenance Reliability and Planning - - 114.03 102.02 Plant No.2 Maintenance 171.72 163.51 215.45 183.14 Environmental Laboratory&Ocean Monitoring 12034 Subtotal 1,331.57 1,337.29 1,467.87 1,404.77 Total Operating Expenses 2,385.96 2,294.21 2,536.81 2,420.32 Cost Allocation (269.45) (282.03) (286.81) (295.56) Net Operating Requirements $ 2, 116.51 $ 2,0 22.18 $ 2,2 00.00 $ 2,124.76 Section 2-Page 2 Operating Budget Review Comparison of Expenses by Department For the Six Months Ended December 31,2017 2017-18 IV31115 12131116 Year to Data Budget% Department and Division Actual Actual Budget IM1117 Realized Executive Management Department General Management Administration $ 1,070,092 $ 1.238,775 $ 2.911,810 $ 1,272,284 43.69% Board Services 226,641 271,180 602,340 317,936 52.78% Public Affairs 445,273 505,756 11108,900 507,736 45.79% Subtotal 1,742,006 2.015,711 4.623,050 2,097.956 45,38% Human Resources Department Human Resources 1,908.246 1.825,529 4.038,470 1,844.414 45,67% Risk Management I Safety I Security 1,483,739 2,036,378 6,426,070 2,871,454 44.68% Subtotal 3,391.985 3.861,907 10.464,540 4,715,868 45,07% Administrative Services Department Administrative Services 320,249 257,262 624,730 248,261 39.74% Financial Management 1,586,133 1,429,448 3,833,990 1,850,402 48.26% Contracts,Purchasing,It Materials Mgmt. 2,091,743 2.125,049 4,422,300 2,257,532 51,05% Information Technology 5,344,753 4,832,573 10.568,540 5,451,430 51.58% subtotal 9,342,878 8,644,332 19,449,560 9,807,625 50.43% Facilities Support Services Department Facilities Support Administration 506,529 - - - 0,00% Facilities Support 1,091,964 - - - 0.00% Collections Engineering 1,447,182 - - - 0.00% NPDES Source Inspection 1,176,019 - - - 0.00% Odor and Coroslon Control 3,578,950 - - - 0,00% Collection Facilities 0&M 1,934,347 0.00% subtotal 9,734,991 - - - 0.00% Environmental Services Department Environmental Services Administration - 408,709 825,750 430,902 52.18% Resource Protection - 2,752,519 5,758,120 2,796,905 48.57% Laboratory,Monitoring and Compliance 4,912,625 10727,570 5,211.394 48.58% Subtotal 8,073,853 17,311,440 8,439,201 48.75% Engineering Department Engineering Administration 263,193 225,956 438,390 256,820 58.58% Planning 1,729,470 1,648,112 3.158,970 1,618,508 51,24% Project Management Office 1,270,433 1.335,715 2.868,900 1,282,645 44.71% CMI and Mechanical Engineering 4.775,392 4,284,039 8,629,930 4,212,371 48.81% Electrical&Control System Engineering - 2,064,785 5,235,710 2,387,126 45.59% Environmental Compliance 3,571,067 0,00% Subtotal 11,609,549 9.558,607 20,331,900 9,757,470 47.99% Operations&Maintenance Department Operations&Maintenance Administration 449,368 244,910 735,030 287,746 39.15% Collections Facilities 0&M - 5,579,495 12,284,740 6,567,237 53.46% Fleet Services - 944,263 1.965,050 937,697 47.72% Plant No.1 Operations 16,630,063 13,916,367 27,866,660 12,902,313 46.30% Plant No.2 Operation 10,531,806 10,151,167 19,389,450 9,807,555 50.58% Plant No.1 Maintenance 7,705,229 8,605,039 14,628,280 7,883,274 53,89% Maintenance Reliability and Planning - - 7,700,130 3,497,816 45.43% Plant No.2 Maintenance 5,833,922 5,494,260 14,548,410 6,278,849 43.16% Environmental Laboratory&Ocean Monitoring 4,089,195 0.00% Subtotal 45,239,583 44,935,501 99,117,750 48,162,487 48.59% Total Operating Expenses 81,060,992 77,089,911 171,298,240 82,980,607 48.44% Cost Allocation (9,153,971) (9,476,871) (19,394,560) (10,133,335) 52.25% Net Operating Requirements $ 71,907,021 $ 67,613,040 $ 151,903,680 $ 72,847,272 47.96% Section 2-Page 3 2017-18 Mid-Year Report Summary of Collection, Treatment, &Disposal Expenses by Major Category For the Six Months Ended December 31, 2017 Expense Expense Increase Increase Percent Budget Through Through (Decrease) (Decrease) Budget Remaining Description 2017-18 12/31/17 12/31/16 $ % Realized Budget Salary&Wages $ 70,883,000 34,616,748 33,174,805 $ 1,441,943 4.35% 48.84% $36,266,252 Employee Benefits 22,478,330 11,235,517 11,355,931 (120,414) -1.06% 49.98% 11,242,813 Administrative Expenses 2,026,550 1,264,500 760,690 503,810 66.23% 62.40% 762,050 Printing&Publication 403,900 153,096 135,662 17,434 12.85% 37.90% 250,804 Training&Meetings 1,252,320 420,715 446,676 (25.961) -5.81% 33.59% 831,605 Operating Materials&Supplies 15,724,300 7,757,453 7,554,763 202,690 2.68% 49.33% 7,966,847 Contractual Services 24,489,090 11,802,148 11.354,517 447,631 3.94% 48.19% 12.686,942 Professional Services 5,125,990 1,922,324 1,503,976 418,348 27.82% 37.50% 3,203,666 Research&Monitoring 889,400 412,525 345,735 66,790 19.32% 46.38% 476,875 Repairs&Maintenance 15,945,110 8,234,235 6,145,263 2,088,972 33.99% 51.64% 7,710,875 Utilities 7,898,590 3,657.421 3,378,952 278,469 8.24% 46.30% 4,241,169 Other Materials,Supplies, and Services 4,181,660 1,503,925 932,941 570,984 61.20% 35.96% 2,677,735 Net Cost Allocation (19,394,560) (10,133,335) (9,476,871) (656,464) 6.93% 52.25% (9,261,225) Net Operating Requirements 151,903,680 72,847,272 67,613,040 5,234,232 7.74% 47.96% 79,056,408 Gallonage Flow(MG) 67,525.00 34,284.89 33,601.95 682.94 2.03% Gallonage Flow(MGD) 185.00 186.33 182.62 3.71 2.03% Gallonage Flow($'a/MG) $2,250000 $2,124.76 $2,012.18 $112.58 5.59% Section 2-Page 4 Operating Budget Review Summary of Revenues For the Six Months Ended December 31, 2017 Revenue Percent Revenue Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2017-18 12/31/17 Realized Budget 12/31/16 $ % Service Fees $291,158,000 $162,727,259 55.89% $ 128.430,741 $158,606,025 $ 4,121,234 2.60% Permit Fees 12,925,000 8,954,152 69.28% 3,970,848 6,004,948 2,949,204 49.11% Inter District Sewer Use-SAWPA&SBSD 3,263.000 1,424,139 43.65% 1,838,861 1,560,261 (136,122) -8.72% Intra District Sewer Use-IRWD 4,552,800 910,021 19.99% 3,642,779 761,413 148,608 19.52% Sludge Disposal-IRWD 5,880,000 5,881,841 100.03% (1,841) 4,993,946 887,895 17.78% Capital Assessments-IRWD 5,375,000 1,328,848 24.72% 4,046,152 928,496 400,352 43.12% Capital Facilities Capacity Charges 9.900.000 5,911,882 59.72% 3,988,118 5,774,493 137,389 2.38% Property Taxes 93,666,000 44,499,417 47.51% 49,166,583 41,601,683 2,897,734 6.97% Interest Earnings 8.398.000 1,537,397 18.31% 6,860,603 (1,409,703) 2,947,100 209.06% CIP Reimbursements 2,130,000 1,125,765 52.85% 1,004,235 - 1,125,765 N/A Wastehauler 800.000 343,396 42.92% 456,602 357,741 (14,343) 4.01% CNG Sales 420,000 73,512 17.50% 346,488 227,216 (153,704) -67.65% Rents&Leases 255.000 203,647 79A6% 51,353 124,284 79,363 63.86% Other Revenues 475,000 166,654 35.09% 308,346 226,733 (60,079) -26.50% Power Sales 30.000 14,449 48.16% 15,551 23,00 (9,151) -38.78% Other Sales 45,000 7,715 17.14% 37,285 19,123 (11,408) -59.66% Total Revenues $439,272,800 $ 235,110,096 53.52% $ 204,162,704 $332,294,679 $ (97,184,583) -29.25% Section 2-Page 5 2017-18 Mid-Year Report Summary of Collection,Treatment, &Disposal Expenses by Line Item For the Six Months Ended December 31,2017 Expense Percent Expense Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2017-18 1=1117 Expensed Budget 12131116 $ % Salaries.Wages&Benefits Salaries&Wages $ 70,883,000 $ 34,616,748 48.84% $ 36,266,252 $ 33,174.805 $ 1,441,943 4.35% Employee Benefits Retirement 10,792,800 5,565,505 51.57% 5,227,295 5,747,044 (181,539) -3.16% Group Insurances 10,421,800 4,988,565 47.87% 5,433,235 4,640,020 348,545 7.61% Tuition is Certification Relmb 102,000 38,945 38.18% 63,055 49,962 (11,037) -22.08% Edu.degrees,Cart.&Lic. 380700 231,371 60.78% 149,329 1991660 31,711 15.88% Uniform Rental 110,600 65,609 59.32% 44,991 55,295 10,314 18.65% Workers'Compensation 554,330 277,161 50.00% 277,169 59&150 (320,989) -53.66% Unemployment Insurance 24,700 18,817 76.18% 5,883 12,334 6,483 52.56% EMT Supplemental BenerRs 91,400 49,544 54.21% 41,856 53,446 (3,902) Total Benefits 22,478,330 11,235,517 49.96% 11,242,813 11,355,931 (120,414) Salaries,Wages&Benefits 93,361,330 45,852,265 49.11% 47,509,065 44,53g736 1,321,529 2.97% Man,Supply,&Services Administrative Expenses Memberships 615,130 355,841 57.85% 259,289 335,649 20,192 6.02% Office Exp-Supplies 66,220 25,963 39.21% 40,257 30,114 (4,151) -13.78% Postage 320,570 281,158 87.71% 39,412 19,870 261,288 1314499% Books&Publications 41,530 15,034 36.20% 26,496 21,308 (6,274) -29.44% Forms 550 190 34.55% S60 - 190 NIA Smell Computer Items 75uW0 463,900 61.85% 286,100 311,023 152,877 49.15% Minor Furniture&Fixtures 232,550 122,414 52.64% 110,136 42,726 79,680 186451% Subtotal 2,026,550 1,264,5W 62.40% 762,050 760,890 W3,810 66.23% Printing&Publication Repro-In-House 243,960 81 36.44% 155,066 95,150 (6,256) -6.57% Printing-Outside 112,560 22,090 19.63% 90,470 6,912 16,178 219.69% Notices&Ads 47,330 42,112 88.96% 5,218 33,600 8,512 25.33% Photo Processing 50 0.00% 50 N/A Subtotal 403,900 153,096 37.N-A 250,804 135,662 17,434 12.85% Training&Meanings Meetings 198,620 48,977 24.66% 149,643 49741 (764) Training 1,053,700 371,730 35.28% 681,962 396,935 (25,197) Subtotal 1,252,320 420,715 33.59% 831,605 446,676 (25,961) -5.81% Operating Mafls&Supplies Chemical Coagulants 5,225,000 2,477,570 47.42% 2,747,430 2,617,231 (139,661) -5.34% Odor Control 7,494,000 3,921,158 52.32% 3,672,842 3,603,443 317,715 8.82% Disinfection 307,600 83,807 27.25% 223,793 101,701 (17,894) -17.59% Chemicals-Misc&Cogan 342,000 147,742 43.20% 194,258 153,559 (5,817) -3.79% Gasoline,Deal&Oil 565,790 216,365 38.24% 349,425 253,014 (36,61 -14.48% Tops 401,500 192,162 47.86% 209,338 135,343 56,819 41.98% Safety equlpmentmols 517,290 341,111 65.94% 176,179 299,478 41,633 13.90% Solt',PairRs&Jan.Supplies 91,600 42,834 46.76% 48766 38,507 4,327 11.24% Lab Chemicals&Supplies 587,160 266,204 45.34% 320,956 270,598 (4,394) -1.62% Other Operating Supplies 181 67,467 35.81% 120,903 80,858 (13,401) -16.67% Property To.Fees 4,000 1,043 26.08% 2,957 1,031 12 1.16% Subtutel 15,724,300 7,757,453 49.33% 7,966,847 7,554,763 202,690 2.68% Contractual Services Solids Removal 15,900,000 7,707,580 48.48% 8,192,420 8,844,955 (1,137,375) -12.86% Other Waste Disposal 9901040 346A45 34.99% 6,3,595 393,159 (46,714) -11.88% Groundskeeping 129,720 81,858 63.10% 47,862 69,332 12,526 18.07% Janitorial 361 183,916 50.19% 182,524 181,110 2,806 1.65% Outside Lab Services 250,000 69,498 27.80% 180,502 62,718 6,780 10.81% Oxygen 375,000 153,079 40.82% 221,921 146,240 6,839 4.68% County Service Fee 658,700 24,797 3.76% 633,903 24,468 329 1.34% Temporary Services 1,637,190 935,232 60.84% 601,958 223,713 711,519 318.05% Security Services 1,600,000 792,766 49.55% 807,234 416,489 376,277 90.35% Other 2,682,000 1,506,977 56.19% 1,175,023 992,333 514.61 51.86% Subtotal 24,489,090 11,802,148 48.19-A 12,686,942 11,354,517 447,631 3.94% (Continued) Section 2-Page 6 Operating Budget Review Summary of Expenses by Line Item For the Six Months Ended December 31,2017 Expense Percent Expense Increase Increae, Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2017-18 IV31/17 Expensed! Budget 12/31/16 $ % Continued. Professional Services Legal 977,000 637,051 6&20% 339,949 606,591 30,460 &02% Audit&Accounting 259,300 105,328 40.62% 153,972 71,077 34,251 48.19% Engineering 1.758,000 529,564 30.12% 1,228,436 262,085 267,479 102.06% Enviro Scientific Consulting 150,800 51,270 34.00% 99,530 23,481 27,789 118.35% Sofhvare Prgm Consulting 416,000 182,224 43A0% 233,776 198,661 (16,437) -&27% Advocacy Efforts 176,000 64,000 36.36% 112,000 78,870 (14,870) -18.85% Industrial Hygiene Services 50,000 29,735 59.47% 20,265 43,802 (14,1367) J2.11% Labor Negotiation Services 20,000 - 0.00% 20,000 32,200 (32,200) -100.00% Other 1,318,890 323,152 24S0% 995,738 187,209 135,943 72.62% Subtotal 5,125,990 1,922,324 37.50% 3,203,666 1,W3,976 41$348 27.82% Research&Monitoring Environmental Monitoring 369,200 197,300 5&. % 171,900 145,203 52,097 35.88% Air Quality Monitoring 95,200 2,725 2.86% 92,475 532 2,193 412.22% Research 425,000 212,500 50.00% 212SW 200,000 12,500 6.25% Subtotal 889,400 412,525 46.38% 476,875 345,735 66,790 19.32% Repairs&Maintenance Materials&Services 13,078,200 6727,801 51.44% 6.350,399 4.962,286 1,765,515 35.58% Svc.Mtc.Agreements 2,866,910 1,506,434 52.55% 1,360,476 1,182,977 323,457 27.34% Subtotal 15,945,110 8,234,235 51,64% 7,710,875 6,145,263 2,088,972 33S9% Utilities Telephone 400,000 183,530 45.88% 216,470 170,340 13,190 7.74% Diesel For Generators 14,290 5,616 39.30% 8,674 4,056 1,680 3&46% Natural Gas 780,500 295,548 37.87% 484,952 307,085 (11,537) -3.76% Pmver 6.037,000 2,871,997 47.57% 3,165,003 2.591,513 280,484 10.82% Water 666,800 300,730 45.10% 366,070 305,958 (5,228) -1.71% Subtotal 7,898,590 3,657,421 46,30% 4,241,169 3,378,952 278,469 &24% Other Operating Supplies Outside Equip Rental 107,600 60,754 56.46% 46,846 35,852 24,902 69.46% Insurance Premiums 32,000 26,189 81S4% 5,811 31,049 (4,860) -1&65% Prop&Gen Liab Insurance 2,110,870 1,055,436 50.00% 1,055,434 555,552 499,884 89.98% Freight 71,560 42,948 60.02% 28,612 35,151 7797 22.18% Misc.Operefing Expanse 259,250 146,798 56.62% 112,452 105,433 41,WS 39.23% Regulatory Operating Fees 716,900 107,892 15.07% 608,008 139,093 (31,201) -22A3% Subtotal 3.297,180 1,440,017 43.67% 1,857,163 902,130 537,887 59.62% General Mgr Contingency &Reappropriations 665,500 0.00% 665,6W N/A Other Non-Oper Expense 218,980 63,908 29.18% 155,072 30,811 33,O7 107.42% Total Materials, Supplies&Services 77,936,910 37,128,342 47.64% 40,808,568 32,559,175 4,569,167 14.03% Total Expenditures 171,298,240 82,980,607 4&. % 88,317,633 77,089,911 5,890,696 7.64% Cost Allocation (19,394,560) (10,133,335) 52.25% (9,261,225) (9,476,871) (656,464) 6S3% Net Operating Requirements $ 151.903,680 $ 72,847,272 47.96% $ 79,056,406 $ 67.613,040 $ 5,231,232 774% Section 2-Page 7 2017-18 Mid-Year Report Summary of Collection,Treatment,8 Disposal Expenses by Process For the Six Months Ended December 31, 2017 Increase Increase Actual Actual (Decrease) (Decrease) 12/31/17 12/31/16 $ % Process: Preliminary Treatment $ 3,300,677 $ 3,790,935 $ (490,258) -12.93% Primary Treatment 5,608,504 5,018,856 589,649 11.75% Secondary Treatment 3,984,519 3,792,044 192,475 5.08% Cryogenic Plant(Plant 2) 299,685 289,718 9,967 3.44% Ef0uent Disposal 260,616 313,093 (52,477) -16.76% Solids Handling 21,109,472 22,753,395 (1,643,922) -7.22% Cogeneration 10,685,254 6,975,711 3,709,543 53.18% Utilities 1,522,649 1,413,404 109,246 7.73% Electrical Distribution 675,283 707,948 (32,666) -4.61% Miscellaneous Buildings 5,776,908 4,395,607 1,381,301 31.42% External Location 28,480 27,628 852 3.08% Nerlssa Vessel 117,655 113,056 4,599 4.07% North County Yard - 2,079 (2,079) -100.00% Laboratory 7,830,729 7,241,498 589,231 8.14% Collections 11,646,841 10,778,070 868,771 8.06% Net Operating Requirements $ 72,847,272 $ 67,613,040 $ 5,234,231 7.74% Section 2-Page 8 Operating Budget Review Staffing Trends Full Time Equivalents December 31, 2017 700 650 624 624 624 627 635 600 38 44 52 550 :1 500 450 6/30114 6/30/15 6/30/16 6130/17 12131/17 8Actua1 8Vacart At December 31, 2017,the total head count was 607 employees,or a full time equivalency of 594. Section 2-Page 9 2017-18 Mid-Year Report This Page Intentionally Left Blank Section 2- Page 10 CIP Budget Review Capital Improvement Program By Type and Funding Source For the Six Months Ended December 31, 2017 MOollectlons Faclllges: 233% eHeaEwarks: 38% MPnmaryTresenenC 2.6% oSecondary Treatment, 03% MSolld.Ha.dling&Dlgestlon: 37,4% 30cean OURaII Systems: 13.0% ouelity systems: 6.9% MPmoess Related Special Protects: 14% Mlnlormaton Management Systems: 3.1% MSirategic&Master Planning: 1.6% MWater Management Projects: 0.1% MReseim6: 0.3% oSuppod FedliOes: 3.4% Mothers: 0.1% MPr or Year Treatment Projects: 0.0% MCapltel EqulpmeM Purchases: 2]% Total Capital Improvement Outlays - $50,210,840 Replacement/Rehabilitation: 54% Improved Treatment: 16% ❑Additional Capacity: 26% ■Support: 4% Total Capital Improvement Outlays-$50,210,840 Section 3- Page 1 FY 2017-18 Mid-Year Report Summary of Capital Improvement Construction Requirements -Current Year For the Six Months Ended December 31, 2017 2017-18 2017-18 2017-18 Cashflow Actual at Projected Budget 1 213112 01 7 Outlay Collection System Improvement Projects Collections Facilities Raitt and Bristol Street Sewer Rehab& Extension 68,623 - 6,300 Santa Ana River Interceptor(SARI) Realignment 201,407 36,042 48,700 SARI Rock Stabilizers Removal 515,545 144,457 314,900 Newhope-Placentia Trunk Grade Separation Replacements 132,306 16,300 50,600 Newhope-Placentia Trunk Replacement 9,464,252 3,278,503 4,935,600 Lakeview Grade Separation Project 114,950 88,628 90,000 Tustin Rose OCTA Grade Separation Project 64,700 9,265 14,500 Orangethorpe OCTA Grade Separation 12,901 10,796 12,800 Seal Beach Pumping Station Upgrade and Rehabilitation 4,375,967 198,312 1,755,900 Rehabilitation of Western Regional Sewers 9,528,506 791,856 10,508,000 Interstate 405 Widening Project Impacts on OCSD Sewers 36,860 39,183 166,400 Newport Force Main Rehabilitation - 87,784 87,800 Bay Bridge Pumping Station Replacement 709,700 115,453 589,600 Newport Beach Pump Stations Odor Control Improvements 67,514 - 17,900 District 6 Trunk Sewer Relief 4,616,301 1,472,435 4,325,400 Gisler-Redhill System Improvements, Reach"B" 6,698,851 4,021,914 6,172,100 MacArthur Pumping Station Rehabilitation 41,271 - - Master Facilities Engineering Projects-Collections 3,795,001 427,883 3,146,100 Master Planning Studies-Collections 2,922,309 777,877 777,900 Research Program-Collections - 2,420 2,500 Bay Bridge Pump Station and Force Mains Rehab Study 90,344 21,732 21,800 Additional Charges to CIP Closed at 6/30/17 171,177 171,200 Subtotal-Collections Facilities 43,457,308 11,712,017 33,216,000 Revenue Area 14 Newport Force Main Rehabilitation (2.18%) 1,956 2,000 Subtotal-Revenue Area 14 1,956 2,000 Total Collection System Improvement Projects 43,457,308 11,713,973 33,218,000 (Confined) Section 3-Page 2 CIP Budget Review Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2017 2017-18 2017-18 2017-18 Cashflow, Actual at Projected Budget 1 213112 01 7 Outlay Treatment&Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 7,229,469 1,120,943 4,284,600 Truck Line Odor Control Improvements P1 35,245 50,837 117,000 Headworks Modifications at P2 for GWRS Final Expansion 1,789,057 766,102 2,813,100 Subtotal -Headworks 9,053,771 1,937,882 7,214,700 Primary Treatment Primary Clarifiers Repl & Impr at Plant No. 1 - 133 200 A-Side Primary Clarifiers Repl. at P2 7,038,302 1,322,819 6,322,800 Subtotal-Primary Treatment 7,038,302 1,322,952 6,323,000 Secondary Treatment Return Activated Sludge Piping Replacement Plant No.1 263,483 68,435 526,000 Activated Sludge Aeration Basin Deck Repair at P2 1,638,294 29,473 773,300 Return Activated Sludge Piping Replacement at P2 487,352 53,892 227,400 Subtotal -Secondary Treatment 2,389,129 151,800 1,526,700 Solids Handling& Digestion Digester Rehabilitation at Plant 1 2,306,580 497,813 920,400 Sludge Dewatedng and Odor Control at Plant 1 13,707,858 4,064,908 8,621,100 Solids Thickening and Processing Upgrades 267 15,208 246,400 Plant No.2 Digester Facilities Rehabilitation 159,528 203,343 352,500 Sludge Dewatedng and Odor Control at Plant 2 20,049,153 14,005,416 22,258,100 Interim Food Waste Receiving Facility 440,383 11,480 55,800 Subtotal-Solids Handling &Digestion 36,663,769 18,798,168 32,454,300 Ocean Ouffall Systems Final Ef0uent Sampler and Building Area Upgrades 541,037 55,384 233,100 Ocean Outfall System Rehabilitation 7,471,473 6,471,910 10,919,800 Subtotal-Ocean Outfall Systems 8,012,510 6,527,294 11,152,900 Utility Systems Cengen Emissions Control Project 251,540 34,128 34,200 Digester Gas Facilities Rehabilitation 733,218 116,719 537,100 Natural Gas Pipelines Repl at Plant No. 1 and 2 88,946 585 73,900 Electrical Power Distribution System Improvements - - 55,300 Uninterruptable Power Supply Impr. at P1 45,512 7,515 22,000 Consolidated Demolition&Utility Improvements at P2 11,646,047 3,290,158 11,161,200 Subtotal-Utility Systems 12,765,263 3,449,105 11,883,700 (Confined) Section 3-Page 3 FY 2017-18 Mid-Year Report Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2017 2017-18 2017-18 2017-18 Cashflow Actual at Projected Budget 1 213112 01 7 Outlay Process Related Special Projects Safety Improvements at Plants Nos. 1 and 2 9,986,488 713,755 3,525,300 Subtotal -Process Related Special Projects 9,986,488 713,755 3,525,300 Information Management Systems Process Control Systems Upgrades - - - Project Management Information System 1,951,448 330,469 631,400 Power Monitoring &Control Systems at P2 1,764,544 703,472 1,910,800 Master Information Technology Capital Program 1,176,832 349,762 349,800 Geographic Information System 659,791 67,299 167,300 EAM Software and Process Implementation 658,725 2,500 277,500 PDS2D Software Replacement 83,814 10,625 10,700 Process Control System Upgrades Study 963,277 83,794 533,500 Subtotal-Information Management Systems 7,258,431 1,547,921 3,881,000 Strategic& Master Planning Master Planning Studies 4,082,267 785,729 4,588,600 Climate Change Impact Study 147,135 2,186 20,700 Subtotal-Strategic&Master Planning 4,229,402 787,915 4,609,300 Water Management Projects GWRS Final Expansion Coordination 86,651 28,742 123,800 Subtotal -Water Management Projects 86,651 28,742 123,800 Research Research Program 1,305,436 167,439 634,900 Subtotal-Research 1,305,436 167,439 634,900 Support Facilities Master Facilities Engineering Projects- Plant 9,675,530 1,370,807 3,739,600 Pl Fleet Services UST Leak Remediation 1,693,273 43,192 43,200 Master Small Capital Replacement/Rehabilitation 2,308,427 - - 18350 Mt. Langley Property 10,150,000 - 9,750,000 Title 24 Access Compliance&Building Rehab Project 1,709,156 97,055 1,585,600 Headquarters Complex, Site& Security&Entrance Realign. 5,389,573 176,274 1,595,300 Site and Security Improvements at Plant No.2 10,881 1,300 Subtotal-Support Facilities 30,936,840 1,687,328 16,715,000 (Continued) Section 3-Page 4 CIP Budget Review Summary of Capital Improvement Construction Requirements - Current Year For the Six Months Ended December 31, 2017 2017-18 2017-18 2017-18 Cashflow Actual at Projected Budget 12/31/2017 Outlay Others Interstate 405 Widening Impacts on OCSD Front Entrance 16,451 21,672 123,700 P2 Southwest Perimeter Screening 46,606 2,524 16,500 Capital Improvement Program Mgmt. Services 6,532 6,600 Subtotal-Others 63,057 30,728 146,800 Additional Charges to CIP Completed at 6/30/17 9,511 9,600 Total Treatment and Disposal Projects 129,789,049 37,160,540 100,201,000 Capital Equipment Purchases 3,879,300 1,336,327 3,879,300 Total Collection,Treatment and Disposal Projects and Capital Equipment Purchases $177,125,657 $ 50,210,840 $137,298,300 Section 3 - Page 5 FY 2017-18 Mid-Year Report Summary of Capital Improvement Construction Requirements- Project Life For the Six Months Ended December 31, 2017 Current Total Approved June 30,2017 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2018 Budget Collection System Improvement Projects Collections Facilities Raiff and Bristol Street Sewer Rehab&Extension 13,622,000 259,075 6,300 265,375 13,356,625 Santa Ana River Interceptor(SARI)Realignment 11,404,000 5,673,355 48,700 5,722,055 5,681,945 SARI Rock Stabilizers Removal 6,860,000 410,508 314,900 725,408 6,134,592 Taft Branch Sewer Relief 1,928,000 12,083 - 12,083 1,915,917 Newhope-Placentia Trunk Grade Separation Replacements 4,300,000 4,059,157 50,600 4,109,757 190,243 Newhope-Placentia Trunk Replacement 112,000,000 30,442,121 4,935,600 35,377,721 76,622,279 Yoffie Linda Pumping Station Abandonment 7,053,000 - - - 7,053,000 Lakeview Grade Separation Project 330,000 70,262 90,000 160,262 169,738 Tustin Rose OCTA Grade Separation Project 586,000 423,587 14,500 438,087 147,913 Orangethorpe OCTA Grade Separation 1,505,000 1,482,972 12,800 1,495,772 9,228 Beach Trunk/Knod Interceptor Sewer Relief 118,678,000 - - - 118,678,000 Seal Beach Pumping Station Upgrade and Rehabilitation 54,000,000 3,583,755 1,755,900 5,339,655 48,660,345 Rehabilitation of Western Regional Sewers 217,069,000 7,706,718 10,508,000 18,214,718 198,854,282 Interstate 405 Widening Project Impacts on OCSD Beware 528,000 2,866 166,400 169,266 358,734 Newport Force Main Rehabilitation 58,367,238 58,147,927 87,800 58,235,727 131,511 Crystal Cove Pumping Station Rehabilitation 10,882,000 - - - 10,882,000 Bay Bridge Pumping Station Replacement 64,000,000 217,700 589,600 807,300 63,192,700 Newport Beach Pump Stations Odor Control Improvements 4,066,000 - 17,900 17,900 4,048,100 District 6 Trunk Sewer Relief 7,965,000 1,791,858 4,325,400 6,117,258 1,847,742 Gisler-Redhill System Improvements,Reach"1" 25,213,000 18,093,894 6,172,100 24,265,994 947,006 MacArthur Pumping Station Rehabilitation 8762,000 - - - 8,762,000 Main Street Pump Station Rehabilitation 39,219,000 - - - 39,219,000 Gisler Red-Hill Interceptor Rehabilitation 15,300,000 - - - 15,300,000 Edinger/Bolsa Chica Trunk Improvements 5,159,000 - - - 5,159,000 Edinger Pumping Station Rehabilitation 8,880,000 - - - 8,880,000 Slater Avenue Pump Station Rehabilitation 9,729,000 - - - 9,729,000 Master Facilities Engineering Projects-Collections 14,192,000 816,413 3,146,100 3,962,513 10,229,487 Master Planning Studies-Collections 11,953,614 1,533,083 7T7,900 2,310,983 9,642,631 Research Program-Collections - - 2,500 2,500 (2,500) Bay Bridge Pump Station and Force Mains Rehab Study 725,000 505,121 21,800 526,921 198,079 Additional Charges to CIP Closed at 6130117 171,200 171,200 (171,200) Subtotal-Collections Facilities 834,275,852 135,232,455 33,216,000 168,448,455 665,827,397 Revenue Area 14: Newport Force Main Rehabilitation(2.18%) 1,300,762 1,295,875 2,000 1,297,875 2,887 Subtotal-Revenue Area 13 1,300,762 1,295,875 2,000 1,297,875 2,887 Total Collection System Improvement Projects 835,576,614 136,528,330 33,218,000 169746,330 665,830,284 (Continued) Section 3-Page 6 CIP Budget Review Summary of Capital Improvement Construction Requirements- Project Life For the Six Months Ended December 31, 2017 Current Total Approved June 30,2017 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2018 Budget Treatment&Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 436,000,000 6,084,545 4,284,600 10,369,145 425,630,855 Truck Line Odor Control Improvements P1 9,299,000 9,035,390 117,000 9,152,390 146,610 Headworks Modifications at P2 for GWRS Final Expansion 54,000,000 229,284 2,813,100 3,042,384 50,957,616 Subtotal-Headworks 499,299,000 15,349,219 7,214,700 22,563,919 476,735,081 Primary Treatment Primary Clarifier&Trickling Filter Odor Control at P1 74,800,000 - - - 74,800,000 Primary Clarifiers Repl&Impr at Plant No.1 112,000,000 520,619 200 520,819 111,479,181 A-Side Primary Clarifiers Repl.at P2 491,000,000 4,817,329 6,322,800 11,140,129 479,859,871 Subtotal-Primary Treatment 677,800,000 5,337,948 6,323,000 11,660,948 666,139,052 Secondary Treatment Return Activated Sludge Piping Replacement Plant No.1 3,979,000 34,632 526,000 560,632 3,418,368 Activated Sludge Aeration Basin Deck Repair at P2 2,800,000 264,277 773,300 1,037,577 1,762,423 Return Activated Sludge Piping Replacement at P2 15,000.000 7,050 227,400 234,450 14,765,550 Subtotal-Secondary Treatment 21,779,000 305,959 1,526,700 1,832,659 19,946,341 Solids Handling&Digestion Digester Rehabilitation at Plant 1 67,150,000 64,908,366 920,400 65,828,766 1,321,234 Sludge Dewatering and Odor Control at Plant 1 188,328,000 165,772,702 8,621,100 174,393,802 13,934,198 Solids Thickening and Processing Upgrades 48,150,000 47,879,175 246,400 48,125,575 24,425 Plant No.2 Digester Facilities Rehabilitation 49,220,000 196,634 352,500 549,134 48,670,866 Sludge Dewatering and Odor Control at Plant 2 90,477,000 46,648,765 22,258,100 68,906,865 21,570,135 Interim Food Waste Receiving Facility 5,400,000 - 55,800 55,800 5,344,200 Digester P,Q,R,&S Replacement 158,000,000 1585000,000 Subtotal-Solids Handling&Digestion 606,725,000 325,405,642 32,454,300 357,859,942 2485865,058 Ocean Oulfall Systems Final Effluent Sampler and Building Area Upgrades 16,411,000 15,925,650 233,100 16,158,750 252,250 Ocean Outfall System Rehabilitation 147,000,000 8,813,199 10,919,800 19,732,999 127,267,001 Subtotal-Ocean Oulfall Systems 163,411,000 24,738,849 11,152,900 35,891,749 127,519,251 Utility Systems Cengen Emissions Control Project 23,820,000 22,247,572 34,200 22,281,772 1,538,228 UPS System Upgrades 8,087,000 - - - 8,087,000 Digester Gas Facilities Rehabilitation 96,500,000 181,030 537,100 718,130 95,781,870 Natural Gas Pipelines Repl at Plant No.1 and 2 1,310,000 24,928 73,900 98,828 1,211,172 Electrical Power Distribution System Improvements 34,608,000 - 55,300 55,300 34,552,700 (Continued) Section 3-Page 7 FY 2017-18 Mid-Year Report Summary of Capital Improvement Construction Requirements- Project Life For the Six Months Ended December 31, 2017 Current Total Approved June 30,2017 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2018 Budget Utility Systems(continued) Central Generation Rehab at Plant No. 1 87,000,000 - - - 87,000,000 Unintermptable Power Supply Impr.at P1 4,800,000 3,351 22,000 25,351 4,774,649 Consolidated Demolition&Utility Improvements at P2 30,300,000 5,453,054 11,161,200 16,614,254 13,685,746 Central Generation Rehab at Plant No.2 114,000.000 114,000,000 Subtotal-Utility Systems 400,425.000 27,909,935 11,883,700 39,793,635 360,631,365 Process Related Special Projects Safety Improvements at Plants Nos.l and 2 19,000.000 1,606,938 3,525,300 5,132,238 13,867,762 Subtotal-Process Related Special Projects 19,000.000 1,606,938 3,525,300 5,132,238 13,867,762 Information Management Systems Process Control Systems Upgrades 102,399,000 - - - 102,399,000 Project Management Infonnadon System 4,000,000 701 631,400 632,101 3,367,899 Power Monitoring&Control Systems at P2 24,100,000 2,211,062 1,910,800 4,121,862 19,978,138 Master Information Technology Capital Program 10,000,000 573,006 349,800 922,806 9,077,194 Geographic information System 4,568,000 2,456,512 167,300 2,623,812 1,944,188 EAM Software and Process Implementation 7,500,000 4,765,108 277,500 5,042,608 2,457,392 PDS21)Software Replacement 530,000 352,351 10,700 363,051 166,949 Process Control System Upgrades Study 3,554,000 69,484 533,500 602,984 2,951,016 Subtotal-Information Management Systems 156,651,000 10,428,224 3,881,000 14,309,224 142,341,776 Strategic&Master Planning Master Planning Studies 16,698,386 6,295,834 4,588,600 10,884,434 5,813,952 Climate Change Impact Study 590,000 3,919 20,700 24,619 565,381 Subtotal-Strategic&Master Planning 17,288,386 6,299,753 4,609,300 10,909,053 6,379,333 Water Management Projects GWRS Final Expansion Coordination 1,132,000 123,800 123,800 1,008,200 Subtotal-Water Management Projects 1,132,000 - 123,800 123,800 1,008,200 Research Research Program 8,500,000 54,133 634,900 689,033 7,810,967 SCCWRP Nutrient Cycling Sampling 95,000 95,000 95,000 Subtotal-Research 8,595,000 149,133 634,900 784,033 7,810,967 (Continued) Section 3-Page 8 CIP Budget Review Summary of Capital Improvement Construction Requirements- Project Life For the Six Months Ended December 31, 2017 Current Total Approved June 30,2017 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2018 Budget Support Facilities Master Facilities Engineering Projects-Plant 28,373,000 6,269,643 3,739,600 10,009,243 18,363,757 P1 Fleet Services LIST Leak Remediation 14,952.000 194,404 43,200 237,604 14,714,396 Master Small Capital ReplacementlRehabilitation 15,622,000 626,765 - 626,765 14,995,235 18350 Mt.Langley Property 10,150,000 - 9,750,000 9,750,000 400,000 Title 24 Access Compliance&Building Rehab Project 18,400,000 13,852,170 1,585,600 15,437,770 2,962,230 Headquarters Complex,Site&Security&Entrance Realign. 179,067,000 528,437 1,595,300 2,123,737 176,943,263 Site and Security Improvements at Plant No.2 252,000 236,410 1,300 237,710 14,290 P2 Warehouse Relocation 9,800,000 - - - 9,800,000 P2 Collections Yard Relocation 1,500,000 - - - 1,500,000 TPAD Digester Facility at P2 419,000,000 419,000,000 Subtotal-Support Facilities 697,116,000 21,707,829 16,715,000 38,422,829 658,693,171 Others Interstate 405 Widening Impacts on OCSD Front Entrance 2,655,000 - 123,700 123,700 2,531,300 Banning Gale Relocation&Grading at Plant No.2 2,931,000 - - - 2,931,000 P2 Southwest Perimeter Screening 2,800,000 - 16,500 16,500 2,783,500 Capital Improvement Program Mgml.Services 300,000 61,180 6,600 67,780 232,220 Subtotal-Others 8,686,000 61,180 146,800 207,980 8,478,020 Additional Charges to CIP Completed at 6130117 9,600 9,600 (9,600) Total Treatment and Disposal Projects 3,277,907,386 439,300,609 100,201,000 539,501,609 2,738,405,777 Capital Equipment Purchases 16,000,000 9,058,965 3,879,300 12,938,265 3,061,735 Total Collection,Treatment and Disposal Projects and Capital Equipment Purchases $4,129,484,000 $584,887,904 $137,298,300 $722,186,204 $3,407,297,796 Section 3-Page 9 FY 2017-18 Mid-Year Report This Page Intentionally Left Blank Section 3- Page 10 Capital Assets Schedule & Debt Service Budget Review Capital Assets Schedule For the Six Months Ended December 31, 2017 Capital Facilities Budget Review Balance Year-to-Date Balance 07/01/17 Additions 12/31/17 CONSTRUCTION IN PROGRESS: Treatment Plant $ 386,799,209 $ 38,496,867 $ 425,296,076 Collection System 75,034,241 11,713,973 86,748,214 Subtotal 461,833,450 50,210,840 512,044,290 PROPERTY,PLANT&EQUIPMENT(at cost): Land and Property Rights 25,247,046 - 25,247,046 Collection Lines and Pump Stations 830,551,347 - 830,551,347 Treatment Facilities 2,366,129,584 - 2,366,129,584 Effluent disposal facilities 97,014,820 - 97,014,820 Solids disposal facilities 3,463,236 - 3,463,236 General and administrative facilities 246,051,157 - 246,051,157 Excess purchase price over book value on acquired assets 19,979,000 19,979,000 Subtotal 3,588,436,190 3,588,436,190 Total Properly,Plant&Equipment&CIP $ 4,050,269,640 $ 50,210,840 $ 4,100,480,480 Debt Service Budget Review 2017-18 Year-to-Date Remaining Budget Payments %of Budget Budget Principal Payments by Debt Issue: 2009A COP 4,465,000 - 0.00% 4,465,000 2010A BABs - - 0.00% - 2010CBABs - - 0.00% - 2011ACOP 20,960,000 20,960,000 100.00% - 2012ACOP - - 0.00% - 2012BCOP - - 0.00% - 2014ACOP 6,715,000 - 0.00% 6,715,000 2015A COP - - 0.00% - 2016ACOP - - 0.00% - 2016BCANs 7,426,217 - 0.00% 7,426,217 2017A COP 0.00% Subtotal Principal Payments 39,566,217 20,960,000 52.97% 18,606,217 Interest Expense by Debt Issue: 2009A COP 457,750 228,875 50.00% 228,875 2010A BABs 2,897,639 2,107,899 72.75% 789,740 2010C BABs 6,523,780 4,745,782 72.75% 1,777,998 2011ACOP 3,872,350 1,761,475 45.49% 2,110,875 2012A COP 3,735,900 1,867,950 50.00% 1,867,950 2012E COP 3,187,400 1,593,700 50.00% 1,593,700 2014A COP 4,254,500 2,127,250 50.00% 2,127,250 2015A COP 6,375,500 3,187,750 50.00% 3,187,750 2016A COP 6,977,300 3,488,650 50.00% 3,488,650 2016B CANs 865,692 1,098,750 126.92% (233,058) 2017A COP 3,318,500 1,660,267 50.03% 1,658,233 Subtotal Interest Expense 42,466,311 23,868,348 56.21% 10,496,388 Total Debt Service $ 82,032,528 $ 44,828,348 54.65% $ 29,102,605 Section 4- Page 1 2017-18 Mid-Year Report This Page Intentionally Left Blank Section 4 - Page 2 Self Insurance Budget Review General Liability and Property Fund Budget Review For the Six Months Ended December 31,2017 Percent Actual of Budget Remaining Actual 2017.18 Through Through 2017-18 Through Increase Budget 12/31/17 12/31/17 Budget 12/31/16 (Decrease) Revenues: In-Lieu Premiums $ 2,110,870 $ 1,055,436 50.00% $ 1,055,434 $ 555,552 $ 499,884 Miscellaneous Other Revenue - 3,532 N/A - - 3,532 Service Department Allocations 18,700 9,348 49.99% 9,352 9,348 - Total Revenues 2,129,570 1,068,316 50.17% 1,064,786 564,900 503,416 Expenses: Benefits/Claims 100,000 2,500 2.50% 97,500 667,161 (664,661) Legal Services 130,000 2,445 1.88% 127,555 72,136 (69,691) Professional Services 25,000 0.00% 25,000 25,976 (25,976) Subtotal 255,000 4,945 1.94% 250,055 765,273 (760,328) Policy Premium Expense 1,080,000 601,055 55.65% 478,945 585,721 15,334 Total Expenses 1,335,000 606,000 45.399% 729,000 1,350,994 (744,994) Excess Revenue(Expense) 794,570 462,316 $ 335,786 (786,094) 1,248,410 Beginning Reserves 54,205,430 54,445,772 55,252,299 (806,527) Ending Reserves 8 55A00,000 $5Q908,088 $ 54. 666,205 $ 441,883 Section 5-Page 1 FY 2017-18 Mid-Year Report Workers'Compensation Fund Budget Review For the Six Months Ended December 31, 2017 Percent Actual of Budget Remaining Actual 2017-18 Through Through 2017-18 Through Increase Budget 12/31/17 12/31/17 Budget 12/31/16 (Decrease) Revenues: In-Lieu Premiums $ 554,330 $ 277,165 50.00% $ 277,165 $ 598,150 $ (320,985) Miscellaneous Other Revenue 10,000 - 0.00% 10,000 - - Total Revenues 564,330 277,165 49.11% 287,165 598,150 (320,985) Expenses: Benefits/Claims 600,000 263,010 43.84% 336,990 137,622 125,388 Legal Services 175,000 64,005 36.57% 110,995 23,875 40,130 Professional Services 65,000 34,573 53.19% 30,427 36,232 (1,659) Subtotal 840,000 361,588 43.05% 478,412 197,729 163,859 Policy Premium Expense 200,000 103,256 51.63% 96,744 104,413 (1,157) Total Expenses 1,040,000 464,844 44.70% 575,156 302,142 162,702 Excess Revenue(Expense) (475,670) (187,679) $ (287,9911 296,008 (483,687) Beginning Reserves 2,475,670 2,464,418 1,913,178 551,240 Ending Reserves $ 2,000,000 _L 2.276.739 $ 2.209,186 $ 67,553 Section 5-Page 2 9 bm January 31, 2018 STAFF REPORT Mid-Year Treasurer's Report For the Period Ended December 31, 2017 SUMMARY Section 15.0 of the District's Investment Policy includes quarterly reporting requirements for the District's two investment portfolios. These two funds, the "Liquid Operating Monies," and the "Long-Term Operating Monies" are managed by Chandler Asset Management, the District's external money manager. The ongoing monitoring of the District's investment program by staff and Callan Associates, the District's independent investment advisor, indicates that the District's investments are in compliance with the District's adopted Investment Policy and the California Government Code, and that overall performance has tracked with benchmark indices. In addition, sufficient liquidity and anticipated revenues are available for the District to meet budgeted expenditures for the next six months. The District's portfolios do not include any reverse repurchase agreements or derivative securities. ADDITIONAL INFORMATION Performance Reports The Quarterly Strategy Review, prepared by Chandler Asset Management, and the Investment Measurement Service Quarterly Review, prepared by Callan Associates, is attached for reference. Also attached are Long-Term and Liquid Operating Monies Summary of Performance Data and Portfolio Statistics charts that depict the performance results, estimated yield and duration, credit quality, and sector diversification of the District's portfolios, as of December 31, 2017. The Liquid Operating Monies portfolio, with an average maturity of 58 days, consists entirely of high quality fixed income investments consistent with the District's investment policy. Portfolio Performance Summary The following table presents a performance summary of the District's portfolios as compared to their benchmarks for the period ended December 31, 2017. OCSD ♦ P.O.Box8127 ♦ Fountain Valley,CA 9272M127 ♦ (716)%2-2411 Mid-Year Treasurer's Report For the Period Ended December 31, 2017 Page 2 of 3 Portfolio Performance Summary As of December 31,2017 Liquid Operating Monies(%) Lang-Term Operating Monies(%) Total Rate of Total Rate of Return Benchmark(o Realm Benchmark0l 3 Months 0.28 0.28 -0.24 -0.32 6 Months 0.55 0.55 0.18 0.06 9 Months 0.75 0.75 0.64 0.54 12 Months 0.89 0.86 1.16 1.02 Annualized Since inception 30 Nov 2014 0.52 0.40 1.06 0.99 Market Value 145.5M $396.6M Average Quality "AA+'rAaa" `AA+'TAal' Current Yield(%) 1.1 le Estimated Yield to Maturity(%) 1.4 1.9 Quarterly Deposits(Withdmwals) $95.8M 64.0M Estimated Annual Income 1.9M T6.9M (1) Benchmarks: • Liquid Operating Portfolio: 3-Month Treasury Bill Index • Long-Term Operating Portfolio: Merrill Lynch Corp/Govt. 1-5 Year Bond Index Portfolio Market Values Comparative marked-to-market quarter-end portfolio values are shown in the following table, and in the attached bar chart. Liquid Long-Term Quarter Operating Operating Ending Monies($M) Monies($M) 31 Mar 17 85.2 318.2 30 Jun 17 124.4 331.8 30 Sep 17 49.5 333.2 30 D.17 145.5 396.6 District's Investment Account Balances as of December 31, 2017 Book Balances Estimated Investment Accounts December 31,2017 Yield(%) State of Calif.LAIF $56,830,465 1.24 Union Bank Checking Account 296,226 0.25 Union Bank Overnight Sweep Account 1,865,000 0.91 Union Bank W/C Checking 92,120 0.25 Chandler-Short-term Portfolio 145,167,658 1.37 Chandler-Long-term Portfolio 394,934,545 1.91 Petty Cash 3,000 N/A BNY Mellon OCIP Reserve 3,607,308 0.75 TOTAL 602.796.32 1.71 Debt Service Reserves w/Trustees 4 992 121 1.15 Mid-Year Treasurer's Report For the Period Ended December 31, 2017 Page 3 of 3 District's Cost of Funds on Debt Issues as of December 31, 2017 Annual Cost of Funds Outstanding Interest Issue Description COP Balance Rate(%) 2009A Fixed $9,155,000 4.72 201OA Fixed 80,000,000 3.68 201 OC Fixed 157,000,000 4.11 2011A Fixed 75,370,000 2.61 2012A Fixed 100,645,000 3.54 2012B Fixed 66,395,000 1.50 2014A Fixed 85,090,000 2.34 2015A Fixed 127,510,000 3.30 2016A Fixed 145,880,000 3.02 2016B Fixed 109,875,000 0.87 2017A Fixed 66.370 000 2.55 TOTAL SI 090 01N1 Weighted Avg.Cost of Funds 2.89 ATTACHMENTS 1. Chandler Quarterly Report 2. Summary of Performance Data and Portfolio Statistics — Liquid Operating Monies 3. Summary of Performance Data and Portfolio Statistics— L-T Operating Monies 4. Investment Transactions and Balances in LAIF 5. Asset Summary by Asset Type — Liquid Operating Portfolio 6. Asset Summary by Asset Type — Long Term Portfolio 7. Asset Summary by Asset Type — Owner Controlled Insurance Program Escrow with Liberty Mutual 8. Investment Listing -Yield 9. Asset Detail — Consolidated 10. Custody Transaction History—Consolidated 11. Callan Quarterly Review 12. Chandler Quarterly Review 13. Rating Agency Comparisons C/" CHANDLER ASSET MANAGEMENT December 31, 2017 Mr. Mike White, CPA Controller Orange County Sanitation District 10844 Ellis Avenue Fountain Valley CA 92708-7018 Dear Mike, Bond Market Recap The yield curve flattened meaningfully in 2017, with the 2-year/10-year Treasury yield spread narrowing from 126 basis points the end of 2016 to as low as 52 basis points at the end of December, the tightest spread since October 2007. In December, the 2-year Treasury yield increased about ten basis points to 1.88% and the 10-year Treasury yield was essentially unchanged. During 2017, the Federal Reserve raised the fed funds rate three times by a total of 75 basis points, which largely fueled the increase in shorter rates. However, inflation expectations were muted, which kept a lid on longer-term rates. All else being equal, we believe the Fed's ongoing efforts to normalize the balance sheet should help promote a steeper yield curve, but we don't expect the impact of this to be reflected in the market until later this year. We also believe tax reform is likely to provide a tailwind to economic growth and help drive yields at the long end of the curve higher. Global demand for Treasuries will also continue to influence yields. The Federal Open Market Committee's (FOMC) economic projections indicate the Fed plans to hike the fed funds rate three times this year to a median level of 2.1%. We believe the rotation of new voting members into the FOMC this year, as well as a new Fed Chairman, may make for a more hawkish FOMC this year. Assuming inflation remains contained below 2.0% and the US dollar does not materially appreciate, we think three rate hikes are likely this year. While we expect the Fed to remain on a path toward monetary policy normalization, we continue to believe that the Fed's terminal rate forecast of 2.8% is too high, and believe the long-run rate is probably closer to 2.5%. As such, we see little room for additional rate hikes beyond this year, unless there is a significant pick-up in economic growth and inflation. We are forecasting GDP growth of about 2.5% in 2018, which is in line with the Fed's forecast and the market consensus. This would equate to a slight increase over the 2017 GDP growth consensus estimate of 2.3%. Overall, economic data was quite favorable heading into 2018, with the exception of still-sluggish inflation readings. The economy is at or near full employment, consumer confidence is strong, and leading indicators suggest the economy will continue to grow modestly. C/" CHANDLER ASSET MANAGEMENT The Treasury yield curve continued to flatten in December. The 2-year Treasury yield increased about ten basis points in December to 1.88% and the 10-year Treasury yield was essentially unchanged. Consumer Prices The Consumer Price Index (CPI) was up 2.1% year-over-year in December, versus up 2.2% year-over-year in November. Core CPI (CPI less food and energy) was up 1.8% year-over-year in December, versus up 1.7% year-over-year in November. Core CPI remains soft but did move higher. The Personal Consumption Expenditures (PCE) index was up 1.8% year-over-year in November, versus up 1.6% year-over-year in October. However, Core PCE (excluding food and energy) was up just 1.5% on a year-over-year basis in November. PCE inflation remains well below the Fed's 2.0% target. Retail Sales On a year-over-year basis, retail sales were up 5.4% in December, versus up 6.0% year-over- year in November. On a month-over-month basis, retail sales increased 0.4% in December (slightly below expectations), following a strong 0.9% increase in November. Excluding autos and gas, the month-over-month figure was up 0.4% in December as well. Overall, retail sales for the last two months of the year combined are indicative of solid consumer spending trends. Labor Market U.S. nonfarm payrolls rose by 148,000 in December, below the consensus forecast of 191,000 but still enough to absorb new entrants into the labor market. October and November payrolls were revised down by a net total of 9,000. Nevertheless, on a trailing 3-month and 6-month basis, payrolls increased by an average of 204,000 and 166,000 per month, respectively. The unemployment rate and the labor participation rate were unchanged in December at 4.1% and 62.7%, respectively. A broader measure of unemployment called the U-6, which includes those who are marginally attached to the labor force and employed part time for economic reasons, edged up to 8.1% in December from 8.0% in November and 7.9% in October. Wages rose 0.3% in December, following a downwardly revised 0.1% increase in November. Wages were up 2.5% on a year-over-year basis in December, in line with expectations. Housing Starts Total housing starts were stronger than expected in November, up 3.3%. Single-family starts increased 5.3% in November, while multi-family starts were down slightly. Permits were also better than than expected in November. z CHANDLER ASSET MANAGEMENT TREASURYYIELDS 1213112017 9/30/2017 CHANGE 3 Month 1.38 1.05 0.33 2 Year 1.89 1.49 0.40 3 Year 1.97 1.62 0.35 5 Year 2.21 1.94 0.27 7 Year 2.33 2.17 0.16 10 Year 2.41 2.33 0.08 30 Year 2.74 2.86 (0.12) Economic Data Points to Ongoing Growth ECONOMIC INDICATOR Current Release Prior Release One Year Ago Trade Balance (50.5)$Bin NOV 17 (48.9)$Bin OCT 17 (46.4)$Bin NOV 16 GDP 3.2%SEP 17 3.1%JUN 17 2.8%SEP 16 Unemployment Rate 4.1%DEC 17 4.1%NOV 17 47%DEC 16 Prime Rate 450%DEC 17 425%NOV 17 3.75%DEC 16 CRB Index 193.86 DEC 17 189.17 NOV 17 192.51 DEC 16 Oil(Wert Texas Int.) $60A2 DEC 17 $57A0 NOV 17 $53.72 DEC 16 Consumer Price lndex(y/o/y) 2.1%DEC 17 2.2%NOV 17 2.1%DEC 16 Producer Price Index(y/o/y) 3.3%DEC 17 4.3%NOV 17 1.9%DEC 16 Dollar/Euro L20 DEC 17 1.19 NOV 17 1.05 DEC 16 Sourm:Bloomberg 3 C/" CHANDLER ASSET MANAGEMENT Performance Attribution Long-Term Portfolio The Long-Term portfolio outperformed the benchmark during the quarter; however the absolute return was negative. The portfolio generated a return of-0.24% versus the -0.32% return of the ICE Bank of America 1-5 Year AAA-A US Corporate and Government Index. The portfolios exposure to the Corporate and Asset Backed sectors were additive to results, as spreads in both sectors performed well during the quarter. The portfolios overall interest rate exposure, as well as the overall term structure positioning of the portfolio, were also additive to the relative performance of the portfolio. The duration of the portfolio was below the benchmark in the rising rate environment while the overall term structure of the portfolio was underweight the one to three year portion of the maturity distribution, which helped insulate the portfolio from some of the impact of rising interest rates. The Chandler team added multiple securities to the portfolio across the Treasury, Agency, Supranational, Commercial Paper and Corporate sectors of the market as a total of$64 million was added to the portfolio during the quarter. The majority of new holdings in the portfolio had maturity dates in either 2018 or 2022, as the Chandler team continues to emphasize underweight exposure to the one to three year portion of the maturity distribution. On a quarter over quarter basis the duration of the portfolio contracted to 2.26 versus 2.44 at the end of the third quarter. In light of the large cash flows into the portfolio at the end of the quarter, and the relatively thin markets in spread product, the Chandler team was comfortable letting the duration remain low as the team felt more attractive investment opportunities would present themselves in the first quarter of 2018. Liquid Portfolio The Liquidity Portfolio matched the return of the ICE Bank of America 3-Month Treasury-Bill Index during the quarter, generating a return of 0.28%. The portfolio experience heavy positive cash flows, in aggregative $96 million. Many securities were purchased across the Treasury, Agency, Supranational, Commercial Paper and Corporate sectors of the market to keep the portfolio as fully invested as possible. The purchased securities ranged in maturity from November 2017 to July 2018. Similar to prior quarters Chandler continues to invest in the Agency discount note sector to partially offset upcoming cash flow needs while being more opportunistic, and yield seeking, with the short maturity Corporate notes in the portfolio. 4 C/" CHANDLER ASSET MANAGEMENT Economic Outlook The global economy is experiencing a modest amount of synchronized global growth and risk assets globally have responded in kind. The S&P 500 returned 19.42% in 2017, a very strong finish to the year after being up 12.35% YTD through the end of the third quarter 2017. Treasury yields also moved higher during the quarter, but more in a bear flattening fashion with shorter maturity notes leading the way while yields at the ten year maturity point and longer were much more contained. Investment grade credit spreads continued to perform with year to date new issue volume remaining elevated and spreads firm as the option adjusted spread of the credit index moved tighter in the fourth quarter. The recently passed legislation on tax reform should provide a tailwind to the domestic economy in 2018. Interest rates should continue to move modestly higher and normalize, but Chandler maintains the view the terminal fed funds rate at equilibrium will be 2.50% or lower, versus the FOMC's higher forecast. The flat shape of the Treasury yield curve remains a concern, but based on our analysis risk assets are not susceptible to a sharp correction based on the shape of the yield curve alone. Most spreads in the investment grade sectors are tight; however we expect some potential widening in the Mortgage sector later this year, coinciding with a larger amount of the Fed's balance sheet reduction, which will likely pressure spreads in alternative high quality product as well. New issue volume in the Corporate market should be lower than the elevated levels of the past two years, but we still anticipate the new issue market will provide ample opportunities to adjust the Corporate exposure of the portfolio. Strategy Strategy highlights for the Long-Term Portfolio in coming months: • Opportunistically increase the overall maturity profile of the Corporate allocation of the District's portfolio. o Although credit spreads in the A or better segment of the market are tight overall, the Chandler team feels we can still identify attractively valued securities to add to the portfolio on a risk adjusted basis. o Tax repatriation could cause some of the positive technical bid in the five year and under sector to weaken, potentially allowing securities to trade at more attractive prices. • Valuations in the Agency sector remain expensive and in general the Chandler team continues to avoid the space. • On a risk adjusted basis Asset Backed securities, particularly in shorter maturities, look attractive. The Chandler team will be utilizing the new issue calendar to increase exposure to the sector. • The duration of the portfolio will migrate higher with the large move in interest rates over the past quarter. 5 C/" CHANDLER ASSET MANAGEMENT Strategy highlights for the Liquidity Portfolio in coming months: • Continue to ladder the Agency discount note and Treasury exposure to coincide with forecasted liquidity needs. • Opportunistically add Corporate, Negotiable CD, and Supranational exposure to the portfolio where the additional spread compensation versus higher quality alternatives is attractive. • Maintain a dedicated exposure to the Treasury sector on an ongoing basis to ensure ample liquidity in the portfolio at all times. Compliance Issues CA Orange County sanitation District Long Term Deeember31,2011 COMPLIANCE WITH INVESTMENT POLICY Assets managed by CsandlerAsset Management are in full compliance one state toward sets the evas(mempolicy Category Standard Comment Tmtesi'l ues 5Were maximum mail Complies' Stphinatlorel 'AA'or better by of 3 NRSR0s; 30%maximum; 5%max issaan, 5years mal halides Complies only. tADB BRD snot IFC parCGC U.S.Agencies 20%mex issuer; 5 years maximum maturity Complies U.S.Corporate(MTNs) Wor better long term raring by l of 3 NRSROs; 30%maximum;5%max issuer; 5 Were max Complies mannity Mtnicipal Seclaities 'A"or higher by t of 3 NRSROS;10%maximum; 5%max issuer. 5 ram maximu matuiy Complies Asset Beckett CMOs)Mortgage- 'AA-or better by l of 3 NRSROSIW"or higher issuer mtitg by t of 3 NRSROe; 20% Complies' backed maximum; 5%max issuer exckdi MBSI .A agency;5 Were max malmity Negotiable CDs Wor hater on its long term debt by l of3 NRSROs; 'Al/al'orNgllest short Wm nadngs by l Complies of3NRSROs; 30%maximlm;5%maxistaer, 5yearsmaxmatudy CDs/TDS 5%maxissuer, 5yearsmaxmatanty, Complies Banksls Acceptances A-1,or equivalent highest short term hiring by t of 3 NRSROS; 40%maximum; 5%max issier, Complies 180 days max matiai Commercial Paper A-1,orequiialem by l of3 NRSROS; 'A'or better by l of 3 NRSROs,iflotg term debtisslcd; Complies 25%mahirl 5%maxissuer 270 days maxmaWrl Mutual Furd B Morey Mallet Highest string by2 NRSROs; 20%maximum;10%max permol lfoul; 20%maxper money Complies Mtatal Ftud market muWel ftnd Re ucbas,A moments 102%oollatemlizatim Complies Receme Repurchase Agreements 5%maximum,90 days maximal Complies IAF Not usetl byinmankmnt adviser Complies A,g Duration Notto exceed 60 monma - (80%to 120%ofthe benchmark) Complies Maximum Maturity 5 aas maximum maturity Complies. 'The sell M1n lway-threw(23)secuntiee with matutltiee Brest r then 5 yeas lndudirrl(1)ABS.kur(4)CMOs.aeunleen(17)MBB env.(1)aped All smuntreaw inventedfiomtinpmiuusmanagerandcumpliehz timeofpunches. 6 C/" CHANDLER ASSET MANAGEMENT CA Orange County Sanitation District Liquid December 31,2017 COMPLIANCEPOLICY Assets managedby Chandsk-A9mtManag2menl are in fun compliance wM state fawand w1h the imesfinenlpollcy Category Standard Comment Treasuy ksues lyearmaximunmamnty', Minmumallocationofl0% Complies Supraretiaral 'AA'or beder by l of 3 NRSRC%; 30%maximum; 5%max issuer, 1 war maWnty; Includes Complies on . ADS,BIRD,and IFC per CGC U.S.Agereies 20%max issuer, 1 war maximum maturity Complies U.S.Cmpomle(IdTNs) 'Wer better long tans rating by l of 3 NRSROs;30%maxirrem;5%max iseuer, hear max Complies rmairty Asset Backed/CM0a 'AA'or beder by l of 3 NRSROa; 'A'or higher issuer mfig by l of 3 NRSRCa; 20% Complies maximum' 5%maxlssuer' 1warmaxicsiturty Negotiable CDs 'A"orbetiar on its brg tens deM by l 03 NRSRCs; "A1rP1'or Nghestel-ortteam edge Complies by 1 of 3 NRSROs; 30%maximum;5%max issuer,1 Warmax madrity CDslTDS 5%maxiWccr;1year max macriy Complies Banka/s Acceptances A-1,or equivalent slcrtterm rating by l Df3 NRSROS;00%maximum;5%max issuer;180 Complies dew max modunty Commercial Paper A-1,or equivalent by l of 3 NRSROS;'A'or beder by l of 3 NRSROs,if long team debt Complies Issued' 25%maximum'5%max issuer'270 days maxmatuX MulplFund&Moray MadmitMWel FUM Higlrestmtlngby2NRSROs; 20%maumugl0%maxpermulnefun; 20%maxper Complies mo maXcetmubalfind Repucbase Agreement, 102%collsteralimijon Complies Rename Re urdamA memearrs 5%maximum,W dew max mdua, Complies -AF Not used by imesbrient adNser Complies PmNbited Municipal Secunties Complies PmNbited Modgage Sewndes Complies A,Dubon Nottoexaeed180days; Mexdurtionofl2per Complies Maximum MaWity 1year maximum maturity Complies 7 C/" CHANDLER ASSET MANAGEMENT C/" OCSD Lehman Exposure December 31,2017 COMPLIANCE WITH INVESTMENT POLICY Assets managed by ChandlerAsset Management are in full compliance wth state lawand wth the investment policy Category standard Comment Treasury Issues 5 years maximum maturity Complies SLpranabonal 'AA"or better by of 3 NRSROs; 30%maximum; 5%mii 5years maturity, Complies Includes only: 1ADB HERD,and IFC per CGC U.S.Agencies 20%max issuer 5 Were maximum maturity Complies U.S.Corporate(MTNs) "i better long term rating by l of3 NRSROs; 30%maximum;5%max issuer, 5 Complies" wars,max maturity Municipal Securities "A"or higher by l of 3 NRSROS;10%maximum; 5%max issuer; 5 years Complies maxmum onaturity Asset Backed/CMOs/ "AA"or betterby1 of3 NRSROs, W'or higher issuer rating by l of3 NRSROs; Complies Mortgage-backed 20%maximum; 5%max issuer(excluding MBS/ ovtagency);5 ars max barturty Negotiable CDs "i better on its long term debt by l of3 NRSROs; "A1/P1"or highest short term Complies listings b 1of 3 NRSROs; 30%maxmum;5%max issuer; 5 years max maturity CDs(TDS 5%max issuer 5 were max maturity Complies Barker's Acceptances A-1,or equivalent highest short term rating by l of 3 NRSROS; 40%maximum; 5% Complies max issuer,180 days max maturity Commercial Paper A-1,or equivalent by l of 3 NRSROS; "A'or better by l of3 NRSROs,if long tens Complies debt issued, 25%maximum; 5%max issuer; 270 days max maturity Money Market Fund Highestretingby2of3NRSR0s; 20%mexmum;10%mexissuer Complies Repurchase A reements 102%collatemlization Complies Reverse Repurchase 5%maximum,90 days max maturity Complies Agreements LAIF Not wed by investment adviser Complies A DuaIon Not exceed 60 months - 80%to 120%blithe benchmark Complies Maximum Maturity 5 years maximum maturity Complies `Account holds$2 million face value(mile 52.5E$=n and$600,booked,value(anot,525ESC1B7)W defauked Lehman B.Holdings Nat ware pumhase l by the pra,mus manager. Complied at time of pumhase. 8 C/" CHANDLER ASSET MANAGEMENT Defaulted Bonds OCSD Lehman Exposure-Account 410284 For the Month Ending 12/31/2017 Commons k 6,HO N ers,l cOpen oaluon wng 1111141 1 Oo0% f42 t 17 b11 ul Common SboM0,111 41 loo, I I IDO% x I13.3316e USca .� ONEW61- 525ESCIB7 611o1110 2111111 wjI74m NI s3seccovs L,nme�E,a,rR rvwon,� z000,00mo 11l .11.as 4sa s sysv. ,w omox m4lsrevma3 mox LOIOlOy0 aaov. 0787e246l —ow NRINR TeW US Cerpa,W 0.00% 1.W4B3&W 0 I1,t83,W8301 NaO.m u PoR3FOtl0 10.M1,331.03 o.mx o0 11,e1s,minl MARKET VALUE YLU84CCRuA B 165,331.M 9 OIL CHANDLER ASSET MANAGEMENT Ratings Orange County Sanitation District Long Term December 31,2017 es.September 30,2017 eovox low% fi6.v6% 1D00% 4000% 3000x vow% lovox 0v6x MA M T W NR •1391/A1] -M=17 AAA M A A NR IV31117 15,5% 0.8% 11.6% 1.m 7.3% 0&3W17 7.5% 70.5% 11.3% 3.2% 7.5% Eau,w:86PPallrgc Orange County Sanitation District Liquid December 31,2017 vs.September 30,2017 l6.wx 60w% SOw% 40wx 30Po% 3M% 10w% 0wx M4 M P U N0. ,1N3lml7 ...17 AAA M A U NR 12/31/17 324% 61.5% 6A% 0.0% U% MW17 377% 42.2% 20D% 0.0% U% Swrte:56P FNlnp 10 C/" CHANDLER ASSET MANAGEMENT OCSD Investment Program Quarter End Portfolio Value $600,000,000 •Liquid Operating Monies $600,000.000 •Long-Term Operating Monies 5400,000,000 $300,000,000 $200,000,000 $100,000.000 S 0,4 4,4 tH ✓GPI SBa' Oe ' 4/�' 'i�'' Se,0.' Oe,' ' ✓�,A' Sma' Off,' 'rim' 'i2'' Sm,0.' pec,' 9 p 9 S S S S S S S S > > > > HISTORICAL YIELD CURVE 4.00% �DECEMBER 2017 �NOVEMBER 2017 3.00% DECEMBER2016 _______________________________________________ _ 2.21% 2.33% 2.74% 1.979/. 