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Home My WebLink About09-26-2018 Board Meeting Agenda Packet Orange County Sanitation District Wednesday, September 26, 2018 AND 6:00 P.M. Orange County Sanitation District Board Room Financing Corporation 10844 Ellis Avenue Regular Meeting of the Fountain Valley, CA 92708 BOARD OF DIRECTORS (714) 593-7433 AGENDA CALL TO ORDER INVOCATION AND PLEDGE OF ALLEGIANCE (David Shawver, City of Stanton) ROLL CALL (Clerk of the Board) 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 onlyand require no action by the Directors. CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Board of Directors,after one motion,without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve the minutes of the Regular Meeting of the Board of Directors held on August 22, 2018. 09/26/2018 OCSD Board of Directors Agenda Page 1 of 10 RECEIVE AND FILE: These items require no action; and without objection, will be so ordered by the Board Chair. 2. COMMITTEE MINUTES (Clerk of the Board) RECOMMENDATION: Receive and file the approved minutes of the following committees: A. Legislative and Public Affairs Meeting of July 9, 2018 B. Administration Committee Meeting of July 11, 2018 C. Operations Committee Meeting of July 18, 2018 D. Steering Committee Meeting of July 25, 2018 3. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF AUGUST 2018 (Lorenzo Tyner) RECOMMENDATION: Receive and file the report of the Investment Transactions for the month of August 2018. OPERATIONS COMMITTEE: 4. PLANT NO. 1 LABORATORY BUILDING UPS SYSTEM REPLACEMENT, PROJECT NO. MP-433 (Ed Torres) RECOMMENDATION: A. Approve a Purchase Order contract for the purchase and installation of an uninterruptible power supply (UPS) system for the Plant No. 1 Laboratory Building, Project No. MP-433, using the U.S. Communities Master Agreement No. EV2370 to Graybar Electric, for an amount not to exceed $233,536; and B. Approve a contingency of$46,707 (20%). 5. PROTECTIVE RELAY AND CIRCUIT BREAKER TESTING, SPECIFICATION NO. S-2018-94OBD (Ed Torres) RECOMMENDATION: Recommend to the Board of Directors to: A. Award a Service Contract to Western Electrical Services for Protective Relay and Circuit Breaker Testing at Plant Nos. 1 and 2, Specification No. S-2018-940-13D, for a total amount not to exceed $437,670; and B. Approve a contingency of$87,534 (20%). 09/26/2018 OCSD Board of Directors Agenda Page 2 of 10 6. TRICKLING FILTER "A" PLANT NO. 2 REPAIR (Ed Torres) RECOMMENDATION: A. Approve a Sole Source Purchase Order to Ovivo USA, LLC to refurbish and repair Trickling Filter "A" rotary distributor and associated damaged components for a total amount not to exceed $175,085; B. Approve a contingency of$35,017 (20%); and C. Approve Amendment to Orange County Sanitation District Purchase Order Terms and Conditions. 7. CAPITAL IMPROVEMENT PROGRAM CONTRACT PERFORMANCE REPORT (Rob Thompson) RECOMMENDATION: Receive and file the Capital Improvement Program Contract Performance Report for the period ending June 30, 2018. 8. BATTERY STORAGE SYSTEM AT PLANT NO. 1, PROJECT NO. FE17-03 (Rob Thompson) RECOMMENDATION: A. Ratify the General Manager's signature of the Southern California Gas Self Generation Incentive Program Reservation Request Form, and authorize the General Manager to sign the remaining required documents for the Battery Storage System at Plant No. 1, Project No. FE17-03; and B. Authorize the General Manager to sign the Southern California Edison's Customer Generation Agreement related to Battery Storage System at Plant No. 1, Project No. FE17-03. 9. SAFETY IMPROVEMENTS PROGRAM, PROJECT NO. J-126 (Rob Thompson) RECOMMENDATION: A. Receive and file Bid Tabulation and Recommendation for Helix Electric for Safety Improvements Program: Exit Signs, Exit Lights, Electrical Disconnects, and Gas Detection, Contract No. J-1261; B. Award a Construction Contract to Helix Electric forthe Safety Improvements Program: Exit Signs, Exit Lights, Electrical Disconnects, and Gas Detection, Contract No. J-1261, for a total amount not to exceed $881,800, to address identified emergency lights and exit sign issues; and C. Approve a contingency of$88,180 (10%). 09/26/2018 OCSD Board of Directors'Agenda Page 3 of 10 10. SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL, PROJECT NO. 2-41-8 (Rob Thompson) RECOMMENDATION: A. Approve a Professional Construction Services Agreement with Michael Baker International, Inc. to provide construction support services for Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8, for a total amount not to exceed $215,129; and B. Approve a contingency of$21,513 (10%). 11. SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL, PROJECT NO. 2-41-8 (Rob Thompson) RECOMMENDATION: A. Receive and file Bid Tabulation and Recommendation for Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8; B. Award a Construction Contract to Griffith Company for Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8, for a total amount not to exceed $2,809,082; and C. Approve a contingency amount of$280,908 (10%). 12. LEASE PACIFIC STREET PROPERTY AND AMEND BANDILIER CIRCLE PROPERTY LEASE (Rob Thompson) RECOMMENDATION: A. Authorize the execution of an amendment to the existing lease with the Chefs' Toys, LLC, a wholly-owned subsidiary of TriMark USA, LLC for the real property at 18484 Bandilier Circle in Fountain Valley, in a form approved by General Counsel. B. Authorize the execution of a lease with Chefs' Toys, LLC, a wholly-owned subsidiary of TriMark USA, LLC for the Orange County Sanitation District's real property at 18475 Pacific Street, Fountain Valley, for a term commencing on September 27, 2018 and ending September 30, 2019, in a form approved by General Counsel; and 13. GISLER-REDHILL SYSTEM IMPROVEMENTS, REACH B, PROJECT NO. 7-37 (Rob Thompson) RECOMMENDATION: Approve a contingency increase of$365,257 (2.37%)to the construction contract with Kiewit Infrastructure West Company for Gisler-Redhill System Improvements, Reach B, Project No. 7-37, for a total construction contingency of$1,908,457 (12.37%). 09/26/2018 OCSD Board of Directors'Agenda Page 4 of 10 14. INTERIM FOOD WASTE RECEIVING FACILITY, PROJECT NO. P2-124 (Rob Thompson) RECOMMENDATION: A. Approve a Professional Design Services Agreement with Kennedy/Jenks Consultants to provide engineering services for Interim Food Waste Receiving Facility, Project No. P2-124, for an amount not to exceed $695,000; and B. Approve a contingency of$69,500 (10%). 15. OCEAN OUTFALL SYSTEM REHABILITATION, PROJECT NO. J-117 (Rob Thompson) RECOMMENDATION: Approve a contingency increase of $677,801 (10%) to the Professional Design Services Agreement with Brown and Caldwell for Ocean Outfall System Rehabilitation, Project No. J-117, for a total contingency of $4,405,708 (65%). 16. TRANSFER UPSTREAM PORTION OF JAMBOREE SEWER TO THE CITY OF NEWPORT BEACH (Rob Thompson) RECOMMENDATION: A. Approve a Quitclaim Deed to the City of Newport Beach transferring ownership and associated property rights for the local sewer in Jamboree Road; and B. Authorize a transfer of$300,000 to the City of Newport Beach for necessary repairs. ADMINISTRATION COMMITTEE: 17. REIMBURSEMENTS TO BOARD MEMBERS AND STAFF (Lorenzo Tyner) RECOMMENDATION: Receive and file report of reimbursements to Board Members and Staff per Government Code Section 53065.5 for the period July 1, 2017 through June 30, 2018. 18. UPDATE TO THE OCSD DEBT POLICY (Lorenzo Tyner) RECOMMENDATION: Adopt Resolution No. OCSD 18-16 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District adopting a Board of Directors Debt Policy." 09/26/2018 OCSD Board of Directors'Agenda Page 5 of 10 19. REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A (Lorenzo Tyner) RECOMMENDATION: A. Adopt Resolution No. OCSD 18-17 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the execution and delivery by the Sanitation District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A, such Notes evidencing principal in an aggregate amount of not to exceed $109,875,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Notes and authorizing the execution of other necessary documents and related actions"; B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Notes in an aggregate amount not to exceed $109,875,000; and C. The proposed financing is structured as an approximate 32-month fixed rate maturity that will be sold in a competitive sale. 20. UPDATES TO OCSD PERSONNEL POLICIES AND PROCEDURES (Celia Chandler) RECOMMENDATION: Adopt Resolution No. OCSD 18-18 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving a Board of Directors Personnel Policies and Procedures Manual providing for classification, compensation, and other terms, conditions, policies, and procedures governing employment of District employees; and repeal Resolution No. OCSD 15-18." LEGISLATIVE & PUBLIC AFFAIRS COMMITTEE: None. STEERING COMMITTEE: 21. GENERAL MANAGER'S FISCAL YEAR 2018-2019 WORK PLAN (Jim Herberg) RECOMMENDATION: Receive and File the General Manager's Fiscal Year 2018- 2019 Work Plan. 09/26/2018 OCSD Board of Directors Agenda Page 6 of 10 22. PROPERTY MANAGEMENT SERVICES FOR 18429 PACIFIC STREET, 18368- 18375 AND 18410-18436 BANDILIER CIRCLE, FOUNTAIN VALLEY (Lorenzo Tyner) RECOMMENDATION: Approve an amendment with The Muller Company for Property Management Services, for an additional management fee of $3,293 per month plus other incurred expenses, for the additional of District acquired properties on Bandilier Circle and Pacific Street including two additional renewal periods of six months each. Recess OCSD Board of Directors Meeting. ...................................... W2612018 OCSD Board of Directors'Agenda Page 7 of 10 ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION The members of the Orange County Sanitation District Board of Directors are each being compensated $212.50 for the Board Meeting;there is no additional compensation for the Financing Corporation Meeting. CALL TO ORDER: Board of Directors, Orange County Sanitation District Financing Corporation. ROLL CALL: (Secretary of the Financing Corporation) APPROVAL OF MINUTES: FC-1. APPROVAL OF MINUTES (Secretary of the Financing Corporation) If no corrections or amendments are made, the minutes for the meeting held on June 27, 2018 will be deemed approved and be so ordered by the Chair. INFORMATION ITEM: FC-2. REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A (Lorenzo Tyner) RECOMMENDATION: Adopt Resolution No. FC-27 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the execution and delivery by the Sanitation District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A, such Notes evidencing principal in an aggregate amount of not to exceed $109,875,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Notes and authorizing the execution of other necessary documents and related actions." Adjourn, Board of Directors, Orange County Sanitation District Financing Corporation. . . . . . . . . . . . . . . . . . . 09/26/2018 OCSD Board of Directors Agenda Page 8 of 10 Reconvene, Board of Directors, Orange County Sanitation District. NON-CONSENT: None. 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 potentiallifigatlon,or personnel matters,pursuant to Govemment Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a) purchase and sale of real property, (b) matters of pending or potential litigation; (c)employment actions or negotiations with employee representatives;or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information. CONVENE IN CLOSED SESSION. (1) CONFERENCE WITH LEGAL COUNSEL RE EXISTING LITIGATION (Government Code Section 54956.9(d)(1)) Number of Cases: 2 Klean Waters, Inc. et al. v. Orange County Sanitation District, at al., United States District Court, Central District of California, Southern Division, Case No. 8:15-cv-00627. Klean Waters, Inc. at al. v. Orange County Sanitation District, at al. United States District Court, Central District of California, Southern Division, Case No. 8:15-cv-01498. (2) CONFERENCE WITH LEGAL COUNSEL RE EXISTING LITIGATION (Government Code Section 54956.9(d)(1)) Number of Cases: 1 Wesley Bauer v. Orange County Sanitation District, Orange County Superior Court, Central Justice Center, Case No. 30-2017-00956252. 09/26/2018 OCSD Board of Directors Agenda Page 9 of 10 (3) CONFERENCE WITH LEGAL COUNSEL RE EXISTING LITIGATION (Government Code Section 54956.9(d)(1)) Number of Cases: 1 Craneveyor v. Orange County Sanitation District, Los Angeles Superior Court, Stanley Mosk Courthouse, Case No. BS175021. 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 October 24, 2018 at 6:00 p.m. Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations,please contact Me 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 line 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 website at www.ocsd.com, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board. Agenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate. NOTICE TO DIRECTORS: To place items on the agenda for a Committee or Board Meeting,items must be submitted to the Cleric of the Board 14 days before the meeting. Kelly A-Lore,MIMIC Clerk of the Board (714)593-7433 klore(aEocsd.com For any quesgons on the agenda,Committee members may contact staff at: General Manager Jim Herberg (714)593-7300 'herbem0ocsd.com Assistant General Manager Lorenzo Tyner (714)593-7550 ItvnerRocsd.com Assistant General Manager Rob Thompson (714)593-7310 rthompsontalocsd.com Director of Environmental Services Jim Colston (714)593-7450 'colston(Mocieloom Director of Human Resources Celia Chandler (714)593-7202 cchandler®ocell Director of Operations&Maintenance Ed Torres 714 593-7080 atered.0mosid.com 09/26/2018 OCSD Board of Directors'Agenda Page 10 of 10 ITEM NO. 1 Orange County Sanitation District MINUTES BOARD MEETING August 22, 2018 �o�Nty S A NI Tgl�oy c ? o -a h HE Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018 08/=018 Minutes of Board Meeting Page 1 of 9 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 August 22, 2018, at 6:02 p.m., in the Administration Building. Director Ellery Deaton delivered the invocation and led the Pledge of Allegiance. 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 Robbie Pitts X Ellery Deaton Sandra Massa-Lavitt X James M. Ferryman Bob Ooten A Phil Hawkins Brooke Jones Steven Jones X Kris Beard X Peter Kim Marshall Goodman X Charlie Nguyen Al Krippner Richard Murphy X Warren Kusumoto X Steve Nagel Cheryl Brothers X Glenn Parker Cecilia Hupp X Scott Peotter Brad Avery X Erik Peterson Mike Posey X Tim Shaw Michael Blazey David Shawver X Carol Warren X Fred Smith Virginia Vaughn A Teresa Smith Mark Murphy X Michelle Steel Shawn Nelson X Sal Tinajero David Benavides X Donald Wagner Lynn Schott X Chad Wanks Ward Smith X John Withers Douglas Reinhart X Mariellen Yarc Stacy Berry Board Chair Sebourn stated that Board Vice-Chair Shawver was representing the District today at the Urban Water Institute's 2511 Annual Conference. STAFF MEMBERS PRESENT: Jim Herberg, General Manager; Bob Ghirelli, Assistant General Manager; Rob Thompson, Assistant General Manager; Celia Chandler, Director of Human Resources; Jim Colston, Director of Environmental Services; Ed Torres, Director of Operations & Maintenance; Lorenzo Tyner, Director of Finance & Administrative Services; Kelly Lore, Clerk of the Board; Bob Bell; Mike Dorman; Alfredo Garcia; Laurie 08/22/2018 Minutes of Board Meeting Page 2 of 9 Klinger; Cortney Light; Laura Maravilla; Gerry Matthews; Jeff Mohr; Kelly Newell; and Gilbert Padilla. OTHERS PRESENT: Brad Hogin (General Counsel); Alternate Director Bob Ooten (CMSD) and James Clark, Black and Veatch. PUBLIC COMMENTS: None. SPECIAL PRESENTATIONS: • Employee Service Award: Board Chair Sebourn presented Assistant General Manager Bob Ghirelli with his 20-year employee service award and recognized Mr. Ghirelli with a resolution for his retirement; and commending him for his dedication in helping to preserve public health and environment of our community. Mr. Ghirelli provided a brief acceptance of the resolution and acknowledged the commitment of the great people that he has worked with over the years. He also thanked his wife Diana, and his family who have supported him in his work. Mr. Ghirelli was then presented with a plaque and a Congressional Record (noting Bob's accomplishments) from Donovan Higbee, Senior District Rep. for Congresswoman Mimi Walters; and a Resolution on behalf of Assemblymen Steven Choi, Matt Harper and Tom Daly, and Senators Pat Bates and Janet Nguyen presented by Field Reps. Sean Rodriguez (Daly) and Stephanie Couch (Harper). REPORTS: General Manager Jim Herberg provided the following information: • Closed Mon. Sept. 3 on for the holiday. • Ocean Monitoring cruise for the Directors will take place on October 25 from 8:00 a.m. — 12:00 p.m., departing from Newport Bay. A flyer was provided to the Directors. • Through the U.S. Bureau of Reclamation — OCSD submitted a WIIN grant request for $550,000 for use in the final expansion of the Groundwater Replenishment System. OCSD previously received $1.325 million for this project during the first round of funding. Chair Seboum announced that OCSD's State of the District will be held on Friday, Oct. 19 from 8:00 a.m. -10:00 a.m. at Mile Square Golf Course in Fountain Valley. More information will follow. 08/22/2018 Minutes of Board Meeting Page 3 of 9 Chair Sebourn stated that he had appointed Director Peter Kim as the first Chairman and Director Allan Bernstein as the first Vice-Chairman of the Legislative and Public Affairs Committee. Chair Sebourn provided a few comments and expressed condolences regarding the recent passing of longtime OCWD Board member Phil Anthony. He stated that the OCSD Board of Directors will be adjourning tonight's meeting in memory of Phil Anthony. CONSENT CALENDAR: Chair Sebourn announced that Item 1.13. had been added to the agenda as a supplemental item. 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve the minutes of the Regular Meeting of the Board of Directors held on July 25, 2018. AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Nagel; Nguyen; Parker; Peotter; Peterson; Sebourn; Shaw; F. Smith; Steel; Tinajero; Wagner; Warren (Alternate); Wanke; Withers; and Yarc NOES: None ABSTENTIONS: Kusumoto (Alternate) ABSENT: Hawkins and T. Smith 1.13. PROPERTY ACQUISITION FOR: 18410-18436 Bandilier Circle and 18368-18384 Bandilier Circle, within the City of Fountain Valley, County of Orange, State of California, designated as Assessor Parcel Numbers 156-163-09, 156-163-10 and 156-163-11. MOVED, SECONDED, AND DULY CARRIED TO: A. Receive and file the fully executed Agreement of Purchase and Sale and Joint Escrow Instructions; and B. Authorize the General Manager to execute any and all other instruments related to the transaction in a form approved by General Counsel. AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Nagel; Nguyen; Parker; Peotter; Peterson; Sebourn; Shaw; F. Smith; Tinajero; Wagner; Warren (Alternate); Wanke; Withers; and Yarc NOES: Steel ABSTENTIONS: Kusumoto (Alternate) ABSENT: Hawkins and T. Smith RECEIVE AND FILE: These items require no action; and without objection, will be so ordered by the Board Chair. 2. COMMITTEE MINUTES (Clerk of the Board) Received and filed the approved minutes of the following committees: 08/22/2018 Minutes of Board Meeting Page 4 of 9 A. Steering Committee Meeting of June 27, 2018. B. GWRS Steering Committee Meeting of April 9, 2018. 3. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF JULY 2018 (Lorenzo Tyner) Received and filed the report of the Investment Transactions for the month of July 2018. PUBLIC HEARING: 4. COLLECTION OF SEWER SERVICE CHARGES VIA THE TAX ROLL (Lorenzo Tyner) Chair Sebourn announced that a public hearing to receive input on a report filed with the Clerk of the Board entitled "Sewer Service Charges for Collection on Tax Rolls for Fiscal Year 2018-19"would be heard. 1. Chair Sebourn opened the public hearing. 2. The Board received a staff report from Director of Finance and Administrative Services Lorenzo Tyner. 3. Clerk of the Board Kelly Lore reported that she had not received written communication regarding this hearing. 4. Chair Sebourn asked for public comment. 5 Hearing none; Chair Seboum closed the public hearing. 6 Discussion by the Board of Directors. MOVED, SECONDED, AND DULY CARRIED TO: A. Adopt Resolution No. OCSD 18-14 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District adopting the Report proposing to collect Sewer Service Fees on the Tax Roll for Fiscal Year 2018/2019"; B. Direct staff to file a certified copy of the adopted report and resolution with the County Auditor-Controller; and C. Direct staff to coordinate collection of sanitary sewer service charges on the general Orange County tax rolls with the County Auditor-Controller, Assessor, and Tax Collector. The Clerk of the Board proceeded with a roll call vote: AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Kusumoto (Alternate); Nagel; Nguyen; Parker; Peotter; Peterson; Sebourn; Shaw; F. Smith; Steel; Tinajero; Wagner; Warren (Alternate); Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Hawkins and T. Smith 08/22/2018 Minutes of Board Meeting Page 5 of 9 OPERATIONS COMMITTEE: None. ADMINISTRATION COMMITTEE: None. LEGISLATIVE & PUBLIC AFFAIRS COMMITTEE: None. STEERING COMMITTEE: 5. RETIREMENT OF ROBERT P. GHIRELLI ASSISTANT GENERAL MANAGER OF THE ORANGE COUNTY SANITATION DISTRICT (Jim Herberg) Mr. Herberg provided an overview of Mr. Ghirelli's accomplishments and thanked him for his 20 years of service. MOVED. SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD 18-13 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District commending Dr. Robert P. Ghirelli for his contributions and dedication to public service as Assistant General Manager of the Orange County Sanitation District." AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Kusumoto (Alternate); Nagel; Nguyen; Parker; Peotter; Peterson; Sebourn; Shaw; F. Smith; Steel; Tinajero; Wagner; Warren (Alternate); Wanks; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Hawkins and T. Smith NON-CONSENT: 6. TREASURER'S REPORT FOR THE FOURTH QUARTER ENDED JUNE 30,2018 (Lorenzo Tyner) Tyner provided a brief report on Item No. 6. MOVED, SECONDED, AND DULY CARRIED TO: Receive and file the Orange County Sanitation District Fourth Quarter Treasurer's Report for the period ended June 30, 2018. AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Kusumoto (Alternate); Nagel; Nguyen; Parker; 08/22/2018 Minutes of Board Meeting Page 6 of 9 Peotter; Peterson; Sebourn; Shaw; F. Smith; Steel; Tinajero; Wagner; Warren (Alternate); Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Hawkins and T. Smith 7. GENERAL MANAGER APPROVED PURCHASES AND ADDITIONS TO THE PRE-APPROVED OEM SOLE SOURCE LIST (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: A. Receive and file Orange County Sanitation District purchases made under the General Manager's authority for the period of April 1, 2018 to June 30, 2018; and B. Approve the following additions to the pre-approved OEM Sole Source List for the period of April 1, 2018 to June 30, 2018: • BEAMEX- Calibrators and communicators • M.K. PLASTICS CORPORATION - Flex connectors for foul air fans • PMWEB - Project management information system software support • RBR - Electronic water quality sensors • SIEMENS BUILDING MANAGEMENT SYSTEM (BMS) - Maintenance Technician training for HVAC and Instrumentation departments • TOSHIBA- HVK Circuit Breakers AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Kusumoto (Alternate); Nagel; Nguyen; Parker; Peotter; Peterson; Sebourn; Shaw; F. Smith; Steel; Tinajero; Wagner; Warren (Alternate); Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Hawkins and T. Smith 8. SLATER PUMP STATION VALVE REPLACEMENTS, PROJECT NO. FE16-14 (Rob Thompson) Assistant General Manager Rob Thompson provided a brief report. MOVED. SECONDED, AND DULY CARRIED TO: A. Award a construction contract to PCL Construction, Inc. for the Slater Pump Station Valve Replacements, Project No. FE16-14, for a total amount not to exceed $459,674; and B. Approve a contingency of$45,967 (10%). AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Kusumoto (Alternate); Nagel; Nguyen; Parker; Peotter; Peterson; Sebourn; Shaw; F. Smith; Steel; Tinajero; Wagner; Warren (Alternate); Wanke; Withers; and Yarc 08/22/2018 Minutes of Board Meeting Page 7 of 9 NOES: None ABSTENTIONS: None ABSENT: Hawkins and T. Smith 9. GENERAL MANAGER'S COMPENSATION AND BENEFITS (Greg Seboum) A late communication providing additional information for this item was provided to the Board of Directors and made available to the public. Chair Sebourn provided a spreadsheet with the base salary & total monthly compensation data comparisons from alternate agencies. He reported that the Performance evaluation for the General Manager is required to be conducted annually by the Steering Committee, as specified in the At-Will Employment Agreement and that the process is completed for this year, and included the following steps: o General Manager provided his self-evaluation & updated work plan for FY18-19 o Chair & Vice-Chair prepared the evaluation and sought input from the Steering Committee, which was incorporated in the appraisal o Conducted performance appraisal discussion with Mr. Herberg Chair Sebourn reported to the Board of Directors that Mr. Herberg has shown satisfactory performance for the year and continues to lead OCSD in a direction consistent with Board expectations, as demonstrated by the results of his Annual General Manager's Work Plan for Fiscal Year 2017-2018. MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD 18-15 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving salary increase and salary range adjustment for the General Manager for Fiscal Year 2018 to 2019," authorizing the Board Chair to implement a base building salary increase of 5.0%, consisting of a 2.5% salary range adjustment and a 2.5% merit increase commencing in the first pay period of July 2018 for fiscal year 2018 to 2019. The total salary cost increase is $13,832 for the fiscal year. Compensation and benefits costs based on impacts to existing benefits total an amount not to exceed $17,761. The Clerk of the Board proceeded with a roll call vote: AYES: Barnes; Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Kim; Nagel; Nguyen; Peotter; Peterson; Sebourn; Shaw; F. Smith; Steel; Tinajero; Wagner; Warren (Alternate); Wanke; Withers; and Yarc NOES: Parker ABSTENTIONS: Kusumoto (Alternate) ABSENT: Hawkins and T. Smith 08/22/2018 Minutes of Board Meeting Page 8 of 9 AB 1234 DISCLOSURE REPORTS: Director Ferryman reported on his recent attendance at the NWRI meeting; and reported upcoming dates for alternate meetings. Director Bernstein reported on his recent attendance at the CASA Conference. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: Mr. Herberg provided closing remarks regarding OCWD Board Member Phil Anthony, whose career of over 50 years of public service will be remembered. At 6:37 p.m., Chair Seboum adjourned the meeting until the Regular Meeting of the Board of Directors to be held on September 26, 2018 at 6:00 p.m. in memory of former OCSD Board Member Philip Anthony. Submitted by: Kelly A. Lore, MMC Clerk of the Board 08/22/2018 Minutes of Board Meeting Page 9 of 9 ITEM NO. 2 MINUTES OF THE LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE Orange County Sanitation District Monday, July 9, 2018 at 3:30 p.m. A meeting of the Legislative and Public Affairs Committee was called to order by Chair Sebourn on Monday, July 9, 2018 at 3:32 p.m. in the Administration Building of the Orange County Sanitation District. Chair Sebourn led the pledge of allegiance. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Greg Sebourn, Board Chair Bob Ghirelli, Assistant General Manager David Shawver, Board Vice-Chair Rob Thompson, Assistant General Manager Allan Bernstein, Member-At-Large Celia Chandler, Director of Human Resources Peter Kim, Member-At-Large Jim Colston, Director of Environmental Services John Withers, Member-At-Large Ed Torres, Director of Operations & Donald P. Wagner, Member-At-Large Maintenance Lorenzo Tyner, Director of Finance & COMMITTEE MEMBERS ABSENT: Administrative Services Chad Wanke, Member-At-Large Kelly Lore, Clerk of the Board Jennifer Cabral Tanya Chong Daisy Covarrubias Rebecca Long Kelly Lore Mark Manzo Kelly Newell OTHERS PRESENT: Brad Hogin, General Counsel Eric Sapirstein, ENS Resources (via teleconference) Eric O'Donnell, Townsend Public Affairs Cori Williams, Townsend Public Affairs PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Board Chair Sebourn did not provide a report. 071D9/2018 Legislative and Public Affairs Committee Minutes Page 1 of 4 REPORT OF GENERAL MANAGER: Assistant General Manager Bob Ghirelli did not provide a report. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED. SECONDED. and DULY CARRIED TO: Approve minutes for the Committee meeting held on June 11, 2018. AYES: Bernstein, Kim, Sebourn, Shawver, Wagner and Withers NOES: None ABSTENTIONS: None ABSENT: Wanke NON-CONSENT CALENDAR: 2. LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE (Bob Ghirelli) Mr. Ghirelli provided a brief overview of the item explaining the options for possible restructuring of the Committee as requested. MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Change the structure of the Legislative and Public Affairs Committee to include a Committee Chairperson and Vice-Chairperson who are not already in a leadership position on any committee or the Board of Directors. AYES: Bernstein, Kim, Sebourn, Shawver, Wagner and Withers NOES: None ABSTENTIONS: None ABSENT: Wanks Item No. 3 was pulled from consideration. 3. nPPORE A SEMBt v BILL 327 (Bob Gh ren') MOVED, SFG0NDFD, and DULY CARRIED TO Approve lettel: of QPPG6 t GR fOF AssemblyBiA 327 SA An Coast A F Qua!ty ManageFReRt 01 3.,..,. . Fleets Item No. 6 was moved forward and heard out of order. 6. LEGISLATIVE AFFAIRS UPDATE (Rebecca Long) Rebecca Long, Senior Public Affairs Specialist, introduced Eric Sapirstein, ENS Resources, who updated the Committee on the following items: Testimony by OCWD for the WIIN Grant; NPDES permitting with a joint letter signed by 07109/2018 Legislative and Pudic Affairs committee Minutes Page 2 of 4 Representatives Alan Lowenthal and John Garamendi, and transmitted to the Committee on Transportation & Infrastructure; EPA funding measures; and today's resignation of EPA chief Scott Pruitt. Ms. Long reported that staff had received 15 letters of support for the WIIN grant, and announced that the State of the District is tentatively set for October 121h at Mile Square golf course. Eric O'Donnell, Townsend Public Affairs (TPA), provided an informative PowerPoint presentation reviewing the current legislative session and bills that are still alive. The presentation also provided Cap and Trade expenditures, November Ballot Initiatives namely Proposition 3, 5, and 6 with a focus on SIB 212 and SIB 1440, and an overview of bill advocacy. Questions and comments were responded to regarding the Propositions. Vice-Chair Shawver requested a presentation of the breakdown of the bond allocation over the last few years. Chair Sebourn directed staff to provide the presentation at the August Steering Committee meeting. Questions regarding the process of the required 2/3 vote to pass SIB 623, the water tax bill, were addressed. 4. SUPPORT SENATE BILL 1440 (Bob Ghirelli) MOVED. SECONDED, and DULY CARRIED TO: Approve letter of Support for Senate Bill 1440 - Biomethane Procurement Program (Senator Hueso). AYES: Bernstein, Kim, Sebourn, Shawver, Wagner and Withers NOES: None ABSTENTIONS: None ABSENT: Wanke INFORMATION ITEMS: 5, PUBLIC AFFAIRS UPDATE (Jennifer Cabral) Public Affairs Supervisor Jennifer Cabral provided information regarding her recent attendance at the CSDA Conference where she presented information on the Transparency of Special Districts. She further reported on OCSD's partnership with the Inside the Outdoors program and that the effort has reached over 2700 students this year. Ms. Cabral announced upcoming events including: Westminster Safety Day on July 18: Association of Women in Water, Energy & Environment (AWWEE) meeting; speaking engagements for the General Manager at the La Habra Rotary Club, Assistant General Manager Rob Thompson at the OC Water Association; and a presentation provided by Acting Human Resources and Risk Manager, Laura Maravilla, and the General Manager at OCBC. 07,09,2018 Legislative and Public AV.1 s CmunU a Minuses Page 3 04 Ms. Cabral informed the Committee of the upcoming tour for the North Orange County Chamber of Commerce this Friday, and provided an update on the State College sewer construction project. Vice-Chair Shawver restated his idea of an OCSD Special District Foundation to assist with Public Outreach, and requested that the District's list of awards and accomplishments be listed more predominantly on our website. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: Chair Sebourn declared the meeting adjourned at 4:14 p.m. to the next Legislative and Public Affairs Committee meeting, Monday, September 10, 2018 at 12:00 p.m. Submitted by: T yv,, N ^ r Kelly A. Lore, MMC Clerk of the Board O7/0912018 Legislative and Public Affairs Committee Minutes Page 4 of 4 MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, July 11, 2018 at 5:00 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chairman Wanks on July 11, 2018 at 5:02 p.m. in the Administration Building of the Orange County Sanitation District. Committee Chairman Wanks led the Flag Salute. A quorum was declared present as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Chad Wanke, Chairman Jim Herberg, General Manager Donald P. Wagner, Vice-Chairman Bob Ghirelli, Assistant General Manager James Ferryman Rob Thompson, Assistant General Manager Peter Kim Jim Colston, Director of Environmental Services Richard Murphy Lorenzo Tyner, Director of Finance & Steve Nagel Administrative Services Glenn Parker Kelly Lore, Clerk of the Board Erik Peterson Laura Maravilla, Human Resources Supervisor Teresa Smith Stephanie Barron Greg Sebourn, Board Chairman Jennifer Cabral David Shawver, Board Vice-Chairman Ron Coss Rhea De Guzman COMMITTEE MEMBERS ABSENT: AI Garcia Charlie Nguyen Brad Hamilton Sal Tinajero Line Hsiao Mark Manzo Tiffany Nguyen Ddaze Phuong John Swindler OTHERS PRESENT: Brad Hogin, General Counsel Ed Soong, PRAG Laurlinda Newell, Alliant Karen Delaney, Alliant PUBLIC COMMENTS: None. REPORTS: General Manager Jim Herberg did not provide a report. 07/112018 Administration Committee Minutes Page 1 of 4 Clerk of the Board Kelly Lore reported late communication regarding Items No. 2(B) & No. 3(B) to amend the approval of 10% contingency instead of the 20% listed. Director of Finance and Administrative Services Lorenzo Tyner reported that the firm Cushman &Wakefield was selected as the Broker for the Sale of the Doig Property. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the June 13, 2018 Administration Committee Meeting. AYES: Ferryman, Kim, Murphy, Nagel, Parker, Peterson, Sebourn, Shawver, T. Smith, and Wanke NOES: None ABSTENTIONS: None ABSENT: Nguyen, Tinajero and Wagner 2. ENTERPRISE DATA STORAGE UPGRADE (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Authorize a Purchase Order Contract with Nth Generation Computing for Nimble Equipment Upgrade and Support Specification Number E-2018- 953BD for a total amount not to exceed $568,127; and B. Approve a contingency of$ 62��.$56,813 (10%). AYES: Ferryman, Kim, Murphy, Nagel, Parker, Peterson, Sebourn, Shawver, T. Smith, and Wanke NOES: None ABSTENTIONS: None ABSENT: Nguyen, Tinajero and Wagner 3 VMWARE ENTERPRISE LICENSE AGREEMENT FOR SERVER AND DESKTOP VIRTUALIZATION (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Authorize a Purchase Order Contract with Nth Generation Computing for VMware Licenses and Support, Specification Number 5-2018-954BD-R, for a total amount not to exceed $595,272; and B. Approve a contingency of$118,064 (20%). $59,527 (10%). AYES: Ferryman, Kim, Murphy, Nagel, Parker, Peterson, Sebourn, Shawver, T. Smith, and Wanks 07/11/2018 Administration Committee Minutes Page 2 of 4 NOES: None ABSTENTIONS: None ABSENT: Nguyen, Tinajero and Wagner NON-CONSENT: 4, REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A (Lorenzo Tyner) Mr. Tyner provided a brief explanation of the item. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize the General Manager to issue Revenue Refunding Certificate Anticipation Notes, Series 2018A, as fixed-rate obligations maturing in February 2022, subject to market conditions, in an amount not to exceed $109,875,000 to replace the $109,875,000 Revenue Refunding Certificate Anticipation Notes, Series 2016B maturing on December 15, 2018. AYES: Ferryman, Kim, Murphy, Nagel, Parker, Peterson, Sebourn, Shawver, T. Smith, and Wanke NOES: None ABSTENTIONS: None ABSENT: Nguyen, Tinajero and Wagner Director Wagner arrived at the meeting at 5:07 p.m. 5. 2019 BENEFITS INSURANCE RENEWAL (Celia Chandler) Acting Human Resources and Risk Manager Laura Maravilla provided a brief overview of the benefits renewal including information regarding the 4.1% overall increase. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Approve the Orange County Sanitation District 2019 Benefits Insurance Renewal for the not-to-exceed amounts specified below: A. WORKTERRA, formerly Employee Benefit Specialists (medical, dental, and vision plans; Health Savings Accounts [HSA]; and Employee Assistance Program [EAP]) — Not to Exceed $10,983,125; B. Life Insurance & Disability Carrier TBDe (basic life, short- and long-term disability) — Not to Exceed $709,394; C. The Standard (EMT& Manager disability) — Not to Exceed $30,000; and D. Approve a contingency of$1,172,251 (10%). 07/11/2018 Administration Committee Minutes Page 3 of 4 'Prudential is the Sanitation District's current carrier for life and disability insurance. However, there may be a change in carrier for the upcoming plan year, which would result in a decrease in insurance premiums, pending renewal negotiation results. AYES: Ferryman, Kim, Murphy, Nagel, Parker, Peterson, Sebourn, Shawver, T. Smith, Wagner, and Wanke NOES: None ABSTENTIONS: None ABSENT: Nguyen and Tinajero INFORMATION ITEMS: 6. LABORATORY, MONITORING, AND COMPLIANCE DIVISION UPDATE (Jim Colston) Director of Environmental Services Jim Colston introduced Environmental Lab and Ocean Monitoring Manager Ron Coss who provided an informational PowerPoint Presentation on the Laboratory including the budget, employee retention, productivity, benchmarking and recent accomplishments. Mr. Coss and Mr. Colston responded to questions from the Committee. DEPARTMENT HEAD REPORTS: None. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: Board Chair Sebourn declared the meeting adjourned at 5:44 p.m. to the next regularly scheduled meeting of Wednesday, September 12, 2018 at 5:00 p.m. Submitted by: T Kelly A. Lore, MMC Clerk of the Board 07/11/2018 Administration Committee Minutes Page 4 of 4 MINUTES OF THE OPERATIONS COMMITTEE Orange County Sanitation District Wednesday, July 18, 2018, 5:00 p.m. A regular meeting of the Operations Committee was called to order by Committee Chair Withers on Wednesday. July 18, 2018 at 5:03 p.m. in the Administration Building. Alternate Director Brooke Jones led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: John Withers, Chair Jim Herberg, General Manager Denise Barnes Rob Thompson, Assistant General Manager Allan Bernstein Jim Colston, Director of Environmental Services Robert Collacott Laura Maravilla, Acting Director of Human Brooke Jones, Alternate Resources Steve Jones Ed Torres, Director of Operations & Maintenance Fred Smith Lorenzo Tyner, Director of Finance & Mariellen Yarc Administrative Services David Shawver, Board Vice-Chair Tina Knapp, Deputy Clerk of the Board Jennifer Cabral COMMITTEE MEMBERS ABSENT: Ron Coss Ellery Deaton, Vice-Chair Mike Dorman Scott Peotter Dean Fisher Tim Shaw Alfredo Garcia Michelle Steel Mark Manzo Greg Sebourn, Board Chair Emmeline McCaw Kathy Millea Jeff Mohr Vanh Phonsiri Ddaze Phuong OTHERS PRESENT: Brad Hogin, General Counsel Jose Zepeda, IRWD PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chair Withers did not provide a report. 07/18/2018 Operations Committee Minutes Page 1 of 5 REPORT OF GENERAL MANAGER: General Manager Jim Herberg reported that a tour was provided yesterday for staff from Congresswoman Mimi Walters office and that the Orange County Business Council held a Workforce Development Committee meeting today at the Sanitation District. Mr. Herberg also indicated that he will be attending the National Association of Clean Water Agencies Conference in Boston next week. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, and DULY CARRIED TO: Approve Minutes of the June 6, 2018 Operations Committee Meeting. AYES: Barnes, Collacott, B. Jones (Alternate), S. Jones, Shawver, F. Smith, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Bernstein, Deaton, Peotter, Sebourn, Shaw, and Steel 2. EXTENSION FOR FISH TRACKING STUDY SOLE SOURCE CONTRACT WITH DR. CHRISTOPHER LOWE — CALIFORNIA STATE UNIVERSITY LONG BEACH (Jim Colston) MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Ratify and approve a contract extension to Dr. Christopher Lowe of the California State University Long Beach for the period July 1, 2018 through October 31, 2018 at a cost not to exceed $14,058 for a total contract cost not to exceed $214,058. AYES: Barnes, Collacott, B. Jones (Alternate), S. Jones, Shawver, F. Smith, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Bernstein, Deaton, Peotter, Sebourn, Shaw, and Steel 3. AGREEMENTS FOR THE PURCHASE OF SODIUM HYPOCHLORITE (BLEACH SOLUTION), SPECIFICATION NO. C-2018-939BD FOR ODOR CONTROL AND PLANT WATER DISINFECTION IN THE TREATMENT PLANTS (Ed Torres) MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: A. Award a Chemical Supplier Agreement to Olin Corporation,for the purchase of bulk Sodium Hypochlorite (Bleach Solution), Specification No. C-2018- 07/18/2018 Operations Committee Minutes Page 2 of 5 93913D, for the period of September 1, 2018 through August 31, 2019, for a unit price of $0.698/gallon, delivered, plus applicable sales tax, for a total estimated annual amount of $910,890 with four (4) one-year renewal options; B. Award a Contract Purchase Order to Waterline Technologies, Inc., for the purchase of chemical totes of Sodium Hypochlorite, Specification No. C-2018-93913D, for the period of September 1, 2018 through August 31, 2019, for a unit price of $1.16/gallon, delivered, plus applicable sales tax, for a total estimated annual amount of$4,996 with four(4)one-year renewal options; and C. Approve a unit price contingency of 10% per year for General Manager's Recommendation Items A and B. AYES: Barnes, Collacott, B. Jones (Alternate), S. Jones, Shawver, F. Smith, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Bernstein, Deaton, Peotter, Sebourn, Shaw, and Steel NON-CONSENT: 4. CEQA PLAN 2017—MASTER CONTRACT NO. CEQA PLAN2017.00 (Rob Thompson) Assistant General Manager Rob Thompson provided background information on this item and Item No. 5. MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve Amendments to Master Contracts forannual Professional Services Agreements with HDR Engineering, Inc.; Michael Baker International, Inc.; Helix Environmental Planning, Inc.; ESA; AECOM Technical Services, Inc.; and LSA Associates, Inc. for on-call CEQA Master Contract No. CEQA PLAN2017-00 to increase the allowable individual task order limit to $300,000, and the allowable maximum annual contract year limitation to $600,000 as established by Purchasing Ordinance No. OCSD-52 for each Professional Services Agreement; and B. Authorize the General Manager to approve amendments for the remaining annual renewals of the Master Contracts with HDR Engineering, Inc.; Michael Baker International, Inc.; Helix Environmental Planning, Inc.; ESA; AECOM Technical Services, Inc.; and LSA Associates, Inc. for on-call CEQA Master Contract No. CEQA PLAN2017-00 in an amount not to exceed the allowable maximum annual amount established in Purchasing Ordinance No. OCSD-52 for each Professional Services Agreement. AYES: Barnes, Collacott, B. Jones (Alternate), S. Jones, Shawver, F. Smith, Withers, and Yarc 0 711 81201 8 Operations Committee Minutes Page 3 of NOES: None ABSTENTIONS: None ABSENT: Bernstein, Deaton, Peotter, Sebourn, Shaw, and Steel 5. ON-CALL PLANNING STUDIES MASTER CONTRACT NO. PLAN2017-00 (Rob Thompson) MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve Amendments to Master Contracts for the annual Professional Services Agreements with Brown and Caldwell; AECOM Technical Services, Inc.; HDR Engineering, Inc.; Dudek; and Woodard & Curran, Inc. for on-call Planning Studies Master Contract No. PLAN2017-00 to increase the allowable individual task order limit to $300,000, and the allowable maximum annual contract year limitation to $600,000 as established by Purchasing Ordinance No. OCSD-52 for each Professional Services Agreement; and B. Authorize the General Manager to approve amendments for the remaining annual renewals of the Master Contracts with Brown and Caldwell; AECOM Technical Services, Inc.; HDR Engineering, Inc.; Dudek; and Woodard & Curran, Inc, for on-call Planning Studies Master Contract No. PLAN2017- 00 in an amount not to exceed the allowable maximum annual amount established in Purchasing Ordinance No. OCSD-52 for each Professional Services Agreement. AYES: Barnes, Collacott, B. Jones (Alternate), S. Jones, Shawver, F. Smith, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Bernstein, Deaton, Peotter, Sebourn, Shaw, and Steel INFORMATION ITEMS: 6. SLATER PUMP STATION VALVE REPLACEMENTS, PROJECT NO. FE16-14 (Rob Thompson) Mr. Thompson provided a verbal report on this item as a precursor to presenting it for approval directly to the Board in August. Director Bernstein arrived at 5:09 p.m. Director Peotter arrived at 5:35 p.m. 07118/2018 Operations Committee Minules Page 4 of 5 7. LABORATORY, MONITORING, AND COMPLIANCE DIVISION UPDATE (Jim Colston) Director of Environmental Services Jim Colston introduced Ron Coss, Environmental Laboratory Manager, who provided an informative PowerPoint presentation that included an overview of the staff structure and retention, the Division's budget, productivity of the lab, how the Sanitation District compares to other agencies, an overview of monitoring both in the water and above, who the Division supports and how reporting is done, an overview of recent accomplishments, and the Division management team. DEPARTMENT HEAD REPORTS: None. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY: Alternate Director Brooke Jones complimented Mr. Thompson on a recent presentation he made. ADJOURNMENT Committee Chair Withers declared the meeting adjourned at 5:42 p.m. to the next meeting of Wednesday, September 5, 2018 at 5:00 p.m. Submitted by, Trv�+v K-vt Tina Knapp, CMC Deputy Clerk of the Board 07/18/2018 Operations CornmBtee Minutes Page 5 of 5 MINUTES OF THE STEERING COMMITTEE Orange County Sanitation District Wednesday, July 25, 2018 at 5:00 p.m. A regular meeting of the Steering Committee of the Orange County Sanitation District was called to order by Boar Chairman Greg Sebourn on Wednesday, July 25, 2018 at 5:03 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 Sebourn, Board Chair Bob Ghirelli, Assistant General Manager David Shawver, Board Vice-Chair Rob Thompson, Assistant General Ellery Deaton, Member-At-Large Manager Donald Wagner, Member-At-Large Jim Colston, Director of Environmental John Withers, Operations Committee Services Chair Ed Torres, Director of Operations & Maintenance COMMITTEE MEMBERS ABSENT: Lorenzo Tyner, Director of Finance & Chad Wanks, Administration Committee Administrative Services Chair Kelly Lore, Clerk of the Board Tim Shaw, Member-At-Large Jennifer Cabral Mike Dorman Laurie Klinger Tina Knapp Mark Manzo Laura Maravilla Kathy Miles Ddaze Phuong OTHERS PRESENT: Brad Hogin, General Counsel PUBLIC COMMENTS: No public comments were provided. REPORTS: Chair Sebourn did not provide a report. Assistant General Manager Bob Ghirelli provided the following information: OCSD received the NACWA Platinum Award for achieving 100% water discharge permit 07/25/2018 Steering Committee Minutes Page 1 of 4 compliance over a consecutive five-year period. He went on to say that General Manager Jim Herberg is in Boston this week attending NACWA's 2018 Utility Leadership Conference where he accepted the award on behalf of OCSD. Mr. Ghirelli informed the Committee that to facilitate the relocation of the Santa Ana River Interceptor Line in 2014, OCSD loaned the County of Orange $56.5 million, pending receipt of funds from the State Flood Control Subventions Program; and further stated that the County has completed full repayment this month. Mr. Ghirelli stated that at the end of this quarter, OCSD posted an impressive 99.4% safety training completion for the fourth quarter of 2018, and a cumulative score of 99%for the entire 2017-18 fiscal year. He stated the safety scorecard is an indication of OCSD's standard commitment to ensure the safety of its employees. In conclusion, Mr. Ghirelli mentioned that an RFP was released this week for State and Federal Lobbyist contracts, with proposals expected towards the end of August. He stated that should any Director receive calls or inquiries regarding this, please have them contact our Purchasing division (Jennifer Martin at ext. 7582). 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 June 27, 2018. AYES: Deaton, Sebourn, Shawver, and Withers NOES: None ABSTENTIONS: None ABSENT: Shaw, Wanke, and Wagner 2. LEASE AGREEMENT WITH CARL KARCHER ENTERPRISES (CKE) PROVIDING DISTRICT PARCEL FOR CKE PARKING AND/OR RELATED ACTIVITIES (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Approve a one year and five-month lease agreement, beginning August 2018, with Carl Karcher Enterprises, Inc (CKE), a California Corporation, to allow paving, striping, parking, and related improvements by CKE within the Orange County Sanitation District's 4-foot wide utility corridor located at 21532 South Brookhurst Street, Huntington Beach. AYES: Deaton, Sebourn, Shawver, and Withers NOES: None ABSTENTIONS: None ABSENT: Shaw, Wanks, and Wagner 07/25/2018 Steering Committee Minutes Page 2 of 4 Director Wagner arrived at 5:09 p.m. NON-CONSENT: Chair Sebourn stated that the Clerk of the Board had provided late communication regarding Item No. 3. 3. LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE (Bob Ghirelli) MOVED, SECONDED, AND DULY CARRIED TO:. Recommend to the Board of Directors to: Adopt Resolution No. OCSD 18-XX 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 17-18", which will amend the rules of procedure to provide for the appointment of a Chairperson and Vice Chairperson of the Legislative and Public Affairs Committee by the Chairperson of the Board of Directors. AYES: Deaton, Sebourn, Shawver, Wagner, and Withers NOES: None ABSTENTIONS: None ABSENT: Shaw and Wanke INFORMATION ITEMS: None. CLOSED SESSION: CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54957(b)(1): The Committee convened in closed session at 5:10 p.m. to discuss one item. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Section 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 5:26 p.m. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: General Counsel Brad Hogin did not provide a report. 07/252018 Steering Committee Minutes Page 3 of 4 OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: Chair Sebourn declared the meeting adjourned at 5.26 p.m. to the next Steering Committee meeting to be held on Wednesday, August 22, 2018 at 5:00 p.m. Submitted by: n A e *KeAe O72512015 Steering Committee Minutes Page 4 of 4 BOARD OF DIRECTORS Meeting Date TOBd.Or Dir. -- 09/26/18 AGENDA REPORT Item Item 3 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 AUGUST 2018 GENERAL MANAGER'S RECOMMENDATION Receive and file the report of the Investment Transactions for the month of August 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 August 31, 2018. RELEVANT STANDARDS CA Government Code Section 53607 PRIOR COMMITTEE/BOARD ACTIONS N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(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 August 31, 2018 Page 1 of 1 U.S. Bank Transaction History O8/01/2018 Thru 08/31/2018 ACQUISMONs 08/02/2018 31WV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 24.421.8200 1.000000 -24,421.82 24,421.82 0.00 O8/02/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 17,002.6800 1.000000 -17,002.68 17,002.68 0.00 08/03/2018 31WV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,300.000.0000 1.000000 -1,300,000.00 1,300,000.00 0.00 O8/06/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,500,000.0000 1.000000 -1,500,000.00 1,500,000.00 0.00 08/06/2018 31WV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 85,050.0000 1.000000 -85,050.00 85,060.00 0.00 O8/07/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 1,010,000.0000 1.000000 -1,010,000.00 1,010,000.00 0.00 08/07/2018 31WV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 32.500.0000 1.000000 -32,500.00 32,500.00 0.00 O8/08/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 23,598.7500 1.000000 -23,598.75 23,598.75 0.00 08/09/2018 318OV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 5,825.000.0000 1.000000 -5,825,000.00 5,825,000.00 0.00 O8/09/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 92,722.6800 1.000000 -92,722.68 92,722.68 0.00 08/15/2018 31BOV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 710,150.0000 1.000000 -710,150.00 710,160.00 0.00 O8/15/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 721,514.5500 1.000000 -721,514.55 721,514.55 0.00 08/15/2018 31BOV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 12,334.2500 1.000000 -12,334.25 12,334.25 0.00 O8/16/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVr OB FD CL Z 89,062.5000 1.000000 -89,062.50 89,062.50 0.00 08/17/2018 31BOV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 13.125.0000 1.000000 -13,125.00 13,125.00 0.00 O8/20/2018 313385F76 PURCHASED PAR VALUE OF F H L B DISC NTS 9/14/18/MIZUHO SECURITIES 3,900,000.0000 0.998667 -3,894,800.00 3,894,800.00 0.00 USA FXD INC/3,900,000 PAR VALUE AT 99,86666667% 08/20/2018 31846V567 PURCHASED UNITS OF FIRST AM DOW OB FD CL Z 4.289.2500 1.000000 -4,289.25 4,289.25 0.00 08/20/201831846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 334,117.9400 1.000000 334,11T94 334,117.94 0.00 08/21/2018 31846V567 PURCHASED UNITS OF FIRST AM DOW OB FD CL Z 126,107.5100 1.000000 -126.107.51 126,107.51 0.00 08/22/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVr OB FD CL Z 5,000,000.0000 1.000000 -5,000,000.00 5,000,000.00 0.00 08/23/2018 31846V567 PURCHASED UNITS OF FIRST AM DOW OB FD CL Z 45.000.0000 1.000000 45,000.00 45,000.00 0.00 08/241201831846V567 PURCHASED UNITS OF FIRST AM GOVr OB FD CL Z 4,268,125.0000 1.000000 4,268,125.00 4,268,125.00 0.00 08/27/2018 912796PY9 PURCHASED PAR VALUE OF U S TREASURY BILL 9I06/18/J.P.MORGAN 5,000.000.0000 0.999467 4,997,333.33 4,997,333.33 0.00 SECURITIES U C/5,000,000 PAR VALUE AT 99.9466666% 08/27/2018 318OV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 5,000,000.0000 1.000000 -5,000,000.00 5,000,000.00 0.00 08/27/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 90,581.0800 1.000000 -90,581.08 90,581.08 0.00 08/27/2018 31BOV567 PURCHASED UNITS OF FIRST AM GOVT OB FD CL Z 26.012.6200 1.000000 -26,012.62 26,012.62 0.00 08/28/2018 43815HAC1 PURCHASED PAR VALUE OF HONDA AUTO 2.950% 8122122/MLPFS INC/FIXED 3,970,000.0000 0.999863 -3,969,455.32 3,969,455.32 0.00 INCOME/3,970,000 PAR VALUE AT 99,9862801 % 08/28/2018 43815HAGI PURCHASED PAR VALUE OF HONDA AUTO 2.950% 8/22122/MLPFS INC/FIXED 3,970.000.0000 0.999863 -3,969,455.32 3,969,455.32 0.00 INCOME/3,970,000 PAR VALUE AT 99.9862801 % 08/29/2018 313383OR5 PURCHASED PAR VALUE OF F H L B DEB 3.250% 6/09123/WELLS FARGO 5,000,000.0000 1.016670 -5,083,350.00 5,083,350.00 0.00 SECURITIES,LLC/5,000,000 PAR VALUE AT 101.667% 1 of 7 U.S. Bank Transaction History 08/01/2018 Thru 08/31/2018 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/29/2018 313385F76 PURCHASED PAR VALUE OF F H L B DISC NTS 9114118/NOMURA SECURITIES 7,000,000.0000 0.999142 -6,993,995.56 6,993,995.56 0.00 INTERNATIONAI7,000,000 PAR VALUE AT 99.91422229% 08/29/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVr OB FD CL Z 3,969,455.3200 1.000000 -3,969,455.32 3,969,455.32 0.00 08/29/2018 43815HAC1 PURCHASE-REV PAR VALUE OF HONDA AUTO 2.950% 8122122 IMLPFS .3,970,000.0000 -0.999863 3,969,455.32 .3,969,455.32 0.00 INC/FIXED INCOME/3,970,000 PAR VALUE AT 99.9862801 % 08/30/2018 313385F50 PURCHASED PAR VALUE OF F H L B DISC NTS 9112/18/CITIGROUP GLOBAL 4,000,000.0000 0.999310 -3,997,241.11 3,997,241.11 0.00 MARKETS INC.I4,000,000 PAR VALUE AT 99.93102775% 08/31/2018 31846V567 PURCHASED UNITS OF FIRST AM GOVr OB FD CL Z 56,250,0000 1.000000 -56,250,00 56,250.00 0.00 TOTAL ACQUISITIONS 59,246,420.9500 59,312,596.27 59,312,596.27 0.00 DISPOSITIONS 08/03/2018 313385A55 MATURED PAR VALUE OF F H L B DISC NTS 8103/181,300,000 PAR VALUE AT -1,300,000,0000 1.000000 1,297,049,72 -1,297,049.72 0.00 100% 08106/2018 02665KH67 MATURED PAR VALUE OF AMERICAN HONDA FIN C P 8/06/181,500,000 PAR -1,500,000.0000 1.000000 1,490,055.00 -1,490,055.00 0.00 VALUE AT 100% 08/07/2018 40428HPUO MATURED PAR VALUE OF HSBC USA INC 2.00W% W07/181,000,000 PAR VALUE .1,000,000.0000 1.000000 1,000,000.00 .999,360.00 640.00 AT 100% 08/09/2018 06417GXH6 MATURED PAR VALUE OF BANK OF NOVA C D 1.570% 8/09118 5,825,000 PAR 5,825,000.0000 1.000000 5,825,000.00 -5,825,000.00 0.00 VALUE AT 100% 08/15/2018 097014AM6 MATURED PAR VALUE OF BOEING CAPITAL CORP 2.900% 8115/18700,000 PAR -700,000.0000 1.000000 700,000.00 -700,973.00 -973.00 VALUE AT 100% 06/15/2018 31348SWZ3 PAID DOWN PAR VALUE OF F H L M C#786064 3.427% 1/01/28 JULY FHLMC -22.5600 0.000000 22.56 -22.01 0.55 DUE 8115118 08/15/2018 3133TOE95 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 3.587% 8/15/32 -1.087.6500 0.000000 1,087.65 .1,088.79 -1.14 08/15/2018 43814QAC2 PAID DOWN PAR VALUE OF HONDA AUTO 1.390% 4/15/20 -102,657.1200 0.000000 102,657.12 -102,655.13 1.99 08/15/2018 47788MA.C4 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.360% 4/15I20 -138.474.4800 0.000000 138,474.48 -138,452.68 21.80 08/15/2018 47787XAB3 PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.500%10/15/19 -132,853.6500 0.000000 132,853.65 -132,853.12 0.53 08/1512018 47788BABO PAID DOWN PAR VALUE OF JOHN DEERE OWNER 1.590% 4/15I20 51,547.6700 0.000000 61,547.67 -61,542.32 5.35 O8/15/2018 65478VAD9 PAID DOWN PAR VALUE OF NISSAN AUTO 1.320% 1/15121 -114,632.5200 0.000000 114,632.52 -113,714.56 917.96 ON15/2018 654747AB0 PAID DOWN PAR VALUE OF NISSAN AUTO 1.470% 1/15I20 -95.059.8600 0.000000 95,059.86 .95,059.37 0.49 O8/2012018 36225CAZ9 PAID DOWN PAR VALUE OF G N M A 11#0800233.125%12/20/26 JULY GNMA -181.5500 0,000000 181.55 -184.55 3.00 DUE 8/20/18 08/20/2018 36225CC20 PAID DOWN PAR VALUE OF G N M A 11#0800883.625% 6/20127 JULY GNMA DUE -209.2800 0.000000 209.28 -213.86 4.58 8120/18 08/20/2018 36225CNM4 PAID DOWN PAR VALUE OF G N M A 11#0803953.625% 4/20130 JULY GNMA DUE -157.7300 0.000000 157.73 .166.30 1.43 8/20/18 2 of U.S. Bank Transaction History 08/01/2018 Thru 08/31/2018 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/20/2018 36225CN28 PAID DOWN PAR VALUE OF G N M A 11#0804083.625% 5120130 JULY GNMA DUE -1,777.6800 0.000000 1,777.68 -1,759.63 18.05 W20/18 O8/20/2018 36225DCB8 PAID DOWN PAR VALUE OF G N M A 11#0809652.750% 7/20/34 JULY GNMA DUE -1,007.2500 0.000000 1,007.25 -1,006.62 0.63 8/20/18 08/20/2018 43814RAGO PAID DOWN PAR VALUE OF HONDA AUTO 1.210%12118/20 -205.725.2500 0.665166 205,725.25 -203,467.09 2,258.16 08/20/201843814PA66 PAID DOWN PAR VALUE OF HONDA AUTO 1.570% 1/21/20 -79,352.7800 1.724470 79,352.78 -79,345.73 7.05 08/20/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z -3,894,800.0000 1.000000 3,894,800.00 -3,894,800.00 0.00 08/21/2018 43814TABB PAID DOWN PAR VALUE OF HONDA AUTO 1.420% 7/22/19 -125,810.2000 0.000000 125,810.20 -125,807.19 3.01 08/22/2018 313385087 MATURED PAR VALUE OF F H L B DISC NTS 8122/185,000,000 PAR VALUE AT -5,000,000.0000 1.000000 4,985,300.00 4,985,300.00 0.00 100% 08/24/2018 313385D29 MATURED PAR VALUE OF F H L B DISC NTS 8124/182,755,000 PAR VALUE AT -2,755.000.0000 1.000000 2,746,900.30 -2,746,900.30 0.00 100% 08/24/2018 4581XOBR8 MATURED PAR VALUE OF INTER AMER DEV BK 1.750% 8/24/18 1,500,000 PAR -1,500,000.0000 1,000000 1,500,000.00 -1,498,672.50 1,327.50 VALUE AT 100% 08/27/2018 313385D52 MATURED PAR VALUE OF F H L B DISC NTS 8127/185,000,000 PAR VALUE AT 5,000,000.0000 1.000000 4,988,916.67 4,988,916.67 0.00 100% 08/27/2018 31394JY35 PAID DOWN PAR VALUE OF F H L M C MLTCL MTG 6.500% 9/25/43 -18,379.1900 0.000000 18,379.19 -20,814.43 -2,435.24 08/27/2018 31371NUC7 PAID DOWN PAR VALUE OF F N M A#257179 4,500% 4101128 JULY FNMA DUE -949.8500 0,000000 949.85 -1,004.56 -54.71 W25/18 08/27/2018 31376KT22 PAID DOWN PAR VALUE OF F N M A#357969 5.000% 9101/35 JULY FNMA DUE -1,116.6400 0.000000 1,116.64 -1,200.39 -83.75 8125118 08/27/2018 31381PDA3 PAID DOWN PAR VALUE OF F N M A#466397 3.400%11/01/20 JULY FNMA DUE -662.3600 0.000000 662.36 -648.03 14.33 8125/18 08/27/2018 31403DJZ3 PAID DOWN PAR VALUE OF F N M A#745580 5.000% 6101/36 JULY FNMA DUE -3,591.6400 0.000000 3,591.64 -3,861.01 -269.37 8125/18 08/27/2018 31403GXF4 PAID DOWN PAR VALUE OF F N M A#748678 5,000%10/01/33 JULY FNMA DUE -198.2600 0,000000 198.26 -213.13 -14.87 W25118 O8/27/2018 31406POY8 PAID DOWN PAR VALUE OF F N M A#815971 5.000% 3/01/35 JULY FNMA DUE -986.3100 0.000000 986.31 -1,060.28 -73.97 8/25/18 08/27/2018 31406XWTS PAID DOWN PAR VALUE OF F N M A#823358 3.481% 2/01/35 JULY FNMA DUE 465.2000 0.000000 465.20 461.57 3.63 8/25/18 08/27/2018 31407BXH7 PAID DOWN PAR VALUE OF F N M A#826080 5.000% 7101/35 JULY FNMA DUE -133.6100 0.000000 133.61 -143.63 .10.02 8/25/18 08/27/2018 31410F4V4 PAID DOWN PAR VALUE OF F N M A#888336 5,000% 7101/36 JULY FNMA DUE -3,788.6200 0,000000 3,788.62 4,072.77 -284.15 8125/18 O8/27/2018 3138EG6F6 PAID DOWN PAR VALUE OF F N M A#AL0869 4.500% 6101/29 JULY FNMA DUE -227.8500 0.000000 227.85 -240.97 -13.12 8125118 3d7 U.S. Bank Transaction History 08/01/2018 Thru 08/31/2018 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/27/2018 31417YAY3 PAID DOWN PAR VALUE OF F N M A#MA0022 4.500% 4/01129 JULY FNMA -332.2000 0.000000 332.20 -351.33 -19,13 DUE 825/18 08/27/2018 31397OREO PAID DOWN PAR VALUE OF F N M A GTD REMIC 1.113% 2/25/41 4,055.8400 0.000000 4,055.84 -4,054.57 1.27 08/27/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z 4,997.333.3300 1.000000 4,997,333.33 4,997,333.33 0.00 O8/28/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z 3,969,455.3200 1.000000 3,969,455.32 -3,969,455.32 0.00 08/28/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z .3,969.455.3200 1.0m000 3,969,455.32 .3,969,455.32 0.00 O8/29/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z 6,993,995.5600 1.000000 6,993,995.56 -6,993,995.56 0.00 08/29/201831846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z .5,119.461.1100 1.0m000 5,119,461.11 .5,119,461.11 0.00 O8/30/2018 31846V567 SOLD UNITS OF FIRST AM GOVT OB FD CL Z 3,997,241.1100 1.000000 3,997,241.11 -3,997,241.11 0.00 TOTAL DISPOSITIONS -58,617,186.5500 56.570,408.24 .58,569,424.56 983.68 OTHER TRANSACTIONS O8/01/2018 31846V567 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 0.0000 0.000000 24,421.82 0.00 0.00 7131/2018 INTEREST FROM 7/1/18 TO 7131118 O8101/2018 31846VS67 INTEREST EARNED ON FIRST AM GOVT OB FD CL Z UNIT ON 0.0000 SHARES DUE 0.0000 0.000000 17,002.68 0.00 0.00 7131/2018 INTEREST FROM 7/1/18 TO 7/31/18 08/03/2018 313385A55 INTEREST EARNED ON F H L B DISC NTS 8/03/18$1 PV ON 1300000.0000 0.0000 0.000000 2,950.28 0.00 0.00 SHARES DUE 8/3/20181,300.000 PAR VALUE AT 100% 08/06/2018 02665KH67 INTEREST EARNED ON AMERICAN HONDA FIN C P 8106/18$1 PV ON 0.0000 0,000000 9,945.00 0.00 0.00 1500000.0000 SHARES DUE W612018 1,500,0W PAR VALUE AT 100% 08/06/2018 44932HAH6 INTEREST EARNED ON IBM CREDIT CORP 3.000% 2/06/23$1 PV ON 5670000.0000 0.0000 0.000000 85,050.00 0.00 0.00 SHARES DUE 8/6/2018 08/07/2018 06406RAA5 INTEREST EARNED ON BANK OF NY MTN 2.600% 2I07/22$1 PV ON 2500000.0000 0.0000 0.000000 32,500.00 0.00 0.00 SHARES DUE 8/7/2018 08/07/2018 40428HPUG INTEREST EARNED ON HSBC USA INC 2.000% 8/07/18$1 PV ON 1000000.0000 0.0000 0.000000 10,000.00 0.00 0.00 SHARES DUE 8/7/2018 08/08/2018 594918BP8 INTEREST EARNED ON MICROSOFT CORP 1,550% 8/08/21 $1 PV ON 0.0000 0.000000 23,598.75 0.00 0.00 3045000.0000 SHARES DUE 8/8/2018 08/09/2018 06417GXH6 INTEREST EARNED ON BANK OF NOVA C D 1.570% 8/09/18$1 PV ON 0.0000 0.000000 92,722.68 0.00 0.00 5825000.0000 SHARES DUE 819/2018 INTEREST ON MATURITY 8/9/18 08/13/2018 912828WUO BOOK VALUE OF U S TREASURY I P S 0.125% 7115/24 ADJUSTED BY 9360.00 UNITS 0.0000 0.000000 0.00 0.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 08/13/2018 912828WUO FED BASIS OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9360.00 UNITS 0.0000 0.000000 0.00 9,360.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 08/13/2018 912828WUO PAR VALUE OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9360.0000 9,360.0000 0.000000 0.00 0.00 0.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 08/13/2018 912828WUO STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9360.00 UNITS 0.0000 0.000000 0.00 0.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 4 of U.S. Bank Transaction History 08/01/2018 Thru 08/31/2018 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/15/2018 02587AAJ3 INTEREST EARNED ON AMERICAN EXPRESS 1.930% 9115/22$1 PV ON 0.0000 0.000000 10,084.25 0.00 0.00 6270000.0000 SHARES DUE V1512018 08/15/2018 02665WAH4 INTEREST EARNED ON AMERICAN HONDA MTN 2.250% 8/15119$1 PV ON 0.0000 0.000000 45,000.00 0.00 0.00 4000000.0000 SHARES DUE 8/1 512 01 8 08/15/2018 097014AM6 INTEREST EARNED ON BOEING CAPITAL CORP 2.900% 8/15118$1 PV ON 0.0000 0.000000 10,150.00 0.00 0.00 700000.0000 SHARES DUE 8/15/2018 08/15/2018 31348SWZ3 INTEREST EARNED ON F H L M C#786064 3.427% 1101128$1 PV ON 5.9600 0.0000 0.000000 5.96 0.00 0.00 SHARES DUE 8/1 512 01 8 JUNE FHLMC DUE 8115/18 08/15/2018 3133TCE95 INTEREST EARNED ON F H L M C MLTCL MTG 3.587% 8/15132$1 PV ON 50.7500 0.0000 0.000000 50.75 0.00 0.00 SHARES DUE 8/1 512 01 8$0.002991PV ON 16,977.40 PV DUE S/15118 O8/15/2018 43814OAC2 INTEREST EARNED ON HONDA AUTO 1.390% 4/15/20$1 PV ON 1062.1400 0.0000 0.000000 1,062.14 0.00 0.00 SHARES DUE 8/1 512 01 8$0.001161PV ON 916,959.49 PV DUE 8115/18 08/15/2018 47788MAG4 INTEREST EARNED ON JOHN DEERE OWNER 1.360% 4/15/20$1 PV ON 1224.7300 0.0000 0.000000 1,224.73 0.00 0.00 SHARES DUE 8/1512018$0.00113/PV ON 1,080,644.50 PV DUE 8/15118 08/15/2018 4778BNAD0 INTEREST EARNED ON JOHN DEERE OWNER 1.490% 5/15/23$1 PV ON 1429.1600 0.0000 0.000000 1,429.16 0.00 0.00 SHARES DUE 8/15I2018$0.00124/PV ON 1,151,000.00 PV DUE 8/15118 08/15/2018 47787XAB3 INTEREST EARNED ON JOHN DEERE OWNER 1.500% 10/15/19$1 PV ON 541.2300 0.0000 0.000000 541.23 0.00 0.00 SHARES DUE 8/15/2018$0.00125/PV ON 432,982.90 PV DUE 8115/18 08/15/2018 47788BABO INTEREST EARNED ON JOHN DEERE OWNER 1.590% 4/15/20$1 PV ON 732.7600 0.0000 0.000000 732.76 0.00 0.00 SHARES DUE 8/1 512 01 8$0.001331PV ON 553,024.28 PV DUE 8115/18 08/15/2018 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 8/15/2018$0.00152/PV ON 675,000.00 PV DUE 8/15/18 08/15/2018 477BBCABB INTEREST EARNED ON JOHN DEERE OWNER 2.420% 10/15/20$1 PV ON 3630.0000 0.0000 0.000000 3,630.00 0.00 0.00 SHARES DUE BJ1512018$0.00202IPV ON 1,800,000.00 PV DUE 8/15118 08/15/2018 47788CAC6 INTEREST EARNED ON JOHN DEERE OWNER 2.660% 4/18122$1 PV ON 2970.3300 0.0000 0,000000 2,970.33 0.00 0.00 SHARES DUE 811 512 01 8$0.00222IPV ON 1,340,000.00 PV DUE 8/15118 08/15/2018 65478VAD9 INTEREST EARNED ON NISSAN AUTO 1.320% 1/15121 $1 PV ON 1752.3200 0.0000 0.000000 1,752.32 0.00 0.00 SHARES DUE 811 512 01 8$0.00110/PV ON 1,593,021.24 PV DUE 8115/18 08/15/2018 654747ABO INTEREST EARNED ON NISSAN AUTO 1.470% 1115/20$1 PV ON 656.4100 0.0000 0.000000 656.41 0.00 0.00 SHARES DUE 8/1 512 01 8$0.00123/PV ON 535,842.00 PV DUE 8/15/18 08/15/2018 65477UAD2 INTEREST EARNED ON NISSAN AUTO 1.500% 9/15/21 $1 PV ON 2250.0000 0.0000 0.0m000 2,250.00 0.00 0.00 SHARES DUE 8/15/2018$0.001251PV ON 1,800,000.00 PV DUE 8/15118 08/15/2018 65479GAD1 INTEREST EARNED ON NISSAN AUTO 3.060% 3/15123$1 PV ON 6052,0000 0.0000 0.000000 6,052.00 0.00 0.00 SHARES DUE W1512018$0.00170/PV ON 3,560,000.00 PV DUE S/15118 O8/15/2018 89238BABB INTEREST EARNED ON TOVOTA AUTO 2.100%10/15/20$1 PV ON 9047.5000 0.0000 0.000000 9,047.50 0.00 0.00 SHARES DUE 8/15/2018$0.00175/PV ON 5,170,000.00 PV DUE 8115/18 08/16/2018 3137EAEL9 INTEREST EARNED ON F H L M C M T N 2.375% 2/16/21$1 PV ON 7500000.0000 0.0000 0.000000 89,062.50 0.00 0.00 SHARES DUE 8116/2018 5 of U.S. Bank Transaction History 08/01/2018 Thru 08/31/2018 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/17/2018 69353RF69 INTEREST EARNED ON PNC BANK NA MTN 2.625% 2/17/22$1 PV ON 0.0000 0.000000 13,125.00 0.00 0.00 1000000.0000 SHARES DUE all712018 08/20/2018 3130A7CV5 INTEREST EARNED ON F H L B DEB 1.375% 2I18/21 $1 PV ON 5365000.0000 0.0000 0.000000 36,884.38 0.00 0.00 SHARES DUE 8/18/2018 08/20/2018 36225CAZ9 INTEREST EARNED ON G N M A 114080023 3.125% 12I20/26$1 PV ON 52.2700 0.0000 0.000000 52.27 0.00 0.00 SHARES DUE 8/2 012 01 8 JULY GNMA DUE 8/20/18 08/20/2018 36225CC20 INTEREST EARNED ON G N M A 11#080088 3.625% 6/20/27$1 PV ON 64.7000 0.0000 0.000000 64.70 0.00 0.00 SHARES DUE 8/2012018 JULY GNMA DUE a/20118 08/20/2018 36225CNM4 INTEREST EARNED ON G N M A 11#0803953,625% 4/20/30$1 PV ON 24,6600 0.0000 0.000000 24.66 0.00 0.00 SHARES DUE a/2012018 JULY GNMA DUE 8120118 O8/20/2018 36225CN28 INTEREST EARNED ON G N M A 11#080408 3.625% 5/20/30$1 PV ON 194.9900 0.0000 0.000000 194.99 0.00 0.00 SHARES DUE 8/20/2018 JULY GNMA DUE 8120118 08/20/2018 36225DCB8 INTEREST EARNED ON G N M A 11#080965 2.750% 7/20/34$1 PV ON 140A600 0.0000 0.000000 140.16 0.00 0.00 SHARES DUE 8/2 012 01 8 JULY GNMA DUE 8120/18 08/20/2018 43814RAC0 INTEREST EARNED ON HONDA AUTO 1.210%12/18/20$1 PV ON 2865.6400 0.0000 0.000000 2,865.64 0.00 0.00 SHARES DUE 8/18/2018$0.00101/PV ON 2,841,958.69 PV DUE 8118118 08/20/2018 43814PAB6 INTEREST EARNED ON HONDA AUTO 1.570% 1121120$1 PV ON 870.3700 0,0000 0.000000 870.37 0.00 0.00 SHARES DUE 8/18/2018$0.001311PV ON 665,254.21 PV DUE 8/18/18 08/20/2018 43814PAC4 INTEREST EARNED ON HONDA AUTO 1.790% 9/20/21 $1 PV ON 4609.2500 0.0000 0.000000 4,609.25 0.00 0.00 SHARES DUE 8/18/2018$0.001491PV ON 3,090,000.00 PV DUE 8118/18 08/20/2018 43814UAG4 INTEREST EARNED ON HONDA AUTO 3.010% 5118/22$1 PV ON 1710000.0000 0.0000 0.000000 4,289.25 0.00 0.00 SHARES DUE 8/1812018 08/21/2018 43814TABB INTEREST EARNED ON HONDA AUTO 1.420% 7/22/19$1 PV ON 297.3100 0.0000 0.000000 297.31 0.00 0.00 SHARES DUE 8/21/2018$0.001181PV ON 251,248.92 PV DUE 8/21/18 08/22/2018 313385C87 INTEREST EARNED ON F H L B DISC NTS 8122/18$1 PV ON 5000000.0000 0.0000 0.000000 14,700.00 0.00 0.00 SHARES DUE a/2212018 5,000,000 PAR VALUE AT 100% O8/23/2018 037833BSB INTEREST EARNED ON APPLE INC 2.250% 2/23/21 $1 PV ON 4000000.0000 0.0000 0.000000 45,000.00 0.00 0.00 SHARES DUE 8/23/2018 O8/2412018 313385D29 INTEREST EARNED ON F H L B DISC NTS 8/24/18$1 PV ON 2755000.0000 0.0000 0.000000 8,099.70 0.00 0.00 SHARES DUE 8/2412018 2,755,000 PAR VALUE AT 100% 08/24/2018 4581XOBRB INTEREST EARNED ON INTER AMER DEV BK 1.750% B124/18$1 PV ON 0.0000 0.000000 13,125.00 0.00 0.00 1500000.0000 SHARES DUE 8/2412 01 8 08/27/2018 03215PFN4 INTEREST EARNED ON AMRESCO 3.30403% 6125/29$1 PV ON 368,2400 0.0000 0.000000 368.24 0.00 0.00 SHARES DUE 8/25/2018$0.00275/PV ON 133,743.29 PV DUE 8/25/18 O8/27/2018 313385D52 INTEREST EARNED ON F H L B DISC NTS 8127/18$1 PV ON 5000000.0000 0.0000 0.000000 11,083.33 0.00 0.00 SHARES DUE 8/27/2018 5,000,000 PAR VALUE AT 100% 08/27/2018 31398VJ98 INTEREST EARNED ON F H L M C MLTCL MTG 4.251% 1125/20$1 PV ON 900000.0000 0.0000 0.000000 3,188.25 0.00 0.00 SHARES DUE 8/25/2018 6 of U.S. Bank Transaction History 08/01/2018 Thru 08/31/2018 Entry Date CUSIP Id Explanation Units Price Net Cash Amt Cost Gain/Loss 08/27/2018 31371 NUC7 INTEREST EARNED ON F N M A#P57179 4.500% 4101128$1 PV ON 71.9700 0.0000 0.000000 71.97 0.00 0.00 SHARES DUE 812 512 01 8 JULY FNMA DUE 8125/18 O8/27/2018 31376KT22 INTEREST EARNED ON F N M A#357969 5.000% 9/01135$1 PV ON 488.5200 0.0000 0.000000 488.52 0.00 0.00 SHARES DUE 812 512 01 8 JULY FNMA DUE 8125/18 08/27/2018 31381PDA3 INTEREST EARNED ON F N M A#466397 3.400%11/01/20$1 PV ON 1016.5700 0.0000 0.000000 1,016.57 0.00 0.00 SHARES DUE 812 512 01 8 JULY FNMA DUE 8125/18 08/27/2018 31403DJZ3 INTEREST EARNED ON F N M A#745580 5.000% W01136$1 PV ON 488.2900 0.0000 0.000000 40.29 0.00 0.00 SHARES DUE 8/25/2018 JULY FNMA DUE 8125/18 08/27/2018 31403GXF4 INTEREST EARNED ON F N M A#748678 5,000%10/01/33$1 PV ON 11.5900 0.0000 0.000000 11.59 0.00 0.00 SHARES DUE a/2512018 JULY FNMA DUE W25118 O8/27/2018 31406POY8 INTEREST EARNED ON F N M A#815971 5.000% 3101/35$1 PV ON 827.5900 0.0000 0.000000 827.59 0.00 0.00 SHARES DUE 812 512 01 8 JULY FNMA DUE 8125/18 08/27/2018 31406XWTS INTEREST EARNED ON F N M A#823358 3.481% 2101135$1 PV ON 352.5300 0.0000 0.000000 352.53 0.00 0.00 SHARES DUE 812 512 01 8 JULY FNMA DUE 8125/18 08M7/2018 31407BXH7 INTEREST EARNED ON F N M A#826080 5.000% 7/01135$1 PV ON 94.8600 0.0000 0.000000 94.86 0.00 0.00 SHARES DUE 8/2 512 01 8 JULY FNMA DUE 8125/18 08/27/2018 31410F4V4 INTEREST EARNED ON F N M A#888336 5,000% 7101136$1 PV ON 946,2100 0.0000 0.000000 946.21 0.00 0.00 SHARES DUE a/2512018 JULY FNMA DUE B125/18 08/27/2018 3138EG6F6 INTEREST EARNED ON F N M A#AL0869 4.500% 6/01/29$1 PV ON 48.1500 0.0000 0.000000 48.15 0.00 0.00 SHARES DUE 812 512 01 8 JULY FNMA DUE 8125/18 08/27/2018 31417YAY3 INTEREST EARNED ON F N M A#MA0022 4.500% 4/01/29$1 PV ON 78.6500 0.0000 0.000000 78.65 0.00 0.00 SHARES DUE 812 512 01 8 JULY FNMA DUE 8125/18 08/27/2018 3135GOJ20 INTEREST EARNED ON F N M A DEB 1.375% 2/26/21 $1 PV ON 10000000.0000 0.0000 0.000000 68,750.00 0.00 0.00 SHARES DUE 8/26/2018 08/27/2018 31397QREO INTEREST EARNED ON F N M A GTD REMIC 1.113% 2/25/41 $1 PV ON 529.5300 0.0000 0,000000 529.53 0.00 0.00 SHARES DUE 8/25/2018$0.00229/PV ON 231,602.87 PV DUE 8/25/18 O8/29/2018 912828WUO BOOK VALUE OF U S TREASURY I P S 0.125% 7115/24 ADJUSTED BY 9048.00 UNITS 0.0000 0.000000 0.00 0.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 08/29/2018 912828WUO FED BASIS OF U S TREASURY I P S 0.125% 7/15124 ADJUSTED BY 9048.00 UNITS 0.0000 0.000000 0.00 9,048.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 08/29/2018 313383OR5 PAID ACCRUED INTEREST ON PURCHASE OF F H L B DEB 3.250% 6/09/23 0.0000 0.000000 36,111.11 0.00 0.00 O8/2912018 912828WUO PAR VALUE OF U S TREASURY I P S 0.125% 7I15/24 ADJUSTED BY 9048.0000 9,048.0000 0.000000 0.00 0.00 0.00 UNITS INCREASE TO ADJUST FOR CHANGE IN CPI 08/29/2018 91282SWUO STATE COST OF U S TREASURY I P S 0.125% 7/15/24 ADJUSTED BY 9048.00 UNITS 0.0000 0.000000 0.00 0.00 0.00 INCREASE TO ADJUST FOR CHANGE IN CPI 08/31/2018 912828124 INTEREST EARNED ON U S TREASURY NT 1.875% W31122$1 PV ON 6000000.0000 0.0000 0.000000 56,250.00 0.00 0.00 SHARES DUE 8/31/2018 TOTAL OTHER TRANSACTIONS 18,408.0000 737,742.85 18,408.00 0.00 7 of OPERATIONS COMMITTEE Meeting Date TOBa.Oroir. 09/OS118 09/26/18 AGENDA REPORT ItemNumber Item Number z a Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: PLANT NO. 1 LABORATORY BUILDING UPS SYSTEM REPLACEMENT, PROJECT NO. MP-433 GENERAL MANAGER'S RECOMMENDATION A. Approve a Purchase Order contract for the purchase and installation of an uninterruptible power supply system for the Plant No. 1 Laboratory Building, Project No. MP-433, using the U.S. Communities Master Agreement No. EV2370 to Graybar Electric, for an amount not to exceed $233,536; and B. Approve a contingency of$46,707 (20%). BACKGROUND Orange County Sanitation District's (Sanitation District) wastewater treatment facilities include critical control systems, networking equipment, and critical facilities such as the Plant No. 1 Laboratory Building. The Laboratory Building houses critical and sensitive analytical equipment for the analysis of the numerous treatment process system samples in accordance with regulatory requirements. The laboratory systems must remain in continuous service, even during a power interruption. For this reason, this equipment requires an uninterruptible power supply (UPS). RELEVANT STANDARDS • Protect Orange County Sanitation District assets • 24/7/365 treatment plant reliability PROBLEM The existing Laboratory Building UPS system is obsolete, prone to failure, and has proven to be unreliable and expensive to maintain. PROPOSED SOLUTION Staff recommends replacing the existing Laboratory Building UPS system with a new, more reliable UPS system that will include enhanced features to easily isolate and maintain the UPS units. Page 1 d 2 TIMING CONCERNS Due to the present unreliability of the Laboratory Building UPS system, proceeding in a timely fashion is desired. RAMIFICATIONS OF NOT TAKING ACTION Not taking action will mean that the Plant No. 1 Laboratory Building analytical and sampling systems are more susceptible to failure. Timely processing and analysis of critical treatment plant process samples could be disrupted resulting in loss of critical data for the operation of the treatment facilities. PRIOR COMMITTEE ACTIONS N/A ADDITIONAL INFORMATION The Laboratory Building at Plant No. 1 includes three UPS Modules: one is located on the first floor and two others are on the second Floor. The scope of this project covers replacement of all three UPS Modules with new UPS's, modification of existing power supply source (installation of new breakers in existing power panels, splicing existing feeder cables and routing to new UPS's, testing and commissioning of new equipment, and subsequent cutovers to existing Panels). A 20% contingency (-7% per UPS) has been suggested to cover any unforeseen issues during the construction phase of the Project. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted in the FY 18/19 Budget, Operations and Maintenance Capital Program (Section 8, Page 50). Date of Approval Contract Amount Continnencv 09/26/18 $233,536 $46,707(20%) ATTACHMENTS The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: N/A Page 2 d 2 OPERATIONS COMMITTEE Meeting Date TOBa.Oroir. 09/OS118 09/26/18 AGENDA REPORT ItemNumber Item Number s s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: PROTECTIVE RELAY AND CIRCUIT BREAKER TESTING, SPECIFICATION NO. S-2018-94OBD GENERAL MANAGER'S RECOMMENDATION A. Award a Service Contract to Western Electrical Services for Protective Relay and Circuit Breaker Testing at Plant Nos. 1 and 2, Specification No. S-2018-940-BD, for a total amount not to exceed $437,670; and B. Approve a contingency of$87,534 (20%). BACKGROUND Electrical Relays and Circuit Breakers are protective devices that serve as the watchdogs in an electrical power system. These devices are designed to continuously monitor electrical circuits for problems (like short circuits) over the decades-long lifespan of the equipment. Yet, if a problem arises at any time, those same devices must swiftly and reliably trip circuit breakers in split-seconds to prevent injury to personnel and reduce damage to equipment. It is therefore necessary to periodically test the devices to ensure that they will work when required. RELEVANT STANDARDS • Protect Orange County Sanitation District assets • 24/7/365 treatment plant reliability • Maintain a proactive asset management program PROBLEM The protective relays and circuit breakers must be tested every 3-4 years to confirm they are properly set and make sure that they will work reliably and safely when an actual power problem occurs. PROPOSED SOLUTION Due to the significant labor effort involved in testing approximately 1,250 protective relays and circuit breakers, this work must be contracted out. Staff recommends awarding a Service Contract to Western Electrical Services to provide Protective Relay and Circuit Breaker Testing Services for Treatment Plant Nos. 1 and 2. Page 1 of 3 TIMING CONCERNS Approval by the Board of Directors is necessary to ensure the Orange County Sanitation District (Sanitation District) can verify by testing that treatment plant power systems are safe, reliable, and conform to NFPA70B (National Fire Protection Association)standards. RAMIFICATIONS OF NOT TAKING ACTION If the testing services are not soon performed, the operational status of protective relays and circuit breakers will continue to be unverified, resulting in greater risk of potential injury and equipment damage, loss of power, and unscheduled plant shutdowns. PRIOR COMMITTEE/BOARD ACTIONS February 2014 - Award of a contract for Electrical Relay Testing and Calibration, Specification No. 5-2013-574-R2 to Power Testing and Energization. ADDITIONAL INFORMATION The Sanitation District issued a Notice Inviting Bids on May 16, 2018 for protective relay and circuit breaker testing at the treatment plants. Four(4) sealed bids were received on June 26, 2018. The bids were evaluated in accordance with the Sanitation District's policies and procedures. After the issuance of the Notice of Intent to Award on July 5, 2018, the lowest responsive bidder (Electric Power Systems)withdrew their Bid on July 9, 2018 due to their incorrect cost calculations for this contract. Furthermore, the next lowest Bid received (submitted by General Electric International Inc.) was considered as non-responsive as they did not meet the NIB's (National Insurance Board) Contractor Staff NETA (National Electrical Testing Association) Certification Requirements. The third lowest responsive bid was submitted by Western Electrical Services for$437,670. Staff recommends awarding a service contract to the lowest responsive and responsible bidder, Western Electrical Services, for Protective Relay and Circuit Breaker Testing. Summary information of the bids received is as follows: Bidder Amount Electric Power Systems $255,335 (Withdrew Bid General Electric International, Inc. $427,885.57 (Non-Responsive) Western Electrical Services $437,670 Applied Engineering Concepts $599,790 A contingency of 20% is recommended because of the potential for additional work required to troubleshoot and repairfaulty electrical equipment revealed by the testing and for rescheduling testing of critical equipment due to potential operating constraints. Page 2 d 3 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 FY18/19 Operating Budget, Divisions 870 and 880, Plant Nos. 1 and 2 Maintenance (Section 6, Pages 92 and 100, Line item: Repairs and Maintenance). Date of Approval Contract Amount Contingency 09/26/18 $437,670 $87,334 (20%) 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 d 3 SERVICE CONTRACT P1 & P2 Electrical Relay Testing Specification No. S-2018-94OBD 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 Western Electrical Services with a principal place of business at 5505 Daniels Street, Chino, CA 91710 (hereinafter referred to as "Contractor") collectively referred to as the "Parties". WITNESSETH WHEREAS, OCSD desires to temporarily retain the services of Contractor for P1 & P2 Electrical Relay Testing "Services"as described in Exhibit"A"; and WHEREAS, OCSD has chosen Contractor to conduct Services in accordance with Ordinance No. OCSD-52; and WHEREAS, on September 26,2018,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. Exhibit "A" Scope of Work Exhibit"B" Bid Exhibit"C" Acknowledgement of Insurance Requirements Exhibit"D" OCSD Safety Standards Exhibit"E" Performance Bond 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-2018-9408D Version 032018 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. 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 four hundred thirty-seven thousand six hundred and seventy Dollars ($437,670.00). 3. California Department of Industrial Relations (DIR) Registration and Record of Wages 3.1 To the extent Contractor'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., 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). Orange County Sanitation District 2 of 10 Specification No. S-2018-9408D Version 032018 4. Payments and Invoicing 4.1 Contractor shall be paid monthly by OCSD upon approval of invoices by OCSD's Project Manager or designee, for Services rendered as required in 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 APStafflaDOCSD.com and "INVOICE" with the Purchase Order Number and 5-2018- 94oBD shall be referenced in the subject line. 5. Audit Rights Contractor agrees that, during the term of this Contract and for a period of Tree (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. Scope 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 Agreement shall be for a period of seventy-two (72) weeks commencing on November 1, 2018. 9. Renewals(Not used) 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: Orange County Sanitation District 3 of 10 Specification No. S-2018-9408D Version 032018 • 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. 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. Bonds Contractor shall, before entering upon the performance of this Contract, furnish a bond (attached hereto in Exhibit "E") approved by OCSD's General Counsel - one in the amount of one hundred percent (100%) of the total Contract price bid, to guarantee the faithful performance of the work, and the other in the amount of one hundred percent(100%)of the total Contract price bid, to guarantee payment of all claims for labor and materials furnished. This Contract shall not become effective until such a bond is supplied to and accepted by OCSD. The Bond must be issued by a California admitted surety and must be maintained throughout the life of the Contract and during the warranty period 15. Indemnification and Hold Harmiess 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 Orange County Sanitation District 4 of 10 Specification No. S-2018-9408D Version 032018 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. 16. 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". 17. Warranties In addition to the warranties stated in Exhibit "A", the following shall apply: 17.1 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. 17.2 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. 18. Liguidated Damages (Not used) 19. Force Maieure Neither party shall be liable for delays caused by accident, flood, acts of God,fire, labor trouble,war, ads of government or any other cause beyond its control, but said party shall use reasonable efforts to minimize the extent of the delay. Work affected by a Force Majeure condition may be rescheduled by mutual consent or may be eliminated from the Contract. 20. Freight(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. 21. Familiarity with Work By executing this Contract, Contractor warrants that: 1) it has investigated the work to be performed; 2) it has investigated the site of the work and is aware of all conditions there; and 3) it understands the facilities,difficulties and restrictions of the work under this Contract. Should 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. 22. Regulatory 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. Orange County Sanitation District 5 of 10 Specification No. S-2018-9408D Version 032018 23. Licenses, Permits. Ordinances. and Regulations 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. 24. Applicable Laws and Regulations 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. 25. Contractor's Employees Compensation 25.1 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. 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 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, OCSD Wil 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 — 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. 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 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. Orange County Sanitation District 6 of 10 Specification No. S-2018-9408D Version 032018 25.5 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. 25.6 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. 26. 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. 27. Governina 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. 28. 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. 29. Remedies In addition to other remedies available in law or equity, H 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. Orange County Sanitation District 7 of 10 Specification No. S-2018-9408D Version 032018 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 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 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 attorneys 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 Forum for Enforcement, shall survive termination or expiration of this Contract. 33. 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. 34. 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. 35. Disclosure Contractor 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 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. Orange County Sanitation District 8 of 10 Specification No. S-2018-9408D Version 032018 37. Limitations upon Subcontracting 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. 38. Third Party Rights Nothing in this Contract shall be construed to give any rights or benefits to anyone other than OCSD and Contractor. 39. Non-Liability of OCSD Officers and Emplovees 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. 40. Read and Understood By signing this Contract, Contractor represents that he has read and understood the terms and conditions of the Contract. 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. 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: Darius Ghazi Senior Buyer Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708 Contractor: Mike Kelly Sales Manager Western Electrical Services 5505 Daniels Street Chino, CA 91710 Each party shall provide the other party written notice of any change in address as soon as practicable. Orange County Sanitation District 9 of 10 Specification No. S-2018-9408D Version 032018 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 A. Lore Clerk of the Board Dated: By: Marc Dubois Contracts, Purchasing and Materials Management Manager WESTERN ELECTRICAL SERVICES Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number Orange County Sanitation District 10 of 10 Specification No. S-2018-9408D Version 032018 OPERATIONS COMMITTEE Meeting Date TOBa.Oroir. 09/OS118 09/26/18 AGENDA REPORT Item Item Number 9 fi Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: TRICKLING FILTER "A" PLANT NO. 2 REPAIR GENERAL MANAGER'S RECOMMENDATION A. Approve a Sole Source Purchase Order to Ovivo USA, LLC to refurbish and repair Trickling Filter "A" rotary distributor and associated damaged components for a total amount not to exceed $175,085; B. Approve a contingency of$35,017 (20%); and C. Approve Amendment to Orange County Sanitation District Purchase Order Terms and Conditions. BACKGROUND The trickling filter process is one of two secondary treatment processes at the Orange County Sanitation District's (Sanitation District) Plant No. 2 that remove suspended and dissolved organic material using microorganisms enabling us to meet our ocean discharge permit limits. The other process is pure oxygen activated sludge. The Trickling Filter process consists of three reactors, A, B, and C. The mechanical gear box on Trickling Filter"A"failed and is in need of repair. RELEVANT STANDARDS • 24/7/365 treatment plant reliability Operate and maintain facilities to minimize impacts on surrounding communities, including odor, noise, and lighting PROBLEM The trickling filter "A" rotary distribution arm gearbox support bracket fasteners failed causing the gearbox to break loose and cause further damage to the trickling filter mechanism. PROPOSED SOLUTION Replace rotary distributor components as a turnkey project using Ovivo USA, LLC and change all parts that were damaged as part of the support bracket fasteners failure. Page 1 d 2 RAMIFICATIONS OF NOT TAKING ACTION Failure to repair the trickling filter components will result in inconsistent secondary treatment performance as well as contribute to additional odors at Plant No. 2. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The distribution arms are working in hydraulic mode which prevents us from flushing and managing the biological layer, as well as controlling speed of rotation. This results in potentially more odors and inconsistent treatment performance. Ovivo USA, LLC has been approved by the Board of Directors as a sole source provider of Trickling Filter Parts. Ovivo requested modifications to the Purchasing Order Terms and Conditions which have been reviewed and accepted by General Counsel and are attached hereto as Attachment "A." A contingency of 20% is requested to cover additional costs for labor and materials should further damage be discovered once the mechanical housings are removed. With these housings in place, the ability to view the components and conduct a thorough inspection is impaired. CEQA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation Districfs Purchasing Ordinance. This item has been budgeted the FY17/18 budget, Division 880 (Line item: Repairs and Maintenance, Section 6, Page 100). Date of Approval Contract Amount Contingency 09/26/18 $175,085 $35,017 (20%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: Amendment to Orange County Sanitation District Purchase Order Terms and Conditions Page 2 d 2 Amendment to Orange County Sanitation District Purchase Order Terms and Conditions In the event of conflict between the Purchase Order documents("Purchase Order")and the Amendment herein, the terms of the Amendment shall control. The parties are Orange County Sanitation District("OCSD")and Ovivo USA, LLC("Contractor"). Limitation of Liability and Consequential Damage Disclaimer To the extent permissible by applicable law, Contractor shall have no further liability in connection with this Purchase Order in excess of the cost of correcting any defects, or in the absence of any defect, in excess of the value of the equipment supplied hereunder. However,notwithstanding any other provision of the Purchase Order to the contrary, in no event shall Contractor be liable for any punitive, exemplary, special, incidental, or consequential loss or damage suffered by OCSD,or any other party, in connection with this Purchase Order. These limits shall not apply to third party claims based on injury, death, or property damage. These limits shall not apply to claims which are based on the willful misconduct,gross negligence,or fraud of the Contractor. Liquidated Damages Except in cases of Force Majeure, Contractor agrees to pay OCSD, as liquidated damages, one hundred dollars ($100) per day for every working day of delay attributable to Contractor. Contractor's liability for liquidated damages shall not exceed,in the aggregate,any amount more than ten percent(10%)of the Purchase Order price. Contractor shall not be liable to pay liquidated damages for solely Owner/OCSD-caused delays such as late drawing approval, inspection delays, scope changes etc. Notwithstanding any other provision of the Purchase Order to the contrary, payment of liquidated damages shall be Contractor's sole liability and OCSD's sole remedy for delays. Such remedies shall not be enforced unless OCSD suffers an economic loss as a result of Contractors delay. Indemnity Any and all indemnity obligations of Contractor in connection with this Purchase Order shall be limited to the extent of Contractor's fault. Insurance Contractor shall maintain its current level of insurance for the duration of the Purchase Order, as set forth in sample certificate of insurance,attached hereto as Exhibit A. Certificates of insurance shall be sufficient evidence of coverage,and in no event,will Contractor be required to provide copies of insurance policies. Bonds In no event shall Contractor be required to provide a Bond for which the value exceeds the Purchase Order price, nor a duration which exceeds the first twenty-four(24) months of the warranty period. Orange County Sanitation District Ovivo USA, LLC ("OCSD") ("Contractor") By: By: Marc Dubois Name: Purchasing Manager Title: Date: Date: 1330529.1 OPERATIONS COMMITTEE Melting D310 TOBd.Or .Dir. 09/OS118 09/26/18 AGENDA REPORT Item1umber Item Number o Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager 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 June 30, 2018. 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 June 30, 2018. 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 June 30, 2018 JM:dm:gc Page 1 of 1 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending June 30, 2018 DATE: August 14, 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 FE17-03 Battery Storage System at Plant Service & 25-Apr-18 No. 1 Installation Contracts Awards 2-72B Newhope-Placentia Trunk Contract Award 30-May-18 Replacement, Segment B J-126L Safety Improvements Program Contract Award 27-Jun-18 The Battery Storage System at Plant No. 1, Project No. FE17-03 involved award of a service contract to install, operate, and maintain a battery energy storage system at Plant No. 1 to reduce peak electric demand charges, and a second contract for the installation Page 1 of 5 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending June 30, 2018 of a replacement feeder cable to accommodate the storage system. The topic was presented at the April Operations Committee Meeting. Anticipated Activity in Next Quarter FE16-14 Slater Pump Station Valve Contract Award 22-Aug-18 Replacements 2-41-8 SARI Rock Stabilizers Removal Contract Award 26-Sep-18 J-126JK Stairs, Hatches, Walkway Hazards, Contract Award 26-Sep-18 Ladders, Guardrails, Roof Fall Protection FE15-06 Gas Compressor Building Piping Final Completion 02-Jul-18 Replacement at Plant 2 J-126E Roof Fall Protection and Skylights Final Completion 23-Jul-18 P2-118 Activated Sludge Aeration Basin Deck Final Completion 25.1ul-18 Repair at Plant No. 2 FE15-09 CenGen Hot Water Pipe Bracing at Final Completion 01-Aug-18 Plant 1 FE16-05 Buried Water Valve Support Final Completion 06-Aug-18 Upgrades at Plant 2 FE14-03 Rehabilitation of Digester Mixing Final Completion 31-Aug-18 Pumps at P2 Digesters E, H, R, S, and T FE16-12 Garfield Road Perimeter Security Final Completion 19-Sep-18 Fence 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. Page 2 of 5 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending June 30, 2018 Activity in Last Quarter P2-124 Interim Food Waste Receiving RFP 15-May-18 Facility Advertisement PS17-03 Active Fault Location Study at Plant RFP 26-Jun-18 No. 2 Advertisement RE17-02 Biogas Scrubber Evaluation PDSA Award 27-Jun-18 FE18-00 Master Professional Design PDSA Awards 27-Jun-18 Services Agreements (8 firms) Anticipated Activity in Next Quarter P1-132 Uninterruptable Power Supply RFP 08-Aug-18 Improvements at Plant 1 Advertisement 132-125 Plant 2 Southwest Perimeter RFP 01-Oct-18 Screening Advertisement 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 seven sets of Master Agreements. 2009 Master Design Agreements (expired) 2012 Master Design Agreements (expired) 2015 Master Design Agreements (expired) 2018 Master Design Agreements (approved in June 2018) • 2017 Master Agreements for CEQA Studies 2017 Master Agreements for Collection Planning Studies 2017 Master Agreements for Wastewater Treatment Planning Studies Page 3 of 5 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending June 30, 2018 The three Master Design Agreements from 2009, 2012, and 2015 have expired, meaning no new task orders can be issued under them, but previously-issued task orders remain active until completed. Sanitation District Ordinance No. OCSD-47, adopted by the Board in May 2018, increased the task order limit from $200,00 to $300,000. The limits for all four unexpired Master Agreements will be amended to reflect the new limit. 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. 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 The recently-adopted Budget for Fiscal Years 2018-2019 and 2019-2020 includes a new Master Program for Small Construction Projects, which replaces the Facilities Engineering Programs for Collections and Plant. This will be reflected in the CIP Contract Performance Report for the quarter ending September 30, 2018. 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. Page 4 of 5 ORANGE COUNTY SANITATION DISTRICT Capital Improvement Program Contract Performance Report For the period ending June 30, 2018 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 2.4—Activity Report for 2018 Master Professional Design Services Agreements Table 2.5—Activity Report for 2017 Master Agreements for CEQA Studies Table 2.6—Activity Report for 2018 Master Agreements for Collection Planning Studies Table 2.7—Activity Report for 2018 Master Agreements for Wastewater Treatment Studies 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 5 of 5 Chart 1.1 Program Overview CUMULATIVE DATA THROUGH QUARTER ENDING JUNE 30,20184 QTR FY17/18 •Collections .Collections • Plant Projects .Plant Projects CLOSED PROJECTS DISTRIBUTION BY CATEGORY* ACTIVE PROJECTS DISTRIBUTION BY CATEGORY Total Base Contract Value $ 1,233,271,140 Total Base Contract Value $ 240,958,183 Collections $ 297,116,525 24.0% Collections $ 20,520,301 8.5% Plant Projects $ 936,154,615 76.0% Plant Projects $ 220,437,882 91.5% Total Base#of Contracts 69 Total Base#of Contracts 20 Collections 30 Collections 3 Plant Projects 39 Plant Projects 17 `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% 4.84% 4.85% 4.99% 4.67% 4.59% 3.84% 4M% 3.78% 3.78% 3.51% 3.52% 3.37% 3.00% 2.00% 1.00% 0.00% o $ eo 0 0 $ eo 8 c $ 8 c c c 8 8 c c c c c $ c 8 c $ eo 8 c $ 8 c c $ S 8 c c 8 c c $ c $ o o $ $ $ $ o 0 0 o e e e e w w m m a a a a a a a 8 8 8 8 8 8 8 c 8 8 8 8 8 8 c 8 8 c 8 8 8 c 8 8 c 8 8 c 8 8 8 c 8 8 c 8 Chart 1.3 Change Order Rates Over Time Closed Collections Projects 14.00% 12.35% 12.00% y 19% 10.00% 9.53% 8.91% 8.00% 7.14% 6.97% 7.14% 7.10% 6.77% 5.19% 5.88% 5.88% 5.81% 6.00% 5.52% 5.51% 5.34% 5.43% 5.51% 4.00% 2.00% 0.00% oac+ ac+ adaaaaaaaaaaaaaaaaaa -0C'f aaaaaaaaaaaa Chart 1.4 Change Order Rates Over Time Closed Plant Projects 7.00% 6.00% 5.73% 5.00% 4.31% q 28% 4.36% 4.19% 4.18% q 11% 4.20% 4.02% 4.00% 3.89% 3.11% 3.00% 2.88% 2.90% 2.70% 2.59% 2.00% No Contracts closed in the last quarter 1.00% 0.00% c c '0 8 c c eo 8 c c eo 8 c c eo 8 c c 8 8 c c 8 8 c c 8 8 c c 8 c c c 8 c c c 8 c c B 8 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 $323,596,863 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 Approved Change Current Contract Project No %Complete Amount Orders Amount Collections 6-17 50.00% $ 3,699,301 $ 94,097 $ 3,783,398 7-37 100.00% $ 15,432,000 $ 1,383,457 $ 16,815,457 FE15-10 3.00% $ 1,389,000 $ - $ 1,389,000 Plant Projects P1-101 98.00% $ 126,908,300 $ 3,626,237 $ 130,534,537 P1-115B 1.00% $ 2,235,563 $ - $ 2,235,563 P2-92 79.00% $ 49,850,000 $ 846,098 $ 50,696,098 P2-92A 15.00% $ 3,304,000 $ - $ 3,304,000 P2-110 19.00% $ 16,730,000 $ 550,716 $ 17,280,716 132-118 4.00% $ 906,975 $ 86,433 $ 993,408 J-126AH 0.00% $ 452,757 $ - $ 905,514 J-126BFG 4.00% $ 557,759 $ - $ 1,115,518 J-126E 16.00% $ 418,000 $ - $ 836,000 J-117A 33.00% $ 12,609,012 $ 43,008 $ 12,652,020 FE13-04 97.00% $ 2,514,000 $ 182,271 $ 2,696,271 FE14-03 70.00% $ 594,000 $ - $ 594,000 FE15-07 0.00% $ 1,790,000 $ - $ 1,790,000 FE16-05 0.00% $ 139,000 $ - $ 139,000 Table 1.3 Active Construction Contracts by Contractor Contractor/Project Number Project Name Current Contract Value Abbe&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-126AH Hot Surfaces Insulation P1/P2/Bay Bridge PS/Slater PS $ 452,757 1-126BFG Lights, Ladder and Walkway Hazards $ 557,759 Charles King Company,Inc. 6.17 District 6 Trunk Sewer Relief $ 3,699,301 FE15-10 East Lido Force Main Rehabilitation $ 1,389,000 Filanc FE15-09 CenGen Hot Water Pipe Bracing at Plant 1 $ 94,784 Flatiron West Inc P2-110 Consolidated Demolition and Utility Improvements at Plant 2 $ 16,730,000 Howard Ridley Co.Inc. FE16-10 East Basin Distribution Box Repair $ 529,350 Klewit 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 CDC Engineering and Technology P3-115B Rehabilitation of Fleet Services Building, Building 8 and Paving Area $ 2,235,563 Shimmick Construction Co., Inc. J-117A 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 Table 1.3 Active Construction Contracts by Contractor Contractor/Project Number Project Name Current Contract Value W. M. Lyles Company FE15-06 Gas Compressor Building Piping Replacement at Plant 2 $ 909,700 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 S $ 675,218 3-64 Rehabilitation of Western Regional Sewers PDSA $ 17,639,250 5 $ 675,218 PI-100 Digester Rehabilitation at Plant l PCSA $ 2,761,337 0 $ - PI-129 Return Activated Sludge Piping Replacement at Activated Sludge Plant No.3 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 $ 1,5W,000 Atkins North America,Inc. $ 611,307 2 $ 61,019 J-I10 Final Effluent Sampler and Building Area Upgrades PCSA $ 611,307 2 $ 61,019 Black&Veatch $ 21,169,014 6 $ 991,376 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 P515-01 Biosolids Master Plan PSA $ 2,965,556 3 $ 172,620 Brown and Caldwell $ 29,518,131 24 $ 4,879,354 5.0 Newport Force Main Rehabilitation PCSA $ 2,231,925 4 $ 939,714 J-117 Ocean Outfall System Rehabilitation PDSA $ 6,778,015 15 $ 3,637,452 J-II7A 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 $ 2,919,197 5 $ 402,188 P2.92 Sludge Dewatering and Odor Control at Plant 2 PCSA $ 4,798,328 0 $ - Carollo Engineers $ 21,190,979 7 $ 2,642,538 P3-105 Headworks Rehabilitation and Expansion at Plant l PDSA $ 17,528,957 2 $ 2,434,127 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 9 Plant 2 for GWRS Final Expansion PDSA $ 5,319,930 0 $ - DUDEK&ASSOCIATES,INC. $ 256,478 1 $ 19,372 PSIS-07 Pressurization and Odor Control Study at Newport Beach PSA $ 256,478 1 $ 19,372 Geosyntec Consultants $ 2,578,028 0 $ PSIS-06 Seismic Evaluation of Structures at Plant Nos.1 and 2 PSA $ 2,578,028 0 $ - HDR Engineering,Inc. $ 19,057,648 5 $ 2,980,234 FE16-11 Lane Channel Crossing PDCSSA $ 131,939 0 $ - PI-101 Sludge Dewatering and Odor Control at Plant 1 PCSA $ 7,140,000 3 $ 2,086,303 PI-128 Headquarters Complex,Site and Security,and Entrance Realignment Program PDSA $ 11,785,709 2 $ 893,931 Lee&Ro $ 11,722,179 5 $ 434,974 2-72 Newhope-Placentia Trunk Replacement PDSA $ 8,468,232 4 $ 434,974 2-72 Newhope-Placentia Trunk Replacement 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 $ - ISAASSOCIATESINC $ 420,927 1 $ PI-128 Headquarters Complex,Site and Security,and Entrance Realignment Program PSA $ 420,927 1 $ - MICHAELBAKERINTERNATIONAL,INC. $ 1,114,313 1 $ 54,939 2-41-8 SARI Rock Stabilizers Removal PDSA $ 399,013 0 $ - PS36-01 Stormwater Master Plan PSA $ 715,300 1 $ 54,839 PM Web Inc $ 1,022,500 0 $ J-128 Project Management Information System PSA $ 1,022,500 0 $ - RBF CONSULTING,INC. $ 475,308 3 $ 37A66 SP-178 Bay Bridge Pumpstation and Force Mains Rehabilitation Study PSA $ 475,308 3 $ 37,466 Stantec Consulting Services,Inc. $ 9,815,880 4 $ 641,768 3-62 Seal Beach Pump Station Rehabilitation PDSA $ 6,917,175 4 $ 641,768 132-310 Consolidated Demolition and Utility Improvements at Plant 2 PCSA $ 1,499,839 0 $ - SP-196 Process Control Systems Upgrades Study PSA $ 1,399,866 0 $ - THE AUSTINCOMPANY $ 2,806,622 6 $ 549,321 PI-115 Title 24 Access Compliance and Building Rehabilitation Projecl PDSA $ 2,200,000 6 $ 549,321 131-115 Title 24 Access Compliance and Building Rehabilitation Projecl PCSA $ 606,622 0 $ - Woodard&Curren $ 3,092,675 3 $ 19,372 6-17 District 6 Trunk Sewer Relief PCSA $ 290,000 1 $ - P535-08 Collections Capacity Evaluution Study PSA $ 2,802,675 2 $ 19,372 Table 2.2 Activity Report for 2012 Master Professional Design Services Agreements Firm Task Order Status PROJECT TITLE/DESCRIPTION FY12.13 FY13-14 FY14-15 FE13-02, Repairs to ear Screen at D Headworks at $ 27 980.00 12-00-01-01 Closed P2 FE13-02 Amendment No.1 $ 9,200.00 FE33-02 Amendment No.2 $ 6,770.00 FR32-035,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 12-00-01-03 Closed FE13-01, (5-60)Newport Force Main Rehabilitation $ 74,600.00 FE13-01 5-60 Amendment No. 1 j $ 24,943.00 FR13-020,Plant No.2 Gas Compressor Building Piping Replacement $ 68,917.00 12-00-01-04 Open FR13-020 Amendment No. 1 $ 30 568.00 FR13-020 Amendment No.2 $ 25,896.00 CUMULATIVE $ 43950.00 $ 152509.00 $ 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 Aban.CLOSED DUDEK&ASSOCIATES,INC. FE09-04, P1 Potable Water System Improvements $ 50,472.00 PO#104616-OB 12-00-02-02 Closed Contract No. FE12-00-02 FE09-04 Amendment No.1 $ 13,320.00 12-00-02-03 Closed FE14-04, Primary Influent Channels Repair at Plant 1 $71,841.00 CUMULATIVE $ 64,095.00 $ 63,792.00 $ 71,841.00 FR12-003,Warner Avenue Manholes Structural $ 42081.00 RMC WATER AND ENVIRONMENT 12-00-03-01 Closed Repair Project PO#104611-OB FR12-003Amendment No. 1 $ 24,739.00 Contract No. FE12-00-03 12-00-03-02 Closed FR33-012,Santa Ana River Interceptor $ 56,404.00 CUMULATIVE $ 66,820.00 $ 56,404.00 $ Table 2.2 Activity Report for 2012 Master Professional Design Services Agreements Firm Task Order Status PROJECT TITLE/DESCRIPTION FY12-13 FYI 3-14 FY14-15 TRAIN CONSULTING ENGINEERS 12-00-04-01 Closed FR12-012,Slater Ave VFD Replacement $ 39,963.00 PO#104617-OB Contract No. FE12-00-04 FR12-012 Amendment No. 1 $ 26,968.00 CUMULATIVE $ 66931.00 $ $ FE10-19, Landscaping and Miscellaneous $ 74,957.00 REF CONSULTING 12-00-05-01 Closed Improvements Along Ellis Avenue PO#104626-013 FE10-19 Amendment No.1 $ 12,295,00 Contract No. FE12-00-05 I FE10-19 Amendment No.2 $ 5,876.00 CUMULATIVE $ 93,128.00 $ $ 12-00-06-01 Closed FR32-030,P2 Solids Loading Station Truck Loading $ 15,935.00 Auger Access IDS GROUP FE12-05, 15th St, Rocky Point and Bitter Point Pump $ 40,575.00 PO#104614-OB 12-00-06-02 Closed Station Fall Protection Improvements Contract No. FE12-00-06 FE12-05 Amendment No.1 $ 2,330.00 12-00-06-03 Open FE12-10, IT Server Room Cooling 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 FE32-02, P3 Hazardous Waste Storage Relocation $ 51,400.00 PO#1046107FE12-00�07 Contract N CUMULATIVE $ 51,400.00 $ $ Table 2.2 Activity Report for 2012 Master Professional Design Services Agreements Firm Task Order Status PROJECT TITLE/DESCRIPTION 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 GHD 12-00-08-02 Closed FE12-07, Upgrade PLC Panels at P1 and P2- $ 69,840.00 PO#104612.OB FE13-04, 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 FE32-08, 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 $ 337,752.00 Table 2.3 Activity Report for 2015 Master Professional Design Services Agreements 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 FE15-00-01-01 Open Remediation DUDEK FE14-05 Amendment No. 1 $53 137.00 Purchase Order No. 105435OB FE15-00-01-02 Open FE15-09, CenGen Hot Water Pipe Bracing at P1 $146,516.00 Contract No. FE15-00-01 FE15-00-01-03 Open FE16-14, Slater Pump Station Valve Replacements $175,500.00 FISCAL YEAR TOTAL $139 253.00 $146 516.00 $175 500.00 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. 1054690E Contract No. FE15-00-03 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 FE15-00-04-01 I Open IPS17-02 ui e ines for Development in 7777777 rea o $93,186.61 AECOM OCSD Facilities Purchase Order No. 1054400B Contract No. FE15-00-04 FISCAL YEAR TOTAL $0.00 $0.00 $93,186.61 HAZEN AND SAWYER Purchase Order No. 1054510E Contract No. FE15-00-05 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 RMC WATER AND ENVIRONMENT FE15-00-06-01 Open PS16-04, Rectangular Primary Clarifier Reliability $156,518.00 Study at Plant 1 Purchase Order No. 105441OB Contract No. FE15-00-06 FISCAL YEAR TOTAL $0.00 1 $0.00 1 $156 518.00 Table 2.3 Activity Report for 2015 Master Professional Design Services Agreements Firm Task Order Status Project Title/Description FYI 5-16 FY16-17 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. 