2.41% 2.00% -----1.89%___ ___ ________________________________________________________ 1.53% 1.38% 1.00% 0.00% O � y IT GilOrange County Sanitation District Liquid Portfolio Summary Account#10282 As of 12/31/2017 PORTFOLIO CHARACTERISTICS ACCOUNTSUMMARY •• aaaa� Average Duration 0.15 * Beg.Values End Values Issuer %Portfolio as of 11/30/17 as of 12131/17 Government of United States 52.7% Average Coupon 1.10% Market Value 75,208,333 145,167,109 Federal Home Loan Bank 19.8% Average Purchase YTM 1.33% Accrued Interest 177,719 319,206 Tennessee Valley Authority 6.9% Averse Market YTM 1.37% Total Market Value 75,386,053 145,486,316 9 Federal Home Loan Mortgage Corp 2.3 Average S&P/Moody Rating AA+/Aaa Income Earned 57,436 99,980 Inter-American Dev Bank 2.1 % Average Final Maturity 0.16 yes ContIWD 70.000,000 Bank of Tokyo-MR UFJ 2.1 Average Life 0.13 yrs Par 75,248,235 145,298,257 International Finance Corp 1.7% Book Value 75,218,110 145,176,603 JP Morgan Chase&Cc 1.4% Cost Value 75,256,719 145.151,820 88.9% • - - • • MATURITY DISTRIBUTION 100% qA US US 88.1% (61.5%) Corporate Treasury (8.9%) (52 7%) 80% 80% Commercial 5upranational Paper (3.8%) 40% (4.7%) 20% Money nd se% A 4A% (6 Agency .1%)M %( % o-zs n-s s-t 1-1s a-a 2-25 as.o a. AAA (11%) Maturity fres) (324%) Total Rate of Return Current Latest Year Annualized Since As of 12/31/2017 Month 3 Months To Date 1 Yr 3 Yrs 8 Yrs 10 Yrs 11/30/2014 11/3012014 Orange County Sanitation District Liquid 0.10% 0.28% 0.89% 0.89% 0.54% N/A N/A 0.52% 1.62% BAML 3-Month US Treasury Bill Index 0.11 % 0.28% 0.86% 0.86% 0.41 % N/A N/A 0.40% 1.24% Chandler Asset Management-CONFIDENTIAL Page 1 Execution Time:1=X)I010:07:27 PM C/" Orange County Sanitation District Long Term Portfolio Summary Account#10268 As of 12/31/2017 PORTFOLIO CHARACTERISTICS ACCOUNTSUMMARY •• eee� Millis Beg.Values End Values Issuer %Portfolio Average Duration 2.26 as of 11/30/17 as of 12131/17 Government of United States 32.8 Average Coupon 1.75% Market Value 340,875,748 394,986,858 Federal Home Loan Bank 13.2 Average Purchase YTM 1.75% Accrued Interest 1,488,820 1,628,835 Federal National Mortgage Assoc 9.3 Averse Market YTM 1.91 % Total Market Value 342,364,568 396,615,693 9 Federal Home Loan Mortgage Corp 5.9 Average S&P/Moody Rating AA+/Aal Income Earned 486,801 507,407 First American Govt Obligation 4.0 Average Final Maturity 2.52 yrs COnt/WD 54.026,138 I Inter-American Dev Bank 2.8 Par 342,269,977 397,069,850 Intl Bank Recon and Development 2.5 Average Life 2.35 ym P Book Value 342,094,499 396,488,061 Tennessee Valley Authority 2.0% I Cost Value 343,603,020 397.455,714 72 5% MBS 25% AA (0.4%) sm%) 20.7% US Corp 20% 10.0% 19.2% (19.3%) US Treasury 17.9% (32.8%) 16.9% CP r (1.7%) 15% Munkipals ( 1%) Negotiable CD 10% BBB MMF (1.5%) (1.7%) (4.0%) 5% 3.a% 34% CMO (59%)Suprarational AM NR (0ci (49%) (155%) (7.3%) ABS, Agency 0 25 15-.5 5-1 1-2 2-3 l-4 4 5 . A (3.2%) (29.5%) Maturity yrs) Total Rate of Return Current Latest Year Annualized Since As of 12/31/2017 Month 3 Months To Date 1 Yr 3 Yrs Syria 10 Yrs 11/30/2014 11/3012014 Orange County Sanitation District Long Tenn 0.04% -0.24% 1.16% 1.16% 1.16% N/A N/A 1.06% 3.29% BAML 1-5 Yr US Corporate/Govt Rated AAA-A Index 0.02% -0.32% 1.02% 1.02% 1.13% N/A N/A 0.99% 3.09% BAML US 15 Yr US Corp/Gout Rated AAA-BBB Index 0.03% -0.28% 1.28% 1.28% 1.31 % N/A N/A 1.16% 3.61 % Chendlgr Asset Menegement-CONFIDENTIAL Pegg 1 Execution Time:1ccW1010:03:22 PM Orange County Sanitation District Investment Transactions and Balances in the State of California Local Agency Investment Fund December 31, 2017 Par Value Book Value Market Value Rate Yield Balance December 1,2017 $60,130,465 $60,130,465 $60,130,465 1.24 1.24 Deposits: 12/8/2017 2,300,000 2,300,000 2,300,000 1.24 1.24 12/12/2017 1,500,000 1,500,000 1,500,000 1.24 1.24 12/20/2017 6,600,000 6,600,000 6,600,000 1.24 1.24 Total Deposits 10,400,000 10,400,000 10,400,000 1.24 1.24 Quarterly Interest Distribution 1.24 1.24 Withdrawals: 12/6/2017 (1,800,000) (1,800,000) (1,800,000) 1.24 1.24 12n12017 (2,000,000) (2,000,000) (2,000,000) 1.24 1.24 12/14/2017 (2,100,000) (2,100,000) (2,100,000) 1.24 1.24 12/21/2017 (4,400,000) (4,400,000) (4,400,000) 1.24 1.24 12/28/2017 (3,400,000) (3,400,000) (3,400,000) 1.24 1.24 Total Withdrawals (13,700,000) (13,700,000) (13,700,000) 1.24 1.24 Balance December 31,2017 $56,830,465 $56,830,465 $56,830,465 1.24 1.24 U.S. Bank Asset Summary - Liquid As of 12/31/2017 Industry Name Shares/Units �sis Market Value Percent of Total Unrealized Gain/Loss Cash Equivalents COMMERCIAL PAPER 6,800,000.0000 6,782,399.59 6,788,904.00 4.68 6,504.41 FIRST AMERICAN SHORT TERM FOS 1,548,257.0500 1,548,257.05 1,548,257.05 1.07 - US AGY-SHORT TERM CASH EQUIV 19,350,000.0000 19,328,793.50 19,336,840.00 13.32 8,046.50 Cash Equivalents Total 27,698,257.0500 27,659,450.14 27,674,001.05 19.06 14,550.91 Fixed Income ENERGY 1,000,000.0000 999,620.00 999,080.00 0.69 (540.00) FINANCE 8,800,000.0000 8,852,736.30 8,813,219.10 6.07 (39,517.20) HEALTH CARE 1,000,000.0000 998,880.00 998,180.00 0.69 (700.00) INDUSTRIAL 1,000,000.0000 999,619.50 999,800.00 0.69 180.50 INFORMATION TECHNOLOGY 1,000,000.0000 1,000,150.00 999,150.00 0.69 (1,000.00) INVEST GRADE-MUNI GENL OBLIG 19,500,000.0000 19,469,767.44 19,479,720.00 13.42 9,952.56 SUPRANATIONAL 5,500,000.0000 5,486,755.00 5,487,530.00 3.78 775.00 U.S. GOVERNMENT 76,500,000.0000 76,389,234.41 76,420,600.00 52.64 31,365.59 US AGY-LONG TERM ISSUES 3,300,000.0000 3,295,607.00 3,296,378.00 2.27 771.00 Fixed Income Total 117,600,000.0000 117,492,369.65 117,493,657.10 80.94 1,287.45 Grand Total 145,298,257.0500 145,151,819.79 145,167,658.15 100.001 15,838.36 1 Off U.S. Bank Asset Summary - Long-Term As of 12/31/2017 Industry Name Shares/Units 'Fast Basis Market Value Percent of Total Unrealized Gain/Loss Cash Equivalents COMMERCIAL PAPER 6,665,000.0000 6,631,443.58 6,643,072.15 1.68 11,628.57 FIRST AMERICAN SHORT TERM FOS 15,653,313.5100 15,653,313.51 15,653,313.51 3.96 - USAGY-SHORT TERM CASH EQUIV 31,075,000.0000 31,045,888.31 31,055,181.25 7.86 9,292.94 Cash Equivalents Total 53,393,313.5100 53,330,645.40 53,351,566.91 13.51 20,921.51 Fixed Income CONSUMER DISCRETIONARY 4,000,000.0000 4,046,640.00 4,006,000.00 1.01 (40,640.00) ENERGY 10,850,000.0000 10,842,376.90 10,828,747.50 2.74 (13,629.40) FINANCE 42,389,000.0000 42,694,526.86 40,337,735.98 10.21 (2,356,790.88) HEALTH CARE 4,000,000.0000 4,009,675.00 3,996,720.00 1.01 (12,955.00) INDUSTRIAL 5,000,000.0000 5,046,984.00 5,003,200.00 1.27 (43,784.00) INFORMATION TECHNOLOGY 12,045,000.0000 12,087,420.55 11,921,595.15 3.02 (165,825.40) INVESTMENT GRADE-MUNI REVENUE 4,240,000.0000 4,307,633.89 4,482,138.80 1.13 174,504.91 MTG RELATED SECURITY 16,354,794.9000 16,540,668.10 16,576,339.96 4.20 35,671.86 SHORT TERM FUNDS 5,825,000.0000 5,825,000.00 5,813,233.50 1.47 (11,766.50) SUPRANATIONAL 23,535,000.0000 23,533,477.05 23,234,471.35 5.88 (299,005.70) U.S. GOVERNMENT 120,808,805.5400 119,694,329.75 119,174,731.54 30.18 (519,598.21) U.S.GOVERNMENT TIPS 10,803,936.0000 10,659,216.09 10,676,989.75 2.70 17,773.66 US AGY-LONG TERM ISSUES 86,365,000.0000 86,148,796.40 85,531,074.95 21.66 (617,721.45) Fixed Income Total 346,216,536.4400 345,436,744.59 341,582,978.48 86.49 (3,853,766.11) Grand Total 399,609,849.9500 398,767,389.99 394,934,545.39 100.00 (3,832,844.60) 1 Of �► BNY MELLON Acco 3OM82 TzmrmlT Through lval mlT Account 3D0282 OCSD LIBERTY MUTUAL Statement of Assets Held Slum, 'Mr. Rka YSYlytlw Acamellnwnx Pays. NW SMVIDtlon AssaaaCwl Can FN AmWlnepma MCIMyMN MEDINCOME 3,600,000.000 UNITED STATES TREASURY NOTHBOND W.8280, 3,583,808.00 6,837.36 a]6% CUSIP:912S2SN25 98.T2266 3.Wa01683 2],000.00 MATURITY DATE:WI!I4?018 RATE:0.760% MOODYS Asa Total Ri INCOME 3,S93,S06.00 5,837.3N 0.76% CASHANDSHORTTERM 3,690,015A3 2],oW.W CASH BALANCE 0.00000 13,500.00 am O.W% 0.00000 13,moroo am Teal CASH AND SHORT TERM 13,500.00 am am 11500AO am ACCOUWTCTALS 3,NOT,308,00 6,83T.3N 0.75% TOW Merkel Votes,PlUs Total Aoi freeness 3.612SA5.36 3,BW,313b3 Y/,OW.W Statement of Transactions Tm� TruwsWnOuarbllw Ama Vnrwioal Cwl WF✓wew No Transactions This Period The eBe.and New Yolk Mellon may u01¢e si&aitlodesaM aMlides to Dmvitle wrnwa eud wHdn pvduco b me ADcwd. Subaoidies aM aKpatasmay be wmpenmted for Nalr MNwe pmtluda. $$ The ,alus of sewhbes set form on mrs Aw.unt Statement are determined by The Beek of N.York Mallon for Corporate Treat on be basis.(marledpriors and Information 8 obtained by The Bain of Nevi Melon From mr tr iated third parties(including inds randenl won verows)(TM1kd parry pricing fhmom5). The Bank of New YDdr Mdon tray M wridelsuch marled ralues or information and makes re assurances as to be accuracy or cinwhess of wch market valnBs or information or that the marled values ed(orm 3 on Nla Acwum Btaldneni refled lire valor of Ne aecunues mat can be reallzetl upon Xu sale Di such secwuas. Natldiaon.tlu marled wlwafor seadhas wNIXlM1 in Nis AccwM 3tateuWneyrned phone h an m rombwiwaaM informationforme same we sensors e used by Omer bustle urNa of Tlw Bankof New York MestoorIlesubsidsed, IX alekssuld etl upon earned prkasaM lnomwEw rewivetl from Diner fM1ld party pridrp sernwsuSlizatl by aucM1 ONw Wsiwss rml5. Corporate Tmst tloea rsslmmDare Ile nrerkIN vduea wiN Now uwtl by.or reconcile tliXemnimarket values usetl by.oNer busltless oohs of TM1e BMikof Nax Vain Mellon or itawMMoOw ofMaNllates. The Bank d New VOrk Mellon shall rat Ca Cabo iw dry loss,tlamage or expense irwwred as a rewlt otwedekM homIX rebhed o me nrarlret vaWee w InMrmatlon pmvidetl bymiM Derry pdclrO wrvicm IXihe 96erereee In roams,pdwa w nbmidiw povoed by Dinar mlrtl pedy pridrq sdviue. U.S. Bank Investment Listing-Yield As of 12/31/2017 Asset Category CUSIP Asset Short Name Yield Shams/Units Moody's S&P Rating Price Cost Basis Market Value Cash Equivalents 02665KBN6 AMERICAN HONDA FINANCE C P 2/22/18 0.0000% 1,000,000.0000 99.77 997,237.50 997,680.00 Cash Equivalents 06538CAX9 BANK OF TOKYO MITSUBIS C P 1/31/18 0.0000% 2,000,000.0000 99.87 1,996,355.56 1,997,480.00 Cash Equivalents 06538CCD1 BANK OF TOKYO MITSUBIS C P 3/13/18 0.0000% 6,665,000.0000 99.67 6,631'44358 6,643,072.15 Cash Equivalents 06538CCD1 BANK OF TOKYO MITSUBIS C P 3/13/18 0.0000% 1,000,000.0000 99.67 994,965.28 996,710.00 Cash Equivalents 313385RR9 F H L B DISC NTS 1/11/18 0.0000% 4,750,000.0000 N/A N/A 99.97 4,746,648.61 4,748,480.00 Cash Equivalents 313385RR9 F H L B DISC NTS 1/11/18 0.0000% 4,750,000.0000 N/A N/A 99.97 4,746,648.61 4,748,480.00 Cash Equivalents 313385RX6 F H L B DISC NTS 1117/18 0.0000% 1,000,000.0000 N/A N/A 99.95 999,075.56 999,460.00 Cash Equivalents 313385RZ1 F H L B DISC NTS 1119/18 0.0000% 12,100,000.0000 N/A N/A 99.94 12,089,459.00 12,092,619.00 Cash Equivalents 313385SE7 F H L B DISC NTS 1124/18 0.0000% 6,225,000.0000 N/A N/A 99.92 6,219,094.03 6,220,082.25 Cash Equivalents 313385SL1 F H L B DISC NTS 1130/18 0.0000% 3,600,000.0000 N/A N/A 99.90 3,594,711.00 3,596,400.00 Cash Equivalents 31846V567 FIRST AM GOUT OB FD CL Z 1.1918% 1,548,257.0500 100.00 1,548,257.05 1,548,257.05 Cash Equivalents 31846V567 FIRST AM GOVT OB FD CL Z 1.1918% 15,653,313.5100 100.00 15,653,313.51 15,653,313.51 Cash Equivalents 69372BAP5 PACCAR FINANCIAL CORP C P 1/23/18 0.0000% 1,500,000.0000 99.91 1,497,643.75 1,498,620.00 Cash Equivalents 880590SD7 T V A DISC NTS 1/23/18 0.0000% 8,000,000.0000 N/A N/A 99.93 7,990,686.67 7,994,000.00 Cash Equivalents 880590SD V A DISC NTS 1/23/18 0.0000% 10,000,000.0000 N/A N/A 99.93 9,988,358.33 9,992,500.00 Cash Equivalents 89233HAW4 TOYOTA MOTOR CREDIT CO C P 1/30/18 0.0000% 1,300,000.0000 99.88 1,296,197.50 1,298,414.00 Fused Income 00440EAU1 ACE INA HOLDINGS 2.875% 11/03/22 2.8364% 4,169,000.0000 A3 A 101.36 4,232,453.17 4,225,781.78 Fixed Income 025816AY5 AMERICAN EXPRESS 7.000% 3/19/18 6.9258%1 2,900,000.0000 A3 BBB- 101.07 3,377,385.79 2,931,059.00 Fixed Income 02665WAT8 AMERICAN HONDA MTN 1.500% 3113118 1.5005% 1,000,000.0000 A2 A+ 99.96 1,001,140.00 999,640.00 Fixed Income 102665WAH4 AMERICAN HONDA MTN 2.250% 8115119 2.2466% 4,000,000.0000 A2 A+ 100.15 4,046,640.00 4,006,000.00 Fixed Income 103215PFN4 AMRESCO 2.49213% 6/25/29 2.6343% 133,743.2900 N/A A+ 94.60 100,432.85 126,526.50 Fixed Income 037833BS8 APPLE INC 2.250% 22321 2.2526% 4,000,000.0000 AA1 AA+ 99.88 4,050,840.00 3,995,320.00 Fixed Income 06406HCW7 BANK NY MELLON MTN 2.300% 9/11/19 2.2940% 2,120,000.0000 Al A 100.26 2,142,175.20 2,125,533.20 Fixed Income 06417GXH6 BANK OF NOVA C D 1.570% 8109118 1.5732% 5,825,000.0000 99.80 5,825,000.00 5,813,233.50 Fixed Income 06406HCE7 BANK OF NY MTN 1.300% 1/25/18 1.3005% 870,000.0000 Al A 99.96 869,364.90 869,669.40 Fixed Income 06406RAA5 BANK OF NY MTN 2.600% 2/07/22 2.5941% 2,500,000.0000 Al A 100.23 2,504,475.00 2,505,725.00 Fixed Income 073902CD8 BEAR STEARNS CO INC 4.650% 7/02/18 4.5894% 3,200,000.0000 A3 N/A 101.32 3,523,520.00 3,242,272.00 Fixed Income 084664BEO BERKSHIRE HATH 5.400% 5/15/18 5.3334% 1,000,000.0000 AA2 AA 101.25 1,016,250.00 1,012,490.00 Fixed Income 084664BT7 BERKSHIRE HATHAWAY 3.000% 5/1522 2.9324% 4,000,000.0000 AA2 AA 102.31 4,131,120.00 4,092,240.00 Fixed Income 808513AK1 CHARLES SCHWAB CORP 1.500% 3/10/18 1.5010% 1,000,000.0000 A2 A 99.93 1,001,100.00 999,310.00 Fixed Income 808513AJ4 CHARLES SCHWAB CORP 2.200% 725/18 2.1972% 930,000.0000 A2 A 100.13 931,841.40 931,199.70 Fixed Income 166764BG4 CHEVRON CORP 2.100% 5/16/21 2.1173% 2,500,000.0000 AA2 AA- 99.18 2,485,350.00 2,479,525.00 Fixed Income 17275RAU6 CISCO SYSTEMS INC 1.650% 6/15/18 1.6514% 1,000,000.0000 Al AA- 99.92 1,000,150.00 999,150.00 Fixed Income 532457BF4 ELI LILLY CO 1.950% 3/15119 1.9516% 4,000,000.0000 A2 AA- 99.921 4,009,675.00 3,996,720.00 Fixed Income 30231GAL6 EXXON MOBIL 1.305% 3/06/18 1.3062% 1,000,000.0000 AAA AA, 99.91 999,620.00 999,080.00 Fixed Income 30231GAV4 EXXON MOBIL 2.222% 3/0121 2.2270% 3,000,000.0000 AAA AA, 99.78 3,016,097.40 2,993,280.00 Fixed Income 3130A7CV5 F H L B DEB 1.375% 2/18/21 1.4065% 5,365,000.0000 AAA AA+ 97.76 5,343,325.40 5,244,984.95 1 of 4 U.S. Bank Investment Listing-Yield As of 12/31/2017 Asset Category CUSIP Asset Short Name Yield Shams/Units Moody's S&P Rating Price Cost Basis Market Value Fixed Income 31337BA43 F H L B DEB 1.375% 3/09/18 1.3749% 7,500,000.0000 AAA AA- 100.01 7,544,850.00 7,500,525.00 Fixed Income 3133782M2 F H L B DEB 1.500% 3/08/19 1.5062% 7,500,000.0000 AAA AA+ 99.59 7,589,190.00 7,469,175.00 Fixed Income 313383HU8 F H L B DEB 1,750% 6/12120 1.7619% 5,000,000.0000 AAA AA+ 99.32 51008,950.00 4,966,150.00 Fixed Income _ 313379RB7 F H L B DEB 1.875% 6/11121 1.8911% 4,000,000.0000 AAA AA+ 99.15 4,030,160.00 3,966,000.00 Fixed Incomee3313385S 19 F H L B DISC NTS 1/31/18 0.0000% 19,500,000.0000 N/A N/A 99.90 19,469,767.44 19,479,720.00 Fixed Income i3137EADP1 F H L M C 0.875% 3/07/18 0.8758% 5,000,000.0000 AAA AA+ 99.91 4,974,100.00 4,995,700.00 Fixed Income 3137EADP1 F H L M C 0.875% 3/07/18 0.8758% 2,500,000.0000 AAA AA+ 99.91 2,497,367.00 2,497,850.00 Fixed Income 3137EADN6 F H L M C M T N 0.750% 1112118 0.7501% 4,000,000.0000 W R N/R 99.98 3,974,000.00 3,999,360.00 Fixed Income 3137EAEA3 F H L M C M T N 0.750% 4/09/18 0.7514% 800,000.0000 N/A AA+ 99.82 798,240.00 798,528.00 Fixed Income 3137EADM8 F H L M C M T N 1.250% 10/02/19 1.2651% 7,500,000.0000 AAA AA, 98.81 7,399,650.00 7,410,675.00 Fixed Income 3137EAEK1 F H L M C M T N 1.875% 11/17/20 1.8849% 5,000,000.0000 N/A AA+ 99.48 4,986,225.00 4,973,800.00 Fixed Income 31348SWZ3 F H L M C#786064 3.187% 1/01/28 3.1099% 2,208.3300 N/A N/A 102.48 2,154.56 2,253.07 Fixed Income 3133TCE95 F H L M C MLTCL MTG 3.298% 8/15/32 3.1560% 25,362.8000 104.50 25,389.33 26,504.38 Fixed Income 31398VJ98 F H L M C MLTCL MTG 4.251% 1/25/20 4.1040% 900,000.0000 N/A N/A 103.58 951,046.88 932,238.00 Fixed Income 31394JY35 F H L M C MLTCL MTG 6.500% 9/25/43 5.6941% 877,411.7000 N/A N/A 114.15 993,668.74 1,001,600.55 Fixed Income 3135GOG72 FNMA 1.125% 12/14/18 1.1325% 5,000,000.0000 N/A AA+ 99.34 4,963,950.00 4,966,750.00 Fixed Income 3135GOF73 FNMA 1.500% 11/30/20 1.5224% 7,500,000.0000 N/A AA. 98.53 7,370,726.00 7,389,825.00 Fixed Income 3135GOT45 FNMA 1.875% 4/0522 1.8987% 5,000,000.0000 AAA AA+ 98.75 4,972,500.00 4,937,700.00 Fixed Income 3135GOS38 FNMA 2.000% 1/0522 2.0133% 3,000,000.0000 AAA AA+ 99.34 2,994,570.00 2,980,230.00 Fixed Income 31371NUC7 F N M A#257179 4.500% 4/01/28 4.2206% 20,890.1600 N/A N/A 106.62 22,093.39 22,273.30 Fixed Income _ 31376KT22 F N M A#357969 5.000% 9/01/35 4.6007% 135,435.1500 N/A N/A 108.68 145,592.77 147,189.57 Fixed Income 31381PDA3 FN MA#466397 3.51332%11/01/20 3.4225% 352,005.8400 N/A N/A 102.65 344,388.23 361,348.07 Fixed Income 31403DJZ3 F N M A#745580 5.000% 6/01/36 4.6046% 130,651.4900 N/A N/A 108.59 140,450.36 141,869.23 Fixed Income 31403GXF4 F N M A#748678 5.000%10/01/33 4.6376% 3,438.5900 N/A N/A 107.82 3,696.48 3,707.32 Fixed Income 31406PQY8 F N M A#815971 5.000% 3/01/35 4.6010% 225,691.2900 N/A N/A 108.67 242,618.16 245,250.98 Fixed Income 31406XWT5 F N M A#823358 3.336% 2/01/35 3.1758% 131,737.3600 N/A N/A 105.04 130,708.17 138,382.19 Fixed Income 31407BXH7 F N M A#826080 5.000% 7/01/35 4.6043% 24,658.3000 N/A N/A 108.60 26,507.65 26,777.68 Fixed Income 3141OF4V4 F N M A#888336 5.000% 7/01/36 4.6079% 253,500.1900 N/A N/A 108.51 272,512.71 275,070.52 Fixed Income 3138EG6F6 F N M A#AL0869 4.500% 6/01/29 4.2177% 14,575.6200 N/A N/A 106.69 15,415.15 15,551.31 Fixed Income 31417YAY3 F N M A#MA0022 4.500% 4/01/29 4.2200% 23,998.6000 N/A N/A 106.64 25,380.86 25,591.15 Fixed Income 3135GOJ20 F N M A DEB 1.375% 2/26/21 1.4046% 10,000,000.0000 AAA AA+ 97.90 10,040,950.00 9,789,500.00 Fixed Income 3135GOD75 F N M A DEB 1.500% 6/22/20 1.5180% 5,000,000.0000 AAA AA+ 98.81 4,955,650.00 4,940,700.00 Fixed Income 31397OREO F N M A GTD REMIC 1.113% 225/41 2.1941% 261,859.7600 N/A N/A 101.73 261,777.93 266,397.79 Fixed Income 36225CAZ9 G N M A 11#080023 2.250%122026 2.1762% 21,382.8500 N/A N/A 103.39 21,736.13 22,107.51 Fixed Income 36225CC20 G N M A 11#080088 2.625% 6/20/27 2.5381% 24,762.5400 N/A N/A 103.42 25,304.24 25,610.41 Fixed Income 36225CNM4 G N M A 1 1#080395 2.625% 4120/30 2.5338% 8,805.5400 IN N/A 103.60 8,725.72 9,122.54 Fixed Income 36225CN28 G N M A 11#080408 2.625% 5/20/30 2.5340% 70,682.1700 N/A N/A 103.59 69,964.31 73,221.07 2of4 U.S. Bank Investment Listing-Yield As of 12/31/2017 Asset Category CUSIP Asset Short Name Yield Shams/Units Moody's S&P Rating Price Cost Basis Market Value Fixed Income 36225DCB8 G N M A 11#080965 2.750% 7/20/34 2.6451% 68,582.5000 N/A N/A 103.97 68,539.64 71,303.17 Fixed Income 3837H4NX9 G N M A GTD REMIC 1.764% 2/16/30 1.9830% 19,965.2500 N/A N/A 100.39 19,965.25 20,043.31 Fixed Income 36962G7MO GENERAL ELEC CA MTN 2.200% 1/09120 2.2022% 5,000,000.0000 A2 A 99.90 51014,950.00 4,994,900.00 Fixed Income 38141GFG4 GOLDMANSACHSGP 5.950% 1/18/18 5.9406% 600,000.0000 WR N/R 100.16 692,806.00 600,948.00 Fixed Income 43814OAC2 HONDA AUTO 1.390% 4/15/20 1.3946% 1,764,246.4600 AAA N/A 99.67 1,764,212.24 1,758,424.45 Fixed Income 43814TAB8 HONDA AUTO 1.420% 7/22/19 1.4219% 1,270,353.6700 AAA N/A 99.87 1,270,323.31 1,268,638.59 Fixed Income 43814PAB6 HONDA AUTO 1.570% 1/21/20 1.5744% 965,000.0000 N/A AAA 99.72 964,914.21 962,317.30 Fixed Income 40428HPH9 HSBC USA INC 1.625% 1116118 1.6251% 1,000,000.0000 WR N/R 99.99 1,000,340.00 999,930.00 Fixed Income 40428HPH9 HSBC USA INC 1.625% 1116118 1.6251% 3,000,000.0000 WR N/R 99.99 3,003,290.00 2,999,790.00 Fixed Income 40428HPR7 HSBC USA INC 2.350% 3/05/20 2.3503% 2,500,000.0000 A2 A 99.99 2,472,287.50 2,499,675.00 Fixed Income 4581XOCX4 INTER AMER DEV BK 1.625% 5/12/20 1.6404% 3,035,000.0000 AAA AAA 99.06 3,027,807.05 3,006,501.35 Fixed Income 4581XOCZ9 INTER AMER DEV BK 1.750% 9/14/22 1.7933% 1,500,000.0000 N/A N/A 97.58 1,471,005.00 1,463,745.00 Fixed Income 4581XOCW6 INTER AMER DEVBK 2.125% 1/18/22 2.1345% 3,000,000.0000 AAA N/A 99.56 2,996,310.00 2,986,710.00 Fixed Income 4581X0CS5 INTER AMERICAN DEVEL 1.875% 3/15/21 1.8922% 3,500,000.0000 AAA AAA 99.09 3,590,405.00 3,468,115.00 Fixed Income 4581XOBZO INTER AMERN DEV BK 0.875% 3/15/18 0.8760% 3,000,000.0000 AAA AAA 99.89 2,996,040.00 2,995,580.00 Fixed Income 459058FY4 INTL BK 2.000% 12622 2.0194% 10,000,000.0000 AAA N/A 99.04 10,006,350.00 9,903,700.00 Fixed Income 45950KBX7 INTL FINANCE CORP 0.875% 6/15/18 0.8782% 2,500,000.0000 AAA AAA 99.64 2,490,715.00 2,490,950.00 Fixed Income 45950KCJ7 INTL FINANCE CORP 1.125% 7/20/21 1.1691% 2,500,000.0000 AAA AAA 96.23 2,441,600.00 2,405,700.00 Fixed Income 24422ESS9 JOHN DEERE CAP MTN 2.300% 9/16/19 2.2985% 5,000,000.0000 A2 A 100.06 5,046,984.00 5,003,200.00 Fixed Income 24422EST7 JOHN DEERE M T N 1.350% 1116118 1.3503% 1,000,000.0000 WR N/R 99.98 999,619.50 999,800.00 Fixed Income 47788NAB4 JOHN DEERE OWNER 1.090% 2/15/19 1.0907% 782,842.6700 AAA N/A 99.94 782,794.92 782,357.31 Fixed Income 47788MAC4 JOHN DEERE OWNER 1.360% 4/15/20 1.3638%1 2,235,401.8800 AAA N/A 99.72F 2,235,050.03 2,229,165.11 Fixed Income 47787XAB3 JOHN DEERE OWNER 1.500%10/15/19 1.5020% 1,399,163.4900 AAA N/A 99.87 1,399,157.89 1,397,330.59 Fixed Income 47788BABO JOHN DEERE OWNER 1.590% 4/15/20 1.5940% 960,000.0000 AAA N/A 99.75 959,916.58 957,619.20 Fixed Income 47788BAD6 JOHN DEERE OWNER 1.820%10/15/21 1.8337% 675,000.0000 AAA N/A 99.25 674,950.59 669,964.50 Fixed Income 46625HGYO JP MORGAN CHASE&CO 6.000% 1/15/18 5.9917% 1,000,000.0000 WR N/R 100.14 1,032,600.00 1,001,390.00 Fixed Income 46625HKA7 JPMORGAN CHASE CO 2.250% 1/23/20 2.2515% 2,000,000.0000 A3 A- 99.93 1,994,880.00 1,998,660.00 Fixed Income 46623EKDO JPMORGAN CHASE MTN 1.700% 3/01/18 1.7002% 1,000,000.0000 A3 A- 99.99 999,780.00 999,900.00 Fixed Income 525ESCOY6 LEHMAN BIRTH HLD ESC 0.0000% 2,000,000.0000 1,070,782.46 Fixed Income 525ESCIB7 LEHMAN BIRTH MTN ES 0.00001% 1/24/13 0.0002% 600,000.0000 N/A N/A 4.60 331,903.74 27,600.00 Fixed Income 58933YAGO MERCK CO INC 1.300% 5118118 1.3024% 1,000,000.0000 Al AA 99.82 998,880.00 998,180.00 Fixed Income 594918BP8 MICROSOFT CORP 1.550% 8/08/21 1.5919% 3,045,000.0000 AAA AAA 97.37 3,041,385.15 2,964,825.15 Fixed Income 61747WAL3 MORGAN STANLEY 5.500% 7/28/21 5.0282% 2,800,000.0000 A3 BBB. 109.38 3,200,848.00 3,062,752.00 Fixed Income 64971M5E8 NEW YORK NYCITY 4.075% 11/01/20 3.8835% 1,400,000.0000 AA1 AAA 104.93 1,400,000.00 1,469,048.00 Fixed Income 65478WAB1 NISSAN AUTO 1.070% 5/15/19 1.0708% 718,603.8100 AAA N/A 99.93 718,575.50 718,079.23 Fixed Income 654747ABO NISSAN AUTO 1.470% 1/1520 1.4727% 1,250,667.5100 AAA N/A 99.82 1:250,861.13 1:248,416.31 Fixed Income 674599CK9 OCCIDENTAL PETROLEUM 2.600% 4/15/22 2.5944% 3,350,000.0000 A3 A 100.22 3,354,589.50 3,357,202.50 3of4 U.S. Bank Investment Listing-Yield As of 12/31/2017 Asset Category CUSIP Asset Short Name Yield Shams/Units Moody's S&P Rating Price Cost Basis Market Value Fixed Income 674599CD5 OCCIDENTAL PETROLM 1.500% 2/15/18 1.5009% 2,000,000.0000 A3 A 99.94 1,986,340.00 1,998,740.00 Fixed Income 69353REJ3 PNC BANK NA MTN 1.500% 2123118 1.5005% 1,000,000.0000 A2 A 99.97 1,000,320.00 999,690.00 Fixed Income 73358WAG9 PORT AUTH NY NJ 5.309% 12/01/19 5.0172% 2,440,000.0000 AA3 AA. 105.82 2,507,633.89 2,581,934.80 Fixed Income 747525AD5 QUALCOMM INC 2.250% 5/20/20 2.2675% 5,000,000.0000 Al A 99.23 4,995,195.40 4,961,450.00 Fixed Income 83162CLJO S B A GTD DEV PART 6.340% 3/01/21 6.0921%1 47,016.4800 N/A N/A 1 104.07 47,016.48 48,929.58 Fixed Income 78445JAA5 S L M A 2.93114% 42523 2.8645% 30,325.6100 BAA3 AA- 102.33 30,202.58 31,031.29 Fixed Income 89236WAC2 TOYOTA AUTO 1.120% 2/15/19 1.1208% 533,629.5400 AAA AAA 99.93 533,548.85 533,229.32 Fixed Income 912828WUO U S TREASURY I P S 0.125% 7/15/24 0.1265% 10,803,936.0000 AAA N/A 98.83 10,659,218.0: 10,676,989.75 Fixed Income 912828P20 U $TREASURY NT 0.750% 1/31/18 0.7503% 35,000,000.0000 AAA N/A 99.96 34,963,766.76 34,986,700.00 Fixed Income 912828UR9 U $TREASURY NT 0.750% 2/28/18 0.7507% 3,500,000.0000 AAA N/A 99.91 3,496,457.04 3,496,710.00 Fixed Income 912828UU2 U $TREASURY NT 0.750% 3/31/18 0.7512% 5,000,000.0000 AAA N/A 99.85 4,991,015.63 4,992,250.00 Fixed Income 912828568 U $TREASURY NT 0.750% 7/31/18 0.7537% 5,000,000.0000 AAA N/A 99.51 4,975,195.31 4,975,400.00 Fixed Income 912828H37 U S TREASURY NT 0.875% 1115118 0.8751% 10,500,000.0000 W R N/A 99.99 10,493,983.27 10,498,740.00 Fixed Income 912828045 U $TREASURY NT 0.875% 3/31/18 0.8761% 13,000,000.0000 AAA N/A 99.88 12,981,523.44 12,983,750.00 Fixed Income 912828VE7 U $TREASURY NT 1.000% 5/31/18 1.0020% 8,000,000.0000 AAA N/A 99.80 7,983,750.00 7,983,760.00 Fixed Income 912828T34 U S TREASURY NT 1.125% 9/3021 1.1659% 7,000,000.0000 AAA N/A 96.49 6,757,914.08 6,754,160.00 Fixed Income 912828T67 U S TREASURY NT 1.250% 10/31/21 1.2903% 6,000,000.0000 AAA N/A 96.88 5,813,691.98 5,812,500.00 Fixed Income 912828N89 U S TREASURY NT 1.375% 1/3121 1.4017% 6,000,000.0000 AAA N/A 98.09 5,895,840.41 5,885,640.00 Fixed Income 9128281-99 U S TREASURY NT 1.375% 10/31/20 1.3975% 10,000,000.0000 AAA N/A 98.39 9,850,311.40 9,838,700.00 Fixed Income 912828833 U $TREASURY NT 1.500% 1/31/19 1.5055% 11,000,000.0000 AAA N/A 99.63 11,042,439.19 10,959,630.00 Fixed Income 912828SN1 U $TREASURY NT 1.500% 3/31/19 1.5063% 5,000,000.0000 AAA N/A 99.58 5,016,423.00 4:979,100.00 Fixed Income 912828XE5 U S TREASURY NT 1.500% 5/3120 1.5149% 5,000,000.0000 AAA N/A 99.02 4,966,423.00 4,950,800.00 Fixed Income 912828G61 U S TREASURY NT 1.500% 11/30/19 1.5109% 7,500,000.0000 AAA N/A 99.28 7,449,634.50 7,445,775.00 Fixed Income 912828WS5 U S TREASURY NT 1.625% 6/30/19 1.6307% 2,000,000.0000 AAA N/A 99.65 1,996,861.44 1,993,040.00 Fixed Income 912828W W U S TREASURY NT 1.625% 7/31/19 1.6310% 5,000,000.0000 AAA N/A 99.63 5,012,388.70 4,981,650.00 Fixed Income 912828.176 U S TREASURY NT 1.750% 3/3122 1.7792% 5,000,000.0000 AAA N/A 98.36 4,976,383.94 4,917,950.00 Fixed Income 912828XW5 U S TREASURY NT 1.750% 6/3022 1.7822% 5,000,000.0000 AAA N/A 98.19 4,973,454.25 4,909,550.00 Fixed Income 912828F39 U S TREASURY NT 1.750% 9/30/19 1.7540% 5,800,000.0000 AAA N/A 99.77 5,873,186.87 5,786,834.00 Fixed Income 9128281-57 U S TREASURY NT 1.750% 9/3022 1.7858% 13,000,000.0000 AAA N/A 98.00 12,763,554.69 12,739,480.00 Fixed Income 912828U65 U S TREASURY NT 1.750% 11/30/21 1.7747% 7,000,000.0000 AAA N/A 98.61 6,90',492.20 6,902,420.00 Fixed Income 912828V72 U S TREASURY NT 1.875% 1/3122 1.8947% 3,000,000.0000 AAA N/A 98.96 3,004,814.74 2,968,830.00 Fixed Income 9128281-24 U S TREASURY NT 1.875% 8/3122 1.9017% 6,000,000.0000 AAA N/A 98.59 5,987,832.60 5,915,640.00 Fixed Income 912828M80 U S TREASURY NT 2.000% 11/30/22 2.0184% 8,000,000.0000 AAA N/A 99.09 7,907,500.00 7,927,200.00 Fixed Income _ 913366EJ5 UNIV OF CALIFORNIA 5.035% 5/1521 4.6712% 400,000.0000 AA3 AA. 107.79 400,000.00 431,156.00 Fixed Income i94974BGM6 WELLS FARGO CO MTN 2.600% 72220 2.5841% 5,000,000.0000 A2 A 100.62 5,001,650.00 5,030,800.00 Total Consolidated 540,102,203.54 4of4 U.S. Bank Asset Detail - Consolidated As of 12/31/2017 CUSIP Asset Shod Name Price Shams/Units Cost Basis Market Value Percent of Total Unrealized Galn&oss Cash Equivalents 02665KBN6 AMERICAN HONDA FINANCE C P 222118 99.7680 1,000,000,0000 997,237.50 997,680,00 0.18 442.50 06538CAX9 BANK OF TOKYO MITSUBIS C P 1/31118 99.8740 2,000,000,0000 1,996,355.56 1,997,480.00 0.3] 1,124.44 06538CCD1 BANK OF TOKYO MITSUBIS C P 3/13/18 99.6710 1 000,0000000 994,965.28 996,710.00 0.18 1,74 ,72 06538CCD1 BANK OF TOKYO MITSUBIS C P 3113118 99.6710 6,665,000,0000 6,631,443.58 6,643,072,15 1.23 11,628,57 313385RR9 F H L B DISC NTS 1111118 99.9680 4,750,000,0000 4,746,648.61 4,748,480,00 0,88 1,831,39 313385RR9 F H L B DISC NTS 1/11118 99.9680 4,750,000,0000 4,746,648.61 4,748,480,00 0S8 1,831,39 313385RX6 F H L B DISC NTS 1117118 99.9460 1,000,000,0000 999,075.56 999,46000 0.19 384.44 313385RZ1 FH LB DISC NTS 1/19118 99.9390 12,100,000,0000 12,089A59.00 12,092,619,00 224 3,160,00 313385SE7 F H L B DISC NTS 124118 99.9210 6,225,000,0000 6,219,094.03 6,220,082.25 1,15 988,22 313385SL1 F H L B DISC NTS 1/30118 99.9000 3,600,000,0000 3,594,711.00 3,596,400.00 0.67 1,689.00 31846V567 FIRST AM GOVT OB FD CL Z 100.0000 1,548,257.0500 1,548,257.05 1,548,257.05 0.29 - 31846V567 FIRST AM GOUT OB FD CL Z 100.0000 15,653,3135100 15,653,313.51 15,653,313.51 2.90 693726AP5 PACCAR FINANCIAL CORP C P 1/23118 99.9080 1,500,WD,0000 1,497,643.75 1,498,620.00 0,28 976.25 880590SD7 T V A DISC NTS 123118 99.9250 10,000,000.0000 9,988,358.33 9,992,500.00 1.85 4,141.67 880590SD7 T V A DISC NTS 123118 99.9250 8,000,000.0000 7,990,686.67 7,994,0D0.00 1.48 3,313.33 _ 89233HAW4 TOYOTA MOTOR CREDIT CO C P 1130/18 99.8780 1,300,000.0000 1,296,197.50 1,298,414.00 0.241 2,216.50 Cash Equivalents Total 81,091,570.5600 80,990,095.5400 81,025,567.9600 15.001 35,472A200 Fixed Income 00440EAUl ACE INA HOLDINGS 2.875%11/03122 101.3620 4,169,000,0000 4,232A53.17 4,225,781.78 0.78 (6,671.39) 025816AY5 AMERICAN EXPRESS 7.000% W19/18 101.0710 2,900,0000000 3,3T,385.79 2,931,059.00 0.54 (446,326.79) 02665WATB AMERICAN HONDA MTN 1.500% 3113118 99.9640 1,000,000,0000 11001,140.00 999,640.00 OAS (1,500.00) 02665WAH4 AMERICAN HONDA MTN 2.250% 8115/19 100.1500 4,000,000,0000 4,046,640.00 4,006,000.00 0,74 (40,640.00) 03215PFN4 AMRESCO 0.0319% 625129 94.6040 133,743,2900 10OA32.85 128,526.50 0.02 26,093.65 0378336SB APPLE INC 2.250% =3/21 99.8830 4,000,000.0000 4,050,840.00 3,995,320.00 0,74 (55,520.00) 06406HCW7 BANK NV MELLON MTN 2.300% 9/11119 100.2610 2,120,000,0000 2,142,175.20 2,125,533.20 0.39 (16,642.00) 06417GXH6 BANK OF NOVA CD 1.570% 8109/18 99.7980 5,825,000,0000 5,825,000.00 5813,233.50 1,08 (11,766,50) 06406HCE7 BANK OF NV MTN 1.300% 1125118 99.9620 870,000,0000 869,364.90 869,669,40 OAF 304.50 06406RAA5 BANK OF NV MTN 2.600% 210722 100.2290 2,500,000,0000 2,504,475.00 2,505,725,00 046 1,250.00 073902CD8 BEAR STEARNS CO INC 4.650% 7102/18 101.3210 3,200,000,0000 3,523,520.00 3,242,272,00 060 (281,248.00) 084664BEO BERKSHIRE HATH 5.400% 5/15118 101.2490 1,000,000,0000 1,016,250.00 1,012,490,00 0,19 (3,760.00) 084664BT7 BERKSHIRE HATHAWAY 3.000% 5/1522 102.3060 4,000,000,0000 4,131,120.00 4,092,240,00 0]6 (38,880.00) 808513AK1 ICHARLES SCHWAB CORP 1.500% 3/10118 99.9310 1,000,000,0000 1,001,100.00 999,310,00 0.19 (1,790.00) 808513AJ6 CHARILES SCHWAB CORP 2.200% 725118 100.1290 930,000,0000 931,841.40 §31,199,70 0.17 (641.70) 166764BG4 CHEVRON CORP 2.100% 5/16121 99.1810 2,500,000,0000 2,485,350.00 2A79,525.00 0.46 (5,825,00) 17275RAU6 CISCO SYSTEMS INC 1.650% 6115118 99.9150 1,000,000,0000 1,000,150.00 999,150,00 0.18 (1,000.00) 532457BF4 ELI LILLY CO 1.950% 3/15119 99.9180 4,000,000,0000 4,009,675.00 3,996,720,00 0.74 (12,955.00) 30231GAL6 EXXON MOBIL 1.305% 3/06118 99.9080 1,000,000,0000 999,620.00 999,080,00 0.18 (540.00) 30231GAV4 EXXON MOBIL 2.222% 310121 99.Aw 3,000,000,0000 3,016,097.40 2,993,280,00 0.55 (22,817.40) 3130A7CV5 F H L B DEB 1.375% 2/18/21 97.7630 5,365,000,0000 5,343,325.40 5,244,984.95 0.97 (98,340.45) 313378A43 F H L S DEB 1.375% 3/09118 100.00701 7,500,000,0000 7,544,850.00 7,500,525,00 1.39 (44,325.00) 1 of U.S. Bank Asset Detail - Consolidated As of 12/31/2017 CUSIP Asset Shod Name Prim Shares/Units Cost Basis Market Value Percent of Total Unrealized GalnlLoss 3133782M2 FH LB DEB 1.500% 3/08119 99.5890 7,500,000,0000 7,589,190.00 7,469,175,00 1.38 (120,015.00) 313383HU8 F H L B DEB 1.750% 6/12120 99.3230 5,000.000,0000 5,008,950.00 4,966,150,00 0.92 (42,800.00) 313379RB7 F H L S DEB 1.875% 6/11121 99.1500 4,000,000,0000 4,030,160.00 3,966,000,00 0.73 (64,160.00) 313385SM9 F H L B DISC NITS 1/31118 99.8960 19,500,000,0000 19,469,767.44 19,479,720,00 3.61 9,952,56 3137EADP1 F H L M C 0.875% "7118 99.9140 2,500,000,0000 2,497,367.00 2,497,850,00 0.46 483,00 3137EADP1 F H L M C 0.875% 3107,18 99.9140 5,000,000,0000 4,974,100.00 4,995,700,00 0.92 21,600,00 3137EADN6 F H L M C M T N 0.750% 1/12/18 99.9840 4,000,000,0000 3,974,000.00 3,999,36000 0.74 25,360.00 3137EAEA3 F H L M C M T N 0.750% 4/09118 99.8160 800,000,0000 798,240.00 798,528,00 OA5 288,00 3137EADMB F H L M C M T N 1.250%10102119 98.8090 7,500,000,0000 7,399,650.00 7,410,675,00 1.37 11,025.00 3137EAEK1 FHLMCMTN 1.875%11/1720 99.4760 5,000,000,0000 4,956.225.00 4,973,800,00 092 (12,425.00) 31348SW23 FH LMC#786%4 3.187% 1/01128 102.4790 2,208,3300 2,154.56 2,263,07 0.00 108,51 3133TCE95 F H L M C MLTCL MTG 3.298% 8/15/32 104.5010 25,362,8000 25,389.33 26,504.38 0.00 1,115,05 31398VJ98 F H L M C MLTCL MTG 4.251% 1125/20 103.5820 900,000,0000 951,046.88 932,238,00 0,17 (18,808.88) 31394JY35 F H L M C MLTCL MTG 6.500% 9125/43 114.1540 877,411,7000 993,668.74 1,001,600.55 OA9 7,931.81 3135GOG72 FNMA 1.125%12M4/18 99.3350 5,000,000,0000 4,963,950.00 4,966,750,00 0,92 2,800,00 3135GOF73 FNMA 1.500%11130/20 98.5310 7,500,000,0000 7,370,726.00 7,389,825,00 1.37 19,099.00 3135GOT45 FNMA 1.875% 4/05/22 98.7540 5,000,000,0000 4,972,500.00 4,937,700,00 0,91 (34,800.00) 3135GOS38 FNMA 2.000% 1105/22 99.3410 3,000,000,0000 2,994,570.00 2,980,230,00 0.55 (14,340.00) 31371NUC7 FN MA 9257179 4.500% 4/0128 106.6210 20,890,1600 22,093.39 22,273.30 0,00 179.91 31376KT22 FN MA#357969 5.000% 9/01/35 108.6790 135,435,1500 145.592T 147,189.57 0.03 1,596.80 31381PDA3 FN MA#466397 3.51332%11/01120 102.6540 352,005,8400 344,388.23 361,348.07 0,07 16,959,84 31403DJZ3 F N M A#745580 5.000% 6/01/36 108.5860 130,651,4900 140.450.36 141,869.23 0.03 1,418S7 31403GXF4 FNMA#748678 5.000%10101133 1078150 3,438.5900 3,696.48 3,701.32 0.00 10.84 31406POVB F N M A#815971 5.000% 3/01/35 108.6710 225,691,2900 242,618.16 245,260.98 0.05 2,64282 31406XWT5 FN MA#823358 3.336% 2101/35 105.0440 131,737,3600 130,708.17 138,382,19 0,03 7,674,02 31407BXH7 FN MA#826080 5.000% VOWS 108.5950 24,658,3000 26,507.65 26,777,68 0.00 270,03 3141OF4V4 FN MA#888336 5.0D0% 7101/36 108.5090 253,5001900 272,512.71 275,070,52 0,05 2,557.81 3138EG6F6 FN MA#AL0869 4.500% 6/0129 106.6940 14,575,6200 15,415.15 15,551,31 0.00 136,16 31417VAV3 FN MA#MA0022 4.500% 4101129 106.6360 23,99B.6000 25,380.86 25,591,15 0,00 210,29 3135GOJ20 FN MA DEB 1.375% 2/26/21 97.8950 10,000,000,0000 10,040,950.00 9,789,500,00 1S1 (251,450.00) 3135GOD75 FN MADES 1.50D% 612220 WSW 5,000,000,0000 4,955,650.00 4,940,700.00 0,91 (14,950.00) 31397OREO F N M A GTD REMIC 1.113% 2/25/41 101.7330 261,859,7600 261,777.93 266,397,79 0.05 4,619.86 36225CAZ9 G N M A 11#0800232.250%12120126 103.3890 21,382.8500 21,736.13 22,107,51 0,00 371,38 36225CC20 G N M A I1#0800882.625% 612027 103.4240 24,762,5400 25,304.24 25,610,41 0.00 306,17 36225CNM4 G N M A 11#0803952.625% 4120/30 103.6000 8,805,5400 8,725.72 9,122,54 0,00 396,82 36225CN28 G N M A I 1#080408 2.625% 5120/30 103.5920 70,682,1700 69,964.31 73,221.07 0.01 3,256,76 36225DCB8 G N M A 11#0809652.750% 7120/34 103.9670 68,582,5000 68,539.64 71,303,17 0,01 2,763,53 3837H4NX9 G N M A GTD REMIC 1.764% V16/30 100.3910 19,965,2500 19,965.25 20,043.31 0.00 78,06 36962G7MO GENERAL ELEC CA MTN 2.200% 110920 99.8980 5,000,000,0000 5,014,950.00 4,994,90000 0,92 (20,050,00) 38141GFG4 GOLDMAN SACHS GP 5.950% 1/18/18 100.1580 600,000,0000 692,806.00 600,948,00 0A1 (91,858.00) 43814OAC2 HONDA AUTO 1.390% 4115/20 99.6700 1,764,246,4600 1,764,212.24 1,758,424.45 0,33 (5,787.79) 43814TABB HONDAAUTO 1.420% 7122119 99.8650 1,270.353,6700 1,270,323.31 1,268,638.691 0.23 (1,684.62) 2 a14 U.S. Bank Asset Detail - Consolidated As of 12/31/2017 CUSIP Asset Short Name PHee Shares/Units Cost Basis Market Value Percent of Total Unrealized GaInlLoss 43814PAB6 HONDAAUTO 1.570% 112120 99.7220 965,000,0000 964,914.21 962,317,30 0,18 (2,596.91) 40428HPH9 HSBC USA INC 1.625% 1/16118 99.9930 1,000.000,0000 1,000,340.00 999,930,00 0.19 (410.00) 40428HPH9 HSBC USA INC 1.625% 1/16118 99.9930 3,000,000,0000 3,003,290.00 2,999,790,00 0,56 (3,500.00) 40428HPR7 HSBC USA INC 2.350% 3/05120 99.9870 2,500,000,0000 2,472,287.50 2A99,675.00 0.46 27,387,50 4581XOCX4 INTER AMER DEV BK 1.625% 5/12/20 99.0610 3,035,000,0000 3,027,807.05 3,006,501,35 0.56 (21,305.70) 4581XOCZ9 INTER AMER DEV BK 1.750% 9/14122 97.5830 1,500,000,0000 1,471,005.00 1,463,745.00 0.27 (7,260.00) 4581XOCW6 INTER AMER DEV BK 2.125% 1/18122 99.5570 3,000,000,0000 2,996,310.00 2,986,710,00 0,55 (9,600.00) 4581XOCS5 INTER AMERICAN DEVEL 1.875% 3/1521 99.0890 3,500,000,0000 3,590,405.00 3,468,115,00 064 (122,290.00) 4581XOBZO INTER AMERNDEVBK 0.875% 3115118 99.8860 3,000,000,0000 2,996,040.00 2,996,580,00 0,55 540.00 459058FY4 INTL BK 2.000% 112622 99.0370 10,000,000,0000 10,006,350.00 9,903,700,00 1S3 (102,650.00) 45950KBX7 INTL FINANCE CORP 0.875% 6115118 99.6380 2,500,000,0000 2,490,715.00 2A90,95000 046 235,00 45950KCJ7 INTL FINANCE CORP 1.125% 7I20/21 96.2280 2,500,000,0000 2,441,600.00 2AO5,700.00 045 (35,900.00) 24422ESS9 JOHN DEERE CAP MTN 2.300% 9116/19 100.0640 5,000,000,0000 5,046,984.00 5,003,200,00 0,93 (43,784.00) 24422EST7 JOHN DEERE M TN 1.350% 1/16118 99.9800 1,000,000,0000 999.619.50 999800.00 0.19 180,50 47788NAB4 JOHN DEERE OWNER 1.090% 2115119 99.9380 782,a42.W00 782,794.92 782:357.31 0,14 (437.61) 47788MAC4 JOHN DEERE OWNER 1.360% 4/15120 99.7210 2,235,401,8800 2,235,050.03 2,229,165,11 041 (5,884.92) 47787XA63 JOHN DEERE OWNER 1.500%10115/19 99.8690 1,399,163,4900 1,399,157.89 1,397,330,59 0,26 (1,827.30) 47788BMO JOHN DEERE OWNER 1.590% 4/15/20 99.7520 960,000,0000 _ 959,916.58 957,619,20 OA8 (2,297.38) 47788BAD6 JOHN DEERE OWNER 1.820%10115/21 99.2540 675,000,0000 674,950.59 669,964.50 0,12 (4,986.09) 46625HGYO JP MORGAN CHASE&CO 6.000% 1/15/18 100.1390 1,000,000,0000 1,032,600.00 1,001,390,00 OA9 (31,210.00) 46625HKA7 JPMORGAN CHASE CO 2.250% 1123120 99.9330 2,000,000,0000 1,994,880.00 1,998,660.00 0,37 3,780,00 46623EKDO JPMORGAN CHASE MTN 1.700% 3/01/18 99.9900 1,000,000,0000 999,780.00 999,900,00 0.19 120,00 525ESCOY6 LEHMAN BIRTH HLD ESC - 2,000p0O0000 1,070,782.46 - - (1,070,782.46) 525ESCIB7 LEHMAN BIRTH MTN ES 0.00001% 124113 4.6000 600,000,0000 331,903.74 27,600.00 0.01 (304,303.74) 58933YAGO MERCK CO INC 1.300% 5118/18 99.8180 1,000,000,0000 998,880.00 998,180,00 0,18 (700.00) 594918BP8 MICROSOFT CORP 1.550% 8/08121 97.3670 3,045,000,0000 3,041,385.15 2,964,825,15 0.55 (76,560.00) 61747WAU MORGAN STANLEY 5.500% 7128/21 109.3840 2,800,000,0000 3,200,848.00 3,062,752,00 0,57 (138,09600) 64971 M5E8 NEWYORKNYCITY 4.075%11/01120 104.9320 1,400,000,0000 1,400,000.00I 1,469,048.00 027 69,w&00 65478WA61 NISSAN AUTO 1.070% 5115/19 99.9270 718,603,8100 718,575.50 718,079,23 0,13 (496.27) 654747MO NISSAN AUTO 1.470% 111520 99.8200 1,250,667.5100 1,250,661.13 1,248,416,31 023 (2,244.82) 674599CK9 OCCIDENTAL PETROLEUM 2.600% 4115122 100.2150 3,350,000,0000 3,354,589.50 3,357,202,50 0,62 2,613,00 674599CD5 OCCIDENTAL PETROLM 1.500% 2/15118 99.9370 2,000,000,0000 1,966,340.00 1,998,740,00 0.37 12,400,00 69353REJ3 PNC BANK NA MTN 1.500% 2123/18 99.9690 1,000,000,0000 1,000,320.00 999,690,00 0.19 (630.00) 73358WAG9 PORT AUTH NV NJ 5.309%12/01/19 105.8170 2,440,000.0000 2,507,633.89 2,581,934.80 04S 74,300,91 747525AD5 OUALCOMM INC 2.25U% 512020 99.2290 5,000,000,0000 4,995,195.40 4,961,450,00 0,92 (33,745.40) 83162CUO S B A GTD DEV PART 6.340% 3/01121 104.0690 47,016,4800 47,016.48 48,929,58 0.01 1,913,10 78445JAA5 S L M A 2.87698% 425123 102.3270 30,325,6100 30,202.58 31,031,29 0.01 828]1 89236WAC2 TOVOTAAUTO 1.120% 2/15/19 99.9250 533,629,5400 533,548.85 533,229.32 0.10 (319.53) 912828W UO U S TREASURY I P S 0.125% 711524 98.8250 10,803,936,0000 10,659,216.09 10,676,989,75 1,98 17,773.66 912828P20 USTREASURYNT 0.750% 1/31118 99.9620 35,000,000,0000 34,963,766.76 34,986,700,00 64S 22,933.24 912828UR9 USTREASURYNT 0.750% 2128118 99.9060 3,500,000,0000 3,4%A57.04 3,496,710,00 065 252.96 912828UU2 USTREASURYNT 0.750% 3/31118 99.8450 5,000,000,0000 4,991,015.63 4,992,250,00 0.92 1,234.37 3d4 U.S. Bank Asset Detail - Consolidated As of 12/31/2017 CUSIP Asset Short Name Pdce Shares/Units Cost Basis Market Value Percent of Total Unrealized Gain/Loss 912828568 U S TREASURY NT 0.750% 7/31118 99.5080 5,000,000,0000 4,975,195.31 4,975,400,00 092 21A 69 912828H37 US TREASURY NT 0.875% 1/15118 99.9880 10,500,000,0000 10,493,983.27 10,498,740,00 1.94 4,756,73 912828045 US TREASURY NIT 0.875% 3/31118 99.8750 13,000,W0,0000 12,%1,523.44 12,983,750,00 2.40 2,226,56 912828VE7 USTREASURYNT 1.000% 5/31118 99.7970 8,000,000.0000 ],983,750.00 7,983,760.00 1.48 10.00 91282BT34 US TREASURY NIT 1.125% 9/30121 96.4880 7,000,000,0000 6,757,914.08 6,754,160.00 1.25 (3,754.08) 912828T67 UB TREASURY NT 1.250%10/31/21 96.8750 6,000,000,0000 5,813,691.98 5,812,500,00 1.08 (1,191.98) 91282BN89 US TREASURY NIT 1.375% 1/31121 98.0940 6,000,000,0000 5,895,840.41 5,885,640.00 1.09 (10,20041) 9128281-99 US TREASURY NT 1.375%10131120 98.3870 10,000,000,0000 9,850,311.40 9,838,700,00 1.82 (11,611.40) 912828633 US TREASURY NIT 1.500% 1/31119 99.6330 11,000,000,0000 11,042,439.19 10,959,630,00 2.03 (82,809.19) 912828SN1 UB TREASURY NT 1.500% 3/31/19 99.5820 5,000,000,0000 5,016,423.00 4,979,100.00 0.92 (37,323.00) 912828XE5 US TREASURY NIT 1.500% 5/31120 99.0160 5,000,000,0000 4,966,423.00 4,950,800.00 0.92 (15,623.00) 912828G61 US TREASURY NT 1.500%11130119 99.2770 7,500,000,0000 7,449,634.50 7,445,775.00 1.38 (3,859.50) 912828WS5 USTREASURYNIT 1.625% W0119 99.6520 2,000,000,0000 1,996,861.44 1,993,040.00 0,37 (3,82144) 912828WW6 USTREASURYNT 1.625% 7/31119 99.6330 5,000,000,0000 5,012,388.70 4,981,650,00 0.92 (30,738.70) 91282BJ76 USTREASURYNIT 1.750% 3/31122 98.3590 5,000,000,0000 4,976,383.94 4,917,950,00 0,91 (58,433.94) 912828=5 USTREASURYNT 1.750% 6/30122 98.1910 5,000,000,0000 4,973,454.25 4,909,550,00 0.91 (63,904.25) 91282BF39 USTREASURYNIT 1.750% 9/30119 99.7730 5,800,000,0000 5,873,186.87 5,786,834.00 1,07 (86,352.87) 912828L57 USTREASURYNT 1.750% 9/30122 97.9960 13,000,000,0000 12,763,554.69 12,739,480,00 2.36 (24,074.69) 91282BU65 US TREASURY NIT 1.750%11130/21 98.6060 7,000,000,0000 6,900,492.20 6,902,420,00 1,28 1,927,80 912828V72 US TREASURY NT 1.875% 1/31122 98.9610 3,000,000,0000 3,OO ,814.74 2,968,830,00 0.55 (35,984.74) 91282BL24 US TREASURY NIT 1.875% 8/31122 98.5940 6,000,000,0000 5,987,832.60 5,915,640.00 1,10 (72,192.60) 912828MBO US TREASURY NT 2.000%11130122 99.0900 8,000,000,0000 7,907,500.00 7,927,200,00 147 19,700.00 913366EJ5 UNIV OF CALIFORNIA 5.035% 5/15121 107.7890 400,000,0000 400,000.00 431,156.00 0.08 31,156,00 94974BGM6 WELLSFARGOCOMTN 2.600% 7/22/20 100.6160 5,000,000,0000 5,001,650.00 5,030,800,00 0.93 29,150,00 Fixed Income Total 463,816,536A400 462,929,114.2400 459,076,635.5800 85.00 (3,852.478.6600) Grand Total 544,908,107.0000 549,919,209.7800 540,102,203.5400 100.00 (3,917,006.2400) 4 0l4 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 PostDate CUSIPid Explanation Units Price Not Cash Amt Cost Gain/Loss ACQUISITIONS 12/01/2017 808513AJ4 PURCHASED PAR VALUE OF CHARLES SCHWAB CORP 930,000.0000 1.001980 (931,841.40) 931,841.40 - 2.200% 7/25/18/PERSHING LLC/930,000 PAR VALUE AT 100.198% 12/01/2017 3137EAEA3 PURCHASED PAR VALUE OF F H L M C M T N 800.000.0000 0.997800 (798,240.00) 798,240.00 - 0.750% 4/09118/PERSHING LLC/800,000 PAR VALUE AT 99.78% 12/01/2017 912828P20 PURCHASED PAR VALUE OF U S TREASURY NT 5.000,000.0000 0.999219 (4,996,093.75) 4.996,093.75 - 0.750% 1131118 IBMO CAPITAL MARKETS CORP/BONDS15,000,000 PAR VALUE AT 99.921875% 12/01/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 3,974,019.8000 1.000000 (3,974,019.80) 3,974,019.80 - 12/04/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 4,467.5900 1.000000 (4,467.59) 4,467.59 - 12/04/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,179.6000 1.000000 (2,179.60) 2,179.60 - 12/05/2017 084664BEO PURCHASED PAR VALUE OF BERKSHIRE HATH 1,000,000.0000 1.016250 (1,016,250.00) 1,016,250.00 - 5.400% 5115/18/FTN FINANCIAL SECURITIES/XNYS 1,000,000 PAR VALUE AT 101.625% 12/05/2017 17275RAU6 PURCHASED PAR VALUE OF CISCO SYSTEMS INC 1.000,000.0000 1.000150 (1,000,150.00) 1.000,150.00 - 1.650% 6115/18/US BANCORP INVESTMENTS INC.11,000,000 PAR VALUE AT 100.015% 12/05/2017 58933YAGO PURCHASED PAR VALUE OF MERCK CO INC 1,000,000.0000 0.998880 (998,880.00) 998,880.00 - 1.300% 5/18118/BONY/TORONTO DOMINION SECURITI/1,000,000 PAR VALUE AT 99.888% 12/05/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 473,314.4400 1.000000 (473,314.44) 473,314.44 - 12/05/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,011,040.0000 1.000000 (2,011,040.00) 2.011,040.00 - 12/06/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,026,250.0000 1.000000 (1,026,250.00) 1.026,250.00 - 12/07/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 30,818.0700 1.000000 (30,818.07) 30,818.07 - 12/08/2017 3137EAEKI PURCHASED PAR VALUE OF F H L M C M T N 3.500.000.0000 0.996540 (3,487,890.00) 3.487,890.00 - 1.875%11/17/20/MORGAN STANLEY&CO.LLC/3,500,000 PAR VALUE AT 99.654% 12/08/2017 45950KBX7 PURCHASED PAR VALUE OF INTL FINANCE CORP 500,000.0000 0.996030 (498,015.00) 498,015.00 - 0.875% 6115/18 AVELLS FARGO SECURITIES,LLC/500,000 PAR VALUE AT 99.603% 12/11/2017 313385SM9 PURCHASED PAR VALUE OF F H L B DISC NTS 2.300.000.0000 0.998187 (2,295,829.33) 2.295,829.33 - 1/31118 IJEFFERIES LLC/2,300,000 PAR VALUE AT 99.81866652% 12/11/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 37,500.0000 1.000000 (37,500.00) 37,500.00 - 12/12/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 43,750.0000 1.000000 (43,750.00) 43,750.00 - 12/13/2017 45950KBX7 PURCHASED PAR VALUE OF INTL FINANCE CORP 2,000,000.0000 0.996350 (1,992,700.00) 1,992,700.00 - 0.875% 6115/18/GOLDMAN SACHS&CO.LLC/2,000,000 PAR VALUE AT 99.635% 12/14/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 28.125.0000 1.000000 (28,125.00) 28,125.00 - I Of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Urit� Price Net Cash Amt Cost GainlLoss 12/15/2017 69372BAP5 PURCHASED PAR VALUE OF PACCAR FINANCIAL CORP C P 1,500,000.0000 0.998429 (1p97,643.75) 1,497,643.75 - 1/23/18/MLPFS INCIFIXED INCOME/1,500,000 PAR VALUE AT 99.84291667% 12/15/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,025,937.5000 1.000000 (1,025,937.50) 1,025,937.50 - 12/15/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,210,595.8200 1.000000 (2,210,595.82) 2,210,595.82 - 12/15/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 655,758.8800 1.000000 (655,758.88) 655,758.88 - 12/18/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 856.5200 1.000000 (856.52) 856.52 - 12/18/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,262.5400 1.000000 (1,262.54) 1,262.54 - 12/19/2017 02665KBN6 PURCHASED PAR VALUE OF AMERICAN HONDA FINANCE C P 1,000,000.0000 0.997238 (997,237.50) 997,237.50 - 2/22/18/MIZUHO SECURITIES USA FXD INC/1,000,000 PAR VALUE AT 99.72375% 12/19/2017 912828VE7 PURCHASED PAR VALUE OF U S TREASURY NT 3.000,000.0000 0.997969 (2,993,906.25) 2.993,906.25 - 1.000% 5131/18 IBMO CAPITAL MARKETS CORP/BONDS/3,000,000 PAR VALUE AT 99.796875% 12/19/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,004,527.8200 1.000000 (2,004,527.82) 2,004,527.82 - 12/19/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CLZ 99,755.1400 1.000000 (99,755.14) 99,755.14 - 12/20/2017 313385SLI PURCHASED PAR VALUE OF F H L B DISC NITS 3,600,000.0000 0.998531 (3,594,711.00) 3,594,711.00 - 1/30/18/CITIGROUP GLOBAL MARKETS INC./3,600,000 PAR VALUE AT 99.85308333% 12/20/2017 4581XOBZO PURCHASED PAR VALUE OF INTER AMERN DEV BK 3.000,000.0000 0.998680 (2,996,040.00) 2.996,040.00 - 0.875% 3115118/J.P.MORGAN SECURITIES LLC/3,000,000 PAR VALUE AT 99.868% 12/20/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 66,405,289.0000 1.000000 (66,405,289.00) 66,405,289.00 - 12/20/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 54,000,000.0000 1.000000 (54,000,000.00) 54,000,000.00 - 12/20/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 2,083.3800 1.000000 (2,083.38) 2,083.38 - 12/21/2017 06538CAX9 PURCHASED PAR VALUE OF BANK OF TOKYO MITSUBIS C P 2,000,000.0000 0.998178 (1,996,355.56) 1,996,355.56 - 1/31/18/MUFG UNION BK NAIMIMI/PIMS/IPA/2,000,000 PAR VALUE AT 99.817778% 12/21/2017 313385SM9 PURCHASED PAR VALUE OF F H L B DISC NTS 10.000,000.0000 0.998537 (9,985,365.28) 9.985,365.28 - 1/31/18/GOLDMAN SACHS&CO.LLC/10,000,000 PAR VALUE AT 99.8536528% 12/21/2017 313385SM9 PURCHASED PAR VALUE OF F H L B DISC NTS 1,600,000.0000 0.998531 (1,597,649.33) 1,597,649.33 - 1/31/18/NOMURA SECURITIES INTERNATIONA/1,600,000 PAR VALUE AT 99.85308312% 12121/2017 313385SM9 PURCHASED PAR VALUE OF F H L B DISC NTS 600.000.0000 0.998531 (599,118.50) 599,118.50 - 1/31/18/NOMURA SECURITIES INTERNATIONA/600,000 PAR VALUE AT 99.85308333% 12/21/2017 880590SD7 PURCHASED PAR VALUE OF T V A DISC NTS 10,000,000.0000 0.998836 (9,988,358.33) 9,988,358.33 - 1/23/18 IBONY/TORONTO DOMINION SECURITI/10,000,000 PAR VALUE AT 99.8835833% 2 of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Urit� Price Net Cash Amt Cost Gainil-oss 12/21/2017 880590SD7 PURCHASED PAR VALUE OF T V A DISC NITS 8,000,000.0000 0.998836 (7,990,686.67) 7,990,686.67 - 1/23/18/BONY/TORONTO DOMINION SECURITI/8,000,000 PAR VALUE AT 99.88358337% 12r22/2017 313385RR9 PURCHASED PAR VALUE OF F H L B DISC NITS 4,750.000.0000 0.999294 (4,746,648.61) 4.746,648.61 - 1/11/18/JEFFERIES LLC/4,750,000 PAR VALUE AT 99.92944442% 12/22/2017 313385RR9 PURCHASED PAR VALUE OF F H L B DISC NTS 4.750.000.0000 0.999294 (4,746,648.61) 4.746,648.61 - 1/11118/JEFFERIES LLC/4,750,000 PAR VALUE AT 99.92944442% 12/22/2017 313385RX6 PURCHASED PAR VALUE OF F H L B DISC NT$ 1,000,000.0000 0.999076 (999,075.56) 999,075.56 - 1/17/18/JEFFERIES LLC/1,000,000 PAR VALUE AT 99.907556% 12/22/2017 313385RZI PURCHASED PAR VALUE OF F H L B DISC NITS 2,100,000.0000 0.999012 (2,097,925.67) 2,097,925.67 - 1/19/18INOMURA SECURITIES INTERNATIONA/2,100,000 PAR VALUE AT 99.90122238% 12/22/2017 46623EKDO PURCHASED PAR VALUE OF JPMORGAN CHASE MTN 1.000.000.0000 0.999780 (999,780.00) 999,780.00 - 1.700% 3/01118/BONY/TORONTO DOMINION SECURITI/1,000,000 PAR VALUE AT 99.978% 12/22/2017 912828UU2 PURCHASED PAR VALUE OF U S TREASURY NT 5,000,000.0000 0.998203 (4,991,015.63) 4,991,015.63 - 0.750% 3131/18 IBMO CAPITAL MARKETS CORP/BONDS15,000,000 PAR VALUE AT 99.8203126% 12/22/2017 912828VE7 PURCHASED PAR VALUE OF U S TREASURY NT 5,000,000.0000 0.997969 (4,989,843.75) 4.989,843.75 - 1.000% 5131/181WELLS FARGO SECURITIES,LLC/5,000,000 PAR VALUE AT 99.796875% 12/22/2017 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 37,500.0000 1.000000 (37,500.00) 37,500.00 - 12/26/2017 313385RZI PURCHASED PAR VALUE OF F H L B DISC NITS 10,000,000.0000 0.999153 (9,991,533.33) 9,991,533.33 - 1/1918/BMO CAPITAL MARKETS CORP/BONDS/10,000,000 PAR VALUE AT 99.9153333% 12/26/2017 313385SM9 PURCHASED PAR VALUE OF F H L B DISC NITS 3.000.000.0000 0.998715 (2,996,145.00) 2.996,145.00 - 1/31/18/GOLDMAN SACHS&CO.LLC/3,000,000 PAR VALUE AT 99.8715% 12/26/2017 3137EADPI PURCHASED PAR VALUE OF F H L M C 2,000,000.0000 0.999026 (1,998,052.00) 1,998,052.00 - 0.875% 3107/18/GOLDMAN SACHS&CO.LLC/2,000,000 PAR VALUE AT 99.9026% 12126/2017 912828045 PURCHASED PAR VALUE OF U S TREASURY NT 8,000.000.0000 0.998594 (7,988,750.00) 7.988,750.00 - 0.875% 3/31/18/JEFFERIES LLC18,000,000 PAR VALUE AT 99.859375% 12/26/2017 912828MBO PURCHASED PAR VALUE OF U S TREASURY NT 8.000,000.0000 0.988438 (7,907,500.00) 7.907,500.00 - 2.000%11/30/22/J.P.MORGAN SECURITIES LLC/8,000,000 PAR VALUE AT 98.84375% 12/27/2017 912828568 PURCHASED PAR VALUE OF U S TREASURY NT 5,000,000.0000 0.995039 (4,975,195.31) 4,975,195.31 - 0.750% 7131/18 AVELLS FARGO SECURITIES,LLC/5,000,000 PAR VALUE AT 99.5039062% 3 of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Unite Prie. Net Cash Arat Cost GainfLoss 12/27/2017 912828Q45 PURCHASED PAR VALUE OF U S TREASURY NT 5,000,000.0000 0.998555 (4,992,773 44) 4,992,773.44 - 0.875% 3/31118/GOLDMAN SACHS&CO.LLC/5,000,000 PAR VALUE AT 99.8554688% 12/28/2017 313385SE7 PURCHASED PAR VALUE OF F H L B DISC NTS 6.225.000.0000 0.999051 (6,219,094.03) 6,219,094.03 - 1/24/18/GOLDMAN SACHS&CO.LLC/6,225,000 PAR VALUE AT 99.90512498% 12/28/2017 9128281-737 PURCHASED PAR VALUE OF U$TREASURY NT 5,000,000.0000 0.999883 (4,999,414.06) 4,999,414.06 - 0.875% 1/15/18/MORGAN STANLEY&CO.LLC/5,000,000 PAR VALUE AT 99.9882812% 12129/2017 40428HPR7 PURCHASED PAR VALUE OF HSBC USA INC 1,250,000.0000 0.999600 (1,249,500.00) 1,249,500.00 - 2.350% 3105120/CITIGROUP GLOBAL MARKETS INC./1,250,000 PAR VALUE AT 99.96% 12/29/2017 9128281-99 PURCHASED PAR VALUE OF U S TREASURY NT 4,500,000.0000 0.983477 (4,425,644.53) 4,425,644.53 - 1.375%10/31/20/GOLDMAN SACHS&CO.LLC/4,500,000 PAR VALUE AT 98.34765622% 12129/2017 912828157 PURCHASED PAR VALUE OF U S TREASURY NT 10,000,000.0000 0.979414 (9,794,140.63) 9,794,140.63 - 1.750% 9/30/22/GOLDMAN SACHS&CO.LLC/10,000,000 PAR VALUE AT 9T9414063% TOTAL ACQUISITIONS 287,980 031 1000 (287,436,672.91) 287,436,672.91 DISPOSITIONS 12/01/2017 31846V567 SOLD UNITS OF FIRST AM COW OB FD CLZ -1,738,109,0700 1,000000 1,738,109,07 (1,738,109,07) - 12/01/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -5,008,627.7200 1.000000 5,008,627.72 (5,008,62T72) - 12/08/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FO CL Z -500,117.4300 1.000000 500,117.43 (500,117.43) - 12/11/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FO CL Z -2,295,829.3300 1.000000 2,295,829.33 (2,295,829.33) - 12/13/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FO CL Z -2,001,352.7800 1.000000 2,001,352.78 (2,001,352.78) - 12/15/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -1,497,643,7500 1.000000 1,497,643.75 (1,497,643.75) - 12/19/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -997,237.5000 1.000000 997,237.50 (997,237.50) - 12/20/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FO CL Z -3,002,967.0800 1.000000 3,002,967.08 (3,002,967.08) - 12/21/201➢ 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -24,166,847.0000 1.000000 24,166,847.00 (24,166,847.00) - 12/22/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -10,997,453.8500 1.000000 10,997,453.85 (10,997,453.85) - 12/22/201➢ 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -5,745,724.1700 1.000000 5,745,724.17 (5,745,724.17) - 12/26/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -2,996,145.0000 1.000000 2,996,145.00 (2,996,145.00) - 12/26/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -10,008,831,3800 1.000000 10,008,831.38 (10,008,831.38) - 12/27/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -9,993,729,0900 1.000000 9,993,729.09 (9,993,729.09) - 12/28/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -5,019,149,1100 1.000000 5,019,149.11 (5,019,149.11) - 12/08/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -3,492,082,7100 1.000000 3,492,082.71 (3,492,082.71) - 4 of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Urits Price Net Cash Arat Cost GainlLoss 12/21/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -7,833,700.3600 1.000000 7,833,700.36 (7,833,700.36) - 12/22/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -6,844,574.2800 1.000000 6,844,574.28 (6,844,574.28) - 12/26/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -7,877,531.2300 1.000000 7,877,531.23 (7,877,531.23) - 12/26/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -9,991,533.3300 1.000000 9,991,533.33 (9,991,533.33) - 12/28/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -6,219,094.0300 1.000000 6,219,094.03 (6,219,094.03) - 12/29/2017 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -15,531,941.0700 1.000000 15,531,941.07 (15,531,941.07) - 12/15/2017 31348SWZ3 PAID DOWN PAR VALUE OF F H L M C#786064 -16.7600 0.000000 16.76 (16.35) 0.41 2.762% 1/01/28 NOVEMBER FHLMC DUE 12/15/17 12/15/2017 3133TCE95 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG -1.278.9500 0.000000 1,278.95 (1,280.29) (1.34) 3.269% 8/15G2 12/26/2017 31394JY35 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG .6.628.7400 8.573104 6,628.74 (7,507.05) (878.31) 6,500% 9125/43 12/26/2017 31371NUC7 PAID DOWN PAR VALUE OF F N M A#257179 -155,2800 0.000000 155.28 (164.22) (8,94) 4.500% 4101/28 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31376KT22 PAID DOWN PAR VALUE OF F N M A#357969 -1,801.5800 0.000000 1,801.58 (1,936.70) (135.12) 5.000% 9/01/35 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31381PDA3 PAID DOWN PAR VALUE OF F N M A#466397 -686.8500 0.000000 686.85 (671.99) 14.86 3.400%11/01/20 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31403DJZ3 PAID DOWN PAR VALUE OF F N M A#745580 -3.018.0300 0.000000 3,018.03 (3,244.38) (226.35) 5,000% 6101/36 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31403GXF4 PAID DOWN PAR VALUE OF F N M A#748678 -728.8800 0.000000 728.88 (783.55) (54.67) 5.000%10/01/33 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31406PQY8 PAID DOWN PAR VALUE OF F N M A#815971 -879.7500 0.000000 879.75 (945.73) (65.98) 5.000% 3101/35 NOVEMBER FNMA DUE 12/25/17 12126/2017 31406XWT5 PAID DOWN PAR VALUE OF F N M A#823358 -483.6000 0.000000 483.60 (479.82) 3.78 3.296% 2/01135 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31407BXH7 PAID DOWN PAR VALUE OF F N M A#826080 .663.0400 0.000000 663.04 (712.77) (49.73) 5.000% 7101/35 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31410F4V4 PAID DOWN PAR VALUE OF F N M A#888336 -6,403.1300 0.000000 6,403.13 (6,883.37) (480.24) 5.000% 7101/36 NOVEMBER FNMA DUE 12/25/17 12/26/2017 3138EG6F6 PAID DOWN PAR VALUE OF F N M A#AL0869 -310.8600 0.000000 310.86 (328.76) (17.90) 4.500% 6101/29 NOVEMBER FNMA DUE 12/25/17 12126/2017 31417YAY3 PAID DOWN PAR VALUE OF F N M A#MA0022 -391.7400 0.000000 391.74 (414.30) (22.56) 4.500% 4101/29 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31397QREO PAID DOWN PAR VALUE OF F N M A GTD REMIC 1.113% 2125/41 -5.709.8400 9.952797 5,709.84 (5,708.06) 1.78 12/20/2017 36225CAZ9 PAID DOWN PAR VALUE OF G N M A 1 19080023 -191.6500 0.000000 191.65 (194.82) (3.17) 2,250%12/20/26 NOVEMBER GNMA DUE 12/20/17 5 0111 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Units Price Net Cash Arat Cost GainlLoss 12/20/2017 36225CC20 PAID DOWN PAR VALUE OF G N M A 11#080088 -222.5700 0.000000 222.57 (227.44) (4.87) 2.625% 6/20/27 NOVEMBER GNMA DUE 12/20/17 12120/2017 36225CNM4 PAID DOWN PAR VALUE OF G N M A 11#080395 -159.8700 0.000000 159.87 (158.42) 1.45 2.625% 4120/30 NOVEMBER GNMA DUE 12/20/17 12/20/2017 36225CN28 PAID DOWN PAR VALUE OF G N M A 11#080408 410.0400 0.000000 410.04 (405.88) 4.16 2,625% 5120/30 NOVEMBER GNMA DUE 12/20/17 1212=017 36225DCB8 PAID DOWN PAR VALUE OF G N M A 11#080965 -670.3300 0.000000 670.33 (669.91) 0.42 2.750% 7120/34 NOVEMBER GNMA DUE 12/20/17 12/18/2017 3837H4NX9 PAID DOWN PAR VALUE OF G N M A GTD REMIC 1.764% 2J16/30 -825.9700 0.000000 825.97 (825.97) - 12/15/2017 43814QAC2 PAID DOWN PAR VALUE OF HONDA AUTO 1.390% 4/15/20 45,753.5400 2.449612 45,753.54 (45,752.65) 0.89 12/21/2017 43814TAB8 PAID DOWN PAR VALUE OF HONDA AUTO 1.420% 7/22/19 -155,299.2900 0.000000 155,299.29 (155,295.58) 3.71 12/18/2017 477877AD6 PAID DOWN PAR VALUE OF JOHN DEERE OWNER -99,755.1400 0.000010 99,755.14 (99,801.90) (46.76) 1.070%11/15/18 CMO FINAL PAYDOW N 12/15/2017 47788NAB4 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.090% 2/15119 -231.197.4300 0.000000 231,197.43 (231,183.33) 14.10 12/15/2017 47788MAC4 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.360% 4/15120 -148.838.2600 10.069393 148,838.26 (148,814.83) 23.43 12/15/2017 47787XAB3 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.500%10115119 -10.836.5100 0.000000 10,836.51 (10,836.47) 0.04 12/15/2017 65478WAB1 PAID DOWN PAR VALUE OF NISSAN AUTO 1.070% 5115119 -147.210.2400 0.000000 147,210.24 (147,204.44) 5.80 12/15/2017 654747ABO PAID DOWN PAR VALUE OF NISSAN AUTO 1.470% 1115120 -107.470.2700 0.000000 107,470.27 (107,469.72) 0.55 12/15/2017 89236WAC2 PAID DOWN PAR VALUE OF TOYOTA AUTO 1.120% 2/15/19 -147,236.8200 0.761212 147,236.82 (147,214.56) 22.26 12/13/2017 912828WUO PAR VALUE OF U S TREASURY I P S -1.144.0000 0.000000 - - - 0.125% 7116/24 ADJUSTED BY-1144.0000 UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 12/27/2017 912828WUO PAR VALUE OF U S TREASURY I P S -3,536,0000 0.000000 - - - 0.125% 7115/24 ADJUSTED BY-3536.0000 UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 12/01/2017 060505DP6 MATURED PAR VALUE OF BANK OF AMERICA 3,800.000.0000 1.000000 3.800,000.00 (4,334,014.00) (534.014.00) 5.750%12/01/17 3,800,000 PAR VALUE AT 100% 12/05/2017 166764AAB MATURED PAR VALUE OF CHEVRON CORP -2,000.000.0000 1.000000 2.000,000.00 (1,988,600.00) 11.400.00 1.104%12/05/17 2,000,000 PAR VALUE AT 100% 12/05/2017 313385QC3 MATURED PAR VALUE OF F H L B DISC NTS -3,500,000.0000 1.000000 3,497,876.67 (3,497,876.67) - 12J05/17 3,500,000 PAR VALUE AT 100% 12/19/2017 313385QS8 MATURED PAR VALUE OF F H L B DISC NTS 5,000,000.0000 1.000000 4,994,312.50 (4,994,312.50) - 12119/17 5,000,000 PAR VALUE AT 100% 12/06/2017 369604BC6 MATURED PAR VALUE OF GENERAL ELECTRIC CO -1,000.000.0000 1.000000 1.000,000.00 (1,033,650.00) (33.650.00) 5.250%12/06/17 1,000,000 PAR VALUE AT 100% 12/15/2017 458140AL4 MATURED PAR VALUE OF INTEL CORP -1.000.000.0000 1.000000 1.000,000.00 (1,000,160.00) (160.00) 1,350%12/15/17 1,000,000 PAR VALUE AT 100% 6 of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Unite Price Net Cash Amt 12/15/2017 458140AL4 MATURED PAR VALUE OF INTEL CORP -2,000,000.0000 1.000000 2,000,000.00 •(2,008,280.00) (8,280.00) 1.350%12/15/17 2,000,000 PAR VALUE AT 100% TOTAL DISPOSITIONS -163,190,136.2300 163,177,645.40 (163,744,247.70) (566,602.30) OTHER TRANSACTIONS 12/13/2017 912828WUO BOOK VALUE OF U S TREASURY I P S 0A 25% 7/15/24 ADJUSTED BY-1144.00 0.0000 0.000000 - - - UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 12/27/2017 912828WUO BOOK VALUE OF U S TREASURY I P S 0.125% 7/15124 ADJUSTED BY-3536.00 0.0000 0.000000 - - - UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 1 212 0/201 7 CASH RECEIPT RECD FROM UNION BANK A/C XXXXXX3230 INCOMING WIRES 0.0000 0.000000 54,000,000.00 - - DUE Dec 1 201712:WIRE REC'D 12/19/17 12/20/2017 CASH RECEIPT RECD FROM UNION BANK A/C XXX)CXX3230 INCOMING WIRES 0.0000 0.000000 70,000,000.00 - - DUE Jul 18201712:WIRE REC'D 12/19/17 12/13/2017 912828WUO FED BASIS OF U S TREASURY I PS 0.125% 7115124 ADJUSTED BY-1144.00 0.0000 0.000000 - (1,144.00) - UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 12/27/2017 912828WUO FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY-3536.00 0.0000 0.000000 - (3,536.00) - UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 12/26/2017 03215PFN4 INTEREST EARNED ON AMRESCO 0.0319% 6/25129$1 PV ON 244.2900 0.0000 0.000000 244.29 - - SHARES DUE 12/26/2017$0.00003/PV ON 133,743.29 PV DUE 12/26/17 12/01/2017 060505DP6 INTEREST EARNED ON BANK OF AMERICA 5.750%12/01/17$1 PV ON 0.0000 0.000000 109,250.00 - - 3800000.0000 SHARES DUE 12/1/2017 12/05/2017 166764AA8 INTEREST EARNED ON CHEVRON CORP 1.104%12/05/17$1 PV ON 0.0000 0.000000 11,040.00 - - 2000000.0000 SHARES DUE 121512017 12/15/2017 17275RAU6 INTEREST EARNED ON CISCO SYSTEMS INC 1.650% 6115/18$1 PV ON 0.0000 0.000000 8,250.00 - - 1000000.0000 SHARES DUE 12/15/2017 12/12/2017 313383HUB INTEREST EARNED ON F H L B DEB 1,750% 6112/20$1 PV ON 0.0000 0.000000 43,750.00 - - 5000000.0000 SHARES DUE 12/12/2017 12/11/2017 313379RB7 INTEREST EARNED ON F H L B DEB 1.875% 6/11/21 $1 PV ON 0.0000 0.000000 37,500.00 - - 4000000.0000 SHARES DUE 1 211112 01 7 12/05/2017 313385OC3 INTEREST EARNED ON F H L B DISC NITS 12/05/17$1 PV ON 3500000.0000 0.0000 0.000000 2,123.33 - - SHARES DUE 12/5/2017 3.500,000 PAR VALUE AT 100% 12/19/2017 313385OSB INTEREST EARNED ON F H L B DISC NITS 12/19/17$1 PV ON 5000000.0000 0.0000 0.000000 5,687.50 - - SHARES DUE 12/19/2017 5,000,000 PAR VALUE AT 100% 12/15/2017 31348SWZ3 INTEREST EARNED ON F H L M C#786064 2,762% 1/01128$1 PV ON 5.1200 0.0000 0.000000 5.12 - - SHARES DUE 12/15/2017 OCTOBER FHLMC DUE 12J15/17 12/15/2017 3133TCE95 INTEREST EARNED ON F H L M C MLTCL MTG 3.269% 8115/32$1 PV ON 0.0000 0.000000 72.58 - - 72.5800 SHARES DUE 1 2/1 512 01 7$0.00272/PV ON 26.641.75 PV DUE 12/15/17 7 of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 12/26/2017 31398VJ98 INTEREST EARNED ON F H L M C MLTCL NITS 4.251% 1125/20$1 PV ON 0.0000 0.000000 3,188.25 - - 3188.2500 SHARES DUE 1 2/2 512 01 7$0.00354/PV ON 900,000.00 PV DUE 12/25/17 12/26/2017 31394JY35 INTEREST EARNED ON F H L M C MLTCL MTG 6.500% 9125143$1 PV ON 0.0000 0.000000 4,788.56 - - 4788.5600 SHARES DUE 12/25/2017$0.00542/PV ON 884,040.44 PV DUE 12/25/17 12/14/2017 3135GOG72 INTEREST EARNED ON F N M A 1.125%12/14/18$1 PV ON 5000000.0000 0.0000 0.000000 28,125.00 - - SHARES DUE 12/14/2017 12/26/2017 31371 NUC7 INTEREST EARNED ON F N M A#257179 4.500% 4/01/28$1 PV ON 78.9200 0.0000 0.000000 78.92 - - SHARES DUE 1 212 512 01 7 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31376KT22 INTEREST EARNED ON F N M A#357969 5.000% 9/01135$1 PV ON 571.8200 0.0000 0.000000 571.82 - - SHARES DUE 1 212 5/2 01 7 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31381PDA3 INTEREST EARNED ON F N M A#466397 3.400%11/01/20$1 PV ON 999.3000 0.0000 0.000000 999.30 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31403DJZ3 INTEREST EARNED ON F N M A#745580 5.000% 6/01/36$1 PV ON 556.9600 0.0000 0.000000 556.96 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12126/2017 31403GXF4 INTEREST EARNED ON F N M A#748678 5.000%10/01/33$1 PV ON 17.3600 0.0000 0.000000 17.36 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31406PQY8 INTEREST EARNED ON F N M A#815971 5.000% 3/01/35$1 PV ON 944.0500 0.0000 0.000000 944.05 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31406XWT5 INTEREST EARNED ON F N M A#823358 3.296% 2/01/35$1 PV ON 363.1700 0.0000 0.000000 363.17 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31407BXH7 INTEREST EARNED ON F N M A#826080 5.000% 7/01/35$1 PV ON 105.5100 0.0000 0.000000 105.51 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12126/2017 31410F4V4 INTEREST EARNED ON F N M A#888336 5.000% 7/01/36$1 PV ON 1082.9300 0.0000 0.000000 1,082.93 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12/26/2017 3138EG6F6 INTEREST EARNED ON F N M A#AL0869 4.500% 6/01129$1 PV ON 55.8200 0.0000 0.000000 55.82 - - SHARES DUE 1 212 5/2 01 7 NOVEMBER FNMA DUE 12/25/17 12/26/2017 31417YAY3 INTEREST EARNED ON F N M A#MA0022 4,500% 4/01129$1 PV ON 91.4600 0.0000 0.000000 91.46 - - SHARES DUE 12/25/2017 NOVEMBER FNMA DUE 12/25/17 12/22/2017 3135GOD75 INTEREST EARNED ON F N M A DEB 1.500% 6/22/20$1 PV ON 0.0000 0.000000 37,500.00 - - 5000000.0000 SHARES DUE 12/22/2017 12/26/2017 31397QREO INTEREST EARNED ON F N M A GTD REMIC 1.113% 2/25/41 $1 PV ON 0.0000 0.000000 447.62 - - 447.6200 SHARES DUE 12/25/2017$0.00167/PV ON 267,569.60 PV DUE 12/25/17 12/01/2017 31 MV567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES 0.0000 0.000000 4,467.59 - - DUE 11/30/2017 I NTEREST FROM 11/1/17 TO 11/30/17 12/01/2017 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES 0.0000 0.000000 2,179.60 - - DUE 11/30/2017 I NTEREST FROM 11/1/17 TO 11/30/17 8 Of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Units Prie. Net Cash Amt Cost Gain)Loss 12/20/2017 36225CAZ9 INTEREST EARNED ON G N M A 11#080023 2.250%12/20/26$1 PV ON 40.4500 0.0000 0.000000 40.45 - - SHARES DUE 12/20/2017 NOVEMBER GNMA DUE 12/20/17 12120/2017 36225CC20 INTEREST EARNED ON G N M A 11#080088 2.625% 6/20/27$1 PV ON 54.6500 0.0000 0.000000 54.65 - - SHARES DUE 1 212 012 01 7 NOVEMBER GNMA DUE 12/20/17 12/20/2017 36225CNM4 INTEREST EARNED ON G N M A 11#0803952.625% 4/20130$1 PV ON 19.6100 0.0000 0.000000 19.61 - - SHARES DUE 1212=017 NOVEMBER GNMA DUE 12/20/17 12/20/2017 36225CN28 INTEREST EARNED ON G N M A 11#0804082,625% 5/20/30$1 PV ON 155.5100 0.0000 0.000000 155.51 - - SHARES DUE 12/20/2017 NOVEMBER GNMA DUE 12/20/17 12/20/2017 36225DCBB INTEREST EARNED ON G N M A 11#0809652.750% 7/20/34$1 PV ON 158.7000 0.0000 0.000000 158.70 - - SHARES DUE 12/20/2017 NOVEMBER GNMA DUE 12/20/17 12/18/2017 3837H4NX9 INTEREST EARNED ON G N M A GTD REMIC 1.764% 2/16/30$1 PV ON 30.5500 0.0000 0.000000 30.55 - - SHARES DUE 12/16/2017$0.00147/PV ON 20,791.22 PV DUE 12/16/17 12/06/2017 369604BC6 INTEREST EARNED ON GENERAL ELECTRIC CO 5.250%12/06/17$1 PV ON 0,0000 0.000000 26,250.00 - - 1000000.0000 SHARES DUE 121612017 12/15/2017 43814QAC2 INTEREST EARNED ON HONDA AUTO 1.390% 4/15/20$1 PV ON 2096.5800 0.0000 0.000000 2,096.58 - - SHARES DUE 12/15/2017$0.00116/PV ON 1,810,000.00 PV DUE 12/15/17 12/21/2017 43814TAB8 INTEREST EARNED ON HONDA AUTO 1.420% 7/22119$1 PV ON 1687.0200 0.0000 0.000000 1,687.02 - - SHARES DUE 1 2121/2 01 7$0.001181PV ON 1,425,652.96 PV DUE 12/21/17 12/18/2017 43814PAB6 INTEREST EARNED ON HONDA AUTO 1.570% 1/21120$1 PV ON 1262.5400 0.0000 0.000000 1,262.54 - - SHARES DUE 12/18/2017$0.00131/PV ON 965,000.00 PV DUE 12/18/17 12/15/2017 458140AL4 INTEREST EARNED ON INTEL CORP 1.350%12/15/17$1 PV ON 0.0000 0.000000 6,750.00 - - 1000000.0000 SHARES DUE 12/15/2017 12/15/2017 458140AL4 INTEREST EARNED ON INTEL CORP 1.350%12/15/17$1 PV ON 0.0000 0.000000 13,500.00 - - 2000000.0000 SHARES DUE 12/15/2017 12/15/2017 45950KBX7 INTEREST EARNED ON INTL FINANCE CORP 0.875% 6/15118$1 PV ON 0.0000 0.000000 10,937.50 - - 2500000.0000 SHARES DUE 12/15/2017 12/15/2017 477877AD6 INTEREST EARNED ON JOHN DEERE OWNER 1.070%11/15/18$1 PV ON 0.0000 0.000000 88.95 - - 88.9500 SHARES DUE 1 2/1 512 01 7$0.000891PV ON 99,755.14 PV DUE 12/15/17 12/15/2017 47788NAB4 INTEREST EARNED ON JOHN DEERE OWNER 1.090% 2115/19$1 PV ON 0.0000 0.000000 921.09 - - 921.0900 SHARES DUE 12/15/2017$0.00091/PV ON 1,014,040.10 PV DUE 12/15/17 12/15/2017 47788MAC4 INTEREST EARNED ON JOHN DEERE OWNER 1.360% 4115120$1 PV ON 0.0000 0.000000 2,702.14 - - 2702.1400 SHARES DUE 1 2/1 512 01 7$0.001131PV ON 2,384,240.14 PV DUE 12/15/17 9 of 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Units Prie. Net Cash Amt Cost Gain)Loss 12/15/2017 47787XAB3 INTEREST EARNED ON JOHN DEERE OWNER 1.500%10/15/19$1 PV ON 0.0000 0.000000 1,762.50 - - 1762.5000 SHARES DUE 12/15/2017$0.00125/PV ON 1,410,000.00 PV DUE 12/15/17 12/15/2017 4778BRABO INTEREST EARNED ON JOHN DEERE OWNER 1.590% 4/15120$1 PV ON 0.0000 0.000000 1,272.00 - - 960000.0000 SHARES DUE 1 2/1 512 01 7 12/15/2017 47788BAD6 INTEREST EARNED ON JOHN DEERE OWNER 1.820%10/15/21 $1 PV ON 0.0000 0.000000 1,023.75 - - 1023.7500 SHARES DUE 12/15/2017$0.00152/PV ON 675,000.00 PV DUE 12/15/17 12/15/2017 65478WAB1 INTEREST EARNED ON NISSAN AUTO 1.070% 5/15/19$1 PV ON 772.0200 0.0000 0.000000 772.02 - - SHARES DUE 12/15/2017$0.00089/PV ON 865,814.05 PV DUE 12/15/17 12/15/2017 654747ABO INTEREST EARNED ON NISSAN AUTO 1.470% 1/15/20$1 PV ON 1663.7200 0.0000 0.000000 1,663.72 - - SHARES DUE 12/15/2017$0.00123/PV ON 1,358,137.78 PV DUE 12/15/17 12/01/2017 73358WAG9 INTEREST EARNED ON PORT AUTH NY NJ 5.309%12/01/19$1 PV ON 0.0000 0.000000 64,769.80 - - 2440000.0000 SHARES DUE 12/1/2017 12/15/2017 89236WAC2 INTEREST EARNED ON TOYOTA AUTO 1.120% 2/15/19$1 PV ON 635.4700 0.0000 0.000000 635.47 - - SHARES DUE 12/15/2017$0.00093/PV ON 680.866.36 PV DUE 12/15/17 12/05/2017 084664BEO PAID ACCRUED INTEREST ON PURCHASE OF BERKSHIRE HATH 5.400% 0.0000 0.000000 (3,000.00) - - 5/15118 12/01/2017 808513AJ4 PAID ACCRUED INTEREST ON PURCHASE OF CHARLES SCHWAB CORP 0.0000 0.000000 (7,161.00) - - 2.200% 7/25/18 12/05/2017 17275RAU6 PAID ACCRUED INTEREST ON PURCHASE OF CISCO SYSTEMS INC 1.650% 0.0000 0.000000 (7,791.67) - - 6/15/18 12/26/2017 3137EADP1 PAID ACCRUED INTEREST ON PURCHASE OFF H L M C 0.875% 3/07/18 0.0000 0.000000 (5,298.61) - - 12/01/2017 3137EAEA3 PAID ACCRUED INTEREST ON PURCHASE OFF H L M C M T N 0.750% 0.0000 0.000000 (866.67) - - 4/09/18 12/08/2017 3137EAEK1 PAID ACCRUED INTEREST ON PURCHASE OF F H L M C M T N 1.875% 0.0000 0.000000 (4,192.71) - - 11/17/20 12/29/2017 40428HPR7 PAID ACCRUED INTEREST ON PURCHASE OF HSBC USA INC 2.350% 0.0000 0.000000 (9,302.08) - - 3/05/20 12120/2017 4581XOBZO PAID ACCRUED INTEREST ON PURCHASE OF INTER AMERN DEV BK 0.875% 0.0000 0.000000 (6,927.08) - - 3/15/18 12/08/2017 4595OKBX7 PAID ACCRUED INTEREST ON PURCHASE OF INTL FINANCE CORP 0.875% 0.0000 0.000000 (2,102.43) - - 6/15118 12/13/2017 4595OKBX7 PAID ACCRUED INTEREST ON PURCHASE OF INTL FINANCE CORP 0.875% 0.0000 0,000000 (8,652.78) - - 6/15/18 10 0f 11 U.S. Bank Transaction History 12/01/2017 Thru 12/31/2017 Post Date CUSIP Id Explanation Units Prie. Net Cash Amt Cost Gairel-oss 12/22/2017 46623EKDO PAID ACCRUED INTEREST ON PURCHASE OF JPMORGAN CHASE MTN 0.0000 0.000000 (5,241.67) - - 1.700% 3101/18 12/05/2017 58933YAGO PAID ACCRUED INTEREST ON PURCHASE OF MERCK CO INC 1.300% 0.0000 0.000000 (613.89) - - 5/18/18 12/01/2017 912828P20 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 0.750% 0.0000 0.000000 (12,533.97) - - 1/31/18 12/22/2017 912828UU2 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 0.750% 0.0000 0.000000 (8,550.82) - - 3/31/18 12/27/2017 912828568 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 0.750% 0.0000 0.000000 (15,183.42) - - 7/31/18 12128/2017 9128281137 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 0.875% 0.0000 0.000000 (19,735.05) - - 1/15/18 12/26/2017 912828Q45 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 0.875% 0.0000 0.000000 (16,730.77) - - 3/31/18 12/27/2017 912828045 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 0.875% 0.0000 0.000000 (10,576.92) - - 3/31/18 12/19/2017 912828VE7 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 1.000% 0.0000 0.000000 (1,565.93) - - 5/31/18 12122/2017 912828VE7 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 1.000% 0.0000 0.000000 (3,021.98) - - 5/31/18 12/29/2017 912828199 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 1.375% 0.0000 0.000000 (10,084.60) - - 10/31/20 12/29/2017 9128281-57 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 1.750% 0.0000 0.000000 (43,269.23) - - M0/22 12/26/2017 912828M80 PAID ACCRUED INTEREST ON PURCHASE OF U S TREASURY NT 2.000% 0.0000 0.000000 (11,428.57) - - 11/30/22 12/13/2017 912828WUO STATE COST OF U S TREASURY I P S 0.125% 7115124 ADJUSTED BY-1144.00 0.0000 0.000000 - - - UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 12/27/2017 912828W UO STATE COST OF U S TREASURY I P S 0.125% 7115124 ADJUSTED BY-3536.00 0.0000 0.000000 - - - UNITS DECREASE TO ADJUST FOR CHANGE IN CPI 12/07/2017 525ESCOY6 Unknown LEHMAN BIRTH HLD ESC PARTIAL LIQUIDATING DISTRIBUTION @ 0,0000 0.000000 23,686.79 (23,686.79) - 11.843393/PAR 12/07/2017 525ESCIB7 Unknown LEHMAN BRTH MTN ES 000001% 1124/13 PARTIAL LIQUIDATING 0.0000 0.000000 7,13128 (7,131 28) - DISTRIBUTION @ 11.885463/PAR TOTAL OTHER TRANSACTIONS 0.0000 124,259,027.51 (35,498.07) 11 of 11 Callan December 11,2011 Orange County Sanitation District Investment Measurement service Quarterly Review TM following report was prepared by Callan using informatlon from sources that Include the following: land Wslee(s); fund custodlan(s11 Investment managens);Callan computer software;Callan investment manager and fund sponsor database;Mind party data vendors;and other outside sources as directed by Me client Callan assumes no responsibility for the accuracy or completeness of the informatlon provided,or methodologies employed,by any informatlon providers external to Callan.Reasonable core has been taken to assure the accuracy of the Callan database and computer wflware.Callan deep not provide advice regarding,nor shall Callan be responsible for,the purchase,sale,hedge or holding of individual securities,including,without limitation securities of the Giant(i.e. company stack)or derivatives In the client's accounts. In preparing the fallowing report,Callan has not reviewed the risks of individual security holdings or the conformity of individual security holdings with the client's investment policies and guidelines,nor has it assumed any responsibility to do so. Advice pertaining to the merits of'individual securities and derivatives should bB discussed with a third pant securities expert. Copyright 2018 by Callan. Table of Contents December 31, 2017 Capital Markel Review 1 Active Management Overview Market Overview 7 Domestic Fixed Income 8 Asset Allocation Investment Manager Asset Allocation 10 Investment Manager Returns 11 Asset Class Risk and Return 15 Manager Analysis Chandler-Long Term Operating Fund 17 Chandler-Liquid Operating Money 21 Callan Research/Education 23 Definitions 26 Disclosures 31 Callan Orange County Sanitation District Executive Summary for Period Ending December 31, 2017 Asset Allocation December 31, 2017 September 30, 2017 Market Value Weight Net New Inv. Inv. Return Market Value Welaht Dona nec Fixed lrcm,e Long Tenn Coomb ng Fund' 396.592,680 73,16% 64,000,000 (637596) 333,230,276 87,07% Adl Fund $542,092,917 10010% $159,800.000 $(421,490) $382,713,807 10010% Performance Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating FundA (0.20%) 1.18% 1.20% 0.76% 1,62% Chandler (0.20%) 1.18% 1.20% - - Blmbg Govt/Creel 1-5 Year Idx (0.30%) 1.27% 1.27% 1.10% 1.55% ML 1-5 Govt/Corp (0.28%) 1.28% 1.31% 1.15% 1,62% Liquid Operating MDniWA 0.30% 0.91% 0.53% 0.36% 0.32% Chandler 0.30% 0.91% 0.53% - - CitiamuD 3-Month Treasury Bill 0.28% 0.84% 0.38% 0.24% 0.20% Total Fund (0.11%) 1.02% 0.99% 0.63% 1.36% Target* (0.17%) 1.19% 1.13% 0.97% 1,33% 'Current Quarter Target=80.0%ML 1 L Govt(Cop and 20.0%CIti 3moT-Bllls AAoats were transferred In Nnd to Chandleron 12/1f2014.Pmviowpedomance reflects PIMCO. Recent Developments During the quarter, $64 million was added to the Long Term Operating Fund, and $95.8 million was added to Liquid Operating Monies. Organizational Issues WA Manaaer Performance The U.S. yield curve Continued its flattening trend i1 the fourth quarter. The 2-year U.S. Treasury yield climbed 42 bps to close at 1.89%, up 69 bps from 12131/2016. At the long end of the yield curve, the 30-year U.S. Treasury yield fell 12 bps during the quarter, ending the year at 2.74%and 32 bps bwer than its close in 2016. This trend reflects the Fed's tightening bias as well as benign inflation. As a result, longer-term bonds sharply outperformed short- term and intermediate-maturity bonds for the quarter and the year. The Bloomberg Barclays Long U.S. Treasury Index gained 2.4% in the quarter and 8.5% in 2017 versus a -0.4% quarterly and +1.1% annual return for the Bloomberg Barclays Intermediate Treasury Index Consistent with the low volatility theme evident in the equity markets, the U.S Treasury 10- CallanOrange County Sanitafim Ns W year traded in a narrow 60 bps band for the year, the lowest since 2000. The Bloomberg Barclays U.S. Aggregate Bond Index was roughly flat (+0.49%) for the quarter. Its 3.5% full year return was generated largely from its coupon income. Corporate bonds outperformed for the quarter and the year, and yield spreads reached a post-crisis tight of 93 bps over Treasuries. High yield corporates fared even better, with the Bloomberg Barclays U.S. Corporate High Yield Index up 0.5% for the quarter and 7.5% for the year. Default rates remained below average, but prices are high relative to historical averages for the sector. TIPS outperformed nominal U.S. Treasuries as expectations for future inflation rose. The Bloomberg Barclays U.S. TIPS Index rose 1.3%for the quarter and 3.0%for the year and the 10-year breakeven spread (the difference between nominal and real yields) rose to 1.96%as of year-end. The Long Term Operating Fund fell 0.20% in the quarter, narrowly beating the ML 1-5 Govt/Corp Index(-0.28%) and ranking in the 83' percentile versus peers. The portfolio was short duration compared to the benchmark (226 versus 2.72 years), which helped relative performance. The portfolio generated a lower yield than the benchmark (1.8% vs. 2.2%), which weighed on results. The Long Term Operating Fund had less than 30% invested in credit and less than the permitted 20% invested in the combination of asset-backed securities, commercial mortgage backed securities, and CMOs as of December 31, 2017 (see page 20). The Liquid Operating Portfolio gained 0.26%(after fees) in the quarter, which slightly trailed the return of the 3-month Treasury(+028%).The Portfolio returned 0.76%(after fees) for the trailing 12-months and ranked 31 s percentile versus peers. Cordially, S. � Gordon M.Weightman, CFA Senior Vice President 2 Capital Market Review Capital Market Overview December 31, 2017 U.S.EQUITY U.S.Equity:Quarterly Returns — The U.S.equity market continued its upward trajectory in the 4th quarter,closing out a very strong year marked by Russell 3000 — 6.34% continued low volatility despite a turbulent U.S.political landscape and a record year in terms of global catastrophes. Russell 1000 — 6.59% Investors embraced accelerating global economic growth as well as low interest rates and inflation.Corporate eamings Russell 1000 Growth 7.86% registered double-digit growth for the quarter,receiving a boost from the U.S.tax reform bill that passed in late December. Russell 1000 Value 5.33% — Large Cap(S&P 500&Russell 1000:+6.6%)outperformed S&P 500 6.64% Small Cap(Russell 2000:+3.3%)across styles for the quarter. Russell Midcap — Risk assets continued to lead the equity market in the quarter.Consumer Discretionary(+9,9%)and Tech(+9%) Russell 2500 — 5.24% were the strongest performers with Apple,Amazon,and Microsoft posting 10%-20%returns due to ongoing Russe112000 _ 3.34% exceptional cash flow generation and growth in global markets.The Tech sector now accounts for 24%of the S&P 500 and 38%of the Russell 1000 Growth index;returns for the FAAMG stacks(Facebook,Apple,Amazon,Microsoft, and Google)ranged from 36%to 56%for 2017. U.S.Equity:One•Year Returns — Consumer Discretionary benefited from strong year-end retail sales as well as positive tax reform expectations as the retailing industry cares the highest industry effective tax Russell 3000 21.13% rate at 35%.The"Amazon Effect,"however,continues to threaten the sector as many large retailers have been forced Russell 1000 21.69% to close stores or lower prices to unsustainable levels. — The Energy sector(+6.0%)continued to improve in the 4th Russell 1000 Growth 30.21% quarter although it closed out the year among the worst performers(-1.0%).A combination of optimism and Russell 1000 Value 13.66% improvements in the global economy has spurred demand in recent months. More near-term volatility is anticipated in the S&P 500 21,83% price of oil as U.S.output is expected to surpass production out of Saudi Arabia for the first time since the early 1990s. Russell Midcap — 18.62% — Growth outperformed Value during the quarter across the marketcap range(Russell 1000 Growth:+7,9%vs Russell Russell 2500 — 16.81% 1000 Value:+5.3%);Russell 2000 Growth:+4.6%vs Russell 2000 Value:+2.0%). Russell 2000 14.65% Quarter ended December 31,2017 e Russell 1000 eRussell 2000 LL h1bdJ 1.6% Consumer Technology Financial Materials& Producer Energy Consumer Utilities Health Care Discretionary Services Processing Durables Staples Sources:Russell Investment Group,Standard&Poor s Callan Capital Market Overview(continued) December 31, 2017 — The overweight to Tech and Consumer Discretionary in the Global Equity:Quarterly Returns Growth indices drove the outperfonnance. Investors favored the stronger earnings and top-line growth outlook in the Tech sector,which also benefited from positive investor sentiment MSCI ACWI 5.73% following tax refoml. MSCI World 5.51% — Momentum-oriented stocks(MSCI Momentum Index: MSCI ACWI ex USA 5.00% +37.8%)posted their biggest annual gain since 1999, leaving valuations stretched in the space:the MSCI MSCI World ex USA 4.23% Defensive Index rose 12.3%for 2017.Anecdotally,some momentum-oriented managers are finding their bench of MSCI ACWI ex USA Small Cap — 6.56% ideas shrinking as they take profits on their winners while defensively oriented managers continue to sit on cash MSCI World ex USA Small Cap — S.83% waiting for more favorable entry points. MSCI Europe ex UK , 0.90% Global/Non-U.S.Equity MSCI United Kingdom 5.72% — Major non-U.S.markets performed largely in-line with each other during the 4th quarter,which saw a bit of an inflection MSCI Pacific ex Japan 7.01% point as investors were more willing to capitalize on synchronized global growth and began to rotate out of MSCI Japan — 8.49% momentum winners into more cyclical areas such as Financials,Energy,and Materials.Cycllcals led as tax MSCI Emerging Markets — 7.44% reform,improving commodity prices,and growth projections MSCI China — ].62% overcame Brexil fears and election uncertainty in Germany in a risk-on quarter.Emerging markets outpaced developed MSCI Frontier Markets 5.61% ones for the fourth consecutive quarter,fueled by a soft U.S. dollar,synchronized global growth, strong oil and commodity prices,and renewed investor interest. — Nan-U.S.developed(MSCI EAFE&MSCI World ex USA: +4.2%)trailed U.S.(MSCI USA:+6.4%)after beating in the Global Equity:One-Year Returns previous three quarters.The U.S.benefited late in the quarter from much anticipated tax reform and a strong consumenholiday period. MSCI ACWI 23.97% — Europe,which led markets in the 3rd quarter on earnings MSCI Wotltl 22.40% growth and political stability,reverted and trailed other developed regions on Brexil negotiation concerns and MSCI ACWI ex USA 272% political uncertainty following German elections.The European Central Bank also announced plans to curb MSCI Word ex USA 24.21% quantitative easing in January 2018. MSCI ACWI ex USA Small Cap 31.65% — Japan inflation was the best performer on elections and improveded inFlation expectations. MSCI World ex USA Small Cap 31.04% — The U.S.dollar fell against the euro and British pound, MSCI Europe ex UK 26.82% boosting dollar returns,but was flat against the Japanese yen. — Markets favored economically sensitive sectors: IT(+8.3%), MSCI United Kingdom 223% Materials(+7.8%),and Discretionary(+7.6%).Energy was MSCI Pacific ex Japan 25.88% also positive(6.8%)as commodity prices were supported by distribution disruptions and high LNG usage with Writer's MSCI Japan 23.99% arrival.Defensive sectors lagged as markets continued to rise: Utilities(-0.44%),Health Care(+0.9%),Telecom MSCI Emerging Markets — 37.3% MSCI China — 54.07% — It was another difficult quarter for Value(MSCI World Value: +4,6%40/+17.1%2017 vs.MSCI World Growth: +6.4%40 MSCI Frontier Markets — 31,86% /+28.0%2017).Factor performance favored strong growth (forecasted),eamings and price momentum,high quality, and beta.Valuation factors were mixed,with price-to-book and yield detracting from performance,while earnings-based multiples contributed. Source:MSCI Callan Capital Market Overview(continued) December 31, 2017 Emerging Markets U.S.Fixed Income:Quarterly Returns — China(+7.6%)performed in line with broader emerging markets(MSCI Emerging Markets:+7.4%),while local China Blmli Barclays Gov/Cr 1-3 Yr .0.2% I A did better(MSCI China A 50: ,13.7%).Octobers 19th National Congress of the Communist Party solidified power Mints,Barclays Intern GovlCr -0.2% I around A Jinping,reconfirming key policy objectives. Chinese technology continued to perform well but was less Blmberg Barclays Aggregate ' 0.4% of a performance outlier than in previous quarters.China's growing and less-visible debt is an increasing concern,while expectations for stronger growth are buoying the market. Blmberg Barclays Long Gov/Cr 2.8% — South Africa(+21.4%)was the best performer as commodity Blmberg Barclays Universal ' 0.4% prices finned and Jacob Zuma was replaced by reform and anti-corruption minded Cyril Ramaphosa. CS Leveraged Loans 1.2% — Brazil(-2%)trailed as the real sold off and stocks paused following a stellar 3rd quarter.Risks increased with Blmberg Barclays High Yield ' 0.5% upcoming elections and a resurgence of Luis da Silva putting reforms at risk. Blmberg Barclays TIPS 1.3% — Mexico was the worst-performing emerging market country where the peso sold off on NAFTA negotiation concems. Economically sensitive sectors sold off(Discretionary: -23.6%,Financials:-21.2%). One Year ended December 31,2017 — Emerging market Health Care(+16.6%)saw very good performance with outsized contribution from China and South Korea as changing demographics continued to drive Blmberg Barclays GowCr 1-3 Yr ' 0.8% demand. — Value factors struggled in emerging markets while growth, Blmbey Barclays Intern Gov/Cr . 2.14% earnings momentum,price momentum,volatility,and beta Blmberg Barclays Aggregate 3.54% were positive.It remains a difficult environment for emerging market value strategies. Blmberg Barclays Long Gov/Cr 10.71% Non-U.S.Small Cap Blmbem Barclays Universal 4.09% — MSCI World ex USA Small Cap rose+5.8%;MSCI EM Small Cap jumped even more,up 9.2%. CS Leveraged Loans - 4.25% — Developed non-U.S.small cap outperformed its large/mid counterpart modestly,led by Asia.Australian SC(+11.6%) Blmberg Barclays High Yield 7.W and Japan SC(+8.7%)led the segment.Sectors were all positive for the quarter with only moderate dispersion. Blmberg Barclays TIPS ■ 3.01% — Emerging market small cap was the best-performing segment of the equity markets In the 4th quarter led by Health Care(+28%);Real Estate(-0.05%)was the laggard. Fixed Income U.S.Treasury Yield Curves — The U.S.yield curve continued its fattening trend in the 4th �December 31,2017 December 31,2016 quarter.The 2-year U.S.Treasury yield climbed 42 bps to September 30,2017 close at 1.89%.At the long end of the yield curve,the 30- 4% year U.S.Treasury yield fell 12 bps during the quarter, 3% ending the year at 2.74%.This trend reflects the Fed's bias to be less accommodative through monetary policy,as well 2% as benign inflation in the face of a strong labor market. Spread sectors again outperformed U.S.Treasuries. 1% Increasing comfort with credit fundamentals across 0% corporates,consumers,and Commercial real estate drove 0 5 10 15 20 25 30 spreads tighter. Matudty(Years) Sources Bloombe,Bloomberg Barclays.Credit Suisse Callan Capital Market Overview(continued) December 31, 2017 — The Bloomberg Barclays U.S.Aggregate Bond Index rose Global Fixed Income:Quarterly Returns 0.4%. — Volatility in fixed income markets(as well as equities)sits Blmberg Barclays GI Aggregate _ 1.08% near historical lows. — Overall nsk appetite remains elevated driven in part by Blmbem Barclays GI Agg(hdg) 0.80% globally strong growth and loose monetary policy from central banks,as well as business and consumer Blmberg Barclays GI High Yield 0.87% confidence. — The Fed is still struggling to estimate the size of the output Blmberg Barleys GI Agg ex US 1.6% gap,which is expected to indicate when growth translates JPM EMBI Global Diversified 1.16% into inflationary pressure.The market is pricing in three hikes for 2018,which would not be far from the Fed's own expectation of where rates will end up in the longer run. JPM GBI-EM Global Diversified - 0.82% Yields on the 10-year Treasury rose modestly from 2.33%to 2.41%.The Fed's previously announced balance sheet JPM EMBI GI Div/JPM GBI-EM GI Div _ 1.01% normalization began without disruption in October. — Corporate bonds outperformed for the quarter and the year, JPM CEMBI - 0.62% and yield spreads reached a post-crisis tight of 93 bps over Treasuries. Investment grade corporate credit was the strongest-performing fixed income sector;tax reform may Improve profitability and negatively impact issuance, Global Fixed Income:One-Year Returns potentially supporting the sector going forward. — High yield credit continued to perform well, aided by rising equity markets,but lagged investment grade bonds.Default Blmberg Barclays GI Aggregate - 7.39% rates remained benign,capping off the lowest annual default rate since 2013.A high share of the market trading"to call' Blmberg Barclays GI Agg(bag) , 3.04% relative to history indicates less potential upside from price appreciation because issuers are able to refinance at par.A Blmberg Barclays GI High Yield 10.43% significant number of high yield issuers are expected to be negatively impacted by the limit on interest deductions from Blmberg Barcays GI Agg ex US 10.51% tax reform,with the energy, leisure, materials,utilities,and financial services sectors being particularly affected. JPM EMBI Global Diversifed 10.26% Issuance was robust in the fourth quarter at$68 billion,but tax reform could negatively impact issuance. JPM Gall Global Diversified — 15.21% — Within emerging market debt in hard currency sovereign, most issuers performed well,driving positive returns,with JPM EMBI GI Div/JPM GBI-EM GI Div 12.74% Venezuela a notable detractor.Higher commodity prices and global growth supported the asset class broadly.The local JPM CEMBI = 7.9% currency JPM GBI-EM Global Diversified Index rose 0.8%in the quarter.Asian countries(+5%)performed best while Latin America sank nearly 5%.Argentina(-7%),Brazil(-3%), and Mexico(-9%)lost the most.These returns were largely a function of currency depreciation rather than changes in Change In 10-Year Global Government Bond Yields interest rates. 3Q17 to 4017 U.S.Treasury 7bps Germany 4 bps ■ U.K. -18 bps — Canada -5 bps = Japan -2 bps , Sources Bloombe,Bloomberg Barclays.JP Morgan Callan Active Management Overview Market Overview Active Management vs Index Returns Market Overview The charts below illustrate the range of returns across managers in Callan's Separate Account database over the most recent one quarter and one year time periods. The database is broken down by asset class to illustrate the difference in returns across those asset classes.An appropriate index is also shown for each asset class for comparison purposes.As an example, the 0rsl bar in the upper chart illustrates the range of returns for domestic equity managers over the last quarter. The triangle represents the S&P 500 return. The number next to the triangle represents the ranking of the S&P 500 in the Large Cap Equity manager database. Range of Separate Account Manager Returns by Asset Class One Quarter Ended December 31,2017 10% 0% 8% (55)� j 096 I601� N (66) K 2% (34) (46)® 0% 73 17- (2%) large Cep Small Cap Non-US Domestic Nan-US Real EquNy Equity Equity Fixed Income Fixed Income Estate s s vs 5&p No Russell 2000 MSCI WE Blmbg Ag9r Bd Citi Non-05 GoA NCREIF index 10ih Percentile 7% fi 76 6.10 0.]1 1.9] 2.97 25M Percentile ]42 531 524 0.59 181 2,53 Metlian 679 394 440 049 152 1,76 75th Percentile 5.78 3.02 3.72 0.38 0.59 1.23 90th Percentile 4.62 1.69 2.85 0,24 (0.26) 0.74 Index • 664 334 423 0,39 1.57 1,80 Range of Separate Account Manager Returns by Asset Class One Year Ended December 31,2017 40% 35% 30% c 25% (75) 20% (52) Y 15% (53) to% 801� 5% (B6J� 0% tame Cap Small Cap Non-Us Domestic N..-US Real Equity Equity Equity Fixed Income Fixed Income Estate se vs 5&P No Russell 2000 MSCI EAFE Blmbg Aggr Bd Giti Non USGoA NCREIF Index 10M Percentile 32.50 29.07 33.99 0.03 13.34 12.50 25ih Percentile 2).82 2289 30.84 4,42 12.34 934 Median Mug 15.22 28.16 3.96 11.71 7.14 75th Percentile 10.67 1047 25.03 3.72 10.81 5.43 90M Percentile 15.52 Z43 23.38 342 10.33 2.79 '� Index • 21.83 14.65 25.03 3.54 10.33 6.96 Callan orange County Sanitation Diatdct 7 Domestic Fixed Income Active Management Overview The U.S. yield curve continued its flattening trend in the fourth quarter. The 2-year U.S. Treasury yield climbed 42 bps to close at 1.89%.At the long end of the yield curve,the 30-year U.S. Treasury yield fell 12 bps during the quarter,ending the year at 2.74%.This trend reflects the Fed's tightening bias as well as benign inflation.As a result,longer-term bonds sharply outperformed short-term and intermediate-maturity bonds.The Bloomberg Barclays U.S.Aggregate Bond Index was roughly flat(+0.4%)for the quarter. Corporate bonds outperformed other sectors within the Aggregate for the quarter and the year, and high yield corporates underperformed investment grade for the quarter. The sector was hurt by outflows and a few negative headlines on specific credits. Separate Account Style Group Median Returns for Quarter Ended December 31,2017 Blmbg Aggregate: 0.39% 4% Blmbg High Yield: 0.41% Blmbg Long Gov/Cred 2.84% 3% ________________________295-_ 2% ---------------------- L0.490.59am 0% (ON) (002) %) Defensive Interme0 Core Core Plus Fxlended Bank High Yield Bond Maturity Loans Separate Account Style Group Median Returns for One Year Ended December 31,2017 Blmbg Aggregate: 3.54% 15% Blmbg High Yield: 7.50% Simon Long G.bCred: 10.71% 11.1] 10% ______________________ .69 to X 5% ___________________99➢-_ 3.98 4.3] 244 1.30 0% Defensive Irharred core Core Plus Extended Bank High Yield Callan Maturity Loan. Callan charge County Sanitation District 5 Asset Allocation Investment Manager Asset Allocation The table below contrasts the distribution of assets across the Fund's investment managers as of December 31, 2017,with the distribution as of September 30,2017.The change in asset distribution is broken down into the dollar change due to Net New Investment and the dollar change due to Investment Return. Asset Distribution Across Investment Managers December 31,2017 September 30,2017 Market Value Weight Net New Inv. Inv.Return Market Value Weight Domestic Fixed Income long Term Operating Fund' 396,692,680 73,16% 64,000,000 (637,596) 333.230.276 87o7% liquid Operatina Monies' 145,199,636 26.134% 95,800,000 216,106 49,483,530 12.93% Total Fund $542,092,317 100.0% 0159,800,000 $(421A90) 5092.713,807 100.0% 'Chandler replaced PIMCO during the 4th quarter of 2014.Assets were transferred In+lnd as of 12I0112014. Callan crania County Sanitation DisNct t9 Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods ended December 31, 2017. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended December 31,2017 Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund^ (0.20%) 1.18% 1.20% 0.76% 1.62% Chandler (0.20%) 1.18% 1.20% - Blmbg Govt/Cred 1-5 Year Idx (0.30%) 1.27% 1.27% 1.10% 1.55% ML 1-5 Govt/Corp (0.28%) 1.28% 1.31% 1.15% 1.62% Liquid Operating Monies^ 0.30% 0.91% 0.53% 0.36% 0.32% Chandler 0.30% 0.91% 0.53% - - Citigroup 3-Month Treasury Bill 0.28% 0.84% 0.38% 0.24% 0,20% Total Fund (0.11%) 1.02% 0.99% 0.63% 1.36% Target* (0,17%) 1,19% 1.13% 0.97% 1.33% Current Quarter Target=80.0%ML US Corp/Gov:1-5Y and 20.0%Chi 3 Mo T-Bill. ^Assets were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. CallanOrenaa County Santlerinn Dist c „ Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods ended December 31, 2017. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended December 31,2017 Last Last Last 10 15 22.1/4 Years Years Years Domestic Fixed Income Long Term Operating Fund^ 2.65% 3.07% 4.32% Blmbg Govt/Cred 1-5 Year Idz 2.46% 2.84% 4.14% ML 1-5 Govt/Corp 2.49% 2.86% 4.17% Liquid Operating Monies^ 0.54% 1,42% 2.61% Ciligroup 3-Month Treasury Bill 0.34% 1.21% 2.30% Total Fund 2.24% 2.76% 4.05% Target` 2.06% 2.53% 3.80% Current Quarter Target=80.0%ML US Corp/Gov:1-5Y and 20.0%Chi 3 Mo T-Bill. Callan were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. Callan Onar,County Sandarinn Distnd 12 Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periotls. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. 2017 2016 2015 2014 2013 Domestic Fixed Income Long Term Operating Fund^ 1.18% 1.58% 0.85% 1.98% (1.77%) Chandler 1.18% 1.58% 0.85% - - Blmbg Govl/Cred 1-5 Year Idx 1.27% 1.56% 0.97% 1.42% 0.28% ML 1-5 Govt/Com 1.28% 1.62% 1.05% 1.51% 0.32% Liquid Operating Monies^ 0.91% 0.47% 0.22% 0.09% 0.13% Chandler 0.91% 0.47% 0.22% - - Citiarouo 3-Month Treasury Bill 0.84% 0.27% 0.03% 0.03% 0.05% Total Fund 1.02% 1.15% 0.80% 1.73% (1.49%) Target* 1.19% 1.35% 0.85% 1.21% 0.26% *Current Quarter Target=80.0%MIL US Corp/Gov:1-5Y and 20.0%Citi 3 Mo T-Bill. ^Assets were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. Callan mrenaa County Santle,Inn mistnd „ Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periotls. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. 2012 2011 2010 2009 2008 Domestic Fixed Income Long Term Operating Fund^ 3.06% 4.59% 4.42% 5.52% 5.37% Blmbg Govt/Cred 1-5 Year Idx 2.24% 3.14% 4.08% 4.62% 5,12% ML1-S Govt/Corp 2.47% 3.10% 4.17% 4.88% 4.65% Liquid Operating Monies- 0.17% 0.24% 0.25% 0,58% 2,40% Citigroup 3-Month Treasury Bill 0.07% 0.08% 0.13% 0.16% 1.80% Total Fund 2.70% 3.70% 3.68% 4.65% 4.61% Target` 1.99% 2.49% 3.36% 3.93% 4.08% Current Quarter Target=80.0%MIL US Corp/Gov:1-5Y and 20.0%Citi 3 Mo T-Bill. Msssets were transferred in kind to Chandler on 12/112014.Previous performance reflects PIMCO. Callan 0mr,,e County Sandarinn DisNtl 14 Asset Class Risk and Return The charts below show the seven year annualized risk and return for each asset class component of the Total Fund.The first graph contrasts these values with those of the appropriate index for each asset class.The second chart contrasts them with the risk and return of the median portfolio in each of the appropriate CAI comparative databases. In each case, the crosshairs on the chart represent the return and risk of the Total Fund. Seven Year Annualized Risk vs Return Asset Classes vs Benchmark Indices 1.4% 1.2% 1.0% N K 0.8% 0.6% 0.4% 0.2% 0.0% 0.0% 02% 0,4% OB% 0.8% 1.0% 1.2% 1.4% Standard Deviation Seven Year Annualized Risk vs Return Asset Classes vs Asset Class Median 1.6% 1.4% 1.2% 1.0% 0.8% N K 0.6% 04% 0.2% 0 0% 0.0% 02% 04% O% 0.8% 10% 1,2% 1.4% ,.., 1,, Standard Deviation Callan Omrr County Sandation Oisftt 15 Manager Analysis Chandler-Long Term Operating Fund Period Ended December 31, 2017 Investment Philosophy Chandler Asset Management's Short Term Bond strategy is driven by quantitative models and focuses on active duration management,sector selection and term structure.The strategy seeks to achieve consistent above-benchmark returns with low volatility relative to the style's performance benchmark. The firm has a unique focus on high quality fixed income management, and places risk control as a higher objective than return. Assets were transferred in kind to Chandler on 12/l/2014.Previous performance reflects PIMCO. Quarterly Summary and Highlights Quarterly Asset Growth • Long Term Operating Fund's portfolio posted a (0.20)% Beginning Market Value $333,230,276 return for the quarter placing it in the 83 percentile of the Net New Investment $64,000,000 Callan Defensive Fixed Income group for the quarter and in Investment Gains/(Losses) $-637,596 the 63 percentile for the last year. • Long Term Operating Fund's portfolio outperformed the ML Ending Market Value $396,592,680 US Corp/Govt 1-5Y by 0.08% for the quarter and underperformed the ML US Corp/Govt 1-5Y for the year by 0.10%. Performance vs Callan Defensive Fixed Income(Gross) 6% 5% 4% 8>®aE= 3 3% 1 11 11 ) ( 31) e(3 1% 54)®M6 6)®A16 fi61®AI6761�A19 36)®B14 ) A2 0% 96) 9 e (,%) Last Otr Last Chandler Las1,3 Yrs Last 5Yrs Last 7Yrs LaN10Yrs Last22Yrs Yr Inception ,run Percentile 0.17 2.18 1.94 IN1.82 2.19 32] 4.44 25M P.. 11e 095 178 . 0. 1 1,.62 1,.62 14. , 11.83 272 420 ]Slh PMe 096 193 6 26 tie 45 2.22 394 015 12 1 00 00 087 12 1.93 3.75 901h Percentile 0.23 0.65 0,82 0.82 0.77 0.98 1.78 3.60 Long Term Operating Fund •A (0.20) 1.18 1.20 1.20 0.76 1.62 2.65 4.32 Undue G.WCred 1-5 Year Idx 06 (030) 127 1,27 1,27 1,10 1.55 2d6 4.14 ML US Com/GmA 1-S • (0.28) 1.28 1,31 1.31 1.15 1.62 2.49 4.17 Callan Defensive Fixed Income(Gross) Relative Return vs ML US Corp/Govt 1-SY Annualized Seven Year Risk vs Return 2.0% 3.0% 15% __ __ __ __ __ ____ 2.5% m 1.0% _ __ __ __ __ ____ OfE 05% - E 2.0% 0.0% K 1.5% e d __ __ ____ o% (1.5%) 0.5% 2011 2012 2013 2014 2015 2016 2017 04 06 08 1.0 1.2 14 16 13 0 Long Term Operating Fund Standard Deviation C/'�,� 1,� allan Cranes,County Sanitation Dlatdcl 17 Long Term Operating Fund Return Analysis Summary Return Analysis The graphs below analyze the manager's return on both a risk-adjusted and unadjusted basis.The first chart illustrates the manager's ranking over different periods versus the appropriate style group.The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last chart illustrates the manager's ranking relative to their style using various risk-adjusted return measures. Assets were transferred in kind to Chandler on 12M/2014. Previous performance reflects PIMCO. Performance vs Callan Defensive Fixed Income(Gross) 20% 15% 19% A(( 5� 0% B A B A ]®A 1 4J.LB 1 1]�B( 512 B( 219 BI et S%) A ) (10%) 2017 2016 2015 2014 2013 2D12 2011 2010 2009 2003 loth Pemenule 2.16 2.82 1.1] 1.50 1.20 4.46 2.]2 4.]1 13.74 6.63 25th Pemenule 1.78 2.17 1.01 1.2] 0.81 2.60 2.30 4.01 8.60 5.64 Median 1.30 1.56 091 1.11 0.65 1.81 185 318 5.94 3.88 75th Pementile 0.91 1.18 e75 087 040 145 185 272 2.53 (0.1]j 90h Percentile 0.65 1.03 0.64 0.73 0.29 0.92 1." 2.41 182 (3.46) Long Tenn Opemung Fend *A 118 1.58 085 1,98 (1,77) 3.06 4.59 442 5.52 5.37 elm GoWCred -5 Vear Idx •B 1.27 1.% 0.97 f A2 0.28 2.24 3.14 4.08 4.62 5.12 ML US Core/Govt 15Y ♦ 1.28 1.62 1.05 151 0.32 2.47 3.10 4.17 4.88 4.65 Cumulative and Quarterly Relative Return vs MIL US Corp/Govt 1-SY 6% 4% 2% u K y 0% m (2%) --- - - - -- -- --- --- --- --- --- ---- d K (6%) 2008 2009 2010 2011 M12 2013 2014 M15 2016 2017 Long Term Operetlng Fund 0 eimbg Ge VCred 15 Year Idx 0 Callan Defensive Fix Inc Risk Adjusted Return Measures vs ML US Corp/Govt 1-SY Rankings Against Callan Defensive Fixed Income(Gross) Seven Years Ended December 31,2017 25 20 5 (( )) 0 A(95) o.5 a� A91 e Rc. Bp]) 5) (2.0) Alpha Sharpe Excess For RNIO Ratio f 0lh Parcentlla 107 2.05 0.88 25th Percentile 0.74 1]5 0.31 Median 0.39 1.53 0.29 75th PervunIle 0.15 1.30 O.a5 Both Percentlle (009) 1.03 1.14 Longg Term Opemtlng Fund *A 0.10 0.90 0.01 Blmbg GovVCred 1-5 Vear ltlx ■B 0.08 1.12 (0.a]) Callan Orarcg County sanitation District 10 Long Term Operating Fund Bond Characteristics Analysis Summary Portfolio Characteristics This graph compares the managers portfolio characteristics with the range of characteristics for the portfolios which make up the manager's style group. This analysis illustrates whether the manager's current holdings are Consistent with other managers employing the same style. Fixed Income Portfolio Characteristics Rankings Against Callan Defensive Fixed Income as of December 31,2017 40 3.5 3.0 (17) 5- (3) N(6) (23) (51)� (45) s21 2.0 95) 1.5 1.0 0.5 oo (0.5) Avenge EReceve Coupon OA Duration 'it. Yield Role conviadry 101b Pemen1le 2.16 3.54 2.74 3.01 0.09 250h Penenale 1.90 2.31 2.35 2.53 and Median 1.81 1.98 2.19 2.16 0." 75tb Percentile 1.62 1.83 1.99 1.82 00 2 901M1 Pemen0le 1.18 1.57 1.88 1.55 (0.01) Long Term Operating Fund • 2.26 2.35 1.75 1.75 - SImh9 Gov/Cred 1-5 Yr ♦ 2.72 2.85 2.17 2.23 0 09 Sector Allocation and Quality Ratings The first graph compares the managers sector allocation with the average allocation across all the members of the manager's style.The second graph compares the manager's weighted average quality rating with the range of quality ratings for the style. Sector Allocation Quality Ratings December 31,2017 vs Callan Defensive Fixed Income 329 Trey US Tray 60.8 ��2 9.s AAA RMBS 03 x Cory(Iml 144A) 54.] �� �{ (14) Omer 9.1 AA 0(61) 4.0 Cash 1.3 AA- 3.6 ASS 3.7 Aa 1.1 Tax-Exempt US Muni A Weighted Average 0.6 Quality Rating CMOs 10m Percentile AAA 25iM1 Percentile AA Gov Related 1,7 Median AA ]Slh Percentile AA, 901M1Percentile At 0% 10% 20% 30% 60% 50% 60% 70% 80% Long Term Operating Funtl Callan Deknsive Fixatl Income Long Term Operating Fund 0 AA Callan 0 Blmbg Gov/Cmd 1-5 Yr Blmbg GavlCmd1-5 Yr ♦ AA* Cellar l Orange County Sensation Distnd 19 Long Term Operating Fund Portfolio Characteristics Summary As of December 31, 2017 Portfolio Structure Comparison The charts below compare the structure of the portfolio to that of the index from the three perspectives that have the greatest influence on return. The first chart compares the two portfolios across sectors. The second chart compares the duration distribution.The last chart compares the distribution across quality ratings. Sector Allocation US Tray US Tray 33% 61% CMOs coon 1% 4% Other 9% ASSMBS 4% 1 29% Gov Related 2% Cary(ind 144A) Corp(ind 144A) 19% Tax-FFxempl US Muni g8% 1% Long Term Operating Fund Blmbg Govt/Credit 1.5 Year Weighted Average: Duration Duration Distribution ■ Long Term 0pere9ng Fund: 2.26 80% ■ aiming GoWC%dit 1-6 Year 2.72 o 70% ____________ ______ ______ 0 60% ——_______ 60.3 ______ ______ ______ ______ d50% _________ ______ ______ ______ ______ 40% _______45R _�.g c30% 47,3____ ______ ______ ______ or P 20% ——— ------ R 10% __ ____ ______ ______ 0% 0.3 3.0 <1 1-3 35 5-7 7-10 NO Years Duration Welgload Average: Oualiry Duality Distribution Long Term Oyerating Fund: M 100% ■ Blmbg OovllCredit 1-5 Year AA+• p80% ______ ___ ___ __ ___ ___ ___ __ ___ ___ 68.7 63L17.7737 8 R60% _ ___ ___ __ ___ ___ ______O 40% _4 20% 53 --T27 7.3 0% APA PA A BBB Be B CCC CC C 0 NIR Quality Rating Callan Orange county Smndation Dla red 20 Chandler-Liquid Operating Money Period Ended December 31, 2017 Investment Philosophy Assets were transferred in kind to Chandler on 12/1/2014. Previous performance reflects PIMCO. Quarterly Summary and Highlights Quarterly Asset Growth • Liquid Operating Money Net's portfolio posted a 0,26% Beginning Market Value $49.483,530 return for the quarter placing it in the 18 percentile of the Net New Investment $95,800,000 Callan Money Market Funds group for the quarter and in the Investment Gains/(Losses) $216,106 31 percentile for the last year. • Liquid Operating Money Nefs portfolio underperformed the Ending Market Value $145,499,636 Citigroup 3-Month Treasury Bill by 0.02%for the quarter and underperformed the Citigroup 3-Month Treasury Bill for the year by 0.08%. Performance vs Callan Money Market Funds(Net) 2. % �(16 2.0% 8) 1.5% 1.0% 23) (31 23)L�(23 23)L�(23 ®( )®(22 97)®(25 t5)®(18 21) 27 19 on% "at Otr Last Chandlar Last 3Ym Last 5Yrs Last 7Yrs Last 10 Yra Last 22 Yrs Yr Incewlon 10T Percentile 030 1,14 0.60 0.60 040 0.30 056 256 25M Percentile 0.25 081 0.3fi 0.36 0.22 0.16 0.39 2.36 Matian 0.20 050 0,23 0.23 0.14 0.10 0.29 2.21 75M Peroentlle 0.13 OW 0,12 0,12 0,07 005 023 2.10 90T Perwntile 007 0,15 0,06 0,06 olNt 003 0,17 195 Liquid Operating Money Net 0 026 076 0,38 0,38 021 017 0.39 2A6 Ciligmup 3-Month Treasury Bill ♦ 0.28 094 0,38 0.38 0.24 0.20 0.34 230 Relative Returns vs Callan Money Market Funds(Net) Citigroup 3-Month Treasury Bill Annualized Seven Year Risk vs Return 0.10% 25% 008% __ __ __ __ __ ____ 20% 0 O6% E 1.5% = ON% f E y 0.02% __ __ __ __ ____ 1.0% o.00% o.s% (0.02%) __ _ __ ___ (0.04%) __ ____ 0.0% . ..- . (0.06%) (0.5%) 2011 2012 2013 2014 2015 2016 2017 (0.5) 00 05 10 15 20 25 Callan Operating Money Net Standard Deviation Callan cranes County Sanitation Dstsdd 21 Liquid Operating Money Net Return Analysis Summary Return Analysis The graphs below analyze the manager's return on both a risk-adjusted and unadjusted basis.The first chart illustrates the manager's ranking over different periods versus the appropriate style group.The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last chart illustrates the manager's ranking relative to their style using various risk-adjusted return measures. Assets were transferred in kind to Chandler on 12M/2014. Previous performance reflects PIMCO. Performance vs Callan Money Market Funds(Net) 3.5% 30% 2.6% 2.0% 1.5% 61 1.0% 23® 31 0.5% 26 22 02 14 0.0% (0.5%) 2017 M16 2015 2014 2013 2012 2011 2010 2009 2008 101h PercenMe 1.14 071 ell 007 0.08 0.18 008 0.15 0.52 2.]] 25th Pecentle 0.01 0.28 003 002 0.02 003 002 005 0113 246 Median 0.60 0.10 0.01 001 0.01 0.01 0.01 0.01 0.12 2.03 75th Pecendle 0.32 0.01 0.00 O rl 0.00 0.01 0.00 0.01 0.03 1.46 Mh PercenMe 0.15 cW 000 000 0.00 000 000 too oel 1.08 Liquid Operating Money Net 01 0.76 0.32 0.07 (Orin (0.02) 0.02 ON 0.10 OA3 2.25 Citigrwp 3-Mordh Treasury Bill ♦ 0.84 0.27 0.03 003 0.05 0.07 0.08 0.13 0.16 1.80 Cumulative and Quarterly Relative Return vs Citigroup 3-Month Treasury Bill 1.0% 0.8% of 0.4% w 0.0% (0.2%) (0.a%) 2008 2C09 2010 2011 M12 2013 2014 M15 2016 2017 10 Liquid OperaOng Money Net 0Callan Monay MaAat Funds Risk Adjusted Return Measures vs Citigroup 3-Month Treasury BIII Rankings Against Callan Money Market Funds(Net) Seven Years Ended December 31,2017 2 0 (22) •122) 11) 2) (3) (4) (s) M) Alpha Sh rye Excess Return Rate Ratio 101h Percentile 0.10 0.34 1.07 25th Percentila (0.03) 0.4]) 1.08 Median (0m) 1.10 1.50 75th Perranhle (0.13) 901h Percentile (0.15) /'� Liquid Operating Money Net • M05) (0.38) main CallanOrange County Sandation DisNct 2 Callan Research/Education CALLAN Callan INSTITUTE 4th Quarter 2017 Education Research and Educational Programs The Callan Institute provides both research to update clients on the latest industry trends and carefully structured educational programs to enhance the knowledge of industry professionals.Visit www.callan.condlibrary to see all of our publications,and www.callan.comlblog to view our bill"Perspectives."For more information contact Anna West at 415.974.5060/institute@callan.mm. New Research from Callan's Experts The 401(k)Plan Turns 40 1 In 1978,a section TDFs, FYI I Jimmy Veneruso, CFA, CAIA,a DC consultant in our -i -- of the Internal Revenue Code was enacted into Fund Sponsor Consulting Group, discusses target date funds law that made 401(k) plans possible. For the (TDFs)and considerations for fund sponsors in this video. '( most part,plan sponsors have taken advantage O of DC plan improvements that have transpired Periodicals © since 1978.Yet some aspects of plan manage- Active vs. Passive Charts, 3rd Quarter 2017 1 This series of menl may still be stuck in the ere of bell bottom charts maps active managers alongside relevant benchmarks. pants.Lori Lucas,Callan's DC pmcfice leader,offers lessons spon- sors can apply to their DC plans in 2018. Market Pulse Flipbook,3rd Quarter 20171 Aquarterly market ref- erence guide covering investment and fund sponsor trends in the The Cost of Returns I This paper summarizes Callan's October U.S.economy,U.S.and non-U.S.equities and fixed income,alter- 2017 Workshop, 'The Cost of Returns: An In-Depth Look at natives,and defined contribution. Institutional Investment Fees' ®� Capital Market Review,3rd Quarter 1 The Review provides 2017 ESG Survey Callan's fifth annual analysis and an overview of the economyomy and public and private survey on the status of environmental, market activity each quarter across a wide range of asset Gasses. social,and governance(ESG)investing in the U.S. institutional investment mar- Real Assets Reporter, Summer/Fall 2017 1 In this edition, Jan ket reveals more than a third of inves. Mende of Callan's Real Assets Consulting Group discusses the tors are incorporating ESG factors into investment decisions. meats of infrastructure debt for institutional investors'porttolios. Real Estate Indicators: Too Hot to Touch or Cool Enough to DC Observer, 3rd Quarter 20171 This edition highlights our"DC Handle? I Callan's Real Assets Consulting Group has identified Plan Governance Survey,"which helps sponsors better understand seven indicators rased on spreads in real estate and fixed income good governance practices, including how their peers are struclur- markets—that,combined with an understanding of prevailing mar- ing oversight committees. With:DC Plan Governance Survey Key ket dynamics, help signal when the institutional real estate market Findings I This infographic displays the surveys highlights. is overheated or cooled. Hedge Fund Monitor, 3rd Quarter 2017 1 Callan's Jim McKee 2017 Investment Management Fee Survey l This survey—the analyzes four major secular forces that may alter our perception of seventh we have produced in 30 years—reports on institutional the financial market's now-healthy glow and explores how inves- investmenl management fee payment practices and trends.The tors can prepare for todays uncertainty surrounding risk assets data in this report were gleaned from electronic questionnaires and the divergent paths that they may take when the next financial sent to a broad sample of U.S-based institutional fund sponsors eclipse occurs. and investment management organizations,as well as from infor- mation in Callan's proprietary database. The Center for Investment Training Events Educational Sessions Miss out on a Callan conference or workshop? Event summa- The Center for Investment Training, better known as the "Callan des and speakers presentations are available on our websile: College;provides a foundation of knowledge for industry profes- www.callan.comllibrary/ sionals who are involved in the investment decision-making pro. Callan's National Conference will be held January 29-31,2018,a1 cess.It was founded in 1994 to provide clients and non-clients alike the Palace Hotel in San Francisco. with basic-to intermediate-level instruction.Our next sessions are: Introduction to Investments For more information about events, please contact Barb Boise,April 4-5,2018 Gerraty:415.274.3093/gerraty@callan.com San Francisco,April 10-11, 2018 San Francisco,July 24-25, 2018 Chicago, October 2-3,2018 This program familiarizes fund sponsor trustees, staff, and asset management advisers with basic investment theory,lemtinology, and practices. It lasts one-and-a-half days and is designed for in. dividuals who have less than two years of experience with asset- management oversight andlor support responsibilities.Tuition for the Introductory "Callan College" session is $2,350 per person. Tuition includes instruction, all materials, breakfast and lunch on each day,and dinner on the first evening with the instructors. Customized Sessions The 'Callan College" is equipped to customize a curriculum to meet the training and educational needs of a specific organization. These tailored sessions range from basic to advanced and can take place anywhere--even at your office. Learn more at www.callan.com/events/callan-college-intro or Education: By the Numbers contact Kathleen Cunnle:415.274.3029/cunnle@callan.com 525 Attendees(on average)of the 50+ Unique pieces of research the Institutes annual National Conference Institute generates each year 3 700 Total attendees of the'Callan 1980 Year the Callan Institute College since 1994 was founded We think the best way to learn something is to teach it. Entrusting client education to our consultants and specialists ensures that they have a total command of their subject matter. This is one reason why education and research have been cornerstones of our firm for more than 40 years:' Ron Peyton,Executive Chairman Callan V @CallanU_C ID Callan Definitions Risk/Reward Statistics The risk statistics used in this report examine performance characteristics of a manager or a portfolio relative to a benchmark (market indicator) which assumes to represent overall movements in the asset class being considered. The main unit of analysis is the excess return, which is the portfolio return minus the return on a risk free asset (3 month T-Bill). R-Squared indicates the extent to which the variability of the portfolio returns are explained by market action. It can also be thought of as measuring the diversification relative to the appropriate benchmark. An r-squared value of.75 indicates that 75% of the fluctuation in a portfolio return is explained by market action. An r-squared of 1.0 indicates that a portfolio's returns are entirely related to the market and it is not influenced by other factors. An r-squared of zero indicates that no relationship exists between the portfolio's return and the market. Relative Standard Deviation is a simple measure of a managers risk(volatility)relative to a benchmark. It is calculated by dividing the manager's standard deviation of returns by the benchmark's standard deviation of returns. A relative standard deviation of 1.20,for example, means the manager has exhibited 20% more risk than the benchmark over that time period. A ratio of .80 would imply 20% less risk. This ratio is especially useful when analyzing the risk of investment grade fixed-income products where actual historical durations are not available. By using this relative risk measure over rolling time periods one can illustrate the "implied" historical duration patterns of the portfolio versus the benchmark. Residual Portfolio Risk is the unsystematic risk of a fund,the portion of the total risk unique to the fund(manager)itself and not related to the overall market. This reflects the"bets"which the manager places in that particular asset market. These bets may reflect emphasis in particular sectors, maturities (for bonds), or other issue specific factors which the manager considers a good investment opportunity. Diversification of the portfolio will reduce or eliminate the residual risk of that portfolio. Rising and Declining Periods refer to the sub-asset class cycles vis-a-vis the broader asset class. This is determined by evaluating the cumulative relative sub-asset class index performance to that of the broader asset class index. For example, to determine the Growth Style cycle, the S&P 