1054490E Contract No. FE15-00-08 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 BEYAZ&PATEL,INC. Purchase Order No. 1054450E 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 RMS ENGINEERING 8 DESIGN,INC. FE15-00-12-01 1 Open FE16-10, East Basin Distribution Box Repair $79,990.00 Purchase Order No. 105439OB Contract No. FE15-00-12 FISCAL YEAR TOTAL $0.00 $79,990.00 $0.00 TOTAL $222,877.00 $226,506.00 $425,204.61 Table 2.4 Activity Report for 2018 Master Professional Design Services Agreements Firm Task Order Status Project Title/Description FY18-19 FY19-20 FY20-21 No Task Orders Issued to Date AECOM Contract No. FE18-00-01 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Black&Veatch Contract No. FE18-00-02 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Dudek Contract No. FE18-00-03 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date GHD Contract No. FEIB-00-04 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date HDR Engineering Contract No. FE18-00-05 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date IDS Group Contract No. FE18-00-06 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Infrastructure Engineering Contract No. FEIB-00-07 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Michael Baker International Contract No. FE18-00-08 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 TOTAL $0.00 $0.00 $0.00 Table 2.5 Activity Report for 2017 Master Agreements for CECIA Studies Firm Task Order Status Project Title/Description FY18-19 FY19-20 FY20-21 No Task Orders Issued to Date HDR Engineering CEQA PLAN2017-01 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Michael Baker International CEQA PLAN2017-02 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Helix Environmental CEQA PLAN2017-03 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date ESA CEQA PLAN2017-04 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date AECOM CEQA PLAN2017-05 FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date LSA CEQA PLAN2017-06 FISCAL YEAR TOTAL $0.00 1 $0.00 1 $0.00 TOTAL $0.00 1 $0.00 1 $0.00 Table 2.6 Activity Report for 2017 Master Agreements for Collection Planning Studies Finn Task Order Status Project Title/Description FY17.18 FY18-119 FY19.20 No Task Orders Issued to Date Brown and Caldwell PLAN2017-01 (Collections) FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date AECOM PLAN2017-02(Collections) FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date HDR Engineering PLAN2017-03(Collections) FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Dudek PLAN2017-04(Collections) FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Woodard and Curran PLAN2017-05(Collections) FISCAL YEAR TOTALI $0.00 1 $0.00 1 $0.00 TOTAL $0.00 $0.00 $0.00 Table 2.7 Activity Report for 2017 Master Agreements for Wastewater Treatment Studies Firm Task Order Status Project Title/Description FY18-19 FY19-20 FY20-21 No Task Orders Issued to Date Brown and Caldwell PLAN2017-01 (Wastewater) FISCAL YEAR TOTAL $0.00 $0.00 $0.00 2017-02-01 W W Open Spill Prevention, Control,and Countermeasure Plan $28,221.00 AECOM for Sludge Dewatedng and Odor Control at Plant 1 PLAN2017-02(Wastewater) FISCAL YEAR TOTAL $28,221.00 $0.00 $0.00 No Task Orders Issued to Date HDR Engineering PLAN2017-03(Wastewater) FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Dudek PLAN2017-04(Wastewater) FISCAL YEAR TOTAL $0.00 $0.00 $0.00 No Task Orders Issued to Date Woodard and Curran PLAN2017-05(Wastewater) FISCAL YEAR TOTALI $0.00 1 $0.00 $0.00 TOTALI $28,221.00 1 $0.00 $0.00 Table 3.1 Planning Studies Status Report Project Numbe=M Project Name Status Allocated Budget PS35-01 PS35-01 Biosolids Master Plan Project Develop. $ 4,000,000 PS15-02 PS15.02 Edinger Pump Station Rehabilitation Study Project Develop. $ 971,000 PS15-06 PS35-06 Seismic Evaluation of Structures at Plant Nos. 1 and 2 Project Develop. $ 3,860,000 PS15-07 PS35-07 Pressurization and Odor Control Study at Newport Beach Project Develop. $ 375,000 PSIS-08 PS35-08 Collections Capacity Evaluation Study Project Develop. $ 3,682,000 PS15-10 PS15-10 2017 Facilities Master Plan Project Develop. $ 4,150,000 PS16-01 PS36-01 Stormwater Master Plan Project Develop. $ 1,415,700 PS16-02 PS36-02 SCE Feed Reliability Improvements Study Project Develop. $ 293,000 PS16-04 PS16-04 Rectangular Primary Clarifier Reliability Study at Plant No.1 Project Develop. $ 420,000 P517-01 PS17.01 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 PS37-03 Active Fault Location Study at Plant No.2 Project Develop. $ 1,121,000 PS17-04 PS17-04 Office workspace Study for Plant No 1 and 2 Project Develop. $ 77,000 P517-08 PS17-08 CEQA-Facilities Master Plan Project Develop. $ 448,000 PS37-09 PS37-09 Calibration of Plant 1/Plant 21nfoWorks Hydraulic Model Project Develop. $ 40,000 PS17-10 PS37-10 Emergency Overflow Weirs,Wing Wall Structural and Geotechnical Project Develop. $ 357,000 PSIS-01 PS18-01 Asset Management Plan Development Project Develop. $ 420,000 Grand Total $ 21,883,700 Total Chartered Project 17 Board Approved Program Budget $ 28,652,000 Remaining Unallocated Budget $ 6,768,300 Table 3.2 Research Program Status Report Project Number Project Name . Status No Alloc.td Budget RE17-01 RE17-01 Operational Research Technical Support FYIS-19 Project Develop. $ 650,000 RE17-02 RE17.02 Biogas Scrubber Evaluation Project Develop. $ 865,000 RE17-03 RE37-03 Reliant Wet Well Wizard Test Project Develop. $ 74,000 RE17-04 RE37-04 AquaNereda Aerobic Granular Sludge Process Project Develop. $ 242,000 RE17-05 RE17-OS Organica FOR Process Project Develop. $ 242,000 RE17-06 RE37-06 TWAS Pump Reliability Improvement Trials at Plant No.2 Project Develop. $ 46,000 RE17-07 RE17-07 Super Oxygenation System Research at Seal Beach Pump Station Project Develop. $ 80,000 Grand Total $ 2,199,000 Total Chartered Project 7 Board Approved Program Budget $ 8,500,000 Remaining Unallocated Budget $ 6,301,000 Table 3.3 Facilities Engineering Program - Status Report Project Number Project Name Status Allocated Budget FEIG-21 FE10-21 Area 02 Craig Regional Park Manhole Improvements Design $ 1,359,000 FE12-10 FE12-10 IT Server Room Cooling Improvements Closed $ 956,086 FE13-04 FE13-04 Plant No.2 Trickling Filter Chemical Odor Control Construction $ 4,730,000 FE14-03 FE34-03 Rehabilitation of Digester Mixing Pumps at P2 Digesters E,H,R,S,a Construction $ 1,360,000 FE14-OS FE34-05 Plant No.1 Fleet Services UST Leak Remediation Design $ 1,487,311 FESS-01 FEIS-01 Fullerton Creek Channel Crossing Design $ 90,000 FEIS-06 FEIS-06 Gas Compressor Building Piping Replacement at Plant 2 Construction $ 3,924,000 FE15-07 FEIS-07 Secondary Treatment and Plant Water VFD Replacement at Plant 1 Design $ 3,500,000 FESS-09 FEIS-09 CenGen Hot Water Pipe Bracing at Plant 1 Design $ 425,000 FESS-10 FEIS-10 East Lido Force Main Rehabilitation Construction $ 2,628,000 FE16-01 FEI6-01 Big Canyon Nature Park Improvements Closed $ 29,915 FE16-02 FEI6-02 Jamboree Sewer Realignment at Big Canyon Closed $ 54,434 FE16-OS FEI6-OS Buried Water Valve Support Upgrades at Plant 2 Construction $ 500,000 FE16-06 FEI6-06 Fuel Cell Facilities Demolition Design $ 520,000 FE16-09 FEI6-08 Carbon Canyon Clay Pipe Repairs Construction $ 1,131,000 FE16-10 FEI6-10 East Basin Distribution Box Repair Construction $ 1,021,960 FE16-I1 FEI6-I1 Lane Channel Crossing Design $ 500,000 FE36-12 FE36-12 Garfield Road Perimeter Security Fence Construction $ 90,000 FE16-13 FE36-13 Collections Infrastructure Relocation at Plant 2,Phase 18 Close-Out $ 120,000 FE16-14 FEI6-14 Slater Pump Station Valve Replacements Bid and Award $ 1,050,000 FE17-01 FE17-01 Carbon Canyon Pipeline Sag Repairs Design $ 500,000 FE17-03 FE37-03 Battery Storage System at Plant No.1 Project Develop. $ 250,000 FE17-04 FE17-04 Storm Water Compliance Improvements at 3 Pump Stations Project Develop. $ 570,000 FE17-OS FE17-05 Plant 1 ICS Network Extension Design $ 950,000 FE37-06 FE37-06 Tustin Ave Manhole and Pipe Repair Project Develop. $ 273,000 FE37-07 FE37-07 Fruit Street Trunk Sewer Relocation-OC Streetcar Project Develop. $ 334,000 FE17-09 FE17-08 Big Canyon Trunk Sewer Realignment-BCCC Maintenance yard Project Develop. $ 72,000 FE17-09 FE17-09 Instrument Air Compressors Replacement at Plant Nos.1 and 2 Can Not Authorized $Grand Total $ 28,425,706 Total Chartered Project 28 Board Approved Program Budget $ 55,000,000 Remaining Unallocated Budget $ 26,574,294 Table 3.4 Information Technology Capital Program Status Report Project Number Project Name Status Allocated Budget ITI6-03 IT16-03 Plant 2Internet Connection Active $ 50,000 ITI6.05 ITI6-05 Plant 2 Radio Repeater Upgrade Active $ 35,000 ITI6-06 ITI6-06 Network Equipment 2016-17 Active $ 44,302 ITI6-07 IT16-07 Server Replacement and Obsolescence Active $ 337,332 ITI6-08 IT16-08 IT Security 2016-17 Active $ 164,912 ITI6-09 ITI6-09 iPACS Enhancements Active $ 85,000 ITI6-10 ITI6-10 LIMS Compliance Improv Project Active $ 490,000 ITI6-11 ITI6-12 Business Continuity Plan Active $ 490,000 IT17-01 IT17-01 VMWare Active $ 416,968 IT17.02 IT17-02 Upgrade Active Directory Directory to 2016 Active $ 56,000 IT17-03 IT37-03 Upgrade ShoreTel System Server Active $ 199,644 IT17-04 IT37-04 PCI Improvements Active $ 131,093 IT37-05 IT37-05 Conference Room Monitor Upgrade Active $ 127,896 IT17-06 IT37-06 Printer Obsolescence Active $ 371,207 IT37-07 IT37-07 Safety Management Suite Active $ 170,077 IT37-08 IT37-08 Perimeter Physical Security Im Active $ 170,077 IT17-09 IT17-09 MYOCSD Redesign Active $ 170,077 IT27.10 IT17-10 Electronic Operator Round Form Active $ 170,077 IT27-11 IT17-11 P2 Radio Repeater Active $ 170,077 IT17-12 IT17-12 Sever/Network Power Improvements Active $ 90,000 IT17-13 IT37-13 Graphric Workstations for PAO Active $ 15,000 IT37-14 IT37-14 Specialized Application Programing&Support Active $ 600,000 IT37-25 IT37-15 Data Storage Replac/Obsolescens Active $ 600,OOO Grand Total $ 5,154,739 Total Chartered Project 23 Board Approved Program Budget $ 10,000,000 Remaining Unallocated Budget $ 4,845,261 Table 4.1 Staff Augmentation Contract Status Total Fees Time Contract $41,000,000 86 months Iti Actuals to Date $10,817,719 26% 26 months 30% Remaining $30,182,281 74% 60 months 70% Assuming three 1-year extensions Table 4.2 Staff Augmentation Labor Summary This Quarter Inception to Date Labor Hours 10,021 77,702 Full Time Equivalents 22.3 19.9 Labor Costs(no expenses) $1,404,308 $10,710,115 Average Hourly Rate $140 $138 OPERATIONS COMMITTEE Meeting Date TOBd.Or .Dir. 09/OS118 09/26/18 AGENDA REPORT Item1umber Item 1, e Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: BATTERY STORAGE SYSTEM AT PLANT NO. 1, PROJECT NO. FE17-03 GENERAL MANAGER'S RECOMMENDATION A. Ratify the General Manager's signature of the Southern California Gas Self Generation Incentive Program Reservation Request Form, and authorize the General Manager to sign the remaining required documents for the Battery Storage System at Plant No. 1, Project No. FE17-03; and B. Authorize the General Manager to sign the Southern California Edison's Customer Generation Agreement related to Battery Storage System at Plant No. 1, Project No. FE17-03. BACKGROUND On April 26, 2018, the Board approved a ten-year Energy Management Services Agreement with Advanced Microgrid Solutions, Inc. (AMS)to provide, install, and operate a battery energy storage system at Plant No. 1. As part of this agreement, the Orange County Sanitation District (Sanitation District) and AMS agreed to cooperate in applying for grants, credits, and other incentives. AMS is responsible for the application costs, and will receive all revenue, credits, and benefits from any incentives. Southern California Gas has an incentive program to support new emerging distributed energy resources, which covers the Battery Storage System. AMS is pursuing that incentive and needs the Sanitation District signature as a host customer. The Southern California Edison's (SCE) Customer Generation Agreement allows the Battery Storage System to be connected to SCE's distribution system. The terms of this agreement are consistent with how the Battery Storage System is intended to be operated. RELEVANT STANDARDS • Maintain a culture of improving efficiency to reduce the cost to provide the current service level or standard • Ensure the public's money is wisely spent Page 1 d 3 PROBLEM The Southern California Gas Self Generation Incentive Program requires Sanitation District approval. SCE requires Sanitation District approval of a Customer Generation Agreement to connect the Battery Storage System. PROPOSED SOLUTION Authorize the General Manager to sign the Southern California Gas Self Generation Incentive Program documents and the SCE Customer Generation Agreement. TIMING CONCERNS The Battery Storage System is scheduled to be completed in early 2019. Delays to the project would also delay energy savings associated with the Battery Storage System. Applications for incentive programs such as the Self Generation Incentive Program must be submitted and approved prior to project completion. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District committed to cooperating with incentive applications as part of the agreement with AMS. AMS' proposal and contract terms were partly based on obtaining Southern California Gas' Self Generation Incentive Program funding. Without the SCE Customer Generation Agreement, the Battery Storage System could not be energized. PRIOR COMMITTEE/BOARD ACTIONS April 2018 - Approved a ten-year Energy Management Services Agreement with Advanced Microgrid Solutions, Inc. to provide, install, and operate a battery energy storage system at Plant No. 1; and approved an Installation Agreement to upgrade the power feed cables from the Central Generation Building to Power Building 6 at Plant No. 1 for a total amount not to exceed $393,000. ADDITIONAL INFORMATION N/A CEQA The project is exempt from CEQA under the Class 3 categorical exemption set forth in California Code of Regulations section 15303 and the Class 11 categorical exemption set forth in California Code of Regulations section 15311. Section 15303 (Class 3) exempts Page 2 d 3 from CEQA the "construction and location of limited numbers of new, small facilities or structures: installation of small new equipment and facilities in small structures" and "Examples of this exemption include but are not limited to: (d) Water main, sewage, electrical, gas and other utilities (a) Accessory structures including garages, carports, patios, swimming pools, and fences." Section 15311 (Class 11)exempts from CEQA the "construction, or placement of minor structures accessory to (appurtenant) existing commercial, industrial, or institutional facilities." The project involves the installation of a battery energy storage backup system to serve as a backup power source at Plant No. 1. The new system can be characterized as a small facility or structure under the Class 3 categorical exemption, or as a minor structure appurtenant to existing industrial facilities under the Class 11 categorical exemption. The project, therefore, qualifies for an exemption under CEQA Guidelines section 15303 (Class 3 categorical exemption) and CEQA Guidelines section 15311 (Class 11 categorical exemption) and no further action is required. A Notice of Exemption will be filed with Orange County Clerk-Recorder following the Board approval of the Energy Management Services Agreement. FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: • Self Generation Incentive Program Reservation Request Form (RRF) • Self Generation Incentive Program Contract • SAMPLE Redacted Self Generation Incentive Program Proof of Project Milestone • SAMPLE Redacted Self Generation Incentive Program Incentive Claim Form • DRAFT SCE Custom Generation Agreement MD:JM:dm:gc Page 3 of 3 7/11f2018 SGIP I None Self Generation Incentive Program LUGas Reservation Request Form A O�Si mpra rnergy w ity Instructions:This Self-Generation Incentive Program(SGIP) SoCalGas Reservation Request Form is reflective of the information entered in the sellgeneration@socalgas.com online form process. Please review thoroughly for accuracy of Application ID: information before signing. Once the form has been signed by all Dale Printed: 07/11/2018 parties,scan and upload this document underme Reservation Request Program Year: 2018 header in the Documents section of the online application. Incomplete applications will result In a suspended application.Upon successful submission of all reservation request information and documents,the Applicant will receive notice from the SGIP Program Administrator that NOTE:Your application is not submitted until you upload this form their rebate request has been received. and all other required documentation and click on"Submit"via the online system. Application Type Application Type: Energy Storage Incentive Step: 3 Budget Category: Large-Scale Storage Incentive Rate: $0.35 Host Customer Contact Name: Mike Dorman Mailing Address: 10844 Ellis Avenue Company Name: Orange County Sanitation City,State,Zip: Fountain Valley,CA,92708 District Phone: 7149622411 Parent Company Name: Email: mtlorman@OCSD.COM NAICS: 562212 Is this a public institution? N/A Sector: Government Sector definition: N/A System Owner Contact Name: Nicolas Connell Mailing Address: 986 Mission Street,3rd Floor Company Name: Advanced Microgdd Solutions City,State,Zip: San Francisco,CA,94107 Parent Company Name: Phone: 949-558-1305 Email: nicolasc@advmicrogrid.com Developer Contact Name: Nicholas Connell Mailing Address: 25 Stillman Street Company Name: Advanced Microgrid Solutions City,State,Zip: San Francisco,CA,94107 Phone: 1-415-699-4175 Email: nicholasc@advmicrogdd.com t.Approaching or communicating with the host customer about the project and learning about Its 1.Yes needs and energy profile 2.Developing the specifications for a system based on the customer's needs and interests 2.Yes 3.Soliciting bids from multiple manufacturers for the specified system 3.Yes 4.Gaining the customer's commitment to purchase or lease the specified system, usually but not 4.Yes necessarily by signing a purchase order with a customer or other form of agreement 5.Purchasing the specified system from the manufacturer to fulfill the obligation to provide a 5.Yes system to the customer https 11wviw.selfgenm.com/applicationllD834/documenWprint 1/5 7/11/2018 SGIP I None 6.Securing permits for the system on behalf of the customer 6.Yes 7.Securing interconnection permission for the system on behalf of the customer 7.Yes S.Submitting SGIP applications on behalf of the customer 8.Yes 9. Liaising with the SGIP administrators on incentive reservations 9.Yes 10. Liaising with the SGIP administrators on data reporting requirements 10.Yes 11.Supplying project data to SGIP evaluators 11.Yes 12.Physically constructing the system at the customer's premises 12.Yes 13.Installing the system at the customer's premises 13.Yes Who is performing the other activities? Applicant Contact Name: Sanjna Mali Mailing Address: 986 Mission Street,3rd Floor Company Name: Advanced Microgrid Solutions, City,State,Zip: San Francisco, CA,94107 Inc Phone: 475-209-0938 Parent Company Name: Email: sanjnam@advmicrognd.com Contractor/Installer Contact Contact Name: Mailing Address: Company Name: City,State,Zip: Contractor License Number Email: (CSLB): Phone: Contractor License Type: Project Site Information Site Address: 10844 Ellis Ave City,State,Zip: Fountain Valley,CA,92708 Project site within the SCEdeHnad local reliability area? N/A Disadvantaged Community or Low-Income Community according to the CalEnviroscreen? Utility Information Electric Utility: Southern California Edison Peak Annual Demand(kW): 8,496 Electric Utility is Municipal? N/A Demand Response N/A Account Name: Orange Country Sanitation Participant? District Demand Response Program Is Existing Service? Yes Name: Utility Account ID: 3-008-2065-05 Demand Response Utility Meter ID: V349N-013729 Obligation(kW): Gas Utility: SoCalGas System Size Based on Load No Growth? Gas Utility is Municipal? N/A Estimated Future Additional Account Name: Orange Country Sanitation Demand(kW): District Is Existing Service? Yes Utility Account ID: 104-710-9500 9 Utility Meter ID: 7800666 Proposed System Information Equipment Technology: Electrochemical Storage Total Rated Capacity(kW): 3000 System Manufacturer: Teals Total Energy Storage 6000 System Model: Powerpack 2.0 Capacity(kWh): Discharge Hours Duration: 2 hftps:iiw ..selfgenca.com/application/108341documents/pdnt 2/5 7111/2018 SGIP I None Other self-generation or storage equipment onsite? Charged at least 75%from No reneavables? Other Onsite System Information SGIP Incentivized System a Onsite: Technology Make/Model Project Cotle Instafletl Energy Storage Total Rated Capacity(kWh) Capacity(MN) Non-Incentivized System(s)Onsite: Technology Make/Model Year Installed Energy Storage Total Rated Capacity Capacity(kWh) (kW) Previous SGIP Generator Capacity 0 (kW): Previous SGIP Storage Capacity(kWh): 0 Project Finance Total Eligible Project Cost(TEPC): $6,000,000,00 Taking Federal Investment Tax Credits No Ineligible Project Cost: (ITC): ITC as a%of TEPC: % Approved California Manufacturer No Equipment: Other Incentives Received Incentive Type Incentive Amount Description Incentive Results Incentive Calculation Currant Step3 Incentive Rate:$0.35 Reference Table 0.2 MWH >24 MWH >44 MWH 0-2HOURS 100% 50% 25% 24 HOURS 50% 25% 12.5% 46 HOURS 25% 125% 6.25% 0.2 MWH >24 MWH >4-6 MWH Existing Onsite Equipment Offeet - - - 0-2 HOURS 2,000,000 2,000000 2,000,000 24HOURS - - - 46HOURS - - - Bass Equipment Incentive $1,225,000.00 CAManutaclurer Atltler Max Equipment Incentive a) $1,225,00.00 Oerer incentives Total Dollars Impact oa SGIP Incentive Other IOU Incentive(100%) 0 b) 0 Other Non-IOU Incentive(50%) 0 c) 0 Nan-Ratepayer Incentive(0%) 0 Investment Tax Credit(0%) 0 Adjusted Equipment Incentive a+b+c = d) $1,225,000.00 Total Other incentives e) 0 SGIP Imandve Adjustments Equipment Incentive Total Other Incentive Cap(s) Incentive Adjustment Incentives<= Pr*d Incentive Cap(Equipment) £) $1,225,000.00 $5,000,000.00 g) 0 Eligible Cost Cal,(All Incentives) f+g-h) $1.225.000.00 0 $61000.000.00 +•+1) 0 https:/M ..selfgence.com/appllcatlon/108341documents/pnnl 315 7/11/2018 SGIP I None Equipment incentive ••1) $1,225,000.00 Calculated SGIP Incentive $1,225,000.00 g=0 if g+d<_$5M,otherwise k=$510-f I=0 X h t I<=Total Eligible Cost,ullm,.[se I=Total Eligible me-(h t i) 'J=hai The incenfive adjustments shown above are based on the Total Eligible Project Cost,the Maximum Incenfive Cap,and the Minimum Customer Investment.See the SGIP Handbook for more information on incentive limitations. Projected PBI Calculation Expected Total Production: 780,000 kWh Performance Based $612,500.00 Total Incentive: $1,226,000.00 Incentive: Initial Payment: $612,500.00 PBI Rate($/kWh): $0.1570513 Residential Energy Storage Eligibility Affidavit Requirements of Host Customers and System Owners e The energy storage system owner and/or Host Customer have the tools to control the usage of the energy storage system when operafing in parallel with the grid. o Provide performance data to the Program upon request(emailed,zipped file of 15 minute Interval data)for a period of five(5)years. o Pass the energy storage Field Vefifcation Inspection. o Host Customer and/or System Owner are required to discharge the energy storage system a minimum of 52 full discharges per year.A'full discharge"is the equivalent of discharging the SGIP-incentivized energy capacity,whether it is during a single or multiple discharges. o Fulfill either of the two following conditions: o Opton A:the Host Customer is on a TOU tariff,dynamic tariff(e.g.PG&E's SmartRate or SDG&E's Reduce Your Use),or agrees to integrate load through the California Independent System Operator's Proxy Demand Response,or equivalent tariff,prior to receiving the SGIP incentive and for five(5)years thereafter.Note that in the event that the Host Customer changes to a non-TOU tariff or is no longer enrolled in a demand reduction program,the energy storage System Owner is required to notify the Program Administrator within 30 days of change,and will be subject to Option B for the required five year period. o Option B:the Host Customer and/or System Owner agrees,for a minimum period of five(5)years,to discharge the energy storage system in an amount equivalent to 52 complete cycles per year of the Incentivized energy capacity,which is defined as two hours of discharge at the SGIP incentivized power capacity rating,with discharges occurring during peak hours or peak day events(such as those called by PG&E's SmartRate program or SDG&E's Reduce Your Use),of the applicable IOU service territory. Declarations by Host Customer and System Owner By Execution of this document, System Owner and Host Customer Host Customer Signature 4l S each cortff Print Name: ,y that the Project meets all program eligibility requirements JW"r —' •7 and that the System Owner and Host Customer agree to abide by the rules and requirements set forth in the SGIP Handbook and SGIP Signalum:/ Contract.The undersigned declare under penalty of peq'ury under the 7itle:Q //�A%It Data: -7 �f8 laws of the Stale of California that 1)The information provided is true and correct,and 2)the above-described generating system is new and System Owner(if not Host Customer) Intended to offset part or all of the Host Customer's electrical Print Name: requirements at the site of installation.For residenfial energy storage projects,the Host Customer and System Owner certify that they have Signature: read and agreed to the terms of the Residential Energy Storage Eligibility Affidavit. Title: Date: The Host Customer and System Owner are committed to completing Applicant(if not Host Customer) this project,and by signing below,are starting their intent to contract Print Name: with individual(s)necessary for completion of the project.The Host Customer is the reservation holder and reserves the right to submit new Signature: Title: Date: h#ps://www.seggenw.mm/appilmdoN10834/documentdprint 415 ➢11112018 SGIP I None project specifications,including a new application with alternative Developer System Owner and/or Applicant designations, upon withdrawal from the Print Name: project and cancellation of this Agreement. Signature: Title: Date. haps://www.selfgence,com/application/10834/documents/print 515 SELF-GENERATION INCENTIVE PROGRAM CONTRACT BETWEEN PROGRAM ADMINISTRATOR("PA"),AND HOST CUSTOMER,SYSTEM OWNER,AND DEVELOPER("THE NON-PA PARTIES") This Contract is made by and between the"PA"jointly and severally with"The Non-PA Parties", organized and existing under California law. Capitalized terms not defined herein are given the same meaning as provided in the Glossary of the Self-Generation Incentive Program (SGIP) Handbook. 1.0 PROJECT DESCRIPTION - This Contract is limited to the Project described in the submitted Reservation Request Form. If all Program and Contract terms and conditions are complied with, PA will pay an incentive to the party designated on the submitted Incentive Claim Form. PA reserves the right to modify or cancel the incentive offer if the actual installation of Self-Generation (SG) Unit(s)differs from the proposed installation described in the Incentive Claim Form. SG Unit(s) must also be installed by the reservation expiration date shown on the Confirmed Reservation Letter. 2.0 DOCUMENTS INCORPORATED BY REFERENCE - The following documents set forth additional terms, conditions and requirements of this Contract: SGIP"Reservation Request Form" (RRF) SGIP"Proof of Project Milestone Form"(PPM) SGIP"Incentive Claim Form" (ICF) Project Cost Affidavit Renewable Fuel Affidavit(if applicable) Residential Energy Storage Affidavit(if applicable) SGIP Handbook, applicable revision,or as subsequently amended. The Non-PA Parties each acknowledge having received and read, and agree to be bound by the aforementioned documents, copies of which are available to the Non-PA Parties on the PA's website and www.selfgenca.com, and the terms of which are incorporated herein by reference as though set forth in full. Should a conflict exist between this Contract and any of these documents,this Contract shall control. 3.0 SUBMITTAL REQUIREMENTS FOR PAYMENT - As a condition of payment, the Non-PA Parties shall submit to PA, within the deadlines established by PA, the documents described in the SGIP Handbook. Each document requires review and PA's approval before the Non-PA Parties may move on to the next stage of the application process. 3.1 The Reservation Request("RRF") -The request for reservation must be made using the RRF, which describes the Project, lists the SG Unit(s)that will be installed in the Project and estimates its size (system rated capacity according to the SGIP Handbook),and estimates its costs(including interconnection fees and,in some cases,warranties costs).When the Non-PA Parties submit the RRF to PA,it shall include the applicable items listed in the SGIP Handbook. PA will review the RRF and, if the Project appears to meet eligibility requirements,the PA will make a reservation of funds for the Project and will send the Non- PA Parties a Reservation Letter, the description of which is provided in the SGIP Handbook. 3.2 Proof of Project Milestone ("PPM") -Within the prescribed number of days, as defined in the SGIP Handbook, of the date on the Conditional Reservation Letter, the Non-PA Parties must submit the applicable PPM Form and the items listed in SGIP Handbook, to demonstrate to PA that the Project is progressing and that there is a substantial commitment to complete the Project. After PA reviews the PPM items and determines that the Project has met the necessary criteria, PA will send the Non-PA Parties a Confirmed Reservation Letter with the specific reservation amount and the Reservation Expiration Date. 3.3 Incentive Claim Form("ICF')-Upon Project completion and priorto the Reservation Expiration Date, the Non-PA Parties must complete and submit the ICF to request an incentive payment. In addition to the completed ICF,the Non-PA Parties must submit the applicable items listed in SGIP Handbook. 4.0 FIELD VERIFICATION BY INSPECTION -After complete, proper installation of the SG Unit(s) and submittal of the applicable items listed in SGIP Handbook,the PA or its authorized agent may schedule and complete a Field Verification Visit to verify that the SG Unit(s)have been installed and are operating in accordance with the approved ICF and required accompanying information. During the Field Verification Visit,the Non-PA Parties must provide access to the SG Unit(s)and must demonstrate the operation of the SG Unit(s). If the SG Units have a rated capacity that is 30 kW and larger, the metering system will be inspected,and it will be verified that it follows the approved monitoring plan required under SGIP Handbook and meets the metering requirements of the SGIP as defined in SGIP Handbook. If the Project uses renewable fuel, the availability and flow rate of the renewable fuel will be demonstrated by the Non-PA Parties. If the Project uses waste energy, the availability and production rate of the waste energy will be demonstrated by the Non-PA Parties. If the Project involves an energy storage system coupled with an SGIP-funded generating system or a photovoltaic system,the electrical coupling of the two systems will be verified at the time of the Field Verification Visit. In addition,the rated capacity of an energy storage system will be verified by allowing the system to discharge its specified duration period and determining the average power output during that time. If the eligible system size depended on new construction or load growth,the required load will be confirmed at the time of Field Verification Visit. The PA will verify system capacity rating to confirm the final incentive amount. During the Field Verification Visit, the Non-PA Parties must ensure that a qualified technician is present for an interview that is knowledgeable about the SG Unit(s) and their operation, and must allow photographs of the SG Unit(s) and their related systems to be taken. No incentive payment can be made until the final Field Verification Visit report has been satisfactorily completed. 5.0 MEASUREMENT &EVALUATION (M&E)ACTIVITIES —PA or its authorized agent must have access to the Project Site(s)for all Field M&E visits and WE data collection activities summarized below and described in detail in the SGIP Handbook. 5.1 The Non-PA Parties agree to participate in M&E activities, as discussed in SGIP Handbook.The Non-PA Parties agree to provide system monitoring data(including, but not limited to,electric,gas,thermal and/or other relevant fuel input data)from the Non-PA Parties installed monitoring equipment to the PA or its authorized agent, and California Public Utilities Commission (CPUC) upon request. Furthermore, the Non-PA Parties agree to cooperate with the installation of any additional monitoring equipment that the PA or its authorized agent may deem necessary in its sole discretion. 5.2 The Non-PA Parties agree to allow the PA or its authorized agent access to the Host Customers Site to develop and implement an M&E Plan for the SG Unit(s)and its related systems in support of M&E activities discussed in SGIP Handbook. 5.3 The Non-PA Parties agree to the public reporting of the following information as applicable to the Project energy generated (kWh), gross and net Greenhouse Gas (GHG) emissions, number of charging and discharging events and total amount of energy charged and discharged (for energy storage), amount and type of fuel consumed, and heat recovered (for Combined Heat and Power(CHP)). 5.4 It is agreed that any and all project information that is not covered by General Order 66-C, may be reported to the public. 6.0 PAYMENT-The incentive payment check will be made payable to the entity designated by the Non-PA Parties on the ICF only after the appropriate documents have been submitted(within the deadlines established by PA)and approved, and the Field Verification Visit report has been satisfactorily completed, in accordance with the Program rules set forth in the SGIP Handbook. PA's determination of the incentive amount is final, and the Non-PA Parties each agree to accept this determination. The incentive payment constitutes final and complete payment for projects under 30kW, or performance based payments for systems 30kW and greater. 6.1 The Non-PA Parties may designate in writing a third party to whom PA shall make the approved incentive payment. 7.0 REVIEW AND DISCLAIMER- PA's review of the design, construction, installation, operation or maintenance of the Project or the SG Unit(s) is not a representation as to their economic or technical feasibility,operational capability,or reliability.The Non-PA Parties each agree that neither of them will make any such representation to any third party. The Non-PA Parties are solely responsible for the economic and technical feasibility, operational capability, and reliability of the Project and the SG Unit(s). 8.0 RENEWABLE AND WASTE GAS FUEL LEVELS—For projects using renewable fuel or waste gas fuel, the Non-PA Parties agree to the renewable fuel level requirements as outlined in the applicable SGIP Handbook. 9.0 TERM AND TERMINATION 9.1 The Term of this Contract shall begin on the date that the last party signs the RRF, and shall terminate no later than the length of the required 10-year warranty; unless terminated earlier pursuant to the operation of this Contract,or unless modified by order of the CPUC or by written agreement of the Non- PA Parties. 9.2 The Contract may be terminated by PA in the event (a) the Non-PA Parties fail to perform a material obligation under this Contract, and the Non-PA Parties fails to cure such default within fifteen (15) days of receipt of written notice from the PA of such failure to perform a material obligation; or (b) any statement, representation or warranty made by the Non-PA Parties in connection with the Program or this Contract is false, misleading or inaccurate on the date as of which it is made. 9.3 The termination of this Contract shall not operate to discharge any liability, which has been incurred by either Party prior to the effective date of such termination. 9.4 Neither Party shall be liable in damages or have the right to terminate this Contract for any delay or default in performing any obligation under this Contract if such delay or default is caused by conditions beyond its control including, but not limited to, Acts of God, Government restrictions (including the denial or cancellation of any export or other necessary license),wars,insurrections and/or any other cause beyond the reasonable control of the Party whose performance is affected. 10.0 PERMANENT INSTALLATION - Equipment installed under this Program is intended to be in place for the duration of its useful life. Only permanently installed systems are eligible for incentives. This means that the Non-PA Parties must demonstrate to the satisfaction of the PA that the SG Unil(s)has both physical and contractual permanence prior to PA's payment of any incentive. Physical permanence is to be demonstrated by the SG Unit(s)' electrical, thermal and fuel connections in accordance with industry practice for permanently installed equipment and its secure physical attachment to a permanent surface (e.g., foundation). Any indication of portability, including, but not limited to, temporary structures, quick disconnects, unsecured equipment, wheels, carrying handles, dolly, trailer and/or platform will render the SG Unit(s) ineligible for incentives. Contractual permanence, corresponding to a minimum of the applicable warranty period, is to be demonstrated as follows: The Non-PA Parties agree to notify the PA in writing a minimum of sixty(60)days prior to any change in either the Site location of the SG Unit(s),or change in ownership of the SG Unit(s). An additional agreement between the Non-PA Parties and the PA may be required at the PA's sole discretion in order to safeguard against the possibility of early removal and relocation of the generation system.This additional agreement, if required,must be negotiated to the satisfaction of the PA. For the required warranty period of the system, it is the Non-PA Parties obligation to report any safety-related issues with the equipment to the PA within 30 days of the issue's emergence. 11.0 OTHER AGREEMENTS-AII agreements involving the Project including, but not limited to,sales agreements,warranties,leases,energy service agreements,agreements for the sale of trade of Renewable Energy Credits (RECs), and/or energy savings guarantees, must be disclosed and provided to the PA as soon as they are available and in no event later than submission of the ICF. 12.0 ASSIGNMENT-The Non-PA Parties consent to PA's assignment of all of PA's rights,duties and obligations under this Contract to the CPUC and/or its designee. Any such assignment shall relieve PA of all rights, duties and obligations arising under this Contract.The Non-PA Parties shall not assign its rights or delegate its duties without the prior written consent of PA or its assignee, if any, except in connection with the sale or merger of a substantial portion of its assets.Any such assignment or delegation without the prior written consent of PA or its assignee, if any, shall be null and void. Consent to assignment shall not be unreasonably withheld or delayed. The Non-PA Parties must provide assurance of the success of a Project if assigned by providing any additional information requested by PA. 13.0 PERMITS AND LICENSES — The Non-PA Parties, at their own expense, shall obtain and maintain all licenses and permits needed to successfully perform work on the Project. 14.0 ADVERTISING, MARKETING AND USE OF PROGRAM ADMINISTRATOR'S NAME — The Non-PA Parties shall not use PA's corporate name, trademark, trade name, logo, identity or any afriliation for any reason, including soliciting persons to participate in the Project,without the prior written consent of PA. The Non-PA Parties shall make no representations on behalf of the PA. 15.0 INDEPENDENT CONTRACTOR - In assuming and performing the obligations of this Contract, the Non-PA Parties are each an independent contractor and neither shall be eligible for any benefits which PA may provide its employees. All persons, if any, hired by the Non-PA Parties shall be their respective employees, subcontractors, or independent contractors and shall not be considered employees or agents of the PA. 16.0 INDEMNIFICATION 16.1 To the greatest extent permitted by applicable law, the Non-PA Parties shall each indemnify, defend and hold harmless PA, its affiliates, subsidiaries, current and future parent company, officers, directors,agents and employees,from and against all claims,demands,losses,damages,costs,expenses, and liability (legal, contractual, or otherwise), which arise from or are in any way connected with any: (i) injury to or death of persons, including, but not limited to, employees of PA, the Non-PA Parties, or any third party;(ii)injury to property or other interests of PA,the Non-PA Parties,or any third party; (iii)violation of local,state or federal common law, statute,or regulation, including, but not limited to,environmental laws or regulations; or (iv) strict liability imposed by any law or regulation; so long as such injury, violation, or strict liability[as set forth in (i)- (iv)above]arises from or is in any way connected with this Contract or the Non-PA Parties performance of, or failure to perform, this Contract, however caused, regardless of any strict liability or negligence of PA whether active or passive, excepting only such loss, damage, cost, expense, liability, strict liability, or violation of law or regulation that is caused by the willful misconduct of PA, its officers, managers, or employees. 16.2 The Non-PA Parties each acknowledges that any claims, demands, losses, damages, costs, expenses, and legal liability that arise out of, result from, or are in any way connected with the release or spill of any hazardous material or waste as a result of the work performed under this Contract are expressly within the scope of this indemnity, and that the costs, expenses, and legal liability for environmental investigations, monitoring, containment, abatement, removal, repair, cleanup, restoration, remedial work, penalties, and fines arising from strict liability, or violation of any local, state, or federal law or regulation, attorney's fees,disbursements, and other response costs incurred as a result of such releases or spills are expressly within the scope of this indemnity. 16.3 The Non-PA Parties each shall, on PA's request, defend any action, claim or suit asserting a claim which might be covered by this indemnity. The Non-PA Parties shall pay all costs and expenses that may be incurred by PA in enforcing this indemnity, including reasonable attorney's fees. This indemnity shall survive the termination of this Contract for any reason. 17.0 LIMITATION OF LIABILITY - PA shall not be liable to the Non-PA Parties or to any of their respective subcontractors for any special, incidental, indirect or consequential damages whatsoever, including, without limitation, loss of profits or commitments, whether in contract, warranty, indemnity, tort (including negligence), strict liability or otherwise arising from PA's performance or nonperformance of its obligations under the Contract. 18.0 VENUE -This Contract shall be interpreted and enforced according to the laws of the State of California. Sole jurisdiction and venue shall be with the courts in Los Angeles County, California. 19.0 INTEGRATION AND MODIFICATION - This Contract and its appendices constitute the entire Contract and understanding between the Non-PA Parties as to its subject matter. It supersedes all prior or contemporaneous contracts, commitments, representations, writings, and discussions between the Non- PA Parties and PA, whether oral or written, and has been induced by no representations, statements or contracts other than those expressed herein. NO AMENDMENT, MODIFICATION OR CHANGE TO THIS CONTRACT SHALL BE BINDING OR EFFECTIVE UNLESS EXPRESSLY SET FORTH IN WRITING AND SIGNED BY THE PA'S REPRESENTATIVE AUTHORIZED TO SIGN THE CONTRACT. Notwithstanding the foregoing,this Contract is subject to such changes or modifications by the CPUC as it may,from time to time,direct in the exercise of its jurisdiction over PA. Furthermore,this Contract is subject to change or modification by the SGIP Working Group, as it may from time to time make to the Program in the exercise of its jurisdiction over the implementation of the Program. For purposes of this Contract, the "SGIP Working Group"shall constitute certain staff of each California investor-owned utility, the Center for Sustainable Energy®, California Energy Commission and the Energy Division of the CPUC. 20.0 NO THIRD PARTY BENEFICIARIES - This Contract is not intended to confer any rights or remedies upon any other persons other than the undersigned Non-PA Parties hereto. By execution of this Contract, the Non-PA Parties each certifies the Project meets all Program eligibility requirements, and that the information supplied in the RRF is true and correct. The Non-PA Parties further certify that the Non-PA Parties have read and understand the Self-Generation Incentive Program documents described in the SGIP Handbook and agree to abide by the rules and requirements set forth in this Contract and the documents identified in Section 2.0. The Non-PA Parties each declare under penalty of perjury under the laws of the State of California that: 1) the information provided in the RRF is true and correct to the best of my/our knowledge; 2)they have each read the Non-PA Parties Agreement set forth in the RRF and agree to terms therein; 3) any and all SG Unit(s) described in the RRF are new and intended to offset part or all of the Host Customer's electrical needs at the Site of installation; 4)the Site of installation is located within the PA's service territory; 5)the SG Unit(s)are not intended to be used solely as a backup systems; and 6)the Non-PA Parties each has received a copy of this Contract and the completed RRF. In witness whereof, the Non-PA Parties have executed this Contract by executing the RRF as of the latest date on the RRF. All communications under this Contract shall be forwarded directly to the appropriate PA. ^••.•• 901PI SC6SGIP-2e .41349 """""""'°r"' Self Generation Incentive Program E D I SOI V Proof of Project Milestone .1..11 I.il 1111 r..r,n......_rr Southern California Edison Application Code: SCE-SGIP-2015.1249 Instructions:This Self-Generation Incentive Program(SGIP) Date Printed: Proof of Project Milestone Form is reflective of the information Program Year: 2015 entered in the online form process. Please review thoroughly for accuracy of Information before signing.Once you have all the signatures, scan and upload this document under the Proof of Protect Milestone header in the Documents section of the online NOTE:Your application Is not submitted until you upload this application.Incomplete applications will result in a suspended form and all other required documentation and click on application. Upon successful submission of all milestone "Submit"via the online system.You will receive a information and documents, the Applicant will receive notice from confirmation page when you complete the submittal process. the SGIP Program Administrator that their proof of project milestone has been received Host Customer Contact Name: Melling Address: Company Name: City,State,rip: Parent Company Name: Phone: Sector: Email: NAICS: System Owner Contact Name: Nadia Marquez Mulling Addrese: 25 Stillman Street Company Name: Advanced Microgrld Sate 200 Solutions, Inc City, State,Zip: San Francisco, CA,94107 Parent Company Name; Phone: 415-63MI46 Email nadiami%ladvmicrogrid.com Applicant Contact Name; Nadia Marquez Mailing Address: 25 Stillman Street Company Nome: Advanced Microgrid Suite 200 Solutions,Inc City,Slate,Zip: San Francisco,CA, 94107 Parent Company Name: Phone: 415-638-6146 Email; nadiam@advmicrogrid.com Directed Blogas Supplier(If applicable) Contact Name: Mailing Address: Company Name: City,State,Zlp: „ Parent Company Name: Phone: Email: ,^.ontractor/Installer Contact Contact Name: Rick Ater Mailing Address: 10089 Willow Creek Road Company Name: Block 8 Veatch Suite 350 Contractor Llcanae CGC046364 City, State,Zip: San Diego, CA,93231 Number(CSLS): Email: AteneQbv.com Phone. 9134581611 nnna>rw,..,.arymra.<eay.nnureleerrbumao.vmrm51n4m us u -I. 501FI SCE SCIP-101 S114V Performance Data Provider(POP) Contact Contact Name; Hugh Henderson Email: hugh.hendemon@cdhenergyco Company Name: CDH Energy Corp. Phone: 31"55.1063 Project Site Information Site Address: City,State,Zip: Utility Information Electric Utility: Peak Annual Demand(kWj: Electric Utility is Munclpal7 Demand Response Account Name: Participant? Is Existing Service? Demand Response USNty Account ID: Program Name: Utility Motor ID: Demand Response Obligation fUM: Gas Utility: system Size Based on Gas Utility la Municipal? Load Growth? Account Name: Estimated Future Is Existing Service? Additional Demand(kWh Utility Account ID: Utility Meter ID: Proposed System Information Equipment Technology: A.E.S. Coupled System: No Fuel Typo: AES Charged From: Blogas Source: Export to Grid: No Directed Bingas produced Unknown Expected Onalte Load In CA? (k Whyear): Secondary Fuel Source? Unknown Fuel Type of Secondary Source: Equipment Details California Supplier: Requested Application Capacity(kW): Model Nameplate Cape Itv lkW1 D eels 00VONU DOG cost(=IMMBtu): Fuel Consumption 0 Natural Gas Cost (Btu/kWh): (N/MMBtu(: DOG Contract Premium: U Gen. System Heat Rai& 6npxerwxw xlfBrncn.vmnrenp11n1iun1a60arJommrnlvlpnm ]!5 o1..11.1 c SGIPI SCESOIP-201i I249 (Btu kWh): Existing Onslte System Informal SLIP In lantivized Systems)Orate: Technology ManulacturerlModel Unit Rated Capacity (kW) Quantity Year Installed Non-Incentivized System(s)Ol Technology Manufacturerill Unit Rated Capacity (1,W) quantity Year Installed Previous SGIP Genxator Capacity: 0 Previous SGIP Storage Capacity: 0 Project Finance Total Eligible Project Cost(TEPC): Taking Tax Credits: No Ineligible Project Coat: 0 ITC (as a% of TEPC): % Engels Cleanup Costs: 0 Other Incentive. Received Incentive Amount Incentive Type Description Incentive Results Equipment lnol llve 04 MW 1.2 MW 2-3 MW Total Dollars Incentive Rate(MVY) CepeGry(A) Eligible Cuenca,(M Preoll SGIP CepeLity(WI 0 0 Been Equipment Incentive CA Suppler Adder Mee E,a drool Inc sh. a) Blopes After Intel Rafe($" Eligible Capacity(Wi 0 Previous SGIP Capacity W 0 Slopes Adder Amount 0 1, 0 DSO Premium Cep c( 0 Adjusted total Adder Lesser of b of dl C 011wr inserts. Total Soo other Incentive table of mors Information Impucl on Sell Incentive Dellem Other IOU Incentive(100%) 0 a1 D Other NOn-1001ncentive(50%) 11 D NonRel.peytl lnceMWe(0%) 0 Adjusted Equipment like owe g) PA38.000.00 Toll l Other lncerdivee nI 0 Incerltive Adlusananhi Equipment single Adder. Otherincandvee Incentive Incentive Incentive♦ Ceple) Adjusannd SGIP Couldbil Gap ql it 0 (EqulymeM Ongj• Project Incentive Cep lei-jl 0 •k) 0 (Equipment and Bbpael Eligible Coel Cap(All lncentivee) j.k-11 C D •ml 0 hnpe:awwweeRarnn.romM1oplicninN(bOWdaumemalpdm 315 �. wmio sGIP i srb SGIP 20151249 Calculated SLIP Incentive' 1)SGIP CoMdbution Cap=(le 4'ITC)•Tolel Eligible Cost 't=0 if gmSGIP Conoublion Cep,otheroise i=SGIP COnlnbulion Cep-g 2)Calculated SGIP Incentive=d+g+i+k+m ^k=C it i+d—S5M,othervel k=S5M-Ipd) '•'m=0 if I+d+h� Total Eligible Oast,olhmwise,m=Total Eligible Cost-(I+d+h) The incentive adjustments shown above are based on the Total Eligible Project Cost,the Maximum Incentive Cap,and the Minimum Customer Investment. See the SGIP Handbook for more information on incentive limitations. Projected PBI Calculation Expected Total Production: Performance Based Total Incentive: 0 Incentive: Initial Payment: PBI Rate(&/kWh): Residential AES Eligibility Affidavit Requirements,of Host Customers and System Owners The AES system owner and/or Host Customer have the tools to control the usage blithe AES system when operating in parallel with the grid Provide performance data to the Program upon request(emaded,zipped file of 15 minute interval data)fora period of five(5)years. Pass the Residential AES Field Verification Inspection. Compliance Option A-Host Customer on TOU tariff or Demand Reduction Program The Host Customer is on a TOU tariff, dynamic tariff(e.g. PG&E's SmartRate or SDG&E's Reduce your Use),or agrees to integrate load through the California Independent System Operators Proxy Demand Response or equivalent tariff, poor to receiving the SGIP incentive and for five (5)years thereafter. Compliance Option B-Host Customer without TOU Tariff or Demand Reduction Program Host Customer and/or System Owner agrees, for a minimum period of five(5)years,to discharge the AES system in a amount equivalent to 52 complete cycles per year of the incentwized energy capacity,which is defined as two hours of discharge at the SGIP incenlivized power capacity rating, in discharges occurring during the peak hours or peak day events(such as those called by PG&E's SmaltRate program or SDG&E's Reduce your Use),of the applicable IOU service territory. Required Materials Include all required attachments with your submittal 1. Completed Proof of Project Milestone Form(AII3-Step Projects) 2. Copy of RFP or equivalent (All Projects) 3- Copy of Executed Contract or Agreement for Installation (All Projects) 4. Energy Efficiency Audit(All Projects) 5, Proposed Monitoring Plan(Projects>=30ill 6. Air Permit Application (Non-Renewable Fuel Projects Only) 7. Proof of Fuel Contracts and Documentation: • Renewable Fuel Contract • Directed Binges Renewable Fuel Attestation—System Owner& Fuel Supplier(Directed) •Gas Injection Qualification (On-Site) •Renewable Fuel Affidavit(On-sife) • Fuel Clean-up On-Site •Waste Gas Fuel Affidavit(Waste Gas Only) Declarations by Host CustommtOwner aroject Site Address: ]fty, Slate,Zip: neentive Amount rr,lhmw.xlf,e a[rim/eppli[:Jionl65I10'Jo[umenlslprinl 4.1 61101 6 SGIP I SL SGIP30111]i9 Requested: By execution of this document,System Owner and Host Host Customer Signature Customer each certify that the Project meets all progam eligibility requirements and that the System Owner and Hosl Customer agree to abide by the rules and requirements set forth In the SGIP Handbook.The undersigned declare under penalty of perjury under the laws of the State of California that the information provided is true,accurate,and complete. Sys am wrier not os us Omer Print Name: MANAL YAMCUr Signature Tide: VP, Pou4Y 4 pccia Dater ;g/, Applicant(if not Host Customer) / Print Name: fs,1ANLf. NAMoef Signature: Title:Ypt pOtAW M Date Alel"675 hIlNflfwwwsclfaencaAaml.pplicuimIMMdoa mmis/print Y5 >/3/IDI7 SGIPISC6SGIP-2015-12,19 r•j1f11R �� Self Generation Incentive Program EcD I SO N Incentive Claim Form Southern California Edison SGIPGmup@sce.com Instructions:This Self-Generation Incentive Program(SGIP)Incentive Application Code: SCE-SGIP-2015-1249 Claim Form is reflective of the information you enter in the online form Data Printed: 0710312017 process.Please review thoroughly for accuracy of information before Program Year: 2015 signing.Once you have all the signatures,seen and upload this document under the Incentive Claim header in the Documents section of the online application.Incomplete applications will result in a suspended application.Upon successful submission of all incentive NOTE:Ye ur application is not Submitted until you upload this form claim information and documents,the Applicant will receive notice from and all other required documentation and click on"Submit"via the the SGIP Program Administrator that their claim has been received. online system.You will receive a confirmation page when you complete Me submittal process. Host Customer Contact Name: Mailing Address: Company Name: City,Slate,Zip: Parent company Name: Phone: Sector: Email: NAICS: System Owner Contact Name: Manal Yamout Mailing Address; 25 Stillman Street Company Name: Advanced Mlcrogntl Solutions, City,State,Zip: San Francisco,CA,94107 Inc Phone: 415-6994175 Parent Company Name: Email: nicholasc@ativmicragdd.com Applicant Contact Name: Nicholas Connell Mailing Address: 25 Stillman Street Company Name: Advanced Microgrid Solutions, City,State,Zip: San Franclsco,CA,94107 Inc Phone: 415-699-4175 Parent Company Name: Email: nicholaacQadvmicrogritl.com Directed Biogas Supplier(if applicable) Contact Name: Mailing Address: Company Name: City,State,Zip: Parent Company Name: Phone: Email: Contractor/Installer Contact Contact Name: Rick Azar Mailing Address: 10069 Willow Creek Road Company Name: Black It Veatch Suite 350 city,State.Zip: San Diego,CA,93231 Contractor License Number CGW46364 (CSLB): Email: Azerre@becom Phone: 9134581611 Performance Data Provider(PDP)Contact Contact Name: Hugh Henderson Email hugh.henderson@cdhenergy min Company Name: 3 Phone: 315-655-1063 Payee Contact hu,01—se1fB—amMapplloa:ionMWbdoeumenlslP.inl 116 71112017 salP I SCE SCIP¢m 5 12+v Contact Nama: ■ Mailing Address: Company Name: Payee Tax Status: City,State,Zip: Email. Payee Tax ID: Phone'. Project Site Information Slte Addreas: City,Shiba,Zip: Utility Information Electric Utility: Peak Annual Demand(kW): Electric Utility Is Municipal? Demand Response Account Name: Parlicipant9 N Existing Service? Demand Response Program Name: Utility Account ID: Demand Response Utility Meter ID: Obligation(kW): Gas Utility: System Size Based on Load Gas Utility Is Municipal? Growth? Account Name: Estimated Future Additional Is Existing Service? Demand(kW): Utility Account ID: Utility Meter ID: Proposed System Information Equipment Technology: Electrochemical Storage Coupled System: No Fuel Type: AES Charged From: Sieges Source: Export to Gdtl: No Directed Blogas Produced In NIA Expected Onshe Load CA? (kWhtyear): Secondary Fuel Source? NIA Fuel Type of Secondary Source: Equipment Details Manufacturer: Tesla Ccrp. California Supplier: Yes Requested Application 250 Capacity hW): Model Nameplate Capacity Unit Rated Caupapil QU.Mj Total Rated Copedty am Im Powenxall 2.0 250 250 1 250 Directed Biogas Contract Details DBG cost($IMMBtu): Fuel Consumption 0 Natural Gas Cost($IMMBW): (BtWkW h): Gen.System Heat Rate DBG Contract Premium: 0 (BtulkWh): u l"!"wx.raiCrn.a:e:n.uPltllomiaW6nOTJorumens:V,im PM1 1/1,201, n(IIP I SSSSOIF 2015 1149 Other Onsite System Information SGIP Incentiviaed System(.)Chattel: Technology ManufacturerlModel Unit Rated Capacity Quantity Year Installed (kW) Non-Incentivized Systam(a)Chanel: Technology Manufacturer/Model Unit Rated Capacity Quantity Year Installed (kW) Previous SGIP Generator Capacity: 0 Previous SGIP Storage Capacity: 0 Project Finance Total Eligible Project Cost(TEPC): Taking Tax Credits: No Ineligible Project Cost: 0 ITC(a.a%of TEII % all Cleanup Costa: Other incentives Received Incentive Amount Incentive Type Description PBI Setup Information Meters Onsix: Meter Manufacturer Meter Model Meter File ID Meter aerial Number NIA NIA NIA Channels Onsits: Meter File ID Channel ID Category Unit of Measure NIA 1 Electric kWh Incentive Results Equipment lncanuva 01 MW LS MW zJ MW Total pollen carve Ram(SW Cepadly(W) Eligible Capacity(A) Frei SGIP Capauly(NO 0 0 Ram Equipment Incentive CA Supplier Adler Max Equipment locemive e) Stages Adder Incenllve RAM(SW Sill Deal(AA 0 Prevlom DOW Cepedlly AN) a Biopm Adder Amount 0 to 0 DEG premium Cap d) a Adjusted eippea Adder Lieu of part it 0 Chimera...Max TINtl Si other lnuMly.table for men Werm.dan Impact an Sale Incentive Dollar. Other IOU Incentive p 0a%) a nI 0 other Non-IOU lncentr a(50%) 0 f I o Na -R.I.Rayel Imat"I A(ml a hllpullwrvw Wig<naa.eenrloppliaolimrl6000ldoeumentalprinl 310 713,20❑ SGIP I SOBSOEP-2015 1249 A IMI Envubal Inbani" 9) 11581000.00 fiW Other frovil s sl 0 falM11W Ad1usanmta Equgmant all Adder• Me,lneetle,. Incentive Inceneve Incmtive• Caste) Adluetmmt SGIP Contribution Cap(Egulpmmt ql Only)' Pmlact lncanfve Cap(Equipmanl And .I., a Binger) Eligible Cost Cap All Incentives) 1R•1l 0 0 Calculal SGIP Mari ¶soup COntrlbugon Cap-(1-0.1-ITflyn el Eligible Con -1.0If g<-SGIP ConnoWon Cap,olMrMee i-SGIP Corgawkin Cap d)Cewlaled 601 P boernve-d•gal•kam ••k-0111•dw45M,ol0enxiaeka IaM g+d) •••m a 9If lW-h a-TCIe Ella)Con,oMervdae m-T"EIpI01e COM-(1•mh) The Incentive adjustments shown above are based on the Total Eligible Project Cost,the Maximum Incentive Cap,ale the Minimum Customer Investment.See the SGIP Handbook for more Information on Incentive limitations. Projected P131 Calculation Expected Total Production: Psdormsnoe Based Total Incentive: PSI ntiv Rate( Initial Payment: PSI Rafe({IkWh): Residential AES Eligibility Affidavit Requirements of Host Customers end System Owners The AES system owner andlor Host Customer have the fools to control the usage of the AES system when operating in Parallel with the grid. Provide performance data to the Program upon request(emalbd,zipped file of 15 minute Interval data)for a period of five(5)years. Pass the Residential AES Field Verification Inspection. Compliance Option A-Host Customer on TOU tang or Demand Reduction Program The Host Customer is on a TOU tariff,dynamic tariff(e.g. PGBE'a SmartRale or SOGAE's Reduce Your Use),or agrees W integrate load through the California Independent System Operator's Proxy Demand Response or equivalent tariff,prior to receiving Me SGIP incentive and for five(5) years thereafter. Compliance Option S-Haut Customer without TOU Tariff or Demand Reduction Program Host Customer andlor System Owner agrees,for a minimum period of five(5)years,to discharge the AES system In a amount equivalent to 52 complete cycles per year of the Incentnued energy capacity,which is banned as two hours of discharge at the SGIP Ineentivized power capacity rating,with discharges occurring during the peak hours or peak day events(such as those called by PG&E's Smardets program or SDGBE's Reduce Your Use),of the applicable IOU service territory. Required Materials Include all required attachments with your submittal: 1. Completed Incentive Claim Form(All Projects) 2. Proof of Authorization to Interconnect(Ail Projects) 3. Project Cost Affidavit and Cost Breakdown Workshest(All Projects) 4. Final Permits: •Building Permit Inspection Report(All Projects) •Air Permit Documentation(Ons/re Renewable Fuel Only) 5. Substantiation of •New or Expanded Load(AII Projects) •Renewable or waste resource(Onsile Renewable Fuel Only) •Fuel cleanup-skid cost(Offal Renewable Fuel Only) •Renewable Contract Commencement(Direct Blogas Only) •Renewable Fuel Metering Specifications(Directed Binges Only) hops:1lwww.;0zma,rwilapb1catmnre60aMcumenri l 116 7l 017 S01PI SCE-SLIP-2a15.12a9 5. Planned Maintenance Coordination Letter(Conventional CHP Pmjecfs>=200kW Only) 7. Final Monitoring Schematic(All Projects>=30kWJ Declarations by Host Customer and System Owner Project Site Atldre6s: City,State,Zip: Incentive Amount Requested: The undersigned certify under Me laws of the State of California that Host Gust n the forgoing is true and correct and is authorized to sign this Affidevit. 1)The information provided in this form is true,accurate,and complete 2)The above described generating system is new and intended to offset part or all of the Host Customer's electrical needs at the site of System Owner(if not Host Customer) installation Print Name: / 0)The site of installation is e within the Utility's service territory and,the selfyenerating equipmrpm enn t is not intentletl solely as a back- Signature: 0 A4 up generator rp� Date: � qJ 4)The Host Customer has receivetl a copy of N Title: is completed form 1 1 5)An electrical generating system meeting the terns and conditions of Self Generation Incentive Program has been installed and is Applicant(if not ost Customer) operating satisfactorily as of the date stated Print Name: /fv fVM� 6)The rated electrical output of the generating system and the Y `r Signature: physical location of the system are as stated above 7)The Host Customer and System Owner(if applicable)understand Title' �LUQ �f Date: 7 [h at all other agreements,other program rebates,grants,forgiven 1 loans,gifted equipment,financial Incentives,post-installation agreements,Renewable Energy Credits(aka RECs,Green Credits, �1 etc.),antl performance payments are"other incentives'and must be disclosed 6)At the time incentive payment is made,System Owner is the owner of the generating or storage equipment which comprise the Project and all the statements below are true and correct: The information providetl on the Incentive Claim Form is true and accurate •System Owner Incurred all Poste referenced in Project Finance section of the Incentive Claim Form, •Project Is operating as intended according to Contract 9)Costs to Project as defined in the Project Cost Breakdown am identical to the costs submitted by Parties to Program Administrator In the Incentive Claim Form 10)Except as noted below,there were no changes in the information regarding the Host Customers generating system specifications, installation location,or price from that information provided in the Reservation Request Form originally submitted by the undersigned, 11)Tax Liability: I understand that the incentives may be taxable and if greater than$600,may be reported to the IRS unless I am exempt from reporting.The Program Administrator may report such rebate payments on IRS Form 1099 unless I have checked corporation or exempt tax status above.You are urged to consult your tax adviser conceming the taxability of rebates.Program Administrator is not responsible for any taxes Chet may be imposed on you or your business as a result of your receipt of this rebate. hmpe llwww.mlfgerm.comlappliuvoNWWdowmeniVWini N6 -)]n.' SOIP 19(L5G I1'All}l1-.Y LI10� vn ux.v..v..un vu nlYln<.n,adMlllgoummurp n'. 06 SOU1aENN GIIrORNN CUSTOMER GENERATION E D I S O-Iv 1. AGREEMENT HOST CUSTOMER GFIDXXXX M EUf1nNIMF1WA1/ONAL`CmemY This Customer Generation Agreement("Agreement")is entered into by and between HOST CUSTOMER, a California public agency("Customer'), and Southern California Edison Company ("SCE"), a California Corporation. Customer and SCE are sometimes also referred to in this Agreement jointly as"Parties"or individually as"Party." In consideration of the mutual promises and obligations stated in this Agreement and its attachments, the Parties agree as follows: 1. SCOPE, PURPOSE, AND RELATED AGREEMENTS This Agreement, in conjunction with the Generation Interconnection and Operating Arrangements identified in Section 2.2 and attached as Appendix A, allows the Producer(as identified in section 2.2)to utilize Customer's electrical facilities to interconnect and operate the Generating Facility in parallel with SCE's Distribution System. The purpose of the Generating Facility is to serve the Customers electrical loads at the location identified in Section 2.1. 2. SUMMARY AND DESCRIPTION OF THE PARTIES AND LOCATION OF GENERATING FACILITY 2.1 The name and address used by SCE to locate the Electric Service Accounts where the Generating Facility interconnects with SCE's Distribution System is: HOST CUSTOMER ADDRESS CITY 2.2 The Generating Facility shall be interconnected with SCE's Distribution System pursuant to the Generating Facility Interconnection Agreement attached as Appendix A between SCE and Hybrid-Electric Building Technologies WLA 2, its successors or assigns ("Producer")dated_, ("Generation Interconnection and Operating Arrangements"). 2.3 Producers contact information: Hybrid-Electric Building Technologies WIA2 Attention: Tom Houle 115 Wild Basin, Suite 301 Austin,TX 78746 Phone: (512)712-1925 3. CUSTOMER ACKNOWLEDGEMENTS AND OBLIGATIONS 3.1 Customer acknowledges that it has authorized the Generating Facility to be installed and operated by Producer in accordance with SCE's Rule 21 on or adjacent to Customers premises. Such Generating Facility shall be used to serve all or a portion of Customer's electrical loads associated with the Electric Service provided by SCE at the location identified in Section 2.1, above, and any other purpose permitted under the Generation Interconnection and Operating Arrangements. Customer shall be solely responsible for the terms of any agreement between it and Producer. 3.2 Customer shall be solely responsible for any charges incurred under SCE's electric service tariffs for the services provided to Customer by SCE. Customer 14-744 09/2012 SCE Use Only 3-001-5731-33 GFID8596 Account No. ID No. CUSTOMER GENERATION AGREEMENT SOUTHERN CALIFORNIA EDISON HOST CUSTOMER GFIDX acknowledges that it is the sole end-use consumer of such tariffed services. This Agreement does not constitute an agreement by SCE to provide any tariffed service to Producer. 3.3 Customer acknowledges the Generating Facility shall be operated in compliance with all SCE tariffs, including but not limited to SCE's Rule 21, and any other regulations and laws governing the interconnection of the Generating Facility. Customer further acknowledges that it has been made aware of the charges and conditions related to the operation of the Generating Facility including, but not limited to Schedule S and Schedule DL-NBC, and that the performance or lack of performance of the Generating Facility may affect the rates and charges billed by SCE for the electric power delivered to Customer. Copies of such tariffs are available at SCE's Internet site:www.sce.com or by request to SCE. 3.4 Any amounts to be paid, or refunded to, SCE for the services received by Customer as a result of the Producer failing to operate the Generating Facility in accordance with the terms of the representations and warranties made under the Generation Interconnection and Operating Arrangements shall be paid to SCE in accordance with SCE's Rule 9. 3.5 Customer shall make the Generating Facility reasonably accessible to SCE's personnel,contractors or agents to perform SCE's duties under Rule 21. 4. TERM AND TERMINATION 4.1 This Agreement shall become effective as of the last date entered in Section 13 below. The Agreement shall continue in full force and effect until the earliest date that one of the following events occurs: (a) The Parties agree in writing to terminate the Agreement, or (b) Unless otherwise agreed in writing by the Parties, at 12:01 A.M. on the day following the date the Customer's electric Service Account through which the Generating Facility is Interconnected to SCE's Distribution System is closed or terminated, or (c) Unless otherwise agreed in writing by the Parties, at 12:01 A.M. on the 3V day following the date the Generation Interconnection and Operating Arrangements are terminated, unless the responsibility for such Generation Interconnection and Operating Arrangements is assigned to or replaced by a subsequent Producer. The Parties shall cooperate in obtaining an assignment or replacement agreement,or (d) At 12:01 A.M.on the 6V day after Customer or SCE provides written Notice pursuant to Section 6 below to the other Party of the Customer or SCE's intent to terminate this Agreement. 4.2 Customer may elect to terminate this Agreement pursuant to the terms of Section 4.1(d)for any reason. SCE may elect to terminate this Agreement pursuant to the terms of Section 4.1(d)for one or more of the following reasons: (a) A change in SCE's applicable tariffs,as approved or directed by the Commission, or a change in any local, state or federal law, statute or regulation, either of which materially alters or otherwise affects SCE's ability or obligation to perform SCE's duties under this Agreement;or, 14-744 2 09r2012 CUSTOMER GENERATION AGREEMENT SOUTHERN CALIFORNIA EDISON HOST CUSTOMER GFIOXXXX (b) Unless otherwise agreed in writing by the Parties, Customer fails to take all corrective actions specified in SCE's Notice provided in accordance with Section 6 that Customer is out of compliance with the terms of this Agreement within the time frame set forth in such Notice. 5. LIMITATION OF LIABILITY 5.1 Each Party's liability to the other Party for any loss, cost, claim, injury, liability, or expense, including reasonable attorney's fees, relating to or arising from any act or omission in its performance of this Agreement shall be limited to the amount of direct damage actually incurred. In no event shall either Party be liable to the other Party for any indirect,special, consequential, or punitive damages of any kind whatsoever. 5.2 SCE shall not be liable to Customer in any manner,whether in tort or contract or under any other theory,for loss or damages of any kind sustained by Customer resulting from termination of the Generation Interconnection and Operating Arrangements between Producer and SCE, provided such termination is consistent with the terms of the Generation Interconnection and Operating Arrangements. 6. NOTICES 6.1 Any written notice,demand, or request required or authorized in connection with this Agreement("Notice")shall be deemed properly given if delivered in person or sent by first class mail, postage prepaid,to the person specified below: If to SCE: Southern California Edison Company Attention: Director,OF Resources 2244 Walnut Grove Avenue P.O. Box 800 Rosemead, CA 91770 Phone: (626)302-1212 FAX: (626)302-9622 If to Customer: HOST CUSOTMER Attention: HOST CUSTOMER SIGNATORY AUTHORITY Address: XXXX City: XXXX Phone: XXXX FAX: XXXX 6.2 A Party may change its address for Nofices at any time by providing the other Party Notice of the change in accordance with Section 6.1. 6.3 The Parties may also designate operating representatives to conduct the daily communications,which may be necessary or convenient for the administration of this Agreement. Such designations, including names, addresses,and phone numbers may be communicated or revised by one Party's Notice to the other. 7. RELEASE OF DATA Customer authorizes SCE to release to the California Energy Commission (CEC)and/or the California Public Utilities Commission(Commission) information regarding the Generating Facility, including Customer's name and location, and the size, location and operational characteristics of the Generating Facility, as may be requested from time to time pursuant to the CEC's or Commission's rules and regulations. 8. ASSIGNMENT 14-744 3 09/2012 CUSTOMER GENERATION AGREEMENT SOUTHERN CALIFORNIA EDISON HOST CUSTOMER GFIDXXXX Customer shall not voluntarily assign its rights nor delegate its duties under this Agreement without SCE's written consent. Any assignment or delegation Customer makes without SCE's written consent shall not be valid. SCE shall not unreasonably withhold its consent to Customer's assignment of this Agreement. 9. NON-WAIVER None of the provisions of this Agreement shall be considered waived by a Party unless such waiver is given in writing. The failure of a Party to insist in any one or more instances upon strict performance of any of the provisions of this Agreement or to take advantage of any of its rights hereunder shall not be construed as a waiver of any such provisions or the relinquishment of any such rights for the future, but the same shall continue and remain in full force and effect. 10. GOVERNING LAW,JURISDICTION OF COMMISSION, INCLUSION OF SCE's TARIFFS, DEFINED TERMS 10.1 This Agreement shall be interpreted, governed, and construed under the laws of the State of California as if executed and to be performed wholly within the State of California without giving effect to choice of law provisions that might apply to the law of a different jurisdiction. 10.2 This Agreement shall, at all times, be subject to such changes or modifications by the Commission as it may from time to time direct in the exercise of its jurisdiction. 10.3 The interconnection and Services provided under this Agreement shall at all times be subject to the terms and conditions set forth in the tariffs applicable to the electric service provided by SCE. Copies of such tariffs are available at SCE's Internet site: www.sce.com or by request to SCE and are incorporated into this Agreement by this reference. 10.4 Notwithstanding any other provisions of this Agreement, SCE shall have the right to unilaterally file with the Commission, pursuant to the Commission's rules and regulations, an application for change in tariffs, rates, charges,classification, service, or any agreement relating thereto. 10.5 When initially capitalized, whether in the singular or in the plural,the terms used herein shall have the meanings assigned to them either in this Agreement or in SCE's Rule 1 or Rule 21, Section C. If any term is defined in both Rule 1 and Rule 21,the definition in Rule 21 shall prevail. 11. AMENDMENTS AND MODIFICATION This Agreement can only be amended or modified by a written agreement signed by both Parties. SCE shall determine in its sole discretion whether prior commission approval is required for such amendments or modifications. 14-744 4 09/2012 CUSTOMER GENERATION AGREEMENT SOUTHERN CALIFORNIA EDISON HOST CUSTOMER GFIDXXXX 12. ENTIREAGREEMENT This Agreement, and the Generation Interconnection and Operating Arrangements, including any incorporated tariffs, contain the entire agreement and understanding between the Parties,their agents, and employees as to the subject matter of this Agreement. Each party also represents that in entering into this Agreement, it has not relied on any promise, inducement, representation,warranty, agreement or other statement not set forth in this Agreement,the Generation Interconnection and Operating Arrangements, or in the incorporated tariffs. 13. SIGNATURES IN WITNESS WHEREOF,the Parties hereto have Caused two originals of this Agreement to be executed by their duly authorized representatives. This Agreement is effective as of the last date set forth below. HOSTCUSTOMER SOUTHERN CALIFORNIA EDISON COMPANY By: XXXX By: Name: XXXX Name: Title: XXXX Title: Date: XXXX Dale: 14-744 5 09/2012 CUSTOMER GENERATION AGREEMENT SOUTHERN CALIFORNIA EDISON HOSTCUSTOMER GFIDXXXX APPENDIX A GENERATION INTERCONNECTION AND OPERATING ARRANGEMENTS BETWEEN PRODUCER AND SCE 14.7" 6 0912012 OPERATIONS COMMITTEE Meeting Date TOBd.Or .Dir. 09/OS118 09/26/18 AGENDA REPORT Item Item Number 2 9 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: SAFETY IMPROVEMENTS PROGRAM, PROJECT NO. J-126 GENERAL MANAGER'S RECOMMENDATION A. Receive and file Bid Tabulation and Recommendation for Helix Electric for Safety Improvements Program: Exit Signs, Exit Lights, Electrical Disconnects, and Gas Detection, Contract No. J-1261; B. Award a Construction Contract to Helix Electric for the Safety Improvements Program: Exit Signs, Exit Lights, Electrical Disconnects, and Gas Detection, Contract No. J-1261, for a total amount not to exceed $881,800, to address identified emergency lights and exit sign issues; and C. Approve a contingency of$88,180 (10%). BACKGROUND The Orange County Sanitation District (Sanitation District) owns and operates facilities that were designed and constructed from the 1950s to present. In July 2014, the Facility Wide Safety Assessment, Project No. SP-145-1, reviewed safety issues at the Sanitation District Plant Nos. 1 and 2 and pump stations. The study identified approximately 2,000 facility issues impacting worker safety and compliance with Cal/OSHA regulations including electrical, fall protection, machine guarding, hazardous area classifications, skylights, and walkway hazards. Each item was assigned a high, medium, or low priority rating. Pending resolution of the safety items, the Sanitation District took interim measures to minimize life-safety risks. There was an approximately even distribution between issues that would be addressed using Sanitation District resources and those that would be addressed through the Capital Improvement Program, depending on the nature and complexity. Items that could not be assigned to existing projects have been assigned to the Safety Improvements Program, Project No. J-126. To resolve the deficiencies as quickly as possible, Safety Improvements Program, Project No. J-126, is being executed through multiple construction packages that can be completed in a shorter time than using a single construction contract. Development of multiple construction packages also allows higher priority safety items to be completed more quickly than lower priority items. Page 1 d 3 RELEVANT STANDARDS Provide a safe and collegial workplace PROBLEM Among the various Project No. J-126 deficiencies are approximately 140 emergency light and exit sign improvements at Plant Nos. 1 and 2. PROPOSED SOLUTION Award Construction Contract No. J-1261. TIMING CONCERNS Delaying resolution of the safety items poses potential threats to staff, contractor, and visitor safety. RAMIFICATIONS OF NOT TAKING ACTION Staff, contractors, and visitors will continue to be exposed to potential safety hazards and certain facilities will continue to not comply with code requirements. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District advertised Contract No. J-1261 for bid on July 9, 2018 and three sealed bids were received on August 21, 2018. A summary of the bid opening is as follows: Engineer's Estimate $ 1,169,208 Bidder Amount of Bid Helix Electric $ 881,800 AECOM Energy & Construction, Inc. $ 1,324,778 Amtek Construction $ 1,333,333 The bids were evaluated in accordance with the Sanitation District's policies and procedures. A notice was sent to all bidders on August 28, 2018 informing them of the intent of Sanitation District staff to recommend awarding a construction contract to the lowest responsive bidder, Helix Electric, for Safety Improvements Program: Exit Signs, Exit Lights, Electrical Disconnects, and Gas Detection, Contract No. J-1261, for a total amount not to exceed $881,800. Page 2 d 3 CEQA A CEQA Notice of Exemption for this project was filed on August 14, 2015. The project is exempt from CEQA pursuant to CEQA's Class 1 Exemption for Existing Facilities (section 15301). The exemption calls for minor alteration of existing public or private structures, facilities, mechanical equipment, involving negligible or no expansion of use beyond that existing at the time of the lead agency's determination. This project calls for safety related modifications of existing facilities which will have no impact to existing capacity. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted (FY2018-19 and 2019-20, Section 8, Page 41, Project No. J-126), and the budget is sufficient for the recommended action. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: Construction Contract TG: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 ..........................6 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...................................................................................9 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....................................................................................21 SECTION -20 ASSIGNMENT.................................................................................22 SECTION -21 RESOLUTION OF DISPUTES ........................................................22 SECTION -22 SAFETY& HEALTH ........................................................................23 SECTION -23 NOTICES.........................................................................................23 C-CA-011317 CONTRACT AGREEMENT ORANGE COUNTY SANITATION DISTRICT CONTRACT NO. J-126 1 SAFETY IMPROVEMENTS PROGRAM THIS AGREEMENT is made and entered into, to be effective, this September 26, 2016, 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. CONFORMED C-CA-011317 CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 1 of 24 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: 1. Specifications (Divisions 01-17) ii. Plans iIL 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 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 2 of 24 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. CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 3 of 24 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: CONTRACT NO. J-126 1 SAFETY IMPROVEMENTS PROGRAM C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 4 of 24 SECTION -4 PLANS AND SPECIFICATONS The Work to be done is shown in a set of Plans and Specifications entitled: CONTRACT NO. J-126 1 SAFETY IMPROVEMENTS PROGRAM 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 fifteen (15) 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 three hundred sixty-five (365) Days from the effective date of the "Notice to Proceed" issued by OCSD, excluding delays caused or authorized by OCSD as set forth in Sections 7, S, and 9 hereof, and applicable provisions in the General Conditions. The time for completion includes ten (10) 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, CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 5 of 24 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 Work 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 Work by the number of days, if any, reasonably required for CONTRACTOR to perform the Extra Work, as determined by the ENGINEER. The decision of the ENGINEER shall be final. C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 6 of 24 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 Documents, 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." 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 Eight Hundred Eighty-One Thousand Eight Hundred Dollars ($881,800)as itemized on the Attached Exhibit"K. Upon satisfaction of the conditions precedent to payment set forth in the General Requirements, Additional General Requirements and General Conditions (including but CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 7 of 24 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 Work a schedule which shows: 1. A minimum of one (1) payment to be made to the CONTRACTOR for each successive four-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 the ENGINEER. The processing of payments shall not be considered as an acceptance of any part of the Work. B. As used in this Section, the following defined terms shall have the following meanings: C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 8 of 24 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 at seq., the CONTRACTOR may, at its sole expense, substitute securities as provided in General Conditions—"Retained Funds; Substitution of Securities." SECTION—13 COMPLETION Final Completion and Final Acceptance shall occur at the time and in the manner specified in the General Conditions, "Final Acceptance and Final Completion", "Final Payment" and Exhibit A- Schedule of Prices. CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 9 of 24 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 Engineering Department. The CONTRACTOR agrees that not less than said prevailing rates shall be paid to workers employed on this public works Contract as required by Labor Code Section 1774 of the State of California. Per California Labor Code 1773.2, OCSD will have on file copies of the prevailing rate of per diem wages at its principal office and at each job site, which shall be made available to any interested party upon request. C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 10 of 24 C. Forfeiture for Violation: CONTRACTOR shall, as a penalty to OCSD, forfeit two thousand 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 it hereunder except as provided in paragraph (B)above. CONTRACTOR shall conform to Article 3, Chapter 1, Part 7 (Section 1810 at sec.)of the Labor Code of the State of California and shall forfeit to OCSD as a penalty, the sum of twenty-five dollars ($25.00)for each worker employed in the execution of this Contract by CONTRACTOR or any Subcontractor for each calendar day during which any worker is required or permitted to labor more than eight (8) hours in any one (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. CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 11 of 24 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 one hundred percent (100%)of the Contract Price. This Contract shall not become effective until such Bonds are supplied to and approved by OCSD. Bonds must be issued by a Surety authorized by the State Insurance Commissioner to do business in California. The Performance Bond shall remain in full force and effect through the warranty period, as specified in Section 19 below. All Bonds required to be submitted relating to this Contract must comply with California Code of Civil Procedure Section 995.630. Each Bond shall be executed in the name of the Surety insurer under penalty of perjury, or the fact of execution of each Bond shall be duly acknowledged before an officer authorized to take and certify acknowledgments, and either one of the following conditions shall be satisfied: C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 12 of 24 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 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 CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 13 of 24 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 requirement(s) providing the more protective coverage for both OSCD and the Third Parties shall control and be purchased and maintained by CONTRACTOR. A. Limits of Insurance 1. General Liability: Three Million Dollars ($3,000,000) per occurrence and a general aggregate limit of Three Million Dollars ($3,000,000)for bodily injury, personal injury and property damage. Coverage shall include each of the following: a. Premises-Operations. b. Products and Completed Operations, with limits of at least Three Million Dollars ($3,000,000) per occurrence and a general aggregate limit of Three Million Dollars ($3,000,000)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 C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 14 of 24 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. 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: CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 15 of 24 Either(1)a combined single limit of Two Million Dollars ($2,000,000) and a general aggregate limit of Two Million Dollars ($2,000,000)for bodily injury, personal injury and property damage; Or alternatively, (2) Two Million Dollars ($2,000,000) per person for bodily injury and One Million Dollars ($1,000,000) 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/Employer's Liability: CONTRACTOR shall provide such Worker's Compensation Insurance as required by the Labor Code of the State of California, including employer's liability with a minimum limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease. If an exposure to Jones Act liability may exist, the insurance required herein shall include coverage with regard to Jones Act claims. Where permitted by law, CONTRACTOR hereby waives all rights of recovery by subrogation because of deductible clauses, inadequacy of limits of any insurance policy, limitations or exclusions of coverage, or any other reason against OCSD, its or their officers, agents, or employees, and any other contractor or subcontractor performing Work or rendering services on behalf of OCSD in connection with the C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 16 of 24 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- 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: CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 17 of 24 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 thirty(30)days prior notice of such an event to OCSD, or to have its insurance broker/agent send to OCSD a certified letter describing the changes in coverage and any increase in deductible or SIR amounts. The certified letter must be sent Attention: Risk Management and shall be received not less than twenty (20) days prior to the effective date of the change(s). The letter must be signed by a Director or Officer of the broker/agent and must be on company letterhead, and may be sent via e-mail in pdf format. C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 18 of 24 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 worker's compensation insurance, subject to OCSD's option, at any time during the term of this Contract, to require a change in insurer upon twenty (20)days written notice. Further, OCSD will require CONTRACTOR to substitute any insurer whose rating drops below the levels herein specified. Said substitution shall occur within twenty (20)days of written notice to CONTRACTOR by OCSD or its agent. E. Verification of Coverage CONTRACTOR shall furnish OCSD with original certificates and mandatory endorsements affecting coverage. Said policies and endorsements shall conform to the requirements herein stated. All certificates and endorsements are to be received and approved by OCSD before Work commences. OCSD reserves the right to require complete, certified copies of all required insurance policies, including endorsements, affecting the coverage required by these Specifications at any time. CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 19 of 24 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. a. Commercial General Liability Form CG-0001 10 01 b. Additional Insured Including Form CG-2010 10 01 and Products-Completed Operations Form CG-2037 10 01 C. Waiver of Transfer of Rights of Form CG-2404 11 85; or Recovery Against Others to Us/ Form CG-2404 10 93 Waiver of Subrogation 3. Required State Compensation Insurance Fund Endorsements a. Waiver of Subrogation Endorsement No. 2570 b. Cancellation Notice Endorsement No. 2065 C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 20 of 24 4. Additional Required 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 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 CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 21 of 24 Completion' that the completed Work is free from all defects due to faulty materials, equipment or workmanship and that it shall promptly make whatever adjustments or corrections which may be necessary to cure any defects, including repairs of any damage to other parts of the system resulting from such defects. OCSD shall promptly give notice to the CONTRACTOR of observed defects. In the event that the CONTRACTOR fails to make adjustments, repairs, corrections or other work made necessary by such defects, OCSD may do so and charge the CONTRACTOR the cost incurred. The CONTRACTOR's warranty shall continue as to any corrected deficiency until the later of(1)the remainder of the original one-year warranty period; or(2)one year after acceptance by OCSD of the corrected Work. The Performance Bond and the Payment Bond shall remain in full force and effect through the guarantee period. The CONTRACTOR's obligations under this clause are in addition to the CONTRACTOR's other express or implied assurances under this Contract, including but not limited to specific manufacturer or other extended warranties specified in the Plans and Specifications, or state law and in no way diminish any other rights that OCSD may have against the CONTRACTOR for faulty materials, equipment or Work. SECTION-20 ASSIGNMENT No assignment by the CONTRACTOR of this Contract or any part hereof, or of funds to be received hereunder, will be recognized by OCSD unless such assignment has had prior written approval and consent of OCSD and the Surety. SECTION—21 RESOLUTION OF DISPUTES OCSD and the CONTRACTOR shall comply with the provisions of California Public Contract Code Section 20104 at. seq., regarding resolution of construction claims for any Claims which arise between the CONTRACTOR and OCSD, as well as all applicable dispute and Claims provisions as set forth in the General Conditions and as otherwise required by law. C-CA-011317 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 22 of 24 SECTION—22 SAFETY & HEALTH CONTRACTOR shall comply with all applicable safety and health requirements mandated by Federal, State, City, and/or public agency codes, permits, ordinances, regulations, and laws, as well as these Contract Documents, including but not limited to the General Requirements, Section entitled "Safety" and Exhibit B OCSD Safety Standards. SECTION-23 NOTICES Any notice required or permitted under this Contract may be given by ordinary mail at the address set forth below. Any party whose address changes shall notify the other party in writing. TO OCSD: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708-7018 Attn: Clerk of the Board Copy to: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708-7018 Attn: Construction Manager Bradley R. Hogin, Esquire Woodruff, Spradlin & Smart 555 Anton Boulevard, Suite 1200 Costa Mesa, California 92626 TO CONTRACTOR: Helix Electric, Inc. 6795 Flanders Drive San Diego, CA 92121 Copy to: Raffi Oghassabian, Vice President of Estimating Helix Electric, Inc. 6795 Flanders Drive San Diego, CA 92121 CONFORMED C-CA-011317 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 23 of 24 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— 11/11/2019) 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 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 24 of 24 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 EXA4 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." EXA3 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. CONFORMED C-EXA-080414 CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM 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) 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 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM 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. CONFORMED C-EXA-080414 CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM 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) Days after receipt of recommended changes from OCSD, the CONTRACTOR will C-EXA-080414 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 4 of 8 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 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) 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: CONFORMED C-EXA-080414 CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 5 of 8 1. The true and correct amount payable for the Work is different from that previously accepted; 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 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM 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 Subcontractor's performance. Name Title Dale CONFORMED C-EXA-080414 CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 7 of 8 ATTACHMENT 2—SCHEDULE OF PRICES See next pages from the Bid Submittal Forms (Helis Electric, Inc.) BF-14 Schedule of Prices, Pages 1-2 C-EXA-080414 CONFORMED CONTRACT NO.J-126 1 SAFETY IMPROVEMENTS PROGRAM Page 8 of 8 Bid Submitted By: Helix Electric, Inc. (Name of(Firm) 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. Bidders 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 determine 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. Federal and/or State and any other special taxes, natant rights or royalties shall be included in the Prices quoted in this Bid. B. Basis of Award AWARD OF THE CONTRACT WILL BE MADE ON THE BASIS OF THE LOWEST RESPONSIVE AND RESPONSIBLE BID. THE LOWEST BID IS DEFINED AS THE"TOTAL AMOUNT OF BID' LISTED IN THIS BID, UNLESS OTHERWISE SPECIFIED BELOW. Note 1: Base Bid. Includes all costs necessary to furnish all labor, materials, equipment and services for the construction of the Project per the Invitation for Bids. BF-14 SCHEDULE OF PRICES C-BF-021115 CONTRACT NO. J-126 1 SAFETY IMPROVEMENTS PROGRAM 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): NoDescHptlon Measurement APProx city Unit Price Extended Price 1. Mobilization, initial progress payment for all fees,labor, materials and equipment required for mobilization, staging area, and Surety Lump Sum 1 = $50,000 Bonds,and other activities in conformance with the Contract Documents,for a lump sum price of: 2. Fumish all labor,materials,and equipment necessary for conduit .� seal-off fittings in conformance with the Contract Documents,for a Unit Price 100 X Q = $ 1,Q 00 unit price of: 3. Fumish all labor,materials,and equipment necessary for masonry/concrete core drills in conformance with the Contract Unit Price 90 X Z 0 = $ 10, 800 Documents,for a unit price of: 4. Fumish all labor,materials,and equipment necessary for the completion of the Contract Work, except for the Work specified in Lump Sum 1 = s814, 000 Bid Item Nos. 1,2, and 3 above, in conformance with the Contract Documents,for a lump sum price of: Q TOTAL AMOUNT OF BID (BASISOFAWARD) $ e81' Vo0 BF-14 SCHEDULE OF PRICES C-BF-021115 CONTRACT NO.J-1261 SAFETY IMPROVEMENTS PROGRAM Page 2 of 2 OPERATIONS COMMITTEE Meeting Date TOBd.Of Dir. 09/OS118 09/26/18 AGENDA REPORT Item Item Number 3 10 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL, PROJECT NO. 241-8 GENERAL MANAGER'S RECOMMENDATION A. Approve a Professional Construction Services Agreement with Michael Baker International, Inc. to provide construction support services for Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8, for a total amount not to exceed $215,129; and B. Approve a contingency of$21,513 (10%). BACKGROUND The Orange County Sanitation District (Sanitation District) has been protecting the now out-of-service segment of the Santa Ana River Interceptor (SARI) pipeline between the County line and Weir Canyon Road in Yorba Linda for many years. The US Army Corps of Engineers permitted the placement of large rocks within the Santa Ana Riverbed to protect the pipe by preventing erosion that might expose the pipe to river flow. The permits required removal of the rocks upon relocation of the SARI line and abandonment of the old line, both of which are completed. The Sanitation District is now obligated to remove the rocks. The design of the SARI Rock Stabilizers Removal project has been completed by Michael Baker Intemational, Inc. under a Professional Design Services Agreement. Staff is separately requesting award of the construction contract for the rock removal at the September Operations Committee meeting. RELEVANT STANDARDS • Comply with Army Corps of Engineers' permit requirements • Maintain collaborative and cooperative relationships with regulators, stakeholders, and neighboring communities • Government Code Section 4526: Select the "best qualified firm" and "negotiate fair and equitable fees" Page 1 of 3 PROBLEM The Sanitation District is obligated by permit requirements to remove the large rocks originally placed in the Santa Ana Riverbed to protect the original SARI line. The Sanitation District requires the services of the design consultant during the associated construction contract. The services include typical engineering services during construction, as well as biological monitoring to comply with permit conditions for removal of the rocks. PROPOSED SOLUTION Award a Professional Construction Services Agreement to the design consultant, Michael Baker International, Inc. The proposed services will be provided on an as-needed basis and will include reviewing submittals; answering Contractor's requests for information; reviewing contract document modifications and construction change orders; conducting biological surveys, monitoring, and reporting; participating in progress meetings; preparing record drawings; and assisting in the closeout of the project. TIMING CONCERNS The schedule driver of this project is the Army Corps of Engineers' regional general permit (RGP 63) condition, which stated that the Sanitation District shall submit a plan within 60 days following the relocation of the SARI line, and implementation of the plan within 90 days after approval of the plan. The SARI line completion would be achieved following the implementation of the Army Corps of Engineers' Reach 9, Phase 4, ongoing bank armoring project anticipated to be completed by fall 2018. RAMIFICATIONS OF NOT TAKING ACTION Engineering support services needed to facilitate and review construction activities will not be available. PRIOR COMMITTEE/BOARD ACTIONS September 2016 - Approved a Professional Design Services Agreement with Michael Baker International, Inc. to provide engineering design services for the Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8, for an amount not to exceed $399,008, and approved a contingency of$39,900 (10%). ADDITIONAL INFORMATION Michael Baker International, Inc. has successfully furnished engineering services for the design of this project and their support services during construction will provide continuity through the completion of the project. Page 2 of 3 Staff negotiated with Michael Baker International, Inc. for these support services in accordance with the Sanitation District's adopted policies and procedures. A review of the proposed fee was conducted using estimated quantities of requests for information, submittals, meetings, site visits, change order review, and design revisions, on site biological surveys, monitoring and reporting, as well as the level of effort for preparing record drawings. Based on this review, staff has determined the negotiated fee to be fair and reasonable for these services. CEQA An Initial Study/Mitigated Negative Declaration for this project was filed on April 28, 2016. FINANCIAL CONSIDERATIONS This recommendation complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted (Line item: FY2018-19 and 2019-20, Section 8, Page 16), and the budget is sufficient for this action. Per an agreement between the Sanitation District and the Santa Ana Watershed Project Authority(SAW PA), SAW PA will reimburse the Sanitation District for 76% of the cost of this project. ATTACHMENT The following attachment(s) may be viewed on-line at the OOSD website (MD .ocsd.corn with the complete agenda package: Professional Construction Services Agreement HK:dm:gc Page 3 of 3 PROFESSIONAL CONSTRUCTION SERVICES AGREEMENT THIS AGREEMENT, is made and entered into to be effective the 26d' day of September, 2018 by and between the ORANGE COUNTY SANITATION DISTRICT, hereinafter referred to as "SANITATION DISTRICT", and MICHAEL BAKER INTERNATIONAL, for purposes of this Agreement hereinafter referred to as "CONSULTANT". WITNESSETH: WHEREAS, the SANITATION DISTRICT desires to engage a CONSULTANT to provide Construction Support Services for Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2.41.8; and, WHEREAS, CONSULTANT is qualified to provide the necessary services for Construction Support Services in connection with these requirements; and, WHEREAS, the SANITATION DISTRICT has adopted procedures in accordance with the SANITATION DISTRICT's Purchasing Ordinance Section 4.03(B)for the continuation of services and has proceeded in accordance with said procedures to perform this work; and, WHEREAS, at its regular meeting on September 26, 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 and technical 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, completeness, and coordination of all design, drawings, specifications, and other 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 laws, 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. B. CONSULTANT is responsible for the quality of work prepared under this Agreement and shall ensure that all work is performed to the standards of best engineering practice for clarity, uniformity, and completeness. PCSA PROJECT NO.231-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 1 of 19 C. In the event that work is not performed to the satisfaction of the SANITATION DISTRICT and does not conform to the requirements of this Agreement or any applicable industry standards, the CONSULTANT shall, without additional compensation, promptly correct or revise any errors or deficiencies in its designs, drawings, specifications, or other services within the timeframe specified by the Project Engineer/Project Manager. The SANITATION DISTRICT may charge to CONSULTANT all costs, expenses and damages associated with any such corrections or revisions. D. All CADD drawings, figures, and other work shall be produced by CONSULTANTS and Subconsultants using the SANITATION DISTRICT standard software. 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 be subject to an acceptance period of Fourteen (14) calendar days during which the SANITATION DISTRICT shall perform appropriate acceptance tests. CONSULTANT shall correct any discrepancies or errors detected and reported within the acceptance period at no additional cost to the SANITATION DISTRICT. E. All professional services performed by the CONSULTANT, including but not limited to all drafts, data, correspondence, proposals, reports, and estimates 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, (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: A. Total Compensation Total compensation shall be in an amount not to exceed Two Hundred Fifteen Thousand One Hundred Twenty-Nine Dollars ($215,129). 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 PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 2 of 19 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. 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 Suboonsultant total compensation in accordance with the Subconsultant amount specified in Attachment"E"- Fee Proposal. For any Subconsultant whose fees for services are less than $100,000, CONSULTANT may pay to Suboonsultant total compensation on an hourly-rate basis 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 PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 3 of 19 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.gsa.gov/portal/category/104711#. The CONSULTANT shall be responsible for the most economical and practical means of 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. 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 general 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 PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 4 of 19 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 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. CONSULTANT shall allocate costs in the same manner as it would for payment requests as described in this Section of the Agreement. CONSULTANT shall warrant and certify the accuracy of these costs and understand that submitted costs are subject to Section 11 -AUDIT PROVISIONS. B. CONSULTANT may submit monthly or periodic statements requesting payment for those items included in Section 2- COMPENSATION hereof in the format as required by the SANITATION DISTRICT. Such requests shall be based upon the amount and value of the work and services performed by CONSULTANT under this Agreement and shall be prepared by CONSULTANT and accompanied by such supporting data, including a detailed breakdown of all costs incurred and project element work performed during the period covered by the statement, as may be required by the SANITATION DISTRICT. PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 5 of 19 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 on a per-project-element basis. 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. He may, at his discretion, 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 each project element or 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, 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, 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 ten thousand dollars ($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 PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 6 of 19 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 e) 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. 5. 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 forwhich 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 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(e). 6. DOCUMENT OWNERSHIP—SUBSEQUENT CHANGES TO PLANS AND SPECIFICATIONS A. Ownership of Documents for the Professional Services performed. All documents, including but not limited to, original plans, studies, sketches, drawings, computer printouts and disk files, and specifications 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 PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 7 of 19 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 plans or specifications, 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. 7. INSURANCE A. General i. Insurance shall be issued and underwritten by insurance companies acceptable to the SANITATION DISTRICT. ii. Insurers must have an "A-" Policyholder's 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 Worker's 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. 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: Two Million Dollars ($2,000,000) per occurrence with Two Million Dollars ($2,000,000) 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, owners and contractors protective liability, 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 PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 8 of 19 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. Drone Liability Insurance: If a drone will be used, drone liability insurance must be maintained by CONSULTANT in the amount of One Million Dollars ($1,000,000) in a form acceptable to the SANITATION DISTRICT. F. 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 Stale 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. G. 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 PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 9 of 19 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. H. 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 SANITATION DISTRICT reserves the right to require complete, certified copies of all required insurance policies, including endorsements, effecting 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 (5/2010)or equivalent. • Additional Insurance (ISO Form) CG2010 11 85 or (General Liability) The combination of(ISO Forms) CG 2010 1001 and CG 2037 1001 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. PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 10 of 19 • Waiver of Subrogation State Compensation Insurance Fund Endorsement No. 2570 or equivalent. • Cancellation Notice State Compensation Insurance Fund Endorsement No. 2065 or equivalent. 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 policy shall not be cancelled 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 as soon as practicable 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. J. Primary Insurance Except for Professional Liability, 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. K. Separation of Insured Except for Professional Liability, all liability policies shall contain a "Separation of Insureds" clause. L. 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. M. 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. PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 11 of 19 N. Defense Costs Except for Professional Liability insurance, liability policies 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. O. 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. P. 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. 8. SCOPECHANGES In the event of a change in the Scope of Work, requested by 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. 9. 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 by CONSULTANT. CONSULTANT shall include a description of the scope of work to be done by each Suboonsultant and each CONSULTANT's project team member. CONSULTANT shall include the respective compensation amounts for CONSULTANT and each Subconsultant on a per-project-element basis, 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. 10. ENGINEERING REGISTRATION The CONSULTANT's personnel 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 requires the services of a registered engineer, such services hereunder will be performed under the direct supervision of registered engineers. PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 12 of 19 11. 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. 12. LEGAL RELATIONSHIP BETWEEN PARTIES The legal relationship between the parties hereto is that of an independent contractor and nothing herein shall be deemed to make CONSULTANT an employee of the SANITATION DISTRICT. 13. 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. Notices shall be mailed to the SANITATION DISTRICT at: ORANGE COUNTY SANITATION DISTRICT 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Attention: Ludwig Lapus, Contracts Administrator Copy: Hardat Khublall, Project Manager PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 13 of 19 Notices shall be mailed to CONSULTANT at: MICHAEL BAKER INTERNATIONAL 5 Hutton Centre Drive Suite 500 Santa Ana, CA 92707 Attention: Bradley Losey, PE, Project Manager Copy: John Moynier, Vice President All communication regarding the Scope of Work, will be addressed to the Project Manager. Direction from other SANITATION DISTRICT's staff must be approved in writing by the SANITATION DISTRICT's Project Manager prior to action from the CONSULTANT. 14. 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 and/or CONSULTANT in accordance with Section 13- NOTICES. 15. 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, computation and study materials in its files pertaining to the work described in this Agreement, which is requested in writing by the SANITATION DISTRICT. 16. 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. 17. 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 agreements for that party. PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 14 of 19 18. 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. 19. ATTORNEY'S 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 it may be entitled. 20. PROGRESS REPORTS Monthly progress reports shall be submitted for review by the tenth day of the following month and must include as a minimum: 1) current activities, 2)future activities, 3) potential items that are not included in the Scope of Work, 4) concerns and possible delays, 5) percentage of completion, and 6) budget status. 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). 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, consultants, 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, reasonable attomeys' fees, disbursements and court costs, and all other professional, expert or consultants fees and costs and the SANITATION DISTRICT's general and administrative expenses (individually, a "Claim', or 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, consultants, subconsultants, subcontractors, and/or anyone employed directly or indirectly by any of them. Notwithstanding the foregoing, nothing herein shall be construed to require CONSULTANT to indemnify the Indemnified Parties from any Claim arising from: PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 15 of 19 (A)the sole or 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. 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. PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 16 of 19 24. CONSULTANT PERFORMANCE The CONSULTANT's performance shall be evaluated by the SANITATION DISTRICT. A copy of the evaluation shall be sent to the CONSULTANT for comment. The evaluation, together with the comments, shall be retained by the SANITATION DISTRICT and may be considered in future CONSULTANT selection processes. 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 this Agreement. Such support must be provided within the timeframe requested by the SANITATION DISTRICT. 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. PCSA PROJECT NO.2-41-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 17 of 19 27. FORCE MAJEURE Neither party shall have any claim or right against the other for any failure of performance where such failure of performance is caused by or is the result of causes beyond the reasonable control of the other party due to any occurrence commonly know as a "force majeure," including, but not limited to: acts of God; fire, flood, or other natural catastrophe; acts of any governmental body; labor dispute or shortage; national emergency; insurrection; riot; or war. PCSA PROJECT NO.231-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 18 of 19 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. MICHAEL BAKER INTERNATIONAL By Date Printed Name &Title ORANGE COUNTY SANITATION DISTRICT By Gregory C. Sebourn, PLS Date Chair, Board of Directors By Kelly A. Lore Date Clerk of the Board By Marc Dubois Date Contracts, Purchasing and Materials Management Manager Attachments: Attachment"A" Scope of Work Attachment"B" Labor Hour and Fee Matrix Attachment"C" Not Used Attachment"D" Allowable Direct Costs Attachment"E" Fee Proposal Attachment"F" Not Used Attachment"G" Not Attached Attachment"H" Not Attached Attachment"I" Cost Matrix and Summary Attachment"J" Not Used Attachment X' Not Used Attachment"L" Resumes of Key Staff LRL:HK:yp PCSA PROJECT NO.231-8 Revised 062218 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 19 of 19 OPERATIONS COMMITTEE Melting D310 TOBd.Or .Dir. 09/OS118 09/26/18 AGENDA REPORT Item Item Number 4 11 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL, PROJECT NO. 241-8 GENERAL MANAGER'S RECOMMENDATION A. Receive and file Bid Tabulation and Recommendation for Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8; B. Award a Construction Contract to Griffith Company for Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 241-8, for a total amount not to exceed $2,809,082; and C. Approve a contingency amount of$280,908 (10%). BACKGROUND The upper reach of the Santa Ana River Interceptor (SARI) line between the Orange County line and Weir Canyon Road in Yorba Linda, primarily carries flows from the Inland Empire into Orange County and then to Treatment Plant No. 1 in Fountain Valley. The segment of the line located within the Santa Ana Riverbed suffered significant erosion of its protective cover during major flood events over a 40-year period. To protect the pipe until a more permanent solution could be completed, large rocks were placed in the river bed at strategic locations to minimize erosion. The US Army Corps of Engineers permitted the placement of the rocks with conditions requiring removal upon the relocation of the SARI line and the abandonment of the old line. The SARI pipeline has been relocated, and the Orange County Sanitation District (Sanitation District) is now required to remove the rocks. RELEVANT STANDARDS • Comply with Army Corps of Engineers' permit requirements • Maintain collaborative and cooperative relationships with regulators, stakeholders, and neighboring communities • CA Public Contract Code Section 20103.8: Award Construction Contract to lowest responsive, responsible bidder Page 1 of 3 PROBLEM The Sanitation District is obligated to remove the large rocks originally placed in the Santa Ana Riverbed to protect the original SARI line by the permits obtained to allow placement of the rocks. PROPOSED SOLUTION Award a construction contractto Griffith Companyforthe SARI Rock Stabilizers Removal, Project No. 241-8. This project will remove and dispose of the large rocks and revegetate access roads and staging areas. TIMING CONCERNS The schedule driver of this project is the Army Corps of Engineers' regional general permit (RGP 63) condition, which stated that the Sanitation District shall submit a plan within 60 days following the relocation of the SARI line, and implementation of the plan within 90 days after approval of the plan. The SARI line completion would be achieved following the implementation of the Army Corps of Engineers' Reach 9, Phase 4, ongoing bank armoring project anticipated to be completed by fall 2018. RAMIFICATIONS OF NOT TAKING ACTION Without this project,the Sanitation District would fail to meet its permit obligations of many RGP 63 permits issued by the Army Corps of Engineers for the emergency protection to safeguard the SARI line from failure. Failure of the Sanitation District to comply with permit timing requirements stipulated by a Regulatory Agency could lead to fines being levied and/or legal implications. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The Sanitation District advertised Project No. 241-8 for bids on June 12, 2018. Nine sealed bids were received on August 1, 2018. The bids were evaluated in accordance with the Sanitation District's policies and procedures. Summary information on the bid opening is as follows: Engineer's Estimate $4,146,880 Bidder Amount of Bid Griffith Company $2,809,082 Cutting Edge Concrete Services $3,035,000 Sukut Construction $3,144,000 CJW Construction $3,298,000 Page 2 of 3 Michaels Corporation $3,912,000 Spectrum Construction $3,964,000 TechCom International $3,968,702 Lonerock $3,985,000 C.S. Legacy Construction $4,085,145 The bids were evaluated in accordance with the Sanitation District's policies and procedures. A notice was sent to all bidders on August 16, 2018, informing them of the intent of Sanitation District staff to recommend award of the Construction Contract to Griffith Company. Staff recommends awarding a Construction Contract to the lowest responsive bidder, Griffith Company, for a total amount not to exceed $2,809,082. CEQA An Initial Study/Mitigated Negative Declaration forthis project was filed on April 28, 2016. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted (Line item: FY2018-19 and 2019-20, Section 8, Page 16), and the budget is sufficient for the action. Per an agreement between the Sanitation District and the Santa Ana Watershed Project Authority(SAWPA), SAW PA will reimburse the Sanitation District for 76% of the cost of this project. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: Construction Contract HK:dm:gc Page 3 of 3 PART A CONTRACT AGREEMENT C-CA-090817 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 ..........................6 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...................................................................................9 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....................................................................................21 SECTION -20 ASSIGNMENT.................................................................................22 SECTION -21 RESOLUTION OF DISPUTES ........................................................22 SECTION -22 SAFETY& HEALTH ........................................................................22 SECTION -23 NOTICES.........................................................................................23 C-CA-090817 CONTRACT AGREEMENT ORANGE COUNTY SANITATION DISTRICT PROJECT NO. 2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL THIS AGREEMENT is made and entered into, to be effective, this September 26, 2018, by and between Griffith Company, 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-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 1 of 24 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-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 2 of 24 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-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 3 of 24 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. 2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 4 of 24 SECTION -4 PLANS AND SPECIFICATONS The Work to be done is shown in a set of Plans and Specifications entitled: PROJECT NO. 2-41.8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL 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 four hundred sixty-four(464)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 twenty (20) calendar days determined by OCSD likely to be inclement weather when CONTRACTOR will be unable to work. In addition, CONTRACTOR shall accomplish such milestones within the periods of performance set forth in Appendix A of the Special Provisions entitled "Work Completion Schedule." 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 C-CA-090917 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 5 of 24 which the Work is to be performed and shall have the right to decide the time or order in which the various portions of the Work shall be installed or the priority of the work of subcontractors, and, in general, all matters representing the timely and orderly conduct of the Work of CONTRACTOR on the premises. SECTION—7 EXCUSABLE DELAYS CONTRACTOR shall only be excused for any delay in the prosecution or completion of the Project as specifically provided in General Conditions, "Extensions for Delay", and the General Requirements, "By CONTRACTOR or Others—Unknown Utilities during Contract Work". Extensions of time and extra compensation arising from such excusable delays will be determined in accordance with the General Conditions, "Extension of Time for Delay" and "Contract Price Adjustments and Payments", and extensions of time and extra compensation as a result of incurring undisclosed utilities will be determined in accordance with General Requirements, "By CONTRACTOR or Others— Unknown Utilities during Contract Work". OCSD's decision will be conclusive on all parties to this Contract. 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-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 6 of 24 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 Two Million Eight Hundred Nine Thousand Eighty-Two Dollars ($2,809,082)as itemized on the Attached Exhibit"A". Upon satisfaction of the conditions precedent to payment set forth in the General Requirements, Additional General Requirements and General Conditions (including but not limited to Sections entitled "Mobilization Payment Requirements' and "Payment C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 7 of 24 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. B. As used in this Section, the following defined terms shall have the following meanings: C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 8 of 24 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 at seq., the CONTRACTOR may, at its sole expense, substitute securities as provided in General Conditions—"Retained Funds; Substitution of Securities." SECTION—13 COMPLETION Final Completion and Final Acceptance shall occur at the time and in the manner specified in the General Conditions, "Final Acceptance and Final Completion", "Final Payment" and Exhibit A- Schedule of Prices. C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 9 of 24 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 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-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 10 of 24 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 sec.)of the Labor Code of the State of California and shall forfeit to OCSD as a penalty, the sum of Twenty-five Dollars ($25.00)for each worker employed in the execution of this Contract by CONTRACTOR or any Subcontractor for each calendar day during which any worker is required or permitted to labor more than eight (8) hours in any one calendar day and forty (40) hours in any one week in violation of said Article. CONTRACTOR shall keep an accurate record showing the name and actual hours worked each calendar day and each calendar week by each worker employed by CONTRACTOR in connection with the Project. C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 11 of 24 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 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: C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 12 of 24 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 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 C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 13 of 24 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 requirement(s) providing the more protective coverage for both OSCD and the Third Parties shall control and be purchased and maintained by CONTRACTOR. A. Limits of Insurance 1. General Liability: Ten Million Dollars ($10,000,000) per occurrence and a general aggregate limit of Ten Million Dollars ($10,000,000)for bodily injury, personal injury and property damage. Coverage shall include each of the following: a. Premises-Operations. b. Products and Completed Operations, with limits of at least Ten Million Dollars ($10,000,000) per occurrence and a general aggregate limit of Ten Million Dollars ($10,000,000)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 C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 14 of 24 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. 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: C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 15 of 24 Either(1)a combined single limit of Ten Million Dollars ($10,000,000) and a general aggregate limit of Ten Million Dollars ($10,000,000)for bodily injury, personal injury and property damage; Or alternatively, (2) Ten Million Dollars ($10,000,000) 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/Employer's Liability: CONTRACTOR shall provide such Worker's Compensation Insurance as required by the Labor Code of the State of California, including employer's liability with a minimum limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease. If an exposure to Jones Act liability may exist, the insurance required herein shall include coverage with regard to Jones Act claims. Where permitted by law, CONTRACTOR hereby waives all rights of recovery by subrogation because of deductible clauses, inadequacy of limits of any insurance policy, limitations or exclusions of coverage, or any other reason against OCSD, its or their officers, agents, or employees, and any other contractor or subcontractor performing Work or rendering services on behalf of OCSD in connection with the C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 16 of 24 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- 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: C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 17 of 24 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 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. C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 18 of 24 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 worker's compensation insurance, subject to OCSD's option, at any time during the term of this Contract, to require a change in insurer upon twenty (20)days written notice. Further, OCSD will require CONTRACTOR to substitute any insurer whose rating drops below the levels herein specified. Said substitution shall occur within twenty (20)days of written notice to CONTRACTOR by OCSD or its agent. E. Verification of Coverage CONTRACTOR shall furnish OCSD with original certificates and mandatory endorsements affecting coverage. Said policies and endorsements shall conform to the requirements herein stated. All certificates and endorsements are to be received and approved by OCSD before Work commences. OCSD reserves the right to require complete, certified copies of all required insurance policies, including endorsements, affecting the coverage required by these Specifications at any time. C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 19 of 24 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. a. Commercial General Liability Form CG-0001 10 01 b. Additional Insured Including Form CG-2010 10 01 and Products-Completed Operations Form CG-2037 10 01 C. Waiver of Transfer of Rights of Form CG-2404 11 85; or Recovery Against Others to Us/ Form CG-2404 10 93 Waiver of Subrogation 3. Required State Compensation Insurance Fund Endorsements a. Waiver of Subrogation Endorsement No. 2570 b. Cancellation Notice Endorsement No. 2065 C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 20 of 24 4. Additional Required 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 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 C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 21 of 24 be necessary to cure any defects, including repairs of any damage to other parts of the system resulting from such defects. OCSD shall promptly give notice to the CONTRACTOR of observed defects. In the event that the CONTRACTOR fails to make adjustments, repairs, corrections or other work made necessary by such defects, OCSD may do so and charge the CONTRACTOR the cost incurred. The CONTRACTOR's warranty shall continue as to any corrected deficiency until the later of(1)the remainder of the original one-year warranty period; or(2)one year after acceptance by OCSD of the corrected Work. The Performance Bond and the Payment Bond shall remain in full force and effect through the guarantee period. The CONTRACTOR's obligations under this clause are in addition to the CONTRACTOR's other express or implied assurances under this Contract, including but not limited to specific manufacturer or other extended warranties specified in the Plans and Specifications, or state law and in no way diminish any other rights that OCSD may have against the CONTRACTOR for faulty materials, equipment or Work. SECTION-20 ASSIGNMENT No assignment by the CONTRACTOR of this Contract or any part hereof, or of funds to be received hereunder, will be recognized by OCSD unless such assignment has had prior written approval and consent of OCSD and the Surety. SECTION—21 RESOLUTION OF DISPUTES OCSD and the CONTRACTOR shall comply with the provisions of California Public Contract Code Section 20104 at. seq., regarding resolution of construction claims for any Claims which arise between the CONTRACTOR and OCSD, as well as all applicable dispute and Claims provisions as set forth in the General Conditions and as otherwise required by law. 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 C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 22 of 24 well as these Contract Documents, including but not limited to the General Requirements, Section entitled "Safety" and Exhibit B OCSD Safety Standards. SECTION-23 NOTICES Any notice required or permitted under this Contract may be given by ordinary mail at the address set forth below. Any party whose address changes shall notify the other party in writing. TO OCSD: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708-7018 Attn: Clerk of the Board Copy to: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708-7018 Attn: Construction Manager Bradley R. Hogin, Esquire Woodruff, Spradlin &Smart 555 Anton Boulevard Suite 1200 Costa Mesa, California 92626 TO CONTRACTOR: Griffith Company 12200 Bloomfield Ave. Santa Fe Springs, CA 90670 Copy to: Lucas J. Walker, Vice President/Regional Manager Griffith Company 12200 Bloomfield Ave. Santa Fe Springs, CA 90670 C-CA-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 23 of 24 IN WITNESS WHEREOF, the parties hereto have executed this Contract Agreement as the date first hereinabove written. CONTRACTOR: Griffith Company 12200 Bloomfield Ave. Santa Fe Springs, CA 90670 By Printed Name Its CONTRACTOR's State License No. 88 (Expiration Date—09/30/2018) 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-090817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 24 of 24 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 EXA4 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." EXA3 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.2A1-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 1 of 8 B. Substitution of Securities: CONTRACTOR may, at its sole expense, substitute securities as provided in General Conditions—"Retained Funds; Substitution of Securities." Payment of Escrow Agent: In lieu of substitution of securities as provided above, the CONTRACTOR may request and OCSD shall make payment of retention earned directly to the escrow agent at the expense of the CONTRACTOR. At the expense of the CONTRACTOR, the CONTRACTOR may direct the investment of the payments into securities consistent with Government Code §16430 and the CONTRACTOR shall receive the interest earned on the investments upon the same terms provided for in this article for securities deposited by the CONTRACTOR. Upon satisfactory completion of the Contract, the CONTRACTOR shall receive from the escrow agent all securities, interest and payments received by the escrow agent from OCSD, pursuant to the terms of this article. The CONTRACTOR shall pay to each Subcontractor, not later than twenty (20)calendar days after receipt of the payment, the respective amount of interest earned, net of costs attributed to retention withheld from each Subcontractor, on the amount of retention withheld to ensure the performance of the Subcontractor. The escrow agreement used by the escrow agent pursuant to this article shall be substantially similar to the form set forth in §22300 of the California Public Contract Code. C. Release of Retention: Upon Final Acceptance of the Work, the CONTRACTOR shall submit an invoice for release of retention in accordance with the terms of the Contract. D. Additional Deductibles: In addition to the retentions described above, OCSD may deduct from each progress payment any or all of the following: 1. Liquidated Damages that have occurred as of the date of the application for progress payment; 2. Deductions from previous progress payments already paid, due to OCSD's discovery of deficiencies in the Work or non-compliance with the Specifications or any other requirement of the Contract; 3. Sums expended by OCSD in performing any of the CONTRACTOR'S obligations under the Contract that the CONTRACTOR has failed to perform, and; 4. Other sums that OCSD is entitled to recover from the CONTRACTOR under the terms of the Contract, including without limitation insurance deductibles and assessments. C-EXA-080414 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL 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.2411-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL 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.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL 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.2411-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 5 of 8 2. The previously-accepted Work did not in fad conform to the Contract requirements, or; 3. A previous payment or portion thereof for Work was improperly made. OCSD also shall not be stopped from demanding and recovering damages from the CONTRACTOR, as appropriate, under any of the foregoing circumstances as permitted under the Contract or applicable law. C-EXA-080414 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL 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 Subcontractor's performance. Name Title Dale C-EXA-080414 PROJECT NO.2A1-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 7 of 8 ATTACHMENT 2— SCHEDULE OF PRICES See next pages for Bid Submittal Forms (Griffith Company). BF-14 Schedule of Prices, Page 1 -3 C-EXA-080414 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL CONFORMED Page 8 of 8 Bid Submitted By: Griffith Company (Name of Firm) 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 As approved Change Orders,pursuant to the Contract Documents. Bidder shall separately price and accurately reflect costs associated with each line hem, 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 coned Total Price for each item shall be totaled to determine 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 casts to complete the Work. including Profit,overhead,etc., unless otherwise specified in the Contract Documents. All applicable sales taxes state and/or federal,and any other special taxes.Patent rights or royalties shall be included in the prices quoted in this Bid. B. Basis of Award AWARD OF THE CONTRACT WILL BE MADE ON THE BASIS OF THE LOWEST RESPONSIVE AND RESPONSIBLE BID. 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 "F-121817 PROJECT NO.241-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 1 of 3 Bid Submitted By: Griffith Company (Name of Finn) EXHIBIT A SCHEDULE OF PRICES BASE BID ITEMS(Refer to Note 1 in the Instructions): Item Description Unit of Approx Unit Price Extended Price No. Measurement Cry 1. Mobilization: Furnish all labor, materials and equipment and other activities required for Mobilization as described In Division 01, Section Lump Sum 1 = $ 120,000.00 01155 and in conformance with the Contract Documents for the lump Sum price of... 2. Rock Removal: Furnish all labor, materials, equipment and services necessary for the Rock Removal as described In Division 01,Section 01155 and in conformance with the Contract Documents for the unit Ton 22,000 x $1y _ $ (/17181 oLS9'` price and the total price of... 3. Weigh Station, Revegetation,Pollution Control,Traffic Control: Furnish all labor, materials, equipment and services necessary for the Weigh Station, Revegetation,Pollution Control,Traffic Control as Lump Sum 1 = $ 14097roO,— described In Division 01,Section 01155 and in conformance with the Contract Documents for the lump sum price of... 4. Permits(Allowance): Furnish all labor,materials, equipment and services necessary for the Caltrans Encroachment Permit Fee, BNSF Railroad Railmaster Fee, County of Orange Property Permits Allowance 1 = $ 50,000.00 Encroachment Permit Fee, Cities of Anaheim,Yorba Linda,and Corona Construction Permit Fee as described in Division 01, Section 01155 and in conformance with the Contract Documents. BF-14 SCHEDULE OF PRICES C-BF-121817 PROJECT NO.2-41-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 2 of 3 Bid Submitted By: (Name of Flrt ) EXHIBIT A SCHEDULE OF PRICES (continued) Item Description Unit of AI Extended Price No. Measurement 5. All Other Portions of the Work set forth in the Contract Documentsc— except for the Work performed in Bid Items 1 through 4Inclusive Lump Sum $7 fa92antl Bid Item 6:as described in Division 01, Section 01155 and inconformance with the Contract Documents for a lump sum price of.... 6. Demobilization: including final progress payment,clean-up antl restoration of the project site as described In Division D1,Section 01155Lump Sum = $ 40,000.00 and in conformance with the Contract Documents for a lump sum price Of.. TOTAL AMOUNT OF BID(BASIS OF AWARD) $ ZI QjQgf OEZ.— BF-14 SCHEDULE OF PRICES C-BF-121817 PROJECT NO.241-8 SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL Page 3 of 3 OPERATIONS COMMITTEE Melting D310 TOBd.Of Dir. 09/OS118 09/26/18 AGENDA REPORT Item Item Number S 12 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: LEASE PACIFIC STREET PROPERTY AND AMEND BANDILIER CIRCLE PROPERTYLEASE GENERAL MANAGER'S RECOMMENDATION A. Authorize the execution of an amendment to the existing lease with the Chefs' Toys, LLC, a wholly-owned subsidiary of TriMark USA, LLC for the real property at 18484 Bandilier Circle in Fountain Valley, in a form approved by General Counsel. B. Authorize the execution of a lease with Chefs' Toys, LLC, a wholly-owned subsidiary of TriMark USA, LLC for the Orange County Sanitation District's real property at 18475 Pacific Street, Fountain Valley, for a term commencing on September 27, 2018 and ending September 30, 2019, in a form approved by General Counsel; and BACKGROUND In November 2016, the Orange County Sanitation District (Sanitation District) Board of Directors approved the purchase of the properties at 18475 Pacific Street and 18484 Bandilier Circle, Fountain Valley. Staff was approached with an unsolicited offer from Chefs' Toys, LLC, represented by Lee and Associates, through the Sanitation District's representative, Cushman and Wakefield, to lease the warehouse space at 18484 Bandilier Circle for a term just over 19 months. The proposed amendment will extend the lease an additional 6 months, through September 30, 2019. Chefs' Toys, LLC, has expressed interest in leasing Sanitation District's real property at 18475 Pacific Street, which is located adjacent to the Bandilier Circle property. The proposed lease will also end September 30, 2019. RELEVANT STANDARDS • Protect Orange County Sanitation District assets • Maintain collaborative and cooperative relationships with regulators, stakeholders, and neighboring communities Page 1 of 4 PROBLEM Vacant properties require maintenance and invite opportunities for vandalism. PROPOSED SOLUTION Leasing the buildings will generate revenue to offset maintenance costs, increase visibility of activity, and discourage vandalism and loitering. The tenant would be responsible for property security, graffiti removal, and general housekeeping. TIMING CONCERNS The proposed tenant has requested possession of the property as soon as possible. RAMIFICATIONS OF NOT TAKING ACTION Loss of revenue from the lease and potential incidents of vandalism. PRIOR COMMITTEE/BOARD ACTIONS August 2017 - Approved the Lease Agreement with the Dickler Corporation, DBA Chefs' Toys, for Orange County Sanitation District's real property located at 18484 Bandilier Circle, Fountain Valley, California, in an as-is condition, commencing August 24, 2017 through March 31, 2019, at a lease rate of$13,500 per month for the first 12 months, and increasing to $15,000 per month for the balance of the term, in a form approved by General Counsel. November 2016 -Approved of the following actions relating to the transaction of purchase of certain real property interests at 18475 Pacific Street and 18484 Bandilier Circle from Bender Properties and authorize the General Manager and General Counsel to: A. Approve the Preliminary Title Report and the exceptions set forth therein, as provided in the Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate (Purchase Agreement); and B. Execute the following: 1. Title Approval Letter, 2. Preliminary Change of Ownership Report; 3. Deeds and other evidences of title to the parcel of property that are the subject of the Purchase Agreement; 4. Acceptance of the Grant Deed to certain real property from Bender Properties; 5. Approved Estimated Closing Statement; 6. Seller's Mandatory Disclosure Statement acknowledging receipt of this document; 7. Property Information Sheet acknowledging receipt of this document; 8. Natural Hazard Disclosure Report acknowledging receipt of this document; and 9. Any and all other instruments related to the transaction. Page 2 of 4 ADDITIONAL INFORMATION The Bandilier property lease rate was $13,500 per month for the first 12 months, increasing to $15,000 per month for the balance of the term. The revenue from the original 19-month lease was projected to be $270,483.87. The proposed lease amendment, which will extend the lease an additional six months through September 30, 2019 will generate an additional $90,000, for a total of$360,483.87. The lease rate for the Pacific property will generate $7,500 per month for an estimated 12-month period, through September 30, 2019. The total revenue from the Pacific Street building is projected at$90,000. The Sanitation District will provide a one-time commission fee of 6% of the $90,000 total lease value for the Pacific property and 6% of the additional 6-month lease value of $90,000 for the amended Bandilier property lease, for a combined total commission of $10,800 with an agreed upon split between the two Real Estate firms. At the September Operations Committee, the Committee asked staff questions regarding market rates and if the agreement was consistent with those rates. Based on discussions with the District's broker, staff believes that the rate is consistent for this lease given that it is an "as-is, where-is" temporary/short term basis for the warehouse portion of the building and that Tenant does not have the right to extend after the short-term lease expires. The extension lease at $0.62 Industrial Gross ($15,000/Mo for 24,073 SF) is at market given the condition of the building. The lease rate could be increased if the Sanitation District were to spend the additional funds of repair and upkeep. However, given the short-term nature of the lease, that approach is not cost effective. Additionally, the broker did conduct a market survey showing all available industrial buildings from 10,000 to 65,000 SF within a 3-mile radius of OCSD's industrial building which generally shows what the rates and spaces look like in the general trade area showing the lease is consistent given the condition of the building. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: First Amendment to the Sanitation District Commercial Lease — Bandilier property lease by and between the Sanitation District and Chefs' Toys Page 3 of 4 • OCSD Commercial Lease— Pacific Property Lease by and between the Sanitation District and Chefs' Toys, LLC. AC:sa:gc Page 4 of 4 FIRST AMENDMENT TO OCSD COMMERCIAL LEASE—BANDILIER PROPERTY LEASE BY AND BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND CHEFS'TOYS.LLC This First Amendment to the OCSD Commercial Lease—Bandilier Property Lease By and Between the Orange County Sanitation District and Chefs'Toys, LLC is entered into this day of September, 2018("Ettective Date"),by and between the Orange County Sanitation District(the"Lessor')and Chefs'Toys,LLC a wholly-owned subsidiary of TriMark USA, LLC(the"Lessee"). The Lessor and Lessee are sometimes collectively referred to herein as the"Parties;and individually referred to as each"Party." RECITALS WHEREAS,on August 24,2017,the Lessor and Lessee entered into a Lease("Lease")for the rental of the real property identified as 18484 Bandilier Circle in Fountain Valley,California,92708, (the"Premises");and WHEREAS,the Lease allowed a rental term of 19 months and eight days,terminating on March 31,2019; and WHEREAS,during the existing Lease,the Lessee was acquired by TriMark USA, LLC, and is currently operating as Chefs'Toys, LLC,a California limited liability company and wholly-owned subsidiary of TriMark,but continuing to operate in substantially the same manner as when the Lease was originally executed;and WHEREAS,on July 5,2018,the Lessee requested to expand the area of the building leased and extend the term of the Lease,and the Seller has agreed;and WHEREAS,the Parties intend to execute a separate commercial lease agreement for the expansion but now desire to extend the tens of the existing Lease; NOW,THEREFORE,the Parties agree to amend the OCSD Commercial Lease—Bandilier Property Lease By and Between the Orange County Sanitation District and the Dickler Corporation,dba Chefs Toys 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. Section 1.3 of the Lease is amended to read as follows to refiect the extended tens of the Lease: 1.3 Term:Twenty-five(25)months and eight(8)days("Original Term") commencing on August 24,2017("Commencement Date")and ending September 30,2019("Expiration Date"). 3. Section 1.4 is amended to read as follows: 1A Rent: Lessee shall pay to Lessor rent on a modified gross basis in the amount of$15,000 per month("Monthly Base Rent")which excluded payments for building utility costs, security,and janitorial costs,all of which are the responsibility of the Lessee.All monetary obligations of Lessee to Lessor as described in this Paragraph are deemed to be and shall he referred to herein as rent("Rent"). 4. Section 1.7(b)is amended to read as follows: 1.7 Real Estate Brokers: (b) Payment to Brokers: Upon execution and delivery of this First Amendment by both parties,Lessor shall pay a total brokerage fee of six percent(6%)of the total Monthly Base Rent Payable for the extended tens of the Lease(April 1,2019 through and including Expiration Date),which shall be divided three and one quarter percent(3.25%) to Lessee's Broker,for the brokerage services rendered by the Lessee's Broker,and two 1334084.1 and three quarters percent(2.75%)to Lessor's Broker for the brokerage services rendered by Lessors Broker. 5. Except as expressly provided herein,this First Amendment does not modify the Lease. B. This First Amendment may be executed in one or more counterparts,all of which shall be considered one and the same agreement. IN WITNESS WHEREOF,intending to be legally bound,the Parties hereto have caused this First Amendment to be signed by the duly authorized representatives as of the day and year last signed below. Orange County Sanitation District Chefs'Toys,LLC Gregory C. Seboum,PLS Date President Date Chairman, Board of Directors Kelly A. Lore, MMC Date Name/Title Date Clerk of the Board Approved as to Form: Bradley R. Hogin,General Counsel 1334084.1 OCSD COMMERCIAL LEASE- PACIFIC PROPERTY LEASE BY AND BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND CHEFS'TOYS,LLC 1. General Provisions("General Provisions"). 1A. Parties: This Lease ("Lease"), entered into this TWENTY-SEVENTH day of September 2018, is made by and between the Orange County Sanitation District("Lessor")and Chefs'Toys, LLC, a wholly-owned subsidiary ofTriMark USA,LLC("Lessee").Lessor and Lessee shall be referred to herein collectively as the"Parties,"or individually as a"Party". 1.2. Premises: That certain real property, including all improvements thereon, under the terms of this Lease,and commonly known as 18475 Pacific Street,located in the City of Fountain Valley,County of Orange, State of California, comprised of a part of a commercial building measuring approximately 24,196 square feet ("Premises"), a depiction of which is attached hereto as Attachment"1 1.3. Term:Twelve(12)months and four(4)days("Original Term")commencing on September 27,2018 ("Commencement Date")and ending September 30,2019("Expiration Date"). 1.4. Rent:Lessee shall pay to Lessor base rent in the amount of$7,500 per month("Monthly Base Rent) which excludes payments for building utility costs, security, and janitorial costs, all of which are the responsibility of the Lessee. All monetary obligations of Lessee to Lessor as described in this Paragraph are deemed to be and shall be referred to herein as rent("Rent"). 1.5. Initial Rent and Security Deposit Paid Upon Execution: Lessee shall deposit with Lessor the Monthly Base Rent for last four(4)days of September 2018,and the Monthly Base Rent for October 2018 in the total amount of eight thousand,five hundred dollars($8,500.00)and a Security Deposit in the amount of seven thousand, five hundred dollars ($7,500.00) ("Security Deposit") upon execution of the Lease Agreement. 1.6. Agreed Use: Lessor agrees to Lease the Premises to Lessee for the sole purpose of a warehouse for storage of restaurant equipment and for any related uses thereto. (See also Paragraph 5).Any and all public uses,warehouse sales,or public cash and carry sales are strictly prohibited. 1.7. Real Estate Brokers: (a) Representation: The following real estate brokers represent Lessee exclusively ("Lessee's Broker'). Lessee's Broker can be contacted at: Brokerage Firm: Lee&Associates Attn: Jim Snyder Title: Senior Vice President Address: 100 Bayview Circle Newport Beach,CA 92660 Telephone: (949)724-4731 Facsimile: (949)623-6331 Federal ID No: 01197433 Broker/Agent DRE Lic. #00872220 The following real estate brokers (Lessor's Brokers) represent Lessor exclusively ("Lessors Broker').Lessors Broker can be contacted at: Brokerage Firm: Cushman&Wakefield Attn: John Gallivan Title: Executive Director Address: 18111 Von Karman Avenue Irvine, CA 92612 Telephone: (949)955-7647 Facsimile: (949)474-0405 Federal ID No: 13-2899582 Broker/Agent DIRE Lic. #01096309 1334290.1 (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay a total brokerage fee of six percent(6%)of the total Monthly Base Rent payable for the Original Term which shall be divided three and one quarter percent (3.25%)to Lessee's Broker, for the brokerage services rendered by Lessee's Broker, and two and three quarters percent (2.75h) to Lessor's Broker for the brokerage services rendered by Lessor's Broker. 2. Premises. 2.1. Leasing.Lessor hereby leases to Lessee,and Lessee hereby leases from Lessor,the Premises,for the Term, at the Rent, and upon all of the terms, covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises,the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different.Lessee is to verify the actual size of the Premises prior to executing this Lease. 2.2. Condition. Lessee acknowledges and accepts the Premises in an "AS-IS" condition. Unless otherwise stated in Paragraph 2.5 herein, Lessor shall deliver the Premises to Lessee in an "AS- IS"Condition on the Commencement Date so long as the required service contracts described in Paragraph 6.1(b) below are obtained by Lessee and in effect within thirty days of the Commencement Date. Lessor makes no warranties (a)that the existing electrical, plumbing, fire sprinkler,lighting,heating,ventilating and air conditioning systems("HVAC"),loading doors,sump pumps,if any,roofing,and all other such elements in the Premises,are in good operating condition on said Commencement Date, (b) that the structural elements of the roof, bearing walls and foundation of any buildings on the Premises(the"Building")are free of material defects,or(c)that the Premises do not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. 2.3. No Warranties.Lessor makes no warranties concerning the improvements on the Premises.Lessee shall be responsible for any modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee's use, or to any Alterations or Utility Installations (as defined in Paragraph 6.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee's intended use, and acknowledges that past uses of the Premises may no longer be allowed. If Lessee is required to make any changes or modifications to the Premises so as to comply with building codes, applicable laws, covenants or restrictions of record, regulations and ordinances during the Term of this Lease ("Capital Expenditure"), Lessee shall be fully responsible for the cost thereof. 2.4. Acknowledgements. Lessee acknowledges that: (a) it has been given an opportunity to inspect, evaluate and measure the Premises, (b)it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and condition of the Premises(including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with applicable laws and regulations and the Americans with Disabilities Act), and the suitability of the Premises for Lessee's intended use, (c) Lessee has made such investigation and evaluation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relates to its occupancy and use of the Premises,(d)Lessee is not relying on any representation as to the size or condition of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent staled herein,and(0 neither Lessor,Lessors agents, nor Brokers have made any oral or written representations or warranties with respect to the above referenced matters other than as set forth in this Lease.In addition,Lessor acknowledges that:(i) Brokers have made no representations,promises or warranties concerning Lessee's ability to honor the Lease or Lessee's suitability to occupy the Premises;and(ii)it is Lessors sole responsibility to investigate the financial capability and/or suitability of Lessee. 2.5. Lessor's Responsibility. Lessor is leasing the Premises in an "AS-IS"condition. Lessor takes no responsibility for the condition of the Premises or any repairs or maintenance required for the allowed use of the Premises by Lessee. Unless otherwise specified herein, Lessor shall not be responsible for any other repairs or improvements to the Premises. 2.6. Lessee's Responsibility.Lessee is leasing the Premises in an"AS-IS"condition.Lessee may repair and maintain the Premises at its own cost. 1334290.1 3. Term. 3.1. Term.The Commencement Date, Expiration Date,and Original Term of this Lease are as specified in Paragraph 1.3. Lessor and Lessee may mutually agree in writing, signed by both Parties, to terminate this Lease prior to the Expiration Date. 3.2. Delay In Possession.If Lessor is unable to deliver possession by the Commencement Date,Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not,however, be obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises 3.3. Lessee Compliance.Lessor shall not be required to deliver possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8). Pending delivery of such evidence,Lessee shall be required to perform all of its obligations under this Lease from and after the Commencement Date, including the payment of Rent, notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Furthermore, if Lessee is required to perform any other conditions prior to or concurrent with the Commencement Date,the Commencement Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied. 3.4. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee continues to occupy the Premises beyond the expiration or termination of the Lease,then Lessee shall become a tenant-at-sufferance only,and the Base Rent shall be increased to either 150%of the Base Rent applicable immediately preceding the expiration or termination of the Lease, or 150%of the market rental rate for the Premises,whichever is greater. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee,and Lessee shall be responsible for all damages to Lessor caused by any such holdover(including consequential damages). 4. Rent. 4.1. Rent Defined.All monetary obligations of Lessee to Lessor under the terms of this Lease as set forth in Paragraph 1.4 herein are deemed to be Rent. 4.2. Payment. Lessee shall pay Lessor Rent on or before the day on which it is due,which is no later than the fret day of each month.All Rent payments shall be made in the amounts stated in Sectionl.4 above. Rent for any period during the Term of this Lease, which is for less than one full calendar month,shall be prorated based upon the actual number of days of said month.Payment of Rent shall be made to Lessor at: Orange County Sanitation District Attn:Angela Brandt Post Office Box 8127 Fountain Valley,CA 92728-8127 Lessor may,from time to time, designate in writing a different person or place to make payments. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so staling. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of$25 in addition to any Late Charge, and Lessor, at its option,may require all future Rent be paid by cashier's check. Payments will be applied first to accrued late charges and attorneys'fees, second to accrued interest,then to Base Rent,and any remaining amount to any other outstanding charges or costs. 4.3. Late Charge.Lessee acknowledges that late payment of Rent or other sums due will cause Lessor to incur costs, the exact amount of which will be difficult to ascertain. Accordingly, if any Rent payment or any other sum due from the Lessee is not received by Lessor within ten (10) days of the date on which it is due, Lessee shall pay to Lessor, in addition to the Rent due and any other amounts owing, the lesser of the maximum amount allowed by law or ten percent (10%)of such overdue amount. In addition,Lessee shall pay Lessor any attomeys'fees or notice/process service fees incurred by Lessor by reason of Lessee's failure to pay Rent or other charges when due hereunder. In addition, all unpaid amounts shall accrue interest at the lesser of the maximum rate allowed by law or 10%per annum until paid. 1334290.1 5. Use. 5.1. Use.Lessee shall use and occupy the Premises only for the Agreed Use,or any other legal use which is reasonably comparable to the Agreed Use,and for no other purpose.Lessee shall not cause or permit the Premises to be used in any way which (i) constitutes a violation of any law, ordinance, or governmental regulation or order regulating the manner of use by Lessee of the Premises (including, without limitation,any law ordinance,regulation or order relating to Hazardous Materials),(ii)constitutes a nuisance or waste,or(III)increases the cost of any insurance relating to the Premises paid by Lessor. Lessee shall obtain,at its sole cost and expense,all governmental permits,licenses and authorizations of whatever nature required by any governmental agencies having jurisdiction over Lessee's use of the Premises. Further, Lessee, at its sole cost, will comply with all applicable governmental laws and regulations in connection with its operations within the City of Fountain Valley. Lessee will also comply with any and all reasonable rules and regulations promulgated by Lessor.No signal shall be installed on the Premises or within the City of Fountain Valley without receipt of the prior written approval of Lessor.Other than guide,signal and seeing-eye dogs,Lessee shall not keep or allow in the Premises any pets,animals,birds,fish,or reptiles. 5.2. Hazardous Substances. (a) Reportable Uses Require Consent.The term"Hazardous Substance"as used in this Lease shall mean flammable items, explosives, radioactive materials, hazardous or toxic substances, material or waste or related materials, including any substances defined as or included in the definition of"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic substances" now or subsequently regulated under any applicable federal, state or local laws or regulations, including without limitation petroleum-based products, hydrocarbons,gasoline, and/or crude oil, paints, solvents, lead, cyanide, DDT, acids, pesticides, ammonia compounds and other chemical products, asbestos, PCBs and similar compounds, by-products or fractions thereof, and including any different products and materials which are subsequently found to have adverse effects on the environment or the health and safety of person,and any product,substance,or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i)potentially injurious to the public health, safety or welfare, the environment or the Premises, (it) regulated or monitored by any governmental authority, or(III) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee's expense)with all applicable laws and regulations. "Reportable Use" shall mean (1) the installation or use of any above or below ground storage tank, (it)the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from,or with respect to which a report, notice, registration or business plan is required to be filed with,any governmental authority, and/or (III)the presence at the Premises of a Hazardous Substance with respect to which any applicable laws and requires that a notice be given to persons entering or occupying the Premises or neighboring properties.Notwithstanding the foregoing,Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.)and common household cleaning materials,so long as such use is in compliance with all applicable laws and regulations, is not a Reportable Use,and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including,but not limited to,the installation(and removal on or before the expiration or termination of the Lease) of protective modifications (such as concrete encasements). (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in,on,under or about the Premises,other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor,and provide Lessor with a copy of any report, notice,claim or other documentation which it has concerning the presence of such Hazardous Substance. (0) Lessee Remediation.Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system)and shall promptly,at Lessee's sole expense,comply with all applicable laws 1334290.1 and regulations and take all investigatory and/or remedial action reasonably recommended,whether or not formally ordered or required,for the cleanup of any contamination of,and for the maintenance, security and/or monitoring of the Premises or neighboring properties,that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease,by or for Lessee,or any third party.The obligations contained in this Paragraph shall survive the expiration or termination of this Lease. (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its directors,officers,agents,employees,lenders and ground lessor,if any,harmless from and against any and all loss of rents and/or damages, liabilities,judgments, claims, expenses, penalties, and attorneys'and consultants'fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties not caused or contributed to by Lessee).Lessee's obligations shall include, but not be limited to,the effects of any contamination or injury to person, property or the environment created or suffered by Lessee,and the cost of investigation, removal,remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by both Parties in writing at the time of such agreement. (a) Lessor Indemnification.Lessor and its successors and assigns shall indemnify, defend,reimburse and hold Lessee,its employees and lenders,harmless from and against any and all environmental damages, claims, and/or actions, including the cost of remediation,which result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligations,as and when required by the applicable laws and regulations,shall include,but not be limited to,the cost of investigation, removal,remediation, restoration and/or abatement,and shall survive the expiration or termination of this Lease. (0 Investigations and Remedlations.Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to Lessee's occupancy, unless such remediation measure is required as a result of Lessee's use(including"Alterations",as defined in paragraph 6.3(a)below)of the Premises, in which event Lessee shall be responsible for such payment.Lessee shall cooperate fully in any such activities at the request of Lessor,including allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor's investigative and remedial responsibilities. 5.3. Lessee's Compliance with Applicable Laws and Regulations.Except as otherwise provided in this Lease,Lessee shall,at Lessee's sole expense,fully,diligently and in a timely manner,materially comply with federal, state, and local laws, regulations, and ordinances ("Applicable Requirements"), the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor's engineers and/or consultants,without regard to whether such Applicable Requirements are now in effect or become effective after the Commencement Date. Lessee shall,within 10 days after receipt of Lessor's written request,provide Lessor with copies of all permits and other documents, and other information evidencing Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved)of any threatened or actual claim, notice, citation, warning,complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements.Likewise,Lessee shall immediately give written notice to Lessor of: (i)any water damage to the Premises and any suspected seepage,pooling,dampness or other condition conducive to the production of mold;or(it)any mustiness or other odors that might indicate the presence of mold in the Premises. SA. Inspection; Compliance. Lessor and Lessors agents and/or consultants shall have the right to enter into and upon the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice,for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor. In the event an inspection is required as a result of a violation of Applicable Requirements, or a Hazardous Substance on, in, under, or upon the Premises is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority, Lessee shall upon written request by Lessor, reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related to the violation or contamination. In addition, Lessee shall provide 1334290.1 copies of all relevant material safety data sheets(MSDS)to Lessor within 10 days of the receipt of a written request therefor. 6. Maintenance; Repairs,Utility Installations;Trade Fixtures and Alterations. 6.1. Lessee's Obligations. (a) Unless otherwise expressly provided for herein, Lessee shall be responsible for utility costs for electricity and water and shall provide its own security for the Premises, and, at Lessee's sole expense,keep the Premises,Utility Installations(intended for Lessee's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use or any prior use), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, loons, windows, doors, plate glass,skylights, landscaping,driveways,parking lots,fences,retaining walls,signs,sidewalks and parkways located in,on,or adjacent to the Premises.Lessee,in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 6.1(b) below. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order,condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary,the exterior repainting of the Building.Lessee may,upon written consent of Lessor,make changes and/or alternations to the interior and exterior portions of the Building consistent with all Applicable Requirements. Lessee may return the Premises in the same condition as received. Lessee is not responsible for any structural failure or subfloor plumbing failure If failure is related solely to age and/or circumstances entirely outside of Lessee's control. (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (1) HVAC equipment, (ii) fire extinguishing systems, including fire alarm and/or smoke detection, (III) landscaping and irrigation systems, (iv) roof covering and drains, and (v) clarifiers. However, Lessor reserves the right, upon written notice to Lessee,to procure and maintain any or all of such service contracts,and Lessee shall reimburse Lessor,upon demand,for the cost thereof. (0) Failure to Perform. If Lessee fails to perform Lessee's obligations under this Paragraph 6.1, Lessor may enter upon the Premises after 10 days' prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf,and put the Premises in good order,condition and repair,and Lessee shall promptly pay to Lessor a sum equal to 115%of the cost thereof. 6.2. Lessor's Obligations.Other than maintenance of landscaping or as expressly provided herein, it is intended by the Parties hereto that Lessor have no obligation or responsibility, in any manner whatsoever,to repair and maintain the Premises, or the equipment therein,all of which obligations are intended to be that of the Lessee. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises,and they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease. 6.3. Utility Installations;Trade Fixtures;Alterations. (a) Definitions. The term "Utility Installations" refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution,security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment,plumbing,and fencing in or on the Premises. The term "Trade Fixtures"shall mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises.The term"Alterations"shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 6.4(a). 1334290.1 (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent, but upon notice to Lessor, as long as they are not visible from the outside,do not involve puncturing, relocating or removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month's Base Rent in the aggregate or a sum equal to one month's Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans.Consent shall be deemed conditioned upon Lessee's: (i)acquiring all applicable governmental permits, fill furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work,and(Ili)compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one month's Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150 of the estimated cost of such Alteration or Utility Installation. (c) Lions; Bonds. Lessee shall not permit to be placed against the Premises, or any part of the Premises, any mechanics', materialmen's, contractors', subcontractors' or other liens. Lessee shall indemnify, defend (with counsel acceptable to Lessor) and hold Lessor harmless from all liability for any and all liens, claims and demands, together with the costs of defense and reasonable attorneys'fees related to same.Lessor reserves the right,at any time and from time to time,to post and maintain on the Premises,any portion thereof or on the improvements on the Premises any notices of non-responsibility or other notice as may be desirable to protect Lessor against liability. In addition to and not in limitation of Lessor's other rights and remedies under this Lease, should Lessee fail, within ten (10) days of a written request from Lessor, to discharge any lien or claim related to Lessee's use of the Premises,or to indemnify,hold harmless and defend Lessor from and against any loss, damage, injury, liability or claim arising out of Lessee's use of the Premises as provided herein,then Lessor, at its option, may elect to pay any lien, claim, loss, demand, injury, liability or damages, or settle or discharge any action or satisfy any judgment and all costs, expenses and attorneys' fees incurred in doing so shall be paid to Lessor by Lessee upon written demand, together with interest thereon at the rate of ten percent (10%)per annum(but in no event more than the maximum interest rate permitted by law)from the date incurred or paid through and including the date of payment. If Lessee shall contest the validity of any such lien,claim or demand,then Lessee shall,at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require,Lessee shall furnish a surety bond in an amount equal to 150%of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessors attorneys'fees and costs. 1334290.1 6.4. Ownership; Removal;Surrender;and Restoration. (a) Ownership.All Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises.Lessor may,at any time,elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 6.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall,at the expiration or termination of this Lease,become the property of Lessor and be surrendered by Lessee with the Premises. (b) Removal. By written notice to Lessee from Lessor, no eadier than 90 days and not later than 30 days prior to the Expiration Date of the Lease, Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without Lessor's consent as required herein. (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date,with all of the improvements, parts and surfaces thereof broom clean and free of debris,and in good operating order,condition and state of repair,ordinary wear and tear excepted."Ordinary wear and tear'shall not include any damage or deterioration that would have been prevented by good maintenance practice. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations,furnishings,and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee,or any third party(except Hazardous Substances which were deposited via underground migration from areas outside of the Premises)even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements.Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee.Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 6.4(c)without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 3.5. In the event Lessee makes any changes and/or alterations to the interior or exterior portions of the Building consistent with Applicable Requirements as provided in Paragraphs 6.1(a) and 6.3 (b), Lessee shall not be required to restore the Building to the original configuration upon the expiration or termination of this Lease. 7. Insurance; Indemnity. 7A. Payment For Insurance.Except as expressly provided herein, Lessee shall provide and maintain at its own expense during the term of this Lease the following insurance covering its operations and activities under this Lease. Such insurance shall be provided with insurers licensed to do business in the State of California,with a rating of at least WWI,"according to the latest Bests Key Rating Guide. Evidence of such insurance shall be delivered to Lessor on or before the effective date of this Lease. The Certificate of Insurance shall specifically identity this Lease and shall contain express conditions that Lessor is to be given at least thirty(30)days advance written notice by the insurer,of any material modification in or termination of insurance.Such insurance,shall be primary to and not contributing with any other insurance maintained by Lessor, and shall name the Lessor, and its directors,officers,agents and employees as additional insureds.Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. 7.2. Liability Insurance. (a)Carried by Lessee.Lessee shall obtain and provide during the Term of this Lease the following insurance: (i) General Liability Insurance.Comprehensive general liability insurance covering the Premises in contractual, broad forth property damage, and personal injury, with a combined single limit of not less than two million dollars ($2,000,000.00) per occurrence.Lessee shall be responsible for the cost to obtain and provide General Liability Insurance coverage for the Premises. ("GL Insurance Coverage Cost"). The GL Insurance Coverage Cost stated herein does not include Lessee's responsibility for obtaining insurance coverage for Lessee's operations and activities, including but not limited to,Lessee's Utility Installations or Trade Fixtures.Lessee shall be solely responsible for all costs to obtain and provide insurance for Lessee's operations and activities. 1334290.1 (ii) Workers Compensation Insurance.Workers compensation insurance in an amount and form meeting all applicable requirements of the California Labor Code, covering all persons providing services by or on behalf of Lessee and all risks to such persons with a minimum limit of$1,000,000.00. (iii) Fire and Extended Coverage Insurance.A standard form all-risk policy for the actual cash value covering fire and extended coverage,theft, burglary,vandalism, malicious mischief, sprinkler leakage and other perils of direct physical loss or damage insuring the personal property,trade fixtures, equipment, and improvements of Lessee. (b) Carried by Lessor. Lessor shall pay any amount exceeding the GL Insurance Coverage Cost for the Premises up to but not exceeding three thousand dollars($3,000.00).Lessor shall not be responsible for paying any liability insurance coverage for Lessee's operations and activities, including, but not limited to Utility Installations and Trade Fixtures. Lessor may elect to maintain separate liability insurance, in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein. (c)Proof of Coverage:The Vendor shall famish 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 (ISO Form)CG2010 1185 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 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. Z3. Failure to Maintain Insurance.Failure by Lessee to procure or maintain required insurance as specified in Paragraph 7.2 above shall constitute an event of default, upon which Lessor may immediately terminate this Lease.Lessee's operations shall be subject to suspension by Lessor during any period Lessee fails to maintain required insurance in full force and effect. 7.4. Risk of Loss. Lessor shall not be liable for any injury to Lessee's business or loss of income therefrom or for injury to any person or for any damage to personal property, good, wares, or merchandise sustained by Lessee or others that are caused by any defects in said Premises, or any service facilities or due to the happening of an accident,including any damage caused by water,wind storm, or by any gas, steam, electrical wiring, sprinkler system, plumbing, heating or conditioning apparatus,or acts or omissions of co-Lessees or other occupants of the Premises,if any,or hereafter occurring therein or due to any part or appurtenance thereof,including any and all fumiture,fixtures, and equipment of Lessee becoming out of repair,or from any act or omission of Lessee. 7.5. Waiver of Subrogation.Lessee hereby releases Lessor from liability and waives all right of recovery against Lessor for any loss in or about the Premises from perils insured against Lessor under its fire, property,or liability insurance contracts,including any all risk endorsements thereof,whether due to negligence or any other cause,provided that this Paragraph shall be inapplicable if it would have the effect,but only to the extent it would have the effect,of invalidating any insurance coverage of Lessor or Lessee. Nothing herein shall relieve Lessee of its obligation to request and procure,to the extent 1334290.1 available on a commercially reasonable basis,the necessary endorsements required to validly waive subrogation in accordance with this Paragraph. Lessee shall,at the request of Lessor, execute and deliver to Lessor a Waiver of Subrogation in the form and content as reasonably required by Lessor's insurance carrier. To the extent Lessee fails to maintain the insurance required under the terms of this Lease,such failure shall be a defense to any claim asserted by Lessee against Lessor by reason of any loss sustained by Lessee due to circumstances that would have been covered had such required insurance been maintained. 7.6. Lessor's Substitute Performance. If Lessee fails to procure, maintain and pay for, at the times and for the durations specified in this Lease, any insurance required by this Lease or fails to carry insurance required by law or governmental regulation, Lessor, at any time or from time to time and without notice, may,at its option, procure such insurance and pay the premiums therefore, in which event Lessee shall repay all sums so paid by Lessor, together with interest thereon as provided in the Lease,and any costs or expenses incurred by Lessor in connection therewith within ten(10)days following Lessors written demand to Lessee for such payment. 7.7. Indemnity.Lessee,as a material part of the consideration to be rendered to Lessor, hereby agrees that it will defend (with counsel acceptable to Lessor), indemnify, and hold harmless Lessor and all of its directors, officers, employees, agents, and independent contractors thereof from any loss, damage, injury, accident, casualty, liability, claim, cost or expense (including, but not limited to, reasonable attorneys'fees)of any kind or character to any person or property(collectively,"Claims") arising from or related to Lessee's use and occupancy of the Premises, the conduct of Lessee's business, and/or any act or omission of Lessee, its employees, agents, contractors, or invitees. Lessee shall not be liable for such Claims to the extent and in the proportion that the same is ultimately determined to be attributable to the sole gross negligence or intentional misconduct of Lessor. Lessee hereby assumes all risk of damage to property or injury to person in or about the Premises from any cause, and Lessee hereby waives all claims in respect thereof against Lessor. Lessor shall not be liable for any loss or theft of any property on the Premises. The indemnity obligations contained herein under this Paragraph shall survive the expiration or termination of this Lease. 7.8. Exemption of Lessor and its Agents from Liability. Notwithstanding the sole gross negligence, intentional misconduct or breach of this Lease by Lessor or its agents,neither Lessor nor its directors, officers,employees,agents,and or independent contractors shall be liable under any circumstances for(i) injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees,contractors,invitees,customers,or any other person in or about the Premises, whether such damage or injury is caused by or results from fire,steam,electricity,gas,water or rain, indoor air quality, the presence of mold or from the breakage, leakage,obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause,whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, (ii) any damages arising from any act or neglect of any other Lessee of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease,or(III)injury to Lessee's business or for any loss of income or profit therefrom. Instead, it is intended that Lessee's sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies)that Lessee is required to maintain pursuant to the provisions of Paragraph 8 herein. 8. Damage or Destruction. 8.1. Insured Loss. In the event the Premises shall be totally or partially destroyed by a risk covered by insurance required by this Lease, Lessor shall be entitled to make the loss adjustment with the insurance company insuring the loss and receive payment of the proceeds of insurance. 8.2. Damage.If the damage to the Premises cannot lawfully and reasonably be repaired within thirty(30) days after the date of damage,this Lease may be terminated by written notice of either Party. If the Premises can reasonably be repaired within the thirty (30) day period, or if this Lease is not terminated in accordance with this provision, Lessee may opt to restore the Premises. In the event Lessee chooses to restore the Premises,said insurance proceeds,if any,shall be held by Lessor for the benefit of Lessee and shall be disbursed in installments as construction progresses for payment of the costs of restoration or reconstruction,upon satisfactory performance of the work required,and release of mechanics liens by all persons furnishing labor and materials thereon. If the insurance proceeds are insufficient to pay the actual costs of restoration or reconstruction,Lessee shall deposit the amount of the deficiency with Lessor upon demand by Lessor, and said sums shall be held for payment of said mats and disbursed in the manner heretofore provided. 1334290.1 8.3. Lessee Restoration.If Lessee elects to restore the Premises,written plans,specifications, and construction cost estimates for the restoration shall be prepared by Lessee and forwarded to Lessor for approval prior to the performance of any work.Said documents shall be prepared and submitted in a timely manner following adjustment of the loss and receipt of the proceeds of insurance by Lessor. The required construction shall be performed by Lessee and/or licensed and bonded contractors),who shall be required to carry comprehensive liability and property damage insurance, workers compensation insurance, and standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements,during the period of construction,in amounts equal to insurance limits required herein,or in greater amounts if otherwise reasonably required by Lessor. Said construction shall be commenced promptly following approval by Lessor, the issuance of applicable permits and posting of the construction site by Lessor with notice of non-responsibility, and shall be diligently prosecuted to completion.All work shall be performed in accordance with the approved plans and specifications, unless changes are approved in writing, in advance, by Lessor. Lessee agrees that Lessor may have on the site at any time during the construction period, an inspector who shall have the right to access the Premises and the work occurring thereon. Lessee, at the commencement of the construction work,shall notify Lessor in writing of the identity, place of business, and telephone number or responsible person(s) in charge of construction. Lessee shall ensure that all construction shall be performed in a good and workmanlike manner.Upon completion of the restoration, Lessee shall immediately record a notice of completion with the Orange County Recorder. In the event Lessee makes any changes and/or alterations to the interior or exterior portions of the Building as provided in this Paragraph 8.3,Lessee shall not be required to restore the Building to the original configuration upon the expiration or termination of this Lease. 8.4. No Insurance Coverage. In the event the Premises shall be totally or partially destroyed by a risk for which insurance coverage is not required or provided herein, Lessor, in its sole discretion, may either restore the Premises or terminate this Lease by providing notice to Lessee. 8.5. Insurance Proceeds. If Lessee elects not to restore the Premises, the insurance proceeds shall be first used to demolish and clearthe Premises.Thereafter,following Lessors compensation for any amounts remaining owing to Lessor pursuant to this Lease, Lessee shall be entitled to the remainder of the insurance proceeds. 8.6. No Obligation of Lessor. Under no circumstances shall Lessor have any obligation to restore or reconstruct the Premises. In the event Lessor elects to repair any damage or destruction,such repair shall be to the Premises, but not Lessee's trade Fixtures or Lessee Owned Alternations and Utility Installations. 9. Real Property Taxes. 9.1. Definition.As used herein, the term"Real Property Taxes"shall include any form of assessment, including,but not limited to,real estate,general,special,ordinary or extraordinary,or rental levy or tax,any improvement bond,and/or license fee imposed upon or levied against any legal or equitable interest in the Premises by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address and where the proceeds so generated are to be applied by the city,county or other local taxing authority of a jurisdiction within which the Premises are located. Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i)imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied or assessed on machinery or equipment (other than "Personal Property Taxes" as described in Paragraph 10.3 below). 9.2. Payment of Real Property Taxes.Lessor shall pay any and all Real Property Tax installments. 9.3. Personal Property Taxes. Lessee shall be solely responsible for paying, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures,furnishings,equipment and all personal property of Lessee.When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations,Trade Fixtures,furnishings,equipment and all other personal property to be assessed and billed separately from the real property of Lessor. 10. Utilities and Services.Lessee shall be responsible for and pay all utilities for the Premises during the use and occupancy of the Premises by Lessee during the Term of the Lease. Lessee's responsibility to pay all utilities include,but are not limited to,water,gas,heat,light,power,telephone,trash disposal and other utilities and services supplied to the Premises,together with any taxes thereon.If any such services are not separately metered or billed to Lessee,Lessee shall pay a reasonable proportion,to be determined by Lessor,of all charges jointly metered or billed. 1334290.1 82]606.2 it. Assignment and Subletting. Lessee is prohibited from assigning this Lease or subletting the Property. 12. Default; Breach; Remedies. 12.1. Default;Breach.Failure by the Lessee to comply with or perform any of Lessee's obligations under the terms,covenants,or conditions of this Lease shall constitute a"Default"Lessee is in"Breach" of this Lease when Lessee fails to cure any such Default within any applicable period of time specified herein or within the applicable grace period,if any.The following shall constitute an event of Default and Breach by Lessee: (a) Lessee's failure(1)to make payments under this Lease,including Rent,when due, or(ii)to provide reasonable evidence of insurance or surety bond.THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES. (b) Lessee's failure to operate in the manner required by this Lease, where such failure continues for more than ten(10)days following receipt of written notice from Lessor to correct the condition therein specified. (c) Lessor's failure to maintain the Premises and Improvements in the state of repair required under this Lease, and in a clean, sanitary, safe, and satisfactory condition, where such failure continues for more than ten(10)days following receipt of written notice from Lessor to correct the conditions therein specified. Where fulfillment of said maintenance obligation requires activity over a period of time and Lessee shall have immediately, following receipt of notice, commenced whatever action may be required to cure the particular Default and continued such performance diligently,said time may be waived in writing in the manner and to the extent determined by Lessor. In the event Lessee fails to correct any maintenance or repair deficiency within the prescribed time, Lessor may, at its option,exercise its rights of entry and repair and/or terminate this Lease. (d) Lessee's failure to keep, perform, and observe any other promises, covenants, conditions, and agreements set forth in this Lease,where such failure continues for more than ten (10)days after receipt of written notice from Lessor to correct the condition therein specified.Where fulfillment of any maintenance or repair obligation requires activity over a period of time and Lessee shall have immediately,following receipt of notice,commenced whatever may be required to cure the particular Default and continued such performance diligently,said time may be waived in writing in the manner and to the extent determined by Lessor. (a) The filing of a voluntary petition in bankruptcy by Lessee; the adjudication of Lessee as bankrupt;the appointment of a receiver or trustee of Lessee's assets; the making of a general assignment for the benefit of creditors; a petition or answer seeking reorganization of Lessee under any Federal reorganization act;the occurrence of any act which operates to deprive Lessee permanently of the rights, powers, and privileges necessary for the proper conduct of its operations under this Lease;the levy of any attachment or execution which substantially interferes with Lessee's operations under this Lease and which is not vacated,dismisses,stayed,or set aside within a period of sixty(60)days;or a reasonable determination by Lessor that Lessee is insolvent. (f) The failure to submit written plans for the Improvements on or before the times designated in this Lease for submission thereof. (g) Lessee's abandonment of the Premises prior to the expiration or termination of the Lease without prior notice or agreement of Lessor. (h) The discovery that any financial statement of Lessee or any information or representation given to Lessor was materially false. 12.2. Remedies.If Lessee fails to comply with or perform any of Lessee's obligations under the terms, covenants,or conditions of this Lease, within 10 days after written notice from Lessor (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Upon written demand or presentation of an invoice, Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance. In the event of a Breach, Lessor may, with or without further notice or 1334290.1 demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach: (a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall tenninate on the date specified in a notice of termination, Lessee shall immediately surrender possession to Lessor,all rights of Lessee under this Lease and in and to the Premises shall expire and terminate, and Lessee shall remain liable for all obligations under this Lease arising up to the date of such termination;or (b) If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 12.1 was not previously given, a notice to pay rent or quit,or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 12.1.In such case,the applicable grace period required by Paragraph 12.1 and the unlawful detainer statute shall run concurrently,and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. (c) Without terminating this Lease, declare immediately due and payable all Rent, Taxes, and other amounts due and coming due under this Lease for the entire remaining Term hereof, together with all other amounts previously due, at once; provided, however, that such payment shall not be deemed a penalty or liquidated damages but shall merely constitute payment in advance of rent for the remainder of said term;or (d) Allow the Premises to remain unoccupied and collect rent from Lessee as it comes due;or fie) Pursue such other remedies as are available at law or equity. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the Term hereof or by reason of Lessee's occupancy of the Premises. 12.3. Breach by Lessor. (a) Notice of Breach. Lessor shall not be deemed in Breach of this Lease unless Lessor fails,within a reasonable time,to perform an obligation required to be performed by Lessor. A reasonable time as used in this Paragraph shall in no event be less than 30 days after receipt by Lessor of written notice specifying any act or obligation that Lessor has failed to perform; provided, however, that if the nature of Lessor's obligation is such that more than 30 days are reasonably required for its performance,then Lessor shall not be in breach if performance is commenced within such 30-day period and thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that Lessor fails to cure said breach within 30 days after receipt of said notice,or if having commenced said cure,Lessor fails to diligently pursue it to completion,then Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable cost to perform such cure; provided, however, that such offset shall not exceed an amount equal to the greater of one month's Base Rent, reserving Lessee's right to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor. 13. Condemnation. 13.1. Total Taking. If, after the execution of this Lease and prior to the expiration of the term hereof,the whole of the Leased Premises shall be taken under power of eminent domain or condemnation by any public or private authority,or conveyed by Lessor to said authority in lieu of such taking,then this Lease and the term hereof shall cease and terminate as of the date when possession of the Leased Premises shall be taken by the taking authority and any unearned rent or other charges, if any, paid in advance, shall be refunded to Lessee. 13.2. Partial Taking. If,after the execution of this Lease and prior to the expiration of the term hereof, any public or private authority shall, under the power of eminent domain or 1334290.1 condemnation,take,or Lessor shall convey to said authority in lieu of such taking,property which results in a reduction by fifteen (15%) percent or more of the area in the Leased Premises, or of a portion of the Leased Premises that substantially interrupts or substantially obstructs the conducting of business on the Leased Premises;then Lessee may,at its election,terminate this Lease by giving Lessor notice of the exercise of Lessee's election within thirty(30)days after Lessee shall receive notice of such taking. In the event of termination by Lessee,this Lease and the Term hereof shall cease and terminate as of the date when possession shall be taken by the appropriate authority of that portion of the Entire Premises that results in one of the above takings, and any unearned rent or other charges, if any, paid in advance by Lessee shall be refunded to Lessee. 13.3. Restoration.In the event of a taking,Lessor and Lessee may terminate the Lease. 13.4. The Award.All compensation awarded for any taking,whether for the whole or a portion of the Leased Premises,shall be the sole property of the Lessor whether such compensation shall be awarded for diminution in the value of, or loss of,the leasehold or for diminution in the value of,or loss of,the fee in the Leased Premises,or otherwise.The Lessee hereby assigns to Lessor all of Lessee's right and title to and interest in any and all such compensation. However, the Lessor shall not be entitled to and Lessee shall have the sole right to make its independent claim for and retain any portion of any award made by the appropriating authority directly to Lessee for loss of business, or damage to or depreciation of, and cost of removal of fixtures, personality and improvements installed in the Leased Premises by, or at the expense of Lessee, and to any other award made by the appropriating authority directly to Lessee. 13.5. Release. In the event of any termination of this Lease as the result of the provisions of this Paragraph concerning Condemnation, the Parties, effective as of such termination, shall be released,each to the other,from all liability and obligations thereafter arising under this Lease. 14. No Relocation Benefits or Loss of Goodwill from Lessor.Lessee expressly waives any and all relocation assistance, relocation benefits, or compensation for loss of goodwill, known or unknown, to which it is or might be entitled upon the expiration or termination of this Lease or sublease, including the provisions of California Civil Code Section 1542. In no event will Lessor be obligated to pay any costs or charges related to costs, expenses,damages, or other charges Lessee might incur as a result of its move to or from the Premises, securing new facilities, or maintaining customer relations. 15. Severablllty.Whenever possible, each provision of this Lease shall be interpreted in such a manner as to be effective and valid under applicable law,but if any provision of this Lease shall be invalid under the applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity,without invalidating the reminder of that provision,or the remaining provisions of this Lease. 16. Days. Unless otherwise specifcally indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days. 17. Limitation on Liability.The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or its directors,officers,employees,or agents,and Lessee shall look to the Premises,and to no other assets of Lessor for the satisfaction of any liability of Lessor with respect to this Lease,and shall not seek recourse against Lessors directors,officers,emplo9yees,agents,or any of their personal assets for such satisfaction. 18. Time of Essence.Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 19. No Prior or Other Agreements.This Lease contains all agreements between the Parties with respect to any matter mentioned herein,and no other prior or contemporaneous agreement or understanding shall be effective. 20. Notices.All notices or other communications required or permitted hereunder shall be in writing,and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, delivered or sent by electronic transmission, and shall be deemed received upon the earlier of(1)the date of delivery to the address of the person to receive such notice if delivered personally or by messenger or overnight courier; (ii)three (3) business days after the date of posting by the United States Post Office if by mail; or(III)when sent if given by electronic transmission. Any notice, request, demand, direction, or other communication sent by electronic transmission must be confirmed within forty-eight (48) hours by letter mailed or delivered. Notices or other communications shall be addressed as follows: 1334290.1 To Lessor: Orange County Sanitation District Attn:Angela Brandt Post Office Box 8127 Fountain Valley,CA 92728-8127 To Lessee: Chefs'Toys, LLC Attn:Steve Dickler, President 18430 Pacific Street Fountain Valley,CA 92708 Either party may, by written notice to the other, designate a different address, which shall be substituted for that specified above. 21. Waivers. 21.1 No waiver by Lessor of the Default or Breach of any term,covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term,covenant or condition hereof.Lessors consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessors consent to,or approval of,any subsequent or similar act by Lessee,or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. 21.2 The acceptance of Rent, or any portion thereof, by Lessor shall not be a waiver of any Default or Breach by Lessee.Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. 22. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 23. Covenants and Conditions; Construction of Agreement.All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In interpreting this Lease,all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease.Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole,as if both Parties had prepared it. 24. Binding Effect;Choice of Law.This Lease shall be binding upon the Parties,their personal representatives, successors and assigns and be governed by the laws of the State of California. Any litigation between the Parties hereto concerning this Lease shall be initiated in the County of Orange. 25. Subordination.This Lease shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises,to any and all advances made on the security thereof, and to all renewals, modifications,and extensions thereof. 26. Attorneys'Fees.If any Party brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party in any such proceeding, action, or appeal thereon,shall be entitled to costs and reasonable attorneys'fees,whether or not such action or proceeding is pursued to decision or judgment. In addition, Lessor shall be entitled to attorneys'fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith,whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach. 27. Lessors Access to Premises.Lessor and Lessors agents shall have the right to enter the Premises at any time,in the case of an emergency,and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers,lenders,or Lessees,making such alterations,repairs,improvements or additions to the Premises as Lessor may deem necessary or desirable,the erecting,using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises, and for purposes of design work for the Lessor's new construction of an administrative building including but not limited to demolition investigations,lead and asbestos surveys,geotechnical borings, potholing,and land surveying, as long as there is no material adverse effect to Lessee's use of the Premises.All such activities shall be without abatement of rent or liability to Lessee. 1334290.1 26. Signs. Lessor may place on the Premises ordinary"For Sale"signs at any time and ordinary"For Lease" signs during the last 6 months of the tens hereof. Except for ordinary"for sublease"signs,Lessee shall not place any sign upon the Premises without Lessors prior written consent.All signs must comply with all Applicable Requirements. 29. Consents.Except as otherwise provided herein,wherever the consent or action of a Party is required,such consent or action shall not be unreasonably withheld or delayed. Lessors actual reasonable costs and expenses (including but not limited to architects',attorneys',engineers'and other consultants'fees)incurred in the consideration of,or response to, a request by Lessee for consent or action, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance,shall be paid by Lessee upon receipt of an invoice and supporting documentation. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists,nor shall such consent be deemed a waiver of any than existing Default or Breach,except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessors consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. 30. Estoppel Certificates.At any time and from time to time, Lessor and Lessee each agree, upon request in writing from the other,to execute, acknowledge and deliver to the other or to any person designated by the other a statement in writing certifying that the Lease is unmodified and is in full force and effect, or if there have been modifications,that the same is in full force and effect as modified(stating the modifications),that the other party is not in default in the performance of its covenants hereunder,or if there have been such defaults,specifying the same,and the dates to which the rent and other charges have been paid. 31. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the Term hereof. 32. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures,and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. 33. Reservations. Lessor reserves to itself the right,from time to time,to grant,without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights,dedication,map or restrictions. 34. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof,the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay.A Party who does not initiate suit for the recovery of sums paid "under protest"with 6 months shall be deemed to have waived its right to protest such payment. 35. Authority; Multiple Parties; Execution. 35.1 If either Parry hereto is a corporation, trust, limited liability company, partnership,or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. 35.2 If this Lease is executed by more than one person or entity as"Lessee",each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease,or other document ancillary thereto and bind all of the named Lessees,and Lessor may rely on the same as if all of the named Lessees had executed such document. 35.3 This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 1334290.1 36. Amendments.This Lease may be modified only in venting,signed by the authorized representatives of both Parties. 37. Americans with Disabilities Act. Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee's use of the Premises requires modifications or additions to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/or additions at Lessee's sole expense. 38, Counterparts.This Lease may be executed in counterparts,each of which shall be deemed an original,but all of which together shall constitute one and the same instrument. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. IN WITNESS WHEREOF, this Lease Agreement has been executed in the name of the Orange County Sanitation Dishict by its officers,thereunto duly authorized,and executed by the Chefs'Toys,LLC,a wholly-owned subsidiary of TriMark USA, LLC as of this day of September,2018. ORANGE COUNTY SANITATION DISTRICT CHEFS'TOYS, LLC By By Gregory C.Sebourn, PLS Steve Dickler Chair, Board of Directors President By Kelly A. Lore. MMC Clerk of the Board APPROVED AS TO FORM: Bradley R. Hogin General Counsel 1334290.1 ATTACHMENT IIIIIIIIIIIIIIIIIL0J IIIIIIIIIIIIIIII i i O p � n NOTA SUBJECT y PART BUILDING I ELLIS AVENUE 1334290.1 OPERATIONS COMMITTEE Melting D310 TOBd.Of Dir. 09/OS118 09/26/18 AGENDA REPORT Item Item Number fi 13 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: GISLER-REDHILL SYSTEM IMPROVEMENTS, REACH B, PROJECT NO. 7-37 GENERAL MANAGER'S RECOMMENDATION Approve a contingency increase of $365,257 (2.37%) to the construction contract with Kiewit Infrastructure West Company for Gisler-Redhill System Improvements, Reach B, Project No. 7-37, for a total construction contingency of$1,908,457 (12.37%). BACKGROUND The Gisler-Redhill System Improvements, Reach B, Project No. 7-37, replaced approximately one mile of 30 to 33-inch sewer and rehabilitated approximately two miles of existing 21 to 36-inch sewer along Redhill Avenue in the cities of Tustin and Irvine. The construction contract was competitively bid and awarded to Kiewit Infrastructure West Company in December 2015. This project included some areas of difficult construction including replacing relatively deep sewer pipelines within large street intersections; work around major existing utilities; and significant exposure to unknown conditions including variances in soil conditions, utility locations, pavement sections, allowable work hours, and traffic control. This type of work in the public right-of-way is challenging and changes are expected, however, it is difficult to predict the specifics of these variances and how they will impact the productivity and timing of the Contractor's planned work. An initial 10% contingency was approved in December 2015 when the construction contract was awarded to account for these variances. The unknown conditions outlined above resulted in significant impacts to the Contractor, many of which were not fully quantified while the work was progressing. Some of these impacts were mitigated where possible, however, many of these variances resulted in changes to the Contractor's means and methods including shoring methods and work hours. Construction was generally completed in September 2017, but several outstanding Contractor Requests for Change resulted in a negotiated resolution of disputed items prior to final closure of the project. The Contractor and the Orange County Sanitation District(Sanitation District)have a tentative agreement of all impacts and these will be included in a final contract change order, the amount of which exceeds the remaining balance of the originally approved contingency. This requested contingency increase will provide final resolution of all outstanding issues and allow closure of the project. Page 1 of 3 RELEVANT STANDARDS • Operate and maintain facilities to minimize impacts on surrounding communities, including odor, noise, and lighting • Achieve less than 2.1 sewer spills per 100 miles PROBLEM Unknown construction conditions have resulted in additional cost impacts and the approved construction contract contingency is insufficient to authorize a tentative settlement agreement. PROPOSED SOLUTION Approve a contingency increase of$365,257 (2.37%)for a total construction contingency of$1,908,457 (12.37%). The project budget is sufficient for this change and no additional funding is needed. TIMING CONCERNS Final construction was completed in September 2017. Failure to reach a settlement on a timely basis may expose the Sanitation District to additional costs. RAMIFICATIONS OF NOT TAKING ACTION If the request for contingency increase is not approved, the tentative negotiated settlement amount for the disputed items will not be paid and the Contractor may revert to legal action against the Sanitation District. PRIOR COMMITTEE/BOARD ACTIONS December 2015 — Awarded a construction contract to Kiewit Infrastructure West Company for Gisler-Redhill System Improvements, Reach B, Project No. 7-37, for a total amount not to exceed $15,432,000, and approved a contingency of$1,543,200 (10%). ADDITIONAL INFORMATION The Sanitation District and Contractor achieved substantial completion in September 2017 and final completion in January 2018. The contractual required completion dates were August 2017 and September 2017, respectively. The project activities in Redhill Boulevard and Newport Avenue caused significant traffic impact to the public. In some cases, the Sanitation District directed the use of contingency to increase Contractor resources to mitigate delays and reduce the overall project risk of associated delay costs. At the end of construction, the Sanitation District and Contractor conducted several dispute review meetings to evaluate costs and merits for the outstanding changes, while Page 2 d 3 preserving individual parties' contractual rights in an attempt to globally settle potential claims for impacts and avoid substantial legal and mediation costs. Through this process, the Sanitation District and the Contractor have reached a tentative agreement to settle all outstanding changes and close the project. This final settlement is full and final compensation for all impacts on the completed work. CECIA The Sanitation District, as lead agency, prepared a Program Environmental Impact Report (PEIR) entitled 1999 OCSD Strategic Plan. The Board certified the PEIR on October 27, 1999. The Sanitation District filed a Notice of Determination on October 29, 1999 and filed an addendum to the 1999 PEIR on December 16, 2015. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted, and the budget is sufficient for this action (Budget FY2018-19 and 2019-20, Section 8, Page 33). Date of Annroval Contract Amount Continaencv 12/16/15 $15,432,000 $1,543,200 (10%) 09/26/18 $ 365,257 (2.37%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: PowerPoint Presentation Operations Committee September 5, 2018 HK:dm:gc Page 3 of 3 rt fR_ - . w m Red Hill Sewer Improvements Project No . 7- 37 Operations Committee September 5, 2018 r ', Project Overview • 4,900-feet of new 30 to Chestnut Ave E Main St. e . 33-inch VCP sewer a� McFadden Ave • New manholes, 60 to 96-inches in diameter Edinger Ave ��o� �a/a`� �tc�eii • Pipe rehabilitation with cured in place pipe (CIPP) Q`aa`p, • Rehabilitation of 50 erRd GISLER-REDHILL manholes Alton Ave SYSTEM IMPROVEMENTS REACH R • Sewer repairs at � ear Mitchell/Newport Avenue 100 96e 'O/r • Sewer repairs at Mitchell/Redhill Avenue Project Challenges • Deep excavations, average of 25-ft in depth • Unknown utilities at several locations including at major intersections : • Redhill/Edinger — 9 utilities • Newport/Mitchell - 5 utilities • City changed Newport/Mitchell intersection work to nights and required daily traffic control removal F 1 s raJ. Y a i i SRO 17 ........ r ' J c 1 J + � " I i► - . Shoring Around Utilities z® MK 111 r Of P N � f � Mitigated Changes • Added crews proactively to finish project on schedule. • Worked with City to mitigate use of excavated soil and reduce hauling costs. • Coordinated with City's project on paving areas. • Changed rehabilitation from grout sleeves to cured in place pipe . Schedule Eff . � . - IMMIN Milestone 1: Work at Mitchel / 8/12/17 8/28/17 A Newport and Mitchell / Redhill Intersections Milestone 2: Substantial Completion 8/18/17 9/16/17 A Milestone 3 : Final Completion 9/27/17 3/15/18 A • Schedule Impacts due to: ✓ Unknown conditions (utilities) ✓Traffic control and work hour changes ✓ Contractor productivity impacts due to change conditions Contract Information Original Contract Amount $15,432,000 Original Contingency $1,543,200 10.0% Change Orders to Date $1,383,457 9.0% Remaining Contingency $159,743 1.0% *Final Settlement Amount $525,000 Additional Contingency Needed $365,257 Final Contingency Amount $1,908,457 12.4% Final Contract Amount $17,340,457 *Initial Contractor's request $1.3M Final Closeout • Work is complete, facilities are in service • Cities are satisfied with work • Final settlement reached resolving all outstanding costs • No project budget increase necessary Recommended Action • Approve a contingency increase of $365, 257 (2 .4%) to the construction contract with Kiewit Infrastructure West Company for the Gisler- Redhill System Improvements, Reach B project No. 7-37, for a total construction contingency of $ 1,908,457 ( 12 .4%) / ~ J i - IN i - _ v OPERATIONS COMMITTEE Mewing Date TOBd. fDir. 09/05/18 09/26A8 AGENDA REPORT Item Item Number 7 14 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: INTERIM FOOD WASTE RECEIVING FACILITY, PROJECT NO. P2-124 GENERAL MANAGER'S RECOMMENDATION A. Approve a Professional Design Services Agreement with Kennedy/Jenks Consultants to provide engineering services for Interim Food Waste Receiving Facility, Project No. P2-124, for an amount not to exceed $695,000; and B. Approve a contingency of$69,500 (10%). BACKGROUND The State of California requires cities to divert organics such as food waste away from landfills. This food waste, after processing, can be added to an anaerobic digester such as those operated by the Orange County Sanitation District (Sanitation District) to produce methane gas and energy. The Biosolids Master Plan evaluated the feasibility of receiving pre-processed food waste. It concluded the costs to construct and operate the facilities and handle the additional biosolids production could be offset by tipping fees charged to food waste processors and additional power associated with increased digester gas production. Because the Biosolids Master Plan also recommended replacement of the digester complex, an interim facility was recommended until a more permanent facility can be constructed in 10 to 15 years. The interim food waste receiving station will consist of prefabricated storage tanks, mixing and transfer pumps, and piping to the digesters. RELEVANT STANDARDS • Maintain and adhere to appropriate internal planning documents (Biosolids Master Plan) • Use all practical and effective means for resource recovery PROBLEM The services of a design consultant are needed to complete this project. Page 1 of 4 PROPOSED SOLUTION Approve a Professional Design Services Agreement with Kennedy/Jenks Consultants. TIMING CONCERNS Assembly Bill AB 1826(2014)sets organic diversion targets overthe nextfew years under which commercial waste generators will need to identify alternatives for organics. SB 1383 (2016) sets organics diversion goals which will require waste generators and haulers to seek alternatives to landfill disposal. RAMIFICATIONS OF NOT TAKING ACTION Service area food waste haulers will need to seek other alternatives for disposal or reuse of the food waste. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION Consultant Selection: The Sanitation District requested and advertised for proposals for Interim Food Waste Receiving Facility, Project No. P2-124, on May 5, 2018. 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 20% Project Team and Staff Qualifications 40% Seven proposals were received on June 21, 2018 and evaluated in accordance with the evaluation process set forth in the Sanitation District's Purchasing Ordinance, by a pre- selected Evaluation Team consisting of the following Sanitation District staff. Jin Kim Engineer Martin Dix Engineering Supervisor Don Stokes Maintenance Superintendent Dave Halverson Engineering Supervisor Jacob Dalgoff CIP Project Manager The Evaluation Team also included three non-voting representatives from the Contracts Administration Division. Page 2 d4 Following scoring by the Evaluation Team, three Consultants were shortlisted for interviews on July 24, 2018. Following the interview, each member of the Evaluation Team ranked the Consultants based on both the proposals and interviews using the evaluation criterion and weighting described above. Based on the ranking shown below, Kennedy/Jenks Consultants was selected as the most qualified Consultant. Kennedy/Jenks CDM Smith Black&Veatch Evaluator 1 1 1 3 Evaluator 2 1 2 3 Evaluator 3 2 3 1 Evaluator 4 1 2 2 Evaluator 5 2 1 3 Combined 1 2 3 Ranking The selected firm's team had the most experience with food waste receiving facilities similar to the desired facility by the Sanitation District. Review of Fee Proposal and Negotiations: Proposals were accompanied by sealed fee proposals. In accordance with 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. Staff conducted negotiations with Kennedy/Jenks Consultants 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. Three negotiating meetings were held where staff and the Consultant reviewed the Project Elements, Preliminary Design, and Final Design tasks for clarity and desired level of effort. These negotiations modified project elements and identified additional efforts that would be needed for a new process at our facility. As a result of these negotiations, Kennedy/Jenks Consultants submitted a revised fee proposal. The negotiated hours and price are appropriate for an interim facility. The required hours negotiated are less that the second and third ranked firms. Original Fee Proposal Negotiated Fee Total Hours 3,232 4,252 Total Fee $539,387 $695,000 Page 3 d 4 The Consultant's fringe and overhead costs, which factor into the billing rate, have been substantiated. The contract profit is 9.22%, which is based on an established formula included in the Sanitation District's standard design 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 Design Services Agreement to Kennedy/Jenks Consultants. CEQA This project was covered under the Biosolids Master Plan Program EIR. A Notice of Determination (NOD)will be filed after Board approval of the PDSA. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted, (Budget FY2018-19 and FY2019-20, Section 8, and Page 70) and the project budget is sufficient for the recommended action. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Professional Design Services Agreement • PowerPoint Presentation Operations Committee September 5, 2018 JGD:dm:gc Page 4 of 4 PROFESSIONAL DESIGN SERVICES AGREEMENT THIS AGREEMENT, is made and entered into to be effective the 26' day of September, 2018 by and between the ORANGE COUNTY SANITATION DISTRICT, hereinafter referred to as "SANITATION DISTRICT", and KENNEDY/JENKS CONSULTANTS, INC., for purposes of this Agreement hereinafter referred to as "CONSULTANT". WITNESSETH: WHEREAS, the SANITATION DISTRICT desires to engage a CONSULTANT to provide Design services for Interim Food Waste Receiving Facility, Project No. P2-124; 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 a CONSULTANT to perform this work; and, WHEREAS, at its regular meeting on September 26, 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 and technical 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, completeness, and coordination of all design, drawings, specifications, and other 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 laws, 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. B. CONSULTANT is responsible for the quality of work prepared under this Agreement and shall ensure that all work is performed to the standards of best engineering practice for clarity, uniformity, and completeness. CONSULTANT shall respond to all comments, suggestions, and recommendations on the SANITATION DISTRICT's review comment sheets (i.e. DS1, DS2 and DS3). All comments shall be incorporated into the design prior to the next submittal deadline or addressed, in writing, as to why the comment has not been PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 1 of 19 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 work is not performed to the satisfaction of the SANITATION DISTRICT and does not conform to the requirements of this Agreement or any applicable industry standards, the CONSULTANT shall, without additional compensation, promptly correct or revise any errors or deficiencies in its designs, drawings, specifications, or other services within the timeframe specified by the Project Engineer/Project Manager. The SANITATION DISTRICT may charge to CONSULTANT all costs, expenses and damages associated with any such corrections or revisions. D. All CAD drawings, figures, and other work shall be produced by CONSULTANTS and Subconsultants using the SANITATION DISTRICT CAD Manual. Conversion of CAD work from any other non-standard CAD 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 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 SANITATION DISTRICT. E. The CONSULTANT shall ensure that all plans and specifications prepared, or recommended under this Agreement allow for competitive bidding. The CONSULTANT shall design such plans or specifications so that procurement of services, labor or materials are not available from only one source, and shall not design plans and specifications around a single or specific product, piece of major equipment or machinery, a specific patented design or a proprietary process, unless required by principles of sound engineering practice and supported by a written justification that has been approved in writing by the SANITATION DISTRICT. The CONSULTANT shall submit this written justification to the SANITATION DISTRICT prior to beginning work on such plans and specifications. Whenever the CONSULTANT recommends a specific product or equipment for competitive procurement, such recommendation shall include at least two brand names of products that are capable of meeting the functional requirements applicable to the project. F. All professional services performed by the CONSULTANT, including but not limited to all drafts, data, correspondence, proposals, reports, and estimates 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 PDSA PROJECT NO. P2424 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 2 of 19 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, (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: A. Total Compensation Total compensation shall be in an amount not to exceed Six Hundred Ninety- Five Thousand Dollars ($695,000). 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. 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. PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 3 of 19 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 Suboonsultant total compensation in accordance with the Subconsultant amount specified in Attachment"E"- Fee Proposal. 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 the attached 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.gsa.gov/portal/category/l 04711#. The CONSULTANT shall be responsible for the most economical and practical means of management of reimbursable costs inclusive but not limited to travel, lodging and meals arrangements. The SANITATION DISTRICT shall apply the PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 4 of 19 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. 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 general 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 meal 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. PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 5 of 19 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. CONSULTANT shall allocate costs in the same manner as it would for payment requests as described in this Section of the Agreement. CONSULTANT shall warrant and certify the accuracy of these costs and understand that submitted costs are subject to Section 11 -AUDIT PROVISIONS. B. CONSULTANT may submit monthly or periodic statements requesting payment for those items included in Section 2- COMPENSATION hereof in the format as required by the SANITATION DISTRICT. Such requests shall be based upon the amount and value of the work and services performed by CONSULTANT under this Agreement and shall be prepared by CONSULTANT and accompanied by such supporting data, including a detailed breakdown of all costs incurred and project element work performed during the period covered by the statement, 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 on a per-project-element basis. 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. He may, at his discretion, 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 each project element or 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 PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 6 of 19 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, 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, 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 ten thousand dollars ($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 e) 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. 5. 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. PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 7 of 19 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 the SANITATION DISTRICT and/or general public upon request, provided the public request is made through the 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(e). 6. DOCUMENT OWNERSHIP—SUBSEQUENT CHANGES TO PLANS AND SPECIFICATIONS A. Ownership of Documents for the Professional Services performed. All documents, including but not limited to, original plans, studies, sketches, drawings, computer printouts and disk files, and specifications 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 plans or specifications, 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. 7. INSURANCE A. General i. Insurance shall be issued and underwritten by insurance companies acceptable to the SANITATION DISTRICT. ii. Insurers must have an "A-" Policyholder's Rating, or better, and Financial Rating of at least Class Vill, or better, in accordance with the most current PDSA PROJECT NO. P2424 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 8 of 19 A.M. Best's Guide Rating. However, the SANITATION DISTRICT will accept State Compensation Insurance Fund, for the required policy of Worker's 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. 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: Two Million Dollars ($2,000,000) per occurrence with Two Million Dollars ($2,000,000) 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, owners and contractors protective liability, 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. Automotive/Vehicle 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 Two Million Dollars ($2,000,000) or alternatively, Two Million Dollars ($2,000,000) 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. PDSA PROJECT NO. P2424 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 9 of 19 E. Drone Liability Insurance If a drone will be used, drone liability insurance must be maintained by CONSULTANT in the amount of One Million Dollars ($1,000,000) in a form acceptable by the SANITATION DISTRICT. F. 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. G. 