500 Growth Index (sub-asset class) performance is compared to that of the S&P 500 Index(broader asset class). Sharpe Ratio is a commonly used measure of risk-adjusted return. It is calculated by subtracting the "risk-tree" return (usually 3 Month Treasury Bill)from the portfolio return and dividing the resulting"excess return" by the portfolio's risk level (standard deviation).The result is a measure of return gained per unit of risk taken. Sortino Ratio is a downside risk-adjusted measure of value-added. It measures excess return over a benchmark divided by downside risk. The natural appeal is that it identifies value-added per unit of truly bad risk. The danger of interpretation, however, lies in these two areas: (1)the statistical significance of the denominator,and (2) its reliance on the persistence of skewness in return distributions. Standard Deviation is a statistical measure of portfolio risk. It reflects the average deviation of the observations from their sample mean. Standard deviation is used as an estimate of risk since it measures how wide the range of returns typically is. The wider the typical range of returns,the higher the standard deviation of returns,and the higher the portfolio risk. If returns are normally distributed (Is. has a bell shaped curve distribution) then approximately 2/3 of the returns would occur within plus or minus one standard deviation from the sample mean. Total Portfolio Risk is a measure of the volatility of the quarterly excess returns of an asset. Total risk is composed of two measures of risk: market(non-diversifable or systematic)risk and residual(diversifiable or unsystematic) risk. The purpose of portfolio diversification is to reduce the residual risk of the portfolio. Callan 27 Risk/Reward Statistics Tracking Error is a statistical measure of a portfolio's risk relative to an index. It reflects the standard deviation of a portfolio's individual quarterly or monthly returns from the index's returns. Typically,the lower the Tracking Error, the more "Index-like"the portfolio. Traynor Ratio represents the portfolio's average excess return over a specified period divided by the beta relative to its benchmark over that same period. This measure reflects the reward over the risk-free rate relative to the systematic risk assumed. Note:Alpha,Total Risk,and Residual Risk are annualized. Callan 28 Fixed Income Portfolio Characteristics All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of these values for the portfolio. Allocation by Sector- Sector allocation is one of the tools which managers often use to add value without impacting the duration of the portfolio. The sector weights exhibit can be used to contrast a portfolio's weights with those of the index to identity any significant sector bets. Average Coupon-The average coupon is the market value weighted average coupon of all securities in the portfolio. The total portfolio coupon payments per year are divided by the total portfolio par value. Average Moody's Rating for Total Portfolio- A measure of the credit quality as determined by the individual security ratings. The ratings for each security, from Moody's Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quality-lowest credit risk)to C (lowest investment quality- highest credit risk). Average Option Adjusted(Effective)Convexity-Convexity is a measure of the portfolio's exposure to interest rate risk. It is a measure of how much the duration of the portfolio will change given a change in interest rates. Generally,securities with negative convexities are considered to be risky in that changes in interest rates will result in disadvantageous changes in duration. When a security's duration changes it indicates that the stream of expected future cash-flows has changed, generally having a significant impact on the value of the security. The option adjusted convexity for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Option Adjusted(Effective)Duration- Duration is one measure of the portfolio's exposure to interest rate risk. Generally, the higher a portfolio's duration, the more that its value will change in response to interest rate changes. The option adjusted duration for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Price-The average price is equal to the portfolio market value divided by the number of securities in the portfolio. Portfolios with an average price above par will tend to generate more current income than those with an average price below par. Average Years to Expected Maturity-This is a measure of the market-value-weighted average of the years to expected maturity across all of the securities in the portfolio. Expected years to maturity takes into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Years to Stated Maturity- The average years to stated maturity is the market value weighted average time to stated maturity for all securities in the portfolio. This measure does not take into account imbedded options, sinking fund paydowns,or prepayments. Current Yield-The current yield is the current annual income generated by the total portfolio market value. It is equal to the total portfolio coupon payments per year divided by the current total portfolio market value. Callan 29 Fixed Income Portfolio Characteristics Duration Dispersion- Duration dispersion is the market-value weighted standard deviation of the portfolio's individual security durations around the total portfolio duration. The higher the dispersion, the more variable the security durations relative to the total portfolio duration ('barbellness"), and the smaller the dispersion, the more concentrated the holdings' durations around the overall portfolio's ('bulletness"). The purpose of this statistic is to gauge the 'bulletness' or 'barbellness'of a portfolio relative to its total duration and to that of its benchmark index. Effective Yield-The effective yield is the actual total annualized return that would be realized if all securities in the portfolio were held to their expected maturities. Effective yield is calculated as the internal rate of return, using the current market value and all expected future interest and principal cash flows. This measure incorporates sinking fund paydowns,expected mortgage principal prepayments,and the exercise of any"in-the-money"imbedded put or call options. Weighted Average Life-The weighted average life of a security is the weighted average time to payment of all remaining principal. It is calculated by multiplying each expected future principal payment amount by the time left to the payment. This amount is then divided by the total amount of principal remaining. Weighted average life is commonly used as a measure of the investment life for pass-through security types for comparison to non-pass-through securities. Callan 30 Disclosures Callan ll Quarterly List as of December 31, 2017 List of Callan's Investment Manager Clients Confidential-For Callan Client Use Only Callan takes its fiduciary and disclosure responsibilities to clients very seriously.We recognize that there are numerous potential conflicts of interest encountered in the investment consulting industry and Mal it is our responsibility to manage those conflicts effectively and in the best interest of our chants. At Callan,we employ a robust process to Identify,manage,monitor and disclose potential conflicts on an ongoing basis. The list below is an important component of our conflicts management and disclosure process. It identities those investment managers Mat pay Callan fees for educational,consulting,software,database or reporting products and services. We update the list quarterly because we believe that our fund sponsor clients should know the investment managers Mat do business with Callan,parbculady those investment manager clients that Me fund sponsor clients may be using or considering using.Please note that If an Investment manager receives a product or service on complimentary basis(e.g. attending an educational event),they are not included in Me list below.Callan is committed to ensuring that we do not consider an investment managers business relationship with Callan,or lack thereof,in performing evaluations for or making suggestions or recommendations to its other clients. Please refer to Callan's ADV Part 2A for a more detailed descnption of Me services and products that Callan makes available to investment manager clients through our Institutional Consulting Group,Independent Adviser Group and Fund Sponsor Consulting Group. Duetothecomplexcorpomteand organizational ownership structures of many investment management firms,parent and affiliate firm relationships are not Indicated on our list. Fund sponsor clients may request a copy of the most currently available list at any time.Fund sponsor clients may also request specific information regarding the fees paid to Callan by particular fund manager clients. Per company policy,information requests regarding fees are handled exclusively by Callan's Compliance Department, Manager Name Manager Name 1607 Capital Partners,LLC Gambler Investors,LLC Aberdeen Asset Management PLC Capital Group Acadian Asset Management LLC CastleArk Management,LLC AEGON USA Investment Management Causeway Capital Management AEW Capital Management Chadwell Investment Partners Affiliated Managers Group,Inc. Citi US Pension Investments Alommor Clearendge Investments,LLC AllianceBemsmin Cohen&Steers Capital Management,Inc. Allianz Global Investors Columbia Management Investment Advisere.LLC Allianz Life Insurance Company of North America Columbus Circle Investors American Century Investments Corbin Capital Partners,L.P. Ammer Smith Breeden LLC Cornerstone Capital Management Angelo,Gordon&Co. Cramer Rosenthal McGlynn,LLC Apollo Global Management Credit Suisse Asset Management AOR Capital Management Coastline Investors.Inc. Area Management LLC D.E.Shaw Investment Management,L.L.C. Anel Investments,LLC DePrince,Race It Zollo,Inc. Aristotle Capital Management LLC Deutsche Asset Management Artisan Holdings Diamond HIII Capital Management,Inc. Atlanta Capital Management Co.,LLC Dimensional Fund Advisors LP Aviva Investors Americas Doubleline AXA Investment Managers Duff It Phelps Investment Mgmt Co. Bathe Gifford Overseas Limited Eagle Asset Management,Inc. BBird Advisors EARNEST Partners,LLe Bank of Amens Eaton Vance Management garage LLC Epoch Investment Partners,Inc. Baron Capital Management,Inc. Fayez Samfim&Company Barrow,Hanley,Mewhinney It Strauss,LLC Federated Investors BlackRock Fidelity Institutional Asset Management BMO Global Asset Management Flats Capital Corporation BNP Paribas Investment Partners First Eagle Investment Management,LLC BNY Mellon Asset Management First Hawaiian Bank Wealth Management Division Boston Partners Fisher Investments Brandes Investment Partners,L.P. Franklin Templeton Brandywine Global Investment Management,LLC Franklin Templeton Institutional Brown Brothers Harriman&Company Fred Alger ManagemenL Inc. Callan I Knowledge.Experience.Integrity. Page 1 of 2 Manager Name Manager Name Fuller&Thaler Asset Management,Inc. Pacific Investment Management Company GAM(USA)Inc. Pax World Management LLC GlobeFlex Capital,L.P. Peregrine Capital Management,Inc. GMO PGIM Goldman Sachs Asset Management PGIM Fixed Income Guggenheim Investments PGIM Real Estate Guggenheim Partners Asset Management PineBridge Investments GW&K Investment Management Pioneer Investments Harbor Capital Group Trust PNC Capital Advisors,LLC Hartford Funds PPM America Hartford Investment Management Co. Principal Global Investors Heitman LLC Private Advisors,LLC Henderson Global Investors Putnam Investments,LLC Hotchkis&Wiley Capital Management,LLC Pzena Investment Management,LLC HSBC Global Asset Management QMA(Quantitative Management Associates) IMCA Retirement Corporation RBC Global Asset Management Income Research+Management,Inc. Regions Financial Corporation Insight Investment Management Limited Ridgei Capital Management,Inc. INTECH Investment Management,LLC Rockefeller&Co.,Inc. Invesco Rothschild Asset Management,Inc. Investec Asset Management Russell Investments Ivy Investments S&P Global,Inc. Janus Capital Management,LLC Santander Global Facilities Janus Henderson Investors Schrader Investment Management North America Inc. Jensen Investment Management Sit Investment Associates,Inc. Jobs Peak Advisors Smith,Graham&Co.Investment Advisers,L.P. J.P.Morgan Asset Management Smith Group Asset Management J.P.Morgan Chase&Company South Texas Money Management Ltd. KeyCom Standard Life Investments Limited Lazard Asset Management Standish Legal&General Investment Management America State Street Global Advisors Lincoln National Corporation Stone Harbor Investment Partners,L.P. LMCG Investments,LLC T.Rowe Price Associates,Inc. Longview Partners Tattle,e,Cents&Habecht Loomis,Series&Company,L.P. Teachers Insurance&Annuity Association of America Lord Abbetl&Company The Boston Company Asset Management.LLC Los Angeles Capital Management The Guardian Life Insurance Company of America LSV Asset Management The Hartford MacKay Shields LLC The London Company Macquarie Investment Management(fka Delaware Investments) The TCW Group,Inc. Man Investments Inc. Thompson,Siegel&Wellesley LLC Manufde Asset Management Thornburg Investment Management,Inc. McKinley Capital Management,LLC Tri lar Trust Bank MFS Investment Management UBS Asset Management MidFirst Bank Van Eck Global Mondrian Investment Partners Limited Versus Capital Group Montag&Caldwell,LLC Victory Capital Management Inc. Morgan Stanley Investment Management Vontobel Asset Management,Inc. Mountain Lake Investment Management LLC Voya Financial MUFG Union Bank,N.A. Voya Investment Management(fka ING) Neuberger Berman WCM Investment Management Newton Investment Management(gas Newon Capital Mgml) WEDGE Capital Management Nikko Asset Management Co.,Ltd. Wellington Management Company,LLP Northam Trust Asset Management Wells Capital Management Nuveen Investments,Inc. Western Asset Management Company OR Global Asset Management William Blair&Company Old Mutual Asset Management O'Shaughnessy Asset Management,LLC Callan I Knowledge.Experience.Integrity. Page 2 of 2 December 31,2017 Investment Report Orange County Sanitation District Period Ending December 31 , 2017 Table of Contents SECTION 1 Economic Update SECTION 2 Account Profile SECTION 3 Consolidated Information SECTION 4 Portfolio Holdings SECTION 5 Transactions Coil SECTION 1 Economic Update ICJJJJ Economic Update ■ The Federal Open Market Committee (FOMC) raised the fed funds target rate by 25 basis points to a range of 1.25%- 1.50% at the December 13 meeting. The Federal Open Market Committee's (FOMC) economic projections indicate the Fed plans to hike the fed funds rate three times this year to a median level of 2.1%. We believe the rotation of new voting members into the FOMC this year, as well as a new Fed Chairman, may make for a more hawkish FOMC this year. Assuming inflation remains contained below 2.0% and the US dollar does not materially appreciate, we think three rate hikes are likely this year. While we expect the Fed to remain on a path toward monetary policy normalization, we continue to believe that the Fed's terminal rate forecast of 2.8% is too high, and believe the long-run rate is probably closer to 2.5%. As such, we see little room for additional rate hikes beyond this year, unless there is a significant pick-up in economic growth and inflation. ■ We are forecasting GDP growth of about 2.5% in 2018, which is in line with the Fed's forecast and the market consensus. This would equate to a slight increase over 2017 GDP growth of 2.3%. Overall, economic data was quite favorable heading into 2018, with the exception of still-sluggish inflation readings. The economy is at or near full employment, consumer confidence is strong, and leading indicators suggest the economy will continue to grow modestly. ■ The Treasury yield curve continued to flatten in December. The 2-year Treasury yield increased about ten basis points in December to 1.88% and the 10-year Treasury yield was essentially unchanged. On a year-over-year basis, the 2- year Treasury yield increased nearly 70 basis points in 2017 and the 10-year Treasury yield declined slightly. All else being equal, we believe the Fed's plan to normalize the balance sheet could help promote a steeper yield curve over an intermediate time horizon. Tax reform may also be stimulative to the economy and drive yields at the long end of the curve higher. s Employment Nonfarm Payroll (000's) Unemployment Rate 350 13.0% 12.0% Undemmployment Rate(U6) 300 11.0% Unemployment Rate(U3) 'w 0 250 e 200 a 9.0% 8.0 v 150 7.0 100 6.0% 5.0% 50 YY 4.0 0 3.0% 4°n %I 11� `�.o, 4% ya. �0s. 4 �°c, 6a1 4101,76 lt� %1, �0c yam. lt�' 0.1, Oft; 7S �6 �6 10 76 �� �� )I » 7S �6 �6 �6 �� b l� Sou :US Department of Labor Sonr e:US Department of Labor U.S. nonfarm payrolls rose by 148,000 in December, below the consensus forecast of 191,000 but still enough to absorb new entrants into the labor market. October and November payrolls were revised down by a net total of 9,000. Nevertheless, on a trailing 3-month and 6-month basis, payrolls increased by an average of 204,000 and 166,000 per month, respectively. The unemployment rate and the labor participation rate were unchanged in December at 4.1%p and 62.7%p, respectively. A broader measure of unemployment called the U-6, which includes those who are marginally attached to the labor farce and employed part time for economic reasons, edged up to 8.1% in December from 8.0%p in November and 7.9% in October. Wages rose 0.3%p in December, following a downwardly revised 0.1% increase in November. Wages were up 2.5% on a year-over-year basis in December, in line with expectations. GRI Inflation Consumer Price Index (CPI) Personal Consumption Expenditures 3.5% 3.5 (PCE) CPI VOV%Change —PCE Poce Deflator VOV%Change 3.0% —Core CPI VOV%Change 3.0% PCE Core Deflator VOV%Change at 2.5% 2.5% a w m 2.0% U t 1.5% O 0 1.0% 0.5% 0.5% 0.0 0.0% -0.5% S..:US Department of Labor Source:US Department of Leber The Consumer Price Index (CPI) was up 2.1% year-over-year in December, versus up 2.2% year-over-year in November. Core CPI (CPI less food and energy) was up 1.8% year-over-year in December, versus up 1.7% year-over-year in November. Core CPI remains soft but did move higher. The Personal Consumption Expenditures (PCE) index was up 1.7% year-over-year in December, versus up 1.8% year-over-year in November. Core PCE (excluding food and energy) was up just 1.5% on a year-over-year basis in December, unchanged from November. PCE inflation remains well below the Fed's 2.0%target. Consumer Retail Sales YOY % Change Consumer Confidence 7.0% 135 6.0% 130 25 m 5.0% 120 m v 4.0% 115 110 3.0% y 105 c 2.0% 100 95 1.0% 90 0.0% 85 's �a.�s �s.�e se'0'�s O�'s �a.>> ✓�n�i s°<+�� �� �s �s'�s��'s'�'a7 4''16 '76'9l7>°.� 7> '7 '7,�Pev> Soume:US Depadmnt of Gomm Sou.:The Conference Boar On a year-over-year basis, retail sales were up 5.4% in December, versus up 6.0% year-over-year in November. On a month-over- month basis, retail sales increased 0.4% in December (slightly below expectations), following a strong 0.9% increase in November. Excluding autos and gas, the month-over-month figure was up 0.4% in December as well. Overall, retail sales for the last two months of the year combined are indicative of solid consumer spending trends. The Consumer Confidence Index eased slightly but remained strong in December at 122.1 down from 128.6 in November. s C�'k� Economic Activity Leading Economic Indicators (LEI) Chicago Fed National Activity Index 1 4% (CFNAI) 0.60 1.2% 1.0% 0.40 0.8% 0.20 m t 0.8 U r 0.00 _ 0.4% � VV0 0.2% n -0.20 0.0% 0.2% -0.40 -0.4% -0.60 1e O 4a,. p Se,0. O� Oa Zia, ✓� Sa O 4ia1 Zs. Sa O ma7s ^Ts 'Ts �7B �Ts 7p l� 71 b fly 76, �.)s A'ps �+ps 7) 7i ,Q71 �Gpi Somce:The Conference Roam Soome:Federal Reserve Bank of Chicago The Index of Leading Economic Indicators (LEI) rose 0.6% in December, slightly above expectations, following a 0.5% increase in November. According to the Conference Board, the growth of the LEI suggests that solid economic growth in the US economy will continue into the first half of 2018. The Conference Board added that tax reform is also likely to provide a tailwind to overall economic growth this year. The Chicago Fed National Activity Index(CFNAI) was little changed in December at 0.42 versus 0.43 in November, on a 3-month moving average basis. The index suggests that the economy is growing at a solid pace. C& I Housing Housing Starts S&P/CaseShiller20 City Composite Home Price Index 1800 7.0% — 'a 1600 N Multi Family Housing Starts 7 III Single Family Houang Starts 6.5% 0 1400 1200 m 6.0% m w 0 1000 H u 5.5% c 800 a 600 p 5.0% c y m 400 4.5% 0 200 f p 4.0 O0n 41a. �s� s°q 10% 4jd. ✓Oo. 'rea O°c &, `5� lr is lS 70 70 71> 11 » » S Source:US Census Bureau Source:S&P Total housing starts were weaker than expected in December, down 8.2%. Single-family starts fell 11.8% in December, while multi- family starts increased just 1.4%. Winter weather may have been a factor for the overall decline. Permits remained strong and were in line with expectations. According to the Case-Shiller 20-City home price index, home prices were up 6.4% year-over-year in October, versus up 6.2% year-over-year in September. Pricing remains firm, helped by an acceleration in demand and lack of supply. s Q1111 Manufacturing Institute of Supply Management Purchasing Industrial Production sz Manager Index 4.0% 60 Expanding 3.0% 58 2.0% u 56 C. 1.0% V 54 0.0 52 p -1.0% ON 50 -20% 48 -3,0% Contracting 46 -4.0% �� �q 10% 4ya,; 'to. �a 6� 44 4ja. �%' %n, 10% 4'a. % 's 's 's 's 's '� '� '� b 'S 's 's 's 's '� '� 10%'� '> Source:In ukute for Supply Management Souce:Fedeml Reserve The Institute for Supply Management (ISM) manufacturing index rose to 59.7 in December from 58.2 in November. The index remains indicative of strength in the manufacturing sector. A reading above 50.0 suggests the manufacturing sector is expanding. The Industrial Production index was up 3.6% year-over-year in December versus up 3.5% year-over-year in November. The index suggests that activity in the factory sector is growing modestly. With Capacity Utilization at just 77.9% in December, there is still excess capacity for growth. J1111 Gross Domestic Product (GDP) Gross Domestic Product (GDP) 6.0% Personal Consumption EjInvestme.t -0.2% .3% 2.2% 1.5% 2.6% 5.0% 4.0% Gross Private Domestic 0.6% 1.2% 0.6% 3.0% Net Exports and Imports .2% 0.2% 0.4% -1.1% 2,0% 1.0% Federal Government Expenditures -0.2% 0.1% 0.1% 0.2% 0.0% State and Local(Consumption and Gross -1 0% GDP OOO%Change Investment) 0.1% -0.2% 0.0% 0.3% -GDPYOY%Change -2.0% Total 1.2% 3.1% 3.2% 2.6% 6og7 111�,76�����oG�-4 i11'77 7j Source: US Department of Commerce Source: US Department o/Commerce GDP growth was slightly weaker than expected in the fourth quarter, up 2.6% (versus the consensus estimate of 2.9%), down from 3.2% in the third quarter and 3.1% in the second quarter. Net exports and inventories were both a large drag on growth during the fourth quarter, however many of the other components of GDP growth were quite strong. Personal consumption expenditures as a contribution to GDP were 2.6% in the fourth quarter, up from 1.5% third quarter. 0111 Bond Yields US Treasury Note Yields US Treasury Yield Curve 3.5% 3.5% 2-year �D-- 7 3.0% � 5-year 3.0% �SeP-1� 10.year Dec-i6 2.5% 2.5 2.0% 3E 2.0% 4 9 d i 1.5% Y ts% 1.0% 1.0% 0.5% 0.5% 0.0% 0.0% Oa17S 7C 7p 7& O�70 �a^71 `�k71 µry Oa47i os yg 2 s! 70 3p So=e:Bloomberg Soume:Bloomberg The yield curve flattened meaningfully in 2017, with the 2-year/10-year Treasury yield spread narrowing from 126 basis points the end of 2016 to as low as 52 basis points at the end of December, the tightest spread since October 2007. In December, the 2-year Treasury yield increased about ten basis points to 1.88% and the 10-year Treasury yield was essentially unchanged. During 2017, the Federal Reserve raised the fed funds rate three times by a total of 75 basis points, which largely fueled the increase in shorter rates. However, inflation expectations were muted, which kept a lid on longer-term rates. Al else being equal, we believe the Fed's ongoing efforts to normalize the balance sheet should help promote a steeper yield curve, but we don't expect the impact of this to be reflected in the market until later this year. We also believe tax reform is likely to provide a tailwind to economic growth and help drive yields at the long end of the curve higher. Global demand for Treasuries will also continue to influence yields. Coil SECTION 2 Account Profile U111 Objectives Investment Objectives The investment objectives of the Orange County Sanitation District are first, to provide safety of principal to ensure the preservation of capital in the overall portfolio; second, to provide sufficient liquidity to meet all operating requirements; and third, to earn a commensurate rate of return consistent with the constraints imposed by the safety and liquidity objectives. Chandler Asset Management Performance Objective Liquid Operating Monies — will be compared to the 3-month T-Bill rate and operate with a maximum maturity of one year. Long-Term Operating Monies —will be compared to the Bank of America Merrill Lynch 1-5 Year Corporate Government Rated AAA—A Index. Strategy In order to achieve these objectives, the portfolio invests in high quality fixed income securities consistent with the investment policy and California Government Code. IC& I Compliance C�h Orange County Sanitation District Long Term December 31,2017 COMPLIANCEPOLICY Assets managed by Chandler Asset Management are in full compliance wth state lawand wth the investment policy Category Standard Comment Treasury Issues 5 years maximum maturity Complies* Supranational "AA"or better by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years maturity; Includes Complies only: ROB, IBRD and IFC per CGC U.S.Agencies 20% max issuer; 5 years maximum maturity Complies U.S.Corporate (MTNs) "A" or better long term rating by 1 of 3 NRSROs; 30%maximum;5% max issuer; 5 years max Complies maturity Municipal Securities "A"or higher by l of 3 NRSROS; 10%maximum; 5% max issuer; 5 years maximum maturity Complies Asset Backed/CMOs/Mortgage- "AA"or better by 1 of 3 NRSROs; "A" or higher issuer rating by 1 of 3 NRSROs; 20% Complies` backed maximum; 5% max issuer(excluding MBS/ ovtagency);5 years max maturity Negotiable CDs "A" or better on its long tens debt by 1 of 3 NRSROs ; "A1/P1"or highest short tens ratings by 1 Complies of 3 NRSROs; 30% maximum; 5%max issuer, 5 years max maturity CDs/TDS 5% max issuer; 5 years max maturity Complies Banker's Acceptances A-1,or equivalent highest short term rating by 1of3NRSROS; 40% maxmum; 5%maxissuer; Complies 180 days max maturity Commercial Paper A-1,or equivalent by 1 of 3 NRSROS; "A"or better by 1 of 3 NRSROs, if long term debt issued; Complies 25% maximum; 5% max issuer; 270 days max maturity Mutual Fund & Money Market Highest rating by 2 NRSROs; 20% maximum; 10% max per mutual fund; 20% max per money Complies Mutual Fund market mutual fund Repurchase Agreements 102%collateralization Complies Reverse Repurchase Agreements 5%maximum, 90 days max maturity Complies LAIF Not used by investment adviser Complies Avg Duration Not to exceed 60 months - (80%to 120% of the benchmark) Complies Maximum Maturity 5 years maximum maturity Complies* *The portfolio has twenty-three(23)securities with maturities greater than 5 years including one(1)ABS, four(4)CMOs, seventeen (17)MBS and one(1)treasury. All securities wem inherited from the previous manager and complied at time of purchase. GKI Portfolio Characteristics Orange County Sanitation District Long Term 12/31/2017 9/30/2017 Benchmark* Portfolio Portfolio Average Maturity (yrs) 2.71 2.52 2.74 Modified Duration 2.58 2.26 2.44 Average Purchase Yield n/a 1.75% 1.73% Average Market Yield 2.09% 1.91% 1.64% Average Quality** AAA AA+/Aa1 AA/Aa2 Total Market Value 396,615,693 333,199,867 *BAML 1-5 Yr US Corporate/Govt Rated AAA-A Index **Benchmark is a blended rating of S&P, Moody's, and Fitch. Portfolio is S&P and Moody's respectively. Many securities were purchased across the Treasury, Agency, Supranational, Commercial Paper, and Corporate sectors of the market to keep the portfolio structure in-line with Chandler targets. The purchased securities ranged in maturity from January 2018 to November 2022. A few securities were sold and in aggregate $64 million was contributed to the portfolio during the quarter to help facilitate the new holdings in the portfolio. Sector Distribution Orange County Sanitation District Long Term December 31, 2017 September 30, 2017 ABS ABS 3.2% 4.7% US Treasury US Treasury 32.8% 32.3% Agency Agency 29.5% 24.7% CMO CMO 0.8% 0.6% Commercial Commercial Paper Paper Money Market 2.0% Money Market 1.7°/ Fund FI US Corporate Fund FI 1.4°/ 19.3% 4 0% US Corporate 23.9% Su ranabonal Mortgage Pass MortgagePass pu Supran ational Municipal Thru 880� Municipal 5.9/ Negotiable CD Bonds 0 4% Negotiable CD Bonds 0.6% 1.5% 1.1% 1.8% 1.4% The sector allocation evolved as the additional monies allocated to the strategy we invested conservatively late in December. The allocation to the Treasury and Agency sectors increased, whereas most of the other sector allocations decreased; the Chandler team will be working to increase the exposure of the portfolio to higher beta sectors in the first quarter of 2018 as liquidity returns to the market in the New Year. 0111 Issuers Orange County Sanitation District Long Term —Account #10268 As of 12/31/2017 Issue Name Investment Type % Portfolio Government of United States US Treasury 32.85% Federal Home Loan Bank Agency 13.19% Federal National Mortgage Association Agency 8.85% Federal Home Loan Mortgage Corp Agency 5.41% First American Govt Obligation Fund Class-Z Money Market Fund FI 3.96% Inter-American Dev Bank Supranational 2.77% Intl Bank Recon and Development Supranational 2.52% Tennessee Valley Authority Agency 2.02% Bank of Tokyo-Mit UFJ Commercial Paper 1.68% John Deere ABS ABS 1.52% Bank of Nova Scotia Houston Negotiable CD 1.48% HSBC USA Corp US Corporate 1.40% Occidental Petroleum Corporation US Corporate 1.36% JP Morgan Chase&Cc US Corporate 1.35% Wells Fargo Corp US Corporate 1.28% General Electric Cc US Corporate 1.27% Deere &Company US Corporate 1.27% Qualcomm Inc US Corporate 1.25% Bank of New York US Corporate 1.18% Chubb Corporation US Corporate 1.07% Berkshire Hathaway US Corporate 1.04% Honda Motor Corporation US Corporate 1.02% Apple Inc US Corporate 1.02% Eli Lilly&Cc US Corporate 1.01% Honda ABS ABS 1.01% Morgan Stanley US Corporate 0.79% Exxon Mobil Corp US Corporate 0.76% American Express Credit US Corporate 0.75% Microsoft US Corporate 0.75% Port Authority of New York and New Jersey Municipal Bonds 0.65% 0111 Issuers Orange County Sanitation District Long Term —Account #10268 As of 12/31/2017 Issue Name Investment Type % Portfolio ChevronTexaco Corp US Corporate 0.63% International Finance Corp Supranational 0.61% Nissan ABS ABS 0.50% Federal Home Loan Mortgage Corp CIAO 0.50% New York City Transitional Finance Authority Municipal Bonds 0.37% Federal National Mortgage Association Mortgage Pass Thru 0.35% Goldman Sachs Inc. US Corporate 0.16% Toyota ABS ABS 0.13% University of California Municipal Bonds 0.11% Federal National Mortgage Association CIAO 0.07% GNMA Mortgage Pass Thru 0.05% AMRESCO Residental Securities Corp Mortgage Pass Thru 0.03% Small Business Administration ABS 0.01% SLIM Corp ABS 0.01% GNMA CMO 0.01% Federal Home Loan Mortgage Corp Mortgage Pass Thm 0.00% Total 100.00% C1111 Quality Distribution Orange County Sanitation District Long Term December 31, 2017 vs. September 30, 2017 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% AAA AA A <A NP. •12/31/2017 9/30/2017 AAA AA A <A NR 12/31/17 15.5% 63.8% 11.6% 1.7% 7.3% 09/30/17 7.5°% 70.5°% 11.3°% 3.2°% 7.5°% Source: S&P Ratings Duration Distribution Orange County Sanitation District Long Term Portfolio Compared to the Benchmark as of December 31, 2017 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 0-0.25 0.25-0.50 0.50- 1 1 -2 2-3 3-4 4-5 5+ •Orange County Sanitation District Long Term .BAML 1-5 Yr US Corporate/Gout Rated AAA-A Index 0- 0.25 0.25- 0.50 0.50- 1 1 -2 2- 3 3 .4 4- 5 5+ Portfolio 21.3% 1.8% 4.2% 19.6% 16.3% 20.8% 12.9% 3.0% Benchmark' 0.0% 0.0% 1.4% 32.6% 28.7% 23.6% 13.7% 0.0% 'BAML 1-5 Yr US Corporate/Govt Rated AAA-A Index The duration of the portfolio contracted primarily due to the large contribution into the strategy. The current duration of 2.26 will be migrating closer to 2.50 in the coming weeks as Chandler tactically repositions the portfolio closer to our strategic targets. AW Investment Performance Orange County Sanitation District Long Term Period Ending December 31, 2017 Total Rate of Return Annualized Since Inception November 30, 2014 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 12 months 2 years 3 years 5 years 10 years Since Inception •Orange County Sanitation District Long Term Annualized 3 months 12 months 2 years 3 years 5 years 10 years Since IOCept100 Orange County Sanitation District Long Tenn -0.24% 1.16% 1.32% 1.16% N/A N/A 1.06% BAML 1-5 Yr US Corporate/Govt Rated AAA-A Index -0.32% 1.02% 1.16% 1.13% N/A N/A 0.99% Total rate of return: A measure of a portfolio's performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains and losses in the portfolio. IC& I Compliance CA Orange County Sanitation District Liquid December 31,2017 COMPLIANCEPOLICY Assets managed by Chand/erAsset Management are in full compliance Wth state lawand uvth the investment policy Category Standard Comment Treasury Issues l year maximum maturity; Minimum allocation of 10% Complies Supranational "AA"or better by 1 of 3 NRSROs; 30% mapmum; 5% max issuer; 1 year maturity, Includes Complies only: IADB, IBRD,and IFC per CGC U.S.Agencies 20% max issuer; 1 year mapmum maturity Complies U.S. Corporate(MTNs) "A"or better long term rating by 1 of 3 NRSROs; 30% maximum; 5%max issuer; 1 year max Complies maturi Asset Backed/CMOs "AA"or better by 1 of 3 NRSROs; "A" or higher issuer rating by 1 of 3 NRSROs; 20% Complies maximum; 5%max issuer; 1 year max maturity Negotiable CDs "A"or better on its long tens debt by 1 of 3 NRSROs ; "A1/P1" or highest short term ratings Complies by 1 of 3 NRSROs; 30%maximum; 5% max issuer; 1 year max maturity CDs/TDS 5% max issuer; 1 year max maturity Complies Banker's Acceptances A-1,or equivalent short term rating by 1 of 3 NRSROS;40% maximum;5% max issuer; 180 Complies days max maturity Commercial Paper A-1,or equivalent by 1 of 3 NRSROS; "A" or better by 1 of 3 NRSROs, if long term debt Complies issued; 25%maximum; 5% max issuer;270 days max maturity Mutual Fund & Money Market Mutual Fund Highest rating by 2 NRSROs; 20% maximum; 10% max per mutual fund; 20% max per Complies money market mutual fund Repurchase Agreements 102%collateralization Complies Reverse Repurchase Agreements 5% mapmum 90 days max maturity Complies LAIF Not used by investment adviser Complies Prohibited Municipal Securities Complies Prohibited Mortgage Securities Complies Avg Duration Notto exceed 180 days; Maxduration of 1/2 year Complies Maximum Maturity 1 year maximum maturity Complies COIL Portfolio Characteristics Orange County Sanitation District Liquid 12/31/2017 9/30/2017 Benchmark* Portfolio Portfolio Average Maturity (yrs) 0.17 0.16 0.17 Modified Duration 0.16 0.15 0.17 Average Purchase Yield n/a 1.33% 1.12% Average Market Yield 1.24% 1.37% 1.16% Average Quality** AAA AA+/Aaa AA+/Aa1 Total Market Value 145,486,316 49,486,477 *BAML 3-Month US Treasury Bill Index **Benchmark is a blended rating of S&P, Moody's, and Fitch. Portfolio is S&P and Moody's respectively. Many securities were purchased across the Treasury, Agency, Supranational, Commercial Paper, and Corporate sector of the market to keep the portfolio fully invested. The purchased securities ranged in maturity from November 2017 to July 2018. One security was called, many matured, and in aggregate$96 million was contributed to the portfolio during the quarter. Sector Distribution Orange County Sanitation District Liquid December 31, 2017 September 30, 2017 Supranalional 3.8% Negotiable CD US Treasury 2.0% 21.2% Agency Agency 29.0% 24.5% US Treasury1 52.7% \ Commercial \ US Corporate Paper Commercial 28 2% 4.5% Paper 4.7% Money Market Money Market US Corporate Fund FI1 1% Fund FI 8.9% 19.5 The sector allocation changed materially with the large contribution into the portfolio. The Treasury allocation is elevated due to the upcoming large liquidity need at the end of January and the lack of attractive alternatives in the Agency discount note market. 0111 Issuers Orange County Sanitation District Liquid —Account #10282 As of 12/31/2017 Issue Name Investment Type % Portfolio Government of United States US Treasury 52.67% Federal Home Loan Bank Agency 19.81% Tennessee Valley Authority Agency 6.87% Federal Home Loan Mortgage Corp Agency 2.27% Inter-American Day Bank Supranational 2.07% Bank of Tokyo-Mit UFJ Commercial Paper 2.06% International Finance Corp Supranational 1.71% JP Morgan Chase&Cc US Corporate 1.40% Charles Schwab Corp/The US Corporate 1.34% First American Govt Obligation Fund Class-Z Money Market Fund FI 1.06% Paccar Financial Commercial Paper 1.03% Toyota Motor Corp Commercial Paper 0.89% Berkshire Hathaway US Corporate 0.70% HSBC USA Corp US Corporate 0.69% Deere&Company US Corporate 0.69% PNC Financial Services Group US Corporate 0.69% Honda Motor Corporation US Corporate 0.69% Exxon Mobil Corp US Corporate 0.69% Cisco Systems US Corporate 0.69% Merck&Company US Corporate 0.69% Honda Motor Corporation Commercial Paper 0.69% Bank of New York US Corporate 0.60% Total 100.00% C1111 Quality Distribution Orange County Sanitation District Liquid December 31, 2017 vs. September 30, 2017 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% AAA AA A 'A NR •12/31/2017 9/30/2017 AAA AA A <A NR 12/31/17 32.4% 61.5% 6.1% 0.0% 0.0% 09/30/17 37.7% 42.2% 20.0% 0.0% 0.0% Source: S&P Ratings Duration Distribution Orange County Sanitation District Liquid Portfolio Compared to the Benchmark as of December 31, 2017 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 0-0.25 0.25-0.50 0.50-1 1 -1.5 1.5-2 2-2.5 2.5-3 3+ •Orange County Sanitation District Liquid .BAML 3-Month US Treasury Bill Index 0-0.25 0.25- 0.50 0.50 - 1 1 - 1.5 1.5-2 2 -2.5 2.5- 3 3+ Portfolio 86.1% 10.5% 3.4% 0.0% 0.0% 0.0% 0.0% 0.0% Benchmark' 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 'BAML 3-Month US Treasury Bill Index The duration of the portfolio was little changed, currently 0.15 compared to 0.17 at the end of the prior quarter. AW Investment Performance Orange County Sanitation District Liquid Period Ending December 31, 2017 Total Rate of Return Annualized Since Inception November 30, 2014 1.00% 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% 12 months 2 years 3 years 5 years 10 years Since Inception a Omnge County Sanitation District Liquid .BAML 3-Month US Treasury Bill Index Annualized 3 months 12 months 2 years 3 years 5 years 10 years Since IOCept100 Orange County Sanitation District Liquid 0.28% 0.89% 0.69% 0.54% N/A NIA 0.52% BAML 3-Month US Treasury Bill Index 0.28% 0.86% 0.59% 0.41% NIA N/A 0.40% Total rate of return: A measure of a portfolio's performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains and losses in the portfolio. 101111 Compliance C/" OCSD Lehman Exposure December 31,2017 COMPLIANCE • Assets managed by Chandler Asset Management are in full compliance wth state lawand Idth the investment policy Category Standard Comment Treasury Issues 5 years maximum maturity Complies Supranational "AA" or better by 1 of 3 NRSROs; 30% maximum; 5% max; 5 years maturity; Complies Includes only: IADB, IBRD, and IFC per CGC U.S.Agencies 20% max issuer; 5 years maximum maturity Complies U.S. Corporate (MTNs) "A" or better long term rating by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 Complies' years max maturity Municipal Securities "A" or higher by 1 of 3 NRSROS; 10% maximum; 5% max issuer; 5 years Complies maximum maturity Asset Backed/CMOs/ "AA" or better by 1 of 3 NRSROs; "A" or higher issuer rating by 1 of 3 NRSROs; Complies Mortgage-backed 20% maximum; 5% max issuer(excluding MBS/ ovt agency); 5 years max maturity Negotiable CDs "A" or better on its long term debt by 1 of 3 NRSROs ; "A1/P1" or highest short term Complies ratings by 1 of 3 NRSROs; 30% maximum; 5% max issuer; 5 years max maturity CDs/TDS 5% max issuer; 5 years max maturity Complies Bankers Acceptances A-1,or equivalent highest short term rating by1of3NRSROS; 40% maximum; 5% Complies max issuer; 180 days max maturity Commercial Paper A-1,or equivalent by 1 of 3 NRSROS; "A" or better by 1 of 3 NRSROs, if long term Complies debt issued; 25% maximum; 5% max issuer; 270 days max maturity Money Market Fund Highest rating by 2 of 3 NRSROs; 20% maximum; 10% max issuer Complies Repurchase A reements 102% collateralization Com lies Reverse Repurchase 5% maximum, 90 days max maturity Complies A reements LAIF 1 Not used bv investment adviser i Complies A Duration Not to exceed 60 months - 80%to 120%of the benchmark Complies Maximum Maturity 15 years maximum maturity lComplies Account holds $2 million face value(cusip 525ESCOY6)and $600,000 face value(cusip 525ESC1 B7)of defaulted Lehman Bros Holdings that were purchased by the pmAous manager. Complied at time of purchase. GRI Portfolio Characteristics OCSD Lehman Exposure 12/31/2017 9/30/2017 Portfolio Portfolio Average Maturity (yrs) 20.18 21.35 Modified Duration 0.00 0.00 Average Purchase Yield 0.00% 0.00% Average Market Yield 0.00% 0.00% Average Quality NR/NR NR/NR Total Market Value 145,221 188,421 Coil SECTION 3 Consolidated Information CIR� Portfolio Characteristics Orange County Sanitation District Consolidated 12/31/2017 9/30/2017 Portfolio Portfolio Average Maturity (yrs) 1.89 2.42 Modified Duration 1.70 2.14 Average Purchase Yield 1.63% 1.64% Average Market Yield 1.76% 1.58% Average Quality AA+/Aa1 AA/Aa2 Total Market Value 542,247,229 382,874,766 Sector Distribution Orange County Sanitation District Consolidated December 31, 2017 September 30, 2017 ABS ABS 2.3% 4.1% US Treasury US Treasury 30.9% 38.2% Agency Agency 29.3% 24.7% CMO CMO 0.7% 0.4% Commercial Commercial Paper Paper 2.3 2.5% Money Market Money Market Fund FI US Corporate Fund FI US Corporate 3.7/o 16.6°/ Supranational 3.2% 24.5% Mortgage Pass 5.3% Municipal Mortgage Pass Supranational Municipal Thm Negotiable CD Bonds Thru 5.8% Negotiable CD Bonds 0.5/ 1.1% 0.8% 0.3% 1.8% 1.2% Coil SECTION 4 Portfolio Holdings Cj'k� Holdings Report Orange County Sanitation District Long Term -Account #10268 For the Month Ending 12/31/2017 CUSIP Security Description ParValue/Units Book Yield Book Value Milli Accrued Ind. Gainfl-oss Fitch Duration Purchase Date Cost Value Mkt Price Market Value %of Pon, MoodyfS&P Maturity 89236WAC2 Toyota Auto Receivables Owner 2015-A 533,629.54 02/24/2015 533,548.85 99,93 533,231,21 0.13% Asia IAM 1.13 1.120% Due OP/15/2019 1.13% 533,626.17 1.64% 265.63 (394.96) NR 0,14 47788NAM John Deere Owner Trust 2016-B A2 782,842.67 0711912016 782,794.92 99.94 782,35872 020% Aaa/NR 1.13 1090% Due02115/2019 1.10% 782,821.69 1.81% 379.24 (462.97) AAA 0.09 65478WAB1 Nissan Auto Receivables Owner 2016-0 A2A 718.603.81 0810212016 718,575.50 99.93 718,080.47 0.18% Aaa I NR 1.37 1.070% Due OS/15/2019 1.08% 718,589.80 1.46% 34174 (509.33) AAA 0.19 43814TAB8 Honda Auto Receivables 2017-1 A2 1,270,353.67 0312112017 1,270,323.31 99.86 1,268,633.52 0.32% Aaa/NR 1.56 1A20% DUe0722/2019 1.43% 1,270,333,32 118% 50108 (1,699.80) AAA 0.38 47781 John Deere Owner Trust 2017-A A2 1,399,163.49 02/22/2017 1,399,157.89 99.87 1,397,330.49 0.35% Asa INR 1.79 1.500% Due 10/152019 1.50% 1.399,159.67 1.84% 932.78 (1,829.18) AAA 0.39 654747AB0 Nissan Auto Receivables 2017-A A2A 1,250,6137.51 03/21/2017 1,250,661.13 99.82 1,248,412.53 0.31% Aaa/NR 2.04 1.470% Due01/15/2020 1.47% 1,250,662.87 1.84% 817.10 (2,250.34) AAA 0.49 43814PAB6 Honda Auto Receivables Owner T 17-3 A2 965,000.00 0912512017 964,914.21 99.72 %2,315.37 0.24% NR I AAA 2.06 1.570% Due01/21/2020 1.50% 964,92376 1.92% 547.10 (2,608.39) AAA 0.80 47788MAC4 John Deere Owner Trust 2016-A A3 2,235,401.88 0212312016 2,235,050,03 99.72 2,229,158.27 0.56% Aaa I NR 2.29 1.360% Due 04/152020 1.37% 2,235 206.67 1.87% 1.351.18 (6,048.40) AAA 0.55 438140AC2 Honda Auto Receivables 2016-2 A3 1,764,246.46 0512412016 1,764,212,24 99.67 1,758,424.29 0.44% Aaa/NR 2.29 1.390% Due 04/152020 1,40% 1,764,226.27 1.92% 1,089.91 (5,801,98) AAA 0.63 4T788BAB0 John Deere Owner Trust 2017-B A2A 960,000.00 07/11/2017 959,916.58 99.75 957.616.32 0.24% Asa/NR 2.29 1.590% Due04/152020 1.60% 959,930A8 1.95% 678.40 (2,314.16) AAA 0.69 83162CLJO Small Business Administration 2001-20C 47,016.48 03/06/2001 47,016A8 104.07 48,929.49 0.01% Aaa/AA+ 3.17 6.340% Due 03/012021 6.34% 47,016.48 5.71% 993.61 1,913.01 AAA 1.55 47788BAD6 John Deere Owner Trust 2017-B A3 675,000.00 0711112017 674,950+59 99.25 669,%3.15 0.17% Aaa/NR 3.79 1.820% Due 10/152021 1.83% 674,955.91 2.22% 546.00 (4,992.76) AM 1.89 78445JAA5 SLMA 2008-9 A 30,325.61 0812212008 30,202.58 102.33 31.031.26 0.01% B801 AA+ 5.32 2.874% Due 04/25/2023 2.94% 30,281+02 2.52% 164.65 750.24 B 3.42 12,631,324.31 12,605,485.09 3.18% Asa I AAA 2.04 Total ABS 12,632,251+12 1A4% 12,631,734.11 1.87% 8,608.42 (26,249.02) Ass 0.57 go 313385RR9 FHLB Discount Note 4.750,00(00 12/22/2017 4,746,648.61 99.96 4.748,324.31 1.20% P-11A-1+ 0,03 1.270% Due01/11/2018 1,29% 4,748,324,31 129% 000 0.00 F-1+ 0,03 3137EADN6 FHLMC Note 4,000,000.00 01123/2015 3,974,000.00 99.98 3,999,344.00 1.01% Aaa/AA+ 0.03 0.750% Due01/122018 0.97% 3,999,735.67 1.28% 14,083.33 (391.67) AAA 0.03 313385RZ1 FHLB Discount Note 12.100,000.00 Various 12.089,459.00 99.94 12,092,316.50 3.05% P-1/A-1+ 0.05 1.270% Due01/192018 1.29% 12,092,316.50 1.29% 0.00 0.00 F-1+ 0.05 800591 TVA Discount Note 8,000,000.00 12/21/2017 7,%0,686.67 99.92 7,993,791.11 2.02% P-1/A-1+ 0.06 1.270% Due01231201B 1.29% 7,993,791.11 1.29% 0.00 0.00 F-1+ 0.06 313385SE7 FHLB Discount Note 6,225,000.00 12/28/2017 6,219,0114.03 99.92 6,219,968.99 1.57% P-1IA-1+ 0.07 1.265% Due01242018 1.28% 6,219,968.99 1.28% 0.00 0.00 F-1+ 0.07 Cj'k� Holdings Report Orange County Sanitation District Long Term -Account #10268 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt Price Market Value %of Fort. MoodyIS&P maturity CUSIP Sacu,ity ),,cripti.� Parvalue/units Book Yi a Id Book Value Mkt WM Accrued Int. Gaindl-oss Fitch Duratiou 3137EADP1 FHLMC Note 5,000,000.00 01/13/2015 4,974,100.00 99.91 4,995,675.00 126% Asa/AA+ 0.18 0.875% Due03/07W8 1.04% 4,998,533.54 1.34% 13.854.17 (2,858.54) AAA 0.18 313378A43 FHLB Note 7,500,000.00 0V1112016 7,544,850.00 100.01 7,500,540.00 1.90% Aso/AA+ 0.19 1.375% Due03109Q018 1.18% 7,502,680.60 1.33% 32,083.33 (2,140.60) AAA 0.19 3135GOG72 FNMA Note 5,000,000.00 12/18/2015 4,%3,950.00 99.34 4,966,765.00 1.25% Aaa/AA+ 0.95 1.125% Due 12/14=18 1.37% 4,988,512.99 1.83% 2,656.25 (21,747.99) AAA 0.94 3133782M2 FHLB Note 7,S ,000.00 Various 7,589,190.00 99.59 7,469,190.00 1.89% Aaa/AA- 1.18 1.500% Due0310M019 1.14% 7,530,808.87 1.85% 35,312.50 (61,618.87) AAA 1.16 3137EADM8 FHLMC Note 7,500,000.00 Various 7,399,650.00 98.81 7,410,682.50 1.87% Aaa/AA+ 1.75 1.250% Due10102/2019 1.61% 7.453,905.70 1.94% 23.177.08 (43223.20) AAA 1.72 313383HUS FHLB Note 5,000,000.00 0811312015 5.008,950.00 99.32 4,W,160.00 1.25% Me/AA+ 2.45 1.750% Due 06/12/2020 1,71% 5,004,530.81 2.03% 4,618.06 (38,370,81) NR 2.38 3135GOD75 FNMA Note 5,000,000.00 1111W2015 4,955,650.00 98.81 4,940,675.00 1.26% Aaa/AA+ 2.48 1.500% Due06t2n020 1.70% 4.976,147.68 1.99% 1,875.00 (35.472.68) AAA 2.41 3137EAEK1 FHLMC Note 5,000,000.00 Various 4,986,225.00 99.48 4,973,795.00 1.26% Ass/AA+ 2.88 1.875% Due 11/17Y 020 1.97% 4,986,546.05 2.06% 11,979.17 (12.751.06) AAA 2.78 3135GOF73 FNMA Note 7,500,000.00 Various 7,370,726.00 98.53 7,389,795.00 1.87% Aaa/AA+ 2.92 1.500% Due11/302020 1.87% 7,424,031.04 2.02% 9,687.50 (34,236.04) AAA 2.83 313OA7CV5 FHLB Note 5,365,000.00 0211712016 5,343,325.40 97.76 5,244,990.31 1.33% Aaa/AA- 3.14 1.375% Due O2/18/2021 1.46% 5.351.428.17 2.12% 27.253.45 (106.437.86) AAA 3.03 3135GOJ20 FNMA Note 10,000,000.00 Various 10,040,950.00 97.89 9,789,490.00 2.48% Me/AA+ 3.16 1.375% Due O2/26/2021 1.28% 10,028,150.37 2.07% 47,743.06 (238,660.37) AAA 3.05 313379RB7 FHLB Note 4,000,000.00 O8/3012017 4,030,160.00 99.15 3,9 ,016.00 1.00% Ass/AA+ 3.45 1.875% Due06/11t2021 1.67% 4.027,471.83 2.13% 4,166.67 (61.455.83) AAA 3.31 3135GOS38 FNMA Note 3,000,000.00 01/30/2017 2,%4,570.00 99.34 2,900,239.00 0.76% Ass/AA+ 4.02 2.000% Due 0110512022 2.04% 2,995,580.58 2.17% 29,333.33 (15.341.58) AAA 3.80 3135GOT45 FNMA Note 5,000,00000 05/05/2017 4,972,500.00 98.75 4,937,720.00 1.25% Aaa/AA+ 4.26 1.875% DUe04/05=22 1.99% 4,976,150.31 2.18% 22,395.83 (38,430.31) AAA 4.05 117,194,684.71 116,585,477.72 29.47% Aaa/AAA 1.59 Total Agency 117,440,000.00 1.45% 117,298,615.12 1.73% 280,210]3 (713,137.40) Aaa 1.54 31398VJ98 FHLMC FHMS K006 A2 900,00000 11/23/2010 951,046.88 103,58 932,239,80 0.24% A..)AA+ 2.07 4.251% Due0112512020 3.54% 911,509.97 2.20% 3,188.25 20,729.83 APA 1.83 3837114NX9 GNMA Pool#2000-9 19,965.25 01/24/2000 19,965+25 100.50 20,064.28 0.01% Aaa/AA+ 12.14 1.995% Due O2/16 030 2.01% 19.965.25 1.61% 31.43 99.03 AAA 0.03 3133TCE95 FHLMC FSPC E3A 25,362.80 03/11/1998 25,38933 100.00 25,362.80 0.01% Aaa/AA+ 14.63 3.349% Due 08/15/2032 3.31% 25,37410 1.82% 70.78 (11.30) AAA 1.35 31397QREO FNMA FNR 2011-3 FA 261,859.76 12/20/2010 261,777.93 101.45 26$654.11 0.07% Me/AA+ 23.17 2.244% Due 02/25/2041 2,25% 261,79677 1.87% 97.92 3,857.34 AAA 0.11 Cj'k� Holdings Report Orange County Sanitation District Long Term -Account #10268 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt Price Market Value %of Port. Mci Maturity CUSIP Security Description Par Value/Units Book Yield Book Value Mkt YTM Accrued fint. GainILoss Fitch Duration 31394JY35 FHLMC FSPC T-582A 877,41170 06/09/2011 993,66874 114.56 1,005,154.07 025% Aaa/AA+ 2575 6.500% Due 01 5,40% 970,074+21 3+74% 950.53 35,079.86 AAA 5,17 2,251,848.13 2,248,475.06 0.57% Asia/AA+ 15.37 Total CMO 2,084,599.51 4.20% 2,188,720.30 2.843/6 4,338.91 59,754.76 Asia 3.10 Commercial Paper 06538CCDI Bank of Tokyo Mitsubishi NY Discount CP 6,665,000.00 1110712017 6.61 99]1 6,645,939.95 1.68% P-1/A-1 0.20 1.450% Due 03/13/2018 1.48% 6,645,939+95 1.48% 0.00 0.00 NR 0.20 6,631,443.58 6,645,939.95 1.68% P-1/A-1 0.20 Total Commercial Paper 6,665,000.00 1.48% 6,645:939+95 1.48% 0.00 0.00 IN 0.20 Money Market Fund FI 31846V567 First American Govt Obligation MMKT Class-Z 15,713,313.51 Various 15,713,313ol 1.00 15,713,31151 3.96% Aaa 1 AAA 0,00 1 15% 15713,31351 1.15% 000 000 AAA 000 15,713313.51 15,713,313.51 3.96% Aaa/AAA 0.00 Total Money Market Fund FI 15,713,313.51 1A5% 15,713:31351 1.15% 0.00 0.00 Asia 0.00 Mortgage Pass Thru 31381PDA3 FNMA FN 466397 352,005.83 12/0112010 344,388.22 102.65 361,34817 009% Aaa 1AA+ 2.84 3400% Due11/01/2020 3.80% 349,826.66 239% 23271 11,522.11 AAA 2.64 36225CAZ9 GNMA Pool#G2 SM23 21,382.85 0810811997 21,737.00 103.39 22,107.45 0.01% Aae/AA+ 8.98 1.625% Due 12/20/2026 1,52% 21,491.16 2.51% 28.96 616.29 AAA 3.87 36225CC20 GNMA Poi G2 BM88 24.762.53 OW1111997 25,304.23 103.42 25.610.32 0.01% Asia/AA+ 9.47 3.120% Due 01 2.98% 24,934.48 2.66% 64.38 675.84 AAA 4.25 31348SWM FHLMC FH 786064 2,208.32 02/18/2000 2,154.55 102.48 2,263.06 0.00% Asia/AA+ 10.01 3.757% Due 01/01=28 3.96% 2,189.02 3.18% 6.91 74.04 AAA 4.68 31371NUC7 FNMA FN 257179 20,890.15 1210512011 22,093+38 106.62 22,273.27 0.01% Aaa/AA+ 10.26 4.500% Due 04/01/2028 3.72% 21,646A4 2.34% 78.34 626.83 AAA 3.19 31417YAy3 FNMA Pool#FN MA0022 23,998.59 1210512011 25.380.85 106.64 25,591.11 0.01% Aaa/AA+ 11.26 4.500% Due 04/01/2029 3.76% 24,897.06 2.51% 89,99 694.05 AM 3.32 3138EG6F6 FNMA FN AL0869 14.575.62 1210512011 15,415.15 106.69 15,551.24 0.00% Aae/AA+ 11.42 4.500% Due 06/01/2029 3,77% 15,124.12 2.54% 1215 427.12 AAA 3.36 01 AMRESCO Residential Securities 191 A 133,743.29 05120/2011 100,432.85 97.93 130,974.80 0.03% NR/A+ 11.49 2.51 Due 06r25Q029 6.18% 112,603.49 2.84% 65.11 18,371.31 BBB 7.39 36225CNW GNMA Poi G280395 8,805.54 03/15/2000 8,725.72 103.60 9,122.50 0.00% Aaa/AA+ 12.31 3.120% Due 01 3.19% 8,772.71 2.32% 22.89 349.79 AAA 3.63 36225CN28 GNMA Poi G280408 70,682.21 03/15/2000 69,964.34 103.59 73,221.26 0.02% Aaa/AA+ 12.39 3.120% Due05202030 3.20% 70,385A3 223% 183.77 2,835.43 AAA 3.36 31401 FNMA Pool#FN 748678 3,438.59 0611012013 3,696.48 107.82 3.707.32 0.00% Aaa/M. 15.76 5.000% Due10/01/2033 4.16% 3.639.51 2.62% 14.33 67.81 AM 3.80 36225DCBB GNMA Pool#G280965 61 0711912OU 68,539.63 103.97 71,303.43 0.02% Me/AA+ 16.56 2.810% Due 07/20/2034 2.82% 68,558+77 1.94% 160.60 2,744.66 AAA 3.07 Cj'k� Holdings Report Orange County Sanitation District Long Term -Account #10268 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt Price Market Value %of Port. MoodyIS&P maturity CUSIP Security D....laugh Par Value/Units Book Yield Book Value Mkt YTM Accrued Int. Gainl Fitch Duration 31406XWT5 FNMA Pool#FN 823358 131,737.36 01/11/2006 130,708.17 105.04 138,381.80 003% Ann/AA, 17.10 3.296% Du,02/01/2035 3,36% 131,131.50 3.08% 361.84 7,250.30 AAA 7.69 31406PDY8 FNMA Pool#FN 815971 225,691.30 OW1012013 242,618.17 108.67 245,261.44 0.06% Asia/AA+ 17.18 5D00% Due 03/01Y2035 4.21% 239,123D8 2.61% 940.38 6,138.36 AAA 3.95 31407BXR7 FNMA P.I#FN 826080 24,658.31 06/10/2013 26,507.67 108.59 26,777.69 OD1% Aaa/AA+ 17.51 5.000% Due 07101Y2035 4.22% 26,131.62 2.61% 102.74 M6.07 AAA 3.96 313761,722 FNMA FN 357969 135,435.14 06/10/2013 145,592+76 108.68 147,189.42 0.04% Aaa/AA- 17.68 5.000% Due 09101/2035 4,22% 143,543.14 2.62% 131.67 3,646.28 AAA 3.97 31403DJZ3 FNMA Pool#745580 130,651.48 06/10/2013 140,450+35 108.59 141.869.22 0.04% Aaa/AA+ 18.43 5.000% Due 06/01/2036 4,26% 138.537+95 2.64% 544.38 3,331.27 AAA 4.00 31410F4V4 FNMA Pool#FN SM336 253,500.21 06/10/2013 272,51234 108.51 275,070.29 0.07% Aaa/AA+ 18.51 5.000% Due 07/01/2036 4,25% 268,815+42 2.63% 1,056.25 6,25487 AAA 3.98 1,666,222.26 1,737,624.39 0.44% Aae/AA+ 13.42 Total Mortgage Pass Thru 1,646,749,81 4.04% 1,671,351+96 2,58% 4,098.00 66,272.43 As. 4.16 Municipal Bonds Vr 73358WAG9 Port Authority of NV B NJ TE-REV 2,440,000.00 Various 2,507633.89 105.82 2,581934.80 0.65% Aa3I AA- 1,92 5.309% Due1210112019 4.97% 2452,42977 2.19% 10.794.97 129,505.03 AA- 1.82 64971fal New York NV TE-REV 1,400,000.00 10/27/2010 1,400,000.00 104.93 1,469,048.00 0.37% Art IAAA 2.84 4.075% Du,11/01/2020 4.08% 1.400.000.00 2.27% 9,508.33 69,048.00 AAA 2.66 913366E,15 Jaw of California Rgts Med TE-REV 400,000.00 11/09/2010 400,000.00 107.79 431,156.00 OA1% Aa3/AA- 3.37 5.035% Due 05115Y2021 5.U% 400,000DO 2.61% 2,573.44 31,1%.00 AA- 3.10 4,307,633.89 4,482,138.80 1.14% Aa2fAA 2.36 Total Municipal Bonds 4,240,000.00 4.68% 4,252,429.77 2.26% 22,876.74 229,709.03 AA 2.22 Negotiable CD 06417GXH6 Bank of Nova Scotia Yankee CD 5,825,000.00 08/O8/2017 5,825,000,00 100.00 5,825,000.00 1 48% P-1/A 0.61 1.570% Due08/09/2018 1.57% 5.825,000.00 1.57% 36,835.03 0.00 NR 0.60 5,825,000.00 5,825,000.00 1.48% Aaa f AA 0.61 Total Negotiable CD 5,825,000.00 1.57% 5,825,000.00 1.57% 36,835.03 0.00 NR 0.60 Supranational 4581XOCX4 Inter-American Dev Bank Note 3,035,000.00 04/05/2017 3,027,807.05 99.06 3,OOQ486.18 0.76% Aaa/AAA 2.36 1.625% Due OS/12Y2020 1.70% 3.029,493.50 2.03% 6,712.83 (23.007.32) AAA 2.30 4581X0CS5 Inter-American Dev Bank Note 3,500,000.00 07/25/2016 3,590,405.00 99.09 3,468,129.00 0.88% Aaa/AAA 3.21 1.875% Due 03115Y2021 1.30% 3,582,423.77 2.17% 19,322.92 (94,294.77) AAA 3.08 45950KCJ7 International Finance Corp Note 2,500,000.00 11/09/2016 2,441,600+00 96.23 2,405,697.50 0.61% Asia I AAA 3.55 1.125% Due0712012021 1.64% 2,455,816.46 2.24% 12,578.13 (50,118.96) NR 3.43 4581XOCW6 Inter-American Dev Bank Note 3,000,000.00 0111012017 2,996,310.00 99,56 2,986,713.00 0.76% Asia I NR 4.05 2,125% Due01AM022 2.15% 2.%7,013.24 2.24% 28,864.58 (10.300.24) AAA 3.82 459058FY4 Intl.Bank Rerun B Development Note 10000,000.00 Various 10,006,350.00 99.04 9,903,720.00 2.52% Aaa/NR 4.07 2.000% Due 01/2612022 1.99% 10,003,903+31 2.25% 86,111.12 (100,183.31) AAA 3.85 Cj'k� Holdings Report Orange County Sanitation District Long Term -Account #10268 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt Price Market Value %of Port, MoodyfS&P maturity CUSIP Sternly Description Par Value/Units Book Yi a Id Book Value Mkt YTM Accrued Int. Curl Fitch Duration 4581XOCZ9 Inter-Amenoan Dev Bank Note 1,500,000.00 11/28/2017 1,471,005,00 97.58 1,463,742.00 0.37% NR/NR 4,71 1.750% Due09/14/2022 2.18% 1.471,535,50 229% 7,80208 (7,793.50) AAA 4,46 23,533,477.05 23,234,487.68 5.90% Aaa 1 AAA 3.71 Total Supranational 23,535,000.00 1.85% 23,520,185.78 2.21% 161,391.66 (285,698.10) Aaa 3.53 US Corporate 40428HPH9 HSBC USA Inc Note 3,OOQ000.00 Vanous 3,003,290.00 99.99 2,999,n8.00 0.76% A21A 0.04 1.625% Due01/16/2018 1.59% 3,000,045.27 1.79% 22,343.75 (267.27) AA- 0.04 38141GFG4 Goldman Sachs Group Inc Note 600,000.00 Various 692,806.00 100.16 600,946.20 0.16% A3/BBB- 0.05 5.950% Due01/18P2018 2.74% 600,834.83 2.54% 16,164.17 111.37 A 0.05 674599CD5 Occidental Pehpleum Callable Note Cont 1115/18 2,M,000.00 01/06/2015 1,986,340.00 99.94 1,998,738.00 0.51% AS I A 0.13 1.500% Due02115Y2018 1.73% 1,999,457.46 2.92% 11,333.33 (719.46) A 0.04 025816AY5 American Express Credit Note 2,M,000.00 Various 3,377,385.79 101.07 2,931,059.00 0.75% A3/BBB+ 0.21 7.000% Due03/192018 4.28% 2,914,189.37 2.00% 57,516.67 16,869.63 A 0.22 073902CDB Bear Stearns Note 3,200,000.00 0111512014 3.523,520+00 101.32 3,242,284.80 0.84% A3/NR 0.50 4.650% Due07/02Y2018 2,25% 3.236,278,89 2.00% 73.986.67 6.005.91 A+ 0.49 532457BF4 Eli Lilly B Co Note 4,000,000.00 Various 4,009,675,00 99.92 3,996720.00 1.01% A21 AA- 1.20 1.950% Dual 1.89% 4.002,723.07 2.02% 22,%6.67 (6,003.07) A 1.18 02665WAH4 American Honda Finance Note 4,000,000.00 Various 4,046,640.00 100.15 4,005,980.00 1.02% A2/A+ 1.62 2.250% Due08115/2019 1.93% 4,019,819.26 2.16% U,000.00 (13.839.26) NR 1.57 06406HCW7 Bank of New York Callable Note Cont 8/11/2019 2,120,000.00 02/10/2016 2,142,175.20 100.26 2,125,526.84 0.54% Al IA 170 2.300% Due09/11Y2019 1.99% 2,130,233.37 2.13% 14,898.89 (4,706.53) AA- 1.57 24422ESS9 John Deere Capital Corp Note 5,M,000.00 Various 5,046,984.00 100.06 5,003,190.00 1.27% A2I A 1.71 2.300% Due 09/16/2019 2.07% 5,018,291.96 2.26% 33,541.67 (15,101.96) A 1.66 36962G7MO General Electric Capital Corp Callable Note 1X 5,M,000.00 Various 5,014,950.00 99.90 4,99g900.00 1.27% A21 A 2.02 12J9/2019 2.13% 5.006,116.05 2.25% 52,555.55 (11.216.05) A+ 1.90 2.200% Due 01/09Y2020 46625HKA7 JP Morgan Chase Callable Note Cent 12/23/2019 2,M,000.00 02/06/2015 1,%4,880.00 99.93 1,99$662.00 0.51% A3/A- 2.06 2.250% Due 0112M020 2.30% 1,%7,869.26 228% 19,750.00 79274 A+ 1.91 40428HPR7 HSBC USA Inc Note 2,500,000.00 Various 2.472,287.50 99.99 2,499,685.00 0.64% A21A 2.18 2.350% Due 03/0SCO20 2.64% 2.484.951.90 2.36% 18.930.56 14733.10 AA- 2.10 747525AD5 Oualcomm Inc Note 5,000,000.00 0511912015 4,995,195.40 99.23 4,961,445.00 1.25% Al I A 2.39 2.250% Due 05/20/2020 2,27% 4,997709.59 2.58% 12,812.51 (36,264,59) NR 2.30 94974BGM6 Wells Fargo Corp Note 5,000.000.00 07/16I2015 5,001,650.00 100.62 5,030,790.00 1.28% A21A 2.56 2.600% Due 07Y22/2020 2.59°% 5.000,842.61 2.35% 57,416.67 29,947.39 A+ 2.44 037833BS8 Apple Inc Callable Note Cant 1/23/2021 4,000,000.00 05/23/2016 4,050,840.00 99.88 3,995,320.00 1.02% Aal/AA+ 3.15 2.260% Due 02/23/2021 1.96% 4,033,375.88 2.29% 32,000.00 (38,055.88) NR 3.00 30231GAV4 Egon Mobil Corp Callable Note Cold 2/112021 3,M,000.00 Various 3,016,097+40 99.78 2,993,286.00 0.76% Aaa I AA+ 3.17 2.222% Due 03/0112021 2.10% 3,010,691.49 2.30% 22,220.00 (17,405.49) NR 3.02 166764BG4 Chevron Corp Callable Note Cent 4/15/2021 2,500,000.00 0512012016 2,485,350.00 99.18 2,479,535.00 0.63% Aa2I AA- 3.38 2.100% Due05116/2021 2.23% 2.490.074.77 2.35% 6,562.50 (10,539.77) NR 3.23 61747WAL3 Morgan Stanley Note 2,800.000.00 0610612014 3.200,848.00 109.38 3,062,746.40 0.79% A3/BBB+ 3.58 5.500% Due 07/=021 3.24% 3,000,731+87 2.73% S5,450.00 62,014.53 A 3.20 Cj'k� Holdings Report Orange County Sanitation District Long Term -Account #10268 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt P,ic. Market Value %of Port, MoodyfS&P maturity CUSIP S..unty Description Par Value/Units Book Yield Book Value Mkt YTM Ac crued Int. Gumli-.a, Fitch Duration 594918BP8 Microsoft Callable Note Cant 718/21 3,045,000.00 Various 3,041.385.15 97.37 2,964,834.29 0.75% Ann I AAA 3.61 1.550% Due 08/08/2021 1,57% 3.042,396,75 2.31% 18.747.89 (77.562.46) AA- 3.45 06406RAA5 BANK OF NV MELLON CORP Callable Note Corti 2,500,000.00 02/08/2017 2,50447500 100.23 2,505,715.00 0.64% At/A 4.11 lR 2.60022 Due 02J07/2022 2.56% 2,503,669.55 2.54% 26,000.00 2,045.45 AA. 3.76 674599CK9 Occidental Petroleum Callable Note Cont W172022 3,350,000.00 04/2512017 3,354,589.50 100.22 3,357,212.55 0.85% A31 A 4.29 2A00% Due04/15n022 2.57% 3.353,95078 2.54% 18,38778 3,26177 A 3.W 084664BT7 Berkshire Hathaway Note 4,000,000.00 05/23/2017 4,131,120.00 102.31 4,092,228.00 1.04% Aa21 AA 4.37 3.000% Due 0511SQ022 2.30% 4.115,226.67 2.44% 15,333.33 (22,998.67) A+ 4.07 00440EAU1 ACE INA Holdings Inc Callable Note Cent 913/2022 4,169,000.00 Various 4,232,453.17 101.36 4,225,769.27 1.07% A3I A 4.84 2.875% DuellMM022 2.54% 4,230,626.26 2.56% 19,310.58 (4,856.99) A 4.33 77,324,937.11 76,ON,351.35 19.35% Al/A+ 2,,1,11 Tonal US Corporate 75,604.000.00 2.30% 76,190,106.91 2.32% 672,229.19 (123,755.56) A+ 2.28 S Treasury 912828UR9 US Treasury Note 3,500,000.00 04/22/2016 3,496,457.04 99.91 3,496,710.00 0.88% Aaa/AA+ 0.16 0.750% Due02/28Y2018 0.81% 3,499,695.12 1.32% 8,919.20 (2,986.12) AAA 0.16 91282BB33 US Treasury Note II'M0,000.00 Various 11,042,439.19 99.63 10,959,608.00 2.78% Asia/AA+ 1.08 1500% Due O1/31W9 1.37% 11,014,799.23 1.84% 69,1148.91 (55,191.23) AAA 1.06 912828SN1 US Treasury Note 5,000,000.00 12/28/2016 5,016,423,00 99.58 4,979,100.00 1.26% Asa/AA+ 1.25 1500% Due03/31/2019 1.35% 5,009,070.61 1.84% 19.162.09 (29.970.61) AAA 1.22 912828WS5 US Treasury Note 2,000,000.00 Various 1,996,861.44 99.65 1,993,046.00 0.50% Aaa/AA+ 1.50 1.625% Due0613o/2019 1,68% 1,999,050.54 1.86% 89.78 (6,004.54) AAA 1.47 912828WW6 US Treasury Note 5,000,000.00 Various 5,012,388.70 99.63 4,981,640.00 1.26% Asia/AA+ 1.58 1.625% Due 07/31/2019 1.57% 5.003,939.53 1.86% 34,001.36 (22.299.53) AAA 1.55 912828F39 US Treasury Note 5,800,000.00 10/27/2014 5,873,186.87 99.77 5,706,857.20 1A7% Aaa/AA+ 1.75 1750% Due09/30Q019 1.48% 5,825,928.83 1.88% 25.932.69 (39,071.63) AAA 1.71 91282BG61 US Treasury Note 7,SW,000.00 12/19/2014 7,449,634.50 99.28 7,445,797.50 1.88% Aaa/AA+ 1.92 1500% Duell/3=019 1,64% 7,480,512.68 1.89% 9,890.11 (34,715.18) AAA 1.87 912828XE5 US Treasury Note 5,000,000.00 12/21/2016 4.966,423+00 99.02 4,9W,780.00 1.25% Aaa/AA+ 2.42 1500% Due 05/31/2020 1.70% 4.976.447+98 1.92% 6.593.41 (25.667.98) AAA 2.36 912828199 US Treasury Note 10,000,000.00 Various 9.850,311.40 98.39 9,838,670.00 2.49% Aaa/AA+ 2.84 1.375% Due 10/31/2020 1,81% 9,882,427+43 1.96% 23,549.73 (43,757.43) AAA 2.75 912828N89 US Treasury Note 6,000.000.00 Various 5,895,840.41 98.09 5,885,628.00 1.49% Asia/AA+ 3.09 1.375% Due01/31t2021 1.81°% 5.922,516.85 2A2% 34,524.45 (36.888.85) AAA 2.98 912828T34 US Treasury Note 7,000,000.00 Various 6,757,914.08 96.49 6,754,181.00 1.71% Aaa/AA+ 3.75 1.125% Due09/30Q021 1.88% 6,811,252.27 2.10% 20,120.19 (57,071.27) AAA 3.63 91282BT67 US Treasury Note 6,M,000.00 1211312016 5,813,691+98 96.88 5,812,500.00 1.47% Aaa/AA+ 3.84 1250% Due 10/31/2021 1,92% 5,853,734.61 2A0% 12,845.30 (41,234.61) AAA 3.70 9128281.65 US Treasury Note 7,000,000.00 12/28/2016 6.900,492+20 98.61 6,902,385.00 1.74% Aaa/AA- 3.92 1.750% Due 11/30/2021 2.06% 6.920,869,98 2.12% 10769.23 (18,484.98) AAA 3.75 912828V72 US Treasury Note 3,000.000.00 02/27/2017 3,004,814,74 98.96 2,968,827.00 0.75% Aaa/AA+ 4.09 1.875% Due 01/31/2022 1."% 3.003,992.65 2.14% 23,539.40 (35,165.65) AAA 3.88 Cj'k� Holdings Report Orange County Sanitation District Long Term -Account #10268 For the Month Ending 12/31/2017 Purchase D:te Cost Value Mkt Price Market Value %of Port. MoodyfS&P maturity CUSIP S..u,ity Deac,ipti.n Par Value/Units Book Yi Id Book Value Mdt YTM Accrued Ind, Gainll-oss Fitch Duration 912828U76 US Treasury Note 5,00Q000.00 04/25/2017 4,976,383.94 98.36 4,917,970.00 125% Aaa/AA- 4.25 1.750% Due 03/31/2022 1,85% 4.979,663+95 2.16% 22.355.77 (61.693.95) AAA 4.05 912828M5 US Treasury Note 5,000,000.00 07/25/2017 4,973,454.25 98.19 4,909,570.00 1.24% Aso/AA+ 4.50 1.750% Due 06/3W2022 1.86% 4,975,799.12 2.17% 241.71 (66.229.12) AAA 4.30 912828124 US Treasury Note 6,M,000.00 09/27/2017 5,987,832.60 98.59 5,915,628.00 1.50% Aaa/AA+ 4.67 1.875% Due 08/31=22 1.92% 5,988,475.48 2.19% 38,225.14 (72,847.48) AAA 4.41 91282BL57 US Treasury Note 13,W0,000.00 Various 12,763,554.69 98.00 12,739,493.00 3.23% Me/AA- 4.75 1.750% Due09/3=022 2.15% 12,765,372.52 2.20% 58,125.00 (25,879.52) AAA 4.50 912828M80 US Treasury Note 8,000,000.00 1212212017 7,907,500.00 99.09 7,927,184.00 2.00% Aaa/AA+ 4.92 2.000% Due11/30/2022 2.25% 7,907,808.33 2.20% 14,W5.93 19.375.67 AAA 4.65 912828WUO US Treasury Inflation Index Note 10,803,936.00 Vanous 10,690,225.08 98.82 10,676,989.73 2.69% Aaa/AA+ 6.54 0.125% Due07/15/2024 0,23% 10,729,306.36 0.31% 6.238.70 (52,316.63) AAA 6.50 130,375,829.11 129,842,564.43 32.85% Aaa/AA+ 3.38 Total US Treasury 131,603,936.00 1.65% 130,550,664.07 1.87% 438,238.10 (708,099.64) Aso 3.26 397,455,713.66 394,986,857.98 100.00% Aat/AA+ 2.52 TOTAL PORTFOLIO 397,069,849.95 1.76% 396,08,061.48 1.91% 1,628,834.78 (1,501,203.50) Aaa 2.26 TOTAL MARKET VALUE PLUS ACCRUALS 396,615,692.76 Cj'k� Holdings Report Orange County Sanitation District Liquid -Account #10282 For the Month Ending 12/31/2017 Purchase Date Cost Value Ifin Price Market Value %of Pon, Mani Maturity CUSIP Security Description ParValue/Units Book Yield Book Value MMY11161 Accrued Ind. Gairl Fitch Duration Agency 313385RR9 FHLB Discount Note 4,750,00000 12/22/2017 4.746,648.61 99,96 4,748,324,31 3.26% P-1IA-1+ 0.03 1270% Due 01/11/2018 1,29% 4,748,324.31 1.29% 0.00 0.00 F-t+ 0,03 313385RX6 FHLB Discount Nate I'M'000.00 12122/2017 999075.56 99.94 99943111 0.69% P-1IA-1+ 0.05 1280% Due(11117/2018 1.30% 999,431.11 1.30% 0.00 0.00 F-1+ 0.05 8805901 TVA Discount Note 10,000,000.00 12/21/2017 9,988.358.33 99.92 9,992,238.89 6.87% P-1 /A-1+ 0.06 1.270% Due0112312018 129% 9.91.89 1.29% 0.00 0.00 F-1+ 0.06 313385SL1 FHLB Discount Note 3,600,000.00 12/20/2017 3,591.00 99.90 3,5%,259.00 2.47% P-1/A-1+ 0.08 1.290% Due01/30Y2018 1.31% 3,596,259,00 1.31% 0.00 0.00 F-1+ 0.08 313385SM9 FHLB Discount Note 19,500,000.00 Various 19,469,767.44 99.89 19,479.194.16 13.39% P-1 /A-1+ 0.08 1.280% DOe01/31Y2018 1.30% 19,479,194.16 1.30% 0.00 0.00 F-1+ 0.08 3137FADP1 FHLMC Note 2,S ,000.00 Various 2,497,367+00 99.91 2,497,037.50 1.72% Aaa/AA+ 0.18 0.875% Due03/072018 1.36% 2,497,819.08 1.34% 6,927.09 18.42 AAA 0.18 3137EAEA3 FHLMC Note 800,000.00 1113012017 798,240+00 99.82 796,527.20 0.55% Aaa/AA+ 0.27 0750% Due04/092018 1.37% 798,662.95 143% 1,36667 (13575) AAA 0.27 42,091 42,111,812.17 28.95% AaaIAAA 0.08 Total Agency 42,150,0t)(I 1.30% 42,111,929.50 1.30% 8,293]6 (117.33) Aaa 0.08 Commercial Pape 69372BAP5 Paccar Financial Discount CP 1,500,000.00 1211512017 1497,64375 99.91 1498,670.83 1.03% P-11 A-1 0.06 1450% Due0112312018 1.47% 1,498,670,83 147% 0.00 0.00 NR 0,06 89233HAW4 Toyota Motor Credit Discount CP 1,3W,000.00 1111012017 1,296,197+50 99.90 11298.W8.61 0.89% P-1 I A-1+ 0.08 1.300% Due0113012018 1.32% 1.298.638+61 1.32% 0.00 0.00 NR 0.08 )6538CAX9 Bank of Tokyo Mitsubishi NY Discount CP 2,M.000.00 1212112017 1,996,355.56 99.87 1,997,333.34 1.37% P-1/A-1 0.08 1.600% Due01/31Y201B 1,63% 1,997,333.34 1.63% 0.00 0.00 NR 0.08 02665KBN6 American Honda Discount CP 1,000,000.00 12/19/2017 997,237.50 99.78 997,790.00 0.69% P-1/A-1 0.15 IS30% Due02Y22Y2018 1.56% 997)90.00 1.56% 0.00 0.00 F-1 0.14 01 Bank of Tokyo Mitsubishi NY Discount CP 1,00,000.00 11/07/2017 991 99.71 997,140.28 OS9% P-1IA4 0.20 1.450% Due03/13Y2018 1.48% 997,140.28 1.48% 0.00 0.00 NR 0.20 6,782,399.59 6,789,573.06 4.67% P-1/A-1 0.10 Total Commercial Paper 6,800,000.00 1.50% 6,789,573.06 1.50% 0.00 0.00 F-1 0.10 Money Market Fund FI go 31846V567 First American Govt Obligation MMKT Class 1,548,257.05 Various 1,548,257.05 1,00 1,548,257,05 1.06% Aaa 1 AAA 0,00 1.15% 1,548,257.05 1.15% 0.00 0.00 AAA 0.00 1,548,257.05 1,548,257.05 1.06% Asa IAAA 0.00 Total Money Markel Fund FI 1,540,257.05 1.15% 1,548,257.05 1.15% 0.00 0.00 Asia 0.00 Supranational 4581XOBZO Inter AmericanDev Bank Note 3,000,000,00 12/18/2017 2,996,040.00 99.89 2,996,571.00 2.07% Aaa I APA 0,20 0.875% Due03/15/2018 1.43% 2,996,599,06 143% 7,729.17 (28.06) AAA 0,20 Cj'k� Holdings Report Orange County Sanitation District Liquid -Account #10282 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt P,ic. Market Value %of Port, Mooti maturity CUSIP Security D...ripti.n Par Value/Units Book Yield Book Value Mdt YTM Accrued Int. Gai.)L.as Fitch Duration 45950KBX7 International Finance Corp Note 2,500,000.00 Various 2,490,715,00 99.64 2,490,957.50 1.71% Aso I AAA 0,45 0875% Due0611512018 1.61% 2.491,720,86 1.67% 972.22 (763,36) NR 0,45 5,486,755.00 5,487,528.50 3.78% Aaa 1 AAA 0.32 Total Supranational 5,500,000.00 1.51% 5,488,319.92 1.54% 8,701.39 (791.42) Aaa 0.32 US Corporate 46625HGYO JP Morgan Chase Note 1'"'1100.00 04/11/2017 1,032,600.00 100.14 1,001,391.00 0.71% A3I A- 0.04 6.000% Due01/15/2018 1.57% 1,001,671.79 2.35% 27,666.67 (280.79) A. 0.04 40428HPH9 HSBC USA Inc Note 1' O .000.00 05111/2017 1,000,340.00 99.99 999,926.00 0.69% A21A 0.04 1A25% Due01/16Y2018 1.57% 1.000,020.82 139% 7,447.92 (94.82) AA- 0.06 24422EST7 John Deere Capital Corp Note 1'M'000.00 Various 999,619.50 99.98 999,799.00 0.69% A2/A 0.04 1.350% DUe01116Y201B 1.43% 999,968.64 1.82% 6.187.51 (169.64) A 0.04 06406110E7 Bank of New York Callable Note Cant 12/25/2017 870,000.00 06/22/2017 859,364.90 99.96 869,665.05 0.60% Al I A 0.07 1.300% Due0112512018 1.43% 869,928.10 1S7% 4,W1.00 (263.05) NR 0.07 69353REJ3 PNC Bank Callable Note Cent 112412018 1,000,000.00 09/21/2017 1.000,320.00 99.97 999,686.00 0.69% A21A 0.15 1.500% Due02123/2018 1.40% 1.000,060,83 1S9% 5.333.33 (374.83) A+ 0.14 46623EKDO JP Morgan Chase Callable Note Cent V112018 1,000,000.00 12/21/2017 999180.00 99.99 999,904.00 0.69% A3I A- 0.16 1.700% Due03/01a018 1.81% 999,811.88 1.75% 5,666.67 92.12 A+ 0.17 30231GAL6 Exxon Mobil Corp Note I'M'000.00 0712012017 999,620.00 99.91 999,075.00 0.69% Asia/AA+ 0.18 1.305% Due03/06/2018 1.37% 999,891A3 IS1% 4,168.75 (816.43) NR 0.18 808513AK1 Charles Schwab Corp Callable Note Cant 2110120181,OO ,000.00 0510112017 1,001,100.00 99.93 999,312.00 0.69% A21A 0.19 1.500% Due03110Y2018 1.37% 1,000,239.74 2.11% 4,625.00 (927.74) A 0.10 02665WATB American Honda Finance Note 1,000,000.00 03/27/2017 1,001,140.00 99.96 999,636.00 0.69% A2/A+ 0.20 1.500% Due031132018 1.38% 1,000,232.59 1S8% 4,500.00 (596.59) NR 0.20 0M664BEO Berkshire Hathaway Note I.000.00000 12/04/2017 1,016250+00 101.25 1,012,486.00 0.70% Aa21 AA 0.37 5400% Due05/15/2018 1.71% 1,013,524.84 2.01% 6.900.00 (1.038.84) A+ 0.37 58933YAGO Merck B Co Note 1,000,000.00 12/01/2017 998,880.00 99.82 998,175.00 0.69% At/AA 0.38 1.300% Due05/18/2018 1.55% 999,064.39 1.78% 1,55278 (889.39) A 0.38 17275RAU6 Cisco Systems Note I'M.000.00 1210112017 1,000,150,00 99.91 999,145.00 0.69% A11AA- 0.45 1.650% Due06/1512018 1,62% 1.000,128,91 1.84% 733.33 (983,91) NR 0.45 808513AJ4 Charles Schwab Corp Callable Note Cant 6/25/2018 930,000.00 1112912017 931,841 40 100.13 931,202.49 0.65% A21 A 0.56 2.200% Due07Y25/2018 1.89% 931,599.52 1.92% 8,866.00 (397.03) A 0.48 12,851,005.80 12,809,402.54 8.87% At/A* 0.22 Total US Corporate 12,800,000.00 1.55% 12,816,143.48 1.88% 88,548.96 (6,740.94) A+ 0.20 US Treasury 912828H37 US Treasury Note 10.W0,000.00 Various 10,493,983.27 99.99 10,498,698.00 7.25% Asia/AA- 0.04 0A75% Due01115/2018 1.11% 10,499.050.05 1A7% 42,442.26 (352.05) AAA 0.04 912828P20 US Treasury Note 35,000,000.00 Various 34,963,766.76 99.96 34,986,655.00 24A2% Asia/AA+ 0.08 0.760% Due01131Y2018 1.16% 34,968,147.78 1.20% 109,850.52 (1,482.78) AAA 0.08 912828UU2 US Treasury Note 5,OO ,000.00 12/21/2017 4,991,015.63 99.85 4,992,255.00 3.44% Aaa/AA+ 0.25 0.750% Due03/312018 1.41% 4.991.923.14 1.38% 9.581.04 331.86 AAA 0.25 Cj'k� Holdings Report Orange County Sanitation District Liquid -Account #10282 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt P,ic. Market Value %of Fort. MoodyfS&P maturity CUSIP S..u,ity Description Par Value/Units Book Yield Book Value Mkt YTM Accrued Int. Gain)Loss Fitch Duration 912828045 US Treasury Note 13,000,00000 Various 12,981,523.44 99.88 12,983,776.00 894% Ann/AA, 0.25 0.875% Due 03/31/2018 1,42% 12.982.618.36 1.38% 29.062.50 1,157.64 AAA 0,25 912828VE7 US Treasury Note 8,000,000.00 Various 7,983,750.00 99.80 7,983,752.00 5.49% Aaa/AA+ 0.41 1.000% Due05/31Y2018 1.46% 7,984,87037 1A9% 7,032.96 (1,11877) AAA 0.41 912828S68 US Treasury Note 5,M,000.00 12/26/2017 4,975,195.31 99.51 4,975,390.00 3.43% Asia/AA+ 0.58 0.750% Due 07/31=18 1.59% 4,975,769.49 1.60% 15,692.93 (379.49) AAA 0.58 76,389,234.41 76,420,536.00 52.67% Aaa/AA+ 0.18 Total US Treasury 76,500,000.00 1.28% 76,422,379.59 1.29% 213,662.21 (1,843.59) Ass 0.18 145,151,819.79 145,167,109.32 100.00% Asa/AA+ 0.16 TOTAL PORTFOLIO 145,298,257.05 1.33% 145,176,602.60 1.37% 319,206.32 (9,493.28) Aaa 0.15 TOTAL MARKET VALUE PLUS ACCRUALS 145,486,315.64 Cj'k� Holdings Report OCSD Lehman Exposure -Account #10284 For the Month Ending 12/31/2017 Purchase Date Cost Value Mkt Price Market Value %of Pon, MoodysS&P Maturity CUSIP Security Description ParValue/Units Book Yield Book Value MMYTM Accrued Ind. Gairi Fitch Duration Common Stock SLHOPNTA4 Lehman Brothers, Inc Open Position Long 60,641 49 1l2l2r)14 5784264 OA2 25,621.03 17.64% NR i NR 0,00 Exposure 0.00% 57,842.64 0.00% 000 (32.22161) NR 0.00 0000% Dui 57,842.64 25,621.03 17.61 NR/NR 0.00 Total Common Stock 60,641.49 0.00% 57,842.64 0.00% 0.00 (32,221.61) NR 0.00 S Corporate 525ESCIB7 Lehman Brothers Note-Defaulted 600,000.00 09/19/2008 331,90374 4.60 27,600.00 19.01% NR/NR 0.07 0.000% Due01242018 0.00% 331,901 0.00% 0.00 (304,303.74) NR 0,00 525ESCOV6 Lehman Brothers Note-Defaulted 2,M,000.00 0911812008 1,070,782A6 4.60 92,000.00 63.35% NR/NR 31,83 0.000% Due 10222049 0.00% 1,070,782.46 0.00% 0.00 (978,782.46) NR 0.00 1,402,686.20 119,600.00 82.36% NR/NR 24.50 Total US Corporate 2,600,000.00 0.00% 1,402,686.20 000% 0.00 (1,283,086.20) NR 0.00 1,460,528.84 145,221.03 100.00% NR/NR 20.18 TOTAL PORTFOLIO 2,660,641.49 0.00% 1,460,528.84 0.00% 0.00 (1,315,307.81) NR 0.00 TOTAL MARKET VALUE PLUS ACCRUALS 145,221.03 Coil SECTION 5 Transactions Cj'k� Transaction Ledger Orange County Sanitation District Long Term -Account #10268 September 30, 2017 through December 31, 2017 Ty" Date CUSIP Quantity Security Description Pnce Yield Amount Pur/Sold Total Amount Gain/Loss I am ertnn4 Purchase 10/06/2017 912828157 3,000,000.00 US Treasury Note 1.75%Due 09/30/2022 98.980 1.97% 2,969,414.06 865.38 2,9]0,2]9.44 0.00 : Purchase 1013012017 459058F 4 5,000,000.00 Intl.Bank Recon&Development Note 99.516 2.12% 4,975,800.00 26,111.11 5,001,911.11 0.00 2%Due:01/26/2022 Purchase 1110712017 00440EAU1 1,419,000.00 ACE INA Holdings Inc Callable Note Cont 9/3/2022 101.663 2.52% l,"2,597.97 453.29 l,"3,051.26 0.00 2.875%Due:11/03/2022 Purchase 1110812017 06538CCD1 6,665,000.00 Bank of Tokyo Mitsubishi NV Discount CP 99497 1.48% 6,631,443.58 0.00 6,631,443.58 0.00 1.45%Due:0 3/1 312 01 8 Purchase 1111312017 00440FAU1 1,620,000.00 ACE INA Holdings Inc Callable Note Cont 9IN2022 101.612 2.53% 1,646,114.40 1,293.75 1,647,408.15 0.00 2.875%Due: 11/03/2022 Purchase 1111612017 00440FAU1 1,130,000.00 ACE INA Holdings Inc Callable Note Cont 9/3/2022 101.216 2.61% 1,143,740.80 1,173.16 1,144,913.96 0.00 2.875%Due: 11/0312022 Purchase 1112912017 3137EAEK1 1,500,000.00 FHLMC Note 99.889 1.91% 1,498,335.00 1,093.75 1,499,428.75 0.00 1.875%Due: 11/1712020 Purchase 11/30/2017 4581XOC29 1,500,000.00 Inter-American Dev Bank Note 98.067 2.18% 1,471,005.00 5,541.67 1,476,546.67 0.00 1.75%Due:09/14/2022 Purchase 1210812017 3137EAEK1 3,500,000.00 FHLMC Note 99.654 2.00% 3,487,890.00 4,192.71 3,492,082.71 0.00 1.875%Due: 1111712020 Purchase 12121/2017 880590SD7 8,000,000.00 TVA Discount Note 99SM 1.29% 7,99Q686.67 ON 7,990,686.67 0.00 1.27%Due:01123/2018 Purchase 1212212017 313385RR9 4,750,000.00 FHLB Discount Note 99929 129% 4,746,648.61 0.00 4,746,648.61 0.00 1.27%Due:01/11/2018 Purchase 1212212017 313385R 1 2,100,000.00 FHLB Discount Note 99901 1.29% 2,097,925.67 0.00 2,097,925.67 0.00 1.27%Due:0111912018 Purchase 1212612017 313385R 1 10,000,000.00 FHLB Discount Note 99.915 1.29% 9,991,533.33 0.00 9,991,533.33 0.00 1.27%Due:0111912018 Purchase 1212612017 912828M80 8,000,000,00 US Treasury Note 98.844 2.25% 7,907,500.00 11,428.57 7,918,928.57 0.00 2%Due:11/30/2022 Purchase 1212812017 313385SE7 6,225,000.00 FHLB Discount Note 99,905 1.28% 6,219,094.03 0.00 6,219,094.03 0.00 1.266%Due:01/24/2018 Cj'k� Transaction Ledger Orange County Sanitation District Long Term -Account #10268 September 30, 2017 through December 31, 2017 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount Pur/Sold Total Annount Gain/Loss Purchase 1212912017 40428HPR7 1,250,000.00 HSBC USA Inc Note 99.960 2.37% 1,249,500.00 9,302.08 1,258,802.08 0.00 2.35%Due:0310512020 Purchase 1212912017 912828157 10,000,000.00 US Treasury Note 97.941 2.21% 9,794,140.63 43,269.23 9,837,409.86 DOD 1.75%Due:M130IM22 Purchase 1212912017 912828199 4,500,000.00 US Treasury Note 98.348 1.98% 4,425,644.53 10,084.60 4,435,729.13 0.00 1.375%Due:10/31/2020 Subtotal 80,159,000.00 79,689,014.28 114,809.30 79,803,823.58 0.00 Security 1012012017 912828WUO 30784.00 US Treasury Inflation Index Note 100.000 30.784.00 10.14 30,794.14 0.00 Contribution 0.125%Due:07/15/2024 Security 1113012017 912828WUO 56,056.00 US Treasury Inflation Index Note 100,000 56,056,00 26.28 56,082.28 0.00 Contribution 0.125%Due:07/15/2024 Subtotal 86,840.00 86,840.00 36.42 86,876.42 0.00 TOTAL ACQUISITIONS 80.245.840.00 79.775.854.28 114.845,72 79.890.700.00 0.00 DISPOSITIONS Sale 1013012017 459058EJB 5,000,000.00 Intl.Bank Recon 8 Development Note 99723 1 45% 4,986,150.00 18,750.00 5,004900.00 -1178045 1%Due:0611512018 Sale 1111012017 3137EADN6 1,000,000.00 FHLMC Note 99.914 1.25% 999,140.00 2,458.33 1,001,598.33 481.53 075%Due:01/12/2018 Subtotal 6,000,000.00 5,985,290.00 21,208.33 6,006,498.33 -12,261.98 Maturity 11/08/2017 M538BY80 6,640,000.00 Bank of Tokyo Mitsubishi NV Discount CP 99542 6,640,000.00 0.00 6,640,000.00 0.00 1.33%Due: 11/08/2017 Maturity 11/15/2017 91282OG20 2,000,000.00 US Treasury Note 100.000 2,000,000.00 0.00 2,000,000.00 0.W 0,875%Due: 11/1512017 Maturity 1210112017 060505DP6 3,800,000.00 Bank of America Corp Note 100.000 3,800,000.00 DN 3,800,000.00 DN 5.75%Due: 12/01/2017 Maturity 1DOW2017 166764AA8 2,000,00600 Chevron Corp Callable Note Cent 11/5117 100.000 2p00,000.00 D(K) 2,000,000.00 D(K) 1.104%Due: 1 210 512 01 7 C& I Transaction Ledger Orange County Sanitation District Long Term -Account #10268 September 30, 2017 through December 31, 2017 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Arr.unt Pur/Sold Total Arnount Gain/Loss Maturity 12/15/2017 458140AL4 2,000,000.00 Intel Core Note 100.000 2,000,000.00 0.00 2,000,000.00 0.00 1.35%Due: 1211512017 Subtotal 16,4 ,000.00 16,440,000.00 0.00 16,440,000.00 0.00 Security 1213112017 912828WUO 4,680.00 US Treasury Inflation Index Note 99769 4,680.00 0.00 4,680.00 32.34 Withdrawal 0.125%Due:07/1512024 Subtotal 4,680.00 4,680.00 0.00 4,680.00 32.34 TOTAL DISPOSITIONS 25,819,556.23 25,804,846.23 114.910.18 25.919.756.41 .12,229.64 Cj'k� Transaction Ledger Orange County Sanitation District Liquid -Account #10282 September 30, 2017 through December 31, 2017 Transaction Sent...no Acq/Diap Interest Ty" Date CUSIP Quamity Security Description Price Yield Amount Pur/Sold Total Amount Gain/Loss Esimm Purchase 10/05/2017 91282BP20 5,000,000.00 US Treasury Note 99.891 1.09% 4,994,531.25 6,725.54 5,001,256.79 0.00 0.75%Due:01/31/2018 Purchase 1011212017 313385PU4 2,000,000.00 FHLB Discount Not. 99.870 1.W% 1,997,393.33 0.00 1,997,393.33 0.00 1.02%Due: 11127IM17 Purchase 1011312017 91282BP20 5,000,000,00 US Treasury Note 99.891 1A2% 4,994,531.25 7,540.76 5,002,072.01 0.00 0.75%Due:0113112018 Purchase 1012012017 912828P20 2,000,000.00 US Treasury Note 99,898 1.11% 1,997.%8.75 3,301.63 2,001,270.38 0.00 0.75%Due:01/31IM18 Purchase 1110812017 06538CCD1 1,000,000.00 Bank of Tokyo Mitsubishi NV Discount CP 99497 148% 994,965.28 0.00 994,965.28 0.00 1.45%Due:0 311 31201 8 Purchase 1111012017 313385QS8 5,000,000.00 FHLB Discount Note 99.886 1.07% 4,994,312.50 0.00 4.994,312.50 0.00 1.05%Due: 12/19/2017 Purchase 11/10/2017 89233HAW4 1,300,000.00 Toyota Motor Credit Discount CP 99.708 1.32% 1,296,197.50 ON 1,296,197.60 0.00 1.3%Due:01/30/2018 Purchase 11/10/2017 912828P20 10.W0,000.00 US Treasury Note 99.895 1.22% 9,909,453.13 20,788.04 10,010,241.17 0.00 0.75%Due:01/31/2018 Purchase 11114/2017 313385CC3 3,500,000.00 FHLB Dismount Note 99.939 1.06% 3,497,076.67 0.00 3,497,876.67 0.00 1.04%Due: 1210512017 Purchase 11/1512017 3137EADP1 W0,000.00 FHLMC Note 99863 1.31% 499,315.00 826.39 500,141.39 0.00 0.875%Due:0310712018 Purchase 1111512017 912828P20 3,000,000.00 US Treasury Note 99.895 1.25% 2,996,835.94 6,542.12 3,003,378.06 0.00 0.75%Due:0113112018 Purchase 1112912017 313385SM9 2,000,000.00 FHLB Discount Note 99783 126% 1,995,660.00 0.00 1,995,660.00 0.00 1.24%Due:0113112018 Purchase 12/0112017 3137EAEA3 W0,000.00 FHLMC Note 99.780 1.37% 798,240.00 866.67 799,106.67 0.00 0.75%Due:04ININ18 Purchase 1210112017 808513AJ4 930.000.00 Charles Schwab Corp Callable Note Cont6R52018 100.198 1.89% 931,841.40 7,161.00 939,002.40 0.00 2.2%Due:07/25/2018 Purchase 1210112017 912828P20 5,000,000.00 US Treasury Note 99,922 1.22% 4,996,093.75 12,5W.97 5,008,627.72 0.00 0.75%Due:01131IM18 Cj'k� Transaction Ledger Orange County Sanitation District Liquid -Account #10282 September 30, 2017 through December 31, 2017 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quamity Security Description Price Yield Ame�rt Pur/Sold Total Amount Gain/Loss Purchase 1210512017 084664BE0 1,000,000.00 Berkshire Hathaway Note 101.625 1.71% 1,016.250.00 3,000.00 1,019,250.00 0.00 5.4%Due:0511512018 Purchase 1210512017 17275RAU6 1,000,000.00 Cisco Systems Note 100.015 1.62% 1p00,150.00 7,791.67 1,007,941.67 0.00 1.65%Due:0 611 512 01 8 Purchase 1210512017 58933YAG0 1,000,000.00 Merck 8 Co We 99.888 1.55% 998,880.00 613.89 999,493.89 0.00 1.3%Due:05/18/2018 Purchase 1210812017 45950KBX7 500.000.00 International Finance Cory Note 99.603 1.65% 498,015.00 2,102.43 500,117.43 0.00 0.875%Due:06/15/2018 Purchase 1211112017 313385SM9 2,300,000.00 FHLB Discount Note 99,819 1.30% 2,295.829.33 0.00 2,295,829.33 0.00 1.28%Due:01/31IM18 Purchase 1211312017 45950KBX7 2,000,000.00 International Finance Cory Note 99.635 1.60% 1,992,700.00 8,652.78 2,001,352.78 ON 0.875%Due:0611512018 Purchase 12/15/2017 69372BAP5 1,500,000.00 Paccar Financial Discount CP 99.843 1.47% 1,497,643.75 0A0 1,497,643.75 ON 1.45%Due:01/23IM18 Purchase 12/19/2017 02665KBN6 1,000,000.00 American Honda Discount CP 99.724 1.56% 997,237.50 ON 997,237.50 OAO 1.53%Due:02/22I2018 Purchase 12119/2017 912828VE7 3,000,000.00 US Treasury Note 99.797 1A6% 2,993,906.25 1,565.93 2,995,472.18 0.00 1%Due:0513112018 Purchase 12/20/2017 313385SL1 3,600,000.00 FHLB Discount Note 99.853 1.31% 3,594,711.00 0.00 3,594,711.00 0.00 1.29%Due:01/30/2018 Purchase 12120/2017 4581XOBM 3,000,000.00 Inter-Amercan Dev Bank Note 99.868 IA3% 2,9%,040.00 6,927.08 3,002,967.08 0.00 0.875%Due:0311512018 Purchase 12121/2017 06538CAX9 2,000,000.00 Bank of Tokyo Mrsumshi NV Discount CP 99818 163% 1,9%,355.56 0.00 1,996,355.56 0.00 1.6%Due:01/31/2018 Purchase 1212112017 313385SM9 10,000,000.00 FHLB Discount Note 99AM 1.30% 9,985,365.28 0.00 9,985,365.28 0.00 1.285%Due:01/3112018 Purchase 1212112017 313385SM9 600.000.00 FHLB Discount Note 99.853 1.31% 599,118.50 0.00 599,118.50 0.00 1.29%Due:01131IM18 Purchase 1212112017 313385SM9 1,600,000.00 FHLB Discount Note 99.853 1.31% 1,597,649.33 0.00 1,597,649.33 0.00 1.29%Due:0113112018 Purchase 12/2112017 880590SD7 10,000,000.00 TVA Discount Note 99,884 1.29% 9,988,358.33 ON 9,988,358.33 0.00 1.27%Due:0112 312 01 8 C& I Transaction Ledger Orange County Sanitation District Liquid -Account #10282 September 30, 2017 through December 31, 2017 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Anneunt Pur/Sold Total Annount Gain/Loss Purchase 12/22/2017 313385RR9 4,750,000.00 FHLB Discount Note gg 929 1.29% 4,746,648.61 0.00 4,746,648.61 0.00 1.27%Due:01/11/2018 Purchase 1212212017 313385RX6 1,000,000.00 FHLB Discount Note 99.908 1.30% 999,075.56 DM 999,075.56 DM 1.28%Due:0 1/1 712 01 8 Purchase 1212212017 46623EKDO 1,000,000.00 3P Morgan Chase Callable Note Cent 211/2018 99978 181% 999,780.00 5,241.67 1,005,021.67 0.00 1.7%Due:03/01/2018 Purchase 1212212017 912828UU2 5,000,000,00 US Treasury Note 99.820 tAt% 4,991,015.63 8,550.82 4,999,566.45 0.00 0.75%Due:0313112018 Purchase 1212212017 912828VET 5,000,000.00 US Treasury Note 99,797 1.46% 4,989,843.75 3,021.98 4,992,865.73 0.00 1%Due:05/31/2018 Purchase 1212612017 313385SM9 3,000,000.00 FHLB Discount Note 99.872 1.30% 2,996,145.00 0.00 2,996,145.00 0.00 1.285%Due:01/3112018 Purchase 12/2612017 3137EADP1 2,000,000.00 FHLMC Note 99.903 1.37% 1,998,052.00 5,296.61 2,003,350.61 0.00 0.875%Due:03I0712018 Purchase 12/26/2017 912828045 8,000,000.00 US Treasury Note 99.859 1.41% 7,988,750.00 16,730.n 8,005,480.T7 0.00 0.875%Due:03/3112018 Purchase 12127/2017 912828Q45 5,000,000.00 US Treasury Note 99.855 1A3% 4,992,773.44 10,576.92 5,003,350.36 0.00 0.875%Due:0313112018 Purchase 12/27/2017 91282BS68 5,000,000.00 US Treasury Note 99.504 1.59% 4,975,195.31 15,183.42 4,990,378.73 0.00 0,75%Due:07/31/2018 Purchase 12/28/2017 912828H37 5,000,000.00 US Treasury Note 99.988 1 11% 4,9911,414.06 19,735.05 5,019,149.11 0.00 0.875%Due:0111512018 Subtotal 135,880,000.00 135,700,118.94 181,279.14 135,881,398.08 0.00 TOTAL ACQUISITIONS 135,880,000.00 135.700.118.94 181,279.14 135,881,393.03 0.00 DISPOSITIONS Call 10/1112017 92826CAA0 1,000,000.00 Visa Inc Note 100.026 1.05% 1,000,260.00 3,900.00 1,004,160.00 388.00 1.2%Due: 12/14/2017 Subtotal 1,000,000.00 1,000,260.00 3,900.00 1,004,160.00 388.00 Maturity 1010112017 911312AP1 1,000,000.00 UPS Note 100.000 1,000,000.00 0.00 1,000,000.00 0.00 1.125%Due:10/01/2017 C& I Transaction Ledger Orange County Sanitation District Liquid -Account #10282 September 30, 2017 through December 31, 2017 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Anncurt Pur/Sold Total Annount Gain/Loss Maturity 1010212017 8695WMU0 1,000,000.00 Svenska Handelsbanken Yankee CD 100.000 1p00,000.00 4,895.83 1,00t,895.83 0.00 1.175%Due: 1010212017 Maturity 101111201] 313385MV5 2,000,000.00 FHLB Discount Note 100.000 2,000,000.00 0.00 2,000,OOOA0 0.00 0.95%Due: 10/1112017 Maturity 1011512017 68389XAN5 1,000,000.00 Oracle Corp Note 100.000 1,000,000.00 0.00 1,000,OOOA0 0.00 1.2%Due: 10/15/2017 Maturity 1013012017 89233GM1 1,000,000,00 Toyota Motor Credit Discount CP 99.902 1,000,000.00 0.00 1,000,000.00 0.00 1.1%Due: 10/30/2017 Maturity 1110812017 06538BY80 1,245,000.00 Bank of Tokyo Mitsubishi NV Discount CP 99542 1,245,000.00 0.00 1,245,000.00 0.00 1.33%Due: Il/N/2017 Maturity 1110912017 166764BC3 1,000,000.00 Chevron Corp Note 100.000 1,000,000.00 0.00 1,000,000.00 0.00 1.344%Due:11/0912017 Maturity 11/13/2017 3133MPE0 5,000,000.00 FHLB Discount Note 100.000 5,000,000.00 0.00 5.000,000.00 0.00 1.005%Due:11/13/2017 Maturity 11/17/2017 3137EABA6 5,000,000.00 FHLMC Note 100.000 5,000,000.00 0.00 5,000,000.00 0.00 5.125%Due:11/1712017 Maturity 11127/2017 313385PU4 2,000,000.00 FHLB Discount Note 100.000 2,000,000.00 0.00 2,000,000.00 0.00 1.02%Due: 11/27/2017 Maturity 1210512017 313365OC3 3,500,000.00 FHLB Discount Note 100.000 3,500,000.00 0.00 3,500,000.00 0.00 1.04%Due: 12/05/2017 Maturity 1210612017 36961 1,000,000.00 General Ell Cc Note 5.25%Due 12/06/201] 100.000 1,000,000.00 0.00 1,000,000.00 0.00 : Maturity 1211512017 458140AL4 1,000,000.00 Intel Corp Note 100.000 1p00,000.00 0.00 1,000,000.00 0.00 1.35%Due: 1211 WW1] Maturity 1211912017 313385OS8 5,000,000.00 FHLB Discount Note 100.000 5,000,000.00 0.00 5,000,000.00 0.00 1.05%Due: 12119IM17 Subtotal 30,745,000.00 30,745,000.00 4,895.83 30,749,895.83 0.00 TOTAL DISPOSITIONS 31.745.000.00 31.745,260.00 8.795.83 31.754,055.83 388.00 IC& I Disclosure 2018 Chandler Asset Management, Inc, An Independent Registered Investment Adviser. Information contained herein is confidential. Prices are provided by IDC, an independent pricing source. In the event IDC does not provide a price or if the price provided is not reflective of fair market value, Chandler will obtain pricing from an alternative approved third party pricing source in accordance with our written valuation policy and procedures. Our valuation procedures are also disclosed in Item 5 of our Form ADV Part 2A. Performance results are presented gross-of-fees and represent the client's Total Return. These results include the reinvestment of dividends and other earnings. Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Economic factors, market conditions or changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio. Index returns assume reinvestment of all distributions. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results. It is not possible to invest directly in an index. This report is provided for informational purposes only and should not be construed as a specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest, credit and market risk. Interest rate risk., the value of fixed income investments will decline as interest rates rise. Credit risk., the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk., the bond market in general could decline due to economic conditions, especially during periods of rising interest rates. Rating Agency Comparisons A summary of investment grade ratings are listed below. More complete descriptions of Moody's and Standard & Poor's ratings are included in the following pages. Quality/Grade Mood 's Standard & Poor's Fitch Best Quality Aaa AAA AAA High Quality Aal AA+ AA+ Aa2 AA AA Aa3 AA- AA- Upper Medium Grade Al A+ A+ A2 A A A3 A- A- Medium Grade Baal BBB+ BBB+ Baa2 BBB BBB Baa3 BBB- BBB1 Moodv's - Investment Grade "Aaa" - Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. "A" - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Mae" - Bonds which are rated Baa are considered as medium grade obligations; i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Bonds in the As, A, and Bee are also assigned "1", "2", or "S' based on the strength of the issue within each category. Accordingly, "At" would be the strongest group of A securities and "AY would be the weakest A securities. Be, B, Caa, Ca, and C - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Be" indicates some speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" represents a poor standing; "Ca" represents obligations which are speculative in a high degree; and "C" represents the lowest rated class of bonds). "Caa", "Ca" and "C" bonds may be in default. Standard and Poor's-Investment Grade AAA- Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal Is extremely strong. AA - Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A - Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Standard and Poor's - Speculative Grade Retina Debt rated "BB", "B", "CCC", "CC" and "C" is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. "BB" indicates the least degree of speculation and "C" the highest. While such debt will likely have some quality and protective characteristics these are outweighed by major uncertainties or major exposures to adverse conditions. BB - Debt rated "BB" has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The "BB" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BBB" rating. B - Debt rated "B" has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The "B" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BB" or"BB" rating. CCC - Debt rated "CCC' has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The "CCC' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "B" or"B" rating. CC - The rating "CC' typically is applied to debt subordinated to senior debt that is assigned an actual or implied "CCC' debt rating. C-The rating"C'typically is applied to debt subordinated to senior debt which is assigned an actual or implied "CCC" debt rating. The "C' rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. Cl -The rating "Cl" is reserved for income bonds on which no interest is being paid. D - Debt rated "D" is in payment default. The "D" rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized. Plus (+) or Minus (-) - The ratings from "AA" to "CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. NR-Indicates no rating has been requested,that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy. 'e? Op January 31, 2018 STAFF REPORT Certificates of Participation (COP) Quarterly Report for the Period Ended December 31, 2017 Summary The District began issuing Certificates of Participation (COPS) in 1990. These COPs were a part of our long-term financing plan that included both variable interest rate and traditional fixed rate borrowing. Following are the current outstanding debt issues of the District: In May 2009, the District issued $200 million of fixed rate COPs, Series 2009A at a true interest cost of 4.72 percent for the issue. In May 2010, the District issued $80 million of fixed rate BABs, Series 2010A at a true interest cost of 3.68 percent for the issue. In December 2010, the District issued $157 million of fixed rate BABs, Series 2010C at a true interest cost of 4.11 percent for the issue. In October 2011, the District issued $147.595 million of fixed rate COPS, Series 2011A refunding a portion of the Series 2000 variable rate debt and a portion of the Series 2003 fixed rate debt. The true interest cost for the issue is 2.61 percent. In March 2012, the District issued $100.645 million of fixed rate COPs, Series 2012A refunding the Series 2003 fixed rate debt. The true interest cost for the issue is 3.54 percent. In August 2012, the District issued $66.395 million of fixed rate COPS, Series 2012E refunding the Series 2000 variable rate debt. The true interest cost for the issue is 1.50 percent. With the issuance of Series 201213, there remains no variable interest rate COPS at the District. OCSD ♦ P.O.Box8127 ♦ Fountain Valley,CA 9272M127 ♦ (714)%2-2411 Quarterly COP Report For the Three Months Ended December 31, 2017 Page 2 of 2 In August 2014, the District issued $85.09 million of fixed rate COPS, Series 2014A, refunding a portion of Series 2007B debt. The true interest cost for the issue is 2.34 percent. In February 2015, the District issued $127.51 million of fixed rate COPS, Series 2015A, refunding $152.99 million of the Series 2007E debt. The true interest cost for the issue is 3.30 percent. In March 2016, the District issued $145.88 million of fixed rate CANS, Series 2016A, refunding $162.78 million of the Series 2009A fixed rate debt. The true interest cost for the issue is 3.02 percent. In November 2016, the District issued $109.875 million of fixed rate CANS, Series 201613, refunding the Series 2014B CANS. The true interest cost for the issue is 0.87 percent. In February 2017, the District issued $66.37 million of fixed rate COPS, Series 2017A, refunding $91.885 million of the Series 2007A debt. The true interest cost for the issue is 2.55 percent. Additional Information The graph entitled, "OCSD COP Rate History Report,' shows the various fixed interest rates of the District's thirteen debt issues. Attachments 1. Graph - OCSD COP Rate History Report Prepared by Finance,1/15/2018,1:45 PM OCSD COP RATE HISTORY REPORT DECEMBER 2017 5.00 4.00 3.00 2.00 1.00 0.00 33 y DATE +Senea—It- ae6e¢20013 Fl- —aeries 1000A FIxM —Sm-2010A%" —Senea2010CR-d —ae6ea2011AFt- —Sene12012AFIIM —r Serlea.12B.� Sede52014A Flx� —Sere.1015A F.W —Sen a201M FdM —Serle .16B.x IS01,2017A Flxad H AdepAasdMMCommon\Monthly and Quarterly Treasumes ReporbFV 17-18\COP Rate History Report FV 17-18 FY 2017-18 Mid-Year Financial Report This Page Intentionally Left Blank ORANGE COUNTY SANITATION DISTRICT FINANCIAL MANAGEMENT DIVISION 10844 Ellis Avenue Fountain Valley, California 92708-7018 714.962.2411 www.ocsd.com 12/31/17 ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir. 0 2�I4 118 o2/z81ia AGENDA REPORT emNumber Item Number 4 IS Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ADOPT RESOLUTION ESTABLISHING AN ENVIRONMENTALLY PREFERABLE PURCHASING AND PRACTICES POLICY GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 18-02 entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District Adopting the "Environmentally Preferable Purchasing and Practices Policy." BACKGROUND The intent of the Environmentally Preferable Purchasing and Practices Policy (EPPPP) is to encourage the use of environmentally preferable products and services for Orange County Sanitation District (Sanitation District) operations and increase the Sanitation District's grant eligibility without increasing costs. The Sanitation District will begin buying and using products and services that reduce negative environmental impacts because of the way they are made, used, transported, packaged and disposed of, including their potential for reuse or ability to be recycled. The Policy confirms the Sanitation District's continued commitment to implementing progressive and efficient waste reduction and recycling considerations without increasing costs. The EPPPP creates a model for successfully purchasing environmentally preferable products for the Sanitation District. Nothing contained in this policy will require a department, purchaser, or contractor to procure products that do not perform adequately for their intended use; increase procurement costs; exclude adequate competition; risk the health or safety of District staff; or are not available at a reasonable price, in a reasonable period of time. Purchases shall focus on environmentally preferable options. Additionally, an approved EPPPP enables the Sanitation District to competitively secure potential grants, such as CalRecycle, thus allowing the opportunity for millions of dollars to help fund the Sanitation District's planned resource recovery projects. In order to qualify for the next round of competitive CalRecycle Grants, the Sanitation District is required to adopt an EPPPP. The Sanitation District's mission, vision statement, and strategic initiatives call on the organization to continually seek efficiencies to ensure the public's money is being spent wisely; to protect public health and the environment; to utilize all practical and effective means for wastewater, energy, and solids resource recovery; and to partner with others to benefit our customers, our region and industry. The adoption of an EPPPP will align with the values and goals of the District and will allow us to leverage grant funds available Page 1 d 2 through CalRecycle's program to help fund projects — hence, reducing the financial burden placed on our rate payers. RELEVANT STANDARDS • Strategic Plan • Ensure the public's money is wisely spent • Secure outside funding (grants)for recycled water or other capital programs PROBLEM The Sanitation District does not currently have an EPPPP, which is required to apply for various grant such as CalRecycle. This policy aligns with the Sanitation District's core mission and vision. PROPOSED SOLUTION Adopt the proposed EPPPP. TIMING CONCERNS The timely adoption of the EPPPP is important in order to qualify for new grants, such as the CalRecycle Grants. RAMIFICATIONS OF NOT TAKING ACTION Will not qualify for certain grants including CalRecycle Grants. FINANCIAL CONSIDERATIONS Financial impacts will be held to a minimum as the EPPPP model will prioritize cost impacts along with the benefits of purchasing environmentally preferable products for the Sanitation District. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: • Resolution No. OCSD 18-02 • Exhibit"A!' - Environmentally Preferable Purchasing and Practices Policy (EPPPP) Page 2 d 2 RESOLUTION NO. OCSD 18-02 A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING THE "ENVIRONMENTALLY PREFERABLE PURCHASING AND PRACTICES POLICY" WHEREAS, the Orange County Sanitation District purchases a wide variety of products and services, and purchasing decisions can adversely affect the environment; and WHEREAS, in order to protect the environment, the Board of Directors has determined that staff should consider environmental impacts when making purchasing decisions, and procure environmentally preferable products and services that compare favorably to alternatives with respect to price, performance, and availability. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. The Board of Directors adopts the Environmentally Preferable Purchasing and Practices Policy attached hereto as Exhibit A. PASSED AND ADOPTED at a regular meeting of the Board of Directors held February 28, 2018. Gregory C. Sebourn, PLS Board Chairman ATTEST: Kelly A. Lore, MIMIC Clerk of the Board 1284950.1 OCSD 18-02-1 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 18-02 was passed and adopted at a regular meeting of said Board on the 28th day of February 2018, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 28th day of February 2018. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District 1284950.1 OCSD 18-02-2 Orange County Sanitation District Control Number: BOARD OF DIRECTORS Policy Version Number: Approved By: Resolution No. OCSD 18-02 E M, Approved Date: 0212812018 Subject: Environmentally Preferable Effective Date: 0212 812 01 8 Purchasing and Practices Policy I. Purpose— Purchasing decisions can affect the environment. This policy is designed to avoid or reduce environmental impacts, where feasible, by requiring Orange County Sanitation District (District)staff to consider environmental impacts when making purchasing decisions, in addition to the traditional factors of price, performance, and availability. H. Organizational Units Affected—All District departments. III. Definitions/Acronyms Durable Goods — goods that are replaced infrequently. Examples include furniture, office equipment, appliances, audio visual equipment, and power adaptors. Environmentally Preferable Products (Epps) — Products and services that have a reduced impact on human health and the environment when compared to competing products and services. In evaluating environmental and health impacts, staff should consider the entire life cycle of the product:from raw material acquisition to production, manufacturing, packaging, distribution, reuse, operation, and disposal. LEED—Leadership in Energy and Environmental Design. Onuoina Consumables—Items used by the Districton a regular basis and will need to be replaced in a sustainable way. These include but are not limited to office paper, envelopes, ink toner, cartridges, and batteries. Feasible — An EEP is feasible if it compares favorably with alternatives with respect to environmental and health impacts, price, performance, and availability. Recycled Products — Products manufactured with waste material that has been recovered or diverted from the waste stream. Recycled material may be derived from post-consumer waste (material that has served its intended end-use and been discarded by a final consumer), industrial scrap, manufacturing waste,andlor other waste that otherwise would not have been utilized. Waste Prevention—means any action undertaken by an individual or organization to eliminate or reduce the amount or toxicity of materials before they enter the municipal solid waste stream.This action is intended to conserve resources, promote efficiency, and reduce pollution. IV. Policy Statement It is the policy of the District to make purchasing decisions, where feasible, that will further the following goals: • Conserve natural resources; 12a479CI OCSD 18-02-3 • Minimize environmental impacts such as pollution and use of water and energy; • Eliminate or reduce toxics that create hazards to workers and the community; • Support strong recycling markets; • Reduce materials that are put into landfills; • Increase the use and availability of environmentally preferable products that protect the environment; and • Encourage manufacturers and vendors to reduce environmental impacts in their production and distribution systems. V. Procedures When making purchasing decisions, the Purchasing Manager or his or her designee, in consultation with the Director of the department requesting the procurement, shall consider the environmental impacts of alternative products, in addition to price, performance, and availability. A. Procurement Practices Where feasible, products should meet the following specifications. 1. Ongoing Consumables a. Printing and writing papers containing a minimum of 30% post-consumer recycled content. b. Paper products including janitorial supplies, facial tissues, toilet paper, file boxes, hanging file folders, and other products composed largely of paper. c. Remanufactured laser printer toner cartridges and remanufactured or refillable ink-jet cartridges. d. Recycled plastic products such as signs, benches, and posts. 2. Durable Goods a. ENERGY STAR— labeled or approved electric equipment, including but not limited to computers, monitors, scanners, printers, refrigerators, microwaves,television, and audio-visual equipment. b. LED and low energy use lighting products. c. Refurbished furnishing and equipment. 3. Buildings Materials a. Consider LEED certified products and furnishings in design. b. Low VOC (volatile organic compounds) or zero-VOC products for paints, finishes and adhesives. B. Waste Prevention Practices Where feasible, District staff is encouraged to reduce consumption of resources by incorporating the following practices into their daily activities. 1. Consider durability and repair ability of products prior to purchase. 2. Conduct routine maintenance on products and equipment to increase the useful life. 3. Use duplex features on laser printer and copiers. Specify duplex on print jobs. 12a4794.1 OCSD 18-02-4 4. Create electronic letterhead for use by all District Staff. 5. Send and store information electronically whenever possible. 6. Review record retention policies and implement document imaging systems. 7. Any other waste prevention practices that further the goals of this policy. C. Responsibilities of Contracts, Purchasing,and Materials Management Division 1. Inform all departments of the responsibilities under this Policy and provide information about recycled products and environmental purchase opportunities. 2. Inform suppliers of the requirements of this Policy. 3. Encourage departments to purchase Epps whenever possible. 4. Review specifications used in public bidding to possibly eliminate barriers to recycled-content products. VI. Recordkeeping All records created or generated in the course of this procedure shall be legible and stored in a way that they are readily retrievable in facilities or electronic document/content management systems that provide a suitable environment to prevent damage, deterioration, or loss. Records may be in the form of any type of media,such as hard copy or electronic media.The OCSD Records Retention Schedule is the official procedure governing the retention, retirement, and destruction of District records. Document owners should use these schedules to determine the item and series that best fit their records. Document owners are responsible for insuring that documents are properly marked, indexed, and filed for their projects or area of responsibility. VII. Exceptions/Conditions/Provisions Vill. References IX. Revision History Version Date By Reason 1 1 10/12/17 1 Jackie La ade I New Implementation X. Attachments 1294794A OCSD 18-02-5 ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir. o�ia1rs o2/z81i8 AGENDA REPORT emNumber Item Number 6 Ifi Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2018-19 AND FY 2019-20 BUDGET TWO-YEAR BUDGET GENERAL MANAGER'S RECOMMENDATION Approve the FY 2018-19 and FY 2019-20 budget assumptions and direct staff to incorporate these parameters in the preparation of this two-year budget. 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 let 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. 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. Page 1 of 2 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 2016-17 and 2017-18 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)is available in hard copy and may also be viewed on-line at the OCSD websife (wwwocsd.com) with the complete agenda package: • Preliminary Budget Assumptions • Budget Calendar • PowerPoint Presentation from Administration Committee Meeting of 02/14/2018 Page 2 of 2 FY 2018-19 Preliminary Budget Assumptions Economic Assumptions • Inflation for Orange County in FY 2018-19 is projected to be 2.4 percent based on the 2018 projected percentage change in consumer price index obtained from Chapman University. A 2.4 percent inflation factor will also be used for FY 2019-20. Revenue Assumptions • Based upon the proposed Sewer Service Fee Rate Schedule to be approved by the Board in March 2018, the single-family residence (SFR) rate will increase by 1.2 percent to$335 in FY 2018-19. • 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 proposed CFCC fee to be approved by the Board in March 2018 will increase by 10 percent for FY 2018-19. 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 2017, a rate study was completed in December 2017 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. • Propose permit user rates for flow will increase by 4.1 percent, Biochemical Oxygen Demand (BOD)will increase by 0.5 percent and Total Suspended Solids (TSS)will increase by 2.9 percent for FY 2018-19 based upon the Rate Study completed in December 2017. • 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 2018-19 income from annexation fees is anticipated. • Property tax revenues are preliminarily estimated to increase by approximately five percent from FY 2017-18 to $98,349,000. 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 2018-19. Operating Assumptions • Operating expenses are expected to approximate the adopted FY 2017-18 budget of$154 million. FY 2018-19 Preliminary Budget Assumptions • Average daily flows are projected at 190 mgd for FY 2018-19 and 191 MGD for FY 2019-20. The FY 2018-19 flow projection of 190 mgd reflects an increase of 3 mgd from the actual for the first 5 months of the current year and is 2 mgd above the final actual flow for FY 2016- 17. Employee/Staffing Assumptions • Staffing level is expected to remain flat. No additional positions are anticipated. The total FY 2017-18 authorized staffing level is 635.00 FTEs, excluding Management Discretion positions. • Vacant positions as of 12/31/17 are budgeted at 50 percent of step 1 for the remainder of FY 2017-18 and at 100 percent of step 2 for FY 2018-19. • New positions will be projected at 100 percent of step 1 for FY 2018-19. • A 5.0 percent vacancy factor on authorized positions has been budgeted for FY 2018-19. The actual vacancy factor is currently running at 7.6 percent, but is on a downward trend due to the streamlined recruitment processes now in place. 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, 2019. Salary adjustments will be included in the budget for COLA based upon the current MOUs. • Retirement costs for employees enrolled in OCERS Plans G and H are estimated at a rate of 15.78 percent of the employee's base salary for FY 2018-19, down from 15.83 percent in FY 2017-18. 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 10.21 percent of the employee's base salary for FY 2018-19, down from 10.30 percent in FY 2017-18. All employees hired on or after January 1, 2013 are enrolled in OCERS Plan U and are estimated at a rate of 9.27 percent for FY 2018-19, up from 9.25 percent in FY 2017-18. 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 2018-19 and FY 2019-20 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 FY 2018-19 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 2018-19 and FY 2019-20 cash flow budget, based on the most current Validated Capital Improvement Program (CIP), is the target. • The baseline CIP cash flow for FY 2018-19 is$169 million and for FY 2019-20 is $193 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 2018-19 and FY 2019-20 CIP budget will only increase for critical projects which were not previously identified in the Strategic Plan Update. • For the first five months of FY 2017-18, $41.1 million of the $148.1 million CIP budget, approximately 27.8 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 FY 2018-19 and FY 2019-20. • 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 criterion 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 criterion 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 criterion will be established to provide for non-recurring expenditures that were not anticipated when the annual budget and sewer service fees FY 2018-19 Preliminary Budget Assumptions were considered and adopted. The level of this criterion will be established at an amount equal to ten percent of the annual operating budget. ► A capital improvement criterion will be maintained to fund annual increments of the capital improvement program. The long-term 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 criterion has been established at one-half of the average annual capital improvement program over the next ten years. ► A catastrophic loss, or self-insurance, criterion will be maintained for property damage including fire, flood and earthquake, for general liability and for workers'compensation. This criterion is 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 criterion has been set at $57 million should such a catastrophic event occur. This criterion 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 criterion 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 Facilities Evaluation Report completed in December 2017, the current replacement value of these facilities is estimated to be $3.17 billion for the collection facilities and $6.94 billion for the treatment and disposal facilities. The initial criterion 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 $177.0 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 criterion. FY 2018-19 Budget Calendar Tasks Responsibility EvenVDue Date PHASE I-BUDGET PREPARATION EMT Strategic Planning Workshop General Manager's 8/17/17 Office Operations Committee Review of Strategic Plan General Manager's 10/4/17 Office Administration Committee Review of Strategic Plan General Manager's 10/11/17 Office Strategic Plan Update Adopted by Board of Directors General Manager's 11/16/17 Office Preliminary Budget Assumptions Identied Financial Planning 12/20/17 CIP -Annual Resource Forecast complete Engineering Project 1/11/18 Review resources needed to complete active CIP Management Office projects (PMO) Preparation for Budget Kickoff/Training Session: Financial Planning 1/18/18 • Develop line item worksheets with mid-year actual expense • Prepare/update budget instruction manual Preliminary Budget Assumptions& Draft Budget Financial Management 1/22118 Calendar Presented to Executive Management Team (EMT) Budget Kickoff/Training Session: Financial Planning 1/25/18 • Distribute budget instruction manual update • Conduct budget training session • Review submission deadlines Operating Divisional Budgets: New Position and Change Divisional Budget 2/9/18 to Existing Position Decision Packages Due to Human Coordinators Resources (Laura Maravilla, Ext. 7007)with copies to John Ralston Operating Budget: Promotional Items Request Forms Divisional Budget 2/9/18 and Conference Request Forms Due to Dr. Robert Coordinators Ghirelli (Division 110) Capital Equipment Budget: Vehicle Capital Equipment Divisional Budget 2/9/18 Decision Packages Due to Fleet Services (Bob Bell, Ext. Coordinators 7214) Capital Equipment Budget: Computer Capital Equipment Divisional Budget 2/9/18 Decision Packages Due to Information Technology (John Coordinators Swindler, Ext. 7260) FY 2018-19 Budget Calendar Tasks Responsibility Event/Due Date Budget Assumptions Presented to Administration Financial Management 2/14/18 Committee Mid-Year Financial Report to Administration Committee Financial Management 2/14/18 Division Budget Packages Due to Financial Planning: Divisional Budget 2/23/18 • Projection of 2017-18 actual operating costs Coordinators • Proposed operating costs for 2018-19 & 2019-20 • Operating Budget Expense Detail • Meetings, Memberships and Training Requests • Capital Equipment Decision Packages (other than computer and vehicle decision packages which were due on 2/9/18) • 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.) Mid-Year Financial Report to Board Financial Management 2/28/18 Complete the Compilation of the Preliminary Division Financial Planning 2128/18 Budget Update Packages CIP-Project Budget Reviews Complete Engineering PMO 3/2/18 Department Narrative Updates for Budget Executive EMT 3/21/18 Summary Due to Financial Planning CIP-Validated CIP budgets delivered to IT/Finance Engineering PMO 3/30/18 PHASE 11 -BUDGET REVIEW Divisional Budgets- Distribution of Preliminary Line Item Financial Planning 3/2/18 Requested Budgets to Department Heads and Managers along with Analysis/Questions for Review Operating Budget- Information on New Positions, Human Resources 3/9/18 Position Upgrades & Reclassifications Submitted to the General Manager Operating Budget- Division Budget Review Meetings Financial Planning & 3/5/18-3/8/18 with Finance and Division Representatives Division Representatives Operating Budget- Completion of Preliminary Divisional Financial Planning 3/14/18 Budgets and Compilation into Departmental Budgets FY 2018-19 Budget Calendar Tasks Responsibility EventlDue Date Operating Budget— Recommendations to General Financial Planning 3/16/18 Manager Final Operating Budget—General Manager Review of Financial Planning, 3/19/18—3/23/18 Budget Recommendations General Manager, & Department Heads Capital Equipment Budget—Requests Reviewed & Financial Planning, 3/19/18—3/23/18 Approved General Manager, & Department Heads Divisional Budgets— Performance Budget Documents Divisional Budget 3/21/18 Due to Financial Planning (John Ralston): Coordinators • Organization Charts • Performance Results (2016-17) • Performance Measures (2018-19 & 2019-20) Operating Budget— Report of General Manager's General Manager 3/23/18 Decisions on New Positions, Position Upgrades & Reclassifications Submitted to the Financial Planning CIP—Approve Proposed CIP Budget EMT 3/26/18 CIP-Operations Committee informational item— Review Engineering 512/18 of Proposed Budget PHASE III -BUDGET PRESENTATION Operating Budget— Presentation of Preliminary Budget Financial Management 4/2/18 Update by Division/Department to EMT Operating Budget Update—Overview to Administration Financial Management 4111/18 Committee CIP - Final CIP Budget Document Preparation and Financial Planning 4/19/18 Incorporation into Final Budget Document CIP—Review draft of Final Budget Document pages with Financial Planning 4/19/18 Engineering Planning & PMO CIP -Section 8 Executive Summary complete Engineering Planning 4/26/18 Initial - Proposed Budget finalized Financial Planning 4/27/18 Operating Budget Update—Overview to Operations Financial Management 5/2/18 Committee General Manager's Budget Message Completed General Manager/ 5/11/18 Financial Management Approval of General Manager's Budget Message General Manager 5/16/18 Final - Proposed Budget to Printer Financial Planning 5/23/18 FY 2018-19 Budget Calendar Tasks Responsibility Event/Due Date PHASE IV-BUDGET&SEWER SERVICE FEE DELIBERATIONS Proposition 218 Notification Consideration Board of Directors 12/20/17 First Reading of the Sewer Service Fee Rate Ordinance Board of Directors 2/28/18 Second Reading and Adoption of the Sewer Service Fee Board of Directors 3/28/18 Rate Ordinance (Public Hearing) Final Draft- Proposed 2018-19 &2019-20 Budget Financial Management Ops—616118 Presented to Committees Admin —6113118 Adoption of 2018-19 &2019-20 Budget Board of Directors 6/27/18 PHASE V-DISTRIBUTION OF BUDGET Final line item budget and equipment budgets posted in Financial Planning 7/11/18 H:\ntglobal PHASE VI -BUDGET DEBRIEFING Budget Debriefing E-mail Message Financial Planning 7/13/18 • 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. OCSD FY 2018 = 19 and FY 2019 =20 Budget Assumptions Budget Development Assumptions Economics • Inflation for Orange County is projected to be approximately 2 .4% Revenue • Staff is proposing an increase in the annual Single-family residence (SFR) Sewer Service Fee of 1 .2%, from $331 in FY17-18 to $335 in FY 18-19. Comparison of Single Family Residential Rates (July 2017) 937 $900 $800 L } $700 N $600 Q i $500 G $400 $331 - $300 $200 $163 $1$0 0 Operations • Average daily flow projections are projected to be 190 mgd and 191 MGD for FY 2018- 19 and FY 2019- 20, respectively. These projection reflect an expected increase of 3 . 