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 Three Million Dollars ($3,000,000)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. PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 10 of 19 H. 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 SANITATION DISTRICT reserves the right to require complete, certified copies of all required insurance policies, including endorsements, effecting 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 (5/2010)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. 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 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 and its insurance broker/agent 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, 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. PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 11 of 19 J. 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. K. Separation of Insured All liability policies shall contain a "Separation of Insureds" clause. L. 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. M. 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. N. Defense Costs Liability policies 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. O. 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. P. Limits Are Minimums If the CONSULTANT maintains higher limits than any minimums shown above, then the SANITATION DISTRICT requires and shall be entitled to coverage for the higher limits maintained by CONSULTANT. PDSA PROJECT NO. P2424 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 12 of 19 8. SCOPECHANGES In the event of a change in the Scope of Work, requested by 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. 9. 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 by CONSULTANT. CONSULTANT shall include a description of the scope of work to be done by each Subconsultant and each CONSULTANT's project team member. CONSULTANT shall include the respective compensation amounts for CONSULTANT and each Subconsultant on a per-project-element basis, 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. 10. ENGINEERING REGISTRATION The CONSULTANT's personnel 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 requires the services of a registered engineer, such services hereunder will be performed under the direct supervision of registered engineers. 11. 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 PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 13 of 19 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. 12. LEGAL RELATIONSHIP BETWEEN PARTIES The legal relationship between the parties hereto is that of an independent contractor and nothing herein shall be deemed to make CONSULTANT an employee of the SANITATION DISTRICT. 13. 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. Notices shall be mailed to the SANITATION DISTRICT at: ORANGE COUNTY SANITATION DISTRICT 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Attention: Gary V. Prater, Principal Contracts Administrator Copy: Jacob Dalgoff, Project Manager Notices shall be mailed to CONSULTANT at: KENNEDYMENKS CONSULTANTS, INC. 9665 Granite Ridge Suite 210 San Diego, CA 92123 Attention: Edward Yang, Principal-in-Charge All communication regarding the Scope of Work, will be addressed to the Project Manager. Direction from other SANITATION DISTRICT's staff must be approved in writing by the SANITATION DISTRICT's Project Manager prior to action from the CONSULTANT. 14. 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 PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 14 of 19 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 and/or CONSULTANT in accordance with Section 13- NOTICES. 15. 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, computation and study materials in its files pertaining to the work described in this Agreement, which is requested in writing by the SANITATION DISTRICT. 16. 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. 17. 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 agreements for that party. 18. 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. 19. 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 it may be entitled. 20. PROGRESS REPORTS Monthly progress reports shall be submitted for review by the tenth day of the following month and must include as a minimum: 1) current activities, 2)future activities, 3) potential items that are not included in the Scope of Work, 4) concerns and possible delays, 5) percentage of completion, and 6) budget status. PDSA PROJECT NO. P2424 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 15 of 19 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). 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 PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 16 of 19 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. 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 SANITATION 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. CONSULTANT PERFORMANCE The CONSULTANT's performance shall be evaluated by the SANITATION DISTRICT. A copy of the evaluation shall be sent to the CONSULTANT for comment. The evaluation, together with the comments, shall be retained by the SANITATION DISTRICT and may be considered in future CONSULTANT selection processes. 25. 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. 26. 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. PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 17 of 19 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 this Agreement. Such support must be provided within the timeframe requested by the SANITATION DISTRICT. 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. 27. 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. PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 18 of 19 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. KENNEDYIJENKS CONSULTANTS, INC. By Date Printed Name &Title ORANGE COUNTY SANITATION DISTRICT By Gregory C. Sebourn, PLS Date Chair, Board of Directors By Kelly A. Lore Date Clerk of the Board By Marc Dubois Date Contracts, Purchasing and Materials Management Manager Attachments: Attachment"A" Scope of Work Attachment"B" Labor Hour Matrix Attachment"C" Not Attached Attachment"D" Allowable Direct Costs Attachment"E" Fee Proposal Attachment"F" Not Used Attachment"G" Not Attached Attachment"H" Not Used Attachment"I" Cost Matrix and Summary Attachment"J" Not Attached Attachment X' Hourly Rate Schedule for Minor Subconsultants Attachment"L" OCSD Safety Standards GVP:yp PDSA PROJECT NO. P2-124 Revised 091217 INTERIM FOOD WASTE RECEIVING FACILITY Page 19 of 19 / '\ . �, �a.JP7 - - ,and•` a- y � \ Interim Food Waste Receiving Facility i _ s a r Project Design Construction Project Overview Budget Complete Complete Estimated Quantity tons/day150 Estimated Charge Encina Wastewater Authority Proposal Process ProposalsRFP Issued InterviewedReceived Top 3 . . firm Recommended Top Ranked Firm : Kennedy/Jenks Consultants is City of Portland-BES Tacoma In in Gresham Yakima In in Santa Rosa Dalles■■ is Petaluma Pendleton■■ ■■ Central Madn Sanitation Agency Linda County Water District■ Is Sausalito Madn City Sanitary DistdctVive Roseville■■ in N.San Mateo County Sanitation Dist San Francisco Public Utilities Commission■ ■■ Milbrae Oro Loma Sanitary District■ Silicon Valley Clean Water is Is in Santa Cruz Cannel Area Wastewater District■ is Goleta Sanitary District Las Virgenes Water District■■ ■■ Camarillo Simi Valley■■ Is Thousand Oaks Orange County Sanitation District Is Irvine Ranch Water District Riverside Is Encina Wastewater Authority Eastern Municipal Water District■ Padre Dam Municipal Water District r is Key in Digester Mixing Design ■FOG Receiving Stations Food Waste Co-Digestion W 1111 1!! 11� 1111 1! i� i ii i 1� i ii�� 8 Negotiations • 3 Meetings • Clarification & Effort Review • Elements • Preliminary Design • Final Design Kennedy/ Jenks Technical Proposal 3,232 Level of Effort Estimate Negotiated Hours 4,252 Negotiated Fee $695,000 Recommendation • Approve a Professional Design Services Agreement with Kennedy/Jenks Consultants to provide engineering services for Interim Food Waste Receiving Facility, Project No. P2-124, for an amount not to exceed $695,000 • Approve a contingency of $69, 500 ( 10%) OPERATIONS COMMITTEE Melting D310 TOBd.Of Dir. 09/OS118 09/26/18 AGENDA REPORT Item Item Number B IS Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: OCEAN OUTFALL SYSTEM REHABILITATION, PROJECT NO. J-117 GENERAL MANAGER'S RECOMMENDATION Approve a contingency increase of$677,801 (10%) to the Professional Design Services Agreement with Brown and Caldwell for Ocean Outfall System Rehabilitation, Project No. J-117, for a total contingency of$4,405,708 (65%). BACKGROUND Outfall System Rehabilitation, Project No. J-117, includes Contract No. J-117B which will construct a new Outfall Low Flow Pump Station and rehabilitate the existing Ocean Outfall Booster Station. Since award of the Professional Design Services Agreement to Brown and Caldwell in early 2015, the Orange County Sanitation District (Sanitation District) has made Board-approved additions to the project elements including replacement of critical electrical switchgear in the Central Generation system, construction of a new plant water pump station required to separate reclaimable and non-reclaimable flows to support the Orange County Water District's reclamation of Plant No. 2 effluent, and construction of SCADA System and Network Upgrades, Project No. 132-107, which has been designed by Brown and Caldwell under a separate project budget and Professional Design Services Agreement. These additions offered unique opportunities to complete critical work more efficiently, better manage construction risks, and expedite completion of the new Plant Water Pump Station which is on the critical path for commissioning the Orange County Water District's GWRS Final Expansion project. All this work is hydraulically and electrically connected and in the same area. These changes were supported by the Board's authorization for an increase of the consultant's contingency from the original 10% to 55%. RELEVANT STANDARDS 24/7/365 treatment plant reliability • Meet volume and water quality needs for the GWRS PROBLEM The design of the additional project elements was covered by contingency-funded amendments negotiated prior to the work being completed. As the design nears completion, the size and complexity have proven to be greater than could have been Page 1 of 3 originally anticipated. The changes have also increased the level of effort for bid-phase services and conformed drawings which was not accounted for in a previous contingency increase request. As a result, the remaining contingency is not sufficient to cover additional proposed costs. PROPOSED SOLUTION Approve a contingency increase of$677,801 (10%), for a total contingency of$4,405,708 (65%). TIMING CONCERNS This construction contract is expected to advertise for bid in September for an award in December 2018. Without additional funds for the consultant, staff will not be able to authorize final design changes, bid support services, and issuance of the conformed documents, which will delay advertisement and construction. In particular, completion of the Plant Water Pump Station is critical for startup of the Orange County Water District's GWRS Final Expansion. RAMIFICATIONS OF NOT TAKING ACTION The consultant's services during bid and award phase would have to be reduced, which would increase the risk of bid protests, construction delays, and increased change order costs. PRIOR COMMITTEE/BOARD ACTIONS September 2017 - Adopted Resolution No. OCSD 17-15, making certain findings and adopting the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program pursuant to the California Environmental Quality Act, and approved a contingency increase of$677,801 (10%) to the Professional Design Services Agreement with Brown and Caldwell for Ocean Outfall System Rehabilitation, Project No. J-117, for a total contingency of$3,727,907 (55%). November 2016 -Approved a budget increase of$28,517,000 for Ocean Outfall System Rehabilitation, Project No. J-117, fora total budget amount of$91,000,000, and approved a contingency increase of $2,372,305 (35%) to the Professional Design Services Agreement with Brown and Caldwell for Ocean Ouffall System Rehabilitation, Project No. J-117, for a total contingency of$3,050,106 (45%). February 2015 - Approved a Professional Design Services Agreement with Brown & Caldwell to provide engineering design services for the Ocean Outfall System Rehabilitation, Project No. J-117,for an amount not to exceed $6,778,015, and approved a contingency of $677,801 (10%). Page 2 d 3 ADDITIONAL INFORMATION N/A CEQA An Initial Study/Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program for the Outfall Low Flow Pump Station, Contract No. J-117B, was adopted by the Board on September 27, 2017. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted (Fiscal Year 2018-19 and 2019-20 Budget, Section 8, Page 37). This particular recommended action, however, does not require additional project budget. Depending on the actual construction bids scheduled to be opened in November 2018, additional project budget may be needed. Date of ADDroval Contract Amount Continaencv 02/25/15 $6,778,015 $ 677,801 (10%) 11/16/16 $2,372,305(35%) 09/27/17 $ 677,801 (10%) 09/26/18 $ 677,801 (10%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: PowerPoint Presentation Operations Committee September 5, 2018 VP:dm:gc Page 3 d 3 AO % O,. - ; /. ` �: til�� ►i;+� � S Si.� +. .,lei. - •. � -'` Feb Ocean Outfall System Rehabilitation, Project No. J- 117 PDSA Contingency Increase Operations Ocean Outfall System Rehabilitation Project No . J -117 1. J -117A Interplant Effluent Pipeline Rehabilitation • Construction Contract Awarded June 2017 ($12.6 mil) 2 . J -117B Outfall Low Flow Pump Station ($91 mil ) • Ocean Outfall Booster Pump Station Rehab • New Outfall Low Flow Pump Station • Replace Plant Water PS for GWRS Final Expansion Added • Power Distribution Switchgear Upgrades Nov2016 • SCADA System and Network Upgrades ( P2-107) Added Mar 2018 Ocean Outfall System Rehabilitation, Project No. J-117 \zp„�-ZZ'q 7 PLANT WATER P5 0 '�--_® LOW FLOW PS �n OCE OCEAN OUTFALL (.KA.L zu�P��IVE BOOSTER STATION i1 - 'i (OOBS( REHAB iREPLACE GSL CEN GEN t t ELECTRICAL IL REPLACE EXISTING PLANT WATER L • I PUMP STATION t Y ter 1 RECLAIMAB NON-RECLAIMABLE FLOWS � Electrical Work Across Plant No . 2 �J RAS West or Load Shedding System TOTAL LOAD 7 MW 10-13 MW CEN GEN CAPACITY 4-6 MW 9 MW LOAD SHEDDING METHODS: CEN GEN OVERLOADED ON . CONTINGENCY BASED (EVENT DRIVEN) POWER IMPORTED 1-3 MW 1-4 MW ' BACKUP FREQUENCY UTILITY POWER OUTAGE PARTIAL TRIPPING Standby Standby LOADS WITH OF DOWNSTREAM STANDBY POWER LOADS (TYPICAL) Generators Generators Ot (TYPICAL)Pump Station Headworks Effluent Pump Stat' Primary PLANT PRIMARY POWER SOURCES City Water m OOOOO® ated Pump Station Sludge Utility Central Generators GStandby _ (5) 3 MW, (1) 1 MW s Centrifuges Trickling Filters resso NON-CRITICA1 /Primary Effluent Digesters Standby LOAD Pump Station Generators Status of Contingency Authorized Total • • Contingency Contingency Feb 2015 Contract Award $677,801 $677,801 (10%) Nov 2016 Add Plant Water PS, $2,372,305 $3,050,106 (45%) CenGen Switchgear Sep 2017 Fault Displacement Mitigation $677,801 $3,727,907 (55%) Sep 2018 Additional Design Requirements $677,801 $4,405,708 (65%) Additional work • Integration of SCADA System and Network Upgrades, Project No . P2-107 • Temporary power feed to keep large Outfall Pumps available during wet season • Integration of all CenGen equipment with existing controls • Increased effort for bid support and conformed documents — Drawings increased from —800 to —1100 drawings . Recommendations • Approve a contingency increase of $677,801 ( 10%) to the Professional Design Services Agreement with Brown and Caldwell for Ocean Outfall System Rehabilitation, Project No . J-117, for a total contingency of $4,405,708 (65%) . OPERATIONS COMMITTEE Melting D310 TOBd.Of Dir. 09/OS118 09/26/18 AGENDA REPORT Item Iem1umber 9 16 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Assistant General Manager SUBJECT: TRANSFER UPSTREAM PORTION OF JAMBOREE SEWER TO THE CITY OF NEWPORT BEACH GENERAL MANAGER'S RECOMMENDATION A. Approve a Quitclaim Deed to the City of Newport Beach transferring ownership and associated property rights for the local sewer in Jamboree Road; and B. Authorize a transfer of $300,000 to the City of Newport Beach for necessary repairs. BACKGROUND The Orange County Sanitation District (Sanitation District) owns a sewer in Jamboree Road within the City of Newport Beach (City). The upstream portion of this sewer does not serve a regional purpose and solely has City connections. The City is suited to provide local sewer service and has a need to make lateral connection to the sewer pipe. The City has agreed to acquire ownership of the upstream portion of this sewer totaling 1,218 linear feet. This sewer needs some rehabilitation which is estimated to cost $300,000 to design, construct, and manage. As a condition of the sewer transfer, the Sanitation District will transfer$300,000 to the City so they can perform this work at their convenience. RELEVANT STANDARDS • Maintain collaborative and cooperative relationships with regulators, stakeholders, and neighboring communities • Maintain a culture of improving efficiency to reduce the cost to provide the current service level or standard PROBLEM The Sanitation District is a regional sewer service provider and owns and operates a legacy local sewer segment. PROPOSED SOLUTION Transfer ownership of the subject sewer to the City. Page 1 of 2 RAMIFICATIONS OF NOT TAKING ACTION The public would not receive the same level of service within the area of the subject sewer. Future connections to the sewer may require additional City sewers since the Sanitation District does not allow house lateral connections directly to the sewer pipe. Existing non-permitted connections will require a permit and additional construction. PRIOR COMMITTEE/BOARD ACTIONS December 2009 - Five-Year Strategic Plan, Business Principles Goal No. 7 Local Sewer Services: Transfer other local assets back to cities that are not serving a true regional purpose. ADDITIONAL INFORMATION The subject sewer starts within the intersection of Jamboree and Ford Road and travels south until it connects into the sewer main that traverses through Big Canyon Country Club and Nature Park. There is an existing City dry weather urban runoff connection to this sewer that is not property connected to the Sanitation District sewer. After the City takes ownership of this sewer, there will be no need to reconnect the urban runoff connection to a Sanitation District manhole. CEOA N/A FINANCIAL CONSIDERATIONS The Sanitation District had created Project No. FE16-01 for the design, construction, and management of the sewer repair of the Upper Jamboree sewer in the City with a budget of $300,000. As this sewer is being transferred to the City, this project is no longer necessary. The Quitclaim Agreement includes the transfer of$300,000 to the City for the cost of the repairs. This $300,000 will be removed from the Sanitation District CIP budget and this ownership transfer will be reflected in financial reporting accordingly. The Sanitation District is no longer responsible for future operations or maintenance of this sewer. ATTACHMENT The following attachment(s) are included in hard copy may also be viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: Quitclaim Sewer Transfer Agreement KM:sa:gc Page 2 of 2 RECORDING REQUESTED BY AND, WHEN RECORDED, RETURN TO: ORANGE COUNTY SANITATION DISTRICT P. O. Box 8127 Fountain Valley, California 92728 Attn: Clerk of the Board WITH A COPY TO: City of Newport Beach P.O. Box 1768 Newport Beach, CA 92658 Attention: City Clerk's Office (Space Above This Line for Recorder's Use) Exempt from recording fee—California Government Code Section 6103 QUITCLAIM SEWER TRANSFER AGREEMENT BETWEEN ORANGE COUNTY SANITATION DISTRICT AND THE CITY OF NEWPORT BEACH THIS AGREEMENT for the transfer of certain sewers and appurtenant facilities(hereafter, "Agreement") is made and entered into this day of , 2018, by and between ORANGE COUNTY SANITATION DISTRICT, a County Sanitation District organized under the laws of the State of California, ("Grantor) and the CITY OF NEWPORT BEACH, a municipal corporation ("Grantee"). Grantor is a regional operator of sewage collection facilities. Grantor also incidentally owns certain local sewers including, but not limited to, the local sewers which are the subject of this Agreement. This Agreement shall document and memorialize a factual understanding concerning certain local sewers and appurtenant facilities to be transferred to Grantee, and a one-time payment being made by Grantor to Grantee in connection therewith. Grantee operates a local sewage collection system within its jurisdiction. Grantee will maintain and operate the sewers which are the subject of this Agreement as part of its local sewage collection system, and shall have sole responsibility therefor following the transfer to Grantee. NOW THEREFORE BE IT RESOLVED that the Grantor and Grantee agree as follows: 1. Grant of Sewer Pipelines and Payment to Grantee For good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged, Grantor does hereby grant, remise, release, quitclaim, convey and transfer to Grantee all of Grantor's interest in all sewer lines and appurtenant sewer facilities covered by this Agreement (collectively, "Facilities") owned by Grantor, which Facilities are described in Exhibit "A" and visually depicted in Exhibit "B" 60629.001-221778.2 attached hereto and incorporated by reference herein. In the event of any conflict or discrepancy between Exhibits "A"and Exhibit"B", Exhibit"A" shall control. In connection with this transfer of the Facilities, Grantee has been granted an opportunity to fully inspect the condition of the subject sewer lines, manholes, easements and other property rights and appurtenances and has done so. Grantee and Grantor agree that necessary repairs to these Facilities are estimated to cost approximately Three Hundred Thousand Dollars and 00/100 ($300,000.00) to complete, and that, in consideration of the condition of the Facilities, Grantor shall,as sole,full and final satisfaction of any obligation to inspect, maintain, repair, or rehabilitate any such Facilities, or any portion thereof, and in consideration of the form of conveyance as a quitclaim,with no representation or guarantee of title, shall make a one-time payment to Grantee of Three-Hundred Thousand Dollars and 00/100 ($300,000.00), no later than ten (10) business days after recordation of this Agreement, which funds shall be used by Grantee to make any such inspections, maintenance, repairs, or rehabilitations of the Facilities as may be necessary or appropriate. Even if the cost of such inspections, maintenance, repairs, or rehabilitations should exceed $300,000.00, Grantee waives all claims against Grantor for the payment of any additional sum therefor or with respect to the condition of title and Grantor shall in no way be obligated to make any additional payment therefor. In connection with the foregoing, Grantee, on behalf of Grantee and Grantee's officers, directors, managers, affiliates, successors and assigns ("Grantee Related Parties") hereby expressly, fully and forever releases and discharges (which release and discharge shall be continuing and shall survive the transfer of the Facilities) Grantor and Grantor's officers, directors, managers, affiliates, employees, representatives, successors and assigns from any and all losses, expenses, claims, costs, damages, rights of subrogation, debts, attorneys' fees, actions, suits, judgments, awards, obligations and/or liabilities of any kind, whether foreseeable or unforeseeable, known or unknown, or suspected or unsuspected,with respect to or in any way relating to or indirectly or directly arising out of the current condition of the Facilities or any repair or replacement work required with respect such Facilities and/or any deferred maintenance. Grantee, on behalf of itself and the Grantee Related Parties, agrees, represents and warrants that the matters released above are not limited to matters which are known or disclosed and hereby knowingly and voluntarily waives and relinquishes all rights and benefits under Section 1542 of the California Civil Code(as such Civil Code may apply to the release above), which provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." 2. No Warranty of Title or Condition: Assumption of Responsibility Grantor makes no warranty or representation of any kind regarding its title to the Facilities, the condition of the Facilities or the suitability of the Facilities for any purpose and Grantee accepts such Facilities subject to all covenants, conditions, 80629.001-221778.2 burdens, restrictions, reservations, and obligations existing as of the date of transfer. Grantee has been granted an opportunity to fully inspect the Facilities and has done so. Subject only to receipt of the one-time payment described above, Grantee accepts the Facilities in their "As Is" condition, without representation or warranty of any kind and without recourse to Grantor. Grantee hereby accepts and assumes all ownership and responsibility for such transferred Facilities, and agrees to indemnify, defend and hold Grantor harmless from any liability, claim, cost, expense or damage hereafter arising from the ownership or use of the Facilities. 3. Assignment The benefits and burdens of this Agreement shall be binding upon and inure to all successors-in-interest and assigns of the parties. 4. Amendment Any amendment to this Agreement must be in writing, signed and acknowledged by the Grantor and Grantee, and duly recorded in the Official Records of the County Recorder of the County of Orange, State of California. 5. Entire Agreement This Agreement (including any attached exhibits) contains the entire agreement between Grantor and Grantee regarding the subject matter of the Agreement, including all representations and warranties between them, and supersedes any prior agreement or understanding with respect to the subject matter hereof. 6. Notices Notices relating to this Agreement must be in writing and sent to the addresses set forth below. A party may change its address for notices by giving notice as required by this Section. A written notice will be considered given (i) when personally delivered, or (ii) two business days after deposit in the United States Mail as first class mail, certified or registered, return receipt requested with postage prepaid, or(iii) one business day after deposit with a reputable overnight delivery service for next business day delivery. The parties' addresses for notices are as follows: To Grantor: Orange County Sanitation District Attn: General Manager P.O. Box 8127 Fountain Valley, CA 92728-8127 To Grantee: City of Newport Beach Attn: City Manager 100 Civic Center Drive Newport Beach, CA 92660 60629.001-221778.2 7. Authori Each party, and the individuals signing this Agreement on behalf of each party, represents and warrants that the individuals who have signed this Agreement on behalf of the parties have the legal power, right and authority to make and enter into this Agreement and bind each respective party hereto. IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto. APPROVED AS TO FORM: CITY OF NEWPORT BEACH, CITY ATTORNEY'S OFFICE a California municipal corporation Date: Date: By: By: Aaron C. Harp Marshall "Duffy" Duffield City Attorney Mayor ATTEST: Date: By: Leiter! I. Brown City Clerk ORANGE COUNTY SANITATION DISTRICT APPROVED AS TO FORM: Date: OCSD Special Counsel Date: By: Abram/Roy LLP Gregory C. Sebourn, PLS Board Chairman By: Dennis Roy Sp ounse ATTEST: Date: By: Kelly A. Lore, MMC Clerk of the Board [SEWER TRANSFER AGREEMENT BETWEEN ORANGE COUNTY SANITATION DISTRICT AND THE CITY OF NEWPORT BEACH] 80629.001-221778.2 EXHIBIT"A' DESCRIPTION OF FACILITIES 93Yi3 R R MR,EN.E MMROREE Y3M106fl9 R 90H]Y SC Y1tlIE00390 YME.OJ SCE �311 0.059M sE39 V5 yMOpREE w Y3MIDOAD 4�SO.W SC YY0E00385 Sp9IY X ]IY 350 OAK03 9139 VO yMROREE Y3IX1. W]S.W S< YROEOPaBO 4a50W SC ]0• 333 OA131 439 VO IMI9OPEE 4N6tl1 SC YTtIOM)S WI500 SC W Offi36 Sa39 YS IMIROREF •Y30tE003A itN}JU 5{ Y30tlOf6A W9000 SC ]s• 39fi ONO9 gab W roru iEEWrx: ss3eaort 3muMRxxoEEs s •Mx repinM Ly06p 60629.001-221778.2 EXHIBIT'B" DEPICTION OF FACILITIES [SEE ATTACHED] 60629.001-221778.2 �a R 00 a oN0 C OCM�Po 3 >YOolOd585 0° C NQ b SEP j BPY OOt006W P �4 �o earooioans BAYOOID-0J10 I � \\ BPTWIOdYO \ �\ i aerowo011s \` A BPYW10d]50{� B OOIOd]55 ^' EXHIBIT B OCSD Proposed Sewer Transfers 6 to City of Newport Beach • Imuwa•rmm+nn++' 0 125 250 500 • x�ru�xm...aocm FeH �IpeuiS�Bo.fM¢v _ ♦B iME F„'� 60629.001-221778.2 CERTIFICATE OF ACCEPTANCE [TO BE ATTACHED BY CITY OF NEWPORT BEACH 60629.001-221778.2 CERTIFICATE OF ACCEPTANCE (California Government Code Section 27281) This is to certify thatthe interest in real property conveyed by the Quitclaim Sewer Transfer Agreement between Orange County Sanitation District and the City of Newport Beach, dated , 2018 from ORANGE COUNTY SANITATION DISTRICT, a County Sanitation District organized under the laws of the State of California, to CITY OF NEWPORT BEACH, a municipal corporation and charter city (herein referred to as the"Grantee"), is hereby accepted by order of the City Council of the City of Newport Beach on , 2018 and the grantee consents to recordation thereof by its duly authorized officer. CITY OF NEWPORT BEACH, a municipal corporation and charter city Date: By: Marshall "Duffy" Duffield Mayor APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date: By: Aaron C. Harp City Attorney ATTEST: Date: By: Leilani I. Brown City Clerk 60629.001-221778.2 ADMINISTRATION COMMITTEE Neebng Date TOBd.Of Dlr. 09/12,18 Og/26/18 AGENDA REPORT Item Number Item Number z v Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: REIMBURSEMENTS TO BOARD MEMBERS AND STAFF GENERAL MANAGER'S RECOMMENDATION Receive and file report of reimbursements to Board Members and Staff per Government Code Section 53065.5 for the period July 1, 2017 through June 30, 2018. SUMMARY Government Code Section 53065.5 requires all Special Districts to disclose any reimbursements paid by the district within the immediately preceding fiscal year of at least one hundred dollars ($100) or more for each individual charge for services or product received. The individual charge includes, but is not limited to, tuition reimbursement; certificate or license reimbursement; or meals, lodging, transportation, or registration fee reimbursed to any employee or member of the governing body of the district. The disclosure requirement shall be fulfilled by including the reimbursement information in a document published or printed at least annually by a date determined by that district and shall be made available for public inspection. Attached is the report of these reimbursements for the fiscal year ended June 30, 2018. RELEVANT STANDARDS • Government Code Section 53065.5 PRIOR COMMITTEE/BOARD ACTIONS September 2017 - Annual report of reimbursements per Government Code Section 53065.5 for the period July 1, 2016 through June 30, 2017. ATTACHMENTS The following attachment(s) are included in hard copy and may also be viewed on-line at the OCSD website(www.ocsd.com) with the complete agenda package: Report of reimbursements per Government Code Section 53065.5 for the period July 1, 2017 through June 30, 2018 Pagel of 1 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp R Name Title Amount Description Site Location Duration 630 133276 Abushaban, Panda Associate Engineer 150.00 Certification Reimbursement 160 163475 Aguilar,Janine M. Principal Human Resources Analyst 1,093.56 CALPELRA Conference Monterey,CA 12/5-12/8/17 160 540091 Alexander,Jennifer L. Senior Plant Operator 340.00 Certification Reimbursement 250 8061 Alop,Juven E. Information Technology Analyst 111 576.68 MaximUTraining San Diego,CA 3/12-3/14/18 220 267151 Alvarez,Angela N. Principal Accountant 254.00 Membership Renewal 110 34606 Ambri Jose Juan Environmental Technician 845.23 Tri-State Seminar Las Vegas,NV 9/25-9/29/17 830 34606 Ambnz,Jose Juan Environmental Technician 180.OG Membership Renewal 160 8133 Anancua,Gerardo Operations Supervicar 150.00 Certification Reimbursement 160 515,1 7 Amin,Anantkumar R. Electrical Technician II 400.00 Certification Reimbursement 110111587 Andrade,David Lead Mechanic 558.78 Tri-State Seminar Las Vegas,NV 9/25-9/29/17 110448876 Andresen,Larry S. Senior Plant Operator 199.60 CWEA Conference Sacramento,CA 4/17-4/20/18 160 M8876 Andresen,Lamy S. Senior Plant Operator 150.00 Certification Reimbursement 630 3533 Angold,Minam Principal Environmental Specialist 130.00 Certification Reimbursement 160 654047 Aponte,LeAnthony 0. Senior Plant Operator 150.00 Certification Reimbursement 250527700 Arango,Isabel C. Data Management Technician ll 1,136.87 Autodesk Traning Las Vegas,NV 11/13-11/16/17 110 U32 Anston,Emilio Power Plant Operator II 579.06 Tri-State Seminar Las Vegas,NV 9/25-9128/17 160 M32 Anston,Emilio Power Plant Operator l l 100AG Certification Reimbursement 830 U32 Anston,Emilio Power Plant Operator ll 815.82 Tuition Reimbursement 160 659913 Avalos-Portillo,Jessica Safety and Health Representative 150.00 Certification Reimbursement 160 659913 Avalos-Portilto,Jessica Safety and Health Representative 413.00 Certification Reimbursement 110256196 Baker,Chad.Eddie Operations Supervisor 892.65 CWEA Conference Sacramento,CA 4/17-4/20/18 110 630521 Barela,Gilbert G. Senior Mechanic 857.45 CWEA Conference Sacramento,CA 4/17-4120/18 160 630521 Barela,Gilbert G. Senior Mechanic 100AG Certification Reimbursement 160 630521 Barela,Gilbert G. Senior Mechanic 105.00 Certification Reimbursement I 630521 Barela,Gilbert G. Senior Mechanic 105.00 Certification Reimbursement 160 630521 Barela,Gilbert G. Senior Mechanic 200.00 Certification Reimbursement 880 630521 Barela,Gilbert G. Senior Mechanic 3,336.12 Tuition Reimbursement 840 9030 Barrett,Michael J. Operations 5upervisar 105.44 Employee Appreciation Luncheon I 9128 Basrai,Shabbfr S. Senior Engineer 116.00 Certification Reimbursement 822 7835 Belt,Robert M. Maintenance Supervisor 100.21 Employee Appreciation Luncheon I 8002 Berdis,Michael A. Operations Supervisor 150.00 Certification Reimbursement 160 659833 Berokoff,Daniel D. Engineer 115.00 Certification Reimbursement I 674507 Mader,Brett L. Plant Operator 170.00 Certification Reimbursement 160 674507 Matter,Brett L. Plant Operator 350.00 Certification Reimbursement 822511556 Biedermann,Jason C. Mobile Crane Operator 991.56 Crane&Rigging Workshop Kansas City,MO 9/19-9/23/17 630 33531 Bingman,Deirdre E. Principal Environment Specialist 532.03 CASA Symposium Sacramento,CA 11/1 -1112/17 230 360516 Blakeley,Gregory R. Buyer 112.68 CAPPO Conference Palm Springs,CA 1/7-118/18 160 678663 Bontems,Baylee E. Human Resources Analyst 419.75 Cornerstone Conference San Diego,CA 6/5-6/6118 160 334537 Bradley Jr.,Jon 0. Chief Plant Operator 340.00 Certification Reimbursement 875431708 Brandt,Robert D. Reliability Maintenance Technician 1,162.55 UltraSound Certification Miami,FL 3/4-3/8118 160 4317M Brandt,Robert D. Reliability Maintenance Technician 275.00 Certification Reimbursement 630 676131 Breiter,Michelle L. Senior Environmental 5pedalist 753.52 CASCA Conference Sacramento,CA 9/24-9127/17 160 676131 Breiter,Michelle L. Senior Environmental Spedalist 190.00 Certification Reimbursement 160 9110 Brown,Jeffrey Senior Engineer 200.00 Certification Reimbursement 750 86254 Brown,Marc A. Principal Staff Analyst 150.00 Certification Reimbursement 160 5303W Buonacomi,Curtis Lead Plant Operator 340.00 Certification Reimbursement 250 3528 Burke,Pinky E. Data Management Technician 11 1,598.08 Tuition Reimbursement 160 164718 Cabral,James Maintenance Supervisor 100.00 Certification Reimbursement 140111202 Cabral,Jennifer M. Public Affairs Supervisor 1,176.99 NACWA Conference Chicago,IL 6/5-6/7/18 140 111202 Cabral,Jennifer M. Public Affairs Supervisor 398.40 CASA Winter Conference Palm Springs,CA 1/24 1126/18 PreparM By I.Hemhaw 8129,2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp B Name Title Amount Description Site Location Duration 1 10 111202 Cabral,Jennifer M. Public Affairs Supervisor 847.81 CSDA Leadership Summit Reno, NV 6/23-7/2/18 140111202 Cabral,Jennifer M. Public Affairs Supervisor 266.38 CASA Conference San Diego,CA 8/22-8/23/17 250 9187 Cady,Pongsakdi Information Technology Supervisor 812.07 Gartner Summit Conference Las Vegas,NV 12/3-12/6/17 230 648819 Calvo,Reed Storekeeper 2,199.00 Tuition Reimbursement 220 640542 Cardenas,Kim A. Principal Accountant 511.50 CSMFO Conference Riverside,CA 2/21 -2/23/18 160 640542 Cardenas,Kim A. Principal Accountant 169.00 Certification Reimbursement 110 IN512 Carrillo, Dindo A. Senior Environmental Specialist 1,235.79 CWEA Conference Sacramento,CA 4/18-4/20/18 160 02531 Casanova,Clifford E. Senior Plant Opeator 150.00 Certification Reimbursement 760 M35 Cassidy,William D. Engineering Supervisor 246.00 CWEA Board Meeting La Jolla,CA 1/26-1/27/18 760 79935 Cassidy,William D. Engineering Supervisor 594.13 CWEA Board Meeting Oakland,CA 6/21 -6/23/18 110 M35 Cassidy,William D. Engineering Supervisor 1,049.24 CWEA Conference Sacramento,CA 4/16-4/20/18 160 79935 Cassidy,William D. Engineering Supervisor 100.00 Certification Reimbursement I M35 Cassidy,William D. Engineering Supervisor 115.00 Certification Reimbursement 110345148 Castro,Ernesto Lead Plant Operator 606.50 Tri-State Seminar Las Vegas,NV 9/25-9/28/17 160 345148 Castro,Ernesto Lead Plant Operator l%.U0 Certification Reimbursement 160666099 Chandler,Celia M. Director of Human Resources 1,356.12 CALPELRA Conference Monterey,CA 1215-12/10/17 160 514087 Chang,Esther H. Senior Plant Operator 340.00 Certification Reimbursement 840 514087 Chang,Esther H. Senior Plant Operator 320.84 Tuition Reimbursement 770337308 ChappeN,Richard D. Construction Inspector Supervisor 524.78 NFPA Conference Las Vegas,NV 6/11 -6/14/18 880 665521 Childers,Michael E. Senior Mechanic 243.43 Tuition Reimbursement 630 558901 Choi,Samuel Environmental Supervisor 1,413.31 ASM Microbe Conference Atlanta,GA 6/6-6/11/18 630 558901 Choi,Samuel Environmental Supervisor 3,089.92 Tuition Reimbursement I 7819 Cleveland,Donald R. Lead Mechanic 100.00 Certification Reimbursement 840 549765 Cole,Christopher H. Plant Operator 240.05 Tri-State Seminar Las Vagas,NV 9/25-9128/17 160 549765 Cole,Christopher H. Plant Operator 110.00 Certification Reimbursement 160 541667 Collett,David M. Plant Operator 150.00 Certification Reimbursement 161 539321 Collins,Rodney L. Safety and Health Supervisor 1,433.36 Canty Conference Boston,MA 9118-9/21117 160 539321 Collins,Rodney L. Safety and Health Supervisor 160.00 Certification Reimbursement I 539321 Collins,Rodney L. Safety and Health Supervisor 175.00 Certification Reimbursement 1ED 539321 Collins,Rodney L. Safety and Health Supervisor 200.00 Certification Reimbursement 610 7907 Colston,James E. Director of Environmental Services 129.00 NACWA Winter Conference Napa,CA 216-219/18 610 79U7 Colston,James E. Director of Environmental Services 116.00 WEF Conference Phoenix,AZ 5/16-5118/18 610 7907 Colston,James E. Director of Environmental Services 256.00 NACWA Leadership Conference St. Louis,MO 7/22-7/26117 610 79U7 Colston,James E. Director of Environmental Services 157.63 CASA DC Policy Forum Washington,DC 2/25-2128/18 610 7907 Colston,James E. Director of Environmental Services 155.00 Lobby Days Meeting Washington,DC 4118-4/20118 160 109891 Conklin,Gary P. Senior Engineer 115.00 Certification Reimbursement 875 528841 Coronet, Rabble A. Maintenance Specialist 1,135.00 Tuition Reimbursement 160 8109 Cortez,Ronald C. Lead Plant Operator 340.00 Certification Reimbursement 630 485124 Coss,Ronald J. Environmental Laboratory and Ocean Monitoring Manager 695.35 NELAC Forum Albuquerque, NM 1121 -1/25118 630485124 Coss,Ronald J. Environmental Laboratory and Ocean Monitoring Manager 1,369.45 National Environmental Monitoring Conference Washington,DC 8/6-8/11/17 630 485124 Coss,Ronald J. Environmental Laboratory and Ocean Monitoring Manager 200.00 Membership Renewal 1ED 166123 Crafton,Ann M. Principal Staff Analyst 100.00 Certification Reimbursement 750 554548 Crider,Suzanne A. Principal Staff Analyst 1,408.02 Tableau Conference Las Vegas,NV 10/8-10/12/17 160 116759 Criscuolo,Keith W. Senior Plant Operator 150.00 Certification Reimbursement 760 1058" Cuellar,Raul Engineering Supervisor 298.67 NASTT Conference Palm Springs,CA 3/25-3/28118 160 405868 Cuellar,Raul Engineering Supervisor 116.00 Certification Reimbursement 160 662400 Cutler,Donald W. Engineering Supervisor 200.00 Certification Reimbursement 630 644535 Daly,Geoffrey J. Environmental Specialist 197.79 Ocean Monitoring Supplies 620673256 Daniel,Jason A. Engineer 1,295.66 NACWA Conference Providence,Rl 5/14-5/18118 160 673256 Daniel,Jason A. Engineer 165.00 Certification Reimbursement Preparel BY L.Hevhaw 8/29/2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp B Name Title Amount Description Site Location Duration 620 673256 Daniel,Jason A. Engineer 180.00 Membership Renewal 760 288075 DaSilva,Andy Engineer 320.00 Membership Renewal 760 288075 DaSilva,Andy Engineer 5,889.38 Tuition Reimbursement 160 651461 Davies,Cyril Senior Engineer 116.00 Certification Reimbursement 160 655322 Davila,Rudy Engineer 115.00 Certification Reimbursement 220646397 de Guzman,Rhea M. Senior Accountant 900.47 CMTA Conference Oakland,CA 4/24-4/27/18 220 M6397 De Guzman,Rhea M. Senior Accountant T76.43 Tuition Reimbursement 110275039 Deas,Dion Maintenance Supervisor 528.31 Tri-State Seminar Las Vegas,NV 9/25-9/28/17 160 275039 Deas,Dion Maintenance Supervisor 210.00 Certification Reimbursement 160 176014 DeVnes,Patrick Thys Senior Human Resources Analyst 767.68 Liebert Cassidy Annual Law Conference San Francisco,CA 2/25-2/27/18 160 323256 Dhodia,Hemal Engineer 115.00 Certification Reimbursement 630 670258 Diaz,Absalon H. Environmental Specialist 2,835.78 Tuition Reimbursement 630 96903 Diaz,Arturo Principal Environmental Specialist 1,360.09 ASM Microbe Conference Atlanta,GA 6/6-6/11/18 630 96903 Diaz,Arturo Principal Environmental Specialist 180.00 Membership Renewal 740 8707 Dillon,Carla D. Engineering Supervisor 120.00 Membership Renewal 620 6499W Dragan,Bryce Lead Source Control Inspector 275.00 P3S Conference 1/10/18 230 9021 Dubois,Marcus Contract and Purchasing Manager 885.29 CAPPO Conference Palm Springs,CA 1/9-1/12/18 630 09581 Dudek,Marta A. Environmental Specialist 2,835.30 Tuition Reimbursement I 541632 Durieux,Shelley J. Human Resources Analyst 367.26 Cornerstone Conference San Diego,CA 6/4-6/6/18 160 541632 Dureux,Shelley J. Human Resources Analyst 899.64 Luebert Cassidy Annual Law Conference San Francisco,CA 2F25-2127/18 160 293819 Escobar,Santiago A. Associate Engineer 275.00 Certification Reimbursement 820 2007 Esquer,Mark A. Engineering Manager 244.41 Product Demonstration South Lake Tahoe,NV 4/23-4124/18 160 2007 Esquer,Mark A. Engineering Manager 100.00 Certification Reimbursement 630 122340 Farmer,Michele Principal Environmental Specialist 189.00 Membership Renewal 630 122340 Fanner,Michele Principal Environmental Specialist 210.00 Membership Renewal 160 660287 Fenton,Justin M. Engineer 116.00 Certification Reimbursement 760 W287 Fenton,Justin M. Engineer 4,636.21 Tuition Reimbursement 160 573221 Fernandez,Binger L. Engineer 115.00 Certification Reimbursement I 573221 Fernandez,Burger L. Engineer 200.00 Certification Reimbursement 630 4171T2 Ferrara Benjamin J. Senior Environmental Specialist 1,142.50 SEATAC Conference Minneapolis,MN 11112-11/16117 830 2015 Ferry,Cynthia L. Administrative Assistant 132.41 Control Center Kitchen Supplies 870 2015 Ferry,Cynthia L. Administrative Assistant 327.87 Employee Appreciation Luncheon 830 2015 Ferry,Cynthia L. Administrative Assistant 538.25 Holiday Decorations 160 2020 Fisher,Dean M. Engineering Manager 116.00 Certification Reimbursement I 588297 Frabizio, Damein E. Senior Mechanic 130.00 Certification Reimbursement 160 588297 Frabizio,Dameun E. Senior Mechanic 280.00 Certification Reimbursement 160 1253M Francis,David P. Source Control Inspector II 165.00 Certification Reimbursement 160 108644 Francis,Victoria L. Senior Engineer 200.00 Certification Reimbursement 160 675201 Freeman,Jesse M. Maintenance Specialist 180.00 Certification Reimbursement 160 675201 Freeman,Jesse M. Maintenance Specialist 280.00 Certification Reimbursement 870 675201 Freeman,Jesse M. Senior Mechanic 188.00 Tuition Reimbursement 160 336348 French,John W. Engineer 115.00 Tuition Reimbursement 110 MU21 Frost,April Lead Plant Operator 606.50 Tri-State Seminar Las Vegas,NV 9125-9/28117 110672392 Fuchs,Shannon D. Mechanic 654.01 Tri-State Seminar Las Vegas,NV 9/25-9128/17 160 672392 Fuchs,Shannon D. Mechanic IN.00 Certification Reimbursement 110 PD8049 Gabriel,Lawrence C Plant Operator R1.79 Tri-State Seminar Las Vegas,NV 9/25-9128/17 160 397301 Gadzinsku,Joscelynn M. Plant Operator 340.00 Certification Reimbursement 840 397301 Gadzunski,Joscelynn M. Plant Operator 4,435.52 Tuition Reimbursement 160 275549 Gasca,Luis Electrical Technician II 185.00 Certification Reimbursement 160 568641 Gerber,Harold T. Engineering Supervisor 116.00 Certification Reimbursement Preparel BY L.Hm,haw 8129,2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp B Name Title Amount Description Site Location Duration 620 568641 Gerber,Harold T. Engineering Supervisor 155.00 Membership Renewal 620 568"1 Gerber,Harold T. Engineering Supervisor 180.00 Membership Renewal 110 71221 Ghire0i, Robert P. Assistant General Manager 209.31 CASA Winter Conference Palm Springs,CA 1/24-1/26/18 76008M Goldsmith,Matthew G. Construction Inspector 868.45 Edui Training Las Vegas,NV 3/18-3/24/18 160 1MB31 Gomez,Ruben A. Senior Construction Inspector 120.00 Certification Reimbursement 870674689 Gonzales,Jed C. Maintenance Superintendent 1,130.90 Total Productive Maintenance Training-weekl Columbus,OH 9/10-9/15/17 870674689 Gonzales,Jed C. Maintenance Superintendent 1,075.30 Total Productive Maintenance Training-week2 Columbus,OH 10/8 10/13/17 870674689 Gonzales,Jed C. Maintenance Superintendent 1,070.30 Total Productive Maintenance Training-week3 Columbus,OH 11/5-11/10/17 870 674689 Gonzales,Jed C. Maintenance Superintendent 905.55 Total Productive Maintenance Training-Week 4 Columbus,OH 12/3 12/7117 110 3022 Gonzalez,John G. Maintenance Supervisor 675.73 Tri-State Seminar Las Vegas,NV 9/25-9/28/17 160 M7242 Gonzalez, Lorenoo Senior Plant Operator 300.00 Certification Reimbursement 110 29091 Grande,Steve Senior Mechanic 630.17 Tri-State Seminar Las Vegas,NV 9/25-9/28/17 160 67127 Grant,Thomas E. Construction In Progress Project Manager 115.00 Certification Reimbursement 160 495218 Green,Scott A. Senior Plant Operator 150.00 Certification Reimbursement 160 528391 HaU,Brent M. Senior Mechanic 459.00 Certification Reimbursement 160 3201 Halverson,David P. Engineering Supervisor 116.00 Certification Reimbursement 250 614897 Hamilton,Bradley A. Principal Information Technology Analyst 39ul.71 VMworld Conference Las Vegas,NV 8/27-9/31117 630 459971 Haney,Lisa Regulatory Specialist 436.73 CASA Winter Conference PaLm Springs,CA 1/24-1125/18 630 459971 Haney,Lt. Regulatory Specialist 832.72 CASQA Conference Sacramento,CA 9/24-9/27117 630 459971 Haney,Lisa Regulatory Specialist 420.51 CASA Conference San Diego,CA 8/22-8123/17 630 459971 Haney,Lisa Regulatory Specialist 1,183.09 NACWA Seminar Savannah,GA 11/13-11/17/17 160 673601 Harris,Sterling W. Senior Engineer 115.00 Certification Reimbursement I 673601 Harris,Sterling W. Senior Engineer 115.00 Certification Reimbursement 110 11199 Haworth,Michael T. Operations Supervisor 1,205.99 WEFTEC Conference Chicago,IL 1011 -1018/17 875 384497 Hawthorne,Donald A. Reliability Maintenance Technician 1,335.10 Vibration Anaylsis ISO Training San Diego,CA 1/21 -1/26/18 160 274263 Handy,Thomas S. Senior Plant Operator 150.00 Certification Reimbursement 110 5019 Herberg,James D. General Manager 385.31 CASA Winter Conference Palm Springs,CA 1/24-1/26118 110 5019 Herberg,James D. General Manager 332.65 CASA Conference San Diego,CA 8/22-8123/17 880 5022 Herrigrtad,Cart A. Lead Instrumentation Technician 556.17 Employee Appreciation Luncheon 760 5023 Hetherington,Michelle R. Senior Engineer 1,924.95 WEFTEC Conference Chicago,IL 9/24-1014/17 160 5023 Hetherington,Michelle R. Senior Engineer 116.00 Certification Reimbursement 160 5028 Huang,Tyler T. Lead Plant Operator 340.00 Certification Reimbursement 220 663921 Hockensmith, Bryce K. Accountant 6,341.64 Tuition Reimbursement AO 185885 Holdman, Robert Senior Construction Inspector 08.25 Product Demonstration Minneapolis,MN 9/25-9128/17 770 185885 Holdman, Robert Senior Construction Inspector 960.34 Product Demonstration North Wales,PA f 0/2-10/6117 160 67448, Hooks,Dereck L. Plant Operator 230.00 Certification Reimbursement 220 172486 Hsiao,Line Accounting Supervisor 467.60 CSMFO Conference Riverside,CA 2/21 -2/23118 250 332013 Hsieh,Eric S. Principal Information Technology Analyst 814.71 iPACS User Group Meeting North Brunswick,NJ 10/3-1016/17 160 487761 Huls,Michael R Senior Plant Operator 150.00 Certification Reimbursement 820 298273 Jaime,Aurelio Senior Mechanic 180.00 Membership Renewal 110 604015 Kareguezian,Lon Principal Staff Analyst 462.26 MRASC Conference La Jolla,CA 10/25-10/27/17 250 94% Kardos,Dionne Data Management Technician 11 131.02 Bluebeam eXtreme Conference Los Angeles,CA 8/14-8116/17 620 9523 Kawamoto,Mark H. Engineering Supervisor 874.52 Water ReUse Conference Monterey,CA 3/25-3/27118 160 9523 Kawamoto,Mark H. Engineering Supervisor 116.00 Certification Reimbursement 160 121355 Khublall, Hardat S. Construction In Progress Project Manager 115.00 Certification Reimbursement 750 121355 Khublall,Hardat S. Construction In Progress Project Manager 164.00 Membership Renewal 630 670936 Kiang,Yen-Po Senior Environmental Specialist %2.15 GCMS Training Columbia,MD 2/19 2/25/18 630 670936 Kiang,Yen-Po Senior Environmental Specialist 2,868.80 Tuition Reimbursement 770 273084 Miller,Matthew J. Principal Information Technology Analyst 220.75 ISSA Symposium Costa Mesa,CA 9114/17 AO 2730M Killion,Matthew J. Principal Information Technology Analyst 1,078.08 CiscoLive Workshop Us Vegas,NV 6/26-6129/17 Prepared By: L.Henfiaw 8/29/2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp R Name Title Amount Description Site Location Duration AO 2730M Killion,Matthew J. Principal Information Technology Analyst 1,198.73 Ciscoi-ive Training Orlando,FL 6/10-6/14/18 T/0 273084 Killion,Matthew J. Principal Information Technology Analyst 395.25 ISSA Conference San Diego,CA 10/10-10/11/17 AO 2730M Killion,Matthew J. Principal Information Technology Analyst 120.00 Membership Renewal 160 122201 Kim,Jin H. Engineer 220.00 Certification Reimbursement 620 110103 Kleinbergs,Mila S. Senior Engineer 275.00 P3S Conference 1/17/18 160 131983 Klinger,Laurie J. Senior Human Resources Analyst 200.00 Certification Reimbursement 120 M7817 Knapp,Tina Deputy Clerk of the Board 119.32 League of California Cities New Law Seminar Newport Beach,CA 12/13-12/15/17 120 667817 Knapp,Tina Deputy Clerk of the Board 365.91 Minter Municipal Clerk Academy San Jose,CA 2/6-2/12/18 160 168743 Kovac, Lille Staff Analyst 100.OG Certification Reimbursement 760668019 Kwiecien, Ricky Senior Constmctlon Inspector 595.00 EduCode Training Las Vegas,NV 3/18-3/24/18 160 668019 Kwiecien, Ricky Senior Construction Inspector 125.00 Certification Reimbursement 760577782 Kyi,May T. Senior Engineer 1,430.06 WEF Odors E Air Pollution Conference Portland,OR 3/25-3/28/18 230 563671 Lagade,Jackie Buyer 289.08 CAPPO Conference Palm Springs,CA 1/7-1/12/18 740 1867% Lahlou,Michael Associate Engineer 423.22 ASCE Pipeline Conference Phoenix,AZ 8/6-8/9/17 160 307A4 Lambertz,Marcus G. Maintenance Supervisor 150.00 Certification Reimbursement 760 89914 Lapite,Elizabeth A. Administrative Assistant 350.00 Tuition Reimbursement 160 3510 Lechner,Jesse J. Plant Operator 150.00 Certification Reimbursement 160 3516 Lee,Tony S. Chief Plant Operator 150.00 Certification Reimbursement 140 130227 Loaiza,Daisy G. Senior Staff Analyst 866.86 Government Social Media Conference Denver,CO 4/23-4/26118 140 655461 Long, Rebecca Senior Public Info Specialist 127.19 CASA Conference San Diego,CA 8/24117 140 655461 Long, Rebecca Senior Public Info Specialist 1,351.86 CASA DC Policy Forum Washington,DC 2/23-2/28118 140 655461 Long, Rebecca Senior Public Info Specialist 786.97 Lobby Days Meeting Washington,DC 4/18-4120/18 140 655461 Long, Rebecca Senior Public Info Specialist 112.40 State of the District Supplies 140 655461 Long, Rebecca Senior Public Info Specialist 179.00 Time Clock for GWR5 Event 120 639111 Lore, Kelly A. Clerk of the Board 667.30 Clerks Association Conference Berkley,CA 4/16-4/19/18 840 3532 Losurdo,Linda Administrative Assistant 300.37 Installation of Shades 161 661802 Lyons,Christopher D. Safety and Health Representative 950.68 OSHA 3115 Training San Diego,CA 9110-9/14117 161 M1802 Lyons,Christopher D. Safety and Health Representative 950.68 OSHA 510 Training San Diego,CA 10129-11/2117 161 661802 Lyons,Christopher D. Safety and Health Representative 1,173.31 OSHA 511 Training San Diego,CA 1/21 -1/26118 160 547452 Malpede,Jaime M. Source Control Supervisor 100.00 Certification Reimbursement 161 676369 Mansoor,Syed D. Safety and Health Representative 113.06 Hazardous Materials Training Ontario,CA 8/22-8/24117 161 676369 Mansoor,Syed D. Safety and Health Representative 1,014.94 OSHA 2255 Training San Diego,CA 11112-11/16117 161 676369 Manscor,Syad D. Safety and Health Representative 1,080.11 OSHA 3115 Training San Diego,CA 9110-9/14117 161 676369 Mansoor,Syed D. Safety and Health Representative 1,246.08 OSHA 510 Training San Diego,CA 1/28-211/18 161 676369 Manscor,Syad D. Safety and Health Representative 1,359.41 OSHA 2264 Training San Lorenzo,CA 12/10-12/15/17 160 676369 Mansoor,Syed D. Safety and Health Representative 500.00 Certification Reimbursement 250 660666 Manzo,Mark A. Information Technology Analyst ll 753.06 Nintex Training San Diego,CA 2126-2/28118 230 667121 Martin,Jennifer Buyer 356.74 CAPPO Conference Palm Springs,CA 1/8-1/9118 230 667121 Martin,Jennifer Buyer 3,07.19 Tuition Reimbursement 160 2033 Martinez,Denise M. Senior Human Resources Analyst 551.48 N.GOV Conference Las Vegas,NV 10124-10/27/17 875 2040 May,Todd A. Maintenance Specialist 564.35 MIIWG Conference Nashville,TN 10/30-11/1/17 250 678621 McCaw,Emmeline G. Information Technology Analyst 111 1,412.85 LabWare Conference Las Vega ,NV 4/15-4120/18 620 2049 McKinley,l orinda Senior Environmental Specialist 150.00 MWD Water Summit Anaheim,CA 6116/18 630 IN641 McMullin,Ryan Senior Environmental Specialist 860.12 GCMS Training Columbia,MD 2/19 2/23118 870 643241 MrMurdy,Adam M. Senior Mechanic 1,834.55 Tuition Reimbursement 110 528825 Malty,Mark Operations Supervisor 1,171.77 WEFTEC Conference Chicago,IL 9/30-1014/17 160 528825 Melby,Mark Operations Supervisor I W.00 Certification Reimbursement 840 528825 Melby,Mark Operations Supervisor 1,045.00 Tuition Reimbursement 630 73M5 Meregillano,Tom B. Senior Regulatory Specialist 102.00 ESRI Conference San Diego,CA 7/12-7/13117 250149155 Michaels,Robert Information Technology Supervisor 164.78 Bluebeam extreme Conference Los Angeles,CA 8/14-8116/17 PreparM By: L.Henfiaw 8/29/2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. EmpB Name Title Amount Description Site Location Duration 10 I(M9 Milk.,Kathleen T. Engineering Manager 150.00 Certification Reimbursement 110 574944 Mohr,Jeffrey D. Engineering Manager 1,69970 WEFTEC Conference Chicago,IL 9/29-10/4/17 160574944 Mohr,Jeffrey D. Engineering Manager 115.00 Certification Reimbursement 750 574944 Mohr,Jeffrey D. Engineering Manager 129.00 Membership Renewal 750 574944 Mohr,Jeffrey D. Engineering Manager 312.00 Membership Renewal 160 124661 Moinuddin,Riaz K. Engineering Manager 115.00 Certification Reimbursement 160 4056 Moline,Milian M. Operations Supervisor 150.OG Certification Reimbursement 760 664843 Moore,Brad A. Senior Engineer 827.23 Tunneling Fundamental Training Denver,CO 9/8-9/24/17 760 664843 Moore,Brad A. Senior Engineer 891.49 NASTT Conference Palm Springs,CA 3/25-3/29/18 160 10" Murphy,Tracey L. Power Plant Operator II 150.00 Certification Reimbursement 160 37014 Murthy,Umesh N. Engineering Supervisor 150,00 Certification Reimbursement 160 37014 Murthy,Umesh N. Engineering Supervisor 158.24 Certification Reimbursement 160 37014 Murthy,Umesh N. Engineering Supervisor 200.00 Certification Reimbursement 750 671891 Namini,Shahrcad F. Construction In Progress Project Manager 150.00 Membership Renewal 4501 Naraooff,Adam A. Engineering Supervisor 913.68 NAGDCA Conference Milwaukee,WI 9/24-9/27/17 161 4501 N.00ff,Adam A. Engineering Supervisor 115.94 Safety Lunch 140 646303 Newell,Kelly C. Public Affairs Specialist 872.75 Government Social Media Conference Denver,CO 4/23-4/26/18 875 325956 Newsom,Adam P. Reliability Maintenance Technician 2,050.96 CAT 3 Vibration Analysis Training San Francisco,CA 11112-11/18117 4008 Nguyen,Huan-Huang Senior Engineer 827.68 NAGDCA Conference Milwaukee,WI 9/24-9/27/17 160 67570 Nguyen,Paul H. Maintenance Worker 176.50 Certification Reimbursement 740 4010 Nguyen,"nh D. Engineering Associate 320.64 ESRI Conference San Diego,CA 7/11 -7/12/17 160 647154 Nguyen,Tiffany H. Senior Human Resources Analyst 150.00 Certification Reimbursement I 647154 Nguyen,Tiffany H. Senior Human Resources Analyst 299.58 Snacks for Health Fair 8754012 Nguyen,Trung T. Reliability Maintenance Technician 1,842.63 Vibration Anaylsis 150 Training Seattle,WA 6/12-6116/17 160 4012 Nguyen,Trung T. Reliability Maintenance Technician 275.00 Certification Reimbursement 160 4012 Nguyen,Trung T. Reliability Maintenance Technician 326.25 Certification Reimbursement 1106727470ngkingco,Arthur Maintenance Supervisor 747.47 Tn-State Seminar Las Vegas,NV 9/25-9/28117 250 M748 Oruganti,Jagadish Senior Information Technology Analyst 4,875.55 Tuition Reimbursement 760 679316 Oseguera,Vincent Engineer 300.00 Membership Renewal 875 2801450swald,Nicholas Maintenance Specialist 571.44 MUWG Conference Nashville,TN 10130-11/1117 250 662063 Paik,Sang Principal Information Technology Analyst 534.48 BlackHat Conference Las Vegas,NV 7/23-7/27117 250 662063 Palk,Sang Principal Information Technology Analyst 1,337.32 Quayls Conference Las Vegas,NV 10115-10/19117 250 662063 Paik,Sang Principal Information Technology Analyst 638.37 ICS Security Summit Orlando,FL 3/18-3/21118 160 662063 Palk,Sang Principal Information Technology Analyst 213.63 Certification Reimbursement 160 662063 Paik,Sang Principal Information Technology Analyst 213.63 Certification Reimbursement 160 609191 Palazuelos,Raul R. Construction Inspector 340.00 Certification Reimbursement 822 519 13 Paramo,Giovanni Automotive/Heavy Equipment Assistant 6,834.00 Tuition Reimbursement 250 125233 Patel,Purvi R. Information Technology Analyst 111 1,303.23 Microsoft Ignite Conference Orlando,FL 9/24-9129/17 250 165315 Patel,Samir Information Technology Analyst III 327.15 Cornerstone Conference San Diego,CA 615-616/18 630 642521 Pavia,Paulo R. Senior Environmental Specialist 2,585.80 Tuition Reimbursement 250 268242 Pham,Duc M. Information Technology Analyst III 512.74 Site Visit&Equipment Testing Las Vegas,NV 11/13-11/15/17 630 3539 Phonsin,Vanh Principal Environmental Specialist 2,637.79 Tuition Reimbursement 110 3540 Phuong,Ddaze Lead Plant Operator 3,606.02 WEFTEC Conference Chicago,IL 9129-10/5117 110 3540 Phuong,Naze Lead Plant Operator 2,362.40 CWEA Conference Sacramento,CA 4/16-4121/18 160 3540 Phuong,Ddaze Lead Plant Operator I W.00 Certification Reimbursement 750 2PO93 Pilko,Victoria Construction In Progress Project Manager 200.00 Membership Renewal 160 674523 Polk,Larry K. Environmental Specialist 100.00 Certification Reimbursement 630 674523 Polk,lorry K. Environmental Specialist 180.00 Membership Renewal 620 667956 PowelL,Jonathon E. Associate Engineer 422.53 ESRI Conference San Diego,CA 7/12-7/13117 160 667956 Powell,Jonathon E. Associate Engineer 160.00 Certification Reimbursement Prepared BY L.Henshaw 8/29/2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp B Name Title Amount Description Site Location Duration 620 667956 Powell,Jonathon E. Associate Engineer 1,207.52 Tuition Reimbursement 870648579 Quiroz,Carlos Maintenance Manager 1,220.26 Maximo Conference Denver,CO 7/17-7/20/17 620 675673 Radvar,Gill Construction In Progress Project Manager 139.00 Membership Renewal 160 648069 Ramirez Jr.,Javier Plant Operator 150.00 Certification Reimbursement 160 119255 Rathert,Kurt M. Plant Operator 150.00 Certification Reimbursement 760 W851 Ratio,Valene 1. Construction In Progress Project Manager 101.26 CWEA SRC Meeting La Jolla,CA 11/25/18 160 664851 Ratto,Valene I. Construction In Progress Project Manager 116.00 Certification Reimbursement 760 664851 Ratio,Valene 1. Construction In Progress Project Manager 192.00 Membership Renewal 160 296761 Rebai,Mathew D. Senior Plant Operator I W OG Certification Reimbursement 830 3558 Reed,Bran K. Principal Environmental Specialist 1,371.70 WEF Odors&Air Pollution Conference Portland,OR 3/25-3/28/18 160 3558 Reed,Brian K. Principal Environmental Specialist 176.00 Certification Reimbursement 160 3558 Reed,Brian K. Principal Environmental Specialist IWJID Certification Reimbursement 161 257421 Rivera,George Security and Emergency Planning Specialist 2,633.66 CESA Training&Conference Yosemite,CA 10/7-10/12/17 630 4076 Robertson,George L. Senior Scientist 2,ODO.50 Oceans'17 Conference Anchorage,AK 9/17-9/22/17 630 667729 Robledo,Joseph P. Environmental Specialist 114.55 Tuition Reimbursement 160 149631 Rocha,Johnny J. Operations Supervisor 150.00 Certification Reimbursement 830 149631 Rocha,Johnny J. Operations Supervisor 470.52 Tuition Reimbursement 160 25575 Rocha,Milton Senior Plant Operator 255.00 Certification Reimbursement I 255775 Rocha,Milton Senior Plant Operator 440A0 Certification Reimbursement 160 4077 Rodriguez,David Engineer 100.00 Certification Reimbursement 160 4077 Rodriguez,David Engineer 100A0 Certification Reimbursement 760 4077 Rodriguez,David Engineer 180.00 Membership Renewal 870 651807 Rows,Henry M. Lead Electrical Technician 178.70 Food for HVAC Training 630 4511 Ruckman,Ernest S. Senior Environmental Specialist 105.00 SEATAC Conference Los Angeles,CA 4/12-4113/18 1106723" Rudnick,Taylor D. Mechanic 612.41 Tri-State Seminar Las Vegas,NV 9/25-9/29/17 820 129285 Ruiz,Stefanie R. Administrative Assistant 2,054.00 Tuition Reimbursement 160 109250 Satin,Julian F. Engineering Supervisor 173.50 Certification Reimbursement 630 1085 5akamoto,Ken A. Senior Emironmental Specialist 239.03 AmGIS Essential Training Redlands,CA 1116-1118/17 630 1085 Sakamoto, Ken A. Senior Environmental Specialist 109.35 ESRI GIS Forum Redlands,CA 11/1 -11/2/17 630 1085 5akamoto,Ken A. Senior Environmental Specalist 439.33 ESRI Conference San Diego,CA 7/10-7112/17 630 1085 Sakamoto, Ken A. Senior Environmental Specialist 404.95 Food&Supplies for Trawl 630 1085 5akamoto,Ken A. Senior Environmental Specialist 3,093.87 Tuition Reimbursement 250 1087 Salgado,Henry R. Principal Information Technology Analyst 672.16 Cloud Security Summit&Training San Diego,CA 2/18-2/20118 875501059 Schuler,Kevin A. Maintenance Supervisor 1,529.20 Maximo Conference Denver,CO 7/17-7120/17 160501059 Schuler,Kevin A. Maintenance Supervisor 210.00 Certification Reimbursement 110 595833 5ebourn,Gregory Board of Directors 641.80 Lobby Days Meeting Washington,DC 4/18-4120/18 230 646311 Segura,Anthony Materials Control Supervisor 139.45 CAPPO Conference Palm Springs,CA 1/11 -1/12118 230 646311 Segura,Anthony Materials Control Supervisor 1,930.00 Tuition Reimbursement 110 156540 Sh.r,David Board of Directors 954.03 CSDA Conference Monterey,CA 9/25-9/28117 110 1565Q Shawver,David Board of Directors 1,097.03 CASA Conference San Diego,CA 8/21 -8124/17 161 4103 Shelp,Curt V. Operations Supervisor 159.00 Safety Boots 160 674494 Siddiqui,Shaun A. Plant Operator 110.00 Certification Reimbursement 160 674494 Siddiqui,Shaun A. Plant Operator 110.00 Certification Reimbursement 160130930 Smith,Duane T. Maintenance Specialist 150.00 Certification Reimbursement 110 584552 Smith,Richard A. Senior Plant Operator 711.39 Tri-State Seminar Las Vegas,NV 9/25-9/28117 160 584552 Smith,Richard A. Senior Plant Operator 150.00 Certification Reimbursement 740 376981 Smith,Wendy A. Engineer 692.05 ESRI Conference San Diego,CA 7/12-7/13/17 620 668027 Soriano,Melissa B. Program Assistant 5,421.60 Tuition Reimbursement 160 351425 Speakman,Steven R. Senior Engineer 116.00 Certification Reimbursement 620131422 Stacklin,Christopher A. Engineer 1,303.61 WEFMeetmg Atlanta,GA 2/6-2/10/18 Prepared By: L.Hmahaw 8/29/2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp B Name Title Amount Description Site Location Duration 110131422 Stacklin,Christopher A. Engineer 2,634.79 WEFTEC Conference Chicago,IL 9/29-10/5/17 620131422 Stacklin,Christopher A. Engineer 1,458.41 National Water Policy Fly-In Meeting Washington,DC 4/16-4/19/18 160 131422 Stacklin,Christopher A. Engineer 116.00 Certification Reimbursement 770 34711 Steiger,Frank R. Engineering Supervisor 145.00 ISSA Symposium Costa Mesa,CA 9/14/17 AO 34711 Steiger,Frank R. Engineering Supervisor 120.00 Membership Renewal 250121865 Steroin,Warren L. Information Technology Supervisor 641.35 MISAC Conference Monterey,CA 10/1 -10/4/17 160 448892 Stewart,Ruben L. Senior Plant Operator 340.00 Certification Reimbursement 110 336276 Stokes,Don F. Maintenance Superintendent 2,580.36 WEFTEC Conference Chicago,IL 10/1 -10/5/17 880 336276 Stokes, Don F. Maintenance Superintendent 112.46 Achievement Lunch 160 336276 Stokes,Don F. Maintenance Superintendent 205.00 Certification Reimbursement 880 336276 Stokes, Don F. Maintenance Superintendent 183.95 Employee Appreciation Luncheon 161 680659 Stone,Jereme J. Safety and Health Representative 756.05 Hazardous Waste Mgmt&Materials Training San Diego,CA 4/9-4/12/18 161 680659 Stone,Jereme J. Safety and Health Representative 338.10 OSHA 7115 Training San Diego,CA 3/7-3/8/18 110253649 Stratmoen,Erik D. Lead Mechanic 721.71 Tri-State Seminar Las Vegas,NV 9/25-9/29/17 160 253649 Stratmoen,Erik D. Lead Mechanic 100.00 Certification Reimbursement 7606762545.1-or,Glenn W. Senior Construction Inspector 1,337.20 EduCode Training Las Vegas,NV 3/18-3124/18 1 W 93665 Sullivan,Patrick A. Senior Plant Operator 1 W.00 Certification Reimbursement 250 5057 Swindler,John W. Information Technology System&Operations Manager 1,235.92 SANS Network Security Conference Austin,TX 1213-12/8/17 250 5057 Swindler,John W. Information Technology System&Operations Manager 252.36 CIO Forum Los Angeles,CA 5/1 -5/2/18 250 5057 Swindler,John W. Information Technology System&Operations Manager 327.15 Cornerstone Conference San Diego,CA 6/5-6/6/18 1 W 132530 Tafolla,Brian J. Reliability Maintenance Technician 135.00 Certification Reimbursement 160132530 Tafolla,Brian J. Reliability Maintenance Technician 275.00 Certification Reimbursement 250639103 Tagumasi, Romeo V. Data Management Technician ll 1,186.35 Autodesk Training Las Vegas,NV 11/14-11/16/17 630 638531 Tang,Danny Scientist 105.00 SEATAC Conference Los Angeles,CA 4/12-4113/18 630 638531 Tang,Danny Scientist 1,249.16 CERF Conference Providence,RI 11/5-11/9/18 880 366352 Tang,Luc H. Senior Mechanic 6,2513.00 Tuition Reimbursement 110 672827 Taula,Ed Maintenance Supervisor 781.04 Tri-State Seminar Las Vegas,NV 9125-9/29117 880672827 Taula,Eli Maintenance Supervisor 157.07 Backflow Prevention Training Los Angeles,CA 1/8-1/12/18 110672827 Taula,Ed Maintenance Supervisor 1,095.97 CWEA Conference Sacramento,CA 4117-4/20118 1 W M8810 Terrell,Brian D. Engineer 275.00 Certification Reimbursement 160 668810 Terrell,Bnan D. Engineer 380.63 Certification Reimbursement 161 553158 Tetsch,Gina A. Occupational Health Nurse 802.T Occupational Hearing Conservation Training San Diego,CA 8/8-8/11/17 160 553158 Tetsch,Gina A. Occupational Health Nurse 200.00 Certification Reimbursement 1 W 553158 Tetsch,Gina A. Occupational Health Nurse 255.00 Certification Reimbursement 750 35650 Thiede, Robert J. Principal Project Controls Analyst 129.00 Membership Renewal 1 W 2547 Thompson,Robert C. Assistant General Manager 116.00 Certification Reimbursement 160 295347 Tien,Kwen T. Plant Operator 150.00 Certification Reimbursement 1W W755 Togia,Liamatua M. Mechanic 160.00 Certification Reimbursement 810 2540 Torres,Edward M. Director of Operations and Maintenance 741.04 CASA Conference San Diego,CA 8/22-8/24117 1 W 2540 Torres,Edward M. Director of Operations and Maintenance 115.00 Certification Reimbursement 250 369203 Tran,Khanh N. Information Technology Analyst 111 496.88 Site Visit&Equipment Testing Las Vegas,NV 11/13-11/15/17 630 2533 Tsai,Yu-Li Senior Scientist 1,117.76 NELAC Symposium Washington,DC 8/6-8/10/17 830 116732 Tufasompo-KemPer,Gary J. Operations Supervisor 1,995.00 Tuition Reimbursement 1 W 2526 Unsell,Bobby L. Lead Mechanic 159.00 Certification Reimbursement 230 526707 yet..,Jesse R. Lead Storekeeper 277.00 Tuition Reimbursement 2522 Velasco,MarcoPolo Principal Staff Analyst 1,172.06 NAGDCA Conference Milwaukee,Wl 9/23-9127/17 82247693 Villslobos,Gmetto Mobile Crane Operator 1,124.40 Crane&Rigging Workshop Kansas City,MO 9/19-9/23117 740 2519 Vitko,Tadeo G. Engineer 1,180.77 WEF Odors&Air Pollution Conference Portland,OR 3/23-3128/18 230 273447 Voss,Betty J. Senior Buyer 157.65 CAPPO Conference Palm Springs,CA 119-1/10/18 110 6W041 Wanke,Chad Board of Directors 209.31 CASA Winter Conference Palm Springs,CA 1/25-1126/18 Prepared BY L.Hemhaw 8129,2018 Public Disclosure Reports-Reimbursements by OCSD July 1,2017 through June 30,2018 Div. Emp p Name Title Amount Description Site Location Duration 250 649918 Weedagama,Wasantha Principal Information Technology Analyst 1,267.93 Meditate User Group Conference Boston,MA 9/18 9/21/17 160 649918 Weedagama,Wasantha Principal Information Technology Analyst 405.00 Certification Reimbursement 250 649918 Weedagama,Wasantha Principal Information Technology Analyst 139.00 Membership Renewal 160 659825 Wheatley,Christopher R. Senior Plant Operator 300.00 Certification Reimbursement 160 569686 Whitney,Robert M. Construction Inspector 100.00 Certification Reimbursement 160 569686 Whitney,Robert M. Construction Inspector 105.00 Certification Reimbursement 160 569686 Whitney,Robert M. Construction Inspector 230.00 Certification Reimbursement 160 80215 Wilcox,Robyn A. Engineer 116.00 Certification Reimbursement 760 W215 Wilcox,Robyn A. Engineer 164.00 Membership Renewal 760 W215 Wilcox,Robyn A. Engineer 185.00 Membership Renewal 160 U62 Wong,Ken H. Operations Supervisor 150.00 Certification Reimbursement 830 U62 Wong,Ken H. Operations Supervisor 100.00 Employee Appreciation Luncheon 160 8731 Woodward,Jeff W. Operations Supervisor 150.00 Certification Reimbursement 160 5MS61 Wyland,Ryan M. Plant Operator 170.00 Certification Reimbursement 110652295 Yamout,Mann Lead Electrical Technician 795.16 Tri-State Seminar Las Vegas,NV 9/25-9/28/17 160 652295 Yamout,Mann Lead Electrical Technician 180.00 Certification Reimbursement IMD 351409 Yin,Shuang Senior Engineer 115.00 Certification Reimbursement 160 351409 Yin,Shuang Senior Engineer 200.00 Certification Reimbursement 822 121224 Yokoyama, Brandon K. Environmental Technician 2,385.00 Tuition Reimbursement 740573247 Yong,Eros Engineering Supervisor 125.00 AWWA Webinar IMD 573247 Yong,Eros Engineering Supervisor 200.00 Certification Reimbursement 740 573247 Yong,Eros Engineering Supervisor 130.00 Employee Appreciation Luncheon 620 8230 Zedek,Michael I. Engineer 294.06 ESRI Conference San Diego,CA 7/12-7/13/17 620 8230 Zedek,Michael I. Engineer 4,670.32 Tuition Reimbursement 283,709.26 Prepared BY L.Hevhaw 8129,2018 ADMINISTRATION COMMITTEE Meeting Date T0Bd.O(Dir. 09/12/18 09/26/18 Item AGENDA REPORT Number Item Number 3 18 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: UPDATE TO THE OCSD DEBT POLICY GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD18-16 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District adopting a Board of Directors Debt Policy." BACKGROUND The Orange County Sanitation District's (Sanitation District) Board of Directors Debt Policy sets forth the parameters for issuing debt and managing outstanding debt and provides guidance to decision makers regarding the timing and purposes for which debt may be issued, types and amounts of permissible debt, methods of sale that may be used, and structural features that may be incorporated. The debt policy should recognize a binding commitment to full and timely repayment of all debt as an intrinsic requirement for entry into the capital markets. The goals of a debt policy are to ensure that a government maintains a sound debt position and that credit quality is protected. The Sanitation District has approximately $110 million in Certificate Anticipation Notes (CANS) that will expire on December 15, 2018. Staff proposes that these notes be refunded. SB-1029 and Government Code Section 8855(i)require any issuer of public debt to provide to the California Debt and Investment Advisory Commission (CDIAC) a report of any proposed debt issuances. Issuers must certify on the Report of Proposed Debt Issuance that they have adopted local debt policies concerning the use of debt and that the proposed debt issuance is consistent with those policies, specifically an updated debt policy. Staff has reviewed and updated the attached Debt Policy to ensure compliance with the changes to California Government Code. Changes primarily include references to appropriate Government Code sections and CDIAC Guidelines. There are no material changes to the implementation of the Sanitation District Debt Policy or structure. RELEVANT STANDARDS • OCSD Debt Policy - Financial Management Policy and Procedure No. 201-3-1; Restructuring debt is deemed to be desirable • Easy access to low cost credit PROBLEM The 2016B CANS are due and payable on December 15, 2018 in the amount of $110,973,750. Changes in California Government Code require the Sanitation District provide an updated Debt Policy. Page 1 d 2 PROPOSED SOLUTION Staff has reviewed and updated the Sanitation District's Debt Policy. TIMING CONCERNS The Sanitation District must update its Debt Policy priorto completing a refinancing of the 2016B CANS. RAMIFICATIONS OF NOT TAKING ACTION Not taking action will result in the Sanitation District not being able to complete the refinancing of the 2016B CANS. PRIOR COMMITTEE/BOARD ACTIONS July 2018 - The Board authorized the General Manager to issue Revenue Refunding Certificate Anticipation Notes, Series 2018A, as fixed-rate obligations, maturing in February 2022, subject to market conditions, in an amount not to exceed $109,875,000 to replace the $109,875,000 Revenue Refunding Certificate Anticipation Notes, Series 2016B maturing on December 15, 2018. December 2016 - The Board adopted Resolution No. OCSD16-32, authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A, authorizing the execution and delivery of such Revenue Obligations evidencing principal in an aggregate amount not to exceed $91,620,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Revenue Obligations and authorizing the execution of necessary documents and related actions. FINANCIAL CONSIDERATIONS N/A ATTACHMENTS The following attachments(s) are included in hard copy and may also be viewed on-line at the OCSD web site(www.ocsd.com) with the complete agenda package: • Resolution No. OCSD 18-16 • Exhibit A - Debt Policy (Redlined) • PowerPoint presentation from 9112/18 Administration Committee meeting Page 2 d 2 RESOLUTION NO. OCSD 18-16 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT ADOPTING A BOARD OF DIRECTORS DEBT POLICY NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: The Board of Directors Debt Policy, attached hereto as Exhibit "A", be adopted. Section 2: Any change in the Policies and Procedures set forth in the Board of Directors Debt Policy must be approved by the Board of Directors prior to implementation. Section 3: This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED at a regular meeting of the Board of Directors held September 26, 2018. Gregory C. Sebourn, PLS Board Chairman ATTEST: Kelly A. Lore, MMC Clerk of the Board OCSD 18-16-1 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 18-16 was passed and adopted at a regular meeting of said Board on the 26th day of September 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 26th day of September 2018. Kelly A. Lore, MMC Clerk of the Board of Directors Orange County Sanitation District OCSD 18-16-2 FINANCIAL MANAGEMENT POLICY AND PROCEDURE Subject: Debt Policy Index: Finance Administration Number: 201-3-1 Effective Date: o'a^,aar^n^-,-'�^�^,a Prepared by: Financial Management September 26, 2018 Division Supersedes: September 17, 2008 Approved By: Administration r^' "'^^Board of Directors 1.0 PURPOSE: The foundation of any well-managed debt program is a comprehensive debt policy. A debt policy sets forth the parameters for issuing debt and managing outstanding debt, and provides guidance to decision makers regarding the timing and purposes for which debt may be issued, types and amounts of permissible debt, methods of sale that may be used and structural features that may be incorporated. The debt policy should recognize a binding commitment to full and timely repayment of all debt as an intrinsic requirement for entry into the capital markets. The goals of AdheFeRGe a debt policy are to ensure that a government maintains a sound debt position, _and that credit quality is protected, and is intended to comply with applicable California Government Code Sections prescribed by California Debt And Investment Advisory Commission (CDIAC) to ensure all the debt issuance is consistent with the Sanitation Sanitation District's debt policies and all the required reports are submitted to CDIAC on time. OBJECTIVES: Each debt issuance must accomplish the following objectives: a. Accelerate the delivery of projects. Debt financing allows the delivery of projects on an accelerated basis: b. Spread cost over the useful life of an asset. Debt financing allows the District to spread the cost of a project over its useful life rather than paving for it at one time: Page 1 of 20 c. Smooth out annual cash flow. Debt financing spreads the cost of a project over a period of years, thereby smoothing out the Sanitation District's cash flew, d. Optimize overall financial resources. To enable existing cash to be invested at a rate higher than the cost of borrowing: e. Refundings: It may become desirable for the District to issue bonds or other securities to refinance outstanding obligations. The reasons for refinancing include: i) To Achieve Debt Service Savings. In general, the net present value savings generated by the refunding bonds shall be at least 3% of the refunded bond amount. ii) For Programmatic Reasons. Such as: restructuring outstanding debt, changing the tvpe of debt instruments originally used, retiring a bond issue, removing covenants/pledges that have become restrictive, or retiring debt prior to maturity. f. The debt policy must be viewed as an integral component of its overall financial practices and in the context of the Sanitation District's capital- intensive expenditure plans. The Sanitation District's issuance of debt must be generally consistent with its planning goals, capital improvement programs and budget. The Sanitation District's financial practices, including the issuance of debt, must be designed to assure sufficient resources to fund all of its operating and capital requirements in all foreseeable circumstances. —Advantages of a debt policy are as follows: 1.1 enhances the quality of decisions by imposing order and discipline, and promoting consistency and continuity in decision making; 1.2 rationalizes the decision-making process; 1.3 identifies objectives for staff to implement; 1.4 demonstrates a commitment to long-term financial planning objectivesaad; 1.5 is viewed positively by the rating agencies in reviewing credit quality, 1.6 minimize debt service and issuance costs; 1.7 ensure full and timely reoavment of debt: 1.8 maintain full and complete financial disclosure and reporting and adequate Page 2 of 20 internal controls: 1.9 ensure use of debt is consistent with the Sanitation District's policies and the proceeds will be directed to the intended use: 1-.5 2.0 ORGANIZATIONS AFFECTED: General Manager's Department, Financial Management Division, General Counsel, bond rating agencies, financial advisors, bond underwriters, bond counsel, and external independent auditors. 3.0 REFERENCES: 3.1 December 2015 Five-Year Strategic Plan Update 3.2 1o00 'Qnon v:..:. n" ......t... PIAR 2017 Facilities Master Plan 3.3 Government Finance Officers Association publication "A Guide for Preparing a Debt Policy". 3.4 "Moody's on Municipals- An Introduction to Issuing Debt" by Moody's Investor Services. 3.5 Handbook for Muni-Bond Issuers by Joe Mysak, published by Bloomberg Professional Library. 4.0 POLICY., 4.1 Limitations on Indebtedness- 4.1.1 The DiW Gt'sSanitation District's debt rapacity will not exceed legal limitations, such as coverage requirements or additional bonds tests imposed by existing bond covenants. 4.1.2 Before any new debt is issued, the impact of debt service payments on total annual fixed costs will be analyzed. In accordance with existing COP indenture agreements, Net Operating Revenues must be at least a 1.25 coverage ratio to the maximum annual debt service. 4.1.3 The District will restrict long-term borrowing of capital improvements that provide long-term benefits to the District. 4.1.4 Proceeds from long-term debt will not be used for current on-going operations. Page 3 of 20 4.1.5 The decision to incur new indebtedness should be integrated with the Sanitation District's biennial Operating Budget and Capital Improvement Program Budget. The annual debt service payment shall be included in the Operating Budget. 4.1.6 The Sanitation District will integrate its debt issuances with the goals of its Capital Improvement Program by timing the issuance of debt to ensure that projects are available when needed. 444 4.2 Types of Debt- 4.2.1 The District may use short-term debt to cover temporary or emergency cash flow shortages. All short-term borrowing will be subject to Board approval by resolution. 4.2.2 The District may utilize Board approved intra-agency loans rather than outside debt instruments to meet short-term cash needs. Intra- agency loans will be permitted only if an analysis of the affected Revenue Areas indicates funds are available and the use of these funds will not impact current operations. The principal, along with interest at the prevailing rate as established by the Distriet'sSanitation District's Treasurer, will be paid to the lending Revenue Area. 4.2.3 Commercial Paper- The District may issue short-term debt in the form of Commercial Paper. 4.2.4 Revenue Bonds- The District may issue as special obligations various types of revenue securities including notes, warrants, interim debentures, bonds, and temporary bonds. Securities issued as special obligations do not constitute outstanding indebtedness of the District nor do they exhaust its legal debt-incurring power. Bonding should be limited to projects with available revenue sources, whether self-generated or dedicated from other sources such as user fees. Adequate financing feasibility studies should be performed for each revenue issue. Sufficiency of revenues should continue throughout the life of the bonds. 4.2.5 Certificates of Participation- Certificates of participation are essentially leases which are sold to the public. The lease payments are subject to annual appropriation. Investors purchase certificates representing their participation in the lease. Often, equipment or facilities being acquired serve as collateral. These securities are most useful when other means to finance are not available under state law. Page 4 of 20 4.2.6 Refundings-A refunding is generally the underwriting of anew bond issue whose proceeds are used to redeem an outstanding issue. 4.2.6.1 Prior to beginning a refunding bond issue, the District will review and estimate of the savings achievable from the refunding. The District may also review a pro forma schedule estimating the savings assuming that the refunding is done at various points in the future. Following are the conditions under which the District will consider refunding outstanding bonds: 4.2.6.1.1 Net present value savings are at least three (3) percent of the par amount of the refunded bonds. Net present value savings of less than three (3) percent of refunded bonds are acceptable when compared to savings that could be achieved by waiting for more favorable interest rates and/or call premiums. 4.2.6.1.2 Net present value savings exceed the costs of issuing the bonds. 4.2.6.1.3 The bonds to be refunded have restrictive or outdated covenants. 4.2.6.1.4 Restructuring debt is deemed to be desirable. 4.3 Debt Structure- 4.3.1 Debt will be structured to achieve the lowest possible net overall cost to the District balanced against potential risks given market conditions, the urgency of the capital program, and the nature and type of security to be provided. Structuring options shall also consider available opportunities related to maximizing earnings and minimizing costs while complying with all Arbitrage regulations, including the timing of issuance and current market conditions. 4.3.2 The term of District debt issues should not extend beyond the useful life of the project and generally should not extend beyond 30 years unless there are compelling factors which make it necessary to extend the term further. 4.3.3 For the issuance of new money debt, the District should consider the appropriate amount to be sold based on the overall debt- versus revenue-funding targets as part of its long-term capital plan and prior to each issuance of new money debt. Page 5 of 20 4.3.4 New money debt issued by the District should be structured to provide for either level principal or level debt service on an individual issuance or aggregate debt service basis. Deferring the repayment of principal should be avoided except in select instances where it will take a period of time before project revenues are sufficient to pay debt service. Ascending debt service should generally be avoided. 4.3.4.1 The District should consider target financial ratios (including debt service coverage) and future financial flexibility when determining the structure of its new money debt. 4.3.5 Variable Rate Obligations- When appropriate, the District may choose to issue variable rate obligations, or securities that pay a rate of interest that varies according to a predetermined formula or results from a periodic remarketing or auction of the securities. 4.3.5.1 The maximum level of net variable rate obligations incurred shall not exceed 150% of the level of available invested reserves. The percentage is intended to reflect the inherent relationship between taxable and tax-exempt interest rates based on the highest marginal federal income tax rate. Such percentage should be adjusted as the highest marginal federal income tax changes. 4.4 Credit Objectives- 4.4.1 The ^'�^•'^^Sanitation District's goal is to maintain or improve its bond ratings. To that end, prudent financial management policies will be adhered to in all areas. 4.4.1.1 The District should monitor the Bistrist'sSanitation District's current and projected key financial ratios (e.g., debt service coverage, debt-to-equity, net floating rate exposure, reserve level) in comparison to those of other similar municipal entities. These ratios should be updated and compared prior to the issuance of new money debt or the restructuring of existing debt. The District will consider these ratios in its financial management policies. 4.4.2 Rating Agencies - 4.4.2.1 Full disclosure of operations will be made to the bond rating agencies. District staff, with the assistance of the financial advisors and bond counsel, will prepare the Page 6 of 20 necessary materials for and presentation to the rating agencies. 4.4.2.2 The District will maintain a line of communications with the rating agencies (Moody's, Standard & Poor's, and/or Fitch), informing them of major financial events at the District as they occur. The Comprehensive Annual Financial Report (CAFR) shall be distributed to the rating agencies after it has been accepted by the Board of Directors. 4.4.2.3 The rating agencies will be notified when the District begins preparation for a debt issuance. After the initial contact, a formal ratings application will be prepared and sent along with the draft of the Official Statement relating to the bond sale to the rating agencies. This application and related documentation should be sent several weeks prior to the bond sale to give the rating agencies sufficient time to perform their review. 4.4.2.4 A personal meeting with representatives of the rating agencies will be scheduled at least once every three years or whenever a major project is initiated. 4.4.3 Credit Enhancements- are mechanisms which guarantee principal and interest payments. They include bond insurance and a line or letter of credit. A credit enhancement, while costly, will sometimes bring a higher rating from the rating agencies and a lower interest rate on debt, thus lowering overall costs. Credit enhancements will only be used when net debt service is reduced by more than the cost of the enhancement. During the debt issuance planning, the Financial Advisor or Underwriter will advise the District which credit enhancements if any, should be purchased. 4.4.4 Dedicated Revenue Sources- In order to ensure the most favorable credit ratings, District revenues are dedicated to debt service in the following order: 4.4.4.1 Ad valorem property tax. 4.4.4.2 Sanitary sewer service charges. 4.4.4.3 Other revenues. 4.5 Method of Sale - L- Page 7 of 20 4.5.1 The District will select a method of sale that is the most appropriate in light of financial, market, transaction-specific and issuer-related conditions, and explain the rationale for its decision. 4.5.1.1 Competitive Sales- Debt obligations are generally issued through a competitive sale. The District and its financial advisor will set the terms of the sale to encourage as many bidders as possible. By maximizing bidding, the District seeks to obtain the lowest possible interest rates on its bonds. 4.5.1.2 Negotiated Sales- When certain conditions favorable for a competitive sale do not exist and when a negotiated sale will provide significant benefits to the District that would not be achieved through a competitive sale, the District may elect to sell its debt obligations through a private or negotiated sale. Such determination may be made on an issue-by-issue basis, for a series of issues, or for part or all of a specific financing program upon approval by the Administration Committee. 4.6 Methods of Selecting Consultants- 4.6.1 Financial Advisor- The District will retain an external independent financial advisor, selected through a competitive process and renewed at the discretion of the Administration Committee. The financial advisor contract will be administered by the Distriet'sSanitation District's Financial Management Division. The utilization of the financial advisor for a particular bond sale will be on a case by case basis upon recommendation by the Director of Administrative Services and approval by the Administration Committee. pursuant to a financial advisory service contract. 4.6.2 Underwriters- For negotiated sales, underwriters will be required to demonstrate sufficient capitalization and experience related to the debt issuance. The selection of underwriters may be for an individual or series of financings or a specified time period. 4.6.3 Bond Counsel- The District will retain external bond counsel for all debt issues. All debt issued by the District will include a written opinion by bond counsel affirming that the District is authorized to issue the debt, stating that the District has met all state constitutional and statutory requirements necessary for issuance, and determining the debt's federal income tax status. Bond counsel will be selected through a competitive process administered by the s'�.�.r et'sSanitation District's Financial Management Division. The Page 8 of 20 selection process will require comprehensive municipal debt experience. 4.6.4 Disclosure Counsel- The District will retain, when appropriate, Disclosure Counsel for debt issues. Disclosure Counsel will be responsible for ensuring that the official statement complies with all applicable rules regulations and guidelines. Disclosure Counsel for a particular transaction may also serve the District as bond counsel on the same issue. Disclosure counsel will be selected through a competitive process administered by the D strisEsSanitation District's Financial Management Division. The selection process will require comprehensive municipal debt experience. 4.7 Disclosure and Arbitrage Compliance- 4.7.1 The District will follow all State and federal regulations and requirements regarding bond provisions, issuance, taxation, and disclosure. 4.7.2 The District will monitor compliance with bond covenants and adhere to federal arbitrage regulations. Any instances of noncompliance will be reported to the Administration Committee. 4.7.3 The District will maintain good communications with bond rating agencies about its financial condition and will follow a policy of full disclosure in every financial report and bond prospectus (Official Statement). 4.7.4 Official Statements accompanying debt issues, CAFRs, and continuous disclosure statements will meet, at a minimum, the standards articulated by the Municipal Standards Rulemaking Board (MSRB), the Government Accounting Standards Board (GASB), the National Federation of Municipal Analysts, the Securities and Exchange Commission (SEC), and Generally Accepted Accounting Principles (GAAP). The Financial Management Division will be responsible for ongoing disclosure to all Nationally Recognized Municipal Information Depositories (NRMSIRs) designated by the SEC and for maintaining compliance with disclosure standards promulgated by state and national regulatory bodies. 4.7.4.1 Quarterly compliance reports to NRMSIRs. 4.7.4.2 Copies of CAFR and updated tables from the Official Statement to NRMSIRs within six month of year end. 4.8 Administration and Internal Control Procedures - Page 9 of 20 4.8.1 Expenditure of Proceeds-Whenever reasonably possible, proceeds of the Sanitation District's debt shall be held by a third party trustee which will release such proceeds upon written requisition signed by the Director of Administrative Service Department Administrative Services, or authorized designee. 4.8.2 Requisition of Bond Proceeds- To reimburse the District for expenditures incurred, bond proceeds requisitions will be prepared by staff and will include summary expenditure data listing the projects funded and related dollar amounts, all totaling to the requisition amount. 4.8.3 Investment of Debt Proceeds- Proceeds raised in a debt financing shall be invested in a manner that is consistent with the bond indenture, and pursuant to the Sanitation District's Investment Policy for investments not address by the indenture. 4.8.4 Continuing Disclosure- The District shall remain in compliance with Securities and Exchange Commission (S.E.C.) Rule 15c2-12 by filing its annual financial statements and other financial and operating data for the benefit of its bondholders within the period required by each Continuing Disclosure Agreement. 4.8.5 Reporting and Filing Requirements- The District shall comply with the applicable reporting and filing requirements in California Government Code Section 8855. 4.8.6 Federal Tax Compliance- The District shall comply with any federal tax requirements, including without limitation, private use tracking, arbitrage and rebate compliance. 4.7.4.2 4,05.0 DEFINITIONS: 44 5.1 ACCRUED INTERST- In the sale of a new issue of municipal bonds, the dollar amount, based on the stated rate or rates of interest, which has accrued on the bonds from the dated date, or other stated date, up to but not including the date of delivery. When a bond is purchased in the secondary market, the dollar amount, based upon the stated rate of interest, which has accrued on the bond from the most recent interest payment date, up to but not including the date of settlement. Accrued interest is paid to the seller by the purchaser and is usually calculated on a 360-day year basis (assumes each month has 30 days). 4,25.2 ADDITIONAL BONDS TEST- Refers to legal test found in resolution or ordinance securing bonds; governs ability to issue additional bonds having Page 10 of 20 the same lien on pledged revenues. Usually expressed as a ratio in which historic earnings meet certain levels of future debt service coverage. 435.3 ADDITIONAL OBLIGATIONS TEST- Refers to legal test found in the resolution which governs an agency's ability to issue additional obligations having the same lien on pledged revenues. The Di&'46Sanitation District's additional obligations test is expressed as a ratio in which historic earnings must meet or exceed certain levels of future obligation service coverage. 445.4 AD VALOREM TAX- A direct tax based "according to value" of property. Counties and school districts and municipalities usually are, and special tax districts may be, authorized by law to levy ad valorem taxes on property other than intangible personal property. Local government bodies with taxing powers may issue bonds or short-term certificates payable from ad valorem taxation. 455.5 ADVANCE REFUNDING- A transaction in which new debt is issued to provide monies to pay interest on old, outstanding debt as it becomes due, and to pay the principal on the old debt either as it matures or at an earlier call date. An advance refunding occurs before the maturity or call date (more than 90 days before the maturity or call date) of the old debt, and the proceeds of the new debt are invested until the maturity or call date of the old debt. Most advance refundings result in defeasance of debt. 4-.95.6 AMORTIZATION-The process of paying the principal amount of an issue of bonds by periodic payments either directly to certificate holders or to a sinking fund for the benefit of certificate holders. Payments are usually calculated to include interest in addition to a partial payment of the original principal amount. 475.7 ARBITRAGE- Classically, the simultaneous purchase and sale of the same or an equivalent security in order to profit from price discrepancies. The most common occurrence in the public sector involves the investment of the proceeds from the sale of tax-exempt securities in a taxable money market instrument that yields a higher rate, resulting in interest revenue in excess of interest costs. 465.5 ARBITRAGE REBATE REQUIREMENTS- Arbitrage profits (interest revenue in excess of interest costs) from investment bond proceeds that are invested in taxable instruments must be rebated to the U.S. Treasury Department. "5.9 AVERAGE COUPON-Weighted average interest cost of an issue. 4495.10 BANK INVESTMENT CONTRACT- A separate account at a financial institution that functions like a guaranteed investment contract, L_ Page 11 of 20 whereby the contract is designed to provide guarantees of principal and interest on funds deposited for a specified period. 4a45.11 BASIS POINT- Yields on municipal securities are usually quoted in basis points where one basis point is equal to 1/100 of one percent. 4425.12 BOND- Written evidence of the issuer's obligation to repay a specified principal amount on a date certain (maturity date), together with interest at a stated rate, or according to a formula for determining that rate. Bonds are distinguishable from notes, which mature in a much shorter period of time. 4435.13 BOND COUNSEL-An attorney (or firm of attorneys) retained by the issuer to give a legal opinion on the legality and security of the issue and its tax exemption or taxability. Typically, bond counsel may prepare, or review and advise the issuer regarding, authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings, and litigation. 4445.14 BONDED DEBT- The portion of an issuer's total indebtedness as represented by outstanding bonds. 4.455.15 BOND INSURANCE-An insurance policy purchased by an issuer or an underwriter for either an entire issue or specific maturities, which guarantees the payment of principal and interest. This security provides a higher credit rating and thus a lower borrowing cost for an issuer. Bond insurance can be purchased directly by the District prior to the bond sale (direct purchase) or at the underwriter's option and expense (bidder's option). 44465.16 BOND RESOLUTION OR ORDINANCE- The document or documents representing action of the issuer authorizing the issuance and sale of municipal bonds. Issuance of the bonds is usually approved in the authorizing resolution or ordinance, and the sale is usually authorized in a separate document known as the "sale' or "award" resolution. All of such resolutions, read together, constitute the bond resolution, which describes the nature of the obligation and the issuer's duties to the bondholders. 4475.17 BROKER- A person or firm, other than a bank, which acts as an intermediary by purchasing and selling securities for others rather than for its own account. 44-85.18 CALLABLE BOND- A bond which permits or requires the issuer to redeem the obligation before the stated maturity date at a specified price, usually at or above par by giving notice of redemption in a manner specified in the bond contract. Page 12 of 20 4495.19 CAPITALIZED INTEREST- Interest paid on long-term obligations during the period of time required to complete and prepare an asset for its intended use is capitalized as part of the acquisition cost of an asset. 4-205.20 CERTIFICATES OF PARTICIPATION- Obligations of a public entity based on a lease or installment sale agreement. These are not considered debt under Article 13 of the California Constitution. 4-235.21 CERTIFICATE HOLDER- The owner of a municipal certificate of participation to whom payments of principal and interest are made. Generally certificates are registered, and the owner is the person whose name is noted on the certificate register. 4-225.22 CERTIFICATE REGISTER- The listing of names and addresses of the current registered owners of the certificates, as maintained by the trustee or certificate registrar. 4-235.23 COMPETITIVE SALE-The sale of bonds through sealed bids. 4.245.24 COST OF ISSUANCE- The expenses associated with the sale of a new issue of municipal securities, including such items as underwriter's spread, printing, legal fees, and rating costs. 4255.25 COVENANTS- The issuer's enforceable promise to perform or refrain from performing certain actions. With respect to municipal bonds, covenants are generally stated in the bond contract, resolution, or indenture. 4-265.26 COVERAGE- The ratio of pledged revenues available annually to pay debt service obligations, as compared to the annual debt service obligation requirement. This ratio is one indication of the margin of safety for debt service obligations. 4-27-5.27 CREDIT ENHANCEMENT- The availability of additional outside support designed to improve an issuer's own credit standing. Examples include bank lines of credit or collateralized funds. 4-265.28 CURRENT REFUNDING- A refunding transaction in which the proceeds of the refunding debt are applied immediately (no more than 90 days from issuance) to redeem the debt to be refunded. This situation differs from an advance refunding, where the proceeds of the refunding bonds are placed in escrow pending the call date or maturity of the debt to be refunded. 4-295.29 CURRENT YIELD- The ratio of the annual dollar amount of interest to the purchase price of a bond, stated as a percentage. Page 13 of 20 4395.30 CUSIP NUMBERS (COMMITTEE ON UNIFORM SECURITY IDENTIFICATION PROCEDURES) - Identification numbers assigned each maturity of a bond issue, and usually printed on the face of each individual bond in the issue. The CUSIP numbers are intended to facilitate identification and clearance of municipal securities. 4515.31 DEBT LIMIT- The maximum amount of debt which an issuer of municipal securities is permitted to incur under constitutional, statutory, or charter provisions. 4425.32 DEBT PER CAPITA- Bonded debt divided by population. 4335.33 DEBT SERVICE OBLIGATION- The amount of funds necessary to pay principal and interest, and the required contributions to an amortization sinking fund for term certificates on an outstanding obligation. Debt service obligation on certificates may be calculated on a calendar-year or on a fiscal-year basis. 4545.34 DEBT SERVICE RESERVE FUND- A fund usually amounting to principal and interest payments for one year and used only if pledged revenues do not generate sufficient funds to satisfy the debt service requirement. The reserve fund is typically funded in whole or in part from the proceeds of the debt issuance. The size and investment of the reserve fund are usually subject to arbitrage regulations. 4355.35 DEBT SERVICE SCHEDULE- A table listing the annual payments necessary to meet debt service requirements over the period of time the bonds are to be outstanding. 4365.36 DEFAULT- Failure to make timely payment of principal and interest or to comply with other features of the indenture. 4375.37 DEFEASANCE- Eliminating bonded indebtedness off an issuer's books through creation of a portfolio of allowable securities sufficient to make all debt service payments on pre-refunded, outstanding bonds. 4385.38 DIRECT DEBT- The debt that a governmental agency incurs in its own name. 4395.39 DISCOUNT- The amount by which par value exceeds the price paid for a security which generally represents the difference between the nominal interest rate and the actual or effective return to the investor. 4495.40 DOUBLE-BARRELED BOND- Traditionally, a bond secured by a defined source of revenue plus the full faith and credit of the issuer. The term is occasionally, although erroneously, used to refer to bonds secured by any two sources of pledged revenue. Page 14 of 20 44-45.41 DOWNGRADE-The lowering of a bond rating by a rating service. A downgrade would be considered if the issuer encountered major financial difficulties or an economic decline, which may be viewed by the rating service as reducing the credit quality of the bond issue. 4425.42 EFFECTIVE INTEREST RATE-The actual rate of interest earned by the investor on bonds purchased, after allowing for premiums, discounts, or accrued interest over the period of the investment. 4435.43 FEASIBILITY STUDY- A report by an independent expert on the economic need and practicality of a proposed debt program. 4445.44 FINANCIAL ADVISOR-Performs analysis as to the appropriateness of a bond sale and, if the governing body of the agency determines that a bond sale is necessary, they then assist in its planning and preparation. 4455.45 FLOATER- A security sold with a variable rate that changes at intervals ranging from daily to annually. 4495.46 FULL FAITH AND CREDIT- The pledge of a government's general taxing power to pay off its debt obligations. 4475.47 GENERAL OBLIGATION BONDS- Bonds which are secured by the full faith and credit of the issuer. General obligation bonds are secured by a pledge of a portion of the ad valorem taxing power. Such bonds constitute debts of the issuer and require approval by election prior to issuance. 4495.48 GUARANTEED INVESTMENT CONTRACT (GIC)-A group annuity contract designed to provide guarantees of principal and interest on funds deposited with an insurance company for a specified period. 4495.49 HIGH GRADE BONDS-Top-rated bonds, usually triple-A. 4,505.50 INDENTURE- Legal document describing the terms and conditions of a bond offering, the rights of the bondholder, and the obligations of the issuer to the bondholder. The document is alternatively referred to as a bond resolution or deed of trust. 4345.51 INTEREST RATE SWAP- An agreement between two parties to exchange future flows of interest payments. Swap payments may be based on actual bond payments and/or based on various market indices. 4325.52 INVERTED YIELD CURVE- When short-term rates are higher than long-term rates. Page 15 of 20 4535.53 INVESTMENT GRADE- The broad credit designation given bonds which have a high probability of being paid. Such bonds, have few, if any, speculative features and are rated by the rating agencies in one of their top four categories, ranging from triple-A to BBB and Baa. 4545.54 ISSUER- A state, political subdivision, agency, or authority that borrows money through the sale of bonds or notes. 4555.55 JUNIOR LIEN BONDS- Bond with a subordinate claim against pledged revenues. 4565.56 LETTER OF CREDIT- An agreement, usually with a commercial bank,to guarantee demands for payment upon compliance with conditions established in the agreement. Bank letters of credit are typically used as additional sources of security and liquidity with variable rate obligations. 4575.57 LIQUIDITY- The ability to convert assets, such as investments, readily into cash. 4585.58 MATURITY-The date on which the principal amount of a security is due and payable to the certificate holder. 4-.695.59 NEGOTIATED SALE- The sale of a new issue of municipal securities by an issuer through an exclusive agreement with a previously selected underwriter or underwriting syndicate. A negotiated sale should be distinguished from a competitive sale, which requires public bidding by the underwriters. Primary points of negotiation for the issuer are the interest rate and purchase price, which reflect the issuer's cost of offering its securities in the market. 4.605.60 NET INTEREST COST (NIC) - Traditional method of calculating an issuer's borrowing cost. NIC is derived by adding the total volume of interest payments for the entire offering and dividing by the amount of certificates outstanding times the years they are outstanding. 4645.61 NET PRESENT VALUE SAVINGS- Present value of gross savings discounted at the refunding bond yield to the closing date plus accrued interest less any contribution from a reserve or debt service fund and anticipated loss investment earnings. 4525.62 NOTES- A written, short-term promise of the issuer to repay a specified principal amount on a certain date, together with interest at a stated rate, or according to a formula for determining that rate, payable from a defined source of anticipated revenue. Notes usually mature in less than five years. Notes are used to cover seasonal cash Flow needs or interim financings. Page 16 of 20 4635.63 OFFICIAL STATEMENT (OS) -A document published by the issuer who generally discloses material information on a bond issue, including the purpose of the bond issue, how the bonds will be repaid, and the financial, economic, and demographic characteristics of the issuer. Investors may use this information to evaluate the credit quality of the bonds. 4645.64 ORIGINAL ISSUE DISCOUNT (OID) - The discount from par at which a new issue comes to market. For tax-exempt bonds, the capital gain represented by the OID is deemed tax-exempt by the IRS. 4-.655.65 OVERLAPPING DEBT-The issuer's share of the debt of other local units. 4,665.66 PAR VALUE-The principal amount of a security, which must be paid at maturity. Par value is also referred to as the face amount of a security. 4-.675.67 PARITY BONDS- Separate bond issues that have the same lien against pledged revenues. 4-6685.68 PAY-AS-YOU GO BASIS-The financial policy of a municipality that finances all capital outlays from current revenues rather than from borrowing. 4495.69 PAYING AGENT-The entity responsible for the payment of principal and interest on municipal obligations on behalf of the issuer. The paying agent is usually a bank or trust company. 4a95.70 PLEDGED REVENUES- Funds obligated for the payment of debt service and other deposits as required by the bond contract. 4a45.71 PRELIMINARY OFFICIAL STATEMENT (POS)- A preliminary version of the official statement which is used by the issuer or underwriter to describe the proposed issue of municipal bonds prior to the determination of an interest rate and offering price. The preliminary official statement is a marketing tool used to gauge buyer's interest in the issue and is relied upon by potential purchasers in making their investment decisions. 4-.725.72 PREMIUM- The amount by which the price paid for a security exceeds par value, generally representing the difference between the nominal interest rate and the actual or effective return to the investor. 4�35.73 PRINCIPAL- The par value or face amount of a bond payable or issue of bonds payable on stated dates of maturity. Page 17 of 20 4-.745.74 PRIMARY MARKET- The market for new issues of municipal securities. 4-65.75 PRIVATE PLACEMENT- An original issue of municipal securities sold directly to an institutional or private investor by way of a negotiated sale rather than through a public offering. 4a65.76 RATE CONVENANT- A bond indenture provision requiring rate changes necessary to meet annual debt service payments. 4a75.77 RATING AGENCIES- Credit quality evaluation of an issuer's securities made by independent rating services. The three primary rating agencies with regard to municipal debt are Moody's Investors Services, Standard & Poor's Corporation, and Fitch. 4a85.78 RATINGS- Evaluations of the credit quality of obligations usually made by independent rating services. Ratings generally measure the probability of the timely repayment of principal and interest on municipal obligations. The higher the credit rating, the more favorable the effect on the marketability of the security. 4-.7-95.79 REDEMPTION- A transaction in which the issuer pays an outstanding obligation at a specified price, usually at or above par prior to the specified maturity date. Also known as a call. 4,995.80 REFUNDING- Selling a new bond issue for redemption or defeasance of an outstanding bond issue. There are generally two reasons for refunding: to reduce the issuer's interest costs or to remove a burdensome or restrictive covenant imposed by the terms of the bonds being refinanced. 4$45.81 REGISTRAR: The person or entity responsible for maintaining records on behalf of the issuer for the purpose of noting the owners of registered obligations. The paying agent frequently performs this function. 4$25.82 REVENUE BONDS- Bonds payable from a specific source of revenue and which do not pledge the full faith and credit of the issuer. 443335.83 SECONDARY MARKET- Market for bonds previously offered and sold. 4,945.84 SENIOR LIEN OBLIGATIONS: Obligations having a prior claim on pledge revenues. 4,955.85 SERIAL BONDS- Bonds of an issue in which some bonds mature in each year over a period of years. L- Page 18 of 20 4395.86 SETTLEMENT- Delivery of and payment for a new issue of municipal bonds. Settlement usually occurs within 30 days after the bonds are awarded to the underwriters, which allows for the printing of the bonds and the completion of certain legal matters. 497-5.87 SETTLEMENT DATE- The date used in price and interest computations, usually the date of delivery. 4335.88 SINKING FUND- A fund established in a bond indenture that contains money available to call bonds prior to maturity. 4895.89 STANDBY BOND PURCHASE AGREEMENT- A legal agreement with a commercial bank or trust company whereby the bank agrees to purchase demand bonds which the remarketing agent was unable to remarket to other parties and chose not to purchase for itself. 4995.90 SUBORDINATE (JUNIOR) LIEN OBLIGATIONS- Obligations having a subordinate claim against pledged revenues. 4945.91 TAX-EXEMPT OBLIGATIONS- Obligations whose interest is exempt from federal income taxation pursuant to Section 103 of the Internal Revenue Code, and may or may not be exempt from state income or personal property taxation in the jurisdiction where issued. 4925.92 TERM BONDS- Bonds coming due in a single maturity. The issuer usually agrees to make periodic payments into a sinking fund for mandatory redemption of term bonds before maturity or for payment at maturity. 4-.935.93 TRUE INTEREST COST(TIC) -The present value borrowing cost of the issuer is reflected by taking into account the costs of issuance and underwriting. TIC is similar to NIC, but also accounts for the time value of money. 4,945.94 TRUSTEE- A financial institution with trust powers which acts in a fiduciary capacity for the benefit of bond holders in enforcing the terms of the bond indenture agreement. 4-.955.95 TRUST INDENTURE- A contract between the issuer of municipal securities and a trustee, serving for the benefit of the security holders. 