7 mgd and 4. 7 mgd, respectively, from the first six month actuals of the current year. This projection reflects an expectation that increased economic activity and urban runoff will be more than offset by efforts of conservation and minimal rainfall • Operating expenses are expected to approximate the previously adopted FY 2017- 18 budget of $ 154 Million . • Staffing levels will remain essentially flat. The current authorized staffing level is 635 FTE . • A 5% vacancy factor will be budgeted for authorized positions . • Salary adjustments will be included in the budget based on changes identified in the MOUs that have been negotiated through June 30, 2019 . • Moderate increases in benefits are anticipated . Capital Improvement Program (CIP) • Cash flow assumptions are based on the most recent validated CIP and the 2017 Facilities Master Plan . • Baseline CIP is $ 169 million for FY18-19 and $ 193 million for FY 19-20. 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 2018- 19 and FY 2019-20 as current user fees and reserves are sufficient to fund CIP over the next two years . • The two-year Certificate Anticipation Notes Series 2016B debt will be maturing in December of 2018 and is expected to be refunded with a new CANS issuance . Budget Summary Revenues FY 18-19 Ten Year Cash Flow Fees and Charges $ 338M (74%) $ 3,694M (72%) Property Taxes 98M (21%) 11178M (23%) Interest / Other 23M ( 5%) 275M ( 5%) Total Revenues $ 459M $ 51147M Expenditures FY 18-19 Ten Year Cash Flow Operating $ 158M (39%) $ 1,824M (36%) CIP / RRR 169M (41%) 2,458M (49%) Debt Service 80M (20%) 750M (15%) Other 2M ( 0%) 25M ( 0%) Total Outlays $ 409M $51057M Net Surplus (Deficit) $ 50M $ 90M Budget Development Key Meeting Dates • FY 18- 19/19-20 Budget Assumptions February • Review of Revenues March • Review of Expenditures April Budget Development Key Meeting Dates • Operations Committee Budget Overview May, June • Administration Committee Budget Elements Review May, June • Board Meeting FY 18- 19 & FY 19-20 Budget Approval June Questions ? STEERING COMMITTEE Meeting Date TOBd.Ot Dir. 0 2 J28/I8 02/2a/18 AGENDA REPORT IWmNumber Item Number z v Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: ESTABLISH PROJECT NO. J-131 FOR 18350 MT. LANGLEY ST. GENERAL MANAGER'S RECOMMENDATION A. Establish 18350 Mt. Langley St. Building Purchase and Improvement Project, Project No. J-131, for the purchase and needed improvements of 18350 Mt. Langley Street, Fountain Valley, with a budget of$11,000,000; and B. Approve a supplemental appropriation of $11,000,000 from available reserves to the Net Capital Improvement Program Budgeted Outlays for FY 2017-18, from $148,061,000to $159,061,000. BACKGROUND On September 27, 2017, the Orange County Sanitation District's (Sanitation District) Board of Directors approved the purchase of the Property at 18350 Mt. Langley Street in Fountain Valley for $10,150,000. Per the purchase and sale agreement, staff arranged for completion of a Facility Condition Assessment and Recommendations report. This effort included physical inspection, a Phase 1 Environmental Site Assessment Report, and an ALTA/NSPS Land Title Survey. This due diligence process revealed that some necessary life safety improvements were required. To address identified issues, a negotiated reduction of the purchase price to $9,750,000 was agreed upon. Staff anticipates necessary improvements of $500,000 which has been included in the requested supplemental appropriation above. The balance of the requested project budget is for the inspections, survey, design of necessary improvement, and legal fees associated with the purchase. RELEVANT STANDARDS • Ensure the public's money is wisely spent • 1, 5, 20 year planning horizons PROBLEM A capital project is required to collect all the costs and properly capitalize the purchase and necessary improvements of the building and the associated fees. Page 1 d 3 PROPOSED SOLUTION Approve establishment of a capital project for the purchase and related purchase costs and necessary improvements of the 18350 Mt. Langley property. Related purchase costs to date have amounted to approximately $80,000 with additional expenses anticipated to close the sale. TIMING CONCERNS Per the Purchase and Sale Agreement, the Sanitation District is required to fund escrow within 30 days of notification from the seller. This notice was received February 9, 2018 and the acquisition is expected to be completed in March 2018. RAMIFICATIONS OF NOT TAKING ACTION Per the Purchase and Sale Agreement, the Sanitation District is obligated to fund the purchase of property. PRIOR COMMITTEE/BOARD ACTIONS September 2017 - Approved a Standard Offer, Agreement, and Escrow Instructions for Purchase of Real Estate (Purchase Agreement)with K&A Investments LP for Property at 18350 Mt. Langley Street, Fountain Valley, in a form approved by General Counsel, for $10,150,000, and authorized the General Manager and General Counsel to execute and approve various related documents and reports. ADDITIONAL INFORMATION N/A CEQA The Sanitation District's Board of Directors has not approved any particular use of this property. The Sanitation District will perform all environmental review required under the California Environmental Quality Act prior to any use other than its current status as an office building. FINANCIAL CONSIDERATIONS This item was not included in the FY 2017-18 Budget, but will be incorporated into the upcoming Proposed Budget for Fiscal Years 2018-19 and 2019-20 for any residual outlays following the initial acquisition in March 2018. This cost will be offset by the following savings: • The planned sale of the real property at 7311 Doig Drive in Garden Grove, with an estimated value of$6 million to $8 million. Page 2 of 3 • Avoiding up to$1 million in charges to Headworks Rehabilitation at Plant No. 1, Project No. P1-105, related to relocation and interim office space for approximately 30 Sanitation District employees currently housed in trailers that must be demolished for a new power building in that project. • Net income in the range of$400,000 per year based on current occupancy. Since these savings will be realized after the current fiscal year, staff is requesting a supplemental appropriation of $11,000,000 from reserves, of which approximately $122 million has been earmarked for the Capital Improvement Program. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: N/A Page 3 d 3 STEERING COMMITTEE Meeting Date TOBd.Of Dir. 02/2811 8 o2/ze�is AGENDA REPORT emNumber Item Number 3 IB Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPERTY MANAGEMENT SERVICES FOR 18350 MT. LANGLEY STREET, FOUNTAIN VALLEY GENERAL MANAGER'S RECOMMENDATION Approve a sole source agreement with The Muller Company for Property Management Services, for the period March 1, 2018 through August 31, 2018, for a management fee of $4,200 per month plus other incurred expenses, including two additional renewal periods of six months each. BACKGROUND On September 27, 2017, the Board of Directors approved the purchase of property at 18350 Mt. Langley Street in Fountain Valley. The property is scheduled to close escrow on March 12, 2018. The property is occupied by commercial tenants and is managed by The Muller Company, a property management company. Some of the tenant leases extend out to 2021. Orange County Sanitation District (Sanitation District) is anticipating using this property for staff offices, but may continue to lease unneeded space to commercial tenants. RELEVANT STANDARDS • Protection of Orange County Sanitation District assets PROBLEM Although the Sanitation District will own and eventually occupy the Mt. Langley property, the need to professionally manage the property utilizing services such as maintenance, security and repairs currently exists. At present, the Sanitation District does not employ staff with this scope of commercial property management expertise. PROPOSED SOLUTION For a short-term basis, engage the firm currently managing the property until a permanent property management strategy has been developed. TIMING CONCERNS Per the Purchase and Sale Agreement, the Sanitation District is required to fund and close escrow within 30 days of notification from the seller. The Sanitation District received Page 1 of 2 notice on February 9, 2018. Escrow is scheduled to close March 12, 2018. Upon escrow closing, the Sanitation District will assume responsibility for management of the property. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District will lose continuity of care of the property and of services to existing tenants while developing the permanent property management strategy. PRIOR COMMITTEE/BOARD ACTIONS September 27, 2017 - Approved a Standard Offer, Agreement and Escrow Instructions for and Authorized General Manager and General Counsel to Execute any and all Instruments Related to the Transaction of Purchase of Real Estate (Purchase Agreement) with K&A Investments LP for Property at 18350 Mt. Langley Street, Fountain Valley. ADDITIONAL INFORMATION Monthly expenses for services such as utility bills and repair work will vary month to month. All expenses will be reviewed and approved by Sanitation District staff. CEQA N/A FINANCIAL CONSIDERATIONS The property management costs will be offset by rents collected on the commercial leases. ATTACHMENT The following attachment(s)in attached in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Management Agreement Page 2 of 2 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") is made and entered into as of February 28, 2018 by and between ORANGE COUNTY SANITATION DISTRICT, a county sanitation district duly organized and existing pursuant to Section 4700 et. seq. of the Health & Safety Code of the State of California (hereinafter called "Owner'), and THE MULLER COMPANY, a California corporation (hereinafter called "Manager'). WITNESSETH WHEREAS, Owner is the owner of that certain real property addressed as 18350 Mt Langley, Fountain Valley, California, commonly known as Fountain Valley Business Center, (the 'Property"); WHEREAS, the Property includes an office building and surface parking; and WHEREAS, Owner desires to appoint Manager to manage and operate the Property and Manager desires to accept such appointment, all upon the terms and conditions hereinafter set forth. NOW, THEREFORE, for and in consideration of the promises and mutual covenants and agreements contained in this Agreement and the fees to be paid under this Agreement, Owner and Manager hereby agree as follows: ARTICLE I Establishment of Hirina: Term 1.1 Exclusive Hiring. Owner hereby appoints Manager, in the capacity of an independent contractor, as the sole and exclusive manager for the Property, and Manager hereby accepts such appointment. This Agreement is not one of agency by manager for owner, but one with Manager engaged with respect to the functions undertaken by or assigned to Manager under this Agreement independently in the business of managing properties on its own behalf, as an independent contractor. 1.2 Term of Agreement. The term of this Agreement will be for an initial term of six (6) months and two renew Options with six (6) month term each to be exercised at the discretion of the Owner upon written notice by Owner of renewal at least thirty (30) days prior to the end of the Initial Term. Notwithstanding the foregoing: (i) if Manager defaults in the performance of any of Managers obligation under this Agreement, and such default is not cured within thirty (30) days after written notice thereof is received by Manager (or, if such default is non-monetary and of such a nature that it cannot be reasonably cured within such 30-day period, Manager fails to commence the curing of such default within such 30-day period and fails to thereafter diligently prosecute such cure to completion), then Owner may thereupon terminate this Agreement for cause by giving written notice of such termination to Manager, such termination to be effective as of the effective date specified in such termination notice; and 672M2.03 2370 M00071& 121dlWdbs -1- 1297106.1 (ii) Manager may terminate this Agreement at any time with or without cause by giving Owner at least thirty (30) days' prior written notice. The Initial Term shall commence once Owner obtains legal title to the Property. 1.3 Furthermore, Owner reserves the right to terminate this Agreement for its convenience, with or without cause, in whole or in part, by giving at least thirty (30) day's prior written notice to the Manager. 1.4 Cooperation. Owner and Manager shall consult and meet with each other to the extent necessary or appropriate to enable Manager to perform its duties under this Agreement or as requested by either party. Each party shall cooperate fully in all matters relating to the management, operation, maintenance and repair of the Property and the defense of any claim, action or proceeding relating thereto or to this Agreement, and both parties shall promptly respond to all requests for information by the other party, including furnishing all documents and services relating thereto required by Owner in connection with the operation of the Property. Any time the consent of Manager or Owner is required under this Agreement, such consent shall not be unreasonably withheld, conditioned or delayed, and whenever this Agreement grants Manager or Owner the right to take action, exercise discretion or make a determination, Manager and Owner shall act reasonably and in good faith unless a different standard is expressly set forth in this Agreement. ARTICLE II Services to be Performed by Manager 2.1 Employment of Personnel. Manager shall employ such personnel as may be necessary, in Manager's sole but good faith discretion, for Manager to (i) accomplish the efficient and successful operation and management of the Property, and (ii) property perform Manager's obligations under this Agreement, which may include, without limitation, employing one (1) or more on-site managers. Such personnel shall in every instance be deemed employees of Manager and not of Owner, and Owner shall have no right to supervise or direct any of such employees. Manager shall fully comply with all applicable laws and regulations having to do with workers' compensation, social security, unemployment insurance, hours of labor, wages, working conditions and other employer-employee related subjects in connection with the Property. All reasonable salaries, wages, and other compensation of personnel employed by Manager under this Agreement, including so-called fringe benefits (but excluding bonuses), medical and health insurance, federal and state unemployment taxes, pension plans, social security taxes, workmen's compensation insurance and the like shall be paid by Manager and reimbursed to Manager by Owner on a pro rate basis of the time such employee has allocated to the Property and where such employee services were required to properly, adequately, safely and economically manage, operate, and maintain the Property, and provided that such employees have been identified by position and compensation enumerated on a schedule provided to Owner by Manager and approved by Owner, or as set forth in the Approved Budget(as defined below). 2.2 Service Contracts. Manager shall make in Manager's name as agent for Owner, contracts for utilities and other services such as water, electricity, gas, telephone, vermin extermination, trash removal, heating, ventilating, and air conditioning maintenance, security, and other services deemed by Manager or Owner to be necessary or advisable for the operation, maintenance, or repair of the Property in accordance with this Agreement. All such contracts shall (i) be in the name of the Manager as agent for owner; (ii) be made expressly 672M2.03 237WM00091& 121dlWdbs -2- 1297106.1 assignable, at Owner's option, to Owner or Owner's nominee, (iii) include a provision for cancellation thereof by Owner or Manager effective upon 30 days' written notice; and (iv) shall provide all contractors provide evidence of adequate and sufficient insurance for the services being proved. Manager shall also place orders in Manager's name as agent for Owner for such equipment, tools, appliances, materials, and supplies as are reasonable and necessary, in Manager's sole but good faith discretion, to properly maintain, manage, operate, or repair the Property in accordance with this Agreement. In entering into any contracts contemplated by this Agreement, Manager shall use commercially reasonable efforts to include as a condition thereof the right of Owner or Manager, as the case may be, to terminate such contract on thirty (30) days' prior written notice. Manager may obtain goods or services for the Property from direct or indirect affiliates of Manager, its officers, directors, shareholders, or employees (collectively, "Manager Affiliated Parties'), but only if such goods and services are of at least equal quality and of no higher prices than comparable goods and services obtainable from unaffiliated parties and such goods and services are otherwise competitive with comparable goods and services and Owner provides written consent of such contacts with Manager Affiliated Parties and after disclosing to Owner the relationship of Manager to the Manager Affiliated Parties. 2.3 Contracts in excess of$5,000.00 shall be procured as follows: (a) For contracts for goods and services with the value $50,000 or less Manager shall obtain three competitive Bids or Proposals as applicable. (b) For construction contracts with value equal or greater than $35,000 all contracts must be competitively bid and the award provided to the lowest, responsive, responsible Bidder. (c) Sole Source contracts may be initiated provided that the following conditions are met: 1. Goods or Services are of a unique nature based on their quality, durability, availability, fitness or qualifications for a particular use; or only available from one source. Written justification must be provided to Owner for approval prior to proceeding with the sole source contract Owner approval must be obtained by Manager prior to proceeding with all new contracts. 2.4 Maintenance and Reoair of Property. To the extent funds of Owner are available, Manager shall make all repairs and perform all maintenance on the buildings, grounds and other improvements of the Property necessary, in Manager's sole but good faith discretion, to maintain the Property in a manner comparable to similar office buildings in the vicinity of the Property, but only to the extent the cost of such work does not exceed $5,000.00; otherwise, prior written approval from Owner shall be required. Notwithstanding the foregoing, Manager shall also perform or furnish any and all emergency repairs or services necessary, in Manager's sole but good faith discretion, for the preservation of the Property or to avoid the suspension of any service to the Property or danger to life or property. Emergency repairs or services may be made or furnished by Manager without Owner's prior written approval, but only if it is not reasonably feasible to secure such prior approval. In any event, with respect to any emergency repair or service which costs more than $5,000.00, only, Manager shall, not later than two (2) business days after performing or furnishing such emergency repair or service, notify Owner of the details and cost thereof. 672M2.03 237WM00091& 1VdWdbs -3- 1297106.1 2.5 Tenant Relations. Manager shall use commercially reasonable efforts to make itself fully familiar with the terms and provisions of all leases for space within the Property, and to the extent funds are available shall use commercially reasonable efforts to perform all delegable duties of Owner as landlord under each such lease, so that such lease shall remain in full force and effect, with no default by Owner, and shall use commercially reasonable efforts to enforce the full performance of all obligations of the tenant under each such lease (including, without limitation, the tenant's obligation to deliver estoppel certificates, subordination and attornment agreements, financial statements and other documents required under such lease). Manager shall maintain business-like relations with tenants, receive requests, complaints and the like, from tenants and shall use reasonable efforts to respond and act upon the foregoing in reasonable fashion. 2.6 Collection of Moneys. Manager shall use commercially reasonable efforts to collect all rent and other charges due from tenants, licensees and other occupants of the Property and such other rents and charges as shall otherwise be due to Owner in connection with Owner's ownership of the Property. Owner authorizes Manager to request, demand, collect, receive and deposit all such rent and other charges and to institute proceedings in the name of, and as an expense reimbursable by, Owner for the collection thereof and for the dispossession of tenants and other persons from the Property, and such expense may include the engaging of counsel for any such matter. However, no unlawful detainer action shall be filed by Manager without prior written approval of Owner. In connection with any of the foregoing, Manager may settle, compromise, or release any action, claim, or demand of Owner, provided that Owner's prior written consent shall be required for the settlement, compromise, or release of any claim for which the amount at issue exceeds $5,000.00. All moneys collected by Manager shall be forthwith deposited in the Operating Account(as defined below). 2.7 Compliance with Leoal Requirements. Manager shall use commercially reasonable efforts to comply with any and all laws, ordinances, rules, regulations, orders, or other requirements affecting the Property of any federal, state, county, or municipal authority having jurisdiction thereover, and orders of the Board of Fire Underwriters or other similar bodies. Manager, however, shall not take any such action as long as Owner is contesting, or has affirmed in writing to Manager its intention to contest and promptly institutes proceedings contesting, any such order or requirement, except that if failure to comply promptly with any such order or requirement would or could expose Manager to criminal liability, Manager shall have the right, but not the obligation, to cause compliance with such order or requirement. However, before any election by Manager to comply with such order or requirement, Manager shall provide Owner written notice of its intent to do so and Owner or Manager shall have the right to immediately terminate this Agreement. Owner agrees to pay all expenses incurred by Manager, including, without limitation, reasonable attorneys' fees for counsel (not exceeding a rate of $250 per hour) employed to represent Manager or Owner, with respect to any proceeding or suit involving an alleged violation by Manager or Owner, or both, of any orders or requirements of any federal, state, county, or municipal authority or orders of the Board of Fire Underwriters or other similar bodies (unless Manager is finally adjudicated to have personally and not in a representative capacity violated such order or requirement), but nothing contained herein shall require Manager to employ counsel to represent Owner in any such proceeding or suit. 2.8 Construction Management and Supervision. Manager shall provide the "CM Services" set forth in Exhibit"A" attached hereto and made a part of this Agreement. 672M2.03 23700M00071& 19dWdbs -4- 1297106.1 2.9 Leasing Services. Manager shall endeavor to secure and retain tenants for the Property. All leasing activity, whether for retention of existing tenants or obtaining of new tenants, shall be conducted in accordance with the Approved Budget(as defined below) and the applicable terms and conditions set forth in this Agreement. Manager agrees to cooperate with any third party brokers ("Outside Brokers") in leasing space at the Property; leasing commissions to such Outside Brokers shall be paid by Manager (following payment of same by Owner to Manager) with respect to leases hereunder; if such leasing commission to be paid to an Outside Broker is set forth in the Approved Budget, then such leasing commission shall not require the approval of Owner (otherwise such leasing commission shall require Owner's prior written approval). 2.10 Notices. Manager shall promptly deliver to Owner all notices received from any mortgagee, trustee, ground lessor, governmental or official entity, or any other party with respect to the Property. Manager may sign and serve in the name of Owner any and all notices only required in connection with the proper performance by Manager of the services required to be performed by Manager under this Agreement. ARTICLE III Budgets/Reports 3.1 Process for Approval of Annual Operating Budget. Within thirty (30) days after the commencement of the Initial Term of this Agreement, Manager shall submit to Owner, for Owner's approval (which approval shall not be unreasonably withheld, conditioned or delayed), a current operating budget for the Property from the date of the commencement of the initial Term of this Agreement through June 30, 2018, which proposed budget shall reflect thereon projections of all receipts and operating costs and expenses, capital expenditures, and replacement reserves that Manager, in the exercise of good business judgment, believes will be received or necessary to be incurred, as the case may be, to operate the Property through June 30, 2018. 3.2 Within sixty days from the initial Term of this Agreement, Manager shall submit to Owner for Owner's approval (which approval shall not be unreasonably withheld, conditioned or delayed) a proposed operating budget for the Property for the fiscal year of July 1, 2018 through June 30, 2019. Such proposed budgets and projections shall be submitted by Manager solely as estimates, without warranty of their accuracy or attainability. Manager may not employ any person, to assist Manager with the preparation of such budget. If Manager has not received written approval or disapproval of Manager's proposed operating budget within thirty (30) days after submittal thereof by Manager, the proposed operating budget submitted by Manager shall be automatically deemed approved by Owner. If written disapprovals are received by Manager, Manager shall promptly revise the proposed operation budget to incorporate any comments thereto proposed by Owner with which Manager agrees and the parties shall consult with each other in order to mutually agree upon an acceptable final operating budget. The approved and/or deemed approved operating budget shall be referred to herein as the "Approved Budget". If, as of July 1 of each fiscal year, a proposed operating budget has not yet been finalized, then Owner and Manager shall continue to proceed under the prior fiscal year's Approved Budget until the current fiscal year's operating budget is agreed upon by Owner and Manager, except that all ordinary reimbursable expenses included in such prior year's Approved Budget (other than taxes, insurance and utilities, which shall be at the actual costs thereof) shall be increased by five percent (5%). If an Approved Budget has not 672M2.03 237WM00091& 1VdVdbs -5- 1297106.1 been agreed upon by March 31st then ether party upon 30-days' written notice may terminate this Agreement. 3.3 Expenditures and Liabilities Which Are in Addition to Items on the Approved Budget. Manager shall secure the written approval of Owner (which approval shall be in the sole discretion of Owner) prior to making any expenditure or incurring any liability or obligation not reflected on the Approved Budget; provided, however, that Manager shall not be required to secure the written approval of Owner if such expenditure does not increase any line item by more than five percent(5%)of the line item amount reflected on the Approved Budget. 3.4 Records; Reporting and Audit. (a) Records. All statements, receipts, invoices, checks, leases, contracts, worksheets, financial statements, books and records, and all other instruments and documents relating to or arising from the operating or management of the Property shall be maintained by Manager, and Owner and Manager shall have the right to inspect and to copy all such items, at such party's expense, at all reasonable times, and from time to time, during the term of this Agreement and for a reasonable time thereafter not to exceed three (3)years. Upon the termination of this Agreement, all of such books, records and other information shall be the property of and be promptly delivered (without warranty) to Owner in readily accessible and readable form; provided, however, that Manager or its representatives shall have the right to inspect such books, records, and other information and to make copies thereof during the three (3) year period referred to in the preceding sentence at the offices of Owner upon reasonable advance notice to Owner. (b) Monthly Reports. On or before the twentieth (201h) day of each month during the term of this Agreement, Manager shall deliver to Owner an operating report for the Property (on a cash and not an accrual method) for the preceding calendar month. (C) Audit. Owner retains the reasonable right to access, review, examine, and audit, any and all books, records, documents and any other evidence of procedures and practices that Owner determines are necessary to discover and verify that Manager is in compliance with all requirements under this Agreement. Manager shall include the SANITATION DISTRICT's right as described above, in any and all of their subcontracts, and shall ensure that these rights are binding upon all Subconsultants. Owner retains the right to examine Manager's books, records, documents and any other evidence of procedures and practices that the Owner determines are necessary to discover and verify all costs, of whatever nature, which are claimed to have been incurred, or anticipated to be incurred or to ensure CONSULTANT's compliance with all requirements under this Agreement during the term of this Agreement and for a period of three (3) years after its termination. Manager shall maintain complete and accurate records in accordance with generally accepted industry standard practices and the Owner's policy. Manager shall make available to Owner for review and audit, all property related accounting records and documents, and any other financial data within 15 days after receipt of notice from Owner. Upon Owners request, Manager shall submit exact duplicates 672M2.03 237WM00091& 19dWdbs -6- 1297106.1 of originals of all requested records to Owner. If an audit is performed, Manager shall ensure that a qualified employee of the Manager will be available to assist Owner's auditor in obtaining all accounting records and documents, and any other financial data as they relate to the property and services provided under this Agreement. (d) No Liability for Returns Required by Law. Manager shall not be responsible or liable for preparing or filing any forms, reports, or returns that may be required by law relating to any personnel employed by Owner in connection therewith. Manager, and not Owner, however, shall be responsible for any forms, reports, or returns that may be required by law relating to any of Manager's employees. ARTICLE IV Expenses. Operating Account 4.1 Expense of Owner. Everything done by Manager under the provisions of this Agreement shall be done as an independent contractor of Owner. Unless otherwise provided herein, Owner shall not be obligated to reimburse Manager for (a) any expense for office equipment or office supplies of Manager (unless and only to the extent incurred and used in the promotion and leasing of the Property and/or the collection of income or payment of expenses for the Property); (b)any overhead expenses of Manager incurred in its general offices in excess of the pro rate portions of overhead expenses attributable to the Property; (c)any salaries or wages allocable to time spent on projects other than the Property; or (d)any salaries, wages, and expenses for any personnel other than personnel located at the Property site and/or personnel spending a portion of their working hours (to be charged on a pro rate basis) at the Property site specifically performing Manager's duties under this Agreement. All payments to be made by Manager under this Agreement shall be payable, or if otherwise paid by Manager, reimbursable, from funds deposited in the Operating Account. Manager shall not be obligated to make any advance to or for the account of Owner or to pay any sums except out of funds held in the Operating Account, nor shall Manager be obligated to incur any liability or obligation for the account of Owner without assurance satisfactory to Manager that the necessary funds for the discharge thereof have been or will be promptly provided by Owner. Owner shall at all times provide Manager, free of charge, with an appropriate management office at the Property. 4.2 Separation of Owner's Moneys. Manager shall establish and maintain in a banking or other financial institution reasonably approved by Owner whose deposits are insured by the Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance Corporation, a separate bank or similar account in the name of Owner for the deposit of moneys of Owner received with respect to the Property (the "Operating Account"). Manager shall also establish such other special bank or similar accounts as may be reasonably required by Owner, or as required under the law. If and only if the funds are to be used for an item set forth in the Approved Budget, or as otherwise provided for by this Agreement, funds may be withdrawn through authorized signature cards from all accounts upon the sole signature of Manager or any of the following persons, on behalf of Manager: Tim Gooch, George Derrington, Tammy Le, or Jenny Blanchart ("Authorized Persons"). Manager shall immediately notify all financial institutions if any of the Authorized Persons are no longer employed by Manager and cause them to be removed as a signatory to withdraw funds. Manager's authority to withdraw funds may be terminated at any time by Owner upon three (3) days written notice to Manager. In the 672M2.03 237WM00091& 121dlWdbs -7- 1297106.1 vent of such termination, Owner will assume full liability for all existing financial obligations incurred by the Manager for the Property incurred prior to the termination and in accordance with this Agreement. 4.3 Manager Disbursements. Manager shall, from the available good funds collected and deposited in the Operating Account, cause to be disbursed regularly and punctually the following amounts (in the following order of priority (1)the amounts which Owner from time to time advises Manager are to be paid for any loans secured by mortgages on the Property, incurred before or after this Agreement becomes affective, including amounts which Owner from time to time advises Manager are due under any mortgage for interest and amortization of principal and for allocation to reserves or escrow funds; (2)the amounts payable to Manager pursuant to this Agreement; and (3)the amounts otherwise due and payable as operating expenses of the Property. Owner shall at all times maintain in the Operating Account a balance equal to the highest projected monthly expenditures as determined by the applicable Approved Budget for the Property. In addition, Owner shall within five (5) business days after Manager's written request, deposit such additional funds as Manager reasonably determines are needed to effect any authorized disbursements to be made by Manager pursuant to the terms of this Agreement. In the event Owner fails to deposit the amount of such expenses and fees, Manager shall be under no obligation to advance any funds to meet the obligations for which the additional funds have been requested and shall not incur any liability in connection therewith. However, Manager may elect to advance funds to pay such expenses and shall in such event be entitled to reimbursement upon demand from Owner therefor. Any funds remaining at the end of each calendar month during the term of this Agreement in the Operating Account (in excess of the balance required to be maintained in such account) shall be disbursed or transferred as generally or specifically directed from time to time by Owner. Within fifteen (15)days after Manager's receipt of written request by Owner(but no more often than once during each calendar month during the term of this Agreement), Manager shall provide Owner with a list of the disbursements made by Manager during such month and if so requested by Owner, invoices supporting the disbursement. Unless otherwise provided for in the Approved Budget, Owner, and not Manager, shall be responsible for the payment of all real estate taxes and other impositions levied by appropriate authorities. ARTICLE V Management and Other Fees 5.1 Management Fee. Owner shall pay to Manager, as compensation for Manager's management services, on a monthly basis, a management fee (the "Management Fee") in an amount equal $2,000.00 per month. 5.2 Comoensation for Tenant Finish Work and Capital Improvements. For services which it performs in overseeing and/or managing the completion of tenant finish work and construction of capital improvements within the Property, Owner shall pay Manager the fees described on Exhibit "A" attached hereto in accordance with the terms and conditions set forth on Exhibit"A" attached hereto. 5.3 Leasina Commissions. For services which it performs in connection with the leasing of the Property, Owner shall pay Manager the fees described on Exhibit "B" attached hereto in accordance with the terms and conditions set forth on Exhibit"B" attached hereto. 672M2.03 237WM00091& 1VdVdbs -8- 1297106.1 5.4 Additional Services. It is expressly agreed that in the event Owner requires Manager to perform or undertake additional services which are of an extraordinary nature or which are not customarily performed (or which are performed less frequently) by property management companies managing projects comparable to the Property located in the vicinity of the Property, Owner shall pay to Manager additional feels)for such additional services, and the amount of such additional fee(s) shall be reasonably and mutually agreed upon by Owner and Manager. ARTICLE VI Insurance/Indemnity 6.1 Insurance. Owner shall maintain in full force and effect insurance policies with respect to the Property, including any personal property of Owner, issued by insurance companies which have an A.M. Best General Policyholder's Service rating of not less than "A- VIII" which are licensed, or approved to do business, in the state in which the Property is located. Such insurance policies shall provide the following coverages: (a) Property Insurance. "All Risk" property insurance including fire, sprinkler leakage if applicable and water damage in an amount not less than the full replacement cost of the Property, with an agreed value endorsement sufficient to prevent Owner from becoming a co-insurer in any loss under the policy. The policies of insurance carried in accordance with this Section 6.1(a) shall contain (1)a replacement cost endorsement without deduction for depreciation or obsolescence, (ii) coverage for building ordinance, increased cost of construction, sinkhole (subsidence) and pollution clean-up resulting from insured peril, and (iii)a waiver of subrogation clause; (b) Flood Insurance. If at any time the Property or any part thereof is within a 100 year Flood Zone or an area designated "Flood zone" pursuant to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001 4128) or any amendments or supplements thereto or substitutions therefor (collectively, the "National Flood Insurance Program"), Flood insurance (to the extent available at commercially reasonably rates) in such total amount as Owner may from time to time reasonably require but in an amount not less than the maximum available under the National Flood Insurance Program with a deductible not exceeding $10,000, and which shall in any event comply with the National Flood Insurance Program as set forth in the legislation; (c) Earthquake Insurance. Earthquake insurance on the Property for not less than the maximum probable loss if located in UBC Seismic Zones 3 and 4; (d) Liability Insurance. Commercial General and Excess Liability Insurance, written on an occurrence basis, including blanket contractual liability, products and completed operations and personal injury coverage, notice of occurrence, knowledge of occurrence, unintentional errors and omissions, pollution from hostile fire, building heating equipment with a combined single limit for any one occurrence of Fifteen Million Dollars ($15,000,000) or such higher limit as Manager may from time to time reasonably request. Such requirement may be satisfied by a layering of Commercial General Liability, Umbrella and Excess Liability policies, but 672M2.03 23700M00071& 19dWdbs -9- 1297106.1 in no event will the liability insurance be written for an amount less than Fifteen Million Dollars ($15,000,000) combined single limit for bodily injury and property damage liability; (e) Boiler Insurance. Boiler and Machinery Breakdown Direct Damage Insurance and third party liability coverage (if not covered under the Commercial General Liability Policy) with full comprehensive coverage on a repair and replacement basis for all HVAC equipment, electrical equipment, boilers and machinery which form a part of the Property, including building ordinance Business Interruption Coverage for Loss of Rental Income in connection therewith in accordance with Section 6.1(d) above; (f) Builder's Risk Insurance. During the course of any construction or repair of improvements or during the course of restoration on the Property (other than tenant installation), Builder's Risk Insurance on a completed value basis and on a non-reporting form against "all risks of physical loss," including flood (if available at commercially reasonable rates), earthquake (if available at commercially reasonable rates), collapse, transit and off-site coverage (if available at commercially reasonable rates), during construction of such improvements or restoration, with deductibles satisfactory to Owner, covering the total replacement cost value of work performed and the equipment, supplies and materials furnished (unless such equipment, supplies and materials are required to be insured by contractors or vendors) and rent loss insurance for a period not less than twelve (12) months or the construction period, whichever is the greater, in an amount satisfactory to Owner. Such policy of insurance shall include coverage for building ordinance, increased cost of construction, sinkhole (subsidence) and pollution clean-up resulting from an insured peril, and shall contain a "permission to occupy" endorsement, a waiver of coinsurance or an agreed amount endorsement and an agreement by the insurer that following a loss, the insurer will pay to the insured (i)the full value of the loss provided Owner is required to or elects to rebuild or (ii)the actual cash value of the loss in the event Owner is not required to or does not elect to rebuild; AND (g) Other Insurance. Such other insurance with respect to the Property, in such amounts as Owner (or any lender in connection with a Financing) from time to time may require against such other insurable hazards which at the time are commonly insured against in respect of property similar to the Property. 6.2 Manager's Insurance. Manager shall, at the expense of Manager, maintain in full force and effect insurance policies with respect to Manager and the employees of Manager issued by insurance companies which have an A.M. Best General Policyholder's Service rating of not less than "A-Vill," which are licensed and approved and authorized to do business in the state in which the Property is located. Such policies shall provide the following coverage: (a) Worker's Compensation Insurance. Worker's Compensation Insurance as required by the Labor Code of the State of California, including Employer's Liability Insurance with a minimum limit of $1,000,000.00. Such Worker's Compensation Insurance shall be endorsed to provide for a waiver of subrogation in favor of OCSD. A statement on an insurance certificate will not be accepted in lieu of the actual endorsements unless your insurance carrier is State of California 672M2.03 237WM00091& 121dlWdbs -to- 1297106.1 Insurance Fund (SCIF and the endorsement numbers 2570 and 2065 are referenced on the certificate of insurance. (b) Automobile Liability Insurance. Comprehensive automobile liability insurance covering owned, non-owned, and hired vehicles in an amount not less than Five Million Dollars ($5,000,000) combined single limit for bodily injury and property damage. Such requirements may be satisfied by layering of comprehensive automobile liability, umbrella and excess liability policies, but in no event shall the comprehensive automobile liability policy be written for an amount less than One Million Dollars ($1,000,000)combined single limit for bodily injury and property damage. (c) Errors and Omissions. Fidelity Bond and Cvber Liability Insurance. Fidelity bond and computer crime insurance with an annual limit of a minimum of One Million Dollars ($1,000,000). (i) Errors and Omissions Coverage (professional liability coverage) in an amount of not less than $1.0 (one) million per occurrence throughout the term of this Agreement (ii) A fidelity bond or crime insurance, in content acceptable to OCSD, shall be carried in the amount of$1 (one) million dollars. (iii) If the Manager provides services related to information technology, the Manager must maintain third-party Cyber Liability insurance with limits of not less than $1.0 million per occurrence covering claims involving technology professional liability, privacy liability where applicable (including but not limited to loss of OCSD employee information), security liability where applicable (including but not limited to technology attacks via hackers or viruses, and cyber extortion threats), media liability where applicable (including but not limited to libel, slander and copyright infringement from content created by the Vendor), and damage to or destruction of electronic information or media. (d) Commercial Liability Insurance. Commercial General Liability Insurance written on an occurrence basis providing the following minimum limits of liability coverage: $5.0 million per occurrence with $5.0 million aggregate separate for this contract. Said insurance shall include coverage for the following hazards: Premises-Operations, blanket contractual liability (for this Agreement), products liability/completed operations (including any product manufactured or assembled), broad form property damage, blanket contractual liability, independent contractors liability, personal and advertising injury, mobile equipment, cross liability and severability of interest clauses. A statement on an insurance certificate will not be accepted in lieu of the actual additional insured endorsement(s). If requested by OCSD and applicable, XCU coverage (Explosion, Collapse and Underground) and Riggers Liability must be included in the General Liability policy and coverage must be reflected on submitted Certificate of Insurance. (e) Umbrella Excess Liability The minimum limits of general liability and automotive liability insurance required, as set forth above, shall be provided for either a single policy of primary insurance, or a combination of policies of primary 672M2.03 23700M00071& 121dlWdbs -11- 1297106.1 and umbrella excess coverage. Umbrella 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 automotive liability. (f) Additional Insured Endorsements Each policy of insurance obtained, except Worker's Compensation Coverage and Errors and Omissions Coverage, shall name OCSD, its Directors, officers, agents, consultants, and employees for this contract, and all public agencies from whom permits will be obtained and their Directors, officers, agents and employees, as determined by OCSD, as additional insured on said policies. No exclusionary language or limitations shall be applicable to any additional insured that are not applicable to the named insured. In addition, 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 said policies. If this coverage is not provided within the coverage form (insurance policy) it shall also be endorsed as primary and non-contributory coverage. (g) Proof of Coverage The Vendor shall furnish OCSD with original certificates and amendatory endorsements effecting 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, at any time. The following are approved forms that must be submitted as proof of coverage: • Certificate of Insurance ACORD Form 25 or other equivalent Certificate of Insurance form. • Additional Insured (GL) (ISO Form)CG2010 11 85 or The combination of(ISO Forms) CG 2010 10 01 and CG 2037 10 01 All other Additional Insured endorsements must be submitted for approval by OCSD, and OCSD may reject alternatives that provide different or less coverage to OCSD. • Additional Insured (Auto) Submit endorsement provided by carrier for OCSD approval. • Waiver of Subrogation State Compensation Insurance Fund Endorsement No. 2570 or equivalent. • Cancellation Notice State Compensation Insurance Fund Endorsement No. 2065 or equivalent. (h) Period of Coverage Insurance coverage is required during the period of this contract. (i) Cancellation Notice. 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. The ACORD Form shall state the required thirty 672M2.03 23700M00071& 121dlWdbs -12- 1297106.1 (30) days' written notification. Policy shall not terminate, nor shall it be cancelled nor the coverage reduced, until thirty (30) days after written notice is given to OCSD except for non payment of premium which shall require not less than ten It 0) days written notice to OCSD. Should there be changes in coverage or an increase in deductible or SIR amounts, the Vendor and its insurance broker/agent shall send to OCSD a certified letter which includes a description of the changes in coverage and/or any increase in deductible or SIR amounts. The certified letter must be sent to the attention of Risk Management, Div. 260, and shall be received by OCSD not less than thirty (30) days prior to the effective date of the change(s) if the change would reduce coverage or increase deductibles or SIR amounts or otherwise reduce or limit the scope of insurance coverage provided to the OCSD. 0) Insurance Carrier Rating The insurers must have an A- (A minus), or better, policyholder's rating, and a financial rating of Class VIII, or better, in accordance with the most current A.M. Best Rating. OCSD recognizes that State Compensation Insurance Fund has withdrawn from participation in the A.M. Best's rating process. Nevertheless, OCSD will accept 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. OCSD will also require Vendor to substitute any insurer whose rating drops below levels herein specified. Said substitution shall occur within twenty (20) days of written notice to Vendor by OCSD or its agent. (k) Primary Insurance All liability policies shall contain a Primary and Non Contributory Clause. Any other insurance maintained by OCSD shall be excess and not contributing with the insurance provided by Vendor (1) Separation of Insured All liability policies shall contain a "Separation of Insured" clause. (m) Non Limiting (if applicable). Nothing in this document shall be construed as limiting in any way, nor shall it limit the indemnification provision contained in the Agreement, or the extent to which Vendor may be held responsible for payments of damages to persons or property. (n) Deductibles and Self Insured Retentions Any deductible and/or self insured retention must be declared to OCSD on the Certificate of Insurance. All deductible and/or self insured retentions require approval by OCSD. At the option of OCSD, either: the insurer shall reduce or eliminate such deductible or self- insured retention as respects OCSD; or the Vendor shall provide a financial guarantee satisfactory to OCSD guaranteeing payment of losses and related investigations, claim administration and defense expenses. (o) Defense Costs Liability policies, except for Errors and Omissions Coverage, shall have a provision that defense costs for all insureds and additional insureds are paid in addition to and do not deplete any policy limits (p) Limits Are Minimums If Manager maintains higher limits than any minimums shown above, OCSD requires and shall be entitled to coverage for the higher limits maintained by Vendor. 672M2.03 237WM00091M-121dlWdbs -13- 1297106.1 6.3 Blanket Insurance. Manager may effect any coverage required of Manager under Section 6.2 above under a blanket insurance policy, provided that the protection afforded under any policy of blanket insurance hereunder shall be no less than that which would have been afforded under a separate policy or policies relating only to the Property. 6.4 Policies. (a) Owner Named Insured. All of the insurance policies maintained under Section 6.1 shall name Owner as the insured and shall also include Manager as an additional insured or loss payee, as its interest may appear. (b) Owner and Manager Named Insured. The insurance maintained under Section 6.1(d) (Liability Insurance) shall name Manager as an insured, and the insurance maintained under Section 6.2(b) (Automobile Insurance), Section 6.2(c) (Fidelity Bond Insurance) and Section 6.2(d) (Commercial Liability Insurance) shall name Owner, if requested, as an insured and such other parties in interest as Owner or Manager may reasonably specify from time to time as additional insureds or loss payees, as their respective interests might appear. (c) Terms of Policies. All insurance policies maintained pursuant to this Agreement shall provide that (1) no cancellation, material change or reduction thereof shall be effective until at least thirty (30) days after receipt by Owner and Manager of written notice thereof; and (ii) all losses covered by the required insurance shall be payable notwithstanding any act of negligence of Manager or any tenant or their partners, members, stockholders, directors, officers, employees or agents which might, absent such agreement, result in a forfeiture of all or part of such insurance payment and notwithstanding ( (1)any foreclosure or other action or proceeding taken pursuant to the provision of any financing instruments encumbering the Property or (2) any change in title or ownership of the Property. In the event of any financing secured by the Property, all insurance shall comply with the terms of such financing. (d) Self Insurance. It is understood that Owner is a large public agency that has a program of insurance and self-insurance with regard to its properties. Orange County Sanitation District will arrange for insurance or self-insurance on the Property, as its Board or management shall approve from time to time, and which may include insurance or self-insurance for property, Flood, earthquake, business interruption, excess liability, workers compensation, boiler & machinery, builder's risk, pollution liability and perhaps others. Owner will from time to time, as reasonably requested by Manager, provide certificates of insurance and letters of self-insurance describing the insurance and self-insurance carried by Owner. Variations of Owner's actual insurance program from the requirements defined in the Agreement shall not constitute a default under this Agreement, but shall be deemed to be an election by Owner to self-insure for any risks or liabilities. Upon the full execution of this Agreement, Owner shall provide Manager with a description of the process by which a claim may be made under Owner's self- insurance program. All of Owner's insurance obligations undertaken with respect to self-insured risks shall survive the expiration or earlier termination of the Agreement. 672M2.03 237WM00091& 19dWdbs -14- 1297106.1 (e) Evidence of Renewal and Premium Payment. Owner and Manager shall furnish to each other, upon request, prior to the expiration date of each insurance policy required to be maintained under this Article VI, certificates of insurance of the renewal thereof. 6.5 Claims. In the event of a loss related to the Property under any of the insurance policies described in Sections 6.1, Section 6.2(b), Section 6.2(c) and Section 6.2(d), Manager shall, at Owner's expense, promptly and timely after Manager learns of such loss, file a claim on behalf of Owner (and Manager or any other party to the extent Manager or such other party is also an insured party) and use commercially reasonable efforts to monitor such claim on behalf of such insured party and cooperate fully with any appointed representatives, consultants and adjusters retained by or on behalf of the insurance companies' interests. 6.6 Subrogation. Owner and Manager each waive any right of recovery against the other (and the respective officers, directors, partners, members and employees of each), for any loss or damage covered by any policy of property insurance applicable to the Property, whether due to the negligence of Owner or Manager or their agents, contractors, officers, directors, partners, members or employees. If any property insurance policy provides that a waiver of subrogation may only be granted by endorsement, the party maintaining such policy shall secure an endorsement providing the waiver of subrogation. 6.7 Indemnity. Neither Manager (nor any employee, agent, director, officer, or owner thereof(collectively, the "Manager Partners")) shall be liable, responsible, or accountable in damages or otherwise to Owner for any acts performed by Manager or any of the Manager Partners in good faith. Manager shall be liable for, and shall indemnify, defend and hold harmless Owner from and against, any and all claims, losses, damages, liabilities, costs and expenses, including reasonable attorneys' fees (collectively, "Claims") arising out of any actions of Manager not within the scope of its duties under this Agreement and proximately caused by the negligence or willful misconduct of Manager, except (i) to the extent such losses are of the type insured, or are required to be insured by Owner under this Agreement, (ii)any latent defect on the Property; or(ill) Owner's failure to cooperate in any repairs or remediating any defects to the Property after such conditions are discovered and brought to the attention of Owner. Owner shall be liable for, and shall indemnify, defend and hold harmless Manager and the Manager Partners, from and against any and all Claims arising out of or resulting from (1) the acts or omissions of Manager in connection with the performance of Manager's duties under this Agreement, and (ill)from the acts or omissions of Owner and its directors and officers, except that the foregoing indemnity obligation of Owner shall not apply in the case of the acts or omissions of Manager or any other Manager Partner which (a) are a breach by Manager under this Agreement, (b) are beyond the scope of authority conferred upon Manager under this Agreement, , or (c) constitute gross negligence, fraud, malfeasance, breach of fiduciary duty, willful, reckless or criminal misconduct. The provisions of this Section 6.7 shall survive the expiration or termination of this Agreement. ARTICLE VII Obligations Upon Termination 7.1 Survival of Obligations. Upon termination of this Agreement, each party shall continue to be fully liable for its obligations which have accrued up to and including the termination date and shall promptly pay to the other party all amounts due to such other party 672M2.03 23700M00071& 19dWdbs -15- 1297106.1 under the terms of this Agreement. Such payment shall be made as soon after the effective date of termination as such amounts are determinable. Upon such payment, neither party shall have any further claim or right against the other, except as expressly provided in this Agreement. 7.2 Obligations Uoon Termination. In the event of termination of this Agreement, upon the effective date of such termination, Manager shall (i) surrender and deliver to Owner all rent and other income of the Property and other moneys of Owner then held by Manager and/or in any bank account (including, without limitation, the Operating Account) in excess of compensation or reimbursements owed Manager by Owner, including without limitation any fees payable or reimbursement of expenses due and payable to Manager, (it) deliver to Owner as received by Manager any moneys or other property due Owner under this Agreement but received after such effective date of termination, and (iii)deliver to Owner (without warranty) copies of all records regarding the Property, keys and all other materials, property and supplies pertaining to the Property and/or this Agreement in the possession of Manager to allow Owner to fully operate, maintain, and manage the Property. ARTICLE VIII Miscellaneous 8.1 No Assignment by Manager. Without the prior written consent of Owner, Manager shall not have the right to assign, transfer, or convey any of its rights, title, or interest under this Agreement, nor shall it have the right to delegate any of the obligations or duties required to be kept or performed by it under this Agreement.,. 8.2 Successors and Assigns. Subject to the terms and conditions of Section 8.1 above, this Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective permitted successors and assigns. 8.3 No Agency. Manager is an independent contractor and, as such, shall be solely responsible for all of its employees, for the supervision of all persons performing services in connection with the performance of all of Manager's obligations under this Agreement and/or relating to the Property, and for determining the manner and time of performance of all acts under this Agreement. Nothing contained in this Agreement shall be deemed or construed to create a partnership or joint venture between Owner and Manager or to cause Manager to be responsible in any way for the debts or obligations of Owner or any other party (but nothing contained herein shall affect Manager's responsibility to transmit payments for the account of Owner as provided in this Agreement), it being the intention of the parties that the only relationship under this Agreement is one of independent contractor , and Manager shall not represent to anyone that its relationship to Owner is other than that set forth herein. 8.4 Notices. All notices, demands, consents, approvals, and requests given or required to be given by either party to the other under this Agreement shall be in writing, shall be sent by (a) United States mail, postage prepaid, return receipt tracked or confirmed, or (b) delivered by a nationally recognized overnight courier or(c) delivered personally: (1)to Manager at the appropriate address set forth below in this Section 8.4, or to such other place as Manager may from time to time designate in a notice to Owner; or(ii)to Owner at the addresses set forth below in this Section 8.4, or to such other place as Owner may from time to time designate in a notice to Manager . Any notice, demand, consent, approval, and/or request will be deemed given (a) on the date which is seventy-two (72) hours after it is mailed as provided in this 672M2.03 23700M00071& 121dlWdbs -16- 1297106.1 Section 8.4, (b) upon the date personal delivery is made or rejected, or (c) on the date which is one (1) business day after it is sent by nationally recognized overnight courier, as the case may be. If to Owner. Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708 Attention: Ann M. Crafton Principal Staff Analyst With a copy to: Bradley R. Hogin, Esq. Woodruff, Spradlin &Smart, APC 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626-7670 If to Manager. The Muller Company 18881 Von Kerman Avenue, Suite 400 Irvine, CA 92612 Attention: Jenny Blanchart 8.5 Security Deposits. Owner agrees to indemnify, defend and hold harmless Manager from and against any and all Claims with respect to any use, detention, or misapplication by Owner of tenants' security deposits. 8.6 Remedies. Notwithstanding anything herein to the contrary, Manager shall not be liable to Owner and Owner shall not be liable to Manager under this Agreement for any damages (other than actual damages) such as, without limitation, any lost profits, loss of business, consequential, special, or other similar damages. Prior to any recovery against Manager or Owner under this Agreement, Manager or Owner, as the case may be, must be given written notice and a reasonable opportunity to cure any default or other condition which is the basis for such recovery. 8.7 Captions. The captions of this Agreement are inserted only for the purpose of convenient reference and do not define, limit or prescribe the scope or intent of this Agreement or any part hereof. 8.8 No Waiver. The failure of a party hereto to seek redress for breach, or to insist upon the strict performance of any covenant, agreement, provision or condition of this Agreement, shall not constitute a waiver thereof, and such party shall have all remedies provided herein and by applicable law with respect to any subsequent act which would have originally constituted a breach. 8.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 8.10 No Third Party Beneficiaries. Neither this Agreement nor any part of this Agreement nor any service, relationship, or other matter alluded to herein shall inure to the benefit of any third party (specifically including any lenders, tenants, or contractors), to any trustee in bankruptcy, to any assignee for the benefit of creditors, to any receiver by reason of 672M2.03 237WM00071& 121dlWdbs -17- 1297106.1 insolvency, to any other fiduciary or officer representing a bankruptcy or insolvent estate of either party, or to the creditors or claimants of such an estate. Without limiting the generality of the foregoing sentence, it is specifically understood and agreed that insolvency or bankruptcy of either of Owner (including any partners thereof) or Manager shall at the option of the other void all rights of such insolvent or bankrupt party under this Agreement (or so many of such rights as the other party shall elect to void). 8.11 Subordination. Manager's rights hereunder are all expressly subordinate, junior, and inferior to any ground lease, mortgage, or deed of trust now or hereafter placed upon the Property and to any and all advances to be made thereunder and to the interest thereon and to all renewals, replacements, and extensions thereof. 8.12 Attorneys' Fees. If either party to this Agreement brings any action to enforce its terms, the prevailing party shall be entitled to receive reasonable attorneys' fees and costs from the other party. 8.13 Change of Manager Status. If there is any dissolution, termination of corporate status, suspension in any licenses required to carry out Manager's duties as provided in this Agreement, change in control (i.e. sale of stock, sale of company, merger, sale of substantially all the assets, etc.), or any of the of the current Executive Team (as set forth in the 2/13/18 proposal) leaves the employment of Manager, Owner shall be provided immediate written notice of such change and Owner shall have the right to terminate this Agreement by delivery of a written notice of termination to Manager within 30 days from receipt of Manager's notice. 8.14 Validity. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 8.15 Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the matters herein contained and any agreement hereafter made shall be ineffective to effect any change or modification, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the change or modification is sought. [SIGNATURES APPEAR ON THE FOLLOWING PAGE] 672M2.03 237WM00091& 1VdVdbs -18- 1297106.1 Consultant: THE MULLER COMPANY Jenny Blanchart 18881 Von Karmen Avenue Suite 400 Irvine, CA 92612 ORANGE COUNTY SANITATION DISTRICT Dated: By: Gregory C. Sebourn, PLS Chair, Board of Directors Dated: By: Kelly A. Lore Clerk of the Board Dated: By: Marc Dubois Contracts, Purchasing and Materials Manager THE MULLER COMPANY Dated: By: Print Name and Title of Officer IRS Employers I.D. Number 672M2.03 237WM00091& 19dWdbs -19- 1297106.1 EXHIBIT "A" CM SERVICES AND FEES (a) Construction Management Fee. Manager shall be entitled to a fee (the "Construction Management Fee") for oversight, conformity, coordination and supervision of the design and build out of tenant improvements made in conjunction with new leases, extensions or renewals of existing leases or expansions of the leased space under existing leases, and construction projects authorized by the Owner that take place during the term of the Agreement (each, an "Improvement Project"). For Improvement Projects where the construction costs for the Improvement Project exceed Five Thousand Dollars ($5,000), Owner shall pay Manager a Construction Management Fee in an amount equal to five percent (5%) of the hard construction costs for such Improvement Project. (b) Minor Improvement Projects. Notwithstanding anything to the contrary, no Construction Management Fee will be paid for any Improvement Projects where either (1)the scope of such Improvement Project is limited to paint and carpet or (it) the construction costs are Five Thousand Dollars ($5,000)or less. (c) Construction Management Services. As part of Manager's construction management services with respect to Improvement Projects, Manager shall, at Owners expense, use commercially reasonable efforts to manage, arrange, supervise and coordinate, subject to the approval and direction of Owner, the design, construction and planning services of such Improvement Project, which services shall include the following: W Arranging, supervising and coordinating the preparation of feasibility, architectural, engineering, environmental and other studies as may be required; (ii) Arranging for the preparation and submission to Owner for approval and, following approval by Owner, monitoring compliance with: A. Plans and specifications, such plans and specifications to be prepared by one or more independent consultants approved by Owner, setting forth the scope of the Improvement Project and methods of construction to be used in the Improvement Project; B. A budget setting forth estimated costs of the design and construction of the Improvement Project; and C. A list of proposed contractors, consultants and other professionals to be employed in the design and construction of the Improvement Project. (ill) Arranging, supervising and coordinating the design, construction and planning services necessary to complete the Improvement Project, which actions shall be subject to the approval and direction of Owner, including the following: A. Coordinating with the consultants and other professionals on matters relating to the plans and specifications and any modifications thereto; 672M2.03 237WM00091& 19dWdbs -�- 1297106.1 B. Coordinating with contractors to prepare cost estimates of the Improvement Project and reviewing and advising Owner with respect to all bid documents; C. Preparing and negotiating design and construction contracts and other Contracts, if required, for the supply of services and materials necessary to design, construct and complete the Improvement Project; D. Reviewing and negotiating all change orders for the Improvement Project which change orders shall be submitted to Owner for its approval; E. Reviewing applications for payment submitted by consultants, contractors and suppliers in connection with the design, construction and completion of the Improvement Project, and submission of such applications to Owner for approval of payment; F. Preparing applications to municipal, other governmental, quasi- governmental and private authorities for Permits, including building permits, inspections and approvals, which applications shall be submitted to Owner for Owner's approval, and upon approval thereof by Owner, shall be submitted by Manager to the applicable authority; G. Supervising and coordinating construction of the Improvement Project; H. Coordinating and supervising the obtaining and maintenance of all Permits and other authorizations necessary for the Improvement Project; and I. Recording and reporting to Owner the progress of the construction of the Improvement Project. (iv) Causing complete and accurate files, books of account and other records of all construction costs and expenses of the Improvement Project incurred by Owner to be prepared and maintained in accordance with generally accepted accounting principles. 672M2.03 237WM00091& 19dWdbs -2- 1297106.1 EXHIBIT "B" LEASING COMMISSIONS Owner shall pay Manager a Leasing Commission (i) for each New Tenant (as defined below) who executes an Occupancy Lease (as defined below) during the term of the Agreement (each, a "New Tenant Lease"), (ii) for each tenant who extends the term of its Occupancy Lease during the term of the Agreement (an "Extension"), and (iii) for each tenant who expands the space leased by such tenant under its Occupancy Lease during the term of the Agreement (an "Expansion"), which Extension or Expansion (as the case may be) shall be pursuant to (A)the exercise by such tenant of its extension or expansion rights under the Occupancy Lease, and/or (B) an Amendment to an Occupancy Lease entered into by Owner and such tenant. All leasing commissions shall be paid from the Operating Account and all leases (i.e. New Tenant Lease, Extension, or Expansion) shall be signed by Owner. The term "New Tenant" shall mean a tenant who has not previously entered an Occupancy Lease then in effect for space at the Property. The term "Occupancy Lease" shall mean a lease of space at the Property, executed and delivered by Owner(or Owner's predecessor, as applicable)and a tenant. The term "Amendment to an Occupancy Lease" shall mean an amendment to an Occupancy Lease executed and delivered by Owner and a tenant. The term "Gross Rentals" shall mean the annual base rental rate stipulated in the Occupancy Lease or Amendment to Occupancy Lease (including stipulated increases, if any) multiplied by the rentable square footage of the leased space subject to the New Tenant Lease, Extension or Expansion (as applicable), the total of which shall then be multiplied by the period comprising the Basic Term. For each Occupancy Lease or Amendment to Occupancy Lease, the "Basic Term" shall be the initial term of such New Tenant Lease, Expansion or Extension i.e., the term of the New Tenant Lease, Expansion or Extension without regard to any option to extend); and provided that if an Occupancy Lease or Amendment to Occupancy Lease contains an express option in favor of the tenant to cancel or terminate the New Tenant Lease, Expansion or Extension (herein a "Tenant Termination Option"), the "Basic Term" shall initially include only that portion of the term of such New Tenant Lease, Expansion or Extension which is not subject to cancellation by exercise of such Tenant Termination Option; provided, however, if such Tenant Termination Option is waived by the tenant (or otherwise lapses) during the term of the Agreement, then the Leasing Commission applicable to the remainder of the initial term of such New Tenant Lease, Expansion or Extension shall become payable to Manager within thirty (30)days after the date such Tenant Termination Option is waived by such tenant (or otherwise lapses). Notwithstanding the foregoing, should an Occupancy Lease or Amendment to Occupancy Lease for any such New Tenant Lease, Expansion or Extension contain a Tenant Termination Option which is conditioned upon the tenant paying a cancellation penalty to the landlord therefor and such cancellation penalty includes the amount of all unamortized Leasing Commissions payable to Manager with respect to such New Tenant Lease, Expansion or Extension, then Owner will pay Manager all of the Leasing Commissions due hereinabove with respect to such New Tenant Lease, Expansion or Extension as if no such Tenant Termination Option existed. Fifty percent (50%) of the applicable Leasing Commission will be paid to Manager within thirty (30)days after all of the following have occurred: (1) if an Occupancy Lease or Amendment to Occupancy Lease is entered into with respect to such New Tenant Lease, Extension or Expansion, the execution of the Occupancy Lease or Amendment to Occupancy Lease by all parties; (it)the tenant's payment of any security deposit and prepaid rent applicable to such New Tenant Lease, 672M2.03 237WM00091& 19dWdbs -3- 1297106.1 Extension or Expansion if provided for in the Occupancy Lease or Amendment to Occupancy Lease and delivery of any Occupancy Lease or Amendment to Occupancy Lease guaranty, letter of credit and other security documents that are due on Occupancy Lease or Amendment to Occupancy Lease execution; (iii) if an Occupancy Lease or Amendment to Occupancy Lease is entered into in accordance with such New Tenant Lease, Extension or Expansion, the delivery of the fully executed Occupancy Lease or Amendment to Occupancy Lease by Owner (or Manager on behalf of Owner)to tenant; (iv)the expiration of any contingencies effecting the validity of the Occupancy Lease or Amendment to Occupancy Lease for such New Tenant Lease, the Extension or Expansion; and (v)Owner's receipt of a factually correct invoice from Manager for all Leasing Commissions due for the subject Occupancy Lease or Amendment to Occupancy Lease. The balance of the applicable Leasing Commission will be paid within thirty (30)days after the commencement date of the New Tenant Lease, Extension or Expansion. The Leasing Commission is as set forth below and the percentage set forth below shall equal the percentage of Gross Rentals required to be paid by (x)each New Tenant under its New Tenant Lease over the Basic Term of such New Tenant Lease, and (y)each tenant of any Extension or Expansion over the Basic Term of such applicable Extension or Expansion: I. New Tenant Leases No Outside Broker: 4.0% of Gross Rentals for years 1 to 5 of the Basic Term 2.0% of Gross Rentals for years 6 to 10 of the Basic Term Outside Broker: Lesser of (i) 1.0% of Gross Rentals for years 1 to 5 of the Basic Term /0.50% of Gross Rentals for years 6 to 10 of the Basic Term or (ii) the net of 5.0% of Gross Rentals for the Basic Term minus any leasing commission payable to any Outside Broker(if applicable). II. Extension/Expansion No Outside Broker: 2.5% of Gross Rentals for years 1 to 5 of the Basic Term 1.25% of Gross Rentals for years 6 to 10 of the Basic Term Outside Broker: Lesser of (i) 1.0% of Gross Rentals for years 1 to 5 of the Basic Term / 0.5% of Gross Rentals for years 6 to 10 of the Basic Term or (ii) the net of 5.0% of Gross Rentals minus any leasing commissions payable to any Outside Broker or any Listing Broker(if applicable). 672M2.03 237WM00091& 1VdWdbs -4- 1297106.1 ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir. o�i41rs oz1z81ia AGENDA REPORT emNumber Item Number 7 19 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPOSED ORDINANCE ADOPTING REGIONAL SEWER SERVICE CHARGES GENERAL MANAGER'S RECOMMENDATION A. Motion to read Ordinance No. OCSD-49 by title only and waive reading of said entire ordinance; B. Introduce Ordinance No. OCSD-49 entitled: "An Ordinance of the Board of Directors of Orange County Sanitation District Adopting Regional Sewer Service Charges and Repealing Ordinance No. OCSD-41 and Ordinance No. OCSD-46"; and C. Set March 28, 2018, as the date of the Public Hearing to hear protests and for the second reading of the Ordinance No. OCSD-49. BACKGROUND Carollo Engineers completed the 2017 Facilities Master Plan which was approved by the Board in December 2017. In conjunction with the Facilities Master Plan, Carollo was tasked with providing an independent analysis of the Sanitation District's cash flow modeling and a rate study. This rate study was received and filed by the Board in December 2017. The proposed five-year rate schedule provides for equitable and proportionate distribution for the cost of service of operating the Sanitation District's wastewater system: 2018-19 2019-20 2020-21 2021-22 2022-23 $335 $339 $343 $347 $351 RELEVANT STANDARDS • Stable rates, no large unforeseen rate increases Page 1 d 3 PROBLEM The Sanitation District's Board of Directors approved a five-year rate schedule which expires at the end of the current fiscal year. PROPOSED SOLUTION Adopt an ordinance with the new proposed five-year rate schedule based on the 2017 rate study completed by Carollo Engineers. TIMING CONCERNS February 9'h— Notifications Mailed February 281h— First Reading of the Ordinance March 28� — Public Hearing, Second Reading and Adoption of the Ordinance July 151— Ordinance takes effect RAMIFICATIONS OF NOT TAKING ACTION Sewer service fees will be insufficient to support the facilities master plan update. PRIOR COMMITTEE/BOARD ACTIONS December 2017 -Approval of the 2017 Facilities Master Plan and Received and Filed the 2017 Rate Study June 2014 - Adoption of Ordinance No. OCSD-46 (Amends OCSD-41) July 2013 -Adoption of Ordinance No. OCSD41 January 2013-Approval of the previous Sanitation District Wastewater Revenue Program Rate Study ADDITIONAL INFORMATION Based on the results of the rate study completed by Carollo Engineers, Sanitation District staff is in the process of recommending a five-year revenue program which includes an increase of approximately 1.2 percent annually for the next five years. Rate Development Schedule 1) June 2017 - Board Meeting— Budget and 10-year Cashflow Approval 2) June 2017 - November 2017 - Development of the Facilities Master Plan 3) June 2017 - November 2017 - Development of the Independent Rate Study 4) December 2017 - Operations Committee - Facilities Master Plan Review &Approval 5) December 2017 -Administration Committee - Rate Study Review and Approval 6) December 2017 - Board Meeting - Facilities Master Plan Review and Approval 7) December 2017 - Board Meeting - Independent Rate Study Review and Approval 8) December 2017 - Board Meeting -Approval to issue Proposition 218 Notices 9) February 2018 - Proposition 218 Notice Mailed 10)February 2018 -Administration Committee - Budget Assumptions for 2018-19 Page 2 of 3 11)February 2018 - Board Meeting - Rate Ordinances - First Reading 12)March 2018 - Board Meeting - Rate Ordinances - Second Reading -Adoption ATTACHMENT The following attachment(s)is available in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Ordinance No. OCSD49 • Cost Savings Measures Memorandum Page 3 d 3 ORDINANCE NO. OCSD-49 AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING REGIONAL SEWER SERVICE CHARGES AND REPEALING ORDINANCE NO. OCSD-41 AND ORDINANCE NO. OCSD46 WHEREAS, Health & Safety Code Section 5471 authorizes the Orange County Sanitation District's ("District") Board of Directors to impose fees and other charges for services and facilities furnished by the District in connection with the District's sewage collection, treatment, disposal, and reuse system; and WHEREAS, the District imposes annual sewer service charges on residential and commercial users. The District uses revenue from these charges to operate, maintain, replace, and improve the District's existing facilities. The current service charges are set forth in Ordinance No. OCSD-41, as amended by Ordinance No. OCSD-46; and WHEREAS, the District recently retained Carollo Engineers to evaluate the District's projected revenue needs and recommend rates for the five-year period of July 1, 2018 to June 30, 2023. In December of 2017, Carollo Engineers issued its "Final Report and Recommendations on Wastewater Rates, Fees, and Charges" ("Carollo Report'). The District's Board of Directors received the Carollo Report on December 20, 2017, and the Carollo Report is on file with the District; and WHEREAS, the recommendations set forth in the Carollo Report are based in part on the District's 2017 Facilities Master Plan ("Master Plan"). The Master Plan identified the capital improvement projects that will be needed over the next 20 years, and estimated the cost of each project. The District's Board of Directors approved the Master Plan on December 20, 2017; and WHEREAS, pursuant to Article XIIID, section 6, of the California Constitution, the District mailed notice of a public hearing on the proposed sewer service charges to the record owner of each parcel subject to the proposed charges. The notice, which set forth the date, time, and location of the public hearing, as well as the charges, fees, and rates proposed for imposition, was mailed no less than 45 days prior to the public hearing; and WHEREAS, pursuant to Health and Safety Code sections 4766 and 5473, the Board of Directors may elect to have the proposed regional sewer service charges collected on the tax roll in the same manner, by the same persons, and at the same time as, together with and not separately from, its general taxes; and WHEREAS, pursuant to Health and Safety Code section 5473.1, on March 14, 2018 and again on March 21, 2018, notice of a public hearing regarding the proposed sewer service charges and the election to have such charges collected on the tax roll was published in the Orange County Register, a newspaper of general circulation within the District published in the county where OCSD-49-1 the District is located. The notice set forth the date, time and location of the hearing; and WHEREAS, on Wednesday, March 28, 2018 at 6:00 P.M., in the District's Boardroom on the first floor of its Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, the District held a properly noticed public hearing in order to receive and consider comments, including objections, concerning the proposed regional sewer service charges and the election to have such charges collected on the tax roll; and WHEREAS, the Board of Directors has carefully reviewed the Carollo Report and considered oral and written comments from the public, Board Members, District staff, and District consultants made at and prior to the March 28, 2018 public hearing; NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District does hereby ORDAIN: SECTION I. Adopt Regional Sewer Service Charges TABLE OF CONTENTS ARTICLE I: FINDINGS Section 1.01 Findings ARTICLE II: SEWER SERVICE CHARGES Section 2.01. Purpose and Scope Section 2.02. Annual Sewer Service Charge Section 2.03. Exemptions, Rebates, Refunds and Reduced Charges A. Exemptions B. Application for Water Efficiency Rebate/ Reduced Charge C. Application for Refund D. Limitation Period E. Determination F. Administrative Fee G. Duration of Reduced Charge H. Penalty Section 2.04. Annual Charge Based on Fiscal Year Section 2.05. Method of Collection Section 2.06. Credit for Industrial Permittees Section 2.07. Open-Air Facilities Table A Annual Sewer Service Charges for Residential Users Table B Annual Sewer Service Charges Property Use Classifications OCSD-49-2 ARTICLE III: MISCELLANEOUS Section 3.01. Application of Ordinance Section 3.02. Exceptions Section 3.03. Out of Area Sewer Service Agreements ARTICLE I FINDINGS Section 1.01. Findings. Based upon substantial evidence presented to the Board of Directors, the Board of Directors of District hereby finds that: A. The revenues collected pursuant to this Ordinance shall be used to finance the improvements, programs, and staffing needed to operate, maintain, replace, and improve the District's existing facilities, fund necessary reserves, and retire debt incurred to finance such activities. The revenues shall be used for no other purpose. B. The revenues collected pursuant to this Ordinance are reasonably related to, and will not exceed, the cost of the improvements, programs, and staffing needed to operate, maintain, replace, and improve the District's existing facilities, fund necessary reserves, and retire debt incurred to finance such activities over a reasonable period of time. C. The amount charged to each parcel pursuant to this Ordinance does not exceed the proportional cost of the service attributable to the parcel. D. The financial requirements of the District as reflected in the Master Plan and other documents, are based on current, reliable information, and further, that data relating to population projections, wastewater flow, and capital facility needs are expected to be realized in each year as described in the reports. E. The successful operation, maintenance, replacement, and improvement of the District's existing facilities is necessary to protect public health, safety, and the environment. F. The Sewer Service Charges adopted herein will not result in an expansion of facilities to accommodate growth within or outside the existing service area. The adoption of these Sewer Service Charges will not result in any specific project, nor result in a direct physical change in the environment. G. This Ordinance is statutorily exempt from review under the California Environmental Quality Act pursuant to Section 21080(b)(8)of the Public Resources Code, because the Sewer Service Charges will be used (i)for operating expenses, (ii) for the purchase or lease of supplies, equipment, or materials, (iii)to meet financial reserve needs and requirements, and (iv)to obtain OCSD-49-3 funds for capital projects necessary to maintain service within existing service areas. H. That all fees and charges established herein have been approved by the District's Board of Directors at a noticed public meeting, all in accordance with applicable provisions of law. ARTICLE II SEWER SERVICE CHARGES Section 2.01. Purpose and Scope. The purpose of this Ordinance is to establish Sewer Service Charges to be paid by property owners for the services and facilities furnished by the District. The revenues collected pursuant to this Ordinance shall be used to finance the improvements, programs, and staffing needed to operate, maintain, replace, and improve the District's existing facilities,fund necessary reserves, and retire debt incurred to finance such activities. Section 2.02. Annual Sewer Service Charge. Commencing with the effective date of this Ordinance, the owner of each parcel of real property located within the District which is improved with structures designed for residential, commercial, or industrial use and which, at the request of the owner or the owner's predecessor-in-interest, is connected to the District's sewerage system, shall pay an annual Sewer Service Charge based on the respective class of users, in the sum or sums, as set forth in Tables A and B of this Ordinance, below, and incorporated by reference herein. The annual Sewer Service Charges for residential users are set forth in Table A. The applicable single family residential rate shown in Table A is multiplied by the applicable percentage figure shown on Table B with respect to the particular use classification to arrive at the annual Sewer Service Charge rate per 1,000 square feet or per unit. The annual Sewer Service Charges are dependent upon the respective classifications of property use, determined by reference to Table B. Section 2.03. Exemptions, Rebates, Refunds and Reduced Charges A. Exemptions. It is the intent of the District that the legal owner(s) of parcels of real property, otherwise subject to the levy and payment of the Sewer Service Charges, as prescribed herein, be relieved, in whole or in part, from the payment of said charges, in certain circumstances and under conditions prescribed herein, and be entitled to either a water efficiency rebate, reduced charge, or a refund with respect to charges paid, as more specifically set forth in Subparagraphs 2.03B and 2.03C below, provided an inequity is established or a billing error is proven, as specified in Subparagraphs 2.03B or 2.03C. B. Application for Water Efficiency Rebate or Reduced Charge. (1) A "water efficiency rebate" is the difference between the original flow portion of the service charge paid by a OCSD-49-4 property owner and the recalculated flow portion of the service charge for the property based on past water use as provided herein. (2) A "reduced charge" is a lower sewer service charge imposed for the current fiscal year or a future fiscal year for the flow portion of the service charge based on water consumption as provided herein. (3) "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. (4) "Suspended Solids" (SS) 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. (5) Any property owner, or legally recognized authorized representative of the property owner, may apply to the District for a water efficiency rebate or reduced charge by establishing that an inequity exists between the amount of the charge paid and the amount of wastewater discharged to the District's system. Proof satisfactory to the General Manager of the District, or his/her designee, shall establish that either: (a) The principal water use is agricultural or horticultural; or (b) The property is devoted to any other use wherein the amount of wastewater discharged to the District's system is significantly less on a regular basis than the amount that would normally be expected to be discharged by the class of property in question. (6) Satisfactory proof shall include, but not be limited to, verifiable documentation showing actual water usage for each billing cycle during the entire period for which the rebate is sought. (7) The amount of any water efficiency rebate shall not reduce the charge payable by any property owner, whose property is connected to the District's system,to OCSD-49-5 less than the single family residential charge shown on the applicable Table attached hereto. (S) Once a water efficiency rebate or reduced charge to a service charge is granted, additional rebates or reduced charges will not be granted in the same year unless the property was vacant for the entire year. (9) If a property owner submits a claim for a water efficiency rebate and also believes that an inequity exists in the BOD and SS components of the sewer service charge, the property owner may contact the District for sampling procedures to submit verifiable BOD and SS data to have these charges reviewed. The District may, in its sole discretion, grant an exemption upon finding satisfactory evidence that the BOD and SS of the property's wastewater discharge is significantly less on a regular basis than the amounts that would normally be expected to be discharged by the class of property in question. C. Application for Refund. (1) A"refund" is the difference between the original service charge paid by a property owner and the corrected service charge when the original charge was billed erroneously. (2) Any property owner, or legally recognized authorized representative of the property owner, may apply to the District for a refund of Sewer Service Charges paid to the District by establishing that the amount paid was pursuant to an error in the amount billed or the amount paid. The applicant for a refund must submit proof satisfactory to the General Manager of the District, or his/her designee, that a billing error has been made by the District, or the County Tax Collector. Such proof shall include, but not be limited to, proof that: (a) The owners parcel of property is not connected to the District's system; or (b) The property has not been classified in the proper property use classification code; or (c) A clerical error has been made. D. Limitations Period. OCSD-49-6 (1) Applications for water efficiency rebates and reduced charges shall be deemed a claim and be governed by the provisions of California Government Code Sections 935 et seq. Water efficiency rebates are only available for the most recently ended fiscal year and shall be presented to the District as provided in the Government Tort Claims Act, Government Code Sections 915 at seq., Reduced charge claims are available for the current fiscal year or future fiscal years. The claim for water efficiency rebate or reduced charge may only be made with respect to amounts paid or payable under such property tax bill. A claim for water efficiency rebate or reduced charge is not deemed a claim for refund, and California Revenue & Taxation Code Sections 5096 and 5097 are not applicable. (2) Applications for refunds shall be deemed to be governed by the provisions of California Revenue & Taxation Code Sections 5096 and 5097. (3) Consistent with Section 2.04, a "year" for purposes of this Section 2.03 commences on July 1 for all annual Sewer Service Charges, based on the District's fiscal year. E. Determination. All applications for water efficiency rebates, reduced charges or refunds of the Sewer Service Charge will be determined by the General Manager of the District, or his/her designee, who, based on the submitted proof, may grant a full or partial rebate, reduced charge or refund. F. Administrative Fee. At the time of filing the application for a water efficiency rebate, reduced charge or refund, the property owner shall pay District an administrative fee for the processing of such application. The amount of the fee shall be equal to the total of all fees and charges imposed on the District by any other public entity, such as the Orange County Tax Collector, the Orange County Auditor, or the Orange County Recorder, in connection with the rebate or refund. G. Duration of Reduced Charge. A reduced charge will remain in effect for one fiscal year, subject to the provisions below: (1) Standard 3 Year Lock-In. Upon submission of two consecutive fiscal years of verifiable water data that resulted in a rebate or reduced charge,the District shall determine the average annual consumption based upon those two years and implement a locked-in reduced charge for a standard period of three years. (2) Renewals. At the end of the lock-in period, the owner of the parcel may apply for a renewal by submitting OCSD-49-7 verifiable water consumption data for the previous two years. (3) Failure to Submit. Failure to submit the required water consumption data with lock-in renewal application is equivalent to making an election to opt-out pursuant to Section 2.03, Article II, G4. (4) Lock-In Opt-Out. At the time the owner of a parcel qualifies for a three-year lock-in pursuant to Section 2.03, Article II, G1, whether as a first time application for rebate or reduced charge, as a renewal pursuant to Section 2.03, Article II, G2, or upon two annual submittals of the most recent fiscal year of verifiable water consumption records, the owner may elect in writing to opt-out of the lock-in and instead elect year to year renewals and submit verifiable water consumption records annually. (5) Significant Change in Business Operation- Demonstration. If the owner of a locked-in parcel is able to demonstrate that a significant change in business operation has occurred, verifiable water consumption may be submitted for the most recently ended fiscal year to be used in a recalculation of the fee with a duration of one year until two consecutive fiscal years of water consumption have been submitted and then the standard lock-in will apply. (6) Audit. If the District becomes aware that a lock-in parcel has had a significant change in business operation that increases water consumption, the District may request current verifiable water consumption records for the most recently ended fiscal year and re-establish the reduced charge prior to the expiration of the three-year period. H. Penalty. The falsification of an application for a water efficiency rebate or reduced charge is a misdemeanor, punishable as provided by the law. In addition, any person who falsifies an application for a water efficiency rebate or reduced charge shall be civilly liable to the District in the maximum sum provided by law. Section 2.04. Annual Charge Based on Fiscal Year. The Sewer Service Charges established by this Ordinance shall be effective as of July 1 of each year, as set forth in Tables A and B, attached hereto, for the District's fiscal year, and shall remain in effect until such time as the rates adopted herein are changed by District Ordinance. There shall be no proration of such charges in any fiscal year. OCSD-49-8 Section 2.05. Method of Collection. A. Pursuant to the authority granted by California Health & Safety Code Sections 4766 and 5473, and except as otherwise provided in Subparagraph 2.05B below, all Sewer Service Charges established herein shall be collected on the County Tax Roll in the same manner, by the same persons, and at the same time as, together with, and not separately from, its general taxes. The County Tax Collector is authorized and hereby ordered to make said collections in accordance with the terms and conditions of agreements between the County of Orange and the District. B. In the event District determines that, due to billing or payment error, or to inequity in the amount billed, a property owner (or person who paid the tax) has underpaid annual Sewer Service Charges payable to District, District, within four(4) years after the date of mailing of the tax bill, may: (1) collect the amount of any deficiency directly on the County Tax Roll; (2) off-set the amount of any deficiency against any amounts that District determines is owing, by District, to the property owner, as a rebate or refund under this Ordinance; or (3) submit, directly to the property owner, a bill for the amount of any deficiency, which shall be due and payable within thirty (30) days of the invoice date and which, if not paid, shall become a lien on said property. Section 2.06. Credit for Industrial Permittees. A credit shall be allowed to all dischargers permitted pursuant to Article 3 of District Ordinance No. OCSD-51, as amended, in an amount equal to the annual Sewer Service Charge established by Section 2.02 of this Ordinance. Section 2.07. Open-Air Facilities. Sewer Service Charges for open-air facilities will be based on annual attendance records. Open-Air facilities will pay a rate per million gallons based upon the related sewage flow, Biochemical Oxygen Demand ("BOD") and Suspended Solids ("SS') charge for single family residences. The usage per attendee will be 15 gallons. OCSD-49-9 TABLE A ANNUAL SEWER SERVICE CHARGES RESIDENTIAL USERS FISCAL YEAR 2018-19 2019-20 2020-21 2021-22 2022-23 SFR* $335.00 $339.00 $343.00 $347.00 $351.00 MFR $234.50 $237.30 $240.10 $242.90 $245.70 SFR = SINGLE FAMILY RESIDENTIAL MFR = MULTI FAMILY RESIDENTIAL * The SFR fee is the minimum sewer service charge any user must pay. All properties located within Revenue Area No. 14 pay no annual sewer service charges. District costs relating to providing service to these properties are billed by the District directly to the Irvine Ranch Water District, the local agency providing the local sewer service. OCSD-49-10 TABLE B ANNUAL SEWER SERVICE CHARGES PROPERTY USE CLASSIFICATIONS Assessor Use Code Percentage of SFR or Unit Description Per 1,000 SF 1 Vacant Land Parcel 0% 5 Common Area Parcel 0% 6 "Hold" Parcel 0% 8 Equivalent to Vacant 0% 121 Parcel of Minimal or No Value 0% 122 Subsurface Parcels 0% 124 Oil/Mineral Rights 0% 125 Mineral Rights Equipment 0% 126 Vacant Comm. Area-IMP Alloc. 0% 201 Homeowners Exemption Add'l. 0% 666 Unassigned Vacant 0% 777 Septic Tank Property 0% 112 Steel Building 7% 113 Mini-Warehouse 7% 58 Nurseries (Plants) 10% 100 Drive-In Theater 10% 44 Lumber/Constr. Material Yard 17% 71 Parking Garage 17% 72 Paved Parking Lot 17% 110 Warehouse — Single Tenant 17% 111 Warehouse — Multi Tenant 17% 115 Recreational Vehicle Storage 17% 116 Truck Terminal 17% 33 Church Buildings 20% 94 Department Store 23% 95 Discount Store 23% 96 Unattached Single Store 23% 97 Strip Store 23% 74 Recreational Vehicle Park 27% 36 Financial Buildings 27% 40 Health Club 29% 68 High Rise Office 30% 225 United States Post Office 35% 21 Automobile Dealership 41% 22 Auto Repair Shop 41% 23 Automotive Service 41% 24 Used Car Lot 41% 39 Golf Course 41% 57 Motorcycle/Small Vehicle Building 41% 83 Automotive Service Station 41% OCSD-49-11 TABLE B (CONTINUED) ANNUAL SEWER SERVICE CHARGES PROPERTY USE CLASSIFICATIONS Assessor Use Code Percentage of SFR or Unit Description Per 1,000 SF 84 Marine Service Station 41% 86 Combin.-Service Station/Convenience 41% 65 Single Office Bldgs. to 3 Stories 41% 66 Small Office Center 41% 67 Office Complex 41% 69 Converted Residence to Office 41% 7 Mobile Home 50% 55 Mobile Home Park 50% 107 Light Industrial — Single Tenant 50% 108 Light Industrial — Multi Tenant 50% 109 Research and Development 50% 114 Industrial Park 50% 37 Fraternal Buildings 51% 101 Unattached Theater 51% 26 Airport and Related Buildings 53% 45 Marinas 53% 88 Low Flow Center 53% 3 Two or More Residences 70% 10 Duplex Only 70% 11 Triplex Only 70% 12 04-Units Only 70% 13 5 to 16 Units 70% 14 17 to 25 Units 70% 15 26 to 40 Units Only 70% 16 41-99 Units Only 70% 17 100 or More Units 70% 18 Developed with a Mix of Forms 70% 63 Low Rise Retirement Building 70% 64 High Rise Retirement Building 70% 56 Low Demand Hotel/Motel 70% 81 Pre-Schools, Nursery or Care 82% 82 Private Schools 82% 98 Store with Offices or Living Quarter 82% 99 Store with Office Upstairs 82% 118 Governmental Use Vacant/Develop. 82% 19 SFR with 1 or 2 rental units 85% 34 Dormitory 97% 42 Hospital 97% 43 High Demand Hotel/Motel 97% 0 Conversion-C/1, Rural PC 100% 2 One Residence 100% OCSD-49-12 TABLE B (CONTINUED) ANNUAL SEWER SERVICE CHARGES PROPERTY USE CLASSIFICATIONS Assessor Use Code Percentage of SFR or Unit Description Per 1,000 SF 4 Miscellaneous Improvement 100% 85 Comb. Serv. Stn./Restaurant 100% 103 Chemical Tank and Bulk Storage 100% 104 Food Processing Plant 100% 105 Cold Storage Plant 100% 106 Factory 100% 119 Public Utility 100% 120 Water Mutual or Company 100% 888 Conversion-Composite Prop. 100% 32 Cemetery & Related Buildings 101% 38 Funeral Home 101% 60 Nursing Home 102% 61 Convalescent Hospitals 102% 62 Converted Res. Used as Nursing 102% 28 Bowling Alleys 112% 92 Skating Rinks 112% 50 Single Medical Bldgs. to 3 Stories 124% 51 Small Medical Center 124% 52 Medical Center Complex 124% 53 High Rise Medical 124% 54 Converted Residence to Medical 124% 89 Average Flow Center 139% 20 Amusement Parks 144% 35 Entertainment Center 144% 73 Recreation 144% 30 Coin Operated Car Wash 151% 47 Supermarket 151% 48 Convenience Market 151% 224 Nightclub 200% 90 High Flow Center 226% 76 Restaurant— Low Demand 300% 77 Restaurant—Coffee Shop 600% 78 Restaurant— Dinner House 600% 79 Restaurant—Conversion from SF 600% 29 Conventional Car Wash 796% 223 Laundromat 1,800% NOTE: Multiply the Table A Single Family Residential Rate by the percentage figure above in order to determine the rate per 1,000 square feet for the commercial or industrial user. OCSD-49-13 ARTICLE III MISCELLANEOUS Section 3.01. Application of Ordinance. The provisions of this Ordinance shall be in addition to (i) the provisions of the District's Wastewater Discharge Regulations for use of District's sewage facilities, including provisions for payment of charges or fees related thereto; (ii) District's ordinance establishing Fees Concerning Annexations of Territory to the District; (III) District's ordinance establishing Local Sewer Service Fees, where applicable, and (iii) any other District Ordinances and Resolutions not in conflict herewith. Section 3.02. Exceptions. The provisions of this Ordinance shall apply to all owners of properties within the District, 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, except as expressly provided herein. Section 3.03. Out of Area Sewer Service Agreements. Pursuant to Health and Safety Code Section 4742.1, the District is empowered to contract for the handling, treatment or disposal by the district of sewage or industrial wastes originating within the district or county or within areas outside of the district or county when, in the judgment of the District Board, it is for the best interest of the district to do so. In exercise of such power, the District may, from time to time, enter into Out-of-Area Sewer Service Agreements. These Out-of- Area Sewer Service Agreements will establish fees and charges relative to the services provided by the District for each individual agreement. The Board of Directors of the Orange County Sanitation District does further hereby ORDAIN: SECTION II. Severabilitv. If any provision of this Ordinance, or the application to any person or circumstances is held invalid by order of Court, the remainder of the Ordinance, or the application of such provision to other persons or other circumstances, shall not be affected. SECTION III. Effective Date. This Ordinance shall take effect July 1, 2018. SECTION IV. Repeal. Ordinance No. OCSD-41 and Ordinance No. OCSD-46 are repealed in their entirety effective June 30, 2018. SECTION V. Certification and Publication. 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 within 15 days as required by law. OCSD-49-14 PASSED AND ADOPTED by a vote of not less than two-thirds of the Board of Directors of the Orange County Sanitation District at a Regular Meeting held on March 28, 2018. Gregory C. Seboum, PLS Chairman, Board of Directors Orange County Sanitation District ATTEST: Kelly A. Lore, MMC Clerk of the Board Orange County Sanitation District APPROVED AS TO FORM: Bradley R. Hogin General Counsel Orange County Sanitation District OCSD-49-15 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. OCSD-49 was introduced for first reading at a regular meeting of said Board on the 28th day of February 2018, and passed and adopted by a vote of not less than two-thirds at a regular meeting of said Board on the 28th day of March 2018, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 28th day of March, 2018. Kelly A. Lore, MMC Clerk of the Board Orange County Sanitation District OCSD-49-16 ORANGE COUNTY SANITATION DISTRICT Memorandum January 24, 2018 TO: Members of the Steering Committee FROM: James D. Herberg, General Manager SUBJECT: Cost Savings Measures As the Board of Directors prepares to consider a new rate program in 2018, 1 want to share with you some of the many cost saving measures implemented during the past five years. Our ratepayers want to know they are getting a good return on their investment and that we are spending their fees to produce substantial benefits. In an effort to reduce costs, our employees are always looking for innovative ways to be more resourceful and efficient while ensuring we maintain our high standard of customer service. The following list is a sample of some cost saving measures that support our overarching goal to contain costs and limit long-term liabilities to the Orange County Sanitation District (Sanitation District). FINANCIAL MANAGEMENT • Beginning in 2014, the Sanitation District issued four debt financing refunding obligations that generated a total of $67 million in net present value savings due to the lower interest rate environment. • After issuing a request for proposal of custodian banking and investment management services, we have retained new firms with an annual cost savings of $667,000. • Since paying off the Sanitation District's Unfunded Actuarial Accrued Liability (Pension)over three years, the employer premium retirement contribution rate has decreased 72 percent since FY 2014-15. • Transitioning to an insurance risk pool with California State Association of Counties resulted in a $700,000 cost savings in comparison to the open market. • We continue to maintain a AAA bond rating. ENVIRONMENTAL SERVICES • After 12 years of certification, the Sanitation District became a Platinum Plus Graduate of the National Biosolids Partnership certification program and began the transition to our own internal set of performance standards for our Biosolids Program. This created an annual cost savings of$200,000. • After ten years of disinfecting our ocean discharge, we worked with State and Federal regulators to cease the disinfection process, yielding an annual savings of $600,000 in chemical costs, while improving the health of marine life near the Sanitation District's ocean outfall. WORKFORCE OPTIMIZATION • While increasing our level of treatment to meet full secondary standards, and operating and maintaining nearly $600 million in new facilities, the Sanitation District's total authorized full-time equivalent (FTE) staffing level has decreased over the past ten years from 641 FTE in 2008-09 to 637 in 2017-18. • The Sanitation District built partnerships with local colleges to develop a Vocational Internship Program to build a pipeline of potential entry-level candidates. • To further ensure we have the right people with the right skills and abilities, we improved our recruitment process, speeding-up the time-to-fill for a vacant position and reducing the need for temporary staff and overtime. • We implemented a new performance based compensation system for Executive Management and Managers based on established goals and objectives. • We outsourced our Rideshare Program to include more accessible commute options, while increasing the average vehicle ridership and reducing air emissions. • The Incentives for Sanitation District Employee Achievement (IDEA) program provides a way for employees to submit innovative cost saving ideas that improve procedures,working conditions and work methods. The program has brought forth ideas from employees that have created over $2 million in annual savings. • Through our Building Leadership Abilities and Skills for Tomorrow (BLAST) program, we are preparing journey-level staff to take on future leadership positions, ensuring a bench of competent staff to run the Sanitation District in the future. • We are providing training — specific for first-year supervisors and staff who aspire to become supervisors — coaching and mentoring opportunities, job shadowing, professional and vocational internships, and tuition reimbursement to further ensure we have the right person, at the right time, in the right job. OPERATIONS AND MAINTENANCE • Optimization studies resulted in re-negotiation of the grit and screenings contract, cooling CenGen engines with plant water, reducing Ferric Chloride for digesters and overall peroxide usage, resulting in a cost savings of$2 million per year. • The move to full secondary treatment at the Plant No. 2 treatment facility yielded cost savings in liquid oxygen plant operations, bleach and bisulfate costs in the amount of$1 million per year. • A comprehensive energy audit found that we can save an estimated $700,000 annual savings in lighting costs within nine years. Page 2 • Implementation of cutting-edge catalytic converter technology helped to reduce emissions from the central generation engines which allowed all eight engines to operate simultaneously, creating an annual cost savings of$700,000 per year. ENGINEERING • We are nearing completion of sludge dewatering projects which will result in four less truckloads of biosolids per day yielding an ongoing savings of$3.7 million per year. • We received grant funds for several projects, reducing the cost of these projects by nearly $2.5 million: o Sludge Dewatering and Odor Control at Plant No. 1 ($1 million) o Newhope-Placentia Trunk Replacement ($1 million) o WaterSMART Grant to share with the Orange County Water District ($450,000) PLANNING FOR THE FUTURE • I am recommending organizational changes to the Steering Committee that will streamline our Executive Management Team and increase our focus on the rehabilitation and maintenance of our infrastructure, while better positioning our agency for leadership succession. Page 3 ADMINISTRATION COMMITTEE Meeting Date TO%8011Dir. 02/14/18 02/28/18 AGENDA REPORT Item Number Item Number s 20 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPOSED ORDINANCE ADOPTING CAPITAL FACILITIES CAPACITY CHARGES GENERAL MANAGER'S RECOMMENDATION A. Motion to read Ordinance No. OCSD-50 by title only and waive reading of said entire ordinance; B. Introduce Ordinance No. OCSD-50 entitled: "An Ordinance of the Board of Directors of Orange County Sanitation District Adopting Capital Facilities Capacity Charges and Repealing Ordinance No. OCSD40 and Ordinance No. OCSD-42"; and C. Set March 28, 2018, as the date of the Public Hearing to hear protests and for the second reading of the Ordinance No. OCSD-50. BACKGROUND The Orange County Sanitation District (Sanitation District) will progress to the fees determined by the Rate Study over the next five years as opposed to implementing the increases in one year. The five-year schedules for the various fees will follow. The Capital Facilities Capacity Charge (CFCC) is a one-time, non-discriminatory charge imposed at the time a building or structure is newly connected to the OCSD's system, or an existing structure is expanded or increased. This charge is to pay a portion of the capacity costs and for access to capacity in the system. Based upon the new Facilities Master Plan, the 3-bedroom base rate for the residential CFCC proposed schedule is as follows: 2018-19 2019-20 2020-21 2021-22 2022-23 $4,228 $4,601 $4,973 $5,346 $5,719 The non-residential CFCC schedule for 2018-19 is below and will adjust by the Engineering News Record Construction Cost Index each year, thereafter. Use Category 2018-19` Low Demand $ 332 Average Demand $2,066 High Demand $4,908 Page 1 d 3 .per thousand square feet The Supplemental Capital Facilities Capacity Charges (SCFCC) are fees to Industrial Permittees that exceed their annual baselines for Flow, Biochemical Oxygen Demand (BOD) and Total Suspended Solids (TSS): 2018-19 2019-20 2020-21 2021-22 2022-23 FLOW $0.001948 $0.001960 $0.001972 $0.001984 $0.001996 BOD $0.427550 $0.440380 $0.453590 $0.467200 $0.481210 SS $0.231510 $0.240770 $0.250410 $0.260420 $0.270840 FLOW—Gallons Per Day BOD— Pounds Per Day SS— Pounds Per Day RELEVANT STANDARDS Fair and equitable costs across all customer classes PROBLEM The Sanitation District's Board of Directors approved a five-year rate schedule for Industrial Sewer Service Charges which expires at the end of the current fiscal year. Capital Facilities Capacity Charges and Supplemental Capital Facility Capacity Charges are currently based upon expansion costs which are now minimal requiring a review and update of the methodology used to calculate the fees. PROPOSED SOLUTION Adopt ordinance with updated fee schedules based upon the 2017 Rate Study performed by Carollo Engineers and received and filed by the Board in December 2017. TIMING CONCERNS February 91h— Notifications Mailed February 28fh— First Reading of the Ordinance March 28' — Public Hearing, 2"d Reading and Adoption of the Ordinance July 1s'— Ordinance takes effect RAMIFICATIONS OF NOT TAKING ACTION Revenues will be insufficient to support the facilities master plan adopted in December 2017. Page 2 of 3 PRIOR COMMITTEE/BOARD ACTIONS December 2017—Adopted 2017 Facilities Master Plan and Received and filed 2017 Rate Study March 2013—Adoption of Ordinance No. OCSD 42 (Industrial Charges) January 2013 — Approval of the previous Sanitation District Wastewater Revenue Program Rate Study. May 2010—Adoption of Ordinance No. OCSD-40 (CFCC's) ADDITIONAL INFORMATION To ensure the appropriate allocation of costs and fees, the Orange County Sanitation District (Sanitation District) engaged an engineering consulting firm, Carollo Engineers, to provide an independent analysis of the Sanitation District's cash flow modeling and a cost of service study. The study demonstrates that the Sanitation District's proposed fees are appropriate and reasonable and will support its projected capital and operating requirements. Carollo Engineers completed the facilities master plan update. In conjunction with this update, Carollo was tasked with performing an updated sewer rate study to determine the appropriate rates going forward to support the facilities