4-.965.96 UNDERWRITER-A dealer at a bank or brokerage house who buys an agency's bonds in order for the firm's sales force to resell them to both institutional and retail investors. The underwriter may acquire the bonds either by negotiation with the issuer, or by award on the basis of competitive bidding. Page 19 of 20 4-975.97 UNDERWRITERS COUNSEL-A lawyer involved in the transaction, who represents the securities firm buying an issuer's bonds. 4-985.98 VARIABLE RATE OBLIGATIONS-A security whose interest rate is reset periodically by the remarketing agent according to a preset formula defined in the indenture agreement. The variable interest rate, also known as a "floater', is determined by the remarketing agent as the level at which all bonds trade at par. 4,995.99 YIELD CURVE-Graph displaying the term structure of interest rates by plotting the yields of all bonds of the same quality with maturities ranging from shortest to the longest available. 4 4005.100 YIELD TO MATURITY-The rate of return to the investor earned from payments of principal and interest,which is compounded semiannually and assumes that interest paid is reinvested at the same rate. Yield to maturity takes into consideration the time value of the investment. 4%45.101 ZERO-COUPON BONDS- Bonds sold at a deep discount from par, which pay no interest and appreciate to full value at maturity. Also known as capital appreciation bonds. Page 20 of 20 Debt Policy Update 1111PPOWO o iv SAN,)gjoa Presenter: Lorenzo Tyner N P Assistant General Manager 90 �2 T�NC THE EMS\Q Overall ObjectiveS (Book Page 25) a ) Accelerates project delivery b) Spreads costs over the useful life of the asset c) Smooths out the District's Cash Flow d ) Achieves the lowest possible overall costs Limitations (Book Page 27) a ) Compliance with legal limits b) Restricts use to supporting Capital Projects c) Cannot support Operating Expenses Types of Debt (Book Page 28) a ) Commercial Paper b) Revenue Bonds c) Refundings d ) Certificates of Participation — Primary Credit Objectives (Book Page 30) a ) Maintain strong bond ratings b) Ensure Transparency with the Rating Agencies c) Appropriate Revenue Sources : Ad Valorem Property Tax, User Fees, Other m Support (Book Page 32) a ) Financial Advisor b) Bond Counsel c) General Counsel ADMINISTRATION COMMITTEE Melting D310 TOBd.Of Dir. 09/12/18 09/26/18 AGENDA REPORT Item Item Number 4 19 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Assistant General Manager SUBJECT: REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A GENERAL MANAGER'S RECOMMENDATION A. Adopt Resolution No. OCSD 18-17 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the execution and delivery by the Sanitation District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A, such Notes evidencing principal in an aggregate amount of not to exceed $109,875,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Notes and authorizing the execution of other necessary documents and related actions"; B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Notes in an aggregate amount not to exceed $109,875,000; and C. The proposed financing is structured as an approximate 32-month fixed rate maturity that will be sold in a competitive sale. BACKGROUND In March 2006, the Orange County Sanitation District (Sanitation District) issued $200 million of variable rate Certificates of Participation (COP), Series 2006 (2006 COPs). Alternatively, the Sanitation District could have issued debt, at an estimated cost of 4.54%, on a fixed rate basis in 2006 ("2006 Fixed Rate"). From inception through August 2008, the average variable rate on the 2006 COPS was 2.95% or 0.22% less than the SIFMA index (weekly market index of tax-exempt variable rate obligations). As the global financial crisis took hold in the late summer of 2008, there was a significant increase in the variable rate borrowing cost of the Sanitation District, including all municipal variable rate borrowers, as the 2006 COPS averaged 4.29% (or 1.56% above the SIFMA index) for the period between September 2008 and December 2008. The amount of the increase in variable rate cost above the SIFMA index can be attributed to the weakened financial strength of the bank, DEPFA Bank plc, that was providing liquidity support on the 2006 COPs. Even with the increase in interest rates during this period of stress, the 4.29% average cost was still lower than the 2006 Fixed Rate of 4.54%. Page 1 of 6 In December 2008, the Sanitation District proactively refunded the 2006 COPs with the Refunding COP Series 2008C Certificate Anticipation Notes (2008C CANS)to reduce its exposure to then higher and more volatile variable rate costs. The yield on the 2008C CANS was 0.98% for a one-year period. The issuance of the 2008C CANS allowed the Sanitation District to redeem the 2006 COPS at an all-in cost of less than 1.25%and avoid paying a bank rate of 4.75% which would have been effective starting a month later. Since the 2008C CANS issuance, the Sanitation District completed five additional one-year refinancing's at yields at progressively lower yields, followed by two subsequent two-year refinancing's starting in 2014 in anticipation of rising short-term rates, as summarized below: rinci al Arn u II-In Cos 2009E $ 165,865,000 0.370% 0.559% 2010E 154,665,000 0.360 0.525 2011E 143,205,000 0.225 0.399 2012C 131,700,000 0.210 0.410 2013A 129,625,000 0.170 0.390 2014E 120,850,000 0.320 0.523 2016E 109,875,000 0.840 1.002 The interest rate on the currently outstanding Revenue Refunding Certificate Anticipation Notes Series 2016B (201613 CANS) was fixed for two years and the entire $109,875,000 plus interest becomes due and payable on December 15, 2018. The purpose of the proposed financing is to refund all of the 2016E CANs to avoid the use of the Sanitation District's cash reserves to make repayment. The Sanitation District has used the current short-term financing strategy since 2006, generating savings of $40 million when compared to an original fixed rate transaction. Staff recommends the continued use of the current strategy of issuing short-term refundings. Assuming no change in interest rates, staff estimate an additional savings of $10.5 million through 2036. Applying these savings to the outstanding debt will result in a payoff of this debt issuance well in advance of the 2044 date target for paying off all existing outstanding debt. The proposed refunding strategy does include future refundings. As with any anticipated refunding, there will be interest Fluctuations that may result in higher interest rates. At the July Administration Committee, Directors asked staff to evaluate other refunding strategies, specifically long-term fixed rate debt, setting a fixed payoff date and insulating the District from future unknown interest rate increase. Staff reviewed those options; however, long-term interest rates would have to double the current short-term rates used in the staff recommended refunding strategy. Therefore, at this time, staff continues to recommend the short-term refunding strategy over using long-term fixed rate debt. RELEVANT STANDARDS • Comply with OCSD Debt Policy - Financial Management Policy and Procedure No. 201-3-1; Restructuring debt is deemed to be desirable Page 2 d 6 PROBLEM The 2016B CANs are due and payable on December 15, 2018 in the amount of $110,973,750. The 2016B CANS were issued with a low-cost, two-year rate with the expectation that upon maturity the issue would be refinanced. PROPOSED SOLUTION The issuance of up to $109,875,000 of Revenue Refunding Certificate Anticipation Notes Series 2018A(2018A CANS)would allow the Sanitation District to repay the 2016B CANS and avoid using $110 million of reserves for such purpose. TIMING CONCERNS The Sanitation District must complete a refinancing by no later than December 15, 2018; otherwise, $110 million of reserves will be required to repay the 2016B CANS. RAMIFICATIONS OF NOT TAKING ACTION Not taking action by December 15, 2018 would cause the Sanitation District to use its reserves to repay the 2016B CANS or cause an alternative refunding method. PRIOR COMMITTEE/BOARD ACTIONS July 2018 - The Board authorized the General Manager to issue Revenue Refunding Certificate Anticipation Notes, Series 2018A, as fixed-rate obligations, subject to market conditions, in an amount not to exceed $109,875,000 to replace the $109,875,000 Revenue Refunding Certificate Anticipation Notes, Series 2016E maturing on December 15, 2018. December 2016 - The Board adopted Resolution No. OCSD16-32, authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2017A, authorizing the execution and delivery of such Revenue Obligations evidencing principal in an aggregate amount not to exceed $91,620,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Revenue Obligations and authorizing the execution of necessary documents and related actions. ADDITIONAL INFORMATION The Sanitation District currently has eleven series of debt issuances outstanding in the par amount of $1,012,110,000. The following table lists each issuance, the outstanding amount, and the interest rate mode. Page 3 of 6 Outstanding Interest Rate Par AmounV) Mode eries 2017A Refunding $66,370,000 Fixed Rate eries 2016E CANS 109,875,000 Fixed Rate(two-year) eries 2016A Refunding 145,880,000 Fixed Rate eries 2015A Refunding 127,510,000 Fixed Rate eries 2014A Refunding 78,375,000 Fixed Rate eries 2012E Refunding 66,395,000 Fixed Rate eries 2012A Refunding 100,645,000 Fixed Rate eries 2011A Refunding 75,370,000 Fixed Rate eries 2010C 157,000,000 Fixed Rate eries 2010A 80,000,000 Fixed Rate eries 2009A Refunding 4,690,000 Fixed Rate Total: $1,012,100,000 (1) As of Seplem0er 1,2018 Due to the fact that this is a fixed-rate debt issuance, staff is proposing to issue the refunding through a competitive sale because it is the most expeditious way to access the market and it is expected to provide the lowest interest cost for this given structure. All costs involved with the refunding, including costs for Public Resources Advisory Group (Municipal Advisor) and Norton Rose Fulbright US LLP (Special Counsel and Disclosure Counsel) will be paid from the proceeds of the new refunding issue. Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) ("SB 450") requires that the governing body of a public body obtain prior to authorizing the issuance of bonds with a term of greater than 13 months (which includes the 2018A CANs), good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d)the sum total of all debt service payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds. For the anticipated issuance of 2018A CANS, the Sanitation District's Municipal Advisor, Public Resources Advisory Group, estimates based on market conditions as of August 23, 2018, subject to changing market conditions which may result in the figures being higher or lower, the following: a) true interest cost of 1.75%; b) sum of all fees and charges paid to third parties of$512,410; c) net proceeds of$109,878,968; and d) total payments of$114,923,900 Page 4 of 6 Legal Authorization and Approvals The Board of Directors and the Financing Corporation will each be required to adopt separate Resolutions to complete this refunding. Drafts of these two Resolutions are available for review on the Sanitation District's webpage, as described in the "Attachments" section below. A Financing Corporation is required by the structure of the Notes and was formed in April 2000 solely to satisfy this need. The Board of Directors of the Corporation is the same as the Board of Directors of the Sanitation District and the Corporation meets after an adjournment of the Sanitation District Board. The Sanitation District Resolution authorizes the execution and delivery of certain legal documents and the execution and delivery of Revenue Refunding Certificate Anticipation Notes, Series 2018A, evidencing principal in an aggregate amount of not to exceed $109,875,000 all as spelled out in the title as follows: "A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE SANITATION DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A, SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $109,875,000, APPROVING A NOTICE OF INTENTION TO SELL, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL NOTICE INVITING BIDS AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH NOTES AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS." The Resolution of the Corporation is somewhat shorter and simpler. It authorizes three actions that are similarly enumerated in the title as follows: "A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $109,875,000 AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS." Following is a chart listing the remaining steps to be completed for the issuance of the Revenue Refunding Certificate Anticipation Notes, Series 2018A debt issuance: September ➢ Board approval of legal and disclosure documents ➢ Financing Corporation approval of legal and disclosure documents Page 5 of 6 October ➢ Receive ratings from Bond Rating Agencies November ➢ Receive competitive bids ➢ Closing CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENTS The following attachments(s) are included in hard copy and may also be viewed on-line at the OCSD web site(mm w.ocsd.com) with the complete agenda package: • Resolution No. OCSD 18-17 • Corporation Resolution FC-27 • Draft Trust Agreement • Draft Installment Purchase Agreement • Draft Preliminary Official Statement (includes Continuing Disclosure Agreement within Appendix D) • Draft Official Notice Inviting Bids • Draft Notice of Intention to Sell Page 6 of 6 RESOLUTION NO. OCSD 18-17 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY BY THE SANITATION DISTRICT OF AN INSTALLMENT PURCHASE AGREEMENT, A TRUST AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A, SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $109,875,000, APPROVING A NOTICE OF INTENTION TO SELL, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL NOTICE INVITING BIDS AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH NOTES AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the 'Prior Project') the District caused the execution and delivery of $109,875,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, of which $109,875,000 in principal amount is currently outstanding (the 'Prior Certificates"); WHEREAS, the District desires to prepay all of the Prior Certificates by paying all of the principal component of the installment payment relating to the Prior Certificates (the 'Prior Installment Payment'), and the interest component thereof, thereby causing all of the Prior Certificates to be paid; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment to be so paid, the District and the Orange County Sanitation District Financing Corporation (the "Corporation") desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payment (the 'Installment Payment') to be made by the District, pursuant to a new installment purchase agreement (the 'Installment Purchase Agreement"), and the Corporation and the District have agreed to finance such payment by causing the execution and delivery of up to $109,875,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes") to be repaid from the sale proceeds of future certificates of participation, other notes or obligations or lawfully available funds of the District; 732414065 IN1035824 OCSD 18-17-1 OCSD 2018A CANS Distnct Rewlutim WHEREAS, the Corporation intends to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to U.S. Bank National Association, as trustee (the 'Trustee"), pursuant to a Trust Agreement by and among the Trustee, the Corporation and the District (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement'); WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, the Trustee will be instructed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon; WHEREAS, the District desires to provide for the public sale of the Notes in one or more discrete sale transactions; WHEREAS, a form of the Notice of Intention to Sell to be published in connection with the public offering and sale of the Notes has been prepared (such Notice of Intention to Sell, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Notice of Intention to Sell"); WHEREAS, a form of the Official Notice Inviting Bids to be distributed in connection with the public offering and sale of the Notes has been prepared (such Official Notice Inviting Bids, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Notice Inviting Bids"); WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Notes has been prepared (such Preliminary Official Statement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the 'Preliminary Official Statement'); WHEREAS, Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended ('Rule 15c2-12"), requires that the underwriter thereof must have reasonably determined that the District has undertaken in a written agreement or contract for the benefit of the holders of the Notes to provide disclosure of certain material events on an ongoing basis; WHEREAS, to cause such requirement to be satisfied, the District desires to enter into a Continuing Disclosure Agreement with a dissemination agent to be named therein and the Trustee (such Continuing Disclosure Agreement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure Agreement'); WHEREAS, there have been prepared and submitted to this meeting forms of: (1) the Installment Purchase Agreement; 7324M6.5 OCSD 18-17-2 (2) the Trust Agreement; (3) the Notice of Intention to Sell; (4) the Notice Inviting Bids; (5) the Preliminary Official Statement; and (6) the Continuing Disclosure Agreement. WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the District is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the District (the "Board") so finds. Section 2. The Installment Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Chair of the Board, and such other member of the Board as the Chair may designate, the General Manager of the District, the Assistant General Manager & Director of Finance and Administrative Services of the District, and such other officers of the District as the Assistant General Manager& Director of Finance and Administrative Services may designate (the "Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Installment Purchase Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of the Installment Payment in excess of$109,875,000, shall not result in a true interest cost for the Installment Payment in excess of 3.0% per annum and shall not result in an Installment Payment later than January 1, 2026. Section 3. The Trust Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Trust Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such 7324M6s OCSD 18-17-3 requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Authorized Officer. Section 4. The execution and delivery of Notes evidencing principal in an aggregate amount of not to exceed $109,875,000, payable in the year and in the amount, and evidencing principal of and interest on the Installment Payment as specified in the Trust Agreement as finally executed, are hereby authorized and approved. Section 5. The payment or prepayment of the remaining principal components of the Prior Installment Payment prior to or at maturity, and the interest components thereof, and the payment or prepayment of the Prior Certificates evidencing interests therein, with the proceeds of the Notes is hereby authorized and approved. Section 6. The form of Notice of Intention to Sell, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the applicable Notice of Intention to Sell in connection with the offering and sale of a series of the Notes is hereby approved. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the District, to cause one or more Notices of Intention to Sell to be published in The Bond Buyer (or in such other financial publication generally circulated throughout the State of California or reasonably expected to be disseminated among prospective bidders for the Notes as an Authorized Officer shall approve as being in the best interests of the District) at least five days prior to the date set for the opening of bids in the Notice Inviting Bids, with such changes, insertions and omissions therein as an Authorized Officer may require or approve, such requirement or approval to be conclusively evidenced by such publishing of the Notice of Intention to Sell. Section 7. The Notice Inviting Bids, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of one or more Notices Inviting Bids in connection with the offering and sale of the Notes is hereby authorized and approved. The terms and conditions of the offering and sale of the Notes shall be as specified in the applicable Notice Inviting Bids. Bids for the purchase of the Notes shall be received at the time and place set forth in the applicable Notice Inviting Bids. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the District, to accept the bid for the Notes with the lowest true interest cost, or to reject all bids therefor, in accordance with the terms of the applicable Notice Inviting Bids. Section 8. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Notes is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the District 7324M6.5 OC$D 18-17-4 that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain information permitted by Rule 15c2- 12 to be omitted). The Authorized Officers are each hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Notes a reasonable number of copies of the Preliminary Official Statement. Section 9. The preparation and delivery of a final Official Statement (the "Official Statement'), and its use in connection with the offering and sale of the Notes, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. The Authorized Officers are, and each of them is, hereby authorized and directed to execute the final Official Statement and any amendment or supplement thereto, for and in the name of the District. Section 10. The Continuing Disclosure Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Continuing Disclosure Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such Authorized Officer. Section 11. The Authorized Officers are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the execution and delivery of the Notes and the transactions contemplated by the notices, agreements and documents referenced in this Resolution. The Authorized Officers are further authorized and directed to execute and deliver such additional notes as may be necessary or desirable to pay the Notes at maturity; provided, however, that the documents executed and delivered in connection with any such notes shall be in the form approved pursuant to this Resolution in connection with the Notes. Section 12. All actions heretofore taken by the officers and employees of the District with respect to the execution, delivery and sale of the Notes, or in connection with or related to any of the agreements or documents referenced in this Resolution, are hereby approved, confirmed and ratified. Section 13. This Resolution shall take effect immediately upon its adoption. 7324M6s OCSD 18-17-5 PASSED AND ADOPTED at a regular meeting of the Orange County Sanitation District Board of Directors held on September 26, 2018. Gregory C. Seboum, PLS Chairman of the Board ATTEST: Kelly A. Lore, MMC Clerk of the Board APPROVED AS TO FORM: Bradley R. Hogin General Counsel Orange County Sanitation District 7324M6.5 OC$D 18-17-6 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 18-17 was passed and adopted at a regular meeting of said Board on the 261h day of September 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 261h day of September 2018. Kelly A. Lore, MMC Clerk of the Board of Directors Orange County Sanitation District 7324M6.5 OCSD 18-XX RESOLUTION NO. FC-27 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION AUTHORIZING THE EXECUTION AND DELIVERY BY THE CORPORATION OF AN INSTALLMENT PURCHASE AGREEMENT AND A TRUST AGREEMENT IN CONNECTION WITH THE EXECUTION AND DELIVERY OF ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2018A, AUTHORIZING THE EXECUTION AND DELIVERY OF SUCH NOTES EVIDENCING PRINCIPAL IN AN AGGREGATE AMOUNT OF NOT TO EXCEED $109,875,000 AND AUTHORIZING THE EXECUTION OF OTHER NECESSARY DOCUMENTS AND RELATED ACTIONS WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project") the Orange County Sanitation District (the "District") caused the execution and delivery of $109,875,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, of which $109,875,000 in principal amount is currently outstanding (the "Prior Certificates"); WHEREAS, the District desires to prepay all of the Prior Certificates by paying all of the principal component of the installment payment relating to the Prior Certificates (the "Prior Installment Payment"), and the interest component thereof, thereby causing all of the Prior Certificates to be paid; WHEREAS, to provide the funds necessary to pay the Prior Installment Payment to be so paid, the District and the Orange County Sanitation District Financing Corporation (the "Corporation") desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payments (the "Installment Payment") to be made by the District, pursuant to a new installment purchase agreement (the "Installment Purchase Agreement"), and the Corporation and the District have agreed to finance such payment by causing the execution and delivery of up to $109,875,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes") to be repaid from future certificates of participation, other notes or obligations or lawfully available funds of the District; WHEREAS, the Corporation intends to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to U.S. Bank National Association, as trustee (the "Trustee"), pursuant to a Trust Agreement by and among the Trustee, the Corporation and the District (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made 932414015 IN1035824 FC-27-1 OCSD 2018A CANS Co tiw Resolution pursuant to this Resolution, being referred to herein as the "Trust Agreement'); WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, the Trustee will be instructed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon; WHEREAS, the Corporation desires to assist the District to provide for the public sale of the Notes; WHEREAS, there have been prepared and submitted to this meeting forms of: (a) the Installment Purchase Agreement; and (b) the Trust Agreement. WHEREAS, all acts, conditions and things required by the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the actions authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Corporation is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such actions for the purpose, in the manner and upon the terms herein provided. NOW, THEREFORE, the Board of Directors of the Corporation DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the Corporation (the "Board") so finds. Section 2. The Installment Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. The President of the Corporation, the Vice-President of the Corporation, the Treasurer of the Corporation and the Secretary of the Corporation, and such other officers of the Corporation as the President may designate (the "Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the Corporation, to execute and deliver the Installment Purchase Agreement in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Installment Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate principal amount of Installment Payments in excess of $109,875,000, shall not result in a true interest cost for the Installment Payments in excess of 3.0% per annum and shall not result in a final Installment Payment later than January 1, 2026. 7324am.5 FC-27-2 Section 3. The Trust Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. The Authorized Officers are, and each of them is, hereby authorized and directed, for and in the name of the Corporation, to execute and deliver the Trust Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Authorized Officer. Section 4. The execution and delivery of Notes evidencing principal in an aggregate amount of not to exceed $109,875,000, payable in the year and in the amount, and evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon, as specified in the Trust Agreement as finally executed, are hereby authorized and approved. Section 5. The Authorized Officers of the Corporation are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the execution and delivery of the Notes and the transactions contemplated by the agreements or documents referenced in this Resolution. The Authorized Officers are further authorized and directed to assist the District in delivering such additional notes as may be necessary or desirable to pay the Notes at maturity; provided, however, that the documents executed and delivered in connection with any such notes shall be in the form approved pursuant to this Resolution in connection with the Notes. Section 6. All actions heretofore taken by the officers and agents of the Corporation with respect to the execution, delivery and sale of the Notes, or in connection with or related to any of the agreements or documents referenced in this Resolution, are hereby approved, confirmed and ratified. Section 7. This Resolution shall take effect immediately upon its adoption. 7324ams FC-27-3 PASSED AND ADOPTED at a meeting of the Orange County Sanitation District Financing Corporation held on September 26, 2018. Gregory C. Sebourn, PLS President, Orange County Sanitation District Financing Corporation ATTEST: Kelly A. Lore, MMC Secretary, Orange County Sanitation District Financing Corporation APPROVED AS TO FORM: Bradley R. Hogin General Counsel, Orange County Sanitation District Financing Corporation 7324am.5 FC-27-4 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly Lore, Secretary of the Orange County Sanitation District Financing Corporation, do hereby certify that the foregoing Resolution No. FC-27 was passed and adopted at a regular meeting of said Board on the 261h day of September 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 Financing Corporation this 261h day of September 2018. Kelly A. Lore, MMC Secretary, Orange County Sanitation District Financing Corporation 7324M1.5 FC-XX-XX DRAFT OF 09/05/18 TRUST AGREEMENT by and among U.S. BANK NATIONAL ASSOCIATION, as Trustee, ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION and ORANGE COUNTY SANITATION DISTRICT Dated as of November 1, 2018 Relating to Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A 9324992M IN1035824 OCSD 2018A CAffi8 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EQUAL SECURITY Section1.01. Definitions........................................................................................................2 Section 1.02. Definitions in Installment Purchase Agreement.............................................. 8 Section1.03. Equal Security.................................................................................................. 8 ARTICLE H TERMS AND CONDITIONS OF NOTES Section 2.01. Preparation and Delivery of Notes...................................................................9 Section 2.02. Denomination, Medium and Dating of Notes..................................................9 Section 2.03. Payment of Notes; Interest Computation.........................................................9 Section2.04. Form of Notes................................................................................................ 10 Section 2.05. Execution of Notes and Replacement Notes.................................................. 10 Section 2.06. Transfer and Payment of Notes; Exchange of Notes..................................... 10 Section 2.07. Note Registration Books................................................................................ 10 Section2.08. Reserved......................................................................................................... 10 Section 2.09. Notes Mutilated, Lost,Destroyed or Stolen................................................... 10 Section 2.10. Book-Entry System........................................................................................ 11 ARTICLE III PROCEEDS OF NOTES Section 3.01. Delivery of Notes........................................................................................... 13 Section 3.02. Deposit and Transfer of Proceeds of Notes................................................... 13 Section 3.03. Costs of Issuance Fund.................................................................................. 13 ARTICLE N PREPAYMENT OF NOTES Section 4.01. Optional Prepayment..................................................................................... 14 Section4.02. Reserved......................................................................................................... 14 Section 4.03. Selection of Notes for Optional Prepayment................................................. 14 Section 4.04. Notice of Prepayment .................................................................................... 14 Section 4.05. Partial Prepayment of Notes.......................................................................... 15 Section 4.06. Effect of Prepayment..................................................................................... 15 ARTICLE V ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS Section 5.01. Assignment and Pledge.................................................................................. 15 Section 5.02. Installment Payment Fund............................................................................. 16 Section 5.03. Investment of Moneys.................................................................................... 17 Section 5.04. Brokerage Confirmations............................................................................... 17 73249923.5 i TABLE OF CONTENTS (continued) Page ARTICLE VI COVENANTS Section 6.01. Compliance with Trust Agreement................................................................ 18 Section 6.02. Compliance with Installment Purchase Agreement....................................... 18 Section 6.03. Compliance with Master Agreement............................................................. 18 Section 6.04. Observance of Laws and Regulations............................................................ 18 Section6.05. Other Liens..................................................................................................... 18 Section 6.06. Prosecution and Defense of Suits .................................................................. 18 Section 6.07. Accounting Records and Statements............................................................. 18 Section 6.08. Tax Covenants ............................................................................................... 19 Section 6.09. Continuing Disclosure ...................................................................................22 Section 6.10. Further Assurances.........................................................................................22 ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action upon Event of Default........................................................................22 Section 7.02. Other Remedies of the Trustee ......................................................................23 Section7.03. Non-Waiver....................................................................................................23 Section 7.04. Remedies Not Exclusive................................................................................24 Section 7.05. Application of Amounts After Default..........................................................24 Section 7.06. Trustee May Enforce Claims Without Possession of Notes..........................24 Section 7.07. Limitation on Suits.........................................................................................25 Section 7.08. No Liability by the Corporation to the Owner...............................................25 Section 7.09. No Liability by the District to the Owners.....................................................25 Section 7.10. No Liability of the Trustee to the Owners.....................................................25 ARTICLE VIII THE TRUSTEE Section 8.01. Employment of the Trustee; Duties...............................................................26 Section 8.02. Removal and Resignation of the Trustee.......................................................26 Section 8.03. Compensation and Indemnification of the Trustee........................................27 Section 8.04. Protection of the Trustee................................................................................28 ARTICLE IX AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT Section 9.01. Amendment or Supplement...........................................................................29 Section 9.02. Disqualified Notes .........................................................................................30 Section 9.03. Endorsement or Replacement of Notes After Amendment or Supplement....................................................................................................30 Section 9.04. Amendment by Mutual Consent....................................................................30 73249923.5 ii TABLE OF CONTENTS (continued) Page ARTICLE X DEFEASANCE Section 10.01. Discharge of Notes and Trust Agreement......................................................31 Section10.02. Unclaimed Moneys........................................................................................32 ARTICLE XI MISCELLANEOUS Section 11.01. Benefits of Trust Agreement..........................................................................32 Section 11.02. Successor Deemed Included in all References to Predecessor......................32 Section 11.03. Execution of Documents by Owners.............................................................33 Section 11.04. Waiver of Personal Liability..........................................................................33 Section 11.05. Acquisition of Notes by District....................................................................33 Section 11.06. Content of Written Certificates......................................................................33 Section 11.07. Funds and Accounts.......................................................................................34 Section 11.08. Article and Section Headings, Gender and References.................................34 Section 11.09. Partial Invalidity.............................................................................................34 Section 11.10. California Law...............................................................................................35 SectionIt.11. Notices...........................................................................................................35 Section 11.12. Effective Date................................................................................................35 Section 11.13. Execution in Counterparts..............................................................................35 EXHIBIT A—FORM OF NOTE 73249923.5 111 TRUST AGREEMENT THIS TRUST AGREEMENT (this "Trust Agreement'), is dated as of November 1, 2018, by and among U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the"Trustee"), the ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing under the laws of the State of California (the "Corporation"), and the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District'). WITNESSETH: WHEREAS, to refinance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project") the District caused the execution and delivery of $109,875,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, of which $109,875,000 in principal amount is currently outstanding(the"Prior Notes"); WHEREAS, the District desires to prepay all of the Prior Notes by paying all of the principal component of the installment payment relating to the Prior Notes (the "Prior Installment Payment'), and the interest component thereof, thereby causing all of the Prior Notes to be paid; WHEREAS, to provide the funds necessary to prepay the Prior Installment Payment, the District and the Corporation desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payment (the "Installment Payment') to be made by the District, pursuant to a new installment purchase agreement (the "Installment Purchase Agreement'), and the Corporation and the District have agreed to finance such payment by causing the execution and delivery of $ in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes"), which are certificates of participation evidencing direct, fractional undivided interests in the Installment Payment and the interest thereon, to be made by the District pursuant to the Installment Purchase Agreement; WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000, by and between the District and the Corporation,the District has established and declared the conditions and terns upon which obligations such as the Installment Purchase Agreement, and the Installment Payment, and the interest thereon, are to be incurred and secured; WHEREAS, the Corporation proposes to assign without recourse certain of its rights under and pursuant to the Installment Purchase Agreement to the Trustee; and 73269923.5 WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Trust Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and deliver this Trust Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Notes and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: "Authorized Corporation Representative"means the President, the Vice President, the Treasurer and the Secretary of the Corporation, and any other Person authorized by the President of the Corporation to act on behalf of the Corporation under or with respect to this Trust Agreement. "Authorized Denominations"means $5,000 and integral multiples thereof. "Authorized District Representative" means the General Manager of the District, the Assistant General Manager & Director of Finance and Administrative Services of the District, the Controller of the District and any other Person authorized by the Assistant General Manager & Director of Finance and Administrative Services of the District to act on behalf of the District under or with respect to this Trust Agreement. "Beneficial Owners" means those individuals, partnerships, corporations or other entities for which the Participants have caused the Depository to hold Book-Entry Notes. "Book-Entry Notes" means the Notes registered in the time of the nominee of DTC, or any successor securities depository for the Notes, as the Owner thereof pursuant to the terms and provisions of Section 2.10 hereof. "Business Day" means a day other than (a) Saturday or Sunday, (b)a day on which banking institutions in the city in which the Principal Office is located are authorized or required by law to be closed, and (c)a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. "Cede & Co." means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Notes. 73269923.5 2 "Closing Date"means November.2018. "Code" means the Internal Revenue Code of 1986. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of the date hereof, by and between the District and Digital Assurance Certification, LLC, as dissemination agent thereunder, as originally executed and as it may from time to time be amended in accordance with the terns thereof. "Corporation" means the Orange County Sanitation District Financing Corporation, a nonprofit public benefit corporation organized and existing under the laws of the State. "Costs of Issuance"means all the costs of executing and delivering the Notes, including, but not limited to, all printing and document preparation expenses in connection with this Trust Agreement, the Installment Purchase Agreement, the Notes and any preliminary official statement and final official statement pertaining to the Notes, rating agency fees, market study fees, legal fees and expenses of counsel with respect to the execution and delivery of the Notes, the initial fees and expenses of the Trustee and its counsel and other fees and expenses incurred in connection with the execution and delivery of the Notes, to the extent such fees and expenses are approved by the District. "Costs of Issuance Fund" means the fund by that name established in accordance with Section 3.03 hereof. "Depository" means the securities depository acting as Depository pursuant to Section 2.10 hereof. "District" means the Orange County Sanitation District, a county sanitation district organized and existing under the laws of the State, and any successor thereto. "DTC"means The Depository Trust Company,New York,New York and its successors. "Event of Default" shall have the meaning set forth in Section 6.01 of the Installment Purchase Agreement. "Government Obligations" means any of the following which are noncallable by the issuer thereof except to the extent not permitted by the laws of the State as an investment for the moneys to be invested therein at the time of investment: (i) (a) direct general obligations of the United States of America, (b)obligations the payment of the principal of and interest on which are unconditionally guaranteed as to the full and timely payment by the United States of America or (c)any fund or other pooling arrangement whose assets consist exclusively of the obligations listed in clause(a) or (b) of this clause(i) and which is rated at least `P-1" by Moody's; provided that, such obligations shall not include unit investment trusts or mutual fond obligations; 73269923.5 3 (ii) advance refunded tax-exempt obligations that (a) are rated by Moody's and S&P, (b) are secured by obligations specified in clause (i), (c) are tax-exempt because they are secured by obligations specified in clause (i) and (d) have the same ratings as the obligations specified in clause (i); (iii) bonds, debentures or notes issued by any of the following federal agencies: Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation or Federal National Mortgage Association; provided, that such bonds, debentures or notes shall be the senior obligations of such agencies (including participation certificates) and have the same ratings by Moody's and S&P as the obligations specified in clause(i); and (iv) bonds, debentures or notes issued by any Federal agency hereafter created by an act of Congress, the payment of the principal of and interest on which are unconditionally guaranteed by the United States of America as to the full and timely payment; provided, that, such obligations shall not include unit investment mists or mutual fund obligations. "Installment Payment Fund" means the fund by that name established in accordance with Section 5.02 hereof. "Installment Payment" means the Installment Payment required to be made by the District pursuant to Section 3.02 of the Installment Purchase Agreement. `Installment Purchase Agreement" means the Installment Purchase Agreement, dated as of the date hereof, by and between the District and the Corporation, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. "Interest Account' means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. "Interest Payment Date" means February 15 and August 15 of each year, commencing February 15, 2019,through and including the Maturity Date. "Letter of Representations"means the letter of the District delivered to and accepted by the Depository on or prior to the delivery of the Notes as Book-Entry Notes setting forth the basis on which the Depository serves as depository for such Book-Entry Notes, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute Depository. "Master Agreement" means the Master Agreement for District Obligations, dated as of August 1, 2000,by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms thereof. "Maturity Date"means August 15,2021. "Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the 73269923.5 4 term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the District. "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.10 hereof. "Notes" means the Orange County Sanitation District Revenue Refunding Certificates of Participation (Certificate Anticipation Notes), Series 2018A, also known as the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A, executed and delivered by the Trustee pursuant hereto. "Opinion of Counsel"means a written opinion of Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District. "Outstanding," when used as of any particular time with reference to Notes, means (subject to the provisions of Section 9.02 hereof) all Notes except (a)Notes previously canceled by the Trustee or delivered to the Trustee for cancellation, (b)Notes paid or deemed to have been paid within the meaning of Section 10.01 hereof, and (c)Notes in lieu of or in substitution for which other Notes shall have been executed and delivered by the Trustee pursuant to Section 2.09 hereof. "Owner" means any Person who shall be the registered owner of any Outstanding Note as indicated in the registration books of the Trustee required to be maintained pursuant to Section 2.07 hereof. "Participants" means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Book-Entry Notes as securities depository. "Participating Underwriter" has the meaning ascribed thereto in the Continuing Disclosure Agreement. "Permitted Investments"means any of the following, except to the extent not permitted by the laws of the State as an investment for the moneys to be invested therein at the time of investment: (1) Government Obligations; (2) Bonds, debentures, notes, participation certificates or other evidences of indebtedness issued, or the principal of and interest on which are unconditionally guaranteed, by the Federal Intermediate Credit Bank, the Federal Home Loan Bank System, the Government National Mortgage Association or any other agency or instrumentality of or corporation wholly owned by the United States of America when such obligations are backed by the full faith and credit of the United States for the full and timely payment of principal and interest; 73269923.5 5 (3) Obligations of any state of the United States or any political subdivision thereof, which at the time of investment are rated "Aa3" or higher by Moody's and "AA-"or higher by S&P; or which are rated by Moody's "VMIGI" or better and by S&P "A-1+" or better with respect to commercial paper, or `VMIGI" and 11SP-1," respectively, with respect to municipal notes; (4) Bank time deposits and bank deposit accounts evidenced by certificates of deposit, deposit accounts, bankers' acceptances, issued by any bank, trust company or national banking association insured by the Federal Deposit Insurance Corporation (including the Trustee); provided that (a) such bank, trust company or national banking association be rated"Aa3"or better by Moody's and"AA-"or better by S&P; and (b)the aggregate of such bank time deposits and bankers' acceptances issued by any bank, trust company or banking association does not exceed at any one time 10% of the aggregate of the capital stock, surplus and undivided profits of such bank, trust company or banking association and that such capital stock, surplus and undivided profits shall not be less than $15,000,000; (5) Repurchase agreements with any bank, trust company or national banking association insured by the Federal Deposit Insurance Corporation(including the Trustee), with subsidiaries (of a parent company), provided the obligations of the subsidiary under the agreement are unconditionally guaranteed by the parent, or with any government bond dealer recognized as a primary dealer by the Federal Reserve Bank of New York, which agreements are fully and continuously secured by a valid and perfected first priority security interest in obligations described in paragraph(1) or(2) of this definition, provided that either such bank, trust company or national banking association which (or senior debt or claims paying ability of the financial entity's guarantor) is rated, at the time of investment,"Aa3"or better by Moody's and"AA-"or better by S&P; (6) Repurchase agreements with maturities of not more than one year entered into with financial institutions such as banks or trust companies organized under state law or national banks or banking associations (including the Trustee), insurance companies or government bond dealers reporting to, trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York and a member of the Securities Investor Protection Corporation or with a dealer or parent holding company that is rated, at the time of investment, or whose long-tern debt obligations (or senior debt or claims paying ability of the financial entity's guarantor) are rated, at the time of investment, "Aa3" or better by Moody's and"AA-"or better by S&P,provided such repurchase agreements are in writing, secured by obligations described in paragraphs (1) and (2) of this definition having a fair market value, exclusive of accrued interest, at least equal to the amount invested in the repurchase agreements and in which the Trustee has a perfected first lien in, and retains possession of, such obligations free from all third party claims; (7) Investment agreements, forward purchase agreements and reserve fund put agreements with any corporation, including banking or financial institutions, or agreements entered into with subsidiaries (of a parent company), provided the obligations of the subsidiary under the agreement are unconditionally guaranteed by the parent, the corporate debt of which (or senior debt or claims paying ability of the financial entity's 73249923.5 6 guarantor) is rated, at the time of investment, "Aa3" or better by Moody's and "AA-" or better by S&P; (8) Guaranteed investment contracts or similar funding agreements issued by insurance companies, provided that either the long tern corporate debt of such insurance company, at the time of investment, is rated, at the time of investment, "Aa3" or better by Moody's and "AA-" or better by S&P or which agreements are fully and continuously secured by a valid and perfected first priority security interest in obligations described in paragraph(1) or (2) of this definition, or that the following conditions are met: (a) the market value of the collateral is maintained at levels acceptable to Moody's and S&P, (b)the Trustee or a third party acting solely as agent for the Trustee has possession of the collateral, (c) the Trustee has a perfected first priority security interest in the collateral, (d) the collateral is free and clear of third-party liens, and (e)failure to maintain the requisite collateral level will require the Trustee to liquidate collateral; (9) Corporate commercial paper rated"P-1"or better by Moody's and"A-1+" or better by S&P at the time of investment; (10) Taxable government money market portfolios which are rated"AAAm"or "AAAm-G" by S&P and "P-l"by Moody's (including funds for which the Trustee or an affiliate provides investment advice or similar services); and (11) Deposits with the Local Agency Investment Fund of the State, as may otherwise be permitted by law. "Person" means an individual, corporation, limited liability company, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Principal Account" means the account by that name within the Installment Payment Fund established in accordance with Section 5.02 hereof. "Principal Office" means the Trustee's principal corporate trust office in Los Angeles, California. "Prior Notes"has the meaning ascribed thereto in the recitals hereto. "Prior Notes Trustee" means U.S. Bank National Association, as trustee for the Prior Notes. "Record Date"means, with respect to the interest payable on any Interest Payment Date, the first day of the calendar month on which such Interest Payment Date falls, whether or not such day is a Business Day. "S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term "S&P" shall be 73269923.5 7 deemed to refer to any other nationally recognized securities rating agency selected by the District. "State"means the State of California. "Tax Certificate" means the Tax Certificate as to Arbitrage and the Provisions of Sections 103 and 141-150 of the Internal Revenue Code of 1986, relating to the Notes, executed by the District at the time of execution and delivery of the Notes, as amended or supplemented from time to time. "Trust Agreement" means this Trust Agreement, dated as of November 1, 2018,by and among the Trustee, the Corporation and the District, as originally executed and delivered and as it may from time to time be amended or supplemented in accordance with the provisions hereof. "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, or any other bank or trust company which may at any time be substituted in its place as provided in Section 10.02 hereof. "Written Certificate"and"Written Request'mean(a)with respect to the Corporation, a written certificate or written request, respectively, signed in the name of the Corporation by an Authorized Corporation Representative, and (b)with respect to the District, a written certificate or written request, respectively, signed in the name of the District by an Authorized District Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. Section 1.02. Definitions in Installment Purchase Agreement. Except as otherwise herein defined and unless the context otherwise requires, the terms defined in the Installment Purchase Agreement shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein have the meanings defined therein, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined therein. With respect to any defined term which is given a different meaning under this Trust Agreement than under the Installment Purchase Agreement, as used herein it shall have the meaning given herein. Section 1.03. Equal Security. In consideration of the acceptance of the Notes by the Owners, this Trust Agreement shall be deemed to be and shall constitute a contract between the Trustee and the Owners to secure the full and final payment of the interest and principal evidenced by the Notes which may be executed and delivered hereunder, subject to each of the agreements, conditions, covenants and terns contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit,protection and security of all Owners without distinction,preference or priority as to security or otherwise of any Notes over any other Notes by reason of the number or date thereof or the time of execution or delivery thereof or for any cause whatsoever,except as expressly provided herein or therein. 73269923.5 8 ARTICLE II TERMS AND CONDITIONS OF NOTES Section 2.01. Preparation and Delivery of Notes. The Trustee is hereby authorized, upon the Written Request of the District, to execute and deliver the Notes in the aggregate principal amount of $ , evidencing the aggregate principal amount of the Installment Payment and each evidencing a direct, fractional undivided interest in the Installment Payment, and the interest thereon. The Installment Payment evidenced by the Notes shall constitute the principal evidenced thereby and the interest on such Installment Payment shall constitute the interest evidenced thereby. The Notes shall be numbered,with or without prefixes, as directed by the Trustee. Section 2.02. Denomination, Medium and Dating of Notes. The Notes shall be designated as the "Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A" and shall be prepared in the form of fully registered Notes, without coupons, in Authorized Denominations and shall be payable in lawful money of the United States of America. The Notes shall be dated the Closing Date. Each Note shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full,unless such date of execution shall be after a Record Date and on or prior to the following Interest Payment Date, in which case such Note shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to January 15, 2019, in which case such Note shall represent interest from the Closing Date. Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Notes shall be in default, each Note shall evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Section 2.03. Payment of Notes; Interest Computation. (a) Method and Place of Payment. Except as otherwise provided in the Letter of Representations, payments of interest evidenced by the Notes shall be made to the Owners thereof(as determined at the close of business on the Record Date next preceding the related Interest Payment Date) by check or draft of the Trustee mailed to the address of each such Owner as it appears on the registration books maintained by the Trustee pursuant to Section 2.07 hereof, or to such other address as may be furnished in writing to the Trustee by each such Owner. Except as otherwise provided in the Letter of Representations, payment of principal and prepayment premium, if any, evidenced by the Notes, on the Maturity Date or on prepayment in whole or in part prior thereto, shall be made only upon presentation and surrender of the Notes at the Principal Office. The Owner of$1,000,000 or more in aggregate principal amount of Notes may request in writing that the Trustee pay the interest thereon by wire transfer to an account in the United States, such request to be filed with the Trustee not later than the applicable Record Date. (b) Computation of Interest. The Notes shall bear interest at a rate of % per annum. The interest evidenced by the Notes shall be payable on each Interest Payment Date to and including the Maturity Date or prepayment prior thereto, and shall represent the sum of the interest on the Installment Payment coming due on the Interest Payment Dates in each year. The 73269923.5 9 principal evidenced by the Notes shall be payable on the Maturity Date and shall represent the Installment Payment coming due on the Maturity Date. Interest evidenced by the Notes shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Section 2.04. Form of Notes. The Notes shall be in substantially the form of Exhibit A hereto, with necessary or appropriate insertions, omissions and variations as permitted or required hereby. Section 2.05. Execution of Notes and Replacement Notes. The Notes shall be executed by the Trustee by the manual signature of an authorized signatory of the Trustee. The Trustee shall deliver replacement Notes in the manner and as contemplated by this Article. Such replacement Notes, shall be executed as herein provided and shall be in Authorized Denominations. Section 2.06. Transfer and Payment of Notes: Exchange of Notes. Each Note is transferable by the Owner thereof, in person or by his attorney duly authorized in writing, at the Principal Office, on the registration books maintained by the Trustee pursuant to the provisions of Section 2.07 hereof, upon surrender of such Note for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Note as the absolute owner of such Note for all purposes, whether or not the principal or interest evidenced by such Note shall be overdue,and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal evidenced by such Note shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such Note to the extent of the sum or sums so paid. Whenever any Note shall be surrendered for transfer, the Trustee shall execute and deliver a new Note or Notes evidencing principal in the same aggregate amount. The Trustee shall require the payment by any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Each Note may be exchanged at the Principal Office for Notes evidencing principal in a like aggregate principal amount in such Authorized Denominations as the Owner thereof may request. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. Section 2.07. Note Registration Books. The Trustee shall keep at its Principal Office sufficient books for the registration and transfer of the Notes, which books shall be available for inspection and copying by the District at reasonable hours and under reasonable conditions; and upon presentation for such purpose the Trustee shall,under such reasonable regulations as it may prescribe, register or transfer the Notes on such books as hereinabove provided. Section 2.08. Reserved. Section 2.09. Notes Mutilated, Lost. Destroyed or Stolen. If any Note shall become mutilated, the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Note evidencing a like principal amount and number in exchange and substitution for the Note so mutilated, but only upon surrender to the Trustee of the Note so mutilated. Every mutilated Note 73249923.5 10 so surrendered to the Trustee shall be canceled by it. If any Note shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Owner thereof, shall execute and deliver a new Note evidencing a like principal amount, numbered as the Trustee shall determine, in lieu of and in substitution for the Note so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Note executed and delivered by it under this Section and of the expenses which may be incurred by it under this Section. Any Note executed and delivered under the provisions of this Section in lieu of any Note alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Notes executed and delivered hereunder, and the Trustee shall not be required to treat both the original Note and any replacement Note as being Outstanding for the purpose of determining the amount of Notes which may be executed and delivered hereunder or for the purpose of determining any percentage of Notes Outstanding hereunder, but both the original and replacement Note shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of executing and delivering a new Note for a Note which has been lost, destroyed or stolen and which evidences principal that is then payable, the Trustee may make payment of such Note to the Owner thereof if so instructed by the District. Whenever in this Trust Agreement provision is made for the cancellation by the Trustee of any Notes,the Trustee shall destroy such Notes and deliver a certificate of such destruction to the District. Section 2.10. Book-Entry System. (a) The Notes shall be initially executed and delivered as Book-Entry Notes, and the Notes shall be in the form of a separate single fully registered Note. Upon initial execution and delivery of the Notes, the ownership of each Note shall be registered in the registration books maintained by the Trustee in the name of the Nominee, as nominee of the Depository. Payment of principal or interest evidenced by any Book-Entry Note registered in the name of the Nominee shall be made on the Maturity Date by wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address which is, on the Record Date, shown for the Nominee in the registration books maintained by the Trustee. (b) With respect to Book-Entry Notes, the District, the Corporation and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book-Entry Notes. Without limiting the immediately preceding sentence, the District, the Corporation and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in Book-Entry Notes, (ii)the delivery to any Participant or any other Person, other than an Owner as shown in the registration books maintained by the Trustee, of any notice with respect to Book-Entry Notes, (iii) the selection by the Depository and its Participants of the beneficial interests in Book-Entry Notes to be prepaid in the event Notes are prepaid in part, (iv)the payment to any Participant or any other Person, other than an Owner as shown in the registration books maintained by the Trustee, of any amount with respect to principal or interest evidenced by Book-Entry Notes, or (v)any consent given or other action taken by the Depository as Owner. 73249923.5 11 (c) The District, the Corporation and the Trustee may treat and consider the Person in whose time each Book-Entry Note is registered in the registration books maintained by the Trustee as the absolute Owner of such Book-Entry Note for the purpose of payment of principal and interest evidenced by such Note, for the purpose of selecting any Notes, or portions thereof, to be prepaid, for the purpose of giving notices of matters with respect to such Note, for the purpose of registering transfers with respect to such Note, for the purpose of obtaining any consent or other action to be taken by Owners and for all other purposes whatsoever, and the District,the Corporation and the Trustee shall not be affected by any notice to the contrary. (d) Reserved. (e) The Trustee shall pay all principal and interest evidenced by the Notes to the respective Owner, as shown in the registration books maintained by the Trustee, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal and interest evidenced by the Notes to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books maintained by the Trustee, shall receive a Note evidencing principal and interest evidenced by the Notes. Upon delivery by the Depository to the Owners,the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Date,the word Nominee in this Trust Agreement shall refer to such nominee of the Depository. (fl To qualify the Book-Entry Notes for the Depository's book-entry system, the District shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Corporation, the District or the Trustee any obligation whatsoever with respect to Persons having, interests in such Book-Entry Notes other than the Owners, as shown on the registration books maintained by the Trustee. Such Letter of Representations may provide the time, form, content and manner of transmission, of notices to the Depository. In addition to the execution and delivery of a Letter of Representations by the District, the District, the Corporation and the Trustee shall take such other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify Book-Entry Notes for the Depository's book-entry program. (g) If the District determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Notes and that such Notes should therefore be made available and notifies the Depository and the Trustee of such determination, the Depository will notify the Participants of the availability through the Depository of certificated Notes. In such event, the Trustee shall transfer and exchange certificated Notes as requested by the Depository and any other Owners in appropriate amounts. If(i)the Depository determines not to continue to act as securities depository for Book-Entry Notes, or (ii)the Depository shall no longer so act and gives notice to the Trustee of such determination, then the District shall discontinue the Book-Entry system with the Depository. If the District determines to replace the Depository with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered Note for such Book-Entry Notes, registered in the name of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace the Depository, then the Notes shall no longer be restricted to being registered in the registration books maintained by the Trustee in 73269923.5 12 the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Notes shall designate, in accordance with the provisions of Sections 2.06 and 2.09 hereof Whenever the Depository requests the District to do so, the District will cooperate with the Depository in taking appropriate action after reasonable notice (i)to make available one or more separate certificates evidencing the Book-Entry Notes to any Participant having Book-Entry Notes credited to its account with the Depository, and (ii)to arrange for another securities depository to maintain custody of certificates evidencing the Book- Entry Notes. (h) Notwithstanding any other provision of this Trust Agreement to the contrary, if DTC is the sole Owner of the Notes, so long as any Book-Entry Note is registered in the name of the Nominee, all payments of principal and interest evidenced by such Note and all notices with respect to such Note shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. (i) In connection with any notice or other communication to be provided to Owners pursuant to the Trust Agreement by the District, the Corporation or the Trustee, with respect to any consent or other action to be taken by Owners, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. Notice to the Depository shall be given only when DTC is the sole Owner of the Notes. ARTICLE III PROCEEDS OF NOTES Section 3.01. Delivery of Notes. The Trustee is hereby authorized to execute the Notes and deliver them to the original purchaser thereof upon receipt of a Written Request of the District and on receipt of the proceeds of sale of the Notes. Section 3.02. Deposit and Transfer of Proceeds of Notes. On the Closing Date, the Trustee shall transfer a portion of the net proceeds received by the Trustee from the sale of the Notes in the amount of $ to the Prior Notes Trustee for deposit in the Installment Payment Fund relating to the Prior Notes and shall deposit a portion of the net proceeds received by the Trustee from the sale of the Notes in the amount of$ in the Costs of Issuance Fund. The Trustee shall establish a special fund known as the Proceeds Fund to facilitate the transfer required by this Section 3.02 to the Prior Notes Trustee. The Proceeds Fund shall be closed immediately following the transfer. Section 3.03. Costs of Issuance Fund. The Trustee shall establish and maintain a separate special fund to be held by the Trustee known as the Costs of Issuance Fund. There shall be deposited in the Costs of Issuance Fund on the Closing Date the amount required to be deposited therein pursuant to Section 3.02 hereof. The Trustee shall disburse moneys from the Costs of Issuance Fund on such dates and in such amounts as are necessary to pay Costs of Issuance, in each case upon the Written Request of the District stating the Person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against the Costs of Issuance Fund. On the date that is 73269923.5 13 six months after the Closing Date, the Trustee shall transfer any amounts then remaining in the Costs of Issuance Fund to the Installment Payment Fund. Upon such transfer, the Costs of Issuance Fund shall be closed. ARTICLE IV PREPAYMENT OF NOTES Section 4.01. Optional Prepayment. The Notes are subject to optional prepayment prior the Maturity Date, on any date on or after August 1, 2021, in whole or in part, in Authorized Denominations, from and to the extent of prepayment of the Installment Payment paid pursuant to Section 4.01 of the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Notes to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. Section 4.02. Reserved. Section 4.03. Selection of Notes for Optional Prepayment. Whenever less than all the Outstanding Notes are to be prepaid on any one date pursuant to Section 4.01 hereof,Notes to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate, which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the numbers of the Notes so selected for prepayment on such date. For purposes of such selection,any Notes may be prepaid in part in Authorized Denominations. Section 4.04. Notice of Prepayment. When prepayment of the Notes is authorized pursuant to Section 4.01, the Trustee shall give notice, at the expense of the District, of the prepayment of the Notes. The notice of prepayment shall specify (a)the Notes or designated portions thereof(in the case of prepayment of the Notes in part but not in whole) which we to be prepaid, (b)the date of prepayment, (c)the place or places where the prepayment will be made, including the time and address of any paying agent, (d)the prepayment price and(e)the CUSIP number assigned to the Notes to be prepaid. Such notice of prepayment shall further state that on the specified date there shall become due and payable upon each Note or portion thereof being prepaid the prepayment price and that from and after such date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of prepayment of the Notes pursuant to Section 4.01 hereof, unless at the time such notice is given the Notes to be prepaid shall be deemed to have been paid within the meaning of Section 10.01 hereof, such notice shall state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Notes to be prepaid, and that if such moneys shall not have been so received said notice shall be of no force and effect and the District shall not be required to prepay such Notes. If a notice of prepayment of the Notes contains such a condition and such moneys are not so received, the prepayment of the Notes as described in the conditional notice of prepayment shall not be made and the Trustee shall, within a reasonable time after the date on which such prepayment was to occur, give notice to the persons and in the manner in which the notice of prepayment was given, that such moneys were 73269923.5 14 not so received and that there shall be no prepayment of the Notes pursuant to such notice of prepayment. The District shall provide written notice to the Trustee of its intention to prepay the Notes at least twenty-five (25) days prior to any prepayment date, unless such time period shall be waived by the Trustee. The Trustee shall, at least twenty (20) but not more than sixty (60) days prior to any prepayment date, give notice of prepayment to the respective Owners of the Notes designated for prepayment by first-class mail, postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Notes or the cessation of interest evidenced thereby on the date fixed for prepayment. A certificate or other confirmation provided by the Trustee that notice of prepayment has been given to Owners as herein provided shall be conclusive as against all parties, and no Owner whose Note is called for prepayment may object thereto or object to the cessation of interest evidenced thereby on the fixed prepayment date by any claim or showing that such Owner failed to actually receive such notice of prepayment. Section 4.05. Partial Prepayment of Notes. Upon surrender of any Note prepaid in part only, the Trustee shall execute and deliver to the Owner thereof a new Note or Notes evidencing the unprepaid principal with respect to the Note surrendered. Section 4.06. Effect of Prepayment. If notice of prepayment has been duly given as aforesaid and moneys for the payment of the prepayment price of the Notes to be prepaid are held by the Trustee, then on the prepayment date designated in such notice, the Notes so called for prepayment shall become payable at the prepayment price specified in such notice; and from and after the date so designated, interest evidenced by the Notes so called for prepayment shall cease to accrue, such Notes shall cease to be entitled to any benefit or security hereunder and the Owners of such Notes shall have no rights in respect thereof except to receive payment of the prepayment price thereof. The Trustee shall, upon surrender for payment of any of the Notes to be prepaid,pay such Notes at the prepayment price thereof, and such moneys shall be pledged to such payment. All Notes prepaid pursuant to the provisions of this Article shall be canceled by the Trustee and shall not be redelivered. ARTICLE V ASSIGNMENT AND PLEDGE; FUNDS AND ACCOUNTS Section 5.01. Assignment and Pledge. The Corporation hereby transfers, conveys and assigns to the Trustee, for the benefit of the Owners, all of the Corporation's rights, title and interest in and to the Installment Purchase Agreement (excepting its rights to indemnification thereunder), including the right to receive the Installment Payment, and the interest thereon, from the District and the right to exercise any remedies provided therein in the event of a default by 73269923.5 15 the District thereunder. The Trustee hereby accepts said transfer, conveyance and assignment, solely in its capacity as Trustee, for the benefit of the Owners, subject to the provisions of this Trust Agreement. All of the Installment Payment, and the interest thereon, shall be paid directly by the District to the Trustee, and if received by the Corporation at any time shall be deposited by the Corporation with the Trustee immediately upon the receipt thereof. To secure the respective rights of the Owners to the payments required to be made thereto as provided herein, the Corporation and the District hereby irrevocably pledge to the Trustee, for the benefit of the Owners, all of their right, title and interest, if any, in and to all amounts on deposit from time to time in the funds and accounts established hereunder. This pledge shall constitute a first lien on the amounts on deposit in such funds and accounts. Section 5.02. Installment Payment Fund. (a) The Trustee shall establish and maintain the Installment Payment Fund until the required Installment Payment and all interest payments thereon, are paid in full pursuant to the Installment Purchase Agreement and until the first date upon which the Notes are no longer Outstanding. The Trustee shall deposit in the Installment Payment Fund the Installment Payment, and each payment of interest thereon, as and when paid by the District and received by the Trustee. The moneys in the Installment Payment Fund shall be held in trust by the Trustee for the benefit of the Owners and shall be used and disbursed only for the purposes and uses herein authorized. (b) The Trustee shall transfer the amounts on deposit in the Installment Payment Fund, at the times and in the manner hereinafter provided, to the following respective accounts within the Installment Payment Fund, each of which the Trustee hereby agrees to establish and maintain until the required Installment Payment, and the interest thereon, is paid in full pursuant to the Installment Purchase Agreement and until the first date upon which the Notes are no longer Outstanding. The moneys in each of such accounts shall be held in trust by the Trustee for the benefit of the Owners and shall be used and disbursed only for the purposes and uses herein authorized. (i) Interest Account. The Trustee, on or before each Interest Payment Date, shall deposit in the Interest Account that amount of moneys representing the interest on the Installment Payment coming due on each Interest Payment Date. Moneys in the Interest Account shall be used by the Trustee for the purpose of paying the interest evidenced by the Notes when due and payable. (ii) Principal Account. The Trustee, on or before the Maturity Date, shall deposit in the Principal Account that amount of moneys representing the Installment Payment coming due on such date. Moneys in the Principal Account shall be used by the Trustee for the purpose of paying the principal evidenced by the Notes when due and payable. (iii) Prepayment Account. The Trustee, on the prepayment date specified in the Written Request of the District filed with the Trustee at the time that any prepaid Installment Payment is paid to the Trustee pursuant to the Installment Purchase Agreement, shall deposit in the Prepayment Account that amount of moneys representing such prepaid Installment Payment, the accrued interest thereon to the prepayment date 73269923.5 16 and any premium payable with respect thereto. The Trustee shall deposit in the Prepayment Account any other amounts made available by the District that the District, pursuant to a Written Request of the District, instructs the Trustee to apply to the prepayment of Notes pursuant to Section 4.01 hereof. Moneys in the Prepayment Account shall be used by the Trustee for the purpose of paying the interest, premium, if any, and principal evidenced by the Notes to be prepaid pursuant to Section 4.01 hereof. Section 5.03. Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Trust Agreement shall be invested by the Trustee solely in Permitted Investments, as directed by the District pursuant to a Written Request of the District at least two (2) Business Days prior to the making of such investment. Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Trust Agreement. Absent timely written direction from the District, the Trustee shall invest any funds held by it in Permitted Investments described in clause (10) of the definition thereof. Permitted Investments that are registerable securities shall be registered in the name of the Trustee. All interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Trust Agreement shall be retained therein. Permitted Investments acquired as an investment of moneys in any fund or account established under this Trust Agreement shall be credited to such fund or account. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued by the Trustee at the market value thereof. The Trustee or an affiliate may act as principal or agent in the making or disposing of any investment. The Trustee shall sell or present for redemption any Permitted Investment whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether or not such affiliate is acting as an agent of the Trustee or for any third Person or dealing as principal for its own account. Section 5.04. Brokeraee Confirmations. The Trustee shall furnish the District periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the District. Upon the District's election, such statements will be delivered via the Trustee's online service and upon electing such service, paper statements will be provided only upon request. The District waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur,to the extent permitted by law. The District further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. 73249923.5 17 ARTICLE VI COVENANTS Section 6.01. Compliance with Trust Agreement. The Trustee will not execute or deliver any Notes in any manner other than in accordance with the provisions hereof, and the Corporation and the District will not suffer or permit any default by them to occur hereunder,but will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms hereof required to be complied with,kept,observed and performed by them. Section 6.02. Compliance with Installment Purchase Agreement. The Corporation and the District will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Installment Purchase Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee, will enforce the Installment Purchase Agreement against the other party thereto in accordance with its terns. Section 6.03. Compliance with Master Agreement. The Corporation and the District will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Master Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee,will enforce the Master Agreement against the other party thereto in accordance with its terms. Section 6.04. Observance of Laws and Regulations. The Corporation and the District will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States of America or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired. Section 6.05. Other Liens. None of the Trustee, the Corporation or the District shall create or suffer to be created any pledge of or lien on the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof. Section 6.06. Prosecution and Defense of Suits. The District will defend against every action, suit or other proceeding at any time brought against the Trustee or any Owner upon any claim arising out of the receipt, deposit or disbursement of the Installment Payment, or the interest thereon, or involving the rights of the Trustee or any Owner hereunder; provided, however, that the Trustee or any Owner at its or his election may appear in and defend any such action, suit or other proceeding. Section 6.07. Accounting Records and Statements. The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions made by the Trustee relating to the receipt, deposit and disbursement of the Installment Payment, and the interest thereon, and such accounting records shall be available for inspection by the 73249923.5 18 Corporation and the District at reasonable hours and under reasonable conditions. The Trustee shall not be obligated to provide an accounting for any fund or account that (a)has a balance of $0.00 and (b)has not had any activity since the last reporting date. The Trustee will, upon written request, make copies of the foregoing available to any Owner (at the expense of such Owner). Section 6.08. Tax Covenants. (a) Special Definitions. When used in this Section, the following terms shall have the following meanings: "Bond Counsel" means Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District and reasonably satisfactory to and approved by the Trustee. "Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Computation Period" means, initially, that period commencing on the date of the execution and delivery of the Notes and concluding on the initial Computation Date and, thereafter, each period commencing on the day next following a Computation Date and concluding on the immediately succeeding Computation Date. "Gross Proceeds" of any issue of governmental obligations means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds) of that issue, and any replacement proceeds as defined in section 1.148-1(c)of the Tax Regulations, of that issue. "Investment"has the meaning set forth in section 1.148-1(b)of the Tax Regulations. "Nonpurpose Investment"means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of an issue are invested and that is not acquired to carry out the governmental purposes of that issue. "Opinion of Bond Counser'means a written opinion of Norton Rose Fulbright US LLP or any other counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the District. "Prior Issue" shall refer to the Prior Notes (but in the case of any of the foregoing executed and delivered for multiple purposes, only to the portion thereof allocable pursuant to section 1.148-9(h)(4) of the Tax Regulations to other than refunding purposes). "Proceeds," with respect to an issue of governmental obligations, has the meaning set forth in has the meaning set forth in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds,but not replacement proceeds). "Tax Regulations" means the United States Treasury Regulations promulgated pursuant to sections 103 and 141 through 150 of the Code. 73249923.5 19 "Yield" of (i) any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations and (ii) in respect of the Notes has the meaning set forth in section 1.148-4 of the Tax Regulations. (b) Exclusion of Interest from Gross Income. The District will take all actions necessary to establish and maintain the exclusion pursuant to section 103(a) of the Code of interest on the Notes from the gross income of the owners thereof for federal income tax purposes, and will not use, permit the use of, or omit to use Gross Proceeds of the Notes or any other amounts (or any property the acquisition, construction or improvement of which is to be refinanced directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, would cause the interest on any Note to fail to be excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the Trustee receives a written Opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the exclusion pursuant to section 103(a) of the Code of interest on any Note from the gross income of the owner thereof, the District shall comply with this covenant and each of the specific covenants in this Section. (c) No Private Use or Private Payments. Except as would not cause any Note to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the District shall at all times prior to the payment and cancellation of the last of the Notes to be retired: (i) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Notes and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds or the Gross Proceeds of any Prior Issue in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (ii) does not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Notes or of any Prior Issue, or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds, other than taxes of general application within the jurisdiction of the District or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan. Except as would not cause any Note to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the District shall not use of Gross Proceeds of the Notes to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be `loaned" to a person or entity if- (i)property acquired, constructed or improved with such Gross Proceeds is sold or leased to such 73249923.5 20 person or entity in a transaction that creates a debt for federal income tax purposes; (ii) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. For purposes of this covenant, the District will treat any transaction constituting a loan of Gross Proceeds of any of the Prior Issues as resulting in a loan of Gross Proceeds of the Notes. (e) Not to Invest at Higher Yield. Except as would not cause any Note to become an "arbitrage bond" within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder,the District will not, at any time prior to the final cancellation of the last Note to be retired, directly or indirectly invest Gross Proceeds of the Notes in any Investment, if as a result of that investment the yield of any Investment acquired with Gross Proceeds of the Notes, whether then held or previously disposed of, would materially exceed the yield of the Notes within the meaning of said section 148. (f) Not Federally Guaranteed. Except to the extent such action or failure to act would not, pursuant to section 149(b) of the Code and the Tax Regulations and rulings thereunder, adversely affect the exclusion pursuant to section 103(a) of interest on the Notes from the gross income of the owners thereof for federal income tax purposes, the District will not take or omit to take any action that would cause any Note to be "federally guaranteed"within the meaning of section 149(b)of the Code and the Tax Regulations and rulings thereunder. (g) Information Report. The District will timely file any information necessary to the exclusion pursuant to section 103(a) of the Code of interest on the Notes required by section 149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary of the Treasury may prescribe. (h) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, the District will not at any time prior to the final cancellation of the last of the Notes to be refired, enter into any transaction that reduces the amount required to be paid to the United States pursuant to section 148(f) of the Code because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the yield on the Notes not been relevant to either party. (i) Notes Satisfy Section 149(g). The District represents that none of the Prior Issue or the Notes are or will become"hedge bonds"within the meaning of section 149(g)of the Code. Without limitation of the foregoing,with respect to the Prior Issue, (i)(A) on the date of issuance of that issue the District reasonably expected (based upon its own knowledge and upon representations made by other governmental persons upon the issuance of those obligations)that within the three-year period commencing on such date no less than 85% of the spendable proceeds of that issue would be expended for the governmental purposes thereof and (B) the District believes and represents that at no time has more than 50% of the proceeds of that issue been invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more, and with respect to the application of Proceeds of the Notes other than for refunding purposes, (ii)(A) the District will not deliver the Notes unless on the date of the 73249923.5 21 issuance of the Notes it reasonably expects that within the three-yew period commencing on such date of issuance at least 85% of such spendable proceeds of the Notes will be expended for the governmental purpose of the Notes and (B) at no time will more than 50% of such spendable proceeds of the Notes be invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more. 0) Elections. The District hereby directs and authorizes any Authorized Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Authorized Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Notes, in the Tax Certificate relating to the Notes or similar or other appropriate certificate, form or document. (k) Tax Certificate. The District agrees to execute and deliver in connection with the execution and delivery of the Notes a Tax Certificate as to Arbitrage and the Provisions of Sections 141-150 of the Internal Revenue Code of 1986, or similar document containing additional representations and covenants pertaining to the exclusion of interest with respect to the Notes from the gross income of the owners thereof for federal income tax purposes (the "Tax Certificate"), which representations and covenants are incorporated as though expressly set forth herein. Section 6.09. Continuine Disclosure. The District will comply with and carry out all of the provisions of the Continuing Disclosure Agreement applicable to it. Notwithstanding any other provision of this Trust Agreement, failure of the District to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; provided, however, the Trustee, at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Notes and upon being indemnified to its reasonable satisfaction, shall, or any Owner or Beneficial Owner of Notes may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. The Trustee is authorized and directed to execute the acceptance and acknowledgement of the Continuing Disclosure Agreement. Section 6.10. Further Assurances. The District will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to carry out the purposes and intentions of this Trust Agreement and for preserving and protecting the rights and interests of the Owners. ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01. Action upon Event of Default. An Event of Default under the Installment Purchase Agreement shall constitute an Event of Default hereunder and an Event of Default under the Master Agreement shall constitute an Event of Default hereunder. The Trustee may give notice, as assignee of the Corporation, of an Event of Default under the Installment Purchase Agreement to the District, and shall do so if directed to do so by the Owners of not less than 5%of the aggregate principal evidenced by Notes then Outstanding. In each and every case 73269Ms 22 during the continuance of an Event of Default, the Trustee may and, at the direction of the Owners of not less than a majority of the aggregate principal evidenced by Notes then Outstanding, shall, upon notice in writing to the District and the Corporation (a)exercise any of the remedies granted to the Corporation under the Installment Purchase Agreement, (b) exercise any of the remedies granted to the Trustee under the Master Agreement, and (c)take whatever action at law or in equity may appear necessary or desirable to enforce its rights pursuant to this Trust Agreement,the Installment Purchase Agreement or the Master Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Trust Agreement, the Notes, the Installment Purchase Agreement or the Master Agreement, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof. Section 7.02. Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof,the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Corporation or the District or any member, director, officer or employee thereof, and to compel the Corporation or the District or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or (c) by suit in equity upon the happening of any Event of Default hereunder to require the Corporation and the District to account as the trustee of an express trust Section 7.03. Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee or the Owners shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee or the Owners to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee or the Owners by law or by this Article may be enforced and exercised from time to time and as often as the Trustee shall deem expedient. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse determination,the Trustee, such Owner,the Corporation and the District shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. 73269923.5 23 Section 7.04. Remedies Not Exclusive. Subject to the provisions of Section 7.01 hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other appropriate right or remedy. Section 7.05. Application of Amounts After Default. All damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under this Article shall be deposited into the Installment Payment Fund and as soon as practicable thereafter applied: (a) to the payment of all amounts due the Trustee under Section 8.03 hereof; (b) unless the unpaid Installment Payment, and the interest thereon, shall have become, and shall remain, immediately due and payable pursuant to the Master Agreement: (i) to the payment of all amounts then due for interest evidenced by the Notes, in respect of which, or for the benefit of which, money has been collected (other than Notes which have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest evidenced by such Notes due and payable; and (ii) to the payment of all amounts then due for principal evidenced by the Notes, in respect of which, or for the benefit of which, money has been collected (other than Notes which have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal evidenced by such Notes due and payable. (c) if the unpaid Installment Payment, and the interest thereon, shall have become, and shall remain, immediately due and payable pursuant to the Master Agreement, to the payment of all amounts then due for principal and interest evidenced by the Notes and, if the amount available therefor shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Note over any other Note, to the persons entitled thereto without any discrimination or preference. Section 7.06. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Trust Agreement or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the 73249923.5 24 Trustee, its agents and counsel, be for the ratable benefit of the Owners of the Notes in respect of which such judgment has been recovered. Section 7.07. Limitation on Suits. No Owner shall have any right to institute any proceeding,judicial or otherwise,with respect to this Trust Agreement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Owner shall have previously given written notice to the Trustee of a continuing Event of Default hereunder, (b)the Owners of not less than a majority of the aggregate principal evidenced by Notes then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, (c) such Owner or Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, (d)the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings, and(e)no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Owners of a majority of the aggregate principal evidenced by Notes then Outstanding; it being understood and intended that no one or more Owners of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of any other Owner of Notes, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal and ratable benefit of all the Owners of Notes. Section 7.08. No Liability by the Corporation to the Owner. Except as expressly provided herein, the Corporation shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payment, and the interest thereon, by the District, or with respect to the performance by the District of the other agreements and covenants required to be performed by it contained in the Installment Purchase Agreement, the Master Agreement or herein, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.09. No Liability by the District to the Owners. Except for the payment when due of the Installment Payment, and the interest thereon, and the performance of the other agreements and covenants required to be performed by it contained in the Installment Purchase Agreement,the Master Agreement or herein, the District shall not have any obligation or liability to the Owners with respect to this Trust Agreement or the preparation, execution, delivery or transfer of the Notes or the disbursement of the Installment Payment, and the interest thereon, by the Trustee to the Owners, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.10. No Liability of the Trustee to the Owners. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Installment Payment, and the interest thereon, by the District, or with respect to the performance by the Corporation or the District of the other agreements and covenants required to be performed by them, respectively, contained in the Installment Purchase Agreement or herein. 73269923.5 25 ARTICLE VIU THE TRUSTEE Section 8.01. Employment of the Trustee: Duties. The Corporation and the District hereby appoint and employ the Trustee to receive, deposit and disburse the Installment Payment, and the interest thereon, to prepare, execute, deliver and transfer the Notes and to perform the other functions contained herein, all in the manner provided herein and subject to the conditions and terns hereof. By executing and delivering this Trust Agreement, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an Event of Default hereunder has occurred and is continuing, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Trust Agreement, and no implied covenants or obligations shall be read into this Trust Agreement against the Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. Section 8.02. Removal and Reshmation of the Trustee. The Corporation and the District may, by an instrument in writing, remove the Trustee initially a party hereto and any successor thereto unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time (a)requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority of the aggregate principal evidenced by the Notes at the time Outstanding (or their attorneys duly authorized in writing), or (b)the Trustee shall cease to be eligible in accordance with the following paragraph, and shall appoint a successor Trustee. The Trustee shall be a bank having trust powers or a trust company in good standing in or incorporated under the laws of the United States or any state thereof, having (or if such bank or trust company is a member of a bank holding company system, its parent bank holding company shall have) a combined capital and surplus of at least $75,000,000, and be subject to supervision or examination by federal or state banking authorities. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Corporation and the District and by giving notice, by first class mail, postage prepaid, of such resignation to the Owners at their addresses appearing on the registration books maintained by the Trustee. Upon receiving such notice of resignation, the Corporation and the District shall promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the event the District and the Corporation do not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the District, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any successor Trustee 732699233 26 appointed under this Trust Agreement shall signify its acceptance of such appointment by executing and delivering to the District and the Corporation and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein;but,nevertheless, at the written request of the District or of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confim»ng to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Trust Agreement and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Trust Agreement and vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.03. Compensation and Indemnification of the Trustee. The District shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all its reasonable advances and expenditures (which shall not include "overhead expenses" except as such expenses are included as a component of the Trustee's stated annual fees or disclosed transaction fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys retained by the Trustee, employed by it in the exercise and performance of its rights and obligations hereunder; provided, however, that the Trustee shall not have any lien for such compensation or reimbursement against any moneys held by it in any of the funds or accounts established hereunder. The Trustee may take whatever legal actions are lawfully available to it directly against the Corporation or the District Except as otherwise expressly provided herein, no provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers hereunder. The District, to the extent permitted by law, agrees to indemnify and save the Trustee, its directors, officers, employees and agents harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder, including but not limited to 73269923.5 27 costs and expenses incurred in defending against any claim or liability, which are not due to its negligence or willful misconduct. Section 5.04. Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent, notice, request, requisition, resolution, statement, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Owners of the Notes pursuant to this Trust Agreement, unless such Owners shall have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may consult with counsel, who may be counsel to the Corporation or the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Notes or the Installment Purchase Agreement, or of the assignment made to it hereunder, or for statements made in the preliminary or final official statement relating to the Notes. The Trustee shall not be required to take notice or be deemed to have notice of any default or Event of Default hereunder, except failure of any of the payments to be made to the Trustee required to be made hereunder or under the Installment Purchase Agreement, unless the Trustee shall be specifically notified in writing of such default or Event of Default by the District, the Corporation or the Owners of not less than 5% of the aggregate principal evidenced by the Notes then Outstanding. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the District or a Written Certificate of the Corporation, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Notes and may join in any action which any Owner may be entitled to take with like effect as if the Trustee were not a party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Corporation or the District, and may net as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Corporation or the District as freely as if it were not the Trustee hereunder. 73249923.5 28 The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall diligently pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the funds established hereunder, except only for its own willful misconduct, negligence or breach of an obligation hereunder. The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Corporation or the District is a party and which, in the opinion of the Trustee and its counsel, affects the Notes or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal evidenced by Notes then Outstanding,provided the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action. ARTICLE IX AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT Section 9.01. Amendment or Supplement. (a) This Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee hereunder may be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Notes then Outstanding, exclusive of Notes disqualified as provided in Section 9.02 hereof, are filed with the Trustee. No such amendment or supplement shall (i) extend the stated Maturity Date of any Note or reduce the rate of interest evidenced thereby or extend the time of payment of such interest or reduce the amount of principal evidenced thereby, (ii)reduce the percentage of Owners whose consent is required for the execution of any amendment hereof or supplement hereto without the prior written consent of the Owners of all Notes then Outstanding, (iii)modify any of the rights or obligations of the Trustee without the prior written consent of the Trustee, or (iv) amend this Section without the prior written consent of the Owners of all Notes then Outstanding. (b) This Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Tmstee hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution, without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: 73269923.5 29 (i) to add to the agreements, conditions, covenants and terms required by the Corporation or the District to be observed or performed herein other agreements, conditions, covenants and terms thereafter to be observed or performed by the Corporation or the District, or to surrender any right or power reserved herein to or conferred herein on the Corporation or the District; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Corporation or the District may deem desirable or necessary and not inconsistent herewith; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest evidenced by the Notes; or (iv) for any other reason, provided such amendment or supplement does not adversely affect the rights or interests of the Owners. Section 9.02. Disqualified Notes. Notes owned or held by or for the account of the District (but excluding Notes held in any pension or retirement fund of the District) shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Notes provided in this Article, and shall not be entitled to consent to or take any other action provided in this Article, and the Trustee may adopt appropriate regulations to require each Owner,before his consent provided for herein shall be deemed effective, to reveal if the Notes as to which such consent is given are disqualified as provided in this Section. Section 9.03. Endorsement or Replacement of Notes After Amendment or Supplement. After the effective date of any action taken as hereinabove provided in this Article, the Trustee may determine that the Notes may bear a notation by endorsement in form approved by the Trustee as to such action, and in that case upon demand of the Owner of any Outstanding Note and presentation of such Note for such purpose at the Principal Office a suitable notation as to such action shall be made on such Note. If the Trustee shall receive an Opinion of Counsel advising that new Notes modified to conform to such action are necessary, modified Notes shall be prepared, and in that case upon demand of the Owner of any Outstanding Notes such new Notes shall be exchanged at the Principal Office without cost to each Owner for Notes then Outstanding upon surrender of such Outstanding Notes. Section 9.04. Amendment by Mutual Consent. The provisions of this Article shall not prevent any Owner from accepting any amendment as to the particular Notes owned by such Owner,provided that due notation thereof is made on such Notes. 73249923.5 30 ARTICLE X DEFEASANCE Section 10.01.Discharge of Notes and Trust Agreement. (a) If the Trustee shall pay or cause to be paid or there shall otherwise be paid (i)to the Owners of all Outstanding Notes the interest and principal evidenced thereby at the times and in the manner stipulated herein and therein, and (ii) all other amounts due hereunder and under the Installment Purchase Agreement, then such Owners shall cease to be entitled to the pledge of and lien on the amounts on deposit in the funds and accounts established hereunder, as provided herein, and all agreements and covenants of the Corporation, the District, and the Trustee to such Owners hereunder shall thereupon cease,terminate and become void and shall be discharged and satisfied. (b) Any Outstanding Note shall be deemed to have been paid within the meaning and with the effect expressed in this Section when the whole amount of the principal, premium, if any, and interest evidenced by such Note shall have been paid or when (i) in case said Note or portion thereof has been selected for prepayment in accordance with Section 4.03 hereof prior to the Maturity Date, the District shall have given to the Trustee irrevocable instructions to give, in accordance with the provisions of Section 4.03 hereof, notice of prepayment of such Note, or portion thereof, (ii) there shall be on deposit with the Trustee, moneys, or Government Obligations, or any combination thereof, the principal of and the interest on which when due, and without any reinvestment thereof,will provide moneys which shall be sufficient to pay when due the principal, premium, if any, and interest evidenced by such Note and due and to become due on or prior to the prepayment date or the Maturity Date, as the case may be, and(iii) in the event the Maturity Date will not occur, and said Note is not to be prepaid, within the next succeeding 60 days, the District shall have given the Trustee irrevocable instructions to give notice, as soon as practicable in the same manner as a notice of prepayment given pursuant to Section 4.03 hereof, to the Owner of such Note, or portion thereof, stating that the deposit of moneys or Government Obligations required by clause(ii) of this subsection has been made with the Trustee and that said Note, or portion thereof, is deemed to have been paid in accordance with this Section and stating the Maturity Date or prepayment date upon which moneys are to be available for the payment of the principal, premium, if any, and interest evidenced by said Note, or portion thereof. Neither the moneys nor the Government Obligations deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Government Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the payment of the principal and interest evidenced by said Note, or portions thereof. If payment of less than all of the Notes is to be provided for in the manner and with the effect expressed in this Section, the Trustee or the District, as applicable, shall select such Notes, or portions thereof in the principal amounts designated to the Trustee by the District. (c) After the payment of all the interest and principal evidenced by all Outstanding Notes and all other amounts due hereunder and under the Installment Purchase Agreement as provided in this Section, the Trustee shall execute and deliver to the Corporation and the District all such instruments as may be necessary or desirable to evidence the discharge and satisfaction of this Trust Agreement, the Trustee shall pay over or deliver to the District all moneys or 73249923.5 31 securities held by it pursuant hereto which are not required for the payment of the interest and principal evidenced by such Notes and all other amounts due hereunder and under the Installment Purchase Agreement. (d) Prior to any defeasance becoming effective under this Article, the District shall cause to be delivered (i)an executed copy of a report, addressed to the Trustee and the District, in form and in substance acceptable to the Trustee and the District, of a nationally recognized certified public accountant, or firm of such accountants, verifying that the Government Obligations and cash, if any, satisfy the requirements of subsection(b) of this Section (a "Verification"), (ii)a copy of the escrow deposit agreement entered into in connection with such defeasance, which escrow deposit agreement shall provide that no substitution of Government Obligations shall be permitted except with other Government Obligations and upon delivery of a new Verification and no reinvestment of Government Obligations shall be permitted except as contemplated by the original Verification or upon delivery of a new Verification, and(iii) a copy of an Opinion of Counsel, dated the date of such defeasance and addressed to the Trustee and the District, in form and in substance acceptable to the District, to the effect that such Notes have been paid within the meaning and with the effect expressed in this Trust Agreement, and all agreements and covenants of the Corporation, the District and the Trustee to the Owners of such Notes under this Trust Agreement have ceased, terminated and become void and have been discharged and satisfied. Section 10.02.Unclaimed Moneys. Any moneys held by the Trustee in trust for the payment and discharge of the interest or principal evidenced by any of the Notes which remain unclaimed for two years after the date when such interest or principal evidenced by such Notes have become payable, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the date when the interest and principal evidenced by such Notes have become payable, shall be repaid by the Trustee to the District as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of the interest and principal evidenced by such Notes. ARTICLE XI MISCELLANEOUS Section 11.01.Benefits of Trust Agreement. Nothing contained herein, expressed or implied, is intended to give to any Person other than the Corporation, the District, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the Corporation or the District shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 11.02.Successor Deemed Included in all References to Predecessor. Whenever the Corporation, the District or the Trustee, or any officer thereof, is named or refereed to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Corporation, the District or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or 73269923.5 32 performed by or on behalf of the Corporation, the District or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03.Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the Person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient. The ownership of any Notes and the amount, payment date, number and date of owning the same may be proved by the registration books maintained by the Trustee pursuant to the provisions of Section 2.07 hereof. Any declaration, request or other instrument in writing of the Owner of any Note shall bind all future Owners of such Note with respect to anything done or suffered to be done by the Corporation,the District or the Trustee in good faith and in accordance therewith. Section 11.04.Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the District or the Corporation shall be individually or personally liable for the payment of any moneys, including without limitation,the interest or principal evidenced by the Notes, but nothing contained herein shall relieve any member, officer or employee of the District or the Corporation from the performance of any official duty provided by any applicable provisions of law, by the Installment Purchase Agreement or hereby. Section 11.05.Acauisition of Notes by District. All Notes acquired by the District, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. Section 11.06.Content of Written Certificates. Every Written Certificate of the District and every Written Certificate of the Corporation with respect to compliance with any agreement, condition, covenant or term contained herein shall include (a) a statement that the Person making or giving such certificate has read such agreement, condition, covenant or term and the definitions herein relating thereto, (b)a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based, (c) a statement that, in the opinion of the signer, the signer has made or caused to be made such examination or investigation as is necessary to enable the signer to express an informed opinion as to whether or not such agreement, condition, covenant or term has been complied with, and (d)a statement as to whether, in the opinion of the signer, such agreement, condition, covenant or term has been complied with. 73269M.5 33 Any Written Certificate of the District and any Written Certificate of the Corporation may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless the Person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which each Person's certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon information which is in the possession of the District or the Corporation upon a representation by an officer or officers of the District or the Corporation, as the case may be, unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which such counsel's opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Section 11.07.Funds and Accounts. Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Notes and the rights of the Owners. The Trustee may establish such funds and accounts as it deems necessary to perform its obligations hereunder. Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Trust Agreement. Section 11.O8.Article and Section Headings. Gender and References. The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to "Articles," "Sections," subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words "hereby," "herein," "hereof," "hereto," "herewith," "bereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section, subsection or clause thereof. Section 11.09.Partial Invalidity. If any one or more of the agreements, conditions, covenants or terns required herein to be observed or performed by or on the part of the Corporation, the District or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such tern or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Notes, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law. The Corporation, the District and the Trustee hereby declare that they would have executed this Trust Agreement, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Notes pursuant hereto irrespective of the fact that any one or 73269923.5 34 more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any Person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 11.10.California Law. This Trust Agreement shall be governed by and construed in accordance with the laws of the State. Section 11.11.Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the District: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Assistant General Manager&Director of Finance and Administrative Services If to the Corporation: Orange County Sanitation District Financing Corporation c/o Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Treasurer If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 241n Floor Los Angeles, California 90071 Attention: Global Corporate Trust Services Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, e.g. facsimile, telecopier or email (with a PDF attachment, if applicable), upon the sender's receipt of an appropriate written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e)if given by any other means,upon delivery at the address specified in this Section. Section 11.12.Effective Date. This Trust Agreement shall become effective upon its execution and delivery. Section 11.13.Execution in Counterparts. This Trust Agreement may be simultaneously executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 73249923.5 35 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above. ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION By: Treasurer ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors (S E A L) Attest: By: Clerk of the Board of Directors U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 73269923.5 36 EXHIBIT A FORM OF NOTE No. R-1 $ Unless this Note is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Note executed and delivered is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered Owner hereof, Cede & Co., has an interest herein. ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE OF PARTICIPATION, SERIES 2018A (CERTIFICATE ANTICIPATION NOTE) DATED DATE INTEREST RATE MATURITY DATE CUSIP November , 2018 % August 15, 2021 REGISTERED OWNER: CEDE &CO. PRINCIPAL AMOUNT: THIS IS TO CERTIFY that the Registered Owner of this Orange County Sanitation District Revenue Refunding Certificate of Participation, Series 2018A (Certificate Anticipation Note) (this "Note"), as identified above, is the owner of a direct, fractional undivided interest in an installment payment (the "Installment Payment"), and the interest thereon, payable under and pursuant to the Installment Purchase Agreement, dated as of November 1, 2018 (the "Installment Purchase Agreement'), by and between the Orange County Sanitation District (the "District'), a county sanitation district organized and existing under the laws of the State of California, and the Orange County Sanitation District Financing Corporation (the"Corporation"), a nonprofit public benefit corporation organized and existing under the laws of the State of California. Certain of the rights of the Corporation under the Installment Purchase Agreement, including the right to receive the Installment Payment, and the interest thereon, have been assigned without recourse by the Corporation to U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, as trustee (the "Trustee") under the Trust Agreement, dated as of November 1, 2018 (the "Trust Agreement'), by and among the Trustee, the District and the Corporation. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust Agreement. 73269923.5 A-1 The District has executed and delivered the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement'), by and between the District and the Corporation, pursuant to which the District establishes and declares the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon, will be incurred and secured. This Note is one of the duly authorized Orange County Sanitation District Revenue Refunding Certificates of Participation, Series 2018A (Certificate Anticipation Notes) evidencing principal in the aggregate amount of $ , executed and delivered pursuant to the terms of the Trust Agreement. The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, payable under the Installment Purchase Agreement. The Notes are executed and delivered to refinance certain improvements to the wastewater collection, treatment and disposal facilities of the District (the "Wastewater System")and to pay the costs of issuance incurred in connection therewith. The Installment Payment, and the interest thereon, are to be paid by the District pursuant to the Installment Purchase Agreement in consideration for the purchase of certain improvements to the Wastewater System and for the other agreements and obligations undertaken by the Corporation under the Installment Purchase Agreement and the Trust Agreement. The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, from Net Revenues, and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as farther provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement, and shall be afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The Installment Purchase Agreement is payable on a parity with the other existing Senior Obligation. The District may at any time incur Senior Obligations in addition to existing Senior Obligations and the Installment Purchase Agreement payable from Net Revenues as provided in the Master Agreement on a parity with all other Senior Obligations theretofore incurred,but only subject to the conditions and upon compliance with the procedures set forth in the Master Agreement. The obligation of the District to pay the Installment Payment and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided in the Installment Purchase Agreement, and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt 73269923.5 A-2 limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other payments required to be made under the Installment Purchase Agreement. Reference is hereby made to the Master Agreement, the Installment Purchase Agreement and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terms under which the District's obligation to pay the Installment Payment, and the interest thereon, is incurred, the Notes are executed and delivered, the provisions with regard to the nature and extent of the Net Revenues and other lawfully available funds of the District, and the rights of the Owners of the Notes. All of the terms of the Master Agreement, the Installment Purchase Agreement and the Trust Agreement are hereby incorporated herein. The Trust Agreement constitutes a contract among the District, the Corporation and the Trustee for the benefit of the Owners of the Notes, to all the provisions of which the Owner of this Note, by acceptance hereof,agrees and consents. The Registered Owner of this Note is entitled to receive, subject to the terms of the Trust Agreement on the Maturity Date set forth above, upon presentation and surrender of this Note at the principal corporate trust office of the Trustee (the "Principal Office"), the Principal Amount specified above, evidencing the Owner's interest in the Installment Payment coming due on the Maturity Date, and to receive on each Interest Payment Date, interest accrued thereon at the interest rate specified above, computed on the basis of a 360-day year consisting of twelve 30- day months, evidencing the Registered Owner's interest in the interest evidenced by the Installment Payment coming due on such date. Payments of interest evidenced by the Notes shall be made on each Interest Payment Date to the Owners thereof(as determined at the close of business on the Record Date next preceding such Interest Payment Date or any other date fixed for payment) by check or draft of the Trustee mailed to the address of each such Owner as it appears on the registration books maintained by the Trustee pursuant to the Trust Agreement, or to such other address as may be furnished in writing to the Trustee by such Owner. Payment of principal evidenced by the Notes, on the Maturity Date, shall be made only upon presentation and surrender of the Notes at the Principal Office. All such amounts are payable in lawful money of the United States of America. The Notes are authorized to be executed and delivered in the form of fully registered notes in denominations of$5,000 or any integral multiple thereof. This Note may be transferred or exchanged by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office,but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement. The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, whether or not the principal or interest evidenced by this Note shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the principal and interest evidenced by this Note shall be made only to such Registered Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by this Note to the extent of the sum or sums so paid. 93269M.5 A-3 The Notes are subject to prepayment prior to the Maturity Date as set forth in the Trust Agreement. To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee under the Trust Agreement may be amended or supplemented at any time by an amendment or supplement thereto which shall become binding when the prior written consents of the Owners of a majority of the aggregate principal evidenced by the Notes then outstanding, exclusive of Notes disqualified as provided under the Trust Agreement, are filed with the Trustee. No such supplement or amendment shall (a)extend the stated Maturity Date or reduce the rate of interest evidenced thereby or extend the time of payment of such interest or reduce the amount of principal evidenced thereby, (b)reduce the percentage of Owners whose consent is required for the execution of any amendment of or supplement to the Trust Agreement without the prior written consent of the Owners of all Notes then outstanding, (c)modify any of the rights or obligations of the Trustee without the prior written consent of the Trustee or(d)amend the amendment provisions of the Trust Agreement without the prior written consent of the Owners of all Notes then outstanding. To the extent and in the manner permitted by the terms of the Trust Agreement, the Trust Agreement and the rights and obligations of the Corporation, the District, the Owners and the Trustee under the Trust Agreement may also be amended or supplemented at any time by an amendment or supplement thereto which shall become binding upon execution, without the written consents of any Owners, but only to the extent permitted by law and only(a)to add to the agreements, conditions, covenants and terms required by the Corporation or the District to be observed or performed under the Trust Agreement other agreements, conditions, covenants and terms thereafter to be observed or performed by the Corporation or the District, or to surrender any right or power reserved therein to or conferred therein on the Corporation or the District, and which in either case shall not adversely affect the rights or interests of the Owners, (b)to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained in the Trust Agreement or in regard to questions arising thereunder which the Corporation or the District may deem desirable or necessary and not inconsistent therewith, (c)to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest evidenced by the Notes or (d) for any other reason, provided such amendment or supplement does not adversely affect the rights or interests of the Owners. THE DISTRICT HAS CERTIFIED that all acts, conditions and things required by the statutes of the State of California and by the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Note do exist, have happened and have been performed in regular and due time, form and manner as required by law,and that the Trustee is duly authorized to execute and deliver this Note. 73269923.5 A-4 IN WITNESS WHEREOF, this Note has been executed by the manual signature of an authorized signatory of the Trustee as of the date set forth below. Date: November_, 2018 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 73269923.5 A-5 ASSIGNMENT For value received, the undersigned doles) hereby sell, assign and transfer unto the within-mentioned Note and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises. Dated: Note: The signature(s)on this Assignment must correspond with the narne(s) as written on the face of the within registered Note in every particular, without alteration or enlargement or any change whatsoever. Tax I.D. #: Signature Guaranteed: Now: Signanhre(s)must be guaranteed by an eligible Now: The signature(s)on this Assignment must correspond guarantor. with the narne(s)as written on the face ofthe within Note in every particular without alteration or enlargement or any change whatsoever. 732699233 A-( DRAFT OF 09/05/18 INSTALLMENT PURCHASE AGREEMENT by and between ORANGE COUNTY SANITATION DISTRICT and ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION Dated as of November 1, 2018 Relating to Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A 73253054.4 IN1035824 OCSD 2018A CAffi8 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS.................................................................................................2 Section 1.01. Definitions............................................................................................2 Section 1.02. Definitions in Master Agreement and Trust Agreement......................3 ARTICLE II PURCHASE OF PROJECT BY,AND SALE THEREOF TO, THE CORPORATION; PAYMENT........................................................................4 Section 2.01. Acquisition of the Project....................................................................4 Section 2.02. Payment of Purchase Price...................................................................4 ARTICLE III PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT; INSTALLMENT PAYMENT.....................................................4 Section 3.01. Purchase and Sale of Project................................................................4 Section 3.02. Installment Payment.............................................................................4 Section3.03. Reserved...............................................................................................4 Section 3.04. Obligation Absolute............................................................................. 5 Section 3.05. Nature of Agreement............................................................................ 5 ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENT; DISCHARGE .............. 5 Section 4.01. Prepayment of Installment Payment.................................................... 5 Section4.02. Notice................................................................................................... 5 Section 4.03. Discharge of Obligations..................................................................... 5 ARTICLE COVENANTS .................................................................................................6 Section 5.01. Compliance with Master Agreement...................................................6 Section 5.02. Compliance with Installment Purchase Agreement.............................6 Section 5.03. Protection of Security and Rights........................................................6 Section 5.04. Indemnification of Corporation...........................................................6 Section 5.05. Further Assurances...............................................................................6 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION.............................................................................................7 Section 6.01. Events of Default.................................................................................7 Section 6.02. Remedies on Default............................................................................7 Section6.03. Non-Waiver.......................................................................................... 8 Section 6.04. Remedies Not Exclusive...................................................................... 8 ARTICLE VII AMENDMENTS ............................................................................................. 8 Section 7.01. Amendments........................................................................................ 8 ARTICLE VIII MISCELLANEOUS........................................................................................9 Section 8.01. Liability of District Limited.................................................................9 Section 8.02. Limitation of Rights........................................................................... 10 Section8.03. Assignment ........................................................................................ 10 Section8.04. Notices............................................................................................... 10 73253054.4 _i_ TABLE OF CONTENTS (continued) Page Section 8.05. Successor Is Deemed Included in all References to Predecessor...... 11 Section 8.06. Waiver of Personal Liability.............................................................. 11 Section 8.07. Article and Section Headings, Gender and References..................... 11 Section 8.08. Partial Invalidity................................................................................. 11 Section 8.09. Governing Law.................................................................................. 11 Section 8.10. Execution in Counterparts.................................................................. 11 EXHIBIT A - DESCRIPTION OF PROJECT..........................................................................A-1 73253054.4 -11- INSTALLMENT PURCHASE AGREEMENT THIS INSTALLMENT PURCHASE AGREEMENT (this "Installment Purchase Agreement'), dated as of November 1, 2018, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "District'), and the ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION, a nonprofit public benefit corporation organized and existing under the laws of the State of California(the"Corporation"). WITNESSETH: WHEREAS, to finance the acquisition, construction and installation of certain improvements to its wastewater system (the "Prior Project') the District caused the execution and delivery of $109,875,000 in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificates Anticipation Notes, Series 2016B, of which $109,875,000 in principal amount is currently outstanding(the`Prior Notes"); WHEREAS, the District desires to prepay all of the Prior Notes by paying at the first Optional Prepayment date all of the principal component of the installment payment relating to the Prior Notes (the"Prior Installment Payment'), and the interest thereon; WHEREAS, to provide the funds necessary to prepay the Prior Installment Payment and the interest thereon to be so paid, the District and the Corporation desire that the Corporation purchase the Prior Project from the District and the District sell the Prior Project to the Corporation, and that the District then purchase the Prior Project from the Corporation and the Corporation sell the Prior Project to the District, for the installment payment (the "Installment Payment') to be made by the District, pursuant to a new installment purchase agreement (the "Installment Purchase Agreement"),and the Corporation and the District have agreed to finance such prepayment by causing the execution and delivery of $ in aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes"), which are certificates of participation evidencing direct, fractional undivided interests in the Installment Payment and the interest thereon,to be made by the District pursuant to the Installment Purchase Agreement; WHEREAS, pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000, by and between the District and the Corporation,the District has established and declared the conditions and terms upon which obligations such as this Installment Purchase Agreement, and the Installment Payment, and the interest thereon, are to be incurred and secured; WHEREAS, the Corporation proposes to assign without recourse certain of its rights under and pursuant to this Installment Purchase Agreement to U.S. Bank National Association, as trustee(the"Trustee"); 73253054.4 WHEREAS, in consideration of such assignment and the execution and delivery of the Trust Agreement, dated as of the date hereof,by and among the Trustee, the Corporation and the District, the Trustee has agreed to execute and deliver the Notes, evidencing direct, undivided fractional interests in the Installment Payment, and the interest thereon,payable hereunder; WHEREAS, a portion of the proceeds of the Notes, together with other available funds, will be used to prepay the Prior Installment Payment; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Installment Purchase Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Installment Purchase Agreement; NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. Except as provided in Section 1.02 hereof or unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: "Business Day" means a day other than (a) Saturday or Sunday, (b) a day on which banking institutions in the city in which the Principal Office is located are authorized or required by law to be closed, and (c) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. "Closing Date"means November_,2018. "Corporation" means the Orange County Sanitation District Financing Corporation, a nonprofit public benefit corporation organized and existing under the laws of the State, and any successor thereto. "District" means the Orange County Sanitation District, a county sanitation district organized and existing under and by virtue of the laws of the State, and any successor thereto. "Event of Default"means an event described in Section 6.01 hereof. "Installment Payment" means the Installment Payment required to be made by the District pursuant to Section 3.02 hereof. "Installment Payment Date"means August 15, 2021. 73253054.4 2 "Installment Purchase Agreement" means this Installment Purchase Agreement, dated as of November 1, 2018, by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms hereof. "Interest Payment Date" means February 15 and August 15 of each year, commencing February 15, 2019,through and including the Installment Payment Date. "Master Agreement" means the Master Agreement for District Obligations, dated as of August 1, 2000, by and between the District and the Corporation, as originally executed and as it may from time to time be amended or supplemented in accordance with the terms thereof. "Notes" means the Orange County Sanitation District Revenue Refunding Certificates of Participation (Certificate Anticipation Notes), Series 2018A, also known as the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A, executed and delivered by the Trustee pursuant to the Trust Agreement. "Person" means an individual, corporation, limited liability company, fine, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Principal Office" means the Trustee's principal corporate trust office in Los Angeles, California. "Project" means the improvements to the Wastewater System, as described in Exhibit A hereto. "Trust Agreement" means the Trust Agreement, dated as of November 1, 2018, by and among the Trustee, the Corporation and the District, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, or any other bank or trust company which may at any time be substituted in its place as provided in the Trust Agreement. Section 1.02. Definitions in Master Agreement and Trust Agreement. Except as otherwise herein defined and unless the context otherwise requires, the terms defined in the Master Agreement or the Trust Agreement shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein have the meanings defined therein, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined therein. With respect to any defined term which is given a different meaning under this Installment Purchase Agreement than under the Master Agreement or the Trust Agreement, as used herein it shall have the meaning given herein. 73253054.4 3 ARTICLE II PURCHASE OF PROJECT BY,AND SALE THEREOF TO, THE CORPORATION; PAYMENT Section 2.01. Acauisition of the Project. The District represents and warrants that it is the sole and exclusive owner of the Project. The Corporation hereby purchases from the District, and the District hereby sells to the Corporation, the Project in accordance with the provisions of this Installment Purchase Agreement. All right, title and interest in and to the Project shall immediately vest in the Corporation on the Closing Date without further action on the part of the Corporation or the District. Section 2.02. Payment of Purchase Price. On the Closing Date, the Corporation shall pay to the District, as the purchase price of the Project, the amount of$ , which amount shall be paid from the net proceeds of the Notes. ARTICLE III PURCHASE OF PROJECT BY,AND SALE THEREOF TO,THE DISTRICT; INSTALLMENT PAYMENT Section 3.01. Purchase and Sale of Project. The District hereby purchases from the Corporation, and the Corporation hereby sells to the District, the Project in accordance with the provisions of this Installment Purchase Agreement. All right, title and interest in and to the Project shall immediately vest in the District on the Closing Date without further action on the part of the District or the Corporation. Section 3.02. Installment Payment. The District shall pay to the Corporation, from Net Revenues and other lawfully available funds of the District,the purchase price of the Project in a single Installment Payment, with interest thereon, as provided herein. The Installment Payment shall be in the aggregate principal amount of$ and shall be payable on or before the Installment Payment Date. The Installment Payment shall accrue interest from the Closing Date, at the rate of %per am=, payable on the Interest Payment Dates. Such interest shall accrue on the basis of a 360-day year consisting of twelve 30-day months. The Installment Payment, and the payment of interest thereon, shall be deposited with the Trustee, as assignee of the Corporation, no later than the Installment Payment Date or Interest Payment Date on which such Installment Payment or payment of interest is due, in lawful money of the United States of America, in immediately available funds. If and to the extent that, on any such date, there are amounts on deposit in the Installment Payment Fund established under the Trust Agreement, or in any of the accounts therein, which amounts we not being held for the payment of specific Notes, such amounts shall be credited against the Installment Payment, or payment of interest thereon, as applicable, due on such date. Section 3.03. Reserved. 73253054.4 4 Section 3.04. Obligation Absolute. The obligation of the District to make the Installment Payment, and payments of interest thereon, and other payments required to be made by it under this Article, from Net Revenues and other lawfully available funds of the District, is absolute and unconditional, and until such time as the Installment Payment, payments of interest thereon, and such other payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article IV), the District shall not discontinue or suspend any Installment Payment, or payments of interest thereon, or other payments required to be made by it hereunder when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payment, payments of interest thereon, and other payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever. Section 3.05. Nature of Agreement. This Installment Purchase Agreement constitutes a Senior Obligation and, as such, shall be subject to the provisions of the Master Agreement and shall be afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. ARTICLE IV PREPAYMENT OF INSTALLMENT PAYMENT; DISCHARGE Section 4.01. Prepayment of Installment Payment. (a) The Installment Payment shall be subject to prepayment prior to the Installment Payment Date as provided in Article IV of the Trust Agreement. (b) The District may prepay, from any source of available funds, all or any portion of the Installment Payment by depositing with the Trustee moneys or securities as provided, and subject to the terns and conditions set forth, in Article X of the Trust Agreement sufficient to pay the Installment Payment, and the interest thereon, when due or to pay the Installment Payment, and the interest thereon, through a specified date on which the District has a right to prepay such Installment Payment pursuant to subsection (a) of this Section, and to prepay the Installment Payment on such prepayment date, at a prepayment price determined in accordance with subsection(a)of this Section. Section 4.02. Notice. The District shall give written notice to the Trustee specifying the date on which the prepayment will be made prior to making any prepayment pursuant to this Article, which date shall be not less than 25 days from the date such notice is given to the Trustee,unless such time period shall be waived by the Trustee. Section 4.03. Discharge of Obligations. If the Installment Payment, and the interest thereon, shall be paid as and when due in accordance with the terms hereof, or prepaid in accordance with Section 4.01 hereof, and if all Notes shall be fully paid, or provision therefor made in accordance with Article X of the Trust Agreement, and the Trust Agreement shall be discharged by its terms, then all agreements, covenants and other obligations of the District hereunder shall thereupon cease,terminate and become void and be discharged and satisfied. 73253054.4 5 ARTICLE V COVENANTS Section 5.01. Compliance with Master Agreement. The District will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Master Agreement required to be observed and performed by it and will not cause, suffer or permit any default to occur thereunder. Section 5.02. Compliance with Installment Purchase Agreement. The District will punctually pay the Installment Payment, and interest thereon, and other payments required to be made by it hereunder in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, will not cause, suffer or permit any default to occur hereunder and will not terminate this Installment Purchase Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political subdivision of either or any failure of the Corporation to observe or perform any agreement, condition, covenant or term contained herein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Corporation or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities. Section 5.03. Protection of Security and Rights. The District will preserve and protect the security hereof and the rights of the Trustee, as assignee of the Corporation, to the Installment Payment, and interest thereon, and other payments required to be made by the District hereunder and will warrant and defend such rights against all claims and demands of all Persons. Section 5.04. Indemnification of Corporation. To the extent permitted by law, the District hereby agrees to indemnify and hold the Corporation and its members and officers harmless against any and all liabilities which might arise out of or are related to the Project, this Installment Purchase Agreement or the Notes, and the District further agrees to defend the Corporation and its members and officers in any action arising out of or related to the Project, this Installment Purchase Agreement or the Notes. Section 5.05. Further Assurances. The District will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Corporation, or unto the Trustee, as assignee of the Corporation, the rights and benefits provided herein to the Corporation, or to the Trustee, as assignee of the Corporation. 73253054.4 6 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION Section 6.01. Events of Default. The following shall be Events of Default under this Installment Purchase Agreement, and "Event of Default' shall mean any one or more of the following events: (a) if default shall be made by the District in the due and punctual payment of or on account of any Senior Obligation as the same shall become due and payable; (b) if default shall be made by the District in the performance of any of the agreements or covenants required herein, in the Trust Agreement or in the Master Agreement to be performed by it (other than as specified in (a) above), and such default shall have continued for a period of 30 days after the District shall have been given notice in writing of such default by the Corporation or the Trustee; provided, however, that the party or parties giving such notice may agree in writing to a reasonable extension of such period prior to the expiration of such 30 day period and, provided further, that if the District shall proceed to take curative action which, if begun and prosecuted with due diligence, cannot be completed within such a period of 30 days, then such period shall be increased without such written extension to such extent as shall be necessary to enable the District to diligently complete such curative action and such default shall not become an Event of Default for so long as shall be necessary to diligently complete such curative action; or (c) if the District shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the District seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the District or of the whole or any substantial part of its property. Section 6.02. Remedies on Default. Upon the occurrence of an Event of Default, the Trustee,as assignee of the Corporation, shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the District and to compel the District to perform and carry out its duties under applicable law and the agreements and covenants required to be performed herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee, as assignee of the Corporation; (c) by suit in equity to require the District to account as the trustee of an express trust; and to have a receiver or receivers appointed for the Wastewater System and of the issues, earnings, income, products and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. 73253054.4 7 Section 6.03. Non-Waiver. Nothing in this Article or in any other provision hereof shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the Installment Payment, and the interest thereon, to the Trustee, as assignee of the Corporation, at the respective due dates from the Net Revenues and the other funds herein committed for such payment, or shall affect or impair the right of the Trustee, as assignee of the Corporation, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein. A waiver of any default or breach of duty or contract by the Trustee, as assignee of the Corporation, shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee, as assignee of the Corporation,to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee, as assignee of the Corporation,by applicable law or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee, as assignee of the Corporation. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Trustee, as assignee of the Corporation, the District and the Trustee, as assignee of the Corporation, shall be restored to their former positions, rights and remedies as if such action,proceeding or suit had not been brought or taken. Section 6.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee, as assignee of the Corporation, is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by law. ARTICLE VII AMENDMENTS Section 7.01. Amendments. (a) This Installment Purchase Agreement and the rights and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or modified from time to time and at any time by a written amendment hereto executed by the District, the Corporation and the Trustee, as assignee of the Corporation, with the written consent of the Owners of a majority of the aggregate principal evidenced by Notes then Outstanding. No such amendment shall (i) extend the payment date of any Installment Payment or reduce the amount of any Installment Payment, or the interest rate applicable thereto, without the prior written consent of the Owner of each affected Note, or (ii) reduce the percentage of Owners of the Notes whose consent is required to effect any such amendment or modification,without the prior written consent of the Owners of all Notes then Outstanding. (b) This Installment Purchase Agreement and the rights and obligations of the District, the Corporation and the Trustee, as assignee of the Corporation, may be amended or modified from time to time and at any time by a written amendment hereto executed by the 73253054.4 8 District, the Corporation and the Trustee, as assignee of the Corporation, without the written consents of any Owners of the Notes, but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the District, the Corporation or the Trustee, as assignee of the Corporation, to be observed or performed herein other agreements, conditions, covenants and terms thereafter to be observed or performed by the District,the Corporation or the Trustee, as assignee of the Corporation, or to surrender any right or power reserved herein to or conferred herein on the District,the Corporation or the Trustee,as assignee of the Corporation; (ii) to make such provisions for the purpose of curing any ambiguity or of conecfing, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the District,the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or necessary and not inconsistent herewith; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest on the Installment Payment; and (iv) to make such other changes herein or modifications hereto as the District, the Corporation or the Trustee, as assignee of the Corporation, may deem desirable or necessary, and which shall not materially adversely affect the interests of the Owners of the Notes. ARTICLE VIU MISCELLANEOUS Section 8.01. Liability of District Limited. Notwithstanding anything contained herein to the contrary, the District shall not be required to advance any moneys derived from any source of income other than Net Revenues and the other funds provided herein for the payment of the Installment Payment, and the interest thereon, and other payments required to be made by it hereunder, or for the performance of any agreements or covenants required to be performed by it contained herein. The District may, however, but in no event shall be obligated to, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such propose and may be legally used by the District for such propose. The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it hereunder is a special obligation of the District payable, in the manner provided herein, from Net Revenues and other funds provided for herein, and does not constitute a debt of the District or of the State, or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State, or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other payments required to be made hereunder. 73253054.4 9 Section 8.02. Limitation of Rights. Nothing in this Installment Purchase Agreement expressed or implied is intended or shall be construed to give to any Person other than the District, the Corporation and the Trustee, as assignee of the Corporation, any legal or equitable right, remedy or claim under or in respect of this Installment Purchase Agreement or any covenant, condition or provision therein or herein contained, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the District, the Corporation and the Trustee, as assignee of the Corporation. Section 8.03. Assignment. The District and the Corporation hereby acknowledge the transfer, conveyance and assignment by the Corporation to the Trustee of all of the Corporation's rights, title and interest in and to this Installment Purchase Agreement (excepting its rights to indemnification hereunder), including the right to receive Installment Payment, and the interest thereon,from the District,pursuant to the Trust Agreement. Section 8.04. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the District: Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Assistant General Manager&Director of Finance and Administrative Services If to the Corporation: Orange County Sanitation District Financing Corporation c/o Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, California 92708 Attention: Treasurer If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 20 Floor Los Angeles, California 90071 Attention: Corporate Trust Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by facsimile, telecopier or email (with a PDF attachment, if applicable), upon the sender's receipt of an appropriate written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means,upon delivery at the address specified in this Section. 73253054.4 10 Section 8.05. Successor Is Deemed Included in all References to Predecessor. Whenever the District or the Corporation is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the District or the Corporation, and all agreements and covenants required hereby to be performed by or on behalf of the District or the Corporation shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 8.06. Waiver of Personal Liability. No official, officer or employee of the District shall be individually or personally liable for the payment of the Installment Payment, or the interest thereon, or other payments required to be made by the District hereunder, but nothing contained herein shall relieve any official, officer or employee of the District from the performance of any official duty provided by any applicable provisions of law or hereby. Section 8.07. Article and Section Headings. Gender and References. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subsections or clauses are to the corresponding articles, sections, subsections or clauses hereof; and the words "hereby,""herein," "hereof," "hereto," "herewith' and other words of similar import refer to this Installment Purchase Agreement as a whole and not to any particular Article, Section, subdivision or clause hereof. Section 8.08. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the District or the Corporation shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants and portions thereof and shall in no way affect the validity hereof. Section 8.09. Governina Law. This Installment Purchase Agreement shall be construed and governed and construed in accordance with the laws of the State. Section 8.10. Execution in Counterparts. This Installment Purchase Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 73253054.4 1 I IN WITNESS WHEREOF, the parties hereto have executed this Installment Purchase Agreement by their officers thereunto duly authorized as of the day and year first written above. ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors (SEAL) Attest: By: Clerk of the Board of Directors ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION By: Treasurer 73253054.4 12 EXHIBIT A DESCRIPTION OF PROJECT The Project includes in general the acquisition, construction and installation of certain improvements to the wastewater collection,treatment and disposal facilities of the District and in particular including, without limitation, the financing of improvements to the Wastewater System including particularly, but without limitation, the District's collection system, two wastewater treatment plants, and Ocean Outfall, and further as follows: the acquisition, construction, installation, rehabilitation, replacement, or repair of the North County Yard, Bushard Trunk Sewer, Gisler-Redhill Trunk Sewer, Magnolia Trunk Sewer, Bay Bridget Pump Station, Bitter Point Pump Station, Ellis Avenue Pumps Station, Rocky Point Pump Station, Headworks at Plant 2, Primary Clarifiers at Plant 1, Primary Treatment System at Plant 2 Secondary Treatment System at Plant 1, Activated Sludge at Plant 1, Trickling Filters at Plant 1 and 2; Sludge Digester at Plant 1, Sludge Dewatering at Plant 1 and 2, Truck Wash and Dewatering Beds at Plant 1, Primary sludge Feed System at Plant 2, Digester at Plant 2, Effluent Pump Station Annex, Groundwater Replenishment System,and Odor Control Facilities. 73253054.4 A-1 DRAFT OF 09/05/18 PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER.2018 NEW ISSUE—BOOK-ENTRY-ONLY RATINGS: Moody's: " 00 Flitch: ` I o (See"RATINGS"herein.) _P In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel, under existing statutes, regulations, E o rulings and coon decisions,and assuming compliance with the tax covenants described herein,the interest component of each Installment Payment, and the allocable portion thereof distributable in respect of any Note, is ercluded pursuant to section 103(a) of the Internal yRevenue Code of 1986 from the gross income of the owners thereof for federal income tax purposes. In the further opinion of Special 9 Counsel, the interest component of each Installment Payment, and the allocable portion theram distributable in respect of any Note, is not ° an item of taxpreference for purposes of the federal alternative minimum rax.It is also the opinion of Special Counsel that under existing —s law the interest component of each Installment Payment, and the allocable portion thereof distributable in respect of any Note is exempt from personal income boas ofthe Slate of California See "TAXMATTBRS"herein. s 6.2 )District Logo] S [DAC Logo] ORANGE COUNTY SANITATION DISTRICT c REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES ° SERIES 2018A :e Dated: Date of Delivery Maturity Date: August 15,2021 a � Interest Rate: _% Price: _%t Yield:_%t CUSIP No.68428P_ ].5 The$ 'Orange County Saturation District Revenue Refunding Certificate Anticipation Notes, Series 2018A(the"Notes") c o evidence direct,fractional undivided interests of the Owners thereof in an installment payment(tire"Installment Payment'),and the interest thereon,to be made by the Orange County Sanitation District(the"District)paramour to the Installment Purchase Agreement,dated as of Nove 1, 2018 (the tallment Purchase and between and tion trict Financing Corporation (thenSCorporation'). Pursuai t to the Master Agreement for DistricttObligations,th dated County o August), 2000s(the g "Master Agro menf), by and between the District and the Corporation, the District has established conditions and terms upon which `o s obligations, such as the Installment Payment and the interest thereon,will be incurred and secured. The Installment Payment under the e c Installment Purchase Agreement is payable from(i)Net Revenues(as more Polly described in the Master Agreement,the"Net Revenues'), as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the a y operation or ownership of the Wastewater System of the District(the"Wastewater System')remaining after payment of Maintenance and Operation Costs, and (ii)other lawfully available birds of the District, as further described in "SECURITY AND SOURCES OF g PAYMENT FOR THE NOTES"herein. 9 a The Notes will mature on August 15, 2021 (the"Maturity Date'). The District expects the principal of the Notes to be paid from 2 proceeds of the sale, on or prior to the Maturity Date, of a tbture series of certificates of participation, notes or other obligations of the District The sale and delivery of a future series of certificates of participation, notes or other obligations of the District will depend on ?= market conditions, certain approvals by the District and the Corporation and other factors. See "SECURITY AND SOURCES OF v s PAYMENT FOR THE NOTES"herein. `o The Notes are subject to prepayment prior to their maturity. See"THE NOTES—Prepayment Provisions"herein. ° The proceeds of the Notes, together with other amounts, will be used e, (i)prepay all of the Orange County Sanitation District 5' Revenue Refunding Certificate Anticipation Notes,Series 2016B,currently outstanding in the aggregate principal amount of$109,875,000, and(it)pay the costs incurred in connection with the execution and delivery of the Notes. See"PLAN OF FINANCE"herein. L Interest evidenced by the Notes will aceme from the date of their initial delivery and will be payable on each February 15 and August 0 15, commencing February 15, 2019, through and including the Maturity Date. See "THE NOTES" herein. The Notes initially will be delivered only in book-entry form and will be registered in the time of Cede&Co.,as nominee of The Depository Trust Company,New o York,New York("DTC"),which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book- entry form only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. o The Notes will be delivered in denominations of$5,000 and any integral multiple thereof. Payments of principal and interest evidenced by 5 the Notes are payable directly to DEC by U.S. Bank National Association,as trustee(the"Trustee'). Upon receipt of payments of such "c principal and interest,DEC will in tum distribute such payments to the beneficial owners of the Notes. See APPENDIX E—"BOOK- ENTRY SYSTEM"herein. L THE OBLIGATION OF THE DISTRICT TO PAY THE INSTALLMENT PAYMENT,AND THE INTEREST THEREON,AND OTHER PAYMENTS REQUIRED TO BE MADE BY IT UNDER THE INSTALLMENT PURCHASE AGREEMENT IS A SPECIAL o c OBLIGATION OF THE DISTRICT PAYABLE, IN THE MANNER PROVIDED IN THE INSTALLMENT PURCHASE v v AGREEMENT,FROM NET REVENUES AND OTHER LAWFULLY AVAILABLE FUNDS OF THE DISTRICT,AS PROVIDED IN c THE INSTALLMENT PURCHASE AGREEMENT, AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT OR OF THE 9 STATE OF CALIFORNIA, OR OF ANY POLITICAL SUBDIVISION THEREOF, IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE INSTALLMENT PAYMENT, OR THE INTEREST THEREON, OR OTHER PAYMENTS REQUIRED TO BE 02 MADE UNDER THE INSTALLMENT PURCHASE AGREEMENT. SEE "SECURITY AND SOURCES OF PAYMENT FOR THE �nm NOTES"HEREIN. c c_ This cover page contains information intended for quick reference only. It is not a summary of this issue. Investors must read the codes Official Statement to obtain information essential to making an informed investment decision. °a BIDS FOR THE PURCHASE OF THE NOTES WILL BE RECEIVED BY THE DISTRICT u? UNTIL_A.M.NEW YORK TIME ON NOVEMBER ,2018 UNLESS POSTPONED OR CANCELLED F m 3 AS SET FORTH IN THE OFFICIAL NOTICE INVITING BIDS. 'Preliminary,subject to change. t Priced to the first prepayment date of August 1,2021. 24724112.5 The Notes are f rd when,as and iifexecamd and delivered subject to the approval of Norton Rose Fulbright US LLP,Los Angeles, California.Special Counsel and Disclosure Counsel to the Dist rct,and certain other conditions.Certain legal matters will be passed upon for the Diving and the Corporation by Woodruf, Spradla at Smart, a Professional Corporation, Costa Mesa, California Public Resources Advisory Group, Los Angeles, California, has served as Municipal Advisor to the District in connection with the execution and delivery of the Notes. It k anticipated that the Notes in defmifive form will be available for delivery through the book-entry facilities of DTC on or about November_,2018. Dated: November,2018 24724112.5 Orange County Sanitation District Service Area and Treatment Plant Locations in Orange County. California aoo aaaW 1a� u HAM M SREA YORSA fULLER LINOA PIACE M LA S NA RE ANAHfIAI VILLA \� V P 0 ! LOSOS + OE ORANGE \ -� R ROV 11 I BEACH SEAL M ER `P SAN UNT ANA P1 HUNK G S IRWME COSTA MESA NEWPORT SUCH � Sorvim arm OaunEary „'�^ Sowcr Pipclnm ""` -'- S ReGamatlon Pbnt Ro.I(P1) Trm tnant Plsnl Ro,21 P21 - Pump aM lift statlons O unlnmgom"Orangc County lwhke a®asl 24724112.5 ORANGE COUNTY SANITATION DISTRICT Board of Directors Gregory C. Sebourn (Chair) Fullerton David Shawver (Vice Chair) Stanton Denise Barnes—Anaheim Teresa Smith—Orange Glenn Parker—Brea Chad WankePlacentia Fred Smith—Buena Park Allan Bernstein—Tustin Mariellen Yarc Cypress Sal Tinajem Santa Ana Steve Nagel—Fountain Valley Ellery Deaton—Seal Beach Steve Jones—Garden Grove Robert Collacott— Villa Park Erik Peterson Huntington Beach James M. Ferryman—Costa Mesa Sanitary District Donald P.Wagner—Lrvine John Withers—lrvine Ranch Water District Tim Shaw—La Habra Charlie Nguyen—Midway City Sanitary District Peter KimLa Palma Phil Hawkins—Yorba Linda Water District Richard Murphy—Los Alamitos Michelle Steel—Member of the Orange County Scott Peotter Newport Beach Board of Supervisors Executive Management of the District James Herberg, General Manager Robert Thompson,Assistant General Manager&Director of Engineering Lorenzo Tyner,Assistant General Manager&Director of Finance and Administrative Services Ed Torres,Director of Operations and Maintenance James Colston,Director of Environmental Services Celia Chandler,Director of Human Resources Special Services Special Counsel and Disclosure Counsel Norton Rose Fulbright US LLP Los Angeles,California District General Counsel Bradley R.Hogin Woodruff, Spradlin& Smart,a Professional Corporation Costa Mesa,California Municipal Advisor Public Resources Advisory Group Los Angeles,California Trustee U.S.Bank National Association Los Angeles,California 24724112.5 No dealer, salesman or any other person has been authorized by the Orange County Sanitation District (the "District") or (the "Initial Purchaser") to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the District or the Initial Purchaser. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Notes by any person in anyjurisdiction in which it is unlawful for such person to make such an offer,solicitation or sale. The information set forth herein has been provided by the District and other sources that are believed by the District to be reliable.No dealer,broker,salesperson or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement. If given or made, such other information or representations must not be relied upon as having been authorized by the District, the Corporation or the Initial Purchaser in connection with any reoffering. This Official Statement is not to be construed as a contract with the purchasers of the Notes. Statements contained in this Official Statement which involve estimates, projections, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District or the Corporation since the date hereof. This Official Statement is submitted with respect to the sale of the Notes referred to herein and may not be reproduced or used,in whole or in part,for any other purpose,unless authorized in writing by the District. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. Preparation of this Official Statement and its distribution have been duly authorized and approved by the District and the Corporation. In connection with the offering of the Notes, the Initial Purchaser in connection with any reoffering may over-allot or effect transactions which stabilize or maintain the market price of the Notes at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced,may be discontinued at any time. The Initial Purchaser in connection with any reoffering may offer and sell the Notes to certain dealers, institutional investors and others at prices lower than the public offering prices stated on the cover page hereof and such public offering prices may be changed from time to time by the Initial Purchaser. Certain statements included or incorporated by reference in this Official Statement constitute forward- looking statements. Such statements are generally identifiable by the terminology used such as "plan," "expect,""estimate,""budget"or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results,performance or achievements described to be materially different from any future results,performance or achievements expressed or implied by such forward-looking statements. CUSIP is a registered trademark of the American Bankers Association. CUSIP data on the cover hereof and herein is provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. The District, the Municipal Advisor and the Initial Purchaser are not responsible for the selection or correctness of the CUSIP numbers set forth on the cover hereof or herein. 24724112.5 TABLE OF CONTENTS Page INTRODUCTION.......................................................................................................................................I General............................................................................................................................................I TheDistrict.....................................................................................................................................2 Security and Sources of Payment for the Notes..............................................................................2 ContinuingDisclosure....................................................................................................................3 Miscellaneous.................................................................................................................................3 PLANOF FINANCE...................................................................................................................................4 ESTIMATED SOURCES AND USES OF FUNDS ...................................................................................4 THENOTES................................................................................................................................................5 General............................................................................................................................................5 Prepayment Provisions....................................................................................................................5 SECURITY AND SOURCES OF PAYMENT FOR THE NOTES............................................................6 Sale Proceeds of Future Obligations...............................................................................................6 InstallmentPayment........................................................................................................................7 Available Funds of the District.......................................................................................................8 NetRevenues..................................................................................................................................8 RateStabilization Account.............................................................................................................9 Allocation of Revenues.................................................................................................................10 RateCovenant...............................................................................................................................10 Limitations on Issuance of Additional Obligations......................................................................11 Insurance.......................................................................................................................................13 Allocation of Installment Payment...............................................................................................14 THEDISTRICT.........................................................................................................................................15 Background...................................................................................................................................15 Organization and Administration..................................................................................................16 Services.........................................................................................................................................17 ServiceArea..................................................................................................................................17 Employees.....................................................................................................................................18 RetirementPlan.............................................................................................................................19 Other Post-Employment Benefits.................................................................................................21 RiskManagement.........................................................................................................................21 ExistingFacilities.........................................................................................................................21 Permits,Licenses and Other Regulations.....................................................................................22 District Planning and Capital Improvement Program...................................................................24 Groundwater Replenishment System............................................................................................25 BiosolidsManagement..................................................................................................................26 UrbanRunoff................................................................................................................................27 Integrated Emergency Response Program....................................................................................28 Five-Year Strategic Planning........................................................................................................29 DISTRICT REVENUES............................................................................................................................30 SewerService Charges.................................................................................................................30 AdditionalRevenues.....................................................................................................................32 WastewaterTreatment History.....................................................................................................34 Customers.....................................................................................................................................34 24724112.5 i TABLE OF CONTENTS (continued) Page AssessedValuation.......................................................................................................................36 Tax Levies and Delinquencies......................................................................................................37 BudgetaryProcess.........................................................................................................................38 Reserves........................................................................................................................................39 Summary of Operating Data.........................................................................................................40 ForecastedOperating Data............................................................................................................42 Management's Discussion and Analysis of Operating Data.........................................................44 Investmentof District Funds.........................................................................................................45 FINANCIAL OBLIGATIONS..................................................................................................................45 ExistingIndebtedness...................................................................................................................45 AnticipatedFinancings.................................................................................................................46 Direct and Overlapping Bonded Debt...........................................................................................46 THECORPORATION..............................................................................................................................46 LIMITATIONS ON TAXES AND REVENUES......................................................................................47 Article XIIIA of the California Constitution.................................................................................47 Legislation Implementing Article XIIIA......................................................................................47 Article XIIIB of the California Constitution.................................................................................48 Proposition IA and Proposition 22...............................................................................................49 Article XIIIC and Article XHID of the California Constitution...................................................49 Other Initiative Measures..............................................................................................................52 LEGALMATTERS...................................................................................................................................52 MUNICIPAL ADVISOR...........................................................................................................................52 ABSENCE OF LITIGATION...................................................................................................................52 FINANCIAL STATEMENTS...................................................................................................................52 TAXMATTERS........................................................................................................................................53 CONTINUING DISCLOSURE.................................................................................................................55 RATINGS..................................................................................................................................................55 PURCHASE AND REOFFERING...........................................................................................................55 MISCELLANEOUS..................................................................................................................................56 APPENDIX A — COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDEDJUNE 30,2017...........................................................................................A-1 APPENDIX B — THE COUNTY OF ORANGE—ECONOMIC AND DEMOGRAPHIC INFORMATION......................................................................................................B-1 APPENDIX C — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS..........................................C-1 APPENDIX D — FORM OF CONTINUING DISCLOSURE AGREEMENT...................................D-1 APPENDIX E — BOOK-ENTRY SYSTEM.......................................................................................E-1 APPENDIX F — FORM OF APPROVING OPINION OF SPECIAL COUNSEL..............................F-1 24724112.5 ii OFFICIAL STATEMENT ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES SERIES 2018A INTRODUCTION This introduction contains only a brief summary of certain of the terms of the Notes being offered and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Oficial Statement. References to, and summaries of, provisions of the Constitution and laws of the State of California (the "State') and any documents referred to herein do not purport to be complete and such references are qualified in their entirety by reference to the complete provisions. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Trust Agreement the Installment Purchase Agreement and the Master Agreement (each, as hereinafter defined). See APPENDIX C— "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Definitions"herein. General This Official Statement, including the cover page and all appendices hereto, provides certain information concerning the sale and delivery of$ 'aggregate principal amount of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes"), which are certificates of participation evidencing direct, fractional undivided interests in an installment payment (the `Installment Payment") and the interest thereon, to be made by the Orange County Sanitation District(the "District") pursuant to the Installment Purchase Agreement, dated as of November 1, 2018 (the `Installment Purchase Agreement'), by and between the District and the Orange County Sanitation District Financing Corporation (the "Corporation"). Unless the context clearly indicates to the contrary, a reference herein to either of the Installment Purchase Agreement or the Notes is intended to refer to the corresponding interest in the Installment Purchase Agreement. Pursuant to the Master Agreement for District Obligations,dated as of August 1,2000 (the"Master Agreement"),by and between the District and the Corporation, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon, will be incurred and seemed. The Installment Payment under the Installment Purchase Agreement is payable from (i)Net Revenues (as defined hereinafter) as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the "Wastewater System") remaining after payment of Maintenance and Operation Costs, and fi)other lawfully available funds of the District, as further described in "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES" herein. The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of November 1, 2018 (the "Trust Agreement"), by and among the District, the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds from the sale of the Notes will be used to (i)prepay all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, currently outstanding in the aggregate principal amount of$109,875,000 (the "Prior Notes"), and (ii)pay the costs incurred in connection with the execution and delivery of the Notes. See `PLAN OF FINANCE"herein. ' preliminary,subject to change. 24724112.5 The Notes are subject to prepayment prior to their maturity. See "THE NOTES — Prepayment Provisions"herein. The Notes will be executed and delivered in the form of fully registered certificates, dated as of the date of initial delivery thereof and will mature on August 15, 2021 (the "Maturity Date"). Interest evidenced by the Notes will be payable on each February 15 and August 15, commencing February 15, 2019, through and including the Maturity Date (each, an "Interest Payment Date"). See "THE NOTES" herein. The Notes initially will be delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company,New York,New York("DTC"),which will act as securities depository for the Notes. The Notes will be delivered in denominations of$5,000 and any integral multiple thereof. So long as the Notes are in the DTC book-entry system, the interest and principal due with respect to the Notes will be payable by the Trustee,or its agent,to DTC or its nominee. DTC, in turn, will make payments pursuant to its procedures as described under APPENDIX E — "BOOK—ENTRY SYSTEM"herein. The District The District is a public agency responsible for regional wastewater collection, treatment and disposal. The District is the sixth largest wastewater discharger in the United States. The District provides service to an area with a population of approximately 2.6 million people in the northern and central portion of the County of Orange (the "County"), in a service area of approximately 479 square miles, treating an average of 185 million gallons per day(Yng/d")of wastewater in Fiscal Year 2017-18. See"THE DISTRICT,""DISTRICT REVENUES"and"FINANCIAL OBLIGATIONS"herein. Security and Sources of Payment for the Notes The Notes, which are certificates of participation, evidence direct, fractional undivided interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, from Net Revenues, and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District expects the principal of the Notes to be paid from proceeds of the sale,on or prior to the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District. The sale and delivery of a future series of certificates of participation,notes or other obligations of the District will depend on market conditions,certain approvals by the District and the Corporation and other factors. See"SECURITY AND SOURCES OF PAYMENT FOR THE NOTES—Sale Proceeds of Future Obligations." The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District currently has Outstanding Senior Obligations payable from Net Revenues on a parity with the Installment Payment under the Installment Purchase Agreement. See"FINANCIAL OBLIGATIONS—Existing Indebtedness" and "THE DISTRICT" herein and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL 24724112.5 2 DOCUMENTS — Master Agreement" attached hereto. The District has no Subordinate Obligations currently outstanding. Pursuant to the Master Agreement, the District will,to the extent permitted by law, fix,prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year (a)Net Revenues equal to 125% of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary,but shall not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND SOURCE OF PAYMENT FOR THE NOTES—Rate Covenant"herein. The obligation of the District to pay the Installment Payment and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided for in the Installment Purchase Agreement, and does not constitute a debt of the District or of the State, or of any political subdivision thereof,in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District or the State or any political subdivision thereof, is pledged to the payment of the Installment Payment, or the interest thereon, or other payments required to be made under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. See `SECURITY AND SOURCES OF PAYMENT FOR THE NOTES"herein. Continuing Disclosure The District has covenanted for the benefit of holders and beneficial owners of the Notes (a)to provide certain financial information and operating data(the "Annual Report')relating to the District and the property in the District not later than eight months after the end of the District's Fiscal Year (which currently would be Much 1), commencing with the report for the 2017-18 Fiscal Year, and(b)to provide notices of the occurrence of certain enumerated events. The specific natrue of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See "CONTINUING DISCLOSURE" herein and APPENDIX D — "FORM OF CONTINUING DISCLOSURE AGREEMENT." Miscellaneous The descriptions herein of the Trust Agreement,the Master Agreement, the Installment Purchase Agreement, the Continuing Disclosure Agreement and any other agreements relating to the Notes are qualified in their entirety by reference to such documents. Copies of the Trust Agreement, the Master Agreement and the Installment Purchase Agreement are on file and available for inspection at the corporate trust office of U.S. Bank National Association, Los Angeles, California, Attention: Corporate Trust. 24724112.5 3 PLAN OF FINANCE A portion of the net proceeds from the sale of the Notes, together with other available moneys, will be used to prepay on November 29, 2018 (the `Prepayment Date') the installment payment (the "Funded Installment Payment")to be made by the District in connection with the Prior Notes. Under the terms of the Trust Agreement, dated as of October 1, 2016 (the `Prior Trust Agreement"), pursuant to which the Prior Notes were executed and delivered, the payment of the Prior Notes will be effected by depositing a portion of the proceeds of the Notes into the Installment Payment Fund established under the Prior Trust Agreement(the`Payment Fund"). Such moneys will be in an amount sufficient to provide for the payment of the interest on the Funded Installment Payment through and including the Prepayment Date and to provide for the payment of the principal represented by the Funded Installment Payment. In accordance with the Prior Trust Agreement, the Funded Installment Payment will be applied to the payment of interest with respect to the outstanding Prior Notes and to the payment of the principal of the outstanding Prior Notes on the Prepayment Date. The amounts deposited in the Payment Fund will be held in trust solely for the Prior Notes and will not be available to pay the principal and interest evidenced by the Notes or any obligations other than the Prior Notes. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds and other amounts in connection with the delivery of the Notes are presented below. Sources Principal Amount of Notes $ Premium District Contribution Total Sources $ Uses Prepayment of Prior Notes $ Costs of Issuance(') Total Uses $ (n Costs of Issuance include,among other things,the Initial Purchaser's discount,fees of rating agencies,Special Counsel and Disclosure Counsel fees and expenses and the initial fees of the Trustee. 24724112.5 4 THE NOTES General The Notes will be prepared in the form of fully registered certificates in Authorized Denominations of$5,000 and any integral multiple thereof. The Notes will be dated the date of initial delivery thereof and will mature on August 15, 2021 (the "Maturity Date"). Interest evidenced by the Notes will accrue from their date of initial delivery and will be payable semiannually on each February 15 and August 15, commencing February 15, 2019, through and including the Maturity Date (each, an "Interest Payment Date"). Each Note shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full,unless such date of execution shall be after a Record Date and on or prior to the following Interest Payment Date, in which case such Note shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to January 15, 2019,in which case such Note shall represent interest from its date of initial delivery. Notwithstanding, the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Notes shall be in default, each Note shall evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Interest evidenced by the Notes shall be computed on the basis of a 360-day year consisting of twelve 30-day months. See APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement." The Notes initially will be delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company,New York, New York("DTC'), which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book-entry form only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. Payments of principal and interest evidenced by the Notes are payable directly to OTC by U.S. Bank National Association, as trustee. Upon receipt of payments of such principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Notes. So long as the Notes are held in the DTC book-entry system,the interest and principal due with respect to the Notes will be payable by the Trustee, or its agent, to DTC or its nominee. DTC, in turn, will make payments pursuant to its procedures as described under APPENDIX E — "BOOK-ENTRY SYSTEM" herein. Prepayment Provisions Optional Prepayment, The Notes are subject to optional prepayment prior to the Maturity Date, on any date on or after August 1, 2021', in whole or in part, in Authorized Denominations, from and to the extent of prepayment of the Installment Payment paid pursuant to the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Notes to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment,without premium. Selection of Notes for Prepayment. Whenever less than all the Outstanding Notes are to be prepaid on any one date in accordance with the Trust Agreement, the Trustee shall select the Notes to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate, which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the Notes so selected for prepayment on such date. For purposes of such selection, any Note may be prepaid in part in Authorized Denominations. Notice of Prepayment. When prepayment of Notes is authorized pursuant to the Trust Agreement, the Trustee shall give notice, at the expense of the District, of the prepayment of the Notes. ' Preliminary,subject to change. 24724112.5 5 The notice of prepayment shall specify (a)the Notes or designated portions thereof (in the case of prepayment of the Notes in part but not in whole) which are to be prepaid, (b)the date of prepayment, (c)the place or places where the prepayment will be made, including the name and address of any paying agent, (d)the prepayment price and (e)the CUSIP numbers assigned to the Notes to be prepaid. Such notice of prepayment shall further state that on the specified date there shall become due and payable upon each Note or portion thereof being prepaid the prepayment price and that from and after such date interest evidenced thereby shall cease to accrue and be payable. With respect to any notice of optional prepayment of Notes, unless at the time such notice is given the Notes to be prepaid shall be deemed to have been paid within the meaning of the Trust Agreement,such notice shall state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Notes to be prepaid, and that if such moneys shall not have been so received said notice shall be of no force and effect and the District shall not be required to prepay such Notes. If a notice of prepayment of Notes contains such a condition and such moneys are not so received, the prepayment of Notes as described in the conditional notice of prepayment shall not be made and the Trustee shall, within a reasonable time after the date on which such prepayment was to occur, give notice to the persons and in the manner in which the notice of prepayment was given, that such moneys were not so received and that there shall be no prepayment of Notes pursuant to such notice of prepayment. The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice of prepayment to the respective Owners of Notes designated for prepayment by fast-class mail,postage prepaid,at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Notes or the cessation of interest evidenced thereby on the date fixed for prepayment. Effect of Prepayment If notice of prepayment has been duly given as aforesaid and moneys for the payment of the prepayment price of the Notes to be prepaid are held by the Trustee, then on the prepayment date designated in such notice, the Notes so called for prepayment shall become payable at the prepayment price specified in such notice; and from and after the date so designated, interest evidenced by the Notes so called for prepayment shall cease to accrue, such Notes shall cease to be entitled to any benefit or security hereunder and the Owners of such Notes shall have no rights in respect thereof except to receive payment of the prepayment price thereof The Trustee shall, upon surrender for payment of any of the Notes to be prepaid, pay such Notes at the prepayment price thereof, and such moneys shall be pledged to such payment. SECURITY AND SOURCES OF PAYMENT FOR THE NOTES Sale Proceeds of Future Obligations The District expects the principal of the Notes to be paid from proceeds of the sale, on or prior to the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District,that will amortize over a tens of approximately 17 years(the"Future Obligations"). The issuance of the Future Obligations will require future authorizations by the governing boards of the District and the Corporation, as well as the preparation of suitable legal and disclosure documents for the issue. The District is currently unaware of any material impediment to obtaining such authorizations and documents. In addition, the issuance and sale of the Future Obligations will be contingent on the District's ability to access the municipal capital markets, which will depend on the District's creditworthiness and market conditions during the weeks immediately preceding the Maturity 24724112.5 6 Date. The District is unable to predict such matters with certainty and therefore cannot guarantee that the Future Obligations will be successfully issued and sold. Installment Payment The Notes evidence direct, fractional undivided interests in the Installment Payment, and the interest thereoq paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided in the Installment Purchase Agreement. Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs, all as further provided in the Mastef Agreement See"DISTRICT REVENUES"herein. Pursuant to the Master Agreement, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payment and the interest thereon payable under the Installment Purchase Agreement, will be incurred and secured. The obligation of the District to make the Installment Payment, and payments of interest thereon, and other payments required to be made by it under the Installment Purchase Agreement, from Net Revenues, and other lawfully available funds of the District,is absolute and unconditional,and until such time as the Installment Payment, payments of interest thereon, and such other payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to the Installment Purchase Agreement), the District has covenanted that it will not discontinue or suspend the Installment Payment when due, whether or not the Project or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payment, payments of interest thereon, and other payments shall not be subject to reduction whether offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or any cause whatsoever. The District's obligation to make the Installment Payment from Net Revenues is on a parity with the District's obligation to make payments with respect to its Outstanding Senior Obligations. See `Net Revenues" below. Pursuant to the Trust Agreement, the Corporation has assigned to the Trustee for the benefit of the Owners of the Notes substantially all of its rights, title and interest in and to the Installment Purchase Agreement, including its right to receive the Installment Payment and the interest thereon. The District has certain Existing Senior Obligations Outstanding payable from Net Revenues on a parity with the Installment Payment under the Installment Purchase Agreement. The term "Existing Senior Obligations" as used in this Official Statement refers to the Installment Purchase Agreements relating to the District's currently Outstanding Senior Obligations, as set forth on Table 16 under the caption"FINANCIAL OBLIGATIONS—Existing Indebtedness"herein. The term"Senior Obligations" as used in this Official Statement refers to the Existing Senior Obligations and to any additional Senior Obligations, such as the Installment Purchase Agreement, that may be made payable on a parity basis to the Installment Payment as provided in the Master Agreement. Senior Obligations, together with any Subordinate Obligations payable on a subordinate basis to the Installment Payments incurred as provided in the Master Agreement, are referred to collectively as the "Obligations." The District has no Subordinate Obligations currently outstanding. See "FINANCIAL OBLIGATIONS Existing Indebtedness" herein and APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement"attached hereto. The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement and Master Agreement, is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other lawfully available funds of the District, as provided for in the 24724112.5 7 Installment Purchase Agreement, and does not constitute a debt of the District, the State or of any political subdivision thereof, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the District, the State or any political subdivision thereof,is pledged to the payment of the Installment Payment,or the interest thereon,or other payments required to be made under the Installment Purchase Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. See`SECURITY AND SOURCES OF PAYMENT FOR THE NOTES"herein. Available Funds of the District As Senior Obligations under the Master Agreement, the Installment Payments are payable from and secured by a pledge of Net Revenues. Should Net Revenues prove insufficient, the Installment Purchase Agreement further provides that the Installment Payments are payable from any other lawfully available funds of the District. The primary lawfully available funds of the District are its reserve funds, other than trustee-held amounts required to be in any Obligation Reserve Fund securing certain of the District's Senior Obligations, as described in the Master Agreement. At June 30, 2018, the District's Debt Service Required Reserves totaled $100 million, of which approximately $5 million were trustee- held amounts in Obligation Reserve Funds as required under the Master Agreement. See APPENDIX C— "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement" attached hereto. District reserve funds are maintained in accordance with the District's reserve policy. See "DISTRICT REVENUES — Reserves." Available reserves at June 30, 20I8 were approximately $680 million. See "DISTRICT REVENUES —Reserves," "— Summary of Operating Data" and "—Projected Operating Data." Net Revenues The District is obligated to make the Installment Payment from, among other things, Net Revenues as provided in the Master Agreement, which consist of Revenues remaining after payment of costs paid by the District for maintaining and operating the Wastewater System ("Maintenance and Operation Costs"). Revenues are defined in the Master Agreement to mean, for any period, all income and revenue received by the District during such period from the operation or ownership of the Wastewater System, determined in accordance with generally accepted accounting principles, including all fees and charges received during such period for the services of the Wastewater System, investment income received during such period (but only to the extent that such investment income is generally available to pay costs with respect to the Wastewater System, including Maintenance and Operation Costs), Net Proceeds of business interruption insurance received during such period, ad valorem taxes received during such period, payments under the Agreement Acquiring Ownership Interests, Assigning Rights and Establishing Obligations, entered into on February 13, 1986, and amendment No. 1 thereto dated December 10, 1986 (the `9RWD Agreement'), by and between predecessor County Sanitation District No. 14 of Orange County and the Irvine Ranch Water District(the`IRWD")received during such period and all other money received during such period howsoever derived by the District from the operation or ownership of the Wastewater System or arising from the Wastewater System(including any standby or availability charges), but excluding (a)Capital Facilities Capacity Charges, (b)payments received under Financial Contracts, and (c)refundable deposits made to establish credit and advances or contributions in aid of construction (which, for purposes of the Master Agreement, shall not include payments under the IRWD Agreement); provided, however, that (i)Revenues shall be increased by the amounts, if any, transferred during such period from the Rate Stabilization Account to the Revenue Account and shall be decreased by the amounts, if any, transferred during such period from the Revenue Account to the Rate Stabilization Account, and (ii)Revenues shall include Capital Facilities Capacity Charges collected during such period to the extent that such Capital Facilities Capacity Charges could be properly expended on a Capital Facilities Capacity Charge Eligible Project for which the proceeds of 24724112.5 8 Senior Obligations were used or are available to be used. Any Federal Subsidy payments received by the District will constitute Revenues as defined in the Master Agreement. See "DISTRICT REVENUES Additional Revenues"herein. The District's obligation to make the Installment Payment from its Net Revenues is on a parity with the District's obligation to make payments with respect to its other outstanding obligations described as Senior Obligations and all Reimbursement Obligations with respect to Senior Obligations, as provided in the Master Agreement. The Installment Purchase Agreement constitutes a Senior Obligation and, as such, is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. Pursuant to the Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations,and the Net Revenues will not be used for any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. The term"Senior Obligations,"generally means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District authorized, issued,executed and delivered under and pursuant to applicable law, the Installment Purchase Agreement, and all other contracts (including financial contracts) or leases of the District authorized and executed by the District under and pursuant to applicable law, including, without limitation, installment, lease or other payments which me, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a parity with the payments under the Master Agreement. The District may at any time incur Subordinate Obligations payable on a subordinate basis to the Installment Payment as provided in the Master Agreement provided, however, that prior to incurring such Subordinate Obligations, the District shall have determined that the incurrence thereof will not materially adversely affect the District's ability to comply with the requirements of the Master Agreement. The District may at any time incur Reimbursement Obligations with respect to Subordinate Obligations. For a description of the District's Outstanding Senior Obligations and Subordinate Obligations, see "FINANCIAL OBLIGATIONS — Existing Indebtedness" herein. There are currently no Subordinate Obligations or Reimbursement Obligations with respect to Subordinate Obligations outstanding. The District may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be junior and subordinate to the pledge of, and lien on,Net Revenues for the payment of Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. Rate Stabilization Account To avoid fluctuations in its fees and charges of the Wastewater System, from time to time the District may deposit in the Rate Stabilization Account from Net Revenues such amounts as the District deems necessary or appropriate. From time to time, the District may also transfer moneys from the Rate Stabilization Account to the Revenue Account to be used by the District,first to pay all Maintenance and Operations Costs as and when the same shall be due and payable. In addition, any such amount transferred from the Rate Stabilization Account to the Revenue Account by the District is included as Revenues for any period,but such transferred amount is excluded from determining Operating Revenues for any period. Revenues will be decreased by the amounts, if any,transferred from the Revenue Account to the Rate Stabilization Account. There are presently no funds in the Rate Stabilization Account. 24724112.5 9 Allocation of Revenues To carry out and effectuate the pledge of Net Revenues under the Master Agreement as described above, the District agrees and covenants that all Operating Revenues received by the District will be deposited when and as received in the Revenue Account. Additionally, amounts may, from time to time as the District deems necessary or appropriate, be transferred from the Rate Stabilization Account and deposited in the Revenue Account,as described above under'—Rate Stabilization Account'above. The District will pay from the Revenue Account all Maintenance and Operations Costs (including amounts reasonably required to be set aside in contingency reserves for Maintenance and Operations Costs, the payment of which is not immediately required)as and when the same shall be due and payable. After having paid, or having made provisions for the payment of, Maintenance and Operations Costs, the District shall set aside and deposit or transfer, as the case may be, from the Revenue Account such amounts at such times as provided in the Master Agreement in the following order of priority: (1) Senior Obligation Payment Account; (2) Senior Obligation Reserve Funds(the Notes are not secured by any Reserve Fund); (3) Subordinate Obligation Payment Account; (4) Subordinate Obligation Reserve Funds;and (5) Rate Stabilization Account. Amounts required or permitted to be deposited or transferred as described in items 2, 3, 4 and 5 above, shall not be so deposited or transferred unless the District shall have determined that there will be sufficient Net Revenues available to make the required deposits or transfers on the dates on which such deposits or transfers are required to be made as described above. So long as the District has determined that Net Revenues will be sufficient to make all of the deposits or transfers required to be made pursuant to items 1, 2, 3, 4 and 5 above, on the dates on which such deposits or transfers are required to be made, Net Revenues on deposit in the Revenue Account may from time to time be used for any purpose for which the District funds may be legally applied. For additional information, see APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement." Rate Covenant Pursuant to the Master Agreement, the District will,to the extent permitted by law, fix, prescribe and collect fees and charges for the services of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for such Fiscal Year and (b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but will not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. In addition, the District has covenanted in the Master Agreement to prepare and adopt an annual budget for the Wastewater System for each Fiscal Year. Such budget will set forth in reasonable detail the Revenues anticipated to be derived in such Fiscal Year and the expenditures anticipated to be paid or provided for therefrom in such Fiscal Year, including, without limitation, the amounts required to pay or provide for the payment of the Obligations during such Fiscal Year, the amounts required to pay or provide for the payment of Maintenance and Operations Costs during such Fiscal Year and the amounts required to pay or provide for the payment of all other claims or obligations required to be paid from Revenues in such Fiscal Year,and will show that Revenues and Net Revenues will be at least sufficient to 24724112.5 10 satisfy the requirements of the Master Agreement. On or before September 1 of each Fiscal Year, the District will file with the Trustee a copy of the adopted budget for such Fiscal Year. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement" for additional information. The District has an established reserve policy with eight separate reserve fund categories. Over the next ten years,the year ending reserve total for each year is projected not to fall below 5475 million as indicated in the District's ten-year cash flow forecast for fiscal years 2018-19 through 2027-28. At its election,the District may use unrestricted reserves to help satisfy the rate covenant described above. See "DISTRICT REVENUES Reserves"herein. Limitations on Issuance of Additional Obligations Senior Obligobons. The District may at any time incur Senior Obligations in addition to the Existing Senior Obligations payable from Net Revenues as provided in the Master Agreement on a parity with all other Senior Obligations theretofore incurred but only subject to the following conditions under the Master Agreement: (1) Upon the incurrence of such Senior Obligations, no Event of Default will be continuing under the Master Agreement;and (2) Subject to the provisions of the Master Agreement, the District will have received either one of the following: (i) A Written Certificate of the District certifying that, for a 12 consecutive calendar month period during the 24 consecutive calendar month period ending in the calendar month prior to the incurrence of such Senior Obligations (which 12 consecutive calendar month period will be specified in such certificate or certificates): (A) Net Revenues,as shown by the books of the District,will have amoumed to at least 125% of Maximum Annual Debt Service on all Senior Obligations to be outstanding immediately after the incurrence of such Senior Obligations,and (B) Net Operating Revenues,as shown by the books of the District,will have amounted to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such Senior Obligations. For purposes of demonstrating compliance with the foregoing,Net Revenues and Net Operating Revenues may be adjusted for(x) any changes in fees and charges for the services of the Wastewater System which have been adopted and are in effect on the date such Senior Obligations are incurred, but which, during all or any part of such 12 consecutive calendar month period, were not in effect, (y)customers added to the Wastewater System subsequent to such 12 consecutive calendar month period but prior to the date such Senior Obligations are incurred, and (z) the estimated change in available Net Revenues and Net Operating Revenues which will result from the connection of existing residences or businesses to the Wastewater System within one year following completion of any project to be funded or any system to be acquired from the proceeds of such Senior Obligations;or 24724112.5 I l (ii) A certificate or certificates from one or more Consultants which, when taken together, project that, for each of the two Fiscal Years next succeeding the incurrence of such Senior Obligations: (A) Net Revenues will amount to at least 125% of Maximum Annual Debt Service on all Senior Obligations to be outstanding immediately after the incurrence of such Senior Obligations,and (B) Net Operating Revenues will amount to at least 100% of Maximum Annual Debt Service on all Obligations to be outstanding immediately after the incurrence of such Senior Obligations. For purposes of demonstrating compliance with the foregoing,Net Revenues and Net Operating Revenues may be adjusted for(x) any changes in fees and charges for the services of the Wastewater System which have been adopted and me in effect on the date such Senior Obligations are incurred or will go into effect prior to the end of such two Fiscal Year period, (y) customers expected to be added to the Wastewater System prior to the end of such two Fiscal Year period, and (z) the estimated change in available Net Revenues and Net Operating Revenues which will result from the connection of existing residences or businesses to the Wastewater System within one year following completion of any project to be funded or any system to be acquired from the proceeds of such Senior Obligations. For purposes of preparing the certificate or certificates described above,the Consultant may rely upon financial statements prepared by the District that have not been subject to audit by an independent certified public accountant if audited financial statements for the period are not available. See, also "FINANCIAL OBLIGATIONS — Existing Indebtedness" herein. The District is not required to comply with the provisions described above in paragraph (2) if the Senior Obligations being incurred are Short-Term Obligations excluded from the calculation of Assumed Debt Service pursuant to clause (H) of the definition thereof. See APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Definitions"herein. The determination of Net Revenues for use in the calculation described above is more fully described in APPENDIX C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Master Agreement — Senior Obligations" attached hereto. The District is not required to comply with the provisions described in paragraph (2) above for such portion of Senior Obligations incurred for the purpose of providing funds to refund or refinance Senior Obligations if (i)upon such refunding or refinancing, debt service on such refunded or refinanced Obligations, or debt service on bonds, notes or other obligations of an entity other than the District,the debt service on which is payable from Obligation Payments for such Obligations (the "Related Bonds"), will no longer be included in the calculation of Assumed Debt Service either because such Obligations, or the Related Bonds of such Obligations, will have been paid in full or because such debt service is disregarded pursuant to clause (L) of the definition of Assumed Debt Service, and (ii)Assumed Debt Service in each Fiscal Year for the portion of such Senior Obligations incurred for the purpose of providing funds to refund or refinance such Obligations is less than or equal to 105% of Assumed Debt Service in such Fiscal Year for such Obligations being refunded or refinanced (assuming for such purposes that debt service on such refunded or refinanced Obligations, or debt service on the Related Bonds of such Obligations, is not disregarded pursuant to clause (L) of the definition of Assumed Debt Service). See APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Master Agreement'attached hereto for additional information. The District may at any time incur Reimbursement Obligations with respect to Senior Obligations. 24724112.5 12 Subordinate Obligations. The Disnict may at any time incur Subordinate Obligations upon satisfaction of the conditions provided in the Master Agreement. See APPENDIX C "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS —Master Agreement'herein for a description of such conditions. The District currently has no Subordinate Obligations outstanding. Insurance The District will procure and maintain or cause to be procured and maintained casualty insurance on the Wastewater System with responsible insurers,or provide self-insurance(which may be provided in the form of risk-sharing pools), in such amounts and against such risks (including accident to or destruction of the Wastewater System) as are usually covered in connection with facilities similar to the Wastewater System. The District will procure and maintain such other insurance which it will deem advisable or necessary to protect its interests and the interests of the Corporation. See "THE DISTRICT —Risk Management' and APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS— Master Agreement'herein. [Remainder of page intentionally left blank.] 24724112.5 13 Allocation of Installment Payment Set forth in Table 1 below is the estimated Installment Payment with respect to the Notes. Also set forth are the payments due on Other Senior Obligations, excluding the Prior Notes. The District ultimately expects the Notes to be paid with obligations that will amortize over a term of approximately 17 years,but there is no guarantee that such refinancing will occur. Table 1 Estimated Installment Payment and Outstanding Existing Senior Obligations of the District (As of October 1,2018) Fiscal Year Installment Payment Other Senior Ending Relatine to Notes Oblieation Payments') June 30 Principal Interest Principal Interest Total 2019 $141,530,000 $23,894,096 $165,424,096 2020 32,730,000 44,007,941 76,737,941 2021 30,430,000 42,371,441 72,801,441 2022 29,405,000 40,849,941 69,254,941 2023 29,805,000 39,444,691 69,249,691 2024 31,140,000 38,114,841 69,254,841 2025 32,655,000 36,590,441 69,245,441 2026 33,985,000 35,267,791 69,252,791 2027 31,850,000 33,602,941 65,452,941 2028 37,595,000 32,010,441 69,605,441 2029 39,470,000 30,130,691 69,600,691 2030 41,445,000 28,157,191 69,602,191 2031 48,510,000 26,084,941 74,594,941 2032 54,100,000 24,161,819 78,261,819 2033 68,845,000 21,516,586 90,361,586 2034 44,660,000 18,249,806 62,909,806 2035 46,830,000 15,835,282 62,665,282 2036 49,105,000 13,304,810 62,409,810 2037 51,485,000 10,652,664 62,137,664 2038 32,995,000 7,972,605 40,967,605 2039 34,455,000 6,212,648 40,667,648 2040 24,575,000 4,375,150 29,950,150 2041 20,805,000 2,912,640 23,717,640 2042 12,430,000 1,591,120 14,011,120 2043 9,795,000 785,600 10,580,600 2044 2 490 000 158,720 2,638,72 Total 31.012.110.000 $57A.24fi.A37 1.59035fi.R37 m Includes debt service on the Prior Notes. 24724112.5 14 THE DISTRICT Background The District is managed by the Board of Directors, whose members are appointed by 25 member cities and agencies which are serviced by the District. The District is a public agency responsible for construction and maintenance of a major portion of the wastewater collection, treatment and disposal facilities within its boundaries and is the sixth largest wastewater discharger in the United States of America. The District provides service to an area with a population of approximately 2.6 million people in the northern and central portion of the County by treating an average of 185 million mg/d of wastewater in Fiscal Year 2017-18. The District serves approximately 81% of the County population in approximately 479 square miles, or approximately 60% of the County's area. Local sanitary districts, water districts and cities are responsible for local sewers in the District's service area. The District reuses more than 50%of the total wastewater flow that it receives. The service area which comprises the District was originally formed in 1954 pursuant to the County Sanitation District Act, as amended, Section 4700 et seq. of the Health and Safety Code of the State. The District's service area originally consisted of seven independent special districts in the County which were each responsible for matters relating to their individual districts. These special districts were jointly responsible for the treatment and disposal facilities which they each used. The seven independent districts were successors to the Joint Outfall Sewer Organization, which was formed in 1923 among the Cities of Anaheim, Santa Ana,Fullerton, and Orange, and the sanitary districts of Placentia, Buena Park, La Habra, and Garden Grove. The Joint Gmfall Sewer Organization constructed a treatment plant and outfall in the early 1920s to serve its members. It was reorganized in 1947 and 1948 into seven county sanitation districts — District Nos. 1, 2, 3, 5, 6, 7 and 11. These prior districts were formed based on engineers' analyses of the gravity flows in the service area. District No. 13 was formed in 1985 and District No. 14 was added in 1986. These districts were co-participants in a Joint Agreement which provided for the joint construction,ownership,and operation of the prior districts'joint facilities. In April 1998, at the request of the Board of Directors of the District (the `Board of Directors"), the Board of Supervisors of the County of Orange (the "County Board") passed Resolution No. 98-140 approving the consolidation of the then existing nine special districts into a new, single sanitation district, to be known as the Orange County Sanitation District. This action was designed to simplify governance structures, reduce the size of the Board of Directors, ease administrative processes, streamline decision- making and consolidate accounting and auditing processes. The consolidation was effective on July 1, 1998. Pursuant to Resolution No. 98-140 and Government Code Section 57500, the prior districts transferred and assigned all of their powers, rights, duties, obligations, functions and properties to the District, and the District assumed all obligations of the prior districts which were several and not joint including, without limitation, their obligations to repay the then outstanding certificates of participation. The boundaries of the nine predecessor special districts were initially used by the District to delineate separate revenue areas (the "Revenue Areas") for budgeting and accounting purposes and in order to facilitate the imposition of fees and charges imposed by the District. See "DISTRICT REVENUES — Sewer Service Charges"herein. 