master plan update. The Rate Study was received and filed and the Facilities Master Plan was adopted by Resolution No. OCSD 17-16 in December 2017. ATTACHMENT The following attachment(s)is attached in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Ordinance No. OCSD-50 Page 3 d 3 ORDINANCE NO. OCSD-50 AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT ADOPTING CAPITAL FACILITIES CAPACITY CHARGES AND REPEALING ORDINANCE NO. OCSD-40 AND ORDINANCE NO. OCSD-42 WHEREAS, Health & Safety Code Section 5471 authorizes the Board of Directors of the Orange County Sanitation District ("District") to impose fees and other charges for services and facilities furnished by the District in connection with the District's wastewater collection, treatment, disposal, and reuse system; and WHEREAS, the District imposes Capital Facilities Capacity Charges on new users and Supplemental Capital Facilities Capacity Charges on specified existing users. These charges are set forth in Ordinance No. OCSD-40, as amended by Ordinance No. OCSD-42; and WHEREAS, the District recently retained Carollo Engineers to evaluate the District's projected revenue needs and recommend service fees and capacity charges for the period July 1, 2018 to June 30, 2023. In December of 2017, Carollo Engineers issued its "Final Report and Recommendations on Wastewater Rates, Fees, and Charges" ("Carollo Report"). The District's Board of Directors received the Carollo Report on December 20, 2017, and the Carollo Report is on file with the District; and WHEREAS, the Carollo Report recommended that the District (1) increase the residential CFCC from $3,855 per equivalent dwelling unit to $5,719 per equivalent dwelling unit by 2023, and (2) increase the commercial-industrial CFCC from $2,000 per 1,000 square feet to $3,639 per 1,000 square feet by 2023; and WHEREAS, the recommendations set forth in the Carollo Report are based on various studies and plans including, among others, financial forecasts and the District's 2017 Facilities Master Plan ("Master Plan"). The Master Plan identified the capital improvement projects that will be needed over the next 20 years, and estimated the cost of each project. The District's Board of Directors adopted the Master Plan on December 20, 2017; and WHEREAS, on Wednesday, March 28, 2018 at 6:00 P.M., in the District's Boardroom on the first floor of its Administration Building located at 10844 Ellis Avenue, Fountain Valley, California,the District held a properly noticed public hearing, and received and considered comments concerning the proposed charges; and WHEREAS,the Board of Directors has carefully reviewed the Carollo Report and considered oral and written comments from the public, Board Members, District staff, and District consultants made at and prior to the March 28, 2018 public hearing; OCSD-50-1 NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District does hereby ORDAIN: SECTION I. Adopt Capital Facilities Capacity Charges TABLE OF CONTENTS ARTICLE I: RECITAL OF FINDINGS Section 1.01. Findings— Declaration of Intent ARTICLE II: CAPITAL FACILITIES CAPACITY CHARGES Section 2.01. Purpose and Scope Section 2.02. Definitions Section 2.03. Connection Permits: Required Section 2.04. Capital Facilities Capacity Charge: Payment Section 2.05. Capital Facilities Capacity Charge: Time of Payment Section 2.06. Capital Facilities Capacity Charge: Schedule of Amounts Table A Capital Facilities Capacity Charges— Non-Residential Table B Capital Facilities Capacity Charges— Residential Table C Plan Check and Inspection Fee Schedule Section 2.07. Supplemental Capital Facilities Capacity Charge: Significant Commercial — Industrial Users—Special Purpose Dischargers— Definitions Section 2.08. Supplemental Capital Facilities Capacity Charge: New Significant Commercial — Industrial Users Section 2.09. Supplemental Capital Facilities Capacity Charge: New Special Purpose Dischargers Section 2.10. Supplemental Capital Facilities Capacity Charge: Existing Significant Commercial — Industrial Users — Special Purpose Dischargers Table D Supplemental Capital Facilities Capacity Charges Section 2.11. Capital Facilities Capacity Charge: Replacement Section 2.12. Capital Facilities Capacity Charge: Remodeled Section 2.13. Accessory Dwelling Units Section 2.14. Payment of Capital Facilities Capacity Charge: Off-Site Sewers Not Part of Master Plan Relative to Reimbursement Agreements Section 2.15. No Refund or Transfer Section 2.16. Baseline Transferability Section 2.17. Capital Facilities Capacity Charge: Annual Updates Section 2.18. Affordable Housing Projects OCSD-50-2 ARTICLE III: MISCELLANEOUS Section 4.01. Application of Ordinance Section 4.02. Exceptions Section 4.03. Out of Area Sewer Service Agreements ARTICLE I RECITAL OF FINDINGS Section 1.01. Findings. Based on substantial evidence in the record, the Board of Directors hereby finds as follows: A. The District operates a system for the collection, treatment, disposal, and reuse of wastewater ("System"). The System protects human health and the environment from the potentially harmful effects of wastewater. B. The District regularly constructs, reconstructs, repairs, and/or rehabilitates System facilities through capital improvement projects ("Capital Projects"). The District recovers the cost of Capital Projects through Capital Facilities Capacity Charges imposed on new users and Supplemental Capital Facilities Capacity Charges imposed on specified existing users. This Ordinance imposes Capital Facilities Capacity Charges and Supplemental Capital Facilities Capacity Charges as recommended in the Carollo Report. C. The District will use the revenues from Capital Facilities Capacity Charges and the Supplemental Capital Facilities Capacity Charges to fund future Capital Projects and/or repay principal and interest on debt incurred in connection with past Capital Projects. The revenues shall not be used for the acquisition or construction of new local street sewers or laterals as distinguished from main trunk, interceptor and outfall sewers. D. The Capital Facilities Capacity Charges and Supplemental Capital Facilities Capacity Charges established by this ordinance are based on the information and analysis set forth in the Carollo Report and the Master Plan, both of which were made available to the public in accordance with Government Code Section 66016 and other provisions of law. E. The Capital Facilities Capacity Charges and Supplemental Capital Facilities Capacity Charges established by this ordinance do not exceed the estimated reasonable cost of providing the wastewater collection, treatment, disposal, and reuse services for which the fees are charged. The manner in which the costs are allocated to each payor bears a fair or reasonable relationship to the payor's burdens on, and benefits received from, the District's System. OCSD-50-3 F. The Capital Facilities Capacity Charges and Supplemental Capital Facilities Capacity Charges established by this ordinance will retire debt and fund capital projects necessary to maintain service within the District's existing service area. Therefore, 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). G. The Capital Facilities Capacity Charges and Supplemental Capital Facilities Capacity Charges established by this ordinance are not imposed as an "incident of property ownership" within the meaning of Article MID of the California Constitution. Thus, the substantive and procedural requirements of Article MID do not apply. H. The Capital Facilities Capacity Charges and Supplemental Capital Facilities Capacity Charges established by this ordinance have been approved by the District's Board of Directors at a noticed public meeting, all in accordance with applicable provisions of law. ARTICLE II CAPITAL FACILITIES CAPACITY CHARGES Section 2.01. Purpose and Scope. This Ordinance is designed to ensure that each user pays his or her fair share of the costs of Capital Projects, based on the burden that each user places on the System. The District will use revenues generated by this Ordinance to (1) fund future Capital Projects, and (ii) repay principal and interest on debt incurred in connection with past Capital Projects. Section 2.02. Definitions. A. "Actual construction costs" include the cost of all activities necessary or incidental to the construction of the District facility, such as financing, planning, designing, acquisition of the property or interests in the property, construction, reconstruction, rehabilitation, and repair. B. "Capital Facilities Capacity Charge" means a one-time, non- discriminatory charge imposed at the time a building or structure is newly connected to the District's System, directly or indirectly, or an existing structure or category of use is expanded or increased. Said charge is to pay for the District facilities in existence at the time the charge is imposed, or to pay for new facilities to be constructed in the future, that are of benefit to the property being charged. This charge does not apply to temporary facilities or operations that are regulated under the provisions of a Special Purpose Discharge Permit. A schedule of the Capital Facilities Capacity Charges specified herein will be on file in the Office of the Board Secretary of the District, and in the Building Department of each City within the District. C. "Connection fee" means a fee equal to the cost necessary to physically connect a property to the District's System, including but not limited to, installation of meters, meter boxes, pipelines, and appurtenances to make the connection OCSD-50-4 and which fee does not exceed the actual cost of labor, materials, and overhead for the installation of those facilities. D. "Non-discriminatory" means that the Capital Facilities Capacity Charge does not exceed an amount determined on the basis of the same objective criteria and methodology applicable to comparable public or non-public users, and is not in excess of the proportionate share of the cost of the District's facilities of benefit to the person or property being charged, based upon the proportionate share of use of those facilities. E. "Public agency" means the United States or any of its agencies, the State or any of its agencies, the Regents of the University of California, a county, city, district, school district, local or regional public authority, or any other political entity, subdivision or public corporation of the State. F. The Supplemental Capital Facilities Capacity Charge, as provided for in Sections 2.07, 2.08, 2.09, and 2.10 of this Ordinance, is an annual charge payable to the District on a quarterly or annual basis, as determined by the District. Said charge is required to be paid by dischargers that exceed the maximum quantity of flow or constituents (BOD or SS) allowed as a base use for which the Capacity Charge is paid. G. "Accessory Dwelling Unit" means an attached or detached residential dwelling unit which provides complete independent living facilities for one or more persons, includes permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated, and has been approved by a local agency pursuant to Government Code Section 65852.2 and/or a local ordinance. Section 2.03. Connection Permits: Required. A. Connection permits are required of each and every dwelling unit, and each commercial or industrial building, and structure connecting directly or indirectly to the District's sewerage system facilities. Included are the connections of laterals to local municipal sewerage facilities, and the connection of local municipal sewerage facilities and laterals to the District's facilities. Multiple detached structures on a single parcel of property shall each be required to obtain a connection permit. B. Except as authorized by the issuance of a Special Purpose Discharge Permit under Sections 305—305.6 of the District's Wastewater Discharge Regulations, or as authorized pursuant to a special extra territorial service agreement approved by the Board of Directors, no permit shall be valid unless the real property to be served by use of the permit is included within the boundaries of the District and within the boundaries of a local sewering agency authorized to maintain public sewering facilities. However, a permit, as authorized above, may be issued for property to be served outside the boundaries of a local sewering agency if a local sewering agency makes application for the issuance of such permit. There will be a non-discriminatory Capital Facilities Capacity Charge assessed to public agencies for connecting directly or indirectly to the District's sewerage system facilities, and a connection permit must be obtained. OCSD-50-5 Section 2.04. Capital Facilities Capacity Charge: Payment Required. No application for a permit for a connection of a structure to the District's sewerage facility, or to any sewerage facility which discharges into the District sewerage facility, shall be approved, nor a permit issued, until the District's Capital Facilities Capacity Charge is paid by the applicant, except as provided for discharges under a Special Purpose Discharge Permit. No connection permit shall be issued unless there is an established category of use of the property to be served or a valid building permit issued which establishes the category of use of said property. Section 2.05. Capital Facilities Capacity Charge: Time of Payment. A. Payment of the Capital Facilities Capacity Charge established by this Ordinance for connection to the District's sewerage system facilities shall be required at the time of issuance of the building permit for all construction within the District, except in the case of a building legally exempt from the requirement of obtaining a permit. The payment of the Capital Facilities Capacity Charge for such exempt buildings will be required at the time of and prior to the issuing of a plumbing connection permit for any construction within the territorial limits of the District, or if none, prior to the issuance of a Certificate of Occupancy. B. Upon application of any property owner seeking to connect to the District's sewerage system, the General Manager or his designee, upon a finding of compelling need, may, pursuant to the authority of California Health &Safety Code Section 5474, approve of an agreement with the property owner for the payment of the applicable connection charge and/or annexation fees in installment payments over a period of not to exceed five (5)years, bearing an interest rate on the unpaid balance of not to exceed ten (10%) percent per annum and that the charges and interest shall constitute a lien on the property. Section 2.06. Capital Facilities Capacity Charge and Plan Check and Inspection Fees: Schedule of Amounts. A. Every person or entity connecting any new or expanded building or structure to the District's system facilities shall pay a Capital Facilities Capacity Charge in the amount for the applicable category of use set forth on Table A & B, below. B. Every person or entity connecting any new or expanded building or structure directly to the District's local or regional system facilities shall pay Plan Check and Inspection Fees in the amount set forth n Table C, below. OCSD-50-6 TABLE A CAPITAL FACILITIES CAPACITY CHARGES (CFCC) NON-RESIDENTIAL Use Category Rate Basis Base Charge Low Demand2 Per 1,000 square feet' $ 332.001 Average Demand45 Per 1,000 square feet $2,066.001 High Demand' Per 1,000 square feet $4,908.001 'Provided that the minimum Capital Facilities Capacity Charge for such new construction shall be $4,228; and all calculations shall be on a 1,000 square foot, or portion thereof, basis. 2Low Demand connections are the following categories of users: Parking Structures; Nurseries; Warehouses; Churches; Truck Terminals; RV Parks; RV Storage Yards; Lumber/Construction Yards; Public Storage Buildings; and other facilities whose wastewater discharge is similar to these listed categories. Parking Structures not connected to the sewer will not be charged. 'High Demand connections are the following categories of users: Food/Beverage Service Establishments; Supermarkets (with bakery, meat counter, and/or food service); Car Washes; Coin Laundries; Amusement Parks; Shopping Centers with one or more Food/Beverage Service Establishments; Food Courts; Food Processing Facilities; Textile Manufacturers; Breweries; and other facilities whose wastewater discharge is similar to these listed categories. 4AII other connections are Average Demand users including: Church Offices and Schools; Hotels, Shopping Centers/Strip Malls without food/beverage service establishments, Music Halls without food facilities, Office buildings, Senior Housing with individual living units without kitchens but with a common kitchen 5 Residential Accessory Structures such as workshops and hobby shops that connect to the sewer, will be charged at the average demand rate and the minimum charge does not apply. OCSD-50-7 TABLE B CAPITAL FACILITIES CAPACITY CHARGES (CFCC) RESIDENTIAL (PER UNIT)- Single Family Residential (SFR)' Base Charge 5+ Bedrooms $5,877.00 4 Bedrooms $5,031.00 3 Bedrooms $4,228.00 2 Bedrooms $3,425.00 1 Bedroom $2,621.00 Multi-Family Residential (MFR)2 Base Charge 4+ Bedrooms $4,566.00 3 Bedrooms $3,763.00 2 Bedrooms $2,960.00 1 Bedroom $2,114.00 StudiO3 $1,353.00 'The Base Rate for Residential CFCC is the 3 Bedroom SFR with all others having a rate that is a percentage of the base rate depending on the size of the unit. The schedule for the base rate shall be as follows: 2018-19 2019-20 2020-21 2021-22 2022-23 $4,228 $4,601 $4,973 $5,346 $5,719 Bedroom additions are considered a change of use and a CFCC must be paid. Enclosed loft additions, bonus rooms, offices, workout rooms, media rooms, libraries and any other enclosed addition which could potentially be used as a bedroom are included in this category. The classification of these additions will be reviewed and determined by staff. 2 MFR units consist of multiple attached units that receive one secured property tax bill such as apartments. Senior housing with individual living units that include a kitchen are considered MFR units. 3 Studio—one single room with no separating doors or openings leading to another part of the room (except for a bathroom). Live/Work units will be charged at the residential rate for the living quarters and at the non- residential rate for the work portion square footage. OCSD-50-8 TABLE C PLAN CHECK AND INSPECTION FEE TABLE INSPECTION FEES FOR SINGLE CONNECTIONS Lateral installation to property line: 2018-19 2019-20 2020-21 2021-22 2022-23 $575.00 $650.00 $725.00 $800.00 $875.00 Lateral Installation to existing manhole with clean out: 2018-19 2019-20 2020-21 2021-22 2022-23 $650.00 $800.00 $950.00 $1,050.00 $1,150.00 Core drilling into existing manhole base—add: 2018-19 2019-20 2020-21 2021-22 2022-23 $600.00 $900.00 $1,200.00 $1,450.00 $1,500.00 Installation of new manhole over existing manhole: 2018-19 2019-20 2020-21 2021-22 2022-23 $1,200.00 $1,400.00 $1,600.00 $1,800.00 $1,900.00 Gas Flap Installation — add: 2018-19 2019-20 2020-21 2021-22 2022-23 $450.00 $455.00 $460.00 $465.00 $470.00 INSPECTION FEES FOR MULTIPLE CONNECTIONS Plan check and inspection fees of 20 percent of the sewer construction cost for new tract sewers, sewer extensions or special facilities are required when plans are submitted for plan check. If additional funds are needed, they must be deposited as soon as they are requested to complete the inspection on the project. If funds are required after the work is completed, they must be paid before the District finals the sewer project. OCSD-50-9 Section 2.07. Supplemental Capital Facilities Capacity Charge: Significant Commercial — Industrial Users and Significant Special Purpose Dischargers — Definitions. A. A Significant Commercial — Industrial User ("SCIU") is any person or entity who discharges commercial or industrial process flow, but excluding domestic sewage flow, in an amount greater than 25,000 gallons per day ("gpd"), or Biochemical Oxygen Demand ("BOD") greater than 150 pounds per day, or Suspended Solids ("SS") greater than 150 pounds per day, or who is required to obtain a Waste Discharge Permit, as prescribed by Article 3 of the District's Wastewater Regulations, due to having federally or the District regulated or significant discharges. B. A Significant Special Purpose Discharger ("SSPD") is any person or entity who discharges to the sewer system wastewater or process flow in an amount greater than 25,000 gpd (excluding domestic, industrial or commercial) and who is required to obtain a Special Purpose Discharge Permit as prescribed in Section 305 of the District's Wastewater Regulations. A Special Purpose Discharger (SPD) discharges 25,000 gpd or less. C. An Existing SCIU or SSPD is any SCIU or SSPD connected and discharging to the District's system prior to January 1, 2000. D. A New SCIU or SSPD is any user who connects and discharges to the District's System pursuant to a Waste Discharge Permit issued on or after January 1, 2000; or if previously connected and not an SCIU, as defined in Subparagraphs 2.07A and B above, but, subsequent to January 1, 2000, increases flow, or BOD, or SS to a level as to constitute an SCIU or SSPD. E. The maximum discharge allowed to a user, for which a base Capital Facilities Capacity Charge is paid, as per Table A, above, is 25,000 gallons per day("gpd"), or 150 pounds per day each of BOD and SS (the "base use"). Discharge of flow, or BOD, or SS in amounts greater than allowed by this Subsection 2.07E shall be subject to the provisions of Sections 2.08 and 2.09 hereof. F. Each Existing SCIU shall have a baseline of allowed discharge of flow, and BOD, and SS established by the the District as of January 1, 2000. The baseline shall be based upon the discharge for Fiscal Year 1998-99, or upon such other discharge data which the District determines is representative of the user's actual annual discharge to the sewerage system. Dischargers who are deemed to be SCIU's solely because of the requirements to obtain a Waste Discharge Permit, pursuant to Section 2.07A above, shall have a minimum baseline established as follows: Flow — 25,000 gallons per day; BOD— 150 pounds per day; and SS— 150 pounds per day. The SCIU shall be authorized to discharge flow, and BOD, and SS up to the baseline amounts without payment of a Supplemental Capital Facilities Capacity Charge. G. Each Existing SPD shall have a baseline of 25,000 gpd. The Existing SPD shall be authorized to discharge flow up to 25,000 gpd without payment of a Supplemental Capital Facilities Capacity Charge. OGSD-50-10 H. The Supplemental Capital Facilities Capacity Charge, as prescribed by Sections 2.08, 2.09, and 2.10 below, shall be payable commencing with the effective date of this Ordinance. Section 2.08. Supplemental Capital Facilities Capacity Charge: New Significant Commercial — Industrial Users. In addition to the base Capital Facilities Capacity Charge, as prescribed in Table A, for commercial — industrial use category properties, all New SCIU's shall pay a Supplemental Capital Facilities Capacity Charge for each gallon of flow, or pound of BOD, or SS, exceeding the base use discharge maximums, in the amount shown in Table D. Section 2.09 Supplemental Capital Facilities Capacity Charge: Significant Special Purpose Dischargers. All SSPDs shall pay a Supplemental Capital Facilities Capacity Charge of$.001948 per gallon per day for each gallon of flow exceeding 25,000 gallons per day. Section 2.10. Supplemental Capital Facilities Capacity Charge: Existing Significant Commercial — Industrial Users and Special Purpose Dischargers. A. All Existing Significant Commercial — Industrial Users connected to and discharging to the District's System shall be required to pay a Supplemental Capital Facilities Capacity Charge upon the occurrence of either (i) an increase of discharge flow of 25,000 gallons per day ("gpd"), or 25% per day over its established baseline authorization, whichever is lesser; or(ii)an increase of either BOO or SS discharge of 150 pounds each per day, or 25% each per day, whichever is lesser, over its established baseline authorization. The daily averages will be based on the daily discharges for a year, utilizing discharge records and reports of the discharger or the District. B. The Supplemental Capital Facilities Capacity Charge shall be in the following amounts for each component that is increased as provided in Section 2.10A above. TABLE D SUPPLEMENTAL CAPITAL FACILITIES CAPACITY CHARGES Daily Charge 2018-19 2019-20 2020-21 2021-22 2022-23 FLOW $0.001948 $0.001960 $0.001972 $0.001984 $0.001996 BOD $0.427550 $0.440380 $0.453590 $0.467200 $0.481210 SS $0.231510 $0.240770 $0.250410 $0.260420 $0.270840 OCSD-50-11 FLOW—Gallons Per Day BOD — Pounds Per Day SS— Pounds Per Day C. All Existing SPDs connected and discharging to the sewer shall be required to pay a Supplemental Capital Facilities Capacity Charge upon occurrence of an increase of discharge flow over 25,000 gpd. The Supplemental Capital Facilities Capacity Charge shall be $ 0.001948 per gallon per day of discharge for each gallon above 25,000 gpd. D. The Supplemental Capital Facilities Capacity Charge shall be calculated on the basis of the average daily quantity of discharge in excess of the User's baseline or 25,000 gpd for SPDs. The daily averages will be based on the daily discharges for a year, utilizing discharge records and reports of the District. Section 2.11. Capital Facilities Capacity Charge: Replacement Structures. For new construction replacing former structures, the Capital Facilities Capacity Charge shall be calculated and paid to the District on the rate basis of the category of the new use and the amounts as set forth in Tables A and B, less a credit amount, up to the amount of the new Capital Facilities Capacity Charge, equal to a charge, as prescribed in Tables A and B that would be for the prior category of use which was terminated and removed. Section 2.12. Capital Facilities Capacity Charge: Remodeled Structures. In the case of existing structures connected to the District's system facilities, to which new construction or alteration is made to change or increase the category of use or number of bedrooms, a Capital Facilities Capacity Charge shall be calculated and paid to the District on the rate basis of the category of the new use and the amounts as set forth in Tables A and B, less a credit amount, up to the amount of the new Capital Facilities Capacity Charge, equal to a charge, as prescribed in Tables A and B for the prior category of use. Section 2.13. Accessory Dwelling Units. Notwithstanding Section 2.12, pursuant to Government Code Section 65852.2, the District shall not collect Capital Facilities Capacity Charges from any ADU if the unit is contained within the existing space of a single-family residence or accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Section 2.14. Payment of Capital Facilities Capacity Charge: Off-Site Sewers Not Part of Master Plan Relative to Reimbursement Agreements. A charge for connection to off-site sewers which are not included as part of the District Master Plan and for which a Non-Master Plan Reimbursement Agreement has been entered into between the District and the property owner, shall be paid in the amount provided for in said Agreement, to be known as a Non-Master Plan Capital Facilities Capacity Charge. The amount set forth in said Agreement shall be the amount due, provided the original Agreement is still in force. The Non-Master Plan Capital Facilities Capacity Charge shall be in addition to the other Capital Facilities Capacity Charges provided for in Sections 2.06 through 2.10 hereinabove, established for property connecting to said facilities. OCSD-50-12 Section 2.15. No Refund or Transfer. A Capital Facilities Capacity Charge is paid for the connection of a specific building or structure on a parcel of property. No refund of any charge shall be made because of non-use or change of use, or any other reason once the connection has been made. If the connection is not made and the request for connection is withdrawn within 12 months of the payment date, the charges paid will be refunded upon establishing proof from the City or County of a canceled permit. The connection permit is non-transferable to any other parcel of property. Section 2.16. Baseline Transferability. The baseline of allowed discharge of flow, BOD and SS used to calculate a Supplemental Capital Facilities Capacity Charge shall not be transferable to a different property, nor shall a credit for such previously existing baseline be provided to another SCIU concurrently or subsequently occupying the same property for a different use. Each such SCIU shall pay Supplemental Capital Facilities Capacity Charges in accordance with Section 2.08 above. Section 2.17.Capital Facilities Capacity Charge Annual Updates. The Capital Facilities Capacity Charge is based upon the most recently completed Facilities Master Plan. This The non-residential charge will be updated annually based upon the increase in the Engineering News-Record construction cost index for Los Angeles as of December of the prior year until the completion of the next Rate Study. The residential charge will be updated based upon the schedule of base fees in Table B. Section 2.18.Affordable Housing Proiects. Per Resolution OCSD 11-02, development projects that include lower income housing units shall not be denied approval of an application for service, nor shall conditions be imposed thereon or services reduced which are applied for, unless the District makes specific written findings that the denial, condition, or reduction is necessary due to the existence of one or more of the following: (a) insufficient water supply or insufficient water treatment or distribution capacity; (b) a State Department of Health Services order prohibiting new water connections; (c) insufficient sewer treatment or collection capacity; (d) a Regional Water Quality Control Board order prohibiting new sewer connections; (e) the applicant has failed to agree to reasonable terms and conditions ARTICLE III MISCELLANEOUS Section 4.01. Application of Ordinance. The provisions of this Ordinance shall be in addition to the provisions of the District's Wastewater Discharge Regulations for use of the District's sewage facilities, including provisions for payment of charges or fees related thereto; the District's ordinance establishing Fees Concerning Annexations of OOSD-50-13 Territory to the District; and any other the District Ordinances and Resolutions not in conflict herewith. Section 4.02. Exceptions. The provisions of this Ordinance shall apply to all owners of properties within the District, 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, except as expressly provided herein. Section 4.03 Out of Area Sewer Service Agreements. The District is empowered to contract for the transport,treatment and disposal of wastewaters originating within areas outside of the District if it is in the best interest of the District to do so. These Out of Area Sewer Service Agreements will establish fees and charges relative to the services provided by the District for each individual agreement. The Board of Directors of the Orange County Sanitation District does further hereby ORDAIN: SECTION II. Severabilitv. If any provision of this Ordinance, or the application to any person or circumstances is held invalid by order of Court, the remainder of the Ordinance, or the application of such provision to other persons or other circumstances, shall not be affected. SECTION III. Effective Date. This Ordinance shall take effect July 1, 2018. SECTION IV. Repeal. Ordinance No. OCSD40 and Ordinance No. OCSD42 are hereby repealed. SECTION V. Certification and Publication. 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. OCSD-50-14 PASSED AND ADOPTED by a vote of not less than two-thirds of the Board of Directors of the Orange County Sanitation District at a Regular Meeting held on March 28, 2018. Gregory C. Seboum, PLS Chairman, Board of Directors Orange County Sanitation District ATTEST: Kelly A. Lore, MMC Clerk of the Board Orange County Sanitation District APPROVED AS TO FORM: Bradley R. Hogin General Counsel Orange County Sanitation District OGSD-50-15 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. OCSD-50 was introduced for first reading at a regular meeting of said Board on the 28th day of February 2018, and passed and adopted by a vote of not less than two-thirds at a regular meeting of said Board on the 28th day of March 2018, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 28th day of March, 2018. Kelly A. Lore, MMC Clerk of the Board Orange County Sanitation District OCSD-50-16 ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir. 02J14118 o2/z8�ls AGENDA REPORT emNumber Item Number 9 21 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPOSED ORDINANCE ADOPTING MISCELLANEOUS CHARGES AND FEES RELATING TO INDUSTRIAL DISCHARGERS, SOURCE CONTROL PERMITTEES AND WASTEHAULERS GENERAL MANAGER'S RECOMMENDATION A. Motion to read Ordinance No. OCSD-51 by title only and waive reading of said entire ordinance on February 28, 2018; B. Introduce Ordinance No. OCSD-51 entitled; "An Ordinance of the Board of Directors of Orange County Sanitation District Adopting Miscellaneous Charges and Fees Relating to Industrial Dischargers, Source Control Permittees and Wastehaulers and Repealing Ordinance No. OCSD-40 and Ordinance No. OCSD- 42; and C. Set March 28, 2018, as the date of the Public Hearing to hear protests and for the second reading of the Ordinance No. OCSD-51. BACKGROUND The Orange County Sanitation District (Sanitation District) will progress to the fees determined by the Rate Study over the next five years as opposed to implementing the increases in one year. The 5 year schedules for the various fees will follow. Industrial Sewer Services Charges for Class I and Class II Permittees for Flow, BOD and TSS: Class l and 11 2018-19 2019-20 2020-21 2021-22 2022-23 Flow(`) $1,433.49 $1,489.42 $1,545.35 $1,601.28 $1,657.22 B.O.D. ('*) $ 658.09 $ 661.39 $ 664.69 $ 667.99 $ 671.28 S.S. (--) $ 716.60 $ 736.73 $ 756.86 $ 777.00 $ 797.14 (*) Flow Per million gallons of Flow (") B.O.D. Per thousand pounds of Biochemical Oxygen Demand S.S. Per thousand pounds of Suspended Solids Page 1 of 3 Special Purpose Discharge Permits for Flow: Special Purpose Discharge Permit 2018-19 2019-20 2020-21 2021-22 2022-23 Flow(*) $1,433.49 $1,489.42 $1,545.35 $1,601.28 $1,657.22 (*) Flow Per million gallons of Flow Wastehauler charges for use`: 2018-19 2019-20 2020-21 2021-22 2022-23 Within OCSD Boundaries $0.06 $0.07 $0.08 $0.09 $0.09 Outside OCSD Boundaries** $0.14 $0.16 $0.18 $0.20 $0.22 (*) per gallon (**) Outside OCSD boundaries and inside OCSD service area or authorized by the OCSD General Manager Class I, Class 11, SPDP, Wastehauler, and Certified Permit Fees: 2018-19 2019-20 2020-21 2021-22 2022-23 A. Class I/Certified Discharger $ 945 $1,105 $1,265 $1,425 $1,585 B. Class 11 $ 240 $ 310 $ 380 $ 450 $ 520 C. SPDP' $1,072 $1,094 $1,116 $1,138 $1,160 SPDP Renewal $ 760 $ 775 $ 785 $ 795 $ 810 D. Wastehauler $ 190 $ 190 $ 190 $ 190 $ 190 E. Certified Zero/No Discharge $ 120 $ 120 $ 120 $ 120 $ 120 'New permit only-add nonrefundable deposit for first 1 million gallons as defined in Table G Additional Plan Check Fees and Miscellaneous Fees for Industrial Dischargers that have remained flat for over 10 years, are proposed to be updated as well and are included the attached revised ordinance. RELEVANT STANDARDS • Fair and equitable costs across all customer classes PROBLEM The Sanitation District's Board of Directors approved a five-year rate schedule for Industrial Sewer Service Charges which expires at the end of the current fiscal year. All other industrial, wastehauler and miscellaneous fees have not been updated in over 10 years. Page 2 d 3 PROPOSED SOLUTION Adopt ordinance with updated fee schedules based upon the 2017 Rate Study performed by Carollo Engineers and received and filed by the Board in December 2017. TIMING CONCERNS February 91h— Notifications Mailed February 281h— First Reading of the Ordinance March 28a'— Public Hearing, 2"d Reading and Adoption of the Ordinance July 151— Ordinance takes effect RAMIFICATIONS OF NOT TAKING ACTION Revenues will be insufficient to support the facilities master plan adopted in December 2017. PRIOR COMMITTEE/BOARD ACTIONS December 2017 -Adopted 2017 Facilities Master Plan and Received and Filed the 2017 Rate Study March 2013 -Adoption of Ordinance No. OCSD 42 (Industrial Charges) January 2013-Approval of the previous Sanitation District Wastewater Revenue Program Rate Study May 2010 - Adoption of Ordinance No. OCSD-40 (CFCC's) ADDITIONAL INFORMATION To ensure the appropriate allocation of costs and fees, the Orange County Sanitation District (Sanitation District) engaged an engineering consulting firm, Carollo Engineers, to provide an independent analysis of the Sanitation District's cash flow modeling and a cost of service study. The study demonstrates that the Sanitation District's proposed fees are appropriate and reasonable and will support its projected capital and operating requirements. Carollo Engineers completed the facilities master plan update. In conjunction with this update, Carollo was tasked with performing an updated sewer rate study to determine the appropriate rates going forward to support the facilities master plan update. The Rate Study was received and filed and the Facilities Master Plan was adopted by Resolution No. OCSD 17-16 in December 2017. ATTACHMENT The following attachment(s)are available in hard copy and may also be viewed on-line at the OCSD website (mm w.ocsd.corn with the complete agenda package: • Ordinance No. OCSD-51 Page 3 d 3 ORDINANCE NO. OCSD-51 AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING MISCELLANEOUS CHARGES AND FEES RELATING TO INDUSTRIAL DISCHARGERS, SOURCE CONTROL PERMITTEES AND WASTEHAULERS AND REPEALING ORDINANCE NO. OCSD40 AND ORDINANCE NO. OCSD-42 WHEREAS, Health & Safety Code Section 5471 authorizes the Board of Directors of the Orange County Sanitation District (the "District") to impose fees and other charges for services and facilities furnished by the District in connection with the District's wastewater collection, treatment, disposal, and reuse system; and WHEREAS, the District imposes charges and fees on industrial dischargers, source control permittees, and wastehaulers pursuant to Ordinance No. OCSD-40, as revised by Ordinance No. OCSD42; and WHEREAS, the District recently retained Carollo Engineers to evaluate the District's projected revenue needs and recommend service fees and capacity charges for the period July 1, 2018 to June 30, 2023. In December of 2017, Carollo Engineers issued its "Final Report and Recommendations on Wastewater Rates, Fees, and Charges" ("Carollo Report"). The District's Board of Directors received the Carollo Report on December 20, 2017, and the Carollo Report is on file with the District; and WHEREAS, the Carollo Report recommended specified adjustments to the fees and charges that the District imposes on industrial dischargers, source control permittees, and wastehaulers; and WHEREAS, the recommendations set forth in the Carollo Report are based on various studies and plans including, among others, financial forecasts and the District's 2017 Facilities Master Plan ("Master Plan"). The Master Plan identified the capital improvement projects that will be needed over the next 20 years, and estimated the cost of each project. The District's Board of Directors adopted the Master Plan on December 20, 2017; and WHEREAS, on Wednesday, March 28, 2018 at 6:00 P.M., in the District's Boardroom on the first floor of its Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, the District held a property noticed public hearing, and received and considered comments concerning the proposed charges; and WHEREAS, the Board of Directors has carefully reviewed the Carollo Report and considered oral and written comments from the public, Board Members, District staff, and District consultants made at and prior to the March 28, 2018 public hearing; OCSD-51-1 NOW,THEREFORE,the Board of Directors of the Orange County Sanitation District does hereby ORDAIN: SECTION I. Adopt miscellaneous charges and fees relating to industrial discharges, source control permittees and wastehaulers. TABLE OF CONTENTS ARTICLE I: RECITAL OF FINDINGS Section 1.01. Findings— Declaration of Intent ARTICLE II: MISCELLANEOUS CHARGES AND FEES RELATING TO INDUSTRIAL DISCHARGERS, SOURCE CONTROL PERMITTEES AND WASTEHAULERS Section 2.01. Purpose and Scope Section 2.02. Administrative Fees and Charges Relating to Permittees Section 2.03. Industrial Discharger, Source Control, and Non-Compliance Sampling Fees Section 2.04. Special Purpose Discharge Permittees; Charges for Use Section 2.05. Class I and Class II Permittees— Charges for Use Section 2.06. Wastehauler Charges for Use Section 2.07. Administrative Appeals Table E Administrative Fees and Charges Relating To Permittees Table F Industrial Discharger, Source Control and Non-Compliance Sampling Fees Table G Class I and Class II Permittees and Special Purpose Discharge Permittees Charges For Use Table H Wastehauler Charges for Use ARTICLE III: MISCELLANEOUS Section 3.01. Application of Ordinance Section 3.02. Exceptions Section 3.03. Severability Section 3.04. Effective Date Section 3.05. Repeal Section 3.06. Certification and Publication OCSD-51-2 ARTICLE I RECITAL OF FINDINGS Section 1.01. Findings— Declaration of Intent. A. The District operates a system for the collection, treatment, disposal, and reuse of wastewater ("System'). The System protects human health and the environment from the potentially harmful effects of wastewater. B. The revenues collected pursuant to this Ordinance shall be used to finance the improvements, programs, and staffing needed to operate, maintain, replace, and improve the District's existing facilities, fund necessary reserves, and retire debt incurred to finance such activities. The revenues shall be used for no other purpose. C. The fees and charges established by this Ordinance are based on the information and analysis set forth in the Carollo Report and the Master Plan, both of which were made available to the public in accordance with Government Code Section 66016 and other provisions of law. D. The fees and charges established by this Ordinance do not exceed the estimated reasonable cost of providing the wastewater collection, treatment, disposal, and reuse services for which the fees are charged. The manner in which the costs are allocated to each payor bears a fair or reasonable relationship to the payor's burdens on, and benefits received from, the District's System. E. The fees and charges established by this Ordinance will fund the operations, maintenance, construction, rehabilitation, and repair necessary to maintain service within the District's existing service area. Therefore, 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). F. The Capital Facilities Capacity Charges and Supplemental Capital Facilities Capacity Charges established by this ordinance have been approved by the District's Board of Directors at a noticed public meeting, all in accordance with applicable provisions of law. ARTICLE II MISCELLANEOUS CHARGES AND FEES RELATING TO INDUSTRIAL DISCHARGERS, SOURCE CONTROL PERMITTEES AND WASTEHAULERS Section 2.01. Purpose and Scope. The purpose of this Ordinance is to recover those costs incurred by the District (i) on account of industrial dischargers' and wastehaulers' use of the District's facilities; (ii) when administering the District's Source Control Program; and (iii) when performing non-compliance sampling of industrial wastewater dischargers who have violated the District's Wastewater Discharge OCSD-51-3 Regulations or the terms and conditions of the discharger's permit. Revenues derived under the provisions of this Ordinance shall be used to defray the costs incurred by the District (i) on account of such use of the District's facilities; and (ii) in performing these tasks. Section 2.02. Administrative Fees and Charges Relating to Permittees. Administrative fees and charges relating to permittees are hereby established in the sum or sums as set forth in Tables E, F, G, H, I and J, below. Section 2.03. Source Control Non-Compliance Fees. Source control non- compliance fees are hereby established for dischargers' non-compliance sampling and for self-monitoring and data reporting non-compliance, in the sum or sums as set forth in Table F, below. Section 2.04. Special Purpose Discharge Permittees: Charges for Use. As authorized by Sections 305.5 and 305.6 of the District's Wastewater Discharge Regulations, charges for use are hereby established for Special Purpose Discharge Permittees, as set forth in Table G, below. Section 2.05. Class I and Class 11 Permittees — Charges for Use. As authorized by Sections 302.3, 302.6, 303.3 and 303.6 of the District's Wastewater Discharge Regulations, the charges for use are hereby established for Class I and Class I I Permittees as set forth in Table F, below. Section 2.06. Wastehauler Charges for Use. As authorized by Sections 306.3 and 306.7 of the OCSD's Wastewater Discharge Regulations, the charges for use are hereby established for wastehaulers as set forth in Table H, below. Section 2.07. Administrative Appeals. A. Any user, permit applicant, or permittee affected by any decision, action, or determination by the District may, within forty-five (45) days of the date of mailing by the District of the initial invoice for fees imposed pursuant to this Ordinance, request that the District reconsider imposition of such fees. Following review of such a request, the District shall notify the user, permit applicant, or permittee by certified mail of the District's decision on the reconsideration request. B. Any user, permit applicant, or permittee adversely affected by the District's decision on the reconsideration request, may file an appeal in accordance with Sections 618 and 621 of the District's Wastewater Discharge Regulations. TABLE E ADMINISTRATIVE FEES AND CHARGES RELATING TO PERMITTEES Permit Fees Charges Per year 2018-19 2019-20 2020-21 2021-22 2022-23 A. Class I/Certified Discharger $ 945.00 $1,105.00 $1,265.00 $1,425.00 $1,585.00 OCSD-51-4 B. Class II $ 240.00 $ 310.00 $ 380.00 $ 450.00 $ 520.00 C. SPDP' $1,072.00 $1,094.00 $1,116.00 $1,138.00 $1,160.00 SPDP Renewal $ 760.00 $ 775.00 $ 785.00 $ 795.00 $ 810.00 D. Wastehauler $ 190.00 $ 190.00 $ 190.00 $ 190.00 $ 190.00 E. Certified Zero/No Discharge $ 120.00 $ 120.00 $ 120.00 $ 120.00 $ 120.00 New permit only-add nonrefundable deposit for first 1 million gallons as defined in Table G Wastehauler Fees Charges F. Permit Decal Initial Issue $ 25.00 G. Permit Decal Replacement $ 50.00 H. Entry Card Initial Issue $ 50.00 I. Entry Card Replacement $100.00 J. Aker Hours Discharge- Prearranged $102.00/event K. After Hours Discharge- Emergency $165.00/event Administrative/Processing Fees Charges L. OCSD's Collection of Water Consumption Data $ 500.00/permit M. Appeal Hearing Filing Fee $ 800.00/appeal N. Late Application (30 days or less from expiration date) $ 500.00 O. Late Application (15 days or less from expiration date) $1,000.00 TABLE F INDUSTRIAL DISCHARGER, SOURCE CONTROL AND NON-COMPLIANCE SAMPLING FEES Charge Cost of Processing and Sampling Following a Minor Violation $200.00/event Cost of Processing and Sampling Following a Ma or Violation $400.00/event Non-Compliance Resampling Fee $275.00/event Cost of Analysis Heavy Metals: $ 50.00/each - Aluminum - Antimony - Arsenic - Cadmium - Chromium - Copper - Gold - Lead - Molybdenum - Nickel - Palladrum OCSD-51-5 TABLE F (CONTINUED) INDUSTRIAL DISCHARGER, SOURCE CONTROL AND NON-COMPLIANCE SAMPLING FEES Platinum Selenium Silver Thallium Zinc Charge Mercury $ 85.00 601/602 $152.00 604 $223.00 606 $254.00 608 $523.00 610 $ 73.00 612 $200.00 624 $355.00 625 $661.00 Ammonia Analysis as Nitrogen $ 32.00 Biochemical Oxygen Demand (BOD) $ 49.00 BOO and Suspended Solids (SS) Analysis $ 97.00 Chemical Oxygen Demand $ 33.00 Conductivity $ 65.00 Cyanide (Amenable) $146.00 Dissolved Mineral Solids $ 15.00 Gamma Radiation Determination $286.00 Gross Alpha and Beta Determination $ 34.00 Tritium Determination $123.00 Oil & Grease (Hexane Soluble Matter) $ 81.00 Oil & Grease (Mineral Partition) $ 81.00 Total Organic Nitrogen $ 65.00 pH $ 32.00 Fluoride $ 49.00 Suspended Solids (Total) $ 49.00 Suspended Solids (Total and Volatile) $146.00 Total Dissolved Solids $ 49.00 Total Sulfides $ 69.00 SELF-MONITORING AND DATA REPORTING NON-COMPLIANCE Cost of Processing and Issuing Significant Non-Compliance Notification $165.00 Cost of Processing Annual SNC and Publication $485.00 Non-Compliance Appeal Filing Fee* $150.00 *Filing Fee will be refunded if customer wins appeal OCSD-51-6 TABLE G CLASS I AND CLASS II PERMITTEES AND SPECIAL PURPOSE DISCHARGE PERMITTEES CHARGES FOR USE Class I and ll 2018-19 2019-20 2020-21 2021-22 2022-23 Flow (*) $1,433.49 $1,489.42 $1,545.35 $1,601.28 $1,657.22 B.O.D. (**) $ 658.09 $ 661.39 $ 664.69 $ 667.99 $ 671.28 S.S. (***) $ 716.60 $ 736.73 $ 756.86 $ 777.00 $ 797.14 Special Purpose Discharge Permit 2018-19 2019-20 2020-21 2021-22 2022-23 Flow (*) $1,433.49 $1,489.42 $1,545.35 $1,601.28 $1,657.22 (*) Flow Per million gallons of Flow (**) B.O.D. Per thousand pounds of Biochemical Oxygen Demand (***)S.S. Per thousand pounds of Suspended Solids All properties located within Revenue Area No. 14 pay no annual service fees. The District's costs relating to providing service to these properties are billed by the District directly to the Irvine Ranch Water District, the local agency providing the local sewer service. TABLE H WASTEHAULER CHARGES FOR USE 2018-19 2019-20 2020-21 2021-22 2022-23 Within OCSD Boundaries $0.06 $0.07 $0.08 $0.09 $0.09 Outside OCSD Boundaries** $0.14 $0.16 $0.18 $0.20 $0.22 (*) per gallon (**) Outside District boundaries and inside the District service area or authorized by the District's General Manager Waste hauled from a source that is not within the District's service area is prohibited unless authorized by the General Manager. Service area is defined as any area the OCSD has an agreement to serve. OCSD-51-7 ARTICLE IV MISCELLANEOUS Section 4.01. Application of Ordinance. The provisions of this Ordinance shall be in addition to the provisions of the District's Wastewater Discharge Regulations for use of the District's sewage facilities, including provisions for payment of charges or fees related thereto; the District's ordinance establishing Fees Concerning Annexations of Territory to the District; and any other District Ordinances and Resolutions not in conflict herewith. Section 4.02. Exceptions. The provisions of this Ordinance shall apply to all owners of properties within the District, 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, except as expressly provided herein. Section 4.03 Out of Area Sewer Service Agreements. The District is empowered to contract for the transport, treatment and disposal of wastewaters originating within areas outside of the District if it is in the best interest of the District to do so. These Out of Area Sewer Service Agreements will establish fees and charges relative to the services provided by the District for each individual agreement. The Board of Directors of the Orange County Sanitation District does further hereby ORDAIN: SECTION II. Severability. If any provision of this Ordinance, or the application to any person or circumstances is held invalid by order of Court, the remainder of the Ordinance, or the application of such provision to other persons or other circumstances, shall not be affected. SECTION III. Effective Date. This Ordinance shall take effect July 1, 2018. SECTION IV. Repeal. Ordinance No. OCSD-40 and No. OCSD-42 are hereby repealed. SECTION V. Certification and publication. 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. OCSD-51-8 PASSED AND ADOPTED by a vote of not less than two-thirds of the Board of Directors of the Orange County Sanitation District at a Regular Meeting held on March 28, 2018. Gregory C. Sebourn, PLS Chairman, Board of Directors Orange County Sanitation District ATTEST: Kelly A. Lore, MMC Clerk of the Board Orange County Sanitation District APPROVED AS TO FORM: Bradley R. Hogin General Counsel Orange County Sanitation District OCSD-51-9 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. OCSD-51 was introduced for first reading at a regular meeting of said Board on the 28th day of February 2018, and passed and adopted by a vote of not less than two-thirds at a regular meeting of said Board on the 28th day of March 2018, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 28th day of March, 2018. Kelly A. Lore, MMC Clerk of the Board Orange County Sanitation District OCSD-51-10 WOODRUFF SPRADIJN&SMART ♦ A . . . P . , . . . . . 555 ANTON BOULEVARD, SUITE 1200 COSTA MESA, CA 92626-7670 (714)558-7W0 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation District Board of Directors FROM: Bradley R. Hogin, Esq. General Counsel DATE: February 21, 2018 RE: Closed Session Items The Board of Directors will hold a closed session on February 28, 2018 for the purpose of conferring with its negotiators regarding the purchase of real property. The negotiating parties and properties are as follows: K&A Investments LP,APN Nos. 156-154-08 & 156-163-17; Valley Business Park,APN Nos. 156-165-05, 156-165-06, 156-163-07;DK-USA LLC,APN No.156-165- 04; Fountain Valley Industrial Parcel 13, APN No.156-165-08; Solent Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust Shabtai,Nevon, APN No. 156-163-16; The Ins Trust, APN No. 156-154-07; Fountain Valley Star LLC,APN No. 156-154-06; TN Sheet Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC, APN No. 156-163-13; Phone Lilly Lin- Lin TR, APN No. 156-154-05; JDK Farmers, APN No. 156-163-14; Chandler Real Properties, APN No. 156-163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFH Fountain Valley LLC, APN No. 156-151-03. The District's negotiators are Jim Herberg, Bob Ghirelli, Lorenzo Tyner, Rob Thompson, Kathy Millea and Jeff Mohr, Tom Grant, Kevin Turner and John Gallivan, Cushman and Wakefield. Said closed session will be held pursuant to authority of California Government Code Section 54956.8. Respectfully submitted, By, �J Bradle R. Hogin, 46eneral Counsel 129m35A Wowuia, sPRADllN&SMART 555 ANION BOULEVARD, SUITE 1200 COSTA M.s A, CA 92626-9670 (714)556-9000 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation District Board of Directors FROM: Bradley R. Hogin, Esq. General Counsel DATE: February 21, 2018 RE: Closed Session Items The Board of Directors desires to hold a closed session on February 28, 2018 for the purpose of conferring with its legal counsel regarding anticipated litigation. Existing facts and circumstances reflect a significant exposure to litigation against the District. The closed session will be held pursuant to the authority of California Government Code Section 54956.9(d)(2). The facts and circumstances are as follows: The District received a claim from an employee Carlos Quiroz. Respec 1 submitted, By: Bradley A.Hogin, G neml Counsel 1297914.1 ORANGE COUNTY SANITATION DISTRICT Agenda Terminology Glossary Glossary of Terms and Abbreviations AQMD Air Quality Management District ASCE American Society of Civil Engineers BOD Biochemical Oxygen Demand CARS California Air Resources Board CASA California Association of Sanitation Agencies CCTV Closed Circuit Television CEQA California Environmental Quality Act CIP Capital Improvement Program CRWQCB California Regional Water Quality Control Board CWA Clean Water Act CWEA California Water Environment Association EIR Environmental Impact Report EMT Executive Management Team EPA US Environmental Protection Agency FOG Fats, Oils, and Grease gpd gallons per day GWRS Groundwater Replenishment System ICS Incident Command System IERP Integrated Emergency Response Plan LOS Level Of Service MGD Million Gallons Per Day NACWA National Association of Clean Water Agencies NPDES National Pollutant Discharge Elimination System NWRI National Water Research Institute O & M Operations & Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District OOBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration PCSA Professional Consultant/Construction Services Agreement PDSA Professional Design Services Agreement POTW Publicly Owned Treatment Works ppm parts per million PSA Professional Services Agreement RFP Request For Proposal RWQCB Regional Water Quality Control Board Glossary of Terms and Abbreviations SARFPA Santa Ana River Flood Protection Agency SARI Santa Ana River Interceptor SARWQCB Santa Ana Regional Water Quality Control Board SAW PA Santa Ana Watershed Project Authority SCADA Supervisory Control And Data Acquisition SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SRF Clean Water State Revolving Fund SSMP Sewer System Management Plan SSO Sanitary Sewer Overflow SWRCB State Water Resources Control Board TDS Total Dissolved Solids TMDL Total Maximum Daily Load TSS Total Suspended Solids WDR Waste Discharge Requirements WEF Water Environment Federation W ERF Water Environment & Reuse Foundation WIFIA Water Infrastructure Finance and Innovation Act WIIN Water Infrastructure Improvements for the Nation Act W RDA Water Resources Development Act Activated sludge process — A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen and consume dissolved nutrients in the wastewater. Benthos —The community of organisms, such as sea stars, worms, and shrimp, which live on, in, or near the seabed, also known as the benthic zone. Biochemical Oxygen Demand (BOD) — The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water. Biogas—A gas that is produced by the action of anaerobic bacteria on organic waste matter in a digester tank that can be used as a fuel. Biosolids—Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farmland or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Glossary of Terms and Abbreviations Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere, used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater. Collections system— In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP)—A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (DIT) — The dilution at which the majority of people detect the odor becomes the D/T for that air sample. Greenhouse Gases (GHG) — In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse effect'). Groundwater Replenishment System (GWRS) — A joint water reclamation project that proactively responds to Southern California's current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons per day of drinking quality water to replenish the local groundwater supply. Levels Of Service (LOS) — Goals to support environmental and public expectations for performance. N-Nitrosodimethylamine (NDMA) — A N-nitrosamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP)—An alliance of the National Association of Clean Water Agencies and Water Environment Federation, with advisory support from the US Environmental Protection Agency. NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. Plume — A visible or measurable concentration of discharge from a stationary source or fixed facility. Glossary of Terms and Abbreviations Publicly Owned Treatment Works (POTW) —A municipal wastewater treatment plant. Santa Ana River Interceptor(SARI) Line —A regional brine line designed to convey 30 million gallons per day of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer—Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban runoff. South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment — Biological wastewater treatment, particularly the activated sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge—Untreated solid material created by the treatment of wastewater. Total Suspended Solids (TSS)—The amount of solids floating and in suspension in wastewater. Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Urban runoff—Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed—A land area from which water drains to a particular water body. The Orange County Sanitation District's service area is in the Santa Ana River Watershed.