24724112.5 15 Organization and Administration The District is independent of and overlaps other political jurisdictions. There are many governmental entities, including the County, that operate within the District's jurisdiction. These entities are exclusively responsible for the administration of their own fiscal affairs,and the District is not entitled to operating surpluses of,or responsible for operating deficits of,any of the other entities. The 25-member Board of Directors is composed of representatives from 20 cities, four special districts and a member representing the County. Several board committees, made up of members of the Board of Directors, consider topics for action by the Board of Directors and make recommendations to the Board of Directors. The Chair and the Vice Chair of the Board of Directors are elected every year by a majority of the Board of Directors, and serve at the pleasure of a majority of the Board of Directors. The District has a general manager, outside general counsel, and administrative and operating staff, with offices located at Reclamation Plant No. 1 in Fountain Valley, California. The District currently employs an administrative and operating staff of approximately 600 under the direction of its General Manager,James Herberg. James Herberg, P.E. is the General Manager of the District and has served in this capacity since April 2013.During his more than 20 years with the District,he has held the positions of Assistant General Manager, Director of Engineering, and Director of Operations and Maintenance. Mr. Herberg has more than 29 years of experience in the water and wastewater industries, including six years at the Orange County Water District with whom the District has partnered on the Groundwater Replenishment System project. Robert Thompson, P.E. is the Assistant General Manager & District's Director of Engineering. He has worked for the District since 1995. Mr. Thompson has served as manager in several departments with the District, including Information Technology, Operations and Maintenance, and Engineering. He has had a lead role in creating and maintaining engineering,programming,tagging and asset standards for the District. Lorenzo Tyner is the District's Assistant General Manager & Director of Finance and Administrative Services. In September 2005, Mr. Tyner joined the District with more than 20 years of public finance and budgeting experience, most recently serving as the Los Angeles Unified School District Budget Director and Deputy Chief Financial Officer. Mr. Tyner previously worked in large government organizations including the City of Los Angeles and the Los Angeles County Metropolitan Transportation Authority and with private sector companies IBM Global Services and TRW Space and Defense. Ed Torres is the District's Director of Operations and Maintenance for the District. He has served the District since 1991. Prior to joining the District, Mr. Torres served in a professional capacity for the California State University System and TRW Electronics and Defense Sector. Mr. Torres has more than 29 years of public and private sector experience in protecting public health and the environment. Celia Chandler is the District's Director of Human Resources. In October 2015, Ms. Chandler joined the District with more than 20 years of experience in all aspects of Human Resources in both public and private sector organizations, most recently serving as the Director of Academic Labor Relations for the California State University system. Ms. Chandler previously worked in large government organizations including the City of Corona,the City of Murrieta and the County of Riverside, and with private sector company Stone&Webster Engineering Services Company. 24724112.5 16 James Colston, JD. is the District's Director of Environmental Services. He has served in this position since May 2016 and he has worked for the District since 1989, serving as the Environmental Compliance & Regulatory Affairs Manager, Environmental Supervisor, Legal & Regulatory Affairs Liaison and in other prior positions.Mr. Colston has the lead role overseeing the District's Environmental Laboratory, Ocean Monitoring Program and Vessel, Pretreatment Program, and Environmental Compliance Program including Clean Water Act and Clean Air Act permits. Services The District owns and operates regional wastewater collection, treatment, and disposal facilities for the metropolitan area in the northern and central portion of the County. The District receives wastewater from the collection systems of the cities, sanitary districts and unincorporated areas of the County located within the District. See`THE DISTRICT—Service Areas"herein. Generally, local agency systems collect wastewater from residential and industrial customers and convey the wastewater to District trunk sewer pipelines for conveyance to the District's wastewater treatment plants. The District's staff is responsible for operating and maintaining the District's infrastructure, although some work is performed by external contractors. Currently, the District has established supply contracts for all chemicals necessary to the operation and maintenance of the facilities of the District. The District has sufficient standby systems in the event of equipment failures or system outages. Service Area The map on the inside cover of this Official Statement shows the District's boundaries and selected cities located within the District. District boundaries were originally established in 1947 and 1948 based on drainage basins. As the existing cities have grown and new areas have incorporated, city limits have come to overlap District boundaries. The District currently serves an approximately 479 square-mile area including 23 of the County's 34 cities and various unincorporated areas of the County. The District serves a population of approximately 2.6 million residents. 24724112.5 17 Set forth in Table 2 below is the estimated populations of cities and unincorporated areas served by the District as of January 1,2018. Table 2 Estimated Populations of Cities and Unincorporated Areas Served by the Orange County Sanitation District As of January 1,2018 Ci�t v Population Anaheim 357,084 Brea 44,890 Buena Park 83,995 Costa Mesa 115,296 Cypress 49,978 Fountain Valley 56,920 Fullerton 144,214 Garden Grove 176,896 Huntington Beach 202,648 Irvine 276,176 La Habra 62,850 La Palma 15,948 Los Alamitos 11,863 Newport Beach 87,182 Orange 141,952 Placentia 52,755 Santa Ana 338,247 Seal Beach 25,984 Stanton 39,470 Tustin 82,344 Villa Park 5,951 Westminster 94,476 Yorba Linda 69.121 Cities Subtotal(') 2,536,240 Unincorporated Areas(estimated)(') 73,179 Total 2 644 41 o)Demographic Research Unit,State of California Depanment of Finance. (2) Center for Demographic Research,California State University,Fullerton. Employees As of July 17, 2018, the District had a total of 600 employees. The majority of the District employees are represented by recognized employee organizations, which include the following: the Orange County Employees Association("OCEA"),representing administrative/clerical,technical services and engineering employees since 1979, the International Union of Operating Engineers — Local 501 ("Local 501"), representing operations and maintenance employees since October 1985, and the Supervisory and Professional Management Group ("SPMT/AFSCME"), representing employees within the Supervisor Group and Professional Group since 1991. The total number of represented employees as of July 17, 2018 was 566, and is broken down as follows: 100 employees represented by OCEA, 199 employees represented by Local 501, and 267 employees represented by SPMT/AFSCME. In October 2016, the District reached final agreement with all bargaining units on the current set of labor contracts that will expire on June 30, 2019. Historically, the District has experienced positive and collaborative 24724112.5 18 working relationships with each organization and has not endured any work stoppages since the early 19808. Retirement Plan The District participates in the Orange County Employees Retirement System ("OCERS'), a cost-sharing multiple-employer defined benefit pension plan, which is governed and administered by a nine-member Board of Retirement. OCERS was established in 1945 under the provisions of the County Employees Retirement Law of 1937,and provides members with retirement,death,disability, and cost of- living benefits. All full-time and part-time District employees participate in OCERS. Contributions are based on an OCERS actuarial-determined rate structure and age at time of employment; contributions are deducted on a pre-tax basis. Most employees do not pay into Social Security with the exception of 1.45%of gross income, which is paid into the Medicare portion of Social Security. The amount of the retirement allowance is based upon the member's age at retirement,the member's"final compensation"as defined in Section 31462 of the Retirement Law of 1937, the total years of service under OCERS, and the employee's classification as a Plan B, G, H or U member. Plan U applies to all full-time and part-time employees hired on or after January 1, 2013. Plan B applies to supervisor and professional employees hired on or after October 1, 2010, Local 501 employees hired on or after July 1, 2011 and OCEA employees hired on or after August 1, 2011. Plan G applies to employees hired before September 21, 1979. Plan H applies to employees hired on or after September 21, 1979 and prior to the eligibility dates for Plan B or Plan U. Plan G and H provide 2.5% of final compensation per year of service at age 55. Plan B provides 1.667% of final compensation per year of service at age 57.5, and Plan U provides 2.5% at 67. "Final compensation" is the highest consecutive 12 months of compensation for Plan G members and the highest consecutive 36 months of compensation divided by three for Plan B,H, and U members. Benefits fully vest under the OCERS retirement plan upon reaching five years of service. Employees who retire at or after age 50 with ten or more years of service are eligible to receive an annual retirement allowance, but at a reduced benefit for those employees retiring prior to age 67 for Plan U members, 57.5 for Plan B members, or prior to age 55 for Plan G and H members. OCERS also provides death and disability benefits. As a condition of participation under the provisions of the County Employees Retirement Law of 1937, members are required to contribute a percentage of their annual compensation to OCERS. The District contributes a portion of the employee's contribution to OCERS for members of Plans G and H based on a percentage of the covered employee's base salary. Members of Plans U and B do not receive any contributions toward employee contribution to OCERS. As of the December 31, 2017 valuation, OCERS had an aggregate Unfunded Actuarial Accrued Liability ("UAAL") of$5.4 billion, and a funded ratio of 72.30%. 24724112.5 19 Set forth in Table 3 below is a current comparison of the District's required contributions to OCERS for Fiscal Years 2012-13 through 2016-17 and estimated actual contributions for Fiscal Year 2017-18. Table 3 Orange County Sanitation District District Required Contributions to OCERS for Fiscal Years 2012-13 through 2016-17 and Projected Required Contributions for Fiscal Year 2017-18 District Required Fiscal Year Rate") Contributions 2012-13 27.35% $16,363,917 2013-14 31.09 18,920,212 2014-15 29.33 17,201,569 2015-16 20.44 12,222,849 2016-17 12.85 7,709,734 2017-18(n 12.07 7,525,655 0) Required contribution as a percent of covered payroll. Includes amortization of Unfunded Actuarial Accrued Liability. Combined one for all plans. (2) Estimated actual. Source: Orange County Sanitation District. As of December 31, 2017, the date of the most recent actuarial valuation completed by OCERS, the District's past UAAL was $0. The balance in the District's UAAL Deferred Account as of December 31, 2017 before any transfer was $38.9 million. As of December 31, 2017, a transfer of$24.0 million was required from this account to pay off the District's UAAL. The balance in the District's UAAL Deferred Account as of December 31, 2017 after the transfer is $14.9 million. For the Fiscal Year ended June 30,2018,total payroll costs of District employees covered by OCERS was$62,341,796. The District's retirement program includes Additional Retiree Benefit Account ("ARBA") benefits. ARBA benefits provide a monthly payment to retirees towards the premium costs of health insurance for the retiree and eligible dependents. The retiree is not required to use this amount for health insurance premium or to remain on the OCERS medical plan. Benefits vest upon retirement. The District pays 100%of the cost for the AREA plan and utilizes a pay-as-you-go method for funding the plan. The District paid$728,450 in AR13A benefits during Fiscal Year 2017-I8. For more information regarding OCERS and the District's retirement plan as of Jane 30, 2017, see Note 5 and 6 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for the Yen Ended June 30, 2017 set forth in Appendix A. The Comprehensive Annual Financial Reports of the Orange County Employees Retirement System are available on the OCERS website at http://www.ocen.org. The information on such website is not incorporated herein by such reference or otherwise. The District cannot predict whether the OCERS investment portfolio will experience additional losses in the future; however, any future losses could result in material increases in the District's required contributions. 24724112.5 20 Other Post-Employment Benefits In June 2015, Governmental Accounting Standards Board ("GASB") issued Statement No. 75, which requires state and local governmental employers to recognize a liability as the employees earn benefits by providing services for its post-employment benefits other than pension benefits (known as other post-employment benefits or "OPEB") and to recognize total OPEB liability if the OPEB is not administered through a trust that meets the specified criteria. Changes to OPEB liability are recognized immediately as OPEB expenses or deferred outflows/inflows of resources. The statement replaces the requirements of Statement No. 45. The District adopted Statement No. 75 for the fiscal year beginning July 1, 2017, as required of GASB. According to the District's actuary, Demsey Filliger & Associates (the "Actuary"), the unfunded OPEB liability as of July 1, 2017 was approximately $6.4 million. The District does not believe that its OPEB liability will have a material impact on its operational results. Risk Management As of the date hereof, the District has in force basic all risk property and casualty insurance, including theft, fire, flood terrorism and boiler and machinery losses at its plants and pump stations. The District is self-insured for portions of workers' compensation,property damage and general liability. The self-insurance portion of workers' compensation is $1,000,000 per person per occurrence with outside excess insurance coverage to the statutory limit. The self-insured portion for property damage covering fire and other disasters is $250,000 per occurrence with outside excess insurance coverage to $1 billion. The self-insured portion for property damage covering flood is $100,000 per occurrence with outside excess insurance coverage to $300 million. The District also maintains outside comprehensive boiler and machinery insurance, including business interruption insurance, with a $100 million limit with deductibles ranging from$25,000 to$350,000. The District is self-insured for general liability coverage up to $500,000 per occurrence, with excess general liability coverage up to $40 million. In addition, the District has limited earthquake insurance partially covering several key structures; beyond that, the District relies on a combination of self-insurance and District reserves for all property damage from the perils of seismic activity as well as the expectation that some disaster relief funds may be available from the Federal Emergency Management Agency("FEMA") to address any resulting damage. See "DISTRICT REVENUES—Reserves" and "— Integrated Emergency Response Program." There is no assurance that, in the event of a significant seismic event, a combination of self-insurance, District reserves or FEMA assistance would be available or sufficient for the repair or replacement of the affected property. During the past five fiscal years there have been no settlements in excess of covered amounts. Claims against the District are primarily processed by outside claim administrators or the District's General Counsel. The District believes that there are no unrecorded claims as of June 30, 2018 that would materially affect the financial position of the District. For more information regarding the District's insurance coverage as of June 30,2017, see Note 1 to the Comprehensive Annual Financial Report of the Orange County Sanitation District for the Year Ended June 30,2017 set forth in Appendix A. Existing Facilities The Wastewater System presently consists of two wastewater treatment plants, an influent metering and diversion structure, 15 off-plant pump stations,various interplant pipelines and connections, and the ocean outfall facilities. The District's Wastewater System includes approximately 396 miles of sewers within 11 trunk sewer systems, two treatment plants, two discharge outfalls and two emergency weir outlets. The existing treatment plants have a rated primary treatment capacity of 376 mg/d, including standby capacity. 24724112.5 21 Treatment Plant No. 1 ("Plant No. 1") is located in the City of Fountain Valley, about four miles from the coast, adjacent to the Santa Ana River. Secondary treatment capabilities are provided by a trickling filter plant and two conventional air activated sludge plants. Up to 130 mg/d of secondary treated effluent is conveyed to a plant owned by the Orange County Water District (the "OCWD") for tertiary treatment prior to reclamation and groundwater recharge. See "Groundwater Replenishment System" below. Treatment Plant No. 2 ("Plant No.2") is located in the City of Huntington Beach, 1,500 feet from the ocean, at the mouth of the Santa Ana River. Secondary treatment capabilities are provided by a Pure Oxygen Activated Sludge plant and a Solids Contact Trickling Filter plant. The District employs several phases in the treatment of wastewater. The first phase, preliminary treatment,removes debris such as eggshells,sand and other non-biodegradable items. See also"Biosolids Management"below. In the next phase,primary treatment,wastewater is pumped to large settling basins. The liquids are separated from the remaining solids which settle or float as the wastewater passes through large settling basins called clarifiers. The settled solids are sent to solids treatment facilities. All of the wastewater received by the District is sent to secondary treatment for further processing. During secondary treatment, the wastewater is treated with naturally occurring bacteria to remove most of the remaining dissolved and suspended microscopic organic solids. The treated wastewater from both plants is mixed together at Plant No. 2,where it is then pumped through the ocean outfall pipe that extends five miles offshore. Set forth in Table 4 below we the treatment plants' approximate treatment capacities. Table 4 Wastewater System Treatment Capacities (mgld) As of June 30,2018 Primary Secondary 2017-18 Treatment Treatment Actual Flows Ca aci Capacity Plant No. 1 121 208 182 Plant No. 2 64 168 150 Aggregate Treatment L85 316 332 Source: Orange County Sanitation District. The District also has the capability to divert a portion of the influent flow from Plant No. 1 to Plant No. 2 through interplant connections. A portion of the flow destined for Plant No. 2 can also be diverted to Plant No. 1. Another interplant facility allows gas generated during solids treatment to be transported between Plant No. 1 and Plant No. 2 and allows digester gas (which is used as fuel for many of the facilities' engines)from one plant to be used at the other to balance the supply and demand, which results in efficient gas utilization. Permits,Licenses and Other Regulations The District is subject to laws, rules and permits issued by federal, state, regional and local regulatory bodies. The wastewater system is subject to regulations imposed by the 1972 Clean Water Act,as amended(the"Clean Water Act"),the California Environmental Quality Act of 1970, as amended ("CEQA") and the federal Clean Air Act. Regulatory requirements to conform with these laws are primarily administered by the United States Environmental Protection Agency (the "EPA"), the California Air Resources Board, the Santa Ana Regional Water Quality Control Board("RWQCB'), and 24724112.5 22 the South Coast Air Quality Management District ("AQMD"). These agencies regulate the standards of quality of water or air that can be discharged or emitted from the treatment plants and their processes. The Clean Water Act directs the EPA to monitor and regulate the discharge of pollutants into the waters of the United States, including a requirement that all wastewater treatment plants provide primary and secondary treatment. In 1977 Congress amended the Clean Water Act to allow modification (so-called "waivers") of secondary treatment standards for certain ocean dischargers, if they could demonstrate to the satisfaction of the EPA that no adverse environmental impacts would occur.The District currently has all applicable permits and licenses necessary to operate its facilities. Since the passage of the Clean Water Act the District has discharged treated wastewater into the Pacific Ocean under a permit issued by the EPA and the RWQCB. The discharge permit included a modification under the Section 301(h) provisions of the Clean Water Act, allowing for less than full secondary treatment based on an ocean discharge of sufficient depth, distance, and dilution. The permit was initially issued in 1985 and was the first modified Section 301(h)permit issued to a major wastewater treatment facility. The permit was re-issued on May 6, 1998 and expired on June 8,2003. On July 17, 2002, the Board of Directors adopted Resolution No. OCSD 02-14, "Establishing the Policy for Level of Treatment of Wastewater Discharged into the Ocean." This resolution established the District's policy to treat all wastewater discharges into the ocean to secondary treatment standards, thereby providing for continued public safety, marine ecosystem protection, and water reclamation opportunities. To implement this policy, the District's staff was directed to immediately proceed with the planning, design, and implementation of treatment methods that will allow the District to meet Clean Water Act secondary treatment standards with the expressed purposes of eliminating the need for the permit modification received under Section 301(h). The District completed these improvements ahead of schedule in December 2012 at a total capital improvement cost of$537.8 million. Following the determination by the Board of Directors in July 2002 to implement full secondary standards, staff prepared the Secondary Treatment National Pollutant Discharge Elimination System ("NPDES") Permit Application that was required to be submitted to the regional office of the EPA and the RWQCB in December 2002. The NPDES permit was approved by the EPA and became effective on October 31,2004 and is subject to renewal every five years.The District's current NPDES permit became effective on July 20, 2012 and was scheduled to expire on July 19, 2017. Federal regulations require permittees to apply for a new application at least 180 days prior to the current permit expiration date. The District submitted a renewal application in December 2016. At this time the EPA is reviewing District's permit application, and District operates under an administrative extension of the permit until this application has been fully reviewed and acted upon by the regulators. District staff has been in frequent contact with the federal and state regulators regarding the permit renewal process, and delays in the renewal have been due to resources in the regulators' offices, not as a result of issues with the permit application. The District expects its NPDES permit to be renewed in 2019. Prior to such renewal, the prior NPDES permit remains valid. The District is also subject to the requirements of the Federal Clean Air Act, which mandates attainment with national ambient air quality standards for criteria pollutants (ozone, particulate matter, carbon monoxide, lead, nitrogen dioxide, and sulfur dioxide). Air pollutants cause adverse effects on human health and environment. The AQMD is the local air pollution control agency charged with implementing the Federal Clean Air Act. In addition to mandated criteria pollutants, the AQMD also implements numerous federal and State requirements related to the toxic air pollutants which can cause cancer or other severe localized health effects. For example,the State's Air Toxic Hot Spots Act requires facilities to conduct health risk assessments and notify the neighboring communities if the health risk exceeds the regulatory thresholds. Pursuant to AQMD's requirements, the District must obtain permits before sewage treatment improvement projects can be constructed and operated. Such permits are project-specific and may contain 24724112.5 23 conditions that govern design criteria, operating parameters, and emissions standards. Most of the District's treatment facilities are enclosed to capture and treat emissions to ensure regulatory emissions standards are met and to minimize odor impact to the neighboring communities. The District's treatment plants are also subject to the requirements of Title V of the Federal Clean Air Act amendments. The Title V permit is a single air quality permit for a facility that consolidates and replaces all of the air permits for individual pieces of equipment previously issued by the local air quality district. The permit contains all applicable local, state, and federal requirements, including periodic self-certification of compliance and mandatory self-reporting of permit deviation. All Title V permit-related reporting and documents submitted to the AQMD must be signed by the highest official —in this case, the General Manager. The Title V program also demands facilities to organize and conduct extensive training of the staff involved, including the field operation and maintenance staff. Another Title V important Feature is a possibility of the public active participation and intervention in the cases of potential emission limits and monitoring violations. The District Title V permits did not receive any negative public responses or comments during the required public review period. The District received initial Title V permits for the treatment plants in January 2009. Title V permits are issued for a five-year period. Title V permits for both plants were re-issued on April 16,2014. Both permits will expire on April 16, 2019. The District's staff are currently in the process of preparing the permit renewal applications for both Title V permits, and it is anticipated that timely renewal applications will be submitted before the 180-day deadline ahead of the expiration of the current permits. District Planning The Board of Directors has adopted a comprehensive strategic plan regarding the District's service levels and operational needs (the `Strategic Plan"). The Strategic Plan is updated annually to continue reviewing a five-year horizon (each, a "Five-Year Strategic Plan"). See "THE DISTRICT — Five-Year Strategic Planning." In December 2017, the Board of Directors adopted a Facilities Master Plan (the "Master Plan") for the District. The Master Plan also incorporates and implements the levels of services defined by the Board of Directors that are included in the Strategic Plan. Capital Improvement Program The Master Plan identified a phased 20-year program of capital improvement projects ("CIP") that will allow the District to maintain reliability and accommodate future growth, as well as meet future regulatory requirements,level of service goals,and strategic initiatives. With this phased 20-year program as a starting point, the Asset Management Program within the Planning Division continues assessing the condition of the District's existing assets and systems to ensure that they can provide the necessary level of service. The District expects to accomplish the following under the CIP over the next 20 years: • Major rehabilitation or replacement of facilities and components used in all stages of the treatment process - preliminary, primary, secondary, and solids treatment, cattail pumping and discharge system, and central generation at both treatment plants; • Implementation of the recommendations of the Biosolids Master Plan to address seismic risks,to produce higher quality biosolids and accept food waste; • Relocation of the District headquarters complex; • Upgrade of the Supervisory Control and Data Acquisition ("SCADA") system and network at Plant No.2,replacement of the process control systems,uninterruptible power supply("UPS")system,and electrical power distribution system at both treatment plants; • Replacement or rehabilitation of plant-wide infrastructures, such as buried process piping,tunnels andjunction structures; 24724112.5 24 • Replacement or rehabilitation of District's outlying pumping stations, including the abandonment and/or demolition of two pump stations; • Rehabilitation of approximately 40 miles of trunk sewer; • Reduction of fence line odor to levels that minimize odor complaints; and • Safety improvements at both treatment plants. The CIP is reviewed, validated and updated annually to ensure that the project scopes of work and cost estimates are up-to-date. Through the budget validation process, each project's schedule, staff resources, total project costs, cash flow and risks are assessed to confirm the budgetary requirements. The most recent CIP validation effort(the"2018 CIP Validation Study") resulted in revisions to the CIP. The CIP currently consists of 68 individual capital projects, five programs such as the Planning Studies Program and Small Construction Program, and budget for capital equipment purchases with a total CIP budget authority of$4.01 billion. Set forth in Table 5 below is a summary of total CIP outlays, net of savings and deferrals, over the next ten years. Of this ten-year$2.7 billion CIP program, $192 million of CIP outlays is budgeted in Fiscal Year 2018-19. Also budgeted in a separate contra line item are anticipated offsetting CIP savings and deferrals of$17 million,thereby reducing the net budgeted outlays to$175 million for Fiscal Year 2018-19. Table 5 Net Capital Improvement Program Outlays Fiscal Years 2018-19 through 2027-28 Project Cost Rehabilitation and Replacement $1,836,400,000 Additional Capacity 245,700,000 Regulatory 32,400,000 Strategic Initiatives 314,700,000 Future Rehabilitation and Replacement 374,900,000 CIP Savings and Deferrals (134,700,000) Total Validated Capital Improvement Program 4.669.400.000 Source: 2018 CIP Validation Study,Orange County Sanitation District. Groundwater Replenishment System The District has taken a multi-jurisdictional approach to planning for capital facilities because many of the methods for reducing or managing flows involve other jurisdictions. One such project is the Groundwater Replenishment System (the "GWRS"). In March 2001, the District entered into an agreement with the OCWD to design and construct the GWRS. The capital cost of this Phase was shared equally (50% shares) by each agency. The GWRS is a joint effort by the two agencies to provide reclaimed water for replenishment of the Orange County Groundwater Basin and to augment the seawater intrusion barrier.The GWRS became operational in January of 2008 producing 70 mgd of highly purified water. The Initial Expansion of the GWRS broke ground in January 2012 to add approximately 30 mgd of production capacity and was completed in June 2015, resulting in purifying 100% of the treated wastewater from the District's Fountain Valley-based Plant No. 1. The Initial Expansion of the GWRS was funded solely by the OCWD. In 2016,the District and the OCWD completed a$2 million joint study to explore the Final Expansion of the GWRS which would increase GWRS capacity by an additional 30 MGD. The study identified an implementation plan to convey secondary effluent from the District's Plant No. 2 in Huntington Beach using new and existing infrastructure to support the GWRS Final 24724112.5 25 Expansion. The GWRS Final Expansion will be funded solely by the OCWD. The District currently has two active projects supporting the GWRS Final Expansion. The costs of these projects will be reimbursed by the OCWD. The Final Expansion of the GWRS is expected to be online in 2023. Biosolids Management Through the treatment of wastewater,the District recovers and heats nutrient-rich, organic matter (solids)to produce biosolids. Consistent with the United States Environmental Protection Agency's (the "EPA") regulations and the regulations in place at the end-use sites, the District's biosolids are recycled through composting fertilizing non-food farm fields (land application), and disposed in a landfill for methane gas recovery. The District's goal is to ensure our biosolids management strategies align with existing market conditions and continue a sustainable, reliable and economical biosolids management program that provides environmentally-sound practices and meets federal, State and local regulatory requirements. The District's biosolids averaged about 780 tons per day ("tpd") in Fiscal Year 2017-18, with a total expenditure of 100% of the $15.9 million budgeted, at an annual average cost per ton of$55.82 for hauling and management at offsite locations, as described in the following table. Actual costs increased from $53.46 in July 2017 to $57.31 in June 2018 (7.2% increase) due to an almost 40% increase in fuel, including a new California diesel tax, along with contract renewal price increases of up to $2.50 per ton. Biosolids costs in Fiscal Year 2018-19 are anticipated to remain stable with a slight budget increase to $16.2 million to cover ongoing fuel increases. The District's biosolids tonnage will begin trending down in Fiscal Year 2019-20 as new solids facilities complete construction and reduce biosolids hauling and management costs. Plant No. I thickening and dewatering centrifuges and Plant No. 2 centrifuge facilities are currently under construction, and it is anticipated that by mid-2019 these facilities will be creating drier solids, which means less water to haul and fewer trucks needed. The Irvine Ranch Water District (the "IRWD") is constructing solids processing facilities, and the agency anticipates it will stop sending solids to the District by the end of 2019. Currently IRWD accounts for 5-10% of all biosolids managed at the Sanitation. 24724112.5 26 Biosolids Management Contracts Current tons per day Estimated managed costperton Contractor Location Product Contract Term (approximate) (June 2018) Synagro Nursery San Bernardino County, Compost Expires 12/26/21; 280 tpd $51.43 Products CA optional five-year renewal on 12/26/21 Liberty Compost Kern County,CA Compost Expires 12/15/21; 135 tpd $58.57 optional five-year renewal on 12/15/21 Inland Empire Regional Rancho Cucamonga,CA Compost Renewed 7/1/18; 40 tp i $74.31 Composting Facility expires 7/1/19 (hauled by Denali Water Solutions) Tule Ranch,AgTech Yuma County,AZ Land Renewed 11/1/17; 325 tpd $60.12 application expires 10/31/22 The District's contractors provide back-up biosolids management capacity in California and Arizona that include compost, land application, lime stabilization before land application and landfill. Together, these options have the additional available capacity to manage more than ten times the District's daily biosolids production to ensure sustainable, consistent and reliable operations. The District's biosolids management contracts do not guarantee biosolids tonnage and are typically interim- term contracts with one five-year renewal option, for a maximum contract term of 10 years. In May 2017, the District completed the Biosolids Master Plan that included an evaluation of existing solids handling facilities, assessment of solids treatment alternatives,recommendations for future capital facilities' improvements,identification of alternatives biosolids products that meet sustainable and beneficial reuse markets, and plans for a high-strength organic (food waste slurry) co-digestion facility. This Plan will serve as the District's solids roadmap through construction of new Plant No. 2 facilities over the next 15 years. Urban Runoff Recognizing that County benches were being affected by pollution carried by urban runoff, the Board of Directors adopted a number of resolutions agreeing to accept dry weather urban runoff into the sewer system. In June 2002, Assembly Bill 1892 amended the District's charter to formally allow the diversion and management of dry weather urban runoff flows. Resolution No. 01-07, adopted March 28, 2001, declared that the District will initially waive fees and charges associated with authorized discharges of dry weather urban runoff to the sewer system until the total volume of all runoff discharges exceeds four million gallons per day ("mg/d") calculated on a monthly average. For the first 12 years of the Urban Runoff Program, the average monthly flow averages remained less than the four mg/d threshold, thus avoiding user fee costs being assessed to the diversion periniuees. In 2012, the District received a number of diversion proposals to deal with bacteria and selenium loading to the upper Newport Bay. The discharge from the additional proposed diversions combined with the existing diversion flows would eventually exceed the four mg/d fee threshold. On June 12, 2013, the Board of Directors adopted Resolution No. 13-09 expanding the waiver of fees or charges on the treatment of dry weather urban runoff from four mg/d to ten mg/d. According to the Board of Directors, the change was necessary not 24724112.5 27 only to protect the County's coastal resources, but also to provide an economic benefit to the local economy by helping to keep the County's beaches open. The Dry Weather Urban Runoff Program is administered by the District's Resource Protection Division,which issues a discharge permit for each of the diversion structures. The permit functions as a control mechanism that specifically prohibits storm runoff and authorizes discharge only during periods of dry weather. The permit also establishes specific discharge limits, constituent monitoring, and flow metering requirements. The District conducts quarterly sampling and analysis of the urban runoff discharges to ensure discharge limit compliance with the various regulated constituents. There me currently 21 active urban runoff diversion structures; three owned and operated by the County of Orange, 11 owned and operated by the City of Huntington Beach,three owned and operated by the City of Newport Beach,three owned and operated by the IRWD, and one owned and operated by PH Finance (present owner of the Pelican Point Resort). The Mid Big Canyon Diversion in the City of Newport Beach became the most recent addition to the urban runoff program with its completion in 2017. To control bacteria loading to the Lower Newport Bay, the City of Newport Beach is currently in the design stage on a fourth diversion in an area known as the Arches. The City of Santa Ana is in construction of the Delhi Channel Diversion, scheduled for completion in early 2019. Built to control bacteria and selenium loading, as well as to divert debris from the Upper Newport Bay, this diversion is projected to contribute an additional 2.0 mg/d of urban runoff. Since the Delhi Channel Diversion will be tributary to the District's Plant No. 1, the diversion will contribute to the flow delivered to the Orange County Water District's Ground Water Replenishment System. The District continues to work with the Orange County Public Works Department to prioritize existing and proposed diversion projects to ensure that the District's limited capacity is effectively utilized to improve coastal water quality. Integrated Emergency Response Program In recognition of the potential damage which could occur in the event of a major earthquake, flood, or other disaster, the District implemented an Integrated Emergency Response Program (the "IERP") in 1979. The IERP is a two-volume plan which contains policies,plans and procedures preparing for, and responding to, emergencies. The District also analyzed disaster preparedness issues and policies within the Master Plan, and within a 1994 report titled Fault Rupture Hazard Investigation—Wastewater Treatment Plant No.2(the"1994 Report"). The disaster preparedness plan included in the Master Plan reviewed two possible major earthquake scenarios: an 8.3 Richter magnitude ("M") earthquake on the southern San Andreas fault system and an M 7.0 earthquake on the Newport-Inglewood fault zone, which includes Plant No. 2. An M 8.3 earthquake on the southern San Andreas fault,while on the whole more destructive than the M 7.0 Newport-Inglewood fault, may result in less damage to the District's service area due to the distance of the fault from most of the service area. However,the Master Plan stated that damage from such a major earthquake on the San Andreas fault would be extensive. Also, the Master Plan indicated that an M 7.0 earthquake on the Newport-Inglewood fault within five miles of the District's sewerage facilities could cause major destruction to those facilities. The disaster preparedness plan in the Master Plan indicated that it would not be economically feasible to upgrade all of the existing sanitary sewerage facilities to survive an earthquake of this magnitude along the Newport-Inglewood fault. The IERP outlines the policies and employee actions to be taken before, during and after an earthquake, earthquake response guidelines and damage assessment procedures. The Master Plan analyzed the vulnerability of the sanitary sewerage facilities and operations of the District and planned a risk reduction program wherein the vulnerability of many of the District's sanitary sewerage facilities to an earthquake could be reduced by recommended retrofit construction measures. The Master Plan also recommended that designs of existing major structures which were 24724112.5 28 constructed prior to development of current seismic design standards be reviewed and the structures strengthened,if necessary. Since the Master Plan and the 1994 Report, the District has completed retrofitting where deemed appropriate. Pursuant to the Master Plan, all recent and future projects have been, and will be, designed to the same high earthquake code standards as set for other essential services, such as hospitals and fire stations. Many of the older buildings analyzed in the Master Plan have been replaced by structures built after 1989. The Army Corps of Engineers' "All-River Plan" has mitigated any future flooding of the Santa Ana River system and potential threats to the District's Wastewater System. Also, both Plant No. 1 and Plant No. 2 me built to federal standards. The IERP takes into account the damage potential posed by coastal flooding,tornadoes,tsunamis (large ocean waves generated by seismic activity) and windstorms. No assurance can be given that any such events would not have a material adverse impact on the Wastewater System. The District's High Flow Emergency Response Plan is included as a section in the IERP. This plan is based on a color code system from blue to yellow to orange to red and then purple that identifies specific actions to be taken by staff in response to expected and actual increasing flow coming into the District's treatment plants and collection sewers. The District believes that wastewater collection, treatment and disposal systems typically undertaken in anticipation of normal wet weather should be able to withstand, for example, an "expected/average" El Nino event without significant disruption. While no assurances can be given, the District believes that the likelihood of a system failure is low due to the operational readiness of all of its equipment and the District's high level of equipment redundancy. The Strategic Plan and IERP makes recommendations regarding fire protection of the Wastewater System. Most of the structures at Plant No. 1 and Plant No. 2 me constructed of fire-resistant materials. The IERP describes the procedures needed to respond to a possible disaster. For more information regarding emergency response policies, the disaster preparedness plan described in the IERP can be reviewed at the District's office. Five-Year Strategic Planning The District maintains a Strategic Plan to address service levels and operational needs over a five- year horizon. The Strategic Plan envisions an organizational culture that adheres to the District's core values and makes efficient and effective use of all available resources. The District is committed to focusing efforts on customer service, protecting public health and the environment, fiscal responsibility, communications,partnering with others,and creating the best possible workforce. Eight strategic goals were identified through planning workshops, individual interviews with members of the Board of Directors, and employee and management focus groups. The following eight strategic goals were adopted in 2013: 1. Odor Control—Completion of the Odor Control Master Plan. 2. Future Biosolids Management Options — Study biosolids management options including third party contracts and onsite capital facilities. 3. Energy Efficiency— Continue to research new energy efficiency and energy conversion technologies. 4. Disinfection of Ocean Discharge — Develop an implementation plan that includes the technical,financial and societal factors associated with cessation of disinfection of the ocean discharge. 24724112.5 29 5. Local Sewer Transfers—Complete the transfer of 174 miles of local sewers serving parts of the City of Tustin and unincorporated areas north of the City of Tustin and local sewer transfers in the City of Santa Ana. 6. Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy and public outreach program. 7. Future Water Recycling — Determine partnerships, needs, strategies, benefits and costs associated with recycling of Plant No. 2 effluent water. 8. Workforce Planning and Workforce Development—This initiative is ongoing and part of a comprehensive workforce planning and development effort to ensure that the District has the right people with the right skills and abilities,in the right place, at the right time. The five-year Strategic Plan is updated biennially. The December 2017 Strategic Plan Update reflected that seven of the strategic goals had been completed and strides had been made towards accomplishing the remaining goal. The strategic goals completed were: 1. Disinfection of Ocean Discharge — Develop an implementation plan including the technical, financial and societal factors associated with cessation of disinfection of the ocean discharge. 2. Legislative Advocacy and Public Outreach—Develop a unified legislative advocacy and public outreach program. 3. Odor Control—Completion of the Odor Control Master Plan. 4. Future Biosohds Management Options — Study biosolids management options including 3rd party contracts and onsite capital facilities. 5. Energy Efficiency— Continue to research new energy efficiency and energy conversion technologies. 6. Local Sewer Transfers—Complete the transfer of 174 miles of local sewers serving parts of Tustin and unincorporated areas north of Tustin and local sewer transfers in the City of Santa Ana. 7. Future Water Recycling — Determine partnerships, needs, strategies, benefits and costs associated with recycling of Plant No. 2 effluent water. DISTRICT REVENUES Sewer Service Charges General. The District has the power to establish fees and charges for services of the Wastewater System. Such fees and charges are established by the District's Board of Directors and are not subject to review or approval by any other agencies. In Fiscal Year 1997-98, a Rate Advisory Committee (the "RAC") was established comprised of representatives from industrial, commercial and residential users. The goal of the RAC was to examine the then current rate structure and, if needed, develop recommendations for change. The RAC analyzed the District's rate structure to determine whether its then current sewer service user fees (now known as "Sewer Service Charges") were equitable among residential and industrial customers. This review resulted in a proposal to expand the number of non- residential user categories from one to 23 and to provide for gradual rate increases in seven of the nine Revenue Areas. The Sewer Service Charges for those categories were based on the average flow and strength of wastewater discharged for each property type and remain currently in use. 24724112.5 30 The Board of Directors establishes the annual sanitary sewer service charges by ordinance. The sanitary sewer service charge ordinances are adopted by a two-thirds vote of the Board of Directors as required under law after conducting a noticed public hearing in compliance with Proposition 218. See "LIMITATIONS ON TAXES AND REVENUES — Article XIIIC and Article XIIID of the California Constitution." The District collects Sewer Service Charges from property owners through the semi-annual property tax bill distributed by the County throughout the District, except in Revenue Area No. 14. Pursuant to the IRWD Agreement, the District receives quarterly fee payments from the IRWD which directly collects fees from customers through a monthly billing procedure in Revenue Area No. 14. The District currently participates in the County's Teeter Plan under which the District receives annually 100% of the secured property tax levies to which it otherwise is entitled, regardless of whether the County has actually collected the levies. The District has covenanted in the Master Agreement to fix, prescribe and collect fees and charges to satisfy certain coverage requirements as further described under "SECURITY AND SOURCES OF PAYMENT FOR THE REVENUE OBLIGATIONS—Rate Covenant"herein. Residential and Commercial Sewer Service Charges. In December 2017,the Board of Directors authorized a Proposition 218 notice on proposed rate increases for each year over the next five years. Pursuant to the adoption of Ordinance No. OCSD-49 on March 28, 2018, the District established residential Sewer Service Charges, except within Revenue Area No. 14,based on the cost of services and facilities provided to each customer of the District. The noticed public hearing held in connection with the adoption of this ordinance considered an increase in the single family residential rate, the underlying rate for all of the District's sewer service charges, of 1.2% for Fiscal Year 2018-19 through Fiscal Year 2022-23. These increases were approved by the Board through the adoption of Ordinance No. OCSD-49. Set forth in Table 6 below is a comparison of the Sewer Service Charge rate for single family residences ("SFRs")for the fiscal years shown. Table 6 Annual Sewer Service Charges Single Family Residence Rate Fiscal Years 2013-14 through 2022-23 Fiscal Sewer Service Percentage Year Charge Change 2013-14 $308 - 2014-15 316 2.6 2015-16 322 1.9 2016-17 327 1.6 2017-18 331 1.2 2018-19 335 1.2 2019-20 339 1.2 2020-21 343 1.2 2021-22 347 1.2 2022-23 351 1.2 Source: Orange County Sanitation District. Set forth in Table 7 below are the total average annual Sewer Service Charges for SFRs within the District, together with comparable total average annual charges for wastewater service within the jurisdictions of certain other cities and districts within the State as of July 1, 2017. The District's 24724112.5 31 approved SFR rate of$335 for Fiscal Year 2018-19 remains below the average annual sewer rate of$529 according to a Fiscal Year 2016-17 survey of 591 agencies encompassing all 58 counties in California conducted by the State Water Resources Control Board. Table 7 Comparison of Total Sewer Service Charges For Single-Family Residences As of July 1,2017 Average Dry Annual Weather Sewer Flow Service Treatment Collection Property Tax Entity (mg/d)@) Chareet1) Levelmoi Responsibility ol Incomeol City of San Diego 140 $573 4 Yes No City of Los Angeles 332 527 4 Yes No Sacramento 99 432 4 No Yes East Bay MUD 53 390 4 No Yes Orange County Sanitation Districtt4) 182 331 3 Yes Yes Los Angeles County N/A 163 4 No Yes 01 Source: Information obtained from respective entities listed. (3) Treatment Level Categories: "1"—Primary treatment. "2"—Advanced primary or primary with some secondary treatment. "3"—Secondary treatment. "4"—Advanced secondary or secondary with some tertiary treatment. "5"—Tertiary treatment. 01 Source: Wastewater User Charge Survey Report by the California State Water Resources Control Board. (4) The District's Annual Sewer Service Charge for Fiscal Year 2018-19 is$335. Industrial Sewer Service Charges. The District charges industrial Sewer Service Charges to customers discharging high-strength or high-volume wastes into the sewer systems. Customers subject to industrial Sewer Service Charges are billed directly by the District The fee charged to each customer is based on the customer's sewage volume, the concentration of suspended solids and biochemical oxygen demand. Total industrial Sewer Service Charges in Fiscal Year 2017-18 were approximately $13.7 million. Industrial Sewer Service Charges are applied to both operating and capital funds. The Sewer Service Charge increases described above are necessary to meet the District's cash flow needs arising from the addition of disinfection treatment and other operating requirements. Additional Revenues The District has several sources of additional revenue, including property taxes, Capital Facilities Capacity Charges,capacity rights,permit and inspection fees and interest earnings. Property Taxes. The District receives approximately 2.5%of the one percent County ad valorem property tax levy, based on the allocation procedure under State law. Property tax revenues were $79.2 million in Fiscal Year 2012-13, $74.9 million in Fiscal Year 2013-14, $79.8 million in Fiscal Year 2014- 15, $84.4 million in Fiscal Year 2015-16 and$88.3 million in Fiscal Yew 2016-17. The District currently estimates that its property tax receipts will increase by approximately 5.0%each year through Fiscal Year 2020-21. The apportionment of the ad valorem tax is pursuant to the Revenue Program adopted in April 1979 to comply with regulations of the Environmental Protection Agency, the State Water Resources Control Board and Board of Directors' policy. 24724112.5 32 Capital Facilities Capacity Charges. Capital Facilities Capacity Charges (commonly referred to as connection fees) are one-time fees with two components, paid at the time property is developed and connected to the Wastewater System. The fees are imposed by the District pursuant to Section 5471 of the California Health and Safety Code and are levied to pay a portion of the District's capital costs and for access to capacity in the Wastewater System. The District currently has Capital Facilities Capacity Charges of $4,228 per residential unit (three-bedroom); however, under the current industrial use ordinance, additional Capital Facilities Capacity Charges can be imposed on industrial users who place larger than average demand on the Wastewater System. Member cities and sanitary districts collect Capital Facilities Capacity Charges for the District when building permits are issued. Capital Facilities Capacity Charges are reviewed annually to reflect the changes in the value of the Wastewater System to which a new customer is connecting. On December 15, 1999, the Board of Directors approved District Ordinance No. OCSD 99-11 (the"1999 Ordinance")which established a comprehensive Capital Facilities Capacity Charge. The 1999 Ordinance, effective as of January 1, 2000, renamed connection fees as Capital Facilities Capacity Charges and provided a more equitable schedule of fees among industrial, commercial and residential users. Pursuant to the 1999 Ordinance,Capital Facilities Capacity Charges were revised for high demand industrial users in five incremental increases from 1999 through 2001. For a summary of historical and projected revenues derived from Capital Facilities Capacity Charges, see Table 14 and Table 15 below. Pursuant to an agreement with the IRWD, the IRWD is not required to pay Capital Facilities Capacity Charges and, in exchange, the IRWD provides funding to the District for the construction costs of certain wastewater collection, transmission, treatment and disposal facilities to be used by the IRWD and is obligated to make certain payments to the District for certain services arising from the Wastewater System(including any standby or availability charges). Sale of Capacity. The District has entered into agreements with the Santa Ana Watershed Project Authority ("SAWPA") whereby wastewater from Upper Santa Ana River Basin dischargers can be transported through the District's Santa Ana River Interceptor to the District's wastewater treatment facilities. This program was developed in the early 1970s. The agreements establish control mechanisms regarding the quality of wastes deposited into the Wastewater System. At the present time, SAWPA has purchased and paid for 30 mg/d of maximum regulated flow capacity rights in the District's Santa Ana River Interceptor and 17 mg/d of monthly average flow capacity in the District's wastewater treatment plants. Projected revenues from SAWPA range from$3.3 million to$3.8 million over the next five years. Additional treatment plant capacity can be purchased in increments at the District's current replacement cost. Federal Subsidy Payments. In connection with the District's Revenue Obligations,Series 2010A (the "20I0A Revenue Obligations") and the District's Revenue Obligations, Series 2010C (the "2010C Revenue Obligations"), issued as `Build America Bonds," the District is scheduled to receive certain federal subsidy payments of approximately $5.1 million annually through 2031 and lesser amounts thereafter until 2044. Subsidy payments with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations constitute Revenues as defined in the Master Agreement. In its financial reports,the District accounts for subsidy payments received in connection with the 2010A Revenue Obligations and the 2010C Revenue Obligations as a reduction in interest expense with respect to such obligations. For the 2010A Revenue Obligations and the 2010C Revenue Obligations to be and remain Build America Bonds, the District must comply with certain covenants and establish certain facts and expectations with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations,the use and investment of proceeds thereof and the use of property financed thereby. Thus, it is possible that the District may not receive the federal subsidy payments due to the District's noncompliance. The federal subsidy payments are also subject to offset against amounts that may, for unrelated reasons, be owed by the District to any agency of the United States of America. 24724112.5 33 On March 1, 2013, the federal government announced the implementation of certain automatic spending cuts known as the sequester (the "Sequester"). As a result of the Sequester, federal subsidy payments for the 2010A Revenue Obligations were reduced by$67,872 (or 8.7%; second half of the year only), $112,339 (or 7.2%), $114,882 (or 7.3%), $106,098 (or 6.8%), $107,659 (or 6.9%) and $102,980 (or 6.6%) for the federal fiscal years ended September 30, 2013, 2014, 2015, 2016, 2017 and 2018, respectively;and federal subsidy payments for the 2010C Revenue Obligations were reduced by$152,807 (or 8.7%; second half of the yew only) by$261,616(or 7.2%), $256,435 (or 7.3%), $238,871 (or 6.8"/0), $242,384 (or 6.9%) and$231,847 (or 6.6%)for the federal fiscal years ended September 30, 2013, 2014, 2015, 2016, 2017 and 2018, respectively. The federal government has announced that the federal subsidy payments for the federal fiscal year ended September 30,2019 will be 6.2%. The District is obligated to make all payments with respect to the 2010A Revenue Obligations and the 2010C Revenue Obligations from Revenues as defined in the Master Agreement, regardless of whether it receives the full amount of federal subsidy payments. The District cannot predict whether future reductions in federal subsidy payments will occur due to the Sequester. However,the District does not believe that any reduction in federal subsidy payments will have a material adverse effect on the District's ability to pay the 2010A Revenue Obligations or the 2010C Revenue Obligations. Wastewater Treatment History The wastewater flows for Fiscal Year 2013-14 through Fiscal Year 2017-18 were 198 mg/d, 190 mg/d, 183 mg/d, 188 mg/d and 185 mg/d,respectively. The highest flow rate experienced was during El Nino storm periods. Peak flows of 500 mg/d were recorded in December 1997 and February 1998. There were no sewer failures or overflows during these events. See "THE DISTRICT—Integrated Emergency Response Program." Customers The historical number of customers served by the District for the Fiscal Years 2013-14 through Fiscal Year 2017-18 and the projected number of customers served by the District for the Fiscal Years 2018-19 through 2022-23, identified in equivalent dwelling units ("EDUs"), are set forth in Table 8 below. As discussed below, sewer service charges are based on the expected amount of wastewater flow for a single family dwelling. Table 8 Historical and Projected Equivalent Dwelling Units Fiscal Years 2013-14 through 2022-23 Historical Projected FiscalYear EDUs01 Fiscal Year EDUs 2013-14 916,812 2018-19 923,730 2014-15 934,141 2019-20 926,501 2015-16 924,944 2020-21 929,281 2016-17 932,232 2021-22 932,069 2017-18 1 1 2022-23 934,865 Source: Orange County Sanitation District. (D With respect to such Fiscal Years,presentation in the Statistical Section of the District's Comprehensive Annual Financial Report set forth in Appendix A includes EDUs that equate to total Sewer Service Charge collections rather than levies. 24724112.5 34 Set forth in Table 9 below are the number of residential and commercial customers and industrial customers and the approximate percentages of Sewer Service Charge revenues derived from the combined residential and commercial use and industrial use for the last five fiscal years. Table 9 Number of Accounts and Revenues by Customer Class for the Fiscal Years 2013-14 through 2017-18 ($in Millions) Residential/Commercial Industrial Number of Percentage Percentage Equivalent of Sewer of Sewer Single- Service Number of Service Family Total Charge Customer Total Charge Fiscal Year Dwellines Revenue Revenues Accounts Revenue Revenues 2013-14 869,461 $267.8 95% 489 $14.4 5 2014-15 806,585 254.9 95 467 14.2 5 2015-16 846,358 272.5 96 450 12.6 4 2016-17 856,315 280.0 95 466 13.8 5 2017-18 867,377 287.1 94 465 17.9 6 Source: Orange County Sanitation District. The EDUs set forth in Table 9 relate to total Sewer Service Charge collections while the EDUs set forth in Table 8 relate to total Sewer Service Charge Levies. Set for0 in Table 10 below are the ten largest principal sewer service customers of the District for the Fiscal Year ended June 30,2018. Table 10 Largest Principal Sewer Service Customers of the District for the Fiscal Year Ended June 30,2018 Sewer User Service Charges House Foods America Corp. $ Kimberly-Clark Worldwide, Inc. Cargill,Inc. Pulmuone Wildwood,Inc. Stremicks Heritage Foods,LLC MCP Foods,Inc. Schreiber Foods,Inc. Ameripec Inc. Jazz Semiconductor Nor-Cal Beverage Co.Inc. (Main) Source: Orange County Sanitation District. 24724112.5 35 Assessed Valuation The assessed valuation of property in the County is established by the County Assessor, except for public utility property which is assessed by the State Board of Equalization. Due to changes in assessment required under State Constitution Article XIIIA, the County assessment roll no longer purports to be proportional to market value. See "LIMITATIONS ON TAXES AND REVENUES" herein. Generally,property can be reappraised upward to market value only upon a change in ownership or completion of new construction. The assessed value of property that has not incurred a change of ownership or new construction most be adjusted annually to reflect inflation at a rate not to exceed 2% per year based on the State consumer price index. In the event of declining property value caused by substantial damage, destruction, economic or other factors, the assessed value must be reduced temporarily to reflect market value.For the definition of full cash value and more information on property tax limitations and adjustments,see"LIMITATIONS ON TAXES AND REVENUES"herein. The County Assessor determines and enrolls a value for each parcel of taxable real property in the County every year. The value review may result in a reduction in value. Taxpayers in the County also may appeal the determination of the County Assessor with respect to the assessed value of their property. Set forth in Table I below is a five-year history of assessed valuations in the District for the fiscal years shown. Table 11 Assessed Valuations of Property in the District Fiscal Years 2014-15 through 2018-19 ($in Billions) Fiscal Year Value Percent Change 2014-15 $350.5 6.44% 2015-16 372.2 6.19 2016-17 391.8 5.27 2017-18 416.3 6.26 2018-19 Source: County of Orange Auditor-Controller. Tax Levies and Delinquencies Property taxes are based on assessed valuation which is determined as described under "DISTRICT REVENUES—Assessed Valuation"herein. In accordance with the California Revenue and Taxation Code, the County tax collector collects secured tax levies for each Fiscal Year. Property taxes on the secured roll are due in two installments, on November 1 and February 1. The District currently participates in the County's Teeter Plan under which the District receives annually 100% of the secured property tax levies and Sewer Service Charges to which it otherwise is entitled,regardless of whether the County has actually collected the levies. This alternative method provides for funding each taxing entity included in the Teeter Plan with its total secured property taxes during the year the taxes are levied, including any amount uncollected at fiscal year-end. Under this plan, the District's general fund receives the full amount of seemed property taxes levied each year on its behalf and, for so long as such plan remains in effect, the participating entities, such as the District, no longer experience delinquent taxes. The County's general fund is the designated recipient of future collections of penalties and interest on all delinquent taxes collected on behalf of participants in this alternative method of apportionment. 24724112.5 36 Set forth in Table 12 below is a five-year history of the District's ad valorem total property tax and Sewer Service Charge levies. Table 12 Total Property Tax and Sewer Service Charge Levies in the District for Fiscal Years 2013-14 through 2017-18 (In Thousands) Total Property Tax and Sewer Fiscal Year Service Charee Levy 2013-14 $356,607 2014-15 362,978 2015-16 371,502 2016-17 381,226 2017-18 386,538 Source: County of Orange Auditor-Controller. Budgetary Process The District's operating fund budget relies on revenues from Sewer Service Charges and property taxes,both of which are collected on the property tax bill, as previously described under the captions "— Sewer Service Charges" and " Additional Revenues." The District receives tax revenues from the County in eight allocations, with the largest receipts in December and April. The District operates on a Fiscal Year beginning each July 1. The operating fund budgets include funds to cover the dry period of each tax year, i.e.,the period from the beginning of the Fiscal Year until the first taxes are received. The dry-period requirement is budgeted at one-half of the annual operating fund budgeted expenditures. The District uses the accrual method of accounting in its budgets. The District has conformed to its budgets for the last five fiscal years and is conforming to its budget for the current fiscal yen. The District's annual budget preparation process begins in January of each yen and concludes in Jane upon its adoption. The General Manager reviews the final operating budgets and then distributes them to the Directors and District Committees for consideration. The Board of Directors then adopts the proposed annual budgets,with any revisions,in June of each year. Budgetary control is exercised at the individual Department level and administrative policies provide guidelines on budget transfers and the authorization necessary to implement transfers. A budget adjustment is a transfer which does not change the total appropriated amount and does not require Board of Directors action. Approval may be granted by the General Manager or the Department Head in certain circumstances. Department Heads have the discretion to reapportion funds between certain line items within a division but may not exceed total appropriated amounts for each department. They may also transfer staff across divisional lines. The General Manager and Board of Directors must approve additional capital outlay items. A budget amendment is an adjustment to the total appropriated amount which was not included in the original budget. These supplemental appropriations require formal action by the Board of Directors. Prior yew reserves or fund balances may be appropriated to fund items not previously included in the adopted budget. Reserves or fund balances exceeding minimum amounts required by fiscal policies may be appropriated if it is determined to be in the best interest of the District. Directors may also appropriate reserves in case of emergencies or unusual circumstances. 24724112.5 37 Reserves The District has an established reserve policy with eight separate categories for its reserve funds. Collectively, these individual reserve requirements total over $551 million for each year of the current ten-year cash flow forecast. Set forth in Table 13 below are the actual reserves at June 30, 2015, June 30, 2016, June 30, 2017, and unaudited reserves at June 30,2018 for each fund. Table 13 Cash and Investment Reserves June 30,2015 through 2017 and Unaudited at June 30,2018 (In Millions) Unaudited 2015 2016 2017 2018 June 30 June 30 June 30 June 30 Cash Flow Requirements Reserve: Operating Expenses $ 76 $ 73 $ 73 $ 76 Certificates of Participation Payments 86 87 87 82 Operating Contingencies Reserve 15 15 15 15 Capital Improvement Program Reserve 163 154 127 284 Catastrophe and Self Insurance 57 57 57 57 Capital Replacement and Refurbishment 62 65 65 66 Debt Service Required Reserves0) 129 107 107 100 Rate Stabilization Reserve Total S5fl8 S558 S531 S60 ft "Debt Service Required Reserves"constitute all amounts designated for reserves within the District's investment management program, together with certain funds held directly by bond trustees. As of June 30, 2018, of the total Debt Service Required Reserves of$100 million,$5 million was held by bond trustees to meet specific covenants in the District's bond documents. Source: Orange County Sanitation District. The District's reserves consist of the following components: • The Cash Flow Requirements Reserve was established to fund operation, maintenance and certificates of participation debt service expenses for the first half of the fiscal year, prior to the receipt of the first installment of the property tax allocation and sewer service user fees which we collected as a separate line item on the property tax bill. The level of this reserve is established as the sum of an amount equal to six months operations and maintenance expense and the total of certificates of participation debt service expenses due in the subsequent fiscal year. • The Operating Contingencies Reserve was established to provide for non-recurring expenditures that were not anticipated when the annual budget and Sewer Service Charges were adopted. The level of this reserve is equal to 10%of the District's annual operating budget. • The Capital Improvement Program Reserve was established to fund annual increments of the Capital Improvement Program with a target level at one-half of the average annual Capital Improvement Program through the year 2020. Levels higher and lower than the target can be expected while the long-term financing and capital improvement programs are being finalized. • The Catastrophic Loss, or Self-Insurance Reserve is established for property damage including fire, flood and earthquake, general liability and workers' compensation. The level of reserve in 24724112.5 38 this fund is maintained at a level to fund the District's non-reimbursed costs which are estimated to be$57 million. • The Capital Replacement and Refurbishment Reserve was established to provide 30% of the funding to replace or refurbish the current collection, treatment and disposal facilities. The current replacement value of these facilities is estimated to be approximately $10.8 billion. The initial reserve level for this fund was established at $50 million and is augmented by interest earnings and a portion of the annual Sewer Service Charges. • Debt Service Required Reserves include trustee-held amounts in any Obligation Reserve Fund and additional amounts held by the District for the payment of debt service in accordance with the District's reserve policy. The District's current policy is to maintain reserves (including trustee- held reserves) for debt service in the amount of 100/. of the principal amount of the District's outstanding debt obligations. • The Rate Stabilization Reserve accumulates all available funds which exceed the targets for all other reserves. The Rate Stabilization Reserve is a separate fund from the Rate Stabilization Account established under the Trust Agreement. There is currently no established target for this reserve and,because the reserves of all other funds have not been exceeded,the reserve level for this reserve fund has been zero for Fiscal Years 2014-15 through 2017-18. • In Fiscal Year 2009-10, Financial Management staff and the Board of Directors concluded that given the nature of the likely events 0rat may cause a withdrawal from the District's reserves and the degree of overlap among reserve categories,the total amount reserved need not equal the sum of each separate reserve category. As a result, the District adjusted the application of its reserve policy, leading to a reduction of $40 million of the accumulated total, or approximately 8%. Reserve levels are calculated in accordance with the District's reserve policy. Summary of Operating Data Set forth in Table 14 below is a summary of historical audited operating results for the District for Fiscal Years 2013-14 through Fiscal Year 2016-17 and unaudited operating results for the District for the Fiscal Year 2017-18. The information presented in the summary should be read in conjunction with the financial statements and notes. See APPENDIX A — "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED JUNE 30,2017Y 24724112.5 39 Table 14 Summary of District Historical Revenues and Expenses and Other Financial Information For Fiscal Years 2013-14 through 2016-17 and Unaudited for Fiscal Year 2017-18 ($in Millions) Audited Unaudited 2013-14 2014-15 2015-16 2016-17 2017-18 Revenues: Residential&Commercial Sewer Service Charges(') Regional $267.8 $260.5 $278.0 $281.2 $288.4 Local 5.7 5.5 5.7 1.3 (0.1) Industrial Sewer Service Charges 14.4 14.2 12.6 13.8 17.9 IRWD Assessments 23.6 28.3 26.6 36.0 9.9 SAWPA Assessments 2.3 2.7 3.2 3.3 2.7 Ad Valorem Taxes 72.8 77.6 84.4 88.3 94.2 Interest Earnings 6.1 4.8 9.2 3.1 3.2 Other Revenues 2.8 3.5 4_0 5_0 6.3 Total Revenues $395.5 $397.1 $423.7 $432.0 $422.5 Operations and Maintenance Expensesl2) $146.4 $149.2 $153.5 $150.3 $145.6 Net Revenues $249.1 $247.9 270. $281.7 276.9 Debt Service $91 $65 $793 $_82.7 $-75-6 UAAL Paymenfo -- $125.0 $ 50.0 S 39.1 Coverage Ratios 2.68x 3.04x 3.39x 3.41x 3.66x CIP Outlay $ 875 1182.6 $1534 $1419 $1217 Ending Reserves $713 7 $588 0 $5582 $531 0 $6$04 (1) Net of rebates,if any,to commercial users. (r) Excludes depreciation and amortization expenses. (3) As of July 1,2014,the District had an unfunded actuarial accrued pension liability in its defined pension benefit plan administered by the Orange County Employees Retirement System of$194 million. In Fiscal Year 2014- 15,Fiscal Year 2015-16, and Fiscal Year 2016-17, the District paid down$125 million, $50 million, and $39 million of this liability,respectively. Source: Orange County Sanitation District. 24724112.5 40 Forecasted Operating Data Set forth in Table 15 below are forecasted operating results for the District for Fiscal Year;2018- 19 through 2022-23. These projections assume the number of projects and scheduled build out set forth in the 2018 CIP Validation Study, and reflects the Board-approved annual rate increase averaging 1.2% for Fiscal Year 2018-19 through and Fiscal Year 2022-23. Principal outlay components of these projections are derived from the 2018 CIP Validation Study, which identified 68 individual capital projects with a 10-year projected outlay of$4.01 billion. Much of the construction is scheduled during the next five yens, with average annual capital outlays of$272.0 million. The District's net CIP cash flow budget for Fiscal Year 2018-19 is $160.3 million, which factors in savings and deferrals. This CIP budget finances joint works treatment and disposal system improvement projects, and collection system improvement projects. The preparation of such projections was based upon certain assumptions and certain forecasts with respect to conditions that may occur in the future. while the District believes that these assumptions and forecasts are reasonable for the purposes of the projected selected operating data,it makes no representation that they will in fact occur.To the extent that actual future conditions differ from those assumed herein,the data will vary. [Remainder of page intentionally left blank.] 24724112.5 41 Table 15 Summary of District Forecasted Revenues and Expenses and Other Financial Information for Fiscal Years 2018-19 through 2022-23 ($in Millions)(', 2018-19 2019-20 2020-21 2021-22 2022-23 Revenues: Residential&Commercial Sewer Service Charges $294.5 $299.1 $303.7 $308.4 $313.2 Industrial Sewer Service Charges 18.3 18.5 18.8 19.0 19.2 IRWD Assessments 20.3 18.0 14.2 17.8 18.8 SAWPA Assessments 3.3 3.4 3.6 3.7 3.8 Ad Valorem Taxes 99.6 104.5 109.8 115.3 121.0 Interest Earnings 6.5 7.2 7.9 7.5 6.5 Other Revenues 6.0 4.4 6.9 19.1 20.6 Total Revenues 448.5 455.1 464.9 490.8 503.1 Build America Bonds Federal Subsidy 2.4 2.3 2.2 2.1 2.0 Operations and Maintenance Expenses 161.2 160.2 163.7 173.2 178.1 Net Revenues(" 289.7 297.2 303.4 319.7 327.0 Debt Service 80.5 80.0 76.0 72.5 72.5 Coverage Ratios(" 3.6 3.7 4.0 4.4 4.5 CIP Outlays 160.3 134.1 195.3 341.4 355.7 Replacement,Refurbishment& Rehabilitation(') 14.3 2.9 7.2 17.3 25.8 Debt Proceeds Ending Reserves $678.6 $773.3 $808.4 $708.1 $592.8 m Calculated in accordance with the Master Agreement and the Installment Purchase Agreement. o) Assumptions: a) Annual growth in equivalent dwelling units is projected to average 0.3%over the next five years. to The Residential, Commercial, and Industrial Sewer Service Charge forecasts are based on the total projected equivalent dwelling units,Board approved rate increases for Fiscal Years 2018-19 and 2022-23 averaging 1.2%per year. c) Revenue Area No. 14 Fees are derived based on the projected contribution of sewage flows to the District from the Wine Rauch Water District. d) Ad Valorem Taxes are projected with annual increases of 5%. e) Interest earnings are projected to average 1.0%of annual cash balances. t) Operating and Maintenance Expenses are forecasted with a base increase of4.0%per year beginning with Fiscal Year 2018- 19 with adjustments for(mown periodic outlays that do not occur morally. g) Annual CIP Outlays are based on the cash flow projections developed from the 2018 CIP Validation Study, with adjustments for CIP savings and deferrals. (3) Replacement, Refurbishment & Rehabilitation are known future capital outlays that have been identified within the District's Asset Management Program but have not yet been developed inm specific proposed projects and included within the CIP Program. Source: Orange County Sanitation District. 24724112.5 42 Management's Discussion and Analysis of Operating Data The District's Fiscal Year 2018-19 total operating, capital improvement, debt service, and other financing requirements budget is $422.3 million, a 9.5% increase over the prior fiscal year budget of $385.6 million. This overall increase consists of an increase in capital outlay of$26.4 million or 17.8% and an increase in operating expenses of$9.3 million or 6.1.%. The Fiscal Year 2019-20 capital outlay budget is $137.0 million, a 21.5% decrease over the Fiscal Year 2018-19 capital outlay budget. The fluctuation in capital outlay requirements is attributable to the timing of the construction schedule on the implementation of the overall combined$2.7 billion CIP over the next ten years. The Fiscal Year 2018-19 approved budget to operate, maintain and manage the District's sewage collection, treatment and disposal system is $161.2 million, a decrease of 6.1%. Personnel costs have increased by $2.6 million, or 2.8%, due primarily cost of living adjustments included in the current Memorandums of Understanding for all employee bargaining units. Adding to the salaries increase is the addition of one new full time equivalent TTTE") staff position bringing the authorized staffing level to 636.0 FTEs. Contractual services and professional services were budgeted to increase $0.7 million, or 2.9% due primarily to increasing support for the Civil Assets Maintenance Program, new coating program, preventive maintenance optimization services,and engineering professional and design services. Repairs and maintenance costs were approved to increase $5.8 million or 36.2%. Major changes from year-to-year are basically from the timing of when large facilities are scheduled for maintenance. During Fiscal Year 2018-19, two central generation engines are scheduled for overhaul at an estimated cost of $3.8 million and major rehabilitation of primary and secondary clarifiers and both plants is planned for$1.6 million. In addition,new, increased scope for electrical services in the process areas and rehabilitation of generators is planned as well as specialized lighting and HVAC services. In preparation of the Fiscal Yen 2018-20 biennium budget, District staff developed levels of service and capital projects that are included in the five-year rolling Strategic Plan of the District. See "THE DISTRICT - District Planning." In addition, staff validated the active capital projects currently being executed to ensure that the scope of work on the active projects remains appropriate, and that the cost estimates have been accurately updated. The Fiscal Year 2018-19 capital related cash flow budget was approved at$191.8 million. After factoring in savings and deferrals, this capital budget was reduced by$17.3 million to$174.5 million. The 2018 CIP Validation Study includes 68 individual capital projects with 10-year outlays totaling approximately$2.7 billion. The Master Plan includes a Wastewater Revenue Program Rate Study that determines the appropriate rates going forward to support the proposed 20-year CIP. In March 2018, following a Proposition 218 notice process, the Bond approved sewer rate increases for each year over the next five years averaging approximately 1.2% per year. These increases are necessary to provide needed capital improvements, to meet additional treatment and disinfection requirements, and to minimize future rate increases. The impact of this five-year sewer fee schedule has increased the single-family residence user fee rate,the underlying rate for all sewer service user fees,an average of 1.2% a year from$335 in Fiscal Year 2018-19 to $351 in Fiscal Year 2022-23. Investment of District Funds State statutes authorize the District to invest in obligations of the United States Government,state and local governmental agencies, negotiable certificates of deposits, banker's acceptances, commercial paper, reverse repurchase agreements and a variety of other investment instruments which are allowable under California Government Code Section 53600 et seq. 24724112.5 43 All District funds, except for Obligation Reserve Funds controlled by a bank trustee pursuant to the provisions of Existing Senior Obligations, are managed by an external money manager, Chandler Asset Management. U.S. Bank National Association serves as the District's independent custodian bank for its investment program. Callan Associates serves as the District's independent advisor. As of June 30, 2018, the District's externally managed fund consisted of a short-term investment portfolio of $156.1 million with an average maturity of 55 days, and a long-tens investment portfolio of $460.9 million with average maturities of 2.8 years. Investments consist of United States government securities, corporate bonds and commercial paper. The District's portfolio contains no structured investment vehicles("SIVs")or reverse repurchase agreements. Deposits in banks are maintained in financial institutions which provide deposit protection on the bank balance from the Federal Deposit Insurance Corporation. The California Government Code requires State banks and savings and loans to secure local government deposits by pledging government securities equal to 110% of the deposits or by pledging first trust deed mortgage notes equal to 150% of the deposits. The District's Investment Policy requires that the District invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonable anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the investment of public funds. The primary objectives, in order, of the District's investment activities are safety,liquidity and retain on investment. FINANCIAL OBLIGATIONS Existing Indebtedness Currently, the District has Senior Obligations Outstanding payable on a parity with the Notes. The table below describes the District's outstanding parity certificates of participation as of November 1, 2018. The payment obligations in connection with each series of these certificates of participation constitute Senior Obligations, subject to the provisions of the Master Agreement and shall be afforded all of the benefits, interests and security afforded Senior Obligations pursuant to the Master Agreement. The District has no general obligation bonds or subordinate bonds outstanding. 24724112.5 44 Table 16 Outstanding Senior Obligations As of November 1,2018 Original Principal Issue Outstanding Final Amount Date Balance Maturity 2009A Certificates $ 200,000,000 05/07/09 $ 4,690,000 02/01/19 2010A Certificates 80,000,000 05/18/10 80,000,000 02/01/40 2010C Revenue Obligations 157,000,000 11/29/10 157,000,000 02/01/44 2011A Revenue Obligations 147,595,000 10/03/11 75,370,000 02/01/26 2012A Revenue Obligations 100,645,000 03/22/12 100,645,000 02/01/33 2012B Revenue Obligations 66,395,000 08/16/12 66,395,000 02/01/26 2014A Revenue Obligations 85,090,000 08/07/14 78,375,000 02/01/27 2015A Revenue Obligations 127,510,000 02/12/15 127,510,000 02/01/37 2016A Revenue Obligations 145,880,000 03/30/16 145,880,000 02/01/39 2016B Certificates' 109,875,000 11/01/16 109,875,000 12/15/18 2017A Revenue Obligations 66.370.000 02/01/17 66,370,000 02/01/30 Total Senior Obligations $1.286.360.000 $1.012.110.000 ' To be prepaid with the proceeds of the Notes. In connection with the execution and delivery of the above-referenced outstanding certificates of participation, the District entered into certain installment purchase agreements, or equivalent documents, providing for the payment of installment payments or similar payments. Anticipated Financings From time to time the District may incur other obligations to finance portions of the CIP and to prepay the Notes. Over the next five years, however, the District does not expect to issue any additional debt, other than refunding debt. The District expects to refund outstanding obligations from time to time. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES — Sale Proceeds of Future Obligations." Direct and Overlapping Bonded Debt The aggregate direct and overlapping bonded debt of the District as of June 30, 2017 is set forth on page 70 of Appendix A. THE CORPORATION The Corporation was organized on June 19, 2000 as a nonprofit public benefit corporation pursuant to the Nonprofit Public Corporation law of the State. The Corporation's purpose is to render assistance to the District in its acquisition of equipment,real property and improvements on behalf of the District. Under its articles of incorporation, the Corporation has all powers conferred upon nonprofit public benefit corporations by the laws of the State, provided that it will not engage in any activity other than that which is necessary or convenient for,or incidental to the purposes for which it was formed. The Corporation is a separate legal entity from the District. It is governed by a twenty-five member Board of Directors. The Corporation has no employees. All staff work is performed by employees of the District. The members of the Corporation's Board of Directors are the Board of Directors of the District. 24724112.5 45 The District's Director of Finance and Administrative Services and other District employees are available to provide staff support to the Corporation. The Corporation has not entered into any material financing arrangements other than those referred to in this Official Statement. Further information concerning the Corporation may be obtained from the Orange County Sanitation District office at 10844 Ellis Avenue, Fountain Valley, California, 92708-7018. LIMITATIONS ON TAXES AND REVENUES Article XIIIA of the California Constitution On June 6, 1978, California voters approved Proposition 13 ("Proposition 13"), which added Article XIIIA to the State Constitution ("Article XIIIA'). Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on (i)indebtedness approved by the voters prior to July 1, 1978,(ii)(as a result of an amendment to Article XIIIA approved by State voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-third of the voters on such indebtedness, and (iii)bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real properly for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures me included in the proposition.Article XIIIA defines full cash value to mean"the county assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash value," or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year or to reflect a reduction in the consumer price index or comparable data for the area under the taxing jurisdiction, or reduced in the event of declining property values caused by substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem properly tax except to pay debt service on indebtedness approved by the voters as described above. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law,local agencies are no longer permitted to levy directly any property tax(except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment me allocated among the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to a local agency continues as part of its allocation in future years. Beginning in the 1981-82 fiscal year, assessors in the State no longer record property values on tax rolls at the assessed value of 25%of market value which was expressed as$4 per$100 assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $I per$100 of taxable value. All taxable property value included in this Official Statement is shown at 1000/. of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value. 24724112.5 46 Article XIIIB of the California Constitution An initiative to amend the State Constitution entitled"Limitation of Government Appropriations" was approved on September 6, 1979, thereby adding Article XIIIB to the State Constitution ("Article XIIIB"). Under Article XIIIB,the State and each local governmental entity has an annual"appropriations limit" and is not permitted to spend certain moneys that are called "appropriations subject to limitation" (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the appropriations limit. Article XIIIB does not affect the appropriations of moneys that are excluded from the definition of"appropriations subject to limitation," including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved by the voters. In general terms, the appropriations limit is to be based on certain 1978-79 expenditures, and is to be adjusted annually to reflect changes in consumer prices, populations, and services provided by these entities. Among other provisions of Article XIIIB, if these entities' revenues in any year exceed the amounts permitted to be spent,the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. "Appropriations subject to limitation" are authorizations to spend `proceeds of taxes," which consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed`the cost reasonably home by such entity in providing the regulation, product or service," but"proceeds of taxes" excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of funds which are not "proceeds of taxes," such as reasonable user charges or fees, and certain other non- tax funds. Not included in the Article XIIIB limit are appropriations for the debt service costs of bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government and appropriations for qualified capital outlay projects. The appropriations limit may also be exceeded in certain cases of emergency. The appropriations limit for the District in each year is based on the District's limit for the prior year, adjusted annually for changes in the cost of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the District's option, either(1) the percentage change in State per capita personal income, or (2) the percentage change in the local assessment roll on nonresidential property. Either test is likely to be greater than the change in the cost of living index, which was used prior to Proposition 111. Change in population is to be measured either within the jurisdiction of the District or the County as a whole. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of the aggregate `proceeds of taxes" received by a District over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years. As originally enacted in 1979,the District's appropriations limit was based on 1978-79 authorizations to expend proceeds of taxes and was adjusted annually to reflect changes in cost of living and population (using different definitions, which were modified by Proposition 111). Starting with Fiscal Year 1990-91,the District's appropriations limit was recalculated by taking the actual Fiscal Year 1986-87 limit, and applying the annual adjustments as if Proposition 111 had been in effect. The District does not anticipate that any such appropriations limitations will impair its ability to make Installment Payments as required by the Installment Purchase Agreement. 24724112.5 47 Proposition 1A and Proposition 22 Proposition lA (`Proposition lA"), proposed by the Legislature in connection with the 2004-05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004-05 and 2005-06. Proposition IA provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition lA generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year,as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition IA provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8%of local government property tax revenues,which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. Such a shift may not occur more than twice in any ten-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition IA was generally superseded by the passage of a new initiative constitutional amendment at the November 2010 election, known as Proposition 22 ("Proposition 22"). The effect of Proposition 22 is to prohibit the State, even during a period of severe fiscal hardship, from delaying the distribution of tax revenues for transportation,redevelopment, or local government projects and services. It prevents the State from redirecting redevelopment agency property tax increment to any other local government or from temporarily shifting property taxes from cities, counties and special districts to schools.This is intended to, among other things,stabilize local government revenue sources by restricting the State's control over local property taxes. Prior to the passage of Proposition 22, the State invoked Proposition lA to divert $1.935 billion in local property tax revenues in fiscal year 2009-10 from cities,counties,and special districts to the State to offset State general fund spending for education and other programs. Approximately$5 million of the District's property tax revenues were diverted to the State as a result of this Proposition lA suspension. The District participated in a Proposition IA Securitization Program (the "Program") sponsored by the California Statewide Communities Development Authority. The Program allowed the District to exchange its anticipated State property tax receivable for an equal amount of cash. In addition, the State's adopted 2009-10 budget included a $1.7 billion diversion in local property tax revenues from local redevelopment agencies. Many California Redevelopment Association members me actively engaged in litigation to block such diversion and recoup certain payments already made under certain legislation passed in July 2009 that is beyond the reach of Proposition 22,known as"ABX4 26." Proposition lA also provides that if the State reduces the vehicle license fee ("VLF") rate currently in effect, 0.65% of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition IA requires the State to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. Article XIIIC and Article XIIID of the California Constitution Proposition 218, a State ballot initiative known as the "Right to Vote on Taxes Act," was approved by the voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the 24724112.5 48 California Constitution, creating additional requirements for the imposition by most local governments of "general taxes,""special taxes,""assessments,""fees,"and"charges." Proposition 218 became effective, pursuant to its terms, as of November 6, 1996, although compliance with some of its provisions was deferred until July 1, 1997, and certain of its provisions purport to apply to any tax imposed for general governmental purposes (i.e., "general taxes") imposed, extended or increased on or after January 1, 1995 and prior to November 6, 1996. Article XIIID imposes substantive and procedural requirements on the imposition, extension or increase of any"fee" or"charge" subject to its provisions. A"fee" or"charge" subject to Article XIIID includes any levy, other than an ad valorem tax, special tax or assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or charge, in the event written protests against the proposed fee or charge are presented at a required public hearing on the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be imposed. Except for fees and charges for water, sewer and refuse collection services, the approval of a majority of the property owners subject to the fee or charge,or at the option of the agency,by a two-thirds vote of the electorate residing in the affected area,is required within 45 days following the public hearing on any such proposed new or increased fee or charge. The California Supreme Court decisions in Richmond v. Shasta Community Services District, 32 Ca .4th 409 (2004) ("Richmond'), and Bighorn- Desert View Water Agency v. Verjil, 39 Cal.4th 205 (2006) (`Bighorn") have clarified some of the uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In Richmond, the Shasta Community Services District charged a water connection fee, which included a capacity charge for capital improvements to the water system and a fire suppression charge. The Court held that both the capacity charge and the fire suppression charge were not subject to Article XIIID because a water connection fee is not a property-related fee or charge because it results from the property owner's voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the Court stated that a fee for ongoing water service through an existing connection is imposed "as an incident of property ownership" within the meaning of Article XIIID, rejecting, in Bighorn, the water agency's argument that consumption-based water charges are not imposed "as an incident of property ownership"but as a result of the voluntary decisions of customers as to how much water to use. Article XIIID also provides that"standby charges"are considered"assessments"and must follow the procedures required for "assessments" under Article XIIID and imposes several procedural requirements for the imposition of any assessment, which may include (I) various notice requirements, including the requirement to mail a ballot to owners of the affected property; (2) the substitution of a property owner ballot procedure for the traditional written protest procedure,and providing that"majority protest" exists when ballots (weighted according to proportional financial obligation) submitted in opposition exceed ballots in favor of the assessments; and (3) the requirement that the levying entity "separate the general benefits from the special benefits conferred on a parcel"of land. Article XIIID also precludes standby charges for services that are not immediately available to the parcel being charged. Article XIIID provides that all existing, new or increased assessments are to comply with its provisions beginning July 1, 1997. Existing assessments imposed on or before November 5, 1996, and "imposed exclusively to finance the capital costs or maintenance and operations expenses for [among other things] water" are exempted from some of the provisions of Article XIIID applicable to assessments. Article XIIIC extends the people's initiative power to reduce or repeal existing local taxes, assessments,fees and charges. This extension of the initiative power is not limited by the terms of Article XIIIC to fees, taxes, assessment fees and charges imposed after November 6, 1996 and absent other authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. In Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public agency's water rates and delivery charges. The Court noted, however, that it was not holding that the 24724112.5 49 authorized initiative power is free of all limitations, stating that it was not determining whether the electorate's initiative power is subject to the public agency's statutory obligation to set water service charges at a level that will "pay the operating expenses of the agency, . . . provide for repairs and depreciation of works,provide a reasonable surplus for improvements, extensions,and enlargements,pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due." The District has consistently increased rates over the years, but the magnitude of such increases has been declining. On March 28, 2018, the Board of Directors adopted Ordinance No. OCSD49 approving single family residential rate increases for each year over the next five years,by 1.2%annually. The single family residential rate is the basis for all of the District's sewer service charges.The Ordinance was adopted by a 2/3 vote of the Board of Directors as required under law after conducting a noticed public hearing in compliance with in compliance with Article XBID. These increases are necessary to provide needed capital improvements, to meet additional treatment and disinfection requirements, and to minimize future rate increases. The impact of this five-year sewer fee schedule has increased the single family residence user fee rate from$335 in Fiscal Year 2018-19 to$351 in Fiscal Year 2022-23. For comparison, in May 2003, the Board of Directors approved a 15% single family residential rate increase per year over the then following five years. However, in May 2005, the Board of Directors approved a 31% single family residential rate increase for Fiscal Year 2005-06 after a CIP Validation Study for Fiscal Year 2005-06 increased the ten year CIP cash flow projections to $2.2 billion, or an average of$220 million per year. The Board of Directors then approved a rate increase of 9.8%annually for the following two years. In February of 2008 the Board of Directors increased the rate by 10.4%, 10.0%, 10.4%, 9.4% and 10.1%, respectively, for Fiscal Years 2008-09 trough 2012-13. Pursuant to Ordinance No. OCSD-41, such rate was increased by 4.8% for Fiscal Year 2013-14 and thereafter by an average of 1.7%annually for each Fiscal Year through the Fiscal Year ended June 30,2018. Pursuant to the Master Agreement, the District will,to the extent permitted by law, fix, prescribe and collect fees and charges for the services of the Wastewater System which will be at least sufficient to yield during each Fiscal Yew(a)Net Revenues equal to 125%of Debt Service on Senior Obligations for such Fiscal Year, and(b)Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but will not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. If service charges are determined to be subject to Article XBID, and proposed increased service charges cannot be imposed as a result of a majority protest, such circumstances may adversely affect the ability of the District to generate revenues in the amounts required by the Master Agreement, and to make the Installment Payment as provided in the Installment Purchase Agreement. No assurance may be given that Articles XBIC and XIBD will not have a material adverse impact on Net Revenues. Other Initiative Measures Articles XIIIA, XIBB, XIIIC and XIIID were adopted pursuant to California's constitutional initiative process. From time to time other initiative measures could be adopted by California voters, placing additional limitations on the ability of the District to increase revenues. LEGAL MATTERS The validity of the Notes and certain other legal matters are subject to the approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel to the District. A complete copy of the proposed form of Special Counsel opinion is attached as Appendix F hereto. Special Counsel, in its capacity as Special Counsel to the District, undertakes no responsibility for the accuracy, 24724112.5 50 completeness or fairness of this Official Statement. Certain legal matters will be passed on for the District and the Corporation by Woodruff, Spradlin & Smart, a Professional Corporation, Costa Mesa, California,and for the District by Norton Rose Fulbright US LLP,Disclosure Counsel to the District. MUNICIPAL ADVISOR The District has retained Public Resources Advisory Group as an independent registered municipal advisor(the"Municipal Advisor")in connection with the execution and delivery of the Notes. The Municipal Advisor has not been engaged, nor have they undertaken, to audit, authenticate or otherwise verify the information set forth in the Official Statement, or any other related information available to the District, with respect to accuracy and completeness of disclosure of such information. The Municipal Advisor has reviewed this Official Statement but makes no guaranty, warranty or other representation respecting accuracy and completeness of the information contained in this Official Statement Certain fees of the Municipal Advisor are contingent upon the execution and delivery of the Notes. ABSENCE OF LITIGATION There is no action, suit,proceeding, inquiry or investigation,at law or in equity,before or by any court, regulatory agency, public board or body, pending or, to the best knowledge of the District, threatened against the District affecting the existence of the District or the titles of its directors or officers to their offices or seeking to restrain or to enjoin the sale or delivery of the Notes, the application of the proceeds thereof in accordance with the Trust Agreement, or in any way contesting or affecting the validity or enforceability of the Notes, the Trust Agreement, the Master Agreement, the Installment Purchase Agreement or any action of the District contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement, or contesting the powers of the District or its authority with respect to the Notes or any action of the District contemplated by any of said documents,nor,to the knowledge of the District is there any basis therefor. There is no action, suit, proceeding, inquiry or investigation,at law or in equity,before or by any court, regulatory agency, public board or body pending or, to the best knowledge of the District, threatened against the District contesting or affecting the ability of the District to collect amounts from which the Installment Payment is payable,or which would have a material adverse effect on the District's ability to make the Installment Payment. FINANCIAL STATEMENTS The basic financial statements of the District included in Appendix A to this Official Statement have been audited by Macias Gini & O'Connell LLP, independent certified public accountants. See APPENDIX A—"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR THE YEAR ENDED JUNE 30, 2017" herein. The District has received the Government Finance Officers Association Certificate of Achievement for "Excellence in Financial Reporting" for over 20 consecutive years. The audited financial statements, including the footnotes thereto, should be reviewed in their entirety. Macias Gini & O'Connell LLP, the District's independent auditor, has not been engaged to perform, and has not performed, since the date of its report included in Appendix A, any procedures on the financial statements addressed in that report. Macias Gini & O'Connell LLP also has not performed any procedures relating to this Official Statement. TAX MATTERS The Internal Revenue Code of 1986 (the "Code") imposes certain requirements that must be met subsequent to the execution and delivery of the Notes for the interest component of each Installment Payment (the "Interest Component'), and the allocable portion thereof distributable in respect of each 24724112.5 51 Note (each a "Note Interest Distribution"), to be and remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof from the gross income of the owner thereof for federal income tax purposes. Noncompliance with such requirements could cause such amounts to be included in gross income for federal income tax purposes retroactive to the date of delivery of the Installment Purchase Agreement and the Notes. In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel, under existing statutes, regulations, rulings and court decisions, the Interest Component of each Installment Payment and the Note Interest Distributions in respect thereof are exempt from personal income taxes of the State of California and, assuming compliance with the covenants referred to herein, are excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. In the further opinion of Special Counsel, under existing statutes, regulations, rulings and court decisions, the Notes are not "specified private activity bonds" within the meaning of section 57(a)(5)of the Code and, therefore, the Interest Component allocable to and the Note Interest Distributions in respect of a Note is not an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accmal of an Interest Component or of a Note Interest Distribution owned by a corporation whose taxable year began on or before December 31, 2017, may affect the computation of the alternative minimum taxable income. The corporate alternative minimum tax is repealed with respect to taxable years beginning on and after January 1, 2018. A corporation's alternative minimum taxable income is the basis on which the alternative mountain tax imposed by section 55 of the Code will be computed. The initial public offering price for the Notes is greater than the principal amount payable on the Notes at maturity. To the extent that a purchaser of a Note who treats the stated interest payable at maturity as qualified stated interest acquires the Note at a price greater than the aggregate amount (other than such qualified stated interest) payable on such Note, such excess will constitute "bond premium" under the Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder, provide generally that bond premium on a non-callable tax-exempt obligation most be amortized over the remaining term of the obligation: the amount of premium so amortized will reduce the owner's basis in such Note for federal income tax purposes,but such amortized premium will not be deductible for federal income tax purposes. Consequently,an owner of a Note who purchased the Note with bond premium and held the Note until paid at maturity generally will not realize tax gain or loss on such Note. The rate and timing of the amortization of the bond premium and the corresponding basis reduction may result in an owner realizing a taxable gain when a Note owned by such owner is sold or disposed of for an amount equal to, or in some circumstances even less than, the original cost of the Note to the owner. Purchasers should consult their own tax advisors as to the computation and treatment of such amortizable bond premium, including, but not limited to, the calculation of gain or loss upon the sale, maturity or other disposition of a Note. Pursuant to the Trust Agreement and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the District and the Corporation in connection with the issuance of the Notes,the District and the Corporation will make representations relevant to the determination of, and will make certain covenants regarding or affecting, the exclusion of interest on the Notes from the gross income of the owners thereof for federal income tax purposes. In reaching the conclusions supporting the opinions described above, Special Counsel will assume the accuracy of such representations and the present and future compliance by the District and the Corporation with such covenants referred to herein. Further, except as stated above, Special Counsel will express no opinion as to any federal or state in consequences of the receipt of interest on,or the ownership or disposition of,the Notes. Special Counsel has not undertaken to advise in the future whether any events after the date of execution and delivery of the Installment Purchase Agreement and the Notes may affect the tax status of the Interest Component or the Note Interest Distributions. No assurance can be given that future 24724112.5 52 legislation, if enacted into law, will not contain provisions that could directly or indirectly reduce the benefit of the exemption of such amounts from personal income taxation by the State of California or of the exclusion of the interest on the Notes from the gross income of the owners thereof for federal income tax purposes. Furthermore, Special Counsel expresses no opinion as to any federal, state or local tax law consequences with respect to the Installment Purchase Agreement, the Notes, the Interest Component or the Note Interest Distributions,if any action is taken with respect to the Installment Purchase Agreement, the Notes or the proceeds thereof, or the Trust Agreement predicated or permitted upon the advice or approval of other counsel. Special Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the District and the Corporation described above. No ruling has been sought from the Internal Revenue Service (the "Service") with respect to the matters addressed in the opinion of Special Counsel,and Special Counsel's opinion is not binding on the Service. The Service has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Notes is commenced, under current procedures the Service is likely to treat the District as the "taxpayer," and the owners would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the Interest Component and the Note Interest Distributions accrued in respect of Notes, the District may have different or conflicting interest from the owners. Public awareness of any future audit of the Notes could adversely affect the value and liquidity of the Notes during the pendency of the audit,regardless of its ultimate outcome. Although Special Counsel is of the opinion that the Interest Component and the Note Interest Distributions in respect of a Note are exempt from California personal income tax and excluded from the gross income of the owners thereof for federal income tax purposes, an owner's federal, state or local tax liability may be otherwise affected by the ownership or disposition of the Notes. The nature and extent of these other tax consequences will depend upon the owner's other items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Notes should be aware that (i) section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Notes and the Code contains additional limitations on interest deductions applicable to financial institutions that own tax-exempt obligations (such as the Notes), (ii) with respect to insurance companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15% of the sum of certain items, including Interest Component and Note Interest Distributions in respect of the Notes, (iii) Interest Component and Note Interest Distributions accrued in respect of Notes owned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income,including Interest Component and Note Interest Distributions accrued in respect of Notes, may be subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25%of the gross receipts of such Subchapter S corporation is passive investment income, (v) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, Interest Distributions and Note Interest Distributions accrued in respect of Notes owned by such recipients for federal income tax purposes,and(vi)under section 32(i) of the Code, receipt of investment income, including Interest Component and Note Interest Distributions accrued in respect of Notes,may disqualify the recipient thereof from obtaining the earned income credit. Special Counsel has expressed no opinion regarding any such other tax consequences. Existing law may change to reduce or eliminate the benefit to noteholders of the exclusion of interest on the Interest Component and the Note Interest Distributions accrued in respect of the Notes from gross income for federal income tax purposes. Any proposed legislation or administrative action, whether or not taken, could also affect the value and marketability of the Notes. Prospective purchasers of the Notes should consult with their own tax advisors with respect to any proposed or future changes in tax law. 24724112.5 53 A copy of the form of opinion of Special Counsel to be delivered at the closing of the Notes is included in Appendix F. CONTINUING DISCLOSURE The District has covenanted for the benefit of holders and beneficial owners of the Notes (a)to provide certain financial information and operating data(the"Annual Report")relating to the District and the property in the District not later than eight months after the end of the District's Fiscal Year (which currently would be March 1), commencing with the report for the 2017-18 Fiscal Year, and(b)to provide notices of the occurrence of certain enumerated events. The Annual Report will be filed by the Trustee on behalf of the District, with the Municipal Securities Rulemaking Board. The notices of enumerated events will be filed by the Trustee on behalf of the District with the Municipal Securities Rulemaking Bond. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See APPENDIX D — "FORM OF CONTINUING DISCLOSURE AGREEMENT." These covenants have been made in order to assist the Initial Purchaser in complying with S.E.C.Rule 15c2-12(the"Rule"). RATINGS The Notes will be assigned long-term ratings of by Moody's Investors Service ("Moody's") and "_" by Fitch Ratings ("Fitch"). The Notes will be assigned a short-term rating by Fitch of " ." Such ratings reflect only the views of the rating agencies, and do not constitute a recommendation to buy, sell or hold the Notes. Explanation of the significance of such ratings may be obtained only from the respective rating agencies. There is no assurance that any such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by the respective rating agencies, if in the judgment of any such rating agency circumstances so warrant.Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Notes. PURCHASE AND REOFFERING (the"Initial Purchaser")has purchased the Notes from the District at a competitive sale for a purchase price of$ (representing the aggregate principal amount of the Notes,plus a premium of$ , less an underwriter's discount of$ ). The public offering price may be changed from time to time by the Initial Purchaser. The Initial Purchaser may offer and sell Notes to certain dealers and others at prices lower than the offering price shown on the cover page hereof. 24724112.5 54 MISCELLANEOUS Included herein are brief summaries of certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the District and the purchasers or Owners of any of the Notes. The execution and delivery of this Official Statement has been duly authorized by the District. ORANGE COUNTY SANITATION DISTRICT By: Chair of the Board of Directors 24724112.5 55 APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FOR FISCAL YEAR ENDED JUNE 30,2017 24724112.5 A-1 APPENDIX B THE COUNTY OF ORANGE—ECONOMIC AND DEMOGRAPHIC INFORMATION The County is bordered on the north by Los Angeles County, on the east by Riverside County,on the southeast by San Diego County and on the west and southwest by the Pacific Ocean. Approximately 42 miles of ocean shoreline provide beaches,marinas and other recreational areas for use by residents and visitors. The climate in the County is mild,with an average annual rainfall of 13 inches. Population The County is the third most populous county in the State and the sixth most populous in the nation. TABLE B-1 COUNTY OF ORANGE,STATE OF CALIFORNIA AND UNITED STATES POPULATION GROWTHtr1 State of Year County of Oranee California United States 2009 2,982,788 36,961,664 307,006,550 2010 3,017,217 37,318,481 308,745,538 2011 3,051,472 37,578,616 311,800,000 2012 3,086,260 38,041,430 313,914,040 2013 3,113,370 38,332,521 316,128,839 2014 3,139,615 38,802,500 321,418,820 2015 3,165,203 39,144,818 321,442,019 2016 3,183,011 39,225,883 322,762,018 2017 3,198,869 39,500,973 326,359,076 2018 3,221,103 38,809,693 328,030,045 As of July 1 of each year,except 2010 State of California and United States data as of April 1,2010,2016 U.S. Census Bureau data as of January 1,2016 and 2017 and 2018 County of Orange and State of California data as of January 1. Source: County of Orange: California Department of Finance, Demographic Research Unit, State of California and United States.- United States Statistics — Population Estimates Program, Population Division, U.S. Census Bureau. Public Schools(Elementary and Secondary) Public instruction in the County is provided by twelve elementary school districts, three high school districts and twelve unified (combined elementary and high school) districts. Public school enrollment for the academic calendar years 2013-14 through 2017-18 is presented in Table B-2. 24724112.5 B-1 TABLE B-2 COUNTY OF ORANGE PUBLIC SCHOOL ENROLLMENT 2013-14 2014-15 2015-16 2016-17 2017-18 Total Enrollment 500,487 497,116 493,030 490,430 485,835 Source: California Department ofEducadon,Data Quest Report. Colleges and Universities The County has a number of top-rated, college-level educational institutions, including the University of California at Irvine and California State University at Fullerton, several private colleges, universities and law schools and four community college districts. Employment The following table summarizes the historical numbers of workers in the County over the period 2013 through 2017 by industry. TABLE B-3 COUNTY OF ORANGE INDUSTRY EMPLOYMENT AND LABOR FORCE-ANNUAL AVERAGE 2013 2014 2015 2016 2017 Farm 2,900 2,800 2,500 2,400 2,200 Natural Resources and Mining 600 700 700 600 700 Construction 76,800 82,000 90,400 97,400 101,700 Manufacturing 158,000 158,700 156,900 157,000 158,600 Wholesale Trade 79,400 80,900 80,800 80,900 82,000 Retail Trade 145,500 148,700 151,200 152,400 153,400 Transportation,Warehousing Utilities 27,500 26,600 26,900 27,200 27,600 Information 25,000 24,200 25,500 26,400 27,300 Financial Activities 113,100 114,100 116,800 117,600 119,000 Professional and Business Services 267,300 275,800 285,400 296,900 301,700 Educational and Health Services 184,200 190,300 198,800 206,800 215,700 Leisure and Hospitality 187,800 193,500 204,000 212,000 218,200 Other Services 45,600 47,700 48,800 50,400 50,200 Government 148,700 151,900 156,200 159 600600 160,500 Total0> 1,462,400 1,498,700 1,545,200 1,602,500 1,618,800 1'1 Totals for all categories. The listed categories do not represent all employment categories. Source: California Employment Development Department. 24724112.5 B-2 Major Employers The following table lists the major employers in the County for 2017. TABLE B-4 COUNTY OF ORANGE MAJOR EMPLOYERS 2017 Employer Name Number of Employees Walt Disney Company 20,000 County of Orange 18,748 University of California,Irvine 17,579 St.Joseph Health System 10,047 Boeing Co. 9,961 Yum! Brands Inc. 7,200 AT&T Incorporated 6,000 California Stater University,Fullerton 5,634 Home Depot, Incorporated 5,450 Memorial health Services Inc. 4,956 Source: Orange County Business Journal, 2017 for all employers other than the County, number of County employees provided by the County Budget Office(number of filled positions). 24724112.5 B-3 Labor Force,Employment and Unemployment Table B-5 summarizes the annual labor force, employment and unemployment figures over the period 2014 through 2018, for the County and the State. TABLE B-5 COUNTY OF ORANGE AND STATE OF CALIFORNIA LABOR FORCE,EMPLOYMENT AND UNEMPLOYMENT YEARLY AVERAGE Year and Unemolovmen Area Labor Force Emplovment Unemolovmen[ t Rate 2014 Omng 1,575,600 1,489,200 86,400 5.5 e County Califo 18,811,400 17,397,100 1,414,300 7.5 mia 2015 Orang 1,595,300 1,523,800 71,500 4.5 e County Califo 18,999,800 17,820,400 1,179,400 6.2 mia 2016 Orang 1,611,600 1,540,500 71,200 4.4 e County Califo 19,181,200 18,093,500 1,087,700 5.7 mia 2017 Oring 1,619,200 1,562,600 56,600 3.5 e County Califo 18,413,600 18,418,000 995,600 4.8 mia 2018 Orang 1,606,700 1,553,200 53,500 3.3 e County Califo 19,356,200 18,486,800 869,400 4.5 mia Source: California Employment Development Department. 24724112.5 B-4 Taxable Transactions The following tables summarize the volume of taxable transactions in the County in 2012 through 2016. In 2015 the California State Board of Equalization changed the categories used for compiling taxable transactions data. Annual totals may not add due to rounding. Total taxable transactions for the County for 2016 for all outlets equaled $62,511,422. Annual figures for types of business for 2017 are unavailable. TABLE B-6 COUNTY OF ORANGE TAXABLE TRANSACTIONS 2012 through 2014 ($in Thousands) Type of Business 2012 2013 2014 Motor vehicles and parts dealers $ 6,551,466 $ 7,147,519 $ 7,765,471 Furniture and home furnishings stores 965,018 1,050,308 1,119,188 Electronics and appliance stores 2,536,415 2,488,963 2,220,819 Bldg.maul.and garden equipment and supplies 2,351,574 2,581,968 2,662,657 Food and beverage stores 2,056,803 2,111,209 2,177,054 Health and personal care stores 948,220 983,067 1,059,761 Gas stations 5,063,762 4,706,666 4,675,051 Clothing and clothing accessories stores 3,510,757 3,764,088 3,942,629 Sporting goods,hobby,book and music stores 1,133,702 1,176,097 1,175,740 General merchandise stores 5,026,911 5,169,057 5,206,936 Miscellaneous store retailers 1,738,855 1,766,848 1,669,672 Nonstore retailers 635,707 893,254 976,238 Food services and drinking places 5.851267 6,186,883 6,637,321 TOTAL RETAIL AND FOOD SERVICES $38,372,456 $40,025,929 $ 41,288,537 All Other Outlets 16,858.156 17,565188 18,808,591 TOTAL ALL OUTLETS $55,230,612 $57,591,217 $460,097,128 Source: California State Board of Equalization. 24724112.5 B-5 TABLE B-7 COUNTY OF ORANGE TAXABLE TRANSACTIONS 2015 and 2016 ($in Thousands) Type of Business 2015 2016 Motor vehicles and parts dealers $8,352,915 $9,648,763 Home Furnishings and Appliance Stores 2,295,378 3,082,463 Bldg.maul.and garden equipment and supplies 2,870,940 2,961,129 Food and beverage stores 2,249,980 2,315,299 Gas stations 3,979,166 3,389,276 Clothing and clothing accessories stores 4,062,185 4,173,147 General merchandise stores 4,773,788 4,719,158 Food services and drinking places 7,174,652 7,561,709 Other Retail Group 5,130,425 5,318,826 TOTAL RETAIL AND FOOD SERVICES 41,589,926 42,269,771 All Other Outlets $61 35R.OR7 $62 511.422 Source: California State Board ofEgualization. Building Permits The total valuation of building permits issued in the County reached$5.6 billion in 2017. Table B-8 provides a summary of residential building permit valuations and the number of new dwelling units authorized in the County during the period 2013 through 2017. TABLE B-8 COUNTY OF ORANGE BUILDING PERMIT ACTIVITY 2013 through 2017 ($in Thousands) 2013 2014 2015 2016 2017 Valuation: Residential $2,596,543 $2,633,471 $2,826,803 $3,188,602 $3,151,640 Non-Residential 1,578,467 2.000.168 2.203.105 2,090,028 2,495,687 Total $4,175,010 $4,633,639 $5,029,988 $5,278,630 $5,647,327 New Housing Units: Single Family 3,889 3,646 3,667 5,097 4,226 Multiple Family 6564 6990 7230 5 197 7 908 Total 10,453 10,636 10,897 10,294 12,134 Source: CHr7CIRB. Water Supply Maintaining the County's water supply is the responsibility of the Orange County Water District ("OCWD"), manager of the County's groundwater basin, and the Municipal Water District of Orange 24724112.5 B-6 County ("MWDOC"), the County's largest manager of imported water. More than 60% of the County's water is from local groundwater sources; the rest is imported. The County's natural underground reservoir is sufficient to carry it through temporary shortfall periods, but local supplies alone cannot sustain the present population. Recreation and Tourism The County is a tourist center in Southern California because of the broad spectrum of amusement parks and leisure, recreational and entertainment activities that it offers. These tourist attractions are complimented by the year-round mild climate. Along the County's Pacific Coast shoreline are five state beaches and parks, five municipal beaches and five County beaches. There are two small-craft docking facilities in Newport Harbor,a third located at Sunset Beach and a fourth at Dana Point. Other major recreational and amusement facilities include Disneyland, Disney's California Adventure, Knott's Berry Farm and the Spanish Mission of San Juan Capistrano. Also located within the County are the Anaheim Convention Center, Edison International Field of Anaheim, Honda Center, Orange County Performing Arts Center, Verizon Wireless Amphitheater and the Art Colony at Laguna Beach with its annual art festival. The Anaheim Convention Center is located adjacent to Disneyland. It is situated on 53 acres and is one of the largest convention centers on the West Coast. Table B-9 summarizes the number of conventions held in the County,as well as attendance for the period 2013 through 2017. TABLE B-9 COUNTY OF ORANGE CONVENTION ACTIVITY 2013 through 2017 Year Conventions Attendance 2013 489 1,085,643 2014 503 1,100,000 2015 181 1,016,000 2016 2017 Source: Anaheim/Orange County Visitor and Convention Bureau. 24724112.5 B-7 Transportation The County has access to excellent roads,rail,air and sea transportation. The Santa Ana Freeway (Interstate 5)provides direct access to downtown Los Angeles and connects with the San Diego Freeway (Interstate 405) southeast of the City of Santa Ana, providing a direct link with San Diego. The Garden Grove Freeway (State 22) and the Riverside Freeway (State 91) provide east-west transportation, linking the San Diego Freeway, Santa Ana Freeway and the Newport Freeway(State 55). The Newport Freeway provides access to certain beach communities. Drivers in the County have access to two toll road systems of the Transportation Corridor Agencies. The San Joaquin Toll Road (73)runs from Costa Mesa to San Juan Capistrano connecting to the 405 and 5 interstate freeways. The Eastern and Foothill Toll Roads (241, 261 and 133) connect the County to the 91 freeway in the north and the 5 freeway, City of Irvine other South County cities,as well as Laguna Canyon Road. The Transportation Corridor Agencies me planning to extend 241 to connect to the 5 freeway near San Clemente. Rail freight service is provided by the Burlington Northern Santa Fe Railway and the Union Pacific Railroad Company. Amtrak provides passenger service to San Diego to the south, Riverside and San Bernardino Counties to the east, and Los Angeles and Santa Barbara to the north. Metro Link provides passenger service to San Bernardino and Riverside counties to the east,the City of Oceanside to the south and Los Angeles County to the north. Bus service is provided by Greyhound Bus Lines. The Orange County Transportation Authority provides bus service between most cities in the County. Most interstate common carrier truck lines operating in California serve the County. The John Wayne Airport, owned and operated by the County, is the only commercial service airport in the County. It is approximately thirty-five miles south of Los Angeles, between the cities of Coast Mesa, Irvine, Newport Beach and Santa Ana. Major airlines, including Alaska, Aloha, America West, American, Continental, Delta, Frontier, Northwest, Southwest and United fly from the airport to major cities throughout the country. Natural Disasters; Seismic Activity Natural disasters, including floods, fires and earthquakes, have been experienced in the County. Seismic records spanning the past half century and historic records dating from the 1700s through the early 1900s indicate that the County is a seismically active area. The State Office of Emergency Services indicates that significant tremors are likely to occur in several fault zones during the next 50 to 100 years, including a tremor of 7.0 on the Richter scale within the Newport-Inglewood fault system. The chance of a Richter 7.0 earthquake occurring is estimated to be 1 to 2%in any year. For this reason, local building codes require that structures be designed to withstand the expected accelerations for the area without collapsing or suffering severe structural damage. Maps published by the State Department of Conservation indicate that portions of the County may be subject to the risk of earthquake-induced landslides or liquefaction. 24724112.5 B-8 APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS 24724112.5 C-1 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement'), dated as of November 1, 2018, is by and between the ORANGE COUNTY SANITATION DISTRICT, a county sanitation district organized and existing under the laws of the State of California (the "Distrief'), and DIGITAL ASSURANCE CERTIFICATION,LLC,as Dissemination Agent(the"Dissemination Agent'). WITNESSETH: WHEREAS, the District has caused to be executed and delivered the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes"), evidencing principal in the aggregate amount of$ , pursuant to a Trust Agreement, dated as of the date hereof (the "Trust Agreement'), by and among U.S. Bank National Association, as trustee (the "Trustee"), the Orange County Sanitation District Financing Corporation (the "Corporation") and the District;and WHEREAS, this Disclosure Agreement is being executed and delivered by the District and the Dissemination Agent for the benefit of the owners and beneficial owners of the Notes and in order to assist the underwriter of the Notes in complying with the Rule(as defined herein); NOW, THEREFORE, for and in consideration of the premises and of the mutual covenants herein contained,the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust Agreement or, if not defined therein, in the Master Agreement, dated as of August 1, 2000, by and between the District and the Corporation. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the District pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means the date in each year that is eight months after the end of the Fiscal Year,which date,as of the date of this Disclosure Agreement,is March 1. "Disclosure Representative" means the Director of Finance and Administrative Services of the District, or such other officer or employee of the District as the District shall designate in writing to the Dissemination Agent and the Trustee from time to time. "Dissemination Agent" means an entity selected and retained by the District, or any successor thereto selected by the District. The initial Dissemination Agent shall be Digital Assurance Certification, LLC. "EMMA" shall mean Electronic Municipal Market Access system, maintained on the Internet at htm://emma.msrb.ore by the MSRB. "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30, or any twelve-month or fifty-two week period hereafter selected by the District,with notice of such selection or change in fiscal year to be provided as set forth herein. 24724112.5 D-1 "Listed Events" means any of the events listed in Section 4 hereof and any other event legally required to be reported pursuant to the Rule. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 1513(b)(I) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with the MSRB are to be made through EMMA. "Official Statement" means the Official Statement, dated 2018, relating to the Notes. "Participating Underwriter" means any of the original purchaser(s) of the Notes required to comply with the Rule in connection with the offering of the Notes. "Repository"means,until otherwise designated by the SEC,EMMA. "Rule" means Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same has been or may be amended from time to time. "SEC" shall mean the United States Securities and Exchange Commission. Section 2. Provision of Annual Reports. (a) The District shall provide, or shall cause the Dissemination Agent to provide, to MSRB, through EMMA, not later than 15 days prior to the Annual Report Date, an Annual Report which is consistent with the requirements of Section 3 of this Disclosure Agreement. The Annual Report must be submitted in electronic format, accompanied by such identifying information as provided by the MSRB. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 3 of this Disclosure Agreement. Not later than 15 Business Days prior to such date, the District shall provide the Annual Report to the Dissemination Agent. If the Fiscal Year changes for the District, the District shall give notice of such change in the manner provided under Section 4(e)hereof. (b) If by 15 Business Days prior to the date specified in subsection(a) for providing the Annual Report to the MSRB, through EMMA, the Dissemination Agent has not received a copy of the Annual Report the Dissemination Agent shall contact the District to determine if the District is in compliance with subsection(a). The District shall provide a written certification with each Annual Report fumished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection(a), the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine the electronic filing address of, and then-current procedures for submitting Annual Reports to, the MSRB each year prior to the date for providing the Annual Report; and 24724112.5 D-2 (ii) to the extent appropriate information is available to it, file a report with the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided. Section 3. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District's audited financial statements are not available by the Annual Report Date,the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The principal evidenced by the Notes Outstanding as of the June 30 next preceding the Annual Report Date and the principal amount of other Senior Obligations outstanding as of the June 30 next preceding the Annual Report Date. (c) Updated information (not to include projections), for the Fiscal Year ended the June 30 next preceding the Annual Report Date, comparable to the information contained in the Official Statement in Table Nos. 2,4, 6(only with respect to information on 6 under the headings Fiscal Year and Sewer Service Charge), 8,9, 10, 11, 12, 13, 14 and 16. (d) In addition to any of the information expressly required to be provided under subsections (a), (b) and (c) of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made,not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the District is an"obligated person" (as defined by the Rule), which are available to the public on EMMA or filed with the SEC. The District shall clearly identify each such document to be included by reference. Section 4. Reoortine of Sienificant Events. (a) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes, in a timely manner not more than ten(10)Business Days after the event: (1) principal and interest payment delinquencies; (2) defeasances; (3) tender offers; (4) rating changes; (5) adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB)or other material notices or determinations with respect to the tax status of the Notes,or other material events affecting the tax status of the Notes; 24724112.5 D-3 (6) unscheduled draws on the debt service reserves reflecting financial difficulties; (7) unscheduled draws on credit enhancements reflecting financial difficulties; (8) substitution of credit or liquidity providers or their failure to perform;or (9) bankruptcy,insolvency,receivership or similar proceedings. For these purposes, any event described in the immediately preceding paragraph(9) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District,or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. (b) Pursuant to the provisions of this Section 4, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes, if material: (1) mergers, consolidations,acquisitions,the sale of all or substantially all of the assets of the obligated persons or their termination; (2) appointment of a successor or additional Trustee or the change of the time of a Trustee; (3) nonpayment related defaults; (4) modifications to the rights of Owners; (5) a notices of prepayment; or (6) release, substitution or sale of property securing repayment of the Notes. (c) Whenever the District obtains knowledge of the occurrence of a Listed Event, described in subsection(b)of this Section 4,the District shall as soon as possible determine if such event would be material under applicable federal securities law. (d) If the District determines that knowledge of the occurrence of a Listed Event described in subsection(b) of this Section 4 would be material under applicable federal securities law, the District shall promptly notify the Dissemination Agent in writing and instruct the Dissemination Agent to report the occurrence to the Repository in a timely manner not more than ten(10)Business Days after the event. (e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event,the Dissemination Agent shall file a notice of such occurrence with the MSRB. 24724112.5 D-4 Section 5. Filings with the MSRB. All information, operating data, financial statements, notices and other documents provided to the MSRB in accordance with this Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination of Reuorting Obligation. The District's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Notes. If such termination occurs prior to the final maturity of the Notes, the District shall give notice of such termination in the same manner as for a Listed Event under Section 4 hereof. Section 7. Dissemination Agent. The District may, from time to time, appoint or engage another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent,with or without appointing a successor Dissemination Agent. Notwithstanding any other provision to this Disclosure Agreement to the contrary, the District may provide any Annual Report to Beneficial Owners by means of posting such Annual Report on an internet site that provides open access to Beneficial Owners. Section S. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the District may amend this Disclosure Agreement, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such party, and any provision of this Disclosure Agreement may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the District and the Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the District or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate amount of principal evidenced by Outstanding Notes and upon being indemnified to its reasonable satisfaction, shall, or any holder or beneficial owner of the Notes may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order,to cause the District or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the District or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties. Immunities and Liabilities of Trustee and Dissemination Agent. Article VIII of the Trust Agreement is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Trust Agreement Neither the Trustee nor the Dissemination Agent shall be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services 24724112.5 D-5 provided under this Disclosure Agreement The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement,and the District agrees to indemnify and save the Dissemination Agent and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees)of defending against any claim of liability,but excluding liabilities due to the Dissemination Agent's or the Trustee's respective negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Notes. Section 12. Beneficiaries. This Disclosure Agreement shall more solely to the benefit of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Notes, and shall create no rights in any other person or entity. Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF,the parties hereto have executed this Disclosure Agreement as of the date first above written. ORANGE COUNTY SANITATION DISTRICT By: Lorenzo Tyner Assistant General Manager&Director of Finance and Administrative Services DIGITAL ASSURANCE CERTIFICATION,LLC, as Dissemination Agent By: Authorized Representative Acknowledged and Accepted: U.S.BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 24724112.5 D-6 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: Orange County Sanitation District Name of Issue: $ Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A(the"Notes") Date of Execution and Delivery: ,2018 NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District')has not provided an Annual Report with respect to the above-captioned Notes as required by Section 6.09 of the Trust Agreement, dated as of November 1, 2018, by and among U.S. Bank National Association, as Trustee, the Orange County Sanitation District Financing Corporation and the District [The District anticipates that the Annual Report will be filed by .] Dated: 120 ORANGE COUNTY SANITATION DISTRICT By: Title: cc: Trustee Dissemination Agent 24724112.5 D-7 APPENDIX E BOOK-ENTRY SYSTEM The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Notes,payment of principal and interest evidenced by the Notes to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Notes, and other Note-related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the District and the Corporation each believes to be reliable, but the District and the Corporation take no responsibility for the completeness or accuracy thereof. The Depository Trust Company—Book-Entry System The Depository Trust Company("DTC"),New York,NY,will set as securities depository for the securities (the "Notes"). The Notes will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other time as may be requested by an authorized representative of DTC. One fully-registered note will be issued for the Notes in the aggregate principal amount of such issue, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations,and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust &Clearing Corporation ("DTCC"). DTCC is the holding company for DTC,National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which me registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,banks,trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (`Indirect Participants"). DTC has an S&P Global Ratings rating of"AA+." The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated herein by such reference or otherwise. Purchases of Notes under the DTC system must be made by or through Direct Participants,which will receive a credit for the Notes on DTC's records. The ownership interest of each actual purchaser of each Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners me, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Notes, except in the event that use of the book-entry system for the Notes is discontinued. 24724112.5 E-1 To facilitate subsequent transfers, all Notes deposited by Direct Participants with DTC we registered in the time of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Notes with DTC and their registration in the name of Cede&Co. or such other nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Notes may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Notes, such as prepayments, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Notes may wish to ascertain that the nominee holding the Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Prepayment notices shall be sent to DTC. If less than all of the Notes within an issue are being prepaid,DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be prepaid. Neither DTC nor Cede & Co. (nor such other DTC nominee)will consent or vote with respect to the Notes unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy). Prepayments with respect to the Notes will be made to Cede&Co.,or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the District or the Trustee on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, nor its nominee, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of prepayment proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Notes at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained,Notes are required to be printed and delivered. 24724112.5 E-2 The District may decide to discontinue use of the system of book-entry-only transfers through DTC(or a successor securities depository). In that event,Notes will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. Discontinuance of DTC Services In the event (i)DTC determines not to continue to act as securities depository for the Notes, (ii)DTC shall no longer net and give notice to the Trustee of such determination or (iii)the District determines that it is in the best interest of the Beneficial Owners that they be able to obtain Notes and delivers a written certificate to the Trustee to that effect, DTC services will be discontinued. If the District determines to replace DTC with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered Note for each of the maturities of the Notes, registered in the name of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace DTC then the Notes shall no longer be restricted to being registered in the certificate registration books in the name of Cede & Co., but shall be registered in such names as are requested in a certificate of the District, in accordance with the Trust Agreement. All Notes may be presented for transfer by the Owner thereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, on the books required to be kept by the Trustee pursuant to the provisions of the Trust Agreement, upon surrender of such Certifications for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee. The Trustee may treat the Owner of any Note as the absolute owner of such Note for all purposes,whether or not such Note shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal evidenced by such Note shall be made only to such Owner, which payments shall be valid and effectual to satisfy and discharge the liability evidenced by such Note to the extent of the sum or sums so paid. Whenever any Notes shall be surrendered for transfer,the Trustee shall execute and deliver new Notes representing the same principal amount in Authorized Denominations. The Trustee shall require the payment of any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. Notes may be presented for exchange at the Principal Office of the Trustee for a like aggregate principal amount of Notes of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to transfer or exchange any Note during the period in which the Trustee is selecting Notes for prepayment,nor shall the Trustee be required to transfer or exchange any Note or portion thereof selected for prepayment from and after the date of mailing the notice of prepayment thereof. 24724112.5 E-3 APPENDIX F FORM OF APPROVING OPINION OF SPECIAL COUNSEL Upon the execution and delivery of the Notes, Norton Rose Fulbright US LLP, Los Angeles, California, Special Counsel to the District, will render its final approving opinion with respect to the Notes in substantially the following form: [Date of Delivery] Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,California 92708-7018 Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A Ladies and Gentlemen: We have acted as Special Counsel in connection with the $ aggregate principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the `Notes'), which evidence direct, fractional undivided interests of the Owners thereof in the installment payment (the "Installment Payment'), and the interest thereon, to be made by the Orange County Sanitation District (the "District") pursuant to the Installment Purchase Agreement, dated as of November 1, 2018 (the "Installment Purchase Agreement"), by and between the District and the Orange County Sanitation District Financing Corporation(the"Corporation"). Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement"), by and between the District and the Corporation, the District has established conditions and terms upon which obligations such as the Installment Payment and the interest thereon, will be incurred and secured. The Installment Payment under the Installment Purchase Agreement is payable from (i)Net Revenues as provided in the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the "Wastewater System") remaining after payment of Maintenance and Operation Costs, and (ii)other lawfully available funds of the District. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terns in the Installment Purchase Agreement. The Notes are to be executed and delivered pursuant to a Trust Agreement, dated as of November 1, 2018 (the "Trust Agreement"), by and among the District, the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds from the sale of the Notes will be used to (i)prepay all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, currently outstanding in the aggregate principal amount of$109,875,000, and (ii)pay the costs incurred in connection with the execution and delivery of the Notes. 24724112.5 F-I As Special Counsel,we have examined copies certified to us as being line and complete copies of the Master Agreement,the Trust Agreement and the Installment Purchase Agreement and the proceedings of the District in connection with the execution and delivery of the Notes. We have also examined such certificates of officers of the District,the Corporation and others as we have considered necessary for the purposes of this opinion. Based upon the foregoing,we are of the opinion that: 1. The Master Agreement, the Installment Purchase Agreement and the Trust Agreement each has been duly and validly authorized,executed and delivered by the District and, assuming the Master Agreement, the Installment Purchase Agreement and the Trust Agreement each constitutes the legally valid and binding obligation of the other parties thereto, each constitutes the legally valid and binding obligation of the District, enforceable against the District in accordance with its respective terms 2. The obligation of the District to pay the Installment Payment, and the interest thereon, and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided in the Installment Purchase Agreement, from Net Revenues and other funds provided for in the Installment Purchase Agreement lawfully available therefor. 3. Assuming due authorization, execution and delivery of the Trust Agreement and the Notes by the Trustee,the Notes are entitled to the benefits of the Trust Agreement. 4. Under existing statutes, regulations, rulings and court decisions, and, assuming compliance with the covenants mentioned below, the component of each Installment Payment designated as "Interest on Installment Payment" in Section 3.02 of the Installment Purchase Agreement (the "Interest Component"), and the allocable portion thereof distributable in respect of any Note (each a "Note Interest Distribution"), is excluded pursuant to section I03(a) of the Internal Revenue Code of 1986 (the "Code") from the gross income of the owners thereof for federal income tax purposes. We are further of the opinion that under existing statutes, regulations, mlings and court decisions, the Installment Purchase Agreement is not a "specified private activity bond"within the meaning of section 57(a)(5)of the Code and,therefore,that each Interest Component and each Note Interest Distribution in respect thereof will not be treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of an Interest Component, or Note Interest Distribution in respect thereof, owned by a corporation whose taxable year began on or before December 31, 2017, may affect the computation of the alternative minimum taxable income of that corporation. The corporate alternative minimum tax is repealed with respect to taxable years beginning on and after January 1,2018. A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will be computed. We are further of the opinion that the Interest Component of each Installment Payment and the Note Interest Distributions in respect of a Note are exempt from personal income taxes of the State of California under present state law. Pursuant to the Trust Agreement and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986, to be delivered by the District in connection with the execution and delivery of the Notes, the District will make representations relevant to the determination of, and will make certain covenants regarding or affecting, the exclusion of the Interest Component and the Note Interest Distribution from the gross income of the owners thereof for federal income tax purposes. In reaching the 24724112.5 F-2 conclusions supporting the opinions described in the immediately preceding paragraph, we have assumed the accuracy of such representations and the present and future compliance by the District with such covenants. Except as stated in the second preceding paragraph, we express no opinion as to any federal or state tax consequence of the ownership or disposition of the Installment Purchase Agreement or the Notes. Furthermore,we express no opinion as to any federal, state or local tax law consequences with respect to the Installment Purchase Agreement, Notes, Interest Component, or Note Interest Distributions, if any action is taken with respect to the Installment Purchase Agreement, the Master Agreement, the Trust Agreement, the Notes or the proceeds thereof,permitted or predicated on the advice or approval of counsel,if such advice or approval is given by counsel other than us. The rights of the owners of the Notes and the enforceability of the Notes, the Master Agreement, the Trust Agreement and the Installment Purchase Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. The enforceability of the Notes, the Master Agreement, the Trust Agreement and the Installment Purchase Agreement is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific performance or injunctive relief,regardless of whether considered in a proceeding in equity or at law,and to the limitations on legal remedies against governmental entities in California. No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Notes. Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of result; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above. Respectfully submitted, 24724112.5 F-3 DRAFT OF 09/05/18 OFFICIAL NOTICE INVITING BIDS ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES,SERIES 2018A (Book-Entry-Only) NOTICE IS HEREBY GIVEN that bids will be received by the Orange County Sanitation District (the "District') for the purchase of $ ' original principal amount of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes"). Bids for less than all of the Notes will not be accepted. The bids will be received in the form, in the manner and up to the time specified below(unless postponed as described herein): Date: Thursday,November 1,2018 10:30 a.m.,New York Time Electronic Bids: Electronic proposals may be submitted to Ipreo, at www.newissuehome.i-deal.com and the Parity electronic bid submission system (the "Electronic Service"). The Electronic Service will act as agent of the bidder and not of the District in connection with the submission of bids and the District assumes no responsibility or liability for bids submitted through the Electronic Service. See"Information Regarding Electronic Proposals"herein. No facsimile,hand delivery or sealed bids will be accepted. Terms of the Notes The Preliminary Official Statement for the Notes, dated October _, 2018, including the cover page and all appendices thereto (the "Preliminary Official Statement"), provides certain information concerning the sale and delivery of$ 'aggregate principal amount of the Notes, which are certificates of participation evidencing direct, undivided fractional interests in the Installment Payment (the `Installment Payment"), and the interest thereon, payable by the District pursuant to the Installment Purchase Agreement, dated as of November 1, 2018 (the"Installment Purchase Agreement"), by and between the District and the Orange County Sanitation District Financing Corporation (the "Corporation"). Each bidder most have obtained and reviewed the Preliminary Official Statement prior to bidding for the Notes. This Official Notice Inviting Bids, including all exhibits and attachments,contains certain information for quick reference only, is not a summary of the issue and governs only the terms of the sale of, bidding for and closing procedures with respect to the Notes. Bidders must read the entire Preliminary Official Statement to obtain information essential to making an informed investment decision. Pursuant to the Master Agreement for District Obligations, dated as of August 1, 2000 (the "Master Agreement"), by and between the District and the Corporation, the District has established and declared the conditions and terms upon which obligations such as the Installment Purchase Agreement, and the Installment Payments and the interest thereon, will be incurred and secured. The Installment *Preliminary,subject to change. 932584304 IN1035824 (OCSD 2018A CAN) Payment under the Installment Purchase Agreement is payable solely from Net Revenues, as provided in the Master Agreement and the Installment Purchase Agreement, consisting primarily of all income and revenue received by the District from the operation or ownership of the Wastewater System of the District (the"Wastewater System")remaining after payment of Maintenance and Operation Costs. The Issue The proceeds from the sale of the Notes will be used to: (i)prepay on November 29, 2018 all of the Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 201613, currently outstanding in the aggregate principal amount of$109,875,000,and(ii)pay the costs incurred in connection with the execution and delivery of the Notes. The Notes are to be executed and delivered pursuant to a Trust Agreement,dated as of November 1, 2018 (the"Trust Agreement"),by and among the District, the Corporation and U.S. Bank National Association, as trustee (the "Trustee"). Capitalized terms not defined herein shall have the same definitions as used in the Trust Agreement or the Master Agreement. Authorization On September 26,2018, the District and the Corporation authorized the execution and delivery of the Installment Purchase Agreement,the Trust Agreement and the Notes. Existing Senior Obligations The District has outstanding Senior Obligations payable on a parity with the Installment Payment under the Installment Purchase Agreement, as described in the Preliminary Official Statement. The proceeds from the sale of the Notes will be applied to terminate the District's obligations under the 2016B Installment Purchase Agreement. Security and Source of Payments The Notes are certificates of participation which evidence direct, undivided fractional interests in the Installment Payment, and the interest thereon, paid by the District pursuant to the Installment Purchase Agreement. The obligation of the District to pay the Installment Payment and the interest thereon and other payments required to be made by it under the Installment Purchase Agreement is a special obligation of the District payable, in the manner provided under the Installment Purchase Agreement, solely from Net Revenues and other funds as provided in the Installment Purchase Agreement Net Revenues generally consist of all income and revenue received by the District from the operation or ownership of the Wastewater System remaining after payment of Maintenance and Operation Costs,all as further provided in the Master Agreement. The District's obligation to make the Installment Payment from Net Revenues is on a parity with the District's obligation to make payments with respect to its other outstanding obligations described as Senior Obligations and all Reimbursement Obligations, if any, with respect to Senior Obligations, as provided in the Master Agreement The Installment Purchase Agreement constitutes a Senior Obligation and is subject to the provisions of the Master Agreement and is afforded all of the advantages, benefits, interests and security for Senior Obligations pursuant to the Master Agreement. Pursuant to the Master Agreement, the District pledges all Net Revenues to the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations,and the Net Revenues will not be used for any other purpose while any of the Senior Obligations or Reimbursement Obligations with respect to Senior Obligations remain unpaid; provided, however, that out of the Net Revenues there may be apportioned such sums for such purposes as are expressly permitted by the Master Agreement. This 73258430.4 2 pledge constitutes a first lien on the Net Revenues for the payment of the Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. The term Senior Obligations, generally means all revenue bonds or notes(including bond anticipation notes and commercial paper)of the District authorized, executed,issued and delivered under and pursuant to applicable law, the Installment Purchase Agreement and all other contracts (including financial contracts) or leases of the District authorized and executed by the District under and pursuant to applicable law, the installment, lease or other payments which are, in accordance with the provisions of the Master Agreement, payable from Net Revenues on a parity with the payments under the Master Agreement. The District may at any time incur Subordinate Obligations; provided, however, that prior to incurring such Subordinate Obligations, the District will have determined that the incurrence thereof will not materially adversely affect the District's ability to comply with the requirements of the Master Agreement The District may at any time incur Reimbursement Obligations with respect to Subordinate Obligations. Currently, there are no Subordinate Obligations outstanding. For a description of the District's outstanding Senior Obligations, see "FINANCIAL OBLIGATIONS — Existing Indebtedness" in the Preliminary Official Statement. The District may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations and Reimbursement Obligations with respect to Subordinate Obligations; provided, however, that such pledge, and any lien created thereby, shall be junior and subordinate to the pledge of, and lien on,Net Revenues for the payment of Senior Obligations and Reimbursement Obligations with respect to Senior Obligations. Pursuant to the Master Agreement, the District is required, to the extent permitted by law,to fix, prescribe and collect fees and charges for the services and facilities of the Wastewater System which will be at least sufficient to yield during each Fiscal Year(a)Net Revenues equal to 125% of Debt Service on Senior Obligations for such Fiscal Year and (b) Net Operating Revenues equal to 100% of Debt Service on all Obligations for such Fiscal Year. The District may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary,but shall not reduce the fees and charges then in effect unless the Revenues and Net Revenues from such reduced fees and charges will at all times be sufficient to meet the requirements of the Master Agreement. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES—Rate Covenant"in the Preliminary Official Statement. Additional Obligations In addition to the Senior Obligations Outstanding, the District may at any time incur Obligations payable on a parity or on a subordinate basis to the payment by the District of the Installment Payment upon satisfaction of conditions provided in the Master Agreement. No Obligations payable on such a subordinate basis are currently outstanding. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES Limitations on Issuance of Additional Obligations" in the Preliminary Official Statement. Book-Entry-Only The Notes will be executed and delivered in the form of fully registered certificates payable in lawful money of the United States of America. The Notes will be initially delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Notes. Individual purchases of the Notes will be made in book-entry fore only. Purchasers of Notes will not receive physical certificates representing their ownership interests in the Notes purchased. The Notes will be 73258430.4 3 delivered in Authorized Denominations of $5,000 and any integral multiple thereof. Payments of principal and interest evidenced by the Notes are payable directly to DTC by the Trustee. Upon receipt of payments of such principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Notes. So long as the Notes are in the DTC book-entry system, the interest,principal and prepayment premiums,if any,due with respect to the Notes will be payable by the Trustee,or its agent,to DTC or its nominee. Principal and Interest Payments The Notes will mature on August 15, 2021 (the "Maturity Date"). The Notes will be dated as of the date of initial delivery and will evidence interest from that date (computed on the basis of a 360-day year of twelve 30day months). Interest evidenced by the Notes is payable semiannually on February 15 and August 15 of each year, commencing on February 15, 2019. Payment of principal of the Notes will be paid in lawful money of the United States of America upon presentation and surrender thereof at the Principal Office of the Trustee. The District expects the principal of the Notes to be paid from proceeds of the sale, prior to the Maturity Date, of a future series of certificates of participation, notes or other obligations of the District. The sale and delivery of a future series of certificates of participation, notes or other obligations of the District will depend on market conditions, certain approvals by the District and the Corporation and other factors. See "SECURITY AND SOURCES OF PAYMENT FOR THE NOTES" in the Preliminary Official Statement. Optional Prepayment The Notes are subject to optional prepayment prior to the Maturity Date on any date on or after August 1, 2021' in whole or in part, in Authorized Denominations, from and to the extent of prepayment of the Installment Payment paid pursuant to the Installment Purchase Agreement or from any other source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Notes to be prepaid,plus accrued interest evidenced thereby to the date fixed for prepayment,without premium. Selection of Notes for Prepayment Whenever less than all the Outstanding Notes are to be prepaid pursuant to provisions of the Trust Agreement with respect to optional prepayment thereof,the Trustee shall select the Notes to be prepaid as directed in a Written Request of the District, or at the discretion of the District by lot in any manner that the Trustee deems fair and appropriate,which decision shall be final and binding upon the District and the Owners. The Trustee shall promptly notify the District in writing of the Notes so selected for prepayment on such date. Notice of Prepayment The Trustee shall,at least 20 but not more than 60 days prior to any prepayment date, give notice of prepayment to the respective Owners of Notes designated for prepayment by first-class mail, postage prepaid, at their addresses appearing on the registration books maintained by the Trustee as of the close of business on the day before such notice of prepayment is given. Such notice may state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys sufficient to pay for the prepayment price of the Notes to be prepaid, and that if such moneys Preliminary,subject to change. 73259430.4 4 shall not have been so received said notice shall be of no force and effect and the District shall not be required to prepay such Notes. If a notice of prepayment of the Notes contains such a condition and such moneys are not so received, the prepayment of the Notes as described in the conditional notice of prepayment shall not be made and the Trustee shall,within a reasonable time after the date on which such prepayment was to occur, give notice to the persons and in the manner in which the notice of prepayment was given, that such moneys were not so received and that there shall be no prepayment of the Notes pursuant to such notice of prepayment. The actual receipt by the Owner of any notice of such prepayment shall not be a condition precedent to prepayment, and neither failure to receive such notice nor any defect therein shall affect the validity of the proceedings for the prepayment of such Notes or the cessation of interest evidenced thereby on the date fixed for prepayment. Interest Rates,Reoffering Prices,Premium Bids,and Certificate of Initial Purchaser Bidders must bid to purchase all and not part of the Notes and must submit their bids on the Official Bid Form. Bidders must specify a rate of interest for the Notes, expressed in multiples of either one-eighths ('/s) or one-twentieths ('/20) of one percent (1%), and no interest rate can exceed 5% per annum. The successful bidder will, within 30 minutes after being notified of the award of the Notes, advise the District of the initial bona fide public reoffering prices of the Notes on the date of award. The successful bidder will also be required to famish to the District a certificate ("Certificate of Initial Purchaser") in the form of the Certificate of Initial Purchaser attached hereto as Exhibit A (with such modifications as may be acceptable to Special Counsel). At any time before or after delivery of the Notes to the successful bidder,that successful bidder also may be required by the District or Special Counsel to clarify any discrepancies between the Certificate of Initial Purchaser and publicly available information relating to trades of the Notes that might suggest that the initial sale of a substantial portion of the Notes to the public was at a materially higher price than the price stated for that maturity in the Certificate of Initial Purchaser. Bidders may bid to purchase Notes from the District with a premium; however, no bid will be considered if the bid is to purchase Notes at an aggregate price less than 100%of the aggregate principal amount of the Notes. No bid will be accepted that contemplates the waiver of any interest or other concession by the bidder as substitute for payment in fall of the purchase price. Bids that do not conform to the terms of this section may be rejected. See"Right to Reject Bids,Waive Irregularities"below. Adjustment of Principal Amount After Receipt of Bids The principal amount of the Notes set forth in the Official Bid Form reflects an estimate of the District as to the likely interest rate of the winning bid and the premium contained in the winning bid. After selecting the winning bid, the principal amount of the Notes may be adjusted in$5,000 increments, if the District elects to do so, to reflect the actual interest rate and any premium in the winning bid to generate a dollar amount bid of approximately$ while maintaining the same "per Note" purchaser's original issue premium, if any, provided in such bid. Any such adjustment will be communicated to the winning bidder within 24 hours after receipt of such bid by the District. Changes in the principal amount of the Notes made as described in this paragraph will not affect the determination of the winning bidder or give the winning bidder any right to reject the Notes. 73258430.4 5 No Insurance THE SUCCESSFUL BIDDER SHALL NOT PURCHASE MUNICIPAL BOND INSURANCE IN CONNECTION WITH THE NOTES. 73259430.4 Form of Bid BIDS FOR LESS THAN ALL OF THE NOTES WILL NOT BE ACCEPTED. Each bid must be on the Official Bid Form. All electronic proposals shall be deemed to incorporate the provisions of the Official Bid Form and must be unconditional and irrevocable. In addition, each bidder is requested to supply an estimate of the true interest cost resulting from its bid, computed as prescribed below under the caption "Award, Delivery and Payment," which shall be considered as informative only and not binding on either the bidder or the District. Each bid must be in accordance with the terms and conditions set forth in this Official Notice Inviting Bids. The District will make its best efforts to accommodate electronic bids; however, the District, the Municipal Advisor(Public Resources Advisory Group) and Special Counsel assume no responsibility for any error contained in any electronic bid, or for the failure of any electronic bid to be transmitted or received at the official time for receipt of such bids. The official time for receipt of bids will be determined by the District at the place of the bid opening, and the District shall not be required to accept the time kept by Electronic Service as the official time. The District assumes no responsibility for informing any bidder prior to the deadline that its bid is incomplete,or not received. If multiple timely bids are received from a single bidder the District shall accept the best of such bids and each bidder agrees,by submitting any bid,to be bound by its best bid. Information Regarding Electronic Proposals Electronic proposals must be submitted through the Electronic Service. If any provision of this Official Notice Inviting Bids conflicts with information provided by the Electronic Service, this Official Notice Inviting Bids shall control. The District is not responsible for the proper operation of, and shall have no liability for any delays or interruptions of or any damages caused by the Electronic Service. The District is using the Electronic Service as a communication mechanism and not as the District's agent to conduct electronic bidding for the Notes. The District is not bound by any advice of or determination by the Electronic Service to the effect that any particular bid complies with the terms of this Official Notice Inviting Bids. All costs and expenses incurred by prospective bidders in connection with their submission of bids through the Electronic Service are the sole responsibility of such bidders and the District is not responsible for any such costs or expenses. Further information about the Electronic Service, including any fee charged, may be obtained from Ipreo at 1359 Broadway, Second Floor, New York, NY 10018, (212)849-5023. The District assumes no responsibility or liability for bids submitted through the Electronic Service. The District shall be entitled to assume that any bid submitted through the Electronic Service has been made by a duly authorized agent of the bidder. Bid Security Deposit Each bidder must provide with its bid wire transfer in immediately available federal funds in the amount of$ (the`Bid Security Deposit"). Bid Security Deposit wire transfers must be received in federal funds prior to the deadline for examination of the bids. Contact the District's Municipal Advisor, Public Resources Advisory Group, 310-477-8487 or by e-mail at Ichoi(aAomeadvisors.com,for wire instructions. The wire transfers of unsuccessful bidders will be returned promptly on the bid date after the examination of bids.The wire transfer of the successful bidder will be retained by the District and applied to the purchase price at the time of delivery of the Notes. The District disclaims any liability for funds sent by wire transfer,except for any willful misconduct or reckless disregard for its duties. 73259430.4 7 If after the award of the Notes, the successful bidder fails to complete the purchase on the terms stated in its bid,unless such failure of performance shall be caused by any act or omission of the District, the Bid Security Deposit shall be retained by the District as stipulated liquidated damages. No interest will be paid upon any Bid Security Deposit. Official Statement The District has approved a Preliminary Official Statement, dated October , 2018, which the District has "deemed final" for purposes of Rule 15c2-12 promulgated by the Securities and Exchange Commission, as amended (the "Rule"), although subject to revision, amendment and completion in conformity with the Rule. The District will provide the successful bidder such reasonable number of printed copies of the final Official Statement as such bidder may reasonably request no later than seven business days after the day the Notes are awarded. Up to 25 copies of the final Official Statement will be furnished without cost to the successful bidder and further copies,if desired,will be made available at the successful bidder's expense. The successful bidder shall file the final Official Statement with a nationally recognized municipal securities information repository on a timely basis. The successful bidder shall,by accepting the award, agree at all times to comply with the provisions of the Rule and with all applicable rules of the Municipal Securities Rulemaking Board. Award,Delivery and Payment If satisfactory bids are received, the Notes will be awarded to the highest responsible bidder not later than two hours after the time established for the receipt of bids. The highest bidder shall be the bidder submitting the best price for the Notes, which best price shall be that resulting in the lowest modified true interest cost with respect to the Notes. The modified true interest cost shall be computed by doubling the semi-annual interest rate (compounded semi-annually) necessary to discount the debt service payments from their respective payment dates to the date of the Notes, assuming that the Notes are redeemed on their first call date of August 1, 2021`, and to the price bid. If two or more bidders have bid the same true interest cost, the award shall be made at the sole discretion of the District. Delivery of the Notes is expected to occur on or about November 29, 2018. The Notes will be delivered through the facilities of DTC, New York, New York. The successful bidder shall pay for the Notes on the date of delivery in Los Angeles, California in immediately available federal funds. Any expenses of providing federal funds shall be home by the purchaser. Payment on the delivery date shall be made in an amount equal to the price bid for the Notes less the amount of the bid security deposit. Right to Reject Bids,Waive Irregularities The District reserves the right to reject any and all bids and to the extent permitted by law to waive any irregularity or informality in any bid. Establishment of Issue Price (a) The winning bidder shall assist the District in establishing the issue price of the Notes and shall execute and deliver to the District at Closing an"issue price" or similar certificate setting forth the reasonably expected initial offering price to the public or, if the competitive sale requirements (defined below) are not satisfied and the parties agree that the 10%test shall apply to the Notes the sales Preliminary,subject to change. 73259430.4 8 price or prices of the Notes, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit A, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the District and Bond Counsel. All actions to be taken by the District under this Official Notice Inviting Bids to establish the issue price of the Notes may be taken on behalf of the District by the District's municipal advisor identified herein and any notice or report to be provided to the District may be provided to the District's municipal advisor. (b) The District intends that Treasury Regulation Sections 1.148-1(t)(3)(i) and 1.148- l(f)(2)(iii) (providing a special Wile for competitive sales and defining the term "competitive sale" for purposes of establishing the issue price of the Notes) will apply to the initial sale of the Notes (the "competitive sale requirements")because: (1) the District shall disseminate this Official Notice Inviting Bids to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (2) all bidders shall have an equal opportunity to bid; (3) the District shall receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and (4) the District anticipates awarding the sale of the Notes to the bidder who submits a firm offer to purchase the Notes at the highest price (or lowest interest cost), as set forth in this Official Notice Inviting Bids. By submitting a bid for the Notes pursuant to this Official Notice Inviting Bids (i) the bid shall be considered a firm offer for the purchase of the Notes,as specified in the bid and(ii)the bidder represents and warrants to the District that the bidder has an established industry reputation for underwriting new issuances of municipal bonds. (c) If the competitive sale requirements are not satisfied, the District will reject all bids and cancel the sale. (d) By submitting a bid, the winning bidder shall confirm that the underwriters have offered or will offer the Notes to the public on or before the date of award at the offering price (the "initial offering price"),or at the corresponding yield,set forth in the bid submitted by the winning bidder. CUSIP Number The District's Municipal Advisor, Public Resources Advisory Group, will timely apply for a CUSIP number with respect to the Notes,as required by MSRB Rule G-34. It is anticipated that a CUSIP number will be printed on the Notes, but the District will assume no obligation for the assignment or printing of such numbers on the Notes or for the correctness of such numbers, and neither the failure to print such number on any Note nor any error with respect thereto shall constitute cause for a failure or refusal by the purchasers thereof to accept delivery of and make payment for the Notes. The cost for the assignment of CUSIP number to the Notes will be the responsibility of the successful bidder. 73259430.4 9 California Debt and Investment Advisory Commission The successful bidder will be required to pay all fees due to the California Debt and Investment Advisory Commission ("CDIAC')under California law. CDIAC will invoice the successful bidder after the delivery of the Notes. Legal Opinions The District will famish to the successful bidder at the closing of the Notes,the legal opinion of Special Counsel to the effect that, in the opinion of Special Counsel, based upon an analysis of existing laws,regulations,rulings and court decisions,and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants,the interest component of the Installment Payment and the allocable portion thereof distributable in respect of each Note is excluded from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986 and is not a specific preference item for purposes of the federal alternative minimum tax and is exempt from State of California personal income taxes. Special Counsel will express no opinion regarding any other tax consequences related to the ownership or disposition of,or the accrual or receipt of interest on,the Notes. Closing Documents The District will famish to the successful bidder at the time of delivery of the Notes: (1)a certificate certifying (i) that as of and at the time of delivery of the Notes, there is no action, suit, proceeding or investigation, pending or, to the best knowledge of the District, threatened against or affecting the District, (A)which affects or seeks to prohibit,restrain or enjoin the execution and delivery of the Notes or the Trust Agreement, (B) in any way contesting the validity of the Notes, the Installation Purchase Agreement or the Trust Agreement or the powers of the District to enter into or perform its obligations under such documents to which it is a party or the existence of the District, or(C)wherein an unfavorable decision, ruling or finding would materially and adversely affect the District, or the validity or enforceability of the Notes, the Installation Purchase Agreement or the Trust Agreement or the ability of the District to perform its obligations under such documents to which it is a parry, (it)that the Preliminary Official Statement did not on the date of sale of the Notes and the Official Statement does not on the date of delivery contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made,not misleading, and(2) a receipt of the District showing that the purchase price of the Notes has been received by the District. Continuing Disclosure To assist the successful bidder in complying with the Rule, the District will undertake, pursuant to the Continuing Disclosure Agreement, to provide certain annual financial information and notices of the occurrence of certain enumerated events. A description of the Continuing Disclosure Agreement is set forth in the Preliminary Official Statement and will be set forth in the final Official Statement. The District has not failed in the past five years to comply with its disclosure undertakings pursuant to S.E.C. Rule 15c2-12 in all material respects. Additional Information Electronic copies of the Trust Agreement, the Installment Purchase Agreement, the Master Agreement, this Official Notice Inviting Bids, the Official Bid Form, and the Preliminary Official Statement will be famished to any potential bidder upon request made to the District's Municipal Advisor 73258430.4 10 at: Public Resources Advisory Group, 11500 West Olympic Boulevard, Suite 502, Los Angeles, CA 90064,310477-8487,via e-mail at lchoi&raeadvisors.com. Right to Modify or Amend The District reserves the right to modify or amend this Official Notice Inviting Bids, including but not limited to the right to adjust and change the principal amount of the Notes being offered; provided, however, that such notifications or amendments shall be made not later than the business day prior to the date fixed for the receipt of bids, by 4:00 p.m., New York Time and communicated through Thomson Municipal News (available at http://w w.tm3.com) and by facsimile transmission to any qualified bidder timely requesting such notice. Bidders are required to bid for the Notes as so modified. Cancellation or Postponement The District reserves the right to cancel or postpone, from time to time, the date established for the receipt of bids for any reason at any time. Any such postponement will be announced by Thomson Municipal News. If any date fixed for the receipt of bids and the sale of the Notes is postponed, any alternative sale date will be announced via Thomson Municipal News at least 24 hours prior to such alternative sale date and will be provided by facsimile transmission to any qualified bidder timely requesting such notice. On any such alternative sale date, any bidder may submit a bid for the purchase of the Notes in conformity in all respects with the provisions of this Official Notice Inviting Bids except for the date of sale and except for the changes announced by Thomson Municipal News at the time the sale date and time are announced. Dated: October_,2018 73258430.4 l l Exhibit A Form of Certificate of Initial Purchaser [Note: If the competitive sale requirements are not satisfied, the District will reject all bids and cancel the sale.] 2018 Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,CA 92708-7018 Norton Rose Fulbright US LLP 555 South Flower Street,41"Floor Los Angeles,CA 90071 Ladies and Gentlemen: The undersigned, on behalf of [NAME OF UNDERWRITER] ("[SHORT NAME OF UNDERWRITER]"), hereby certifies as set forth below with respect to the sale, execution and delivery by the Orange County Sanitation District (the "District') of its Revenue Refunding Certificate Anticipation Notes, Series 2018A(the"Notes"). 1. Reasonably Expected Initial Offering Price. (a) As of the Sale Date, the reasonably expected initial offering price of the Notes to the Public by [SHORT NAME OF UNDERWRITER] is the price shown in Schedule A (the "Expected Offering Price"). The Expected Offering Price is the price of the Notes used by [SHORT NAME OF UNDERWI=R] in formulating its bid to purchase the Notes. Attached as Schedule B is a true and correct copy of the bid provided by[SHORT NAME OF UNDERWRITER] to purchase the Notes. (b) [SHORT NAME OF UNDERWRITER] was not given the opportunity to review other bids prior to submitting its bid. (c) The bid submitted by [SHORT NAME OF UNDERWRITER] constituted a firth offer to purchase the Notes. 2. Defined Terms. (a) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term "related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership,directly or indirectly. (b) Sale Date means the first day on which there is a binding contract in writing for the sale of the Notes. The Sale Date of the Notes is October ,2018. (c) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer(or with the lead underwriter to form an underwriting syndicate)to participate in the initial sale of the Notes to the Public,and(ii) any person that agrees pursuant to a written contract directly or indirectly 7325B43aA A-1 with a person described in clause (i) of this paragraph to participate in the initial sale of the Notes to the Public(including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Notes to the Public). The undersigned understands that the statements made herein will be relied upon by the District in its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986 (the "Code"), and will be relied upon by Special Counsel in rendering its legal opinion, concerning the exclusion from the gross income for federal income tax purposes of interest with respect to the Notes. [INITIAL PURCHASER), as Underwriter By: Title: ]3258430.4 A-2 Exhibit A Yield Proof (See attached) 732SM30.4 A-3 OFFICIAL BID FORM ORANGE COUNTY SANITATION DISTRICT REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES,SERIES 2018A 2018 Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,CA 92708-7018 Attention: Lorenzo Tyner Ladies and Gentlemen: We hereby offer to purchase all of the $ ' aggregate principal amount of the Orange County Sanitation District (the "District") Revenue Refunding Certificate Anticipation Notes, Series 2018A(the"Notes"),more particularly described in your Official Notice Inviting Bids,dated October_, 2018 (the "Official Notice Inviting Bids"), which is incorporated herein by reference, and made a part thereof, at a purchase price of$ (which purchase price is not less than 100% of the aggregate principal amount of the Notes). This offer is for Notes evidencing interest at the rate per annum of %. The bid is subject to acceptance not later than two hours after the expiration of the time established for the final receipt of bids. Our calculation of the modified true interest cost, computed in accordance with the instructions in the Official Notice Inviting Bids, and which is considered to be informative only and not a part of the bid, is With this bid we are providing the District a wire transfer in immediately available federal funds in the amount of$ to an account specified by the District or its representative,in accordance with the Official Notice Inviting Bids. We have noted that payment of the purchase price is to be made in immediately available Federal Funds at the time of delivery of the Notes. If we are the successful bidder, we will (1) within 30 minutes after being notified of the verbal award of the Notes, advise the District of the initial public offering prices of the Notes; and (2) prior to delivery of the Notes famish a certificate, acceptable to Special Counsel, Norton Rose Fulbright US LLP, as to the "issue price" of the Notes in the form specified in the Official Notice Inviting Bids. We represent that we have full and complete authority to submit this bid on behalf of our bidding syndicate, that has an established industry reputation for underwriting new issuances of municipal bonds, and the undersigned will serve as the lead manager for the group if the Notes are awarded pursuant to this bid. We certify (or declare) under penalty of perjury under the laws of the State of California that this proposal is genuine, and not a sham or collusive, nor made in the interest of or on behalf of any person not herein named,and that the bidder has not directly or indirectly induced or solicited any other bidder to `Preliminary; subject to change. 7325M30A put in a sham bid or any other person, firm or corporation to refrain from bidding, and that the bidder has not in any manner sought by collusion to secure for himself an advantage over any other bidder. Further, we did not consult with any other potential underwriter about this bid,and this bid was determined by us, independently, without regard to any other formal or informal agreement, if any, that we may have with the District(whether or not in connection with the sale and issuance of the Notes). Respectfully Submitted, Account Manager: By: Address: City: State: Telephone: Following(or attached)is a list of the members of our account on whose behalf this bid is made. DRAFT OF 08/17/18 NOTICE OF INTENTION TO SELL Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes Series2018A NOTICE IS HEREBY GIVEN that the Orange County Sanitation District(the"District") intends to receive electronic bids until 10:30 a.m.,New York time, on Thursday, November 1, 2018, through the use of electronic bidding service offered by Ipreo, at www.newissuehome.i-deal.com and the Parity electronic bid submission system, for the purchase of all of the District's Revenue Refunding Certificate Anticipation Notes, Series 2018A (the "Notes"), dated as of the date of initial delivery, and maturing on August 15, 2021, as described in the related Official Notice Inviting Bids (the "Notice"). No bids will be accepted by facsimile. Bids for less than all of the Notes will not be accepted. The District reserves the right to postpone the date established for the receipt of bids as more fully described under the paragraph "Cancellation or Postponement" in the Notice. NOTICE IS HEREBY FURTHER GIVEN that electronic copies of the Notice and the Preliminary Official Statement issued in connection with the sale of the Notes may be obtained from the District's financial advisor, Public Resources Advisory Group, 11500 West Olympic Boulevard, Suite 502, Los Angeles, California 90064, 310477-8487, via e-mail: lchoi@pmgadvisors.com. Orange County Sanitation District Dated: October. 2018 ' Preliminary,subject to change. 732583573 IN1035824 (OCSD 2018 CANS) ADMINISTRATION COMMITTEE Meeting Date TOBd.oroir. 09/12/18 09/26/18 AGENDA REPORT Item Item Number 5 20 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: UPDATES TO OCSD PERSONNEL POLICIES AND PROCEDURES GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 18-18 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving a Board of Directors Personnel Policies and Procedures Manual providing for classification, compensation, and other terms, conditions, policies, and procedures governing employment of District employees; and repeal Resolution No. OCSD 15-18." BACKGROUND The Orange County Sanitation District's(Sanitation District) Board of Directors' Personnel Policies and Procedures Manual (Policies) contains the terms, conditions, rules, and regulations of employment which are consolidated into one reference document. The Policies are reviewed periodically and updated as required; and the last comprehensive update to the Policies was completed in 2012. Staff is proposing updates to the Policies as a result of local, state, and federal law changes, and changes in work practices. In accordance with Resolution No. OCSD 15-18, revisions to the Policies require Board of Directors' approval. RELEVANT STANDARDS • Comply with Resolution No. OCSD 15-18 • Maintain positive employer-employee relations PROBLEM There are a total of 51 policies that require updates to align with local, state, and federal law, and to reflect current work practices. PROPOSED SOLUTION Staff recommends that the Board of Directors approve and adopt the policy updates by Resolution. The proposed revisions to each of the policies are summarized in the following table. Specific revisions are noted in the attached documents. Page 1 d 6 Policy Number/Title Reason for Revision 1.1 —Harassment and Policy updated to include language that complies with federal and state Discrimination laws. 1.2—Retaliation & Policy updated to include language that complies with federal and state Whistleblowing laws. Section 3.1 updated with a qualifying statement that aligns with EEOC. 1.3—Workplace Violence Policy updated to include managers as a point of contact within &Weapons procedure. Clarifying language on knives and what is acceptable on OCSD property. Policy updated to include: new definitions; clarification on the types of probation; language that complies with federal and state laws; the 1.4—Recruitment& elimination of specific sections that will be moved into a separate HR Selection Standard Operating Procedures document; defined types of recruitment; changes to employment posting; advertising; applicant screening; the selection process; addition of eligibility lists; changes to employment offers; and addition of promotions. 1.5—Outside Employment & Professional Policy updated to include clarifying terms within both policy and Associations procedure. 1.6—Nepotism Policy updated to include clarifying language within procedure. 1.7—At-Will EMT Policy updated to include clarifying terms within both policy and Employment Agreements procedure, in addition to language that complies with federal and state laws. 1.8—Business Ethics Policy updated to include clarifying language within procedure. 1.9—Layoff Procedure Policy updated to include clarifying language within policy and procedure. 1.10—Employee Policy updated to include clarifying language within policy and Separation procedure. Specifically, updated Section 7.1.4 to include banked compensatory time. 1.11 —Temporary&Contract Workers (NEW) New policy that addresses temporary and contract workers at OCSD. 1.12—Student Internship Program (NEW) New policy that addresses student internships available at OCSD. 2.1 —Classification & Policy updated to include clarifying language within procedure. Edits Compensation applied to policy definitions and the elimination of the "Z Rating". Page 2 d 6 Policy Number/Title Reason for Revision 2.2—Non-Base Building Policy updated to include clarifying language within policy and Pay procedure. 2.3—Wage Gamishments Minimal edits to correct spelling and grammar. 3.1.1 — Hours of Work— Nonexempt Employees Minimal edits to correct spelling and grammar. 3.1.2— Hours of Work— Exempt Employees Minimal edits to correct spelling and grammar. 3.2—Attendance Minimal edits to correct spelling and grammar in policy, and clarifying language applied in both procedure and exceptions. Policy updated to include clarifying terms within both policy and 3.3—Leave of Absence procedure sections. Outdated language removed from policy section. with Pay Specifically, updated language in 4.2.13 to align with California Labor Code. 3.3.1 —Military Leave Policy updated to include minor grammatical changes. Policy updated to include additional definitions, language that complies 3.4—Leave of Absence with federal and state laws, as well as changes in policy. Additional without Pay information added to the policy on Workers Compensation and Protected Child-related activities. Corrected minor grammatical errors. 4.1 — Insurance Policy updated to include more clear definitions, changes in policy for qualifying events, and minor grammatical changes. 4.2—Retirement Policy updated to include more detailed definitions and minor grammatical changes. 4.3—Tuition Policy updated to include clarifying terms within both policy and Reimbursement procedure sections. Policy updated to include clarifying language within the definitions, 4.4—Certification policy, and procedure sections. Specifically, updated exceptions in Reimbursement Section 7.0 and provisions and conditions in Section 8.0 to align with Policy 4.3, Tuition Reimbursement Policy. 4.5—Professional & Policy updated to include clarifying language within policy and Technical Memberships exceptions sections. Specifically, updated section 4.3 that allows and Fees discretion as needed. Corrected minor grammatical errors. Page 3 of 6 Policy Number/Title Reason for Revision 4.6—Domestic Partnership Policy updated to include minor grammatical changes and specific references to Memoranda of Understanding. 4.7—Pro-Rats Benefits for Policy updated to include clarifying language within definitions, purpose Part-Time Employees and procedure and specific references to Memoranda of Understanding. 4.9—Catastrophic Leave Policy updated to include clarifying terms within both policy and Bank Donation Program procedure. 4.10—Employee Policy updated to include clarifying language within purpose and Development procedure. Newly created policy that outlines the definitions and guidelines 4.11 —Development Pay regarding the Development Pay program. Moved "Educational (NEW) Degrees" Section of the policy to the "Non-Base Building Pay" policy 2.2 and added a reference to it in the related documents section. 5.1 —Rules of Conduct Policy updated to remove procedural information re: employee's history and include clarifying information and minor grammatical changes. Policy updated to include clarifying information in the procedure and 5.2—Discipline minor grammatical changes. Specifically, updated Section 3.3 to refer to Section 5.9, not 5.5. 5.3—Operator Certification Policy updated to remove language about quarterly reviews and include Maintenance minor grammatical changes. 5.4—Employee Participation in Athletic and Policy updated to include information on authorization forms needed, Recreational Activities on the use of the Fitness Room at OCSD, and minor grammatical Off-Duty Time changes. 5.5—Meal and Rest Periods Policy updated to include minor grammatical changes. 5.6—Travel Policy updated to include e-hailing services, the use of OCSD WiFi hotspots, and minor grammatical changes. 5.7—Solicitation & Policy updated to include definitions, exceptions, and minor Distribution grammatical changes. 5.10—Wireless/Electronic Policy updated to include use of drones, for clarity, and minor Communications grammatical changes. Updates within Social Media and IT Forms for network access were also included. Page 4 of 6 Policy Number/Title Reason for Revision 5.18—Use of District Property Policy updated to include exception and minor grammatical changes. Policy updated to include minor grammatical changes. Clarifying 5.19—Vehicle Usage language included within definitions, policy, procedure, and exceptions. Specifically, language on the use of toll roads is included in Section 4.9.11. 5.20—Substance Abuse Policy updated to include marijuana and minor grammatical changes. 5.21 —Smoking Policy updated to include more detailed definitions, deletion of related documents, and minor grammatical changes. 6.1 —Appraisal of Policy updated for clarity and to include minor grammatical changes. Performance Specifically added Section 4.1.5 and 5.4 to align with Performance Management. 6.2—Open Communication Policy updated for clarity and to include minor grammatical changes. 6.3—Privacy R HR Policy updated to include minor grammatical changes and the removal Records of specific references to Memoranda of Understanding in Section 8.0, Related Documents. 6.4—Problem Solving Policy updated to include exceptions and minor grammatical changes. 6.5—Grievance Procedure Policy updated to include minor grammatical changes. 7.1 —Miscellaneous Provisions Policy updated to include minor grammatical changes. Policy updated for clarity and to include minor grammatical changes. 7.2— IDEA Program Specifically removed Section 7.3.3, there is no longer and Employee Activities Committee. TIMING CONCERNS The proposed revisions ensure dated language within the Policies is updated and aligns with current legal requirements. RAMIFICATIONS OF NOT TAKING ACTION The Policies will not reflect current practice and provisions of the law. Page 5 d 6 PRIOR COMMITTEE/BOARD ACTIONS September 2015 - Approved Resolution OCSD No. 15-18 entitled, "A Resolution of the Board of Directors of Orange County Sanitation District approving a Board of Directors Personnel Policies and Procedures Manual providing for classification, compensation, and other terms, conditions, policies, and procedures governing employment of District employees; and repealing Resolution No. OCSD 98-33 and all associated amendments:' October 2012 - Approved proposed changes to Personnel Policies, Procedures, and Guidelines. ADDITIONAL INFORMATION The Policies, as adopted by a Resolution of the Board of Directors, supersede any and all prior Board Resolutions and actions that are inconsistent with these Policies, unless otherwise specified herein. The Policies do not constitute a contract of employment. To the extent the Policies are inconsistent with any tern or provision of an individual employment agreement or Memorandum of Understanding (MOU), the term or provision of the employment agreement or MOU shall govern. The Policies intend to increase the mutual understanding of expectations and minimize the making of personal decisions on matters of District-wide policy. CECA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)am attached in hard copy and may also be viewed on-line at the OCSD website (mm w.ocsd.coml with the complete agenda package: • Proposed Resolution No. OCSD 18-18 • Orange County Sanitation District Board of Directors Personnel Policies and Procedures Manual FINAL (online only) • Redlined version & Resolution No. OCSD 15-18 (on file in the Clerk of the Board's office) Page 6 of 6 RESOLUTION NO. OCSD 18-18 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT ADOPTING A BOARD OF DIRECTORS PERSONNEL POLICIES AND PROCEDURES MANUAL PROVIDING FOR CLASSIFICATION, COMPENSATION, AND OTHER TERMS, CONDITIONS, POLICIES, AND PROCEDURES GOVERNING EMPLOYMENT OF DISTRICT EMPLOYEES; AND REPEALING RESOLUTION NO. OCSD 15-18 NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: The Board of Directors Personnel Policies and Procedures Manual, attached hereto as Exhibit `A", be adopted. Section 2: Any change in the Policies and Procedures set forth in the Board of Directors Personnel Policies and Procedures Manual must be approved by the Board of Directors prior to implementation. Section 3: This Resolution shall take effect immediately upon its adoption. Section 4: Resolution No. OCSD 15-18 is hereby repealed. PASSED AND ADOPTED at a regular meeting of the Board of Directors held September 26, 2018. Gregory C. Sebourn, PLS Board Chairman ATTEST: Kelly A. Lore, MMC Clerk of the Board OCSD 18-18-1 STATE OF CALIFORNIA ) 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 18-18 was passed and adopted at a regular meeting of said Board on the 261h day of September 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 261h day of September 2018. Kelly A. Lore, MMC Clerk of the Board of Directors Orange County Sanitation District OCSD 18-18-2 STEERING COMMITTEE Meeting Date TOBd.of Dir. 09/26/18 09/26/18 AGENDA REPORT emNumber Iem2umber 2 21 Orange County Sanitation District FROM: James D. Herberg, General Manager SUBJECT: GENERAL MANAGER'S FISCAL YEAR 2018-2019 WORK PLAN GENERAL MANAGER'S RECOMMENDATION Receive and File the General Manager's Fiscal Year 2018-2019 Work Plan. BACKGROUND Each year, the General Manager prepares a work plan of activities supporting the Orange County Sanitation District's strategic goals and initiatives to be accomplished during the fiscal year. The draft work plan was submitted to the Steering Committee for review and input from the Directors in August. This final work plan is being submitted to the Steering Committee and Board of Directors for approval. RELEVANT STANDARDS Sustain 1, 5, 20-year planning horizons 24/7/365 treatment plant reliability Negotiate fair and equitable labor agreements Commitment to safety& reducing risk in all operations Meet volume and water quality needs for the GWRS Maintain a culture of improving efficiency to reduce the cost to provide the current service level or standard PRIOR COMMITTEE/BOARD ACTIONS August 2018 — Draft work plan was reviewed by the Steering Committee. ADDITIONAL INFORMATION The General Managers work plan includes goals for the 2018-2019 fiscal year. The work plan has five areas of focus which include: Safety and Security; Succession Planning; Resource Recovery; Reliability; and Operational Optimization. FINANCIAL CONSIDERATIONS All items included in the General Manager's Work Plan are budgeted in the FY 2018- 2019 Budget. Page 1 d 2 ATTACHMENT The following attachments)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • General Manager's Fiscal Year 2018-2019 Work Plan Page 2 of 2 ORANGE COUNTY SANITATION DISTRICT Memorandum September 26, 2018 TO: Chairman and Members of the Board of Directors FROM: James D. Herberg, General Manager SUBJECT: General Manager's Fiscal Year 2018-2019 Work Plan I am pleased to present for your consideration my proposed work plan for Fiscal Year 2018- 2019. 1 have identified five areas of focus for the next year to ensure that: 1) our operations are safe and reliable; 2) we continue to attract, develop, and retain a capable workforce; and 3) we enhance our sustainability by maximizing water recycling and sound financial practices. This forward-looking work plan is designed to position our agency to continue providing our customers with a high level of service while seizing opportunities and meeting future challenges. My five focus areas are: 1. Safety and Security • Emergency Preparedness — Develop and conduct an external emergency response and recovery drill by June 30, 2019 that tests the Integrated Emergency Response Plan (IERP). • Safety Engineering Solutions — Continue the 11 Safety Improvement Construction Projects and implement physical site security enhancements as needed to ensure all facilities remain secure. All identified safety improvement contracts and task orders are awarded by May 30, 2019. • Voluntary Protection Plan (VPP) Certification — Complete a full review and audit of all Safety and Health policies, conduct a third-party VPP readiness assessment, and draft a VPP implementation plan by June 30, 2019. • Safety Help Desk— Create a Safety Help Desk Program by June 30, 2019 with software and in-house telephone extension monitored by Risk Management staff, intended to provide internal customers with prompt information and support related to health and safety services. Services include but are not limited to: troubleshooting safety problems, scheduling contractor orientation, or getting policy guidance. • Security Committee & Plan — Reconvene the Security Committee to facilitate development and implementation of a Physical and Cyber Security Plan by March 31, 2019. 2. Succession Planning • Realignment of Operations, Maintenance & Engineering (Maintenance Mode) — Assess the roles and responsibilities of each department and workgroup within the Operation and Maintenance and Engineering Departments and adjust the structure and roles to more efficiently support delivery of services to operate, maintain, refurbish, and replace Orange County Sanitation District (OCSD) assets by November 30, 2018. Make the necessary adjustments to the organization by March 31, 2019. • Labor Negotiations — Complete successful negotiations with all represented bargaining units by June 30, 2019. • Leadership Development — Provide at least two specialized trainings tailored to the Supervisory Level by June 30, 2019. Page 2 3. Resource Recovery • Water Quality for Water Recycling — Update OCSD's wastewater ordinance to reflect necessary discharge regulations resulting from alkaline hydrolysis to protect water quality by June 30, 2019. 4. Reliability • Asset Management Plan — Develop an Asset Management Plan by October 31, 2018 that includes an inventory of critical assets for each process area, the collection system and fleet; an evaluation of their condition and performance; and a budgeting and implementation plan to maintain, rehabilitate, and replace these assets to meet the required levels of service at the lowest life cycle cost and at an acceptable level of risk. 5. Operational Optimization • OCSD Headquarters Building — Create a final concept plan for the new building complex north of Ellis Avenue by February 28, 2019. • Board Meeting Agenda Management Software System—Select and install a new Board Meeting Agenda Management Software System by June 30, 2019. • Document Management — In preparation for creating a more digital workplace and reducing physical record storage, develop a Scope of Work by November 30, 2018 to issue a Request for Proposals for a Trusted System Needs Assessment and award a contract by February 28, 2019. Present the records retention schedule to the Board of Directors for approval by December 31, 2018. Page 3 Operational Optimization (continued) • Sludge Dewatering and Odor Control Plant No. 1 — Begin production of dewatered biosolids cake by March 31, 2019. • American Society of Civil Engineers Peer Review— Complete a peer review of the Engineering Department's Capital Improvement Program delivery system by the American Society of Civil Engineers by May 31, 2019. • Communications Audit — Develop scope of work and issue RFP by June 30, 2019 to select firm to conduct a communications audit to review effectiveness of OCSD's communication efforts to redefine and rescope the program. • Lobbyist Contract — Complete selection and contract implementation of legislative lobbyist contracts by December 31, 2018. • Return to Work Program — Develop a formal Return to Work Program to communicate expectations of what is expected of all parties (employees, supervisors, physicians, etc.) by June 30, 2019. Page 4 STEERING COMMITTEE Melting D310 TOBd.Of Dir. 09/26/18 09/26/18 AGENDA REPORT Item Item Number 3 22 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPERTY MANAGEMENT SERVICES FOR 18429 PACIFIC STREET, 18368-18375 AND 18410-18436 BANDILIER CIRCLE, FOUNTAIN VALLEY GENERAL MANAGER'S RECOMMENDATION Approve an amendment with The Muller Company for Property Management Services, for an additional management fee of$3,293 per month plus other incurred expenses, for the additional of District acquired properties on Bandilier Circle and Pacific Street 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 closed 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. On August 28, 2018, the District acquired properties on Bandilier Circle and Pacific Street as the future site of its Administration Building. RELEVANT STANDARDS Protection of Orange County Sanitation District assets PROBLEM Although the Sanitation District now owns additional 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. Page 1 of 2 TIMING CONCERNS Although the Sanitation District acquired the properties on August 28, 2018 and has assumed responsibility for management of the property, the Sanitation District does not have in-house property management resources. 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 February 28, 2018 — Approved 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. 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.com) with the complete agenda package: Amendment No. 1 to Management Agreement Page 2 of 2 AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT This AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT("Amendment") is made and entered into effective as of August 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("Owner'),and THE MULLER COMPANY,LLC ("Manager"). RECITALS : A. Owner and Manager entered into that certain Management Agreement dated as of February 28, 2018 (the "Agreement") pursuant to which Owner contracted with Manager to provide management services forl8350 Mount Langley,Fountain Valley,California,the"Property". B. Except as otherwise set forth herein,all capitalized terms used in this Amendment shall have the same meaning given such terms in the Agreement. C. Owner and Manager desire to amend the Agreement to change the Management Fee and Properties,as hereinafter provided. NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto agree as follows: L The Parties agree to correct an inadvertent error in the Management Agreement with respect to THE MULLER COMPANY name. Through this Amendment No. 1 to Management Agreement, the name of the Manager is hereby revised to read THE MULLER COMPANY,LUC.The Parties desire that this Item 1 of Amendment No, 1 to Management Agreement be incorporated into the Agreement,and become a part thereof from the beginning. 2. Parties agree to exercise the Option to renew the Agreement for a six(6)month term from August 28, 2018 through February 28,2019. 3. The Agreement shall be expanded to include the management of the following: 18368, 18375, 18381, 18384, 18410, 18430, 18436 Bandilier Circle and 18429 Pacific Street, Fountain Valley ("Additional Properties") 4. Effective Date of Additional Properties:August 28,2018 5. The parties hereby agree that the Owner shall pay to Manager, as compensation for Manager's management services, on a monthly basis, a management fee (the "Additional Properties Management Fee") in the amount equal to $0.05/psf/month for the actual Additional Properties in addition to the existing Management Fee in the Agreement for the Property. The square footage of the Additional Properties and Additional Properties Management Fee per each individual Additional Property is as follows: _ - a. 18368 Bandilier Circle 6,000 sq.ft. $ 300.00/month b. 18375 Bandilier Circle 6,000 sq.ft. $ 300.00/month c. 18381 Bandilier Circle 6,000 sq.ft. $ 300.00/month d. 18384 Bandilier Circle 6,000 sq.ft. $ 300.00/month e. 18410 Bandilier Circle 6,000 sq.ft. $ 300.00/month f. 18430 Bandilier Circle 6,000 sq.ft. $ 300.00/month g. 18436 Bandilier Circle 6,000 sq.ft. $ 300.00/month h. 18429 Pacific Street 23,847 sq.ft. $ 1,192.35/month Total square footage: 65,847 @$0.05/psf/month= $3,292.35/month 6. No Further Modification. Except as set forth in this Amendment, all of the terms and provisions of the Agreement shall remain unmodified and in full force and effect. IN WITNESS WHEREOF,this Amendment has been executed as of the day and year first above written. 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, LLC Dated: By: Print Name and Title of Officer IRS Employer's I.D. Number -2- ITEM FC-1 Orange County Sanitation District MINUTES FINANCING CORPORATION MEETING June 27, 2018 3 N �TjO ©� '2�6 O� � � 9 H Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018 O6/27)2018 Minutes of Board Meeting Page 1 of 3 ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION CALL TO ORDER: Chair Sebourn called the Board of Directors, Orange County Sanitation District Financing Corporation meeting to order at 6:13 p.m. Kelly Lore, Secretary of the Financing Corporation, declared a quorum present as follows: ACTIVE DIRECTORS ALTERNATE DIRECTORS X Gregory Sebourn, Chair Jesus Silva A Denise Barnes Lucille Kring X Allan Bernstein Chuck Puckett X Robert Collacott Robbie Pitts 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 Charlie Nguyen X Al Krippner X Richard Murphy Warren Kusumoto A Steve Nagel Cheryl Brothers X Glenn Parker Cecilia Hupp A Scott Peotter Brad Avery X Erik Peterson _ Mike Posey X Tim Shaw Michael Blazey X David Shawver Carol Warren X Fred Smith Virginia Vaughn X Teresa Smith Mark Murphy A Michelle Steel Shawn Nelson Sal Tinajero X David Benavides X Donald Wagner Lynn Schott X _Chad Wanke Ward Smith X John Withers Douglas Reinhart X Mariellen Yarc Stacy Berry Kelly Lore, Secretary of the Financing Corporation, announced that the members of the Orange County Sanitation District Board of Directors are each being compensated $212.50 for the Board of Directors Meeting; there is no additional compensation for the Financing Corporation Meeting. 06n7n016 Minutes of Board Meeting Page 2 of 3 APPROVAL OF MINUTES: FC-1. APPROVAL OF MINUTES (Secretary of the Financing Corporation) Hearing no corrections or amendments made, the minutes for the meeting held on June 28, 2017 were deemed approved as so ordered by the Chair. INFORMATION ITEM: FC-2. ANNUAL STATUS REPORT OF THE ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION (Lorenzo Tyner) Director of Finance & Administrative Services Lorenzo Tyner provided a brief overview of the item. MOVED SECONDED AND DULY CARRIED TO: Receive and File the Annual Status Report of the Orange County Sanitation District Financing Corporation. AYES: Beard (Alternate); Bernstein; Collacott; Deaton; Ferryman; Hawkins; Kim; Krippner (Alternate); R. Murphy; Parker; Peterson; Sebourn; Shaw; Shawver; F. Smith; T. Smith; Wagner; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: Barnes; Benavides (Alternate); Nagel; Peotter and Steel Chair Sebourn adjourned the meeting of the Board of Directors, Orange County Sanitation District/Financing Corporation at 6:15 p.m. Sub itted byAIL Kelly A. r , M C Fin cin orporation Secretary 0 6/2 712 01 8 Minutes of Board Meeting Page 3 of 3 •T WooDuiff $PRADllN6$MART CS-1 555 ANION BOULEVARD, BUTTE 1200 COSTA M.s A, CA 92626-7670 (714)559-7000 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation District Board of Directors FROM: Bradley R. Hogin, Esq. General Counsel DATE: September 17, 2018 RE: Closed Session Items The Board of Directors desires to hold a closed session on September 26, 2018 for the purpose of conferring with its legal counsel regarding existing litigation to which the District is a party. The title of the cases are Klean Waters, Inc. et. al. v. Orange County Sanitation District, United States District Court, Central District of California, Southern Division, Case No. 8:15-cv- 00627 and Klean Waters, Inc. et al. v. Orange County Sanitation District, United States District Court, Central District of California, Southern Division, Case No. 8:15-cv-01498. The closed session will be held pursuant to the authority of California Government Code Section 54956.9(d)(1). Respectfully submitted, By Bradle . Hogin, Qeneral Counsel 1347900.1 •T WOODRUFF,.spRADLIN&SMART 555 ANION BOULEVARD, BUTTE 1200 COSIA M.s A, CA 92626-7670 (714)558-7000 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation District Board of Directors FROM: Bradley R. Hogin, Esq. General Counsel DATE: September 17, 2018 RE: Closed Session Items The Board of Directors desires to hold a closed session on September 26, 2018 for the purpose of conferring with its legal counsel regarding existing litigation to which the District is a party. The title of the case is Wesley Bauer v. Orange County Sanitation District, Orange County Superior Court, Central Justice Center, Court Case No. 30-2017-00956252. The closed session will be held pursuant to the authority of California Government Code Section 54956.9(d)(1). Respectfully submitted, By ;411'� & Bradley R. Hogin, Oeneral Counsel 1347893.1 •T WooDRuff sPRADllN6$MART 555 Anton BOULEVARD, BUTTE 1200 COSTA M.s A, CA 92626-7670 (714)558-7000 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation Board of Directors FROM: Bradley R. Hogin, Esq. General Counsel DATE: September 18, 2018 RE: Closed Session Items The Board of Directors desires to hold a closed session on September 26, 2018 for the purpose of conferring with its legal counsel regarding existing litigation to which the District is a party. The title of the case is Craneveyor v. Orange County Sanitation District, Los Angeles Superior Court, Stanley Mosk Courthouse, Case No. BS175021. The closed session will be held pursuant to the authority of California Government Code Section 54956.9(d)(1). Respectfully submitted, By By li / Bradle .Hogin, General Counsel 1348211.1 ORANGE COUNTY SANITATION DISTRICT COMMON ACRONYMS ACWA Association of California LAFCO Local Agency Formation RWQCB Regional Water Quality Water Agencies Commission Control Board APWA American Public Works LOS Level Of Service SARFPA Santa Ana River Flood Association Protection Agency AQMD Air Quality Management MGD Million Gallons Per Day SARI Santa Ana River District Interceptor ASCE American Society of Civil MOU Memorandum of SARWQCB Santa Ana Regional Water Engineers Understanding Quality Control Board BOD Biochemical O National Association of Clean Santa Ana Watershed Oxygen Demand NACWA SARPA Water Agencies Project Authority California Air Resources National Environmental Supervisory Control And CARB Board NEPA Policy Act SCADA Data Acquisition California Association of Non-Governmental Southern California CASA Sanitation Agencies NGOs Organizations SCAP Alliance of Publicly Owned Treatment Works CCTV Closed Circuit Television NPDES National Pollutant Discharge SCAQMD South Coast Air Quality Elimination System Management District CEQA California Environmental NWRI National Water Research SOCWA South Orange County Quality Act Institute Wastewater Authority CIP Capital Improvement O&M Operations&Maintenance SRF Clean Water State Program Revolving Fund California Regional Water Orange County Council of Sewer System CRWQCe Quality Control Board OCCOG Governments SSMP Management Plan CWA Clean Water Act OCHCA Orange County Health Care SSO Sanitary Sewer Overflow Agency California Water Environment Orange County Sanitation State Water Resources CWEA Association OCSD District SWRCe Control Board EIR Environmental Impact Report OCWD Orange County Water District TDS Total Dissolved Solids EMT Executive Management Team COBS Ocean Outfall Booster Station TMDL Total Maximum Daily Load EPA US Environmental Protection OSHA Occupational Safety and 7SS Total Suspended Solids Agency Health Administration Professional Waste Discharge FOG Fats,Oils,and Grease PCSA Consultant/Construction WDR Wastee Discharge Services Agreement gpd gallons per day PDSA Professional Design Services WEE Water Environment Agreement Federation GWRS Groundwater Replenishment POTW Publicly Owned Treatment WERE Water Environment& System Works Reuse Foundation ICS Incident Command System ppm parts per million WIFIA Water Infrastructure Finance and Innovation Act Integrated Emergency Professional Services Water Infrastructure IERP Response Plan PSA Agreement WIIN Improvements for the Nation Act JPA Joint Powers Authority REP Request For Proposal WRDA Water Resources Develo ment Act ORANGE COUNTY SANITATION DISTRICT GLOSSARY OF TERMS 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. CAPITAL IMPROVEMENT PROGRAM (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements,additional capacity, and projects forthe 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 (DR)—The dilution at which the majority of people detect the odor becomes the Dfr 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 efil GROUNDWATER REPLENISHMENT SYSTEM(GWRS)—Ajoint 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. LEVEL OF SERVICE(LOS)—Goals to support environmental and public expectations for performance. N-NITROSODIMETHYLAMINE (NDMA) — A N-nitmsamine 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. 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.